INCOME TAXES

12 Months Ended

Mar. 31, 2025

Income Tax Disclosure [Abstract]

INCOME TAXES

NOTE 13 — INCOME TAXES

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

	Fiscal Year Ended March 31,
	2025		2024			2023
Current	$	35	$	46		$	97
Deferred		7		(5	)		17,881
Total	$	42	$	41		$	17,978
	2025		2024			2023
Federal, Current	$	—	$	—		$	—
Federal, Deferred		2		(1	)		14,557
Total Federal	$	2		(1	)		14,557
State, Current		35		46			97
State, Deferred		5		(4	)		3,324
Total State	$	40		42			3,421
Total	$	42	$	41		$	17,978

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

	Fiscal Year Ended March 31,
	2025			2024			2023
Statutory federal tax rate		21.0	%		21.0	%		21.0	%
State taxes, net		4.1	%		3.2	%		4.0	%
State tax credits, net		(0.2	)%		(0.2	)%		(1.9	)%
Federal tax credit		(0.5	)%		(0.4	)%		—	%
Change in valuation reserve		(23.7	)%		(22.7	)%		(131.3	)%
Permanent items		(0.9	)%		(0.8	)%		(1.0	)%
Change in tax contingency reserve		(0.1	)%		(0.1	)%		(0.1	)%
Equity compensation cancellations		—			(0.2	)%		(0.1	)%
State return to provision		0.1	%		0.1	%		(0.9	)%
Other, net		(0.2	)%		(0.3	)%		0.4	%
Effective income tax rate		(0.4	)%		(0.4	)%		(109.9	)%

The net deferred tax assets reported in the accompanying consolidated financial statements include the following components (dollars in thousands):

	March 31,
	2025			2024
Deferred tax assets:
Inventory, accruals and reserves		742			737
Interest deduction carry-forward		495			248
Federal and state operating loss carry-forwards		22,332			20,515
Tax credit carry-forwards		1,367			1,459
Equity compensation		272			200
Deferred revenue		19			21
Lease liability		922			527
Intangible assets		1,871			1,296
Other		1,206			1,164
Total deferred tax assets		29,226			26,167
Valuation allowance		(28,149	)		(25,367	)
Deferred tax assets, net of valuation allowance		1,077			800
Deferred tax liabilities:
Lease ROU asset		(880	)		(442	)
Fixed assets		(276	)		(430	)
Total deferred tax liabilities		(1,156	)		(872	)
Total net deferred tax (liabilities) assets	$	(79	)	$	(72	)

For fiscal year ended March 31, 2025, Orion’s deferred tax assets were primarily the result of U.S. NOL and tax credit carryforwards. Orion recorded a valuation allowance of $28.1 million and $25.4 million against its net deferred tax asset balance as of March 31, 2025 and March 31, 2024, respectively, due to the uncertainty of its realization value in the future. For fiscal years ended March 31, 2025 and March 31, 2024, the valuation allowance against Orion’s deferred tax assets increased by $2.7 million, primarily due to the current and prior year book losses.

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, 2025, Orion has federal NOL carryforwards of approximately $85.4 million, state NOL carryforwards of approximately $76.1 million, and foreign NOL carryforwards of approximately $0.7 million. Orion also had federal tax credit carryforwards of approximately $1.2 million and state tax credits of $0.2 million. All of Orion’s tax credit carryforwards and $126.0 million of its NOL carryforwards will begin to expire in varying amounts between 2025 and 2045. The remaining $36.2 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 $28.1 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 2025, fiscal 2024, or fiscal 2023.

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, 2020 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, 2020 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, 2025, 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, 2025 and 2024 were $0.1 million. Orion had the following unrecognized tax benefit activity (dollars in thousands):

	Fiscal Year Ended March 31,
	2025		2024		2023
Unrecognized tax benefits as of beginning of fiscal year	$	237	$	225	$	215
Additions based on tax positions related to the current period positions		1		1		1
Additions for tax positions of prior years		10		11		9
Unrecognized tax benefits as of end of fiscal year	$	248	$	237	$	225