☒ 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

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

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

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

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

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

There were ~~31,984,645~~32,512,221 shares of the Registrant’s common stock outstanding on October 31, ~~2022.~~2023.


	September 30, 2022			March 31, 2022			September 30, 2023			March 31, 2023
Assets
Cash and cash equivalents	$	12,520		$	14,466		$	4,025		$	15,992
Accounts receivable, net		11,591			11,899			16,117			13,728
Revenue earned but not billed		1,346			2,421			1,827			1,320
Inventories, net		16,849			19,832			20,160			18,205
Prepaid expenses and other current assets		2,493			2,631			3,153			1,116
Total current assets		44,799			51,249			45,282			50,361
Property and equipment, net		10,911			11,466			10,368			10,470
Goodwill		564			350			1,484			1,484
Other intangible assets, net		2,282			2,404			5,464			6,004
Deferred tax assets		19,426			17,805
Other long-term assets		3,203			3,543			3,232			3,260
Total assets	$	81,185		$	86,817		$	65,830		$	71,579
Liabilities and Shareholders’ Equity
Accounts payable	$	5,938		$	9,855		$	15,561		$	13,405
Accrued expenses and other		6,263			8,427			11,612			10,552
Deferred revenue, current		76			76			1,864			480
Current maturities of long-term debt		16			16			12			17
Total current liabilities		12,293			18,374			29,049			24,454
Revolving credit facility		5,000			—			10,000			10,000
Long-term debt, less current maturities		11			19			—			3
Deferred revenue, long-term		526			564			451			489
Other long-term liabilities		2,380			2,760			3,690			3,384
Total liabilities		20,210			21,717			43,190			38,330
Commitments and contingencies
Shareholders’ equity:
Preferred stock, $0.01 par value: Shares authorized: 30,000,000 at September 30, 2022 and March 31, 2022; no shares issued and outstanding at September 30, 2022 and March 31, 2022		—			—
Common stock, no par value: Shares authorized: 200,000,000 at September 30, 2022 and March 31, 2022; shares issued: 41,352,020 at September 30, 2022 and 40,570,909 at March 31, 2022; shares outstanding: 31,355,911 at September 30, 2022 and 31,097,872 at March 31, 2022		—			—
Preferred stock, $0.01 par value: Shares authorized: 30,000,000 at September 30, 2023 and March 31, 2023; no shares issued and outstanding at September 30, 2023 and March 31, 2023								—			—
Common stock, no par value: Shares authorized: 200,000,000 at September 30, 2023 and March 31, 2023; shares issued: 41,973,543 at September 30, 2023 and 41,767,092 at March 31, 2023; shares outstanding: 32,503,320 at September 30, 2023 and 32,295,408 at March 31, 2023								—			—
Additional paid-in capital		159,460			158,419			161,321			160,907
Treasury stock, common shares: 9,996,109 at September 30, 2022 and 9,473,037 at March 31, 2022		(36,239	)		(36,239	)
Treasury stock, common shares: 9,470,223 at September 30, 2023 and 9,471,684 at March 31, 2023								(36,235	)		(36,237	)
Retained deficit		(62,246	)		(57,080	)		(102,446	)		(91,421	)
Total shareholders’ equity		60,975			65,100			22,640			33,249
Total liabilities and shareholders’ equity	$	81,185		$	86,817		$	65,830		$	71,579

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


	Three Months Ended September 30,						Six Months Ended September 30,						Three Months Ended September 30,						Six Months Ended September 30,
	2022			2021			2022			2021			2023			2022			2023			2022
Product revenue	$	12,833		$	27,811		$	26,316		$	56,057		$	15,588		$	12,833		$	29,259		$	26,316
Service revenue		4,727			8,699			9,150			15,554			4,998			4,727			8,940			9,150
Total revenue		17,560			36,510			35,466			71,611			20,586			17,560			38,199			35,466
Cost of product revenue		9,287			18,864			19,672			38,297			10,897			9,287			20,956			19,672
Cost of service revenue		3,838			6,858			7,805			12,296			5,120			3,838			9,503			7,805
Total cost of revenue		13,125			25,722			27,477			50,593			16,017			13,125			30,459			27,477
Gross profit		4,435			10,788			7,989			21,018			4,569			4,435			7,740			7,989
Operating expenses:
General and administrative		3,945			2,753			7,699			5,864			5,040			3,945			10,779			7,699
Acquisition costs		333			—			347			—
Acquisition related costs														3			333			56			347
Sales and marketing		2,649			2,687			5,538			5,932			3,312			2,649			6,608			5,538
Research and development		451			317			965			773			382			451			862			965
Total operating expenses		7,378			5,757			14,549			12,569			8,737			7,378			18,305			14,549
(Loss) income from operations		(2,943	)		5,031			(6,560	)		8,449
Loss from operations														(4,168	)		(2,943	)		(10,565	)		(6,560	)
Other income (expense):
Other income		1			—			—			1			12			1			12			—
Interest expense		(16	)		(14	)		(33	)		(33	)		(192	)		(16	)		(368	)		(33	)
Amortization of debt issue costs		(16	)		(15	)		(31	)		(31	)		(25	)		(16	)		(49	)		(31	)
Interest income														—			—			2			—
Total other expense		(31	)		(29	)		(64	)		(63	)		(205	)		(31	)		(403	)		(64	)
(Loss) income before income tax		(2,974	)		5,002			(6,624	)		8,386
Income tax (benefit) expense		(643	)		1,343			(1,458	)		2,217
Net (loss) income	$	(2,331	)	$	3,659		$	(5,166	)	$	6,169
Basic net (loss) income per share attributable to common shareholders	$	(0.07	)	$	0.12		$	(0.17	)	$	0.20
Loss before income tax														(4,373	)		(2,974	)		(10,968	)		(6,624	)
Income tax expense														15			(643	)		57			(1,458	)
Net loss													$	(4,388	)	$	(2,331	)	$	(11,025	)	$	(5,166	)
Basic net loss per share attributable to common shareholders													$	(0.14	)	$	(0.07	)	$	(0.34	)	$	(0.17	)
Weighted-average common shares outstanding		31,330,030			31,031,098			31,240,475			30,946,105			32,502,566			31,330,030			32,424,623			31,240,475
Diluted net (loss) income per share	$	(0.07	)	$	0.12		$	(0.17	)	$	0.20
Diluted net loss per share													$	(0.14	)	$	(0.07	)	$	(0.34	)	$	(0.17	)
Weighted-average common shares and share equivalents outstanding		31,330,030			31,287,826			31,240,475			31,310,965			32,502,566			31,330,030			32,424,623			31,240,475

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


	Six Months Ended September 30,						Six Months Ended September 30,
	2022			2021			2023			2022
Operating activities
Net (loss) income	$	(5,166	)	$	6,169
Adjustments to reconcile net (loss) income to net cash used in operating activities:
Net loss							$	(11,025	)	$	(5,166	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		663			622			707			663
Amortization of intangible assets		104			113			540			104
Stock-based compensation		987			372			414			987
Amortization of debt issue costs		31			31			49			31
Deferred income tax		(1,620	)		2,075			—			(1,620	)
Gain (loss) on sale of property and equipment		10			(15	)
Loss on sale of property and equipment								45			10
Provision for inventory reserves		175			313			283			175
Provision for bad debts		20			8
Provision for credit losses								190			20
Other		117			—			(1	)		117
Changes in operating assets and liabilities:
Changes in operating assets and liabilities, net of acquisition:
Accounts receivable		233			(9,972	)		(2,579	)		233
Revenue earned but not billed		1,075			722			(507	)		1,075
Inventories		2,808			(495	)		(2,238	)		2,808
Prepaid expenses and other assets		448			(1,015	)		(2,058	)		448
Accounts payable		(3,954	)		(633	)		2,154			(3,954	)
Accrued expenses and other		(2,486	)		(2,208	)		1,365			(2,486	)
Deferred revenue, current and long-term		(40	)		(43	)		1,346			(40	)
Net cash used in operating activities		(6,595	)		(3,956	)		(11,315	)		(6,595	)
Investing activities
Cash to fund acquisition		55			—
Cash paid for investment		—			(500	)
Cash to fund acquisition, net of cash received								—			55
Purchases of property and equipment		(442	)		(312	)		(747	)		(442	)
Additions to patents and licenses		(10	)		(7	)		—			(10	)
Proceeds from sale of property, plant and equipment		—			17			100			—
Net cash used in investing activities		(397	)		(802	)		(647	)		(397	)
Financing activities
Payment of long-term debt		(8	)		(7	)		(7	)		(8	)
Proceeds from revolving credit facility		5,000			—			—			5,000
Payments of revolving credit facility		—			—			—			—
Payments to settle employee tax withholdings on stock-based compensation		(2	)		(6	)		—			(2	)
Deferred financing costs		—			(5	)
Net proceeds from employee equity exercises		56			123
Net cash provided by financing activities		5,046			105
Proceeds from employee equity exercises								2			56
Net cash (used in) provided by financing activities								(5	)		5,046
Net decrease in cash and cash equivalents		(1,946	)		(4,653	)		(11,967	)		(1,946	)
Cash and cash equivalents at beginning of period		14,466			19,393			15,992			14,466
Cash and cash equivalents at end of period	$	12,520		$	14,740		$	4,025		$	12,520
Supplemental disclosure of non-cash investing and financing activities:
Operating lease assets obtained in exchange for new operating lease liabilities							$	363		$	—

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

NOTE 1 ��— DESCRIPTION OF BUSINESS

Orion includes Orion Energy Systems, Inc., a Wisconsin corporation, and all consolidated subsidiaries. Orion ~~is a provider~~provides light emitting diode lighting systems, wireless Internet of ~~energy-efficient LED lighting and controls,~~Things enabled control solutions, project engineering, energy project management design, maintenance services and ~~electrical~~turnkey electric vehicle ~~(EV)~~ charging station ~~solutions,~~installation services to commercial and industrial businesses, and federal and local governments, predominantly in North America.

Orion’s corporate offices and leased primary manufacturing operations are located in Manitowoc, Wisconsin. Orion also leases office space in Jacksonville, Florida, Lawrence, Massachusetts and Pewaukee, Wisconsin.

NOTE 2 ~~— IMPACT OF COVID-19~~

The COVID-19 pandemic has disrupted business, trade, commerce, financial and credit markets, in the U.S. and globally. Orion’s business was adversely impacted by measures taken by customers, suppliers, government entities and others to control the spread of the virus beginning in March 2020, the last few weeks of Orion’s 2020 fiscal year, and continuing most significantly into the second quarter of fiscal 2021. During the third quarter of fiscal 2021, Orion experienced a rebound in business as project installations resumed for its largest customer. However, potential future risks remain due to the COVID-19 pandemic. It is not possible to predict the overall impact, including the economic and regulatory impact, the COVID-19 pandemic will have on Orion’s business, liquidity, capital resources or financial results. If the COVID-19 pandemic becomes more pronounced in Orion’s markets or experiences a resurgence in markets recovering from the spread of COVID-19, Orion’s results of operation would likely be materially adversely affected.

NOTE 43 — REVENUE

Orion generates revenue primarily by selling manufactured or sourced commercial lighting fixtures and components, sourced electric vehicle chargers and related products, installing these ~~fixtures~~products in customer’s facilities, and providing maintenance services including repairs and replacements for the lighting and related electrical components. Orion recognizes revenue in accordance with the guidance in “Revenue from Contracts with Customers” (Topic 606) (“ASC 606”) when control of the goods or services being provided (which we refer to as a performance obligation) is transferred to a customer at an amount that reflects the consideration Orion expects to receive in exchange for those goods or services.

During the ~~fourth~~third quarter of fiscal ~~2022,~~2023, Orion acquired ~~Stay-Lite Lighting,~~Voltrek LLC ("Voltrek"), which ~~provides lighting~~sells and ~~electrical services.~~installs sourced electric vehicle charging stations and related software subscriptions and renewals. The results of ~~Stay-Lite Lighting~~Voltrek are included in the Orion ~~Services Group~~Electric Vehicle Charging segment ("EV") and ~~accelerate the growth of~~complement Orion’s ~~maintenance services customer offering. The disaggregated revenue table provides total revenue from the maintenance services offering.~~existing turnkey installation model.

The sale of charging stations and related software subscriptions and renewals is presented in Product revenue. Orion is the principal in the sales of charging stations as it has control of the physical products prior to transfer to the customer. Accordingly, revenue is recognized on a gross basis. For certain sales, primarily software subscriptions and renewals, Orion is the sales agent providing access to the content and recognize commission revenue net of amounts due to third parties who fulfill the performance obligation. For these sales, control passes at the point in time upon providing access of the content to the customer.

