Document and Entity Information - USD ($)	12 Months Ended
Document and Entity Information - USD ($)	Mar. 31, 2019	May 31, 2019	Sep. 30, 2018
Document And Entity Information [Abstract]
Entity Registrant Name	ORION ENERGY SYSTEMS, INC.
Entity Central Index Key	0001409375
Trading Symbol	OESX
Document Type	10-K
Document Period End Date	Mar. 31, 2019
Amendment Flag	false
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	FY
Current Fiscal Year End Date	--03-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Entity Emerging Growth Company	false
Entity Small Business	true
Entity Shell Company	false
Entity Public Float			$ 19,881,105
Entity Common Stock, Shares Outstanding		29,601,669

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2019	Apr. 01, 2018	Mar. 31, 2018	Mar. 31, 2017	Mar. 31, 2016
Assets
Cash and cash equivalents	$ 8,729		$ 9,424	$ 17,307	$ 15,542
Accounts receivable, net	14,804	$ 9,020	8,736
Revenue earned but not billed	3,746
Inventories, net	13,403		7,826
Deferred contract costs	0		1,000
Prepaid expenses and other current assets	695		2,467
Total current assets	41,377		29,453
Property and equipment, net	12,010		12,894
Other intangible assets, net	2,469		2,868
Other long-term assets	165		110
Total assets	56,021		45,325
Liabilities and Shareholders’ Equity
Accounts payable	19,706		11,675
Accrued expenses and other	7,410		4,171
Deferred revenue, current	123		499
Current maturities of long-term debt	96		79
Total current liabilities	27,335		16,424
Revolving credit facility	9,202		3,908
Long-term debt, less current maturities	81		105
Deferred revenue, long-term	791		940
Other long-term liabilities	642		524
Total liabilities	38,051		21,901
Commitments and contingencies (Note 13)
Shareholders’ equity:
Preferred stock, $0.01 par value: Shares authorized: 30,000,000 shares at March 31, 2019 and 2018; no shares issued and outstanding at March 31, 2019 and 2018			0
Common stock, no par value: Shares authorized: 200,000,000 at March 31, 2019 and 2018; shares issued: 39,037,969 and 38,384,575 at March 31, 2019 and 2018; shares outstanding: 29,600,158 and 28,953,183 at March 31, 2019 and 2018			0
Additional paid-in capital	155,828		155,003
Treasury stock: 9,437,811 and 9,431,392 common shares at March 31, 2019 and 2018	(36,091)		(36,085)
Retained deficit	(101,767)		(95,494)
Total shareholders’ equity	17,970		23,424	$ 35,450	$ 45,983
Total liabilities and shareholders’ equity	$ 56,021		$ 45,325

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Mar. 31, 2019	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)	39,037,969	38,384,575
Common stock, shares outstanding (in shares)	29,600,158	28,953,183
Treasury stock (in shares)	9,437,811	9,431,392

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	12 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Mar. 31, 2017
Revenues	$ 65,754	$ 60,300	$ 70,211
Cost of revenue	51,202	45,628	52,874
Gross profit	14,552	14,672	17,337
Operating expenses:
General and administrative	10,231	13,159	14,777
Impairment of intangible assets		710	250
Sales and marketing	9,104	11,879	12,833
Research and development	1,374	1,905	2,004
Total operating expenses	20,709	27,653	29,864
Loss from operations	(6,157)	(12,981)	(12,527)
Other income (expense):
Other income	80	248	215
Interest expense	(493)	(333)	(163)
Amortization of debt issue costs	(101)	(92)	(110)
Interest income	11	15	36
Total other expense	(503)	(162)	(22)
Loss before income tax	(6,660)	(13,143)	(12,549)
Income tax expense (benefit)	14	(15)	(261)
Net loss	$ (6,674)	$ (13,128)	$ (12,288)
Basic net loss per share attributable to common shareholders	$ (0.23)	$ (0.46)	$ (0.44)
Weighted-average common shares outstanding	29,429,540	28,783,830	28,156,382
Diluted net loss per share	$ (0.23)	$ (0.46)	$ (0.44)
Weighted-average common shares and share equivalents outstanding	29,429,540	28,783,830	28,156,382
Product revenue
Revenues	$ 56,261	$ 55,595	$ 66,224
Cost of revenue	44,111	41,415	49,630
Service revenue
Revenues	9,493	4,705	3,987
Cost of revenue	$ 7,091	$ 4,213	$ 3,244

STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) $ in Thousands	Total	Common Stock, Shares	Common Stock, Additional Paid-in Capital	Treasury Stock	Shareholder Notes Receivable	Retained Earnings (Deficit)
Shareholders' equity, beginning of period at Mar. 31, 2016	$ 45,983		$ 152,140	$ (36,075)	$ (4)	$ (70,078)
Shareholders' equity, beginning of period (Shares) at Mar. 31, 2016		27,767,138
Issuance of stock for services	156		156
Issuance of stock services (shares)		110,566
Shares issued under Employee Stock Purchase Plan	8			8
Shares issued under Employee Stock Purchase Plan (shares)		5,156
Stock-based compensation	1,605		1,605
Stock-based compensation (shares)		444,102
Employee tax withholdings on stock-based compensation	(14)			(14)
Employee tax withholdings on stock-based compensation (shares)		(9,472)
Net loss	(12,288)					(12,288)
Shareholders' equity, end of period at Mar. 31, 2017	35,450		153,901	(36,081)	(4)	(82,366)
Shareholders' equity, at end of period (shares) at Mar. 31, 2017		28,317,490
Issuance of stock services (shares)		24,747
Shares issued under Employee Stock Purchase Plan	$ 11			11
Shares issued under Employee Stock Purchase Plan (shares)	10,057	10,057
Stock-based compensation	$ 1,102		1,102
Stock-based compensation (shares)		612,601
Employee tax withholdings on stock-based compensation	(11)			(11)
Employee tax withholdings on stock-based compensation (shares)		(10,482)
Collection of Stockholders Notes				(4)	$ 4
Collections on stockholder notes (shares)		(1,230)
Net loss	(13,128)					(13,128)
Shareholders' equity, end of period at Mar. 31, 2018	$ 23,424		155,003	(36,085)		(95,494)
Shareholders' equity, at end of period (shares) at Mar. 31, 2018	28,953,183	28,953,183
Shares issued under Employee Stock Purchase Plan	$ 4			4
Shares issued under Employee Stock Purchase Plan (shares)	4,642	4,642
Stock-based compensation	$ 825		825
Stock-based compensation (shares)		653,394
Collection of Stockholders Notes	(10)			(10)
Collections on stockholder notes (shares)		11,061
Cumulative effect of accounting change \| ASC 606	401					401
Net loss	(6,674)					(6,674)
Shareholders' equity, end of period at Mar. 31, 2019	$ 17,970		$ 155,828	$ (36,091)		$ (101,767)
Shareholders' equity, at end of period (shares) at Mar. 31, 2019	29,600,158	29,600,158

