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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2021

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 001-33887

 

Orion Energy Systems, Inc.

(Exact name of Registrant as specified in its charter)

 

 

Wisconsin

 

39-1847269

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification number)

 

2210 Woodland Drive, Manitowoc, Wisconsin

 

54220

(Address of principal executive offices)

 

(Zip code)

Registrant’s telephone number, including area code: (920892-9340

 

Securities registered pursuant to Section 12(b) of the act:

 

Title of Each Class

 

Trading Symbol (s)

 

Name of Each Exchange on Which Registered

Common stock, no par value

 

OESX

 

The Nasdaq Stock Market LLC

(NASDAQ Capital Market)

Common stock purchase rights

 

 

 

The Nasdaq Stock Market LLC

(NASDAQ Capital Market)

 

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405) during the preceding 12 months (or for shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an "emerging growth company". See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

 

 

 

 

Non-accelerated filer

Smaller reporting company

 

 

 

 

 

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

There were 31,000,701 shares of the Registrant’s common stock outstanding on July 30, 2021.

 

 

 


 

ORION ENERGY SYSTEMS, INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED JUNE 30, 2021

TABLE OF CONTENTS

 

 

 

Page(s)

PART I FINANCIAL INFORMATION

3

ITEM 1.

Financial Statements (unaudited)

3

 

Condensed Consolidated Balance Sheets as of June 30, 2021 and March 31, 2021

3

 

Condensed Consolidated Statements of Operations for the Three Months Ended June 30, 2021 and June 30, 2020

4

 

Condensed Consolidated Statements of Shareholders’ Equity for the Three Months Ended June 30, 2021 and June 30, 2020

5

 

Condensed Consolidated Statements of Cash Flows for the Three Months Ended June 30, 2021 and June 30, 2020

6

 

Notes to the Condensed Consolidated Financial Statements

7

ITEM 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

19

ITEM 3.

Quantitative and Qualitative Disclosures about Market Risk

26

ITEM 4.

Controls and Procedures

26

PART II OTHER INFORMATION

27

ITEM 1.

Legal Proceedings

27

ITEM 1A.

Risk Factors

27

ITEM 2.

Unregistered Sale of Equity Securities and Use of Proceeds

27

ITEM 5.

Other Information

27

ITEM 6.

Exhibits

28

SIGNATURE

29

 

 


 

 

PART I – FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

ORION ENERGY SYSTEMS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)

 

 

 

June 30, 2021

 

 

March 31, 2021

 

Assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

15,863

 

 

$

19,393

 

Accounts receivable, net

 

 

19,506

 

 

 

13,572

 

Revenue earned but not billed

 

 

1,043

 

 

 

2,930

 

Inventories, net

 

 

20,647

 

 

 

19,554

 

Prepaid expenses and other current assets

 

 

963

 

 

 

1,082

 

Total current assets

 

 

58,022

 

 

 

56,531

 

Property and equipment, net

 

 

11,253

 

 

 

11,369

 

Other intangible assets, net

 

 

1,890

 

 

 

1,952

 

Deferred tax assets

 

 

18,913

 

 

 

19,785

 

Other long-term assets

 

 

3,540

 

 

 

3,184

 

Total assets

 

$

93,618

 

 

$

92,821

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

 

 

Accounts payable

 

$

18,528

 

 

$

17,045

 

Accrued expenses and other

 

 

9,855

 

 

 

13,226

 

Deferred revenue, current

 

 

203

 

 

 

87

 

Current maturities of long-term debt

 

 

15

 

 

 

14

 

Total current liabilities

 

 

28,601

 

 

 

30,372

 

Revolving credit facility

 

 

 

 

 

 

Long-term debt, less current maturities

 

 

31

 

 

 

35

 

Deferred revenue, long-term

 

 

621

 

 

 

640

 

Other long-term liabilities

 

 

3,521

 

 

 

3,700

 

Total liabilities

 

 

32,774

 

 

 

34,747

 

Commitments and contingencies

 

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

 

 

 

Preferred stock, $0.01 par value: Shares authorized: 30,000,000 at

   June 30, 2021 and March 31, 2021; no shares issued and outstanding at

   June 30, 2021 and March 31, 2021

 

 

 

 

 

 

