10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________________________________________________________________________

Form 10-Q

(Mark One)

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

For the quarterly period ended September 30, 2020

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: 001-08762

ITERIS, INC.

(Exact name of registrant as specified in its charter)

Delaware

(State or other jurisdiction of

incorporation or organization)

1700 Carnegie Avenue, Suite 100

Santa Ana, California

(Address of principal executive office)

95-2588496

(I.R.S. Employer

Identification No.)

92705

(Zip Code)

(949) 270-9400

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.10 par value	ITI	The Nasdaq Stock Market LLC

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, as amended (the “Exchange Act”), 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 x 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 x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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	☐	Accelerated filer	☒	Non-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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x

As of October 14, 2020, there were 41,174,331 shares of our common stock outstanding.

ITERIS, INC.

Quarterly Report on Form 10-Q

Table of Contents

PART I.	FINANCIAL INFORMATION	1
ITEM 1.	FINANCIAL STATEMENTS	1
	UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS AT SEPTEMBER 30, 2020 AND MARCH 31, 2020	1
	UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE- AND SIX-MONTHS ENDED SEPTEMBER 30, 2020 AND 2019	2
	UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2020 AND 2019	3
	UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY FOR THE THREE- AND SIX-MONTHS ENDED SEPTEMBER 30, 2020 AND 2019	4
	NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS	5
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	27
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	36
ITEM 4.	CONTROLS AND PROCEDURES	36
PART II.	OTHER INFORMATION	37
ITEM 1.	LEGAL PROCEEDINGS	37
ITEM 1A.	RISK FACTORS	37
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	37
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	38
ITEM 4.	MINE SAFETY DISCLOSURES	38
ITEM 5.	OTHER INFORMATION	38
ITEM 6.	EXHIBITS	38

Unless otherwise indicated in this report, the "Company," "we," "us" and "our" refer to Iteris, Inc. and its wholly-owned subsidiaries, ClearAg, Inc. and Albeck Gerken, Inc., CheckPoint™, ClearGuide™, ClearFleet™, ClearMobility™, ClearRoute™, ClearPath 511®, CVIEW-Plus™, Edge®, EdgeConnect™, inspect™, iPeMS®, Iteris®, Iteris SPM™, Next®, P10™, P100™, P-Series™, PedTrax®, Pegasus™, Reverse 511®, SmartCycle®, SmartCycle Bike Indicator™, SmartSpan®, SPM™ (logo), UCRLink™, Vantage®, VantageLive!™, Vantage Next®, VantagePegasus®, VantageRadius®, Vantage Vector®, Velocity® and VersiCam™ are among, but not all of, the trademarks of Iteris, Inc. Any other trademarks or trade names mentioned herein are the property of their respective owners.

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Iteris, Inc.

Unaudited Condensed Consolidated Balance Sheets

(In thousands, except par values)

	September 30, 2020		March 31, 2020
Assets
Current assets:
Cash and cash equivalents	$	15,623	$	14,217
Restricted cash	146		146
Short-term investments	22,164		11,556
Trade accounts receivable, net of allowance for doubtful accounts of $916 and $802 at September 30, 2020 and March 31, 2020, respectively	17,810		16,706
Unbilled accounts receivable	10,284		9,848
Inventories	3,193		3,040
Prepaid expenses and other current assets	4,163		2,040
Assets held for sale, current portion	15		1,476
Total current assets	73,398		59,029
Property and equipment, net	1,744		1,835
Right-of-use assets	12,035		12,598
Intangible assets, net	5,758		6,066
Goodwill	20,590		20,590
Other assets	1,449		1,213
Assets held for sale, noncurrent portion	114		626
Total assets	$	115,088	$	101,957
Liabilities and stockholders’ equity
Current liabilities:
Trade accounts payable	$	8,810	$	8,101
Accrued payroll and related expenses	9,006		7,508
Accrued liabilities	4,113		3,665
Deferred revenue	5,003		4,413
Liabilities held for sale, current portion	486		2,828
Total current liabilities	27,418		26,515
Lease liabilities	10,992		11,638
Deferred income taxes	206		190
Unrecognized tax benefits	116		130
Liabilities held for sale, noncurrent portion	310		357
Total liabilities	39,042		38,830
Commitments and contingencies (Note 7)
Stockholders’ equity:
Preferred stock, $1.00 par value:
Authorized shares — 2,000
Issued and outstanding shares — none	—		—
Common stock, $0.10 par value:
Authorized shares - 70,000 at September 30, 2020 and March 31, 2020
Issued and outstanding shares — 41,110 at September 30, 2020 and 40,713 at March 31, 2020	4,111		4,071
Additional paid-in capital	178,327		176,209
Accumulated deficit	(106,392)		(117,153)
Total stockholders' equity	76,046		63,127
Total liabilities and stockholders' equity	$	115,088	$	101,957

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements

1

Iteris, Inc.

Unaudited Condensed Consolidated Statements of Operations

(In thousands, except per share amounts)

​	Three Months Ended September 30,				Six Months Ended September 30,
​	2020		2019		2020		2019
Product revenues	$	16,265	$	13,795	$	30,659	$	28,312
Service revenues	12,991		12,791		26,597		23,441
Total revenues	29,256		26,586		57,256		51,753
Cost of product revenues	9,332		7,551		17,413		16,046
Cost of service revenues	8,566		8,357		17,617		15,445
Cost of revenues	17,898		15,908		35,030		31,491
Gross profit	11,358		10,678		22,226		20,262
Operating expenses:
Selling, general and administrative	9,246		10,678		17,969		19,814
Research and development	1,134		983		2,048		1,903
Amortization of intangible assets	230		230		460		296
Restructuring charges	—		—		619		—
Total operating expenses	10,610		11,891		21,096		22,013
Operating income (loss)	748		(1,213)		1,130		(1,751)
Non-operating income (expense):
Other (expense) income, net	(44)		115		(28)		107
Interest income, net	43		48		97		81
Income (loss) from continuing operations before income taxes	747		(1,050)		1,199		(1,563)
Provision for income taxes	(28)		(1)		(62)		(25)
Net income (loss) from continuing operations	719		(1,051)		1,137		(1,588)
Loss from discontinued operations before gain on sale, net of tax	(306)		(1,136)		(1,664)		(2,171)
Gain on sale of discontinued operations, net of tax	—		—		11,288		—
Net (loss) income from discontinued operations, net of tax	(306)		(1,136)		9,624		(2,171)
Net income (loss)	$	413	$	(2,187)	$	10,761	$	(3,759)
Income (loss) per share - basic:
Income (loss) per share from continuing operations	$	0.02	$	(0.03)	$	0.03	$	(0.04)
Income (loss) per share from discontinued operations	$	(0.01)	$	(0.03)	$	0.24	$	(0.06)
Net income (loss) per share	$	0.01	$	(0.06)	$	0.27	$	(0.10)
Income (loss) per share - diluted:
Income (loss) per share from continuing operations	$	0.02	$	(0.03)	$	0.03	$	(0.04)
Income (loss) per share from discontinued operations	$	(0.01)	$	(0.03)	$	0.23	$	(0.06)
Net income (loss) per share	$	0.01	$	(0.06)	$	0.26	$	(0.10)
Shares used in basic per share calculations	40,989		40,493		40,860		37,397
Shares used in diluted per share calculations	41,909		40,493		41,708		37,397

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements

2

Iteris, Inc.

