UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended ~~December 31, 2019~~September 30, 2020

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

For the transition period from _____ to _____.

Commission File Number: 0-19672

American Superconductor Corporation

(Exact name of registrant as specified in its charter)

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

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

(978) 842-3000

(Registrant’s telephone number, including area code)

N/A

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

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

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value per share	AMSC	Nasdaq Global Select Market

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

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

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

Large accelerated filer ☐	Accelerated filer ☒☐
Non-accelerated filer ☐☒	Smaller reporting company ☒
	Emerging growth company ☐

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

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

Shares outstanding of the Registrant’s common stock:

Common Stock, par value $0.01 per share		~~22,556,538~~27,603,102
Class		Outstanding as of ~~January 31,~~November 2, 2020

AMERICAN SUPERCONDUCTOR CORPORATION

INDEX

		Page No.
PART I—FINANCIAL INFORMATION

Item 1.	Financial Statements	3

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2321

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3028

Item 4.	Controls and Procedures	3028

PART II—OTHER INFORMATION

Item 1.	Legal Proceedings	3129

Item 1A.	Risk Factors	3129

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3129

Item 3.	Defaults Upon Senior Securities	3129

Item 4.	Mine Safety Disclosure	3129

Item 5.	Other Information	3129

Item 6.	Exhibits	3230

Signature		3331

AMERICAN SUPERCONDUCTOR CORPORATION

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

	December 31, 2019			March 31, 2019			September 30, 2020			March 31, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	25,481		$	77,483		$	41,246		$	24,699
Marketable securities		25,000			0			10,191			30,149
Accounts receivable, net		16,491			7,855			16,810			16,987
Inventory		18,591			12,119			14,155			18,975
Note receivable, current portion		0			2,888
Prepaid expenses and other current assets		3,704			3,053			3,496			2,959
Restricted cash								508			508
Total current assets		89,267			103,398			86,406			94,277

Marketable securities		10,047			0			—			5,046
Property, plant and equipment, net		8,840			8,972			8,140			8,565
Intangibles, net		2,635			2,890			3,309			3,550
Right-of-use asset		3,495			0
Right-of-use assets								3,907			3,359
Goodwill		1,719			1,719			1,719			1,719
Restricted cash		5,754			715			5,782			5,657
Deferred tax assets		1,373			1,357			1,631			1,551
Other assets		361			279			333			385
Total assets	$	123,491		$	119,330		$	111,227		$	124,109

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Accounts payable and accrued expenses	$	19,379		$	15,885		$	18,470		$	22,091
Lease liability, current portion		436			0			568			439
Derivative liabilities		(0	)		4,942
Deferred revenue, current portion		15,220			7,557			13,547			18,430
Total current liabilities		35,035			28,384			32,585			40,960

Deferred revenue, long term portion		7,923			7,962			8,409			7,712
Lease liability, long term portion		3,128			0			3,430			3,000
Deferred tax liabilities		175			1,698			352			180
Other liabilities		42			93			31			38
Total liabilities		46,303			38,137			44,807			51,890

Commitments and contingencies (Note 15)
Commitments and Contingencies (Note 14)

Stockholders' equity:
Common stock		228			216			234			229
Additional paid-in capital		1,052,621			1,044,622			1,055,548			1,053,507
Treasury stock		(2,666	)		(2,101	)		(3,336	)		(2,666	)
Accumulated other comprehensive loss		(247	)		(5	)		(262	)		(216	)
Accumulated deficit		(972,748	)		(961,539	)		(985,764	)		(978,635	)
Total stockholders' equity		77,188			81,193			66,420			72,219
Total liabilities and stockholders' equity	$	123,491		$	119,330		$	111,227		$	124,109

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

AMERICAN SUPERCONDUCTOR CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

	Three Months Ended						Nine Months Ended						Three Months Ended						Six Months Ended
	December 31,						December 31,						September 30,						September 30,
	2019			2018			2019			2018			2020			2019			2020			2019
Revenues	$	17,915		$	14,134		$	45,697		$	41,618		$	21,117		$	14,012		$	42,329		$	27,782

Cost of revenues		16,329			10,398			38,770			30,364			15,596			10,248			31,768			22,441

Gross margin		1,586			3,736			6,927			11,254			5,521			3,764			10,561			5,341

Operating expenses:
Research and development		2,049			2,470			6,920			7,573			2,719			2,398			5,218			4,871
Selling, general and administrative		6,071			5,347			16,726			16,308			5,887			5,400			11,524			10,655
Amortization of acquisition-related intangibles		85			85			255			255			121			85			242			170
Restructuring		0			47			0			450
Gain on Sinovel settlement, net		0			(24,978	)		0			(53,698	)
Total operating expenses		8,205			(17,029	)		23,901			(29,112	)		8,727			7,883			16,984			15,696

Operating (loss) income		(6,619	)		20,765			(16,974	)		40,366
Operating loss														(3,206	)		(4,119	)		(6,423	)		(10,355	)

Change in fair value of warrants		556			(2,475	)		4,648			(2,658	)		—			1,145			—			4,092
Gain on sale of minority interest		0			127			0			127
Interest income, net		262			336			1,101			769			161			335			320			840
Other (expense) income, net		(932	)		124			45			1,058
(Loss) income before income tax expense		(6,733	)		18,877			(11,180	)		39,662
Other (expense)/income, net														(476	)		1,520			(646	)		976
Loss before income tax expense														(3,521	)		(1,119	)		(6,749	)		(4,447	)

Income tax expense		112			1,584			29			4,548
Income tax expense (benefit)														191			(294	)		380			(83	)

Net (loss) income	$	(6,845	)	$	17,293		$	(11,209	)	$	35,114
Net loss													$	(3,712	)	$	(825	)	$	(7,129	)	$	(4,364	)

Net (loss) income per common share
Net loss per common share
Basic	$	(0.32	)	$	0.85		$	(0.54	)	$	1.73		$	(0.17	)	$	(0.04	)	$	(0.33	)	$	(0.21	)
Diluted	$	(0.35	)	$	0.83		$	(0.75	)	$	1.71		$	(0.17	)	$	(0.10	)	$	(0.33	)	$	(0.40	)

Weighted average number of common shares outstanding
Basic		21,185			20,419			20,786			20,300			21,860			20,656			21,775			20,586
Diluted		21,203			20,864			20,894			20,538			21,860			20,723			21,775			20,736

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

AMERICAN SUPERCONDUCTOR CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE ~~(LOSS) INCOME~~LOSS

(In thousands)

Three Months Ended

Nine Months Ended

December 31,

December 31,

2019

2018

2019

2018

Net (loss) income
$ (6,845 ) $ 17,293 $ (11,209 ) $ 35,114
Other comprehensive loss, net of tax:

Foreign currency translation (loss) gain
609 (54 ) (242 ) (948 )
Total other comprehensive (loss) income, net of tax
609 (54 ) (242 ) (948 )
Comprehensive (loss) income
$ (6,236 ) $ 17,239 $ (11,451 ) �� $ 34,166

	Three Months Ended						Six Months Ended
	September 30,						September 30,
	2020			2019			2020			2019
Net loss	$	(3,712	)	$	(825	)	$	(7,129	)	$	(4,364	)
Other comprehensive loss, net of tax:
Foreign currency translation loss		(43	)		(1,269	)		(46	)		(851	)
Total other comprehensive loss, net of tax		(43	)		(1,269	)		(46	)		(851	)
Comprehensive loss	$	(3,755	)	$	(2,094	)	$	(7,175	)	$	(5,215	)

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

AMERICAN SUPERCONDUCTOR CORPORATION

UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE THREE AND ~~NINE~~SIX MONTHS ENDED ~~DECEMBER 31, 2019~~September 30, 2020 AND ~~2018~~2019

(In thousands)

	Common Stock				Additional						Accumulated Other						Total			Common Stock				Additional						Accumulated Other						Total
	Number of Shares		Par Value		Paid-in Capital			Treasury Stock			Comprehensive Income (Loss)			Accumulated Deficit			Stockholders' Equity			Number of Shares		Par Value		Paid-in Capital			Treasury Stock			Comprehensive Income (Loss)			Accumulated Deficit			Stockholders' Equity
Balance at March 31, 2019		21,652	$	216	$	1,044,622		$	(2,101	)	$	(5	)	$	(961,539	)	$	81,193
Balance at March 31, 2020																					22,902	$	229	$	1,053,507		$	(2,666	)	$	(216	)	$	(978,635	)	$	72,219
Issuance of common stock - restricted shares		174		2		(2	)		—			—			—			—			493		5		(5	)		—			—			—			—
Stock-based compensation expense		—		—		249			—			—			—			249			—		—		909			—			—			—			909
Issuance of stock for 401(k) match		8		—		81			—			—			—			81			13		—		88			—			—			—			88
Issuance of common stock - warrant exercise		23		—		294			—			—			—			294
Repurchase of treasury stock		—		—		—			(283	)		—			—			(283	)		—		—		—			(377	)		—			—			(377	)
Cumulative translation adjustment		—		—		—			—			418			—			418			—		—		—			—			(3	)		—			(3	)
Net loss		—		—		—			—			—			(3,539	)		(3,539	)		—		—		—			—			—			(3,417	)		(3,417	)
Balance at June 30, 2019		21,857	$	218	$	1,045,244		$	(2,384	)	$	413		$	(965,078	)	$	78,413
Balance at June 30, 2020																					23,408	$	234	$	1,054,499		$	(3,043	)	$	(219	)	$	(982,052	)	$	69,419
Issuance of common stock - ESPP		15		—		100			—			—			—			100			8		—		99			—			—			—			99
Issuance of common stock - restricted shares		10		—		—			—			—			—			—			33		—		—			—			—			—			—
Stock-based compensation expense		—		—		397			—			—			—			397			—		—		849			—			—			—			849
Issuance of stock for 401(k) match		12		—		92			—			—			—			92			9		—		101			—			—			—			101
Issuance of common stock - warrant exercise		—		—		—			—			—			—			0
Repurchase of treasury stock		—		—		—			(222	)		—			—			(222	)		—		—		—			(293	)		—			—			(293	)
Cumulative translation adjustment		—		—		—			—			(1,269	)		—			(1,269	)		—		—		—			—			(43	)		—			(43	)
Net loss		—		—		—			—			—			(825	)		(825	)		—		—		—			—			—			(3,712	)		(3,712	)
Balance at September 30, 2019		21,894	$	218	$	1,045,833		$	(2,606	)	$	(856	)	$	(965,903	)	$	76,686
Issuance of common stock - restricted shares		167		2		(2	)		—			—			—			—
Stock-based compensation expense		—		—		590			—			—			—			590
Issuance of stock for 401(k) match		8		—		69			—			—			—			69
Issuance of common stock - warrant exercise		786		8		6,131			—			—			—			6,139
Repurchase of treasury stock		—		—		—			(60	)		—			—			(60	)
Cumulative translation adjustment		—		—		—			—			609			—			609
Net loss		—		—		—			—			—			(6,845	)		(6,845	)
Balance at December 31, 2019		22,855		228		1,052,621			(2,666	)		(247	)		(972,748	)		77,188
Balance at September 30, 2020																					23,458	$	234	$	1,055,548		$	(3,336	)	$	(262	)	$	(985,764	)	$	66,420

	Common Stock				Additional						Accumulated Other						Total			Common Stock				Additional						Accumulated Other						Total
	Number of Shares		Par Value		Paid-in Capital			Treasury Stock			Comprehensive Income (Loss)			Accumulated Deficit			Stockholders' Equity			Number of Shares		Par Value		Paid-in Capital			Treasury Stock			Comprehensive Income (Loss)			Accumulated Deficit			Stockholders' Equity
Balance at March 31, 2018		21,139	$	211	$	1,041,113		$	(1,645	)	$	883		$	(988,333	)	$	52,229
Balance at March 31, 2019																					21,652	$	216	$	1,044,622		$	(2,101	)	$	(5	)	$	(961,539	)	$	81,193
Issuance of common stock - restricted shares		276		3		(3	)		—			—			—			0			174		2		(2	)		—			—			—			—
Stock-based compensation expense		—		—		785			—			—			—			785			—		—		249			—			—			—			249
Issuance of stock for 401(k) match		14		—		85			—			—			—			85			8		—		81			—			—			—			81
Issuance of common stock - warrant exercise																					23		—		294			—			—			—			294
Repurchase of treasury stock		—		—		—			(239	)		—			—			(239	)		—		—		—			(283	)		—			—			(283	)
Cumulative translation adjustment		—		—		—			—			(216	)		—			(216	)		—		—		—			—			418			—			418
Cumulative impact of adoption of ASU No. 2014-09		—		—		—			—			—			33			33
Net income		—		—		—			—			—			(4,737	)		(4,737	)
Balance at June 30, 2018		21,429	$	214	$	1,041,980		$	(1,884	)	$	667		$	(993,037	)	$	47,940
Net loss																					—		—		—			—			—			(3,539	)		(3,539	)
Balance at June 30, 2019																					21,857	$	218	$	1,045,244		$	(2,384	)	$	413		$	(965,078	)	$	78,413
Issuance of common stock - ESPP		12		—		71			—			—			—			71			15		—		100			—			—			—			100
Issuance of common stock - restricted shares		140		1		(1	)		—			—			—			—			10		—		—			—			—			—			—
Stock-based compensation expense		—		—		825			—			—			—			825			—		—		397			—			—			—			397
Issuance of stock for 401(k) match		13		—		87			—			—			—			87			12		—		92			—			—			—			92
Repurchase of treasury stock		—		—		—			(157	)		—			—			(157	)		—		—		—			(222	)		—			—			(222	)
Cumulative translation adjustment		—		—		—			—			(678	)		—			(678	)		—		—		—			—			(1,269	)		—			(1,269	)
Net loss		—		—		—			—			—			22,558			22,558			—		—		—			—			—			(825	)		(825	)
Balance at September 30, 2018		21,594	$	215	$	1,042,962		$	(2,041	)	$	(11	)	$	(970,479	)	$	70,646
Issuance of common stock - restricted shares		328		1		(1	)		—			—			—			—
Stock-based compensation expense		—		—		792			—			—			—			792
Issuance of stock for 401(k) match		8		—		63			—			—			—			63
Repurchase of treasury stock		—		—		—			(60	)		—			—			(60	)
Cumulative translation adjustment		—		—		—			—			(54	)		—			(54	)
Net loss		—		—		—			—			—			17,293			17,293
Balance at December 31, 2018		21,930	$	216	$	1,043,816		$	(2,101	)	$	(65	)	$	(953,186	)	$	88,680
Balance at September 30, 2019																					21,894	$	218	$	1,045,833		$	(2,606	)	$	(856	)	$	(965,903	)	$	76,686

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

AMERICAN SUPERCONDUCTOR CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	Nine Months Ended December 31,						Six Months Ended September 30,
	2019			2018			2020			2019
Cash flows from operating activities:

Net (loss) income	$	(11,209	)	$	35,114
Adjustments to reconcile net (loss) income to net cash (used in)/provided by operations:
Net loss							$	(7,129	)	$	(4,364	)
Adjustments to reconcile net loss to net cash used in operations:
Depreciation and amortization		3,312			3,455			2,009			2,262
Stock-based compensation expense		1,236			2,402			1,758			646
Provision for excess and obsolete inventory		491			686			1,250			196
Gain on sale of minority interest		0			(127	)
Deferred income taxes		(1,069	)		(940	)
Change in fair value of warrants		(4,648	)		2,658			—			(4,092	)
Non-cash interest income		0			(168	)		—			(112	)
Other non-cash items		(22	)		(752	)		233			(888	)
Unrealized foreign exchange (gain)/loss on cash and cash equivalents		(209	)		—
Unrealized foreign exchange loss on cash and cash equivalents								272			—
Changes in operating asset and liability accounts:
Accounts receivable		(8,661	)		(724	)		157			(2,244	)
Inventory		(6,968	)		3,320			3,591			(3,589	)
Prepaid expenses and other assets		(332	)		(1,380	)		(866	)		(1,810	)
Accounts payable and accrued expenses		2,648			4,603			(3,192	)		2,799
Deferred revenue		7,652			(361	)		(4,636	)		711
Net cash (used in)/provided by operating activities		(17,779	)		47,786
Net cash used in operating activities								(6,553	)		(10,485	)

