What changed in this filing

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Item 1. Financial Statements

2022-08-03 compared with 2022-02-02 · 332 added, 466 removed, 799 unchanged (50% of the section changed)

2 unchanged sentences

(In thousands)

December 31, 2021

June 30, 2022

March 31, 2022

3 unchanged sentences

$ 40,584  

Marketable securities

Accounts receivable, net

11 unchanged sentences

13,397  

13,656  

Intangibles, net

10,599  

11,311  

Right-of-use assets

50 unchanged sentences

Three Months Ended

Nine Months Ended

Cost of revenues

17 unchanged sentences

Three Months Ended

Nine Months Ended

$ ( 8,710 )  

Other comprehensive (loss) gain, net of tax:

2 unchanged sentences

Comprehensive loss

$ ( 8,647 )  

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

1 unchanged sentence

UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’

FOR THE THREE AND nine MONTHS ENDED December 31, 2021 AND 2020

FOR THE THREE MONTHS ENDED June 30, 2022 AND 2021

(In thousands)

7 unchanged sentences

Balance at March 31, 2022

Issuance of common stock - bonus payout

Issuance of common stock - restricted shares

Issuance of common stock - restricted shares, net of forfeited shares

Stock-based compensation expense

Issuance of stock for 401(k) match

Issuance of common stock - Neeltran acquisition

Repurchase of treasury stock

Cumulative translation adjustment

Balance at June 30, 2022

Issuance of common stock - ESPP

Issuance of common stock - bonus payout

Stock-based compensation expense

Issuance of stock for 401(k) match

Cumulative translation adjustment

Balance at September 30, 2021

Issuance of common stock - restricted shares

Stock-based compensation expense

Issuance of stock for 401(k) match

Cumulative translation adjustment

Balance at December 31, 2021

Accumulated Other

6 unchanged sentences

Balance at March 31, 2021

Issuance of common stock - bonus payout

Issuance of common stock - restricted shares

1 unchanged sentence

Issuance of stock for 401(k) match

Neeltran acquisition

Repurchase of treasury stock

1 unchanged sentence

Balance at June 30, 2021

Issuance of common stock - ESPP

Issuance of common stock - restricted shares

Stock-based compensation expense

Issuance of stock for 401(k) match

Repurchase of treasury stock

Cumulative translation adjustment

Balance at September 30, 2020

Issuance of common stock - restricted shares, net of forfeitures

Stock-based compensation expense

Issuance of stock for 401(k) match

Issuance of common stock - stock offering

Issuance of common stock - NEPSI acquisition

Repurchase of treasury stock

Cumulative translation adjustment

Balance at December 31, 2020

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

2 unchanged sentences

(In thousands)

Nine Months Ended December 31,

Three Months Ended June 30,

Cash flows from operating activities:

$ ( 8,710 )  

Adjustments to reconcile net loss to net cash used in operations:

6 unchanged sentences

Other non-cash items

( 127 )  

Unrealized foreign exchange loss on cash and cash equivalents

1 unchanged sentence

Accounts receivable

( 1,426 )  

( 9,633 )  

Prepaid expenses and other assets

2 unchanged sentences

Net cash used in operating activities

( 5,863 )  

Cash flows from investing activities:

Purchase of property, plant and equipment

Sale of marketable securities

( 441 )  

Cash paid for acquisition, net of cash acquired

Proceeds from the maturity of marketable securities

Change in other assets

( 55 )  

Net cash used in investing activities

( 496 )  

Cash flows from financing activities:

1 unchanged sentence

Repayment of debt

Proceeds from public equity offering, net

Proceeds from exercise of employee stock options and ESPP

Net cash provided by financing activities

( 20 )  

Net cash used in financing activities

( 20 )  

Effect of exchange rate changes on cash

Net increase/(decrease) in cash, cash equivalents and restricted cash

( 17 )  

Net decrease in cash, cash equivalents and restricted cash

( 6,396 )  

Cash, cash equivalents and restricted cash at beginning of period

49,486  

75,539  

Cash, cash equivalents and restricted cash at end of period

$ 43,090  

$ 57,951  

Supplemental schedule of cash flow information:

1 unchanged sentence

Non-cash investing and financing activities

Issuance of common stock in connection with the purchase of Northeast Power Systems, Inc.

Issuance of common stock in connection with the purchase of Neeltran, Inc.

$ 4,387  

Issuance of common stock to settle liabilities

14 unchanged sentences

The unaudited condensed consolidated financial statements, in the opinion of management, reflect all adjustments (consisting of normal recurring adjustments) necessary for a fair statement of the results for the interim periods ended 

December 31, 2021 

June 30, 2022 

2021  and the financial position at 

December 31, 2021;

June 30, 2022;

however, these results are not necessarily indicative of results which may be expected for the full year.

3 unchanged sentences

filed with the SEC on June 1, 2022.

The Company has historically experienced recurring operating losses and as of December 31, 2021 , the Company had an accumulated deficit of $ 1,015  million.

In addition, the Company has historically experienced recurring negative operating cash flows.  At December 31, 2021 , the Company had cash and cash equivalents of $ 43.9 million.

The Company has historically experienced recurring operating losses and as of June 30, 2022 , the Company had an accumulated deficit of $ 1,029  million.

In addition, the Company has historically experienced recurring negative operating cash flows.  At June 30, 2022 , the Company had cash and cash equivalents of $ 33.4 million.

Cash used in operations for the 

nine months ended 

December 31, 2021 was $ 15.9 million.

three months ended 

June 30, 2022 was $ 5.9 million.

In February 2021, the Company filed a shelf registration statement on Form S- 3 that will expire in February 2024 ( the “Form S- 3”

2 unchanged sentences

The terms of any future offering under the Form S- 3 will be established at the time of such offering and will be described in a prospectus supplement filed with the SEC prior to the completion of any such offering.

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.

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. 

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").

The Company also paid $ 1.1 million to International selling stockholders at closing to pay off previous loans made by them to Neeltran.

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.

In March 2020, the World Health Organization declared the disease caused by the novel coronavirus, COVID- 19,  to be a pandemic.

In March 2020, the World Health Organization declared the disease caused by the novel coronavirus (“COVID- 19“

) to be a pandemic.

COVID- 19  has spread throughout the globe, including in the Commonwealth of Massachusetts where the Company’s headquarters are located, and in other areas where the Company has business operations.

In response to the outbreak, the Company has followed the guidelines of the U.S.

Centers for Disease Control and Prevention and applicable state government authorities to protect the health and safety of the Company’s employees, families, suppliers, customers and communities.

In response to the pandemic, the Company has followed the guidelines of the U.S.

Centers for Disease Control and Prevention (“CDC”) and applicable state government authorities to protect the health and safety of the Company’s employees, families, suppliers, customers and communities.

While these existing measures and, COVID- 19 generally, have not materially disrupted the Company’s business to date, any future actions necessitated by the COVID- 19 pandemic may result in disruption to the Company’s business.

While the COVID- 19 pandemic continues to rapidly evolve, the Company is experiencing some inflation pressure in its supply chains, some delays in sourcing materials needed for its products, and some production disruption resulting from higher than typical employee absenteeism due to the highly contagious omicron variant. The Company continues to assess the impact of the COVID- 19 pandemic to best mitigate risk and continue the operations of the Company’s business.

The extent to which the outbreak impacts the Company’s business, liquidity, results of operations and financial condition will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including new information that may emerge concerning the severity of the COVID- 19 pandemic, the spread of new variations of the virus, the actions to contain it or treat its impact and the effectiveness and adoption of vaccines and treatments, among others. 

If the Company, its customers or suppliers experience prolonged shutdowns or other business disruptions, including global supply chain disruptions, the Company’s business, liquidity, results of operations and financial condition are likely to be materially adversely affected, and the Company’s ability to access the capital markets may be limited. 

The Company believes that based on the information presented above and its quarterly management assessment, it has sufficient liquidity to fund its operations and capital expenditures for the next twelve months following the issuance of the financial statements for the nine months ended December 31, 2021 .

The Company’s liquidity is highly dependent on its ability to increase revenues and gross margin, its ability to control its operating costs, and its ability to raise additional capital, if necessary.  The impact of the COVID- 19 pandemic 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.  There can be no assurance that the Company will be able to continue to raise additional capital, on favorable terms or at all, from other sources or execute on any other means of improving liquidity described above.

The COVID- 19 pandemic continues to rapidly evolve. The Company is experiencing substantial inflationary pressure in its supply chain, some delays in sourcing materials needed for its products and some production disruption resulting from higher than typical employee absenteeism, all of which have increased the Company’s cost of revenues and decreased gross margin. The extent to which the pandemic impacts the Company’s business, liquidity, results of operations and financial condition will depend on future developments, which are highly uncertain and cannot be predicted with confidence. 

Changes in macroeconomic 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 the Company’s business, financial condition and results of operation.

The Company’s liquidity is highly dependent on its ability to increase revenues, its ability to control its operating costs, and its ability to raise additional capital, if necessary.

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. 

There can be no assurance that the Company will be able to continue to raise additional capital, on favorable terms or at all, from other sources or execute on any other means of improving liquidity described above.

2021 Acquisition of Neeltran

As described in Note 1, "Nature of the Business and Operations and Liquidity", on the Neeltran Acquisition Date, 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 and International for $ 1.0 million in cash and the AMSC Shares, that were paid and issued, respectively, to the Neeltran selling stockholders.

