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What changed in ORION ENERGY SYSTEMS, INC.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of ORION ENERGY SYSTEMS, INC.'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.

+230 added−329 removedSource: 10-K (2024-06-12) vs 10-K (2023-06-12)

Top changes in ORION ENERGY SYSTEMS, INC.'s 2024 10-K

230 paragraphs added · 329 removed · 196 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeOrion Services Group Division Our OSG segment (a) develops and sells lighting products and provides construction and engineering services for our commercial lighting and energy management systems and (b) provides retailers, distributors and other businesses with maintenance, repair and replacement services for the lighting and related electrical components deployed in their facilities.
Biggest changeMaintenance Segment Our maintenance segment provides retailers, distributors and other businesses with maintenance, repair and replacement services for the lighting and related electrical components deployed in their facilities. EV Segment Our EV segment offers leading electric vehicle charging expertise and provides EV turnkey installation solutions with ongoing support to all commercial verticals.
We typically sell our lighting systems in replacement of our customers’ existing lighting fixtures. We call this replacement process a "retrofit". We frequently sell our products and services directly to our customers and in many cases we provide design and installation as well as project management services.
We typically sell our lighting systems in replacement of our customers’ existing lighting fixtures. We call this replacement process a "retrofit". We frequently sell our products and services directly to our customers and in many cases we provide design and installation services as well as project management services.
Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, are available through the investor relations page of our internet website free of charge as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission, or the SEC.
Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), are available through the investor relations page of our internet website free of charge as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission ("SEC").
Services We provide a range of fee-based lighting-related energy management services to our customers, including: • comprehensive site assessment, which includes a review of the current lighting and controls including IoT enabled devices requirements and energy usage at the customer’s facility; • site field verification, or SFV, during which we perform a test implementation of our energy management system at a customer’s facility; • utility incentive and government subsidy management, where we assist our customers in identifying, applying for and obtaining available utility incentives or government subsidies; • engineering design, which involves designing a customized system to suit our customers' facility lighting and energy management needs, and providing the customer with a written analysis of the potential energy savings and lighting and environmental benefits associated with the designed system; • project management, which involves us working with the electrical contractor in overseeing and managing all phases of implementation from delivery through installation for a single facility or through multi-facility roll-outs tied to a defined project schedule; • installation services, for our products, which we provide through our national network of qualified third-party installers; • complete facility design commissioning of IoT enabled control devices • recycling in connection with our retrofit installations, where we remove, dispose of and recycle our customer’s legacy lighting fixtures; and • lighting and electrical system maintenance services both preventative and reactive in nature.
Services We provide a range of lighting-related energy management services to customers, including: • comprehensive site assessment, which includes a review of the current lighting and controls including IoT enabled devices requirements and energy usage at the customer’s facility; • site field verification, or ("SFV"), during which we perform a test implementation of our energy management system at a customer’s facility; • utility incentive and government subsidy management, where we assist our customers in identifying, applying for and obtaining available utility incentives or government subsidies; • engineering design, which involves designing a customized system to suit our customers' facility lighting and energy management needs, and providing the customer with a written analysis of the potential energy savings and lighting and environmental benefits associated with the designed system; • project management, which involves us working with the electrical contractor in overseeing and managing all phases of implementation from delivery through installation for a single facility or through multi-facility roll-outs tied to a defined project schedule; • installation services, for our products, which we provide through our national network of qualified third-party installers; • complete facility design commissioning of IoT enabled control devices • recycling in connection with our retrofit installations, where we remove, dispose of and recycle our customer’s legacy lighting fixtures; and • lighting and electrical system maintenance services both preventative and reactive in nature.
Overview We provide state-of-the-art light emitting diode (“LED”) lighting systems, wireless Internet of Things (“IoT”) enabled control solutions, commercial and industrial electric vehicle "EV" charging infrastructure solutions and maintenance services. We help our customers achieve their sustainability, energy savings and carbon footprint reduction goals through innovative technology and exceptional service.
Overview We provide state-of-the-art light emitting diode (“LED”) lighting systems, wireless Internet of Things (“IoT”) enabled control solutions, commercial and industrial electric vehicle "EV" charging infrastructure solutions and lighting and electrical maintenance services. We help our customers achieve their sustainability, energy savings and carbon footprint reduction goals through innovative technology and exceptional service.
These contracts are entered into in the ordinary course of business and typically provide that we will deliver products and services on a work order or purchase order basis and any purchase order may be terminated prior to shipment. Our maintenance work orders or contracts may be for discrete projects or may have multi-year terms.
These contracts are entered into in the ordinary course of business and typically provide that we will deliver products and services on a work order or purchase order basis and any purchase order may be terminated prior to shipment. Our maintenance work orders or contracts 8 may be for discrete projects or may have multi-year terms.
Our patented LDR TM product allows for a significantly quicker installation when compared to competitor's commercial office lighting products. Our smart lighting controls allow our lighting fixtures to selectively provide a targeted amount of light where and when it is needed most. We believe that our patent portfolio as a whole is material to our business.
Our patented LDR TM product allows for a significantly quicker installation when compared to competitor's commercial office lighting products. We offer smart lighting controls that allow our lighting fixtures to selectively provide a targeted amount of light where and when it is needed most. We believe that our patent portfolio as a whole is material to our business.
Our employees are not represented by any labor union, and we have never experienced a work stoppage or strike due to employee relations. We are an employee-centric organization, maintaining a safe and respectful environment that provides opportunity for our employees. We believe our employees are among our most important resources and are critical to our continued success.
Our employees are not represented by any labor union, and we have never experienced a work stoppage or strike due to employee relations. We are an employee-centric organization, maintaining a safe and respectful environment that provides opportunity for our employees. 10 We believe our employees are among our most important resources and are critical to our continued success.
We focus significant attention on attracting and retaining talented and experienced individuals to manage and support our operations. We pay our employees competitively and offer a broad range of company-paid benefits, which we believe are competitive with others in our industry. 14 We are committed to hiring, developing and supporting a diverse and inclusive workplace.
We focus significant attention on attracting and retaining talented and experienced individuals to manage and support our operations. We pay our employees competitively and offer a broad range of company-paid benefits, which we believe are competitive with others in our industry. We are committed to hiring, developing and supporting a diverse and inclusive workplace.
Products and Services Our primary focus has been the sale of our LED lighting fixtures with integrated controls technology and related installation services. We will continue to focus on these products and services, as well as on expanding our maintenance service offerings and our EV charging station solutions.
Products and Services Our historical primary focus has been the sale of our LED lighting fixtures with integrated controls technology and related installation services. We will continue to focus on these products and services, as well as on expanding our maintenance service offerings and our EV charging station solutions.
We also offer our customers a variety of other LED fixtures to address their lighting and energy management needs, including fixtures designed for agribusinesses, parking lots, roadways, retail, mezzanine, outdoor applications and private label resale. Warranty Policy .
We also offer our customers a variety of other LED fixtures to address their lighting and energy management needs, including fixtures designed for agribusinesses, parking lots, retail, mezzanine, outdoor applications and private label resale. Warranty Policy .
On October 5, 2022, we acquired Voltrek, which is intended to leverage our project management and maintenance expertise into the rapidly growing EV sector. Our lighting products consist primarily of LED lighting fixtures, many of which include IoT enabled control systems provided by third parties. We believe the market for LED lighting products continues to grow.
On October 5, 2022, we acquired Voltrek, which was intended to leverage our project management and maintenance expertise into the rapidly growing EV sector. Our lighting products consist primarily of LED lighting fixtures, many of which include IoT enabled control systems provided by third parties. We believe the market for LED lighting products continues to grow.
Intellectual Property As of March 31, 2023, we had been issued over 100 United States patents and have applied for a number of additional United States patents. The patented and patent pending technologies cover various innovative elements of our products, including our HIF and LED fixtures.
Intellectual Property As of March 31, 2024, we had been issued over 100 United States patents and have applied for a number of additional United States patents. The patented and patent pending technologies cover various innovative elements of our products, including our HIF and LED fixtures.
Over the last three fiscal years, we have focused our development on additional LED products, resulting in our development and commercialization of several new suites of LED interior high bay products. We operate research and development lab and test facilities in our Jacksonville, Florida and Manitowoc, Wisconsin locations.
Over the last three fiscal years, we have focused on developing additional LED products, resulting in our development and commercialization of several new suites of LED interior high bay products. We operate a research and development lab and test facilities in our Jacksonville, Florida and Manitowoc, Wisconsin locations.
These efforts have included participating in national, regional and local trade organizations, exhibiting at trade shows, executing targeted direct mail campaigns, advertising in select publications, public relations campaigns, social media and other lead generation and brand-building initiatives. Competition The market for energy-efficient lighting products, EV charging solutions and maintenance services is fragmented.
These efforts have included participating in national, regional and local trade organizations, exhibiting at trade shows, executing targeted digital campaigns, advertising in select publications, public relations campaigns, social media and other lead generation and brand-building initiatives. Competition The market for energy-efficient lighting products, EV charging solutions and maintenance services is fragmented.
All of our employees must adhere to a code of conduct that sets standards for appropriate behavior and includes required annual training on preventing, identifying, reporting and stopping any type of unlawful discrimination. 15
All of our employees must adhere to a code of conduct that sets standards for appropriate behavior and includes required annual training on preventing, identifying, reporting and stopping any type of unlawful discrimination. 11
As a result, a change in the total mix of our sales among higher or lower gross margin products can cause our profitability to fluctuate from period to period. Our fiscal year ends on March 31. We refer to our current fiscal year which ended on March 31, 2023 as "fiscal 2023".
As a result, a change in the total mix of our sales among higher or lower gross margin products can cause our profitability to fluctuate from period to period. Our fiscal year ends on March 31. We refer to our current fiscal year which ends on March 31, 2025 as "fiscal 2025".
We are not including the information contained on our website as part of, or incorporating it by reference into, this report. Human Capital As of March 31, 2023, we had approximately 265 full-time employees. We also employ temporary employees in our manufacturing facility as demand requires.
We are not including the information contained on our website as part of, or incorporating it by reference into, this report. Human Capital As of March 31, 2024, we had approximately 260 full-time employees. We also employ temporary employees in our manufacturing facility as demand requires.
We generally ship our products directly to the end user. Research and Development Our research and development efforts are centered on developing new LED products and technologies and enhancing existing products. The products, technologies and services we are developing are focused on increasing end user energy efficiency and enhancing lighting output.
Research and Development Our research and development efforts are centered on developing new LED products and technologies and enhancing existing products. The products, technologies and services we are developing are focused on increasing end user energy efficiency and enhancing lighting output.
Lighting companies such as Acuity Brands, Inc., Signify Co., Cree, Inc., LSI Industries, Inc. and GE Current, a Daintree Company, are some of our main competitors within the commercial office, retail and industrial markets. We are also facing increased competition from manufacturers in low-cost countries.
Lighting companies such as Acuity Brands, Inc., Signify Co., Cree, Inc., LSI Industries, Inc. and Current Lighting Solutions, LLC, are some of our main competitors within the commercial office, retail and industrial markets. We are also facing increased competition from manufacturers in low-cost countries.
We also sell our lighting systems on a wholesale basis, principally to electrical distributors, electrical contractors and ESCOs to sell to their own customer bases. The gross margins of our products can vary significantly depending upon the types of products we sell, with gross margins typically ranging from 10% to 50%.
We also sell our lighting systems on a wholesale basis, principally to electrical distributors, electrical contractors and ESCOs which then resell to their own customers. The gross margins of our products can vary significantly depending upon the types of products we sell, with gross margins typically ranging from 10% to 50%.
Backlog Backlog represents the amount of revenue that we expect to realize in the future as a result of firm, committed orders. Our backlog as of March 31, 2023 and March 31, 2022 totaled $17.2 million and $10.1 million, respectively. We generally expect our backlog to be recognized as revenue within one year.
Backlog Backlog represents the amount of revenue that we expect to realize in the future as a result of firm, committed orders. Our backlog as of March 31, 2024 and March 31, 2023 totaled $22.0 million and $17.2 million, respectively. We generally expect our backlog to be recognized as revenue within one year.
Reportable Segments Reportable segments are components of an entity that have separate financial data that the entity's chief operating decision maker ("CODM") regularly reviews when allocating resources and assessing performance. Our CODM is our chief executive officer. Historically, we have had three reportable segments: Orion Services Group Division ("OSG"), Orion Distribution Services Division ("ODS"), and Orion U.S. Markets Division ("USM").
Reportable Segments Reportable segments are components of an entity that have separate financial data that the entity's chief operating decision maker ("CODM") regularly reviews when allocating resources and assessing performance. Our CODM is our chief executive officer. Previously, we had four reportable segments: Orion Services Group Segment, Orion Distribution Services Segment, Orion U.S.
Currently, a significant amount of our lighting products are manufactured at our leased production facility location in Manitowoc, Wisconsin, although as the LED market continues to evolve, we also source products and components from third parties in order to have versatility in our product development.
Currently, a significant amount of our lighting products are manufactured at our leased production facility location in Manitowoc, Wisconsin, although as the LED market continues to evolve, we are increasing the sourcing of products and components from third parties in order to expand our product offerings.
We refer to our most recently completed fiscal year, which ended on March 31, 2022, as “fiscal 2022”, and our prior fiscal year which ended on 6 March 31, 2021 as "fiscal 2021".
We refer to our most recently completed fiscal year, which ended on March 31, 2024, as “fiscal 2024”, and our prior fiscal year which ended on 6 March 31, 2023 as "fiscal 2023".
We have historically focused our marketing efforts on traditional direct advertising, as well as developing brand awareness through customer education and active participation in trade shows and energy management seminars.
We work cooperatively with our indirect channels through participation in national trade organizations and by providing product and sales training. We have historically focused our marketing efforts on traditional direct advertising, as well as developing brand awareness through customer education and active participation in trade shows and energy management seminars.
We believe there are significant growth opportunities in Voltrek’s existing east coast geographic market, as well as on a national basis. We plan to focus our growth plans on cross selling our new EV charging solutions to our historical market channels and customers.
We believe there are significant growth opportunities for Voltrek 7 both in its existing northeast geographic market, as well as on a national basis. We also plan to focus our growth plans on cross selling our new EV charging solutions to our historical market channels and customers and vice versa. Other Products.
Backlog does not include any amounts for contracted maintenance services. Manufacturing and Distribution We lease an approximately 266,000 square foot primary manufacturing and distribution facility located in Manitowoc, Wisconsin, where most of our products are manufactured.
Backlog does not include any amounts for contracted maintenance services. 9 Manufacturing and Distribution We lease an approximately 266,000 square foot primary manufacturing and distribution facility located in Manitowoc, Wisconsin, where most of our products are manufactured. We utilize both solar and wind power to support the energy requirements for our manufacturing facility, allowing us to reduce our carbon footprint.
In addition, we began to offer lighting and electrical maintenance services in fiscal 2021, which enable us to support a long-term business relationship with our customers. We completed the acquisition of Stay-Lite Lighting on January 1, 2022, which is intended to further expand our maintenance services capabilities.
We believe that providing these services enables us to support a long-term business relationship with our customers and results in an increase in our recurring revenue. We completed the acquisition of Stay-Lite Lighting on January 1, 2022, which is intended to further expand our maintenance services capabilities.
We differentiate ourselves from our competitors by offering very efficient light fixtures (measured in lumens per watt) coupled with our project management services to national account customers to retrofit their multiple locations. Our comprehensive services include initial site surveys and audits, utility incentive and government subsidy management, engineering design, and project management from delivery through to installation and controls integration.
We differentiate ourselves from our competitors by offering very efficient light fixtures (measured in lumens per watt) coupled with our project management services to national account customers to retrofit their multiple locations.
We utilize both solar and wind power to support the energy requirements for our manufacturing facility, allowing us to reduce our carbon footprint. 13 We generally maintain a significant supply of raw material and purchased and manufactured component inventory. We contract with transportation companies to ship our products and manage all aspects of distribution logistics.
We generally maintain a significant supply of raw material and purchased and manufactured component inventory. We contract with transportation companies to ship our products and manage all aspects of distribution logistics. We generally ship our products directly to the end user.
