(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 x☒ No ¨

☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ 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 ~~and post~~ such files). Yes x☒ 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.

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 x

☒

Shares outstanding of the Registrant’s common stock:



Common Stock, par value $0.01 per share		~~20,936,769~~ 30,318,511
Class		Outstanding as of ~~February 1, 2018~~October 27, 2023

AMERICAN SUPERCONDUCTOR CORPORATION

INDEX

		Page No.

		~~Page No.~~
PART I—FINANCIAL INFORMATION

Item 1.	Financial Statements	43

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2627

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3635

Item 4.	Controls and Procedures	3635

PART II—OTHER INFORMATION

Item 1.	Legal Proceedings	3736

Item 1A.	Risk Factors	3836

Item 2.	Unregistered Sales of Equity Securities, ~~and~~ Use of Proceeds and Issuer Purchases of Equity Securities	3836

Item 3.	Defaults Upon Senior Securities	3836

Item 4.	Mine Safety Disclosure	3836

Item 5.	Other Information	3936

Item 6.	Exhibits	3937

Signature		4138

AMERICAN SUPERCONDUCTOR CORPORATION

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

	*September 30, 2023*			*March 31, 2023*
ASSETS
Current assets:
Cash and cash equivalents	$	22,818		$	23,360
Accounts receivable, net		27,509			30,665
Inventory, net		47,835			36,986
Prepaid expenses and other current assets		5,398			13,429
Restricted cash		546			1,733
Total current assets		104,106			106,173

Property, plant and equipment, net		11,583			12,309
Intangibles, net		7,445			8,527
Right-of-use assets		2,493			2,857
Goodwill		43,471			43,471
Restricted cash		616			582
Deferred tax assets		1,083			1,114
Other assets		530			528
Total assets	$	171,327		$	175,561

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Accounts payable and accrued expenses	$	28,949		$	38,383
Lease liability, current portion		696			808
Debt, current portion		57			75
Contingent consideration		3,470			1,270
Deferred revenue, current portion		52,093			43,572
Total current liabilities	$	85,265			84,108

Deferred revenue, long-term portion		6,953			7,188
Lease liability, long-term portion		1,929			2,184
Deferred tax liabilities		261			243
Debt, long-term portion		-			15
Other liabilities		25			26
Total liabilities		94,433			93,764

Commitments and Contingencies (Note 16)

Stockholders' equity:
Common stock		307			299
Additional paid-in capital		1,142,023			1,139,113
Treasury stock		(3,639	)		(3,639	)
Accumulated other comprehensive income		1,633			1,571
Accumulated deficit		(1,063,430	)		(1,055,547	)
Total stockholders' equity		76,894			81,797
Total liabilities and stockholders' equity	$	171,327		$	175,561

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

December 31,
2017 March 31,
2017
ASSETS
Current assets:
     Cash and cash equivalents $ 22,113
$ 26,784
     Accounts receivable, net 12,052
7,956
     Inventory 17,129
17,462
     Prepaid expenses and other current assets 2,822
2,703
     Restricted cash —
795
          Total current assets 54,116
55,700

     Property, plant and equipment, net 36,684
43,438
     Intangibles, net 3,315
301
     Goodwill 1,719
—
     Restricted cash 165
165
     Deferred tax assets 545
407
     Other assets 227
233
          Total assets $ 96,771
$ 100,244

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Accounts payable and accrued expenses $ 15,486
$ 14,490
Note payable, current portion, net of discount of $19 as of March 31, 2017 —
1,481
Derivative liabilities 1,142
1,923
Deferred revenue 14,194
14,323
          Total current liabilities 30,822
32,217

Deferred revenue 8,425
7,631
Deferred tax liabilities 125
125
Other liabilities 54
45
          Total liabilities 39,426
40,018

Commitments and contingencies (Note 14)

Stockholders' equity:
Common stock 211
147
Additional paid-in capital 1,040,348
1,017,510
Treasury stock (1,645 ) (1,371 )
Accumulated other comprehensive income (loss) 770
(503 )
Accumulated deficit (982,339 ) (955,557 )
           Total stockholders' equity 57,345
60,226
           Total liabilities and stockholders' equity $ 96,771
$ 100,244

AMERICAN SUPERCONDUCTOR CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

	*Three Months Ended*						*Six Months Ended*
	*September 30,*						*September 30,*
	*2023*			*2022*			*2023*			*2022*
Revenues	$	34,004		$	27,680		$	64,258		$	50,360

Cost of revenues		25,418			25,710			49,390			46,169

Gross margin		8,586			1,970			14,868			4,191

Operating expenses:
Research and development		1,641			2,314			3,493			4,992
Selling, general and administrative		7,946			7,350			15,815			14,911
Amortization of acquisition-related intangibles		538			688			1,076			1,369
Change in fair value of contingent consideration		850			(290	)		2,200			(120	)
Restructuring		(20	)		-			(14	)		-
Total operating expenses		10,955			10,062			22,570			21,152

Operating loss		(2,369	)		(8,092	)		(7,702	)		(16,961	)

Interest income, net		194			45			368			70
China dissolution		-			(1,921	)		-			(1,921	)
Other income (expense), net		(204	)		73			(321	)		240
Loss before income tax expense (benefit)		(2,379	)		(9,895	)		(7,655	)		(18,572	)

Income tax expense (benefit)		106			(14	)		228			18

Net loss	$	(2,485	)	$	(9,881	)	$	(7,883	)	$	(18,590	)

Net loss per common share
Basic	$	(0.09	)	$	(0.35	)	$	(0.28	)	$	(0.67	)
Diluted	$	(0.09	)	$	(0.35	)	$	(0.28	)	$	(0.67	)

Weighted average number of common shares outstanding
Basic		28,828			27,867			28,545			27,714
Diluted		28,828			27,867			28,545			27,714

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

AMERICAN SUPERCONDUCTOR CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF ~~OPERATIONS~~

COMPREHENSIVE LOSS

(In ~~thousands, except per share data)~~ thousands)

	*Three Months Ended*						*Six Months Ended*
	*September 30,*						*September 30,*
	*2023*			*2022*			*2023*			*2022*
Net loss	$	(2,485	)	$	(9,881	)	$	(7,883	)	$	(18,590	)
Other comprehensive (loss) gain, net of tax:
China dissolution		-			1,921			-			1,921
Foreign currency translation gain		64			105			62			168
Total other comprehensive gain, net of tax		64			2,026			62			2,089
Comprehensive loss	$	(2,421	)	$	(7,855	)	$	(7,821	)	$	(16,501	)

Three months ended
December 31, Nine months ended
December 31,
2017 2016 2017 2016
Revenues $ 14,933
$ 27,148
$ 34,904
$ 59,000

Cost of revenues 9,917
22,107
34,103
50,992

Gross margin 5,016
5,041
801
8,008

Operating expenses:
   Research and development 3,023
2,985
8,690
8,804
   Selling, general and administrative 5,486
6,077
16,964
19,640
   Amortization of acquisition-related intangibles 85
39
98
118
   Change in fair value of contingent consideration 272
—
71
—
   Restructuring 1
—
1,328
—
      Total operating expenses 8,867
9,101
27,151
28,562

Operating loss (3,851 ) (4,060 ) (26,350 ) (20,554 )

Change in fair value of warrants 399
101
1,468
667
Gain on sale of minority interest —
325
951
325
Interest income (expense), net 49
(89 ) 94
(331 )
Other (expense)/income, net (279 ) 873
(2,449 ) 481
Loss before income tax (benefit) expense (3,682 ) (2,850 ) (26,286 ) (19,412 )

Income tax (benefit) expense 566
(82 ) 496
1,036

Net loss $ (4,248 ) $ (2,768 ) $ (26,782 ) $ (20,448 )

Net loss per common share
   Basic $ (0.21 ) $ (0.20 ) $ (1.44 ) $ (1.49 )
   Diluted $ (0.21 ) $ (0.20 ) $ (1.44 ) $ (1.49 )

Weighted average number of common shares outstanding
   Basic 19,949
13,792
18,614
13,746
   Diluted 19,949
13,792
18,614
13,746

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

AMERICAN SUPERCONDUCTOR CORPORATION

UNAUDITED ~~CONDENSED~~ CONSOLIDATED STATEMENTS OF ~~COMPREHENSIVE LOSS~~

STOCKHOLDERS’ EQUITY

FOR THE Three and Six Months Ended September 30, 2023 AND 2022

(In thousands)

	*Common Stock*				*Additional*						*Accumulated Other*						*Total*
	*Number of Shares*		*Par Value*		*Paid-in Capital*			*Treasury Stock*			*Comprehensive Income*			*Accumulated Deficit*			*Stockholders' Equity*
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		—		—		1,357			—			—			—			1,357
Issuance of stock for 401(k) match		33		1		163			—			—			—			164
Cumulative translation adjustment		—		—		—			—			(2	)		—			(2	)
Net loss		—		—		—			—			—			(5,398	)		(5,398	)
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		9		—		—			—			—			—			—
Stock-based compensation expense		—		—		1,111			—			—			—			1,111
Issuance of stock for 401(k) match		17		—		150			—			—			—			150
Cumulative translation adjustment		—		—		—			—			64			—			64
Net loss		—		—		—			—			—			(2,485	)		(2,485	)
Balance at September 30, 2023		30,716	$	307	$	1,142,023		$	(3,639	)	$	1,633		$	(1,063,430	)	$	76,894

Three months ended
December 31, Nine months ended
December 31,
2017 2016 2017 2016
Net loss $ (4,248 ) $ (2,768 ) $ (26,782 ) $ (20,448 )
Other comprehensive gain (loss), net of tax:
Foreign currency translation gain (loss) 52
(831 ) 1,273
(1,372 )
Total other comprehensive gain (loss), net of tax 52
(831 ) 1,273
(1,372 )
Comprehensive loss $ (4,196 ) $ (3,599 ) $ (25,509 ) $ (21,820 )

	*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, 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 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 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

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

AMERICAN SUPERCONDUCTOR CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	*Six Months Ended September 30,*
	*2023*			*2022*
Cash flows from operating activities:
Net loss	$	(7,883	)	$	(18,590	)
Adjustments to reconcile net loss to net cash used in operations:
Depreciation and amortization		2,234			2,799
Stock-based compensation expense		2,468			2,052
Provision for excess and obsolete inventory		1,070			1,015
Deferred income taxes		-			63
Change in fair value of contingent consideration		2,200			(120	)
China dissolution		-			1,921
Other non-cash items		273			(137	)
Changes in operating asset and liability accounts:
Accounts receivable		3,152			(92	)
Inventory		(11,935	)		(13,749	)
Prepaid expenses and other assets		8,378			211
Accounts payable and accrued expenses		(9,763	)		6,885
Deferred revenue		8,458			6,170
Net cash used in operating activities		(1,348	)		(11,572	)

Cash flows from investing activities:
Purchase of property, plant and equipment		(430	)		(560	)
Change in other assets		(10	)		(99	)
Net cash used in investing activities		(440	)		(659	)

Cash flows from financing activities:
Repayment of debt		(33	)		(33	)
Proceeds from exercise of employee stock options and ESPP		136			128
Net cash provided by financing activities		103			95

Effect of exchange rate changes on cash		(10	)		4

Net decrease in cash, cash equivalents and restricted cash		(1,695	)		(12,132	)
Cash, cash equivalents and restricted cash at beginning of period		25,675			49,486
Cash, cash equivalents and restricted cash at end of period	$	23,980		$	37,354

Supplemental schedule of cash flow information:
Cash paid for income taxes, net of refunds	$	171		$	152
Non-cash investing and financing activities
Issuance of common stock to settle liabilities	$	313		$	317

Nine months ended
December 31,
2017 2016
Cash flows from operating activities:

   Net loss $ (26,782 ) $ (20,448 )
   Adjustments to reconcile net loss to net cash used in operations:
      Depreciation and amortization 9,239
5,606
      Stock-based compensation expense 2,115
2,266
      Provision for excess and obsolete inventory 415
1,074
        Gain on sale of minority interest (951 ) (325 )
        Change in fair value of warrants and contingent consideration (1,397 ) (667 )
        Non-cash interest expense 19
127
        Other non-cash items 81
(937 )
Changes in operating asset and liability accounts:
         Accounts receivable (3,576 ) 3,213
         Inventory 180
(2,294 )
         Prepaid expenses and other current assets 647
2,283
         Accounts payable and accrued expenses 638
(4,031 )
         Deferred revenue (862 ) 3,598
   Net cash used in operating activities (20,234 ) (10,535 )

Cash flows from investing activities:
      Purchase of property, plant and equipment (2,125 ) (557 )
      Proceeds from the sale of property, plant and equipment 18
15
      Change in restricted cash 795
457
      Cash paid for acquisition, net of cash acquired 74
—
      Proceeds from sale of minority interest 951
325
      Change in other assets 26
117
   Net cash (used in)/provided by investing activities (261 ) 357

Cash flows from financing activities:
      Employee taxes paid related to net settlement of equity awards (274 ) (490 )
      Repayment of debt (1,575 ) (3,167 )
      Proceeds from public equity offering, net 16,952
—
      Proceeds from exercise of employee stock options and ESPP 85
—
   Net cash provided by/(used in) financing activities 15,188
(3,657 )

Effect of exchange rate changes on cash and cash equivalents 636
(432 )

Net decrease in cash and cash equivalents (4,671 ) (14,267 )
Cash and cash equivalents at beginning of year 26,784
39,330
Cash and cash equivalents at end of year $ 22,113
$ 25,063

Supplemental schedule of cash flow information:
      Issuance of common stock in connection with the purchase of Infinia Technology Corporation $ 3,498
$ —
      Cash paid for income taxes, net of refunds 1,012
920
      Issuance of common stock to settle liabilities 252
289
      Cash paid for interest 42
238

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

AMERICAN SUPERCONDUCTOR CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Nature of the Business and Operations and Liquidity

Nature of the Business and Operations

American Superconductor Corporation ~~(“AMSC”~~(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 ~~lower~~orchestrate the ~~cost~~rhythm and harmony of ~~wind~~ power on the grid™ and ~~enhance~~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 ~~the~~megawatt-scale power grid. In the wind power market, the Company enables manufacturers to field wind turbines through its advanced engineering, support services and power electronics products. In the power grid market, the Company enables electric utilities and renewable energy project developers to connect, transmit and distribute power through its transmission planning services and power electronics and superconductor-based products. The Company’s wind and power grid products and services provide exceptional reliability, security, efficiency and affordability to its customers.

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.~~10-Q. 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, 2017~~September 30, 2023 and ~~2016~~2022 and the financial position at ~~December 31, 2017;~~September 30, 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, ~~2017,~~ 2023, and notes thereto, included in the Company’s ~~annual report~~Annual Report on Form ~~10-K~~10-K for the year ended March 31, ~~2017~~ 2023 filed with the ~~Securities and Exchange Commission~~SEC on May ~~25, 2017.~~

31, 2023.

Liquidity

The Company has historically experienced recurring operating losses and as of ~~December 31, 2017,~~September 30, 2023, the Company had an accumulated deficit of ~~$982.3~~$1,063.4 million. In addition, the Company has historically experienced recurring negative operating cash flows. At ~~December 31, 2017,~~September 30, 2023, the Company had cash and cash equivalents of ~~$22.1 million, with no outstanding debt other than ordinary trade payables.~~$22.8 million. Cash used in operations for the ~~nine~~six months ended ~~December 31, 2017~~September 30, 2023 was ~~$20.2~~$1.3 million.

~~From April 1, 2011 through the date of this filing,~~

In February 2021, the Company ~~has reduced its global workforce substantially, including~~filed a ~~restructuring action announced~~shelf registration statement on ~~April 4, 2017 which led to a $1.3 million restructuring charge~~Form S-3 that will expire in February 2024 (the ~~nine months ended December 31, 2017. See Note 15 "Restructuring" for further discussion of this action.~~“Form S-3”). The ~~Company has taken actions to consolidate certain business operations to reduce facility costs. As of December 31, 2017,~~Form S-3 allows the Company ~~had a global workforce~~to offer and sell from time-to-time up to $250 million of ~~275 persons.~~common stock, debt securities, warrants or units comprised of any combination of these securities. The ~~Company plans~~Form S-3 is intended to ~~closely monitor its expenses and, if required, expects to further reduce operating costs and capital spending to enhance liquidity.~~

~~Over the last several years,~~provide the Company ~~has entered into equity financing arrangements~~flexibility to conduct registered sales of the Company's securities, subject to market conditions, in order to ~~enhance liquidity. Since April 1, 2012,~~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 Company continues to experience 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 generated aggregate cash flows~~continues to take actions to limit this pressure, including adjusting the pricing of its products and services. Changes in macroeconomic conditions arising from ~~financing activities~~the COVID-19 pandemic or for other reasons, such as the ongoing wars between Russia and Ukraine and Israel and Hamas, inflation, 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 ~~$85.1 million. Included in this amount are proceeds of approximately $17.0 million after deducting underwriting discounts and commissions and offering expenses payable by~~operation.

From time-to-time the Company ~~from~~may undertake restructuring activities in order to align the ~~Company's equity offering completed on May 10, 2017, which includes the subsequent exercise by the underwriters of their option~~global organization in full to purchase additional shares. The Company terminated its At Market Issuance Sales Agreement ("ATM") with FBR Capital Markets & Co. in conjunction with this equity offering. See Note 13 “Stockholder's Equity” for further discussion of these financing arrangements.

~~In December 2015, the Company entered into~~ a set of strategic agreements valued at approximately $210.0 million with Inox Wind Ltd. (“Inox” or "Inox Wind"), which includes a multi-year supply contract pursuant to which the Company will supply electric control systems to Inox and a license agreement allowing Inox to manufacture a limited number of electrical control systems. After Inox purchases the specified number of electrical control systems required under the terms of the supply contract, Inox agreedmanner that the Company believes will ~~continue as Inox’s preferred supplier and Inox will be required~~better position it to ~~purchase from~~ achieve its long-term goals. In January 2023, the Company undertook a ~~majority~~reduction in force that involved approximately 5% of ~~its electric control systems requirements for an additional three-year period.~~

the global workforce. This restructuring is expected to incur $1.0 million of cash expenses, $0.8 million of which has been paid as of September 30, 2023, and to result in annualized cost savings of approximately $5.0 million, beginning in fiscal 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~~six months ended ~~December 31, 2017.~~September 30, 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 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.

2. Revenue Recognition

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 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 six months ended September 30, 2023, 79% and 78% 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 six months ended September 30, 2022, 83% and 77% 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.

