DEFA14A: Capstone Green Energy Faces Accounting Firm Merger, Stockholders to Vote on Ratification

Capstone Green Energy's stockholders will vote on the ratification of Marcum LLP or CBIZ CPAs P.C. as the company's independent registered public accounting firm following Marcum's merger with CBIZ.

Summary

• This document is a proxy statement supplement related to Capstone Green Energy Holdings, Inc.'s upcoming annual meeting of stockholders on February 12, 2025.
• The supplement addresses the merger of Capstone's independent registered public accounting firm, Marcum LLP, with CBIZ CPAs P.C.
• On November 1, 2024, CBIZ purchased Marcum's attest business assets, and the partners and staff providing attestation services for Marcum joined CBIZ.
• CBIZ is expected to be engaged as Capstone's independent registered public accounting firm for the fiscal year ending March 31, 2025, pending approval by the Audit Committee and completion of CBIZ's client acceptance procedures.
• The audit team from CBIZ is expected to be substantially the same as the team that previously serviced Capstone from Marcum.
• Marcum's audit report on Capstone's financial statements for the fiscal years ended March 31, 2024 and 2023, contained an indication of substantial doubt about the company's ability to continue as a going concern.
• There were no disagreements with Marcum on accounting principles or practices, financial statement disclosures, or audit scope, except for a material weakness in internal control over financial reporting.
• Stockholders are being asked to ratify the appointment of Marcum, or CBIZ, as the company's independent registered public accounting firm for the fiscal year ending March 31, 2025.
• A vote for Marcum will be deemed a vote for CBIZ, assuming the Audit Committee elects to engage CBIZ.
• The Board of Directors unanimously recommends a vote for the ratification of the appointment of Marcum, or CBIZ.

Sentiment

Score: 6

Explanation: The sentiment is neutral. While there are positive aspects like the continuity of the audit team, the disclosure of a going concern warning and material weakness in internal control tempers the overall outlook.

Positives

• The transition to CBIZ is expected to maintain continuity in the audit team.
• The company is addressing the identified material weakness in its internal control over financial reporting.
• The Board of Directors unanimously recommends a vote for the ratification of the appointment of Marcum, or CBIZ.

Negatives

• Marcum's audit report included a statement indicating substantial doubt about Capstone's ability to continue as a going concern.
• The company identified a material weakness in its internal control over financial reporting.

Risks

• The engagement of CBIZ is subject to the approval of the Audit Committee and the completion of CBIZ's customary client acceptance procedures.
• The company's ability to address the material weakness in its internal control over financial reporting remains a risk.
• There is a risk that the transition to CBIZ could disrupt the audit process.

Future Outlook

The company expects CBIZ to be engaged as its independent registered public accounting firm for the fiscal year ending March 31, 2025, subject to approval.

Management Comments

• The Board of Directors unanimously recommends a vote for the ratification of the appointment of Marcum, or CBIZ, as the company's independent registered public accounting firm for the fiscal year ending March 31, 2025.

Industry Context

The merger of accounting firms is a common occurrence in the industry, often driven by consolidation and the desire to expand service offerings and geographic reach. This merger reflects that trend.

Comparison to Industry Standards

• The engagement of a new auditor following a merger is a standard practice.
• Companies like General Electric and Siemens often use large firms like Deloitte, Ernst & Young, KPMG, and PricewaterhouseCoopers, while Capstone is using a smaller firm.
• The disclosure of material weaknesses in internal control is required by regulations like Sarbanes-Oxley, and Capstone's disclosure is in line with these requirements.

Stakeholder Impact

• Shareholders are impacted by the change in accounting firm and the need to vote on the ratification.
• The company's employees, particularly those in the finance and accounting departments, may be impacted by the transition to a new accounting firm.
• The company's creditors may be concerned about the going concern warning and the material weakness in internal control.

Next Steps

• Stockholders will vote on the ratification of the appointment of Marcum, or CBIZ, as the company's independent registered public accounting firm at the Annual Meeting on February 12, 2025.
• The Audit Committee of the Board will need to approve the engagement of CBIZ.
• CBIZ will need to complete its customary client acceptance procedures.

Key Dates

Keywords

CBIZ, Marcum, accounting firm, audit, proxy statement, ratification, Capstone Green Energy, internal control, going concern