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.

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.

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 Company also paid $ 1.1 million to International selling stockholders to pay off previous loans made by them to Neeltran.

Additionally, the Company paid approximately $ 7.6 million, including $ 1.9 million of indebtedness secured by the mortgage on the real property as described below, directly to Neeltran lenders at closing to extinguish outstanding Neeltran indebtedness to third parties.

Pursuant to the terms of the Real Property Purchase Agreement, AMSC Husky purchased the real property that serves as Neeltran's headquarters for $ 4.3 million, of which (a) $ 2.4 million was paid from immediately available funds by AMSC Husky to the selling parties, 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.

The total purchase price of $ 16.4 million includes cash paid, the fair value of the AMSC Shares issued at closing and the debt payoff on behalf of the sellers as follows (in millions):

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 total purchase price of $ 16.4 million includes cash paid, the fair value of the AMSC Shares issued at closing and the debt payoff on behalf of the sellers as follows (in millions):

Issuance of 301,556 shares of Company's common stock

2 unchanged sentences

$ 16.4  

The Neeltran Acquisition completed by the Company during the nine months ended December 31, 2021 has been accounted for under the purchase method of accounting in accordance with ASC 805, Business Combinations.

The Neeltran Acquisition completed by the Company during the fiscal year ended March 

31, 2022  has been accounted for under the purchase method of accounting in accordance with ASC 805, Business Combinations.

The Company allocated the purchase price to the assets acquired and liabilities assumed at their estimated fair values as of the date of Neeltran Acquisition.

1 unchanged sentence

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.

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.

10 unchanged sentences

Total purchase consideration

$ 16.4  

 Inventory include

1 unchanged sentence

The fair value was based on the estimated selling price of the inventory, less the remaining manufacturing and selling cost and a normal profit margin on those manufacturing and selling efforts.

The inventory step up adjustment increased cost of revenue $ 0.6 million in the nine month period ended December 31, 2021 as the inventory was sold. This increase is not reflected in the pro forma condensed combined statements of operations because it does not have a continui ng impact beyond the

The inventory step up adjustment increased cost of revenue by $ 0.6 million in the twelve month period ended March 31, 2022 as the inventory was sold. This increase is not reflected in the pro forma condensed combined statements of operations because it does not have a continui ng impact beyond the

Backlog of $ 0.1 million was evaluated using the multi period excess earnings method under the income approach.

6 unchanged sentences

The relief from royalty method was utilized using a 1 % royalty rate on revenues with a 24.5 % discount rate over 15 years.

The goodwill represents the value associated with the acquired workforce and expected synergies related to the business combinations of the

two companies.

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.

This purchase price allocation is preliminary and has

not been finalized as the analysis on the assets and liabilities acquired, primarily the tax liability

may require further adjustments to our purchase accounting that could result in a measurement period adjustment that would impact our recorded net assets and goodwill as of

Material changes, if any, to the preliminary allocation summarized above will be reported once the related uncertainties are resolved but

no later than

May 6, 2022.  

$2.3 million of deferred tax liability is primarily related to inventory step up and intangibles. 

 The results of Neeltran's operations, are included in the Company's consolidated results from the date of the Neeltran Acquisition of

May 6, 2021, for the

nine months ended

December 31, 2021.

In the unaudited consolidated results for the

nine months ended

December 31, 2021, Neeltran contributed $

million of revenue and

 $ 1.2  mi llion in net loss for the Company.

Goodwill recognized in the Neeltran Acquisition is 

not  deductible for tax purposes.

The Company has finalized its purchase price allocation for the Neeltran Acquisition, and there were no changes to the net assets and goodwill recorded by the Company as of May 6, 2021. 

Unaudited Pro Forma Operating Results

The unaudited pro forma condensed consolidated statement of operations for the

three months ended

June 30, 2022 and 

2021 is presented as if the Neeltran Acquisition had occurred on

April 1, 2021.

Months  

Operating  loss

Net loss per common share

Shares - basic

Shares - diluted

The pro forma amounts include the historical operating results of the Company, and Neeltran, with appropriate adjustments that give effect to acquisition related costs, income taxes, intangible amortization resulting from the Neeltran Acquisition and certain conforming accounting policies of the Company. 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.

Acquisition of NEPSI

12 unchanged sentences

As NEPSI was previously a private company, the adoption of ASC 606  was completed as part of the NEPSI Acquisition. 

See Note 3  "Revenue Recognition" for further details. 

See Note 3, "Revenue Recognition" for further details. 

There were no leases acquired and the NEPSI Acquisition had 

20 unchanged sentences

Total purchase consideration

$ 42.4  

Inventory includes a $ 1.0 million adjustment to step up the inventory balance to fair value consistent with the purchase price allocation. 

9 unchanged sentences

Goodwill resulting from the NEPSI Acquisition was assigned to the Company’s Grid business segment.  Goodwill recognized in the NEPSI Acquisition is not deductible for tax purposes. The $ 1.7 million of deferred tax liability is primarily related to inventory step up and intangibles. 

Unaudited Pro Forma Operating Results

The unaudited pro forma condensed consolidated statement of operations for the

three and nine months ended

December 31, 2021 and 

2020 is presented as if the NEPSI Acquisition and Neeltran Acquisition had occurred on

April 1, 2020.

Three Months Ended December 31,

Nine Months Ended December 31,

Operating loss

Net loss per common share

Shares - basic

Shares - diluted

The pro forma amounts include the historical operating results of the Company, NEPSI and Neeltran, with appropriate adjustments that give effect to acquisition related costs, income taxes, intangible amortization resulting from the NEPSI Acquisition and Neeltran Acquisition and certain conforming accounting policies of the Company. The pro forma amounts are

not necessarily indicative of the operating results that would have occurred if the NEPSI Acquisition 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.

Revenue Recognition

3 unchanged sentences

For its customer contracts, the Company identifies the performance obligations, determines the transaction price, allocates the contract transaction price to the performance obligations, and recognizes the revenue when (or as) control of goods or services is transferred to the customer.

three and nine months ended December 31, 2021 , 79 % and 76 % of revenue, respectively, was recognized at the point in time when control transferred to the customer, with the remainder being recognized over time.

In the three and nine months ended December 31, 2020, 78 % and 79 % of revenue, respectively, was recognized at the point in time when control transferred to the customer, with the remainder being recognized over time.

three months ended June 30, 2022  and 2021, 70 % and 78 % of revenue, respectively, was recognized at the point in time when control transferred to the customer, with the remainder being recognized over time. 

In the Company's equipment and system product line, each contract with a customer summarizes each product sold to a customer, which typically represents distinct performance obligations.

3 unchanged sentences

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 three and nine months ended December 31, 2021 , the Company recorded $ 0.1 million and $ 0.9 million in grant revenue, respectively, which is included in the Company’s Grid business segment revenue. In the three and nine months ended December 31, 2020, the Company recorded $ 1.1 million and $ 1.8 million in grant revenue, respectively, which is included in the Company's Grid segment revenue.

The Company recorded no grant revenue in the three months ended June 30, 2022 

and $ 0.5  

million in grant revenue in the three months ended June 30, 2021.

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 represent distinct performance obligations.

3 unchanged sentences

The ongoing service transactions are for service contracts that provide benefit to the customer simultaneously as the Company performs its obligations, and therefore this revenue is recognized ratably over time throughout the effective period of these contracts.

The transaction prices on these contracts are allocated based on an adjusted market approach which is re-assessed annually for reasonableness.

The transaction prices on these contracts are allocated based on an adjusted market approach which is reassessed annually for reasonableness.

The field service transactions include contracts for delivery of goods and completion of services made at the customer's requests, which are not deemed satisfied until the work has been completed and/or the requested goods have been delivered, so all of this revenue is recognized at the point in time when the control changes, and at allocated prices based on the adjusted market approach driven by standard price lists.

21 unchanged sentences

The following tables disaggregate the Company’s revenue by product line and by shipment destination (in thousands):

Three Months Ended December 31, 2021

Nine Months Ended December 31, 2021

Three Months Ended June 30, 2022

Product Line:

1 unchanged sentence

Services and technology development

Three Months Ended December 31, 2020

Nine Months Ended December 31, 2020

Three Months Ended June 30, 2021

Product Line:

1 unchanged sentence

Services and technology development

As of December 31, 2021 , and 2020 , 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.

As of June 30, 2022 , and 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.

9 unchanged sentences

Increases for costs incurred to fulfill performance obligations

Increase for balances acquired

Increase (decrease) due to customer billings

2 unchanged sentences

Other changes and FX impact

Ending balance as of December 31, 2021

Ending balance as of June 30, 2022

Unbilled Accounts Receivable

8 unchanged sentences

Other changes and FX impact

Ending balance as of December 31, 2020

Ending balance as of June 30, 2021

The Company’s remaining performance obligations represent the unrecognized revenue value of the Company’s contractual commitments.

The Company’s performance obligations may vary significantly each reporting period based on the timing of major new contractual commitments.

As of December 31, 2021 , the Company had outstanding performance obligations on existing contracts under ASC 606 to be recognized in the next twelve months of approximately $ 80.6 million.

As of June 30, 2022 , the Company had outstanding performance obligations on existing contracts under ASC 606 to be recognized in the next twelve months of approximately $ 101.5  million.

