8-K
Capstone Green Energy Holdings, Inc. (CGEH)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 25, 2022
CAPSTONE GREEN ENERGY CORPORATION
(Exact name of registrant as specified in its charter)
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|---|---|---|---|---|
| Delaware | 001-15957 | 95-4180883 | ||
| (State or other jurisdiction | (Commission File Number) | (IRS Employer | ||
| of incorporation) | Identification No.) | |||
| | | | | |
| --- | --- | --- | --- | --- |
| 16640 Stagg Street, | ||||
| Van Nuys, California | | 91406 | ||
| (Address of principal executive offices) | | (Zip Code) |
(818) 734-5300
(Registrant’s telephone number, including area code)
Former name or former address, if changed since last report: N/A
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| | | |||
|---|---|---|---|---|
| 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 | | | | |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Termination of Employment of Chief Revenue Officer and Furlough of Chief Accounting Officer
Pursuant to a plan of Capstone Green Energy Corporation (the Company”) to reduce its cash use (the “Expense Reduction Plan”), the employment of James Crouse, the Chief Revenue Officer of the Company, will terminate effective April 1, 2022.
On February 25, 2022, pursuant to the Expense Reduction Plan, the Company also furloughed Neshan “Nino” Tavitian, the Company’s Chief Accounting Officer, effective February 28, 2022, for 120 days. In his absence, Mr. Frederick S. Hencken III has assumed the role of Chief Accounting Officer. Mr. Hencken will also continue in his role as Chief Financial Officer of the Company.
Reduction in Base Salary of Executive Officers
On February 28, 2022, pursuant to the Expense Reduction Plan, each of Mr. Darren R. Jamison, the Company’s Chief Executive Officer and Frederick S. Hencken III, the Company’s Chief Financial Officer, voluntarily agreed to accept 25% reductions to their base salaries. These reductions, which were effective as of February 28, 2022, will remain in effect for a period of 120 days thereafter.
Item 7.01Regulation FD Disclosure.
On March 3, 2022, the Company published a press release discussing the Expense Reduction Plan, which is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
The information in this Item 7.01 and in Exhibit 99.1 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Item 8.01Other Events.
On March 3, 2022, the Company announced that, pursuant to the Expense Reduction Plan, it furloughed or reduced the pay of approximately 55% of its direct workforce beginning on February 28, 2022. The employees that will receive reduced pay will continue to be employees of the Company and receive employee benefits, including medical benefits. The furloughed employees will not receive direct compensation from the Company during the furlough period, which will last 120 days, depending on employee, but will be immediately eligible for unemployment benefits.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit Number | Description |
|---|
| 99.1 | Press Release of Capstone Green Energy Corporation, dated March 3, 2022 (furnished herewith) |
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104Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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|---|---|---|
| | CAPSTONE GREEN ENERGY CORPORATION | |
| | | |
| | | |
| Date: March 3, 2022 | By: | /s/ Frederick S. Hencken III |
| | | Name: Frederick S. Hencken III |
| | | Title: Chief Financial Officer<br><br>(Principal Financial Officer) |
EXHIBIT 99.1
Capstone Green Energy Reducing Operating Costs as the Business Model
Shifts Towards Energy as a Service
Lower Operating Costs Combined with Rental Fleet Deployments to
Improve Financial Performance
VAN NUYS, CA / BUSINESS WIRE / March 3, 2022 / Capstone Green Energy Corporation (www.CapstoneGreenEnergy.com) (NASDAQ:CGRN) ("Capstone," the "Company," “we” or “us”), a global leader in carbon reduction and on-site resilient green Energy-as-a-Service (EaaS) solutions, has launched an effort to reduce operating costs and modify the operating model to better match the Company’s expanding EaaS business. The expense reduction plan implemented this week is intended to support Capstone's stated goal of reaching consistent quarterly positive adjusted EBITDA.
The Company has undertaken a holistic review of the organization, taking the growing EaaS business into account. EaaS adds diversity to the Company’s revenues and allows for a more streamlined staffing model that constitutes most of the operating cost reductions. Other measures taken to reduce expenses, until this spring when the Company expects to realize increased revenue from rental units yet to be commissioned, include temporary salary reductions for the Capstone Green Energy leadership team and company management, furloughing some employees, and moving others to part-time status.
