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What changed in AMERICAN SUPERCONDUCTOR CORP /DE/'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of AMERICAN SUPERCONDUCTOR CORP /DE/'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+324 added−333 removedSource: 10-K (2024-05-29) vs 10-K (2023-05-31)

Top changes in AMERICAN SUPERCONDUCTOR CORP /DE/'s 2024 10-K

324 paragraphs added · 333 removed · 262 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

138 edited+20 added−37 removed142 unchanged
Biggest changeFINANCIAL STATEMENTS CONSOLIDATED BALANCE SHEETS (In thousands) March 31, March 31, 2023 2022 ASSETS Current assets: Cash and cash equivalents $ 23,360 $ 40,584 Accounts receivable 30,665 20,280 Inventory 36,986 23,666 Prepaid expenses and other current assets 13,429 7,052 Restricted cash 1,733 2,754 Total current assets 106,173 94,336 Property, plant and equipment, net 12,309 13,656 Intangibles, net 8,527 11,311 Right-of-use asset 2,857 3,502 Goodwill 43,471 43,471 Restricted cash 582 6,148 Deferred tax assets 1,114 1,224 Other assets 528 239 Total assets $ 175,561 $ 173,887 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued expenses $ 38,383 $ 29,140 Lease liability, current portion 808 740 Debt, current portion 75 72 Contingent consideration 1,270 1,200 Deferred revenue, current portion 43,572 22,812 Total current liabilities 84,108 53,964 Deferred revenue, long term portion 7,188 7,222 Lease liability, long term portion 2,184 2,900 Deferred tax liabilities 243 297 Debt, long-term portion 15 90 Other liabilities 26 25 Total liabilities 93,764 64,498 Commitments and contingencies (Note 17) Stockholders' equity: Common stock, $ 0.01 par value, 75,000,000 shares authorized; 29,937,119 and 28,919,990 shares issued and 29,539,488 and 28,522,359 shares outstanding at March 31, 2023 and 2022, respectively 299 289 Additional paid-in capital 1,139,113 1,133,536 Treasury stock, at cost, 397,631 at March 31, 2023 and 2022, respectively (3,639 ) (3,639 ) Accumulated other comprehensive income (loss) 1,571 (291 ) Accumulated deficit (1,055,547 ) (1,020,506 ) Total stockholders' equity 81,797 109,389 Total liabilities and stockholders' equity $ 175,561 $ 173,887 The accompanying notes are an integral part of the consolidated financial statements. 35 AMERICAN SUPERCONDUCTOR CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) Fiscal Year Ended March 31, 2023 2022 Revenues $ 105,984 $ 108,435 Cost of revenues 97,463 94,943 Gross profit 8,521 13,492 Operating expenses: Research and development 8,966 10,470 Selling, general and administrative 28,700 27,494 Amortization of acquisition related intangibles 2,746 2,467 Change in fair value on contingent consideration 70 (5,850 ) Restructuring 1,048 — Total operating expenses 41,530 34,581 Operating loss (33,009 ) (21,089 ) Interest income, net 252 75 China dissolution (1,921 ) - Other expense, net (148 ) (28 ) Loss before income tax expense (benefit) (34,826 ) (21,042 ) Income tax expense (benefit) 215 (1,849 ) Net loss $ (35,041 ) $ (19,193 ) Net loss per common share Basic $ (1.26 ) $ (0.71 ) Diluted $ (1.26 ) $ (0.71 ) Weighted average number of common shares outstanding Basic 27,848 27,203 Diluted 27,848 27,203 The accompanying notes are an integral part of the consolidated financial statements. 36 AMERICAN SUPERCONDUCTOR CORPORATION CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (In thousands) Fiscal Year Ended March 31, 2023 2022 Net loss $ (35,041 ) $ (19,193 ) Other comprehensive (loss) gain, net of tax: China dissolution 1,921 - Foreign currency translation loss (59 ) (14 ) Total other comprehensive (loss) gain, net of tax 1,862 (14 ) Comprehensive loss $ (33,179 ) $ (19,207 ) The accompanying notes are an integral part of the consolidated financial statements. 37 AMERICAN SUPERCONDUCTOR CORPORATION CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (In thousands) Common Stock Additional Accumulated Other Total Number of Shares Par Value Paid-in Capital Treasury Stock Comprehensive Income (Loss) Accumulated Deficit Stockholders' Equity Balance at March 31, 2021 27,988 $ 280 $ 1,121,495 $ (3,593 ) $ (277 ) $ (1,001,313 ) $ 116,592 Issuance of common stock - ESPP 28 — $ 241 — — — $ 241 Issuance of common stock - Bonus payments 158 2 2,278 — — — 2,280 Issuance of common stock - restricted shares 404 4 (4 ) — — — — Stock-based compensation expense — — 4,661 — — — 4,661 Issuance of stock for 401(k) match 40 — 481 — — — 481 Issuance of common stock - Neeltran acquisition 302 3 4,384 — — — 4,387 Repurchase of treasury stock — — — (46 ) — — (46 ) Cumulative translation adjustment — — — — (14 ) — (14 ) Net loss — — — — — (19,193 ) (19,193 ) Balance at March 31, 2022 28,920 $ 289 $ 1,133,536 $ (3,639 ) $ (291 ) $ (1,020,506 ) $ 109,389 Issuance of common stock - ESPP 60 1 234 — — — 235 Issuance of common stock - restricted shares 827 8 (8 ) — — — — Stock-based compensation expense — — 4,729 — — — 4,729 Issuance of stock for 401(k) match 130 1 622 — — — 623 Cumulative translation adjustment — — — — 1,862 — 1,862 Net loss — — — — — (35,041 ) (35,041 ) Balance at March 31, 2023 29,937 $ 299 $ 1,139,113 $ (3,639 ) $ 1,571 $ (1,055,547 ) $ 81,797 ) ) The accompanying notes are an integral part of the consolidated financial statements. 38 AMERICAN SUPERCONDUCTOR CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Fiscal Year Ended March 31, 2023 2022 Cash flows from operating activities: Net loss $ (35,041 ) $ (19,193 ) Adjustments to reconcile net loss to net cash used in operations: Depreciation and amortization 5,361 5,341 Stock-based compensation expense 4,729 4,661 Provision for excess and obsolete inventory 1,467 1,902 Deferred income taxes 24 (2,403 ) Change in fair value of contingent consideration 70 (5,850 ) China dissolution 1,921 — Non-cash interest income — (49 ) Other non-cash items 600 525 Unrealized foreign exchange gain on cash and cash equivalents (226 ) (186 ) Changes in operating asset and liability accounts: Accounts receivable (10,360 ) (3,760 ) Inventory (14,796 ) (3,307 ) Prepaid expenses and other current assets (5,757 ) (420 ) Accounts payable and accrued expenses 8,660 4,695 Deferred revenue 20,863 (933 ) Net cash used in operating activities (22,485 ) (18,977 ) Cash flows from investing activities: Purchase of property, plant and equipment (1,236 ) (938 ) Cash paid for acquisition, net of cash received — (11,479 ) Proceeds from the maturity of marketable securities — 5,189 Change in other assets (281 ) 65 Net cash used in investing activities (1,517 ) (7,163 ) Cash flows from financing activities: Repurchase of treasury stock — (46 ) Repayment of debt (73 ) (53 ) Proceeds from exercise of employee stock options and ESPP 235 241 Net cash provided by financing activities 162 142 Effect of exchange rate changes on cash, cash equivalents and restricted cash 29 (55 ) Net decrease in cash, cash equivalents and restricted cash (23,811 ) (26,053 ) Cash, cash equivalents and restricted cash at beginning of year 49,486 75,539 Cash, cash equivalents and restricted cash at end of year $ 25,675 $ 49,486 Supplemental schedule of cash flow information: Cash paid for income taxes, net of refunds 350 $ 531 Non-cash investing and financing activities Issuance of common stock in connection with the purchase of Neeltran, Inc. — 4,387 Issuance of common stock to settle liabilities 623 2,761 The accompanying notes are an integral part of the consolidated financial statements. 39 1.
Biggest changeFINANCIAL STATEMENTS CONSOLIDATED BALANCE SHEETS (In thousands) March 31, March 31, 2024 2023 ASSETS Current assets: Cash and cash equivalents $ 90,522 $ 23,360 Accounts receivable, net 26,325 30,665 Inventory, net 41,857 36,986 Prepaid expenses and other current assets 7,295 13,429 Restricted cash 468 1,733 Total current assets 166,467 106,173 Property, plant and equipment, net 10,861 12,309 Intangibles, net 6,369 8,527 Right-of-use assets 2,557 2,857 Goodwill 43,471 43,471 Restricted cash 1,290 582 Deferred tax assets 1,119 1,114 Other assets 637 528 Total assets $ 232,771 $ 175,561 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued expenses $ 24,235 $ 38,383 Lease liability, current portion 716 808 Debt, current portion 25 75 Contingent consideration 3,100 1,270 Deferred revenue, current portion 50,732 43,572 Total current liabilities 78,808 84,108 Deferred revenue, long term portion 7,097 7,188 Lease liability, long term portion 1,968 2,184 Deferred tax liabilities 300 243 Debt, long-term portion — 15 Other liabilities 27 26 Total liabilities 88,200 93,764 Commitments and Contingencies (Note 17) Stockholders' equity: Common stock, $ 0.01 par value, 75,000,000 shares authorized; 37,343,812 and 29,937,119 shares issued and 36,946,181 and 29,539,488 shares outstanding at March 31, 2024 and 2023, respectively 373 299 Additional paid-in capital 1,212,913 1,139,113 Treasury stock, at cost, 397,631 at March 31, 2024 and 2023, respectively (3,639 ) (3,639 ) Accumulated other comprehensive income 1,582 1,571 Accumulated deficit (1,066,658 ) (1,055,547 ) Total stockholders' equity 144,571 81,797 Total liabilities and stockholders' equity $ 232,771 $ 175,561 The accompanying notes are an integral part of the consolidated financial statements. 35 AMERICAN SUPERCONDUCTOR CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) Fiscal Year Ended March 31, 2024 2023 Revenues $ 145,639 $ 105,984 Cost of revenues 110,356 97,463 Gross profit 35,283 8,521 Operating expenses: Research and development 7,991 8,966 Selling, general and administrative 31,600 28,700 Amortization of acquisition related intangibles 2,152 2,746 Change in fair value on contingent consideration 4,922 70 Restructuring (14 ) 1,048 Total operating expenses 46,651 41,530 Operating loss (11,368 ) (33,009 ) Interest income, net 1,302 252 China dissolution — (1,921 ) Other expense, net (736 ) (148 ) Loss before income tax expense (10,802 ) (34,826 ) Income tax expense 309 215 Net loss $ (11,111 ) $ (35,041 ) Net loss per common share Basic $ (0.37 ) $ (1.26 ) Diluted $ (0.37 ) $ (1.26 ) Weighted average number of common shares outstanding Basic 29,825 27,848 Diluted 29,825 27,848 The accompanying notes are an integral part of the consolidated financial statements. 36 AMERICAN SUPERCONDUCTOR CORPORATION CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (In thousands) Fiscal Year Ended March 31, 2024 2023 Net loss $ (11,111 ) $ (35,041 ) Other comprehensive income, net of tax: China dissolution — 1,921 Foreign currency translation gain (loss) 11 (59 ) Total other comprehensive income, net of tax 11 1,862 Comprehensive loss $ (11,100 ) $ (33,179 ) The accompanying notes are an integral part of the consolidated financial statements. 37 AMERICAN SUPERCONDUCTOR CORPORATION CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (In thousands) Common Stock Accumulated Other Total Number of Shares Par Value Additional Paid-in Capital Treasury Stock Comprehensive Income (Loss) Accumulated Deficit Stockholders' Equity Balance at March 31, 2022 28,920 $ 289 $ 1,133,536 $ (3,639 ) $ (291 ) $ (1,020,506 ) $ 109,389 Issuance of common stock - ESPP 60 1 234 — — — 235 Issuance of common stock - restricted shares, net of forfeited shares 827 8 (8 ) — — — — Stock-based compensation expense — — 4,729 — — — 4,729 Issuance of stock for 401(k) match 130 1 622 — — — 623 Cumulative translation adjustment — — — — 1,862 — 1,862 Net loss — — — — — (35,041 ) (35,041 ) Balance at March 31, 2023 29,937 $ 299 $ 1,139,113 $ (3,639 ) $ 1,571 $ (1,055,547 ) $ 81,797 Issuance of common stock - ESPP 34 — 279 — — — 279 Issuance of common stock - restricted shares, net of forfeited shares 682 7 (7 ) — — — — Stock-based compensation expense — — 4,652 — — — 4,652 Issuance of stock for 401(k) match 80 1 623 — — — 624 Issuance of common stock for contingent consideration 400 4 3,088 — — — 3,092 Issuance of common stock - equity offering 6,210 62 65,165 — — — 65,227 Cumulative translation adjustment — — — — 11 — 11 Net loss — — — — — (11,111 ) (11,111 ) Balance at March 31, 2024 37,343 $ 373 $ 1,212,913 $ (3,639 ) $ 1,582 $ (1,066,658 ) $ 144,571 The accompanying notes are an integral part of the consolidated financial statements. 38 AMERICAN SUPERCONDUCTOR CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Fiscal Year Ended March 31, 2024 2023 Cash flows from operating activities: Net loss $ (11,111 ) $ (35,041 ) Adjustments to reconcile net loss to net cash used in operations: Depreciation and amortization 4,494 5,361 Stock-based compensation expense 4,652 4,729 Provision for excess and obsolete inventory 1,970 1,467 Deferred income taxes 65 24 Change in fair value of contingent consideration 4,922 70 China dissolution — 1,921 Other non-cash items 44 600 Unrealized foreign exchange gain on cash and cash equivalents (2 ) (226 ) Changes in operating asset and liability accounts: Accounts receivable 4,340 (10,360 ) Inventory (6,841 ) (14,796 ) Prepaid expenses and other current assets 6,313 (5,757 ) Accounts payable and accrued expenses (13,825 ) 8,660 Deferred revenue 7,117 20,863 Net cash provided by (used in) operating activities 2,138 (22,485 ) Cash flows from investing activities: Purchases of property, plant and equipment (934 ) (1,236 ) Change in other assets (27 ) (281 ) Net cash used in investing activities (961 ) (1,517 ) Cash flows from financing activities: Repayment of debt (65 ) (73 ) Proceeds from public equity offering, net 65,227 — Proceeds from exercise of ESPP 279 235 Net cash provided by financing activities 65,441 162 Effect of exchange rate changes on cash, cash equivalents and restricted cash (13 ) 29 Net increase (decrease) in cash, cash equivalents and restricted cash 66,605 (23,811 ) Cash, cash equivalents and restricted cash at beginning of year 25,675 49,486 Cash, cash equivalents and restricted cash at end of year $ 92,280 $ 25,675 Supplemental schedule of cash flow information: Cash paid for income taxes, net of refunds $ 286 $ 350 Non-cash investing and financing activities Issuance of common stock to settle contingent consideration $ 3,092 $ — Issuance of common stock to settle liabilities $ 624 $ 623 The accompanying notes are an integral part of the consolidated financial statements. 39 1.
As the customer is consuming the benefits as the service is being provided the revenue is recognized over time ratably. The Company’s policy is to not accept volume discounts, product returns, or rebates and allowances within its contracts.
As the customer is consuming the benefits as the service is being provided the revenue is recognized over time ratably. The Company’s policy is not to accept volume discounts, product returns, or rebates and allowances within its contracts.
The Company's goodwill balance relates to the Neeltran Acquisition in fiscal 2021, the NEPSI Acquisition in fiscal 2020, and Infinia Technology Corporation in fiscal 2017 and is reported in the Grid business segment.
The Company's goodwill balance relates to the Neeltran acquisition in fiscal 2021, the NEPSI acquisition in fiscal 2020, and Infinia Technology Corporation acquisition in fiscal 2017 and is reported in the Grid business segment.
The first step is to evaluate the tax position for recognition by determining if, based on the technical merits, it is more likely than not that the position will be sustained upon audit, including resolution of related appeals or litigation processes, if any.
