What changed in this filing

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Item 1. Financial Statements

2022-11-01 compared with 2022-08-03 · 540 added, 231 removed, 900 unchanged (46% of the section changed)

2 unchanged sentences

(In thousands)

June 30, 2022

September 30, 2022

March 31, 2022

19 unchanged sentences

11,311  

Right-of-use assets

34 unchanged sentences

( 3,639 )  

Accumulated other comprehensive loss

( 228 )  

Accumulated other comprehensive income (loss)

Accumulated deficit

12 unchanged sentences

Three Months Ended

Six Months Ended

September 30,

$ 27,680  

$ 27,908  

$ 50,360  

$ 53,328  

Cost of revenues

25,710  

24,647  

46,169  

46,698  

Operating expenses:

1 unchanged sentence

Selling, general and administrative

14,911  

13,838  

Amortization of acquisition-related intangibles

Change in fair value of contingent consideration

( 290 )  

( 2,430 )  

( 120 )  

Total operating expenses

10,062  

21,152  

18,431  

Operating loss

( 8,092 )  

( 4,302 )  

( 16,961 )  

Interest income, net

China dissolution

( 1,921 )  

Other income (expense), net

Loss before income tax expense (benefit)

Loss before income tax expense

( 9,895 )  

( 4,253 )  

( 18,572 )  

Income tax expense (benefit)

( 14 )  

$ ( 9,881 )  

$ ( 4,434 )  

$ ( 18,590 )  

Net loss per common share

$ ( 0.35 )  

$ ( 0.16 )  

$ ( 0.67 )  

$ ( 0.35 )  

$ ( 0.16 )  

$ ( 0.67 )  

Weighted average number of common shares outstanding

27,867  

27,252  

27,714  

27,040  

27,867  

27,252  

27,714  

27,040  

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

3 unchanged sentences

Three Months Ended

Six Months Ended

September 30,

$ ( 9,881 )  

$ ( 4,434 )  

$ ( 18,590 )  

Other comprehensive (loss) gain, net of tax:

China dissolution

Foreign currency translation (loss) gain

2 unchanged sentences

$ ( 7,855 )  

$ ( 4,410 )  

$ ( 16,501 )  

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 MONTHS ENDED June 30, 2022 AND 2021

FOR THE THREE and six MONTHS ENDED September 30, 2022 AND 2021

(In thousands)

Accumulated Other

Number of Shares

Paid-in Capital

Treasury Stock

Comprehensive Loss

Accumulated Deficit

Stockholders' Equity

Accumulated Other  

Number of Shares  

Par Value  

Paid-in Capital  

Treasury Stock  

Comprehensive Loss  

Accumulated Deficit  

Stockholders' Equity  

Balance at March 31, 2022

28,920  

$ 1,133,536  

$ ( 3,639 )  

$ ( 291 )  

$ ( 1,020,506 )  

$ 109,389  

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

2 unchanged sentences

Cumulative translation adjustment

( 8,710 )  

Balance at June 30, 2022

Accumulated Other

Number of Shares

Paid-in Capital

Treasury Stock

Comprehensive Loss

Accumulated Deficit

Stockholders' Equity

28,939  

$ 1,134,707  

$ ( 3,639 )  

$ ( 228 )  

$ ( 1,029,216 )  

$ 101,913  

Issuance of common stock - ESPP

Issuance of common stock - restricted shares

Stock-based compensation expense

Issuance of stock for 401(k) match

Cumulative translation adjustment

( 9,881 )  

Balance at September 30, 2022

29,337  

$ 1,136,028  

$ ( 3,639 )  

$ 1,798  

$ ( 1,039,097 )  

$ 95,383  

Accumulated Other  

Number of Shares  

Par Value  

Paid-in Capital  

Treasury Stock  

Comprehensive Loss  

Accumulated Deficit  

Stockholders' Equity  

Balance at March 31, 2021

27,988  

$ 1,121,495  

$ ( 3,593 )  

$ ( 277 )  

$ ( 1,001,313 )  

$ 116,592  

Issuance of common stock - bonus payout

4 unchanged sentences

Repurchase of treasury stock

( 46 )  