There are also approximately $ 13.1 million of outstanding performance obligations to be recognized over a period of thirteen to sixty months.

3 unchanged sentences

The timing of the performance obligations beyond the twelve -month forecast provided by Inox are not determinable and therefore are not included in the total remaining performance obligations. 

The following table sets forth customers who represented 10% or more of the Company’s total revenues for the three and nine months ended December 31, 2021 and 2020 :

The following table sets forth customers who represented 10% or more of the Company’s total revenues for the three months ended June 30, 2022 and 2021 :

Three Months Ended

Nine Months Ended

Inox Wind Limited

Fuji Bridex PTE Ltd

Micron Technology

Nextera Energy Resources

SGL Carbon LLC

Ascend Performance Materials Ops LLC

Stock-Based Compensation

1 unchanged sentence

The following table summarizes stock-based compensation expense by financial statement line item for the 

three and nine months ended 

December 31, 2021 and 

three months ended 

June 30, 2022 and 

2021 (in thousands):

Three Months Ended December 31,

Nine Months Ended December 31,

Three Months Ended June 30,

Cost of revenues

$ ( 23 )  

Research and development

Selling, general and administrative

$ 1,120  

$ 3,513  

$ 2,597  

The Company issued 370,700 shares of restricted stock awards and 

166,648  shares of immediately vested common stock, of which 158,356 shares were issued in-lieu of cash bonuses during the nine months ended 

December 31, 2021 . The Company issued 27,341  shares of immediately vested common stock and 697,167 shares of restricted stock awards during the nine months ended December 31, 2020. 

The Company issued 25,806  shares 

of immediately vested common stock  

during the three months ended 

June 30, 2022 . The Company issued 119,044 shares of immediately vested common stock, of which 110,752 shares were issued in-lieu of cash bonuses in the period, and 309,700 shares of restricted stock awards during the three months ended June 30, 2021. 

These restricted stock awards generally vest over 2 - 3 years.  Awards for restricted stock include both time-based and performance-based awards.  For options and restricted stock awards that vest upon the passage of time, expense is being recorded over the vesting period.  Performance-based awards are expensed over the requisite service period based on probability of achievement.

1 unchanged sentence

service period.

The Company has no unrecognized compensation co st for unvested outstanding stock options at December 31, 2021 .

The total unrecognized compensation cost for unvested outstanding restricted stock was $ 6.5 million at December 31, 2021 .

The total unrecognized compensation cost for unvested stock options was $ 0.1 million at June 30, 2022.

This expense will be recognized over a weighted average of approximately 2.0  years.

The total unrecognized compensation cost for unvested outstanding restricted stock was $ 4.3 million at June 30, 2022 .

This expense will be recognized over a weighted-average expense period of approximately 

The Company did not grant any stock options during the three and 

nine  months ended 

December 31, 2021 or December 31, 2020.

The Company granted 20,564 stock options during the 

three  months ended 

June 30, 2022 .

The Company did not grant any stock options during the three months ended June 30, 2021.

The stock options granted during the three months ended June 30, 2022 will vest over 2 years.

The weighted average assumptions used in the Black Scholes valuation model for stock options granted during the three months ended June 30, 2022 are as follows:

Three Months Ended June 30,

Expected volatility

Risk-free interest rate

Expected life (years)

Dividend yield

Computation of Net Loss per Common Share

3 unchanged sentences

Stock options and warrants that are out-of-the-money with exercise prices greater than the average market price of the underlying common shares and shares of performance-based restricted stock where the contingency was not met are excluded from the computation of diluted EPS as the effect of their inclusion would be anti-dilutive.

 For each of the three and nine months ended December 31, 2021 , and 2020,  

 For each of the three months ended June 30, 2022 , and 2021,  

1.1 million shares were not included in the calculation of diluted EPS. 

Of these, 

1.0  million relate to shares tied to the derivative liability for which the contingency has not yet been met, and 

0.1  million relate to outstanding stock options as they were considered anti-dilutive .

Of these, 1.0  million relate to shares tied to the derivative liability for which the contingency has not yet been met, and 0.1 million relate to outstanding stock options as they were considered anti-dilutive .

The following table reconciles the numerators and denominators of the earnings per share calculation for the 

three and nine months ended 

December 31, 2021 and 

three months ended 

June 30, 2022 and 

2021 (in thousands, except per share data):

Three Months Ended December 31,

Nine Months Ended December 31,

$ ( 4,324 )  

$ ( 7,933 )  

Three Months Ended June 30,

$ ( 8,710 )  

2 unchanged sentences

27,919  

28,234  

24,143  

Weighted-average shares subject to repurchase

( 960 )  

( 1,062 )  

( 1,089 )  

Shares used in per-share calculation ―

1 unchanged sentence

26,826  

27,145  

23,011  

Shares used in per-share calculation ―

1 unchanged sentence

26,826  

27,145  

23,011  

Net loss per share ―

$ ( 0.32 )  

$ ( 0.31 )  

$ ( 0.52 )  

Net loss per share ―

$ ( 0.32 )  

$ ( 0.31 )  

$ ( 0.52 )  

Goodwill and Other Intangibles

Goodwill represents the difference between the purchase price and the fair value of the identifiable tangible and intangible net assets when accounted for using the purchase method of accounting. The Company's goodwill balance relates to the Neeltran Acquisition in the current fiscal year, the NEPSI Acquisition in fiscal 2020, and the acquisition of Infinia Technology Corporation in fiscal 2017 and is reported in the Grid business segment. Goodwill is not amortized but reviewed for impairment.

Goodwill represents the difference between the purchase price and the fair value of the identifiable tangible and intangible net assets when accounted for using the purchase method of accounting. The Company's goodwill balance relates to the Neeltran Acquisition in fiscal 2021, the NEPSI Acquisition in fiscal 2020, and the acquisition of Infinia Technology Corporation in fiscal 2017 and is reported in the Grid business segment. Goodwill is not amortized but reviewed for impairment.

Goodwill is reviewed annually and whenever events or changes in circumstances indicate that the carrying value of the goodwill might not be recoverable.

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Neeltran Acquisition

March 31, 2022

$ 43,471  

Less impairment loss

December 31, 2021

June 30, 2022

$ 43,471  

The Company did not identify any triggering events in the 

three and nine months ended 

December 31, 2021 that would require interim impairment testing of goodwill.

three months ended 

June 30, 2022 that would require interim impairment testing of goodwill.

Other Intangibles

Intangible assets at 

December 31, 2021  and 

June 30, 2022  and 

March 31, 2022  consisted of the following (in thousands):

December 31, 2021

June 30, 2022

March 31, 2022

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$ ( 3,610 )  

Indefinite  

$ 3,610  

$ ( 3,610 )  

$ ( 668 )  

$ ( 631 )  

Trade name and trademarks

Customer relationships

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$ 11,311  

The Company recorded intangible amortization expense related to customer relationship and core technology and know-how of $ 0.6  million and $ 1.8  million, in the three and nine months ended 

December 31, 2021 , respectively, and $ 0.4 million and $ 0.6 million in the three and nine  months ended December 31, 2020, respectively.

Additionally, the Company recorded intangible amortization related to backlog that is reported in cost of revenues of  

$0.1 million in each of the three and nine months ended 

December 31, 2021 , respectively, and $0.3 million in each of the three and nine months ended December 31, 2020.

The Company recorded intangible amortization expense related to customer relationship and core technology and know-how of $ 0.7  million and $ 0.6 million, in the three  months ended 

June 30, 2022 , and 2021 respectively.

 Additionally, in the three months 

June 30, 2022  and 2021, the Company recorded less than $0.1 million related to intangible amortization related to backlog that is reported in cost of revenues.

Expected future amortization expense related to intangible assets is as follows (in thousands):

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The Company develops these inputs based on the best information available, including its own data.

The Company provides a gross presentation of activity within Level 3 measurement roll-forward and details of transfers in and out of Level 1 and 2 measurements.  A change in the hierarchy of an investment from its current level is reflected in the period during which the pricing methodology of such investment changes.  Disclosure of the transfer of securities from Level 1 to Level 2 or Level 3 is made in the event that the related security is significant to total cash and investments.  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 nine months ended December 31, 2021 .

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.

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Changes in fair value are recorded to other income (expense), net. 

The Company had no outstanding marketable securities as of December 31, 2021 and the Company recognized no change in t he three  and nine months ended 

December 31, 2021 .

The Company recognized no change in the three months ended December 31, 2020 and $ 0.2 million in unrealized losses on marketable securities, which is recorded in other income (expense), net, for the nine months ended December 30, 2020 and less than a $ 0.1 million gain which was recognized during the nine months ended December 31, 2020 upon the sale of one of the certificates of deposit.

The Company had no outstanding marketable securities as of June 30, 2022 

and the Company recognized no change in t he three  months ended 

June 30, 2022 .

The Company recognized $ 0.1 million in unrealized losses on marketable securities, which is recorded in other income (expense), net, for the three months ended June 30, 2021.

The Company periodically reviews the realizability of each short and long term marketable security when impairment indicators exist with respect to the security.