The first step is to evaluate the tax position for recognition by determining if, based on the technical merits, it is more likely than not that the position will be sustained upon audit, including resolution of related appeals or litigation processes, if any.
The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement. The Company reevaluates these uncertain tax positions on a quarterly basis.
The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement. The Company reevaluates these uncertain tax positions on a quarterly basis.
This evaluation is based on factors including, but not limited to, changes in facts or circumstances, changes in tax law, effectively settled issues under audit and new audit activity. Any changes in these factors could result in the recognition of a tax benefit or an additional charge to the tax provision.
This evaluation is based on factors including, but not limited to, changes in facts or circumstances, changes in tax law, effectively settled issues under audit and new audit activity. Any changes in these factors could result in the recognition of a tax benefit or an additional charge to the tax provision.
The Company is a leading system provider of megawatt-scale power resiliency solutions that Orchestrate the Rhythm and Harmony of Power on the Grid™ and protect and expand the capability of the Navy's fleet. The Company’s products leverage its proprietary “smart materials” and “smart software and controls” to provide enhanced resiliency and improved performance of megawatt-scale power flow.
The Company is a leading system provider of megawatt-scale power resiliency solutions that orchestrate the rhythm and harmony of power on the grid™ and protect and expand the capability of the Navy's fleet. The Company’s system level products leverage its proprietary “smart materials” and “smart software and controls” to provide enhanced resiliency and improved performance of megawatt-scale power flow.
Legal costs incurred in connection with loss contingencies are expensed as incurred. See Note 17, “Commitments and Contingencies,” for further information. Disclosure of Fair Value of Financial Instruments The Company’s financial instruments consist principally of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, and derivatives.
Legal costs incurred in connection with loss contingencies are expensed as incurred. See Note 17, “Commitments and Contingencies,” for further information. Disclosure of Fair Value of Financial Instruments The Company’s financial instruments consist principally of cash and cash equivalents, restricted cash, accounts receivable, accounts payable, accrued expenses, and derivatives.
Prepaid and Other Current Assets During fiscal 2022, the Company conducted an analysis as to whether it was entitled to employee retention credits (“ERC”) under the CARES Act as amended by the Taxpayer Certainty and Disaster Tax Relief Act of 2020 and the American Plan Act of 2021.
Prepaid and Other Current Assets During fiscal 2022, the Company conducted an analysis as to whether it was entitled to employee retention credits (“ERC”) under the CARES Act as amended by the Taxpayer Certainty and Disaster Tax Relief Act of 2020 and the American Rescue Plan Act of 2021.
As part of the transaction, the selling stockholders may receive up to an additional 1,000,000 shares of common stock of the Company upon the achievement of certain specified revenue objectives during varying periods of up to four years following closing of the NEPSI Acquisition. 4.
As part of the transaction, the selling stockholders may receive up to an additional 1,000,000 shares of common stock of the Company upon the achievement of certain specified revenue objectives during varying periods of up to four years following closing of the NEPSI Acquisition.
The Company evaluates its long-lived assets whenever events or circumstances suggest that the carrying amount of an asset or group of assets may not be recoverable from the estimated undiscounted future cash flows. There were no indicators requiring impairment testing on the Company's long-lived assets during the fiscal years ended March 31, 2023 and 2022 .
The Company evaluates its long-lived assets whenever events or circumstances suggest that the carrying amount of an asset or group of assets may not be recoverable from the estimated undiscounted future cash flows. There were no indicators requiring impairment testing on the Company's long-lived assets during the fiscal years ended March 31, 2024 and 2023 .
A dditionally, there was no impairment identified for the fiscal year ended March 31, 2022 based on the assessment performed in the prior fiscal year. 42 Revenue Recognition Revenue contracts are defined as an arrangement that creates enforceable rights and obligations of both parties where collection of the contract price is deemed probable.
A dditionally, there was no impairment identified for the fiscal year ended March 31, 2023 based on the assessment performed in the prior fiscal year. 42 Revenue Recognition Revenue contracts are defined as an arrangement that creates enforceable rights and obligations of both parties where collection of the contract price is deemed probable.
The Company includes interest and penalties related to gross unrecognized tax benefits within the provision for income taxes. See Note 14, “Income Taxes,” for further information regarding its income tax assumptions and expenses. Stock-Based Compensation The Company accounts for stock-based payment transactions using a fair value-based method and recognizes the related expense in the results of operations.
The Company includes interest and penalties related to gross unrecognized tax benefits within the provision for income taxes. See Note 13, “Income Taxes,” for further information regarding its income tax assumptions and expenses. Stock-Based Compensation The Company accounts for stock-based payment transactions using a fair value-based method and recognizes the related expense in the results of operations.
The Company's service contracts can include a purchase order from a customer for specific goods in which each item is a distinct performance obligation satisfied at a point in time at which control of the goods is transferred to the customer which occurs based on the contracted delivery terms or when the requested service work has been completed.
The Company's service contracts can include a purchase order from a customer for specific goods in which each item is a distinct performance obligation satisfied at a point in time at which control of the goods is transferred to the customer. This transfer occurs based on the contracted delivery terms or when the requested service work has been completed.
As of March 31, 2023 and March 31, 2022 , the Company’s contract assets and liabilities primarily relate to the timing differences between cash received from a customer in connection with contractual rights to invoicing and the timing of revenue recognition following completion of performance obligations. The Company's accounts receivable balance is made up entirely of customer contract related balances.
As of March 31, 2024 and March 31, 2023 , the Company’s contract assets and liabilities primarily relate to the timing differences between cash received from a customer in connection with contractual rights to invoicing and the timing of revenue recognition following completion of performance obligations. The Company's accounts receivable balance is made up entirely of customer contract related balances.
The Company periodically assesses the need to provide for impairment on these purchase contracts and records a loss on purchase commitments when required. Lease Commitments During the years ended March 31, 2023 and 2022 , all lease costs were recorded in selling, general and administrative expense. See Note 15, "Leases" for further details.
The Company periodically assesses the need to provide for impairment on these purchase contracts and records a loss on purchase commitments when required. Lease Commitments During the years ended March 31, 2024 and 2023 , all lease costs were recorded in selling, general and administrative expense. See Note 15, "Leases" for further details.
The Company did not have any transfers of assets and liabilities from Level 1, Level 2 or Level 3 of the fair value measurement hierarchy during the year ended March 31, 2023 . A financial asset’s or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.
The Company did not have any transfers of assets and liabilities from Level 1, Level 2 or Level 3 of the fair value measurement hierarchy during the year ended March 31, 2024 . A financial asset’s or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.
An analysis is performed annually, or upon execution of any individually material agreement, to ensure that the rates being applied to newly acquired leases are still accurate. The majority of the Company's leases are classified as operating leases, and therefore the expense is captured in income from operations each period.
An analysis is performed annually, or upon execution of any individually material agreement, to ensure that the rates being applied to newly acquired leases are still accurate. The majority of the Company's leases are classified as operating leases, and therefore the expense is captured in operating loss from operations each period.
Upon retirement or other disposition of assets, the costs and related accumulated depreciation are eliminated from the accounts and the resulting gain or loss is reflected in operating expenses. Valuation of Long-Lived Assets The Company periodically evaluates its long-lived assets, consisting principally of fixed assets and amortizable intangible assets, for potential impairment.
Upon retirement or other disposition of assets, the costs and related accumulated depreciation are eliminated from the accounts and the resulting gain or loss is reflected in operating expenses. Valuation of Long-Lived Assets The Company periodically evaluates its long-lived assets, consisting principally of fixed assets and definite-lived intangible assets, for potential impairment.
The Company has a history of successfully obtaining financing under incrementally-funded contracts with the U.S. government and it expects to continue to obtain additional contract modifications in the year ending March 31, 2024 and beyond as incremental funding is authorized and appropriated by the government.
The Company has a history of successfully obtaining financing under incrementally-funded contracts with the U.S. government and it expects to continue to obtain additional contract modifications in the year ending March 31, 2025 and beyond as incremental funding is authorized and appropriated by the government.
If the carrying value of a reporting unit exceeds the reporting unit’s fair value, then an impairment charge is recognized reducing the goodwill by the excess of the carrying amount over the fair value, not to exceed the total amount of the goodwill allocated to the that reporting unit. See Note 5, "Goodwill" for further information and discussion.
If the carrying value of a reporting unit exceeds the reporting unit’s fair value, then an impairment charge is recognized reducing the goodwill by the excess of the carrying amount over the fair value, not to exceed the total amount of the goodwill allocated to the that reporting unit. See Note 4, "Goodwill" for further information and discussion.
There are also approximately $31.7 million of outstanding performance obligations to be recognized over a period of thirteen to sixty months. The remaining performance obligations are subject to customer actions and therefore the timing of revenue recognition cannot be reasona bly estimated.
There are also approximately $23.7 million of outstanding performance obligations to be recognized over a period of thirteen to sixty months. The remaining performance obligations are subject to customer actions and therefore the timing of revenue recognition cannot be reasona bly estimated.
Stockholders’ Equity Stock-Based Compensation Plans As of March 31, 2023 , the Company had two active stock plans: the Amended and Restated 2007 Director Stock Plan (the “2007 Director Plan”) and the 2022 Stock Incentive Plan (the "2022 Plan"). On August 2, 2022, the Company's stockholders approved the 2022 Plan and amendments to the Company's 2007 Director Plan.
Stockholders’ Equity Stock-Based Compensation Plans As of March 31, 2024 , the Company had two active stock plans: the Amended and Restated 2007 Director Stock Plan (the “2007 Director Plan”) and the 2022 Stock Incentive Plan (the "2022 Plan"). On August 2, 2022, the Company's stockholders approved the 2022 Plan and amendments to the Company's 2007 Director Plan.
Goodwill The guidance under ASC 805 - 30 provides for the recognition of goodwill on the acquisition date measured as the excess of the aggregate consideration transferred over the net of the acquisition date amounts of net assets acquired and liabilities assumed.
Goodwill The guidance under ASC 805 - 30, Business Combinations , provides for the recognition of goodwill on the acquisition date measured as the excess of the aggregate consideration transferred over the net of the acquisition date amounts of net assets acquired and liabilities assumed.
The Company did not identify any uncertain tax positions at March 31, 2023 . The Company did not have any gross unrecognized tax benefits at March 31, 2023 or 2022 . There were no reversals of uncertain tax positions in the fiscal years ended March 31, 2023 and 2022 .
The Company did not identify any uncertain tax positions at March 31, 2024 . The Company did not have any gross unrecognized tax benefits at March 31, 2024 or 2023 . There were no reversals of uncertain tax positions in the fiscal years ended March 31, 2024 and 2023 .
The transfer of control can occur at the time of delivery, installation or post-installation where applicable. The Company's equipment and system product line includes certain contracts which do not meet the requirements of an exchange transaction and therefore do not fall within the scope of ASC 606.
The transfer of control can occur at the time of delivery, installation or post-installation where applicable. The Company's equipment and system product line includes certain contracts which do not meet the requirements of an exchange transaction and therefore do not fall within the scope of Accounting Standards Codification ("ASC") 606.
The Form S- 3 is intended to provide the Company flexibility to conduct registered sales of the Company's securities, subject to market conditions, in order to fund the Company's future capital needs.
The Form S- 3 is intended to provide the Company flexibility to conduct registered sales of its securities, subject to market conditions, in order to fund its future capital needs.
Diluted EPS is computed by dividing the net loss by the weighted-average number of common shares and dilutive common equivalent shares outstanding during the period, calculated using the treasury stock method. Common equivalent shares include the effect of restricted stock, exercise of stock options and warrants and contingently issuable shares.
Diluted EPS is computed in periods of net income, by dividing the net loss by the weighted-average number of common shares and dilutive common equivalent shares outstanding during the period, calculated using the treasury stock method. Common equivalent shares include the effect of restricted stock, exercise of stock options and warrants and contingently issuable shares.
The Company updated its study in 2020 to determine whether Section 382 could limit the use of its carryforwards in this manner. After completing this study, the Company has concluded that the limitation will not have a material impact on its ability to utilize its NOL carryforwards.
The Company updated its study in fiscal 2023 to determine whether Section 382 could limit the use of its carryforwards in this manner. After completing this study, the Company has concluded that the limitation will not have a material impact on its ability to utilize its NOL carryforwards.
Pursuant to the terms of the Stock Purchase Agreement and concurrently with entering into such agreement, the Company acquired all of the issued and outstanding (i) shares of capital stock of Northeast Power Systems, Inc., a New York corporation (“NEPSI”), and (ii) membership interests of Northeast Power Realty, LLC, a New York limited liability company, which holds the real property that serves as NEPSI’s headquarters (the "NEPSI Acquisition").
Pursuant to the terms of the NEPSI Stock Purchase Agreement and concurrently with entering into such agreement, the Company acquired all of the issued and outstanding (i) shares of capital stock of NEPSI, and (ii) membership interests of Northeast Power Realty, LLC, a New York limited liability company, which holds the real property that serves as NEPSI's headquarters (the "NEPSI Acquisition").
In determining the allowance for doubtful accounts, the Company evaluates the collectability of accounts receivable based primarily on the probability of recoverability based on historical collection and write-off experience, the age of past due receivables, specific customer circumstances, and current economic trends.
In determining the allowance for credit losses, the Company evaluates the collectability of accounts receivable based primarily on the probability of recoverability based on historical collection and write-off experience, the age of past due receivables, specific customer circumstances, and current economic trends.
Failure to accurately estimate the losses for doubtful accounts and ensure that payments are received on a timely basis could have a material adverse effect on the Company’s business, financial condition, results of operations, and cash flows.
Failure to accurately estimate the losses for credit losses and ensure that payments are received on a timely basis could have a material adverse effect on the Company’s business, financial condition, results of operations, and cash flows.
The Company conducts business globally and, as a result, its subsidiaries file income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. Major tax jurisdictions include the U.S. and Austria. All U.S. income tax filings for fiscal years ended March 31, 1996 through 2022 remain open and subject to examination.
The Company conducts business globally and, as a result, its subsidiaries file income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. Major tax jurisdictions include the U.S. and Austria. All U.S. income tax filings for fiscal years ended March 31, 1997 through 2023 remain open and subject to examination.
The following table presents restructuring charges and cash payments during the year ended March 31, 2023 ( in thousands): Severance pay and benefits Accrued restructuring balance at April 1, 2022 $ — Charges to operations 1,048 Cash payments (331 ) Accrued restructuring balance at March 31, 2023 $ 717 All restructuring charges discussed above are included within restructuring in the Company’s consolidated statements of operations.
The following table presents restructuring charges and cash payments during the year ended March 31, 2024 and 2023 (in thousands): Severance pay and benefits Accrued restructuring balance at April 1, 2023 $ 717 Recoveries to operations (14 ) Cash payments (703 ) Accrued restructuring balance at March 31, 2024 $ — Accrued restructuring balance at April 1, 2022 $ — Charges to operations 1,048 Cash payments (331 ) Accrued restructuring balance at March 31, 2023 $ 717 All restructuring charges discussed above are included within restructuring in the Company’s consolidated statements of operations.
There we r e 200,000 perfor mance-based restricted shares awarded during th e fiscal year ended March 31, 2023 for which the performance conditions are deemed probable to be met and the expense is being recorded over a three -year vesting period.
There we r e 213,000 perfor mance-based restricted shares awarded during th e fiscal year ended March 31, 2024 for which the performance conditions are deemed probable to be met and the expense is being recorded over a three -year vesting period.
If there were material ownership changes subsequent to the study, such changes could limit the Company's ability to utilize its NOL carryforwards. The total amount of undistributed foreign earnings available to be repatriated at March 31, 2023 was $1.9 million resulting in the recording of a $0.2 million deferred tax liability for foreign withholding taxes.
If there were material ownership changes subsequent to the study, such changes could limit the Company's ability to utilize its NOL carryforwards. The total amount of undistributed foreign earnings available to be repatriated at March 31, 2024 was $2.2 million resulting in the recording of a $0.3 million deferred tax liability for foreign withholding taxes.
