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("CHP"), Integrated Combined Heat and Power ("ICHP"), and Combined Cooling, Heat and Power ("CCHP"). Our solutions also support full microgrid applications that integrate renewables, battery energy storage, and other distributed energy resources. Our inverter-based microturbine technology serves as the stabilizing backbone of these systems, providing dispatchable, continuous power.

With over 10,800 units shipped, totaling 1.18 GW to 89 countries, Capstone's global footprint reflects decades of proven performance across diverse industries and geographies.

Built on our core 30 kilowatts ("kW"), 65kW, and 200kW microturbine platforms, our scalable multi-megawatt solutions are designed for rapid deployment, continuous operation, and simplified maintenance.

Capstone Energy+ serves critical industries including data centers, hospitals, agriculture, and industrial facilities where uptime and energy certainty are essential. Beyond power generation, our solutions support the circular economy by converting waste streams into usable fuel and capturing waste heat to produce valuable thermal energy with a lower carbon footprint.

To support evolving customer needs, Capstone also offers flexible Energy as a Service ("EaaS") solutions, including power purchase or energy service agreements (PPAs/ESAs), leasing, rentals, and long-term service agreements designed to reduce upfront costs, accelerate deployment, and provide life-cycle cost predictability.

Our modular, plug-and-play architecture enables customers to scale quickly, reduce integration risk, and adapt to growing energy demands with resilient, always-available power solutions.

While we sell directly to certain end users, our go-to-market strategy is anchored by a global network of distributors and Original Equipment Manufacturers ("OEMs"). Our distributors provide application engineering, installation support, air permitting, commissioning, and long-term maintenance services, extending Capstone's reach and deepening customer relationships across markets worldwide. In August 2025, the Company expanded its direct presence in the United States by acquiring the Cal Microturbine (as defined herein) territory, establishing Capstone West Territory ("CWT") and strengthening our direct engagement with customers across key western states.

Looking ahead, we believe Capstone is uniquely positioned to capitalize on several powerful and converging market tailwinds. As part of our growth strategy, we continue to evaluate opportunities to expand our distribution network, including potential acquisitions of existing distributors in select markets. The rapid growth of artificial intelligence is driving unprecedented demand for reliable, high-density, on-site power which is a demand that traditional utility infrastructure is struggling to meet.

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Products

Capstone's microturbines are compact, lightweight, and environmentally advanced distributed power generation systems. Operating on similar principles as a jet engine, our systems are engineered to deliver clean, reliable electricity, heat, and cooling across a wide range of commercially available fuels, from natural gas and renewable biogas to landfill gas, wastewater-derived methane, sour gas, low-BTU gas, and hydrogen blends of up to 30% here we can easily operate across the entire operating window. This exceptional fuel/operating flexibility is not incidental to our design, it is a core competitive differentiator that enables Capstone to serve customers across diverse industries, geographies, and regulatory environments where competing technologies cannot operate effectively across all operating ranges or do so economically and environmentally.

Core Technology

Capstone's microturbines are built on four proprietary design pillars that collectively deliver the reliability, efficiency, and low-maintenance performance our customers depend on:

Advanced Combustion Technology. Our combustion system achieves emissions levels among the lowest of any distributed generation technology available. Our natural gas-fueled C65, C200, C600, C800, and C1000S Series

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microturbines, when combined with catalyst and heat recovery, have been certified by the California Air Resources Board ("CARB") as meeting its stringent 2007 emissions standards, the same standards applied to fuel cells and central power plants. These ultra-low emission levels not only reflect our environmental commitment, but also materially simplify the permitting process for continuously operated on-site power generation across numerous jurisdictions. These low emission levels not only provide a more environmentally friendly product, but also simplify permitting requirements in several municipalities for continuously operated on-site power generation.

Proprietary Air Bearing Technology. Capstone's air bearing system eliminates the friction noise of ball bearings and the use of petroleum-based lubrication entirely. By using a high-pressure field of air generated by high rotation speeds, we are able to support the microturbine's single moving assembly on a cushion of air. This design fundamentally reduces maintenance intervals since there is no friction, no oil changes, no coolant systems, and no other lubricants. This is a primary driver of our industry-leading uptime which allows us to deliver higher energy production at a lower maintenance cost, thus driving a total cost of ownership that distinguishes Capstone from reciprocating engine and other competing technologies.

Digital Power Electronics. Our advanced power electronics platform manages all critical microturbine functions, including speed, temperature, fuel flow, load management, and grid coordination, entirely through digital controls. The system enables seamless transitions between grid-connected and stand-alone operating modes, ensuring that customers' critical loads experience no interruption in the event of a utility outage. Our inverter-based architecture is also the foundation for microgrid integration, allowing Capstone systems to serve as the dispatchable backbone for complex distributed energy systems incorporating solar PV, wind, battery energy storage, and fuel cells.

Proprietary Remote Monitoring Software. Capstone's Remote Monitoring Software enables Capstone and its end users to operate, manage, and optimize their microturbine systems from anywhere in the world. This capability delivers meaningful operational flexibility, proactive maintenance visibility, and measurable cost savings, particularly valuable for customers in remote or mission-critical applications.

Product Line

Capstone offers a comprehensive and scalable product portfolio ranging from 65 kW to multiple megawatts, including our C65, C200, C400, C600, C800, and C1000S Series microturbines. All models are listed by Underwriters Laboratories ("UL") as meeting UL 2200 stationary engine generator standards. The electrical output of individual units can be combined through our system controllers and digital communications architecture to serve installations requiring multiple megawatts of capacity, functioning as a "virtual single" unit with built-in active redundancy.

During fiscal year 2026, Capstone completed certification under UL1741 SB and IEEE 1547 for the C200 and C1000 families in North America, meeting the most demanding grid interconnection requirements in markets such as California and Hawaii. This certification streamlines the grid connection process, eliminates the need for costly external equipment, and removes the burden of site-by-site utility analysis for our customers and distributors.

The Company is developing the C250, a new 250-kilowatt microturbine that has completed successful test runs and is advancing through our commercialization process. The C250 is designed as a highly efficient, modular building block for distributed generation, with power output that maps well to the block-power topology increasingly favored by AI data center operators. We anticipate the C250 will complement our existing product portfolio across a range of applications.

Energy Surplus Program - Engineered Equipment Packages for the AI Era

Capstone's Energy Surplus Program ("ESP") represents the next evolution of our product platform, a unified, integrated architecture purpose-built for the high-density, mission-critical power demands of modern AI workloads and data center applications. This reference design was developed to flexibly match the data center’s topology of today’s and tomorrow’s IT power blocks. The ESP's Engineered Equipment Package ("EEP") brings together proven, complementary technologies into a single deployable solution:

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In October 2025, Capstone announced it has developed an 800-volt direct-current ("VDC") microturbine solution, a natural extension of our existing inverter-based power electronics platform, designed to directly interface with next-generation AI chip architectures including NVIDIA's forthcoming Kyber and Rubin Ultra platforms. This 800 VDC system eliminates multiple AC/DC conversion stages, reduces copper mass by up to 45%, and improves overall power efficiency by as much as 5% compared to legacy systems. These integrated "AI Power Blocks" combine power, liquid cooling, and compute into a rapidly deployable, grid-independent system scalable from edge deployments to AI giga-campuses exceeding 1 GW.

These advanced offerings build upon Capstone's full suite of proven accessories and ancillary products. Beyond data centers, Capstone also offers a comprehensive suite of accessories and ancillary products, including rotary gas compressors, integrated heat recovery modules for CHP applications, dual-mode controllers, batteries for stand-alone and dual-mode operations, protocol converters, and a full range of installation hardware and packaging options, ensuring that Capstone's platform can be configured and deployed across virtually any distributed energy application.

“Plug and Play” Modular Design

Capstone's microturbine platform is engineered to serve a broad and growing range of power generation applications across multiple vertical markets worldwide. Our full product line, from the C65 to the C1000 Series, is designed to scale with customer needs, and our multi-bay architecture allows for modular expansion without changes to an existing site footprint. For example, a customer may have only a 600kW demand today but expects to grow to 1 MW in the future. With our “pay as you grow” modular expansion, we can populate the first three bays with our C200 engines, thus providing 600kW in a five-bay configuration, enabling customers to add capacity incrementally, from 600kW up to 1 MW without any site modification.

Energy Efficiency - CHP/CCHP

Energy efficiency applications represent one of Capstone's most established and economically compelling verticals. In CHP and CCHP configurations, our microturbines provide high grade waste heat where we capture and repurpose the waste heat into highly useful thermal energy, thus increasing total system efficiency from approximately 33% in simple-cycle operation to approximately 85% for hot water and chilled water applications, and as high as 90% or more in steam and direct drying applications. This improvement in fuel utilization translates into lower net utility costs, reduced greenhouse gas emissions, as this approach will reduce use of separate boiler and chiller systems thus reducing their NOx, CO, and VOC emissions.

The recycled thermal energy can be applied across a wide range of uses, including space heating and cooling, domestic water heating, process steam, and direct drying. Hot water is generated through a Heat Recovery Module ("HRM"), chilled water is generated through an absorption chiller, and steam is generated through a Heat Recovery Steam Generator ("HRSG") in CCHP configurations. Capstone systems have been deployed successfully across hotels and resorts, hospitals and medical centers, greenhouses, agricultural operations, office buildings, large retail facilities, and industrial plants, where simultaneous heat and power demand creates a compelling economic case for on-site generation.

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Natural Resources - Crude Oil, Natural Gas, Shale Gas & Mining

Capstone has a long and proven track record in the natural resources market, where our microturbines provide onshore and offshore power for oil and gas operations, shale gas production, compression and transmission sites, and mining facilities; often in remote locations with no access to utility grid power. Our ability to operate on flare gas, associated gas, sour gas, and other fuel byproducts of oil and gas production makes Capstone uniquely valuable in this market, converting waste gases that would otherwise be burned or vented into usable on-site power, while simultaneously reducing emissions and displacing diesel generation. In addition, because of our low maintenance interval requirements, the reduction of trips that maintenance teams have to take to these remote locations brings significant savings in time and costs.

The C65 and C200-series microturbines can be configured to meet Class 1 Zone 2 hazardous location requirements and can be upgraded to stainless steel construction for corrosive offshore environments. The addressable market in U.S. shale reserves continues to grow as domestic natural gas production expands and LNG exports increase, while EPA and state-level regulations continue to tighten restrictions on flaring, both trends strengthen the economic and regulatory case for our natural resources’ offerings.

Renewable Energy

Capstone's fuel flexibility extends naturally into the renewable energy market. Our microturbines operate efficiently and on a wide operating window when using biogas derived from landfills, wastewater treatment facilities, food processing plants, livestock operations, and agricultural waste. Converting what would otherwise be an emissions liability for these facilities, they are now able recycle that waste stream into clean, on-site electricity and thermal energy. In many cases, this renewable fuel is effectively free to the operator, making the economics of a Capstone installation particularly compelling. Our systems have demonstrated consistent performance on variable-quality biogas, including fuels with elevated sulfur content that would damage or degrade competing reciprocating engine technology.

Critical Power Supply

Certain mission-critical high-demand power users, including advanced technology facilities, healthcare campuses, and data-intensive operations, require a level of power reliability that the traditional utility grid alone cannot consistently deliver, especially during weather and fire events. Capstone’s microturbine solutions offer a compelling alternative to conventional UPS and diesel backup generator systems for these mission-critical environments.

Designed for continuous operation, our systems have demonstrated resilience through severe weather events and other disruptions. With built-in black-start capability and seamless transition to stand-alone mode, Capstone microturbines ensure uninterrupted power when it matters most.

This makes them ideally suited for industries where even a momentary loss of power can lead to significant operational risks and financial losses.

