Question:

The question I had is concerning your 4th quarter report that says CPST had a $.12 per share loss with revenue of 22.8 million and last quarter you had around a $.03 per share loss with revenue of around 24.2 million. Would you help me see how that is possible and where did all this money go? Thanks for your time and I am looking forward to your response.

Answer from Capstone Management:

The difference that you have noted is related to a non-cash charge associated with the warrant liability based upon quarter over quarter changes in Capstone’s stock price. This non-cash adjustment is made pursuant to new rules on accounting for outstanding common stock warrants and can only have a positive impact on Capstone from a cash perspective if the warrants are exercised at some point in the future. Warrant liability is adjusted up or down on a quarterly basis until all the warrants are either exercised or expire at the end of their term.

Question:

Mr. Jamison mentioned on the 4th quarter call that the 250 when ready will help the overall margin. What would be the timing of the C250 coming on the market. Thanks.

Answer from Capstone Management:

Capstone is staffing up the C250 program and anticipates fielding initial beta units in approximately 18 months with commercial release in approximately 24 months.

Question:

Are there plans to bring more awareness to the public about Capstone and their products besides the recent spotlight Washington placed on them?

Answer from Capstone Management:

Capstone spends in excess of one million dollars a year in global marketing efforts. This expenditure is in addition to the regional marketing efforts of our 95 distribution partners.

Question:

Are there currently any plans to reduce the Days Sales Outstanding? Also, if you are able to disclose, what plans are being implemented to cut costs up to 30%?

Answer from Capstone Management:

Capstone has been working hard to reduce its receivable days outstanding and has made significant progress to date. The 30% cost reduction program is focused on reducing purchased material cost and involves a combination of new vendors, outsourcing to low cost overseas vendors and engineering for manufacturability changes.

Question:

I noticed approx. 10-12 or so new job postings for new hires at Capstone. Are these related to higher orders, sales delivery and production?

Answer from Capstone Management:

Capstone is adding approximately 14 new engineering and program management positions in support of its cost reduction program and new product development efforts. Key product development efforts include the C250/C370, Flexible Fuel Turbine and Externally Fired or Solar turbine.