Hello, everyone, and thank you for joining us today. My name is Shawn Severson, Co-Founder and President of Water Tower Research, and Head of Sustainable and Climate Tech Investing Research. Today in our ongoing series of fireside chat series, we have Capstone Green Energy with us today, CGRN. We have Darren Jamison, President and CEO of the company. Today's focus is going to be on the Energy-as-a-Service strategy or the EaaS. That'll be our topic today. As a reminder, we try to keep these to 30 minutes or so. I will take some questions at the end from the audience. Please do submit your questions, and I will try to get to some of those. As a reminder, we're a MiFID II compliant, open access research platform. This presentation and all of our research is available to every investor to access. You can reach to see that at www.watertowerresearch.com, where you can find also a replay of this, as a reminder, this is on demand, so it will be available for replay. With that, I'm gonna jump into questions, Darren, if you're ready. We're good to go. Great. Looking forward to it, Shawn. I guess let's start with what EaaS is. I mean, I know a lot of investors have heard. They've been familiar with Capstone's story or just in general what's going on in distributed energy generation. They've heard about this, but maybe, let's give a brief primer on it and specifically how you see that business as it pertains to Capstone. I think it's important to compare and contrast what this business is versus what the traditional business has been at Capstone. Yeah, absolutely. No, I think what we've done over the last several years is realize that not only are we more competitive on an energy service basis, but we also wanted more recurring revenue, high margin revenue, and really play to our strength of our value proposition. If you look back, you know, 10 years ago, seven years ago, we were almost all in a sale mode. We sold product and then sold parts and service after the fact. Then we moved more toward selling product with a FPP, a Factory Protection Plan, a long-term service agreement. That was better. We went from, you know, simple math, a million-dollar box at a 20% margin if we sell the product, over a five-year period, a million-dollar box with a 25% margin, and a $200,000 service agreement on a five-year period. What's really more transformational for us is if we actually rent that equipment or do Energy- as- a-S ervice contract, now you're looking at a, you know, $1.8 million revenue, 60% margin, 30% IRR, and we still own the equipment after five years. Very different business model, but more importantly, is we're more competitive. If you look at us against traditional internal combustion engines, they are very low first cost, and they're very high lifecycle cost. We're just the opposite. We're higher first cost, lower lifecycle. Energy- as- a- Service actually puts us on par, from a total cost of energy standpoint. We're much more competitive on our rental or Energy- as- a- Service rates than we are selling product, you know, head-to-head without any service agreements or any additional, Energy- as- a- Service factor. I'd like to go back just a second to that recurring revenue. One of the reasons I wanna highlight that is because The Street tends to value that higher. Obviously, predictable cash flows, you know, and it has some visibility into the business. Before we get into a little more explanation on EaaS, why that is a predictable cash flow stream, and I know we talked about equipment sales in one quarter versus the next, push-outs, pull-ins, but really explain that, what the cash flow looks like from that. Energy- as-a- Service for us is actually it's multiple things in the bucket. The overall goal for us is not only improve the margins. If you look at last quarter, we hit 25% gross margin, which, I think, is the highest since I've been CEO at Capstone. It's been one of our targets for a long time to get to 25% gross margin. What's driving that is our Energy- as- a- Service business that's made up of our long-term rental fleet, which we'll talk about more in a second. It's made up of our long-term service contracts, our Factory Protection Plan. It's our distributor support fee or franchise fee we charge our distributors, and then spare parts that we sell. Today, if you take all of those recurring revenue streams, and you look at the margins that throw off, it's, you know, north of 50% margin. More importantly, it's starting to cover our OpEx. I think last quarter, up to 85% absorption, I call it, saying the gross margin or the contribution margin from that Energy- as- a- Service bucket of businesses is covering 85% of our quarterly OpEx. That's why we threw off a positive $432,000 EBITDA, and what's gonna drive us for more predictable revenue, you know, steadier gross margins going forward. Obviously, our part sales are, you know, very mature. We got 10,000 units worldwide in 83 countries. We can obviously have a lot of predictability on the part sales. On the service contracts, those are minimum five years and as long as 20 years, so a lot of predictability in that revenue. And obviously, our rentals are all, you know, short-term, one year, long-term, seven years, average three years, but those are very easy for us, again, to predict and see those revenue streams. As we move forward, we'll get to the point where we're 100% absorbed or more, and then we'll be profitable every quarter before we even ship our first product, which is where we wanna get to as a business. Let's talk a little bit about a progress report. This isn't just an