OTC: CGEH

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.

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

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.

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:

●Microturbines - Low-emission, oil-free, high integrated and active redundancy, scalable on-site power generation;

●Absorption Chillers - Recycling microturbine waste heat into useful chilled water, generating chilled water at one tenth the energy of an air-cooled electric chiller currently used in data centers;

●Dry Coolers - Zero-water heat rejection to support sustainable, water-conscious operations;

●Battery Energy Storage Systems ("BESS") - Rapid response to fast-changing electrical loads, including the dynamic demands of GPU-intensive computing; and

●Microgrid Controls - Advanced microgrid control architecture enabling intelligent, automated energy management.

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.

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. 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.

Bridge Power

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.

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

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.

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.)

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

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.

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.

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

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:

●Where waste heat recovery creates significant economic value through CHP, CCHP or direct exhaust use configurations, improving total system efficiency to 85–90% or more

●Where renewable or low-cost fuel sources, including biogas, flare gas, renewable natural gas, and hydrogen blends, reduce the cost of on-site generation

●Where grid connection costs are prohibitive or grid access is unavailable, such as remote oil and gas production sites, island locations, or rapidly growing data center campuses where utility infrastructure cannot keep pace

●Where power reliability and quality are mission-critical and the consequences of outages are severe

●Where peak shaving or demand charge reduction creates meaningful cost savings in markets with highly variable electricity pricing

●Where policy proposals, grid constraints and market dynamics may encourage behind-the-meter or self-generated power for data centers.

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.

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). 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:

●Provide reliable, continuous power when the utility grid is unavailable, unstable, or insufficient

●Reduce the total cost of electricity and fuel through CHP efficiency, fuel flexibility, and EaaS commercial structures

●Deliver high power quality through smart digital electronics, and exceptional availability through our active redundancy architecture and industry-leading maintenance intervals

●Operate on a wider range of fuel types than any competing technology, from natural gas and propane to biogas, sour gas, flare gas, hydrogen blends, and renewable natural gas

●Achieve ultra-low emissions that meet or exceed the most stringent regulatory standards in key markets, including CARB certification

●Serve as the stabilizing backbone of advanced microgrids integrating renewables, storage, and other distributed energy resources

●Simplify installation, operation, and long-term maintenance through our oil-free design, digital controls, and remote monitoring capabilities

●Support the next generation of AI and data center infrastructure through our 800 VDC platform and ESP Engineered Equipment Packages, addressing power density, efficiency, and grid-independence requirements that no competing technology currently matches at scale

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.

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.

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. 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. 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 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. 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

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. 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.

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.

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., 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.