Capstone Green Energy Holdings Inc
For the period ended Dec 31, 2023. Filed Sep 9, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Dec 31, 2023 · Filed Sep 9, 2024
CEPL$2.93+12.7%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2023-09-30; filed 2024-08-05.
0001558370-24-010759
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2023-12-31; filed 2024-09-09.
0001558370-24-012687
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 100 previous paragraphs and 95 current paragraphs.
42 unchanged; 40 reworded; 10 added; 15 removed; 3 previous and 3 current paragraphs rearranged.
Tables are not compared: 43 previous and 43 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (10)
Current report
During the three months ended December 31, 2023 our net income increased by 483% to $24.2 million and our basic and diluted income per share increased by 469% to $1.27 compared to a $6.3 million net loss and $(0.35), respectively, in the same period of the previous fiscal year. The increase to net income during the three months ended December 31, 2023 was primarily due to the impact of the Chapter 11 reorganization, inclusive of a gain on settlement of debt upon emergence from Chapter 11 on December 7, 2023 of $35.3 million. See Note 3— Chapter 11 Proceedings and Emergence in the Notes to Condensed Consolidated Financial Statements for further discussion of our outstanding indebtedness and the post emergence financing.
Current report
Transportation
Current report
Our technology can also be used in Hybrid Electric Vehicle (“HEV”) applications. Our customers have applied our products in HEV applications such as transit buses and Class 7 and 8 work trucks. In these applications, the microturbine acts as an onboard battery charger to recharge the battery system as needed. The benefits of microturbine-powered HEV hybrids include extended range, fuel economy gains, quieter operation, reduced emissions, and higher reliability when compared with traditional internal combustion engines.
Current report
Additionally, our technology has been used in marine applications. Our customers have applied our products in the commercial vessel and luxury yacht market segments. The application for our marine products is for use as a ship auxiliary engine. In this application, the microturbines provide power to the vessel’s electrical loads and, in some cases, the vessel can utilize the exhaust energy to increase the overall efficiency of the application, thereby reducing overall fuel consumption and emissions. Another feasible application is similar to our HEV application where the vessel is driven by an electric propulsion system and the microturbine serves as an on board range extender. Transportation is a developing market segment for us. We have experienced continued development in these vertical markets and remain focused on the development of these applications.
Current report
Research and Development (“R&D”) Expenses. R&D expenses were $0.6 million and $0.6 million during the three months ended December 31, 2023 and 2022, respectively.
Current report
Nine Months Ended December 31, 2023 and 2022
Current report
Selling, General, and Administrative (“SG&A”) Expenses. SG&A expenses increased $10.1 million, or 65%, to $25.7 million from $15.6 million primarily as a result of increases of approximately $8.6 million in legal and accounting fees incurred primarily for the restatement activities, $1.4 million in consulting expense and $1.3 million in stock-based compensation expense, partially offset by decreases of $0.5 million in facilities costs, $0.4 million in net credit loss expense and $0.3 million in marketing and travel costs during the nine months ended December 31, 2023 compared to the same period last year. See our Annual Report on Form 10-K/A for the fiscal year ended March 31, 2022 and our Annual Report on Form 10-K for the fiscal year ended March 31, 2023 for details on the Restatement.
Current report
Interest Expense. Interest expense for the nine months ended December 31, 2023 and 2022 was $4.6 million and $4.5 million, respectively. The increase was primarily due to higher interest rates during the nine months ended December 31, 2023, partially offset by a decrease in interest accruing on $30.0 million of borrowings under the DIP facility compared
Current report
Debt Refer to Note 13— Debt in the Notes to Condensed Consolidated Financial Statements (Part I, Item 1 of this Form 10-Q) for information related to our notes.
Current report
Lease Commitments Refer to Note 16— Leases in the Notes to Condensed Consolidated Financial Statements for information related to our leases.
Removed paragraphs (15)
Previous report
During the three months ended September 30, 2023 our net loss increased by 57% to $5.9 million and our basic and diluted loss per share increased by 42% to $0.32 compared to $3.8 million and $0.22, respectively, in the same period of the previous fiscal year. The increase in the net loss during the three months ended September 30, 2023 was primarily the result of higher direct material costs, and higher operating and interest expenses, partially offset by increase in revenue and a greater contribution from the higher margin rental business.
Previous report
Direct material profit, calculated as total revenue less our direct material costs, increased $2.2 million during the second quarter of Fiscal 2024 compared to the second quarter of Fiscal 2023. The increase was due to higher margin rental business, partially offset by higher direct material costs due to vendor price increases and supply chain shortages. We increased our sales prices effective January 2023 and are negotiating with vendors to reduce these costs.
Previous report
Research and Development (“R&D”) Expenses increased by less than $0.1 million, or 8%, to $0.7 million from $0.6 million as a result oflower costs from actions taken in our cost reduction plan during the three months ended September 30, 2022.
Previous report
Six Months Ended September 30, 2023 and 2022
Previous report
Direct material profit, calculated as total revenue less our direct material costs, increased $4.1 million during the six months ended September 30, 2023 compared to the six months ended September 30, 2022 primarily due to an increase in sales, partially offset by higher direct material costs due to vendor price increases and supply chain shortages. We increased our sales prices effective January 2023 and are negotiating with vendors to reduce these costs.
Previous report
The $0.2 million increase in product and accessories gross profit in the six months ended September 30, 2023 was primarily the result of increases in volume of product shipments.
Previous report
Selling, General, and Administrative (“SG&A”) Expenses increased $6.0 million, or 60%, to $16.0 million from $10.0 million, primarily as a result of increases of approximately $4.7 million in legal fees incurred primarily for the Chapter 11 proceedings, $1.1 million in consulting expenses and $0.2 million in accounting costs. See Note 3 – Chapter 11 Proceedings for details of the bankruptcy plan.