“We are committed to making the changes needed to increase our profitability through better alignment of our current cost structure to support our higher margin Energy-as-a-Service revenues,” said Darren Jamison, President and Chief Executive Officer of Capstone Green Energy. “While Capstone has achieved adjusted positive EBITDA in the past, the EaaS business model generates high margin recurring revenue that should drive more consistent quarter to quarter positive adjusted EBITDA.”
The EaaS rental unit timeline includes a delay between the time of manufacture and the time revenue from that unit is realized. The microturbine rental unit is built, allocated by a signed rental contract, and then commissioned at the customer site, at which point it begins to generate revenue.
“These actions are designed to enhance our ability to execute on our business plans and serve our customers who are looking to outsource their energy management, while also lowering energy costs, increasing resiliency and reducing emissions,” Mr. Jamison continued. “We will continue to look for ways to enhance Capstone’s financial performance and overall cost structure to optimize adjusted EBITDA.”
About Capstone Green Energy
Capstone Green Energy (www.CapstoneGreenEnergy.com) (NASDAQ: CGRN) is a leading provider of customized microgrid solutions and on-site energy technology systems focused on helping customers around the globe meet their environmental, energy savings, and resiliency goals. Capstone Green Energy focuses on four key business lines. Through its Energy as a Service (EaaS) business, it offers
rental solutions utilizing its microturbine energy systems and battery storage systems, comprehensive Factory Protection Plan (FPP) service contracts that guarantee life-cycle costs, as well as aftermarket parts. Energy Conversion Products are driven by the Company's industry-leading, highly efficient, low-emission, resilient microturbine energy systems offering scalable solutions in addition to a broad range of customer-tailored solutions, including hybrid energy systems and larger frame industrial turbines. The Energy Storage Products business line designs and installs microgrid storage systems creating customized solutions using a combination of battery technologies and monitoring software. Through Hydrogen Energy Solutions, Capstone Green Energy offers customers a variety of hydrogen products, including the Company's microturbine energy systems.
For customers with limited capital or short-term needs, Capstone offers rental systems; for more information, contact: rentals@CGRNenergy.com. To date, Capstone has shipped over 10,000 units to 83 countries and estimates that, in FY21, it saved customers over $217 million in annual energy costs and approximately 397,000 tons of carbon. Total savings over the last three years are estimated at 1,115,100 tons of carbon and $698 million in annual energy savings.
For more information about the Company, please visit www.CapstoneGreenEnergy.com. Follow Capstone Green Energy on Twitter, LinkedIn, Instagram, Facebook, and YouTube.
Cautionary Note Regarding Forward-Looking Statements
This release contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995, including statements regarding the Company’s positive adjusted EBITDA goal and expectations for the Company’s expense reduction plan. The Company has tried to identify these forward-looking statements by using words such as "expect," "anticipate," "believe," "could," "should," "estimate," "intend," "may," "will," "plan," "goal" and similar terms and phrases, but such words, terms and phrases are not the exclusive means of identifying such statements. Actual results, performance and achievements could differ materially from those expressed in, or implied by, these forward-looking statements due to a variety of risks, uncertainties and other factors, including, but not limited to, the following: the timing of rental units generating revenue; further cost reduction efforts; the ongoing effects of the COVID-19 pandemic; the availability of credit and compliance with the agreements governing the Company's indebtedness; the Company's ability to develop new products and enhance existing products; product quality issues, including the adequacy of reserves therefor and warranty cost exposure; intense competition; financial performance of the oil and natural gas industry and other general business, industry and economic conditions; the Company's ability to adequately protect its intellectual property rights; and the impact of pending or threatened litigation. For a detailed discussion of factors that could affect the Company's future operating results, please see the Company's filings with the Securities and Exchange Commission, including the disclosures under "Risk Factors" in those filings. Except as expressly required by the federal securities laws, the Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, changed circumstances or future events or for any other reason.
**CONTACT:**Capstone Green Energy Investor and investment media inquiries: 818-407-3628 ir@CGRNenergy.com
SOURCE: Capstone Green Energy Corporation