Our warranty policy generally provides for a limited five-year warranty on our LED products, although we do offer warranties ranging up to 10 years for certain LED products.
Our warranty policy generally provides for a limited five-year warranty on our LED products, although we do offer warranties ranging up to 10 years for certain LED products. Drivers, LED chips, EV charging stations and other electrical components are excluded from our standard warranty as they are covered by separate warranties offered by the original equipment manufacturers.
OSG provides engineering, design, lighting products and in many cases turnkey solutions for large national accounts, governments, municipalities, schools and other customers. Orion Distribution Services Division Our ODS segment focuses on selling lighting products through manufacturer representative agencies and a network of North American broadline and electrical distributors and contractors. Orion U.S.
Our lighting segment provides engineering, design, lighting products and in many cases turnkey solutions for large national accounts, governments, municipalities, schools and other customers. Our lighting segment sells mostly through direct sales and also through manufacturer representative agencies and to the wholesale contractor markets through ESCOs and contractors.
In fiscal 2023, one customer accounted for 16.2% of our total revenue. In fiscal 2022, that same customer accounted for 49.1% of our total revenue, and in fiscal 2021, this same customer accounted for 56.0% of our total revenue. In fiscal 2024, we expect that our customer concentration will continue at the approximate level experienced in fiscal 2023.
Our Customers We primarily target commercial, institutional and industrial customers who have warehousing, retail, manufacturing and office facilities. In fiscal 2024, one customer accounted for 25.2% of our total revenue. In fiscal 2023, that same customer accounted for 16.2% of our total revenue, and in fiscal 2022, this same customer accounted for 49.1% of our total revenue.
Ballasts, lamps, drivers, LED chips and other electrical components are excluded from our standard warranty as they are covered by separate warranties offered by the original equipment manufacturers. 11 We coordinate and process customer warranty inquiries and claims, including inquiries and claims relating to ballast and lamp components, through our customer service department.
We coordinate and process customer warranty inquiries and claims, including inquiries and claims relating to ballast and lamp components, through our customer service department.
See "Products and Services" below. In addition, we offer lighting maintenance services on both a preventative and reactive basis to the commercial and industrial verticals. In October, 2022, we acquired Voltrek LLC, which offers leading EV charging expertise and provides turnkey EV installation solutions with ongoing support to all commercial verticals. Environmental Benefits.
Our smart lighting controls provide both lighting control options and data intelligence capabilities for building managers to log, monitor and analyze use of space, energy savings, and provide physical security of space. In addition, in October 2022, we acquired Voltrek, which offers leading EV charging expertise and provides turnkey EV installation solutions with ongoing support to all commercial verticals.
The loss of a significant customer or the termination of a material volume of purchase orders (or the underlying agreements) could have a material adverse effect on our results of operations. 12 Sales and Marketing We sell our lighting products in one of three ways: (i) directly through our relationships with our national account partners or through Voltrek; (ii) indirectly through independent sales agencies and broadline North American distributors; and (iii) through ESCOs.
The loss of a significant customer or the termination of a material volume of purchase orders (or the underlying agreements) could have a material adverse effect on our results of operations.
With the acquisition of Voltrek on October 5, 2022, we added a fourth reporting segment, Orion Electric Vehicle Charging Division (“EV Division”). For financial results by reportable segment, please refer to Note 18 – Segment Data in our consolidated financial statements included in Item 8. of this Annual Report.
For financial results by reportable segment, please refer to Note 17 – Segment Data in our consolidated financial statements included in Item 8. of this Annual Report. Lighting Segment Our lighting segment develops and sells lighting products and provides construction and engineering services for our commercial lighting and energy management systems.
Our ODS segment focuses on developing and expanding customer relationships with independent manufacturer’s sales agents and broadline distributors. As of the end of fiscal 2023 we had 33 independent lighting agencies representing us in substantially all of North America expanding our reach with broadline distributors.
Sales and Marketing We sell our lighting products in one of three ways: (i) directly where Orion offers turnkey installation services, (ii) indirectly through independent sales agencies and broadline North American distributors; and (iii) through ESCOs. As of the end of fiscal 2024 we had 41 ESCO partners and independent lighting agencies representing us in substantially all of North America.
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Markets Division Our USM segment sells commercial lighting systems and energy management systems to the wholesale contractor markets. USM customers include ESCOs and contractors. Orion Electric Vehicle Charging Division Our EV Division offers leading electric vehicle charging expertise and provides EV turnkey installation solutions with ongoing support to all commercial verticals.
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Our comprehensive services include initial site surveys and audits, utility incentive and government subsidy management, engineering design, and project management from delivery through to installation and controls integration and commissioning. In addition, we began to offer lighting and electrical maintenance services in fiscal 2021.
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Our Market Opportunity We provide enterprise-grade LED lighting and energy management project solutions. We are primarily focused on providing commercial and industrial facilities lighting retrofit solutions in North America using solid-state LED technology. We believe the market for lighting products has shifted to LED lighting systems and continues to grow.
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Markets Segment and Orion Electric Vehicle Charging Segment (the “EV Segment”). Effective during the first quarter of fiscal 2024, we began to evaluate and report the business using three segments: Lighting Segment, Maintenance Segment and the EV Segment.
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We believe that LED lighting technology allows for better optical performance, significantly reduced energy consumption. Due to their size and flexibility in application, we also believe that LED lighting systems can address opportunities for retrofit applications that cannot be satisfied by other technologies.
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We third party source all of the EV charging stations and components that are installed by our EV segment. Products Our Lighting and Maintenance segments market fixtures for both interior and exterior use, including our LED high bay fixtures, LED troffer retrofits and smart lighting controls.
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Our lighting products deliver energy savings and efficiency gains to our commercial and industrial customers without compromising their quantity or quality of light.
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In fiscal 2025, we expect that our customer concentration will continue at the approximate level experienced in fiscal 2024.
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We estimate that our energy management systems reduce our customers’ legacy lighting-related electricity costs by approximately 50% or greater, while maintaining their quantity of light after the reduced wattage and improving overall lighting quality when replacing traditional fixtures.
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Our customers with legacy lighting systems typically realize a one to four-year payback period, and most often 18 – 24 months, from electricity cost savings generated by our lighting systems without considering utility incentives or government subsidies.
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Energy-efficient lighting systems are cost-effective and environmentally responsible solutions allowing end users to reduce operating expenses and their carbon footprint. 7 We serve government and private sector end-customers in the following primary markets: commercial office and retail, exterior area lighting and industrial applications. Commercial office and retail.
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Our commercial office and retail market includes commercial office buildings, retail store fronts, government offices, schools, hospitals and other buildings with traditional 10 to 12 foot ceiling heights. Industrial applications. Our market for industrial facilities includes manufacturing facilities, distribution and warehouse facilities, government buildings and agricultural buildings. These facilities typically contain "high-bay" lighting fixtures for ceiling heights of 20-60 feet.
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Commercial and industrial facilities in the United States employ a variety of lighting technologies, including HID, traditional fluorescents, LED and incandescent lighting fixtures. We estimate that approximately 25-30% of this market still utilizes inefficient high intensity discharge ("HID") lighting technologies. Our lighting systems typically replace less efficient HID, HIF fixtures, and earlier generation of LED fixtures. Exterior Area lighting.
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Our market for area lighting includes parking garages, surface lots, automobile dealerships and gas service stations. EV Charging Infrastructure: Our market for designing/engineering and installing EV charging systems (we do not make equipment) includes commercial and industrial customers including government.
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We focus largely on level 2 EV charging solutions for employee and guest charging of passenger vehicles and level 3 DC fast charge systems for fleet applications and high speed passenger vehicle charging. Maintenance Business: Our maintenance business services customers generally require third party lighting maintenance services. along with modest electrical maintenance service.
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We believe that utilities within the United States recognize the importance of energy efficiency as an economical means to manage capacity constraints and as a low-cost alternative when compared to the construction costs of building new power plants. Accordingly, many of these utilities are continually focused on demand reduction through energy efficiency.
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According to our research of individual state and utility programs, utilities design and fund programs that promote or deliver energy efficiency through legislation, regulation or voluntary action. Our product sales are not solely dependent upon these incentive programs, but we do believe that these incentive programs provide an important benefit as our customers evaluate their out-of-pocket cash investments.
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Our Solution Value Proposition. We estimate our LED lighting systems generally reduce lighting-related electricity usage and costs by approximately 50% or greater, compared to legacy fixtures, while retaining the quantity of light, improving overall lighting quality and helping customers reduce their carbon footprint. Multi-Facility Roll-Out Capability.
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We offer our customers a single source, turnkey solution for project implementation in which we manage and maintain responsibility for entire multi-facility rollouts of our energy management solutions across North American commercial and industrial facility portfolios. This capability allows us to offer our customers an orderly, timely and scheduled process for recognizing energy reductions and cost savings.
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Rapid Payback Period Retrofit Lighting. In most lighting retrofit projects where we replace HID and HIF fixtures, our customers typically realize a one to four year, but most often 18 – 24 months, payback period on our lighting systems.
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These returns are achieved without considering utility incentives or government subsidies (although subsidies and incentives are continually being made available to our customers in connection with the installation of our systems that further shorten payback periods). Easy Installation, Implementation and Maintenance.
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Most of our fixtures are designed with a lightweight construction and modular plug-and-play architecture that allows for fast and easy installation, facilitates maintenance, and integration of other components of our energy management system.
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Our office LED Troffer Door Retrofit ( " LDR TM ") products are designed to allow for fast and easy installation without disrupting the ceiling space or the office workspace. We believe our system’s design reduces installation time and 8 expense compared to other lighting solutions, which further improves our customers’ return on investment.
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We also believe that our use of standard components reduces our customers’ ongoing maintenance costs. Expanded Product Offerings. We are committed to continuing to develop LED product offerings in all of the markets we serve. Our third generation of ISON® class of LED interior fixture delivers a market leading up to 214 lumens per watt.
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This advancement means our customers can get more light with less energy, and sometimes fewer fixtures, than with any other product on the market. We have also recently launched a variety of new products, features and functionality targeting healthcare, food service, high and low temperature environments and other market segments.
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Our lighting products also may be configured to include IoT enabled control systems. In fiscal 2022, we introduced a product range under the brand PureMotion. These products circulate air for enhanced airflow, temperature comfort and energy savings. In addition, the PureMotion UVC products sanitize air in a safe UVC chamber that eliminates various airborne viruses, bacteria, mold and fungi.
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By allowing for the permanent reduction of electricity consumption, we believe our energy management systems significantly reduce indirect CO2 emissions that are a negative by-product of energy generation which help enable our customers to achieve their sustainability, energy savings and carbon footprint reduction goals. Our Competitive Strengths Compelling Value Proposition.
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By permanently reducing lighting-related electricity usage, our systems help enable our customers to achieve their sustainability, energy savings and carbon footprint reduction goals without compromising quantity and quality of light in their facilities. As a result, our products offer our customers a rapid return on their investment, without relying on government subsidies or utility incentives.
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We also help our customers with their mobility infrastructure needs supporting the transition to passenger and fleet EVs. Comprehensive Project Management. We offer our customers a single source solution whereby we manage and are responsible for an entire retrofit lighting project, from initial site surveys and energy audits through to installation and controls integration and subsequent maintenance.
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Our ability to offer such comprehensive turnkey project management services, coupled with best-in-class customer service, allows us to deliver energy reductions and cost savings to our customers in timely, orderly and planned multi-facility rollouts nationwide. We believe one of our competitive advantages is our ability to deliver full turnkey LED lighting project capabilities.
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The success of this approach has resulted in what we call a “Customer for Life” relationship with customers that encourages additional projects and maintenance services. Few LED lighting providers are organized to serve every step of a custom retrofit project in a comprehensive, non-disruptive and timely fashion, from custom fixture design and initial site surveys to final installations.
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Incrementally, we are also able to help customers deploy state-of-the-art IoT control systems that provide even greater long-term value from their lighting system investments. Large and Growing Customer Base. We have developed a large and growing national customer base and have installed our products in commercial and industrial facilities across North America.
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We believe that the willingness of our blue-chip customers to install our products across multiple facilities represents a significant endorsement of our value proposition, which in turn helps us sell our energy management systems to new customers. Innovative Technology. We have developed a portfolio of United States patents primarily covering various elements of our products.
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We believe these innovations allow our products to produce more light output per unit of input energy compared to our competition. We also have patents pending that primarily cover various elements of our newly developed LED products and certain business methods.
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To complement our innovative energy management products, our integrated energy management services provide our customers with a turnkey solution either at a single facility or across their North American facility footprints. Our demonstrated ability to innovate provides us with significant competitive advantages.
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Our lighting products offer significantly more light output as measured in foot-candles of light delivered per watt of electricity consumed when compared to HID or traditional fluorescent fixtures.
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Beyond the benefits of our lighting fixtures, we believe that there is also an opportunity to utilize our system platform as a “connected ceiling” or “smart ceiling”, or a framework or network that can support the installation and integration of other solutions on a digital 9 platform.
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This “smart ceiling” can be integrated with other technologies to collect data and manage assets and resources more efficiently.
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Our “Industrial Internet of Things”, or IoT, enabled devices not only contain energy management control functions, but also have the ability to collect facility usage and traffic data as well as collect data from other facility mechanical systems, providing our customers with a path to digitization for their business operations.
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Our percentage of systems utilizing IoT enabled devices has grown significantly over the past few years and we expect this trend to continue. Expanded Sales and Distribution Network. In addition to selling directly to national accounts, electrical contractors and ESCOs, we sell our lighting products and services to electrical distributors through a North American network of independent lighting agencies.
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As of the end of fiscal 2023, we had 33 independent lighting agencies representing us in substantially all of North America. We intend to continue to selectively evaluate our sales network in the future, with a focus on geographic regions where we do not currently have a strong sales presence.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

71 edited+7 added−36 removed116 unchanged
Biggest changeThe reduction of revenue from our most significant customer over the past three fiscal years has had, and the potential future loss of other significant customers or a major customer would likely have, a materially adverse effect on our results of operations, financial condition and cash flows. • Our ability to replace the substantially reduced revenue from our prior most significant customer, regain and sustain our profitability and achieve our desired revenue and profitability goals depends on our ability to effectively and timely execute on our key strategic initiatives. • We may not realize the anticipated benefits of our recent acquisitions of Stay-Lite Lighting and Voltrek, and the integration of Stay-Lite Lighting and Voltrek may disrupt our business and management, which could adversely affect our business, financial condition or results of operations • Our products use components and raw materials that may be subject to price fluctuations, shortages or interruptions of supply. • Our ability to balance customer demand and production capacity and increased difficulty in obtaining permanent employee staffing could negatively impact our business. • We increasingly rely on third-party manufacturers for the manufacture and development of our products and product components. • Macroeconomic pressures in the markets in which we operate or anticipate operating in the future may adversely affect our financial results. • Our existing liquidity and capital resources may not be sufficient to allow us to effectively pursue our evolving strategies, complete potential acquisitions or otherwise fund or sustain growth initiatives. • Adverse conditions in the global economy have negatively impacted, and could in the future negatively impact, our customers, suppliers and business. • As we evolve our business strategy to increase our focus on new product and service offerings, the nature of our business may be significantly changed, or transformed. • Our continued emphasis on indirect distribution channels to sell our products and services to supplement our direct distribution channels has had limited success to date. • The success of our LED lighting retrofit solutions depends, in part, on our ability to claim market share away from our competitors. 16 • Government tariffs and other actions may adversely affect our business. • The reduction or elimination of investments in, or incentives to adopt, LED lighting or the elimination of, or changes in, policies, incentives or rebates in certain states or countries that encourage the use of LEDs over some traditional lighting technologies could cause the growth in demand for our products to slow.