Previous report
Term Note Payable On July 6, 2023, we entered into a Fourth Amendment (the “Fourth Amendment”) to the A&R Note Purchase Agreement by and among ourselves, certain subsidiaries of ours, Goldman Sachs Specialty Lending Group, L.P. (as successor in interest to Goldman Sachs Specialty Lending Holdings, Inc.), as collateral agent (the “Collateral Agent”) and the purchaser party thereto (the “Purchaser”). The Fourth Amendment provides for (i) the waiver by the Purchaser and the Collateral Agent of the our breach of the minimum Consolidated Liquidity covenant contained in the A&R Note Purchase Agreement, the failure to make the interest payment for the most recently ended quarter and certain other breaches specified therein; (ii) the extension of the maturity of the $50 million aggregate principal amount of Notes outstanding pursuant to the A&R Note Purchase Agreement from October 1, 2023 to September 1, 2024; (iii) an amendment fee payable by us at maturity equal to 1.00% of the principal balance of the Notes on the Fourth Amendment Effective Date (the “Fourth Amendment Effective Date”); (iv) a due date for the next interest payment on the date that is 30 days from the Fourth Amendment Effective Date, which interest payment was originally due on July 3, 2023; (v) following our entry into a Transaction Support Agreement (as defined below), the payment-in-kind of the quarterly interest payments that are due following the next the interest payment; (vi) a new minimum Consolidated Liquidity covenant
Previous report
requirement of $4.0 million, commencing on July 14, 2023, which amount will increase to $4.5 million on August 16, 2023 and to $6.0 million on August 31, 2023; (vii) the replacement of the Adjusted LIBO Rate with a Term SOFR interest rate benchmark; (viii) the ability for the Collateral Agent to either (A) force a conversion of the interest rate benchmark to Base Rate or (B) impose default interest during an Event of Default; (ix) the right for one designated Collateral Agent board observer to attend the meetings of our Board of Directors (and committees thereof) in a non-voting capacity, subject to certain customary exceptions; and (x) the amendment to certain provisions of the A&R Note Purchase Agreement, including to add a number of new covenants. Those new covenants include requirements that we (i) enter into a transaction support agreement with one or more lenders in form and substance mutually satisfactory to the Collateral Agent and us (the “Transaction Support Agreement”) within 30 days of the Fourth Amendment Effective Date; (ii) subject to necessary stockholder approvals, execute and deliver, or reach agreement on substantially final versions of, the definitive documentation with respect of the transactions specified in the Transaction Support Agreement in form and substance satisfactory to the Collateral Agent within 45 days after the Fourth Amendment Effective Date; (iii) close the transactions specified by the Transaction Support Agreement by September 15, 2023; and (iv) provide a Section 382 analysis (i.e., an analysis relating to the potential limitation of the use of our net operating loss carryforwards due to ownership changes, which loss carryforwards we understand may be potentially valuable in one or more transaction structures) to the Collateral Agent on a quarterly basis. The Fourth Amendment also imposes restrictions on our ability to (i) pay professional fees for the 30 days in excess of $2,000,000 in the aggregate; (ii) make certain other cash disbursements in excess of thresholds set forth in the Fourth Amendment; and (iii) amend existing, or enter into new, employment agreements or pay or incur any bonus or severance payment.
Previous report
On August 16, 2023, we entered into a Fifth Amendment (the “Fifth Amendment”) to the A&R Note Purchase Agreement by and among ourselves, certain subsidiaries of ours, the Collateral Agent and the purchaser. The Fifth Amendment provides for (i) the waiver by the Purchaser and the Collateral Agent of our breach of a covenant contained in the A&R Note Purchase Agreement to enter into a Transaction Support Agreement with one or more lenders in form and substance mutually satisfactory to the Collateral Agent and ourselves within 30 days of the Fourth Amendment Effective Date and the failure to make an interest payment within 30 days of the Fourth Amendment Effective Date; (ii) a due date for the next interest payment on August 22, 2023 or such later date as is agreed to by the Collateral Agent in its sole discretion, which interest payment was originally due within 30 days of the Fourth Amendment Effective Date to the A&R Note Purchase Agreement; (iii) a minimum Consolidated Liquidity covenant requirement of $3.5 million, commencing on July 14, 2023 and operative through September 1, 2024; and (iv) the amendment of the milestones with respect of the Transaction Support Agreement to require that we (A) agree to the terms and form of the Transaction Support Agreement (which may include a structure including bankruptcy proceedings) with one or more lenders in form and substance mutually satisfactory to the Collateral Agent and ourselves by August 22, 2023 or such later date as is agreed to by the Collateral Agent in its sole discretion,(B) subject to any necessary stockholder approvals, execute and deliver, or reach agreement on substantially final versions of, the definitive documentation with respect of the transactions specified in the Transaction Support Agreement in form and substance satisfactory to the Collateral Agent by August 31, 2023 or such later date as is agreed to by the Collateral Agent in its sole discretion, and (C) that we shall have closed the transactions specified by the Transaction Support Agreement by September 15, 2023 or such later date as is agreed by the Collateral Agent in its sole discretion.
Previous report
On September 22, 2023, we entered into a Sixth Amendment (the “Sixth Amendment”) to the A&R Note Purchase Agreement by and among ourselves, certain of our subsidiaries, the Collateral Agent and the Purchaser. Pursuant to the Sixth Amendment, we issued and the Purchaser purchased for $3,000,000 in cash additional senior secured notes on September 22, 2023 (the “Additional Notes”). The Additional Notes bear interest at the SOFR Rate plus 8.75% per annum, payable-in-kind on the last day of each interest period of one-, two-, three- or six-months (but, in the case of a six-month interest period, every three-months). The entire principal amount of the Additional Notes is due and payable on September 1, 2024 (the “Maturity Date”). The Additional Notes do not amortize and the entire principal balance is due in a single payment on the Maturity Date.
Previous report
As of September 30, 2023, $57.0 million in borrowings were outstanding under the Notes, which includes the accrual for an exit fee to be paid at maturity or upon pre-payment. Interest expense related to the Notes payable during the three months ended September 30, 2023 and 2022 was $1.8 million and $1.3 million, respectively. Interest expense related to the Notes payable during the six months ended September 30, 2023 and 2022 was $3.5 million and $2.6 million, respectively.
Previous report
As a result of our restated earnings, we were not in compliance with the Adjusted EBITDA covenant contained in the A&R Note Purchase Agreement. The breach required a change in classification of the term note payable to current liability on the Condensed Consolidated Balance Sheet resulting in a liquidity issue for us. See Note 18–Subsequent Events
Previous report
in the Notes to Condensed Consolidated Financial Statements for a summary of our current outstanding debt facility, which we entered into after September 30, 2023.
