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 December 31, ~~2022~~2023

☐	Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from _____ to _____.

Commission File Number: 0-19672

American Superconductor Corporation

(Exact name of registrant as specified in its charter)

Delaware	04-2959321
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

114 East Main St. Ayer, Massachusetts	01432
(Address of principal executive offices)	(Zip Code)

(978) 842-3000

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

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, $0.01 par value per share	AMSC	Nasdaq Global Select 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 of this chapter) during the preceding 12 months (or for such 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, a 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 ☒

Shares outstanding of the Registrant’s common stock:

Common Stock, par value $0.01 per share		~~29,530,137~~30,736,347
Class		Outstanding as of January 3019, ~~2023~~2024

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

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

FOR THE ~~THREE~~Three and ~~NINE MONTHS ENDED~~Nine Months Ended December 31, ~~2022~~2023 AND ~~2021~~2022

	*Common Stock*					*Additional*						*Accumulated Other*						*Total*			*Common Stock*				*Additional*						*Accumulated Other*						*Total*
	*Number of Shares*			*Par Value*		*Paid-in Capital*			*Treasury Stock*			*Comprehensive Loss*			*Accumulated Deficit*			*Stockholders' Equity*			*Number of Shares*		*Par Value*		*Paid-in Capital*			*Treasury Stock*			*Comprehensive Income (Loss)*			*Accumulated Deficit*			*Stockholders' Equity*
Balance at March 31, 2022		28,920		$	289	$	1,133,536		$	(3,639	)	$	(291	)	$	(1,020,506	)	$	109,389
Issuance of common stock - restricted shares, net of forfeited shares		(9	)		—		—			—			—			—			—
Balance at March 31, 2023																						29,937	$	299	$	1,139,113		$	(3,639	)	$	1,571		$	(1,055,547	)	$	81,797
Issuance of common stock – restricted shares																						699		7		(7	)		—			—			—			—
Stock-based compensation expense		—			—		1,033			—			—			—			1,033			—		—		1,357			—			—			—			1,357
Issuance of stock for 401(k) match		28			—		138			—			—			—			138
Issuance of common stock for 401(k) match																						33		1		163			—			—			—			164
Cumulative translation adjustment		—			—		—			—			63			—			63			—		—		—			—			(2	)		—			(2	)
Net loss		—			—		—			—			—			(8,710	)		(8,710	)		—		—		—			—			—			(5,398	)		(5,398	)
Balance at June 30, 2022		28,939		$	289	$	1,134,707		$	(3,639	)	$	(228	)	$	(1,029,216	)	$	101,913
Issuance of common stock - ESPP		34			—		127			—			—			—			127
Balance at June 30, 2023																						30,669	$	307	$	1,140,626		$	(3,639	)	$	1,569		$	(1,060,945	)	$	77,918
Issuance of common stock – ESPP																						21		—		136			—			—			—			136
Issuance of common stock - restricted shares		331			3		(3	)		—			—			—			—			9		—		—			—			—			—			-
Stock-based compensation expense		—			—		1,019			—			—			—			1,019			—		—		1,111			—			—			—			1,111
Issuance of stock for 401(k) match		33			1		178			—			—			—			179
Issuance of common stock for 401(k) match																						17		—		150			—			—			—			150
Cumulative translation adjustment		—			—					—			2,026			—			2,026			—		—		—			—			64			—			64
Net loss		—			—					—			—			(9,881	)		(9,881	)		—		—		—			—			—			(2,485	)		(2,485	)
Balance at September 30, 2022		29,337		$	293	$	1,136,028		$	(3,639	)	$	1,798		$	(1,039,097	)	$	95,383
Issuance of common stock - restricted shares		550			6		(6	)		—			—			—			—
Balance at September 30, 2023																						30,716	$	307	$	1,142,023		$	(3,639	)	$	1,633		$	(1,063,430	)	$	76,894
Stock-based compensation expense		—			—		1,440			—			—			—			1,440			-		—		1,140			—			—			—			1,140
Issuance of stock for 401(k) match		41			—		160			—			—			—			160
Issuance of common stock for 401(k) match																						18		—		154			—			—			—			154
Issuance of common stock for contingent consideration																						400		4		3,088			—			—			—			3,092
Cumulative translation adjustment		—			—		—			—			(195	)		—			(195	)		—		—		—			—			(106	)		—			(106	)
Net loss		—			—		—			—			—			(9,581	)		(9,581	)		—		—		—			—			—			(1,649	)		(1,649	)
Balance at December 31, 2022		29,928		$	299	$	1,137,622		$	(3,639	)	$	1,603		$	(1,048,678	)	$	87,207
Balance at December 31, 2023																						31,134	$	311	$	1,146,405		$	(3,639	)	$	1,527		$	(1,065,079	)	$	79,525

Common Stock

Additional
Accumulated Other
Total

Number of Shares Par Value Paid-in Capital Treasury Stock Comprehensive Loss Accumulated Deficit Stockholders' Equity
Balance at March 31, 2021
27,988 $ 280 $ 1,121,495 $ (3,593 ) $ (277 ) $ (1,001,313 ) $ 116,592
Issuance of common stock - bonus payout
111 1 1,681 — — — 1,682
Issuance of common stock - restricted shares
318 3 (3 ) — — — —
Stock-based compensation expense
— — 1,292 — — — 1,292
Issuance of stock for 401(k) match
7 — 112 — — — 112
Neeltran acquisition
302 3 4,384 — — — 4,387
Repurchase of treasury stock
— — — (46 ) — — (46 )
Cumulative translation adjustment
— — — — (63 ) — (63 )
Net loss
— — — — — (5,403 ) (5,403 )
Balance at June 30, 2021
28,726 $ 287 $ 1,128,961 $ (3,639 ) $ (340 ) $ (1,006,716 ) $ 118,553
Issuance of common stock - ESPP
10 — 125 — — — 125
Issuance of common stock - bonus payout
47 1 597 — — — 598
Stock-based compensation expense
— — 1,101 — — — 1,101
Issuance of stock for 401(k) match
10 — 137 — — — 137
Cumulative translation adjustment
— — — — 24 — 24
Net loss
— — — — — (4,434 ) (4,434 )
Balance at September 30, 2021
28,793 $ 288 $ 1,130,921 $ (3,639 ) $ (316 ) $ (1,011,150 ) $ 116,104
Issuance of common stock - restricted shares
54 1 (1 ) — — — —
Stock-based compensation expense
— — 1,120 — — — 1,120
Issuance of stock for 401(k) match
8 — 115 — — — 115
Cumulative translation adjustment
— — — — 20 — 20
Net loss
— — — — — (4,324 ) (4,324 )
Balance at December 31, 2021
28,855 $ 289 $ 1,132,155 $ (3,639 ) $ (296 ) $ (1,015,474 ) $ 113,035

	*Common Stock*					*Additional*						*Accumulated Other*						*Total*
	*Number of Shares*			*Par Value*		*Paid-in Capital*			*Treasury Stock*			*Comprehensive Income (Loss)*			*Accumulated Deficit*			*Stockholders' Equity*
Balance at March 31, 2022		28,920		$	289	$	1,133,536		$	(3,639	)	$	(291	)	$	(1,020,506	)	$	109,389
Issuance of common stock – restricted shares, net of forfeited shares		(9	)		—		—			—			—			—			—
Stock-based compensation expense		—			—		1,033			—			—			—			1,033
Issuance of common stock for 401(k) match		28			—		138			—			—			—			138
Cumulative translation adjustment		—			—		—			—			63			—			63
Net loss		—			—		—			—			—			(8,710	)		(8,710	)
Balance at June 30, 2022		28,939		$	289	$	1,134,707		$	(3,639	)	$	(228	)	$	(1,029,216	)	$	101,913
Issuance of common stock – ESPP		34			—		127			—			—			—			127
Issuance of common stock – restricted shares		331			3		(3	)		—			—			—			—
Stock-based compensation expense		—			—		1,019			—			—			—			1,019
Issuance of common stock for 401(k) match		33			1		178			—			—			—			179
Cumulative translation adjustment		—			—		—			—			2,026			—			2,026
Net loss		—			—		—			—			—			(9,881	)		(9,881	)
Balance at September 30, 2022		29,337		$	293	$	1,136,028		$	(3,639	)	$	1,798		$	(1,039,097	)	$	95,383
Issuance of common stock – restricted shares		550			6		(6	)		—			—			—			—
Stock-based compensation expense		—			—		1,440			—			—			—			1,440
Issuance of common stock for 401(k) match		41			—		160			—			—			—			160
Cumulative translation adjustment		—			—		—			—			(195	)		—			(195	)
Net loss		—			—		—			—			—			(9,581	)		(9,581	)
Balance at December 31, 2022		29,928		$	299	$	1,137,622		$	(3,639	)	$	1,603		$	(1,048,678	)	$	87,207

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

American Superconductor Corporation (together with its subsidiaries, “AMSC®” or the “Company”) was founded on April 9, 1987. The Company is a leading system provider of megawatt-scale power resiliency solutions that orchestrate the rhythm and harmony of power on the grid™ and that protect and expand the capability of the Navy’s fleet. The Company’s system level products leverage its proprietary “smart materials” and “smart software and controls” to provide enhanced resiliency and improved performance of megawatt-scale power flow.

These unaudited condensed consolidated financial statements of the Company have been prepared on a going concern basis in accordance with United States generally accepted accounting principles (“GAAP”) and the Securities and Exchange Commission’s (“SEC”) instructions to Form 10-Q. Certain prior period amounts were reclassified to conform to the presentation in the current period. The going concern basis of presentation assumes that the Company will continue operations and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to those instructions. The year-end condensed balance sheet data was derived from audited financial statements but does not include all disclosures required by GAAP. The unaudited condensed consolidated financial statements, in the opinion of management, reflect all adjustments (consisting of normal recurring adjustments) necessary for a fair statement of the results for the interim periods ended December 31, ~~2022~~ 2023and ~~2021~~2022 and the financial position at December 31, ~~2022;~~ 2023; however, these results are not necessarily indicative of results which may be expected for the full year. The interim condensed consolidated financial statements, and notes thereto, should be read in conjunction with the audited consolidated financial statements for the year ended March 31, ~~2022,~~2023, and notes thereto, included in the Company’s Annual Report on Form 10-K for the year ended March 31, ~~2022~~2023 filed with the SEC on ~~June 1, 2022.~~May 31, 2023.

The Company has historically experienced recurring operating losses and as of December 31, ~~2022~~2023, the Company had an accumulated deficit of ~~$1,049~~$1,065.1 million. In addition, the Company has historically experienced recurring negative operating cash flows. At December 31, ~~2022~~2023, the Company had cash and cash equivalents of ~~$23.7~~$24.0 million. Cash used in operations for the nine months ended December 31, ~~2022~~2023 was ~~$17.1~~$0.1 million.

In February 2021, the Company filed a shelf registration statement on Form S-3 that will expire in February 2024 (the “Form S-3”). The Form S-3 allows the Company to offer and sell from time-to-time up to $250 million of common stock, debt securities, warrants or units comprised of any combination of these securities. The Form S-3 is intended to provide the Company flexibility to conduct registered sales of the Company's securities, subject to market conditions, in order to fund the Company's future capital needs. The terms of any future offering under the Form S-3 will be established at the time of such offering and will be described in a prospectus supplement filed with the SEC prior to the completion of any such offering.

~~The~~In recent periods, the Company ~~is experiencing substantial~~has experienced inflationary pressure in its supply chain and some delays in sourcing materials needed for its products resulting in some production disruption, both of which have increased the Company’s cost of revenues and decreased gross margin. While the impact of inflation has been challenging, the Company has taken actions to limit this pressure, including adjusting the pricing of its products and services. Changes in macroeconomic conditions arising from ~~the COVID-~~19 ~~pandemic or for other~~various reasons, such as the ongoing ~~war~~wars between Russia and Ukraine and Israel and Hamas, inflation, COVID-19, rising interest rates, labor force availability, sourcing, material delays and global supply chain disruptions, could have a material adverse effect on the Company’s business, financial condition and results of operation.

From time-to-time the Company may undertake restructuring activities in order to align the global organization in a manner that the Company believes will better position it to achieve its long-term goals. In January 2023, the Company undertook a reduction in force that involved approximately 5% of the global workforce. This restructuring is expected to incur ~~an immaterial amount~~$1.0 million of cash ~~expense~~ expenses, of which $0.9 million has been paid as of December 31, 2023 and the remaining $0.1 million is expected to be paid by March 31, 2024, and to result in annualized cost savings of approximately $5$5.0 million, beginning in fiscal ~~year~~ 2023.

The Company believes that based on the information presented above and its quarterly management assessment, it has sufficient liquidity to fund its operations and capital expenditures for the next twelve months following the issuance of the unaudited condensed consolidated financial statements for the nine months ended December 31, ~~2022~~2023. The Company’s liquidity is highly dependent on its ability to increase revenues, its ability to control its operating costs, and its ability to raise additional capital, if necessary. The impact of ~~the~~ COVID-19 ~~pandemic~~ and other sources of instability, including the ~~war~~wars between Russia and Ukraine and Israel and Hamas, on the global financing markets may reduce the Company's ability to raise additional capital, if necessary, which could negatively impact the Company's liquidity. There can be no assurance that the Company will be able to continue to raise additional capital, on favorable terms or at all, from other sources or execute on any other means of improving liquidity described above.

On ~~May 6, 2021,~~ the Company entered into a Purchase and Sale Agreement (the "Real Property Purchase Agreement") and a Stock Purchase Agreement (the "Neeltran Stock Purchase Agreement") with the selling equity holders named therein. Also on ~~May 6, 2021~~, pursuant to the terms of the Real Property Purchase Agreement, the Company's wholly-owned Connecticut limited liability company, AMSC Husky LLC ("AMSC Husky"), purchased the real property that serves as Neeltran's headquarters for $4.3 million, of which (a) $2.4 million was paid in immediately available funds by AMSC Husky to the owners of such real property, and (b) $1.9 million was paid directly to TD Bank as full payment for the outstanding indebtedness secured by the mortgage on such real property.

Pursuant to the terms of the Neeltran Stock Purchase Agreement, the Company purchased all of the issued and outstanding shares of capital stock of Neeltran, Inc., a Connecticut corporation ("Neeltran") and Neeltran International, Inc., a Connecticut corporation ("International") for $1.0 million in cash and 301,556 shares of the Company's common stock, $.01 par value per share ("AMSC Shares"), that were paid and issued, respectively, to the Neeltran selling stockholders. The Company also paid $1.1 million to International selling stockholders to pay off previous loans made by them to Neeltran.