idea. Obviously, it's been commercially implemented. We're seeing the results. But go back in history just a bit and maybe talk about when this started, and then I think it's worth talking about a progress report, kind of where you are to date, you know, and you know, getting over those commercials of an idea from an idea to a commercial business for you. Yeah, if you look at each piece, we started with the Factory Protection Plan first. Today we're up to half of our machines worldwide are under long-term service agreement or FPP, so that's been great progress. You know, much like when you buy a car and you come out of the warranty period, we bother you just like those folks do and make sure that you re-up on your service contract and make sure you don't break coverage and give them a little bit of a financial incentive not to break coverage. That's gotten very, very well for us. Obviously, as the product continues to perform better and the life cycle improves, then those margins on those service contracts will only get better going forward as we get maturation of the products we have in the field. We pay for every failure worldwide, so we're always making the product better and lowering our costs there. So that's been great and progress is very steady there. On the rental side, we started about a year ago, March. We're at 7 MW of rental equipment out in the field. This last March, we were at 25 MW of product out in the field. We're currently at 35 MW. From March to March, we went from 7 MW to 25 MW. From March to today, we went from another 10 MW. Our goal is to be at 50 MW by March 31st of this upcoming year. Very excited about it, and it's really multiple verticals. We're doing everything from oil and gas, energy efficiency projects for hospitality and hotels, as well as Bitcoin and cannabis have been strong drivers for that market as well. We've done a lot of work in this sector, so we know there's great growth opportunity. Also, you know, a number of consulting studies I'd refer investors to. If you really look at this, the Energy-as-a-Service idea and model is a very big part of the future of distributed energy generation and really what's the decentralization of energy. Instead of having, you know, big new nat gas power plants, talking about more distributed resources to meet energy needs. I think there's a lot of evidence that is on the rise. What are you seeing from your customers? I mean, has this been something that they had asked for or you brought to them and they liked the idea? Trying to understand from the Capstone experience in transitioning and building new customers in the EaaS category. Yeah. No, I think we're seeing general, you know, win in our sales in all of our businesses, right? Whether it's ESG, whether it's companies looking to save money on their energy costs, lower their carbon footprint, move toward electrification, the oil patch trying to decarbonize, all of that is moving in the right direction. We're seeing opportunities for selling products. I feel like our book-to-bill the last few quarters has been excellent. This quarter is also going very well. Some customers don't have CapEx dollars that they can allocate, or they've got an approval process that's onerous, or they just may say, "Look, I've got a short time horizon, right? I'm gonna be in this facility for two years, or I've got a lease on this oil facility for, you know, three years. I'm a Bitcoin miner, and I'm worried about Bitcoin prices going forward." I think a lot of customers, either because of CapEx constraints or prioritization, or because they've got shorter time horizons, Energy- as- a-S ervice makes a lot of sense. We have a lot of customers who almost want to do a try and buy. Let me, you know, I'll do an energy service contract for a couple of years, and if the product performs as well as we say it does, then we'll look at buying a new system at that point and sending back the energy service unit. Customers like it for a lot of reasons. Customers like to have choices. They want to say, "If I buy it, here's the price. If I lease it, here's the price. We do a Capstone energy and service business, here's the price." I think that's just all about giving customers the ability to control their own destiny. I think, you know, we're seeing remarkable changes going on. We had the IRA Act that was just signed, which is gonna take our investment tax credit from 10% to up to 40%. That's huge for our U.S. business, transformational for us. We're seeing you know, states like California, who came out last week and said, you know, "By 2035, you're not gonna be able to buy a internal combustion engine car in California." Two days later, they came out and said, "Stop charging your car. We don't have enough energy." That's a big deal, right? We need distributed generation. We need more energy sources because electrification is gonna be a huge demand on the utility grid, and they just can't move that fast. Let's go back to the Inflation Reduction Act a little bit and, you know, highlight some of the specifics. It's been positively impacting a lot of companies across the sector. I know you touched on it a bit, but maybe just a little more specifics on how that's impacted you. Importantly, I think the timing of it too. When does this really kind of work through that you think it would have an impact on your business? Yeah. We go from a 10% ITC for our technology to a 30% ITC for our technology in CHP applications or modes. There's also a 10% U.S. manufacturing ITC on top of that, so we assume we're gonna you know, qualify that. The language hasn't been written, so to say we qualify would be too early, but we're highly confident that you know, 70% of our supply chain is U.S.