What the changes say
- Going concern doubt added due to cash limits and liquidity constraints.
- Legal risks increased with an $18.8 million arbitration demand from Cal Microturbine.
- Debt under the Exit Note rose to $32.2 million with floating interest rates.
- Customer concentration shifted, with E-Finity, Lone Star, and Horizon driving top revenues.
What changed since the prior 10-K
New
- NewRisks Related to Our Emergence from Chapter 11
Our independent registered public accounting firm’s report contains an explanatory paragraph that expresses substantial doubt about our ability to continue as a going concern
Our auditor expressed substantial doubt about our ability to continue as a going concern due to low cash, lack of liquidity, and capital constraints.
- NewRisks Related to Pending Litigation and Government Regulation
We were previously involved in a SEC investigation and certain current and former directors and officers are currently involved in stockholder litigation related to our Restatement, and we and our directors and officers may be named as defendants in other types of legal proceedings in the future
Distributor Cal Microturbine demanded approximately $18.8 million in arbitration damages alleging breach of contract and fraud.
Dropped
- DroppedRisks Related to Our Emergence from Chapter 11
We emerged from bankruptcy in December 2023, which could adversely affect our business and business relationships
Emerging from bankruptcy in December 2023.
- DroppedRisks Related to Our Emergence from Chapter 11
There are significant risks related to our substantial indebtedness
- DroppedRisks Related to Our Emergence from Chapter 11
(iii) an additional $7.0 million new money committed delayed draw term loan facility (the “Exit New Money Notes” and, together with the Exit Roll Up Notes, the “Notes”)
Significant risks related to our substantial indebtedness of $28.0 million.
- DroppedRisks Related to our Corporate Structure
The Preferred Member’s 37.5% equity interest in Operating Subsidiary is non-dilutable
Details regarding the $7.0 million delayed draw term loan facility and $28.9 million total borrowings.
- DroppedRisks Related to Our Restatement
The SEC enforcement division is conducting an investigation into the circumstances surrounding the Restatement, the results of which may have a material adverse effect on our financial condition and business
- DroppedRisks Related to Our Business Operations and Financial Results
We are exposed to floating interest rate risk under the Exit Note Purchase Agreement, which could cause our debt service obligations to increase significantly
- DroppedRisks Related to Our Business Operations and Financial Results
The occurrence of regional epidemics or a global pandemic may adversely affect our business, financial condition and results of operations. For example, the COVID-19 pandemic has and could continue to materially and adversely affect our business, financial condition and results of operations
- DroppedRisks Related to Our Business Operations and Financial Results
We may not be able to manage our growth effectively, expand our production capabilities or improve our operational, financial and management information systems, which would impair our results of operations
- DroppedRisks Related to Our Business Operations and Financial Results
If an earthquake, fire, or other man-made or natural disaster occurs at or near our facilities, our business, financial condition, operating results and cash flow could be materially adversely affected
- DroppedRisks Related to Our Business Operations and Financial Results
We may be adversely impacted by the effects of climate change and may incur increased costs and experience other impacts due to new or more stringent greenhouse gas regulations designed to address climate change
The Preferred Member's 37.5% equity interest is non-dilutable.
- DroppedRisks Related to Our Business Operations and Financial Results
among other items, physical long-term changes in freshwater availability and the frequency and severity of weather events as well as customer product changes either through preference or regulation
- DroppedRisks Related to Our Business Operations and Financial Results
While we aim to position ourselves as a solution for climate change-related issues to our customers, there are other solutions in the market that may be cheaper or better suited to our customers’ needs, and we may not be able to capitalize on the move towards renewable energy
SEC enforcement division investigation regarding the Restatement.
- DroppedRisks Related to Our Product Offerings
we have business relationships. Accordingly, new competitors or alliances may emerge and rapidly acquire significant market share
- DroppedRisks Related to Pending Litigation and Government Regulation
We and certain of our current and former directors and officers are subject to various legal proceedings
Reworded
- 100% rewrittenRisks Related to Our Emergence from Chapter 11
There are significant risks related to our substantial indebtedness and our long-term liquidity requirements following our emergence from Chapter 11 and reorganization and the adequacy of our capital resources is difficult to predict at this time
Updated total borrowings under the Exit Note Purchase Agreement to $32.2 million as of March 31, 2025, and removed prior cash figures of $2.1 million.
