##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, DC 20549
 FORM 10-KSB/A
 Amendment No. 1
 (Mark One)
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
 For the fiscal year ended December 31, 2006
 or
 o
    
    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
 For the transition period from  _____________ to _____________.
 Commission File No. 000-31953
 CATALYTICA ENERGY SYSTEMS, INC.
 (Name of small business issuer in its charter)
 Delaware
(State or other jurisdiction of 
incorporation or organization)
    
    77-0410420
(IRS Employer
Identification Number)
 301 West Warner Road, Suite 132
Tempe, Arizona 85284
(Address of principal executive offices)
(480) 556-5555
(Issuers telephone number)
 Securities registered under Section 12(b) of the Exchange Act:
 Title of each class
    
    Name of each exchange on which registeredCommon Stock, $0.001 par value
    
    NASDAQ Global Market
 Securities registered under Section 12(g) of the Exchange Act: None
(Title of Class)
 o
 þ o
 o
 o þ
    Documents Incorporated by Reference
  o þ




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Explanatory Note




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##### 



CATALYTICA ENERGY SYSTEMS, INC.
 Annual Report on Form 10-KSB
 December 31, 2006
 Table of Contents
 Page No.PART IIIItem 9.
    
    Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Act
    
    4Item 10.
    
    Executive Compensation
    
    7Item 11.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    12Item 12.
    
    Certain Relationships and Related Transactions
    
    14Item 14.
    
    Principal Accountant Fees and Services
    
    15
   3




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PART III
 
 Item 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS; COMPLIANCE WITH SECTION
16(a) OF THE EXCHANGE ACT
  Name
    
    Age
    
    PositionRobert W. Zack(a)(1)
    
    
    44
    
    
    President, Chief Executive Officer, Chief Financial Officer and DirectorWilliam J. McMahon
    
    
    51
    
    
    President, SCR-Tech LLCRichard A. Abdoo (1)(3)(4)(b)
    
    
    63
    
    
    Vice Chairman of the Board, DirectorWilliam B. Ellis (2)(4)(b)
    
    
    66
    
    
    DirectorHoward I. Hoffen (2)(4)(c)
    
    
    43
    
    
    DirectorRicardo B. Levy (1)(2)(3)(a)
    
    
    62
    
    
    Chairman of the Board, DirectorDavid F. Merrion(c)
    
    
    71
    
    
    DirectorSusan F. Tierney (1)(3)(b)
    
    
    55
    
    
    Director
 
 (1)
    
    Member of the Strategic Committee.(2)
    
    Member of the Audit Committee.(3)
    
    Member of the Nominating / Governance Committee.(4)
    
    Member of the Compensation Committee.(a)
    
    Class III director with a term expiring in 2009.(b)
    
    Class I director with a term expiring in 2007.(c)
    
    Class II director with a term expiring in 2008.
 Directors
 Richard
A. Abdoo
  4




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William B. Ellis, Ph.D.
 Howard I. Hoffen
 Ricardo B. Levy, Ph.D.
 David F. Merrion
 Susan F. Tierney, Ph.D.
  5




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Robert W. Zack
 Non-Director Executive Officers
 William J. McMahon
  Section 16(a) Beneficial Ownership Reporting Compliance
   Code of Ethics
 http://www.catalyticaenergy.com
 
 Audit Committee
   6




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##### Table of Contents



Item 10. EXECUTIVE COMPENSATION
 EXECUTIVE OFFICER COMPENSATION
  Non-Equity
    
    
    NonqualifiedStock
    
    
    Option
    
    
    Incentive Plan
    
    
    Deferred
    
    
    All OtherName and
    
    
    
    
    
    Salary
    
    
    Bonus
    
    
    Awards
    
    
    Awards
    
    
    Compensation
    
    
    Compensation
    
    
    Compensation
    
    
    TotalPrincipal Position
    
    Year
    
    
    ($)
    
    
    ($)(3)
    
    
    ($)(6)
    
    
    ($)(6)
    
    
    ($)
    
    
    Earnings ($)
    
    
    ($)(4)
    
    
    ($)Robert W. Zack
President, Chief
Executive Officer,
Chief Financial
Officer
    
    
    2006
    
    
    
    260,000
    
    
    
    175,500
    
    
    
    18,750
    
    
    
    67,228
    
    
    
    
    
    
    
    
    
    
    
    18,218
    (1)
    
    
    539,696William J. McMahon
President,
SCR-Tech, LLC
    
    
    2006
    
    
    