Unaudited Condensed Consolidated Statements of Cash Flows

(In thousands)

	Six Months Ended September 30,
	2020		2019
Cash flows from operating activities
Net income (loss)	$	10,761	$	(3,759)
Less: Net income (loss) from discontinued operations	9,624		(2,171)
Net income (loss) from continuing operations	1,137		(1,588)
Adjustments to reconcile net income (loss) from continuing operations to net cash provided by (used in) operating activities:
Right-of-use asset non-cash expense	563		730
Deferred income taxes	2		(19)
Depreciation of property and equipment	367		380
Stock-based compensation	1,331		1,218
Amortization of intangible assets	724		499
Other	47		—
Changes in operating assets and liabilities, net of effects of discontinued operation and acquisition:
Trade accounts receivable	(1,104)		986
Unbilled accounts receivable and deferred revenue	154		(279)
Inventories	(153)		374
Prepaid expenses and other assets	(859)		(919)
Trade accounts payable and accrued expenses	2,570		1,861
Operating lease liabilities	(561)		(680)
Net cash provided by operating activities - continuing operations	4,218		2,563
Net cash used in operating activities - discontinued operations	(2,027)		(2,726)
Net cash provided by (used in) operating activities	2,191		(163)
Cash flows from investing activities
Purchases of property and equipment	(288)		(246)
Purchase of short-term investments	(23,655)		(21,251)
Maturities of investments	13,000		3,175
Capitalized software development costs	(416)		(522)
Cash paid in business acquisition, net of cash acquired	—		(5,581)
Net cash used in investing activities - continuing operations	(11,359)		(24,425)
Net cash provided by (used in) investing activities - discontinued operations	9,690		(30)
Net cash used in investing activities	(1,669)		(24,455)
Cash flows from financing activities
Proceeds from stock option exercises	696		81
Proceeds from ESPP purchases	188		172
Proceeds from issuance of common stock, net of costs	—		26,751
Net cash provided by financing activities - continuing operations	884		27,004
Net cash provided by financing activities - discontinued operations	—		—
Net cash provided by financing activities	884		27,004
Increase in cash, cash equivalents and restricted cash	1,406		2,386
Cash, cash equivalents and restricted cash at beginning of period	14,363		7,071
Cash, cash equivalents and restricted cash at end of period	$	15,769	$	9,457
Supplemental cash flow information:
Cash paid during the year for:
Income taxes	$	102	$	54
Supplemental schedule of non-cash investing and financing activities:
Lease liabilities arising from obtaining right-of-use assets	$	310	$	95
Deferred payment of purchase price	$	1,500	$	—
Issuance of common stock in connection with acquisition	$	—	$	4,535

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements

3

Iteris, Inc.

Unaudited Condensed Consolidated Statements of Stockholders’ Equity

(In thousands)

	For Three and Six Months Ended September 30, 2020
​	Common Stock			Additional Paid-In Capital		Accumulated Deficit		Total Stockholders' Equity
​	Shares	Amount
Balance at March 31, 2020	40,713	$	4,071	$	176,209	$	(117,153)	$	63,127
Stock option exercises	27	3		71		—		74
Stock-based compensation	—	—		607		—		607
Issuance of shares pursuant - to vesting of restricted stock units, net of payroll withholding taxes	12	1		(1)		—		—
Net income	—	—		—		10,348		10,348
Balance at June 30, 2020	40,752	$	4,075	$	176,886	$	(106,805)	$	74,156
Stock option exercises	239	24		598		—		622
Issuance of shares pursuant - to Employee Stock Purchase Plan	42	4		184		—		188
Stock-based compensation	—	—		667		—		667
Issuance of shares pursuant - to vesting of restricted stock units, net of payroll withholding taxes	77	8		(8)		—		—
Net income	—					413		413
Balance at September 30, 2020	41,110	$	4,111	$	178,327	$	(106,392)	$	76,046

	For Three and Six Months Ended September 30, 2019
	Common Stock			Additional Paid-In Capital		Accumulated Deficit		Total Stockholders' Equity
​	Shares	Amount
Balance at March 31, 2019	33,377	$	3,338	$	142,260	$	(111,543)	$	34,055
Stock option exercises	10	1		13		—		14
Issuance of shares pursuant to Employee Stock Purchase Plan	48	5		167		—		172
Stock-based compensation	—	—		602		—		602
Issuance of shares pursuant - to vesting of restricted stock units, net of payroll withholding taxes	2	—		—		—		—
Balance at Issuance of common stock in connection with public offering	6,183	618		26,133		—		26,751
Net loss	—	—		—		(1,572)		(1,572)
Balance at June 30, 2019	39,620	3,962		169,175		(113,115)		60,022
Stock option exercises	23	2		65		—		67
Issuance of shares pursuant - to Employee Stock Purchase Plan	—	—		793		—		793
Stock-based compensation	59	6		(6)		—		—
Issuance of shares pursuant - to vesting of restricted stock units, net of payroll withholding taxes	869	87		4,448		—		4,535
Net loss	—	—		—		(2,187)		(2,187)
Balance at September 30, 2019	40,571	$	4,057	$	174,475	$	(115,302)	$	63,230

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements

4

Iteris, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

September 30, 2020

1.Description of Business and Summary of Significant Accounting Policies

Description of Business

Iteris, Inc. (referred to collectively with its wholly-owned subsidiaries, ClearAg, Inc. and Albeck Gerken, Inc. ("AGI"), in this report as "Iteris," the "Company," "we," "our," and "us") is a provider of smart mobility infrastructure management solutions. Our solutions enable municipalities, transportation agencies, and other transportation infrastructure providers monitor, visualize, and optimize mobility infrastructure to help ensure roads are safe, travel is efficient, and communities thrive. As a pioneer in intelligent transportation systems ("ITS") technology, our intellectual property, products and software-as-a-service ("SaaS") offerings represent a comprehensive range of ITS solutions that we distribute to customers throughout the U.S. and internationally. We believe our products, solutions and services increase safety and decrease congestion within our communities, while also minimizing environmental impact. We continue to make significant investments to leverage our existing technologies and further expand both our advanced detection sensors and performance analytics systems in the transportation infrastructure market and we are always exploring strategic alternatives intended to optimize the value of our Company. Iteris was incorporated in Delaware in 1987 and has operated in its current form since 2004.