Previous report
Lease Commitments During the second quarter of Fiscal 2024 we entered into several rental agreements to rent used microturbine equipment from customers where that equipment was not currently in use. We then rent this equipment to end users as part of our Energy-as-a-Service business. As of September 30, 2023, lease commitments totaled approximately 18.4 MW of microturbines, have an average term of 36 months, and a total commitment value of approximately $18.7 million.
Reworded paragraphs (40)
Previous wording
All references in this Quarterly Report on Form 10-Q to “the Company,” “we,” “us,” “our,” or “Capstone” are to Capstone Green Energy Corporation and its consolidated subsidiaries prior to the Effective Date (as defined below) and to Capstone Green Energy Holdings, Inc. and its consolidated subsidiaries following the Effective Date.
Current wording
All references in this Quarterly Report on Form 10-Q to “the Company,” “we,” “us,” “our,” or “Capstone” are to Capstone Green Energy Corporation and its consolidated subsidiaries prior to the Effective Date (as defined Note 3**-**Chapter 11 Proceedings and Emergence) and to Capstone Green Energy Holdings, Inc. and its consolidated subsidiaries following the Effective Date.
Previous wording
Refer to Note 3— Chapter 11 Proceedings in the Notes to Condensed Consolidated Financial Statements for a summary of our voluntary filing under Chapter 11 of the Bankruptcy Code and our emergence therefrom, the Exit Facility, the Operating Subsidiary LLC Agreement, Service Agreements, Trademark Licensing Agreement, the delisting of our common stock from the Nasdaq and the implemented 2023 Equity Incentive Plan.
Current wording
Refer to Note 3— Chapter 11 Proceedings and Emergence in the Notes to Condensed Consolidated Financial Statements for a summary of our voluntary filing under Chapter 11 of the Bankruptcy Code, our emergence therefrom and our delisting of our common stock from the Nasdaq. Refer to Note 13— Debt for details regarding our Exit Facility and Note 15— Commitments and Contingencies for details regarding our Service Agreements and the Trademark Licensing Agreement.
Previous wording
We are the market leader in microturbine energy systems based on the number of microturbines sold annually and total installed base. Generally, power purchased from the electric utility grid is less costly than power produced by distributed generation technologies in simple cycle mode. Utilities may also charge fees to interconnect to their power grids. However, when considering and including the waste heat from our microturbine (CHP and CCHP) the economic benefit improves significantly. Further, our clean technology can produce thermal energy at a lower carbon footprint. These benefits can be especially realized, when fuel costs are low, where the costs of connecting to the grid may be high or impractical (such as remote power applications or new grid services need to be provided), where reliability and power quality are of critical importance, or in situations where peak shaving could be economically advantageous because of highly variable electricity prices. Our microturbines are an inverter-based technology and can be interconnected to other distributed energy resources to form “microgrids” (also called “distribution networks”) located within a specific geographic area and provide power to a group of buildings. Because our microturbines can provide a reliable source of power and can operate on multiple fuel sources, management believes they help solve the tri-lemma: (1) resiliency, (2) sustainability and (3) affordability. Management also believes our products and services offer a level of flexibility not currently offered by other technologies such as reciprocating engines. We are currently exploring energy conversion options for the smaller end of the power spectrum.
Current wording
We are the market leader in microturbine energy systems based on the number of microturbines sold annually and total installed base. Generally, power purchased from the electric utility grid is less costly than power produced by distributed generation technologies in simple cycle mode. Utilities may also charge fees to interconnect to their power grids. However, when considering and including the waste heat from our microturbine (CHP and CCHP) the economic benefit improves significantly. Further, our highly efficient, low emission, resilient technology can produce thermal energy at a lower carbon footprint. These benefits can be especially realized, when fuel costs are low, where the costs of connecting to the grid may be high or impractical (such as remote power applications or new grid services need to be provided), where reliability and power quality are of critical importance, or in situations where peak shaving could be economically advantageous because of highly variable electricity prices. Our microturbines are an inverter-based technology and can be interconnected to other distributed energy resources to form “microgrids” (also called “distribution networks”) located within a specific geographic area and provide power to a group of buildings. Because our microturbines can provide a reliable source of power and can operate on multiple fuel sources, management believes they help solve the “Energy Trilemma” of resiliency, sustainability and affordability. Management also believes our products and services offer a level of flexibility not currently offered by other technologies such as reciprocating engines. We are currently exploring energy conversion options for the smaller end of the power spectrum.
Previous wording
Our products continue to gain interest in all our major vertical markets (energy efficiency, renewable energy, natural resources, critical power supply, and microgrids). In the energy efficiency market, we continue to expand our market presence in hotels, office buildings, hospitals, retail, and industrial applications globally. The renewable energy market is fueled by landfill gas, biodiesel, and biogas from sources such as food processing, agricultural waste and livestock manure. Our product sales in the oil and gas and other natural resources market is driven by our microturbines’ reliability, emissions profile and ease of installation. Given the volatility of the oil and gas market, our business strategy is to ensure diversification by also targeting projects within the energy efficiency and renewable energy markets.
Current wording
Our products continue to gain interest in all our major vertical markets (energy efficiency, natural resources, renewable energy, critical power supply, microgrid and transportation products). In the energy efficiency market, we continue to expand our market presence in hotels, office buildings, hospitals, retail and industrial applications globally. The renewable energy market is fueled by landfill gas, biodiesel and biogas from sources such as food processing, agricultural waste and livestock manure. Our product sales in the oil and gas and other natural resources market is driven by our microturbines’ reliability, emissions profile and ease of installation. Given the volatility of the oil and gas market,
Previous wording
We continue to focus on improving our products based on customer input, building brand awareness and new channels to market by developing a diversified network of strategic distribution partners. Our focus is on products and solutions that provide near term opportunities to drive repeatable business rather than discrete projects for niche markets. In addition, management closely monitors operating expenses and strives to improve manufacturing efficiencies while
Current wording
We continue to focus on improving our products based on customer input, building brand awareness and new channels to market by developing a diversified network of strategic distribution partners. Our focus is on products and solutions that provide near term opportunities to drive repeatable business rather than discrete projects for niche markets. In addition, management closely monitors operating expenses and strives to improve manufacturing efficiencies while simultaneously lowering direct material costs and increasing average selling prices. The key drivers to our success are revenue growth, higher average selling prices, lower direct material costs, positive new order flow, reduced cash usage and expansion of the Energy-as-a-Service (“EaaS”) business.