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 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 the profit 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 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 its obligations on 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 $1.0 million and $1.2 million in the three and six months ended September 30, 2022, respectively, which negatively impacted the Company's gross margins. The contract loss accrual decreased by $0.9 million in each of the three and six months ended September 30, 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):

	*Three Months Ended September 30, 2023*				*Six Months Ended September 30, 2023*
Product Line:	*Grid*		*Wind*		*Grid*		*Wind*
Equipment and systems	$	22,682	$	4,879	$	45,808	$	8,862
Services and technology development		5,833		610		8,443		1,145
Total	$	28,515	$	5,489	$	54,251	$	10,007

Region:
Americas	$	24,696	$	27	$	47,856	$	57
Asia Pacific		3,418		5,462		5,129		9,928
EMEA		401		—		1,266		22
Total	$	28,515	$	5,489	$	54,251	$	10,007

	*Three Months Ended September 30, 2022*				*Six Months Ended September 30, 2022*
Product Line:	*Grid*		*Wind*		*Grid*		*Wind*
Equipment and systems	$	24,128	$	1,330	$	42,204	$	3,302
Services and technology development		1,570		652		3,323		1,531
Total	$	25,698	$	1,982	$	45,527	$	4,833

Region:
Americas	$	18,021	$	-	$	34,923	$	-
Asia Pacific		6,178		1,912		8,855		4,763
EMEA		1,499		70		1,749		70
Total	$	25,698	$	1,982	$	45,527	$	4,833

As of September 30, 2023, and 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 7, “Accounts Receivable” and Note 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):

	*Unbilled Accounts Receivable*			*Deferred Program Costs*			*Contract Liabilities*
Beginning balance as of March 31, 2023	$	9,958		$	2,136		$	50,760
Increases for costs incurred to fulfill performance obligations		—			2,110			—
Increase (decrease) due to customer billings		(13,981	)		—			34,284
Decrease due to cost recognition on completed performance obligations		—			(2,160	)		—
Increase (decrease) due to recognition of revenue based on transfer of control of performance obligations		10,351			—			(25,710	)
Other changes and FX impact		7			(11	)		(288	)
Ending balance as of September 30, 2023	$	6,335		$	2,075		$	59,046

	*Unbilled Accounts Receivable*			*Deferred Program Costs*			*Contract Liabilities*
Beginning balance as of March 31, 2022	$	6,492		$	858		$	30,034
Increases for costs incurred to fulfill performance obligations		—			782			—
Increase (decrease) due to customer billings		(7,322	)		—			33,141
Decrease due to cost recognition on completed performance obligations		—			(697	)		—
Increase (decrease) due to recognition of revenue based on transfer of control of performance obligations		7,342			—			(26,857	)
Other changes and FX impact		—			(47	)		(863	)
Ending balance as of September 30, 2022	$	6,512		$	896		$	35,455

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 September 30, 2023, the Company had outstanding performance obligations on existing contracts under ASC 606 to be recognized in the next twelve months of approximately $128.3 million. There are also approximately $43.2 million of 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 following table sets forth customers who represented 10% or more of the Company’s total revenues for the three and six months ended September 30, 2023 and 2022:

Three Months Ended

Six Months Ended

Reportable

September 30,

Segment

2023

2022

2023

2022

Inox Wind Limited

Wind

<10%

Fuji Bridex Pte Ltd

Grid

<10%

Gray Construction, Inc.

Grid

<10%

Ascend Performance Materials Ops LLC

Grid

<10%

3. Stock-Based Compensation

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~~six months ended ~~December 31, 2017~~September 30, 2023 and ~~2016~~2022 (in thousands):

Three months ended December 31, Nine months ended December 31,
2017 2016 2017 2016
Cost of revenues $ 39
$ 40
$ 98
$ 139
Research and development 184
61
294
153
Selling, general and administrative 660
512
1,723
1,974
Total $ 883
$ 613
$ 2,115
$ 2,266

	*Three Months Ended September 30,*				*Six Months Ended September 30,*
	*2023*		*2022*		*2023*		*2022*
Cost of revenues	$	59	$	78	$	169	$	107
Research and development		156		177		311		355
Selling, general and administrative		896		764		1,988		1,590
Total	$	1,111	$	1,019	$	2,468	$	2,052

The Company issued ~~37,140~~9,000 shares and 681,500 shares of restricted stock during the three and six months ended September 30, 2023, respectively. The Company issued no shares of immediately vested common stock ~~and 800,500 shares of restricted stock awards~~ during the ~~nine~~three months ended ~~December 31, 2017,~~September 30, 2023 and ~~issued 35,000~~53,675 shares of immediately vested common stock ~~and granted 126,000~~during the six months ended September 30, 2023. The Company issued 338,500 shares of restricted stock ~~awards~~ during the ~~nine~~three and six months ended ~~December 31, 2016.~~September 30, 2022. The Company issued no shares of immediately vested common stock during the three months ended September 30, 2022 and 25,806 shares of immediately vested common stock during the six months ended September 30, 2022. 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. In addition, the Company issued 16,667 restricted stock units under the 2007 Stock Incentive Plan during the nine months ended December 31, 2017, each of which represents the right to receive one share of common stock in connection with a severance agreement entered into with one of the Company's former executive officers. These restricted stock units vested and were settled in shares of common stock on the eighth day after receipt of an irrevocable release.

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 ~~outstanding~~ stock options was ~~$0.3 million at December 31, 2017.~~less than $0.1 million for the six months ended September 30, 2023. This expense will be recognized over a weighted average ~~expense period~~ of approximately ~~1.2~~0.7 years. The total unrecognized compensation cost for unvested outstanding restricted stock was ~~$2.8 million at December 31, 2017.~~$6.8 million for the six months ended September 30, 2023. This expense will be recognized over a weighted-average expense period of approximately 2.0 years.

The Company ~~did not grant any~~granted no stock options during the three and ~~nine~~six months ended ~~December 31, 2017. During~~September 30, 2023. The Company granted no stock options in the ~~nine~~three months ended ~~December 31, 2016,~~September 30, 2022, and 20,564 stock options during the ~~Company~~six months ended September 30, 2022. The stock options granted ~~9,703 stock options. These options~~during the six months ended September 30, 2022 will vest over 2 years. The weighted average assumptions used in the Black Scholes valuation model for stock options granted during the ~~nine~~six months ended ~~December 31, 2016~~September 30, 2022 are as follows:



	~~December 31,~~ ~~2017~~ Expected volatility	~~December 31,~~ ~~2016~~
~~Expected volatility~~	~~N/A~~	~~67.6~~71.40	%
Risk-free interest rate	~~N/A~~	~~1.3~~	3.10	%
Expected life (years)	~~N/A~~	~~5.7~~	6.14
Dividend yield	~~N/A~~	None

4. Computation of Net Loss per Common Share

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~~six months ended ~~December 31, 2017, 1.2~~September 30, 2023, 1.0 million shares were not included in the calculation of diluted ~~EPS as they were considered anti-dilutive, of~~EPS. Of these, 1.0 million relate to shares tied to the contingent consideration derivative liability for which ~~0.3~~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 threeand ~~0.9 million relate to outstanding warrants. For the three and nine~~six months ended ~~December 31, 2016, 1.6~~September 30, 2022, 1.1 million shares were not included in the calculation of diluted ~~EPS as they were considered anti-dilutive, of~~EPS. Of these, 1.0 million relate to shares tied to the contingent consideration derivative liability for which ~~0.4~~the contingency has not yet been met, and 0.1 million relate to outstanding stock options ~~and 1.2 million relate to outstanding warrants.~~

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~~six months ended ~~December 31, 2017~~September 30, 2023 and ~~2016~~2022 (in thousands, except per share data):

	*Three Months Ended September 30,*						*Six Months Ended September 30,*
	*2023*			*2022*			*2023*			*2022*
Numerator:
Net loss	$	(2,485	)	$	(9,881	)	$	(7,883	)	$	(18,590	)
Denominator:
Weighted-average shares of common stock outstanding		30,283			28,775			29,996			28,648
Weighted-average shares subject to repurchase		(1,455	)		(908	)		(1,451	)		(934	)
Shares used in per-share calculation ― basic		28,828			27,867			28,545			27,714
Shares used in per-share calculation ― diluted		28,828			27,867			28,545			27,714
Net loss per share ― basic	$	(0.09	)	$	(0.35	)	$	(0.28	)	$	(0.67	)
Net loss per share ― diluted	$	(0.09	)	$	(0.35	)	$	(0.28	)	$	(0.67	)

Three months ended December 31, Nine months ended December 31,
2017 2016 2017 2016
Numerator:
Net loss $ (4,248 ) $ (2,768 ) $ (26,782 ) $ (20,448 )
Denominator:
Weighted-average shares of common stock outstanding 20,889
14,203
19,189
14,175
Weighted-average shares subject to repurchase (940 ) (411 ) (575 ) (429 )
Shares used in per-share calculation ― basic 19,949
13,792
18,614
13,746
Shares used in per-share calculation ― diluted 19,949
13,792
18,614
13,746
Net loss per share ― basic $ (0.21 ) $ (0.20 ) $ (1.44 ) $ (1.49 )
Net loss per share ― diluted $ (0.21 ) $ (0.20 ) $ (1.44 ) $ (1.49 )

~~4. Acquisition~~

5. Goodwill and ~~Related~~ Other Intangibles

Goodwill

~~Acquisition of Infinia Technology Corporation~~

On September 25, 2017, the Company acquired Infinia Technology Corporation ("ITC") for approximately $3.8 million as described below (the "Acquisition"). Located in Richmond, Washington, ITC is a technology firm founded in 2009 specializing in the design, development and commercialization of cryo-coolers for a wide range of applications.

Pursuant to the terms of the stock purchase agreement ("SPA"), the Company acquired all of the issued and outstanding shares of ITC (the "ITC Shares") from the selling stockholders, for a purchase price of approximately $3.8 million consisting of $0.1 million in cash and 884,890 shares of the Company’s common stock (the "AMSC Shares"), $0.01 par value per share at a per share price of $4.02 on the acquisition date. Under the terms of the SPA, the Company was obligated to file a registration statement (the "Resale Registration Statement") covering the resale of the AMSC Shares by the selling stockholders no later than 10 business days following the closing of the Acquisition, and to use commercially reasonable efforts to cause the Resale Registration Statement to be declared effective by the SEC as soon as practicable thereafter. Additionally, the Company agreed to pay the selling stockholders in cash (the "Make Whole Payment"), if any, equal to (x) an amount equal to (i) the price per AMSC Share pursuant to the terms of the SPA, multiplied by (ii) the number of AMSC Shares sold by the selling stockholders during the first 90 days after the effectiveness of the Resale Registration Statement, minus (y) the aggregate sales proceeds received by the Selling Stockholders from the sale of any AMSC Shares during the first 90 days after the effectiveness of the Resale Registration Statement. The Resale Registration Statement was declared effective on October 23, 2017. The contingent liability related to the Make Whole Payment was determined under a fair value option based pricing model to be $0.6 million on September 25, 2017 and was subsequently reassessed at each period end until the final amount due of $0.7 million as of December 31, 2017 was determined according to the agreed upon formula. See Note 5 "Fair Value Measurements" and Note 12 "Warrants and Derivative Liabilities" for further discussion regarding the valuation of this liability. On January 5, 2018, the Company settled the Make Whole Payment to the selling stockholders in the amount of $0.7 million.

ITC was integrated into the Company's Grid business unit. The Acquisition has been accounted for under the purchase method of accounting in accordance with ASU 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 Acquisition. The Company estimated the fair value of the intangible assets at $3.4 million, which consisted of core-technology and know-how, working capital of $0.2 million and property, plant and equipment of less than $0.1 million. A long-term deferred tax liability of $1.1 million was recorded for the differing book and tax basis of the ITC assets and liabilities. Provisional amounts have been recorded for the related tax activity as of December 31, 2017. Final adjustments are expected to be made during the fourth quarter of fiscal 2017.

The following table summarizes the consideration paid for ITC and the amounts of the assets acquired and liabilities assumed recognized at the acquisition date, as well as the fair value at the acquisition date (in millions):

September 25, 2017
Consideration
    Cash $ 0.1
    Equity (884,890 shares of common stock at $4.02 per share) 3.6
    Contingent consideration 0.6
Total Consideration $ 4.3

Recognized amounts of identifiable assets acquired and liabilities assumed
     Core technology and know-how $ 3.4
     Working capital 0.2
     Property, plant and equipment 0.0
Total identifiable net assets $ 3.6
Long-term deferred tax liability 1.1
Goodwill allocated $ 1.7

At the Acquisition date, the Company valued the Acquisition at $4.2 million (excluding Acquisition costs), using a value of $4.02 per share, which was the closing price of the Company's common stock on the date of Acquisition plus $0.1 million in cash and including $0.6 million of contingent consideration for the Make Whole Payment valued as of the closing date. Acquisition costs of less than $0.1 million were recorded in selling, general and administrative costs.

The results of ITC's operations, which were not significant from the date of acquisition until December 31, 2017, are included in the Company’s consolidated results from the date of Acquisition of September 25, 2017, for the three and nine months ended December 31, 2017. Assuming the Acquisition had occurred on April 1, 2017 and 2016, the impact on the consolidated results of the Company would not have been significant.

~~Goodwill~~

At the time of the Acquisition, the Company allocated the purchase price to the assets acquired and liabilities assumed at their estimated fair values as of the date of Acquisition. The excess of the purchase price paid by the Company over the estimated fair value of net assets acquired of $1.7 million has been recorded as goodwill in the Company's Grid segment. Goodwill represents the value associated with the acquired workforce and synergies related to the merger of the two companies.

The guidance under ASC 805-30 provides for the recognition of goodwill on the Acquisition date measured as the excess of the aggregate consideration transferred over the net of the Acquisition date amounts of net assets acquired and liabilities assumed. The fair value of the contingent consideration included in the total consideration transferred was determined using the Black Scholes pricing model, and all other consideration transferred was calculated using its observable market fair value. The tangible net assets acquired fair value was based on observable market fair value. The acquired intangible asset fair value was determined using discounted cash flows under an excess in earnings model.

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. 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 Company early adopted ASU 2017-04 as of~~

There were no changes to goodwill during the six months ended September 30, ~~2017. The Company will perform an annual impairment assessment on goodwill, unless events occur in the interim periods to indicate impairment may have occurred.~~ 2023 or year ended March 31, 2023.

The Company did not identify any triggering events in the ~~period between the date of Acquisition~~three and ~~December 31, 2017, which~~six months ended September 30, 2023 that would require ~~subsequent~~ interim impairment testing of goodwill. ~~As such,~~

Other Intangibles

Intangible assets at September 30, 2023 and March 31, 2023 consisted of the following (in thousands):

	*September 30, 2023*							*March 31, 2023*
	*Gross Amount*		*Accumulated Amortization*			*Net Book Value*		*Gross Amount*		*Accumulated Amortization*			*Net Book Value*		*Estimated Useful Life*
Backlog		681		(681	)		—		681		(675	)	$	6		2
Trade name and trademarks		1,800		—			1,800		1,800		—			1,800	Indefinite
Customer relationships		9,600		(5,815	)		3,785		9,600		(4,980	)		4,620		7
Core technology and know-how		5,970		(4,110	)		1,860		5,970		(3,869	)		2,101		5-10
Intangible assets	$	18,051	$	(10,606	)	$	7,445	$	18,051	$	(9,524	)	$	8,527

The Company recorded intangible amortization expense related to customer relationship and core technology and know-how of $0.5 million and $1.1 million, in the three and six months ended September 30, 2023, respectively, and $0.7 million and $1.4 million in the three and six months ended September 30, 2022, respectively. Additionally, the Company ~~expects~~recorded no intangible amortization related to ~~perform its annual goodwill impairment test during~~backlog that is reported in cost of revenues in the ~~fourth quarter of fiscal 2017.~~three months ended September 30, 2023 and less than $0.1 million in the six months ended September 30, 2023. The Company ~~will compare~~recorded no intangible amortization related to backlog in the ~~fair value~~three months ended September 30, 2022 and the Company recorded less than $0.1 million related to backlog that is reported in cost of ~~its reporting unit~~revenues in the six months ended September 30, 2022, respectively.

Expected future amortization expense related to ~~its carrying value. If the carrying value of the net~~intangible assets ~~assigned~~is as follows (in thousands):

Years ending March 31,	*Total*
2024		1,076
2025		1,648
2026		1,221
2027		1,085
2028		543
Thereafter		72
Total	$	5,645

The Company's intangible assets relate entirely to the ~~reporting unit exceeds~~Grid business segment operations in the ~~fair value of the reporting unit, then the Company would record an impairment loss equal to the difference.~~United States.

6. Fair Value Measurements

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:


Level 1	-
	~~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	~~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	~~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.

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, ~~but did transfer $0.7 million related to the contingent liability from~~ Level ~~3 to~~2 or Level 23 of the fair value measurement hierarchy during the ~~three and nine~~six months ended December 31, 2017. The fair value calculation at December 31, 2017 was based on actual observable stock price inputs following the sale of all of the related shares, in place of the Company's assumptions which had been used in the prior period.

September 30, 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.

Valuation Techniques

Cash Equivalents

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

Contingent consideration relates to the earnout payment set forth in the 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 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" 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 and 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, 2017~~September 30, 2023 and March 31, ~~2017~~2023 (in thousands):

Total
Carrying
Value

Quoted Prices in
Active Markets
(Level 1)

Significant Other
Observable Inputs
(Level 2)

Significant
Unobservable Inputs
(Level 3)
December 31, 2017:
Assets:
Cash equivalents $ 17,944
$ 17,944
$ —
$ —
Derivative liabilities:
Acquisition contingent consideration $ 687
$ —
$ 687
$ —
Warrants 455
—
—
455
Total derivative liabilities $ 1,142
$ —
$ 687
$ 455

Total
Carrying
Value Quoted Prices in
Active Markets
(Level 1) Significant Other
Observable Inputs
(Level 2) Significant
Unobservable Inputs
(Level 3)
March 31, 2017:
Assets:
Cash equivalents $ 14,105
$ 14,105
$ —
$ —
Derivative liabilities:
Warrants $ 1,923
$ —
$ —
$ 1,923

	*Total Carrying Value*		*Quoted Prices in Active Markets (Level 1)*		*Significant Other Observable Inputs (Level 2)*		*Significant Unobservable Inputs (Level 3)*
September 30, 2023:
Assets:
Cash equivalents	$	5,157	$	5,157	$	—	$	—
Derivative liabilities:
Contingent consideration	$	3,470	$	—	$	—	$	3,470

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

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

	*Acquisition Contingent Consideration*
Balance at March 31, 2022	$	1,200
Change in fair value		70
Balance at March 31, 2023		1,270
Change in fair value		2,200
Balance at September 30, 2023	$	3,470

Warrants Acquisition Contingent Consideration
April 1, 2017 $ 1,923
$ —
Issuance of contingent consideration —
571
Mark to market adjustment (1,468 ) 71
Settlement fees —
45
Balance at December 31, 2017 $ 455
$ 687

Warrants
April 1, 2016 $ 3,227
Mark to market adjustment (1,304 )
Balance at March 31, 2017 $ 1,923

~~Valuation Techniques~~

~~Cash Equivalents~~

Cash equivalents consist of highly liquid instruments with maturities of three months or less that are regarded as high quality, low risk investments and 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.