Microgrid

Capstone's inverter-based microturbine technology serves as the dispatchable backbone of microgrid installations, providing the continuous, controllable power generation that allows microgrids to function reliably as integrated energy systems. Our proprietary programmable logic control systems and sensors interface with building automation systems and other distributed energy resources, including solar PV, wind, fuel cells, and battery storage, enabling intelligent, automated energy management across the full microgrid architecture.

We have participated in successful microgrid deployments across a diverse range of installations, including wind turbine manufacturing facilities, ski resorts, universities, industrial farms, breweries, and electrical distribution utilities. Our distribution partners have also combined our microturbines with battery storage and EV chargers to deliver integrated vehicle charging solutions. Our distribution partners have also paired our microturbines with battery storage and EV chargers to offer vehicle charging solutions. The resilience of our microgrid-enabled systems has been demonstrated through major weather events, where installations have continued operating independently when surrounding grid infrastructure failed.

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Bridge Power

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A growing number of commercial and industrial customers face a critical gap between their immediate power needs and the timeline for permanent grid infrastructure to become available. Substations are oversubscribed, interconnection queues stretch years into the future, and utility construction schedules frequently do not align with the operational timelines of data centers, manufacturing facilities, EV charging networks, and other high-load developments. Capstone's microturbines are well-suited to serve as bridge power solutions in these situations, providing reliable, dispatchable on-site generation that enables customers to operate at full capacity while awaiting grid access. Unlike diesel generators, which carry significant emissions liabilities and fuel logistics burdens, Capstone's clean-burning, low-emission microturbines can operate under stringent air quality regulations and integrate seamlessly into permanent energy infrastructure once grid connectivity is established. Our containerized, modular form factor allows bridge power installations to be commissioned rapidly, scaled to match load requirements, and redeployed upon completion of permanent grid buildout, making Capstone a cost-effective and environmentally responsible choice for customers navigating grid constraints.

Transportation & EV Charging

Our microturbine platform addresses a growing gap in EV charging infrastructure, particularly in locations where utility grid capacity is insufficient to support high-demand charging operations. Capstone systems have been deployed in EV charging applications for fleet operations and remote charging stations, including mobile trailer-mounted configurations, and we continue to pursue global EV charging opportunities as electrification of transportation accelerates.

Ports

Driven by increasing regulatory pressure to electrify port operations and reduce emissions, terminal operators are faced with electrifying their equipment, yet the power infrastructure to support charging all of their electric devices has come under extreme pressures in power quality, reliability and availability. Ports and marine terminals represent a significant and growing market opportunity for Capstone's microturbine technology providing ultra-low emissions on-site mobile or permanent power and charging solutions.

Capstone's containerized microturbine systems are well-suited to address these demands. Capable of generating up to 1 MW of power within a single 30-foot container, our systems are designed to generate electricity and provide EV chargers at the point of consumption, eliminating transmission losses and reducing vulnerability to grid instability. Equally important in the port environment is the physical footprint of the power generation solution. Port facilities operate in dense, logistically complex environments where space is premium and operational flexibility is essential. Capstone's compact, containerized form factor allows our systems to be deployed, relocated, and reconfigured with minimal disruption to terminal operations, a critical advantage compared to traditional stationary generation infrastructure that requires permanent installation and significant civil works. This mobility enables port operators to right-size and reposition power generation assets as operational needs evolve, whether supporting a specific berth, a cargo handling zone, or a temporary surge in power demand.

A key differentiator for Capstone in this market is our demonstrated fuel flexibility, particularly with respect to hydrogen. The Company has successfully validated both 30% blended hydrogen with natural gas and 100% hydrogen operation through collaborative work with the University of California, Irvine, as well as through deployments with industrial customers internationally. This positions Capstone to support port operators not only in meeting current emissions requirements, but in transitioning toward longer-term net-zero objectives as hydrogen infrastructure matures.

We believe the confluence of tightening electrification mandates, utility grid constraints, and increasing demand for fuel-flexible, distributed power generation creates a favorable environment for Capstone's solutions in the ports and marine terminal vertical. We are actively pursuing opportunities in this market and view it as a meaningful component of our long-term commercial growth strategy.

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AI Data Center

The data center market represents one of the most significant and rapidly expanding opportunities in distributed energy generation. Surging demand for AI compute power has driven unprecedented capital investment in data center infrastructure globally, while simultaneously exposing a critical vulnerability: the inability of traditional utility grids to deliver power at the speed, scale, and reliability that next-generation AI facilities require. Grid constraints, rising electricity costs, permitting delays, and the relentless power density demands of modern AI workloads are accelerating the industry's shift toward on-site power generation solutions, a shift that plays directly to Capstone's core strengths.

Capstone is actively developing a flexible reference design for the data center topology of today and tomorrow. Our microturbine-based systems are uniquely suited to address the data center sector's dual imperatives of integrated and active redundancy and ultra-low emissions that make air permitting easier and less costly. Recovering the high-grade waste heat and converting it into chilled water at one-tenth the energy consumption of electric air-cooled chillers currently used by data centers not only improves energy efficiency to approximately 85%, but also significantly lowers the carbon footprint of the facility. An important feature of Capstone's microturbines is that they natively produce approximately 760 VDC as part of the standard power output. This has become a meaningful technical foundation for the emerging 800 VDC data center standard. This proximity to the target voltage means the transition to 800 VDC architecture represents a small incremental engineering step for Capstone rather than a fundamental redesign, providing a competitive advantage in both development timeline and cost relative to power generation technologies that must bridge a significantly larger voltage gap. This has allowed us to develop an 800-volt direct-current microturbine solution designed to directly interface with next-generation AI chip architectures, eliminating multiple AC/DC conversion stages, reducing copper mass by up to 45%, and improving overall power efficiency by as much as 5% compared to legacy systems. These integrated "AI Power Blocks" are designed to scale from edge deployments to up to 200 MW AI campuses.

While data center applications have not yet represented a significant portion of the Company's revenue, Capstone views this vertical as a transformational long-term growth opportunity and continues to invest in product development, strategic partnerships, and commercial readiness to capitalize on this next generation of AI and data center environments.

Sales and Marketing

Capstone's Sales and Marketing teams operate as a single, unified organization, focusing on developing and managing our worldwide distribution channel, expanding our direct sales capabilities, growing our long-term rental fleet, and building Capstone into a strong, globally recognized brand in the distributed energy space. The addition of direct sales through our acquisition of Cal Microturbine marks a strategic evolution in our commercial model, allowing us to reach end users more directly, capture additional margin, and deepen customer relationships in key markets. This integrated structure enables us to execute consistently across direct sales, distributor-led channels, and EaaS offerings, ensuring a coherent customer experience regardless of how or where customers engage with Capstone.

Go-to-Market Strategy

We reach end-use customers through two complementary channels: direct sales and our global network of authorized distributors and OEMs. Our direct sales efforts target key accounts, strategic verticals, and markets where we have established a direct operational presence. As of August 2025, the U.S. Western Region was established as Capstone West Territory ("CWT") following our acquisition of the Cal Microturbine distributor territory. This expansion deepens our direct customer relationships across one of the highest-demand regions for distributed energy in the United States.

Our direct sales efforts target key accounts, strategic verticals, and markets where we have established a direct operational presence. As of August 2025, the U.S. Western Region was established as Capstone West Territory ("CWT") following our acquisition of the Cal Microturbine distributor territory. This expansion deepens our direct customer relationships across one of the highest-demand regions for distributed energy in the United States.

Our global distributor network remains the cornerstone of our go-to-market reach. Built from the ground up over nearly four decades, this network of strategically placed, independent authorized partners represents one of Capstone's most valuable commercial assets, providing local market expertise, applications engineering, installation support, remote

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monitoring, warranty coverage, spare parts logistics, and long-term service support in markets around the world. Each distributor operates as an extension of the Capstone brand, and we invest meaningfully in their training, certification, and commercial development to ensure consistent quality and performance standards globally.Our success, growth prospects, and ability to capitalize on market opportunities also depend to a significant extent on our ability to identify, hire, motivate, and retain qualified managerial personnel, including senior members of management.

OEMs complement our distributor channel by integrating Capstone microturbine technology into their own product solutions, extending our reach into applications and end markets where our technology serves as an enabling component within a larger system.

Energy-as-a-Service & Rental

For customers who prefer to preserve capital or whose operational needs favor a non-ownership model, Capstone offers a growing suite of EaaS solutions. These offerings include Rental Services, Build-Own-Operate-Maintain ("BOOM"), under either a power purchase agreements ("PPA") or an energy services agreement (“ESA”), as well as lease-to-own structures and embedded service contracts ("ESC"), where we can help our clients lower their Capex and finance the difference under a long-term service agreement.

Our rental fleet provides flexible, fast, and turnkey power solutions for customers with short-term energy needs or capital constraints, and we continue to invest in refreshing and expanding the fleet to meet growing demand. Rental assets that have completed their contracted use may be redeployed or sold, generating capital to fund continued fleet growth.

Customer Support & Service Infrastructure

Capstone's commitment to the customer extends well beyond the point of sale. We offer comprehensive Long-Term Maintenance Agreements ("LTMAs") and continue to support our existing Factory Protection Plans (“FPP”). These service agreements cover both planned and unplanned maintenance which help protect customers' total cost of ownership and ensure maximum system availability. All personnel authorized to perform sales, commissioning, applications, and long-term service on Capstone systems must complete factory and on-site training and hold active Authorized Service Provider ("ASP") certification, ensuring that every technician touching a Capstone system, whether employed by a distributor or an end user, meets our rigorous performance and safety standards.

We also provide application and installation design review services, evaluating customers' proposed configurations against our technical requirements across all critical parameters, electrical interconnection, load profile, fuel type and pressure, cooling airflow, and exhaust routing. Prior to accepting standard manufacturer warranty obligations, we require a commissioning checklist confirming that each installation adheres to our technical specifications. Our standard terms of sale include title transfer at our dock, payment terms ranging from full advance payment to net 90 days, and warranty periods of 12 to 36 months from shipment depending on product type.

Distributor Support System

The Distributor Support System ("DSS Program") is a key enabler of our global distribution network's commercial effectiveness. Funded by our distributors, the DSS Program provides a comprehensive platform of support services including worldwide distributor training, access to online technical documentation and publications, paperless service software, sales efficiency tools, website development, and coordinated business-to-business marketing programs tailored to each major geographic region and vertical market. Through the DSS Program, Capstone and its distributors operate with a shared infrastructure for brand building, lead generation, and customer engagement, creating a more consistent and professional commercial presence across all markets.

Effective March 31, 2026, Capstone acquired the assets and liabilities of Capstone Distributor Support Services Corporation ("CDSSC"), the related party that previously owned and operated the DSS Program on the Company's behalf under a Services Agreement. This acquisition brings the DSS Program fully in-house, strengthening Capstone's direct control over distributor support, brand standards, and global marketing activities as we continue to scale our commercial operations. (See Note 20 – Business Combinations.)

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Geographic Markets

Capstone operates through a globally distributed commercial footprint, reaching customers across six major geographic regions through our authorized distributor network, direct sales operations, and OEM partnerships. Our geographic strategy is anchored by a consistent set of core verticals, energy efficiency, natural resources, renewable energy, and critical power, while remaining responsive to the distinct regulatory, economic, and infrastructure dynamics that shape opportunity in each region.

United States and Canada

North America represents Capstone's largest and most strategically significant geographic market.The primary verticals driving North American demand include energy efficiency, renewable energy, natural resources, and EV charging. Looking ahead, we believe the most powerful near-term tailwind in this region is the accelerating convergence of AI-driven power demand and utility grid constraints. In late 2025, several U.S. states began passing or exploring legislation specifically designed to address the massive power requirements of AI data centers, with provisions encouraging or enabling behind-the-meter, self-generated power. In early 2026, federal proposals were introduced that would require data centers to supply their own power or offset their grid demand, further validating the structural shift already underway. The market reality is that technology companies are increasingly moving off-grid, building their own power plants and microgrids because utility grid capacity cannot keep pace with their growth. This dynamic creates a compelling and expanding opportunity for Capstone's distributed generation platform.