Cumulative translation adjustment

( 63 )  

( 5,403 )  

Balance at June 30, 2021

28,726  

$ 1,128,961  

$ ( 3,639 )  

$ ( 340 )  

$ ( 1,006,716 )  

$ 118,553  

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

( 4,434 )  

Balance at September 30, 2021

28,793  

$ 1,130,921  

$ ( 3,639 )  

$ ( 316 )  

$ ( 1,011,150 )  

$ 116,104  

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

2 unchanged sentences

(In thousands)

Three Months Ended June 30,

Six Months Ended September 30,

Cash flows from operating activities:

6 unchanged sentences

Change in fair value of contingent consideration

Non-cash interest income

( 120 )  

China dissolution

Other non-cash items

14 unchanged sentences

Cash paid for acquisition, net of cash acquired

Proceeds from the maturity of marketable securities

Change in other assets

6 unchanged sentences

( 33 )  

Net cash used in financing activities

( 20 )  

Proceeds from exercise of employee stock options and ESPP

Net cash provided by financing activities

Effect of exchange rate changes on cash

( 17 )  

Net decrease in cash, cash equivalents and restricted cash

9 unchanged sentences

Non-cash investing and financing activities

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

$ 4,387  

Issuance of common stock to settle liabilities

$ 2,529  

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

13 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 

June 30, 2022 

2021  and the financial position at 

June 30, 2022;

September 30, 2022 

2021  and the financial position at September 

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 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.

The Company has historically experienced recurring operating losses and as of September 30, 2022 , the Company had an accumulated deficit of $ 1,039  million.

In addition, the Company has historically experienced recurring negative operating cash flows.

At September 30, 2022 , the Company had cash and cash equivalents of $ 27.8 million.

Cash used in operations for the 

three months ended 

June 30, 2022 was $ 5.9 million.

six months ended 

September 30, 2022 was $ 11.6 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.

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 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.

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 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 three months ended June 30, 2022 .

The COVID- 19 pandemic continues to rapidly evolve.

While the COVID- 19 pandemic has 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.

In addition, 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, inflation, rising interest rates, labor force availability, sourcing, material delays and global supply chain disruptions could have a material adverse effect on the Company’s business, financial condition and results of operation.

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.

51 unchanged sentences

The unaudited pro forma condensed consolidated statement of operations for the

three months ended

June 30, 2022 and 

three and six months ended

September 30, 2022 and 

2021 is presented as if the Neeltran Acquisition had occurred on

April 1, 2021.

Months  

Operating  loss

Three Months Ended September 30,

Six Months Ended September 30,

$ 27,680  

$ 27,908  

$ 50,360  

$ 56,158  

Operating loss

( 8,092 )  

( 4,302 )  

( 16,975 )  

$ ( 9,881 )  

$ ( 4,434 )  

$ ( 18,605 )  

Net loss per common share

$ ( 0.35 )  

$ ( 0.16 )  

$ ( 0.67 )  

$ ( 0.35 )  

$ ( 0.16 )  

$ ( 0.67 )  

Shares - basic

27,867  

27,252  

27,714  

27,101  

Shares - diluted

27,867  

27,252  

27,714  

27,101  

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.

54 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 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. 

three and six months ended September 30, 2022 , 83 % and 77 % 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 six months ended September 30, 2021, 86 % and 82 % 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.

2 unchanged sentences

The Company's equipment and system product line includes certain contracts which do not meet the requirements of an exchange transaction and therefore do not fall within the scope of ASC 606.

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. 

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.

The Company recorded no grant revenue in each of the three and six months ended September 30, 2022. 

In the three and six months ended September 30, 2021, 

the Company recorded $ 0.3 million and $ 0.8 million in grant revenue, respectively, which is included in the Company’s Grid business segment revenue.

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.