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The following table provides the assets and liabilities carried at fair value on a recurring basis, measured as of 

December 31, 2021 and 

June 30, 2022 and 

March 31, 2022 (in thousands):

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Significant Unobservable Inputs (Level 3)

December 31, 2021:

June 30, 2022:

Cash equivalents

$ 20,110  

Marketable securities

Derivative liabilities:

Contingent consideration

$ 2,610  

Total Carrying Value  

Quoted Prices in Active Markets (Level 1)  

Significant Other Observable Inputs (Level 2)  

Significant Unobservable Inputs (Level 3)  

Total Carrying Value

Quoted Prices in Active Markets (Level 1)

Significant Other Observable Inputs (Level 2)

Significant Unobservable Inputs (Level 3)

March 31, 2022:

Cash equivalents

$ 54,104  

Marketable securities

$ 5,140  

Derivative liabilities:

Contingent consideration

$ 7,050  

The table below reflects the activity for the Company’s derivative liability measured at fair value on a recurring basis (in thousands):

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Balance at March 31, 2021

$ 7,050  

Change in fair value

Balance at December 31, 2021

$ 2,610  

Balance at March 31, 2022

Change in fair value

Balance at June 30, 2022

Accounts Receivable

Accounts receivable at 

December 31, 2021 and 

June 30, 2022 and 

March 31, 2022 consisted of the following (in thousands):

December 31, 2021

June 30, 2022

March 31, 2022

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Inventory, net of reserves, at 

December 31, 2021 and 

June 30, 2022 and 

March 31, 2022 consisted of the following (in thousands):

December 31, 2021

June 30, 2022

March 31, 2022

Raw materials

$ 11,409  

$ 8,255  

Work-in-process

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Net inventory

$ 20,942  

$ 13,306  

The Company recorded inventory write-downs of $ 0.4 million in each of the three months ended December 31, 2021  and 2020 , respectively.

The Company recorded inventory write-downs of $1.6  

million in each of the 

nine months ended December 31, 2021 and 2020, respectively. 

The Company recorded inventory write-downs of $ 0.3 million and $ 0.6 million for the three months ended June 30, 2022  and 2021 , respectively.

These write-downs were based on the Company's evaluation of its inventory on hand for excess quantities and obsolescence.

Deferred program costs as of 

December 31, 2021 , and 

June 30, 2022 , and 

March 31, 2022 , primarily represent costs incurred on programs where the Company needs to complete performance obligations before the related revenue and costs will be recognized.

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The cost and accumulated depreciation of property, plant and equipment at 

December 31, 2021 and 

June 30, 2022 and 

March 31, 2022 are as follows (in thousands):

December 31, 2021

June 30, 2022

March 31, 2022

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Property, plant and equipment, net

Depreciation expense was $ 0.7 million and $ 1.2 million for the three months ended December 31, 2021 and 2020 , respectively.

Depreciation expense was $ 2.0  

million and $ 2.9 million for the nine months ended December 31, 2021 and 2020, respectively.

The increase in land and building relates to the property added as part of the Neeltran Acquisition.

Depreciation expense was $ 0.7 million and $ 0.6  million for the three months ended June 30, 2022 and 2021 , respectively. 

Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses at 

December 31, 2021 and 

June 30, 2022 and 

March 31, 2022 consisted of the following (in thousands):

December 31, 2021

June 30, 2022

March 31, 2022

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Product warranty activity was as follows (in thousands):

Three Months Ended December 31,

Nine Months Ended December 31,

Three Months Ended June 30,

Balance at beginning of period

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Balance at end of period

The Company recorded an income tax expense of $1.0 thousand 

and income tax benefit of $ 1.9  million in the 

three and nine months ended December 31, 2021 , respectively. 

The Company recorded an income tax benefit of $ 1.5 million and $ 1.2 million in the three and nine months period ended December 31, 2020, respectively. 

As a result of a difference in book and tax basis related to the intangible assets acquired in the Neeltran Acquisition (see Note 2, "Acquisitions"), the Company recorded a deferred tax liability of $ 2.3 million.

The Company recorded an  income tax expense of less than $ 0.1  million in the 

three months ended June 30, 2022 . 

The Company recorded an income tax benefit of $ 2.1 million in the three months ended June 30, 2021.

As a result, the Company was able to benefit from additional deferred tax assets and therefore released a corresponding valuation allowance of $ 2.3  million 

during the nine  

months ended 

December 31, 2021 .  The purchase price allocation is preliminary and has not been finalized as the analysis on the assets and liabilities acquired, primarily the tax related liability, may require further adjustments to the Company's purchase accounting that could result in measurement period adjustments that would impact the Company's reported net assets and goodwill as of May 6, 2021.

Material changes, if any, to the preliminary allocation summarized in Note 2, "Acquisitions" will be reported once the related uncertainties are resolved, but no later than May 6, 2022. 

As a result of a difference in book and tax basis related to the intangible assets acquired in the NEPSI Acquisition, the Company recorded a deferred tax liability of $ 1.7 million.

As a result, the Company was able to benefit from additional deferred tax assets and therefore released a corresponding valuation allowance of $ 1.7 million during the three and nine months ended December 31, 2020.

The purchase price allocation was final as of October 1, 2021.

Goodwill recognized in the Neeltran Acquisition and the NEPSI Acquisition is not deductible for tax purposes.

during the three  

months ended June 30 2021 . Goodwill recognized in the Neeltran Acquisition is not deductible for tax purposes.

Accounting for income taxes requires a two -step approach to recognizing and measuring uncertain tax positions.  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 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 to be realized upon ultimate settlement.  The Company re-evaluates these uncertain tax positions on a quarterly basis.  The evaluation is based on factors including, but not limited to, changes in facts or circumstances, changes in tax law, effectively settled issues under audit and new audit activity.  Any changes in these factors could result in the recognition of a tax benefit or an additional charge to the tax provision.  The Company did not identify any uncertain tax positions in the 

nine months ended 

December 31, 2021  and did not have any gross unrecognized tax benefits as of December 31, 2021 .

three months ended 

June 30, 2022  and did not have any gross unrecognized tax benefits as of June 30, 2022 .

Contingent Consideration

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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:

September 30,

Fiscal Year 2022

Revenue risk premium

6.60 %  

Revenue volatility

$ 5.18  

Payment delay (days)

Fair value (millions)

September 30,

Fiscal Year 2021

Revenue risk premium

6.50 %  

6.60 %  

Revenue volatility

$ 7.61  

$ 10.88  

$ 14.58  

$ 17.39  

$ 18.96  

Payment delay (days)

Fair value (millions)

The Company recorded a net g ain of $ 2.1 million and $ 4.4  m illion resulting from the decrease in the fair value of the contingent consideration in the 

three and nine  months ended 

December 31, 2021 , respectively.

The Company recorded a net loss of $ 2.7 million resulting from the increase in the fair value of the contingent consideration in both the three and nine months period ended December 31, 2020.

The Company recorded a net loss  of $ 0.2 million resulting  from the increase in the fair value of the contingent consideration in the 

three  months ended 

June 30, 2022 .

The Company recorded a net loss of $ 0.1 million resulting from the increase in the fair value of the contingent consideration in the three  months ended June 30, 2021.

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 mi llion each during the nine months ended December 31, 2021 . 

The Company determined to account for these agreements as a debt transaction and recorded current and long-term debt liabilities of $ 0.1 mi llion each during the three  months ended June 30, 2021.

The current and long term debt balance is $0.1 million each as of the three months ended June 30, 2022.

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.

Control over the use of the identified asset means that the Company have both the right to obtain substantially all of the economic benefits from the use of the asset and the right to direct the use of the asset.

Control over the use of the identified asset means that the Company has both the right to obtain substantially all of the economic benefits from the use of the asset and the right to direct the use of the asset.

The discount rate was calculated using an incremental borrowing rate based on an assessment prepared by the Company through the use of Company credit ratings, consideration of its lease populations potential risk to its total capital structure, and a market rate for a collateralized loan for its risk profile, calculated by a third party.

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Finance

As part of the adoption of ASC 842 at Neeltran, the Company identified one lease contract that is classified as a financing lease.

As part of the adoption of ASC 842 at Neeltran, the Company identified one lease contract that is classified as a finance lease.

In February 2020, Neeltran entered into a contract to lease a copy machine for an initial term of 39 months, or through May 2023.

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Accordingly, on May 6, 2021, the Company recognized a finance lease right-of-use asset and a finance lease liability of $ 13.2 thousand on the Neeltran opening balance sheet.

As of December 31, 2021, the right-of-use asset related to the finance lease w as $ 9.1  t housand, net of accumulated amortization o f $ 4.1 thousand, and is included in the property and equipment, net on the Company's consolidated balance sheet.

As of June 30, 2022, the right-of-use asset related to the finance lease w as $ 5.8  t housand, net of accumulated amortization o f $ 7.4 thousand, and is included in the property and equipment, net on the Company's consolidated balance sheet.

Finance lease right-of-use assets and lease liabilities are recognized similar to an operating lease, at the lease commencement date or the date the lessor makes the leased asset available for use.

Finance lease right-of-use assets are generally amortized on a straight-line basis over the lease term, and the carrying amount of the finance lease liabilities are ( 1 ) accreted to reflect interest using the incremental borrowing rate if the rate implicit in the lease is not readily determinable, and ( 2 ) reduced to reflect lease payments made during the period.

Amortization expense for finance lease right-of-use assets and interest accretion on finance lease liabilities are recorded to depreciation expense and interest expense, respectively in our consolidated statement of operations.

