Document and Entity Information - shares	6 Months Ended
Document and Entity Information - shares	Sep. 30, 2018	Oct. 31, 2018
Document and Entity Information [Abstract]
Entity Registrant Name	ORION ENERGY SYSTEMS, INC.
Entity Central Index Key	0001409375
Document Type	10-Q
Document Period End Date	Sep. 30, 2018
Amendment Flag	false
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q2
Current Fiscal Year End Date	--03-31
Entity Filer Category	Non-accelerated Filer
Entity Emerging Growth Company	false
Entity Small Business	true
Entity Common Stock, Shares Outstanding		29,570,086

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2018	Mar. 31, 2018	Sep. 30, 2017	Mar. 31, 2017
Assets
Cash and cash equivalents	$ 5,665	$ 9,424	$ 8,671	$ 17,307
Accounts receivable, net	5,778	8,736
Revenue earned but not billed	703	0
Inventories, net	8,327	7,826
Deferred contract costs	0	1,000
Prepaid expenses and other current assets	417	2,467
Total current assets	20,890	29,453
Property and equipment, net	12,281	12,894
Other intangible assets, net	2,664	2,868
Other long-term assets	102	110
Total assets	35,937	45,325
Liabilities and Shareholders’ Equity
Accounts payable	8,850	11,675
Accrued expenses and other	4,828	4,171
Deferred revenue, current	117	499
Current maturities of long-term debt	81	79
Total current liabilities	13,876	16,424
Revolving credit facility	1,419	3,908
Long-term debt, less current maturities	64	105
Deferred revenue, long-term	828	940
Other long-term liabilities	621	524
Total liabilities	16,808	21,901
Commitments and contingencies
Shareholders’ equity:
Preferred stock, $0.01 par value: Shares authorized: 30,000,000 at September 30, 2018 and March 31, 2018; no shares issued and outstanding at September 30, 2018 and March 31, 2018	0	0
Common stock, no par value: Shares authorized: 200,000,000 at September 30, 2018 and March 31, 2018; shares issued: 38,974,961 at September 30, 2018 and 38,384,575 at March 31, 2018; shares outstanding: 29,537,474 at September 30, 2018 and 28,953,183 at March 31, 2018	0	0
Additional paid-in capital	155,442	155,003
Treasury stock, common shares: 9,437,487 at September 30, 2018 and 9,431,392 at March 31, 2018	(36,090)	(36,085)
Retained deficit	(100,223)	(95,494)
Total shareholders’ equity	19,129	23,424
Total liabilities and shareholders’ equity	$ 35,937	$ 45,325

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Sep. 30, 2018	Mar. 31, 2018
Statement of Financial Position [Abstract]
Preferred stock, par value (usd per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	30,000,000	30,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (usd per share)	$ 0	$ 0
Common stock, shares authorized (in shares)	200,000,000	200,000,000
Common stock, shares issued (in shares)	38,974,961	38,384,575
Common stock, shares outstanding (in shares)	29,537,474	28,953,183
Treasury stock (in shares)	9,437,487	9,431,392

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)	3 Months Ended		6 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Revenues	$ 13,198,000	$ 15,422,000	$ 27,020,000	$ 27,980,000
Total revenues from contracts with customers	12,754,000		25,786,000
Cost of revenue	10,656,000	11,801,000	21,022,000	21,649,000
Gross profit	2,542,000	3,621,000	5,998,000	6,331,000
Operating expenses:
General and administrative	2,336,000	3,157,000	5,412,000	8,491,000
Impairment of intangible assets	0	710,000	0	710,000
Sales and marketing	2,135,000	2,906,000	4,713,000	6,260,000
Research and development	354,000	380,000	759,000	904,000
Total operating expenses	4,825,000	7,153,000	10,884,000	16,365,000
Loss from operations	(2,283,000)	(3,532,000)	(4,886,000)	(10,034,000)
Other income (expense):
Other income	15,000	0	34,000	0
Interest expense	(169,000)	(139,000)	(258,000)	(206,000)
Interest income	3,000	3,000	6,000	7,000
Total other expense	(151,000)	(136,000)	(218,000)	(199,000)
Loss before income tax	(2,434,000)	(3,668,000)	(5,104,000)	(10,233,000)
Income tax expense	4,117	0	25,748	0
Net loss	$ (2,438,000)	$ (3,668,000)	$ (5,130,000)	$ (10,233,000)
Basic net loss per share attributable to common shareholders (in dollars per share)	$ (0.08)	$ (0.13)	$ (0.18)	$ (0.36)
Weighted-average common shares outstanding (in shares)	29,488,363	28,834,868	29,280,421	28,646,188
Diluted net loss per share (in dollars per share)	$ (0.08)	$ (0.13)	$ (0.18)	$ (0.36)
Weighted-average common shares and share equivalents outstanding (in shares)	29,488,363	28,834,868	29,280,421	28,646,188
Product revenue
Revenues	$ 11,590,000	$ 14,109,000	$ 24,398,000	$ 25,890,000
Total revenues from contracts with customers	11,146,000		23,164,000
Cost of revenue	9,367,000	10,593,000	19,091,000	19,406,000
Service revenue
Revenues	1,608,000		2,622,000
Total revenues from contracts with customers	1,608,000	1,313,000	2,622,000	2,090,000
Cost of revenue	$ 1,289,000	$ 1,208,000	$ 1,931,000	$ 2,243,000