27 unchanged sentences

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

Three Months Ended June 30, 2022

Three Months Ended September 30, 2022

Six Months Ended September 30, 2022

Product Line:

Equipment and systems

$ 24,128  

$ 1,330  

$ 42,204  

$ 3,302  

Services and technology development

Three Months Ended June 30, 2021

$ 25,698  

$ 1,982  

$ 45,527  

$ 4,833  

$ 18,021  

$ 34,923  

$ 25,698  

$ 1,982  

$ 45,527  

$ 4,833  

Three Months Ended September 30, 2021

Six Months Ended September 30, 2021

Product Line:

Equipment and systems

$ 23,031  

$ 1,826  

$ 44,189  

$ 2,860  

Services and technology development

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.

$ 24,619  

$ 3,289  

$ 48,119  

$ 5,209  

$ 18,115  

$ 40,760  

$ 24,619  

$ 3,289  

$ 48,119  

$ 5,209  

As of September 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.

4 unchanged sentences

for a reconciliation to the condensed consolidated balance sheets) and "Contract liabilities", which are included in the current portion and long-term portion of "Deferred revenue" in the Company’s condensed consolidated balance sheets, are as follows (in thousands):

Unbilled Accounts Receivable

Deferred Program Costs

Contract Liabilities

Unbilled Accounts Receivable  

Deferred Program Costs  

Contract Liabilities  

Beginning balance as of March 31, 2022

$ 6,492  

$ 30,034  

Increases for costs incurred to fulfill performance obligations

Increase (decrease) due to customer billings

( 7,322 )  

33,141  

Decrease due to cost recognition on completed performance obligations

( 697 )  

Increase (decrease) due to recognition of revenue based on transfer of control of performance obligations

Other changes and FX impact

Ending balance as of June 30, 2022

Unbilled Accounts Receivable

Deferred Program Costs

Contract Liabilities

( 47 )  

Ending balance as of September 30, 2022

$ 6,512  

$ 35,454  

Unbilled Accounts Receivable  

Deferred Program Costs  

Contract Liabilities  

Beginning balance as of March 31, 2021

$ 5,765  

$ 21,257  

Increases for costs incurred to fulfill performance obligations

Increase for balance acquired

10,048  

Increase (decrease) due to customer billings

( 4,807 )  

34,344  

Decrease due to cost recognition on completed performance obligations

( 3,055 )  

Increase (decrease) due to recognition of revenue based on transfer of control of performance obligations

Other changes and FX impact

Ending balance as of June 30, 2021

Ending balance as of September 30, 2021

$ 8,796  

$ 31,518  

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 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.

As of September 30, 2022 , the Company had outstanding performance obligations on existing contracts under ASC 606 to be recognized in the next twelve months of approximately $ 101.0 million.

There are also approximately $ 18.1  

million of outstanding performance obligations to be recognized over a period of thirteen to sixty months.

The remaining performance obligations are subject to customer actions and therefore the timing of revenue recognition cannot be reasonably estimated.

2 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 months ended June 30, 2022 and 2021 :

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

Three Months Ended

Six Months Ended

September 30,

Inox Wind Limited

Fuji Bridex Pte Ltd

Tri-State Generation and Transmission Association, Inc.

Micron Technology

Nextera Energy Resources

SGL Carbon LLC

Ascend Performance Materials Ops LLC

2 unchanged sentences

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

three months ended 

June 30, 2022 and 

three and six months ended 

September 30, 2022 and 

2021 (in thousands):

Three Months Ended June 30,

Three Months Ended September 30,

Six Months Ended September 30,

Cost of revenues

1 unchanged sentence

Selling, general and administrative

The Company issued 25,806  shares 

$ 1,019  

$ 1,101  

$ 2,052  

$ 2,393  

The Company issued 338,500  shares of restricted stock awards during the three and six  months ended September 30, 2022, and 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. 

during the six months ended 

September 30, 2022 . The Company issued 47,604 shares of immediately vested common stock, all of which were issued in lieu of cash bonuses, during the three months ended September 30, 2021, and 

166,648  shares of immediately vested common stock, of which 158,356 shares were issued in-lieu of cash bonuses, and 309,700  shares of restricted stock awards during the six months ended 

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

The total unrecognized compensation cost for unvested stock options was less than $ 0.1  million during the six months ended September 30, 2022. 

This expense will be recognized over a weighted average of approximately 1.7  years.

