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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, 2022

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)

 

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 31,250,071 shares of the Registrant’s common stock outstanding on July 29, 2022.

 

 

 


 

ORION ENERGY SYSTEMS, INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED JUNE 30, 2022

TABLE OF CONTENTS

 

 

 

Page(s)

PART I FINANCIAL INFORMATION

3

ITEM 1.

Financial Statements (unaudited)

3

 

Condensed Consolidated Balance Sheets as of June 30, 2022 and March 31, 2022

3

 

Condensed Consolidated Statements of Operations for the Three Months Ended June 30, 2022 and June 30, 2021

4

 

Condensed Consolidated Statements of Shareholders’ Equity for the Three Months Ended June 30, 2022 and June 30, 2021

5

 

Condensed Consolidated Statements of Cash Flows for the Three Months Ended June 30, 2022 and June 30, 2021

6

 

Notes to the Condensed Consolidated Financial Statements

7

ITEM 2.

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

20

ITEM 3.

Quantitative and Qualitative Disclosures about Market Risk

27

ITEM 4.

Controls and Procedures

27

PART II OTHER INFORMATION

28

ITEM 1.

Legal Proceedings

28

ITEM 1A.

Risk Factors

28

ITEM 2.

Unregistered Sales of Equity Securities and Use of Proceeds

28

ITEM 5.

Other Information

28

ITEM 6.

Exhibits

29

SIGNATURE

30

 

 


 

 

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, 2022

 

 

March 31, 2022

 

Assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

9,424

 

 

$

14,466

 

Accounts receivable, net

 

 

11,735

 

 

 

11,899

 

Revenue earned but not billed

 

 

1,894

 

 

 

2,421

 

Inventories, net

 

 

18,753

 

 

 

19,832

 

Prepaid expenses and other current assets

 

 

2,624

 

 

 

2,631

 

Total current assets

 

 

44,430

 

 

 

51,249

 

Property and equipment, net

 

 

11,061

 

 

 

11,466

 

Goodwill

 

 

622

 

 

 

350

 

Other intangible assets, net

 

 

2,330

 

 

 

2,404

 

Deferred tax assets

 

 

18,783

 

 

 

17,805

 

Other long-term assets

 

 

3,375

 

 

 

3,543

 

Total assets

 

$

80,601

 

 

$

86,817

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

 

 

Accounts payable

 

$

7,411

 

 

$

9,855

 

Accrued expenses and other

 

 

7,362

 

 

 

8,427

 

Deferred revenue, current

 

 

127

 

 

 

76

 

Current maturities of long-term debt

 

 

16

 

 

 

16

 

Total current liabilities

 

 

14,916

 

 

 

18,374

 

Revolving credit facility

 

 

 

 

 

 

Long-term debt, less current maturities

 

 

15

 

 

 

19

 

Deferred revenue, long-term

 

 

545

 

 

 

564

 

Other long-term liabilities

 

 

2,553

 

 

 

2,760

 

Total liabilities

 

 

18,029

 

 

 

21,717

 

Commitments and contingencies

 

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

 

 

 

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

   June 30, 2022 and March 31, 2022; no shares issued and outstanding at

   June 30, 2022 and March 31, 2022

 

 

 

 

 

 

Common stock, no par value: Shares authorized: 200,000,000 at June 30, 2022

   and March 31, 2022; shares issued: 40,723,299 at June 30, 2022 and

   40,570,909 at March 31, 2022; shares outstanding: 31,250,071 at

   June 30, 2022 and 31,097,872 at March 31, 2022

 

 

 

 

 

 

Additional paid-in capital

 

 

158,727

 

 

 

158,419

 

Treasury stock, common shares: 9,476,228 at June 30, 2022 and 9,473,037 at

   March 31, 2022

 

 

(36,240

)

 

 

(36,239

)

Retained deficit

 

 

(59,915

)

 

 

(57,080

)

Total shareholders’ equity

 

 

62,572

 

 

 

65,100

 

Total liabilities and shareholders’ equity

 

$

80,601

 

 

$

86,817

 

 

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,

 

 

 

2022

 

 

2021

 

Product revenue

 

$

13,483

 

 

$

28,246

 

Service revenue

 

 

4,423

 

 

 

6,855

 

Total revenue

 

 

17,906

 

 

 

35,101

 