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Operating activities
Net loss	$ (5,130)	$ (10,233)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	679	701
Amortization	232	324
Stock-based compensation	439	618
Impairment of intangible assets	0	710
Provision for inventory reserves	(159)	301
Provision for bad debts	85	21
Other	8	12
Changes in operating assets and liabilities:
Accounts receivable, current and long-term	3,157	1,014
Revenue earned but not billed	1,652	0
Inventories	345	3,981
Deferred contract costs	0	751
Prepaid expenses and other assets	141	1,156
Accounts payable	(1,941)	(3,816)
Accrued expenses and other	(628)	(438)
Deferred revenue, current and long-term	(12)	237
Net cash used in operating activities	(1,132)	(4,661)
Investing activities
Purchases of property and equipment	(66)	(283)
Additions to patents and licenses	(28)	(30)
Net cash used in investing activities	(94)	(313)
Financing activities
Payment of long-term debt and capital leases	(39)	(111)
Proceeds from revolving credit facility	33,011	34,176
Payment of revolving credit facility	(35,501)	(37,722)
Payments to settle employee tax withholdings on stock-based compensation	(6)	(8)
Net proceeds from employee equity exercises	2	3
Net cash used in financing activities	(2,533)	(3,662)
Net decrease in cash and cash equivalents	(3,759)	(8,636)
Cash and cash equivalents at beginning of period	9,424	17,307
Cash and cash equivalents at end of period	$ 5,665	$ 8,671

DESCRIPTION OF BUSINESS	6 Months Ended
DESCRIPTION OF BUSINESS	Sep. 30, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]
DESCRIPTION OF BUSINESS	DESCRIPTION OF BUSINESS Organization Orion includes Orion Energy Systems, Inc., a Wisconsin corporation, and all consolidated subsidiaries. Orion is a developer, manufacturer and seller of lighting and energy management systems to commercial and industrial businesses, and federal and local governments, predominantly in North America. Orion’s corporate offices and leased primary manufacturing operations are located in Manitowoc, Wisconsin. Orion leases office space in Jacksonville, Florida. Orion had leased office space in Chicago, Illinois, and Houston, Texas, but as of June 30, 2018, Orion had vacated these locations. During fiscal 2018, Orion had leased warehouse space in Manitowoc, Wisconsin and Augusta, Georgia, but as of March 31, 2018, Orion had vacated these storage locations.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	6 Months Ended
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	Sep. 30, 2018
Accounting Policies [Abstract]
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation The Condensed Consolidated Financial Statements include the accounts of Orion Energy Systems, Inc. and its wholly-owned subsidiaries. Basis of Presentation The accompanying unaudited Condensed Consolidated Financial Statements of Orion have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information and with the rules and regulations of the Securities and Exchange Commission ("SEC"). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation have been included. Interim results are not necessarily indicative of results that may be expected for the fiscal year ending March 31, 2019 or other interim periods. The Condensed Consolidated Balance Sheets at March 31, 2018 has been derived from the audited consolidated financial statements at that date but does not include all of the information required by GAAP for complete financial statements. The accompanying unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited consolidated financial statements and footnotes thereto included in Orion’s Annual Report on Form 10-K for the fiscal year ended March 31, 2018 filed with the SEC on June 13, 2018. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during that reporting period. Areas that require the use of significant management estimates include revenue recognition, inventory obsolescence, allowance for doubtful accounts, accruals for warranty and loss contingencies, income taxes, impairment analyses, and certain equity transactions. Accordingly, actual results could differ from those estimates. Concentration of Credit Risk and Other Risks and Uncertainties Orion's cash is deposited with two financial institutions. At times, deposits in these institutions exceed the amount of insurance provided on such deposits. Orion has not experienced any losses in such accounts and believes that it is not exposed to any significant financial institution viability risk on these balances. Orion purchases components necessary for its lighting products, including ballasts, lamps and LED components, from multiple suppliers. For the three and six months ended September 30, 2018, no supplier accounted for more than 10.0% of total cost of revenue. For the three and six months ended September 30, 2017, no supplier accounted for more than 10.0% of total cost of revenue. For the three months ended September 30, 2018, one customer accounted for 14.0% of total revenue. For the six months ended September 30. 2018, no customers accounted for more than 10.0% of total revenue. For the three months ended September 30, 2017, one customer accounted for 13.7% of total revenue. For the six months ended September 30, 2017, one customer accounted for 11.9% of total revenue. As of September 30, 2018, no customer accounted for more than 10.0% of Accounts receivable. As of March 31, 2018, one customer accounted for 13.2% of Accounts receivable. Recent Accounting Pronouncements Issued: Not Yet Adopted In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-02, "Leases" (Subtopic 842). The pronouncement, and subsequent amendments, which is included in the Accounting Standards Codification as Subtopic 842 (“ASC 842”), requires that lessees recognize right-of-use assets and liabilities on the balance sheet for the rights and obligations created by long-term leases and disclose additional quantitative and qualitative information about leasing arrangements. Under ASU 842, leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition. Similarly, lessors will be required to classify leases as sales-type, finance or operating leases, with classification affecting the pattern of income recognition. Classification for both lessees and lessors will be based on an assessment of whether risks and rewards, as well as substantive control, have been transferred through the lease contract. ASU 842 also provides guidance on the presentation of the effects of leases in the income statement and statement of cash flows. Orion will adopt this ASU and subsequent amendments on April 1, 2019 and expects to elect certain practical expedients permitted under the transition guidance. Additionally, Orion expects to elect the optional transition method that allows for a cumulative-effect adjustment in the period of adoption and will not restate prior periods. Orion has not yet completed its review of the full provisions of this ASU against its outstanding lease arrangements and is in the process of quantifying the lease liability and related right of use asset which will be recorded to its condensed consolidated balance sheets upon adoption of the ASU. In addition, management continues to assess the impact of adoption of this ASU on its condensed consolidated statements of operations, cash flows, and the related footnote disclosures. Recently Adopted Standards On April 1, 2018, Orion adopted ASU 2014-09 and subsequent amendments, which is included in the Accounting Standards Codification as "Revenue from Contracts with Customers" (Topic 606) (“ASC 606”) and Sub-Topic 340-40 (“ASC 340-40”), using the modified retrospective approach. ASC 606 supersedes the revenue recognition requirements in “Revenue Recognition” (Topic 605) ("ASC 605") and provides guidance on the accounting for other assets and deferred costs associated with contracts with customers. ASC 606 requires entities to recognize revenue when control of the promised goods or services is transferred to customers at an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. ASC 340-40 limits the circumstances that an entity can recognize an asset from the costs incurred to obtain or fulfill a contract that are not subject to the guidance in other portions in the Accounting Standards Codification, such as those related to inventory. The provisions of ASC 606 and ASC 340-40 require entities to use more judgments and estimates than under previous guidance when allocating the total consideration in a contract to the individual promises to customers (“performance obligations”) and determining when a performance obligation has been satisfied and revenue can be recognized. The adoption of ASC 606 did not have a material effect on Orion's financial statements. Orion has updated its processes and controls necessary for implementing ASC 606, including the increased disclosure requirements. In August 2016, the FASB issued ASU 2016-15, "Classification of Certain Cash Receipts and Cash Payments," which provided clarification and additional guidance as to the presentation and classification of certain cash receipts and cash payments in the statement of cash flows. This ASU provided guidance as to the classification of a number of transactions including: contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies, and distributions received from equity method investees. This new ASU was effective for Orion in the first quarter of fiscal 2019 and has been applied through retrospective adjustment to all periods presented. The adoption of this ASU did not have a material impact on Orion’s condensed consolidated financial statements. In May 2017, the FASB issued ASU 2017-09, “Compensation-Stock Compensation: Scope of Modification Accounting” which provides guidance about which changes to the terms or conditions of a share-based payment award would require an entity to apply modification accounting. The provisions of this ASU were effective for Orion beginning on April 1, 2018. The adoption of this ASU did not have a material impact on Orion’s condensed consolidated financial statements.

