ý
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended March 31, 2017
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from to
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Wisconsin
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39-1847269
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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2210 Woodland Drive, Manitowoc, WI
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54220
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(Address of principal executive offices)
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(Zip Code)
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Title of Each Class
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Name of Each Exchange on Which Registered
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Common stock, no par value
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The Nasdaq Stock Market LLC
(NASDAQ Captial Market) |
Common stock purchase rights
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The Nasdaq Stock Market LLC
(NASDAQ Captial Market)
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Large accelerated filer
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¨
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Accelerated filer
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o
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Non-accelerated filer
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o
(Do not check if a smaller reporting company)
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Smaller reporting company
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ý
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Emerging growth company
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o
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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.
¨
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Page
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•
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our ability to achieve profitability and positive cash flows;
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•
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our levels of cash and our limited borrowing capacity under our revolving line of credit;
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•
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the availability of additional debt financing and/or equity capital;
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•
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our increasing emphasis on selling more of our products through third party distributors and sales agents, including our ability to attract and retain effective third party distributors and sales agents to execute our sales model;
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•
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our ability to develop and participate in new product and technology offerings or applications in a cost effective and timely manner;
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•
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our ability to manage the ongoing decreases in the average selling prices of our products as a result of competitive pressures in the evolving light emitting diode ("LED") market;
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•
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our ability to manage our inventory and avoid inventory obsolescence in a rapidly evolving LED market;
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•
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our lack of major sources of recurring revenue and the potential consequences of the loss of one or more key customers or suppliers, including key contacts at such customers;
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•
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our ability to adapt to increasing convergence in the LED market;
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•
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our ability to differentiate our products in a highly competitive market;
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•
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the deterioration of market conditions, including our dependence on customers' capital budgets for sales of products and services;
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•
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our ability to complete and execute our strategy in a highly competitive market and our ability to respond successfully to market competition;
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•
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our increasing reliance on third parties for the manufacture and development of products and product components;
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•
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our ability to successfully implement our strategy of focusing mainly on lighting solutions using LED technologies;
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•
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the market acceptance of our products and services;
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•
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our ability to realize expected cost savings from our cost reduction initiatives;
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•
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adverse developments with respect to litigation and other legal matters pursuant to which we are subject, including the ongoing litigation initiated against us by a former Chief Executive Officer;
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•
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our failure to comply with the covenants in our revolving credit agreement;
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•
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our fluctuating quarterly results of operations as we focus on new LED technologies, implement cost reduction initiatives and continue to focus investing in our third party distribution sales channel;
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•
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our ability to recruit, hire and retain talented individuals in all disciplines of our company;
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•
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our inability to timely and effectively remediate any material weakness in our internal controls and our failure to maintain an effective system of internal control over financial reporting;
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•
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price fluctuations, shortages or interruptions of component supplies and raw materials used to manufacture our products;
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•
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our ability to defend our patent portfolio;
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•
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a reduction in the price of electricity;
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•
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the cost to comply with, and the effects of, any current and future government regulations, laws and policies; and
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•
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potential warranty claims in excess of our reserve estimates.
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ITEM 1.
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BUSINESS
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•
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Constant monitoring and management of manufacturing overhead costs to ensure we continue to deliver strong gross margin amid an increasingly competitive market landscape;
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•
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Reducing staff positions through a targeted reduction in existing headcount;
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•
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Reductions in the total compensation of our executive management and board of directors;
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•
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Reductions in operating expenses, including better control of legal spending, elimination of our racing program and removal of various non-critical back office programs and initiatives.
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•
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comprehensive site assessment, which includes a review of the current lighting requirements and energy usage at the customer’s facility;
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•
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site field verification, or SFV, during which we perform a test implementation of our energy management system at a customer’s facility;
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•
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utility incentive and government subsidy management, where we assist our customers in identifying, applying for and obtaining available utility incentives or government subsidies;
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•
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engineering design, which involves designing a customized system to suit our customers' facility lighting and energy management needs, and providing the customer with a written analysis of the potential energy savings and lighting and environmental benefits associated with the designed system;
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•
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project management, which involves us working with the electrical contractor in overseeing and managing all phases of implementation from delivery through installation for a single facility or through multi-facility roll-outs tied to a defined project schedule;
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•
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installation services, for our products, which we provide through our national network of qualified third-party installers; and
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•
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recycling in connection with our retrofit installations, where we remove, dispose of and recycle our customer’s legacy lighting fixtures.
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ITEM 1A.
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RISK FACTORS
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•
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The price, volatility and trading volume and history of our common stock.
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•
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Our current and future financial results and position.
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•
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The market’s view of our company, industry and products.
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•
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The perception in the equity and debt markets of our ability to execute our business plan or achieve our operating results expectations.
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ITEM 1B.
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UNRESOLVED STAFF COMMENTS
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ITEM 2.
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PROPERTIES
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•
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5,600 square foot office in Houston, Texas.
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•
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10,500 square foot office space in Jacksonville, Florida.
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•
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3,100 square foot office space in Chicago, Illinois.
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ITEM 3.
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LEGAL PROCEEDINGS
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ITEM 4.
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MINE SAFETY DISCLOSURES
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ITEM 5.
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MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|
|
High
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Low
|
||||
Fiscal 2017
|
|
|
|
||||
First Quarter
|
$
|
1.55
|
|
|
$
|
1.13
|
|
Second Quarter
|
$
|
1.45
|
|
|
$
|
1.18
|
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Third Quarter
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$
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2.49
|
|
|
$
|
1.17
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Fourth Quarter
|
$
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2.31
|
|
|
$
|
1.76
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Fiscal 2016
|
|
|
|
||||
First Quarter
|
$
|
3.48
|
|
|
$
|
2.17
|
|
Second Quarter
|
$
|
2.59
|
|
|
$
|
1.73
|
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Third Quarter
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$
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2.50
|
|
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$
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1.58
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Fourth Quarter
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$
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2.25
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|
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$
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1.18
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Equity Compensation Plan Information
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||||||||||
Plan Category
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Number of Securities to be Issued Upon Exercise of Outstanding Options and Vesting of Restricted Shares
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Weighted Average Exercise Price of Outstanding Options and Restricted Shares
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Number of Securities Remaining Available for
Future Issuances Under the Equity Compensation Plans (1) |
||||
Equity Compensation plans approved by security holders
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3,225,496
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$
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2.47
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1,298,221
|
|
Equity Compensation plans not approved by security holders
|
|
—
|
|
|
—
|
|
|
—
|
|
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Total
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|
3,225,496
|
|
|
$
|
2.47
|
|
|
1,298,221
|
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(1)
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Excludes shares reflected in the column titled “Number of Securities to be Issued Upon Exercise of Outstanding Options and Vesting of Restricted Shares”.
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ITEM 6.
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SELECTED FINANCIAL DATA
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|
Fiscal Year Ended March 31,
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||||||||||||||||||
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2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||||
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(in thousands, except per share amounts)
|
||||||||||||||||||
Consolidated statements of operations data:
|
|
|
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|
|
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||||||||||
Product revenue
|
$
|
66,224
|
|
|
$
|
64,897
|
|
|
$
|
65,881
|
|
|
$
|
71,954
|
|
|
$
|
72,604
|
|
Service revenue
|
3,987
|
|
|
2,745
|
|
|
6,329
|
|
|
16,669
|
|
|
13,482
|
|
|||||
Total revenue
|
70,211
|
|
|
67,642
|
|
|
72,210
|
|
|
88,623
|
|
|
86,086
|
|
|||||
Cost of product revenue (1)(5)(7)
|
49,630
|
|
|
49,630
|
|
|
68,388
|
|
|
54,423
|
|
|
49,551
|
|
|||||
Cost of service revenue
|
3,244
|
|
|
2,015
|
|
|
4,959
|
|
|
11,220
|
|
|
9,805
|
|
|||||
Total cost of revenue
|
52,874
|
|
|
51,645
|
|
|
73,347
|
|
|
65,643
|
|
|
59,356
|
|
|||||
Gross profit (loss)
|
17,337
|
|
|
15,997
|
|
|
(1,137
|
)
|
|
22,980
|
|
|
26,730
|
|
|||||
General and administrative expenses (1)(2)(3)
|
14,777
|
|
|
16,884
|
|
|
14,908
|
|
|
14,951
|
|
|
13,946
|
|
|||||
Impairment of assets (6)
|
250
|
|
|
6,023
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Acquisition and integration related expenses (4)
|
—
|
|
|
—
|
|
|
47
|
|
|
819
|
|
|
—
|
|
|||||
Sales and marketing expenses (1)(2)
|
12,833
|
|
|
11,343
|
|
|
13,290
|
|
|
13,527
|
|
|
17,129
|
|
|||||
Research and development expenses (1)
|
2,004
|
|
|
1,668
|
|
|
2,554
|
|
|
2,026
|
|
|
2,259
|
|
|||||
Loss from operations
|
(12,527
|
)
|
|
(19,921
|
)
|
|
(31,936
|
)
|
|
(8,343
|
)
|
|
(6,604
|
)
|
|||||
Other income
|
215
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Interest expense
|
(273
|
)
|
|
(297
|
)
|
|
(376
|
)
|
|
(481
|
)
|
|
(567
|
)
|
|||||
Dividend and interest income
|
36
|
|
|
128
|
|
|
300
|
|
|
567
|
|
|
845
|
|
|||||
Loss before income tax
|
(12,549
|
)
|
|
(20,090
|
)
|
|
(32,012
|
)
|
|
(8,257
|
)
|
|
(6,326
|
)
|
|||||
Income tax (benefit) expense (2)(3)
|
(261
|
)
|
|
36
|
|
|
49
|
|
|
(2,058
|
)
|
|
4,073
|
|
|||||
Net loss and comprehensive loss
|
$
|
(12,288
|
)
|
|
$
|
(20,126
|
)
|
|
$
|
(32,061
|
)
|
|
$
|
(6,199
|
)
|
|
$
|
(10,399
|
)
|
Net loss per share attributable to common shareholders:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
$
|
(0.44
|
)
|
|
$
|
(0.73
|
)
|
|
$
|
(1.43
|
)
|
|
$
|
(0.30
|
)
|
|
$
|
(0.50
|
)
|
Diluted
|
$
|
(0.44
|
)
|
|
$
|
(0.73
|
)
|
|
$
|
(1.43
|
)
|
|
$
|
(0.30
|
)
|
|
$
|
(0.50
|
)
|
Weighted-average shares outstanding:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
28,156
|
|
|
27,628
|
|
|
22,353
|
|
|
20,988
|
|
|
20,997
|
|
|||||
Diluted
|
28,156
|
|
|
27,628
|
|
|
22,353
|
|
|
20,988
|
|
|
20,997
|
|
(1)
|
Includes stock-based compensation expense recognized under Financial Accounting Standards Board Accounting Standards Codification Topic 718, or ASC Topic 718, as follows:
|
|
Fiscal Year Ended March 31,
|
||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Cost of product revenue
|
$
|
30
|
|
|
$
|
36
|
|
|
$
|
50
|
|
|
$
|
70
|
|
|
$
|
114
|
|
General and administrative expenses
|
1,337
|
|
|
1,148
|
|
|
1,056
|
|
|
1,025
|
|
|
578
|
|
|||||
Sales and marketing expenses
|
139
|
|
|
235
|
|
|
360
|
|
|
485
|
|
|
451
|
|
|||||
Research and development expenses
|
99
|
|
|
43
|
|
|
33
|
|
|
13
|
|
|
21
|
|
|||||
Total stock-based compensation expense
|
$
|
1,605
|
|
|
$
|
1,462
|
|
|
$
|
1,499
|
|
|
$
|
1,593
|
|
|
$
|
1,164
|
|
(2)
|
Includes fiscal 2013 reorganization expenses of $1,900 in general and administrative expenses, $225 in sales and marketing expenses and a $4,074 valuation reserve for deferred tax assets in income tax expense.