For U.S. federal tax purpose, approximately $101.7 million of federal net operating losses have an indefinite carryforward period. Included in the U.S. net operating loss are $3.5 million of acquired losses from Power Quality Systems, Inc. and $0.3 million of acquired losses from Infinia Technology Corporation.
For U.S. federal tax purpose, approximately $103.1 million of federal net operating losses have an indefinite carryforward period. Included in the U.S. net operating loss are $3.5 million of acquired losses from Power Quality Systems, Inc. and $0.3 million of acquired losses from Infinia Technology Corporation.
Accounts Receivable Accounts receivable consist of amounts owed by commercial companies and government agencies. Accounts receivable are stated net of allowances for doubtful accounts. The Company’s accounts receivable relate principally to a limited number of customers.
Accounts Receivable Accounts receivable consist of amounts owed by commercial companies and government agencies. Accounts receivable are stated net of allowances for credit losses. The Company’s accounts receivable relate principally to a limited number of customers.
The Company recorded a $3.3 million receivable in Prepaid expenses and other current assets and a benefit of $1.8 million to Cost of revenues, $0.8 million to SG&A and $0.7 million to Research and development in the fiscal year ended March 31, 2023 for the ERC that is expected to be received based on the amended filings. 10.
The Company recorded a $3.3 million receivable in prepaid expenses and other current assets and a benefit of $1.8 million to cost of revenues, $0.8 million to selling, general, and administrative, and $0.7 million to research and development in the fiscal year ended March 31, 2023 for the ERC that is expected to be received based on the amended filings.
The Company’s consolidated financial statements have been prepared on a going concern basis in accordance with United States generally accepted accounting principles (“GAAP”) and the Securities and Exchange Commission’s (“SEC”) instructions to Form 10 -K.
These consolidated financial statements of the Company have been prepared on a going concern basis in accordance with United States generally accepted accounting principles (“GAAP”) and the Securities and Exchange Commission’s (“SEC”) instructions to Form 10 -K.
After consideration of all the available evidence, both positive and negative, the Company has determined tha t a $183.6 million valuation allowance at March 31, 2023 is necessary to reduce the deferred tax assets to the amount that will more likely than not be realized which is a $3.1 million decrease from the $186.6 valuation allowance as of March 31, 2022.
After consideration of all the available evidence, both positive and negative, the Company has determined tha t a $177.1 million valuation allowance at March 31, 2024 is necessary to reduce the deferred tax assets to the amount that will more likely than not be realized which is a $6.5 million decrease from the $183.6 valuation allowance as of March 31, 2023 .
The purpose of the workforce reduction was to reduce operating expenses to better align with the Company’s current revenues. In fiscal 2022, the Company recorded restructuring charges of $1.0 million as a result of this reduction in force, which was comprised of severance pay. All amounts related to these restructuring activities are expected to be paid by March 31, 2024.
The purpose of the workforce reduction was to reduce operating expenses to better align with the Company’s current revenues. In fiscal 2022, the Company recorded restructuring charges of $1.0 million as a result of this reduction in force, which was comprised of severance pay. All amounts related to these restructuring activities have been paid as of March 31, 2024 .
In addition, certain corporate expenses which the Company does not believe are specifically attributable or allocable to either of the two business segments have been excluded from the segment operating loss. 62 Unallocated corporate expenses primarily consist of a loss on contingent consideration of $0.1 million, stock-based compensation expense of $4.7 million and a restructuring charge of $1.0 million in the fiscal year ended March 31, 2023 .
In addition, certain corporate expenses which the Company does not believe are specifically attributable or allocable to either of the two business segments have been excluded from the segment operating loss. 62 Unallocated corporate expenses primarily consist of a loss on contingent consideration of $4.9 million, and stock-based compensation expense of $4.7 million in the fiscal year ended March 31, 2024 .
The going concern basis of presentation assumes that the Company will continue operations and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business. Liquidity The Company has historically experienced recurring operating losses and as of March 31, 2023 , the Company had an accumulated deficit of $1,055.5 million.
The going concern basis of presentation assumes that the Company will continue operations and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business. Liquidity The Company has historically experienced recurring operating losses and as of March 31, 2024 , the Company had an accumulated deficit of $1,066.7 million.
In addition, the Company has various contractual arrangements in which minimum quantities of goods or services have been committed to be purchased on an annual basis. As of March 31, 2023 , the Company had $0.6 million of restricted cash included in long-term assets and $1.7 million of restricted cash in current assets.
In addition, the Company has various contractual arrangements in which minimum quantities of goods or services have been committed to be purchased on an annual basis. As of March 31, 2024 , the Company had $1.3 million of restricted cash included in long-term assets and $0.5 million of restricted cash included in current assets.
Recent Accounting Pronouncements In June 2016, the FASB issued ASU 2016 - 13, Financial Instruments-Credit Losses (Topic 326 ): Measurement of Credit Losses on Financial Instruments .
Recent Accounting Pronouncements In June 2016 , the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016 - 13, Financial Instruments-Credit Losses (Topic 326 ): Measurement of Credit Losses on Financial Instruments .
There were 76,500 performance-based restricted shares awarded during the fiscal year ended March 31, 2022 for which the performance conditions are deemed probable to be met and the expense is being recorded over a three -year vesting period. The remaining shares awarded vest upon the passage of time.
There were 200,000 performance-based restricted shares awarded during the fiscal year ended March 31, 2023 for which the performance conditions are deemed probable to be met and the expense is being recorded over a three -year vesting period. The remaining shares awarded vest upon the passage of time.
Significant judgment is employed in determining these assumptions as of the acquisition date and for each subsequent period. Accordingly, future business and economic conditions, as well as changes in any of the assumptions described above, can materially impact the fair value of contingent consideration recorded at each reporting period. See Note 3, "Acquisitions," for additional information.
Significant judgment is employed in determining these assumptions as of the acquisition date and for each subsequent period. Accordingly, future business and economic conditions, as well as changes in any of the assumptions described above, can materially impact the fair value of contingent consideration recorded at each reporting period.
The Company’s performance obligations may vary significantly each reporting period based on the timing of major new contractual commitments. As of March 31, 2023 , the Company had outstanding performance obligations on existing contracts under ASC 606 to be recognized in the next twelve months of approximately $125.7 million.
The Company’s performance obligations may vary significantly each reporting period based on the timing of major new contractual commitments. As of March 31, 2024 , the Company had outstanding performance obligations on existing contracts under ASC 606 to be recognized in the next twelve months of approximately $139.9 million.
The Company provides assurance-type warranties on all product sales for a term of typically one to three years, and extended service-type warranties at the customers’ option for an additional term ranging up to four additional years.
The Company provides assurance-type warranties on all product sales for a term of typically one to three years, and extended service-type warranties are available for purchase at the customer's option for an additional term ranging up to four additional years.
Additionally, the Company recorded less than $0.1 million and $0.2 million related to intangible amortization related to backlog that is reported in cost of revenues for the fiscal years ended March 31, 2023, and 2022, respectively.
Additionally, the Company recorded less than $0.1 million related to intangible amortization related to backlog that is reported in cost of revenues for both the fiscal years ended March 31, 2024 and 2023 .
In accordance with ASC 280, Segment Reporting , we aggregate four operating segments into one reporting segment for financial reporting purposes due to their similar operating and financial characteristics. Our operating segments reflect the way in which internally-reported financial information is used to make decisions and allocate resources.
In accordance with ASC 280, Segment Reporting , the Company aggregates four operating segments into one reporting segment for financial reporting purposes due to their similar operating and financial characteristics. The Company's operating segments reflect the way in which internally-reported financial information is used to make decisions and allocate resources.
Amortization recovery for such costs are five years for domestic expenditures and fifteen for foreign expenditures. As of March 31, 2023, the Company had approximately $9.2 million of research and experimental expenses that had been capitalized under Section 174.
Amortization recovery for such costs are five years for domestic expenditures and fifteen for foreign expenditures. As of March 31, 2024 , the Company had approximately $18.4 million of research and experimental expenses that had been capitalized under Section 174.
Revenue for the fiscal year ended March 31, 2023 included $0.6 million from such held transactions. Revenues for the fiscal year ended March 31, 2022 included $1.2 million from such held transactions. The Company has elected to record taxes collected from customers on a net basis and does not include tax amounts in revenue or costs of revenue.
During the fiscal year ended March 31, 2024 there were no such held transactions. Revenues for the fiscal year ended March 31, 2023 included $0.6 million from such held transactions. The Company has elected to record taxes collected from customers on a net basis and does not include tax amounts in revenue or costs of revenue.
The total unrecognized compensation cost for unvested outstanding stock options was less than $0.1 million for the fiscal year ended March 31, 2023 . The total unrecognized compensation cost for unvested outstanding restricted stock was $4.7 million for the fiscal year ended March 31, 2023 . This expense will be recognized over a weighted-average expense period of approximately 1.7 years.
The total unrecognized compensation cost for unvested outstanding stock options was less than $0.1 million as of March 31, 2024 . The total unrecognized compensation cost for unvested outstanding restricted stock was $4.7 million as of March 31, 2024 . This expense will be recognized over a weighted-average expense period of approximately 1.6 years.
Stock-Based Compensation The components of stock-based compensation for the years ended March 31, 2023 and 2022 were as follows (in thousands): Fiscal years ended March 31, 2023 2022 Stock options $ 32 $ 3 Restricted stock and stock awards 4,656 4,615 Employee stock purchase plan 41 43 Total stock-based compensation expense $ 4,729 $ 4,661 The estimated fair value of the Company’s stock-based awards, less expected annual forfeitures, is amortized over the awards’ service period.
Stock-Based Compensation The components of stock-based compensation for the years ended March 31, 2024 and 2023 were as follows (in thousands): Fiscal years ended March 31, 2024 2023 Stock options $ 40 $ 32 Restricted stock and stock awards 4,563 4,656 Employee stock purchase plan 49 41 Total stock-based compensation expense $ 4,652 $ 4,729 The estimated fair value of the Company’s stock-based awards, less expected annual forfeitures, is amortized over the awards’ service period.
The following table reconciles the numerators and denominators of the EPS calculation for the fiscal years ended March 31, 2023 and 2022 (in thousands except per share amounts): Fiscal year ended March 31, 2023 2022 Numerator: Net loss $ (35,041 ) $ (19,193 ) Denominator: Weighted-average shares of common stock outstanding 29,038 28,293 Weighted-average shares subject to repurchase (1,190 ) (1,090 ) Shares used in per-share calculation ― basic 27,848 27,203 Shares used in per-share calculation ― diluted 27,848 27,203 Net loss per share ― basic $ (1.26 ) $ (0.71 ) Net loss per share ― diluted $ (1.26 ) $ (0.71 ) Foreign Currency Translation The functional currency of all the Company’s foreign subsidiaries is the U.S. dollar, except for AMSC Austria, for which the local currency (Euro) is the functional currency.
The following table reconciles the numerators and denominators of the EPS calculation for the fiscal years ended March 31, 2024 and 2023 (in thousands except per share amounts): Fiscal year ended March 31, 2024 2023 Numerator: Net loss $ (11,111 ) $ (35,041 ) Denominator: Weighted-average shares of common stock outstanding 31,277 29,038 Weighted-average shares subject to repurchase (1,452 ) (1,190 ) Shares used in per-share calculation ― basic 29,825 27,848 Shares used in per-share calculation ― diluted 29,825 27,848 Net loss per share ― basic $ (0.37 ) $ (1.26 ) Net loss per share ― diluted $ (0.37 ) $ (1.26 ) Foreign Currency Translation The functional currency of all the Company’s foreign subsidiaries is the U.S. dollar, except for AMSC Austria, for which the local currency (Euro) is the functional currency.
The total fair value of restricted stock that vested during the fiscal years ended March 31, 2023 and 2022 was $ 2.6 million and $7.6 million, respectively.
The total fair value of restricted stock that vested during the fiscal years ended March 31, 2024 and 2023 was $4.5 million and $2.6 million, respectively.
At March 31, 2023 , the Company had aggregate net operating loss carryforwards in the U.S. for federal and state income tax purposes of approximately $718 .9 million and $204.2 m illion, respectively, which expire in the years ending March 31, 2024 through 2040.
At March 31, 2024 , the Company had aggregate net operating loss carryforwards in the U.S. for federal and state income tax purposes of approximately $682.7 million and $197.2 m illion, respectively, which expire in the years ending March 31, 2025 through 2040.
The Company performed its annual assessment of goodwill on February 28, 2023 and noted no triggering events from the analysis date to March 31, 2023 and determined that there was no impairment to goodwill.
The Company performed its annual assessment of goodwill on February 29, 2024 noting no triggering events from the analysis date to March 31, 2024 , and determined that there was no impairment to goodwill.
During the year ended March 31, 2023, several long-term contracts that were acquired from Neeltran were impacted by higher than planned costs due to required design changes and the impact of inflation on material costs, resulting in an increase to the contract loss accrual of $2.7 million in the year ended March 31, 2023 which negatively impacted the Company's gross margins.
(“Neeltran”) were impacted by higher than planned costs due to required design changes and the impact of inflation on material costs, resulting in an increase to the contract loss accrual of $2.7 million in the year ended March 31, 2023 which negatively impacted the Company's gross margins.
We have elected to exclude all leases of less than twelve months from the balance sheet presentation.
The Company has elected to exclude all leases of less than twelve months from the balance sheet presentation.
As of March 31, 2023 , the ESPP had 99,906 shares available for future issuance. The Company recognized less than $0.1 million of compensation expense for both the fiscal years ended March 31, 2023 and 2022 , related to the ESPP. 60 18.
As of March 31, 2024 , the ESPP had 66,221 shares available for future issuance. The Company recognized less than $0.1 million of compensation expense for both the fiscal years ended March 31, 2024 and 2023 , related to the ESPP. 60 17.
The Company is experiencing substantial inflationary pressure in its supply chain and some delays in sourcing materials needed for its products resulting in some disruption, both of which have increased the Company's cost of revenues and decreased gross margin.
In recent periods, the Company has experienced inflationary pressure in its supply chain and some delays in sourcing materials needed for its products resulting in some production disruption, both of which have increased the Company's cost of revenues and decreased gross margin.
This restructuring will cause the Company to incur $1.0 million of cash expense and is expected to result in annualized cost savings of approximately $5 million, beginning in fiscal 2023. 40 The Company believes that based on the information presented above and its annual management assessment, it has sufficient liquidity to fund its operations and capital expenditures for the next twelve months following the issuance of the financial statements for the year ended March 31, 2023 .
This restructuring resulted in $1.0 million of cash expenses, of which $1.0 million has been paid as of March 31, 2024 , and is expected to result in annualized cost savings of approximately $5.0 million, which the Company began to realize in fiscal 2023. 40 The Company believes that based on the information presented above and its annual management assessment, it has sufficient liquidity to fund its operations and capital expenditures for the next twelve months following the issuance of the consolidated financial statements for the year ended March 31, 2024 .
The Company has elected to recognize incremental costs of obtaining a contract as expense when incurred except in contracts where the amortization period would exceed twelve months; in such cases the long term amount will be assessed for materiality.
The Company has elected to recognize incremental costs of obtaining a contract as expense when incurred except in contracts where the amortization period would exceed twelve months; in such cases the long term amount will be assessed for materiality. As of March 31, 2024 and 2023, the Company's capitalized incremental contract costs were not material.
The carrying amounts of cash and cash equivalents, accounts receivable, short-term debt, accounts payable, and accrued expenses due to their short nature approximate fair value at March 31, 2023 and 2022 . The estimated fair values have been determined through information obtained from market sources and management estimates. Changes in fair value are recorded to other income (expense), net.
The carrying amounts of cash and cash equivalents, restricted cash, accounts receivable, short-term debt, accounts payable, and accrued expenses due to their short nature approximate fair value at March 31, 2024 and 2023 . The estimated fair values have been determined through information obtained from market sources and management estimates.
Should the Company determine that such a payout is likely, the Company would record a liability. The Company would reduce revenue to the extent a liability is recorded. In addition, the Company enters into licensing arrangements that include training services.
The Company would reduce revenue to the extent a liability is recorded. In addition, the Company enters into licensing arrangements that include training services.
