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What changed in AMERICAN SUPERCONDUCTOR CORP /DE/'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of AMERICAN SUPERCONDUCTOR CORP /DE/'s 2022 and 2023 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 2023 report.

+282 added−288 removedSource: 10-K (2023-05-31) vs 10-K (2022-06-01)

Top changes in AMERICAN SUPERCONDUCTOR CORP /DE/'s 2023 10-K

282 paragraphs added · 288 removed · 222 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

123 edited+24 added−37 removed170 unchanged
Biggest changeFINANCIAL STATEMENTS CONSOLIDATED BALANCE SHEETS (In thousands) March 31, March 31, 2022 2021 ASSETS Current assets: Cash and cash equivalents $ 40,584 $ 67,814 Marketable securities — 5,140 Accounts receivable 20,280 13,267 Inventory 23,666 13,306 Prepaid expenses and other current assets 7,052 3,546 Restricted cash 2,754 2,157 Total current assets 94,336 105,230 Property, plant and equipment, net 13,656 8,997 Intangibles, net 11,311 9,153 Right-of-use asset 3,502 3,747 Goodwill 43,471 34,634 Restricted cash 6,148 5,568 Deferred tax assets 1,224 1,223 Other assets 239 314 Total assets $ 173,887 $ 168,866 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued expenses $ 29,140 $ 19,810 Lease liability, current portion 740 612 Debt, current portion 72 — Contingent consideration 1,200 7,050 Deferred revenue, current portion 22,812 13,266 Total current liabilities 53,964 40,738 Deferred revenue, long term portion 7,222 7,991 Lease liability, long term portion 2,900 3,246 Deferred tax liabilities 297 274 Debt, long-term portion 90 — Other liabilities 25 25 Total liabilities 64,498 52,274 Commitments and contingencies (Note 17) Stockholders' equity: Common stock, $ 0.01 par value, 75,000,000 shares authorized; 28,919,990 and 27,988,536 shares issued and 28,522,359 and 27,593,400 shares outstanding at March 31, 2022 and 2021, respectively 289 280 Additional paid-in capital 1,133,536 1,121,495 Treasury stock, at cost, 397,631 and 395,136 shares at March 31, 2022 and 2021, respectively (3,639 ) (3,593 ) Accumulated other comprehensive loss (291 ) (277 ) Accumulated deficit (1,020,506 ) (1,001,313 ) Total stockholders' equity 109,389 116,592 Total liabilities and stockholders' equity $ 173,887 $ 168,866 The accompanying notes are an integral part of the consolidated financial statements. 36 AMERICAN SUPERCONDUCTOR CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) Fiscal Year Ended March 31, 2022 2021 Revenues $ 108,435 $ 87,125 Cost of revenues 94,943 69,671 Gross profit 13,492 17,454 Operating expenses: Research and development 10,470 11,015 Selling, general and administrative 27,494 25,322 Amortization of acquisition related intangibles 2,467 1,222 Change in fair value on contingent consideration (5,850 ) 3,060 Total operating expenses 34,581 40,619 Operating loss (21,089 ) (23,165 ) Interest income, net 75 426 Other expense, net (28 ) (771 ) Loss before income tax expense (21,042 ) (23,510 ) Income tax benefit (1,849 ) (832 ) Net loss $ (19,193 ) $ (22,678 ) Net loss per common share Basic $ (0.71 ) $ (0.95 ) Diluted $ (0.71 ) $ (0.95 ) Weighted average number of common shares outstanding Basic 27,203 23,879 Diluted 27,203 23,879 The accompanying notes are an integral part of the consolidated financial statements. 37 AMERICAN SUPERCONDUCTOR CORPORATION CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (In thousands) Fiscal Year Ended March 31, 2022 2021 Net loss $ (19,193 ) $ (22,678 ) Other comprehensive loss, net of tax: Foreign currency translation losses (14 ) (61 ) Total other comprehensive loss, net of tax (14 ) (61 ) Comprehensive loss $ (19,207 ) $ (22,739 ) The accompanying notes are an integral part of the consolidated financial statements. 38 AMERICAN SUPERCONDUCTOR CORPORATION CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (In thousands) Common Stock Additional Accumulated Other Total Number of Shares Par Value Paid-in Capital Treasury Stock Comprehensive Income (Loss) Accumulated Deficit Stockholders' Equity Balance at March 31, 2020 22,902 $ 229 $ 1,053,507 $ (2,666 ) $ (216 ) $ (978,635 ) $ 72,219 Exercise of stock options 3 — $ 63 — — — $ 63 Issuance of common stock - ESPP 15 — 215 — — — 215 Issuance of common stock - restricted shares 494 5 (5 ) — — — — Stock-based compensation expense — — 3,485 — — — 3,485 Issuance of stock for 401(k) match 30 — 366 — — — 366 Issuance of common stock - equity offering 3,670 37 51,440 — — — 51,477 Issuance of common stock - NEPSI acquisition 874 9 12,424 — — — 12,433 Repurchase of treasury stock — — — (927 ) — — (927 ) Cumulative translation adjustment — — — — (61 ) — (61 ) Net loss — — — — — (22,678 ) (22,678 ) Balance at March 31, 2021 27,988 $ 280 $ 1,121,495 $ (3,593 ) $ (277 ) $ (1,001,313 ) $ 116,592 Issuance of common stock - ESPP 28 — 241 — — — 241 Issuance of common stock - Bonus payments 158 2 2,278 — — — 2,280 Issuance of common stock - restricted shares 404 4 (4 ) — — — — Stock-based compensation expense — — 4,661 — — — 4,661 Issuance of stock for 401(k) match 40 — 481 — — — 481 Issuance of common stock - Neeltran acquisition 302 3 4,384 — — — 4,387 Repurchase of treasury stock — — — (46 ) — — (46 ) Cumulative translation adjustment — — — — (14 ) — (14 ) Net loss — — — — — (19,193 ) (19,193 ) Balance at March 31, 2022 28,920 $ 289 $ 1,133,536 $ (3,639 ) $ (291 ) $ (1,020,506 ) $ 109,389 The accompanying notes are an integral part of the consolidated financial statements. 39 AMERICAN SUPERCONDUCTOR CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Fiscal Year Ended March 31, 2022 2021 Cash flows from operating activities: Net loss $ (19,193 ) $ (22,678 ) Adjustments to reconcile net loss to net cash used in operations: Depreciation and amortization 5,341 5,352 Stock-based compensation expense 4,661 3,485 Provision for excess and obsolete inventory 1,902 1,762 Deferred income taxes (2,403 ) (1,221 ) Change in fair value of contingent consideration (5,850 ) 3,060 Non-cash interest income (49 ) (94 ) Other non-cash items 525 272 Unrealized foreign exchange loss/(gain) on cash and cash equivalents (186 ) 363 Changes in operating asset and liability accounts: Accounts receivable (3,760 ) 5,193 Inventory (3,307 ) 8,106 Prepaid expenses and other current assets (420 ) 823 Accounts payable and accrued expenses 4,695 (5,047 ) Deferred revenue (933 ) (8,057 ) Net cash used in operating activities (18,977 ) (8,681 ) Cash flows from investing activities: Purchase of property, plant and equipment (938 ) (1,764 ) Sale of marketable securities — 30,152 Cash paid for acquisition, net of cash received (11,479 ) (26,000 ) Proceeds from the maturity of marketable securities 5,189 — Change in other assets 65 81 Net cash provided by (used in) investing activities (7,163 ) 2,469 Cash flows from financing activities: Repurchase of treasury stock (46 ) (927 ) Repayment of debt (53 ) — Proceeds from public equity offering, net — 51,477 Proceeds from exercise of employee stock options and ESPP 241 278 Net cash provided by financing activities 142 50,828 Effect of exchange rate changes on cash, cash equivalents and restricted cash (55 ) 59 Net increase (decrease) in cash, cash equivalents and restricted cash (26,053 ) 44,675 Cash, cash equivalents and restricted cash at beginning of year 75,539 30,864 Cash, cash equivalents and restricted cash at end of year $ 49,486 $ 75,539 Supplemental schedule of cash flow information: Cash paid for income taxes, net of refunds $ 531 $ 594 Non-cash investing and financing activities Issuance of common stock in connection with the purchase of Northeast Power Systems, Inc — 12,433 Issuance of common stock in connection with the purchase of Neeltran, Inc. 4,387 — Issuance of common stock to settle liabilities 2,761 395 The accompanying notes are an integral part of the consolidated financial statements. 40 1.
Biggest changeFINANCIAL STATEMENTS CONSOLIDATED BALANCE SHEETS (In thousands) March 31, March 31, 2023 2022 ASSETS Current assets: Cash and cash equivalents $ 23,360 $ 40,584 Accounts receivable 30,665 20,280 Inventory 36,986 23,666 Prepaid expenses and other current assets 13,429 7,052 Restricted cash 1,733 2,754 Total current assets 106,173 94,336 Property, plant and equipment, net 12,309 13,656 Intangibles, net 8,527 11,311 Right-of-use asset 2,857 3,502 Goodwill 43,471 43,471 Restricted cash 582 6,148 Deferred tax assets 1,114 1,224 Other assets 528 239 Total assets $ 175,561 $ 173,887 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued expenses $ 38,383 $ 29,140 Lease liability, current portion 808 740 Debt, current portion 75 72 Contingent consideration 1,270 1,200 Deferred revenue, current portion 43,572 22,812 Total current liabilities 84,108 53,964 Deferred revenue, long term portion 7,188 7,222 Lease liability, long term portion 2,184 2,900 Deferred tax liabilities 243 297 Debt, long-term portion 15 90 Other liabilities 26 25 Total liabilities 93,764 64,498 Commitments and contingencies (Note 17) Stockholders' equity: Common stock, $ 0.01 par value, 75,000,000 shares authorized; 29,937,119 and 28,919,990 shares issued and 29,539,488 and 28,522,359 shares outstanding at March 31, 2023 and 2022, respectively 299 289 Additional paid-in capital 1,139,113 1,133,536 Treasury stock, at cost, 397,631 at March 31, 2023 and 2022, respectively (3,639 ) (3,639 ) Accumulated other comprehensive income (loss) 1,571 (291 ) Accumulated deficit (1,055,547 ) (1,020,506 ) Total stockholders' equity 81,797 109,389 Total liabilities and stockholders' equity $ 175,561 $ 173,887 The accompanying notes are an integral part of the consolidated financial statements. 35 AMERICAN SUPERCONDUCTOR CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) Fiscal Year Ended March 31, 2023 2022 Revenues $ 105,984 $ 108,435 Cost of revenues 97,463 94,943 Gross profit 8,521 13,492 Operating expenses: Research and development 8,966 10,470 Selling, general and administrative 28,700 27,494 Amortization of acquisition related intangibles 2,746 2,467 Change in fair value on contingent consideration 70 (5,850 ) Restructuring 1,048 — Total operating expenses 41,530 34,581 Operating loss (33,009 ) (21,089 ) Interest income, net 252 75 China dissolution (1,921 ) - Other expense, net (148 ) (28 ) Loss before income tax expense (benefit) (34,826 ) (21,042 ) Income tax expense (benefit) 215 (1,849 ) Net loss $ (35,041 ) $ (19,193 ) Net loss per common share Basic $ (1.26 ) $ (0.71 ) Diluted $ (1.26 ) $ (0.71 ) Weighted average number of common shares outstanding Basic 27,848 27,203 Diluted 27,848 27,203 The accompanying notes are an integral part of the consolidated financial statements. 36 AMERICAN SUPERCONDUCTOR CORPORATION CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (In thousands) Fiscal Year Ended March 31, 2023 2022 Net loss $ (35,041 ) $ (19,193 ) Other comprehensive (loss) gain, net of tax: China dissolution 1,921 - Foreign currency translation loss (59 ) (14 ) Total other comprehensive (loss) gain, net of tax 1,862 (14 ) Comprehensive loss $ (33,179 ) $ (19,207 ) The accompanying notes are an integral part of the consolidated financial statements. 37 AMERICAN SUPERCONDUCTOR CORPORATION CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (In thousands) Common Stock Additional Accumulated Other Total Number of Shares Par Value Paid-in Capital Treasury Stock Comprehensive Income (Loss) Accumulated Deficit Stockholders' Equity Balance at March 31, 2021 27,988 $ 280 $ 1,121,495 $ (3,593 ) $ (277 ) $ (1,001,313 ) $ 116,592 Issuance of common stock - ESPP 28 — $ 241 — — — $ 241 Issuance of common stock - Bonus payments 158 2 2,278 — — — 2,280 Issuance of common stock - restricted shares 404 4 (4 ) — — — — Stock-based compensation expense — — 4,661 — — — 4,661 Issuance of stock for 401(k) match 40 — 481 — — — 481 Issuance of common stock - Neeltran acquisition 302 3 4,384 — — — 4,387 Repurchase of treasury stock — — — (46 ) — — (46 ) Cumulative translation adjustment — — — — (14 ) — (14 ) Net loss — — — — — (19,193 ) (19,193 ) Balance at March 31, 2022 28,920 $ 289 $ 1,133,536 $ (3,639 ) $ (291 ) $ (1,020,506 ) $ 109,389 Issuance of common stock - ESPP 60 1 234 — — — 235 Issuance of common stock - restricted shares 827 8 (8 ) — — — — Stock-based compensation expense — — 4,729 — — — 4,729 Issuance of stock for 401(k) match 130 1 622 — — — 623 Cumulative translation adjustment — — — — 1,862 — 1,862 Net loss — — — — — (35,041 ) (35,041 ) Balance at March 31, 2023 29,937 $ 299 $ 1,139,113 $ (3,639 ) $ 1,571 $ (1,055,547 ) $ 81,797 ) ) The accompanying notes are an integral part of the consolidated financial statements. 38 AMERICAN SUPERCONDUCTOR CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Fiscal Year Ended March 31, 2023 2022 Cash flows from operating activities: Net loss $ (35,041 ) $ (19,193 ) Adjustments to reconcile net loss to net cash used in operations: Depreciation and amortization 5,361 5,341 Stock-based compensation expense 4,729 4,661 Provision for excess and obsolete inventory 1,467 1,902 Deferred income taxes 24 (2,403 ) Change in fair value of contingent consideration 70 (5,850 ) China dissolution 1,921 — Non-cash interest income — (49 ) Other non-cash items 600 525 Unrealized foreign exchange gain on cash and cash equivalents (226 ) (186 ) Changes in operating asset and liability accounts: Accounts receivable (10,360 ) (3,760 ) Inventory (14,796 ) (3,307 ) Prepaid expenses and other current assets (5,757 ) (420 ) Accounts payable and accrued expenses 8,660 4,695 Deferred revenue 20,863 (933 ) Net cash used in operating activities (22,485 ) (18,977 ) Cash flows from investing activities: Purchase of property, plant and equipment (1,236 ) (938 ) Cash paid for acquisition, net of cash received — (11,479 ) Proceeds from the maturity of marketable securities — 5,189 Change in other assets (281 ) 65 Net cash used in investing activities (1,517 ) (7,163 ) Cash flows from financing activities: Repurchase of treasury stock — (46 ) Repayment of debt (73 ) (53 ) Proceeds from exercise of employee stock options and ESPP 235 241 Net cash provided by financing activities 162 142 Effect of exchange rate changes on cash, cash equivalents and restricted cash 29 (55 ) Net decrease in cash, cash equivalents and restricted cash (23,811 ) (26,053 ) Cash, cash equivalents and restricted cash at beginning of year 49,486 75,539 Cash, cash equivalents and restricted cash at end of year $ 25,675 $ 49,486 Supplemental schedule of cash flow information: Cash paid for income taxes, net of refunds 350 $ 531 Non-cash investing and financing activities Issuance of common stock in connection with the purchase of Neeltran, Inc. — 4,387 Issuance of common stock to settle liabilities 623 2,761 The accompanying notes are an integral part of the consolidated financial statements. 39 1.
The first step is to evaluate the tax position for recognition by determining if, based on the technical merits, it is more likely than not that the position will be sustained upon audit, including resolution of related appeals or litigation processes, if any.