Biggest changeIt is generally difficult to predict the timing of projects that will be awarded, which can impact our ability to achieve our expected financial results. • Our continued emphasis on indirect distribution channels to sell our products and services to supplement our direct distribution channels has had limited success to date. • Goodwill and other intangibles acquired through acquisitions could be impacted by net losses and low levels of liquidity, thus resulting in a valuation impairment. • Our products use components and raw materials that may be subject to price fluctuations, shortages or interruptions of supply. • Our ability to balance customer demand and production capacity and increased difficulty in obtaining permanent employee staffing could negatively impact our business. • We increasingly rely on third-party manufacturers for the manufacture and development of our products and product components. • We are subject to the risk of a cybersecurity breach. • Macroeconomic pressures in the markets in which we operate or anticipate operating in the future may adversely affect our financial results. • Adverse conditions in the global economy have negatively impacted, and could in the future negatively impact, our customers, suppliers and business. • The success of our LED lighting retrofit solutions depends, in part, on our ability to claim market share away from our competitors. • Government tariffs and other actions may adversely affect our business. 12 • The reduction or elimination of investments in, or incentives to adopt, LED lighting or the elimination of, or changes in, policies, incentives or rebates in certain states or countries that encourage the use of LEDs over some traditional lighting technologies could cause the growth in demand for our products to slow.
Failure by such contractors to remove or dispose of the components containing these hazardous materials in a safe, effective and lawful manner could give rise to liability for us, or could expose our workers or other persons to these hazardous materials, which could result in claims against us which may have a material adverse effect on our results of operations, financial condition and cash flows.
Failure by such contractors to remove or dispose of the components containing these hazardous materials in a safe, effective and lawful manner could give rise to liability for us, or could expose our workers or other persons 22 to these hazardous materials, which could result in claims against us which may have a material adverse effect on our results of operations, financial condition and cash flows.
Our efforts to mitigate the impact of added costs resulting from these tariffs include a variety of activities, such as sourcing from non-tariff impacted countries and raising prices. If we are unable to successfully mitigate the impacts of these tariffs and other trade policies, our results of operations, financial condition and cash flows may be materially adversely affected.
Our efforts to mitigate the impact of added costs resulting from these tariffs include a variety of activities, such as sourcing from non-tariff impacted countries and raising 18 prices. If we are unable to successfully mitigate the impacts of these tariffs and other trade policies, our results of operations, financial condition and cash flows may be materially adversely affected.
Particularly because our products often incorporate new technologies or designs, we cannot predict whether or not product liability claims will be brought against us in the future or result in negative publicity about our business or adversely affect our customer relations. Moreover, we may not have adequate 29 resources in the event of a successful claim against us.
Particularly because our products often incorporate new technologies or designs, we cannot predict whether or not product liability claims will be brought against us in the future or result in negative publicity about our business or adversely affect our customer relations. Moreover, we may not have adequate resources in the event of a successful claim against us.
The operation of our manufacturing facility entails risks in these areas and there can be no assurance that we will not incur material costs or liabilities in the future that could adversely affect our results of operations, financial condition and cash flows. 30 Risks Related to Our Common Stock We expect our quarterly revenue and operating results to fluctuate.
The operation of our manufacturing facility entails risks in these areas and there can be no assurance that we will not incur material costs or liabilities in the future that could adversely affect our results of operations, financial condition and cash flows. Risks Related to Our Common Stock We expect our quarterly revenue and operating results to fluctuate.
If we are unable to attract and retain sufficient talent, we may be unable to broaden our customer base, which will adversely affect our results of operations, financial condition and cash flows. 28 Legal, Regulatory and Compliance Risks Our retrofitting process frequently involves responsibility for the removal and disposal of components containing hazardous materials.
If we are unable to attract and retain sufficient talent, we may be unable to broaden our customer base, which will adversely affect our results of operations, financial condition and cash flows. Legal, Regulatory and Compliance Risks Our retrofitting process frequently involves responsibility for the removal and disposal of components containing hazardous materials.
Our failure to obtain or maintain adequate protection of our intellectual property rights for any reason could have a material adverse effect on our results of operations, financial condition and cash flows. We own United States patents and patent applications for some of our products, systems, business methods and technologies.
Our failure to obtain or maintain adequate protection of 23 our intellectual property rights for any reason could have a material adverse effect on our results of operations, financial condition and cash flows. We own United States patents and patent applications for some of our products, systems, business methods and technologies.
If we do identify suitable candidates, we may not be able to negotiate or consummate such acquisitions on favorable terms or at all. Any acquisitions we complete may not achieve their initially intended results and benefits, and may be viewed negatively by investors and other stakeholders.
If we do identify suitable candidates, we may not be able to negotiate or consummate such acquisitions on favorable 20 terms or at all. Any acquisitions we complete may not achieve their initially intended results and benefits, and may be viewed negatively by investors and other stakeholders.
We may be unable to successfully develop and market new products or services that keep pace with technological or industry changes, differentiate ourselves from our competition, satisfy changes in customer demands or comply with present or emerging government and 27 industry regulations and technology standards.
We may be unable to successfully develop and market new products or services that keep pace with technological or industry changes, differentiate ourselves from our competition, satisfy changes in customer demands or comply with present or emerging government and industry regulations and technology standards.
Further, the risk of a security breach or disruption, particularly through cyber attacks, or cyber intrusion, including by computer hackers, foreign governments, and cyber 19 terrorists, has generally increased as cyber attacks have become more prevalent and harder to detect and fight against.
Further, the risk of a security breach or disruption, particularly through cyber attacks, or cyber intrusion, including by computer hackers, foreign governments, and cyber terrorists, has generally increased as cyber attacks have become more prevalent and harder to detect and fight against.
We experienced a net loss in fiscal 2023, and prior to fiscal 2020, we experienced net losses and negative cash flows for the prior five fiscal years. There is no guarantee that we will be able to regain or sustain profitability and positive cash flows in the future.
We experienced a net loss in fiscal 2024 and 2023, and prior to fiscal 2020 we experienced net losses and negative cash flows for the prior five fiscal years. There is no guarantee that we will be able to regain or sustain profitability and positive cash flows in the future.
In addition, our ability to attract talented new employees, particularly in our sales group and our innovation and engineering team, is also critical to our success. We also depend on our distribution channels and network of manufacturer sales representative agencies.
In addition, our ability to attract talented new employees, particularly in our sales group and our 15 innovation and engineering team, is also critical to our success. We also depend on our distribution channels and network of manufacturer sales representative agencies.
The reduction or elimination of investments in, or incentives to adopt, LED lighting or the elimination of, or changes in, policies, incentives or rebates in certain states or countries that encourage the use of LEDs over some traditional lighting technologies could cause the growth in demand for our products to slow, which could have a material adverse affect on our results of operations, financial condition and cash flows.
The reduction or elimination of investments in, or incentives to adopt, LED lighting or the elimination of, or changes in, policies, incentives or rebates in certain states or countries that encourage the use of LEDs over some traditional lighting technologies could cause the growth in demand for our products to slow, which could have a material adverse effect on our results of operations, financial condition and cash flows.
Any of these competitive factors could make it more difficult for us to attract and retain customers, or require us to lower our average selling prices in order to remain competitive, any of which could have a material adverse effect on our results of operations, financial condition and cash flows.
These competitive factors have, and may continue to make it more difficult for us to attract and retain customers, or require us to lower our average selling prices in order to remain competitive, any of which could have a material adverse effect on our results of operations, financial condition and cash flows.
The revenue growth of our EV Division ultimately depends on consumers’ willingness to adopt electric vehicles in a market which is still in its early stages. The growth of our EV Division is highly dependent upon the adoption by consumers of EVs, and we are subject to a risk of any reduced demand for EVs.
The revenue growth of our EV Segment ultimately depends on consumers’ willingness to adopt electric vehicles in a market which is still in its early stages. The growth of our EV Segment is highly dependent upon the adoption by consumers of EVs, and we are subject to a risk of any reduced demand for EVs.
Our results for any particular quarter are not an indication of our future performance. Our revenue and operating results may fall below the expectations of market analysts or investors in some future quarter or quarters. Our failure to meet these expectations could cause the market price of our common stock to decline substantially.
Our results for any particular quarter are not an indication of our future performance. Our revenue and operating results may fall below the expectations of market analysts or investors in some future quarter or quarters. Our failure to meet these expectations could cause the market price of our common stock to further decline.
If securities or industry analysts do not continue to publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline. The trading market for our common stock will continue to depend, in part, on the research reports that securities or industry analysts publish about us and our peer group companies.
If securities or industry analysts do not continue to publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline. The trading market for our common stock may continue to depend, in part, on the research reports that securities or industry analysts publish about us and our peer group companies.
The new United States administration may pursue a wide range of monetary, regulatory and trade policies, including the continued imposition of the previous United States administration’s tariffs on certain imports. Certain sourced finished products and certain of the components used in our products are impacted by tariffs imposed on China imports.
The current United States administration may pursue a wide range of monetary, regulatory and trade policies, including the continued imposition of the previous United States administration’s tariffs on certain imports. Certain sourced finished products and certain of the components used in our products are impacted by tariffs imposed on China imports.
Factors affecting the availability to us of additional equity capital or debt financing on acceptable terms and conditions, or in sufficient amounts, include: • Our operating loss in fiscal 2023; • Our history of operating losses prior to our fiscal 2020; • Our current and future financial results and condition; • Our limited collateral availability; • Our current customer concentration; • The market’s, investors’ and lenders' view of our company, industry and products; • The perception in the equity and debt markets of our ability to execute and sustain our business plan or achieve our operating results expectations; and • The price, volatility and trading volume and history of our common stock.
Factors affecting the availability to us of additional equity capital or debt financing on acceptable terms and conditions, or in sufficient amounts, include: • Our recent operating losses; 17 • Our history of operating losses prior to our fiscal 2020; • Our current and future financial results and condition; • Our limited collateral availability; • Our current customer concentration; • The market’s, investors’ and lenders' view of our company, industry and products; • The perception in the equity and debt markets of our ability to execute and sustain our business plan or achieve our operating results expectations; and • The price, volatility and trading volume and history of our common stock.
If the market for EVs does not gain broader market acceptance or develops slower than we expect, our 21 business, prospects, financial condition and operating results will be harmed.
If the market for EVs does not gain broader market acceptance or develops slower than we expect, our 16 business, prospects, financial condition and operating results will be harmed.
Our ability to replace the substantially reduced revenues from our prior most significant customer, regain profitability and achieve our desired revenue and profitability goals depends on how effectively and timely we execute on our following key strategic initiatives: • executing and marketing our turnkey LED retrofit capabilities to large national account customers; • continuing our product innovation; • leveraging our smart lighting systems to support IoT applications; • developing our maintenance service offerings; • supporting the success of our ESCO and distribution sales channels; and • cross selling our EV charging solutions to our historical sales channels and customers.
Our ability to replace the substantially reduced revenues from our most significant customer, regain profitability and achieve our desired revenue and profitability goals depends on how effectively and timely we execute on our following key strategic initiatives: • executing and marketing our turnkey LED retrofit capabilities to large national account customers; • continuing our product innovation; • leveraging our smart lighting systems to support IoT applications; • expanding our EV charging business, including increasing cross selling our EV charging solutions to our historical sales channels and customers; • further developing our maintenance service offerings; and • supporting the success of our ESCO and distribution sales channels.
We experienced a net loss in fiscal 2023 and, until fiscal 2020, we had a history of losses and negative cash flow. We may be unable to regain sustained profitability and positive cash flows in the future.
We experienced a net loss in fiscal 2024 and 2023 and, prior to fiscal 2020, we had a history of losses and negative cash flow. We may be unable to regain sustained profitability and positive cash flows in the future.
If we become involved in this type of litigation, regardless of the outcome, we could incur substantial legal costs, management’s attention could be diverted from the operation of our business, and our reputation could be damaged, which could adversely affect our results of operations, financial condition and cash flows.
If we become involved in this type of litigation or are de-listed, regardless of the outcome, we could incur substantial legal costs, management’s attention could be diverted from the operation of our business, and our reputation could be damaged, which could adversely affect our results of operations, financial condition and cash flows.
In addition, acquisitions involve numerous other risks, including: • the failure of the acquired business to achieve its revenue or profit forecasts; • the business culture of the acquired business may not match well with our culture; • our business strategies and focus may change in ways that adversely affect our results of operations; • technological and product synergies, economies of scale and cost reductions from the acquisition may not occur as expected; • unforeseen expenses, delays or conditions may result from the acquisition, including required regulatory approvals or consents; • potential changes may result to our management team and/or board of directors; • we may acquire or assume unexpected liabilities or be subject to unexpected penalties or other enforcement actions or legal consequences; • faulty assumptions may be made regarding the macroeconomic environment or the integration process that form a basis for the acquisition; • unforeseen difficulties, delays and costs may arise in integrating the acquired business’s operations, processes and systems; • higher than expected investments may be required to implement necessary compliance processes and related systems, including information technology systems, accounting systems and internal controls over financial reporting; • we may fail to retain, motivate and integrate key management and other employees of the acquired business; • higher than expected costs may arise due to unforeseen changes in tax, trade, environmental, labor, safety, payroll or pension policies in any jurisdiction in which the acquired business conducts its operations; • we may adversely impact our sales channels and our sales channel partners; and • we may experience problems in retaining customers and integrating customer bases. 26 Many of these factors will be outside of our control and any one of them could result in increased costs and reduced profitability, decreases in the amount of expected revenues and diversion of our management’s time and attention.
In addition, acquisitions involve numerous other risks, including: • the failure of the acquired business to achieve its revenue or profit forecasts; • the business culture of the acquired business may not match well with our culture; • our business strategies and focus may change in ways that adversely affect our results of operations; • technological and product synergies, economies of scale and cost reductions from the acquisition may not occur as expected; • unforeseen expenses, delays or conditions may result from the acquisition, including required regulatory approvals or consents; • potential changes may result to our management team and/or board of directors; • we may acquire or assume unexpected liabilities or be subject to unexpected penalties or other enforcement actions or legal consequences; • faulty assumptions may be made regarding the macroeconomic environment or the integration process that form a basis for the acquisition; • unforeseen difficulties, delays and costs may arise in integrating the acquired business’s operations, processes and systems; • higher than expected investments may be required to implement necessary compliance processes and related systems, including information technology systems, accounting systems and internal controls over financial reporting; • we may fail to retain, motivate and integrate key management and other employees of the acquired business; • higher than expected costs may arise due to unforeseen changes in tax, trade, environmental, labor, safety, payroll or pension policies in any jurisdiction in which the acquired business conducts its operations; • we may adversely impact our sales channels and our sales channel partners; and • we may experience problems in retaining customers and integrating customer bases.
For example, the adoption of new tariffs by the United States administration or by other countries and the ongoing impact of COVID-19 in China could continue to adversely affect our profitability and availability of raw materials and components, as there 18 can be no assurance that future price increases will be successfully passed through to customers or that we will be able to find alternative suppliers.
For example, the adoption of new tariffs by the United States administration or by other countries could continue to adversely affect our profitability and availability of raw materials and components, as there can be no assurance that future price increases will be successfully passed through to customers or that we will be able to find alternative suppliers.
Furthermore, the average selling price of our products has been, and may be further, negatively impacted by market over-supply conditions, product feature cannibalization by competitors or component providers, low-cost non-traditional sales methods by new market entrants, and comparison of our retrofit fixture products with replacement lamp equivalents.
Furthermore, the average selling price of our products has been, and may be further, negatively impacted by the re-normalization of the supply chain and reduction in import costs, market over-supply conditions, product feature cannibalization by competitors or component providers, low-cost non-traditional sales methods by new market entrants, and comparison of our retrofit fixture products with replacement lamp equivalents.
If we fail to meet the expectations of market analysts or investors, the market price of our common stock could decline substantially, and we could become subject to securities litigation. Our quarterly revenue and operating results have fluctuated in the past and will likely vary from quarter to quarter in the future.
If we fail to meet the expectations of market analysts or investors, the market price of our common stock could further decline, and we could become subject to securities litigation or a potential de-listing from NASDAQ. Our quarterly revenue and operating results have fluctuated in the past and will likely vary from quarter to quarter in the future.
The reduction of revenue from our most significant customer over the past three fiscal years has had, and the potential future loss of other significant customers or a major customer would likely have, a materially adverse effect on our results of operations, financial condition and cash flows. In fiscal 2023, one customer accounted for 16.2% of our total revenue.