Longer term, the energy efficiency and natural resources verticals are also expected to benefit from continued growth in domestic hydrocarbon production, low downstream natural gas pricing, and the regulatory and public acceptance of distributed generation as a core component of grid modernization and resilience strategy. We continue to work proactively with regulators, utilities, and permitting authorities across the region to streamline grid interconnection, emissions compliance, and installation approval processes, reducing costs and timelines for our customers and accelerating project completion.

Latin America

Latin America is a dynamic and growing market for Capstone, with primary focus on energy efficiency, renewable energy, and natural resources. Oil and gas production continues to expand across the region, and we have an established and growing installation base serving these applications. Interest in EaaS structures, particularly rentals, is high, as many regional customers seek to access Capstone's technology without large upfront capital commitments.

Asia and Australia

Capstone targets energy efficiency, renewable energy, and natural resources applications across Asia and Australia. Our historical strength in Southeast Asia and Australia has been in energy efficiency and oil and gas, and we see continued growth potential in both. Industrial manufacturing expansion across Southeast Asia, driven by supply chain diversification serving European and North American markets, is creating new demand for energy efficiency and renewable solutions, as manufacturers adapt to carbon-related regulations including the EU's Carbon Border Adjustment Mechanism and increasingly stringent green procurement standards from multinational customers. These regulatory tailwinds are expected to drive sustained demand for Capstone's low-emission, high-efficiency distributed generation platform across the region.

Middle East and Africa

The Middle East and Africa remain primarily an oil and gas market for Capstone, with flare gas-to-power applications representing a particularly significant opportunity given the volume of gas being flared across the region and the critical need for stable, reliable on-site power. Several countries in the region have committed to the World Bank's Zero Routine Flaring by 2030 initiative, creating both regulatory impetus and commercial opportunity for Capstone's flare gas utilization capabilities. We have targeted distributors and customers with established positions in the flare gas capture and utilization space and continue to develop these relationships. While geopolitical volatility in parts of the region remains

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a risk factor, we continue to evaluate customer opportunities on a case-by-case basis, ensuring full compliance with all applicable laws and regulations prior to order acceptance and shipment.

Europe

Europe has a long and established history of distributed generation adoption, and Capstone has a meaningful installed base and active distributor relationships across the continent. We are actively strengthening these partnerships and expanding our distributor coverage to capture the full scope of European market opportunity.

A key infrastructure investment supporting our European growth is our Integrated Remanufacturing Facility in the United Kingdom, which we have upgraded to ensure new and remanufactured parts are readily available to distributors across the region, reducing lead times, improving service responsiveness, and supporting the long-term performance of our installed fleet. Our recent completion of VDE 4110:2023 certification for the C65, and existing certifications for the C200 and C1000 families, further strengthens our commercial position across Germany, Austria, and other markets with stringent medium-voltage grid interconnection requirements.

We are also seeing renewed interest in oil and gas drilling activity across Europe as the continent works to address energy security challenges following the disruption of Russian gas supplies. We ceased pursuing growth opportunities in sanctioned markets following Russia's invasion of Ukraine in February 2022, and that position remains unchanged. We continue to evaluate opportunities in non-sanctioned markets such as Kazakhstan and Uzbekistan, where oil and gas development remains active, in full compliance with all applicable laws and export regulations. Revenue in the European region was negatively impacted in Fiscal 2026 as a result of the ongoing conflict and its broader economic consequences across the region and we continue to monitor developments closely.

Customers

A significant portion of the Company’s revenue is generated from a limited number of distributors, which may result in variability in revenue and accounts receivable based on ordering patterns and payment behavior. See Note 4 – Customer Concentrations and Accounts Receivable for additional information.

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The Company is exposed to credit risk associated with its accounts receivable balances. Credit losses may vary based on customer financial condition and payment behavior.

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Competition

The market for distributed power generation is highly competitive and continues to evolve rapidly as energy demand, grid constraints, decarbonization mandates, and the rise of AI-driven compute infrastructure reshape customer priorities and accelerate the adoption of on-site power solutions. Capstone's microturbine systems compete across multiple dimensions, against conventional technologies such as reciprocating engines, against emerging distributed generation and storage technologies, and against the utility grid itself as a default power source for many commercial and industrial customers.

Many of our competitors are large, well-established companies with significant advantages in production scale, global brand recognition, and financial resources available for product development and promotion. We believe, however, that Capstone's combination of fuel flexibility, ultra-low emissions, oil-free maintenance architecture, inverter-based grid integration, and our growing EaaS commercial platform positions us to compete effectively, and increasingly favorably, as the energy market shifts toward reliability, sustainability, and on-site generation independence.

The Utility Grid

For many potential customers, electricity purchased from the utility grid remains the default and, in some cases, the lower-cost option for power. Utilities may also impose interconnection fees that affect the economics of distributed generation. However, the competitive calculus is shifting. Grid constraints driven by surging electrification demand, AI data center load growth, utility infrastructure delays, and rising electricity prices are eroding the grid's traditional cost and

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convenience advantages in an increasing number of markets. Capstone's distributed generation platform becomes economically compelling, and in some cases the only viable solution, in the following scenarios:

Reciprocating Engines

Reciprocating engines, internal combustion engines similar in principle to those used in automotive applications, represent our most established competitive category. These technologies are widely deployed for both primary and backup power, benefit from decades of market development, and in many cases carry a lower upfront capital cost than microturbines. Key competitors in this category include Caterpillar Inc., Cummins Inc., and Innio Jenbacher and MTU amongst others.

Despite their market presence, reciprocating engines carry meaningful disadvantages relative to Capstone's technology: higher emissions of NOx, CO, and VOCs; greater noise and vibration; more frequent and complex maintenance requirements driven by their use of petroleum-based lubricants; and an architecture that lacks the built-in redundancy of Capstone's multi-module, active-redundancy design. For customers where total cost of ownership, emissions compliance, maintenance simplicity, and operational availability are the determining factors, rather than upfront capital cost alone, we believe Capstone offers a superior value proposition.

Renewable and Storage Technologies

Solar PV, wind, and battery energy storage systems represent a growing category of distributed generation competitors. These technologies produce no direct emissions and benefit from above-market pricing contracts supported by state renewable energy mandates and federal incentives. However, solar and wind remain inherently non-dispatchable, their output is dependent on weather conditions and cannot be reliably controlled to match load demand. Affordable, long-duration utility-scale storage solutions that could effectively address this intermittency challenge have yet to emerge at scale.

Capstone's inverter-based microturbine technology is uniquely positioned not as a competitor to these technologies, but as their essential complement, providing the continuous, dispatchable power generation backbone that makes renewable microgrids reliable and commercially viable. Our systems stabilize the dynamic and frequently changing output of solar, wind, and battery assets, enabling customers to pursue integrated sustainability strategies without sacrificing operational reliability.

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Fuel Cells and Linear Generators

A number of fuel cell and linear generator providers are active in markets that overlap with ours, including Bloom Energy and Mainspring Energy. These technologies can achieve slightly lower levels of certain criteria pollutants, NOx, CO, and VOCs, than microturbines in some configurations. However, fuel cells and linear generators generally carry higher capital costs, more complex fuel supply requirements, longer startup times, significant output and efficiency degradation curves (except Linear Generators) and more limited fuel flexibility than Capstone's platform. We believe that on an equivalent-incentive basis, microturbines provide superior economic value to end users across the majority of applications.

Other Microturbine Manufacturers

Capstone also competes with a limited number of other microturbine manufacturers, including Aurelia and Ansaldo Energia S.p.A. (manufacturer of the Turbec microturbine). (which manufactures the Turbec microturbine). We believe our nearly four decades of microturbine development, our installed base of over 10,800 units across 89 countries, our proprietary air bearing technology, and our global distribution and service infrastructure represent a durable competitive advantage that is difficult to replicate.

Competitive Strengths

Across all competitive categories, Capstone competes on the basis of our platform's ability to:

We believe the convergence of AI-driven power demand, grid constraints, decarbonization pressure, and the structural shift toward behind-the-meter generation is creating a competitive environment that increasingly favors Capstone's unique technology profile, and that the Company is better positioned today than at any point in its history to capture the expanding opportunity before it.

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Governmental and Regulatory Impact

Our markets can be positively or negatively impacted by the effects of governmental and regulatory matters. We have systems installed in approximately 89 countries around the world, each of which has its own policies and regulatory framework, which are subject to change. We are affected not only by energy policies, laws, regulations, tariffs and incentives of governments in the markets in which we sell, but also by rules, regulations and costs imposed by utilities. Utility companies or governmental entities may place barriers on the installation or interconnection of our products with the electric grid. Further, utility companies may charge additional fees to customers that install on-site power generation, thereby reducing the electricity they take from the utility, or for having the capacity to use power from the grid for back-up or standby purposes. These types of restrictions, fees or charges could hamper the ability to install or effectively use our products or increase the cost to our potential customers for using our systems. This could make our systems less economical for our customers, thereby adversely affecting our sales and ultimately our revenue and profitability. In addition, utility rate reductions can make our products less competitive, which would have a material adverse effect on our operations. These costs, incentives and rules are not always the same as those faced by technologies with which we compete. However, rules, regulations, laws and incentives could also provide an advantage to our distributed generation solutions as compared with competing technologies if we are able to achieve required compliance in a lower cost, more efficient manner. Additionally, reduced emissions and higher fuel efficiency could help our customers combat the effects of climate change and lower their energy costs. Accordingly, we may benefit from increased government regulations that impose tighter emission standards, particularly on burning coal and fuel oil and fuel efficiency, as long as gas combustion technology solutions are not excluded.

Government funding can impact the rate of development of new technologies or improvements to existing technologies. We continue to engage with federal and state policymakers to support government programs that promote the deployment of our low emission and energy efficient products. Competing new technologies have historically received larger incentives and development funding than microturbines. However, the U.S. Department of Energy continues to fund the development and testing of distributed power generation with low carbon fuels, like hydrogen. Flexible CHP could provide additional generating capacity when grid demand increases, or renewable resources are not available. As more intermittent renewable resources are added to the electric grid, grid operators need access to additional dispatchable generation capacity to ensure an adequate and stable power supply. Capstone’s system controllers could provide this automated response capability to allow for participation in grid services markets, where permitted.

Under the Inflation Reduction Act (“IRA”), the Investment Tax Credit (“ITC”) for energy property is transitioning from technology-specific rules (Section 48) to a technology-neutral, emissions-based regime (Section 48E) for projects that begin construction after December 31, 2024.

CHP, CCHP and microturbine projects that begin construction before that date may still qualify for the legacy ITC, including systems powered by natural gas or biogas, subject to IRA continuity requirements. However, under the new technology-neutral framework, eligibility is limited to projects that meet strict greenhouse gas emissions thresholds, which will likely exclude most conventional natural gas CHP systems and potentially limit eligibility for biogas systems depending on lifecycle emissions. Separately, bonus depreciation continues to phase down, with 40% available for property placed in service in 2025 and 20% in 2026.

In global markets, demand has not yet returned to the levels prior to the Russian invasion of Ukraine. Gas power declined for the fifth year in a row in the EU with continued volatility in gas pricing. This has negatively impacted industrial production, a key market for CHP solutions. Gas is still essential for energy security and, with Russian gas exports to Europe via Ukraine stopped at the start of 2025, LNG imports are still expected to support demand. Sales of our products to Europe are likely to remain dampened until greater certainty around gas pricing and supply. In the oil and gas market, production activities have grown as Europe seeks to fill the gap left by the loss of the Nord Stream pipeline, and many producers have committed to reduce methane emissions from their operations. Our systems’ low maintenance costs, reliability, and ability to run on a range of fuels could fit such producers’ needs and result in a positive impact on our sales. Our 12 Table of Contentssystems’ low maintenance costs, reliability, and ability to run on a range of fuels could fit such producers’ needs and result in a positive impact on our sales.

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Sourcing and Manufacturing

We are focused on improving our supply chain effectiveness, strengthening our manufacturing processes, and increasing operational efficiencies within our organization. Our manufacturing designs include the use of conventional technology, which has been proven in high-volume automotive and turbocharger production for many years. Some components used in the manufacture of our products are readily fabricated from commonly available raw materials or off-the-shelf items available from multiple supply sources; however, many items are custom made to meet our specifications that require longer lead time. We believe that in most cases, adequate capacity exists at our suppliers. We have several single source suppliers with long lead times which may be more challenging to transition to another supplier. We have an ongoing program to develop alternative suppliers for sole source parts wherever possible. We regularly reassess the adequacy and abilities of our suppliers to meet our future needs. We continue to evaluate and implement new systems designed to provide improved quality, reliability, service, greater efficiency, and lower supply chain costs.

During Fiscal 2026, we remained focused on mitigating supply chain issues, such as the costs of materials and delayed lead times.During Fiscal 2025, we remained focused on mitigating supply chain issues, such as the costs of materials and delayed lead times, related to macroeconomic conditions. Localization of our immediate supply chain within the Southwest U.S., located in close proximity to our manufacturing facility in Van Nuys, California, can mitigate some of complexity associated with a geographically dispersed supply chain, as many of our suppliers shared similar experiences following the pandemic resulting in slightly higher prices. As the global markets stabilize, we will look to low-cost countries for cost-saving opportunities while global freight delays, tariffs and costs remain a concern from a supply perspective. As the global markets stabilize, we will look to low-cost countries for cost-saving opportunities. For a discussion of the risks relating to the impact of changes to the tariff regime by the current U.S. presidential administration, refer to “Risk Factors – Risks Related to Our Business Operations and Financial Results.” To ensure component availability, we are right sizing our inventory to account for shipping times and variations in our customers’ ordering patterns. We are continuing to maintain proactive measures in the form of safety stocks and investigating dual sourcing potential partners to minimize interruptions to our supply chain.

We have substantially increased our focus on process controls and validations, supplier controls, and providing our operations teams with the training and tools necessary to drive continuous improvement in product quality. In addition, we remain focused on examining our operations and general business activities to identify cost improvement opportunities through operational effectiveness and the use of lean manufacturing processes. Our ability to leverage these capabilities may be affected by the current variability in our volumes. Our ability to leverage these capabilities may be affected by the current variability in our demand volumes and forecasting. Our volumes could continue to be negatively impacted by the volatility of the global oil and gas markets, a strong U.S. dollar (making our products more expensive overseas), tariffs and/or import taxes, and ongoing global geopolitical tensions.

Capstone's principal corporate offices and primary operations facility is located at 16640 Stagg Street, Van Nuys, California. This approximately 79,000 square foot facility houses our corporate headquarters, administrative functions, sales and marketing operations, research and development activities, and our manufacturing, assembly, and test operations. The Van Nuys facility serves as the operational hub of the Company, capable of producing more than 1GW of power annually on three shifts.

Research and Development (“R&D”)

In Fiscal 2026, we continued supporting business operational goals and enhancing our existing suite of products, focusing on alternative fuels and technologies, modernizing our key components, and continuing to secure certifications in the global evolution of grid interconnection requirements. We focused our engineering efforts on coordinating our product design and manufacturing processes to bring our products to market in a cost-effective, reliable and timely manner. For Fiscal 2026 and 2025, R&D expenses were $3.6 million and $2.7 million, representing approximately 3% of total revenue, respectively, for these fiscal years. We have targeted higher output microturbines which can improve power density for our customers as well as an 800 Volt DC solution for the Data Center space as discussed above.

We continue to leverage our patented, multiple-fuel capable, pre-mixed, low emission injector for high flame speed fuel combustion. 13 Table of ContentsWe continue to leverage our patented, multiple-fuel capable, pre-mixed, low emission injector for high flame speed fuel combustion. During Fiscal 2025, work progressed with our partners at Argonne National Laboratory and the University of California, Irvine (“UCI”) on the development of hydrogen-based technologies to support the growing decarbonization of energy production. We continued making advancements in hydrogen combustion through the cooperative research and development agreement with Argonne National Laboratory to perform design and

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manufacturability optimization of our fuel flexible microturbine system ranging from 70% natural gas/30% hydrogen blends to 100% hydrogen fuel operation using computational fluid dynamics, high performance AI computing and machine learning. The primary objective of this partnership is to optimize our engine design for minimizing NOx emissions while also maintaining high reliability when operating on hydrogen. We continue support of UCI through its Advanced Power and Energy Program, which works to evaluate microturbine operation using hydrogen and other fuel blends.

As noted previously in our Products discussion above, we continue to comply with the most stringent grid interconnection standards throughout the world, completing multiple certifications during Fiscal 2025 (see Products for additional details). For Fiscal 2026, we will be dedicating resources to complete other global grid certifications, especially in markets such as Australia and Italy, as well as developing new controls for our C65 to achieve UL1741 SB certification and complement the C1000 family. We are currently in the process of completing UL 1741 SB certification for the C65 and expect to achieve certification in the near term, and believe these certifications will enable customers to produce clean, reliable power while supporting the energy grid with high-speed, power-quality-enhanced functionality.

During Fiscal 2025 and 2026, a significant allocation of Engineering resources were strategically directed toward critical Cost Out and Design for Manufacturing and Assembly (“DFMA”) initiatives.During Fiscal 2025, a significant allocation of Engineering resources was strategically directed towards critical Cost Out and Design for Manufacturing and Assembly initiatives. These focused efforts yielded appreciable direct material cost improvements, achieved through innovative design modifications that carefully considered material selection, component integration and standardized parts. These cost reductions were realized without compromising the established high standards of product quality and performance. Capstone analyzed existing designs and minimized unnecessary part count. Simultaneously, we forged stronger partnerships with our key suppliers to collaboratively streamline fabrication processes and deploy lean manufacturing principles across the supply chain.

Protecting our Intellectual Property Rights and Patents

We rely on a combination of patent, trade secret, copyright, “know how”, trademark laws and contracts to protect our intellectual property rights. With a renewed focus on developing new microturbine system technologies that will provide us with a long-term competitive advantage, we actively evaluate our intellectual property portfolio, and we pursue and enhance patent and trade secret protections, as appropriate.

Human Capital

In accordance with its charter, our Compensation and Human Capital Committee is responsible for 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, ensuring a respectful workplace free of discrimination and harassment.

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Diversity

We are committed to maintaining, and continuing to foster, our diverse and inclusive work environment. We recruit the best people for the job regardless of gender, ethnicity or other protected traits and it is our policy to promote inclusive, nondiscriminatory hiring and employment practices and fully comply with all laws applicable to discrimination in the workplace. Our DEI stands for Dedication, Excellence and Intelligence.

Workforce Statistics

As of March 31, 2026, we had 115 full-time employees. As of March 31, 2025, we had 100 full-time employees and one part-time employee. No employees are covered by collective bargaining arrangements. We consider relations with our employees to be in good standing.

The Company’s workforce reflects a diverse range of experience and tenure, including both long-tenured employees and newer hires. This balance supports the retention of institutional knowledge while fostering new skills and perspectives. The Company continues to focus on succession planning, knowledge transfer and talent development.

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Corporate Information

Capstone Energy+, Inc. (formerly Capstone Green Energy Holdings, Inc.) is the publicly traded successor to a business originally organized in 1988 as NoMac Energy Systems in the State of California. The business was reincorporated in the State of Delaware on June 22, 2000, as Capstone Turbine Corporation, and on April 22, 2021, changed its name to Capstone Green Energy Corporation ("Legacy Capstone"). Effective April 30, 2026, the Company changed its legal name from Capstone Green Energy Holdings, Inc. to Capstone Energy+, Inc., reflecting the Company's broader strategic identity encompassing clean power generation, thermal energy recovery, circular economy applications, and flexible Energy-as-a-Service offerings. The Company's common stock trades under the symbol "CGEH" on the OTCQX Best Market.

As previously reported, on September 28, 2023, Legacy Capstone and certain of its subsidiaries filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. The Company emerged from Chapter 11 on December 7, 2023 (the "Effective Date") pursuant to a confirmed Plan of Reorganization, and on June 13, 2025, the Bankruptcy Court issued its Final Decree closing the Chapter 11 cases.

In connection with the Plan of Reorganization, Capstone Turbine International, Inc., a former wholly owned subsidiary of Legacy Capstone, became the publicly traded successor entity and was subsequently renamed Capstone Green Energy Holdings, Inc., a former wholly owned subsidiary of Capstone Green Energy Corporation, became a public company and was renamed Capstone Green Energy Holdings, Inc. , and then Capstone Energy+, Inc. Legacy Capstone became a private company (the "Reorganized PrivateCo"), retaining certain trademark assets, distributor support assets, and income tax attributes. On March 31, 2026, the assets and liabilities of Reorganized PrivateCo were acquired by the Company pursuant to the Reorganized PrivateCo Services Agreement. See Note 12 – Commitments and Contingencies to the Consolidated Financial Statements. A new operating entity, Capstone Green Energy LLC (the "Operating Subsidiary"), was formed to hold the operating assets of the business, which were transferred from Legacy Capstone and its subsidiaries. The Company holds a majority ownership interest in the Operating Subsidiary, with the remaining interest held by a third party.

For a complete description of the corporate reorganization and related transactions, refer to the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2024.

Available Information

This Form 10-K, as well as our quarterly reports on Form 10-Q, current reports on Form 8-K and exhibits and amendments to those reports filed or furnished pursuant to section 13(a) or 15(d) of the Exchange Act are made available free of charge on our Internet website (http://www. capstoneenergyplus.com) as soon as reasonably practicable after such materials are electronically filed with or furnished to the SEC. These filings are also available on the SEC’s website at www.sec.gov.

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Item 1A. Risk Factors

The following are risk factors that could affect our business, financial condition, results of operations, and cash flows. These risk factors should be considered in connection with evaluating the forward-looking statements contained in this Form 10-K because these factors could cause actual results, performance, and achievements to differ materially from those projected in forward-looking statements. Before you invest in our publicly traded securities, you should know that making such an investment involves some risks, including the risks described below. Additional risks of which we may not be aware or that we currently believe are immaterial may also impair our business operations or our stock price. If any of the risks occur, our business, financial condition, results of operations or cash flow could be negatively affected. In that case, the trading price of our common stock could decline, and you may lose all or part of your investment. In assessing these risks, investors should also refer to the other information contained in this Form 10-K, our quarterly reports on Form 10-Q and other documents filed by us from time to time.

Summary of Risk Factors

The following is a summary of the principal risks that could adversely affect our business, operations, and financial results.

For a more complete discussion of the material risks facing our business, please see below.

Risks Related to Substantial Indebtedness and Long-Term Liquidity

There are significant risks related to our substantial indebtedness and our long-term liquidity.

Following our emergence from Chapter 11 and reorganization, we are party to an Exit Note Purchase Agreement (the “Exit Note Purchase Agreement”), for an aggregated principal amount of $21.1 million, including accrued and unpaid interest, commitment fees (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 Guarantors, Purchaser and the Collateral Agent.Following our emergence from Chapter 11 and reorganization, we are party to an Exit Note Purchase Agreement (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 “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 Guarantors, Purchaser and the Collateral Agent.

The Exit Note Purchase Agreement also provides for a $10.0 million uncommitted incremental facility. As of March 31, 2026, we had $25.3 million in borrowings outstanding under the Exit Notes, including accrued and unpaid interest, net of debt issuance costs. As of March 31, 2025, we had $32.2 million in borrowings outstanding under the Notes, including accrued and unpaid interest, net of debt issuance costs. The Exit Notes mature on December 7, 2026.

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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. See Note 11 - Debt in the Notes to Consolidated Financial Statements. See Note 12 Debt in the Notes to Consolidated Financial Statements.

We believe there is a degree of risk that the consolidated liquidity and consolidated adjusted EBITDA financial covenants discussed below will not be satisfied as forecasted. We have in the past secured and may need to secure additional waivers of the covenants or an amendment to the Exit Note Purchase Agreement with the senior lender, but no assurance can be given that additional waivers or an amendment will be obtained. We have secured, and may need to secure additional waivers of the covenants or an amendment to the Exit Note Purchase Agreement with the senior lender, but no assurance can be given that additional waivers or an amendment will be obtained. We have 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. 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. As of the date of this Annual Report on Form 10-K, the Exit Notes, net of discount is classified as current liabilities on the Company’s Consolidated Balance Sheet as of March 31, 2026.

Our obligations under the Exit Note Purchase Agreement have important consequences, including the following:

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If we are unable to raise additional capital when required on acceptable terms, we may be required to file for bankruptcy protection again, go out of business, or suffer disruptions in our business.

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Risks Related to Our Business Operations and Financial Results

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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.

Our products represent an alternative technology, and we do not know whether our targeted customers will accept our technology or will purchase our products in sufficient quantities or that our addressable market will grow sufficiently to allow our business to grow. To succeed, demand for our products must increase significantly in existing markets, and there must be strong demand for products that we introduce in the future. In addition, as part of our business strategy, we are focusing our marketing efforts on the data center, energy efficiency, renewable energy and natural resources markets, and expanding our EaaS business. In addition, as part of our business strategy, we are focusing our marketing efforts on expanding our EaaS business and on the energy efficiency, renewable energy and natural resources markets. If a sustainable market fails to develop or develops more slowly than we anticipate, we may be unable to recover the losses we have incurred to develop our products, we may have further impairment of assets,

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and we may be unable to meet our operational expenses. The development of a sustainable market for our systems may be hindered by many factors, including some that are out of our control. The 21 Table of Contentsdevelopment of a sustainable market for our systems may be hindered by many factors, including some that are out of our control. Examples include:

There are uncertainties and risks related to the profitability, safety and regulatory environment of AI that could adversely affect our business and operations.

In order to position ourselves to take advantage of growth opportunities, we have made, and may continue to make, investments, strategic acquisitions, mergers, partnerships, joint ventures and alliances related to AI-infrastructure and data centers that involve significant risks and uncertainties. We only recently began to pursue initiatives in AI related technologies and have not made any sales to AI infrastructure clients. Some of our competitors, including competitors that have significantly greater resources, have already successfully generated revenues from AI business lines. AI technologies and their uses are currently evolving rapidly. If we fail to successfully integrate our products in AI infrastructure or develop new products in response to changes in technology or industry standards or fail to bring product enhancements or new product developments to market quickly enough, our products could rapidly become less competitive or obsolete for use in the development of AI infrastructure. There can be no assurance that we will successfully identify new product opportunities, develop and bring new or enhanced products to market in a timely manner, successfully lower costs and achieve market acceptance of our products, or that products and technologies developed by others will not render our products or technologies obsolete or uncompetitive. Thus, the future profitability of any AI-related investments is highly uncertain and such investments may adversely affect our business and operations.

The regulatory landscape surrounding AI is also evolving rapidly, and we anticipate increased scrutiny and potential regulation in the near and long term. If we continue to invest in utilizing our products for the development of AI data centers and other AI infrastructure, then any such developments may significantly impact our business and operations in ways that are difficult to predict. Governments and regulatory bodies are considering measures to ensure the responsible development and deployment of AI systems, including transparency, accountability, and fairness guidelines. The amount of energy used for AI has also received significant attention, and it is expected that energy efficiency and sustainability will be critical factors regulating AI data centers. Any future regulation of AI systems and related activities, including energy efficiency, could adversely affect our business and operations.

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.

While we sell our solutions to customers in a variety of industries and for a variety of applications, we may see a significant increase in demand for our products to meet the power needs of AI data centers, which are experiencing increased demand for reliable, on-site power. These AI data centers are experiencing this increased demand largely as a result of the large power consumption requirements of AI computing and the lack of available generation, transmission and interconnection from the utility grid. A deceleration in AI adoption, changes in customer capital expenditure priorities, financing constraints (including reduced availability of project finance or tax equity), longer permitting or construction lead times, local moratoria, protests or siting restrictions on data centers or distributed generation, or improved grid interconnection timelines could adversely affect AI data centers’ demand for our solutions. The rate at which AI will continue to be adopted, and the resulting increase in power needs by AI data centers and the development of new AI data centers, is inherently difficult to predict and beyond our control. However, if AI adoption does not continue at the pace that we expect, or at all, our business, financial condition and results of operations could be adversely affected.

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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.

To remain current in an energy industry that is rapidly evolving, we expect the services and products associated with such activities to continue to evolve and accordingly, our business model may also need to evolve. Our growth strategy includes exploring expansion and diversification of our revenue sources into new markets. For example, we are increasing our focus on the data center market. We cannot offer any assurance that these or any other modifications will be successful or will not result in harm to the business, damage our reputation or limit our growth. Such modifications may increase the complexity of our business and place significant strain on our management, personnel, operations, systems, technical performance, financial resources and internal financial control and reporting functions. Moreover, we may not be able to manage growth effectively, which could damage our reputation, limit our growth and adversely affect our operating results. Further, we cannot provide any assurance that we will successfully identify all emerging trends and growth opportunities within the data center market or other markets. Additionally, any such changes to our business model or strategy could subject us to additional regulatory scrutiny and requirements, including licensing and permitting requirements. Any of the foregoing could have a material adverse effect on our business, prospects, financial condition and operating results.

Product quality expectations may not be met, causing slower market acceptance or warranty cost exposure.

Our goal of improving the quality and lowering the total costs of ownership of our products may require engineering changes.In order to achieve our goal of improving the quality and lowering the total costs of ownership of our products, we may require engineering changes. Such improvement initiatives may render existing inventories obsolete. Despite our continuous quality improvement initiatives, we may not meet customer expectations. Any significant quality issues with our products could have a material adverse effect on our rate of product adoption, results of operations, financial condition, and cash flow. Moreover, as we develop new configurations for our microturbines and as our customers place existing configurations in commercial use, our products may perform below expectations. Any significant performance below expectations could adversely affect our operating results, financial condition and cash flow and affect the marketability of our products.

We sell our products with warranties. Any significant incurrence of warranty expense in excess of estimates could have a material adverse effect on our operating results, financial condition and cash flow. Further, we have at times undertaken programs to enhance the performance of units previously sold. As of March 31, 2026, the balance for the warranty reserve was $1.0 million. Any future product quality issues with our parts suppliers could lead to lengthy and costly litigation, even if the outcome is ultimately in our favor. In addition, such quality issues with any of our parts could lead us to fail to meet the product quality expectations of our own customers, which could adversely affect our operating results, financial condition and cash flow and affect the marketability of our products.

Our products involve a lengthy sales cycle, and we may not anticipate sales levels appropriately, which could impair our results of operations.

The sale of our products typically involves a significant commitment of capital by customers, which can result in the typical delays associated with large capital expenditures. For these and other reasons, the sales cycle associated with our products is typically lengthy and subject to several significant risks over which we have little or no control. AI and data center customers and other large loads also tend to have longer sales cycles. Prospective customers often undertake a significant evaluation process that may further extend the sales cycle, and which evaluation may be negatively impacted by general market and economic conditions such as inflation, rising interest rates, availability of capital, a recessionary environment, geopolitical instability, energy availability and costs, and the availability and effects of government initiatives.

We plan our production and inventory levels based on internal forecasts of customer demand, which is highly unpredictable and can fluctuate substantially. We plan our production and inventory levels based on internal forecasts of customer demand, which is highly unpredictable and can fluctuate substantially. If sales in any period fall significantly below anticipated levels, our financial condition, results of operations, and cash flow would suffer. If demand in any period increases well above anticipated levels, we may have difficulties in responding, incur greater costs to respond, or be unable to fulfill the demand in sufficient time to retain the order, which would negatively impact our operations. In addition, our operating expenses are based on anticipated sales levels, and a high percentage of our expenses are generally fixed in the short term. As a result of these factors, a small fluctuation in timing of sales can cause operating results to vary materially from period to period.

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The timing of the backlog is based on the requirement date indicated by our customers. Based on historical experience, management expects that a significant portion of our backlog may not be shipped within the next 12 months. The timing of shipments is subject to change based on several variables (including customer deposits, payments, availability of credit and customer delivery schedule changes), most of which are not in our control and can affect the timing of our revenue.

If we do not effectively implement our sales, marketing, and service plans, our sales will not grow and our results of operations will suffer.

Our sales and marketing efforts may not achieve intended results and, therefore, may not generate the revenue we anticipate. As a result of our corporate strategies, we have decided to focus our resources on expanding our EaaS business and further developing selected vertical markets. We may change our focus to other markets or applications in the future. There can be no assurance that our focus or our near-term plans will be successful. If we are not able to address markets for our products successfully, we may not be able to grow our business, compete effectively or achieve profitability.

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.

While our production is located in the United States, a majority of the total items on our bill of materials are sourced domestically; however, certain critical or limited-source components and raw materials used in our products are sourced internationally, including from China, Mexico, Canada, and other jurisdictions. Further, our products contain a number of commodity materials, including steel, special high-temperature alloys, copper, nickel, and molybdenum, as well as computer components. Further, our products contain a number of commodity materials from metals, which include steel, special high temperature alloys, copper, nickel, and molybdenum, to computer components. We import certain critical and limited-source parts and raw materials, which are subject to increasing tariffs. We import a significant volume of critical and limited source parts and raw materials which are subject to increasing tariffs. As a result, we remain subject to risks associated with international trade conflicts, tariffs, export and import controls, sanctions, supply chain constraints, transportation costs, and geopolitical conditions. For example, during recent periods, we have experienced significant price increases in the cost of certain commodity materials and components, and we may continue to see price increases due to tariffs, supply chain constraints, or other market factors. Subsequent modifications and delays to, or invalidation of, various tariffs and associated refund procedures, litigation, and developments, including impacts from the U.S. Supreme Court decision invalidating the use of the International Emergency Economic Powers Act to authorize certain tariffs, have produced heightened uncertainty with respect to trade and tariff policies, which could continue to impact the global trade environment and tariff rates applicable to goods we or our suppliers import and export.

The timeline, structure, and scope of any potential regulatory policies are uncertain, making it difficult for us to plan for or mitigate these risks effectively. In addition, we cannot predict what further action may be taken with respect to tariffs or trade relations between the U.S. and other governments. Any such changes could fundamentally alter the competitive and regulatory landscape in which we operate, and political tensions as a result of trade policies could reduce trade volume, investment, technological exchange, and other economic activities between major international economies, resulting in a material adverse effect on global economic conditions and the stability of global financial markets. There is a great deal of uncertainty as to how long these tariffs may be in place and regarding any further changes in tariff rates. We may not be able to have alternative sources for these materials, or the ability to pass these costs onto our customers, and our operating results may be negatively impacted.

Moreover, any new tariffs, or other changes in U.S. trade policy, could trigger retaliatory actions by affected countries. Certain foreign governments have instituted or are considering imposing trade sanctions on certain U.S. goods. Others are considering the imposition of sanctions that will deny U.S. companies access to critical raw materials. A “trade war” of this nature or other governmental action related to tariffs or international trade agreements or policies has the potential to adversely impact demand for our products, our costs, customers, suppliers and/or the U.S. economy or certain sectors thereof and, thus, to adversely impact our business.

The U.S. government imposes sanctions through executive orders restricting U.S. companies from conducting business activities with specified individuals and companies and requires export licenses for certain of such activities. Following Russia’s military invasion of Ukraine in March 2022, we re-evaluated our efforts in the Russian and the

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surrounding CIS markets and have ceased exploring growth opportunities in such markets. We do, however, continue to evaluate customer orders and ensure that we are in compliance with all laws and regulations upon acceptance and before shipment. If we are unable to conduct business with new or existing customers or pursue opportunities with sanctioned countries, including Russia, our business, including our revenue, profitability, and cash flows, could be materially adversely affected. If we are unable to conduct business with new or existing customers or pursue opportunities with sanctioned 23 Table of Contentscountries, including Russia, our business, including our revenue, profitability, and cash flows, could be materially adversely affected.

We 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.

In order to serve certain of our targeted markets, we believe that we must ally ourselves with companies that have particular expertise or better access to those markets. We believe that retaining or developing relationships with strong OEMs (which to date have typically resold our products under their own brands or packaged our products with other products as part of an integrated unit) or distributors in these targeted markets can improve the rate of adoption as well as reduce the direct financial burden of introducing a new technology and creating a new market. We offer our OEMs and distributors stated discounts from the list price of the products they purchase. In the future, to attract and retain OEMs and distributors we may provide volume price discounts or otherwise incur significant costs that may reduce the potential revenue from these relationships. We may not be able to retain or develop appropriate OEMs and distributors on a timely basis, and we cannot provide assurance that the OEMs and distributors will focus adequate resources on selling our products or will be successful in selling them. In addition, some of the relationships may require that we grant exclusive distribution rights in defined territories. These exclusive distribution arrangements could result in our being unable to enter into other arrangements at a time when the OEM or distributor with whom we form a relationship is not successful in selling our products or has reduced its commitment to market our products. We cannot provide assurance that we will be able to negotiate collaborative relationships on favorable terms or at all. Our inability to have appropriate distribution in our target markets may adversely affect our financial condition, results of operations and cash flow.

If any of our distributor relationships are not successful, we may terminate or choose not to renew the related distributor agreement, which may result in interference with the wind down of the relationship or the transition of end user service agreements and could potentially negatively impact our distribution channels or result in litigation costs or other expenses.

Successfully managing our distribution channels in an effort to reach various potential customer segments for our products and services is a complex process. Each of our distributors is a strategically placed independent partner that provides for the marketing and selling of our products and services on our behalf. If our distribution relationships are not successful, we may lose sales opportunities, customers, and revenues. Our agreements with our distribution partners require them to comply with performance conditions that are subject to interpretation, which could result in disagreements. At any given time, we may be in disputes with one or more distribution partners. Any such dispute could result in lengthy and costly litigation, even if the outcome is ultimately in our favor. We cannot predict the outcome of any arbitration or litigation, the effect of any negative judgment against us or the amount of any settlement that we may enter into with such distribution partners. A contractual dispute with a distribution partner may result in our or our distribution partner seeking to terminate the related distribution agreement, even if such termination would be wrongful, which could harm our business or interfere with a previously agreed wind down of the relationship or transition of end user service agreements. Any prolonged disruptions of our distribution channels that results from the termination of one or more of our distributions or our failure to renew our distribution agreements with our desired distributors, could negatively affect our ability to effectively sell our products.

Increased credit loss expense or delays in collecting accounts receivable could have a material adverse effect on our cash flows and results of operations.

Our accounts receivable balance, net of allowances, was $12.9 million and $7 million as of March 31, 2026 and 2025, respectively. Our days sales outstanding (“DSO”) in accounts receivable at the end of Fiscal 2026 was 34 days, compared with 30 days at the end of Fiscal 2025. We recorded net credit loss expense of approximately $0.5 million and $0.8 million during Fiscal 2026 and 2025, respectively. Our days sales outstanding (“DSO”) in accounts receivable at the end of Fiscal 2025 was 30 days, compared with 27 days at the end of Fiscal 2024. We recorded net credit loss expense of approximately $0.8 million and $0.4 million during Fiscal 2025 and 2024, respectively. No assurances can be given that future days sales outstanding will not increase and credit loss expense will not increase above current operating levels. Increased credit loss expense or delays in collecting accounts receivable could have a material adverse effect on results of operations and cash flows.

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Loss of a significant customer could have a material adverse effect on our results of operations.

E-Finity Distributed Generation (“E-Finity”), Cal Microturbine, DTC Soluciones SA de CV (“DTC”), and Lone Star Power Solutions (“Lone Star”), accounted for approximately 17%, 16%, 13% and 10%, respectively, of our revenue for Fiscal 2026. Additionally, E-Finity, Lone Star and RSP Systems accounted for approximately 14%, 14% and 10%, respectively, of total accounts receivable as of March 31, 2026. The loss of any significant customer could have a material adverse effect on our results of operations and financial condition.

We may not achieve production cost reductions necessary to competitively price our products, which would adversely affect our sales.

We believe that we will need to reduce the unit production cost of our products over time to maintain our ability to offer competitively priced products. Our ability to achieve cost reductions will depend on our ability to develop low-cost design enhancements, to obtain necessary tooling and favorable supplier contracts and to increase sales volumes so we can achieve economies of scale. We cannot provide assurance that we will be able to achieve any such production cost reductions. In fact, we have implemented two price increases in the past twenty months in reaction to increased costs. Our failure to achieve sufficient cost reductions could have a material adverse effect on our business and results of operations.

We may incur costs and liabilities as a result of product liability claims.

We face a risk of exposure to product liability claims in the event that the use of our products is alleged to have resulted in injury or other damage. Although we currently maintain product liability insurance coverage, we may not be able to obtain such insurance on acceptable terms in the future, if at all, or obtain insurance that will provide adequate coverage against potential claims. Product liability claims can be expensive to defend and can divert the attention of management and other personnel for long periods of time, regardless of the ultimate outcome. A significant unsuccessful product liability defense could have a material adverse effect on our financial condition and results of operations. In addition, we believe our business depends on the strong brand reputation we have developed. If our reputation is damaged, we may face difficulty in maintaining our market share and pricing with respect to some of our products, which could reduce our sales and profitability.

Operational restructuring may result in asset impairment or other unanticipated charges.

As a result of our corporate strategy, we have identified opportunities to outsource to third-party suppliers certain functions which we currently perform. We believe outsourcing can reduce product costs, improve product quality, and increase operating efficiency. These actions may not yield the expected results, and outsourcing may result in production delays or lower-quality products. Transitioning to outsourcing may cause certain of our affected employees to leave before the outsourcing is complete. This could result in a lack of the experienced in-house talent necessary to successfully implement the outsourcing effort. Further, depending on the nature of operations outsourced and the structure of agreements we reach with suppliers to perform these functions, and to the extent restructuring activities affect the use or expected cash flows of other long-lived assets, additional impairment charges may result, or other unanticipated charges, which could have a material adverse effect on our operating results. Further, depending on the nature of operations outsourced and the structure of agreements we reach with suppliers to perform these functions, we may experience impairment in the value of manufacturing assets related to the outsourced functions or other unanticipated charges, which could have a material adverse effect on our operating 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.

Our success depends in significant part upon the continuing service of our executive officers, senior management, and sales and technical personnel. The failure of our personnel to execute our strategy or our failure to retain management and personnel could have a material adverse effect on our business. We have suffered departures of directors, officers and other key personnel, including those in accounting/finance and information technology. These departures have placed additional strain on our remaining personnel, and we do not expect to replace all of the departed employees, so the increased burdens on the remaining personnel are expected to continue for the foreseeable future.

Our success, growth prospects, and ability to capitalize on market opportunities also depend to a significant extent on our ability to identify, hire, motivate, and retain qualified managerial personnel, including senior members of management. There can be no assurances that we can do so. Our growth may be constrained by resource limitations as competitors and customers compete for human capital resources. Our growth may be constrained by resource limitations as competitors and customers compete for increasingly scarce human capital resources. If we are unable to attract and retain a sufficient number

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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.

In addition, our internal control systems rely on employees trained in the execution of the controls, particularly within our financial and accounting functions. Loss of these employees or our inability to replace them with similarly skilled and trained individuals or new processes in a timely manner could adversely impact our internal control mechanisms further.

Activities necessary to integrate any future acquisitions may result in costs in excess of current expectations or be less successful than anticipated.

Future acquisitions, including our acquisition of Cal Microturbine, LLC on August 13, 2025, involve integration, financing, diligence, customer-retention, cybersecurity, litigation, accounting and other risks. If we are unable to integrate acquired businesses, retain customers or personnel, realize expected synergies or avoid unanticipated liabilities, costs, impairments or other charges, our business, financial condition, results of operations and cash flows could be materially adversely affected.

Our acquisition of Cal Microturbine, LLC on August 13, 2025 may fail to generate a financial return or realize anticipated synergies sufficient to offset acquisition costs. This transaction involves significant challenges and risks including that the transaction does not advance our business strategy or strategic goals, that we do not realize a satisfactory return on our investment, that we cannot realize anticipated tax benefits or incur tax costs, that we acquire liabilities and/or litigation, that our due diligence process did not identify significant issues or liabilities, diversion of management’s attention from our other businesses, unknown or unanticipated cybersecurity issues, as well as heightened vulnerabilities during integration, that we face challenges retaining customers of the acquired business, and the incurrence of debt, contingent liabilities or amortization expenses, write-offs of goodwill, intangibles, or acquired in-process technology, or other increased cash and non-cash expenses.

Risks Related to Our Product Offerings

We depend upon the development of new products and enhancements of existing products.

Our operating results depend on our ability to develop and introduce new products, enhance existing products, and reduce the costs to produce our products. The success of our products is dependent on several factors, including proper product definition, product cost, timely completion and introduction of products, differentiation of products from those of our competitors, meeting changing customer requirements, emerging industry standards, and market acceptance of our products. The development of new, technologically advanced products and enhancements is a complex and uncertain process requiring high levels of innovation, as well as the accurate anticipation of technological and market trends. There can be no assurance that we will successfully identify new product opportunities, develop and bring new or enhanced products to market in a timely manner, successfully lower costs and achieve market acceptance of our products, or that products and technologies developed by others will not render our products or technologies obsolete or uncompetitive. We continued to expand and develop our new hydrogen products, which are commercially available running on a 30% hydrogen / 70% natural gas mix. Continued development towards a 100% hydrogen product will require a long-time horizon and a significant amount of financial resources. We do not currently have and there can be no assurance that we will develop the resources or financial ability to develop a 100% hydrogen product.

Development of higher output microturbines and the refinement and commercialization of our 800 VDC, AI data center and related power solutions may require additional engineering, certification, customer validation, supplier support and capital investment, and may not be completed on schedule, within budget or accepted by customers.

Our 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.

We cannot be certain that we will deliver products ordered in a timely manner. We have limited production slots for our products. Any delays in production will increase our costs, reduce future production slots, and could significantly impact our business, financial condition, and operating results.

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We may not be able to produce our products on a timely basis if we fail to correctly anticipate product supply requirements or if we suffer delays in production resulting from issues with our suppliers. Our suppliers may not supply us with a sufficient amount of components or components of adequate quality, or they may provide components at significantly increased prices.

Some of our components are currently available only from a single source or limited sources. We may experience delays in production if we fail to identify alternative suppliers or if any parts supply is interrupted, each of which could materially adversely affect our business and operations. In order to reduce manufacturing lead times and ensure adequate component supply, we enter into agreements with certain suppliers that allow them to procure inventories based upon criteria defined by us. If we fail to anticipate customer demand properly, an oversupply of parts could result in excess or obsolete inventories, which could adversely affect our business. Additionally, if we fail to correctly anticipate our internal supply requirements, an undersupply of parts could limit our production capacity. Our inability to meet volume commitments with suppliers could affect the availability or pricing of our parts and components. A reduction or interruption in supply, a significant increase in the price of one or more components, or a decrease in demand of our products could materially adversely affect our business and operations and could materially damage our customer relationships. Financial constraints of suppliers on whom we rely could limit our supply of components or increase our costs. Financial problems of suppliers on whom we rely could limit our supply of components or increase our costs. Also, we cannot guarantee that any of the parts or components that we purchase will be of adequate quality or that the prices we pay for the parts or components will not increase. Inadequate quality of products from suppliers could interrupt our ability to supply quality products to our customers in a timely manner. Additionally, defects in materials or products supplied by our suppliers that are not identified before our products are placed in service by our customers could result in higher warranty costs and damage to our reputation. We also outsource certain of our components internationally. As a result of outsourcing internationally, we may be subject to delays in delivery because of regulations associated with the import/export process, delays in transportation or regional instability.

Commodity market factors impact our costs and availability of materials.

Our products contain a number of commodity materials from metals, which include steel, special high temperature alloys, copper, nickel, and molybdenum, to computer components. The availability of these commodities could impact our ability to acquire the materials necessary to meet our production requirements. The cost of metals has historically fluctuated. The pricing could impact the costs to manufacture our products. During recent periods, we have experienced significant price increases in the cost of certain commodity materials and components, and we may continue to see price increases due to tariffs, supply chain constraints or other market factors. If we are not able to acquire commodity materials at prices and on terms satisfactory to us or at all, our operating results may be materially adversely affected.

We 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.

Overall, the market for our products is highly competitive. We compete with several technologies, including reciprocating engines, fuel cells, and solar power. Competing technologies may receive certain benefits, like governmental subsidies or promotion, or be able to offer consumer rebates or other incentives that we cannot receive or offer to the same extent. This could enhance our competitors’ abilities to fund research, penetrate markets, or increase sales. We also compete with other manufacturers of microturbines.

Our competitors include several well-known companies with histories of providing power solutions. They have substantially greater resources than we do and have established worldwide presence. Because of greater resources, some of our competitors may be able to adapt more quickly to new or emerging technologies, including artificial intelligence, and changes in customer requirements, to devote greater resources to the promotion and sale of their products than we can or lobby for governmental regulations and policies to create competitive advantages vis-à-vis our products. We believe that developing and maintaining a competitive advantage will require continued investment by us in product development and quality, as well as attention to product performance, our product prices, our conformance to industry standards, manufacturing capability, and sales and marketing. In addition, current and potential competitors have established or may in the future establish collaborative relationships among themselves or with third parties, including third parties with whom we have business relationships. Accordingly, new competitors or alliances may emerge and rapidly acquire significant market share.

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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.

Revenue in the oil and natural gas industry is affected by volatility in oil prices, as well as a movement towards clean energy and away from fossil fuels, which has impacted capital expenditures in the oil and natural gas industry.Revenue in the oil and natural gas industry has been in decline for several years from historical highs, due to volatility in oil prices, as well as a movement towards clean energy and away from fossil fuels, which has impacted capital expenditures in the oil and natural gas industry. We continue to be impacted by the volatility of the global oil and gas industry. If prices were to decline and remain low for a sustained period, we would expect to see additional declines in our customers’ spending, which would have an adverse effect on our revenue. In addition, a worsening of these conditions may have a material adverse impact on certain of our customers’ liquidity and financial positions, resulting in further spending reductions, delays in the collection of amounts owing to us, and other similar adverse effects. Despite a recent increase in oil prices, we have not yet seen a corresponding significant increase in sales activity, primarily due to customers in our natural resources market vertical moderating their spend on capital expenditures that would include our microturbine products. Despite a recent increase in oil prices, we have not yet seen a corresponding significant increase in sales activity, primarily due to the customers in our natural resources market vertical not yet increasing their spend on capital expenditures that would include our microturbine products.

Our sales and results of operations could be materially and adversely impacted by risks inherent in international markets.28 Table of ContentsOur sales and results of operations could be materially and adversely impacted by risks inherent in international markets.

As we expand in international markets, customers may have difficulty or be unable to integrate our products into their existing systems or may have difficulty complying with foreign regulatory and commercial requirements. As a result, our products may require redesign. Any redesign of our products may delay sales or cause quality issues. In addition, we may be subject to a variety of other risks associated with international business, including import/export restrictions, fluctuations in currency exchange rates and economic or political instability. In addition, doing business internationally subjects us to risks relating to political or social unrest, as well as corruption and government regulation, including laws such as the Foreign Corrupt Practices Act and the U.K. Bribery Act, that impose stringent requirements on how we conduct our foreign operations.

We may not be able to develop sufficiently trained applications engineering, installation, and service support resources to serve our targeted markets.

Our ability to identify and develop business relationships with companies that can provide quality, cost effective application engineering, installation, and service can significantly affect our success. The application engineering and proper installation of our microturbines, as well as proper maintenance and service, are critical to the performance of the units. Additionally, we need to reduce the total installed cost of our microturbines to enhance market opportunities. Our inability to improve the quality of applications, installation and service while reducing associated costs could affect the marketability of our products.

Changes in our product components may require us to replace parts held at distributors.

We have entered into agreements with some of our distributors requiring that if we render parts obsolete in inventories they own and hold in support of their obligations to serve fielded microturbines, we are required to replace the affected stock at no cost to the distributors. As a result, it is possible that future changes in our product technology could involve increased costs, that may have a material adverse effect on our results of operations, cash flow or financial position.

Utility companies or governmental entities could place barriers to our entry into the marketplace, and we may not be able to effectively sell our products.

Utility companies or governmental entities could place barriers on the installation of our products or the interconnection of our products with the electric grid. Further, they may charge additional fees to customers who install on-site generation or have the capacity to use power from the grid for back-up or standby purposes. These types of restrictions, fees or charges could hamper the ability to install or effectively use our products or increase the cost to our potential customers for using our systems. This could make our systems less desirable, thereby adversely affecting our revenue and other operating results. In addition, utility rate reductions can make our products less competitive, which would have a material adverse effect on our operations. The cost of electric power generation bears a close relationship to natural gas and other fuels. However, changes to electric utility tariffs often require lengthy regulatory approval and include

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a mix of fuel types as well as customer categories. Potential customers may perceive the resulting swings in natural gas and electric pricing as an increased risk of investing in on-site generation.

Risks 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.

Our products are subject to federal, state, local, and foreign laws and regulations, governing, among other things, emissions and occupational health and safety. Regulatory agencies may impose special requirements for the implementation and operation of our products or that may significantly affect or even eliminate some of our target markets. We may incur material costs or liabilities in complying with government regulations. In addition, potentially significant expenditures could be required in order to comply with evolving environmental and health and safety laws, regulations, requirements, and approvals that may be adopted or imposed in the future. We can provide no assurances that we will be able to obtain any such approvals in a timely manner, or at all. Non-compliance with applicable regulations could have a material adverse effect on our operating results. Furthermore, our potential utility customers must comply with numerous laws and regulations. Furthermore, our potential utility customers must comply with numerous 29 Table of Contentslaws and regulations. The deregulation of the utility industry may also create challenges for our marketing efforts. For example, as part of electric utility deregulation, federal, state, and local governmental authorities may impose transitional charges or exit fees, which would make it less economical for some potential customers to switch to our products.

Concerns regarding climate change may lead to additional international, national, regional and local legislative and regulatory responses. Various stakeholders, including legislators and regulators, shareholders, and non-governmental organizations, are continuing to look for ways to reduce GHG emissions. Increased input costs, such as fuel, utility, transportation, and compliance-related costs, could increase our operating costs.

Our prior restatement and related Audit Committee investigations may continue to affect investor confidence, our reputation and our ability to raise capital.

We previously restated certain prior-period financial statements and concluded related Audit Committee investigations. Although the Restatement occurred in prior periods and related disclosure has been streamlined elsewhere in this Annual Report, related matters may continue to affect investor confidence, our reputation and our ability to raise capital. With our stand-alone feature, customers can produce their own energy in the event of a utility power outage and can use microturbines as their primary source of power for extended periods of time unlike traditional diesel standby generator sets.

We may be involved in litigation and other proceedings that could adversely affect us.

From time to time, we may be involved in claims, litigation, investigations and other proceedings arising in the ordinary course of business, including commercial, employment, contractual, collection and other matters. Litigation and regulatory proceedings are inherently uncertain and may result in substantial costs, diversion of management’s attention, adverse judgments, settlements or other consequences that could adversely affect our business, financial condition or results of operations.

Risks Related to Data, Security, and Intellectual Property

Our 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.

We view our intellectual property rights as important assets. We seek to protect our intellectual property rights through a combination of patent, trademark, copyright, and trade secret laws, as well as licensing and confidentiality agreements. These protections may not prove to be adequate to prevent third parties from using our intellectual property without our authorization, breaching any confidentiality agreements with us, copying or reverse engineering our products, or developing and marketing products that are substantially equivalent to or superior to our own. The unauthorized use of our intellectual property by others could reduce our competitive advantage and harm our business. If it became necessary for us to litigate to protect these rights, any proceedings could be burdensome and costly and we may not prevail. We cannot guarantee that any patents, issued or pending, will provide us with any competitive advantage or will not be challenged by third parties. A number of our issued patents have less than ten years remaining life. Moreover, the expiration of our patents may lead to increased competition with respect to certain products. In addition, we cannot be certain that we

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do not or will not infringe third parties’ intellectual property rights. Any such claim, even if it is without merit, may be expensive and time consuming to defend, subject us to damages, cause us to cease making, using or selling certain products that incorporate the disputed intellectual property, require us to redesign our products, divert management time and attention and/or require us to enter into costly royalty or licensing arrangements.

We face security and cybersecurity risks related to our electronic processing of sensitive and confidential business and product data.​30 Table of ContentsWe 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.

As a manufacturer of high technology commercial products, we face security and cybersecurity threats, as well as the potential for business disruptions associated with information technology failures or cybersecurity attacks. Given the nature of our business, we collect, process, and retain sensitive and confidential customer and associated data, in addition to proprietary business information. Our business, including our turbines and related energy assets, may be vulnerable to a data compromise, computer viruses, physical and electronic break-ins and manipulations and similar disruptions, which may not be prevented by our efforts to secure our computer systems and assets, which include vulnerability scans and patching, network firewalls, identity and access management, data encryption, intrusion detection and prevention devices. Our cybersecurity efforts may not be able to prevent rapidly evolving types of cyber-attacks, and a successful breach of our computer systems could result in the misappropriation of personal, payment or sensitive business information, as well as, among other things, unfavorable publicity, litigation by affected parties, damage to sources of competitive advantage, disruptions to our operations, loss of customers, financial obligations for damages related to the theft or misuse of such information, and costs to remediate such security vulnerabilities, any of which could have a substantial impact on our results of operations, financial condition or cash flows. Both the frequency and magnitude of cyberattacks is expected to increase and attackers are becoming more sophisticated. Geopolitical tensions or conflicts, such as Russia’s invasion of Ukraine, the conflicts in Israel and Iran or increasing tension with China, may create a heightened risk of cybersecurity attacks. Geopolitical tensions or conflicts, such as Russia’s invasion of Ukraine, the conflict in Israel or increasing tension with China, may create a heightened risk of cybersecurity attacks. To the extent artificial intelligence capabilities improve and are increasingly adopted, they may be used to identify vulnerabilities and craft increasingly sophisticated cybersecurity attacks. Vulnerabilities may be introduced from the use of artificial intelligence by us, our customers or third parties. In addition, we rely on associates, contractors, and other third parties that may attempt to circumvent our security measures in order to obtain such information and may purposefully or inadvertently cause a breach involving such information. A security breach involving confidential and proprietary data or the fleet of turbines we have deployed across the globe for our customers could damage our reputation and our ability to retain existing customers or gain new customers and impact the competitive advantages derived from our R&D efforts, the usefulness of our products and services, and ultimately our stock price. In addition, we may incur material liabilities and remediation costs as a result of a security breach, and our insurance may not be sufficient to cover the impact to the business. Moreover, evolving privacy laws in the United States, Europe, and elsewhere, including the adoption by the European Union of the General Data Protection Regulation, which became effective May 2018, establish new individual privacy rights and impose increased obligations on companies handling personal data. Consequently, we may incur significant costs related to prevention and compliance with laws regarding the protection and unauthorized disclosure of personal information. Further, a greater number of our employees are working remotely, which could expose us to greater risks related to cybersecurity and our information technologies systems.

Risks 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.

The Company is a holding company with assets consisting primarily of our investment in the Operating Subsidiary.The Company is a holding company with assets consisting primarily of our investment in the Operating Subsidiary, of which Goldman Sachs owns a 37.5% non-dilutable equity interest. Our business operations are conducted primarily out of the Operating Subsidiary and certain of its subsidiaries. As a result, in addition to the restrictions on payment of dividends that apply under the terms of our existing indebtedness, our ability to pay dividends, if any, will be dependent upon cash dividends and distributions or other transfers from the Operating Subsidiary. As a result, in addition to the restrictions on payment of dividends that apply under the terms of our existing indebtedness and the limited liability company agreement of Operating Subsidiary (the “Capstone Green Energy LLC Agreement”), our ability to pay dividends, if any, will be dependent upon cash dividends and distributions or other transfers from the Operating Subsidiary. Payments to us from the Operating Subsidiary will be contingent upon its earnings and subject to any limitations on the ability of such entity to make payments or other distributions to us. Payments to us from the Operating Subsidiary will be contingent upon its earnings and subject to any limitations on the ability of such entity to make payments or other distributions to us, including limitations contained in the Capstone Green Energy LLC Agreement.

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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.

We may issue additional shares of our Common Stock in the future. The issuance of a substantial amount of our Common Stock could have the effect of substantially diluting the interests of our current stockholders. The sale of a substantial number of shares of our Common Stock, or anticipation of any such sales, could cause the trading price of our Common Stock to decline or make it more difficult for us to sell equity or equity-related securities in the future at a time and at a price that we might otherwise desire.

We cannot predict the effect, if any, that future sales of our Common Stock or the availability of additional shares of our Common Stock for sale will have on the market and trading price of our Common Stock. If any of our stockholders sell substantial amounts of our Common Stock in the public market, or if the public perceives that such sales could occur, this could have an adverse impact on the market and trading price of our securities, even if there is no relationship between such sales and the performance of our business.

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.

The Series A Preferred Stock will accrue a cumulative dividend at the rate (the “Dividend Rate”) of 5.00% per annum on the original issue price (as increased by prior PIK Dividends) (the “PIK Dividend”), compounding annually and payable in kind by increasing the liquidation preference and accreted value of the Series A Preferred Stock. The PIK Dividend will automatically accrue daily from the date of issuance and compound on each anniversary thereof without requirement of any further action (including the declaration of dividends) by the Company. Beginning on June 30, 2030, we may elect to pay accrued and unpaid dividends for any quarterly period in cash, provided that we satisfy minimum earnings, leverage and liquidity requirements (the “Minimum Financial Metrics”). The Series A Preferred Stock will also entitle holders to participate in any dividends or distributions paid or made on the Common Stock on an as-converted basis.

If the Common Stock is not listed on a national securities exchange on or before the date that is eighteen (18) months after the closing date of the Preferred Stock Investment (the “Preferred Stock Investment Closing Date”), the dividend rate will increase by two hundred (200) basis points per annum on such date and an additional one hundred (100) basis points on each anniversary of such date thereafter. Beginning on the four (4) year anniversary of the Preferred Stock Investment Closing Date and on each June 30, September 30, December 31 and March 31 thereafter, (x) the Regular Dividend Rate (as defined in the Certificate of Designation) will increase by two hundred (200) basis points during certain periods if the Minimum Financial Metrics are not satisfied or one hundred (100) basis points if the Minimum Financial Metrics are satisfied, subject, in each case, to a maximum regular dividend rate of thirteen percent (13.0%) per annum.

If such rate increases occur, our financial obligations to the holders of the Series A Preferred Stock could become significantly more burdensome. Also, our ability to make payments due to the holders of our Series A Preferred Stock using cash is limited by the amount of cash we have on hand at the time such payments are due as well as certain provisions of the Delaware General Corporation Law (the “DGCL”).

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.

If we issue Common stock or Securities convertible into or exercisable for common stock at a price less than the then-applicable conversion price of the Preferred Shares (the “Conversion Price”), then the Conversion Price will be reduced on a weighted-average basis that provides for more significant adjustment in the case of securities issued at a price (or deemed price) that is less than 50% of the then-effective Conversion Price. The Conversion Price is also subject to customary adjustments in the case of a spinoff, recapitalization, rights distribution or similar transaction, with distribution of rights, options or warrants at an exercise price below the then-applicable Conversion Price triggering additional adjustment under the weighted-average basis described above. Such adjustments can dilute the book value per share of Common Stock. In addition, the perceived risk of dilution may cause our stockholders to be more inclined to sell their Common Stock, which may in turn depress the price of our shares of common stock regardless of our business performance. We may also find it more difficult to raise additional equity capital while any of the Preferred Shares remain outstanding.

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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.

The Certificate of Designation contains certain protective provisions that require the prior approval of the Majority Holders (as defined in the Certificate of Designation) before we may take certain actions, including, but not limited to, the acquisition of assets, the incurrence of indebtedness and liens, transactions with stockholders, sales and dispositions of assets, the payment of dividends and other distributions, the issuance of equity capital, any change in the authorized number of directors and any voluntary bankruptcy filing, in each case subject to certain exceptions. These protective provisions may limit our flexibility in raising capital, pursuing strategic transactions or otherwise managing our business, which may have an adverse effect on our financial condition and results of operations. If we require additional funding while these restrictions remain in effect, we may be unable to effect a financing transaction on terms acceptable to us, or at all, while also remaining in compliance with the terms of the Certificate of Designation, or we may be forced to seek a waiver from the holders of the Series A Preferred Stock, which such holders are not obligated to grant to us.

The Certificate of Designation also provides that eligible holders of the Series A Preferred Stock have the right to participate, on a pro rata basis, in certain future offerings of our equity and debt securities. These preemptive rights could make it more difficult or time-consuming for us to consummate future capital-raising transactions, and the participation of Series A Preferred Stockholders in such offerings could increase the overall dilution to our existing common stockholders.

Under the securities purchase agreement we entered into with certain investors on November 24, 2025 (the “2025 PIPE Purchase Agreement”), the Company is restricted from entering into or effecting variable rate transactions until January 2, 2027.

These protective provisions and other limitations may limit our flexibility in raising capital or incurring any indebtedness, which may have an adverse effect on our financial condition.

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.

As of this filing, the Company’s Common Stock trades on the Over the Counter (“OTC”) market under the ticker symbol CGEH. We cannot provide any assurance that the trading volume or price will increase with over-the-counter trading. Being listed on a more limited marketplace such as OTC, may have an adverse effect on the liquidity of the Common Stock, not only in terms of the number of shares that can be bought and sold at a given price, but also through delays in the timing of transactions and reduction in security analysts’ and the media’s coverage of our company. This may result in lower prices for the Common Stock than might otherwise be obtained and could also result in a larger spread between the bid and asked prices for the 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.

There is limited trading activity for our Common Stock in the OTC market. An investment in our securities is risky, and stockholders could lose their investment in our securities or suffer significant losses and wide fluctuations in the market value of their investment and the market price of our Common Stock is likely to be highly volatile. An investment in our securities is risky, and stockholders could lose their investment in our securities or suffer significant losses and wide fluctuations in the market value of their investment. Given the continued uncertainty surrounding many variables that may affect our business, and the industry in which we operate, our ability to foresee results for future periods is limited. This variability could affect our operating results and thereby adversely affect our stock price. Many factors that contribute to this volatility are beyond our control and may cause the market price of our Common Stock to change, regardless of our operating performance. Factors that could cause fluctuation in our stock price may include, among other things:

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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.

In the past, following periods of volatility in the market price of a company’s securities, securities class action litigation has been instituted against the Company. We and our directors and officers may be named as defendants in other types of legal proceedings in the future. This type of litigation, regardless of whether we prevail on the underlying claim, could result in substantial costs and a diversion of management’s attention and resources, which could materially harm our financial condition, results of operations and cash flow. Refer to “Legal Proceedings” This type of litigation, regardless of whether we prevail on the underlying claim, could result in substantial costs and a diversion of management’s attention and resources, which could materially harm our financial condition, results of operations and cash flow.

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.

Provisions of our amended and restated certificate of incorporation and amended and restated bylaws, as well as provisions of the General Corporation Law of the State of Delaware, could discourage, delay, or prevent unsolicited proposals to merge with or acquire us, even though such proposals may be at a premium price or otherwise beneficial to common stockholders. These provisions include authorization by our Board of Directors (the “Board”) to issue shares of preferred stock, on terms the Board determines in its discretion, without stockholder approval, and the following provisions of Delaware law that restrict many business combinations.

Additionally, we are governed by Section 203 of the Delaware General Corporation Law, which may restrict mergers or combinations with significant stockholders (those owning 15% or more of voting stock) without prior Board approval for a specified period. These provisions may discourage takeover attempts, reduce the appeal of our Common Stock to investors, and result in a lower market price for our shares than might otherwise occur.

We do not intend to pay cash dividends. We have never paid cash dividends on our capital stock, and we do not anticipate paying any cash dividends in the foreseeable future. Consequently, any gains from an investment in our securities will likely depend on whether the price of our Common Stock increases.

We have not paid cash dividends on any of our capital stock to date and we currently intend to retain our future earnings, if any, to fund the development and growth of our business. In addition, our ability to distribute dividends is subject to restrictions that apply under the terms of our existing indebtedness and the Certificate of Designation. In addition, our ability to distribute dividends is subject to restrictions that apply under the terms of our existing indebtedness and Capstone Green Energy LLC Agreement. Refer to “We are a holding company and will depend on dividends and distributions from our Operating Subsidiary to pay any dividends.” As a result, capital appreciation, if any, of our Common Stock will be your sole source of gain for the foreseeable future. Consequently, in the foreseeable future, you will likely only experience a gain from your investment in our securities if the price of our Common Stock increases.

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Item 1B. Unresolved Staff Comments.

None.

Item 1C. Cybersecurity.

Risk Management and Strategy

Governance

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Cybersecurity Incidents

As of the date of this report, we are not aware of any cybersecurity threats, including as a result of any previous cybersecurity incidents, that have materially affected or are reasonably likely to materially affect the Company, including our business strategy, results of operations, or financial condition. However, cybersecurity threats are continuously evolving, and we cannot provide assurance that our program will prevent all incidents or that future incidents will not have a material impact on our business. For a more complete discussion of cybersecurity-related risks, see Part I, Item 1A, “Risk Factors. For additional discussion of our cybersecurity-related risks, see Part I, Item 1A, “Risk Factors. ”