-based. We manufacture here in California, so we're highly confident that we'll qualify for that 10%. That takes us from a 10% to a 40% ITC, puts us very competitively in place against fuel cells and other more expensive technologies. When we look at it from a customer perspective, you know, if somebody had a five or six-year payback today, that's now a three or four-year payback. You know, we think it's gonna take two years off most people's payback on a simple payback basis on the project. Obviously, this is U.S. only, but that's a big deal. If you had a five-year project and it didn't meet your hurdle rate, now it's a three-year project payback. Again, this is a 20-year life cycle plus machine that will guarantee the life cycle for 20 years. We think it's gonna be very compelling, and it's gonna strengthen our value proposition. Our distributors in the U.S. are going back to, you know, all the clients the last couple of years who didn't move forward, because of economics and rerunning the numbers and reaching back out to them. To your point, I think we could start closing even more deals, you know, quicker, right? We've got, you know, marketing and advertising, digital marketing all going out right now, talking about the IRA bill and how beneficial it is for our customers. In fact, we're doing something USA Today here in the next couple of weeks. We'll be marketing and getting it out there as fast as we can. I just wanted to go back again to review the actual economics of EaaS, because obviously for shareholders, incredibly important, you know, profitability, being able to fund the business. you know, we touched on a couple of different pieces, but walk through again the compelling economics of EaaS and, you know, relative to a product sale so that we can really understand the margin impact and reach profitability. Yeah, no, as I kind of said, if we sell a C1000 for $1 million to our distributor, and all we do is get that product sale, that's $1 million of revenue for us and about $200,000 of gross margin. It's hard for us to drive more first cost when we're more competitive than traditional old technology, internal combustion engine technology. It's hard for us to drive a higher, you know, price for that. But on the energy service basis, that same megawatt over a five-year period is worth about $1.8 million in revenue to us, as opposed to $1 million and the 60% gross margin, right? That's a significant improvement. You're talking about, you know, over $1 million of gross margin. More importantly is we haven't sold that machine. We still own it. It's on our balance sheet. We're depreciating them straight in line for 10 years. After 10 years, this you know these units are completely off our balance sheet from a carrying cost basis, and it's you know essentially 100% gross margin at that point. Our maintenance costs are so much lower than internal combustion engines that when we go up against Aggreko or the traditional engine-based rental companies, our rental rates are the same or very very similar because they know what it costs to maintain a Caterpillar, Cummins, Siemens engine, and they've got to roll those lifecycle costs into that maintenance agreement for the customers to cover those costs. When you're selling the product, the customer isn't paying for the lifecycle, future lifecycle costs like you are on the rental side. We can be 30% or 40% higher on a first-cost product-only basis, but we could be equal on a rental basis head-to-head with older technologies that you know have trouble getting air permits, are noisier. You got lube oil, antifreeze, maintenance done, you know, every 200 hours. Our machines are unmanned. We remotely monitor them. We do maintenance, you know, every six months to a year. Maintenance is usually a few hours. I mean, so it's just a very different technology. Obviously we're one-tenth the emissions. We're much more reliable, better resiliency, inverter-based technology. The Bitcoin miners, we can tweak our inverters to give them the best possible output on their mining equipment. There's a lot of customer benefits that we can really deliver that when you take away the cost, you know, factor, it really comes down then to our value proposition, which we stack up very well. I would also encourage investors to take a look at your deck. If I recall correctly, I think you've got some good slides that break out the economic differences, right, or the economic advantages of EaaS that. I'd refer investors back to that to get an idea from illustrative idea of how the impact is, on the company as well. Certainly worth taking a look at. No, look at the first quarter's earnings, right? I mean, if you look at the numbers. Yeah. You know, we put up a modest top-line revenue number, but you know, a very nice bottom-line EBITDA, very nice gross margin. I put our OpEx against any company our size in the clean tech space. I think we're at less than $20 million in revenue, we're positive EBITDA. You know, you've got fuel cell companies putting up $200,000-$300,000 or $200-$300 million per quarter of negative EBITDA. I think our business is much more profitable, very scalable. As we continue to grow this fleet, you're gonna see at 60, 70, 80 MW, we'll be throwing off $20 million of positive EBITDA a year. I mean, it's a great business. I think if you look at it, you say the technology works. We've known that. It's worked for a long time. The micro turbine, very effective at what it