REVENUE (Notes)

6 Months Ended

Sep. 30, 2018

Revenue from Contract with Customer [Abstract]

REVENUE

Changes in Accounting Policies

Orion adopted ASC 606 and ASC 340-40 (the “new standards”) as of April 1, 2018 for contracts with customers that were not fully complete as of April 1, 2018 using the modified retrospective transition method. The cumulative effect of initially applying the new standards was recorded as an immaterial adjustment to the opening balance of retained deficit within Orion’s Condensed Consolidated Statement of Shareholders’ Equity.

The new standards are applied separately for each contract between Orion and a customer. While the impact of the new standards vary for each contract based on its specific terms, in general, the new standards result in Orion (a) delaying the recognition of some of its Product revenue from the point of shipment until a later date during the installation period, (b) recording Service revenue associated with installing lighting fixtures as such fixtures are installed instead of recording all Services revenue at the completion of the installation, and (c) recording costs associated with installing lighting fixtures as they are incurred instead of deferring such costs and recognizing them at the time Service revenue was recorded.

The adoption of the new standards also resulted in reclassifications (a) between Product revenue and Service revenue, and between Cost of service revenue and Sales and marketing expenses in Orion’s Condensed Consolidated Statement of Operations, and (b) between Accounts receivable, net, Revenue earned but not billed, Inventories, net, Deferred contract costs, Prepaid expenses and other current assets, Accounts payable, Accrued expenses and other, Deferred revenue, current, Deferred revenue, long-term, and Other long-term liabilities in Orion’s Condensed Consolidated Balance Sheets.

For all adjustments and changes as a result of adopting the new standards for the current period, refer to the section “Impacts on Financial Statements” below. In accordance with the modified retrospective transition method, the historical information within the financial statements has not been restated and continues to be reported under the accounting standard in effect for those periods. As a result, Orion has disclosed the accounting policies in effect prior to April 1, 2018, as well as the policies applied starting April 1, 2018.

Revenue Recognition

Periods prior to April 1, 2018

Revenue is recognized in accordance with ASC 605 when the following criteria are met:


1.	persuasive evidence of an arrangement exists;


2.	delivery has occurred and title has passed to the customer;


3.	the sales price is fixed and determinable and no further obligation exists; and


4.	collectability is reasonably assured.

Revenue is recorded net of estimated provisions for returns, early payment discounts and rebates and other consideration paid to Orion’s customers. Revenues are presented net of sales tax and other sales related taxes.

Deferred contract costs consist primarily of the costs of products delivered, and services performed, that are subject to additional performance obligations or customer acceptance. These Deferred contract costs are expensed at the time the related revenue is recognized.

Deferred revenue relates to advance customer billings and investment tax grants received related to power purchase agreement contracts still outstanding related to Orion’s legacy solar business.

Period Commencing April 1, 2018

General Information

Orion generates revenues primarily by selling commercial lighting fixtures and components and by installing these fixtures in its customer’s facilities. Orion recognizes revenue in accordance with the guidance in ASC 606 when control of the goods or services being provided (which Orion refers to as a performance obligation) is transferred to a customer at an amount that reflects the consideration that management expects to receive in exchange for those goods or services. Prices are generally fixed at the time of order confirmation. The amount of expected consideration includes estimated deductions and early payment discounts calculated based on historical experience, customer rebates based on agreed upon terms applied to actual and projected sales levels over the rebate period, and any amounts paid to customers in conjunction with fulfilling a performance obligation.