The first step is to evaluate the tax position for recognition by determining if, based on the technical merits, it is more likely than not that the position will be sustained upon audit, including resolution of related appeals or litigation processes, if any.
The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement. The Company reevaluates these uncertain tax positions on a quarterly basis.
The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement. The Company reevaluates these uncertain tax positions on a quarterly basis.
This evaluation is based on factors including, but not limited to, changes in facts or circumstances, changes in tax law, effectively settled issues under audit and new audit activity. Any changes in these factors could result in the recognition of a tax benefit or an additional charge to the tax provision.
This evaluation is based on factors including, but not limited to, changes in facts or circumstances, changes in tax law, effectively settled issues under audit and new audit activity. Any changes in these factors could result in the recognition of a tax benefit or an additional charge to the tax provision.
Debt As part of the Neeltran Acquisition, the Company identified four equipment financing agreements that Neeltran had entered into prior to the acquisition on May 6, 2021. The Company determined to account for these agreements as a debt transaction and recorded current and long-term debt liabilities of $0.1 million each during the twelve months ended March 31, 2022. 15.
Debt As part of the Neeltran Acquisition, the Company identified four equipment financing agreements that Neeltran had entered into prior to the acquisition on May 6, 2021. The Company determined to account for these agreements as a debt transaction and recorded current and long-term debt liabilities of $0.1 million each during the twelve months ended March 31, 2022.
The assets and liabilities of AMSC Austria and AMSC China are translated into U.S. dollars at the exchange rate in effect at the balance sheet date and income and expense items are translated at average rates for the period. Cumulative translation adjustments are excluded from net loss and shown as a separate component of stockholders’ equity.
The assets and liabilities of AMSC Austria are translated into U.S. dollars at the exchange rate in effect at the balance sheet date and income and expense items are translated at average rates for the period. Cumulative translation adjustments are excluded from net loss and shown as a separate component of stockholders’ equity.
As part of the transaction, the selling stockholders may receive up to an additional 1,000,000 shares of common stock of the Company upon the achievement of certain specified revenue objectives during varying periods of up to four years following closing of the NEPSI Acquisition.
As part of the transaction, the selling stockholders may receive up to an additional 1,000,000 shares of common stock of the Company upon the achievement of certain specified revenue objectives during varying periods of up to four years following closing of the NEPSI Acquisition. 4.
Program costs may be deferred and recorded as inventory on contracts on which costs are incurred in excess of approved contractual amounts and/or funding, if future recovery of the costs is deemed probable. 42 At each balance sheet date, the Company evaluates its ending inventories for excess quantities and obsolescence. Inventories that management considers excess or obsolete are reserved.
Program costs may be deferred and recorded as inventory on contracts on which costs are incurred in excess of approved contractual amounts and/or funding, if future recovery of the costs is deemed probable. 41 At each balance sheet date, the Company evaluates its ending inventories for excess quantities and obsolescence. Inventories that management considers excess or obsolete are reserved.
The Company evaluates its long-lived assets whenever events or circumstances suggest that the carrying amount of an asset or group of assets may not be recoverable from the estimated undiscounted future cash flows. There were no indicators requiring impairment testing on the Company's long-lived assets during the fiscal years ended March 31, 2022 and 2021 .
The Company evaluates its long-lived assets whenever events or circumstances suggest that the carrying amount of an asset or group of assets may not be recoverable from the estimated undiscounted future cash flows. There were no indicators requiring impairment testing on the Company's long-lived assets during the fiscal years ended March 31, 2023 and 2022 .
The Company includes interest and penalties related to gross unrecognized tax benefits within the provision for income taxes. See Note 13, “Income Taxes,” for further information regarding its income tax assumptions and expenses. Stock-Based Compensation The Company accounts for stock-based payment transactions using a fair value-based method and recognizes the related expense in the results of operations.
The Company includes interest and penalties related to gross unrecognized tax benefits within the provision for income taxes. See Note 14, “Income Taxes,” for further information regarding its income tax assumptions and expenses. Stock-Based Compensation The Company accounts for stock-based payment transactions using a fair value-based method and recognizes the related expense in the results of operations.
As of March 31, 2022 and March 31, 2021 , the Company’s contract assets and liabilities primarily relate to the timing differences between cash received from a customer in connection with contractual rights to invoicing and the timing of revenue recognition following completion of performance obligations. The Company's accounts receivable balance is made up entirely of customer contract related balances.
As of March 31, 2023 and March 31, 2022 , the Company’s contract assets and liabilities primarily relate to the timing differences between cash received from a customer in connection with contractual rights to invoicing and the timing of revenue recognition following completion of performance obligations. The Company's accounts receivable balance is made up entirely of customer contract related balances.
The Company reviews SSP and the related margins at least annually. 44 The Company’s license agreements provide either for the payment of contractually determined paid-up front license fees or milestone based payments in consideration for the grant of rights to manufacture and/or sell products using its patented technologies or know-how.
The Company reviews SSP and the related margins at least annually. 43 The Company’s license agreements provide either for the payment of contractually determined paid-up front license fees or milestone based payments in consideration for the grant of rights to manufacture and/or sell products using its patented technologies or know-how.
The amendments in ASU 2021 - 10 will improve financial reporting by requiring disclosures that increase the transparency of transactions with government accounted for by applying a grant or contribution accounting model by analogy. Following the release of ASU 2021 - 10 in November 2021, the new effective date will be annual reporting periods beginning after December 15, 2021.
The amendments in ASU 2021 - 10 will improve financial reporting by requiring disclosures that increase the transparency of transactions with government accounted for by applying a grant or contribution accounting model by analogy. Following the release of ASU 2021 - 10 in November 2021, the new effective date is annual reporting periods beginning after December 15, 2021.
The Company did not have any transfers of assets and liabilities from Level 1, Level 2 or Level 3 of the fair value measurement hierarchy during the year ended March 31, 2022 . A financial asset’s or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.
The Company did not have any transfers of assets and liabilities from Level 1, Level 2 or Level 3 of the fair value measurement hierarchy during the year ended March 31, 2023 . A financial asset’s or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.
The Company has a history of successfully obtaining financing under incrementally-funded contracts with the U.S. government and it expects to continue to obtain additional contract modifications in the year ending March 31, 2023 and beyond as incremental funding is authorized and appropriated by the government.
The Company has a history of successfully obtaining financing under incrementally-funded contracts with the U.S. government and it expects to continue to obtain additional contract modifications in the year ending March 31, 2024 and beyond as incremental funding is authorized and appropriated by the government.
During the year ended March 31, 2022, AMSC China was dissolved, so all deferred tax assets for AMSC China have been written off as of March 31, 2022 . The Company had established a full valuation allowance against its deferred tax assets in China as the future tax benefit was not expected to reverse in the foreseeable future.
During the year ended March 31, 2023, AMSC China was dissolved, so all deferred tax assets for AMSC China have been written off as of March 31, 2023 . The Company had established a full valuation allowance against its deferred tax assets in China as the future tax benefit was not expected to reverse in the foreseeable future.
Also on May 6, 2021 , pursuant to the Real Property Purchase Agreement, the Company's wholly-owned Connecticut limited liability company, AMSC Husky LLC ("AMSC Husky"), purchased the real property that served as Neeltran's headquarters for $4.3 million, of which (a) $2.4 million was paid in immediately available funds by AMSC Husky to the owners of such real property, and (b) $1.9 million was paid directly to TD Bank as full payment for the outstanding indebtedness secured by the mortgage on such real property.
Also on May 6, 2021 , pursuant to the terms of the Real Property Purchase Agreement, the Company's wholly-owned Connecticut limited liability company, AMSC Husky LLC ("AMSC Husky"), purchased the real property that serves as Neeltran's headquarters for $4.3 million, of which (a) $2.4 million was paid in immediately available funds by AMSC Husky to the owners of such real property, and (b) $1.9 million was paid directly to TD Bank as full payment for the outstanding indebtedness secured by the mortgage on such real property.
Should actual performance rates or repair costs differ from estimates, revision to the estimated warranty liability would be required. Research and Development Costs Research and development costs are expensed as incurred. 45 Income Taxes The Company’s provision for income taxes is comprised of a current and a deferred portion.
Should actual performance rates or repair costs differ from estimates, revision to the estimated warranty liability would be required. Research and Development Costs Research and development costs are expensed as incurred. 44 Income Taxes The Company’s provision for income taxes is comprised of a current and a deferred portion.
Legal costs incurred in connection with loss contingencies are expensed as incurred. See Note 17, “Commitments and Contingencies,” for further information. Disclosure of Fair Value of Financial Instruments The Company’s financial instruments consist principally of cash and cash equivalents, accounts receivable, marketable securities, accounts payable, accrued expenses, and derivatives.
Legal costs incurred in connection with loss contingencies are expensed as incurred. See Note 17, “Commitments and Contingencies,” for further information. Disclosure of Fair Value of Financial Instruments The Company’s financial instruments consist principally of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, and derivatives.
This increase is not reflected in the pro forma condensed combined statements of operations because it does not have a continuing impact beyond the first year. Backlog of $0.1 million was evaluated using the multi period excess earnings method under the income approach.
This increase is not reflected in the pro forma condensed consolidated statements of operations because it does not have a continuing impact beyond the first year. Backlog of $0.1 million was evaluated using the multi period excess earnings method under the income approach.
As Neeltran was previously a private company, the adoption of Accounting Standards Codification 842 ("ASC 842" ) was completed as part of the Neeltran Acquisition. See Note 15 "Leases" for further details. Neeltran had previously adopted Accounting Standards Codification 606, Revenue from Contracts with Customers ("ASC 606" ) as part of prior year audited financial statements.
As Neeltran was previously a private company, the adoption of Accounting Standards Codification 842 ("ASC 842" ) was completed as part of the Neeltran Acquisition. See Note 16 "Leases" for further details. Neeltran had previously adopted Accounting Standards Codification 606, Revenue from Contracts with Customers ("ASC 606" ) as part of prior year audited financial statements.
In accordance with ASC 280, Segment Reporting , we aggregate three operating segments into one reporting segment for financial reporting purposes due to their similar operating and financial characteristics. Our operating segments reflect the way in which internally-reported financial information is used to make decisions and allocate resources.
In accordance with ASC 280, Segment Reporting , we aggregate four operating segments into one reporting segment for financial reporting purposes due to their similar operating and financial characteristics. Our operating segments reflect the way in which internally-reported financial information is used to make decisions and allocate resources.
The non-employee share based payments will be included within the Company's stock compensation currently reported. 46 Computation of Net Loss per Common Share Basic net loss per share (“EPS”) is computed by dividing net loss by the weighted-average number of common shares outstanding for the period.
The non-employee share based payments will be included within the Company's stock compensation currently reported. 45 Computation of Net Loss per Common Share Basic net loss per share (“EPS”) is computed by dividing net loss by the weighted-average number of common shares outstanding for the period.
The pro forma amounts are not necessarily indicative of the operating results that would have occurred if the NEPSI and Neeltran Acquisition and related transactions had been completed at the beginning of the applicable periods presented. In addition, the pro forma amounts are not necessarily indicative of operating results in future periods. 4.
The pro forma amounts are not necessarily indicative of the operating results that would have occurred if the Neeltran Acquisition and related transactions had been completed at the beginning of the applicable periods presented. In addition, the pro forma amounts are not necessarily indicative of operating results in future periods.
Subsequent Events The Company has performed an evaluation of subsequent events through the time of filing this Annual Report on Form 10 -K with the SEC, and has determined that there are no such events to report. 65
Subsequent Events The Company has performed an evaluation of subsequent events through the time of filing this Annual Report on Form 10 -K with the SEC, and has determined that there are no such events to report. 63
The Company did not identify any uncertain tax positions at March 31, 2022 . The Company did not have any gross unrecognized tax benefits at March 31, 2022 or 2021 . There were no reversals of uncertain tax positions in the fiscal years ended March 31, 2022 and 2021 .
The Company did not identify any uncertain tax positions at March 31, 2023 . The Company did not have any gross unrecognized tax benefits at March 31, 2023 or 2022 . There were no reversals of uncertain tax positions in the fiscal years ended March 31, 2023 and 2022 .
The 2007 Plan provides for the grant of incentive stock options intended to qualify under Section 422 of the IRC of 1986, as amended, nonstatutory stock options, stock appreciation rights, restricted stock, restricted stock units and other stock-based awards.
The 2022 Plan provides for the grant of incentive stock options intended to qualify under Section 422 of the IRC of 1986, as amended, nonstatutory stock options, stock appreciation rights, restricted stock, restricted stock units and other stock-based awards.
The Company performed its annual assessment of goodwill on February 28, 2022 and noted no triggering events from the analysis date to March 31, 2022 and determined that there was no impairment to goodwill.
The Company performed its annual assessment of goodwill on February 28, 2023 and noted no triggering events from the analysis date to March 31, 2023 and determined that there was no impairment to goodwill.
Customer relationships of $3.5 million relates to customers currently under contract and was determined based on a multi period excess earnings method under the income approach. The method of amortization being utilized is the economic consumption over 7 years with the expense being allocated to SG&A.
Customer relationships of $3.5 million relates to customers currently under contract and was determined based on a multi period excess earnings method under the income approach. The method of amortization being utilized is the economic consumption over 7 years with the expense being allocated to selling, general and administrative ("SG&A").
For U.S. federal tax purpose, approximately $86.7 million of federal net operating losses have an indefinite carryforward period. Included in the U.S. net operating loss are $3.7 million of acquired losses from Power Quality Systems, Inc. and $0.3 million of acquired losses from Infinia Technology Corporation.
For U.S. federal tax purpose, approximately $101.7 million of federal net operating losses have an indefinite carryforward period. Included in the U.S. net operating loss are $3.5 million of acquired losses from Power Quality Systems, Inc. and $0.3 million of acquired losses from Infinia Technology Corporation.
A dditionally, there was no impairment identified for the fiscal year ended March 31, 2021 based on the assessment performed in the prior fiscal year. 43 Revenue Recognition Revenue contracts are defined as an arrangement that creates enforceable rights and obligations of both parties where collection of the contract price is deemed probable.
A dditionally, there was no impairment identified for the fiscal year ended March 31, 2022 based on the assessment performed in the prior fiscal year. 42 Revenue Recognition Revenue contracts are defined as an arrangement that creates enforceable rights and obligations of both parties where collection of the contract price is deemed probable.
The going concern basis of presentation assumes that the Company will continue operations and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business. Liquidity The Company has historically experienced recurring operating losses and as of March 31, 2022 , the Company had an accumulated deficit of $1,020.5 million.
The going concern basis of presentation assumes that the Company will continue operations and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business. Liquidity The Company has historically experienced recurring operating losses and as of March 31, 2023 , the Company had an accumulated deficit of $1,055.5 million.
Net foreign currency gains and losses are included in other income (expense), net on the consolidated statements of operations was less than $0.1 million and $0.7 million, for the fiscal years ended March 31, 2022 and 2021 , respectively.
Net foreign currency gains and losses are included in other income (expense), net on the consolidated statements of operations was $0.1 million and less than $0.1 million, for the fiscal years ended March 31, 2023 and 2022 , respectively.
There are also approximately $6.6 million of outstanding performance obligations to be recognized over a period of thirteen to sixty months. The remaining performance obligations are subject to customer actions and therefore the timing of revenue recognition cannot be reasona bly estimated.
There are also approximately $31.7 million of outstanding performance obligations to be recognized over a period of thirteen to sixty months. The remaining performance obligations are subject to customer actions and therefore the timing of revenue recognition cannot be reasona bly estimated.
Section 382 of the U.S. Internal Revenue Code of 1986, as amended (the “IRC”), provides limits on the extent to which a corporation that has undergone an ownership change (as defined) can utilize any net operating loss ("NOL") and general business tax credit carryforwards it may have.
Internal Revenue Code of 1986, as amended (the “IRC”), provides limits on the extent to which a corporation that has undergone an ownership change (as defined) can utilize any net operating loss ("NOL") and general business tax credit carryforwards it may have.