Additionally, the Company paid approximately $7.6 million, including $1.9 million of indebtedness secured by the mortgage on the real property as described above, directly to Neeltran lenders at closing to extinguish outstanding Neeltran indebtedness to ~~third~~ ~~parties. The total purchase price of $16.4 million includes cash paid, the fair value of the AMSC Shares issued at closing and the debt payoff on behalf of the sellers as follows (in millions):~~

Cash payment
$ 4.4
Issuance of 301,556 shares of Company's common stock
4.4
Debt payment to third party lenders on behalf of sellers
7.6
Total consideration
$ 16.4

~~The Neeltran Acquisition completed by the Company during the fiscal year ended~~ ~~March~~ ~~31,~~~~2022~~ ~~has been accounted for under the purchase method of accounting in accordance with ASC~~ ~~805,~~~~Business Combinations.~~ The Company allocated the purchase price to the assets acquired and liabilities assumed at their estimated fair values as of the date of Neeltran Acquisition. The excess of the purchase price paid by the Company over the estimated fair value of net assets acquired has been recorded as goodwill. As Neeltran was previously a private company, the adoption of Accounting Standards Codification ~~842~~ ~~("ASC~~ ~~842"~~~~) was completed as part of the Neeltran Acquisition. See Note~~ ~~15,~~ ~~"Leases" for further details. Neeltran had previously adopted Accounting Standards Codification~~ ~~606,~~~~Revenue from Contracts with Customers~~ ~~("ASC~~ ~~606"~~~~) as part of prior year audited financial statements.~~

The following table summarizes the allocation of the purchase price based on the estimated fair value of the assets acquired and liabilities assumed in connection with the Neeltran Acquisition (in millions):

Cash and short-term investments
$ 0.5
Net working capital (excluding inventory and deferred revenue)
(0.9 )
Inventory
9.0
Property, plant and equipment
6.5
Deferred revenue
(10.0 )
Deferred tax liability
(2.3 )
Net tangible assets/(liabilities)
2.8

Backlog
0.1
Trade names and trademarks
1.2
Customer relationships
3.5
Net identifiable intangible assets/(liabilities)
4.8

Goodwill
8.8

Total purchase consideration
$ 16.4

~~Inventory include~~ s a $0.6 million adjustment to step up the inventory balance to fair value consistent with the purchase price allocation. The fair value was based on the estimated selling price of the inventory, less the remaining manufacturing and selling cost and a normal profit margin on those manufacturing and selling efforts. The inventory step up adjustment increased cost of revenue by $0.6 million in the ~~twelve~~ ~~month period ended~~ ~~March 31, 2022~~ ~~as the inventory was sold. This increase is~~ ~~not~~ ~~reflected in the pro forma condensed combined statements of operations because it does~~ ~~not~~ ~~have a continuing impact beyond the~~ ~~first~~ ~~year.~~

~~Backlog of $0.1 million was evaluated using the multi period excess earnings method under the income approach. The contracts with customers do~~ ~~not~~ ~~provide for any guarantees to source all future requirements from the Company. The amortization method being utilized is economic consumption estimated over a~~ ~~two~~ ~~year period with the expense being allocated to cost of revenues.~~

Customer relationships of $3.5 million relates to customers currently under contract and was determined based on a multi period excess earnings method under the income approach. The method of amortization being utilized is the economic consumption over 7 years with the expense being allocated to SG&A.

Trade names and trademarks of $1.2 million were reviewed using the assumption that the Company would continue to utilize the Neeltran trade name indefinitely. The relief from royalty method was utilized using a 1% royalty rate on revenues with a 24.5% discount rate over 15 years.

~~The goodwill represents the value associated with the acquired workforce and expected synergies related to the business combinations of the~~ ~~two~~ ~~companies. Goodwill resulting from the Neeltran Acquisition was assigned to the Company's Grid business segment. Goodwill recognized in the Neeltran Acquisition is~~ ~~not~~ ~~deductible for tax purposes. The Company has finalized its purchase price allocation for the Neeltran Acquisition, and there were~~ no ~~changes to the net assets and goodwill recorded by the Company as of~~ ~~May 6, 2021.~~

~~Unaudited Pro Forma Operating Results~~

~~The unaudited pro forma condensed consolidated statement of operations for the~~ ~~three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~December 31, 2022~~ ~~and~~ ~~2021~~ ~~is presented as if the Neeltran Acquisition had occurred on~~ ~~April 1, 2021.~~

Three Months Ended December 31,

Nine Months Ended December 31,

2022

2021

2022

2021

Revenues
$ 23,881 $ 26,799 $ 74,241 $ 82,957
Operating loss
(9,209 ) (4,380 ) (26,184 ) (16,066 )
Net loss
$ (9,581 ) $ (4,324 ) $ (28,186 ) $ (14,323 )

Net loss per common share

Basic
$ (0.34 ) $ (0.16 ) $ (1.01 ) $ (0.53 )
Diluted
$ (0.34 ) $ (0.16 ) $ (1.01 ) $ (0.53 )
Shares - basic
27,954 27,352 27,794 27,185
Shares - diluted
27,954 27,352 27,794 27,185

The pro forma amounts include the historical operating results of the Company, and Neeltran, with appropriate adjustments that give effect to acquisition related costs, income taxes, intangible amortization resulting from the Neeltran Acquisition and certain conforming accounting policies of the Company. The pro forma amounts are ~~not~~ necessarily indicative of the operating results that would have occurred if the Neeltran Acquisition and related transactions had been completed at the beginning of the applicable periods presented. In addition, the pro forma amounts are ~~not~~ ~~necessarily indicative of operating results in future periods.~~

On ~~October 1, 2020 (~~the "NEPSI Acquisition Date"), the Company entered into a Stock Purchase Agreement (the "NEPSI Stock Purchase Agreement") with the selling stockholders named therein. Pursuant to the terms of the NEPSI Stock Purchase Agreement and concurrently with entering into such agreement, the Company acquired all of the issued and outstanding (i) shares of capital stock of Northeast Power Systems, Inc., a New York corporation ("NEPSI"), and (ii) membership interests of Northeast Power Realty, LLC, a New York limited liability company, which holds the real property that serves as NEPSI's headquarters (the "NEPSI Acquisition"). NEPSI is a U.S.-based global provider of medium-voltage metal-enclosed power capacitor banks and harmonic filter banks for use on electric power systems. Prior to the NEPSI Acquisition, the Company had purchased $0.4 million of products from NEPSI in fiscal year ~~2019~~ ~~for which NEPSI was paid and had recorded revenue.~~

Pursuant to the NEPSI Stock Purchase Agreement, the Company acquired all of the issued and outstanding shares of NEPSI, and membership interest in the realty entity, for which the Company paid $26.0 million in cash and issued 873,657 restricted shares of the Company’s common stock. Additionally, the Company ~~may~~ ~~issue to the selling stockholders up to an additional 1,000,000 shares of common stock upon NEPSI’s achievement of specified revenue objectives during varying periods of up to~~ ~~four~~ years following closing of the NEPSI Acquisition. This contingent consideration is recorded as a derivative liability based on a Monte Carlo simulation to determine fair value at the time of issuance. NEPSI is now a wholly-owned subsidiary of the Company and is operated and reported as a component of its Grid business unit.

~~The NEPSI Acquisition completed by the Company during the fiscal year ended~~ ~~March 31, 2021~~ ~~has been accounted for under the purchase method of accounting in accordance with ASC~~ ~~805,~~~~Business Combinations~~. The Company allocated the purchase price to the assets acquired and liabilities assumed at their estimated fair values as of the date of NEPSI Acquisition. The excess of the purchase price paid by the Company over the estimated fair value of net assets acquired has been recorded as goodwill. As NEPSI was previously a private company, the adoption of ASC ~~606~~ ~~was completed as part of the NEPSI Acquisition. See Note~~ 3, ~~"Revenue Recognition" for further details. There were~~ no ~~leases acquired and the NEPSI Acquisition had~~ no ~~impact to the Company's reporting under ASC~~ ~~842.~~

The total purchase price of approximately $42.4 million includes the fair value of shares of the Company’s common stock issued at closing, cash paid, and contingent consideration as follows (in millions):

Total consideration consists of (a) cash of $26.0 million, (b) issuance of the Company's common stock, using $14.23 per share, which was the closing price on the day that the Company acquired NEPSI, and (c) $4.0 million of contingent consideration for the earnout liability valued as of the NEPSI Acquisition Date. NEPSI Acquisition costs of $0.3 million were recorded in selling, general and administrative ("SG&A") costs for the fiscal year ended ~~March 31, 2021.~~

The fair value of the contingent consideration was determined using a Monte Carlo model and is accounted for as a derivative liability which is revalued at the fair value determined at each subsequent balance sheet date until the contingencies are resolved and the shares to be issued are determined, with the change in fair value recorded in the current period operating loss or (income). See Note ~~13,~~ ~~"Contingent Consideration" for further details and a summary of key assumptions used to determine fair value in each period.~~

The following table summarizes the allocation of the purchase price based on the estimated fair values of the assets acquired and liabilities assumed and related deferred income taxes in connection with the NEPSI Acquisition (in millions):

Inventory includes a $1.0 million adjustment to step up the inventory balance to fair value consistent with the purchase price allocation. The fair value was determined based on the estimated selling price of the inventory, less the remaining manufacturing and selling cost and a normal profit margin on those manufacturing and selling efforts. The $1.0 million step up adjustment increased cost of revenue in the fiscal year ended ~~March 31, 2021~~ ~~as the inventory was sold. This increase is~~ ~~not~~ ~~reflected in the pro forma condensed combined statements of operations because it does~~ ~~not~~ ~~have a continuing impact beyond the~~ ~~first~~ ~~year.~~

~~Backlog of $0.6 million was evaluated using the multi period excess earnings method under the income approach. The contracts with customers do~~ ~~not~~ ~~provide for any guarantees to source all future requirements from the Company. The amortization method being utilized is economic consumption estimated over a~~ ~~two~~ ~~year period with the expense being allocated to cost of revenues.~~

Customer relationships of $6.1 million relates to customers currently under contract and was determined based on a multi period excess earnings method under the income approach. The method of amortization being utilized is the economic consumption over 7 ~~years with the expense being allocated to SG&A.~~

Trade names and trademarks of $0.6 million were reviewed, using the assumption that the Company would continue to utilize the NEPSI trade name indefinitely. The relief from royalty method was utilized using an 8% royalty rate on revenues with a 13% discount rate over 8 years.

~~Goodwill represents the value associated with the acquired workforce and expected synergies related to the business combination of the~~ ~~two~~ ~~companies. Goodwill resulting from the NEPSI Acquisition was assigned to the Company’s Grid business segment. Goodwill recognized in the NEPSI Acquisition is~~ ~~not~~ ~~deductible for tax purposes. The $1.7 million of deferred tax liability is primarily related to inventory step up and intangibles.~~

The Company’s revenues in its Grid business segment are derived primarily through enabling the transmission and distribution of power, providing planning services that allow it to identify power grid needs and risks, and developing ship protection systems for the U.S. Navy. The Company’s revenues in its Wind business segment are derived primarily through supplying advanced power electronics and control systems, licensing its highly engineered wind turbine designs, and providing extensive customer support services to wind turbine manufacturers. The Company records revenue based on a five-step model in accordance with ~~ASC~~Accounting Standards Codification ("ASC") 606. For its customer contracts, the Company identifies the performance obligations, determines the transaction price, allocates the contract transaction price to the performance obligations, and recognizes the revenue when (or as) control of goods or services is transferred to the customer. In the three and nine months ended December 31, ~~2022~~2023, ~~87%~~85% and 80% of revenue, respectively, was recognized at the point in time when control transferred to the customer, with the remainder being recognized over time. In the three and nine months ended December 31, ~~2021,~~ 2022~~79%~~, 87% and ~~76%~~80% of revenue, respectively, was recognized at the point in time when control transferred to the customer, with the remainder being recognized over time.

In the Company's equipment and system product line, each contract with a customer summarizes each product sold to a customer, which typically represents distinct performance obligations. A contract's transaction price is allocated to each distinct performance obligation using the respective standalone selling price which is determined primarily using the cost-plus expected margin approach and recognized as revenue when, or as, the performance obligation is satisfied. The majority of the Company’s product sales transfer control to the customer in line with the contracted delivery terms and revenue is recorded at the point in time when title and risk transfer to the customer, which is primarily upon delivery, as the Company has determined that this is the point in time that control transfers to the customer.

~~The Company's equipment and system product line includes certain contracts which do~~ ~~not~~ ~~meet the requirements of an exchange transaction and therefore do~~ ~~not~~ ~~fall within the scope of ASC~~ ~~606.~~ ~~As these non-exchange transaction contracts are considered grant revenue and do~~ ~~not~~ ~~fall within any specific accounting literature, the Company follows guidance within ASC~~ ~~606~~ ~~by analogy to recognize grant revenue over time. The Company recorded no grant revenue in each of the~~ ~~three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~December~~ ~~31,~~~~2022.~~ ~~In the~~ ~~three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~December 31, 2021,~~ ~~the Company recorded $0.1 million and $0.9 million in grant revenue, respectively, which is included in the Company’s Grid business segment revenue.~~

In the Company's service and technology development product line, there are several different types of transactions, and each begins with a contract with a customer that summarizes each product sold to a customer, which typically ~~represent~~represents distinct performance obligations. The technology development transactions are primarily for activities that have no alternative use and for which a profit can be expected throughout the life of the contract. In these cases, the revenue is recognized over time, but in the instances where ~~a reasonable~~the profit ~~margin~~ cannot be assured throughout the entire contract then the revenue is recognized at a point in time. Each contract's transaction price is allocated to each distinct performance obligation using the respective standalone selling price which is determined primarily using the cost-plus expected margin approach. The ongoing service transactions are for service contracts that provide benefit to the customer simultaneously as the Company performs its obligations, and therefore this revenue is recognized ratably over time throughout the effective period of these contracts. The transaction prices on these contracts are allocated based on an adjusted market approach which is ~~reassessed~~re-assessed annually for reasonableness. The field service transactions include contracts for delivery of goods and completion of services made at the customer's requests, which are not deemed satisfied until the work has been completed and/or the requested goods have been delivered, so all of this revenue is recognized at the point in time when the control changes, and at allocated prices based on the adjusted market approach driven by standard price lists. The royalty transactions are related to certain contract terms on transactions in the Company's equipment and systems product line based on activity as specified in the contracts. The transaction prices of these agreements are calculated based on an adjusted market approach as specified in the contract. The Company reports royalty revenue for usage-based royalties when the sales have occurred. In circumstances when collectability is not assured and a contract does not exist under ASC 606, revenue is deferred until a non-refundable payment has been received for substantially all the amount that is due and there are no further remaining performance obligations.

The Company's service contracts can include a purchase order from a customer for specific goods in which each item is a distinct performance obligation satisfied at a point in time at which control of the goods is transferred to the customer. This transfer occurs based on the contracted delivery terms or when the requested service work has been completed. The transaction price for these goods is allocated based on the adjusted market approach considering similar transactions under similar circumstances. Service contracts are also derived from ongoing maintenance contracts and extended service-type warranty contracts. In these transactions, the Company is contracted to provide an ongoing service over a specified period of time. As the customer is consuming the benefits as the service is being provided, the revenue is recognized over time ratably.

The Company’s policy is not to accept volume discounts, product returns, or rebates and allowances within its contracts. In the event a contract was approved with any of these terms, it would be evaluated for variable consideration, estimated and recorded as a reduction of revenue in the same period the related product revenue was recorded.

The Company provides assurance-type warranties on all product sales for a term of typically one to three years, and extended service-type warranties are available for purchase at the customer's option for an additional term ranging up to four additional years. The Company accrues for the estimated warranty costs for assurance warranties at the time of sale based on historical warranty experience plus any known or expected changes in warranty exposure. For all extended service-type warranties, the Company recognizes the revenue ratably over time during the effective period of the services.

The Company records revenue net of sales tax, value added tax, excise tax and other taxes collected concurrent with revenue-producing activities. The Company has elected to recognize the cost for freight and shipping when control over the products sold passes to customers and revenue is recognized. The Company has elected to recognize incremental costs of obtaining a contract as expense when incurred except in contracts where the amortization period would exceed twelve months; in such cases the long-term amount will be assessed for materiality. The Company has elected not to adjust the promised amount of consideration for the effects of a significant financing component if the period of financing is twelve months or less. The Company has elected to recognize revenue based on the As invoiced practical expedient if there is a right to consideration from a customer in an amount that corresponds directly with the value of the Company's performance.

The Company monitors costs to meet ~~our~~its obligations on ~~our~~its customer contracts. When it is evident that there is a loss expected on a contract, a contract loss is accrued in the period. Several long-term contracts that were acquired from Neeltran, Inc. (“Neeltran”) were impacted by higher than planned costs due to required design changes and inflation on material costs, resulting in an increase to the contract loss accrual of $1.6 million and $3.2 million in the three and nine ~~month period~~months ended December 31, 2022, respectively, which negatively impacted the Company's gross margins. The contract loss accrual decreased by $2.5 million and $3.4 million in each of the three and nine months ended December 31, 2023, respectively, as projects have been completed.