Common stock, no par value: Shares authorized: 200,000,000 at June 30, 2021

   and March 31, 2021; shares issued: 40,474,565 at June 30, 2021 and

   40,279,050 at March 31, 2021; shares outstanding: 31,000,701 at

   June 30, 2021 and 30,805,300 at March 31, 2021

 

 

 

 

 

 

Additional paid-in capital

 

 

157,746

 

 

 

157,485

 

Treasury stock, common shares: 9,473,864 at June 30, 2021 and 9,473,750 at

   March 31, 2021

 

 

(36,241

)

 

 

(36,240

)

Retained deficit

 

 

(60,661

)

 

 

(63,171

)

Total shareholders’ equity

 

 

60,844

 

 

 

58,074

 

Total liabilities and shareholders’ equity

 

$

93,618

 

 

$

92,821

 

 

The accompanying notes are an integral part of these Condensed Consolidated Statements.

 

3


 

 

ORION ENERGY SYSTEMS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share amounts)

 

 

 

Three Months Ended June 30,

 

 

 

2021

 

 

2020

 

Product revenue

 

$

28,246

 

 

$

9,701

 

Service revenue

 

 

6,855

 

 

 

1,110

 

Total revenue

 

 

35,101

 

 

 

10,811

 

Cost of product revenue

 

 

19,433

 

 

 

7,229

 

Cost of service revenue

 

 

5,438

 

 

 

947

 

Total cost of revenue

 

 

24,871

 

 

 

8,176

 

Gross profit

 

 

10,230

 

 

 

2,635

 

Operating expenses:

 

 

 

 

 

 

 

 

General and administrative

 

 

3,111

 

 

 

2,411

 

Sales and marketing

 

 

3,245

 

 

 

1,854

 

Research and development

 

 

456

 

 

 

415

 

Total operating expenses

 

 

6,812

 

 

 

4,680

 

Income (loss) from operations

 

 

3,418

 

 

 

(2,045

)

Other income (expense):

 

 

 

 

 

 

 

 

Other income

 

 

1

 

 

 

9

 

Interest expense

 

 

(19

)

 

 

(49

)

Amortization of debt issue costs

 

 

(16

)

 

 

(61

)

Total other expense

 

 

(34

)

 

 

(101

)

Income (loss) before income tax

 

 

3,384

 

 

 

(2,146

)

Income tax expense

 

 

874

 

 

 

73

 

Net income (loss)

 

$

2,510

 

 

$

(2,219

)

Basic net income (loss) per share attributable to

   common shareholders

 

$

0.08

 

 

$

(0.07

)

Weighted-average common shares outstanding

 

 

30,860,178

 

 

 

30,352,217

 

Diluted net income (loss) per share

 

$

0.08

 

 

$

(0.07

)

Weighted-average common shares and share

   equivalents outstanding

 

 

31,289,924

 

 

 

30,352,217

 

 

The accompanying notes are an integral part of these Condensed Consolidated Statements.

4


 

ORION ENERGY SYSTEMS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(in thousands, except share amounts)

 

 

 

Shareholders’ Equity

 

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Additional

Paid-in

Capital

 

 

Treasury

Stock

 

 

Retained

Deficit

 

 

Total

Shareholders’

Equity

 

Balance, March 31, 2021

 

 

30,805,300

 

 

$

157,485

 

 

$

(36,240

)

 

$

(63,171

)

 

$

58,074

 

Exercise of stock options for cash

 

 

24,045

 

 

 

101

 

 

 

 

 

 

 

 

 

101

 

Shares issued under Employee Stock Purchase

   Plan

 

 

496

 

 

 

 

 

 

3

 

 

 

 

 

 

3

 

Stock-based compensation

 

 

171,470

 

 

 

160

 

 

 

 

 

 

 

 

 

160

 

Employee tax withholdings on stock-based

   compensation

 

 

(610

)

 

 

 

 

 

(4

)

 

 

 

 

 

(4

)

Net income

 

 

 

 

 

 

 

 

 

 

 

2,510

 

 

 

2,510

 

Balance, June 30, 2021

 

 

31,000,701

 

 

$

157,746

 

 

$

(36,241

)

 

$

(60,661

)

 

$

60,844

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders’ Equity

 

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Additional

Paid-in

Capital

 

 

Treasury

Stock

 

 

Retained

Deficit

 

 

Total

Shareholders’

Equity

 

Balance, March 31, 2020

 

 

30,265,997

 

 

$

156,503

 

 

$

(36,163

)

 

$

(89,305

)

