What the changes say
- AI infrastructure and data-center expansion now drive major demand, execution and technology risks.
- Liquidity is more immediate: $25.3 million of Exit Note borrowings mature December 7, 2026.
- Series A Preferred Stock adds compounding 5% PIK dividends, anti-dilution protections and consent rights.
- Restatement effects, litigation and customer concentration remain material investor-confidence and operating risks.
What changed since the prior 10-K
New
- NewRisks Related to Substantial Indebtedness and Long-Term Liquidity
There are significant risks related to our substantial indebtedness and our long-term liquidity
The company has $25.3 million outstanding under secured Exit Notes maturing December 7, 2026, plus a $10 million uncommitted facility.
- NewRisks Related to Our Business Operations and Financial Results
There are uncertainties and risks related to the profitability, safety and regulatory environment of AI that could adversely affect our business and operations
AI investments are unproven, with no AI-infrastructure sales yet and risks from rapid technology changes, safety and regulation.
- NewRisks Related to Our Business Operations and Financial Results
Our business may depend upon the demand for data centers. Slower expansion of AI data centers due to actual or perceived deceleration in AI adoption or other factors could have an adverse impact on our business, financial condition and results of operations
Slower AI data-center growth, financing constraints, permitting delays, local opposition or improved grid access could reduce demand for its power solutions.
- NewRisks Related to Our Business Operations and Financial Results
We have an evolving business model and strategy, which includes an increasing focus on diversifying into partnerships with data centers for AI and HPC companies
Expanding into AI and high-performance-computing data-center partnerships could overextend management, systems and finances or fail to produce growth.
- NewRisks Related to Our Business Operations and Financial Results
of skilled personnel, our ability to successfully implement our business plan, grow our Company and maintain or expand our product offerings may be adversely affected, and the costs of doing so may increase
Losing skilled employees, especially in finance and accounting controls, could hinder growth, product offerings and internal-control operation.
- NewRisks Related to Pending Litigation and Government Regulation
Our prior restatement and related Audit Committee investigations may continue to affect investor confidence, our reputation and our ability to raise capital
Prior financial restatement and Audit Committee investigations may continue damaging investor confidence, reputation and access to capital.
- NewRisks Related to Pending Litigation and Government Regulation
We may be involved in litigation and other proceedings that could adversely affect us
Commercial, employment, contractual, collection, regulatory and other litigation could create costs, adverse judgments and management distraction.
- NewRisks Related to Ownership of Our Common Stock
Holders of our Series A Preferred Stock are entitled to certain dividend payments under the Certificate of Designation that may increase over time and could adversely affect our financial condition and results of operations
Series A Preferred Stock compounds a 5% annual in-kind dividend, increasing its liquidation preference and potentially reducing financial flexibility.
- NewRisks Related to Ownership of Our Common Stock
The Certificate of Designation contains anti-dilution provisions that may dilute the interests of our common stockholders, depress the price of our common stock and make it difficult for us to raise additional capital
Preferred Stock weighted-average anti-dilution adjustments could dilute common holders, depress the stock price and hinder equity fundraising.
- NewRisks Related to Ownership of Our Common Stock
The Certificate of Designation contains protective provisions and preemptive rights that may make it difficult to procure additional financing and that may affect our financial condition and results of operations
Preferred Stock protective provisions require Majority Holder approval for indebtedness, asset transactions, equity issuance, dividends and other major actions.
Dropped
- DroppedRisks 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
Post-reorganization debt and uncertainty over whether capital resources would meet long-term requirements.
- DroppedRisks 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
The auditor’s going-concern doubt regarding the company’s ability to meet obligations for the following twelve months.
- DroppedRisks Related to Our Emergence from Chapter 11
As a result of the implementation of the Plan of Reorganization and the transactions contemplated thereby, our future results of operations, financial condition, and business may not be comparable to the results of operations, financial condition, and business reflected in our historical financial statements
Difficulty comparing post-reorganization results and financial condition with historical financial statements.
- DroppedRisks Related to Our Emergence from Chapter 11
It may be difficult for us to attract and retain employees, including members of our senior management, as a result of our emergence from Chapter 11
Difficulty attracting and retaining employees and senior management following Chapter 11 emergence.
- DroppedRisks 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
- DroppedRisks Related to Our Restatement
Refer to Note 14— Commitments and Contingencies in the Notes to Consolidated Financial Statements and to “Legal Proceedings” for information regarding legal proceedings in which we are involved
- DroppedRisks Related to Our Restatement
We have incurred and expect to continue to incur significant expenses related to remediation of material weaknesses in our internal control over financial reporting and disclosure controls and procedures, and any resulting litigation
Goldman Sachs approval rights over significant Operating Subsidiary actions, including debt, distributions and acquisitions.
- DroppedRisks 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
A cross-reference to information about legal proceedings in the financial statement notes and Legal Proceedings section.
- DroppedRisks 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
Costs of remediating material weaknesses and related internal-control litigation following investigations and the restatement.
- DroppedRisks 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
Dependence on timely SEC filings to access public debt or equity markets.
Reworded
- 98% rewrittenRisks Related to Our Business Operations and Financial Results
Activities necessary to integrate any future acquisitions may result in costs in excess of current expectations or be less successful than anticipated
The risk now specifically covers the August 13, 2025 Cal Microturbine acquisition and adds customer retention, cybersecurity, litigation, impairment and unexpected-liability risks.
- 81% 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
Fiscal 2026 revenue concentration shifted to E-Finity 17%, Cal Microturbine 16%, DTC 13% and Lone Star 10%; receivables also changed.
- 63% 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
No substantive wording change; the risk still emphasizes departures of directors, officers and finance and information-technology personnel.
