Capstone Energy Plus, Inc 10-Q for FY2023 Q2

Capstone Energy Plus, Inc. (CEPL)

10-Q 2022-11-14 For: 2022-09-30

Added on April 06, 2026

About this 10-Q

Capstone Energy Plus, Inc filed this 10-Q on November 14, 2022, covering the quarter ended September 30, 2022 (FY2023 Q2).

Headline figures

Quarter ended September 30, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $20.78M; up 20.8% from $17.2M a year earlier
Net loss: $4.92M; compared with a net loss of $5.99M a year earlier
Diluted EPS: -$0.30; compared with -$0.40 a year earlier

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Delaware		95-4180883
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

16640 Stagg Street Van Nuys, California (Address of principal executive offices)		91406 (Zip Code)


Title of each class	Trading Symbol(s)	Name of exchange on which registered
Common Stock, par value $.001 per share	CGRN	NASDAQ Capital Market
Series B Junior Participating Preferred Stock Purchase Rights


Large accelerated filer ☐	Accelerated filer ☐	Non-accelerated filer ☒	Smaller reporting company ☒
Emerging growth company ☐

		Page Number
PART I — FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)	3

	Condensed Consolidated Balance Sheets as of September 30, 2022 and March 31, 2022	3

	Condensed Consolidated Statements of Operations for the Three and Six Months Ended September 30, 2022 and 2021	4

	Condensed Consolidated Statements of Stockholders’ Equity for the Three and Six Months Ended September 30, 2022 and 2021	5

	Condensed Consolidated Statements of Cash Flows for the Six Months Ended September 30, 2022 and 2021	6

	Notes to Condensed Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25

Item 4.	Controls and Procedures	39

PART II — OTHER INFORMATION

Item 1.	Legal Proceedings	40

Item 1A.	Risk Factors	40

Item 6.	Exhibits	42

Signatures		44


	September 30,		March 31,
	2022		2022
Assets
Current Assets:
Cash and cash equivalents	$	23,780	$	22,559
Accounts receivable, net of allowances of $916 at September 30, 2022 and $845 at March 31, 2022		18,189		24,665
Inventories, net		21,801		18,465
Prepaid expenses and other current assets		7,039		5,519
Total current assets		70,809		71,208
Property, plant, equipment and rental assets, net		25,375		18,038
Non-current portion of accounts receivable		1,109		1,212
Non-current portion of inventories		2,277		1,680
Other assets		11,735		8,635
Total assets	$	111,305	$	100,773
Liabilities and Stockholders’ Equity
Current Liabilities:
Accounts payable and accrued expenses	$	24,344	$	25,130
Accrued salaries and wages		1,123		1,147
Accrued warranty reserve		1,662		1,483
Deferred revenue		10,686		9,185
Current portion of notes payable and lease obligations		3,215		675
Total current liabilities		41,030		37,620
Deferred revenue - non-current		915		981
Term note payable, net		50,966		50,949
Long-term portion of notes payable and lease obligations		12,321		5,809
Total liabilities		105,232		95,359
Commitments and contingencies (Note 14)
Stockholders’ Equity:
Preferred stock, $.001 par value; 1,000,000 shares authorized; none issued		—		—
Common stock, $.001 par value; 51,500,000 shares authorized, 18,449,567 shares issued and 18,332,553 shares outstanding at September 30, 2022; 15,398,368 shares issued and 15,296,735 shares outstanding at March 31, 2022		18		15
Additional paid-in capital		954,750		946,969
Accumulated deficit		(946,556)		(939,482)
Treasury stock, at cost; 117,014 shares at September 30, 2022 and 101,633 shares at March 31, 2022		(2,139)		(2,088)
Total stockholders’ equity		6,073		5,414
Total liabilities and stockholders' equity	$	111,305	$	100,773