~~Warrants~~

Warrants were issued in conjunction with a Securities Purchase Agreement (the “Purchase Agreement”) with Capital Ventures International (“CVI”) in April 2012, an equity offering to Hudson Bay Capital in November 2014, and a Loan and Security Agreement with Hercules Technology Growth Capital, Inc. (“Hercules”) in June 2012 and through subsequent amendments. See Note 11, “Debt,” and Note 12 “Warrants and Derivative Liabilities,” for additional information. These warrants are subject to revaluation at each balance sheet date, and any change in fair value will be recorded as a change in fair value in derivatives and warrants until the earlier of their exercise or expiration.

The Company relies on various assumptions in a lattice model to determine the fair value of warrants. The Company has valued the warrants within Level 3 of the valuation hierarchy. See Note 12, “Warrants and Derivative Liabilities,” for a discussion of the warrants and the valuation assumptions used.

~~Contingent Consideration~~

Contingent consideration relates to the Make Whole Provision set forth in the SPA that requires the Company to guarantee the purchase price of the acquisition should the aggregate proceeds of the resale of AMSC Shares sold by selling stockholders during the first 90 days after the effectiveness of the Resale Registration Statement be less than the agreed upon purchase price for such AMSC Shares (per the terms of the SPA) sold during such 90 day period. See Note 12, "Warrants and Derivative Liabilities" and Note 4, “Acquisition and Related Goodwill” for further discussion. The Company relied on a Black Scholes option pricing method to determine the fair value of the contingent consideration on the date of acquisition and continued to revalue the fair value of the contingent consideration at each subsequent balance sheet date until the final settlement date, with the change in fair value recorded in the current period operating loss. This liability was settled on January 5, 2018.

7. Accounts Receivable

Accounts receivable at ~~December 31, 2017~~September 30, 2023 and March 31, ~~2017~~2023 consisted of the following (in thousands):

��

	*September 30, 2023*		*March 31, 2023*
Accounts receivable (billed)	$	21,174	$	20,707
Accounts receivable (unbilled)		6,335		9,958
Accounts receivable, net	$	27,509	$	30,665

December 31,
2017 March 31,
2017
Accounts receivable (billed) $ 10,379
$ 7,436
Accounts receivable (unbilled) 1,727
574
Less: Allowance for doubtful accounts (54 ) (54 )
Accounts receivable, net $ 12,052
$ 7,956

8. Inventory

Inventory, net of reserves, at ~~December 31, 2017~~September 30, 2023 and March 31, ~~2017~~2023 consisted of the following (in thousands):

December 31,
2017 March 31,
2017
Raw materials $ 5,544
$ 4,263
Work-in-process 1,626
426
Finished goods 7,931
8,016
Deferred program costs 2,028
4,757
Net inventory $ 17,129
$ 17,462

	*September 30, 2023*		*March 31, 2023*
Raw materials	$	19,337	$	16,654
Work-in-process		22,714		15,200
Finished goods		3,709		2,996
Deferred program costs		2,075		2,136
Net inventory	$	47,835	$	36,986

The Company recorded inventory write-downs of ~~$0.1~~$0.7 million ~~and $0.4~~and $0.7 million ~~for~~for the three ~~and nine~~ months ended ~~December 31, 2017.~~ September 30, 2023 and 2022, respectively. The Company recorded inventory write-downs of ~~$0.4~~$1.1 million and ~~$1.1~~$1.0 million for the ~~three and nine~~six months ended ~~December 31, 2016.~~September 30, 2023 and 2022, respectively. These ~~write downs~~write-downs were based on ~~evaluating~~the Company's evaluation of its inventory on hand for excess quantities and obsolescence.

Deferred program costs as of ~~December 31, 2017~~September 30, 2023 and March 31, ~~2017~~2023, primarily represent costs incurred on programs ~~accounted for under contract accounting~~ where the Company needs to complete ~~development milestones~~performance obligations before the related revenue and costs will be recognized.

9. Prepaid and Other Current Assets

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 six months ended September 30, 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.

10. Property, Plant and Equipment

The cost and accumulated depreciation of property, plant and equipment at ~~December 31, 2017~~September 30, 2023 and March 31, ~~2017~~2023 are as follows (in thousands):

December 31,
2017 March 31,
2017
Land $ 3,643
$ 3,643
Construction in progress - equipment 2,160
601
Buildings 34,549
34,549
Equipment and software 72,566
73,445
Furniture and fixtures 1,048
1,201
Leasehold improvements 498
2,442
Property, plant and equipment, gross 114,464
115,881
Less accumulated depreciation (77,780 ) (72,443 )
Property, plant and equipment, net $ 36,684
$ 43,438

	*September 30, 2023*			*March 31, 2023*
Land	$	980		$	980
Construction in progress - equipment		342			748
Buildings		5,416			5,416
Equipment and software		43,915			43,156
Finance lease - right of use asset		1			1
Furniture and fixtures		1,531			1,535
Leasehold improvements		6,812			6,815
Property, plant and equipment, gross		58,997			58,651
Less accumulated depreciation		(47,414	)		(46,342	)
Property, plant and equipment, net	$	11,583		$	12,309

Depreciation expense was ~~$1.4~~$0.6 million and ~~$8.9~~$0.7 million for the three ~~and nine~~ months ended ~~December 31, 2017.~~September 30, 2023 and 2022, respectively. Depreciation expense was ~~$1.7~~$1.2 million and ~~$5.2~~$1.4 million for the ~~three and nine~~six months ended December 31, 2016. Included in depreciation expense for the nine months ended December 31, 2017 is $4.1 million of accelerated depreciation recorded to cost of revenues related to revised estimates of the remaining useful lives of certain pieces of manufacturing equipment. Construction in progress - equipment primarily includes capital investments in the Company's newly leased facility in Ayer, Massachusetts.September 30, 2023 and 2022, respectively.

11. Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses at ~~December 31, 2017~~September 30, 2023 and March 31, ~~2017~~2023 consisted of the following (in thousands):

December 31,
2017 March 31,
2017
Accounts payable $ 5,626
$ 3,207
Accrued inventories in-transit 505
313
Accrued other miscellaneous expenses 2,326
2,240
Accrued restructuring 394
—
Accrued compensation 3,792
5,042
Income taxes payable 1,372
1,344
Accrued warranty 1,471
2,344
Total $ 15,486
$ 14,490

	*September 30, 2023*		*March 31, 2023*
Accounts payable	$	11,393	$	13,935
Accrued inventories in-transit		1,123		2,267
Accrued other miscellaneous expenses		4,237		3,870
Accrued contract loss		2,584		3,464
Advanced deposits		1,156		5,653
Accrued compensation		6,041		5,430
Income taxes payable		297		409
Accrued product warranty		1,892		2,638
Accrued restructuring		226		717
Total	$	28,949	$	38,383

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

Product warranty activity was as follows (in thousands):

	*Three Months Ended September 30,*						*Six Months Ended September 30,*
	*2023*			*2022*			*2023*			*2022*
Balance at beginning of period	$	1,926		$	1,942		$	2,638		$	2,066
Provisions for warranties during the period		644			479			852			656
Settlements during the period		(678	)		(368	)		(1,598	)		(669	)
Balance at end of period	$	1,892		$	2,053		$	1,892		$	2,053

Three months ended December 31, Nine months ended December 31,
2017 2016 2017 2016
Balance at beginning of period $ 1,852
$ 2,694
$ 2,344
$ 3,601
Change in accruals for warranties during the period 25
591
152
1,009
Settlements during the period (406 ) (608 ) (1,025 ) (1,933 )
Balance at end of period $ 1,471
$ 2,677
$ 1,471
$ 2,677

~~10.~~

12. Income Taxes

T~~he Company recorded income tax expenses of $0.6 million and $0.5 million in the three and nine months ended December 31, 2017, respectively.~~

The Company recorded income tax ~~benefit~~expense of $0.1 million and ~~expense of $1.0~~$0.2 million in the three and ~~nine~~six months ended ~~December 31, 2016,~~September 30, 2023, respectively.

~~As a result~~The Company recorded an income tax benefit of ~~purchase accounting for the acquired intangible assets~~less than $0.1 million and an income tax expense of less than $0.1 million in the ~~ITC acquisition, the Company recorded a deferred tax liability of $1.1 million for the difference in book~~three and ~~tax basis. As a result, the Company was able to benefit additional deferred tax assets and therefore released a corresponding valuation allowance of $1.1 million during the nine~~six months ended ~~December 31, 2017. Goodwill recognized in the acquisition is not deductible for tax purposes.~~

~~Section 382 of the U.S. Internal Revenue Code of 1986, as amended (the “IRC”)~~September 30, 2022, provides limits on the extent to which a corporation that has undergone an ownership change (as defined in the IRC) can utilize any net operating loss ("NOL") and general business tax credit carryforwards it may have. The Company conducted a study as a result of the Company's May 2017 equity offering to determine whether Section 382 could limit the use of its carryforwards in this manner. After completing this study, the Company has concluded that the limitation will not have a material impact on its ability to utilize its NOL carryforwards. If there were material ownership changes subsequent to the study, such changes could limit the Company's ability to utilize its NOL carryforwards. The Company increased its NOL’s by $0.3 million due to acquired losses in the nine months ended December 31, 2017 from ITC. The Company conducted a study on the acquired NOL and concluded that the limitations under Section 382 will not have a material impact on its ability to utilize its NOL carryforwards.

impact due to the transition tax, and the Company anticipates completing the analysis under ASC Topic 740 by March 31, 2018, at which time the Company expects to be in a position to book any required adjustments for any transition tax impact. The Company does not anticipate any other material tax exposure due to the tax reform at this time.

respectively.

Accounting for income taxes requires a ~~two-step~~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~~six months ended ~~December 31, 2017~~September 30, 2023 and did not have any gross unrecognized tax benefits as of ~~March 31, 2017.~~September 30, 2023.

~~11. Debt~~

~~Senior Secured Term Loans~~

13. Contingent Consideration

Acquisition of NEPSI

On ~~December 19, 2014,~~October 1, 2020 (the "NEPSI Acquisition Date"), the Company entered into a ~~second amendment to its Loan and Security~~Stock Purchase Agreement (the "NEPSI Stock Purchase Agreement") with ~~Hercules (the “Hercules Second Amendment”) and entered into a new term loan, borrowing an additional $1.5 million (the “Term Loan C”). After closing fees and expenses,~~ the ~~net proceeds~~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 ~~Term Loan C were $1.4 million.~~Company and is operated by its Grid business unit. The ~~Company made interest only payments at an interest rate of 11% through March 16, 2017 when the interest rate~~purchase price was ~~increased to 11.25%, until maturity on June 1, 2017, when Term Loan C was repaid~~$26.0 million in ~~its entirety.~~

~~Hercules received warrants to purchase 13,927~~cash and 873,657 restricted shares of common stock ~~(the “First Warrant”) and 25,641~~of the Company. As part of the transaction, the selling stockholders may receive up to an additional 1,000,000 shares of common stock (the “Second Warrant”) in conjunction with prior term loans that have been repaid in full. Due to certain adjustment provisions within the warrants, they qualified for liability accounting. The fair value of the ~~warrants, $0.4~~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 ~~and $0.2 million, respectively, was recorded upon issuance~~during the three years after the NEPSI Acquisition Date. As a result, the Company expects to debt discount and a warrant liability. In conjunction with the Hercules Second Amendment, the First Warrant and Second Warrant were canceled and replaced with the issuance of a new warrant (the “Hercules Warrant”) to purchase 58,823issue 400,000 shares of common stock ~~at an exercise price~~ of ~~$7.85 per share, subject~~the Company to ~~certain price-based and other anti-dilution adjustments. The Hercules Warrant expires on June 30, 2020. See Note 12, “Warrants and Derivative Liabilities”, for a discussion on~~ the ~~Hercules Warrant and~~selling stockholders during the ~~valuation assumptions used.~~

~~The Company recorded no interest expense for the three months ended~~ quarter ending December 31, ~~2017 and less than $0.1 million for the three months ended December 31, 2016. Included in the prior year period was less than $0.1 million of non-cash interest expense related to the amortization~~2023, upon certification of the debt discount on the respective term loans. Interest expense on the Term Loans for the nine months ended December 31, 2017 and 2016, was less than $0.1 million and $0.3 million, respectively. Included in the nine months ended December 31, 2017 and 2016 were less than $0.1 million and $0.1 million, respectively,achievement of ~~non-cash interest expense related to the amortization of debt discount on the respective Term Loans.~~

~~12. Warrants and Derivative Liabilities~~

The Company accounts for its warrants and contingent consideration as liabilities due to certain adjustment provisions within the instruments, which require that they be recorded at fair value. The warrants are subject to revaluation at each balance sheet date and any change in fair value is recorded as a change in fair value of warrants until the earlier of its expiration or its exercise at which time the warrant liability will be reclassified to equity. The Company calculated the fair value of the warrants utilizing an integrated lattice model. The contingent consideration is subject to revaluation at each balance sheet date and any change in fair value is recorded as a change in fair value of contingent consideration until the earlier of its settlement or expiration. The Company determined the fair value of the contingent consideration utilizing a Black Scholes option pricing method upon acquisition and as of September 30, 2017. As of December 31, 2017, the actual amount due for the contingent consideration was determined according to the stated formula in the agreement. See Note 5, "Fair Value Measurements", for further discussion.

~~Senior Convertible Note Warrant~~

On April 4, 2012, the Company entered into a Purchase Agreement with Capital Ventures International ("CVI"). The Purchase Agreement included a warrant to purchase 309,406 shares of the Company’s common stock (the “Original Warrant”). Pursuant to an exchange in October 2013, the Original Warrant was exchanged for a new warrant (the “Exchanged Warrant”). The Exchanged Warrant expired on October 4, 2017.

~~Following is a summary of the key assumptions used to calculate the fair value of the Exchanged Warrant:~~

Fiscal Year 17 September 30,
2017 June 30,
2017
Risk-free interest rate 1.05% 1.05%
Expected annual dividend yield — —
Expected volatility 77.95% 78.25%
Term (years) 0.01 0.26
Fair value $— $—

Fiscal Year 16
March 31,
2017

December 31,
2016

September 30,
2016

June 30,
2016
March 31,
2016
Risk-free interest rate 0.91% 0.56% 0.59% 0.48% 0.66%
Expected annual dividend yield — — — — —
Expected volatility 44.12% 58.04% 70.50% 76.30% 76.76%
Term (years) 0.51 0.76 1.01 1.26 1.51
Fair value $— $0.1 million $0.2 million $0.4 million $0.4 million

The Company recorded no change in the fair value of the Exchanged Warrant during the three and nine months ended December 31, 2017. The Company recorded net gains of $0.1 million and $0.3 million resulting from a decrease in the fair value of the Exchanged Warrant in each of the three and nine months ended December 31, 2016, respectively.

~~Hercules Warrant~~

On December 19, 2014, the Company entered into the Hercules Second Amendment. See Note 11, “Debt” for additional information. In conjunction with the agreement, the Company issued the Hercules Warrant to purchase 58,823 shares of the Company’s common stock. The Hercules Warrant is exercisable at any time after its issuance at an exercise price of $7.85 per share, subject to certain price-based and other anti-dilution adjustments, and expires on June 30, 2020.

~~Following is a summary of the key assumptions used to calculate the fair value of the Hercules Warrant:~~

Fiscal Year 17 December 31,
2017 September 30,
2017 June 30,
2017
Risk-free interest rate 1.98% 1.56% 1.58%
Expected annual dividend yield — — —
Expected volatility 69.11% 63.97% 67.76%
Term (years) 2.46 2.72 2.97
Fair value $0.1 million $0.1 million $0.1 million

Fiscal Year 16
March 31,
2017

December 31,
2016

September 30,
2016

June 30,
2016
March 31,
2016
Risk-free interest rate 1.55% 1.57% 0.97% 0.86% 1.08%
Expected annual dividend yield — — — — —
Expected volatility 66.51% 67.28% 67.98% 68.34% 70.25%
Term (years) 3.25 3.50 3.75 4.00 4.25
Fair value $0.2 million $0.2 million $0.2 million $0.3 million $0.2 million

The Company recorded no change and a net gain of $0.1 million, resulting from decreases in the fair value of the Hercules Warrant during the three and nine months ended December 31, 2017, respectively. The Company recorded no change in the fair value of the Hercules Warrant during the three and nine months ended December 31, 2016.

~~November 2014 Warrant~~

On November 13, 2014, the Company completed an offering of 909,090 units of the Company’s common stock with Hudson Bay Capital. Each unit consisted of one share of the Company’s common stock and 0.9 of a warrant to purchase one share of common stock, or a warrant to purchase in the aggregate 818,181 shares (the “November 2014 Warrant”). The November 2014

~~Warrant is exercisable at any time, at an exercise price equal to $7.81 per share, subject to certain price-based and other anti-dilution adjustments, and expires on November 13, 2019.~~

~~Following is a summary of the key assumptions used to calculate the fair value of the November 2014 Warrant:~~

Fiscal Year 17 December 31,
2017 September 30,
2017 June 30,
2017
Risk-free interest rate 1.87% 1.49% 1.44%
Expected annual dividend yield — — —
Expected volatility 65.86% 65.64% 67.21%
Term (years) 1.87 2.12 2.37
Fair value $0.4 million $0.8 million $0.9 million

Fiscal Year 16
March 31,
2017

December 31,
2016

September 30,
2016

June 30,
2016
March 31,
2016
Risk-free interest rate 1.41% 1.43% 0.93% 0.77% 0.98%
Expected annual dividend yield — — — — —
Expected volatility 66.53% 69.31% 68.96% 70.01% 69.88%
Term (years) 2.62 2.87 3.12 3.37 3.62
Fair value $1.8 million $2.3 million $2.3 million $3.2 million $2.6 million

The Company recorded net gains of $0.4 million and $1.4 million, resulting from decreases in the fair value of the November 2014 Warrant during the three and nine months ended December 31, 2017, respectively. The Company recorded no change and a net gain of $0.3 million, resulting from the decrease in the fair value of the November 2014 Warrant in the three and nine months ended December 31, 2016, respectively.

specified earnout revenue objectives.

Contingent Consideration

The Company evaluated the ~~ITC acquisition Make Whole Payment~~NEPSI Acquisition earnout payment set forth in the ~~SPA (see Note 5, "Fair Value Measurements" for further details),~~NEPSI Stock Purchase Agreement, which ~~ultimately required net~~is expected to require settlement ~~cash,~~in the Company's common stock, and determined the contingent consideration qualified for liability classification and derivative treatment under ASC ~~815.~~815,Derivatives and Hedging. As a result, for each period, the fair value of the contingent consideration ~~was~~will be remeasured and the resulting gain or loss ~~was~~will be recognized in operating ~~expenses.~~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 ~~ITC acquisition:~~

Fiscal Year 17 September 30,
2017 September 25,
2017
Risk-free interest rate 1.09% 1.09%
Expected annual dividend yield — —
Expected volatility 66.54% 65.71%
Term (years) 0.31 0.32
Fair value $0.4 million $0.6 million

All of the stock related to this liability was sold as of December 5, 2017 and the amount of the Make Whole Payment was calculated to be $0.7 million, and subsequently paid on January 5, 2018. As such, no fair value estimate using a Black Scholes model was needed as the liability was recorded at the known settlement value for the period ending December 31, 2017. NEPSI Acquisition:

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

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

The Company recorded net losses of ~~$0.3~~$0.9 million and ~~$0.1~~$2.2 million resulting from the increases in the fair value of the contingent consideration in the three and ~~nine~~six months ended ~~December 31, 2017,~~September 30, 2023, respectively. The Company recorded a net gain of $0.3 million and $0.1 million resulting from the decrease in the fair value of the contingent consideration in the three and six months ended September 30, 2022, respectively.

~~13. Stockholders’ Equity~~

~~Equity Offerings~~

~~On May 5, 2017,~~

14. Debt

As part of the acquisition of Neeltran, the Company identified four equipment financing agreements that Neeltran had entered into ~~an underwriting agreement with Oppenheimer & Co. Inc., as representative of several underwriters named therein, relating~~prior to the ~~issuance~~acquisition of Neeltran on May 6, 2021. The current debt balance is $0.1 million as of September 30, 2023 and ~~sale (the "Offering")~~March 31, 2023.

15. Leases

The Company determines whether a contract is or contains a lease at inception of ~~4.0 million shares~~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 ~~Company's common stock at a public offering price of $4.00 per share. The net proceeds to~~identified asset means that the Company has both the right to obtain substantially all of the economic benefits from the ~~Offering were approximately $14.7 million, after deducting underwriting discounts~~use of the asset and ~~commissions and offering expenses payable~~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.~~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.

Operating Leases

All significant lease arrangements are recognized at lease commencement. Operating lease right–of-use assets and lease liabilities are recognized at commencement. The ~~Offering closed~~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 ~~May 10, 2017. In addition,~~a straight-line basis over the lease term. The Company ~~granted~~enters into a variety of operating lease agreements through the ~~underwriters a 30-day option (the “Option”)~~normal course of its business, but primarily real estate leases to ~~purchase up to an additional 600,000 shares of common stock at the public offering price. On May 24, 2017, the underwriters notified the Company that they had exercised their Option in full.~~support its operations. The net proceeds to the Company from the Option were approximately $2.3 million, after deducting underwriting discounts and commissions and offering expenses payable by the Company. The total net proceeds to the Company from the Offeringreal estate lease agreements generally provide for fixed minimum rental payments and the ~~Option were approximately $17.0 million, after deducting underwriting discounts~~payment of real estate taxes and ~~commissions and offering expenses payable by~~insurance. Many of these real estate leases have one or more renewal options that allow the ~~Company. The Option closed on May 26, 2017.~~

~~ATM Arrangement~~

~~On January 27, 2017, the~~ Company, ~~entered into an At Market Issuance Sales Agreement ("ATM"), pursuant to which, the Company could,~~ at its discretion, ~~sell~~to renew the lease for varying periods up to ~~$10.0 million of~~five years or to terminate the ~~Company’s common stock through its sales agent, FBR Capital Markets & Co. ("FBR"). Sales of common stock made under~~lease. Only renewal options or termination rights that the ~~ATM~~Company believed were ~~made pursuant~~likely to ~~the prospectus supplement dated January 27, 2017, which supplements the prospectus dated October 1, 2014,~~be exercised were included in the ~~shelf registration~~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.

Finance Leases

As of September 30, 2023, the right-of-use asset related to the finance lease, net of accumulated amortization is less than $0.1 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 ~~that AMSC filed with the SEC on~~ of operations.

Supplemental balance sheet information related to leases at September ~~19, 2014.~~

~~During the year ended~~ 30, 2023, and March 31, ~~2017,~~2023 are as follows (in thousands):

	*September 30, 2023*			*March 31, 2023*
Leases:
Right-of-use assets - Financing	$	-			1
Right-of-use assets - Operating		2,493			2,857
Total right-of-use assets		2,493			2,858

Lease liabilities - ST Financing	$	-			1
Lease liabilities - ST Operating		696			807
Lease liabilities - LT Operating		1,929			2,184
Total lease liabilities	$	2,625			2,992

Weighted-average remaining lease term		3.7 years			3.95 years
Weighted-average discount rate		8.48	%		6.46	%

The costs related to the ~~Company received net proceeds of $2.5 million, from sales of approximately 379,693 shares of its common stock at an average sales price of approximately $6.79 per share~~Company's finance lease are not material. The costs related to the Company's operating leases for the three and six months ended September 30, 2023 and 2022 are as follows (in thousands):

	*Three Months Ended*		*Six Months Ended*
	*September 30, 2023*		*September 30, 2023*
Operating Leases:
Operating lease costs - fixed	$	255	$	514
Operating lease costs - variable		40		79
Short-term lease costs		37		74
Total lease costs	$	332	$	667

	*Three Months Ended*		*Six Months Ended*
	*September 30, 2022*		*September 30, 2022*
Operating Leases:
Operating lease costs - fixed	$	262	$	504
Operating lease costs - variable		41		76
Short-term lease costs		30		61
Total lease costs	$	333	$	641

The Company’s estimated minimum future lease obligations under the ~~ATM. No sales of the~~ Company's ~~common stock were made under the ATM after March 31, 2017. On May 4, 2017, the Company provided to FBR a notice of termination of the ATM.~~leases are as follows (in thousands):

	*Leases*
Year ending March 31,
2024	$	472
2025		803
2026		755
2027		614
2028		392
Thereafter		15
Total minimum lease payments		3,051
Less: interest		(426	)
Present value of lease liabilities	$	2,625

~~Stock Purchase Agreement~~

On September 25, 2017, the Company entered into the SPA with ITC. The purchase price was approximately $3.8 million, consisting of 884,890 AMSC Shares and $0.1 million in cash. See Note 4, “Acquisition and Related Goodwill” for further discussion.

~~14.~~

16. Commitments and Contingencies

Legal Contingencies

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.

On September 13, 2011, the Company commenced a series of legal actions in China against Sinovel Wind Group Co. Ltd. (“Sinovel”). The Company’s Chinese subsidiary, Suzhou AMSC Superconductor Co. Ltd., filed a claim for arbitration with the Beijing Arbitration Commission in accordance with the terms of the Company’s supply contracts with Sinovel. The case is captioned ~~(2011) Jing Zhong An Zi No. 963~~. The Company alleges that Sinovel committed various material breaches of its contracts with the Company and Sinovel has refused to pay past due amounts for prior shipments of core electrical components and spare parts. The Company is seeking compensation for past product shipments and retention (including interest) in the amount of approximately RMB 485 million (approximately $75 million) due to Sinovel’s breaches of its contracts. The Company is also seeking specific performance of its existing contracts as well as reimbursement of all costs and reasonable expenses with respect to the arbitration. The value of the undelivered components under the existing contracts, including the deliveries refused by Sinovel in March 2011, amounts to approximately RMB 4.6 billion (approximately $707 million).

~~On October 8, 2011, Sinovel filed with the Beijing Arbitration Commission an application under the caption~~ ~~(2011) Jing Zhong An Zi No. 963,~~ for a counterclaim against the Company for breach of the same contracts under which the Company filed its original arbitration claim. Sinovel claims, among other things, that the goods supplied by the Company do not conform to the standards specified in the contracts and claims damages in the amount of approximately RMB 1.2 billion (approximately $184 million) upon Sinovel’s requests for change of counterclaim. On February 27, 2012, Sinovel filed with the Beijing Arbitration Commission an application under the caption ~~(2012) Jing Zhong An Zi No. 157,~~ against the Company for breach of the same contracts under which the Company filed its original arbitration claim. Sinovel claims, among other things, that the goods supplied by the Company do not conform to the standards specified in the contracts and claims damages in the amount of approximately RMB 105 million (approximately $16 million). The Company believes that Sinovel’s claims are without merit and it intends to defend these actions vigorously. Since the proceedings in this matter are still in the early technical review phase, the Company cannot reasonably estimate possible losses or range of losses at this time.

Other

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, 2017,~~September 30, 2023, the Company had ~~$0.2~~$0.6 million of restricted cash included in long-term assets and $0.5 million of restricted cash included in current assets. As of March 31, 2023, the Company had $0.6 million of restricted cash included in long term assets and $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.~~contracts and long-term projects or collateral deposits. These deposits are held in interest bearing accounts.

During the nine months ended December 31, 2017, the Company received $1.0 million related to the achievement of certain milestones following the previous sale of the Company's minority interest in Blade Dynamics Limited.

On September 25, 2017, the Company acquired ITC for a purchase price of approximately $3.8 million, consisting of $0.1 million in cash and the AMSC Shares. The Company paid certain selling stockholders the Make Whole Payment given that the value of the AMSC Shares sold was less than the agreed upon purchase price. The amount of this payment, which was made on January 5, 2018, was $0.7 million and settled the related contingent liability. See Note 4, “Acquisitions and Related Goodwill” for further discussion.

~~15.~~

17. Restructuring

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—~~,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 ~~April 3, 2017,~~January 24, 2023, the ~~Board of Directors~~Company approved a plan to reduce ~~the Company’s~~its global workforce by approximately 8%5%, effective ~~April 4, 2017.~~as of such date. The purpose of the workforce reduction was to reduce operating expenses to better align with the Company’s current revenues. ~~Included~~In fiscal 2022 through second quarter of fiscal 2023, the Company recorded restructuring charges of $1.0 million as a result of this reduction in ~~the $1.3 million severance pay, charged to operations in the nine months ended December 31, 2017, is $0.5 million~~force, which was comprised of severance pay for one of the Company's former executive officers pursuant to the terms of a severance agreement dated June 30, 2017. Under the terms of the severance agreement, the Company's former executive officer is entitled to 18 months of his base salary, which is expected to be paid by December 31, 2018. From and after January 1, 2018, the Company, at its discretion, may settle any remaining unpaid cash severance owed to its former executive officer through the issuance of a number of immediately vested shares of the Company’s common stock, determined by multiplying the remaining unpaid cash severance owed by 120%, and then dividing by the closing stock price per share of the Company's common stock as of the last business day prior to the issuance of the shares.

pay. All amounts related to these restructuring activities are expected to be paid by ~~December~~March 31, ~~2018.~~2024.

The following table presents restructuring charges and cash payments ~~for~~during the ~~nine~~six months ended ~~December~~September 30, 2023 and year ended March 31, ~~2017 (in~~2023 (in thousands):

Severance pay

and benefits
Accrued restructuring balance at April 1, 2017 $ —
Charges to operations 1,328
Cash payments (934 )
Accrued restructuring balance at December 31, 2017 $ 394

	*Severance pay*
	*and benefits*
Accrued restructuring balance at April 1, 2023	$	717
Charges to operations		(14	)
Cash payments		(477	)
Accrued restructuring balance at September 30, 2023	$	226

	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

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

~~16.~~

18. Business Segments

The Company reports its financial results in two reportable business segments: ~~Wind~~Grid and ~~Grid.~~

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 ~~Windtec Solutions, the Wind business segment enables manufacturers to field wind turbines with exceptional~~ power output, reliability and affordability. 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 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.~~

~~Through the Company’s Gridtec Solutions,~~offerings, the Grid business segment enables electric utilities, industrial facilities, and renewable energy project developers to connect, transmit and distribute smarter, cleaner and better power ~~with exceptional efficiency, reliability~~through its transmission planning services, power electronics, and ~~affordability.~~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 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 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):

Three months ended December 31, Nine months ended December 31,
2017 2016 2017 2016
Revenues:

Wind $ 2,633
$ 18,248
$ 10,465
$ 36,822
Grid 12,300
8,900
24,439
22,178
Total $ 14,933
$ 27,148
$ 34,904
$ 59,000

Three months ended December 31, Nine months ended December 31,
2017 2016 2017 2016
Operating loss:
Wind $ (1,684 ) $ 1,044
$ (7,557 ) $ (3,220 )
Grid (1,011 ) (4,491 ) (15,279 ) (15,068 )
Unallocated corporate expenses (1,156 ) (613 ) (3,514 ) (2,266 )
Total $ (3,851 ) $ (4,060 ) $ (26,350 ) $ (20,554 )

	*Three Months Ended September 30,*				*Six Months Ended September 30,*
	*2023*		*2022*		*2023*		*2022*
Revenues:
Grid	$	28,515	$	25,698	$	54,251	$	45,527
Wind		5,489		1,982		10,007		4,833
Total	$	34,004	$	27,680	$	64,258	$	50,360

	*Three Months Ended September 30,*						*Six Months Ended September 30,*
	*2023*			*2022*			*2023*			*2022*
Operating income (loss):
Grid	$	(679	)	$	(6,495	)	$	(2,649	)	$	(13,776	)
Wind		252			(868	)		(398	)		(1,254	)
Unallocated corporate expenses		(1,942	)		(729	)		(4,655	)		(1,931	)
Total	$	(2,369	)	$	(8,092	)	$	(7,702	)	$	(16,961	)

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 ~~primarily consist~~consisted of ~~stock-based compensation expense~~a loss on contingent consideration of $0.9 million and ~~$0.6~~$2.2 million in the three and six months ended ~~December 31, 2017 and 2016,~~September 30, 2023, respectively. Unallocated corporate expenses ~~primarily consist~~consisted of ~~stock-based compensation expense of $2.1 million and $2.3 million in the nine months ended December 31, 2017 and 2016, respectively. Additionally,~~ a ~~restructuring charge of $1.3 million is included in the nine months ended December 31, 2017, as well as losses for the change in fair value of the~~gain on contingent consideration of $0.3 million and $0.1 million in the three and ~~nine~~six months ended ~~December 31, 2017.~~

September 30, 2022. Additionally, unallocated corporate expenses consisted of stock-based compensation expense of $1.1 million and $1.0 million in the three months ended September 30, 2023 and 2022, respectively, and $2.5 million and $2.1 million in the six months ended September 30, 2023 and 2022, respectively.

Total assets for the two business segments as of ~~December 31, 2017~~September 30, 2023 and March 31, ~~2017~~2023, are as follows (in thousands):

	*September 30, 2023*		*March 31, 2023*
Grid	$	137,607	$	135,296
Wind		9,750		14,361
Corporate assets		23,970		25,904
Total	$	171,327	$	175,561

December 31,
2017 March 31,
2017
Wind $ 15,303
$ 18,346
Grid 36,165
31,060
Corporate assets 45,303
50,838
Total $ 96,771
$ 100,244

~~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, 2017 and 2016:~~

Three months ended December 31, Nine months ended December 31,
2017 2016 2017 2016
Inox Wind Limited 15 % 66 % 27 % 58 %
Vestas Middle East S.L.U. 27 % — % 11 % — %
SSE Generation Ltd. 17 % — % <10%
— %
Hidalgo Wind Farm LLC <10%
17 % <10%
<10%

~~17.~~

19. Recent Accounting Pronouncements

In ~~May 2014,~~ June 2016, the Financial Accounting Standards Board ~~(“FASB”~~("FASB") ~~and the International~~issued Accounting Standards ~~Board~~Update ("~~IASB"~~ASU") ~~issued, ASU 2014-09,~~ ~~Revenue from Contracts with Customers (Topic 606)~~. The guidance substantially converges final standards on revenue recognition between the FASB and IASB providing a framework on addressing revenue recognition issues and, upon its effective date, replaces almost all existing revenue recognition guidance, including industry-specific guidance, in current U.S. generally accepted accounting principles. The FASB has subsequently issued the following amendments to ASU 2014-09 which are all effective for annual reporting periods beginning after December 15, 2017.

I~~n March~~ 2016 ~~the FASB issued ASU No. 2016-08,~~ ~~Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations, which clarifies the implementation guidance on principal versus agent considerations.~~

~~In April 2016, the FASB issued ASU No. 2016-10,~~ ~~Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, which clarifies certain aspects of identifying performance obligations and licensing implementation guidance.~~

~~In May 2016, the FASB issued ASU No. 2016-12,~~ ~~Revenue from Contracts with Customers (Topic 606): Narrow- Scope Improvements and Practical Expedients~~ related to disclosures of remaining performance obligations, as well as other amendments to guidance on collectability, non-cash consideration and the presentation of sales and other similar taxes collected from customers.

~~In December 2016, the FASB issued ASU No. 2016-20,~~ ~~Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers~~, which amends certain narrow aspects of the guidance issued in ASU 2014-09 including guidance related to the disclosure of remaining performance obligations and prior-period performance obligations, as well as other amendments to the guidance on loan guarantee fees, contract costs, refund liabilities, advertising costs and the clarification of certain examples.

As of December 31, 2017, the Company has made significant progress towards completing its assessment of the potential effects of ASU 2014-09 and its amendments on its consolidated financial statements, and is actively assessing the potential effects on business processes, systems and controls to support revenue recognition and the related disclosures under this ASU. The Company’s assessment includes a detailed review of representative contracts from each of the Company’s revenue streams and a comparison of its historical accounting policies and practices to the new standard. The Company is required to adopt the new standards on April 1, 2018, and expects to do so retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (the modified retrospective transition method). Additionally, this guidance could lead to recognizing certain revenue transactions sooner than in the past on certain contracts, as the Company will need to estimate the revenue it will be entitled to upon contract completion, and later on other contracts, due to lack of an enforceable right to payment for performance obligations satisfied over time. The Company's preliminary assessment of this adoption method supports the determination that there are no expected changes in the accounting for its largest revenue stream which includes Inox Wind Limited as its primary customer. Across other revenue streams the timing of revenue recognition could be affected for multiple types of contracts, primarily multiple element contracts in its grid business unit, but those differences are not expected to have a material impact on its consolidated financial statements. However, the Company's assessment is not yet finalized and is subject to change. Additionally, the Company is currently evaluating any tax implications the adoption of this new standard may have on the consolidated financial statements. As part of this analysis, the Company is evaluating its information technology capabilities and systems, and does not expect to incur significant information technology costs to modify systems currently in place.

During the fourth quarter of fiscal 2017, the Company plans to assess its current revenue controls, and identify and implement any changes that may be necessary to comply with its new revenue policies and the provisions of ASU 2014-09, which will be effective for the Company as of April 1, 2018.

~~In January 2016, the FASB issued ASU 2016-01,~~ ~~Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities~~. The amendments in ASU 2016-01 will enhance the reporting model for financial instruments to provide users of financial statements with more decision-useful information. This ASU is effective for annual reporting periods beginning after December 15, 2017, and interim periods within those fiscal years. The Company does not expect any significant changes to the consolidated financial statement results with the adoption of ASU 2016-01.

~~In February 2016, the FASB issued ASU 2016-02,~~ ~~Leases (Topic 842)~~. The guidance in this ASU supersedes the leasing guidance in Topic 840, Leases. Under the new guidance, lessees are required to recognize lease assets and lease liabilities on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. This ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is currently evaluating the effects adoption of this guidance will have on its consolidated financial statements.

~~In June 2016, the FASB issued ASU 2016-13,~~ -13,Financial Instruments-Credit Losses (Topic ~~326)~~326): Measurement of Credit Losses on Financial Instruments. The amendments in ASU ~~2016-13~~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. ~~The~~Following the release of ASU is2019-10 in November 2019, the effective ~~for~~date, as long as the Company remains a smaller reporting company, was annual reporting periods beginning after December 15, ~~2019, including interim periods within that year. The~~2022. As of April 1, 2023, the Company ~~is currently evaluating the~~has adopted ASU 2016-13 and noted no material impact ~~if any, the adoption of ASU 2016-13 may have~~ on its condensed consolidated financial statements.

In ~~2016,~~ 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 ~~following two ASU's on Statement~~accounting for acquired revenue contracts with customers in a business combination. Following the release of ~~Cash Flows (Topic 230). Both amendments are~~ASU 2021-08 in October 2021, the effective ~~for~~date was annual reporting periods beginning after December 15, ~~2017, including interim periods within that year.~~

~~In August 2016,~~ 2022. As of April 1, 2023, the ~~FASB issued ASU 2016-15,~~ ~~Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The amendments in ASU 2016-15 will provide more guidance towards the classification of multiple different types of cash flows in order to reduce the diversity in reporting across entities.~~

~~In November 2016, the FASB issued ASU 2016-18,~~ ~~Statement of Cash Flows (Topic 230): Restricted Cash~~. The amendments in ASU 2016-18 will explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows.

~~The~~ Company ~~does not expect any significant changes to the consolidated financial statement results with the adoption of ASU 2016-15 and ASU 2016-18.~~

~~In October 2016, the FASB issued ASU 2016-16,~~ ~~Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory~~. The amendments in ASU 2016-16 will improve the accounting for the income tax consequences of intra-entity transfers of assets other than inventory. The ASU is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that year. The Company does not anticipate any significant changes to the consolidated financial statement results with the adoption of ASU 2016-16.

~~In January 2017, the FASB issued ASU 2017-01,~~ ~~Business Combinations~~. The amendments in ASU 2017-01 will clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The ASU is effective for annual reporting periods beginning after December 15, 2017, including interim periods within those periods. The Companyhas adopted ASU ~~2017-01 effective September 30, 2017, following the Acquisition of ITC. The Company considered these amendments in~~2021-08 and noted no material impact on its ~~decision to record the combination of the entities as an acquisition of a business. See Note 4, "Acquisition and Related Goodwill", for further details. These impacts have been included in the~~condensed consolidated financial statements.

~~In January 2017, the FASB issued ASU 2017-03,~~ ~~Accounting Changes and Error Corrections (Topic 250) and Investments - Equity Method and Joint Ventures~~. The amendments in ASU 2017-03 provide additional detail surrounding disclosures required related to adoption of new pronouncements. The ASU is effective for the periods of each related pronouncement. The Company is currently evaluating the impact the adoption of ASU 2017-03 may have on its consolidated financial statements.

~~In January 2017, the FASB issued ASU 2017-04,~~ ~~Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.~~ The amendments in ASU 2017-04 eliminated the prior requirement to perform procedures to determine the fair value at the impairment testing date of an entity's assets and liabilities (including unrecognized assets and liabilities) following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Under the new guidelines an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. The ASU is effective for annual reporting periods beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. Following the Acquisition of ITC, the Company performed an analysis and determined that the transaction included a portion of goodwill. The Company has accounted for that value on its balance sheet as of December 31, 2017. See Note 4, "Acquisition and Related Goodwill" for further details. The Company adopted ASU 2017-04 effective September 30, 2017, and determined there were no triggering events requiring further impairment analysis at this time. The Company expects to perform its annual impairment test during the fourth quarter of fiscal 2017.

~~In February 2017, the FASB issued ASU 2017-05,~~ ~~Other Income - Gains and Losses from the Derecognition of Non-financial Assets (Subtopic 610-20)~~. The amendments in ASU 2017-05 clarify the scope of Subtopic 610-20, Other Income-Gains and Losses from the Derecognition of Non-financial Assets, and to add guidance for partial sales of non-financial assets. Subtopic 610-20, which was issued in May 2014 as a part of Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606), provides guidance for recognizing gains and losses from the transfer of non-financial assets in contracts with non-customers. The Company does not expect any significant changes to the consolidated financial statement results with the adoption of ASU 2017-05.

~~In May 2017, the FASB issued ASU 2017-09,~~ ~~Compensation - Stock Compensation (Subtopic 718) Scope of Modification Accounting~~. The amendments in ASU 2017-09 provide clarity and reduce both (1) diversity in practice and (2) cost and complexity when applying the guidance in Topic 718, Compensation—Stock Compensation, to a change to the terms or conditions of a share-based payment award. The ASU is effective for annual reporting periods beginning after December 15, 2017, including interim periods within those periods. The Company does not expect any significant changes to the consolidated financial statement results with the adoption of ASU 2017-09.

~~In July 2017, the FASB issued ASU 2017-11,~~ ~~Earnings per Share (Topic~~ ~~260),~~ ~~Distinguishing Liabilities from Equity (Topic 480), and Derivatives and Hedging (Topic 815)~~. The amendments in ASU 2017-11 provide guidance for freestanding equity-linked financial instruments, such as warrants and conversion options in convertible debt or preferred stock, and should no longer be accounted for as a derivative liability at fair value as a result of the existence of a down round feature. The ASU is effective for annual reporting periods beginning after December 15, 2018, including interim periods within those periods. The Company is currently evaluating the impact the adoption of ASU 2017-11 may have on its consolidated financial statements.

for annual reporting periods beginning after December 15, 2018, including interim periods within those periods. The Company is currently evaluating the impact the adoption of ASU 2017-12 may have on its consolidated financial statements.

~~18.~~

20. Subsequent Events

On February 1, 2018, ASC Devens, LLC (the “Seller”), a wholly owned subsidiary of American Superconductor Corporation (the “Company”), entered into a Purchase and Sale Agreement (the “PSA”) with 64 Jackson LLC (the “Purchaser”) and Stewart Title Guaranty Company (“Escrow Agent”), pursuant to which the Seller has agreed to sell to the Purchaser certain real property located at 64 Jackson Road, Devens, Massachusetts, as described in the PSA, including the building that has served as the Company’s headquarters (collectively, the “Property”), in exchange for total consideration of $23.0 million, which is composed of (i) cash consideration of $17.0 million, and (ii) a $6.0 million subordinated secured commercial promissory note payable to the Seller (the “Seller Note”) at an interest rate equal to the short-term applicable federal rate then in effect at closing (the “Transaction”). The cash consideration includes a deposit of $500,000 (the “First Deposit”), which the Purchaser has agreed to deposit with the Escrow Agent within three business days after the execution of the PSA, and a second deposit (together with the First Deposit, the “Deposit”) of $500,000, which the Purchaser has agreed to deposit with the Escrow Agent on February 15, 2018, provided that the Seller has not terminated the PSA by that date. The PSA contains customary representations, warranties and covenants of the Seller and the Purchaser. The Transaction is anticipated to close on March 30, 2018. Pursuant to the PSA, at closing, the Escrow Agent has agreed to deliver the Deposit to the Seller, and Purchaser has agreed to deliver the remaining cash consideration and the Seller Note to the Seller. The closing of the Transaction is not contingent on any due diligence investigations (other than title), permitting, or financing, however, there is no guarantee that the Transaction will close in the timeframe the Company expects, or at all.

According to the Seller Note, the form of which is attached as Exhibit B to the PSA, $3,000,000 in principal, together with all accrued interest, is due and payable to the Seller on March 31, 2019, and $3,000,000 in principal, together with all accrued interest, is due and payable to the Seller on March 31, 2020, provided that, if the Purchaser sells the Property, all unpaid principal and accrued interest must be repaid in full.

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

AMERICAN SUPERCONDUCTOR CORPORATION

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS


ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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, or our prospective results of operations or financial position, the benefits of our 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: ~~A significant portion of our revenues are derived from a single customer, Inox;~~ We have a history of operating losses, ~~and negative operating cash flows,~~ which may continue in the ~~future and require us to secure additional financing in the future;~~future. Our operating results may fluctuate significantly from quarter to quarter and may fall below expectations in any particular fiscal quarter; ~~Our financial condition~~We have a history of negative operating cash flows, and we may ~~have an adverse effect on our customer and supplier relationships; Our success~~require additional financing in ~~addressing~~ the wind energy market is dependent on the manufacturers that license our designs; Our success is dependent upon attracting and retaining qualified personnel and our inability to do so could significantly damage our business and prospects; We rely upon third-party suppliers for the components and sub-assemblies of many of our Wind and Grid products, making us vulnerable to supply shortages and price fluctuations; Failure to successfully execute any move of our Devens, Massachusetts manufacturing facility or achieve expected savings or other anticipated benefits following any move could adversely impact our financial performance; We may not realize all of the sales expected from our backlog of orders and contracts; Our success depends upon the commercial use of high temperature superconductor products,future, which is currently limited, and a widespread commercial market for our products may not develop; 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; 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, and additional funding of such contracts may not be ~~approved by the U.S. Congress; Tax reform in the U.S.~~available to us; We may ~~negatively 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~~be required to issue performance bonds or ~~limit~~provide letters of credit, which restricts our ability to ~~expand~~access any cash used as collateral for the bonds or letters of credit; Changes in exchange rates could adversely affect our ~~operations outside~~results of ~~these markets; Our business and operations would be adversely impacted in the event of a failure or security breach of our information technology infrastructure;~~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 ~~face risks~~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 has adversely impacted our business, financial condition and results of 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 parties information 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 the anticipated benefits; We or third parties on whom we depend may be adversely affected by natural disasters, including events resulting from climate change, and our business continuity and disaster recovery plans may not 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'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; 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;~~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, ~~2017,~~2023, and our other reports filed with the SEC. These ~~and the~~ important factors, ~~discussed under the caption “Risk Factors” in Part 1. Item 1A of our Form 10-K for the fiscal year ended March 31, 2017~~ 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~~®Superconductor®, ~~Amperium~~®Amperium®, ~~AMSC~~®AMSC®, D-VAR®, PowerModule™, D-VAR VVO®, ~~PowerModule~~™PQ-IVR®, ~~D-VAR® VVO,~~ ~~PQ-IVR~~®SeaTitan®, ~~SeaTitan~~™~~, Gridtec~~Gridtec™ Solutions,™~~, Windtec~~ Windtec™ Solutions,™ ~~and~~ Smarter, Cleaner...Better ~~Energy~~™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.

Executive Overview

We are a leading system provider of megawatt-scale power resiliency solutions that ~~lower~~Orchestrate the ~~cost~~Rhythm and Harmony of ~~wind power~~Power on the Grid™, and protect and expand the capability of our Navy's fleet. Our solutions enhance the performance of the power ~~grid.~~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. ~~In the~~Our power grid ~~market, we enable electric utilities~~ and ~~renewable energy project developers to connect, transmit and distribute power through our transmission planning services and power electronics and superconductor-based products. Our~~ wind ~~and power grid~~ products and services provide exceptional reliability, security, efficiency and affordability to our customers.

Our ~~wind and~~ power ~~grid~~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 in-board power systems to support fleet electrification, and the need for increased renewable sources of electricity, such as wind and solar ~~energy, and for modernized smart grids that improve power reliability, security and quality.~~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, ~~national~~ and ~~global~~national levels, including renewable portfolio standards, tax incentives and international treaties.

We manufacture products using two proprietary core technologies: ~~PowerModule~~PowerModule™ programmable power electronic converters and our ~~Amperium~~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: ~~Wind~~Grid and ~~Grid.~~Wind. We believe this market-centric structure enables us to more effectively anticipate and meet the needs of ~~wind turbine manufacturers,~~ power generation project developers, ~~and electric utilities.~~

~~Wind.~~ ~~Through our Windtec Solutions~~™~~, our Wind business segment enables manufacturers to field wind turbines with exceptional power output, reliability and affordability. We supply advanced power electronics and control~~the Navy's ship protection systems, license our highly engineered wind turbine designs, and provide extensive customer support services to wind turbine manufacturers. Our design portfolio includes a broad range of drive trains and power ratings of 2 megawatts (“MW”) and higher. We provide a broad range of power electronics and software-based control systems that are highly integrated and designed for optimized performance, efficiency, and grid compatibility.

~~Grid.~~ ~~Through our Gridtec Solutions~~™~~, our Grid business segment enables~~ electric utilities and renewable energy project developers to connect, transmit and distribute power with exceptional efficiency, reliability, security and affordability. We provide transmission planning services that allow us to identify power grid congestion, poor power quality, and other risks, which help us determine how our solutions can improve network performance. These services often lead to sales of our grid interconnection solutions for wind ~~farms and solar power plants, power quality systems and transmission and distribution cable systems. We also sell ship protection products to the U.S. Navy through our Grid business segment.~~

turbine manufacturers.

•

Grid. Through our Gridtec™ Solutions, our Grid business segment enables electric utilities, industrial facilities, and renewable energy project developers to connect, transmit and distribute power with exceptional efficiency, reliability, security and affordability. We provide transmission planning services that allow us to identify power grid congestion, poor power quality, and other risks, which help us determine how our solutions can improve network performance. These services often lead to sales of our grid interconnection solutions for wind farms and solar power plants, power quality systems and transmission and distribution cable systems. We also sell ship protection products to the U.S. Navy through our Grid business segment.

•

Wind. Through our Windtec™ Solutions, our Wind business segment enables manufacturers to field wind turbines with exceptional power output, reliability and affordability. We supply advanced power electronics and control systems, license our highly engineered wind turbine designs, and provide extensive customer support services to wind turbine manufacturers. Our design portfolio includes a broad range of drivetrains and power ratings of 2 megawatts ("MWs") and higher. We provide a broad range of power electronics and software-based control systems that are highly integrated and designed for optimized performance, efficiency, and grid compatibility.

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 ~~beginning~~that began on April 1 of that same year. For example, fiscal ~~2017~~2023 refers to the fiscal year ~~beginning~~that began on April 1, ~~2017.~~2023. Other fiscal years follow similarly.

We 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 reasons, such as the ongoing wars between Russia and Ukraine or Israel and Hamas, inflation, rising interest rates, labor force availability, sourcing, material delays and global supply chain disruptions could have a material adverse effect on our 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 $1.0 million of cash expenses, $0.8 million of which has been paid as of September ~~25, 2017, we acquired Infinia Technology Corporation (“ITC”) for approximately $3.8 million as described below (the “Acquisition”). Located~~30, 2023, and to result in ~~Richmond, Washington, ITC is a technology firm founded in 2009 specializing in the design, development and commercialization of cryo-coolers for a wide range of applications.~~

~~Pursuant to a stock purchase agreement (the “SPA”), we acquired all of the issued and outstanding shares of ITC (the “ITC Shares”) for a purchase price~~annualized cost savings of approximately ~~$3.8~~$5.0 million, ~~consisting of $0.1 million~~beginning in ~~cash and 884,890 shares of our common stock, par value $0.01 per share (the “AMSC Shares”). Under the terms of the SPA,~~fiscal 2023.

In February 2023, we were obligated to file a registration statement (the “Resale Registration Statement”) covering the resale of the AMSC Shares by certain selling stockholders (the “Selling Stockholders”) no later than 10 business days following the closing of the Acquisition, and to use commercially reasonable efforts to cause the Resale Registration Statement to be declared effective by the Securities and Exchange Commission (“SEC”) as soon as practicable thereafter. Additionally, we agreed to pay the Selling Stockholders an amount in cash (the “Make Whole Payment”), if any, equal to (x) an amount equal to (i) the price per AMSC Share pursuant to the terms of the SPA, multiplied by (ii) the number of AMSC Shares sold by Selling Stockholders during the first 90 days after the effectiveness of the Resale Registration Statement, minus (y) the aggregate sales proceeds received by the Selling Stockholders from the sale of any AMSC Shares during the first 90 days after the effectiveness of the Resale Registration Statement. The Resale Registration Statement was declared effective on October 23, 2017. The contingent liability related to the Make Whole Payment was determined under a fair value option based pricing model to be $0.6 million on September 25, 2017 and was subsequently reassessed at each period end until the final amount of $0.7 million as of December 31, 2017 was determined according to the formula per the agreement. See Note 5 "Fair Value Measurements" and Note 12 "Warrants and Derivative Liabilities" for further discussion regarding the

~~valuation of this liability. On January 5, 2018 we issued the Make Whole Payment to the selling stockholders in the amount of $0.7 million and settled the contingent liability.~~

We valued the Acquisition at $4.2 million (excluding Acquisition costs), using a value of $4.02 per share, which represents the closing price of our common stock on the closing date of the Acquisition plus $0.1 million in cash and $0.6 million contingent consideration for the Make Whole Payment valued as of the closing date. As a result of this transaction, ITC became a wholly-owned subsidiary and was integrated into our Grid business unit.

The results of ITC's operations are included in our consolidated results and our Grid segment reporting from the date of acquisition, September 25, 2017. Assuming the Acquisition had occurred on April 1, 2017 and 2016, the impact on our consolidated results would not have been significant.

On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (“tax reform”) was signed into law. ASC Topic 740 requires deferred tax assets and liabilities to be measured using the enacted rate for the period in which they are expected to reverse. The tax reform was enacted as of December 22, 2017. Accordingly, the new 21% U.S. Federal corporate tax rate was used to measure the U.S. deferred tax assets and liabilities that will reverse in future periods. Our reduction to our net U.S. deferred tax asset was offset by a corresponding reduction to our valuation allowance. In addition, the new legislation includes a transition tax in which all foreign earnings are deemed to be repatriated to the U.S. and taxable at specified rates included within the tax reform. We are incompleted the process of ~~calculating~~determining and verifying our eligibility and amount of payroll tax credits known as the ~~impact~~Employee Retention Credit (“ERC”) under the CARES Act which Congress enacted as part of the ~~transition tax. The analysis is complex~~Taxpayer Certainty and ~~encompasses many years.~~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 ~~are working with our foreign subsidiaries~~recognized a receivable in prepaid expenses and ~~their local tax service providers~~other current assets and a benefit to ~~gather historical information, including historical tax returns,~~cost of revenues and operating expenses in ~~order to complete~~ the ~~calculation. Pursuant to Staff Accounting Bulletin No. 118, our measurement period~~quarter ended March 31, 2023. During the six months ended September 30, 2023, we received $3.0 million in payments for the ~~tax impact of the tax law changes~~initial claims that were processed. The remaining balance is ~~still open. At this time, we do not anticipate a material impact due to the transition tax, and we anticipate completing the accounting under ASC Topic 740 by March 31, 2018, at which time we expect~~expected to be ~~in a position to book any required adjustments for any transition tax impact We do not anticipate any other material tax exposure due to~~paid during the ~~tax reform at this time.~~

remainder of fiscal 2023.

Critical Accounting Policies and Estimates

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. During the nine months ended December 31, 2017, we adopted ASU 2017-04, which provides for changes to the annual impairment testing of goodwill. See Note 4, "Acquisition and Related Goodwill" for further details. Aside from the adoption of ASU 2017-04, thereThere were no significant changes in the critical accounting policies that were disclosed in our Annual Report on Form 10-K for the fiscal ~~2016, which~~year ended on March 31, ~~2017.~~

2023.

Results of Operations

Three and ~~nine~~six months ended ~~December 31, 2017~~September 30, 2023, compared to the three and ~~nine~~six months ended ~~December 31, 2016~~

September 30, 2022

Revenues

Total revenues ~~decreased 45%~~increased 23% to $34.0 million for the three months ended September 30, 2023 and ~~41%~~total revenues increased 28% to ~~$14.9~~$64.3 million for the six months ended September 30, 2023, compared to $27.7 million and ~~$34.9~~$50.4 million for the three and ~~nine~~six months ended ~~December 31, 2017, respectively, compared to $27.1 million and $59.0 million for the three and nine months ended December 31, 2016,~~September 30, 2022, respectively. Our revenues are summarized as follows (in thousands):

	Three Months Ended September 30,				Six Months Ended September 30,
	2023		2022		2023		2022
Revenues:
Grid	$	28,515	$	25,698	$	54,251	$	45,527
Wind		5,489		1,982		10,007		4,833
Total	$	34,004	$	27,680	$	64,258	$	50,360

Our Grid business unit accounted for 84% of total revenues for each of the three and six months ended September 30, 2023, respectively, compared to 93% and 90% for the three and six months ended September 30, 2022, respectively. Our Grid business unit revenues increased 11% to $28.5 million in the three months ended September 30, 2023, from $25.7 million in the three months ended September 30, 2022. Our Grid business unit revenues increased 19% to $54.3 million in the six months ended September 30, 2023, from $45.5 million in the six months ended September 30, 2022. The increase in the Grid business unit revenue in the three and six months ended September 30, 2023, compared to the three and six months ended September 30, 2022 was primarily driven by increased shipments of new energy power systems and ship protection systems revenues than in the prior year periods.

Our Wind business unit accounted for ~~18% and 30%~~16% of total revenues for each of the three and ~~nine~~six months ended ~~December 31, 2017,~~September 30, 2023, respectively, compared to ~~67%~~7% and ~~62%~~10% for the three and ~~nine~~six months ended ~~December 31, 2016,~~September 30, 2022, respectively. Revenues in the Wind business unit ~~decreased 86%~~increased 177% and ~~72%~~107% to ~~$2.6~~$5.5 million and ~~$10.5~~$10.0 million in the three and ~~nine~~six months ended ~~December 31, 2017, respectively,~~September 30, 2023, from ~~$18.2~~$2.0 million and ~~$36.8~~$4.8 million in the three and ~~nine~~six months ended ~~December 31, 2016,~~September 30, 2022, respectively.

Wind business unit revenues in the three months ended December 31, 2017 decreased due to a lack of ECS shipments to Inox during the period, partially offset by increased license revenues. Wind business unit revenues in the nine months ended December 31, 2017 decreased primarily due to fewer shipments to Inox, partially offset by increased license revenues in the three month period as discussed above. We believe this reduction in demand has been caused by the transition in India from a local fixed tariff policy regime to a central and state government auction regime, which has had an adverse impact on the Wind industry in India. We cannot predict if and when this demand dislocation will be resolved.

Our Grid business unit accounted for 82% and 70% of total revenues for the three and nine months ended December 31, 2017, respectively, compared to 33% and 38% for the three and nine months ended December 31, 2016, respectively. Our Grid business unit revenues increased 38% and 10% to $12.3 million and $24.4 million The increase in the three and ~~nine~~six months ended ~~December 31, 2017, respectively, from $8.9 million~~September 30, 2023, compared to the three and ~~$22.2 million~~six months ended September 30, 2022, was driven by additional shipments of electrical control systems ("ECS") at increased prices in the three and ~~nine~~six months ended December 31, 2016, respectively. Grid business unit revenues in the three months ended December 31, 2017 increased primarily due to higher D-VAR system revenues. Grid business unit revenues in the nine months ended December 31, 2017 increased primarily due to higher D-VAR system revenues, as well as higher revenue from the U.S. Navy.

~~The following table sets forth customers who represented 10% or more of our total revenues for the three and nine months ended December 31, 2017 and 2016:~~

September 30, 2023.

Cost of Revenues and Gross Margin

Cost of revenues decreased by ~~55%~~1% to ~~$9.9~~$25.4 million for the three months ended September 30, 2023, compared to $25.7 million for the three months ended ~~December 31, 2017, compared~~September 30, 2022. Cost of revenues increased by 7% to ~~$22.1~~$49.4 million for the ~~three~~six months ended ~~December 31, 2016.~~ September 30, 2023, compared to $46.2 million for the six months ended September 30, 2022. Gross margin was ~~34%~~25% and 23% for the three and six months ended ~~December 31, 2017,~~September 30, 2023, respectively, compared to ~~19%~~7% and 8% for the three and six months ended ~~December 31, 2016.~~ September 30, 2022, respectively. The increase in ~~the~~ gross margin ~~for~~in the three and six months ended ~~December 31, 2017~~September 30, 2023, was due to ~~increased royalty revenue and~~higher revenues, a more favorable product mix inincluding increased spares and service revenues and favorable impacts across the ~~current year period.~~

~~Cost of revenues decreased by 33%~~business due to $34.1 million for the nine months ended December 31, 2017, compared to $51.0 million for the nine months ended December 31, 2016. Gross margin was 2% for the nine months ended December 31, 2017, compared to 14% for the nine months ended December 31, 2016. The decrease in the gross margin for the nine months ended December 31, 2017 was due primarily to the reduction in demand from Inox as discussed above.

pricing increases across our product lines.

Operating Expenses

Research and development

Research and development ("R&D&D") expenses decreased ~~in three~~29% and ~~nine months ended December 31, 2017 by 1% to $3.0 million and $8.7 million from $3.0 million and $8.8 million for the three and nine months ended December 31, 2016. The decrease in R&D expenses~~30% in the three and ~~nine~~six months ended ~~December 31, 2017 as compared~~September 30, 2023, respectively, to ~~the prior year periods was primarily due to reduced compensation expense.~~

~~Selling, general, and administrative~~

~~SG&A expenses decreased by 10% and 14% to $5.5~~$1.6 million ~~and $17.0~~from $2.3 million in the three ~~and nine~~ months ended ~~December 31, 2017,~~September 30, 2022, and to $3.5 million from ~~$6.1~~$5.0 million in the six months ended September 30, 2022. The decrease in both periods was driven primarily by decreased compensation expense as well as increased labor charges reclassified to cost of goods sold to support revenue generating projects.

Selling, general, and ~~$19.6~~administrative

Selling, general and administrative ("SG&A") expenses increased 8% in the three months ended September 30, 2023, to $7.9 million from $7.3 million in the three ~~and nine~~ months ended ~~December 31, 2016.~~September 30, 2022. The ~~decreases~~increase in SG&A ~~expenses~~expense in the three ~~and nine~~ months ended ~~December 31, 2017 were~~September 30, 2023, was due ~~primarily~~ to ~~reduced~~higher compensation and stock compensation expense than in the prior year period. SG&A expenses increased 6% to $15.8 million in the six months ended September 30, 2023, compared to $14.9 million in the six months ended September 30, 2022. The increase in SG&A expense in the six months ended September 30, 2023, was due to higher overall compensation expense ~~and~~than in the ~~reduced use of outside service providers.~~

prior year period.

Amortization of acquisition related intangibles

We recorded amortization expense related to our core technology and know-how, ~~trade names~~customer relationships, and ~~trademark~~other intangible assets of less than $0.1 million in each of the three months ended December 31, 2017 and 2016. We recorded amortization expense related to our core technology and know-how, trade names and trademark intangible assets of less than $0.1$0.5 million and ~~$0.1~~$1.1 million in the ~~nine~~three and six months ended ~~December 31, 2017~~September 30, 2023, respectively, and ~~2016,~~$0.7 million and $1.4 million in the three and six months ended September 30, 2022, respectively.

The decrease in amortization expense in both periods is a result of using the economic consumption method as the basis to amortize the acquired customer relationship intangible assets from Northeast Power Systems, Inc ("NEPSI") and Neeltran.

Change in fair value of contingent consideration

The change in fair value of our contingent consideration for the ~~Make Whole Payment~~earnout payment on the ~~ITC Acquisition~~acquisition of NEPSI resulted in a loss of $0.9 million and $2.2 million in the three and six months ended September 30, 2023, respectively, compared to a gain of $0.3 million and $0.1 million in the three and ~~nine~~six months ended ~~December 31, 2017.~~ September 30, 2022, respectively. The change in the fair value was ~~primarily~~ driven by ~~the change in stock price, which is a key valuation metric.~~

~~Restructuring~~

~~We recorded a restructuring charge~~an increased likelihood of ~~$1.3 million for severance costs~~achieving certain revenue targets and an increase in the ~~nine months ended~~Company's stock price.

NEPSI has recognized revenues in excess of $75 million during the three years after the NEPSI Acquisition Date. As a result, we expect to issue 400,000 shares of common stock of the Company to the selling stockholders during the quarter ending December 31, ~~2017 as a result~~2023 upon certification of the ~~reduction in force announced on April 4, 2017. Included in the $1.3 million severance pay, charged to operations in the nine months ended December 31, 2017, is $0.5 million~~achievement of ~~severance pay for one of our former executive officers pursuant to the terms of a severance agreement dated June~~ specified earnout revenue objectives.

30 2017. Under the terms of the severance agreement, our former executive officer is entitled to eighteen months of his base salary, which is expected to be paid by December 31, 2018. From and after January 1, 2018, at our discretion, we may settle any remaining unpaid cash severance owed to our former executive officer through the issuance of a number of immediately vested shares of our common stock, determined by multiplying the remaining unpaid cash severance owed by 120%, and then dividing by the closing stock price per share of our common stock as of the last business day prior to the issuance of the shares.

Operating ~~loss~~

income (loss)

Our operating ~~loss~~income (loss) is summarized as follows (in thousands):

~~Our Wind~~

	Three Months Ended September 30,						Six Months Ended September 30,
	2023			2022			2023			2022
Operating income (loss):
Grid	$	(679	)	$	(6,495	)	$	(2,649	)	$	(13,776	)
Wind		252			(868	)		(398	)		(1,254	)
Unallocated corporate expenses		(1,942	)		(729	)		(4,655	)		(1,931	)
Total	$	(2,369	)	$	(8,092	)	$	(7,702	)	$	(16,961	)

Our Grid business segment generated operating losses of ~~$1.7~~$0.7 million and ~~$7.6~~$2.6 million in the three and ~~nine~~six months ended ~~December 31, 2017,~~September 30, 2023, respectively, compared to ~~a profit~~operating losses of ~~$1.0~~$6.5 million and ~~loss of $3.2~~$13.8 million in the three and ~~nine~~six months ended December 31, 2016, respectively. The increase in the Wind business unit operating losses in the three months ended December 31, 2017 was due primarily to a lack of ECS shipments to Inox, offset partially by increased license revenue as previously discussed. The increase in the Wind business unit operating loss in the nine months ended December 31, 2017 was due primarily to fewer ECS shipments to Inox, partially offset by increased license revenue, as previously discussed.

Our Grid segment generated operating losses of $1.0 million and $15.3 million in the three and nine months ended December 31, 2017, respectively, compared to $4.5 million and $15.1 million in the three and nine months ended December 31, 2016,September 30, 2022, respectively. The decrease in the Grid business unit operating loss in the three and six months ended ~~December 31, 2017~~September 30, 2023, was due ~~primarily~~ to ~~increased D-VAR~~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 $0.4 million in the three and six months ended September 30, 2023, respectively, compared to ~~the prior year period. The increase in Grid business unit~~ operating loss in the nine months ended December 31, 2017 was due primarily to $4.1 million of accelerated depreciation related to revised estimates of the useful lives of certain pieces of manufacturing equipment.

~~Unallocated corporate expenses primarily consist of stock-based compensation expense~~losses of $0.9 million and ~~$2.1~~$1.3 million ~~for~~in the three and six months ended September 30, 2022, respectively. The improvement in the Wind business unit operating margin in the three and ~~nine~~six months ended ~~December 31, 2017, respectively,~~September 30, 2023 was due to higher revenues and ~~$0.6~~gross margins from increased sales of ECS units.

Unallocated corporate expenses included a loss on contingent consideration of $0.9 million and ~~$2.3~~$2.2 million in the three and ~~nine~~six months ended ~~December 31, 2016, respectively. Additionally,~~September 30, 2023, respectively, and a ~~restructuring charge of $1.3 million, primarily for severance costs as a result of the restructuring action announced~~gain on ~~April 4, 2017, is included in unallocated corporate expenses for the nine months ended December 31, 2017, as well as losses~~contingent consideration of $0.3 million and $0.1 million ~~for the change in fair value of the contingent consideration~~ in the three and ~~nine~~six months ended ~~December 31, 2017,~~September 30, 2022, respectively.

~~Change in fair value~~ Additionally, unallocated corporate expenses primarily consisted of ~~warrants~~

~~The change in fair value~~stock-based compensation expense of ~~warrants resulted in gains of $0.4~~$1.1 million and ~~$1.5~~$2.5 million in the three and ~~nine~~six months ended ~~December 31, 2017,~~September 30, 2023, respectively, ~~compared to gains of $0.1~~and $1.0 million and ~~$0.7~~$2.1 million in the three and six months ended September 30, 2022, respectively.

Interest income, net

Interest income, net, was $0.2 million and $0.4 million in the three and ~~nine~~six months ended

~~December 31, 2016, respectively. The change in the fair value was primarily driven by changes in stock price, which is a key valuation metric.~~

~~Interest income (expense), net~~

~~Interest income (expense), net, was income of~~ September 30, 2023, respectively, compared to less than $0.1 million and $0.1 million in the three and six months ended September 30, 2022, respectively, due to higher earned interest at increased rates in the fiscal year 2023 periods.

China dissolution

China dissolution expense was $1.9 million in each of the three and ~~nine~~six months ended ~~December 31, 2017, respectively, compared to~~September 30, 2022, and there was no similar transaction in the three and six months ended September 30, 2023. The impact of the China dissolution expense during the three and six months ended September 30, 2022, was driven by the liquidation of ~~$0.1~~our China entity, resulting in a foreign currency loss from the cumulative translation release of $1.9 million.

Other income (expense), net

Other expense, net, was $0.2 million and $0.3 million in the three and ~~nine~~six months ended ~~December 31, 2016, respectively. The decrease in interest expense was related~~September 30, 2023, respectively, compared to lower interest due to the maturity of both of our term loans with Hercules Technology Growth Capital, Inc. (“Hercules”). Our Term Loan B matured in November 2016, and our Term Loan C matured in June 2017.

~~Other (expense) income, net~~

~~Other (expense)~~other income, net, ~~was expense~~ of ~~$0.3~~$0.1 million and ~~$2.4~~$0.2 million in the three and ~~nine~~six months ended ~~December 31, 2017, respectively, compared to income of $0.9 million and $0.5 million in the three and nine months ended December 31, 2016,~~September 30, 2022, respectively. The increase in other expense, net, during the three and ~~nine~~six months ended ~~December 31, 2017,~~September 30, 2023, compared to the three and six months ended September 30, 2022, was ~~primarily~~ driven by ~~higher~~the impacts of unfavorable fluctuations in foreign ~~currency losses.~~

currencies during the periods.

Income Taxes

Income tax expense was ~~$0.6~~$0.1 million and ~~$0.5~~$0.2 million in the three and ~~nine~~six months ended ~~December 31, 2017, respectively, compared to income~~September 30, 2023, respectively. Income tax benefit ofwas less than $0.1 ~~million and expense of $1.0~~ million in the three ~~and nine~~ months ended ~~December~~ September 30, 2022 and income tax expense was less than $0.1 million in the six months ended September 30, 2022.

31 ~~2016,~~

Net loss

Net loss was $2.5 million and $7.9 million in the three and six months ended September 30, 2023, respectively, compared to $9.9 million and $18.6 million in the three and six months ended September 30, 2022, respectively. The decrease in ~~income tax expense during~~net loss in both periods was driven primarily by the nine months ended December 31, 2017 was primarily due to the release of valuation allowances of $1.1 million in the nine months ended December 31, 2017 as a result of the deferred tax liability purchase adjustment recorded as a result of the ITC Acquisition, for the difference in tax basis on the ITC net assets acquired.

increased revenues and gross margins.

Non-GAAP ~~Measures~~

Financial Measure - Non-GAAP Net Income (Loss)

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 ~~measure~~measures prepared in accordance with GAAP.

We define non-GAAP net ~~loss~~income (loss) as net loss before, ~~sale of minority investments,~~China dissolution, stock-based compensation, amortization of acquisition-related intangibles, ~~consumption of zero cost-basis inventory, changes~~change in fair value of ~~warrants and~~ contingent consideration, ~~non-cash interest expense, tax effect of adjustments,~~ and ~~the~~ other non-cash or unusual ~~charges, indicated in the table below.~~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 ~~or non-recurring~~ charges and other items that we do not believe are indicative of our core operating performance. In addition, we use non-GAAP net 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):

Three months ended December 31, Nine months ended December 31,
2017 2016 2017 2016
Net loss $ (4,248 ) $ (2,768 ) $ (26,782 ) $ (20,448 )
Sale of minority investments —
(325 ) (951 ) (325 )
Stock-based compensation 883
613
2,115
2,266
Amortization of acquisition-related intangibles 85
39
98
118
Consumption of zero cost-basis inventory (118 ) (478 ) (514 ) (1,118 )
Change in fair value of warrants and contingent consideration (126 ) (101 ) (1,397 ) (667 )
Non-cash interest expense —
30
19
127
Tax effect of adjustments 19
77
142
179
Non-GAAP net loss $ (3,505 ) $ (2,913 ) $ (27,270 ) $ (19,868 )

Non-GAAP net loss per share $ (0.18 ) $ (0.21 ) $ (1.46 ) $ (1.45 )
Weighted average shares outstanding - basic and diluted 19,949
13,792
18,614
13,746

	Three Months Ended September 30,						Six Months Ended September 30,
	2023			2022			2023			2022
Net loss	$	(2,485	)	$	(9,881	)	$	(7,883	)	$	(18,590	)
China dissolution		-			1,921			-			1,921
Stock-based compensation		1,111			1,019			2,468			2,052
Amortization of acquisition-related intangibles		538			688			1,082			1,400
Change in fair value of contingent consideration		850			(290	)		2,200			(120	)
Non-GAAP net income (loss)	$	14		$	(6,542	)	$	(2,133	)	$	(13,337	)

Non-GAAP net income (loss) per share - basic	$	0.00		$	(0.23	)	$	(0.07	)	$	(0.48	)
Weighted average shares outstanding - basic		28,828			27,867			28,545			27,714

We incurred non-GAAP net ~~losses~~income of ~~$3.5~~less than $0.1 million and a non-GAAP net loss of $2.1 million, or ~~$0.18 per share,~~$0.00 and ~~$27.3 million or $1.46~~$0.07 per share, for the three and ~~nine~~six months ended ~~December 31, 2017,~~September 30, 2023, respectively, compared to non-GAAP net losses of ~~$2.9~~$6.5 million and $13.3 million, or ~~$0.21 per share,~~$0.23 and ~~$19.9 million or $1.45~~$0.48 per share, for the three and ~~nine~~six months ended ~~December 31, 2016.~~September 30, 2022, respectively. The ~~increases~~improvement in the non-GAAP net loss ~~in both~~for the three and nine month period ended December 31, 2017 were driven primarily by an increase in net loss, as previously discussed, and an adjustment for the sale of our minority investment in Blade Dynamics Limited, partially offset by decreased consumption of zero cost basis inventory and the gain resulting from the decreased value of the warrants and contingent consideration on the ITC acquisition in the three and ninesix months ended ~~December 31, 2017.~~September 30, 2023 was due to a lower operating loss driven by higher revenues and gross margins.

Liquidity and Capital Resources

We have experienced recurring operating losses and, as of ~~December 31, 2017~~September 30, 2023, had an accumulated deficit of $982.3 million. In addition, we have experienced recurring negative operating cash flows and our Wind segment revenues decreased substantially in the nine months ended December 31, 2017 compared to the prior year period due to decreased demand from Inox. We cannot predict if and when this demand dislocation will be resolved. From April 1, 2011 through the date of this filing, we have reduced our global workforce substantially, including an 8% reduction in force, primarily affecting employees in our Devens, Massachusetts facility, effective April 4, 2017. We incurred restructuring charges of $1.3 million in cash severance expenses in the nine months ended December 31, 2017 in connection with the workforce reduction. We are currently moving our manufacturing and administrative operations from our facility in Devens, Massachusetts to a nearby, smaller-scale leased building in Ayer, Massachusetts, which is anticipated to reduce operating costs.

$1,063.4 million.

Our cash requirements depend on numerous factors, including ~~if and when the Inox demand dislocation is resolved,~~ the successful completion of our product development activities, our ability to commercialize our ~~Resilient Electric Grid (“REG”)~~REG and ship protection system solutions, the rate of customer and market adoption of our products, collecting receivables according to established terms, ~~and~~ the continued availability of U.S. government funding during the product development phase of our ~~Superconductors-based products.~~

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, 2017,~~September 30, 2023, we had cash, cash equivalents and restricted cash of ~~$22.3~~$24.0 million, compared to ~~$27.7~~$25.7 million as of March 31, ~~2017,~~2023, a decrease of ~~$5.5~~$1.7 million. As of September 30, 2023, we had $2.6 million in cash, cash equivalents, and restricted cash in foreign bank accounts. Our cash, ~~and~~ cash equivalents, and restricted cash are summarized as follows (in thousands):

December 31, 2017
March 31,
2017
Cash and cash equivalents $ 22,113
$ 26,784
Restricted cash 165
960
Total cash, cash equivalents, and restricted cash $ 22,278
$ 27,744

~~As of December 31, 2017, we had approximately $1.4 million of cash, cash equivalents, and restricted cash in foreign bank accounts, with a majority of this cash located in Europe.~~

	September 30, 2023		March 31, 2023
Cash and cash equivalents	$	22,818	$	23,360
Restricted cash		1,162		2,315
Total cash, cash equivalents, and restricted cash	$	23,980	$	25,675

For the ~~nine~~six months ended ~~December 31, 2017,~~September 30, 2023, net cash used in operating activities was ~~$20.2~~$1.3 million, compared to ~~$10.5~~$11.6 million ~~of cash used~~ for the ~~nine~~six months ended ~~December 31, 2016.~~September 30, 2022. The ~~increase~~decrease in net cash used in operations was due primarily to ~~an increased~~decrease in prepaid expenses and other current asset as well as accounts receivable in the six months ended September 30, 2023 as compared to September 30, 2022. Cash flows from operating ~~loss,~~activities in the six months ended September 30, 2023 included a reimbursement of $3.0 million for the ERC receivable in prepaid expenses and ~~less cash collections from Inox, partially offset by usage of inventory.~~

other current assets at March 31, 2023.

For the ~~nine~~six months ended ~~December 31, 2017,~~September 30, 2023, net cash used in investing activities was ~~$0.3~~$0.4 million, compared to ~~net cash provided by investing activities of $0.4~~$0.7 million for the ~~nine~~six months ended ~~December 31, 2016.~~September 30, 2022. The ~~increase~~decrease in net cash used in investing activities was primarily due ~~primarily~~ to ~~increased~~a decrease in purchases of property, plant and ~~equipment related to~~equipment.

For the ~~Devens facility move, partially offset by proceeds received from the final payment due from Blade Dynamics as well as releases of restricted cash in the nine~~six months ended ~~December 31, 2017.~~

~~For the nine months ended December 31, 2017,~~September 30, 2023 and 2022, respectively, net cash provided by financing activities was $15.2 million compared to net cash used in financing activities of $3.7 million in the nine months ended December 31, 2016. The increase in net cash provided by financing activities was primarily due to net proceeds of $17.0 million from the issuance of 4.6 million shares of common stock in May 2017, with no such equity offering in the prior year period. See the discussion regarding the May 2017 equity offering below.

remained consistent at $0.1 million.

As of ~~December 31, 2017,~~September 30, 2023, we had ~~$0.2~~$0.6 million of restricted cash included in long-term assets and $0.5 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 included in restricted cash primarily represent collateral deposits to secure surety bonds and letters of credit for various ~~supply~~customer contracts. These deposits are held in interest bearing accounts.

~~On December 19, 2014, we amended~~

We are a party to many contractual obligations involving commitments to make payments to third parties. These obligations impact our ~~Loan~~short-term and ~~Security Agreement (the "Term Loan") with Hercules~~long-term liquidity and entered into a new term loan (the “Term Loan C”), borrowing $1.5 million (our prior $10.0 million term loan with Hercules was repaid in full at maturity on November 1, 2016). After closing fees and expenses, the net proceeds from the Term Loan C were $1.4 million. We made interest only paymentscapital resource needs. Certain contractual obligations are reflected on the ~~Term Loan C until maturity on June 1, 2017, when the loan was repaid in its entirety.~~

~~On May 5, 2017,~~consolidated balance sheet as of September 30, 2023, while others are considered future commitments. We have various contractual arrangements, under which we entered into an underwriting agreement relating to the issuance and sale (the "Offering") of up to 4.0 million shares of our common stock at a public offering price of $4.00 per share and granted a 30-day option (the "Option") to the underwritershave committed to purchase upcertain minimum quantities of goods or services on an annual basis. For information regarding our other contractual obligations, refer to ~~an additional 600,000 shares of common stock at the public offering price. The net proceeds~~Note 13, "Contingent Consideration," Note 14, "Debt," Note 15, "Leases" and Note 16, "Commitments and Contingencies" to us from the Offering were approximately $14.7 million, after deducting underwriting discounts and commissions and offering expenses payable by us. On May 24, 2017, the underwriters notified us that they had exercisedour condensed consolidated financial statements included elsewhere in full their Option to purchase an additional 600,000 shares of common stock in connection with the Offering. The net proceeds to us from the Option were approximately $2.3 million, after deducting underwriting discounts and commissions and offering expenses payable by us. The total net proceeds to us during the three months ended June 30, 2017 from the Offering and Option were approximately $17.0 million, after deducting underwriting discounts and commissions and offering expenses payable by us. The Company terminated its At Market Issuance Sales Agreement with FBR Capital Markets & Co in conjunction with the Offering. In addition, in December 2015, we entered into a set of strategic agreements valued at approximately $210.0 million with Inox.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, control our operating costs, and ~~our ability to~~ 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 the COVID-19 pandemic or other sources of instability, including the ongoing wars between Russia and 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.

Legal Proceedings

From 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.

~~Off-Balance Sheet Arrangements~~

We do not have any off-balance sheet arrangements, as defined under SEC rules, such as relationships with unconsolidated entities or financial partnerships, which are often referred to as structured finance or special purpose entities, established for the purpose of facilitating transactions that are not required to be reflected on our balance sheet except as discussed below.

We occasionally enter into construction contracts that include a performance bond. As these contracts progress, we continually assess the probability of a payout from the performance bond. Should we determine that such a payout is probable, we would record a liability.

~~In addition, we have various contractual arrangements in which minimum quantities of goods or services have been committed to be purchased on an annual basis.~~

Recent Accounting Pronouncements

In ~~May 2014,~~June 2016, the Financial Accounting Standards Board ~~(“FASB”~~("FASB") ~~and the International~~issued Accounting Standards ~~Board (IASB) issued ASU 2014-09,~~ ~~Revenue from Contracts with Customers (Topic 606).~~ The guidance substantially converges final standards on revenue recognition between the FASB and IASB providing a framework on addressing revenue recognition issues and, upon its effective date, replaces almost all existing revenue recognition guidance, including industry-specific guidance, in current U.S. generally accepted accounting principles. The FASB has subsequently issued the following amendments to ASU 2014-09 which are all effective for annual reporting periods beginning after December 15, 2017.

•~~In March 2016, the FASB issued ASU No. 2016-08,~~ ~~Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations, which clarifies the implementation guidance on principal versus agent considerations.~~

•~~In April 2016, the FASB issued ASU No. 2016-10,~~ ~~Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, which clarifies certain aspects of identifying performance obligations and licensing implementation guidance.~~

•~~In May 2016, the FASB issued ASU No. 2016-12,~~ ~~Revenue from Contracts with Customers (Topic 606): Narrow- Scope Improvements and Practical Expedients~~ related to disclosures of remaining performance obligations, as well as other amendments to guidance on collectability, non-cash consideration and the presentation of sales and other similar taxes collected from customers.

•~~In December 2016, the FASB issued ASU No. 2016-20,~~ ~~Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers~~, which amends certain narrow aspects of the guidance issued in ASU 2014-09 including guidance related to the disclosure of remaining performance obligations and prior-period performance obligations, as well as other amendments to the guidance on loan guarantee fees, contract costs, refund liabilities, advertising costs and the clarification of certain examples.

As of December 31, 2017, we have made significant progress towards completing our assessment of the potential effects of ASU 2049-09 and its amendments on our consolidated financial statements, and are actively assessing the potential effects on business processes, systems and controls to support revenue recognition and the related disclosures under this ASU. Our assessment includes a detailed review of representative contracts from each of our revenue streams and a comparison of its historical accounting policies and practices to the new standard. We are required to adopt the new standards on April 1, 2018, and expect to do so retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (the modified retrospective transition method). Additionally, this guidance could lead to recognizing certain revenue transactions sooner than in the past on certain contracts, as we will need to estimate the revenue we will be entitled to upon contract completion, and later on other contracts, due to lack of an enforceable right to payment for performance obligations satisfied over time. Our preliminary assessment of this adoption method supports the determination that there are no expected changes in the accounting for our largest revenue stream which includes Inox Wind Limited as the primary customer. Across other revenue streams the timing of revenue recognition could be affected for multiple types of contracts, primarily multiple element contracts in our grid business unit, but those differences are not expected to have a material impact on our consolidated financial statements. However, our assessment is not yet finalized and is subject to change. Additionally, we are currently evaluating any tax implications the adoption of this new standard may have on the consolidated financial statements. As part of this analysis, we are evaluating our information technology capabilities and systems, and do not expect to incur significant information technology costs to modify systems currently in place.

During the fourth quarter of fiscal 2017 we plan to assess our current revenue controls, and identify and implement any changes that may be necessary to comply with our new revenue policies and the provisions of ASU 2014-09, which will be effective for us as of April 1, 2018.

annual reporting periods beginning after December 15, 2017, and interim periods within those fiscal years. We do not expect any significant changes to the consolidated financial statement results with the adoption of ASU 2016-01.

~~In February 2016, the FASB issued ASU 2016-02,~~ ~~Leases~~ (Topic 842). The guidance in this ASU supersedes the leasing guidance in Topic 840, Leases. Under the new guidance, lessees are required to recognize lease assets and lease liabilities on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. This ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. We are currently evaluating the effects adoption of this guidance will have on our consolidated financial statements.

~~In June 2016, the FASB issued ASU~~Update ("ASU") 2016-13, Financial Instruments-Credit Losses (Topic 326): 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. ~~The~~Following the release of ASU is2019-10 in November 2019, the effective ~~for~~date, as long as we remain a smaller reporting company, was annual reporting periods beginning after December 15, ~~2019, including interim periods within that year. We are currently evaluating the impact, if any, the adoption~~2022. As of April 1, 2023, we have adopted ASU 2016-13 ~~may have~~and noted no material impact on our condensed consolidated financial statements.

In ~~2016,~~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 ~~following two ASU's on~~ ~~Statement~~accounting for acquired revenue contracts with customers in a business combination. Following the release of ~~Cash Flows (Topic 230). Both amendments are~~ASU 2021-08 in October 2021, the effective ~~for~~date was annual reporting periods beginning after December 15, ~~2017, including interim periods within that year.~~

•~~In August 2016, the FASB issued~~2022. As of April 1, 2023, we have adopted ASU ~~2016-15,~~ ~~Statement of Cash Flows~~ ~~(Topic 230): Classification of Certain Cash Receipts~~2021-08 and ~~Cash Payments. The amendments in ASU 2016-15 provide more guidance towards the classification of multiple different types of cash flows in order to reduce the diversity in reporting across entities.~~

•~~In November 2016, the FASB issued ASU 2016-18,~~ ~~Statement of Cash Flows (Topic 230): Restricted Cas~~h. The amendments in ASU 2016-18 explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shownnoted no material impact on ~~the statement of cash flows.~~

~~We do not expect any significant changes to the~~our condensed consolidated financial ~~statement results with the adoption of ASU 2016-15 and ASU 2016-18.~~

~~In October 2016, the FASB issued ASU 2016-16,~~ ~~Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory~~. The amendments in ASU 2016-16 improve the accounting for the income tax consequences of intra-entity transfers of assets other than inventory. The ASU is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that year. We do not anticipate any significant changes to our consolidated financial statements with the adoption of ASU 2016-16.

~~In January 2017, the FASB issued ASU 2017-01,~~ ~~Business Combinations~~. The amendments in ASU 2017-01 clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The ASU is effective for annual reporting periods beginning after December 15, 2017, including interim periods within those periods. We adopted ASU 2017-01 effective September 30, 2017, following the acquisition of ITC. We considered these amendments in our decision to record the combination of the entities as an Acquisition. See Note 4, "Acquisitions and Related Goodwill", for further details. These impacts have been included in the consolidated financial statements.

~~In January 2017, the FASB issued ASU 2017-03,~~ ~~Accounting Changes and Error Corrections (Topic 250) and Investments - Equity Method and Joint Ventures~~. The amendments in ASU 2017-03 provide additional detail surrounding disclosures required related to adoption of new pronouncements. The ASU is effective for the periods of each related pronouncement. We are currently evaluating the impact the adoption of ASU 2017-03 may have on our consolidated financial statements.

which the carrying amount exceeds the reporting unit’s fair value. The ASU is effective for annual reporting periods beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. Following the Acquisition of ITC, we performed an analysis and determined that the transaction included a portion of goodwill. We have accounted for that value on our balance sheet as of December 31, 2017. See Note 4, "Acquisitions and Related Goodwill" for further details. Given the results of our analysis, we adopted ASU 2017-04 effective September 30, 2017, and determined there were no triggering events requiring further impairment analysis at this time. The Company expects to perform its annual impairment test during the fourth quarter of fiscal 2017.

~~In February 2017, the FASB issued ASU 2017-05,~~ ~~Other Income - Gains and Losses from the Derecognition of Non-financial Assets (Subtopic 610-20)~~. The amendments in ASU 2017-05 clarify the scope of Subtopic 610-20, Other Income-Gains and Losses from the Derecognition of Non-financial Assets, and to add guidance for partial sales of non-financial assets. Subtopic 610-20, which was issued in May 2014 as a part of Accounting Standards Update No. 2014-09, ~~Revenue from Contracts with Customers (Topic 606)~~, provides guidance for recognizing gains and losses from the transfer of non-financial assets in contracts with non-customers. We do not expect any significant changes to the consolidated financial statement results with the adoption of ASU 2017-05.

~~In May 2017, the FASB issued ASU 2017-09,~~ ~~Compensation - Stock Compensation (Subtopic 718) Scope of Modification Accounting~~. The amendments in ASU 2017-09 provide clarity and reduce both (1) diversity in practice and (2) cost and complexity when applying the guidance in Topic 718, Compensation—Stock Compensation, to a change to the terms or conditions of a share-based payment award. The ASU is effective for annual reporting periods beginning after December 15, 2017, including interim periods within those periods. We do not expect any significant changes to the consolidated financial statement results with the adoption of ASU 2017-09.

~~In July 2017, the FASB issued ASU 2017-11,~~ ~~Earnings per Share (Topic~~ ~~260),~~ ~~Distinguishing Liabilities from Equity (Topic 480), and Derivatives and Hedging (Topic 815)~~. The amendments in ASU 2017-11 provide guidance for freestanding equity-linked financial instruments, such as warrants and conversion options in convertible debt or preferred stock, and should no longer be accounted for as a derivative liability at fair value as a result of the existence of a down round feature. The ASU is effective for annual reporting periods beginning after December 15, 2018, including interim periods within those periods. We are currently evaluating the impact the adoption of ASU 2017-11 may have on our consolidated financial statements.

~~In August 2017, the FASB issued ASU 2017-12,~~ ~~Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities~~. The amendments in ASU 2017-12 provide improved financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements. In addition, the amendments in this update make certain targeted improvements to simplify the application of the hedge accounting guidance. The ASU is effective for annual reporting periods beginning after December 15, 2018, including interim periods within those periods. We are currently evaluating the impact the adoption of ASU 2017-12 may have on our 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.

ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We face exposure to financial market risks such as adverse movements in foreign currency exchange rates. These exposures may change over time as our business practices evolve and could have a material adverse impact on our financial results. Our market risk profile as of December 31, 2017 has not materially changed since March 31, 2017. Our market risk profile as of March 31, 2017 is disclosed in our Annual Report on Form 10-K for the fiscal year ended March 31, 2017, filed with the SEC on May 25, 2017.

Not Applicable

ITEM 4.
CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

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, 2017.~~September 30, 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 ~~that~~the evaluation of our disclosure controls and procedures as of ~~December 31, 2017,~~September 30, 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.

Changes in Internal Control over Financial Reporting

There were no changes into 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, 2017~~September 30, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

ITEM 1.
LEGAL PROCEEDINGS

On September 13, 2011, we commenced a series of legal actions in China against Sinovel. Our Chinese subsidiary, Suzhou AMSC Superconductor Co. Ltd., filed a claim for arbitration with the Beijing Arbitration Commission in accordance with the terms of our supply contracts with Sinovel. The case is captioned ~~(2011) Jing Zhong An Zi No. 0963~~. On March 31, 2011, Sinovel refused to accept contracted shipments of 1.5 MW and 3 MW wind turbine core electrical components and spare parts that we were prepared to deliver. We allege that these actions constitute material breaches of our contracts because Sinovel did not give us notice that it intended to delay deliveries as required under the contracts. Moreover, we allege that Sinovel has refused to pay past due amounts for prior shipments of core electrical components and spare parts. We are seeking compensation for past product shipments and retention (including interest) in the amount of approximately RMB 485 million (approximately $75 million) due to Sinovel’s breaches of our contracts. We are also seeking specific performance of our existing contracts as well as reimbursement of all costs and reasonable expenses with respect to the arbitration. The value of the undelivered components under the existing contracts, including the deliveries refused by Sinovel in March 2011, amounts to approximately RMB 4.6 billion (approximately $707 million).

~~On October 8, 2011, Sinovel filed with the Beijing Arbitration Commission an application under the caption~~ ~~(2011) Jing Zhong An Zi No. 0963,~~ for a counterclaim against us for breach of the same contracts under which we filed our original arbitration claim. Sinovel claims, among other things, that the goods supplied by us do not conform to the standards specified in the contracts and claims damages in the amount of approximately RMB 370 million (approximately $57 million). On October 17, 2011, Sinovel filed with the Beijing Arbitration Commission a request for change of counterclaim to increase its damage claim to approximately RMB 1 billion (approximately $154 million). On December 22, 2011, Sinovel filed with the Beijing Arbitration Commission an additional request for change of counterclaim to increase its damages claim to approximately RMB 1.2 billion (approximately $184 million). On February 27, 2012, Sinovel filed with the Beijing Arbitration Commission an application under the caption ~~(2012) Jing Zhong An Zi No. 0157,~~ against us for breach of the same contracts under which we filed our original arbitration claim. Sinovel claims, among other things, that the goods supplied by us do not conform to the standards specified in the contracts and claims damages in the amount of approximately RMB 105 million (approximately $16 million). We believe that Sinovel’s claims are without merit and we intend to defend these actions vigorously. Since the proceedings in this matter are still in the early technical review phase, we cannot reasonably estimate possible losses or range of losses at this time.

~~We also submitted a civil action application to the Beijing No. 1 Intermediate People’s Court under the caption~~ ~~(2011) Yi Zhong Min Chu Zi No. 15524,~~ against Sinovel for software copyright infringement on September 13, 2011. The application alleges Sinovel’s unauthorized use of portions of our wind turbine control software source code developed for Sinovel’s 1.5MW wind turbines and the binary code, or upper layer, of our software for the PM3000 power converters in 1.5MW wind turbines. In July 2011, a former employee of our Austrian subsidiary was arrested in Austria on charges of economic espionage and fraudulent manipulation of data. In September 2011, the former employee pled guilty to the charges, and was imprisoned. As a result of our internal investigation and a criminal investigation conducted by Austrian authorities, we believe that this former employee was contracted by Sinovel through an intermediary while employed by us and improperly obtained and transferred to Sinovel portions of our wind turbine control software source code developed for Sinovel’s 1.5MW wind turbines. Moreover, we believe the former employee illegally used source code to develop for Sinovel a software modification to circumvent the encryption and remove technical protection measures on the PM3000 power converters in 1.5MW wind turbines in the field. We are seeking a cease and desist order with respect to the unauthorized copying, installation and use of our software, monetary damages of approximately RMB 38 million (approximately $6 million) for our economic losses and reimbursement of all costs and reasonable expenses. The Beijing No. 1 Intermediate People’s Court accepted the case, which was necessary in order for the case to proceed. On September 15, 2014, the Beijing No. 1 Intermediate People’s Court held its first substantive hearing in the Beijing case. At the hearing, the parties presented evidence, reviewed claims, and answered questions from the court. On April 24, 2015, we received notification

from the Beijing No. 1 Intermediate People’s Court that it dismissed the case for what it cited was a lack of evidence. On May 6, 2015, we filed an appeal of the Beijing No. 1 Intermediate People’s Court decision to dismiss the case with the Beijing Higher People’s Court. On September 8, 2015, the Beijing Higher People’s Court held its first substantive hearing on our appeal of the Beijing No. 1 Intermediate People’s Court’s dismissal of the case. At the hearing, the parties presented evidence and answered questions from the court. We are awaiting a decision from the Beijing Higher People’s Court.

~~We submitted a civil action application to the Beijing Higher People’s Court against Sinovel and certain of its employees for trade secret infringement on September 13, 2011 under the caption~~ ~~(2011) Gao Min Chu Zi No. 4193~~. The application alleges the defendants’ unauthorized use of portions of our wind turbine control software source code developed for Sinovel’s 1.5MW wind turbines as described above with respect to the Copyright Action. We are seeking monetary damages of approximately RMB 2.9 billion (approximately $446 million) for the trade secret infringement as well as reimbursement of all costs and reasonable expenses. The Beijing Higher People’s Court has accepted the case, which was necessary in order for the case to proceed. On December 22, 2011 the Beijing Higher People’s Court transferred the case to the Beijing No. 1 Intermediate People’s Court under the caption (~~2011) Gao Min Chu Zi No. 4193.~~ ~~On June 7, 2012, we received an Acceptance Notice from the Beijing No.1 Intermediate People’s Court under the caption~~ ~~(2012) Yi Zhong Min Chu Zi No.6833.~~ The Beijing No. 1 Intermediate Court held the first substantive hearing on May 11, 2015. On June 15, 2015, we submitted a request for the withdrawal of our complaint to the Beijing No. 1 Intermediate Court. On June 16, 2015, the Beijing No. 1 Intermediate Court granted our request. We immediately filed a civil action application to the Beijing Intellectual Property Court against the same parties and seeking the same amount of monetary damages for trade secret infringement on June 16, 2015 under the caption (2015) ~~Jin Zhi Min Chu Zi No. 1135.~~ On January 18, 2016, the Beijing Intellectual Property Court held its first substantive hearing on our trade secret infringement case. At the hearing, the parties presented evidence, reviewed claims and answered questions from the court. We are awaiting a decision from the Beijing Intellectual Property Court.

On September 16, 2011, we filed a civil copyright infringement complaint in the Hainan Province No. 1 Intermediate People’s Court against Dalian Guotong Electric Co. Ltd. (“Guotong”), a supplier of power converter products to Sinovel, and Huaneng Hainan Power, Inc. (“Huaneng”), a wind farm operator that has purchased Sinovel wind turbines containing Guotong power converter products. The case is captioned ~~(2011) Hainan Yi Zhong Min Chu Zi No. 62~~. The application alleges that our PM1000 converters in certain Sinovel wind turbines have been replaced by converters produced by Guotong. Because the Guotong converters are being used in wind turbines containing our wind turbine control software, we believe that our copyrighted software is being infringed. We are seeking a cease and desist order with respect to the unauthorized use of our software, monetary damages of approximately RMB 1.2 million (approximately $0.2 million) for our economic losses (with respect to Guotong only) and reimbursement of all costs and reasonable expenses. The court has accepted the case, which was necessary in order for the case to proceed. In addition, upon the request of the defendant Huaneng, Sinovel has been added by the court to this case as a defendant and Huaneng has been released from this case. On November 18, 2014, the Hainan No. 1 Intermediate People’s Court held its first substantive hearing in the Hainan case. At the hearing, the parties presented evidence, reviewed claims, and answered questions from the court. On June 3, 2015, we received notification from the Hainan No. 1 Intermediate People’s Court that it dismissed the case for what it cited was a lack of evidence. On June 18, 2015 we filed an appeal of the Hainan No. 1 Intermediate People’s Court decision to dismiss the case with the Hainan Higher People’s Court. On August 20, 2015, the Hainan Higher People’s Court accepted the appeal under the caption (2015) ~~QiongZhi MinZhongZi No.~~6. On November 26, 2015, the Hainan Higher People’s Court held its first substantive hearing on our appeal of the Hainan No. 1 Intermediate People’s Court’s dismissal of the case. On August 17, 2016, we received notification from the Hainan Higher People’s Court that it dismissed the case for what it cited was a lack of evidence. We intend to file an appeal of the Hainan Higher People’s Court’s decision with China’s Supreme People’s Court. China’s Supreme People’s Court has discretion to decide whether to hear the appeal.

None

ITEM 1A.
RISK FACTORS

There have been no material changes ~~in the nine months ended December 31, 2017~~ to the risk factors described in Part I, Item IA1A of our Annual Report on Form 10-K for the fiscal year ended March 31, ~~2017,~~2023, filed with the SEC on May ~~25, 2017.~~

31, 2023.

ITEM 2.
UNREGISTERED SALES OF EQUITY SECURITIES, ~~AND~~ USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES

~~None~~
The Company’s stock repurchase activity during the three months ended September 30, 2023 was as follows:
Month
Total Number
of Shares
Purchased^(a)
Average
Price Paid
per Share
Total Number of
Shares Purchased
as Part of Publicly
Announced
Plans or
Programs
Approximate
Dollar Value of Shares
that May Yet Be
Purchased under the
Plans or Programs
(in millions)
July 1, 2023 - July 31, 2023 — — —
August 1, 2023 - August 31, 2023 — — —
September 1, 2023 - September 30, 2023 — — —
Total
— — —
(a) During the three months ended September 30, 2023, we did not repurchase shares in connection with our stock-based compensation plans.
ITEM 3.
DEFAULTS UPON SENIOR SECURITIES
None

ITEM 4.
MINE SAFETY DISCLOSURES

Not Applicable

ITEM 5.
OTHER INFORMATION
None
~~None~~
36
ITEM 6.
EXHIBITS
See the Exhibit Index on the page immediately preceding the exhibits for a list of exhibits filed as part of this Quarterly Report on Form 10-Q, which Exhibit Index is incorporated herein by this reference.

EXHIBIT INDEX
Incorporated by Reference
Exhibit
Number
Exhibit Description
Form
File No.
Exhibit
Filing
Date
Filed/Furnished
Herewith
31.1
Chief Executive Officer—Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
*
31.2
Chief Financial Officer—Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
*
32.1
Chief Executive Officer—Certification pursuant to Rule13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
**
32.2
Chief Financial Officer—Certification pursuant to Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
**
101.INS
Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
*
101.SCH
Inline XBRL Taxonomy Extension Schema Document.
*
101.CAL
Inline XBRL Taxonomy Calculation Linkbase Document.
*
101.DEF
Inline XBRL Definition Linkbase Document.
*
101.LAB
Inline XBRL Taxonomy Label Linkbase Document.
*
101.PRE
Inline XBRL Taxonomy Presentation Linkbase Document.
*

~~101.INS~~104 Cover Page Interactive Data File (formatted as Inline XBRL Instance Document.***and contained in Exhibit 101)
_________________________
*
~~101.SCH~~ XBRL Taxonomy Extension Schema Document. ***
~~101.CAL~~ XBRL Taxonomy Calculation Linkbase Document. ***
~~101.DEF~~ XBRL Definition Linkbase Document. ***
~~101.LAB~~ XBRL Taxonomy Label Linkbase Document. ***
~~101.PRE~~ XBRL Taxonomy Presentation Linkbase Document. ***
~~_________________________~~
*
Filed herewith
**
**
Furnished herewith
~~***~~ ~~Submitted electronically herewith~~
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, 2017~~September 30, 2023 and March 31, ~~2017~~2023 (ii) Condensed Statements of Operations ~~and Income~~ for the three and ~~nine~~six months ended ~~December 31, 2017~~September 30, 2023 and ~~2016,~~2022, (iii) Condensed Consolidated Statements of Comprehensive ~~(Loss) Income~~Loss for the three and ~~nine~~six months ended ~~December 31, 2017~~September 30, 2023 and ~~2016,~~2022, (iv) Condensed Consolidated Statements of Cash Flows for the ~~nine~~six months ended ~~December 31, 2017~~September 30, 2023 and ~~2016,~~2022, and (v) Notes to Condensed Consolidated Financial Statements.
37

SIGNATURE
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.
AMERICAN SUPERCONDUCTOR CORPORATION
~~Date:~~
~~February 5, 2018~~
By:
/s/ John W. Kosiba, Jr.
Date:
November 1, 2023
John W. Kosiba, Jr.
Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)

41
38

Delaware	04-2959321

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

~~64 Jackson Rd. Devens,~~ 114 East Main St. Ayer, Massachusetts	~~01434~~ 01432
(Address of principal executive offices)	(Zip Code)


☒
x	Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934


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



	December 31, 2017			March 31, 2017
ASSETS
Current assets:
Cash and cash equivalents	$	22,113		$	26,784
Accounts receivable, net	12,052			7,956
Inventory	17,129			17,462
Prepaid expenses and other current assets	2,822			2,703
Restricted cash	—			795
Total current assets	54,116			55,700

Property, plant and equipment, net	36,684			43,438
Intangibles, net	3,315			301
Goodwill	1,719			—
Restricted cash	165			165
Deferred tax assets	545			407
Other assets	227			233
Total assets	$	96,771		$	100,244

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Accounts payable and accrued expenses	$	15,486		$	14,490
Note payable, current portion, net of discount of $19 as of March 31, 2017	—			1,481
Derivative liabilities	1,142			1,923
Deferred revenue	14,194			14,323
Total current liabilities	30,822			32,217

Deferred revenue	8,425			7,631
Deferred tax liabilities	125			125
Other liabilities	54			45
Total liabilities	39,426			40,018

Commitments and contingencies (Note 14)

Stockholders' equity:
Common stock	211			147
Additional paid-in capital	1,040,348			1,017,510
Treasury stock	(1,645		)	(1,371		)
Accumulated other comprehensive income (loss)	770			(503		)
Accumulated deficit	(982,339		)	(955,557		)
Total stockholders' equity	57,345			60,226
Total liabilities and stockholders' equity	$	96,771		$	100,244



	Three months ended December 31,						Nine months ended December 31,
	2017			2016			2017			2016
Revenues	$	14,933		$	27,148		$	34,904		$	59,000

Cost of revenues	9,917			22,107			34,103			50,992

Gross margin	5,016			5,041			801			8,008

Operating expenses:
Research and development	3,023			2,985			8,690			8,804
Selling, general and administrative	5,486			6,077			16,964			19,640
Amortization of acquisition-related intangibles	85			39			98			118
Change in fair value of contingent consideration	272			—			71			—
Restructuring	1			—			1,328			—
Total operating expenses	8,867			9,101			27,151			28,562

Operating loss	(3,851		)	(4,060		)	(26,350		)	(20,554		)

Change in fair value of warrants	399			101			1,468			667
Gain on sale of minority interest	—			325			951			325
Interest income (expense), net	49			(89		)	94			(331		)
Other (expense)/income, net	(279		)	873			(2,449		)	481
Loss before income tax (benefit) expense	(3,682		)	(2,850		)	(26,286		)	(19,412		)

Income tax (benefit) expense	566			(82		)	496			1,036

Net loss	$	(4,248	)	$	(2,768	)	$	(26,782	)	$	(20,448	)

Net loss per common share
Basic	$	(0.21	)	$	(0.20	)	$	(1.44	)	$	(1.49	)
Diluted	$	(0.21	)	$	(0.20	)	$	(1.44	)	$	(1.49	)

Weighted average number of common shares outstanding
Basic	19,949			13,792			18,614			13,746
Diluted	19,949			13,792			18,614			13,746



	Three months ended December 31,				Nine months ended December 31,
	2017		2016		2017		2016
Cost of revenues	$	39	$	40	$	98	$	139
Research and development	184		61		294		153
Selling, general and administrative	660		512		1,723		1,974
Total	$	883	$	613	$	2,115	$	2,266



	September 25, 2017
Consideration
Cash	$	0.1
Equity (884,890 shares of common stock at $4.02 per share)	3.6
Contingent consideration	0.6
Total Consideration	$	4.3

Recognized amounts of identifiable assets acquired and liabilities assumed
Core technology and know-how	$	3.4
Working capital	0.2
Property, plant and equipment	0.0
Total identifiable net assets	$	3.6
Long-term deferred tax liability	1.1
Goodwill allocated	$	1.7



	Total Carrying Value		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
December 31, 2017:
Assets:
Cash equivalents	$	17,944	$	17,944	$	—	$	—
Derivative liabilities:
Acquisition contingent consideration	$	687	$	—	$	687	$	—
Warrants	455		—		—		455
Total derivative liabilities	$	1,142	$	—	$	687	$	455



	Warrants			Acquisition Contingent Consideration
April 1, 2017	$	1,923		$	—
Issuance of contingent consideration	—			571
Mark to market adjustment	(1,468		)	71
Settlement fees	—			45
Balance at December 31, 2017	$	455		$	687



	Warrants
April 1, 2016	$	3,227
Mark to market adjustment	(1,304		)
Balance at March 31, 2017	$	1,923



Fiscal Year 17	September 30, 2017	June 30, 2017
Risk-free interest rate	1.05%	1.05%
Expected annual dividend yield	—	—
Expected volatility	77.95%	78.25%
Term (years)	0.01	0.26
Fair value	$—	$—



Fiscal Year 16	March 31, 2017	December 31, 2016	September 30, 2016	June 30, 2016	March 31, 2016
Risk-free interest rate	0.91%	0.56%	0.59%	0.48%	0.66%
Expected annual dividend yield	—	—	—	—	—
Expected volatility	44.12%	58.04%	70.50%	76.30%	76.76%
Term (years)	0.51	0.76	1.01	1.26	1.51
Fair value	$—	$0.1 million	$0.2 million	$0.4 million	$0.4 million



Fiscal Year 17	September 30, 2017	September 25, 2017
Risk-free interest rate	1.09%	1.09%
Expected annual dividend yield	—	—
Expected volatility	66.54%	65.71%
Term (years)	0.31	0.32
Fair value	$0.4 million	$0.6 million



	Severance pay
	and benefits
Accrued restructuring balance at April 1, 2017	$	—
Charges to operations	1,328
Cash payments	(934		)
Accrued restructuring balance at December 31, 2017	$	394



	December 31, 2017		March 31, 2017
Cash and cash equivalents	$	22,113	$	26,784
Restricted cash	165		960
Total cash, cash equivalents, and restricted cash	$	22,278	$	27,744

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