What changed in this filing

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Item 1. Financial Statements

2024-10-30 compared with 2024-08-06 · 317 added, 198 removed, 527 unchanged (49% of the section changed)

2 unchanged sentences

(In thousands)

June 30, 2024

September 30, 2024

March 31, 2024

17 unchanged sentences

Deferred tax assets

Equity-method investments

$ 298,448 $ 232,771

6 unchanged sentences

Contingent consideration

Deferred tax liabilities, current portion

Deferred revenue, current portion

4 unchanged sentences

Lease liability, long-term portion

Deferred tax liabilities

Deferred tax liabilities, long-term portion

Other liabilities

19 unchanged sentences

Three Months Ended

Six Months Ended

September 30,

Cost of revenues

9 unchanged sentences

Other expense, net

Loss before income tax expense

Income tax expense

Net loss per common share

Loss before income tax expense (benefit)

Income tax (benefit) expense

Net income (loss)

Net income (loss) per common share

Weighted average number of common shares outstanding

1 unchanged sentence

AMERICAN SUPERCONDUCTOR CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

Three Months Ended

Six Months Ended

September 30,

Net income (loss)

Other comprehensive (loss) gain, net of tax:

1 unchanged sentence

Total other comprehensive (loss) gain, net of tax

Comprehensive loss

Comprehensive income (loss)

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

1 unchanged sentence

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE Three Months Ended June 30, 2024 AND 2023

FOR THE Three and Six Months Ended September 30, 2024 AND 2023

(In thousands)

3 unchanged sentences

Treasury Stock

Comprehensive Income

Comprehensive Income (Loss)

Accumulated Deficit

1 unchanged sentence

Balance at March 31, 2024

37,343 $ 373 $ 1,212,913 $ ( 3,639 ) $ 1,582 $ ( 1,066,658 ) $ 144,571

Issuance of common stock – restricted shares

44 1 ( 1 ) — — — —

Stock-based compensation expense

— — 1,229 — — — 1,229

Issuance of common stock for 401(k) match

12 — 179 — — — 179

Repurchase of treasury stock

— — — ( 126 ) — — ( 126 )

Cumulative translation adjustment

— — — — 15 — 15

— — — — — ( 2,524 ) ( 2,524 )

Balance at June 30, 2024

37,399 $ 374 $ 1,214,320 $ ( 3,765 ) $ 1,597 $ ( 1,069,182 ) $ 143,344

Accumulated Other Total

Number of Shares Par Value Paid-in Capital Treasury Stock Comprehensive Income (Loss) Accumulated Deficit Stockholders' Equity

Issuance of common stock – ESPP

Issuance of common stock - restricted shares

Stock-based compensation expense

Issuance of common stock for 401(k) match

Issuance of common stock - Megatran acquisition, net of offering expenses

Issuance of common stock to settle contingent consideration

Cumulative translation adjustment

Balance at September 30, 2024

Accumulated Other

Number of Shares

Paid-in Capital

Treasury Stock

Comprehensive Income (Loss)

Accumulated Deficit

Stockholders' Equity

Balance at March 31, 2023

29,937 $ 299 $ 1,139,113 $ ( 3,639 ) $ 1,571 $ ( 1,055,547 ) $ 81,797

Issuance of common stock – restricted shares

699 7 ( 7 ) — — — —

Stock-based compensation expense

— — 1,357 — — — 1,357

Issuance of common stock for 401(k) match

33 1 163 — — — 164

Cumulative translation adjustment

— — — — ( 2 ) — ( 2 )

— — — — — ( 5,398 ) ( 5,398 )

Balance at June 30, 2023

30,669 $ 307 $ 1,140,626 $ ( 3,639 ) $ 1,569 $ ( 1,060,945 ) $ 77,918

Issuance of common stock – ESPP

Issuance of common stock – restricted shares

Stock-based compensation expense

Issuance of common stock for 401(k) match

Cumulative translation adjustment

Balance at September 30, 2023

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:

Adjustments to reconcile net loss to net cash provided by (used in) operations:

Net income (loss)

Adjustments to reconcile net income (loss) to net cash provided by (used in) operations:

Depreciation and amortization

14 unchanged sentences

Purchases of property, plant and equipment

Cash paid to settle Megatran contingent consideration liability

Cash paid for Megatran Acquisition, net of cash acquired

Change in other assets

1 unchanged sentence

Cash flows from financing activities:

Repurchase of treasury stock

Repayment of debt

Employee taxes paid related to net settlement of equity awards

Net cash used in financing activities

Cash paid related to registration of common stock shares

Proceeds from exercise of employee stock options and ESPP

Net cash (used in) provided by financing activities

Effect of exchange rate changes on cash

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

Net decrease in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash at beginning of period

3 unchanged sentences

Non-cash investing and financing activities

Issuance of common stock in connection with the purchase of Megatran

Issuance of common stock to settle contingent consideration

Right-of-use assets obtained in exchange for new lease obligations

Issuance of common stock to settle liabilities

Issuance of common stock to settle 401k match liabilities

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

11 unchanged sentences

The year-end balance sheet data was derived from audited financial statements but does not include all disclosures required by GAAP.

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, 2024 and 2023 and the financial position at June 30, 2024 ;

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 September 30, 2024 and 2023 and the financial position at September 30, 2024 ;

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

The interim condensed consolidated financial statements, and notes thereto, should be read in conjunction with the audited condensed consolidated financial statements for the year ended March 31, 2024 , and notes thereto, included in the Company’s Annual Report on Form 10 -K for the year ended March 31, 2024 filed with the SEC on May 29, 2024 .

The Company has historically experienced recurring operating losses and as of June 30, 2024 , the Company had an accumulated deficit of $ 1,069.2 million.

The Company has historically experienced recurring operating losses and as of September 30, 2024 , the Company had an accumulated deficit of $ 1,064.3 million.

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

At June 30, 2024 , the Company had cash and cash equivalents of $ 93.5 million.

Cash provided by operations for the three months ended June 30, 2024 was $ 3.4 million.

In January 2024, the Company filed a shelf registration statement on Form S- 3 that will expire three years from the date on which it was declared effective, March 15, 2027 ( the “Form S- 3” ).

The Form S- 3 allows the Company to offer and sell from time-to-time up to $ 250 million of common stock, debt securities, warrants or units comprised of any combination of these securities.