	Three Months Ended				Six Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
Revenue:
Product and accessories	$	10,603	$	8,465	$	19,770	$	16,854
Parts, service and rentals		10,172		8,731		19,657		16,424
Total revenue		20,775		17,196		39,427		33,278
Cost of goods sold:
Product and accessories		12,496		8,797		21,387		17,790
Parts, service and rentals		6,103		5,689		11,158		10,130
Total cost of goods sold		18,599		14,486		32,545		27,920
Gross margin		2,176		2,710		6,882		5,358
Operating expenses:
Research and development		603		987		1,093		1,870
Selling, general and administrative		5,107		6,438		10,026		11,762
Total operating expenses		5,710		7,425		11,119		13,632
Loss from operations		(3,534)		(4,715)		(4,237)		(8,274)
Other income		(50)		(5)		(48)		660
Interest income		26		6		32		11
Interest expense		(1,356)		(1,278)		(2,718)		(2,513)
Gain (loss) on debt extinguishment		—		—		—		1,950
Loss before provision for income taxes		(4,914)		(5,992)		(6,971)		(8,166)
Provision for income taxes		4		2		6		10
Net loss		(4,918)		(5,994)		(6,977)		(8,176)
Less: Deemed dividend on purchase warrant for common shares		97		—		97		—
Net loss attributable to common stockholders	$	(5,015)	$	(5,994)	$	(7,074)	$	(8,176)

Net loss per common share attributable to common stockholders—basic and diluted	$	(0.30)	$	(0.40)	$	(0.44)	$	(0.58)
Weighted average shares used to calculate basic and diluted net loss per common share attributable to common stockholders		16,785		15,167		16,056		14,202


				Additional							Total
	Common Stock			Paid-in		Accumulated		Treasury Stock			Stockholders’
	Shares	Amount		Capital		Deficit		Shares	Amount		Equity
Balance, March 31, 2022	15,398,368	$	15	$	946,969	$	(939,482)	101,633	$	(2,088)	$	5,414
Purchase of treasury stock	—		—		—		—	9,296		(36)		(36)
Vested restricted stock awards	33,234		—		36		—	—		—		36
Stock-based compensation	—		—		232		—	—		—		232
Net loss	—		—		—		(2,059)	—		—		(2,059)
Balance, June 30, 2022	15,431,602		15		947,237		(941,541)	110,929		(2,124)		3,587
Purchase of treasury stock	—		—		—		—	6,085		(15)		(15)
Vested restricted stock awards	28,882		—		15		—	—		—		15
Stock-based compensation	—		—		154		—	—		—		154
Stock awards to Board of Directors	54,585		—		—		—	—		—		—
Issuance of common stock, net of issuance costs	2,934,498		3		7,247		—	—		—		7,250
Deemed dividend on purchase warrant for common shares	—		—		97		(97)	—		—		—
Net loss	—		—		—		(4,918)	—		—		(4,918)
Balance, September 30, 2022	18,449,567	$	18	$	954,750	$	(946,556)	117,014	$	(2,139)	$	6,073


		Non-current Inventory
		Balance Expected
Expected Period of Use		to be Used
13 to 24 months	$	988
25 to 36 months		1,289
Total	$	2,277


		Weighted
		Average Grant
		Date Fair
Restricted Stock Units and Performance Restricted Stock Units	Shares	Value
Non-vested restricted stock units outstanding at March 31, 2022	591,805	$	5.66
Granted	298,164		2.48
Vested and issued	(116,701)		5.65
Forfeited	(211,303)		4.51
Non-vested restricted stock units outstanding at September 30, 2022	561,965		4.40
Restricted stock units expected to vest beyond September 30, 2022	561,965	$	4.40


	Three Months Ended September 30,				Six Months Ended September 30,
	2022		2021		2022		2021
Restricted stock compensation expense (in thousands)	$	154	$	333	$	386	$	638
Aggregate fair value of restricted stock units vested and issued (in thousands)	$	212	$	543	$	341	$	704
Weighted average grant date fair value of restricted stock units granted during the period	$	2.57	$	4.53	$	2.48	$	5.69


Risk-free interest rate		0.2%
Contractual term		3 years
Expected volatility		81.0%


Balance, beginning of the period	$	1,483
Standard warranty provision		364
Deductions for warranty claims		(185)
Balance, end of the period	$	1,662


FPP Balance, beginning of the period	$	4,544
FPP Billings		9,698
FPP Revenue recognized		(9,632)
Balance attributed to FPP contracts		4,610
DSS Program		1,243
Deposits		5,748
Deferred revenue balance, end of the period	$	11,601


