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Item 9A. Controls and Procedures

2025-06-27 compared with 2024-09-27 · 499 added, 999 removed, 915 unchanged (62% of the section changed)

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In connection with the preparation of this Form 10-K for the fiscal year ended March 31, 2025, an evaluation was performed under the supervision and with the participation of our management, including the CEO and CFO, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in and pursuant to Rules 13a-15(e) and 15d-15(e) under the Exchange Act).

Based on this evaluation, our CEO and CFO have concluded that, as of March 31, 2023, due to the material weaknesses in our internal control over financial reporting described below, our disclosure controls and procedures were not effective.

Notwithstanding the identified material weaknesses, management believes the consolidated financial statements included in this Annual Report on Form 10-K fairly present, in all material respects, our consolidated financial position and consolidated results from operations and cash flows for the fiscal years ended March 31, 2024 and March 31, 2023, and our financial condition as of each such date and have been prepared in conformity with U.S.

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

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

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over our financial reporting.

Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act as a process designed by, or under the supervision of, our CEO and CFO and effected by our board of directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S.

Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act as a process designed by, or under the supervision of, our CEO and CFO and effected by our Board, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S.

GAAP and includes those policies and procedures that:

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

Based on this evaluation, management concluded that our internal control over financial reporting was not effective as of March 31, 2024 because of the material weaknesses described below.

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

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

The following material weaknesses were identified:

● There was an inappropriate tone at the top established by certain former senior executives.

For example, certain former senior executives delayed shipments of parts under the FPP service contracts, which because of our incorrect accounting for our FPP program resulted in delayed recording of the associated expense and liabilities on the Company’s financial statements.

These business practices were also not properly communicated to our Board, Audit Committee, or independent registered public accounting firm.

● We lacked sufficient qualified professionals with an appropriate level of accounting and internal control knowledge, training and experience to (i) appropriately analyze, record and disclose accounting matters timely and accurately and (ii) design and maintain effective internal control over financial reporting.

● We did not perform a sufficient review of accounting policies to ensure ongoing adherence with U.S.

● We did not design and maintain effective controls over financial reporting for systems, products, parts, and accessories sales subject to bill and hold arrangements with customers.

● We did not design and maintain effective controls over financial reporting related to the proper accounting, presentation and disclosure for FPP service contracts, including the cost recognition of parts and labor associated with FPP service contracts.

The following material weakness was identified:

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

Management’s Remediation Plan

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

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

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

● The Company has reinforced and will continue to reinforce its tone at the top through enhanced communication of the Company’s values and expected business conduct to their personnel directly from the Company’s senior leadership.

● Management is enhancing our quarterly disclosure committee meetings to require additional communication of business activities to the appropriate finance and accounting personnel and to our Board and Audit Committee as required.

● The Company has hired and continues to hire additional accounting and compliance personnel as is necessary to maintain an effective control environment commensurate with our financial reporting requirements.

Management will continue to assess the composition of its resource needs, both internal and external, which may include hiring additional accounting and compliance resources, including engaging in third-party advisors when necessary.

● Management is implementing a formal process to periodically review and update accounting policies.

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

Additionally, management is enhancing the design of and implementing controls over financial reporting for (i) systems, products, parts, and accessories sales subject to bill and hold arrangements with customers and (ii) FPP service contracts, including the cost recognition of parts and labor associated with FPP service contracts.

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

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

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

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

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

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

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

Changes in Internal Control over Financial Reporting

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

We completed these remediation

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

Specifically, we undertook the following remediation measures:

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

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

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

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

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

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

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

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

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

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

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Rule 10b5-1 Trading Plans

During the quarter ended March 31, 2024, none of our directors or officers adopted or terminated any contract, instruction or written plan for the purchase or sale of our securities to satisfy the affirmative defense conditions of “Rule 10b5-1 trading arrangement” or any “non-Rule 10b5-1 trading arrangement.”

During the year ended March 31, 2025, none of our directors or officers adopted or terminated any contract , instruction or written plan for the purchase or sale of our securities to satisfy the affirmative defense conditions of “Rule 10b5-1 trading arrangement” or any “non-Rule 10b5-1 trading arrangement.”

Goldman NPA Liquidity Covenant Waiver Letter

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

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

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

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Directors, Executive Officers and Corporate Governance.

Board of Directors;

Leadership Structure

Set forth below is certain information regarding the directors of the Company.

The ages of and biographical information regarding the Board is based on information furnished to the Company by each director and is as of September 24, 2024.

Board Class (1)

Audit Committee

Compensation & Human Capital Committee

Governance & Sustainability Committee

(1) The term of Class I directors expires at the first annual meeting following the initial classification in April 2024.

The term of Class II directors expires at the second annual meeting following the initial classification.

The term of Class III directors expires at the third annual meeting following the initial classification.

(2) Chair of the Board

Canino joined the Board on March 11, 2024 in connection with his appointment as President and Chief Executive Officer

(4) Lead Independent Director

Miller joined the Board on February 26, 2024

The principal occupations and business experience for at least the last five years for each director are set forth below.

The biographies of each of the directors below contain information regarding the person’s service as a director, business experience, director positions held currently or at any time during the last five years, information regarding the experiences, qualifications, attributes or skills that caused the Governance and Sustainability Committee and the Board to determine that the person should serve as a director.

Flexon has been a director since April 2018 and has served as Chair since January 2021.

Flexon served as our Executive Chairman from August 9, 2023 until March 31, 2024 and as our Interim President and Chief Executive Officer from August 22, 2023 until March 10, 2024.

Flexon has served as a director of PG&E Corporation (NYSE:

PCG) since June 2020 and is currently the chair of the board.

He has also served as a director for Charah Solutions, Inc.

CHRA) from June 2018 to July 2023 and of the Electric Reliability Council of Texas (ERCOT) since 2021.

Flexon was President and Chief Executive Officer and a director of Dynegy Inc.

DYN), a power-generating company that owns and operates a number of natural gas-fueled or coal-fueled power stations in the U.S, from July 2011 to April 2018.

In 2016, a subsidiary of Dynegy filed for bankruptcy under Chapter 11 of the bankruptcy code.

Prior to joining Dynegy, Mr.

Flexon served as the Chief Financial Officer of UGI Corporation (NYSE:

UGI), a distributor and marketer of energy products and related services from February 2011 to July 2011.

Flexon was the Chief Executive Officer of Foster Wheeler AG (Nasdaq:

FWLT) from June to October 2010 and the President and Chief Executive Officer of Foster Wheeler USA from November 2009 to May 2010.

Prior to joining Foster Wheeler, Mr.

Flexon was Executive Vice President and Chief Financial Officer of NRG Energy, Inc.

NRG) from February to November 2009.

Flexon previously served as Executive Vice President and Chief Operating Officer of NRG Energy from March 2008 to February 2009 and as its Executive Vice President and Chief Financial Officer from 2004 to 2008.

Prior to joining NRG Energy, Mr.

Flexon held executive positions with Hercules, Inc.

and various key positions, including General Auditor, with Atlantic Richfield Company.

In addition, Mr.

Flexon was a CPA with the former Coopers & Lybrand from 1980 to 1987.

Flexon served on the public board of directors of Foster Wheeler from 2006 until 2009 and from May to October 2010, of Westmoreland Coal Company from 2017 to 2019 and of TransAlta Corp.

He served on the board of directors for Genesys Works-Houston, an organization that transforms the lives of disadvantaged high school students through meaningful work experience, from 2016 to 2021.

He also served on the board of directors of Baker Ripley, a Texas non-profit organization that connects low-income people to opportunities, from 2014 to 2016.

He has served on the board of directors of Nexus, a privately held water utility company, since April 2024.

Flexon holds a Bachelor of Science degree in Accounting from Villanova University.

He became a Certified Public Accountant (inactive) in the State of Pennsylvania.

Among his other skills and expertise, Mr.

Flexon brings to the Board over a decade of experience in accounting and financial matters and has a breadth of executive management experience.

In his years as an energy industry executive, he has developed a deep comprehension of wholesale power generation markets and customers.

See “Executive Officers” for information pertaining to Mr.

Jorden has been a director since April 2017.

Jorden has also served as director and audit committee and nominating & governance committee member of Cohu, Inc.

COHU) since May 2021, which is a global leader in back-end semiconductor equipment and services, delivering leading-edge solutions for the manufacturing of semiconductors.

She has also served as director and audit committee member of Alignment Healthcare, Inc.

ALHC), which is a tech-enabled Medicare Advantage plan company, since January 2022.

Additionally, she serves as a director and finance committee member of Methodist Health System, a not-for-profit Texas-based hospital system since 2008.

Prior to her current roles, Ms.

Jorden served as director, chairperson of the compensation committee, a member of the audit committee and a member of the governance and nominating committee, the latter of which she previously served on as chairperson, for Maxwell Technologies (Nasdaq:

MXWL), a leader in development and manufacturing of energy storage and power delivery solutions from 2008 to 2017.

In addition, she also served as director and chairperson of the audit committee of Magnatek, Inc.

MAG), a manufacturer of digital power control systems, U.S.

Oncology, a privately-held oncology services company, and BioScrip, Inc.

BIOS), a national provider of infusion and home care management solutions.

During her business career, Ms.

Jorden has served as chief financial officer of four publicly traded companies, including as Executive Vice President and Chief Financial Officer of AdvancePCS (Nasdaq:

ADVP), a pharmacy benefits management company, from 2002 to 2004.

Previously she was chief financial officer of Informix, a Nasdaq-listed technology company, Oxford Health Plans, a Nasdaq-listed provider of managed health care services, and WellPoint, Inc., a NYSE-listed managed care company.

Jorden received her Bachelor of Science degree in Accounting from the California State University, Los Angeles.

Earlier in her career, she was a senior auditor with Arthur Andersen & Co., where she became a Certified Public Accountant (inactive) in the State of California.

Among her other skills and expertise, Ms.

Jorden brings to the Board decades of extensive experience as both a chief financial officer as well as a board member in all areas of corporate governance and finance, including mergers and acquisitions, structuring IPOs, restructurings, and managing public debt and equity offerings.

Jorden is a board leadership fellow of the National Association of Corporate Directors, demonstrating her commitment and leadership as a board member.

Powelson has been a director since June 2019.

Powelson has served as the President and Chief Executive Officer of the National Association of Water Companies (“NAWC”) since June 2018.

Prior to joining NAWC, Mr.

Powelson was nominated to the Federal Energy Regulatory Commissioner (“FERC”) by President Donald J.

Trump in May 2017, confirmed by the U.S.

Senate in August 2017, and served as a member of FERC until August 2018.

Prior to his appointment to FERC, Mr.

Powelson served on the Pennsylvania Public Utility Commission (“PUC”) from June 2008 to August 2017, and served as the PUC’s chairman from February 2011 to May 2015.

Powelson also served on Pennsylvania’s Marcellus Shale Advisory Commission from March 2011 to July 2011.

Prior to joining the PUC, Mr.

Powelson served as president of the Chester County Chamber of Business & Industry from February 1994 to July 2008.

Powelson was also a past president of the National Association of Regulatory Utility Commissioners (“NARUC”), where he also was a member of the board of directors from March 2011 to July 2017.

Powelson served as chairman of the NARUC Committee on Water and Power and represented the Water Committee on NARUC’s Task Force on Climate Policy.

Powelson holds a Masters of Governmental Administration from the University of Pennsylvania and a Bachelor of Arts from St.

Joseph’s University.

Among his other skills and expertise, Mr.

Powelson brings to the Board extensive expertise in public utilities, the regulatory environment and public policy.

Wilson has been a director since November 2019.

Wilson served as Executive Vice President and President, Alternative Energy Businesses for NRG Energy, Inc.

NRG), an independent power company with generation, energy retail business and cleantech ventures, from July 2011 through January 2016.

Wilson served as Executive Vice President and Chief Administrative Officer of NRG from September 2008 through July 2011.

Prior to September 2008, Ms.

Wilson served as Executive Vice President, Human Resources for Nash-Finch Company, a national food distributor, and other various senior roles at NRG from 2000 through 2007.

Prior to joining NRG, Ms.

Wilson held various key positions as Vice President Human Resources with Metris Companies Inc.

and Director, Human Resources with General Electric ITS.

Wilson holds a Masters in Industrial Relations from the University of Minnesota.

Wilson brings to the Board extensive experience as President of a Fortune 500 company that generates electricity and provides energy solutions and natural gas to more than 3.7 million residential, small business, and commercial and industrial customers.

Fu has been a director since August 2021.

She currently serves on the board of directors of Live Nation Entertainment (NYSE:

LYV), the world’s largest live entertainment company, as well as the boards of Long Now Foundation and Burning Man Project.

Fu co-founded Geomagic, a leader in 3D imaging and 3D printing technologies that has fundamentally changed the way products are designed and manufactured around the world, and she served as its CEO until 2013.

Following the acquisition by 3D Systems (NYSE:

DDD) of Geomagic in 2013, Ms.

Fu served as Chief Strategy Officer and Chief Entrepreneur Officer at 3D Systems until 2016.

She was also part of the team that created the NCSA Mosaic software and HTTP server software which were key in the early development of the Internet.

Fu has received numerous awards for her leadership, including the Outstanding American by Choice award from the U.S.

Citizenship and Immigration Services, the Ernst & Young Entrepreneur of the Year award and Inc.

Magazine’s Entrepreneur of the Year award.

Fu’s book, Bend Not Break:

A Life in Two Worlds, was on the New York Times bestseller list.

Fu brings to the Board extensive experience in senior executive and leadership positions, global business experience and expertise in technology trends, social change and policy making.

Miller has been a director since February 2024.

He has over 40 years of broad-based executive management experience in the manufacturing, distribution and transportation industries and has served in senior finance and leadership roles at public and private companies across a range of industry categories.

He has served on the board of directors of Spruce Power Holding Corporation, an owner and operator of distributed solar energy assets, since 2022.

From 2017 to 2021, he served as Chief Executive Officer of Power Solutions International, Inc., a publicly traded company focusing on the design, engineering and manufacture of a broad range of advanced, emission-certified engines and power systems.

From 2008 until 2016, Mr.

Miller served in operational and financial management positions of increasing responsibility at Navistar International Corporation, a global vehicle manufacturer and solutions provider, including as senior vice president of operations and corporate finance.

Prior to such roles, he served in the role of Chief Financial Officer of Laidlaw International, Inc., a provider of public transportation services, Chicago Metallic Corporation, a global manufacturer of suspended ceiling and metal products, Fleetpride, Inc., a distributor of heavy duty truck parts, and Peapod, an online grocery delivery company.

Miller received his Master of Business Administration from the University of Michigan and a Bachelor of Arts degree in economics from DePauw University.

Miller brings to the Board extensive industry experience and expertise in financial management and strategic planning.

Other than Mr.

Flexon in respect of the bankruptcy filing of Dynegy’s subsidiary and Mr.

Flexon and Mr.

Juric in respect of the Chapter 11 Cases, no director or officer has been involved in any legal proceedings required to be disclosed under Item 401(f) of Regulation SK.

The Board met thirty (30) times during the fiscal year ended March 31, 2024 (the “2024 Fiscal Year” or “Fiscal 2024”).

The Board has established an Audit Committee, a Compensation and Human Capital Committee, and a Governance and Sustainability Committee.

During Fiscal 2024, each director attended at least 75% of the aggregate of (1)

the total number of meetings of the Board (held during the period for which he or she was a director) and (2) the total number of meetings of all committees of the Board of the Company on which the director served (during the periods that he or she served).

The Company strongly encourages each member of the Board to attend each annual meeting of stockholders.

The Company’s independent directors met in executive session, without members of the Company’s management present, at all of the regularly scheduled meetings of the Board in Fiscal 2024.

Risk Oversight

The Board oversees an enterprise-wide approach to risk management designed to support the achievement of organizational objectives, including strategic objectives, to improve long-term organizational performance and to enhance stockholder value.