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

The total unrecognized compensation cost for unvested outstanding restricted stock was $ 5.2  million at September 30, 2022.

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

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,

1.6  years.

The Company granted 20,564 stock options during the 

six  months ended 

September 30, 2022 .

The Company did not grant any stock options during the three months ended September 30, 2022 or the three and six months ended September 30, 2021.

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

The weighted average assumptions used in the Black Scholes valuation model for stock options granted during the 

six months ended September 30, 2022 are as follows:

Three Months Ended September 30,

Six Months Ended September 30,

Expected volatility

71.40 %  

Risk-free interest rate

3.10 %  

Expected life (years)

5 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 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 .

 For each of the three and six months ended September 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 .

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

three months ended 

June 30, 2022 and 

three and six months ended 

September 30, 2022 and 

2021 (in thousands, except per share data):

Three Months Ended June 30,

Three Months Ended September 30,

Six Months Ended September 30,

$ ( 9,881 )  

$ ( 4,434 )  

$ ( 18,590 )  

Weighted-average shares of common stock outstanding

1 unchanged sentence

28,360  

28,648  

28,141  

Weighted-average shares subject to repurchase

( 908 )  

( 1,108 )  

( 934 )  

Shares used in per-share calculation ―

1 unchanged sentence

27,252  

27,714  

27,040  

Shares used in per-share calculation ―

1 unchanged sentence

27,252  

27,714  

27,040  

Net loss per share ―

$ ( 0.35 )  

$ ( 0.16 )  

$ ( 0.67 )  

Net loss per share ―

$ ( 0.35 )  

$ ( 0.16 )  

$ ( 0.67 )  

Goodwill and Other Intangibles

8 unchanged sentences

Less impairment loss

June 30, 2022

September 30, 2022

$ 43,471  

The Company did not identify any triggering events in the 

three months ended 

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

three and six months ended 

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

Other Intangibles

Intangible assets at 

June 30, 2022  and 

September 30, 2022  and 

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

June 30, 2022

September 30, 2022

March 31, 2022

25 unchanged sentences

$ 11,311  

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.

The Company recorded intangible amortization expense related to customer relationship and core technology and know-how of $ 0.7  million and $ 1.4  million, in the three and six months ended 

September 30, 2022 , respectively, and $ 0.6 million and $ 1.2 million in the three and six months ended September 30, 2021, respectively.

 Additionally, the Company recorded no intangible amortization related to backlog in the three months 

September 30, 2022  and the Company recorded less than $0.1 million related to backlog that is reported in cost of revenues in the six months ended September 30, 2022.

The Company recorded intangible amortization related to backlog that is reported in cost of revenues of less than $0.1 million and $ 0.1 million in the three and six months ended September 30, 2021, respectively.

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 three months ended June 30, 2022 .

A financial asset’s or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

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

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 had no outstanding marketable securities as of September 30, 2022 

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

September 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 and six months ended September 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.

6 unchanged sentences

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

June 30, 2022 and 

September 30, 2022 and 

March 31, 2022 (in thousands):

3 unchanged sentences

Significant Unobservable Inputs (Level 3)

June 30, 2022:

September 30, 2022:

Cash equivalents

$ 9,894  

Derivative liabilities:

Contingent consideration

Total Carrying Value

Quoted Prices in Active Markets (Level 1)

Significant Other Observable Inputs (Level 2)

Significant Unobservable Inputs (Level 3)

$ 1,080  

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

$ 17,641  

Derivative liabilities:

Contingent consideration

$ 1,200  

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

1 unchanged sentence

Balance at March 31, 2021

$ 7,050  

Change in fair value

1 unchanged sentence

Change in fair value

Balance at June 30, 2022

Balance at September 30, 2022

$ 1,080  

Accounts Receivable

Accounts receivable at 

June 30, 2022 and 

September 30, 2022 and 

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

June 30, 2022

September 30, 2022

March 31, 2022

Accounts receivable (billed)

$ 13,879  

$ 13,788  

Accounts receivable (unbilled)

Accounts receivable, net

$ 20,391  

$ 20,280  

Inventory, net of reserves, at 

June 30, 2022 and 

September 30, 2022 and 

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

June 30, 2022

September 30, 2022

March 31, 2022

Raw materials

$ 17,601  

$ 11,020  

Work-in-process

14,591  

10,462  

Finished goods

1 unchanged sentence

Net inventory

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.