	September 30, 2022		March 31, 2022
Operating lease right-of-use assets	$	9,075	$	5,959
Total operating lease right-of-use assets	$	9,075	$	5,959

Operating lease liability, current	$	1,693	$	586
Operating lease liability, non-current		7,572		5,619
Total operating lease liabilities	$	9,265	$	6,205

Weighted average remaining lease life		6.10 years		8.35 years

Weighted average discount rate		12.00%		12.00%


	Operating
Year Ending March 31,	Leases
2023 (remainder of fiscal year)	$	1,370
2024		2,760
2025		2,685
2026		1,653
2027		1,279
Thereafter		3,358
Total lease payments	$	13,105
Less: imputed interest		(3,840)
Present value of operating lease liabilities	$	9,265


	September 30,		March 31,
	2022		2022
Machinery, equipment, automobiles and furniture	$	16,479	$	15,945
Leasehold improvements		8,868		8,848
Molds and tooling		3,499		3,469
Rental assets		25,314		17,079
		54,160		45,341
Less: accumulated depreciation		(28,785)		(27,303)
Total property, plant, equipment and rental assets, net	$	25,375	$	18,038


	Six Months Ended September 30,
	2022		2021
United States	$	25,788	$	15,174
Mexico		1,054		1,584
All other North America		1,229		447
Total North America		28,071		17,205
Russia		1,294		2,206
All other Europe		5,804		5,612
Total Europe		7,098		7,818
Asia		1,199		823
Australia		2,051		3,342
All other		1,008		4,090
Total Revenue	$	39,427	$	33,278


Exhibit Number		Description
3.1		Conformed Copy of Second Amended and Restated Certificate of Incorporation of Capstone Green Energy Corporation, as amended through April 22, 2021 (b)
3.2		Conformed Copy of Fifth Amended and Restated Bylaws of Capstone Green Energy Corporation effective as of April 22, 2021, as amended through August 26, 2021 (a)
4.1		Amended and Restated Note Purchase Agreement, dated as of October 1, 2020, by and among Capstone Turbine Corporation, certain subsidiaries of the Company and Goldman Sachs Specialty Lending Group, L.P. (as successor in interest to Goldman Sachs Specialty Lending Holdings, Inc.) (c)
4.2		First Amendment to the Amended and Restated Note Purchase Agreement, dated as of May 13, 2021 by and among Capstone Green Energy Corporation, certain subsidiaries of the Company and Goldman Sachs Specialty Lending Group, L.P. (d)
4.3		Capstone Green Energy Corporation 2017 Equity Incentive Plan, as amended through September 12, 2022 (g)
4.4		Second Amendment to the Amended and Restated Note Purchase Agreement dated as of July 13, 2022, by and among Capstone Green Energy Corporation, certain subsidiaries of the Company, the purchaser party thereto and Goldman Sachs Specialty Lending Group, L.P. (e)
4.5		Form of Common Stock Purchase Warrant (f)
10.1		Amendment No. 1 to NOL Rights Agreement by and between the Company and Broadridge Financial Solutions, Inc., as rights agent, dated as of May 6, 2019 (g)
31.1		Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2		Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32		Certification of Chief Executive Officer and Chief Financial Officer 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS		XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the inline XBRL document
101.SCH		XBRL Schema Document
101.CAL		XBRL Calculation Linkbase Document
101.LAB		XBRL Label Linkbase Document
101.PRE		XBRL Presentation Linkbase Document
101.DEF		XBRL Definition Linkbase Document
104		The cover page from Capstone Green Energy Corporation’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2022, formatted in Inline XBRL and contained in Exhibit 101

	CAPSTONE GREEN ENERGY CORPORATION


	By:	/s/ SCOTT W. ROBINSON
		Scott W. Robinson
		Interim Chief Financial Officer
		(Principal Financial Officer)
Date: November 14, 2022


Date: November 14, 2022	By:	/s/ DARREN R. JAMISON
		Darren R. Jamison
		President and Chief Executive Officer (Principal Executive Officer)


	By:	/s/ DARREN R. JAMISON
		Darren R. Jamison
		President and Chief Executive Officer (Principal Executive Officer)


	By:	/s/ SCOTT W. ROBINSON
		Scott W. Robinson
		Interim Chief Financial Officer (Principal Financial Officer)

Date: November 14, 2022