A fundamental part of risk management is not only understanding the risks the Company faces and what steps management is taking to manage those risks, but also understanding what level of risk is appropriate for the Company.

The involvement of the full Board in setting the Company’s business strategy is a key part of its assessment of management’s appetite for risk and also a determination of what constitutes an appropriate level of risk for the Company.

The full Board participates in an annual enterprise risk management assessment.

While the Board has the ultimate oversight responsibility for the risk management process, various committees of the Board also have responsibility for risk management.

In particular, the Audit Committee focuses on financial risk, including internal controls, and receives an annual risk assessment report from the Company’s internal auditors.

In setting compensation, the Compensation and Human Capital Committee strives to create incentives that encourage a level of risk-taking behavior consistent with the Company’s business strategy and is responsible for oversight with respect to compensation and succession planning risks.

Cybersecurity Governance

The Board is responsible for overseeing assessments of major risks facing the Company and for reviewing options to mitigate these risks.

It has delegated oversight responsibility for information security matters is shared by the Audit Committee, CFO and our internal IT resources.

Our CFO oversees our cybersecurity risk management, including appropriate risk mitigation strategies, systems, processes, and controls, and receives quarterly updates from IT and our third-party IT service provider on cybersecurity and information security matters.

The CFO communicates regularly with the Audit Committee and Board on the state of our cybersecurity risk management, current and evolving threats, and recommendations for changes.

We have also implemented a cyber incident response plan that provides a protocol to report certain incidents to the CFO with the goal of timely assessment of such incidents, determining applicable disclosure requirements and communicating with the Audit Committee and Board for timely and accurate reporting of any material cybersecurity incident.

Audit Committee

The Audit Committee currently consists of Ms.

Jorden (Chair), Ms.

Miller, which was also the composition as of March 31, 2024.

Following his appointment as Executive Chairman in August 2023, Mr.

Flexon resigned from the Audit Committee.

Upon his appointment to the Board on February 26, 2024, Mr.

Miller was appointed to the Audit Committee.

The Audit committee is constituted to comply with Section 3(a)(58)(A) of the Exchange Act and is responsible, among other items, for:

(i) overseeing the Company’s accounting and financial reporting practices;

(ii) annually retaining the independent public accountants as auditors of the financial statements and accounts of the Company;

(iii) monitoring the scope of audits made by the independent public accountants and the audit reports submitted by the independent public accountants;

(iv) overseeing the systems of internal control which management and the Board have established;

and (v) discussing with management and the independent and internal auditors the Company’s major financial risk exposure and the steps taken to monitor and control such exposure.

In addition, the Audit Committee reviews and approves all related party transactions.

The Audit Committee operates under a written charter adopted by the Board, a copy of which is available on the Company’s website at www.capstonegreenenergy.com.

Pursuant to its written charter, the Audit Committee reviews its charter on an annual basis for compliance, best practices and any other needed updates or changes.

During Fiscal 2024, the Audit Committee held twelve (12) meetings.

The Board has determined that Ms.

Jorden is an “audit committee financial expert,” as that term is defined by applicable rules adopted by the SEC.

The Board has further determined that each member of the Audit Committee is independent and financially literate as defined by Nasdaq and SEC rules, as applicable.

Compensation and Human Capital Committee

The Compensation and Human Capital Committee currently consists of Ms.

Wilson (Chair), Mr.

Powelson, and Ms.

Jorden, which was also the composition as of March 31, 2024.

The Compensation and Human Capital Committee is comprised solely of directors who qualify as independent for purposes of Nasdaq rules in conformance with the Compensation and Human Capital Committee’s charter, and are “non-employee directors,” as defined in Rule 16b-3 under the Exchange Act and “outside directors,” as defined under Section 162(m) of the Internal Revenue Code of 1986, amended (the “Code”).

The functions of the Compensation and Human Capital Committee include:

(i) annually reviewing and recommending to the Board the corporate goals and objectives relevant to the compensation of our Chief Executive Officer, (ii) evaluating the performance of our Chief Executive Officer in light of such corporate goals and objectives and, based on such evaluation, recommending to the Board the compensation of our Chief Executive Officer, (iii) determining the compensation of all executive officers other than the Chief Executive Officer, (iv) retaining, terminating and approving the compensation of any compensation advisors, (v) reviewing and approving our policies and procedures for the grant of equity based awards, (vi) reviewing and approving grants of awards under our incentive based compensation plans and equity based plans, (vii) reviewing and making recommendations to the Board with respect to director compensation, (viii) reviewing and overseeing the Company’s policies and practices relating to human capital management, (ix) reviewing, monitoring and providing recommendations to our Board on our workplace policies and practices, including corporate culture and employee engagement, talent management and leadership development, employee diversity and inclusion, and ensuring a respectful workplace free of discrimination and harassment, and (x) reviewing and evaluating, at least annually, the performance of our Compensation and Human Capital Committee and its members, and reporting to the Board on the results of such evaluation.

The Compensation and Human Capital Committee operates under a written charter adopted by the Board, a copy of which is available on the Company’s website at www.capstonegreenenergy.com.

Pursuant to its written charter, the Compensation and Human Capital Committee reviews its charter on an annual basis for compliance, best practices and any other needed updates or changes.

During Fiscal 2024, the Compensation and Human Capital Committee held four (4) meetings.

Governance and Sustainability Committee

The Governance and Sustainability Committee currently consisted of Mr.

Powelson (Chair), Ms.

Wilson, and Ms.

Fu, which was also the composition as of March 31, 2024.

Upon his appointment to the Board on February 26, 2024, Mr.

Miller was appointed to the Governance and Sustainability Committee.

The Governance and Sustainability Committee is comprised solely of “independent directors” as defined by Nasdaq rules in conformance with the Governance and Sustainability Committee’s charter.

The Governance and Sustainability Committee is responsible for, among other things, (i) monitoring corporate governance matters;

(ii) recommending to the full Board candidates for election to the Board and committees of the Board;

(iii) coordinating the Board evaluation process;

(iv) providing general oversight in respect of corporate governance, social responsibility, and sustainability matters;

and (v) overseeing succession planning of the CEO and other key positions.

The Governance and Sustainability Committee operates under a written charter adopted by the Board, a copy of which is available on the Company’s website at www.capstonegreenenergy.com .

Pursuant to its written charter, the Governance and Sustainability Committee reviews its charter on an annual basis for compliance, best practices and any other needed updates or changes.

During Fiscal 2024, the Governance and Sustainability Committee held one (1) meeting.

Board of Directors and Committee Performance Evaluations

The charter of each of the Audit Committee, the Compensation and Human Capital Committee and the Governance and Sustainability Committee requires an annual performance evaluation, and the Company’s Corporate Governance Principles also mandate an annual evaluation of the Board.

Such performance evaluations are designed to assess whether the Board and its committee’s function effectively and make valuable contributions to the Company.

In June 2024, the Governance and Sustainability Committee conducted an assessment of the performance of the Board, as well as an assessment of each member’s skill sets and experience and how such skill sets and experience align with the needs of the Company in reaching the Company’s strategic objectives.

In July 2024, the Governance and Sustainability Committee and the Board discussed the results of the assessments and put a follow-up process in place to conduct the annual performance evaluation of the Audit Committee, the Compensation and Human Capital Committee and the Governance and Sustainability Committee as well as the Board.

Director Recommendation and Nomination Process

Nominations of persons for election to our Board by the stockholders may be made at an annual meeting of stockholders by any stockholder who (i) was a stockholder of record entitled to vote in the election of directors at the time of giving of notice provided for below on the record date for the determination of stockholders entitled to vote at such annual meeting, and (ii) complies with the notice procedures set forth below and as further described in our bylaws as to such nomination.

Without qualification, for nominations, the stockholder must have given timely notice thereof in writing to the secretary of the corporation at:

Capstone Green Energy Holdings, Inc.

16640 Stagg Street

Van Nuys, CA 91406

To be timely, a stockholder’s notice shall be delivered to the Secretary at the principal executive offices of the corporation not earlier than the close of business on the 150th calendar day and not later than the close of business on the 120th calendar day prior to the first anniversary of the date of the immediately preceding annual meeting of stockholders;

provided, however, that the date of the annual meeting is advanced by more than thirty (30) calendar days prior to such anniversary date or delayed more than seventy (70) calendar days after such anniversary date, a proposal shall be received by the corporation not earlier than the close of business on the 150th day before the meeting and not later than the later of (a) the close of business on the 120th day before the meeting or (b) the close of business on the tenth day following the day on which public announcement of the date of the annual meeting is first made by the corporation.

In no event shall the public announcement of an adjournment of an annual meeting commence a new time period for the giving of a stockholder’s notice as described above.

As discussed in the Company’s bylaws, the notice must set forth:

(A) certain information as to each nominee such stockholder proposes to nominate at the meeting as set forth in the Company’s bylaws, including such person’s written consent to being named in the proxy statement, proxy card and ballot as a nominee and to serving as a director if elected, and (B) certain information as to, and certain representations and certifications from, the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination is being made, as set forth in the Company’s bylaws.

The above does not purport to provide in detail the requirements for a stockholder’s nomination of the director.

A stockholder interested in nominating a director to our Board is encouraged to review our bylaws and the SEC’s proxy rules, as any stockholder nomination must comply with the applicable provisions of our bylaws and the SEC’s proxy rules and will be handled in accordance with our bylaws and applicable laws.

The Governance and Sustainability Committee reviews the composition and size of the Board and determines the criteria for Board membership.

In addition, the Governance and Sustainability Committee reviews the qualifications, qualities, skills and other expertise of prospective candidates to determine whether they will make good candidates for membership on the Company’s Board.

This consideration includes, at a minimum, a review of each prospective candidate’s character, judgment, experience, expertise, age, diverse characteristics, independence under applicable law and freedom from other conflicts, as well as other factors that the Governance and Sustainability Committee deems relevant in light of the needs of the Board and the Company and/or that are in the best interests of the Company, including the ability to dedicate sufficient time, energy and attention to performance of Board duties, among other things.

The Governance and Sustainability Committee selects qualified candidates and recommends those candidates to the Board, and the Board then decides if it will invite the candidates to be nominees for election to the Board.

The Governance and Sustainability Committee also considers legal requirements, including stock exchange requirements and applicable laws and regulations.

The Governance and Sustainability Committee also considers issues of diversity, such as diversity of education and professional experience and differences in viewpoints, skills and backgrounds, including gender, race and ethnicity differences, as well as other differentiating characteristics.

The Governance and Sustainability Committee actively considers all relevant factors when considering nominees for directors, including the factors outlined above, when

evaluating potential nominees to the Board.

The Board and the Governance and Sustainability Committee believe that it is essential that members of the Board represent diverse viewpoints.

As of the date of this Annual Report on Form 10-K, we meet California state laws (that were recently ruled to be unconstitutional by California Superior Courts) to have (i) at least one director who self-identifies as a member of an underrepresented community (as defined by such law) and (ii) based on the current size of our Board, at least three female directors.

The Governance and Sustainability Committee uses the following process to identify prospective candidates for the Board and to evaluate all candidates, including candidates recommended by stockholders in accordance with the Company’s policy regarding stockholder recommendations and the director nominations process.

The Governance and Sustainability Committee:

(i) reviews the composition and size of the Board and determines the criteria for Board membership;

(ii) evaluates the Board for effectiveness and makes a verbal presentation of its findings to the Board;

(iii) determines whether the current members of the Board who satisfy the criteria for Board membership are willing to continue in service;

if the current members of the Board are willing to continue in service, the Governance and Sustainability Committee evaluates the performance of such board members and considers those current members for re-nomination, and if the current members of the Board are not willing to continue in service or if there will be an increase in the number of directors on the Board, the Governance and Sustainability Committee considers candidates who meet the criteria for Board membership;

(iv) if necessary, engages a search firm to assist with the identification of potential candidates;

(v) compiles a list of potential candidates;

(vi) evaluates the prospective candidates, including candidates recommended by stockholders, to determine which of the prospective candidates, if any, will best represent the interests of all stockholders and determines whether any conflicts of interest exist;

(vii) holds meetings to narrow the list of prospective candidates;

(viii) along with the Chair of the Board and management, interviews a select group of prospective candidates;

(ix) approves the candidate or candidates who are most likely to advance the best interests of the stockholders;

and (x) recommends the selected candidate or candidates to the Board and the stockholders for approval.

The Governance and Sustainability Committee, which may request the assistance of members of the Board who are not on the Governance and Sustainability Committee in the execution of its duties, carefully documents the selection and evaluation process.

Pursuant to our Corporate Governance Guidelines, management directors are required to offer to resign from the Board upon their termination as an employee of the Company (other than as a result of normal retirement), which resignation may be accepted by the Board in its sole discretion.

A non-employee director must inform, and offer his or her resignation to, the Board in the event of any principal occupation or business association change, including retirement.

The Board does not believe that directors who retire from or change the primary occupation that they held when they were first elected to the Board should necessarily leave the Board in every instance.

Stockholder Communications

The Company has a policy whereby stockholders may communicate directly with the Company’s Board, or individual members of the Board, by writing to the Company at:

Capstone Green Energy Holdings, Inc.

16640 Stagg Street

Van Nuys, CA 91406

and indicating prominently on the outside of any envelope that the communication is intended for:

(i) the Board;

(ii) the Chair of the Board;

(iii) a specific committee of the Board;

(iv) the non-management directors;

or (v) any director or subset of directors of the Board.

The Secretary reviews all correspondence and regularly forwards to the appropriate director, directors or the Board, copies of all communications that, in the opinion of the Secretary, deal with the functions of or otherwise require the attention of individual directors, the Board or committees or subsets thereof.

Unless, in the opinion of the Secretary, a communication is improper or irrelevant, a communication will not be withheld from its intended recipient(s) without the approval of the Chair of the Board, the Chair of the appropriate committee or the director who presides during non-management executive sessions.

Directors may, at any time, review a log of all correspondence received by the Company in accordance with the policy and request copies of any such correspondence.

Executive Officers

The names and ages of all executive officers of the Company and the principal occupation and business experience for at least the last five years for each are set forth below.

The age of and biographical information regarding each executive officer is based on information furnished to the Company by each executive officer and is as of September 24, 2024.

The following list identifies the name, age and position(s) of the executive officers of the Company:

President & Chief Executive Officer

Chief Financial Officer

The term of each executive officer runs until his or her successor is elected and qualified, or until his or her earlier death, resignation or removal.

The following is a biographical summary of the experience of the executive officers of the Company:

Canino was appointed as President and Chief Executive Officer and a member of the Board on March 11, 2024.

Prior to joining the Company, Mr.

Canino served as the Chief Operating Officer of ESS Tech, Inc.

GWH), a developer of long-duration energy storage solutions, from September 2022 to March 2024.

He previously spent approximately eight years with Smardt Chiller Group, Inc.

(“Smardt”), a manufacturer of oil-free chillers, most recently serving as Smardt’s President and Chief Executive Officer.

Canino also served in various roles with Trane Commercial Systems (“Trane”), a manufacturer of heating, ventilation and air conditioning systems, including as Trane’s Vice President, Enterprise Businesses and Renewable Energy.

Canino’s career includes multiple leadership, management, operations and sales roles with publicly traded and privately held organizations.

Canino serves as a board member of Western Washington University and holds a Master of Science in Engineering Mechanics from Pennsylvania State University and a Bachelor of Technology in Mechanical Engineering from the State University of New York at Binghamton.

Among his other skills and expertise, Mr.

Canino brings to the Board his unique perspective as President and Chief Executive Officer of the Company and substantial executive and industry experience.

Juric was appointed Chief Financial Officer in March 2023.

Prior to joining the Company, Mr.

Juric spent nearly two years providing management and financial consulting services to C-suite executives in multiple industries.

Previously, Mr.