Recent Developments

COVID-19 Update

The COVID-19 pandemic (the “Pandemic”) has materially adversely impacted global economic conditions. Indeed, more than six months into the Pandemic, COVID-19 continues to have an unpredictable and unprecedented impact on the U.S. economy as federal, state and local governments react to this public health crisis with travel restrictions, quarantines and "stay-at-home" orders. The uncertainties caused by the Pandemic include, but are not limited to, supply chain disruptions, workplace dislocations, economic contraction, and downward pressure on some customer budgets and customer sentiment in general. While there has been no material impact during the first two quarters of the fiscal year ending March 31, 2021 (“Fiscal 2021”), we did experience some work delays due to the Pandemic. Should such conditions become protracted or worsen the Pandemic could impact our business, results of operations and financial condition. The extent of the impact of the Pandemic on our business and financial results and volatility of our stock price will depend largely on future developments, including the duration of the spread of the outbreak, the impact on capital and financial markets and the related impact on the budgets and financial circumstances of our customers, all of which are highly uncertain and cannot be reasonably estimated as of this report.

Given the uncertainties surrounding the impacts of the Pandemic on the Company's future financial condition and results of operations, the Company has taken certain actions to preserve its liquidity, manage cash flow and strengthen its financial flexibility. Such actions include, but are not limited to, reducing discretionary spending, reducing capital expenditures, implementing restructuring activities, and reducing payroll costs, including employee furloughs, pay freezes and pay cuts. Refer to Note 4, Restructuring Activities, for more information.

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act ("CARES Act") was signed into law in the United States. The CARES Act provides relief to U.S. corporations through financial assistance programs and modifications to certain income tax provisions. The Company is applying certain beneficial provisions of the CARES Act, including the payroll tax deferral and the alternative minimum tax acceleration. Refer to Note 6, Income Taxes, for more information.

The Company assessed the impacts of the Pandemic on the estimates and assumptions used in preparing these unaudited condensed consolidated financial statements. The estimates and assumptions used in these assessments were based on management’s judgment and may be subject to change as new events occur and additional information is obtained. In particular, there is significant uncertainty about the duration and extent of the impact of the Pandemic and its resulting impact on global economic conditions. If economic conditions caused by the Pandemic do not recover as currently estimated by management, the Company’s financial condition, cash flows and results of operations may be materially impacted. See below for areas that required more judgments and estimates as a result of the Pandemic. The Company will continue to assess the effect on its operations by monitoring the spread of the Pandemic and the actions implemented to combat the virus throughout the world and its assessment of the impact of the Pandemic may change.

5

Inventory Valuation

The Company values inventory at the lower of cost or net realizable value. Cost is determined using the first-in, first-out method. Net realizable value is determined by estimated expected selling prices based on anticipated recovery rates for slow-moving and obsolete inventory and other factors, such as market conditions, expected channel of distribution and current consumer demand and preferences.

Accounts Receivable

Accounts receivable are recorded net of an allowance for doubtful accounts. The Company estimates the allowance for doubtful accounts based on an analysis of the aging of accounts receivable, assessment of collectability, including any known or anticipated bankruptcies, customer-specific circumstances and an evaluation of current economic conditions.

Goodwill and Other Long-Lived Assets

The Company reviews its goodwill and other long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may be impaired. Impairment losses are measured and recorded for the excess of carrying value over its fair value, estimated based on expected future cash flows and other quantitative and qualitative factors. The Company performed a qualitative assessment of its goodwill to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying value and noted no indicators of impairment at September 30, 2020. The Company also reviewed its other long-lived assets and noted no indicators of impairment related to the Pandemic.

Sale of Agriculture and Weather Analytics Segment

On May 5, 2020, the Company completed the sale of substantially all of our assets used in connection with our Agriculture and Weather Analytics segment to DTN, LLC (“DTN”), an operating company of TBG AG, a Swiss-based holding company, pursuant to an Asset Purchase Agreement (the “Purchase Agreement”) signed on May 2, 2020, in exchange for a total purchase consideration of $12.0 million in cash, subject to working capital adjustments. Upon closing on May 5, 2020, the Company received $10.5 million in cash and $1.45 million and $50,000 will be paid by DTN at the 12-month and 18-month anniversaries of the closing date, respectively, subject to satisfactions of the conditions set forth in the Purchase Agreement relating to the transition of certain customers to DTN and the collection of certain receivables by DTN. See Note 3, Discontinued Operations, for further details on the sale of the Agriculture and Weather Analytics segment.

Restructuring Activities

On April 30, 2020, in connection with the sale of the Agriculture and Weather Analytics segment, the Board of Directors of Iteris, Inc. approved restructuring activities to better position the Company for increased profitability and growth. Restructuring charges of approximately $1.5 million were incurred for separation costs for certain employees who did not transition to DTN, additional positions that were eliminated to right-size the cost structure of the Company, and the impairment of certain lease-related assets. See Note 4, Restructuring Activities, for further details on the restructuring activities.

Basis of Presentation

Our unaudited condensed consolidated financial statements include the accounts of Iteris, Inc. and its subsidiaries, and have been prepared in accordance with the rules of the U.S. Securities and Exchange Commission (“SEC”) for interim reporting, which permit certain footnotes or other financial information that are normally required by generally accepted accounting principles in the U.S. (“GAAP”) to be condensed or omitted. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and related notes included in its Annual Report on Form 10-K for the fiscal year ended March 31, 2020 (“Fiscal 2020”), filed with the SEC on June 9, 2020. All intercompany accounts and transactions have been eliminated in consolidation. The results of operations for the three- and six-month periods ended September 30, 2020 are not necessarily indicative of the results to be expected for Fiscal 2021 or any other periods.

During the first quarter of Fiscal 2021, the Company completed the sale of its Agriculture and Weather Analytics segment for total cash consideration of $12.0 million, subject to certain working capital adjustments and transaction costs. The Agriculture and Weather Analytics segment’s results of operations and related cash flows have been reclassified to loss from discontinued operations, respectively, for all periods presented. The assets and liabilities of the Agriculture and Weather Analytics segment have been reclassified to assets held for sale and liabilities held for sale, respectively, in the unaudited condensed consolidated balance sheet as of March 31, 2020. See Note 3, Discontinued Operations, for further information.