Cash flows from investing activities:
Purchase of property, plant and equipment		(2,926	)		(709	)		(1,326	)		(1,736	)
Proceeds from the sale of property, plant and equipment		3,001			138			—			3,001
Purchase of marketable securities		(35,000	)		—			—			(10,000	)
Proceeds from sale of minority interest		0			127
Sale of marketable securities								25,006			—
Change in other assets		37			(206	)		63			66
Net cash used in investing activities		(34,888	)		(650	)
Net cash (used in)/provided by investing activities								23,743			(8,669	)

Cash flows from financing activities:
Employee taxes paid related to net settlement of equity awards		(565	)		(456	)
Proceeds from exercise of warrants		6,139			—
Repurchase of treasury stock								(670	)		(505	)
Proceeds from exercise of employee stock options and ESPP		100			71			99			100
Net cash (used in)/provided by financing activities		5,674			(385	)
Net cash used in financing activities								(571	)		(405	)

Effect of exchange rate changes on cash		30			(792	)		53			(74	)

Net (decrease)/increase in cash, cash equivalents and restricted cash		(46,963	)		45,959
Net increase/(decrease) in cash, cash equivalents and restricted cash								16,672			(19,633	)
Cash, cash equivalents and restricted cash at beginning of period		78,198			34,248			30,864			78,198
Cash, cash equivalents and restricted cash at end of period	$	31,235		$	80,207		$	47,536		$	58,565

Supplemental schedule of cash flow information:
Cash paid for income taxes, net of refunds	$	3,520		$	2,792		$	275		$	130
Non-cash investing and financing activities
Issuance of common stock to Hercules to settle warrant liability		294			0			—			294
Issuance of common stock to settle liabilities		242			235			189			173

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

AMERICAN SUPERCONDUCTOR CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Nature of the Business and Operations and Liquidity

Nature of the Business and Operations

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

These unaudited condensed consolidated financial statements of the Company have been prepared on a going concern basis in accordance with United States generally accepted accounting principles (“GAAP”) and the Securities and Exchange Commission’s (“SEC”) instructions to Form 10-Q. The going concern basis of presentation assumes that the Company will continue operations and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to those instructions. The year-end condensed balance sheet data was derived from audited financial statements but does not include all disclosures required by GAAP. The unaudited condensed consolidated financial statements, in the opinion of management, reflect all adjustments (consisting of normal recurring adjustments) necessary for a fair statement of the results for the interim periods ended ~~December 31, 2019~~September 30, 2020 and ~~2018~~2019 and the financial position at ~~December 31, 2019~~September 30, 2020; however, these results are not necessarily indicative of results which may be expected for the full year. The interim condensed consolidated financial statements, and notes thereto, should be read in conjunction with the audited consolidated financial statements for the year ended March 31, ~~2019~~2020, and notes thereto, included in the Company’s ~~annual report~~Annual Report on Form 10-K for the year ended March 31, ~~2019~~2020 filed with the ~~Securities and Exchange Commission~~SEC on June ~~5, 2019.~~2, 2020.

Liquidity

The Company has historically experienced recurring operating losses and as of ~~December 31, 2019~~September 30, 2020, the Company had an accumulated deficit of $~~972.7~~985.8 million. In addition, the Company has historically experienced recurring negative operating cash flows. At ~~December 31, 2019~~September 30, 2020, the Company had cash, cash equivalents, and marketable securities of $~~60.5~~51.4 ~~million, with no outstanding debt other than ordinary trade payables.~~million. Marketable securities include certificate of deposits with maturities between ~~eleven~~six and ~~twenty-four~~eleven months. Cash used in operations for the ~~nine~~six months ended ~~December 31, 2019~~September 30, 2020 was $~~17.8~~6.6 million.

On July 3, 2018, the Company and its wholly-owned subsidiaries Suzhou AMSC Superconductor Co. Ltd. (“AMSC China”) and AMSC Austria GMBH (“AMSC Austria”) entered into a settlement agreement (the “Settlement Agreement”) with Sinovel Wind Group Co., Ltd. (“Sinovel”). The Settlement Agreement settles the litigation and arbitration proceedings between the Company and Sinovel. Under the terms of the Settlement Agreement, Sinovel agreed to pay AMSC China an aggregate cash amount in Renminbi (“RMB”) equivalent to $57.5 million, consisting of two installments. Sinovel paid the first installment of the RMB equivalent of $32.5 million on July 4, 2018, which was repatriated to the Company during the nine months ended December 31, 2018 and paid the second installment of the RMB equivalent of $25.0 million on December 27, 2018. The Company’s fiscal 2018 results included the net gain received from the settlement with Sinovel of $52.7 million.

On February 1, 2018, ASC Devens LLC (the “Seller”), a wholly-owned subsidiary of the Company, entered into a Purchase and Sale Agreement (the “PSA”) with 64 Jackson, LLC (the “Purchaser”) and Stewart Title Guaranty Company (“Escrow Agent”), to effectuate the sale of certain real property located at 64 Jackson Road, Devens, Massachusetts, including the building that had served as the Company’s headquarters (collectively, the “Property”), in exchange for total consideration of $23.0 million, composed of (i) cash consideration of $17.0 million, and (ii) a $6.0 million subordinated secured commercial promissory note payable to the Company (the “Seller Note”). Subsequently, the Seller, the Purchaser and Jackson 64 MGI, LLC (“Assignee”) entered into an Assignment of Purchase and Sale Agreement (the “Assignment Agreement”), pursuant to which the Purchaser assigned all of its rights and interests in the PSA to the Assignee and the Assignee agreed to assume all of the Purchaser’s obligations and liabilities under the PSA. The transaction closed on March 28, 2018, at which time the Company received, from the Assignee, cash consideration, net of certain agreed upon closing costs, of $16.9 million, and the Seller Note at an interest rate of 1.96%. The Seller Note was secured by a subordinated second mortgage on the Property and a subordinated second assignment of leases and rents. The Company received the first $3.0 million payment due pursuant to the Seller Note on March 28, 2019 and the second $3.0 million payment plus interest on May 23, 2019.

In December 2015, the Company entered into a set of strategic agreements valued at approximately $210.0 million with Inox Wind Ltd. (“Inox” or “Inox Wind”), which includes a multi-year supply contract pursuant to which the Company will supply electrical control systems ("ECS") to Inox and a license agreement allowing Inox to manufacture a limited number of ECS. After Inox purchases the specified number of ECS required under the terms of the supply contract, Inox agreed that the Company will continue as Inox’s preferred supplier and Inox will be required to purchase from the Company a majority of its ECS requirements for an additional three-year period. Pursuant to these strategic agreements, Inox must forecast future purchase orders of sets of ECS which become firm orders three months prior to shipment, and Inox must post letters of credit before the Company will ship such orders. Inox ~~is currently~~had been delinquent on its obligation to post letters of credit for sets of ECS that Inox forecasted to purchase under the terms of the supply contract. ~~We cannot predict if and when~~On May 29, 2020, the Company sent written notice to Inox ~~will post letters~~notifying Inox of ~~credit consistent with~~its default under the ~~forecasted ECS quantities.~~supply contract due to Inox’s failure to post letters of credit in the amount of €6.0 million for the payment of ECS that Inox is obligated to purchase under the terms of the supply contract. If Inox failed to post letters of credit in the amount of €6.0 million in accordance with the terms of the supply contract within the ninety day cure period after receipt of the default notice, then the Company could have terminated the supply contract by providing written notice of such termination to Inox. On September 2, 2020, Inox delivered approved letters of credit in the amount of €1.3 million for the payment of a portion of the ECS that Inox was obligated to purchase under the terms of the supply contract. On September 11, 2020, the Company notified Inox that due to (i) the Company’s business relationship with Inox, and ~~take~~(ii) Inox’s delivery of ~~forecasted~~approved letters of credit in the amount of €1.3 million as described above, the Company gave Inox until October 5, 2020 to regain compliance with the terms of the supply contract by providing approved letters of credit in the amount of €4.7 million for payment of the remaining ECS ~~quantities would impact~~that Inox currently was obligated to purchase under the ~~Company’s revenues~~terms of the supply contract. On October 1, 2020, Inox delivered approved letters of credit for payment of the remaining ECS that Inox was obligated to purchase under the terms of the supply contract and ~~liquidity.~~cured the default set forth in the May 29, 2020 default notice.

On October 1, 2020, the Company entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”) with the selling stockholders named therein. Pursuant to the terms of the Stock Purchase Agreement and concurrently with entering into such agreement, the Company acquired all of the issued and outstanding (i) shares of capital stock of Northeast Power Systems, Inc., a New York corporation (“NEPSI”), and (ii) membership interests of Northeast Power Realty, LLC, a New York limited liability company, which holds the real property that serves as NEPSI’s headquarters. NEPSI is a U.S.-based global provider of medium-voltage metal-enclosed power capacitor banks and harmonic filter banks for use on electric power systems. NEPSI is now a wholly-owned subsidiary of the Company and will be operated by its Grid business unit. The ~~Company issued warrants in conjunction with an equity offering to Hudson Bay Capital ("Hudson") in November 2014 (the "Hudson Warrant"). The Hudson Warrant~~purchase price was ~~partially exercised on November 13, 2019 with an exercise price of $7.81. The Company received $6.1~~$26.0 million in cash and 873,657 restricted shares of common stock of the Company. As part of the transaction, the selling stockholders may receive up to an additional 1,000,000 shares of common stock of the Company upon the achievement of certain specified revenue objectives in the future.

On October 22, 2020, the Company entered into an underwriting agreement with Oppenheimer & Co. Inc., as representative of the several underwriters named therein, relating to the issuance and sale (the “Offering”) of 3,670,000 shares of the Company’s common stock at a public offering price of $15.00 per share. The net proceeds to the Company from the Offering were approximately $51.4 million, after deducting underwriting discounts and commissions and estimated offering expenses payable by the Company. The Offering closed on October 26, 2020. In addition, the Company has granted the underwriters a 30-day option to purchase up to an additional 550,500 shares of common stock at the public offering price.

In March 2020, the World Health Organization declared the disease caused by the novel coronavirus, COVID-19, to be a pandemic. COVID-19 has spread throughout the globe, including in the Commonwealth of Massachusetts where the Company’s headquarters are located, and in other areas where the Company has business operations. In response to the outbreak, the Company has followed the guidelines of the U.S. Centers for Disease Control and Prevention and applicable state government authorities to protect the ~~exercise~~health and safety of ~~786,000 warrants.~~the Company’s employees, families, suppliers, customers and communities. While these existing measures and, COVID-19 generally, have not materially disrupted the Company’s business to date, any future actions necessitated by the COVID-19 pandemic may result in disruption to the Company’s business.

While the COVID-19 pandemic continues to rapidly evolve, the Company continues to assess the impact of the COVID-19 pandemic to best mitigate risk and continue the operations of the Company’s business. The ~~remaining 32,181 warrants expired~~extent to which the outbreak impacts the Company’s business, liquidity, results of operations and financial condition will depend on ~~November 13, 2019.~~future developments, which are highly uncertain and cannot be predicted with confidence, including new information that may emerge concerning the severity of the COVID-19 pandemic and the actions to contain it or treat its impact, among others. If the Company, its customers or suppliers experience prolonged shutdowns or other business disruptions, the Company’s business, liquidity, results of operations and financial condition are likely to be materially adversely affected, and the Company’s ability to access the capital markets may be limited.

The Company believes that based on the information presented above and its quarterly management assessment, it has sufficient liquidity to fund its operations and capital expenditures for the next twelve months following the issuance of the financial statements for the ~~nine~~six months ended ~~December 31, 2019~~September 30, 2020. The Company’s liquidity is highly dependent on its ability to increase revenues, including its ability to collect revenues under its agreements with Inox, its ability to control its operating costs, and its ability to raise additional capital, if necessary. The impact of the COVID-19 pandemic on the global financing markets may reduce the Company's ability to raise additional capital, if necessary, which could negatively impact the Company's liquidity. There can be no assurance that the Company will be able to continue to raise additional capital, on favorable terms or at all, from other sources or execute on any other means of improving liquidity described above.

2. Revenue Recognition

~~On April 1, 2018, the Company adopted Accounting Standards Codification (“ASC”) 606,~~ ~~Revenue from Contracts with Customers,~~ ~~and all the related amendments and applied it to all contracts that were not completed as of April 1, 2018 using the modified retrospective method.~~

The Company’s revenues in its Grid segment are derived primarily through enabling the transmission and distribution of power, providing planning services that allow it to identify power grid needs and risks, and developing ship protection systems for the U.S. Navy. The Company’s revenues in its Wind segment are derived primarily through supplying advanced power electronics and control systems, licensing its highly engineered wind turbine designs, and providing extensive customer support services to wind turbine manufacturers. The Company records revenue based on a five-step model in accordance with ~~ASC 606.~~Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers. For its customer contracts, the Company identifies the performance obligations, determines the transaction price, allocates the contract transaction price to the performance obligations, and recognizes the revenue when (or as) control of goods or services is transferred to the customer. In the three and ~~nine~~six months ended ~~December 31, 2019~~September 30, 2020, 5778% and 6979% of revenue, respectively, was recognized at the point in time when control transferred to the customer, with the remainder being recognized over time. In both the three and six months ended September 30, 2019, 77% of revenue was recognized at the point in time when control transferred to the customer, with the remainder being recognized over time.

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

The Company's equipment and system product line includes certain contracts which do not meet the requirements of an exchange transaction and therefore do not fall within the scope of ASC 606. As these non-exchange transaction contracts are considered grant revenue and do not fall within any specific accounting literature, the Company follows guidance within ASC 606 by analogy to recognize grant revenue over time. In the three and ~~nine~~six months ended ~~December 31, 2019~~September 30, 2020, the Company recorded $~~3.9~~0.4 million and $~~5.3~~0.8 million in grant revenue, respectively, which is included in the Company’s Grid segment revenue. ~~There was no~~In the three and six months ended September 30, 2019, the Company recorded $0.7 million and $1.1 million in grant revenue, respectively, which is included in the ~~three and nine~~ ~~months ended~~ ~~December 31, 2018~~.Company’s Grid revenue.