If there are multiple performance obligations in a single contract, the contract’s total sales price is allocated to each individual performance obligation based on their relative standalone selling price. A performance obligation’s standalone selling price is the price at which Orion would sell a promised good or service separately to a customer. Orion uses an observable price to determine the stand-alone selling price for separate performance obligations or a cost-plus margin approach when one is not available. The cost-plus margin approach is used to determine the stand-alone selling price for the installation performance obligation and is based on average historical installation margin.

Revenue derived from customer contracts which include only performance obligation(s) for lighting fixtures and components is classified as Product revenue in the Condensed Consolidated Statements of Operations. The revenue for these transactions is recorded at the point in time when management believes that the customer obtains control of the products, generally either upon shipment or upon delivery to the customer’s facility. This point in time is determined separately for each contract and requires judgment by management of the contract terms and the specific facts and circumstances concerning the transaction.

Revenue from a customer contract which includes both the sale of fixtures and the installation of such fixtures (which Orion refers to as a turnkey project) is allocated between each lighting fixture and the installation performance obligation based on relative standalone selling prices.

Revenue from turnkey projects that is allocated to the sale of the lighting fixtures is recorded at the point in time when management believes the customer obtains control of the product(s) and is reflected in Product revenue. This point in time is determined separately for each customer contract based upon the terms of the contract and the nature and extent of Orion’s control of the light fixtures during the installation. Product revenue associated with turnkey projects can be recorded (a) upon shipment or delivery, (b) subsequent to shipment or delivery and upon customer payments for the light fixtures, (c) when an individual light fixture is installed and working correctly, or (d) when the customer acknowledges that the entire installation project is substantially complete. Determining the point in time when a customer obtains control of the lighting fixtures in a turnkey project can be a complex judgment and is applied separately for each individual light fixture included in a contract. In making this judgment, management considers the timing of various factors, including, but not limited to, those detailed below:


•	when there is a legal transfer of ownership;


•	when the customer obtains physical possession of the products;


•	when the customer starts to receive the benefit of the products;


•	the amount and duration of physical control that Orion maintains on the products after they are shipped to, and received at, the customer’s facility;


•	whether Orion is required to maintain insurance on the lighting fixtures when they are in transit and after they are delivered to the customer’s facility;


•	when each light fixture is physically installed and working correctly;


•	when the customer formally accepts the product; and


•	when Orion receives payment from the customer for the light fixtures.

Revenue from turnkey projects that is allocated to the single installation performance obligation is reflected in Service revenue. Service revenue is recorded over-time as Orion fulfills its obligation to install the light fixtures. Orion measures its performance toward fulfilling its performance obligations for installations using an output method that calculates the number of light fixtures completely installed as of the measurement date in comparison to the total number of light fixtures to be installed under the contract.

Most products are manufactured in accordance with Orion’s standard specifications. However, some products are manufactured to a customer’s specific requirements with no alternative use to Orion. In such cases, and when Orion has an enforceable right to payment, Product revenue is recorded on an over-time basis measured using an input methodology that calculates the costs incurred to date as compared to total expected costs. There was no over-time revenue related to custom products recognized in the three and six months ended September 30, 2018.

Orion also records revenue in conjunction with several limited power purchase agreement (“PPA”) contracts still outstanding. Those PPA’s are supply-side agreements for the generation of electricity. The last PPA contact expires in 2031. Revenue associated with the sale of energy generated by the solar facilities under these PPA contracts is in the scope of ASC 606. Revenues are recognized over-time and are equal to the amount billed to the customer which is calculated by applying the fixed rate designated in contract to the variable amount of electricity generated each month. This approach is in accordance with the “right to invoice” practical expedient provided for in ASC 606. Orion also recognizes revenue upon the sale to third parties of tax credits received from operating the solar facilities and from amortizing a grant received from the federal government during the period starting when the power generating facilities were constructed until the expiration of the PPA contracts; these revenues are not derived from contracts with customers and therefore not under the scope of ASC 606.

When shipping and handling activities are performed after a customer obtains control of the product, Orion has elected to treat shipping and handling costs as an activity necessary to fulfill the performance obligation to transfer product to the customer and not as a separate performance obligation. Any shipping and handling costs charged to customers are recorded in Product revenue. Shipping and handling costs are accrued and included in Cost of product revenue.

See Note 9, Accrued Expenses and Other for a discussion of Orion’s accounting for the warranty it provides to customers for its products and services.

Sales taxes collected from customers and remitted to governmental authorities are accounted for on a net (excluded from revenues) basis.

Contract Fulfillment Costs

Costs associated with product sales are accumulated in inventory as the fixtures are manufactured and are transferred to Cost of product revenue at the time revenue is recorded. See Note 5, Inventories, Net. Costs associated with installation sales are expensed as incurred.

Disaggregation of Revenue

Orion’s Product revenue includes revenue from contracts with customers accounted for under the scope of ASC 606 and revenue which is accounted for under other guidance. For the three and six months ended September 30, 2018, Product revenue included $0.3 million and $1.0 million, respectively, derived from sales-type leases for light fixtures, $0.1 million and $0.2 million, respectively, derived from the sale of tax credits generated from Orion’s legacy operation for distributing solar energy, and $18,889 and $37,777, respectively, derived from the amortization of federal grants received in 2010 and 2011 as reimbursement for a portion of the costs to construct the legacy solar facilities which are not under the scope of ASC 606. All remaining Product revenue, and all Service revenue, are derived from contracts with customers as defined in ASC 606.

The primary end-users of Orion’s lighting products and services are (a) the federal government, and (b) commercial or industrial companies.