Supplemental balance sheet information related to leases at 

December 31, 2021 , and 

June 30, 2022 , and 

March 31, 2022 are as follows (in thousands):

December 31, 2021

June 30, 2022

March 31, 2022

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Weighted-average discount rate

6.60 %  

The costs related to the Company's finance lease are not material.

The costs related to the Company's operating leases for the 

three and nine months ended December 31, 2021  and 

three months ended June 30, 2022  and 

2021 are as follows (in thousands):

Three Months Ended

Nine Months Ended

December 31, 2021

June 30, 2022

Operating Leases:

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Three Months Ended

Nine Months Ended

December 31, 2020

June 30, 2021

Operating Leases:

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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 December 31, 2021 , the Company had $ 6.0 million of restricted cash included in long-term assets and $ 2.7 million of restricted cash included in current assets.

As of June 30, 2022 , the Company had $ 6.0 million of restricted cash included in long-term assets and $ 3.8  m illion of restricted cash included in current assets.

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 included in current assets.

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The operating results for the two business segments are as follows (in thousands):

Three Months Ended December 31,

Nine Months Ended December 31,

$ 25,050  

$ 17,086  

$ 73,169  

$ 51,149  

14,812  

$ 26,799  

$ 23,632  

$ 80,126  

$ 65,961  

Three Months Ended December 31,

Nine Months Ended December 31,

Operating Income (loss):

$ ( 3,691 )  

$ ( 5,826 )  

$ ( 14,873 )  

( 1,678 )  

( 2,236 )  

Unallocated corporate gain (expenses)

( 3,579 )  

$ ( 4,380 )  

$ ( 9,258 )  

$ ( 16,182 )  

Three Months Ended June 30,

Operating loss:

Unallocated corporate expenses

The accounting policies of the business segments are the same as those for the consolidated Company.

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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.

Unallocated corporate expenses consist of a gain on contingent consider ation of $ 2.1 million and $ 4.4  

m illion in the three and nine months ended December 

31, 2021, respectively.

Unallocated corporate expenses consist of a loss on contingent consideration of $ 2.7 million in both the three and nine months ended December 31, 2020.

Unallocated corporate expenses consist of a loss on contingent consider ation of $ 0.2 million in the three  months ended June 30, 2022.

Unallocated corporate expenses consist of a loss on contingent consideration of $ 0.1 million in the three  months ended June 30, 2021.

Additionally, unallocated corporate expenses consist of stock-based compensation expense of $ 1.0 million and $ 1.3  million in the three months ended 

December 31, 2021 , and 2020 , respectively, an d $ 3.5  

million and $ 2.6 million in the nine months ended December 31, 2021, 

and 2020, respectively.

June 30, 2022 , and 2021 , respectively .

Total assets for the two business segments as of 

December 31, 2021 , and 

June 30, 2022 , and 

March 31, 2022 , are as follows (in thousands):

December 31, 2021

June 30, 2022

March 31, 2022

$ 113,512  

$ 81,253  

Corporate assets

53,143  

81,515  

$ 175,296  

$ 168,866  

Recent Accounting Pronouncements

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The amendments in ASU 2016 - 13 will provide more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date.

The Company is currently evaluating the impact, if any, that the adoption of ASU 2016 - 13 may have on its consolidated financial statements.

In December 2019, the FASB issued ASU 2019 - 12, Income Taxes (Topic 740 ):

Simplifying the Accounting for Income Taxes .

The amendments in ASU 2019 - 12 provide for simplified accounting to several income tax situations and removal of certain accounting exceptions.

As of April 1, 2021, we have adopted ASU 2019 - 12 and noted no material impact on our consolidated financial statements.

Following the release of ASU 2019 - 10 in November 2019, the new effective date, as long as the Company remains a smaller reporting company, would be annual reporting periods beginning after December 15, 2022.The Company is currently evaluating the impact, if any, that the adoption of ASU 2016 - 13 may have on its consolidated financial statements.

In October 2021, the FASB issued ASU 2021 - 08, Business Combinations (Topic 805 ):

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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 Company is currently evaluating the impact, if any, that the adoption of ASU 2021 - 10 may have on its consolidated financial statements.

As of April 1, 2022, the Company has adopted ASU 2021 - 10 and noted no material impact on its consolidated financial statements.

Subsequent Events

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("NEPSI") and Neeltran, Inc.

("Neeltran"), changes in macroeconomic and market conditions, arising from the COVID-19 pandemic, including inflation, sourcing, production disruption, material delays and global supply chain disruptions and adoption of accounting changes may be deemed to be forward-looking statements.

("Neeltran"), changes in macroeconomic and market conditions, including increasing inflation and impacts from the COVID-19 pandemic, sourcing, production disruption, material delays and global supply chain disruptions and adoption of accounting changes may be deemed to be forward-looking statements.

Without limiting the foregoing, the words “believes,”

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The continued funding of such contracts remains subject to annual congressional appropriation, which, if not approved, could reduce our revenue and lower or eliminate our profit;

The “COVID-19” pandemic could adversely impact our business, financial condition and results of operations;

The COVID-19 pandemic could 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 rely on third-party suppliers for components and subassemblies of many of our Grid and Wind products, making us vulnerable to supply shortages and price fluctuations, which could harm our business;

Uncertainty surrounding our prospects and financial condition may have an adverse effect on our customer and supplier relationships;

We may experience difficulties re-establishing our HTS wire production capability in our Ayer, Massachusetts facility;

Our success is dependent upon attracting and retaining qualified personnel and our inability to do so could significantly damage our business and prospects; Historically, a significant portion of our revenues have been derived from a single customer and if this customer’s business is negatively affected, it could adversely impact our business;

We rely upon third-party suppliers for the components and subassemblies of many of our Grid and Wind products, making us vulnerable to supply shortages and price fluctuations, which could harm our business;

Uncertainty surrounding our prospects and financial condition may have an adverse effect on our customer and supplier relationships;

We have not manufactured our Amperium wire in commercial quantities, and a failure to manufacture our Amperium wire in commercial quantities at acceptable cost and quality levels would substantially limit our future revenue and profit potential;

Our success is dependent upon attracting and retaining qualified personnel and our inability to do so could significantly damage our business and prospects;

A significant portion of our Wind segment revenues are derived from a single customer.

If this customer's business is negatively affected, it could adversely impact our business;

Our success in addressing the wind energy market is dependent on the manufacturers that license our designs;

Our business and operations would be adversely impacted in the event of a failure or security breach of our information technology infrastructure;

Our business and operations would be adversely impacted in the event of a failure or security breach of our or any critical third parties  

information technology infrastructure and networks;

Failure to comply with evolving data privacy and data protection laws and regulations or to otherwise protect personal data, may adversely impact our business and financial results;

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We have had limited success marketing and selling our superconductor products and system-level solutions, and our failure to more broadly market and sell our products and solutions could lower our revenue and cash flow;

We may acquire additional complementary businesses or technologies, which may require us to incur substantial costs for which we may never realize the anticipated benefits, such as in connection with our acquisition of NEPSI and Neeltran ;

We may acquire additional complementary businesses or technologies, which may require us to incur substantial costs for which we may never realize the anticipated benefits;

Our 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;

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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.

Changes in India’s political, social, regulatory and economic environment may affect our financial performance;

Changes in India ’

s political, social, regulatory and economic environment may affect our financial performance;

Our products face competition, which could limit our ability to acquire or retain customers;

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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;

Lower prices for other fuel sources may reduce the demand for wind energy development, which could have a material adverse effect on our ability to grow our Wind business; We may be unable to adequately prevent disclosure of trade secrets and other proprietary information;

Our patents may not provide meaningful protection for our technology, which could result in us losing some or all of our market position; We face risks related to our technologies;

Lower prices for other fuel sources may reduce the demand for wind energy development, which could have a material adverse effect on our ability to grow our Wind business;

The increasing focus on environmental sustainability and social initiatives could increase our costs, and inaction could harm our reputation and adversely impact our financial results;

We may be unable to adequately prevent disclosure of trade secrets and other proprietary information;

Our patents may not provide meaningful protection for our technology, which could result in us losing some or all of our market position;

There are a number of technological challenges that must be successfully addressed before our superconductor products can gain widespread commercial acceptance, and our inability to address such technological challenges could adversely affect our ability to acquire customers for our products;

Third parties have or may acquire patents that cover the materials, processes and technologies we use or may use in the future to manufacture our Amperium products, and our success depends on our ability to license such patents or other proprietary rights;

Our technology and products could infringe intellectual property rights of others, which may require costly litigation and, if we are not successful, could cause us to pay substantial damages and disrupt our business;

We face risks related to our legal proceedings;

We face risks related to our common stock;

and the important factors discussed under the caption "Risk Factors" in Part 1.

Item 1A of our Form 10-K for the fiscal year ended March 31, 2021 and our other reports filed with the SEC.

and the other important factors discussed under the caption "Risk Factors" in Part 1.

Item 1A of our Annual Report on Form 10-K for the fiscal year ended March 31, 2022, and our other reports filed with the SEC.

These important factors, among others, could cause actual results to differ materially from those indicated by forward-looking statements made herein and presented elsewhere by management from time to time.