$ 36,342  

$ 23,666  

The Company recorded inventory write-downs of $ 0.7 million and $ 0.6 million for the three months ended September 30, 2022  and 2021 , respectively.

The Company recorded inventory write-downs of $ 1.0  million and $ 1.2 million for the six months ended September 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 

June 30, 2022 , and 

September 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 

June 30, 2022 and 

September 30, 2022 and 

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

June 30, 2022

September 30, 2022

March 31, 2022

1 unchanged sentence

Equipment and software

43,652  

43,668  

Finance lease - right of use asset

2 unchanged sentences

Property, plant and equipment, gross

58,764  

58,512  

Less accumulated depreciation

( 45,966 )  

Property, plant and equipment, net

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

$ 12,798  

$ 13,656  

Depreciation expense was $ 0.7 million for each of the three months ended September 30, 2022 and 2021 , respectively.

Depreciation expense was $ 1.4 million and $ 1.3 million for the six months ended September 30, 2022 and 2021, respectively.

Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses at 

June 30, 2022 and 

September 30, 2022 and 

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

June 30, 2022

September 30, 2022

March 31, 2022

Accounts payable

$ 18,184  

$ 13,192  

Accrued inventories in-transit

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Accrued product warranty

$ 36,082  

$ 29,140  

The Company generally provides a one to three year warranty on its products, commencing upon delivery or installation where applicable.

1 unchanged sentence

Product warranty activity was as follows (in thousands):

Three Months Ended June 30,

Three Months Ended September 30,

Six Months Ended September 30,

Balance at beginning of period

$ 1,942  

$ 2,187  

$ 2,066  

$ 2,053  

Acquired warranty obligations

1 unchanged sentence

Settlements during the period

( 368 )  

( 238 )  

( 669 )  

Balance at end of period

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 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 during the three months ended June 30, 2021.

$ 2,053  

$ 2,155  

$ 2,053  

$ 2,155  

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

three and six months ended September 30, 2022 , respectively. 

The Company recorded an income tax expense of $ 0.2 million and income tax benefit of $ 1.9 million in the 

three and six months ended September 30, 2021, respectively

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 three  

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

during the six  

months ended September 

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 

three months ended 

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

six months ended 

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

June 30,  

Fiscal Year 2022

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5.20 %  

6.60 %  

Revenue volatility

$ 4.38  

$ 5.18  

Payment delay (days)

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Fair value (millions)

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.

The Company recorded a net gain  of $ 0.3  and $ 0.1 million resulting  from the decrease in the fair value of the contingent consideration in the 

three and six  months ended 

September 30, 2022 .

The Company recorded a net gain of $ 2.4  million and $ 2.3 million resulting from the decrease in the fair value of the contingent consideration in the 

three and six  months ended 

September 30, 2021, respectively.

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 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 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 

The current and long-term debt balance is $0.1 million each as of 

September 30, 2022.

The Company determines whether a contract is or contains a lease at inception of a contract.

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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 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.

As of September 30, 2022, the right-of-use asset related to the finance lease w as $ 4.2  t housand, net of accumulated amortization o f $ 9.0  

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.

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Supplemental balance sheet information related to leases at 

June 30, 2022 , and 

September 30, 2022 , and 

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

June 30, 2022

September 30, 2022

March 31, 2022

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Weighted-average discount rate

6.37 %  

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

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

three months ended June 30, 2022  and 

three and six months ended September 30, 2022  and 

2021 are as follows (in thousands):

Three Months Ended

June 30, 2022

Six Months Ended

September 30, 2022

Operating Leases:

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Three Months Ended

June 30, 2021

Six Months Ended

September 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 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 September 30, 2022 , the Company had $ 6.0 million of restricted cash included in long-term assets and $ 3.6  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 Company supplies advanced power electronics and control systems, licenses its highly engineered wind turbine designs, and provides extensive customer support services to wind turbine manufacturers.