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

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

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

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

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

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

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

	Three Months Ended December 31, 2019				Nine Months Ended December 31, 2019				Three Months Ended September 30, 2020				Six Months Ended September 30, 2020
Product Line:	Grid		Wind		Grid		Wind		Grid		Wind		Grid		Wind
Equipment and systems	$	14,040	$	2,160	$	32,438	$	7,742	$	15,261	$	4,059	$	31,798	$	6,676
Services and technology development		1,192		523		4,139		1,379		1,086		711		2,264		1,591
Total	$	15,232	$	2,683	$	36,577	$	9,120	$	16,347	$	4,770	$	34,062	$	8,267

Region:
Americas	$	10,164	$	2	$	28,663	$	49	$	15,677	$	30	$	26,231	$	42
Asia Pacific		330		2,647		2,550		8,968		370		4,734		6,385		8,002
EMEA		4,738		34		5,364		104		300		6		1,446		223
Total	$	15,232	$	2,683	$	36,577	$	9,120	$	16,347	$	4,770	$	34,062	$	8,267

	Three Months Ended December 31, 2018				Nine Months Ended December 31, 2018				Three Months Ended September 30, 2019				Six Months Ended September 30, 2019
Product Line:	Grid		Wind		Grid		Wind		Grid		Wind		Grid		Wind
Equipment and systems	$	4,614	$	7,215	$	17,571	$	17,925	$	10,044	$	2,077	$	18,399	$	5,581
Services and technology development		2,212		93		5,754		368		1,445		446		2,946		856
Total	$	6,826	$	7,308	$	23,325	$	18,293	$	11,489	$	2,523	$	21,345	$	6,437

Region:
Americas	$	3,771	$	36	$	16,319	$	82	$	10,698	$	1	$	18,499	$	47
Asia Pacific		2,815		7,263		5,930		18,136		393		2,464		2,220		6,320
EMEA		240		9		1,076		75		398		58		626		70
Total	$	6,826	$	7,308	$	23,325	$	18,293	$	11,489	$	2,523	$	21,345	$	6,437

As of ~~December 31, 2019~~September 30, 2020, and ~~December 31, 2018~~2019, the Company’s contract assets and liabilities primarily relate to the timing differences between cash received from a customer in connection with contractual rights to invoicing and the timing of revenue recognition following completion of performance obligations. The Company's accounts receivable balance is made up entirely of customer contract related balances. Changes in the Company’s contract assets, which are included in “Accounts ~~Receivable~~receivable (unbilled)” and “Deferred program costs” (see Note 7, “Accounts Receivable” and Note 8, “Inventory” for a reconciliation to the condensed consolidated balance sheets) and contract liabilities, which are included in the current portion and long term portion of ~~deferred revenue~~"Deferred revenue" in the Company’s condensed consolidated balance sheets, are as follows:

	Unbilled Accounts Receivable			Deferred Program Costs			Contract Liabilities			Unbilled Accounts Receivable			Deferred Program Costs			Contract Liabilities
Beginning balance as of March 31, 2019	$	2,213		$	318		$	15,519
Beginning balance as of March 31, 2020										$	5,711		$	1,631		$	26,142
Increases for costs incurred to fulfill performance obligations		—			3,001			—			—			3,279			—
Increase (decrease) due to customer billings		(7,417	)		—			36,461			(5,929	)		—			23,931
Decrease due to cost recognition on completed performance obligations		—			(2,221	)		—			—			(3,314	)		—
Increase (decrease) due to recognition of revenue based on transfer of control of performance obligations		9,820			—			(28,768	)		6,186			—			(28,678	)
Other changes and FX impact		(3	)		(1	)		(69	)		0			18			561
Ending balance as of December 31, 2019	$	4,613		$	1,097		$	23,143
Ending balance as of September 30, 2020										$	5,968		$	1,614		$	21,956

	Unbilled Accounts Receivable			Deferred Program Costs			Contract Liabilities			Unbilled Accounts Receivable			Deferred Program Costs			Contract Liabilities
Beginning balance as of March 31, 2018	$	3,016		$	2,567		$	21,937
Impact of adoption of ASC 606		—			(1,599	)		(2,657	)
Beginning balance as of March 31, 2019										$	2,213		$	318		$	15,519
Increases for costs incurred to fulfill performance obligations		—			1,461			—			—			2,153			—
Increase (decrease) due to customer billings		(11,063	)		—			11,167			(2,926	)		—			19,340
Decrease due to cost recognition on completed performance obligations		—			(1,132	)		—			—			(310	)		—
Increase (decrease) due to recognition of revenue based on transfer of control of performance obligations		9,722			(9	)		(11,345	)		4,711			—			(18,534	)
Other changes and FX impact		(53	)		8			(1,040	)		(4	)		(9	)		(313	)
Ending balance as of December 31, 2018	$	1,622		$	1,296		$	18,062
Ending balance as of September 30, 2019										$	3,994		$	2,152		$	16,012

The Company’s remaining performance obligations represent the unrecognized revenue value of the Company’s contractual commitments. The Company’s performance obligations may vary significantly each reporting period based on the timing of major new contractual commitments. As of ~~December 31, 2019~~September 30, 2020, the Company had outstanding performance obligations on existing contracts under ASC 606 to be recognized in the next twelve months of approximately $~~76.2~~48.5 million. There are also approximately $~~7.0~~10.7 million of outstanding performance obligations to be recognized over a period of thirteen to sixty months. The remaining performance obligations are subject to customer actions and therefore the timing of revenue recognition cannot be reasonably estimated. The twelve-month performance obligations include anticipated shipments to Inox based on the twelve-month rolling forecast provided by Inox on the multi-year supply contract. The quantities specified in any forecast provided by Inox related to the multi-year supply contract are firm and irrevocable for the first three months of a twelve-month rolling forecast. The timing of the performance obligations beyond the twelve-month forecast provided by Inox are not determinable and therefore are not included in the total remaining performance obligations.

The following table sets forth customers who represented 10% or more of the Company’s total revenues for the three and ~~nine~~six months ended ~~December 31, 2019~~September 30, 2020 and ~~2018~~2019:

Three Months Ended

Nine Months Ended

Reportable

December 31,

December 31,

Segment

2019

2018

2019

2018

Inox Wind Limited
Wind
<10% 47 % 11 % 40 %
Department of Homeland Security Grid 22 % <10% 12 % <10%
Vestas
Grid
25 % <10% 10 % 15 %
Fuji Bridex Pte. Ltd. Grid <10% 17 % <10% <10%

		Three Months Ended						Six Months Ended
	Reportable	September 30,						September 30,
	Segment	2020			2019			2020			2019
EPC Services	Grid		12	%		0	%		18	%		0	%
Hoffman Construction	Grid		<10%			25	%		<10%			12	%
Inox Wind Limited	Wind		<10%			<10%			<10%			17	%
M.J. Electric, LLC	Grid		<10%			25	%		<10%			13	%
Micron Technology	Grid		<10%			<10%			<10%			14	%
Reed & Reed Inc.	Grid		25	%		0	%		12	%		0	%
Siemens Gamesa Renewable Energy Pty. Ltd.	Grid		<10%			0	%		13	%		0	%

3. Stock-Based Compensation

The Company accounts for its stock-based compensation at fair value. The following table summarizes stock-based compensation expense by financial statement line item for the three and ~~nine~~six months ended ~~December 31, 2019~~September 30, 2020 and ~~2018~~2019 (in thousands):

	Three Months Ended December 31,				Nine Months Ended December 31,				Three Months Ended September 30,				Six Months Ended September 30,
	2019		2018		2019		2018		2020		2019		2020		2019
Cost of revenues	$	21	$	42	$	45	$	132	$	30	$	21	$	59	$	24
Research and development		117		168		219		289		161		92		291		103
Selling, general and administrative		452		582		971		1,981		658		283		1,408		519
Total	$	590	$	792	$	1,236	$	2,402	$	849	$	397	$	1,758	$	646

The Company issued ~~13,174~~27,341 shares of immediately vested common stock and ~~366,000~~688,167 shares of restricted stock awards during the ~~nine~~six months ended ~~December 31, 2019~~September 30, 2020 and issued 4~~7,075~~13,174 shares of immediately vested common stock and ~~463,000~~170,500 shares of restricted stock awards during the ~~nine~~six months ended ~~December 31, 2018~~September 30, 2019. These restricted stock awards generally vest over 2-3 years. Awards for restricted stock include both time-based and performance-based awards. For options and restricted stock awards that vest upon the passage of time, expense is being recorded over the vesting period. Performance-based awards are expensed over the requisite service period based on probability of achievement.

The estimated fair value of the Company’s stock-based awards, less expected annual forfeitures, is amortized over the awards’ service period. The total unrecognized compensation cost for unvested outstanding stock options was less than $0.1 million at ~~December 31, 2019~~September 30, 2020. This expense will be recognized over a weighted average expense period of approximately ~~1.4~~0.6 years. The total unrecognized compensation cost for unvested outstanding restricted stock was $~~3.9~~5.9 million at ~~December 31, 2019~~September 30, 2020. This expense will be recognized over a weighted-average expense period of approximately ~~1.4~~2.2 years.

~~The Company granted~~ ~~5,939~~ ~~stock options during the~~ ~~nine~~ ~~months ended~~ ~~December 31, 2019~~. The Company did not grant any stock options during the three or six months ended ~~December 31, 2019~~September 30, 2020 or. The Company granted 5,939 stock options during the ~~three and nine~~six months ended ~~December 31, 2018~~September 30, 2019. The stock options granted during the ~~nine~~six months ended ~~December 31,~~September 30, 2019 will vest over 2 years. The weighted average assumptions used in the Black Scholes valuation model for stock options granted during the ~~nine~~six months ended ~~December 31,~~September 30, 2019 are as follows:

Three Months Ended December 31,

Nine Months Ended December 31,

Three Months Ended September 30,

Six Months Ended September 30,

2019

2018

2019

2018

2020

2019

2020

2019

Expected volatility

N/A

66.5

N/A

66.5

Risk-free interest rate

N/A

1.8

N/A

1.8

Expected life (years)

N/A

5.91

N/A

5.91

Dividend yield

N/A

None

N/A

None

4. Computation of Net Loss per Common Share

Basic net loss per share (“EPS”) is computed by dividing net loss by the weighted-average number of common shares outstanding for the period. Where applicable, diluted EPS is computed by dividing the net loss by the weighted-average number of common shares and dilutive common equivalent shares outstanding during the period, calculated using the treasury stock method. Common equivalent shares include the effect of restricted stock, exercise of stock options and warrants and contingently issuable shares. Stock options and warrants that are out-of-the-money with exercise prices greater than the average market price of the underlying common shares and shares of performance based restricted stock where the contingency was not met are excluded from the computation of diluted EPS as the effect of their inclusion would be anti-dilutive. For the three and six months ended ~~December 31, 2019~~September 30, 2020, 0.1 million shares related to outstanding stock options were not included in the calculation of diluted EPS as they were considered anti-dilutive. For the ~~nine~~three and six months ended ~~December 31,~~September 30, 2019, ~~0.1~~ ~~million shares related to outstanding stock options were not included in the calculation of diluted EPS as they were considered anti-dilutive. For the three months ended~~ ~~December 31, 2018, 0.5~~0.2 million shares were not included in the calculation of diluted EPS as they were considered ~~anti-dilutive, of which 0.3 million relate to outstanding stock options, and 0.2 million relate to outstanding unvested stock awards. For the~~ ~~nine~~ ~~months ended~~ ~~December 31, 2018~~, 1.1 million shares were not included in the calculation of diluted EPS as they were considered anti-dilutive, of which 0.3 million shares relate to outstanding stock options, 0.6 million shares relate to outstanding warrants and 0.2 million relate to outstanding unvested stock awards.anti-dilutive.

The following table reconciles the numerators and denominators of the earnings per share calculation for the three and ~~nine~~six months ended ~~December 31, 2019~~September 30, 2020 and ~~2018~~2019 (in thousands, except per share data):

	Three Months Ended December 31,						Nine Months Ended December 31,						Three Months Ended September 30,						Six Months Ended September 30,
	2019			2018			2019			2018			2020			2019			2020			2019
Numerator:
Net (loss) income	$	(6,845	)	$	17,293		$	(11,209	)	$	35,114
Net loss													$	(3,712	)	$	(825	)	$	(7,129	)	$	(4,364	)
Less: decrease in fair value of warrants, net of income tax		(556	)		0			(4,648	)		0			—			(1,145	)		—			(4,092	)
Plus: change in fair value due to exercise of warrants		0			0			83			0			—			—			—			83
Net income (loss) - diluted	$	(7,401	)	$	17,293		$	(15,774	)	$	35,114		$	(3,712	)	$	(1,970	)	$	(7,129	)	$	(8,373	)
Denominator:
Weighted-average shares of common stock outstanding		22,110			21,396			21,729			21,216			23,057			21,678			22,943			21,538
Weighted-average shares subject to repurchase		(925	)		(977	)		(943	)		(916	)		(1,197	)		(1,022	)		(1,168	)		(952	)
Shares used in per-share calculation ― basic		21,185			20,419			20,786			20,300			21,860			20,656			21,775			20,586
Common stock awards		0			445			0			238
Common stock warrants		18			0			108			0			—			67			—			150
Shares used in per-share calculation ― diluted		21,203			20,864			20,894			20,538			21,860			20,723			21,775			20,736
Net (loss) income per share ― basic	$	(0.32	)	$	0.85		$	(0.54	)	$	1.73
Net (loss) income per share ― diluted	$	(0.35	)	$	0.83		$	(0.75	)	$	1.71
Net loss per share ― basic													$	(0.17	)	$	(0.04	)	$	(0.33	)	$	(0.21	)
Net loss per share ― diluted													$	(0.17	)	$	(0.10	)	$	(0.33	)	$	(0.40	)

For the ~~nine~~three and six months ended ~~December 31,~~September 30, 2019, the diluted net loss per common share amounts under the treasury stock method were calculated based on the dilutive effect of the total number of shares of common stock related to the warrants issued to Hudson ~~Warrant of~~Bay Capital (the “Hudson Warrants”) for 818,181 shares with an ~~exercise~~exercise price of $7.81. For the three and ~~nine~~six month periods ended ~~December 31,~~September 30, 2019, the average stock price was ~~$8.19~~$8.50 and ~~$9.29~~$9.56 respectively, ~~through November 13, 2019 when~~providing 66,638 and 150,025 dilutive shares respectively, for the Hudson ~~Warrant was partially exercised for 786,000 shares, providing 37,962 and 130,345 dilutive shares respectively.~~Warrants. The ~~increase of $0.6 million and the~~ decrease ~~of $4.6 million~~ in the fair ~~valu~~evalue of the warrant liability of $1.1 million and $4.1 million, respectively, is included in the net loss available to common shareholders for the diluted net loss per common share amount when the impact is dilutive.

5. Goodwill

The Company did not identify any triggering events in the three and ~~nine~~six months ended ~~December 31, 2019~~September 30, 2020, that would require interim impairment testing of goodwill.

6. Fair Value Measurements

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

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

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

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

The Company provides a gross presentation of activity within Level 3 measurement roll-forward and details of transfers in and out of Level 1 and 2 measurements. A change in the hierarchy of an investment from its current level is reflected in the period during which the pricing methodology of such investment changes. Disclosure of the transfer of securities from Level 1 to Level 2 or Level 3 is made in the event that the related security is significant to total cash and investments. The Company did not have any transfers of assets and liabilities from Level 1, Level 2 or Level 3 of the fair value measurement hierarchy during the ~~nine~~six months ended ~~December 31, 2019~~September 30, 2020.

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

~~The following table provides the assets and liabilities carried at fair value on a recurring basis, measured as of~~ ~~December 31, 2019~~ ~~and~~ ~~March 31, 2019~~ ~~(in thousands):~~

Total Carrying Value

Quoted Prices in Active Markets (Level 1)
Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3)
December 31, 2019:

Assets:

Cash equivalents
$ 21,230 $ 21,230 $ — $ —
Marketable securities $ 35,047 $ 35,047 $ — $ —

Total Carrying Value

Quoted Prices in Active Markets (Level 1)
Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3)
March 31, 2019:

Assets:

Cash equivalents
$ 41,839 $ 41,839 $ — $ —
Derivative liabilities:

Warrants
$ 4,942 $ — $ — $ 4,942

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

Warrants

April 1, 2019
$ 4,942
Mark to market adjustment (4,648 )
Exercise of in-the-money warrants (294 )
Balance at December 31, 2019
$ -

	Warrants
April 1, 2019	$	4,942
Mark to market adjustment		(4,648	)
Exercise of in-the-money warrants		(294	)
Balance at December 31, 2019	$	-

Warrants

April 1, 2018
$ 1,217
Mark to market adjustment
2,658
Balance at December 31, 2018
$ 3,875

Valuation Techniques

Cash Equivalents

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

Marketable Securities

Marketable securities consist of certificates of deposit ~~with maturities of greater than 12 months~~ that are measured using such inputs as quoted prices and are classified within Level 1 of the valuation hierarchy. The Company determines the appropriate classification of its marketable securities at the time of purchase and re-evaluates such classification as of each balance sheet date. All marketable securities are considered available for sale and are carried at fair value. Changes in fair value ~~would be~~are recorded to other ~~income/expense,~~income (expense), net. The Company recognized $0.2 million and $0.1 million in unrealized losses on marketable securities, which is recorded in other income (expense), net, for the three and six months ended September 30, 2020 and less than a $0.1 million gain which was recognized during the three and six months ended September 30, 2020 upon the sale of one of the certificates of deposit. The Company did not recognize any gains or losses on marketable securities in the three and six months ended September 30, 2019. The Company periodically reviews the realizability of each short and long term marketable security when impairment indicators exist with respect to the security. If other than temporary impairment of value of the security exists, the carrying value of the security is written down to its estimated fair value.