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	12 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Mar. 31, 2017
Operating activities
Net loss	$ (6,674)	$ (13,128)	$ (12,288)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	1,339	1,404	1,451
Amortization of intangible assets	444	607	881
Stock-based compensation	825	1,102	1,605
Amortization of debt issue costs	101	92	110
Impairment of intangible assets		710	250
Provision for inventory reserves	(202)	1,261	2,212
Provision for bad debts	56	22	132
Other	57	(94)	178
Changes in operating assets and liabilities:
Accounts receivable	(5,840)	419	1,687
Revenue earned but not billed	(1,390)
Inventories	(4,689)	4,706	1,220
Deferred contract costs	0	(65)	(899)
Prepaid expenses and other current assets	68	391	1,974
Accounts payable	8,916	20	(81)
Accrued expenses and other	1,975	(1,736)	(635)
Deferred revenue, current and long-term	(44)	(126)	300
Net cash used in operating activities	(5,058)	(4,415)	(1,903)
Investing activities
Purchase of property and equipment	(381)	(512)	(660)
Additions to patents and licenses	(68)	(73)	(291)
Proceeds from sales of property, plant and equipment			2,600
Net cash (used in) provided by investing activities	(449)	(585)	1,649
Financing activities
Payment of long-term debt	(80)	(158)	(880)
Proceeds from revolving credit facility	60,270	68,734	87,935
Payment of revolving credit facility	(54,976)	(71,456)	(85,025)
Payments to settle employee tax withholdings on stock-based compensation	(10)	(9)	(19)
Debt issue costs	(396)
Net proceeds from employee equity exercises	4	6	8
Net cash provided by (used in) financing activities	4,812	(2,883)	2,019
Net (decrease) increase in cash and cash equivalents	(695)	(7,883)	1,765
Cash and cash equivalents at beginning of period	9,424	17,307	15,542
Cash and cash equivalents at end of period	8,729	9,424	17,307
Supplemental cash flow information:
Cash paid for interest	(176)	(147)	(164)
Cash received for income taxes	12	$ 17	153
Supplemental disclosure of non-cash investing and financing activities:
Purchase of property, plant and equipment by issuing a debt	$ 74		$ 175

DESCRIPTION OF BUSINESS

12 Months Ended

Mar. 31, 2019

Organization Consolidation And Presentation Of Financial Statements [Abstract]

DESCRIPTION OF BUSINESS

NOTE 1 — 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 also leases office space in Jacksonville, Florida and warehouse space in Manitowoc, Wisconsin. During fiscal 2018 and fiscal 2017 Orion had leased warehouse space in Augusta, Georgia, but as of March 31, 2018, Orion had vacated this storage location.

In fiscal 2018, we did not renew the leases for our 5,600 square foot of office space in Houston, Texas and our 3,100 square foot of office space in Chicago, Illinois. The leases terminated as of April 30, 2018 and May 31, 2018, respectively.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Mar. 31, 2019

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The consolidated financial statements include the accounts of Orion Energy Systems, Inc. and its wholly-owned subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation.

Reclassifications

In the warranty rollforward in Note 9 – Accrued Expenses and Other, certain prior period balances have been reclassified to conform to current period presentation. The reclassifications were immaterial to the financial statements.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make 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 and 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.

Cash and Cash Equivalents

Orion considers all highly liquid, short-term investments with original maturities of three months or less to be cash equivalents.

Fair Value of Financial Instruments

Orion’s financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and other, revolving credit facility and long-term debt. The carrying amounts of Orion’s financial instruments approximate their respective fair values due to the relatively short-term nature of these instruments, or in the case of long-term debt and revolving credit facility, because of the interest rates currently available to Orion for similar obligations. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. GAAP describes a fair value hierarchy based on the following three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value:

Level 1 — Valuations are based on unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2 — Valuations are based on quoted prices for similar assets or liabilities in active markets, or quoted prices in markets that are not active for which significant inputs are observable, either directly or indirectly.

Level 3 — Valuations are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. Inputs reflect management's best estimate of what market participants would use in valuing the asset or liability at the measurement date.

Allowance for Doubtful Accounts

Orion performs ongoing evaluations of its customers and continuously monitors collections and payments. Orion estimates an allowance for doubtful accounts based upon the aging of the underlying receivables, historical experience with write-offs and specific customer collection issues that have been identified. See Note 4 - Accounts Receivable for further discussion of the allowance for doubtful accounts.

