15. Subsequent Events

On May 9, 2016, the Company announced that its Board of Directors adopted a Net Operating Loss (“NOL”) Shareholder Rights Agreement (the “NOL Rights Plan”) designed to preserve its substantial tax assets. At March 31, 2016, we had federal and state net operating loss carryforwards of approximately $652 million and $181 million, respectively, which may be utilized to reduce future taxable income, subject to limitations under Section 382 of the Internal Revenue Code of 1986. In connection with the adoption of the NOL Rights Plan, Capstone also entered into Amendment No. 5 (the “Amendment”) to the rights agreement, dated as of July 7, 2005, as amended (the “Original Rights Agreement”), between the Company and Computershare Inc. as successor-in-interest to Mellon Investor Services LLC. The Amendment accelerates the expiration of the Company’s preferred share purchase rights under the Original Rights Agreement from 5:00 p.m., California time, on the 30th day after the Company’s 2017 annual meeting of stockholders to 5:00 p.m., California time, on May 6, 2016, and has the effect of terminating the Original Rights Agreement. Upon the termination of the Original Rights Agreement, all of the preferred share purchase rights distributed to holders of the Company’s common stock pursuant to the Original Rights Agreement expired.

On April 19, 2016, the Company entered into an underwriting agreement with Oppenheimer & Co. Inc. as the sole book-running manager, and Rodman & Renshaw, a unit of H.C. Wainwright & Co., LLC, as the co-manager, related to the public offering of 2.7 million shares of our common stock and pre-funded Series B warrants to purchase up to 5.5 million shares of common stock, which were offered in lieu of common stock to those purchasers whose purchase of common stock in the offering otherwise would result in the purchaser beneficially owning more than 4.99% of the Company’s outstanding common stock following the completion of the offering. Also included in the offering were Series A warrants to purchase 4.1 million shares of common stock. Every two shares of common stock were sold with one Series A Warrant to purchase one share of common stock at a collective negotiated price of $3.50. Every two Series B Warrants were sold with one Series A Warrant to purchase one share of common stock at a collective negotiated price of $3.48. The net proceeds to the Company from the sale of the common stock, after deducting fees and other offering expenses, were approximately $13.1 million. The offering closed on April 22, 2016.