The Form S- 3 is intended to provide the Company flexibility to conduct registered sales of its securities, subject to market conditions, in order to fund its future capital needs.

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.

At September 30, 2024 , the Company had cash and cash equivalents of $ 72.1 million.

Cash provided by operations for the six months ended September 30, 2024 was $ 16.1 million.

In January 2024, the Company filed a shelf registration statement on Form S- 3 that will expire three years from the date on which it was declared effective, March 15, 2027 ( the “First Form S- 3” ).

The First Form S- 3 allows the Company to offer and sell from time-to-time up to $ 250 million of common stock, debt securities, warrants or units comprised of any combination of these securities, with $ 250 million available for future offerings as of September 30, 2024 .

The First Form S- 3 is intended to provide the Company flexibility to conduct registered sales of its securities, subject to market conditions, in order to fund its future capital needs.

The terms of any future offering under the First 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 January 31, 2024, the Company entered into an underwriting agreement with Oppenheimer & Co.

2 unchanged sentences

The 2024 Offering closed on February 14, 2024.

On August 1, 2024, the Company entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”) with the selling stockholders named therein.

Pursuant to the terms of the Stock Purchase Agreement and concurrently with entering into such agreement, the Company acquired all of the issued and outstanding shares of Megatran ("the "Acquisition"), for aggregate consideration in an amount equal to $ 61,350,000 (the “Purchase Price”), which consideration amount shall be subject to various adjustments set forth in the Stock Purchase Agreement (including those described below) and consists of:

(a) (i) $ 25,000,000 , minus (ii) the Indebtedness (as defined in the Stock Purchase Agreement) outstanding as of immediately prior to the closing, minus (iii) Company Expenses (as defined in the Stock Purchase Agreement) (collectively, the “Cash Purchase Price”);

On August 1, 2024 (the "Acquisition Date"), the Company entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”) with the selling stockholders named therein.

Pursuant to the terms of the Stock Purchase Agreement and concurrently with entering into such agreement, the Company acquired all of the issued and outstanding shares of Megatran Industries, Inc.

("Megatran") (the "Acquisition"), for aggregate consideration in an amount equal to $ 61.4 million (the “Purchase Price”), which consideration amount was subject to various adjustments set forth in the Stock Purchase Agreement (including those described below) and consisted of:

(a) (i) $ 25.0 million, minus (ii) the Indebtedness (as defined in the Stock Purchase Agreement) outstanding as of immediately prior to the closing, minus (iii) Company Expenses (as defined in the Stock Purchase Agreement) (collectively, the “Cash Purchase Price”);

(b) a number of restricted shares (rounded up or down to the nearest whole share, as applicable) (the “Company Shares”) of the Company’s common stock, $.

01 par value per share (“Common Stock”) equal to the quotient obtained by dividing ( x ) $ 31,350,000 (the “Share Purchase Price”) by (y) the closing price per share of Common Stock on the Nasdaq Global Select Market on the last trading day immediately preceding the Closing Date;

and (c) an additional cash payment equal to $ 5,000,000 , as adjusted pursuant to Sections 5.6 (c), (d), and (f) of the Stock Purchase Agreement (the “Additional Cash Purchase Price”).

Megatran is now a wholly-owned subsidiary of the Company and is operated and reported as a component of its Grid business unit.

01 par value per share (“Common Stock”) equal to the quotient obtained by dividing ( x ) $ 31.4 million (the “Share Purchase Price”) by (y) the closing price per share of Common Stock on the Nasdaq Global Select Market on the last trading day immediately preceding the Closing Date;

and (c) an additional cash payment equal to $ 5.0 million, as adjusted pursuant to Sections 5.6 (c), (d), and (f) of the Stock Purchase Agreement (the “Additional Cash Purchase Price”).

Megatran is now a wholly-owned subsidiary of the Company and, together with its wholly-owned subsidiaries and affiliates, is operated and reported as a component of its Grid business unit.

On September 23, 2024, the Company paid $ 3.3 million to the selling stockholders, which was calculated based on the agreed upon formula set forth in the Stock Purchase Agreement.

This amount is reflected as the change in fair value of this contingent consideration in the three and six months ended September 30, 2024.

As of September 30, 2024, there are no remaining obligations to the selling stockholders of Megatran.

In August 2024, the Company filed an automatically-effective shelf registration statement on Form S- 3 that will expire no later than August 12, 2027 ( the “Second Form S- 3” ).

The Second Form S- 3 allows the Company to offer and sell from time-to-time unspecified amounts of common stock, debt securities, warrants or units comprised of any combination of these securities and allows certain selling stockholders to offer and sell from time-to-time common stock.

The Second Form S- 3 is intended to assist the selling stockholders in the resale of their common stock and to provide the Company flexibility to conduct registered sales of its securities, subject to market conditions, in order to fund its future capital needs.

The terms of any future offering under the Second 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 recent periods, the Company has experienced inflationary pressure in its supply chain and some delays in sourcing materials needed for its products resulting in some production disruption, both of which have increased the Company’s cost of revenues and decreased gross margin.

While the impact of inflation has been challenging, the Company has taken actions to limit this pressure, including adjusting the pricing of its products and services.

Changes in macroeconomic conditions arising from various reasons, such as the ongoing wars between Russia and Ukraine and Israel and Hamas, inflation, rising interest rates, labor force availability, sourcing, material delays and global supply chain disruptions could have a material adverse effect on the Company’s business, financial condition and results of operation.

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 unaudited condensed consolidated financial statements for the three months ended June 30, 2024 .

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.

1 unchanged sentence

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.

Acquisition of Megatran

As described in Note 1, Nature of the Business and Operations and Liquidity, on the Acquisition Date, the Company acquired all of the issued and outstanding shares of capital stock of Megatran.

Megatran's wholly-owned subsidiary, NWL, Inc.

("NWL"), is a U.S.-based global provider of engineered power conversion solutions for demanding industrial and military applications.