Deferred Contract Costs

Deferred contract costs consist primarily of the costs of products delivered, and services performed, that are subject to additional performance obligations or customer acceptance. In the prior year, these deferred contract costs were expensed at the time the related revenue was recognized. Upon adoption of “Revenue from Contracts with Customers” (Topic 606) on April 1, 2018, this account was no longer used; there were no Deferred costs as of March 31, 2019. Deferred costs amounted to $1.0 million as of March 31, 2018.

Incentive Plan

Orion’s compensation committee approved an Executive Fiscal Year 2019 Annual Cash Incentive Program. The program provided for performance cash bonus payments ranging from 50-100% of the fiscal 2019 base salaries of Orion’s named executive officers and other key employees. The program provided for bonuses to be paid out on the basis of achieving positive net income in fiscal 2019. Based upon the results for the year ended March 31, 2019, Orion did not accrue any expense related to this plan.

Orion’s compensation committee approved an Executive Fiscal Year 2018 Annual Cash Incentive Program. The program provided for performance cash bonus payments ranging from 50-100% of the fiscal 2018 base salaries of Orion’s named executive officers and other key employees. The program provided for bonuses to be paid out on the basis of achieving positive EBITDA in fiscal 2018. Based upon the results for the year ended March 31, 2018, Orion did not accrue any expense related to this plan.

Orion’s compensation committee approved an Executive Fiscal Year 2017 Annual Cash Incentive Program. The program provided for performance cash bonus payments ranging from 35-100% of the fiscal 2017 base salaries of Orion’s named executive officers and other key employees. The program provided for bonuses to be paid out on the basis of the achievement in fiscal 2018 of at least (i) $0.5 million of profit before taxes and (ii) revenue growth of 10% more than fiscal year 2016. Based upon the results for the year ended March 31, 2017, Orion did not accrue any expense related to this plan.

Revenue Recognition

Periods prior to April 1, 2018

Revenue was recognized in accordance with the revenue recognition requirements in “Revenue Recognition” (Topic 605) (“ASC 605”) when the following criteria were met:

persuasive evidence of an arrangement exists;

delivery has occurred and title has passed to the customer;

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

collectability is reasonably assured.

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

For sales of Orion’s lighting and energy management technologies under multiple element arrangements, consisting of a combination of product sales and services, Orion determines revenue by allocating the total contract revenue to each element based on their relative selling prices in accordance with ASC 605-25, Revenue Recognition - Multiple Element Arrangements. In such circumstances, Orion uses a hierarchy to determine the selling price to be used for allocating revenue to deliverables: (1) vendor-specific objective evidence ("VSOE") of fair value, if available, (2) third-party evidence ("TPE") of selling price if VSOE is not available, and (3) best estimate of the selling price if neither VSOE nor TPE is available (a description as to how Orion determines estimated selling price is provided below).

The nature of Orion’s multiple element arrangements for the sale of its lighting and energy management technologies is similar to a construction project, with materials being delivered and contracting and project management activities occurring according to an installation schedule. The significant deliverables include the shipment of products and related transfer of title and the installation.

To determine the selling price in multiple-element arrangements, Orion establishes the selling price for its energy management system products using management's best estimate of the selling price, as VSOE and TPE do not exist. Product revenue is recognized when title and risk of loss for the products transfers. For product revenue, management's best estimate of selling price is determined using a cost plus gross profit margin method.

In addition, Orion records in service revenue the selling price for its installation and recycling services using management’s best estimate of selling price, as VSOE and TPE do not exist. Service revenue is recognized when services are completed and customer acceptance has been received. Recycling services provided in connection with installation entail the disposal of the customer’s legacy lighting fixtures. Orion’s service revenues, other than for installation and recycling that are completed prior to delivery of the product, are included in product revenue using management’s best estimate of selling price, as VSOE and TPE do not exist. These services include comprehensive site assessment, site field verification, utility incentive and government subsidy management, engineering design, and project management. For these services, along with Orion's installation and recycling services, under a multiple-element arrangement, management’s best estimate of selling price is determined using a cost plus gross profit margin method with consideration given to other relevant economic conditions and trends, customer demand, pricing practices, and margin objectives. The determination of an estimated selling price is made through consultation with and approval by management, taking into account the preceding factors.