Cost of product revenue

 

 

10,385

 

 

 

19,433

 

Cost of service revenue

 

 

3,967

 

 

 

5,438

 

Total cost of revenue

 

 

14,352

 

 

 

24,871

 

Gross profit

 

 

3,554

 

 

 

10,230

 

Operating expenses:

 

 

 

 

 

 

 

 

General and administrative

 

 

3,754

 

 

 

3,111

 

Acquisition costs

 

 

14

 

 

 

 

Sales and marketing

 

 

2,889

 

 

 

3,245

 

Research and development

 

 

514

 

 

 

456

 

Total operating expenses

 

 

7,171

 

 

 

6,812

 

(Loss) income from operations

 

 

(3,617

)

 

 

3,418

 

Other income (expense):

 

 

 

 

 

 

 

 

Other (expense) income

 

 

(1

)

 

 

1

 

Interest expense

 

 

(17

)

 

 

(19

)

Amortization of debt issue costs

 

 

(15

)

 

 

(16

)

Total other expense

 

 

(33

)

 

 

(34

)

(Loss) income before income tax

 

 

(3,650

)

 

 

3,384

 

Income tax (benefit) expense

 

 

(815

)

 

 

874

 

Net (loss) income

 

$

(2,835

)

 

$

2,510

 

Basic net (loss) income per share attributable to

   common shareholders

 

$

(0.09

)

 

$

0.08

 

Weighted-average common shares outstanding

 

 

31,138,398

 

 

 

30,860,178

 

Diluted net (loss) income per share

 

$

(0.09

)

 

$

0.08

 

Weighted-average common shares and share

   equivalents outstanding

 

 

31,138,398

 

 

 

31,289,924

 

 

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, 2022

 

 

31,097,872

 

 

$

158,419

 

 

$

(36,239

)

 

$

(57,080

)

 

$

65,100

 

Exercise of stock options for cash

 

 

26,646

 

 

 

54

 

 

 

 

 

 

 

 

 

54

 

Shares issued under Employee Stock Purchase

   Plan

 

 

443

 

 

 

 

 

 

1

 

 

 

 

 

 

1

 

Stock-based compensation

 

 

125,744

 

 

 

254

 

 

 

 

 

 

 

 

 

254

 

Employee tax withholdings on stock-based

   compensation

 

 

(634

)

 

 

 

 

 

(2

)

 

 

 

 

 

(2

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

(2,835

)

 

 

(2,835

)

Balance, June 30, 2022

 

 

31,250,071

 

 

$

158,727

 

 

$

(36,240

)

 

$

(59,915

)

 

$

62,572

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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,

 

 

 

2022

 

 

2021

 

Operating activities

 

 

 

 

 

 

 

 

Net (loss) income

 

$

(2,835

)

 

$

2,510

 

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

operating activities:

 

 

 

 

 

 

 

 

Depreciation

 

 

354

 

 

 

309

 

Amortization of intangible assets

 

 

52

 

 

 

67

 

Stock-based compensation

 

 

254

 

 

 

160

 

Amortization of debt issue costs

 

 

15

 

 

 

16

 

Deferred income tax

 

 

(978

)

 

 

872

 

Gain on sale of property and equipment

 

 

(1

)

 

 

 

Provision for inventory reserves

 

 

100

 

 

 

134

 

Other

 

 

(9

)

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

109

 

 

 

(5,934

)

Revenue earned but not billed

 

 

527

 

 

 

1,886

 

Inventories

 

 

979

 

 

 

(1,232

)

Prepaid expenses and other assets

 

 

160

 

 

 

251

 

Accounts payable

 

 

(2,491

)

 

 

1,447

 

Accrued expenses and other

 

 

(1,273

)

 

 

(3,550

)

Deferred revenue, current and long-term

 

 

32

 

 

 

98

 

Net cash used in operating activities

 

 

(5,005

)

 

 

(2,966

)

Investing activities

 

 

 

 

 

 

 

 

Cash to fund acquisition

 

 

55

 

 

 

 

Cash paid for investment

 

 

 

 

 

(500

)

Purchases of property and equipment

 

 

(139

)

 

 

(152

)

Additions to patents and licenses

 

 

(1

)

 

 

(4

)

Net cash used in investing activities

 

 

(85

)

 

 

(656

)

Financing activities

 

 

 

 

 

 