    200,000
    
    
    
    129,500
    
    
    
    
    
    
    
    8,846
    
    
    
    
    
    
    
    
    
    
    
    39,760
    (2)
    
    
    378,106Ralph A. Dalla Betta
Former Vice
President and Chief
Technology Officer
    
    
    2006
    
    
    
    171,313
    
    
    
    
    
    
    
    
    
    
    
    25,852
    
    
    
    
    
    
    
    152,408
    
    
    
    636,345
    (5)
    
    
    985,918
 (1)
    
    Amounts under All Other Compensation include contributions by the Company of (i) $12,320
in 2006 under its 401(k) plan; (ii) $1,260 in 2006 for supplemental life insurance premiums and (iii)
$4,638 in 2006 for supplemental disability premiums.(2)
    
    Amounts under All Other Compensation include contributions by the Company of (i) $12,320 in
2006 under its 401(k) plan; and (ii) $27,440 in 2006 in relocation costs.(3)
    
    Represents bonuses accrued in the year of service whether paid during the year of service or
thereafter.(4)
    
    Includes 401(k) matching contributions accrued in the year of service whether paid during the
year of service or the following year.(5)
    
    Amounts under All Other Compensation include contributions by the Company of $7,520 in
2006 under its 401(k) plan; (ii) $5,810 in 2006 for supplement life insurance premiums; (iii) $3,298 in
2006 for supplemental disability premiums; (iv) $385,355 paid in 2006 in conjunction with his
severance agreement as detailed in Executive Compensation-Employment Contracts and Termination
of Employment and Change-in-Control Arrangements below; (v) $215,000 in consideration of
Dr. Dalla Bettas assistance with the sale of the Companys diesel business to Eaton
Corporation and his significant contributions to the Company and its
predecessors since 1976; and (vi) $19,362 for accrued vacation in
connection with the termination of his employment effective October 26, 2006.(6)
    
    Amounts set forth in the Stock Awards and Option Awards columns represent the aggregate
amount recognized for financial statement reporting purposes, disregarding the estimate of forfeitures related to
service-based vesting conditions, but otherwise computed in accordance with the Statement of
Financial Accounting Standards (SFAS) No 123, as amended by SFAS No. 123(R), Share-Based
Payment,(SFAS 123(R)) based on the assumptions set forth in Note 8 to the Companys
consolidated financial statements as filed with the Securities and Exchange Commission on Form
10-KSB on March 23, 2007. There were no equity award forfeitures
by the Named Executive Officers during fiscal 2006. Restricted stock awards are computed in accordance with SFAS
123(R) based on the closing stock price on the grant date. These amounts reflect the
Companys accounting expense for these awards, and do not reflect the actual value that will
be recognized by the Named Executive Officers.
   7




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Outstanding Equity Awards at Fiscal Year End
  OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
 Option Awards
    
    
    Stock AwardsEquityIncentivePlanEquity
    
    
    Awards:Incentive
    
    
    MarketPlan
    
    
    Value orEquity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Awards:
    
    
    PayoutIncentive
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Market
    
    
    Number of
    
    
    Value ofPlan
    
    
    
    
    
    
    
    
    
    
    Number of
    
    
    
    
    
    
    Value of
    
    
    Unearned
    
    
    UnearnedAwards:
    
    
    
    
    
    
    
    
    
    
    Shares
    
    
    
    
    
    
    Shares
    
    
    Shares,
    
    
    Shares,Number of
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Number of
    
    
    
    
    
    
    
    
    
    
    or Units
    
    
    
    
    
    
    or Units
    
    
    Units or
    
    
    Units orSecurities
    
    
    
    
    
    
    Number of
    
    
    
    
    
    
    Securities
    
    
    
    
    
    
    
    
    
    
    of Stock
    
    
    
    
    
    
    of Stock
    
    
    Other
    
    
    OtherUnderlying
    
    
    
    
    
    
    Securities
    
    
    
    
    
    
    Underlying
    
    
    
    
    
    
    
    
    
    
    That
    
    
    
    
    
    
    That
    
    
    Rights
    
    
    RightsUnexercised
    
    
    
    
    
    
    Underlying
    
    
    
    
    
    
    Unexercised
    
    
    Option
    
    
    
    
    
    
    Have
    
    
    
    
    
    
    Have
    
    
    that Have
    
    
    ThatOptions (#)
    
    
    
    
    
    
    Unexercised
    
    
    
    
    
    
    Unearned
    
    
    Exercise
    
    
    Option
    
    
    Not
    
    
    