For the fiscal years ended March 31, 2022 and 2021 , the Company recorded inventory reserves of approximately $1.9 million and $1.8 million, respectively, based on evaluating its ending inventory on hand for excess quantities and obsolescence. Leases Leases include all agreements in which the Company obtains control of a physical asset.
For the fiscal years ended March 31, 2023 and 2022 , the Company recorded inventory reserves of approximately $1.5 million and $1.9 million, respectively, based on evaluating its ending inventory on hand for excess quantities and obsolescence. Leases Leases include all agreements in which the Company obtains control of a physical asset.
The Company also paid $1.1 million to International selling stockholders at closing to pay off previous loans made by them to Neeltran.
The Company also paid $1.1 million to International selling stockholders to pay off previous loans made by them to Neeltran.
The total unrecognized compensation cost for unvested outstanding stock options was less than $0.1 million for the fiscal year ended March 31, 2022 . The total unrecognized compensation cost for unvested outstanding restricted stock was $5.7 million for the fiscal year ended March 31, 2022 . This expense will be recognized over a weighted-average expense period of approximately 1.5 years.
The total unrecognized compensation cost for unvested outstanding stock options was less than $0.1 million for the fiscal year ended March 31, 2023 . The total unrecognized compensation cost for unvested outstanding restricted stock was $4.7 million for the fiscal year ended March 31, 2023 . This expense will be recognized over a weighted-average expense period of approximately 1.7 years.
On May 6, 2021 ( the "Neeltran Acquisition Date"), the Company entered into a Purchase and Sale Agreement (the "Real Property Purchase Agreement") and a Stock Purchase Agreement (the "Neeltran Stock Purchase Agreement") with the selling equity holders named therein.
Acquisitions 2021 Acquisition of Neeltran On May 6, 2021, the Company entered into a Purchase and Sale Agreement (the "Real Property Purchase Agreement") and a Stock Purchase Agreement (the "Neeltran Stock Purchase Agreement") with the selling equity holders named therein.
Stockholders’ Equity Stock-Based Compensation Plans As of March 31, 2022 , the Company had two active stock plans: the 2007 Stock Incentive Plan, as amended (the “2007 Plan”) and the Amended and Restated 2007 Director Stock Plan (the “2007 Director Plan”). On August 1, 2019, the Company’s stockholders approved amendments to the 2007 Plan and the 2007 Director Plan.
Stockholders’ Equity Stock-Based Compensation Plans As of March 31, 2023 , the Company had two active stock plans: the Amended and Restated 2007 Director Stock Plan (the “2007 Director Plan”) and the 2022 Stock Incentive Plan (the "2022 Plan"). On August 2, 2022, the Company's stockholders approved the 2022 Plan and amendments to the Company's 2007 Director Plan.
The Company periodically assesses the need to provide for impairment on these purchase contracts and records a loss on purchase commitments when required. Lease Commitments During the year ended March 31, 2022 and 2021 all leases were recorded in selling, general and administrative expense. See Note 15, "Leases" for further details.
The Company periodically assesses the need to provide for impairment on these purchase contracts and records a loss on purchase commitments when required. Lease Commitments During the years ended March 31, 2023 and 2022 , all lease costs were recorded in selling, general and administrative expense. See Note 15, "Leases" for further details.
The goodwill represents the value associated with the acquired workforce and expected synergies related to the business combinations of the two companies. Goodwill resulting from the Neeltran Acquisition was assigned to the Company's Grid business segment. Goodwill recognized in the Neeltran Acquisition is not deductible for tax purposes.
The goodwill represents the value associated with the acquired workforce and expected synergies related to the Neeltran Acquisition. Goodwill resulting from the Neeltran Acquisition was assigned to the Company's Grid business segment. Goodwill recognized in the Neeltran Acquisition is not deductible for tax purposes.
Additionally, no impairment resulted from the assessment performed in the fiscal year ended March 31, 2021 . 51 6. Fair Value Measurements A valuation hierarchy for disclosure of the inputs to valuation used to measure fair value has been established.
Additionally, no impairment resulted from the assessment performed in the fiscal year ended March 31, 2022 . 49 6. Fair Value Measurements A valuation hierarchy for disclosure of the inputs to valuation used to measure fair value has been established.
If there were material ownership changes subsequent to the study, such changes could limit the Company's ability to utilize its NOL carryforwards. The total amount of undistributed foreign earnings available to be repatriated at March 31, 2022 was $2.7 million resulting in the recording of a $0.3 million deferred tax liability for foreign withholding taxes.
If there were material ownership changes subsequent to the study, such changes could limit the Company's ability to utilize its NOL carryforwards. The total amount of undistributed foreign earnings available to be repatriated at March 31, 2023 was $1.9 million resulting in the recording of a $0.2 million deferred tax liability for foreign withholding taxes.
After consideration of all the available evidence, both positive and negative, the Company has determined tha t a $186.6 million valuation allowance at March 31, 2022 is necessary to reduce the deferred tax assets to the amount that will more likely than not be realized which is a $13.5 million decrease from the $200.1 valuation allowance as of March 31, 2021.
After consideration of all the available evidence, both positive and negative, the Company has determined tha t a $183.6 million valuation allowance at March 31, 2023 is necessary to reduce the deferred tax assets to the amount that will more likely than not be realized which is a $3.1 million decrease from the $186.6 valuation allowance as of March 31, 2022.
In addition, the Company has various contractual arrangements in which minimum quantities of goods or services have been committed to be purchased on an annual basis. As of March 31, 2022 , the Company had $6.1 million of restricted cash included in long-term assets and $2.8 million of restricted cash in current assets.
In addition, the Company has various contractual arrangements in which minimum quantities of goods or services have been committed to be purchased on an annual basis. As of March 31, 2023 , the Company had $0.6 million of restricted cash included in long-term assets and $1.7 million of restricted cash in current assets.
As of March 31, 2022 , 76% of revenue was recognized at the point in time when control transferred to the customer, with the remainder being recognized over time. In the fiscal year ended March 31, 2021, 78% of revenue was recognized at the point in time when control transferred to the customer, with the remainder being recognized over time.
As of March 31, 2023 , 80% of revenue was recognized at the point in time when control transferred to the customer, with the remainder being recognized over time. In the fiscal year ended March 31, 2022, 76% of revenue was recognized at the point in time when control transferred to the customer, with the remainder being recognized over time.
Additionally, the Company paid approximately $7.6 million on behalf of the selling equity holders, including $1.9 million of indebtedness secured by the mortgage on the real property as described above, directly to Neeltran lenders at closing to extinguish outstanding Neeltran indebtedness to third parties on behalf of the sellers.
Additionally, the Company paid approximately $7.6 million, including $1.9 million of indebtedness secured by the mortgage on the real property as described above, directly to Neeltran lenders at closing to extinguish outstanding Neeltran indebtedness to third parties.
The Company’s performance obligations may vary significantly each reporting period based on the timing of major new contractual commitments. As of March 31, 2022 , the Company had outstanding performance obligations on existing contracts under ASC 606 to be recognized in the next twelve months of approximately $78.4 million.
The Company’s performance obligations may vary significantly each reporting period based on the timing of major new contractual commitments. As of March 31, 2023 , the Company had outstanding performance obligations on existing contracts under ASC 606 to be recognized in the next twelve months of approximately $125.7 million.
There was $3.9 million in grant revenue recorded in the year ended March 31, 2021 , which is included in the Company's Grid revenue. 49 In the Company's service and technology development product line, there are several different types of transactions and each begins with a contract with a customer that summarizes each product sold to a customer, which typically represents distinct performance obligations.
There was $1.1 million in grant revenue recorded in the year ended March 31, 2022 , which is included in the Company's Grid revenue. 47 In the Company's service and technology development product line, there are several different types of transactions and each begins with a contract with a customer that summarizes each product sold to a customer, which typically represents distinct performance obligations.
These write downs were based on evaluating its inventory on hand for excess quantities and obsolescence. Deferred program costs as of March 31, 2022 and March 31, 2021 primarily represent costs incurred on programs accounted for upon completion of the project when control has transferred to the customer before revenue and costs will be recognized. 53 9.
These reserves were based on evaluating its inventory on hand for excess quantities and obsolescence. Deferred program costs as of March 31, 2023 and March 31, 2022 primarily represent costs incurred on programs accounted for upon completion of the project when control has transferred to the customer before revenue and costs will be recognized. 51 9.
The impact of the COVID- 19 pandemic and other sources of instability, including the war between Russia and Ukraine, on the global financing markets may reduce the Company's ability to raise additional capital, if necessary, which could negatively impact the Company's liquidity.
The impact of the COVID- 19 pandemic and other sources of instability, including the war between Russia and Ukraine, instability of financial institutions and political instability in the United States on the global financing markets may reduce the Company's ability to raise additional capital, if necessary, which could negatively impact the Company's liquidity.
The Company uses the Black-Scholes option pricing model to estimate the fair value of awards with service and performance conditions. For awards with service conditions only, the Company recognizes compensation cost on a straight-line basis over the requisite service/vesting period. For awards with performance conditions, estimates of compensation cost are made based on the probable outcome of the performance conditions.
The Company uses the Black-Scholes option pricing model to estimate the fair value of option awards with service and performance conditions. For awards with service conditions only, the Company recognizes compensation cost on a straight-line basis over the requisite service/vesting period.
Revenue for the fiscal year ended March 31, 2022 included $1.2 million from such held transactions. There were no such transactions in fiscal 2020. The Company has elected to record taxes collected from customers on a net basis and does not include tax amounts in revenue or costs of revenue.
Revenue for the fiscal year ended March 31, 2023 included $0.6 million from such held transactions. Revenues for the fiscal year ended March 31, 2022 included $1.2 million from such held transactions. The Company has elected to record taxes collected from customers on a net basis and does not include tax amounts in revenue or costs of revenue.
Research and development and other tax credit carryforwards amounting to approximately $10.9 million and $3.2 million are availab le to offset federal and state income taxes, respectively, and will expire in the years ending through 2040.
Research and development and other tax credit carryforwards amounting to approximately $11.1 million and $3.5 million are availab le to offset federal and state income taxes, respectively, and will expire in the years ending through 2040.
Stock-Based Compensation The components of stock-based compensation for the years ended March 31, 2022 and 2021 were as follows (in thousands): Fiscal years ended March 31, 2022 2021 Stock options $ 3 $ 19 Restricted stock and stock awards 4,615 3,428 Employee stock purchase plan 43 38 Total stock-based compensation expense $ 4,661 $ 3,485 The estimated fair value of the Company’s stock-based awards, less expected annual forfeitures, is amortized over the awards’ service period.
Stock-Based Compensation The components of stock-based compensation for the years ended March 31, 2023 and 2022 were as follows (in thousands): Fiscal years ended March 31, 2023 2022 Stock options $ 32 $ 3 Restricted stock and stock awards 4,656 4,615 Employee stock purchase plan 41 43 Total stock-based compensation expense $ 4,729 $ 4,661 The estimated fair value of the Company’s stock-based awards, less expected annual forfeitures, is amortized over the awards’ service period.
The following table provides a roll forward of the changes in our Grid business segment goodwill balance: Goodwill March 31, 2020 $ 1,719 NEPSI Acquisition 32,915 March 31, 2021 $ 34,634 Neeltran Acquisition 8,837 March 31, 2022 $ 43,471 The Company performed its annual assessment of goodwill on February 28, 2022 and noted no triggering events from the analysis date to March 31, 2022 and determined that there was no impairment to goodwill.
The following table provides a roll forward of the changes in the Company's Grid business segment goodwill balance: Goodwill March 31, 2021 $ 34,634 Neeltran Acquisition 8,837 March 31, 2022 $ 43,471 Less impairment loss - March 31, 2023 $ 43,471 The Company performed its annual assessment of goodwill on February 28, 2023 and noted no triggering events from the analysis date to March 31, 2023 and determined that there was no impairment to goodwill.
The total fair value of restricted stock that vested during the fiscal years ended March 31, 2022 and 2021 was $ 7.6 million and $4.3 million, respectively.
The total fair value of restricted stock that vested during the fiscal years ended March 31, 2023 and 2022 was $ 2.6 million and $7.6 million, respectively.
The Company’s accounts receivable relate principally to a limited number of customers. As of March 31, 2022 , Fuji Bridex PTE Ltd accounted for approximately 31% of the Company's accounts receivable balance, with no other customers accounting for greater than 10% of the balance.
As of March 31, 2022, Fuji Bridex PTE Ltd accounted for approximately 31% of the Company's accounts receivable balance, with no other customers accounting for greater than 10% of the balance.
There were 255,000 performance-based restricted shares awarded during the fiscal year ended March 31, 2021 for which the performance conditions are deemed probable to be met and the expense is being recorded over the expected vesting period. The remaining shares awarded vest upon the passage of time.
There were 76,500 performance-based restricted shares awarded during the fiscal year ended March 31, 2022 for which the performance conditions are deemed probable to be met and the expense is being recorded over a three -year vesting period. The remaining shares awarded vest upon the passage of time.
Unaudited Pro Forma Operating Results The unaudited pro forma condensed consolidated statement of operations for the year ended March 31, 2022 and 2021 is presented as if the NEPSI Acquisition and Neeltran Acquisition had occurred on April 1, 2020.
Unaudited Pro Forma Operating Results The unaudited pro forma condensed consolidated statement of operations for the years ended March 31, 2023 and 2022 are presented as if the Neeltran Acquisition had occurred on April 1, 2021.
Additionally, in the fiscal year ended March 31, 2022, the Company recorded $0.2 and $0.5 million related to intangible amortization related to backlog that is reported in cost of revenues for the fiscal years ended March 31, 2022, and 2021, respectively.
Additionally, the Company recorded less than $0.1 million and $0.2 million related to intangible amortization related to backlog that is reported in cost of revenues for the fiscal years ended March 31, 2023, and 2022, respectively.
There we r e 76,500 perfor mance-based restricted shares awarded during th e fiscal year ended March 31, 2022 for which the performance conditions are deemed probable to be met and the expense is being recorded over the expected vesting period.
There we r e 200,000 perfor mance-based restricted shares awarded during th e fiscal year ended March 31, 2023 for which the performance conditions are deemed probable to be met and the expense is being recorded over a three -year vesting period.
The carrying amounts of cash and cash equivalents, accounts receivable, short-term debt, accounts payable, and accrued expenses due to their short nature approximate fair value at March 31, 2022 and 2021 . The estimated fair values have been determined through information obtained from market sources and management estimates.
The carrying amounts of cash and cash equivalents, accounts receivable, short-term debt, accounts payable, and accrued expenses due to their short nature approximate fair value at March 31, 2023 and 2022 . The estimated fair values have been determined through information obtained from market sources and management estimates. Changes in fair value are recorded to other income (expense), net.
The following table sets forth customers who represented 10% or more of the Company’s total revenues for the year ended March 31, 2022 and 2021 : Year Ended Reportable March 31, Segment 2022 2021 EPC Services Company Grid 13% Fuji Bridex Pte Ltd Grid 14% 5.
The following table sets forth customers who represented 10% or more of the Company’s total revenues for the years ended March 31, 2023 and 2022: Year Ended Reportable March 31, Segment 2023 2022 Fuji Bridex Pte Ltd Grid 15 % 14 % 5.
Leases The Company determines whether a contract is or contains a lease at inception of a contract. The Company defines a lease as a contract, or part of a contract, that conveys the right to control the use of identified property or equipment (an identified asset) for a period of time in exchange for consideration.
The Company defines a lease as a contract, or part of a contract, that conveys the right to control the use of identified property or equipment (an identified asset) for a period of time in exchange for consideration.