Juric served as Vice President of Finance and Chief Financial Officer of USALCO, LLC, a chemical manufacturing and distribution company, for six years, and as President Americas & Asia Industrial Division and Americas Region Chief Financial Officer of Fiberweb, PLC., a global nonwoven products manufacturer and distributor, for nearly five years.

Additionally, Mr.

Juric’s career includes multiple leadership, finance, and accounting roles with publicly traded and privately held organizations.

He also previously served as the Director of Finance at Hercules, Inc., a global specialty chemical manufacturing company.

Juric is a Certified Public Accountant and holds an MBA and Bachelor of Science in Accounting degree from West Chester University.

Code of Business Conduct and Code of Ethics

The Company has adopted a Code of Business Conduct and Ethics that applies to all directors, officers and employees of the Company.

All directors, officers and employees of the Company are expected to be committed to the highest standards of honest, ethical and legal behavior.

The Board reviews the Code of Business Conduct and Ethics on an annual basis or more often, if necessary.

The Company has also adopted a Code of Ethics for Principal and Senior Financial Officers.

Each governance document is available on the Company’s website at www.capstonegreenenergy.com.

We intend to post on our website all disclosures that are required by law concerning any amendments to, or waivers from, any provision of the Code of Business Conduct and Ethics and Code of Ethics for Principal and Senior Financial Officers.

Delinquent Section 16(a) Reports

Section 16(a) of the Exchange Act requires the Company’s directors and executive officers and persons who own more than 10% of a registered class of the Company’s equity securities to file with the SEC initial reports of ownership

and reports of changes in ownership of the Company’s equity securities.

The Company endeavors to assist officers and directors in making these filings.

Based solely on its review of the reports filed with the SEC during the Company’s fiscal year ended March 31, 2024, the Company believes that all reporting requirements under Section 16(a) for the fiscal year ended March 31, 2024 were met in a timely manner by its directors, executive officers, and greater than 10% beneficial owners, except for one filing made by Celia Fanning in connection with the acquisition of 15,000 shares of common stock underlying restricted stock units, the information for which was filed on Form 4 on April 13, 2023.

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

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

Executive Compensation.

The Company is a “smaller reporting company” under Item 10 of Regulation S-K promulgated under the Exchange Act and has elected to comply with certain of the requirements applicable to smaller reporting companies in connection with this Annual Report on Form 10-K.

Although the rules allow the Company to provide less detail about its executive compensation program, the Compensation and Human Capital Committee is committed to providing the information necessary to help stockholders understand its executive compensation-related decisions.

The information below summarizes the executive compensation program and results for our named executive officers (“NEOs”) for Fiscal 2024.

2024 Summary Compensation Table

The following table sets forth information regarding the compensation paid to or earned by the Company’s CEO and our other NEOs, for services rendered to the Company and its subsidiaries for the fiscal years indicated.

Non-Equity Incentive

Plan Compensation

Name and Principal Position

President & Chief Executive Officer (5)

Former Interim President, Chief Executive Officer & Executive Chairman (6)

Former President & Chief Executive Officer (8)

Chief Financial Officer (9)

(1) This column represents the aggregate grant date fair value of restricted stock units (“RSUs”) and performance restricted stock units (“PRSUs”) granted in the years presented in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718, excluding the estimated impact of forfeitures related to service-based vesting conditions.

Grant date fair value is calculated using the closing price of Capstone’s common stock on the date of grant.

For a discussion of the valuation assumptions, see Note 9— Permanent Equity in the Notes to Consolidated Financial Statements.

For PRSUs granted in Fiscal 2024, the amount reported in the table above represents the grant date fair value of such award assuming the probable outcome of the performance conditions.

The value of such award, assuming the maximum achievement of the performance conditions, is $56,250 for Mr.

Jamison forfeited his PRSU award upon his termination of service.

Canino joined the Company in March 2024 and did not receive a PRSU award for Fiscal 2024.

Juric earned a signing bonus of $100,000 upon joining the Company on March 6, 2023.

(3) This column represents non-equity incentive plan compensation earned pursuant to the Capstone Executive Annual Incentive Plan (the “AIP”).

(4) Amounts reported in this column include Company vacation payouts, Company contributions to the 401(k) plan and premiums paid by the Company for life insurance.

Canino joined the Company on March 11, 2024.

Flexon served as Non-Executive Chairman of the Board until his appointment as Executive Chairman on August 9, 2023 and served as our Interim President and Chief Executive Officer from August 22, 2023 until March 10, 2024.

Flexon remained Executive Chairman until March 31, 2024, upon which time he transitioned back to the role of Non-Executive Chairman of the Board effective April 1, 2024.

(7) Consists of $ 356,715 in base salary earned by Mr.

Flexon in connection with his service as Interim President and Chief Executive Officer from August 22, 2023 until March 10, 2024 and $34,000 in director compensation received by Mr.

Flexon during the periods in Fiscal 2024 when he was not serving as Interim President and Chief Executive Officer.

Jamison departed the Company on August 22, 2023.

Juric joined the Company on March 6, 2023.

Components and Results of the Fiscal 2023 Executive Compensation Program

The primary components of the compensation program for our NEOs are base salary, annual incentive compensation and long-term incentives and awards.

Our NEOs are also eligible for employee benefits consistent with those offered to other employees of the Company and for severance and change in control (“CIC”) benefits.

Base Salary Base salary is intended to provide a level of assured cash compensation that is competitive in the marketplace to our executive officers.

It is based on the individual’s qualifications, experience with the Company, past performance, taking into account all relevant criteria, value to the Company, the Company’s ability to pay and relevant competitive market data.

For Fiscal 2024, the Compensation and Human Capital Committee approved the following base salaries:

Base Salary at the end

Named Executive Officer

of 2024 Fiscal Year

of 2023 Fiscal Year

Canino joined the Company on March 11, 2024.

Juric joined the Company on March 6, 2023.

Jamison departed the Company on August 22, 2023.

Flexon served as Interim President and CEO, from August 22, 2023 until March 10, 2024.

In connection with Mr.

Flexon’s appointment as Interim President and Chief Executive Officer, the Board approved this base salary, which as pro-rated based on his total tenure as Interim President and Chief Executive Officer.

Annual Incentive Compensation, Targets and Results The AIP for Fiscal 2024 was designed to focus our NEOs on driving future growth and profitability.

The AIP established for Fiscal 2024 was cancelled upon Emergence and a new Post-emergence AIP Plan was approved for the period from Emergence to March 31, 2024.

Specifically, this plan was designed to reward our NEOs and other senior executives if the Company were to achieve pre-determined total revenue, adjusted EBITDA, and cash flow from operating activities, subject to the Company’s standard clawback provisions.

Target annual incentive opportunities are expressed as a percentage of base salary and were established based on each NEO’s level of responsibility and ability to impact overall results.

The Compensation and Human Capital Committee also considers market data in setting target award amounts.

Juric’s target award opportunity for Fiscal 2024 was 60% of his base salary.

Canino will begin participating in the AIP in Fiscal 2025, and his target award opportunity will be 100% of his base salary.

All awards require compliance with the Exit Note Purchase Agreement covenants to be eligible for any incentive payout regardless of goal achievement(s).

The Compensation and Human Capital Committee also has the discretion to determine if any amendments to the Exit Note Purchase Agreement covenants that have a financial impact on the Company could result in the performance gate/trigger to not have been met.

The weightings for the performance measures for Fiscal 2024 are set forth in the table below:

Cash Provided by

The Fiscal 2024 AIP performance goals were structured to encourage growth (in millions):

Performance Payout Level

Performance Metrics

Threshold (50%)

Target (100%)

Maximum (150%)

Actual Results

Adjusted EBITDA

Cash flows from operating activities

(1) Adjusted EBITDA for purposes of the AIP is defined as EBITDA before gain on debt extinguishment, stock-based compensation and other expense, non-recurring legal and consulting expenses and other items determined at the discretion of the Compensation and Human Capital Committee.

Refer to page 69 for a reconciliation of Net Loss, as reported to adjusted EBITDA.

On July 8, 2024, the Compensation and Human Capital Committee met to determine if certain performance targets were met under the terms of awards granted for the 2024 Fiscal Year pursuant to the Post-emergence AIP.

The Compensation and Human Capital Committee determined that the Company reached above the threshold level of achievement for c ash flows from operating activities performance criteria.

As such, the Compensation and Human Capital Committee authorized payments for Fiscal 2024 pursuant to the Post-emergence AIP.

Canino was appointed at the end of the fiscal year and did not receive an award under this plan for Fiscal 2024.

Long-Term Incentive Targets and Awards In discharging its responsibility for administering the Company’s stock-based compensation programs, the Compensation and Human Capital Committee regularly monitors and evaluates the total cost of such programs, based on information provided annually by, and in consultation with the Company’s independent compensation consultant.

This information includes share utilization and annual grant levels.

The Compensation and Human Capital Committee determines the appropriate award to each NEO by assessing equity incentive awards made to officers of comparable companies.

Long-term incentive awards are designed to have senior executives focused on the execution of longer-term financial and strategic growth goals that drive stockholder value creation, strengthen our financial position, and support the Company’s leadership retention strategy.

All awards granted prior to Emergence were cancelled on the Effective Date in accordance with the Plan.

Outstanding Equity Awards at 2024 Fiscal Year-End

Information about outstanding equity awards held by our NEOs as of the end of Fiscal 2024 is set forth in the table below.

Option Awards

Equity Incentive

Market or Payout

Number of Securities

Unearned Shares,

Value of Unearned

Units of Stock

Units or Other

Shares, Units or

Unexercised Options

Rights That Have

Other Rights That

Unexercisable

Have Not Vested

(1) Options vested 25% on the first anniversary of the grant date and monthly thereafter on a pro rata basis over the next 36 months, conditioned on continued service to the Company.

However, all grants were cancelled on the Effective Date in connection with Emergence.

(2) All options terminate, if not sooner, at the expiration of ten years following the grant date.

However, all grants were cancelled on the Effective Date in connection with Emergence.

(3) Based on the fair value of our common stock of $1.05 as forth in the valuation report as of March 31, 2024.

(4) These RSUs vest in three equal installments on each anniversary of March 11, 2025, conditioned on continued service to the Company.

Employee Benefits Executive officers are generally entitled only to health, welfare and retirement benefits that are consistent with those offered to other employees of the Company.

The Company offers group life, disability, medical, dental and vision insurance and an employee stock purchase program.

The Company maintains a defined contribution 401(k) profit - sharing plan in which all employees are eligible to participate.

The plan also provides for both Company matching and discretionary contributions, which are determined by the Board.

The Company matches 50 cents on the dollar up to 6% of the employee’s compensation that is contributed.

The Company’s match vests 25% a year over four years starting from the employee’s hire date.

Executive Employment Contracts, Termination of Employment and Change in Control Arrangements

In July 2018, the Company adopted the Capstone Turbine Corporation Amended and Restated Severance Pay Plan (the “Original Severance Plan”).

The Original Severance Plan provided that, in the event that a NEO’s employment is terminated by the Company without Cause (as defined in the Original Severance Plan), the NEO would be entitled to receive, subject to the execution of a separation agreement containing a general release of claims, 26 weeks (or 52 weeks in the case of the Chief Executive Officer) of base salary continuation and reimbursement of COBRA premiums for six months (or twelve months in the case of the Chief Executive Officer).

On March 2, 2023, the Company amended the Original Severance Plan (the “Amended Original Severance Plan”) to provide that, in the event that the Chief Financial Officer’s employment is terminated by the Company without Cause, the Chief Financial Officer will be entitled to receive, subject to the execution of a separation agreement containing a general release of claims, 52 weeks of base salary continuation and reimbursement of COBRA premiums for twelve months.

The amendment also provides that, in the event that the Chief Executive Officer’s employment is terminated by the Company without Cause, the Chief Executive Officer will be entitled to receive, subject to the execution of a separation agreement containing a general release of claims, 18 months of base salary continuation and reimbursement of COBRA premiums for eighteen months.

On the Effective Date, the Company adopted the Capstone Green Energy Holdings, Inc.

Severance Pay Plan (the “New Severance Plan”), which contains terms substantially similar to those set forth in the Amended Original Severance Plan.

Prior to the Effective Date, the Company entered into Change in Control Agreements (“CIC Agreements”) with each of our NEOs that provide for certain payments and benefits following a termination of the NEO’s employment either by the Company without Cause (as defined in the CIC Agreements) (other than due to the NEO’s death, the NEO being Disabled (as defined in the CIC Agreements), or the NEO becoming an employee of any direct or indirect successor to the business or assets of the Company, rather than continuing as an employee of the Company) or by the NEO for Good Reason (as defined in the CIC Agreements), in either case within six months prior to or 24 months following a CIC (as defined in the CIC Agreements and such a termination, a “Qualifying Termination”).

In the event of a Qualifying Termination, subject to the NEO signing and not revoking a separation agreement containing a general release of claims and a non-disparagement covenant (the “Separation Agreement”), compliance with his or her obligations under the Separation Agreement and compliance with any other continuing obligations to the Company or its successor, the NEO will be eligible to receive (a) a lump sum severance payment equal to 1.0 times the sum of the NEO’s (i) annual base salary for the calendar year in which the Qualifying Termination occurs (or annual base salary in effect immediately prior to the CIC, if higher) and (ii) target annual incentive compensation for the calendar year in which the Qualifying Termination occurs, but pro-rated for the portion of such calendar year that falls prior to the Qualifying Termination;

(b) a monthly cash payment in an amount equal to the monthly employer contribution that the Company would have made to provide health insurance to the NEO if he or she had remained employed by the Company for up to 18 months;

and (c) acceleration of any unvested equity awards outstanding on the date of the Qualifying Termination, assuming achievement of performance criteria at target and without reduction for any shortened performance period in the case of performance-based equity awards.

Payments under the CIC Agreements are in lieu of payments under the Severance Plan.

Our recently completed financial restructuring constituted a CIC under the CIC Agreements.

If a NEO experiences a Qualifying Termination within 24 months following such restructuring, such NEO would be eligible to receive the foregoing severance payments and benefits, as applicable, pursuant to such NEO’s CIC Agreement.

Prior to the Effective Date, the Company entered into Change in Control Agreements (“Pre-Emergence CIC Agreement”) with Mr.

Juric for certain payments and benefits following a termination of Mr.

Juric’s employment either by the Company without Cause (as defined in the Pre-Emergence CIC Agreement) (other than due to Mr.

Juric’s death, Mr.

Juric being Disabled (as defined in the Pre-Emergence CIC Agreement), or Mr.

Juric becoming an employee of any

direct or indirect successor to the business or assets of the Company, rather than continuing as an employee of the Company) or by Mr.

Juric for Good Reason (as defined in the Pre-Emergence CIC Agreement), in either case within six months prior to or 24 months following a CIC (as defined in the Pre-Emergence CIC Agreement and such a termination, a “Qualifying Termination”).

In the event of a Qualifying Termination, subject to Mr.

Juric signing and not revoking a separation agreement containing a general release of claims and a non-disparagement covenant (the “Separation Agreement”), compliance with his obligations under the Separation Agreement and compliance with any other continuing obligations to the Company or its successor, Mr.

Juric will be eligible to receive (a) a lump sum severance payment equal to 1.5 times the sum of Mr.

Juric’s (i) annual base salary for the calendar year in which the Qualifying Termination occurs (or annual base salary in effect immediately prior to the CIC, if higher) and (ii) target annual incentive compensation for the calendar year in which the Qualifying Termination occurs, but pro-rated for the portion of such calendar year that falls prior to the Qualifying Termination;

(b) a monthly cash payment in an amount equal to the monthly employer contribution that the Company would have made to provide health insurance to Mr.

Juric if he had remained employed by the Company for up to 18 months;

Payments under the Pre-Emergence CIC Agreements are in lieu of payments under the Severance Plan.

Our recently completed financial restructuring constituted a CIC under the Pre-Emergence CIC Agreements, but a Qualifying Termination of Mr.