 

$

31,035

 

Exercise of stock options for cash

 

 

20,000

 

 

 

41

 

 

 

 

 

 

 

 

 

41

 

Shares issued under Employee Stock Purchase

   Plan

 

 

458

 

 

 

 

 

 

2

 

 

 

 

 

 

2

 

Stock-based compensation

 

 

342,780

 

 

 

208

 

 

 

 

 

 

 

 

 

208

 

Employee tax withholdings on stock-based

   compensation

 

 

(4,346

)

 

 

 

 

 

(18

)

 

 

 

 

 

(18

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

(2,219

)

 

 

(2,219

)

Balance, June 30, 2020

 

 

30,624,889

 

 

$

156,752

 

 

$

(36,179

)

 

$

(91,524

)

 

$

29,049

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these Condensed Consolidated Statements.

5


 

ORION ENERGY SYSTEMS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

 

 

 

Three Months Ended June 30,

 

 

 

2021

 

 

2020

 

Operating activities

 

 

 

 

 

 

 

 

Net income (loss)

 

$

2,510

 

 

$

(2,219

)

Adjustments to reconcile net income (loss) to net cash used in

operating activities:

 

 

 

 

 

 

 

 

Depreciation

 

 

309

 

 

 

292

 

Amortization of intangible assets

 

 

67

 

 

 

78

 

Stock-based compensation

 

 

160

 

 

 

208

 

Amortization of debt issue costs

 

 

16

 

 

 

61

 

Deferred income tax

 

 

872

 

 

 

 

Provision for inventory reserves

 

 

134

 

 

 

27

 

Other

 

 

 

 

 

9

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(5,934

)

 

 

5,483

 

Revenue earned but not billed

 

 

1,886

 

 

 

(1,819

)

Inventories

 

 

(1,232

)

 

 

(2,590

)

Prepaid expenses and other assets

 

 

251

 

 

 

236

 

Accounts payable

 

 

1,447

 

 

 

(6,119

)

Accrued expenses and other

 

 

(3,550

)

 

 

(1,322

)

Deferred revenue, current and long-term

 

 

98

 

 

 

(34

)

Net cash used in operating activities

 

 

(2,966

)

 

 

(7,709

)

Investing activities

 

 

 

 

 

 

 

 

Cash paid for investment

 

 

(500

)

 

 

 

Purchases of property and equipment

 

 

(152

)

 

 

(221

)

Additions to patents and licenses

 

 

(4

)

 

 

(23

)

Net cash used in investing activities

 

 

(656

)

 

 

(244

)

Financing activities

 

 

 

 

 

 

 

 

Payment of long-term debt

 

 

(4

)

 

 

(25

)

Proceeds from revolving credit facility

 

 

 

 

 

 

Payments of revolving credit facility

 

 

 

 

 

(10,013

)

Payments to settle employee tax withholdings on stock-based compensation

 

 

(4

)

 

 

(19

)

Deferred financing costs

 

 

(4

)

 

 

 

Net proceeds from employee equity exercises

 

 

104

 

 

 

43

 

Net cash provided by (used in) financing activities

 

 

92

 

 

 

(10,014

)

Net decrease in cash and cash equivalents

 

 

(3,530

)

 

 

(17,967

)

Cash and cash equivalents at beginning of period

 

 

19,393

 

 

 

28,751

 

Cash and cash equivalents at end of period

 

$

15,863

 

 

$

10,784

 

Supplemental disclosure of non-cash investing and financing activities:

 

 

 

 

 

 

 

 

Operating lease assets obtained in exchange for new operating lease liabilities

 

$

 

 

$

355

 

 

The accompanying notes are an integral part of these Condensed Consolidated Statements.

 

6


 

 

ORION ENERGY SYSTEMS, INC. AND SUBSIDIARIES

UNAUDITED NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 — DESCRIPTION OF BUSINESS

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.

 

NOTE 2 — IMPACT OF COVID-19

The COVID-19 pandemic has disrupted business, trade, commerce, financial and credit markets, in the U.S. and globally. Orion’s business was adversely impacted by measures taken by government entities and others to control the spread of the virus beginning in March 2020, the last month of Orion’s fiscal 2020 year, and continuing most significantly into the second quarter of fiscal 2021. During the second half of fiscal 2021, Orion experienced a rebound in business. Project installations resumed for Orion’s largest customer and installations for a new large specialty retail customer began, with no further significant COVID-19 impacts. However, some customers continue to refrain from awarding new projects and potential future risks remain due to the COVID-19 pandemic.