|
(3)
|
Includes fiscal 2014 loss on sale of a leased corporate jet of $1,507 in general and administrative expenses and a $2,315 benefit for deferred tax liabilities created by the acquisition of Harris in income tax benefit. Includes in fiscal 2016 a $1,400 loss contingency.
|
(5)
|
Includes fiscal 2015 expenses of $12,130 related to the impairment of wireless control inventory, fixed assets and intangible assets.
|
(6)
|
Includes fiscal 2017 intangible asset impairment of $250 and fiscal 2016 expenses of $4,409 related to the impairment of goodwill and $1,614 related to the write-down to fair value of the manufacturing facility.
|
(7)
|
Includes fiscal 2017 expenses of $2,209 related to an increase in inventory reserves and other inventory adjustments.
|
|
As of March 31,
|
||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Consolidated balance sheet data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
17,307
|
|
|
$
|
15,542
|
|
|
$
|
20,002
|
|
|
$
|
17,568
|
|
|
$
|
14,376
|
|
Short-term investments
|
—
|
|
|
—
|
|
|
—
|
|
|
470
|
|
|
1,021
|
|
|||||
Total assets
|
62,051
|
|
|
70,875
|
|
|
87,805
|
|
|
98,940
|
|
|
102,097
|
|
|||||
Long term borrowings
|
6,819
|
|
|
4,021
|
|
|
3,222
|
|
|
3,151
|
|
|
4,109
|
|
|||||
Shareholder notes receivable
|
(4
|
)
|
|
(4
|
)
|
|
(4
|
)
|
|
(50
|
)
|
|
(265
|
)
|
|||||
Total shareholders’ equity
|
35,450
|
|
|
45,983
|
|
|
64,511
|
|
|
77,012
|
|
|
77,769
|
|
ITEM 7.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
•
|
Rapidly declining LED component costs and LED product end user customer pricing pressure.
|
•
|
Improving LED product performance and customer return on investment payback periods driving increasing customer preferences for LED lighting products compared to legacy lighting products.
|
•
|
Increasing LED lighting product customer sales compared to decreasing HIF product sales.
|
•
|
A broader and more diverse customer base and market opportunities compared to our historical commercial and industrial facility customers.
|
•
|
Increased importance of highly innovative product designs and features and enhanced product research and development capabilities resulting in more rapid new product introduction.
|
•
|
Significantly reduced product technology life cycles; significantly shorter product inventory shelf lives and the related increased risk of rapidly occurring product technology obsolescence.
|
•
|
Increased reliance on international component sources.
|
•
|
Less internal product fabrication and production capabilities needed to support LED product assembly.
|
•
|
Different and broader types of components, fabrication and assembly processes needed to support LED product assembly compared to our legacy products.
|
•
|
Expanding customer bases and sales channels.
|
•
|
Significantly longer end user product warranty requirements for LED products compared to our legacy products.
|
•
|
Constant monitoring and management of manufacturing overhead costs to ensure we continue to deliver strong gross margin amid an increasingly competitive market landscape;
|
•
|
Reducing staff positions through a targeted reduction in existing headcount;
|
•
|
Reductions in the total compensation of our executive management and board of directors;
|
•
|
Reductions in operating expenses, including better control of legal spending, elimination of our racing program and removal of various non-critical back office programs and initiatives.
|
•
|
LED adoption continues to grow in all sectors;
|
•
|
Commercial and industrial sentiment is strengthening;
|
•
|
Utility incentives continue to be available and are increasing as a percent of project costs in many areas;
|
•
|
Prospects of tax regulatory reform are encouraging;
|
•
|
Capital spending is increasing;
|
•
|
Business profits are increasing; and
|
•
|
Consumer spending remains strong.
|
|
Fiscal Year Ended March 31,
|
|||||||||||||||
|
2017
|
|
2016
|
|
|
|
2017
|
|
2016
|
|||||||
|
Amount
|
|
Amount
|
|
%
Change |
|
% of
Revenue |
|
% of
Revenue |
|||||||
Product revenue
|
$
|
66,224
|
|
|
$
|
64,897
|
|
|
2.0
|
%
|
|
94.3
|
%
|
|
95.9
|
%
|
Service revenue
|
3,987
|
|
|
2,745
|
|
|
45.2
|
%
|
|
5.7
|
%
|
|
4.1
|
%
|
||
Total revenue
|
70,211
|
|
|
67,642
|
|
|
3.8
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
||
Cost of product revenue
|
49,630
|
|
|
49,630
|
|
|
—
|
%
|
|
70.7
|
%
|
|
73.4
|
%
|
||
Cost of service revenue
|
3,244
|
|
|
2,015
|
|
|
61.0
|
%
|
|
4.6
|
%
|
|
3.0
|
%
|
||
Total cost of revenue
|
52,874
|
|
|
51,645
|
|
|
2.4
|
%
|
|
75.3
|
%
|
|
76.4
|
%
|
||
Gross profit (loss)
|
17,337
|
|
|
15,997
|
|
|
8.4
|
%
|
|
24.7
|
%
|
|
23.6
|
%
|
||
General and administrative expenses
|
14,777
|
|
|
16,884
|
|
|
(12.5
|
)%
|
|
21.0
|
%
|
|
25.0
|
%
|
||
Impairment of assets
|
250
|
|
|
6,023
|
|
|
NM
|
|
|
0.4
|
%
|
|
8.6
|
%
|
||
Sales and marketing expenses
|
12,833
|
|
|
11,343
|
|
|
13.1
|
%
|
|
18.3
|
%
|
|
16.8
|
%
|
||
Research and development expenses
|
2,004
|
|
|
1,668
|
|
|
20.1
|
%
|
|
2.9
|
%
|
|
2.5
|
%
|
||
Loss from operations
|
(12,527
|
)
|
|
(19,921
|
)
|
|
37.1
|
%
|
|
(17.8
|
)%
|
|
(29.5
|
)%
|
||
Other income
|
215
|
|
|
—
|
|
|
NM
|
|
|
0.3
|
%
|
|
—
|
%
|
||
Interest expense
|
(273
|
)
|
|
(297
|
)
|
|
(8.1
|
)%
|
|
(0.4
|
)%
|
|
(0.4
|
)%
|
||
Interest income
|
36
|
|
|
128
|
|
|
(71.9
|
)%
|
|
0.1
|
%
|
|
0.2
|
%
|
||
Loss before income tax
|
(12,549
|
)
|
|
(20,090
|
)
|
|
37.5
|
%
|
|
(17.9
|
)%
|
|
(29.7
|
)%
|
||
Income tax expense
|
(261
|
)
|
|
36
|
|
|
NM
|
|
|
(0.4
|
)%
|
|
0.1
|
%
|
||
Net loss and comprehensive loss
|
$
|
(12,288
|
)
|
|
$
|
(20,126
|
)
|
|
38.9
|
%
|
|
(17.5
|
)%
|
|
(29.8
|
)%
|
|
Fiscal Year Ended March 31,
|
|||||||||||||||
|
2016
|
|
2015
|
|
|
|
2016
|
|
2015
|
|||||||
|
Amount
|
|
Amount
|
|
%
Change |
|
% of
Revenue |
|
% of
Revenue |
|||||||
Product revenue
|
$
|
64,897
|
|
|
$
|
65,881
|
|
|
(1.5
|
)%
|
|
95.9
|
%
|
|
91.2
|
%
|
Service revenue
|
2,745
|
|
|
6,329
|
|
|
(56.6
|
)%
|
|
4.1
|
%
|
|
8.8
|
%
|
||
Total revenue
|
67,642
|
|
|
72,210
|
|
|
(6.3
|
)%
|
|
100.0
|
%
|
|
100.0
|
%
|
||
Cost of product revenue
|
49,630
|
|
|
68,388
|
|
|
(27.4
|
)%
|
|
73.4
|
%
|
|
94.7
|
%
|
||
Cost of service revenue
|
2,015
|
|
|
4,959
|
|
|
(59.4
|
)%
|
|
3.0
|
%
|
|
6.9
|
%
|
||
Total cost of revenue
|
51,645
|
|
|
73,347
|
|
|
(29.6
|
)%
|
|
76.4
|
%
|
|
101.6
|
%
|
||
Gross profit (loss)
|
15,997
|
|
|
(1,137
|
)
|
|
NM
|
|
|
23.6
|
%
|
|
(1.6
|
)%
|
||
General and administrative expenses
|
16,884
|
|
|
14,908
|
|
|
13.3
|
%
|
|
25.0
|
%
|
|
20.6
|
%
|
||
Impairment of assets
|
6,023
|
|
|
—
|
|
|
NM
|
|
|
0.4
|
%
|
|
—
|
%
|
||
Acquisition and integration related expenses
|
—
|
|
|
47
|
|
|
(100.0
|
)%
|
|
—
|
%
|
|
0.1
|
%
|
||
Sales and marketing expenses
|
11,343
|
|
|
13,290
|
|
|
(14.7
|
)%
|
|
16.8
|
%
|
|
18.4
|
%
|
||
Research and development expenses
|
1,668
|
|
|
2,554
|
|
|
(34.7
|
)%
|
|
2.5
|
%
|
|
3.5
|
%
|
||
Loss from operations
|
(19,921
|
)
|
|
(31,936
|
)
|
|
37.6
|
%
|
|
(29.5
|
)%
|
|
(44.2
|
)%
|
||
Interest expense
|
(297
|
)
|
|
(376
|
)
|
|
21.0
|
%
|
|
(0.4
|
)%
|
|
(0.5
|
)%
|
||
Interest income
|
128
|
|
|
300
|
|
|
(57.3
|
)%
|
|
0.2
|
%
|
|
0.4
|
%
|
||
Loss before income tax
|
(20,090
|
)
|
|
(32,012
|
)
|
|
37.2
|
%
|
|
(29.7
|
)%
|
|
(44.3
|
)%
|
||
Income tax expense
|
36
|
|
|
49
|
|
|
(26.5
|
)%
|
|
0.1
|
%
|
|
0.1
|
%
|
||
Net loss and comprehensive loss
|
$
|
(20,126
|
)
|
|
$
|
(32,061
|
)
|
|
37.2
|
%
|
|
(29.8
|
)%
|
|
(44.4
|
)%
|
|
For the year ended March 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Revenues
|
$
|
29,501
|
|
|
$
|
26,325
|
|
|
$
|
33,454
|
|
Operating income (loss)
|
$
|
(3,647
|
)
|
|
$
|
(6,982
|
)
|
|
$
|
(12,431
|
)
|
Operating margin
|
(12.4
|
)%
|
|
(26.5
|
)%
|
|
(37.2
|
)%
|
|
Fiscal Year Ended March 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
|
(in thousands)
|
||||||||||
Operating activities
|
$
|
(1,903
|
)
|
|
$
|
(3,473
|
)
|
|
$
|
(12,812
|
)
|
Investing activities
|
1,649
|
|
|
(372
|
)
|
|
(730
|
)
|
|||
Financing activities
|
2,019
|
|
|
(615
|
)
|
|
15,976
|
|
|||
Increase (decrease) in cash and cash equivalents
|
$
|
1,765
|
|
|
$
|
(4,460
|
)
|
|
$
|
2,434
|
|
|
Payments Due By Period
|
||||||||||||||||||
|
Total
|
|
Less than
1 Year
|
|
1-3 Years
|
|
3-5 Years
|
|
More than
5 Years
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Bank debt obligations
|
$
|
6,629
|
|
|
$
|
—
|
|
|
$
|
6,629
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Other debt obligations
|
21
|
|
|
16
|
|
|
5
|
|
|
—
|
|
|
|
||||||
Capital lease obligations
|
327
|
|
|
137
|
|
|
161
|
|
|
29
|
|
|
|
||||||
Cash interest payments on debt
|
287
|
|
|
143
|
|
|
144
|
|
|
—
|
|
|
—
|
|
|||||
Operating lease obligations
|
1,241
|
|
|
654
|
|
|
587
|
|
|
—
|
|
|
—
|
|
|||||
Purchase order and capital expenditure commitments(1)
|
4,218
|
|
|
4,218
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
$
|
12,723
|
|
|
$
|
5,168
|
|
|
$
|
7,526
|
|
|
$
|
29
|
|
|
$
|
—
|
|
(1)
|
Reflects non-cancellable purchase commitments for certain inventory items entered into in order to secure better pricing and ensure materials on hand.
