Effective on January 1, 2022, Orion acquired all of the issued and outstanding capital stock of Stay-Lite Lighting, Inc. (“Stay-Lite Lighting”), a nationwide lighting and electrical maintenance service provider, for $4.3 million (the “Stay-Lite Acquisition”). Stay-Lite Lighting will operate as Stay-Lite Lighting, an Orion Energy Systems business. The 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 preliminarily allocated the purchase price of approximately $4.3 million, which includes an estimate of the earn-out liability of $0.2 million and a receivable of $0.1 million for the working capital adjustment received subsequent to year-end, 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. Orion could pay up to $0.7 million in earnout related purchase price, which is based on the gross profit of the legacy business over the next two calendar years. Orion is in the process of finalizing third party valuations of property and equipment and intangible assets.

The preliminary allocation of the purchase consideration to the fair value of the assets acquired and liabilities assumed as of January 1, 2022, is as follows (dollars in thousands):

Cash	$	95
Accounts receivable		2,690
Revenue earned but not billed		342
Inventory		504
Prepaid expenses and other current assets		41
Property and equipment		958
Goodwill		350
Other intangible assets		696
Other long-term assets		537
Accounts payable		(965	)
Accrued expenses and other		(550	)
Other long-term liabilities		(412	)
Net purchase consideration		4,286

Goodwill recorded from the acquisition of Stay-Lite Lighting is attributable to the expected synergies from the business combination. The goodwill resulting from the 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 acquisition (dollars in thousands):

Estimated

Fair Value

Estimated Useful Life (Years)

Tradename

118

Customer relationships

578

Transaction costs related to the acquisition totaled $0.5 million in fiscal 2022 and are recorded in acquisition costs in the consolidated statements of operations.

Stay-Lite Lighting’s post-acquisition results of operations for the period from January 1, 2022, through March 31, 2022, are included in the Orion’s Consolidated Statements of Operations. Since the acquisition date, net sales of Stay-Lite Lighting for the period were $2.7 million and operating income was $0.2 million. The operating results of Stay-Lite Lighting are included in the Orion Services Group segment.

The unaudited pro forma revenue for the year ended March 31, 2022 and 2021, assuming the acquisition had occurred on April 1, 2020 was $131.3 million and $125.4 million respectively.

The unaudited pro forma information was determined based on the historical results of Orion and unaudited financial results from Stay-Lite Lighting. 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 combination 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 acquisition of Stay-Lite Lighting.