The Company’s design portfolio includes a broad range of drive trains and power ratings of 2 megawatts ("MWs") and higher.

The Company’s design portfolio includes a broad range of drivetrains and power ratings of 2 megawatts ("MWs") and higher.

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

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

Three Months Ended June 30,

Three Months Ended September 30,

Six Months Ended September 30,

$ 25,698  

$ 24,619  

$ 45,527  

$ 48,119  

$ 27,680  

$ 27,908  

$ 50,360  

$ 53,328  

Three Months Ended September 30,

Six Months Ended September 30,

Operating loss:

$ ( 6,495 )  

$ ( 5,836 )  

$ ( 13,776 )  

( 868 )  

( 1,254 )  

Unallocated corporate expenses

( 729 )  

( 1,931 )  

$ ( 8,092 )  

$ ( 4,302 )  

$ ( 16,961 )  

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 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.

Unallocated corporate expenses consist of a gain on contingent consider ation of $ 0.3  million and $ 0.1  million 

in the three and six months ended September 30, 2022.

Unallocated corporate expenses consist of a gain on contingent consideration of $ 2.4  million and $ 2.3 million in the three and six months ended September 

Additionally, unallocated corporate expenses consist of stock-based compensation expense of $ 1.0 million and $ 1.1  million in the three months ended 

June 30, 2022 , and 2021 , respectively .

September 30, 2022 , and 2021 , respectively 

and $ 2.1  million and $ 2.4  million in the six months ended September 30, 2022 

and 2021, respectively.

Total assets for the two business segments as of 

June 30, 2022 , and 

September 30, 2022 , and 

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

June 30, 2022

September 30, 2022

March 31, 2022

$ 121,227  

$ 114,053  

Corporate assets

40,804  

49,968  

$ 171,747  

$ 173,887  

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.

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.

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 evaluated the impact of the adoption of ASU 2016 - 13, and does not expect it to have a material impact on its consolidated financial statements.

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

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 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.

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.

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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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.

Changes in macroeconomic and market conditions arising from the COVID-19 pandemic, or for other reasons, such as the ongoing war between Russia and Ukraine, inflation, rising interest rates, 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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Results of Operations

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. 

Three and six months ended September 30, 2022 , compared to the three and six months ended September 30, 2021

Total revenues decreased 1% to $27.7 million for the three months ended September 30, 2022  and total revenues decreased 6% to $50.4 million for the six months ended September 30, 2022, compared to $27.9 million and $53.3 million for the three and six months ended September 30, 2021, respectively.

Our revenues are summarized as follows (in thousands):

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.

Three Months Ended September 30,

Six Months Ended September 30,

Our Grid business unit accounted for 93% and 90% of total revenues for the three and six months ended September 30, 2022 , respectively, compared to  88% and 90% 

for the three and six months ended September 30, 2021, respectively.

Our Grid business unit revenues  increased 

4% to $25.7 million in the three months ended September 30, 2022, from $24.6 million in the three months ended September 30, 2021.

Our Grid business unit revenues decreased 5% to $45.5 million in the six months ended September 30, 2022 , from $48.1 million in the six 

months ended September 30, 2021 .

The increase in the Grid business unit revenue in the three months ended September 30, 2022, was primarily driven by higher NEPSI revenues than in the prior year period.

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

Our Wind business unit accounted for 7% and 10% of total revenues for the three and six months ended September 30, 2022 , respectively, c ompared to 12% and 10% for the 

three and six months ended September 30, 2021 , respectively. Revenues in the Wind business unit decreased 40%  and 7% to $ 2.0 million and $4.8 million in the 

three and six months ended September 30, 2022 , from $3.3 million and $5.2 million i n the 

three and six months ended September 30, 2021 , respectively.

T he decrease in the three months ended September 30, 2022, was driven by fewer royalty collections and shipments of electrical control systems ("ECS") to Inox in the three months ended September 30, 2022. The decrease in the six months ended September 30, 2022 was driven by lower license and development revenue as well as fewer royalty collections than in the prior year period.

Cost of Revenues and Gross Margin

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 .