Pursuant to the Stock Purchase Agreement, the Company acquired all of the issued and outstanding shares of Megatran, for aggregate consideration in an amount equal to $ 61.4 million, which consideration amount was subject to various adjustments set forth in the Stock Purchase Agreement (including those described below) and consisted of:

(b) a number of restricted shares (rounded up or down to the nearest whole share, as applicable) of Common Stock equal to the quotient obtained by dividing ( x ) $ 31.4 million by (y) the closing price per share of Common Stock on the Nasdaq Global Select Market on the last trading day immediately preceding the Closing Date;

and (c) an additional cash payment equal to $ 5.0 million, as adjusted pursuant to Sections 5.6 (c), (d), and (f) of the Stock Purchase Agreement.

Megatran is now a wholly-owned subsidiary of the Company and, together with its wholly-owned subsidiaries and affiliates, is operated and reported as a component of its Grid business unit.

On September 23, 2024, the Company paid $ 3.3 million to the selling stockholders, which was calculated based on the agreed upon formula set forth in the Stock Purchase Agreement.

This amount is reflected as the change in fair value of this contingent consideration in the three and six months ended September 30, 2024.

As of September 30, 2024, there are no remaining obligations to the selling stockholders of Megatran.

The Acquisition 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 acquisition.

The excess of the purchase price paid by the Company over the estimated fair value of net assets acquired has been recorded as goodwill.

The total purchase price of approximately $ 61.4 million includes the fair value of shares of the Company’s common stock issued at closing, and cash paid, as follows (in millions):

Cash payments $ 30.0

Issuance of 1,297,600 shares of Company’s Common Stock $ 31.4

At the Acquisition Date, in addition to the $ 30.0 million cash, the Company valued the Company’s common stock, using $ 24.16 per share, which was the closing price on the day prior to the day that the Company acquired Megatran.

Acquisition costs of $ 0.9 million and $ 1.1 million were included in s elling, general and administrative ("SG&A") for the three and six months ended September 30, 2024, respectively.

The following table summarizes the allocation of the purchase price based on the estimated fair values of the assets acquired and liabilities assumed and related deferred income taxes in connection with the Acquisition (in millions):

Cash and cash equivalents

Equity-method investments

Prepaid expenses and other current assets

Accounts receivable

Property, plant, and equipment

Accounts payable and accrued expenses

Deferred revenue

Deferred tax liability

Net tangible assets/(liabilities)

Customer relationships

Net identifiable intangible assets

Total purchase consideration

The fair value of the financial assets acquired includes receivables with a fair value of $ 16.1 million.

The gross amount due is $ 16.9 million, of which $ 0.8 million is expected to be uncollectible.

Inventory includes a $ 0.7 million adjustment to step up the inventory balance to fair value consistent with the purchase price allocation.

The fair value was determined 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 $ 0.3 million in the three month period ended September 30, 2024 as the inventory was sold.

Backlog of $ 0.7 million was evaluated using the multi period excess earnings method under the income approach.

The contracts with customers do not provide for any guarantees to source all future requirements from the Company.

The amortization method being utilized is economic consumption estimated over an eight -month period with the expense being allocated to cost of revenues.

Customer relationships of $ 1.3 million relates to customers currently under contract and was determined based on a multi period excess earnings method under the income approach.

The method of amortization being utilized is straight line over 10 years, as the results were not materially different from the economic consumption method, with the expense being allocated to SG&A.

Goodwill represents the value associated with the acquired workforce and expected synergies related to the business combination of the two companies.

Goodwill resulting from the Acquisition was assigned to the Company’s Grid segment.

Goodwill recognized in the 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 related liability may require further adjustments to our purchase accounting that could result in a measurement period adjustment that would impact the Company's reported net assets and goodwill as of August 1, 2024.

Material changes, if any, to the preliminary allocation summarized above will be reported once the related uncertainties are resolved, but no later than August 1, 2025.

The $ 6.4 million of deferred tax liability is primarily related to basis difference of property, plant, and equipment.

Unaudited Pro Forma Operating Results

The unaudited pro forma condensed consolidated statement of operations for the three and six months ended September 30, 2024 and 2023 presented as if the Acquisition had occurred on April 1, 2024 and 2023, respectively, is as follows:

Three Months Ended September 30,

Six Months Ended September 30,

$ 58,722 $ 50,929 $ 118,032 $ 99,915

Operating income (loss)

81 ( 1,783 ) ( 4,079 ) ( 7,193 )

Net income (loss)

$ 635 $ ( 311 ) $ ( 2,748 ) $ ( 633 )

Net income (loss) per common share

$ 0.02 $ ( 0.01 ) $ ( 0.07 ) $ ( 0.02 )

Shares - basic

37,404 30,126 37,189 29,843

Shares - diluted

37,950 30,126 37,189 29,843

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

In the unaudited consolidated results for the three and six months ended September 30, 2024, Megatran’s operations are included in the Company’s consolidated results from the date of Acquisition of August 1, 2024.

Megatran contributed $ 14.3 million of revenue and $ 2.1 million in net income for the Company for the three and six month periods ended September 30, 2024.

Amortization expense of $ 0.2 million is included in the three and six months ended September 30, 2024, as a result of the Megatran acquired intangible assets.

In addition, $ 0.3 million for the step-up basis assigned to acquired inventory was charged to cost of revenues in the three and six months ended September 30, 2024.

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.

For the three months ended June 30, 2024 and 2023 , 88 % 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.

For the three and six months ended September 30, 2024 , 90 % and 89 % of revenue, respectively, was recognized at the point in time when control transferred to the customer, with the remainder being recognized over time.

For the three and six months ended September 30, 2023 , 79 % 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.

26 unchanged sentences

The Company has elected to recognize incremental costs of obtaining a contract as expense when incurred except in contracts where the amortization period would exceed twelve months.

In such cases the long term amount will be assessed for materiality.

As of June 30, 2024 and March 31, 2024 , the Company's capitalized incremental contract costs were not material.

As of September 30, 2024 and March 31, 2024 , the Company's capitalized incremental contract costs were not material.

The Company has elected not to adjust the promised amount of consideration for the effects of a significant financing component if the period of financing is twelve months or less.

3 unchanged sentences

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

Three Months Ended June 30, 2024

Three Months Ended September 30, 2024

Six Months Ended September 30, 2024

Product Line:

4 unchanged sentences

$ 46,936 $ 7,535 $ 79,272 $ 15,489

Three Months Ended June 30, 2023

$ 43,479 $ 1 $ 73,957 $ 1

790 7,531 1,989 15,483

2,667 3 3,326 5

$ 46,936 $ 7,535 $ 79,272 $ 15,489

Three Months Ended September 30, 2023

Six Months Ended September 30, 2023

Product Line:

4 unchanged sentences

$ 28,515 $ 5,489 $ 54,251 $ 10,007

As of June 30, 2024 and 2023 , the Company’s contract assets and liabilities primarily relate to the timing differences between cash received from a customer in connection with contractual rights to invoicing and the timing of revenue recognition following completion of performance obligations.

$ 24,696 $ 27 $ 47,856 $ 57

3,418 5,462 5,129 9,928

401 - 1,266 22

$ 28,515 $ 5,489 $ 54,251 $ 10,007

As of September 30, 2024 and 2023 , the Company’s contract assets and liabilities primarily relate to the timing differences between cash received from a customer in connection with contractual rights to invoicing and the timing of revenue recognition following completion of performance obligations.

The Company's accounts receivable balance is made up entirely of customer contract related balances.

5 unchanged sentences

$ 6,150 $ 2,523 $ 57,829

Increase for balance acquired

Increases for costs incurred to fulfill performance obligations

2 unchanged sentences

Decrease due to cost recognition on completed performance obligations

— ( 2,553 ) —

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

1 unchanged sentence

Other changes and FX impact

( 2 ) ( 2 ) ( 50 )

Ending balance as of June 30, 2024

Ending balance as of September 30, 2024

$ 4,523 $ 4,848 $ 81,271

12 unchanged sentences

Other changes and FX impact

Ending balance as of June 30, 2023

7 ( 11 ) ( 288 )

Ending balance as of September 30, 2023

$ 6,335 $ 2,075 $ 59,046

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, 2024 , the Company had outstanding performance obligations on existing contracts under ASC 606 to be recognized in the next twelve months of approximately $ 161.0 million .

As of September 30, 2024 , the Company had outstanding performance obligations on existing contracts under ASC 606 to be recognized in the next twelve months of approximately $ 205.0 million .

There are also approximately $ 102.3 m illion o f 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.

The following table sets forth customers who represented 10% or more of the Company’s total revenues for the three months ended June 30, 2024 and 2023 :

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, 2024 and 2023 :

Three Months Ended

Six Months Ended

September 30,

Inox Wind Limited

12 % 12 % 14 % 12 %

Gray Construction, Inc.

<10% 11 % <10% <10%

Stock-Based Compensation

The Company accounts for its stock-based compensation at fair value.

The following table summarizes stock-based compensation expense by financial statement line item for the three months ended June 30, 2024 and 2023 (in thousands):

Three Months Ended June 30,

The following table summarizes stock-based compensation expense by financial statement line item for the three and six months ended September 30, 2024 and 2023 (in thousands):

Three Months Ended September 30,

Six Months Ended September 30,

Cost of revenues

$ 39 $ 59 $ 97 $ 169

Research and development

113 156 256 311

Selling, general and administrative

691 896 1,719 1,988

The Company issued 25,000 shares of restricted stock and 19,200 shares of immediately vested common stock during the three months ended June 30, 2024 .

The Company issued 672,500 shares of restricted stock and 53,675 shares of immediately vested common stock during the three months ended June 30, 2023 .

$ 843 $ 1,111 $ 2,072 $ 2,468

The Company issued 817,500 shares and 842,500 shares of restricted stock during the three and six months ended September 30, 2024 , respectively.

The Company issued no shares and 19,200 shares of immediately vested common stock during the three and six months ended September 30, 2024 , respectively.

The Company issued 9,000 shares and 681,500 shares of restricted stock during the three and six months ended September 30, 2023 , respectively.

No shares of immediately vested common stock were issued during the three months ended September 30, 2023 and 53,675 shares of immediately vested common stock during the six months ended September 30, 2023 .

These restricted stock awards generally vest over 2 - 3 years.

3 unchanged sentences

The estimated fair value of the Company’s stock-based awards, less expected annual forfeitures, is amortized over the awards’ service period.

There were no unrecognized compensation costs for unvested stock options as of June 30, 2024 .

The total unrecognized compensation cost for unvested outstanding restricted stock was $ 4.1 mi llion as of June 30, 2024 .

There were no unrecognized compensation costs for unvested stock options as of September 30, 2024 .

The total unrecognized compensation cost for unvested outstanding restricted stock was $ 17.8 mi llion as of September 30, 2024 .

This expense will be recognized over a weighted-average expense period of approximately 1.8 years.

The Company granted no stock options during the three months ended June 30, 2024 and 2023 .

Computation of Net Loss per Common Share

Basic net loss per share (“EPS”) is computed by dividing net loss by the weighted-average number of common shares outstanding for the period.

Where applicable, diluted EPS is computed by dividing the net loss by the weighted-average number of common shares and dilutive common equivalent shares outstanding during the period, calculated using the treasury stock method.

The Company granted no stock options during the three and six months ended September 30, 2024 and 2023 .

Computation of Net Income (Loss) per Common Share

Basic net income (loss) per share (“EPS”) is computed by dividing net income (loss) by the weighted-average number of common shares outstanding for the period.

Where applicable, diluted EPS is computed by dividing the net income by the weighted-average number of common shares and dilutive common equivalent shares outstanding during the period, calculated using the treasury stock method.

Common equivalent shares include the effect of restricted stock, exercise of stock options and warrants and contingently issuable shares.

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 the three months ended June 30, 2024 , 336,206 shares were not included in the calculation of diluted EPS.

Of these, 300,000 relate to shares associated with the contingent consideration derivative liability for which the contingency has not yet been met, and 36,206 relate to outstanding stock options as they were considered anti-dilutive .

For the three months ended June 30, 2023 , 1,071,504 million shares were not included in the calculation of diluted EPS.

For the three months ended September 30, 2024 , 535,001 shares were not included in the calculation of diluted EPS.

Of these, 526,333 were shares of performance-based restricted stock where the contingency was not met.

Of the remaining shares, 652 shares relate to outstanding stock awards that were considered anti-dilutive, and 8,016 shares related to ESPP shares and were excluded as they were considered anti-dilutive.

For the six months ended September 30, 2024 , 479,341 shares were not included in the calculation of diluted EPS.

Of these, 469,667 were shares of performance-based restricted stock where the contingency was not met.

Of the remaining shares, 326 shares relate to outstanding stock awards that were considered anti-dilutive, and 9,348 shares related to ESPP shares and were excluded as they were considered anti-dilutive.

For each of the three and six months ended September 30, 2023 , 1,036,206 shares were not included in the calculation of diluted EPS.

Of these, 1,000,000 relate to shares associated with the contingent consideration derivative liability for which the contingency has not yet been met, and 36,206 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, 2024 and 2023 (in thousands, except per share data):

Three Months Ended June 30,

The following table reconciles the numerators and denominators of the earnings per share calculation for the three and six months ended September 30, 2024 and 2023 (in thousands, except per share data):

Three Months Ended September 30,

Six Months Ended September 30,

Net income (loss)

$ 4,887 $ ( 2,485 ) $ 2,363 $ ( 7,883 )

7 unchanged sentences

37,499 28,828 36,951 28,545

Net loss per share ― basic

Net income (loss) per share ― basic

$ 0.13 $ ( 0.09 ) $ 0.07 $ ( 0.28 )

Net loss per share ― diluted

Net income (loss) per share ― diluted

$ 0.13 $ ( 0.09 ) $ 0.06 $ ( 0.28 )

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Goodwill is not amortized but reviewed for impairment.

The Company's goodwill balance relates to the Megatran Acquisition in fiscal 2024, the Neeltran acquisition in fiscal 2021 , the Northeast Power Systems, Inc.

("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 reviewed annually on February 28th and whenever events or changes in circumstances indicate that the carrying value of the goodwill might not be recoverable.

There were no changes to goodwill during the three months ended June 30, 2024 or the year ended March 31, 2024 .

The Company did not identify any triggering events in the three months ended June 30, 2024 that would require interim impairment testing of goodwill.

There were no changes to goodwill during the year ended March 31, 2024.

March 31, 2024

Megatran Acquisition

September 30, 2024

The Company did not record impairment in the three and six months ended September 30, 2024 that would require interim impairment testing of goodwill.

Other Intangibles

Intangible assets at June 30, 2024 and March 31, 2024 consisted of the following (in thousands):

June 30, 2024

Intangible assets at September 30, 2024 and March 31, 2024 consisted of the following (in thousands):

September 30, 2024

March 31, 2024

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$ 20,031 $ ( 12,702 ) $ 7,329 $ 18,051 $ ( 11,682 ) $ 6,369

The Company recorded intangible amortization expense related to customer relationship and core technology and know-how of $ 0.4 million in the three months ended June 30, 2024 a nd $ 0.5 million in the three months ended June 30, 2023 .

The Company recorded no intangible amortization related to backlog during the three months ended June 30, 2024 as the asset is fully amortized.

Amortization expense of less than $ 0.1 million was reported in cost of revenues during the three months ended June 30, 2023 .

The Company recorded intangible amortization expense related to customer relationship and core technology and know-how of $ 0.4 million and $ 0.8 million in the three and six months ended September 30, 2024 , respectively.

The Company recorded intangible amortization expense related to customer relationship and core technology and know-how of $ 0.5 million and $ 1.1 million in the three and six months ended September 30, 2023 , respectively.

The Company recorded $ 0.2 million of intangible amortization in cost of revenue related to backlog during both the three and six months ended September 30, 2024 .

The Company recorded no amortization expense related to backlog during the three months ended September 30, 2023 and less than $ 0.1 million related to backlog was reported in cost of revenues during the six months ended September 30, 2023 .

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

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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, 2024 .

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 six months ended September 30, 2024 .

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

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Contingent Consideration

Contingent consideration relates to the earnout payment set forth in the Stock Purchase Agreement governing the acquisition of Northeast Power Systems, Inc ("NEPSI") that provides that the selling stockholders may receive up to an additional 1,000,000 shares of common stock of the Company upon the achievement of certain specified revenue objectives over varying periods of up to four years following the NEPSI Acquisition Date which must occur by September 30, 2024.

Contingent consideration related to the earnout payment set forth in the NEPSI Stock Purchase Agreement governing the acquisition of NEPSI provided that the selling stockholders may have received up to an additional 1,000,000 shares of common stock of the Company upon the achievement of certain specified revenue objectives over varying periods of up to four years following the NEPSI acquisition date which must have occurred by September 30, 2024.

Contingent consideration related to the make whole payment set forth in the Megatran Stock Purchase Agreement provided that the selling stockholders would be made whole for any costs or taxes as a result of the orderly distribution process.

See Note 15 , "Contingent Consideration" for further discussion.

The Company relied on a Monte Carlo method to determine the fair value of the contingent consideration on the closing of the acquisition of NEPSI and continues to revalue the fair value of the contingent consideration using the same method at each subsequent balance sheet date until the contingencies are resolved and the shares to be issued are determined, with the change in fair value recorded in the current period operating loss.

The following table provides the assets and liabilities carried at fair value on a recurring basis, measured as of June 30, 2024 and March 31, 2024 (in thousands):

As of September 30, 2024, the Company has settled all outstanding contingent consideration.

The following table provides the assets and liabilities carried at fair value on a recurring basis, measured as of September 30, 2024 and March 31, 2024 (in thousands):

Total Carrying Value

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Significant Unobservable Inputs (Level 3)

June 30, 2024:

September 30, 2024:

Cash equivalents

$ 41,731 $ 41,731 $ — $ —

Derivative liabilities:

Contingent consideration

$ 7,020 $ — $ — $ 7,020

Total Carrying Value Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3)

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

Acquisition Contingent Consideration

NEPSI Acquisition Contingent Consideration

Megatran Acquisition Contingent Consideration

Balance at March 31, 2023

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Change in fair value

Balance at June 30, 2024

Settlement of contingent consideration

( 6,504 ) ( 3,278 )

Balance at September 30, 2024

Accounts Receivable

Accounts receivable at June 30, 2024 and March 31, 2024 consisted of the following (in thousands):

June 30, 2024

Accounts receivable at September 30, 2024 and March 31, 2024 consisted of the following (in thousands):

September 30, 2024

March 31, 2024

2 unchanged sentences

Accounts receivable (unbilled)

Accounts receivable, net

Accounts receivable

$ 40,059 $ 26,325

Inventory, net of reserves, at June 30, 2024 and March 31, 2024 consisted of the following (in thousands):

June 30, 2024

Inventory, net of reserves, at September 30, 2024 and March 31, 2024 consisted of the following (in thousands):

September 30, 2024

March 31, 2024

7 unchanged sentences

$ 70,880 $ 41,857

The Company recorded inventory write-downs of $ 0.5 million and $ 0.4 million f or the three months ended June 30, 2024 and 2023 , respectively.

The Company recorded inventory write-downs of $ 0.3 million and $ 0.7 million f or the three months ended September 30, 2024 and 2023 , respectively.

The Company recorded inventory write-downs of $ 0.8 million and $ 1.1 million f or the six months ended September 30, 2024 and 2023 , 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, 2024 and March 31, 2024 primarily represent costs incurred on programs where the Company needs to complete performance obligations before the related revenue and costs will be recognized.

Deferred program costs as of September 30, 2024 and March 31, 2024 primarily represent costs incurred on programs where the Company needs to complete performance obligations before the related revenue and costs will be recognized.

Prepaid and Other Current Assets

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During the year ended March 31, 2024, the Company received $ 3.0 million for the initial claims that were processed.

During the three months ended June 30, 2024 , the Company did not receive any cash for the remaining $ 0.3 million balance of initial claims that were processed.

During the six months ended September 30, 2024 , the Company did not receive any cash for the remaining $ 0.3 million balance of initial claims that were processed.

The remaining balance is expected to be received during the remainder of fiscal 2024.

Property, Plant and Equipment

The cost and accumulated depreciation of property, plant and equipment at June 30, 2024 and March 31, 2024 are as follows (in thousands):

June 30, 2024

The cost and accumulated depreciation of property, plant and equipment at September 30, 2024 and March 31, 2024 are as follows (in thousands):

September 30, 2024

March 31, 2024

$ 22,650 $ 980

Construction in progress – equipment

9 unchanged sentences

$ 38,765 $ 10,861

Depreciation expense was $ 0.6 million for each of the three months ended June 30, 2024 and 2023 , respectively.

Depreciation expense was $ 0.8 million and $ 0.6 million for the three months ended September 30, 2024 and 2023 , respectively.

Depreciation expense was $ 1.4 million and $ 1.2 million for the six months ended September 30, 2024 and 2023 , respectively.

The increase in land relates to the property added as part of the Megatran Acquisition.

Equity-Method Investments

Investment in NWL Pacific Inc.

The Company has a 50 % ownership in NWL Pacific Inc.

Co., LTD ("NWL Pacific").

The investment represents the Company's interest in NWL Pacific.

The investment is a joint venture in South Korea established on May 12, 1998.

The Company treats the equity investment in the condensed consolidated financial statements under the equity method.

Equity method investments are equity securities in entities the Company does not control but over which it has the ability to exercise significant influence.

These investments are accounted for under the equity method of accounting in accordance with ASC 323, Investments — Equity Method and Joint Ventures .

Equity method investments are measured at cost minus impairment, if any, plus or minus the Company’s share of an investee’s income or loss, less distributions received.

As of September 30, 2024 the Company did not have material accounts receivable nor accounts payable balances with NWL Pacific.

The tables below present the summarized financial information from the date of acquisition through September 30, 2024 , as provided to the Company by the investee, for the unconsolidated company (in thousands):

Income from operation

Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses at June 30, 2024 and March 31, 2024 consisted of the following (in thousands):

June 30, 2024

Accounts payable and accrued expenses at September 30, 2024 and March 31, 2024 consisted of the following (in thousands):

September 30, 2024

March 31, 2024

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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

$ 2,542 $ 1,926 $ 2,363 $ 2,638

Acquired warranty obligations

Provisions for warranties during the period

298 644 774 852

Settlements during the period

2 unchanged sentences

$ 3,110 $ 1,892 $ 3,110 $ 1,892

The Company recorded income tax expense of $ 0.2 million in the three months ended June 30, 2024 and $ 0.1 million in the three months ended June 30, 2023 .

The Company recorded income tax benefit of $ 5.0 million and $ 4.8 million in the three and six months ended September 30, 2024 , respectively, and income tax expense of $ 0.1 million and $ 0.2 million in the three and six months ended September 30, 2023 , respectively.

As a result of a difference in book and tax basis related to the intangible assets acquired in the Acquisition (see Note 2, "Acquisition"), the Company recorded a deferred tax liability of $ 6.4 million.

As a result, the Company was able to benefit from additional deferred tax assets and therefore released a corresponding valuation allowance of $ 5.2 million during the three months ended September 30, 2024.

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 August 1, 2024 .

Material changes, if any, to the preliminary allocation summarized in Note 2, "Acquisition" will be reported once the related uncertainties are resolved, but no later than August 1, 2025 .

Goodwill recognized in the Acquisition, is not deductible for tax purposes.

Accounting for income taxes requires a two -step approach to recognizing and measuring uncertain tax positions.

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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, 2024 and did not have any gross unrecognized tax benefits as of June 30, 2024 .

The Company did not identify any uncertain tax positions in the six months ended September 30, 2024 and did not have any gross unrecognized tax benefits as of September 30, 2024 .

Contingent Consideration

NEPSI Contingent Considerations

On October 1, 2020 ( the "NEPSI Acquisition Date"), the Company entered into a Stock Purchase Agreement (the "NEPSI Stock Purchase Agreement") with the selling stockholders named therein.

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The purchase price was $ 26.0 million in cash and 873,657 restricted shares of common stock of the Company.

As part of the transaction, the selling stockholders may receive up to an additional 1,000,000 shares of common stock of the Company upon the achievement of certain specified revenue objectives during varying periods of up to four years following closing of the NEPSI Acquisition.

As part of the transaction, the selling stockholders were entitled to receive up to an additional 1,000,000 shares of common stock of the Company upon the achievement of certain specified revenue objectives during varying periods of up to four years following closing of the NEPSI Acquisition.

During the year ended March 31, 2024, the Company issued 399,999 shares of common stock and cash in lieu of a fractional share of common stock, related to the achievement of specified revenue objectives in connection with the NEPSI Acquisition.

One specified revenue objective, which would have earned the selling stockholders 300,000 shares of the Company’s common stock, was not achieved, leaving 300,000 shares of common stock remaining for potential issuance upon the achievement of the last specified revenue objective by September 30, 2024.

The Company evaluated the NEPSI Acquisition earnout payment set forth in the NEPSI Stock Purchase Agreement, which is expected to require settlement in the Company's common stock, and determined the contingent consideration qualified for liability classification and derivative treatment under ASC 815, Derivatives and Hedging .

As a result, for each period, the fair value of the contingent consideration will be remeasured and the resulting gain or loss will be recognized in operating expenses until the share amount is fixed.

NEPSI recognized revenues in excess of $ 120.0 million during the four years after the NEPSI Acquisition Date.

As a result, during the quarter ended September 30, 2024, the Company issued 300,000 shares of common stock of the Company to the selling stockholders, following certification of the achievement of the specified earnout revenue objective.

As of September 30, 2024, the Company has settled all outstanding contingent consideration under the NEPSI Stock Purchase Agreement.

The Company evaluated the NEPSI Acquisition earnout payment set forth in the NEPSI Stock Purchase Agreement, which was expected to require settlement in the Company's common stock, and determined the contingent consideration qualified for liability classification and derivative treatment under ASC 815, Derivatives and Hedging .

As a result, for each period, the fair value of the contingent consideration was remeasured and the resulting gain or loss was recognized in operating expenses until the share amount is fixed.

Megatran Contingent Consideration

On August 1, 2024 , the Company entered into a Stock Purchase Agreement with the selling stockholders of Megatran named therein.

Pursuant to the terms of the Stock Purchase Agreement and concurrently with entering into such agreement, the Company acquired all of the issued and outstanding shares of Megatran for aggregate consideration in an amount equal to $ 61.4 million which consideration amount was subject to various adjustments set forth in the Stock Purchase Agreement.

The value of the contingent consideration to make the sellers whole was determined to be de minimus at the time of the Acquisition.

On September 23, 2024, the Company paid $ 3.3 million to the selling stockholders, which was calculated based on the agreed upon formula set forth in the Stock Purchase Agreement.

This amount is reflected as the change in fair value of this contingent consideration in the three and six months ended September 30, 2024.

As of September 30, 2024, there are no remaining obligations to the selling stockholders of Megatran.

In the three and six months ended September 30, 2024 the Company completed the payment of $ 3.3 million to selling stockholders of Megatran to settle the remaining obligations of the acquisition.

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:

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$ 3.1 $ 1.2 $ 3.5 $ 2.6 $ 1.3

The Company recorded losses of $ 3.9 million and $ 1.3 million resulting from the increases in the fair value of the contingent consideration in the three months ended June 30, 2024 and 2023 , respectively.

During the three and six months ended September 30, 2024 the Company issued 300,000 shares of common stock related to the achievement of specified revenue objectives at a fair value of $ 6.5 million.

The Company recorded a gain resulting from the decrease in fair value of $ 0.5 million and a loss of $ 3.4 million resulting from the increases in the fair value of the contingent consideration in the three and six months ended September 30, 2024 , respectively.

The Company recorded losses of $ 0.9 million and $ 2.2 million resulting from the increases in the fair value of the contingent consideration in the three and six months ended September 30, 2023 , respectively.

As part of the acquisition of Neeltran, the Company identified four equipment financing agreements that Neeltran had entered into prior to the acquisition of Neeltran on May 6, 2021.

The current debt balanc e was less than $ 0.1 million as of both June 30, 2024 and March 31, 2024 .

The Company did not have a current debt balanc e as of September 30, 2024 and had a balance of less than $ 0.1 million as of March 31, 2024 .

Operating Leases

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Finance Leases

As of June 30, 2024 , the right-of-use asset related to the finance lease is fully amortized, and is included in the property and equipment, net on the Company's condensed consolidated balance sheet.

As of September 30, 2024 , the right-of-use asset related to the finance lease is fully amortized, and is included in the property and equipment, net on the Company's condensed 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.

1 unchanged sentence

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 the Company's condensed consolidated statement of operations.

Supplemental balance sheet information related to leases at June 30, 2024 , and March 31, 2024 are as follows (in thousands):

June 30, 2024

Supplemental balance sheet information related to leases at September 30, 2024 , and March 31, 2024 are as follows (in thousands):

September 30, 2024

March 31, 2024

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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, 2024 and 2023 are as follows (in thousands):

The costs related to the Company's operating leases for the three and six months ended September 30, 2024 and 2023 are as follows (in thousands):

Three Months Ended

June 30, 2024

Six Months Ended

September 30, 2024

Operating Leases:

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Three Months Ended

June 30, 2023

Six Months Ended

September 30, 2023

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, 2024 , the Company had $ 1.6 million of restricted cash included in long-term assets and $ 0.5 million of restricted cash included in current assets.

As of September 30, 2024 , the Company had $ 1.5 million of restricted cash included in long-term assets and $ 1.2 million of restricted cash included in current assets.

As of March 31, 2024 , the Company had $ 1.3 million of restricted cash included in long term assets and $ 0.5 million of restricted cash included in current assets.

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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,

$ 46,936 $ 28,515 $ 79,272 $ 54,251

7,535 5,489 15,489 10,007

Three Months Ended June 30,

$ 54,471 $ 34,004 $ 94,761 $ 64,258

Three Months Ended September 30,

Six Months Ended September 30,

Operating income (loss):

$ 2,336 $ ( 679 ) $ 3,195 $ ( 2,649 )

516 252 1,515 ( 398 )

Unallocated corporate expenses

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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 consisted of net losses of $ 3.9 million and $ 1.3 million resulting from the increases in the fair value of contingent consideration in the three months ended June 30, 2024 and 2023 , respectively.

There are 300,000 shares remaining for potential issuance upon the achievement of the last specified revenue objective under the NEPSI Stock Purchase Agreement by September 30, 2024.

Additionally, unallocated corporate expenses consisted of stock-based compensation expense of $ 1.2 million and $ 1.4 million in the three months ended June 30, 2024 and 2023 , respectively .

Total assets for the two business segments as of June 30, 2024 and March 31, 2024 , are as follows (in thousands):

June 30, 2024

Unallocated corporate expenses consisted of net losses resulting from activity relating to both the NEPSI earnout and the Megatran make whole payment which resulted in $ 2.8 million and $ 6.7 million in increases in the fair value of contingent consideration in the three and six months ended September 30, 2024 , respectively.

Unallocated corporate expenses consisted of a loss on contingent consideration of $ 0.9 million and $ 2.2 million in the three and six months ended September 30, 2023 , respectively.

Additionally, unallocated corporate expenses consisted of stock-based compensation expense of $ 0.8 million and $ 2.1 million in the three and six months ended September 30, 2024 , respectively, and $ 1.1 million and $ 2.5 million in the three and six months ended September 30, 2023 , respectively .

Total assets for the two business segments as of September 30, 2024 and March 31, 2024 , are as follows (in thousands):

September 30, 2024

March 31, 2024

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Following the release of ASU 2023 - 07 in November 2023, the effective date will be annual reporting periods beginning after December 15, 2024.

As of June 30, 2024, the Company is evaluating the impact on its condensed consolidated financial statements.

As of September 30, 2024 , the Company is evaluating the impact on its condensed consolidated financial statements.

In December 2023, the FASB issued ASU 2023 - 09, Income Taxes (Topic 740 ):

2 unchanged sentences

Following the release of ASU 2023 - 09 in December 2023, the effective date will be annual reporting periods beginning after December 15, 2024.

As of June 30, 2024, the Company is evaluating the impact on its condensed consolidated financial statements.

As of September 30, 2024 , the Company is evaluating the impact on its condensed consolidated financial statements.

In March 2024, the FASB issued ASU 2024 - 02, Codification Improvements — Amendments to Remove References to the Concepts Statements .

1 unchanged sentence

Following the release of ASU 2024 - 02 in March 2024, the effective date will be annual reporting periods beginning after December 15, 2024.

As of June 30, 2024, the Company is evaluating the impact on its condensed consolidated financial statements.

As of September 30, 2024 , the Company is evaluating the impact on its condensed consolidated financial statements.

Subsequent Events

The Company has performed an evaluation of subsequent events through the time of filing this Quarterly Report on Form 10 -Q with the SEC and has determined that, other than as reported herein and described below, there are no such events to report.

Acquisition of Megatran

As described in Note 1, Nature of the Business and Operations and Liquidity, on the Acquisition Date, the Company acquired all of the issued and outstanding shares of capital stock of Megatran.

Megatran is a U.S.-based global provider of engineered power conversion solutions for demanding industrial and military applications.

Pursuant to the Stock Purchase Agreement, the Company acquired all of the issued and outstanding shares of Megatran, for aggregate consideration in an amount equal to $ 61,350,000 (the “Purchase Price”), which consideration amount shall be subject to various adjustments set forth in the Stock Purchase Agreement (including those described below) and consists of:

(b) a number of restricted shares (rounded up or down to the nearest whole share, as applicable) (the “Company Shares”) of the Company’s common stock, $.

and (c) an additional cash payment equal to $ 5,000,000 , as adjusted pursuant to Sections 5.6 (c), (d), and (f) of the Stock Purchase Agreement (the “Additional Cash Purchase Price”).

Megatran is now a wholly-owned subsidiary of the Company and is operated and reported as a component of its Grid business unit.

The Acquisition completed by the Company subsequent to the three months ended June 30, 2024 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 acquisition.

The excess of the purchase price paid by the Company over the estimated fair value of net assets acquired has been recorded as goodwill.

The total purchase price of approximately $ 61.4 million includes the fair value of shares of the Company’s common stock issued at closing, and cash paid, as follows (in millions):

Cash payment 30.0

Issuance of 1,297,600 shares of Company’s Common Stock 31.4

Acquisition costs are expected to be $ 0.8 million and will be recorded in selling, general and administrative ("SG&A") costs.

Acquisition costs are of $ 0.2 million were included in SG&A for the three months ended June 30, 2024.

Cash and cash equivalents

Investment in joint venture

Prepaid and other current assets

Accounts receivable

Property plant and equipment

Accrued expenses

Accounts payable

Deferred revenue

Deferred tax liability

Net tangible assets/(liabilities)

Customer relationships

Net identifiable intangible assets

Total purchase consideration

The fair value of the financial assets acquired includes receivables with a fair value of $ 16.7 million.

The gross amount due is $ 17.5 million, of which $ 0.8 million is expected to be uncollectible.

Inventory includes a $ 0.7 million adjustment to step up the inventory balance to fair value consistent with the purchase price allocation.

Backlog of $ 0.7 million was evaluated using the multi period excess earnings method under the income approach.

The contracts with customers do not provide for any guarantees to source all future requirements from the Company.

The amortization method being utilized is economic consumption estimated over a two -year period with the expense being allocated to cost of revenues.

Customer relationships of $ 1.3 million relates to customers currently under contract and was determined based on a multi period excess earnings method under the income approach.

The method of amortization being utilized is the economic consumption over 10 years with the expense being allocated to SG&A.

Goodwill represents the value associated with the acquired workforce and expected synergies related to the business combination of the two companies.

Goodwill resulting from the Acquisition was assigned to the Company’s Grid segment.

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

Material changes, if any, to the preliminary allocation summarized above will be reported once the related uncertainties are resolved, but no later than August 1, 2025.

The $ 6.5 million of deferred tax liability is primarily related to property plant and equipment.

Unaudited Pro Forma Operating Results

The unaudited pro forma condensed consolidated statement of operations for the year ended March 31, 2024 and three months ended June 30, 2024 is presented as if the Acquisition had occurred on April 1, 2023 and April 1, 2024, respectively.

Three months ended June 30,

Year Ended March 31,

$ 59,310 $ 217,954

Operating loss

( 2,702 ) ( 7,140 )

$ ( 1,760 ) $ ( 4,152 )

Net loss per common share

36,974 31,123

Shares - basic

$ ( 0.05 ) $ ( 0.13 )

Shares - diluted

$ ( 0.05 ) $ ( 0.13 )

In addition, the pro forma amounts are not necessarily indicative of operating results in future periods.

The Company has performed an evaluation of subsequent events through the time of filing this Quarterly Report on Form 10 -Q with the SEC and has determined that there are no such events to report.

AMERICAN SUPERCONDUCTOR CORPORATION

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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