    
    
    
    Not
    
    
    Not
    
    
    Have NotExercisable
    
    
    
    
    
    
    Options (#)
    
    
    
    
    
    
    Options
    
    
    Price
    
    
    Expiration
    
    
    Vested
    
    
    
    
    
    
    Vested
    
    
    Vested
    
    
    VestedName
    
    (1)
    
    
    
    
    
    
    Unexercisable
    
    
    
    
    
    
    (#)
    
    
    ($)
    
    
    Date
    
    
    (#)
    
    
    
    
    
    
    ($)
    
    
    (#)
    
    
    ($)Robert W. Zack
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    34,375
    
    
    
    (4
    )
    
    
    71,15610,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3.55
    
    
    
    4/1/201285,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2.76
    
    
    
    2/10/201310,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3.45
    
    
    
    8/29/201370,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4.03
    
    
    
    1/26/201425,600
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2.41
    
    
    
    1/31/201535,625
    
    
    
    
    
    
    
    154,375
    
    
    
    (2
    )
    
    
    
    
    
    
    1.15
    
    
    
    3/22/20161,042
    
    
    
    
    
    
    
    48,958
    
    
    
    (3
    )
    
    
    
    
    
    
    1.35
    
    
    
    11/6/2016William J. McMahon
    
    
    50,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.91
    
    
    
    5/3/20154,688
    
    
    
    
    
    
    
    20,312
    
    
    
    (5
    )
    
    
    
    
    
    
    1.15
    
    
    
    3/22/2016Ralph Dalla Betta
    
    
    750
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5.60
    
    
    
    1/25/200711,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12.00
    
    
    
    1/25/20074,900
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21.60
    
    
    
    1/25/20076,100
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21.00
    
    
    
    1/25/20077,091
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14.31
    
    
    
    1/25/20078,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16.94
    
    
    
    1/25/200764,800
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3.53
    
    
    
    1/25/200751,600
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2.76
    
    
    
    1/25/200710,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3.45
    
    
    
    1/25/200750,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4.03
    
    
    
    1/25/200726,500
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2.41
    
    
    
    1/25/200735,200
    
    
    
    (6
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.15
    
    
    
    3/22/2016
 (1)
    
    In anticipation of
implementation of SFAS No. 123(R), Shared-Based Payments, at December
31, 2005 the Company accelerated vesting of all unvested option grants at that date. The
options subject to acceleration remain exercisable throughout the original term of each option
award. However, executives that remain employed with the Company have agreed not to exercise
their options until they would otherwise come due under the original vesting schedule.(2)
    
    Mr. Zacks unexercisable options vest as follows: 3,958 on January 22, 2007 and on each
22nd of the month through March 22, 2010.(3)
    
    Mr. Zacks unexercisable options vest as follows: 1,042 on January 6, 2007 and on each
6th of the month through November 6, 2010.(4)
    
    Mr. Zacks unvested restricted stock units vest as follows: 3,125 on March 22, 2007 and each
3rd month thereafter through September 22, 2009.(5)
    
    Mr. McMahons unexercisable options vest as follows: 521 on January 22, 2007 and on each
22nd of the month through March 22, 2010.(6)
    
    Per the terms of the March 22, 2006 stock option grant, the vesting of Mr. Dalla Bettas
unexercisable options was accelerated, effective as of his employment termination date on
October 25, 2006.
  8




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Employment Contracts and Termination of Employment and Change-in-Control Arrangements
     9




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10




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COMPENSATION OF DIRECTORS
  DIRECTOR COMPENSATION
 Fees
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    NonqualifiedEarned or
    
    
    
    
    
    
    Option
    
    
    Non-Equity
    
    
    DeferredPaid in
    
    
    Stock
    
    
    Awards ($)
    
    
    Incentive Plan
    
    
    Compensation
    
    
    All OtherName
    
    Cash ($) (1)
    
    
    Awards ($)
    
    
    (2)(3)(4)(5)
    
    
    Compensation ($)
    
    
    Earnings ($)
    
    
    Compensation ($)
    
    
    Total ($)Richard A. Abdoo
    
    
    48,500
    
    
    
    
    
    
    
    6,308
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    54,808
    (8)William B. Ellis
    
    
    34,000
    
    
    
    
    
    
    
    6,308
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    40,308
    (9)Howard I. Hoffen
    
    
    31,000
    
    
    
    
    
    
    
    6,308
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    37,308
    (10)Ricardo B. Levy
    