Juric has not occurred.

Juric experiences a Qualifying Termination within 24 months following such restructuring, Mr.

Juric would be eligible to receive the foregoing severance payments and benefits, as applicable, pursuant to his CIC Agreement.

In connection with the appointment of Mr.

Canino as President and Chief Executive Officer, the Company entered into a CIC Agreement with Mr.

Canino (the “Amended and Restated CIC Agreement” and together with the Pre-Emergence CIC Agreement, the “CIC Agreements”).

The Amended and Restated CIC Agreement provides for certain payments and benefits following a Qualifying Termination (as defined in the Amended and Restated CIC Agreement).

In the event of a Qualifying Termination, subject to Mr.

Canino’s execution and non-revocation of a Separation Agreement, compliance with his obligations under the Separation Agreement and compliance with any other continuing obligations to the Company or its successor, he will be eligible to receive (a) two and one-half (2.5) times the sum of his:

(i) annual base salary for the calendar year in which the Date of Termination (as defined in the Amended and Restated CIC Agreement) occurs (or the employee’s annual base salary in effect immediately prior to the CIC, if higher);

and (ii) target annual incentive compensation for the calendar year in which the Date of Termination occurs;

(b) a monthly cash payment in an amount equal to the monthly employer contribution that the Company would have made to provide health insurance to Mr.

Canino if he had remained employed by the Company, for up to 30 months;

Payments under the Amended and Restated CIC Agreements are in lieu of payments under the Severance Plan.

The Company has entered into indemnification agreements with its officers and directors containing provisions which may require the Company, among other things, to indemnify its officers and directors against certain liabilities that may arise by reason of their status or service as officers or directors (other than liabilities arising from willful misconduct of a culpable nature) and to advance their expenses incurred as a result of any proceeding against them as to which they could be indemnified.

The tables below set forth the amount of compensation payable to each of Messrs.

Canino and Juric, as if each situation occurred on March 31, 2024, under the Severance Plan or CIC Agreements discussed above.

Involuntary Termination

Executive Benefits and Payments upon Termination

without Cause

Change in Control

Cash Payments

Insurance Benefits

(1) Reflects severance payments of Mr.

Canino’s annual base salary as of March 31, 2024 over a period of 18 months, payable under the Severance Plan.

(2) Reflects a lump sum severance payment equal to two and one-half times the sum of Mr.

Canino’s annual base salary as of March 31, 2024, and target annual incentive compensation, payable under the Change in Control Agreement with Mr.

(3) Reflects monthly payments of health benefit premiums over a period of 18 months, payable under the Severance Plan.

(4) Reflects monthly payments of health benefit premiums over a period of 30 months, payable under the Change in Control Agreement with Mr.

Involuntary Termination

Executive Benefits and Payments upon Termination

without Cause

Change in Control

Cash Payments

Insurance Benefits

(1) Reflects severance payments of Mr.

Juric’s annual base salary as of March 31, 2024 over a period of 52 weeks, payable under the Severance Plan.

(2) Reflects a lump sum severance payment equal to one and one-half times the sum of Mr.

Juric’s annual base salary as of March 31, 2024, and target annual incentive compensation, payable under the Change in Control Agreement with Mr.

(3) Reflects monthly payments of health benefit premiums over a period of 12 months, payable under the Severance Plan.

(4) Reflects monthly payments of health benefit premiums over a period of 18 months, payable under the Change in Control Agreement with Mr.

Director Compensation

The non-employee director’s RSUs were cancelled on the Effective Date in connection with Emergence.

The director fee schedule for the 2024 Fiscal Year remained unchanged from the previous fiscal year.

The director cash retainer was $35,000, the Chair of the Board additional cash retainer was $25,000, and the director equity retainer was $50,000.

The Audit Committee Chair retainer was $17,000, the Compensation and Human Capital Committee Chair retainer was $15,000, and the Governance and Sustainability Committee Chair retainer was $10,000.

Each non-employee director who served on the Audit Committee received an $8,000 annual retainer.

Each non-employee director who served on the Compensation and Human Capital and the Governance and Sustainability Committees received a $5,000 annual retainer.

Non-employee directors may elect to receive shares of Common Stock in lieu of any cash retainer, based on the fair market value of Common Stock on the date that cash would have otherwise been paid.

All payments are paid quarterly in arrears.

If requested, all director expenses incurred in attending the Board or committee meetings are reimbursed by the Company.

On the Effective Date, the Board adopted a new director compensation policy.

Pursuant to the revised director compensation policy, each non-executive director will receive an annual base retainer of $75,000, payable in cash on a quarterly basis.

The Audit Committee chair will receive an additional annual retainer of $17,000 and each other Audit Committee member will receive an additional annual retainer of $8,000.

The Compensation and Human Capital Committee chair will receive an annual retainer of $15,000 and each other Compensation and Human Capital Committee member will receive an additional annual retainer of $6,000.

The Governance and Sustainability Committee chair will receive an additional annual retainer of $10,000 and each other Governance and Sustainability Committee member will receive an additional annual retainer of $6,000.

Non-executive directors will also receive an annual grant of $10,000 of restricted stock units, commencing with the 2024 annual meeting of stockholders.

On January 22, 2024, the Board approved a policy providing for the grant of 10,000 RSU’s to each new director appointed on or prior to December 7, 2024.

Canino, the Company’s President and Chief Executive Officer did not receive compensation for serving as a member of the Board.

Flexon is not included in the below table as he was an employee of the Company for a portion of Fiscal 2024.

See “—2024 Summary Compensation Table” for information about the compensation earned by Mr.

Flexon in Fiscal 2024 in his capacity as both a non-employee director and Executive Chairman and Interim Chief Executive Officer and President of the Company.

The Company uses its fiscal year in reporting compensation rather than the term

of the Board.

Compensation amounts may differ between the Company’s fiscal year and the term of the Company’s Board.

Information about the compensation of the non-employee directors for the 2024 Fiscal Year is set forth in the table below.

Fees Earned or

Paid in Cash ($)(1)

Awards ($)(2)

Robert Flexon(3)

(1) For each term of the Board (beginning on the date of an annual meeting of stockholders and ending on the date immediately preceding the next annual meeting of stockholders), a non-employee director may elect to receive a stock award in lieu of all or any portion of his or her annual retainer or committee fee cash payment.

The award is calculated by dividing the amount of the fee by the fair market value of a share of common stock on the date the fee is payable.

For the 2024 Fiscal Year, due to limited share pool availability, 100% of the amount of the aggregate directors’ fees was paid in cash.

(2) This column represents the aggregate grant date fair value of stock awards granted during the 2024 Fiscal Year calculated in accordance with FASB ASC Topic 718, excluding the estimated impact of forfeitures related to service-based vesting conditions.

For a discussion of valuation assumptions, see Note 9— Permanent Equity to the Notes to Consolidated Financial Statements.

(3) Please see the 2024 Summary Compensation Table for disclosure regarding Mr.

Flexon’s director compensation in the 2024 Fiscal Year.

Miller’s fees are prorated for services on the Board and Audit Committee.

Miller received 10,000 RSUs.

Non-GAAP Measures Reconciliation

Because we disclose Adjusted EBITDA in connection with the disclosure regarding the AIP targets, we have provided the below reconciliation of net income (loss) to Adjusted EBITDA:

Reconciliation of Reported Net Loss to EBITDA and Adjusted EBITDA

(In thousands)

Net income (loss)

Interest expense

Provision for income taxes

Depreciation and amortization

Stock-based compensation and other expense

Non-recurring legal/consulting

Executive bonus

Adjusted EBITDA

(1) Adjusted EBITDA calculation for purposes of the Post-emergence AIP Plan was for the period from Emergence, December 7, 2023 to March 31, 2024.

The information required by this Item is incorporated by reference from our proxy statement for our 2025 Annual Meeting of Stockholders under the caption “Compensation of Officers,” and “Compensation of Directors.”

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The table below sets forth certain information as of September 24, 2024 (unless otherwise indicated) regarding beneficial ownership of our common stock and non-voting common stock by:

(1) each director, nominee for director and NEO of the Company;

(2) all directors and executive officers as a group;

and (3) each person known by the Company to be the beneficial owner of more than 5% of the outstanding common stock of the Company.

As of September 24, 2024, there were 18,540,789 shares of common stock and 508,475 shares of non-voting common stock outstanding.

Except as otherwise indicated, the beneficial owners listed below have sole voting and investment power with respect to all shares owned by them, except to the extent such power is shared by a spouse under applicable law.

The information provided in the table below is based on the Company’s records, information filed publicly with the SEC and other information provided to the Company.

Non-Voting Common Stock (3)

% of Combined

Name and Address of Beneficial Owner**(1)

Stockholders Beneficially Owning More Than 5%

Non-Management

AIGH Capital Management, LLC(2)

Named Executive Officers and Directors

All directors, director nominees and executive officers as a group (8 persons)

Less than one percent.

Unless otherwise indicated, the address of each person listed is c/o Capstone Green Energy Holdings, Inc., 16640 Stagg Street, Van Nuys, California 91406.

(1) In computing the number of shares beneficially owned by an individual and the percentage ownership of that individual, shares of common stock and shares of non-voting common stock held by that individual that are currently exercisable, or will become exercisable within 60 days from September 24, 2024, are deemed outstanding.

In addition, shares underlying RSUs that will vest within 60 days from September 24, 2024, are deemed outstanding.

Percentage of combined total voting power excludes our non-voting common stock, any shares of non-voting common stock underlying options held by that individual that are currently exercisable, or will become exercisable within 60 days from September 24, 2024, or any shares of non-voting common stock underlying RSUs that will vest within 60 days from September 24, 2024 , as our non-voting common stock is non-voting.

(2) AIGH Capital Management, LLC (“AIGH”) filed a Schedule 13G on September 29, 2023 reporting beneficial ownership, as of September 28, 2023, of the number of shares reflected in the above table.

AIGH reported having sole voting power and sole dispositive power over 1,800,000 shares of common stock.

The business address of AIGH is 6006 Berkeley Avenue, Baltimore, MD 21209.

(3) Excludes $0.4 million step-up expense for the respective individuals who received non-voting common stock.

Stock Ownership Guidelines The Board has established stock ownership guidelines applicable to senior executives (including the NEOs) and non-employee directors in order to further align the interests of executives and directors with the interests of stockholders.

These ownership guidelines provide that the subject persons should own common stock equal in value to a multiple of their annual salary (or, in the case of directors, their annual retainer) as follows:

Chief Executive Officer

4 times annual base salary

Executive Vice Presidents

2 times annual base salary

Senior Vice Presidents and other NEOs

1 times annual base salary

Non-employee members of the Board

4 times annual retainer

Covered persons are expected to hold the specified amount of stock within five years from the later of the date of Emergence or the date they become subject to the ownership guidelines.

The Board will continue to monitor progress towards the achievement of the ownership guidelines.

Clawbacks On the Effective Date, the Company adopted the Executive Officer Incentive Compensation Recoupment (Clawback) Policy in accordance with Rule 10D-1 of the Exchange Act (the “Clawback Policy”).

The Clawback Policy applies to incentive-based compensation that is granted, earned or vested based wholly or in part upon the attainment of a financial reporting measure and requires the Company to recover Erroneously Awarded Compensation (as defined below) from covered executive officers in the event that the Company is required to prepare an Accounting Restatement (as defined below) (except in certain limited circumstances).

Current and former covered executive officers of the Company are subject to the Clawback Policy regardless of whether such covered executive officers engaged in misconduct or otherwise caused or contributed to the requirement for an Accounting Restatement.

“Erroneously Awarded Compensation” means, in the event of an accounting restatement, the amount of incentive-based compensation previously received by covered executive officers that exceeds the amount of incentive-based compensation that otherwise would have been received had it been determined based on the restated amounts in such accounting restatement, and must be computed without regard to any taxes paid by the relevant covered executive officer, provided, however, that for Incentive-Based Compensation based on stock price or total stockholder return, where the amount of Erroneously Awarded Compensation is not subject to mathematical recalculation directly from the information in an Accounting Restatement:

(i) the amount of Erroneously Awarded Compensation must be based on a reasonable estimate of the effect of the Accounting Restatement on the stock price or total stockholder return upon which the Incentive-Based Compensation was received, and (ii) the Company must maintain documentation of the determination of that reasonable estimate and, if the Company’s common stock is then listed on a national securities exchange, provide such documentation to such national securities exchange.

“Accounting Restatement” means an accounting restatement of the Company’s financial statements due to the Company’s material noncompliance with any financial reporting requirement under U.S.

federal securities laws, including any required accounting restatement to correct an error in previously issued financial statements that is material to the previously issued financial statements, or to correct an error that is not material to the previously issued financial statements, but that would result in a material misstatement if the error were corrected or left uncorrected in the current period.

Anti-Hedging Policy The Company’s insider trading policy prohibits directors, officers, employees, contractors and consultants (and their family members, including spouses, minor children or any other family members living in the same household) from engaging in short sales of the Company’s common stock prohibited by Section 16 of the Exchange Act, i.e., sales of shares which the insider does not own at the time of sale, or sales of common stock against which the insider does not deliver the shares within 20 days after the sale involving the Company’s securities, including the Company’s common stock, options or warrants.

The insider trading policy further prohibits the buying or selling puts, calls, other derivative securities of the Company or any derivative securities that that provide the economic equivalent of ownership of any of the Company’s securities or an opportunity, direct or indirect, to profit from any change in the value of the Company’s securities or engage in any other hedging transaction with respect to the Company’s securities.

Anti-Pledging Policy The Company’s insider trading policy also states that no covered person may pledge Company securities as collateral for a loan (or modify an existing pledge).

Compliance The responsibilities and authority of the Compensation and Human Capital Committee are set forth in its charter, which is intended to set forth best practices for compensation.

The members of the Compensation and Human Capital Committee are all “independent directors,” as defined under Nasdaq rules.

Equity incentive awards are granted by the Compensation and Human Capital Committee in a manner that is intended to satisfy Rule 16b-3 under the Exchange Act.

Securities Authorized for Issuance Under Equity Compensation Plans

The following table sets forth information regarding securities authorized for issuance under equity compensation plans as of March 31, 2024:

securities to be

issued upon exercise

available for

of outstanding

Weighted-average

future issuance

options, warrants,

exercise price of

vesting of restricted

Plan category

stock units & rights

options and rights

Equity Compensation Plans Approved by Securityholders

Equity Compensation Plans Not Approved by Securityholders

(1) These shares are available for stock options, restricted stock, RSUs, PRSUs and other awards under the 2023 Plan.

(2) The weighted-average exercise price does not take into account RSUs and PRSUs as there is no exercise price associated with RSUs and PRSUs.

Capstone Green Energy Holdings, Inc.

2023 Equity Incentive Plan

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

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

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

The Incentive Plan was not approved by the Company’s stockholders.

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

Compensation and Human Capital Committee or the Board.

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

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

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

The Capstone Green Energy Holdings, Inc.

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

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

The information required by this Item is incorporated by reference from our proxy statement for our 2025 Annual Meeting of Stockholders under the caption “Security Ownership of Certain Beneficial Owners and Management”

Certain Relationships and Related Transactions, and Director Independence.

Certain Relationships and Related Transactions

The Audit Committee has adopted written policies and procedures regarding related party transactions.

The policies and procedures require that the Audit Committee, whose members are all independent directors, review and approve all related party transactions where the amount involved is in excess of $120,000.

Any proposed related party transaction where the amount involved is $120,000 or less may be approved by the Chair of the Audit Committee or, in applicable situations, the Chief Compliance Officer.

This review covers any material transaction, arrangement or relationship, or any series of similar transactions, arrangements or relationships, in which we were or are to be a participant, and a related person had or will have a direct or indirect material interest, including, purchases of goods or services by or from the related person or entities in which the related person has a material interest, indebtedness, guarantees of indebtedness and employment by us of a related person.