|
Item 7A.
|
Quantitative and Qualitative Disclosure About Market Risk
|
ITEM 8.
|
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
|
|
|
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
Page
Number
|
|
March 31,
|
||||||
|
2017
|
|
2016
|
||||
Assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
17,307
|
|
|
$
|
15,542
|
|
Accounts receivable, net
|
9,171
|
|
|
10,889
|
|
||
Inventories, net
|
13,593
|
|
|
17,024
|
|
||
Deferred contract costs
|
935
|
|
|
37
|
|
||
Prepaid expenses and other current assets
|
2,877
|
|
|
5,038
|
|
||
Total current assets
|
43,883
|
|
|
48,530
|
|
||
Property and equipment, net
|
13,786
|
|
|
17,004
|
|
||
Other intangible assets, net
|
4,207
|
|
|
5,048
|
|
||
Long-term accounts receivable
|
5
|
|
|
108
|
|
||
Other long-term assets
|
170
|
|
|
185
|
|
||
Total assets
|
$
|
62,051
|
|
|
$
|
70,875
|
|
Liabilities and Shareholders’ Equity
|
|
|
|
||||
Accounts payable
|
$
|
11,635
|
|
|
$
|
11,716
|
|
Accrued expenses and other
|
5,988
|
|
|
6,586
|
|
||
Deferred revenue, current
|
621
|
|
|
243
|
|
||
Current maturities of long-term debt
|
152
|
|
|
746
|
|
||
Total current liabilities
|
18,396
|
|
|
19,291
|
|
||
Revolving credit facility
|
6,629
|
|
|
3,719
|
|
||
Long-term debt, less current maturities
|
190
|
|
|
302
|
|
||
Deferred revenue, long-term
|
944
|
|
|
1,022
|
|
||
Other long-term liabilities
|
442
|
|
|
558
|
|
||
Total liabilities
|
26,601
|
|
|
24,892
|
|
||
Commitments and contingencies
|
|
|
|
||||
Shareholders’ equity:
|
|
|
|
||||
Preferred stock, $0.01 par value: Shares authorized: 30,000,000 shares at March 31, 2017 and 2016; no shares issued and outstanding at March 31, 2017 and 2016
|
—
|
|
|
—
|
|
||
Common stock, no par value: Shares authorized: 200,000,000 at March 31, 2017 and 2016; shares issued: 37,747,227 and 37,192,559 at March 31, 2017 and 2016; shares outstanding: 28,317,490 and 27,767,138 at March 31, 2017 and 2016
|
—
|
|
|
—
|
|
||
Additional paid-in capital
|
153,901
|
|
|
152,140
|
|
||
Treasury stock: 9,429,737 and 9,425,421 common shares at March 31, 2017 and 2016
|
(36,081
|
)
|
|
(36,075
|
)
|
||
Shareholder notes receivable
|
(4
|
)
|
|
(4
|
)
|
||
Retained deficit
|
(82,366
|
)
|
|
(70,078
|
)
|
||
Total shareholders’ equity
|
35,450
|
|
|
45,983
|
|
||
Total liabilities and shareholders’ equity
|
$
|
62,051
|
|
|
$
|
70,875
|
|
|
Fiscal Year Ended March 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Product revenue
|
$
|
66,224
|
|
|
$
|
64,897
|
|
|
$
|
65,881
|
|
Service revenue
|
3,987
|
|
|
2,745
|
|
|
6,329
|
|
|||
Total revenue
|
70,211
|
|
|
67,642
|
|
|
72,210
|
|
|||
Cost of product revenue
|
49,630
|
|
|
49,630
|
|
|
68,388
|
|
|||
Cost of service revenue
|
3,244
|
|
|
2,015
|
|
|
4,959
|
|
|||
Total cost of revenue
|
52,874
|
|
|
51,645
|
|
|
73,347
|
|
|||
Gross profit (loss)
|
17,337
|
|
|
15,997
|
|
|
(1,137
|
)
|
|||
Operating expenses:
|
|
|
|
|
|
||||||
General and administrative
|
14,777
|
|
|
16,884
|
|
|
14,908
|
|
|||
Impairment of assets
|
250
|
|
|
6,023
|
|
|
—
|
|
|||
Acquisition and integration related expenses
|
—
|
|
|
—
|
|
|
47
|
|
|||
Sales and marketing
|
12,833
|
|
|
11,343
|
|
|
13,290
|
|
|||
Research and development
|
2,004
|
|
|
1,668
|
|
|
2,554
|
|
|||
Total operating expenses
|
29,864
|
|
|
35,918
|
|
|
30,799
|
|
|||
Loss from operations
|
(12,527
|
)
|
|
(19,921
|
)
|
|
(31,936
|
)
|
|||
Other income (expense):
|
|
|
|
|
|
||||||
Other income
|
215
|
|
|
—
|
|
|
—
|
|
|||
Interest expense
|
(273
|
)
|
|
(297
|
)
|
|
(376
|
)
|
|||
Interest income
|
36
|
|
|
128
|
|
|
300
|
|
|||
Total other expense
|
(22
|
)
|
|
(169
|
)
|
|
(76
|
)
|
|||
Loss before income tax
|
(12,549
|
)
|
|
(20,090
|
)
|
|
(32,012
|
)
|
|||
Income tax (benefit) expense
|
(261
|
)
|
|
36
|
|
|
49
|
|
|||
Net loss and comprehensive loss
|
$
|
(12,288
|
)
|
|
$
|
(20,126
|
)
|
|
$
|
(32,061
|
)
|
|
|
|
|
|
|
||||||
Basic net loss per share attributable to common shareholders
|
$
|
(0.44
|
)
|
|
$
|
(0.73
|
)
|
|
$
|
(1.43
|
)
|
Weighted-average common shares outstanding
|
28,156,382
|
|
|
27,627,693
|
|
|
22,353,419
|
|
|||
Diluted net loss per share
|
$
|
(0.44
|
)
|
|
$
|
(0.73
|
)
|
|
$
|
(1.43
|
)
|
Weighted-average common shares and share equivalents outstanding
|
28,156,382
|
|
|
27,627,693
|
|
|
22,353,419
|
|
|
Shareholders’ Equity
|
|||||||||||||||||||||
|
Common Stock
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Shares
|
|
Additional
Paid-in Capital |
|
Treasury
Stock |
|
Shareholder
Notes Receivable |
|
Retained
Earnings (Deficit) |
|
Total
Shareholders’ Equity |
|||||||||||
Balance, March 31, 2014
|
21,588,326
|
|
|
$
|
130,987
|
|
|
$
|
(36,034
|
)
|
|
$
|
(50
|
)
|
|
$
|
(17,891
|
)
|
|
$
|
77,012
|
|
Issuance of common stock for cash, net of issuance costs
|
5,462,500
|
|
|
$
|
17,465
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
17,465
|
|
Issuance of stock for services
|
27,931
|
|
|
131
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
131
|
|
|||||
Exercise of stock options and warrants for cash
|
178,387
|
|
|
430
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
430
|
|
|||||
Shares issued under Employee Stock Purchase Plan
|
1,486
|
|
|
4
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
11
|
|
|||||
Collection of shareholder notes receivable
|
—
|
|
|
—
|
|
|
—
|
|
|
46
|
|
|
—
|
|
|
46
|
|
|||||
Stock-based compensation
|
170,055
|
|
|
1,499
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,499
|
|
|||||
Employee tax withholdings on stock-based compensation
|
(7,152
|
)
|
|
—
|
|
|
(22
|
)
|
|
—
|
|
|
—
|
|
|
(22
|
)
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(32,061
|
)
|
|
(32,061
|
)
|
|||||
Balance, March 31, 2015
|
27,421,533
|
|
|
$
|
150,516
|
|
|
$
|
(36,049
|
)
|
|
$
|
(4
|
)
|
|
$
|
(49,952
|
)
|
|
$
|
64,511
|
|
Issuance of stock for services
|
35,290
|
|
|
66
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
66
|
|
|||||
Exercise of stock options and warrants for cash
|
46,410
|
|
|
97
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
97
|
|
|||||
Shares issued under Employee Stock Purchase Plan
|
3,925
|
|
|
(1
|
)
|
|
8
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|||||
Stock-based compensation
|
270,303
|
|
|
1,462
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,462
|
|
|||||
Employee tax withholdings on stock-based compensation
|
(10,323
|
)
|
|
—
|
|
|
(34
|
)
|
|
—
|
|
|
—
|
|
|
(34
|
)
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(20,126
|
)
|
|
(20,126
|
)
|
|||||
Balance, March 31, 2016
|
27,767,138
|
|
|
$
|
152,140
|
|
|
$
|
(36,075
|
)
|
|
$
|
(4
|
)
|
|
$
|
(70,078
|
)
|
|
$
|
45,983
|
|
Issuance of stock for services
|
110,566
|
|
|
156
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
156
|
|
|||||
Shares issued under Employee Stock Purchase Plan
|
5,156
|
|
|
—
|
|
|
8
|
|
|
—
|
|
|
—
|
|
|
8
|
|
|||||
Stock-based compensation
|
444,102
|
|
|
1,605
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,605
|
|
|||||
Employee tax withholdings on stock-based compensation
|
(9,472
|
)
|
|
—
|
|
|
(14
|
)
|
|
—
|
|
|
—
|
|
|
(14
|
)
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(12,288
|
)
|
|
(12,288
|
)
|
|||||
Balance, March 31, 2017
|
28,317,490
|
|
|
$
|
153,901
|
|
|
$
|
(36,081
|
)
|
|
$
|
(4
|
)
|
|
$
|
(82,366
|
)
|
|
$
|
35,450
|
|
|
Fiscal Year Ended March 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Operating activities
|
|
|
|
|
|
||||||
Net loss
|
$
|
(12,288
|
)
|
|
$
|
(20,126
|
)
|
|
$
|
(32,061
|
)
|
Adjustments to reconcile net loss to net cash used in
