Capstone Green Energy Corp (fka CGRNQ)

[Seasound]

There seems to be a fundamental shift in sentiment (my opinion formed by what I read and see) going on that begs several questions; questions that can't be answered by past Q/Q Conference Calls, the last Annual Report to Stockholders, nor forward looking statements, projections, or pie charts. I suppose we'll hear the answers in early November.

What effect will Greenvironment's September 1 filing of insolvency have on Capstone's bottom line, i.e. Accounts Receivable? Are we hanging out to dry with our own CHP units? The aftershocks, considering the market they did business with, will be significant in my opinion.

Quote from Greenvironment's Feb 28, 2011 Report of the directors "The directors have prepared cash flow forecasts for the next 36 months and are confident that the company can deliver on its extensive pipeline of future projects and remain within the company’s liquidity limits without further funding." Just a tad short it seems. In the same report, several paragraphs down under the heading Events after reporting date I note this sentence "After the reporting date the company has been able to raise equity of €3.2M to further strengthen its financial position." The directors go on to say that they had just signed the largest deal in the history of the company with Russia, so we can cut them some slack on that one.

Greenvironment's February 28, 2011 report also states that they predict profitability in February of 2013. Too bad they couldn't make it through 2012. All of the above is starting to sound erringly familiar.

On slide 16 of the Annual General Meeting Presentation The header states "Greenvironment is an ideal target for any big energy company." Despite the rosy picture painted, one of our prime customers failed and no White Knight road up to rescue them. Why? I sure don't know. Let's hope that Greenvironment's Creditor's Payment Policy which states that "It is the Group’s policy to ensure that all of its suppliers are paid promptly and in accordance with contractual obligations" came through before they went under.

What's with the noticeable slowdown of order announcements? Lack of sales seems a logical choice. Are potential customers selecting different technologies? Is "clean" coal the new green? The last sales announcement was on September 25th for 5MW (the only order announced since the Annual Stockholders meeting on 08/28.) Prior to that the last announcement was on August 3rd. If we aren't packing the back-end of the much heretofore touted back-log, and customers aren't requesting delivery of those existing orders, we are in deep bio-mass--IMHO of course.

The only other recent announcements concerned an iPad App and the hiring of Paul Campbell as Senior VP of Customer Service. Did we have a VP of Customer Service prior to Mr. Campbell's arrival? Campbell gets options to purchase 250,000 shares in the next 4 years (pro-rated) at the September 24 closing price of $1.005. He also negotiated a grant of 62,5000 restricted stock units (trumps us retail folks in a meltdown) that vest 25% per year during his first 4 years.

The upcoming Q2 CC is crucial. Hopefully the trends that we have seen in the past will continue, and we don't take a major hit from Greenvironment. A major announcement or two between now and then couldn't hurt either.