Question:

How many C200 were produced during Fiscal 2010 that were used in the C200, C600, C800 and C1000?

Answer from Capstone Management:

The table below summarizes our revenue (in millions) and megawatts and units shipped by product line for each of Fiscal 2009 and Fiscal 2010:

 

		Years Ended March 31,
		2010									2009
		Revenue			Megawatts			Units			Revenue			Megawatts			Units
C30		$	6.9			5.0			161		$	4.0			3.1			104
C60 Series			17.4			17.7			272			23.8			24.4			375
TA100			1.2			1.1			11			—			—			—
C200			4.9			5.6			28			1.4			1.8			9
C600			2.8			3.0			5			1.0			1.2			2
C800			5.0			6.4			8			1.1			1.6			2
C1000 Series			10.5			14.0			14			1.1			2.0			2
Total from Microturbine Products		$	48.7			52.8			499		$	32.4			34.1			494
Accessories, Parts and Service			12.9			—			—			11.5			—			—
Total		$	61.6			52.8			499		$	43.9			34.1			494

   

 

 

 

Question:

Please explain the Wells Fargo credit problems and possible seizure of Capstone assets upon default.

Answer from Capstone Management:

As of March 31, 2010, Capstone determined that it was not in compliance with the financial covenant in the Credit and Security Agreements (the “Agreements”) with Wells Fargo regarding net income.  On May 11, 2010, Capstone received a notice of default from Wells Fargo related to the noncompliance. As a result, Wells Fargo imposed default pricing of an additional 3.0% effective March 1, 2010.  On June 11, 2010, Capstone received from Wells Fargo a waiver of the noncompliance with the financial covenant as of March 31, 2010, and Capstone amended the Agreements to set the covenants for Fiscal 2011. As a condition of the amended Agreements, Capstone has restricted $5.0 million of cash effective June 11, 2010 as additional security for the Credit Facility.

If Capstone had not obtained the waiver and amended the Agreements, Capstone would not be able to draw additional funds under the Credit Facility. In addition, Capstone has pledged its accounts receivables, inventories, equipment, patents and other assets as collateral for the Agreements, which would be subject to seizure by Wells Fargo if Capstone was in default under the Agreements and unable to repay the indebtedness.  Wells Fargo also has the option to terminate the Agreements or accelerate the indebtedness during a period of noncompliance. Based on its current forecasts, Capstone believes it will maintain compliance with the covenants contained in the amended Agreements for the next twelve months.

 

Question:

Can the 30kW Capstone Microturbine be run on a very high hydrogen content syngas? This would be a very clean gas, comprised of hydrogen and carbon monoxide.

Answer from Capstone Management:

In conjunction with a U.S. Department of Energy program, Capstone is currently developing a flex fuel microturbine that can run on agricultural syngas, which is akin to hydrogen. Capstone anticipates finishing this funded product development project in the next 18 months. After successful completion of this program, Capstone plans to release a hydrogen product.

Question:

I went to Western Energy Systems website. It only mentions Jenbacher. Does this reflect a conflict of interest with Capstone?

Answer from Capstone Management:

Western Energy Systems received approval from GE Jenbacher to represent the Capstone product line because GE Jenbacher was unable to produce a CARB-certified product for Western Energy to sell and market in the California market.

Question:

What amount of CPST stock is held by upper management and the board of directors?

Answer from Capstone Management:

The tables below set forth certain information as of June 30, 2010 (unless otherwise indicated) regarding beneficial ownership of Common Stock by: (1) each director, nominee for director and Named Executive Officer of the Company; (2) all directors and executive officers as a group; and (3) each person known by the Company to be the beneficial owner of more than 5% of the outstanding Common Stock of the Company. As of June 30, 2010, there were 242,348,323 shares of Common Stock outstanding. Except as otherwise indicated, the beneficial owners listed below have sole voting and investment power with respect to all shares owned by them, except to the extent such power is shared by a spouse under applicable law.

 

Name of Beneficial Owner**		Amount and Nature of Beneficial Ownership(1)				Percent of Class
Gilder, Gagnon, Howe & Co. LLC 3 Columbus Circle, 26th Floor New York, NY 10019(2)			41,750,272				17.8	%
Darren R. Jamison(2)			2,754,556				1.1	%
Eliot G. Protsch			224,348				*
Mark G. Gilbreth(3)			1,039,849				*
James D. Crouse			907,320				*
Edward I. Reich(4)			645,002				*
John V. Jaggers(5)			318,243				*
Jayme L. Brooks			175,878				*
Noam Lotan			82,779				*
Darrell J. Wilk			89,006				*
Gary D. Simon			76,966				*
Richard K. Atkinson			59,100				*
Gary J. Mayo			59,834				*
Holly A. Van Deursen			59,854				*
Directors and executive officers as a group (13 persons)			6,492,736				2.6	%

____________

 

*		Less than one percent.
**		Unless otherwise indicated, the address of each person listed is c/o Capstone Turbine Corporation, 21211 Nordhoff Street, Chatsworth, California 91311

(1)

In computing the number of shares beneficially owned by an individual and the percentage ownership of that individual, shares of Common Stock underlying options held by that individual that are currently exercisable, or will become exercisable within 60 days from June 30, 2010, are deemed outstanding. The total number of shares of Common Stock underlying options, pursuant to which such individuals have rights to acquire beneficial ownership of Common Stock within 60 days, is as follows:

 

		Shares Underlying
Name		Options
Darren R. Jamison			2,195,833
Eliot G. Protsch			106,884
Mark G. Gilbreth			894,387
James D. Crouse			775,000
Edward I. Reich			621,875
John V. Jaggers			85,284
Jayme L. Brooks			104,688
Noam Lotan			71,600
Darrell J. Wilk			61,600
Gary D. Simon			61,600
Richard K. Atkinson			61,600
Gary J. Mayo			34,400
Holly A. Van Deursen			34,400

(2)		The number of shares listed as beneficially owned by Gilder, Gagnon, Howe & Co. LLC includes shares held by certain of its affiliates. Information is based solely from a Schedule 13G filed by Gilder, Gagnon, Howe & Co. LLC on March 10, 2010 and amended on June 10, 2010. Gilder, Gagnon, Howe & Co. LLC has sole voting power and sole dispositive power with respect to 1,109,742 shares and shared dispositive power with respect to 40,640,530 shares.
(3)		Mr. Gilbreth disclaims beneficial ownership of 362,708 shares underlying stock options, 15,374 shares underlying restricted stock units and 6,375 shares underlying exercised stock options which were the subject of a divorce decree.
(4)		Mr. Reich disclaims beneficial ownership of 37,500 shares underlying stock options and 21,675 shares underlying restricted stock units which were the subject of a divorce decree.
(5)		The ownership includes: (a) 43,087 shares of Common Stock held by Sevin Rosen Fund V L.P.; (b) 1,842 shares of Common Stock held by Sevin Rosen V Affiliates Fund L.P.; (c) 9,728 shares of Common Stock held by Sevin Rosen VII Affiliates Fund, L.P.; (d) 16 shares of Common Stock held by SRB Associates VII L.P.; and (e) 180,786 shares directly owned by Mr. Jaggers.  Mr. Jaggers is a general partner of SRB Associates V L.P. (the general partner of Sevin Rosen Fund V L.P. and Sevin Rosen V Affiliates Fund L.P.) and of SRB Associates VII L.P. (the general partner of Sevin Rosen VII Affiliates Fund L.P.) and may be deemed to have shared power to dispose of and vote these shares. Mr. Jaggers disclaims beneficial ownership of these shares except to the extent of his proportionate partnership interest in these shares.