The Company’s contracts with customers do not typically include extended payment terms and may include milestone billing over the life of the contract. Payment terms vary by contract type and type of customer and generally range from 30 to 60 days from delivery.

The following tables disaggregate the Company’s revenue by product line and by shipment destination (in thousands):

As of December 31, ~~2022~~2023, and ~~2021~~2022, the Company’s contract assets and liabilities primarily relate to the timing differences between cash received from a customer in connection with contractual rights to invoicing and the timing of revenue recognition following completion of performance obligations. The Company's accounts receivable balance is made up entirely of customer contract related balances. Changes in the Company’s contract assets, which are included in “Unbilled accounts receivable” and “Deferred program costs” (see Note 8,7, “Accounts Receivable” and Note 9,8, “Inventory” for a reconciliation to the condensed consolidated balance sheets) and "Contract liabilities", which are included in the current portion and long-term portion of "Deferred revenue" in the Company’s condensed consolidated balance sheets, are as follows (in thousands):

The Company’s remaining performance obligations represent the unrecognized revenue value of the Company’s contractual commitments. The Company’s performance obligations may vary significantly each reporting period based on the timing of major new contractual commitments. As of December 31, ~~2022~~2023, the Company had outstanding performance obligations on existing contracts under ASC 606 to be recognized in the next twelve months of approximately ~~$112.1 million.~~$137.2 million. There are also approximately $$30.2 m~~30.4~~ illion o~~million of~~f outstanding performance obligations to be recognized over a period of thirteen to sixty months. The remaining performance obligations are subject to customer actions and therefore the timing of revenue recognition cannot be reasonably estimated. ~~The~~ ~~twelve~~~~-month performance obligations include anticipated shipments to Inox based on the~~ ~~twelve~~-month rolling forecast provided by Inox on the multi-year supply contract. The quantities specified in any forecast provided by Inox related to the multi-year supply contract are firm and irrevocable for the ~~first~~~~three~~ ~~months of a~~ ~~twelve~~~~-month rolling forecast. The timing of the performance obligations beyond the~~ ~~twelve~~~~-month forecast provided by Inox are~~ ~~not~~ ~~determinable and therefore are~~ ~~not~~ ~~included in the total remaining performance obligations.~~

The following table sets forth customers who represented 10% or more of the Company’s total revenues for the three and nine months ended December 31, ~~2022~~2023 and ~~2021~~2022:

The Company accounts for its stock-based compensation at fair value. The following table summarizes stock-based compensation expense by financial statement line item for the three and nine months ended December 31, ~~2022~~2023 and ~~2021~~2022 (in thousands):

The Company issued ~~550,000~~no shares and 681,500 shares of restricted stock during the three and nine months ended December 31, 2023, respectively. The Company issued no shares of immediately vested common stock during the three months ended December 31, 2023 and 53,675 shares of immediately vested common stock during the nine months ended December 31, 2023. The Company issued 550,000 shares of restricted stock and no shares of immediately vested common stock during the three months ended December 31, 2022and 888,500 shares of restricted stock and 25,806 shares of immediately vested common stock during the nine months ended December 31, ~~2022.~~2022 ~~The Company issued 61,000 shares of restricted stock during the~~ ~~three~~ ~~months ended~~ ~~December 31, 2021,~~ ~~and 370,700 shares of restricted stock and 166,648 shares of immediately vested common stock, of which 158,356 shares were issued in-lieu of cash bonuses during the~~ ~~nine~~ ~~months ended~~ ~~December 31, 2021.~~ . These restricted stock awards generally vest over ~~2-3~~2-3 years. Awards for restricted stock include both time-based and performance-based awards. For options and restricted stock awards that vest upon the passage of time, expense is being recorded over the vesting period. Performance-based awards are expensed over the requisite service period based on probability of achievement.

The estimated fair value of the Company’s stock-based awards, less expected annual forfeitures, is amortized over the awards’ service period. The total unrecognized compensation cost for unvested stock options was less than $0.1 ~~million during the~~ ~~nine~~ ~~months ended~~ million as of December 31, ~~2022.~~ 2023. This expense will be recognized over a weighted average of approximately ~~1.4~~0.4 years. The total unrecognized compensation cost for unvested outstanding restricted stock was ~~$6.1 million at~~$5.8 million as of December 31, ~~2022.~~ 2023. This expense will be recognized over a weighted-average expense period of approximately 1.7 years.

The Company granted no stock options during the three and nine months ended December 31, 2023. The Company granted no stock options in the three months ended December 31, 2022, and 20,564 stock options during the nine months ended December 31, 2022. The ~~Company did~~ ~~not~~ ~~grant any stock options during the~~ ~~three~~ ~~months ended~~ ~~December 31, 2022~~ ~~or the~~ ~~three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~December 31, 2021.~~ ~~The~~ stock options granted during the nine months ended December 31, 2022will vest in equal annual installments over 2 years. The weighted average assumptions used in the Black Scholes valuation model for stock options granted during the nine months ended December 31, 2022are as follows:

Basic net loss per share (“EPS”) is computed by dividing net loss by the weighted-average number of common shares outstanding for the period. Where applicable, diluted EPS is computed by dividing the net loss by the weighted-average number of common shares and dilutive common equivalent shares outstanding during the period, calculated using the treasury stock method. Common equivalent shares include the effect of restricted stock, exercise of stock options and warrants and contingently issuable shares. Stock options and warrants that are out-of-the-money with exercise prices greater than the average market price of the underlying common shares and shares of performance-based restricted stock where the contingency was not met are excluded from the computation of diluted EPS as the effect of their inclusion would be anti-dilutive. For each of the three and nine months ended December 31, 2023, 0.3 million shares were not included in the calculation of diluted EPS. Of these, 0.3 million relate to shares associated with the contingent consideration derivative liability for which the contingency has not yet been met, and less than 0.1 million relate to outstanding stock options as they were considered anti-dilutive. For each of the three and nine months ended December 31, 2022, ~~and~~ ~~2021,~~ 1.1 million shares were not included in the calculation of diluted EPS. Of these, 1.0 million relate to shares ~~tied to~~associated with the contingent consideration derivative liability for which the contingency has not yet been met, and 0.1 million relate to outstanding stock options as they were considered anti-dilutive.

The following table reconciles the numerators and denominators of the earnings per share calculation for the three and nine months ended December 31, ~~2022~~2023 and ~~2021~~2022 (in thousands, except per share data):

Goodwill represents the difference between the purchase price and the fair value of the identifiable tangible and intangible net assets when accounted for using the purchase method of accounting. ~~The Company's goodwill balance relates to the Neeltran Acquisition in fiscal~~ ~~2021,~~ ~~the NEPSI Acquisition in fiscal~~ ~~2020,~~ ~~and the acquisition of Infinia Technology Corporation in fiscal~~ ~~2017~~ ~~and is reported in the Grid business segment.~~ Goodwill is not amortized but reviewed for impairment. Goodwill is reviewed annually on February 28th and whenever events or changes in circumstances indicate that the carrying value of the goodwill might not be recoverable.

~~The following table provides a roll forward of~~There were no changes to goodwill during the ~~changes in the Company's Grid business segment goodwill balance:~~nine months ended December 31, 2023 or year ended March 31, 2023.

The Company did not identify any triggering events in the three and nine months ended December 31, ~~2022~~2023 that would require interim impairment testing of goodwill.

Intangible assets at December 31, ~~2022~~2023 and March 31, ~~2022~~2023 consisted of the following (in thousands):

The Company recorded intangible amortization expense related to customer relationship and core technology and know-how of $0.5 million and $1.6 million, in the three and nine months ended December 31, 2023, respectively, and $0.7 million and $2.1 million in the three and nine months ended December 31, 2022, respectively ~~and $0.6 million and $1.8 million in the~~ ~~three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~December 31, 2021,~~ ~~respectively.~~. Additionally, the Company recordedno intangible amortization related to backlog that is reported in cost of revenues ofin the three months ended December 31, 2023 and less than ~~$0.1~~$0.1 million in ~~each~~the nine months ended December 31, 2023. The Company recorded less than $0.1 million related to backlog that is reported in cost of revenues in the three and nine months ended December 31, 2022~~. The Company recorded intangible amortization related to backlog that is reported in cost of revenues of~~ ~~$0.1~~ ~~million in each of the~~ ~~three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~December 31, 2021,~~ , respectively.

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

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

A valuation hierarchy for disclosure of the inputs to valuation used to measure fair value has been established. This hierarchy prioritizes the inputs into three broad levels as follows:

The Company provides a gross presentation of activity within Level 3 measurement roll-forward and details of transfers in and out of Level 1 and 2 measurements. A change in the hierarchy of an investment from its current level is reflected in the period during which the pricing methodology of such investment changes. Disclosure of the transfer of securities from Level 1 to Level 2 or Level 3 is made in the event that the related security is significant to total cash and investments. The Company did not have any transfers of assets and liabilities from Level 1, Level 2 or Level 3 of the fair value measurement hierarchy during the nine months ended December 31, ~~2022~~2023.

A financial asset’s or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

Cash equivalents consist of highly liquid instruments with maturities of three months or less that are regarded as high quality, low risk investments, are measured using such inputs as quoted prices and are classified within Level 1 of the valuation hierarchy. Cash equivalents consist principally of certificates of deposits and money market accounts.

Contingent consideration relates to the earnout payment set forth in the ~~NEPSI~~ Stock Purchase Agreement governing the acquisition of Northeast Power Systems, Inc ("NEPSI") that provides that the selling stockholders may receive up to an additional ~~1,000,000~~300,000 shares of common stock of the Company upon the achievement of certain specified revenue objectives over varying periods of up to four years following the NEPSI Acquisition Date. See Note 13, "Contingent Consideration" ~~and Note~~ 2, ~~“Acquisitions”~~ for further discussion. The Company relied on a Monte Carlo method to determine the fair value of the contingent consideration on the closing of the acquisition of NEPSI ~~Acquisition Date~~ and ~~will continue~~continues to revalue the fair value of the contingent consideration using the same method at each subsequent balance sheet date until the contingencies are resolved and the shares to be issued are determined, with the change in fair value recorded in the current period operating loss.

The following table provides the assets and liabilities carried at fair value on a recurring basis, measured as of December 31, ~~2022~~2023 and March 31, ~~2022~~2023 (in thousands):

The table below reflects the activity for the Company’s contingent consideration derivative liability measured at fair value on a recurring basis (in thousands):

Accounts receivable at December 31, ~~2022~~2023 and March 31, ~~2022~~2023 consisted of the following (in thousands):

Inventory, net of reserves, at December 31, ~~2022~~2023 and March 31, ~~2022~~2023 consisted of the following (in thousands):

The Company recorded inventory write-downs of $~~0.2~~$0.5 million ~~and $0.4~~and $0.2 million ~~for~~for the three months ended December 31, ~~2022~~2023 and ~~2021~~2022, respectively. The Company recorded inventory write-downs of ~~$1.2~~$1.5 million and ~~$1.6~~$1.2 million for the nine months ended December 31, ~~2022~~ 2023and ~~2021,~~2022, respectively. These write-downs were based on the Company's evaluation of its inventory on hand for excess quantities and obsolescence.

Deferred program costs as of December 31, ~~2022~~2023 and March 31, ~~2022~~2023, primarily represent costs incurred on programs where the Company needs to complete performance obligations before the related revenue and costs will be recognized.

During fiscal 2022, the Company conducted an analysis as to whether it was entitled to employee retention credits (“ERC”) under the CARES Act as amended by the Taxpayer Certainty and Disaster Tax Relief Act of 2020 and the American Rescue Plan Act of 2021. Based on the analysis, the Company determined that it was entitled to an ERC of approximately $3.3 million related to payroll taxes paid in the first and second quarters of 2021 and the first quarter of 2020. The Company determined it met all the criteria required under the gross receipts test of the applicable Internal Revenue Service regulations related to ERCs.

As accounting for payroll tax credits are not within the scope of ASC 740,Income Taxes, the Company has chosen to account for the ERCs by analogizing to the International Accounting Standards Board IAS 20,Accounting for Government Grants and Disclosure of Government Assistance. In accordance with IAS 20, an entity recognizes government grants only when there is reasonable assurance that the entity will comply with the conditions attached to them and the grants will be received. The Company evaluated its eligibility for the ERC and determined that it met all the criteria to claim a refundable tax credit against the employer portion of Social Security taxes for up to 70% of the qualified wages the Company paid to employees for the three month periods ended March 31, 2021 and June 30, 2021 and for up to 50% of the qualified wages the Company paid to employees for the three month period ended March 31, 2020.

The Company recorded a $3.3 million receivable in Prepaid expenses and other current assets and a benefit of $1.8 million to Cost of revenues, $0.8 million to SG&A and $0.7 million to Research and development in the fiscal year ended March 31, 2023 for the ERC that is expected to be received based on the amended filings. During the nine months ended December 31, 2023, the Company received $3.0 million for the initial claims that were processed. The remaining balance is expected to be received during the remainder of fiscal 2023.

The cost and accumulated depreciation of property, plant and equipment at December 31, ~~2022~~2023 and March 31, ~~2022~~2023 are as follows (in thousands):

Depreciation expense was $0.6 million and ~~$0.7~~$0.6 million for the three months ended December 31, ~~2022~~2023 and ~~2021~~2022, respectively. Depreciation expense was $1.7 million and $2.0 million for ~~each of~~ the nine months ended December 31, ~~2022~~ 2023and ~~2021,~~2022, respectively.

Accounts payable and accrued expenses at December 31, ~~2022~~2023 and March 31, ~~2022~~2023 consisted of the following (in thousands):

The Company generally provides a one to three year warranty on its products, commencing upon delivery or installation where applicable. A provision is recorded upon revenue recognition to cost of revenues for estimated warranty expense based on historical experience.

The Company recorded income tax expense of $0.1 million and $0.3 million in the three and nine months ended December 31, 2023, respectively. The Company recorded an income tax expense of $0.1 million in each of the three and nine months ended December 31, 2022. ~~The Company recorded an income tax expense of less than $0.1 million and income tax benefit of $1.9 million in the~~ ~~three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~December 31, 2021,~~ , respectively.

~~As a result of a difference in book and tax basis related to the intangible assets acquired in the Neeltran Acquisition (see Note~~ 2, ~~"Acquisitions"), the Company recorded a deferred tax liability of $2.3 million during the~~ ~~nine~~ ~~months ended~~ ~~December 31, 2021.~~ ~~As a result, the Company was able to benefit from additional deferred tax assets and therefore released a corresponding valuation allowance of $2.3 million~~ ~~during the~~ ~~nine~~~~months ended~~ ~~December~~ ~~31,~~~~2021~~~~. Goodwill recognized in the Neeltran Acquisition is~~ ~~not~~ ~~deductible for tax purposes.~~

Accounting for income taxes requires a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if, based on the technical merits, it is more likely than not the position will be sustained upon audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. The Company re-evaluates these uncertain tax positions on a quarterly basis. The evaluation is based on factors including, but not limited to, changes in facts or circumstances, changes in tax law, effectively settled issues under audit and new audit activity. Any changes in these factors could result in the recognition of a tax benefit or an additional charge to the tax provision. The Company did not identify any uncertain tax positions in the nine months ended December 31, ~~2022~~2023 and did not have any gross unrecognized tax benefits as of December 31, ~~2022~~2023.