|
|
|
|
|
|
||||||
operating activities:
|
|
|
|
|
|
||||||
Depreciation
|
1,451
|
|
|
2,950
|
|
|
2,853
|
|
|||
Amortization
|
881
|
|
|
1,215
|
|
|
1,327
|
|
|||
Stock-based compensation expense
|
1,605
|
|
|
1,462
|
|
|
1,499
|
|
|||
Impairment of assets
|
250
|
|
|
6,023
|
|
|
12,130
|
|
|||
Loss (gain) on sale of property and equipment
|
1
|
|
|
40
|
|
|
(21
|
)
|
|||
Provision for inventory reserves
|
2,212
|
|
|
509
|
|
|
361
|
|
|||
Provision for bad debts
|
132
|
|
|
575
|
|
|
285
|
|
|||
Other
|
177
|
|
|
258
|
|
|
265
|
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||||||
Accounts receivable, current and long-term
|
1,687
|
|
|
7,116
|
|
|
(1,909
|
)
|
|||
Inventories, current
|
1,220
|
|
|
(3,249
|
)
|
|
(2,356
|
)
|
|||
Deferred contract costs
|
(899
|
)
|
|
137
|
|
|
651
|
|
|||
Prepaid expenses and other current assets
|
2,084
|
|
|
(2,645
|
)
|
|
1,261
|
|
|||
Accounts payable
|
(81
|
)
|
|
713
|
|
|
2,475
|
|
|||
Accrued expenses and other
|
(635
|
)
|
|
1,803
|
|
|
838
|
|
|||
Deferred revenue, current and long-term
|
300
|
|
|
(254
|
)
|
|
(410
|
)
|
|||
Net cash used in operating activities
|
(1,903
|
)
|
|
(3,473
|
)
|
|
(12,812
|
)
|
|||
Investing activities
|
|
|
|
|
|
||||||
Purchase of property and equipment
|
(660
|
)
|
|
(401
|
)
|
|
(2,006
|
)
|
|||
Purchase of short-term investments
|
—
|
|
|
—
|
|
|
(2
|
)
|
|||
Sale of short-term investments
|
—
|
|
|
—
|
|
|
472
|
|
|||
Additions to patents and licenses
|
(291
|
)
|
|
(6
|
)
|
|
(234
|
)
|
|||
Proceeds from sales of property, plant and equipment
|
2,600
|
|
|
35
|
|
|
1,040
|
|
|||
Net cash provided by (used in) investing activities
|
1,649
|
|
|
(372
|
)
|
|
(730
|
)
|
|||
Financing activities
|
|
|
|
|
|
||||||
Payment of long-term debt
|
(880
|
)
|
|
(1,901
|
)
|
|
(4,494
|
)
|
|||
Proceeds from revolving credit facility
|
87,935
|
|
|
65,767
|
|
|
2,500
|
|
|||
Repayments of revolving credit facility
|
(85,025
|
)
|
|
(64,549
|
)
|
|
—
|
|
|||
Proceeds from long-term debt
|
—
|
|
|
—
|
|
|
446
|
|
|||
Proceeds from repayment of shareholder notes
|
—
|
|
|
—
|
|
|
46
|
|
|||
Proceeds from issuance of common stock, net of issuance costs
|
—
|
|
|
(2
|
)
|
|
17,465
|
|
|||
Payments to settle employee tax withholdings on stock-based compensation
|
(19
|
)
|
|
(34
|
)
|
|
(22
|
)
|
|||
Deferred financing costs
|
—
|
|
|
—
|
|
|
(406
|
)
|
|||
Net proceeds from employee equity exercises
|
8
|
|
|
104
|
|
|
441
|
|
|||
Net cash provided by (used in) financing activities
|
2,019
|
|
|
(615
|
)
|
|
15,976
|
|
|||
Net increase (decrease) in cash and cash equivalents
|
1,765
|
|
|
(4,460
|
)
|
|
2,434
|
|
|||
Cash and cash equivalents at beginning of period
|
15,542
|
|
|
20,002
|
|
|
17,568
|
|
|||
Cash and cash equivalents at end of period
|
$
|
17,307
|
|
|
$
|
15,542
|
|
|
$
|
20,002
|
|
Supplemental cash flow information:
|
|
|
|
|
|
Cash paid for interest
|
$
|
164
|
|
|
$
|
191
|
|
|
$
|
287
|
|
Cash (received) paid for income taxes
|
$
|
(153
|
)
|
|
$
|
18
|
|
|
$
|
42
|
|
Supplemental disclosure of non-cash investing and financing activities:
|
|
|
|
|
|
||||||
Vendor financed capital lease addition
|
$
|
175
|
|
|
$
|
396
|
|
|
$
|
—
|
|
|
2017
|
|
2016
|
||||
Accounts receivable, gross
|
$
|
9,315
|
|
|
$
|
11,394
|
|
Allowance for doubtful accounts
|
(144
|
)
|
|
(505
|
)
|
||
Accounts receivable, net
|
$
|
9,171
|
|
|
$
|
10,889
|
|
|
Not Past Due
|
|
1-90 days
past due |
|
Greater than 90
days past due |
|
Total past due
|
|
Total sales-type
leases |
||||||||||
Lease balances included in consolidated accounts receivable—current
|
$
|
44
|
|
|
$
|
—
|
|
|
$
|
3
|
|
|
$
|
3
|
|
|
$
|
47
|
|
Lease balances included in consolidated accounts receivable—long-term
|
5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|||||
Total gross sales-type leases
|
49
|
|
|
—
|
|
|
3
|
|
|
3
|
|
|
52
|
|
|||||
Allowance
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total net sales-type leases
|
$
|
49
|
|
|
$
|
—
|
|
|
$
|
3
|
|
|
$
|
3
|
|
|
$
|
52
|
|
|
Not Past Due
|
|
1-90 days
past due |
|
Greater than 90
days past due |
|
Total past due
|
|
Total sales-type
leases |
||||||||||
Lease balances included in consolidated accounts receivable—current
|
$
|
294
|
|
|
$
|
4
|
|
|
$
|
10
|
|
|
$
|
14
|
|
|
$
|
308
|
|
Lease balances included in consolidated accounts receivable—long-term
|
101
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
101
|
|
|||||
Total gross sales-type leases
|
395
|
|
|
4
|
|
|
10
|
|
|
14
|
|
|
409
|
|
|||||
Allowance
|
—
|
|
|
—
|
|
|
(9
|
)
|
|
(9
|
)
|
|
(9
|
)
|
|||||
Total net sales-type leases
|
$
|
395
|
|
|
$
|
4
|
|
|
$
|
1
|
|
|
$
|
5
|
|
|
$
|
400
|
|
|
Balance at
beginning of period |
|
Provisions
charged to expense |
|
Write offs
and other |
|
Balance at
end of period |
|||||||||
March 31,
|
(in Thousands)
|
|||||||||||||||
2017
|
Allowance for Doubtful Accounts on financing receivables
|
$
|
9
|
|
|
$
|
—
|
|
|
$
|
9
|
|
|
$
|
—
|
|
2016
|
Allowance for Doubtful Accounts on financing receivables
|
$
|
156
|
|
|
$
|
30
|
|
|
$
|
177
|
|
|
$
|
9
|
|
2015
|
Allowance for Doubtful Accounts on financing receivables
|
$
|
94
|
|
|
$
|
62
|
|
|
$
|
—
|
|
|
$
|
156
|
|
|
Cost
|
|
Obsolescence Reserve
|
|
Net
|
||||||
As of March 31, 2017
|
|
|
|
|
|
||||||
Raw materials and components
|
$
|
8,104
|
|
|
$
|
(1,807
|
)
|
|
$
|
6,297
|
|
Work in process
|
1,918
|
|
|
(329
|
)
|
|
1,589
|
|
|||
Finished goods
|
7,044
|
|
|
(1,337
|
)
|
|
5,707
|
|
|||
Total
|
$
|
17,066
|
|
|
$
|
(3,473
|
)
|
|
$
|
13,593
|
|
|
|
|
|
|
|
||||||
As of March 31, 2016
|
|
|
|
|
|
||||||
Raw materials and components
|
$
|
10,556
|
|
|
$
|
(1,052
|
)
|
|
$
|
9,504
|
|
Work in process
|
2,045
|
|
|
(119
|
)
|
|
1,926
|
|
|||
Finished goods
|
6,550
|
|
|
(956
|
)
|
|
5,594
|
|
|||
Total
|
$
|
19,151
|
|
|
$
|
(2,127
|
)
|
|
$
|
17,024
|
|
|
March 31, 2017
|
|
March 31, 2016
|
||||
Unbilled accounts receivable
|
$
|
2,226
|
|
|
$
|
4,307
|
|
Other prepaid expenses
|
651
|
|
|
731
|
|
||
Total
|
$
|
2,877
|
|
|
$
|
5,038
|
|
|
March 31, 2017
|
|
March 31, 2016
|
||||
Land and land improvements
|
$
|
424
|
|
|
$
|
421
|
|
Buildings and building improvements
|
9,245
|
|
|
11,849
|
|
||
Furniture, fixtures and office equipment
|
7,056
|
|
|
7,233
|
|
||
Leasehold improvements
|
324
|
|
|
148
|
|
||
Equipment leased to customers under Power Purchase Agreements
|
4,997
|
|
|
4,997
|
|
||
Plant equipment
|
11,627
|
|
|
10,805
|
|
||
Construction in progress
|
61
|
|
|
128
|
|
||
|
33,734
|
|
|
35,581
|
|
||
Less: accumulated depreciation and amortization
|
(19,948
|
)
|
|
(18,577
|
)
|
||
Net property and equipment
|
$
|
13,786
|
|
|
$
|
17,004
|
|
|
March 31, 2017
|
|
March 31, 2016
|
||||
Equipment
|
$
|
581
|
|
|
408
|
|
|
Less: accumulated depreciation and amortization
|
(202
|
)
|
|
(65
|
)
|
||
Net equipment
|
$
|
379
|
|
|
$
|
343
|
|
Balance at March 31, 2015
|
$
|
4,409
|
|
Impairments
|
(4,409
|
)
|
|
Balance at March 31, 2016
|
$
|
—
|
|
|
March 31, 2017
|
|
March 31, 2016
|
||||||||||||||||||||
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net
|
||||||||||||
Patents
|
$
|
2,658
|
|
|
$
|
(1,211
|
)
|
|
$
|
1,447
|
|
|
$
|
2,377
|
|
|
$
|
(1,053
|
)
|
|
$
|
1,324
|
|
Licenses
|
58
|
|
|
(58
|
)
|
|
—
|
|
|
58
|
|
|
(58
|
)
|
|
—
|
|
||||||
Trade name and trademarks
|
1,715
|
|
|
—
|
|
|
1,715
|
|
|
1,956
|
|
|
—
|
|
|
1,956
|
|
||||||
Customer relationships
|
3,600
|
|
|
(3,054
|
)
|
|
546
|
|
|
3,600
|
|
|
(2,512
|
)
|
|
1,088
|
|
||||||
Developed technology
|
900
|
|
|
(426
|
)
|
|
474
|
|
|
900
|
|
|
(265
|
)
|
|
635
|
|
||||||
Non-competition agreements
|
100
|
|
|
(75
|
)
|
|
25
|
|
|
100
|
|
|
(55
|
)
|
|
45
|
|
||||||
Total
|
$
|
9,031
|
|
|
$
|
(4,824
|
)
|
|
$
|
4,207
|
|
|
$
|
8,991
|
|
|
$
|
(3,943
|
)
|
|
$
|
5,048
|
|
Fiscal 2018
|
$
|
621
|
|
Fiscal 2019
|
445
|
|
|
Fiscal 2020
|
359
|
|
|
Fiscal 2021
|
285
|
|
|
Fiscal 2022
|
167
|
|
|
Thereafter
|
615
|
|
|
|
$
|
2,492
|
|
|
Fiscal Year Ended March 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Amortization included in cost of sales:
|
|
|
|
|
|
||||||
Patents
|
$
|
158
|
|
|
$
|
139
|
|
|
$
|
132
|
|
Total
|
$
|
158
|
|
|
$
|
139
|
|
|
$
|
132
|
|
|
|
|
|
|
|
||||||
Amortization included in operating expenses:
|
|
|
|
|
|
||||||
Customer relationships
|
$
|
542
|
|
|
$
|
891
|
|
|
$
|
1,085
|
|
Developed technology
|
161
|
|
|
156
|
|
|
90
|
|
|||
Non-competition agreements
|
20
|
|
|
20
|
|
|
20
|
|
|||
Patents
|
—
|
|
|
9
|
|
|
—
|
|
|||
Total
|
723
|
|
|
1,076
|
|
|
1,195
|
|
|||
Total amortization
|
$
|
881
|
|
|
$
|
1,215
|
|
|
$
|
1,327
|
|
|
March 31, 2017
|
|
March 31, 2016
|
||||
Deferred financing costs
|
$
|
—
|
|
|
$
|
92
|
|
Security deposits
|
117
|
|
|
87
|
|
||
Other
|
53
|
|
|
6
|
|
||
Total
|
$
|
170
|
|
|
$
|
185
|
|
|
March 31, 2017
|
|
March 31, 2016
|
||||
Compensation and benefits
|
$
|
2,431
|
|
|
$
|
1,794
|
|
Sales tax
|
213
|
|
|
913
|
|
||
Contract costs
|
223
|
|
|
586
|
|
||
Legal and professional fees (1)
|
2,262
|
|
|
2,348
|
|
||
Warranty (2)
|
449
|
|
|
554
|
|
||
Other accruals
|
410
|
|
|
391
|
|
||
Total
|
$
|
5,988
|
|
|
$
|
6,586
|
|
|
March 31,
|
||||||
|
2017
|
|
2016
|
||||
Beginning of year (1)
|
$
|
864
|
|
|
$
|
1,015
|
|
Provision to product cost of revenue
|
(102
|
)
|
|
159
|
|
||
Charges
|
(3
|
)
|
|
(310
|
)
|
||
End of year (1)
|
$
|
759
|
|
|
$
|
864
|
|
|
Fiscal Year Ended March 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Numerator:
|
|
|
|
|
|
||||||
Net loss (dollars in thousands)
|
$
|
(12,288
|
)
|
|
$
|
(20,126
|
)
|
|
$
|
(32,061
|
)
|
Denominator:
|
|
|
|
|
|
||||||
Weighted-average common shares outstanding
|
28,156,382
|
|
|
27,627,693
|
|
|
22,353,419
|
|
|||
Weighted-average common shares and share equivalents outstanding
|
28,156,382
|
|
|
27,627,693
|
|
|
22,353,419
|
|
|||
Net loss per common share:
|
|
|
|
|
|
||||||
Basic
|
$
|
(0.44
|
)
|
|
$
|
(0.73
|
)
|
|
$
|
(1.43
|
)
|
Diluted
|
$
|
(0.44
|
)
|
|
$
|
(0.73
|
)
|
|
$
|
(1.43
|
)
|
|
March 31,
|
||||||
|
2017
|
|
2016
|
||||
Revolving credit facility
|
$
|
6,629
|
|
|
$
|
3,719
|
|
Harris seller's note
|
—
|
|
|
546
|
|
||
Equipment lease obligations
|
321
|
|
|
345
|
|
||
Customer equipment finance notes payable
|
7
|
|
|
90
|
|
||
Other long-term debt
|
14
|
|
|
67
|
|
||
Total long-term debt
|
6,971
|
|
|
4,767
|
|
||
Less current maturities
|
(152
|
)
|
|
(746
|
)
|
||
Long-term debt, less current maturities
|
$
|
6,819
|
|
|
$
|
4,021
|
|
Fiscal 2018
|
$
|
152
|
|
Fiscal 2019
|
6,707
|
|
|
Fiscal 2020
|
83
|
|
|
Fiscal 2021
|
29
|
|
|
Fiscal 2022
|
—
|
|
|
Thereafter
|
—
|
|
|
|
$
|
6,971
|
|
|
Fiscal Year Ended March 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Current
|
$
|
(261
|
)
|
|
$
|
36
|
|
|
$
|
49
|
|
Deferred
|
—
|
|
|
—
|
|
|
—
|
|
|||
|
$
|
(261
|
)
|
|
$
|
36
|
|
|
$
|
49
|
|
|
|
|
|
|
|
||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Federal
|
$
|
(283
|
)
|
|
$
|
15
|
|
|
$
|
—
|
|
State
|
22
|
|
|
21
|
|
|
49
|
|
|||
|
$
|
(261
|
)
|
|
$
|
36
|
|
|
$
|
49
|
|
|
Fiscal Year Ended March 31,
|
|||||||
|
2017
|
|
2016
|
|
2015
|
|||
Statutory federal tax rate
|
34.0
|
%
|
|
34.0
|
%
|
|
34.0
|
%
|
State taxes, net
|
3.5
|
%
|
|
2.8
|
%
|
|
3.6
|
%
|
Federal tax credit
|
—
|
%
|
|
—
|
%
|
|
0.2
|
%
|
State tax credit
|
—
|
%
|
|
—
|
%
|
|
0.1
|
%
|
Change in valuation reserve
|
(37.6
|
)%
|
|
(29.1
|
)%
|
|
(37.0
|
)%
|
Permanent items
|
(0.5
|
)%
|
|
(7.5
|
)%
|
|
(0.1
|
)%
|
Change in tax contingency reserve
|
1.0
|
%
|
|
(0.1
|
)%
|
|
—
|
%
|
Federal Refunds
|
1.4
|
%
|
|
—
|
%
|
|
—
|
%
|
Other, net
|
0.3
|
%
|
|
(0.3
|
)%
|
|
(1.0
|
)%
|
Effective income tax rate
|
2.1
|
%
|
|
(0.2
|
)%
|
|
(0.2
|
)%
|
|
March 31,
|
||||||
|
2017
|
|
2016
|
||||
Inventory, accruals and reserves
|
$
|
4,016
|
|
|
$
|
3,686
|
|
Other
|
54
|
|
|
187
|
|
||
Deferred revenue
|
(141
|
)
|
|
73
|
|
||
Valuation allowance
|
(3,929
|
)
|
|
(3,946
|
)
|
||
Total net current deferred tax assets and liabilities
|
$
|
—
|
|
|
$
|
—
|
|
Federal and state operating loss carry-forwards
|
23,927
|
|
|
19,727
|
|
||
Tax credit carry-forwards
|
1,403
|
|
|
1,475
|
|
||
Non-qualified stock options
|
3,265
|
|
|
3,125
|
|
||
Deferred revenue
|
(51
|
)
|
|
(31
|
)
|
||
Fixed assets
|
(1,360
|
)
|
|
(1,493
|
)
|
||
Intangible assets
|
(1,034
|
)
|
|
(1,297
|
)
|
||
Valuation allowance
|
(26,150
|
)
|
|
(21,506
|
)
|
||
Total net long-term deferred tax assets and liabilities
|
$
|
—
|
|
|
$
|
—
|
|
Total net deferred tax assets
|
$
|
—
|
|
|
$
|
—
|
|
|
Fiscal Year Ended March 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Unrecognized tax benefits as of beginning of fiscal year
|
$
|
227
|
|
|
$
|
212
|
|
|
$
|
210
|
|
Additions based on tax positions related to the current period positions
|
2
|
|
|
15
|
|
|
2
|
|
|||
Reduction for tax positions of prior years
|
$
|
(116
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
Unrecognized tax benefits as of end of fiscal year
|
$
|
113
|
|
|
$
|
227
|
|
|
$
|
212
|
|
Fiscal 2018
|
$
|
654
|
|
Fiscal 2019
|
473
|
|
|
Fiscal 2020
|
114
|
|
|
|
$
|
1,241
|
|
|
As of March 31, 2017
|
||||||||||||||
|
Shares Issued Under ESPP
Plan |
|
Closing Market
Price |
|
Shares Issued Under Loan
Program |
|
Dollar Value of
Loans Issued |
|
Repayment of
Loans |
||||||
Quarter Ended March 31, 2017
|
1,034
|
|
|
$1.98
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Quarter Ended December 31, 2016
|
840
|
|
|
$2.17
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Quarter Ended September 30, 2016
|
1,511
|
|
|
$1.33
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Quarter Ended June 30, 2016
|
1,771
|
|
|
$1.16
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Total
|
5,156
|
|
|
$1.16 - 2.17
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
As of March 31, 2016
|
||||||||||||||
|
Shares Issued Under ESPP
Plan |
|
Closing Market
Price |
|
Shares Issued Under Loan
Program |
|
Dollar Value of
Loans Issued |
|
Repayment of
Loans |
||||||
Quarter Ended March 31, 2016
|
1,435
|
|
|
$1.39
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Quarter Ended December 31, 2015
|
1,170
|
|
|
$2.17
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Quarter Ended September 30, 2015
|
779
|
|
|
$1.80
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Quarter Ended June 30, 2015
|
541
|
|
|
$2.51
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Total
|
3,925
|
|
|
$1.39 - 2.51
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Fiscal Year Ended March 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Cost of product revenue
|
$
|
30
|
|
|
$
|
36
|
|
|
$
|
50
|
|
General and administrative
|
1,337
|
|
|
1,148
|
|
|
1,056
|
|
|||
Sales and marketing
|
139
|
|
|
235
|
|
|
360
|
|
|||
Research and development
|
99
|
|
|
43
|
|
|
33
|
|
|||
|
$
|
1,605
|
|
|
$
|
1,462
|
|
|
$
|
1,499
|
|
Available at March 31, 2014
|
1,291,996
|
|
Granted stock options
|
—
|
|
Granted shares
|
(27,931
|
)
|
Restricted Shares
|
(410,496
|
)
|
Forfeited restricted shares
|
74,957
|
|
Forfeited stock options
|
150,074
|
|
Available at March 31, 2015
|
1,078,600
|
|
Granted stock options
|
—
|
|
Granted shares
|
(64,960
|
)
|
Restricted Shares
|
(795,805
|
)
|
Forfeited restricted shares
|
206,471
|
|
Forfeited stock options
|
363,380
|
|
Available at March 31, 2016
|
787,686
|
|
Shares reserved under new plan
|
1,750,000
|
|
Shares canceled from old plan
|
(168,289
|
)
|
Granted stock options
|
—
|
|
Granted shares
|
(58,484
|
)
|
Restricted shares
|
(1,132,392
|
)
|
Forfeited restricted shares
|
52,500
|
|
Forfeited stock options
|
67,200
|
|
Available at March 31, 2017
|
1,298,221
|
|
|
Number of
Shares |
|
Weighted
Average Exercise Price |
|
Weighted
Average Fair Value of Options Granted |
|
Aggregate Intrinsic
Value |
||||||
Outstanding at March 31, 2014
|
2,716,317
|
|
|
$
|
3.43
|
|
|
1.32
|
|
|
|
||
Granted
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|||
Exercised
|
(139,407
|
)
|
|
$
|
2.46
|
|
|
|
|
|
|||
Forfeited
|
(150,074
|
)
|
|
$
|
3.13
|
|
|
|
|
|
|||
Outstanding at March 31, 2015
|
2,426,836
|
|
|
$
|
3.50
|
|
|
—
|
|
|
|
||
Granted
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|||
Exercised
|
(46,410
|
)
|
|
$
|
2.09
|
|
|
|
|
|
|||
Forfeited
|
(363,380
|
)
|
|
$
|
4.68
|
|
|
|
|
|
|||
Outstanding at March 31, 2016
|
2,017,046
|
|
|
$
|
3.32
|
|
|
—
|
|
|
|
||
Granted
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|||
Exercised
|
(80,000
|
)
|
|
$
|
2.20
|
|
|
|
|
|
|||
Forfeited
|
(416,093
|
)
|
|
$
|
3.41
|
|
|
|
|
|
|||
Outstanding at March 31, 2017
|
1,520,953
|
|
|
$
|
3.36
|
|
|
—
|
|
|
$
|
53,760
|
|
Exercisable at March 31, 2017
|
1,405,653
|
|
|
|
|
|
|
$
|
49,536
|
|
|
March 31, 2017
|
||||||||||
|
Outstanding
|
|
Weighted Average Remaining Contractual Life (Years)
|
|
Weighted Average Exercise Price
|
|
Vested
|
|
Weighted Average Exercise Price
|
||
$1.62 - 2.20
|
460,584
|
|
|
5.33
|
|
$1.90
|
|
406,484
|
|
|
$1.89
|
$2.41 - 2.75
|
212,640
|
|
|
5.99
|
|
2.45
|
|
209,440
|
|
|
2.44
|
$2.86 - 4.28
|
650,674
|
|
|
2.97
|
|
3.39
|
|
592,674
|
|
|
3.43
|
$4.49 - 4.76
|
25,000
|
|
|
1.44
|
|
4.64
|
|
25,000
|
|
|
4.64
|
$5.35 - 5.44
|
75,204
|
|
|
2.01
|
|
5.39
|
|
75,204
|
|
|
5.39
|
$9.00
|
27,000
|
|
|
0.87
|
|
9.00
|
|
27,000
|
|
|
9.00
|
$10.14 - 11.61
|
69,851
|
|
|
0.98
|
|
10.56
|
|
69,851
|
|
|
10.56
|
|
1,520,953
|
|
|
3.90
|
|
$3.36
|
|
1,405,653
|
|
|
$3.42
|
Balance at March 31, 2016
|
1,053,389
|
|
|
|
Shares issued
|
1,132,392
|
|
|
|
Shares vested
|
(375,738
|
)
|
|
|
Shares forfeited
|
(105,500
|
)
|
|
|
Shares outstanding at March 31, 2017
|
1,704,543
|
|
|
|
Per share price on grant date
|
$1.35-6.80
|
|
|
|
Compensation expense
|
$
|
1,680,362
|
|
|
Fiscal 2018
|
$
|
1,189
|
|
Fiscal 2019
|
673
|
|
|
Fiscal 2020
|
186
|
|
|
Fiscal 2021
|
46
|
|
|
Fiscal 2022
|
—
|
|
|
Thereafter
|
—
|
|
|
|
$
|
2,094
|
|
Remaining weighted average expected term
|
2.2 years
|
|
|
Revenues
|
|
Operating (Loss) Profit
|
||||||||||||||||||||
(dollars in thousands)
|
For the year ended March 31,
|
|
For the year ended March 31,
|
||||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2017
|
|
2016
|
|
2015
|
||||||||||||
Segments:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. Markets
|
$
|
17,852
|
|
|
$
|
38,841
|
|
|
$
|
37,778
|
|
|
$
|
(1,357
|
)
|
|
$
|
(4,958
|
)
|
|
$
|
(12,542
|
)
|
Engineered Systems
|
29,501
|
|
|
26,325
|
|
|
33,454
|
|
|
(3,647
|
)
|
|
(6,982
|
)
|
|
(12,431
|
)
|
||||||
Distribution Services
|
22,858
|
|
|
2,476
|
|
|
978
|
|
|
(927
|
)
|
|
(632
|
)
|
|
(455
|
)
|
||||||
Corporate and Other
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,596
|
)
|
|
(7,349
|
)
|
|
(6,508
|
)
|
||||||
|
$
|
70,211
|
|
|
$
|
67,642
|
|
|
$
|
72,210
|
|
|
$
|
(12,527
|
)
|
|
$
|
(19,921
|
)
|
|
$
|
(31,936
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Depreciation and Amortization
|
|
Capital Expenditures
|
||||||||||||||||||||
|
For the year ended March 31,
|
|
For the year ended March 31,
|
||||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2017
|
|
2016
|
|
2015
|
||||||||||||
Segments:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. Markets
|
$
|
359
|
|
|
$
|
1,168
|
|
|
$
|
1,711
|
|
|
$
|
150
|
|
|
$
|
72
|
|
|
$
|
626
|
|
Engineered Systems
|
1,249
|
|
|
1,987
|
|
|
1,404
|
|
|
224
|
|
|
43
|
|
|
495
|
|
||||||
Distribution Services
|
148
|
|
|
71
|
|
|
32
|
|
|
184
|
|
|
10
|
|
|
40
|
|
||||||
Corporate and Other
|
576
|
|
|
939
|
|
|
1,036
|
|
|
102
|
|
|
276
|
|
|
845
|
|
||||||
|
$
|
2,332
|
|
|
$
|
4,165
|
|
|
$
|
4,183
|
|
|
$
|
660
|
|
|
$
|
401
|
|
|
$
|
2,006
|
|
|
Total Assets
|
|
Deferred Revenue
|
||||||||||||
|
March 31, 2017
|
|
March 31, 2016
|
|
March 31, 2017
|
|
March 31, 2016
|
||||||||
Segments:
|
|
|
|
|
|
|
|
||||||||
U.S. Markets
|
$
|
6,698
|
|
|
$
|
18,503
|
|
|
$
|
141
|
|
|
$
|
167
|
|
Engineered Systems
|
18,111
|
|
|
21,885
|
|
|
1,424
|
|
|
1,098
|
|
||||
Distribution Services
|
9,702
|
|
|
1,386
|
|
|
—
|
|
|
—
|
|
||||
Corporate and Other
|
27,540
|
|
|
29,101
|
|
|
—
|
|
|
—
|
|
||||
|
$
|
62,051
|
|
|
$
|
70,875
|
|
|
$
|
1,565
|
|
|
$
|
1,265
|
|
|
Three Months Ended
|
|
|
||||||||||||||||
|
Mar 31, 2017
|
|
Dec 31, 2016
|
|
Sep 30, 2016
|
|
Jun 30, 2016
|
|
Total
|
||||||||||
|
(in thousands, except per share amounts)
|
||||||||||||||||||
Total revenue
|
$
|
15,290
|
|
|
$
|
20,617
|
|
|
$
|
18,670
|
|
|
$
|
15,634
|
|
|
$
|
70,211
|
|
Gross profit
|
$
|
912
|
|
|
$
|
6,155
|
|
|
$
|
6,244
|
|
|
$
|
4,026
|
|
|
$
|
17,337
|
|
Net loss (1)
|
$
|
(7,292
|
)
|
|
$
|
(1,086
|
)
|
|
$
|
(970
|
)
|
|
$
|
(2,940
|
)
|
|
$
|
(12,288
|
)
|
Basic net loss per share
|
$
|
(0.26
|
)
|
|
$
|
(0.04
|
)
|
|
$
|
(0.03
|
)
|
|
$
|
(0.11
|
)
|
|
$
|
(0.44
|
)
|
Shares used in basic per share calculation
|
28,310
|
|
|
28,259
|
|
|
28,172
|
|
|
27,886
|
|
|
28,156
|
|
|||||
Diluted net loss per share
|
$
|
(0.26
|
)
|
|
$
|
(0.04
|
)
|
|
$
|
(0.03
|
)
|
|
$
|
(0.11
|
)
|
|
$
|
(0.44
|
)
|
Shares used in diluted per share calculation
|
28,310
|
|
|
28,259
|
|
|
28,172
|
|
|
27,886
|
|
|
28,156
|
|
|
Three Months Ended
|
|
|
||||||||||||||||
|
Mar 31, 2016
|
|
Dec 31, 2015
|
|
Sep 30, 2015
|
|
Jun 30, 2015
|
|
Total
|
||||||||||
|
(in thousands, except per share amounts)
|
||||||||||||||||||
Total revenue
|
$
|
18,576
|
|
|
$
|
16,751
|
|
|
$
|
15,728
|
|
|
$
|
16,587
|
|
|
$
|
67,642
|
|
Gross profit
|
$
|
4,619
|
|
|
$
|
4,708
|
|
|
$
|
2,913
|
|
|
$
|
3,757
|
|
|
$
|
15,997
|
|
Net loss (2)
|
$
|
(10,871
|
)
|
|
$
|
(2,004
|
)
|
|
$
|
(3,600
|
)
|
|
$
|
(3,651
|
)
|
|
$
|
(20,126
|
)
|
Basic net loss per share
|
$
|
(0.39
|
)
|
|
$
|
(0.07
|
)
|
|
$
|
(0.13
|
)
|
|
$
|
(0.13
|
)
|
|
$
|
(0.73
|
)
|
Shares used in basic per share calculation
|
27,759
|
|
|
27,672
|
|
|
27,598
|
|
|
27,482
|
|
|
27,628
|
|
|||||
Diluted net loss per share
|
$
|
(0.39
|
)
|
|
$
|
(0.07
|
)
|
|
$
|
(0.13
|
)
|
|
$
|
(0.13
|
)
|
|
$
|
(0.73
|
)
|
Shares used in diluted per share calculation
|
27,759
|
|
|
27,672
|
|
|
27,598
|
|
|
27,482
|
|
|
27,628
|
|
(1)
|
Includes intangible impairment of
$250
and
$2,209
related to inventory reserve and other inventory adjustments.
|
(2)
|
Includes
$4,409
related to the impairment of goodwill, and
$1,614
related to the write-down to fair value of the manufacturing facility, and
$1,400
reserve for a loss contingency.
|
ITEM 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
ITEM 9A.
|
CONTROLS AND PROCEDURES
|
i.
|
pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;
|
ii.
|
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and
|
iii.
|
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.
|
•
|
Information & Communication.
We determined that our controls pertaining to information and communication did not operate effectively, resulting in a material weakness pertaining to these COSO components. Specifically, we did not have sufficient communication of the status and evolution of a project to ensure timely and accurate recognition of
|
•
|
Control Activities - Accounting Close.
The operating effectiveness of our controls were inadequate to ensure that project costs were identified and recorded to expense in a timely manner. In addition, matters identified through management review controls were not brought to a timely resolution.
|
•
|
Ensure a thorough understanding of the “as is” state, process owners, and procedural or technological gaps causing the deficiency;
|
•
|
Design and evaluate a remediation action for the review and analysis of project costs; validate or improve the related policy and procedures; evaluate skills of the process owners with regard to the policy and adjust as required;
|
•
|
Implement specific remediation actions: train process owners, allow time for process adoption and adequate transaction volume for next steps;
|
•
|
Test and measure the design and effectiveness of the remediation actions; test and provide feedback on the design and operating effectiveness of the controls, and:
|
•
|
Review and acceptance of completion of the remediation effort by executive management and the Audit & Finance Committee.
|
•
|
Developed a regular method for the evaluation of actual project costs incurred against budgeted costs and for the communication of such costs and project status.
|
•
|
Revisited the method in which projects are reviewed and evaluated by the accounting department to ensure the accurate and timely recording of necessary adjustments.
|
ITEM 9B.
|
OTHER INFORMATION
|
Name
|
Title
|
FY18
Base Salary
|
Long-Term
Incentive Award
|
Michael W. Altschaefl
|
CEO
|
$325,000
|
$260,000
|
William T. Hull
|
CFO/CAO/EVP
|
$283,500
|
$226,800
|
Scott Green
|
COO/EVP
|
$275,000
|
$220,000
|
Michael J. Potts
|
CRO/EVP
|
$260,000
|
N/A
|
Marc Meade
|
EVP
|
$211,500
|
$169,200
|
Total:
|
|
$1,355,000
|
$876,000
|
Name
|
FY 18 Title
|
Target FY 18 Bonus
% of FY 18 Base
|
Target
FY 18 $ Bonus
|
% of
Bonus Pool
|
Michael W. Altschaefl
|
CEO
|
100 %
|
$325,000
|
45.77%
|
William T. Hull
|
CFO/CAO/EVP
|
50 %
|
$141,750
|
19.96%
|
Scott Green
|
COO/EVP
|
50 %
|
$137,500
|
19.37%
|
Marc Meade
|
EVP
|
50 %
|
$105,750
|
14.90%
|
Total
|
|
|
$710,000
|
100.00%
|
Position
|
|
Retainer
|
Chairman of the Board
|
|
N/A
|
Lead Director
|
|
$30,000
|
Audit and Finance Committee Chair
|
|
$25,000
|
Compensation Committee Chair
|
|
$20,000
|
Nominating and Corporate Governance Committee Chair
|
|
$20,000
|
Ad Hoc Litigation Committee Chair
|
|
$10,000
|
Total
|
|
$105,000
|
ITEM 10.
|
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
ITEM 11.
|
EXECUTIVE COMPENSATION
|
ITEM 12.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS
|
(a)
|
Financial Statements
|
(b)
|
Financial Statement Schedule
|
|
|
SCHEDULE II
VALUATION and QUALIFYING ACCOUNTS |
||||||||||||||
|
|
Balance at
beginning of period |
|
Provisions
charged to expense |
|
Write offs
and other |
|
Balance at
end of period |
||||||||
March 31,
|
|
(in Thousands)
|
||||||||||||||
2017
|
Allowance for Doubtful Accounts
|
$
|
505
|
|
|
$
|
132
|
|
|
$
|
493
|
|
|
$
|
144
|
|
2016
|
Allowance for Doubtful Accounts
|
$
|
458
|
|
|
$
|
575
|
|
|
$
|
528
|
|
|
$
|
505
|
|
2015
|
Allowance for Doubtful Accounts
|
$
|
384
|
|
|
$
|
285
|
|
|
$
|
211
|
|
|
$
|
458
|
|
|
|
|
|
|
|
|
|
|
||||||||
2017
|
Inventory Obsolescence Reserve
|
$
|
2,127
|
|
|
$
|
2,212
|
|
|
$
|
866
|
|
|
$
|
3,473
|
|
2016
|
Inventory Obsolescence Reserve
|
$
|
1,619
|
|
|
$
|
509
|
|
|
$
|
1
|
|
|
$
|
2,127
|
|
2015
|
Inventory Obsolescence Reserve
|
$
|
2,527
|
|
|
$
|
10,505
|
|
|
$
|
11,413
|
|
|
$
|
1,619
|
|
Number
|
|
Exhibit Title
|
|
|
|
||
3.1
|
|
|
Amended and Restated Articles of Incorporation of Orion Energy Systems, Inc., filed as Exhibit 3.3 to the Registrant’s Form S-1 filed August 20, 2007, is hereby incorporated by reference.
|
|
|
||
3.2
|
|
|
Amended and Restated Bylaws of Orion Energy Systems, Inc., filed as Exhibit 3.2 to the Registrant’s Form 10-Q filed November 8, 2013, is hereby incorporated by reference.
|
|
|
||
4.1
|
|
|
Rights Agreement, dated as of January 7, 2009, between Orion Energy Systems, Inc. and Wells Fargo Bank, N.A., which includes as Exhibit A thereto the Form of Right Certificate and as Exhibit B thereto the Summary of Common Share Purchase Rights, filed as Exhibit 4.1 to the Registrant’s Form 8-A filed January 8, 2009, is hereby incorporated by reference.
|
|
|
||
10.1
|
|
|
Credit and Security Agreement dated as of February 6, 2015 among Orion Energy Systems, Inc. and certain of its subsidiaries, as borrowers and guarantors, and Wells Fargo Bank, National Association, as lender, filed as Exhibit 10.1 to Registrant’s Form 10-Q filed on February 9, 2015, is hereby incorporated by reference.
|
|
|
|
|
10.2
|
|
|
First Amendment to Credit Agreement and Security Agreement, dated as of December 27, 2016, by and among Orion Energy Systems, Inc., the subsidiary Borrowers party thereto, the subsidiary Guarantors party thereto and Wells Fargo Bank, National Association, filed as Exhibit 10.1 to Registrant’s Form 8-K filed on December 29, 2016, is hereby incorporated by reference.
|
|
|
|
|
10.3
|
|
|
Orion Energy Systems, Inc. 2003 Stock Option Plan, as amended, filed as Exhibit 10.6 to the Registrant’s Form S-1 filed August 20, 2007, is hereby incorporated by reference.*
|
|
|
||
10.4
|
|
|
Form of Stock Option Agreement under the Orion Energy Systems, Inc. 2003 Stock Option Plan, filed as Exhibit 10.7 to the Registrant’s Form S-1 filed August 20, 2007, is hereby incorporated by reference.*
|
|
|
||
10.5
|
|
|
Orion Energy Systems, Inc. 2004 Stock and Incentive Awards Plan, filed as Exhibit 10.9 to the Registrant’s Form S-1 filed August 20, 2007, is hereby incorporated by reference.*
|
|
|
||
10.5(a)
|
|
|
Amendment to Orion Energy Systems, Inc. 2004 Stock and Incentive Awards Plan, filed September 9, 2011 as Appendix A to the Registrant’s definitive proxy statement is hereby incorporated by reference.*
|
|
|
||
10.6
|
|
|
Form of Stock Option Agreement under the Orion Energy Systems, Inc. 2004 Equity Incentive Plan, filed as Exhibit 10.10 to the Registrant’s Form S-1 filed August 20, 2007, is hereby incorporated by reference.*
|
|
|
||
10.7
|
|
|
Form of Stock Option Agreement as of May 14, 2013 under the Orion Energy Systems, Inc. 2004 Stock and Incentive Awards Plan, filed as Exhibit 10.7 to the Registrant’s Form 10-K filed on June 14, 2014, is hereby incorporated by reference.*
|
|
|
||
10.8
|
|
|
Form of Restricted Stock Award Agreement as of May 14, 2013 under the Orion Energy Systems, Inc. 2004 Stock and Incentive Awards Plan, filed as Exhibit 10.8 to the Registrant’s Form 10-K filed on June 14, 2014, is hereby incorporated by reference.*
|
|
|
|
|
10.9
|
|
|
Orion Energy Systems, Inc. 2016 Omnibus Incentive Plan, filed as Annex A to the Registrant’s Form 8-K filed July 8, 2016, is hereby incorporated by reference.*
|
|
|
|
|
10.10
|
|
|
Form of Non-Employee Director Tandem Restricted Stock and Cash Award Agreement under the Orion Energy Systems, Inc. 2016 Omnibus Incentive Plan, filed as Exhibit 4.5 to the Registrant’s Form S-8 filed August 10, 2016, is hereby incorporated by reference.*
|
|
|
|
|
10.11
|
|
|
Form of Non-Employee Director Restricted Stock Award Agreement under the Orion Energy Systems, Inc. 2016 Omnibus Incentive Plan, filed as Exhibit 4.6 to the Registrant’s Form S-8 filed August 10, 2016, is hereby incorporated by reference.*
|
|
|
|
|
10.12
|
|
|
Form of Executive Tandem Restricted Stock and Cash Award Agreement under the Orion Energy Systems, Inc. 2016 Omnibus Incentive Plan, filed as Exhibit 4.7 to the Registrant’s Form S-8 filed August 10, 2016, is hereby incorporated by reference.*
|
|
|
|
|
10.13
|
|
|
Form of Executive Restricted Stock Award Agreement under the Orion Energy Systems, Inc. 2016 Omnibus Incentive Plan, filed as Exhibit 4.8 to the Registrant’s Form S-8 filed August 10, 2016, is hereby incorporated by reference.*
|
10.14
|
|
|
Orion Energy Systems, Inc. Non-Employee Director Compensation Plan, updated and effective as of June 6, 2017. * +
|
|
|
10.15
|
|
|
Executive Employment and Severance Agreement, dated April 1, 2017, by and between Orion Energy Systems, Inc. and Michael J. Potts, filed as Exhibit 10.1 to the Registrant’s Form 8-K filed April 3, 2017, is hereby incorporated by reference.*
|
|
|
|
|
10.16
|
|
|
Executive Employment and Severance Agreement, dated as of June 8, 2017, by and between Orion Energy Systems, Inc. and Michael W. Altschaefl. * +
|
|
|
||
10.17
|
|
|
Executive Employment and Severance Agreement by and between Orion Energy Systems, Inc. and William T. Hull, filed as Exhibit 10.1 to the Registrant’s Form 8-K filed on October 5, 2015, is hereby incorporated by reference.*
|
|
|
||
10.18
|
|
|
Executive Employment and Severance Agreement, dated as of August 3, 2016, by and between Orion Energy Systems, Inc. and Scott A. Green, filed as Exhibit 10.1 to Registrant’s Form 8-K filed on August 4, 2016, is hereby incorporated by reference.*
|
|
|
|
|
10.19
|
|
|
Letter Agreement effective June 13, 2017 between Orion and William T. Hull. * +
|
|
|
|
|
10.20
|
|
|
Executive Employment and Severance Agreement, dated as of January 1, 2014, by and between Orion Energy Systems, Inc. and Marc Meade filed as Exhibit 10.1 to the Registrant’s Form 8-K filed on January 6, 2014, is hereby incorporated by reference.*
|
|
|
|
|
10.21
|
|
|
Form of Executive Restricted Stock Award Agreement as of May 14, 2014 under the Orion Energy Systems, Inc. 2004 Stock and Incentive Awards Plan filed as Exhibit 10.17 to the Registrant’s Form 10-K filed on June 13, 2014, is hereby incorporated by reference.*
|
|
|
|
|
10.22
|
|
|
Form of Non-Employee Director Restricted Stock Award Agreement as of May 14, 2014 under the Orion Energy Systems, Inc. 2004 Stock and Incentive Awards Plan filed as Exhibit 10.18 to the Registrant’s Form 10-K filed on June 13, 2014, is hereby incorporated by reference.*
|
|
|
|
|
10.23
|
|
|
Form of Executive Restricted Stock Award Agreement as of May 26, 2015 under the Orion Energy Systems, Inc. 2004 Stock and Incentive Awards Plan , filed as Exhibit 10.18 to the Registrant’s Form 10-K for the year ended March 31, 2015, is hereby incorporated by reference.*
|
|
|
|
|
10.24
|
|
|
Form of Executive Tandem Restricted Stock and Cash Award Agreement as of May 26, 2015 under the Orion Energy Systems, Inc. 2004 Stock and Incentive Awards Plan, filed as Exhibit 10.19 to the Registrant’s Form 10-K for the year ended March 31, 2015, is hereby incorporated by reference.*
|
|
|
|
|
10.25
|
|
|
Form of Non-Employee Director Restricted Stock Award Agreement as of May 26, 2015 under the Orion Energy Systems, Inc. 2004 Stock and Incentive Awards Plan, filed as Exhibit 10.20 to the Registrant’s Form 10-K for the year ended March 31, 2015, is hereby incorporated by reference.*
|
|
|
|
|
10.26
|
|
|
Form of Non-Employee Director Tandem Restricted Stock and Cash Award Agreement as of May 26, 2015 under the Orion Energy Systems, Inc. 2004 Stock and Incentive Awards Plan, filed as Exhibit 10.21 to the Registrant’s Form 10-K for the year ended March 31, 2015, is hereby incorporated by reference.*
|
|
|
||
10.27
|
|
|
Mutual Termination and Severance Agreement and Complete and Permanent Release of All Claims, dated June 8, 2017, by and between Orion Energy Systems, Inc. and John H. Scribante .* +
|
|
|
|
|
21.1
|
|
|
Subsidiaries of Orion Energy Systems, Inc.+
|
|
|
||
23.1
|
|
|
Consent of Independent Registered Public Accounting Firm. +
|
|
|
||
31.1
|
|
|
Certification of Chief Executive Officer of Orion Energy Systems, Inc. pursuant to Rule 13a-14(a) or Rule 15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended. +
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31.2
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Certification of Chief Financial Officer of Orion Energy Systems, Inc. pursuant to Rule 13a-14(a) or Rule 15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended. +
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32.1
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Certification of Chief Executive Officer and Chief Financial Officer of Orion Energy Systems, Inc. pursuant to Rule 13a-14(b) promulgated under the Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. +
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101
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101.INS XBRL Instance Document+
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101.SCH Taxonomy extension schema document
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101.CAL Taxonomy extension calculation linkbase document
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101.LAB Taxonomy extension label linkbase document
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101.PRE Taxonomy extension presentation linkbase document
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Documents incorporated by reference by Orion Energy Systems, Inc. are filed with the Securities and Exchange Commission under File No. 001-33887.
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*
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Management contract or compensatory plan or arrangement.
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+
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Filed herewith
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ITEM 16.
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FORM 10-K SUMMARY
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ORION ENERGY SYSTEMS, INC.
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By:
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/s/ MICHAEL W. ALTSCHAEFL
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Michael W. Altschaefl
Chief Executive Officer and Board Chair
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Signature
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Title
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/s/ Michael W. Altschaefl
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Chief Executive Officer and Board Chair (Principal
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Michael W. Altschaefl
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Executive Officer)
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/s/ William T. Hull
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Chief Financial Officer, Chief Accounting Officer and
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William T. Hull
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Treasurer (Principal Financial Officer)
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/s/ Anthony L. Otten
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Lead Independent Director
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Anthony L. Otten
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/s/ Kenneth L. Goodson, Jr.
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Director
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Kenneth L. Goodson, Jr.
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/s/ James R. Kackley.
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Director
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James R. Kackley
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/s/ Michael J. Potts
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Director
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Michael J. Potts
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/s/ Elizabeth Gamsky Rich
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Director
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Elizabeth Gamsky Rich
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/s/ Ellen B. Richstone
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Director
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Ellen B. Richstone
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/s/ Mark C. Williamson
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Director
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Mark C. Williamson
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1. Annual cash retainer:
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$36,000 (cash or stock) ($9,000 paid quarterly)
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2. Board meeting fee:
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None
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3. Committee meeting fee
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None
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4. Annual restricted stock grant:
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$40,500 grant date fair market value (option to accept tandem restricted stock (60%) and restricted cash (40%))
2
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5. Annual Lead Director retainer:
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$30,000 (cash or stock)
1
($7,500 paid quarterly)
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6. Annual Ad Hoc Litigation Committee Chair retainer:
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$10,000 (cash or stock)
1
($2,500 paid quarterly)
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7. Annual Audit Committee Chair retainer:
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$25,000 (cash or stock)
1
($8,333 paid quarterly)
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8. Annual Compensation Committee Chair retainer:
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$20,000 (cash or stock)
1
($5,000 paid quarterly)
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9. Annual Nominating and Corporate Governance Committee Chair retainer:
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$20,000 (cash or stock)
1
($5,000 paid quarterly)
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10. Reimburse out-of-pocket expenses:
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Yes
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11. Non-Employee Director Early Retirement Plan
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a. Upon the recommendation of the Compensation Committee and the approval of the Board of Directors, any non-employee director who voluntarily retires from the Board prior to the end of his or her stated term or who voluntarily decides not to stand for re-election at the end of his or her stated term will be entitled to continued vesting of up to all of his or her then outstanding unvested restricted stock and options on the dates when such vesting would otherwise occur if such director remained on the Board on such dates, subject to such additional terms and conditions, if any, as may be determined necessary or appropriate by the Compensation Committee and the Board of Directors.
b. Upon the recommendation of the Compensation Committee and approval by the Board of Directors, any non-employee director who voluntarily retires from the Board prior to the end of his or her stated term or who voluntarily decides not to stand for re-election at the end of his or her stated term will be entitled to receive a services fee of $200 per hour for any time spent at the request of the Company on Company-related matters, plus reimbursement for all out-of-pocket expenses, subject to such additional terms and conditions, if any, as may be determined necessary or appropriate by the Compensation Committee and the Board of Directors.
c. Upon approval of the Compensation Committee, any non-employee director who voluntarily retires from the Board prior to the end of his or her stated term or who voluntarily decides not to stand for re-election at the end of his or her stated term will be entitled to an extension of the terms of all vested stock options until dates determined by the Compensation Committee that shall not exceed the dates on which such term would have otherwise expired if such director remained on the Board on such dates, subject to such additional terms and conditions, if any, as may be determined necessary or appropriate by the Compensation Committee.
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Name of Executive:
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Michael W. Altschaefl
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Position:
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Chief Executive Officer
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Fiscal Year 2018 Base Salary (pro-rated):
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$325,000
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Initial Term:
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Effective Date through June 8, 2019
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Renewal Periods are:
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1 Year
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Pre-Change of Control Severance Multiplier is:
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2.0x
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EXECUTIVE
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/s/ Michael W. Altschaefl
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Michael W. Altschaefl
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Address
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ORION ENERGY SYSTEMS, INC.
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By:
/s/ Anthony L. Otten
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Anthony L. Otten
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Lead Independent Director
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ORION ENERGY SYSTEMS, INC.
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ORION ENERGY SYSTEMS, INC.
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By: /s/ Michael W. Altschaefl
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Michael W. Altschaefl
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Chief Executive Officer and Board Chair
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/s/ John H. Scribante
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John H. Scribante
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Entity
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Jurisdiction of Organization
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Great Lakes Energy Technologies, LLC
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Wisconsin
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Clean Energy Solutions, LLC
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Wisconsin
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Orion Asset Management, LLC
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Wisconsin
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Orion LED Canada, Inc.
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British Columbia, Canada
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/s/ BDO USA, LLP
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Milwaukee, Wisconsin
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June 13, 2016
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1.
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I have reviewed this Annual Report on Form 10-K of Orion Energy Systems, Inc.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a.
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b.
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c.
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d.
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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a.
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b.
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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/s/ Michael W. Altschaefl
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Michael W. Altschaefl
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Chief Executive Officer
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1.
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I have reviewed this Annual Report on Form 10-K of Orion Energy Systems, Inc.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a.
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b.
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c.
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d.
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b.
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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/s/ William T. Hull
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William T. Hull
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Chief Financial Officer, Chief Accounting Officer and Treasurer
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/s/ Michael W. Altschaefl
|
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Michael W. Altschaefl
|
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Chief Executive Officer
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/s/ William T. Hull
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William T. Hull
|
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Chief Financial Officer,
|
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Chief Accounting Officer and Treasurer
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Date:
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June 13, 2016
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