- 58% 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
Receivables rose to $12.9 million, DSO increased to 34 days, and credit-loss expense fell to $0.5 million in Fiscal 2026.
- 44% 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
The company now says most bill-of-materials items are domestic but adds sanctions, supply-chain constraints, transportation costs and geopolitical conditions.
- 44% 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
The revised risk specifically identifies longer sales cycles for AI, data-center and other large-load customers and cites financing and energy-market obstacles.
- 41% 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
The discussion removes specific Restatement-related stockholder litigation involving current and former directors and officers, while retaining broader litigation exposure.
- 39% rewrittenRisks Related to Ownership of Our Common Stock
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
The revised risk adds OTC liquidity effects, transaction delays, reduced analyst and media coverage, lower prices and wider bid-ask spreads.
- 36% rewrittenRisks Related to Our Product Offerings
Commodity market factors impact our costs and availability of materials
- 35% rewrittenRisks Related to Ownership of Our Common Stock
We are a holding company and will depend on dividends and distributions from our Operating Subsidiary to pay any dividends
- 32% rewrittenRisks Related to Our Business Operations and Financial Results
Product quality expectations may not be met, causing slower market acceptance or warranty cost exposure
- 28% rewrittenRisks Related to Our Business Operations and Financial Results
Operational restructuring may result in asset impairment or other unanticipated charges
- 23% rewrittenRisks Related to Ownership of Our Common Stock
Future issuances or sales of our Common Stock, exercises by holders of any warrants we may issue or conversion of the Series A Preferred Stock could lower our stock price and dilute the interests of existing stockholders
Was: 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
- 23% rewrittenRisks Related to Our Product Offerings
Our business and financial performance depends in part on the oil and natural gas industry, where a continued movement towards clean energy and away from fossil fuels, as well as fluctuations in prices for oil and natural gas, may have an adverse effect on our revenue, cash flows, profitability, and growth
All 41 risk factors
Headings as the filing states them, in filing order.
Risks Related to Substantial Indebtedness and Long-Term Liquidity
- 01There are significant risks related to our substantial indebtedness and our long-term liquidityNew
Risks Related to Our Business Operations and Financial Results
- 02A sustainable market for microturbines may never develop or may take longer to develop than we anticipate, which would adversely affect our results of operations
- 03There are uncertainties and risks related to the profitability, safety and regulatory environment of AI that could adversely affect our business and operationsNew
- 04Our business may depend upon the demand for data centers. Slower expansion of AI data centers due to actual or perceived deceleration in AI adoption or other factors could have an adverse impact on our business, financial condition and results of operationsNew
- 05We have an evolving business model and strategy, which includes an increasing focus on diversifying into partnerships with data centers for AI and HPC companiesNew
- 06Product quality expectations may not be met, causing slower market acceptance or warranty cost exposure32% rewritten
- 07Our products involve a lengthy sales cycle, and we may not anticipate sales levels appropriately, which could impair our results of operations44% rewritten
- 08If we do not effectively implement our sales, marketing, and service plans, our sales will not grow and our results of operations will suffer
- 09Changes 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 business44% rewritten
- 10We 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
- 11Increased credit loss expense or delays in collecting accounts receivable could have a material adverse effect on our cash flows and results of operations58% rewritten
- 12Loss of a significant customer could have a material adverse effect on our results of operations81% rewritten
- 13We may not achieve production cost reductions necessary to competitively price our products, which would adversely affect our sales
- 14We may incur costs and liabilities as a result of product liability claims
- 15Operational restructuring may result in asset impairment or other unanticipated charges28% rewritten
- 16Our 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 Capstone63% rewritten
- 17of skilled personnel, our ability to successfully implement our business plan, grow our Company and maintain or expand our product offerings may be adversely affected, and the costs of doing so may increaseNew
- 18Activities necessary to integrate any future acquisitions may result in costs in excess of current expectations or be less successful than anticipated98% rewritten
Risks Related to Our Product Offerings
- 19We depend upon the development of new products and enhancements of existing products
- 20Our 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
- 21Commodity market factors impact our costs and availability of materials36% rewritten
- 22We 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
- 23Our 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 growth23% rewritten
- 24Our sales and results of operations could be materially and adversely impacted by risks inherent in international markets
- 25We may not be able to develop sufficiently trained applications engineering, installation, and service support resources to serve our targeted markets
- 26Changes in our product components may require us to replace parts held at distributors
- 27Utility 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
- 28We 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
- 29Our prior restatement and related Audit Committee investigations may continue to affect investor confidence, our reputation and our ability to raise capitalNew
- 30We may be involved in litigation and other proceedings that could adversely affect usNew
Risks Related to Data, Security, and Intellectual Property
- 31Our 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
- 32We 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
- 33We are a holding company and will depend on dividends and distributions from our Operating Subsidiary to pay any dividends35% rewritten
- 34Future issuances or sales of our Common Stock, exercises by holders of any warrants we may issue or conversion of the Series A Preferred Stock could lower our stock price and dilute the interests of existing stockholders23% rewritten
- 35Holders of our Series A Preferred Stock are entitled to certain dividend payments under the Certificate of Designation that may increase over time and could adversely affect our financial condition and results of operationsNew
- 36The Certificate of Designation contains anti-dilution provisions that may dilute the interests of our common stockholders, depress the price of our common stock and make it difficult for us to raise additional capitalNew
- 37The Certificate of Designation contains protective provisions and preemptive rights that may make it difficult to procure additional financing and that may affect our financial condition and results of operationsNew
- 38There 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 stock39% 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 securities
- 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 prices41% 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 price
Other Capstone Energy Plus 10-Ks
- FY2025 10-K risk factors41 risks2 new14 dropped20 reworded
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.
Filed Jun 27, 2025 - 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.