The following table provides the assets and liabilities carried at fair value on a recurring basis, measured as of March 31, 2022 and 2021 (in thousands): Total Carrying Value Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) March 31, 2022: Assets: Cash equivalents $ 17,641 $ 17,641 $ — $ — Marketable securities $ — $ — $ — $ — Derivative liabilities: Contingent Consideration $ 1,200 $ — $ — $ 1,200 Total Carrying Value Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) March 31, 2021: Assets: Cash equivalents $ 54,104 $ 54,104 $ — $ — Marketable securities $ 5,140 $ 5,140 $ — $ — Derivative liabilities: Contingent Consideration $ 7,050 $ — $ — $ 7,050 52 The table below reflects the activity for the Company’s major classes of liabilities measured at fair value on a recurring basis (in thousands): Acquisition Contingent Consideration Balance at April 1, 2020 $ - Issuance of contingent consideration 3,990 Change in fair value 3,060 Balance at March 31, 2021 $ 7,050 Change in fair value (5,850 ) Balance at March 31, 2022 $ 1,200 7.
The following table provides the assets and liabilities carried at fair value on a recurring basis, measured as of March 31, 2023 and 2022 (in thousands): Total Carrying Value Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) March 31, 2023: Assets: Cash equivalents $ 7,913 $ 7,913 $ — $ — Derivative liabilities: Contingent Consideration $ 1,270 $ — $ — $ 1,270 Total Carrying Value Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) March 31, 2022: Assets: Cash equivalents $ 17,641 $ 17,641 $ — $ — Derivative liabilities: Contingent Consideration $ 1,200 $ — $ — $ 1,200 50 The table below reflects the activity for the Company’s major classes of liabilities measured at fair value on a recurring basis (in thousands): Acquisition Contingent Consideration Balance at March 31, 2021 $ 7,050 Change in fair value (5,850 ) Balance at March 31, 2022 $ 1,200 Change in fair value 70 Balance at March 31, 2023 $ 1,270 7.
Supplemental balance sheet information related to leases at March 31, 2022 and 2021 are as follows: March 31, 2022 March 31, 2021 Operating Leases: Right-of-use assets - Financing 8 - Right-of-use assets - Operating 3,502 3,747 Total right-of-use assets $ 3,510 $ 3,747 Lease liabilities - ST Financing 7 - Lease liabilities - ST Operating 740 612 Lease liabilities - LT Financing 1 - Lease liabilities - LT Operating 2,900 3,246 Total operating lease liabilities $ 3,648 $ 3,858 Weighted-average remaining lease term 4.93 5.82 Weighted-average discount rate 6.36 % 6.72 % The costs related to the Company's finance lease are not material.
Supplemental balance sheet information related to leases at March 31, 2023 and 2022 are as follows: March 31, 2023 March 31, 2022 Leases: Right-of-use assets - Financing 1 8 Right-of-use assets - Operating 2,857 3,502 Total right-of-use assets $ 2,858 $ 3,510 Lease liabilities - ST Financing 1 7 Lease liabilities - ST Operating 807 740 Lease liabilities - LT Financing - 1 Lease liabilities - LT Operating 2,184 2,900 Total lease liabilities $ 2,992 $ 3,648 Weighted-average remaining lease term 3.95 4.93 Weighted-average discount rate 6.46 % 6.36 % The costs related to the Company's finance lease are not material.
As these non-exchange transaction contracts are considered grant revenue and do not fall within any specific accounting literature, the Company follows guidance within ASC 606 by analogy to recognize grant revenue over time. In the year ended March 31, 2022 , the Company recorded $1.1 million in grant revenue, which is included in the Company’s Grid revenue.
As these non-exchange transaction contracts are considered grant revenue and do not fall within any specific accounting literature, the Company follows guidance within ASC 606 by analogy to recognize grant revenue over time. In the year ended March 31, 2023 , the Company recorded no grant revenue.
The following table reconciles the numerators and denominators of the EPS calculation for the fiscal years ended March 31, 2022 and 2021 (in thousands except per share amounts): Fiscal year ended March 31, 2022 2021 Numerator: Net loss $ (19,193 ) $ (22,678 ) Denominator: Weighted-average shares of common stock outstanding 28,293 24,991 Weighted-average shares subject to repurchase (1,090 ) (1,112 ) Shares used in per-share calculation ― basic 27,203 23,879 Shares used in per-share calculation ― diluted 27,203 23,879 Net loss per share ― basic $ (0.71 ) $ (0.95 ) Net loss per share ― diluted $ (0.71 ) $ (0.95 ) Foreign Currency Translation The functional currency of all the Company’s foreign subsidiaries is the U.S. dollar, except for AMSC Austria, for which the local currency (Euro) is the functional currency, and AMSC China, for which the local currency (Renminbi) is the functional currency.
The following table reconciles the numerators and denominators of the EPS calculation for the fiscal years ended March 31, 2023 and 2022 (in thousands except per share amounts): Fiscal year ended March 31, 2023 2022 Numerator: Net loss $ (35,041 ) $ (19,193 ) Denominator: Weighted-average shares of common stock outstanding 29,038 28,293 Weighted-average shares subject to repurchase (1,190 ) (1,090 ) Shares used in per-share calculation ― basic 27,848 27,203 Shares used in per-share calculation ― diluted 27,848 27,203 Net loss per share ― basic $ (1.26 ) $ (0.71 ) Net loss per share ― diluted $ (1.26 ) $ (0.71 ) Foreign Currency Translation The functional currency of all the Company’s foreign subsidiaries is the U.S. dollar, except for AMSC Austria, for which the local currency (Euro) is the functional currency.
In addition, certain corporate expenses which the Company does not believe are specifically attributable or allocable to either of the two business segments have been excluded from the segment operating loss. 64 Unallocated corporate expenses primarily consist of a gain on contingent consideration of $5.9 million offset by stock-based compensation expense of $4.7 million, in the fiscal year ended March 31, 2022 .
In addition, certain corporate expenses which the Company does not believe are specifically attributable or allocable to either of the two business segments have been excluded from the segment operating loss. 62 Unallocated corporate expenses primarily consist of a loss on contingent consideration of $0.1 million, stock-based compensation expense of $4.7 million and a restructuring charge of $1.0 million in the fiscal year ended March 31, 2023 .
At March 31, 2022 , the Company had aggregate net operating loss carryforwards in the U.S. for federal and state income tax purposes of approximately $ 755.5 million and $201.3 m illion, respectively, which expire in the years ending March 31, 2023 through 2040.
At March 31, 2023 , the Company had aggregate net operating loss carryforwards in the U.S. for federal and state income tax purposes of approximately $718 .9 million and $204.2 m illion, respectively, which expire in the years ending March 31, 2024 through 2040.
As of March 31, 2022, the right-of-use asset related to the finance lease wa s $7.6 t housand, net of accumulated amortizati on of $5.6 t housand, and is included in the property and equipment, net on the Company's consolidated balance sheet.
As of March 31, 2023, the right-of-use asset related to the finance lease wa s $1.0 t housand, net of accumulated amortizati on of $12.2 t housand, and is included in the property and equipment, net on the Company's consolidated balance sheet.
The following is a summary of the key assumptions used in a Monte Carlo simulation to calculate the fair value of the contingent consideration related to the NEPSI Acquisition: Fiscal Year 2021 March 31, 2022 December 31, 2021 September 30, 2021 June 30, 2021 Revenue risk premium 6.50 % 6.60 % 6.60 % 6.60 % Revenue volatility 33 % 33 % 30 % 30 % Stock Price $ 7.61 $ 10.88 $ 14.58 $ 17.39 Payment delay (days) 80 80 80 80 Fair value (millions) $ 1.2 $ 2.6 $ 4.7 $ 7.2 Fiscal Year 2020 March 31, 2021 December 31, 2020 October 1, 2020 Revenue risk premium 6.70 % 6.90 % 7.10 % Revenue volatility 30 % 30 % 30 % Stock Price $ 18.96 $ 23.42 $ 14.23 Payment delay (days) 80 80 - Fair value (millions) $ 7.1 $ 6.7 $ 4.0 The Company recorded a net gain of $5.9 million from the decrease in the fair value of the contingent consideration in the twelve months ended March 31, 2022.
The following is a summary of the key assumptions used in a Monte Carlo simulation to calculate the fair value of the contingent consideration related to the NEPSI Acquisition: Fiscal Year 2022 March 31, 2023 December 31, 2022 September 30, 2022 June 30, 2022 Revenue risk premium 5.30 % 5.30 % 5.20 % 6.60 % Revenue volatility 25 % 25 % 25 % 30 % Stock Price $4.91 $3.68 $4.38 $5.18 Payment delay (days) 80 80 80 80 Fair value (millions) $1.3 $0.9 $1.1 $1.4 Fiscal Year 2021 March 31, 2022 December 31, 2021 September 30, 2021 June 30, 2021 Revenue risk premium 6.50 % 6.60 % 6.60 % 6.60 % Revenue volatility 33 % 33 % 30 % 30 % Stock Price $ 7.61 $ 10.88 $ 14.58 $ 17.39 Payment delay (days) 80 80 80.00 80.00 Fair value (millions) $ 1.2 $ 2.6 $ 4.7 $ 7.2 The Company recorded a net loss of $0.1 million for the increase in the fair value of the contingent consideration in the twelve months ended March 31, 2023.
The Company elected to apply the discount rate using the remaining lease term at the date of adoption. Following the Neeltran Acquisition, the Company evaluated all open Neeltran contracts at the date of the acquisition to determine if any applied under ASC 842 as Neeltran, a private company, had deferred adopting ASC 842 prior to the Neeltran Acquisition, as permitted.
Following the Neeltran Acquisition, the Company evaluated all open Neeltran contracts at the date of the acquisition to determine if any applied under ASC 842 as Neeltran, a private company, had deferred adopting ASC 842 prior to the Neeltran Acquisition, as permitted.
Pursuant to the terms of the Neeltran Stock Purchase Agreement and concurrently with entering into such agreement, the Company purchased all of the issued and outstanding shares of capital stock of (i) Neeltran, Inc., a Connecticut corporation ("Neeltran") that supplies rectifiers and transformers to industrial customers, and (ii) Neeltran International, Inc., a Connecticut corporation ("International"), for: (a) $1.0 million in cash, and (b) 301,556 shares of the Company's common stock, $.01 par value per share (the "AMSC Shares"), that were paid and issued to the Neeltran selling stockholders, respectively at closing (the "Neeltran Acquisition").
Pursuant to the terms of the Neeltran Stock Purchase Agreement, the Company purchased all of the issued and outstanding shares of capital stock of Neeltran, Inc., a Connecticut corporation ("Neeltran") and Neeltran International, Inc., a Connecticut corporation ("International") for $1.0 million in cash and 301,556 shares of the Company's common stock, $.01 par value per share ("AMSC Shares"), that were paid and issued, respectively, to the Neeltran selling stockholders (the "Neeltran Acquisition").
Intangible Assets Intangible assets at March 31, 2022 and 2021 consisted of the following (in thousands): 2022 2021 Gross Amount Accumulated Amortization Net Book Value Gross Amount Accumulated Amortization Net Book Value Estimated Useful Life Licenses $ 3,610 $ (3,610 ) $ — $ 3,610 $ (3,610 ) $ — 7 Backlog 681 (631 ) 50 600 (475 ) 125 2 Trade names and trademarks 1,800 - 1,800 600 - 600 Indefinite Customer relationships 9,600 (2,723 ) 6,877 6,100 (739 ) 5,361 7 Core technology and know-how 5,970 (3,386 ) 2,584 5,970 (2,903 ) 3,067 5-10 Intangible assets $ 21,661 $ (10,350 ) $ 11,311 $ 16,880 $ (7,727 ) $ 9,153 The Company recorded intangible amortization expense of $2.5 million and $1.2 million, for the fiscal years ended March 31, 2022 , and 2021 , respectively.
Intangible Assets Intangible assets at March 31, 2023 and 2022 consisted of the following (in thousands): 2023 2022 Gross Amount Accumulated Amortization Net Book Value Gross Amount Accumulated Amortization Net Book Value Estimated Useful Life Licenses $ 3,610 $ (3,610 ) $ — $ 3,610 $ (3,610 ) $ — 7 Backlog 681 (675 ) 6 681 (631 ) 50 2 Trade names and trademarks 1,800 - 1,800 1,800 - 1,800 Indefinite Customer relationships 9,600 (4,980 ) 4,620 9,600 (2,723 ) 6,877 7 Core technology and know-how 5,970 (3,869 ) 2,101 5,970 (3,386 ) 2,584 5-10 Intangible assets $ 21,661 $ (13,134 ) $ 8,527 $ 21,661 $ (10,350 ) $ 11,311 The Company recorded intangible amortization expense of $2.8 million and $2.5 million, for the fiscal years ended March 31, 2023 and 2022 , respectively.
Product warranty activity was as follows (in thousands): Fiscal Years Ended March 31, 2022 2021 Balance at beginning of period $ 2,053 $ 2,015 Acquired Warranty Obligation 248 147 Change in accruals for warranties during the period 618 643 Settlements during the period (853 ) (752 ) Balance at end of period $ 2,066 $ 2,053 12.
Product warranty activity was as follows (in thousands): Fiscal Years Ended March 31, 2023 2022 Balance at beginning of period $ 2,066 $ 2,053 Acquired Warranty Obligation - 248 Change in accruals for warranties during the period 2,276 618 Settlements during the period (1,704 ) (853 ) Balance at end of period $ 2,638 $ 2,066 13.
The cumulative effect of changes in the probability outcomes are recorded in the period in which the changes occur. Determining the appropriate fair value model and related assumptions requires judgment, including estimating stock price volatilities of the Company’s common stock and expected terms. The expected volatility rates are estimated based on historical and implied volatilities of the Company’s common stock.
Determining the appropriate fair value model and related assumptions requires judgment, including estimating stock price volatilities of the Company’s common stock and expected terms. The expected volatility rates are estimated based on historical and implied volatilities of the Company’s common stock.
As of March 31, 2022 , the ESPP had 159,822 shares available for future issuance. The Company recognized less than $0.1 million of compensation expense for both the fiscal years ended March 31, 2022 and 2021 , related to the ESPP. 62 17.
As of March 31, 2023 , the ESPP had 99,906 shares available for future issuance. The Company recognized less than $0.1 million of compensation expense for both the fiscal years ended March 31, 2023 and 2022 , related to the ESPP. 60 18.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

41 edited+23 added−13 removed151 unchanged
Biggest changeIn addition, government shutdowns could prevent or delay such contracts from being funded. 13 We cannot be certain that our U.S. government contracts, including our contract for Project REG, or our contracts with third parties that relate to projects for the U.S. government will not be terminated or suspended in the future.
Biggest changeCongress to further suspend or increase the debt ceiling could delay or result in the loss of contracts for the procurement of our products and services, and we may be asked or required to continue to perform for some period of time on certain of our U.S. government contracts, even if the U.S. government is unable to make timely payments. 13 We cannot be certain that our U.S. government contracts, or our contracts with third parties that relate to projects for the U.S. government will not be terminated or suspended in the future.
We were not profitable in fiscal 2021 and have recorded net losses for the last three fiscal years. We may not be profitable in fiscal 2022 or future years. There is currently substantial uncertainty in our business, which makes it difficult to evaluate our business and future prospects.
We were not profitable in fiscal 2022 and have recorded net losses for the last three fiscal years. We may not be profitable in fiscal 2023 or future years. There is currently substantial uncertainty in our business, which makes it difficult to evaluate our business and future prospects.
Moreover, we could incur substantial litigation costs in defending the validity of or enforcing our own patents. We also rely on trade secrets and proprietary know-how to protect our intellectual property. However, our non-disclosure agreements and other safeguards may not provide meaningful protection for our trade secrets and other proprietary information.
Moreover, we could incur substantial litigation costs in defending the validity of or enforcing our own patents. We also rely on trade secrets and proprietary know-how to protect our intellectual property. However, our confidentiality agreements and other safeguards may not provide meaningful protection for our trade secrets and other proprietary information.
The extent to which the pandemic impacts our business, liquidity, results of operations and financial condition will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the pandemic, the location, duration and magnitude of future waves of infection, new mutations of the virus, timing, effectiveness and adoption of vaccines, travel restrictions and social distancing in the United States and other countries, the duration and extent of future business closures or business disruptions and the effectiveness of actions taken to contain and treat the disease.
The extent to which the COVID-19 pandemic continues to impact our business, liquidity, results of operations and financial condition will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the pandemic, the location, duration and magnitude of future waves of infection, new mutations of the virus, timing, effectiveness and adoption of vaccines, travel restrictions and social distancing in the United States and other countries, the duration and extent of future business closures or business disruptions and the effectiveness of actions taken to contain and treat the disease.
There is a risk that we may be subject to fines and penalties, litigation and reputational harm if we fail to properly process or protect the data or privacy of third parties or comply with the GDPR, and other laws that have been enacted, such as the California Consumer Privacy Act and other applicable data privacy and data protection regimes.
There is a risk that we may be subject to fines and penalties, litigation and reputational harm if we fail to properly process or protect the data or privacy of third parties or comply with the GDPR, and other laws that have been enacted, such as the Massachusetts Data Privacy Law including The Safeguards Regulations, the California Consumer Privacy Act and other applicable data privacy and data protection regimes.
If this customer’s business is negatively affected, it could adversely impact our business . Revenues from Inox are supported by a supply contract to purchase, and a license to make, use and supply, wind turbine ECS.
If this customer’s business is negatively affected, it could adversely impact our business . A significant portion of our Wind segment revenues are derived from Inox. Revenues from Inox are supported by a supply contract to purchase, and a license to make, use and supply, wind turbine ECS.
Even if a commercial market for our REG systems were to develop, commercial terms requested by utilities and power grid operators relating to bonding requirements, limitations of liability, warranty periods, or other contractual provisions, may not be acceptable to us, which could impede our ability to enter into contractual arrangements for the sale of our REG system.
Even if a commercial market for our REG systems were to develop, commercial terms requested by utilities and power grid operators relating to bonding requirements, limitations of liability, warranty periods, or other contractual provisions, may not be acceptable to us, which could impede our ability to enter into contractual arrangements for the sale of our REG system. 17 Industry consolidation could result in more powerful competitors and fewer customers.
In fiscal 2021, 38% of our revenues were recognized from sales outside of the United States. In addition, approximately 8% of our revenues in fiscal 2021 were derived under sales contracts where prices were denominated in the Euro.
In fiscal 2022, 45% of our revenues were recognized from sales outside of the United States. In addition, approximately 10% of our revenues in fiscal 2022 were derived under sales contracts where prices were denominated in the Euro.
Consequently, at the beginning of many major governmental programs, contracts often may not be fully funded, and additional monies are then committed to the contract only if, as and when appropriations are made by the U.S. Congress for future fiscal years.
Consequently, at the beginning of many major governmental programs, contracts often may not be fully funded, and additional monies are then committed to the contract only if, as and when appropriations are made by the U.S. Congress for future fiscal years. In addition, government shutdowns could prevent or delay such contracts from being funded. Failure by the U.S.
If we experience problems with obtaining registrations, compliance with foreign country or applicable U.S. laws, or if we experience difficulties in payments or intellectual property matters in foreign jurisdictions, or if significant political, economic or regulatory changes occur, our results of operations would be adversely affected. 17 Our products face competition, which could limit our ability to acquire or retain customers.
If we experience problems with obtaining registrations, compliance with foreign country or applicable U.S. laws, or if we experience difficulties in payments or intellectual property matters in foreign jurisdictions, or if significant political, economic or regulatory changes occur, our results of operations would be adversely affected.
We face competition from other companies offering FACTS systems similar to our D-VAR products. These include adaptive VAR compensators, Dynamic voltage restorers (“DVRs”), and STATCOMs produced by ABB, Siemens, Mitsubishi, RXHK, NR Electric Co,. and Ingeteam, and battery-based uninterruptible power supply (“UPS”) systems offered by various companies around the world.
These include adaptive VAR compensators, Dynamic voltage restorers (“DVRs”), and STATCOMs produced by ABB, Siemens, Mitsubishi, RXHK, NR Electric Co,. and Ingeteam, and battery-based uninterruptible power supply (“UPS”) systems offered by various companies around the world.
Our suppliers have experienced some production disruption due to the COVID-19 pandemic and related delays in sourcing materials. As a result, we have been experiencing delays or difficulty sourcing products and some inflationary pressure in our supply chains, which have started to and could continue to negatively affect our business and financial results.
As a result, we have been experiencing delays or difficulty sourcing products and some inflationary pressure in our supply chains, which have started to and could continue to negatively affect our business and financial results.
The situation is rapidly evolving as a result of the war in Ukraine, and the United States, the European Union, the United Kingdom and other countries may implement additional sanctions, export controls or other measures against Russia, Belarus and other countries, regions, officials, individuals or industries in the respective territories.
The United States, the European Union, the United Kingdom and other countries may implement additional sanctions, export controls or other measures against Russia, Belarus and other countries, regions, officials, individuals or industries in the respective territories.
Further, in the event that any of our government contracts are terminated for cause, it could affect our ability to obtain future government contracts which could, in turn, seriously harm our ability to develop our technologies and products. The COVID-19 pandemic has adversely impacted our business, financial condition and results of operations.
Further, in the event that any of our government contracts are terminated for cause, it could affect our ability to obtain future government contracts which could, in turn, seriously harm our ability to develop our technologies and products.
As of March 31, 2022, we had approximately $49.5 million of cash, cash equivalents, marketable securities and restricted cash, and during the fiscal year ended March 31, 2022, we used $19.0 m illion in cash for our operating activities. We have historically experienced net losses.
At March 31, 2023, we had approximately $25.7 million of cash, cash equivalents and restricted cash, and during the fiscal year ended March 31, 2023, we used $22.5 m illion in cash for our operating activities. We have historically experienced net losses.
Changes in U.S. government defense spending could negatively impact our financial position, results of operations, liquidity and overall business. We have several contracts with the U.S. government, including defense-related programs with the U.S. Department of Defense.
Other future pandemics or health crises may cause similar disruptions and adversely impact our business, financial condition and results of operations. Changes in U.S. government defense spending could negatively impact our financial position, results of operations, liquidity and overall business. We have several contracts with the U.S. government, including defense-related programs with the U.S. Department of Defense.
Moreover, any officer or employee can terminate his or her relationship with us at any time. Losing the services of any of our executive officers or key employees could materially and adversely impact our business.
Moreover, any officer or employee can terminate his or her relationship with us at any time. Losing the services of any of our executive officers or key employees could materially and adversely impact our business. 14 A significant portion of our Wind segment revenues are derived from a single customer.
Any system failure, accident, security breach, or cyberattack could result in disruptions to our operations, loss, damage or compromise to our data, or inappropriate disclosure of confidential information.
Any failure, accident, security breach, or cyberattack to our IT Systems or those of third parties upon which we rely could result in disruptions to our operations, loss, damage or compromise to our data, or inappropriate disclosure of confidential information.
The stock market in general, and the stock of high technology companies, in particular, have, in recent years, experienced extreme price and volume fluctuations, which are often unrelated to the performance or condition of particular companies, such as in connection with the ongoing coronavirus outbreak.
The stock market in general, and the stock of high technology companies, in particular, have, in recent years, experienced extreme price and volume fluctuations, which are often unrelated to the performance or condition of particular companies. Such broad market fluctuations have and could continue to adversely affect the market price of our common stock.
In particular, in fiscal 2021, we experienced substantial inflationary pressure in our supply chain. These events have resulted or could in the future result in higher product costs, reductions in sales of our products, longer sales cycles, slower adoption of new technologies, increased accounts receivable and inventory write-offs and increased price competition.
These events have resulted or could in the future result in higher product costs, reductions in sales of our products, longer sales cycles, slower adoption of new technologies, increased accounts receivable and inventory write-offs and increased price competition. We also purchase large amounts of commodity-based raw materials.
Following periods of volatility in the market price of a particular company’s securities, securities class action litigation has often been brought against that company. In the past, we have been subject to a number of class action lawsuits which were filed against us on behalf of certain purchasers of our common stock.
In the past, we have been subject to a number of class action lawsuits which were filed against us on behalf of certain purchasers of our common stock.
We also manufacture certain of our products and purchase a portion of our raw materials and components from suppliers in other foreign countries. The ongoing war between Ukraine and Russia has caused increased raw material costs and material shortages and, as a result, adversely impacted certain of our suppliers.
The ongoing war between Ukraine and Russia has caused increased raw material costs and material shortages and, as a result, adversely impacted certain of our suppliers.
Congress of the necessary spending to honor such contracts. Congress often appropriates funds for a program on a fiscal year basis even though contract performance may take more than one year.
In addition to the right of the U.S. government to terminate its contracts with us, U.S. government contracts are conditioned upon the continuing approval by the U.S. Congress of the necessary spending to honor such contracts. Congress often appropriates funds for a program on a fiscal year basis even though contract performance may take more than one year.
Although the material weakness was remediated during the quarter ended March 31, 2021, if additional material weaknesses or significant deficiencies in our internal control over financial reporting are discovered or occur in the future, our consolidated financial statements may contain material misstatements and we could be required to restate our financial results.
Maintaining effective internal control over financial reporting is necessary for us to produce reliable financial statements. If material weaknesses or significant deficiencies in our internal control over financial reporting are discovered or occur in the future, our consolidated financial statements may contain material misstatements and we could be required to restate our financial results.
We may experience increased costs in order to execute upon any sustainability goals and measure achievement of those goals, which could have an adverse impact on our business and financial condition. In addition, this emphasis on environmental, social, and other sustainability matters has resulted and may result in the adoption of new laws and regulations, including new reporting requirements.
We may experience increased costs in order to execute upon any sustainability goals and measure achievement of those goals, which could have an adverse impact on our business and financial condition.
Termination-for-convenience provisions typically provide only for our recovery of costs incurred or committed, and for settlement of expenses and profit on work completed prior to termination. In addition to the right of the U.S. government to terminate its contracts with us, U.S. government contracts are conditioned upon the continuing approval by the U.S.
All of our U.S. government contracts, as well as certain of our contracts with third parties that are dependent on U.S. government contracts, can be terminated by the U.S. government for its convenience. Termination-for-convenience provisions typically provide only for our recovery of costs incurred or committed, and for settlement of expenses and profit on work completed prior to termination.
We may not be successful in developing and implementing policies and strategies that will be effective in managing these risks in each country where we do business or conduct operations.
We may not be successful in developing and implementing policies and strategies that will be effective in managing these risks in each country where we do business or conduct operations. Our failure to manage these risks successfully could harm our international operations and reduce our international sales, thus lowering our total revenue and increasing losses.
We cannot provide any assurance that we will realize any of the anticipated benefits of any acquisition, including our NEPSI Acquisition completed in October 2020, and Neeltran, Inc. acquisition completed in May 2021, and if we fail to realize these anticipated benefits, our operating performance could suffer. 16 Risks Related to Our Markets Our success depends upon the commercial adoption of the REG system, which is currently limited, and a widespread commercial market for our products may not develop.
We cannot provide any assurance that we will realize any of the anticipated benefits of any acquisition, including our NEPSI Acquisition completed in October 2020, and Neeltran, Inc. acquisition completed in May 2021, and if we fail to realize these anticipated benefits, our operating performance could suffer.
Adverse credit conditions in the future could have a negative impact on our ability to execute on future strategic activities. In addition, if credit is difficult to obtain in the future, some customers may delay or reduce purchases. Similarly, inflationary pressures have increased and may increase our costs or force us to increase prices for our products.
In addition, if credit is difficult to obtain in the future, some customers may delay or reduce purchases. Similarly, inflationary pressures have increased and may increase our costs or force us to increase prices for our products. In particular, in fiscal 2021 and 2022, we experienced substantial inflationary pressure in our supply chain.
Any of these events would likely harm our business, results of operations and financial condition. We have operations in, and depend on sales in, emerging markets, including India, and global conditions could negatively affect our operating results or limit our ability to expand our operations outside of these markets.
We can provide no assurance that we will continue to effectively compete against our current competitors or additional companies that may enter our markets. We have operations in, and depend on sales in, emerging markets, including India, and global conditions could negatively affect our operating results or limit our ability to expand our operations outside of these markets.
To date, there has been no widespread commercial use of the REG system. It is uncertain whether a robust commercial market for those new and unproven products will ever develop. In addition, we believe in-grid demonstrations of REG systems are necessary to convince utilities and power grid operators of the benefits of this technology.
Our success depends upon the commercial adoption of the REG system, which is currently limited, and a widespread commercial market for our products may not develop. To date, there has been no widespread commercial use of the REG system. It is uncertain whether a robust commercial market for those new and unproven products will ever develop.
We face competition for the supply of wind turbine engineering design services from design engineering firms such as Aerovide and W2E. Our international operations are subject to risks that we do not face in the United States, which could have an adverse effect on our operating results.
Our international operations are subject to risks that we do not face in the United States, which could have an adverse effect on our operating results. In recent years, a substantial amount of our consolidated revenues were recognized from customers outside of the United States.
For example, as part of the agreement with Commonwealth Edison Company (“ComEd”) to install the Resilient Electric Grid (“REG”) system in Chicago, we delivered an irrevocable letter of credit in the amount of $5.0 million to secure certain of our obligations under the Subcontract Agreement and deposited $5.0 million in an escrow account as collateral to secure such letter of credit.
In recent years, we have entered into contracts that require us to post bonds and to deliver letters of credit of significant magnitude, such as our prior $5.0 million irrevocable letter of credit (secured by a $5.0 million deposit in an escrow account) as part of the agreement with Commonwealth Edison Company (“ComEd”) to install the Resilient Electric Grid (“REG”) system in Chicago.
In such event, we would not be able to implement our strategy, and our results of operations could be reduced or eliminated.
It is possible that the market demands we currently anticipate for our REG system will not develop and that they will never achieve widespread commercial acceptance. In such event, we would not be able to implement our strategy, and our results of operations could be reduced or eliminated.
Such broad market fluctuations have and could continue to adversely affect the market price of our common stock. Due to these factors, the price of our common stock may decline, and investors may be unable to resell their shares of our common stock for a profit.
Due to these factors, the price of our common stock may decline, and investors may be unable to resell their shares of our common stock for a profit. Following periods of volatility in the market price of a particular company’s securities, securities class action litigation has often been brought against that company.
The markets for our products are competitive and many of our competitors have substantially greater financial resources and research and development, manufacturing and marketing capabilities than we do. In addition, as our target markets develop, other large industrial companies may enter these fields and compete with us.
Our products face competition, which could limit our ability to acquire or retain customers. The markets for our products are competitive and many of our competitors have substantially greater financial resources and research and development, manufacturing and marketing capabilities than we do.
Slow growth or a long-term reduction in the demand for renewable energy could have a material adverse effect on our ability to grow our Wind business. The increasing focus on environmental sustainability and social initiatives could increase our costs, and inaction could harm our reputation and adversely impact our financial results.
Slow growth or a long-term reduction in the demand for renewable energy could have a material adverse effect on our ability to grow our Wind business. Risks Related to Our Technologies We may be unable to adequately prevent disclosure of trade secrets and other proprietary information.
In recent years, a substantial amount of our consolidated revenues were recognized from customers outside of the United States. For example, 38% of our revenues in fiscal 2021 and 41% of our revenues in fiscal 2020 were recognized from sales outside the United States.
For example, 45% of our revenues in fiscal 2022 and 38% of our revenues in fiscal 2021 were recognized from sales outside the United States. We also manufacture certain of our products and purchase a portion of our raw materials and components from suppliers in other foreign countries.
In recent years, particularly in fiscal 2020 and 2021 as a result of the COVID-19 pandemic and in late fiscal 2021 and 2022 as a result of the war between Russia and Ukraine, financial markets have been volatile and the state of both the domestic and global economies has been uncertain.
We have become increasingly subject to the risks arising from adverse changes in domestic and global economic conditions, including as a result of political instability in the United States. In recent years, financial markets have been volatile and the state of both the domestic and global economies has been uncertain.
Our failure to manage these risks successfully could harm our international operations and reduce our international sales, thus lowering our total revenue and increasing losses. 18 Growth of the wind energy market depends largely on the availability and size of government subsidies, economic incentives and legislative programs designed to support the growth of wind energy.
If we fail to comply with new laws, regulations, or reporting requirements, our reputation and business could be adversely impacted. Growth of the wind energy market depends largely on the availability and size of government subsidies, economic incentives and legislative programs designed to support the growth of wind energy.
Even if a project is funded, completion of projects can be delayed as a result of other factors. It is possible that the market demands we currently anticipate for our REG system will not develop and that they will never achieve widespread commercial acceptance.
In addition, we believe in-grid demonstrations of REG systems are necessary to convince utilities and power grid operators of the benefits of this technology. Even if a project is funded, completion of projects can be delayed as a result of other factors.
Removed
In recent years, we have entered into contracts that require us to post bonds and to deliver letters of credit of significant magnitude.
Added
In addition, the Company maintains the majority of its cash and cash equivalents in accounts with major U.S. and multi-national financial institutions, and our deposits at certain of these institutions exceed insured limits. Market conditions can impact the viability of these institutions.
Removed
Maintaining effective internal control over financial reporting is necessary for us to produce reliable financial statements. In the quarter ended December 31, 2020, we identified a material weakness in our internal control over financial reporting.
Added
In the event of failure of any of the financial institutions where we maintain our cash and cash equivalents, there can be no assurance that we will be able to access uninsured funds in a timely manner or at all.
Removed
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the financial statements will not be prevented or detected on a timely basis.
Added
The COVID-19 pandemic has adversely impacted our business, financial condition and results of operations and other future pandemics or health crises may have similar impacts. The COVID-19 pandemic continues to evolve.
Removed
All of our U.S. government contracts, as well as certain of our contracts with third parties that are dependent on U.S. government contracts, can be terminated by the U.S. government for its convenience, including our contract with the Department of Homeland Security (“DHS”) to deploy our REG system in ComEd’s electric grid in Chicago, Illinois (“Project REG”).
Added
At times, our suppliers have experienced some production disruption due to the COVID-19 pandemic and certain of our customers have been adversely impacted as well, which have collectively adversely impacted our business, financial condition and results of operations.
Removed
Since March 2020, COVID-19 has spread throughout the globe, including in the Commonwealth of Massachusetts where our headquarters are located, and in other areas where we have business operations. In response to the pandemic, we have followed the guidelines of the U.S.
Added
We or third parties on whom we depend may be adversely affected by natural disasters, including events resulting from climate change, and our business continuity and disaster recovery plans may not adequately protect us or our value chain from such events .
Removed
Centers for Disease Control and Prevention ("CDC") and applicable state government authorities to protect the health and safety of our employees, their families, our suppliers, our customers and our communities. While these existing measures, and COVID-19 generally, have not materially disrupted our business to date, any future actions necessitated by the COVID-19 pandemic may result in disruption to our business.
Added
Natural disasters (including, but not limited to tornadoes, earthquakes, fires, storms, floods, droughts and extreme temperatures) and chronic changes in the physical environment could severely disrupt our operations and have a material adverse effect on our business, results of operations, financial condition and prospects. Climate change may increase the frequency or intensity of such events.
Removed
Even if we are able to find alternate sources for such products, they may cost more, which could adversely impact our profitability and financial condition. Inox’s ability to perform under the supply contract has been and may continue to be hampered by the long-term impacts of the COVID-19 pandemic.
Added
If a natural disaster, power outage, or other event, including human acts such as terrorism, occurred that prevented us from fully utilizing our value chain or facilities, that damaged critical infrastructure, such as the manufacturing facilities on which we rely, or that otherwise disrupted operations, it may be difficult or, in certain cases, impossible for us to continue our business for a substantial period of time.
Removed
Our other customers may become adversely impacted by the long-term impacts of the COVID-19 pandemic. As a result of a deterioration in economic conditions resulting from COVID-19, our customers and potential customers may reduce demand for our products, decrease their spending or reconsider orders, all of which would adversely affect our business, operating results and financial condition.
Added
The disaster recovery and business continuity plans we have in place may prove inadequate in the event of a serious disaster or similar event. We may incur substantial expenses as a result of the limited nature of our disaster recovery and business continuity plans, which could have a material adverse effect on our business.
Removed
If we, our customers or suppliers experience prolonged shutdowns or other business disruptions, our business, liquidity, results of operations and financial condition and the trading price of our common stock are likely to be materially adversely affected, and our ability to access the capital markets may be limited.
Added
In addition, changes in climate change-related laws or regulations, including laws relating to greenhouse gas emissions, could lead to new or additional compliance requirements and expenditures, and subject us to additional operational costs and restrictions, including increased energy and raw material costs and other compliance requirements which could negatively impact our reputation, business, capital expenditures, results of operations and financial position. 16 Risks Related to Our Markets Adverse changes in domestic and global economic conditions could adversely affect our operating results.
Removed
As a U.S. federal government contractor, we are requiring all U.S. based employees at sites that service or support our U.S. federal government contracts to be fully vaccinated. In addition, vaccine mandates have been and may be announced in jurisdictions in which our businesses operate.
Added
Political instability in the United States, such as the failure to increase the federal debt ceiling, could lead to further financial market volatility and harm the economy. Adverse credit conditions in the future could have a negative impact on our ability to execute on future strategic activities.
Removed
Our implementation of these requirements may result in attrition, including attrition of key personnel and skilled labor, and difficulty securing future labor needs, which could have a material adverse effect on our business, financial condition and results of operations. 14 A significant portion of our Wind segment revenues are derived from a single customer.
Added
Prevailing prices for such commodities are subject to fluctuations due to changes in supply and demand and a variety of additional factors beyond our control, such as global political and economic conditions. Any of these events would likely harm our business, results of operations and financial condition.
Removed
Adverse changes in domestic and global economic conditions could adversely affect our operating results. We have become increasingly subject to the risks arising from adverse changes in domestic and global economic conditions.
Added
In addition, as our target markets develop, other large industrial companies may enter these fields and compete with us. We face competition from other companies offering FACTS systems similar to our D-VAR products.
Removed
If we fail to comply with new laws, regulations, or reporting requirements, our reputation and business could be adversely impacted. Risks Related to Our Technologies We may be unable to adequately prevent disclosure of trade secrets and other proprietary information.
Added
We face competition for the supply of wind turbine engineering design services from design engineering firms such as Aerovide and W2E. The competition in these markets could adversely affect our operating results by reducing the volume of the products we sell or the prices we can charge.
Added
These competitors may be able to respond more rapidly than us to new or emerging technologies or changes in customer requirements. They may also devote greater resources to the development, promotion and sale of their products than we do.
Added
Our success depends significantly upon our ability to enhance our products and technologies and to develop and introduce, on a timely and cost-effective basis, new products and features that meet changing customer requirements and incorporate technological enhancements. If we are unable to develop new products and enhance functionalities or technologies to adapt to these changes, our business will suffer.
Added
Competitors in the industries in which we operate are consolidating. If our competitors consolidate, they likely will increase their market share, gain economies of scale that enhance their ability to compete with us and/or acquire additional products and technologies that could displace our product offerings. Our customer base also is undergoing consolidation.
Added
Consolidation within our customers’ industries could affect our customers and their relationships with us. If one of our competitors’ customers acquires any of our customers, we may lose that business. Additionally, if our customers become larger and more concentrated, they could exert pricing pressure on all suppliers, including us.
Added
If we were to lose market share or customers or face pricing pressure due to consolidation of our customers, our results of operations and financial condition could be adversely affected. 18 The increasing focus on environmental sustainability and social initiatives could increase our costs, and inaction could harm our reputation and adversely impact our financial results.
Added
While we may at times engage in voluntary initiatives (such as voluntary disclosures, certifications, or goals, among others) to improve our ESG profile, such initiatives may be costly and may not have the desired effect. Moreover, we may not be able to successfully complete such initiatives due to factors that are within or outside of our control.
Added
Even if this is not the case, our actions may subsequently be determined to be insufficient by various stakeholders, and we may be subject to investor or regulator engagement on our ESG efforts, even if such initiatives are currently voluntary.
Added
Certain market participants, including major institutional investors and capital providers, use third-party benchmarks and scores to assess companies’ ESG profiles in making investment or voting decisions. We have limited and in some instances no visibility or control over these scores or their underlying methodologies.
Added
Unfavorable ESG ratings could lead to increased negative investor sentiment towards us or our industry, which could negatively impact our share price as well as our access to and cost of capital.
Added
To the extent ESG matters negatively impact our reputation, it may also impede our ability to compete as effectively to attract and retain employees or customers, which may adversely impact our operations. In addition, this emphasis on environmental, social, and other sustainability matters has resulted and may result in the adoption of new laws and regulations, including new reporting requirements.

Item 2. Properties

Properties — owned and leased real estate

1 edited+0 added−0 removed3 unchanged
Biggest changeThe following table summarizes information regarding our significant properties, as of March 31, 2022: Location Supporting Square footage Owned/Leased United States Ayer, Massachusetts Corporate & Grid Segment 88,000 Leased Westminster, Massachusetts Grid Segment 77,500 Leased Queensbury, New York Grid Segment 35,000 Owned New Milford, Connecticut Grid Segment 85,000 Owned
Biggest changeThe following table summarizes information regarding our significant properties, as of March 31, 2023: Location Supporting Square footage Owned/Leased United States Ayer, Massachusetts Corporate & Grid Segment 88,000 Leased Westminster, Massachusetts Grid Segment 77,500 Leased Queensbury, New York Grid Segment 35,000 Owned New Milford, Connecticut Grid Segment 85,000 Owned

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

4 edited+0 added−0 removed1 unchanged
Biggest changeCOMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN Among American Superconductor Corporation, the Nasdaq Composite Index and the Nasdaq Electrical Components & Equipment Index Fiscal year ended March 31, Company/Index 2017 2018 2019 2020 2021 2022 American Superconductor Corporation 100.00 84.84 187.46 79.88 276.38 110.93 Nasdaq Composite Index 100.00 120.76 133.60 134.52 233.26 252.05 Nasdaq Electrical Components & Equipment Index 100.00 111.71 110.99 92.04 171.00 170.22
Biggest changeCOMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN Among American Superconductor Corporation, the Nasdaq Composite Index and the Nasdaq Electrical Components & Equipment Index Fiscal year ended March 31, Company/Index 2018 2019 2020 2021 2022 2023 American Superconductor Corporation 100.00 220.96 94.16 325.77 130.76 84.36 Nasdaq Composite Index 100.00 111.71 116.65 198.48 191.21 176.12 Nasdaq Electrical Components & Equipment Index 100.00 107.33 82.52 155.74 139.45 156.80
This graph assumes the investment of $100.00 on March 31, 2017 in our common stock, the Nasdaq Composite Index and the Nasdaq Electrical Components & Equipment Index, and assumes any dividends are reinvested. Measurement points are March 31, 2017; March 31, 2018; March 31, 2019; March 31, 2020; March 31, 2021; and March 31, 2022.
This graph assumes the investment of $100.00 on March 31, 2018 in our common stock, the Nasdaq Composite Index and the Nasdaq Electrical Components & Equipment Index, and assumes any dividends are reinvested. Measurement points are March 31, 2018; March 31, 2019; March 31, 2020; March 31, 2021; March 31, 2022; and March 31, 2023.
Payment of future cash dividends, if any, will be at the discretion of our board of directors after taking into account various factors, including our financial condition, operating results, current and anticipated cash needs and plans for expansion. 22 Stock Performance Graph The following graph compares the cumulative total stockholder return on our common stock from March 31, 2017 to March 31, 2022 with the cumulative total return of (i) the Nasdaq Composite Index and (ii) the Nasdaq Electrical Components & Equipment Index.
Payment of future cash dividends, if any, will be at the discretion of our board of directors after taking into account various factors, including our financial condition, operating results, current and anticipated cash needs and plans for expansion. 22 Stock Performance Graph The following graph compares the cumulative total stockholder return on our common stock from March 31, 2018 to March 31, 2023 with the cumulative total return of (i) the Nasdaq Composite Index and (ii) the Nasdaq Electrical Components & Equipment Index.
Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock has been listed on the Nasdaq Global Select Market under the symbol “AMSC” since 1991. Holders The number of holders of record of our common stock on May 27, 2022 was 182.
Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock has been listed on the Nasdaq Global Select Market under the symbol “AMSC” since 1991. Holders The number of holders of record of our common stock on May 29, 2023 was 175.

Item 7. Management's Discussion & Analysis

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

53 edited+13 added−16 removed57 unchanged
Biggest changeChanges in macroeconomic and market conditions arising from the COVID-19 pandemic, or for other reasons, such as the ongoing war between Russia and Ukraine, including inflation, labor force availability, sourcing, material delays and global supply chain disruptions could have a material adverse effect on our business, financial condition and results of operation. 25 Results of Operations Fiscal Years Ended March 31, 2022 and March 31, 2021 For a discussion of our results of operations for the year ended March 31, 2020, including a year-to-year comparison between fiscal 2020 and fiscal 2019, refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended March 31, 2021.
Biggest changeChanges in macroeconomic and market conditions arising from the COVID-19 pandemic, or for other reasons, such as the ongoing war between Russia and Ukraine, inflation, rising interest rates, instability of financial institutions, political instability in the United States, including failure to raise the federal debt ceiling, labor force availability, sourcing, material delays and global supply chain disruptions could have a material adverse effect on our business, financial condition and results of operation.
As part of our separate cost sharing arrangement with DHS under the Prime Contract, we received funding provided by DHS in connection with the Subcontract Agreement of approximately $10.0 million, which represents the total amount of revenue we recognized over the term of the Subcontract Agreement and includes $1.0 million that we have agreed to reimburse ComEd for costs incurred by ComEd while undertaking its tasks under the Subcontract Agreement (the “Reimbursement Amount”).
As part of our separate cost sharing arrangement with DHS under the Prime Contract, we received funding provided by DHS in connection with the Subcontract Agreement of approximately $10.0 million, which represents the total amount of revenue we recognized over the term of the Subcontract Agreement and includes $1.0 million that we agreed to reimburse ComEd for costs incurred by ComEd while undertaking its tasks under the Subcontract Agreement (the “Reimbursement Amount”).
If the loss is not probable or cannot be reasonably estimated, a liability is not recorded in our consolidated financial statements. 29 30 Recent Accounting Pronouncements In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments .
If the loss is not probable or cannot be reasonably estimated, a liability is not recorded in our consolidated financial statements. 29 Recent Accounting Pronouncements In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments .
These obligations impact our short-term and long-term liquidity and capital resource needs. Certain contractual obligations are reflected on the consolidated balance sheet as of March 31, 2022, while others are considered future commitments. We have various contractual arrangements, under which we have committed to purchase certain minimum quantities of goods or services on an annual basis.
These obligations impact our short-term and long-term liquidity and capital resource needs. Certain contractual obligations are reflected on the consolidated balance sheet as of March 31, 2023, while others are considered future commitments. We have various contractual arrangements, under which we have committed to purchase certain minimum quantities of goods or services on an annual basis.
We do not believe that, outside of those disclosed here, there are any other recently issued accounting pronouncements that will have a material impact on our consolidated financial statements. 31 Critical Accounting Policies and Estimates The preparation of consolidated financial statements requires that we make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities.
We do not believe that, outside of those disclosed here, there are any other recently issued accounting pronouncements that will have a material impact on our consolidated financial statements. 30 Critical Accounting Policies and Estimates The preparation of consolidated financial statements requires that we make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities.
The key uncertainties in the calculations, as applicable, are the selection of an appropriate royalty rate, assumptions used in developing estimates of future cash flows, including revenue growth and expense forecasts, assumed customer attrition rates, as well as perceived risks associated with those forecasts in determining the discount rate.
The future cash flows are discounted using an applicable discount rate. The key uncertainties in the calculations, as applicable, are the selection of an appropriate royalty rate, assumptions used in developing estimates of future cash flows, including revenue growth and expense forecasts, assumed customer attrition rates, as well as perceived risks associated with those forecasts in determining the discount rate.
When those caparisons indicate that the carrying value of those assets is greater than the undiscounted cash flows, we recognize an impairment loss for the amount that the carrying value exceeds the fair value. The Company has not made any material changes to the method of evaluating for impairment during the last three years.
When those comparisons indicate that the carrying value of those assets is greater than the undiscounted cash flows, we recognize an impairment loss for the amount that the carrying value exceeds the fair value. The Company has not made any material changes to the method of evaluating for impairment during the last three years.
We performed our annual assessment of goodwill on February 28, 2022 and noted no triggering events from the analysis date to March 31, 2022 and determined that there was no impairment to goodwill. See Note 5, “Goodwill,” for further information regarding the our goodwill valuation assumptions.
We performed our annual assessment of goodwill on February 28, 2023 and noted no triggering events from the analysis date to March 31, 2023 and determined that there was no impairment to goodwill. See Note 5, “Goodwill,” for further information regarding our goodwill valuation assumptions.
See Note 3, "Acquisitions," for additional information. 32 Valuation of long-lived assets We periodically evaluate our long-lived assets, consisting principally of fixed and amortizable intangible assets for potential impairment.
See Note 3, "Acquisitions," for additional information. 31 Valuation of long-lived assets We periodically evaluate our long-lived assets, consisting principally of fixed and amortizable intangible assets for potential impairment.
When we refer to a particular fiscal year, we are referring to the fiscal year beginning on April 1 of that same year. For example, fiscal 2021 refers to the fiscal year beginning on April 1, 2021.
When we refer to a particular fiscal year, we are referring to the fiscal year beginning on April 1 of that same year. For example, fiscal 2022 refers to the fiscal year beginning on April 1, 2022.
The increase in income tax benefit is a result of purchase accounting for the acquired intangible assets and the resulting deferred tax liability from the NEPSI Acquisition. The Company recorded a deferred tax liability o f $2.3 million, primarily for the difference in book and tax basis on the intangible assets acquired in fiscal 2021.
The increase in income tax expense is a result of purchase accounting for the acquired intangible assets and the resulting deferred tax liability from the NEPSI Acquisition in the prior year. The Company recorded a deferred tax liability o f $2.3 million, primarily for the difference in book and tax basis on the intangible assets acquired in fiscal 2021.
There were no indicators requiring further impairment testing on our long-lived assets during the fiscal years ended March 31, 2022 or 2021. 33 Goodwill Goodwill represents the excess of cost over net assets of acquired businesses that are consolidated.
There were no indicators requiring further impairment testing on our long-lived assets during the fiscal years ended March 31, 2023 or 2022. 32 Goodwill Goodwill represents the excess of cost over net assets of acquired businesses that are consolidated.
Additionally, the impact of the COVID-19 pandemic or other sources of instability, including the ongoing war between Russia and Ukraine, on the global financial markets may reduce our ability to raise additional capital, if necessary, which could negatively impact our liquidity.
Additionally, the impact of the COVID-19 pandemic or other sources of instability, including the ongoing war between Russia and Ukraine, instability of financial institutions and political instability in the United States, on the global financial markets may reduce our ability to raise additional capital, if necessary, which could negatively impact our liquidity.
Other fiscal years follow similarly. 24 On October 31, 2018, we entered into a Subcontract Agreement with Commonwealth Edison Company (“ComEd”) (the “Subcontract Agreement”) for the manufacture and installation of the Company’s resilient electric grid ("REG") system within ComEd’s electric grid in Chicago, Illinois (the “Project”).
Other fiscal years follow similarly. 24 On October 31, 2018, we entered into a Subcontract Agreement with Commonwealth Edison Company (“ComEd”) (the “Subcontract Agreement”) for the manufacture and installation of the Company’s resilient electric grid ("REG") system within ComEd’s electric grid in Chicago, Illinois (the “Project”), which became effective on June 20, 2019.
Significant judgment is employed in determining these assumptions as of the acquisition date and for each subsequent period. Accordingly, future business and economic conditions, as well as changes in any of the assumptions described above, can materially impact the fair value of contingent consideration recorded at each reporting period. See Note 3, "Acquisitions," for additional information.
Significant judgment is employed in determining these assumptions as of the acquisition date and for each subsequent period. Accordingly, future business and economic conditions, as well as changes in any of the assumptions described above, can materially impact the fair value of contingent consideration recorded at each reporting period.
In addition, we are required to deliver an irrevocable letter of credit in the amount of $5.0 million to secure certain Company obligations under the Subcontract Agreement, which we have done, and deposited $5.0 million in an escrow account as collateral to secure such letter of credit.
In addition, we were required to deliver an irrevocable letter of credit in the amount of $5.0 million to secure certain Company obligations under the Subcontract Agreement, which we did, and deposited $5.0 million in an escrow account as collateral to secure such letter of credit.
The increase in non-GAAP net loss in fiscal 2021 compared to fiscal 2020 was due to a higher operating loss driven by lower gross margin and higher operating expenses. 28 Liquidity and Capital Resources We have experienced recurring operating losses and as of March 31, 2022 had an accumulated deficit of $1,020.5 million.
The increase in non-GAAP net loss in fiscal 2022 compared to fiscal 2021 was due to a higher operating loss driven by lower gross margins. 28 Liquidity and Capital Resources We have experienced recurring operating losses and as of March 31, 2023 had an accumulated deficit of $1,055.5 million.
We define non-GAAP net loss as net loss before stock-based compensation, amortization of acquisition-related intangibles, acquisition costs, changes in fair value of contingent consideration, and other non-cash or unusual charges.
We define non-GAAP net loss as net loss before stock-based compensation, amortization of acquisition-related intangibles, acquisition costs, changes in fair value of contingent consideration, China dissolution, ERC tax benefit, and other non-cash or unusual charges.
At March 31, 2022, we had $6.1 million of restricted cash included in long-term assets and $2.8 million of restricted cash in short-term assets. At March 31, 2021, we had $5.6 million of restricted cash included in long-term assets and $2.2 million of restricted cash in short-term assets.
At March 31, 2023, we had $0.6 million of restricted cash included in long-term assets and $1.7 million of restricted cash in short-term assets. At March 31, 2022, we had $6.1 million of restricted cash included in long-term assets and $2.8 million of restricted cash in short-term assets.
The decrease in other expense was driven by the impacts of more favorable fluctuations in foreign currencies in fiscal 2021. 27 Income Taxes We recorded an income tax benefit of $1.8 million in fiscal 2021 compared to income tax benefit of $0.8 million in fiscal 2020.
The increase in other expense was driven by the impacts of fluctuations in foreign currencies in fiscal 2022. 27 Income Taxes We recorded an income tax expense of $0.2 million in fiscal 2022 compared to income tax benefit of $1.8 million in fiscal 2021.
The decrease in R&D expenses is a result of lower total compensation expense. Selling, general, and administrative Selling, general and administrative (“SG&A”) expenses increased by 9% to $27.5 million, or 25% of rev enue in fiscal 2021 from $25.3 million, or 29% of revenue, in fiscal 2020.
The decrease in R&D expenses is primarily a result of lower total compensation expense. Selling, general, and administrative Selling, general and administrative (“SG&A”) expenses increased by 4% to $28.7 million, or 27% of rev enue in fiscal 2022 from $27.5 million, or 25% of revenue, in fiscal 2021.
Our revenues are summarized as follows (in thousands): Fiscal Years Ended March 31, 2022 2021 Revenues: Grid $ 98,876 $ 70,528 Wind 9,559 16,597 Total $ 108,435 $ 87,125 Revenues in our Grid business unit are derived from our D-VAR product sales, NEPSI product sales, Neeltran product sales, HTS wire sales, ship protection systems ("SPS"), government-sponsored electric utility projects and other prototype development contracts.
Our revenues are summarized as follows (in thousands): Fiscal Years Ended March 31, 2023 2022 Revenues: Grid $ 94,631 $ 98,876 Wind 11,353 9,559 Total $ 105,984 $ 108,435 Revenues in our Grid business unit are derived from our D-VAR product sales, NEPSI product sales, Neeltran product sales, HTS wire sales, ship protection systems ("SPS"), government-sponsored electric utility projects and other prototype development contracts.
The increase in net cash used in operations in fiscal 2021 compared to fiscal 2020 was driven primarily by decreased collections in fiscal 2021 and higher inventory balances in fiscal 2021. Net cash used in investing activities was $7.2 million in fiscal 2021, compared to net cash provided by investing activities of $2.5 million in fiscal 2020 .
The increase in net cash used in operations in fiscal 2022 compared to fiscal 2021 was driven primarily by purchases of inventory and decreased cash collections in fiscal 2022. Net cash used in investing activities was $1.5 million and $7.2 million in fiscal 2022 and 2021, respectively.
Following the release of ASU 2021-10 in November 2021, the new effective date will be annual reporting periods beginning after December 15, 2021. We do not expect the impact of the adoption of ASU 2021-10 to be material on our consolidated financial statements.
Following the release of ASU 2021-08 in October 2021, the new effective date will be annual reporting periods beginning after December 15, 2022. We evaluated the impact of the adoption of ASU 2021-08, and we do not expect it to have a material impact on our consolidated financial statements.
We also engineer, install and commission our products on a turnkey-basis for some customers. The Grid business unit accounted for 91% of total revenues in fiscal 2021 and 81% in fiscal 2020. Grid revenues increased 40% to $98.9 million in fiscal 2021 from $70.5 million in fiscal 2020.
We also engineer, install and commission our products on a turnkey-basis for some customers. The Grid business unit accounted for 89% of total revenues in fiscal 2022 and 91% in fiscal 2021. Grid revenues decreased 4% to $94.6 million in fiscal 2022 from $98.9 million in fiscal 2021.
Following the release of ASU 2019-10 in November 2019, the new effective date, as long as we remain a smaller reporting company, would be annual reporting periods beginning after December 15, 2022. We are currently evaluating the impact, if any, that the adoption of ASU 2016-13 may have on our consolidated financial statements.
Following the release of ASU 2019-10 in November 2019, the new effective date, as long as we remain a smaller reporting company, would be annual reporting periods beginning after December 15, 2022. We evaluated the impact of the adoption of ASU 2016-13, and we do not expect it to have a material impact on our consolidated financial statements.
Our Wind business unit accounted for 9% of total revenues in fiscal 2021 and 19% in fiscal 2020. Revenues in the Wind business unit decreased 42% to $9.6 million in fiscal 2021 from $16.6 million in fiscal 2020.
Our Wind business unit accounted for 11% of total revenues in fiscal 2022 and 9% in fiscal 2021. Revenues in the Wind business unit increased 19% to $11.4 million in fiscal 2022 from $9.6 million in fiscal 2021.
The quantitative impairment test is required only if the entity concludes that it is more likely than not that a reporting unit’s fair value is less than its carrying amount. We determine the fair value of a reporting unit based on an income approach utilizing a discounted cash flow adjusted for entity specific factors.
The quantitative impairment test is required only if the entity concludes that it is more likely than not that a reporting unit’s fair value is less than its carrying amount. We determine the fair value of a reporting unit, using a methodology which combines an income approach, using a discounted cash flow method, with a market approach.
A reconciliation of GAAP to non-GAAP net loss is set forth in the table below (in thousands, except per share data): Year ended March 31, 2022 2021 Net loss $ (19,193 ) $ (22,678 ) Stock-based compensation 4,661 3,485 Amortization of acquisition-related intangibles 2,623 1,697 Acquisition costs 681 313 Change in fair value of contingent consideration (5,850 ) 3,060 Non-GAAP net loss (17,078 ) (14,123 ) Non-GAAP net loss per share $ (0.63 ) $ (0.59 ) Weighted average shares outstanding - basic and diluted 27,203 23,879 We incurred non-GAAP net losses of $17.1 million or $0.63 per s hare for fiscal 2021, compared to $14.1 million, or $0.59 per share, for fiscal 2020.
A reconciliation of GAAP to non-GAAP net loss is set forth in the table below (in thousands, except per share data): Year ended March 31, 2023 2022 Net loss $ (35,041 ) $ (19,193 ) Stock-based compensation 4,729 4,661 Amortization of acquisition-related intangibles 2,784 2,623 Acquisition costs - 681 Change in fair value of contingent consideration 70 (5,850 ) China dissolution 1,921 — ERC tax benefit (3,283 ) — Non-GAAP net loss (28,820 ) (17,078 ) Non-GAAP net loss per share $ (1.03 ) $ (0.63 ) Weighted average shares outstanding - basic and diluted 27,848 27,203 We incurred non-GAAP net losses of $28.8 million or $1.03 per s hare for fiscal 2022, compared to $17.1 million, or $0.63 per share, for fiscal 2021.
In addition, we may seek to raise additional capital, which could be in the form of loans, convertible debt or equity, to fund our operating requirements and capital expenditures.
In addition, we may seek to raise additional capital, which could be in the form of loans, convertible debt or equity, to fund our operating requirements and capital expenditures. Our liquidity is highly dependent on our ability to increase revenues, control our operating costs, and our ability to raise additional capital, if necessary.
We are experiencing substantial inflationary pressure in our supply chain, some delays in sourcing materials needed for our products and some production disruption resulting from higher than typical employee absenteeism due to the highly contagious omicron variant which have increased our cost of revenues and decreased gross margin.
We are experiencing substantial inflationary pressure in our supply chain and some delays in sourcing materials needed for our products, resulting in some production disruption both of which have increased our cost of revenues and decreased gross margin.
At March 31, 2022, we had cash, cash equivalents, marketable securities and restricted cash of $49.5 million, compared to $80.7 million at March 31, 2021, a decrease of $31.2 million. As of March 31, 2022, we had approximately $2.6 million of cash, cash equivalents and restricted cash in foreign bank accounts.
At March 31, 2023, we had cash, cash equivalents and restricted cash of $25.7 million, compared to $49.5 million at March 31, 2022, a decrease of $23.8 million. As of March 31, 2023, we had approximately $1.9 million of cash, cash equivalents and restricted cash in foreign bank accounts.
The increase in amortization expense is primarily a result of the NEPSI and Neeltran Acquisitions. Change in fair value of contingent consideration The change in fair value of our contingent consideration for the earnout payment on the NEPSI Acquisition resulted in a gain of $ 5.9 million in the year ended March 31, 2022.
The increase in amortization expense is primarily a result of the Neeltran acquisition. Change in fair value of contingent consideration The change in fair value of our contingent consideration for the earnout payment on the NEPSI acquisition resulted in a loss of $ 0.1 million in fiscal 2022.
Our cash and cash equivalents, marketable securities and restricted cash are summarized as follows (in thousands): March 31, 2022 March 31, 2021 Cash and cash equivalents $ 40,584 $ 67,814 Marketable securities - 5,140 Restricted cash 8,902 7,725 Total cash, cash equivalents, marketable securities and restricted cash $ 49,486 $ 80,679 Net cash used in operating activities was $19.0 m illion and $8.7 million in fiscal 2021 and 2020, respectively.
Our cash, cash equivalents and restricted cash are summarized as follows (in thousands): March 31, 2023 March 31, 2022 Cash and cash equivalents $ 23,360 $ 40,584 Restricted cash 2,315 8,902 Total cash, cash equivalents and restricted cash $ 25,675 $ 49,486 Net cash used in operating activities was $22.5 m illion and $19.0 million in fiscal 2022 and 2021, respectively.
Cost of revenues in fiscal 2021 includes total amortization expense of $0.2 million as a result of the NEPSI and Neeltran acquired backlog intangible assets.
Cost of revenues in fiscal 2022 and fiscal 2021 includes total amortization expense of less than $0.1 million as a result of the acquired backlog intangible assets from our acquisitions of Northeast Power Systems, Inc. and related assets ("NEPSI") and Neeltran, Inc. and related assets ("Neeltran").