Previous wording
Focus on Vertical Markets. Within the distributed generation markets that we serve, we focus on vertical markets that we identify as having the greatest near-term potential. In our primary products and applications (energy efficiency, renewable energy, natural resources, critical power supply, and microgrid products), we identify specific targeted vertical market segments. Within each of these segments, we identify what we believe to be the critical factors to success and base our plans on those factors. Given the volatility of the oil and gas market, we have refocused our business strategy to target projects within the energy efficiency and renewable energy markets.
Current wording
Focus on Vertical Markets. Within the distributed generation markets that we serve, we focus on vertical markets that we identify as having the greatest near-term potential. In our primary products and applications (energy efficiency, natural resources, renewable energy, critical power supply, microgrid and transportation products), we identify specific targeted vertical market segments. Within each of these segments, we identify what we believe to be the critical factors to success and base our plans on those factors. Given the volatility of the oil and gas market, we have refocused our business strategy to target projects within the energy efficiency and renewable energy markets.
Previous wording
Energy efficiency refers to the proper utilization of both electrical and thermal energies in the power production process. In such applications, our microturbines are able to maximize the availability of usable energy to provide a significant economic advantage to customers while reducing their on-site emissions. CHP and CCHP can improve site economics by capturing the exhaust heat created from a single combustion process to increase the efficiency of the total system, from approximately 30% to 80% or more. Compared with more traditional, independent generation sources, the increase in operational efficiency also reduces greenhouse gas emissions through the displacement of other separate systems, which can also reduce operating costs.
Current wording
Energy efficiency refers to the proper utilization of both electrical and thermal energies in the power production process. In such applications, our microturbines are able to maximize the availability of usable energy to provide a significant economic advantage to our customers while reducing their on-site emissions. CHP and CCHP can improve site economics by capturing the waste heat created from a single combustion process to increase the efficiency of the total system, from approximately 30% to approximately 85% for hot water and chilled water to as much as 90% or more for some steam and direct drying applications. Compared with more traditional, independent generation sources, the increase in operational efficiency also reduces greenhouse gas emissions through the displacement of other separate systems, which can also reduce operating costs and industrial waste.
Previous wording
Net product orders were approximately $6.3 million and $14.5 million for the three months ended September 30, 2023 and 2022, respectively. Ending backlog was approximately $17.9 million at September 30, 2023 compared to $42.8 million at March 31, 2023. The Book-to-bill ratio was 0.4:1 and 1.6.1 for the three months ended September 30, 2023 and 2022, respectively. Book-to-bill ratio is the ratio of new orders we received to units shipped and billed during a period.
Current wording
Net product orders were approximately $5.9 million and $1.7 million for the three months ended December 31, 2023 and 2022, respectively. Ending backlog was approximately $18.7 million at December 31, 2023 compared to $42.8 million at March 31, 2023. The book-to-bill ratio was 1.2:1 and 0.8:1 for the three months ended December 31, 2023 and 2022, respectively. Book-to-bill ratio is the ratio of new orders we received to units shipped and billed during a period.
Previous wording
We offer new and remanufactured parts through our global distribution network. Service revenue in the second quarter of Fiscal 2024 was approximately 19% of total revenue.
Current wording
We offer new and remanufactured parts through our global distribution network. Service revenue in the third quarter of Fiscal 2024 was approximately 32% of total revenue.
Previous wording
We have continued to develop our new hydrogen products. In March 2022, we released a commercially available hydrogen-based combined heat and power (CHP) product, which can safely run on a 30% hydrogen-70% natural
Current wording
We have continued to develop our new hydrogen products. In March 2022, we released a commercially available hydrogen-based combined heat and power (CHP) product, which can safely run on a 30% hydrogen-70% natural gas mix. In continuing these efforts, we are testing a 100% hydrogen gas combustion system through our research and development partnership with Argonne National Laboratory.
Previous wording
Note 2, “Basis of Presentation and Significant Accounting Policies” in Part I, Item 1 of this Form 10-Q and in the Notes to Consolidated Financial Statements in Part II, Item 8 of our Annual Report on Form 10-K for the year ended March 31, 2023 describe the significant accounting policies and methods used in the preparation of our Condensed Consolidated Financial Statements.
Current wording
Note 2— Basis of Presentation, Significant Accounting Policies and Going Concern in Part I, Item 1 of this Form 10-Q and in the Notes to Consolidated Financial Statements in Part II, Item 8 of our Annual Report on Form 10-K for the year ended March 31, 2023 describe the significant accounting estimates and methods used in the preparation of our Condensed Consolidated Financial Statements.
Previous wording
Revenue for the three months ended September 30, 2023 increased $8.3 million to $28.4 million from $20.1 million for the three months ended September 30, 2022. The $8.3 million increase was primarily driven by increases of $5.0 million in the United States and Canada and $4.1 million in Latin America, partially offset by decreases of $0.6 million in Asia and Australia and $0.3 million in Europe and Russia. The increases in the United States and Canada and Latin America were primarily attributable to an increase of product deliveries for projects during the three months ended September 30, 2023. The decreases in Asia and Australia and Europe and Russia were due to decreases in product shipments into the renewable energy vertical markets in those regions compared to the same period last year.
Current wording
Revenue. Revenue for the three months ended December 31, 2023 decreased $6.4 million to $14.6 million from $21.0 million for the three months ended December 31, 2022. The $6.4 million decrease was primarily driven by decreases in revenue of $7.4 million in the United States and Canada and $0.5 million in Russia, partially offset by increases of $0.7 million in Latin America, $0.5 million in Asia and Australia and $0.3 million in Europe. The decreases in the United States and Canada were primarily attributable to a decrease of product deliveries for projects during the three months ended December 31, 2023 and the decrease in Russia was a result of United States sanctions. The increases in Latin America, Asia and Australia and Europe were due to an increase in our EaaS long-term rental services and product shipments into the natural resources and renewable energy vertical markets in those regions compared to the same period last year.
Previous wording
For the three months ended September 30, 2023, revenue from microturbine products and accessories increased $5.5 million, or 57%, to $15.1 million from $9.6 million for the three months ended September 30, 2022. The $5.5 million increase was primarily driven by a increase in megawatts and units shipped during the three months ended September 30, 2023 compared to the same period last year. Megawatts shipped were 12.2 megawatts and 8.7 megawatts during the three months ended September 30, 2023 and 2022, respectively. Average revenue per megawatt shipped was approximately $1.2 million and $1.1 million during the three months ended September 30, 2023 and 2022, respectively. The timing of shipments is variable and based on several factors (including customer deposits, payments, availability of credit and delivery schedule changes), most of which are not within our control and can affect the timing of revenue recognition.