Was: Our long-term liquidity requirements and the adequacy of our capital resources are difficult to predict at this time
- 80% rewrittenRisks Related to Our Business Operations and Financial Results
Loss of a significant customer could have a material adverse effect on our results of operations
Updated top customers and receivables, replacing Cal Microturbine and E-Finity with E-Finity, Lone Star, and Horizon as key revenue contributors.
- 72% rewrittenRisks Related to our Corporate Structure
Holders of the Preferred Units can exercise significant control over our Operating Subsidiary, which could limit our ability to influence the outcome of key corporate actions of our Operating Subsidiary
Clarified Goldman Sachs' consent requirements for incurring new third-party debt exceeding $5.0 million and identified Capstone Distributor Support Services Corporation.
- 67% rewrittenRisks Related to Our Business Operations and Financial Results
Changes to trade regulations, quotas, duties or tariffs, and sanctions caused by the changing U.S. and geopolitical environments or otherwise, may increase our costs or limit the amount of raw materials and products that we can import or may otherwise adversely impact our business
Added specific mention that a high percentage of vehicle parts are sourced from China, Mexico, and Canada, alongside commodity metals like steel and copper.
- 66% rewrittenRisks Related to Our Business Operations and Financial Results
Increased credit loss expense or delays in collecting accounts receivable could have a material adverse effect on our cash flows and results of operations
Updated days sales outstanding to 30 days and net credit loss expense to $0.8 million for Fiscal 2025.
- 62% rewrittenRisks Related to Our Emergence from Chapter 11
There is currently limited public trading market for our common stock on the OTC market, and we cannot assure you that a more active trading market will develop for our common stock
Updated to reflect that common stock now trades on the OTC market under ticker CGEH after becoming current in reporting obligations.
Was: There is currently no public trading market for our New Common Stock, and we cannot assure you that an active trading market will develop for the New Common Stock
- 59% rewrittenRisks Related to Our Business Operations and Financial Results
Our operations are vulnerable to interruption by fire, earthquake, riots, domestic and international instability, war, terrorism, geopolitical events, pandemics and other events beyond our control
Retained the Southern California facility risk factors without substantive textual modifications.
Was: Our operations are vulnerable to interruption by fire, earthquake, riots, domestic and international instability, war, terrorism, geopolitical events and other events beyond our control
- 51% rewrittenRisks Related to Pending Litigation and Government Regulation
We operate in a highly regulated business environment, and changes in regulation could impose significant costs on us or make our products less economical, thereby affecting demand for our microturbines
Retained the regulatory and emissions compliance risk factors without substantive textual modifications.
- 46% rewrittenRisks Related to Ownership of Our Common Stock
Market conditions may result in volatility in the level of, and fluctuations in, market prices of stocks generally and, in turn, our Common Stock. Global financial markets have experienced extreme disruption in recent years, including, among other things, extreme volatility in securities prices
Was: Market conditions may result in volatility in the level of, and fluctuations in, market prices of stocks generally and, in turn, our New Common Stock. Global financial markets have experienced extreme disruption in recent years, including, among other things, extreme volatility in securities prices
- 45% rewrittenRisks Related to Ownership of Our Common Stock
Provisions in our certificate of incorporation and bylaws, as well as Delaware law, may discourage, delay or prevent a merger or acquisition at a premium price
- 41% rewrittenRisks Related to Ownership of Our Common Stock
The market price of our Common Stock is likely to be highly volatile and you could lose all or part of your investment in our securities
Was: Once trading in the New Common Stock commences, the market price of our New Common Stock is likely to be highly volatile and you could lose all or part of your investment in our securities
- 39% rewrittenRisks Related to our Corporate Structure
We are a holding company and will depend on dividends and distributions from our Operating Subsidiary to pay any dividends
Was: We are a holding company with an stockholders’ deficiency and will depend on dividends and distributions from our Operating Subsidiary to pay any dividends
- 38% rewrittenRisks Related to Our Business Operations and Financial Results
Our success depends in significant part upon the continuing service of management, directors and other key personnel, and several key management and other employees have recently left Capstone
Was: Our success depends in significant part upon the continuing service of management and key employees, and several key management and other employees have recently left Capstone
- 29% rewrittenRisks Related to Ownership of Our Common Stock
Future issuances or sales of our Common Stock or exercises by holders of any warrants we may issue could lower our stock price and dilute the interests of existing stockholders
Was: Future issuances or sales of our New Common Stock or exercises by holders of any warrants we may issue could lower our stock price and dilute the interests of existing stockholders
- 29% rewrittenRisks Related to Our Restatement
Our access to the public markets to raise debt or equity capital depends on our ability to continue to timely file our periodic reports within the SEC limits
Was: Our failure to prepare and timely file our periodic reports with the SEC limits our access to the public markets to raise debt or equity capital
- 28% rewrittenRisks Related to Our Product Offerings
Our sales and results of operations could be materially and adversely impacted by risks inherent in international markets
- 28% rewrittenRisks Related to Our Business Operations and Financial Results
A sustainable market for microturbines may never develop or may take longer to develop than we anticipate, which would adversely affect our results of operations
- 28% rewrittenRisks Related to Our Business Operations and Financial Results
Our products involve a lengthy sales cycle, and we may not anticipate sales levels appropriately, which could impair our results of operations
- 24% rewrittenRisks Related to Our Product Offerings
Commodity market factors impact our costs and availability of materials
- 23% rewrittenRisks Related to Our Business Operations and Financial Results
We may not achieve production cost reductions necessary to competitively price our products, which would adversely affect our sales
All 41 risk factors
Headings as the filing states them, in filing order.
Risks Related to Our Emergence from Chapter 11
- 01There are significant risks related to our substantial indebtedness and our long-term liquidity requirements following our emergence from Chapter 11 and reorganization and the adequacy of our capital resources is difficult to predict at this time100% rewritten
- 02Our independent registered public accounting firm’s report contains an explanatory paragraph that expresses substantial doubt about our ability to continue as a going concernNew
- 03As a result of the implementation of the Plan of Reorganization and the transactions contemplated thereby, our future results of operations, financial condition, and business may not be comparable to the results of operations, financial condition, and business reflected in our historical financial statements
- 04It may be difficult for us to attract and retain employees, including members of our senior management, as a result of our emergence from Chapter 11
- 05There is currently limited public trading market for our common stock on the OTC market, and we cannot assure you that a more active trading market will develop for our common stock62% rewritten
Risks Related to our Corporate Structure
- 06We are a holding company and will depend on dividends and distributions from our Operating Subsidiary to pay any dividends39% rewritten
- 07Holders of the Preferred Units can exercise significant control over our Operating Subsidiary, which could limit our ability to influence the outcome of key corporate actions of our Operating Subsidiary72% rewritten
Risks Related to Our Restatement
- 08Refer to Note 14— Commitments and Contingencies in the Notes to Consolidated Financial Statements and to “Legal Proceedings” for information regarding legal proceedings in which we are involved
- 09We have incurred and expect to continue to incur significant expenses related to remediation of material weaknesses in our internal control over financial reporting and disclosure controls and procedures, and any resulting litigation
- 10Our access to the public markets to raise debt or equity capital depends on our ability to continue to timely file our periodic reports within the SEC limits29% rewritten
Risks Related to Our Business Operations and Financial Results
- 11A sustainable market for microturbines may never develop or may take longer to develop than we anticipate, which would adversely affect our results of operations28% rewritten
- 12Product quality expectations may not be met, causing slower market acceptance or warranty cost exposure
- 13Our products involve a lengthy sales cycle, and we may not anticipate sales levels appropriately, which could impair our results of operations28% rewritten
- 14If we do not effectively implement our sales, marketing, and service plans, our sales will not grow and our results of operations will suffer
- 15Changes to trade regulations, quotas, duties or tariffs, and sanctions caused by the changing U.S. and geopolitical environments or otherwise, may increase our costs or limit the amount of raw materials and products that we can import or may otherwise adversely impact our business67% rewritten
- 16We may not be able to retain or develop relationships with OEMs or distributors in our targeted markets, in which case our sales would not increase as expected