The reduction of revenue from our most significant customer over the past three fiscal years has had, and the potential future loss of other significant customers or a major customer would likely have, a materially adverse effect on our results of operations, financial condition and cash flows.
Our future growth and profitability are tied in part to our ability to successfully bring to market new and innovative product and service offerings. We have begun to evolve our business strategy to focus on further expanding the nature and scope of our products and services offered to our customers.
Our future growth and profitability are tied in part to our ability to successfully bring to market new and innovative product and service offerings. Our business strategy is focused on further expanding the nature and scope of our products and services offered to our customers.
We continue to attempt to replace this reduced revenue by diversifying our customer base and expanding our reach to national accounts, ESCOs, the agent driven distribution channel, lighting maintenance customers and the EV market, there is no assurance we will be successful in replacing this reduced revenue.
While this customer continues to be a substantial source of business for us, we continue to attempt to replace this reduced revenue by diversifying our customer base and expanding our reach to national accounts, ESCOs, the agent driven distribution channel, lighting maintenance customers and the EV market, there is no assurance we will be successful in replacing this reduced revenue.
Internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of financial reporting for external purposes in accordance with accounting principles generally accepted in the United States.
Our management is responsible for establishing and maintaining effective internal control over financial reporting. Internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of financial reporting for external purposes in accordance with accounting principles generally accepted in the United States.
If one or more of these analysts ceases coverage of our company or fails to publish reports on us regularly, demand for our stock could decrease, which could cause our stock price and trading volume to decline. The price of our common stock has been, and may continue to be, volatile.
If one or more of these analysts ceases coverage of our company or fails to publish reports on us regularly, demand for our stock could decrease, which could cause our stock price and trading volume to decline.
Geopolitical issues around the world can impact macroeconomic conditions in where we operate and where we anticipate operating in the future and could have a material adverse impact on our financial results.
Macroeconomic pressures in the markets in which we operate or anticipate operating in the future may adversely affect our financial results. Geopolitical issues around the world can impact macroeconomic conditions in where we operate and where we anticipate operating in the future and could have a material adverse impact on our financial results.
Our inability to obtain the equity capital or debt financing necessary to pursue our evolving growth strategy could force us to scale back our growth initiatives or abandon potential acquisitions. If we are unable to pursue our evolving growth strategy and growth initiatives, our results of operations, financial condition and cash flows could be materially adversely affected.
Our inability to obtain the equity capital or debt financing necessary to fund our operations could force us to scale back our growth initiatives or take action to restructure or reduce our operations. If we are unable to pursue our growth initiatives, our results of operations, financial condition and cash flows could be materially adversely affected.
For example, the ultimate impact of the conflict in Ukraine on fuel prices, inflation, the global supply chain and other macroeconomic conditions is unknown and could materially adversely affect global economic growth, disrupting discretionary spending habits and generally decreasing demand for our products and services, including our planned retrofit project in Germany in fiscal 2024.
For example, the ultimate impact of the conflicts in Ukraine and the Middle East on fuel prices, inflation, the global supply chain and other macroeconomic conditions is unknown and could materially adversely affect global economic growth, disrupting discretionary spending habits and generally decreasing demand for our products and services.
Financial Risks Our existing liquidity and capital resources may not be sufficient to allow us to effectively pursue our evolving growth strategies, complete potential acquisitions or otherwise fund or sustain our growth initiatives.
Financial Risks Our existing liquidity and capital resources may not be sufficient to allow us to fund or sustain our growth initiatives. Our existing liquidity and capital resources may not be sufficient to allow us to effectively fund or sustain our growth initiatives.
We cannot predict the size or the effect, if any, that future sales of shares of our common stock by us or our executive officers and directors, or the perception of such sales, will have on the market price of our common stock.
We cannot predict the size or the effect, if any, that future sales of shares of our common stock by us or our executive officers and directors, or the perception of such sales, will have on the market price of our common stock. 25 We are not currently paying dividends on our common stock and will likely continue not paying dividends for the foreseeable future.
Any future determination to pay dividends will be at the discretion of our board of directors and will depend on our financial condition, results of operations, capital requirements, contractual restrictions and other factors that our board of directors deems relevant.
In addition, the terms of our existing revolving credit agreement restrict the payment of cash dividends on our common stock. Any future determination to pay dividends will be at the discretion of our board of directors and will depend on our financial condition, results of operations, capital requirements, contractual restrictions and other factors that our board of directors deems relevant.
We currently intend to retain all available funds and any future earnings to fund the continued development and expansion of our business, and we do not anticipate paying any cash dividends on our common stock in the foreseeable future. In addition, the terms of our existing revolving credit agreement restrict the payment of cash dividends on our common stock.
We have never paid or declared any cash dividends on our common stock. We currently intend to retain all available funds and any future earnings to fund the continued development and expansion of our business, and we do not anticipate paying any cash dividends on our common stock in the foreseeable future.
Our business and results of operations will be adversely affected to the extent these adverse economic conditions affect our customers’ purchasing decisions. 24 We are subject to financial and operating covenants in our credit agreement and any failure to comply with such covenants, or obtain waivers in the event of non-compliance, could limit our borrowing availability under the credit agreement, resulting in our being unable to borrow under our credit agreement and materially adversely impact our liquidity.
We are subject to financial and operating covenants in our credit agreement and any failure to comply with such covenants, or obtain waivers in the event of non-compliance, could limit our borrowing availability under the credit agreement, resulting in our being unable to borrow under our credit agreement and materially adversely impact our liquidity.
We and our executive officers and directors may from time to time sell shares of our common stock in the public market or otherwise.
The market price of our common stock could be adversely affected by future sales of our common stock in the public market by us or our executive officers and directors. We and our executive officers and directors may from time to time sell shares of our common stock in the public market or otherwise.
We increasingly rely on third-party manufacturers for the manufacture and development of our products and product components. We have increased our utilization of third-party manufacturers for the manufacture and development of our products and product components.
We have increased our utilization of third-party manufacturers for the manufacture and development of our products and product components, some of which are located overseas.
Our products use components and raw materials that may be subject to price fluctuations, shortages or interruptions of supply, including semiconductor chips. If we are unable to maintain supply sources of our components and raw materials or if our sources fail to satisfy our supply requirements, we may lose sales and experience increased component costs.
If we are unable to maintain supply sources of our components and raw materials or if our sources fail to satisfy our supply requirements, we may lose sales and experience increased component costs.
The market price of our common stock could be impacted due to a variety of factors, including: • actual or anticipated fluctuations in our operating results or our competitors’ operating results; • actual or anticipated changes in the growth rate of the general LED lighting industry, our growth rates or our competitors’ growth rates; • conditions in the financial markets in general or changes in general economic conditions, including government efforts to mitigate the severe economic downturn resulting from the COVID-19 pandemic; • novel and unforeseen market forces and trading strategies, such as the massive short squeeze rally caused by retail investors and social media activity affecting companies such as GameStop Corp.; • actual or anticipated changes in governmental regulation, including taxation and tariff policies; • interest rate or currency exchange rate fluctuations; • our ability to forecast or report accurate financial results; and • changes in stock market analyst recommendations regarding our common stock, other comparable companies or our industry generally.
The market price of our common stock could be impacted due to a variety of factors, including: • actual or anticipated fluctuations in our operating results or our competitors’ operating results; • our ability to achieve our analyst's results of operations expectations; • actual or anticipated changes in the growth rate of the general LED lighting industry, our growth rates or our competitors’ growth rates; • conditions in the financial markets in general or changes in general economic conditions; • novel and unforeseen market forces and trading strategies; • actual or anticipated changes in governmental regulation, including taxation and tariff policies; • interest rate or currency exchange rate fluctuations; • our ability to forecast or report accurate financial results; and • changes in stock market analyst recommendations regarding our common stock, other comparable companies or our industry generally.
If our information technology systems security measures are breached or fail, our products may be perceived as not being secure, customers may curtail or stop buying our products, we may incur significant legal and financial exposure, and our results of operations, financial condition and cash flows could be materially adversely affected.
Our ability to achieve our budgeted fiscal 2025 revenue expectations, and related public fiscal 2025 revenue guidance, will have a significant impact on our cash flow, financial condition and stock price. 13 If our information technology systems security measures are breached or fail, our products may be perceived as not being secure, customers may curtail or stop buying our products, we may incur significant legal and financial exposure, and our results of operations, financial condition and cash flows could be materially adversely affected.
Our net operating loss carry-forwards provide a future benefit only if we regain sustained profitability and may be subject to limitation based upon ownership changes. 23 We have significant federal net operating loss carry-forwards and state net operating loss carry-forwards. If we are unable to regain sustained profitability, we will not be able to fully utilize these tax benefits.
We have significant federal net operating loss carry-forwards and state net operating loss carry-forwards. If we are unable to regain sustained profitability, we will not be able to fully utilize these tax benefits.
In addition, due to one or more of the foregoing factors in one or more future quarters, our results of operations may fall below the expectations of securities analysts and investors.
In addition, due to one or more of the foregoing factors in one or more future quarters, our results of operations may fall below the expectations of securities analysts and investors. In the event any of the foregoing occur, the market price of our common stock could be highly volatile and may materially decline.
Because of its inherent limitations, internal control over financial reporting is not intended to provide absolute assurance that we would prevent or detect a misstatement of our consolidated financial statements or fraud. As of March 31, 2023, our Chief Executive Officer and Chief Financial Officer concluded that our internal controls for fiscal 2023 were designed and operating effectively.
Because of its inherent limitations, internal control over financial reporting is not intended to provide absolute assurance that we would prevent or detect a misstatement of our consolidated financial statements or fraud.
Any interruption of our information technology systems could result in decreased revenue, increased expenses, increased capital expenditures, customer dissatisfaction and potential lawsuits, any of which could have a material adverse effect on our results of operations, financial condition and cash flows. The success of our business depends upon market acceptance of our energy management products and services.
Any interruption of our information technology systems could result in decreased revenue, increased expenses, increased capital expenditures, customer dissatisfaction and potential lawsuits, any of which could have a material adverse effect on our results of operations, financial condition and cash flows. We increasingly rely on third-party manufacturers for the manufacture and development of our products and product components.
Finally, in connection with our historical primary focus on selling our LED products, we expect our results of operations to continue to fluctuate from quarter to quarter to the extent that customers delay purchasing decisions as they evaluate their return on investment from purchasing LED products compared to alternative lighting solutions, the pricing of LED products continues to fall and LED products continue to gain more widespread customer acceptance.
Moreover, if new sources of lighting or lighting-based solutions are developed, our current products and technologies could become less competitive or obsolete, which could result in reduced revenue, reduced earnings or increased losses, and/or inventory and other impairment charges. 21 Finally, in connection with our historical primary focus on selling our LED products, we expect our results of operations to continue to fluctuate from quarter to quarter to the extent that customers delay purchasing decisions as they evaluate their return on investment from purchasing LED products compared to alternative lighting solutions, the pricing of LED products continues to fall and LED products continue to gain more widespread customer acceptance.
Failure to implement our acquisition strategy, including successfully integrating acquired businesses, could have a material adverse effect on our results of operations, financial condition and cash flows. Our continued emphasis on indirect distribution channels to sell our products and services to supplement our direct distribution channels has had limited success to date.
Failure to implement our acquisition strategy, including successfully integrating acquired businesses, could have a material adverse effect on our results of operations, financial condition and cash flows.
Our expansion efforts also involve utilizing control sensor technology to collect data and assisting customers in the digitization of this data, along with other potential services. We have experienced recent success offering our comprehensive energy project management services to national account customers to retrofit their multiple locations.
Our expansion efforts also involve integrating control sensor technology to help customers collect and digitize data for monitoring and decision making purposes. We have experienced recent success offering our comprehensive energy project management services to national account customers to retrofit their multiple locations.
We face strong competition, primarily from manufacturers and distributors of energy management products and services, as well as from ESCOs and electrical contractors. We are also facing increased competition from manufacturers in low-cost countries. We compete primarily on the basis of customer relationships, price, quality, energy efficiency, customer service and marketing support.
We are also facing increased competition from manufacturers in low-cost countries. We compete primarily on the basis of customer relationships, price, quality, energy efficiency, customer service and marketing support. Our products are in direct competition with the expanding availability of LED products, as well as other technologies in the lighting systems retrofit market.
Our evolving business strategies may include exploring potential acquisitions, including potential acquisitions that could significantly change, or even transform, the nature of our business. These potential acquisitions could be unsuccessful or consume significant resources, which could materially adversely affect our results of operations, financial condition and cash flows.
These potential acquisitions could be unsuccessful or 19 consume significant resources, which could materially adversely affect our results of operations, financial condition and cash flows.
The reduction of revenue from this customer has had a material advent effect on our results of operations, financial condition and cash flow.
In prior fiscal years, one customer represented more than 40% of total revenues, which has not recurred in recent fiscal years. The reduction of revenue from this customer has had a material advent effect on our results of operations, financial condition and cash flow.
Historically, the market price of our common stock has fluctuated over a wide range, and it is likely that the price of our common stock will continue to be volatile in the future. The trading price of our common stock has ranged from $1.45 to $2.94 per share during the period from April 1, 2022 to March 31, 2023.
The price of our common stock has been, and may continue to be, volatile. Historically, the market price of our common stock has fluctuated over a wide range, and it is likely that the price of our common stock will continue to be volatile in the future.
We also plan to pursue the expansion of our IoT “smart-building” and “connected ceiling” and other related technology, software and controls products and services we offer to our customers.
We also plan to pursue the expansion of our IoT “smart-building” and “connected ceiling” and other related technology, software and controls products and services we offer to our customers. Our evolving business strategies may include exploring potential acquisitions, including potential acquisitions that could significantly change, or even transform, the nature of our business.
Our results of operations, financial condition and cash flows could be materially adversely affected if our third-party manufacturers were to experience problems with product quality, credit or liquidity issues, or disruptions or delays in their manufacturing process or delivery of the finished products and components or the raw materials used to make such products and components. 20 Macroeconomic pressures in the markets in which we operate or anticipate operating in the future may adversely affect our financial results.
Our results of operations, financial condition and cash flows could be materially adversely affected if our third-party manufacturers were to experience problems with product quality, credit or liquidity issues, or supply chain and logistics that could cause delays in delivery of the finished products and components or the raw materials used to make such products and components. 14 Our products use components and raw materials that may be subject to price fluctuations, shortages or interruptions of supply, including semiconductor chips.
In addition, the LED market has seen increased convergence in recent years, resulting in our competition gaining increased market share and resources. Competitors could focus their substantial resources on developing a competing business model or energy management products or services that may be potentially more attractive to customers than our products or services.
Competitors could focus their substantial resources on developing a competing business model or energy management products or services that may be potentially more attractive to customers than our products or services. In addition, we may face competition from other products or technologies that reduce demand for electricity.
Our existing liquidity and capital resources may not be sufficient to allow us to effectively pursue our evolving growth strategies, complete potential acquisitions or otherwise fund or sustain our growth initiatives. If we require additional capital resources, we may 22 not be able to obtain sufficient equity capital and/or debt financing on acceptable terms or conditions, or at all.
If we require additional capital resources, we may not be able to obtain sufficient equity capital and/or debt financing on acceptable terms or conditions, or at all.
Our inability to successfully regain or sustain our profitability and positive cash flows could materially and adversely affect our ability to pursue our evolving strategies and growth initiatives. Adverse conditions in the global economy have negatively impacted, and could in the future negatively impact, our customers, suppliers and business. Our operations and financial performance are impacted by worldwide economic conditions.
Adverse conditions in the global economy have negatively impacted, and could in the future negatively impact, our customers, suppliers and business. Our operations and financial performance are impacted by worldwide economic conditions.
Our products are in direct competition with the expanding availability of LED products, as well as other technologies in the lighting systems retrofit market. Many of our competitors are better capitalized than we are and have strong customer relationships, greater name recognition, and more extensive engineering, manufacturing, sales and marketing capabilities.