does, very efficient. EaaS is definitely a trend that's coming. Decentralization, you know, can't keep up with power needs. I think it's pretty easy to establish, you know, that as a mega trend. When you put these two together and you've got the technology and the product, you've got the end market tailwinds and demand, this brings it back to the question, what is the execution risk? What has to happen here for you and the company to fully take advantage of what seems to be a great backdrop, probably the best backdrop the company's had in history, quite honestly, in terms of tailwinds, to deliver on this model? Yeah. Let me start with the last thing you just said. I mean, I'll be here 16 years this December. I've never felt that we've had a better backdrop in the history of the company. Maybe before my time, there was a better backdrop for the business. Today it's the best it's been since I've been here. Besides the ground war in Europe, everything else is going our direction from, you know, high energy prices, oil and gas companies, you know, being more active, our revenue in that market's going up. They're looking to lower their carbon footprint in the oil patch, more restraints on air permits. You know, in Pennsylvania, you know, the air board is telling the Bitcoin miners that, you know, "Why are you submitting an engine-based application for an air permit? Don't bother. Go rent or buy a micro turbine." Right? As more air boards move that direction toward California's, you know, CARB low limits, that's gonna make it harder and harder for these older, dirtier technologies. Just EaaS in general has been great for our business. ESG customers have carbon goals, and they have no idea how to get there. With what we've done with the micro turbine plus adding battery storage and solar and some other technologies, we can really help them reduce their carbon footprint and save money. I think if you can save money and save the planet, then that's a great place to be. Keeping up with the energy service business, especially the equipment rentals, has been challenging. We've gone to a re-rent strategy, so we're actually finding Capstone products, you know, of the 10,000 units we've shipped worldwide that is either idle or we get an opportunity to either buy or rent back. One case, we rented four of our machines out of a Caterpillar fleet out of Texas. A competitor's rental fleet had our technology. We rented it back. You know, quickly took off the logos and put Capstone Green Energy back on it and put it out to our customer. That gives us an ability to flex for short-term opportunities, make sure we don't miss an order for a customer. We recently completed an $8 million CMPO, which most all of that money will be targeted at growing the rental fleet. Between the cash that we just raised and the equity offering, the ability to do re-rents and then the, you know, just what we're focused on moving more product sales over to rentals, we'll keep growing that rental fleet to 50 MW and beyond. Obviously, at some point, we self-fund. I mean, we start generating positive EBITDA and positive cash flow, you know, we start building the rental units out of our own capital, which is a great opportunity for us. Looking at that, I mean, I assume the biggest hurdles are, one, supply chain. Everybody's seeing that today. Just getting products, getting equipment. Then the nature of EaaS is it's capital intensive. It requires working capital to do this. What are your thoughts there? I know you talked, you just had a raise, gives you some runway. In the end, I think there's this balance between self-funding, right, and where that comes and the cash flows come and how you and what's a high growth business consumes high working capital, right? As a model itself, creating great long-term predictable cash flows, but you need the balance sheet to do it. Where are your thoughts on that? Yeah. No, I think it's a multi-pronged approach, right? I think we have to do multiple things. Our inventory turns are down a little bit because of COVID and the supply chain issues you've talked about. We've had to lay in more, you know, emergency parts and, you know, more runway there because it's just so unpredictable right now. I would say, you know, what keeps me up at night is absolutely supply chain. It's extraordinarily challenging right now with all of our vendors and freight costs, shipping times, and everything else. You know, our inventory turns, like, the high water mark since I've been CEO is six. If we can get our inventory turns from kind of 2.5 today to five, that would take more cash out of our balance sheet and allow us to build more rental units. Our DSO is too high. We hit about 150 days DSO during COVID, up from 65. Today we're at 121 last quarter. We need to get that back down to 65. I've got about $11 million in my AR on my balance sheet that, you know, that build a lot of rental units. Getting the DSO down, getting that cash out. You know, I probably have $15+ million on my balance sheet between inventory turns and AR reduction that I could build rental units. You mentioned the $8 million we did on CMPO recently. That'll help build more rental units. The re-rents obviously are cheaper, lower margin, but that's doesn't impact cash the same way. Last but not least, as we start generating cash right now, we're positive EBITDA last quarter. We'll start generating cash from operations. Once we overcome the cost of Goldman note, then we'll start using that cash to, you know, build more rental units. The countdown timer you see above my head, above the door, is when