Net foreign currency gains and losses are included in other income (expense), net on the consolidated statements of operations was $0.1 million and less than $0.1 million, for the fiscal years ended March 31, 2023 and 2022 , respectively.
Net foreign currency gains and losses are included in other expense, net on the consolidated statements of operations and were net losses of $0.7 million and $0.1 million, for the fiscal years ended March 31, 2024 and 2023 , respectively.
The following table sets forth customers who represented 10% or more of the Company’s total revenues for the years ended March 31, 2023 and 2022: Year Ended Reportable March 31, Segment 2023 2022 Fuji Bridex Pte Ltd Grid 15 % 14 % 5.
The following table sets forth customers who represented 10% or more of the Company’s total revenues for the years ended March 31, 2024 and 2023 : Year Ended Reportable March 31, Segment 2024 2023 Inox Wind Limited Wind 13 % Fuji Bridex Pte Ltd Grid 15 % 4.
Contingent Consideration Contingent Consideration The Company evaluated the NEPSI Acquisition earnout payment set forth in the Stock Purchase Agreement (see Note 3, "Acquisitions" for further details), which may require settlement in the Company's common stock, and determined the contingent consideration qualified for liability classification and derivative treatment under ASC 815, Derivatives and Hedging .
The Company evaluated the NEPSI Acquisition earnout payment set forth in the NEPSI Stock Purchase Agreement, which is expected to require settlement in the Company's common stock, and determined the contingent consideration qualified for liability classification and derivative treatment under ASC 815, Derivatives and Hedging .
These estimates are reviewed and revised as facts and circumstances dictate; changes in these estimates could have a material effect on the amount accrued on the consolidated balance sheet. On January 24, 2023, Daniel P. McGahn, President, CEO and Chairman of the Board, approved a plan to reduce the Company’s global workforce by approximately 5%, effective as of such date.
These estimates are reviewed and revised as facts and circumstances dictate; changes in these estimates could have a material effect on the amount accrued on the consolidated balance sheets. On January 24, 2023, the Company approved a plan to reduce its global workforce by approximately 5%, effective as of such date.
The following table provides the assets and liabilities carried at fair value on a recurring basis, measured as of March 31, 2023 and 2022 (in thousands): Total Carrying Value Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) March 31, 2023: Assets: Cash equivalents $ 7,913 $ 7,913 $ — $ — Derivative liabilities: Contingent Consideration $ 1,270 $ — $ — $ 1,270 Total Carrying Value Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) March 31, 2022: Assets: Cash equivalents $ 17,641 $ 17,641 $ — $ — Derivative liabilities: Contingent Consideration $ 1,200 $ — $ — $ 1,200 50 The table below reflects the activity for the Company’s major classes of liabilities measured at fair value on a recurring basis (in thousands): Acquisition Contingent Consideration Balance at March 31, 2021 $ 7,050 Change in fair value (5,850 ) Balance at March 31, 2022 $ 1,200 Change in fair value 70 Balance at March 31, 2023 $ 1,270 7.
The following table provides the assets and liabilities carried at fair value on a recurring basis, measured as of March 31, 2024 and 2023 (in thousands): Total Carrying Value Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) March 31, 2024: Assets: Cash equivalents $ 72,832 $ 72,832 $ — $ — Derivative liabilities: Contingent Consideration $ 3,100 $ — $ — $ 3,100 Total Carrying Value Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) March 31, 2023: Assets: Cash equivalents $ 7,913 $ 7,913 $ — $ — Derivative liabilities: Contingent Consideration $ 1,270 $ — $ — $ 1,270 50 The table below reflects the activity for the Company’s contingent consideration derivative liability measured at fair value on a recurring basis (in thousands): Acquisition Contingent Consideration Balance at March 31, 2022 $ 1,200 Change in fair value 70 Balance at March 31, 2023 $ 1,270 Change in fair value 4,922 Settlement of contingent consideration (3,092 ) Balance at March 31, 2024 $ 3,100 6.
The Company estimates the fair value of contingent consideration obligations through valuation models that incorporate probability adjusted assumptions related to the achievement of the milestones and the likelihood of making related payments.
The Company estimates the fair value of contingent consideration obligations through valuation models that incorporate probability adjusted assumptions related to the achievement of the milestones and the likelihood of making related payments, refer to Note 12 for further information regarding valuation methodology and assumptions.
This hierarchy prioritizes the inputs into three broad levels as follows: Level 1 - Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
Fair Value Measurements A valuation hierarchy for disclosure of the inputs to valuation used to measure fair value has been established. This hierarchy prioritizes the inputs into three broad levels as follows: Level 1 - Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
For the fiscal years ended March 31, 2023 and 2022 , common equivalent shares of 1,421,771, and 1,495,402, respectively, were not included in the calculation of diluted EPS as they were considered antidilutive. Of these, 1.0 million relate to shares tied to the derivative liability for which the contingency has not yet been met.
For the fiscal years ended March 31, 2024 and 2023 , common equivalent shares of 809,949, and 1,421,771 , respectively, were not included in the calculation of diluted EPS as they were considered antidilutive. Of these, 300,000 and 1,000,000, respectively, relate to shares associated with the derivative liability for which the contingency has not yet been met.
The Company has elected to not adjust the promised amount of consideration for the effects of a significant financing component if the period of financing is twelve months or less. The Company monitors costs to meet its obligations on its customer contracts.
The Company has elected not to adjust the promised amount of consideration for the effects of a significant financing component if the period of financing is twelve months or less.
All fiscal years from the fiscal year ended March 31, 2021 through 2023 remain open and subject to examination in Austria. Tax filings in Romania for the fiscal years ended March 31, 2018 through 2023 remain open and subject to examination. 57 15.
All fiscal years from the fiscal year ended March 31, 2022 through 2024 remain open and subject to examination in Austria. Tax filings in Romania for the fiscal years ended March 31, 2019 through 2024 remain open and subject to examination. 57 14.
Changes in the Company’s contract assets, which are included in “Unbilled Accounts Receivable” and “De ferred program costs” (see Note 7, “Accounts Receivable” and Note 8, “Inventory” for a reconciliation to the condensed consolidated balance sheet) and contract liabilities, which are included in the current portion and long term portion of “deferred revenue” in the Company’s condensed consolidated balance sheets, are as follows: Unbilled AR Deferred Program Costs Contract Liabilities Beginning balance as of March 31, 2022 $ 6,492 $ 858 $ 30,034 Increases for costs incurred to fulfill performance obligations — 2,476 — Increase (decrease) due to customer billings (14,373 ) — 77,489 Decrease due to cost recognition on completed performance obligations — (1,189 ) — Increase (decrease) due to recognition of revenue based on transfer of control of performance obligations 17,839 — (56,643 ) Other changes and foreign currency exchange impact — (9 ) (120 ) Ending balance as of March 31, 2023 $ 9,958 $ 2,136 $ 50,760 Unbilled AR Deferred Program Costs Contract Liabilities Beginning balance as of March 31, 2021 $ 5,765 $ 977 $ 21,257 Increases for balances acquired — 634 10,048 Increases for costs incurred to fulfill performance obligations — 4,814 — Increase (decrease) due to customer billings (16,125 ) — 68,895 Decrease due to cost recognition on completed performance obligations — (5,551 ) — Increase (decrease) due to recognition of revenue based on transfer of control of performance obligations 16,852 — (70,141 ) Other changes and foreign currency exchange impact — (16 ) (25 ) Ending balance as of March 31, 2022 $ 6,492 $ 858 $ 30,034 The Company’s remaining performance obligations represent the unrecognized revenue value of the Company’s contractual commitments.
Changes in the Company’s contract assets, which are included in “Unbilled accounts receivable” and “De ferred program costs” (see Note 6, “Accounts Receivable” and Note 7, “Inventory” for a reconciliation to the consolidated balance sheets) and "Contract liabilities", which are included in the current portion and long term portion of “Deferred revenue” in the Company’s consolidated balance sheets, are as follows (in thousands): Unbilled AR Deferred Program Costs Contract Liabilities Ending balance as of March 31, 2023 $ 9,958 $ 2,136 $ 50,760 Increases for costs incurred to fulfill performance obligations — 4,411 — Increase (decrease) due to customer billings (20,392 ) — 77,685 Decrease due to cost recognition on completed performance obligations — (4,021 ) — Increase (decrease) due to recognition of revenue based on transfer of control of performance obligations 16,572 — (70,529 ) Other changes and foreign currency exchange impact 12 (3 ) (87 ) Ending balance as of March 31, 2024 $ 6,150 $ 2,523 $ 57,829 Unbilled AR Deferred Program Costs Contract Liabilities Beginning balance as of March 31, 2022 $ 6,492 $ 858 $ 30,034 Increases for costs incurred to fulfill performance obligations — 2,476 — Increase (decrease) due to customer billings (14,373 ) — 77,489 Decrease due to cost recognition on completed performance obligations — (1,189 ) — Increase (decrease) due to recognition of revenue based on transfer of control of performance obligations 17,839 — (56,643 ) Other changes and foreign currency exchange impact — (9 ) (120 ) Ending balance as of March 31, 2023 $ 9,958 $ 2,136 $ 50,760 The Company’s remaining performance obligations represent the unrecognized revenue value of the Company’s contractual commitments.
Acquisition of NEPSI On October 1, 2020 ( the “NEPSI Acquisition Date”), the Company entered into a Stock Purchase Agreement (the “NEPSI Stock Purchase Agreement”) with the selling stockholders named therein.
Contingent Consideration Contingent Consideration On October 1, 2020 ( the "NEPSI Acquisition Date"), the Company entered into a Stock Purchase Agreement (the "NEPSI Stock Purchase Agreement") with the selling stockholders named therein.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

61 edited+24 added−16 removed138 unchanged
Biggest changeInox has been active in the new central and state government auction regime in India and has a cumulative order book of over 1.4 GW. However, we cannot predict if and how successful Inox will be in executing on these orders or in obtaining new orders under the new central and state auction regime.
Biggest changeRevenues from Inox are supported by supply contracts to purchase wind turbine ECS, and licenses to make, use and supply, wind turbines based on our designs. Inox has been active in the new central and state government auction regime in India and has a cumulative order book of over 2.6 GW.
In addition, the Company maintains the majority of its cash and cash equivalents in accounts with major U.S. and multi-national financial institutions, and our deposits at certain of these institutions exceed insured limits. Market conditions can impact the viability of these institutions.
In addition, the Company maintains the majority of its cash and cash equivalents in accounts with major U.S. and multi-national financial institutions, and our deposits at certain institutions exceed insured limits. Market conditions can impact the viability of these institutions.
We manage certain IT Systems but also rely on IT Systems and various products and services provided by critical third-party vendors and others in the supply chain. We also collect and store sensitive and confidential information in the ordinary course of our business.
We manage certain IT Systems but also rely on IT Systems and various products and services provided by critical third-party vendors and others in the supply chain. We also collect and store sensitive and confidential information ("Confidential Information") in the ordinary course of our business.
In addition, if credit is difficult to obtain in the future, some customers may delay or reduce purchases. Similarly, inflationary pressures have increased and may increase our costs or force us to increase prices for our products. In particular, in fiscal 2021 and 2022, we experienced substantial inflationary pressure in our supply chain.
In addition, if credit is difficult to obtain in the future, some customers may delay or reduce purchases. Similarly, inflationary pressures have increased and may increase our costs or force us to increase prices for our products. In particular, in fiscal 2022, we experienced substantial inflationary pressure in our supply chain.
With respect to our Wind business, other companies that serve the wind turbine components industry include ABB, Hopewind, and Semikron. We also face indirect competition in the wind energy market from global manufacturers of wind turbines, such as Siemens Gamesa, General Electric, Vestas and Suzlon.
With respect to our Wind business, other companies that serve the wind turbine components industry include ABB and Hopewind. We also face indirect competition in the wind energy market from global manufacturers of wind turbines, such as Siemens Gamesa, General Electric, Vestas and Suzlon.
Costly and time-consuming litigation could be necessary to enforce and determine the scope of our proprietary rights, and failure to obtain or maintain trade secret protection could adversely affect our competitive business position. Our patents may not provide meaningful protection for our technology, which could result in us losing some or all of our market position.
Costly and time-consuming litigation could be necessary to enforce and determine the scope of our proprietary rights, and failure to obtain or maintain trade secret protection could adversely affect our competitive business position. Our patents may not provide meaningful or long-term protection for our technology, which could result in us losing some or all of our market position.
Lower prices for other fuel sources may reduce the demand for wind energy development, which could have a material adverse effect on our ability to grow our Wind business. The wind energy market is affected by the price and availability of other fuels, including nuclear, coal, natural gas and oil, as well as other sources of renewable energy.
Lower prices for other energy sources may reduce the demand for wind energy development, which could have a material adverse effect on our ability to grow our Wind business. The wind energy market is affected by the price and availability of other energy sources, including nuclear, coal, natural gas and oil, as well as other sources of renewable energy.
If we were to lose market share or customers or face pricing pressure due to consolidation of our customers, our results of operations and financial condition could be adversely affected. 18 The increasing focus on environmental sustainability and social initiatives could increase our costs, and inaction could harm our reputation and adversely impact our financial results.
If we were to lose market share or customers or face pricing pressure due to consolidation of our customers, our results of operations and financial condition could be adversely affected. 18 Increasing focus and scrutiny on environmental sustainability and social initiatives could increase our costs, and inaction could harm our reputation and adversely impact our financial results.
However, the patents that we own or license may not provide us with meaningful protection of our technologies and may not prevent our competitors from using similar technologies for a variety of reasons, such as: • the patent applications that we or our licensors file may not result in patents being issued; • any patents issued may be challenged by third parties; and • others may independently develop similar technologies not protected by our patents or design around the patented aspects of any technologies we develop.
However, the patents that we own or license may not provide us with meaningful or long-term protection of our technologies and may not prevent our competitors from using similar technologies for a variety of reasons, such as: • the patent applications that we or our licensors file may not result in patents being issued; • our existing patents may expire; • any patents issued may be challenged by third parties; and • others may independently develop similar technologies not protected by our patents or design around the patented aspects of any technologies we develop.
Our success depends upon the commercial adoption of the REG system, which is currently limited, and a widespread commercial market for our products may not develop. To date, there has been no widespread commercial use of the REG system. It is uncertain whether a robust commercial market for those new and unproven products will ever develop.
Our success could depend upon the commercial adoption of the REG system, which is currently limited, and a widespread commercial market for our REG products may not develop. To date, there has been no widespread commercial use of the REG system. It is uncertain whether a robust commercial market for those new and unproven products will ever develop.
In addition, any event that negatively impacts our supply, including, among others, wars, terrorist activities, cyberattacks, natural disasters and outbreaks of infectious disease, including the COVID-19 pandemic, could delay or suspend shipments of products or the release of new products or could result in the delivery of inferior products.
In addition, any event that negatively impacts our supply, including, among others, wars, terrorist activities, cyberattacks, natural disasters and outbreaks of infectious disease, could delay or suspend shipments of products or the release of new products or could result in the delivery of inferior products.
To the extent renewable energy, particularly wind energy, becomes less cost-competitive due to reduced government targets, increases in the cost of wind energy, as a result of new regulations, and incentives that favor alternative renewable energy, cheaper alternatives or otherwise, demand for wind energy and other forms of renewable energy could decrease.
To the extent renewable energy, particularly wind energy, becomes less cost-competitive due to reduced government targets, increases in the cost of wind energy, new regulations, incentives that favor alternative renewable energy, cheaper alternatives or otherwise, demand for wind energy and other forms of renewable energy could decrease.
In the United States, various legislation and regulations designed to support the growth of wind energy have been implemented or proposed by the federal government, such as the Production Tax Credit for Renewable Energy (“PTC”) and the Clean Power Plan.
In the United States, various legislation and regulations designed to support the growth of wind energy have been implemented or proposed by the federal government, such as the Inflation Reduction Act, Production Tax Credit for Renewable Energy (“PTC”) and the Clean Power Plan.
In recent years, we have entered into contracts that require us to post bonds and to deliver letters of credit of significant magnitude, such as our prior $5.0 million irrevocable letter of credit (secured by a $5.0 million deposit in an escrow account) as part of the agreement with Commonwealth Edison Company (“ComEd”) to install the Resilient Electric Grid (“REG”) system in Chicago.