Many of our competitors are better capitalized than we are and have strong customer relationships, greater name recognition, and more extensive engineering, manufacturing, sales and marketing capabilities. In addition, the LED market has seen increased convergence in recent years, resulting in our competition gaining increased market share and resources.
The influence of any of the factors described above may negatively impact the widespread consumer adoption of EVs, which could materially and adversely affect our EV Division business, operating results, financial condition and prospects. Our business was, and could again in the future be, negatively impacted by the COVID-19 pandemic.
The influence of any of the factors described above may negatively impact the widespread consumer adoption of EVs, which could materially and adversely affect our EV Segment business, operating results, financial condition and prospects. If we fail to establish and maintain effective internal controls over financial reporting, our business and financial results could be harmed.
In addition, we may face competition from other products or technologies that reduce demand for electricity. Our competitors may also offer energy management products and services at reduced prices in order to improve their competitive positions.
Our competitors have, and may continue to offer energy management products and services at reduced prices in order to improve their competitive positions.
The conflict in Ukraine may also continue to exacerbate geopolitical tensions globally. We operate in a highly competitive industry and, if we are unable to compete successfully, our results of operations, financial condition and cash flows will likely be materially adversely affected.
We operate in a highly competitive industry and, if we are unable to compete successfully, our results of operations, financial condition and cash flows will likely be materially adversely affected. We face strong competition, primarily from manufacturers and distributors of energy management products and services, as well as from ESCOs and electrical contractors.
There can be no assurance that we will be able to successfully implement these initiatives or, even if implemented, that they will result in the anticipated benefits to our business. 17 We may not realize the anticipated benefits of our recent acquisitions of Stay-Lite Lighting and Voltrek.
There can be no assurance that we will be able to successfully implement these initiatives or, even if implemented, that they will result in the anticipated benefits to our business. Our ability to achieve our budgeted fiscal 2025 revenue expectations, and related public fiscal 2025 revenue guidance, will have a significant impact on our cash flow and stock price.
Risk Factor Summary Our business is subject to a number of risks and uncertainties, including those highlighted immediately following this summary. Some of these risks are summarized below: • We do not have major sources of recurring revenue and we depend upon a limited number of customers in any given period to generate a substantial portion of our revenue.
Risk Factor Summary Our business is subject to a number of risks and uncertainties, including those highlighted immediately following this summary.
The reduction of revenue from our prior most significant customer has had, and the loss of other significant customers or a major customer would likely have, a materially adverse effect on our results of operations, financial condition and cash flows.
The reduction of revenue from our most significant customer over the past three fiscal years has had, and the potential future loss of other significant customers or a major customer would likely have, a materially adverse effect on our results of operations, financial condition and cash flows. • Our existing liquidity and capital resources may not be sufficient to allow us to fund or sustain our growth initiatives. • A substantial portion of our revenues are derived from major project-based retrofit work that is awarded through a competitive bid process.
If the price of our common stock is volatile or falls significantly below our current price, we may be the target of securities litigation.
If the price of our common stock is volatile or falls significantly below our 24 current price, we may be the target of securities litigation or could be de-listed from NASDAQ. On April 5, 2024, we received written notice from NASDAQ that we were not in compliance with NASDAQ’s minimum bid price requirement for continued listing on NASDAQ.
While we do not purchase any of our significant raw materials directly from Russia, it is a significant global producer of fuel, nickel and copper. Disruptions in the markets for those inputs could negatively impact the macroeconomy.
While we do not purchase any of our significant raw materials directly from Russia or Isreal, disruption in the markets resulting from such conflicts could negatively impact the macroeconomy. The conflicts in Ukraine and the Middle East may also continue to exacerbate geopolitical tensions globally.
We do not have major sources of recurring revenue and we depend upon a limited number of customers in any given period to generate a substantial portion of our revenue.
Some of these risks are summarized below: • We are experiencing ongoing increasing pressures to reduce the selling price of our products driven largely by a return to a more normalized supply chain and reduction in shipping costs for imported products, coupled with the related increase in competition from foreign competitors. • We do not have major sources of recurring revenue and we depend upon a limited number of customers in any given period to generate a substantial portion of our revenue.
Removed
In fiscal 2022, that same customer accounted for 49.1% of our total revenue, and in fiscal 2021, this same customer accounted for 56.0% of our total revenue. In fiscal 2024, we expect that our customer concentration will continue at the approximate level experienced in fiscal 2023.
Added
A substantial portion of our revenues are derived from project-based work that is awarded through a competitive bid process. It is generally difficult to predict the timing and success rate of the projects that we bid and will be awarded.
Removed
We also may identify and pursue additional strategic acquisition candidates that would help support these initiatives.
Added
We have historically had difficulties in achieving our budgeted revenue expectations, and related public annual revenue guidance.
Removed
The integrations of Stay-Lite Lighting and Voltrek may disrupt our business and management, which could adversely affect our business, financial condition or results of operations. Effective on January 1, 2022, we acquired all of the issued and outstanding capital stock of Stay-Lite Lighting, Inc., a nationwide lighting and electrical maintenance service provider.
Added
The success of our business depends upon market acceptance of our energy management products and services.
Removed
On October 5, 2022, we acquired the equity interests of Voltrek, LLC an EV charging station solutions provider. We may acquire additional companies or enter into other business combinations or strategic initiatives in the future.
Added
Our inability to successfully regain or sustain our profitability and positive cash flows could materially and adversely affect our ability to pursue our growth initiatives and continue our current level of operations. Our net operating loss carry-forwards provide a future benefit only if we regain sustained profitability and may be subject to limitation based upon ownership changes.
Removed
We may not realize the anticipated benefits of the Stay-Lite or Voltrek acquisition or such other business combinations or acquisitions, and we may encounter substantial difficulties, costs and delays involved in integrating our operations with such businesses, including: • Exposure to unknown liabilities; • Potential conflicts between business cultures; • Adverse changes in business focus perceived by third-party constituencies; • Disruption of our ongoing business; • Potential conflicts in distribution, marketing or other important relationships; • Potential constraints of management resources; • Inability to implement uniform standards, controls, procedures and policies; • Failure to maximize our financial and strategic position; • Failure to achieve planned synergies or expected financial results benefits; • Failure to realize the potential of the acquired businesses' technologies, complete product development, or properly obtain or secure appropriate protection of intellectual property rights; and • Loss of key employees and/or the diversion of management's attention from other ongoing business concerns.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe own our approximately 70,000 square foot technology center and corporate headquarters adjacent to our leased Manitowoc manufacturing and distribution facility, of which we sub-lease a portion to third parties. We also lease approximately 10,500 square feet of office space in Jacksonville, Florida, 5,375 square feet in Lawrence, Massachusetts and 9,180 square feet of office space in Pewaukee, Wisconsin.
Biggest changeWe own our approximately 70,000 square foot technology center and corporate headquarters adjacent to our leased Manitowoc manufacturing and distribution facility. We also lease approximately 10,500 square feet of office space in Jacksonville, Florida, 5,375 square feet in Lawrence, Massachusetts and 9,180 square feet of office space in Pewaukee, Wisconsin.
The Manitowoc and Jacksonville facilities noted above are utilized by all our business segments, the Lawrence facility by our EV Division and the Pewaukee facility by our Orion Services Group Division.
The Manitowoc and Jacksonville facilities noted above are utilized by all our business segments, the Lawrence facility by our EV Segment and the Pewaukee facility by our Lighting segment.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeIssuer Purchase of Equity Securities We did not purchase shares of our common stock during the fiscal year ended March 31, 2023.
Biggest changeIssuer Purchase of Equity Securities We did not purchase shares of our common stock during the fiscal year ended March 31, 2024. Unregistered Sales of Securities We did not effect any unregistered sales of our common stock during the year ended March 31, 2024. ITE M 6. [RESERVED] 28
Any future determination to pay dividends will be at the discretion of our board of directors and will depend on our financial condition, results of operations, capital requirements, contractual restrictions (including those under our loan agreements) and other factors that our board of directors deems relevant. 33 Securities Authorized for Issuance under Equity Compensation Plans The following table represents shares outstanding under our 2004 Stock and Incentive Awards Incentive Plan, and our 2016 Omnibus Incentive Plan as of March 31, 2023.
Any future determination to pay dividends will be at the discretion of our board of directors and will depend on our financial condition, results of operations, capital requirements, contractual restrictions (including those under our loan agreements) and other factors that our board of directors deems relevant. 27 Securities Authorized for Issuance under Equity Compensation Plans The following table represents shares outstanding under our 2004 Stock and Incentive Awards Incentive Plan, and our 2016 Omnibus Incentive Plan as of March 31, 2024.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHA REHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Shares of our common stock are traded on the NASDAQ Capital Market under the symbol “OESX”. Shareholders As of May 31, 2023, there were approximately 160 record holders of the 32,295,408 outstanding shares of our common stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHA REHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Shares of our common stock are traded on the NASDAQ Capital Market under the symbol “OESX”. Shareholders As of May 31, 2024, there were approximately 158 record holders of the 32,567,746 outstanding shares of our common stock.
Equity Compensation Plan Information Plan Category Number of Shares to be Issued Upon Exercise of Outstanding Options and Vesting of Restricted Shares Weighted Average Exercise Price of Outstanding Options Number of Shares Remaining Available for Future Issuances Under the 2016 Omnibus Incentive Plan Plans (1) Equity Compensation plans approved by security holders 816,590 $ 2.41 545,146 Equity Compensation plans not approved by security holders — — — Total 816,590 $ 2.41 545,146 (1) Excludes shares reflected in the column titled “Number of Shares to be Issued Upon Exercise of Outstanding Options and Vesting of Restricted Shares”.
Equity Compensation Plan Information Plan Category Number of Shares to be Issued Upon Exercise of Outstanding Options and Vesting of Restricted Shares Weighted Average Exercise Price of Outstanding Options Number of Shares Remaining Available for Future Issuances Under the 2016 Omnibus Incentive Plan Plans (1) Equity Compensation plans approved by security holders 1,014,104 — 1,788,994 Equity Compensation plans not approved by security holders — — — Total 1,014,104 — 1,788,994 (1) Excludes shares reflected in the column titled “Number of Shares to be Issued Upon Exercise of Outstanding Options and Vesting of Restricted Shares”.
Removed
Unregistered Sales of Securities We did not make any unregistered sales of our common stock during the year ended March 31, 2023 that were not previously disclosed in a Quarterly Report on Form 10-Q or a current report on Form 8-K during such period. ITE M 6. [RESERVED] 34

Item 7. Management's Discussion & Analysis

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

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Biggest changeResults of Operations: Fiscal 2022 versus Fiscal 2021 The following table sets forth the line items of our consolidated statements of operations and as a relative percentage of our total revenue for each applicable period, together with the relative percentage change in such line item between applicable comparable periods (in thousands, except percentages): Fiscal Year Ended March 31, 2022 2021 2022 2021 Amount Amount % Change % of Revenue % of Revenue Product revenue $ 91,889 $ 87,664 4.8 % 73.9 % 75.0 % Service revenue 32,494 29,176 11.4 % 26.1 % 25.0 % Total revenue 124,383 116,840 6.5 % 100.0 % 100.0 % Cost of product revenue 65,249 63,233 3.2 % 52.5 % 54.1 % Cost of service revenue 25,222 23,483 7.4 % 20.3 % 20.1 % Total cost of revenue 90,471 86,716 4.3 % 72.7 % 74.2 % Gross profit 33,912 30,124 12.6 % 27.3 % 25.8 % General and administrative expenses 11,680 11,262 3.7 % 9.4 % 9.6 % Acquisition related costs 512 — NM 0.4 % 0.0 % Sales and marketing expenses 11,628 10,341 12.4 % 9.3 % 8.9 % Research and development expenses 1,701 1,685 0.9 % 1.4 % 1.4 % Income from operations 8,391 6,836 22.7 % 6.7 % 5.9 % Other income 1 56 (98.2 )% 0.0 % 0.0 % Interest expense (80 ) (127 ) 37.0 % (0.1 )% (0.1 )% Amortization of debt issue costs (62 ) (157 ) 60.5 % (0.0 )% (0.1 )% Loss on debt extinguishment — (90 ) NM 0.0 % (0.1 )% Income before income tax 8,250 6,518 26.6 % 6.6 % 5.6 % Income tax expense (benefit) 2,159 (19,616 ) NM 1.7 % (16.8 )% Net income $ 6,091 $ 26,134 (76.7 )% 4.9 % 22.4 % * NM = Not Meaningful Revenue, Cost of Revenue and Gross Margin.
Biggest change(7) Fiscal 2022 includes an offset to payroll expenses of $1.6 million related to the anticipated employee retention payroll tax credit (“payroll tax credit”), as expanded and extended by the American Rescue Plan Act of 2021, as follows: Fiscal Year Ended March 31, 2022 (in thousands) Cost of product revenue $ 649 Cost of service revenue 144 General and administrative expenses 273 Sales and marketing expenses 416 Research and development expenses 105 Total payroll tax credit $ 1,587 Results of Operations: Fiscal 2024 versus Fiscal 2023 The following table sets forth the line items of our consolidated statements of operations and as a relative percentage of our total revenue for each applicable period, together with the relative percentage change in such line item between applicable comparable periods (in thousands, except percentages): Fiscal Year Ended March 31, 2024 2023 2024 2023 Amount Amount % Change % of Revenue % of Revenue Product revenue $ 63,307 $ 57,210 10.7 % 69.9 % 73.9 % Service revenue 27,274 20,173 35.2 % 30.1 % 26.1 % Total revenue 90,581 77,383 17.1 % 100.0 % 100.0 % Cost of product revenue 44,466 42,979 3.5 % 49.1 % 55.5 % Cost of service revenue 25,204 16,893 49.2 % 27.8 % 21.8 % Total cost of revenue 69,670 59,872 16.4 % 76.9 % 77.4 % Gross profit 20,911 17,511 19.4 % 23.1 % 22.6 % General and administrative expenses 16,740 19,487 (14.1 )% 18.5 % 25.2 % Impairment on Intangibles 456 — NM 0.5 % 0.0 % Acquisition related costs 56 765 (92.7 )% 0.1 % 1.0 % Sales and marketing expenses 12,988 11,392 14.0 % 14.3 % 14.7 % Research and development expenses 1,495 1,852 (19.3 )% 1.7 % 2.4 % (Loss) income from operations (10,824 ) (15,985 ) NM (11.9 )% (20.7 )% Other income 39 0 NM 0.0 % 0.0 % Interest expense (752 ) (339 ) (121.8 )% (0.8 )% (0.4 )% Amortization of debt issue costs (95 ) (73 ) (30.1 )% (0.1 )% (0.1 )% (Loss) income before income tax (11,630 ) (16,363 ) NM (12.8 )% (21.1 )% Income tax expense 41 17,978 NM 0.0 % 23.2 % Net (loss) income $ (11,671 ) $ (34,341 ) NM (12.9 )% (44.4 )% * NM = Not Meaningful 33 Revenue, Cost of Revenue and Gross Margin.
While we believe that we 44 will likely have adequate available cash and equivalents and credit availability under our Credit Agreement to satisfy our currently anticipated working capital and liquidity requirements during the next 12 months and beyond based on our current cash flow forecast, there can be no assurance to that effect.
While we believe that we will likely have adequate available cash and equivalents and credit availability under our Credit Agreement to satisfy our currently anticipated working capital and liquidity requirements during the next 12 months and beyond based on our current cash flow forecast, there can be no assurance to that effect.
We differentiate ourselves from our competitors through offering comprehensive project management services to national account customers to retrofit their multiple locations. Our comprehensive services include initial site surveys and audits, utility incentive and government subsidy management, engineering design, and project management from delivery through to installation and controls integration.
We differentiate ourselves from our competitors by offering comprehensive project management services to national account customers to retrofit their multiple locations. Our comprehensive services include initial site surveys and audits, utility incentive and government subsidy management, engineering design, and project management from delivery through to installation and controls integration.
If an event of default under the Credit Agreement occurs and is continuing, then the lender may cease making advances under the Credit Agreement and declare any outstanding obligations under the Credit Agreement to be immediately due and payable.