The federal government obtains Orion products and services primarily through turnkey project sales that Orion makes to a select group of contractors who focus on the federal government. Revenues associated with government end-users are primarily included in the Orion Engineered Systems Division segment.

Commercial or industrial end-users obtain Orion products and services through turnkey project sales or by purchasing products either direct from Orion or through distributors or energy service companies ("ESCOs"). Revenues associated with commercial and industrial end-users therefore are included within each of Orion’s segments, dependent on the sales channel.

See Footnote 16, Segments, for additional discussion concerning Orion’s reportable segments.

The following table provides detail of Orion’s total revenues for the three and six months ended September 30, 2018 (dollars in thousands):



	Three months ended September 30, 2018						Six Months Ended September 30, 2018
	Product		Services		Total		Product		Services		Total
Revenue from contracts with customers:
Lighting revenues, by end user
Federal government	$	18	$	—	$	18	$	115	$	—	$	115
Commercial and industrial	11,110		1,608		12,718		23,011		2,622		25,633
Total lighting	11,128		1,608		12,736		23,126		2,622		25,748
Solar energy related revenues	18		—		18		38		—		38
Total revenues from contracts with customers	11,146		1,608		12,754		23,164		2,622		25,786
Revenue accounted for under other guidance	444		—		444		1,234		—		1,234
Total revenue	$	11,590	$	1,608	$	13,198	$	24,398	$	2,622	$	27,020

Cash Flow Considerations

Customer payments for material only orders are due shortly after shipment.

Turnkey projects where the end-user is the federal government typically span a three to six-month period. The contracts for these sales often provide for monthly progress payments equal to ninety percent (90%) of the value provided by Orion during the month.

Turnkey projects where the end-user is a commercial or industrial company typically span between two weeks to three months. Customer payment requirements for these projects vary by contract. Some contracts provide for customer payments for products and services as they are delivered, other contracts specify that the customer will pay for the project in its entirety upon completion of the installation.

Orion provides long-term financing to one customer who frequently engages Orion in large turnkey projects that span between three and nine months. The customer executes an agreement providing for monthly payments of the contract price, plus interest, over a five-year period. The total transaction price in these contracts is allocated between product and services in the same manner as all other turnkey projects. The portion of the transaction associated with the installation is accounted for consistently with all other installation related performance obligations. The portion of the transaction associated with the sale of the multiple individual light fixtures is accounted for as sales-type leases in accordance with ASC 840, "Leases". Revenues associated with the sales-type leases are included in Product revenue and recorded for each fixture separately based on the customer’s monthly acknowledgment that specified fixtures have been installed and are operating as specified.

The payments associated with these transactions that are due during the twelve months subsequent to September 30, 2018 are included in Accounts receivable, net in Orion’s Condensed Consolidated Balance Sheets. The remaining amounts due that are associated with these transactions are included in Other long-term assets in Orion’s Condensed Consolidated Balance Sheets.

The customer’s monthly payment obligation commences after completion of the turnkey project. Orion generally sells the receivable from the customer to an independent financial institution either during, or shortly after completion of, the installation period. Upon execution of the receivables purchase / sales agreement, all amounts due from the customer are included in Revenues earned but not billed on Orion’s Condensed Consolidated Balance Sheets until cash is received from the financial institution. The financial institution releases funds to Orion based on the customer’s monthly acknowledgment of the progress Orion has achieved in fulfilling its installation obligation. Orion provides the progress certifications to the financial institution one month in arrears.

The total amount received from the sales of these receivables during the three and six months ended September 30, 2018 was $0.9 million and $2.9 million, respectively. Orion’s losses on these sales aggregated to $0.1 million and $0.2 million for the three and six months ended September 30, 2018 and is included in Interest expense in the Condensed Consolidated Statement of Operations.

Practical Expedients and Exemptions

Orion expenses sales commissions when incurred because the amortization period is one year or less. These costs are recorded within Sales and marketing expense. There are no other capitalizable costs associated with obtaining contracts with customers.

Orion’s performance obligations related to lighting fixtures typically do not exceed nine months in duration. As a result, Orion has elected the practical expedient that provides an exemption of the disclosure requirements regarding information about value assigned to remaining performance obligations on contracts that have original expected durations of one year or less.

Orion has also adopted the practical expedient that provides an exemption of the disclosure requirement of the value assigned to performance obligations associated with contracts that were not complete as of April 1, 2018.

Orion also elected the practical expedient that permits companies to not disclose quantitative information about the future revenue when revenue is recognized as invoices are issued to customers for services performed.

Other than the turnkey projects which result in sales-type leases discussed above, Orion generally receives full payment for satisfied performance obligations in less than one year. Accordingly, Orion does not adjust revenues for the impact of any potential significant financing component as permitted by the practical expedients provided in ASC 606.

Contract Balances

A receivable is recognized when Orion has an enforceable right to payment in accordance with contract terms and an invoice has been issued to the customer. Payment terms on invoiced amounts are typically 30 days from the invoice date.

Revenue earned but not billed represents revenue that has been recognized in advance of billing the customer, which is a common practice in Orion turnkey contracts. Once Orion has an unconditional right to consideration under a turnkey contract, Orion typically bills the customer accordingly and reclassifies the amount to Accounts receivable, net. Revenue earned but not billed as of September 30, 2018 and April 1, 2018 includes $0.1 million and $0.6 million, respectively, which was not derived from contracts with customers and therefore not classified as a contract asset as defined by the new standards.

Deferred revenue, current as of September 30, 2018, included $41,425 of contract liabilities which represented consideration received from customers prior to the point that Orion has fulfilled the promises included in a performance obligation and recorded revenue.