The decrease over the prior year period was primarily driven by shipments of electrical control systems ("ECS") to Doosan in the fiscal year ended March 31, 2021 with no similar shipments in fiscal 2021. Cost of Revenues and Gross Margin Cost of revenues increased by 36% to $94.9 million in fiscal 2021 , compared to $69.7 million in fiscal 2020.
The increase over the prior year period was primarily driven by shipments of electrical control systems ("ECS") to INOX in fiscal 2022, compared to fiscal 2021. Cost of Revenues and Gross Margin Cost of revenues increased by 3% to $97.5 million in fiscal 2022 , compared to $94.9 million in fiscal 2021.
These amounts included in restricted cash primarily represent collateral deposits to secure surety bonds and letters of credit for various customer contracts including the Subcontract Agreement with ComEd. These deposits are held in interest bearing accounts. We are a party to many contractual obligations involving commitments to make payments to third parties.
These amounts included in restricted cash primarily represent collateral deposits to secure surety bonds and letters of credit for various customer contracts. These deposits are held in interest bearing accounts.
The increase in revenues was driven by the contribution from the NEPSI Acquisition and Neeltran Acquisition as well as growth in the D-VAR, Volt Var Optimization ("VVO") and SPS product lines. Revenues in our Wind business unit are derived from wind turbine electrical control systems and core components, wind turbine license and development contracts, service contracts and consulting arrangements.
The decrease in revenues was driven by lower D-VAR revenues than in the prior year period. Revenues in our Wind business unit are derived from wind turbine electrical control systems and core components, wind turbine license and development contracts, service contracts and consulting arrangements.
The decrease in interest income, net, was related to a lower cash balance earning lower interest rates in fiscal 2021 than in fiscal 2020. Other expense, net Oth er expense, ne t was less than $0.1 million in fiscal 2021, compared to other expense, net of $0.8 million in fiscal 2020.
Other expense, net Oth er expense, ne t was $0.1 million in fiscal 2022, compared to other expense, net of less than $0.1 million in fiscal 2021.
Unallocated corporate expenses in fiscal 2020 consisted of a loss on contingent consideration of $3.0 million and stock-based compensation expense of $3.5 million. Interest income, net Interest income, net was $0.1 million in fiscal 2021 compared to $0.4 million for fiscal 2020.
Unallocated corporate expenses in fiscal 2022 consisted of a loss on contingent consideration of $0.1 million, stock-based compensation expense of $4.7 million and a restructuring charge of $1.0 million. Unallocated corporate expenses in fiscal 2021 consisted of a gain on contingent consideration of $5.9 million offset by stock-based compensation expense of $4.7 million.
Net cash provided by financing activities was $0.1 million and $50.8 million in fiscal 2021 and 2020, respectively. The decrease in net cash provided by financing activities in fiscal 2021 compared to fiscal 2020 was primarily due to the proceeds from our October 2020 offering of common stock in which there was no similar transaction in fiscal 2021.
The decrease in net cash used in investing activities in fiscal 2022 compared to fiscal 2021 was due primarily to the Neeltran acquisition in fiscal 2021, in which no similar transaction occurred in fiscal 2022. Net cash provided by financing activities was $0.2 million and $0.1 million in fiscal 2022 and 2021, respectively.
Following the release of ASU 2021-08 in October 2021, the new effective date will be annual reporting periods beginning after December 15, 2022. We are currently evaluating the impact, if any, that the adoption of ASU 2021-08 may have on our consolidated financial statements.
Following the release of ASU 2021-10 in November 2021, the new effective date will be annual reporting periods beginning after December 15, 2021. As of April 1, 2022, we adopted ASU 2021-10 and noted no material impact on our consolidated financial statements.
The increase in SG&A expenses on a dollar basis is primarily the result of higher compensation, higher stock compensation expense and additional outside services expenses. Amortization of acquisition related intangibles We recorded $2.5 million in fiscal 2021 and $1.2 million in fiscal 2020 in amortization expense related to our core technology and know-how, customer relationships, and other intangible assets.
Included in SG&A is a $0.8 million benefit from the ERC recognized in fiscal 2022. Amortization of acquisition related intangibles We recorded $2.7 million in fiscal 2022 and $2.5 million in fiscal 2021 in amortization expense related to our core technology and know-how, customer relationships, and other intangible assets.
The increase in the Grid business unit operating loss was due to lower gross margins driven by less favorable margins from the Neeltran acquired backlog as well as purchase accounting adjustments related to the acquisition. The Wind segment generated an operating loss of $1.6 m illion in fiscal 2021 and $3.3 million in fiscal 2020.
The Wind segment generated an operating loss of $2.5 m illion in fiscal 2022 and $1.6 million in fiscal 2021. The increase in the Wind business unit operating loss was due to lower gross margins in fiscal 2022, compared to fiscal 2021.
The change in the fair value was primarily driven by the change in our stock price, which is a key valuation metric. 26 Operating loss Our operating loss is summarized as fo llows (in thousands): Fiscal Years Ended March 31, 2022 2021 Operating income (loss): Grid $ (20,725 ) $ (13,318 ) Wind (1,554 ) (3,302 ) Unallocated corporate expenses 1,190 (6,545 ) Total $ (21,089 ) $ (23,165 ) The Grid segment generated an operating loss o f $20.7 million in fiscal 2021 and $13.3 million in fiscal 2020.
There were no restructuring charges recorded in fiscal 2021. 26 Operating loss Our operating loss is summarized as fo llows (in thousands): Fiscal Years Ended March 31, 2023 2022 Operating income (loss): Grid $ (24,615 ) $ (20,725 ) Wind (2,547 ) (1,554 ) Unallocated corporate expenses (5,847 ) 1,190 Total $ (33,009 ) $ (21,089 ) The Grid segment generated an operating loss o f $24.6 million in fiscal 2022 and $20.7 million in fiscal 2021.
The increase in net cash used in investing activities in fiscal 2021 compared to fiscal 2020 was due primarily to the sale of marketable securities in fiscal 2020 in which there was no similar transaction in fiscal 2021 offset by decreased cash used for acquisitions in fiscal 2021.
The increase in net cash provided by financing activities in fiscal 2022 compared to fiscal 2021 was primarily due to the repurchase of treasury stock in fiscal 2021, in which no similar transaction occurred in fiscal 2022. .
Determining the fair value of certain assets and liabilities assumed is judgmental in nature and often involves the use of significant estimates and assumptions as well as the use of specialists as needed. The Company utilizes management estimates and an independent third-party valuation firm to assist in determining the fair values of assets acquired, including intangible assets and liabilities assumed.
The excess purchase price over the estimated fair value of the net assets acquired is recorded as goodwill. Intangible assets, if identified, are also recorded. Determining the fair value of certain assets and liabilities assumed is judgmental in nature and often involves the use of significant estimates and assumptions as well as the use of specialists as needed.
Gross margin decreased to 12% in fis cal 2021 from 20% in fiscal 2020. The decrease in gross margin in fiscal 2021 was due to an unfavorable product mix, inflation pressure in our supply chain, some delays in sourcing materials due to the COVID-19 pandemic and purchase accounting adjustments associated with the Neeltran Acquisition.
Gross margin decreased to 8% in fis cal 2022 from 12% in fiscal 2021. The decrease in gross margin in fiscal 2022 was due to an unfavorable product mix, inflation pressure in our supply chain, and additional expenses incurred to complete and deliver certain projects from the preacquisition Neeltran backlog.
The basis for future sales projections for both the MPEEM and RFR are based on internal revenue forecasts which the Company believes represents reasonable market participant assumptions. The future cash flows are discounted using an applicable discount rate.
The fair value of customer relationships is measured using the multi-period excess earnings method (“MPEEM”). The fair value of the trade names is measured using a relief-from-royalty (“RFR”) approach. The basis for future sales projections for both the MPEEM and RFR are based on internal revenue forecasts which the Company believes represents reasonable market participant assumptions.
Net loss Net loss was $19.2 million in fiscal 2021, compared to net loss of $22.7 million in fiscal 2020. The decrease in net loss was driven primarily by the change in fair value of the contingent consideration for the earnout payment on the NEPSI Acquisition.
The change in the fair value of our contingent consideration for the earnout payment on the NEPSI acquisition resulted in a gain of $5.9 million in fiscal 2021. The change in the fair value was primarily driven by the change in our stock price and assumptions on likelihood of achieving revenue targets.
See Note 4, “Revenue Recognition,” for further information regarding the Company’s adoption of ASC 606, Revenue from Contracts with Customers . Business Acquisitions We account for acquisitions using the purchase method of accounting in accordance with ASC 805, Business Combinations .
See Note 4, “Revenue Recognition,” for additional information. Business Acquisitions We account for acquisitions using the purchase method of accounting in accordance with ASC 805, Business Combinations . The purchase price for each acquisition is allocated to the assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition.
The primary intangible assets acquired include customer relationship and trade names. Intangible assets are initially valued using a methodology commensurate with the intended use of the asset. The fair value of customer relationships is measured using the multi-period excess earnings method (“MPEEM”). The fair value of the trade names is measured using a relief-from-royalty (“RFR”) approach.
The Company utilizes management estimates and an independent third-party valuation firm to assist in determining the fair values of assets acquired, including intangible assets and liabilities assumed. The primary intangible assets acquired include customer relationship and trade names. Intangible assets are initially valued using a methodology commensurate with the intended use of the asset.
The step up was assigned to acquired work-in-progress and finished goods inventory that were completely delivered during fiscal 2021. Operating Expenses Research and development Research and development (“R&D”) expenses decreased by 5% to $10.5 million, or 10% of revenue in fiscal 2021 , compared to $11.0 million, or 13% of revenue, in fiscal 2020.
Operating Expenses Research and development Research and development (“R&D”) expenses decreased by 14% to $9.0 million, or 8% of revenue in fiscal 2022 , compared to $10.5 million, or 10% of revenue, in fiscal 2021. Included in R&D is a $0.7 million benefit from the ERC recognized in fiscal 2022.
Removed
As provided in the Subcontract Agreement, the Subcontract Agreement became effective upon the signing of an amendment by us and the U.S. Department of Homeland Security (“DHS”) to the existing contract (the “Prime Contract”) between us and DHS on June 20, 2019.
Added
This irrevocable letter of credit was terminated and the full $5.0 million was returned from escrow to us during the fiscal year ended March 31, 2023.
Removed
Unless terminated earlier by us, ComEd or DHS according to the terms of the Subcontract Agreement, the term of the Subcontract Agreement will continue until we complete our warranty obligations under the Subcontract Agreement.
Added
From time-to-time we may undertake restructuring activities in order to align our global organization in a manner that we believe will better position us to achieve our long-term goals. In January 2023, we undertook a reduction in force that involved approximately 5% of our global workforce.
Removed
ComEd has agreed to provide the site and provide all civil engineering work required to support the operation and integration of the REG system into ComEd’s electric grid. Other than the Reimbursement Amount, ComEd is responsible for its own costs and expenses. DHS’s approval to commence with construction was obtained on June 20, 2019.
Added
This restructuring will cause us to incur $1.0 million of cash expense and is expected to result in annualized cost savings of approximately $5 million, beginning in fiscal 2023.
Removed
Substation work on the project began in late 2019 and we successfully integrated the REG system on Com Ed's electric power grid and the REG system became fully operational in August 2021. On October 1, 2020, we entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”) with the selling stockholders named therein.
Added
In February 2023, we completed the process of determining and verifying our eligibility and amount of payroll tax credits known as the Employee Retention Credit (“ERC”) under the CARES Act which Congress enacted as part of the Taxpayer Certainty and Disaster Tax Relief Act of 2020.
Removed
Pursuant to the terms of the Stock Purchase Agreement and concurrently with entering into such agreement, we acquired all of the issued and outstanding (i) shares of capital stock of Northeast Power Systems, Inc., a New York corporation (“NEPSI”), and (ii) membership interests of Northeast Power Realty, LLC, a New York limited liability company, which holds the real property that serves as NEPSI’s headquarters (the "NEPSI Acquisition").
Added
This resulted in filing certain amended payroll tax forms for eligible quarters in 2020 and 2021, which, in the aggregate, totaled $3.3 million.
Removed
NEPSI is a U.S.-based global provider of medium-voltage metal-enclosed power capacitor banks and harmonic filter banks for use on electric power systems. As a result of this transaction, NEPSI became a wholly-owned subsidiary and is operated by our Grid business segment. The NEPSI purchase price was $26.0 million in cash on hand and 873,657 restricted shares of our common stock.
Added
We have accordingly recognized a receivable in prepaid expenses and other current assets and a benefit to cost of revenues and operating expenses in the quarter ended March 31, 2023. 25 Results of Operations Fiscal Years Ended March 31, 2023 and March 31, 2022 Revenues Total revenues decreased by 2% to $106.0 million in fiscal 2022 from $108.4 million in fiscal 2021.
Removed
As part of the transaction, in the future, the selling stockholders may receive up to an additional 1,000,000 restricted shares of our common stock upon the achievement of certain specified future revenue objectives during varying periods of up to four years after the closing.
Added
Included in cost of revenues is a $1.8 million benefit from the ERC recognized in fiscal 2022.
Removed
On May 6, 2021, we acquired all of the issued and outstanding shares of capital stock of (i) Neeltran, Inc., a Connecticut corporation (“Neeltran”) that supplies rectifiers and transformers to industrial customers, and (ii) Neeltran International, Inc., a Connecticut corporation (“International”), as well as the real property that serves as Neeltran’s headquarters. The COVID-19 pandemic continues to rapidly evolve.
Added
Restructuring We recorded restructuring charges of $1.0 million in fiscal 2022 for severance pay as a result of the reduction in force announced on January 24, 2023.
Removed
The extent to which the outbreak impacts our business, liquidity, results of operations and financial condition will depend on future developments, which are highly uncertain and cannot be predicted with confidence.
Added
The increase in the Grid business unit operating loss was due to lower gross margins driven by a less favorable product mix and additional expenses incurred to deliver on the Neeltran acquired backlog. In addition, Grid segment operating loss includes a $3.3 million benefit from the ERC that was recognized in fiscal 2022.
Removed
Revenues Total revenues increased by 24% to $108.4 million in fiscal 2021 from $87.1 million in fiscal 2020.
Added
Interest income, net Interest income, net was $0.3 million in fiscal 2022 compared to $0.1 million for fiscal 2021. The increase in interest income, net, was due to increased interest rates in fiscal 2022. China dissolution China dissolution expense was $1.9 million in fiscal 2022 compared to no activity in fiscal 2021.
Removed
In addition, a fair value purchase adjustment of approxima tely $0.6 million for the step-up basis assigned to acquired inventory, to properly reflect the fair value in purchase accounting, was charged to cost of revenues in the fiscal year ended March 31, 2022.
Added
The China dissolution expense during fiscal 2022, was driven by the liquidation of our China entity, resulting in a foreign currency loss from the cumulative translation release of $1.9 million in fiscal 2022 in which there was no similar transaction in fiscal 2021.
Removed
The change in the fair value of our contingent consideration for the earnout payment on the NEPSI Acquisition resulted in a loss of $3.0 million in the year ended March 31, 2021.
Added
Net loss Net loss was $35.0 million in fiscal 2022, compared to net loss of $19.2 million in fiscal 2021. The increase in net loss was driven primarily by lower gross margins, the impact of the China dissolution in fiscal 2022 and partially offset by the ERC benefit.
Removed
The decrease in the Wind business unit operating loss was due to lower costs of revenues on lower revenues driven by fewer shipments of ECS than in fiscal 2020. Unallocated corporate expenses in fiscal 2021 consisted of a gain on contingent consideration of $5.9 million offset by stock-based compensation expense of $4.7 million.
Added
The restricted cash held in escrow in long-term assets at the end of March 31, 2022 securing the letter of credit with Com Ed on the REG project was released back to us in the fourth quarter of fiscal 2022. We are a party to many contractual obligations involving commitments to make payments to third parties.
Removed
Our liquidity is highly dependent on our ability to increase revenues, including our ability to collect revenues under our agreements with Inox, control our operating costs, and our ability to raise additional capital, if necessary.

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