If an event of default under the credit agreement occurs and is continuing, then the lender may cease making advances under the credit agreement and declare any outstanding obligations 39 under the credit agreement to be immediately due and payable.
As of March 31, 2023, the balance of gross unrecognized tax benefits was approximately $0.2 million, all of which would reduce our effective tax rate if recognized. We believe that our estimates and judgments discussed herein are reasonable, however, actual results could differ, which could result in gains or losses that could be material.
As of March 31, 2024, the balance of gross unrecognized tax benefits was approximately $0.2 million, all of which would reduce our effective tax rate if recognized. We believe that our estimates and judgments discussed herein are reasonable, however, actual results could differ, which could result in gains or losses that could be material.
Revenue from a customer contract which includes both the sale of Orion manufactured or sourced fixtures and the installation of such fixtures (which we refer to as a turnkey project) is allocated between each lighting fixture and the installation performance obligation based on relative standalone selling prices. 47 Revenue from turnkey projects that is allocated to the single installation performance obligation is reflected in Service revenue.
Revenue from a customer contract which includes both the sale of Orion manufactured or sourced fixtures and the installation of such fixtures (which we refer to as a turnkey project) is allocated between each lighting fixture and the installation performance obligation based on relative standalone selling prices. 40 Revenue from turnkey projects that is allocated to the single installation performance obligation is reflected in Service revenue.
We performed a qualitative assessment in conjunction with our annual impairment test of our indefinite lived intangible assets and goodwill as of January 1, 2023. These qualitative assessments considered our operating results for the first nine months of fiscal 2023 in comparison to prior years as well as its anticipated fourth quarter results and fiscal 2023 plan.
We performed a qualitative assessment in conjunction with our annual impairment test of our indefinite lived intangible assets and goodwill as of January 1, 2024. These qualitative assessments considered our operating results for the first nine months of fiscal 2024 in comparison to prior years as well as its anticipated fourth quarter results and fiscal 2024 plan.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS O F FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of our financial condition and results of operations should be read together with our audited consolidated financial statements and related notes included in this Annual Report on Form 10-K for the fiscal year ended March 31, 2023.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS O F FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of our financial condition and results of operations should be read together with our audited consolidated financial statements and related notes included in this Annual Report on Form 10-K for the fiscal year ended March 31, 2024.
The Credit Agreement is secured by a first lien security interest in substantially all of our assets. Borrowings under the Credit Agreement are permitted in the form of LIBOR or prime rate-based loans and generally bear interest at floating rates plus an applicable margin determined by reference to our availability under the Credit Agreement.
The credit agreement is secured by a first lien security interest in substantially all of our assets. Borrowings under the credit agreement are permitted in the form of SOFR or prime rate-based loans and generally bear interest at floating rates plus an applicable margin determined by reference to our availability under the Credit Agreement.
Currently, most of our lighting products are manufactured at our leased production facility located in Manitowoc, Wisconsin, although as the LED and related IoT market continues to evolve, we are increasingly sourcing products and components from third parties in order to provide versatility in our product development.
Currently, most of our interior lighting products are manufactured at our leased production facility located in Manitowoc, Wisconsin, although as the LED and related IoT market continues to evolve, we are increasingly sourcing products and components from third parties in order to provide versatility in our product development and offerings.
Sales and Marketing. Our sales and marketing expenses decreased 2.0%, or $0.2 million, in fiscal 2023 compared to fiscal 2022. The decrease was primarily due to an decrease in commission expense on lower sales partially offset by expenses associated with the Stay-Lite Lighting and Voltrek businesses. 40 Research and Development.
Sales and Marketing. Our sales and marketing expenses decreased 2.0%, or $0.2 million, in fiscal 2023 compared to fiscal 2022. The decrease was primarily due to an decrease in commission expense on lower sales partially offset by expenses associated with the Stay-Lite Lighting and Voltrek businesses. 35 Research and Development.
Cash provided by (used in) operating activities primarily consists of net loss adjusted for certain non-cash items, including depreciation, amortization of intangible assets, stock-based compensation, amortization of debt issue costs, provisions for reserves, and the effect of changes in working capital and other activities.
Cash (used in) provided by operating activities primarily consisted of net loss adjusted for certain non-cash items, including depreciation, amortization of intangible assets, stock-based compensation, amortization of debt issue costs, provisions for reserves, and the effect of changes in working capital and other activities.
Our annual impairment test may begin with a qualitative test to determine 48 whether it is more likely than not that an indefinite lived intangible asset's carrying value is greater than its fair value.
Our annual impairment test may begin with a qualitative test to determine 41 whether it is more likely than not that an indefinite lived intangible asset's carrying value is greater than its fair value.
Of these tax attributes, $19.7 million of the federal and state net operating loss carryforwards are not subject to time restrictions on use but may only be used to offset 80% of future adjusted taxable income.
Of these tax attributes, $25.8 million of the federal and state net operating loss carryforwards are not subject to time restrictions on use but may only be used to offset 80% of future adjusted taxable income.
Reportable segments are components of an entity that have separate financial data that the entity's chief operating decision maker ("CODM") regularly reviews when allocating resources and assessing performance. Our CODM is our chief executive officer. We have four reportable segments: Orion Services Group Division ("OSG"), Orion Distribution Services Division ("ODS"), Orion U.S.
Reportable segments are components of an entity that have separate financial data that the entity's chief operating decision maker ("CODM") regularly reviews when allocating resources and assessing performance. Our CODM is our chief executive officer. Previously, we had four reportable segments: Orion Services Group Segment, Orion Distribution Services Segment, Orion U.S.
Factors that we consider include whether there has been a significant decrease in the market value of an asset, a significant change in the way an asset is being utilized, or a significant change, delay or departure in our strategy for that asset, or a significant change in the macroeconomic environment, such as the impact of the COVID-19 pandemic.
Factors that we consider include whether there has been a significant decrease in the market value of an asset, a significant change in the way an asset is being utilized, or a significant change, delay or departure in our strategy for that asset, or a significant change in the macroeconomic environment.
We refer to our just completed fiscal year, which ended on March 31, 2023, as "fiscal 2023", and our prior fiscal years which ended on March 31, 2022 and March 31, 2021 as "fiscal 2022" and “fiscal 2021”, respectively.
We refer to our just completed fiscal year, which ended on March 31, 2024, as "fiscal 2024", and our prior fiscal years which ended on March 31, 2023 and March 31, 2022 as "fiscal 2023" and “fiscal 2022”, respectively.
Revenue from the EV segment that includes both the sale of product and service is allocated between the product and service performance obligations based on relative standalone selling prices, and is recorded in Product revenue and Service revenue, respectively, in the Consolidated Statement of Operations. Inventories. We review our inventory for obsolescence.
Revenue from the EV segment that includes both the sale of product and service is allocated between the product and service performance obligations based on relative standalone selling prices, and is recorded in Product revenue and Service revenue, respectively, in the Consolidated Statement of Operations. Inventory.
Cash used in investing activities in fiscal 2022 was $4.9 million and consisted primarily of the $4.0 million acquisition of Stay-Lite Lighting, and an investment of a non-controlling equity stake in ndustrial, Inc. of $0.5 million and purchases of property and equipment.
Cash used in investing activities in fiscal 2022 was $4.9 million and consisted primarily of the $4.0 million acquisition of Stay-Lite Lighting, and an investment of a non-controlling equity stake in ndustrial, Inc. of $0.5 million and purchases of property and equipment. Cash Flows Related to Financing Activities. Cash used in financing activities in fiscal 2024 was $14 thousand.
We also are pursuing the expansion of our IoT, “smart-building” and “connected ceiling” and other related technology, software and controls products and services that we offer to our customers.
We plan to pursue the expansion of our IoT, “smart-building” and “connected ceiling” and other related technology, software and controls products and services that we offer to our customers.
The acquisition was funded from existing cash resources. Stay-Lite Lighting has been operating as Stay-Lite, an Orion Energy Systems business. The acquisition accelerates the growth of our maintenance services offerings through our Orion Services Group, which provides lighting and electrical services to customers. Our fiscal 2023 results included a full year of operations of Stay-Lite Lighting.
The acquisition was funded from existing cash resources. Stay-Lite Lighting has been operating as Stay-Lite, an Orion Energy Systems business. The acquisition accelerates the growth of our maintenance services offerings through our Orion Services Group, which provides lighting and electrical services to customers.
Fiscal Year Ended March 31, 2023 2022 2021 2020 2019 (in thousands, except per share amounts) Consolidated statements of operations data: Product revenue $ 57,210 $ 91,889 $ 87,664 $ 113,352 $ 56,261 Service revenue 20,173 32,494 29,176 37,489 9,493 Total revenue 77,383 124,383 116,840 150,841 65,754 Cost of product revenue (1) (2) (7) 42,979 65,249 63,233 83,588 44,111 Cost of service revenue (1) (3) (7) 16,893 25,222 23,483 30,130 7,091 Total cost of revenue 59,872 90,471 86,716 113,718 51,202 Gross profit 17,511 33,912 30,124 37,123 14,552 General and administrative expenses (1) (4) (7) 19,487 11,680 11,262 11,184 10,231 Acquisition related costs 765 512 — — — Sales and marketing expenses (1) (5) (7) 11,392 11,628 10,341 11,113 9,104 Research and development expenses (1) (7) 1,852 1,701 1,685 1,716 1,374 (Loss) income from operations (15,985 ) 8,391 6,836 13,110 (6,157 ) Other income — 1 56 28 80 Interest expense (339 ) (80 ) (127 ) (279 ) (493 ) Amortization of debt issue costs (73 ) (62 ) (157 ) (243 ) (101 ) Loss on debt extinguishment — — (90 ) — — Dividend and interest income 34 — — 5 11 (Loss) income before income tax (16,363 ) 8,250 6,518 12,621 (6,660 ) Income tax expense (benefit) (6) 17,978 2,159 (19,616 ) 159 14 Net (loss) income $ (34,341 ) $ 6,091 $ 26,134 $ 12,462 $ (6,674 ) Net (loss) income per share attributable to common shareholders: Basic $ (1.08 ) $ 0.20 $ 0.85 $ 0.41 $ (0.23 ) Diluted $ (1.08 ) $ 0.19 $ 0.83 $ 0.40 $ (0.23 ) Weighted-average shares outstanding: Basic 31,704 31,018 30,635 30,105 29,430 Diluted 31,704 31,295 31,304 30,965 29,430 (1) Includes stock-based compensation expense recognized under Financial Accounting Standards Board Accounting Standards Codification Topic 718, or ASC Topic 718, as follows: Fiscal Year Ended March 31, 2023 2022 2021 2020 2019 (in thousands) Cost of product revenue $ 4 $ 5 $ 4 $ 3 $ 2 Cost of service revenue — — — (1 ) 3 General and administrative expenses 1,596 793 716 576 764 Sales and marketing expenses 8 12 29 38 54 Research and development expenses 4 3 4 2 2 Total stock-based compensation expense $ 1,612 $ 813 $ 753 $ 618 $ 825 (2) Fiscal 2020 includes expenses of $0.1 million related to restructuring.
Fiscal Year Ended March 31, 2024 2023 2022 2021 2020 (in thousands, except per share amounts) Consolidated statements of operations data: Product revenue $ 63,307 $ 57,210 $ 91,889 $ 87,664 $ 113,352 Service revenue 27,274 20,173 32,494 29,176 37,489 Total revenue 90,581 77,383 124,383 116,840 150,841 Cost of product revenue (1) (2) (7) 44,466 42,979 65,249 63,233 83,588 Cost of service revenue (1) (3) (7) 25,204 16,893 25,222 23,483 30,130 Total cost of revenue 69,670 59,872 90,471 86,716 113,718 Gross profit 20,911 17,511 33,912 30,124 37,123 General and administrative expenses (1) (4) (7) 16,740 19,487 11,680 11,262 11,184 Impairment of assets (5) 456 — 512 — — Acquisition related costs 56 765 — — — Sales and marketing expenses (1) (5) (7) 12,988 11,392 11,628 10,341 11,113 Research and development expenses (1) (7) 1,495 1,852 1,701 1,685 1,716 (Loss) income from operations (10,824 ) (15,985 ) 8,391 6,836 13,110 Other income 39 — 1 56 28 Interest expense (752 ) (339 ) (80 ) (127 ) (279 ) Amortization of debt issue costs (95 ) (73 ) (62 ) (157 ) (243 ) Loss on debt extinguishment — — — (90 ) — Dividend and interest income 2 34 — — 5 (Loss) income before income tax (11,630 ) (16,363 ) 8,250 6,518 12,621 Income tax expense (benefit) (6) 41 17,978 2,159 (19,616 ) 159 Net (loss) income $ (11,671 ) $ (34,341 ) $ 6,091 $ 26,134 $ 12,462 Net (loss) income per share attributable to common shareholders: Basic $ (0.36 ) $ (1.08 ) $ 0.20 $ 0.85 $ 0.41 Diluted $ (0.36 ) $ (1.08 ) $ 0.19 $ 0.83 $ 0.40 Weighted-average shares outstanding: Basic 32,486 31,704 31,018 30,635 30,105 Diluted 32,486 31,704 31,295 31,304 30,965 (1) Includes stock-based compensation expense recognized under Financial Accounting Standards Board Accounting Standards Codification Topic 718, or ASC Topic 718, as follows: Fiscal Year Ended March 31, 2024 2023 2022 2021 2020 (in thousands) Cost of product revenue $ 5 $ 4 $ 5 $ 4 $ 3 Cost of service revenue — — — — (1 ) General and administrative expenses 923 1,596 793 716 576 Sales and marketing expenses 17 8 12 29 38 Research and development expenses 5 4 3 4 2 Total stock-based compensation expense $ 950 $ 1,612 $ 813 $ 753 $ 618 (2) Fiscal 2024 and Fiscal 2020 includes expense of $26 thousand and $0.1 million related to restructuring, respectively.
We continue to attempt to diversify our customer base by expanding our reach to national accounts, ESCOs, the agent driven distribution channel, lighting maintenance customers and the EV market, in order to replace this reduced level of revenue from our prior most significant customer. 39 Results of Operations: Fiscal 2023 versus Fiscal 2022 The following table sets forth the line items of our consolidated statements of operations and as a relative percentage of our total revenue for each applicable period, together with the relative percentage change in such line item between applicable comparable periods (in thousands, except percentages): Fiscal Year Ended March 31, 2023 2022 2023 2022 Amount Amount % Change % of Revenue % of Revenue Product revenue $ 57,210 $ 91,889 (37.7 )% 73.9 % 73.9 % Service revenue 20,173 32,494 (37.9 )% 26.1 % 26.1 % Total revenue 77,383 124,383 (37.8 )% 100.0 % 100.0 % Cost of product revenue 42,979 65,249 (34.1 )% 55.5 % 52.5 % Cost of service revenue 16,893 25,222 (33.0 )% 21.8 % 20.3 % Total cost of revenue 59,872 90,471 (33.8 )% 77.4 % 72.7 % Gross profit 17,511 33,912 (48.4 )% 22.6 % 27.3 % General and administrative expenses 19,487 11,680 66.8 % 25.2 % 9.4 % Acquisition related costs 765 512 49.4 % 1.0 % 0.4 % Sales and marketing expenses 11,392 11,628 (2.0 )% 14.7 % 9.3 % Research and development expenses 1,852 1,701 8.9 % 2.4 % 1.4 % (Loss) income from operations (15,985 ) 8,391 NM (20.7 )% 6.7 % Other income — 1 NM 0.0 % 0.0 % Interest expense (339 ) (80 ) (323.8 )% (0.4 )% (0.1 )% Amortization of debt issue costs (73 ) (62 ) (17.7 )% (0.1 )% (0.0 )% (Loss) income before income tax (16,363 ) 8,250 NM (21.1 )% 6.6 % Income tax expense 17,978 2,159 NM 23.2 % 1.7 % Net (loss) income $ (34,341 ) $ 6,091 NM (44.4 )% 4.9 % * NM = Not Meaningful Revenue, Cost of Revenue and Gross Margin.