In recent years, we have entered into contracts that require us to post bonds and to deliver letters of credit of significant magnitude, such as our prior $5.0 million irrevocable letter of credit (secured by a $5.0 million deposit in an escrow account, subsequently released upon completion of our obligations) as part of the agreement with Commonwealth Edison Company (“ComEd”) to install the Resilient Electric Grid (“REG”) system in Chicago.
In order to minimize costs and time to market, we have and will continue to identify local suppliers that meet our quality standards to produce certain of our subassemblies and components. These efforts may not be successful.
In order to minimize costs and time to market, we have and will continue to identify local suppliers that meet our quality standards to produce certain of our subassemblies and components. These efforts may not be successful including as quality standards evolve.
Such sanctions and other measures, as well as the existing and potential further responses from Russia or other countries to such sanctions, tensions and military actions, could adversely affect the global economy and financial markets and could adversely affect our business, financial condition and results of operations.
Such sanctions and other measures, as well as the existing and potential further responses from countries subject to such sanctions, tensions and military actions, could adversely affect the global economy and financial markets and could adversely affect our business, financial condition and results of operations.
As a result, most of our current and planned revenue-generating projects involve business collaborators on whose performance our revenue is dependent.
As a result, many of our current and planned revenue-generating projects involve business collaborators on whose performance our revenue is dependent.
Many of the revenue opportunities for our business involve projects, such as the installation of superconductor cables in power grids and electrical system hardware in wind turbines, in which we collaborate with other companies, including suppliers of cryogenic systems, manufacturers of electric power cables and manufacturers of wind turbines.
Many of the revenue opportunities for our business involve projects, such as the installation of our ship protection systems and electrical system hardware in wind turbines, in which we collaborate with other companies, including suppliers of cryogenic systems, manufacturers of electric power cables and manufacturers of wind turbines.
There has been increasing public focus by investors, customers, environmental activists, the media and governmental and nongovernmental organizations on a variety of environmental, social and other sustainability matters. If we are not effective in addressing environmental, social and other sustainability matters affecting our business, or setting and meeting relevant sustainability goals, our reputation and financial results may suffer.
There has been increasing public focus by investors, customers, environmental activists, the media and governmental and nongovernmental organizations on a variety of environmental, social and other sustainability matters. If we are not effective in addressing environmental, social and other sustainability matters affecting our business, including any relevant sustainability goals, our reputation and financial results may suffer.
For example, 45% of our revenues in fiscal 2022 and 38% of our revenues in fiscal 2021 were recognized from sales outside the United States. We also manufacture certain of our products and purchase a portion of our raw materials and components from suppliers in other foreign countries.
For example, 37% of our revenues in fiscal 2023 and 45% of our revenues in fiscal 2022 were recognized from sales outside the United States. We also manufacture certain of our products and purchase a portion of our raw materials and components from suppliers in other foreign countries.
It is possible that the market demands we currently anticipate for our REG system will not develop and that they will never achieve widespread commercial acceptance. In such event, we would not be able to implement our strategy, and our results of operations could be reduced or eliminated.
It is possible that the market demands we currently anticipate for our REG system will not develop and that they will never achieve widespread commercial acceptance. In such event, we would not be able to implement our strategy, and our results of operations could be adversely affected.
We were not profitable in fiscal 2022 and have recorded net losses for the last three fiscal years. We may not be profitable in fiscal 2023 or future years. There is currently substantial uncertainty in our business, which makes it difficult to evaluate our business and future prospects.
We were not profitable in fiscal 2023 and have recorded net losses for the last three fiscal years. We may not be profitable in fiscal 2024 or future years. There remains substantial uncertainty in our business, which makes it difficult to evaluate our business and future prospects.
The potential for hostilities between India and Pakistan has been high in light of tensions related to recent terrorist incidents in India and the unsettled nature of the regional geopolitical environment, including events in and related to Afghanistan and Iraq.
The potential for hostilities between India and Pakistan has been high in light of tensions related to recent terrorist incidents in India and the unsettled nature of the regional geopolitical environment.
Our ability to implement our business strategy could also be affected by a number of factors beyond our control, such as increased competition, legal developments, government regulation, general economic conditions, including as a result of the COVID-19 pandemic and the ongoing war between Russia and Ukraine, or increased operating costs or expenses.
Our ability to implement our business strategy could also be affected by a number of factors beyond our control, such as increased competition, legal developments, government regulation, general economic conditions, including as a result of the ongoing wars between Russia and Ukraine and Israel and Hamas, or increased operating costs or expenses.
Changes in U.S. government defense spending for various reasons, including as a result of potential changes in policy positions or priorities that may result from the U.S. presidential and congressional elections, could negatively impact our results of operations, financial condition and liquidity.
We have several contracts with the U.S. government, including defense-related programs with the U.S. Department of Defense. Changes in U.S. government defense spending for various reasons, including as a result of potential changes in policy positions or priorities that may result from the U.S. presidential and congressional elections, could negatively impact our results of operations, financial condition and liquidity.
Any or all of the foregoing could harm our reputation, result in substantial remediation and compliance costs, lead to lost revenues and business opportunities, lead to regulatory investigations and litigation, and related fines or penalties, increase our insurance premiums and have other materially adverse effects on our business and results.
Any or all of the foregoing could harm our reputation, result in substantial remediation, incident response, system restoration and compliance costs, lead to lost revenues and business opportunities, lead to regulatory investigations and enforcement and/or litigation (such as class actions), and related fines or penalties, increase our insurance premiums and have other materially adverse effects on our business and results.
Prevailing prices for such commodities are subject to fluctuations due to changes in supply and demand and a variety of additional factors beyond our control, such as global political and economic conditions. Any of these events would likely harm our business, results of operations and financial condition.
We also purchase large amounts of commodity-based raw materials. Prevailing prices for such commodities are subject to fluctuations due to changes in supply and demand and a variety of additional factors beyond our control, such as global political and economic conditions. Any of these events would likely harm our business, results of operations and financial condition.
In addition, changes in climate change-related laws or regulations, including laws relating to greenhouse gas emissions, could lead to new or additional compliance requirements and expenditures, and subject us to additional operational costs and restrictions, including increased energy and raw material costs and other compliance requirements which could negatively impact our reputation, business, capital expenditures, results of operations and financial position. 16 Risks Related to Our Markets Adverse changes in domestic and global economic conditions could adversely affect our operating results.
In addition, changes in climate change-related laws or regulations, including laws relating to greenhouse gas emissions, could lead to new or additional compliance requirements and expenditures, and subject us to additional operational costs and restrictions, including increased energy and raw material costs and other compliance requirements which could negatively impact our reputation, business, capital expenditures, results of operations and financial position.
Natural disasters (including, but not limited to tornadoes, earthquakes, fires, storms, floods, droughts and extreme temperatures) and chronic changes in the physical environment could severely disrupt our operations and have a material adverse effect on our business, results of operations, financial condition and prospects. Climate change may increase the frequency or intensity of such events.
Natural disasters (including, but not limited to tornadoes, earthquakes, fires, storms, floods, droughts and extreme temperatures) and chronic changes in the physical environment, such as changes to meteorological or hydrological patterns, could severely disrupt our operations and have a material adverse effect on our business, results of operations, financial condition and prospects.
The ongoing war between Ukraine and Russia has caused increased raw material costs and material shortages and, as a result, adversely impacted certain of our suppliers.
The ongoing wars between Ukraine and Russia and Israel and Hamas have caused increased raw material costs and material shortages and, as a result, adversely impacted certain of our suppliers.
Significant changes in U.S. government defense spending or changes in U.S. government priorities, policies and requirements could have a material adverse effect on our results of operations, financial condition and liquidity.
Significant changes in U.S. government defense spending or changes in U.S. government priorities, policies and requirements could have a material adverse effect on our results of operations, financial condition and liquidity. Pandemics, epidemics, or other public health crises may adversely impact our business, financial condition and results of operations .
Any failure, accident, security breach, or cyberattack to our IT Systems or those of third parties upon which we rely could result in disruptions to our operations, loss, damage or compromise to our data, or inappropriate disclosure of confidential information.
Any adverse impact to the availability, integrity or confidentiality of our IT Systems or those of third parties upon which we rely could result in disruptions to our operations, loss, damage or compromise to our data, or inappropriate disclosure of confidential information.
Further, in the event that any of our government contracts are terminated for cause, it could affect our ability to obtain future government contracts which could, in turn, seriously harm our ability to develop our technologies and products.
Further, in the event that any of our government contracts are terminated for cause, it could affect our ability to obtain future government contracts which could, in turn, seriously harm our ability to develop our technologies and products. Changes in U.S. government defense spending could negatively impact our financial position, results of operations, liquidity and overall business.
As the HTS wire, superconductor electric motors and generators, and power electronic systems markets develop, other large industrial companies may enter those fields and compete with us. If we are unable to compete successfully, it may harm our business, which in turn may limit our ability to acquire or retain customers.
Companies such as Ultra Maritime, L3 Harris, and Raytheon have the bulk of the copper-based business today. As the HTS systems markets develop, other large industrial companies may enter those fields and compete with us. If we are unable to compete successfully, it may harm our business, which in turn may limit our ability to acquire or retain customers.
Moreover, we could incur substantial litigation costs in defending the validity of or enforcing our own patents. We also rely on trade secrets and proprietary know-how to protect our intellectual property. However, our confidentiality agreements and other safeguards may not provide meaningful protection for our trade secrets and other proprietary information.
We also rely on trade secrets and proprietary know-how to protect our intellectual property. However, our confidentiality agreements and other safeguards may not provide meaningful protection for our trade secrets and other proprietary information.
While we may at times engage in voluntary initiatives (such as voluntary disclosures, certifications, or goals, among others) to improve our ESG profile, such initiatives may be costly and may not have the desired effect. Moreover, we may not be able to successfully complete such initiatives due to factors that are within or outside of our control.
While we may at times engage in voluntary initiatives (such as voluntary disclosures, certifications, or goals, among others) to improve our environmental, social, and governance ("ESG") profile or respond to stakeholder expectations, such initiatives may be costly and may not have the desired effect.
At March 31, 2023, we had approximately $25.7 million of cash, cash equivalents and restricted cash, and during the fiscal year ended March 31, 2023, we used $22.5 m illion in cash for our operating activities. We have historically experienced net losses.
At March 31, 2024, we had approximately $92.3 million of cash, cash equivalents and restricted cash, and during the fiscal year ended March 31, 2024, $2.1 m illion in cash was provided by our operating activities. We have historically experienced net losses and negative operating cash flows.
These events have resulted or could in the future result in higher product costs, reductions in sales of our products, longer sales cycles, slower adoption of new technologies, increased accounts receivable and inventory write-offs and increased price competition. We also purchase large amounts of commodity-based raw materials.
Sustained higher prices continued throughout fiscal 2023, although we believe inflationary pressures were more stable. These events have resulted or could in the future result in higher product costs, reductions in sales of our products, longer sales cycles, slower adoption of new technologies, increased accounts receivable and inventory write-offs and increased price competition.
We rely upon third-party suppliers for the components and subassemblies of many of our Grid and Wind products, making us vulnerable to supply shortages and price fluctuations, which could harm our business. Many of our components and subassemblies are currently manufactured for us by a limited number of qualified suppliers.
Measures to contain a public health crisis may intensify other risks described in these Risk Factors. We rely upon third-party suppliers for the components and subassemblies of many of our Grid and Wind products, making us vulnerable to supply shortages and price fluctuations, which could harm our business.
Unfavorable currency fluctuations could require us to increase prices to foreign customers, which could result in a lesser number of orders, and therefore lower revenues, from such customers. Alternatively, if we do not adjust the prices for our products in response to unfavorable currency fluctuations, our results of operations could be adversely affected.
Alternatively, if we do not adjust the prices for our products in response to unfavorable currency fluctuations, our results of operations could be adversely affected.
If this customer’s business is negatively affected, it could adversely impact our business . A significant portion of our Wind segment revenues are derived from Inox. Revenues from Inox are supported by a supply contract to purchase, and a license to make, use and supply, wind turbine ECS.
If this customer’s business is negatively affected, it could adversely impact our business . A significant portion of our Wind segment revenues have historically been derived from Inox and a significant decrease in revenues from Inox could adversely impact our Wind segment.
Problems with product quality or product performance may cause us to incur warranty expenses and may damage our market reputation and prevent us from achieving increased sales and market share. Consistent with customary practice in our industry, we guarantee our products and/or services to be free from defects in material and workmanship under normal use and service.
Problems with product quality or product performance may cause us to incur warranty expenses and may damage our market reputation and prevent us from achieving increased sales and market share.
By entering into marketing and sales alliances, the financial benefits to us of commercializing our products will be dependent on the efforts of others. We may acquire additional complementary businesses or technologies, which may require us to incur substantial costs for which we may never realize the anticipated benefits. Our recent acquisitions have required substantial integration and management efforts.
Any or all of the foregoing could materially adversely affect our business, operating results, and financial condition. We may acquire additional complementary businesses or technologies, which may require us to incur substantial costs for which we may never realize the anticipated benefits. Our recent acquisitions have required substantial integration and management efforts.
We are subject to many rapidly evolving privacy and data protection laws and regulations in the United States, Europe and around the world. This requires us to operate in a complex environment where there are significant constraints on how we can process personal data across our business.
This requires us to operate in a complex environment where there are significant constraints on how we can process personal data across our business. The scope of these laws are changing, subject to differing interpretations, and may be inconsistent among jurisdictions.
Further, should our working capital situation deteriorate, we would not be able to access the restricted cash to meet working capital requirements. Changes in exchange rates could adversely affect our results of operations. Currency exchange rate fluctuations could have an adverse effect on our revenues and results of operations, and we could experience losses with respect to hedging activities.
Changes in exchange rates could adversely affect our results of operations. Currency exchange rate fluctuations could have an adverse effect on our revenues and results of operations, and we could experience losses with respect to hedging activities. In fiscal 2023, 37% of our revenues were recognized from sales outside of the United States.
Our business activities in China may increase our risks to such breaches. We cannot guarantee the security or protection of any IT Systems. Threat actors, such as ransomware groups, are becoming increasingly sophisticated in using techniques that are designed to circumvent controls, evade detection and remove or obfuscate forensic evidence.
Threat actors, such as ransomware groups, are becoming increasingly sophisticated in using techniques and tools including artificial intelligence that are designed to circumvent controls, evade detection and remove or obfuscate forensic evidence.
These include adaptive VAR compensators, Dynamic voltage restorers (“DVRs”), and STATCOMs produced by ABB, Siemens, Mitsubishi, RXHK, NR Electric Co,. and Ingeteam, and battery-based uninterruptible power supply (“UPS”) systems offered by various companies around the world.
These include adaptive VAR compensators, Dynamic voltage restorers (“DVRs”), and STATCOMs produced by ABB, Hitachi, Siemens, Mitsubishi, and Ingeteam, and battery-based uninterruptable power supply (“UPS”) systems offered by various companies around the world. We face competition from other companies offering medium-voltage metal-enclosed power capacitor banks and harmonic filter banks for use on electric power systems similar to our NEPSI products.
The possibility of future product failures or issues related to services we provided could cause us to incur substantial expenses to repair or replace defective products or re-perform such services potentially in excess of our reserves. Furthermore, widespread product failures may damage our market reputation and reduce our market share and cause sales to decline.
A provision is recorded upon revenue recognition to cost of revenues for estimated warranty expense based on historical experience. The possibility of future product failures or issues related to services we provided could cause us to incur substantial expenses to repair or replace defective products or re-perform such services potentially in excess of our reserves.
As a result, we and our third-party providers may be unable to timely or effectively anticipate, detect, or recover from cyberattacks in the future. We also face increased cyber risk due to the number of our and others' employees who are (and may continue to be) working remotely.
As a result, we and our third-party providers may be unable to timely or effectively anticipate, detect, investigate, remediate or recover from cyberattacks in the future or avoid material impact to our IT Systems and our business.