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Solutions, Smarter, Cleaner...Better Energy™, Orchestrate the Rhythm and Harmony of Power on the Grid™, actiVAR®, armorVAR™, NEPSI™

and Neeltran™ are trademarks or registered trademarks of American Superconductor Corporation or our subsidiaries. We reserve all of our rights with respect to our trademarks or registered trademarks regardless of whether they are so designated in this Quarterly Report on Form 10-Q by an ®

and Neeltran™

and SafetyLOCK™ are trademarks or registered trademarks of American Superconductor Corporation or our subsidiaries. We reserve all of our rights with respect to our trademarks or registered trademarks regardless of whether they are so designated in this Quarterly Report on Form 10-Q by an ®

symbol. All other brand names, product names, trademarks or service marks appearing in this Quarterly Report on Form 10-Q are the property of their respective holders.

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Navy, electric utilities, industrial facilities, power generation project developers and wind turbine manufacturers.

Through our Gridtec™ Solutions, our Grid business segment enables electric utilities, industrial facilities and renewable energy project developers to connect, transmit and distribute power with exceptional efficiency, reliability, security and affordability.

 Through our Gridtec™

Solutions, our Grid business segment enables electric utilities and renewable energy project developers to connect, transmit and distribute power with exceptional efficiency, reliability, security and affordability.

We provide transmission planning services that allow us to identify power grid congestion, poor power quality, and other risks, which help us determine how our solutions can improve network performance.

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Navy through our Grid business segment.

Through our Windtec™

Solutions, our Wind business segment enables manufacturers to field wind turbines with exceptional power output, reliability and affordability.

 Through our Windtec™

Solutions, our Wind business segment enables manufacturers to field wind turbines with exceptional power output, reliability and affordability.

We supply advanced power electronics and control systems, license our highly engineered wind turbine designs, and provide extensive customer support services to wind turbine manufacturers.

Our design portfolio includes a broad range of drive trains and power ratings of 2 megawatts (“MW”) and higher.

Our design portfolio includes a broad range of drivetrains and power ratings of 2 MW and higher.

We provide a broad range of power electronics and software-based control systems that are highly integrated and designed for optimized performance, efficiency, and grid compatibility.

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Other fiscal years follow similarly.

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 REG system within ComEd’s electric grid in Chicago, Illinois (the “Project”).

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”).

As provided in the Subcontract Agreement, the Subcontract Agreement became effective upon the signing of an amendment by us and the U.S.

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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.

Under the terms of the Subcontract Agreement, we have agreed, among other things, to provide the REG system and to supervise ComEd’s installation of the REG system in Chicago.

As part of our separate cost sharing arrangement with DHS under the Prime Contract, we expect funding provided by DHS in connection with the Subcontract Agreement to be between $9.0 to $11.0 million, which represents the total amount of revenue we are expected to recognize over the term of the Subcontract Agreement and includes up to $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”).

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.  ComEd has agreed to provide the site and provide all civil engineering work required to support the installation, operation and integration of the REG system into ComEd’s electric grid.

Under the terms of the Subcontract Agreement, we agreed, among other things, to provide the REG system and to supervise ComEd’s installation of the REG system in Chicago.

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”).

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.  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.

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.

The REG system was placed into operation during the nine months ended December 31, 2021.

On October 1, 2020, we entered into a Stock Purchase Agreement (the “NEPSI Stock Purchase Agreement”) with the selling stockholders named therein. 

Pursuant to the terms of the NEPSI 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").

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, including cash from the settlement of our $25 million certificate of deposit during the three months ended September 30, 2020, and 873,657 restricted shares of our common stock.  As part of the transaction, in the future, the selling stockholders may receive up to an additional 1,000,000 million 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.

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 served as Neeltran’s headquarters ("the Neeltran Acquisition").

For additional information, see “Liquidity and Capital Resources”

In 2020, COVID-19 was declared a pandemic and 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.

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 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.

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. 

The COVID-19 pandemic continues to rapidly evolve.

We are experiencing some inflation 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.

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, including the continued geographic spread of the disease, the duration of the pandemic, the location, duration and magnitude of future waves of infection, new variants of the virus, availability and adoption of vaccines and treatments, effectiveness of vaccines against the virus and its mutations, travel restrictions and social distancing in the United States, the European Union, India and other countries, the duration and extent of business closures or business disruptions including global supply chain disruptions and the effectiveness of actions taken to contain and treat the disease.

Changes in macroeconomic and market conditions arising from the COVID-19 pandemic, 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.

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 which have increased our cost of revenues and decreased gross margin.

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.

Changes in macroeconomic and market conditions arising from the COVID-19 pandemic, or for other reasons, such as the ongoing war between Russia and Ukraine, 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.

Critical Accounting Policies and Estimates

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Actual results may differ under different assumptions or conditions.

There were no significant changes in the critical accounting policies that were disclosed in our Form 10-K for the fiscal year ended March 31, 2021.

There were no significant changes in the critical accounting policies that were disclosed in our Annual Report on Form 10-K for the fiscal year ended March 31, 2022.

Results of Operations

Three and nine months ended December 31, 2021 , compared to the three and nine months ended December 31, 2020

Total revenues increased 13% and 21% to $26.8 million and $ 80.1  million for the three and nine months ended December 31, 2021 , respectively, compared to $23.6 million and $66.0 million for the three and nine months ended December 31, 2020, respectively. 

Three months ended June 30, 2022 , compared to the three months ended June 30, 2021

Total revenues decreased 11% to $22.7 million for the three months ended June 30, 2022 , compared to $25.4 million for the three months ended June 30, 2021. 

Our revenues are summarized as follows (in thousands):

Three Months Ended December 31,

Nine Months Ended December 31,

Our Grid business unit accounted for 93% and 91 % of total revenues for the three and nine months ended December 31, 2021 , respectively, compared to  72% and 78% for the three and nine months ended December 31, 2020, respectively.

Our Grid business unit revenues increased 

47% and 43% to $25.0 million and $73.2 m illion in the three and nine months ended December 31, 2021 , respectively, from $17.1  million and $51.1 million in the 

three and nine months ended December 31, 2020 , respectively. The increase in the Grid business unit revenue in the three months ended December 31, 2021, was primarily driven by the contribution from the Neeltran Acquisition.

The increase in the Grid business unit revenue in the nine months ended December 31, 2021 , was primarily driven by the contributions from the acquisitions of NEPSI and Neeltran.

Our Wind business unit accounted for 7% and 9% of total revenues for the three and nine months ended December 31, 2021 , respectively, c ompared to 28% and 22% for the 

three and nine months ended December 31, 2020 , respectively. 

Revenues in the Wind business unit decreased 73% and 53% to $ 1.7 million and $7.0 million in the 

three and nine months ended December 31, 2021 , from $6.5 million and $14.8 million in the 

three and nine months ended December 31, 2020 .

The decrease in the three and nine months ended December 31, 2021 , was driven by shipments of electrical control systems ("ECS") to Doosan in the three and nine months ended December 31, 2020 with no similar shipments in the current year period. Inox, historically one of the largest customers of our Wind business unit has had and may in the future have its ability to perform under our ECS supply contract hampered by the prolonged impacts of the COVID-19 pandemic.

Inox has been active in the new central and state government auction regime in India and has a cumulative order book of over 1.4 GW. We are parties to a technology transfer & license agreement dated as of April 17, 2009, as amended (the “2009 TTLA”) with Inox for a 2 MW class wind turbine, the manufacture of which requires our ECS. 

On November 9, 2021, we sent written notice to Inox notifying Inox of its default under the 2009 TTLA due to Inox’s failure to pay royalties for commissioned 2 MW wind turbines in the amount of €0.1 million that Inox is obligated to pay under the terms of the 2009 TTLA. 

Inox subsequently paid the royalties during the cure period.

On December 1, 2021, we sent written notice to Inox notifying Inox of its default under our supply contract for 2 MW ECS due to Inox's failure to post letters of credit in the amount of €0.9 million for payment of ECS that Inox is obligated to purchase under the terms of the supply contract.

If Inox fails to post letters of credit in the amount of €0.9 million in accordance with the terms of the supply contract within the ninety-day cure period after receipt of the default notice, then we may terminate the supply contract by providing written notice of such termination to Inox.

We cannot predict if and when Inox will pay royalties due and payable under the 2009 TTLA or if or when Inox will resume posting letters of credit for payment of contracted shipments of ECS in the future.

In the event we were to terminate the 2009 TTLA in connection with Inox's failure to pay royalties under such agreement, Inox would no longer be able to manufacture 2 MW wind turbines, likely resulting in a decrease in Inox’s demand for our ECS and our revenues and liquidity could be impacted.

In the event we were to terminate the 2 MW ECS supply contract, our revenues and liquidity could also be negatively impacted.

We cannot predict if and how successful Inox will be in executing on these orders or in obtaining new orders under the new central and state auction regime.

Any failure by Inox to succeed under this regime, or any delay in Inox’s ability to deliver its wind turbines, could result in fewer ECS shipments to Inox.

Three Months Ended June 30,

Our Grid business unit accounted for 87% of total revenues for the three months ended June 30, 2022 , compared to  92% 

for the three months ended June 30, 2021.

Our Grid business unit revenues decreased 

16% to $19.8 million in the three months ended June 30, 2022 , from $23.5  million in the 

three months ended June 30, 2021 . The decrease in the Grid business unit revenue in the three months ended June 30, 2022, was primarily driven by lower D-VAR revenues than in the prior year period. 