 

 

Payment of long-term debt

 

 

(4

)

 

 

(4

)

Proceeds from revolving credit facility

 

 

 

 

 

 

Payments of revolving credit facility

 

 

 

 

 

 

Payments to settle employee tax withholdings on stock-based compensation

 

 

(2

)

 

 

(4

)

Deferred financing costs

 

 

 

 

 

(4

)

Net proceeds from employee equity exercises

 

 

54

 

 

 

104

 

Net cash provided by financing activities

 

 

48

 

 

 

92

 

Net decrease in cash and cash equivalents

 

 

(5,042

)

 

 

(3,530

)

Cash and cash equivalents at beginning of period

 

 

14,466

 

 

 

19,393

 

Cash and cash equivalents at end of period

 

$

9,424

 

 

$

15,863

 

 

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 provider of energy-efficient LED lighting, controls and Internet of Things (“IoT”) systems, including turnkey project implementation, program management and system maintenance 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 customers, suppliers, government entities and others to control the spread of the virus beginning in March 2020, the last few weeks of Orion’s 2020 fiscal year, and continuing most significantly into the second quarter of fiscal 2021. During the third quarter of fiscal 2021, Orion experienced a rebound in business as project installations resumed for its largest customer. However, potential future risks remain due to the COVID-19 pandemic. It is not possible to predict the overall impact, including the economic and regulatory impact, the COVID-19 pandemic will have on Orion’s business, liquidity, capital resources or financial results. If the COVID-19 pandemic becomes more pronounced in Orion’s markets or experiences a resurgence in markets recovering from the spread of COVID-19, Orion’s results of operation would likely be materially adversely affected.

NOTE 3 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The consolidated financial statements include the accounts of Orion 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, 2023 or other interim periods.

The Condensed Consolidated Balance Sheet March 31, 2022 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, 2022 filed with the SEC on June 10, 2022.

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 accounts, accruals for warranty and loss contingencies, income taxes, impairment analyses, and certain equity transactions. Accordingly, actual results could differ from those estimates.

7


 

Concentration of Credit Risk and Other Risks and Uncertainties

Orion's cash is primarily deposited with one financial institution. At times, deposits in this institution exceeds 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, 2022, no suppliers accounted for more than 10.0% of total cost of revenue. 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, 2022, one customer accounted for 13.8% of total revenue. For the three months ended June 30, 2021, two customers accounted for 50.9 % and 14.2% of total revenue, respectively.

As of June 30, 2022, one customer accounted for 10.8% of accounts receivable. As of March 31, 2022, two customers accounted for 11.8% and 10.4% 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

Orion generates revenue primarily by selling manufactured or sourced commercial lighting fixtures and components, installing these fixtures in customer’s facilities, and providing maintenance services including repairs and replacements for the lighting and related electrical components. 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 we refer to as a performance obligation) is transferred to a customer at an amount that reflects the consideration Orion expects to receive in exchange for those goods or services.

During the fourth quarter of fiscal 2022, Orion acquired Stay-Lite Lighting, which provides lighting and electrical services.  The results of Stay-Lite Lighting are included in the Orion Services Group segment and accelerate the growth of Orion’s maintenance services customer offering.  The disaggregated revenue table provides total revenue from the maintenance services offering.

Revenue from the maintenance offering that includes both the sale of Orion manufactured or sourced product and service is allocated between the product and service performance obligations based on relative standalone selling prices, and is recorded in Product revenue and Service revenue, respectively, in the Condensed Consolidated Statement of Operations.

The following tables provide detail of Orion’s total revenue for the three months ended June 30, 2022 and June 30, 2021 (dollars in thousands):

 

 

 

Three Months Ended June 30, 2022

 

 

 

Product

 

 

Services

 

 

Total

 

Revenue from contracts with customers:

 

 

 

 

 

 

 

 

 

 

 

 

Lighting product and installation

 

$

12,404

 

 

$

1,358

 

 

$

13,762

 

Maintenance services

 

 

989

 

 

 

3,065

 

 

 

4,054

 

Solar energy related revenues

 

 

 

 

 

 

 

 

 

Total revenues from contracts with customers

 

 

13,393

 

 

 

4,423

 

 

 

17,816

 

Revenue accounted for under other guidance

 

 

90

 

 

 

 

 

 

90

 

Total revenue

 

$

13,483

 

 

$

4,423

 

 

$

17,906

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30, 2021

 

 

 

Product

 

 

Services

 

 

Total

 

Revenue from contracts with customers:

 

 

 

 

 

 

 

 

 

 

 

 

Lighting product and installation

 

$

27,359

 

 

$

6,661

 

 

$

34,020

 

Maintenance services

 

 

98

 

 

 

194

 

 

 

292

 

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

 

From time to time, Orion sells the receivables from one customer to a financing institution. The was no activity during the three months ended June 30, 2022. 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 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, 2022 and March 31, 2022 (dollars in thousands):

 

 

 

June 30,

2022

 

 

March 31,

2022

 

Accounts receivable, net

 

$

11,735

 

 

$

11,899

 

Contract assets

 

$

1,704

 

 

$

1,966

 

Contract liabilities

 

$

(52

)

 

$

 

 

9


 

 

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.

 

 

NOTE 5 — ACCOUNTS RECEIVABLE, NET

As of June 30, 2022, and March 31, 2022, Orion's accounts receivable and allowance for doubtful accounts balances were as follows (dollars in thousands):

 

 

 

June 30,

2022

 

 

March 31,

2022

 

Accounts receivable, gross

 

$

11,753

 

 

$

11,907

 

Allowance for doubtful accounts

 

 

(18

)

 

 

(8

)

Accounts receivable, net

 

$

11,735

 

 

$

11,899

 

 

NOTE 6 — INVENTORIES, NET

As of June 30, 2022, and March 31, 2022, Orion's inventory balances were as follows (dollars in thousands):

 

 

 

Cost

 

 

Excess and

Obsolescence

Reserve

 

 

Net

 

As of June 30, 2022

 

 

 

 

 

 

 

 

 

 

 

 

Raw materials and components

 

$

10,462

 

 

$

(799

)

 

$

9,663

 

Work in process

 

 

1,356

 

 

 

(178

)

 

 

1,178

 

Finished goods

 

 

8,506

 

 

 

(594

)

 

 

7,912

 

Total

 

$

20,324

 

 

$

(1,571

)

 

$

18,753

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of March 31, 2022

 

 

 

 

 

 

 

 

 

 

 

 

Raw materials and components

 

$

10,781

 

 

$

(1,140

)

 

$

9,641

 

Work in process

 

 

1,529

 

 

 

(267

)

 

 

1,262

 

Finished goods

 

 

9,593

 

 

 

(664

)

 

 

8,929

 

Total

 

$

21,903

 

 

$

(2,071

)

 

$

19,832

 

 

NOTE 7 — PREPAID EXPENSES AND OTHER CURRENT ASSETS

 

As of June 30, 2022, and March 31, 2022, prepaid expenses and other current assets include the following (dollars in thousands):

 

 

June 30,

2022

 

 

March 31,

2022

 

Payroll tax credit

 

$

1,587

 

 

$

1,587

 

Other prepaid expenses

 

 

1,037

 

 

 

1,044

 

Total

 

$

2,624

 

 

$

2,631

 

 

10


 

 

NOTE 8 — PROPERTY AND EQUIPMENT, NET

As of June 30, 2022, and March 31, 2022, property and equipment, net, included the following (dollars in thousands):

 

 

 

June 30,

2022

 

 

March 31,

2022

 

Land and land improvements

 

$

433

 

 

$

433

 

Buildings and building improvements

 

 

9,491

 

 

 

9,491

 

Furniture, fixtures and office equipment

 

 

7,690

 

 

 

7,650

 

Leasehold improvements

 

 

490

 

 

 

490

 

Equipment leased to customers

 

 

4,997

 

 

 

4,997

 

Plant equipment

 

 

11,135

 

 

 

11,130

 

Vehicles

 

 

568

 

 

 

796

 

Construction in Progress

 

 

134

 

 

 

3

 

Gross property and equipment

 

 

34,938

 

 

 

34,990

 

Less: accumulated depreciation

 

 

(23,877

)

 

 

(23,524

)

Total property and equipment, net

 

$

11,061

 

 

$

11,466

 

 

 

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, 2022

 

 

March 31, 2022

 

Assets

 

 

 

 

 

 

 

 

 

 

Operating lease assets

 

Other long-term assets

 

$

2,283

 

 

$

2,440

 

Liabilities