6

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires our management to make certain 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 the reporting period. Actual results could differ from those estimates. Significant estimates made in the preparation of the consolidated financial statements include the collectability of accounts receivable and related allowance for doubtful accounts, projections of taxable income used to assess realizability of deferred tax assets, warranty reserves and other contingencies, costs to complete long-term contracts, indirect cost rates used in cost plus contracts, the valuation of inventories, the valuation of purchased intangible assets and goodwill, the valuation of investments, estimates of future cash flows used to assess the recoverability of long-lived assets and the impairment of goodwill, and fair value of our stock option awards used to calculate stock-based compensation.

Revenue Recognition

Product revenue related contracts with customers begin when we acknowledge a purchase order for a specific customer order of product to be delivered in the near term. These purchase orders are short-term in nature. Product revenue is recognized at a point in time upon shipment or upon customer receipt of the product, depending on shipping terms. The Company determined that this method best represents the transfer of goods as transfer of control typically occurs upon shipment or upon customer receipt of the product.

Service revenues, primarily derived from the Transportation Systems segment, are primarily from long-term engineering and consulting service contracts with governmental agencies. These contracts generally include performance obligations in which control is transferred over time. We recognize revenue on fixed fee contracts, over time, using the proportion of actual costs incurred to the total costs expected to complete the contract performance obligation. The Company determined that this method best represents the transfer of services as the proportion closely depicts the efforts or inputs completed towards the satisfaction of a fixed fee contract performance obligation. Time & Materials (“T&M”) and Cost Plus Fixed Fee (“CPFF”) contracts are considered to involve variable consideration. However, contractual performance obligations with these fee types qualify for the “Right to Invoice” practical expedient. Under this practical expedient, the Company is allowed to recognize revenue, over time, in the amount to which the Company has a right to invoice. In addition, the Company is not required to estimate such variable consideration upon inception of the contract and reassess the estimate each reporting period. The Company determined that this method best represents the transfer of services as, upon billing, the Company has a right to consideration from a customer in an amount that directly corresponds with the value to the customer of the Company’s performance completed to date.

Service revenues also consist of revenues derived from maintenance support and the use of the Company’s service platforms and APIs on a subscription basis. We generate this revenue from fees for maintenance and support, monthly active user fees, SaaS fees, and hosting and storage fees. In most cases, the subscription or transaction arrangement is a single performance obligation comprised of a series of distinct services that are substantially the same and that have the same pattern of transfer (i.e., distinct days of service). The Company applies a time-based measure of progress to the total transaction price, which results in ratable recognition over the term of the contract. The Company determined that this method best represents the transfer of services as the customer obtains equal benefit from the service throughout the service period.

The Company accounts for individual goods and services separately if they are distinct performance obligations, which often requires significant judgment based upon knowledge of the products and/or services, the solution provided and the structure of the sales contract. In SaaS agreements, we provide a service to the customer that combines the software functionality, maintenance and hosting into a single performance obligation. In product-related contracts, a purchase order may cover different products, each constituting a separate performance obligation.

We generally estimate variable consideration at the most likely amount to which we expect to be entitled and in certain cases based on the expected value, which requires judgment. We include estimated amounts in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Our estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of our anticipated performance and all information (historical, current and forecasted) that is reasonably available to us. We review and update these estimates on a quarterly basis.

7

The Company’s typical performance obligations include the following:

Performance Obligation	When Performance Obligation is Typically Satisfied	When Payment is Typically Due	How Standalone Selling Price is Typically Estimated
Product Revenues
Standard purchase orders for delivery of a tangible product	Upon shipment (point in time)	Within 30 days of delivery	Observable transactions
Engineering services where the deliverable is considered a product	As work is performed (over time)	Within 30 days of services being invoiced	Estimated using a cost-plus margin approach
Service Revenues
Engineering and consulting services	As work is performed (over time)	Within 30 days of services being invoiced	Estimated using a cost-plus margin approach
SaaS	Over the course of the SaaS service once the system is available for use (over time)	At the beginning of the contract period	Estimated using a cost-plus margin approach

Disaggregation of Revenue

The Company disaggregates revenue from contracts with customers into reportable segments and the nature of the products and services. See Note 12, Business Segment Information, for our revenue by reportable segments.

Trade Accounts Receivable and Contract Balances

We classify our right to consideration in exchange for goods and services as either a receivable or a contract asset. A receivable is a right to consideration that is unconditional (i.e. only the passage of time is required before payment is due). We present such receivables in trade accounts receivable, net, in our unaudited condensed consolidated balance sheets at their net estimated realizable value.

The Company maintains an allowance for doubtful accounts to provide for the estimated amount of receivables that will not be collected. If warranted, the allowance is increased by the Company’s provision for doubtful accounts, which is charged against income. All recoveries on receivables previously charged off are included in income, while direct charge-offs of receivables are deducted from the allowance.

A contract asset is a right to consideration that is conditional upon factors other than the passage of time. Contract assets are presented as unbilled accounts receivable on the accompanying unaudited condensed consolidated balance sheets. For example, we would record a contract asset if we record revenue on a professional services engagement, but are not entitled to bill until we achieve specified milestones.

Our contract assets and refund liabilities are reported in a net position on a contract basis at the end of each reporting period. Refund liabilities are consideration received in advance of the satisfaction of performance obligations.

Contract Fulfillment Costs

The Company evaluates whether or not we should capitalize the costs of fulfilling a contract. Such costs would be capitalized when they are not within the scope of other standards and: (1) are directly related to a contract; (2) generate or enhance resources that will be used to satisfy performance obligations; and (3) are expected to be recovered. As of September 30, 2020 and March 31, 2020, there was approximately $2,073,000 and $1,236,000, respectively, of contract fulfillment costs, which are presented in the accompanying unaudited condensed consolidated balance sheets as prepaid and other current assets. These costs primarily relate to the satisfaction of performance obligations related to the set up of SaaS platforms. These costs are amortized on a straight-line basis over the estimated useful life of the SaaS platform.

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Transaction Price Allocated to the Remaining Performance Obligations

As of September 30, 2020 and March 31, 2020, the aggregate amount of transaction price allocated to remaining performance obligations was immaterial, primarily as a result of the termination provisions within our contracts, which make the duration of the accounting term of the contract one year or less.

Deferred Revenue

Deferred revenue in the accompanying unaudited condensed consolidated balance sheets is comprised of refund liabilities related to billings and consideration received in advance of the satisfaction of performance obligations.