Our Wind business unit accounted for 13% of total revenues for the three months ended June 30, 2022 , c ompared to 8% for the 

three months ended June 30, 2021 . 

Revenues in the Wind business unit increased 49%  to $ 2.9 million in the 

three months ended June 30, 2022 , from $1.9 million i n the 

three months ended June 30, 2021 .

The increase in the three months ended June 30, 2022 , was driven 

by additional shipments of electrical control systems ("ECS") to Inox in the period ended June 30, 2022.

Cost of Revenues and Gross Margin

Cost of revenues increased b y 18% and 36% to $23.2 million and $69.9 

million for the three and nine months ended December 31, 2021 , compared to $19.7 million and $51.4 million for the three and nine month s ended December 31, 2020 .

Cost of revenues decreased b y 7% to $20.5 million for the three months ended June 30, 2022 , compared to $22.1 million for the three month s ended June 30, 2021 .

Gross margin was 

13%  for both the 

three and nine months ended December 31, 2021 , compared to 17% and 22% for the 

three and nine months ended December 31, 2020 . 

The decrease in gross margin in the three and nine months ended 

December 31, 2021 , was due to an unfavorable product mix, inflation pressure in our supply chain and some delays in sourcing materials due to the COVID-19 pandemic and additional costs related to purchase accounting adjustments associated with the Neeltran Acquisition. Cost of revenues includes total amortization expense of $0.1 million in both of the 

three and nine months ended 

December 31, 2021 as a result of each of the NEPSI and Neeltran acquired backlog intangible assets. In addition, a fair value purchase adjustment of approximately $0.1 million and $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 three and nine months ended December 31, 2021 , respectively.

10%  for the 

three months ended June 30, 2022 , compared to 13% 

for the 

three months ended June 30, 2021 . 

The decrease in gross margin in the three months ended 

June 30, 2022 , was due to lower revenues, an unfavorable product mix, inflation pressure in our supply chain and some delays in sourcing materials due to the COVID-19 pandemic.

Operating Expenses

Research and development

Research and development ("R&D") expense decreased 12% in the three months ended December 31, 2021 to 

Research and development ("R&D") expense decreased 12% in the three months ended June 30, 2022 to 

$ 2.7 million  from $3.0 million in the three months ended 

December 31, 2020 .

June 30, 2021 .

The decrease in R&D expense was due to lower overall compensation expense.

 R&D expenses increased 1% in the nine months ended December 31, 2021 to $8.4 million from $8.2 million in the nine 

months ended December 31, 2020.

The increase in R&D expense in the nine month period was due to higher travel and stock compensation expense.

Selling, general, and administrative

Selling, general and administrative ("SG&A") expen ses decreased 4%  in the three months ended December 31, 2021 , 

Selling, general and administrative ("SG&A") expen ses increased 6%  in the three months ended June 30, 2022 , 

to $ 7.6 million from $7.1  million 

in the three months ended 

December 31, 2020 . The decrease in SG&A expense in the three months ended December 31, 2021  was due to lower overall compensation expense than in the prior year period.

SG&A expenses increased 11% to $20.6 million in the nine months ended December 31, 2021 compared to $18.6 million in the nine months ended December 31, 2020.

The increase in SG&A expense in the nine months ended December 31, 2021 was due to the addition of NEPSI and Neeltran in the current year period.

June 30, 2021 . The increase in SG&A expense in the three months ended June 30, 2022, was due to higher overall compensation expense than in the prior year period.

Amortization of acquisition related intangibles

We recorded amortization expense related to our core technology and know-how, customer relationships, and other intangible assets of $0.6 million and $1.8 million in the three and nine months ended 

December 31, 2021 , respectively, and $0.4 million and $0.6 million in the three and nine months ended December 31, 2020, respectively. 

The increase in amortization expense is a result of the acquisitions of NEPSI and Neeltran.

We recorded amortization expense related to our core technology and know-how, customer relationships, and other intangible assets of $0.7 million in the three months ended 

June 30, 2022  and $0.6 million in the three months ended June 30, 2021. 

The increase in amortization expense is a result of additional expense relating to Neeltran.

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 $2.1 million and $4.4  million in the three and nine months ended 

December 31, 2021 , respectively, compared to a loss of $2.7 million in both the three and nine months ended December 31, 2020.

The change in the fair value was primarily driven by a decreased likelihood of achieving certain revenue targets and a decline in the Company's stock price.

The change in fair value of our contingent consideration for the earnout payment on the NEPSI Acquisition resulted in a loss 

of $0.2 million 

in the three months ended 

June 30, 2022 , compared to a loss of $0.1 million in the three months ended June 30, 2021.

The change in the fair value was primarily driven by an increased likelihood of achieving certain revenue targets.

Operating loss

Our operating loss is summarized as follows (in thousands):

Three Months Ended December 31,

Nine Months Ended December 31,

Operating Income (loss):

Three Months Ended June 30,

Operating loss:

Unallocated corporate expenses

Our Grid business segment generated operating losses of $3.7 million and $ 14.9  million in the three and nine mon ths ended December 31, 2021 , compared to $5.8 million and $8.4 million 

in the three and nine months ended December 31, 2020 .

The decrease in the Grid business unit operating loss in the three months ended December 31, 2021  against the prior year period was due to increased revenues, in part related to the acquisition of Neeltran, and improved gross margins.

The increase in the Grid business unit operating loss in the nine months ended December 31, 2021, was due to a less favorable product mix and the impact of the purchase accounting adjustments recorded as part of the Neeltran Acquisition, including the inventory step up charge noted above and an adjustment to recognize the fair value adjustment related to the acquired customer deposits, in order to properly reflect pre-acquisition activities, which reduced revenue by $0.6 million less than the contract value. 

Our Wind business segment generated operating losses of $1.7 milli on and 

million in the three and nine months ended December 31, 2021 , compared to an operating profit of $0.1 million and an operating loss of $2.0 million in the three and nine months ended December 31, 2020 .

The increase in the Wind business unit operating los s in the three and nine month periods was due to lower revenues and gross margins driven by fewer shipments of ECS than in the year ago periods.

Unallocated corporate expenses consisted of a gain on contingent consideration of $2.1 million and $4.4 million in the three and nine months ended December 31, 2021, respectively.

Unallocated corporate expenses consisted of a loss on contingent consideration of $2.7 million in both the three and nine months ended December 31, 2020. 

Additionally, unallocated corporate expenses consisted of stock-based compensation expense of $1.1 million and $0.8 million in the three months ended 

December 31, 2021 and 2020, respe ctively, and $3.5 

million and $2.6 million in the nine months ended December 31, 2021 and 2020, respectively.

Our Grid business segment generated operating losses of $7.3 million in the three mon ths ended June 30, 2022 , compared to $5.3 million in the three months ended June 30, 2021 .

The increase in the Grid business unit operating loss in the three months ended June 30, 2022  was due to lower revenues and gross margins, and additional operating expenses. 

Our Wind business segment generated operating losses of $0.4 milli on in the three months ended June 30, 2022 , compared to an operating loss of $0.8 million in the three months ended June 30, 2021 .

The decrease in the Wind business unit operating los s was due to additional revenues and higher gross margins driven by additional shipments of ECS than in the year ago period.

Unallocated corporate expenses included a loss on contingent consideration of $0.2 million 

in the three months ended June 30, 2022.

Unallocated corporate expenses included a loss on contingent consideration of $0.1 million in the three months ended June 30, 2021. 

Additionally, unallocated corporate expenses included stock-based compensation expense of $1.0 million and $1.3 million in the three months ended 

June 30, 2022 and 2021, respe ctively .

Interest income, net

Interest income, net, was less tha n $0.1 million and $0.1 million in the three and nine months ended December 31, 2021 , compared to $0.1 million and $0.4 million in the three and nine months ended December 31, 2020.

T he decrease in interes t income in the three and nine months ended 

December 31, 2021 was relate d to a lower cash balance earning lower interest rates than in the prior periods.

Interest income, net, was less tha n $0.1 million  in both the three months ended June 30, 2022  and June 30, 2021, respectively. 

Other (expense) income, net

Other income, net, was less than $0.1 

million in both the three and nine months ended December 31, 2021 , compared to o ther expense, net, of $ 0.3 million and $0.9 million  in the 

three and nine months ended December 31, 2020 .

The decrease in other expense during both periods was driven by the impacts of favorable fluctuations in foreign currencies during the respective period.  

Other income, net, was $0.2 

million in the three months ended June 30, 2022 , compared to o ther expense, net, of less than $ 0.1 million in the 

three months ended June 30, 2021 .

The increase in other income during the period ended June 30, 2022, was driven by the impacts of favorable fluctuations in foreign currencies.  

 Income Taxes

Income tax expense was less than $0.1 million in the three months ended December 31, 2021 and income tax benefit was $1.9 million in the nine months ended December 31, 2021.

I ncome tax benefit was $1.5 million and $1.2 million in the three and nine months ended 

December 31, 2020 . 

The income tax benefit in the nine months ended December 31, 2021 and the three and nine months ended December 31, 2020 is  a result of releasing valuation allowances to offset the recording of deferred tax liabilities from the Neeltran Acquisition in the nine month period ended December 31, 2021 and the NEPSI Acquisition in the three and nine months ended December 31, 2020.