We do not expect to remit significant cash taxes for the next several years. 34 Results of Operations: Fiscal 2023 versus Fiscal 2022 The following table sets forth the line items of our consolidated statements of operations and as a relative percentage of our total revenue for each applicable period, together with the relative percentage change in such line item between applicable comparable periods (in thousands, except percentages): Fiscal Year Ended March 31, 2023 2022 2023 2022 Amount Amount % Change % of Revenue % of Revenue Product revenue $ 57,210 $ 91,889 (37.7 )% 73.9 % 73.9 % Service revenue 20,173 32,494 (37.9 )% 26.1 % 26.1 % Total revenue 77,383 124,383 (37.8 )% 100.0 % 100.0 % Cost of product revenue 42,979 65,249 (34.1 )% 55.5 % 52.5 % Cost of service revenue 16,893 25,222 (33.0 )% 21.8 % 20.3 % Total cost of revenue 59,872 90,471 (33.8 )% 77.4 % 72.7 % Gross profit 17,511 33,912 (48.4 )% 22.6 % 27.3 % General and administrative expenses 19,487 11,680 66.8 % 25.2 % 9.4 % Acquisition related costs 765 512 49.4 % 1.0 % 0.4 % Sales and marketing expenses 11,392 11,628 (2.0 )% 14.7 % 9.3 % Research and development expenses 1,852 1,701 8.9 % 2.4 % 1.4 % (Loss) income from operations (15,985 ) 8,391 (290.5 )% (20.7 )% 6.7 % Other income - 1 (100.0 )% 0.0 % 0.0 % Interest expense (339 ) (80 ) (323.8 )% (0.4 )% (0.1 )% Amortization of debt issue costs (73 ) (62 ) (17.7 )% (0.1 )% (0.0 )% (Loss) income before income tax (16,363 ) 8,250 (298.3 )% (21.1 )% 6.6 % Income tax expense (benefit) 17,978 2,159 NM 23.2 % 1.7 % Net (loss) income $ (34,341 ) $ 6,091 (663.8 )% (44.4 )% 4.9 % * NM = Not Meaningful Revenue, Cost of Revenue and Gross Margin.
We apply the provisions of ASC 718, Compensation - Stock Compensation , to these restricted stock and stock option awards which requires us to expense the estimated fair value of the awards based on the fair value of the award on the date of grant.
Prior to fiscal 2015, we also issued stock options to these individuals. We apply the provisions of ASC 718, Compensation - Stock Compensation , to these restricted stock and stock option awards which requires us to expense the estimated fair value of the awards based on the fair value of the award on the date of grant.
Our products are targeted for applications in primary market segments: commercial office and retail, area lighting, industrial applications and government, although we do sell and install products into other markets. Our services consist of turnkey installation and system maintenance. Virtually all of our sales occur within North America.
Our products are targeted for applications in the following primary market segments: commercial office and retail, area lighting, industrial applications and government, although we do sell and install products into other markets. Our services consist of turnkey installation and system maintenance.
Cash Flows The following table summarizes our cash flows for our fiscal 2023, fiscal 2022 and fiscal 2021: Fiscal Year Ended March 31, 2023 2022 2021 (in thousands) Operating activities $ (2,291 ) $ (113 ) $ 1,729 Investing activities (6,195 ) (4,918 ) (946 ) Financing activities 10,012 104 (10,141 ) Increase (decrease) in cash and cash equivalents $ 1,526 $ (4,927 ) $ (9,358 ) Cash Flows Related to Operating Activities.
Cash Flows The following table summarizes our cash flows for our fiscal 2024, fiscal 2023 and fiscal 2022: Fiscal Year Ended March 31, 2024 2023 2022 (in thousands) Operating activities $ (10,092 ) $ (2,291 ) $ (113 ) Investing activities (731 ) (6,195 ) (4,918 ) Financing activities (14 ) 10,012 104 (Decrease) increase in cash and cash equivalents $ (10,837 ) $ 1,526 $ (4,927 ) Cash Flows Related to Operating Activities.
We will also pay an additional $3.0 million based on Voltrek's performance in fiscal 2023 and could pay up to an additional $3.5 million and $7.15 million in compensatory consideration if Voltrek exceeds certain earnings targets in fiscal 2024 and 2025, respectively.
We also paid $3.0 million based on Voltrek's performance in fiscal 2023 and will pay an additional $0.9 million and could pay up to an additional $9.8 million if Voltrek exceeds certain earnings targets in fiscal 2024 and 2025, respectively.
The $120.2 million net operating loss and tax credit carryforwards will begin to expire in varying amounts between 2023 and 2033. 49 We recognize penalties and interest related to uncertain tax liabilities in income tax expense. Penalties and interest were immaterial as of the date of adoption and are included in unrecognized tax benefits.
The $123.5 million net operating loss and tax credit carryforwards will begin to expire in varying amounts between 2024 and 2044. 42 We recognize penalties and interest related to uncertain tax liabilities in income tax expense. Penalties and interest were immaterial as of the date of adoption and are included in unrecognized tax benefits.
Cash used in investing activities in fiscal 2023 was $6.2 million and consisted primarily of the $5.6 million acquisition of Voltrek and $0.6 million purchases of property and equipment.
Cash Flows Related to Investing Activities. Cash used in investing activities in fiscal 2024 was $0.7 million and consisted primarily of $0.8 million of purchases of property and equipment. 38 Cash used in investing activities in fiscal 2023 was $6.2 million and consisted primarily of the $5.6 million acquisition of Voltrek and $0.6 million of purchases of property and equipment.
As a result of the conditions that existed as of the assessment date, an asset impairment was not deemed to be more likely than not and a quantitative analysis was not required. Stock-Based Compensation. We currently issue restricted stock awards to our employees, executive officers and directors. Prior to fiscal 2015, we also issued stock options to these individuals.
As a result of the conditions that existed as of the assessment date, an asset impairment was not deemed to be more likely than not in the Lighting and EV segments and a quantitative analysis was not required. Stock-Based Compensation. We currently issue restricted stock awards to our employees, executive officers and directors.
We typically sell our lighting systems in replacement of our customers’ existing fixtures. We call this replacement process a "retrofit". We frequently engage our customer’s existing electrical contractor to provide installation and project management services. We also sell our lighting systems on a wholesale basis, principally to electrical distributors and ESCOs to sell to their own customer bases.
We frequently engage our customer’s existing electrical contractor to provide installation and project management services. We also sell our lighting systems on a wholesale basis, principally to electrical distributors and ESCOs to sell to their own customer bases.
In March 2023, we filed a universal shelf registration statement with the Securities and Exchange Commission. Under our shelf registration statement, we currently have the flexibility to publicly offer and sell from time to time up to $100 million of debt and/or equity securities.
Under our shelf registration statement, we currently have the flexibility to publicly offer and sell from time to time up to $100 million of debt and/or equity securities.
We generally attempt to maintain at least a three-month supply of on-hand inventory of purchased components and raw materials to meet anticipated demand, as well as to reduce our risk of unexpected raw material or component shortages or supply interruptions. Because of recent supply chain challenges, we have been making additional incremental inventory purchases.
We generally attempt to maintain a three-month supply of on-hand inventory of purchased components and raw materials to meet anticipated demand, as well as to reduce our risk of unexpected raw material or component shortages or supply interruptions.
Revenue derived from customer contracts which include only performance obligation(s) for the sale of lighting fixtures and components we manufacture, or source is classified as product revenue in the Consolidated Statements of Operations.
Revenue derived from customer contracts which include performance obligation(s) for the sale of lighting fixtures and components we manufacture, lighting fixtures we source, and EV charging stations and related software and warranty arrangements we source, are classified as product revenue in the Consolidated Statements of Operations.
Our capital expenditures totaled $0.7 million in fiscal 2023, $0.5 million in fiscal 2022 and $0.9 million in fiscal 2021. Our capital spending plans predominantly consist of investments related to maintenance fleet vehicles, new product development tooling and equipment and information technology systems, exclusive of any capital spending for potential acquisitions.
Our capital spending plans predominantly consist of investments related to maintenance fleet vehicles, new product development tooling and equipment and information technology systems, exclusive of any capital spending for potential acquisitions.
As of March 31, 2023, our borrowing base supported $17.3 million of availability under our Credit Facility, with $10.0 million drawn against that availability. As of March 31, 2022, no amounts were borrowed under the Credit Facility. Additional information on our Credit Agreement can be found in the “Indebtedness” section located below.
As of March 31, 2023, our borrowing base supported $17.3 million of availability under our credit facility, with $10.0 million drawn against that availability. Additional information on our Credit Agreement can be found in the “Indebtedness” section located below. In March 2023, we filed a universal shelf registration statement with the Securities and Exchange Commission.
Orion is launching a new line of exterior products in FY’24 Q2 designed to increase sales and market share in the application market. Our goal is to provide state-of-the-art lighting products with modular plug-and-play designs to enable lighting system customization from basic controls to advanced IoT capabilities. Leverage of our Smart Lighting Systems to Support Internet of Things Applications.
Orion launched a new line of interior and exterior products in FY’24 Q2 designed to increase sales and market share which we expect to continue to accelerate in FY'25. Our goal is to provide 30 state-of-the-art lighting products with modular plug-and-play designs to enable lighting system customization from basic controls to advanced IoT capabilities.
We believe one of our competitive advantages is our ability to deliver full turnkey LED lighting project capabilities. These turnkey services were the principal reason we achieved significant recent revenue growth as we executed on our commitment to retrofit multiple locations for a major national account customer.
These turnkey services were the principal reason we achieved significant recent revenue growth as we executed on our commitment to retrofit multiple locations for a major national account customer.
We expect to finance these capital expenditures primarily through our existing cash, equipment secured loans and leases, to the extent needed, long-term debt financing, or by using our Credit Facility. Inflation We have experienced increases in various input costs including labor, components and transportation in the past year.
We expect to finance these capital expenditures primarily through our existing cash, equipment secured loans and leases, to the extent needed, long-term debt financing, or by using our Credit Facility.
In fiscal 2021, we recognized a tax benefit of $19.6 million. The benefit was driven by the release of the valuation allowance on a significant portion of our deferred tax assets. This resulted in substantially and disproportionately increasing our reported net income and our earnings per share compared to our operating results.
In fiscal 2023, we recognized tax expense of $18.0 million. The fiscal 2023 expense was driven by a $17.8 million non-cash charge to increase the valuation allowance on a significant portion of our deferred tax assets. This resulted in substantially and disproportionately decreasing our reported net income and our earnings per share compared to our operating results.
While we currently intend to primarily pursue these expansion strategies organically, we also may explore potential additional business acquisitions, like our acquisition of Stay-Lite Lighting and Voltrek, which have more quickly added these types of expanded and different capabilities to our product and services offerings. 35 We generally do not have long-term contracts with our customers for product or turnkey services that provide us with recurring annual revenue.
While we currently intend to primarily pursue growth organically, we also may explore potential additional business acquisitions to expand and add different capabilities to our product and services offerings. We generally do not have long-term contracts with our customers for product or turnkey services that provide us with recurring annual revenue.
In March 2021, we entered into an At Market Issuance Sales Agreement to undertake an “at the market” (ATM) public equity capital raising program pursuant to which we may offer and sell shares of our common stock, having an aggregate offering price of up to $50 million from time to time through or to the Agent, acting as sales agent or principal.
The filing of the shelf registration statement may help facilitate our ability to raise public equity or debt capital to expand existing businesses, fund potential acquisitions, invest in other growth opportunities, repay existing debt, or for other general corporate purposes. 37 In March 2021, we entered into an At Market Issuance Sales Agreement to undertake an “at the market” (ATM) public equity capital raising program pursuant to which we may offer and sell shares of our common stock, having an aggregate offering price of up to $50 million from time to time through or to the Agent, acting as sales agent or principal.
Our lighting products consist primarily of LED lighting fixtures, many of which include IoT enabled control systems. Our principal lighting customers include large national account end-users, federal and state government facilities, large regional account end-users, electrical distributors, electrical contractors and energy service companies (“ESCOs”).
Our principal lighting customers include large national account end-users, federal and state government facilities, large regional account end-users, electrical distributors, electrical contractors and energy service companies (“ESCOs”).
While we intend to pursue these expansion strategies organically, we also are actively exploring potential business acquisitions which would more quickly add these types of expanded and different capabilities to our product and services offerings. Increase our Maintenance Service Offerings. We believe we can leverage our construction management process expertise to develop a high-quality, quick-response, multi-location maintenance service offering.
While we intend to pursue these expansion strategies organically, we also are actively exploring potential business acquisitions which would more quickly add these types of expanded and different capabilities to our product and services offerings. Increase Profitability within our Maintenance Service Offerings.
We plan to focus our growth plans on maximizing the initial positive momentum realized in fiscal 2023 from our Voltrek acquisition and on cross selling our EV charging solutions into our historical market channels and customers.
We believe there are significant growth opportunities in Voltrek’s existing northeast geographic market as well as on a national basis. We plan to focus our growth plans on maximizing the initial positive momentum realized in fiscal 2024 from our Voltrek acquisition and on cross selling our EV charging solutions into our historical market channels and customers.
OSG provides engineering, design and lighting products and in many cases turnkey solutions for large national accounts, governments, municipalities, schools and other customers.
Lighting Segment Our lighting segment develops and sells lighting products and provides construction and engineering services for our commercial lighting and energy management systems. Our lighting segment provides engineering, design, lighting products and in many cases turnkey solutions for large national accounts, governments, municipalities, schools and other customers.
Our net working capital as of March 31, 2021 was $26.2 million, consisting of $56.5 million in current assets and $30.4 million in current liabilities. The increase in our working capital from the fiscal 2021 year-end was primarily due to an overall reduction in project volume performed for our largest customer and partially offset by the acquisition of Stay-Lite Lighting.
The increase in our working capital in fiscal 2023 from our fiscal 2022 year-end was primarily due to an overall reduction in project volume performed for our largest customer and partially offset by the acquisition of Stay-Lite Lighting.
We also had federal tax credit carryforwards of $1.3 million and state tax credit carryforwards of $0.3 million, which are reserved for as part of our valuation allowance.
As of March 31, 2024, we had net operating loss carryforwards of approximately $78.2 million for federal tax purposes, $70.3 million for state tax purposes, and $0.8 million for foreign tax purposes. We also had federal tax credit carryforwards of $1.3 million and state tax credit carryforwards of $0.3 million, which are reserved for as part of our valuation allowance.
We believe the market for LED lighting products and related controls continues to grow. Due to their size and flexibility in application, we also believe that LED lighting systems can address opportunities for retrofit applications that cannot be satisfied by other lighting technologies.
Due to their size and flexibility in application, we also believe that LED lighting systems can address opportunities for retrofit applications that cannot be satisfied by other lighting technologies. Our LED lighting technologies have become the primary component of our revenue as we continue to strive to be a leader in the LED market.
(3) Fiscal 2020 includes expenses of $0.1 million related to restructuring. (4) Fiscal 2020 includes expenses of $28 thousand related to restructuring. (5) Fiscal 2020 includes expenses of $0.2 million related to restructuring. (6) Fiscal 2021 includes tax benefit of $20.9 million related to the release of the valuation allowance on deferred tax assets.
(5) Fiscal 2024 and Fiscal 2020 includes expense of $21 thousand and $0.2 million related to restructuring, respectively. 32 (6) Fiscal 2021 includes tax benefit of $20.9 million related to the release of the valuation allowance on deferred tax assets. Fiscal 2023 includes tax expense of $17.8 million related to the recording of the valuation allowance on deferred tax assets.
We did not incur any early termination fees in connection with the termination of the Prior Credit Agreement, but did recognize a loss on debt extinguishment of $0.1 million on the write-off of unamortized debt issue costs related to the Prior Credit Agreement. 46 Capital Spending Our capital expenditures are primarily for general corporate purposes for our corporate headquarters and technology center, production equipment and tooling and for information technology systems.
We did not incur any early termination fees in connection with the termination of the prior credit agreement, but did recognize a loss on debt extinguishment of $0.1 million on the write-off of unamortized debt issue costs related to the prior credit agreement.