The sale of installation and services related to the EV charging business is presented in Service revenue. Revenue from the EV segment that includes both the sale of product and service is allocated between the product and service performance obligations based on relative standalone selling prices, and is recorded in Product revenue and Service revenue, respectively, in the Condensed Consolidated Statement of Operations.

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

The following tables provide detail of Orion’s total revenue for the three and six months ended September 30, ~~2022~~2023 and September 30, ~~2021~~2022 (dollars in thousands):

Three Months Ended September 30, 2022

Six Months Ended September 30, 2022

Product

Services

Total

Product

Services

Total

Revenue from contracts with customers:

Lighting product and installation

$
12,059

$
2,036

$
14,095

$
24,463

$
3,394

$
27,857

Maintenance services

755

2,691

3,446

1,744

5,756

7,500

Solar energy related revenues

—

—

—

—

—

—

Total revenues from contracts with customers

12,814

4,727

17,541

26,207

9,150

35,357

Revenue accounted for under other guidance

19

—

19

109

—

109

Total revenue

$
12,833

$
4,727

$
17,560

$
26,316

$
9,150

$
35,466

Three Months Ended September 30, 2021

Six Months Ended September 30, 2021

Product

Services

Total

Product

Services

Total

Revenue from contracts with customers:

Lighting product and installation

$
27,432

$
8,305

$
35,737

$
54,875

$
14,966

$
69,841

Maintenance services

54

394

448

68

588

656

Solar energy related revenues

12

—

12

28

—

28

Total revenues from contracts with customers

27,498

8,699

36,197

54,971

15,554

70,525

Revenue accounted for under other guidance

313

—

313

1,086

—

1,086

Total revenue

$
27,811

$
8,699

$
36,510

$
56,057

$
15,554

$
71,611

~~From time to time, Orion sells the receivables from one customer to a financing institution. The was~~ no ~~activity during the three and six months ended September 30, 2022. The total amount received from the sales of these receivables during the three and six months ended September 30, 2021 was $~~0 ~~and $2.4~~ ~~million, respectively. Orion’s losses on these sales were $~~1 ~~thousand and $~~3 ~~thousand, for the three and six months ended September 30, 2021, respectively, and are included in Interest expense in the Condensed Consolidated Statement of Operations.~~


	Three Months Ended September 30, 2023						Six Months Ended September 30, 2023
	Product		Services		Total		Product		Services		Total
Revenue from contracts with customers:
Lighting product and installation	$	11,928	$	1,614	$	13,542	$	23,713	$	2,445	$	26,158
Maintenance services		876		2,757		3,633		1,775		5,612		7,387
Electric vehicle charging		2,752		627		3,379		3,734		883		4,617
Solar energy related revenues		13		—		13		13		—		13
Total revenues from contracts with customers		15,569		4,998		20,567		29,235		8,940		38,175
Revenue accounted for under other guidance		19		—		19		24		—		24
Total revenue	$	15,588	$	4,998	$	20,586	$	29,259	$	8,940	$	38,199

	Three Months Ended September 30, 2022						Six Months Ended September 30, 2022
	Product		Services		Total		Product		Services		Total
Revenue from contracts with customers:
Lighting product and installation	$	12,059	$	2,036	$	14,095	$	24,463	$	3,394	$	27,857
Maintenance services		755		2,691		3,446		1,744		5,756		7,500
Total revenues from contracts with customers		12,814		4,727		17,541		26,207		9,150		35,357
Revenue accounted for under other guidance		19		—		19		109		—		109
Total revenue	$	12,833	$	4,727	$	17,560	$	26,316	$	9,150	$	35,466

The following chart shows the balance of Orion’s receivables arising from contracts with customers, contract assets and contract liabilities as of September 30, ~~2022~~2023 and March 31, ~~2022~~2023 (dollars in thousands):


	September 30, 2022		March 31, 2022		September 30, 2023		March 31, 2023
Accounts receivable, net	$	11,591	$	11,899	$	16,117	$	13,728
Contract assets	$	1,346	$	1,966	$	1,827	$	1,320
Contract liabilities	$	—	$	—	$	1,748	$	480

There were no significant changes in the contract assets outside of standard reclassifications to accounts receivable, net upon billing. ~~There were~~ Deferred revenue, current as of September 30, 2023 and March 31, 2023, includes $no1.7 ~~significant changes to~~million and $0.5 million, respectively, of contract ~~liabilities.~~liabilities which represent consideration received from a customer contract on which installation has not yet begun and Orion has not fulfilled the promises included. Of the $0.5 million outstanding as of March 31, 2023, $0.3 million has been recognized as revenue.

NOTE 54 — ACCOUNTS RECEIVABLE, NET

As of September 30, ~~2022~~2023 and March 31, ~~2022,~~2023, Orion's accounts receivable and allowance for ~~doubtful accounts~~credit losses balances were as follows (dollars in thousands):


	September 30, 2022			March 31, 2022			September 30, 2023			March 31, 2023
Accounts receivable, gross	$	11,632		$	11,907		$	16,389		$	13,814
Allowance for doubtful accounts		(41	)		(8	)
Allowance for credit losses								(272	)		(86	)
Accounts receivable, net	$	11,591		$	11,899		$	16,117		$	13,728

Changes in Orion’s allowance for credit losses were as follows (dollars in thousands):


	For the Three Months Ended September 30,						For the Six Months Ended September 30,
	2023			2022			2023			2022
Beginning of period	$	(272	)	$	(18	)	$	(86	)	$	(8	)
Credit loss expense		—			(23	)		(190	)		(33	)
Write-off		—			—			4			—
End of period	$	(272	)	$	(41	)	$	(272	)	$	(41	)

NOTE 65 — INVENTORIES, NET

As of September 30, ~~2022~~2023 and March 31, ~~2022,~~2023, Orion's inventory balances were as follows (dollars in thousands):


	Cost		Excess and Obsolescence Reserve			Net		Cost		Excess and Obsolescence Reserve			Net
As of September 30, 2022
As of September 30, 2023
Raw materials and components	$	10,539	$	(799	)	$	9,740	$	7,292	$	(1,085	)	$	6,207
Work in process		1,252		(152	)		1,100		512		(141	)		371
Finished goods		6,571		(562	)		6,009		14,318		(736	)		13,582
Total	$	18,362	$	(1,513	)	$	16,849	$	22,122	$	(1,962	)	$	20,160

As of March 31, 2022
As of March 31, 2023
Raw materials and components	$	10,781	$	(1,140	)	$	9,641	$	9,988	$	(1,094	)	$	8,894
Work in process		1,529		(267	)		1,262		693		(135	)		558
Finished goods		9,593		(664	)		8,929		9,313		(560	)		8,753
Total	$	21,903	$	(2,071	)	$	19,832	$	19,994	$	(1,789	)	$	18,205

NOTE 76 — PREPAID EXPENSES AND OTHER CURRENT ASSETS

AsPrepaid expenses consists primarily of prepaid insurance premiums, debt issue costs, prepaid subscription fees and sales tax receivable.

Other current assets as of September 30, ~~2022~~2023 and March 31, ~~2022,~~2023 consists primarily of $1.8 million and none, respectively, of prepaid ~~expenses~~software and ~~other current assets include the following (dollars in thousands):~~services.

September 30,
2022

March 31,
2022

Payroll tax credit

$
1,587

$
1,587

Other prepaid expenses

906

1,044

Total

$
2,493

$
2,631

NOTE 87 — PROPERTY AND EQUIPMENT, NET

As of September 30, ~~2022~~2023 and March 31, ~~2022,~~2023, property and equipment, net, included the following (dollars in thousands):


	September 30, 2022			March 31, 2022			September 30, 2023			March 31, 2023
Land and land improvements	$	433		$	433		$	433		$	433
Buildings and building improvements		9,491			9,491			9,504			9,491
Furniture, fixtures and office equipment		7,663			7,650			7,910			7,782
Leasehold improvements		540			490			540			540
Equipment leased to customers		4,997			4,997			4,997			4,997
Plant equipment		11,211			11,130			11,135			11,234
Vehicles		617			796			1,027			720
Construction in Progress		26			3			103			37
Gross property and equipment		34,978			34,990			35,649			35,234
Less: accumulated depreciation		(24,067	)		(23,524	)		(25,281	)		(24,764	)
Total property and equipment, net	$	10,911		$	11,466		$	10,368		$	10,470

NOTE 98 — LEASES

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

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

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


	Balance sheet classification	September 30, 2022		March 31, 2022		Balance sheet classification	September 30, 2023		March 31, 2023
Assets
Operating lease assets	Other long-term assets	$	2,124	$	2,440	Other long-term assets	$	2,159	$	2,174
Liabilities
Current liabilities
Operating lease liabilities	Accrued expenses and other	$	769	$	768	Accrued expenses and other	$	948	$	823
Non-current liabilities
Operating lease liabilities	Other long-term liabilities		1,894		2,271	Other long-term liabilities		1,625		1,826
Total lease liabilities		$	2,663	$	3,039		$	2,573	$	2,649

Orion had operating lease costs of $0.7 million and $1.1 million for the three and six months ended September 30, 2023, respectively. Orion had operating lease costs of $0.3 million and $0.6 million for the three and six months ended September 30, ~~2022. Orion had operating lease costs of $0.2~~ ~~million and $0.4~~ ~~million for the three and six months ended September 30, 2021.~~2022, respectively.

The estimated maturity of lease liabilities for each of the next five years is shown below (dollars in thousands):

Maturity of Lease Liabilities

Operating Leases

Fiscal 2023

$
458

Fiscal 2024

849

Fiscal 2025

828

Fiscal 2026

722

Fiscal 2027

71

Total lease payments

$
2,928

Less: Interest

(265
)
Present value of lease liabilities

$
2,663


Maturity of Lease Liabilities	Operating Leases
Fiscal 2024 (period remaining)	$	531
Fiscal 2025		1,083
Fiscal 2026		984
Fiscal 2027		177
Thereafter		—
Total lease payments	$	2,775
Less: Interest		(202	)
Present value of lease liabilities	$	2,573

~~Assets Orion Leases to Other Parties~~

One of Orion’s frequent customers purchases products and installation services under agreements that provide for monthly payments, at a fixed monthly amount, of the contract price, plus interest, typically over a five-year period. While Orion retains ownership of the light fixtures during the financing period, the transaction terms and the underlying economics associated with used lighting fixtures results in Orion essentially ceding ownership of the lighting fixtures to the customer after completion of the agreement. The portions of the transaction associated with the sale of the light fixtures is accounted for as a sales-type lease under ASC 842. The total transaction price in these contracts is allocated between the lease and non-lease components in the same manner as the total transaction price of other turnkey projects containing lighting fixtures and installation services.

~~Revenues, and production and acquisition costs, associated with sales-type leases are included in Product revenue and Costs of product revenues in the Condensed Consolidated Statement of Operations.~~

~~The following chart shows the amount of revenue and cost of sales arising from sales-type leases during the three and six months ended September 30, 2022 and September 30, 2021 (dollars in thousands):~~

Three Months Ended September 30,

Six Months Ended September 30,

2022

2021

2022

2021

Product revenue

$
(25
)

$
100

$
(25
)

$
651

Cost of product revenue

$
—

$
104

$
—

$
583

NOTE 109 — GOODWILL AND OTHER INTANGIBLE ASSETS, NET

Orion has $0.9 million of goodwill related to its purchase of Voltrek in the third quarter of fiscal 2023, which has an indefinite life, and is assigned to the EV Charging operating segment.

Orion has $0.6 million of goodwill related to its purchase of Stay-Light Lighting during fiscal year 2022, which has an indefinite ~~life. The goodwill~~life, and is assigned to the ~~Orion Services Group reporting unit. Goodwill increased by $~~Maintenance operating segment.

~~0.2~~ ~~million to $0.6~~ ~~million as compared to March 31, 2022. This increase was due to updates to purchase accounting within the measurement period.~~ See Note 1918 – Acquisition for further discussion of the ~~Stay-Lite Lighting~~Voltrek acquisition.

As of September 30, ~~2022~~2023 and March 31, ~~2022,~~2023, the components of, and changes in, the carrying amount of other intangible assets, net, were as follows (dollars in thousands):


	September 30, 2022							March 31, 2022							September 30, 2023									March 31, 2023
	Gross Carrying Amount		Accumulated Amortization			Net		Gross Carrying Amount		Accumulated Amortization			Net		Gross Carrying Amount		Accumulated Amortization			Net		Weighted Average Useful Life		Gross Carrying Amount		Accumulated Amortization			Net
Amortized Intangible Assets
Patents	$	2,604	$	(1,937	)	$	667	$	2,652	$	(1,932	)	$	720	$	2,521	$	(1,981	)	$	540		8.4	$	2,521	$	(1,930	)	$	591
Licenses		58		(58	)		—		58		(58	)		—		58		(58	)		—		—		58		(58	)		—
Trade name and trademarks		164		(25	)		139		118		(6	)		112		464		(117	)		347		3.8		464		(73	)		391
Customer relationships		4,109		(3,647	)		462		4,178		(3,618	)		560		5,509		(4,174	)		1,335		3.3		5,509		(3,914	)		1,595
Vendor relationships																2,600		(368	)		2,232		6.0		2,600		(183	)		2,417
Developed technology		900		(900	)		—		900		(900	)		—		900		(900	)		—		—		900		(900	)		—
Total Amortized Intangible Assets	$	7,835	$	(6,567	)	$	1,268	$	7,906	$	(6,514	)	$	1,392	$	12,052	$	(7,598	)	$	4,454		5.3	$	12,052	$	(7,058	)	$	4,994


Indefinite-lived Intangible Assets
Trade name and trademarks	$	1,014	$	—		$	1,014	$	1,012	$	—		$	1,012	$	1,010	$	—		$	1,010			$	1,010	$	—		$	1,010
Total Amortized Intangible Assets	$	1,014	$	—		$	1,014	$	1,012	$	—		$	1,012
Total Non-Amortized Intangible Assets															$	1,010	$	—		$	1,010			$	1,010	$	—		$	1,010

Amortization expense on intangible assets was $0.2 million and $0.5 million for the three and six months ended September 30, 2023, respectively.

Amortization expense on intangible assets was $0.1 million for the three and six months ended September 30, 2022, respectively.

~~Amortization expense on intangible assets was $~~46 ~~thousand and $0.1~~ ~~million for the three and six months ended September 30, 2021, respectively.~~

~~As of September 30, 2022, the weighted average remaining useful life of intangible assets was~~ ~~7.8~~ ~~years.~~

The estimated amortization expense for the remainder of fiscal ~~2023,~~2024, the next five fiscal years and beyond is shown below (dollars in thousands):


Fiscal 2023 (period remaining)	$	102
Fiscal 2024		202
Fiscal 2024 (period remaining)			$	545
Fiscal 2025		192		1,083
Fiscal 2026		183		845
Fiscal 2027		162		587
Fiscal 2028		118		516
Fiscal 2029				469
Thereafter		309		409
Total	$	1,268	$	4,454

NOTE 1110 — ACCRUED EXPENSES AND OTHER

As of September 30, ~~2022~~2023 and March 31, ~~2022,~~2023, accrued expenses and other included the following (dollars in thousands):


	September 30, 2022		March 31, 2022		September 30, 2023		March 31, 2023
Accrued acquisition earn-out					$	3,250	$	3,000
Other accruals	$	2,083	$	2,221		2,739		2,598
Compensation and benefits		1,386		1,668		1,903		1,412
Accrued project costs		986		2,215		1,532		1,218
Credits due to customers		870		1,209		1,142		1,310
Warranty		559		728		517		497
Legal and professional fees		181		106
Sales tax		109		157		335		274
Sales returns reserve		89		123		175		71
Legal and professional fees						19		172
Total	$	6,263	$	8,427	$	11,612	$	10,552

Orion generally offers a limited warranty of one to ten years on its lighting products, including the pass through of standard warranties offered by major original equipment component manufacturers. The manufacturers’ warranties cover lamps, power supplies, LED modules, chips and drivers, control devices, and other fixture related items, which are significant components in Orion's lighting products.

Changes in Orion’s warranty accrual (both current and long-term) were as follows (dollars in thousands):


	For the Three Months Ended September 30,						For the Six Months Ended September 30,						For the Three Months Ended September 30,						For the Six Months Ended September 30,
	2022			2021			2022			2021			2023			2022			2023			2022
Beginning of period	$	811		$	1,038		$	860		$	1,009		$	654		$	811		$	646		$	860
Accruals		29			89			196			205			81			29			145			196
Warranty claims (net of vendor reimbursements)		(142	)		(113	)		(358	)		(200	)		(60	)		(142	)		(116	)		(358	)
End of period	$	698		$	1,014		$	698		$	1,014		$	675		$	698		$	675		$	698

NOTE 1211 — NET ~~(LOSS) INCOME~~LOSS PER COMMON SHARE

Basic net ~~income~~loss per common share is computed by dividing net income attributable to common shareholders by the weighted-average number of common shares outstanding for the period and does not consider common stock equivalents.

Diluted net ~~income~~loss per common share reflects the dilution that would occur if stock options were exercised and restricted shares vested. In the computation of diluted net income per common share, Orion uses the treasury stock method for outstanding options and restricted shares. For the three and six months ended September 30, 2023 and 2022, Orion was in a net loss position; therefore, the Basic and Diluted weighted-average shares outstanding are equal because any increase to the basic shares would be anti-dilutive. Net (loss) income per common share is calculated based upon the following shares:

For the Three Months Ended
September 30,

For the Six Months Ended
September 30,

2022

2021

2022

2021

Numerator:

Net (loss) income (in thousands)

$
(2,331
)

$
3,659

$
(5,166
)

$
6,169

Denominator:

Weighted-average common shares outstanding

31,330,030

31,031,098

31,240,475

30,946,105

Weighted-average common shares and common share
equivalents outstanding

31,330,030

31,287,826

31,240,475

31,310,965

Net (loss) income per common share:

Basic

$
(0.07
)

$
0.12

$
(0.17
)

$
0.20

Diluted

$
(0.07
)

$
0.12

$
(0.17
)

$
0.20


	For the Three Months Ended September 30,						For the Six Months Ended September 30,
	2023			2022			2023			2022
Numerator:
Net loss (in thousands)	$	(4,388	)	$	(2,331	)	$	(11,025	)	$	(5,166	)
Denominator:
Weighted-average common shares outstanding		32,502,566			31,330,030			32,424,623			31,240,475
Weighted-average common shares and common share equivalents outstanding		32,502,566			31,330,030			32,424,623			31,240,475
Net loss per common share:
Basic	$	(0.14	)	$	(0.07	)	$	(0.34	)	$	(0.17	)
Diluted	$	(0.14	)	$	(0.07	)	$	(0.34	)	$	(0.17	)

The following table indicates the number of potentially dilutive securities excluded from the calculation of Diluted net income per common share because their inclusion would have been anti-dilutive. The number of shares is as of the end of each period:


	For the Three Months Ended September 30,				For the Six Months Ended September 30,				For the Three Months Ended September 30,				For the Six Months Ended September 30,
	2022		2021		2022		2021		2023		2022		2023		2022
Common stock options		—		—		—		—		—		85,136		—		85,136
Restricted shares		—		26,205		—		26,205
Time-Based Restricted shares										933,808		845,645		933,808		845,645
Performance-Based Restricted shares										708,377		178,669		708,377		178,669
Total		—		26,205		—		26,205		1,642,185		1,109,450		1,642,185		1,109,450

NOTE 1312 — LONG-TERM DEBT

Long-term debt consisted of the following (dollars in thousands):


	September 30, 2022			March 31, 2022			September 30, 2023			March 31, 2023
Revolving credit facility	$	5,000		$	—		$	10,000		$	10,000
Equipment debt obligations		27			35			12			20
Total long-term debt		5,027			35			10,012			10,020
Less current maturities		(16	)		(16	)		(12	)		(17	)
Long-term debt, less current maturities	$	5,011		$	19		$	10,000		$	10,003

Revolving Credit Agreement

On December 29, 2020, Orion entered into a ~~new~~ $25 million Loan and Security Agreement with Bank of America, N.A., as lender (the “Credit Agreement”). The Credit Agreement replaced Orion’s prior $20.15 million secured revolving credit and security agreement (the “Prior Credit Agreement”).

The replacement of the Prior Credit Agreement with the Credit Agreement provides Orion with increased financing capacity and liquidity to fund its operations and implement its strategic plans.

The Credit Agreement provides for a five-year $25.0 million revolving credit facility (the “Credit Facility”) that matures on December 29, 2025. Borrowings under the Credit Facility are subject to a borrowing base requirement based on eligible receivables, inventory and cash. As of September 30, ~~2022,~~2023, the borrowing base ~~supports $16.2~~ ~~million availability~~ of the Credit ~~Facility. As of September 30, 2022,~~Facility supports $~~5.0~~18.9 million of availability, with $8.9 million of remaining availability net of $10.0 million borrowed.

Effective November 4, 2022, Orion, with Bank of America, N.A. as lender, executed Amendment No. 1 to its Credit Agreement. The primary purpose of the amendment was ~~borrowed~~to include the assets of the acquired subsidiaries, Stay-Lite Lighting, Inc. ("Stay-Lite Lighting") and Voltrek, as secured collateral under the Credit ~~Facility.~~Agreement. Accordingly, eligible assets of Stay-Lite and Voltrek will be included in the borrowing base calculation for the purpose of establishing the monthly borrowing availability under the Credit Agreement. The amendment also clarified that the earn-out liabilities associated with the Stay-Lite and Voltrek transactions are permitted under the Credit Agreement and that the expenses recognized in connection with those earn-outs should be added back in the computation of EBITDA, as defined, under the Credit Agreement.

As of September 30, ~~2022,~~2023, Orion was in compliance with all debt covenants.

Equipment Debt Obligations

In February 2019, Orion entered into additional debt agreements with a financing company in the principal amount of $44 thousand and $30 thousand to fund the purchase of certain equipment. The debts are secured by the related equipment. The debts bear interest at a rate of 6.43% and 8.77% per annum, respectively, and both debts mature in January 2024.

NOTE 1413 — INCOME TAXES

Orion’s income tax provision was determined by applying an estimated annual effective tax rate, based upon the facts and circumstances known, to book income (loss) before income tax, adjusting for discrete items. Orion’s actual effective tax rate is adjusted each interim period, as appropriate, for changes in facts and circumstances. For the three months ended September 30, ~~2022~~2023 and ~~2021,~~2022, Orion recorded income tax ~~(benefit)/~~expense (benefit) of $15 thousand and $(0.6) ~~million and $1.3~~ million, respectively, using this methodology. For the six months ended September 30, ~~2022~~2023 and ~~2021,~~2022, Orion recorded income tax (benefit)/expense of $0.1 million and $(1.5) ~~million and $2.2~~ million, respectively, using this methodology.

As of September 30, ~~2022~~2023 and March 31, ~~2022,~~2023, Orion ~~has~~had a ~~recorded~~full valuation allowance ~~of $1.2~~ ~~million~~ against its net deferred tax asset balance. Orion considers future taxable income and ongoing prudent and feasible tax planning strategies in assessing the need for the valuation allowance. In the event that Orion determines that the deferred tax assets are able to be realized, an adjustment to the deferred tax asset would increase income in the period such determination is made.

As of each reporting date, management considers new evidence, both positive and negative, that could affect its view of the future realization of deferred tax assets. Orion considers future taxable income and ongoing prudent and feasible tax planning strategies in assessing the need for the valuation allowance. In the event that Orion determines that the more or less of its deferred tax assets are able to be realized, an adjustment to the valuation allowance would be reflected in the company’s provision for income taxes.

Uncertain Tax Positions

As of September 30, ~~2022,~~2023, Orion’s balance of gross unrecognized tax benefits was approximately $0.2 million, all of which would reduce Orion’s effective tax rate if recognized.

Orion has classified the amounts recorded for uncertain tax benefits in the balance sheet as Other long-term liabilities to the extent that payment is not anticipated within one year. Orion recognizes penalties and interest related to uncertain tax liabilities in income tax (benefit) expense. Penalties and interest are included in the unrecognized tax benefits.

NOTE 1514 — COMMITMENTS AND CONTINGENCIES

Litigation

Orion is subject to various claims and legal proceedings arising in the ordinary course of business. Orion does not believe the final resolution of any of such claims or legal proceedings will have a material adverse effect on Orion’s future results of operations or financial condition.

~~State Tax Assessment~~

During fiscal year 2018, Orion was notified of a pending sales and use tax audit by the Wisconsin Department of Revenue for the period covering April 1, 2013 through March 31, 2017. This sales and use tax audit was settled during the quarter ended June 30, 2022 with no tax adjustment.

NOTE 1615 — SHAREHOLDERS’ EQUITY

Employee Stock Purchase Plan

In August 2010, Orion’s Board of Directors approved a non-compensatory employee stock purchase plan, or “ESPP”. In the three months ended September 30, 2023, Orion issued 762 shares under the ESPP plan at a closing market price of $1.26. In the three months ended September 30, 2022, Orion issued 648 shares under the ESPP plan at a closing market price of $1.56.

Shares Issued
Under ESPP
Plan

Closing Market
Price
Quarter Ended June 30, 2022

443

2.01
Quarter Ended September 30, 2022

648

1.56
Total issued in fiscal 2022

1,091

$ 1.56 - 2.01

Sale of shares

In March ~~2020,~~2023, Orion filed a universal shelf registration statement with the Securities and Exchange Commission. Under the shelf registration statement, Orion currently has the flexibility to publicly offer and sell from time to time up to $100 million of debt and/or equity securities. The filing of the shelf registration statement may help facilitate Orion’s ability to raise public equity or debt capital to expand existing businesses, fund potential acquisitions, invest in other growth opportunities, repay existing debt, or for other general corporate purposes.

In March 2021, Orion entered into an At Market Issuance Sales Agreement to undertake an “at the market” (ATM) public equity capital raising program pursuant to which Orion may offer and sell shares of common stock from time to time, having an aggregate offering price of up to $50 million. No share sales have been effected pursuant to the ATM program through September 30, ~~2022.~~2023.

NOTE 1716 — STOCK OPTIONS AND RESTRICTED SHARES

At ~~Orion’s 2019~~Orion's 2023 annual meeting of shareholders (the “2023 Annual Meeting”) held on August ~~7, 2019, Orion’s~~10, 2023, Orion's shareholders approved the Orion Energy Systems, Inc. 2016 Omnibus Incentive Plan, as amended and restated (the ~~“Amended~~"Amended 2016 ~~Plan”~~Plan"). The Amended 2016 Plan increased the number of shares of ~~Orion’s~~Orion's common stock available for issuance under the Amended 2016 Plan from ~~1,750,000~~3,500,000 shares to ~~3,500,000~~6,000,000 shares (an increase of ~~1,750,000~~2,500,000 shares)~~; added a minimum vesting period for all awards granted under~~ and extended the term of the Amended 2016 Plan ~~(with limited exceptions); and added a specific prohibition on~~to the ~~payment~~tenth anniversary of ~~dividends and dividend equivalents on unvested awards.~~the date of the 2023 Annual Meeting.

The Amended 2016 Plan authorizes grants of equity-based and incentive cash awards to eligible participants designated by the Plan's administrator. Awards under the Amended 2016 Plan may consist of stock options, stock appreciation rights, performance shares, performance units, common stock, restricted stock, restricted stock units, incentive awards or dividend equivalent units.

Prior to the 2016 Omnibus Incentive Plan, Orion maintained its 2004 Stock and Incentive Awards Plan, as amended, which authorized the grant of cash and equity awards to employees (the “2004 Plan”). No new awards are being granted under the 2004 Plan; however, all awards granted under the 2004 Plan that are outstanding will continue to be governed by the 2004 Plan. Forfeited awards originally issued under the 2004 Plan are canceled and are not available for subsequent issuance under the 2004 Plan or under the Amended 2016 Plan. The Amended 2016 Plan and the 2004 Plan also permit accelerated vesting in the event of certain changes of control of Orion as well as under other special circumstances.

Certain non-employee directors have from time to time elected to receive stock awards in lieu of cash compensation pursuant to elections made under Orion’s non-employee director compensation program.

~~The~~During the three and six months ended September 30, 2023 and 2022, the following amounts of stock-based compensation were recorded in Orion’s Condensed Consolidated Statements of Operations (dollars in thousands):


	For the Three Months Ended September 30,				For the Six Months Ended September 30,				For the Three Months Ended September 30,				For the Six Months Ended September 30,
	2022		2021		2022		2021		2023		2022		2023		2022
Cost of product revenue	$	1	$	1	$	2	$	3	$	2	$	1	$	3	$	2
General and administrative		729		205		979		360		218		729		400		979
Sales and marketing		2		4		4		7		4		2		8		4
Research and development		1		1		2		2		2		1		3		2
Total	$	733	$	211	$	987	$	372	$	226	$	733	$	414	$	987

During the ~~first~~ three and six months ~~of fiscal 2022,~~ended September 30, 2023, Orion had the following activity related to its stock-based ~~compensation:~~compensation.


	Restricted Shares			Stock Options			Time-Based Restricted Shares			Performance-Based Restricted Shares		Stock Options
Awards outstanding at March 31, 2022		450,458			142,428
Awards outstanding at March 31, 2023								612,819			130,635		73,136
Awards granted		806,738			—			532,690			577,742		—
Awards vested or exercised		(231,602	)		(26,646	)		(206,451	)		—		—
Awards forfeited		(1,280	)		(30,646	)		(5,250	)		—		(73,136	)
Awards outstanding at September 30, 2022		1,024,314			85,136
Awards outstanding at September 30, 2023								933,808			708,377		—
Per share weighted average price on grant date	$	2.18			—		$	1.56		$	1.55		—

As of September 30, ~~2022,~~2023, the amount of deferred stock-based compensation expense to be recognized, over a remaining period of ~~2.9~~2.6 years, was approximately $~~1.4~~1.8 million.

NOTE 1817 — SEGMENTS

Reportable segments are components of an entity that have separate financial data that the entity's chief operating decision maker ("CODM") regularly reviews when allocating resources and assessing performance. Orion's CODM is the chief executive officer. Previously, Orion ~~has the following business~~had four reportable segments: Orion Services Group Division ("OSG"), Orion Distribution Services Division ("ODS"), ~~and~~ Orion U.S. Markets Division ~~("USM"~~(“USM”) and Orion Electric Vehicle Charging Division (“EV Segment”). ~~The accounting policies are~~Effective during the ~~same~~first quarter of fiscal 2024, Orion began to evaluate and report the business using three segments: Orion Lighting Division, Orion Maintenance Division and Orion Electric Vehicle Charging Division. Orion configured its fiscal 2024 budget in order to compare actual performance to plan performance for ~~each business~~these segments. Due to the change in composition of reportable segments in the first quarter of fiscal 2024, the corresponding segment ~~as they are~~information for fiscal year 2023 has been restated for presentation on a ~~consolidated~~comparable basis.

~~Orion Services Group Division~~Lighting Segment

The ~~OSG segment~~Lighting Segment develops and sells lighting products and provides construction ~~engineering along with installation~~ and ~~maintenance~~engineering services for Orion's commercial lighting and energy management systems. ~~OSG~~The Lighting Segment provides engineering, design, lighting products and in many cases turnkey solutions for large national accounts, governments, municipalities, schools and other customers.

~~Orion Distribution Services Division~~

The ~~ODS segment~~Lighting Segment sells mostly through direct sales, but it also sells lighting products ~~through~~though manufacturer representative agencies and ~~a network of North American broadline electrical distributors~~to the wholesale contractor markets through energy service companies and contractors.

~~Orion U.S. Markets Division~~Maintenance Segment

The ~~USM segment sells commercial~~Maintenance Segment provides retailers, distributors and other businesses with maintenance, repair and replacement services for the lighting ~~systems~~ and ~~energy management systems to contractors and energy service companies ("ESCOs").~~related electrical components deployed in their facilities.

17Electric Vehicle Charging Segment

The EV Charging Segment offers leading electric vehicle charging expertise, sells and installs sourced electric vehicle charging stations with related software subscriptions and renewals and provides EV turnkey installation solutions with ongoing support to all commercial verticals.

Corporate and Other

Corporate and Other is comprised of operating expenses not ~~directly~~ allocated to Orion’s segments and adjustments to reconcile to consolidated results (dollars in thousands).

Revenues

Operating Income (Loss)

For the Three Months Ended
September 30,

For the Three Months Ended
September 30,

2022

2021

2022

2021

Segments:

Orion Services Group

$
9,747

$
26,952

$
(1,543
)

$
4,281

Orion Distribution Services

4,309

4,036

134

560

Orion U.S. Markets

3,504

5,522

310

1,297

Corporate and Other

—

—

(1,844
)

(1,107
)

$
17,560

$
36,510

$
(2,943
)

$
5,031


	Revenues				Operating Loss						Total Assets
	For the Three Months Ended September 30,				For the Three Months Ended September 30,
	2023		2022		2023			2022			September 30, 2023		March 31, 2023
Segments:
Lighting Segment	$	13,573	$	14,115	$	(1,962	)	$	(2,296	)	$	27,827	$	25,009
Maintenance Segment		3,634		3,445		(1,760	)		(795	)		8,051		10,372
Electric Vehicle Charging Segment		3,379		—		(1,029	)		—			16,626		11,501
Corporate and Other		—		—		583			148			13,326		24,697
	$	20,586	$	17,560	$	(4,168	)	$	(2,943	)	$	65,830	$	71,579

Revenues

Operating Income (Loss)

For the Six Months Ended
September 30,

For the Six Months Ended
September 30,

2022

2021

2022

2021

Segments:

Orion Services Group

$
18,782

$
48,940

$
(3,772
)

$
6,145

Orion Distribution Services

9,135

13,322

83

2,682

Orion U.S. Markets

7,549

9,349

496

1,948

Corporate and Other

—

—

(3,367
)

(2,326
)

$
35,466

$
71,611

$
(6,560
)

$
8,449

NOTE 1918 — ACQUISITION

Effective on January 1, 2022, Orion acquired all of the issued and outstanding capital stock of Stay-Lite Lighting, Inc. (“Stay-Lite Lighting”), a nationwide lighting and electrical maintenance service provider, for $~~4.3~~ million (the “Stay-Lite Acquisition”). Stay-Lite Lighting will operate as Stay-Lite Lighting, an Orion Energy Systems business. The acquisition accelerates the growth of Orion's maintenance services offerings through its Orion Services Group, which provides lighting and electrical services to customers.

~~Orion has accounted for this transaction as a business combination. Orion has preliminarily allocated the purchase price of approximately $4.3~~ ~~million, which includes an estimate of the earn-out liability of $0.2~~ ~~million and $0.1~~ million for the working capital adjustment received in the first quarter fiscal 2023, to the assets acquired and liabilities assumed at estimated fair values, and the excess of the purchase price over the aggregate fair values is recorded as goodwill. Orion could pay up to $~~0.7~~ ~~million in earnout related purchase price, which is based on performance during the current and following calendar years. Any accretion of the earnout liability above $0.2~~ ~~million recorded as part of the opening balance sheet will be recognized as expense in the Consolidated Statement of Operations. Orion is in the process of finalizing related tax impacts.~~

~~The preliminary allocation of the purchase consideration to the fair value of the assets acquired and liabilities assumed as of January 1, 2022, is as follows (dollars in thousands):~~

Cash

$
95

Accounts receivable

2,690

Revenue earned but not billed

342

Inventory

504

Prepaid expenses and other current assets

41

Property and equipment

725

Goodwill

564

Other intangible assets

673

Other long-term assets

537

Accounts payable

(965
)
Accrued expenses and other

(492
)
Other long-term liabilities

(411
)
Net purchase consideration

4,303

Goodwill recorded from the acquisition of Stay-Lite Lighting is attributable to the expected synergies from the business combination. The goodwill resulting from the acquisition is deductible for tax purposes. The intangible assets include amounts recognized for the fair value of the trade name and customer relationships. The fair value of the intangible assets was determined based upon the income (discounted cash flow) approach.

~~The following table presents the details of the intangible assets acquired at the date of acquisition (dollars in thousands):~~

Estimated
Fair Value

Estimated Useful Life (Years)

Tradename

$
164

5

Customer relationships

509

8

Stay-Lite Lighting’s post-acquisition results of operations since January 1, 2022 are included in Orion’s Consolidated Statements of Operations. The operating results of Stay-Lite Lighting are included in the Orion Services Group segment.

Transaction costs related to the acquisition of Stay-Lite Lighting and Voltrek LLC (see Note 20 - Subsequent Events) are recorded in acquisition costs in the consolidated statements of operations. Transaction costs totaled $~~0.5~~ ~~million in fiscal 2022 and $0.3~~ ~~million in the three and six months ended September 30, 2022, respectively.~~

~~NOTE 20 — SUBSEQUENT EVENTS~~

Acquisition of Voltrek

Effective on October 5, 2022, Orion acquired all the membership interests of Voltrek, ~~LLC (“Voltrek”),~~ an electric vehicle charging station solutions provider for a purchase price of $5.0 million in cash and $1.0 million of shares of common stock of Orion, subject to normal and customary closing adjustments of $0.9 million (the “Voltrek Acquisition”). In addition, depending upon the relative EBITDA growth of Voltrek’s business in fiscal 2023, 2024 and 2025, Orion could pay up to an additional $3.0 million, $3.5 million and $7.15 million, respectively, in ~~earnout~~earn-out payments. ~~Those~~These compensatory payments do not fall within the scope of ASC 805, Business Combinations, and will be expensed over the course of the ~~earnout~~earn-out periods to the extent they are earned. As of September 30, 2023, Orion recorded $3.0 million to accrued expenses for its fiscal 2023 earn-out payment and an additional $2.1 million to other long-term liabilities for the cumulative potential earn-out opportunity which is anticipated to be paid in fiscal 2026. The ~~acquisition~~Voltrek Acquisition was funded ~~from existing~~with cash ~~resources~~ and Orion shares. Voltrek ~~will operate~~operates as Voltrek, an Orion Energy Systems business. The Voltrek Acquisition leverages Orion’s project management and maintenance expertise into a rapidly growing sector.

~~No amounts relating to Voltrek or~~Orion has accounted for the Voltrek Acquisition ~~other than acquisition costs, are recognized~~as a business combination. Orion has allocated a purchase price of approximately $6.9 million to the assets acquired and liabilities assumed at estimated fair values, and the excess of the purchase price over the aggregate fair values is recorded as goodwill. The purchase price and closing adjustments were paid in cash and 620,067 shares of common stock with a total fair market value of $1.0 million, which is recorded in the ~~accompanying financial statements because~~opening balance sheet at fair value of $0.8 million, the ~~acquisition date occurred subsequent~~discount on which is due to ~~September 30, 2022.~~ lock-up requirements on the shares.

The ~~accounting for the acquisition and~~following table summarizes the purchase price allocation for Voltrek:


(in thousands)	Opening Balance Sheet
Cash	$	416
Accounts receivable		1,363
Revenue earned but not billed		325
Inventory		880
Prepaid expenses and other current assets		39
Property and equipment		4
Goodwill		920
Other intangible assets		4,300
Other long-term assets		223
Accounts payable		(1,133	)
Accrued expenses and other		(286	)
Other long-term liabilities		(180	)
Net purchase consideration	$	6,871

Goodwill recorded from the Voltrek Acquisition is ~~not determinable at this time, as Orion~~attributable to the skillset of the acquired workforce. The goodwill resulting from the Voltrek Acquisition is ~~still in the process of determining acquisition date fair values of certain working capital~~expected to be deductible for tax purposes. The intangible assets include amounts ~~and estimating~~recognized for the fair value of ~~identifiable~~the trade name, vendor relationship and customer relationships.

The tradename intangible asset was valued using a relief from royalty method. The significant assumptions used include the estimated revenue and royalty rate, among other factors.

The vendor relationship intangible asset was valued using the income approach – excess earnings method. The significant assumptions include estimated revenue, cost of goods sold, and probability of renewal, among other factors.

The customer relationship intangible asset was valued using the income approach – with-and-without method. The significant assumptions include estimated cash flows (including appropriate revenue, cost of revenue and operating expenses attributable to the asset, retention rate, among other factors), and discount rate, reflecting the risks inherent in the future cash flow stream, among other factors.

The categorization of the framework used to measure fair value of the intangible assets ~~associated with this acquisition.~~

~~Amendment~~is considered to ~~Loan Security Agreement~~

~~Effective November 4, 2022, Orion, with Bank of America, N.A. as lender, executed Amendment No. 1~~be within the Level 3 valuation hierarchy due to ~~its Loan Security Agreement (“LSA”) dated December 29, 2020. The primary purpose~~the subjective nature of the ~~amendment is to include~~unobservable inputs used.

The following table presents the ~~assets~~details of the intangible assets acquired ~~subsidiaries, Stay-Lite Lighting, Inc. and~~at the date of Voltrek ~~LLC, as security interests~~Acquisition (dollars in thousands):


	Estimated Fair Value		Estimated Useful Life (Years)
Tradename	$	300		5
Vendor relationship		2,600		7
Customer relationships		1,400		3

Voltrek's post-acquisition results of ~~the LSA. Accordingly, eligible assets~~operations since October 5, 2022 are included in Orion’s Condensed Consolidated Statements of ~~Stay-Lite and~~Operations. The operating results of Voltrek ~~will be~~are included in the ~~borrowing base calculation~~EV segment. See note 17 – Segments, for results.

Transaction costs related to the Voltrek Acquisition are recorded in acquisition costs in the Condensed Consolidated Statements of Operations. Transaction costs totaled $3 thousand and $0.1 million in the three and six months ended September 30, 2023, respectively, and $0.3 million in each of the three and six months ended September 30, 2022, respectively.

If Voltrek had been acquired on April 1, 2022, the pro forma Orion revenue for the ~~purpose~~three and six months ended September 30, 2022 would have been $18.8 million and $37.9 million, respectively. Proforma net loss for the three and six months ended September 30, 2022 would have been $(2.7) million and $(6.0) million, respectively.

The pro forma information was determined based on the historical results of ~~establishing~~Orion and unaudited financial results from Voltrek. These proforma results reflect additional depreciation and amortization that would have been charged assuming the ~~monthly borrowing availability under~~fair value adjustments to property, plant, and equipment and intangible asset occurred at the ~~LSA.~~beginning of the period, along with consequential tax effects. The ~~amendment also clarifies~~unaudited pro forma results have been prepared for comparative purposes only and are not necessarily indicative of what would have occurred had the business combinations been completed at the beginning of the period or the results that ~~the earnout liabilities associated with the Stay-Lite and Voltrek transaction are permitted under the LSA and that the expenses recognized in connection with those earnouts should be added back~~may occur in the ~~computation~~future. Furthermore, the unaudited pro forma financial information does not reflect the impact of ~~EBITDA, as defined.~~any synergies resulting from the acquisitions.

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

The following discussion and analysis of our financial condition and results of operations should be read together with our unaudited Condensed Consolidated Financial Statements and related notes included in this Form 10-Q, as well as our audited Consolidated Financial Statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended March 31, ~~2022.~~2023.

Any statements in this Quarterly Report on Form 10-Q about our expectations, beliefs, plans, objectives, prospects, financial condition, assumptions or future events or performance are not historical facts and are “forward-looking statements” as that term is defined under the federal securities laws. These statements are often, but not always, made through the use of words or phrases such as “believe”, “anticipate”, “should”, “intend”, “plan”, “will”, “expects”, “estimates”, “projects”, “positioned”, “strategy”, “outlook” and similar words. You should read the statements that contain these types of words carefully. Such forward-looking statements are subject to several risks, uncertainties and other factors that could cause actual results to differ materially from what is expressed or implied in such forward-looking statements. There may be events in the future that we are not able to predict accurately or over which we have no control. Potential risks and uncertainties include, but are not limited to, those discussed in “Part I, Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended March 31, ~~2022.~~2023. We urge you not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. We do not undertake any obligation to release publicly any revisions to such forward-looking statements to reflect events or uncertainties after the date hereof or to reflect the occurrence of unanticipated events.

We provide ~~energy-efficient LED~~state-of-the-art light emitting diode (“LED”) lighting systems, sourced wireless Internet of Things (“IoT”) enabled control solutions, commercial and ~~controls,~~industrial electric vehicle (“EV”) charging infrastructure solutions and maintenance ~~services and electrical vehicle (EV) charging station solutions.~~services. We help our customers achieve their sustainability, energy savings and carbon footprint reduction goals through innovative technology and exceptional service. We ~~research, design, develop, manufacture, market,~~ sell ~~install,~~our products and ~~implement energy management systems consisting primarily of high-performance, energy-efficient~~services into many vertical markets within the broader commercial and industrial ~~interior and exterior LED lighting systems and related services. Our products are targeted for applications in three primary~~ market ~~segments:~~segment. Primary verticals include: big box retail, manufacturing, warehousing/logistics, commercial office, federal and ~~retail, area lighting,~~municipal government, healthcare and ~~industrial applications, although we do sell and install products into other markets.~~schools. Our services consist of turnkey installation and system maintenance. Virtually all of our sales occur within North America.

Our lighting products consist primarily of LED lighting fixtures, many of which include sourced IoT enabled control systems. Our principal lighting customers include large national account end-users, federal and state government facilities, large regional account end-users, electrical distributors, electrical contractors and energy service companies ~~("ESCOs"~~(“ESCOs”). Currently, most of our lighting products are manufactured at our leased production facility located in Manitowoc, Wisconsin, although as the LED and related IoT market continues to evolve, we are increasingly sourcing products and components from third parties in order to provide versatility in our product development.

We differentiate ourselves from our competitors through offering comprehensive project management services to national account customers to retrofit their multiple locations. Our comprehensive services include initial site surveys and audits, utility incentive and government subsidy management, engineering design, and project management from delivery through to installation and controls integration. In addition, we began to offer lighting and electrical maintenance services in fiscal 2021 which enables us to support a lifetime business relationship with our ~~customer.~~customer (which we call “Customers for Life”). We completed the ~~acquisition of~~ Stay-Lite Lighting acquisition on January 1, 2022, which ~~is intended~~has allowed us to further expand our maintenance services capabilities. We completed the acquisition of Voltrek on October 5, 2022, which has allowed us to further expand our turnkey services capabilities as well as capitalize on the rapidly growing market for EV charging solutions.

We believe the market for LED lighting products and related controls continues to grow. Due to their size and flexibility in application, we also believe that LED lighting systems can address opportunities for retrofit applications that cannot be satisfied

by other lighting technologies. Our LED lighting technologies have ~~become~~been the primary component of our revenue as we continue to strive to be a leader in the LED market.

In fiscal 2022, we continued to successfully capitalize on our capability of being a full service, turn-key provider of LED lighting and controls systems with design, build, installation and project management services, as we continued a very large project for a major national ~~account which was substantially complete by the end of the fiscal year.~~account. As a result of this success, we have ~~begun to evolve~~evolved our business strategy to focus on further expanding the nature and scope of our products and services offered to our customers. This further expansion of our products and services includes pursuing projects to develop recurring revenue streams, including providing lighting and electrical maintenance services and utilizing control sensor technology to collect data and assisting customers in the digitization of this data, along with other potential services. We also ~~plan to pursue~~are pursuing the expansion of our IoT, “smart-building” and “connected ceiling” and other related technology, software and controls products and services that we offer to our customers. We currently plan on investing significant time, resources and capital into expanding our offerings in these areas with no expectation that they will result in us realizing material revenue in the near term and without any assurance they will succeed or be profitable. In fact, it is likely that these efforts will reduce our profitability, at least in the near term as we invest resources and incur expenses to develop these offerings. While we currently intend to primarily pursue these expansion strategies organically, we also ~~are actively exploring~~may explore potential additional business acquisitions, like our acquisition of Stay-Lite Lighting and Voltrek, which ~~would~~have more quickly ~~add~~added these types of expanded and different capabilities to our product and services offerings. It is possible that the acquisitions of Stay-Lite Lighting and Voltrek, or other potential acquisitions, if successfully completed, could significantly change, and potentially transform, the nature and extent of our business.

We generally do not have long-term contracts with our customers for product or turnkey services that provide us with recurring annual revenue. However, ~~some of~~ our maintenance services contracts usually consist of multi-year arrangements. We typically generate substantially all of our revenue from sales of lighting and control systems and related services to governmental, commercial and industrial customers on a project-by-project basis. We also perform work under master services or product purchasing agreements with major customers with sales completed on a purchase order basis. In addition, in order to provide quality and timely service under our multi-location master retrofit agreements we are required to make substantial working capital expenditures and advance inventory purchases that we may not be able to recoup if the agreements or a substantial volume of purchase orders under the agreements are delayed or terminated. The loss of, or substantial reduction in sales to, any of our significant customers, or our current single largest customer, or the termination or delay of a significant volume of purchase orders by one or more key customers, could have a material adverse effect on our results of operations in any given future period.

We typically sell our lighting systems in replacement of our customers’ existing fixtures. We call this replacement process a "retrofit". We frequently engage our customer’s existing electrical contractor to provide installation and project management services. We also sell our lighting systems on a wholesale basis, principally to electrical distributors and ESCOs to sell to their own customer bases.

The gross margins of our products can vary significantly depending upon the types of products we sell, with margins typically ranging from 10% to 50%. As a result, a change in the total mix of our sales among higher or lower margin products can cause our profitability to fluctuate from period to period.

Our fiscal year ends on March 31. Our current fiscal year ends on March 31, ~~2023~~2024 and is referred to as “fiscal ~~2023”~~2024”. We refer to our just completed fiscal year, which ended on March 31, ~~2022,~~2023, as "fiscal ~~2022"~~2023", and our prior fiscal year which ended on March 31, ~~2021~~2022 as "fiscal ~~2021"~~2022". Our fiscal first quarter of each fiscal year ends on June 30, our fiscal second quarter ends on September 30, our fiscal third quarter ends on December 31 and our fiscal fourth quarter ends on March 31.

~~The COVID-19 pandemic has disrupted business, trade, commerce, financial~~ and ~~credit markets, in~~Orion Electric Vehicle Charging Division (“EV Segment”). Effective during the U.S. and globally. Our business was adversely impacted by measures taken by customers, suppliers, government entities and others to control the spread of the virus beginning in March 2020, the last few weeks of our 2020 fiscal year, and continuing most significantly into the secondfirst quarter of fiscal ~~2021. During~~2024, we began to evaluate and report the ~~third quarter of fiscal 2021, we experienced a rebound in~~ business ~~as project installations resumed for our largest customer. However, potential future risks remain due to the COVID-19 pandemic. It is not possible to predict the overall impact, including the economic~~using three segments: Orion Lighting Division, Orion Maintenance Division and regulatory impact, the COVID-19 pandemic will have on put business, liquidity, capital resources or financial results. If the COVID-19 pandemic becomes more pronounced in our markets or experiences a resurgence in markets recovering from the spread of COVID-19, our results of operation would likely be materially adversely affected.Orion Electric Vehicle Charging Division.

Effective on January 1, 2022, we acquired all of the issued and outstanding capital stock of Stay-Lite Lighting, a nationwide lighting and electrical maintenance service provider, for a cash purchase price of $4.0 million. In addition, depending upon the performance during the current and following calendar years, Orion could pay up to an additional $0.7 million in earn out related purchase price. The acquisition was funded from existing cash resources. Stay-Lite Lighting will operate as Stay-Lite, an Orion Energy Systems business. The acquisition accelerates the growth of our maintenance services offerings through our Orion Services Group, which provides lighting and electrical services to customers.

Effective on October 5, 2022, we acquired all of the outstanding membership interests of Voltrek LLC, ana leading electric vehicle charging ~~station~~company that provides turnkey installation solutions ~~provider, for a~~with ongoing support to all commercial verticals. The initial purchase price consisted of $5.0 million in cash and $1.0 million of ~~shares of common stock of Orion, subject to normal and customary closing adjustments. In addition, depending upon the relative EBITDA growth of Voltrek’s business~~stock. We also paid an additional $3.0 million based on Voltrek's performance in fiscal 2023 ~~2024~~ and ~~2025, we~~ could pay up to an additional ~~$3.0 million,~~ $3.5 million and $7.15 million ~~respectively,~~ in ~~earnout payments. Those~~ compensatory ~~payments do not fall within the scope of ASC 805, Business Combinations,~~consideration if Voltrek exceeds certain earnings targets in fiscal 2024 and ~~will be expensed over the course of the earnout periods to the extent they are earned.~~2025, respectively. The acquisition was funded from existing cash and credit resources and ~~our common stock. Voltrek will operate~~has been operating as Voltrek, ana division of Orion Energy ~~Systems business. The acquisition leverages our project management and maintenance expertise into a rapidly growing sector.~~Systems.

During the fourth quarter of fiscal 2022, we substantially completed a significant project rollout for our large national retail customer and future sales to this customer are expected to be at substantially lower amounts. During fiscal 2023, we continue to support this customer, but at lower revenue levels than in the comparative prior year. Despite the reduction experienced from the large national retail customer and a global online retailer, revenue for the balance of our business grew in the three and six months ended September 30, 2022.

Results of Operations - Three Months Ended September 30, ~~2022~~2023 versus Three Months Ended September 30, ~~2021~~2022

The following table sets forth the line items of our Condensed Consolidated Statements of Operations and as a relative percentage of our total revenue for each applicable period, together with the relative percentage change in such line item between applicable comparable periods (dollars in thousands, except percentages):


	Three Months Ended September 30,															Three Months Ended September 30,
	2022			2021						2022			2021			2023			2022						2023			2022
	Amount			Amount			% Change			% of Revenue			% of Revenue			Amount			Amount			% Change			% of Revenue			% of Revenue
Product revenue	$	12,833		$	27,811			(53.9	)%		73.1	%		76.2	%	$	15,588		$	12,833			21.5	%		75.7	%		73.1	%
Service revenue		4,727			8,699			(45.7	)%		26.9	%		23.8	%		4,998			4,727			5.7	%		24.3	%		26.9	%
Total revenue		17,560			36,510			(51.9	)%		100.0	%		100.0	%		20,586			17,560			17.2	%		100.0	%		100.0	%
Cost of product revenue		9,287			18,864			(50.8	)%		52.9	%		51.7	%		10,897			9,287			17.3	%		52.9	%		52.9	%
Cost of service revenue		3,838			6,858			(44.0	)%		21.9	%		18.8	%		5,120			3,838			33.4	%		24.9	%		21.9	%
Total cost of revenue		13,125			25,722			(49.0	)%		74.7	%		70.5	%		16,017			13,125			22.0	%		77.8	%		74.7	%
Gross profit		4,435			10,788			(58.9	)%		25.3	%		29.5	%		4,569			4,435			3.0	%		22.2	%		25.3	%
General and administrative expenses		3,945			2,753			43.3	%		22.5	%		7.5	%		5,040			3,945			27.8	%		24.5	%		22.5	%
Acquisition costs		333			—		NM				1.9	%		—
Acquisition related costs																	3			333			(99.1	)%		0.0	%		1.9	%
Sales and marketing expenses		2,649			2,687			(1.4	)%		15.1	%		7.4	%		3,312			2,649			25.0	%		16.1	%		15.1	%
Research and development expenses		451			317			42.3	%		2.6	%		0.9	%		382			451			(15.3	)%		1.9	%		2.6	%
(Loss) income from operations		(2,943	)		5,031			(158.5	)%		(16.8	)%		13.8	%
Loss from operations																	(4,168	)		(2,943	)		(41.6	)%		(20.2	)%		(16.8	)%
Other income		1			—		NM				0.0	%		—			12			1			1100.0	%		0.1	%		0.0	%
Interest expense		(16	)		(14	)		14.3	%		(0.1	)%		(0.0	)%		(192	)		(16	)		1100.0	%		(0.9	)%		(0.1	)%
Amortization of debt issue costs		(16	)		(15	)		6.7	%		(0.1	)%		(0.0	)%		(25	)		(16	)		56.3	%		(0.1	)%		(0.1	)%
(Loss) income before income tax		(2,974	)		5,002		NM				(16.9	)%		13.7	%
Income tax (benefit) expense		(643	)		1,343		NM				(3.7	)%		3.7	%
Net (loss) income	$	(2,331	)	$	3,659		NM				(13.3	)%		10.0	%
Loss before income tax																	(4,373	)		(2,974	)		(47.0	)%		(21.2	)%		(16.9	)%
Income tax expense (benefit)																	15			(643	)	NM				0.1	%		(3.7	)%
Net loss																$	(4,388	)	$	(2,331	)		(88.2	)%		(21.3	)%		(13.3	)%

Revenue, Cost of Revenue and Gross Margin. Product revenue ~~decreased 53.9%~~increased 21.5%, or ~~$15.0~~$2.8 million, for the second quarter of fiscal ~~2023~~2024 versus the second quarter of fiscal ~~2022.~~2023. Service revenue ~~decreased 45.7%~~increased 5.7%, or ~~$4.0~~$0.3 million, for the second quarter of fiscal ~~2023~~2024 versus the second quarter of fiscal ~~2022.~~2023. The ~~decrease~~increase in ~~product and service~~total revenue was due to ~~significantly lower revenues~~the addition of EV revenue from ~~our largest customer~~the Voltrek acquistion and ~~comparatively lower project volume~~a new 3-year preventive maintenance contract. Cost of product revenue increased by 17.3%, or $1.6 million, in the second quarter of fiscal 2024 versus the comparable period in fiscal 2023. Cost of service revenue increased by 33.4%, or $1.3 million, in the second quarter of fiscal 2024 versus the comparable period in fiscal 2023. Gross margin decreased from ~~other customers, primarily caused by the response~~25.3% of ~~customers to supply chain disruptions and other delays. The installations from our existing large national retail customer represented 16.0% of total~~ revenue in the second quarter of fiscal 2023 ~~compared~~ to ~~58.9%~~22.2% in the second quarter of fiscal 2022. This decrease in revenue is partially offset by revenues due to the acquisition of Stay-Lite Lighting. Cost of product revenue decreased by 50.8%, or $9.6 million, in the second quarter of fiscal 2023 versus the comparable period in fiscal 2022. Cost of service revenue decreased by 44.0%, or $3.0 million, in the second quarter of fiscal 2023 versus the comparable period in fiscal 2022. The decrease in product and service costs was primarily due to the decrease in revenue. Gross margin decreased from 29.5% of revenue in the second quarter of fiscal 2022 to 25.3% in the second quarter of fiscal 2023,2024, due primarily to ~~reduced sales decreasing the absorption of~~inflationary cost pressures related to subcontractor costs and maintenance technician costs on fixed ~~costs.~~price contracts.

General and Administrative. General and administrative expenses increased ~~43.3%~~27.8%, or ~~$1.2~~$1.1 million, in the second quarter of fiscal ~~2023~~2024 compared to the second quarter of fiscal ~~2022.~~2023. This comparative increase was primarily due to the ~~acquisition~~$1.1 million accrual of ~~Stay-Lite Lighting and an acceleration~~the expected Voltrek earn-out payment.

Acquisition Related Costs. Acquisition related costs decreased 99.1% or $0.3 million, in the second quarter of ~~stock-based compensation expense due~~fiscal 2024 compared to ~~retirement modifications~~the second quarter of ~~existing restricted stock awards.~~fiscal 2023.

Sales and Marketing. Sales and marketing expenses ~~were relatively flat,~~increased 25.0%, or $0.7 million, in the second quarter of fiscal ~~2023~~2024 compared to the second quarter of fiscal ~~2022, reflecting a reduction~~2023. This comparative increase was primarily due to the inclusion of Voltrek in ~~commission expense~~the current year and commissions on ~~lower sales, partially offset by~~ higher ~~employment costs.~~revenues.

Research and Development. Research and development expenses ~~increased 42.3%,~~decreased 15.3% or $0.1 million, in the second quarter of fiscal ~~2023~~2024 compared to the second quarter of fiscal ~~2022, as a result~~2023. This comparative decrease was primarily due to the reduction of ~~higher employment~~site testing costs.

~~Orion Services Group~~Interest Expense. Interest expenses increased 1100.0% or $0.2 million, in the second quarter of fiscal 2024 compared to the second quarter of fiscal 2023. This comparative increase was primarily due to the interest on increased outstanding borrowings.

Our ~~OSG segment~~lighting division develops and sells lighting products and provides construction ~~engineering along with installation~~ and ~~maintenance~~engineering services for our commercial lighting and energy management systems. ~~OSG~~Our lighting division provides engineering, design, lighting products and in many cases turnkey solutions for large national accounts, governments, municipalities, schools and other customers.

~~The following table summarizes our OSG segment operating results (dollars in thousands):~~

OSG segment revenue in the second quarter of fiscal 2023 decreased by 63.8%, or $17.2 million compared to the second quarter of fiscal 2022. The decrease in OSG segment revenue was due to a significant reduction of project volume from our largest customer Our lighting division sells mostly through direct sales and comparatively lower project volume from other customers, primarily caused by the response of customers to supply chain disruptions and other delays. This revenue decrease was partially offset by the added revenue from Stay-Lite Lighting. This decrease led to a corresponding operating loss in this segment, as a result of decreased absorption of fixed costs.

~~Our ODS segment focuses on selling lighting products~~also through manufacturer representative agencies and ~~a network of North American broadline and electrical distributors and contractors.~~

~~The following table summarizes our ODS segment operating results (dollars in thousands):~~

ODS segment revenue in the second quarter of fiscal 2023 increased by 6.8%, or $0.3 million, compared to the second quarter of fiscal 2022. Operating income in this segment decreased as a result of increased allocation of corporate costs.

~~Our USM segment sells commercial lighting systems and energy management systems~~ to the wholesale contractor ~~markets. USM customers include~~markets through ESCOs and contractors.

The following table summarizes our ~~USM segment~~lighting division operating results (dollars in thousands):

~~USM segment~~Lighting division revenue in the second quarter of fiscal ~~2023~~2024 decreased by ~~36.5%~~3.8%, or ~~$2.0~~$0.5 million, compared to the second quarter of fiscal ~~2022,~~2023. The decrease in lighting division revenue was due to variability in the timing of larger lighting projects. The decrease in corresponding operating loss in this segment is a result of a decrease in under absorption of fixed costs.

Our maintenance division provides retailers, distributors and other businesses with maintenance, repair and replacement services for the lighting and related electrical components deployed in their facilities.

The following table summarizes our maintenance division operating results (dollars in thousands):

Maintenance division revenue in the second quarter of fiscal 2024 increased by 5.5%, or $0.2 million, compared to the second quarter of fiscal 2023, primarily due to a ~~less diversified customer base.~~new 3-year preventive maintenance contract. Operating ~~income~~loss in this segment ~~decreased~~increased as a result of ~~lower~~a decrease in gross margins primarily due to inflationary cost pressures related to subcontractor costs and maintenance technician costs on fixed price contracts.

Our EV division offers leading electric vehicle charging expertise and provides EV turnkey installation solutions with ongoing support to all commercial verticals.

The following table summarizes our EV segment operations results (dollars in thousands):

EV segment revenue generated by Voltrek in the second quarter of fiscal 2024 was $3.4 million. Operating loss in this segment was primarily a result of the $1.1 million of earn-out expense included in general and ~~increased~~administrative costs and the allocation of corporate ~~costs.~~expenses.

Results of Operations - Six Months Ended September 30, ~~2022~~2023 versus Six Months Ended September 30, ~~2021~~2022

Revenue, Cost of Revenue and Gross Margin. Product revenue ~~decreased 53.1%~~increased 11.2%, or ~~$29.7~~$2.9 million, for the first six months of fiscal ~~2023~~2024 versus the first six months of fiscal ~~2022.~~2023. Service revenue decreased ~~41.2%~~2.3%, or ~~$6.4~~$0.2 million, for the first six months of fiscal ~~2023~~2024 versus the first six months of fiscal ~~2022.~~2023. The ~~decrease~~resulting increase in ~~product and service~~total revenue was due to ~~significantly lower project revenues~~the addition of EV revenue from ~~our largest customer and comparatively lower project volume~~the Voltrek acquisition, offset by variability in the timing of larger lighting projects. Cost of product revenue increased by 6.5%, or $1.3 million, in the first six months of fiscal 2024 versus the comparable period in fiscal 2023. Cost of service revenue increased by 21.8%, or $1.7 million, in the first six months of fiscal 2024 versus the comparable period in fiscal 2023. Gross margin decreased from ~~other customers, primarily caused by the response~~22.5% of ~~customers to supply chain disruptions and other delays. The installations from our existing large national retail customer represented 14.9% of total~~ revenue in the first six months of fiscal 2023 ~~compared~~ to ~~55.0%~~20.3% in the first six months of fiscal 2022. This decrease in revenue was partially offset by revenues due to the acquisition of Stay-Lite Lighting. Cost of product revenue decreased by 48.6%, or $18.6 million, in the first six months of fiscal 2023 versus the comparable period in fiscal 2022. Cost of service revenue decreased by 36.5%, or $4.5 million, in the first six months of fiscal 2023 versus the comparable period in fiscal 2022. The decrease in product and service costs was primarily due to the decrease in revenue. Gross margin decreased from 29.4% in the first six months of fiscal 2022 to 22.5% in the first six months of fiscal 2023,2024, due primarily to ~~reduced sales decreasing the absorption of~~inflationary cost pressures related to subcontractor costs and maintenance technician costs on fixed ~~costs.~~price contracts.

General and Administrative. General and administrative expenses increased ~~31.3%~~40.0%, or ~~$1.8~~$3.1 million, in the first six months of fiscal ~~2023~~2024 compared to the first six months of fiscal ~~2022.~~2023. This comparative increase was primarily due to the $2.3 million accrual of the expected Voltrek earn-out payment.

Acquisition Related Costs. Acquisition related costs decreased 83.9%, or $0.3 million, in the first six months of fiscal 2024 compared to the first six months of fiscal 2023.

Sales and Marketing. Sales and marketing expenses increased 19.3%, or $1.1 million, in the first six months of fiscal 2024 compared to the first six months of fiscal 2023. This comparative increase was primarily due to the acquisition of ~~Stay-Lite Lighting~~Voltrek and ~~an acceleration of stock-based compensation expense due to retirement modifications of existing restricted stock awards.~~

~~Sales and Marketing.~~ ~~Sales and marketing expenses decreased 6.6%, or $0.4 million, in the first six months of fiscal 2023 compared to the first six months of fiscal 2022, reflecting a reduction in commission expense~~commissions on ~~lower sales, partially offset by increased employment costs.~~higher revenues.

Research and Development. Research and development expenses ~~increased 24.8%~~decreased 10.7%, or ~~$0.2~~$0.1 million, in the first six months of fiscal ~~2023~~2024 compared to the first six months of fiscal ~~2022, as a result~~2023. This comparative decrease was primarily due to the reduction of ~~increased~~ employment ~~costs and testing.~~costs.

~~Orion Services Group Division~~Interest Expense. Interest expenses increased 1015.2% or $0.3 million, in the first six months of fiscal 2024 compared to the first six months of fiscal 2023. This comparative increase was primarily due to the interest on outstanding borrowings.

Our OSG segment develops and sells lighting products and provides construction, engineering along with installation and maintenance services for our commercial lighting and energy management systems. OSG provides engineering, design, lighting products and in many cases turnkey solutions for large national accounts, governments, municipalities, schools and other customers.Lighting Division

The following table summarizes our ~~OSG segment~~lighting division operating results (dollars in thousands):

~~OSG segment~~Lighting division revenue in the first six months of fiscal ~~2023~~2024 decreased by 61.6%, or $30.2 million, compared to the first six months of fiscal 2022. The decrease in revenue was due to a significant reduction of project volume from our largest customer and comparatively lower project volume from other customers, primarily caused by the response of customers to supply chain disruptions and other delays. This revenue decrease is partially offset by the added revenue from Stay-Lite Lighting. This decrease led to a corresponding operating loss in this segment, as a result of revenue decreased absorption of fixed costs.

~~Our ODS segment focuses on selling lighting products through manufacturer representative agencies and a network of North American broadline and electrical distributors and contractors.~~

~~The following table summarizes our ODS segment operating results (dollars in thousands):~~

ODS segment revenue in the first six months of fiscal 2023 decreased by 31.4%, or $4.2 million, compared to the first six months of fiscal 2022, primarily due to a decrease in sales to one customer. The decrease in sales resulted in a corresponding operating loss in this segment based on operating leverage.

~~Our USM segment sells commercial lighting systems and energy management systems to the wholesale contractor markets. USM customers include ESCOs and contractors.~~

~~The following table summarizes our USM segment operating results (dollars in thousands):~~

~~USM segment revenue in the first six months of fiscal 2023 decreased by 19.3%~~6.3%, or $1.8 million compared to the first six months of fiscal ~~2022,~~2023. The decrease in lighting division revenue was due to variability in the timing of larger lighting projects. The decrease in corresponding operating loss in this segment is a result of a decrease in under absorption of fixed costs.

The following table summarizes our maintenance division operating results (dollars in thousands):

Maintenance division revenue in the first six months of fiscal 2024 increased by 1.5%, or $0.1 million, compared to the first six months of fiscal 2023, primarily due to a ~~less diversified customer base.~~new 3-year preventive maintenance contract. Operating ~~income~~loss in this segment ~~decreased~~increased as a result of ~~increased~~a decrease in gross margins primarily due to inflationary cost pressures related to subcontractor costs and maintenance technician costs on fixed price contracts.

The following table summarizes our EV segment operations results (dollars in thousands):

EV segment revenue generated by Voltrek in the first six months of fiscal 2024 was $4.6 million. Operating loss in this segment was primarily a result of the $2.3 million of earn-out expense included in general and administrative costs and the allocation of corporate ~~costs.~~expenses.

We believe our existing cash and operating cash flow provide us with the financial flexibility needed to meet our capital requirements, based on our current cash flow forecast, including to fund ~~targeted~~our budgeted capital expenditures ~~acquisitions~~ and working capital needs for at least one year from the date of this report, as well as our currently anticipated longer-term capital requirements for periods beyond at least one year from the date of this report.

We had approximately ~~$12.5~~$4.0 million in cash and cash equivalents as of September 30, ~~2022,~~2023, compared to ~~$14.5~~$16.0 million at March 31, ~~2022.~~2023. Our cash position decreased as a result of an ~~EBITDA~~operating loss and an overall use of working capital during the first six months of fiscal ~~2023.~~2024. We expect our operating cash flows to be positive during the second half of fiscal 2024.

Our future liquidity needs and forecasted cash flows are dependent upon many factors, including our relative revenue, gross margins, cash management practices, cost containment, working capital management and capital expenditures. While we believe that we will likely have adequate available cash and equivalents and credit availability under our Credit Agreement to satisfy our currently anticipated working capital and liquidity requirements ~~during~~for at least the next 12 months based on our current cash flow forecast, ~~there can be no assurance to that effect. If~~if we experience significant liquidity constraints, we may be required to issue equity or debt securities, reduce our sales efforts, implement additional cost savings initiatives or undertake other efforts to conserve our cash. We are also currently pursuing other potential supplemental liquidity sources.

The following table summarizes our cash flows for the six months ended September 30, ~~2022~~2023 and ~~2021~~2022 (in thousands):

Cash Flows Related to Operating Activities. Cash used in operating activities primarily consists of net loss adjusted for certain non-cash items, including depreciation, amortization of intangible assets, stock-based compensation, amortization of debt issue costs, provisions for reserves, and the effect of changes in working capital and other activities.

Cash used in operating activities for the first six months of fiscal 2024 was $11.3 million and consisted of our net loss of $11.1 million adjusted for non-cash expense items and net cash used in changes in operating assets of $0.2 million, the largest of which was a $2.6 million increase in accounts receivable.

Cash used in operating activities for the first six months of fiscal 2023 was $6.6 million and consisted of our net loss of $5.2 million adjusted for non-cash expense items and net cash used in changes in working capital of $1.3 million, the largest of which was a $4.0 million decrease in accounts payable.

Cash Flows Related to Investing Activities. Cash used in ~~operating~~investing activities ~~for~~of $0.6 million in the first six months of fiscal ~~2022 was $4.0 million~~2024 consisted primarily of purchases of property and ~~consisted of our net income of $6.2 million adjusted for non-cash expense items of $3.5 million~~equipment, partially offset by ~~working capital uses~~proceeds from sale of ~~$13.7 million, the largest of which was a $10.0 million increase in accounts receivable.~~property and equipment.

~~Cash Flows Related to Investing Activities~~. Cash used in investing activities of $0.4 million in the first six months of fiscal ~~2022~~2023 consisted primarily of ~~purchases of property and equipment.~~

~~Cash used in investing activities of $0.8 million in the first six months of fiscal 2022 consisted primarily of cash paid for a non-controlling equity stake in ndustrial, Inc. of $0.5 million and~~ purchases of property and equipment.

Cash Flows Related to Financing Activities. Cash used by financing activities of $5 thousand in the first six months of fiscal 2024 consisted primarily of payment of long-term debt.

Cash provided by financing activities of $5.0 million in the first six months of fiscal 2023 consisted primarily of proceeds from our revolving credit facility, which was drawn down to subsequently pay the cash purchase price to acquire Voltrek.

~~Cash provided by financing activities of $0.1 million in the first six months of fiscal 2022 consisted primarily of proceeds from employee equity exercises.~~

Our net working capital as of September 30, ~~2022~~2023 was ~~$32.5~~$16.2 million, consisting of ~~$44.8~~$45.3 million in current assets and ~~$12.3~~$29.0 million in current liabilities. Our net working capital as of March 31, ~~2022~~2023 was ~~$32.9~~$25.9 million, consisting of ~~$51.2~~$50.4 million in current assets and ~~$18.4~~$24.5 million in current liabilities.

We generally attempt to maintain at least a three-month supply of on-hand inventory of purchased components and raw materials to meet anticipated demand, as well as to reduce our risk of unexpected raw material or component shortages or supply interruptions. Because of recent supply chain challenges, we have been making additional incremental inventory purchases. Our accounts receivables, inventory and payables may increase to the extent our revenue and order levels increase.

On December 29, 2020, we entered into a new $25 million Loan and Security Agreement (the “Credit Agreement”) with Bank of America, N.A., as lender (the “Lender”). The Credit Agreement replaced our prior $20.15 million secured revolving credit and security agreement (the “Prior Credit Agreement”).

The replacement of the Prior Credit Agreement with the Credit Agreement provides us with increased financing capacity and liquidity to fund our operations and implement our strategic plans.

The Credit Agreement provides for a five-year $25.0 million revolving credit facility (the “Credit Facility”) that matures on December 29, 2025. Borrowings under the Credit Facility are subject to a borrowing base requirement based on eligible receivables, inventory and cash. As of September 30, ~~2022,~~2023, the borrowing base ~~supports $16.2 million availability~~ of the Credit ~~Facility. As~~Facility supports $18.9 million of ~~September 30, 2022, $5.0~~availability, with $8.9 million ~~was borrowed under the Credit Facility.~~of remaining availability net of $10.0 million borrowed.

The Credit Agreement is secured by a first lien security interest in substantially all of our assets.

Effective November 4, 2022, we, along with ~~Bank of America, N.A. as lender,~~the Lender, executed Amendment No. 1 to the ~~Loan Security Agreement (“LSA”) dated December 29, 2020.~~Credit Agreement. The primary purpose of the amendment iswas to include the assets of ~~the~~our acquired subsidiaries, Stay-Lite Lighting ~~Inc.~~ and Voltrek ~~LLC,~~ as ~~security interests of~~secured collateral under the ~~LSA.~~Credit Agreement. Accordingly, eligible assets of Stay-Lite and Voltrek ~~will be~~are now included in ~~the~~our borrowing base calculation for the purpose of establishing ~~the~~our monthly borrowing availability under the ~~LSA.~~Credit Agreement. The amendment also ~~clarifies~~clarified that the ~~earnout~~earn-out liabilities associated with the Stay-Lite and Voltrek ~~transaction~~transactions are permitted under the ~~LSA~~Credit Agreement and that the expenses recognized in connection with those ~~earnouts~~earn-outs should be added back in the computation of EBITDA, as ~~defined.~~defined, under the Credit Agreement.

Backlog represents the amount of revenue that we expect to realize in the future as a result of firm, committed purchase orders. Backlog totaled ~~$11.2~~$21.2 million and ~~$10.1~~$17.2 million as of September 30, ~~2022~~2023 and March 31, ~~2022,~~2023, respectively. We generally expect our backlog to be recognized as revenue within one ~~year, although the COVID-19 pandemic may extend this time period.~~year. Backlog does not include any amounts for contracted maintenance services.

We have experienced increases in various input costs including labor, components and transportation in the past year. In response, we have implemented multiple price increases, and we have substantially mitigated the inflationary pressures, such that our results from operations have not been materially affected to date by inflation. ~~We are monitoring input costs and cannot currently predict the future impact to our operations by inflation.~~

The discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of our consolidated financial statements requires us to make certain estimates and judgments that affect our reported assets, liabilities, revenue and expenses, and our related disclosure of contingent assets and liabilities. We re-evaluate our estimates on an ongoing basis, including those related to revenue recognition, inventory valuation, ~~collectability of receivables,~~ stock-based compensation ~~warranty reserves~~ and income taxes. The estimates of forecasted cash flows are used in the assessment for impairment of long-lived assets and the realizability of deferred tax assets. We base our estimates on historical experience and on various assumptions that we believe to be reasonable under the circumstances. Actual results may differ from these estimates. A summary of our critical accounting policies is set forth in the “Critical Accounting Policies and Estimates” section of our Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the year ended March 31, ~~2022.~~2023. For the ~~six months~~quarter ended September 30, ~~2022,~~2023, there were no material changes in our accounting policies.

For a complete discussion of recent accounting pronouncements, refer to Note 3 in the Condensed Consolidated Financial Statements included elsewhere in this report.

Our exposure to market risk was discussed in the “Quantitative and Qualitative Disclosures About Market Risk” section contained in our Annual Report on Form 10-K for the year ended March 31, ~~2022.~~2023. There have been no material changes to such exposures since March 31, ~~2022.~~2023.

Our disclosure controls and procedures are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

As of September 30, ~~2022,~~2023, an evaluation was conducted under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act). Based on this evaluation, such officers have concluded that our disclosure controls and procedures were effective as of September 30, ~~2022.~~2023.

There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act) for the quarter ended September 30, ~~2022,~~2023, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

We are subject to various claims and legal proceedings arising in the ordinary course of business. As of the date of this report, we do not believe that the final resolution of any of such claims or legal proceedings will have a material adverse effect on our future results of operations.

See Note 15 – Commitments and Contingencies, to the Condensed Consolidated Financial Statements in Item 1 of this Quarterly Report on Form 10-Q.

We operate in a rapidly changing environment that involves a number of risks that could materially affect our business, financial condition or future results, some of which are beyond our control. In addition to the other information set forth in this Quarterly Report on Form 10-Q, the risks and uncertainties that we believe are most important for you to consider are discussed in Part I - Item 1A under the heading “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended March 31, ~~2022,~~2023, which we filed with the SEC on June ~~10, 2022~~12, 2023 and in Part 1 - Item 2 under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations" in this Form 10-Q.

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

Effective November 4, 2022, Orion, with Bank of America, N.A. as lender, entered into Amendment No. 1 to Loan and Security Agreement (the “Amendment”) to the Credit Agreement (as amended by the Amendment, the “Amended Credit Agreement”), which provides for a five-year $25.0 million revolving credit facility that matures on December 29, 2025. The Amendment amended the Credit Agreement to, among other things: (i) add Stay-Lite Lighting and Voltrek as additional borrowers under the Amended Credit Agreement; (ii) clarify that the obligations related to the earn out payments associated with the acquisitions of Stay-Lite Lighting and Voltrek are permitted under the Amended Credit Agreement; and (iii) add expenses recognized in connection with the potential earnouts payable in the Stay-Lite Lighting and Voltrek acquisitions to the computation of EBITDA as defined under the Amended Credit Agreement.

~~Pursuant to the terms and conditions of the Amended Credit Agreement, future borrowing base calculations will incorporate the applicable assets of Stay-Lite Lighting and Voltrek.~~

The foregoing description of the Amendment does not purport to be complete and is qualified in its entirety by reference to the full text of the Amended Credit Agreement, a copy of which is filed as Exhibit 10.4 to this Quarterly Report.None

^ The schedules to this exhibit have been omitted in accordance with Regulation S-K Item 601(a)(5). The Registrant agrees to furnish a copy of all omitted exhibits and schedules to the SEC upon its request; provided, however, that the Registrant may request confidential treatment pursuant to Rule 24b-2 of the Exchange Act, as amended, for any schedule so furnished.

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, on November ~~8, 2022.~~9, 2023.


2210 Woodland Drive, Manitowoc, Wisconsin		54220
(Address of principal executive offices)		(Zip code)


Large accelerated filer	☐	Accelerated filer	~~Accelerated~~☐

Non-accelerated filer	☒

~~Non-accelerated filer~~	☐	Smaller reporting company	☒

		Emerging growth company	☐


		Page(s)
PART I FINANCIAL INFORMATION		3
ITEM 1.	Financial Statements (unaudited)	3
	Condensed Consolidated Balance Sheets as of September 30, ~~2022~~2023 and March 31, ~~2022~~2023	3
	Condensed Consolidated Statements of Operations for the Three and Six Months Ended September 30, ~~2022~~2023 and September 30, ~~2021~~2022	4
	Condensed Consolidated Statements of Shareholders’ Equity for the Three and Six Months Ended September 30, ~~2022~~2023 and September 30, ~~2021~~2022	5
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended September 30, ~~2022~~2023 and September 30, ~~2021~~2022	6
	Notes to the Condensed Consolidated Financial Statements	7
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2120
ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	3129
ITEM 4.	Controls and Procedures	3129
PART II OTHER INFORMATION		3230
ITEM 1.	Legal Proceedings	3230
ITEM 1A.	Risk Factors	3230
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3230
ITEM 5.	Other Information	3230
ITEM 6.	Exhibits	3331
SIGNATURE		3432


	Shareholders’ Equity
	Common Stock
	Shares		Additional Paid-in Capital		Treasury Stock			Retained Deficit			Total Shareholders’ Equity
Balance, March 31, 2023		32,295,408	$	160,907	$	(36,237	)	$	(91,421	)	$	33,249
Shares issued under Employee Stock Purchase Plan		699		—		1			—			1
Stock-based compensation		206,451		188		—			—			188
Net loss		—		—		—			(6,637	)		(6,637	)
Balance, June 30, 2023		32,502,558	$	161,095	$	(36,236	)	$	(98,058	)	$	26,801
Shares issued under Employee Stock Purchase Plan		762		—		1			—			1
Stock-based compensation		—		226		—			—			226
Net loss		—		—		—			(4,388	)		(4,388	)
Balance, September 30, 2023		32,503,320	$	161,321	$	(36,235	)	$	(102,446	)	$	22,640


	September 30, 2022		March 31, 2022
Payroll tax credit	$	1,587	$	1,587
Other prepaid expenses		906		1,044
Total	$	2,493	$	2,631


Maturity of Lease Liabilities	Operating Leases
Fiscal 2023	$	458
Fiscal 2024		849
Fiscal 2025		828
Fiscal 2026		722
Fiscal 2027		71
Total lease payments	$	2,928
Less: Interest		(265	)
Present value of lease liabilities	$	2,663


	Shares Issued Under ESPP Plan		Closing Market Price
Quarter Ended June 30, 2022		443	2.01
Quarter Ended September 30, 2022		648	1.56
Total issued in fiscal 2022		1,091	$ 1.56 - 2.01


	Revenues				Operating Income (Loss)
	For the Three Months Ended September 30,				For the Three Months Ended September 30,
	2022		2021		2022			2021
Segments:
Orion Services Group	$	9,747	$	26,952	$	(1,543	)	$	4,281
Orion Distribution Services		4,309		4,036		134			560
Orion U.S. Markets		3,504		5,522		310			1,297
Corporate and Other		—		—		(1,844	)		(1,107	)
	$	17,560	$	36,510	$	(2,943	)	$	5,031


Cash	$	95
Accounts receivable		2,690
Revenue earned but not billed		342
Inventory		504
Prepaid expenses and other current assets		41
Property and equipment		725
Goodwill		564
Other intangible assets		673
Other long-term assets		537
Accounts payable		(965	)
Accrued expenses and other		(492	)
Other long-term liabilities		(411	)
Net purchase consideration		4,303


10.1	~~Voluntary Retirement and Consulting Agreement, dated as of August 2, 2022 and effective as of November 10, 2022, between~~ Orion Energy Systems, Inc. 2016 Omnibus Incentive Plan, as amended and ~~Michael W. Altschaefl, filed as Exhibit 10.1~~restated [Incorporated by reference to Annex A to the ~~Registrant's Form 8-K~~Registrant’s Definitive Proxy Statement on Schedule 14A filed with the Securities and Exchange Commission on August 3, 2022, is hereby incorporated by reference.*June 30, 2023 (File No. 001-33887)].

~~10.2~~	Amended Executive Employment and Severance Agreement, effective as of November 10, 2022, by and between Orion Energy Systems, Inc. and Michael H. Jenkins, filed as Exhibit 10.2 to the Registrant's Form 8-K filed on August 3, 2022, is hereby incorporated by reference.*

~~10.3~~	Consulting Agreement, dated as of August 2, 2022 and effective as of August 4, 2022, between Orion Energy Systems, Inc. and Alan Howe, filed as Exhibit 10.3 to the Registrant's Form 8-K filed on August 3, 2022, is hereby incorporated by reference.*

~~10.4~~	Agreement No. 1 to Loan and Security Agreement, dated effective as of November 4, 2022, among Orion Energy Systems, Inc., Bank of America, N.A., as lender, and the subsidiary borrowers party thereto. +^

31.1	Certification of Chief Executive Officer of Orion Energy Systems, Inc. pursuant to Rule 13a-14(a) or Rule 15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended.+

31.2	Certification of Chief Financial Officer of Orion Energy Systems, Inc. pursuant to Rule 13a-14(a) or Rule 15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended.+

32.1	Certification of Chief Executive Officer of Orion Energy Systems, Inc. pursuant to Rule 13a-14(b) promulgated under the Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.+

32.2	Certification of Chief Financial Officer of Orion Energy Systems, Inc. pursuant to Rule 13a-14(b) promulgated under the Securities Exchange Act of 1934, as amended, 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+

101.SCH	Inline XBRL Taxonomy extension schema document+

101.CAL	Inline XBRL Taxonomy extension calculation linkbase document+

101.DEF	Inline XBRL Taxonomy extension definition linkbase document+

101.LAB	Inline XBRL Taxonomy extension label linkbase document+

101.PRE	Inline XBRL Taxonomy extension presentation linkbase document+

104	~~The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2022, has been formatted~~Cover Page Interactive Data File (formatted as Inline XBRL and contained in ~~Inline XBRL.~~Exhibit 101)


ORION ENERGY SYSTEMS, INC.

By		/s/ J. Per Brodin
		J. Per Brodin
		Chief Financial Officer
		(Principal Financial Officer and Authorized Signatory)