Overview

A class action lawsuit, captioned Spitzer v. Flexon, et al., No. 2:23cv08659 (C.D. Cal.), has been filed against Capstone Green Energy Corp. (“Capstone” or the “Company”) (OTC BB: CGRNQ) and certain of its top current and former executive officers alleging that they violated the federal securities laws.  The lawsuit seeks to represent purchasers or acquirers of Capstone securities between June 14, 2021 and September 22, 2023, inclusive (the “Class Period”). 

Capstone is a California-based gas turbine manufacturer that specializes in microturbine power along with heating and cooling cogeneration systems.

The Capstone lawsuit alleges that throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants failed to disclose to investors: (1) that the Company had engaged in “bill and hold transactions” with customers; (2) that these transactions were not reported pursuant to generally accepted accounting principles (“GAAP”); (3) that, “as a result of apparent errors primarily related to revenue recognition associated with bill and hold transactions” the Company lacked a reasonable basis to report certain financial results and was reasonably likely to restate its financial statements; and (4) that, as a result of the foregoing, Defendant’s positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis.

On August 15, 2023, after the closing of trading, the Company announced it was unable to timely file its Form 10-Q due to an “ongoing review and investigations by the Audit Committee of financial reporting and other matters.”  On this news, the Company’s stock price fell $0.05, or 5%, to close at $0.89 per share on August 16, 2023, on unusually high trading volume. The Company’s stock price continued to fall the next trading session by $0.05, or 5%, to close at $0.84 per share on August 17, 2023.

Then, after the market closed on August 18, 2023, the Company announced it had entered into a Fifth Amendment to its Amended and Restated Note Purchase Agreement among the Company, Goldman Sachs Specialty Lending Group, L.P., and a purchaser party.  Capstone also reported receipt of a notice from the NASDAQ exchange that the Company was not in compliance with listing requirements due to its failure to file periodic financial reports.  On this news, the Company’s stock price fell an additional $0.26, or 30%, to close at $0.58 per share on August 21, 2023, on unusually high trading volume.

Then, on September 22, 2023, after trading hours, the Company disclosed that certain financial statements could no longer be relied upon “as a result of apparent errors primarily related to revenue recognition associated with bill and hold transactions that were identified in the course a review by the Audit Committee[.]” The Company disclosed there were “numerous instances where bill and hold transactions did not appear to meet the requirements for revenue recognition under GAAP.”

On September 28, 2023, the Company announced it had filed for Chapter 11 bankruptcy protection, causing the Company’s stock price to fall  $0.10, or 17%, to close at $0.50 per share on September 28, 2023.

Again, on October 4, 2023, after trading hours, it was announced that the company would be delisted, and the ticker symbol changed from “CGRN” to “CGRNQ.”

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If you purchased Capstone securities during the Class Period and suffered substantial losses, and you wish to serve as lead plaintiff in this lawsuit, we encourage you to submit your information to DiCello Levitt LLP via the form on this page. You can also contact DiCello Levitt partner Brian O’Mara by calling (888) 287-9005 or at investors@dicellolevitt.com. 

The deadline to apply to the Court to serve as a lead plaintiff in the Capstone lawsuit is December 12, 2023.