Deferred revenue, long-term consists of the unamortized portion of the funds received from the federal government in 2010 and 2011 as reimbursement for the costs to build the two facilities related to the PPAs. As the transaction is not considered a contract with a customer, this value is not a contract liability as defined by the new standards.

The following chart shows the balance of Orion’s receivables arising from contracts with customers, contract assets and contract liabilities as of September 30, 2018, and April 1, 2018, after the adoption of the new standards (dollars in thousands):



	September 30, 2018		April 1, 2018
Accounts receivable, net	$	5,778	$	9,020
Contract assets	$	617	$	1,773
Contract liabilities	$	41	$	13

There were no significant changes in the contract assets outside of standard reclassifications to Accounts receivable, net upon billing. There were no significant changes to contract liabilities.

Impact on Financial Statements

ORION ENERGY SYSTEMS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)



	As Reported September 30, 2018			Adjustments			Balances without application of ASC 606
Assets
Cash and cash equivalents	$	5,665		$	—		$	5,665
Accounts receivable, net	5,778			(113		)	5,665
Revenue earned but not billed	703			(703		)	—
Inventories, net	8,327			(231		)	8,096
Deferred contract costs	—			430			430
Prepaid expenses and other current assets	417			485			902
Total current assets	20,890			(132		)	20,758
Property and equipment, net	12,281			—			12,281
Other intangible assets, net	2,664			—			2,664
Other long-term assets	102			—			102
Total assets	$	35,937		$	(132	)	$	35,805
Liabilities and Shareholders’ Equity
Accounts payable	$	8,850		$	964		$	9,814
Accrued expenses and other	4,828			(1,120		)	3,708
Deferred revenue, current	117			195			312
Current maturities of long-term debt	81			—			81
Total current liabilities	13,876			39			13,915
Revolving credit facility	1,419			—			1,419
Long-term debt, less current maturities	64			—			64
Deferred revenue, long-term	828			90			918
Other long-term liabilities	621			(90		)	531
Total liabilities	16,808			39			16,847
Commitments and contingencies
Shareholders’ equity:
Preferred stock, $0.01 par value: Shares authorized: 30,000,000 at September 30, 2018 and March 31, 2018; no shares issued and outstanding at September 30, 2018 and March 31, 2018	—			—			—
Common stock, no par value: Shares authorized: 200,000,000 at September 30, 2018 and March 31, 2018; shares issued: 38,974,961 at September 30, 2018 and 38,384,575 at March 31, 2018; shares outstanding: 29,537,474 at September 30, 2018 and 28,953,183 at March 31, 2018	—			—			—
Additional paid-in capital	155,442			—			155,442
Treasury stock, common shares: 9,437,487 at September 30, 2018 and 9,431,392 at March 31, 2018	(36,090		)	—			(36,090		)
Retained deficit	(100,223		)	(171		)	(100,394		)
Total shareholders’ equity	19,129			(171		)	18,958
Total liabilities and shareholders’ equity	$	35,937		$	(132	)	$	35,805

ORION ENERGY SYSTEMS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share amounts)



	Three months ended September 30, 2018									Six Months Ended September 30, 2018
	As Reported			Adjustments			Balances without application of ASC 606			As Reported			Adjustments			Balances without application of ASC 606
Product revenue	$	11,590		$	511		$	12,101		$	24,398		$	1,064		$	25,462
Service revenue	1,608			(406		)	1,202			2,622			(1,131		)	1,491
Total revenue	13,198			105			13,303			27,020			(67		)	26,953
Cost of product revenue	9,367			—			9,367			19,091			1			19,092
Cost of service revenue	1,289			(317		)	972			1,931			(738		)	1,193
Total cost of revenue	10,656			(317		)	10,339			21,022			(737		)	20,285
Gross profit	2,542			422			2,964			5,998			670			6,668
Operating expenses:
General and administrative	2,336			—			2,336			5,412			—			5,412
Sales and marketing	2,135			315			2,450			4,713			570			5,283
Research and development	354			—			354			759			—			759
Total operating expenses	4,825			315			5,140			10,884			570			11,454
Loss from operations	(2,283		)	107			(2,176		)	(4,886		)	100			(4,786		)
Other income (expense):
Other income	15			—			15			34			—			34
Interest expense	(169		)	3			(166		)	(258		)	1			(257		)
Interest income	3			—			3			6			—			6
Total other expense	(151		)	3			(148		)	(218		)	1			(217		)
Loss before income tax	(2,434		)	110			(2,324		)	(5,104		)	101			(5,003		)
Income tax expense	4			—			4			26			—			26
Net loss	$	(2,438	)	$	110		$	(2,328	)	$	(5,130	)	$	101		$	(5,029	)
Basic net loss per share attributable to common shareholders	$	(0.08	)	$	0.00		$	(0.08	)	$	(0.18	)	$	0.00		$	(0.17	)
Weighted-average common shares outstanding	29,488,363			—			29,488,363			29,280,421			—			29,280,421
Diluted net loss per share	$	(0.08	)	$	0.00		$	(0.08	)	$	(0.18	)	$	0.00		$	(0.17	)
Weighted-average common shares and share equivalents outstanding	29,488,363			—			29,488,363			29,280,421			—			29,280,421

ORION ENERGY SYSTEMS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)