    
    65,500
    
    
    
    
    
    
    
    12,616
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    78,116
    (11)David F. Merrion
    
    
    32,000
    
    
    
    
    
    
    
    6,308
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    38,808
    (12)Frederick OSuch(6)
    
    
    13,000
    
    
    
    
    
    
    
    1,050
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,050
    (13)Susan F. Tierney
    
    
    32,500
    
    
    
    
    
    
    
    6,308
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    38,808
    (14)John A. Urquhart(7)
    
    
    14,000
    
    
    
    
    
    
    
    1,050
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,050
    (15)
 (1)
    
    We report in this column the cash value of board retainer fees, committee chair fees, and
board and committee meeting fees earned by each non-employee director in 2006 irrespective of
whether they were paid in 2006.(2)
    
    Non-employee directors of the Company each received options to purchase 10,000 shares of the
Companys common stock in 2006 at an exercise price of $1.15 for each option granted.(3)
    
    Non-Qualified stock options granted March 22, 2006. These options become exercisable in 12
equal monthly installments commencing one month after the date of grant such that options
become fully vested one year from the date of grant, and expire no later than ten years from
the date of grant.(4)
    
    An additional option to purchase 10,000 shares of the Companys common stock at an exercise
price of $1.15 granted to Dr. Levy for service to the Company as its representative on the
board of directors of NovoDynamics, Inc.(5)
    
    Amounts set forth in the Option Awards columns represent
the aggregate amount recognized for financial statement reporting purposes,
disregarding the estimate of forfeitures related to service-based vesting conditions, but
otherwise computed in accordance with the Statement of Financial Accounting Standards (SFAS)
No. 123, as amended by SFAS No. 123(R), Share-Based
Payment, based on the
assumptions set forth in Note 8 to the Companys consolidated financial statements as filed
with the Securities and Exchange Commission on Form 10-KSB on March 23, 2007.(6)
    
    Frederick M. OSuch resigned from our Board of Directors effective the date of the 2006
Annual Meeting of Stockholders, which took place on June 8, 2006.(7)
    
    John A. Urquhart resigned from our Board of Directors effective the date of the 2006 Annual
Meeting of Stockholders, which took place on June 8, 2006.(8)
    
    As of December 31, 2006, Richard A. Abdoo had 35,000 option awards outstanding.(9)
    
    As of December 31, 2006, William B. Ellis had 54,000 option awards outstanding.(10)
    
    As of December 31, 2006, Howard I. Hoffen had 68,000 option awards outstanding.(11)
    
    As of December 31, 2006, Ricardo B. Levy had 176,039 option awards outstanding.(12)
    
    As of December 31, 2006, David F. Merrion had 40,000 option awards outstanding.(13)
    
    As of December 31, 2006, Frederick OSuch had no option awards outstanding.(14)
    
    As of December 31, 2006, Susan Tierney had 65,000 option awards outstanding.(15)
    
    As of December 31, 2006, John A. Urquhart had no option awards outstanding.
  11




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Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
 Security Ownership of Principal Stockholders and Management
   Shares of Common Stock Beneficially OwnedPercentageName of Person or Identity of Group
    
    Number
    
    
    Ownership(1)AWM Investment Company, Inc.(2)
    153 East 53rd Street, 55th floor
New York, New York 10022
    
    
    3,999,757
    
    
    
    21.86
    %Metalmark Capital LLC (3)
    1177 Avenue of the Americas
New York, New York 10036
    
    
    3,386,748
    
    
    
    18.51
    %Farallon Capital Management, L.L.C.(4)
    One Maritime Plaza, Suite 1325
San Francisco, California 94111
    
    
    2,274,960
    
    
    
    12.44
    %Howard I. Hoffen(5)
    
    
    3,461,061
    
    
    
    18.85
    %Ricardo B. Levy(6)
    
    
    418,704
    
    
    
    2.27
    %Robert W. Zack(7)
    
    
    286,086
    
    
    
    1.54
    %William B. Ellis(8)
    
    
    72,665
    
    
    
    *Susan F. Tierney(9)
    
    
    71,313
    
    
    
    *William J. McMahon(10)
    
    
    70,874
    
    
    
    *Richard A. Abdoo(11)
    
    
    76,464
    
    
    
    *David F. Merrion(12)
    
    
    46,313
    
    
    
    *All current
executive officers and directors as a group (8 persons)(13)
    
    
    4,503,480
    
    
    
    23.59
    %
  12




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##### Table of Contents



* Less than 1%(1)
    
    Based upon 18,294,677 shares of common stock outstanding as of March 31, 2007.(2)
    
    Based solely on information as of December 13, 2006 as set forth in Schedule 13D filed on
December 13, 2006. Includes 899,692 shares of common stock owned by Special Situations Cayman
Fund, L.P. (SSCF), 253,101 shares of common stock owned by Special Situations Fund III, L.P.
(SSF) and 2,846,964 shares of common stock owned by Special Situations Fund III QP, L.P.
(SSFQ). AWM Investment Company, Inc. (AWM) serves as general partner of SSCF, SSF and
SSFQ and may be deemed to be the beneficial owner of the shares of Company common stock held
by these entities. Austin W. Marxe (Marxe) and David M. Greenhouse (Greenhouse) are the
controlling principals of AWM, the general partner of and investment adviser to SSCF. AWM
also serves as the general partner of MGP Advisers Limited Partnership, the general partner of
and investment adviser to SSF and the general partner of SSFQ. AWM serves as the investment
adviser to SSFQ.(3)
    
    Consists of 2,995,781 shares owned by Morgan Stanley Capital Partners III, L.P. (MSCP III),
84,253 shares owned by Morgan Stanley Capital Investors, L.P. (MSCI), and 306,714 shares
owned by MSCP III 892 Investors, L.P. (MSCP III 892). Pursuant to a subadvisory agreement
between certain affiliates of Morgan Stanley and Metalmark Capital LLC (Metalmark) and
Metalmark Subadvisor LLC, Metalmark agreed to manage MSCP III and MSCP III 892 on a
subadvisory basis, and as a result, may be deemed to beneficially own 3,302,495 shares. In
addition, under the subadvisory arrangement, MSCI, a fund related to MSCP III and MSCP III
892, is effectively obligated to vote or direct the vote and to dispose or direct the
disposition of any common stock owned directly by it on the same terms and conditions as MSCP
III and MSCP 892. Metalmark is an independent private equity firm managed by Howard I. Hoffen
and senior team members formerly from Morgan Stanley Capital Partners. Mr. Hoffen disclaims
beneficial ownership of all shares owned by these entities, except to the extent of his
pecuniary interest therein.(4)
    
    Based solely on information as of December 31, 2006 as set forth in a Form 3 filed on January
9, 2007. The aggregate 2,274,960 shares are owned directly by Farallon Capital Partners,
L.P., Farallon Capital Institutional Partners, L.P., Farallon Capital Institutional Partners
II, L.P., Farallon Capital Institutional Partners III, L.P. and Tinicum Partners, L.P.
(collectively, the Partnerships) and by a discretionary account (the Managed Account)
managed by Farallon Capital Management, L.L.C. (FCMLLC). As the general partner to each of
the Partnerships, Farallon Partners, L.L.C. (FPLLC) may be deemed to be the beneficial owner
of the Companys securities held by each of the Partnerships. FCMLLC, as the registered
investment advisor to the Managed Account, may be deemed to be the beneficial owner of the
Companys securities held by the Managed Account. Each of Noonday G.P. (U.S.), L.L.C.
(NGPUS) and Noonday Asset Management, L.P. (NAMLP), as a sub-investment adviser to the
Partnerships and the Managed Account, may be deemed to be the beneficial owner of the
Companys securities held by the Partnerships and the Managed Account. As the general partner
of NAMLP, Noonday Capital, L.L.C. (NCLLC) may be deemed to be the beneficial owner of the
Issuers securities held by the Partnerships and the Managed Account. Effective as of January
1, 2007, Douglas M. MacMahon (MacMahon) became a managing member of FPLLC and FCMLLC, and as
a result MacMahon may be deemed to be the beneficial owner of the Companys securities held by
the Partnerships and the Managed Account. All of such securities of the Company have been
previously reported by the Partnerships, FCMLLC on behalf of the Managed Account and other
related entities and individuals on the Forms 4 filed on July 8, 2004 by the Partnerships,
FCMLLC on behalf of the Managed Account and the other entities and individuals listed on such
forms. NGPUS, NAMLP, NCLLC and David I. Cohen also filed a Form 3 with respect to such
securities on January 4, 2005. Saurabh K. Mittal also filed a Form 3 with
respect to such securities on October 11, 2005. Jason E. Moment also filed a Form 3 with respect
to such securities on January 10, 2006. There have been no transactions in such securities by
any such entities or individuals since such forms were filed. MacMahon, FCMLLC, NGPUS, NAMLP
and NCLLC and the individuals identified on the prior Form 3s and 4s disclaim any beneficial
ownership of any of the Companys securities reported or referred to herein for purposes of
Rules 16a-1(a) under the Securities Exchange Act of 1934, as amended (the 34 Act). FPLLC
disclaims any beneficial ownership of any of the Companys securities reported or referred to
herein for purposes of Rule 16a-1(a) under the 34 Act, or otherwise, except as to securities
representing FPLLCs pro rata interest in, and interest in the profits of, the Partnerships.
MacMahon, together with the entities and individuals identified in this footnote, may be deemed
members of a group holding equity securities of the Company. The foregoing shall not be deemed
to be an admission that such entities and individuals are member of such group(5)
    
    Includes 70,525 shares of common stock issuable upon exercise of options and vesting of
restricted stock units held by Mr. Hoffen, which are exercisable within 60 days of March 31,
2007, and 3,386,748 shares beneficially owned by Metalmark Capital LLC as described in
footnote (3) above. Mr. Hoffen disclaims beneficial ownership of the shares beneficially
owned by Metalmark Capital LLC and the entities described in footnote (3), except to the
extent of his pecuniary interest in such entities.(6)
    
    Includes (i) 178,564 shares of common stock issuable upon exercise of options and vesting of
restricted stock units held by Dr. Levy, which are exercisable within 60 days of March 31,
2007, (ii) 229,647 shares of common stock held by the Levy Family Trust, of which Dr. Levy
serves as trustee and (iii) 6,705 shares of common stock held by the Polly Jean Cusumano
Trust, of which Dr. Levy serves as trustee. Dr. Levy disclaims beneficial ownership of the
shares owned by the Polly Jean Cusumano Trust.
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##### Table of Contents



(7)
    
    Includes 271,132 shares of common stock issuable upon exercise of options and vesting of
restricted stock units held by Mr. Zack, which are exercisable within 60 days of March 31,
2007.(8)
    
    Includes 56,525 shares of common stock issuable upon exercise of options and vesting of
restricted stock units held by Dr. Ellis, which are exercisable within 60 days of March 31,
2007.(9)
    
    Includes 67,525 shares of common stock issuable upon exercise of options and vesting of
restricted stock units held by Dr. Tierney, which are exercisable within 60 days of March 31,
2007.(10)
    
    Includes 67,243 shares of common stock issuable upon exercise of options and vesting of
restricted stock units held by Mr. McMahon, which are exercisable within 60 days of March 31,
2007.(11)
    
    Includes 43,585 shares of common stock issuable upon exercise of options and vesting of
restricted stock units held by Mr. Abdoo, which options are exercisable within 60 days of
March 31, 2007.(12)
    
    Includes 42,525 shares of common stock issuable upon exercise of options and vesting of
restricted stock units held by Mr. Merrion, which are exercisable within 60 days of March 31,
2007.(13)
    
    Includes 797,624 shares of common stock issuable upon exercise of options and vesting of
restricted stock units held by current executive officers and directors, which are exercisable
within 60 days of March 31, 2007.
 Securities Authorized for Issuance under Equity Compensation Plans
  
 Item 12.
    
    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 Transactions with Related Persons, Promoters and Certain Control Persons
    Independence of Members of our Board of Directors and Committees
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Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
  Audit Fees(1)
    
    
    Audit-Related Fees
    
    
    Tax Fees
    
    
    All Other Fees(2)2006
    
    $
    279,087
    
    
    $
    
    
    
    $
    
    
    
    $
    2005
    
    $
    299,202
    
    
    $
    
    
    
    $
    
    
    
    $
    12,769
 
 (1)
    
    Includes fees and expenses related to the fiscal year audit, interim reviews and audit
services provided in connection with statutory and regulatory filings, irrespective of when
the fees and expenses were billed or paid or when the services were rendered.(2)
    
    All Other Fees paid in 2005 includes fees (i) for professional services relating to
preparation of and assistance with the Companys response to a Securities and Exchange
Commission comment letter, (ii) for assistance in the development of procedures for compliance
with the Sarbanes Oxley Act of 2002 and (iii) for professional services relating to a review
of Company procedures used for allocating costs to government and other contracts.
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SIGNATURES
  CATALYTICA ENERGY SYSTEMS, INC.
(Registrant)Date: April 30, 2007
    By:
    /s/ Robert W. ZackRobert W. ZackPresident, Chief Executive Officer andChief Financial Officer  16