Deferred revenue relates to advance customer billings, investment tax grants received related to PPAs and long term maintenance contracts on OTAs and is classified as a liability on the consolidated balance sheet. The fair value of the maintenance is readily determinable based upon pricing from third-party vendors. Deferred revenue related to maintenance services is recognized when the services are delivered, which occurs in excess of a year after the original OTA contract is executed.

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 “Revenue from Contracts with Customers” (Topic 606) (“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 such 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 the sale of lighting fixtures and components is classified as Product revenue in the 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 fiscal year 2019.

Orion offers a financing program, called an Orion Throughput Agreement, or OTA, for a customer’s lease of Orion’s energy management systems. The OTA is structured as a sales-type lease and upon successful installation of the system and customer acknowledgment that the system is operating as specified, revenue is recognized at Orion’s net investment in the lease, which typically is the net present value of the future cash flows.

Orion also records revenue in conjunction with several limited power purchase agreements (“PPAs”) still outstanding. Those PPAs are supply-side agreements for the generation of electricity. Orion’s last PPA expires in 2031. Revenue associated with the sale of energy generated by the solar facilities under these PPAs is within 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 the PPAs 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 PPAs; 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.

Shipping and Handling Costs

Orion records costs incurred in connection with shipping and handling of products as cost of product revenue. Amounts billed to customers in connection with these costs are included in product revenue.

Research and Development

Orion expenses research and development costs as incurred. Amounts are included in the Statement of Operations and Comprehensive Income on the line item Research and development.

Income Taxes

Orion recognizes deferred tax assets and liabilities for the future tax consequences of temporary differences between financial reporting and income tax basis of assets and liabilities, measured using the enacted tax rates and laws expected to be in effect when the temporary differences reverse. Deferred income taxes also arise from the future tax benefits of operating loss and tax credit carry-forwards. A valuation allowance is established when management determines that it is more likely than not that all or a portion of a deferred tax asset will not be realized. For the fiscal year ended March 31, 2019, Orion increased its full valuation allowance by $1.6 million against its deferred tax assets due to the increase in its deferred tax assets.

ASC 740, Income Taxes, also prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination. Orion has classified the amounts recorded for uncertain tax benefits in the balance sheet as other liabilities (non-current) to the extent that payment is not anticipated within one year. Orion recognizes penalties and interest related to uncertain tax liabilities in income tax expense. Penalties and interest are immaterial and are included in the unrecognized tax benefits.

The Tax Cut and Jobs Act ("ACT") was enacted December 22, 2017. Further information on the impacts of the Act can be found in Note 13, Income Taxes.

Stock Based Compensation

Orion’s share-based payments to employees are measured at fair value and are recognized in earnings, on a straight-line basis over the requisite service period.

Orion accounts for stock-based compensation in accordance with ASC 718, Compensation - Stock Compensation. Under the fair value recognition provisions of ASC 718, stock-based compensation is measured at the grant date based on the fair value of the award and is recognized as expense ratably over the requisite service period. As more fully described in Note 15 - Stock Options and Restricted Shares, Orion currently awards non-vested restricted stock to employees, executive officers and directors. Orion did not issue any stock options during fiscal 2019, fiscal 2018 or fiscal 2017.

Orion has not paid dividends in the past and does not plan to pay any dividends in the foreseeable future. Orion estimates its forfeiture rate of unvested stock awards based on historical experience.

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 fiscal 2019, 2018 and 2017, no supplier accounted for more than 10% of total cost of revenue.

In fiscal 2019, one customer accounted for 20.7% of total revenue. In fiscal 2018, two customers accounted for 11.7% and 10.8% of total revenue. In fiscal 2017, no customer accounted for 10% of revenue.