Concentration of Credit Risk

Financial instruments that potentially subject us to a concentration of credit risk consist principally of cash and cash equivalents and trade accounts receivable.

Cash and cash equivalents consist primarily of demand deposits and money market funds maintained with several financial institutions. Deposits held with banks may exceed the amount of insurance provided on such deposits. Generally, these deposits may be redeemed upon demand and are maintained with high quality financial institutions, and therefore are believed to have minimal credit risk.

Our accounts receivable are primarily derived from billings with customers located throughout North America, as well as in Europe and South America. We generally do not require collateral or other security from our domestic customers. We maintain an allowance for doubtful accounts for potential credit losses, which losses have historically been within management’s expectations.

We currently have, and historically have had, a diverse customer base. For the three- and six-months ended September 30, 2020 and 2019, no individual customer represented greater than 10% of our total revenues. As of September 30, 2020 and March 31, 2020, no individual customer represented greater than 10% of our total accounts receivable.

Fair Values of Financial Instruments

The fair value of cash equivalents, receivables, accounts payable and accrued expenses approximate carrying value because of the short period of time to maturity. Our investments are measured at fair value on a recurring basis.

The framework for measuring fair value and related disclosure requirements about fair value measurements are provided in Financial Accounting Standard Board (“FASB”) Accounting Standards Codification (“ASC”) 820, Fair Value Measurements (“ASC 820”). This pronouncement defines fair value as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The fair value hierarchy prescribed by ASC 820 contains three levels as follows:

Level 1—Quoted prices in active markets for identical assets or liabilities.

Level 2—Observable inputs other than quoted prices in active markets for identical assets or liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3—Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability.

Cash, Cash Equivalents and Restricted Cash

Cash and cash equivalents consist of cash and short-term investments with initial maturities of 90 days or less.

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As of September 30, 2020 and March 31, 2020, restricted cash was $146,000 and $146,000, respectively, related to cash restricted for shares purchased under the Employee Stock Purchase Plan ("ESPP") (see Note 9, Stock-Based Compensation, for further details on the ESPP).

Cash, cash equivalents and restricted cash presented in the accompanying unaudited condensed consolidated statements of cash flows consist of the following (in thousands):

	September 30, 2020		March 31, 2020
Cash and cash equivalents	$	15,623	$	14,217
Restricted cash	146		146
	$	15,769	$	14,363

Investments

The Company’s investments are classified as either held-to-maturity, available-for-sale or trading, in accordance with FASB ASC 320 – Investments – Debt and Equity Securities. Held-to-maturity securities are those securities that the Company has the positive intent and ability to hold until maturity. Trading securities are those securities that the Company intends to sell in the near term. All other securities not included in the held-to-maturity or trading category are classified as available-for-sale. Held-to-maturity securities are recorded at amortized cost, which approximates fair market value. Trading securities are carried at fair value with unrealized gains and losses charged to earnings. Available-for-sale securities are carried at fair value with unrealized gains and losses recorded within accumulated other comprehensive loss as a separate component of stockholders’ equity. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs, where available (see Note 5, Fair Value Measurements). As of September 30, 2020 and March 31, 2020, all of our investments are available-for-sale. Under FASB ASC 320-10-35, a security is considered to be other-than-temporarily impaired if the present value of cash flows expected to be collected are less than the security’s amortized cost basis (the difference being defined as the “Credit Loss”) or if the fair value of the security is less than the security’s amortized cost basis and the investor intends, or will be required, to sell the security before recovery of the security’s amortized cost basis. If an other-than-temporary impairment exists, the charge to earnings is limited to the amount of Credit Loss if the investor does not intend to sell the security, and will not be required to sell the security, before recovery of the security’s amortized cost basis. Any remaining difference between fair value and amortized cost is recognized in other comprehensive loss, net of applicable taxes. The Company evaluates whether the decline in fair value of its investments is other-than-temporary at each quarter-end. This evaluation consists of a review by management, and includes market pricing information and maturity dates for the securities held, market and economic trends in the industry and information on the issuer’s financial condition and, if applicable, information on the guarantors’ financial condition. Factors considered in determining whether a loss is temporary include the length of time and extent to which the investment’s fair value has been less than its cost basis, the financial condition and near-term prospects of the issuer and guarantors, including any specific events which may influence the operations of the issuer and the Company’s intent and ability to retain the investment for a reasonable period of time sufficient to allow for any anticipated recovery of fair value.

Allowance for Doubtful Accounts

The collectability of our accounts receivable is evaluated through review of outstanding invoices and ongoing credit evaluations of our customers’ financial condition. In cases where we are aware of circumstances that may impair a specific customer’s ability to meet its financial obligations subsequent to the original sale, we will record an allowance against amounts due, and thereby reduce the net recognized accounts receivable to the amount we reasonably believe will be collected. We also maintain an allowance based on our historical collections experience. When we determine that collection is not likely, we write off accounts receivable against the allowance for doubtful accounts.

Inventories

Inventories consist of finished goods, work-in-process and raw materials and are stated at the lower of cost or net realizable value. Cost is determined using the first-in, first-out method.

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Property and Equipment

Property and equipment are recorded at cost and are depreciated using the straight-line method over the estimated useful life ranging from three to eight years. Leasehold improvements are depreciated over the term of the related lease or the estimated useful life of the improvement, whichever is shorter.

Intangible Assets

Intangible assets with determinable economic lives are carried at cost, less accumulated amortization. Amortization is computed over the estimated useful life of each asset on a straight-line basis. The Company determines the useful lives of identifiable intangible assets after considering the specific facts and circumstances related to each intangible asset. Factors the Company considers when determining useful lives include the contractual term of any agreement related to the asset, the historical performance of the asset, the Company's long-term strategy for using the asset, any laws or other local regulations which could impact the useful life of the asset and other economic factors, including competition and specific market conditions.

Goodwill and Long-Lived Assets

We perform an annual qualitative assessment of our goodwill during the fourth fiscal quarter, or more frequently, to determine if any events or circumstances exist, such as an adverse change in business climate or a decline in overall industry demand, that would indicate that it would more likely than not reduce the fair value of a reporting unit below its carrying amount, including goodwill. If events or circumstances do not indicate that the fair value of a reporting unit is below its carrying amount, then goodwill is not considered to be impaired and no further testing is required; if otherwise, we compare the fair value of our reporting unit to its carrying value, including goodwill. If the carrying amount of a reporting unit exceeds the reporting unit’s fair value, the amount by which the carrying value of the goodwill exceeds its implied fair value, if any, is recognized as an impairment loss. We monitor the indicators for goodwill impairment testing between annual tests. As of September 30, 2020, there were no indicators of goodwill impairment.