A “related person” is any person who is or was one of our executive officers, directors or director nominees or is a holder of more than 5% of our common stock, or their immediate family members or any entity owned or controlled by any of the foregoing persons.

In determining whether to approve or ratify a related party transaction, the Audit Committee considers, among other factors, whether the related party transaction is on terms no more favorable than terms generally available to an unaffiliated third party under the same or similar circumstances, the extent of the related person’s interest in the transaction and, in the case of directors and officers, whether the provisions of Section 144 of the Delaware General Corporation Law have been met.

Any director who is a related person with respect to a transaction under review may not participate in the discussion or approval of the transaction.

We describe below the transactions and series of similar transactions, since April 1, 2022, to which we were a party or will be a party, in which:

• the amounts involved exceeded or will exceed the lesser of $120,000 or one percent of the average of our total assets at year-end for the last two completed fiscal years;

• any of our directors, executive officers, holders of more than 5% of our capital stock or any member of their immediate family had or will have a direct or indirect material interest, other than equity and other compensation, termination, change in control, and other arrangements with directors and executive officers.

Capstone Distributor Support System

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

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

Upon emerging from Chapter 11 bankruptcy, Capstone Green Energy Corporation legally became DSS;

all contracts were novated to Capstone Green Energy LLC along with the transfer of operating assets, except for the distributor services as those assets remained with DSS.

As a result, DSS assumed the responsibility of providing the services, making DSS obligated to perform the distributor services.

DSS is responsible for making available regularly scheduled Authorized Service Provider (“ASP”), applications, and/or sales training and support for the distributor’s business development activities.

The agreement includes the fee, which is the greater of 5% of distributor’s prior calendar year revenue or $20,000.

Director Independence and Board Structure

The Board is committed to having a sound governance structure that promotes the best interests of all of the Company’s stockholders.

To that end, the Board has evaluated and actively continues to examine emerging corporate governance trends and best practices.

Stockholder perspectives play an important role in that process.

The following are the key aspects of the Company’s governance structure:

● The Board is predominantly independent.

Of our seven directors, one (our President and Chief Executive Officer) is an employee of the Company.

Further, the Board has affirmatively determined that all six of our other directors are independent under SEC and Nasdaq corporate governance rules, as applicable.

● Our board committees are comprised exclusively of independent directors.

● Our independent directors meet in executive session at every regularly scheduled board and committee meeting.

● We have separated the roles of Chair of the Board and Chief Executive Officer.

Our Chair focuses on board oversight responsibilities, strategic planning, setting board agendas and mentoring company officers, as well as facilitating communications between the Board and management.

Flexon served as both Chairman and Interim President and Chief Executive Officer from August 22, 2023 until March 10, 2024, following the departure of our former President and Chief Executive Officer Darren Jamison and in order to lead the Company through its bankruptcy and financial restructuring.

● Our Board is very active and our directors are engaged.

As noted above, each of our directors attended more than 75% of the 2024 Fiscal Year board meetings and meetings of the committees on which such director served.

We believe our Board structure serves the interests of stockholders by balancing board continuity and the promotion of long-term thinking with the need for director accountability.

Principal Accounting Firm Fees and Services.

The table below provides information concerning fees for services rendered by our current principal independent registered public accounting firm, Marcum, for the audit of our annual consolidated financial statements for the fiscal years ended March 31, 2024 and March 31, 2023.

All fees described below were pre-approved by the Audit Committee.

Amount of Fees

Description of Fees

Audit-Related Fees

All Other Fees

Audit Fees These fees were primarily for professional services rendered by Marcum in connection with the audit of the Company’s Consolidated Annual Financial Statements and reviews of the interim Consolidated Financial Statements included in the Company’s quarterly reports on Form 10-Q for the first three fiscal quarters of the 2024 Fiscal Year and the 2023 Fiscal Year, respectively.

The fees also relate to Marcum’s comfort letters and consents related to SEC filings.

Finally, of the total amount for Fiscal 2023 $406,850 pertained to fees incurred in connection with the restatement of our March 31, 2022 and 2021 consolidated annual financial statements.

Pre-approval Policies and Procedures

Our Audit Committee has adopted a procedure for pre-approval of all fees charged by our independent auditors.

Under the procedure, the Audit Committee pre-approves all auditing services and the terms thereof and non-audit services (other than non-audit services prohibited under Section 10A(g) of the Exchange Act or the applicable rules of the SEC or the Public Company Accounting Oversight Board) to be provided to the Company by the independent auditors.

Such pre-approval requirement is waived with respect to the provision of non-audit services for the Company if the “de minimis” provisions of Section 10A(i)(1)(B) of the Exchange Act are satisfied.

This authority to pre-approve non-audit services may be delegated to one or more members of the Audit Committee, who must present any decision to pre-approve an activity to the full Audit Committee at its first meeting following such decision.

The information required by this Item is incorporated by reference from our proxy statement for our 2025 Annual Meeting of Stockholders under the caption “Other Information.”

Principal Accountant Fees and Services.

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

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

Exhibits and Financial Statement Schedules.

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Report of Independent Registered Public Accounting Firm (PCAOB 00 199 );

Marcum LLP, Los Angeles, CA

CBIZ CPAs P.C.

, Los Angeles, CA

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

Marcum , Los Angeles, CA

Consolidated Financial Statements:

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Opinion on the Financial Statements

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

and Subsidiaries (the “Company”) as of March 31, 2024 and 2023, the related consolidated statements of operations, temporary equity and stockholders’ deficiency and cash flows for each of the two years in the period ended March 31, 2024, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2024 and 2023, and the results of its operations and its cash flows for each of the two years in the period ended March 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

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

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

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

Explanatory Paragraph – Going Concern

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

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

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

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

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

Basis for Opinion

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

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

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

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

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

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

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

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

Accordingly, we express no such opinion.

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

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

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

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

Critical Audit Matter

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

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

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

Net Realizable Value of Inventories

Description of the Matter

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

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

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

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

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

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

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

How We Addressed the Matter

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

These procedures included:

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

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

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

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

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

/s/ CBIZ CPAs P.C.

CBIZ CPAs P.C.

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

effective November 1, 2024)

Los Angeles, CA

June 26, 2025

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors of

Capstone Green Energy Holdings, Inc.

Opinion on the Financial Statements

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

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

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

Explanatory Paragraph – Going Concern

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

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

38 unchanged sentences

/s/ Marcum llp

We have served as the Company’s auditor since 2017

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

Los Angeles, CA

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Accounts receivable, net of allowances of $ 607 at March 31, 2025 and $ 3,287 at March 31, 2024

Lease receivable, current

Prepaid expenses and other current assets

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Non-current portion of inventories

Lease receivable, non-current

Liabilities, Temporary Equity and Stockholders’ Deficiency

Current Liabilities:

Accounts payable and accrued expenses

Accounts payable

Accrued expenses

Accrued salaries and wages

4 unchanged sentences

Factory protection plan liability

Term note payable, current

Exit new money notes, net of discount, current

3 unchanged sentences

Operating lease liability, non-current

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

Other non-current liabilities

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59,400,000 shares authorized, 18,643,587 shares issued and outstanding at March 31, 2025;

51,500,000 shares authorized, 18,511,555 shares issued and 18,394,541 shares outstanding at March 31, 2023

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

59,400,000 shares authorized, 18,540,789 shares issued and outstanding at March 31, 2024

0 shares issued and outstanding at March 31, 2023

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

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

Additional paid-in capital

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Product and accessories

Parts, service and rentals

Parts and service

Total revenue, net

1 unchanged sentence

Product and accessories

Parts, service and rentals

Parts and service

Total cost of goods sold

4 unchanged sentences

Loss from operations

Other income (expense)

Interest income

16 unchanged sentences

Stockholders’

Balance, March 31, 2022

Vested restricted stock units

Issuance of common stock, net of issuance costs

Stock awards to Board of Directors

Deemed dividend on purchase warrant for common shares

Stock-based compensation

Balance, March 31, 2023

Balance, April 1, 2023

Vested restricted stock units

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Balance, March 31, 2024

Purchase of treasury stock

Vested restricted stock units (1)

Stock-based compensation

Balance, March 31, 2025

(1) The common stock par value in total does not change the total common stock par value presented in thousands.

See accompanying notes to consolidated financial statements.

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Provision for warranty expenses

Loss on disposal of equipment

Stock-based compensation

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Accounts receivable

Lease receivable

Prepaid expenses, other current assets and other assets

Accounts payable and accrued expenses

Accounts payable

Accrued expenses

Operating lease liability, net

3 unchanged sentences

Factory protection plan liability

Net cash used in operating activities

Net cash provided (used) in operating activities

Cash Flows from Investing Activities:

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Repayment of finance lease obligations

Net proceeds from issuance of common stock and warrants

Net cash provided by financing activities

Net decrease in Cash

Net cash provided (used) by financing activities

Net increase (decrease) in Cash

Cash, Beginning of Period

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Supplemental Disclosures of Non-Cash Information:

Acquisition of property and equipment through accounts payable

Renewal of insurance contracts financed by notes payable

Deemed dividend

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

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Conversion of inventory to rental assets

Rental assets transferred to inventory

Sales-type lease

Conversion of prepaid expenses to rental assets

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

Acquisition of treasury stock with accrueds

See accompanying notes to consolidated financial statements.

3 unchanged sentences

Business and Organization

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

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

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

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

Because these are still emerging offerings, Hydrogen Energy Solutions revenue has been immaterial to date.

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

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

In connection with emergence from the Chapter 11 Cases (as defined below), Capstone Green Energy Corporation was reorganized pursuant to the T ransaction Support Agreement dated September 28, 2023 by and among the Debtors (as defined below), Goldman Sachs Specialty Lending Group, L.P.

and Broad Street Credit Holdings LLC (the “TSA”) and became a privately-held company that continues to own the Retained Assets (as defined below).

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

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

In addition, Capstone Green Energy LLC (the “Operating Subsidiary”) was formed as a result of the Plan of Reorganization (the “Plan”).

Refer to Note 3— Chapter 11 Proceedings and Emergence for more detail.

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

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

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

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

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

and its consolidated subsidiaries following the Effective Date.

Basis of Presentation, Significant Accounting Policies and Going Concern

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

Refer to Note 3— Chapter 11 Proceedings and Emergence for details on the formation of the Operating Subsidiary.

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

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

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

amounts and distributed between the controlling and noncontrolling interests in accordance with the governing documents.

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

Separately, the Company will also determine whether an adjustment should be recorded to remeasure the redemption feature attached to the Preferred Units to their maximum redemption value through retained earnings.

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

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

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

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

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

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

The Company reclassified certain revenue stream and cost of goods sold on the Consolidated Statements of Operations for the year ended March 31, 2023 to conform to the presentation of the current year.

The reclassification has not materially impacted the Company’s financial statements and did not result in a change in total revenue, net income or cash flows from operations for the years presented.

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

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

852— Reorganizations (“ASC 852”).

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

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

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

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

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

See Note 11— Fair Value Measurements, for disclosure regarding the fair value of other financial instruments.

Trade Accounts Receivable and Allowance for Credit Loss On April 1, 2023, the Company adopted Accounting Standards Update (“ASU”) 2016-13, Topic No.

326— Credit Loss, Measurement of Credit Losses on Financial Instruments , which replaces the incurred loss methodology with an expected loss methodology referred to as the current expected credit loss (“CECL”).

The CECL model applies to financial assets measured at amortized cost, including accounts receivable.

Under the CECL model, the Company identifies allowances for credit losses based on future expected losses when accounts receivable are created rather than when losses are probable.

Refer to Note 11— Fair Value Measurements, for disclosure regarding the fair value of other financial instruments.

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

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

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

The factors include assessments of various economic conditions, significant

events that occurred, geographic location, size and credit ratings of the customers.

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

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

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

On a quarterly basis, in accordance with ASC 326, the Company evaluates the collectability of outstanding accounts receivable balances to determine an allowance for credit loss that reflects its best estimate of the lifetime expected credit losses.

Changes in the CECL allowance for accounts receivable are as follows (in thousands):

Balance, March 31, 2022

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

Balance, April 1, 2023

Provision for credit losses

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

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

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

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

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

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

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

Parts and Services Revenue from extended warranties and post-shipment performance obligations is recognized when or as those obligations are satisfied.

The Company primarily offers assurance-type standard warranties that do not represent separate performance obligations and will separately offer and price extended warranties that are separate performance obligations for which the associated revenue is recognized over-time based on the extended warranty period.

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

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

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

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

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

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

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

There are two types of warranties:

standard (assurance) and extended warranties.

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

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

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

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

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

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

Revenue related to the Company’s performance obligation to provide replacement parts as needed is recognized over the 30-day , FPP contract period with automatic renewals for 5 , 10 , 15 , or 20 years under ASC 606.

The related costs are accrued at the time a customer submits an order, and the order’s compliance with the terms of the plan are confirmed, for a replacement part to reflect the Company’s obligation.

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

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

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

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

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

Comprehensive factory protection plan service contracts require payment at the beginning of the contract period.

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

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

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

Once control transfers to the customer and the Company meets the revenue recognition criteria, the deferred revenue is recognized in the Consolidated Statement of Operations.

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

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

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

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

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

Due to the nature of the arrangement, labor reimbursements are accounted for under ASC 460.

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

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

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

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

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

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

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

Significant Judgments - Contracts with Multiple Performance Obligations

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

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

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

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

Other leases are classified as operating leases.

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

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

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

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

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

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

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

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

Contracts with Multiple Performance Obligations

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

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

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

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

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

availability of the services from other vendors, the nature of the services, the timing of when the services contract was signed in comparison to the product delivery date and the contractual dependence of the product on the customer’s satisfaction with the professional services work.

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

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

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

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

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

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

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

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

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

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

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

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

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

Sales to E-Finity and RSP Systems accounted for 12 % and 11 %, respectively, of the Company’s revenue for Fiscal 2023.

Additionally, Supernova and CES accounted for 14 % and 11 % of net accounts receivable as of March 31, 2024, respectively, and E-Finity accounted for 12 % of net accounts receivable as of March 31, 2023.

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

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

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

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

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

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

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

There was no change in the carrying value of the redeemable controlling interests for the year ended March 31, 2024 as the carrying value equaled the fair value at issuance.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The Company incurred a loss from operations of $ 20.4 million and used cash from operating activities of $ 27.7 million during Fiscal 2024.

On September 28, 2023, the Company filed for a prepackaged financial restructuring with its Senior Lender, Goldman Sachs under the U.S.

Chapter 11 Bankruptcy laws, as further discussed in Note 3— Chapter 11 Proceedings and Emergence in the Notes to Consolidated Financial Statements.

The Company emerged from Bankruptcy on December 7, 2023 and effected a financial and organizational restructuring.

However, given its current cash position, lack of liquidity, limits to accessing capital and debt funding options, and current economic and market risks, there is substantial doubt regarding the Company’s ability to continue as a going concern and its ability to meet its financial obligations as they become due over the next twelve months from the date of issuance of the financial statements as of, and for the period ended March 31, 2024.

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

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

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

280, Segment Reporting (“ASC 280”) .

The Company evaluates a reporting segment by first identifying its operating segments

under ASC 280.

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

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

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The Company is considered to be a single reporting segment.

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

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

Impact of Recently Issued Accounting Standards

In June 2016, the FASB issued ASU No.

2016-13, Financial Instruments—Credit Losses :

Measurement of Credit Losses on Financial Instruments (Topic 326).

The amendments in this ASU provide guidance for estimating credit losses on certain types of financial instruments, including trade receivables, by introducing an approach based on expected losses.

The expected loss approach will require entities to incorporate considerations of historical information, current information and reasonable forecasts.

With certain exceptions, the transition to the new guidance will be through a cumulative effect adjustment to opening accumulated deficit as of the beginning of the first reporting period in which the guidance is adopted.

