Orion Energy Systems Annual Report 2023

FY2023 Annual Report · Orion Energy Systems

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Orion Energy Systems, Inc.

Shareholders’ Letter and Annual Report on Form 10-K

Fiscal Year Ended March 31, 2023

Dear Fellow Shareholders:

June 30, 2023

I am honored to write you in my first shareholder letter as CEO. In fiscal 2023, Orion’s
talented team made substantial progress advancing our mission to help our customers achieve
their energy efficiency and environmental goals. Now, more than ever, the carbon and emissions
reduction benefits of our solutions are proving as important to many customers as the significant
financial and business benefits.

Building upon our core expertise in lighting and controls, Orion has expanded into electrical

maintenance solutions and entered the rapidly growing market for commercial electric vehicle
charging solutions. We are building out the national service footprint for both of these new
businesses that complement our capabilities and customer base in lighting. This diversification of
our product and service offerings supports our “customers for life” commitment, which is backed
by our unique technical expertise and industry-leading product and service quality. We believe
these commitments differentiate Orion’s value proposition and are integral to our long-term
growth objectives.

Let us now turn to some fiscal 2023 highlights:

EV Charging Solutions. We acquired Voltrek in early October 2022 to serve our
customers’ EV charging needs. The business is off to a very strong start, delivering revenue of
$6.3M in the second half of FY 2023 versus target revenue of $3-$5M. We anticipate substantial
growth in our EV charging division in coming years as we build out our capabilities to support
the rapid growth of electric vehicles and associated infrastructure across the U.S.

Maintenance Services. Maintenance services rose 150% to $14.6M in FY 2023 compared
to FY 2022, benefitting from organic growth as well as a full year’s contribution from our new
Stay-Lite Lighting team. Maintenance services provide an ideal complement to our project-
related businesses, allowing us to expand our value to new and existing customers while also
creating a growing base of recurring revenues.

Financial Performance. Revenue declined to $77.4M in FY 2023 from $124.4M in FY

2022, due primarily to the expected lower level of revenue from our largest customer and a
global online retailer, as well as delays in the start of certain large LED retrofit projects; some of
these delayed projects have since commenced. Importantly, Orion grew revenue outside of our
largest customer and the global online retailer by approximately 11% over FY 2022, reflecting
the growing diversity of our customer base and operations. Our FY 2023 net loss of ($34.2M), or
($1.11) per share, included a $17.8M non-cash valuation allowance charge and a $4.0M earnout
accrual related to the Voltrek acquisition.

Financial Strength. Importantly, Orion exited FY 2023 with $24.9M of working capital,

including $16.0M of cash and cash equivalents and $18.2M of inventory. We believe this
positions us well to fund our operations and growth objectives in FY 2024.

FY 2024 Outlook. Reflecting anticipated growth across LED lighting products and
solutions, maintenance services and EV charging solutions, we currently expect FY 2024
revenue to grow 30% or more to approximately $100M, with a greater proportion of revenue

expected in the second half of the fiscal year. This outlook anticipates approximately $34M in
aggregate revenue from maintenance services and EV charging solutions and the balance from
LED lighting products and solutions.

Today, we feel Orion has evolved into a stronger, more diversified business that is better
able to capitalize on our expertise and our product and turnkey service strengths. We are very
excited about the growth opportunities that lie ahead and look forward to reporting to you on our
progress.

We encourage you to attend our Virtual Annual Meeting of Shareholders on Thursday,

August 10, 2023, at 1:00 p.m. Central Time, accessible at
http://www.virtualshareholdermeeting.com/OESX2023. A replay of the meeting will be posted
to our website during the month of August.

In closing, we thank you for your confidence and investment in Orion. We have a very

strong team that is committed to serving the needs of our customers in an exemplary and
environmentally sustainable fashion and in so doing, creating financial rewards for our
shareholders.

Sincerely,

Michael H. Jenkins
Chief Executive Officer

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K

☒

☐

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 2023
or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-33887
Orion Energy Systems, Inc.

(Exact name of Registrant as specified in its charter)

Wisconsin
(State or other jurisdiction of
incorporation or organization)
2210 Woodland Drive, Manitowoc, WI

(Address of principal executive offices)

39-1847269
(I.R.S. Employer
Identification No.)
54220
(Zip Code)

(920) 892-9340
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the act:

Title of Each Class

Trading Symbol (s)

Common stock, no par value

OESX

Name of Each Exchange on Which Registered
The Nasdaq Stock Market LLC
(NASDAQ Capital Market)

Securities registered pursuant to Section 12(g) of the act:
None

Indicate by check mark if the Registrant is a well-known seasoned issuer as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐ No ☒

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation

S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

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

Large accelerated filer
Non-accelerated filer

☐
☒

Accelerated filer
Smaller reporting company
Emerging growth company

☐
☒
☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or

revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over
financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
Yes ☐ No ☒

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing

reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by

any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

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

The aggregate market value of shares of the Registrant’s common stock held by non-affiliates as of September 30, 2022, the last business day of the Registrant’s

most recently completed second fiscal quarter, was approximately $41,177,495.

As of May 31, 2023, there were 32,295,408 shares of the Registrant’s common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant's Proxy Statement for the 2023 Annual Meeting of Shareholders to be held on August 10, 2023 are incorporated herein by reference in

Part III of this Annual Report on Form 10-K.

ORION ENERGY SYSTEMS, INC.
ANNUAL REPORT ON FORM 10-K
FOR THE YEAR ENDED MARCH 31, 2023

Table of Contents

PART I

Item 1 Business
Item 1A Risk Factors
Item 1B Unresolved Staff Comments
Item 2 Properties
Item 3 Legal Proceedings
Item 4 Mine Safety Disclosures

PART II

Item 5 Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities
Item 6 [Reserved]
Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 7A Quantitative and Qualitative Disclosures About Market Risk
Item 8 Financial Statements and Supplementary Data
Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A Controls and Procedures
Item 9B Other Information
Item 9C Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

PART III

Item 10 Directors, Executive Officers and Corporate Governance
Item 11 Executive Compensation
Item 12 Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters
Item 13 Certain Relationships and Related Transactions, and Director Independence
Item 14 Principal Accountant Fees and Services

PART IV

Item 15 Exhibits and Financial Statement Schedules
Item 16 Form 10-K Summary
Signatures

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FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K includes forward-looking statements that are based on Orion Energy Systems, Inc.'s ("Orion",
"we", "us", "our" and similar references) beliefs and assumptions and on information currently available to us. When used in this Form
10-K, the words “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,”
“should,” “will,” “would” and similar expressions identify forward-looking statements. Although we believe that our plans, intentions,
and expectations reflected in any forward-looking statements are reasonable, these plans, intentions or expectations are based on
assumptions, are subject to risks and uncertainties, and may not be achieved. These statements are based on assumptions made by us
based on our experience and perception of historical trends, current conditions, expected future developments and other factors that we
believe are appropriate under the current circumstances. Such statements are subject to a number of risks and uncertainties, many of
which are beyond our control. Our actual results, performance or achievements could differ materially from those contemplated,
expressed or implied by the forward-looking statements contained in this Form 10-K. Important factors could cause actual results to
differ materially from our forward-looking statements. Given these uncertainties, you should not place undue reliance on these forward-
looking statements. Also, forward-looking statements represent our beliefs and assumptions only as of the date of this Form 10-K,
including particularly the Risk Factors described under Part I. Item 1A. of this Form 10-K. All forward-looking statements attributable
to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements set forth in this Form 10-K.
Actual events, results and outcomes may differ materially from our expectations due to a variety of factors. Although it is not possible
to identify all of these factors, they include, among others, the following:

•

our ability to regain and sustain our profitability and positive cash flows;

our ability to integrate and realize the anticipated benefits of our recent acquisitions of Voltrek and Stay-Lite;

our dependence on a limited number of key customers, and the consequences of the loss of one or more key customers or
suppliers, including key contacts at such customers;

the deterioration of market conditions, including our dependence on customers' capital budgets for sales of products and
services, and adverse impacts on costs and the demand for our products;

our ability to manage general economic, business and geopolitical conditions, including the impacts of natural disasters,
pandemics and outbreaks of contagious diseases and other adverse public health developments, such as the COVID-19
pandemic;

our ability to successfully launch, manage and maintain our refocused business strategy to successfully bring to market new
and innovative product and service offerings;

our ability to recruit, hire and retain talented individuals in all disciplines of our company;

price fluctuations (including as a result of tariffs), shortages or interruptions of component supplies and raw materials used
to manufacture our products;

the availability of additional debt financing and/or equity capital to pursue our evolving strategy and sustain our growth
initiatives;

our risk of potential loss related to single or focused exposure within our current customer base and product offerings;

our ability to differentiate our products in a highly competitive and converging market, expand our customer base and gain
market share;

our ability to manage and mitigate downward pressure on the average selling prices of our products as a result of competitive
pressures in the light emitting diode ("LED") market;

our ability to manage our inventory and avoid inventory obsolescence in a rapidly evolving LED market;

our increasing reliance on third parties for the manufacture and development of products, product components, as well as
the provision of certain services;

our increasing emphasis on selling more of our products through third party distributors and sales agents, including our
ability to attract and retain effective third party distributors and sales agents to execute our sales model;

our ability to develop and participate in new product and technology offerings or applications in a cost effective and timely
manner;

our ability to maintain safe and secure information technology systems;

•

our ability to balance customer demand and production capacity;

our ability to maintain an effective system of internal control over financial reporting;

our ability to defend our patent portfolio and license technology from third parties;

a reduction in the price of electricity;

the reduction or elimination of investments in, or incentives to adopt, LED lighting or the elimination of, or changes in,
policies, incentives or rebates in certain states or countries that encourage the use of LEDs over some traditional lighting
technologies;

our failure to comply with the covenants in our credit agreement;

the electric vehicle (“EV”) market and deliveries of passenger and fleet vehicles may not grow as expected;

incentives from governments or utilities may not materialize or may be reduced, which could reduce demand for EVs, or
the portion of regulatory credits that customers claim may increase, which would reduce our revenue from such incentives;

the cost to comply with, and the effects of, any current and future industry and government regulations, laws and policies;
and

potential warranty claims in excess of our reserve estimates.

You are urged to carefully consider these factors and the other factors described under Part I. Item 1A. “Risk Factors” when evaluating
any forward-looking statements, and you should not place undue reliance on these forward-looking statements.

Except as required by applicable law, we assume no obligation to update any forward-looking statements publicly or to update the
reasons why actual results could differ materially from those anticipated in any forward-looking statements, even if new information
becomes available in the future.

ITEM 1. BUSINESS

As used herein, unless otherwise expressly stated or the context otherwise requires, all references to “Orion,” “we,” “us,” “our,”

“Company” and similar references are to Orion Energy Systems, Inc. and its consolidated subsidiaries.

Overview

We provide state-of-the-art light emitting diode (“LED”) lighting systems, wireless Internet of Things (“IoT”) enabled control
solutions, commercial and industrial electric vehicle "EV" charging infrastructure solutions and maintenance services. We help our
customers achieve their sustainability, energy savings and carbon footprint reduction goals through innovative technology and
exceptional service. We sell our products and services into many vertical markets within the broader commercial and industrial market
segment. Primary verticals include: big box retail, manufacturing, warehousing/logistics, commercial office, federal and municipal
government, healthcare and schools. Our services consist of turnkey installation (lighting and EV) and system maintenance. Virtually
all of our sales occur within North America.

Our principal lighting customers include large national account end-users, electrical distributors, electrical contractors and energy
service companies (“ESCOS”). Currently, a significant amount of our lighting products are manufactured at our leased production
facility located in Manitowoc, Wisconsin, although as the LED and related IoT market continues to evolve, we are increasingly sourcing
products and components from third parties in order to diversify our product offerings.

We differentiate ourselves from our competitors by offering very efficient light fixtures (measured in lumens per watt) coupled
with our project management services to national account customers to retrofit their multiple locations. Our comprehensive services
include initial site surveys and audits, utility incentive and government subsidy management, engineering design, and project
management from delivery through to installation and controls integration. In addition, we began to offer lighting and electrical
maintenance services in fiscal 2021, which enable us to support a long-term business relationship with our customers. We completed
the acquisition of Stay-Lite Lighting on January 1, 2022, which is intended to further expand our maintenance services capabilities. On
October 5, 2022, we acquired Voltrek, which is intended to leverage our project management and maintenance expertise into the rapidly
growing EV sector.

Our lighting products consist primarily of LED lighting fixtures, many of which include IoT enabled control systems provided by
third parties. We believe the market for LED lighting products continues to grow. Due to their size and flexibility in application, we also
believe that LED lighting systems can address opportunities for retrofit applications that cannot be satisfied by other lighting
technologies.

We generally do not have long-term contracts with our customers for product or turnkey services that provide us with recurring
annual revenue. However, our maintenance services contracts usually consist of multi-year arrangements. We typically generate
substantially all of our lighting revenue from sales of lighting systems and related services to governmental, commercial and industrial
customers on a project-by-project basis. We also perform work under global services or product purchasing agreements with major
customers with sales completed on a purchase order basis. The loss of, or substantial reduction in sales to, any of our significant
customers, or our current single largest customer, or the termination or delay of a significant volume of purchase orders by one or more
key customers, could have a material adverse effect on our results of operations in any given future period.

We typically sell our lighting systems in replacement of our customers’ existing lighting fixtures. We call this replacement process
a "retrofit". We frequently sell our products and services directly to our customers and in many cases we provide design and installation
as well as project management services. We also sell our lighting systems on a wholesale basis, principally to electrical distributors,
electrical contractors and ESCOs to sell to their own customer bases.

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

Our fiscal year ends on March 31. We refer to our current fiscal year which ended on March 31, 2023 as "fiscal 2023". We refer
to our most recently completed fiscal year, which ended on March 31, 2022, as “fiscal 2022”, and our prior fiscal year which ended on

March 31, 2021 as "fiscal 2021". Our fiscal first quarter of each fiscal year ends on June 30, our fiscal second quarter ends on September
30, our fiscal third quarter ends on December 31, and our fiscal fourth quarter ends on March 31.

Reportable Segments

Reportable segments are components of an entity that have separate financial data that the entity's chief operating decision maker
("CODM") regularly reviews when allocating resources and assessing performance. Our CODM is our chief executive officer.
Historically, we have had three reportable segments: Orion Services Group Division ("OSG"), Orion Distribution Services Division
("ODS"), and Orion U.S. Markets Division ("USM"). With the acquisition of Voltrek on October 5, 2022, we added a fourth reporting
segment, Orion Electric Vehicle Charging Division (“EV Division”).

For financial results by reportable segment, please refer to Note 18 – Segment Data in our consolidated financial statements

included in Item 8. of this Annual Report.

Orion Services Group Division

Our OSG segment (a) develops and sells lighting products and provides construction and engineering services for our commercial
lighting and energy management systems and (b) provides retailers, distributors and other businesses with maintenance, repair and
replacement services for the lighting and related electrical components deployed in their facilities. OSG provides engineering, design,
lighting products and in many cases turnkey solutions for large national accounts, governments, municipalities, schools and other
customers.

Orion Distribution Services Division

Our ODS segment focuses on selling lighting products through manufacturer representative agencies and a network of North

American broadline and electrical distributors and contractors.

Orion U.S. Markets Division

Our USM segment sells commercial lighting systems and energy management systems to the wholesale contractor markets. USM

customers include ESCOs and contractors.

Orion Electric Vehicle Charging Division

Our EV Division offers leading electric vehicle charging expertise and provides EV turnkey installation solutions with ongoing

support to all commercial verticals.

Our Market Opportunity

We provide enterprise-grade LED lighting and energy management project solutions. We are primarily focused on providing
commercial and industrial facilities lighting retrofit solutions in North America using solid-state LED technology. We believe the market
for lighting products has shifted to LED lighting systems and continues to grow. We believe that LED lighting technology allows for
better optical performance, significantly reduced energy consumption. Due to their size and flexibility in application, we also believe
that LED lighting systems can address opportunities for retrofit applications that cannot be satisfied by other technologies.

Our lighting products deliver energy savings and efficiency gains to our commercial and industrial customers without
compromising their quantity or quality of light. We estimate that our energy management systems reduce our customers’ legacy lighting-
related electricity costs by approximately 50% or greater, while maintaining their quantity of light after the reduced wattage and
improving overall lighting quality when replacing traditional fixtures. Our customers with legacy lighting systems typically realize a
one to four-year payback period, and most often 18 – 24 months, from electricity cost savings generated by our lighting systems without
considering utility incentives or government subsidies. Energy-efficient lighting systems are cost-effective and environmentally
responsible solutions allowing end users to reduce operating expenses and their carbon footprint.

We serve government and private sector end-customers in the following primary markets: commercial office and retail, exterior

area lighting and industrial applications.

Commercial office and retail. Our commercial office and retail market includes commercial office buildings, retail store fronts,

government offices, schools, hospitals and other buildings with traditional 10 to 12 foot ceiling heights.

Industrial applications. Our market for industrial facilities includes manufacturing facilities, distribution and warehouse facilities,
government buildings and agricultural buildings. These facilities typically contain "high-bay" lighting fixtures for ceiling heights of 20-
60 feet.

Commercial and industrial facilities in the United States employ a variety of lighting technologies, including HID, traditional
fluorescents, LED and incandescent lighting fixtures. We estimate that approximately 25-30% of this market still utilizes inefficient
high intensity discharge ("HID") lighting technologies. Our lighting systems typically replace less efficient HID, HIF fixtures, and earlier
generation of LED fixtures.

Exterior Area lighting. Our market for area lighting includes parking garages, surface lots, automobile dealerships and gas service

stations.

EV Charging Infrastructure: Our market for designing/engineering and installing EV charging systems (we do not make
equipment) includes commercial and industrial customers including government. We focus largely on level 2 EV charging solutions for
employee and guest charging of passenger vehicles and level 3 DC fast charge systems for fleet applications and high speed passenger
vehicle charging.

Maintenance Business: Our maintenance business services customers generally require third party lighting maintenance

services. along with modest electrical maintenance service.

We believe that utilities within the United States recognize the importance of energy efficiency as an economical means to manage
capacity constraints and as a low-cost alternative when compared to the construction costs of building new power plants. Accordingly,
many of these utilities are continually focused on demand reduction through energy efficiency. According to our research of individual
state and utility programs, utilities design and fund programs that promote or deliver energy efficiency through legislation, regulation
or voluntary action. Our product sales are not solely dependent upon these incentive programs, but we do believe that these incentive
programs provide an important benefit as our customers evaluate their out-of-pocket cash investments.

Our Solution

Value Proposition. We estimate our LED lighting systems generally reduce lighting-related electricity usage and costs by
approximately 50% or greater, compared to legacy fixtures, while retaining the quantity of light, improving overall lighting quality and
helping customers reduce their carbon footprint.

Multi-Facility Roll-Out Capability. We offer our customers a single source, turnkey solution for project implementation in which
we manage and maintain responsibility for entire multi-facility rollouts of our energy management solutions across North American
commercial and industrial facility portfolios. This capability allows us to offer our customers an orderly, timely and scheduled process
for recognizing energy reductions and cost savings.

Rapid Payback Period Retrofit Lighting. In most lighting retrofit projects where we replace HID and HIF fixtures, our customers
typically realize a one to four year, but most often 18 – 24 months, payback period on our lighting systems. These returns are achieved
without considering utility incentives or government subsidies (although subsidies and incentives are continually being made available
to our customers in connection with the installation of our systems that further shorten payback periods).

Easy Installation, Implementation and Maintenance. Most of our fixtures are designed with a lightweight construction and
modular plug-and-play architecture that allows for fast and easy installation, facilitates maintenance, and integration of other components
of our energy management system. Our office LED Troffer Door Retrofit ("LDRTM") products are designed to allow for fast and easy
installation without disrupting the ceiling space or the office workspace. We believe our system’s design reduces installation time and

expense compared to other lighting solutions, which further improves our customers’ return on investment. We also believe that our use
of standard components reduces our customers’ ongoing maintenance costs.

Expanded Product Offerings. We are committed to continuing to develop LED product offerings in all of the markets we serve.
Our third generation of ISON® class of LED interior fixture delivers a market leading up to 214 lumens per watt. This advancement
means our customers can get more light with less energy, and sometimes fewer fixtures, than with any other product on the market. We
have also recently launched a variety of new products, features and functionality targeting healthcare, food service, high and low
temperature environments and other market segments. Our lighting products also may be configured to include IoT enabled control
systems. In fiscal 2022, we introduced a product range under the brand PureMotion. These products circulate air for enhanced airflow,
temperature comfort and energy savings. In addition, the PureMotion UVC products sanitize air in a safe UVC chamber that eliminates
various airborne viruses, bacteria, mold and fungi. See "Products and Services" below. In addition, we offer lighting maintenance
services on both a preventative and reactive basis to the commercial and industrial verticals. In October, 2022, we acquired Voltrek
LLC, which offers leading EV charging expertise and provides turnkey EV installation solutions with ongoing support to all commercial
verticals.

Environmental Benefits. By allowing for the permanent reduction of electricity consumption, we believe our energy management
systems significantly reduce indirect CO2 emissions that are a negative by-product of energy generation which help enable our customers
to achieve their sustainability, energy savings and carbon footprint reduction goals.

Our Competitive Strengths

Compelling Value Proposition. By permanently reducing lighting-related electricity usage, our systems help enable our customers
to achieve their sustainability, energy savings and carbon footprint reduction goals without compromising quantity and quality of light
in their facilities. As a result, our products offer our customers a rapid return on their investment, without relying on government
subsidies or utility incentives. We also help our customers with their mobility infrastructure needs supporting the transition to passenger
and fleet EVs.

Comprehensive Project Management. We offer our customers a single source solution whereby we manage and are responsible
for an entire retrofit lighting project, from initial site surveys and energy audits through to installation and controls integration and
subsequent maintenance. Our ability to offer such comprehensive turnkey project management services, coupled with best-in-class
customer service, allows us to deliver energy reductions and cost savings to our customers in timely, orderly and planned multi-facility
rollouts nationwide. We believe one of our competitive advantages is our ability to deliver full turnkey LED lighting project capabilities.
The success of this approach has resulted in what we call a “Customer for Life” relationship with customers that encourages additional
projects and maintenance services. Few LED lighting providers are organized to serve every step of a custom retrofit project in a
comprehensive, non-disruptive and timely fashion, from custom fixture design and initial site surveys to final installations.
Incrementally, we are also able to help customers deploy state-of-the-art IoT control systems that provide even greater long-term value
from their lighting system investments.

Large and Growing Customer Base. We have developed a large and growing national customer base and have installed our
products in commercial and industrial facilities across North America. We believe that the willingness of our blue-chip customers to
install our products across multiple facilities represents a significant endorsement of our value proposition, which in turn helps us sell
our energy management systems to new customers.

Innovative Technology. We have developed a portfolio of United States patents primarily covering various elements of our
products. We believe these innovations allow our products to produce more light output per unit of input energy compared to our
competition. We also have patents pending that primarily cover various elements of our newly developed LED products and certain
business methods. To complement our innovative energy management products, our integrated energy management services provide
our customers with a turnkey solution either at a single facility or across their North American facility footprints. Our demonstrated
ability to innovate provides us with significant competitive advantages. Our lighting products offer significantly more light output as
measured in foot-candles of light delivered per watt of electricity consumed when compared to HID or traditional fluorescent fixtures.
Beyond the benefits of our lighting fixtures, we believe that there is also an opportunity to utilize our system platform as a “connected
ceiling” or “smart ceiling”, or a framework or network that can support the installation and integration of other solutions on a digital

platform. This “smart ceiling” can be integrated with other technologies to collect data and manage assets and resources more efficiently.
Our “Industrial Internet of Things”, or IoT, enabled devices not only contain energy management control functions, but also have the
ability to collect facility usage and traffic data as well as collect data from other facility mechanical systems, providing our customers
with a path to digitization for their business operations. Our percentage of systems utilizing IoT enabled devices has grown significantly
over the past few years and we expect this trend to continue.

Expanded Sales and Distribution Network. In addition to selling directly to national accounts, electrical contractors and ESCOs,
we sell our lighting products and services to electrical distributors through a North American network of independent lighting agencies.
As of the end of fiscal 2023, we had 33 independent lighting agencies representing us in substantially all of North America. We intend
to continue to selectively evaluate our sales network in the future, with a focus on geographic regions where we do not currently have a
strong sales presence.

Our Growth Strategies

In fiscal 2023, we continued to successfully capitalize on our capability of being a full service, turn-key provider of LED lighting
and controls systems with design, build, installation and project management services, including being awarded large additional projects
for a major national account. To build on this success, we are evolving our business strategy to further leverage this unique capability,
along with a strong network of ESCO partners, agents and distributors to offer more products and services to our customers. We have
adopted a “Customers for Life” philosophy that broadens our view of platforms that can be offered to deliver our mission. Two new
platforms that we recently added to our service offerings have been our maintenance services business, along with our EV charging
station business. We intend to continue to pursue expanding our product and service offerings, organically and through potential
acquisitions that could accelerate our progress.

Focus on executing and marketing our turnkey LED retrofit capabilities to large national account customers. We believe one of
our competitive advantages is our ability to deliver full turnkey LED lighting project capabilities starting with energy audits and site
assessments that lead to custom engineering and manufacturing through to fully managed installations. These attributes coupled with
our superior customer service, high quality designs and expedited delivery responsiveness resulted in our contract to retrofit multiple
locations for a significant single national account beginning in fiscal 2020 that continued into fiscal 2023.

Continue Product Innovation. We continue to innovate, developing lighting fixtures and features that address specific customer
requirements, while also working to maintain a leadership position in energy efficiency, smart product design and installation benefits.
For interior building applications, we recently expanded our product line to include a family of ceiling air movement solutions, some of
which incorporate LED lighting and others which utilize ultraviolet C light waves to kill viruses, bacteria and germs. We also continue
to deepen our capabilities in the integration of smart lighting controls. Our goal is to provide state-of-the-art lighting products with
modular plug-and-play designs to enable lighting system customization from basic controls to advanced IoT capabilities.

Leverage Orion’s Smart Lighting Systems to Support Internet of Things Applications. We believe we are ideally positioned to help
customers to efficiently deploy new IoT controls and applications by leveraging the “Smart Ceiling” capabilities of their Orion solid
state lighting system. IoT capabilities can include the management and tracking of facilities, personnel, resources and customer behavior,
driving both sales and lowering costs. As a result, these added capabilities provide customers an even greater return on investment from
their lighting system and make us an even more attractive partner, providing our customers with a path to digitization for their business
operations.

Expand Maintenance Service Offerings. We believe we can leverage our construction management process expertise to develop a
high-quality, quick-response, multi-location maintenance service offering. Our experience with large national customers and our large
installed base of fixtures positions us well to extend our maintenance services to historical customers, as well as to new customers.
Development of this recurring revenue stream is making progress and we believe there is significant market opportunity.

Support success of our ESCO and agent driven distribution sales channels. We continue to focus on building our relationships
and product and sales support for our ESCO and agent driven distribution channels. These efforts include an array of product and sales
training efforts as well as the development of new products to cater to the unique needs of these sales channels.

Grow EV Charging Installation Business. In fiscal 2023, we acquired Voltrek, a turnkey EV charging installation business. We
believe there are significant growth opportunities in Voltrek’s existing east coast geographic market, as well as on a national basis. We
plan to focus our growth plans on cross selling our new EV charging solutions to our historical market channels and customers.

Products and Services

Our primary focus has been the sale of our LED lighting fixtures with integrated controls technology and related installation
services. We will continue to focus on these products and services, as well as on expanding our maintenance service offerings and our
EV charging station solutions.

Currently, a significant amount of our lighting products are manufactured at our leased production facility location in Manitowoc,
Wisconsin, although as the LED market continues to evolve, we also source products and components from third parties in order to have
versatility in our product development. We are focused on researching, developing and/or acquiring new innovative LED products and
technologies for the retrofit markets. We plan to continue developing creative new LED retrofit products in order to offer our customers
a variety of integrated energy management services, such as system design, project management and installation.

Products

The following is a description of our primary products:

Interior LED High Bay Fixture: Our LED interior high bay lighting products consist of our Harris high bay, ApolloTM high bay
and ISON® high bay products. Our ISON® class of LED interior fixture offers a full package of premium features, including low total
cost of ownership, optics that currently exceed competitors in terms of lumen package, delivered light, modularity and advanced thermal
management. Our third generation of ISON® class of LED interior fixture delivers up to an exceptional 214 lumens per watt. This
advancement means our customers can get more light with less energy, and sometimes fewer fixtures, compared to other products on
the market. Our ApolloTM class of LED interior fixtures is designed for new construction and retrofit projects where initial cost is the
largest factor in the purchase decision. Our Harris high bay is ideal for customers seeking a cost-effective solution to deliver energy
savings and maintenance reductions. In addition, our LED interior lighting products are lightweight and easy to handle, which further
reduces installation and maintenance costs and helps to build brand loyalty with electrical contractors and installers.

Smart Lighting Controls. We offer a broad array of smart building control systems. These control systems provide both lighting
control options (such as occupancy, daylight, or schedule control) and data intelligence capabilities for building managers to log,
monitor, and analyze use of space, energy savings, and provide physical security of the space.

The LED Troffer Door Retrofit (LDRTM): The LDRTM is designed to replace existing 4 foot by 2 foot and 2 foot by 2 foot fluorescent
troffers that are frequently found in office or retail grid ceilings. Our LDRTM product is unique in that the LED optics and electronics
are housed within the doorframe that allows for installation of the product in approximately one to two minutes. Our LDRTM product
also provides reduced maintenance expenses based upon improved LED chips.

In addition, in October 2022, we acquired Voltrek LLC, which offers leading EV charging expertise and provides turnkey EV
installation solutions with ongoing support to all commercial verticals. We believe there are significant growth opportunities in Voltrek’s
existing east coast geographic market, as well as on a national basis. We plan to focus our growth plans on cross selling our new EV
charging solutions to our historical market channels and customers.

Other Products. In fiscal 2022, we introduced a range of air movement products capable of virus elimination. We also offer our
customers a variety of other LED fixtures to address their lighting and energy management needs, including fixtures designed for
agribusinesses, parking lots, roadways, retail, mezzanine, outdoor applications and private label resale.

Warranty Policy. Our warranty policy generally provides for a limited five-year warranty on our LED products, although we do
offer warranties ranging up to 10 years for certain LED products. Ballasts, lamps, drivers, LED chips and other electrical components
are excluded from our standard warranty as they are covered by separate warranties offered by the original equipment manufacturers.

We coordinate and process customer warranty inquiries and claims, including inquiries and claims relating to ballast and lamp
components, through our customer service department.

Services

We provide a range of fee-based lighting-related energy management services to our customers, including:

•

comprehensive site assessment, which includes a review of the current lighting and controls including IoT enabled devices
requirements and energy usage at the customer’s facility;

site field verification, or SFV, during which we perform a test implementation of our energy management system at a
customer’s facility;

utility incentive and government subsidy management, where we assist our customers in identifying, applying for and
obtaining available utility incentives or government subsidies;

engineering design, which involves designing a customized system to suit our customers' facility lighting and energy
management needs, and providing the customer with a written analysis of the potential energy savings and lighting and
environmental benefits associated with the designed system;

project management, which involves us working with the electrical contractor in overseeing and managing all phases of
implementation from delivery through installation for a single facility or through multi-facility roll-outs tied to a defined
project schedule;

installation services, for our products, which we provide through our national network of qualified third-party installers;

complete facility design commissioning of IoT enabled control devices

recycling in connection with our retrofit installations, where we remove, dispose of and recycle our customer’s legacy lighting
fixtures; and

•

lighting and electrical system maintenance services both preventative and reactive in nature.

We also provide similar turnkey services to our EV customers that include site audit, engineering, grant filing, installation,
commissioning and network services. Our maintenance business provides services that includes both preventative and reactive services.
We also provide other services that comprise a small amount of our revenue. These services primarily include management and control
of power quality and remote monitoring and control of our installed systems. We also sell and distribute replacement lamps and fixture
components into the after-market.

Our Customers

We primarily target commercial, institutional and industrial customers who have warehousing, retail, manufacturing and office
facilities. In fiscal 2023, one customer accounted for 16.2% of our total revenue. In fiscal 2022, that same customer accounted for 49.1%
of our total revenue, and in fiscal 2021, this same customer accounted for 56.0% of our total revenue. In fiscal 2024, we expect that our
customer concentration will continue at the approximate level experienced in fiscal 2023. As we continue to diversify our customer base
by expanding our reach to national accounts, ESCOs, the agent driven distribution channel, lighting maintenance customers and the EV
market, we expect to continue to derive a significant percentage of our revenue from contracts with one or a few customers. These
contracts are entered into in the ordinary course of business and typically provide that we will deliver products and services on a work
order or purchase order basis and any purchase order may be terminated prior to shipment. Our maintenance work orders or contracts
may be for discrete projects or may have multi-year terms. These contracts generally do not guarantee that the customer will buy our
products or services.

The amount and concentration of our revenues with one or more customer may fluctuate on a year to year or quarter to quarter
basis depending on the number of purchase orders issued by our customers. The loss of a significant customer or the termination of a
material volume of purchase orders (or the underlying agreements) could have a material adverse effect on our results of operations.

Sales and Marketing

We sell our lighting products in one of three ways: (i) directly through our relationships with our national account partners or
through Voltrek; (ii) indirectly through independent sales agencies and broadline North American distributors; and (iii) through ESCOs.
Our ODS segment focuses on developing and expanding customer relationships with independent manufacturer’s sales agents and
broadline distributors. As of the end of fiscal 2023 we had 33 independent lighting agencies representing us in substantially all of North
America expanding our reach with broadline distributors. We attempt to leverage the customer relationships of these distributors to
further extend the geographic scope of our selling efforts. We work cooperatively with our indirect channels through participation in
national trade organizations and by providing training on our sales methodologies.

We have historically focused our marketing efforts on traditional direct advertising, as well as developing brand awareness through
customer education and active participation in trade shows and energy management seminars. These efforts have included participating
in national, regional and local trade organizations, exhibiting at trade shows, executing targeted direct mail campaigns, advertising in
select publications, public relations campaigns, social media and other lead generation and brand-building initiatives.

Competition

The market for energy-efficient lighting products, EV charging solutions and maintenance services is fragmented. We face strong
competition primarily from manufacturers and distributors of lighting products and services as well as electrical contractors. We compete
primarily on the basis of technology, cost, performance, quality, customer experience, energy efficiency, customer service and marketing
support. We compete against other value-added resellers and electrical contractors in the EV charging market. We compete against a
variety of service providers for lighting maintenance.

There are a number of lighting fixture manufacturers that sell LED products that compete with our lighting product lines. Lighting
companies such as Acuity Brands, Inc., Signify Co., Cree, Inc., LSI Industries, Inc. and GE Current, a Daintree Company, are some of
our main competitors within the commercial office, retail and industrial markets. We are also facing increased competition from
manufacturers in low-cost countries.

Intellectual Property

As of March 31, 2023, we had been issued over 100 United States patents and have applied for a number of additional United
States patents. The patented and patent pending technologies cover various innovative elements of our products, including our HIF and
LED fixtures. Our patented LDRTM product allows for a significantly quicker installation when compared to competitor's commercial
office lighting products. Our smart lighting controls allow our lighting fixtures to selectively provide a targeted amount of light where
and when it is needed most.

We believe that our patent portfolio as a whole is material to our business. We also believe that our patents covering our ability to
manage the thermal and optical performance of our lighting products are material to our business, and that the loss of these patents could
significantly and adversely affect our business, operating results and prospects.

Backlog

Backlog represents the amount of revenue that we expect to realize in the future as a result of firm, committed orders. Our backlog
as of March 31, 2023 and March 31, 2022 totaled $17.2 million and $10.1 million, respectively. We generally expect our backlog to be
recognized as revenue within one year. Backlog does not include any amounts for contracted maintenance services.

Manufacturing and Distribution

We lease an approximately 266,000 square foot primary manufacturing and distribution facility located in Manitowoc, Wisconsin,
where most of our products are manufactured. We utilize both solar and wind power to support the energy requirements for our
manufacturing facility, allowing us to reduce our carbon footprint.

We generally maintain a significant supply of raw material and purchased and manufactured component inventory. We contract
with transportation companies to ship our products and manage all aspects of distribution logistics. We generally ship our products
directly to the end user.

Research and Development

Our research and development efforts are centered on developing new LED products and technologies and enhancing existing
products. The products, technologies and services we are developing are focused on increasing end user energy efficiency and enhancing
lighting output. Over the last three fiscal years, we have focused our development on additional LED products, resulting in our
development and commercialization of several new suites of LED interior high bay products.

We operate research and development lab and test facilities in our Jacksonville, Florida and Manitowoc, Wisconsin locations.

Regulatory Matters

Our operations are subject to federal, state, and local laws and regulations governing, among other things, emissions to air,
discharge to water, the remediation of contaminated properties and the generation, handling, storage, transportation, treatment, and
disposal of, and exposure to, waste and other materials, as well as laws and regulations relating to occupational health and safety. We
believe that our business, operations, and facilities are being operated in compliance in all material respects with applicable
environmental and health and safety laws and regulations.

State, county or municipal statutes often require that a licensed electrician be present and supervise each retrofit project. Further,
all installations of electrical fixtures are subject to compliance with electrical codes in virtually all jurisdictions in the United States. In
cases where we engage independent contractors to perform our retrofit projects, we believe that compliance with these laws and
regulations is the responsibility of the applicable contractor.

Our Corporate and Other Available Information

We were incorporated as a Wisconsin corporation in April 1996 and our corporate headquarters are located at 2210 Woodland
Drive, Manitowoc, Wisconsin 54220. Our Internet website address is www.orionlighting.com. Annual Reports on Form 10-K, Quarterly
Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or
15(d) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, are available through the investor relations page of our
internet website free of charge as soon as reasonably practicable after we electronically file such material with, or furnish it to, the
Securities and Exchange Commission, or the SEC. We are not including the information contained on our website as part of, or
incorporating it by reference into, this report.

Human Capital

As of March 31, 2023, we had approximately 265 full-time employees. We also employ temporary employees in our
manufacturing facility as demand requires. Our employees are not represented by any labor union, and we have never experienced a
work stoppage or strike due to employee relations.

We are an employee-centric organization, maintaining a safe and respectful environment that provides opportunity for our

employees.

We believe our employees are among our most important resources and are critical to our continued success. We focus significant
attention on attracting and retaining talented and experienced individuals to manage and support our operations. We pay our employees
competitively and offer a broad range of company-paid benefits, which we believe are competitive with others in our industry.

We are committed to hiring, developing and supporting a diverse and inclusive workplace. Our management teams and all of our
employees are expected to exhibit and promote honest, ethical and respectful conduct in the workplace. We will not tolerate
discrimination or harassment in any form. All of our employees must adhere to a code of conduct that sets standards for appropriate
behavior and includes required annual training on preventing, identifying, reporting and stopping any type of unlawful discrimination.

ITEM 1A. RISK FACTORS

You should carefully consider the risk factors set forth below and in other reports that we file from time to time with the Securities
and Exchange Commission and the other information in this Annual Report on Form 10-K. The matters discussed in the following risk
factors, and additional risks and uncertainties not currently known to us or that we currently deem immaterial, could have a material
adverse effect on our business, financial condition, results of operations and future growth prospects and could cause the trading price
of our common stock to decline.

1. Risk Factor Summary

Our business is subject to a number of risks and uncertainties, including those highlighted immediately following this summary. Some
of these risks are summarized below:

•

We do not have major sources of recurring revenue and we depend upon a limited number of customers in any given period
to generate a substantial portion of our revenue. The reduction of revenue from our most significant customer over the past
three fiscal years has had, and the potential future loss of other significant customers or a major customer would likely have,
a materially adverse effect on our results of operations, financial condition and cash flows.

Our ability to replace the substantially reduced revenue from our prior most significant customer, regain and sustain our
profitability and achieve our desired revenue and profitability goals depends on our ability to effectively and timely execute
on our key strategic initiatives.

We may not realize the anticipated benefits of our recent acquisitions of Stay-Lite Lighting and Voltrek, and the integration
of Stay-Lite Lighting and Voltrek may disrupt our business and management, which could adversely affect our business,
financial condition or results of operations

Our products use components and raw materials that may be subject to price fluctuations, shortages or interruptions of
supply.

Our ability to balance customer demand and production capacity and increased difficulty in obtaining permanent employee
staffing could negatively impact our business.

We increasingly rely on third-party manufacturers for the manufacture and development of our products and product
components.

Macroeconomic pressures in the markets in which we operate or anticipate operating in the future may adversely affect our
financial results.

Our existing liquidity and capital resources may not be sufficient to allow us to effectively pursue our evolving strategies,
complete potential acquisitions or otherwise fund or sustain growth initiatives.

Adverse conditions in the global economy have negatively impacted, and could in the future negatively impact, our
customers, suppliers and business.

As we evolve our business strategy to increase our focus on new product and service offerings, the nature of our business
may be significantly changed, or transformed.

Our continued emphasis on indirect distribution channels to sell our products and services to supplement our direct
distribution channels has had limited success to date.

The success of our LED lighting retrofit solutions depends, in part, on our ability to claim market share away from our
competitors.

•

Government tariffs and other actions may adversely affect our business.

The reduction or elimination of investments in, or incentives to adopt, LED lighting or the elimination of, or changes in,
policies, incentives or rebates in certain states or countries that encourage the use of LEDs over some traditional lighting
technologies could cause the growth in demand for our products to slow.

Risks Related to Our Business

Operational Risks

We do not have major sources of recurring revenue and we depend upon a limited number of customers in any given
period to generate a substantial portion of our revenue. The reduction of revenue from our most significant customer over the
past three fiscal years has had, and the potential future loss of other significant customers or a major customer would likely
have, a materially adverse effect on our results of operations, financial condition and cash flows.

In fiscal 2023, one customer accounted for 16.2% of our total revenue. In fiscal 2022, that same customer accounted for 49.1% of
our total revenue, and in fiscal 2021, this same customer accounted for 56.0% of our total revenue. In fiscal 2024, we expect that our
customer concentration will continue at the approximate level experienced in fiscal 2023. The reduction of revenue from this customer
has had a material advent effect on our results of operations, financial condition and cash flow. We continue to attempt to replace this
reduced revenue by diversifying our customer base and expanding our reach to national accounts, ESCOs, the agent driven distribution
channel, lighting maintenance customers and the EV market, there is no assurance we will be successful in replacing this reduced
revenue.

Our ability to replace the substantially reduced revenue from our prior most significant customer, regain and sustain
profitability and achieve our desired revenue and profitability goals depends on our ability to effectively and timely execute on
our key strategic initiatives.

Our ability to replace the substantially reduced revenues from our prior most significant customer, regain profitability and achieve
our desired revenue and profitability goals depends on how effectively and timely we execute on our following key strategic initiatives:

•

executing and marketing our turnkey LED retrofit capabilities to large national account customers;

continuing our product innovation;

leveraging our smart lighting systems to support IoT applications;

developing our maintenance service offerings;

supporting the success of our ESCO and distribution sales channels; and

cross selling our EV charging solutions to our historical sales channels and customers.

We also may identify and pursue additional strategic acquisition candidates that would help support these initiatives. There can
be no assurance that we will be able to successfully implement these initiatives or, even if implemented, that they will result in the
anticipated benefits to our business.

We may not realize the anticipated benefits of our recent acquisitions of Stay-Lite Lighting and Voltrek. The integrations of
Stay-Lite Lighting and Voltrek may disrupt our business and management, which could adversely affect our business, financial
condition or results of operations.

Effective on January 1, 2022, we acquired all of the issued and outstanding capital stock of Stay-Lite Lighting, Inc., a nationwide
lighting and electrical maintenance service provider. On October 5, 2022, we acquired the equity interests of Voltrek, LLC an EV
charging station solutions provider. We may acquire additional companies or enter into other business combinations or strategic
initiatives in the future. We may not realize the anticipated benefits of the Stay-Lite or Voltrek acquisition or such other business
combinations or acquisitions, and we may encounter substantial difficulties, costs and delays involved in integrating our operations with
such businesses, including:

•

Exposure to unknown liabilities;

Potential conflicts between business cultures;

Adverse changes in business focus perceived by third-party constituencies;

Disruption of our ongoing business;

Potential conflicts in distribution, marketing or other important relationships;

Potential constraints of management resources;

Inability to implement uniform standards, controls, procedures and policies;

Failure to maximize our financial and strategic position;

Failure to achieve planned synergies or expected financial results benefits;

Failure to realize the potential of the acquired businesses' technologies, complete product development, or properly obtain
or secure appropriate protection of intellectual property rights; and

Loss of key employees and/or the diversion of management's attention from other ongoing business concerns.

Business combinations and acquisitions of companies are inherently risky, and ultimately, if we do not complete the integration
of Stay-Lite Lighting or Voltrek or other acquired businesses successfully and in a timely manner, we may not realize the anticipated
benefits of such acquisitions to the extent anticipated, which could adversely affect our business, financial condition or results of
operations.

Our products use components and raw materials that may be subject to price fluctuations, shortages or interruptions of
supply, including semiconductor chips. If we are unable to maintain supply sources of our components and raw materials or if
our sources fail to satisfy our supply requirements, we may lose sales and experience increased component costs.

We are vulnerable to price increases, as well as transportation and delivery delays, for components and raw materials that we
require for our products, including aluminum, copper, certain rare earth minerals, semiconductor chips, power supplies and LED chips
and modules. In particular, we utilize semiconductor chips in our LED lighting products and control sensors. For example, our ability
to source semiconductor chips has been adversely affected in the recent past and could occur again. Difficulty in sourcing necessary
components in the past has resulted in increased component delivery lead times, delays in our product production and increased costs to
obtain components with available semiconductor chips. To the extent a semiconductor chip shortage occurs or our ability to acquire the
parts necessary to conduct our business operations, such as other necessary finished goods, is materially affected, our production ability
and results of operations will be adversely affected.

Limitations inherent within our supply chain of certain of our components, raw materials and finished goods, including
competitive, governmental, and legal limitations, natural disasters, and other events, could impact costs and future increases in the costs
of these items. For example, the adoption of new tariffs by the United States administration or by other countries and the ongoing impact
of COVID-19 in China could continue to adversely affect our profitability and availability of raw materials and components, as there

can be no assurance that future price increases will be successfully passed through to customers or that we will be able to find alternative
suppliers. Further, suppliers’ inventories of certain components that our products require may be limited and are subject to acquisition
by others and we may not, as a result, have the necessary inventory of parts and goods necessary to conduct our operations. We have in
the past purchased excess quantities of certain components critical to our product manufacturing, but there is no guarantee that we will
be able to follow or continue to follow this practice in the future. As a result, we have had, and may need to continue, to devote additional
working capital to support component and raw material inventory purchases that may not be used over a reasonable period to produce
saleable products, and we may be required to increase our excess and obsolete inventory reserves to account for these excess quantities,
particularly if demand for our products does not meet our expectations. Also, any further delays, shortages or interruptions in the supply
of our components or raw materials could further disrupt our operations. If any of these events occur, our results of operations, financial
condition and cash flows could be materially adversely affected.

Our ability to balance customer demand and production capacity and increased difficulty in obtaining permanent employee
staffing could negatively impact our business.

As customer demand for our products changes, we must be able to adjust our production capacity, including increasing or
decreasing our employee workforce, to meet demand. We are continually taking steps to address our manufacturing capacity needs for
our products. If we are not able to increase or decrease our production capacity at our targeted rate or if there are unforeseen costs
associated with adjusting our capacity levels, our ability to execute our operating plan could be adversely affected.

We have, in the past, experienced difficulty in hiring sufficient permanent employees to support our production demands. This
circumstance has resulted in our increased reliance on temporary employee staffing to support our production operations. Temporary
employees can be less reliable and require more ongoing training than permanent employees. These factors can adversely affect our
operational efficiencies. This situation has also placed a significant burden on our continuing employees, has resulted in higher recruiting
expenses as we have sought to recruit and train additional new permanent employees, and introduced increased instability in our
operations to the extent responsibilities are reallocated to new or different employees. To the extent that we are unable to effectively
hire a sufficient number of permanent employees, and our reliance on temporary staffing continues to increase, our operations and our
ability to execute our operating plan could be adversely affected.

Our inability to attract and retain key employees, our reseller network members or manufacturer representative agencies could
adversely affect our operations and our ability to execute on our operating plan and growth strategy.

We rely upon the knowledge, experience and skills of key employees throughout our organization, particularly our senior
management team, our sales group that requires technical knowledge or contacts in, and knowledge of, the LED industry, and our
innovation and engineering team. In addition, our ability to attract talented new employees, particularly in our sales group and our
innovation and engineering team, is also critical to our success. We also depend on our distribution channels and network of
manufacturer sales representative agencies. If we are unable to attract and retain key employees, resellers, and manufacturer sales
representative agencies because of competition or, in the case of employees, inadequate compensation or other factors, our results of
operations and our ability to execute our operating plan could be adversely affected.

If our information technology systems security measures are breached or fail, our products may be perceived as not being secure,
customers may curtail or stop buying our products, we may incur significant legal and financial exposure, and our results of
operations, financial condition and cash flows could be materially adversely affected.

Our information technology systems involve the storage of our confidential information and trade secrets, as well as our customers’
personal and proprietary information in our equipment, networks and corporate systems. Security breaches expose us to a risk of loss of
this information, litigation and increased costs for security measures, loss of revenue, damage to our reputation and potential liability.
Security breaches or unauthorized access may result in a combination of significant legal and financial exposure, increased remediation
and other costs, theft and/or unauthorized use or publication of our trade secrets and other confidential business information, damage to
our reputation and a loss of confidence in the security of our products, services and networks that could have an adverse effect upon our
business. While we take steps to prevent unauthorized access to our corporate systems, because the techniques used to obtain
unauthorized access, disable or sabotage systems change frequently or may be designed to remain dormant until a triggering event, we
may be unable to anticipate these techniques or implement adequate preventative measures. Further, the risk of a security breach or
disruption, particularly through cyber attacks, or cyber intrusion, including by computer hackers, foreign governments, and cyber

terrorists, has generally increased as cyber attacks have become more prevalent and harder to detect and fight against. In addition,
hardware, software or applications we procure from third parties may contain defects in design or manufacture or other problems that
could unexpectedly compromise network and data security. Any breach or failure of our information technology systems could result in
decreased revenue, increased expenses, increased capital expenditures, customer dissatisfaction and potential lawsuits, any of which
could have a material adverse effect on our results of operations, financial condition and cash flows.

Some of our existing information technology systems are in need of enhancement, updating and replacement. If our information
technology systems fail, or if we experience an interruption in their operation, then our business, results of operations and
financial condition could be materially adversely affected.

The efficient operation of our business is dependent on our information technology systems, some of which are in need of
enhancement, updating and replacement. We rely on these systems generally to manage day-to-day operations, manage relationships
with our customers, maintain our research and development data, and maintain our financial and accounting records. The failure of our
information technology systems, our inability to successfully maintain, enhance and/or replace our information technology systems, or
any compromise of the integrity or security of the data we generate from our information technology systems, could have a material
adverse affect on our results of operations, disrupt our business and product development and make us unable, or severely limit our
ability, to respond to customer demands. In addition, our information technology systems are vulnerable to damage or interruption from:

•

earthquake, fire, flood and other natural disasters;

employee or other theft;

attacks by computer viruses or hackers;

power outages; and

computer systems, internet, telecommunications or data network failure.

Any interruption of our information technology systems could result in decreased revenue, increased expenses, increased capital
expenditures, customer dissatisfaction and potential lawsuits, any of which could have a material adverse effect on our results of
operations, financial condition and cash flows.

The success of our business depends upon market acceptance of our energy management products and services.

Our future success depends upon the continued market acceptance of our energy management products and services and obtaining
additional project management retrofit contracts, as well as customer orders for new and expanded products and services to supplement
our contract with our current single largest customer. If we are unable to convince current and potential new customers of the advantages
of our lighting systems and energy management products and services, or our expanded product and services offerings, then our results
of operations, financial condition and cash flows will likely be materially adversely affected. In addition, because the market for energy
management products and services, as well as potential new customer uses for our products and services, is rapidly evolving, we may
not be able to accurately assess the size of the market, and we may have limited insight into trends that may emerge and affect our
business. If the market for our lighting systems and energy management products and services, as well as potential new customer uses
for our products and services, does not continue to develop as we anticipate, or if the market does not accept our products or services,
then our ability to grow our business could be limited and we may not be able to increase our revenue and our results of operations,
financial condition and cash flows will likely be materially adversely affected.

We increasingly rely on third-party manufacturers for the manufacture and development of our products and product
components.

We have increased our utilization of third-party manufacturers for the manufacture and development of our products and product
components. Our results of operations, financial condition and cash flows could be materially adversely affected if our third-party
manufacturers were to experience problems with product quality, credit or liquidity issues, or disruptions or delays in their manufacturing
process or delivery of the finished products and components or the raw materials used to make such products and components.

Macroeconomic pressures in the markets in which we operate or anticipate operating in the future may adversely affect our
financial results.

Geopolitical issues around the world can impact macroeconomic conditions in where we operate and where we anticipate operating
in the future and could have a material adverse impact on our financial results. For example, the ultimate impact of the conflict in
Ukraine on fuel prices, inflation, the global supply chain and other macroeconomic conditions is unknown and could materially adversely
affect global economic growth, disrupting discretionary spending habits and generally decreasing demand for our products and services,
including our planned retrofit project in Germany in fiscal 2024. While we do not purchase any of our significant raw materials directly
from Russia, it is a significant global producer of fuel, nickel and copper. Disruptions in the markets for those inputs could negatively
impact the macroeconomy. We cannot predict the extent or duration of sanctions in response to the conflict in Ukraine, nor can we
predict the effects of legislative or other governmental actions or regulatory scrutiny of Russia and Belarus, Russia's other allies or other
countries with which Russia has significant trade or financial ties, including China. The conflict in Ukraine may also continue to
exacerbate geopolitical tensions globally.

We operate in a highly competitive industry and, if we are unable to compete successfully, our results of operations, financial
condition and cash flows will likely be materially adversely affected.

We face strong competition, primarily from manufacturers and distributors of energy management products and services, as well
as from ESCOs and electrical contractors. We are also facing increased competition from manufacturers in low-cost countries. We
compete primarily on the basis of customer relationships, price, quality, energy efficiency, customer service and marketing support. Our
products are in direct competition with the expanding availability of LED products, as well as other technologies in the lighting systems
retrofit market.

Many of our competitors are better capitalized than we are and have strong customer relationships, greater name recognition, and
more extensive engineering, manufacturing, sales and marketing capabilities. In addition, the LED market has seen increased
convergence in recent years, resulting in our competition gaining increased market share and resources. Competitors could focus their
substantial resources on developing a competing business model or energy management products or services that may be potentially
more attractive to customers than our products or services. In addition, we may face competition from other products or technologies
that reduce demand for electricity. Our competitors may also offer energy management products and services at reduced prices in order
to improve their competitive positions. Any of these competitive factors could make it more difficult for us to attract and retain
customers, or require us to lower our average selling prices in order to remain competitive, any of which could have a material adverse
effect on our results of operations, financial condition and cash flows.

If we fail to establish and maintain effective internal controls over financial reporting, our business and financial results could
be harmed.

Our management is responsible for establishing and maintaining effective internal control over financial reporting. Internal control
over financial reporting is a process to provide reasonable assurance regarding the reliability of financial reporting for external purposes
in accordance with accounting principles generally accepted in the United States. Because of its inherent limitations, internal control
over financial reporting is not intended to provide absolute assurance that we would prevent or detect a misstatement of our consolidated
financial statements or fraud. As of March 31, 2023, our Chief Executive Officer and Chief Financial Officer concluded that our internal
controls for fiscal 2023 were designed and operating effectively. However, there can be no assurance that we will not experience a
material weakness in our internal control over financial reporting in the future. A material weakness is defined as 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 our annual or interim consolidated financial statements will not be prevented or detected on a timely basis. A failure to
maintain an effective system of internal control over financial reporting could limit our ability to report our financial results accurately
and in a timely manner or to detect and prevent fraud, could result in a restatement of our consolidated financial statements, and could
also cause a loss of investor confidence and decline in the market price of our common stock.

The revenue growth of our EV Division ultimately depends on consumers’ willingness to adopt electric vehicles in a market
which is still in its early stages.

The growth of our EV Division is highly dependent upon the adoption by consumers of EVs, and we are subject to a risk of any
reduced demand for EVs. If the market for EVs does not gain broader market acceptance or develops slower than we expect, our

business, prospects, financial condition and operating results will be harmed. The market for alternative fuel vehicles is relatively new,
rapidly evolving, characterized by rapidly changing technologies, price competition, additional competitors, evolving government
regulation and industry standards, frequent new vehicle announcements, long development cycles for EV original equipment
manufacturers, and changing consumer demands and behaviors. Factors that may influence the purchase and use of alternative fuel
vehicles, specifically EVs, include:

● perceptions about EV quality, safety (in particular with respect to lithium-ion battery packs), design, performance and cost,

especially if adverse events or accidents occur that are linked to the quality or safety of EVs;

● the limited range over which EVs may be driven on a single battery charge and concerns about running out of power while in

use;

● concerns regarding the stability of the electrical grid;

● improvements in the fuel economy of the internal combustion engine;

● consumers’ desire and ability to purchase a luxury automobile or one that is perceived as exclusive;

● the environmental consciousness of consumers;

● volatility in the cost of oil and gasoline;

● consumers’ perceptions of the dependency of the United States on oil from unstable or hostile countries and the impact of

international conflicts;

● government regulations and economic incentives promoting fuel efficiency and alternate forms of energy;

● access to charging stations, standardization of EV charging systems and consumers’ perceptions about convenience and cost to

charge an EV; and

● the availability of tax and other governmental incentives to purchase and operate EVs or future regulation requiring increased

use of nonpolluting vehicles.

The influence of any of the factors described above may negatively impact the widespread consumer adoption of EVs, which

could materially and adversely affect our EV Division business, operating results, financial condition and prospects.

Our business was, and could again in the future be, negatively impacted by the COVID-19 pandemic.

The COVID-19 pandemic disrupted business, trade, commerce, financial and credit markets in the United States and globally. Our
business was adversely impacted by measures taken by customers, suppliers, government entities and others to control the spread of the
virus beginning in March 2020, the last few weeks of our fiscal 2020, and continuing most significantly into the second quarter of fiscal
2021. During the third quarter of fiscal 2021, we experienced a rebound in business, with a full quarter of project installations for our
largest customer, as well as installations for a new large specialty retail customer, and no significant COVlD-19 impacts. However,
some customers continue to refrain from awarding new projects and potential future risks remain due to the COVID-19 pandemic. If
the COVID-19 pandemic experiences a resurgence in markets recovering from the spread of COVID-19, or if another significant natural
disaster or pandemic were to occur in the future, our results of operation would likely be materially adversely affected.

Financial Risks

Our existing liquidity and capital resources may not be sufficient to allow us to effectively pursue our evolving growth
strategies, complete potential acquisitions or otherwise fund or sustain our growth initiatives.

Our existing liquidity and capital resources may not be sufficient to allow us to effectively pursue our evolving growth strategies,
complete potential acquisitions or otherwise fund or sustain our growth initiatives. If we require additional capital resources, we may

not be able to obtain sufficient equity capital and/or debt financing on acceptable terms or conditions, or at all. Factors affecting the
availability to us of additional equity capital or debt financing on acceptable terms and conditions, or in sufficient amounts, include:

•

Our operating loss in fiscal 2023;

Our history of operating losses prior to our fiscal 2020;

Our current and future financial results and condition;

Our limited collateral availability;

Our current customer concentration;

The market’s, investors’ and lenders' view of our company, industry and products;

The perception in the equity and debt markets of our ability to execute and sustain our business plan or achieve our operating
results expectations; and

The price, volatility and trading volume and history of our common stock.

Our inability to obtain the equity capital or debt financing necessary to pursue our evolving growth strategy could force us to scale
back our growth initiatives or abandon potential acquisitions. If we are unable to pursue our evolving growth strategy and growth
initiatives, our results of operations, financial condition and cash flows could be materially adversely affected.

We do not have major sources of recurring revenue and we depend upon a limited number of customers in any given period to
generate a substantial portion of our revenue. The reduction of revenue from our prior most significant customer has had, and
the loss of other significant customers or a major customer would likely have, a materially adverse effect on our results of
operations, financial condition and cash flows.

We do not have any significant long-term contracts with our customers that provide us with recurring revenue from period to
period. We currently generate a substantial portion of our revenue by securing large retrofit and multi-facility roll-out projects from new
and existing customers. As a result, our dependence on individual key customers can vary from period to period due to the significant
size of some of our retrofit and multi-facility roll-out projects. Our top 10 customers accounted for approximately 48.9%, 69.4% and
80.0% respectively, of our total revenue for fiscal 2023, 2022 and 2021. In fiscal 2021, one customer accounted for 56.0% of our total
revenue compared to 49.1% in fiscal 2022 and in fiscal 2023, this customer accounted for 16.2% of our total revenue. In fiscal 2024, we
expect our customer concentration will continue at the approximate level experienced in fiscal 2023. The reduction in revenue from this
customer over the past three fiscal years has had a material adverse effect on our results of operations, financial condition and cash
flows. While we continue to try to diversify and expand our customer base, there can be no assurance we will be successful doing so.
We expect large retrofit and rollout projects to continue to remain a significant component of our total revenue.

The multi-location master retrofit agreements we have entered into with several of our key customers (including our current largest
customer) generally require that the customer issue individual facility location work orders or purchase orders before we may install our
products at that location. These master agreements do not guarantee that our key customers will make individual facility location
purchases from us and they also generally allow any individual location purchase order or work order to be terminated prior to shipment.
As a result, the relative amount and concentration of our revenues may fluctuate year over year and period over period depending on
the number of purchase orders or work orders issued by our key customers, which may fluctuate due to factors such as our customers’
capital expenditure budgets and general economic conditions. The loss of, or substantial reduction in sales to, any of our significant
customers, or a major customer, or the termination or delay of a significant volume of purchase orders by one or more key customers,
would likely have a material adverse effect on our results of operations, financial condition and cash flows in any given future period.

Our net operating loss carry-forwards provide a future benefit only if we regain sustained profitability and may be subject to
limitation based upon ownership changes.

We have significant federal net operating loss carry-forwards and state net operating loss carry-forwards. If we are unable to regain
sustained profitability, we will not be able to fully utilize these tax benefits. Furthermore, generally a change of more than 50% in the
ownership of a company’s stock, by value, over a three-year period constitutes an ownership change for federal income tax purposes.
An ownership change may limit a company’s ability to use its net operating loss carry-forwards attributable to the period prior to such
change. As a result, our ability to use our net operating loss carry-forwards attributable to the period prior to such ownership change to
offset taxable income could be subject to limitations in a particular year, which could potentially result in our increased future tax
liability.

We experienced a net loss in fiscal 2023 and, until fiscal 2020, we had a history of losses and negative cash flow. We may be
unable to regain sustained profitability and positive cash flows in the future.

We experienced a net loss in fiscal 2023, and prior to fiscal 2020, we experienced net losses and negative cash flows for the prior
five fiscal years. There is no guarantee that we will be able to regain or sustain profitability and positive cash flows in the future. Our
inability to successfully regain or sustain our profitability and positive cash flows could materially and adversely affect our ability to
pursue our evolving strategies and growth initiatives.

Adverse conditions in the global economy have negatively impacted, and could in the future negatively impact, our customers,
suppliers and business.

Our operations and financial performance are impacted by worldwide economic conditions. Uncertainty about global economic
conditions has contributed to customers postponing purchases of our products and services in response to tighter credit, unemployment,
negative financial news and/or declines in income or asset values and other macroeconomic factors. The occurrence of these
circumstances will likely have a material negative effect on demand for our products and services and, accordingly, on our results of
operations, financial condition and cash flows. For example, any economic and political uncertainty caused by the United States tariffs
imposed on other countries, and any corresponding tariffs from such other countries in response, may negatively impact demand and/or
increase the cost for our products and components used in our products.

The new United States administration may pursue a wide range of monetary, regulatory and trade policies, including the continued
imposition of the previous United States administration’s tariffs on certain imports. Certain sourced finished products and certain of the
components used in our products are impacted by tariffs imposed on China imports. Our efforts to mitigate the impact of added costs
resulting from these tariffs include a variety of activities, such as sourcing from non-tariff impacted countries and raising prices. If we
are unable to successfully mitigate the impacts of these tariffs and other trade policies, our results of operations, financial condition and
cash flows may be materially adversely affected.

In addition, global economic and political uncertainty has led many customers to adopt strategies for conserving cash, including
limits on capital spending. Our lighting systems are often purchased as capital assets and therefore are subject to our customers’ capital
availability. Uncertainty around such availability has led customers to delay their purchase decisions, which has elongated the duration
of our sales cycles. Weak economic conditions in the past have adversely affected our customers’ capital budgets, purchasing decisions
and facilities managers and, as a result, have adversely affected our results of operations, financial condition and cash flows. The return
to a recessionary state of the global economy could potentially have negative effects on our near-term liquidity and capital resources,
including slower collections of receivables, delays of existing order deliveries, postponements of incoming orders and reductions in the
number and volume of purchase orders received from key customers as a result of reduced capital expenditure budgets. Our business
and results of operations will be adversely affected to the extent these adverse economic conditions affect our customers’ purchasing
decisions.

We are subject to financial and operating covenants in our credit agreement and any failure to comply with such covenants, or
obtain waivers in the event of non-compliance, could limit our borrowing availability under the credit agreement, resulting in
our being unable to borrow under our credit agreement and materially adversely impact our liquidity.

Our credit agreement contains provisions that limit our future borrowing availability and sets forth other customary covenants,
including certain restrictions on our ability to incur additional indebtedness, consolidate or merge, enter into acquisitions, make
investments, pay any dividend or distribution on our stock, redeem, repurchase or retire shares of our stock, or pledge or dispose of
assets.

There can be no assurance that we will be able to comply with the financial and other covenants in our credit agreement. Our
failure to comply with these covenants could cause us to be unable to borrow under the credit agreement and may constitute an event of
default which, if not cured or waived, could result in the acceleration of the maturity of any indebtedness then outstanding under the
credit agreement, which would require us to pay all amounts then outstanding. Such an event could materially adversely affect our
financial condition and liquidity. Additionally, such events of non-compliance could impact the terms of any additional borrowings
and/or any credit renewal terms. Any failure to comply with such covenants may be a disclosable event and may be perceived negatively.
Such perception could adversely affect the market price for our common stock and our ability to obtain financing in the future.

Strategic Risks

As we evolve our business strategy to increase our focus on new product and service offerings, including our comprehensive
energy management and maintenance services and our IoT, “smart-building,” “connected ceilings” and other related
technology, software and controls products and services, the nature of our business may be significantly changed, or
transformed, and our results of operations, financial condition and cash flows may be materially adversely affected.

Our future growth and profitability are tied in part to our ability to successfully bring to market new and innovative product and
service offerings. We have begun to evolve our business strategy to focus on further expanding the nature and scope of our products and
services offered to our customers. This further expansion of our products and services includes pursuing projects to develop recurring
revenue streams, including beginning to offer lighting, electrical, heating and ventilation, and other energy maintenance services to large
customers with numerous locations. Our expansion efforts also involve utilizing control sensor technology to collect data and assisting
customers in the digitization of this data, along with other potential services. We have experienced recent success offering our
comprehensive energy project management services to national account customers to retrofit their multiple locations. We also plan to
pursue the expansion of our IoT “smart-building” and “connected ceiling” and other related technology, software and controls products
and services we offer to our customers. We have invested, and plan to continue to invest, significant time, resources and capital into
expanding our offerings in these areas with no expectation that they will provide material revenue in the near term and without any
assurance they will succeed or be profitable. In fact, these efforts have reduced our profitability, and will likely continue to do so, at
least in the near term. Moreover, as we continue to explore, develop and refine new offerings, we expect that market preferences will
continue to evolve, our offerings may not generate sufficient interest by end-user customers and we may be unable to compete effectively
with existing or new competitors, generate significant revenues or achieve or maintain acceptable levels of profitability.

If we are successful in introducing new product and services offerings, including expanded energy management and maintenance
services and products with new technology, software and controls, the nature of our business may significantly change or be transformed
away from being principally lighting products focused. Additionally, our experience providing energy maintenance services and
technology, software and controls products and services is limited. If we do not successfully execute our strategy or anticipate the needs
of our customers, our credibility as a provider of energy maintenance services and technology, software and controls products could be
questioned and our prospects for future revenue growth and profitability may never materialize.

As we expand our product and services offerings to new markets, the overall complexity of our business will likely increase at an
accelerated rate and we may become subject to different market dynamics. The new markets into which we are expanding, or may
expand, may have different characteristics from the markets in which we have historically competed. These different characteristics may
include, among other things, rapidly changing technologies, different supply chains, different competitors and methods of competition,

new product development rates, client concentrations and performance and compatibility requirements. Our failure to make the
necessary adaptations to our business model to address these different characteristics, complexities and new market dynamics could
adversely affect our operating results.

Accordingly, if we fail to successfully launch, manage and maintain our evolving business strategy, our future revenue growth
and profitability would likely be limited and our results of operations, financial condition and cash flows would likely be materially
adversely affected.

Our evolving business strategies may include exploring potential acquisitions, including potential acquisitions that could
significantly change, or even transform, the nature of our business. These potential acquisitions could be unsuccessful or
consume significant resources, which could materially adversely affect our results of operations, financial condition and cash
flows.

We may explore additional potential business acquisitions which could more quickly add expanded and different capabilities to

our product and services offerings, including potential acquisitions that could significantly change, or even transform, the nature of
our business. There can be no assurance that we will identify or successfully complete transactions with suitable acquisition
candidates in the future. Similarly, there can be no assurance that our recently completed acquisitions will be successful. Acquisitions
may involve significant cash expenditures, debt incurrence, stock issuances, operating losses and expenses that would otherwise be
directed to investments in our existing business and could have a material adverse effect on our financial condition, results of
operations and cash flows. To pursue acquisitions and other strategic transactions, we may need to raise additional debt and/or equity
capital in the future, which may not be available on acceptable terms, in sufficient amounts or at all. In addition, we may issue new
shares of our common stock as consideration in such transactions, which may have a dilutive impact on our existing shareholders and
may also result in a reduction in the market price of our shares once those newly issued shares are resold in the market. In addition,
acquisitions involve numerous other risks, including:

•

the failure of the acquired business to achieve its revenue or profit forecasts;

the business culture of the acquired business may not match well with our culture;

our business strategies and focus may change in ways that adversely affect our results of operations;

technological and product synergies, economies of scale and cost reductions from the acquisition may not occur as expected;

unforeseen expenses, delays or conditions may result from the acquisition, including required regulatory approvals or
consents;

potential changes may result to our management team and/or board of directors;

we may acquire or assume unexpected liabilities or be subject to unexpected penalties or other enforcement actions or legal
consequences;

faulty assumptions may be made regarding the macroeconomic environment or the integration process that form a basis for
the acquisition;

unforeseen difficulties, delays and costs may arise in integrating the acquired business’s operations, processes and systems;

higher than expected investments may be required to implement necessary compliance processes and related systems,
including information technology systems, accounting systems and internal controls over financial reporting;

we may fail to retain, motivate and integrate key management and other employees of the acquired business;

higher than expected costs may arise due to unforeseen changes in tax, trade, environmental, labor, safety, payroll or pension
policies in any jurisdiction in which the acquired business conducts its operations;

we may adversely impact our sales channels and our sales channel partners; and

we may experience problems in retaining customers and integrating customer bases.

Many of these factors will be outside of our control and any one of them could result in increased costs and reduced profitability,
decreases in the amount of expected revenues and diversion of our management’s time and attention. They may also delay, decrease or
eliminate the realization of some or all of the benefits we anticipate when we enter into the transaction.

Our management team has limited experience in, and limited time to dedicate to, pursuing, negotiating or integrating
acquisitions. If we do identify suitable candidates, we may not be able to negotiate or consummate such acquisitions on favorable
terms or at all. Any acquisitions we complete may not achieve their initially intended results and benefits, and may be viewed
negatively by investors and other stakeholders.

We may undertake acquisitions financed in part through public offerings or private placements of debt or equity securities,

including through the new issuance of our common stock or debt securities as consideration in an acquisition transaction. Such
acquisition financing could result in dilution to our current shareholders, a decrease in our earnings and/or adversely affect our
financial condition, liquidity or other leverage measures.

In addition to committing additional capital resources to complete any acquisitions, substantial additional capital may be
required to operate the acquired businesses following their acquisition. Moreover, these acquisitions may result in significant financial
losses if the intended objectives of the transactions are not achieved. Some of the businesses we may acquire may have significant
operating and financial challenges, requiring significant additional capital commitments to overcome such challenges and adversely
affecting our financial condition and liquidity.

Failure to implement our acquisition strategy, including successfully integrating acquired businesses, could have a material

adverse effect on our results of operations, financial condition and cash flows.

Our continued emphasis on indirect distribution channels to sell our products and services to supplement our direct distribution
channels has had limited success to date. If we are unable to attract, incentivize and retain our third-party distributors and sales
agents, or our distributors and sales agents do not sell our products and services at the levels expected, our revenues could
decline and our costs could increase.

We utilize manufacturer representative sales agencies that sell our products through distributors. Many of these sales agents and
distributors are not exclusive, which means that these sales agents and distributors may sell other third-party products and services in
direct competition with us. Since many of our competitors use sales agents and distributors to sell their products and services,
competition for such agents and distributors is intense and may adversely affect our product pricing and gross margins. Additionally,
due to mismanagement, industry trends, macro-economic developments, or other reasons, our sales agents and distributors may be
unable to effectively sell our products at the levels desired or anticipated. In addition, we have historically relied on direct sales to sell
our products and services, which were often made in competition with sales agents and distributors. In order to attract and form lasting
partnerships with sales agents and distributors, we are attempting to overcome our historical perception as a direct sales competitor. As
a result, we may have difficulty attracting and retaining sales agents and distributors and any inability to do so could have a negative
effect on our ability to attract and obtain customers, which could have an adverse impact on our business.

The success of our business depends upon our adaptation to the quickly changing market conditions in the lighting industry and
on market acceptance of our lighting retrofit solutions using LED and control technologies.

The market for lighting products has experienced a significant technology shift to LED lighting systems. In addition, we continue
to explore utilizing our system platform as a “connected ceiling” or “smart ceiling”, or a framework or network that can support the
installation and integration of other business technology or data information solutions on our lighting platform.

As a result, our future success depends significantly upon the adoption rate of LED products within our primary markets, our
ability to participate in this ongoing market trend and our ability to expand into complementary markets. To be an effective participant
in the LED market, we must keep up with the evolution of LED and related technologies, which continue to move at a fast pace. We
may be unable to successfully develop and market new products or services that keep pace with technological or industry changes,
differentiate ourselves from our competition, satisfy changes in customer demands or comply with present or emerging government and

industry regulations and technology standards. The development and introduction of new products and services may result in increased
warranty expenses and other new product and services introduction expenses. In addition, we will likely continue to incur substantial
costs to research and develop new products and services, which will increase our expenses, without guarantee that our new products and
services will be commercially viable. We may also spend time and resources to develop and release new products and services only to
discover that a competitor has also introduced similar new products and services with superior performance, at a lower price or on better
delivery terms. Moreover, if new sources of lighting or lighting-based solutions are developed, our current products and technologies
could become less competitive or obsolete, which could result in reduced revenue, reduced earnings or increased losses, and/or inventory
and other impairment charges.

Finally, in connection with our historical primary focus on selling our LED products, we expect our results of operations to
continue to fluctuate from quarter to quarter to the extent that customers delay purchasing decisions as they evaluate their return on
investment from purchasing LED products compared to alternative lighting solutions, the pricing of LED products continues to fall and
LED products continue to gain more widespread customer acceptance. Similarly, these circumstances have adversely impacted, and
may continue to adversely impact, our product gross margins and our profitability from quarter to quarter.

If we are unable to achieve market acceptance of our lighting retrofit solutions using LED technologies and our system platform
as a “connected ceiling” or “smart ceiling” or realize the expected benefits from our focus on promoting new products and services, our
results of operations, financial condition and cash flows will likely be materially adversely affected.

Our financial performance is dependent on our ability to achieve growth in our average selling price of our products.

The gross margins of our products can vary significantly, with margins ranging from 10% to 50%. While we continue to implement
our strategy of transitioning to higher-margin products and reducing the material cost of our products, a change in the total mix of our
sales toward lower margin products, a decrease in the margins on our products as a result of competitive pressures driving down the
average selling price of our products, lower sales volumes, and promotional programs to increase sales volumes could reduce our
profitability and result in a material adverse effect on our results of operations, financial condition and cash flows. Furthermore, the
average selling price of our products has been, and may be further, negatively impacted by market over-supply conditions, product
feature cannibalization by competitors or component providers, low-cost non-traditional sales methods by new market entrants, and
comparison of our retrofit fixture products with replacement lamp equivalents. While we have previously implemented general price
increases applicable to many new product orders, there is no assurance that such price increases will be accepted by our customers or
succeed in increasing the average selling price of our products. In our highly competitive lighting industry, we must be able to innovate
and release new products on a regular basis with features and benefits that generate increases in our average selling price and average
gross margin. There can be no assurance we will be successful in achieving these goals.

The success of our LED lighting retrofit solutions depends, in part, on our ability to claim market share away from our
competitors. If we are unable to expand our customer base and increase sales in our targeted markets, our results of operations,
financial condition and cash flows will likely be materially adversely affected.

Participants in the LED market who are able to quickly establish customer relationships and achieve market penetration are likely
to gain a competitive advantage as the lighting retrofit solutions offered by us and our competitors generally have a product life of
several years following installation. If we are unable to broaden our customer base and achieve greater market penetration in the LED
market in a timely manner, we may lose the opportunity to market our LED products and services to significant portions of the lighting
systems retrofit market for several years and may be at a disadvantage in securing future business opportunities from customers that
have previously established relationships with one or more of our competitors. These circumstances could have a material adverse effect
on our results of operations, financial condition and cash flows.

In addition, as we continue to seek to expand our customer base within our national account, agent and ESCO sales channels, our
success will depend, in part, on our ability to attract and retain talent to execute on our sales model. If we are unable to attract and retain
sufficient talent, we may be unable to broaden our customer base, which will adversely affect our results of operations, financial
condition and cash flows.

Legal, Regulatory and Compliance Risks

Our retrofitting process frequently involves responsibility for the removal and disposal of components containing hazardous
materials.

When we retrofit a customer’s facility, we typically assume responsibility for removing and disposing of its existing lighting
fixtures. Certain components of these fixtures typically contain trace amounts of mercury and other hazardous materials. Older
components may also contain trace amounts of polychlorinated biphenyls, or PCBs. We currently rely on contractors to remove the
components containing such hazardous materials at the customer job site. The contractors then arrange for the disposal of such
components at a licensed disposal facility. Failure by such contractors to remove or dispose of the components containing these
hazardous materials in a safe, effective and lawful manner could give rise to liability for us, or could expose our workers or other persons
to these hazardous materials, which could result in claims against us which may have a material adverse effect on our results of
operations, financial condition and cash flows.

Government tariffs and other actions may adversely affect our business.

The United States government has, from time to time, implemented various monetary, regulatory, and trade importation

restraints, penalties, and tariffs. Certain sourced finished products and certain of the components used in our products have been
impacted by tariffs imposed on China imports. Our efforts to mitigate the impact of added costs resulting from these government
actions include a variety of activities, such as sourcing from non-tariff impacted countries and raising prices. If we are unable to
successfully mitigate the impacts of these tariffs and other trade policies, our results of operations may be adversely affected. Any
future policy changes that may be implemented by the current or future United States administration could have a negative
consequence on our financial performance.

The reduction or elimination of investments in, or incentives to adopt, LED lighting or the elimination of, or changes in, policies,
incentives or rebates in certain states or countries that encourage the use of LEDs over some traditional lighting technologies
could cause the growth in demand for our products to slow, which could have a material adverse affect on our results of
operations, financial condition and cash flows.

Reductions in (including as a result of any budgetary constraints), or the elimination of, government investment and favorable
energy policies designed to accelerate the adoption of LED lighting could result in decreased demand for our products and adversely
affect our results of operations, financial condition and cash flows. Further, if our products fail to qualify for any financial incentives or
rebates provided by governmental agencies or utilities for which our competitors’ products qualify, such programs may diminish or
eliminate our ability to compete by offering products at lower prices than ours.

Changes in government budget priorities and political gridlock, and future potential government shutdown, could negatively
impact our results of operations, financial condition and cash flows.

Actual and perceived changes in governmental budget priorities, and future potential government shutdowns, could adversely
affect our results of operations, financial condition and cash flows. Certain government agencies purchase certain products and services
directly from us. When the government changes budget priorities, such as in times of war, financial crisis, or a changed administration,
or reallocates spending to areas unrelated to our business, our results of operations, financial condition and cash flows can be negatively
impacted. For example, demand and payment for our products and services may be affected by public sector budgetary cycles, funding
authorizations or rebates. Funding reductions or delays, including delays caused by political gridlock, and future potential government
shutdowns, could negatively impact demand and payment for our products and services. If any of these events occur, our results of
operations, financial condition and cash flows could be materially adversely affected.

Product liability claims could adversely affect our business, results of operations and financial condition.

We face exposure to product liability claims in the event that our energy management products fail to perform as expected or
cause bodily injury or property damage. Since virtually all of our products use electricity, it is possible that our products could result in
injury, whether by product malfunctions, defects, improper installation or other causes. Particularly because our products often
incorporate new technologies or designs, we cannot predict whether or not product liability claims will be brought against us in the
future or result in negative publicity about our business or adversely affect our customer relations. Moreover, we may not have adequate

resources in the event of a successful claim against us. A successful product liability claim against us that is not covered by insurance
or is in excess of our available insurance limits could require us to make significant payments of damages and could materially adversely
affect our results of operations, financial condition and cash flows.

Our inability to protect our intellectual property, or our involvement in damaging and disruptive intellectual property litigation,
could adversely affect our results of operations, financial condition and cash flows or result in the loss of use of the related
product or service.

We attempt to protect our intellectual property rights through a combination of patent, trademark, copyright and trade secret laws,
as well as employee and third-party nondisclosure and assignment agreements. Our failure to obtain or maintain adequate protection of
our intellectual property rights for any reason could have a material adverse effect on our results of operations, financial condition and
cash flows.

We own United States patents and patent applications for some of our products, systems, business methods and technologies. We
offer no assurance about the degree of protection which existing or future patents may afford us. Likewise, we offer no assurance that
our patent applications will result in issued patents, that our patents will be upheld if challenged, that competitors will not develop
similar or superior business methods or products outside the protection of our patents, that competitors will not infringe upon our patents,
or that we will have adequate resources to enforce our patents. Effective protection of our United States patents may be unavailable or
limited in jurisdictions outside the United States, as the intellectual property laws of foreign countries sometimes offer less protection
or have onerous filing requirements. In addition, because some patent applications are maintained in secrecy for a period of time, we
could adopt a technology without knowledge of a pending patent application, and such technology could infringe a third party’s patent.

We also rely on unpatented proprietary technology. It is possible that others will independently develop the same or similar
technology or otherwise learn of our unpatented technology. To protect our trade secrets and other proprietary information, we generally
require employees, consultants, advisors and collaborators to enter into confidentiality agreements. We cannot assure you that these
agreements will provide meaningful protection for our trade secrets, know-how or other proprietary information in the event of any
unauthorized use, misappropriation or disclosure of such trade secrets, know-how or other proprietary information. If we are unable to
maintain the proprietary nature of our technologies, our business could be materially adversely affected.

We rely on our trademarks, trade names, and brand names to distinguish our company and our products and services from our
competitors. Some of our trademarks may conflict with trademarks of other companies. Failure to obtain trademark registrations could
limit our ability to protect our trademarks and impede our sales and marketing efforts. Further, we cannot assure you that competitors
will not infringe our trademarks, or that we will have adequate resources to enforce our trademarks.

In addition, third parties may bring infringement and other claims that could be time-consuming and expensive to defend. Also,
parties making infringement and other claims against us may be able to obtain injunctive or other equitable relief that could effectively
block our ability to provide our products, services or business methods and could cause us to pay substantial damages. In the event of a
successful claim of infringement against us, we may need to obtain one or more licenses from third parties, which may not be available
at a reasonable cost, or at all. It is possible that our intellectual property rights may not be valid or that we may infringe upon existing
or future proprietary rights of others. Any successful infringement claims could subject us to significant liabilities, require us to seek
licenses on unfavorable terms, prevent us from manufacturing or selling products, services and business methods and require us to
redesign or, in the case of trademark claims, re-brand our company or products, any of which could have a material adverse effect on
our results of operations, financial condition and cash flows.

The cost of compliance with environmental laws and regulations and any related environmental liabilities could adversely affect
our results of operations, financial condition and cash flows.

Our operations are subject to federal, state and local laws and regulations governing, among other things, emissions to air,
discharge to water, the remediation of contaminated properties and the generation, handling, storage, transportation, treatment and
disposal of, and exposure to, waste and other materials, as well as laws and regulations relating to occupational health and safety. These
laws and regulations frequently change, and the violation of these laws or regulations can lead to substantial fines, penalties and other
liabilities. The operation of our manufacturing facility entails risks in these areas and there can be no assurance that we will not incur
material costs or liabilities in the future that could adversely affect our results of operations, financial condition and cash flows.

Risks Related to Our Common Stock

We expect our quarterly revenue and operating results to fluctuate. If we fail to meet the expectations of market analysts or
investors, the market price of our common stock could decline substantially, and we could become subject to securities litigation.

Our quarterly revenue and operating results have fluctuated in the past and will likely vary from quarter to quarter in the future.
Our results for any particular quarter are not an indication of our future performance. Our revenue and operating results may fall below
the expectations of market analysts or investors in some future quarter or quarters. Our failure to meet these expectations could cause
the market price of our common stock to decline substantially. If the price of our common stock is volatile or falls significantly below
our current price, we may be the target of securities litigation. If we become involved in this type of litigation, regardless of the outcome,
we could incur substantial legal costs, management’s attention could be diverted from the operation of our business, and our reputation
could be damaged, which could adversely affect our results of operations, financial condition and cash flows.

If securities or industry analysts do not continue to publish research or publish inaccurate or unfavorable research about our
business, our stock price and trading volume could decline.

The trading market for our common stock will continue to depend, in part, on the research reports that securities or industry
analysts publish about us and our peer group companies. If these analysts do not continue to provide adequate research coverage or if
one or more of the analysts who covers us downgrades our stock, lowers our stock’s price target or publishes inaccurate or unfavorable
research about our business, our stock price would likely decline. If one or more of these analysts ceases coverage of our company or
fails to publish reports on us regularly, demand for our stock could decrease, which could cause our stock price and trading volume to
decline.

The price of our common stock has been, and may continue to be, volatile.

Historically, the market price of our common stock has fluctuated over a wide range, and it is likely that the price of our common
stock will continue to be volatile in the future. The trading price of our common stock has ranged from $1.45 to $2.94 per share during
the period from April 1, 2022 to March 31, 2023. The market price of our common stock could be impacted due to a variety of factors,
including:

•

actual or anticipated fluctuations in our operating results or our competitors’ operating results;

actual or anticipated changes in the growth rate of the general LED lighting industry, our growth rates or our competitors’
growth rates;

conditions in the financial markets in general or changes in general economic conditions, including government efforts to
mitigate the severe economic downturn resulting from the COVID-19 pandemic;

novel and unforeseen market forces and trading strategies, such as the massive short squeeze rally caused by retail investors
and social media activity affecting companies such as GameStop Corp.;

actual or anticipated changes in governmental regulation, including taxation and tariff policies;

interest rate or currency exchange rate fluctuations;

our ability to forecast or report accurate financial results; and

changes in stock market analyst recommendations regarding our common stock, other comparable companies or our industry
generally.

In addition, due to one or more of the foregoing factors in one or more future quarters, our results of operations may fall below
the expectations of securities analysts and investors. In the event any of the foregoing occur, the market price of our common stock
could be highly volatile and may materially decline

The market price of our common stock could be adversely affected by future sales of our common stock in the public market by
us or our executive officers and directors.

We and our executive officers and directors may from time to time sell shares of our common stock in the public market or
otherwise. We cannot predict the size or the effect, if any, that future sales of shares of our common stock by us or our executive officers
and directors, or the perception of such sales, will have on the market price of our common stock.

We are not currently paying dividends on our common stock and will likely continue not paying dividends for the foreseeable
future.

We have never paid or declared any cash dividends on our common stock. We currently intend to retain all available funds and
any future earnings to fund the continued development and expansion of our business, and we do not anticipate paying any cash
dividends on our common stock in the foreseeable future. In addition, the terms of our existing revolving credit agreement restrict the
payment of cash dividends on our common stock. Any future determination to pay dividends will be at the discretion of our board of
directors and will depend on our financial condition, results of operations, capital requirements, contractual restrictions and other factors
that our board of directors deems relevant. The restrictions on, and decision not to, pay dividends on our common stock may impact our
ability to attract certain investors and raise funds, if necessary, in the capital markets.

Anti-takeover provisions included in the Wisconsin Business Corporation Law, provisions in our amended and restated articles
of incorporation or bylaws and the common share purchase rights that accompany shares of our common stock could delay or
prevent a change of control of our company, which could adversely impact the value of our common stock and may prevent or
frustrate attempts by our shareholders to replace or remove our current board of directors or management.

A change of control of our company may be discouraged, delayed or prevented by certain provisions of the Wisconsin Business
Corporation Law. These provisions generally restrict a broad range of business combinations between a Wisconsin corporation and a
shareholder owning 15% or more of our outstanding common stock. These and other provisions in our amended and restated articles of
incorporation, including our staggered board of directors and our ability to issue “blank check” preferred stock, as well as the provisions
of our amended and restated bylaws and Wisconsin law, could make it more difficult for shareholders or potential acquirers to obtain
control of our board of directors or initiate actions that are opposed by our then-current board of directors, including to delay or impede
a merger, tender offer or proxy contest involving our company or result in a lower price per share paid to our shareholders.

In addition, our employment arrangements with senior management provide for severance payments and accelerated vesting of
benefits, including accelerated vesting of stock options and restricted stock awards, upon a change of control and a subsequent qualifying
termination. These provisions could limit the price that investors might be willing to pay in the future for shares of our common stock,
thereby adversely affecting the market price of our common stock. These provisions may also discourage or prevent a change of control
or result in a lower price per share paid to our shareholders.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

We lease our approximately 266,000 square foot manufacturing and distribution facility located in Manitowoc, Wisconsin. On

January 31, 2020, we entered a new lease for the facility with a ten-year term, and an option to terminate after six years.

We own our approximately 70,000 square foot technology center and corporate headquarters adjacent to our leased Manitowoc
manufacturing and distribution facility, of which we sub-lease a portion to third parties. We also lease approximately 10,500 square feet
of office space in Jacksonville, Florida, 5,375 square feet in Lawrence, Massachusetts and 9,180 square feet of office space in Pewaukee,
Wisconsin.

The Manitowoc and Jacksonville facilities noted above are utilized by all our business segments, the Lawrence facility by our EV

Division and the Pewaukee facility by our Orion Services Group Division.

ITEM 3. LEGAL PROCEEDINGS

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

ITEM 4. MINE SAFETY DISCLOSURES

None.

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES

Shares of our common stock are traded on the NASDAQ Capital Market under the symbol “OESX”.

Shareholders

As of May 31, 2023, there were approximately 160 record holders of the 32,295,408 outstanding shares of our common stock.

The number of record holders does not include shareholders for whom shares are held in a “nominee” or “street” name.

Dividend Policy

We have never paid or declared any cash dividends on our common stock. We currently intend to retain all available funds and
any future earnings to fund the development and expansion of our business, and we do not anticipate paying any cash dividends in the
foreseeable future. In addition, the terms of our existing credit agreement restrict the payment of cash dividends on our common stock.
Any future determination to pay dividends will be at the discretion of our board of directors and will depend on our financial condition,
results of operations, capital requirements, contractual restrictions (including those under our loan agreements) and other factors that
our board of directors deems relevant.

Securities Authorized for Issuance under Equity Compensation Plans

The following table represents shares outstanding under our 2004 Stock and Incentive Awards Incentive Plan, and our 2016

Omnibus Incentive Plan as of March 31, 2023.

Equity Compensation Plan Information

Plan Category
Equity Compensation plans approved by security holders
Equity Compensation plans not approved by security holders
Total

Number of
Shares to be
Issued Upon
Exercise of
Outstanding
Options and
Vesting of
Restricted
Shares

Weighted
Average
Exercise Price of
Outstanding
Options

816,590
—
816,590

2.41
—
2.41

Number of
Shares
Remaining
Available for
Future Issuances
Under the 2016
Omnibus Incentive
Plan
Plans (1)

545,146
—
545,146

(1)

Excludes shares reflected in the column titled “Number of Shares to be Issued Upon Exercise of Outstanding Options and
Vesting of Restricted Shares”.

Issuer Purchase of Equity Securities

We did not purchase shares of our common stock during the fiscal year ended March 31, 2023.

Unregistered Sales of Securities

We did not make any unregistered sales of our common stock during the year ended March 31, 2023 that were not previously

disclosed in a Quarterly Report on Form 10-Q or a current report on Form 8-K during such period.

ITEM 6. [RESERVED]

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read together with our audited
consolidated financial statements and related notes included in this Annual Report on Form 10-K for the fiscal year ended March 31,
2023. See also “Forward-Looking Statements” and Item 1A “Risk Factors”.

Overview

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

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

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

We believe the market for LED lighting products and related controls continues to grow. Due to their size and flexibility in
application, we also believe that LED lighting systems can address opportunities for retrofit applications that cannot be satisfied by other
lighting technologies. Our LED lighting technologies have become the primary component of our revenue as we continue to strive to be
a leader in the LED market.

In fiscal 2022, we continued to successfully capitalize on our capability of being a full service, turn-key provider of LED lighting
and controls systems with design, build, installation and project management services, as we continued a very large project for a major
national account. As a result of this success, we have begun to evolve our business strategy to focus on further expanding the nature and
scope of our products and services offered to our customers. This further expansion of our products and services includes pursuing
projects to develop recurring revenue streams, including providing lighting and electrical maintenance services and utilizing control
sensor technology to collect data and assisting customers in the digitization of this data, along with other potential services. We also are
pursuing the expansion of our IoT, “smart-building” and “connected ceiling” and other related technology, software and controls
products and services that we offer to our customers. While we currently intend to primarily pursue these expansion strategies
organically, we also may explore potential additional business acquisitions, like our acquisition of Stay-Lite Lighting and Voltrek, which
have more quickly added these types of expanded and different capabilities to our product and services offerings.

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

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

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

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

Reportable segments are components of an entity that have separate financial data that the entity's chief operating decision maker
("CODM") regularly reviews when allocating resources and assessing performance. Our CODM is our chief executive officer. We have
four reportable segments: Orion Services Group Division ("OSG"), Orion Distribution Services Division ("ODS"), Orion U.S. Markets
Division (“USM”) and Orion Electric Vehicle Charging Division (“EV Division”).

Selected Financial Data

The selected historical consolidated financial data are not necessarily indicative of future results.

Consolidated statements of operations data:
Product revenue
Service revenue
Total revenue
Cost of product revenue (1) (2) (7)
Cost of service revenue (1) (3) (7)
Total cost of revenue
Gross profit
General and administrative expenses (1) (4) (7)
Acquisition related costs
Sales and marketing expenses (1) (5) (7)
Research and development expenses (1) (7)
(Loss) income from operations
Other income
Interest expense
Amortization of debt issue costs
Loss on debt extinguishment
Dividend and interest income
(Loss) income before income tax
Income tax expense (benefit) (6)
Net (loss) income
Net (loss) income per share attributable to common
shareholders:
Basic
Diluted
Weighted-average shares outstanding:
Basic
Diluted

2023

Fiscal Year Ended March 31,
2022
2020
2021
(in thousands, except per share amounts)

2019

$
$

57,210
20,173
77,383
42,979
16,893
59,872
17,511
19,487
765
11,392
1,852
(15,985)
—
(339)
(73)
—
34
(16,363)
17,978
(34,341) $

91,889
32,494
124,383
65,249
25,222
90,471
33,912
11,680
512
11,628
1,701
8,391
1
(80)
(62)
—
—
8,250
2,159
6,091

(1.08) $
(1.08) $

0.20
0.19

31,704
31,704

31,018
31,295

$
$

87,664
29,176
116,840
63,233
23,483
86,716
30,124
11,262
—
10,341
1,685
6,836
56
(127)
(157)
(90)
—
6,518
(19,616)
26,134

0.85
0.83

30,635
31,304

$
$

113,352
37,489
150,841
83,588
30,130
113,718
37,123
11,184
—
11,113
1,716
13,110
28
(279)
(243)
—
5
12,621
159
12,462

0.41
0.40

30,105
30,965

56,261
9,493
65,754
44,111
7,091
51,202
14,552
10,231
—
9,104
1,374
(6,157)
80
(493)
(101)
—
11
(6,660)
14
(6,674)

(0.23)
(0.23)

29,430
29,430

(1)

Includes stock-based compensation expense recognized under Financial Accounting Standards Board Accounting Standards
Codification Topic 718, or ASC Topic 718, as follows:

Cost of product revenue
Cost of service revenue
General and administrative expenses
Sales and marketing expenses
Research and development expenses
Total stock-based compensation expense

2023

2022

4
—
1,596
8
4
1,612

Fiscal Year Ended March 31,
2021
(in thousands)
4
$
—
716
29
4
753

5
—
793
12
3
813

2020

2019

3
(1)
576
38
2
618

2
3
764
54
2
825

(2)

(3)

(4)

(5)

(6)

Fiscal 2020 includes expenses of $0.1 million related to restructuring.

Fiscal 2020 includes expenses of $28 thousand related to restructuring.

Fiscal 2020 includes expenses of $0.2 million related to restructuring.

Fiscal 2021 includes tax benefit of $20.9 million related to the release of the valuation allowance on deferred tax assets. Fiscal
2023 includes tax expense of $17.8 million related to the recording of the valuation allowance on deferred tax assets.

(7)

Fiscal 2022 includes an offset to payroll expenses of $1.6 million related to the anticipated employee retention payroll tax credit
(“payroll tax credit”), as expanded and extended by the American Rescue Plan Act of 2021, as follows:

Cost of product revenue
Cost of service revenue
General and administrative expenses
Sales and marketing expenses
Research and development expenses
Total payroll tax credit

Fiscal 2024 Outlook

Fiscal Year Ended
March 31, 2022
(in thousands)

649
144
273
416
105
1,587

In fiscal 2024, we plan on focusing on the following initiatives:

Executing and marketing our turnkey LED retrofit capabilities to large national account customers. We believe one of our
competitive advantages is our ability to deliver full turnkey LED lighting project capabilities. These turnkey services were the principal
reason we achieved significant recent revenue growth as we executed on our commitment to retrofit multiple locations for a major
national account customer. Our success in the national account market segment centers on our turnkey design, engineering,
manufacturing and project management capabilities, which represent a very clear competitive advantage for us among large enterprises
seeking to benefit from the illumination benefits and energy savings of LED lighting across locations nationwide. We believe one of
our competitive advantages is that we are organized to serve every step of a custom retrofit project in a comprehensive, non-disruptive
and timely fashion, from custom fixture design and initial site surveys to final installations. We are also able to help customers deploy
state-of-the-art control systems that provide even greater long-term value from their lighting system investments.

Looking forward, we are focused on continuing to successfully execute on existing national account opportunities while also
actively pursuing new national account opportunities that leverage our customized, comprehensive turnkey project solutions, and
expanding our addressable market with high-quality, basic lighting systems to meet the needs of value-oriented customer segments
served by our other market channels. Given our compelling value proposition, capabilities and focus on customer service, we are
optimistic about our business prospects and working to build sales momentum with existing and new customers.

Continued Product Innovation. We continue to innovate, developing lighting fixtures and features that address specific customer
requirements, while also working to maintain a leadership position in energy efficiency, smart product design and installation benefits.
For interior building applications, we recently expanded our product line to include a family of ceiling air movement solutions, some of
which incorporate LED lighting and others which utilize ultraviolet C light waves to kill viruses, bacteria and germs. We also continue
to deepen our capabilities in the integration of smart lighting controls. Orion is launching a new line of exterior products in FY’24 Q2
designed to increase sales and market share in the application market. Our goal is to provide state-of-the-art lighting products with
modular plug-and-play designs to enable lighting system customization from basic controls to advanced IoT capabilities.

Leverage of our Smart Lighting Systems to Support Internet of Things Applications. We believe we are ideally positioned to help
customers to efficiently deploy new IoT controls and applications by leveraging the “Smart Ceiling” capabilities of their Orion solid
state lighting system. IoT capabilities can include the management and tracking of facilities, personnel, resources and customer behavior,
driving both sales and lowering costs. As a result, these added capabilities provide customers an even greater return on investment from
their lighting system and make us an even more attractive partner. We plan to pursue the expansion of our IoT, “smart-building” and
“connected ceiling” and other related technology, software and controls products and services that we offer to our customers. While we
intend to pursue these expansion strategies organically, we also are actively exploring potential business acquisitions which would more
quickly add these types of expanded and different capabilities to our product and services offerings.

Increase our Maintenance Service Offerings. We believe we can leverage our construction management process expertise to
develop a high-quality, quick-response, multi-location maintenance service offering. Our experience with large national customers and
our large installed base of fixtures positions us well to extend a maintenance offering to historical customers, as well as to new customers.

Development of this recurring revenue stream is making progress and we believe there is significant market opportunity. In fiscal 2021,
we began providing energy maintenance services, and, on January 1, 2022, we completed the acquisition of Stay-Lite Lighting. The
acquisition of Stay-Lite Lighting is intended to further increase our energy maintenance services capabilities.

Support success of our ESCO and agent-driven distribution sales channels. We continue to focus on building our relationships
and product and sales support for our ESCO and agent driven distribution channels. These efforts include an array of product and sales
training efforts as well as the development of new products to cater to the unique needs of these sales channels.

Grow EV Charging Installation Business. We acquired Voltrek, a turnkey EV charging installation business, in fiscal 2023. We
believe there are significant growth opportunities in Voltrek’s existing east coast geographic market, as well as on a national basis. We
plan to focus our growth plans on maximizing the initial positive momentum realized in fiscal 2023 from our Voltrek acquisition and
on cross selling our EV charging solutions into our historical market channels and customers.

Recent Acquisitions

Acquisition of Voltrek

Effective on October 5, 2022, we acquired all of the outstanding membership interests of Voltrek LLC, a leading electric vehicle
charging company that provides turnkey installation solutions with ongoing support to all commercial verticals. The initial purchase
price consisted of $5.0 million cash and $1.0 million of stock. We will also pay an additional $3.0 million based on Voltrek's performance
in fiscal 2023 and could pay up to an additional $3.5 million and $7.15 million in compensatory consideration if Voltrek exceeds certain
earnings targets in fiscal 2024 and 2025, respectively. The acquisition was funded from existing cash and credit resources and has been
operating as Voltrek, a division of Orion Energy Systems.

Acquisition of Stay-Lite Lighting

Effective on January 1, 2022, we acquired all of the issued and outstanding capital stock of Stay-Lite Lighting, a nationwide
lighting and electrical maintenance service provider, for a cash purchase price of $4.0 million. The acquisition was funded from existing
cash resources. Stay-Lite Lighting has been operating as Stay-Lite, an Orion Energy Systems business. The acquisition accelerates the
growth of our maintenance services offerings through our Orion Services Group, which provides lighting and electrical services to
customers. Our fiscal 2023 results included a full year of operations of Stay-Lite Lighting.

Replacing Reduced Revenue from Primary Customer

In fiscal 2023, one customer accounted for 16.2% of our total revenue. In fiscal 2022, that same customer accounted for 49.1% of
our total revenue, and in fiscal 2021, this same customer accounted for 56.0% of our total revenue. In fiscal 2024, we expect that our
customer concentration will continue at the approximate level experienced in fiscal 2023. We continue to attempt to diversify our
customer base by expanding our reach to national accounts, ESCOs, the agent driven distribution channel, lighting maintenance
customers and the EV market, in order to replace this reduced level of revenue from our prior most significant customer.

Results of Operations: Fiscal 2023 versus Fiscal 2022

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

Product revenue
Service revenue
Total revenue
Cost of product revenue
Cost of service revenue
Total cost of revenue
Gross profit
General and administrative expenses
Acquisition related costs
Sales and marketing expenses
Research and development expenses
(Loss) income from operations
Other income
Interest expense
Amortization of debt issue costs
(Loss) income before income tax
Income tax expense
Net (loss) income
* NM = Not Meaningful

Fiscal Year Ended March 31,

2023

2022

Amount

%
Change

2023
% of
Revenue

2022
% of
Revenue

57,210 $
20,173
77,383
42,979
16,893
59,872
17,511
19,487
765
11,392
1,852
(15,985)
—
(339)
(73)
(16,363)
17,978
(34,341) $

91,889
32,494
124,383
65,249
25,222
90,471
33,912
11,680
512
11,628
1,701
8,391
1
(80)
(62)
8,250
2,159
6,091

(37.7)%
(37.9)%
(37.8)%
(34.1)%
(33.0)%
(33.8)%
(48.4)%
66.8%
49.4%
(2.0)%
8.9%
NM
NM
(323.8)%
(17.7)%
NM
NM
NM

73.9%
26.1%
100.0%
55.5%
21.8%
77.4%
22.6%
25.2%
1.0%
14.7%
2.4%
(20.7)%
0.0%
(0.4)%
(0.1)%
(21.1)%
23.2%
(44.4)%

73.9%
26.1%
100.0%
52.5%
20.3%
72.7%
27.3%
9.4%
0.4%
9.3%
1.4%
6.7%
0.0%
(0.1)%
(0.0)%
6.6%
1.7%
4.9%

Revenue, Cost of Revenue and Gross Margin. Product revenue decreased by 37.7%, or $34.7 million, for fiscal 2023 versus fiscal
2022. Service revenue decreased by 37.9%, or $12.3 million, for fiscal 2023 versus fiscal 2022. The decrease in product revenue was
primarily due to the completion of a significant project for our largest customer and delays in the commencement of certain projects
partially offset by revenue associated with the Stay-Lite and Voltrek acquisitions. The decrease in service revenue was primarily due to
the completion of the significant project for our largest customer partially offset by revenue association with the acquisition of Stay-Lite
and Voltrek. Cost of product revenue decreased by 34.1%, or $22.3 million, in fiscal 2023 versus the comparable period in fiscal 2022.
Cost of service revenue decreased by 33.0%, or $8.3 million, in fiscal 2023 versus fiscal 2022. The decreases were primarily because of
decreases in revenue described above. Gross margin decreased to 22.6% of revenue in fiscal 2023 from 27.3% in fiscal 2022, due
primarily to lower absorption of fixed costs on reduced revenue volume.

Operating Expenses

General and Administrative. General and administrative expenses increased 66.8%, or $7.8 million, in fiscal 2023 compared to
fiscal 2022. This comparative increase was primarily due to the acquisition of Stay-Lite Lighting and Voltrek, which included $4.0
million for compensatory Voltrek earn-out payments. In addition, there were lower employment costs in fiscal 2022 as a result of
COVID-19 related actions and the payroll tax credit.

Acquisition Related Costs. In fiscal 2023, we incurred acquisition costs of $0.8 million, primarily relating to the Voltrek

acquisition. In fiscal 2022, we incurred acquisition expenses of $0.5 million relating to the acquisition of Stay-Lite Lighting.

Sales and Marketing. Our sales and marketing expenses decreased 2.0%, or $0.2 million, in fiscal 2023 compared to fiscal 2022.
The decrease was primarily due to an decrease in commission expense on lower sales partially offset by expenses associated with the
Stay-Lite Lighting and Voltrek businesses.

Research and Development. Research and development expenses increased 8.9%, or $0.2 million, in fiscal 2023 compared to

fiscal 2022 .

Interest Expense. Interest expense in fiscal 2023 increased by $0.2 million to $0.3 million primarily because of higher borrowings

on Orion’s credit facility and increased third party financing costs related to the sale of receivables.

Income Taxes. In fiscal 2023, we recognized tax expense of $18.0 million. In fiscal 2022, we recognized tax expense of $2.2
million. The fiscal 2023 expense was driven by a $17.8 million non-cash charge to increase the valuation allowance on a significant
portion of our deferred tax assets. This resulted in substantially and disproportionately decreasing our reported net income and our
earnings per share compared to our operating results. Historical and future comparisons to these amounts are not, and will not be,
indicative of actual profitability trends for our business. Our fiscal 2022 income tax provision reflects a more normalized effective
income tax rate. We do not expect to remit significant cash taxes for the next several years.

Results of Operations: Fiscal 2022 versus Fiscal 2021

Product revenue
Service revenue
Total revenue
Cost of product revenue
Cost of service revenue
Total cost of revenue
Gross profit
General and administrative expenses
Acquisition related costs
Sales and marketing expenses
Research and development expenses
Income from operations
Other income
Interest expense
Amortization of debt issue costs
Loss on debt extinguishment
Income before income tax
Income tax expense (benefit)
Net income
* NM = Not Meaningful

Fiscal Year Ended March 31,

2022

2021

Amount

%
Change

2022
% of
Revenue

2021
% of
Revenue

91,889 $
32,494
124,383
65,249
25,222
90,471
33,912
11,680
512
11,628
1,701
8,391
1
(80)
(62)
—
8,250
2,159
6,091 $

87,664
29,176
116,840
63,233
23,483
86,716
30,124
11,262
—
10,341
1,685
6,836
56
(127)
(157)
(90)
6,518
(19,616)
26,134

4.8%
11.4%
6.5%
3.2%
7.4%
4.3%
12.6%
3.7%
NM
12.4%
0.9%
22.7%
(98.2)%
37.0%
60.5%
NM
26.6%
NM
(76.7)%

73.9%
26.1%
100.0%
52.5%
20.3%
72.7%
27.3%
9.4%
0.4%
9.3%
1.4%
6.7%
0.0%
(0.1)%
(0.0)%
0.0%
6.6%
1.7%
4.9%

75.0%
25.0%
100.0%
54.1%
20.1%
74.2%
25.8%
9.6%
0.0%
8.9%
1.4%
5.9%
0.0%
(0.1)%
(0.1)%
(0.1)%
5.6%
(16.8)%
22.4%

Revenue, Cost of Revenue and Gross Margin. Product revenue increased by 4.8%, or $4.2 million, for fiscal 2022 versus fiscal
2021. Service revenue increased by 11.4%, or $3.3 million, for fiscal 2022 versus fiscal 2021. The increase in product revenue was
primarily due to multiple projects put on hold in the prior year as a result of COVID-19. The increase in service revenue was primarily
due to the acquisition of Stay-Lite Lighting. Cost of product revenue increased by 3.2%, or $2.0 million, in fiscal 2022 versus the
comparable period in fiscal 2021. Cost of service revenue increased by 7.4%, or $1.7 million, in fiscal 2022 versus fiscal 2021. The

increase in product costs was primarily due to the increase in product revenue. Gross margin increased to 27.3% of revenue in fiscal
2022 from 25.8% in fiscal 2021, due primarily to cost management and a change in customer sales mix.

Operating Expenses

General and Administrative. General and administrative expenses increased 3.7%, or $0.4 million, in fiscal 2022 compared to
fiscal 2021. This comparative increase was primarily due to the acquisition of Stay-Lite Lighting and lower employment costs in fiscal
2021 as a result of COVID-19 related actions, partially offset by the payroll tax credit.

Acquisition Related Costs. In fiscal 2022, we incurred acquisition expenses of $0.5 million relating to the acquisition of Stay-Lite

Lighting.

Sales and Marketing. Our sales and marketing expenses increased 12.4%, or $1.3 million, in fiscal 2022 compared to fiscal 2021.
The increase was primarily due to an increase in commission expense on higher sales and an increase in travel, both a result of COVID-19
restrictions in fiscal 2021, as well as a result of the acquisition of Stay-Lite Lighting.

Research and Development. Research and development expenses were essentially flat in fiscal 2022 compared to fiscal 2021 and

also remained consistent as a percentage of sales between years.

Interest Expense. Interest expense in fiscal 2022 decreased by 37.0%, or $47 thousand, from fiscal 2021. The decrease in interest

expense was due to fewer sales of receivables.

Loss on Debt Extinguishment. Loss on debt extinguishment in fiscal 2021 related to the write-off of fees incurred with respect to

our prior credit facility, which was recognized upon execution of our new credit facility during the third quarter of fiscal 2021.

Income Taxes. In fiscal 2022, we recognized a tax expense of $2.2 million. In fiscal 2021, we recognized a tax benefit of $19.6
million. The benefit was driven by the release of the valuation allowance on a significant portion of our deferred tax assets. This resulted
in substantially and disproportionately increasing our reported net income and our earnings per share compared to our operating results.
Historical and future comparisons to these amounts are not, and will not be, indicative of actual profitability trends for our business. Our
fiscal 2022 income tax provision reflects a more normalized effective income tax rate. We do not expect to remit significant cash taxes
for the next several years.

Orion Services Group Division

Our OSG segment (a) develops and sells lighting products and provides construction and engineering services for our commercial
lighting and energy management systems and (b) provides retailers, distributors and other businesses with maintenance, repair and
replacement services for the lighting and related electrical components deployed in their facilities. OSG provides engineering, design
and lighting products and in many cases turnkey solutions for large national accounts, governments, municipalities, schools and other
customers.

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

Revenues
Operating (loss) income
Operating margin

Fiscal 2023 Compared to Fiscal 2022

2023

Fiscal Year Ended March 31,
2022

2021

$
$

38,002
(6,982)
(18.4)%

$
$

82,568
6,462

$
$

7.8%

84,243
7,472

8.9%

OSG segment revenue decreased in fiscal 2023 by 54.0%, or $44.6 million, and operating income decreased $13.4 million to an
operating loss, compared to fiscal 2022, due to an overall reduction in project volume performed for our largest customer, partially offset

by revenue from the acquisition of Stay-Lite Lighting. This decrease led to a corresponding operating loss in this segment, as a result of
decreased absorption of fixed costs.

Fiscal 2022 Compared to Fiscal 2021

OSG segment revenue decreased in fiscal 2022 by 2.0%, or $1.7 million, and operating income decreased by 13.5%, or $1.0
million, compared to fiscal 2021, due to an overall reduction in project volume performed for our largest customer, partially offset by
revenue from the acquisition of Stay-Lite Lighting.

Orion Distribution Services Division

Our ODS segment focuses on selling lighting products through manufacturer representative agencies and a network of North

American broadline and electrical distributors and contractors.

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

Revenues
Operating (loss) income
Operating margin

Fiscal 2023 Compared to Fiscal 2022

2023

Fiscal Year Ended March 31,
2022

2021

$
$

15,395
(186)
(1.2)%

$
$

22,209
3,114
14.0%

$
$

21,122
2,430
11.5%

ODS segment revenue decreased $6.8 million, or 30.7%, and operating income decreased $3.3 million, or 106.0%, in fiscal 2023
compared to fiscal 2022 primarily due to reduced sales to a large global on-line retailer. Operating income in this segment decreased as
a result of increased allocation of corporate costs.

Fiscal 2022 Compared to Fiscal 2021

ODS segment revenue in fiscal 2022 increased 5.1%, or $1.1 million, compared to fiscal 2021, primarily due to sales to a more
diversified customer base. This sales increase led to a corresponding increase in operating income in this segment based on operating
leverage.

Orion U.S. Markets Division

Our USM segment sells commercial lighting systems and energy management systems to the wholesale contractor markets. USM

customers include ESCOs and contractors.

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

Revenues
Operating income
Operating margin

Fiscal 2023 Compared to Fiscal 2022

2023

Fiscal Year Ended March 31,
2022

2021

$
$

17,710
1,605

$
$

9.1%

19,606
3,963
20.2%

$
$

11,475
1,683
14.7%

USM segment revenue decreased $1.9 million, or 9.7%, and operating income decreased by $2.4 million, or 59.5%, in fiscal 2023
compared to fiscal 2022, primarily due to a less diversified customer base. Operating income in this segment decreased as a result of
lower revenue and increased allocation of corporate costs.

Fiscal 2022 Compared to Fiscal 2021

USM segment revenue increased $8.1 million, or 70.9%, and operating income increased by $2.3 million, or 135.5%, in fiscal
2022 compared to fiscal 2021, primarily due to the impact of COVID-19 on fiscal 2021 and an increased focus on sales opportunities in
this segment.

Orion EV Charging Division

We acquired Voltrek effective October 5, 2022, upon which it became an additional reporting segment. The results shown below
are since the acquisition date and include the accrual of compensatory earn-out payments. Absent allocations and earn-out payment
expenses, the EV Division had a positive effect on our consolidated earnings in fiscal 2023.

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

Revenues
Operating (loss)
Operating margin

2023

Fiscal Year Ended March 31,
2022

2021

$
$

6,275
(4,133)
(65.9)%

$
$

— $
— $
—

—
—
—

EV Division revenue generated by Voltrek in fiscal 2023 was $6.3 million. Operating loss in this segment was primarily a result

of $4.0 million earn-out expense included in general and administrative costs.

Liquidity and Capital Resources

Overview

We had $16.0 million in cash and cash equivalents as of March 31, 2023, compared to $14.5 million at March 31, 2022. Our cash
position increased primarily as a result of a $10.0 million draw made on our Credit Facility, together with positive changes in working
capital changes, partially offset by the results of our operations and the funding of our acquisition of Voltrek.

As of March 31, 2023, our borrowing base supported $17.3 million of availability under our Credit Facility, with $10.0 million

drawn against that availability. As of March 31, 2022, no amounts were borrowed under the Credit Facility.

Additional information on our Credit Agreement can be found in the “Indebtedness” section located below.

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

In March 2021, we entered into an At Market Issuance Sales Agreement to undertake an “at the market” (ATM) public equity
capital raising program pursuant to which we may offer and sell shares of our common stock, having an aggregate offering price of up
to $50 million from time to time through or to the Agent, acting as sales agent or principal. No share sales have yet been effected
pursuant to the ATM program through March 31, 2023.

We also are exploring various alternative sources of liquidity to help ensure that we will have the best allocation of investing

capital to satisfy our working capital needs.

Our future liquidity needs and forecasted cash flows are dependent upon many factors, including our relative revenue, gross
margins, cash management practices, cost containment, working capital management, capital expenditures. While we believe that we

will likely have adequate available cash and equivalents and credit availability under our Credit Agreement to satisfy our currently
anticipated working capital and liquidity requirements during the next 12 months and beyond based on our current cash flow forecast,
there can be no assurance to that effect. If we experience significant liquidity constraints, we may be required to issue equity or debt
securities, reduce our sales efforts, implement additional cost savings initiatives or undertake other efforts to conserve our cash.

Cash Flows

The following table summarizes our cash flows for our fiscal 2023, fiscal 2022 and fiscal 2021:

Operating activities
Investing activities
Financing activities
Increase (decrease) in cash and cash equivalents

2023

Fiscal Year Ended March 31,
2022
(in thousands)

2021

(2,291) $
(6,195)
10,012
1,526

(113) $

(4,918)
104
(4,927) $

1,729
(946)
(10,141)
(9,358)

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

Cash used in operating activities for fiscal 2023 was $2.3 million and consisted of our net loss of $34.3 million adjusted for non-
cash expense items and net cash used in changes in operating assets of $32.1 million, the largest of which was a $17.8 million decrease
in deferred income tax assets as a result of the valuation allowance.

Cash used in operating activities for fiscal 2022 was $0.1 million and consisted of a net income of $6.1 million adjusted for non-
cash expense items of $5.0 million and offset by net cash used by changes in operating assets and liabilities of $11.2 million. Cash used
by changes in operating assets and liabilities consisted primarily of decreases in accounts payable of $8.1 million and accrued liabilities
of $6.9 million, partially offset by cash provided by a decrease in accounts receivable of $4.4 million, all caused by changes in business
volume late in fiscal 2022 compared to late fiscal 2021.

Cash provided by operating activities for fiscal 2021 was $1.7 million and consisted of a net income adjusted for non-cash expense
items of $9.1 million and net cash used by changes in operating assets and liabilities of $7.4 million. Cash used by changes in operating
assets and liabilities consisted primarily of an increase in inventory of $5.3 million due to the release of new product lines and pre-
ordering due to supply chain delays as a result of COVID-19, a decrease in accounts payable of $2.6 million due to the timing of
payments, an increase in accounts receivable of $2.4 million due to the timing of billing and customer collections, and an increase in
Revenue earned but not billed of $2.4 million due to timing on revenue recognition compared to invoicing. Cash provided by changes
in operating assets and liabilities included an increase in accrued expenses of $5.8 million due to the timing of project completions and
the receipt of invoices.

Cash Flows Related to Investing Activities. Cash used in investing activities in fiscal 2023 was $6.2 million and consisted primarily

of the $5.6 million acquisition of Voltrek and $0.6 million purchases of property and equipment.

Cash used in investing activities in fiscal 2022 was $4.9 million and consisted primarily of the $4.0 million acquisition of Stay-
Lite Lighting, and an investment of a non-controlling equity stake in ndustrial, Inc. of $0.5 million and purchases of property and
equipment.

Cash used in investing activities in fiscal 2021 was $0.9 million and consisted primarily of purchases of property and equipment.

Cash Flows Related to Financing Activities. Cash provided by financing activities in fiscal 2023 was $10.0 million which consisted

of proceeds from the revolving credit facility.

Cash provided by financing activities in fiscal 2022 was $0.1 million.

Cash used in financing activities in fiscal 2021 was $10.1 million. This cash used consisted primarily of a net payment of $10.0

million under our Credit Facility.

Working Capital

Our net working capital as of March 31, 2023 was $25.9 million, consisting of $50.4 million of current assets and $24.5 million
of current liabilities. Our net working capital as of March 31, 2022 was $32.9 million, consisting of $51.2 million in current assets and
$18.4 million in current liabilities. The change was primarily due to decreases in inventory and collection of the employee retention tax
credit plus increases in accounts payable, accrued expenses and accounts receivable.

Our net working capital as of March 31, 2021 was $26.2 million, consisting of $56.5 million in current assets and $30.4 million
in current liabilities. The increase in our working capital from the fiscal 2021 year-end was primarily due to an overall reduction in
project volume performed for our largest customer and partially offset by the acquisition of Stay-Lite Lighting.

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

Indebtedness

Revolving Credit Agreement

Our Credit Agreement provides for a five-year $25.0 million revolving credit facility (the “Credit Facility”) that matures on
December 29, 2025. Borrowings under the Credit Facility are subject to a borrowing base requirement based on eligible receivables,
inventory and cash. As of March 31, 2023, the borrowing base supported approximately $17.3 million of availability under the Credit
Facility with $10.0 million drawn against that availability. As of March 31, 2022, no amounts were borrowed under the Credit Facility.

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

Borrowings under the Credit Agreement are permitted in the form of LIBOR or prime rate-based loans and generally bear interest
at floating rates plus an applicable margin determined by reference to our availability under the Credit Agreement. Among other fees,
we are required to pay an annual facility fee of $15,000 and a fee of 25 basis points on the unused portion of the Credit Facility.

The Credit Agreement includes a springing minimum fixed cost coverage ratio of 1.0 to 1.0 when excess availability under the
Credit Facility falls below the greater of $3.0 million or 15% of the committed facility. Currently, the required springing minimum fixed
cost coverage ratio is not required.

The Credit Agreement also contains customary events of default and other covenants, including certain restrictions on our ability
to incur additional indebtedness, consolidate or merge, enter into acquisitions, pay any dividend or distribution on our stock, redeem,
retire or purchase shares of our stock, make investments or pledge or transfer assets. If an event of default under the Credit Agreement
occurs and is continuing, then the lender may cease making advances under the Credit Agreement and declare any outstanding
obligations under the Credit Agreement to be immediately due and payable. In addition, if we become the subject of voluntary or
involuntary proceedings under any bankruptcy or similar law, then any outstanding obligations under the Credit Agreement will
automatically become immediately due and payable.

We did not incur any early termination fees in connection with the termination of the Prior Credit Agreement, but did recognize a

loss on debt extinguishment of $0.1 million on the write-off of unamortized debt issue costs related to the Prior Credit Agreement.

Capital Spending

Our capital expenditures are primarily for general corporate purposes for our corporate headquarters and technology center,
production equipment and tooling and for information technology systems. Our capital expenditures totaled $0.7 million in fiscal 2023,
$0.5 million in fiscal 2022 and $0.9 million in fiscal 2021. Our capital spending plans predominantly consist of investments related to
maintenance fleet vehicles, new product development tooling and equipment and information technology systems, exclusive of any
capital spending for potential acquisitions. We expect to finance these capital expenditures primarily through our existing cash,
equipment secured loans and leases, to the extent needed, long-term debt financing, or by using our Credit Facility.

Inflation

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

Critical Accounting Estimates

The discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements,
which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of our
consolidated financial statements requires us to make certain estimates and judgments that affect our reported assets, liabilities, revenue
and expenses, and our related disclosure of contingent assets and liabilities. We re-evaluate our estimates on an ongoing basis, including
those related to revenue recognition, inventory valuation, collectability of receivables, stock-based compensation, warranty reserves and
income taxes. We base our estimates on historical experience and on various assumptions that we believe to be reasonable under the
circumstances. Actual results may differ from these estimates. A summary of our critical accounting estimates is set forth below.

Revenue Recognition. We recognize revenue in accordance with the guidance in “Revenue from Contracts with Customers” (Topic
606) (“ASC 606”) when control of the goods or services being provided (which we refer to as a performance obligation) is transferred
to a customer at an amount that reflects the consideration we expect to receive in exchange for those goods or services. The amount of
expected consideration includes estimated deductions and early payment discounts calculated based on historical experience, customer
rebates based on agreed upon terms applied to actual and projected sales levels over the rebate period, and any amounts paid to customers
in conjunction with fulfilling a performance obligation.

If there are multiple performance obligations in a single contract, the contract’s total transaction price per GAAP is allocated to
each individual performance obligation based on their relative standalone selling price. A performance obligation’s standalone selling
price is the price at which we would sell such promised good or service separately to a customer. We use an observable price to determine
the stand-alone selling price for separate performance obligations or an expected cost-plus margin per GAAP approach when one is not
available. The expected cost-plus margin per GAAP approach is used to determine the stand-alone selling price for the installation
performance obligation and is based on average historical installation margin.

Revenue derived from customer contracts which include only performance obligation(s) for the sale of lighting fixtures and
components we manufacture, or source is classified as product revenue in the Consolidated Statements of Operations. The revenue for
these transactions is recorded at the point in time when management believes that the customer obtains control of the products, generally
either upon shipment or upon delivery to the customer’s facility. This point in time is determined separately for each contract and
requires judgment by management of the contract terms and the specific facts and circumstances concerning the transaction.

Revenue from a customer contract which includes both the sale of Orion manufactured or sourced fixtures and the installation of
such fixtures (which we refer to as a turnkey project) is allocated between each lighting fixture and the installation performance
obligation based on relative standalone selling prices.

Revenue from turnkey projects that is allocated to the single installation performance obligation is reflected in Service revenue.
Service revenue is recorded over-time as we fulfill our obligation to install the light fixtures. We measure our performance toward
fulfilling our performance obligations for installations using an output method that calculates the number of light fixtures completely
removed and installed as of the measurement date in comparison to the total number of light fixtures to be removed and installed under
the contract.

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

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

Inventories. We review our inventory for obsolescence. If the net realizable value, which is based upon the estimated selling price,
less estimated costs of completion, disposal, and transportation, falls below cost, then the inventory value is reduced to its net realizable
value. Our inventory obsolescence reserves at March 31, 2023 were $1.8 million, or 8.9% of gross inventory, and $2.1 million, or 9.5%
of gross inventory, at March 31, 2022.

Recoverability of Long-Lived Assets. We evaluate long-lived assets such as property, equipment and definite lived intangible
assets, such as patents, for impairment whenever events or circumstances indicate that the carrying value of the assets recognized in our
financial statements may not be recoverable. Factors that we consider include whether there has been a significant decrease in the market
value of an asset, a significant change in the way an asset is being utilized, or a significant change, delay or departure in our strategy for
that asset, or a significant change in the macroeconomic environment, such as the impact of the COVID-19 pandemic. Our assessment
of the recoverability of long-lived assets involves significant judgment and estimation. These assessments reflect our assumptions,
which, we believe, are consistent with the assumptions hypothetical marketplace participants use. Factors that we must estimate when
performing recoverability and impairment tests include, among others, forecasted revenue, margin costs and the economic life of the
asset. If impairment is indicated, we determine if the total estimated future cash flows on an undiscounted basis are less than the carrying
amounts of the asset or assets. If so, an impairment loss is measured and recognized.

As of December 31, 2022, due to a change in our forecast, a triggering event occurred requiring us to evaluate the long-lived assets
in its enterprise asset group for impairment. The enterprise asset group includes the corporate assets that support the revenue producing
activities of other asset groups. We performed the recoverability test for the asset group by comparing its carrying value to the group’s
expected future undiscounted cash flows. We concluded that the undiscounted cash flows of the long-lived asset group exceeded its
carrying value. As such the asset group was deemed recoverable and no impairment was recorded.

Our impairment loss calculations require that we apply judgment in identifying asset groups, estimating future cash flows,
determining asset fair values, and estimating asset’s useful lives. To make these judgments, we may use internal discounted cash flow
estimates, quoted market prices, when available, and independent appraisals, as appropriate, to determine fair value.

If actual results are not consistent with our assumptions and judgments used in estimating future cash flows and asset fair values,

we may be required to recognize future impairment losses which could be material to our results of operations.

Indefinite Lived Intangible Assets and Goodwill. We test indefinite lived intangible assets and goodwill for impairment at least
annually on the first day of our fiscal fourth quarter, or when indications of potential impairment exist. We monitor for the existence of
potential impairment indicators throughout the fiscal year. Our annual impairment test may begin with a qualitative test to determine

whether it is more likely than not that an indefinite lived intangible asset's carrying value is greater than its fair value. If our qualitative
assessment reveals that asset impairment is more likely than not, we perform a quantitative impairment test by comparing the fair value
of the indefinite lived intangible asset to its carrying value. Alternatively, we may bypass the qualitative test and initiate impairment
testing with the quantitative impairment test.

We performed a qualitative assessment in conjunction with our annual impairment test of our indefinite lived intangible assets
and goodwill as of January 1, 2023. These qualitative assessments considered our operating results for the first nine months of fiscal
2023 in comparison to prior years as well as its anticipated fourth quarter results and fiscal 2023 plan. As a result of the conditions that
existed as of the assessment date, an asset impairment was not deemed to be more likely than not and a quantitative analysis was not
required.

Stock-Based Compensation. We currently issue restricted stock awards to our employees, executive officers and directors. Prior
to fiscal 2015, we also issued stock options to these individuals. We apply the provisions of ASC 718, Compensation - Stock
Compensation, to these restricted stock and stock option awards which requires us to expense the estimated fair value of the awards
based on the fair value of the award on the date of grant. Compensation costs for equity incentives are recognized in earnings, on a
straight-line basis over the requisite service period.

Accounting for Income Taxes. As part of the process of preparing our consolidated financial statements, we are required to
determine our income taxes in each of the jurisdictions in which we operate. This process involves estimating our actual current tax
expenses, together with assessing temporary differences resulting from recognition of items for income tax and accounting purposes.
These differences result in deferred tax assets and liabilities, which are included within our consolidated balance sheet. We must then
assess the likelihood that our deferred tax assets will be recovered from future taxable income and, to the extent we believe that recovery
is not likely, establish a valuation allowance. To the extent we establish a valuation allowance or increase this allowance in a period, we
must reflect this increase as an expense within the tax provision in our statements of operations.

Our judgment is required in determining our provision for income taxes, our deferred tax assets and liabilities, and any valuation
allowance recorded against our net deferred tax assets. We continue to monitor the realizability of our deferred tax assets and adjust the
valuation allowance accordingly. Prior to fiscal 2021, we recorded a full valuation allowance against our net federal and net state deferred
tax assets due to our cumulative three-year taxable losses. During fiscal 2021, we reduced our valuation allowance on the basis of our
reassessment of the amount of our deferred tax assets that are more likely than not to be realized. During fiscal 2023, we reestablished
a full valuation allowance on our net deferred tax assets due to end of the period of sustained profitability. In making these
determinations, we considered all available positive and negative evidence, including projected future taxable income, tax planning
strategies, recent financial performance and ownership changes.

We believe that past issuances and transfers of our stock caused an ownership change in fiscal 2007 that affected the timing of the
use of our net operating loss carry-forwards, but we do not believe the ownership change affects the use of the full amount of the net
operating loss carry-forwards. As a result, our ability to use our net operating loss carry-forwards attributable to the period prior to such
ownership change to offset taxable income will be subject to limitations in a particular year, which could potentially result in increased
future tax liability for us.

As of March 31, 2023, we had net operating loss carryforwards of approximately $71.4 million for federal tax purposes, $66.1
million for state tax purposes, and $0.8 million for foreign tax purposes. As of the fiscal 2018, this amount is inclusive of the entire loss
carryforward on the filed returns.

We also had federal tax credit carryforwards of $1.3 million and state tax credit carryforwards of $0.3 million, which are reserved
for as part of our valuation allowance. Of these tax attributes, $19.7 million of the federal and state net operating loss carryforwards are
not subject to time restrictions on use but may only be used to offset 80% of future adjusted taxable income. The $120.2 million net
operating loss and tax credit carryforwards will begin to expire in varying amounts between 2023 and 2033.

We recognize penalties and interest related to uncertain tax liabilities in income tax expense. Penalties and interest were immaterial

as of the date of adoption and are included in unrecognized tax benefits.

By their nature, tax laws are often subject to interpretation. Further complicating matters is that in those cases where a tax position
is open to interpretation, differences of opinion can result in differing conclusions as to the amount of tax benefits to be recognized
under Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 740, Income Taxes. ASC 740
utilizes a two-step approach for evaluating tax positions. Recognition (Step 1) occurs when an enterprise concludes that a tax position,
based solely on its technical merits, is more likely than not to be sustained upon examination. Measurement (Step 2) is only addressed
if Step 1 has been satisfied. Under Step 2, the tax benefit is measured as the largest amount of benefit, determined on a cumulative
probability basis that is more likely than not to be realized upon ultimate settlement. Consequently, the level of evidence and
documentation necessary to support a position prior to being given recognition and measurement within the financial statements is a
matter of judgment that depends on all available evidence. As of March 31, 2023, the balance of gross unrecognized tax benefits was
approximately $0.2 million, all of which would reduce our effective tax rate if recognized. We believe that our estimates and judgments
discussed herein are reasonable, however, actual results could differ, which could result in gains or losses that could be material.

Recent Accounting Pronouncements

See Note 3 – Summary of Significant Accounting Policies to our accompanying audited consolidated financial statements for a
full description of recent accounting pronouncements including the respective expected dates of adoption and expected effects on results
of operations and financial condition.

Item 7A. Quantitative and Qualitative Disclosure About Market Risk

Market risk is the risk of loss related to changes in market prices, including interest rates, foreign exchange rates and commodity

pricing that may adversely impact our consolidated financial position, results of operations or cash flows.

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

Foreign Exchange Risk. We face minimal exposure to adverse movements in foreign currency exchange rates. Our foreign

currency losses for all reporting periods have been nominal.

Interest Rate Risk. We do not believe that we are subject to any material risks arising from changes in interest rates, foreign
currency exchange rates, commodity prices, equity prices or other market changes that affect market risk sensitive instruments. It is our
policy not to enter into interest rate derivative financial instruments. As a result, we do not currently have any significant interest rate
exposure.

As of March 31, 2023, we had $10 million of outstanding debt with floating interest rates.

Commodity Price Risk. We are exposed to certain commodity price risks associated with our purchases of raw materials, most
significantly our aluminum purchases. During fiscal 2023, we have experienced commodity price increases; however, as of the date of
this report, we are not able to predict the future impact of on this risk. A hypothetical additional 20% increase in aluminum prices would
have had a negative impact of $0.7 million on our net income in fiscal 2023.

ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Reports of Independent Registered Public Accounting Firm (BDO USA, LLP; Milwaukee, WI; PCAOB ID#243)

Consolidated Balance Sheets

Consolidated Statements of Operations

Consolidated Statements of Shareholders’ Equity

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

Page
Number

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Shareholders and Board of Directors

Orion Energy Systems, Inc.

Manitowoc, Wisconsin

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Orion Energy Systems, Inc. (the “Company”) as of March 31, 2023
and 2022, the related consolidated statements of operations, shareholders’ equity, and cash flows for each of the three years in the period
ended March 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the
consolidated financial statements present fairly, in all material respects, the financial position of the Company at March 31, 2023 and
2022, and the results of its operations and its cash flows for each of the three years in the period ended March 31, 2023, in conformity
with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion
on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public
Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in
accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission
and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to
error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial
reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the
purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we
express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether
due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the
accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the
consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements
that was communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are
material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The
communication of critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole,
and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the
accounts or disclosures to which it relates.

Realizability of Deferred Tax Assets

As described in Note 13 to the Company’s consolidated financial statements, during the year ended March 31, 2023, the Company
recorded approximately $17.8 million in valuation allowance on a significant portion of its deferred tax assets. In evaluating the
realizability of deferred tax assets, the available positive and negative evidence, including projected future taxable income and ongoing
prudent and feasible tax planning strategies in assessing the need for the valuation allowance are considered.

We identified the Company’s evaluation of the realizability of deferred tax assets as a critical audit matter. Significant management
judgments are required in evaluating and weighing the collective positive and negative evidence that are used to assess the realizability
of deferred tax assets, which include various assumptions surrounding projected future taxable (loss) income. Auditing these elements
involved complex and subjective auditor judgment due to the nature and extent of audit effort required to address these matters, including
the need to involve personnel with specialized skill and knowledge.

The primary procedures we performed to address this critical audit matter included:

•

Assessing the Company’s ability to generate future taxable income and utilize the deferred tax assets by evaluating the
forecast of future revenue, gross profit, and operating expenses that support pre-tax book (loss) income using the Company’s
historical performance.

Utilizing personnel with specialized knowledge and skill in taxes to assist in the evaluation of the Company’s assessment
of positive and negative evidence, and whether the estimated future sources of taxable income were sufficient to utilize the
deferred tax assets in the relevant time period.

/s/ BDO USA, LLP

We have served as the Company's auditor since 2012.

Milwaukee, Wisconsin

June 12, 2023

ORION ENERGY SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)

Assets
Cash and cash equivalents
Accounts receivable, net
Revenue earned but not billed
Inventories, net
Prepaid expenses and other current assets

Total current assets

Property and equipment, net
Goodwill
Other intangible assets, net
Deferred tax assets
Other long-term assets

Total assets

Liabilities and Shareholders’ Equity
Accounts payable
Accrued expenses and other
Deferred revenue, current
Current maturities of long-term debt

Total current liabilities
Revolving credit facility
Long-term debt, less current maturities
Deferred revenue, long-term
Other long-term liabilities
Total liabilities
Commitments and contingencies (Note 14)
Shareholders’ equity:
Preferred stock, $0.01 par value: Shares authorized: 30,000,000 shares
at March 31, 2023 and 2022; no shares issued and outstanding at
March 31, 2023 and 2022
Common stock, no par value: Shares authorized: 200,000,000 at
March 31, 2023 and 2022; shares issued: 41,767,092 and
40,570,909 at March 31, 2023 and 2022; shares outstanding:
32,295,408 and 31,097,872 at March 31, 2023 and 2022
Additional paid-in capital
Treasury stock: 9,471,684 and 9,473,037 common shares at
March 31, 2023 and 2022
Retained deficit

Total shareholders’ equity
Total liabilities and shareholders’ equity

March 31,

2023

2022

15,992
13,728
1,320
18,205
1,116
50,361
10,470
1,484
6,004
—
3,260
71,579

13,405
10,552
480
17
24,454
10,000
3
489
3,384
38,330

14,466
11,899
2,421
19,832
2,631
51,249
11,466
350
2,404
17,805
3,543
86,817

9,855
8,427
76
16
18,374
—
19
564
2,760
21,717

—

—
160,907

(36,237)
(91,421)
33,249
71,579

—
158,419

(36,239)
(57,080)
65,100
86,817

ORION ENERGY SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share amounts)

Product revenue
Service revenue
Total revenue

Cost of product revenue
Cost of service revenue
Total cost of revenue
Gross profit

Operating expenses:
General and administrative
Acquisition related costs
Sales and marketing
Research and development
Total operating expenses

Income from operations
Other income (expense):
Other income
Interest expense
Amortization of debt issue costs
Loss on debt extinguishment
Interest income

Total other expense
Income before income tax
Income tax expense (benefit)

Net (loss) income

Basic net (loss) income per share attributable to common shareholders
Weighted-average common shares outstanding
Diluted net (loss) income per share
Weighted-average common shares and share equivalents
outstanding

2023

Fiscal Year Ended March 31,
2022

2021

$
$

57,210
20,173
77,383
42,979
16,893
59,872
17,511

19,487
765
11,392
1,852
33,496
(15,985)

—
(339)
(73)
—
34
(378)
(16,363)
17,978
(34,341)
(1.08)
31,703,712
(1.08)

$
$

91,889
32,494
124,383
65,249
25,222
90,471
33,912

11,680
512
11,628
1,701
25,521
8,391

1
(80)
(62)
—
—
(141)
8,250
2,159
6,091
0.20
31,018,356
0.19

$
$

87,664
29,176
116,840
63,233
23,483
86,716
30,124

11,262
—
10,341
1,685
23,288
6,836

56
(127)
(157)
(90)
-
(318)
6,518
(19,616)
26,134
0.85
30,634,553
0.83

31,703,712

31,294,573

31,303,727

ORION ENERGY SYSTEMS, INC. AND SUBSIDIARIES
STATEMENTS OF SHAREHOLDERS’ EQUITY
(in thousands, except share amounts)

Common Stock

Shareholders’ Equity

Balance, March 31, 2020
Exercise of stock options for cash
Shares issued under Employee Stock Purchase
Plan
Stock-based compensation
Employee tax withholdings on stock-based
compensation
Net income
Balance, March 31, 2021
Exercise of stock options for cash
Shares issued under Employee Stock Purchase
Plan
Stock-based compensation
Employee tax withholdings on stock-based
compensation
Net income
Balance, March 31, 2022
Issuance of common stock for acquisition
Issuance of stock and shares for services
Exercise of stock options for cash
Shares issued under Employee Stock Purchase
Plan
Stock-based compensation
Employee tax withholdings on stock-based
compensation
Net loss
Balance, March 31, 2023

Additional
Paid-in
Capital

156,503
229

Treasury
Stock
(36,163) $
—

Retained
Earnings
(Deficit)

Total
Shareholders’
Equity

(89,305) $
—

31,035
229

—
753

—
—
157,485
121

—
813

—
—
158,419
800
22
54

—
1,612

7
—

(84)
—
(36,240)
—

—
—

—
26,134
(63,171)
—

—

(5)
—
(36,239)
—
—
—

4
—

—
6,091
(57,080)
—
—
—

—

7
753

(84)
26,134
58,074
121

6
813

(5)
6,091
65,100
800
22
54

4
1,612

—
—
160,907

(2)
—
(36,237) $

—
(34,341)
(91,421) $

(2)
(34,341)
33,249

Shares
30,265,997
99,000

1,146
450,481

(11,324)
—
30,805,300
31,845

1,617
260,014

(904)
—
31,097,872
620,067
12,848
26,646

2,274
536,622

(921)

32,295,408

ORION ENERGY SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

2023

Fiscal Year Ended March 31,
2022

2021

(34,341)

6,091

26,134

Operating activities
Net (loss) income
Adjustments to reconcile net (loss) income to net cash used in
operating activities:
Depreciation
Amortization of intangible assets
Stock-based compensation
Amortization of debt issue costs
Loss on debt extinguishment
Deferred income tax benefit
Loss (gain) on sale of property and equipment
Provision for inventory reserves
Provision for bad debts
Other
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable
Revenue earned but not billed
Inventories
Prepaid expenses and other assets
Accounts payable
Accrued expenses and other liabilities
Deferred revenue, current and long-term

Net cash (used in) provided by operating activities

Investing activities
Cash to fund acquisitions, net of cash received
Cash paid for investment
Purchase of property and equipment
Additions to patents and licenses
Proceeds from sales of property, plant and equipment
Net cash used in investing activities

Financing activities
Payment of long-term debt
Proceeds from revolving credit facility
Payment of revolving credit facility
Payments to settle employee tax withholdings on stock-based
compensation
Debt issue costs
Proceeds from employee equity exercises
Net cash provided by (used in) financing activities

Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
Supplemental cash flow information:
Cash paid for interest
Cash paid for income taxes
Supplemental disclosure of non-cash investing and financing activities:
Operating lease assets obtained in exchange for new operating lease
liabilities
Issuance of common stock in connection with acquisition

$
$

1,369
653
1,612
73
—
17,881
27
628
65
96

(586)
1,426
1,879
2,017
2,372
2,209
329
(2,291)

(5,600)
—
(586)
(9)
—
(6,195)

(15)
10,000
—

(2)
(29)
58
10,012
1,526
14,466
15,992

(346)
(87)

$
$

1,327
227
813
62
—
1,980
(77)
623
10
26

4,407
851
(420)
(888)
(8,125)
(6,933)
(87)
(113)

(4,012)
(500)
(518)
(10)
122
(4,918)

(14)
—
—

(5)
(4)
127
104
(4,927)
19,393
14,466

(68)
(203)

$
$

— $
$
800

— $
— $

1,190
290
753
157
90
(19,860)
1
275
—
106

(2,384)
(2,370)
(5,322)
(396)
(2,637)
5,797
(95)
1,729

—
—
(902)
(51)
7
(946)

(35)
8,000
(18,013)

(84)
(245)
236
(10,141)
(9,358)
28,751
19,393

(118)
(175)

355
—

ORION ENERGY SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 — DESCRIPTION OF BUSINESS

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

Orion’s corporate offices and leased primary manufacturing operations are located in Manitowoc, Wisconsin. Orion also leases

office space in Jacksonville, Florida, Lawrence, Massachusetts and Pewaukee, Wisconsin.

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The consolidated financial statements include the accounts of Orion Energy Systems, Inc. and its wholly-owned subsidiaries. All

significant intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial
statements and reported amounts of revenues and expenses during that reporting period. Areas that require the use of significant
management estimates include revenue recognition, inventory obsolescence, allowance for doubtful accounts, accruals for warranty and
loss contingencies, income taxes, impairment analyses, and certain equity transactions. Accordingly, actual results could differ from
those estimates.

Cash and Cash Equivalents

Orion considers all highly liquid, short-term investments with original maturities of three months or less to be cash equivalents.

Fair Value of Financial Instruments

Orion’s financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and
other, revolving credit facility and long-term debt. In addition, other long-term assets includes an equity investment of $0.5 million that
is carried at cost less impairment, of which there has been no impairment as of March 31, 2023. Valuation techniques used to measure
fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. GAAP describes a fair value
hierarchy based on the following three levels of inputs, of which the first two are considered observable and the last unobservable, that
may be used to measure fair value:

Level 1 — Valuations are based on unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2 — Valuations are based on quoted prices for similar assets or liabilities in active markets, or quoted prices in markets that

are not active for which significant inputs are observable, either directly or indirectly.

Level 3 — Valuations are based on prices or valuation techniques that require inputs that are both unobservable and significant to
the overall fair value measurement. Inputs reflect management's best estimate of what market participants would use in valuing the asset
or liability at the measurement date.

The carrying amounts of Orion’s financial instruments approximate their respective fair values due to the relatively short-term
nature of these instruments. Long-term debt and revolving credit facility are classified as Level 2 in the fair value hierarchy because of
the interest rates currently available to Orion for similar obligations.

Allowance for Doubtful Accounts

Orion performs ongoing evaluations of its customers and continuously monitors collections and payments. Orion estimates an
allowance for doubtful accounts based upon the aging of the underlying receivables, historical experience with write-offs and specific
customer collection issues that have been identified. See Note 4 – Accounts Receivable for further discussion of the allowance for
doubtful accounts.

Incentive Plan

Orion’s compensation committee approved an Executive Annual Cash Incentive Program. Based upon the results for the fiscal
years ended March 31, 2023, 2022, and 2021, Orion accrued approximately $0, $0.1 million, and $0.7 million expense related to this
plan, respectively.

Revenue Recognition

Orion generates revenues primarily by selling commercial lighting fixtures and components, installing these fixtures in its
customer’s facilities, and providing maintenance services including repairs and replacements for the lighting and related electrical
components deployed in its customer’s facilities. Orion recognizes revenue in accordance with the guidance in “Revenue from Contracts
with Customers” (Topic 606) (“ASC 606”) when control of the goods or services being provided (which Orion refers to as a performance
obligation) is transferred to a customer at an amount that reflects the consideration that management expects to receive in exchange for
those goods or services. Prices are generally fixed at the time of order confirmation, either for the contact as a whole or for the hourly
rates that will be charged for the type of maintenance services delivered. The amount of expected consideration includes estimated
deductions and early payment discounts calculated based on historical experience, customer rebates based on agreed upon terms applied
to actual and projected sales levels over the rebate period, and any amounts paid to customers in conjunction with fulfilling a performance
obligation.

If there are multiple performance obligations in a single contract, the contract’s total transaction price is allocated to each
individual performance obligation based on their relative standalone selling price. A performance obligation’s standalone selling price
is the price at which Orion would sell such promised good or service separately to a customer. Orion uses an observable price to
determine the stand-alone selling price for separate performance obligations or an expected cost-plus margin approach when one is not
available. The expected cost-plus margin approach is used to determine the estimated stand-alone selling price for the installation
performance obligation and is based on average historical installation margin.

Revenue derived from customer contracts which include only performance obligation(s) for the sale of Orion manufactured or
sourced lighting fixtures and components is classified as Product revenue in the Consolidated Statements of Operations. The revenue
for these transactions is recorded at the point in time when management believes that the customer obtains control of the products,
generally either upon shipment or upon delivery to the customer’s facility. This point in time is determined separately for each contract
and requires judgment by management of the contract terms and the specific facts and circumstances concerning the transaction.

Revenue from a customer contract which includes both the sale of Orion manufactured or sourced fixtures and the installation of
such fixtures (which Orion refers to as a turnkey project) is allocated between each lighting fixture and the installation performance
obligation based on relative standalone selling prices.

Revenue from turnkey projects that is allocated to the sale of the lighting fixtures is recorded at the point in time when management
believes the customer obtains control of the product(s) and is reflected in Product revenue. This point in time is determined separately
for each customer contract based upon the terms of the contract and the nature and extent of Orion’s control of the light fixtures during
the installation. Product revenue associated with turnkey projects can be recorded (a) upon shipment or delivery, (b) subsequent to
shipment or delivery and upon customer payments for the light fixtures, (c) when an individual light fixture is installed and working
correctly, or (d) when the customer acknowledges that the entire installation project is substantially complete. Determining the point in
time when a customer obtains control of the lighting fixtures in a turnkey project can be a complex judgment and is applied separately
for each individual light fixture included in a contract. In making this judgment, management considers the timing of various factors,
including, but not limited to, those detailed below:

• when there is a legal transfer of ownership;

• when the customer obtains physical possession of the products;

• when the customer starts to receive the benefit of the products;

•

the amount and duration of physical control that Orion maintains on the products after they are shipped to, and received at,
the customer’s facility;

• whether Orion is required to maintain insurance on the lighting fixtures when they are in transit and after they are delivered

to the customer’s facility;

• when each light fixture is physically installed and working correctly;

• when the customer formally accepts the product; and

• when Orion receives payment from the customer for the light fixtures.

Revenue from turnkey projects that is allocated to the single installation performance obligation is reflected in Service revenue.
Service revenue is recorded over-time as Orion fulfills its obligation to install the light fixtures. Orion measures its performance toward
fulfilling its performance obligations for installations using an output method that calculates the number of light fixtures removed and
installed as of the measurement date in comparison to the total number of light fixtures to be removed and installed under the contract.

Orion offers a financing program, called an Orion Throughput Agreement, or OTA, for a customer’s lease of Orion’s energy
management systems. The OTA is structured as a sales-type lease and upon successful installation of the system and customer
acknowledgment that the system is operating as specified, revenue is recognized at Orion’s net investment in the lease, which typically
is the net present value of the future cash flows.

Orion also records revenue in conjunction with several limited power purchase agreements (“PPAs”) still outstanding. Those PPAs
are supply-side agreements for the generation of electricity. Orion’s last PPA expires in 2031. Revenue associated with the sale of energy
generated by the solar facilities under these PPAs is within the scope of ASC 606. Revenues are recognized over-time and are equal to
the amount billed to the customer, which is calculated by applying the fixed rate designated in the PPAs to the variable amount of
electricity generated each month. This approach is in accordance with the “right to invoice” practical expedient provided for in ASC
606. Orion also recognizes revenue upon the sale to third parties of tax credits received from operating the solar facilities and from
amortizing a grant received from the federal government during the period starting when the power generating facilities were constructed
until the expiration of the PPAs; these revenues are not derived from contracts with customers and therefore not under the scope of ASC
606.

During the third quarter of fiscal 2023, Orion acquired Voltrek LLC ("Voltrek"), which sells and installs sourced electric vehicle
charging stations and related software subscriptions and renewals. The results of Voltrek are included in the Orion EV segment and
compliment Orion’s existing turnkey installation model.

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

See Note 10 – Accrued Expenses and Other for a discussion of Orion’s accounting for the warranty it provides to customers for

its products and services.

Sales taxes collected from customers and remitted to governmental authorities are accounted for on a net (excluded from revenues)

basis.

Shipping and Handling Costs

Orion records costs incurred in connection with shipping and handling of products as cost of product revenue. Amounts billed to

customers in connection with these costs are included in product revenue.

Research and Development

Orion expenses research and development costs as incurred. Amounts are included in the Statement of Operations on the line item

Research and development.

Income Taxes

Orion recognizes deferred tax assets and liabilities for the future tax consequences of temporary differences between financial
reporting and income tax basis of assets and liabilities, measured using the enacted tax rates and laws expected to be in effect when the
temporary differences reverse. Deferred income taxes also arise from the future tax benefits of operating loss and tax credit
carryforwards. A valuation allowance is established when management determines that it is more likely than not that all or a portion of
a deferred tax asset will not be realized. For the fiscal year ended March 31, 2023, Orion recognized a valuation allowance for all of its
net deferred tax assets.

ASC 740, Income Taxes, also prescribes a recognition threshold and measurement attribute for the financial statement recognition
and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must
be more-likely-than-not to be sustained upon examination. Orion has classified the amounts recorded for uncertain tax benefits in the
balance sheet as other liabilities (non-current) to the extent that payment is not anticipated within one year. Orion recognizes penalties
and interest related to uncertain tax liabilities in income tax expense. Penalties and interest are immaterial and are included in the
unrecognized tax benefits.

Stock Based Compensation

Orion’s share-based payments to employees are measured at fair value and are recognized against earnings, on a straight-line basis

over the requisite service period.

Orion accounts for stock-based compensation in accordance with ASC 718, Compensation - Stock Compensation. Under the fair
value recognition provisions of ASC 718, stock-based compensation is measured at the grant date based on the fair value of the award
and is recognized as expense ratably over the requisite service period. As more fully described in Note 17 – Stock Options and Restricted
Shares, Orion currently awards non-vested restricted stock (and in some cases, in conjunction with associated cash award accounted for
as a liability) to employees, executive officers and directors.

Acquisition Related Costs

Acquisition related costs includes legal fees, consulting and success fees, and other integration related costs.

Concentration of Credit Risk and Other Risks and Uncertainties

Orion’s cash is primarily deposited with one financial institution. At times, deposits in these institutions exceed the amount of
insurance provided on such deposits. Orion has not experienced any losses in such accounts and believes that it is not exposed to any
significant financial institution viability risk on these balances.

Orion purchases components necessary for its lighting products, including ballasts, lamps and LED components, from multiple

suppliers. For fiscal 2023, 2022 and 2021, no supplier accounted for more than 10% of total cost of revenue.

In fiscal 2023, one customer accounted for 16.2% of revenue. In fiscal 2022, one customer accounted for 49.1% of total revenue.
In fiscal 2021, one customer accounted for 56.0% of total revenue. The revenue from this customer is recorded in Orion's OSG segment.

As of March 31, 2023, one customer accounted for 10.8% of accounts receivable. As of March 31, 2022, two customers accounted

for 11.8 % and 10.4 % of accounts receivable, respectively.

Recent Accounting Pronouncements

Issued: Not Yet Adopted

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit
Losses on Financial Instruments (“ASU 2016-13”), which requires an entity to assess impairment of its financial instruments based on
its estimate of expected credit losses. Since the issuance of ASU 2016-13, the FASB released several amendments to improve and clarify
the implementation guidance. The provisions of ASU 2016-13 and the related amendments are effective for Orion for fiscal years (and
interim reporting periods within those years) beginning after December 15, 2022. Entities are required to apply these changes through a
cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective.
Orion does not anticipate the impact of adoption of this standard will be material on its consolidated statements of operations, cash
flows, and the related footnote disclosures.

In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and
Contract Liabilities from Contracts with Customers (“ASU 2021-08”), which requires an entity to use the guidance in ASC 606, Revenue
from Contracts with Customers, rather than using fair value, when recognizing and measuring contract assets and contract liabilities
related to customer contracts assumed in a business combination. The provisions of ASU 2021-08 are effective for Orion for fiscal years
(and interim reporting periods within those years) beginning after December 15, 2022. Orion is currently evaluating the impact of
adoption of this standard on its consolidated balance sheet.

NOTE 3 — REVENUE

Revenue Recognition

See Note 3 – Summary of Significant Accounting Policies for a discussion of Orion’s accounting policies related to revenue

recognition.

Contract Fulfillment Costs

Costs associated with product sales are accumulated in inventory as the fixtures are manufactured and are transferred to Cost of
product revenue at the time revenue is recorded. See Note 6 – Inventories. Costs associated with installation sales are expensed as
incurred.

Disaggregation of Revenue

Orion’s Product revenue includes revenue from contracts with customers accounted for under the scope of ASC 606 and revenue
which is accounted for under other guidance. For fiscal year 2023, Product revenue included $2.8 million derived from sales-type leases
for light fixtures, $0.1 million derived from the sale of tax credits generated from Orion’s legacy operation for distributing solar energy,
and $0.1 million derived from the amortization of federal grants received in 2010 and 2011 as reimbursement for a portion of the costs
to construct the legacy solar facilities which are not under the scope of ASC 606. All remaining Product revenue, and all Service revenue,
are derived from contracts with customers as defined in ASC 606.

The primary end-users of Orion’s lighting products and services are (a) the federal government, and (b) commercial or industrial

companies.

The federal government obtains Orion products and services primarily through turnkey project sales that Orion makes to a select
group of contractors who focus on the federal government. Revenues associated with government end-users are primarily included in
the Orion Engineered Systems Division segment.

Commercial or industrial end-users obtain Orion products and services through turnkey project sales or by purchasing products
either direct from Orion or through distributors or energy service companies ("ESCOs"). Revenues associated with commercial and
industrial end-users are included within each of Orion’s segments, dependent on the sales channel.

See Footnote 17 - Segment Data, for additional discussion concerning Orion’s reportable segments.

The following table provides detail of Orion’s total revenues for the year ended March 31, 2023 (dollars in thousands):

Revenue from contracts with customers:
Lighting product and installation
Maintenance Services
Electric Vehicles
Solar energy related revenues
Total revenues from contracts with customers
Revenue accounted for under other guidance
Total revenue

Cash Flow Considerations

Year Ended March 31, 2023
Total
Services

Product

Year Ended March 31, 2022
Total
Services

Product

Year Ended March 31, 2021
Total
Services

Product

$ 46,500
3,266
4,479
—
54,245
2,965
$ 57,210

7,088
11,289
1,796
—
20,173
—
$ 20,173

$ 53,588
14,555
6,275
—
74,418
2,965
$ 77,383

$ 89,827
573
—
42
90,442
1,447
$ 91,889

$ 27,242
5,252
—
—
32,494
—
$ 32,494

$ 117,069
5,825
—
42
122,936
1,447
$ 124,383

$ 84,659
—
—
57
84,716
2,948
$ 87,664

$ 29,081
95
—
—
29,176
—
$ 29,176

$ 113,740
95
—
57
113,892
2,948
$ 116,840

Material only orders are short-term in nature generally having terms of significantly less than one year. We record revenue from
these contracts when the customer obtains control of those goods, which is generally consistent with the payment due date. There is not
a significant impact on the nature, amount, timing, and uncertainty of revenue or cash flows based on when control transfers.

Turnkey projects and repair services provided to commercial or industrial companies typically span between one week to three
months. Customer payment requirements for these projects vary by contract. Some contracts provide for customer payments for products
and services as they are delivered, other contracts specify that the customer will pay for the project in its entirety upon completion of
the installation.

Turnkey projects where the end-user is the federal government typically span a three to six-month period. The contracts for these

sales often provide for monthly progress payments equal to ninety percent (90%) of the value provided by Orion during the month.

Orion provides long-term financing to one customer who frequently engages Orion in large turnkey projects that span between
three and nine months. The customer executes an agreement providing for monthly payments of the contract price, plus interest, over a
five-year period. The total transaction price in these contracts is allocated between product and services in the same manner as all other
turnkey projects. The portion of the transaction associated with the installation is accounted for consistently with all other installation
related performance obligations. The portion of the transaction associated with the sale of the multiple individual light fixtures is
accounted for as sales-type leases in accordance with the guidance for leases. Revenues associated with the sales-type leases are included
in Product revenue and recorded for each fixture separately based on the customer’s monthly acknowledgment that specified fixtures
have been installed and are operating as specified.

The payments associated with these transactions that are due during the twelve months subsequent to March 31, 2023 are included
in Accounts receivable, net in Orion’s Consolidated Balance Sheets. The remaining amounts due that are associated with these
transactions are included in Long-term accounts receivable in Orion’s Consolidated Balance Sheets. As of March 31, 2023, there were
no such transactions included in Long-term accounts receivable.

The customer’s monthly payment obligation commences after completion of the turnkey project. Orion generally sells the
receivable from the customer to a financial institution either during, or shortly after completion of, the installation period. Upon
execution of the receivables purchase / sales agreement, all amounts due from the customer are included in Revenues earned but not
billed on Orion’s Consolidated Balance Sheets until cash is received from the financial institution. The financial institution releases
funds to Orion based on the customer’s monthly acknowledgment of the progress Orion has achieved in fulfilling its installation
obligation. Orion provides the progress certifications to the financial institution one month in arrears.

The total amount received from the sales of these receivables during the twelve months ended March 31, 2023, 2022, and 2021
was $6.3 million, $2.8 million and $5.1 million, respectively. Orion’s losses on these sales aggregated to $0.1 million, $13 thousand and
$0.1 million for the twelve months ended March 31, 2023, 2022, and 2021, respectively, and are included in Interest expense in the
Consolidated Statements of Operations.

Practical Expedients and Exemptions

Orion expenses sales commissions when incurred because the amortization period is one year or less. These costs are recorded

within Sales and marketing expense. There are no other capitalizable costs associated with obtaining contracts with customers.

Orion’s performance obligations related to lighting fixtures typically do not exceed nine months in duration. As a result, Orion
has elected the practical expedient that provides an exemption to the disclosure requirements regarding information about value assigned
to remaining performance obligations on contracts that have original expected durations of one year or less.

Orion also elected the practical expedient that permits companies to not disclose quantitative information about the future revenue

when revenue is recognized as invoices are issued to customers for services performed.

Other than the turnkey projects which result in sales-type leases discussed above, Orion generally receives full payment for
satisfied performance obligations in less than one year. Accordingly, Orion does not adjust revenues for the impact of any potential
significant financing component as permitted by the practical expedients provided in ASC 606.

Contract Balances

A receivable is recognized when Orion has an enforceable right to payment in accordance with contract terms and an invoice has

been issued to the customer. Payment terms on invoiced amounts are typically 30 days from the invoice date.

Revenue earned but not billed represents revenue that has been recognized in advance of billing the customer, which is a common
practice in Orion contracts for turnkey installations and repairs / replacement services. Once Orion has an unconditional right to
consideration under these contracts, Orion typically bills the customer accordingly and reclassifies the amount to Accounts receivable,
net. Revenue earned but not billed as of March 31, 2023 includes $0 and March 31, 2022 includes $0.5 million, respectively, which was
not derived from contracts with customers and therefore not classified as a contract asset as defined by the standards. The change in
contract assets is due to lower fiscal 2023 revenue and timing of project completions and invoicing. This was partially offset by the
acquisition of Voltrek. As of March 31, 2023, Voltrek had $0.5 million of contract assets.

Deferred revenue, current as of March 31, 2023, includes $0.5 million of contract liabilities which represent consideration received

from a new customer contract on which installation has not yet begun and Orion has not fulfilled the promises included.

Deferred revenue, long-term consists of the unamortized portion of the funds received from the federal government in 2010 and
2011 as reimbursement for the costs to build the two facilities related to the PPAs. As the transaction is not considered a contract with
a customer, this value is not a contract liability as defined by the new standards.

The following chart shows the balance of Orion’s receivables arising from contracts with customers, contract assets and contract

liabilities as of March 31, 2023, and March 31, 2022 (dollars in thousands):

Accounts receivable, net
Contract assets
Contract liabilities

March 31, 2023

March 31, 2022

$
$
$

13,728
1,320
480

$
$
$

11,899
1,966
—

NOTE 4 — ACCOUNTS RECEIVABLE

Orion’s accounts receivable are due from companies in the commercial, governmental, industrial and agricultural industries, as
well as wholesalers. Credit is extended based on an evaluation of a customer’s financial condition. Generally, collateral is not required
for end users; however, the payment of certain trade accounts receivable from wholesalers is secured by irrevocable standby letters of
credit and/or guarantees. Accounts receivable are generally due within 30-60 days. Accounts receivable are stated at the amount Orion
expects to collect from outstanding balances. Orion provides for probable uncollectible amounts through a charge to earnings and a
credit to an allowance for doubtful accounts based on its assessment of the current status of individual accounts. Balances that are still
outstanding after Orion has used reasonable collection efforts are written off through a charge to the allowance for doubtful accounts
and a credit to accounts receivable. Orion's accounts receivable and allowance for doubtful accounts balances were as follows (dollars
in thousands):

Accounts receivable, gross
Allowance for doubtful accounts
Accounts receivable, net

2023

2022

13,814
(86)
13,728

11,907
(8)
11,899

NOTE 5 — INVENTORIES

Inventories consist of raw materials and components, such as drivers, metal sheet and coil stock and molded parts; work in process
inventories, such as frames and reflectors; and finished goods, including completed fixtures and systems, and accessories. All inventories
are stated at the lower of cost or net realizable value with cost determined using the first-in, first-out (FIFO) method. Orion reduces the
carrying value of its inventories for differences between the cost and estimated net realizable value, taking into consideration usage in
the preceding 9 to 12 months, expected demand, and other information indicating obsolescence. Orion records, as a charge to cost of
product revenue, the amount required to reduce the carrying value of inventory to net realizable value. As of March 31, 2023 and 2022,
Orion's inventory balances were as follows (dollars in thousands):

As of March 31, 2023

Raw materials and components
Work in process
Finished goods

Total

As of March 31, 2022

Raw materials and components
Work in process
Finished goods

Total

Cost

Excess and
Obsolescence
Reserve

Net

9,988
693
9,313
19,994

10,781
1,529
9,593
21,903

(1,094)
(135)
(560)
(1,789)

(1,140)
(267)
(664)
(2,071)

8,894
558
8,753
18,205

9,641
1,262
8,929
19,832

Costs associated with the procurement and warehousing of inventories, such as inbound freight charges and purchasing and

receiving costs, are also included in cost of product revenue.

NOTE 6 — PREPAID EXPENSES AND OTHER CURRENT ASSETS

As of March 31, 2023, and March 31, 2022, prepaid expenses and other current assets include the following (dollars in thousands):

Payroll tax credit
Other prepaid expenses
Total

March 31, 2023

March 31, 2022

— $

1,116
1,116

1,587
1,044
2,631

During fiscal 2022, Orion recorded a $1.6 million current asset for the anticipated employee retention payroll tax credit (“payroll
tax credit”), as expanded and extended by the American Rescue Plan Act of 2021. The credit was recorded as an offset to payroll
expense, in accordance with IAS 20, in the following income statement categories: $0.7 million in cost of product revenue, $0.1 million
in cost of service revenue, $0.3 million in general and administrative, $0.4 million in sales and marketing, and $0.1 million in research
and development expenses. The refund was collected in fiscal 2023.

NOTE 7 — PROPERTY AND EQUIPMENT

Property and equipment are stated at cost. Expenditures for additions and improvements are capitalized, while replacements,
maintenance and repairs, which do not improve or extend the lives of the respective assets, are expensed as incurred. Properties and
equipment sold, or otherwise disposed of, are removed from the property and equipment accounts, with gains or losses on disposal
credited or charged to income from operations.

Orion periodically reviews the carrying values of property and equipment for impairment in accordance with ASC 360, Property,
Plant and Equipment, if events or changes in circumstances indicate that the assets may be impaired. The estimated future undiscounted
cash flows expected to result from the use of the assets and their eventual disposition are compared to the assets' carrying amount to
determine if a write down to market value is required.

Property and equipment were comprised of the following (dollars in thousands):

Land and land improvements
Buildings and building improvements
Furniture, fixtures and office equipment
Leasehold improvements
Equipment leased to customers
Plant equipment
Vehicles
Construction in progress

Less: accumulated depreciation and amortization
Net property and equipment

March 31, 2023

March 31, 2022

433
9,491
7,782
540
4,997
11,234
720
37
35,234
(24,764)
10,470

433
9,491
7,650
490
4,997
11,130
796
3
34,990
(23,524)
11,466

Depreciation is recognized over the estimated useful lives of the respective assets, using the straight-line method. Orion recorded

depreciation expense of $1.4 million, $1.3 million and $1.2 million for the years ended March 31, 2023, 2022 and 2021, respectively.

Depreciable lives by asset category are as follows:

Land improvements
Buildings and building improvements
Furniture, fixtures and office equipment
Leasehold improvements
Equipment leased to customers under Power Purchase Agreements
Plant equipment
Vehicles

10-15 years
10-39 years
2-10 years
Shorter of asset life or life of lease
20 years
3-10 years
5-7 years

No interest was capitalized for construction in progress during fiscal 2023 or fiscal 2022.

As of December 31, 2022, due to a change in Orion's forecast, a triggering event occurred requiring Orion to evaluate the long-
lived assets in its enterprise asset group for impairment. The enterprise asset group includes the corporate assets that support the revenue
producing activities of other asset groups. Orion performed the recoverability test for the asset group by comparing its carrying value to
the group’s expected future undiscounted cash flows. Orion concluded that the undiscounted cash flows of the long-lived asset group
exceeded its carrying value. As such the asset group was deemed recoverable and no impairment was recorded.

NOTE 8 — LEASES

From time to time, Orion leases assets from third parties. Orion also leases certain assets to third parties. Effective April 1, 2019,

leases are accounted for, and reported upon, following the requirements of ASC 842, Leases.

Whether it is the lessee or the lessor, Orion’s determination of whether a contract includes a lease, and assessing how the lease
should be accounted for, is a matter of judgment based on whether the risks and rewards, as well as substantive control of the assets

specified in the contract, have been transferred from the lessor to the lessee. The judgment considers matters such as whether the assets
are transferred from the lessor to the lessee at the end of the contract, the term of the agreement in relation to the asset’s remaining
economic useful life, and whether the assets are of such a specialized nature that the lessor will not have an alternative use for such
assets at the termination of the agreement. Other matters requiring judgment are the lease term when the agreement includes renewal or
termination options and the interest rate used when initially determining the ROU asset and lease liability.

ROU assets represent Orion’s right to use an underlying asset for the lease term and lease liabilities represent Orion’s obligation
to make lease payments arising from the lease. Under ASC 842, both finance and operating lease ROU assets and lease liabilities for
leases with initial terms in excess of 12 months are recognized at the commencement date based on the present value of lease payments
over the lease term. When available, Orion uses the implicit interest rate in the lease when completing this calculation. However, as
most of Orion’s operating lease agreements generating ROU assets do not provide the implicit rate, Orion’s incremental borrowing rate
under its line of credit, adjusted for differences in duration and the relative collateral value in relation to the payment obligation, at the
commencement of the lease is generally used in this calculation. The lease term includes options to extend or renew the agreement, or
for early termination of the agreement, when it is reasonably certain that Orion will exercise such option. ROU assets are depreciated
using the straight-line method over the lease term.

Orion recognizes lease expense for leases with an initial term of 12 months or less, referred to as short term leases, on a straight-

line basis over the lease term.

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

Orion leases portions of its corporate headquarters to third parties; all such agreements have been, and continue to be, classified
as operating leases under the applicable authoritative accounting guidance. The assets being leased continue to be included in Property
and equipment, net. Lease payments earned are recorded as a reduction in administrative expenses.

Assets Orion Leases from Other Parties

On January 31, 2020, Orion entered into the current lease for its primary manufacturing and distribution facility in Manitowoc,
WI. The lease has a 10-year term, with the option to terminate after six years. The lease also has an option to renew for two additional
successive periods of five years each. The renewal option is not in the calculation of the right of use asset or liability as the company
has considered the termination option in the calculation. Orion is responsible for the costs of insurance and utilities for the facility. These
costs are considered variable lease costs. The agreement is classified as an operating lease.

In February 2014, Orion entered into a multi-year lease agreement for use of office space in a multi-use office building in
Jacksonville, Florida. The lease has since been extended, most recently during the first quarter of fiscal 2021, and presently terminates
on June 30, 2023. Subsequent to year-end, this lease was extended for another three-year term. The agreement is classified as an
operating lease.

We lease office space in Lawrence, Massachusetts. The lease presently terminates in October, 2026. The agreement is classified

as an operating lease.

We also lease office space in Pewaukee, Wisconsin. The lease has an option to renew one additional period of five years. The lease
presently terminates in December, 2026. The renewal option is not in the calculation of the right of use asset or liability as the company
has considered the termination option in the calculation. The agreement is classified as an operating lease.

Orion has leased other assets from third parties, principally office and production equipment. The terms of our other leases vary

from contract to contract and expire at various dates in the next five years.

The weighted average discount rate for Orion’s lease obligations as of March 31, 2023 is 5.4%. The weighted average remaining

lease term as of March 31, 2023 is 3.0 years.

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

Assets
Operating lease assets
Liabilities
Current liabilities

Operating lease liabilities

Non-current liabilities

Operating lease liabilities
Total lease liabilities

Balance sheet classification

March 31, 2023

March 31, 2022

Other long-term assets

Accrued expenses and other

Other long-term liabilities

2,174

823

1,826
2,649

2,440

768

2,271
3,039

Orion had operating lease costs of $1.6 million for the year ended March 31, 2023. This includes short-term leases and variable

lease costs, which are immaterial.

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

Maturity of Lease Liabilities
Fiscal 2024
Fiscal 2025
Fiscal 2026
Fiscal 2027
Thereafter
Total lease payments
Less: Interest
Present value of lease liabilities

Assets Orion Leases to Other Parties

Operating Leases
$

946
949
845
142
—
2,882
(233)
2,649

While Orion retains ownership of the light fixtures during the financing period, the transaction terms and the underlying economics
associated with used lighting fixtures results in Orion essentially ceding ownership of the lighting fixtures to the customer after
completion of the agreement. Therefore, the portions of the transaction associated with the sale of the multiple individual light fixtures
is accounted for as a sales-type lease under ASC 842.

Revenues, and production and acquisition costs, associated with sales-type leases are included in Product revenue and Costs of
product revenues in the Consolidated Statement of Operations. These amounts are recorded for each fixture separately based on the
customer’s monthly acknowledgment that specified fixtures have been installed and are operating as specified. The execution of the
acknowledgment is considered the commencement date as defined in ASC 842.

The following chart shows the amount of revenue and cost of sales arising from sales-type leases during the year ended March 31,

2023, 2022 and 2020 (dollars in thousands):

Product revenue
Cost of product revenue

March 31, 2023

March 31, 2022

March 31, 2021

2,818
2,771

1,169
1,073

2,758
2,512

The Consolidated Balance Sheet as of March 31, 2023 does not include a net investment in sales-type leases as all amounts due
from the customer associated with lighting fixtures that were acknowledged to be installed and working correctly prior to period end
were transferred to the financing institution prior to the respective balance sheet dates.

Other Agreements where Orion is the Lessor

Orion has leased unused portions of its corporate headquarters to third parties. The length and payment terms of the leases vary
from contract to contract and, in some cases, include options for the tenants to extend the lease terms. Annual lease payments are
recorded as a reduction in administrative operating expenses and were not material in the years ended March 31, 2023, 2022 and 2021.
Orion accounts for these transactions as operating leases.

NOTE 9 — GOODWILL AND OTHER INTANGIBLE ASSETS

Orion has $0.9 million of goodwill related to its purchase of Voltrek in the third quarter of fiscal 2023, which has an indefinite

life, and is assigned to the EV Charging operating segment.

Orion has $0.6 million of goodwill related to its purchase of Stay-Lite Lighting during fiscal year 2022, which has an indefinite
life, and is assigned to the Orion Services Group operating segment. Goodwill related to the Stay-Lite Lighting acquisition increased by
$0.2 million to $0.6 million as compared to March 31, 2022. This increase was due to updates to purchase accounting within the
measurement period.

See Note 18 – Acquisition for further discussion of the Stay-Lite Lighting and Voltrek acquisitions.

The costs of specifically identifiable intangible assets that do not have an indefinite life are amortized over their estimated useful

lives. Goodwill and intangible assets with indefinite lives are not amortized.

Amortizable intangible assets are amortized over their estimated economic useful life to reflect the pattern of economic benefits

consumed based upon the following lives and methods:

Patents
Licenses
Customer relationships

Vendor relationships

Developed technology

Tradename

10-17 years
7-13 years
5-8 years

5-8 years

8 years

5-10 years

Straight-line
Straight-line
Accelerated based upon the pattern of economic benefits
consumed
Accelerated based upon the pattern of economic benefits
consumed
Accelerated based upon the pattern of economic benefits
consumed
Straight-line

Intangible assets that have a definite life are evaluated for potential impairment whenever events or circumstances indicate that
the carrying value may not be recoverable based primarily upon whether expected future undiscounted cash flows are sufficient to
support the asset recovery. If the actual useful life of the asset is shorter than the estimated life, the asset may be deemed to be impaired
and accordingly a write-down of the value of the asset determined by a discounted cash flow analysis or shorter amortization period
may be required.

Indefinite lived intangible assets and goodwill are evaluated for impairment at least annually on the first day of Orion’s fiscal
fourth quarter, or when indications of potential impairment exist. This annual impairment review may begin with a qualitative test to
determine whether it is more likely than not that an indefinite lived intangible asset's carrying value is greater than its fair value. If the
qualitative assessment reveals that asset impairment is more likely than not, a quantitative impairment test is performed comparing the
fair value of the indefinite lived intangible asset to its carrying value. Alternatively, the qualitative test may be bypassed and the
quantitative impairment test may be immediately performed. If the fair value of the indefinite lived intangible asset exceeds its carrying
value, the indefinite lived intangible asset is not impaired and no further review is performed. If the carrying value of the indefinite lived

intangible asset exceeds its fair value, an impairment loss would be recognized in an amount equal to such excess. Once an impairment
loss is recognized, the adjusted carrying value becomes the new accounting basis of the indefinite lived intangible asset.

Orion performed a qualitative assessment in conjunction with its annual impairment test of its indefinite lived intangible assets as
of January 1, 2023. This qualitative assessment considered Orion’s operating results for the first nine months of fiscal 2023 in
comparison to prior years as well as its anticipated fourth quarter results and fiscal 2024 plan. As a result of the conditions that existed
as of the assessment date, an asset impairment was not deemed to be more likely than not and a quantitative analysis was not required.

Orion performed a qualitative assessment in conjunction with its annual impairment test of its goodwill as of January 1, 2023.
This qualitative assessment considered Orion segment's operating results for the first nine months of fiscal 2023 in comparison to prior
years as well as its anticipated fourth quarter results and fiscal 2024 plan. As a result of the conditions that existed as of the assessment
date, an asset impairment was not deemed to be more likely than not and a quantitative analysis was not required.

The components of, and changes in, the carrying amount of other intangible assets were as follows (dollars in thousands):

Amortized Intangible Assets
Patents
Licenses
Trade name and trademarks
Customer relationships
Vendor relationships
Developed technology
Total Amortized Intangible Assets

March 31, 2023

March 31, 2022

Gross
Carrying
Amount

Accumulated
Amortization

Net

Weighted
Average
Useful
Life

Gross
Carrying
Amount

Accumulated
Amortization

Net

2,521 $
58
464
5,509
2,600
900
$ 12,052 $

(1,930) $
(58)
(73)
(3,914)
(183)
(900)

591
—
391
1,595
2,417
—
(7,058) $ 4,994

8.1 $
—
4.3
3.9
6.5
—
5.6 $

2,652 $
58
118
4,178
—
900
7,906 $

(1,932) $
(58)
(6)
(3,618)
—
(900)
(6,514) $

720
—
112
560
—
—
1,392

Indefinite-lived Intangible Assets
Trade name and trademarks
Total Indefinite-lived Intangible Assets

$
$

1,010 $
1,010 $

— $ 1,010
— $ 1,010

Total Other Intangible Assets

$ 13,062 $

(7,058) $ 6,004

$
$

1,012 $
1,012 $

— $
— $

1,012
1,012

8,918 $

(6,514) $

2,404

The estimated amortization expense for each of the next five years is shown below (dollars in thousands):

Fiscal 2024
Fiscal 2025
Fiscal 2026
Fiscal 2027
Fiscal 2028
Thereafter

1,093
1,084
846
588
517
866
4,994

Amortization expense is set forth in the following table (dollars in thousands):

Amortization included in cost of sales:
Patents
Total
Amortization included in operating expenses:
Customer relationships
Vendor relationships
Developed technology
Tradename
Total
Total amortization of intangible assets

2023

Fiscal Year Ended March 31,
2022

2021

$
$

107
107

296
183
—
67
546
653

$
$

183
183

27
—
11
6
44
227

$
$

175
175

47
—
68
—
115
290

Orion’s management periodically reviews the carrying value of patent applications and related costs. When a patent application is
probable of being unsuccessful or a patent is no longer in use, Orion writes off the remaining carrying value as a charge to general and
administrative expense within its Consolidated Statements of Operations. In fiscal years 2023, 2022, and 2021, write-offs were
immaterial.

NOTE 10 — ACCRUED EXPENSES AND OTHER

As of March 31, 2023 and March 31, 2022, Accrued expenses and other included the following (dollars in thousands):

Accrued acquisition earn-out
Other accruals
Compensation and benefits
Credits due to customers
Accrued project costs
Warranty
Sales tax
Legal and professional fees
Sales returns reserve

Total

March 31, 2023

March 31, 2022

3,000
2,598
1,412
1,310
1,218
497
274
172
71
10,552

234
1,987
1,668
1,209
2,215
728
157
106
123
8,427

Accrued earn-out is related to recent acquisitions. Refer to discussion of acquisitions at Note 18 – Acquisitions.

Orion generally offers a limited warranty of one to 10 years on its lighting products including the pass through of standard
warranties offered by major original equipment component manufacturers. The manufacturers’ warranties cover lamps, ballasts, LED
modules, LED chips, LED drivers, control devices, and other fixture related items, which are significant components in Orion's lighting
products.

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

Beginning of year
Accruals
Warranty claims (net of vendor reimbursements)
Ending balance

March 31,

2023

2022

860
382
(596)
646

1,009
434
(583)
860

NOTE 11 — NET (LOSS) INCOME PER COMMON SHARE

Basic net (loss) income per common share is computed by dividing net (loss) income attributable to common shareholders by the

weighted-average number of common shares outstanding for the period and does not consider common stock equivalents.

Diluted net (loss) income per common share reflects the dilution that would occur if stock options were exercised and restricted
shares vested. In the computation of diluted net (loss) income per common share, Orion uses the treasury stock method for outstanding
options and restricted shares. Net (loss) income per common share is calculated based upon the following shares:

Numerator:
Net (loss) income (dollars in thousands)
Denominator:
Weighted-average common shares outstanding
Weighted-average effect of assumed conversion of stock options and
restricted stock
Weighted-average common shares and share equivalents outstanding
Net (loss) income per common share:

Basic
Diluted

2023

Fiscal Year Ended March 31,
2022

2021

(34,341)

6,091

26,134

31,703,712

31,018,356

30,634,553

—
31,703,712

276,217
31,294,573

669,174
31,303,727

$
$

(1.08)
(1.08)

$
$

0.20
0.19

$
$

0.85
0.83

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

Common stock options
Restricted shares
Total

NOTE 12 — LONG-TERM DEBT

2023

March 31,
2022

2021

—
—
—

—
17,803
17,803

Long-term debt as of March 31, 2023 and 2022 consisted of the following (dollars in thousands):

Revolving credit facility
Equipment debt obligations
Total long-term debt
Less current maturities
Long-term debt, less current maturities

Revolving Credit Agreement

March 31,

2023

2022

10,000
20
10,020
(17)
10,003

—
—
—

—
35
35
(16)
19

On December 29, 2020, Orion entered into a new Loan and Security Agreement with Bank of America, N.A., as lender (the
“Credit Agreement”). The Credit Agreement replaced Orion’s prior $20.15 million secured revolving credit and security agreement
dated as of October 26, 2018, as amended, by and among Orion and Western Alliance Bank, National Association, as lender (the “Prior
Credit Agreement”). The replacement of the Prior Credit Agreement with the Credit Agreement provides Orion with increased financing
capacity and liquidity to fund its operations and implement its strategic plans.

The Credit Agreement provides for a five-year $25.0 million revolving credit facility (the “Credit Facility”) that matures on
December 29, 2025. Borrowings under the Credit Facility are subject to a borrowing base requirement based on eligible receivables,
inventory and cash. As of March 31, 2023, the borrowing base of the Credit Facility supports $17.3 million of availability, with $7.3
million remaining availability net of $10.0 million borrowed.

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

Borrowings under the Credit Agreement are permitted in the form of SOFR or prime rate-based loans and generally bear interest
at floating rates plus an applicable margin determined by reference to Orion’s availability under the Credit Agreement. Among other
fees, Orion is required to pay an annual facility fee and a fee on the unused portion of the Credit Facility.

The Credit Agreement also contains customary events of default and other covenants, including certain restrictions on Orion’s
ability to incur additional indebtedness, consolidate or merge, enter into acquisitions, pay any dividend or distribution on Orion’s stock,
redeem, retire or purchase shares of Orion’s stock, make investments or pledge or transfer assets. If an event of default under the Credit
Agreement occurs and is continuing, then the lender may cease making advances under the Credit Agreement and declare any
outstanding obligations under the Credit Agreement to be immediately due and payable. In addition, if Orion becomes the subject of
voluntary or involuntary proceedings under any bankruptcy or similar law, then any outstanding obligations under the Credit Agreement
will automatically become immediately due and payable.

Orion did not incur any early termination fees in connection with the termination of the Prior Credit Agreement, but did recognize
a loss on debt extinguishment of $0.1 million on the write-off of unamortized debt issue costs related to the Prior Credit Agreement.
The Prior Credit Agreement was scheduled to mature on October 26, 2021.

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

As of March 31, 2023, Orion is in compliance with all debt covenants.

Equipment Debt Obligation

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

Aggregate Maturities

As of March 31, 2023, aggregate maturities of long-term debt were as follows (dollars in thousands):

Fiscal 2024
Fiscal 2025
Fiscal 2026

17
3
10,000
10,020

NOTE 13 — INCOME TAXES

The total provision (benefit) for income taxes consists of the following for the fiscal years ended (dollars in thousands):

Current
Deferred
Total

Federal, Current
Federal, Deferred
Total Federal
State, Current
State, Deferred
Total State
Total

2023

Fiscal Year Ended March 31,
2022

2021

97
17,881
17,978

179
1,980
2,159

244
(19,860)
(19,616)

2023

2022

2021

— $

14,557
14,557
97
3,324
3,421
17,978

1,658
1,658
179
322
501
2,159

—
(16,217)
(16,217)
244
(3,643)
(3,399)
(19,616)

A reconciliation of the statutory federal income tax rate and effective income tax rate is as follows:

Statutory federal tax rate
State taxes, net
State tax credits, net
Change in valuation reserve
Permanent items
Change in tax contingency reserve
Equity compensation cancellations
State return to provision
Other, net
Effective income tax rate

2023

Fiscal Year Ended March 31,
2022

2021

21.0%
4.0%
(1.9)%
(131.3)%
(1.0)%
(0.1)%
(0.1)%
(0.9)%
0.4%
(109.9)%

21.0%
5.2%
—%
(0.4)%
(1.9)%
0.1%
0.1%
2.3%
(0.2)%
26.2%

21.0%
5.3%
—%
(321.4)%
(3.4)%
(0.5)%
0.6%
(1.7)%
(0.9)%
(301.0)%

The net deferred tax assets reported in the accompanying consolidated financial statements include the following components

(dollars in thousands):

Deferred tax assets:
Inventory, accruals and reserves
Interest deduction carry-forward
Federal and state operating loss carry-forwards
Tax credit carry-forwards
Equity compensation
Deferred revenue
Lease liability
Intangible assets
Other
Total deferred tax assets
Valuation allowance
Deferred tax assets, net of valuation allowance

Deferred tax liabilities:
Lease ROU asset
Fixed assets
Intangible assets
Total deferred tax liabilities

March 31,

2023

2022

680
71
18,849
1,537
188
25
669
984
798
23,801
(22,731)
1,070

(549)
(598)
—
(1,147)

809
—
16,485
1,847
231
29
670
—
247
20,318
(1,249)
19,069

(518)
(529)
(217)
(1,264)

Total net deferred tax (liabilities) assets

(77)

17,805

For fiscal year ended March 31, 2023, Orion’s deferred tax assets were primarily the result of U.S. NOL and tax credit
carryforwards. Orion recorded a valuation allowance of $22.7 million and $1.2 million against its net deferred tax asset balance as of
March 31, 2023 and March 31, 2022, respectively, due to the uncertainty of its realization value in the future. Orion realized a 36-month
cumulative loss as of March 31, 2023 and the accounting forecast, as revised in the previous quarter, projects losses in the near term. As
such, Orion management has concluded that it is more likely than not that the domestic deferred tax assets will not be realized and an
increase to the valuation allowance has been recorded in the third quarter, which increased tax expense by $17.8 million.

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

As of March 31, 2023, Orion has federal NOL carryforwards of approximately $71.4 million, state NOL carryforwards of
approximately $66.1 million, and foreign NOL carryforwards of approximately $0.8 million. Orion also had federal tax credit
carryforwards of approximately $1.3 million and state tax credits of $0.3 million. All of Orion's tax credit carryforwards and $118.6
million of its NOL carryforwards will begin to expire in varying amounts between 2023 and 2033. The remaining $19.7 million of its
federal and state NOL carryforwards are not subject to time restrictions but may only be used to offset 80% of adjusted taxable income.
Orion believes it is more likely than not that the benefit from its state credit carryforwards, foreign NOL carryforwards, federal credit
carryforwards, and state loss carryforwards will not be realized. In recognition of this risk, Orion has provided a net valuation allowance
of $22.7 million on the deferred tax assets related to these carryforwards.

Generally, a change of more than 50% in the ownership of Orion's stock, by value, over a three-year period constitutes an
ownership change for federal income tax purposes as defined under Section 382 of the Internal Revenue Code. As a result, Orion's
ability to use its net operating loss carryforwards, attributable to the period prior to such ownership change, to offset taxable income can
be subject to limitations in a particular year, which could potentially result in increased future tax liability for Orion. There was no
limitation of NOL carryforwards that occurred for fiscal 2023, fiscal 2022, or fiscal 2021.

Orion records its tax provision based on the respective tax rules and regulations for the jurisdictions in which it operates. Where
Orion believes that a tax position is supportable for income tax purposes, the item is included in their income tax returns. Where treatment
of a position is uncertain, a liability is recorded based upon the expected most likely outcome taking into consideration the technical
merits of the position based on specific tax regulations and facts of each matter. These liabilities may be affected by changing
interpretations of laws, rulings by tax authorities, or the expiration of the statute of limitations.

Orion files income tax returns in the United States federal jurisdiction and in several state jurisdictions. The Company's federal
tax returns for tax years beginning April 1, 2019 or later are open. For states in which Orion files state income tax returns, the statute of
limitations is generally open for tax years beginning April 1, 2019 or later.

State income tax returns are generally subject to examination for a period of 3 to 5 years after filing of the respective return. The
state effect of any federal changes remains subject to examination by various states for a period of up to two years after formal
notification to the states. Orion currently has no state income tax return positions in the process of examination, administrative appeals
or litigation.

Uncertain tax positions

As of March 31, 2023, the balance of gross unrecognized tax benefits was approximately $0.2 million, all of which would affect

Orion’s effective tax rate if recognized.

Orion has classified the amounts recorded for uncertain tax benefits in the balance sheet as other liabilities (non-current) to the
extent that payment is not anticipated within one year. Orion recognizes penalties and interest related to uncertain tax liabilities in
income tax expense. Penalties and interest are included in the unrecognized tax benefits. Accrued interest and penalties for such
unrecognized tax benefits as of March 31, 2023 and 2022 were $0.1 million. Orion had the following unrecognized tax benefit activity
(dollars in thousands):

Unrecognized tax benefits as of beginning of fiscal year
Additions based on tax positions related to the current period positions
Additions/(reductions) for tax positions of prior years
Unrecognized tax benefits as of end of fiscal year

215
1
9
225

285
39
(109)
215

259
123
(97)
285

2023

Fiscal Year Ended March 31,
2022

2021

NOTE 14 — COMMITMENTS AND CONTINGENCIES

Purchase Commitments

Orion enters into non-cancellable purchase commitments for certain inventory items in order to secure better pricing and ensure
materials on hand. As of March 31, 2023, Orion had entered into $9.0 million of purchase commitments related primarily to inventory
purchases. Orion expects the purchase commitments to be fulfilled within the next 12 months.

Retirement Savings Plan

Orion sponsors a tax deferred retirement savings plan that permits eligible employees to contribute varying percentages of their
compensation up to the limit allowed by the Internal Revenue Service. This plan also provides for discretionary contributions by Orion.
In fiscal 2023, Orion made matching contributions of $0.2 million. In both fiscal 2022 and 2021, Orion made matching contributions of
approximately $0.1 million.

Litigation

Orion is subject to various claims and legal proceedings arising in the ordinary course of business. As of the date of this report,
Orion does not believe that the final resolution of any of such claims or legal proceedings would have a material adverse effect on its
future results of operations. In addition to ordinary-course litigation, Orion was a party to the proceedings described below.

State Tax Assessment

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

NOTE 15 — SHAREHOLDERS’ EQUITY

Shareholder Rights Plan

On January 3, 2019, Orion entered into Amendment No. 1 to the Rights Agreement, which amended the Rights Agreement dated
as of January 7, 2009 and extended its terms by three years to January 7, 2022. In December 2021, Orion’s Board of Directors announced
that it had decided to allow the Rights Agreement to terminate and expire by its terms on January 7, 2022.

Employee Stock Purchase Plan

In August 2010, Orion’s Board of Directors approved a non-compensatory employee stock purchase plan, or ESPP. The ESPP
authorizes 2,500,000 shares to be issued from treasury or authorized shares to satisfy employee share purchases under the ESPP. All
full-time employees of Orion are eligible to be granted a non-transferable purchase right each calendar quarter to purchase directly from
Orion up to $20,000 of Orion’s common stock at a purchase price equal to 100% of the closing sale price of Orion’s common stock on
The NASDAQ Capital Market on the last trading day of each quarter.

Sale of shares

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

In March 2021, Orion entered into an At Market Issuance Sales Agreement to undertake an “at the market” (ATM) public equity
capital raising program pursuant to which Orion may offer and sell shares of common stock, having an aggregate offering price of up to
$50 million from time to time through or to the Agent, acting as sales agent or principal. No share sales have been effected pursuant to
the ATM program through March 31, 2023.

NOTE 16 — STOCK OPTIONS AND RESTRICTED SHARES

At Orion’s 2019 annual meeting of shareholders held on August 7, 2019, Orion’s shareholders approved the Orion Energy
Systems, Inc. 2016 Omnibus Incentive Plan, as amended and restated (the “Amended 2016 Plan”). Approval of the Amended 2016 Plan
increased the number of shares of Orion’s common stock available for issuance under the Amended 2016 Plan from 1,750,000 shares
to 3,500,000 shares (an increase of 1,750,000 shares); added a minimum vesting period for all awards granted under the Amended 2016
Plan (with limited exceptions); and added a specific prohibition on the payment of dividends and dividend equivalents on unvested
awards. As of March 31, 2023, the number of shares available for grant under the Amended 2016 Plan was 545,146.

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

Prior to the 2016 Omnibus Incentive Plan, the Company maintained its 2004 Stock and Incentive Awards Plan, as amended,
which authorized the grant of cash and equity awards to employees (the “2004 Plan”). No new awards are being granted under the
2004 Plan; however, all awards granted under the 2004 Plan that are outstanding will continue to be governed by the 2004 Plan.
Forfeited awards originally issued under the 2004 Plan are canceled and are not available for subsequent issuance under the 2004 Plan
or under the Amended 2016 Plan.

Certain non-employee directors have elected to receive stock awards in lieu of cash compensation pursuant to elections made
under Orion’s non-employee director compensation program. The Amended 2016 Plan and the 2004 Plan also permit accelerated vesting
in the event of certain changes of control of Orion as well as under other special circumstances.

Orion historically granted stock options and restricted stock under the 2004 Plan. Orion has not issued stock options since fiscal

2014 and instead has issued restricted stock.

In fiscal 2023, Orion added performance conditions to a portion of the annual long-term incentive grants for fiscal 2023 for Orion's
executive compensation program. The performance-vesting restricted stock will vest to the extent Orion achieves revenue growth targets
over fiscal 2023-2025. Orion recognizes performance-vesting restricted stock expense ratably over the requisite service period based on
the likelihood of meeting the performance conditions. As of March 31, 2023, Orion has not recognized any stock-based compensation
for performance-vesting restricted stock.

The following amounts of stock-based compensation expense for restricted shares and options were recorded (dollars in

thousands):

Cost of product revenue
General and administrative
Sales and marketing
Research and development

2023

Fiscal Year Ended March 31,
2022

2021

4
1,596
8
4
1,612

5
793
12
3
813

The following table summarizes information with respect to outstanding stock options:

Number of
Shares

Weighted
Average
Exercise
Price

Outstanding at March 31, 2022

Granted
Exercised
Forfeited

Outstanding at March 31, 2023
Exercisable at March 31, 2023

142,428

$
— $
$
$
$
$

(26,646)
(42,646)
73,136
73,136

4
716
29
4
753

2.28
—
2.18
2.22
2.41
2.41

The following table summarizes the range of exercise prices on outstanding stock options at March 31, 2023:

$2.41

March 31, 2023
Weighted
Average
Remaining
Contractual
Life (Years)

Weighted
Average
Exercise
Price

0.16
0.16

2.41
2.41

Outstanding and
Vested Shares

73,136
73,136

The aggregate intrinsic value of outstanding stock options is $0 at March 31, 2023 based on the closing share price of $2.03.

The following table summarizes information with respect to performance-vesting restricted stock and time vesting-restricted stock

activity:

Balance at March 31, 2022
Shares issued
Shares vested
Shares forfeited
Shares outstanding at March 31, 2023
Per share price on grant date

Weighted
Average
Fair Value
Price

4.80
2.16
3.58
3.96
2.90

450,458
856,738
(536,622)
(27,120)
743,454
$1.82 - 2.18

$
$
$
$
$

During fiscal 2023, Orion recognized $1.6 million of stock-based compensation expense related to restricted shares.

As of March 31, 2023, 2022 and 2021, the weighted average grant-date fair value of restricted shares granted was $2.16, $5.55

and $4.27, respectively.

Unrecognized compensation cost related to non-vested common stock-based compensation as of March 31, 2023 is expected to

be recognized as follows (dollars in thousands):

Fiscal 2024
Fiscal 2025
Fiscal 2026
Thereafter
Total
Remaining weighted average expected term

NOTE 17 — SEGMENT DATA

704
467
503
—
1,674
2.0 years

Orion has the following business segments: Orion Services Group Division (“OSG”), Orion Distribution Services Division
(“ODS”), Orion U.S. Markets Division (“USM”) and Orion Electric Vehicle Charging Systems Division ("EV Division"). The
accounting policies are the same for each business segment as they are on a consolidated basis.

Orion Services Group Division

The OSG segment (a) develops and sells lighting products and provides construction and engineering services for Orion's
commercial lighting and energy management systems and (b) provides retailers, distributors and other businesses with maintenance,
repair and replacement services for the lighting and related electrical components deployed in their facilities. OSG provides engineering,
design, lighting products and in many cases turnkey solutions for large national accounts, governments, municipalities, schools and
other customers.

Orion Distribution Services Division

The ODS segment sells lighting products through manufacturer representative agencies and a network of North American

broadline electrical distributors and contractors.

Orion U.S. Markets Division

The USM segment sells commercial lighting systems and energy management systems to the wholesale contractor markets. USM

customers include ESCOs and contractors.

Orion Electric Vehicle Charging Division

Our EV Division segment offers leading electric vehicle charging expertise and provides turnkey installation solutions with

ongoing support to all commercial verticals.

Corporate and Other

Corporate and Other is comprised of operating expenses not directly allocated to Orion’s segments and adjustments to reconcile

to consolidated results.

(dollars in thousands)
Segments:
Orion Services Group
Orion Distribution Services
Orion U.S. Markets
Orion Electric Vehicle Charging Systems
Corporate and Other

Segments:
Orion Services Group
Orion Distribution Services
Orion U.S. Markets
Orion Electric Vehicle Charging Systems
Corporate and Other

Revenues
For the year ended March 31,
2022

2023

2021

Operating Income (Loss)
For the year ended March 31,
2022

2023

2021

38,002
15,395
17,710
6,275
—
77,383

82,568
22,209
19,606
—
—
124,383

84,243
21,122
11,475
—
—
116,840

Depreciation and Amortization
For the year ended March 31,
2022

2023

2021

987
195
229
465
219
2,095

997
205
185
—
229
1,616

913
231
128
—
208
1,480

(6,982) $
(186)
1,605
(4,133)
(6,289)
(15,985) $

6,462
3,114
3,963
—
(5,148)
8,391

7,472
2,430
1,683
—
(4,749)
6,836

Capital Expenditures
For the year ended March 31,
2022

2023

2021

227
17
21
5
316
586

224
63
58
—
153
498

516
158
107
—
121
902

Total Assets

March 31, 2023

March 31, 2022

19,167
6,021
10,191
11,502
24,698
71,579

26,642
6,723
8,017
—
45,435
86,817

Orion’s revenue outside the United States was $0.2 million in fiscal 2023 and $0.0 million in fiscal 2022 and fiscal 2021,

respectively. Orion has no long-lived assets outside the United States.

Fiscal 2022 Operating Income above includes a payroll tax credit, in accordance with IAS 20.

NOTE 18 — ACQUISITION

Acquisition of Voltrek

Effective on October 5, 2022, Orion acquired all the membership interests of Voltrek, an electric vehicle charging station solutions
provider for a purchase price of $5.0 million in cash and $1.0 million of shares of common stock of Orion, subject to normal and
customary closing adjustments of $0.9 million (the “Voltrek Acquisition”). In addition, depending upon the relative EBITDA growth
of Voltrek’s business in fiscal 2023, 2024 and 2025, Orion could pay up to an additional $3.0 million, $3.5 million and $7.15 million,
respectively, in earn-out payments. These compensatory payments do not fall within the scope of ASC 805, Business Combinations,
and will be expensed over the course of the earn-out periods to the extent they are earned. As of March 31, 2023, Orion recorded $3.0
million to accrued expenses for the fiscal 2023 earn-out opportunity and an additional $1.0 million to other long-term liabilities for the

cumulative potential earn-out opportunity which would be paid in fiscal 2026. The Voltrek Acquisition was funded with cash and Orion
shares. Voltrek operates as Voltrek, an Orion Energy Systems business. The Voltrek Acquisition leverages Orion’s project management
and maintenance expertise into a rapidly growing sector.

Orion has accounted for the Voltrek Acquisition as a business combination. Orion has preliminarily allocated the purchase price
of approximately $6.9 million to the assets acquired and liabilities assumed at estimated fair values, and the excess of the purchase price
over the aggregate fair values is recorded as goodwill. The purchase price and closing adjustments were paid in cash and 620,067 shares
of common stock with a total fair market value of $1.0 million, which is recorded in the opening balance sheet at fair value of $0.8
million, the discount on which is due to lock-up requirements on the shares. Orion is in the process of finalizing third party valuations
of intangible assets.

The following table summarizes the purchase price allocation for Voltrek, including any adjustments during the measurement

period:

(in thousands)
Cash
Accounts receivable
Revenue earned but not billed
Inventory
Prepaid expenses and other current assets
Property and equipment
Goodwill
Other intangible assets
Other long-term assets
Accounts payable
Accrued expenses and other
Other long-term liabilities
Net purchase consideration

Preliminary
Opening Balance
Sheet

Adjustments

Adjusted
Opening Balance
Sheet

416
1,438
365
880
39
4
861
4,200
211
(1,199)
(286)
(180)
6,749

— $
(75)
(40)
—
—
—
59
100
12
66
—
—
122

416
1,363
325
880
39
4
920
4,300
223
(1,133)
(286)
(180)
6,871

Goodwill recorded from the Voltrek Acquisition is attributable to the skillset of the acquired workforce. The goodwill resulting
from the Voltrek Acquisition is expected to be deductible for tax purposes. The intangible assets include amounts recognized for the
fair value of the trade name, vendor relationship and customer relationships.

The tradename intangible asset was valued using a relief from royalty method. The significant assumptions used include the

estimated revenue and royalty rate, among other factors.

The vendor relationship intangible asset was valued using the income approach - excess earnings method. The significant

assumptions include estimated revenue, cost of goods sold, and probability of renewal, among other factors.

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

The categorization of the framework used to measure fair value of the intangible assets is considered to be within the Level 3

valuation hierarchy due to the subjective nature of the unobservable inputs used.

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

Tradename
Vendor relationship
Customer relationships

Estimated
Fair Value

Estimated Useful Life
(Years)

$
$
$

300
2,600
1,400

5
7
3

Voltrek's post-acquisition results of operations since October 5, 2022 are included in Orion’s Consolidated Statements of

Operations. The operating results of Voltrek are included in the EV Division segment. See note 17 - Segments, for results.

Acquisition of Stay-Lite Lighting

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

Orion has accounted for this transaction as a business combination. Orion has allocated the purchase price of approximately $4.3
million, which included an estimate of the earn-out liability of $0.2 million and $0.1 million for the working capital adjustment received
in the first quarter fiscal 2023, to the assets acquired and liabilities assumed at estimated fair values, and the excess of the purchase price
over the aggregate fair values is recorded as goodwill. The remaining was $4.0 million funded with cash. Orion could pay up to $0.7
million in earn-out related purchase price, which is based on performance during the 2022 and 2023 calendar years. During fiscal 2023,
the earn-out liability of $0.2 million was reversed, through acquisition related costs, based on Stay-Lite Lighting's actual performance
during fiscal 2023 and Orion's assessment of expected performance in fiscal 2024.

The following table summarizes the purchase price allocation for Voltrek, including any adjustments during the measurement

period:

Preliminary
Opening Balance
Sheet

Adjustments

Adjusted
Opening
Balance Sheet

95
2,690
342
504
41
958
350
696
537
(965)
(550)
(412)
4,286

— $
—
—
—
—
(233)
214
(23)
—
—
58
1
17

95
2,690
342
504
41
725
564
673
537
(965)
(492)
(411)
4,303

Goodwill recorded from the Stay-Lite Acquisition is attributable to the expected synergies from the business combination. The

goodwill resulting from the Stay-Lite Acquisition is deductible for tax purposes. The intangible assets include amounts recognized for
the fair value of the trade name and customer relationships. The fair value of the intangible assets was determined based upon the
income (discounted cash flow) approach.

The following table presents the details of the intangible assets acquired at the date of Stay-Lite Acquisition (dollars in

thousands):

Tradename
Customer relationships

Estimated
Fair Value

Estimated Useful Life
(Years)

164
509

5
8

Stay-Lite Lighting’s post-acquisition results of operations since January 1, 2022 are included in Orion’s Consolidated Statements
of Operations. Fiscal 2022 net sales of Stay-Lite Lighting for the period were $2.7 million and operating loss was $0.7 million. The
operating results of Stay-Lite Lighting are included in the Orion Services Group segment.

Unaudited pro forma

The pro forma information was determined based on the historical results of Orion and unaudited financial results from Stay-Lite
Lighting and Voltrek. These proforma results reflect additional depreciation and amortization that would have been charged assuming
the fair value adjustments to property, plant, and equipment and intangible asset occurred at the beginning of the period, along with
consequential tax effects. The unaudited pro forma results have been prepared for comparative purposes only and are not necessarily

indicative of what would have occurred had the business combinations been completed at the beginning of the period or the results that
may occur in the future. Furthermore, the unaudited pro forma financial information does not reflect the impact of any synergies resulting
from the acquisitions.

If Voltrek was acquired on April 1, 2022, the pro forma Orion revenue for the twelve-month period ended on March 31, 2023
would have been $79.8 million and proforma net loss would have been $(33.5) million. Orion pro-forma fiscal 2022 revenue would
have been $128.0 million and net income would have been $5.9 million.

If Stay-Lite was acquired on April 1, 2020, the pro forma Orion full year fiscal 2022 revenue would have been $131.3 million and
net income would have been $6.0 million. Orion pro-forma fiscal 2021 revenue would have been $125.4 million and net income would
have been $25.5 million.

Transaction costs related to the Stay-Lite Acquisition and the Voltrek Acquisition are recorded in acquisition related costs in the
Consolidated Statements of Operations. Transaction costs totaled $0.8 million in the twelve months ending March 31, 2023 and $0.5
million twelve months ended March 31, 2022, respectively.

NOTE 19 — SUBSEQUENT EVENTS

Subsequent events are events or transactions that occur after the balance sheet date but before financial statements are issued.
Recognized subsequent events are events or transactions that provide additional evidence about conditions that existed at the date of the
balance sheet, including the estimates inherent in the process of preparing financial statements. Non-recognized subsequent events are
events that provide evidence about conditions that did not exist at the date of the balance sheet but arose after that date.

NOTE 20 — QUARTERLY FINANCIAL DATA (UNAUDITED)

Summary quarterly results for the years ended March 31, 2023 and March 31, 2022 are as follows:

Total revenue
Gross profit
Net loss (1)
Basic net loss per share (1)
Shares used in basic per share calculation
Diluted net loss per share (1)
Shares used in diluted per share calculation

Total revenue
Gross profit
Net income (loss)
Basic net income (loss) per share
Shares used in basic per share calculation
Diluted net income (loss) per share
Shares used in diluted per share calculation

Three Months Ended

Jun 30, 2022

Sep 30, 2022

Dec 31, 2022

(in thousands, except per share amounts)

March 31,
2023

Total

$
17,906
3,554
$
(2,835) $
(0.09) $

31,138

$
17,560
4,435
$
(2,331) $
(0.07) $

31,031

$
20,288
4,781
$
(24,059) $
(0.75) $

32,048

$
21,629
4,741
$
(5,116) $
(0.16) $

32,294

(0.09) $

(0.07) $

(0.75) $

(0.16) $

31,138

31,031

32,048

32,294

77,383
17,511
(34,341)
(1.08)
31,704
(1.08)
31,704

Jun 30, 2021

Sep 30, 2021

Dec 31, 2021

Mar 31, 2022

Total

Three Months Ended

(in thousands, except per share amounts)

35,101
10,230
2,510
0.08
30,860
0.08
31,290

$
$
$
$

36,510
10,788
3,659
0.12
31,031
0.12
31,288

$
$
$
$

30,714
7,641
1,102
0.04
31,085
0.04
31,235

$
$
$
$

$
22,058
5,253
$
(1,180) $
(0.04) $

31,097

(0.04) $

31,097

124,383
33,912
6,091
0.20
31,018
0.19
31,295

$
$
$
$

(1)

Includes $17.8 million of tax expense related to the booking of the valuation allowance on deferred tax assets during the three
months ended December 31, 2022.

The four quarters for net earnings per share may not add to the total year because of differences in the weighted average number

of shares outstanding during the quarters and the year.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE

None

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as such term is
defined in Rule 13a-15(f) of the Exchange Act. We maintain disclosure controls and procedures that are designed to ensure that
information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded,
processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is
accumulated and communicated to our management, including our principal executive and principal financial officers, as appropriate,
to allow timely decisions regarding required disclosure.

Our management evaluated, with the participation of our Chief Executive Officer and our Chief Financial Officer, the effectiveness
of our disclosure controls and procedures and our internal control over financial reporting as of March 31, 2023, pursuant to Exchange
Act Rule 13a-15(b) and 15d-15. Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded
that our disclosure controls and procedures were effective at a level of reasonable assurance as of March 31, 2023.

Management, including our Chief Executive Officer and Chief Financial Officer, believes the consolidated financial statements
included in this Annual Report on Form 10-K fairly represent in all material respects our financial condition, results of operations and
cash flows at and for the periods presented in accordance with GAAP.

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in
Rules 13a-15(f) and 15d-15(f) under the Exchange Act). Internal control over financial reporting is a process designed by, or under the
supervision of, the Chief Executive Officer and Chief Financial Officer, or persons performing similar functions, and effected by the
board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with GAAP and includes those policies and procedures that:

ii.

iii.

pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions
of our assets;

provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our
management and directors; and

provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our
assets that could have a material effect on our financial statements.

Because of inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in
conditions or that the degree of compliance with the policies or procedures may deteriorate.

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial
Officer, our management has assessed the effectiveness of our internal control over financial reporting based on the criteria set forth in
the Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO). Based on our assessment, management believes that, as of March 31, 2023, our internal control over financial reporting was
effective.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended March 31, 2023, that have

materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

None.

ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

Not Applicable.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required by this item with respect to directors, executive officers and corporate governance is incorporated by
reference to our Proxy Statement for our 2023 Annual Meeting of Shareholders to be filed with the SEC within 120 days after the end
of the fiscal year ended March 31, 2023.

Code of Conduct

We have adopted a Code of Conduct that applies to all of our directors, employees and officers, including our principal executive
officer, our principal financial officer, our controller and persons performing similar functions. Our Code of Conduct is available on our
web site at www.orionlighting.com. Future material amendments or waivers relating to the Code of Conduct will be disclosed on our
web site referenced in this paragraph within four business days following the date of such amendment or waiver.

ITEM 11. EXECUTIVE COMPENSATION

The information required by this item is incorporated by reference to our Proxy Statement for our 2023 Annual Meeting of

Shareholders to be filed with the SEC within 120 days after the end of the fiscal year ended March 31, 2023.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
SHAREHOLDER MATTERS

See Item 5, Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchaser of Securities, under the
heading “Equity Compensation Plan Information” for information regarding our securities authorized for issuance under equity
compensation plans. The additional information required by this item is incorporated by reference to our Proxy Statement for its 2023
Annual Meeting of Shareholders to be filed with the SEC within 120 days after the end of the fiscal year ended March 31, 2023.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

The information required by this item is incorporated by reference to our Proxy Statement for our 2023 Annual Meeting of

Shareholders to be filed with the SEC within 120 days after the end of the fiscal year ended March 31, 2023.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by this item is incorporated by reference to our Proxy Statement for our 2023 Annual Meeting of

Shareholders to be filed with the SEC within 120 days after the end of the fiscal year ended March 31, 2023.

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Financial Statements

Our financial statements are set forth in Item 8 of this Form 10-K.

Number

Exhibit Title

EXHIBIT INDEX

3.1

3.2

4.1

10.1

10.2

10.3

10.4

10.5

10.6

10.7

10.8

10.9

10.10

10.11

10.12

10.13

10.14

10.15

10.16

Amended and Restated Articles of Incorporation of Orion Energy Systems, Inc., filed as Exhibit 3.3 to the Registrant’s
Form S-1 filed August 20, 2007, is hereby incorporated by reference.

Second Amended and Restated Bylaws of Orion Energy Systems, Inc., filed as Exhibit 3.1 to the Registrant’s Form 8-K
filed November 14, 2022, is hereby incorporated by reference.

Description of Orion Energy Systems, Inc. Capital Stock. +

Loan and Security Agreement dated as of December 29, 2020 among Orion Energy Systems, Inc., Bank of America, N.A.,
as lender, and the subsidiary borrowers party thereto, filed as Exhibit 10.1 to Registrant’s Form 8-K filed on January 5,
2021, is hereby incorporated by reference.

Agreement No. 1 to Loan and Security Agreement, dated effective as of November 4, 2022, among Orion Energy
Systems, Inc., Bank of America, N.A., as lender, and the subsidiary borrowers party thereto, filed as Exhibit 10.4 to the
Registrant’s Quarterly Report on Form 10-Q filed November 8, 2022, is hereby incorporated by reference.

Orion Energy Systems, Inc. 2004 Stock and Incentive Awards Plan, filed as Exhibit 10.9 to the Registrant’s Form S-1
filed August 20, 2007, is hereby incorporated by reference.*

Amendment to Orion Energy Systems, Inc. 2004 Stock and Incentive Awards Plan, filed September 9, 2011 as Appendix
A to the Registrant’s definitive proxy statement is hereby incorporated by reference.*

Form of Stock Option Agreement under the Orion Energy Systems, Inc. 2004 Equity Incentive Plan, filed as Exhibit 10.10
to the Registrant’s Form S-1 filed August 20, 2007, is hereby incorporated by reference.*

Form of Stock Option Agreement as of May 14, 2013 under the Orion Energy Systems, Inc. 2004 Stock and Incentive
Awards Plan, filed as Exhibit 10.7 to the Registrant’s Form 10-K filed on June 13, 2014, is hereby incorporated by
reference.*

Orion Energy Systems, Inc. 2016 Omnibus Incentive Plan, as amended and restated, filed as Annex A to the Registrant’s
Definitive Proxy Statement on Schedule 14A filed on June 21, 2019, is hereby incorporated by reference.*

Form of Non-Employee Director Tandem Restricted Stock and Cash Award Agreement under the Orion Energy
Systems, Inc. 2016 Omnibus Incentive Plan, filed as Exhibit 4.5 to the Registrant’s Form S-8 filed August 10, 2016, is
hereby incorporated by reference.*

Form of Non-Employee Director Restricted Stock Award Agreement under the Orion Energy Systems, Inc. 2016
Omnibus Incentive Plan, filed as Exhibit 4.6 to the Registrant’s Form S-8 filed August 10, 2016, is hereby incorporated
by reference.*

Form of Executive Tandem Restricted Stock and Cash Award Agreement under the Orion Energy Systems, Inc. 2016
Omnibus Incentive Plan, filed as Exhibit 4.7 to the Registrant’s Form S-8 filed August 10, 2016, is hereby incorporated
by reference.*

Form of Executive Restricted Stock Award Agreement under the Orion Energy Systems, Inc. 2016 Omnibus Incentive
Plan, filed as Exhibit 4.8 to the Registrant’s Form S-8 filed August 10, 2016, is hereby incorporated by reference.*

Orion Energy Systems, Inc. Non-Employee Director Compensation Plan, effective as of February 16, 2023.* +

Executive Employment and Severance Agreement, effective as of October 19, 2020, between Orion Energy Systems,
Inc. and J. Per Brodin, filed as Exhibit 10.1 to the Registrant's Form 8-K filed on October 15, 2020, is hereby
incorporated by reference.*

Amended and Restated Executive Employment and Severance Agreement, dated as of June 1, 2020, by and between Orion
Energy Systems, Inc. and Scott A. Green, filed as Exhibit 10.17 to the Registrant's Form 10-K filed on June 1, 2021, is
hereby incorporated by reference.*

At Market Issuance Sales Agreement between Orion Energy Systems, Inc. and B. Riley Securities, Inc., dated March 26,
2021, filed as Exhibit 10.1 to the Registrant's Form 8-K filed on March 26, 2021, is hereby incorporated by reference.

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

10.17

10.18

10.19

10.20

10.21

10.22

10.23

10.24

10.25

10.26

10.27

10.28

21.1

23.1

31.1

31.2

32.1

Voluntary Retirement and Consulting Agreement, dated as of August 2, 2022 and effective as of November 10, 2022,
between Orion Energy Systems, Inc. and Michael W. Altschaefl, filed as Exhibit 10.1 to the Registrant's Form 8-K filed
on August 3, 2022, is hereby incorporated by reference.*

Restricted Stock Award Agreement, effective as of the third business day after the Company publicly announces its
financial results for its fiscal 2022 fourth quarter and year-end, between Orion Energy Systems, Inc. and Michael W.
Altschaefl, filed as Exhibit 10.3 to the Registrant's Form 8-K filed on February 22, 2022, is hereby incorporated by
reference.*

Form of Executive Performance Share Award Agreement under the Orion Energy Systems, Inc. 2016 Omnibus Incentive
Plan, filed as Exhibit 10.19 to the Registrant's Form 10-K filed on June 10, 2022, is hereby incorporated by reference.*

Form of Non-Employee Director Restricted Stock Award Agreement under the Orion Energy Systems, Inc. 2016 Omnibus
Incentive Plan, filed as Exhibit 10.20 to the Registrant's Form 10-K filed on June 10, 2022, is hereby incorporated by
reference. *

Form of Executive Tandem Restricted Stock and Cash Award Agreement under the Orion Energy Systems, Inc. 2016
Omnibus Incentive Plan, filed as Exhibit 10.21 to the Registrant's Form 10-K filed on June 10, 2022, is hereby incorporated
by reference. *+

Form of Non-Employee Director Tandem Restricted Stock and Cash Award Agreement under the Orion Energy Systems,
Inc. 2016 Omnibus Incentive Plan, filed as Exhibit 10.22 to the Registrant's Form 10-K filed on June 10, 2022, is hereby
incorporated by reference. *

Form of Executive Restricted Stock Award Agreement under the Orion Energy Systems, Inc. 2016 Omnibus Incentive
Plan, filed as Exhibit 10.23 to the Registrant's Form 10-K filed on June 10, 2022, is hereby incorporated by reference. *

Form of Executive Tandem Performance Share and Cash Award Agreement under the Orion Energy Systems, Inc. 2016
Omnibus Incentive Plan, effective May 24, 2023.* +

Form of Non-Employee Director Tandem Restricted Stock and Cash Award Agreement under the Orion Energy Systems,
Inc. 2016 Omnibus Incentive Plan, effective May 24, 2023.* +

Form of Executive Tandem Restricted Stock and Cash Award Agreement under the Orion Energy Systems, Inc. 2016
Omnibus Incentive Plan, effective May 24, 2023.* +

Cooperation Agreement, dated January 3, 2023, by and among Orion Energy Systems, Inc., Kanen Wealth Management,
LLC, Philotimo Fund, LP and David Kanen and Charles McDulin (incorporated by reference to Exhibit 10.1 to the
Company’s Current Report on Form 8-K filed on January 4, 2023).

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

Subsidiaries of Orion Energy Systems, Inc.+

Consent of Independent Registered Public Accounting Firm. +

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

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

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

101

101.INS Inline XBRL Instance Document+

101.SCH Inline XBRL Taxonomy extension schema document+

101.CAL Inline XBRL Taxonomy extension calculation linkbase document+

101.DEF Inline XBRL Taxonomy extension definition linkbase document+

101.LAB Inline XBRL Taxonomy extension label linkbase document+

101.PRE Inline XBRL Taxonomy extension presentation linkbase document+

104

The cover page from the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2022, has been
formatted in Inline XBRL

Documents incorporated by reference by Orion Energy Systems, Inc. are filed with the Securities and Exchange Commission

under File No. 001-33887.

* Management contract or compensatory plan or arrangement.
+ Filed herewith

ITEM 16. FORM 10-K SUMMARY

None.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this

Annual Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized, on June 12, 2023.

SIGNATURES

ORION ENERGY SYSTEMS, INC.

By:

/s/ Michael H. Jenkins
Michael H. Jenkins
Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report on Form 10-K has been signed by the

following persons on behalf of the Registrant in the capacities indicated on June 12, 2023.

Signature

/s/ Michael H. Jenkins
Michael H. Jenkins

/s/ J. Per Brodin
J. Per Brodin

/s/ Anthony L. Otten
Anthony L. Otten

/s/ Michael W. Altschaefl
Michael W. Altschaefl

/s/ Ellen B. Richstone
Ellen B. Richstone

/s/ Sally Washlow
Sally Washlow

/s/ Richard A. Shapiro
Richard A. Shapiro

Title

Chief Executive Officer and Director (Principal
Executive Officer)

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

Board Chair

Director

Executive Officers
Michael H. Jenkins
Chief Executive Officer
John Per Brodin
Executive Vice President, Chief Financial Officer,
Chief Accounting Officer and Treasurer
Scott A. Green
Executive Vice President and President, Orion
Services Group

Board of Directors

Michael W. Altschaefl
Retired Chief Executive Officer, Orion Energy
Systems, Inc.

Anthony L. Otten (1), (2), (3a), (4)
Retired Chief Executive Officer, Versar, Inc.,
Managing Member, Stillwater, LLC

Sally A. Washlow (1), (2a), (3)
Former Chief Executive Officer, Cedar Electronics
Corporation

Ellen B. Richstone (1a), (2), (3)
Director, National Association of Corporate Directors
(NACD-New England), Cognition Therapeutics, Inc.,
Superior Industries International and eMargin
Corporation

Richard A. Shapiro
Founder/CIO, Ridge Run Partners, LLC

Michael H. Jenkins
Chief Executive Officer, Orion Energy Systems, Inc.

(1) Audit and Finance Committee
(2) Compensation Committee
(3) Nominating and Corporate Governance

Committee
(4) Board Chair
(a) Committee Chair

NASDAQ Capital Market: OESX

2210 Woodland Drive, Manitowoc, WI 54220