We test long-lived assets and purchased intangible assets (other than goodwill) for impairment if we believe indicators of impairment exist. We determine whether the carrying value of an asset or asset group is recoverable, based on comparisons to undiscounted expected future cash flows the asset or asset group is expected to generate. If an asset is not recoverable, we record an impairment loss equal to the amount by which the carrying value of the asset exceeds its fair value. We primarily use the income valuation approach to determine the fair value of our long-lived assets and purchased intangible assets. During the three months ended June 30, 2020, we recorded $313,000 in impairment charges related to right-of-use assets and leasehold improvements directly resulting from the restructuring activities. There was no additional impairment or restructuring charges during the three months ended September 30, 2020. See Note 4, Restructuring Activities, for further details on the restructuring activities.

Income Taxes

We utilize the asset and liability method of accounting for income taxes, under which deferred taxes are determined based on the temporary differences between the financial statement and tax basis of assets and liabilities using tax rates expected to be in effect during the years in which the basis differences reverse. A valuation allowance is recorded when it is more-likely-than-not that some or all of the deferred tax assets will not be realized, which increases our income tax expense in the period such determination is made. As such, as of September 30, 2020, we determined it was appropriate to record a full valuation allowance against our deferred tax assets. We will continuously reassess the appropriateness of maintaining a valuation allowance.

Income tax positions must meet a more-likely-than-not recognition threshold to be recognized. Income tax positions that previously failed to meet the more-likely-than-not threshold are recognized in the first subsequent financial reporting period in which that threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not threshold are derecognized in the first subsequent financial reporting period in which that threshold is no longer met.

Stock-Based Compensation

We record stock-based compensation in our unaudited condensed consolidated statements of operations as an expense, based on the estimated grant date fair value of our stock-based awards, whereby such fair values are amortized over the requisite service period. Our stock-based awards are currently comprised of common stock options, restricted stock units and performance stock units. The fair value of our common stock option awards is estimated on the grant date using the Black-

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Scholes-Merton option-pricing formula. The fair value of our performance stock unit awards is estimated on the grant date using a Monte Carlo simulation model. While the use of these models meets established requirements, the estimated fair values generated by the models may not be indicative of the actual fair values of our awards as it does not consider certain factors important to those awards to employees, such as continued employment and periodic vesting requirements, as well as limited transferability. The fair value of our restricted stock units is based on the closing market price of our common stock on the grant date. If there are any modifications or cancellations of the underlying unvested stock-based awards, we may be required to accelerate, increase or cancel any remaining unearned stock-based compensation expense.

Research and Development Expenditures

Research and development expenditures are charged to expense in the period incurred.

Warranty

We generally provide a one- to three-year warranty from the original invoice date on all products, materials and workmanship. Products sold to various original equipment manufacturer customers sometimes carry longer warranties. Defective products will be either repaired or replaced, usually at our option, upon meeting certain criteria. We accrue a provision for the estimated costs that may be incurred for product warranties relating to a product as a component of cost of sales at the time revenue for that product is recognized. The accrued warranty reserve is included within accrued liabilities in the accompanying unaudited condensed consolidated balance sheets. We do not provide any service-type warranties.

Repair and Maintenance Costs

We incur repair and maintenance costs in the normal course of business. Should the repair or maintenance result in a permanent improvement to one of our leased facilities, the cost is capitalized as a leasehold improvement and amortized over its useful life or the remainder of the lease period, whichever is shorter. Non-permanent repair and maintenance costs are charged to expense as incurred.

Comprehensive Income (Loss)

The difference between net income and comprehensive income for the three- and six-months ended September 30, 2020 and between net loss and comprehensive loss for the three- and six-months ended September 30, 2019 was de minimis.

Recent Accounting Pronouncements

In June 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments—Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments. This standard update requires that certain financial assets be measured at amortized cost net of an allowance for estimated credit losses such that the net receivable represents the present value of expected cash collection. In addition, this standard update requires that certain financial assets be measured at amortized cost reflecting an allowance for estimated credit losses expected to occur over the life of the assets. The estimate of credit losses must be based on all relevant information including historical information, current conditions and reasonable and supportable forecasts that affect the collectability of the amounts. In November 2019, the FASB issued ASU 2019-10, Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815) and Leases (Topic 842): Effective Dates, which defers the effective date of ASU 2016-13 to fiscal years beginning after December 15, 2022 for all entities except SEC reporting companies that are not smaller reporting companies. As a smaller reporting company, ASU 2016-13 will now be effective for our fiscal year 2024 beginning April 1, 2023; however, early adoption is permitted. We are currently evaluating the timing and impact of adopting ASU 2016-13 on our unaudited condensed consolidated financial statements.

In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirement for Fair Value Measurements (“ASU 2018-13”), which modifies the disclosure requirements on fair value measurements. This update is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019, and early adoption is permitted. The Company adopted this update effective April 2020. The adoption of this ASU did not have a material impact on the Company’s financial statements.

In August 2018, the FASB issued ASU No. 2018-15, Intangibles—Goodwill and Other—Internal Use Software (subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract ("ASU 2018-15"), which clarifies the accounting for implementation costs in cloud computing arrangements. This update is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019, and early

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adoption is permitted. The Company adopted this update effective April 2020. The adoption of this ASU did not have a material impact on the Company’s financial statements.

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes. The ASU removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. This ASU is effective for fiscal years beginning after December 15, 2020, including interim periods within that fiscal year, with early adoption permitted. The Company early adopted this update effective July 2020. The adoption of this ASU did not have a material impact on the Company’s financial statements.

2.Supplemental Financial Information

Inventories

The following table presents details of our inventories:

	September 30, 2020		March 31, 2020
	(In thousands)
Materials and supplies	$	1,720	$	1,380
Work in process	27		162
Finished goods	1,446		1,498
	$	3,193	$	3,040

Property and Equipment.

The following table presents details of our property and equipment, net:

	September 30, 2020		March 31, 2020
	(In thousands)
Equipment	$	6,500	$	6,222
Leasehold improvements	2,966		2,911
Accumulated depreciation	(7,722)		(7,298)
	$	1,744	$	1,835

Depreciation expense was approximately $182,000 and $367,000 for the three- and six-months ended September 30, 2020, respectively, and $203,000 and $380,000 for the three- and six-months ended September 30, 2019, respectively. Approximately $56,000 and $117,000 of the depreciation expense was recorded to cost of revenues, and approximately $126,000 and $250,000 was recorded to operating expenses, respectively, in the unaudited condensed consolidated statements of operations for the three- and six-months ended September 30, 2020. Approximately $65,000 and $130,000 of the depreciation expense was recorded to cost of revenues, and approximately $138,000 and $250,000 was recorded to operating expenses, respectively, in the unaudited condensed consolidated statements of operations for the three- and six-months ended September 30, 2019.