Current wording
2023 compared to the same period last year. Megawatts shipped were 4.4 megawatts and 8.2 megawatts during the three months ended December 31, 2023 and 2022, respectively. Product demand was adversely affected by the Chapter 11 Bankruptcy as customers assess the long-term viability of the Company. Average revenue per megawatt shipped was approximately $1.2 million and $1.2 million during the three months ended December 31, 2023 and 2022, respectively, illustrating the effect of previously announced Product price increases. The timing of shipments is variable and based on several factors (including customer deposits, payments, availability of credit and delivery schedule changes), most of which are not within our control and can affect the timing of revenue recognition.
Previous wording
Parts, service and rentals revenue (which are part of our EaaS business line and includes revenue from our parts shipments, factory protection plan (“FPP”) contracts, rentals, Distributor Support Subscription fees, and other service revenue) increased $2.8 million, or 27%, to $13.3 million for three months ended September 30, 2023 from $10.5 million for the three months ended September 30, 2022. The $2.8 million increase was primarily driven by an increase in rental revenue as a result of our EaaS business plan during the three months ended September 30, 2023 compared to the same period last year.
Current wording
Parts, service and rentals revenue (which are part of our EaaS business line and includes revenue from our parts shipments, FPP contracts, rentals, Distributor Support Subscription fees, and other service revenue) decreased $0.5 million, or 5%, to $9.4 million for three months ended December 31, 2023 from $9.9 million for the three months ended December 31, 2022. The $0.5 million decrease was primarily driven by decreases of $0.4 million in distributor support services, $0.3 million in spare parts and $0.2 million in engineering service revenue, partially offset by an increase of $0.4 million in rentals during the three months ended December 31, 2023 compared to the same period last year. Refer to Note 15 – Commitments and Contingencies — Related Party Transactions, in the Notes to Condensed Consolidated Financial Statements for information related to Reorganized PrivateCo’s retained assets and distributor services business connected to our emergence from the Chapter 11 Cases.
Previous wording
E-Finity and Cal Microturbine accounted for 16% and 10% of revenue for the six months ended September 30, 2023, respectively. Cal Microturbine accounted for 18% of revenue for the six months ended September 30, 2022.
Current wording
Sales to Cal Microturbine accounted for 17% of our revenue for the three months ended December 31, 2023, respectively. RSP Systems and Cal Microturbine, two of our domestic distributors, accounted for 21% and 14% of revenue for the three months ended December 31, 2022, respectively.
Previous wording
Gross Profit Cost of goods sold includes direct material costs, production and service center labor and overhead, inventory charges and provision for estimated product warranty expenses. Gross profit was $5.3 million, or 19% of revenue, for the three months ended September 30, 2023 compared to a gross profit of $3.4 million, or 17% of revenue, for the three months ended September 30, 2022. The increase of $1.9 million was primarily the result of an increase in higher margin rental revenue. The increase was also due to higher direct material profit of $2.2 million, partially offset by higher production and service center labor and overhead expense of $0.3 million.
Current wording
Gross Profit. Cost of goods sold includes direct material costs, production and service center labor and overhead, inventory charges and provision for estimated product warranty expenses. Gross profit was $3.0 million, or 21% of revenue for the three months ended December 31, 2023 compared to a gross profit of $1.7 million, or 8% of revenue for the three months ended December 31, 2022. The increase was primarily the result of an increase in product pricing and increased revenue from our higher margin rental business and lower inventory charges, partially offset by higher production and service center labor and overhead expenses. Effective January 2023, we increased our sales prices and are negotiated with vendors to reduce material costs.
Previous wording
Production and service center labor and overhead expense increased by $0.3 million during the second quarter of Fiscal 2024 compared to the second quarter of Fiscal 2023. The increase was primarily due to increases of $0.4 million in facilities expenses.
Current wording
Production and service center labor and overhead expense increased by $0.6 million during the third quarter of Fiscal 2024 compared to the third quarter of Fiscal 2023. The increase was primarily because of an increase of $0.6 million in depreciation and rent expense related to our rental business.
Previous wording
The $1.2 million improvement in product and accessories gross profit was primarily the result of increase in volume of product shipments in the three months ended September 30, 2023.
Current wording
The $0.2 million decrease in product and accessories gross profit was primarily the result of a decrease in volume of product shipments in the three months ended December 31, 2023.
Previous wording
Product and accessories gross margin as a percentage of product and accessories revenue increased to (1)% during the three months ended September 30, 2023, from (15)% during the three months ended September 30, 2022, primarily driven by higher product sales in the three months ended September 30, 2023. Parts, service and rentals gross margin as a percentage of parts and service revenue decreased to 41% during the three months ended September 30, 2023, compared to 46% during the three months ended September 30, 2022 primarily as a result of higher material and overhead costs in the three months ended September 30, 2023.
Current wording
Product and accessories gross margin as a percentage of product and accessories revenue decreased to (27)% during the three months ended December 31, 2023, from (11)% during the three months ended December 31, 2022, primarily driven by lower product sales and higher material and overhead costs in the three months ended December 31, 2023. Parts, service and rentals gross margin as a percentage of parts and service revenue increased to 47% during the three months ended December 31, 2023, compared to 29% during the three months ended December 31, 2022 primarily as a result of increases in Parts prices and higher margin rental revenue in the three months ended December 31, 2023.
Previous wording
Selling, General, and Administrative (“SG&A”) Expenses increased $4.1 million, or 80%, to $9.2 million from $5.1 million primarily as a result of increases of approximately $4.0 million in legal and accounting fees incurred primarily for the Chapter 11 proceedings during the three months ended September 30, 2023 compared to the same period last year. See Note 3 – Chapter 11 Proceedings for details of the bankruptcy plan.
Current wording
Selling, General, and Administrative (“SG&A”) Expenses. SG&A expenses increased $4.1 million, or 73%, to $9.7 million from $5.6 million primarily as a result of increases of approximately $3.7 million in legal and accounting fees incurred primarily for the restatement activities and $1.3 million in stock-based compensation expense, partially offset by decreases of $0.5 million in marketing costs and $0.4 million in net credit loss expense during the three months ended December 31, 2023 compared to the same period last year. See Fiscal Year 2022 10-K/A and Fiscal Year 2023 10-K for details of the Restatement.