we can refinance the Goldman note, and we are down to 23 days, 14 hours, 37 minutes and 20 seconds. We are working with an investment bank. We'll announce that here shortly, maybe next week, to refinance Goldman. Refinance them, you know, is really more importantly lengthen the term of that note, but also upsize that note. So if we get another $20 million out of that facility, combined with the $15 million from our balance sheet, the $8 million from the CMPO, and start generating cash, that gives us a lot of firepower to really grow this rental fleet beyond where it is today. I just want to go back a second on the receivables. Those are high-quality receivables. You believe you're gonna collect on them. That's. You think there's $11 million, did I understand correctly? $11 million? $10.8 million right now to be exact. About 35% of that is U.S., which we're not worried about at all. It's projects that got delayed and are coming through, and that should be, you know, fairly quick to fix. Some of our European receivables were impacted by the war in Ukraine. Energy prices in Europe are a disaster, as we all know. That's been very challenging for some of our European distributors. We have a couple other areas that we're trying to clean up. I think, you know, we'll get at least, you know, $7 million of that $10-$11 million cleaned up here in the next quarter. The final, you know, $2 million or $ 3 million may take a little longer, depending on what happens with the war in Ukraine and a few other factors. We did lay in a little more bad debt reserves at the end of our fourth quarter. Traditionally, we've had almost no bad debt as a company. As you said, you know, we've got very high-quality receivables. Our distributors are all 100% dedicated to Capstone. So if they don't pay Capstone eventually, then you know we terminate them and the relationship ends. It'd be like a, you know, a Mercedes dealership not wanting to pay Mercedes. Well, if you can't get any more cars and you can't get more parts, it's hard to be, you know, in the business. We're highly confident we'll get it. Is it gonna take a little bit of work? Sure. That's one of our primary focuses right now is to clean up the balance sheet. COVID impact is still out there, but it's lessening every month, every quarter, which we're very excited about. I wanted to go to all the additional product offerings you made. I basically partnerships like Baker Hughes, I believe, is one on the energy storage side. As I look at that, the strategic idea, right, was to be able to offer a comprehensive solution to your customers. When you come in, you're not just providing the power gen step of the storage and renewables and things. Yeah. No, absolutely. How does that fit into the? Yeah. It gives you that comprehensive solution. How does EaaS fit into that? I mean, is that something, again, you know, not to put more pressure on the balance sheet, but is that something that when you look at the opportunity there to provide a comprehensive, you know, DEG or microgrid solution in an EaaS form to customers? Yeah, no, you're absolutely correct, Shawn. We surrounded ourselves with you know, high-quality network providers, network partners. You know, on the solar side, a company called Global RAIS, we have very unique technology that really fits for rooftop solar. They can get more panels in a smaller space because of their advantage on shading and some other areas. You know, that helps us where we're kind of in the commercial industrial space. We've got Baker Hughes that you mentioned for larger scale products, which we've got about a dozen of those in the pipeline, and those will be very impactful. You know, if we are an $80-$90 million business, we do a $30 million project with Baker Hughes, you can see pretty quickly the impact that can have for our growth rates. Very excited about that. We're also talking to Baker Hughes about putting an NovaLT5 in our rental fleet or energy service fleet as well. That would be very exciting for us. You're right, it allows us to do larger scale projects. I almost look at it like the automotive, you know, manufacturers. They're all trying to get car content. For us, if a customer is gonna put in a microgrid or nanogrid, we wanna have as much of that, you know, that energy supply as possible. If we can do the microturbines, the battery storage, the solar, you know, whatever they may be, requiring to get the maximum, you know, microgrid performance, we'd rather do all that for them. That's really the goal. You know, will that have more draw on our balance sheet? Absolutely. We're very confident in these products and these partners and again, we wanna solve you know, problems for customers. That's the end goal, is to save customers money, save the planet. Resiliency. I think that's one thing we haven't talked about, is resiliency is becoming a much bigger issue. We were out here in California losing power, you know, on a daily, weekly basis right now with between fires and then the high heat conditions we have. You've got, you know, hurricane storms, you know, obviously, you know, what's going on in Europe with the energy markets. I think people want to be able to control their own energy destiny. If they can lock in the cost of their energy and have resilient energy and have the power not go off and continue their business, that's important. You know, a lot of stuff we do in the Caribbean is all hurricane-proof. We make sure we have enough LPG or LNG on site to make you know, ride out any storm. I think there's huge opportunity for resiliency going forward as well. I'm