On April 1, 2023, the Company adopted Topic 326.

The standard required entities to record a cumulative-effect adjustment to the balance sheet as of the beginning of the first reporting period in which the guidance is effective.

The adoption did not have a material impact on its financial statements and no adjustment was made to retained earnings.

Not Yet Adopted

In November 2023, the FASB issued ASU No.

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Improvements to Reportable Segment Disclosures (Topic 280).

This update applies to all public entities that are required to report segment information in accordance with Topic 280.

This update applies to all reporting public entities.

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

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

The new standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted.

The standard should be applied retrospectively to all prior periods presented in the financial statements.

The Company is in the process of assessing the effect adoption will have on its annual consolidated financial statement disclosure.

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

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

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

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

Not Yet Adopted

In December 2023, the FASB issued ASU No.

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

The amendments in this update are effective for annual periods beginning after December 15, 2024.

The amendments in this update are effective for annual periods beginning

after December 15, 2024, early adoption is permitted.

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

In November 2024, the FASB issued ASU No.

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

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

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

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

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

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

Chapter 11 Proceedings and Emergence

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

Under this agreement, Broad Street provided a $ 30 million DIP Facility, consisting of $ 12 million in new money

DIP notes and an $ 18 million roll-up of pre-petition debt.

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

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

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

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

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

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

- DIP Claim received in full satisfaction, settlement, release and discharge of such claim the pro rata amount (pro rata along with Pre-Petition Secured Claim) of Reorganized PrivateCo equity and the indirect ownership of the Operating Subsidiary preferred units issued to Reorganized PrivateCo, and exit financing roll-over notes issued at Emergence, which is referred to as part of the Exit Note Purchase Agreement detailed below.

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

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

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

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

Refer to the Statement of Stockholders’ Equity.

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

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

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

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

Pre-petition senior secured principal

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

The Company’s restructuring activities resulted in additional charges and other adjustments for expected allowed claims (including claims that may be subsequently allowed by the U.S.

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

that may be subsequently allowed by the U.S.

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

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13 to 24 months

25 to 36 months

25 to 36 plus months

Property, Plant, Equipment and Rental Assets

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

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

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

Depreciation expense recorded to cost of sales during Fiscal 2024 and 2023, was $ 3.8 million and $ 3.1 million, respectively.

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

There were no rental asset sales in Fiscal 2024.

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

Accrued Warranty Reserve

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Parts and Service

Total ASC 606 Revenue

Microturbine Products

Total ASC 842 Revenue

Total Revenue

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Total North America

All other Europe

Total Revenue

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

The Company expects to recognize revenue on approximately $ 4.0 million of these remaining performance obligations over the next 12 months and the balance of $ 0.7 million will be recognized thereafter.

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

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

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

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

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

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

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Income (loss) before provision for income taxes

Current income tax provision is the amount of income taxes reported or expected to be reported on the Company’s income tax return.

The provision for current income taxes was $ 14,000 and $ 7,000 for the years ended March 31, 2024 and 2023, respectively.

The current income taxes were related to state income taxes.

The Company did no t have current federal income taxes for the fiscal years ended March 31, 2024 and 2023.

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

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

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

Year Ended March 31,

Total income tax expense

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

1 unchanged sentence

Year Ended March 31,

Federal income tax benefit at the statutory rate

Federal income tax at the statutory rate

State taxes, net of federal effect

Expiring NOLs and tax credits

Redeemable noncontrolling interest

Impact of Chapter 11 reorganization, net

Impact of state rate change

Valuation allowance

Shortfall in tax benefit—stock compensation

Impact of Reorganization, net

Change in Valuation Allowance

Research and Development Credits

Excess Business Interest Expense

True-up of prior year's estimates

Income tax expense

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Deferred tax assets:

Warranty reserve

Bad debt reserve

Deferred revenue

NOL carryforwards

Tax credit carryforwards

Depreciation, amortization and impairment loss

Lease liability

Interest limitation

Investment in Partnership

Deferred tax assets

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Investment in Partnership

Depreciation, amortization and impairment loss

Right-of-use assets

Net deferred tax assets

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

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

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

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

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

The amount of CODI realized by a taxpayer is

determined based on the fair market value of the consideration received by the creditors in settlement of outstanding indebtedness.

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

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

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

The change in valuation allowance for fiscal years ended March 31, 2024 and 2023 was $ 153.1 million and $ 3.5 million, respectively.

The decrease was primarily attributable to the impact of the Plan reorganization.

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

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

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

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

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

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

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

Based on management's evaluation, the total amount of unrecognized tax benefits related to research and development credits as of March 31, 2024 and 2023 was zero and $ 1.9 million, respectively.

There were no interest or penalties related to unrecognized tax benefits as of March 31, 2024 or March 31, 2023.

The amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate as of March 31, 2024 and March 31, 2023 was zero and $ 1.9 million, respectively.

However, this impact would be offset by an equal increase in the deferred tax valuation allowance as the Company has recorded a full valuation allowance against its deferred tax assets due to the uncertainty of future realization.

The fully reserved recognized federal and state deferred tax assets related to research and development credits balance as of March 31, 2024 and 2023 was zero and $ 5.0 million, and zero and $ 5.7 million, respectively.

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

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

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

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

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

Balance at April 1, 2023

Gross decrease due to reorganization

Balance at March 31, 2024

Gross increase related to prior year tax positions

Lapse of statute of limitations

Balance at March 31, 2025

Gross decrease due to Chapter 11 reorganization

Balance at March 31, 2024

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

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

Permanent Equity

Stock Compensation

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

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

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

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

Capstone Green Energy Holdings, Inc.

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Compensation and Human Capital Committee or the Board.

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

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

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

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

The intent of issuing the non-voting common share was to provide value to the employees and officers after the

restructuring and substantial de-leveraging following the Company’s Chapter 11.

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

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

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

The holders of non-voting common stock may not transfer any such shares of non-voting common stock until the end of the period ending on the date that is twelve months immediately following the date of the COI (the “Lock-Up Period”), with certain exceptions as described in the COI.

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

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

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

1 unchanged sentence

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

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

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

Restricted Stock Units and Performance Restricted Stock Units

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

The following table summarizes restricted stock unit and performance restricted stock unit (“PRSU”) activity during Fiscal 2024:

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

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

The following table summarizes restricted stock unit activity:

Average Grant

Restricted Stock Units and Performance Restricted Stock Units

Non-vested restricted stock units outstanding at March 31, 2023

Restricted Stock Units

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

Vested and issued

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

Vested and issued

Forfeited/cancelled

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

Restricted stock units expected to vest beyond March 31, 2025

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

Average Grant

Performance Restricted Stock Units

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

Vested and issued

Forfeited/cancelled

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

Vested and issued

Forfeited/cancelled

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

Restricted stock units expected to vest beyond March 31, 2025

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

Stockholder Rights Plan

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

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

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

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

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

In connection with the bankruptcy proceedings, the TSA provided for the issuance of 10,449,863 Series A Redeemable Preferred Units of the newly formed subsidiary, the Operating Subsidiary that include a redemption feature.

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

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

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

The Preferred Units also provide the holder with the option to convert all or less than all of the Preferred Units into common units at any time and from time to time without the payment of additional consideration.

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

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

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

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

The Company recorded $ 13.9 million, the initial fair value, as Temporary Equity on the Consolidated Balance Sheet as of March 31, 2024.

The fair value of $ 1.33 per Preferred Unit at the respective dates below was determined through the use of an option-pricing method (“OPM”) that treats the common and preferred units as call options on the enterprise value of the Company with exercise prices based on the liquidation preference of the preferred units.

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

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

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

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

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

The OPM used was the Black-Scholes model to price the call option, which includes the below variables.

The enterprise value utilized by the Company in the OPM represents the value agreed upon by the parties involved the Chapter 11 Proceedings and Emergence as approved by the Bankruptcy Court:

March 31, 2024

December 7, 2023

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

The enterprise

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

Year Ended March 31,

Fair value of common units

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Expected term

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

There was no change in the carrying value of the convertible preferred stock units for the year ended March 31, 2024 as the carrying value equaled the redemption value.

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

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

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

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

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

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

The initial fair value was $ 13.9 million.

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

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

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

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

Fair Value Measurements

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

The Company used the BSM model (Level 3) with standard valuation inputs to value the Preferred Units as detailed in Note 10— Temporary Equity.

The fair value of the Company’s Exit Notes on the date of issuance approximated their carrying value based on a comparable market yield analysis completed by the Company.

As of March 31, 2024, the carrying value of the Exit Notes approximates their fair value.

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

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

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

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

CGEH is a holding company with no other business activity.

Refer to Note 10— Temporary Equity.

Exit Facility Agreement

In connection with the emergence from the Chapter 11 Cases, on the Effective Date, the DIP Facility converted to the Exit Note Purchase Agreement for an aggregated principal amount of $ 28.0 million, including accrued and unpaid interest subject to the terms and conditions set forth in the Exit Note Purchase Agreement by and among the Operating Subsidiary, as the issuer, the Guarantors, Purchaser and the Collateral Agent (each as defined in the Exit Note Purchase Agreement).

The Exit Note Purchase Agreement provides for:

(i) a roll up of $ 12.6 million DIP New Money Notes (plus any accrued unpaid interest);

(ii) a roll up of $ 8.0 million of DIP Roll Up Notes (plus any accrued unpaid interest) (collectively with the roll up of the $ 12.6 million DIP New Money Notes, the “Exit Roll Up Notes”);

(iii) an additional $ 7.0 million of Exit New Money Notes and together with the Exit Roll Up Notes, the “Notes”, of which $ 7.0 million was drawn, less $ 0.2 million of debt issuance costs, as of March 31, 2024.

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

(the “Collateral Agent”).

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

The proceeds of the $ 7.0 million of Exit New Money Notes were used to fund restructuring expenses and for working capital, for general corporate purposes and to pay interest, premiums, fees and expenses payable under the other Note Documents (as defined in the Exit Note Purchase Agreement).

The Notes bear interest at a rate equal to the Adjusted Term SOFR (as

defined in the Exit Note Purchase Agreement) plus 7.00 % per annum.

A portion of the interest on the Notes is paid-in-kind until the third year following the Effective Date.

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

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

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

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

1 unchanged sentence

Year Ending March 31,

Total expected future maturities

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

Total principal payments and debt maturities

Less unamortized issuance costs

Net principal payments and debt maturities

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

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

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

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

The Company believes it is probable the consolidated liquidity and consolidated adjusted EBITDA financial covenants discussed below will not be satisfied on September 30, 2024.

The Company is working to secure a waiver of the covenants or an amendment to the Exit Note Purchase Agreement with the senior lender, but no assurance can be given that such a waiver or amendment will be obtained.

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

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

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

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.

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

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

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

(ii) from March 31, 2025 to June 29, 2025, $ 2,500,000 ;

(iii) from June 30, 2025 to September 29, 2025, $ 3,000,000 ;

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

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

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

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

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

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

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September 30, 2026

As of March 31, 2024, the Company has outstanding debt of $ 28.9 million, which includes the fully drawn $ 7.0 million of the Exit New Money Notes, $ 21.1 million of the DIP Claim (including the accrued interest of $ 1.1 million) and $ 1.0 million of total PIK interest, less debt issuance costs of $ 0.2 million.

Debt issuance costs in relation to the Exit New Money Notes and DIP Claim are being amortized over the term at an effective interest rate of 12.93 % and 12.69 %, respectively, as of March 31, 2024.

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

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

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

Three-Year Term Note

2 unchanged sentences

As of March 31, 2023, the Company had borrowings under the Note Purchase Agreement of $ 51.0 million.

The A&R Note Purchase Agreement contained a covenant, among others requiring the Company to have at all times a liquidity (the “Liquidity Covenant”) of at least $ 9.0 million.

The A&R Note Purchase Agreement contained a covenant, among others requiring the Company to have at all times a minimum consolidated liquidity (the “Liquidity Covenant”) of at least $ 9.0 million.

On April 21, 2023, the Company breached the Liquidity Covenant when its total funds in accounts subject to account control agreements fell below $ 9.0 million.

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(ii) the extension of the maturity of the $ 50 million aggregate principal amount of Notes outstanding pursuant to the A&R Note Purchase Agreement from October 1, 2023 to September 1, 2024;

(iii) an amendment fee payable by the Company at maturity equal to 1.00 % of the principal balance of the Notes on the effective date of the Fourth Amendment (the “Fourth Amendment

Effective Date”);

(iii) an amendment fee payable by the Company at maturity equal to 1.00 % of the principal balance of the Notes on the effective date of the Fourth Amendment (the “Fourth Amendment Effective Date”);

(iv) a due date for the next interest payment on the date that is 30 days from the Fourth Amendment Effective Date, which interest payment was originally due on July 3, 2023;

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(vii) the replacement of the Adjusted LIBO Rate with a Term SOFR interest rate benchmark;

(viii) the ability for the Collateral Agent to either (A) force a conversion of the interest rate benchmark to Base Rate or (B) impose default interest during an Event of Default;

(viii) the ability for the Collateral Agent to either (A) force a

conversion of the interest rate benchmark to Base Rate or (B) impose default interest during an Event of Default;

(ix) the right for one designated Collateral Agent board observer to attend the meetings of the Company’s Board of Directors (and committees thereof) in a non-voting capacity, subject to certain customary exceptions;

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The Company suspended accruing and paying interest and amortizing deferred financing costs, discounts and premiums, as applicable.

During Fiscal 2024, $ 18.0 million of the LSTC balance, including accrued interest of $ 1.3

million, was rolled up into the Debtor-in-Possession financing agreement and recorded within Exit new money notes, net, current on the Company’s Consolidated Balance Sheet as of March 31, 2024.

Interest expense related to the Term note payable, current during Fiscal 2024 and 2023 was $ 3.3 million and $ 6.2 million, respectively.

During Fiscal 2024, $ 18.0 million of the LSTC balance, including accrued interest of $ 1.3 million, was rolled up into the Debtor-in-Possession financing agreement and recorded within Exit New Money Notes, net, current on the Company’s Consolidated Balance Sheet as of March 31, 2024.

On June 23, 2025, the Company received an additional waiver from Goldman Sachs Specialty Lending Group, L.P.

(the Collateral Agent) to defer the minimum liquidity increase from $ 2.5 million to $ 3.0 million from June 30, 2025, to July 31, 2025.

Interest expense related to the term note payable during Fiscal 2025 and 2024 was $ 3.8 million and $ 3.3 million, respectively.

Gain on Extinguishment of Debt

The Company incurred a $ 35.3 million gain as a result of the debt amendment related to emerging from Chapter 11 Bankruptcy on December 7, 2023.

The gain is recorded within Reorganization items, net on the Company’s Consolidated Statement of Operations.

The Company rents microturbine equipment to its customers for terms up to thirty-six months with an extension option , which may impact the lease term.

The gain was recorded within Reorganization items, net on the Company’s Consolidated Statement of Operations.

The Company rents microturbine equipment to its customers for terms ranging from a couple of months to up to ninety-six months with most of the leases generally with thirty-six months term with an extension option , which may impact the lease term.

The leases may provide the lessee with the option to purchase the underlying assets at the end of the lease term.

Monthly rental payments are fixed;

however, the leases may include variable payments for fuel, excess labor, additional equipment, or technician labor and engineering support.

The leases are classified as either sales-type leases or operating leases, as appropriate.

As further described below, the Company rents certain microturbine equipment back from customers and subleases this equipment to end users as a part of its Energy-as-a-Service business.

3 unchanged sentences

Total minimum rental revenue

The profit recognized from sales-type leases at their commencement date were as follows (in thousands):

Year Ended March 31,

Cost of sales

At March 31, 2025, the Company’s future scheduled minimum lease payments to be received from its sales-type lease was as follows (in thousands):

Year Ending March 31,

Total minimum lease payments

imputed interest

unguaranteed residual value

Present value of lease receivable

The Company recognized $ 0.2 million of interest income related to lease receivables in Fiscal 2025.