Previous wording
Interest Expense for the six months ended September 30, 2023 and 2022 was $3.5 million and $2.6 million, respectively. See Liquidity and Capital Resources below for additional discussion on our interest expense.
Current wording
Interest Expense. Interest expense for the three months ended December 31, 2023 and 2022 was $1.1 million and $1.9 million, respectively. The decrease in interest expense wasprimarily due to interest accruing on $30.0 million of borrowings under the DIP facilityd uring the three months ended December 31, 2023 compared to the $51.0 million pre-petition notes during the three months ended December 31, 2022. See Liquidity and Capital Resources below for additional discussion on our interest expense.
Previous wording
Revenue for the six months ended September 30, 2023 increased $13.4 million, or 34%, to $52.3 million from $38.9 million for the six months ended September 30, 2022. The $13.4 million increase was primarily driven by increases of $5.6 million in the United States and Canada, $3.1 million in Latin America, $3.1 million in Europe and Russia and $1.6 million in Asia and Australia. The increases were primarily attributable to an increase in our EaaS long-term rental services and product deliveries during the six months ended September 30, 2023.
Current wording
Revenue. Revenue for the nine months ended December 31, 2023 increased $7.0 million, or 12%, to $66.9 million from $59.9 million for the nine months ended December 31, 2022. The $7.0 million increase was primarily driven by increases of $5.1 million in Europe, $3.8 million in Latin America and $2.1 million in Asia and Australia, partially offset by a decrease of $2.2 million in Russia and $1.8 million in the United States and Canada. The increases were primarily attributable to an increase in our EaaS long-term rental services and product deliveries for projects during the nine months ended December 31, 2023. The decreases in the United States and Canada were primarily attributable to a decrease in our product shipments into the energy efficiency vertical markets in those regions compared to the same period last year. The decrease in Russia were the result of United States sanctions.
Previous wording
For the six months ended September 30, 2023 revenue from microturbine products and accessories increased $8.9 million, or 46%, to $28.3 million from $19.4 million for the six months ended September 30, 2022. The $8.9 million increase was primarily due to higher product sales during the six months ended September 30, 2023 compared to the same period last year. Megawatts shipped were 24.2 megawatts and 16.8 megawatts during the six months ended September 30, 2023 and 2022, respectively. Average revenue per megawatt shipped was approximately $1.2 million and $1.1 million during the six months ended September 30, 2023 and 2022, respectively.
Current wording
For the nine months ended December 31, 2023, revenue from microturbine products and accessories increased $3.0 million, or 10%, to $33.5 million from $30.5 million for the nine months ended December 31, 2022. The $3.0 million increase was primarily due to higher product sales during the nine months ended December 31, 2023 compared to the same period last year. Megawatts shipped were 27.6 megawatts and 25.1 megawatts during the nine months ended December 31, 2023 and 2022, respectively. Average revenue per megawatt shipped was approximately $1.2 million and $1.1 million during the nine months December 31, 2023 and 2022, respectively.
Previous wording
Parts, service and rentals revenue (which are part of our EaaS business line and includes revenue from our parts shipments, FPP contracts, rentals, Distributor Support Subscription fees, and other service revenue) increased $4.5 million, or 23%, to $24.0 million for six months ended September 30, 2023 from $19.5 million for the six months ended September 30, 2022. The $4.5 million increase was primarily driven by an increase in rental revenue as a result of our EaaS business plan during the six months ended September 30, 2023 compared to the same period last year.
Current wording
Parts, service and rentals revenue (which are part of our EaaS business line and includes revenue from our parts shipments, FPP contracts, rentals, Distributor Support Subscription fees, and other service revenue) increased $4.0 million, or 14%, to $33.4 million for nine months ended December 31, 2023 from $29.4 million for the nine months ended December 31, 2022. The $4.0 million increase was primarily driven by an increase in rental revenue as a result of our EaaS business plan during the nine months ended December 31, 2023 compared to the same period last year.
Previous wording
Sales to E-Finity Distribution Generation, LLC and Cal Microturbine accounted for 21% and 11% of our revenue for the three months ended September 30, 2023, respectively. Sales to RSP Systems, Capstone Engineered Solutions, Cal Microturbine, and Horizon Power Systems accounted for 15%, 13%, 12%, and 10% of our revenue for the three months ended September 30, 2022, respectively.
Current wording
Sales to E-Finity Distribution Generation, LLC and Cal Microturbine accounted for 14% and 11% of our revenue for the nine months ended December 31, 2023, respectively. Sales to Cal Microturbine and RSP Systems accounted for 16% and 13%of our revenue for the nine months ended December 31, 2022, respectively.
Previous wording
Gross Profit was approximately $8.7 million, or 17% of revenue, for the six months ended September 30, 2023 compared to a gross profit of $5.9 million, or 15% of revenue, for the six months ended September 30, 2022. The increase of $1.9 million was primarily due to higher direct material profit of $4.1 million, partially offset by higher production and service center labor and overhead expense of $1.3 million.
Current wording
Gross Profit. Gross Profit was approximately $11.7 million, or 18% of revenue, for the nine months ended December 31, 2023 compared to a gross profit of $7.6 million, or 13% of revenue, for the nine months ended December 31, 2022. The increase was primarily the result of an increase in product pricing and increased revenue from our higher margin rental business, and lower inventory charges, partially offset by higher production and service center labor and overhead expense. Effective January 2023, we increased our sales prices and are negotiating with vendors to reduce these costs.
Previous wording
Production and service center labor and overhead expense increased $1.3 million in the six months ended September 30, 2023 compared to the six months ended September 30, 2022 primarily due to increases of facility expenses, partially offset by a decrease in supplies expense of $0.3 million.
Current wording
Production and service center labor and overhead expense increased $2.0 million in the nine months ended December 31, 2023 compared to the nine months ended December 31, 2022 primarily due to increases of approximately $2.3 million in depreciation and rent expense related to our rental business, $0.5 million in facilities costs, and $0.2 million in labor costs, partially offset by decreases of $0.7 million in freight expense and $0.3 million of supplies expense.