Therefore, the primary competition for our SPS products is currently coming from defense contractors that provide the copper-based systems that our lighter, more efficient HTS versions have been developed to replace. Companies such as L3 Harris, Raytheon, and Ultra have the bulk of the copper-based business today.
We believe we are currently the only company that can offer HTS-based SPS products that have been fully qualified for use aboard U.S. Navy surface combatants. Therefore, the primary competition for our SPS products is currently coming from defense contractors that provide the copper-based systems that our lighter, more efficient HTS versions have been developed to replace.
However, we cannot be certain that our efforts will be adequate to protect us against significant currency fluctuations or that such efforts will not expose us to additional exchange rate risks. 12 If we fail to maintain proper and effective internal control over financial reporting, our ability to produce accurate and timely financial statements could be impaired and may lead investors and other users to lose confidence in our financial data .
Further, should our working capital situation deteriorate, we would not be able to access the restricted cash to meet working capital requirements. 12 If we fail to maintain proper and effective internal control over financial reporting, our ability to produce accurate and timely financial statements could be impaired and may lead investors and other users to lose confidence in our financial data .
We face competition from other companies offering medium-voltage metal-enclosed power capacitor banks and harmonic filter banks for use on electric power systems similar to our NEPSI products. These include Controllix PowerSide, Elgin Power Solutions (formally Gilbert), Scott Engineering and QVARx. We face competition from other companies offering DC power supply systems similar to our Neeltran products.
These include Southern States, Controllix PowerSide, Elgin Power Solutions (formally Gilbert), Scott Engineering and QVARx. We face competition from other companies offering DC power supply systems similar to our Neeltran products. These include SCR Controlled Rectifiers, IGBT-controlled choppers produced by ABB, Siemens, Friem, Dynapower, and Nidec offering systems around the world.
To the extent ESG matters negatively impact our reputation, it may also impede our ability to compete as effectively to attract and retain employees or customers, which may adversely impact our operations. In addition, this emphasis on environmental, social, and other sustainability matters has resulted and may result in the adoption of new laws and regulations, including new reporting requirements.
To the extent ESG matters negatively impact our reputation, it may also impede our ability to compete as effectively to attract and retain employees or customers, which may adversely impact our operations. Simultaneously, there are efforts by some stakeholders to reduce companies’ efforts on certain ESG-related matters.
Despite our implementation of security measures, all IT Systems are vulnerable to disruption, compromise and damage from computer viruses, bugs or vulnerabilities, natural disasters, human error, intentional conduct, cyberattacks, unauthorized access and other similar disruptions. Our business is also subject to break-ins, sabotage, and intentional acts of vandalism by third parties as well as employees.
Our IT Systems, and those of the third-party vendors we rely on, are vulnerable to disruption, compromise and damage from computer viruses (including malware and ransomware), bugs, misconfigurations or vulnerabilities, social engineering/phishing, natural disasters, human or technical error, intentional conduct, cyberattacks, unauthorized access and other similar disruptions.
In addition, a breach of the GDPR or other data privacy or data protection laws or regulations could result in regulatory investigations, reputational damage, orders to cease/change our use of data, enforcement notices, as well potential civil claims including class action type litigation.
Any failure or perceived failure by us to comply with our privacy, data protection and data security obligations may result in substantial fines, regulatory investigations or enforcement, reputational damage, orders to cease/change our use of data, enforcement notices, as well as potential civil claims, including class action type litigation, and could result in significant liability (including monetary penalties or requirements to alter our operations), and otherwise materially and adversely affect our reputation and business.
In addition, Inox’s ability to perform under the supply contract has been and may continue to be hampered by the prolonged impacts of the COVID-19 pandemic. Any failure by Inox to succeed under this regime, or any delay in Inox’s ability to deliver its wind turbines, could result in fewer ECS shipments to Inox.
However, we cannot predict if and how successful Inox will be in executing on these orders or in obtaining new orders under the new central and state auction regime. Any failure by Inox to succeed under this regime, or any delay in Inox’s ability to deliver its wind turbines, could result in fewer ECS shipments to Inox.
The COVID-19 pandemic has adversely impacted our business, financial condition and results of operations and other future pandemics or health crises may have similar impacts. The COVID-19 pandemic continues to evolve.
The occurrence or reoccurrence of regional epidemics, a global pandemic or other public health crises, such as COVID-19, may adversely affect our operations, financial condition, and results of operations.
Therefore, we believe that we compete with traditional approaches such as new full-sized substations, overhead and underground transmission, and urban power transformers. We believe we are currently the only company that can offer HTS-based SPS products that have been fully qualified for use aboard U.S. Navy surface combatants.
With our HTS-based REG product, we are offering a new approach that provides alternatives to utilities for power system design. Therefore, we believe that we compete with traditional approaches such as new full-sized substations, overhead and underground transmission, and urban power transformers.
Our insurance policies may not cover, or may be insufficient to cover, any or all costs, losses and liability associated with any cyberattacks, security incidents or other disruptions. Failure to comply with evolving data privacy and data protection laws and regulations or to otherwise protect personal data, may adversely impact our business and financial results.
Failure to comply with evolving data privacy and data protection laws and regulations or to otherwise protect personal data, may adversely impact our business and financial results. We are subject to many rapidly evolving privacy and data protection laws and regulations in the United States, Europe and around the world.
If we fail to comply with new laws, regulations, or reporting requirements, our reputation and business could be adversely impacted. Growth of the wind energy market depends largely on the availability and size of government subsidies, economic incentives and legislative programs designed to support the growth of wind energy.
Additionally, many of our customers and suppliers may be subject to similar expectations, which may augment or create additional risks, including risks that may not be known to us. Growth of the wind energy market depends largely on the availability and size of government subsidies, economic incentives and legislative programs designed to support the growth of wind energy.
In fiscal 2022, 45% of our revenues were recognized from sales outside of the United States. In addition, approximately 10% of our revenues in fiscal 2022 were derived under sales contracts where prices were denominated in the Euro.
In addition, approximately 14% of our revenues in fiscal 2023 were derived under sales contracts where prices were denominated in the Euro. Unfavorable currency fluctuations could require us to increase prices to foreign customers, which could result in a lesser number of orders, and therefore lower revenues, from such customers.
Removed
At times, our suppliers have experienced some production disruption due to the COVID-19 pandemic and certain of our customers have been adversely impacted as well, which have collectively adversely impacted our business, financial condition and results of operations.
Added
However, we cannot be certain that our efforts will be adequate to protect us against significant currency fluctuations or that such efforts will not expose us to additional exchange rate risks.
Removed
As a result, we have been experiencing delays or difficulty sourcing products and some inflationary pressure in our supply chains, which have started to and could continue to negatively affect our business and financial results.
Added
The extent to which a public health crisis impacts our business going forward will depend on factors such as the duration and scope; governmental, business, and individuals' actions in response to the public health crisis; and the impact on economic activity, including the possibility of recession or financial market instability.
Removed
The extent to which the COVID-19 pandemic continues to impact our business, liquidity, results of operations and financial condition will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the pandemic, the location, duration and magnitude of future waves of infection, new mutations of the virus, timing, effectiveness and adoption of vaccines, travel restrictions and social distancing in the United States and other countries, the duration and extent of future business closures or business disruptions and the effectiveness of actions taken to contain and treat the disease.
Added
Many of our components and subassemblies are currently manufactured for us by a limited number of qualified suppliers.
Removed
Other future pandemics or health crises may cause similar disruptions and adversely impact our business, financial condition and results of operations. Changes in U.S. government defense spending could negatively impact our financial position, results of operations, liquidity and overall business. We have several contracts with the U.S. government, including defense-related programs with the U.S. Department of Defense.
Added
For example, there are increasing expectations in various jurisdictions that companies monitor the environmental, social, and/or geographic provenance of their supply chain; complying with such expectations may cause us to incur additional costs, subject us to increased scrutiny, reduce the number of acceptable suppliers, or otherwise impact our business or operations.
Removed
We have not manufactured our Amperium wire in commercial quantities, and a failure to manufacture our Amperium wire in commercial quantities at acceptable cost and quality levels would substantially limit our future revenue and profit potential.
Added
Despite our implementation of security measures, we face numerous and evolving cybersecurity risks that threaten the confidentiality, integrity and availability of our IT Systems and Confidential Information.
Removed
As part of our effort to increase manufacturing efficiency, we moved from our former manufacturing facility located in Devens, Massachusetts to our smaller-scale leased facility located in Ayer, Massachusetts. However, we have not yet manufactured our Amperium wire in commercial quantities at our Ayer facility or any other facility.
Added
Because we rely on certain third party vendors that support our operations, successful cyberattacks that disrupt or result in unauthorized access to third party IT Systems can materially impact our operations and financial results.
Removed
Failure to successfully produce commercial quantities of HTS wire with an acceptable yield and cost could adversely affect our ability to meet customer demand for our products and could increase the cost of production versus projections, both of which could adversely impact our operating and financial results.
Added
There can also be no assurance that our cybersecurity risk management program and processes, including our policies, controls or procedures, or the processes of third-party vendors we rely on, will be fully implemented, complied with or effective in protecting our IT Systems and data.
Removed
For example, European General Data Protection Regulation (the “GDPR”), which became effective in May 2018, has established stringent data protection requirements for companies doing business in or handling personal data of individuals in the European Union.
Added
Our business is also subject to break-ins, sabotage, and intentional acts of vandalism by third parties as well as employees. We cannot guarantee the security or protection of any IT Systems.
Removed
The GDPR imposes obligations on data controllers and processors including the requirement to maintain a record of their data processing and to implement policies and procedures as part of their mandated privacy governance framework. Breaches of the GDPR could result in substantial fines, which in some cases could be up to four percent of our worldwide revenue.
Added
We also face increased cyber risk due to the number of our and others' employees who are (and may continue to be) working remotely due to the challenges associated with managing remote computing assets and security vulnerabilities that are present in many non-corporate and home networks.
Removed
There is a risk that we may be subject to fines and penalties, litigation and reputational harm if we fail to properly process or protect the data or privacy of third parties or comply with the GDPR, and other laws that have been enacted, such as the Massachusetts Data Privacy Law including The Safeguards Regulations, the California Consumer Privacy Act and other applicable data privacy and data protection regimes.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe following table summarizes information regarding our significant properties, as of March 31, 2023: Location Supporting Square footage Owned/Leased United States Ayer, Massachusetts Corporate & Grid Segment 88,000 Leased Westminster, Massachusetts Grid Segment 77,500 Leased Queensbury, New York Grid Segment 35,000 Owned New Milford, Connecticut Grid Segment 85,000 Owned
Biggest changeThe following table summarizes information regarding our significant properties, as of March 31, 2024: Location Supporting Square footage Owned/Leased United States Ayer, Massachusetts Corporate & Grid Segment 88,000 Leased New Milford, Connecticut Grid Segment 85,000 Owned Queensbury, New York Grid Segment 35,000 Owned Westminster, Massachusetts Grid Segment 77,500 Leased
We also occupy leased facilities located in Australia, Austria, India, Wisconsin, Washington and the United Kingdom with a combined total of approximately 72,000 square feet of space. These leases have varying expiration dates throug h November 2027 w hich can generally be terminated at our request after a six-month advance notice.
We also occupy leased facilities located in Australia, Austria, India, Wisconsin, Washington and the United Kingdom with a combined total of approximately 72,000 square feet of space. These leases have varying expiration dates throug h January 2029 w hich can generally be terminated at our request after a six-month advance notice.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeCOMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN Among American Superconductor Corporation, the Nasdaq Composite Index and the Nasdaq Electrical Components & Equipment Index Fiscal year ended March 31, Company/Index 2018 2019 2020 2021 2022 2023 American Superconductor Corporation 100.00 220.96 94.16 325.77 130.76 84.36 Nasdaq Composite Index 100.00 111.71 116.65 198.48 191.21 176.12 Nasdaq Electrical Components & Equipment Index 100.00 107.33 82.52 155.74 139.45 156.80
Biggest changeCOMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN Among American Superconductor Corporation, the Nasdaq Composite Index and the Nasdaq Electrical Components & Equipment Index Fiscal year ended March 31, Company/Index 2019 2020 2021 2022 2023 2024 American Superconductor Corporation 100.00 42.61 147.43 59.18 38.18 105.05 Nasdaq Composite Index 100.00 100.70 174.60 188.67 163.62 221.02 Nasdaq Electrical Components & Equipment Index 100.00 82.93 154.08 153.37 160.21 189.37
This graph assumes the investment of $100.00 on March 31, 2018 in our common stock, the Nasdaq Composite Index and the Nasdaq Electrical Components & Equipment Index, and assumes any dividends are reinvested. Measurement points are March 31, 2018; March 31, 2019; March 31, 2020; March 31, 2021; March 31, 2022; and March 31, 2023.
This graph assumes the investment of $100.00 on March 31, 2019 in our common stock, the Nasdaq Composite Index and the Nasdaq Electrical Components & Equipment Index, and assumes any dividends are reinvested. Measurement points are March 31, 2019; March 31, 2020; March 31, 2021; March 31, 2022; March 31, 2023; and March 31, 2024.
Payment of future cash dividends, if any, will be at the discretion of our board of directors after taking into account various factors, including our financial condition, operating results, current and anticipated cash needs and plans for expansion. 22 Stock Performance Graph The following graph compares the cumulative total stockholder return on our common stock from March 31, 2018 to March 31, 2023 with the cumulative total return of (i) the Nasdaq Composite Index and (ii) the Nasdaq Electrical Components & Equipment Index.
Payment of future cash dividends, if any, will be at the discretion of our board of directors after taking into account various factors, including our financial condition, operating results, current and anticipated cash needs and plans for expansion. 22 Stock Performance Graph The following graph compares the cumulative total stockholder return on our common stock from March 31, 2019 to March 31, 2024 with the cumulative total return of (i) the Nasdaq Composite Index and (ii) the Nasdaq Electrical Components & Equipment Index.
Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock has been listed on the Nasdaq Global Select Market under the symbol “AMSC” since 1991. Holders The number of holders of record of our common stock on May 29, 2023 was 175.
Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock has been listed on the Nasdaq Global Select Market under the symbol “AMSC” since 1991. Holders The number of holders of record of our common stock on May 24, 2024 was 168 .

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeA reconciliation of GAAP to non-GAAP net loss is set forth in the table below (in thousands, except per share data): Year ended March 31, 2023 2022 Net loss $ (35,041 ) $ (19,193 ) Stock-based compensation 4,729 4,661 Amortization of acquisition-related intangibles 2,784 2,623 Acquisition costs - 681 Change in fair value of contingent consideration 70 (5,850 ) China dissolution 1,921 — ERC tax benefit (3,283 ) — Non-GAAP net loss (28,820 ) (17,078 ) Non-GAAP net loss per share $ (1.03 ) $ (0.63 ) Weighted average shares outstanding - basic and diluted 27,848 27,203 We incurred non-GAAP net losses of $28.8 million or $1.03 per s hare for fiscal 2022, compared to $17.1 million, or $0.63 per share, for fiscal 2021.
Biggest changeA reconciliation of GAAP to non-GAAP net income (loss) is set forth in the table below (in thousands, except per share data): Year ended March 31, 2024 2023 Net loss $ (11,111 ) $ (35,041 ) Stock-based compensation 4,652 4,729 Amortization of acquisition-related intangibles 2,158 2,784 Change in fair value of contingent consideration 4,922 70 China dissolution — 1,921 ERC tax benefit — (3,283 ) Non-GAAP net income (loss) 621 (28,820 ) Non-GAAP net income (loss) per share - basic $ 0.02 $ (1.03 ) Non-GAAP net income (loss) per share - diluted $ 0.02 $ (1.03 ) Weighted average shares outstanding - basic 29,825 27,848 Weighted average shares outstanding - diluted 30,909 27,848 We incurred non-GAAP net income of $0.6 million or $0.02 per s hare for fiscal 2023, compared to non-GAAP net loss of $28.8 million, or $1.03 per share, for fiscal 2022.
We believe non-GAAP net loss assists management and investors in comparing our performance across reporting periods on a consistent basis by excluding these non-cash charges and other items that we do not believe are indicative of our core operating performance. In addition, we use non-GAAP net loss as a factor to evaluate the effectiveness of our business strategies.