Orion Services Group Division Our OSG segment (a) develops and sells lighting products and provides construction and engineering services for our commercial lighting and energy management systems and (b) provides retailers, distributors and other businesses with maintenance, repair and replacement services for the lighting and related electrical components deployed in their facilities.
Maintenance Segment Our maintenance segment provides retailers, distributors and other businesses with maintenance, repair and replacement services for the lighting and related electrical components deployed in their facilities.
Our accounts receivables, inventory and payables may increase to the extent our revenue and order levels increase Indebtedness Revolving Credit Agreement Our Credit Agreement provides for a five-year $25.0 million revolving credit facility (the “Credit Facility”) that matures on December 29, 2025.
Indebtedness Revolving Credit Agreement Our credit agreement provides for a five-year $25.0 million revolving credit facility (the “Credit Facility”) that matures on December 29, 2025. Borrowings under the Credit Facility are subject to a borrowing base requirement based on eligible receivables, inventory and cash.
We continue to focus on building our relationships and product and sales support for our ESCO and agent driven distribution channels. These efforts include an array of product and sales training efforts as well as the development of new products to cater to the unique needs of these sales channels. Grow EV Charging Installation Business.
These efforts include an array of product and sales training efforts as well as the development of new products to cater to the unique needs of these sales channels. Grow EV Charging Installation Business. We acquired Voltrek, a turnkey EV charging installation business, in fiscal 2023.
We completed the acquisition of Voltrek on October 5, 2022, which is intended to further expand our turnkey services capabilities as well as capitalize on the rapidly growing market for EV charging solutions. We completed the Stay-Lite Lighting acquisition on January 1, 2022, which is intended to further expand our maintenance services capabilities.
In addition, we offer lighting and electrical maintenance services which enables us to support a lifetime business relationship with our customer (which we call “Customers for Life”). We completed the acquisition of Voltrek on October 5, 2022, which was intended to further expand our turnkey services capabilities as well as capitalize on the rapidly growing market for EV charging solutions.
We believe we are ideally positioned to help customers to efficiently deploy new IoT controls and applications by leveraging the “Smart Ceiling” capabilities of their Orion solid state lighting system. IoT capabilities can include the management and tracking of facilities, personnel, resources and customer behavior, driving both sales and lowering costs.
Leverage of our Smart Lighting Systems to Support Internet of Things Applications. We believe we are ideally positioned to help customers to efficiently deploy new IoT controls and applications by leveraging the “Smart Ceiling” capabilities of their Orion solid state lighting system.
In fiscal 2023, we recognized tax expense of $18.0 million. In fiscal 2022, we recognized tax expense of $2.2 million. The fiscal 2023 expense was driven by a $17.8 million non-cash charge to increase the valuation allowance on a significant portion of our deferred tax assets.
Income tax expense decreased $18.0 million, or 99.9%, to $41 thousand compared to fiscal 2023. The fiscal 2023 expense included a one-time $17.8 million non-cash charge to increase the valuation allowance on a significant portion of our deferred tax assets.
Our impairment loss calculations require that we apply judgment in identifying asset groups, estimating future cash flows, determining asset fair values, and estimating asset’s useful lives. To make these judgments, we may use internal discounted cash flow estimates, quoted market prices, when available, and independent appraisals, as appropriate, to determine fair value.
To make these judgments, we may use internal discounted cash flow estimates, quoted market prices, when available, and independent appraisals, as appropriate, to determine fair value.
Fiscal 2022 Compared to Fiscal 2021 OSG segment revenue decreased in fiscal 2022 by 2.0%, or $1.7 million, and operating income decreased by 13.5%, or $1.0 million, compared to fiscal 2021, due to an overall reduction in project volume performed for our largest customer, partially offset by revenue from the acquisition of Stay-Lite Lighting.
Fiscal 2023 Compared to Fiscal 2022 Lighting segment revenue decreased in fiscal 2023 compared to fiscal 2022 by 52.3%, or $62.0 million, and operating income decreased by 123.8%, or $26.8 million, compared to fiscal 2022, due to an overall reduction in project volume performed for our largest customer.
Our net working capital as of March 31, 2022 was $32.9 million, consisting of $51.2 million in current assets and $18.4 million in current liabilities. The change was primarily due to decreases in inventory and collection of the employee retention tax credit plus increases in accounts payable, accrued expenses and accounts receivable.
Our net working capital as of March 31, 2022 was $32.9 million, consisting of $51.2 million in current assets and $18.4 million in current liabilities.
Replacing Reduced Revenue from Primary Customer In fiscal 2023, one customer accounted for 16.2% of our total revenue. In fiscal 2022, that same customer accounted for 49.1% of our total revenue, and in fiscal 2021, this same customer accounted for 56.0% of our total revenue.
Replacing Reduced Revenue from Primary Customer In fiscal 2024, 2023 and 2022, one customer accounted for 25.2%, 16.2% and 49.1% of our total revenue, respectively. In fiscal 2025, we expect that our customer concentration will continue at the approximate range experienced in fiscal 2024 and 2023.
We continue to monitor the realizability of our deferred tax assets and adjust the valuation allowance accordingly. Prior to fiscal 2021, we recorded a full valuation allowance against our net federal and net state deferred tax assets due to our cumulative three-year taxable losses.
We continue to monitor the realizability of our deferred tax assets and adjust the valuation allowance accordingly. During fiscal 2023, we established a full valuation allowance on our net deferred tax assets due to end of the period of sustained profitability.
Borrowings under the Credit Facility are subject to a borrowing base requirement based on eligible receivables, inventory and cash. As of March 31, 2023, the borrowing base supported approximately $17.3 million of availability under the Credit Facility with $10.0 million drawn against that availability. As of March 31, 2022, no amounts were borrowed under the Credit Facility.
As of March 31, 2024, the borrowing base supported approximately $20.1 million of availability under the Credit Facility with $10.0 million drawn against that availability. As of March 31, 2023, the borrowing base supported approximately $17.3 million of availability under the Credit Facility with $10.0 million drawn against that availability.
Cash used in financing activities in fiscal 2021 was $10.1 million. This cash used consisted primarily of a net payment of $10.0 million under our Credit Facility. Working Capital Our net working capital as of March 31, 2023 was $25.9 million, consisting of $50.4 million of current assets and $24.5 million of current liabilities.
Cash provided by financing activities in fiscal 2023 was $10.0 million which consisted of proceeds from our revolving credit facility. Cash provided by financing activities in fiscal 2022 was $0.1 million. Working Capital Our net working capital as of March 31, 2024 was $16.7 million, consisting of $44.8 million of current assets and $28.1 million of current liabilities.
In addition, in order to provide quality and timely service under our multi-location master retrofit agreements we are required to make substantial working capital expenditures and advance inventory purchases that we may not be able to recoup if the agreements or a substantial volume of purchase orders under the agreements are delayed or terminated.
In addition, in order to provide quality and timely service under our 29 multi-location master retrofit agreements we make substantial working capital expenditures and advance inventory purchases that we intend to recoup through the completion of these or similar projects. We typically sell our lighting systems in replacement of our customers’ existing fixtures. We call this replacement process a "retrofit".
The following table summarizes our EV Division operations results (dollars in thousands): Fiscal Year Ended March 31, 2023 2022 2021 Revenues $ 6,275 $ — $ — Operating (loss) $ (4,133 ) $ — $ — Operating margin (65.9 )% — — EV Division revenue generated by Voltrek in fiscal 2023 was $6.3 million.
The following table summarizes our EV segment operations results (dollars in thousands): Fiscal Year Ended March 31, 2024 2023 2022 Revenues $ 12,332 $ 6,275 — Operating loss $ (1,563 ) $ (4,158 ) — Operating margin (12.7 )% (66.3 )% — Fiscal 2024 Compared to Fiscal 2023 EV segment revenue increased 96.5% or $6.1 million in fiscal 2024 compared to fiscal 2023 primarily due to a full year of Voltrek results being included in segment results.
The following table summarizes our ODS segment operating results (dollars in thousands): Fiscal Year Ended March 31, 2023 2022 2021 Revenues $ 15,395 $ 22,209 $ 21,122 Operating (loss) income $ (186 ) $ 3,114 $ 2,430 Operating margin (1.2 )% 14.0 % 11.5 % Fiscal 2023 Compared to Fiscal 2022 ODS segment revenue decreased $6.8 million, or 30.7%, and operating income decreased $3.3 million, or 106.0%, in fiscal 2023 compared to fiscal 2022 primarily due to reduced sales to a large global on-line retailer.
The following table summarizes our lighting segment operating results (dollars in thousands): Fiscal Year Ended March 31, 2024 2023 2022 Revenues $ 61,102 $ 56,553 $ 118,557 Operating (loss) income $ (1,352 ) $ (5,150 ) $ 21,647 Operating margin (2.2 )% (9.1 )% 18.3 % Fiscal 2024 Compared to Fiscal 2023 Lighting segment revenue increased in fiscal 2024 by 8.0%, or $4.6 million, and operating loss decreased $3.8 million, compared to fiscal 2023, due to increased project volume on a government retrofit project.
Our experience with large national customers and our large installed base of fixtures positions us well to extend a maintenance offering to historical customers, as well as to new customers. 38 Development of this recurring revenue stream is making progress and we believe there is significant market opportunity.
We believe we can leverage our construction management process expertise to develop a high-quality, quick-response, multi-location maintenance service offering. Our experience with large national customers and our large installed base of fixtures positions us well to extend a maintenance offering to historical customers, as well as to new customers.
The following table summarizes our USM segment operating results (dollars in thousands): Fiscal Year Ended March 31, 2023 2022 2021 Revenues $ 17,710 $ 19,606 $ 11,475 Operating income $ 1,605 $ 3,963 $ 1,683 Operating margin 9.1 % 20.2 % 14.7 % Fiscal 2023 Compared to Fiscal 2022 USM segment revenue decreased $1.9 million, or 9.7%, and operating income decreased by $2.4 million, or 59.5%, in fiscal 2023 compared to fiscal 2022, primarily due to a less diversified customer base.
The following table summarizes our maintenance segment operating results (dollars in thousands): Fiscal Year Ended March 31, 2024 2023 2022 Revenues $ 17,147 $ 14,555 $ 5,826 Operating (loss) income $ (5,523 ) $ (2,221 ) $ 337 Operating margin (32.2 )% (15.3 )% 5.8 % 36 Fiscal 2024 Compared to Fiscal 2023 Maintenance segment revenue increased $2.6 million, or 17.8% in fiscal 2024 compared to fiscal 2023 primarily due to increased volume at a major customer.
As a result, these added capabilities provide customers an even greater return on investment from their lighting system and make us an even more attractive partner. We plan to pursue the expansion of our IoT, “smart-building” and “connected ceiling” and other related technology, software and controls products and services that we offer to our customers.
IoT capabilities can include the management and tracking of facilities, personnel, resources and customer behavior, driving both sales and lowering costs. As a result, these added capabilities provide customers an even greater return on investment from their lighting system and make us an even more attractive partner.
We performed the recoverability test for the asset group by comparing its carrying value to the group’s expected future undiscounted cash flows. We concluded that the undiscounted cash flows of the long-lived asset group exceeded its carrying value. As such the asset group was deemed recoverable and no impairment was recorded.
As of January 1, 2024, due to a change in our forecast, a triggering event occurred requiring us to evaluate certain long-lived assets in our Maintenance segment. We performed the recoverability test for the asset group by comparing its carrying value to the group’s expected future undiscounted cash flows.
Cash provided by operating activities for fiscal 2021 was $1.7 million and consisted of a net income adjusted for non-cash expense items of $9.1 million and net cash used by changes in operating assets and liabilities of $7.4 million.
Cash used in operating activities for fiscal 2024 was $10.1 million and consisted of our net loss of $11.7 million adjusted for non-cash expense items and net cash used in changes in operating assets of $1.6 million, the largest of which was a $5.0 million increase in accounts payable, an increase of $3.2 million in revenue earned not billed, and a $2.3 million decrease in accrued liabilities.
Operating loss in this segment was primarily a result of $4.0 million earn-out expense included in general and administrative costs. Liquidity and Capital Resources Overview We had $16.0 million in cash and cash equivalents as of March 31, 2023, compared to $14.5 million at March 31, 2022.
EV segment operating loss decreased $2.6 million or 62.4% in fiscal 2024 compared to fiscal 2023 due to increased revenue volume in the segment, partially offset by reduced gross margins. Liquidity and Capital Resources Overview We had $5.2 million in cash and cash equivalents as of March 31, 2024, compared to $16.0 million at March 31, 2023.
This decrease led to a corresponding operating loss in this segment, as a result of decreased absorption of fixed costs.
This increase led to a corresponding operating loss decrease in this segment, along with improved project margins.
In fiscal 2022, we incurred acquisition expenses of $0.5 million relating to the acquisition of Stay-Lite Lighting. Sales and Marketing. Our sales and marketing expenses increased 12.4%, or $1.3 million, in fiscal 2022 compared to fiscal 2021.
In fiscal 2023, we incurred acquisition expenses of $0.8 million relating to the acquisition of Voltrek. Sales and Marketing. Our sales and marketing expenses increased 14.0%, or $1.6 million, in fiscal 2024 compared to fiscal 2023. The increase was primarily due to an increase in commission expense on higher sales volume. Research and Development.
The increase in service revenue was primarily due to the acquisition of Stay-Lite Lighting. Cost of product revenue increased by 3.2%, or $2.0 million, in fiscal 2022 versus the comparable period in fiscal 2021. Cost of service revenue increased by 7.4%, or $1.7 million, in fiscal 2022 versus fiscal 2021.
Product revenue increased by 10.7%, or $6.1 million, for fiscal 2024 versus fiscal 2023. Service revenue increased by 35.2%, or $7.1 million, for fiscal 2024 versus fiscal 2023. The increase in product and service revenue was primarily due to the execution of a significant government retrofit Lighting segment project along with increased EV segment revenues.
In fiscal 2021, we began providing energy maintenance services, and, on January 1, 2022, we completed the acquisition of Stay-Lite Lighting. The acquisition of Stay-Lite Lighting is intended to further increase our energy maintenance services capabilities. Support success of our ESCO and agent-driven distribution sales channels.
We completed the Stay-Lite Lighting acquisition on January 1, 2022, which was intended to further expand our maintenance services capabilities. We believe the market for LED lighting products and related controls continues to grow.
No share sales have yet been effected pursuant to the ATM program through March 31, 2023. We also are exploring various alternative sources of liquidity to help ensure that we will have the best allocation of investing capital to satisfy our working capital needs.
See Note 20 - Subsequent Event to our accompanying audited consolidated financial statements for more information. We regularly explore various alternative sources of liquidity to help ensure that we will have the best allocation of invested capital to satisfy our working capital needs.
Removed
In addition, we began to offer lighting and electrical maintenance services in fiscal 2021 which enables us to support a lifetime business relationship with our customer (which we call “Customers for Life”).
Added
Virtually all of our sales occur within North America or for the US Department of Defense's military bases operating in foreign countries. Our lighting products consist primarily of LED lighting fixtures, many of which include IoT enabled control systems.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeDuring fiscal 2023, we have experienced commodity price increases; however, as of the date of this report, we are not able to predict the future impact of on this risk. A hypothetical additional 20% increase in aluminum prices would have had a negative impact of $0.7 million on our net income in fiscal 2023. 50
Biggest changeDuring fiscal 2024, we have experienced commodity price increases; however, as of the date of this report, we are not able to predict the future impact of on this risk. A hypothetical additional 20% increase in aluminum prices would have had a negative impact of $0.7 million on our net income in fiscal 2024. 43
As a result, we do not currently have any significant interest rate exposure. As of March 31, 2023, we had $10 million of outstanding debt with floating interest rates. Commodity Price Risk. We are exposed to certain commodity price risks associated with our purchases of raw materials, most significantly our aluminum purchases.
As a result, we do not currently have any significant interest rate exposure. As of March 31, 2024, we had $10.0 million of outstanding debt with floating interest rates. Commodity Price Risk. We are exposed to certain commodity price risks associated with our purchases of raw materials, most significantly our aluminum purchases.

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