just gonna make this my last question. We have a number from the audience. You know, I apologize. We've been a little bit long here, but want to get to some of those. Darren, if you could pick a case study for me in EaaS and say, "This is what I want to replicate 1,000x over," what would that project be? The customer, I mean, maybe describe how it came about and how it works. I mean, if you say, this is what we want to do in the perfect case and multiply this, what would it be? Yeah, I mean, it's a hard one because we're in so many different verticals between oil and gas, hospitality, you know, cannabis, Bitcoin. I guess let me think of two of them that I'd probably highlight instead of just one. One of them is an oil and gas company, up in the northwest of Alaska. They were the very first C1000 rental we put out, just three years ago now. The product worked perfectly. We did little to no maintenance. They were extremely happy with the machine, and we just signed another two-year agreement with them. We'll be up to five years on that machine. Our simple payback on the product's about 30 months. We got a happy customer. The machine's running perfectly. It's an oil and gas application. The reliability has been off the charts, availability's been off the charts. It's a great success. Obviously they're signed up for a second contract, so that's you know if I can do that over and over again, that'd be great. Probably the other one I'd say is a hotel chain that's in the Caribbean, Mexico and the Caribbean. They have 29 locations. We're doing the very first one right now on a seven-year EaaS contract. We're doing absorption chilling as well as the microturbine. We've got them here today at the factory. We take them to the race this weekend, and we're looking to do you know all of their hotels, right? That would be the kind of customer who say, "Hey, we did one. We love it. We're saving a lot of money. We're saving the environment. Performance is great. Let's not just do one or two at a time. Let's do all 29 of our facilities or all of our hotels in a certain region, like the Caribbean. That's exciting for us. Either repeat customers where we don't have to move the machine, we keep getting paid, and it's very easy for us or a customer we do one and we can go do a whole bunch more. Those are the kind of opportunities we're looking for, because that's how you scale very quickly. I'd say as we look at going from today's 35 MW on rent to 50, I can tell you a customer name for each one of those megawatts and who they're gonna be. Over half of those are just add-ons to the same customer. A lot of the Bitcoin and cannabis customers continue to add on capacity, manufacturing capacity or mining capacity, and so we're just growing with them. From a cost of sale customer acquisition standpoint, it's much easier to just continue to add with the same customer, you know, sign another rental agreement, ship another product to them as they grow their installation. Either growth with the current customer, in the same location or different locations or extending the current EaaS agreement is really what we need because that's low impact on the business, high probability of closure, and obviously it's a good customer. Let's do more with them. Great. I'm gonna take a couple of questions now, Darren. We have lots of topics, and I just like to try to keep it on specific focus today, which is EaaS, but we've got so many questions on the equity raise. I do want to bring it up and put it out there. I think, you know, summarize all the questions. What was the logic behind it, the reasoning, the best efforts, and maybe an explanation for, you know, for the timing and the deal itself? Yeah, no, we had some conversations going on with Goldman, and so we needed to do an equity raise. We told them we'd do something by September 15th. Unfortunately, that got put out in the public domain through an 8-K that we did. We didn't wanna wait. You know, the market punishes you if they know you're coming or you have to come. We didn't wanna wait until our backs are against the wall. The share price had some nice momentum. I think we're just a hair below $4. If the market's, you know, in a good spot and they don't know you're coming, that's the right time to do an equity raise. If you were waiting till the 11th hour and the market knows you're coming, then you're gonna pay for it in your pricing and your discount. More importantly than pricing and discount is who's in the book, right? We were very happy. We worked with Lake Street Capital. It's our first time we did an equity raise with them. Virtually everybody that was in the book we talked to previously in non-deal roadshows with Lake Street, which is how it should work, right? Go talk to investors, get them interested in your story, and then when you do need more capital, get those investors to invest and hopefully be sticky money and add to their position going forward. I got a couple of questions on economics of growth in the EaaS, and this is a great topic. You know, when we're talking about capital, when we're talking about growing the business, what is the formula that investors need to understand for growth in EaaS in terms of megawatt and capital needs from your end? Yeah. I mean, obviously, not everything in the EaaS business is a megawatt solution, but on average, we're, you know, roughly $800,000 per megawatt. As we're gonna add another 15 MW, you can do that math to see what we need to have in capital. Now we, you know, we're building the energy service business. These are our units, and we own them, so we can