We believe non-GAAP net income (loss) assists management and investors in comparing our performance across reporting periods on a consistent basis by excluding these non-cash charges and other items that we do not believe are indicative of our core operating performance. In addition, we use non-GAAP net income (loss) as a factor to evaluate the effectiveness of our business strategies.
The amendments in ASU 2016-13 provide more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date.
The amendments in ASU 2016-13 will provide more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date.
As a result, we may constrain revenue to the extent that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Significant judgement is required to estimate the total expected costs and variable consideration for projects that typically have a timeline of 12-24 months.
As a result, we may constrain revenue to the extent that a significant reversal in the amount of cumulative revenue recognized will not occur until the uncertainty associated with the variable consideration is subsequently resolved. Significant judgement is required to estimate the total expected costs and variable consideration for projects that typically have a timeline of 12-24 months.
The deferred income tax provision is calculated for the estimated future tax effects attributable to temporary differences and carryforwards using expected tax rates in effect in the years during which the differences are expected to reverse. All deferred tax assets and liabilities are presented as non-current in the Consolidated Balance Sheet.
The deferred income tax provision is calculated for the estimated future tax effects attributable to temporary differences and carryforwards using expected tax rates in effect in the years during which the differences are expected to reverse. All deferred tax assets and liabilities are presented as non-current in the consolidated balance sheets.
There were no indicators requiring further impairment testing on our long-lived assets during the fiscal years ended March 31, 2023 or 2022. 32 Goodwill Goodwill represents the excess of cost over net assets of acquired businesses that are consolidated.
There were no indicators requiring further impairment testing on our long-lived assets during the fiscal years ended March 31, 2024 or 2023. 32 Goodwill Goodwill represents the excess of cost over net assets of acquired businesses that are consolidated.
Our cash requirements depend on numerous factors, including the successful completion of our product development activities, our ability to commercialize our REG and ship protection system solutions, the rate of customer and market adoption of our products, collecting receivables according to established terms, the continued availability of U.S. government funding during the product development phase of our superconductor-based products and whether Inox is successful in executing on Solar Energy Corporation of India Limited orders or in obtaining additional orders under the new central and state auction regime.
Our cash requirements depend on numerous factors, including the successful completion of our product development activities, our ability to commercialize our Resilient Electric Grid and ship protection system solutions, the rate of customer and market adoption of our products, collecting receivables according to established terms, the continued availability of U.S. government funding during the product development phase of our superconductor-based products and whether Inox is successful in executing on Solar Energy Corporation of India Limited orders or in obtaining additional orders under the new central and state auction regime.
We do not believe that, outside of those disclosed here, there are any other recently issued accounting pronouncements that will have a material impact on our consolidated financial statements. 30 Critical Accounting Policies and Estimates The preparation of consolidated financial statements requires that we make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities.
We do not believe that, outside of those disclosed here, there are any other recently issued accounting pronouncements that will have a material impact on our consolidated financial statem ents. 30 Critical Accounting Policies and Estimates The preparation of the consolidated financial statements requires that we make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities.
See Note 4, “Revenue Recognition,” for additional information. Business Acquisitions We account for acquisitions using the purchase method of accounting in accordance with ASC 805, Business Combinations . The purchase price for each acquisition is allocated to the assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition.
See Note 3, “Revenue Recognition,” for additional information. Business Acquisitions We account for acquisitions using the purchase method of accounting in accordance with Accounting Standards Codification ("ASC") 805, Business Combinations . The purchase price for each acquisition is allocated to the assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition.
The China dissolution expense during fiscal 2022, was driven by the liquidation of our China entity, resulting in a foreign currency loss from the cumulative translation release of $1.9 million in fiscal 2022 in which there was no similar transaction in fiscal 2021.
The China dissolution expense during fiscal 2022 was driven by the liquidation of our China entity, resulting in a foreign currency loss from the cumulative translation release of $1.9 million in fiscal 2022. There was no similar transaction in fiscal 2023.
Non-GAAP Measures Generally, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position or cash flow that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles in the United States (“GAAP”).
Non-GAAP Financial Measure - Non-GAAP Net Income (Loss) Generally, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position or cash flow that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles in the United States (“GAAP”).
We define non-GAAP net loss as net loss before stock-based compensation, amortization of acquisition-related intangibles, acquisition costs, changes in fair value of contingent consideration, China dissolution, ERC tax benefit, and other non-cash or unusual charges.
We define non-GAAP net income (loss) as net income (loss) before stock-based compensation, amortization of acquisition-related intangibles, change in fair value of contingent consideration, China dissolution, ERC tax benefit, and other non-cash or unusual charges.
Navy's effort to upgrade in-board power systems to support fleet electrification, and the need for increased renewable sources of electricity, such as wind and solar energy.
Navy's effort to upgrade onboard power systems to support fleet electrification, and the need for increased renewable sources of electricity, such as wind and solar energy.
If the loss is not probable or cannot be reasonably estimated, a liability is not recorded in our consolidated financial statements. 29 Recent Accounting Pronouncements In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments .
If the loss is not probable or cannot be reasonably estimated, a liability is not recorded in our consolidated financial statements. 29 Recent Accounting Pronouncements In June 2016, the Finan cial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments .
We performed our annual assessment of goodwill on February 28, 2023 and noted no triggering events from the analysis date to March 31, 2023 and determined that there was no impairment to goodwill. See Note 5, “Goodwill,” for further information regarding our goodwill valuation assumptions.
We performed our annual assessment of goodwill on February 29, 2024 and noted no triggering events from the analysis date to March 31, 2024 and determined that there was no impairment to goodwill. See Note 4, “Goodwill,” for further information regarding our goodwill valuation assumptions.
When we refer to a particular fiscal year, we are referring to the fiscal year beginning on April 1 of that same year. For example, fiscal 2022 refers to the fiscal year beginning on April 1, 2022.
When we refer to a particular fiscal year, we are referring to the fiscal year that began on April 1 of that same year. For example, fiscal 2023 refers to the fiscal year that began on April 1, 2023.
Our design portfolio includes a broad range of drivetrains and power ratings of 2 MW and higher. We provide a broad range of power electronics and software-based control systems that are highly integrated and designed for optimized performance, efficiency, and grid compatibility. Our fiscal year begins on April 1 and ends on March 31.
We provide a broad range of power electronics and software-based control systems that are highly integrated and designed for optimized performance, efficiency, and grid compatibility. Our fiscal year begins on April 1 and ends on March 31.
Additionally, the impact of the COVID-19 pandemic or other sources of instability, including the ongoing war between Russia and Ukraine, instability of financial institutions and political instability in the United States, on the global financial markets may reduce our ability to raise additional capital, if necessary, which could negatively impact our liquidity.
Additionally, the impact of global sources of instability, including the ongoing wars between Russia and Ukraine and Israel and Hamas, instability of financial institutions and political instability in the United States, on the global financial markets may reduce our ability to raise additional capital, if necessary, which could negatively impact our liquidity.
The increase in non-GAAP net loss in fiscal 2022 compared to fiscal 2021 was due to a higher operating loss driven by lower gross margins. 28 Liquidity and Capital Resources We have experienced recurring operating losses and as of March 31, 2023 had an accumulated deficit of $1,055.5 million.
The improvement in the non-GAAP net income in fiscal 2023 compared to fiscal 2022 was due to an improved operating loss driven by higher revenues and gross margins. 28 Liquidity and Capital Resources We have experienced recurring operating losses and as of March 31, 2024 had an accumulated deficit of $1,066.7 million.
These technologies and our system-level solutions are protected by a broad and deep intellectual property portfolio consisting of hundreds of patents and licenses worldwide. We operate our business under two market-facing business units: Grid and Wind.
These technologies and our system-level solutions are protected by a robust intellectual property portfolio consisting of patents and patent applications worldwide and rights through exclusive and non-exclusive licenses. We operate our business under two market-facing business units: Grid and Wind.
Other expense, net Oth er expense, ne t was $0.1 million in fiscal 2022, compared to other expense, net of less than $0.1 million in fiscal 2021.
Other expense, net Oth er expense, ne t was $0.7 million in fiscal 2023, compared to $0.1 million in fiscal 2022.
There can be no assurance that we will be able to raise additional capital on favorable terms or at all, or execute on any other means of improving our liquidity as described above.
Our liquidity is highly dependent on our ability to increase revenues, control our operating costs, and raise additional capital, if necessary. There can be no assurance that we will be able to raise additional capital on favorable terms or at all or execute on any other means of improving our liquidity as described above.
We are experiencing substantial inflationary pressure in our supply chain and some delays in sourcing materials needed for our products, resulting in some production disruption both of which have increased our cost of revenues and decreased gross margin.
Other fiscal years follow similarly. 24 We continue to experience some inflationary pressure in our supply chain and some delays in sourcing materials needed for our products, resulting in some production disruption both of which have increased our cost of revenues and decreased gross margin.
We continue to closely monitor our expenses and, if required, expect to reduce our operating and capital spending to enhance liquidity In February 2021, we filed a shelf registration statement on Form S-3 that will expire in February 2024 (the “Form S-3”).
We continue to closely monitor our expenses and, if required, expect to reduce our operating and capital spending to enhance liquidity. In January 2024, we filed a shelf registration statement on Form S-3 that will expire three years from the date on which it was declared effective, March 15, 2027 (the “Form S-3”).
The increase in other expense was driven by the impacts of fluctuations in foreign currencies in fiscal 2022. 27 Income Taxes We recorded an income tax expense of $0.2 million in fiscal 2022 compared to income tax benefit of $1.8 million in fiscal 2021.
The increase in other expense was driven by the impacts of unfavorable fluctuations in foreign currencies in fiscal 2023. 27 Income Taxes We recorded an income tax expense of $0.3 million in fiscal 2023, compared to $0.2 million in fiscal 2022. The increase in income tax expense is a result of higher income tax in foreign jurisdictions.
Following the release of ASU 2021-10 in November 2021, the new effective date will be annual reporting periods beginning after December 15, 2021. As of April 1, 2022, we adopted ASU 2021-10 and noted no material impact on our consolidated financial statements.
Following the release of ASU 2019-10 in November 2019, the effective date, as long as the Company remained a smaller reporting company, was annual reporting periods beginning after December 15, 2022. As of April 1, 2023, we have adopted ASU 2016-13, and noted no material impact on our consolidated financial statements.
The decrease in R&D expenses is primarily a result of lower total compensation expense. Selling, general, and administrative Selling, general and administrative (“SG&A”) expenses increased by 4% to $28.7 million, or 27% of rev enue in fiscal 2022 from $27.5 million, or 25% of revenue, in fiscal 2021.
Selling, general, and administrative Selling, general and administrative (“SG&A”) expenses increased by 10% to $31.6 million, or 22% of rev enue in fiscal 2023 from $28.7 million, or 27% of revenue, in fiscal 2022. The increase in SG&A expenses is primarily a result of higher total compensation expense.
The Wind segment generated an operating loss of $2.5 m illion in fiscal 2022 and $1.6 million in fiscal 2021. The increase in the Wind business unit operating loss was due to lower gross margins in fiscal 2022, compared to fiscal 2021.
The decrease in the Grid business unit operating loss was due to higher revenues and gross margins, compared to fiscal 2022. The Wind segment generated operating income of $0.9 m illion in fiscal 2023 and an operating loss of $2.5 million in fiscal 2022.
The increase in amortization expense is primarily a result of the Neeltran acquisition. Change in fair value of contingent consideration The change in fair value of our contingent consideration for the earnout payment on the NEPSI acquisition resulted in a loss of $ 0.1 million in fiscal 2022.
Change in fair value of contingent consideration The change in fair value of our contingent consideration for the earnout payment on the NEPSI acquisition resulted in a loss of $4.9 million and $0.1 million in fiscal 2023 and 2022, respectively.
Included in SG&A is a $0.8 million benefit from the ERC recognized in fiscal 2022. Amortization of acquisition related intangibles We recorded $2.7 million in fiscal 2022 and $2.5 million in fiscal 2021 in amortization expense related to our core technology and know-how, customer relationships, and other intangible assets.
Amortization of acquisition related intangibles We recorded $2.2 million in fiscal 2023 and $2.7 million in fiscal 2022 in amortization expense related to our core technology and know-how, customer relationships, and other intangible assets.
These amounts included in restricted cash primarily represent collateral deposits to secure surety bonds and letters of credit for various customer contracts. These deposits are held in interest bearing accounts.
At March 31, 2023, we had $0.6 million of restricted cash included in long-term assets and $1.7 million of restricted cash in current assets. These amounts included in restricted cash primarily represent collateral deposits to secure surety bonds and letters of credit for various customer contracts. These deposits are held in interest bearing accounts.
Unallocated corporate expenses in fiscal 2022 consisted of a loss on contingent consideration of $0.1 million, stock-based compensation expense of $4.7 million and a restructuring charge of $1.0 million. Unallocated corporate expenses in fiscal 2021 consisted of a gain on contingent consideration of $5.9 million offset by stock-based compensation expense of $4.7 million.
Unallocated corporate expenses in fiscal 2022 consisted of a loss on contingent consideration of $0.1 million, stock-based compensation expense of $4.7 million, and a restructuring charge of $1.0 million. Interest income, net Interest income, net was $1.3 million in fiscal 2023 compared to $0.3 million for fiscal 2022.
Our cash, cash equivalents and restricted cash are summarized as follows (in thousands): March 31, 2023 March 31, 2022 Cash and cash equivalents $ 23,360 $ 40,584 Restricted cash 2,315 8,902 Total cash, cash equivalents and restricted cash $ 25,675 $ 49,486 Net cash used in operating activities was $22.5 m illion and $19.0 million in fiscal 2022 and 2021, respectively.
Our cash, cash equivalents and restricted cash are summarized as follows (in thousands): March 31, 2024 March 31, 2023 Cash and cash equivalents $ 90,522 $ 23,360 Restricted cash 1,758 2,315 Total cash, cash equivalents and restricted cash $ 92,280 $ 25,675 Net cash provided by operating activities was $2.1 m illion compared to net cash used in operating activities of $22.5 million in fiscal 2023 and 2022, respectively.
Changes in macroeconomic and market conditions arising from the COVID-19 pandemic, or for other reasons, such as the ongoing war between Russia and Ukraine, inflation, rising interest rates, instability of financial institutions, political instability in the United States, including failure to raise the federal debt ceiling, labor force availability, sourcing, material delays and global supply chain disruptions could have a material adverse effect on our business, financial condition and results of operation.
Changes in macroeconomic conditions arising from various reasons, such as the ongoing wars between Russia and Ukraine, and Israel and Hamas, inflation, rising interest rates, labor force availability, sourcing, material delays and global supply chain disruptions could have a material adverse effect on the Company's business, financial condition and results of operation.
Interest income, net Interest income, net was $0.3 million in fiscal 2022 compared to $0.1 million for fiscal 2021. The increase in interest income, net, was due to increased interest rates in fiscal 2022. China dissolution China dissolution expense was $1.9 million in fiscal 2022 compared to no activity in fiscal 2021.
The increase in interest income, net, was primarily due to increased interest rates in fiscal 2023 and higher cash balances. China dissolution China dissolution expense was $1.9 million in fiscal 2022.
This restructuring will cause us to incur $1.0 million of cash expense and is expected to result in annualized cost savings of approximately $5 million, beginning in fiscal 2023.
This restructuring has caused us to incur $1.0 million of cash expense which has been fully paid as of March 31, 2024 and is expected to result in annualized cost savings of approximately $5.0 million, which we began to realize in fiscal 2023.
The decrease in net cash used in investing activities in fiscal 2022 compared to fiscal 2021 was due primarily to the Neeltran acquisition in fiscal 2021, in which no similar transaction occurred in fiscal 2022. Net cash provided by financing activities was $0.2 million and $0.1 million in fiscal 2022 and 2021, respectively.
The decrease in net cash used in investing activities in fiscal 2023 compared to fiscal 2022 was due primarily to lower investment in property, plant, and equipment in fiscal 2023 compared to fiscal 2022. Net cash provided by financing activities was $65.4 million and $0.2 million in fiscal 2023 and 2022, respectively.