~~Contingent Consideration~~On October 1, 2020 (the "NEPSI Acquisition Date"), the Company entered into a Stock Purchase Agreement (the "NEPSI Stock Purchase Agreement") with the selling stockholders named therein. Pursuant to the terms of the NEPSI Stock Purchase Agreement and concurrently with entering into such agreement, the Company acquired all of the issued and outstanding (i) shares of capital stock of NEPSI, and (ii) membership interests of Northeast Power Realty, LLC, a New York limited liability company, which holds the real property that serves as NEPSI's headquarters (the "NEPSI Acquisition"). NEPSI is a U.S.-based global provider of medium-voltage metal-enclosed power capacitor banks and harmonic filter banks for use on electric power systems. NEPSI is a wholly-owned subsidiary of the Company and is operated by its Grid business unit. The purchase price was $26.0 million in cash and 873,657 restricted shares of common stock of the Company. As part of the transaction, the selling stockholders may receive up to an additional 1,000,000 shares of common stock of the Company upon the achievement of certain specified revenue objectives during varying periods of up to four years following closing of the NEPSI Acquisition. NEPSI has recognized revenues in excess of $75.0 million during the three years after the NEPSI Acquisition Date. As a result, the Company issued 399,999 shares of common stock of the Company and cash in lieu of a fractional share of common stock to the selling stockholders during the quarter ended December 31, 2023, following certification of the achievement of specified earnout revenue objectives.

The Company evaluated the NEPSI Acquisition earnout payment set forth in the NEPSI Stock Purchase Agreement, ~~(see Note~~ 2, ~~"Acquisitions" for further details),~~ which ~~may~~ is expected to require settlement in the Company's common stock, and determined the contingent consideration qualified for liability classification and derivative treatment under ASC 815, Derivatives and Hedging. As a result, for each period, the fair value of the contingent consideration will be remeasured and the resulting gain or loss will be recognized in operating expenses until the share amount is fixed.

Following is a summary of the key assumptions used in a Monte Carlo simulation to calculate the fair value of the contingent consideration related to the NEPSI Acquisition:

~~The Company recorded a net gain~~ ~~of $0.2 million and $0.3 million resulting~~ ~~from~~ During the ~~decrease in the fair value of the contingent consideration in the~~ three and nine months ended December 31, ~~2022~~2023 the Company issued 399,999 shares and cash in lieu of a fractional share of common stock related to the achievement of specified revenue objectives at a fair value of $3.1 million. One specified revenue objective, which would have earned the selling stockholders 300,000 shares of Company common stock, was not achieved, leaving 300,000. shares of common stock remaining for potential issuance upon the achievement of the last specified revenue objective by September 30, 2024. The Company recorded ~~a net gain~~losses of ~~$2.1~~$0.9 million and ~~$4.4~~$3.1 million resulting from the ~~decrease~~increases in the fair value of the contingent consideration in the three and nine months ended December 31, ~~2021,~~ 2023, respectively.

As part of the acquisition of Neeltran, ~~Acquisition,~~ the Company identified four equipment financing agreements that Neeltran had entered into prior to the acquisition of Neeltran on May 6, 2021. The ~~Company determined to account for these agreements as a~~current debt ~~transaction and recorded current and long-term debt liabilities~~balanc ~~of $0.1 million each during the~~ ~~three~~ ~~months ended~~ ~~June~~ ~~30,~~~~2021.~~ ~~The current and long-term debt balance~~e is~~$0.1~~ ~~million and~~ less than ~~$0.1~~$0.1 million as of December 31, ~~2022,~~ 2023~~respectively.~~ and was $0.1 million as ofMarch 31, 2023.

The Company determines whether a contract is or contains a lease at inception of a contract. The Company defines a lease as a contract, or part of a contract, that conveys the right to control the use of identified property or equipment (an identified asset) for a period of time in exchange for consideration. Control over the use of the identified asset means that the Company has both the right to obtain substantially all of the economic benefits from the use of the asset and the right to direct the use of the asset.

The discount rate was calculated using an incremental borrowing rate based on an assessment prepared by the Company through the use of Company credit ratings, consideration of its lease populations potential risk to its total capital structure, and a market rate for a collateralized loan for its risk profile, calculated by a third party. ~~The Company elected to apply the discount rate using the remaining lease term at the date of adoption for Neeltran lease contracts.~~

~~Following the Neeltran Acquisition, the Company evaluated all open Neeltran contracts at the date of the acquisition to determine if any applied under ASC~~ ~~842~~ ~~as Neeltran, a private company, had deferred adopting ASC~~ ~~842~~ ~~prior to the Neeltran Acquisition, as permitted. The Company identified~~ ~~nine~~ ~~lease contracts with terms greater than~~ ~~twelve~~ ~~months and evaluated them under ASC~~ ~~842~~ ~~guidance. As part of the implementation, the Company identified~~ ~~one~~ ~~lease contract that classified as a financing lease. The Company does~~ ~~not~~ ~~expect a material impact to the financial statements on an ongoing basis resulting from the adoption of the ASC~~ ~~842~~ ~~standard for the Neeltran business and Neeltran will follow the existing policies below.~~

All significant lease arrangements are recognized at lease commencement. Operating lease right–of-use assets and lease liabilities are recognized at commencement. The operating lease right-of-use asset includes any lease payments related to initial direct cost and prepayments and excludes any lease incentives. Lease expense is recognized on a straight-line basis over the lease term. The Company enters into a variety of operating lease agreements through the normal course of its business, but primarily real estate leases to support its operations. The real estate lease agreements generally provide for fixed minimum rental payments and the payment of real estate taxes and insurance. Many of these real estate leases have one or more renewal options that allow the Company, at its discretion, to renew the lease for varying periods up to five years or to terminate the lease. Only renewal options or termination rights that the Company believed were likely to be exercised were included in the lease calculations.

The Company also enters into leases for vehicles, IT equipment and service agreements, and other leases related to its manufacturing operations that are also included in the right-of-use assets and lease liability accounts if they are for a term of longer than twelve months. However, many of these leases are either short-term in nature or immaterial. The Company has made the policy election to exclude short-term leases from the condensed consolidated balance sheet.

As ~~part of the adoption of ASC~~ ~~842~~ ~~at Neeltran, the Company identified~~ ~~one~~ ~~lease contract that is classified as a finance lease. In~~ ~~February 2020,~~ ~~Neeltran entered into a contract to lease a copy machine for an initial term of~~ 39 ~~months, or through~~ ~~May 2023.~~ ~~The Company concluded that the lease should be classified and accounted for as a finance lease as the total value of the lease payments are greater than fair value of the asset. Accordingly, on~~ ~~May 6, 2021,~~ ~~the Company recognized a finance lease right-of-use asset and a finance lease liability of $13.2 thousand on the Neeltran opening balance sheet. As~~ of December 31, ~~2022,~~ 2023, the right-of-use asset related to the finance lease, w~~as $2.6 thousand,~~ net of accumulated amortization o~~f $10.6~~ ~~thousand,~~is $0.0 million, and is included in the property and equipment, net on the Company's condensed consolidated balance sheet.

Finance lease right-of-use assets and lease liabilities are recognized similar to an operating lease, at the lease commencement date or the date the lessor makes the leased asset available for use. Finance lease right-of-use assets are generally amortized on a straight-line basis over the lease term, and the carrying amount of the finance lease liabilities are (1) accreted to reflect interest using the incremental borrowing rate if the rate implicit in the lease is not readily determinable, and (2) reduced to reflect lease payments made during the period. Amortization expense for finance lease right-of-use assets and interest accretion on finance lease liabilities are recorded to depreciation expense and interest expense, respectively in the Company's condensed consolidated statement of operations.

Supplemental balance sheet information related to leases at December 31, ~~2022~~2023, and March 31, ~~2022~~2023 are as follows (in thousands):

The costs related to the Company's finance lease are not material. The costs related to the Company's operating leases for the three and nine months ended December 31, ~~2022~~2023 and ~~2021~~2022 are as follows (in thousands):

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

From time to time, the Company is involved in legal and administrative proceedings and claims of various types. The Company records a liability in its condensed consolidated financial statements for these matters when a loss is known or considered probable and the amount can be reasonably estimated. The Company reviews these estimates each accounting period as additional information is known and adjusts the loss provision when appropriate. If a matter is both probable to result in a liability and the amounts of loss can be reasonably estimated, the Company estimates and discloses the possible loss or range of loss to the extent necessary to make the condensed consolidated financial statements not misleading. If the loss is not probable or cannot be reasonably estimated, a liability is not recorded in its condensed consolidated financial statements.

The Company enters into long-term construction contracts with customers that require the Company to obtain performance bonds. The Company is required to deposit an amount equivalent to some or all the face amount of the performance bonds into an escrow account until the termination of the bond. When the performance conditions are met, amounts deposited as collateral for the performance bonds are returned to the Company. In addition, the Company has various contractual arrangements in which minimum quantities of goods or services have been committed to be purchased on an annual basis.

As of December 31, ~~2022~~2023, the Company had ~~$1.0~~$0.4 million of restricted cash included in long-term assets and $6.6 m~~illion~~$0.7 million of restricted cash included in current assets. As of March 31, ~~2022~~2023, the Company had ~~$6.1~~$0.6 million of restricted cash included in long term assets and ~~$2.8~~$1.7 million of restricted cash included in current assets. These amounts included in restricted cash primarily represent deposits to secure letters of credit for various supply contracts and long-term projects ~~including the irrevocable letter of credit in the amount of $5.0 million to secure certain of the Company's obligations under a subcontract agreement with ComEd.~~or collateral deposits. These deposits are held in interest bearing accounts.

The Company accounts for charges resulting from operational restructuring actions in accordance with ASC Topic 420,Exit or Disposal Cost Obligations (“ASC 420”) and ASC Topic 712,Compensation—Nonretirement Postemployment Benefits (“ASC 712”). In accounting for these obligations, the Company is required to make assumptions related to the amounts of employee severance, benefits, and related costs and the time period over which leased facilities will remain vacant, sublease terms, sublease rates and discount rates. Estimates and assumptions are based on the best information available at the time the obligation arises. These estimates are reviewed and revised as facts and circumstances dictate; changes in these estimates could have a material effect on the amount accrued on the condensed consolidated balance sheet.

On January 24, 2023, the Company approved a plan to reduce its global workforce by approximately 5%, effective as of such date. The purpose of the workforce reduction was to reduce operating expenses to better align with the Company’s current revenues. In fiscal 2022, the Company recorded restructuring charges of $1.0 million as a result of this reduction in force, which was comprised of severance pay. All amounts related to these restructuring activities are expected to be paid by March 31, 2024.

The following table presents restructuring charges and cash payments during the nine months ended December 31, 2023 and year ended March 31, 2023 (in thousands):

All restructuring charges discussed above are included within restructuring in the Company’s condensed consolidated statements of operations. The Company includes accrued restructuring within accounts payable and accrued expenses in the condensed consolidated balance sheets. The Company's restructuring charges relate primarily to the Grid business segment operations in the United States.

The Company reports its financial results in two reportable business segments: Grid and Wind. In accordance with ASC 280,Segment Reporting, we aggregate four operating segments into one reporting segment for financial reporting purposes due to their similar operating and financial characteristics. Our operating segments reflect the way in which internally-reported financial information is used to make decisions and allocate resources.

Through the Company’s power grid offerings, the Grid business segment enables electric utilities, industrial facilities, and renewable energy project developers to connect, transmit and distribute ~~power with exceptional efficiency, reliability, security~~smarter, cleaner and ~~affordability~~better power through its transmission planning services, power electronics, and superconductor-based systems. The sales process is enabled by transmission planning services that allow it to identify power grid congestion, poor power quality and other risks, which helps the Company determine how its solutions can improve network performance. These services often lead to sales of grid interconnection solutions for wind farms and solar power plants, power quality systems, and transmission and distribution cable systems. The Company also sells ship protection products to the U.S. Navy through its Grid business segment.

Through the Company’s wind power offerings, the Wind business segment enables manufacturers to field highly competitive wind turbines ~~with exceptional power output, reliability and affordability. The Company provides~~through its advanced power electronics and control system products, engineered designs, and support services. The Company supplies advanced power electronics and control systems, licenses its highly engineered wind turbine designs, and provides extensive customer support services to wind turbine manufacturers. The Company’s design portfolio includes a broad range of ~~drivetrains~~drive trains and power ratings of 2 megawatts ("MWs") and higher. The Company provides a broad range of power electronics and software-based control systems that are highly integrated and designed for optimized performance, efficiency, and grid compatibility.

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

The accounting policies of the business segments are the same as those for the consolidated Company. The Company’s business segments have been determined in accordance with the Company’s internal management structure, which is organized based on operating activities. The Company evaluates performance based upon several factors, of which the primary financial measures are segment revenues and segment operating loss. The disaggregated financial results of the segments reflect allocation of certain functional expense categories consistent with the basis and manner in which Company management internally disaggregates financial information for the purpose of assisting in making internal operating decisions. In addition, certain corporate expenses which the Company does not believe are specifically attributable or allocable to either of the two business segments have been excluded from the segment operating loss.

Unallocated corporate expenses ~~consist~~consisted of ~~a gain on contingent consideration~~net losses of $~~0.2~~$0.9 million and ~~$0.3~~$3.1 million resulting from the increases in the fair value of contingent consideration in the three and nine months ended December 31, ~~2022.~~2023, respectively. There are 300,000 shares remaining for potential issuance upon the achievement of the last specified revenue objective under the NEPSI Stock Purchase Agreement by September 30, 2024. Unallocated corporate expenses ~~consist~~consisted of a gain on contingent consideration of ~~$2.1~~$0.2 million and ~~$4.4~~$0.3 million in the three and nine months ended December 31, 2022~~31,~~~~2021.~~, respectively. Additionally, unallocated corporate expenses ~~consist~~consisted of stock-based compensation expense of $~~1.4~~1.1 million and ~~$1.1~~ $1.4 million in the three months ended December 31, 2023 and 2022, respectively, and ~~2021~~~~, respectively~~$3.6 million and $3.5 million in ~~each of~~ the nine months ended December 31, ~~2022~~ 2023and ~~2021,~~2022, respectively.

Total assets for the two business segments as of December 31, ~~2022~~2023, and March 31, ~~2022~~2023, are as follows (in thousands):

In June 2016,the ~~FASB~~Financial Accounting Standards Board ("FASB") issued ~~ASU~~ Accounting Standards Update ("ASU") 2016-13, Financial Instruments-Credit Losses (Topic326): Measurement of Credit Losses on Financial Instruments. The amendments in ASU 2016-13 will provide more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. Following the release of ASU 2019-10 in November 2019, the ~~new~~ effective date, as long as the Company remains a smaller reporting company, ~~would be~~was annual reporting periods beginning after December 15, 2022. ~~The~~As of April 1, 2023, the Company ~~evaluated the impact of the adoption of~~has adopted ASU 2016-13 and ~~does~~noted ~~not~~no ~~expect it to have a~~ material impact on its condensed consolidated financial statements.

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. The amendments in ASU 2021-08 will improve the accounting for acquired revenue contracts with customers in a business combination. Following the release of ASU 2021-08 in October 2021, the ~~new~~effective date was annual reporting periods beginning after December 15, 2022. As of April 1, 2023, the Company has adopted ASU 2021-08 and noted no material impact on its condensed consolidated financial statements.

In November 2023, the FASB issued ASU 2023-07,Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The amendments in ASU 2023-07 improve the disclosures about a public entity’s reportable segments and address requests from investors for additional, more detailed information about a reportable segment’s expenses. Following the release of ASU 2023-07 in November 2023, the effective date will be annual reporting periods beginning after December 15, ~~2022.~~2024. ~~The~~As of December 31, 2023, the Company ~~evaluated~~is evaluating the impact ~~of the adoption of ASU~~ ~~2021~~-~~08,~~ ~~and does~~ ~~not~~ ~~expect it to have a material impact~~ on its condensed consolidated financial statements.

In ~~November 2021,~~December 2023, the FASB issued ASU ~~2021~~2023-~~10,~~09, ~~Government Assistance~~Income Taxes (Topic ~~832~~740): Improvements to Income Tax Disclosures ~~by Business Entities about Government Assistance~~. The amendments in ASU ~~2021~~2023-1009 ~~will improve financial reporting by requiring~~address investor requests for more transparency about income tax information through improvements to income tax disclosures ~~that increase~~primarily related to the ~~transparency of transactions with government accounted for by applying a grant or contribution accounting model by analogy.~~rate reconciliation and income taxes paid information. Following the release of ASU ~~2021~~2023-1009 in ~~November 2021,~~December 2023, the ~~new~~ effective date will be annual reporting periods beginning after December 15, ~~2021.~~2024. As of ~~April 1, 2022,~~December 31, 2023, the Company ~~has adopted ASU~~ ~~2021~~-10 ~~and noted~~ no ~~material~~is evaluating the impact on its condensed consolidated financial statements.

The Company has performed an evaluation of subsequent events through the time of filing this Quarterly Report on Form 10-Q with the SEC and has determined that there are no such events to report.

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). For this purpose, any statements contained herein that relate to future events or conditions, including without limitation, the statements in Part II, “Item 1A. Risk Factors” and in Part I under “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and located elsewhere herein regarding industry prospects, our prospective results of operations or financial position, the benefits of our ~~acquisition~~acquisitions of Northeast Power Systems, Inc. ("NEPSI") and Neeltran, Inc. ("Neeltran"), contingent payments related to the NEPSI acquisition, changes in macroeconomic and market conditions, including increasing inflation and impacts from ~~the~~ COVID-19, ~~pandemic,~~ sourcing, production disruption, material delays and global supply chain disruptions and adoption of accounting changes may be deemed to be forward-looking statements. Without limiting the foregoing, the words “believes,” “anticipates,” “plans,” “expects,” and similar expressions are intended to identify forward-looking statements. Such forward-looking statements represent management’s current expectations and are inherently uncertain. There are a number of important factors that could materially impact the value of our common stock or cause actual results to differ materially from those indicated by such forward-looking statements. These important factors include but are not limited to: We have a history of operating losses, which may continue in the future. Our operating results may fluctuate significantly from quarter to quarter and may fall below expectations in any particular fiscal quarter; We have a history of negative operating cash flows, and we may require additional financing in the future, which may not be available to us; We may be required to issue performance bonds or provide letters of credit, which restricts our ability to access any cash used as collateral for the bonds or letters of credit; Changes in exchange rates could adversely affect our results of operations; If we fail to maintain proper and effective internal control over financial reporting, our ability to produce accurate and timely financial statements could be impaired and may lead investors and other users to lose confidence in our financial data; We may not realize all of the sales expected from our backlog of orders and contracts; Our contracts with the U.S. government are subject to audit, modification or termination by the U.S. government and include certain other provisions in favor of the government. The continued funding of such contracts remains subject to annual congressional appropriation, which, if not approved, could reduce our revenue and lower or eliminate our profit; ~~The~~ COVID-19 ~~pandemic could~~has adversely ~~impact~~impacted our business, financial condition and results of ~~operations;~~operations and other future pandemics or health crises may have similar impacts; Changes in U.S. government defense spending could negatively impact our financial position, results of operations, liquidity and overall business; We rely upon third-party suppliers for the components and subassemblies of many of our Grid and Wind products, making us vulnerable to supply shortages and price fluctuations, which could harm our business; Uncertainty surrounding our prospects and financial condition may have an adverse effect on our customer and supplier relationships; We have not manufactured our Amperium wire in commercial quantities, and a failure to manufacture our Amperium wire in commercial quantities at acceptable cost and quality levels would substantially limit our future revenue and profit potential; Our success is dependent upon attracting and retaining qualified personnel and our inability to do so could significantly damage our business and prospects; A significant portion of our Wind segment revenues are derived from a single customer. If this customer's business is negatively affected, it could adversely impact our business;Our success in addressing the wind energy market is dependent on the manufacturers that license our designs; Our business and operations would be adversely impacted in the event of a failure or security breach of our or any critical third partiesinformation technology infrastructure and networks; Failure to comply with evolving data privacy and data protection laws and regulations or to otherwise protect personal data, may adversely impact our business and financial results; Many of our revenue opportunities are dependent upon subcontractors and other business collaborators; If we fail to implement our business strategy successfully, our financial performance could be harmed; Problems with product quality or product performance may cause us to incur warranty expenses and may damage our market reputation and prevent us from achieving increased sales and market share; Many of our customers outside of the United States may be either directly or indirectly related to governmental entities, and we could be adversely affected by violations of the United States Foreign Corrupt Practices Act and similar worldwide anti-bribery laws outside the United States; We have had limited success marketing and selling our superconductor products and system-level solutions, and our failure to more broadly market and sell our products and solutions could lower our revenue and cash flow; We may acquire additional complementary businesses or technologies, which may require us to incur substantial costs for which we may never ~~realize~~realize the anticipated ~~benefits; Our success depends upon the commercial adoption of the REG system, which is currently limited,~~benefits; We or third parties on whom we depend may be adversely affected by natural disasters, including events resulting from climate change, and ~~a widespread commercial market for~~ our ~~products~~business continuity and disaster recovery plans may not ~~develop;~~adequately protect us or our value chain from such events; Adverse changes in domestic and global economic conditions could adversely affect our operating results; Our international operations are subject to risks that we do not face in the United States, which could have an adverse effect on our operating results; Adverse changes in domestic and global economic conditions could adversely affect our operating results; We have operations in, and depend on sales in, emerging markets, including India, and global conditions could negatively affect our operating results or limit our ability to expand our operations outside of these markets. Changes in ~~India~~’sIndia's political, social, regulatory and economic environment may affect our financial performance; Our products face competition, which could limit our ability to acquire or retain customers; Our products face competition, which could limit our ability to acquire or retain customers; Industry consolidation could result in more powerful competitors and fewer customers; Our products face competition, which could limit our ability to acquire or retain customers; Industry consolidation could result in more powerful competitors and fewer customers; Our international operations are subject to risks that we do not face in the United States, which could have an adverse effect on our operating results; Growth of the wind energy market depends largely on the availability and size of government subsidies, economic incentives and legislative programs designed to support the growth of wind energy; Lower prices for other fuel sources may reduce the demand for wind energy development, which could have a material adverse effect on our ability to grow our Wind business; ~~The increasing focus on environmental sustainability and social initiatives could increase our costs, and inaction could harm our reputation and adversely impact our financial results;~~ We may be unable to adequately prevent disclosure of trade secrets and other proprietary information; Our patents may not provide meaningful protection for our technology, which could result in us losing some or all of our market position; There are a number of technological challenges that must be successfully addressed before our superconductor products can gain widespread commercial acceptance, and our inability to address such technological challenges could adversely affect our ability to acquire customers for our products; Third parties have or may acquire patents that cover the materials, processes and technologies we use or may use in the future to manufacture our Amperium products, and our success depends on our ability to license such patents or other proprietary rights; Our technology and products could infringe intellectual property rights of others, which may require costly litigation and, if we are not successful, could cause us to pay substantial damages and disrupt our business; We face risks related to our legal proceedings; We face risks related to our common stock; and the other important factors discussed under the caption "Risk Factors" in Part 1. Item 1A of our Annual Report on Form 10-K for the fiscal year ended March 31, ~~2022,~~2023, and our other reports filed with the SEC.These important factors, among others, could cause actual results to differ materially from those indicated by forward-looking statements made herein and presented elsewhere by management from time to time. Any such forward-looking statements represent management’s estimates as of the date of this Quarterly Report on Form 10-Q. While we may elect to update such forward-looking statements at some point in the future, we disclaim any obligation to do so, even if subsequent events cause our views to change. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to the date of this Quarterly Report on Form 10-Q.

American Superconductor®, Amperium®, AMSC®, D-VAR®, PowerModule™, D-VAR VVO®, PQ-IVR®, SeaTitan®, Gridtec™ Solutions, Windtec™ Solutions, Smarter, Cleaner...Better Energy™, Orchestrate the Rhythm and Harmony of Power on the Grid™, actiVAR®, armorVAR™, NEPSI™ and Neeltran™ and SafetyLOCK™ are trademarks or registered trademarks of American Superconductor Corporation or our subsidiaries. We reserve all of our rights with respect to our trademarks or registered trademarks regardless of whether they are so designated in this Quarterly Report on Form 10-Q by an ® or ™ symbol. All other brand names, product names, trademarks or service marks appearing in this Quarterly Report on Form 10-Q are the property of their respective holders.

We are a leading system provider of megawatt-scale power resiliency solutions that ~~orchestrate~~Orchestrate the ~~rhythm~~Rhythm and ~~harmony~~Harmony of ~~power~~Power on the ~~grid™~~Grid™, and ~~that~~ protect and expand the capability of ~~the U.S.~~our Navy's fleet. Our solutions enhance the performance of the power grid, protect our Navy’s fleet, and lower the cost of wind power. In the power grid market, we enable electric utilities, industrial facilities, and renewable energy project developers to connect, transmit and distribute smarter, cleaner and better power through our transmission planning services and power electronics and superconductor-based systems. In the wind power market, we enable manufacturers to field highly competitive wind turbines through our advanced power electronics and control system products, engineering, and support services. Our power grid and wind products and services provide exceptional reliability, security, efficiency and affordability to our customers.

Our power system solutions help to improve energy efficiency, alleviate power grid capacity constraints, improve system resiliency, and increase the adoption of renewable energy generation. Demand for our solutions is driven by the growing needs for modernized smart grids that improve power reliability, security and quality, the U.S. Navy's effort to upgrade ~~on-board~~in-board power systems to support fleet electrification, and the need for increased renewable sources of electricity, such as wind and solar energy. Concerns about these factors have led to increased spending by corporations and the military, as well as supportive government regulations and initiatives on local, state, and national levels, including renewable portfolio standards, tax incentives and international treaties.

We manufacture products using two proprietary core technologies: PowerModule™ programmable power electronic converters and our Amperium® high temperature superconductor (“HTS”) wires. These technologies and our system-level solutions are protected by a broad and deep intellectual property portfolio consisting of hundreds of patents and licenses worldwide.

We operate our business under two market-facing business units: Grid and Wind. We believe this market-centric structure enables us to more effectively anticipate and meet the needs of ~~the U.S. Navy, electric utilities, industrial facilities,~~ power generation project developers, the Navy's ship protection systems, electric utilities and wind turbine manufacturers.

Our fiscal year begins on April 1 and ends on March 31. When we refer to a particular fiscal year, we are referring to the fiscal year that began on April 1 of that same year. For example, fiscal ~~2022~~2023 refers to the fiscal year that began on April 1, ~~2022.~~2023. Other fiscal years follow similarly.

On October 31, 2018, we entered into a Subcontract Agreement with Commonwealth Edison Company (“ComEd”) (the “Subcontract Agreement”) for the manufacture and installation of the Company’s resilient electric grid ("REG") system within ComEd’s electric grid in Chicago, Illinois (the “Project”). As provided in the Subcontract Agreement, the Subcontract Agreement became effective upon the signing of an amendment by us and the U.S. Department of Homeland Security (“DHS”) to the existing contract (the “Prime Contract”) between us and DHS on June 20, 2019. Unless terminated earlier by us, ComEd or DHS according to the terms of the Subcontract Agreement, the term of the Subcontract Agreement will continue until we complete our warranty obligations under the Subcontract Agreement. Under the terms of the Subcontract Agreement, we agreed, among other things, to provide the REG system and to supervise ComEd’s installation of the REG system in Chicago. As part of our separate cost sharing arrangement with DHS under the Prime Contract, we received funding provided by DHS in connection with the Subcontract Agreement of approximately $10.0 million, which represents the total amount of revenue we recognized over the term of the Subcontract Agreement and includes $1.0 million that we have agreed to reimburse ComEd for costs incurred by ComEd while undertaking its tasks under the Subcontract Agreement (the “Reimbursement Amount”). In addition, we are required to deliver an irrevocable letter of credit in the amount of $5.0 million to secure certain Company obligations under the Subcontract Agreement, which we have done, and deposited $5.0 million in an escrow account as collateral to secure such letter of credit. We expect that this irrevocable letter of credit will be terminated and the full $5.0 million will be returned from escrow to us during the quarter ending March 31, 2023. ComEd has agreed to provide the site and provide all civil engineering work required to support the operation and integration of the REG system into ComEd’s electric grid. Other than the Reimbursement Amount, ComEd is responsible for its own costs and expenses. DHS’s approval to commence with construction was obtained on June 20, 2019. Substation work on the project began in late 2019 and we successfully integrated the REG system on Com Ed's electric power grid and the REG system became fully operational in August 2021.

We ~~are experiencing substantial~~continue to experience some inflationary pressure in our supply chain and some delays in sourcing materials needed for our products, resulting in some production disruption, both of which have increased our cost of revenues and decreased gross margin. While the impact of inflation has been challenging, we continue to take actions to limit this pressure including adjusting the pricing of our products and services. Changes in macroeconomic ~~and market~~ conditions arising from ~~the COVID-19 pandemic, or for other~~various reasons, such as the ongoing ~~war~~wars between Russia and Ukraine and Israel and Hamas, inflation, COVID-19, rising interest rates, labor force availability, sourcing, material delays and global supply chain disruptions, could have a material adverse effect on ~~our~~the Company’s business, financial condition and results of operation.

From time-to-time we may undertake restructuring activities in order to align our global organization in a manner that we believe will better position us to achieve our long-term goals. In January 2023, we undertook a reduction in force that involved approximately 5% of our global workforce. This restructuring is expected to incur ~~an immaterial amount~~$1.0 million of cash ~~expense~~ expenses, of which $0.9 million has been paid as of December 31, 2023 and the remaining $0.1 million is expected to be paid by March 31, 2024, and to result in annualized cost savings of approximately $5$5.0 million, beginning in fiscal ~~year~~2023.

In February 2023, we completed the process of determining and verifying our eligibility and amount of payroll tax credits known as the Employee Retention Credit (“ERC”) under the CARES Act which Congress enacted as part of the Taxpayer Certainty and Disaster Tax Relief Act of 2020. This resulted in filing certain amended payroll tax forms for eligible quarters in 2020 and 2021, which, in the aggregate, totaled $3.3 million. We recognized a receivable in prepaid expenses and other current assets and a benefit to cost of revenues and operating expenses in the quarter ended March 31, 2023. During the nine months ended December 31, 2023, we received $3.0 million in payments for the initial claims that were processed. The remaining balance is expected to be paid during the remainder of fiscal 2023.

The preparation of the unaudited condensed consolidated financial statements requires that we make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We base our estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ under different assumptions or conditions. Certain prior period amounts were reclassified to conform to the presentation in the current period. There were no significant changes in the critical accounting policies that were disclosed in our Annual Report on Form 10-K for the fiscal year ended March 31, ~~2022.~~2023.

Three and nine months ended December 31, ~~2022~~2023, compared to the three and nine months ended December 31, ~~2021~~2022

Total revenues ~~decreased 11%~~increased 65% to ~~$23.9~~$39.4 million for the three months ended December 31, ~~2022~~2023 and total revenues ~~decreased 7%~~increased 40% to ~~$74.2~~$103.6 million for the nine months ended December 31, ~~2022~~2023, compared to ~~$26.8~~$23.9 million and ~~$80.1~~$74.2 million for the three and nine months ended December 31, ~~2021,~~2022, respectively. Our revenues are summarized as follows (in thousands):

Our Grid business unit accounted for ~~87% and 89%~~85% of total revenues for each of the three and nine months ended December 31, ~~2022~~,2023, respectively, compared to ~~93%~~ 87% and ~~91%~~ 89% for the three and nine months ended December 31, ~~2021,~~2022, respectively. Our Grid business unit revenues ~~decreased~~ ~~17%~~ increased 61% to $33.6 million in the three months ended December 31, 2023, from $20.8 million in the three months ended December 31, ~~2022, from $25.0 million in the three months ended December 31, 2021.~~2022. Our Grid business unit revenues ~~decreased 9%~~increased 32% to ~~$66.3 million in the nine months~~ ~~ended~~ ~~December 31, 2022, from $73.2~~$87.9 million in the nine months ended December 31, ~~2021~~.2023, from $66.3 million in the nine months ended December 31, 2022. The ~~decrease~~increase in the Grid business unit ~~revenue~~revenues in the three and nine months ended December 31, 2023, compared to the three and nine months ended December 31, 2022 was primarily driven by increased shipments of new energy power systems and increased ship protection systems revenues than in the prior year periods.

Our Wind business unit accounted for 15% of total revenues for each of the three and nine months ended December 31, 2023, respectively, compared to 13% and 11% for the three and nine months ended December 31, 2022, respectively. Revenues in the Wind business unit increased 87% and 99% to $5.8 million and $15.8 million in the three and nine months ended December 31, 2023, from $3.1 million and $7.9 million in the three and nine months ended December 31, 2022, ~~was primarily driven by lower D-VAR revenues than in the prior year periods.~~

~~Our Wind business unit accounted for 13% and 11% of total revenues for~~respectively. The increase during the three and nine months ended December 31, ~~2022, respectively, compared~~2023, compared to ~~7% and 9% for the~~ ~~three and nine~~ ~~months ended~~ ~~December 31, 2021, respectively. Revenues in the Wind business unit increased~~ ~~76%~~ ~~and 14% to $3.1~~ ~~million and $7.9 million in the~~ ~~three and nine~~ ~~months ended~~ ~~December 31, 2022, from $1.7 million and $7.0 million in the~~ ~~three and nine~~ ~~months ended~~ ~~December 31, 2021, respectively. The increase in~~ the three and nine months ended December 31, 2022, was driven by additional shipments of electrical control systems ("ECS") ~~to Inox in the three months ended December 31, 2022.~~at increased prices.

Cost of revenues increased bby 26% to $29.4 million for the three months ended ~~y 1%~~December 31, 2023, compared to $23.4 million for the three months ended December 31, 2022. ~~, compared~~Cost of revenues increased by 13% to ~~$23.2~~$78.8 million for the ~~three month~~snine months ended December 31, ~~2021. Cost of revenues decreased by less than 1%~~2023, compared to $69.5 million for the nine months ended December 31, ~~2022, compared to $69.9 million for the nine months ended December 31, 2021.~~ 2022. Gross margin was 25% and 24% for the three and nine months ended December 31, 2023, respectively, compared to 2% and 6% for the three and nine months ended December 31, 2022, ~~respectively, compared to 13% for both the~~respectively. ~~three and nine~~ ~~months ended~~ ~~December 31, 2021~~. The ~~decrease~~increase in gross margin in the three and nine months ended December 31, ~~2022~~, 2023 was due to ~~lower~~higher revenues, ~~contract losses, an unfavorable~~a more favorable product mix and ~~inflation pressure in~~favorable impacts across the business due to pricing increases across our ~~supply chain.~~product lines.

Research and development ("R&D") ~~expense decreased 22%~~expenses increased 6% in the three months ended December 31, ~~2022,~~2023 to ~~$2.1~~$2.2 million from ~~$2.7~~$2.1 million in the three months ended December 31, ~~2021.~~2022. The increase was driven primarily by lower cost share revenue. R&D expense decreased ~~15%~~20% in the nine months ended December 31, ~~2022,~~ 2023to ~~$7.1~~$5.7 million from ~~$8.4~~$7.1 million in the nine months ended December 31, ~~2021.~~2022. The decrease ~~in R&D expense~~ was ~~due to lower overall~~driven primarily by decreased compensation, ~~expense~~materials and ~~an increase in utilization of our research engineers supporting funded projects.~~ supplies expenses.

Selling, general and administrative ("SG&A") ~~expenses~~expenses increased 6%9% in the three months ended December 31, ~~2022~~, 2023to $~~7.2~~7.8 million from ~~$6.8~~$7.2 million in the three months ended December 31, ~~2021~~2022.SG&A expenses increased 7% to $23.6 million in the nine months ended December 31, 2023, compared to $22.1 million in the nine months ended December 31, 2022. The increase in SG&A expense in the three ~~months ended December 31, 2022, was due to higher stock compensation expense than in the prior year period.~~ ~~SG&A expenses increased 7% to $22.1 million in the nine months ended~~ ~~December 31, 2022, compared to $20.6 million in the~~and nine months ended December 31, ~~2021.~~ ~~The increase in SG&A expense in the nine months ended December 31, 2022,~~2023, was due to higher overall ~~sales~~compensation expense than in each of the prior year ~~period.~~ periods.

We recorded amortization expense related to our core technology and know-how, customer relationships, and other intangible assets of $0.5 million and $1.6 million in the three and nine months ended December 31, 2023, respectively, and $0.7 million and $2.1 million in the three and nine months ended December 31, 2022, ~~respectively, and $0.6 million and $1.8 million in the three and nine months ended December 31, 2021,~~ respectively. The ~~increase~~decrease in amortization expense in both periods is a result of ~~additional expense tied~~using the economic consumption method as the basis to amortize the ~~acquisition of~~acquired customer relationship intangible assets from Northeast Power Systems, Inc ("NEPSI") and Neeltran.

The change in fair value of our contingent consideration for the earnout payment on the acquisition of NEPSI ~~Acquisition~~ resulted in losses of $0.9 million and $3.1 million resulting from the increase in the fair value of the contingent consideration in the three and nine months ended December 31, 2023, respectively. During the three and nine months ended December 31, 2023 we issued 399,999 shares and cash in lieu of a fractional share of common stock related to the achievement of specified revenue objectives in connection with the acquisition of NEPSI at a fair value of $3.1 million. One specified revenue objective, which would have earned the selling stockholders 300,000 shares of our common stock, was not achieved, leaving 300,000 shares of common stock remaining for potential issuance upon the achievement of the last specified revenue objective by September 30, 2024. We recorded the above noted losses, compared to a gain of $0.2 million and $0.3 million in the three and nine months ended December 31, 2022, ~~respectively, compared to a gain of $2.1 million and $4.4 million in the three and nine months ended December 31, 2021,~~ respectively. The change in the fair value was ~~primarily~~ driven by ~~a decreased~~an increased likelihood of achieving certain revenue targets and ~~a decline~~an increase in ~~the Company's~~our stock price.

~~Our~~Our Grid business segment generated operating ~~losses~~income of ~~$7.1~~$0.3 million and ~~$20.9 million in the three and nine months ended~~ ~~December 31, 2022, compared to~~ operating ~~losses~~loss of ~~$3.7 million and $14.9~~$2.4 million in the three and nine months ended December 31, ~~2021~~2023., respectively, compared to operating losses of $7.1 million and $20.9 million in the three and nine months ended December 31, 2022, respectively. The increase in the Grid business unit operating loss in the three months ended December 31, 2022, was due to lower gross margins due to an unfavorable product mix, and higher operating expenses. The increase in the Grid business unit operating loss in the nine months ended December 31, 2022 was due to lower revenues and gross margins.

~~Our Wind business segment generated operating losses of $0.9 million and $2.2 million in the~~ ~~three and nine~~ ~~months ended~~ ~~December 31, 2022, compared to operating losses of $1.7 million and $2.2 million in the~~ ~~three and nine~~ ~~months ended~~ ~~December 31, 2021, respectively.~~ ~~The decrease in the Wind business unit operating loss was due to higher revenues and gross margins.~~

~~Unallocated corporate expenses included a gain on contingent consideration of $0.2 million and $0.3 million~~ income in the three and nine months ended December 31, ~~2022.~~ 2023 was due to higher revenues and gross margins due to a favorable product mix as well as the reduction of the remaining acquired Neeltran backlog.

Our Wind business segment generated operating income of $0.3 million and operating loss of $0.1 million in the three and nine months ended December 31, 2023, respectively, compared to operating losses of $0.9 million and $2.2 million in the three and nine months ended December 31, 2022, respectively. The improvement in the Wind business unit operating income in the three and nine months ended December 31, 2023 was due to higher revenues and gross margins from increased sales of ECS units.

Unallocated corporate expenses included net losses of $0.9 million and $3.1 million resulting from the increases in the fair value of the NEPSI contingent consideration in the three and nine months ended December 31, 2023, respectively. Additionally, unallocated corporate expenses consisted of ~~a gain on contingent consideration~~stock-based compensation expense of ~~$2.1~~$1.1 million and ~~$4.4~~$3.6 million in the three and nine months ended December 31, ~~2021, respectively. Additionally, unallocated corporate expenses primarily consisted of stock-based compensation expense of~~2023, respectively, and $1.4 million and ~~$1.1~~$3.5 million in the three and nine months ended December 31, 2022, ~~and 2021, respectively, and $3.5 million in each of the nine months ended December 31, 2022 and 2021,~~ respectively.

Interest income, net, was $0.2 million and $0.5 million in the three and nine months ended December 31, 2023, respectively, compared to less ~~tha~~nthan $0.1 million and $0.1 million in the three and nine months ended December 31, 2022, respectively, due to higher earned interest at increased interest rates in the fiscal year 2023 periods.

China dissolution expense was $1.9 million in the nine months ended December 31, 2022, and there was no similar transaction in the three and nine months ended December 31, 2023, or the three months ended December 31, ~~2022 and 2021, respectively. Interest income, net, was $0.1 million in~~2022. The impact of the China dissolution expense during the nine months ended December 31, 2022 ~~and less than $0.1 million in the nine months ended December 31, 2021.~~

Other expense, net, was $0.3 million and $0.6 million in the three and nine~~$0.3~~ months ended December 31, 2023, respectively, compared to other expense, net, of $0.3 million and less than $0.1 million in the three and nine months ended December 31, 2022,~~, respectively, compared to other income,~~ respectively. The increase in other expense, net, ~~of less than $0.1 million in both~~during the three and nine months ended December 31, ~~2021.~~ ~~The increase in other expense during~~2023, compared to the three and nine months ended December 31, 2022, was driven by the impacts of unfavorable fluctuations in foreign currencies during the ~~respective~~ periods.

Income tax expense was $0.1 million and $0.3 million in the three and nine months ended December 31, 2023, respectively. Income tax expense was $0.1 million in each of the three and nine months ended December 31, 2022. ~~Income tax expense~~

Net loss was ~~less than $0.1~~$1.6 million and $9.5 million in the three and nine months ended December 31, ~~2021 and income tax benefit was $1.9 million in the nine months ended December 31, 2021. The increase in income tax expense in the three months ended December 31, 2022~~2023, respectively, compared to the same period in fiscal 2021 was primarily due to lower withholding taxes from foreign jurisdictions in the three months ended December 31, 2022. The increase in income tax expense in the nine months ended December 31, 2022 compared to the same period in fiscal 2021 was a result of the release of the valuation allowance to offset the recording of the deferred tax liability from the Neeltran Acquisition in the nine months ended December 31, 2021.

~~Net loss was~~ ~~$9.6~~$9.6 million and $28.2 million in the three and nine months ended December 31, 2022, ~~compared to $4.3 million and $14.2 million in the three and nine months ended December 31, 2021.~~respectively. The ~~increase~~decrease in net loss in both periods was driven primarily by the increased ~~operating loss due to lower~~ revenues and gross margins.

Generally, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position or cash flow that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. The non-GAAP measures included in this Quarterly Report on Form 10-Q, however, should be considered in addition to, and not as a substitute for or superior to the comparable measures prepared in accordance with GAAP.

We define non-GAAP net ~~loss~~income (loss) as net loss before China dissolution, stock-based compensation, amortization of acquisition-related intangibles, ~~acquisition costs,~~ change in fair value of contingent consideration, and other non-cash or unusual charges. We believe non-GAAP net ~~loss~~ income (loss) assists management and investors in comparing our performance across reporting periods on a consistent basis by excluding these non-cash charges and other items that we do not believe are indicative of our core operating performance. In addition, we use non-GAAP net ~~loss~~income (loss) as a factor to evaluate the effectiveness of our business strategies. A reconciliation of GAAP to non-GAAP net ~~loss~~income (loss) is set forth in the table below (in thousands, except per share data):

We incurred non-GAAP net income of $0.9 million and a non-GAAP net loss of $1.3 million, or $0.03 and $(0.04) per share, for the three and nine months ended December 31, 2023, respectively, compared to non-GAAP net losses of $~~7.7~~$7.7 million and $21.0 million, or $~~0.27~~$(0.27) and ~~$0.76~~$(0.76) per share, for the three and nine months ended December 31, 2022, ~~compared to $4.6 million and $12.4 million, or $0.17 and $0.46 per share, for the~~ ~~three and nine~~ ~~months ended~~ ~~December 31, 2021~~. respectively. The ~~increase~~improvement in the non-GAAP net ~~loss~~income (loss) for the three and nine months ended December 31, ~~2022~~2023 was due to a ~~higher~~lower operating loss driven by ~~lower~~higher revenues and gross ~~margin and higher operating expenses.~~ margins.

We have experienced recurring operating losses and, as of December 31, ~~2022~~2023, had an accumulated deficit of ~~$1,049~~$1,065.1 million.

Our cash requirements depend on numerous factors, including the successful completion of our product development activities, our ability to commercialize our ~~REG~~Resilient Electric Grid and ship protection system solutions, the rate of customer and market adoption of our products, collecting receivables according to established terms, the continued availability of U.S. government funding during the product development phase of our superconductor-based products and whether Inox is successful in executing on Solar Energy Corporation of India Limited orders or in obtaining additional orders under the new central and state auction regime. We continue to closely monitor our expenses and, if required, expect to reduce our operating and capital spending to enhance liquidity.

In February 2021, we filed a shelf registration statement on Form S-3 that will expire in February 2024 (the “Form S-3”). The Form S-3 allows us to offer and sell from time-to-time up to $250 million of common stock, debt securities, warrants or units comprised of any combination of these securities. The Form S-3 is intended to provide us flexibility to conduct registered sales of our securities, subject to market conditions, in order to fund our future capital needs. The terms of any future offering under the Form S-3 will be established at the time of such offering and will be described in a prospectus supplement filed with the SEC prior to the completion of any such offering.

As of December 31, ~~2022~~2023, we had cash, cash equivalents and restricted cash of ~~$31.4~~$25.0 million, compared to ~~$49.5~~$25.7 million as of March 31, ~~2022,~~2023, a decrease of ~~$18.1~~$0.7 million. As of December 31, ~~2022~~2023, we had ~~approximately $1.8~~$2.4 million ofin cash, cash equivalents, and restricted cash in foreign bank accounts. Our cash, cash equivalents, and restricted cash are summarized as follows (in thousands):

For the nine months ended December 31, ~~2022~~,2023, net cash used in operating activities was ~~$17.1~~$0.1 million, compared to ~~$15.9~~$17.1 million for the nine months ended December 31, ~~2021.~~ 2022. The ~~increase~~decrease in net cash used in operations was due primarily to ~~an increase~~decreases in ~~inventory purchases offset by accounts receivable collections~~net loss and in prepaid expenses and other current assets in the nine months ended December 31, ~~2022~~2023 as compared to December 31, ~~2021.~~2022. Cash flows from operating activities in the nine months ended December 31, 2023 included a reimbursement of $3.0 million for the ERC receivable included in prepaid expenses and other current assets at March 31, 2023.

For the nine months ended December 31, ~~2022~~,2023, net cash used in investing activities was $~~1.2~~$0.6 million, compared to ~~$7.1~~$1.2 million for the nine months e~~nded~~ ended December 31, ~~2021~~.2022. The decrease in net cash used in investing activities was primarily due to ~~the cash that was used to pay for the Neeltran Acquisition~~a decrease in ~~the nine months ended December 31, 2021. There was no such transaction in the nine months ended December 31, 2022.~~ purchases of property, plant and equipment.

For the nine months ended December 31, ~~2022~~ ~~and 2021, respectively,~~2023, net cash provided by financing activities ~~remained consistent at~~was $0.1 million. For the nine months ended December 31, 2022, net cash provided by financing activities was less than $0.1 million.

As of December 31, ~~2022~~,2023, we had ~~$1.0~~$0.4 million of restricted cash included in long-term assets and ~~$6.6~~$0.7 million of restricted cash included in current assets. At March 31, 2023, we had $0.6 million of restricted cash included in long-term assets and $1.7 million of restricted cash in current assets. These amounts ofincluded in restricted cash primarily represent collateral deposits to secure surety bonds and letters of credit for various ~~supply contracts and long-term projects, including the irrevocable letter of credit in the amount of $5.0 million to secure certain of our obligations under the Subcontract Agreement with ComEd.~~customer contracts. These deposits are held in interest bearing accounts.

We are a party to many contractual obligations involving commitments to make payments to third parties. These obligations impact our short-term and long-term liquidity and capital resource needs. Certain contractual obligations are reflected on the consolidated balance sheet as of December 31, ~~2022,~~2023, while others are considered future commitments. We have various contractual arrangements, under which we have committed to purchase certain minimum quantities of goods or services on an annual basis. For information regarding our other contractual obligations, refer to Note 13, "Contingent Consideration," Note 14, "Debt," Note 15, "Leases" and Note 16, "Commitments and Contingencies" to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

We believe we have sufficient available liquidity to fund our operations and capital expenditures for the next twelve months. In addition, we may seek to raise additional capital, which could be in the form of loans, convertible debt or equity, to fund our operating requirements and capital expenditures. Our liquidity is highly dependent on our ability to increase revenues, ~~improve upon gross margins,~~ control our operating costs, and raise additional capital, if necessary. There can be no assurance that we will be able to raise additional capital on favorable terms or at all or execute on any other means of improving our liquidity as described above. Additionally, the impact of COVID-19 or other sources of instability, including the ~~COVID-19 pandemic~~ongoing wars between Russia and ~~adverse macroeconomic conditions~~Ukraine or Israel and Hamas, instability of financial institutions and political instability in the United States, on the global financial markets may reduce our ability to raise additional capital, if necessary, which could negatively impact our liquidity. We also continue to closely monitor our expenses and, if required, we intend to reduce our operating and capital spending to enhance liquidity.

WeFrom time to time, we are involved in legal and administrative proceedings and claims of various types. ~~See Part II, Item 1, “Legal Proceedings,” for additional information.~~ We record a liability in our condensed consolidated financial statements for these matters when a loss is known or considered probable and the amount can be reasonably estimated. We review these estimates each accounting period as additional information is known and adjust the loss provision when appropriate. If a matter is both probable to result in liability and the amounts of loss can be reasonably estimated, we estimate and disclose the possible loss or range of loss to the extent necessary to make the condensed consolidated financial statements not misleading. If the loss is not probable or cannot be reasonably estimated, a liability is not recorded in our condensed consolidated financial statements.

In June 2016, the ~~FASB~~Financial Accounting Standards Board ("FASB") issued ~~ASU 2016-13,~~Accounting Standards Update ("ASU") 2016-13, Financial Instruments-Credit Losses (Topic326): Measurement of Credit Losses on Financial Instruments. The amendments in ASU 2016-13 will provide more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. Following the release of ASU 2019-10 in November 2019, the ~~new~~ effective date, as long as ~~we remain~~the Company remains a smaller reporting company, ~~would be~~was annual reporting periods beginning after December 15, 2022. WeAs of April 1, 2023, we have ~~evaluated the impact of the adoption of~~adopted ASU 2016-13 and ~~do not expect it to have a~~noted no material impact on our condensed consolidated financial statements.

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. The amendments in ASU 2021-08 will improve the accounting for acquired revenue contracts with customers in a business combination. Following the release of ASU 2021-08 in October 2021, the ~~new~~effective date was annual reporting periods beginning after December 15, 2022. As of April 1, 2023, we have adopted ASU 2021-08 and noted no material impact on our condensed consolidated financial statements.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The amendments in ASU 2023-07 improve the disclosures about a public entity’s reportable segments and address requests from investors for additional, more detailed information about a reportable segment’s expenses. Following the release of ASU 2023-07 in November 2023, the effective date will be annual reporting periods beginning after December 15, ~~2022. We have evaluated~~2024. As of December 31, 2023, we are evaluating the impact ~~of the adoption of ASU 2021-08, and do not expect it to have a material impact~~ on our condensed consolidated financial statements.

In ~~November 2021,~~December 2023, the FASB issued ASU ~~2021-10,~~2023-09, ~~Government Assistance~~Income Taxes (Topic ~~832)~~740): Improvements to Income Tax Disclosures ~~by Business Entities about Government Assistance~~. The amendments in ASU ~~2021-10 improve financial reporting by requiring~~2023-09 address investor requests for more transparency about income tax information through improvements to income tax disclosures ~~that increase~~primarily related to the ~~transparency of transactions with government accounted for by applying a grant or contribution accounting model by analogy.~~rate reconciliation and income taxes paid information. Following the release of ASU ~~2021-10~~2023-09 in ~~November 2021,~~December 2023, the effective date ~~was~~will be annual reporting periods beginning after December 15, ~~2021.~~2024. As of ~~April 1, 2022,~~December 31, 2023, we ~~have adopted ASU 2021-10 and noted no material~~are evaluating the impact on our condensed consolidated financial statements.

We do not believe that, outside of those disclosed here, there are any other recently issued accounting pronouncements that will have a material impact on our condensed consolidated financial statements.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of December 31, ~~2022~~2023. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of December 31, ~~2022~~2023, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

There were no changes to our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended December 31, ~~2022~~2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

There have been no material changes to the risk factors described in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended March 31, ~~2022,~~2023, filed with the SEC on ~~June 1, 2022.~~May 31, 2023.

The Company’s stock repurchase activity during the three months ended December 31, ~~2022~~2023 was as follows:

(a) During the three months ended December 31, ~~2022~~2023, we did not repurchase shares in connection with our stock-based compensation plans.

~~None~~On December 13, 2023, Daniel P. McGahn, Chairman, President and Chief Executive Officer, adopted a Rule 10b5-1 trading arrangement that is intended to satisfy the affirmative defense of Rule 10b5-1(c) for the sale of up to 57,724 shares of the Company’s common stock until the earlier of (i) June 28, 2024, or (ii) the date in which all shares under the trading arrangement are sold.

On December 6, 2023, John W. Kosiba, Jr., Senior Vice President, Chief Financial Officer and Treasurer, adopted a Rule 10b5-1 trading arrangement that is intended to satisfy the affirmative defense of Rule 10b5-1(c) for the sale of up to 61,000 shares of the Company’s common stock until the earlier of (i) June 28, 2024, or (ii) the date in which all shares under the trading arrangement are sold.

Attached as Exhibits 101 to this report are the following formatted in inline XBRL (Extensible Business Reporting Language): (i) Condensed Consolidated Balance ~~Sheet~~Sheets as of December 31, ~~2022~~2023 and March 31, ~~2022~~2023 (ii) Condensed Statements of Operations ~~and Income~~ for the three and nine months ended December 31, ~~2022~~2023 and ~~2021,~~2022, (iii) Condensed Consolidated Statements of Comprehensive ~~(Loss) Income~~Loss for the three and nine months ended December 31, ~~2022~~2023 and ~~2021,~~2022, (iv) Condensed Consolidated Statements of Cash Flows for the nine months ended December 31, ~~2022~~2023 and ~~2021,~~2022, and (v) Notes to Condensed Consolidated Financial Statements.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		Page No.
PART I—FINANCIAL INFORMATION

Item 1.	Financial Statements	3

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2327

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3035

Item 4.	Controls and Procedures	3035

PART II—OTHER INFORMATION

Item 1.	Legal Proceedings	3136

Item 1A.	Risk Factors	3136

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3136

Item 3.	Defaults Upon Senior Securities	3136

Item 4.	Mine Safety Disclosure	3136

Item 5.	Other Information	3136

Item 6.	Exhibits	3237

Signature		3338

	*December 31, 2022*			*March 31, 2022*			*December 31, 2023*			*March 31, 2023*
ASSETS
Current assets:
Cash and cash equivalents	$	23,685		$	40,584		$	23,979		$	23,360
Accounts receivable, net		17,568			20,280			24,721			30,665
Inventory, net		38,725			23,666			44,197			36,986
Prepaid expenses and other current assets		7,544			7,052			6,635			13,429
Restricted cash		6,643			2,754			667			1,733
Total current assets		94,165			94,336			100,199			106,173

Property, plant and equipment, net		12,611			13,656			11,205			12,309
Intangibles, net		9,215			11,311			6,907			8,527
Right-of-use assets		3,068			3,502			2,401			2,857
Goodwill		43,471			43,471			43,471			43,471
Restricted cash		1,023			6,148			379			582
Deferred tax assets		1,086			1,224			1,141			1,114
Other assets		433			239			640			528
Total assets	$	165,072		$	173,887		$	166,343		$	175,561

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Accounts payable and accrued expenses	$	32,060		$	29,140		$	23,002		$	38,383
Lease liability, current portion		822			740			680			808
Debt, current portion		72			72			41			75
Contingent consideration		860			1,200			1,230			1,270
Deferred revenue, current portion		34,239			22,812			52,598			43,572
Total current liabilities	$	68,053			53,964		$	77,551		$	84,108

Deferred revenue, long-term portion		7,176			7,222			7,145			7,188
Lease liability, long-term portion		2,375			2,900			1,861			2,184
Deferred tax liabilities		202			297			235			243
Debt, long-term portion		35			90			—			15
Other liabilities		24			25			26			26
Total liabilities		77,865			64,498			86,818			93,764

Commitments and Contingencies (Note 16)

Stockholders' equity:
Common stock		299			289			311			299
Additional paid-in capital		1,137,622			1,133,536			1,146,405			1,139,113
Treasury stock		(3,639	)		(3,639	)		(3,639	)		(3,639	)
Accumulated other comprehensive income (loss)		1,603			(291	)
Accumulated other comprehensive income								1,527			1,571
Accumulated deficit		(1,048,678	)		(1,020,506	)		(1,065,079	)		(1,055,547	)
Total stockholders' equity		87,207			109,389			79,525			81,797
Total liabilities and stockholders' equity	$	165,072		$	173,887		$	166,343		$	175,561

	*Three Months Ended*						*Nine Months Ended*						*Three Months Ended*						*Nine Months Ended*
	*December 31,*						*December 31,*						*December 31,*						*December 31,*
	*2022*			*2021*			*2022*			*2021*			*2023*			*2022*			*2023*			*2022*
Revenues	$	23,881		$	26,799		$	74,241		$	80,126		$	39,353		$	23,881		$	103,611		$	74,241

Cost of revenues		23,364			23,227			69,533			69,925			29,369			23,364			78,759			69,533

Gross margin		517			3,572			4,708			10,201			9,984			517			24,852			4,708

Operating expenses:
Research and development		2,083			2,657			7,076			8,368			2,199			2,083			5,693			7,076
Selling, general and administrative		7,173			6,777			22,084			20,615			7,833			7,173			23,648			22,084
Amortization of acquisition-related intangibles		690			628			2,058			1,840			538			690			1,614			2,058
Change in fair value of contingent consideration		(220	)		(2,110	)		(340	)		(4,440	)		852			(220	)		3,052			(340	)
Restructuring														—			—			(14	)		—
Total operating expenses		9,726			7,952			30,878			26,383			11,422			9,726			33,993			30,878

Operating loss		(9,209	)		(4,380	)		(26,170	)		(16,182	)		(1,438	)		(9,209	)		(9,141	)		(26,170	)

Interest income, net		42			12			112			68			150			42			518			112
China dissolution		-			-			(1,921	)		-			—			—			—			(1,921	)
Other income (expense), net		(287	)		45			(48	)		7
Other expense, net														(298	)		(287	)		(618	)		(48	)
Loss before income tax expense		(9,454	)		(4,323	)		(28,027	)		(16,107	)		(1,586	)		(9,454	)		(9,241	)		(28,027	)

Income tax expense (benefit)		127			1			144			(1,946	)
Income tax expense														63			127			291			144

Net loss	$	(9,581	)	$	(4,324	)	$	(28,171	)	$	(14,161	)	$	(1,649	)	$	(9,581	)	$	(9,532	)	$	(28,171	)

Net loss per common share
Basic	$	(0.34	)	$	(0.16	)	$	(1.01	)	$	(0.52	)	$	(0.06	)	$	(0.34	)	$	(0.33	)	$	(1.01	)
Diluted	$	(0.34	)	$	(0.16	)	$	(1.01	)	$	(0.52	)	$	(0.06	)	$	(0.34	)	$	(0.33	)	$	(1.01	)

Weighted average number of common shares outstanding
Basic		27,954			27,352			27,794			27,145			29,092			27,954			28,728			27,794
Diluted		27,954			27,352			27,794			27,145			29,092			27,954			28,728			27,794

	*Three Months Ended*						*Nine Months Ended*						*Three Months Ended*						*Nine Months Ended*
	*December 31,*						*December 31,*						*December 31,*						*December 31,*
	*2022*			*2021*			*2022*			*2021*			*2023*			*2022*			*2023*			*2022*
Net loss	$	(9,581	)	$	(4,324	)	$	(28,171	)	$	(14,161	)	$	(1,649	)	$	(9,581	)	$	(9,532	)	$	(28,171	)
Other comprehensive (loss) gain, net of tax:
China dissolution		-			-			1,921			-			—			—			—			1,921
Foreign currency translation (loss) gain		(195	)		20			(27	)		(19	)
Foreign currency translation loss														(106	)		(195	)		(44	)		(27	)
Total other comprehensive (loss) gain, net of tax		(195	)		20			1,894			(19	)		(106	)		(195	)		(44	)		1,894
Comprehensive loss	$	(9,776	)	$	(4,304	)	$	(26,277	)	$	(14,180	)	$	(1,755	)	$	(9,776	)		(9,576	)	$	(26,277	)

	*Nine Months Ended December 31,*						*Nine Months Ended December 31,*
	*2022*			*2021*			*2023*			*2022*
Cash flows from operating activities:

Net loss	$	(28,171	)	$	(14,161	)	$	(9,532	)	$	(28,171	)
Adjustments to reconcile net loss to net cash used in operations:
Depreciation and amortization		4,104			4,009			3,360			4,104
Stock-based compensation expense		3,492			3,513			3,608			3,492
Provision for excess and obsolete inventory		1,247			1,627			1,536			1,247
Deferred income taxes		65			(2,136	)		3			65
Change in fair value of contingent consideration		(340	)		(4,440	)		3,052			(340	)
China dissolution		1,921			-			—			1,921
Non-cash interest income		-			(49	)
Other non-cash items		185			407			495			185
Unrealized foreign exchange loss on cash and cash equivalents		(3	)		(118	)		(1	)		(3	)
Changes in operating asset and liability accounts:
Accounts receivable		2,738			(4,528	)		5,945			2,738
Inventory		(16,324	)		(279	)		(8,737	)		(16,324	)
Prepaid expenses and other assets		(165	)		85			7,139			(165	)
Accounts payable and accrued expenses		2,565			(236	)		(15,859	)		2,565
Deferred revenue		11,619			381			8,894			11,619
Net cash used in operating activities		(17,067	)		(15,925	)		(97	)		(17,067	)

Cash flows from investing activities:
Purchase of property, plant and equipment		(970	)		(710	)		(635	)		(970	)
Cash paid for acquisition, net of cash acquired		-			(11,479	)
Proceeds from the maturity of marketable securities		-			5,189
Change in other assets		(194	)		(56	)		(8	)		(194	)
Net cash used in investing activities		(1,164	)		(7,056	)		(643	)		(1,164	)

Cash flows from financing activities:
Repurchase of treasury stock		-			(46	)
Repayment of debt		(56	)		(30	)		(49	)		(56	)
Proceeds from exercise of employee stock options and ESPP		127			125			136			127
Net cash provided by financing activities		71			49			87			71

Effect of exchange rate changes on cash		25			(51	)		3			25

Net decrease in cash, cash equivalents and restricted cash		(18,135	)		(22,983	)		(650	)		(18,135	)
Cash, cash equivalents and restricted cash at beginning of period		49,486			75,539			25,675			49,486
Cash, cash equivalents and restricted cash at end of period	$	31,351		$	52,556		$	25,025		$	31,351

Supplemental schedule of cash flow information:
Cash paid for income taxes, net of refunds	$	280		$	445		$	263		$	280
Non-cash investing and financing activities
Issuance of common stock in connection with the purchase of Neeltran, Inc.		-		$	4,387
Issuance of common stock to settle contingent consideration							$	3,092		$	—
Issuance of common stock to settle liabilities	$	476		$	2,643		$	467		$	476

Cash payment	$	4.4
Issuance of 301,556 shares of Company's common stock		4.4
Debt payment to third party lenders on behalf of sellers		7.6
Total consideration	$	16.4

Cash and short-term investments	$	0.5
Net working capital (excluding inventory and deferred revenue)		(0.9	)
Inventory		9.0
Property, plant and equipment		6.5
Deferred revenue		(10.0	)
Deferred tax liability		(2.3	)
Net tangible assets/(liabilities)		2.8

Backlog		0.1
Trade names and trademarks		1.2
Customer relationships		3.5
Net identifiable intangible assets/(liabilities)		4.8

Goodwill		8.8

Total purchase consideration	$	16.4

	*Three Months Ended December 31,*						*Nine Months Ended December 31,*
	*2022*			*2021*			*2022*			*2021*
Revenues	$	23,881		$	26,799		$	74,241		$	82,957
Operating loss		(9,209	)		(4,380	)		(26,184	)		(16,066	)
Net loss	$	(9,581	)	$	(4,324	)	$	(28,186	)	$	(14,323	)

Net loss per common share
Basic	$	(0.34	)	$	(0.16	)	$	(1.01	)	$	(0.53	)
Diluted	$	(0.34	)	$	(0.16	)	$	(1.01	)	$	(0.53	)
Shares - basic		27,954			27,352			27,794			27,185
Shares - diluted		27,954			27,352			27,794			27,185

Cash payment	$	26.0
Issuance of 873,657 shares of Company’s common stock		12.4
Contingent consideration		4.0
Total consideration	$	42.4

	*Three Months Ended December 31, 2022*				*Nine Months Ended December 31, 2022*				*Three Months Ended December 31, 2023*				*Nine Months Ended December 31, 2023*
Product Line:	*Grid*		*Wind*		*Grid*		*Wind*		*Grid*		*Wind*		*Grid*		*Wind*
Equipment and systems	$	19,475	$	2,842	$	61,680	$	6,144	$	31,210	$	4,983	$	81,181	$	13,844
Services and technology development		1,334		230		4,657		1,760		2,393		767		6,673		1,913
Total	$	20,809	$	3,072	$	66,337	$	7,904	$	33,603	$	5,750	$	87,854	$	15,757

Region:
Americas	$	17,010		19	$	51,934	$	19	$	26,782	$	45	$	74,640	$	102
Asia Pacific		1,760		3,053		10,615		7,815		3,704		5,660		8,832		15,587
EMEA		2,039		-		3,788		70		3,117		45		4,382		68
Total	$	20,809	$	3,072	$	66,337	$	7,904	$	33,603	$	5,750	$	87,854	$	15,757

	*Three Months Ended December 31, 2021*				*Nine Months Ended December 31, 2021*				*Three Months Ended December 31, 2022*				*Nine Months Ended December 31, 2022*
Product Line:	*Grid*		*Wind*		*Grid*		*Wind*		*Grid*		*Wind*		*Grid*		*Wind*
Equipment and systems	$	23,416	$	1,309	$	67,605	$	4,168	$	19,475	$	2,842	$	61,680	$	6,144
Services and technology development		1,634		440		5,564		2,789		1,334		230		4,657		1,760
Total	$	25,050	$	1,749	$	73,169	$	6,957	$	20,809	$	3,072	$	66,337	$	7,904

Region:
Americas	$	16,739	$	56	$	57,498	$	134	$	17,010	$	19	$	51,934	$	19
Asia Pacific		7,064		1,690		10,931		6,781		1,760		3,053		10,615		7,815
EMEA		1,247		3		4,740		42		2,039		—		3,788		70
Total	$	25,050	$	1,749	$	73,169	$	6,957	$	20,809	$	3,072	$	66,337	$	7,904

	*Unbilled Accounts Receivable*			*Deferred Program Costs*			*Contract Liabilities*			*Unbilled Accounts Receivable*			*Deferred Program Costs*			*Contract Liabilities*
Beginning balance as of March 31, 2022	$	6,492		$	858		$	30,034
Beginning balance as of March 31, 2023										$	9,958		$	2,136		$	50,760
Increases for costs incurred to fulfill performance obligations		—			909			—			—			2,714			—
Increase (decrease) due to customer billings		(11,723	)		—			48,013			(18,354	)		—			55,018
Decrease due to cost recognition on completed performance obligations		—			(791	)		—			—			(3,518	)		—
Increase (decrease) due to recognition of revenue based on transfer of control of performance obligations		9,544			—			(36,452	)		12,969			—			(46,190	)
Other changes and FX impact		—			(15	)		(180	)		15			5			155
Ending balance as of December 31, 2022	$	4,313		$	961		$	41,415
Ending balance as of December 31, 2023										$	4,588		$	1,337		$	59,743

		Three Months Ended						Nine Months Ended							Three Months Ended						Nine Months Ended
	*Reportable*	*December 31,*						*December 31,*						Reportable	December 31,						December 31,
	*Segment*	*2022*			*2021*			*2022*			*2021*			Segment	2023			2022			2023			2022
Inox Wind Limited	Wind		11	%	<10%			<10%			<10%			Wind		11	%		11	%		12	%	<10%
Fuji Bridex Pte Ltd	Grid	<10%				20	%		10	%		10	%	Grid	<10%			<10%			<10%				10	%

	*Goodwill*
March 31, 2021	$	34,634
Neeltran Acquisition		8,837
March 31, 2022	$	43,471
Less impairment loss		-
December 31, 2022	$	43,471

Years ended March 31,	*Total*
2023		688
Years ending March 31,			*Total*
2024		2,158		538
2025		1,648		1,648
2026		1,221		1,221
2027		1,085		1,085
2028				543
Thereafter		615		72
Total	$	7,415	$	5,107

	*December 31, 2022*							*March 31, 2022*									*December 31, 2023*							*March 31, 2023*
	*Gross Amount*		*Accumulated Amortization*			*Net Book Value*		*Gross Amount*		*Accumulated Amortization*			*Net Book Value*		*Estimated Useful Life*		*Gross Amount*		*Accumulated Amortization*			*Net Book Value*		*Gross Amount*		*Accumulated Amortization*			*Net Book Value*		*Estimated Useful Life*
Licenses	$	3,610	$	(3,610	)		—	$	3,610	$	(3,610	)		—		7
Backlog	$	681	$	(675	)	$	6	$	681	$	(631	)	$	50		2		681		(681	)		—		681		(675	)	$	6		2
Trade name and trademarks		1,800		—			1,800		1,800		—			1,800		Indefinite		1,800		—			1,800		1,800		—			1,800	Indefinite
Customer relationships		9,600		(4,413	)		5,187		9,600		(2,723	)		6,877		7		9,600		(6,232	)		3,368		9,600		(4,980	)		4,620		7
Core technology and know-how		5,970		(3,748	)		2,222		5,970		(3,386	)		2,584		5-10		5,970		(4,231	)		1,739		5,970		(3,869	)		2,101		5-10
Intangible assets	$	21,661	$	(12,446	)	$	9,215	$	21,661	$	(10,350	)	$	11,311			$	18,051	$	(11,144	)	$	6,907	$	18,051	$	(9,524	)	$	8,527

	*Total Carrying Value*		*Quoted Prices in Active Markets (Level 1)*		*Significant Other Observable Inputs (Level 2)*		*Significant Unobservable Inputs (Level 3)*		*Total Carrying Value*		*Quoted Prices in Active Markets (Level 1)*		*Significant Other Observable Inputs (Level 2)*		*Significant Unobservable Inputs (Level 3)*
December 31, 2022:
December 31, 2023:
Assets:
Cash equivalents	$	6,392	$	6,392	$	—	$	—	$	9,936	$	9,936	$	—	$	—
Derivative liabilities:
Contingent consideration	$	860	$	—	$	—	$	860	$	1,230	$	—	$	—	$	1,230

	*Total Carrying Value*		*Quoted Prices in Active Markets (Level 1)*		*Significant Other Observable Inputs (Level 2)*		*Significant Unobservable Inputs (Level 3)*		*Total Carrying Value*		*Quoted Prices in Active Markets (Level 1)*		*Significant Other Observable Inputs (Level 2)*		*Significant Unobservable Inputs (Level 3)*
March 31, 2022:
March 31, 2023:
Assets:
Cash equivalents	$	17,641	$	17,641	$	—	$	—	$	7,913	$	7,913	$	—	$	—
Derivative liabilities:
Contingent consideration	$	1,200	$	—	$	—	$	1,200	$	1,270	$	—	$	—	$	1,270

	*December 31, 2022*			*March 31, 2022*			*December 31, 2023*			*March 31, 2023*
Land							$	980		$	980
Construction in progress - equipment	$	844		$	573			245			748
Land		980			980
Building		5,416			5,270
Buildings								5,416			5,416
Equipment and software		43,938			43,668			44,203			43,156
Finance lease - right of use asset		3			8			—			1
Furniture and fixtures		1,530			1,379			1,537			1,535
Leasehold improvements		6,650			6,634			6,897			6,815
Property, plant and equipment, gross	$	59,361			58,512			59,278			58,651
Less accumulated depreciation		(46,750	)		(44,856	)		(48,073	)		(46,342	)
Property, plant and equipment, net	$	12,611		$	13,656		$	11,205		$	12,309

Level 1	-	Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

Level 2	-	Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability, and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).

Level 3	-	Unobservable inputs that reflect the Company’s assumptions that market participants would use in pricing the asset or liability. The Company develops these inputs based on the best information available, including its own data.

	*Acquisition Contingent Consideration*			*Acquisition Contingent Consideration*
Balance at March 31, 2021	$	7,050
Change in fair value		(5,850	)
Balance at March 31, 2022		1,200		$	1,200
Change in fair value		(340	)		70
Balance at December 31, 2022	$	860
Balance at March 31, 2023					1,270
Settlement of contingent consideration					(3,092	)
Change in fair value					3,052
Balance at December 31, 2023				$	1,230

																	*December 31,*			*September 30,*			*June 30,*
Fiscal Year 2023																	*2023*			*2023*			*2023*
Revenue risk premium																	5.70	%		5.30	%		5.20	%
Revenue volatility																	24.8	%		27.5	%		23	%
Stock Price																$	11.14		$	7.55		$	6.26
Payment delay (days)																	80			80			80
Fair value (millions)																$	1.2		$	3.5		$	2.6

		*December 31,*			*September 30,*			*June 30,*								*March 31,*			*December 31,*			*September 30,*			*June 30,*			*March 31,*
Fiscal Year 2022		*2022*			*2022*			*2022*								*2023*			*2022*			*2022*			*2022*			*2022*
Revenue risk premium		5.30	%		5.20	%		6.60	%								5.30	%		5.30	%		5.20	%		6.60	%		6.50	%
Revenue volatility		25	%		25	%		30	%								25	%		25	%		25	%		30	%		33	%
Stock Price	$	3.68		$	4.38		$	5.18								$	4.91		$	3.68		$	4.38		$	5.18		$	7.61
Payment delay (days)		80			80			80									80			80			80			80			80
Fair value (millions)	$	0.9		$	1.1		$	1.4								$	1.3		$	0.9		$	1.1		$	1.4		$	1.2

	*March 31,*			*December 31,*			*September 30,*			*June 30,*			*March 31,*
Fiscal Year 2021	*2022*			*2021*			*2021*			*2021*			*2021*
Revenue risk premium		6.50	%		6.60	%		6.60	%		6.60	%		6.70	%
Revenue volatility		33	%		33	%		30	%		30	%		30	%
Stock Price	$	7.61		$	10.88		$	14.58		$	17.39		$	18.96
Payment delay (days)		80			80			80			80			80
Fair value (millions)	$	1.2		$	2.6		$	4.7		$	7.2		$	7.1

	December 31, 2022			March 31, 2022			*December 31, 2023*			*March 31, 2023*
Leases:
Right-of-use assets - Financing	$	3			8		$	-			1
Right-of-use assets - Operating		3,068			3,502			2,401			2,857
Total right-of-use assets		3,071			3,510			2,401			2,858

Lease liabilities - ST Financing	$	3			7		$	-			1
Lease liabilities - ST Operating		819			740			680			807
Lease liabilities - LT Financing		-			1
Lease liabilities - LT Operating		2,375			2,900			1,861			2,184
Total lease liabilities		3,197			3,648		$	2,541			2,992

Weighted-average remaining lease term		4.12			4.93			3.5 years			3.95 years
Weighted-average discount rate		6.42	%		6.36	%		8.68	%		6.46	%

	*Leases*		*Leases*
Year ended March 31,
2023	$	256
Year ending March 31,
2024		973	$	234
2025		780		841
2026		720		793
2027		579		646
2028				392
Thereafter		357		15
Total minimum lease payments		3,665		2,921
Less: interest		468		(380	)
Present value of lease liabilities		3,197		2,541

	*Severance pay*
	*and benefits*
Accrued restructuring balance at April 1, 2023	$	717
Charges to operations		(14	)
Cash payments		(600	)
Accrued restructuring balance at December 31, 2023	$	103

	Severance pay
	and benefits
Accrued restructuring balance at April 1, 2022	$	—
Charges to operations		1,048
Cash payments		(331	)
Accrued restructuring balance at March 31, 2023	$	717

	Three Months Ended December 31,				Nine Months Ended December 31,				Three Months Ended December 31,				Nine Months Ended December 31,
	2022		2021		2022		2021		2023		2022		2023		2022
Revenues:
Grid	$	20,809	$	25,050	$	66,337	$	73,169	$	33,603	$	20,809	$	87,854	$	66,337
Wind		3,072		1,749		7,904		6,957		5,750		3,072		15,757		7,904
Total	$	23,881	$	26,799	$	74,241	$	80,126	$	39,353	$	23,881	$	103,611	$	74,241

	December 31, 2022		March 31, 2022		December 31, 2023		March 31, 2023
Cash and cash equivalents	$	23,685	$	40,584	$	23,979	$	23,360
Restricted cash		7,666		8,902		1,046		2,315
Total cash, cash equivalents, and restricted cash	$	31,351	$	49,486	$	25,025	$	25,675

		AMERICAN SUPERCONDUCTOR CORPORATION

		By:	/s/ John W. Kosiba, Jr.
Date:	~~February 1, 2023~~January 24, 2024		John W. Kosiba, Jr.
			Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)