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Intangible Assets

There are no indefinite lived intangible assets on our unaudited condensed consolidated balance sheets. The following table presents details of our net intangible assets:

	September 30, 2020						March 31, 2020
	Gross Carrying Amount		Accumulated Amortization		Net Book Value		Gross Carrying Amount		Accumulated Amortization		Net Book Value
	(In thousands)
Technology	$	1,286	$	(1,286)	$	—	$	1,286	$	(1,286)	$	—
Customer contracts / relationships	3,750		(979)		2,771		3,750		(688)		3,062
Trade names and non-compete agreements	770		(648)		122		770		(613)		157
Capitalized software development costs	4,839		(1,974)		2,865		4,423		(1,576)		2,847
Total	$	10,645	$	(4,887)	$	5,758	$	10,229	$	(4,163)	$	6,066

Amortization expense for intangible assets subject to amortization was approximately $363,000 and $724,000 for the three- and six-months ended September 30, 2020, respectively, and $336,000 and $499,000 for the three- and six-months ended September 30, 2019, respectively. Approximately $133,000 and $264,000 of the intangible asset amortization was recorded to cost of revenues and approximately $230,000 and $460,000, was recorded to amortization expense for the three- and six-months ended September 30, 2020, respectively, in the unaudited condensed consolidated statements of operations. Approximately $106,000 and $203,000 of the intangible asset amortization was recorded to cost of revenues and approximately $230,000 and $296,000 was recorded to amortization expense for the three- and six-months ended September 30, 2019, respectively, in the unaudited condensed consolidated statements of operations.

As of September 30, 2020, future estimated amortization expense is as follows:

Year Ending March 31,
(In thousands)
2021	$	731
2022	1,373
2023	1,149
2024	912
2025	849
Thereafter	744
	$	5,758

Warranty Reserve Activity

Warranty reserve is recorded as accrued liabilities in the accompanying unaudited condensed consolidated balance sheets. The following table presents activity related to the warranty reserve:

​	Six Months Ended September 30,
​	2020		2019
​	(In thousands)
Balance at beginning of fiscal year	$	416	$	463
Additions charged to cost of sales	152		372
Warranty claims	(128)		(340)
Balance at end of reporting period	$	440	$	495

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Earnings Per Share

The following table sets forth the computation of basic and diluted net income (loss) per share:

​	Three Months Ended September 30,				Six Months Ended September 30,
​	2020		2019		2020		2019
​	(In thousands, except per share amounts)				(In thousands, except per share amounts)
Numerator:
Net income (loss) from continuing operations	$	719	$	(1,051)	$	1,137	$	(1,588)
Net income (loss) from discontinued operations, net of tax	(306)		(1,136)		9,624		(2,171)
Net income (loss)	$	413	$	(2,187)	$	10,761	$	(3,759)
Denominator:
Weighted average common shares used in basic computation	40,989		40,493		40,860		37,397
Dilutive stock options	920		—		848		—
Weighted average common shares used in diluted computation	41,909		40,493		41,708		37,397
Basic:	​		​		​		​
Net income (loss) per share from continuing operations:	$	0.02	$	(0.03)	$	0.03	$	(0.04)
Net income (loss) per share from discontinued operations:	$	(0.01)	$	(0.03)	$	0.24	$	(0.06)
Net income (loss) per basic share	$	0.01	$	(0.06)	$	0.27	$	(0.10)
Diluted:
Net income (loss) per share from continuing operations:	$	0.02	$	(0.03)	$	0.03	$	(0.04)
Net income (loss) per share from discontinued operations:	$	(0.01)	$	(0.03)	$	0.23	$	(0.06)
Net income (loss) per diluted share	$	0.01	$	(0.06)	$	0.26	$	(0.10)

The following instruments were excluded for purposes of calculating weighted average common share equivalents in the computation of diluted net income (loss) per share as their effect would have been anti-dilutive:

	Three Months Ended September 30,		Six Months Ended September 30,
	2020	2019	2020	2019
	(In thousands)		(In thousands)
Stock options	2,887	5,039	2,889	5,050
Restricted stock units	106	438	158	282

3.Discontinued Operations

On May 5, 2020, the Company completed the sale of substantially all of our assets used in connection with our Agriculture and Weather Analytics segment to DTN, LLC (“DTN”), an operating company of TBG AG, a Swiss-based holding company, pursuant to the Purchase Agreement signed on May 2, 2020, in exchange for a total purchase consideration of $12.0 million in cash, subject to working capital adjustments. Upon closing on May 5, 2020, the Company received $10.5 million. The deferred payments of the purchase price of $1.45 million and $50,000, which were included in prepaid expenses and other current assets, and other assets on the unaudited condensed consolidated balance sheets, respectively, will be paid by DTN at the 12-month and 18-month anniversaries of the closing date, subject to satisfaction of the conditions set forth in the Purchase Agreement relating to the transition of certain customers to DTN and the collection of certain receivables by DTN. The Purchase Agreement also provides for customary post-closing adjustments to the purchase price related to working capital at closing. The parties also entered into certain ancillary agreements at the closing of the transaction that will provide Iteris with ongoing access to weather and pavement data that it integrates into its transportation software products, and a joint development agreement under which the parties agreed to pursue future joint opportunities in the global transportation market.

The sale of the Agriculture and Weather Analytics segment was a result of the Company’s shift in strategy to focus on its smart mobility infrastructure management solutions and to capitalize on the potential for a future partnership upon the sale of this business component to DTN. We have determined that the Agriculture and Weather Analytics segment, which constituted one of our operating segments, qualifies as a discontinued operation in accordance with the criteria set forth in ASC 205-20, Presentation of Financial Statements – Discontinued Operations.

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On May 5, 2020, the Company also entered into a transition services agreement (“TSA”) with DTN, pursuant to which the Company agreed to support the information technology and accounting functions of the Agriculture and Weather Analytics segment for a period up to 12 months and DTN agreed to provide the contract administration/account management services for certain contracts of the Company and other transition services. Either party may make any reasonable request to extend the period of time the other party shall provide a transition service beyond the initial service period or access to additional services that are necessary for the transition of the operations and business. The Company earned approximately $70,000 and $84,000 in income and incurred approximately $24,000 and $27,000 in costs associated with the TSA for the three- and six-months ended September 30, 2020, respectively, which were included in loss from discontinued operations on the unaudited condensed consolidated statement of operations.

