Orion(US:OESX)2025-08-06 20:08PART I Financial Statements This section presents the unaudited condensed consolidated financial statements for the quarter ended June 30, 2025, including balance sheets, statements of operations, shareholders' equity, and cash flows, along with accompanying notes. Condensed Consolidated Balance Sheets As of June 30, 2025, total assets decreased to $49.0 million from $52.5 million, primarily due to a reduction in cash and cash equivalents, while total liabilities and shareholders' equity also declined. Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | March 31, 2025 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $3,564 | $5,972 | | Total current assets | $32,667 | $35,498 | | Total assets | $49,017 | $52,463 | | Liabilities & Equity | | | | Total current liabilities | $26,553 | $26,844 | | Total liabilities | $38,211 | $40,579 | | Total shareholders' equity | $10,806 | $11,884 | Condensed Consolidated Statements of Operations For the three months ended June 30, 2025, the company reported a net loss of $1.2 million, a significant improvement from a $3.8 million net loss in the prior-year period, driven by increased gross profit despite a slight revenue decrease. Statements of Operations Summary (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Total revenue | $19,575 | $19,906 | | Gross profit | $5,901 | $4,299 | | Loss from operations | $(1,013) | $(3,432) | | Net loss | $(1,244) | $(3,758) | | Basic net loss per share | $(0.04) | $(0.12) | Condensed Consolidated Statements of Cash Flows Net cash used in operating activities significantly improved to $0.5 million for the first quarter of fiscal 2026, but financing activities used $1.8 million, resulting in a net decrease in cash and cash equivalents to $3.6 million. Cash Flow Summary (in thousands) | Activity | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(515) | $(2,962) | | Net cash used in investing activities | $(55) | $(24) | | Net cash (used in) provided by financing activities | $(1,838) | $3,523 | | Net (decrease) increase in cash | $(2,408) | $537 | | Cash and cash equivalents at end of period | $3,564 | $5,692 | Notes to the Condensed Consolidated Financial Statements These notes provide crucial context to the financial statements, detailing accounting policies, revenue breakdown, debt structure, and segment performance, including significant customer concentration and a NASDAQ compliance issue. - For the three months ended June 30, 2025, one customer accounted for 30.2% of total revenue, indicating significant customer concentration risk25 - The company received a notice from NASDAQ for not meeting the minimum $1.00 bid price requirement and has until September 15, 2025, to regain compliance, potentially through a reverse stock split262728 Revenue by Segment (in thousands) - Q1 FY2026 vs Q1 FY2025 | Segment | Q1 2025 Revenue | Q1 2024 Revenue | | :--- | :--- | :--- | | Lighting product and installation | $12,716 | $12,719 | | Maintenance services | $3,997 | $3,323 | | Electric vehicle charging | $2,696 | $3,830 | | Total Revenue | $19,575 | $19,906 | - As of June 30, 2025, the company has accrued $3.3 million for the unpaid acquisition earn-out related to the Voltrek acquisition, with a subsequent term sheet entered into to settle these obligations5770 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 FY26 financial results, highlighting a slight revenue decrease but significant improvements in gross profit and operating loss due to better margins and cost reductions, alongside updates on liquidity and backlog. Results of Operations In Q1 FY26, total revenue decreased slightly by 1.7% to $19.6 million, but gross margin improved significantly from 21.6% to 30.1%, leading to a 66.9% reduction in net loss to $1.2 million. Q1 FY26 vs Q1 FY25 Performance Summary (in thousands) | Metric | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Total revenue | $19,575 | $19,906 | (1.7)% | | Gross profit | $5,901 | $4,299 | 37.3% | | Loss from operations | $(1,013) | $(3,432) | (70.5)% | | Net loss | $(1,244) | $(3,758) | (66.9)% | - The decrease in operating expenses was primarily due to reduced wages and benefits resulting from restructuring that took place in fiscal 2025120121 Segment Analysis The Maintenance segment showed strong performance in Q1 FY26 with a 20.2% revenue increase and a swing to operating profit, while the Lighting segment improved operating income despite flat revenue, and the EV segment faced declining revenue and widening losses. Segment Operating Results (in thousands) - Q1 FY26 vs Q1 FY25 | Segment | Revenue (Q1'26) | Operating Income/(Loss) (Q1'26) | Revenue (Q1'25) | Operating Income/(Loss) (Q1'25) | | :--- | :--- | :--- | :--- | :--- | | Lighting | $12,882 | $235 | $12,751 | $(1,206) | | Maintenance | $3,997 | $128 | $3,324 | $(976) | | EV | $2,696 | $(322) | $3,831 | $(231) | Liquidity and Capital Resources The company's cash decreased to $3.6 million due to operating losses and debt repayment, but its backlog grew to $19.0 million, and management believes existing cash and credit availability are sufficient for the next 12 months. - Cash and cash equivalents decreased to $3.6 million as of June 30, 2025, from $6.0 million at March 31, 2025128 - As of June 30, 2025, the company had $11.5 million of availability under its revolving credit facility, with $5.3 million drawn137 - Backlog increased to $19.0 million as of June 30, 2025, from $17.3 million at the end of the prior fiscal year144 Quantitative and Qualitative Disclosures about Market Risk The company reports no material changes to its market risk exposures since the end of its last fiscal year on March 31, 2025. - There have been no material changes to the company's market risk exposures since March 31, 2025149 Controls and Procedures Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control over financial reporting during the quarter. - Management concluded that disclosure controls and procedures were effective as of June 30, 2025151 - No material changes were identified in the company's internal control over financial reporting for the quarter ended June 30, 2025152 PART II OTHER INFORMATION Legal Proceedings The company is subject to various claims and legal proceedings in the ordinary course of business but does not expect them to have a material adverse effect on its financial results. - The company does not believe that any current legal proceedings will have a material adverse effect on its future results of operations or financial condition154 Risk Factors This section refers investors to the detailed discussion of risk factors in the company's Annual Report on Form 10-K for the fiscal year ended March 31, 2025, indicating no new material risks have been identified. - For a comprehensive discussion of risks, the company refers to Part I, Item 1A of its Annual Report on Form 10-K for the fiscal year ended March 31, 2025155 Unregistered Sales of Equity Securities and Use of Proceeds The company reported two instances of unregistered equity sales, including approximately 1.65 million shares issued for the Voltrek earn-out and restricted stock and options granted to a new executive. - On July 16, 2025, the company issued 1,649,077 shares of Common Stock as earn-out consideration related to the Voltrek acquisition, exempt from registration under Section 4(a)(2) of the Securities Act156 - On July 18, 2025, the company granted 100,000 restricted shares and a non-qualified stock option for 125,000 shares to a new Senior Vice President as a material inducement for employment157 Other Information During the quarter ended June 30, 2025, none of the company's directors or officers adopted or terminated a Rule 10b5-1 trading plan. - No directors or officers adopted or terminated a Rule 10b5-1 trading arrangement during the three months ended June 30, 2025159 Exhibits This section lists the exhibits filed with the Form 10-Q, including an amendment to the Voltrek earn-out term sheet and certifications by the CEO and CFO. - The report includes several exhibits, such as the Earn Out Term Sheet Amendment dated July 31, 2025, and CEO/CFO certifications pursuant to securities laws163