Previous wording
Product and accessories gross margin as a percentage of product and accessories revenue increased to (4)% during the six months ended September 30, 2023 from (7)% during the six months ended September 30, 2022, primarily due to higher product sales in the six months ended September 30, 2023. Parts, services and rentals gross margin as a percentage of parts, services and rentals revenue increased to 41% during the six months ended September 30, 2023 compared to 37% during the six months ended September 30, 2022, primarily due to higher margin rental revenue in the six months ended September 30, 2023.
Current wording
Product and accessories gross margin as a percentage of product and accessories revenue increased to (8)% during the nine months ended December 31, 2023, from (9)% during the nine months ended December 31, 2022, primarily due to higher margin accessories revenue and increase in Product prices in the nine months ended December 31, 2023. Parts, service and rentals gross margin as a percentage of parts and service revenue increased to 43% during the nine months ended December 31, 2023, compared to 35% during the nine months ended December 31, 2022 primarily as a result of higher margin rental revenue and Parts price increases.
Previous wording
Research and Development (“R&D”) Expenses increased $0.2 million, or 21%, to $1.3 million from $1.1 million, primarily as a result oflower costs from actions taken in our cost reduction plan during the six months ended September 30, 2022.
Current wording
Research and Development (“R&D”) Expenses. R&D expenses increased $0.2 million, or 10%, to $1.9 million from $1.7 million as a result ofhigher labor costs incurred during the nine months ended December 31, 2023.
Previous wording
Interest Expense for the three months ended September 30, 2023 and 2022 was $1.8 million and $1.3 million, respectivly. See Liquidity and Capital Resources below for additional discussion on our interest expense.
Current wording
to the $51.0 million pre-petition notes. See Liquidity and Capital Resources below for additional discussion on our interest expense.
Previous wording
Our cash requirements depend on many factors, including the execution of our business strategy and plan. Our cash and cash equivalents balances decreased $10.3 million during the six months ended September 30, 2023, primarily due to the net loss and cash used in operating activities.
Current wording
Our cash requirements depend on many factors, including the execution of our business strategy and plan. Our cash and cash equivalents balances decreased $9.0 million during the nine months ended December 31, 2023, primarily due to cash used in operating activities, partially offset by net cash provided by financing activities.
Previous wording
Operating Activities During the six months ended September 30, 2023, we used $9.4 million in cash in our operating activities, which consisted of a net loss for the period of $11.6 million and cash used for working capital of $2.0 million, partially offset by non-cash adjustments (primarily depreciation and amortization, inventory provision, warranty provision and stock-based compensation) of $4.2 million. During the six months ended September 30, 2022, we used $3.0 million in cash in our operating activities, which consisted of a net loss for the period of $7.9 million, cash provided from working capital of $1.4 million and non-cash adjustments (primarily gain on extinguishment of debt, warranty provision, depreciation and amortization, stock-based compensation and inventory provision) of $3.5 million.
Current wording
Operating Activities During the nine months ended December 31, 2023, we used $22.1 million in cash in our operating activities, which consisted of a net income for the period of $12.7 million, offset by non-cash adjustments (primarily the reorganization items, net, paid-in-kind interest expense, depreciation and amortization of assets and stock-based compensation) of $25.9 million and cash used for working capital of $8.9 million. During the nine months ended December 31, 2022, we used $8.4 million in cash in our operating activities, which consisted of a net loss for the period of $14.2 million, cash provided from working capital of $0.4 million and non-cash adjustments (primarily depreciation and amortization, inventory provision and stock-based compensation) of $5.4 million.
Previous wording
The change in non-cash operating activities during the six months ended September 30, 2023, compared to the same period the previous year was primarily driven by an increase in depreciation expense related to the additions to our rental fleet and the increase in the amortization of our right-of-use assets during the six months ended September 30, 2023. The change in accounts receivable was primarily the result of delayed collections during the six months ended September 30, 2023 compared to the same period in the previous fiscal year. The change in inventory was primarily the result of a decrease in finished goods during the six months ended September 30, 2023. The change in accounts payable and accrued expenses was primarily due to lower accounts payable payments to vendors during the six months ended September 30, 2023 compared to the same period of the previous fiscal year. The change in other operating assets and liabilities during the six months ended September 30, 2023 compared to the same period in the previous fiscal year, was primarily driven by the decreases in deferred revenue attributable to customer deposits, FPP contracts and DSS program.
Current wording
The change in non-cash operating activities during the nine months ended December 31, 2023, compared to the same period in the previous year was primarily driven by the net reorganization items, which included our gain on debt extinguishment, offset by increases in amortization expense of our right-of-use assets, stock-based compensation expense and paid-in-kind interest expense. The change in accounts receivable was primarily the result of delayed collections during the nine months ended December 31, 2023 compared to the same period in the previous fiscal year. The change in inventory compared to the nine months ended December 31, 2022, was primarily the result of a decrease in finished goods during the nine months ended December 31, 2023. The change in accounts payable and accrued expenses was primarily due to higher payments to vendors during the nine months ended December 31, 2023, compared to the same period of the previous fiscal year. The change in other operating assets and liabilities during the nine months ended December 31, 2023 compared to the same period in the previous fiscal year, was primarily driven by the decreases in deferred revenue attributable to customer deposits, FPP contracts and DSS program.
Previous wording
Investing Activities Net cash used in investing activities were $3.9 million and $2.6 million during the six months ended September 30, 2023 and 2022, respectively, primarily due to the additions to our rental fleet of approximately $3.9 million and $1.9 million, respectively.
Current wording
Investing Activities Net cash used in investing activities was $4.6 million and $4.0 million during the nine months ended December 31, 2023 and 2022, respectively, primarily related to the additions to our rental fleet.
Previous wording
Financing Activities During the six months ended September 30, 2023, we generated cash of approximately $2.9 million from financing activities, compared to cash generated during the six months ended September 30, 2022 of approximately $6.8 million. The funds generated from financing activities during the six months ended September 30, 2023 were primarily the result of net cash of $3.0 million received from the issuance of additional pre-petition senior secured notes under the Amended and Restated (“A&R”) Note Purchase Agreement on September 22, 2023 (“Pre-Funding Advance”). This amendment was entered into to provide liquidity to Capstone for working capital needs to operate the business during the bankruptcy proceedings and until Capstone could secure additional funding through a debtor-in-possession financing facility. See Note 3– Chapter 11 Proceedings in the Notes to Condensed Consolidated Financial Statements for further discussion of the outstanding debt and the post emergence financing. The funds generated from financing activities during the six months ended September 30, 2022 were primarily the result of net proceeds net proceeds from the issuance of common stock and warrants of $7.3 million, offset by $0.5 million in repayments of lease obligations.
Current wording
Financing Activities During the nine months ended December 31, 2023, we generated cash of approximately $17.6 million from financing activities, compared to cash generated during the nine months ended December 31, 2022 of approximately $6.5 million. The funds generated from financing activities during the nine months ended December 31, 2023 were primarily the result of $12.0 million of funding under the DIP Facility, cash of $3.0 million received from the issuance of additional pre-petition senior secured notes under the A&R Note Purchase Agreement during the second quarter of Fiscal 2024 (“Pre-Funding Advance”) and $3.0 million of funding under the Exit Facility during the third quarter
Previous wording
Going Concern In connection with preparing the Condensed Consolidated Financial Statements for the three and six months ended September 30, 2023, management evaluated whether there were conditions and events, considered in the aggregate, that raised substantial doubt about our ability to meet our obligations as they became due for the next twelve months from the date of issuance of our financial statements. As of September 30, 2023, we had cash and cash equivalents of $2.5 million, and $57.0 million in borrowings were outstanding under the Notes. We incurred a net loss of $11.6 million and used cash from operating activities of $9.4 million during the six months ended September 30, 2023.
Current wording
Going Concern In connection with preparing the Condensed Consolidated Financial Statements for the three and nine months ended December 31, 2023, management evaluated whether there were conditions and events, considered in the aggregate, that raised substantial doubt about our ability to meet our obligations as they became due for the next twelve months from the date of issuance of our financial statements. As of December 31, 2023, we had cash and cash equivalents of $3.9 million and a working capital deficit of $9.3 million. We incurred net income of $12.7 million and used cash from operating activities of $22.1 million during the nine months ended December 31, 2023.
Previous wording
In May 2023, we implemented an expense reduction plan to align our cost structure. The cost reductions focused on non-operating, discretionary expenses and employee costs. Beginning May 12, 2023, nine employees were furloughed for a period of 180 days, the Sales Solutions Team was abandoned, and the effort in Energy Storage Products business was discontinued.
Current wording
In May 2023, we implemented an expense reduction plan to align our cost structure. The cost reductions focused on non-operating, discretionary expenses and employee costs. Beginning May 12, 2023, nine employees were furloughed for a period of 180 days, the Sales Solutions Team was abandoned, and the effort in Energy Storage Products business was discontinued. Furloughed employees were able to return to work in November 2023.
Previous wording
In February 2022, we announced that we reached our goal of having 21.1 MW of rental units in our fleet and under contract. As of September 30, 2023, we had 50.2 MW of rental units in our fleet and under contract. The EaaS rental unit timeline includes a delay between the time of manufacture and the time revenue from that unit is realized. The microturbine rental unit is built, allocated by a signed rental contract, and then commissioned at the customer site, at which point it begins to generate revenue. Additionally in March 2022, we announced that we increased the Distributor Support System, or DSS, program fee to 5% of prior calendar year revenue, from 3%, to support the expanding EaaS business.
Current wording
As of December 31, 2023, we had 51.2 MW of rental units in our fleet and under contract. The EaaS rental unit timeline includes a delay between the time of manufacture and the time revenue from that unit is realized. The microturbine rental unit is built, allocated by a signed rental contract, and then commissioned at the customer site, at which point it begins to generate revenue.
Previous wording
Our accounts receivable balance, net of allowances, was $8.7 million and $7.1 million as of September 30, 2023 and March 31, 2023, respectively. DSO decreased by 18 days to 28 days as of September 30, 2023 compared to 46 days as of March 31, 2023, primarily due to an increase in revenue.
Current wording
Our accounts receivable balance, net of allowances, was $5.6 million and $7.1 million as of December 31, 2023 and March 31, 2023, respectively. DSO decreased by 11 days to 35 days as of December 31, 2023 compared to 46 days as of March 31, 2023, primarily due to an increase in revenue.
Previous wording
Goldman Sachs under the U.S. Chapter 11 Bankruptcy laws, as further discussed in Note 3– Chapter 11 Proceedings in the Notes to Condensed Consolidated Financial Statements. We emerged from Bankruptcy on December 7, 2023, and effected a financial and organizational restructuring.
Current wording
On September 28, 2023, we filed for a prepackaged financial restructuring with our Senior Lender, Goldman Sachs under the U.S. Chapter 11 Bankruptcy laws. We emerged from Bankruptcy on December 7, 2023, and effected a financial and organizational restructuring. See Note 3– Chapter 11 Proceedings and Emergence in the Notes to Condensed Consolidated Financial Statements
Rearranged current paragraphs (3)
Current report — wording carried from elsewhere
our business strategy is to ensure diversification by also targeting projects within the energy efficiency and renewable energy markets.
Current report — wording carried from elsewhere
For the three months ended December 31, 2023, revenue from microturbine products and accessories decreased $5.9 million, or 53%, to $5.2 million from $11.1 million for the three months ended December 31, 2022. The $5.9 million decrease was primarily driven by a decrease in megawatts and units shipped during the three months ended December 31,
Current report — wording carried from elsewhere
of Fiscal 2024, partially offset by issuance costs of $0.2 million. See Note 3— Chapter 11 Proceedings and Emergence in the Notes to Condensed Consolidated Financial Statements and Note 13— Debt for further discussion of the outstanding debt and the post emergence financing. The funds generated from financing activities during the nine months ended December 31, 2022 were primarily the result of net proceeds net proceeds from the issuance of common stock and warrants of $7.3 million, offset by $0.8 million in repayments of lease obligations.
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
simultaneously lowering direct material costs and increasing average selling prices. The key drivers to our success are revenue growth, higher average selling prices, lower direct material costs, positive new order flow, reduced cash usage and expansion of the EaaS business.
Previous report — wording carried elsewhere
gas mix. In continuing these efforts, we are testing a 100% hydrogen gas combustion system through our research and development partnership with Argonne National Laboratory.
Previous report — wording carried elsewhere
Subsequent to September 30, 2023, we reduced our outstanding debt via proceedings in U.S. Chapter 11 Bankruptcy Court. On September 28, 2023, we filed for a prepackaged financial restructuring with our Senior Lender,