As an essential business, Orion provides products and services to ensure energy and lighting infrastructure and Orion therefore continued to operate throughout the pandemic. If there is a resurgence of the COVID-19 pandemic, Orion’s markets and operations could be impacted and there could be a further material adverse financial impact, including supply chain disruption for certain components.

NOTE 3 — 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.

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 statement have been included. Interim results are not necessarily indicative of results that may be expected for the fiscal year ending March 31, 2022 or other interim periods.

The Condensed Consolidated Balance Sheet at March 31, 2021 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, 2021 filed with the SEC on June 1, 2021.

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, allowance for doubtful

7


 

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 three 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 lamps and LED components, from multiple suppliers. For the three months ended June 30, 2021, one supplier accounted for 12.8% of total cost of revenue. For the three months ended June 30, 2020, three suppliers accounted for 16.1% and 12.5% and 10.0%, of total cost of revenue, respectively.

For the three months ended June 30, 2021, two customers accounted for 50.9% and 14.2% of total revenue, respectively. For the three months ended June 30, 2020, one customer accounted for 32.9 % of total revenue.

As of June 30, 2021, two customers accounted for 56.9% and 17.4% of accounts receivable, respectively. As of March 31, 2021, three customers accounted for 33.9%, 16.4% and 10.1% of accounts receivable, respectively.

Recent Accounting Pronouncements

 

Issued: Not Yet Adopted

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which requires an entity to assess impairment of its financial instruments based on its estimate of expected credit losses. Since the issuance of ASU 2016-13, the FASB released several amendments to improve and clarify the implementation guidance. The provisions of ASU 2016-13 and the related amendments are effective for Orion for fiscal years (and interim reporting periods within those years) beginning after December 15, 2022. Entities are required to apply these changes through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. Orion is currently evaluating the impact of adoption of this standard on its consolidated statements of operations, cash flows, and the related footnote disclosures.

8


 

NOTE 4 — REVENUE

The following tables provide detail of Orion’s total revenues for the three months ended June 30, 2021 and June 30, 2020 (dollars in thousands):

 

 

 

Three Months Ended June 30, 2021

 

 

 

Product

 

 

Services

 

 

Total

 

Revenue from contracts with customers:

 

 

 

 

 

 

 

 

 

 

 

 

Lighting revenues, by end user

 

 

 

 

 

 

 

 

 

 

 

 

Federal government

 

$

493

 

 

$

270

 

 

$

763

 

Commercial and industrial

 

 

26,964

 

 

 

6,585

 

 

 

33,549

 

Total lighting

 

 

27,457

 

 

 

6,855

 

 

 

34,312

 

Solar energy related revenues

 

 

16

 

 

 

 

 

 

16

 

Total revenues from contracts with customers

 

 

27,473

 

 

 

6,855

 

 

 

34,328

 

Revenue accounted for under other guidance

 

 

773

 

 

 

 

 

 

773

 

Total revenue

 

$

28,246

 

 

$

6,855

 

 

$

35,101

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30, 2020

 

 

 

Product

 

 

Services

 

 

Total

 

Revenue from contracts with customers:

 

 

 

 

 

 

 

 

 

 

 

 

Lighting revenues, by end user

 

 

 

 

 

 

 

 

 

 

 

 

Federal government

 

$

50

 

 

$

 

 

$

50

 

Commercial and industrial

 

 

8,709

 

 

 

1,110

 

 

 

9,819

 

Total lighting

 

 

8,759

 

 

 

1,110

 

 

 

9,869

 

Solar energy related revenues

 

 

22

 

 

 

 

 

 

22

 

Total revenues from contracts with customers

 

 

8,781

 

 

 

1,110

 

 

 

9,891

 

Revenue accounted for under other guidance

 

 

920

 

 

 

 

 

 

920

 

Total revenue

 

$

9,701

 

 

$

1,110

 

 

$

10,811

 

From time to time, Orion sells the receivables from one customer to a financing institution. The total amount received from the sales of these receivables during the three months ended June 30, 2021, was $2.4 million. Orion’s losses on these sales were $2 thousand, for the three months ended June 30, 2021 and are included in Interest expense in the Condensed Consolidated Statements of Operations. The total amount received from the sales of these receivables during the three months ended three months ended June 30, 2020 was $0.2 million. Orion’s gains on these sales were $9 thousand for the three months ended June 30, 2020 and are included in Interest expense in the Condensed Consolidated Statement of Operations.