Operating Expenses Research and development Research and development (“R&D”) expenses decreased by 14% to $9.0 million, or 8% of revenue in fiscal 2022 , compared to $10.5 million, or 10% of revenue, in fiscal 2021. Included in R&D is a $0.7 million benefit from the ERC recognized in fiscal 2022.
Operating Expenses Research and development Research and development (“R&D”) expenses decreased by 11% to $8.0 million, or 5% of revenue in fiscal 2023 , compared to $9.0 million, or 8% of revenue, in fiscal 2022. The decrease in R&D expenses is primarily a result of lower total compensation expense and lower materials and consulting expenses.
These obligations impact our short-term and long-term liquidity and capital resource needs. Certain contractual obligations are reflected on the consolidated balance sheet as of March 31, 2023, while others are considered future commitments. We have various contractual arrangements, under which we have committed to purchase certain minimum quantities of goods or services on an annual basis.
We are a party to many contractual obligations involving commitments to make payments to third parties. These obligations impact our short-term and long-term liquidity and capital resource needs. Certain contractual obligations are reflected on the consolidated balance sheet as of March 31, 2024, while others are considered future commitments.
The increase in net cash used in operations in fiscal 2022 compared to fiscal 2021 was driven primarily by purchases of inventory and decreased cash collections in fiscal 2022. Net cash used in investing activities was $1.5 million and $7.2 million in fiscal 2022 and 2021, respectively.
The increase in net cash provided by operations in fiscal 2023 compared to fiscal 2022 was driven primarily by higher gross margins, increased cash collections, and relief of deferred revenue from prior fiscal periods. Net cash used in investing activities was $1.0 million and $1.5 million in fiscal 2023 and 2022, respectively.
At March 31, 2023, we had cash, cash equivalents and restricted cash of $25.7 million, compared to $49.5 million at March 31, 2022, a decrease of $23.8 million. As of March 31, 2023, we had approximately $1.9 million of cash, cash equivalents and restricted cash in foreign bank accounts.
At March 31, 2024, we had cash, cash equivalents and restricted cash of $92.3 million, compared to $25.7 million at March 31, 2023, an increase of $66.6 million. As of March 31, 2024, we had approximately $4.0 million in cash, cash equivalents and restricted cash in foreign bank accounts.
Significant judgment is employed in determining these assumptions as of the acquisition date and for each subsequent period. Accordingly, future business and economic conditions, as well as changes in any of the assumptions described above, can materially impact the fair value of contingent consideration recorded at each reporting period.
Accordingly, future business and economic conditions, as well as changes in any of the assumptions described above, can materially impact the fair value of contingent consideration recorded at each reporting period. 31 Valuation of long-lived assets We periodically evaluate our long-lived assets, consisting principally of fixed and amortizable intangible assets for potential impairment.
Net loss Net loss was $35.0 million in fiscal 2022, compared to net loss of $19.2 million in fiscal 2021. The increase in net loss was driven primarily by lower gross margins, the impact of the China dissolution in fiscal 2022 and partially offset by the ERC benefit.
Net loss Net loss was $11.1 million in fiscal 2023, compared to net loss of $35.0 million in fiscal 2022. The decrease in net loss was driven primarily by higher revenues and gross margins in fiscal 2023 partially offset by the increase in fair value of contingent consideration in fiscal 2023.
Through our Gridtec™ Solutions, our Grid business segment enables electric utilities and renewable energy project developers to connect, transmit and distribute power with exceptional efficiency, reliability, security and affordability. We provide transmission planning services that allow us to identify power grid congestion, poor power quality, and other risks, which help us determine how our solutions can improve network performance.
Through our Gridtec™ Solutions, our Grid business segment enables electric utilities, industrial facilities, and renewable energy project developers to connect, transmit and distribute power with exceptional efficiency, reliability, security and affordability.
In addition, we may seek to raise additional capital, which could be in the form of loans, convertible debt or equity, to fund our operating requirements and capital expenditures. Our liquidity is highly dependent on our ability to increase revenues, control our operating costs, and our ability to raise additional capital, if necessary.
We recently raised $65.2 million, net of offering expenses, through an equity raise in February 2024. In addition, we may seek to raise additional capital, which could be in the form of loans, convertible debt or equity, to fund our operating requirements and capital expenditures.
Following the release of ASU 2021-08 in October 2021, the new effective date will be annual reporting periods beginning after December 15, 2022. We evaluated the impact of the adoption of ASU 2021-08, and we do not expect it to have a material impact on our consolidated financial statements.
Following the release of ASU 2021-08 in October 2021, the effective date was annual reporting periods beginning after December 15, 2022. As of April 1, 2023, we have adopted ASU 2021-08, and noted no material impact on our consolidated financial statements. In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures .
This resulted in filing certain amended payroll tax forms for eligible quarters in 2020 and 2021, which, in the aggregate, totaled $3.3 million.
This resulted in filing certain amended payroll tax forms for eligible quarters in 2020 and 2021, which, in the aggregate, totaled $3.3 million. We recognized a receivable in prepaid expenses and other current assets and a benefit to cost of revenues and operating expenses in the quarter ended March 31, 2023.
The decrease in revenues was driven by lower D-VAR revenues than in the prior year period. Revenues in our Wind business unit are derived from wind turbine electrical control systems and core components, wind turbine license and development contracts, service contracts and consulting arrangements.
Revenues in our Wind business unit are derived from wind turbine electrical control systems and core components, wind turbine license and development contracts, service contracts and consulting arrangements. Our Wind business unit accounted for 16% of total revenues in fiscal 2023 and 11% in fiscal 2022.
There were no restructuring charges recorded in fiscal 2021. 26 Operating loss Our operating loss is summarized as fo llows (in thousands): Fiscal Years Ended March 31, 2023 2022 Operating income (loss): Grid $ (24,615 ) $ (20,725 ) Wind (2,547 ) (1,554 ) Unallocated corporate expenses (5,847 ) 1,190 Total $ (33,009 ) $ (21,089 ) The Grid segment generated an operating loss o f $24.6 million in fiscal 2022 and $20.7 million in fiscal 2021.
The change in fair value was primarily driven by an increased likelihood of achieving certain revenue targets and an increase in our stock price. 26 Operating loss Our operating loss is summarized as fo llows (in thousands): Fiscal Years Ended March 31, 2024 2023 Operating income (loss): Grid $ (2,754 ) $ (24,615 ) Wind 946 (2,547 ) Unallocated corporate expenses (9,560 ) (5,847 ) Total $ (11,368 ) $ (33,009 ) Our Grid business segment generated an operating loss o f $2.8 million in fiscal 2023 and $24.6 million in fiscal 2022.
Our revenues are summarized as follows (in thousands): Fiscal Years Ended March 31, 2023 2022 Revenues: Grid $ 94,631 $ 98,876 Wind 11,353 9,559 Total $ 105,984 $ 108,435 Revenues in our Grid business unit are derived from our D-VAR product sales, NEPSI product sales, Neeltran product sales, HTS wire sales, ship protection systems ("SPS"), government-sponsored electric utility projects and other prototype development contracts.
Our revenues are summarized as follows (in thousands): Fiscal Years Ended March 31, 2024 2023 Revenues: Grid $ 122,065 $ 94,631 Wind 23,574 11,353 Total $ 145,639 $ 105,984 Revenues in our Grid business unit are derived from our D-VAR product sales, Northeast Power Systems, Inc.
Through our Windtec™ Solutions, our Wind business segment enables manufacturers to field wind turbines with exceptional power output, reliability and affordability. We supply advanced power electronics and control systems, license our highly engineered wind turbine designs, and provide extensive customer support services to wind turbine manufacturers.
We supply advanced power electronics and control systems, license our highly engineered wind turbine designs, and provide extensive customer support services to wind turbine manufacturers. Our design portfolio includes a broad range of drivetrains and power ratings of 2 megawatts ("MWs") and higher.
The increase over the prior year period was primarily driven by shipments of electrical control systems ("ECS") to INOX in fiscal 2022, compared to fiscal 2021. Cost of Revenues and Gross Margin Cost of revenues increased by 3% to $97.5 million in fiscal 2022 , compared to $94.9 million in fiscal 2021.
Revenues in the Wind business unit increased 108% to $23.6 million in fiscal 2023 from $11.4 million in fiscal 2022. The increase over the prior year period was driven by additional shipments of electrical control systems ("ECS") at increased prices.
We also engineer, install and commission our products on a turnkey-basis for some customers. The Grid business unit accounted for 89% of total revenues in fiscal 2022 and 91% in fiscal 2021. Grid revenues decreased 4% to $94.6 million in fiscal 2022 from $98.9 million in fiscal 2021.
("NEPSI") product sales, Neeltran product sales, HTS wire sales, ship protection systems ("SPS"), government-sponsored electric utility projects and other prototype development contracts. We also engineer, install and commission our products on a turnkey-basis for some customers. The Grid business unit accounted for 84% of total revenues in fiscal 2023 and 89% in fiscal 2022.
These services often lead to sales of our grid interconnection solutions for wind farms and solar power plants, power quality systems and transmission and distribution cable systems. We also sell ship protection products to the U.S. Navy through our Grid business segment. • Wind.
We provide transmission planning services that allow us to identify power grid congestion, poor power quality, and other risks, which help us determine how our solutions can improve network performance. These services often lead to sales of our grid interconnection solutions for wind farms and solar power plants, power quality systems and transmission and distribution cable systems.
Following the release of ASU 2019-10 in November 2019, the new effective date, as long as we remain a smaller reporting company, would be annual reporting periods beginning after December 15, 2022. We evaluated the impact of the adoption of ASU 2016-13, and we do not expect it to have a material impact on our consolidated financial statements.
Following the release of ASU 2024-02 in March 2024, the effective date will be annual reporting periods beginning after December 15, 2024. As of March 31, 2024, we are evaluating the impact on our consolidated financial statements .
At March 31, 2023, we had $0.6 million of restricted cash included in long-term assets and $1.7 million of restricted cash in short-term assets. At March 31, 2022, we had $6.1 million of restricted cash included in long-term assets and $2.8 million of restricted cash in short-term assets.
The increase in net cash provided by financing activities in fiscal 2023 compared to fiscal 2022 was primarily due to the equity raise in February 2024. At March 31, 2024, we had $1.3 million of restricted cash included in long-term assets and $0.5 million of restricted cash in current assets.
We have accordingly recognized a receivable in prepaid expenses and other current assets and a benefit to cost of revenues and operating expenses in the quarter ended March 31, 2023. 25 Results of Operations Fiscal Years Ended March 31, 2023 and March 31, 2022 Revenues Total revenues decreased by 2% to $106.0 million in fiscal 2022 from $108.4 million in fiscal 2021.
See Note 1, “Nature of the Business and Operations and Liquidity,” for further information about this offering. 25 Results of Operations Fiscal Years Ended March 31, 2024 and March 31, 2023 Revenues Total revenues increased by 37% to $145.6 million in fiscal 2023 from $106.0 million in fiscal 2022.
Removed
Other fiscal years follow similarly. 24 On October 31, 2018, we entered into a Subcontract Agreement with Commonwealth Edison Company (“ComEd”) (the “Subcontract Agreement”) for the manufacture and installation of the Company’s resilient electric grid ("REG") system within ComEd’s electric grid in Chicago, Illinois (the “Project”), which became effective on June 20, 2019.
Added
We also sell ship protection products to the U.S. Navy through our Grid business segment. • Wind. Through our Windtec™ Solutions, our Wind business segment enables manufacturers to field wind turbines with exceptional power output, reliability and affordability.
Removed
Under the terms of the Subcontract Agreement, we agreed, among other things, to provide the REG system and to supervise ComEd’s installation of the REG system in Chicago.
Added
While the impact of inflation has been challenging, we continue to take actions to limit this pressure including adjusting the pricing of our products and services.
Removed
As part of our separate cost sharing arrangement with DHS under the Prime Contract, we received funding provided by DHS in connection with the Subcontract Agreement of approximately $10.0 million, which represents the total amount of revenue we recognized over the term of the Subcontract Agreement and includes $1.0 million that we agreed to reimburse ComEd for costs incurred by ComEd while undertaking its tasks under the Subcontract Agreement (the “Reimbursement Amount”).
Added
In the year ended March 31, 2024, the Company received $3.0 million in payments for the initial claims that were processed. The remaining balance is expected to be paid during fiscal 2024.
Removed
In addition, we were required to deliver an irrevocable letter of credit in the amount of $5.0 million to secure certain Company obligations under the Subcontract Agreement, which we did, and deposited $5.0 million in an escrow account as collateral to secure such letter of credit.
Added
On February 2, 2024, we completed an offering of 6,210,000 shares of our common stock at a public offering price of $11.25 per share under our then-existing Registration Statement on Form S-3. We received net proceeds of approximately $65.2 million after deducting underwriting discounts and commissions and offering expenses.
Removed
This irrevocable letter of credit was terminated and the full $5.0 million was returned from escrow to us during the fiscal year ended March 31, 2023.
Added
Grid revenues increased 29% to $122.1 million in fiscal 2023 from $94.6 million in fiscal 2022. The increase in revenues was driven by higher NEPSI, Neeltran, and SPS revenues than in the prior year period.
Removed
Our Wind business unit accounted for 11% of total revenues in fiscal 2022 and 9% in fiscal 2021. Revenues in the Wind business unit increased 19% to $11.4 million in fiscal 2022 from $9.6 million in fiscal 2021.
Added
Cost of Revenues and Gross Margin Cost of revenues increased by 13% to $110.4 million in fiscal 2023 , compared to $97.5 million in fiscal 2022. Gross margin increased to 24% in fis cal 2023 from 8% in fiscal 2022. The increase in gross margin in fiscal 2023 was due to additional revenues while minimizing fixed factory cost.
Removed
Gross margin decreased to 8% in fis cal 2022 from 12% in fiscal 2021. The decrease in gross margin in fiscal 2022 was due to an unfavorable product mix, inflation pressure in our supply chain, and additional expenses incurred to complete and deliver certain projects from the preacquisition Neeltran backlog.
Added
Fiscal 2023 experienced a favorable product mix in the Wind and Grid business units, with increased service revenues and a sharp improvement in Neeltran project margins.
Removed
Included in cost of revenues is a $1.8 million benefit from the ERC recognized in fiscal 2022.
Added
The decrease in amortization expense is primarily a result of using the economic consumption method as the basis to amortize the acquired customer relationship intangible assets related to NEPSI and Neeltran.
Removed
Cost of revenues in fiscal 2022 and fiscal 2021 includes total amortization expense of less than $0.1 million as a result of the acquired backlog intangible assets from our acquisitions of Northeast Power Systems, Inc. and related assets ("NEPSI") and Neeltran, Inc. and related assets ("Neeltran").
Added
During fiscal 2023, we issued 399,999 shares of common stock and cash in lieu of a fractional share of common stock, related to the achievement of specified revenue objectives in connection with the acquisition of NEPSI at a fair value of $3.1 million.
Removed
The change in the fair value of our contingent consideration for the earnout payment on the NEPSI acquisition resulted in a gain of $5.9 million in fiscal 2021. The change in the fair value was primarily driven by the change in our stock price and assumptions on likelihood of achieving revenue targets.
Added
One specified revenue objective, which would have earned the selling stockholders 300,000 shares of our common stock, was not achieved, leaving 300,000 shares of common stock remaining for potential issuance upon the achievement of the last specified revenue objective by September 30, 2024.
Removed
Restructuring We recorded restructuring charges of $1.0 million in fiscal 2022 for severance pay as a result of the reduction in force announced on January 24, 2023.
Added
The increase in the Wind business unit operating income was due to higher revenue and gross margins in fiscal 2023, compared to fiscal 2022. Unallocated corporate expenses in fiscal 2023 consisted of a loss on contingent consideration of $4.9 million and stock-based compensation expense of $4.7 million.
Removed
The increase in the Grid business unit operating loss was due to lower gross margins driven by a less favorable product mix and additional expenses incurred to deliver on the Neeltran acquired backlog. In addition, Grid segment operating loss includes a $3.3 million benefit from the ERC that was recognized in fiscal 2022.

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