Cost of revenues  increased b y 4% to $25.7 million for the three months ended September 30, 2022 , compared to $24.6 for the three month s ended September 30, 2021 .

Cost of revenues decreased by 1% to $46.2 million for the six months ended September 30, 2022, compared to $46.7 million for the six months ended September 30, 2021.

Gross margin was 

10%  for the 

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

7%  and 8% for the 

three and six months ended September 30, 2022 , respectively compared to 12% and 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.

three and six months ended September 30, 2021 . 

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

September 30, 2022 , 

was due to lower revenues, an unfavorable product mix and inflation pressure in our supply chain.

Operating Expenses

Research and development

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 

June 30, 2021 .

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

Research and development ("R&D") expense decreased 13% in each of the three and six months ended September 30, 2022, to $2.3 million from $2.7 million in the three months ended September 30, 2021, and to $5.0 million from $5.7 million in the six months ended September 30, 2021.

The decrease in R&D expense was due to an increase in cost share revenues and a higher utilization of our research engineers supporting funded projects. 

Selling, general, and administrative

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

Selling, general and administrative ("SG&A") expen ses increased 10%  in the three months ended September 30, 2022 , 

to $ 7.3 million from $6.7  million 

in the three months ended 

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.

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

SG&A expen ses increased 8% to $14.9 million 

in the six months ended September 30, 2022 , compared to $13.8 million in the six months ended September 30, 2021.

 The increase in SG&A expense in the six months ended September 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 $0.7 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.

We recorded amortization expense related to our core technology and know-how, customer relationships, and other intangible assets of $0.7 million and $1.4 million in the three and six months ended 

September 30, 2022 , respectively, and $0.6 million and $1.2 million in the three and six months ended September 30, 2021, respectively.

The increase in amortization expense is a result of additional expense tied to the acquisition of 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 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.

The change in fair value of our contingent consideration for the earnout payment on the NEPSI Acquisition resulted in a gain of $0.3 million and $0.1 million in the three and six months ended September 30, 2022, respectively, compared to a gain of $2.4 million and $2.3 million in the three and six months ended September 30, 2021, respectively.

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.

Operating loss

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

Three Months Ended June 30,

Three Months Ended September 30,

Six Months Ended September 30,

Operating loss:

Unallocated corporate expenses

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 .

Our Grid business segment generated operating losses of $6.5 million and $13.8 million in the three and six mon ths ended September 30, 2022 , compared to $5.8 million and $11.2 million 

in the three and six months ended September 30, 2021 . 

The increase in the Grid business unit operating loss in the three months ended September 30, 2022, was due to lower gross margins due to an unfavorable product mix, and higher operating expenses.

The increase in the grid business unit operating loss in the six months ended September 30, 2022 was due to lower revenues and gross margins due to an unfavorable product mix, and higher operating expenses.

Our Wind business segment generated operating losses of $0.9 milli on and $1.3 million 

in the three and six months ended September 30, 2022 , compared to an operating profit of $0.2 million and an operating loss of $0.6 million in the three and six months ended September 30, 2021 , respectively. 

The increase in the Wind business unit operating loss was due to lower revenues and gross margins, and higher operating expenses.

Unallocated corporate expenses included a gain on contingent consideration of $0.3 million and $0.1 million 

in the three and six months ended September 30, 2022.

Additionally, unallocated corporate expenses primarily consisted of stock-based compensation expense of $1.0 million and $1.1 million in the three months ended September 30, 2022 and 2021, respectively, and $2.1 million and $2.4 million in the six months ended September 30, 2022 and 2021, respectively.

Interest income, net

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

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

China dissolution

China dissolution, was

million in each of the 

three and six months ended

September 30, 2022 , respectively, compared to no activity in each of the

three and six

September 30, 2021

The increase in China dissolution during the three and six months ended September 30, 2022, was driven by the liquidation of our China entity, resulting in a foreign currency gain/loss from the cumulative translation release of $1.9 million in the three and six months ended September 30, 2022 in which there was no similar transaction in the three and six months ended September 30, 2021.

