AMSC 10-K & 10-Q changes, risk factors and insider trading
American Superconductor Corp. · Nasdaq · Motors & Generators · CIK 880807 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “Our performance on contracts with the U.S. Department of Defense may result in restrictions to our ability to repurchase our common stock or U.S. government denial of Foreign Military Sales or ceasing of assistance for international Direct Commercial Sales.”
New heading “Changes in valuation allowance of deferred tax assets may affect our future operating results.”
New heading “We have not been historically profitable, and there can be no assurance that we will sustain our recent profitability. Our operating results may fluctuate significantly from quarter to quarter and may fall below expectations in any particular fiscal quarter.”
New heading “While we generated positive operating cash flow in fiscal 2025 and the prior year, we have a history of negative operating cash flows, and we may require additional financing in the future, which may not be available to us.”
New heading “The ongoing conflict between the United States, Israel, and Iran has disrupted global energy markets and supply chains and could adversely affect our business, financial condition, and results of operations”
Removed heading “We have not been historically profitable, which may recur in the future. Our operating results may fluctuate significantly from quarter to quarter and may fall below expectations in any particular fiscal quarter.”
Removed heading “While we generated positive operating cash flow in fiscal 2024 and the prior year, we have a history of negative operating cash flows, and we may require additional financing in the future, which may not be available to us.”
Removed heading “Our success could depend upon the commercial adoption of the REG system, which is currently limited, and a widespread commercial market for our REG products may not develop.”
Largest changes
“We and certain of our third-party providers regularly experience cyberattacks and other incidents, and we expect such attacks and incidents to continue in varying degrees. While to date no incidents have had a material impact on our operations or financial results, we cannot guarantee that material incidents will not occur in the future. …”see in full comparison
“We and certain of our third-party providers regularly experience cyberattacks and other incidents, and we expect such attacks and incidents to continue in varying degrees. While to date no incidents have had a material impact on our operations or financial results, we cannot guarantee that material incidents will not occur in the future. Any adverse impact to the availability, integrity or confidentiality of our IT Systems or those of third parties upon which we rely could result in disruptions to our operations, and/or loss, damage or compromise Confidential Information. …”see in full comparison
“In February 2026, the United States and Israel launched coordinated military strikes against Iran, which retaliated with missile attacks across the region. Although we do not have material operations in the Middle East, the ongoing conflict and any further escalation has and could continue to lead to significant disruption of global energy supplies and increases in global energy prices, which could affect demand for our Grid and Wind products and solutions in multiple ways. …”see in full comparison
“Our ability to implement our business strategy could also be affected by a number of factors beyond our control, such as increased competition, legal developments, government regulation, general economic conditions, including as a result of the ongoing wars between Russia and Ukraine and in the Middle East and trade conflicts, or increased operating costs or expenses.”see in full comparison
“Our ability to implement our business strategy could also be affected by a number of factors beyond our control, such as increased competition, legal developments, government regulation, general economic conditions, including as a result of the ongoing wars between Russia and Ukraine and Israel and Hamas and trade conflicts, or increased operating costs or expenses.”see in full comparison
“We face numerous and evolving cybersecurity risks that threaten the confidentiality, integrity and availability of our IT Systems and Confidential Information. Our IT Systems, and those of the third-party vendors we rely on, as well as our Confidential Information, are vulnerable to disruption, compromise and damage from computer viruses (including malware and ransomware), bugs, misconfigurations or vulnerabilities, social engineering/phishing, natural disasters, human or technical error, intentional conduct, cyberattacks, unauthorized access and other similar disruptions. …”see in full comparison
Full comparison: every changed paragraph (71)
We have not been historically profitable, which may recur in the future. Our operating results may fluctuate significantly from quarter to quarter and may fall below expectations in any particular fiscal quarter.
We were profitable in fiscal 2024, however, we have recorded net losses for the prior three fiscal years. We may not be profitable in fiscal 2025 or future years. While we achieved profitable results in fiscal 2024, we cannot be certain that we will sustain profitability in future years.
While we generated positive operating cash flow in fiscal 2024 and the prior year, we have a history of negative operating cash flows, and we may require additional financing in the future, which may not be available to us.
At March 31, 2025, we had approximately $85.4 million of cash, cash equivalents and restricted cash, and during the fiscal year ended March 31, 2025, $28.3 million in cash was provided by our operating activities. In the current period, we experienced net income and positive operating cash flows. In prior years, we have experienced net losses and negative operating cash flows. We plan to continue to closely monitor our expenses and, if required, will further reduce operating costs and capital spending to enhance liquidity.
Currency exchange rate fluctuations could have an adverse effect on our revenues and results of operations, and we could experience losses with respect to hedging activities. In fiscal 2024, 31% of our revenues were recognized from sales outside of the United States. In addition, approximately 16% of our revenues in fiscal 2024 were derived under sales contracts where prices were denominated in the Euro. Unfavorable currency fluctuations could require us to increase prices to foreign customers, which could result in a lesser value of orders, and therefore lower revenues, from such customers. Alternatively, if we do not adjust the prices for our products in response to unfavorable currency fluctuations, our results of operations could be adversely affected. In addition, most sales made by our foreign subsidiaries are denominated in the currency of the country in which these products are sold, and the currency they receive in payment for such sales could be less valuable at the time of receipt as a result of exchange rate fluctuations. However, we cannot be certain that our efforts will be adequate to protect us against significant currency fluctuations or that such efforts will not expose us to additional exchange rate risks.
Maintaining effective internal control over financial reporting is necessary for us to produce reliable financial statements. If material weaknesses or significant deficiencies in our internal control over financial reporting are discovered or occur in the future, our consolidated financial statements may contain material misstatements and we could be required to restate our financial results.
While we have been required to provide performance bonds in the form of surety bonds or other forms of security and letters of credit in the past, the size of the bonds and letters of credit was not material. In recent years, we have entered into contracts that require us to post bonds and to deliver letters of credit of significant magnitude. Similarly, in many other instances, we have been required to deposit cash in escrow accounts as collateral for these instruments, which is unavailable to us for general use for significant periods of time. Should we be unable to obtain performance bonds or letters of credit in the future, significant future potential revenue could become unavailable to us. Further, should our working capital situation deteriorate, we would not be able to access the restricted cash to meet working capital requirements.
Our future financial performance and success are dependent in large part upon our ability to implement our business strategy successfully. Our business strategy envisions several initiatives, including driving revenue growth and enhancing operating results by increasing customer adoption of our products by targeting high-growth segments with commercial and system-level products as well as identifying and completing opportunistic acquisitions. We may not be able to implement our business strategy successfully or achieve the anticipated benefits of our business plan. If we are unable to do so, our long-term growth and profitability may be adversely affected. Even if we are able to implement some or all of the initiatives of our business plan successfully, our operating results may not improve to the extent we anticipate, or at all. In addition, to the extent we have misjudged the nature and extent of industry trends or our competition, we may have difficulty in achieving our strategic objectives. Any failure to implement our business strategy successfully may adversely affect our business, financial condition and results of operations. In addition, we may decide to alter or discontinue certain aspects of our business strategy at any time.
Our ability to implement our business strategy could also be affected by a number of factors beyond our control, such as increased competition, legal developments, government regulation, general economic conditions, including as a result of the ongoing wars between Russia and Ukraine and in the Middle East and trade conflicts, or increased operating costs or expenses.
Our future financial performance and success are dependent in large part upon our ability to implement our business strategy successfully. Our business strategy envisions several initiatives, including driving revenue growth and enhancing operating results by increasing customer adoption of our products by targeting high-growth segments with commercial and system-level products. We may not be able to implement our business strategy successfully or achieve the anticipated benefits of our business plan. If we are unable to do so, our long-term growth and profitability may be adversely affected. Even if we are able to implement some or all of the initiatives of our business plan successfully, our operating results may not improve to the extent we anticipate, or at all. In addition, to the extent we have misjudged the nature and extent of industry trends or our competition, we may have difficulty in achieving our strategic objectives. Any failure to implement our business strategy successfully may adversely affect our business, financial condition and results of operations. In addition, we may decide to alter or discontinue certain aspects of our business strategy at any time.
Our ability to implement our business strategy could also be affected by a number of factors beyond our control, such as increased competition, legal developments, government regulation, general economic conditions, including as a result of the ongoing wars between Russia and Ukraine and Israel and Hamas and trade conflicts, or increased operating costs or expenses.
In order to minimize costs and time to market, we have and will continue to identify local suppliers that meet our quality standards to produce certain of our subassemblies and components. These efforts may not be successful including as quality standards evolve. For example, there are increasing expectations in various jurisdictions that companies monitor the environmental, social, and/or geographic provenance of their supply chain; complying with such expectations may cause us to incur additional costs, subject us to increased scrutiny, reduce the number of acceptable suppliers, or otherwise impact our business or operations. In addition, any event that negatively impacts our supply, including, among others, wars, terrorist activities, cyberattacks, natural disastersdisasters, trade policy and outbreaks of infectious disease, could delay or suspend shipments of products or the release of new products or could result in the delivery of inferior products. Our revenues from the affected products would decline or we could incur losses until such time as we are able to restore our production processes or put in place alternative contract manufacturers or suppliers. Even though we carry business interruption insurance policies, we may suffer losses as a result of business interruptions that exceed the coverage available under our insurance policies.
We cannot provide any assurance that we will realize any of the anticipated benefits of any acquisition, including our acquisition of Comtrafo Indústria de Transformadores Elétricos S.A. (“Comtrafo”), completed in December 2025, and Megatran Industries, Inc. including its subsidiaries, completed in August 2024, and if we fail to realize these anticipated benefits, our operating performance could suffer.
We rely upon the capacity, reliability, and security of information technology hardware and software infrastructure and networks (collectively, "IT Systems"), and our ability to expand and update such IT Systems in response to our changing needs. We manage certain IT Systems but also rely on IT Systems and various products and services provided by critical third-party vendors and others in the supply chain. We also collect, store, and otherwise process sensitive, personal and confidential information ("Confidential Information") in the ordinary course of our business. Any failure to manage, expand, or update our IT Systems or Confidential Information or any disruption to or failure in the operation of such IT Systems or Confidential Information could materially harm our business. In addition, the costs associated with updating and securing our IT Systems or Confidential Information are likely to increase as such security measures become more complex, which may harm our operating results and financial condition.
We face numerous and evolving cybersecurity risks that threaten the confidentiality, integrity and availability of our IT Systems and Confidential Information. Our IT Systems, and those of the third-party vendors we rely on, as well as our Confidential Information, are vulnerable to disruption, compromise and damage from computer viruses (including malware and ransomware), bugs, misconfigurations or vulnerabilities, social engineering/phishing, natural disasters, human or technical error, intentional conduct, cyberattacks, unauthorized access and other similar disruptions. Because we rely on certain third party vendors that support our operations, successful cyberattacks that disrupt or result in unauthorized access to third-party IT Systems can materially impact our operations and financial results. There can also be no assurance that our cybersecurity risk management program and processes, including our policies, controls or procedures, or the processes of third-party vendors we rely on, will be fully implemented, complied with or effective in protecting our IT Systems and Confidential Information. Our business is also subject to break-ins, sabotage, and intentional acts of vandalism by third parties as well as employees. We cannot guarantee the security or protection of any IT Systems or Confidential Information. Cyberattacks are expected to accelerate on a global basis in frequency and magnitude, particularly as threat actors, such as ransomware groups, are becoming increasingly sophisticated in using techniques and tools, including artificial intelligence, that are designed to circumvent controls, evade detection and remove or obfuscate forensic evidence. As a result, we and our third-party providers may be unable to timely or effectively anticipate, detect, investigate, remediate or recover from cyberattacks in the future or avoid material impact to our IT Systems, Confidential Information, and our business. We also face increased cyber risk due to the number of our and others' employees who are (and may continue to be) working remotely due to the challenges associated with managing remote computing assets and security vulnerabilities that are present in many non-corporate and home networks.
We and certain of our third-party providers regularly experience cyberattacks and other incidents, and we expect such attacks and incidents to continue in varying degrees. While to date no incidents have had a material impact on our operations or financial results, we cannot guarantee that material incidents will not occur in the future. Any adverse impact to the availability, integrity or confidentiality of our IT Systems or those of third parties upon which we rely could result in disruptions to our operations, and/or loss, damage or compromise Confidential Information. Any or all of the foregoing could harm our reputation, result in substantial remediation, incident response, system restoration and compliance costs, lead to lost revenues and business opportunities, lead to regulatory investigations and enforcement and/or litigation (such as class actions), and related fines or penalties, increase our insurance premiums and have other materially adverse effects on our business and results. Our insurance policies may not cover, or may be insufficient to cover, any or all costs, losses and liability associated with any cyberattacks, security incidents or other disruptions and we cannot guarantee that applicable insurance will be available to us in the future on economically reasonable terms or at all. Any or all of the foregoing could materially adversely affect our business, operating results, and financial condition.
All of our U.S. and Canadian government contracts, as well as certain of our contracts with third parties that are dependent on such government contracts, can be terminated by the applicable government for its convenience. Termination-for-convenience provisions typically provide only for our recovery of costs incurred or committed, and for settlement of expenses and profit on work completed prior to termination. In addition to the right of the government to terminate its contracts with us, these government contracts are conditioned upon the continuing approval by the applicable legislature of the necessary spending to honor such contracts. The U.S. Congress often appropriates funds for a program on a fiscal year basis even though contract performance may take more than one year. Consequently, at the beginning of many major governmental programs, contracts often may not be fully funded, and additional monies are then committed to the contract only if, as and when appropriations are made by the U.S. Congress or other applicable body for future fiscal years. In addition, government shutdowns could prevent or delay such contracts from being funded. Failure by the U.S. Congress to further suspend or increase the debt ceiling could delay or result in the loss of contracts for the procurement of our products and services, and we may be asked or required to continue to perform for some period of time on certain of our U.S. government contracts, even if the U.S. government is unable to make timely payments. Moreover, the U.S. executive branch has recently created the Department of Government Efficiency, which is identifying ways to cut federal spending. There can be no assurance that we will not be adversely affected by suchgovernment cost-cutting measures.
Our performance on contracts with the U.S. Department of Defense may result in restrictions to our ability to repurchase our common stock or U.S. government denial of Foreign Military Sales or ceasing of assistance for international Direct Commercial Sales.