	Six Months Ended September 30, 2018
	As Reported			Adjustments			Balances without application of ASC 606
Operating activities
Net loss	$	(5,130	)	$	101		$	(5,029	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	679			—			679
Amortization	232			—			232
Stock-based compensation	439			—			439
Provision for inventory reserves	(159		)	—			(159		)
Provision for bad debts	85			—			85
Other	8			—			8
Changes in operating assets and liabilities:
Accounts receivable, current and long-term	3,157			(171		)	2,986
Revenue earned but not billed	1,652			(1,652		)	—
Inventories	345			(456		)	(111		)
Deferred contract costs	—			564			564
Prepaid expenses and other assets	141			1,424			1,565
Accounts payable	(1,941		)	80			(1,861		)
Accrued expenses and other	(628		)	170			(458		)
Deferred revenue, current and long-term	(12		)	(60		)	(72		)
Net cash used in operating activities	(1,132		)	—			(1,132		)
Investing activities
Purchases of property and equipment	(66		)	—			(66		)
Additions to patents and licenses	(28		)	—			(28		)
Net cash used in investing activities	(94		)	—			(94		)
Financing activities
Payment of long-term debt and capital leases	(39		)	—			(39		)
Proceeds from revolving credit facility	33,011			—			33,011
Payment of revolving credit facility	(35,501		)	—			(35,501		)
Payments to settle employee tax withholdings on stock-based compensation	(6		)	—			(6		)
Net proceeds from employee equity exercises	2			—			2
Net cash used in financing activities	(2,533		)	—			(2,533		)
Net decrease in cash and cash equivalents	(3,759		)	—			(3,759		)
Cash and cash equivalents at beginning of period	9,424			—			9,424
Cash and cash equivalents at end of period	$	5,665		$	—		$	5,665

ACCOUNTS RECEIVABLE, NET

6 Months Ended

Sep. 30, 2018

Receivables [Abstract]

ACCOUNTS RECEIVABLE, NET

As of September 30, 2018, and March 31, 2018, Orion's Accounts receivable and Allowance for doubtful accounts balances were as follows (dollars in thousands):



	September 30, 2018			March 31, 2018
Accounts receivable, gross	$	6,013		$	8,886
Allowance for doubtful accounts	(235		)	(150		)
Accounts receivable, net	$	5,778		$	8,736

- Definition

The entire disclosure for claims held for amounts due a entity, excluding financing receivables. Examples include, but are not limited to, trade accounts receivables, notes receivables, loans receivables. Includes disclosure for allowance for credit losses.

+ References + Details

INVENTORIES, NET

6 Months Ended

Sep. 30, 2018

Inventory Disclosure [Abstract]

INVENTORIES, NET

As of September 30, 2018, and March 31, 2018, Orion's Inventory balances were as follows (dollars in thousands):



	Cost		Reserve			Net
As of September 30, 2018
Raw materials and components	$	6,920	$	(1,260	)	$	5,660
Work in process	1,016		(282		)	734
Finished goods	3,386		(1,453		)	1,933
Total	$	11,322	$	(2,995	)	$	8,327

As of March 31, 2018
Raw materials and components	$	6,073	$	(1,363	)	$	4,710
Work in process	1,190		(263		)	927
Finished goods	3,934		(1,745		)	2,189
Total	$	11,197	$	(3,371	)	$	7,826

PROPERTY AND EQUIPMENT, NET

6 Months Ended

Sep. 30, 2018

Property, Plant and Equipment [Abstract]

PROPERTY AND EQUIPMENT, NET

As of September 30, 2018, and March 31, 2018, Property and equipment, net, included the following (dollars in thousands):



	September 30, 2018			March 31, 2018
Land and land improvements	$	433		$	424
Buildings and building improvements	9,245			9,245
Furniture, fixtures and office equipment	7,117			7,096
Leasehold improvements	324			324
Equipment leased to customers	4,997			4,997
Plant equipment	11,999			12,106
	34,115			34,192
Less: accumulated depreciation and amortization	(21,834		)	(21,298		)
Property and equipment, net	$	12,281		$	12,894

As of September 30, 2018, a triggering event occurred requiring Orion to evaluate its long-lived assets for impairment. Due to the central nature of its operations, Orion’s tangible and intangible definite-lived assets support its full operations, are utilized by all three of its reportable segments, and do not generate separately identifiable cash flows. As such, these assets together represent a single asset group. In reviewing the asset group for impairment, Orion elected to bypass the qualitative impairment assessment and went directly to performing the Step 1 recoverability test. Orion performed the Step 1 recoverability test for the asset group comparing its carrying value to the group’s expected future undiscounted cash flows. Orion concluded that the undiscounted cash flows of the definite lived asset group exceeded its carrying value. As such the asset group was deemed recoverable and no impairment was recorded.

Equipment included above under capital leases was as follows (dollars in thousands):



	September 30, 2018			March 31, 2018
Equipment	$	581		$	581
Less: accumulated depreciation and amortization	(415		)	(344		)
Equipment, net	$	166		$	237

Orion recorded depreciation expense of $0.4 and $0.7 million for the three and six months ended September 30, 2018, respectively, and $0.3 and $0.7 million for the three and six months ended September 30, 2017, respectively.

OTHER INTANGIBLE ASSETS, NET

6 Months Ended

Sep. 30, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

OTHER INTANIGBLE ASSETS, NET

OTHER INTANGIBLE ASSETS, NET

As of September 30, 2018, and March 31, 2018, the components of, and changes in, the carrying amount of Other intangible assets, net, were as follows (dollars in thousands):



	September 30, 2018							March 31, 2018
	Gross Carrying Amount		Accumulated Amortization			Net		Gross Carrying Amount		Accumulated Amortization			Net
Patents	$	2,664	$	(1,451	)	$	1,213	$	2,636	$	(1,370	)	$	1,266
Licenses	58		(58		)	—		58		(58		)	—
Trade name and trademarks	1,005		—			1,005		1,005		—			1,005
Customer relationships	3,600		(3,401		)	199		3,600		(3,326		)	274
Developed technology	900		(653		)	247		900		(582		)	318
Non-competition agreements	100		(100		)	—		100		(95		)	5
Total	$	8,327	$	(5,663	)	$	2,664	$	8,299	$	(5,431	)	$	2,868