Other income (expense), net 

Other income, net, was $0.1 

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.  

million and $0.2 million in the three and six months ended September 30, 2022 , respectively, compared to o ther income, net, of less than $ 0.1 million in the three months ended September 30, 2021 and other expense, net of less than $0.1 million in the six 

months ended September 30, 2021 .

The decrease in other expense during the three and six months ended September 30, 2022, was driven by the impacts of favorable fluctuations in foreign currencies during the respective period.

 Income Taxes

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.

Income tax benefit was less than $0.1 million in the three months ended September 30, 2022 and income tax expense was less than $0.1 million in the six months ended September 30, 2022.

Income tax expense was $0.2 million in the three months ended September 30, 2021 and income tax benefit was $1.9 million in the six months ended September 30, 2021. The increase in income tax benefit in the three months ended September 30, 2022 compared to the same period in fiscal 2021 was primarily due to lower withholding taxes from foreign jurisdictions in the three months ended September 30, 2022.

The increase in income tax expense in the six months ended September 30, 2022 compared to the same period in fiscal 2021 was a result of the release of the valuation allowance to offset the recording of the deferred tax liability from the Neeltran Acquisition in the six months ended September 30, 2021. 

Net loss was $9.9 million and $18.6 million  in the three and six months ended September 30, 2022 , compared to $4.4 million and $9.8 million in the three and six months ended September 30, 2021. The increase in net loss was driven primarily by the increased operating loss due to lower revenues and gross margins.

Non-GAAP Financial Measure - 

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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 June 30,

We define non-GAAP net loss as net loss before China dissolution, 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 September 30,

Six Months Ended September 30,

China dissolution

Stock-based compensation

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Weighted average shares outstanding - basic

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

We incurred non-GAAP net losses of $ 6.5 million and $13.3 million,  or $ 0.23  and $0.48 

per share, for the 

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.  

three and six months ended September 30, 2022 , compared to $5 .1 million and $7.8 million, 

or $ 0.19 and $0.29 per share , for the 

three and six months ended September 30, 2021 .

The increase in the non-GAAP net loss for the three and six months ended September 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 June 30, 2022 , had an accumulated deficit of $1,029 millio n.

We have experienced recurring operating losses and, as of September 30, 2022 , had an accumulated deficit of $1,039 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 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.

As of September 30, 2022 , we had cash, cash equivalents and restricted cash of $37.4 million, compared to $49.5 million as of March 31, 2022, a decrease of $12.1 million.

As of September 30, 2022 , we had approximately $1.9 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

September 30, 2022

March 31, 2022

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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 

For the six months ended September 30, 2022 , net cash used in operating activities was $11.6 million, compared to $11.7 million for the six months ended September 30, 2021. 

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

For the six months ended September 30, 2022 , net cash used in investing activities was $ 0.7  million, compared to $6.8 million for the six months e nded September 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 six months ended September 30, 2021.

There was no such transaction in the six months ended September 30, 2022. 

For the six months ended September 30, 2022  and 2021, respectively, net cash provided by 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. 

As of September 30, 2022 , we had $6.0 million of restricted cash included in long-term assets and $3.6 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.

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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.

Certain contractual obligations are reflected on the consolidated balance sheet as of September 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.

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Our liquidity is highly dependent on our ability to increase revenues, improve upon gross margins, control our operating costs, and raise additional capital, if necessary.

There can be no assurance that we will be able to raise additional capital on favorable terms or at all, or execute on any other means of improving our liquidity as described above.  Additionally, the impact of the COVID-19 pandemic on the global financial markets may reduce our ability to raise additional capital, if necessary, which could negatively impact our liquidity.

There can be no assurance that we will be able to raise additional capital on favorable terms or at all, or execute on any other means of improving our liquidity as described above.  Additionally, the impact of the COVID-19 pandemic and adverse macroeconomic conditions on the global financial markets may reduce our ability to raise additional capital, if necessary, which could negatively impact our liquidity.

Legal Proceedings

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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.

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

Following the release of ASU 2019-10 in November 2019, the new effective date, as long as we remain a smaller reporting company, would be annual reporting periods beginning after December 15, 2022. We have evaluated the impact of the adoption of ASU 2016-13, and do not expect it to have a material impact on our consolidated financial statements.

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

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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