put in a remanufactured recuperator or power head, or repurpose an enclosure. So there's a lot of things we can do to try to get that $800,000 number lower. Where we can do that, we will do that. I mean, obviously, our goal is to put out a high-quality piece of equipment that's gonna run very well, but it doesn't mean it has to be a zero-hour piece of equipment. Just like when you rent a car, you don't expect it to be, you know, a brand new car every time you jump in. Customers just want it to work and be reliable. So that's key for us. Again, as we go forward, our distributors are learning that, you know, we are interested in finding, you know, idled equipment or equipment to customers maybe, you know, or have too many of. Like, so maybe the plant load dropped from 3 MW to 1 MW, and they've got 2 MW of extra capacity now, and we can go, you know, buy that equipment or re-rent it at a good rate. Almost all of our re-rent agreements that we have in place have a purchase option, so my goal would be to never send those units back. Once we bring them back, freshen them up, you know, put our logos on them and our controls and monitoring, you know, we wanna just keep them out there. At the end of that three-year term, we would just pay off the purchase of that agreement to put on our balance sheet. That was actually one of the next questions from the audience wanted to address was what happens to the length of the contracts, right? Yep. What happens to the equipment at the end of those contracts? Yeah. I mean, our average contract today is three years. We'll sign them as short as one year and as long as seven. When the equipment is done, then the customers let us know. We reach out to them, you know, two or three months before the end of the contract and say, "Are you still planning on, you know, adding on to the contract? Do you wanna sign an extension, or do we need to make provisions to come pick it up?" I mean, typically, we need a crane or a large forklift to pick the machines up. We've had some come back, and hopefully, if we're doing our job right, we've got another customer lined up. We'll bring it back, check it out, retest it. If we need to modify the package, if it's a grid connect and it needs to be standalone or dual mode, or if it's high pressure or low pressure, we'll make those changes here at the factory and then ship it out to the next customer. We don't ship directly from one, you know, contract to another customer without bringing the unit back and making sure it's in good working shape. We wanna make sure we put our best foot forward every time, especially as we're growing our reputation, our brand in this business. Thanks. We're running 33 minutes in here, but I'm gonna take one more question. It was really an update on hydrogen and specifically the PowerTap relationship. I think maybe we need to make it a bigger question and talk about where are you on hydrogen, how this fits in, fits into the business today, you know, any color you'd like to add. Yeah. You know, obviously, the Inflation Reduction Act helps us as a business, you know, transformationally, but also helps PowerTap. PowerTap is very excited about what this is gonna do for their business. We had a meeting with them internally here yesterday. Saw their folks recently at the Grand Prix of Portland. Definitely, you know, we're involved with them. We've got a manufacturing agreement with them and a licensing agreement. They had some issues to work through, but they're now starting to spin up. I think the Inflation Reduction Act is gonna help, you know, push their business faster as well. Very excited about that. The other thing we didn't talk about from a policy standpoint in the U.S. was the Jobs Act before that in last November. There's a lot of money in that to be spent for hydrogen development, for hydrogen hubs, for EV charging, all things that are gonna be, you know, helpful for us. We've got several conversations going on with the U.S. Department of Energy on helping us bridge that gap from an R&D perspective, from a 30% hydrogen product to a 100% hydrogen product. I think with some, you know, U.S. Department of Energy funding, we can accelerate that development faster than we could do it with our own funding. All right. That should do it for today, Darren, and thank you for all the participants. I apologize, we have a number of questions we did not get to. Feel free to reach out to me, and of course, you can contact the company in their IR department as well. Anything I can help with, please let me know. You can reach me, shawn@watertowerresearch.com, if anybody on the presentation today has any questions. With that, I can turn it over to you for any closing remarks, and we can wrap it up, Darren. No. Thank you, Shawn. Appreciate it. Great questions. I wish I had more time to answer them all, but you know, we'll definitely be out there doing more marketing, answering more questions. We're very excited about where Capstone is a business. You said the market has never been better for us as far as all the different factors. You know, the IRA bill is transformational. The energy service business is transformational. I'm very excited to be reporting Q2, Q3, Q4 this year. You know, the only negatives out there for us as a business at all at the moment is obviously the ground war in Europe with Ukraine and Russia, and then just supply chain. But supply chain is temporary, and hopefully, the war in Russia is also temporary. Great. Good. Thank you, everyone. Thank you, Darren, and look forward to having you back again soon. Thanks, Shawn. Appreciate it.