- 17Increased credit loss expense or delays in collecting accounts receivable could have a material adverse effect on our cash flows and results of operations66% rewritten
- 18Loss of a significant customer could have a material adverse effect on our results of operations80% rewritten
- 19We may not achieve production cost reductions necessary to competitively price our products, which would adversely affect our sales23% rewritten
- 20We may incur costs and liabilities as a result of product liability claims
- 21Operational restructuring may result in asset impairment or other unanticipated charges
- 22Our success depends in significant part upon the continuing service of management, directors and other key personnel, and several key management and other employees have recently left Capstone38% rewritten
- 23Our operations are vulnerable to interruption by fire, earthquake, riots, domestic and international instability, war, terrorism, geopolitical events, pandemics and other events beyond our control59% rewritten
- 24Activities necessary to integrate any future acquisitions may result in costs in excess of current expectations or be less successful than anticipated
Risks Related to Our Product Offerings
- 25We depend upon the development of new products and enhancements of existing products
- 26Our operating results are dependent, in large part, upon the successful commercialization of our products. Failure to produce our products as scheduled and budgeted could materially and adversely affect our business and financial condition
- 27Commodity market factors impact our costs and availability of materials24% rewritten
- 28We operate in a highly competitive market among competitors that have significantly greater resources than we have, and we may not be able to compete effectively
- 29Our business and financial performance depends in part on the oil and natural gas industry, where a continued movement towards clean energy and away from fossil fuels, as well as fluctuations in prices for oil and natural gas, may have an adverse effect on our revenue, cash flows, profitability, and growth
- 30Our sales and results of operations could be materially and adversely impacted by risks inherent in international markets28% rewritten
- 31We may not be able to develop sufficiently trained applications engineering, installation, and service support resources to serve our targeted markets
- 32Changes in our product components may require us to replace parts held at distributors
- 33Utility companies or governmental entities could place barriers to our entry into the marketplace, and we may not be able to effectively sell our products
Risks Related to Pending Litigation and Government Regulation
- 34We operate in a highly regulated business environment, and changes in regulation could impose significant costs on us or make our products less economical, thereby affecting demand for our microturbines51% rewritten
- 35We were previously involved in a SEC investigation and certain current and former directors and officers are currently involved in stockholder litigation related to our Restatement, and we and our directors and officers may be named as defendants in other types of legal proceedings in the futureNew
Risks Related to Data, Security, and Intellectual Property
- 36Our business could be negatively impacted if we fail to adequately protect our intellectual property rights or if third parties claim that we are in violation of their intellectual property rights
- 37We face security and cybersecurity risks related to our electronic processing of sensitive and confidential business and product data. If we are unable to protect our data or the data of our customers, a security breach could damage our reputation and have a material adverse effect on our business
Risks Related to Ownership of Our Common Stock
- 38Future issuances or sales of our Common Stock or exercises by holders of any warrants we may issue could lower our stock price and dilute the interests of existing stockholders29% rewritten
- 39The market price of our Common Stock is likely to be highly volatile and you could lose all or part of your investment in our securities41% rewritten
- 40Market conditions may result in volatility in the level of, and fluctuations in, market prices of stocks generally and, in turn, our Common Stock. Global financial markets have experienced extreme disruption in recent years, including, among other things, extreme volatility in securities prices46% rewritten
- 41Provisions in our certificate of incorporation and bylaws, as well as Delaware law, may discourage, delay or prevent a merger or acquisition at a premium price45% rewritten
Other Capstone Energy Plus 10-Ks
- FY2026 10-K risk factors41 risks10 new10 dropped14 reworded
AI infrastructure and data-center expansion now drive major demand, execution and technology risks.
Filed Jun 25, 2026 - FY2024 10-K risk factors53 risks
Emerging from bankruptcy in December 2023, the company faces severe liquidity shortages, substantial debt, and ongoing SEC scrutiny.
Filed Sep 27, 2024
About this page
The headings are the filing's own. The one-line readings and the overview are automated and can be wrong: read Item 1A of the 10-K for the exact wording.