As of March 31, 2019, one customer accounted for 56.2% of accounts receivable and 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, is included in the Accounting Standards Codification as Subtopic 842 (“ASC 842”). For Orion, the primary impact of the adoption of ASC 842 will be the recognition of right-of-use assets and liabilities on the balance sheet for the rights and obligations created by contracts where Orion is leasing assets from third parties for periods in excess of one year. Previously, the financial impact associated with such contracts was recorded only in Orion’s statement of operations. Additional quantitative and qualitative disclosures about Orion’s lease arrangements are also required.

Orion implemented ASC 842 at the start of the first quarter of the fiscal year ending March 31, 2020 using the optional transition method under which the new standard is applied only to the most current period presented and the cumulative effect of applying the new standards to existing lease agreements is recognized at the date of initial application. Adoption of ASC 842 resulted in the recording of additional right-of-use lease assets and lease liabilities of approximately $0.2 million for operating lease agreements associated with assets used by Orion but owned by a third party. There was no adjustment to retained deficit. Orion also leases assets to third parties under capital and sales-type leases. There was no financial statement impact from the adoption of ASC 842 on the contracts where Orion leases assets to third parties.

Determining whether a contract includes a lease, and assessing whether the lease should be accounted for as a finance lease or an operating lease, is a matter of judgment based on whether the risks and rewards as well as substantive control of the associated with the assets specified in the contract have been transferred from the lessor to the lessee. Orion implemented the appropriate changes to business processes and controls to support recognition and disclosure under the new standard, including the new qualitative and quantitative disclosures that will include information on the nature, amount, timing and significant judgments impacting revenue from contracts with customers.

Orion management believes that the adoption of ASC 842 will not materially impact Orion’s future consolidated results of operations and will have no impact on Orion’s future cash flows.

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 superseded 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. Orion’s 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 footnote 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 beginning 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 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 consolidated financial statements.

REVENUE

12 Months Ended

Mar. 31, 2019

Revenue From Contract With Customer [Abstract]

REVENUE

NOTE 3 — 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 a $0.4 million adjustment to the opening balance of retained deficit within Orion’s 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 Service 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 Consolidated Statements 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 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 Orion’s 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

See Note 2, Summary of Significant Accounting Policies for a discussion of Orion’s accounting policies in effect prior to April 1, 2018, as well as the policies applied starting April 1, 2018 in regards to revenue recognition.

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 fiscal year 2019, Product revenue included $3.4 million derived from sales-type leases for light fixtures, $0.2 million derived from the sale of tax credits generated from Orion’s legacy operation for distributing solar energy, and $0.1 million 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 are included within each of Orion’s segments, dependent on the sales channel.

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

The following table provides detail of Orion’s total revenues for the year ended March 31, 2019 (dollars in thousands):

	Year Ended March 31, 2019
	Product		Services		Total
Revenue from contracts with customers:
Lighting revenues, by end user
Federal government	$	2,579	$	642	$	3,221
Commercial and industrial		49,963		8,851		58,814
Total lighting		52,542		9,493		62,035
Solar energy related revenues		57		—		57
Total revenues from contracts with customers		52,599		9,493		62,092
Revenue accounted for under other guidance		3,662		—		3,662
Total revenue	$	56,261	$	9,493	$	65,754

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 March 31, 2019 are included in Accounts receivable, net in Orion’s Consolidated Balance Sheets. The remaining amounts due that are associated with these transactions are included in Other long-term assets in Orion’s 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 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 twelve months ended March 31, 2019 was $6.9 million. Orion’s losses on these sales aggregated to $0.3 million for the twelve months ended March 31, 2019 and is included in Interest expense in the Consolidated Statements 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 to 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 to 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 March 31, 2019 and April 1, 2018 includes $0.7 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 March 31, 2019, included $48 thousand 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 March 31, 2019, and April 1, 2018, after the adoption of the new standards (dollars in thousands):