Warrants

The Company issued ~~warrants~~the Hudson Warrants in conjunction with an equity offering to Hudson Bay Capital in November 2014 and issued warrants to purchase 58,823 shares of the Company's common stock in conjunction a Loan and Security Agreement with Hercules Technology Growth Capital, Inc. (“~~Hercules”~~Hercules Warrants”). The ~~warrants issued to~~ Hercules Warrants were exercised on April 8, 2019. The ~~warrants issued to~~ Hudson Warrants were partially exercised on November 13, 2019 and the remaining unexercised warrants expired on November 13, 2019. As of ~~December 31, 2019~~September 30, 2020 the Company has no remaining outstanding warrants.

The Company historically relied on various assumptions in a lattice model to determine the fair value of warrants. The Company had valued the warrants within Level 3 of the valuation hierarchy. See Note ~~13,~~12, “Warrants and Derivative Liabilities,” for ~~additional information including~~ a discussion of the warrants and the valuation assumptions used.

The following table provides the assets and liabilities carried at fair value on a recurring basis, measured as of September 30, 2020 and March 31, 2020 (in thousands):

	Total Carrying Value		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
September 30, 2020:
Assets:
Cash equivalents	$	35,613	$	35,613	$	—	$	—
Marketable securities	$	10,191	$	10,191	$	—	$	—

	Total Carrying Value		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
March 31, 2020:
Assets:
Cash equivalents	$	19,394	$	19,394	$	—	$	—
Marketable securities	$	35,195	$	35,195	$	—	$	—

7. Accounts Receivable

Accounts receivable at ~~December 31, 2019~~September 30, 2020 and March 31, ~~2019~~2020 consisted of the following (in thousands):

	December 31, 2019		March 31, 2019		September 30, 2020			March 31, 2020
Accounts receivable (billed)	$	11,878	$	5,642	$	10,865		$	11,276
Accounts receivable (unbilled)		4,613		2,213		5,968			5,711
Less: Allowance for doubtful accounts						(23	)		—
Accounts receivable, net	$	16,491	$	7,855	$	16,810		$	16,987

The Company recorded allowance for doubtful accounts of less than $0.1 million for the three months and six months ended September 30, 2020 and no allowance for the three or six months ended September 30, 2019. The allowances are based on evaluation of customer accounts that are past due.

8. Inventory

Inventory, net of reserves, at ~~December 31, 2019~~September 30, 2020 and March 31, ~~2019~~2020 consisted of the following (in thousands):

	December 31, 2019		March 31, 2019		September 30, 2020		March 31, 2020
Raw materials	$	11,456	$	5,474	$	4,989	$	10,739
Work-in-process		2,072		1,922		2,283		1,345
Finished goods		3,967		4,405		5,269		5,260
Deferred program costs		1,096		318		1,614		1,631
Net inventory	$	18,591	$	12,119	$	14,155	$	18,975

~~The Company recorded inventory write-downs of $0.3~~ ~~million and $0.2 million for the three months ended~~ ~~December 31, 2019~~ ~~and~~ ~~2018, respectively.~~ The Company recorded inventory write-downs of $0.5 million and ~~$0.7~~$0.1 million for the three months ended ~~nine~~September 30, 2020 and 2019, respectively. The Company recorded inventory write-downs of $1.3 million and $0.2 million for the six months ended ~~December 31, 2019~~September 30, 2020 and ~~2018~~2019, respectively. These write-downs were based on the Company's evaluation of its inventory on hand for excess quantities and obsolescence.

Deferred program costs as of ~~December 31, 2019~~September 30, 2020 and March 31, ~~2019~~2020 primarily represent costs incurred on programs where the Company needs to complete performance obligations before the related revenue and costs will be recognized.

~~9. Note Receivable~~

The Company entered into the PSA dated February 1, 2018, for the sale of the Devens facility (including land, building and building improvements) located at 64 Jackson Road, Devens, Massachusetts to 64 Jackson, LLC, a limited liability company (subsequently assigned to Jackson 64 MGI, LLC) in the amount of $23.0 million. The terms for payment included a $1.0 million security deposit, and a note receivable for $6.0 million payable to the Company with the remaining cash, net of certain adjustments for closing costs, at the date of settlement. The note receivable was due in two $3.0 million installments plus accrued interest at a rate of 1.96% on March 31, 2019 and March 31, 2020. The note was subordinate to East Boston Savings Bank's mortgage on the Devens property. The first installment was paid on March 28, 2019 and the second installment was paid on May 23, 2019.

The note receivable was discounted to its present value of $5.7 million utilizing a discount rate of 6%, which was based on management’s assessment of what an appropriate loan at current market rates would be. The $0.3 million discount was recorded as an offset to the long-term portion of the note receivable. In addition, the resulting gain of $0.1 million from the sale of the Devens property which was deferred previously was recorded as a component of the cumulative effect of an accounting change upon the adoption of Accounting Standards Update ("ASU") 2017-05 ~~Other Income - Gains and Losses from the Derecognition of Non-financial Assets (Subtopic 610-20)~~ ~~which was issued as a part of ASU 2014-09~~ ~~Revenue from Contracts with Customers (Topic 606)~~~~. This gain was recorded as an offset to the opening accumulated deficit as of April 1, 2018.~~

~~Note receivable as of~~ ~~December 31, 2019~~ ~~and~~ ~~March 31, 2019~~ ~~consisted of the following (in thousands):~~

Current assets

December 31, 2019

March 31, 2019

Note receivable, current
$ — $ 3,000
Note receivable discount
— (112 )
Total current note receivable
$ — $ 2,888

Current assets	December 31, 2019		March 31, 2019
Note receivable, current	$	—		$	3,000
Note receivable discount		—			(112	)
Total current note receivable	$	—		$	2,888

~~10.~~9. Property, Plant and Equipment

The cost and accumulated depreciation of property, plant and equipment at ~~December 31, 2019~~September 30, 2020 and March 31, ~~2019~~2020 are as follows (in thousands):

	December 31, 2019			March 31, 2019			September 30, 2020			March 31, 2020
Construction in progress - equipment	$	2,812		$	603		$	718		$	3,130
Equipment and software		45,301			45,705			42,015			41,737
Furniture and fixtures		1,245			1,269			1,326			1,302
Leasehold improvements		2,485			1,955			6,114			2,477
Property, plant and equipment, gross		51,843			49,532			50,173			48,646
Less accumulated depreciation		(43,003	)		(40,560	)		(42,033	)		(40,081	)
Property, plant and equipment, net	$	8,840		$	8,972		$	8,140		$	8,565

Depreciation expense was $~~1.0~~0.9 million and ~~$1.1~~$1.0 million for the three months ended ~~December 31, 2019~~September 30, 2020 and ~~2018~~2019, respectively. Depreciation expense was $~~3.1~~1.8 million and ~~$3.2~~$2.1 million for the ~~nine~~six months ended ~~December 31, 2019~~September 30, 2020 and ~~2018~~2019, respectively. ~~Construction~~The decrease in construction in progress ~~- equipment~~ primarily ~~includes~~relates to the completion of capital investments in ~~our~~the Company's HTS equipment and leasehold improvements in the Company's leased ~~facility~~facilities in Westminster and Ayer, Massachusetts.

~~11.~~10. Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses at ~~December 31, 2019~~September 30, 2020 and March 31, ~~2019~~2020 consisted of the following (in thousands):

	December 31, 2019		March 31, 2019		September 30, 2020		March 31, 2020
Accounts payable	$	7,349	$	2,939	$	7,655	$	10,045
Accrued inventories in-transit		894		244		316		763
Accrued other miscellaneous expenses		2,588		1,759		2,383		1,986
Advanced deposits		986		631		691		666
Accrued compensation		4,448		5,404		4,349		5,683
Income taxes payable		1,408		3,363		967		933
Accrued product warranty		1,706		1,545		2,109		2,015
Total	$	19,379	$	15,885	$	18,470	$	22,091

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

Product warranty activity was as follows (in thousands):

	Three Months Ended December 31,						Nine Months Ended December 31,						Three Months Ended September 30,						Six Months Ended September 30,
	2019			2018			2019			2018			2020			2019			2020			2019
Balance at beginning of period	$	1,641		$	1,760		$	1,545		$	1,769		$	2,168		$	1,606		$	2,015		$	1,545
Change in accruals for warranties during the period		93			260			247			577			148			71			384			156
Settlements during the period		(28	)		(524	)		(86	)		(850	)		(207	)		(36	)		(290	)		(60	)
Balance at end of period	$	1,706		$	1,496		$	1,706		$	1,496		$	2,109		$	1,641		$	2,109		$	1,641

~~12.~~11. Income Taxes

The Company recorded an income tax expense of $~~0.1~~0.2 million and ~~$1.6~~$0.4 million in the three and six month periods ended September 30, 2020. The Company recorded income tax benefits of $0.3 million and $0.1 million in the three and six months ended ~~December 31,~~September 30, 2019 ~~and~~ ~~2018, respectively. The Company recorded an income tax expense of less than $0.1~~ ~~million and $4.5 million in the~~ ~~nine~~ ~~months ended~~ ~~December 31, 2019~~ ~~and~~ ~~2018, respectively.~~

Accounting for income taxes requires a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if, based on the technical merits, it is more likely than not the position will be sustained upon audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. The Company re-evaluates these uncertain tax positions on a quarterly basis. The evaluation is based on factors including, but not limited to, changes in facts or circumstances, changes in tax law, effectively settled issues under audit and new audit activity. Any changes in these factors could result in the recognition of a tax benefit or an additional charge to the tax provision. The Company did not identify any uncertain tax positions in the ~~nine~~six months ended ~~December 31, 2019~~September 30, 2020 and did not have any gross unrecognized tax benefits as of March 31, ~~2019~~2020.

~~13.~~12. Warrants and Derivative Liabilities

The Company ~~accounts~~accounted for its warrants ~~and contingent consideration~~ as liabilities due to certain adjustment provisions within the instruments, which ~~require~~required that they be recorded at fair value. The warrants ~~are~~were subject to revaluation at each balance sheet date and any change in fair value iswas recorded as a change in fair value of warrants until the earlier of its expiration or its exercise at which time the warrant liability ~~will be~~was reclassified to equity. The Company calculated the fair value of the warrants utilizing an integrated lattice model. See Note 6, "Fair Value Measurements", for further discussion. As of September 30, 2020, the Company had no remaining outstanding warrants.

Hercules Warrants

On December 19, 2014, the Company entered into a second amendment to the Loan and Security Agreement with Hercules (the "Hercules Second Amendment"). In conjunction with the Hercules Second Amendment, the Company issued the Hercules ~~a warrant to purchase 58,823 shares of the Company’s common stock (the "Hercules Warrant")~~Warrant which replaced the First Warrant and the Second Warrant. The Hercules Warrant was exercisable at any time after its issuance at an exercise price of $7.85 per share, subject to certain price-based and other anti-dilution adjustments, including the equity offering in May 2017, the acquisition of ~~ITC~~Infinia Technology Corporation ("ITC") with common stock in September 2017 and sales of common stock under the ATM entered into in January 2017. This warrant had a fair value of $0.4 million as of March 31, 2019. On April 8, 2019, Hercules notified the Company of its intent to exercise this warrant on a cashless basis. Hercules received 22,821 shares of the Company's common stock on April 17, 2019. As a result of this exercise the Company recorded a net gain of $0.1 million to change in fair value of warrants, resulting from the decrease in the fair value of the Hercules Warrant during the ~~nine~~six months ended December 31, 2019. The Company recorded a net loss of $0.2 million to change in fair value of warrants, resulting from the increase in the fair value of the Hercules Warrant during the nine months ended December 31, 2018.September 30, 2019.

November 2014 Warrant

On November 13, 2014, the Company completed an offering of 909,090 units of the Company’s common stock with Hudson Bay Capital. Each unit consisted of one share of the Company’s common stock and 0.9 of a warrant to purchase one share of common stock, or a warrant to purchase in the aggregate 818,181 ~~shares (the “November 2014 Warrant”).~~shares. The ~~November 2014 Warrant is~~Hudson Warrants were exercisable at any time, at an exercise price equal to $7.81 per share, subject to certain price-based and other anti-dilution adjustments including those noted above. On November 13, 2019, Hudson partially exercised the ~~November 2014 Warrant~~Hudson Warrants for 786,000 restricted shares of Company common stock at $7.81 per share. The remaining 32,181 warrants expired on November 13, 2019. ~~As a result of this exercise the~~The Company recorded net gains of ~~$0.5~~$1.1 million and ~~$4.6~~$4.1 million to change in fair value of warrants, resulting from the decrease in the fair value of the Hudson ~~Warrant~~Warrants during the three and ~~nine~~six months ended ~~December 31,~~September 30, 2019, respectively. ~~As of December 31, 2019, the Company has no remaining outstanding warrants~~

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

September 30,

June 30,

Fiscal Year 2019 2019 2019
Risk-free interest rate
1.90 % 2.11 %
Expected annual dividend yield
— —
Expected volatility
62.84 % 60.58 %
Term (years)
0.12 0.37
Fair value

$0.6 million

$1.7 million

March 31,

December 31,

September 30,

June 30,

March 31,
Fiscal Year 2018

2019

2018

2018

2018

2018
Risk-free interest rate

2.43%

2.61%

2.62%

2.40%

2.20%
Expected annual dividend yield

—

—

—

—

—
Expected volatility

75.61%

70.29%

63.66%

67.40%

65.86%
Term (years)

0.62

0.87

1.12

1.37

1.62
Fair value

$4.6 million

$3.6 million

$1.3 million

$1.6 million

$1.1 million

~~The Company recorded net~~ ~~gains~~ ~~of $0.6~~ ~~million and $4.6~~ ~~million resulting from the~~ ~~decreases~~ ~~in the fair value of the November 2014 Warrant during the~~ ~~three and nine~~ ~~months ended~~ ~~December 31, 2019, respectively. The Company recorded net losses of $2.3 million and $2.5 million resulting from the increase in the fair value of the November 2014 Warrant during the~~ ~~three and nine~~ ~~months ended~~ ~~December 31, 2018, respectively.~~

~~14.~~13. Leases

On April 1, 2019, the Company adopted ASU 2016-02, Leases (Topic 842) ("ASC 842"), using the modified retrospective approach. The Company elected the package of practical expedients available in the standard and as a result, did not reassess the lease classification of existing contracts or leases or the initial direct costs associated with existing leases. The Company did not elect the hindsight practical expedient and evaluated lease terms for existing leases. The Company has also elected the practical expedient to not separate lease components and non-lease components and will account for the leases as a single lease component for all classes of leases.

As a result of the adoption of ASC 842, the Company recognized lease right-of-use assets of $3.8 million, and operating lease liabilities of $3.8 million. There was no impact to the condensed consolidated statements of operations or stockholders' equity for the adoption of ASC 842. No impairment was recognized on the right-of-use asset upon adoption. These adjustments are detailed as follows:

March 31, 2019

ASC 842 Adjustment

April 1, 2019

Operating Leases:

Right of use asset
$ — $ 3,795 $ 3,795
Total operating lease right-of-use asset
— 3,795 3,795

Operating lease liabilities – ST
$ — $ 309 $ 309
Operating lease liabilities – LT
— 3,512 3,512
Total operating lease liabilities
— 3,821 3,821

Weighted-average remaining lease term

7.69 years

Weighted-average discount rate
7.06 %

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

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

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

The Company did not identify any leases that are classified as financing leases.

Supplemental balance sheet information related to leases at ~~December~~September 30, 2020 and March 31, ~~2019~~2020 are as follows:

	December 31, 2019			September 30, 2020			March 31, 2020
Operating Leases:
Right-of-use assets	$	3,495		$	3,907		$	3,359
Total right-of-use assets		3,495			3,907			3,359

Lease liabilities - ST	$	436		$	568		$	439
Lease liabilities - LT		3,128			3,430			3,000
Total operating lease liabilities		3,564			3,997			3,439

Weighted-average remaining lease term		7.1 years			6.31			6.91
Weighted-average discount rate		7.07	%		6.79	%		7.08	%

The costs related to the Company's leases for the three and ~~nine~~six months ended ~~December 31,~~ September 30, 2020 and 2019 are as follows:

	Three Months Ended		Nine Months Ended		Three Months Ended		Six Months Ended
	December 31, 2019		December 31, 2019		September 30, 2020		September 30, 2020
Operating Lease:
Operating Leases:
Operating lease costs - fixed	$	179	$	535	$	214	$	392
Operating lease costs - variable		27		73		28		55
Short-term lease costs		164		378		510		678
Total lease costs		370		986		752		1,125

	Three Months Ended		Six Months Ended
	September 30, 2019		September 30, 2019
Operating Leases:
Operating lease costs - fixed	$	178	$	356
Operating lease costs - variable		27		46
Short-term lease costs		176		214
Total lease costs		381		616

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

	Operating Leases			Operating Leases
Year ended March 31,
2020	$	167
2021		672		$	416
2022		651			791
2023		624			764
2024		562			709
2025					647
Thereafter		1,896			1,597
Total minimum lease payments		4,572			4,924
Less: interest		(1,008	)		927
Present value of lease liabilities		3,564			3,997

~~15.~~14. Commitments and Contingencies

Legal Contingencies

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

Other

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

As of ~~December~~September 30, 2020, and March 31, ~~2019~~2020, the Company had $5.8 million of restricted cash included in long-term ~~assets.~~assets and $0.5 million of restricted cash included in current assets, respectively. These amounts included in restricted cash primarily represent deposits to secure letters of credit for various supply ~~contracts. These deposits are held in interest bearing accounts. As part of~~contracts and long-term projects, including the ~~agreement with Commonwealth Edison Company to install the Resilient Electric Grid ("REG") system in Chicago, the Company agreed to deliver an~~ irrevocable letter of credit in the amount of $5.0 million to secure certain ~~Company~~of the Company's obligations under the Subcontract ~~Agreement. The funds to secure the $5.0 million letter of credit were deposited~~Agreement with ComEd. These deposits are held in ~~an escrow account on July 1, 2019.~~interest bearing accounts.

~~16. Restructuring~~

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

~~The $0.4 million charged to operations in the~~ ~~nine~~ ~~months ended~~ ~~December 31, 2018~~ ~~is related to exit costs incurred in connection with the move of the Company's corporate office.~~

~~The following table presents restructuring charges and cash payments for the~~ ~~nine~~ ~~months ended~~ ~~December 31, 2018~~ ~~(in thousands):~~

Severance pay

Facility exit and

and benefits

Relocation costs

Total

Accrued restructuring balance at April 1, 2018
$ 262 $ 173 $ 435
Charges to operations
— 450 450
Cash payments
(262 ) (623 ) (885 )
Accrued restructuring balance at December 31, 2018
$ — $ — $ —

All restructuring charges discussed above are included within restructuring in the Company’s unaudited condensed consolidated statements of operations. The Company includes accrued restructuring within accounts payable and accrued expenses. There was no restructuring activity in the ~~nine~~ ~~months ending~~ ~~December 31, 2019~~ ~~or any remaining accrued restructuring balance as of~~ ~~December 31, 2019~~.

~~17.~~15. Business Segments

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

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

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

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

	Three Months Ended December 31,				Nine Months Ended December 31,				Three Months Ended September 30,				Six Months Ended September 30,
	2019		2018		2019		2018		2020		2019		2020		2019
Revenues:
Grid	$	15,232	$	6,826	$	36,577	$	23,325	$	16,347	$	11,489	$	34,062	$	21,345
Wind		2,683		7,308		9,120		18,293		4,770		2,523		8,267		6,437
Total	$	17,915	$	14,134	$	45,697	$	41,618	$	21,117	$	14,012	$	42,329	$	27,782

	Three Months Ended December 31,						Nine Months Ended December 31,						Three Months Ended September 30,						Six Months Ended September 30,
	2019			2018			2019			2018			2020			2019			2020			2019
Operating (loss) income:
Operating loss:
Grid	$	(3,732	)	$	(2,665	)	$	(9,723	)	$	(8,202	)	$	(1,374	)	$	(1,324	)	$	(2,562	)	$	(5,988	)
Wind		(2,297	)		24,269			(6,015	)		51,419			(983	)		(2,398	)		(2,103	)		(3,721	)
Unallocated corporate expenses		(590	)		(839	)		(1,236	)		(2,851	)		(849	)		(397	)		(1,758	)		(646	)
Total	$	(6,619	)	$	20,765		$	(16,974	)	$	40,366		$	(3,206	)	$	(4,119	)	$	(6,423	)	$	(10,355	)

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

Unallocated corporate expenses primarily consist of stock-based compensation expense of $~~0.6~~0.8 million and $~~0.8~~0.4 million in the three months ended ~~December 31, 2019~~September 30, 2020 and ~~2018~~2019, ~~respectively, and restructuring charges of less than $0.1 million in the three months ended~~ ~~December 31, 2018~~.respectively. Unallocated corporate expenses primarily consist of stock-based compensation expense of $~~1.2~~1.8 million and ~~$2.4~~$0.6 million in the ~~nine~~six months ended ~~December 31, 2019~~September 30, 2020 and ~~2018~~2019, ~~respectively, and restructuring charges of $0.5 million in the~~ ~~nine~~ ~~months ended~~ ~~December 31, 2018~~.respectively.

Total assets for the two business segments as of ~~December 31, 2019~~September 30, 2020 and March 31, ~~2019~~2020 are as follows (in thousands):

	December 31, 2019		March 31, 2019		September 30, 2020		March 31, 2020
Grid	$	43,638	$	31,075	$	40,358	$	44,044
Wind		11,772		8,167		11,760		14,250
Corporate assets		68,081		80,088		59,109		65,815
Total	$	123,491	$	119,330	$	111,227	$	124,109

~~18.~~16. Recent Accounting Pronouncements

~~In February 2016, the FASB issued ASU 2016-02,~~ ~~Leases (Topic 842)~~~~. The guidance in this ASU supersedes the leasing guidance in Topic 840,~~ ~~Leases~~. Under the new guidance, lessees are required to recognize lease assets and lease liabilities on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. This ASU and its amendments are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.

•

~~In July 2018, the FASB issued ASU 2018-10,~~ ~~Codification improvements to Topic 842, Leases.~~ ~~The amendments in ASU 2018-10 provide more clarification in regards to the application and requirements of ASU 2016-02.~~

•

~~In July 2018, the FASB issued ASU 2018-11,~~ ~~Topic 842, Leases - Targeted improvements.~~ The amendments in ASU 2018-11 provide for the option to adopt the standard prospectively and recognize a cumulative-effect adjustment to the opening balance of retained earnings as well as offer a new practical expedient that will allow the Company to elect, by class of underlying asset, to not separate non-lease and lease components in certain circumstances and instead to account for those components as a single item.

ASU 2016-02 became effective on April 1, 2019, and the Company adopted the standard using the modified retrospective transition method, which impacted all leases existing at, or entered into after, the period of adoption. For all leases existing at the time of adoption the Company recognized a right-of-use asset and lease liability on the balance sheet. See Note 14 "Leases" for additional information.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The amendments in ASU 2016-13 will provide more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. The ASU is effective for annual reporting periods beginning after December 15, 2019, including interim periods within that year. Following the release of ASU 2019-10 in November 2019, the new effective date, as long as the Company remains a smaller reporting company, would be annual reporting periods beginning after December 15, 2022. The Company is currently evaluating the impact, if any, that the adoption of ASU 2016-13 may have on its consolidated financial statements.

~~In July 2017, the FASB issued ASU 2017-11,~~ ~~Earnings per Share (Topic~~ ~~260),~~ ~~Distinguishing Liabilities from Equity (Topic 480), and Derivatives and Hedging (Topic 815)~~. The amendments in ASU 2017-11 provide guidance for freestanding equity-linked financial instruments, such as warrants and conversion options in convertible debt or preferred stock and should no longer be accounted for as a derivative liability at fair value as a result of the existence of a down round feature. The ASU is effective for annual reporting periods beginning after December 15, 2018, including interim periods within those periods. As of April 1, 2019, the Company has adopted ASU 2017-11 and noted no significant impact on its consolidated financial statements, primarily due to the put option feature within the Company's warrant agreements which required continued liability classification under ASC 480.

~~In August 2017, the FASB issued ASU 2017-12,~~ ~~Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities~~. The amendments in ASU 2017-12 provide improved financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements. In addition, the amendments in this update make certain targeted improvements to simplify the application of the hedge accounting guidance. The ASU is effective for annual reporting periods beginning after December 15, 2018, including interim periods within those periods. As of April 1, 2019, the Company has adopted ASU 2017-12 and noted no significant impact on its consolidated financial statements, primarily due to the fact that there are no longer any hedging instruments included in its results.

~~In June 2018, the FASB issued ASU 2018-08,~~ ~~Not-For-Profit Entities (Topic 958): Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions Made~~. The amendments in ASU 2018-08 assist entities in (1) evaluating whether transactions should be accounted for as contributions (nonreciprocal transactions) within the scope of Topic 958, Not-for-Profit Entities, or as exchange (reciprocal) transactions subject to other guidance and (2) determining whether a contribution is conditional. The ASU is effective for annual reporting periods beginning after December 15, 2018, including interim periods within those periods. As of April 1, 2019, the Company has adopted ASU 2018-08 and noted additional disclosures within its revenue footnote to appropriately present the revenue related to its grant revenue.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Changes to the Disclosure Requirements for Fair Value Measurement. The amendments in ASU 2018-13 provide for increased effectiveness of the disclosures made around fair value measurements while including consideration for costs and benefits. The ASU is effective for annual reporting periods beginning after December 15, 2019, including interim periods within those periods. ~~The~~As of April 1, 2020, the Company ~~is currently evaluating the impact the adoption of~~has adopted ASU 2018-13 ~~may have~~and noted no material impact on its consolidated financial ~~statements.~~statements, primarily due to the fact that the Company does not currently report any Level 3 fair value measurements.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendments in ASU 2019-12 provide for simplified accounting to several income tax situations and removal of certain accounting exceptions. The ASU is effective for annual reporting periods beginning after December 15, 2020, including interim periods within those periods. The Company does not expect the impact of the adoption of ASU 2019-12 to be material to its consolidated financial statements.

~~19.~~17. Subsequent Events

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

On October 1, 2020, the Company entered into the Stock Purchase Agreement with the selling stockholders named therein. Pursuant to the terms of the Stock Purchase Agreement and concurrently with entering into such agreement, the Company acquired all of the issued and outstanding (i) shares of capital stock of NEPSI, and (ii) membership interests of Northeast Power Realty, LLC, a New York limited liability company, which holds the real property that serves as NEPSI’s headquarters. NEPSI is a U.S.-based global provider of medium-voltage metal-enclosed power capacitor banks and harmonic filter banks for use on electric power systems. NEPSI is now a wholly-owned subsidiary of the Company and will be operated by the Grid business unit. The NEPSI purchase price was $26.0 million in cash on hand, including cash from the settlement of the Company's $25 million certificate of deposit during the three months ended September 30, 2020, and 873,657 restricted shares of common stock of the Company. The transaction also includes an earn-out opportunity with the potential for the issuance of up to an additional 1.0 million shares of common stock of the Company to the selling stockholders based on the achievement by NEPSI of certain revenue targets for the fiscal years ending March 31, 2021 through March 31, 2024. The Company assumed no debt in this transaction. NEPSI's results of operations will be included in the Company’s consolidated financial statements beginning on October 1, 2020.

On October 26, 2020, the Company completed the Offering of 3,670,000 shares of common stock of the Company at a public offering price of $15.00 per share. The net proceeds to the Company from the Offering were approximately $51.4 million, after deducting underwriting discounts and commissions and estimated offering expenses payable by the Company. In addition, the Company has granted the underwriters a 30-day option to purchase up to an additional 550,500 shares of common stock at the public offering price.

AMERICAN SUPERCONDUCTOR CORPORATION

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). For this purpose, any statements contained herein that relate to future events or conditions, including without limitation, the statements in Part II, “Item 1A. Risk Factors” and in Part I under “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and located elsewhere herein regarding industry prospects, the timing of our ~~REG~~resilient electric grid ("REG") system project with Commonwealth Edison Company, our prospective results of operations or financial position, the potential exercise of the option to purchase additional shares of our common stock by the underwriters to our October 26, 2020 offering of common stock (the “Offering”), and adoption of accounting changes may be deemed to be forward-looking statements. Without limiting the foregoing, the words “believes,” “anticipates,” “plans,” “expects,” and similar expressions are intended to identify forward-looking statements. Such forward-looking statements represent management’s current expectations and are inherently uncertain. There are a number of important factors that could materially impact the value of our common stock or cause actual results to differ materially from those indicated by such forward-looking statements. These important factors include, but are not limited to: A significant portion of our revenues are derived from a single customer, Inox, and we cannot predict if and how successful Inox will be in executing on Solar Energy Corporation of India ("SECI") orders under the new central and state auction regime, and any related failure by Inox to succeed under this regime, or any delay in Inox’s ability to deliver its wind turbines, could result in fewer electric control systems shipments to Inox; We have a history of operating losses, ~~and negative operating cash flows,~~ which may continue in the ~~future and require us to secure additional financing in the future;~~future. Our operating results may fluctuate significantly from quarter to quarter and may fall below expectations in any particular fiscal quarter; We have a history of negative operating cash flows, and we may require additional financing in the future, which may not be available to us; We may be required to issue performance bonds or provide letters of credit, which restricts our ability to access any cash used as collateral for the bonds or letters of credit; Changes in exchange rates could adversely affect our results of operations; If we fail to maintain proper and effective internal control over financial reporting, our ability to produce accurate and timely financial statements could be impaired and may lead investors and other users to lose confidence in our financial data; ~~Our financial condition~~We may ~~have an adverse effect on~~not realize all of the sales expected from our ~~customer~~backlog of orders and ~~supplier relationships;~~contracts; Our contracts with the U.S. government are subject to audit, modification or termination by the U.S. government and include certain other provisions in favor of the ~~government, and additional~~government. The continued funding of such contracts remains subject to annual congressional appropriation, which, if not approved, could reduce our revenue and lower or eliminate our profit; The novel coronavirus (“COVID-19”) pandemic could adversely impact our business, financial condition and results of operations; Our financial condition may ~~not be approved by U.S. Congress; Our success~~have an adverse effect on our customer and supplier relationships; We may experience difficulties re-establishing our HTS wire production capability in ~~addressing the wind energy market is dependent on the manufacturers that license~~ our ~~designs;~~Ayer, Massachusetts facility; Our success is dependent upon attracting and retaining qualified personnel and our inability to do so could significantly damage our business and prospects; ~~We may experience difficulties re-establishing~~Historically, a significant portion of our ~~HTS wire production capability~~revenues have been derived from a single customer and if this customer’s business is negatively affected, it could adversely impact our business; Our success in addressing the wind energy market is dependent on the manufacturers that license our ~~Ayer, Massachusetts facility; We may not realize all of the sales expected from our backlog of orders and contracts;~~ designs;Our business and operations would be adversely impacted in the event of a failure or security breach of our information technology infrastructure; Failure to comply with evolving data privacy and data protection laws and regulations or to otherwise protect personal data, may adversely impact our business and financial results; We rely upon third-party suppliers for the components and subassemblies of many of our ~~Wind~~Grid and ~~Grid~~Wind products, making us vulnerable to supply shortages and price fluctuations, which could harm our business; Many of our revenue opportunities are dependent upon subcontractors and other business collaborators; If we fail to implement our business strategy successfully, our financial performance could be harmed; Problems with product quality or product performance may cause us to incur warranty expenses and may damage our market reputation and prevent us from achieving increased sales and market share;Many of our customers outside of the United States may be either directly or indirectly related to governmental entities, and we could be adversely affected by violations of the United States Foreign Corrupt Practices Act and similar worldwide anti-bribery laws outside the United States; We have had limited success marketing and selling our superconductor products and system-level solutions, and our failure to more broadly market and sell our products and solutions could lower our revenue and cash flow; We may acquire additional complementary businesses or technologies, which may require us to incur substantial costs for which we may never realize the anticipated ~~benefits;~~benefits, such as in connection with our acquisition of Northeast Power Systems, Inc.; Our success depends upon the commercial adoption of the ~~Resilient Electric Grid ("REG")~~REG system, which is currently limited, and a widespread commercial market for our products may not develop; ~~Growth of the wind energy market depends largely on the availability~~Adverse changes in domestic and ~~size of government subsidies,~~global economic ~~incentives and legislative programs designed to support the growth of wind energy;~~ conditions could adversely affect our operating results; We have operations in, and depend on sales in, emerging markets, including India, and global conditions could negatively affect our operating results or limit our ability to expand our operations outside of these ~~markets;~~markets. Changes in India’s political, social, regulatory and economic environment may affect our financial performance; Our products face ~~intense~~ competition, which could limit our ability to acquire or retain customers; Our international operations are subject to risks that we do not face in the United States, which could have an adverse effect on our operating results; Growth of the wind energy market depends largely on the availability and size of government subsidies, economic incentives and legislative programs designed to support the growth of wind energy; Lower prices for other fuel sources may reduce the demand for wind energy development, which could have a material adverse effect on our ability to grow our Wind business; ~~Adverse changes~~Unfavorable results of legal proceedings could have a material adverse effect on our business, operating results and financial condition; We may be unable to adequately prevent disclosure of trade secrets and other proprietary information;Our patents may not provide meaningful protection for our technology, which could result in ~~domestic and global economic conditions could adversely affect~~us losing some or all of our ~~operating results; We face risks related to our intellectual property;~~market position; We face risks related to our technologies; We face risks related to our legal proceedings; We face risks related to our common stock; and the important factors discussed under the caption "Risk Factors" in Part 1. Item 1A of our Form 10-K for the fiscal year ended March 31, ~~2019~~2020 and our other reports filed with the SEC. These important factors, among others, could cause actual results to differ materially from those indicated by forward-looking statements made herein and presented elsewhere by management from time to time. Any such forward-looking statements represent management’s estimates as of the date of this Quarterly Report on Form 10-Q. While we may elect to update such forward-looking statements at some point in the future, we disclaim any obligation to do so, even if subsequent events cause our views to change. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to the date of this Quarterly Report on Form 10-Q.

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

Executive Overview

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

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

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

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

•

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

•

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

Our fiscal year begins on April 1 and ends on March 31. When we refer to a particular fiscal year, we are referring to the fiscal year beginning on April 1 of that same year. For example, fiscal ~~2019~~2020 refers to the fiscal year beginning on April 1, ~~2019.~~2020. Other fiscal years follow similarly.

On July 3, 2018, we and our wholly-owned subsidiaries Suzhou AMSC Superconductor Co. Ltd. (“AMSC China”) and AMSC Austria GmbH (“AMSC Austria”) entered into a settlement agreement (the “Settlement Agreement”) with Sinovel Wind Group Co., Ltd. (“Sinovel”). The Settlement Agreement settles the litigation and arbitration proceedings between us and Sinovel listed on Schedule 2 of the Settlement Agreement (the “Proceedings”), and any other civil claims, counterclaims, causes of action, rights and obligations directly or indirectly relating to the subject matters of the Proceedings and the contracts between us and Sinovel listed on Schedules 1 and 4 of the Settlement Agreement, subject to the exception described in Section 1.1 of the Settlement Agreement. The Settlement Agreement was filed as Exhibit 10.1 to the Company’s Form 8-K filed with the Securities and Exchange Commission on July 9, 2018. Under the terms of the Settlement Agreement, Sinovel agreed to pay AMSC China an aggregate cash amount in Renminbi (“RMB”) equivalent to $57.5 million, consisting of two installments. Sinovel paid the first installment of the RMB equivalent of $32.5 million on July 4, 2018 and paid the second installment of the RMB equivalent of $25.0 million on December 27, 2018.

In addition, pursuant to the terms of the Settlement Agreement, we and AMSC Austria have granted Sinovel a non-exclusive license for certain of our intellectual property to be used solely in Sinovel’s doubly fed wind turbines (the “License”). We have agreed not to sue Sinovel, Sinovel’s power converter suppliers or Sinovel’s customers for use of the technology covered by the License.

On October 31, 2018, we entered into a Subcontract Agreement with Commonwealth Edison Company (“ComEd”) (the “Subcontract Agreement”) for the manufacture and installation of the Company’s REG system within ComEd’s electric grid in Chicago, Illinois (the “Project”). As provided in the Subcontract Agreement, the Subcontract Agreement became effective upon the signing of an amendment by us and the U.S. Department of Homeland Security (“DHS”) to the existing contract (the “Prime Contract”) between us and DHS on June 20, 2019. Unless terminated earlier by us, ComEd or DHS according to the terms of the Subcontract Agreement, the term of the Subcontract Agreement will continue until we complete our warranty obligations under the Subcontract Agreement. Under the terms of the Subcontract Agreement, we have agreed, among other things, to provide the REG system and to supervise ComEd’s installation of the REG system in Chicago. As part of our separate cost sharing arrangement with DHS under the Prime Contract, we expect funding provided by DHS in connection with the Subcontract Agreement to be between $9.0 to $11.0 million, which represents the total amount of revenue we are expected to recognize over the term of the Subcontract Agreement and includes up to $1.0 million that we have agreed to reimburse ComEd for costs incurred by ComEd while undertaking its tasks under the Subcontract Agreement (the “Reimbursement Amount”). In addition, we are required to deliver an irrevocable letter of credit in the amount of $5.0 million to secure certain Company obligations under the Subcontract ~~Agreement.~~Agreement, which we have done, and deposited $5.0 million in an escrow account as collateral to secure such letter of credit. ComEd has agreed to provide the site and provide all civil engineering work required to support the installation, operation and integration of the REG system into ComEd’s electric grid. Other than the Reimbursement Amount, ComEd is responsible for its own costs and expenses. DHS’s approval to commence with construction was obtained on June 20, 2019. Substation work on the project began in late ~~2019.~~2019 and we are on schedule to deliver the REG project hardware in late 2020. The REG system is expected to be operational in 2021.

On October 1, 2020, we entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”) with the selling stockholders named therein. Pursuant to the terms of the Stock Purchase Agreement and concurrently with entering into such agreement, we acquired all of the issued and outstanding (i) shares of capital stock of Northeast Power Systems, Inc., a New York corporation (“NEPSI”), and (ii) membership interests of Northeast Power Realty, LLC, a New York limited liability company, which holds the real property that serves as NEPSI’s headquarters. NEPSI is a U.S.-based global provider of medium-voltage metal-enclosed power capacitor banks and harmonic filter banks for use on electric power systems. As a result of this transaction, NEPSI became a wholly-owned subsidiary and will be operated by our Grid business unit.

The NEPSI purchase price was $26.0 million in cash on hand, including cash from the settlement of our $25 million certificate of deposit during the three months ended September 30, 2020, and 873,657 restricted shares of our common stock. As part of the transaction, in the future the selling stockholders may receive up to an additional 1,000,000 million restricted shares of our common stock upon the achievement of certain specified revenue objectives.

On October 26, 2020, we completed the Offering of 3,670,000 shares of our common stock at a public offering price of $15.00 per share. We received net proceeds of approximately $51.4 million after deducting underwriting discounts and commissions and estimated offering expenses. See Note 1, “Nature of the Business and Operations and Liquidity,” for further information about this offering.

In March 2020, the World Health Organization declared the disease caused by the novel coronavirus, COVID-19 to be a pandemic. COVID-19, has spread throughout the globe, including in the Commonwealth of Massachusetts where our headquarters are located, and in other areas where we have business operations. In response to the outbreak, we have followed the guidelines of the U.S. Centers for Disease Control and Prevention and applicable state government authorities to protect the health and safety of our employees, their families, our suppliers, our customers and our communities. While these existing measures and, COVID-19 generally, have not materially disrupted our business to date, any future actions necessitated by the COVID-19 pandemic may result in disruption to our business.

The COVID-19 pandemic continues to rapidly evolve. The extent to which the outbreak impacts our business, liquidity, results of operations and financial condition will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including new information that may emerge concerning the severity of the COVID-19 pandemic and the actions to contain it or treat its impact, among others.

Critical Accounting Policies and Estimates

The preparation of the unaudited condensed consolidated financial statements requires that we make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We base our estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ under different assumptions or conditions. ~~Effective April 1, 2019, we adopted ASU 2016-02, which provides for new requirements in regards to leases. See Note 14, "Leases" for further details. Aside from the adoption of ASU 2016-02, there~~There were no significant changes in the critical accounting policies that were disclosed in our Form 10-K for the fiscal ~~2018, which~~year ended on March 31, ~~2019.~~2020.

Results of Operations

Three and ~~nine~~six months ended ~~December 31, 2019~~September 30, 2020 compared to the three and ~~nine~~six months ended ~~December 31, 2018~~September 30, 2019

Revenues

Total revenues increased ~~27%~~51% and ~~10%~~52% to $~~17.9~~21.1 million and $~~45.7~~42.3 million for the three and ~~nine~~six months ended ~~December 31, 2019~~September 30, 2020, respectively, compared to ~~$14.1~~$14.0 million and ~~$41.6~~$27.8 million for the three and ~~nine~~six months ended ~~December 31, 2018~~September 30, 2019., respectively. Our revenues are summarized as follows (in thousands):

	Three Months Ended December 31,				Nine Months Ended December 31,				Three Months Ended September 30,				Six Months Ended September 30,
	2019		2018		2019		2018		2020		2019		2020		2019
Revenues:
Grid	$	15,232	$	6,826	$	36,577	$	23,325	$	16,347	$	11,489	$	34,062	$	21,345
Wind		2,683		7,308		9,120		18,293		4,770		2,523		8,267		6,437
Total	$	17,915	$	14,134	$	45,697	$	41,618	$	21,117	$	14,012	$	42,329	$	27,782

Our Grid business unit accounted for ~~85%~~77% and 80% of total revenues for the three and ~~nine~~six months ended ~~December 31, 2019~~September 30, 2020, respectively, compared to ~~48%~~ 82% and ~~56%~~ 77% for the three and ~~nine~~six months ended ~~December 31, 2018~~September 30, 2019, respectively. Our Grid business unit revenues increased ~~123%~~42% and ~~57%~~60% to $~~15.2~~16.3 million and $~~36.6~~34.1 million in the three and ~~nine~~six months ended ~~December 31, 2019~~September 30, 2020, respectively, from ~~$6.8 million~~$11.5 million and ~~$23.3~~$21.3 million in the three and ~~nine~~six months ended ~~December 31, 2018~~September 30, 2019, respectively. Grid business unit revenue in ~~both~~ the three and ~~nine~~six months ended ~~December 31, 2019 increased primarily~~September 30, 2020 was driven by ~~growth in~~stronger D-VAR, ~~SPS~~VVO and ~~REG~~ship protection systems revenue.

Our Wind business unit accounted for ~~15%~~23% and 20% of total revenues for the three and ~~nine~~six months ended ~~December 31, 2019~~September 30, 2020, respectively, compared to ~~52%~~18% and ~~44%~~23% for the three and ~~nine~~six months ended ~~December 31, 2018~~September 30, 2019, respectively. Revenues in the Wind business unit ~~decreased~~increased ~~63%~~89% and ~~50%~~28% to $~~2.7~~4.8 million and $~~9.1~~8.3 million in the three and ~~nine~~six months ended ~~December 31, 2019~~September 30, 2020, ~~respectively,~~ from ~~$7.3~~$2.5 million and ~~$18.3~~$6.4 million in the three and ~~nine~~six months ended ~~December 31, 2018~~September 30, 2019~~, respectively.~~. The ~~decreases~~increase over the prior year period ~~were~~was driven ~~primarily~~ by ~~decreased~~increased shipments of ~~ECS~~electrical control systems ("ECS") to ~~Inox offset slightly by increased development revenue for the 3MW wind turbine platform with Inox~~Doosan and ~~the 5.5MW with Doosan.~~an increase in spares revenue. As further described in Note 1 “Nature of the Business and Operations and Liquidity,” Inox ~~is currently~~was delinquent on its obligations to post letters of credit for sets of ~~electrical control systems~~ECS that Inox has agreed to purchase under the terms of the supply contract, and on May 29, 2020, we sent written notice to Inox notifying Inox of its default under the supply contract due to Inox’s failure to post letters of credit in the amount of €6.0 million for the payment of ECS that Inox is obligated to purchase under the terms of the supply contract. ~~We cannot predict if and when~~On October 1, 2020, Inox ~~will resume posting~~delivered approved letters of credit for payment of ~~contracted-for shipments~~the remaining ECS that Inox had been obligated to purchase under the terms of ~~electrical control systems. Any continued failure~~the Supply Contract and has cured the default set forth in the May 29, 2020 default notice. Despite curing the default, Inox’s ability to perform under the supply contract has been and may continue in the future to be hampered by ~~Inox to post letters~~the prolonged impacts of ~~credit and take delivery of contracted-for shipments of electrical control shipments would impact~~ the ~~Company’s revenues and liquidity.~~ COVID-19 pandemic. Inox has been active in the new central and state government auction regime in India and has a cumulative order book of over ~~900 MW of orders from the first four SECI central government auctions, and 50 MW from the Maharashtra state government auction.~~1.4 GW. However, we cannot predict if and how successful Inox will be in executing on these orders or in obtaining new orders under the new central and state auction regime. Any failure by Inox to succeed under this regime, or any delay in Inox’s ability to deliver its wind turbines, could result in fewer ECS shipments to Inox.

Cost of Revenues and Gross Margin

Cost of revenues increased by ~~57%~~52% and ~~28%~~42% to $~~16.3~~15.6 million and $~~38.8~~31.8 million for the three and ~~nine~~six months ended ~~December 31, 2019~~September 30, 2020, ~~respectively,~~ compared to ~~$10.4~~$10.2 million and ~~$30.4~~$22.4 million for the three and ~~nine~~six months ended ~~December 31, 2018~~September 30, 2019~~, respectively.~~. Gross margin was 9%26% and ~~15%~~25% for the three and ~~nine~~six months ended ~~December 31, 2019~~September 30, 2020, ~~respectively,~~ compared to ~~26%~~27% and ~~27%~~19% for the three and ~~nine~~six months ended ~~December 31, 2018~~September 30, 2019~~, respectively.~~. The ~~decrease~~three month period remained relatively flat and there was an increase in gross margin in the ~~three and nine~~six months ended ~~December 31, 2019~~September 30, 2020 which was ~~primarily~~ due to ~~increased~~higher revenue ~~from cost share projects with DHS~~ and a ~~less~~more favorable product ~~mix in the current year periods.~~mix.

Operating Expenses

Research and development

Research and development ("R&D&D") expenses ~~decreased~~ increased ~~17%~~13% in the three months ended ~~December 31, 2019~~September 30, 2020 to $~~2.0~~2.7 million from ~~$2.5~~$2.4 million in the three months ended ~~December 31, 2018~~September 30, 2019. The increase in R&D ~~expenses decreased~~ 9%expense was due to a higher overall compensation expense in the ~~nine~~three months ended ~~December 31,~~September 30, 2020 compared to the three months ended September 30, 2019. Research and development expenses increased 7% in the six months endedSeptember 30, 2020 to $~~6.9~~5.2 million from ~~$7.6~~$4.9 million in the ~~nine~~sixmonths ended ~~December 31, 2018~~September 30, 2019. The ~~decreases~~increase in R&D expense in ~~both~~ the ~~three and~~ ~~nine~~six month ~~periods were primarily~~period was due to ~~better labor absorption to cost of revenues to support revenue generating projects.~~higher overall compensation expense than in the prior year period.

Selling, general, and administrative

Selling, general and administrative ("SG&A&A") expenses increased ~~14%~~9% in the three months ended ~~December 31, 2019~~September 30, 2020 to $~~6.1~~5.9 million from ~~$5.3~~$5.4 million in the three months ended ~~December 31, 2018~~September 30, 2019. ~~SG&A expenses increased~~ 3% ~~in the~~ ~~ninemonths ended~~ ~~December 31, 2019~~ ~~to $16.7~~ ~~million from $16.3 million in the~~ ~~nine~~ ~~months ended~~ ~~December 31, 2018~~. The ~~increases~~increase in SG&A expense in the ~~both the~~ three ~~and~~ months ended~~nine~~ ~~month periods~~ September 30, 2020 was due ~~primarily~~ to higher overall compensation expense than in the prior ~~fiscal year.~~year period.

~~Gain on Sinovel settlement~~

~~We recorded a gain of $25.0 million~~Selling, general and ~~$53.7 million, net of legal and other direct costs,~~administrative expenses increased 8% to $11.5 in the ~~three and nine~~six months ended ~~December 31, 2018~~September 30, 2020~~, respectively, as a result of~~ compared to $10.7 million in the ~~receipt of~~six months ended September 30, 2019. The increase in SG&A expense in the ~~payments from Sinovel required by~~six months ended September 30, 2020 was due to higher overall compensation expense than in the ~~Settlement Agreement.~~prior year period.

Amortization of acquisition related intangibles

We recorded amortization expense related to our core technology and know-how, trade names and trademark, and intangible assets of $0.1 million in each of the three month periods ended September 30, 2020 and 2019, respectively, and $~~0.3~~0.2 million in each of the ~~three and nine~~six month periods ended ~~December 31, 2019~~September 30, 2020~~, respectively,~~ and ~~$0.1 million and $0.3 million in the three and nine months ended~~ ~~December 31, 2018~~2019 respectively.

~~Restructuring~~

~~We recorded $0.1 million and $0.4 million for facility exit costs in the~~ ~~three and nine~~ ~~months ended~~ ~~December 31, 2018, respectively, as a result of the relocation of the corporate office that was announced as part of our April 4, 2017 approved restructuring plan. There was no restructuring activity in the~~ ~~three and nine~~ ~~months ended~~ ~~December 31, 2019~~.

Operating ~~(loss) income~~loss

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

	Three Months Ended December 31,						Nine Months Ended December 31,						Three Months Ended September 30,						Six Months Ended September 30,
	2019			2018			2019			2018			2020			2019			2020			2019
Operating (loss) income:
Operating loss:
Grid	$	(3,732	)	$	(2,665	)	$	(9,723	)	$	(8,202	)	$	(1,374	)	$	(1,324	)	$	(2,562	)	$	(5,988	)
Wind		(2,297	)		24,269			(6,015	)		51,419			(983	)		(2,398	)		(2,103	)		(3,721	)
Unallocated corporate expenses		(590	)		(839	)		(1,236	)		(2,851	)		(849	)		(397	)		(1,758	)		(646	)
Total	$	(6,619	)	$	20,765		$	(16,974	)	$	40,366		$	(3,206	)	$	(4,119	)	$	(6,423	)	$	(10,355	)

Our Grid segment generated an operating ~~loss~~losses of $~~3.7~~1.4 million and $~~9.7~~2.6 million in the three and ~~nine~~six months ended ~~December 31, 2019~~September 30, 2020, ~~respectively,~~ compared to ~~$2.7~~$1.3 million and ~~$8.2~~$6.0 million in the three and ~~nine~~six months ended ~~December 31, 2018~~September 30, 2019~~, respectively.~~. The increase in the Grid business unit operating loss in the three ~~and nine~~ months ended ~~December 31, 2019~~September 30, 2020 was ~~primarily~~ due to higher revenues and a ~~less~~more favorable product mix ~~than~~offset by increased overall compensation expense. The decrease in the ~~prior year period.~~Grid business unit operating loss in the six months ended September 30, 2020 was due to higher revenues and a more favorable product mix.

Our Wind segment generated an operating ~~loss~~losses of $~~2.3~~1.0 million and $~~6.0~~2.1 million in the three and ~~nine~~six months ended ~~December 31, 2019~~September 30, 2020, ~~respectively,~~ compared to ~~income of $24.3~~$2.4 million and ~~$51.4~~$3.7 million in the three and ~~nine~~six months ended ~~December 31, 2018~~September 30, 2019~~, respectively.~~. The ~~decreases~~decrease in the Wind business unit operating ~~income~~loss in both periods ~~were~~was due ~~primarily~~ to ~~receipt of the payments from Sinovel required by the Settlement Agreement in the second~~higher revenues and ~~third quarters of fiscal 2018 and no such payment in fiscal 2019~~.a more favorable product mix.

Unallocated corporate expenses primarily ~~consist~~consisted of stock-based compensation expense of $~~0.6~~0.8 million and ~~$0.8~~$0.4 million in the three months ended ~~December 31, 2019~~September 30, 2020 and ~~2018~~2019~~, respectively, and restructuring charges of $0.1 million in the three months ended~~ ~~December 31, 2018~~. respectively. Unallocated corporate expenses primarily ~~consist~~consisted of stock-based compensation expense of $~~1.2~~1.8 million and ~~$2.4~~$0.6 million in the ~~nine~~six months ended ~~December 31, 2019~~September 30, 2020 and ~~2018~~2019, ~~respectively, and restructuring charges of $0.4 million in the~~ ~~nine~~ ~~months ended~~ ~~December 31, 2018~~.respectively.

Change in fair value of warrants

There were no warrants outstanding in the three and six months ended September 30, 2020.The change in fair value of warrants resulted in gains of $~~0.6~~$1.1 million and $~~4.6~~$4.1 million in the three and ~~nine~~six months ended ~~December 31,~~September 30, 2019~~, respectively, compared to losses of $2.5 million and $2.7 million in the~~ ~~three and nine~~ ~~months ended~~ ~~December 31, 2018, respectively.~~. The change in the fair value was primarily driven by changes in stock price, which is a key valuation ~~metric, as well as the exercise of the Hercules warrant in June 2019 and Hudson warrants in November 2019.~~metric.

~~Minority Interest~~

~~The gain on sale of minority interest was $0.1 million in each of the three and nine months ended December 31, 2018. There was no minority interest activity in the~~ ~~three and nine~~ ~~months ended~~ ~~December 31, 2019~~.

Interest income, net

Interest income, net, was $~~0.3~~0.2 million and $~~1.1~~0.3 million in the three and ~~nine~~six months ended ~~December 31, 2019~~September 30, 2020, compared to $0.3 million and $0.8 million in the three and ~~nine~~six months ended ~~December 31, 2018~~September 30, 2019. The ~~increase~~decreases in interest income in the ~~nine~~three and six months ended ~~December 31, 2019~~September 30, 2020 ~~was primarily~~were related to ~~higher~~lower cash balances earning ~~higher~~lower interest rates than in the prior ~~periods~~period, as well as interest recorded related to the ~~non-cash interest income recognized from receipt~~sale of ~~the final payment on~~ the Devens facility ~~note receivable.~~for the six months ended September 30, 2019 with no such transaction in the current year.

Other (expense)/income, net

Other expense, net, was $~~0.9~~0.5 million and ~~other income, net was less than~~ $~~0.1~~0.6 million in the three and ~~nine~~six months ended ~~December 31, 2019~~September 30, 2020, compared to other income, net of ~~$0.1~~$1.5 million and ~~$1.1~~$1.0 million in the three and ~~nine~~six months ended ~~December 31, 2018~~September 30, 2019. The ~~increase~~decreases in other ~~expense,~~income, net, ~~in the three month period was primarily~~were driven by higher foreign currency losses. ~~The decrease in other income, net, in the nine month period was primarily driven by foreign exchange gains and higher interest income.~~

Income Taxes

Income tax expense was $~~0.1~~0.2 million and ~~less than~~ $~~0.1~~0.4 in the three and six months ended September 30, 2020. Income tax benefit was $0.3 million and $0.1 million in the three and ~~nine~~six months ended ~~December 31,~~September 30, 2019~~, compared to $1.6 million and $4.5 million in the~~ ~~three and nine~~ ~~months ended~~ ~~December 31, 2018~~. The ~~decrease in~~ income tax expense is due primarily to ~~the prior year repayment of previously reserved intercompany trade balances due to AMSC Austria from AMSC China, and a dividend paid by AMSC Austria to us~~taxes incurred in ~~the nine months ended December 31, 2018 following the Sinovel settlement~~.foreign jurisdictions.

Net ~~(loss) income~~loss

Net loss was $~~6.8~~3.7 million and $~~11.2~~7.1 million in the three and ~~nine~~six months ended ~~December 31, 2019~~September 30, 2020, ~~respectively,~~ compared to ~~net income of $17.3~~$0.8 million and ~~$35.1~~$4.4 million in the three and ~~nine~~six months ended ~~December 31, 2018~~September 30, 2019~~, respectively.~~. The in~~increase~~creases in net loss ~~in both periods was primarily~~were driven by the ~~receipt~~gain on fair value of ~~the payments from Sinovel required by the Settlement Agreement~~warrants in the ~~second and third quarters of fiscal 2018 and no such payments~~prior year period that did not recur in ~~fiscal 2019.~~the six months ended September 30, 2020 as well as decreases in other income as discussed above.

Non-GAAP Financial Measure - Non-GAAP Net Loss

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

We define non-GAAP net loss as net loss before ~~sale of minority investments,~~ stock-based compensation, ~~gain on Sinovel settlement, net,~~ amortization of acquisition-related intangibles, ~~changes~~change in fair value of warrants, and other non-cash or unusual charges, and the tax effect of those adjustments calculated at the relevant rate for our non-GAAP metric, ~~indicated in the table below.~~if applicable. We believe non-GAAP net loss assists management and investors in comparing our performance across reporting periods on a consistent basis by excluding these non-cash ~~or non-recurring~~ charges and other items that we do not believe are indicative of our core operating performance. In addition, we use non-GAAP net loss as a factor to evaluate the effectiveness of our business strategies. A reconciliation of GAAP to non-GAAP net loss is set forth in the table below (in thousands, except per share data):

	Three Months Ended December 31,						Nine Months Ended December 31,						Three Months Ended September 30,						Six Months Ended September 30,
	2019			2018			2019			2018			2020			2019			2020			2019
Net (loss) income	$	(6,845	)	$	17,293		$	(11,209	)	$	35,114
Sale of minority investments		0			(127	)		0			(127	)
Net loss													$	(3,712	)	$	(825	)	$	(7,129	)	$	(4,364	)
Stock-based compensation		590			792			1,236			2,402			849			397			1,758			646
(Gain) on Sinovel settlement, net		—			(24,978	)		—			(53,698	)
Amortization of acquisition-related intangibles		85			85			255			255			121			85			242			170
Changes in fair value of warrants		(556	)		2,475			(4,648	)		2,658
Tax effect of adjustments for (gain) on Sinovel settlement, net		—			2,163			—			4,991
Change in fair value of warrants														—			(1,145	)		—			(4,092	)
Non-GAAP net loss	$	(6,726	)	$	(2,297	)	$	(14,366	)	$	(8,405	)	$	(2,743	)	$	(1,488	)	$	(5,129	)	$	(7,640	)

Non-GAAP net loss per share - basic	$	(0.32	)	$	(0.11	)	$	(0.69	)	$	(0.41	)	$	(0.13	)	$	(0.07	)	$	(0.24	)	$	(0.37	)
Non-GAAP net loss per share - diluted													$	(0.13	)	$	(0.07	)	$	(0.24	)	$	(0.37	)
Weighted average shares outstanding - basic		21,185			20,419			20,786			20,300			21,860			20,656			21,775			20,586
Weighted average shares outstanding - diluted														21,860			20,723			21,775			20,736

We incurred non-GAAP net losses of $~~6.7~~2.7 million and $~~14.4~~5.1 million or $~~0.32~~0.13 and $~~0.69~~0.24 per share, for the three and ~~nine~~six months ended ~~December 31, 2019~~September 30, 2020, ~~respectively,~~ compared to ~~non-GAAP net losses of $2.3~~$1.5 million and ~~$8.4~~$7.6 million, or ~~$0.11~~$0.07 and ~~$0.41~~$0.37 per share for the three and ~~nine~~six months ended ~~December 31, 2018~~September 30, 2019 ~~respectively.~~. The de~~increases~~crease in the six month non-GAAP net loss ~~were~~was ~~primarily~~ due to ~~the~~lower operating loss driven by higher revenues and a more favorable product ~~mix~~mix. The increase in the ~~prior year period.~~three month period was driven by increased net loss as a result of higher foreign currency losses during the three months ended September 30, 2020.

For a description and reconciliation of our other non-GAAP financial measure, non-GAAP operating cash flow, see ~~the~~ below under “Non-GAAP Financial Measure – Non-GAAP Operating Cash Flow.”

Liquidity and Capital Resources

We have experienced recurring operating losses, and as of ~~December 31, 2019~~September 30, 2020, had an accumulated deficit of $~~972.7~~985.8 million.

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

As described above, on October 1, 2020, we acquired NEPSI. The NEPSI purchase price was $26.0 million in cash on hand, including cash from the settlement of our $25 million certificate of deposit during the three months ended September 30, 2020, and 873,657 restricted shares of common stock of the Company. As part of the transaction, the selling stockholders may receive additional restricted shares of common stock of the Company upon the achievement of certain specified revenue objectives in the future.

As described above, on October 26, 2020, we completed an offering of 3,670,000 shares of our common stock at a public offering price of $15.00 per share. We received net proceeds of approximately $51.4 million after deducting underwriting discounts and commissions and estimated offering expenses. In addition, we have granted the underwriters a 30-day option to purchase up to an additional 550,500 shares of common stock at the public offering price.

As of ~~December 31, 2019~~September 30, 2020, we had cash, cash equivalents, marketable securities and restricted cash ~~and marketable securities~~ of $~~66.3~~57.7 million, compared to ~~$78.2~~$66.1 million as of March 31, ~~2019~~2020, a decrease of $~~11.9~~8.3 million. As of ~~December 31, 2019~~September 30, 2020, we had approximately $~~8.4~~6.1 million of cash, cash equivalents, and restricted cash in foreign bank accounts. Our cash, ~~and~~ cash equivalents, marketable securities and restricted cash are summarized as follows (in thousands):

	December 31, 2019		March 31, 2019		September 30, 2020		March 31, 2020
Cash and cash equivalents	$	25,481	$	77,483	$	41,246	$	24,699
Marketable securities		35,047		0		10,191		35,195
Restricted cash		5,754		715		6,290		6,165
Total cash, cash equivalents, marketable securities and restricted cash	$	66,283	$	78,198	$	57,726	$	66,059

For the ~~nine~~six months ended ~~December 31, 2019~~September 30, 2020, net cash used in operating activities was $~~17.8~~6.6 million, compared to ~~net cash provided by operating activities of $47.8~~$10.5 million for the ~~nine~~six months ended ~~December 31, 2018~~September 30, 2019. The decrease in net cash ~~provided by~~used in operations was due primarily to the ~~receipt~~overall impact of increased sales activities on the ~~first~~operating activities, partially offset by higher payments on accounts payable and ~~second payments from the Sinovel settlement~~higher accrued expenses in the ~~nine~~six months ended ~~December 31, 2018 with no similar transaction in the nine months ended December 31,~~September 30, 2020 as compared to September 30, 2019.

For the ~~nine~~six months ended ~~December 31, 2019~~September 30, 2020, net cash provided by investing activities was $23.7 million, compared to net cash used in investing activities ~~was $34.9~~ ~~million, compared to $0.7~~of $8.7 million for the ~~nine~~six months ended ~~December 31, 2018~~September 30, 2019. The increase in net cash ~~used in~~provided by investing activities was due primarily to the purchase of marketable securities and increased purchases of property, plant and equipment related to improvements to the Ayer facility and factory equipment to support the Navy and REG projects, partially offset by ~~the receipt~~settlement of the ~~second installment payment under~~$25.0 million certificate of deposit which was used to fund the ~~Note Receivable from the Devens facility sale~~acquisition of NEPSI on October 1, 2020 in the ~~nine~~six months ended ~~December 31, 2019.~~September 30, 2020 with no such transaction in the prior fiscal year.

For the ~~nine~~six months ended ~~December 31, 2019~~September 30, 2020, ~~net cash provided by financing activities was $5.7~~ ~~million compared to~~ net cash used in financing activities ofwas $0.6 million compared to $0.4 million in the ~~nine~~six months ended ~~December 31, 2018~~September 30, 2019. The increase in net cash ~~provided by~~used in financing activities was due primarily to ~~proceeds received from~~ the ~~exercise~~repurchase of common stock in connection with employee tax obligations upon the ~~Hudson warrants during the nine months ended~~ ~~December 31, 2019~~vesting of stock awards.

As of ~~December 31, 2019~~September 30, 2020, we had $5.8 million of restricted cash included in long-term assets and $0.5 million of restricted cash included in current assets. These amounts included in restricted cash primarily represent deposits to secure letters of credit for various supply contracts and long-term ~~projects.~~projects, including the irrevocable letter of credit in the amount of $5.0 million to secure certain of the Company's obligations under the Subcontract Agreement with ComEd. These deposits are held in interest bearing accounts.

We believe we have sufficient available liquidity to fund our operations and capital expenditures for the next twelve months. In addition, we may seek to raise additional capital, which could be in the form of loans, convertible debt or equity, to fund our operating requirements and capital expenditures. We have no outstanding warrants as of September 30, 2020. Our liquidity is highly dependent on our ability to increase revenues, including our ability to collect revenues under our agreements with Inox, control our operating costs, and ~~our ability to~~ raise additional capital, if necessary. There can be no assurance that we will be able to raise additional capital on favorable terms or at all, or execute on any other means of improving our liquidity as described above. Additionally, the impact of the COVID-19 pandemic on the global financial markets may reduce our ability to raise additional capital, if necessary, which could negatively impact our liquidity.

Non-GAAP Financial Measure – Non-GAAP Operating Cash Flow

We define non-GAAP operating cash flow as operating cash flow before the Sinovel settlement (net of legal fees and expenses); ~~tax effect of adjustments;~~ and other unusual cash flows or items. We believe non-GAAP operating cash flow assists management and investors in comparing our operating cash flow across reporting periods on a consistent basis by excluding these non-recurring cash items that ~~it does~~we do not believe are indicative of our core operating cash flow. A reconciliation of GAAP to non-GAAP operating cash flow is set forth in the table below (in thousands).

		Nine months ended					Six months ended
	December 31, 2019			December 31, 2018			September 30, 2020			September 30, 2019
Operating cash flow	$	(17,779	)	$	47,786		$	(6,553	)	$	(10,485	)
Sinovel settlement (net of legal fees and expenses)		1,000			(54,724	)		—			1,000
Tax effect of adjustments		2,724			2,377
Non-GAAP operating cash flow	$	(14,055	)	$	(4,561	)	$	(6,553	)	$	(9,485	)

Legal Proceedings

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

Off-Balance Sheet Arrangements

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

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

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

Recent Accounting Pronouncements

~~In February 2016, the FASB issued Accounting Standards Update ("ASU") 2016-02,~~ ~~Leases (Topic 842)~~. The guidance in this ASU supersedes the leasing guidance in Topic 840, Leases. Under the new guidance, lessees are required to recognize lease assets and lease liabilities on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. This ASU and its amendments are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.

•

~~In July 2018, the FASB issued ASU 2018-11,~~ ~~Topic 842, Leases - Targeted improvements.~~ The amendments in ASU 2018-11 provide for the option to adopt the standard prospectively and recognize a cumulative-effect adjustment to the opening balance of retained earnings as well as offer a new practical expedient that will allow us to elect, by class of underlying asset, to not separate non-lease and lease components in certain circumstances and instead to account for those components as a single item.

ASU 2016-02 became effective on April 1, 2019, and we adopted the standard using the modified retrospective transition method, which will impact all leases existing at, or entered into after, the period of adoption. For all leases existing at the time of adoption we recognized a right-of-use asset and lease liability on the balance sheet. See Note 14 "Leases" for additional information.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The amendments in ASU 2016-13 provide more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. The ASU is effective for annual reporting periods beginning after December 15, 2019, including interim periods within that year. Following the release of ASU 2019-10 in November 2019, the new effective date, as long as the Company remains a smaller reporting company, would be annual reporting periods beginning after December 15, 2022. We are currently evaluating the impact, if any, that the adoption of ASU 2016-13 may have on our consolidated financial statements.

~~In July 2017, the FASB issued ASU 2017-11,~~ ~~Earnings per Share (Topic~~ ~~260),~~ ~~Distinguishing Liabilities from Equity (Topic 480), and Derivatives and Hedging (Topic 815)~~. The amendments in ASU 2017-11 provide guidance for freestanding equity-linked financial instruments, such as warrants and conversion options in convertible debt or preferred stock, and should no longer be accounted for as a derivative liability at fair value as a result of the existence of a down round feature. The ASU is effective for annual reporting periods beginning after December 15, 2018, including interim periods within those periods. As of April 1, 2019 we have adopted ASU 2017-11 and noted no significant impact on our consolidated financial statements, primarily due to the put option feature which required continued liability classification under ASC 840.

~~In August 2017, the FASB issued ASU 2017-12,~~ ~~Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities~~. The amendments in ASU 2017-12 provide improved financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements. In addition, the amendments in this update make certain targeted improvements to simplify the application of the hedge accounting guidance. The ASU is effective for annual reporting periods beginning after December 15, 2018, including interim periods within those periods. As of April 1, 2019 we have adopted ASU 2017-12 and noted no significant impact on our consolidated financial statements, primarily due to the fact that there are no longer any hedging instruments included in our results.

~~In June 2018, the FASB issued ASU 2018-08,~~ ~~Not-For-Profit Entities (Topic 958): Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions Made~~. The amendments in ASU 2018-08 assist entities in (1) evaluating whether transactions should be accounted for as contributions (nonreciprocal transactions) within the scope of Topic 958, Not-for-Profit Entities, or as exchange (reciprocal) transactions subject to other guidance and (2) determining whether a contribution is conditional. The ASU is effective for annual reporting periods beginning after December 15, 2018, including interim periods within those periods. As of April 1, 2019, we have adopted ASU 2018-08 and noted additional disclosures within our revenue footnote to appropriately present the revenue related to our grant revenue.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Changes to the Disclosure Requirements for Fair Value Measurement. The amendments in ASU 2018-13 provide for increased effectiveness of the disclosures made around fair value measurements while including consideration for costs and benefits. The ASU is effective for annual reporting periods beginning after December 15, 2019, including interim periods within those periods. ~~We are currently evaluating the impact the adoption~~As of April 1, 2020, we have adopted ASU 2018-13 ~~may have~~and noted no material impact on our consolidated financial ~~statements.~~statements, primarily due to the fact that we do not currently report any Level 3 fair value measurements.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendments in ASU 2019-12 provide for simplified accounting to several income tax situations and removal of certain accounting exceptions. The ASU is effective for annual reporting periods beginning after December 15, 2020, including interim periods within those periods. We do not expect the impact of the adoption of ASU 2019-12 to be material to our consolidated financial statements.

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

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not Applicable

ITEM 4.

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of ~~December 31, 2019~~September 30, 2020. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on that evaluation of our disclosure controls and procedures as of ~~December 31, 2019~~September 30, 2020, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There were no changes to our internal controls over financial reporting during the quarter ended ~~December 31, 2019~~September 30, 2020, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

None

ITEM 1A.

RISK FACTORS

There have been no material changes to the risk factors described in Part I, Item IA of our Annual Report on Form 10-K for the fiscal year ended March 31, ~~2019~~2020, filed with the SEC on June ~~5, 2019.~~2, 2020.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On November 13, 2019, Hudson Bay Capital (“Hudson”) exercised warrants to purchase an aggregate of 786,000 shares of the Company’s common stock at an exercise price of $7.81 per share. Hudson Bay paid an aggregate of $6.1 million to the Company in connection with such exercise. Accordingly, the Company issued 786,000 restricted shares of its common stock to Hudson upon such exercise. The issuance of the 786,000 restricted shares of the Company’s common stock upon exercise of the warrants described herein was exempt from registration requirements under the Securities Act of 1933, as amended, pursuant to Section 4(2) thereof, because the transaction did not involve a public offering.

The Company’s stock repurchase activity during the three months ended ~~December 31, 2019~~September 30, 2020 was as follows:

Month

Total Number
of Shares
Purchased^(a)

Average
Price Paid
per Share

Total Number of
Shares Purchased
as Part of Publicly
Announced
Plans or
Programs

Approximate
Dollar Value of Shares
that May Yet Be
Purchased under the
Plans or Programs
(in millions)
October 1, 2019 - October 31, 2019
0 0 — —
November 1, 2019 - November 30, 2019 7,378 $8.08 — —
December 1, 2019 - December 31, 2019 0 0 — —
Total

7,378

$8.08

—

—
Month

Total Number
of Shares
Purchased^(a)

Average
Price Paid
per Share

Total Number of
Shares Purchased
as Part of Publicly
Announced
Plans or
Programs

Approximate
Dollar Value of Shares
that May Yet Be
Purchased under the
Plans or Programs
(in millions)
July 1, 2020 - July 31, 2020
25,546 $9.74 — —
August 1, 2020 - August 31, 2020 3,627 $12.28 — —
September 1, 2020 - September 30, 2020 0 $0.0 — —
Total

29,173

$10.06

—

—

(a) During the three months ended ~~December 31, 2019~~September 30, 2020, we purchased shares in connection with our stock-based compensation plans, whereby shares of our common stock were tendered by employees for payment of applicable statutory tax withholdings.

ITEM 3.
DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4.
MINE SAFETY DISCLOSURES

Not Applicable

ITEM 5.
OTHER INFORMATION

None

ITEM 6.
EXHIBITS

EXHIBIT INDEX

~~Incorporated by Reference~~
~~Exhibit~~
~~Number~~
~~Exhibit Description~~
~~Form~~
~~File No.~~
~~Exhibit~~
~~Filing~~
~~Date~~
~~Filed/Furnished~~
~~Herewith~~
~~10.1~~
~~Form of Performance-Based Restricted Stock Agreement for Executive Officers under 2007 Stock Incentive Plan, as amended.~~ *
~~10.2~~ ~~Form of Time-Based Restricted Stock Agreement for Executive Officers under 2007 Stock Incentive Plan, as amended.~~ *
~~31.1~~
~~Chief Executive Officer—Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.~~
*
~~31.2~~
~~Chief Financial Officer—Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.~~
*
~~32.1~~
Chief Executive Officer—Certification pursuant to Rule13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
**
~~32.2~~
Chief Financial Officer—Certification pursuant to Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
**
~~101.INS~~
XBRL Instance Document.***
~~101.SCH~~
XBRL Taxonomy Extension Schema Document. ***
~~101.CAL~~
XBRL Taxonomy Calculation Linkbase Document. ***
~~101.DEF~~
XBRL Definition Linkbase Document. ***
~~101.LAB~~
XBRL Taxonomy Label Linkbase Document. ***
~~101.PRE~~
XBRL Taxonomy Presentation Linkbase Document. ***
Incorporated by Reference
Exhibit
Number

Exhibit Description

Form

File No.

Exhibit

Filing
Date

Filed/Furnished
Herewith

10.1

Stock Purchase Agreement, dated October 1, 2020, by and among American Superconductor Corporation, Frank J. Steciuk, Paul B. Steciuk and Peter A. Steciuk.
8-K 000-19672 10.1 10/5/20

31.1

Chief Executive Officer—Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*

31.2

Chief Financial Officer—Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*

32.1

Chief Executive Officer—Certification pursuant to Rule13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

**

32.2

Chief Financial Officer—Certification pursuant to Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

**

101.INS

XBRL Instance Document.***

101.SCH

XBRL Taxonomy Extension Schema Document. ***

101.CAL

XBRL Taxonomy Calculation Linkbase Document. ***

101.DEF

XBRL Definition Linkbase Document. ***

101.LAB

XBRL Taxonomy Label Linkbase Document. ***

101.PRE

XBRL Taxonomy Presentation Linkbase Document. ***

_________________________

*
Filed herewith

**
Furnished herewith

***
Submitted electronically herewith

Attached as Exhibits 101 to this report are the following formatted in XBRL (Extensible Business Reporting Language): (i) Condensed Consolidated Balance Sheet as of ~~December 31, 2019~~September 30, 2020 and March 31, ~~2019~~2020 (ii) Condensed Statements of Operations and Income for the three and ~~nine~~six months ended ~~December 31, 2019~~September 30, 2020 and ~~2018~~2019, (iii) Condensed Consolidated Statements of Comprehensive (Loss) Income for the three and ~~nine~~six months ended ~~December 31, 2019~~September 30, 2020 and ~~2018~~2019, (iv) Condensed Consolidated Statements of Cash Flows for the ~~nine~~six months ended ~~December 31, 2019~~September 30, 2020 and ~~2018~~2019, and (v) Notes to Condensed Consolidated Financial Statements.

SIGNATURE

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

AMERICAN SUPERCONDUCTOR CORPORATION

Date:
~~February 5,~~November 4, 2020
By:
/s/ John W. Kosiba, Jr.

John W. Kosiba, Jr.

Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)

33
31

	Warrants
April 1, 2018	$	1,217
Mark to market adjustment		2,658
Balance at December 31, 2018	$	3,875

	September 30,			June 30,
Fiscal Year 2019		2019			2019
Risk-free interest rate		1.90	%		2.11	%
Expected annual dividend yield		—			—
Expected volatility		62.84	%		60.58	%
Term (years)		0.12			0.37
Fair value	$0.6 million			$1.7 million

	March 31,	December 31,	September 30,	June 30,	March 31,
Fiscal Year 2018	2019	2018	2018	2018	2018
Risk-free interest rate	2.43%	2.61%	2.62%	2.40%	2.20%
Expected annual dividend yield	—	—	—	—	—
Expected volatility	75.61%	70.29%	63.66%	67.40%	65.86%
Term (years)	0.62	0.87	1.12	1.37	1.62
Fair value	$4.6 million	$3.6 million	$1.3 million	$1.6 million	$1.1 million

	March 31, 2019		ASC 842 Adjustment		April 1, 2019
Operating Leases:
Right of use asset	$	—	$	3,795	$	3,795
Total operating lease right-of-use asset		—		3,795		3,795

Operating lease liabilities – ST	$	—	$	309	$	309
Operating lease liabilities – LT		—		3,512		3,512
Total operating lease liabilities		—		3,821		3,821

Weighted-average remaining lease term					7.69 years
Weighted-average discount rate						7.06	%

	Severance pay			Facility exit and
	and benefits			Relocation costs			Total
Accrued restructuring balance at April 1, 2018	$	262		$	173		$	435
Charges to operations		—			450			450
Cash payments		(262	)		(623	)		(885	)
Accrued restructuring balance at December 31, 2018	$	—		$	—		$	—

Month	Total Number of Shares Purchased^(a)	Average Price Paid per Share	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased under the Plans or Programs (in millions)
October 1, 2019 - October 31, 2019	0	0	—	—
November 1, 2019 - November 30, 2019	7,378	$8.08	—	—
December 1, 2019 - December 31, 2019	0	0	—	—
Total	7,378	$8.08	—	—

		AMERICAN SUPERCONDUCTOR CORPORATION

Date:	~~February 5,~~November 4, 2020	By:	/s/ John W. Kosiba, Jr.
			John W. Kosiba, Jr.
			Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)