As of September 30, 2017, a triggering event occurred requiring Orion to evaluate its long-lived assets for impairment. As such Orion performed a quantitative impairment review of its indefinite lived intangible assets related to the Harris trade name applying the royalty replacement method to determine the asset’s fair value as of September 30, 2017. Under the royalty replacement method, the fair value of the Harris tradename was determined based on a market participant’s view of the royalty that would be paid to license the right to use the tradename. This quantitative analysis incorporated several assumptions including forecasted future revenues and cash flows, estimated royalty rate, based on similar licensing transactions and market royalty rates, and discount rate, which incorporates assumptions such as weighted-average cost of capital and risk premium. As a result of this impairment test, the carrying value of the Harris trade name exceeded its estimated fair value and an impairment of $0.7 million was recorded to Impairment of intangible assets during the quarter ended September 30, 2017 to reduce the asset’s carrying value to its calculated fair value. This fair value determination was categorized as Level 3 in the fair value hierarchy.

Amortization expense on intangible assets was $0.1 and $0.2 million for the three months ended September 30, 2018 and 2017, respectively. Amortization expense on intangible assets was $0.2 and $0.3 million for the six months ended September 30, 2018 and 2017, respectively.

As of September 30, 2018, the weighted average remaining useful life of intangible assets was 5.2 years.

The estimated amortization expense for the remainder of fiscal 2019, the next five fiscal years and beyond is shown below (dollars in thousands):



Fiscal 2019 (period remaining)	$	209
Fiscal 2020	361
Fiscal 2021	287
Fiscal 2022	190
Fiscal 2023	98
Fiscal 2024	95
Thereafter	419
Total	$	1,659

ACCRUED EXPENSES AND OTHER

6 Months Ended

Sep. 30, 2018

Other Liabilities Disclosure [Abstract]

ACCRUED EXPENSES AND OTHER

As of September 30, 2018, and March 31, 2018, Accrued expenses and other included the following (dollars in thousands):



	September 30, 2018		March 31, 2018
Compensation and benefits	$	1,231	$	1,786
Accrued taxes	322		237
Contract costs	1,173		985
Legal and professional fees	310		400
Warranty	361		402
Sales returns reserve (1)	147		—
Credits due to customers (1)	964		—
Other accruals	320		361
Total	$	4,828	$	4,171

(1)Sales returns reserve was previously classified in Accounts receivable, net and Credits due to customers was previously classified in Accounts payable. As of April 1, 2018, in conjunction with the adoption of ASC 606, these balances are now included in Accrued expenses and other on the Condensed Consolidated Balance Sheets.

Orion generally offers a limited warranty of one to ten years on its lighting products, including the pass through of standard warranties offered by major original equipment component manufacturers. The manufacturers’ warranties cover lamps, ballasts, LED modules, chips and drivers, control devices, and other fixture related items, which are significant components in Orion's lighting products.

Changes in Orion’s warranty accrual (both current and long-term) were as follows (dollars in thousands):



	Three Months Ended September 30,						Six Months Ended September 30,
	2018			2017			2018			2017
Beginning of period	$	718		$	781		$	673		$	759
Reclassification on adoption of ASC 606	—			—			73			—
Provision to product cost of revenue	9			(40		)	(13		)	(15		)
Charges	(6		)	(2		)	(12		)	(5		)
End of period	$	721		$	739		$	721		$	739

NET LOSS PER COMMON SHARE

6 Months Ended

Sep. 30, 2018

Earnings Per Share [Abstract]

NET LOSS PER COMMON SHARE

Basic net loss per common share is computed by dividing Basic net loss attributable to common shareholders by the Weighted-average number of common shares outstanding for the period and does not consider common stock equivalents.

For the three and six months ended September 30, 2018 and 2017, Orion was in a net loss position; therefore, the Basic and Diluted Weighted average shares outstanding are equal because any increase to the basic shares would be anti-dilutive. Basic and Diluted net loss per common share was calculated based upon the following:



	Three Months Ended September 30,						Six Months Ended September 30,
	2018			2017			2018			2017
Numerator:
Net loss (in thousands)	$	(2,438	)	$	(3,668	)	$	(5,130	)	$	(10,233	)
Denominator:
Weighted-average common shares outstanding	29,488,363			28,834,868			29,280,421			28,646,188
Weighted-average common shares and common share equivalents outstanding	29,488,363			28,834,868			29,280,421			28,646,188
Net loss per common share:
Basic	$	(0.08	)	$	(0.13	)	$	(0.18	)	$	(0.36	)
Diluted	$	(0.08	)	$	(0.13	)	$	(0.18	)	$	(0.36	)

The following table indicates the number of potentially dilutive securities excluded from the calculation of Diluted net loss per common share because their inclusion would have been anti-dilutive. The number of shares are as of the end of each period:



	September 30, 2018	September 30, 2017
Common stock options	484,836	993,011
Restricted shares	1,365,678	1,536,506
Total	1,850,514	2,529,517

RELATED PARTY TRANSACTIONS	6 Months Ended
RELATED PARTY TRANSACTIONS	Sep. 30, 2018
Related Party Transactions [Abstract]
RELATED PARTY TRANSACTIONS	RELATED PARTY TRANSACTIONS During the three and six months ended September 30, 2018, Orion did not have any related party transactions. During the three and six months ended September 30, 2017, Orion incurred a de minimis amount for consulting services provided by a member of its Board of Directors.