	March 31, 2019		April 1, 2018
Accounts receivable, net	$	14,804	$	9,020
Contract assets	$	3,005	$	1,773
Contract liabilities	$	48	$	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 (in thousands)

	As Reported March 31, 2019			Adjustments			Balances without application of ASC 606 As of March 31, 2019
Assets
Cash and cash equivalents	$	8,729		$	—		$	8,729
Accounts receivable, net		14,804			(67	)		14,737
Revenue earned but not billed		3,746			(3,746	)		—
Inventories, net		13,403			(351	)		13,052
Deferred contract costs		0			396			396
Prepaid expenses and other current assets		695			3,419			4,114
Total current assets		41,377			(349	)		41,028
Property and equipment, net		12,010			—			12,010
Other intangible assets, net		2,469			—			2,469
Other long-term assets		165			—			165
Total assets	$	56,021		$	(349	)	$	55,672
Liabilities and Shareholders’ Equity
Accounts payable	$	19,706		$	987		$	20,693
Accrued expenses and other		7,410			(1,193	)		6,217
Deferred revenue, current		123			51			174
Current maturities of long-term debt		96			—			96
Total current liabilities		27,335			(155	)		27,180
Revolving credit facility		9,202			—			9,202
Long-term debt, less current maturities		81			—			81
Deferred revenue, long-term		791			104			895
Other long-term liabilities		642			(104	)		538
Total liabilities		38,051			(155	)		37,896
Commitments and contingencies
Shareholders’ equity:
Preferred stock		—			—			—
Common stock		—			—			—
Additional paid-in capital		155,828			—			155,828
Treasury stock		(36,091	)		—			(36,091	)
Retained deficit		(101,767	)		(194	)		(101,961	)
Total shareholders’ equity		17,970			(194	)		17,776
Total liabilities and shareholders’ equity	$	56,021		$	(349	)	$	55,672

	Year Ended March 31, 2019 (in thousands)
	As Reported			Adjustments			Balances without application of ASC 606
Product revenue	$	56,261		$	2,191		$	58,452
Service revenue		9,493			(2,143	)		7,350
Total revenue		65,754			48			65,802
Cost of product revenue		44,111			1			44,112
Cost of service revenue		7,091			(1,472	)		5,619
Total cost of revenue		51,202			(1,471	)		49,731
Gross profit		14,552			1,519			16,071
Operating expenses:
General and administrative		10,231			—			10,231
Sales and marketing		9,104			1,459			10,563
Research and development		1,374			—			1,374
Total operating expenses		20,709			1,459			22,168
Loss from operations		(6,157	)		60			(6,097	)
Other income (expense):
Other income		80			—			80
Interest expense		(493	)		19			(474	)
Amortization of debt issue costs		(101	)					(101	)
Interest income		11			—			11
Total other expense		(503	)		19			(484	)
Loss before income tax		(6,660	)		79			(6,581	)
Income tax expense		14			—			14
Net loss	$	(6,674	)	$	79		$	(6,595	)

	Year Ended March 31, 2019 (in thousands)
	As Reported			Adjustments			Balances without application of ASC 606
Operating activities
Net loss	$	(6,674	)	$	79		$	(6,595	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		1,339			—			1,339
Amortization of intangible assets		444			—			444
Stock-based compensation		825			—			825
Amortization of debt issue costs		101			—			101
Provision for inventory reserves		(202	)		—			(202	)
Provision for bad debts		56			—			56
Other		57			—			57
Changes in operating assets and liabilities:
Accounts receivable		(5,840	)		(217	)		(6,057	)
Revenue earned but not billed		(1,390	)		1,390			—
Inventories		(4,689	)		(335	)		(5,024	)
Deferred contract costs		0			599			599
Prepaid expenses and other assets		68			(1,512	)		(1,444	)
Accounts payable		8,916			102			9,018
Accrued expenses and other		1,975			84			2,059
Deferred revenue, current and long-term		(44