On January 7, 2026, the President of the United States signed an Executive Order titled "Prioritizing the Warfighter in Defense Contracting," (the "Executive Order") which directs the Secretary of Defense to identify contractors for critical weapons, supplies, and equipment that have engaged in stock repurchases or dividend distributions and are underperforming on their contracts, not investing capital into necessary production capacity, not prioritizing contract performance, or whose production speed is insufficient (collectively, "Underperformance"). Contractors that fail to remediate their Underperformance may be subject to enforcement actions under the Defense Production Act or contract law. Future defense contract awards will contain provisions prohibiting stock repurchases or dividend distributions and capping executive base salaries during periods of Underperformance as determined by the Secretary of Defense, and will require that executive incentive compensation be linked to on-time delivery of work under defense contracts, increased production, and facilitation of investments and operating improvements. The Secretary of Defense may also deny new advocacy cases for Foreign Military Sales or cease ongoing advocacy efforts for international Direct Commercial Sales for Underperforming contractors.
Our failure to sufficiently perform and prioritize our U.S. defense contracts, invest capital into production, capacity, or perform our contracts at the appropriate speed could result in restrictions to our ability to repurchase our common stock, issue dividends, or compete for International Foreign Military Sales or Direct Commercial Sales Contracts. In addition, the U.S. government could terminate our existing contracts or withhold payment for completed work due to Underperformance. The U.S. government could also cap the base salaries for our executives based upon the Secretary of Defense's finding of Underperformance.
Given the recency of the Executive Order, it is unclear how the U.S. government will implement its enforcement provisions or what metrics or conditions the Secretary of Defense will use to identify Underperforming defense contractors. If any of the foregoing were to occur, it could materially harm our business, result in reduced revenue and profitability, damage our reputation and customer relationships, or affect our stock price and increase its volatility.
We rely upon the capacity, reliability, and security of information technology hardware and software infrastructure and networks (collectively, "IT Systems"), and our ability to expand and update such IT Systems in response to our changing needs. We manage certain IT Systems but also rely on IT Systems and various products and services provided by critical third-party vendors and others in the supply chain. We also collect and store sensitive, personal and confidential information ("Confidential Information") in the ordinary course of our business. Any failure to manage, expand, or update our IT Systems or Confidential Information or any disruption to or failure in the operation of such IT Systems or Confidential Information could harm our business. In addition, the costs associated with updating and securing our IT Systems or Confidential Information are likely to increase as such security measures become more complex, which may harm our operating results and financial condition.
We face numerous and evolving cybersecurity risks that threaten the confidentiality, integrity and availability of our IT Systems and Confidential Information. Our IT Systems, and those of the third-party vendors we rely on, as well as our Confidential Information, are vulnerable to disruption, compromise and damage from computer viruses (including malware and ransomware), bugs, misconfigurations or vulnerabilities, social engineering/phishing, natural disasters, human or technical error, intentional conduct, cyberattacks, unauthorized access and other similar disruptions. Because we rely on certain third party vendors that support our operations, successful cyberattacks that disrupt or result in unauthorized access to third party IT Systems can materially impact our operations and financial results. There can also be no assurance that our cybersecurity risk management program and processes, including our policies, controls or procedures, or the processes of third-party vendors we rely on, will be fully implemented, complied with or effective in protecting our IT Systems and Confidential Information. Our business is also subject to break-ins, sabotage, and intentional acts of vandalism by third parties as well as employees. We cannot guarantee the security or protection of any IT Systems or Confidential Information. Cyberattacks are expected to accelerate on a global basis in frequency and magnitude, particularly as threat actors, such as ransomware groups, are becoming increasingly sophisticated in using techniques and tools including artificial intelligence that are designed to circumvent controls, evade detection and remove or obfuscate forensic evidence. As a result, we and our third-party providers may be unable to timely or effectively anticipate, detect, investigate, remediate or recover from cyberattacks in the future or avoid material impact to our IT Systems, Confidential Information, and our business. We also face increased cyber risk due to the number of our and others' employees who are (and may continue to be) working remotely due to the challenges associated with managing remote computing assets and security vulnerabilities that are present in many non-corporate and home networks.
We and certain of our third-party providers regularly experience cyberattacks and other incidents, and we expect such attacks and incidents to continue in varying degrees. While to date no incidents have had a material impact on our operations or financial results, we cannot guarantee that material incidents will not occur in the future. Any adverse impact to the availability, integrity or confidentiality of our IT Systems or those of third parties upon which we rely could result in disruptions to our operations, loss, damage or compromise to our data, or inappropriate disclosure of Confidential Information. Any or all of the foregoing could harm our reputation, result in substantial remediation, incident response, system restoration and compliance costs, lead to lost revenues and business opportunities, lead to regulatory investigations and enforcement and/or litigation (such as class actions), and related fines or penalties, increase our insurance premiums and have other materially adverse effects on our business and results. Our insurance policies may not cover, or may be insufficient to cover, any or all costs, losses and liability associated with any cyberattacks, security incidents or other disruptions and we cannot guarantee that applicable insurance will be available to us in the future on economically reasonable terms or at all. Any or all of the foregoing could materially adversely affect our business, operating results, and financial condition.
Failure to comply with evolving data privacy and data protection lawslaws, regulations, and regulationsother obligations, or to otherwise protect personal data, may adversely impact our business and financial results.
In connection with running our business, we receive, store, use and otherwise process information that relates to individuals and/or constitutes “personal data,” “personal information,” “personally identifiable information,” or similar terms under applicable data privacy laws (collectively, “Personal Data”).We are therefore subject to many rapidly evolving privacy and data protection laws and regulations in the United States, Europe and around the world. These laws require us to operate in a complex environment where there are significant constraints on how we can process Personal Data across our business. The scope of these laws are changing, subject to differing interpretations, and may be inconsistent among jurisdictions. For example, the European and United Kingdom General Data Protection Regulation, the California Consumer Privacy Act, and the data protection and security laws of other jurisdictions impose onerous obligations — including around transparency, data subject rights, contractual requirements, data breach reporting, and international data transfers — with respect to our processing of Personal Data. We are also subject to certain contractual obligations related to privacy, data protection and data security that may also impose onerous obligations. The legal and regulatory framework for privacy, data protection and data security worldwide is, and is likely to remain for the foreseeable future, uncertain and complex, and it is possible that these or other actual or alleged obligations may be interpreted and applied in a manner that we do not anticipate or that is inconsistent from one jurisdiction to another, and may conflict with our other legal obligations or our practices. Any failure or perceived failure by us to comply with our privacy, data protection and data security obligations may result in substantial fines, regulatory investigations or enforcement, reputational damage, orders to cease/change our use of data, as well as potential civil claims, including class action litigation, and could result in significant liability (including monetary penalties or requirements to alter our operations), any of which could materially and adversely affect our business, results of operations, and financial condition. Further, any significant change to applicable laws, regulations or industry practices regarding privacy, data protection, and data security could increase our costs and require us to modify our operations, possibly in a material manner.
We cannot provide any assurance that we will realize any of the anticipated benefits of any acquisition, including our acquisition of Megatran Industries, Inc. including its subsidiaries, completed in August 2024, and if we fail to realize these anticipated benefits, our operating performance could suffer.
Problems with product quality or product performance may cause us to incur warranty expenses or product liability charges and may damage our market reputation and prevent us from achieving increased sales and market share.
Consistent with customary practice in our industry, we provide various warranties or guarantees relating to our products, such as that our products and/or services will be free from defects in material and workmanship under normal use and service. We generally provide a one- to three-year warranty on our products, commencing upon installation. A provision is recorded upon revenue recognition to cost of revenues for estimated warranty expense based on historical experience. The possibility of future product failures or issues related to services we provided could cause us to incur substantial expenses to repair or replace defective products or re-perform such services potentially in excess of our reserves. Furthermore, widespread product failures or other shortcomings of our products may damage our market reputation andreputation, reduce our market shareshare, andcreate product liability obligations or cause sales to decline.
We have had limited success marketing and selling our superconductor products and system-level solutions, including our REG system, and our failure to more broadly market and sell our products and solutions could lower our revenue and cash flow.
To date, we have had limited success marketing and selling our superconductor products and system-level solutions.solutions and there has been no widespread commercial use of the REG system. Once our products and solutions are ready for widespread commercial use, we will have to develop a marketing and sales organization that will effectively demonstrate the advantages of our products over more traditional products, competing superconductor products and other technologies. We may not be successful in our efforts to market this technology and we may not be able to establish an effective sales and distribution organization.
Even if a project is funded, completion of projects can be delayed as a result of other factors. It is possible that the market demands we currently anticipate for our products and solutions will not develop and that they will never achieve widespread commercial acceptance. In such event, we would not be able to implement our strategy, and our results of operations could be adversely affected. Even if a commercial market were to develop, commercial terms requested by third parties, such as relating to bonding requirements, limitations of liability, warranty periods, or other contractual provisions, may not be acceptable to us, which could impede our ability to enter into contractual arrangements for the sale of our products and systems.
In addition, changes in climate change-related laws or regulations, including laws relating to greenhouse gas emissions, could lead to new or additional compliance requirements and expenditures, and subject us to additional operational costs and restrictions, including increased energy and raw material costs and other compliance requirements which could negatively impact our reputation, business, capital expenditures, results of operations and financial position. For more information, please refer to our risk factor titled “TheEvolving increasingand focusvaried expectations on environmental sustainability and social initiatives could increase our costs, and inaction could harm our reputation and adversely impact our financial results."
The occurrence or reoccurrence of regional epidemics, a global pandemic or other public health crises, such as COVID-19,crises may adversely affect our operations, financial condition, and results of operations. The extent to which a public health crisis impacts our business going forward will depend on factors such as the duration and scope; governmental, business, and individuals' actions in response to the public health crisis; and the impact on economic activity, including the possibility of recession or financial market instability. Measures to contain a public health crisis may intensify other risks described in these Risk Factors.
Changes in valuation allowance of deferred tax assets may affect our future operating results.
We are required to periodically review our deferred tax assets and determine whether, based on available evidence, a valuation allowance is necessary. In fiscal 2025, based on our evaluation of all available positive and negative evidence, we concluded that it was more-likely-than not that a significant portion of our federal and state deferred tax assets would be realized. Accordingly, we released the valuation allowance against these deferred tax assets. The assessment of the realizability of future tax assets involved considerable management judgement and required evaluation of all available evidence, including cumulative recent financial performance and forecasts of future taxable income. As a result of this assessment, we recognized a deferred income tax benefit of $118.4 million in fiscal 2025. Our judgement regarding the likelihood of realization of these deferred tax assets could change in future periods, which could result in a material impact to our income tax provision expense and our results of operations in the period in which the valuation allowance is adjusted.
Maintaining effective internal control over financial reporting is necessary for us to produce reliable financial statements. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the financial statements will not be prevented or detected on a timely basis.
During the fourth quarter of fiscal 2025, in connection with the preparation of our financial statements for this Annual Report on Form 10-K, management identified the following material weakness: We did not maintain effective internal controls over preparation and review of the initial purchase accounting and the continuing fair value accounting associated with the Comtrafo Acquisition to ensure the accurate and timely reporting of our financial results related to this acquisition. Specifically, errors went undetected in amounts initially recorded to the opening balance sheet due to controls not operating at the appropriate level of precision during management's review process which could have led to a reasonable possibility of material misstatement to account balances or disclosures.
Notwithstanding the material weakness, we believe that our financial statements contained in this Annual Report on Form 10-K fairly present our financial position, results of operations and cash flows for the periods covered by this report in all material respects.
Our management, with the oversight of our audit committee, has initiated steps and plans to take additional measures to remediate the underlying causes of the material weakness, which we currently believe will be primarily through the development and implementation of new levels of precision of management review controls around business acquisitions.
We have not been historically profitable, and there can be no assurance that we will sustain our recent profitability. Our operating results may fluctuate significantly from quarter to quarter and may fall below expectations in any particular fiscal quarter.
While we achieved profitable results in fiscal 2025 and 2024, our ability to sustain profitability depends on numerous factors, many of which are outside of our control. If we are unable to maintain profitability, we could be required to take charges, including the potential restoration of some or all of the valuation allowance against our deferred tax assets, which could materially affect our financial condition and results of operations.
While we generated positive operating cash flow in fiscal 2025 and the prior year, we have a history of negative operating cash flows, and we may require additional financing in the future, which may not be available to us.
At March 31, 2026, we had approximately $ 147.6 million of cash, cash equivalents and restricted cash, and during the fiscal year ended March 31, 2026, $ 23.1 million in cash was provided by our operating activities. In the current period, we experienced net income and positive operating cash flows. In prior years, we have experienced net losses and negative operating cash flows.
Currency exchange rate fluctuations could have an adverse effect on our revenues and results of operations, and we could experience losses with respect to hedging activities. In fiscal 2025, 52% of our revenues were recognized from sales outside of the United States. In addition, approximately 16% and 7% of our revenues in fiscal 2025 were derived under sales contracts where prices were denominated in the Euro and Real, respectively. Unfavorable currency fluctuations could require us to increase prices to foreign customers, which could result in a lesser value of orders, and therefore lower revenues, from such customers. Alternatively, if we do not adjust the prices for our products in response to unfavorable currency fluctuations, our results of operations could be adversely affected. In addition, most sales made by our foreign subsidiaries are denominated in the currency of the country in which these products are sold, and the currency they receive in payment for such sales could be less valuable at the time of receipt as a result of exchange rate fluctuations. However, we cannot be certain that our efforts will be adequate to protect us against significant currency fluctuations or that such efforts will not expose us to additional exchange rate risks.
While we have been required to provide performance bonds in the form of surety bonds or other forms of security and letters of credit in the past, the size of the bonds and letters of credit was not material. In recent years, we have entered into contracts that require us to post bonds and deliver letters of credit of significant magnitude. Similarly, in many other instances, we have been required to deposit cash in escrow accounts as collateral for these instruments, which is unavailable to us for general use for significant periods of time. Should we be unable to obtain performance bonds or letters in the future, significant future potential revenue could become unavailable to us. Further, should our working capital situation deteriorate, we would not be able to access the restricted cash to meet working capital requirements.
We have become increasingly subject to the risks arising from adverse changes in domestic and global economic conditions, including as a result of governmental policies and actions in the United States. In recent years, financial markets have been volatile and the state of both the domestic and global economies has been uncertain. Governmental policies and actions in the United States, such as new tariffs, trade restrictions and resulting trade conflicts, cuts in government spending or the failure to increase the federal debt ceiling, could lead to further financial market volatility and harm the economy. Adverse credit conditions in the future could have a negative impact on our ability to execute on future strategic activities. In addition, if credit is difficult to obtain in the future, some customers may delay or reduce purchases. Similarly, inflationary pressures have increased and may increase our costs or force us to increase prices for our products. InThese particular, in fiscal 2023, we experienced substantial inflationary pressure in our supply chain. Sustained higher prices continued throughout fiscal 2024, although we believe inflationary pressures were more stable. Theseeconomic events have resulted or could in the future result in higher product costs, reductions in sales of our products, longer sales cycles, slower adoption of new technologies, increased accounts receivable and inventory write-offs and increased price competition. If recessionary conditions exist and continue for an extended period of time, our business and results of operations may be materially adversely affected. We also purchase large amounts of commodity-based raw materials. Prevailing prices for such commodities are subject to fluctuations due to changes in supply and demand, tariffs, and a variety of additional factors beyond our control, such as global political and economic conditions. Any of these events would likely harm our business, results of operations and financial condition.
The ongoing conflict between the United States, Israel, and Iran has disrupted global energy markets and supply chains and could adversely affect our business, financial condition, and results of operations
In February 2026, the United States and Israel launched coordinated military strikes against Iran, which retaliated with missile attacks across the region. Although we do not have material operations in the Middle East, the ongoing conflict and any further escalation has and could continue to lead to significant disruption of global energy supplies and increases in global energy prices, which could affect demand for our Grid and Wind products and solutions in multiple ways. Higher energy prices and energy market volatility may alter utility and industrial customer spending patterns and priorities, potentially accelerating investment in grid infrastructure and resilience in certain markets while constraining capital budgets in others. The conflict could also increase the cost or reduce the availability of commodity-based raw materials we depend on, including stainless steel, nickel, and copper, and disrupt global supply chains on which we and our suppliers rely. In addition, further escalation could heighten inflationary pressures on our input costs, adversely affect global financial markets, increase currency exchange rate volatility, including with respect to Brazilian Real and the Euro, in which a significant portion of our revenues and costs are denominated, and elevate interest rates, which could increase the cost of future debt financing and affect our ability to execute our acquisition-driven growth strategy on favorable terms. The conflict could also affect U.S. defense spending priorities and appropriations, which could positively or negatively impact funding for our ship protection systems and other defense-related programs with the U.S. Navy. Finally, increased geopolitical instability in the Middle East could adversely affect our ability to pursue business opportunities in the region, including in countries where we have existing or prospective customer relationships. While the impacts of the conflict between the United States, Israel, and Iran may have an adverse effect on our business, financial condition, and results of operations, we are unable to predict the extent or nature of these impacts at this time.
In recent years, a substantial amount of our consolidated revenues were recognized from customers outside of the United States. For example, 52% of our revenues in fiscal 2025 and 31% of our revenues in fiscal 2024 and 37% of our revenues in fiscal 2023 were recognized from sales outside the United States. We also manufacture certain of our products and purchase a portion of our raw materials and components from suppliers in other foreign countries. The ongoing wars between Ukraine and Russia and Israelthe andMiddle HamasEast have caused increased raw material costs and material shortages and, as a result, adversely impacted certain of our suppliers. Our international operations are subject to a variety of risks that we do not face in the United States, including:
We cannot predict with certainty the effect that new quotas, tariffs, taxes or other trade barriers upon the importation or exportation of our products or gauge the effect that new barriers would have on our financial position or results of operations. These new tariffs or any additional tariffs or other trade barriers may cause our costs to increase, our products to be less competitive, and our business, results of operations and financial position to be materially adversely affected. Moreover, in February 2026, the United States Supreme Court ruled that the use of the International Emergency Economic Powers Act ("IEEPA") to impose tariffs was not permitted, invalidating a significant portion of U.S. tariffs that had been in effect since April 2025. The Administration responded by invoking a 10% global tariff pursuant to section 122 of the Trade Act of 1974 for 150 days, effective February 24, 2026. The Administration also initiated trade investigations that could result in additional future tariffs. The ruling, and the Administration's subsequent actions, have created substantial uncertainty regarding the tariff environment, including with respect to (i) the timing and scope of any new tariffs that may be imposed under alternative mechanisms and (ii) the potential for further legal challenges to any such tariffs.
We face competition across our product lines from companies like ABB, Hitachi, Ingeteam, Mitsubishi and Siemens. We face more local competition in a subset of our business like power quality by companies that include, Southern States, Controllix, Powerside, Elgin Power, Scott Manufacturing and QVARx. Additionally, we face competition on our power transformers and power supplies from companies like Friem, Dynapower, Nidec, Espey Manufacturing, Hammond, WEG S.A., and Kraft Powercon.
We face competition from other companies offering FACTS systems similar to our D-VAR products. These include adaptive VAR compensators, Dynamic voltage restorers (“DVRs”), and STATCOMs produced by ABB, Hitachi, Ingeteam, Mitsubishi, RXHK, and Siemens, and battery-based uninterruptable power supply (“UPS”) systems offered by various companies around the world.
We face competition from other companies offering medium-voltage metal-enclosed power capacitor banks and harmonic filter banks for use on electric power systems similar to our NEPSI products. These include Southern States, Controllix, Powerside, Elgin Power Solutions (formally Gilbert), Scott Manufacturing Solutions, and QVARx.
We face competition from other companies offering DC power supply systems similar to our Neeltran products. These include SCR Controlled Rectifiers, IGBT-controlled choppers produced by ABB, Siemens, Friem, Dynapower, and Nidec offering systems around the world.
We face competition from other companies offering transformers and power supplies similar to our NWL products. These include industrial and military transformers produced by Espey Manufacturing & Electronics Corp., Hammond and Ocrev, and power supplies offered by Kraft Powercon, Andritz, Lonking Holdings, and Rico.
With respect to our Wind business, other companies that serve the wind turbine components industry include ABB and Hopewind.ABB. We also face indirect competition in the wind energy market from global manufacturers of wind turbines, such as Siemens Gamesa,Siemens, Vestas, Envision and Suzlon. We face competition for the supply of wind turbine engineering design services from design engineering firms such as Aerovide and W2E.
The competition in these markets could adversely affect our operating results by reducing the volume of the products we sell or the prices we can charge. These competitors may be able to respond more rapidly than us to new or emerging technologies or changes in customer requirements. They may also devote greater resources to the development, promotion and sale of their products than we do. Our success depends significantly upon our ability to enhance our products and technologies and to develop and introduce, on a timely and cost-effective basis, new products and features that meet changing customer requirements and incorporate technological enhancements.enhancements, which may include artificial intelligence, machine learning, and other advanced digital technologies that are increasingly central to product development, manufacturing efficiency, and customer engagement. If we are unable to develop new products and enhance functionalities or technologies to adapt to these changes, our business will suffer. We can provide no assurance that we will continue to effectively compete against our current competitors or additional companies that may enter our markets.
We have operations in, and depend on sales in, emerging markets, including Latin America and India, and global conditions could negatively affect our operating results or limit our ability to expand our operations outside of these markets. Changes in Brazil's or India’s political, social, regulatory and economic environment may affect our financial performance.
We have operations in emerging markets, including Brazil and India. Our financial performance depends upon our ability to carry on our operations and sell our products in markets such as India, as well as other emerging markets around the world.markets. We are, and will continue to be, subject to financial, political, economic and business risks in connection with our operations and sales in these emerging markets. In addition to the business risks inherent in developing and servicing these markets, economic conditions may be more volatile, legal and regulatory systems less developed and predictable, and the possibility of various types of adverse governmental action more pronounced in emerging markets. In addition, inflation, fluctuations in currency and interest rates, competitive factors, civil unrest, public health emergencies and labor problems could affect our revenues, expenses and results of operations. Our operations could also be adversely affected by acts of war, terrorism or the threat of any of these events as well as government actions such as controls on imports, exports and prices, tariffs, new forms of taxation, or changes in fiscal regimes and increased government regulation in the countries in which we operate or service customers. Unexpected or uncontrollable events or circumstances in any of these markets could have a material adverse effect on our financial results and cash flows.
Management's Discussion & Analysis (MD&A)
New heading “A discussion regarding our financial condition and results of operations for the year ended March 31, 2026 compared to the year ended March 31, 2025 is presented below. A discussion regarding our financial condition and results of operations for year ended March 31, 2025 compared to March 31, 2024 is included under "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended March 31, 2025 filed with the SEC on May 21, 2025.”
Largest changes
Goodwill represents the excess of cost over net assets of acquired businesses that are consolidated. We perform our annual assessment of goodwill on February 28th of each fiscal year and whenever events or changes in circumstances or a triggering event indicate that the carrying amount may not be recoverable.see in full comparisonAnCircumstancesentitythatiscouldpermittedtriggertoan impairment test include, but are not limited to, a significant adverse change in the business climate or legal factors, an adverse action or assessment by a regulator, or unanticipated competition. The Company may first assessqualitativelyqualitative factors to determine whether it is necessary to performathe quantitative goodwill impairmenttest.test,SignificantorjudgmenttheisCompanyrequiredcan bypass the qualitative assessment and proceed directly todetermine if an indication of impairment has taken place. Factors to be considered includethefollowing:quantitativeadverse change in operating results, decline in strategic business plans, significantly lower future cash flows, and sustainable declines in market data such as market capitalization.test. The quantitative goodwill impairment testis required only ifrequires theentityCompanyconcludestothatestimateitandiscomparemore likely than not that a reporting unit’sthe fair valueisoflessthethanreporting unit with its carryingamount.value. We determine the fair value of a reporting unit, using a methodology which combines an income approach, using a discounted cash flow method, with a market approach. The income approach includes estimates and assumptions about revenue growth rates,operating marginsEBITDA andterminal growthdiscount rates, discounted by an estimated weighted-average cost of capital derived from otherpublicly-tradedpublicly traded companies that are similar but not identical from an operational and economic standpoint. These estimates are based on historical experiences, our projects of future operating activity and our weighted-average cost of capital. A significant change in events, circumstances or any of these assumptions could adversely affect these estimates, which could result in an impairment.
“A discussion regarding our financial condition and results of operations for the year ended March 31, 2026 compared to the year ended March 31, 2025 is presented below. A discussion regarding our financial condition and results of operations for year ended March 31, 2025 compared to March 31, 2024 is included under "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended March 31, 2025 filed with the SEC on May 21, 2025.”see in full comparison
We believe we have sufficient available liquidity to fund our operations and capital expenditures for at least the next twelve months. We may seek to raise additional capital, which could be in the form of loans, convertible debt or equity, to fund our operating requirements and capital expenditures. There can be no assurance that we will be able to raise additional capital on favorable terms or at all or execute on any other means of improving our liquidity as described above.see in full comparisonAdditionally.Additionally, the impact of global sources of instability, including tariffs, trade restrictions and resulting trade conflicts, the ongoing wars between Russia and Ukraine andIsraelinandtheHamas,Middle East, instability of financial institutions and political instability in the United States, on the global financial markets may reduce our ability to raise additional capital, if necessary, which could negatively impact our liquidity. In addition, the current interest rate environment may affect the cost and availability of debt financing for future acquisitions or other capital needs. While we funded our recent acquisitions primarily with cash on hand and equity, we may seek to use debt financing for future transactions, and higher interest rates could increase the cost of such financing or make certain transactions less attractive.
“On August 1, 2024, we entered into the Stock Purchase Agreement with the selling stockholders named therein. …”see in full comparison
“On August 1, 2024, we entered into the Stock Purchase Agreement with the selling stockholders named therein. …”see in full comparison
We regularly assess our ability to realize our deferred tax assets. Assessments of the realization of deferred tax assets require that management consider all available evidence, both positive and negative, and make significant judgments about many factors, including the amount and likelihood of future taxable income.see in full comparisonBasedAsonofallMarch 31, 2026, theavailable evidence, we haveCompany recordedvaluationaallowances$118.4 million non-cash income tax benefit related toreducetheourrelease of a substantial portion of its valuation allowance against deferred taxassetsassets. This was based on the Company's evaluation of the positive evidence, including cumulative income position over the three year period ended March 31, 2026, revenue growth, current profitability, expectations regarding future forecasted income, and negative evidence, including uncertainty in economic and political environments from industry competition and dependence on government contracts. This release of the valuation allowance resulted in the recognition of a deferred tax asset and a corresponding increase to income tax benefit in fiscal 2025, theamounteffectthatof which ismoreanlikelyincreasethaninnotreportedtonetbe realizable due to the taxable losses that have been incurred since our inception and uncertainty around our future profitability.income.
Full comparison: every changed paragraph (48)
Guided by a belief in the power of next, we are a leading provider of power control solutions that apply innovation and creativity to address today’s challenges and enable a more resilient and sustainable energy future. Driven by our purpose “to power progress,” we integrate future-facing technologies to balance the growing global demand for power with the need for reliable, and efficient power delivery. Our advanced grid systems, engineering services, power electronics, software controls, and superconductor-based solutions help the traditional and renewable energy sectors, electric utilities, the materials and mining sector, industrial facilities, and other critical infrastructure operators optimize network reliability, improve power quality, alleviate grid constraints, and scale operations without added complexity or size.
We also deliver ship protection and power management solutions that enhance fleet efficiency, survivability, and operational readiness for the U.S. Navy and allied fleets. In the wind power market, we provide advanced electrical control systems, engineering, and support services that help manufacturers lower the cost of wind energy and improve turbine performance. Beyond these markets, we provide industrial process, environmental and emission control capabilities that support operational efficiency across the broader energy infrastructure. Across our businesses, our solutions are helping optimize power networks, strengthen naval capabilities, and support gigawatts of renewable energy generation worldwide as governments and industries continue investing in more resilient, secure, and sustainable power systems.
We are a leading system provider of megawatt-scale power resiliency solutions that orchestrate the rhythm and harmony of power on the grid™, and protect and expand the capability of our Navy's fleet. Our solutions enhance the performance of the power grid, protect our Navy’s fleet, and lower the cost of wind power. In the power grid market, we enable electric utilities, industrial facilities, and renewable energy project developers to connect, transmit and distribute smarter, cleaner and better power through our transmission planning services and power electronics and superconductor-based systems. In the wind power market, we enable manufacturers to field highly competitive wind turbines through our advanced power electronics and control system products, engineering, and support services. Our power grid and wind products and services provide exceptional reliability, security, efficiency and affordability to our customers.
Our power system solutions help to improve energy efficiency, alleviate power grid capacity constraints, improve system resiliency, and increase the adoption of renewable energy generation. Demand for our solutions is driven by the growing needs for modernized smart grids that improve power reliability, security and quality, the U.S. Navy's effort to upgrade onboard power systems to support fleet electrification, and the needs for increased renewable sources of electricity, such as wind and solar energy. Concerns about these factors have led to increased spending by corporations and the military, as well as supportive government regulations and initiatives on local, state, and national levels, including renewable portfolio standards, tax incentives and international treaties.
We manufacture products using two proprietary core technologies: PowerModule™ programmable power electronic converters and our Amperium® high temperature superconductor ("HTS") wires. These technologies and our system-level solutions are protected by a robust intellectual property portfolio consisting of patents and patent applications worldwide and rights through exclusive and non-exclusive licenses.
We operate our business under two market-facing business segments: Grid and Wind. We believe this market-centricmarket centric structure enables us to more effectively anticipate and meet the needs of power generationgenerators, projectpower developers,utilities, industrial manufacturers, the Navy's ship protection systems, electric utilitiesmilitary and windrenewable turbineenergy manufacturers.companies.
Changes in macroeconomic conditions arising from various reasons, such as the ongoing wars between Russia and Ukraine, and Israelin andthe Hamas,Middle East, tariffs, trade restrictions and resulting trade conflicts, labor force availability, sourcing, material delays and global supply chain disruptions could have a material adverse effect on our business, financial condition and results of operation.operations.
On December 5, 2025 (the "Comtrafo Acquisition Date"), we entered into a Stock Exchange Agreement (the "Stock Exchange Agreement") with the selling stockholders named therein. Pursuant to the terms of the Stock Exchange Agreement, Mardin Participações Ltda., an entity incorporated in Brazil (“AMSC Brazil”) and our wholly-owned subsidiary, directly or indirectly, purchased all of the issued and outstanding shares of Comtrafo Indústria de Transformadores Elétricos S.A. ("Comtrafo") (the "Comtrafo Acquisition") for (a) (i) 300.0 million Brazilian Real in cash; and (b) 2,417,142 restricted shares of our common stock, $0.01 par value per share (the "AMSC Shares") that were paid and issued, respectively, at closing. In addition, pursuant to certain additional real property agreements, AMSC Brazil through Comtrafo purchased certain real estate assets and transportation assets of Comtrafo for 155.6 million Brazilian Real and 13.4 million Brazilian Real, respectively, in cash. Additionally, AMSC Brazil has agreed to pay the selling stockholders up to an additional 382.5 million Brazilian Real in cash (the "Earnout") upon the achievement of specified earnings before interest, taxes, depreciation, and amortization ("EBITDA") objectives during the three years following the closing. On May 15, 2026, pursuant to the terms of the Stock Exchange Agreement, Comtrafo purchased a certain real estate asset from the selling stockholders that Comtrafo was leasing and using for administrative and manufacturing operations for 37.2 million Brazilian Real in cash. Comtrafo is a Brazil-based manufacturer of large power and distribution transformers primarily for utility customers and also for industrial customers.
On August 1, 2024, we entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”) with the selling stockholders named therein. Pursuant to the terms of the Stock Purchase Agreement and concurrently with entering into such agreement, we acquired all of the issued and outstanding shares of Megatran, Industries, Inc. ("Megatran"), for aggregate consideration in an amount equal to $61.4 million, as may be adjusted pursuant to the Stock Purchase Agreement (the “Purchase Price”), including a cash payment after closing of $5.0 million, as adjusted pursuant to Sections 5.6(c), (d), and (f) of the Stock Purchase Agreement (the “Additional Cash Purchase Price”). At closing, we paid to Megatran's selling stockholders $25.0 million in cash on hand, and 1,297,600 restricted shares of our common stock. On September 23, 2024, we paid the Additional Cash Purchase Price to the selling stockholders, which was calculated based on the agreed upon formula set forth in the Stock Purchase Agreement, in the amount of $8.3 million which includes the Additional Cash Purchase Price and the make whole payment. Megatran's wholly-owned subsidiary, NWL, Inc. (together with Megatran, "NWL"), is a U.S.-based global provider of engineered power conversion solutions for demanding industrial and military applications. As a result of this transaction, Megatran became a wholly-owned subsidiary and is operated by our Grid business segment. We refer to this transaction as the "acquisition of NWL".
A discussion regarding our financial condition and results of operations for the year ended March 31, 2026 compared to the year ended March 31, 2025 is presented below. A discussion regarding our financial condition and results of operations for year ended March 31, 2025 compared to March 31, 2024 is included under "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended March 31, 2025 filed with the SEC on May 21, 2025.
Revenues in our Grid business segment are derived from our D-VAR product sales, Northeast Power Systems, Inc. ("NEPSI") product sales, Neeltran, Inc. ("Neeltran") product sales, NWL product sales, Comtrafo product sales, HTS wire sales, ship protection systems ("SPS"), government-sponsored electric utility projects and other prototype development contracts. We also engineer, install and commission our products on a turnkey-basis for some customers. The Grid business segment accounted for 84% of total revenues in both fiscal 20242025 and 2023.2024. Grid revenues increased 53%34% to $251.3 million in fiscal 2025 from $187.2 million in fiscal 2024 from $122.1 million in fiscal 2023.2024. The increase in revenues was driven by higher D-VARnew energy power systems revenues, higher ship protection systems revenues, and NEPSI revenues than in the priorcontribution year period along with the NWL revenues earned afterfrom the acquisition of NWL.Comtrafo in fiscal 2025.
Revenues in our Wind business segment are derived from wind turbine electrical control systems and core components, wind turbine license and development contracts, service contracts and consulting arrangements. Our Wind business segment accounted for 16% of total revenues in both fiscal 20242025 and 2023.2024. Revenues in the Wind business segment increased 51%34% to $47.8 million in fiscal 2025 from $35.6 million in fiscal 2024 from $23.6 million in fiscal 2023.2024. The increase over the prior year period was driven by additional shipments of electrical control systems ("ECS") atin increasedfiscal prices.2025.
Cost of revenues increased by 29% to $207.8 million in fiscal 2025, compared to $161.0 million in fiscal 2024. Gross margin increased to 31% in fiscal 2025 from 28% in fiscal 2024. Cost of revenues include total amortization expense of $0.6 million in the fiscal year ended March 31, 2026 as a result of Comtrafo acquired backlog intangible assets. In addition, $0.8 million related to a fair value adjustment for the step-up basis assigned to acquired inventory to properly reflect the fair value in purchase accounting was charged to cost of revenues in the fiscal year ended March 31, 2026. The increase in gross margin in fiscal 2025 was due to higher revenues and a beneficial product mix in the Grid and Wind business segments.
Cost of revenues increased by 46% to $161.0 million in fiscal 2024, compared to $110.4 million in fiscal 2023. Gross margin increased to 28% in fiscal 2024 from 24% in fiscal 2023. The increase in gross margin in fiscal 2024 was due to additional revenues, a favorable product mix, and a sharp improvement in Neeltran project margins.
Research and development (“R&D”) expenses increased by 43%38% to $11.4$15.7 million, or 5% of revenue in fiscal 2024,2025, compared to $8.0$11.4 million, or 5% of revenue, in fiscal 2023.2024. The increase in R&D expenses is primarily a result of additional total compensation and stock compensation expense dueexpenses in partfiscal to additional employees as a result of the acquisition of NWL.2025.
Selling, general and administrative (“SG&A”) expenses increased by 36%34% to $43.1$57.6 million, or 19% of revenue in fiscal 20242025 from $31.6$43.1 million, or 22%19% of revenue, in fiscal 2023.2024. The increase in SG&A expenses is primarily a result of higherthe totaladdition of Comtrafo operating expenses and additional compensation expense, additionaland stock compensation expenseexpenses andin acquisitionfiscal costs related to the acquisition of NWL.2025.
We recorded $2.4 million in fiscal 2025 and $1.7 million in fiscal 2024 and $2.2 million in fiscal 2023 in amortization expense related to our core technology and know-how, customer relationships, and other intangible assets. The decreaseincrease in amortization expense is primarily a result of usingadditional the economic consumption method as the basis to amortize the acquired customer relationship intangible assetsamortization related to NEPSI and Neeltran, partially offset by the increaseComtrafo related to amortization of NWL related intangibles.acquisition.
The change in fair value of our contingent consideration for the earnout payment on the acquisition of Comtrafo resulted in a loss of $ 4.2 million from an increase in fair value of the contingent consideration in fiscal 2025.
The change in fair value of our contingent consideration for the earnout payment on the acquisition of NEPSI resulted in a loss of $3.4 million resulting from an increase in fair value in fiscal 2024, and $4.9 million during fiscal 2023.2024. During fiscal 2024, we issued 300,000 shares of our common stock to the selling stockholders following certification of the achievement of specified earnout revenue objectives. We also recorded a $3.3 million payment relating to the acquisition of NWL, as a payment to settle the remaining obligations after the acquisition. The value of this contingent consideration was de minimis at the Acquisition Date and the resulting change in fair value was recorded in September 2024 when the payment was calculated and paid.
Our Grid business segment generated operating income of $8.5 million in fiscal 2025 and $1.8 million in fiscal 2024 and operating loss of $6.9 million in fiscal 2023.2024. The improvement in the Grid business segment operating income was due to higher revenues and improved gross margins in fiscal 2024, compared to fiscal 2023.2025.
The Wind segment generated operating income of $7.1 million in fiscal 2025 and $3.8 million in fiscal 2024 and $0.4 million in fiscal 2023.2024. The increase in the Wind business segment operating income was due to higher revenuerevenues and improved gross margins in fiscal 2024, compared to fiscal 2023.2025.
Unallocated corporate expenses consisted of a loss on contingent consideration of $4.2 million in fiscal 2025 and $6.7 million in fiscal 2024, and a loss on contingent consideration of $4.9 million in fiscal 2023.2024.
Interest income, net was $3.7$6.4 million in fiscal 20242025 compared to $1.3$3.7 million for fiscal 2023.2024. The increase in interest income, net, was primarily due to higher cash balances generating additional interest income in fiscal 2024.2025.
Other expense, net was $1.1 million in fiscal 2025, compared to $0.3 million in fiscal 2024, compared to $0.7 million in fiscal 2023.2024. The decreaseincrease in other expenseexpense, net was driven by the impacts of more favorableunfavorable fluctuations in foreign currenciesexchange rates, resulting in fiscaltranslation 2024, compared to fiscal 2023.losses.
We recorded an income tax benefit of $117.1 million in fiscal 2025, compared to $3.7 million in fiscal 2024,2024. comparedThe net impact to income tax expenseis of $0.3 million in fiscal 2023. The net improvement in income tax isprimarily a result of a non-cash tax benefit from the release of the majority of our valuation allowance against deferred tax assets due to thea recordingchange in facts and circumstances that impact our conclusion on realizability of thesuch deferred tax liability from the acquisition of NWL.assets.
Net income was $133.8 million in fiscal 2025, compared to $6.0 million in fiscal 2024, compared to net loss of $11.1 million in fiscal 2023.2024. The improvement in net income was driven primarily by the non-cash tax benefit from the release of the majority of our valuation allowance against deferred tax assets, higher revenues and improved gross margins in fiscal 2024 and other factors described above.2025.
Non-GAAP Financial Measure - Non-GAAP Net Income and Non-GAAP Net Income Per Share
We define non-GAAP net income as net income (loss) before stock-based compensation, amortization of acquisition-related intangibles, change in fair value of contingent consideration, acquisition costs, and other non-cash or unusual charges. We believe non-GAAP net income assists management and investors in comparing our performance across reporting periods on a consistent basis by excluding these non-cash charges and other items that we do not believe are indicative of our core operating performance. In addition, we use non-GAAP net income as a factor to evaluate the effectiveness of our business strategies. A reconciliation of GAAP net income (loss) to non-GAAP net income (loss) is set forth in the table below (in thousands, except per share data):
Non-GAAP net income was $158.1 million, or $3.68 per share, for fiscal 2025, compared to $24.0 million, or $0.65 per share, for fiscal 2024,2024 compared toand $0.6 million, or $0.02 per share, for fiscal 2023. The improvement in non-GAAP net income in fiscal 20242025 compared to fiscal 20232024 was due primarily to the non-cash tax benefit from the release of the majority of our valuation allowance against deferred income tax assets, and improved operating incomemargin drivenin bythe higher revenuesWind and grossGrid margins.business segments.
The Company’s primary sources of liquidity are internally generated cash provided by operating activities, our cash and cash equivalents on hand, along with access to capital markets. The Company believes that these sources of liquidity provide adequate liquidity to meet both its short-term and reasonably foreseeable long-term requirements and obligations. At March 31, 2025,2026, we had cash, cash equivalents and restricted cash of $85.4$147.6 million, compared to $92.3$85.4 million at March 31, 2024,2025, aan decreaseincrease of $6.9$62.2 million. As of March 31, 2025,2026, we had approximately $4.7$17.8 million in cash, cash equivalents and restricted cash in foreign bank accounts. Our cash, cash equivalents and restricted cash are summarized as follows (in thousands):
Net cash provided by operating activities was $23.1 million, $28.3 million compared to net cash used in operating activities ofand $2.1 million in fiscal 20242025, 2024, and 2023, respectively. The decrease in net cash provided by operations in fiscal 2025 compared to fiscal 2024 was due primarily to changes in deferred revenue and accounts receivable, offset by changes in accounts payable and accrued expenses, deferred income taxes, changes in fair value of contingent consideration and stock-based compensation expense. The increase in net cash provided by operations in fiscal 2024 compared to fiscal 2023 was driven primarily by higher gross margins, favorable changes in accounts payable and accrued expenses, relief of deferred revenue,revenues, increased non-cash expenses like stock-basedstock compensation, depreciation and amortization, and change in fair value of contingent consideration, offset by decreased cash collections, increased prepaid balances, and change in deferred income taxes.
Net cash used in investing activities was $77.1 million, $35.2 millionmillion, and $1.0 million in fiscal 20242025, 2024, and 2023, respectively. The increase in net cash used in investing activities in fiscal 2025 compared to fiscal 2024 was primarily due to cash paid for the Comtrafo acquisition in the current fiscal year. The increase in net cash used in investing activities in fiscal 2024 compared to fiscal 2023 was due primarily to cash paid for the acquisition of NWL.
Net cash provided by financing activities was $116.1 million compared to less than $0.1 million compared toand $65.4 million in fiscal 20242025, 2024, and 2023, respectively. The increase in cash provided by financing activities in fiscal 2025 compared to fiscal 2024 was primarily related to net proceeds received from an equity offering in June 2025. The decrease in cash provided by financing activities in fiscal 2024 compared to fiscal 2023 was primarily related to net proceeds received from an equity offering in fiscal 2023, while the Companycompany had no equity offerings in fiscal 2024.
On the Comtrafo Acquisition Date, we entered into the Stock Exchange Agreement with the selling stockholders. Pursuant to the terms of the Stock Exchange Agreement, AMSC Brazil, directly or indirectly, purchased all of the issued and outstanding shares of Comtrafo for (a) (i) 300.0 million Brazilian Real in cash; and (b) AMSC Shares that were paid and issued, respectively, at closing. In addition, pursuant to certain additional real property agreements, AMSC Brazil through Comtrafo purchased certain real estate assets and transportation assets of Comtrafo for 155.6 million Brazilian Real and 13.4 million Brazilian Real, respectively, in cash. Additionally, AMSC Brazil has agreed to pay the Stockholders the Earnout upon the achievement of specified EBITDA objectives during the three years following the closing. Comtrafo is a Brazil-based manufacturer of large power and distribution transformers primarily for utility customers and also for industrial customers.
In June 2025, we completed an offering of 4,743,750 shares of our common stock at a public offering price of $28.00 per share under our Registration Statement on Form S-3. We received aggregate net proceeds of approximately $124.6 million after deducting underwriting discounts and commissions and offering expenses.
On August 1, 2024, we entered into the Stock Purchase Agreement with the selling stockholders named therein. Pursuant to the terms of the Stock Purchase Agreement and concurrently with entering into such agreement, we acquired all of the issued and outstanding shares of Megatran, for the purchase price of $61.4 million, which consideration amount was subject to various adjustments set forth in the Stock Purchase Agreement (including those described below) and consisted of: (a) (i) $25.0 million, minus (ii) the Indebtedness (as defined in the Stock Purchase Agreement) outstanding as of immediately prior to the closing, minus (iii) Company Expenses (as defined in the Stock Purchase Agreement); (b) a number of restricted shares (rounded up or down to the nearest whole share, as applicable) of our common stock equal to the quotient obtained by dividing (x) $31.4 million by (y) the closing price per share of our common stock on the Nasdaq Global Select Market on the last trading day immediately preceding the Acquisition Date; and (c) an additional cash payment equal to $5.0 million, as adjusted pursuant to Sections 5.6(c), (d), and (f) of the Stock Purchase Agreement. Megatran is now a wholly-owned subsidiary of the Company and, together with its wholly-owned subsidiaries and affiliates, is operated and reported as a component of its Grid business segment. On September 23, 2024, the Company paid $3.3 million to the selling stockholders, which was calculated based on the agreed upon formula set forth in the Stock Purchase Agreement. As of March 31, 2025, there are no remaining obligations to the selling stockholders of Megatran.
On August 1, 2024, we entered into the Stock Purchase Agreement with the selling stockholders named therein. Pursuant to the terms of the Stock Purchase Agreement and concurrently with entering into such agreement, we acquired all of the issued and outstanding shares of Megatran, for the Purchase Price of $61.4 million, which consideration amount was subject to various adjustments set forth in the Stock Purchase Agreement (including those described below) and consisted of: (a) (i) $25.0 million, minus (ii) the Indebtedness (as defined in the Stock Purchase Agreement) outstanding as of immediately prior to the closing, minus (iii) Company Expenses (as defined in the Stock Purchase Agreement); (b) a number of restricted shares (rounded up or down to the nearest whole share, as applicable) of our common stock equal to the quotient obtained by dividing (x) $31.4 million by (y) the closing price per share of our common stock on the Nasdaq Global Select Market on the last trading day immediately preceding the Acquisition Date; and (c) an additional cash payment equal to $5.0 million, as adjusted pursuant to Sections 5.6(c), (d), and (f) of the Stock Purchase Agreement. Megatran is now a wholly-owned subsidiary of the Company and, together with its wholly-owned subsidiaries and affiliates, is operated and reported as a component of its Grid business segment. On September 23, 2024, the Company paid $3.3 million to the selling stockholders, which was calculated based on the agreed upon formula set forth in the Stock Purchase Agreement. As of September 30, 2024, there are no remaining obligations to the selling stockholders of Megatran.
In August 2024, the Company filed an automatically-effective shelf registration statement on Form S-3 that will expire no later than August 12, 2027 (the “Second Form S-3”). The Second Form S-3 allows the Company to offer and sell from time-to-time unspecified amounts of common stock, debt securities, warrants or units comprised of any combination of these securities and allows certain selling stockholders to offer and sell from time-to-time common stock. The Second Form S-3 assisted the Megatran selling stockholders in the resale of their common stock and register the Comtrafo selling stockholder's AMSC shares, and is intended to provide the Company flexibility to conduct registered sales of its securities, subject to market conditions, in order to fund its future capital needs. The terms of any future offering under the Second Form S-3 will be established at the time of such offering and will be described in a prospectus supplement filed with the SEC prior to the completion of any such offering.
We believe we have sufficient available liquidity to fund our operations and capital expenditures for at least the next twelve months. We may seek to raise additional capital, which could be in the form of loans, convertible debt or equity, to fund our operating requirements and capital expenditures. There can be no assurance that we will be able to raise additional capital on favorable terms or at all or execute on any other means of improving our liquidity as described above. Additionally.Additionally, the impact of global sources of instability, including tariffs, trade restrictions and resulting trade conflicts, the ongoing wars between Russia and Ukraine and Israelin andthe Hamas,Middle East, instability of financial institutions and political instability in the United States, on the global financial markets may reduce our ability to raise additional capital, if necessary, which could negatively impact our liquidity. In addition, the current interest rate environment may affect the cost and availability of debt financing for future acquisitions or other capital needs. While we funded our recent acquisitions primarily with cash on hand and equity, we may seek to use debt financing for future transactions, and higher interest rates could increase the cost of such financing or make certain transactions less attractive.
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The amendments in ASU 2023-07 improve the disclosures about a public entity’s reportable segments and address requests from investors for additional, more detailed information about a reportable segment’s expenses. Following the release of ASU 2023-07 in November 2023, the effective date will be annual reporting periods beginning after December 15, 2024. As of March 31, 2025, we have adopted ASU 2023-07 and made the required disclosures, and noted no other material impact on our consolidated financial statements.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments in ASU 2023-09 address investor requests for more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. Following the release of ASU 2023-09 in December 2023, the effective date will be annual reporting periods beginning after December 15, 2024. WeAs areof evaluatingMarch 31, 2026, we have adopted ASU 2023-09, made the required disclosures, and noted no other material impact on our consolidated financial statements.
In March 2024, the FASB issued ASU 2024-02, Codification Improvements—Amendments to Remove References to the Concepts Statements. The amendments in ASU 2024-02 contain amendments to the Codification that remove references to various FASB Concepts Statements. Following the release of ASU 2024-02 in March 2024, the effective date will be annual reporting periods beginning after December 15, 2024. WeAs areof evaluatingMarch the31, 2026, we have adopted ASU 2024-02 and noted no other material impact on our consolidated financial statements.
In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses. The amendments in ASU 2025-05 contain updates to how entities are permitted to estimate expected credit losses for accounts receivable and contract assets. Following the release of ASU 2025-05 in July 2024, the effective date will be annual reporting periods beginning after December 15, 2025. As of April 1, 2025, we early adopted ASU 2025-05 and noted no material impact on our consolidated financial statements.
In November 2025, the FASB issued ASU 2025-08, Financial Instruments — Credit Losses: Purchased Loans. The amendments in ASU 2025-08 requires that loans acquired without credit deterioration and deemed “seasoned” will be considered purchased seasoned loans and accounted for using the gross-up approach at acquisition. Following the release of ASU 2025-08 in November 2025, the effective date will be annual reporting periods beginning after December 15, 2026. As of April 1, 2025, we early adopted ASU 2025-08 and noted no material impact on our consolidated financial statements.
Determining the fair value of certain assets and liabilities assumed is judgmental in nature and often involves the use of significant estimates and assumptions as well as the use of specialists as needed. The Company utilizes management estimates and an independent third-party valuation firm to assist in determining the fair values of assets acquired, including intangible assets and liabilities assumed. The primary intangible assets acquired include customer relationship and trade names.relationship. Intangible assets are initially valued using a methodology commensurate with the intended use of the asset. The fair value of customer relationships is measured using the multi-period excess earnings method (“MPEEM”). The fair value of the trade names is measured using a relief-from-royalty (“RFR”) approach. The basis for future sales projections for both the MPEEM and RFR are based on internal revenue forecasts which the Company believes represents reasonable market participant assumptions. The future cash flows are discounted using an applicable discount rate. The key uncertainties in the calculations, as applicable, are the selection of an appropriate royalty rate, assumptions used in developing estimates of future cash flows, including revenue growth and expense forecasts, assumed customer attrition rates, as well as perceived risks associated with those forecasts in determining the discount rate. There is inherent uncertainty in forecasted cash flows and therefore, actual results may differ and could result in a subsequent impairment charge of acquired intangibles and/or goodwill.
The consideration for our acquisitions may include future payments that are contingent upon the occurrence of a particular event. We record a contingent consideration obligation for such contingent consideration payments at fair value on the acquisition date. We estimate the fair value of contingent consideration obligations through valuation models that incorporate probability adjusted assumptions related to the achievement of the milestones andmilestones, the likelihood of making related payments.payments, the EBITDA volatility, and the discount rate. Significant judgment is employed in determining these assumptions as of the acquisition date and for each subsequent period. Accordingly, future business and economic conditions, as well as changes in any of the assumptions described above, can materially impact the fair value of contingent consideration recorded at each reporting period.
Goodwill represents the excess of cost over net assets of acquired businesses that are consolidated. We perform our annual assessment of goodwill on February 28th of each fiscal year and whenever events or changes in circumstances or a triggering event indicate that the carrying amount may not be recoverable. AnCircumstances entitythat iscould permittedtrigger toan impairment test include, but are not limited to, a significant adverse change in the business climate or legal factors, an adverse action or assessment by a regulator, or unanticipated competition. The Company may first assess qualitativelyqualitative factors to determine whether it is necessary to perform athe quantitative goodwill impairment test.test, Significantor judgmentthe isCompany requiredcan bypass the qualitative assessment and proceed directly to determine if an indication of impairment has taken place. Factors to be considered include the following:quantitative adverse change in operating results, decline in strategic business plans, significantly lower future cash flows, and sustainable declines in market data such as market capitalization.test. The quantitative goodwill impairment test is required only ifrequires the entityCompany concludesto thatestimate itand iscompare more likely than not that a reporting unit’sthe fair value isof lessthe thanreporting unit with its carrying amount.value. We determine the fair value of a reporting unit, using a methodology which combines an income approach, using a discounted cash flow method, with a market approach. The income approach includes estimates and assumptions about revenue growth rates, operating marginsEBITDA and terminal growthdiscount rates, discounted by an estimated weighted-average cost of capital derived from other publicly-tradedpublicly traded companies that are similar but not identical from an operational and economic standpoint. These estimates are based on historical experiences, our projects of future operating activity and our weighted-average cost of capital. A significant change in events, circumstances or any of these assumptions could adversely affect these estimates, which could result in an impairment.
We regularly assess our ability to realize our deferred tax assets. Assessments of the realization of deferred tax assets require that management consider all available evidence, both positive and negative, and make significant judgments about many factors, including the amount and likelihood of future taxable income. BasedAs onof allMarch 31, 2026, the available evidence, we haveCompany recorded valuationa allowances$118.4 million non-cash income tax benefit related to reducethe ourrelease of a substantial portion of its valuation allowance against deferred tax assetsassets. This was based on the Company's evaluation of the positive evidence, including cumulative income position over the three year period ended March 31, 2026, revenue growth, current profitability, expectations regarding future forecasted income, and negative evidence, including uncertainty in economic and political environments from industry competition and dependence on government contracts. This release of the valuation allowance resulted in the recognition of a deferred tax asset and a corresponding increase to income tax benefit in fiscal 2025, the amounteffect thatof which is morean likelyincrease thanin notreported tonet be realizable due to the taxable losses that have been incurred since our inception and uncertainty around our future profitability.income.
What changed in the latest 10-Q
Risk Factors
There have been no material changes to the risk factors described in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended March 31, 2026, filed with the SEC on May 27, 2026.
No wording changes found in this section (only numbers or dates changed in 1 paragraph).
Full comparison: every changed paragraph (0)
Management's Discussion & Analysis (MD&A)
Largest changes
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). For this purpose, any statements contained herein that relate to future events or conditions, including without limitation, the statements in Part II, “Item 1A. Risk Factors” and in Part I under “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and located elsewhere herein regarding industry prospects, our addressable markets, our competitive position, macroeconomic conditions and their anticipated effect on our business, the benefits of our acquisitions, financial results and financial condition, expectations for our products, capabilities and potential uses of our products, steps taken to enhance liquidity, or our prospective results of operations or financial position, may be deemed to be forward-looking statements. Without limiting the foregoing, the words “believes,” “anticipates,” “plans,” “expects,” and similar expressions are intended to identify forward-looking statements. Such forward-looking statements represent management’s current expectations and are inherently uncertain. There are a number of important factors that could materially impact the value of our common stock or cause actual results to differ materially from those indicated by such forward-looking statements. These important factors include, but are not limited to:see in full comparisonWe have not been historically profitable, which may recur in the future. Our operating results may fluctuate significantly from quarter to quarter and may fall below expectations in any particular fiscal quarter; While we generated positive operating cash flow in fiscal 2024 and the prior year, we have a history of negative operating cash flows, and we may require additional financing in the future, which may not be available to us; Our technology and products could infringe intellectual property rights of others, which may require costly litigation and, if we are not successful, could cause us to pay substantial damages and disrupt our business; Changes in exchange rates could adversely affect our results of operations;If we fail tomaintainimplementproperourandbusinesseffectivestrategyinternalsuccessfully,control overour financialreporting, our ability to produce accurate and timely financial statementsperformance could beimpaired and may lead investors and other users to lose confidence in our financial data; We may be required to issue performance bonds, which restricts our ability to access any cash used as collateral for the bondsharmed; We may not realize all of the sales expected from our backlog of orders and contracts; If we fail to implement our business strategy successfully, our financial performance could be harmed; We rely upon third-party suppliers for the components and subassemblies of many of our Grid and Wind products, making us vulnerable to supply shortages and price fluctuations, which could harm our business; We may acquire additional complementary businesses or technologies, which may require us to incur substantial costs for which we may never realize the anticipated benefits; Our business and operations may be materially adversely impacted in the event of a failure or security breach of our or any critical third parties' IT Systems or Confidential Information; Our contracts with the U.S. and Canadian governments are subject to audit, modification or termination by such governments and include certain other provisions in favor of the governments. The continued funding of such contracts may remain subject to annual legislative appropriation, which, if not approved, could reduce our revenue and lower or eliminate our profit; Changes in U.S. government defense spending could negatively impact our financial position, results of operations, liquidity and overall business; Ourbusinessperformanceandonoperationscontracts with the U.S. Department of Defense maybe materially adversely impactedresult intherestrictionseventto our ability to repurchase our common stock or U.S. government denial ofaForeignfailureMilitary Sales orsecurity breachceasing ofourassistanceorforanyinternationalcriticalDirectthirdCommercialparties' IT Systems or Confidential InformationSales; Failure to comply with evolving data privacy and data protectionlawslaws, regulations, andregulationsother obligations, or to otherwise protect personal data, may adversely impact our business and financial results; Our success is dependent upon attracting and retaining qualified personnel and our inability to do so could significantly damage our business and prospects;We may acquire additional complementary businesses or technologies, which may require us to incur substantial costs for which we may never realize the anticipated benefits;A significant portion of our Wind segment revenues are derived from a single customer. If thiscustomer’scustomer' s business is negatively affected, it could adversely impact our business; Our success in addressing the wind energy market is dependent on the manufacturers that license our designs; Many of our revenue opportunities are dependent upon subcontractors and other business collaborators; Problems with product quality or product performance may cause us to incur warranty expenses or product liability charges and may damage our market reputation and prevent us from achieving increased sales and market share; Many of our customers outside of the United States may be either directly or indirectly related to governmental entities, and we could be adversely affected by violations of the United States Foreign Corrupt Practices Act and similar worldwide anti-bribery laws outside the United States; We have had limited success marketing and selling our superconductor products and system-level solutions, including our REG system, and our failure to more broadly market and sell our products and solutions could lower our revenue and cash flow; We or third parties on whom we depend may be adversely affected by natural disasters, including events resulting from climate change, and our business continuity and disaster recovery plans may not adequately protect us or our value chain from such events; Uncertainty surrounding our prospects and financial condition may have an adverse effect on our customer and supplier relationships; Pandemics, epidemics, or other public health crises may adversely impact our business, financial condition and results of operations; Changes in valuation allowance of deferred tax assets may affect our future operating results; If we fail to maintain proper and effective internal control over financial reporting on business acquisitions, our ability to produce accurate and timely financial statements could be impaired and may lead investors and other users to lose confidence in our financial data; We have not been historically profitable, and there can be no assurance that we will sustain our recent profitability; we have a history of negative operating cash flows, and we may require additional financing in the future, which may not be available to us; Changes in exchange rates could adversely affect our results of operations; We may be required to issue performance bonds, which restricts our ability to access any cash used as collateral for the bonds; Adverse changes in domestic and global economic conditions could adversely affect our operating results; The ongoing conflicts between the United States, Israel, and Iran has disrupted global energy markets and supply chains and could adversely affect our business, financial condition, and results of operations; Our international operations are subject to risks that we do not face in the United States, which could have an adverse effect on our operating results; Our products face competition, which could limit our ability to acquire or retain customers; We have operations in, and depend on sales in, emerging markets, including Latin America and India, and global conditions could negatively affect our operating results or limit our ability to expand our operations outside of these markets. Changes inIndia’sBrazil' s or India' s political, social, regulatory and economic environment may affect our financial performance; Industry consolidation could result in more powerful competitors and fewer customers;Our success could depend upon the commercial adoption of the REG system, which is currently limited,Evolving andavariedwidespread commercial market for our REG products may not develop; Increasing focus and scrutinyexpectations on environmental sustainability and social initiatives could adversely impact our business and financial results; Growth of the wind energy market depends largely on the availability and size of government subsidies, economic incentives and legislative programs designed to support the growth of wind energy; Lower prices for other energy sources may reduce the demand for wind energy development, which could have a material adverse effect on our ability to grow our Wind business; Our technology and products could infringe intellectual property rights of others, which may require costly litigation and, if we are not successful, could cause us to pay substantial damages and disrupt our business; We may be unable to adequately prevent disclosure of trade secrets and other proprietary information; Our patents may not provide meaningful or long-term protection for our technology, which could result in us losing some or all of our market position; Third parties have or may acquire patents that cover the materials, processes and technologies we use or may use in the future to manufacture our Amperium products, and our success depends on our ability to license such patents or other proprietary rights; There are a number of technological challenges that must be successfully addressed before our superconductor products can gain widespread commercial acceptance, and our inability to address such technological challenges could adversely affect our ability to acquire customers for our products; Our common stock has experienced, and may continue to experience, market price and volume fluctuations, which may prevent our stockholders from selling our common stock at a profit and could lead to costly litigation against us that could divert ourmanagement’smanagement' s attention; Unfavorable results of legal proceedings could have a material adverse effect on our business, operating results and financial condition; and the other important factors discussed under the caption "Risk Factors" in Part 1. Item 1A of our Form 10-K for the fiscal year ended March 31,2025,2026, and our other reports filed with the SEC. These important factors, among others, could cause actual results to differ materially from those indicated by forward-looking statements made herein and presented elsewhere by management from time to time. Any such forward-looking statements represent management's estimates as of the date of this Quarterly Report on Form 10-Q. While we may elect to update such forward-looking statements at some point in the future, we disclaim any obligation to do so, even if subsequent events cause our views to change. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to the date of this Quarterly Report on Form 10-Q.
“Our cash requirements depend on numerous factors, including the successful completion of our product development activities, our ability to commercialize our Resilient Electric Grid and ship protection system solutions, the rate of customer and market adoption of our products, collecting receivables according to established terms, the continued availability of U.S. …”see in full comparison
“In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software. The amendments in ASU 2025-06 remove all references to software development project stages and requires entities to start capitalizing software costs when both of the following occur: (i) management has authorized and committed to funding the software project and (ii) it is probable that the project will be completed and the software will be used to perform the function intended. …”see in full comparison
“Our power system solutions help to improve energy efficiency, alleviate power grid capacity constraints, improve system resiliency, and increase the adoption of renewable energy generation. Demand for our solutions is driven by the growing needs for modernized smart grids that improve power reliability, security and quality, the U.S. Navy's effort to upgrade onboard power systems to support fleet electrification, and the needs for increased renewable sources of electricity, such as wind and solar energy. …”see in full comparison
Threesee in full comparisonand ninemonths endedDecemberJune31,30,2025,2026, compared to the threeand ninemonths endedDecemberJune31,30,20242025
“On August 1, 2024, we entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”) with the selling stockholders named therein. Pursuant to the terms of the Stock Purchase Agreement and concurrently with entering into such agreement, we acquired all of the issued and outstanding shares of Megatran, Industries, Inc. …”see in full comparison
Full comparison: every changed paragraph (43)
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). For this purpose, any statements contained herein that relate to future events or conditions, including without limitation, the statements in Part II, “Item 1A. Risk Factors” and in Part I under “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and located elsewhere herein regarding industry prospects, our addressable markets, our competitive position, macroeconomic conditions and their anticipated effect on our business, the benefits of our acquisitions, financial results and financial condition, expectations for our products, capabilities and potential uses of our products, steps taken to enhance liquidity, or our prospective results of operations or financial position, may be deemed to be forward-looking statements. Without limiting the foregoing, the words “believes,” “anticipates,” “plans,” “expects,” and similar expressions are intended to identify forward-looking statements. Such forward-looking statements represent management’s current expectations and are inherently uncertain. There are a number of important factors that could materially impact the value of our common stock or cause actual results to differ materially from those indicated by such forward-looking statements. These important factors include, but are not limited to: We have not been historically profitable, which may recur in the future. Our operating results may fluctuate significantly from quarter to quarter and may fall below expectations in any particular fiscal quarter; While we generated positive operating cash flow in fiscal 2024 and the prior year, we have a history of negative operating cash flows, and we may require additional financing in the future, which may not be available to us; Our technology and products could infringe intellectual property rights of others, which may require costly litigation and, if we are not successful, could cause us to pay substantial damages and disrupt our business; Changes in exchange rates could adversely affect our results of operations;
If we fail to maintainimplement properour andbusiness effectivestrategy internalsuccessfully, control overour financial reporting, our ability to produce accurate and timely financial statementsperformance could be impaired and may lead investors and other users to lose confidence in our financial data; We may be required to issue performance bonds, which restricts our ability to access any cash used as collateral for the bondsharmed; We may not realize all of the sales expected from our backlog of orders and contracts; If we fail to implement our business strategy successfully, our financial performance could be harmed; We rely upon third-party suppliers for the components and subassemblies of many of our Grid and Wind products, making us vulnerable to supply shortages and price fluctuations, which could harm our business; We may acquire additional complementary businesses or technologies, which may require us to incur substantial costs for which we may never realize the anticipated benefits; Our business and operations may be materially adversely impacted in the event of a failure or security breach of our or any critical third parties'
IT Systems or Confidential Information; Our contracts with the U.S. and Canadian governments are subject to audit, modification or termination by such governments and include certain other provisions in favor of the governments. The continued funding of such contracts may remain subject to annual legislative appropriation, which, if not approved, could reduce our revenue and lower or eliminate our profit; Changes in U.S. government defense spending could negatively impact our financial position, results of operations, liquidity and overall business; Our businessperformance andon operationscontracts with the U.S. Department of Defense may be materially adversely impactedresult in therestrictions eventto our ability to repurchase our common stock or U.S. government denial of aForeign failureMilitary Sales or security breachceasing of ourassistance orfor anyinternational criticalDirect thirdCommercial parties' IT Systems or Confidential InformationSales; Failure to comply with evolving data privacy and data protection lawslaws, regulations, and regulationsother obligations, or to otherwise protect personal data, may adversely impact our business and financial results; Our success is dependent upon attracting and retaining qualified personnel and our inability to do so could significantly damage our business and prospects; We may acquire additional complementary businesses or technologies, which may require us to incur substantial costs for which we may never realize the anticipated benefits; A significant portion of our Wind segment revenues are derived from a single customer. If this customer’scustomer'
s business is negatively affected, it could adversely impact our business; Our success in addressing the wind energy market is dependent on the manufacturers that license our designs; Many of our revenue opportunities are dependent upon subcontractors and other business collaborators; Problems with product quality or product performance may cause us to incur warranty expenses or product liability charges and may damage our market reputation and prevent us from achieving increased sales and market share; Many of our customers outside of the United States may be either directly or indirectly related to governmental entities, and we could be adversely affected by violations of the United States Foreign Corrupt Practices Act and similar worldwide anti-bribery laws outside the United States; We have had limited success marketing and selling our superconductor products and system-level solutions, including our REG system, and our failure to more broadly market and sell our products and solutions could lower our revenue and cash flow; We or third parties on whom we depend may be adversely affected by natural disasters, including events resulting from climate change, and our business continuity and disaster recovery plans may not adequately protect us or our value chain from such events; Uncertainty surrounding our prospects and financial condition may have an adverse effect on our customer and supplier relationships; Pandemics, epidemics, or other public health crises may adversely impact our business, financial condition and results of operations; Changes in valuation allowance of deferred tax assets may affect our future operating results; If we fail to maintain proper and effective internal control over financial reporting on business acquisitions, our ability to produce accurate and timely financial statements could be impaired and may lead investors and other users to lose confidence in our financial data; We have not been historically profitable, and there can be no assurance that we will sustain our recent profitability; we have a history of negative operating cash flows, and we may require additional financing in the future, which may not be available to us; Changes in exchange rates could adversely affect our results of operations; We may be required to issue performance bonds, which restricts our ability to access any cash used as collateral for the bonds; Adverse changes in domestic and global economic conditions could adversely affect our operating results; The ongoing conflicts between the United States, Israel, and Iran has disrupted global energy markets and supply chains and could adversely affect our business, financial condition, and results of operations; Our international operations are subject to risks that we do not face in the United States, which could have an adverse effect on our operating results; Our products face competition, which could limit our ability to acquire or retain customers; We have operations in, and depend on sales in, emerging markets, including Latin America and India, and global conditions could negatively affect our operating results or limit our ability to expand our operations outside of these markets. Changes in India’sBrazil'
s or India'
s political, social, regulatory and economic environment may affect our financial performance; Industry consolidation could result in more powerful competitors and fewer customers; Our success could depend upon the commercial adoption of the REG system, which is currently limited,Evolving and avaried widespread commercial market for our REG products may not develop; Increasing focus and scrutinyexpectations on environmental sustainability and social initiatives could adversely impact our business and financial results; Growth of the wind energy market depends largely on the availability and size of government subsidies, economic incentives and legislative programs designed to support the growth of wind energy; Lower prices for other energy sources may reduce the demand for wind energy development, which could have a material adverse effect on our ability to grow our Wind business; Our technology and products could infringe intellectual property rights of others, which may require costly litigation and, if we are not successful, could cause us to pay substantial damages and disrupt our business; We may be unable to adequately prevent disclosure of trade secrets and other proprietary information; Our patents may not provide meaningful or long-term protection for our technology, which could result in us losing some or all of our market position; Third parties have or may acquire patents that cover the materials, processes and technologies we use or may use in the future to manufacture our Amperium products, and our success depends on our ability to license such patents or other proprietary rights; There are a number of technological challenges that must be successfully addressed before our superconductor products can gain widespread commercial acceptance, and our inability to address such technological challenges could adversely affect our ability to acquire customers for our products; Our common stock has experienced, and may continue to experience, market price and volume fluctuations, which may prevent our stockholders from selling our common stock at a profit and could lead to costly litigation against us that could divert our management’smanagement'
s attention; Unfavorable results of legal proceedings could have a material adverse effect on our business, operating results and financial condition;
and the other important factors discussed under the caption "Risk Factors" in Part 1. Item 1A of our Form 10-K for the fiscal year ended March 31, 2025,2026, and our other reports filed with the SEC. These important factors, among others, could cause actual results to differ materially from those indicated by forward-looking statements made herein and presented elsewhere by management from time to time. Any such forward-looking statements represent management's estimates as of the date of this Quarterly Report on Form 10-Q. While we may elect to update such forward-looking statements at some point in the future, we disclaim any obligation to do so, even if subsequent events cause our views to change. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to the date of this Quarterly Report on Form 10-Q.
American Superconductor®, Amperium®, AMSC®, D-VARComtrafo™, Neeltran®, PowerModuleNEPSI™, D-VAR VVONWL®, PQ-IVR®to the next power™, SeaTitan®think inside the box™, Gridtec™ Solutions, Windtec™ Solutions, Smarter, Cleaner...Better Energy™, orchestrate the rhythm and harmony of power on the grid™, Amperium®, D-VAR®, PowerModule™, D-VAR VVO®, PQ-IVR®, SeaTitan®, Gridtec™, Mairnetec™, Windtec™, actiVAR®, armorVAR™, NEPSI™ and Neeltran™, NWL™ and SafetyLOCK™ are trademarks or registered trademarks of American Superconductor Corporation or our subsidiaries. We reserve all of our rights with respect to our trademarks or registered trademarks regardless of whether they are so designated in this Quarterly Report on Form 10-Q by an ® or ™ symbol. All other brand names, product names, trademarks or service marks appearing in this Quarterly Report on Form 10-Q are the property of their respective holders.
Guided by a belief in the power of next, we are a leading provider of power control solutions that apply innovation and creativity to address today’s challenges and enable a more resilient and sustainable energy future. Driven by our purpose “to power progress,” we integrate future-facing technologies to balance the growing global demand for power with the need for reliable, and efficient power delivery. Our advanced grid systems, engineering services, power electronics, software controls, and superconductor-based solutions help the traditional and renewable energy sectors, electric utilities, the materials and mining sector, industrial facilities, and other critical infrastructure operators optimize network reliability, improve power quality, alleviate grid constraints, and scale operations without added complexity or size.
We also deliver ship protection and power management solutions that enhance fleet efficiency, survivability, and operational readiness for the U.S. Navy and allied fleets. In the wind power market, we provide advanced electrical control systems, engineering, and support services that help manufacturers lower the cost of wind energy and improve turbine performance. Beyond these markets, we provide industrial process, environmental and emission control capabilities that support operational efficiency across the broader energy infrastructure. Across our businesses, our solutions are helping optimize power networks, strengthen naval capabilities, and support gigawatts of renewable energy generation worldwide as governments and industries continue investing in more resilient, secure, and sustainable power systems.
We are a leading system provider of megawatt-scale power resiliency solutions that orchestrate the rhythm and harmony of power on the grid™, and protect and expand the capability of our Navy's fleet. Our solutions enhance the performance of the power grid, protect our Navy’s fleet, and lower the cost of wind power. In the power grid market, we enable electric utilities, industrial facilities, and renewable energy project developers to connect, transmit and distribute smarter, cleaner and better power through our transmission planning services and power electronics and superconductor-based systems. In the wind power market, we enable manufacturers to field highly competitive wind turbines through our advanced power electronics and control system products, engineering, and support services. Our power grid and wind products and services provide exceptional reliability, security, efficiency and affordability to our customers.
Our power system solutions help to improve energy efficiency, alleviate power grid capacity constraints, improve system resiliency, and increase the adoption of renewable energy generation. Demand for our solutions is driven by the growing needs for modernized smart grids that improve power reliability, security and quality, the U.S. Navy's effort to upgrade onboard power systems to support fleet electrification, and the needs for increased renewable sources of electricity, such as wind and solar energy. Concerns about these factors have led to increased spending by corporations and the military, as well as supportive government regulations and initiatives on local, state, and national levels, including renewable portfolio standards, tax incentives and international treaties.
We manufacture products using two proprietary core technologies: PowerModule™ programmable power electronic converters and our Amperium® high temperature superconductor ("HTS") wires. These technologies and our system-level solutions are protected by a robust intellectual property portfolio consisting of patents and patent applications worldwide and rights through exclusive and non-exclusive licenses.
We operate our business under two market-facing business segments: Grid and Wind. We believe this market-centricmarket centric structure enables us to more effectively anticipate and meet the needs of power generationgenerators, projectpower developers,utilities, industrial manufacturers, the Navy's ship protection systems, electric utilitiesmilitary and windrenewable turbineenergy manufacturers.companies.
Changes in macroeconomic conditions arising from various reasons, such as the ongoing warwars between Russia and Ukraine, and in the Middle East, tariffs, trade restrictions and resulting trade conflicts, labor force availability, sourcing, material delays and global supply chain disruptions, could have a material adverse effect on our business, financial condition and results of operations.
On December 5, 2025 (the "Comtrafo Acquisition Date"), we entered into a Stock Exchange Agreement (the "Stock Exchange Agreement") with the selling stockholders named therein (the "Stockholders"). Pursuant to the terms of the Stock Exchange Agreement, Mardin Participações Ltda., an entity incorporated in Brazil (“AMSC Brazil”) and our wholly-owned subsidiary, directly or indirectly, purchased all of the issued and outstanding shares of Comtrafo Indústria de Transformadores Elétricos S.A. ("Comtrafo") (collectively, the "Comtrafo Acquisition") for (a) (i) 300,000,000300 million Brazilian Real in cash; and (b) 2,417,142 restricted shares of our common stock, $0.01 par value per share (the "AMSC Shares") that were paid and issued, respectively, at closing. In addition, pursuant to certain additional real property agreements, AMSC Brazil through Comtrafo purchased certain real estate assets and transportation assets of Comtrafo for 155,564,538155.6 million Brazilian Real and 13,376,67613.4 million Brazilian Real, respectively, in cash. Additionally, AMSC Brazil has agreed to pay the Stockholders up to an additional 382,500,000382.5 million Brazilian Real in cash (the "Earnout") upon the achievement of specified earnings before interest, taxes, depreciation, and amortization ("EBITDA") objectives during the three years following the closing. Comtrafo is a Brazil-based manufacturer of large power and distribution transformers primarily for utility customers and also for industrial customers.
On August 1, 2024, we entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”) with the selling stockholders named therein. Pursuant to the terms of the Stock Purchase Agreement and concurrently with entering into such agreement, we acquired all of the issued and outstanding shares of Megatran, Industries, Inc. ("Megatran"), for aggregate consideration in an amount equal to $61.4 million, as may be adjusted pursuant to the Stock Purchase Agreement (the “Purchase Price”), including a cash payment after closing of $5.0 million, as adjusted pursuant to Sections 5.6(c), (d), and (f) of the Stock Purchase Agreement (the “Additional Cash Purchase Price”). At closing, we paid to Megatran's selling stockholders $25.0 million in cash on hand, and 1,297,600 restricted shares of our common stock. On September 23, 2024, we paid the Additional Cash Purchase Price to the selling stockholders, which was calculated based on the agreed upon formula set forth in the Stock Purchase Agreement, in the amount of $8.3 million which includes the Additional Cash Purchase Price and the make whole payment. Megatran's wholly-owned subsidiary, NWL, Inc. (together with Megatran, "NWL"), is a U.S.-based global provider of engineered power conversion solutions for demanding industrial and military applications. As a result of this transaction, Megatran became a wholly-owned subsidiary and is operated by our Grid business segment. We refer to this transaction as the "acquisition of NWL".
Three and nine months ended DecemberJune 31,30, 2025,2026, compared to the three and nine months ended DecemberJune 31,30, 20242025
Total revenues increased 21%30% to $74.5$94.1 million for the three months ended DecemberJune 31,30, 20252026 and total revenues increased 36%compared to $212.7$72.4 million for the ninethree months ended DecemberJune 31,30, 2025 compared to $61.4 million and $156.2 for the three and nine months ended December 31, 2024, respectively.2025. Our revenues are summarized as follows (in thousands):
Our Grid business segment accounted for 85% and 83% of total revenues for both the three and nine months ended December 31, 2025, respectively, compared to 85% and 84% for the three and nine months ended December 31, 2024, respectively. Our Grid business segment revenues increased 21% to $63.2 million in the three months ended December 31, 2025, from $52.3 million in the three months ended December 31, 2024. Our Grid business segment revenues increased 35% to $177.6 million in the nine months ended December 31, 2025, from $131.6 million in the nine months ended December 31, 2024. The increase in the Grid business segment revenues in the three months ended December 31, 2025, compared to the three months ended December 31, 2024, was driven by increased shipments of new energy power systems and additional ship protection systems revenues than in the prior year period along with the addition of Comtrafo revenues. The increase in the Grid business segment revenues in the nine months ended December 31, 2025, compared to the nine months ended December 31, 2024, was driven by the acquisitions of NWL and Comtrafo, increased shipments of new energy power systems, and additional ship protection systems revenues compared to the prior year periods.
Our WindGrid business segment accounted for 15% and 17%81% of total revenues for the three and nine months ended DecemberJune 31,30, 2025, respectively,2026 compared to 15% and 16%83% for the three and nine months ended DecemberJune 31,30, 2024,2025. respectively.Our Revenues in the WindGrid business segment revenues increased 25%27% to $11.3$76.3 million in the three months ended DecemberJune 31,30, 2025,2026, from $9.1$60.1 million in the three months ended DecemberJune 31,30, 2024.2025. RevenuesThe increase in the WindGrid business segment increased 43% to $35.1 millionrevenues in the ninethree months ended DecemberJune 31,30, 2025, from $24.6 million in the nine months ended December 31, 2024. The increase during the three and nine months ended December 31, 2025,2026, compared to the three and nine months ended DecemberJune 31,30, 2024,2025, was driven by additionalthe shipmentsaddition of electricalComtrafo control systems ("ECS").revenues.
Our Wind business segment accounted for 19% of total revenues for the three months ended June 30, 2026, compared to 17% for the three months ended June 30, 2025. Revenues in the Wind business segment increased 45% to $17.8 million in the three months ended June 30, 2026, from $12.3 million in the three months ended June 30, 2025. The increase during the three months ended June 30, 2026, compared to the three months ended June 30, 2025, was driven by additional shipments of electrical control systems ("ECS").
Cost of revenues increased by 15%45% to $51.7$69.3 million for the three months ended DecemberJune 31,30, 2025,2026, compared to $45.1$47.9 million for the three months ended DecemberJune 31,30, 2024. Cost of revenues increased by 29% to $145.0 million for the nine months ended December 31, 2025, compared to $112.0 million for the nine months ended December 31, 2024.2025. Gross margin was 31% and 32%26% for the three and nine months ended DecemberJune 31,30, 2025, respectively,2026, compared to 27% and 28%34% for the three and nine months ended DecemberJune 31,30, 2024, respectively.2025. Cost of revenues includes total amortization expense of $0.1$0.5 million in the three and nine months ended DecemberJune 31,30, 20252026 as a result of Comtrafo acquired backlog intangible assets. In addition, a charge of $0.4$0.7 million related to a fair value adjustment for the step-up basis assigned to acquired inventory to properly reflect the fair value in purchase accounting was charged to cost of revenues in the three and nine months ended DecemberJune 31,30, 2025, when the inventory was sold.2026. The increasedecrease in gross margin in the three and nine months ended DecemberJune 31,30, 20252026 was due to highera revenues, aless favorable product mix and favorable impacts across the businessimpact dueof toComtrafo pricingpurchase increasesaccounting across product lines.items.
Research and development ("R&D") expenses increaseddecreased 18%9% in the three months ended DecemberJune 31,30, 2025,2026, to $3.5$3.9 million from $3.0$4.3 million in the three months ended DecemberJune 31,30, 2024. R&D expenses increased 46% in the nine months ended December 31, 2025, to $11.6 million from $7.9 million in the nine months ended December 31, 2024.2025. The increasedecrease in the three and nine months ended DecemberJune 31,30, 20252026 was driven primarily by higherlower overallstock-based compensation expense and additionallower stock-basedoutside compensationservices expense.
Selling, general and administrative ("SG&A") expenses increased 33%31% in the three months ended DecemberJune 31,30, 2025,2026, to $15.4$18.6 million from $11.6$14.2 million in the three ended December 31, 2024. SG&A expenses increased 39% in the nine months ended DecemberJune 31,30, 2025, to $43.1 million from $31.0 million in the nine months ended December 31, 2024.2025. The increase in SG&A expense in the three and nine months ended DecemberJune 31,30, 20252026 was driven primarily by the addition of Comtrafo expenses, higher overall compensation expense, and additional stock-based compensation expense, and acquisition costs related to the acquisition of Comtrafo.expense.
We recorded amortization expense related to our core technology and know-how and customer relationships of $0.5 million in the three months ended DecemberJune 31,30, 2025,2026, and $0.4$0.3 million in the three months ended DecemberJune 31,30, 2024. We recorded amortization expense related to our core technology and know-how and customer relationships of $1.2 million in the nine months ended December 31, 2025, and $1.3 million in the nine months ended December 31, 2024.2025. The increase in amortization expense in the three months ended DecemberJune 31,30, 2025,2026, was a result of additional amortization related to the Comtrafo acquisition, as well as ongoing activity from NEPSI and Neeltran which are using the economic consumption method as the basis to amortize the acquired customer relationships intangible assets. The decrease in amortization expense in the nine months ended December 31, 2025, was a result of additional amortization expense related to the Comtrafo acquisition using the economic consumption method as the basis to amortize the acquired customer relationships intangible assets offset by similar ongoing activity from NEPSI and Neeltran, Inc.
The change in fair value of our contingent consideration for the earnout payment on the acquisition of NEPSIComtrafo resulted in a lossgain of $3.4$8.1 million resulting from ana increasedecrease in fair value of the contingent consideration driven by changes in the nineforecast in the three months ended DecemberJune 31,30, 2024. During the three and nine months ended December 31, 2024, we issued 300,000 shares of common stock of the Company to the selling stockholders following certification of the achievement of specified earnout revenue objectives.2026. There was no activity in the three and nine months ended DecemberJune 31,30, 2025 asrelated to the contingent consideration for NEPSI and NWL was settled during the prior fiscal year. The change in fair value of the Comtrafo contingent consideration was deemed immaterial to the financial statements from the Comtrafo Acquisition Date.consideration.
Our Grid business segment generated operating incomeloss of $2.0 million and $7.5$2.2 million in the three and nine months ended DecemberJune 31,30, 2025, respectively,2026, compared to an operating income of $0.2 million and $1.6$4.2 million in the three and nine months ended DecemberJune 31,30, 2024, respectively.2025. The increasedecrease in the Grid business segment operating income in the three and nine months ended DecemberJune 31,30, 20252026 was due to higherlower revenuesgross margins and grossComtrafo margins.purchase accounting expense.
Our Wind business segment generated operating income of $1.3 million and $4.5$3.9 million in the three and nine months ended DecemberJune 31,30, 2025, respectively,2026, compared to operating income of $1.1 million and $2.4$1.5 million in the three and nine months ended DecemberJune 31,30, 2024, respectively.2025. The increase in the Wind business segment operating income in the three and nine months ended DecemberJune 31,30, 20252026 was due to higher revenues and gross margins from increased sales of ECS units.
Unallocated corporate expenses included a net loss on contingent consideration of $6.7 million in the nine months ended December 31, 2024.
Interest income, net, was $2.0 million and $5.2$1.5 million in the three and nine months ended DecemberJune 31,30, 2025, respectively,2026, compared to $0.8 million and $2.9$0.9 million in the three and nine months ended DecemberJune 31,30, 2024, respectively.2025. The increase in interest income, net, in the three and nine months ended DecemberJune 31,30, 20252026 was due to higher cash balances primarily generated fromin the publiccurrent offering completed in June 2025.year.
Other expense, net, was $0.1$0.6 million and both in the three and nine months ended DecemberJune 31,30, 2025,2026, compared to other income, net of $0.3 million and other expense, net of $0.2 million in the three and nine months ended DecemberJune 31,30, 2024, respectively.2025. The increasedecrease in other expense,income, net, during the three months ended DecemberJune 31,30, 2025, compared to the three months ended December 31, 20242026, was driven by unfavorable fluctuations in foreign currencies. The decrease in other expense, net, during the nine months ended December 31, 2025, compared to the nine months ended December 31, 2024 was driven by favorable fluctuations in foreign currencies.
Income tax benefitexpense was $112.3 million and $112.1$1.3 million in the three and nine months ended DecemberJune 31,30, 2025, respectively,2026, compared to income tax benefitexpense of $0.1 million and $4.9$0.2 million in the three and nine months ended DecemberJune 31,30, 2024, respectively.2025. The increase in our income tax benefitexpense was primarily due to ataxes $113.1in millionforeign non-cash tax benefit from the release of the majority of our valuation allowance against deferred tax assets.jurisdictions.
Net income was $117.8 million and $129.3$9.5 million in the three and nine months ended DecemberJune 31,30, 2025, respectively,2026, compared to $2.5 million and $4.8$6.7 million in the three and nine months ended DecemberJune 31,30, 2024, respectively.2025. The increase in net income for the three and nine months ended DecemberJune 31,30, 20252026 was driven primarily by the releasechange in fair value of thecontingent valuation allowance and increased revenues and gross margins.consideration.
We define non-GAAP net income as net income before stock-based compensation, acquisition costs, amortization of acquisition-related intangibles, change in fair value of contingent consideration, and other non-cash or unusual charges. We believe non-GAAP net income assists management and investors in comparing our performance across reporting periods on a consistent basis by excluding these non-cash charges and other items that we do not believe are indicative of our core operating performance. In addition, we use non-GAAP net income as a factor to evaluate the effectiveness of our business strategies. A reconciliation of GAAP to non-GAAP net income is set forth in the table below (in thousands, except per share data):
We generated non-GAAP net income of $123.5 million and $144.0$7.6 million, or $2.81 and $3.42$0.17 per share, for the three and nine months ended DecemberJune 31,30, 2025, respectively,2026, compared to a non-GAAP net income of $6.0 million and $19.3$11.6 million, or $0.16 and $0.52$0.30 per share, for the three and nine months ended DecemberJune 31,30, 2024, respectively.2025. For the three and nine months ended DecemberJune 31,30, 2025,2026, the increasedecrease in non-GAAP net income was a result of the release of the valuation allowance and higher revenues andlower gross margins.
The Company’s primary sources of liquidity are internally generated cash provided by operating activities, our cash and cash equivalents on hand, along with access to capital markets, including through our currently effective Registration Statements on Form S-3. We believe that these sources of liquidity are sufficient to meet both our short-term and reasonably foreseeable long-term requirements and obligations. As of DecemberJune 31,30, 2025,2026, we had cash andcash, cash equivalents and restricted cash of $141.1$153.1 million, compared to $147.6 million as of March 31, 2026, an increase of $5.5 million. As of June 30, 2026, we had $22.8 million in cash, cash equivalents, and restricted cash in foreign bank accounts. Our cash, cash equivalents, and restricted cash are summarized as follows (in thousands):
Our cash requirements depend on numerous factors, including the successful completion of our product development activities, our ability to commercialize our Resilient Electric Grid and ship protection system solutions, the rate of customer and market adoption of our products, collecting receivables according to established terms, the continued availability of U.S. government funding during the product development phase of our superconductor-based products and whether Inox is successful in executing on Solar Energy Corporation of India Limited orders or in obtaining additional orders under the new central and state auction regime. We continue to closely monitor our expenses and, if required, may reduce our operating and capital spending to enhance liquidity.
On June 10, 2025, we completed an offering of 4,125,000 shares of our common stock at a public offering price of $28.00 per share under our Registration Statement on Form S-3. We received net proceeds of approximately $108.2 million after deducting underwriting discounts and commissions and offering expenses. The offering included an option to purchase an additional 618,750 shares over the initial offering of 4,125,000 shares at the public offering price, less underwriting discounts and commission. This option was fully exercised on June 16, 2025 resulting in an additional $16.3 million in net proceeds, after deducting underwriting discounts and commissions and offering expenses payable by the Company, for total net proceeds of approximately $124.6 million. The offering closed on June 16, 2025.
As of December 31, 2025, we had cash, cash equivalents and restricted cash of $147.1 million, compared to $85.4 million as of March 31, 2025, an increase of $61.7 million. As of December 31, 2025, we had $22.8 million in cash, cash equivalents, and restricted cash in foreign bank accounts. Our cash, cash equivalents, and restricted cash are summarized as follows (in thousands):
For the ninethree months ended DecemberJune 31,30, 2025,2026, net cash provided by operating activities was $13.9$16.0 million, compared to $22.0$4.1 million for the ninethree months ended DecemberJune 31,30, 2024.2025. The decreaseincrease in cash flows provided by operating activities in the ninethree months ended DecemberJune 31,30, 20252026 was due primarily to changes in deferred revenue, offsetinventory, byprepaid changeexpenses and other current assets, and changes in accountsfair payablevalue and accrued expenses, accounts receivable, deferred income taxes, and stock-based compensation expense.consideration.
For the ninethree months ended DecemberJune 31,30, 2025,2026, net cash used in investing activities was $75.3$10.5 million, compared to $34.1$0.7 million for the ninethree months ended DecemberJune 31,30, 2024.2025. The increase in net cash used in investing activities was primarily due to cash paid for the Comtrafopurchase acquisitionof property, plant and equipment in the current year.
For the ninethree months ended DecemberJune 31,30, 2026, there was no cash provided by or used in financing activities. For the three months ended June 30, 2025, net cash provided by financing activities was $123.9$124.6 million compared to cash used in financing activities of $0.1 million for the nine months ended December 31, 2024.million. The increasedecrease in net cash provided by financing activities was due primarily to the equity raise in June 2025.
As of DecemberJune 30, 2026, we had $5.6 million of restricted cash included in long-term assets and $3.8 million of restricted cash included in current assets. At March 31, 2025,2026, we had $3.3 million of restricted cash included in long-term assets and $2.8 million of restricted cash included in current assets. At March 31, 2025, we had $4.3 million of restricted cash included in long-term assets and $1.6$3.5 million of restricted cash in current assets. These amounts included in restricted cash primarily represent collateral deposits to secure surety bonds and letters of credit for various customer contracts. These deposits are held in interest bearing accounts.
We are a party to many contractual obligations involving commitments to make payments to third parties. These obligations impact our short-term and long-term liquidity and capital resource needs. Certain contractual obligations are reflected on the condensed consolidated balance sheet as of DecemberJune 31,30, 2025,2026, while others are considered future commitments. We have various contractual arrangements, under which we have committed to purchase certain minimum quantities of goods or services on an annual basis. For information regarding our other contractual obligations, refer to Note 3, "Revenue Recognition," Note 14, "Contingent Consideration," Note 16,15, "Leases" and Note 17,16, "Commitments and Contingencies" to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. Other than the contingent consideration owed to the former Comtrafo stockholders there have been no material changes to our contractual obligations from those disclosed in our Annual Report on Form 10-K for the fiscal year ended March 31, 2025.2026.
In December 2023, the FASB issued ASU 2023-09,
Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments in ASU 2023-09 address investor requests for more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. Following the release of ASU 2023-09 in December 2023, the effective date was annual reporting periods beginning after December 15, 2024. As of
December 31, 2025, we are evaluating the impact on our consolidated financial statements.
In March 2024, the FASB issued ASU 2024-02, Codification Improvements—Amendments to Remove References to the Concepts Statements. The amendments in ASU 2024-02 contain amendments to the Codification that remove references to various FASB Concepts Statements. Following the release of ASU 2024-02 in March 2024, the effective date was annual reporting periods beginning after December 15, 2024. As of December 31, 2025, we are evaluating the impact on our consolidated financial statements.
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures. The amendments in ASU 2024-03 address investor requests for more disclosure of disaggregated financial reporting information about expenses presented in the income statement. Following the release of ASU 2024-03 in November 2024, the effective date will be annual reporting periods beginning after December 15, 2026. As of December 31, 2025, weWe are evaluating the impact on our consolidated financial statements.
In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software. The amendments in ASU 2025-06 remove all references to software development project stages and requires entities to start capitalizing software costs when both of the following occur: (i) management has authorized and committed to funding the software project and (ii) it is probable that the project will be completed and the software will be used to perform the function intended. Following the release of ASU 2024-05 in September 2025, the effective date will be annual reporting periods beginning after December 15, 2027. We are evaluating the impact on our consolidated financial statements.
AMSC insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 7 filings (3 insiders, 4 trade dates, 163,718 shares, about $7.8M; 6 of these filings say the sales were made under a Rule 10b5-1 trading plan). Net open-market shares: -163,718 (purchases minus sales); net value about -$7.8M.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-09-18 | Littlefield Barbara G. |
Grant/award | 1,607 | — | — |
| 2026-06-11 | Dambier Laura A. |
Open-market sale | 4,000 | $37.63 | $150.5K |
| 2026-06-11 | Kosiba John W Jr |
Open-market sale |
5,026 | $37.33 | $187.6K |
| 2026-06-11 | Kosiba John W Jr |
Open-market sale |
1,743 | $37.85 | $66.0K |
| 2026-06-11 | Mcgahn Daniel P |
Open-market sale |
4,609 | $37.85 | $174.5K |
| 2026-06-11 | Mcgahn Daniel P |
Open-market sale |
11,508 | $37.28 | $429.0K |
| 2026-06-08 | Kosiba John W Jr |
Open-market sale |
3,286 | $41.50 | $136.4K |
| 2026-06-08 | Kosiba John W Jr |
Open-market sale |
1,549 | $42.35 | $65.6K |
| 2026-06-08 | Mcgahn Daniel P |
Open-market sale |
4,992 | $41.39 | $206.6K |
| 2026-06-08 | Mcgahn Daniel P |
Open-market sale |
4,678 | $42.19 | $197.4K |
| 2026-06-03 | Kosiba John W Jr |
Open-market sale |
2,638 | $49.28 | $130.0K |
| 2026-06-03 | Kosiba John W Jr |
Open-market sale |
609 | $50.83 | $31.0K |
| 2026-06-03 | Kosiba John W Jr |
Open-market sale |
3,200 | $48.31 | $154.6K |
| 2026-06-03 | Mcgahn Daniel P |
Open-market sale |
4,501 | $49.25 | $221.7K |
| 2026-06-03 | Mcgahn Daniel P |
Open-market sale |
7,075 | $48.31 | $341.8K |
| 2026-06-03 | Mcgahn Daniel P |
Open-market sale |
500 | $50.29 | $25.1K |
| 2026-06-03 | Mcgahn Daniel P |
Open-market sale |
817 | $50.99 | $41.7K |
| 2026-06-02 | Kosiba John W Jr |
Open-market sale |
5,704 | $49.46 | $282.1K |
| 2026-06-02 | Kosiba John W Jr |
Open-market sale |
600 | $52.19 | $31.3K |
| 2026-06-02 | Kosiba John W Jr |
Open-market sale |
12,036 | $51.47 | $619.5K |
| 2026-06-02 | Kosiba John W Jr |
Open-market sale |
12,122 | $50.62 | $613.6K |
| 2026-06-02 | Mcgahn Daniel P |
Open-market sale |
13,762 | $49.45 | $680.5K |
| 2026-06-02 | Mcgahn Daniel P |
Open-market sale |
27,900 | $50.63 | $1.4M |
| 2026-06-02 | Mcgahn Daniel P |
Open-market sale |
28,558 | $51.46 | $1.5M |
| 2026-06-02 | Mcgahn Daniel P |
Open-market sale |
2,305 | $52.14 | $120.2K |
| 2026-06-01 | Kosiba John W Jr |
Grant/award |
30,000 | — | — |
| 2026-06-01 | Mcgahn Daniel P |
Grant/award |
60,000 | — | — |
Well-known investors holding AMSC (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| Baillie Gifford | 2026-06-30 | 933,308 | $38.7M | 0.04% | Reduced 36% |
| D. E. Shaw & Co. | 2026-06-30 | 366,845 | $15.2M | 0.01% | Reduced 35% |
| AQR Capital Management (Cliff Asness) | 2026-06-30 | 194,477 | $8.1M | 0.0% | Added 5% |
| Millennium Management (Israel Englander) | 2026-06-30 | 100,762 | $4.2M | 0.0% | Reduced 1% |
| Two Sigma Investments | 2026-06-30 | 90,340 | $3.8M | 0.0% | Reduced 47% |
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 20,528 | $852.1K | 0.0% | Reduced 91% |