There was no interest income related to lease receivables in Fiscal 2024.

Year Ended March 31,

Gross receivables

Unguaranteed residual value

The Company leases facilities and equipment under various non-cancelable operating and finance leases expiring at various times through Fiscal 2037.

2 unchanged sentences

Lease expense is recognized on a straight-line basis over the term of the lease, which may include extension periods.

There were no new rental agreements in Fiscal 2025.

During Fiscal 2024, the Company entered into eight rental agreements to rent used microturbine equipment from customers where that equipment was not currently in use.

The existing rental agreements provide the Company an option to extend the lease, however, the Company is not likely to exercise these options and therefore not included in the determination of the lease term.

As of March 31, 2024, lease commitments totaled approximately 18.4 MW of microturbines and have an average term of 36 months and a total commitment value of approximately $ 18.7 million.

As of March 31, 2025, lease commitments totaled approximately 17.8 megawatts of microturbines and have an average term of 43 months and a total remaining commitment value of approximately $ 8.6 million.

The components of lease expense were as follows (in thousands):

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Lease Commitments

See Note 13 – Leases.

Refer to Note 13 – Leases.

Related Party Transactions

In connection with the emergence from the Chapter 11 Cases, on December 7, 2023, Reorganized PrivateCo continues to own assets consisting of (i) all of the Company’s right, title, and interest in and to certain trademarks of the Company and (ii) assets owned by the Company relating to distributor support services ((i) and (ii) together, the “Retained Assets”) and certain income tax attributes that remained with Reorganized PrivateCo.

On the Effective Date, Reorganized PrivateCo continues to own assets consisting of (i) all of the Company’s right, title, and interest in and to certain trademarks of the Company and (ii) assets owned by the Company relating to distributor support services ((i) and (ii) together, the “Retained Assets”) and certain income tax attributes that remained with Reorganized PrivateCo.

Services Agreement between Reorganized PrivateCo and Operating Subsidiary

On the Effective Date, Operating Subsidiary entered into the Reorganized PrivateCo Services Agreement by and among Reorganized PrivateCo and Operating Subsidiary.

The Reorganized PrivateCo Services Agreement provides that, among other things, Operating Subsidiary will provide certain services to Reorganized PrivateCo, and Reorganized PrivateCo will provide to Operating Subsidiary’s distributors on a subcontracted basis and, where applicable, to Operating Subsidiary, certain ongoing services and transition services related to Reorganized PrivateCo’s distributor support services business.

On the Effective Date, Operating Subsidiary entered into a Services Agreement by and among Reorganized PrivateCo and Operating Subsidiary (the “Reorganized PrivateCo Services Agreement”).

The Reorganized PrivateCo Services Agreement provides that, among other things, Operating Subsidiary will provide certain services to Reorganized PrivateCo, and Reorganized PrivateCo will provide the Operating Subsidiary’s distributors on a subcontracted basis and, where applicable, to Operating Subsidiary, certain ongoing services and transition services related to Reorganized PrivateCo’s distributor support services business.

Reorganized PrivateCo will pay to Operating Subsidiary a service fee (the “Reorganized PrivateCo Services Fee”) of an amount in cash equal to 90 % of Reorganized PrivateCo’s Income (as defined in the Reorganized PrivateCo Services Agreement) less itemized expenses incurred and actually paid in cash by Reorganized PrivateCo in direct support of Operating Subsidiary’s distributors and in Reorganized PrivateCo’s performance of the services (excluding the Reorganized PrivateCo Services Fees).

The Company reported $ 0.7 million in other income for DSS service fees for Fiscal 2024.

The Company reported $ 2.5 million and $ 0.7 million in other income for DSS service fees for Fiscal 2025 and Fiscal 2024, respectively.

Trademark License Agreement

1 unchanged sentence

The Trademark License Agreement provides that, among other things, Reorganized PrivateCo grants the Company a non-exclusive, royalty-bearing, non-transferable, non-sublicensable (except to the Company’s affiliates), worldwide, perpetual (subject to the terms and conditions of the Trademark License Agreement), irrevocable (subject to the terms and conditions of the Trademark License Agreement), limited license, under all of its right, title and interest in and to the Capstone Trademarks (as defined in the Trademark License Agreement) to use the Capstone Trademarks solely in connection with the Business (as defined in the Trademark License Agreement).

In consideration for the license, the Company pays to Reorganized PrivateCo an annual royalty of $ 100,000 .

In consideration for the license, the Company pays Reorganized PrivateCo an annual royalty of $ 100,000 .

Reorganized PrivateCo may not assign the Capstone Trademarks to any third party without the Company’s consent, not to be unreasonably withheld, delayed or conditioned (subject to the terms and conditions of the Trademark License Agreement).

1 unchanged sentence

Services Agreement between the Company and Operating Subsidiary

In connection with the emergence from the Chapter 11 Cases, on the Effective Date, the Company entered into a Services Agreement (the “Services Agreement”) by and among the Company and Operating Subsidiary.

On the Effective Date, the Company entered into a Services Agreement (the “Services Agreement”) by and among the Company and Operating Subsidiary.

The Services Agreement provides, among other things, that the Company will provide certain services to Operating Subsidiary, in its capacity as a majority equity holder of Operating Subsidiary, and in consideration for the services provided by the Company, Operating Subsidiary will reimburse the Company for its reasonable audit, board and executive compensation expenses incurred in connection with being a publicly traded company (the “New Capstone Services Fee”).

Capstone Services Fee for the Company’s fiscal year 2023 will not exceed $ 2,500,000 , in the aggregate (the “Services Fee Cap”), which amount will be prorated based on the number of days in such fiscal year following execution of the Services Agreement.

Effective as of April 1 of each year, beginning with April 1, 2024, the Services Fee Cap will increase for each fiscal year by an amount equal to the greater of (a) 3.5000 % and (b) the Consumer Price Index, as set by the U.S.

The New Capstone Services Fee will not exceed $ 2,500,000 , per fiscal year (the

“Services Fee Cap”), to be increased on April 1 of each year, beginning with April 1, 2024, by an amount equal to the greater of (a) 3.5000 % and (b) the Consumer Price Index, as set by the U.S.

Bureau of Labor Statistics and available on March 31 of each year;

provided that such increase effective on April 1, 2024, shall be equal to 1.7500 %.

provided however, that for the Fiscal Year ending March 31, 2024, such amount was prorated based on the number of days in such fiscal year following the execution of the Reorganized PublicCo Services Agreement;

provided, further, however, that such increase effective on April 1, 2024, was equal to 1.7500 %.

Service Agreement with CFGI

On January 12, 2024, the Company entered into a services agreement with CFGI, pursuant to which CFGI provides third party accounting consultancy services to the Company.

A related person who is the son of John Juric, our Chief Financial Officer, is a staff employee at CFGI.

We have been advised that, under the CFGI compensation policy, Mr.

Juric’s son is being paid a commission related to the fees paid by the Company during the first year of the engagement.

The Company incurred service fee expense of $ 1.3 million and $ 0.3 million for Fiscal 2025 and 2024, respectively.

The potential bonus to be earned by Mr.

Juric’s son is estimated to be $ 65,000 .

Other Commitments

5 unchanged sentences

Turbine International, LLC.

Capstone Turbine Corporation v.

Turbine International, LLC;

20STCV04372 (“Capstone-Turbine Intl.

Litigation”).

The Company has alleged claims against Turbine Intl.

for breach of contract and for injunctive relief relating to the parties’ prior distributor relationship, which terminated at the end of March 2018, and Turbine Intl.’s failure to satisfy its payment obligations under certain financial agreements, namely an accounts receivable agreement and promissory note in favor of Capstone.

As remedies for these claims, the Company is seeking compensatory and consequential damages, along with injunctive relief and attorney’s fees, interest, and costs.

On March 18, 2020, Turbine Intl.

filed its answer and cross-claims in the Capstone-Turbine Intl.

In its cross-claims, Turbine Intl.

asserted claims against Capstone, and individually against Mr.

James Crouse, Capstone’s Chief Revenue Officer, for breach of contract under the distributor agreement, accounts receivable agreement and promissory note, fraud, breach of the covenant of good faith and fair dealing, unjust enrichment and constructive trust, negligent misrepresentation, violation of the California unfair practices act, violation of the racketeer influenced corrupt organizations act, and conspiracy to commit fraud.

As remedies for these alleged claims, Turbine Intl.

is seeking compensatory, consequential, and punitive damages along with attorney’s fees, interest, and costs.

Capstone answered the cross-claims on May 7, 2020.

On June 29, 2020, Capstone filed a motion to file a First Amended Complaint to add, among other things, a claim for enforcement of a guaranty signed by an entity related to Turbine Intl., Hispania Petroleum, S.A., and personal claims against the principals of Turbine Intl.

and Hispania.

That motion was granted on August 19, 2020, and the First Amended Complaint (“FAC”) was filed.

All of the additional defendants were served and have filed answers.

As of March 31, 2024, discovery had been served and answered on both sides.

On May 17, 2024, the trial was set for July 29, 2024;

and the court ordered the parties to mediate the matter by June 19, 2024.

On July 2, 2024, Turbine Intl.

petitioned the court for a continuance and to reopen discovery.

The court granted the continuance and set the trial date for December 2, 2024 and rejected the request to reopen discovery.

Mediation remains court ordered.

The Company has not recorded a liability as of March 31, 2024, as the Company is unable to estimate the possible loss or range of possible loss.

On February 3, 2020, Capstone Turbine Corporation filed suit against its former distributor, Turbine International, LLC (“Turbine Intl.”), in the Superior Court of California alleging breach of contract relating to the parties’ prior distributor relationship (which terminated at the end of March 2018) and Turbine Intl.’s failure to satisfy its payment obligations under certain financial agreements, namely an accounts receivable agreement and promissory note in favor of Capstone.

The Company subsequently modified its complaint to include Turbine Intl.

guarantors as defendants.

The Company was seeking approximately $ 4.8 million in compensatory damages, along with injunctive relief and attorney’s fees, interest, and costs.

In 2024, the Court ordered default judgments first against Turbine International and then against the other defendants.

The default judgement in the amount of approximately $ 7.3 million, which included pre-judgement interest and costs of the suite, was entered and placed on the docket in June 2025.

The Company has prevailed in this proceeding.

The ability of Capstone to collect on the judgement is unclear, as the defendants are overseas or without U.S.-based assets, therefor we have no t recorded a receivable as of March 31, 2025.

SEC Investigation

In June 2023, prior to the issuance of the Company’s consolidated financial statements for the fiscal year ended March 31, 2023, the Audit Committee of the Company’s Board commenced an Investigation into certain accounting and internal control matters of the Company, principally focused on certain revenue recognition matters (the “Revenue Recognition Investigation”), and self-reported its findings to the Division of Enforcement of the SEC.

Following the self-report, the SEC Enforcement Division commenced an investigation into the circumstances surrounding the restatement of

the Company’s quarterly and annual financial statements (the “SEC Investigation”).

Following the self-report, the SEC Enforcement Division commenced an investigation into the circumstances surrounding the restatement of the Company’s quarterly and annual financial statements (the “SEC Investigation”).

The Audit Committee further self-reported its findings pursuant to an investigation into FPP related practices to the SEC.

The Company is cooperating with the SEC in connection with its investigation.

Investigations of this nature may be costly and require management to devote significant time and attention away from the ongoing operation of the business.

The Company has not recorded a liability as of March 31, 2024, as a loss cannot be reasonably estimated .

The Company cooperated with the SEC in connection with its investigation.

On June 10, 2025, the SEC Division of Enforcement notified the Company that it closed its investigation with no action taken against the Company.

Cal Microturbine Arbitration

On March 13, 2024, Cal Microturbine, a distributor of the Company, submitted a demand for arbitration before the American Arbitration Association seeking, among other things, approximately $ 24.5 million in damages and alleging that the Company breached its distributor agreement with Cal Microturbine and committed fraud in allowing another company, Capstone Engineered Solutions, to sell, rent and service turbines in Cal Microturbine’s exclusive territory under the distribution agreement.

The parties have completed selection of an arbitration panel;

and the arbitration panel has provided two possible dates in June and October 2025 for a hearing date.

On August 18, 2024, Cal Microturbine amended its complaint and reduced its damage claim to $ 18.8 million.

The Company has not recorded a liability as of March 31, 2024, as the Company is unable to estimate the possible loss or range of possible loss.

On March 13, 2024 , Cal Microturbine, a current distributor of the Company, filed a complaint before the American Arbitration Association, seeking approximately $ 24.5 million in damages and alleging that the Company

breached the Distributor Agreement between the parties and committed fraud by allowing another company, to sell, rent and service turbines in Cal Microturbine’s exclusive territory.

On August 18, 2024, Cal Microturbine amended its complaint and reduced its damages claim to $ 18.8 million.

On September 9, 2024, the Company filed a counterclaim against Cal Microturbine for $ 20.0 million, alleging various violations of the Distributor Agreement.

On September 27, 2024, Cal Microturbine provided the second amendment to its complaint and increased its damages to $ 25.0 million.

The parties have completed selection of a three-person arbitration panel and a hearing date is scheduled for September 2025.

The parties engaged in mediation in November and December 2024, and they are currently in settlement discussions.

Discovery was scheduled to begin in November 2024 but has been stayed due to ongoing settlement discussions.

On December 8, 2024, the Company issued a notice of intent to terminate the Distributor Agreement with Cal Microturbine due to the alleged violations by Cal Microturbine.

In February 2025, Cal Microturbine filed an action in California state court seeking a temporary restraining order (“TRO”) to preclude the Company from terminating the Distributor Agreement.

Due to ongoing settlement discussions and extensions of the termination date during those discussions, the court has refrained from scheduling a TRO hearing.

The Company has no t recorded a liability as of March 31, 2025, as a loss is neither probable nor estimable.

Flexon, Jamison, Juric, Robinson, and Hencken

3 unchanged sentences

2:23-cv-08659, naming certain of the Company’s current and former directors and officers as defendants.

The suit alleges claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder based on allegedly false and misleading statements regarding, and allegedly inadequate disclosure surrounding, the Company’s business, operations and prospects and the circumstances leading up to the restatement of the Company’s quarterly and annual financial statements.

The suit alleges various claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 based on allegedly false and misleading statements and allegedly inadequate disclosure regarding the Company’s business, operations and prospects and the circumstances leading up to the restatement of the Company’s quarterly and annual financial statements.

The suit is purportedly brought on behalf of persons and entities that purchased or otherwise acquired the Company’s securities between June 14, 2021, and September 22, 2023, and seeks to recover unspecified compensatory damages and other relief, including attorney’s fees.

The Company may incur significant legal expenses in defending the legal matters described above during the pendency of these matters, and in connection with any other potential legal matters, including expenses for the potential reimbursement of legal fees of officers and directors under indemnification obligations.

The Company anticipates these legal fees to not exceed the insurance deductible of $ 1.2 million and has not recorded a liability as of March 31, 2024, as a loss cannot be reasonably estimated and the outcome of this matter is uncertain .

The Company incurred legal fees of $ 0.1 million as of March 31, 2024.

Capstone Green Energy Corporation

On June 18, 2024, a complaint for damages was filed in the Superior Court of the State of California, County of Los Angeles captioned Mark Rouse v.

Capstone Green Energy Corporation alleging violations of the California labor code, breach of contract, conversion, breach of covenant of good faith and fair dealing and wrongful termination.

The complaint seeks damages, medical expenses, attorneys’ fees, interest and costs related to the termination of Mr.

Rouse’s employment and alleged non-payment of sales commissions in excess of $ 300,000 .

The Company resolved the dispute entering into a settlement agreement on September 15, 2024 for a non-material amount.

The Company is not a named respondent in this matter and has not engaged legal counsel.