The increase in income tax benefit in the nine month period ended December 31, 2021 is due primarily to higher foreign taxes in the prior year offsetting the tax benefit from the NEPSI Acquisition.

Net loss was $4.3 million an d $14.2 million in the three and nine months ended December 31, 2021 , compared to $7.9 million and $15.1 million in the three and nine months ended December 31, 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.

Income tax expense was less than $0.1 million in the three months ended June 30, 2022.

I ncome tax benefit was $2.1 million in the three months ended 

June 30, 2021 . 

The increase in income tax expense in the three month period ended June 30, 2022 is due primarily to the tax benefit from the acquisition of all of the issued and outstanding shares of capital stock of Neeltran and International (the "Neeltran Acquisition") in the period ended June 30, 2021.

Net loss was $8.7 million  in the three months ended June 30, 2022 , compared to $5.4 million in the three months ended June 30, 2021.  

The increase in net loss was driven primarily by the income tax benefit of $2.1 million from the acquisition of Neeltran in the period ended June 30, 2021.

Non-GAAP Financial Measure - 

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Generally, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position or cash flow that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP.

The non-GAAP measures included in this Form 10-Q, however, should be considered in addition to, and not as a substitute for or superior to the comparable measures prepared in accordance with GAAP.

The non-GAAP measures included in this Quarterly Report on Form 10-Q, however, should be considered in addition to, and not as a substitute for or superior to the comparable measures prepared in accordance with GAAP.

We define non-GAAP net loss as net loss before stock-based compensation, amortization of acquisition-related intangibles, acquisition costs, change in fair value of contingent consideration, and other non-cash or unusual charges.  We believe non-GAAP net loss assists management and investors in comparing our performance across reporting periods on a consistent basis by excluding these non-cash charges and other items that we do not believe are indicative of our core operating performance. In addition, we use non-GAAP net loss as a factor to evaluate the effectiveness of our business strategies. A reconciliation of GAAP to non-GAAP net loss is set forth in the table below (in thousands, except per share data):

Three Months Ended December 31,

Nine Months Ended December 31,

Three Months Ended June 30,

Stock-based compensation

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Weighted average shares outstanding - basic

We incurred non-GAAP net losses of $ 4.6 million and $ 12.4 million or $ 0.17  and $ 0.46 per share, for the 

three and nine months ended December 31, 2021 , compared to $ 3.4 million and $8.5 million , or $ 0.13 and $0.37 

We incurred non-GAAP net losses of $ 6.8 million  or $ 0.25  

per share, for the 

three and nine months ended December 31, 2020 .

The increase in the non-GAAP net loss for the three and nine months ended December 31, 2021 was due to a higher operating loss driven by lower gross margin and higher operating expenses.  

three months ended June 30, 2022 , compared to $ 2.7 million or $ 0.10 , for the 

three months ended June 30, 2021 .

The increase in the non-GAAP net loss for the three months ended June 30, 2022 was due to a higher operating loss driven by lower gross margin and higher operating expenses.  

Liquidity and Capital Resources

We have experienced recurring operating losses, and as of December 31, 2021 , had an accumulated deficit of $1,015 millio n.

We have experienced recurring operating losses, and as of June 30, 2022 , had an accumulated deficit of $1,029 millio n.

Our cash requirements depend on numerous factors, including the successful completion of our product development activities, our ability to commercialize our REG and ship protection system solutions, the rate of customer and market adoption of our products, collecting receivables according to established terms, the continued availability of U.S.

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The terms of any future offering under the Form S-3 will be established at the time of such offering and will be described in a prospectus supplement filed with the SEC prior to the completion of any such offering.

As described above, on May 6, 2021, we acquired all of the issued and outstanding shares of capital stock of (i) Neeltran and (ii) International, for:

(a) $1.0 million in cash, and (b) 301,556 shares of the Company’s common stock, which were paid and issued to the selling stockholders of Neeltran.

We also paid $1.1 million to the selling stockholders of International at closing to pay off previous loans made by them to Neeltran. 

Also on May 6, 2021, our wholly-owned Connecticut limited liability company, AMSC Husky LLC, 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.

In addition to the amount paid to discharge the mortgage, we paid approximately $5.7 million directly to other Neeltran lenders at closing to extinguish outstanding Neeltran indebtedness to third parties on behalf of the sellers.

All cash payments associated with the Neeltran Acquisition were funded with cash on hand.

As of December 31, 2021 , we had cash, cash equivalents, marketable securities and restricted cash of $52.6 million, compared to $80.7 million as of March 31, 2021, a decrease of $28.1 million.

As of December 31, 2021 , we had approximately $1.3 million of cash, cash equivalents, and restricted cash in foreign bank accounts.

Our cash, cash equivalents, marketable securities and restricted cash are summarized as follows (in thousands):

December 31, 2021

As of June 30, 2022 , we had cash, cash equivalents and restricted cash of $43.1 million, compared to $49.5 million as of March 31, 2022, a decrease of $6.4 million.

As of June 30, 2022 , we had approximately $2.1 million of cash, cash equivalents, and restricted cash in foreign bank accounts.

Our cash, cash equivalents, and restricted cash are summarized as follows (in thousands):

June 30, 2022

March 31, 2022

Cash and cash equivalents

Marketable securities

Restricted cash

Total cash, cash equivalents, marketable securities and restricted cash

For the nine months ended December 31, 2021 , net cash used in operating activities was $15.9 million, compared to $4.9 million for the nine months ended December 31, 2020. 

The increase in net cash used in operations was due primarily to an increase in inventory purchases and accounts r eceivable activity in the nine months ended December 31, 2021 as compared to December 31, 2020.

For the nine months ended December 31, 2021 , net cash used in investing activities was $ 7.1  million, compared to $2.6 million for the nine months e nded December 31, 2020 .

The increase in net cash used in investing activities was primarily due to the cash that was used to pay for the Neeltran Acquisition. 

For the nine months ended December 31, 2021 , net cash provided by financing activities was less tha n $0.1 

million compared to $50.6 million in the nine months ended December 31, 2020. 

The decrease in net cash provided by financing activities was due to the prior year period including $51.5 million in proceeds from our October 2020 offering of common stock.

There was no such transaction in the nine months ended December 31, 2021.

As of December 31, 2021 , we had $6.0 million of restricted cash included in long-term assets and $2.7 million of restricted cash included in current assets. 

Total cash, cash equivalents, and restricted cash

For the three months ended June 30, 2022 , net cash used in operating activities was $5.9 million, compared to $5.8 million for the three months ended June 30, 2021. 

The increase in net cash used in operations was due primarily to an increase in inventory purchases offset by accounts r eceivable collections in the three months ended June 30, 2022 as compared to June 30, 2021.

For the three months ended June 30, 2022 , net cash used in investing activities was $ 0.5  million, compared to $11.7 million for the three months e nded June 30, 2021 .

The decrease in net cash used in investing activities was primarily due to the cash that was used to pay for the Neeltran Acquisition in the three months ended June 30, 2021.

There was no such transaction in the three months ended June 30, 2022. 

For the three months ended June 30, 2022  and 2021, respectively, net cash used in financing activities remained consistent at 

less than $0.1 

million.  

As of June 30, 2022 , we had $6.0 million of restricted cash included in long-term assets and $3.8 million of restricted cash included in current assets. 

These amounts of restricted cash primarily represent deposits to secure letters of credit for various supply contracts and long-term projects, including the irrevocable letter of credit in the amount of $5.0 million to secure certain of our obligations under 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 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 June 30, 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.

For information regarding our other contractual obligations, refer to Note 13, "Contingent Consideration," Note 14, "Debt," Note 15, "Leases" and Note 16, "Commitments and Contingencies" to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

We believe we have sufficient available liquidity to fund our operations and capital expenditures for the next twelve months.

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If the loss is not probable or cannot be reasonably estimated, a liability is not recorded in our consolidated financial statements.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements, as defined under SEC rules, such as relationships with unconsolidated entities or financial partnerships, which are often referred to as structured finance or special purpose entities, established for the purpose of facilitating transactions that are not required to be reflected on our balance sheet except as discussed below.

We occasionally enter into construction contracts that include a performance bond.

As these contracts progress, we continually assess the probability of a payout from the performance bond.

Should we determine that such a payout is probable, we would record a liability.

In addition, we have various contractual arrangements under which we have committed to purchase minimum quantities of goods or services on an annual basis.

Recent Accounting Pronouncements

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Measurement of Credit Losses on Financial Instruments .

The amendments in ASU 2016-13 provide more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. 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.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes .

The amendments in ASU 2019-12 provide for simplified accounting to several income tax situations and removal of certain accounting exceptions. 

As of April 1, 2021, we have adopted ASU 2019-12 and noted no material impact on our consolidated financial statements.

The amendments in ASU 2016-13 will provide more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date.

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.

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805):

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Disclosures by Business Entities about Government Assistance .

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.

We are currently evaluating the impact, if any, that the adoption of ASU 2021-10 may have on our consolidated financial statements.

The amendments in ASU 2021-10 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 effective date was annual reporting periods beginning after December 15, 2021.

As of April 1, 2022, we have adopted ASU 2021-10 and noted no material impact on our consolidated financial statements.

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.

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements