What changed in this filing

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Item 1. Financial Statements

2025-02-05 compared with 2024-10-30 · 176 added, 156 removed, 688 unchanged (33% of the section changed)

2 unchanged sentences

(In thousands)

September 30, 2024

December 31, 2024

March 31, 2024

26 unchanged sentences

Contingent consideration

Deferred tax liabilities, current portion

Deferred revenue, current portion

10 unchanged sentences

Stockholders' equity:

Common stock, $ 0.01 par value, 75,000,000 shares authorized;

39,863,084 and 37,343,812 shares issued and 39,459,733 and 36,946,181 shares outstanding at December 31, 2024 and March 31, 2024, respectively

Additional paid-in capital

1,256,210 1,212,913

Treasury stock

Treasury stock, at cost, 403,351 and 397,631 at December 31, 2024 and March 31, 2024, respectively

( 3,765 ) ( 3,639 )

11 unchanged sentences

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

Cost of revenues

6 unchanged sentences

Total operating expenses

Operating loss

Operating income (loss)

Interest income, net

Other expense, net

Loss before income tax expense (benefit)

Other income (expense), net

Income (loss) before income tax expense (benefit)

Income tax (benefit) expense

7 unchanged sentences

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

Net income (loss)

Other comprehensive (loss) gain, net of tax:

Foreign currency translation (loss) gain

Total other comprehensive (loss) gain, net of tax

Other comprehensive gain (loss), net of tax:

Foreign currency translation gain (loss)

Total other comprehensive gain (loss), net of tax

Comprehensive income (loss)

2 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

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

FOR THE Three and Nine Months Ended December 31, 2024 AND 2023

(In thousands)

21 unchanged sentences

Balance at September 30, 2024

Issuance of common stock – restricted shares

Stock-based compensation expense

Issuance of common stock for 401(k) match

Cumulative translation adjustment

Balance at December 31, 2024

Accumulated Other

17 unchanged sentences

Balance at September 30, 2023

Stock-based compensation expense

Issuance of common stock for 401(k) match

Issuance of common stock - stock offering

Cumulative translation adjustment

Balance at December 31, 2023

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

2 unchanged sentences

(In thousands)

Six Months Ended September 30,

Nine Months Ended December 31,

Cash flows from operating activities:

6 unchanged sentences

Deferred income taxes

Earnings from equity method investments

Change in fair value of contingent consideration

40 unchanged sentences

Certain prior period amounts were reclassified to conform to the presentation in the current period.

All significant intercompany accounts and transactions are eliminated in consolidation.

Investments in entities in which we do not have a controlling interest are accounted for under the equity method of accounting.

The going concern basis of presentation assumes that the Company will continue operations and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business.

Certain information and footnote disclosures normally included in the condensed consolidated financial statements prepared in accordance with GAAP have been or omitted pursuant to those instructions.

Certain information and footnote disclosures normally included in the condensed consolidated financial statements prepared in accordance with GAAP have been omitted pursuant to those instructions.

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 September 30, 2024 and 2023 and the financial position at September 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 December 31, 2024 and 2023 and the financial position at December 31, 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 September 30, 2024 , the Company had an accumulated deficit of $ 1,064.3 million.

The Company has historically experienced recurring operating losses and as of December 31, 2024 , the Company had an accumulated deficit of $ 1,061.8 million.

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

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.

At December 31, 2024 , the Company had cash and cash equivalents of $ 75.2 million.

Cash provided by operations for the nine months ended December 31, 2024 was $ 22.0 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.

9 unchanged sentences

(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 ) $ 31.4 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.

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 segment.

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.

This amount is reflected as the change in fair value of this contingent consideration in the nine months ended December 31, 2024 .

As of December 31, 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 Second Form S- 3 assisted the Megatran selling stockholders in the resale of their common stock and 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 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 operations.

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 six months ended September 30, 2024 .

Changes in macroeconomic conditions arising from various reasons, such as the ongoing wars between Russia and Ukraine and Israel and Hamas, 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 operations.

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.

7 unchanged sentences

(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);

(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.

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 segment.

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.

This amount is reflected as the change in fair value of this contingent consideration in the nine months ended December 31, 2024 .

As of December 31, 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 .

5 unchanged sentences

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):

Acquisition costs of less than $ 0.1 million and $ 1.1 million were included in s elling, general and administrative ("SG&A") for the three and nine months ended December 31, 2024 , respectively.

Cash and cash equivalents

14 unchanged sentences

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.

The inventory step up adjustment increased cost of revenue $ 0.4 million and $ 0.7 million in the three and nine months ended December 31, 2024 , respectively, as the inventory was sold.

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

4 unchanged sentences

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

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

3 unchanged sentences

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,

The unaudited pro forma condensed consolidated statement of operations for the three and nine months ended December 31, 2024 and 2023 presented as if the Acquisition had occurred on April 1, 2023, is as follows:

Three Months Ended December 31,

Nine Months Ended December 31,

$ 61,403 $ 58,874 $ 179,435 $ 158,789

13 unchanged sentences

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.

In the unaudited consolidated results for the three and nine months ended December 31, 2024 , Megatran’s operations are included in the Company’s consolidated results from the date of Acquisition of August 1, 2024.

Megatran contributed $ 18.3 million of revenue and $ 1.9 million in net income for the Company for the three months ended December 31, 2024 .

Megatran contributed $ 32.4 million of revenue and $ 3.9 million in net income for the Company for the nine months ended December 31, 2024 .

Amortization expense of $ 0.3 million and $ 0.5 million is included in the three and nine months ended December 31, 2024 , respectively, as a result of the Megatran acquired intangible assets.

In addition, $ 0.4 million and $ 0.7 million for the step-up basis assigned to acquired inventory was charged to cost of revenues in the three and nine months ended December 31, 2024 , respectively.

Revenue Recognition

The Company’s revenues in its Grid segment are derived primarily through enabling the transmission and distribution of power, providing planning services that allow it to identify power grid needs and risks, and developing ship protection systems for the U.S.

The Company’s revenues in its Wind segment are derived primarily through supplying advanced power electronics and control systems, licensing its highly engineered wind turbine designs, and providing extensive customer support services to wind turbine manufacturers.

The Company’s revenues in its Grid business segment are derived primarily through enabling the transmission and distribution of power, providing planning services that allow it to identify power grid needs and risks, and developing ship protection systems for the U.S.

The Company’s revenues in its Wind business segment are derived primarily through supplying advanced power electronics and control systems, licensing its highly engineered wind turbine designs, and providing extensive customer support services to wind turbine manufacturers.

The Company records revenue based on a five -step model in accordance with Accounting Standards Codification ("ASC") 606.

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 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.

For the three and nine months ended December 31, 2024 , 87 % and 88 % 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 nine months ended December 31, 2023 , 85 % and 80 % 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.

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

As of December 31, 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 September 30, 2024

Six Months Ended September 30, 2024

Three Months Ended December 31, 2024

Nine Months Ended December 31, 2024

Product Line:

8 unchanged sentences

$ 52,306 $ 9,097 $ 131,578 $ 24,585

Three Months Ended September 30, 2023

Six Months Ended September 30, 2023

Three Months Ended December 31, 2023

Nine Months Ended December 31, 2023

Product Line:

8 unchanged sentences

$ 33,603 $ 5,750 $ 87,854 $ 15,757

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.

As of December 31, 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.

14 unchanged sentences

Other changes and FX impact

Ending balance as of September 30, 2024

( 18 ) ( 11 ) ( 540 )

Ending balance as of December 31, 2024

$ 5,113 $ 7,255 $ 83,328

Unbilled Accounts Receivable

11 unchanged sentences

Other changes and FX impact

7 ( 11 ) ( 288 )

Ending balance as of September 30, 2023

Ending balance as of December 31, 2023

$ 4,588 $ 1,337 $ 59,743

1 unchanged sentence

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

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 .

As of December 31, 2024 , the Company had outstanding performance obligations on existing contracts under ASC 606 to be recognized in the next twelve months of approximately $ 204.2 million .

There are also approximately $ 96.6 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 and six months ended September 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 nine months ended December 31, 2024 and 2023 :

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

Inox Wind Limited

10 % 11 % 13 % 12 %

Gray Construction, Inc.

Innomotics LLC

14 % <10% <10% <10%

1 unchanged sentence

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 and six months ended September 30, 2024 and 2023 (in thousands):

Three Months Ended September 30,

Six Months Ended September 30,

The following table summarizes stock-based compensation expense by financial statement line item for the three and nine months ended December 31, 2024 and 2023 (in thousands):

Three Months Ended December 31,

Nine Months Ended December 31,

Cost of revenues

5 unchanged sentences

$ 2,861 $ 1,140 $ 4,933 $ 3,608

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 .

The Company issued 30,000 shares and 872,500 shares of restricted stock during the three and nine months ended December 31, 2024 , respectively.

The Company issued no shares and 19,200 shares of immediately vested common stock during the three and nine months ended December 31, 2024 , respectively.

The Company issued no shares and 681,500 shares of restricted stock during the three and nine months ended December 31, 2023 , respectively.

No shares of immediately vested common stock were issued during the three months ended December 31, 2023 and 53,675 shares of immediately vested common stock were issued during the nine months ended December 31, 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 September 30, 2024 .

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

There were no unrecognized compensation costs for unvested stock options as of December 31, 2024 .

The total unrecognized compensation cost for unvested outstanding restricted stock was $ 18.2 mi llion as of December 31, 2024 .

This expense will be recognized over a weighted-average expense period of approximately 1.6 years.

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

The Company granted no stock options during the three and nine months ended December 31, 2024 and 2023 .

Computation of Net Income (Loss) per Common Share

3 unchanged sentences

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

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

For the three months ended December 31, 2024 , 475,971 shares were not included in the calculation of diluted EPS.

Of these, 475,971 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.

For the nine months ended December 31, 2024 , 471,985 shares were not included in the calculation of diluted EPS.

Of these, 471,768 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 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,

217 shares relate to outstanding stock awards that were considered anti-dilutive.

For each of the three and nine months ended December 31, 2023 , 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 had 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 and nine months ended December 31, 2024 and 2023 (in thousands, except per share data):

Three Months Ended December 31,

Nine Months Ended December 31,

Net income (loss)

21 unchanged sentences

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.

December 31, 2024

The Company did not record impairment in the three and nine months ended December 31, 2024 .

Other Intangibles

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

September 30, 2024

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

December 31, 2024

March 31, 2024

13 unchanged sentences

$ 20,031 $ ( 13,409 ) $ 6,622 $ 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 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 .

The Company recorded intangible amortization expense related to customer relationship and core technology and know-how of $ 0.4 million and $ 1.3 million in the three and nine months ended December 31, 2024 , respectively.

The Company recorded intangible amortization expense related to customer relationship and core technology and know-how of $ 0.5 million and $ 1.6 million in the three and nine months ended December 31, 2023 , respectively.

The Company recorded $ 0.3 million and $ 0.4 million of intangible amortization in cost of revenue related to backlog during the three and nine months ended December 31, 2024 , respectively.

The Company recorded no amortization expense related to backlog during the three months ended December 31, 2023 and less than $ 0.1 million related to backlog was reported in cost of revenues during the nine months ended December 31, 2023 .

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

Years ending March 31,

2025 (remaining)

The Company's intangible assets relate entirely to the Grid business segment operations in the United States.

9 unchanged sentences

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 six months ended September 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 three or nine months ended December 31, 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.

6 unchanged sentences

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.

We classified contingent consideration related to certain acquisitions within level 3 of the fair value hierarchy because the fair value is derived using significant unobservable inputs, which include revenue risk premium and revenue volatility.

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

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):

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

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

Total Carrying Value

2 unchanged sentences

Significant Unobservable Inputs (Level 3)

September 30, 2024:

December 31, 2024:

Cash equivalents

13 unchanged sentences

Settlement of contingent consideration

Balance at December 31, 2023

Balance at March 31, 2024

2 unchanged sentences

( 6,504 ) ( 3,278 )

Balance at September 30, 2024

Balance at December 31, 2024

Accounts Receivable

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

September 30, 2024

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

December 31, 2024

March 31, 2024

4 unchanged sentences

$ 44,135 $ 26,325

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

September 30, 2024

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

December 31, 2024

March 31, 2024

7 unchanged sentences

$ 74,588 $ 41,857

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.

The Company recorded inventory write-downs of $ 0.4 million and $ 0.5 million f or the three months ended December 31, 2024 and 2023 , respectively.

The Company recorded inventory write-downs of $ 1.2 million and $ 1.5 million f or the nine months ended December 31, 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 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.

Deferred program costs as of December 31, 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

7 unchanged sentences

During the year ended March 31, 2024, the Company received $ 3.0 million for the 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.

During the nine months ended December 31, 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 fiscal 2025.

Property, Plant and Equipment

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

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

December 31, 2024

March 31, 2024

11 unchanged sentences

$ 38,390 $ 10,861

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.

Depreciation expense was $ 0.9 million and $ 0.6 million for the three months ended December 31, 2024 and 2023 , respectively.

Depreciation expense was $ 2.3 million and $ 1.7 million for the nine months ended December 31, 2024 and 2023 , respectively.

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

9 unchanged sentences

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):

As of December 31, 2024 the Compa ny did not have material accounts receivable nor accounts payable balances wi th NWL Pacific.

The tables below present the summarized financial information from the date of acquisition through December 31, 2024 , as provided to the Company by the investee, for the unconsolidated company (in thousands):

Three Months Ended December 31,

Nine Months Ended December 31,

$ 1,368 $ 2,225

Income from operation

Accounts Payable and Accrued Expenses

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

September 30, 2024

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

December 31, 2024

March 31, 2024

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Accrued compensation

10,688 10,326

Income taxes payable

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Product warranty activity was as follows (in thousands):

Three Months Ended September 30,

Six Months Ended September 30,

Three Months Ended December 31,

Nine Months Ended December 31,

Balance at beginning of period

7 unchanged sentences

$ 3,043 $ 2,031 $ 3,043 $ 2,031

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.

The Company recorded income tax benefit of $ 0.1 million and $ 4.9 million in the three and nine months ended December 31, 2024 , respectively, and income tax expense of $ 0.1 million $ 0.3 million in the three and nine months ended December 31, 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.

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 nine months ended December 31, 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 .

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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 six months ended September 30, 2024 and did not have any gross unrecognized tax benefits as of September 30, 2024 .

The Company did not identify any uncertain tax positions in the nine months ended December 31, 2024 and did not have any gross unrecognized tax benefits as of December 31, 2024 .

Contingent Consideration

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NEPSI is a U.S.-based global provider of medium-voltage metal-enclosed power capacitor banks and harmonic filter banks for use on electric power systems.

NEPSI is a wholly-owned subsidiary of the Company and is operated by its Grid business unit.

NEPSI is a wholly-owned subsidiary of the Company and is operated by its Grid business segment.

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

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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.

As of September 30, 2024, the Company had 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.

As a result, for the periods in which the Company had outstanding contingent consideration, 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

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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.

The value of the contingent consideration to make the sellers whole was determined to be de minimis 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.

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

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

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.

During the nine months ended December 31, 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 loss of $ 3.4 million resulting from the increases in the fair value of the contingent consideration in the nine months ended December 31, 2024 .

The Company recorded losses of $ 0.9 million and $ 3.1 million resulting from the increases in the fair value of the contingent consideration in the three and nine months ended December 31, 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 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 .

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

Operating Leases

11 unchanged sentences

Finance Leases

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.

As of December 31, 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 September 30, 2024 , and March 31, 2024 are as follows (in thousands):

September 30, 2024

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

December 31, 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 and six months ended September 30, 2024 and 2023 are as follows (in thousands):

The costs related to the Company's operating leases for the three and nine months ended December 31, 2024 and 2023 are as follows (in thousands):

Three Months Ended

Six Months Ended

September 30, 2024

Nine Months Ended

December 31, 2024

Operating Leases:

Operating lease costs – fixed

$ 407 $ 1,052

Operating lease costs – variable

1 unchanged sentence

Total lease costs

$ 466 $ 1,278

Three Months Ended

Six Months Ended

September 30, 2023

Nine Months Ended

December 31, 2023

Operating Leases:

3 unchanged sentences

Total lease costs

$ 379 $ 1,047

The Company’s estimated minimum future lease obligations under the Company's leases are as follows (in thousands):

Year ending March 31,

2025 (remaining)

Total minimum lease payments

11 unchanged sentences

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 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 December 31, 2024 , the Company had $ 3.5 million of restricted cash included in long-term assets and $ 1.3 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.

4 unchanged sentences

Grid and Wind.

In accordance with ASC 280 , Segment Reporting , the Company aggregates four operating segments into one reporting segment for financial reporting purposes due to their similar operating and financial characteristics.

In accordance with ASC 280 , Segment Reporting , the Company aggregates five operating segments into the Grid reporting business segment for financial reporting purposes due to their similar operating and financial characteristics.

The Company's operating segments reflect the way in which internally-reported financial information is used to make decisions and allocate resources.

9 unchanged sentences

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

Three Months Ended September 30,

Six Months Ended September 30,

Three Months Ended December 31,

Nine Months Ended December 31,

$ 52,306 $ 33,603 $ 131,578 $ 87,854

1 unchanged sentence

$ 61,403 $ 39,353 $ 156,163 $ 103,611

Three Months Ended September 30,

Six Months Ended September 30,

Three Months Ended December 31,

Nine Months Ended December 31,

Operating income (loss):

6 unchanged sentences

The Company’s business segments have been determined in accordance with the Company’s internal management structure, which is organized based on operating activities.

The Company evaluates performance based upon several factors, of which the primary financial measures are segment revenues and segment operating loss.

The Company evaluates performance based upon several factors, of which the primary financial measures are segment revenues and segment operating income (loss).

The disaggregated financial results of the segments reflect allocation of certain functional expense categories consistent with the basis and manner in which Company management internally disaggregates financial information for the purpose of assisting in making internal operating decisions.

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 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

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 $ 6.7 million in increases in the fair value of contingent consideration in the nine months ended December 31, 2024 .

Unallocated corporate expenses consisted of a loss on contingent consideration of $ 0.9 million and $ 3.1 million in the three and nine months ended December 31, 2023 , respectively.

Additionally, unallocated corporate expenses consisted of stock-based compensation expense of $ 2.9 million and $ 4.9 million in the three and nine months ended December 31, 2024 , respectively, and $ 1.1 million and $ 3.6 million in the three and nine months ended December 31, 2023 , respectively .

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

December 31, 2024

March 31, 2024

9 unchanged sentences

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

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

As of December 31, 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 September 30, 2024 , the Company is evaluating the impact on its condensed consolidated financial statements.

As of December 31, 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 September 30, 2024 , the Company is evaluating the impact on its condensed consolidated financial statements.

As of December 31, 2024 , the Company is evaluating the impact on its condensed consolidated financial statements.

In November 2024, the FASB issued ASU 2024 - 03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures .

The amendments in ASU 2024 - 03 address investor requests for more disclosure of disaggregated financial reporting information about expenses presented in the income statement.

Following the release of ASU 2024 - 03 in November 2024, the effective date will be annual reporting periods beginning after December 15, 2026.

As of December 31, 2024 , the Company is evaluating the impact on its condensed consolidated financial statements.

Subsequent Events

4 unchanged sentences

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

What changed 10-Q

Item 1. Financial Statements