Business Combinations |
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| Business Combination, Asset Acquisition, Transaction between Entities under Common Control, and Joint Venture Formation [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Business Combination |
20. Business Combinations Acquisition of Cal Microturbine, LLC On August 13, 2025, the Company entered into an Equity Purchase Agreement (the “Purchase Agreement”) to acquire 100% of the equity interests of Cal Microturbine for total consideration of approximately $14.9 million, which was comprised of $6.0 million cash paid at closing, $3.4 million in deferred consideration, and the settlement of preexisting relationships of $5.5 million. The acquisition expands the Company’s direct distribution and service capabilities in key markets and is expected to enhance operational efficiencies and customer reach. The transaction closed on August 13, 2025 (“Closing Date”) and was funded using available cash on hand. The table below summarizes the total consideration transferred at the Closing Date (in thousands):
(1)The deferred consideration reflects cash payments of $4.0 million which will be distributed over 24 monthly installments starting in January 2026. These payments were discounted to their present value using an 11.45% discount rate. (2)The settlement of preexisting relationships reflects the resolution of outstanding accounts receivable and deferred revenue balances between Capstone and Cal Microturbine that existed as of the Closing Date. In accordance with ASC 805-10-25-20, this settlement was accounted for separately from the business combination and is excluded from the measurement of consideration transferred for purposes of the purchase price allocation and the determination of goodwill.
At the time of acquisition, Capstone and Cal Microturbine were engaged in ongoing litigation and arbitration related to their distributor agreement. As a result of the Purchase Agreement, these disputes were resolved, and mutual releases were executed. Neither company had recorded any contingent assets nor liabilities related to these matters as of the Closing Date. The Company incurred acquisition and integration-related costs of $1.6 million during the year ended March 31, 2026, which were recorded within “Selling, general and administrative” expenses on the Company’s Consolidated Statement of Operations. The Company accounted for the acquisition using the acquisition method under ASC 805, Business Combinations, under which assets acquired and liabilities assumed are recorded at their estimated fair values as of the Closing Date. The most significant judgment in the purchase price allocation relates to the valuation of Cal Microturbine's customer relationships, which were valued using the multi-period excess earnings method. Key assumptions include projected revenue, customer attrition rates, operating expenses, selling and general administrative expenses, and a discount rate. Because this valuation relies on company-specific forecasts and assumptions rather than observable market inputs, the customer relationship intangible asset is classified as a Level 3 measurement within the ASC 820 fair value hierarchy. As of the date of this filing, the Company performed the preliminary analysis to assign fair value to all tangible and intangible assets acquired and liabilities assumed. The preliminary purchase price allocation includes measurement period adjustments recognized based on information obtained subsequent to the Closing Date related to facts and circumstances that existed as of the acquisition date, primarily related to the identification of previously unrecorded sales tax payable and commissions payable, which resulted in corresponding adjustments to the estimated fair value of identifiable intangible assets. The purchase price allocation remains preliminary and is subject to further refinement as additional information becomes available, which may result in changes to the estimated fair values of assets acquired and liabilities assumed. The Company expects to finalize the fair value measurements as soon as practicable, but no later than 12 months from the Closing Date. No goodwill has been recognized as its management estimate as of the date of this filing is that the fair value of the net assets and liabilities acquired approximate the purchase price. However, upon finalizing its purchase price allocation, goodwill may result. The following table summarizes the amounts of assets acquired and liabilities assumed at the acquisition date, valued at their estimated acquisition date fair value and subsequent adjustments made during the measurement period (in thousands):
(1) The intangible asset relates to customer relationships and was determined to have a amortization period of six years, amortized on a straight-line basis. Amortization expense from August 13, 2025, Closing Date, through March 31, 2026 is $0.4 million.
No goodwill was recognized as the estimated fair value of the net assets acquired approximates the total consideration transferred. The post-closing operating results of Cal Microturbine have been included in our consolidated financial statements. For the period from the Closing Date through March 31, 2026, the Company’s Consolidated Statements of Operations include Cal Microturbine revenue of $4.0 million and earnings of $1.2 million for the year ended March 31, 2026, respectively. Pro Forma Financial Information (Unaudited) The following unaudited pro forma consolidated results of operations present the estimated unaudited pro forma combined results of Capstone and Cal Microturbine for the year ended March 31, 2026 and 2025, as if the acquisition had occurred on April 1, 2024 and was prepared in accordance with ASC 805. The pro forma information does not necessarily represent what the combined companies' revenue or results of operations would have been had the acquisition occurred on April 1, 2024, nor is it intended to be a projection of future operating results. It does not reflect any operating efficiencies or potential cost savings from combining the two entities. Cal Microturbine's fiscal year ends December 31; accordingly, the pro forma financial information was prepared using comparable reporting periods, with Cal Microturbine's financial data derived from internally generated, unaudited reports and certain estimates applied to allocate revenues and expenses across periods. Pro forma adjustments include the elimination of intercompany revenue and expenses, amortization of the customer relationship intangible asset, interest expense on deferred consideration, and reclassification of acquisition-related transaction costs. Acquisition-related costs incurred by Capstone were excluded from the fiscal 2026 pro forma results and included in the fiscal 2025 pro forma results, consistent with ASC 805 requirements.
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| Asset Acquisition |
Asset Acquisition of Capstone Distributor Support Services (“CDSS”) On March 31, 2026, pursuant to an asset purchase agreement, the Company acquired a set of assets and assumed certain liabilities associated with its distributor support activities, including the Company’s right, title, and interest in and to certain trademarks of the Company from Capstone Distributor Support Services Corporation (the “Seller” or “CDSS”) (the “DSS Transaction”). Total consideration transferred was $4.4 million, consisting of $1.0 million of cash paid at closing, $1.0 million attributable to the settlement of a pre-existing relationship between the Company and CDSS and the assumption of $2.4 million of liabilities. The Company determined the Transaction constituted an asset acquisition because the acquired set did not include an assembled workforce with a substantive process and therefore did not meet the definition of a business under U.S. GAAP. Under asset acquisition accounting, the total purchase consideration was allocated to assets acquired and liabilities assumed on a relative fair value basis. No goodwill was recognized. The allocation of the purchase consideration to the assets acquired and liabilities assumed is summarized below (in thousands):
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