The following chart shows the balance of Orion’s receivables arising from contracts with customers, contract assets and contract liabilities as of June 30, 2021 and March 31, 2021 (dollars in thousands):

 

 

 

June 30,

2021

 

 

March 31,

2021

 

Accounts receivable, net

 

$

19,506

 

 

$

13,572

 

Contract assets

 

$

1,041

 

 

$

2,367

 

Contract liabilities

 

$

128

 

 

$

11

 

 

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.

9


 

 

 

NOTE 5 — ACCOUNTS RECEIVABLE, NET

As of June 30, 2021, and March 31, 2020, Orion's Accounts receivable and Allowance for doubtful accounts balances were as follows (dollars in thousands):

 

 

 

June 30,

2021

 

 

March 31,

2021

 

Accounts receivable, gross

 

$

19,514

 

 

$

13,583

 

Allowance for doubtful accounts

 

 

(8

)

 

 

(11

)

Accounts receivable, net

 

$

19,506

 

 

$

13,572

 

 

NOTE 6 — INVENTORIES, NET

As of June 30, 2021, and March 31, 2020, Orion's Inventory balances were as follows (dollars in thousands):

 

 

 

Cost

 

 

Excess and

Obsolescence

Reserve

 

 

Net

 

As of June 30, 2021

 

 

 

 

 

 

 

 

 

 

 

 

Raw materials and components

 

$

13,717

 

 

$

(1,063

)

 

$

12,654

 

Work in process

 

 

808

 

 

 

(368

)

 

 

440

 

Finished goods

 

 

8,142

 

 

 

(589

)

 

 

7,553

 

Total

 

$

22,667

 

 

$

(2,020

)

 

$

20,647

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of March 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

Raw materials and components

 

$

12,410

 

 

$

(967

)

 

$

11,443

 

Work in process

 

 

758

 

 

 

(356

)

 

 

402

 

Finished goods

 

 

8,295

 

 

 

(586

)

 

 

7,709

 

Total

 

$

21,463

 

 

$

(1,909

)

 

$

19,554

 

 

NOTE 7 — PREPAID EXPENSES AND OTHER CURRENT ASSETS

 

Prepaid expenses and other current assets consist primarily of prepaid insurance premiums, debt issue costs, and sales tax receivable.

NOTE 8 — PROPERTY AND EQUIPMENT, NET

As of June 30, 2021, and March 31, 2021, Property and equipment, net, included the following (dollars in thousands):

 

 

 

June 30,

2021

 

 

March 31,

2021

 

Land and land improvements

 

$

433

 

 

$

433

 

Buildings and building improvements

 

 

9,481

 

 

 

9,477

 

Furniture, fixtures and office equipment

 

 

7,489

 

 

 

7,372

 

Leasehold improvements

 

 

425

 

 

 

340

 

Equipment leased to customers

 

 

4,997

 

 

 

4,997

 

Plant equipment

 

 

12,477

 

 

 

12,451

 

Construction in Progress

 

 

4

 

 

 

135

 

Gross property and equipment

 

 

35,306

 

 

 

35,205

 

Less: accumulated depreciation

 

 

(24,053

)

 

 

(23,836

)

Total property and equipment, net

 

$

11,253

 

 

$

11,369

 

 

10


 

 

Orion recorded depreciation expense of $0.3 million for both the three months ended June 30, 2021 and 2020.

 

NOTE 9 — LEASES

From time to time, Orion leases assets from third parties. Orion also leases certain assets to third parties.

Orion accounts for leases in accordance with ASC 842. Under ASC 842, both finance and operating lease ROU assets and lease liabilities for leases with initial terms in excess of 12 months are recognized at the commencement date based on the present value of lease payments over the lease term. Orion recognizes lease expense for leases with an initial term of 12 months or less, referred to as short term leases, on a straight-line basis over the lease term.

A summary of Orion’s assets leased from third parties follows (dollars in thousands):

 

 

 

Balance sheet classification

 

June 30, 2021

 

 

March 31, 2021

 

Assets

 

 

 

 

 

 

 

 

 

 

Operating lease assets

 

Other long-term assets

 

$

2,451

 

 

$

2,585