The parties reached agreement on a settlement amount and on April 4, 2025, the parties filed an unopposed motion for the court to approve settlement and notice procedures.

A preliminary hearing date was held on June 5, 2025, and a final settlement hearing date has been set for November 13, 2025.

Expenses up to the $ 1.3 million insurance deductible amount have either been incurred or accrued.

Mark Estrada and Ricardo Montalvo, vs.

Capstone Green Energy LLC and Erick Kim.

August 19, 2024, a Class Action, pursuant to Code of Civil Procedure section 382 was filed in the Superior Court of the State of California for the County of Los Angeles, Case No.

24STCV21118, on behalf of Plaintiffs and all other current and former non-exempt California employees employed by or formerly employed by Defendants claiming failure to pay overtime wages, failure to pay minimum wages, failure to provide meal periods, failure to provide rest periods, waiting time penalties, wage statement violations, failure to timely pay wages, failure to indemnify, violation of Labor Code 227.3, and unfair competition.

The Court has not ruled to certify the Class.

The Company has not recorded a liability as of March 31, 2024, as the Company is unable to estimate the possible loss or range of possible loss.

The Company intends to fight the claims vigorously.

In August 2024, two filings were made by lawyers on behalf of current and former non-exempt Capstone employees against Capstone and one supervisory employee.

Both filings allege various pay violations.

The first action filed with the Superior Court of the State of California, requested that the Court certify the employees as a Class.

Capstone has arbitration agreements in place with those current and former employees, agreements which include a class action waiver.

Accordingly, Capstone moved that the Court compel arbitration, which Plaintiffs opposed.

At a hearing in January 2025, the Court determined that the arbitration agreements were enforceable.

Then in April 2025, the Court determined that the employees were not entitled to exemption from the enforcement of the arbitration agreements under the Federal Arbitration Act.

The second filing was made with the Labor Development Workforce Agency.

While Plaintiffs are positioned to pursue that claim privately under the Private Attorney General Act, they have not yet filed suit.

The Company has no t recorded a liability as of March 31, 2025, as a loss is neither probable nor estimable.

DV Energy, LLC vs Capstone Green Energy Holdings, Inc, Capstone Turbine Corporation, Capstone Green Energy Corporation, and Capstone Green Energy, LLC.

On August 26, 2024, DV Energy, LLC (“DV Energy”), a distributor of the Company, filed a lawsuit in the Superior Court of California, County of Los Angeles claiming breach of contract, restitution, breach of implied covenant of good faith and fair dealing, account stated, money had and received, open book account, unfair business practices, accounting, and conversion, all related to DV Energy’s deposit for parts ordered.

DV Energy has asserted $ 715,552 in damages plus interest, attorney’s fees and costs.

The complaint relates to a deposit for product order that the Company is restricted from delivering due to U.S.

sanctions laws.

The Company intends to meet its obligation to deliver the product once it can do so in accordance with U.S.

Sanctions laws.

The Company’s Distributor Agreement defines deposits as non-refundable.

The value of the DV Energy deposit is recorded in the Company’s financial statements as current liability.

The Company is unable to estimate the possible loss or range of possible loss and intends to fight the claims vigorously.

On August 26, 2024 , DV Energy, LLC (“DV Energy”), a Capstone distributor in Russia, filed a lawsuit in the Superior Court of California, County of Los Angeles to recover a $ 0.7 million parts deposit, along with interest and legal fees.

Among other things, DV Energy alleges breach of contract associated with a product order that Capstone was unable to deliver due to the imposition of U.S.

sanctions following Russia’s invasion of Ukraine.

The Company disputes DV Energy’s claim.

DV Energy is also an unsecured creditor in the Chapter 11 Cases of the Company’s predecessors but opted to file the complaint in the state court as well.

The Bankruptcy Court placed pre-conditions on closure of the Chapter 11 Cases.

In April 2025, the Company filed motions with the Bankruptcy Court to deposit funds with the Registry of the

Court pending the outcome of the state court litigation and to close the Chapter 11 Cases.

At a hearing on June 5, 2025, the Bankruptcy Court granted the Company’s motion to deposit funds with the Registry of the Court in the amount of $ 0.8 million as a security pending the outcome of the state court litigation.

The Company is in the process of depositing funds with the Registry of the Court, and on June 13, 2025, the Bankruptcy Court issued its Final Decree and Order Closing Debtors’ Chapter 11 Cases and Terminating Services of Kroll Restructuring Administration LLC as Claims and Noticing Agent which amount other things, closed the Chapter 11 Cases for the Debtors with immediate effect.

The value of the DV Energy deposit is recorded in the Company’s financial statements as a current liability as of March 31, 2025.

Employee Benefit Plans

7 unchanged sentences

The Company’s match vests 25 % a year over four years starting from the employee’s hire date.

The Company recorded expense of approximately $ 0.3 million and $ 0.2 million for each of Fiscal 2024 and 2023, respectively.

The Company recorded expense of approximately $ 0.3 million for each of Fiscal 2025 and 2024.

Supplemental Balance Sheet Information

3 unchanged sentences

A 15 -year amortization period is the minimum expected life cycle of the current generation of product.

The effective royalty rate is calculated as the prepaid royalty settlement divided by total projected C200 System units over the 15-year amortization period.

On a quarterly basis, the Company performs a re-forecast of C200 System unit shipments to determine if an adjustment to the effective royalty rate is necessary and accordingly whether an impairment exists.

The Company determined an impairment did not exist as of March 31, 2024 or 2023.

The effective royalty rate is calculated as the prepaid royalty settlement divided by total projected microturbine system units over the 15 -year amortization period.

On a quarterly basis, the Company performs a re-forecast of microturbine system unit shipments to determine if an adjustment to the effective royalty rate is necessary and accordingly whether an impairment exists.

The Company determined an impairment did no t exist as of March 31, 2025 or 2024.

The current and long-term portions of prepaid royalties and prepaid and other assets were as follows (in thousands):

2 unchanged sentences

Total royalty-related assets

Prepaid insurance current asset

Prepaid insurance noncurrent asset

Total prepaid insurance

Deposits current asset

Deposits noncurrent asset

Total deposits

Prepaid vendor inventory

Prepaid Insurance

Prepaid taxes

Total Prepaid expenses, other current assets and other assets

Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consisted of (in thousands):

Trade payables

Accrued interest

Accrued professional fees

Accrued commissions

Accrued service claims

Segment Information

The Company has a single reportable segment:

microturbine systems and their related parts, rentals and services.

The Company is one line of business that provides for the development, manufacture, sale and rental of turbine generator sets and their related parts and services to customers.

The Company derives revenue primarily in North America and the Company’s Chief Operating Decision Maker (“CODM”) regularly reviews financial information presented on a consolidated basis for purposes of allocating resources and assessing performance.

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

The CODM assesses performance for the single reportable segment under a GAAP basis of accounting, consistent with the basis of presentation in our financial statements and decides how to allocate resources based on consolidated net loss.

This measure is used to monitor performance which is compared to prior periods and forecasted results to support operational efficiencies and business expansion.

The CODM does not evaluate its reportable segment using asset or liability information.

There are no intra-equity sales or transfers between the reporting units within the consolidated entity.

The following table presents the Company’s information about reported segment revenue, segment gross profit, segment profit or loss and significant segment expenses that are regularly provided to the Company’s CODM as a single reporting segment and a reconciliation of the consolidated statement of operations:

Year Ended March 31,

Revenue, net:

Cost of revenue

Research and development

Selling, general & administrative expenses

Non-recurring professional expenses (1)

Reorganization items, net

Other (income) expense items (2)

Consolidated net income (loss)

(1) Non-recurring professional expenses include restructuring, financing, shareholder litigation, nonrecurring legal, restatement and SEC investigation.

(2) Other segment items included in segment (income) expense include other income (expense), interest expense, interest income and income tax expense.

Subsequent Events

4 unchanged sentences

(II) Confirming the Joint Prepackaged Chapter 11 Plan of Reorganization of Capstone Green Energy Corporation and Its Debtor Affiliates;

and (III) Granting Related Relief, dated November 14, 2023) (l)

Plan Supplement to Joint Prepackaged Chapter 11 Plan of Reorganization of Capstone Green Energy Corporation and its Debtor Affiliates, dated as of October 24, 2023 (k)

Notice of Filing of Additional Exhibits to Plan Supplement, dated as of November 9, 2023 (l)

and (III) Granting Related Relief, dated November 14, 2023) (k)

Plan Supplement to Joint Prepackaged Chapter 11 Plan of Reorganization of Capstone Green Energy Corporation and its Debtor Affiliates, dated as of October 24, 2023 (j)

Notice of Filing of Additional Exhibits to Plan Supplement, dated as of November 9, 2023 (k)

Findings of Fact, Conclusions of Law, and Order (I) Approving the Disclosure Statement;

(II) Confirming the Joint Prepackaged Chapter 11 Plan of Reorganization of Capstone Green Energy Corporation and Its Debtor Affiliates;

and (III) Granting Related Relief, dated November 14, 2023 (l)

and (III) Granting Related Relief, dated November 14, 2023 (k)

Second Amended and Restated Certificate of Incorporation of Capstone Green Energy Holdings, Inc.

Amended and Restated Bylaws of Capstone Green Energy Holdings, Inc.

Super-Priority Senior Secured Debtor-In-Possession Note Purchase Agreement, dated as of October 2, 2023, among Capstone Green Energy Corporation, as a Chapter 11 Debtor and Debtor-in-Possession, the other debtors party thereto from time to time, each as a Chapter 11 Debtor and Debtor-in-Possession and as a Guarantor, Broad Street Credit Holdings LLC, as Purchaser, and Goldman Sachs Specialty Lending Group, L.P., as Collateral Agent (j)

First Amendment to Super-Priority Senior Secured Debtor-In-Possession Note Purchase Agreement, dated as of November 15, 2023, among Capstone Green Energy Corporation, as a Chapter 11 Debtor and Debtor-in-Possession, the other debtors party thereto from time to time, each as a Chapter 11 Debtor and Debtor-in-Possession and as a Guarantor, Broad Street Credit Holdings LLC, as Purchaser, and Goldman Sachs Specialty Lending Group, L.P., as Collateral Agent (l)

Exit Note Purchase Agreement, dated December 7, 2023, by and among Capstone Green Energy LLC, Capstone Green Energy Holdings, Inc., Capstone Financial Services, Broad Street Credit Holdings LLC, as Purchaser, and Goldman Sachs Specialty Lending Group, L.P., as Collateral Agent (m)

First Amendment to Note Purchase Agreement, dated as of June 28, 2024, by and among Capstone Green Energy Holdings, Inc., Capstone Green Energy LLC, Capstone Turbine Financial Services, LLC, Goldman Sachs Specialty Lending Group, L.P.

and the Purchaser party thereto (o)

Description of the Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (p)

and the Purchaser party thereto (n)

Description of the Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (o)

Amended and Restated Capstone Turbine Corporation Change of Control Severance Plan (a)

11 unchanged sentences

Reorganized PublicCo Services Agreement, dated December 7, 2023, by and among Capstone Green Energy Holdings, Inc.

and Capstone Green Energy LLC (m)

and Capstone Green Energy LLC (l)

Trademark License Agreement, dated December 7, 2023, by and among Capstone Distributor Support Services Corporation and Capstone Green Energy Holdings, Inc.

Capstone Green Energy Holdings, Inc.

Form of Indemnity Agreement (m)

Form of Indemnity Agreement (l)

Severance Pay Plan of Capstone Green Energy Holdings, Inc.

1 unchanged sentence

Amended and Restated Limited Liability Company Agreement, dated December 7, 2023, of Capstone Green Energy LLC.

Reorganized PrivateCo Services Agreement, dated December 7, 2023, by and among Capstone Distributor Support Services Corporation and Capstone Green Energy LLC (m)

Registration Rights Agreement, dated December 7, 2023, by and among Capstone Green Energy LLC and Capstone Distributor Support Services Corporation (m)

Reorganized PrivateCo Services Agreement, dated December 7, 2023, by and among Capstone Distributor Support Services Corporation and Capstone Green Energy LLC (l)

Registration Rights Agreement, dated December 7, 2023, by and among Capstone Green Energy LLC and Capstone Distributor Support Services Corporation (l)

Employment Offer Letter for Vincent J.

Canino, dated February 22, 2024 (n)

Canino, dated February 22, 2024 (m)

Capstone Green Energy Holdings, Inc.

Form of Amended and Restated Change in Control Agreement (n)

Form of Restricted Stock Unit Agreement (p)

Form of Amended and Restated Change in Control Agreement (m)

Form of Restricted Stock Unit Agreement (o)

Exit Note Purchase Agreement Waiver Letter dated June 23, 2025.

Capstone Green Energy Holdings, Inc.

Insider Trading Policy.

List of Subsidiaries of Capstone Green Energy Holdings, Inc.

Consent of CBIZ CPAs P.C.

Consent of Marcum llp

Power of Attorney (included on the signature page of this Form 10-K)

3 unchanged sentences

Capstone Green Energy Holdings, Inc.

Clawback Policy, effective October 2, 2023

Clawback Policy, effective October 2, 2023 (p)

XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the inline XBRL document

16 unchanged sentences

(j) Incorporated by reference to Capstone Green Energy Corporation’s Current Report on Form 8-K filed on October 25, 2023 (File No.

(k) Incorporated by reference to Capstone Green Energy Corporation’s Current Report on Form 8-K filed on October 25, 2023 (File No.

(l) Incorporated by reference to Capstone Green Energy Corporation’s Current Report on Form 8-K filed on November 17, 2023 (File No.

(m) Incorporated by reference to Capstone Green Energy Holdings, Inc.’s Current Report on Form 8-K12G3 filed on December 11, 2023 (File No.

(n) Incorporated by reference to Capstone Green Energy Holdings, Inc.’s Current Report on Form 8-K filed on March 12, 2024 (File No.

(o) Incorporated by reference to Capstone Green Energy Holdings, Inc.’s Current Report on Form 8-K filed on June 28, 2024 (File No.

(k) Incorporated by reference to Capstone Green Energy Corporation’s Current Report on Form 8-K filed on November 17, 2023 (File No.

(l) Incorporated by reference to Capstone Green Energy Holdings, Inc.’s Current Report on Form 8-K12G3 filed on December 11, 2023 (File No.

(m) Incorporated by reference to Capstone Green Energy Holdings, Inc.’s Current Report on Form 8-K filed on March 12, 2024 (File No.

(n) Incorporated by reference to Capstone Green Energy Holdings, Inc.’s Current Report on Form 8-K filed on June 28, 2024 (File No.

(o) Incorporated by reference to Capstone Green Energy Holdings, Inc.’s Annual Report on Form 10-K for the fiscal year ended March 31, 2023 (File No.

(p) Incorporated by reference to Capstone Green Energy Holdings, Inc.’s Annual Report on Form 10-K for the fiscal year ended March 31, 2024 (File No.

1 unchanged sentence

CAPSTONE GREEN ENERGY HOLDINGS, INC.

September 26, 2024

June 26, 2025

Chief Financial Officer

5 unchanged sentences

President, Chief Executive Officer and Director (Principal Executive Officer)

September 26, 2024

June 26, 2025

Chief Financial Officer (Principal Financial Officer)

September 26, 2024

June 26, 2025

/s/ Celia Fanning

Controller and Chief Accounting Officer

Controller and Chief Accounting Officer (Principal Accounting Officer)

June 26, 2025

Celia Fanning

(Principal Accounting Officer)

September 26, 2024

/s/ Robert C.

Chair of the Board of Directors

September 26, 2024

June 26, 2025

/s/ Robert F.

September 26, 2024

June 26, 2025

/s/ Denise Wilson

September 26, 2024

June 26, 2025

Denise Wilson

September 26, 2024

June 26, 2025

/s/ John Miller

September 26, 2024

June 26, 2025

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures