AMERICAN SUPERCONDUCTOR CORP /DE/

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

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

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE Three and Six Months EndedSeptember 30, 2025** AND 2024**

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Nature of the Business and Operations

Nature of the Business and Operations

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

These unaudited condensed consolidated financial statements of the Company have been prepared on a going concern basis in accordance with United States generally accepted accounting principles (“GAAP”) and the Securities and Exchange Commission’s (“SEC”) instructions to Form10-Q. All significant intercompany accounts and transactions are eliminated in consolidation. Investments in entities in which we donot have a controlling interest are accounted for under the equity method of accounting. The going concern basis of presentation assumes that the Company will continue operations and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business. Certain information and footnote disclosures normally included in the condensed consolidated financial statements prepared in accordance with GAAP have been omitted pursuant to those instructions. The year-end balance sheet data was derived from audited financial statements but doesnot include all disclosures required by GAAP. The unaudited condensed consolidated financial statements, in the opinion of management, reflect all adjustments (consisting of normal recurring adjustments) necessary for a fair statement of the results for the interim periods ended* September 30, 2025* and2024, and the financial position at* September 30, 2025*; however, these results arenot necessarily indicative of results which* maybe expected for the full year. The interim condensed consolidated financial statements, and notes thereto, should be read in conjunction with the audited condensed consolidated financial statements for the year ended March 31,2025, and notes thereto, included in the Company’s Annual Report on Form10-K for the year ended March 31,2025 filed with the SEC on May 21,*2025.

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2. Acquisition

Acquisition of NWL

On* August**1,* 2024 (the "Acquisition Date"), the Company entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”) with the selling stockholders named therein. Pursuant to the terms of the Stock Purchase Agreement and concurrently with entering into such agreement, the Company acquired all of the issued and outstanding shares of capital stock of Megatran Industries, Inc. ("Megatran") (the "NWL Acquisition"). Megatran's wholly-owned subsidiary, NWL, Inc. (together with Megatran, "NWL"), is a U.S.-based global provider of engineered power conversion solutions for demanding industrial and military applications.

The NWL Acquisition has been accounted for under the purchase method of accounting in accordance with ASC805, Business Combinations. The Company allocated the purchase price to the assets acquired and liabilities assumed at their estimated fair values as of the Acquisition Date. The excess of the purchase price paid by the Company over the estimated fair value of net assets acquired has been recorded as goodwill.

The total purchase price of approximately $61.4 million includes the fair value of shares of the Company’s common stock issued at closing, and cash paid, as follows (in millions):

At the Acquisition Date, in addition to the $30.0 million cash, the Company valued the Company’s common stock, using $24.16 per share, which was the closing price on the day prior to the day that the Company completed the NWL Acquisition. Acquisition costs of $1.1 million were included in selling, general and administrative ("SG&A") for the fiscal year ended* March 31, 2025.*

The following table summarizes the allocation of the purchase price based on the estimated fair values of the assets acquired and liabilities assumed and related deferred income taxes in connection with the NWL Acquisition as of the Acquisition Date and reflective of measurement period adjustments (in millions):

The fair value of the financial assets acquired includes receivables with a fair value of $16.1 million. The gross amount due is $16.9 million, of which $0.8 million is expected to be uncollectible.

Inventory includes a $0.7 million adjustment to step up the inventory balance to fair value consistent with the purchase price allocation. The fair value was determined based on the estimated selling price of the inventory, less the remaining manufacturing and selling cost and a normal profit margin on those manufacturing and selling efforts. The inventory step up adjustment increased cost of revenue $0.7 million for the fiscal year ended* March 31, 2025*as the inventory was sold.

Backlog of $0.7 million was evaluated using the multi period excess earnings method under the income approach. The contracts with customers donot provide for any guarantees to source all future requirements from the Company. The amortization method being utilized is economic consumption estimated over aneight-month period with the expense being allocated to cost of revenues.

Customer relationships of $1.3 million relates to customers currently under contract and was determined based on a multi period excess earnings method under the income approach. The method of amortization being utilized is straight line over 10 years, as the results werenot materially different from the economic consumption method, with the expense being allocated to SG&A.

Goodwill represents the value associated with the acquired workforce and expected synergies related to the business combination of thetwo companies. Goodwill resulting from the NWL Acquisition was assigned to the Company’s Grid business segment. Goodwill recognized in the NWL Acquisition isnot deductible for tax purposes.

Unaudited Pro Forma Operating Results

The unaudited pro forma condensed consolidated statement of operations for thethree andsix months ended* September 30,2024 presented as if the NWL Acquisition had occurred on April 1, 2024,*is as follows:

The pro forma amounts include the historical operating results of the Company and NWL with appropriate adjustments that give effect to acquisition related costs, income taxes, intangible amortization resulting from the NWL Acquisition and certain conforming accounting policies of the Company. The pro forma amounts arenot necessarily indicative of the operating results that would have occurred if the NWL Acquisition and related transactions had been completed at the beginning of the applicable periods presented. In addition, the pro forma amounts arenot necessarily indicative of operating results in future periods.

NWL contrib uted $16.4 million of revenue and $2.0 million in net income for the Company for thethree months ended* September 30, 2025*. NWL contributed $34.1 million of revenue and $4.5 million in net income for the Company for thesix months ended* September 30, 2025*. Amortization expense of less than $0.1 million and $0.1 million is included in thethree andsix months ended* September 30, 2025*, respectively, as a result of the acquired intangible assets from the NWL Acquisition.

3. Revenue Recognition

The Company’s revenues in its Grid segment are derived primarily through enabling the transmission and distribution of power, providing planning services that allow it to identify power grid needs and risks, and developing ship protection systems for the U.S. Navy. The Company’s revenues in its Wind segment are derived primarily through supplying advanced power electronics and control systems, licensing its highly engineered wind turbine designs, and providing extensive customer support services to wind turbine manufacturers. The Company records revenue based on afive-step model in accordance with Accounting Standards Codification ("ASC")606. For its customer contracts, the Company identifies the performance obligations, determines the transaction price, allocates the contract transaction price to the performance obligations, and recognizes the revenue when (or as) control of goods or services is transferred to the customer. For both thethree andsix months ended* September 30, 2025*,90% of revenue was recognized at the point in time when control transferred to the customer, with the remainder being recognized over time. For thethree andsix months ended* September 30, 2024*,90% and 89%, respectively, of revenue was recognized at the point in time when control transferred to the customer, with the remainder being recognized over time.

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

In the Company's service and technology development product line, there are several different types of transactions and each begins with a contract with a customer that summarizes each product sold to a customer, which typically represents distinct performance obligations. The technology development transactions are primarily for activities that haveno alternative use and for which a profit can be expected throughout the life of the contract. In these cases, the revenue is recognized over time, but in the instances where the profit cannot be assured throughout the entire contract then the revenue is recognized at a point in time. Each contract's transaction price is allocated to each distinct performance obligation using the respective standalone selling price which is determined primarily using the cost-plus expected margin approach. The ongoing service transactions are for service contracts that provide benefit to the customer simultaneously as the Company performs its obligations, and therefore this revenue is recognized ratably over time throughout the effective period of these contracts. The transaction prices on these contracts are allocated based on an adjusted market approach which is re-assessed annually for reasonableness. The field service transactions include contracts for delivery of goods and completion of services made at the customer's requests, which arenot deemed satisfied until the work has been completed and/or the requested goods have been delivered, so all of this revenue is recognized at the point in time when the control changes, and at allocated prices based on the adjusted market approach driven by standard price lists. The royalty transactions are related to certain contract terms on transactions in the Company's equipment and systems product line based on activity as specified in the contracts. The transaction prices of these agreements are calculated based on an adjusted market approach as specified in the contract. The Company reports royalty revenue for usage-based royalties when the sales have occurred. In circumstances when collectability isnot assured and a contract doesnot exist under ASC606, revenue is deferred until a non-refundable payment has been received for substantially all the amount that is due and there areno further remaining performance obligations.

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

The Company’s policy isnot to accept volume discounts, product returns, or rebates and allowances within its contracts. In the event a contract was approved with any of these terms, it would be evaluated for variable consideration, estimated and recorded as a reduction of revenue in the same period the related product revenue was recorded.

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

Infrequently, the Company receives requests from customers to hold product being purchased from us for a valid business purpose. The Company recognizes revenues for such arrangements provided the transaction meets, at a minimum, the following criteria: the reason for the bill-and-hold arrangement must be substantive; the product must be identified separately as belonging to the customer; the product currently must be ready for physical transfer to the customer; the entity cannot have the ability to use the product or to direct it to another customer. Revenue for thethree andsix months ended* September 30, 2025* included $7.9 million from such held transactions. There wereno such transactions for thethree andsix months ended* September 30, 2024*.

The Company records revenue net of sales tax, value added tax, excise tax and other taxes collected concurrent with revenue-producing activities. The Company has elected to recognize the cost for freight and shipping when control over the products sold passes to customers and revenue is recognized. The Company has elected to recognize incremental costs of obtaining a contract as expense when incurred except in contracts where the amortization period would exceedtwelve months. As of* September 30, 2025* and* March 31, 2025*, the Company's capitalized incremental contract costs werenot material. The Company has electednot to adjust the promised amount of consideration for the effects of a significant financing component if the period of financing istwelve months or less. The Company has elected to recognize revenue based on the as invoiced practical expedient if there is a right to consideration from a customer in an amount that corresponds directly with the value of the Company's performance.

The Company’s contracts with customers donot typically include extended payment terms and* may*include milestone billing over the life of the contract. Payment terms vary by contract type and type of customer and generally range from 30 to 60 days from delivery.

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

As of* September 30, 2025* and2024, the Company’s contract assets and liabilities primarily relate to the timing differences between cash received from a customer in connection with contractual rights to invoicing and the timing of revenue recognition following completion of performance obligations. The Company's accounts receivable balance is made up entirely of customer contract related balances. Changes in the Company’s contract assets, which are included in “Unbilled accounts receivable” and “Deferred program costs” (see Note8, “Accounts Receivable” and Note9, “Inventory” for a reconciliation to the condensed consolidated balance sheets) and "Contract liabilities", which are included in the current portion and long-term portion of "Deferred revenue" in the Company’s condensed consolidated balance sheets, are as follows (in thousands):

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The Company’s remaining performance obligations represent the unrecognized revenue value of the Company’s contractual commitments. The Company’s performance obligations* mayvary significantly each reporting period based on the timing of major new contractual commitments. As of September 30, 2025*, the Company had outstanding performance obligations on existing contracts under ASC606 to be recognized in the next twelve months of approximately $209.5 million. There are also approximately $78.2 million of outstanding performance obligations to be recognized over a period ofthirteen tosixty months. The remaining performance obligations are subject to customer actions and therefore the timing of revenue recognition cannot be reasonably estimated.

The following table sets forth customers who represented10% or more of the Company’s total revenues for thethree andsix months ended* September 30, 2025*, and2024:

4. Stock-Based Compensation

The Company accounts for its stock-based compensation at fair value. The following table summarizes stock-based compensation expense by financial statement line item for thethree andsix months ended* September 30, 2025*, and2024 (in thousands):

The Company issued 7,000 shares and 887,000 shares of restricted stock during thethree andsix months ended* September 30, 2025*, respectively. The Company issuedno shares and 39,445 shares of immediately vested common stock during thethree andsix months ended* September 30, 2025*, respectively. The Company issued 817,500 shares and 842,500 shares of restricted stock during thethree andsix months ended* September 30, 2024*, respectively. The Company issuedno shares and 19,200 shares of immediately vested common stock during thethree andsix months ended* September 30, 2024*, respectively. These restricted stock awards generally vest over 2-3 years. Awards for restricted stock include both time-based and performance-based awards. For options and restricted stock awards that vest upon the passage of time, expense is being recorded over the vesting period. Performance-based awards are expensed over the requisite service period based on probability of achievement.

The Company grantedno stock options and 2,112 stock options during thethree andsix months ended* September 30, 2025*, respectively. The Company grantedno stock options during thethree andsix months ended* September 30, 2024*. The stock options granted during thesix months ended* September 30, 2025* will vest over 2 years. The estimated fair value of the Company’s stock-based awards, less expected annual forfeitures, is amortized over theawards’ service period. There were less than $0.1 million of unrecognized compensation costs for unvested stock optionsas of* September 30, 2025*. This expense will be recognized over a weighted average period of approximately 1.7 years. The total unrecognized compensation cost for unvested outstanding restricted stock was$28.4 million as of* September 30, 2025*. This expense will be recognized over a weighted-average expense period of approximately 1.9 years.

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The weighted average assumptions used in the Black Scholes valuation model for stock options granted during thesix months ended* September 30, 2025* are as follows:

5. Computation of Net Income per Share of Common Stock

Basic net income per share (“EPS”) is computed by dividing net income by the weighted-average number of common shares outstanding for the period. Where applicable, diluted EPS is computed by dividing the net income by the weighted-average number of common shares and dilutive common equivalent shares outstanding during the period, calculated using the treasury stock method. Common equivalent shares include the effect of restricted stock, exercise of stock options and warrants and contingently issuable shares. Stock options and warrants that are out-of-the-money with exercise prices greater than the average market price of the underlying common shares and shares of performance-based restricted stock where the contingency wasnot met are excluded from the computation of diluted EPS as the effect of their inclusion would be anti-dilutive. For thethree months ended* September 30, 2025*,553,740 shares werenot included in the calculation of diluted EPS. Of these,553,334 were shares of performance-based restricted stock where the contingency wasnot met and 406 shares relate to outstanding stock options that were considered anti-dilutive. For thesix months ended* September 30, 2025*,514,535 shares werenot included in the calculation of diluted EPS. Of these,513,926 were shares of performance-based restricted stock where the contingency wasnot met and 609 shares relate to outstanding stock options that were considered anti-dilutive. For thethree months ended* September 30, 2024*,535,001 shares werenot included in the calculation of diluted EPS. Of these,526,333 were shares of performance-based restricted stock where the contingency wasnot met. Of the remaining shares,652 shares relate to outstanding stock awards that were considered anti-dilutive, and 8,016 shares related to ESPP shares and were excluded as they were considered anti-dilutive. For thesix months ended* September 30, 2024*,479,341 shares werenot included in the calculation of diluted EPS. Of these,469,667 were shares of performance-based restricted stock where the contingency wasnot met. Of the remaining shares,326 shares relate to outstanding stock awards that were considered anti-dilutive, and 9,348 shares related to ESPP shares and were excluded as they were considered anti-dilutive.

The following table reconciles the numerators and denominators of the earnings per share calculation for thethree andsix months ended* September 30, 2025*, and2024 (in thousands, except per share data):

6. Goodwill and Other Intangibles

Goodwill

Goodwill represents the difference between the purchase price and the fair value of the identifiable tangible and intangible net assets when accounted for using the purchase method of accounting. Goodwill isnot amortized but reviewed for impairment. The Company's goodwill balance relates to the NWL Acquisition in fiscal2024, the acquisition of Neeltran, Inc. in fiscal2021**, the Northeast Power Systems, Inc. ("NEPSI") acquisition in fiscal2020**, and the acquisition of Infinia Technology Corporation in fiscal2017 and is reported in the Grid business segment. Goodwill is reviewed annually on* February**28th* and whenever events or changes in circumstances indicate that the carrying value of the goodwill mightnot be recoverable. Goodwill increased by $4.7 million during the fiscal year ended* March 31, 2025,related to the NWL Acquisition. There wereno changes to Goodwill during thesix* months ended* September 30, 2025*.

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The Company didnot identify any triggers to assess impairment in thethree andsix months ended* September 30, 2025* or2024.

Other Intangibles

Intangible assets at* September 30, 2025* and* March 31, 2025* consisted of the following (in thousands):

The Company recorded intangible amortization expense related to customer relationship and core technology and know-how of $0.3 million and $0.7 million in thethree andsix months ended* September 30, 2025*, respectively. The Company recorded intangible amortization expense related to customer relationship and core technology and know-how of$0.4 million and $0.8 million inthethree andsix months ended* September 30, 2024*.

Expected future amortization expense related to intangible assets is as follows (in thousands):

The Company's intangible assets relate entirely to the Grid business segment operations in the United States.

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7. Fair Value Measurements

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

The Company provides a gross presentation of activity within Level3 measurement roll-forward and details of transfers in and out of Level1 and2 measurements. A change in the hierarchy of an investment from its current level is reflected in the period during which the pricing methodology of such investment changes. Disclosure of the transfer of securities from Level1 to Level2 or Level3 is made in the event that the related security is significant to total cash and investments. The Company didnot have any transfers of assets and liabilities from Level1, Level2 or Level3 of the fair value measurement hierarchy during thethree orsix months ended* September 30, 2025*.

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

Valuation Techniques

Cash Equivalents

Cash equivalents consist of highly liquid instruments with maturities ofthree months or less that are regarded as high quality, low risk investments and are measured using such inputs as quoted prices, and are classified within Level1 of the valuation hierarchy. Cash equivalents consist principally of money market accounts.

Short-term Cash Instruments

Short-term cash instruments consist of highly liquid instruments with maturities ofthree months or less that are regarded as high quality, low risk investments and are measured using such inputs as quoted prices in markets that arenot active, and are classified within Level2 of the valuation hierarchy. Short-term cash instruments consist principally of certificates of deposits.

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The following table provides the assets and liabilities carried at fair value on a recurring basis, measured as of* September 30, 2025* and* March 31, 2025* (in thousands):

8. Accounts Receivable

Accounts receivable at* September 30, 2025* and* March 31, 2025* consisted of the following (in thousands):

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9. Inventory

Inventory, net of reserves, at* September 30, 2025* and* March 31, 2025* consisted of the following (in thousands):

The Company recorded inventory write-downs of $1.1 million and $0.3 millionfor thethree months ended* September 30, 2025* and2024, respectively. The Company recorded inventory write-downs of $1.8 million and $0.8 millionfor thesix months ended* September 30, 2025* and2024, respectively. These write-downs were based on the Company's evaluation of its inventory on hand for excess quantities and obsolescence.

Deferred program costs as of* September 30, 2025* and* March 31, 2025* primarily represent costs incurred on programs where the Company needs to complete performance obligations before the related revenue and costs will be recognized.

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10. Property, Plant and Equipment

The cost and accumulated depreciation of property, plant and equipment at* September 30, 2025* and* March 31, 2025* are as follows (in thousands):

Depreciation expense was $0.9 million and $0.8 million for thethree months ended* September 30, 2025* and2024, respectively. Depreciation expense was $1.8 million and $1.4 million for thesix months ended* September 30, 2025* and2024, respectively.

11. Equity-Method Investments

Investment in NWL Pacific Inc. Co., LTD

The Company has a 50% ownership in NWL Pacific Inc. Co., LTD ("NWL Pacific"). The investment represents the Company's interest in NWL Pacific. The investment is a joint venture in South Korea established on* May 12, 1998.*

The Company treats the equity investment in the condensed consolidated financial statements under the equity method. Equity method investments are equity securities in entities the Company doesnot control but over which it has the ability to exercise significant influence. These investments are accounted for under the equity method of accounting in accordance with ASC323, Investments—* Equity Method and Joint Ventures*. Equity method investments are measured at cost minus impairment, if any, plus or minus the Company’s share of an investee’s income or loss, less distributions received. As of* September 30, 2025* the Company didnot have material accounts receivable nor accounts payable balances with NWL Pacific. The Company's investment in NWL Pacific was $1.5 million and $1.1 million as of* September 30, 2025* and* March 31, 2025,*respectively.

The table below presents the summarized financial information for periods presented post acquisition, as provided to the Company by the investee, for the unconsolidated company (in thousands):

12. Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses at* September 30, 2025* and* March 31, 2025* consisted of the following (in thousands):

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

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Product warranty activity was as follows (in thousands):

13. Income Taxes

The Company recorded income tax expense of $0.1 million and $0.3 million for thethree andsix months ended* September 30, 2025*, respectively, and income tax benefit of $5.0 million and $4.8 million for thethree andsix months ended* September 30, 2024*, respectively.

On* July 4, 2025,the reconciliation bill, commonly referred to as the One Big Beautiful Bill ("OBBB") was signed into law, which includes a broad range of tax reform provisions that mayaffect the company's financial results. The OBBB allows an elective deduction for domestic Research and Development (R&D), a reinstatement of elective100%* first-year bonus depreciation, and a more favorable tax rate on Foreign-derived Deduction Eligible Income and income from non-U.S. subsidiaries (Net CFC Tested Income), among other provisions. The Company has performed an initial evaluation of the impact of the OBBB on the Company's effective tax rate and deferred tax assets in2025 and future periods. Based on this initial evaluation, the Company believes the tax reform provisions willnot have a material impact on the Company’s consolidated financial statements and related disclosures. We will continue to assess the implications of the OBBB, and our tax provision* may*be further impacted as additional guidance from the U.S. Department of the Treasury is released.

Accounting for income taxes requires atwo-step approach to recognizing and measuring uncertain tax positions. Thefirst step is to evaluate the tax position for recognition by determining if, based on the technical merits, it is more likely thannot the position will be sustained upon audit, including resolution of related appeals or litigation processes, if any. Thesecond step is to measure the tax benefit as the largest amount that is more than50% likely to be realized upon ultimate settlement. The Company re-evaluates these uncertain tax positions on a quarterly basis. The evaluation is based on factors including, butnot limited to, changes in facts or circumstances, changes in tax law, effectively settled issues under audit and new audit activity. Any changes in these factors could result in the recognition of a tax benefit or an additional charge to the tax provision. The Company didnot identify any uncertain tax positions in thesix months ended* September 30, 2025* and didnot have any gross unrecognized tax benefits as of* September 30, 2025*.

On a quarterly basis, the Company reassesses the valuation allowance on deferred income tax assets, weighing positive and negative evidence to assess the recoverability of the deferred tax assets. As of* September 30, 2025*, the Company continues to maintain a valuation allowance to reduce the U.S. federal and state deferred tax assets to the amount that will more likely thannot be realized. Given the Company’s positive trend in earnings, the Company will assess during fiscal year2025 whether sufficient positive evidence will exist to allow the Company to reach a conclusion that some or all of the U.S. valuation allowance willno longer be needed. A release of the valuation allowance would result in the recognition of deferred tax assets and a corresponding decrease to income tax expense in the period the release is recorded, the effect of which would be an increase in reported net income.

14. Contingent Consideration

NEPSI Contingent Consideration

On* October 1, 2020 (the "NEPSI Acquisition Date"), the Company entered into a Stock Purchase Agreement (the "NEPSI Stock Purchase Agreement") with the selling stockholders named therein. Pursuant to the terms of the NEPSI Stock Purchase Agreement and concurrently with entering into such agreement, the Company acquired all of the issued and outstanding (i) shares of capital stock of NEPSI, and (ii) membership interests of Northeast Power Realty, LLC, a New York limited liability company, which holds the real property that serves as NEPSI's headquarters (the "NEPSI Acquisition"). NEPSI is a U.S.-based global provider of medium-voltage metal-enclosed power capacitor banks and harmonic filter banks for use on electric power systems. NEPSI is a wholly-owned subsidiary of the Company and is operated by its Grid business segment. The purchase price was $26.0 million in cash and 873,657 restricted shares of common stock of the Company. As part of the transaction, the selling stockholders were entitled to receive up to an additional 1,000,000 shares of common stock of the Company upon the achievement of certain specified revenue objectives during varying periods of up tofour* years following closing of the NEPSI Acquisition. During the year ended* March 31, 2024,the Company issued 399,999 shares of common stock and cash in lieu of a fractional share of common stock, related to the achievement of specified revenue objectives in connection with the NEPSI Acquisition. One specified revenue objective, which would have earned the selling stockholders 300,000 shares of Company common stock, wasnot* achieved. NEPSI recognized revenues in excess of $120.0 million during thefour years after the NEPSI Acquisition Date. As a result, during the quarter ended* September 30, 2024,the Company issued 300,000 shares of common stock of the Company to the selling stockholders, following certification of the achievement of the specified earnout revenue objective. As of September 30, 2024,*the Company had settled all outstanding contingent consideration under the NEPSI Stock Purchase Agreement.

The Company evaluated the NEPSI Acquisition earnout payment set forth in the NEPSI Stock Purchase Agreement, which was expected to require settlement in the Company's common stock, and determined the contingent consideration qualified for liability classification and derivative treatment under ASC815, Derivatives and Hedging. As a result, for the periods in which the Company had outstanding contingent consideration, the fair value of the contingent consideration was remeasured and the resulting gain or loss was recognized in operating expenses until the share amount was fixed.

NWL Contingent Consideration

On* August*1,* 2024,* the Company entered into the Stock Purchase Agreement with the selling stockholders named therein. Pursuant to the terms of the Stock Purchase Agreement and concurrently with entering into such agreement, the Company acquired all of the issued and outstanding shares of Megatran for aggregate consideration in an amount equal to $61.4 million which consideration amount was subject to various adjustments set forth in the Stock Purchase Agreement. The value of the contingent consideration to make the sellers whole was determined to be de minimis at the time of the NWL Acquisition. On* September 23, 2024,the Company paid $3.3 million to the selling stockholders, which was calculated based on the agreed upon formula set forth in the Stock Purchase Agreement. As of September 30, 2024,*there wereno remaining obligations to the selling stockholders of Megatran.

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Following is a summary of the key assumptions used in a Monte Carlo simulation to calculate the fair value of the contingent consideration related to the NEPSI Acquisition:

The Company didnot record any activity related to contingent consideration in thethree andsix months ended* September 30, 2025* as the liability was settled in the prior fiscal year. The Company recorded a gain resulting from the decrease in fair value of $0.5 million and a loss of $3.4 million resulting from the increases in the fair value of the contingent consideration in thethree andsix months ended* September 30, 2024*, respectively.

15. Leases

Operating Leases

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

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

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Supplemental balance sheet information related to leases at* September 30, 2025*, and* March 31, 2025* are as follows (in thousands):

The costs related to the Company's operating leases for thethree andsix months ended* September 30, 2025* and2024, are as follows (in thousands):

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

16. Commitments and Contingencies

Legal Contingencies

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

Other

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

As of* September 30, 2025*, the Company had $3.0 million of restricted cash included in long-term assets and $2.9 million of restricted cash included in current assets. As of* March 31, 2025*, the Company had $4.3 million of restricted cash included in long term assets and $1.6 million of restricted cash included in current assets. These amounts included in restricted cash primarily represent deposits to secure letters of credit for various supply contracts and long-term projects or collateral deposits. These deposits are held in interest bearing accounts.

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17. Business Segments

The Company reports its financial results intwo reportable business segments: Grid and Wind. In accordance with ASC280**, Segment Reporting, the Company has identifiedtwo operating segments. The Company's operating segments reflect the way in which internally-reported financial information is used to make decisions and allocate resources.

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

Through the Company’s wind power offerings, the Wind business segment enables manufacturers to field highly competitive wind turbines through its advanced power electronics and control system products, engineered designs, and support services. The Company supplies advanced power electronics and control systems, licenses its highly engineered wind turbine designs, and provides extensive customer support services to wind turbine manufacturers. The Company’s design portfolio includes a broad range of drive trains and power ratings of2 megawatts ("MWs") and higher. The Company provides a broad range of power electronics and software-based control systems that are highly integrated and designed for optimized performance, efficiency, and grid compatibility.

AMSC’s Chief Executive Officer Daniel McGahn is the chief operating decision maker. The chief operating decision maker uses segment operating income (loss) to allocate resources (including employees, property, and financial or capital resources) for each segment predominantly in the annual budget and forecasting process. The chief operating decision maker considers budget-to-actual variances on a monthly basis for segment operating income (loss) when making decisions about allocating capital and personnel to the segments. The chief operating decision maker also uses segment operating income or loss to assess the performance for each segment by comparing the results and return on assets of each segment withone another and in the compensation of certain employees.

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The following tables (i) summarize total sales by segment and (ii) reconcile each segment's sales to their respective segment operating income, including segment operating expenses, for each of thethree andsix months ended* September 30, 2025* and2024 (in thousands):

(a) The significant expense categories and amounts align with the segment-level information that is regularly provided to the chief operating decision maker.

(b) Segment other operating expense includes cost of sales, research and development expense, selling general, and administrative expense, and amortization of acquisition related intangibles.

(a) The significant expense categories and amounts align with the segment-level information that is regularly provided to the chief operating decision maker.

(b) Segment other operating expense includes cost of sales, research and development expense, selling general, and administrative expense, amortization of acquisition related intangibles, and gain/loss on contingent consideration.

Unallocated corporate expenses included anet loss on contingent consideration $2.8 million and $6.7 million in thethree andsix months ended* September 30, 2024*, respectively.

The reconciliation of segment operating income (loss) to consolidated income (loss) before income taxes for thethree andsix months ended* September 30, 2025* and2024 is as follows (in thousands):

Depreciation and amortization expense by segment for thethree andsix months ended* September 30, 2025* and2024 is as follows (in thousands):

The accounting policies of the business segments are the same as those for the consolidated Company. The Company’s business segments have been determined in accordance with the Company’s internal management structure, which is organized based on operating activities. The Company evaluates performance based upon several factors, of which the primary financial measures are segment revenues and segment operating income (loss). The disaggregated financial results of the segments reflect allocation of certain functional expense categories consistent with the basis and manner in which Company management internally disaggregates financial information for the purpose of assisting in making internal operating decisions. In addition, certain corporate expenses which the Company doesnot believe are specifically attributable or allocable to either of thetwo business segments have been excluded from the segment operating income (loss).

Total assets for thetwo business segments as of* September 30, 2025* and* March 31, 2025*, are as follows (in thousands):

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18. Recent Accounting Pronouncements

In* December 2023,the FASB issued ASU2023*-09, Income Taxes (Topic740*): Improvements to Income Tax Disclosures*. The amendments in ASU2023-09 address investor requests for more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. Following the release of ASU2023-09 in* December 2023,the effective date was annual reporting periods beginning after December 15, 2024.As of September 30, 2025*, the Company is evaluating the impact on its consolidated financial statements.

In* March 2024,the FASB issued ASU2024*-02, Codification Improvements—Amendments to Remove References to the Concepts Statements. The amendments in ASU2024-02 contain amendments to the Codification that remove references to various FASB Concepts Statements. Following the release of ASU2024-02 in* March 2024,the effective date was annual reporting periods beginning after December 15, 2024.As of September 30, 2025*, the Company is evaluating the impact on its consolidated financial statements.

In* November 2024,the FASB issued ASU2024*-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures. The amendments in ASU2024-03 address investor requests for more disclosure of disaggregated financial reporting information about expenses presented in the income statement. Following the release of ASU2024-03 in* November 2024,the effective date will be annual reporting periods beginning after December 15, 2026.As of September 30, 2025*, the Company is evaluating the impact on its consolidated financial statements.

19. Subsequent Events

The Company has performed an evaluation of subsequent events through the time of filing this Quarterly Report on Form10-Q with the SEC and has determined that there areno such events to report.

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