The related assets and liabilities of the Agriculture and Weather Analytics segment were reclassified to assets held for sale and liabilities held for sale, respectively, as of March 31, 2020 on the unaudited condensed consolidated balance sheets. The following table is a summary of major classes of assets and liabilities held for sale:

	March 31, 2020
	(In thousands)
Assets
Trade accounts receivable, net of allowance for doubtful accounts	$	863
Unbilled accounts receivable	504
Prepaid expenses and other current assets	109
Total assets held for sale, current portion	1,476
Property and equipment, net	107
Right-of-use assets	446
Other classes of assets that are not major	73
Total assets held for sale, noncurrent	626
Total assets held for sale	$	2,102
Liabilities
Trade accounts payable	$	254
Accrued liabilities	91
Accrued payroll and related expenses	933
Deferred revenue	1,550
Total liabilities held for sale, current position	2,828
Lease liabilities	357
Total liabilities held for sale	$	3,185

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The results of operations for the Agriculture and Weather Analytics segment were included in net income (loss) from discontinued operations on the Company's unaudited condensed consolidated statements of operations. The following table provides information regarding the results of discontinued operations:

	Three Months Ended September 30,				Six Months Ended September 30,
	2020		2019		2020		2019
Service revenue	$	—	$	1,295	$	695	$	2,736
Cost of service revenues	—		590		349		1,207
Gross profit	—		705		346		1,529
Operating expenses:
Selling, general and administration	230		839		746		1,772
Research and development	—		1,002		407		1,928
Restructuring charges	—		—		837		—
Total operating expenses	230		1,841		1,990		3,700
Operating loss from discontinued operations	(230)		(1,136)		(1,644)		(2,171)
Other (expense) income, net	(29)		—		27		—
Loss from discontinued operation before income tax	(259)		(1,136)		(1,617)		(2,171)
Income tax	(47)		—		(47)		—
Net loss from discontinued operations	(306)		(1,136)		(1,664)		(2,171)
Gain on disposal of discontinued operations before income tax	—		—		11,315		—
Income tax expense on gain on disposal	—		—		(27)		—
Gain on disposal of discontinued operations after income tax	—		—		11,288		—
Net income (loss) from discontinued operations	$	(306)	$	(1,136)	$	9,624	$	(2,171)

The following table provides information on the gain recorded on the sale of the Agriculture and Weather Analytics segment for the three- and six-months ended September 30, 2020. These amounts reflect the closing balance sheet of the Agriculture and Weather Analytics segment upon the closing of the sale on May 5, 2020 (in thousands).

Initial proceeds from sale, net of transaction costs	$	9,440
Closing working capital adjustment	250
Deferred payments of purchase price	1,500
Total consideration, net of transaction costs	11,190
Trade accounts receivable, net of allowance for doubtful accounts	1,060
Unbilled accounts receivable	488
Other classes of assets that are not major	194
Total Agriculture and Weather Analytics segment assets	1,742
Trade accounts payable	349
Deferred revenue	1,518
Total Agriculture and Weather Analytics segment liabilities	1,867
Gain on sale of Agriculture and Weather Analytics segment	$	11,315

The initial proceeds were net of transaction costs of approximately $1.1 million.

4.Restructuring Activities

On April 30, 2020, in connection with the sale of the Agriculture and Weather Analytics segment, the Board of Directors of Iteris, Inc. approved restructuring activities to better position the Company for increased profitability and growth, and the Company incurred total restructuring charges of approximately $1.5 million, primarily resulting from a separation for

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certain employees who did not transition to DTN, additional positions that were eliminated to right-size the cost structure of the Company and lease impairment related to our Grand Forks, North Dakota facility.

There were no restructuring and severance costs for the three months ended September 30, 2020. The following table presents the restructuring and severance costs for our reportable segments, as well as corporate expenses, for the six months ended September 30, 2020. (in thousands):

	Roadway Sensors		Transportation Systems		Agriculture and Weather Analytics		Corporate		Total
Severance and benefits	$	110	$	43	$	524	$	428	$	1,105
Lease impairment and other costs	—		—		313		38		351
Total restructuring and severance costs	$	110	$	43	$	837	$	466	$	1,456

During the six months ended September 30, 2020, approximately $619,000 of the restructuring costs were recorded to restructuring charges in the unaudited condensed consolidated statements of operations, and approximately $837,000 of the restructuring costs were recorded to loss from discontinued operations in the unaudited condensed consolidated statements of operations.

As of September 30, 2020, we have accrued approximately $247,000 for severance and benefits related to the restructuring activities in accrued payroll and related expenses on the unaudited condensed consolidated balance sheet. Our restructuring activities during the three- and six-months ended September 30, 2020 were as follows (in thousands):

Balance at March 31, 2020	$	—
Charged to expenses	1,105
Cash payments	(661)
Balance at June 30, 2020	$	444
Cash payments	(197)
Balance at September 30, 2020	$	247

5.Fair Value Measurements

We measure fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Fair value measurements are based on a three tier hierarchy that prioritizes the inputs used to measure fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets for identical assets and liabilities; Level 2, defined as observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities or prices quoted in inactive markets; and Level 3, defined as unobservable inputs that are significant to the fair value of the asset or liability, and for which little or no market data exists, therefore requiring management to utilize its own assumptions to provide its best estimate of what market participants would use in valuing the asset or liability.

We did not have any material financial assets or liabilities measured at fair value on a recurring basis using Level 3 inputs as of September 30, 2020 or March 31, 2020. Our non-financial assets, such as goodwill, intangible assets and property and equipment, are measured at fair value on a nonrecurring basis, generally when there is a transaction involving those assets such as a purchase transaction, a business combination or an adjustment for impairment. No non-financial assets were measured at fair value at September 30, 2020 and March 31, 2020.

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The following tables present the Company’s financial assets that are recorded at fair value on a recurring basis, segregated among the appropriate levels within the fair value hierarchy:

	As of September 30, 2020
	(In thousands)
	Amortized Cost		Gross Unrealized Loss		Gross Unrealized Gain		Estimated Fair Value
Level 1:
Money market funds	$	4,190	$	—	$	—	$	4,190
Subtotal	4,190		—		—		4,190
Level 2:
Commercial paper	10,197		—		1		10,198
Corporate notes and bonds	2,255		—		2		2,257
US Treasuries	9,710		(1)		—		9,709
Subtotal	22,162		(1)		3		22,164
Total	$	26,352	$	(1)	$	3	$	26,354

	As of March 31, 2020
	(In thousands)
	Amortized Cost		Gross Unrealized Loss		Gross Unrealized Gain		Estimated Fair Value
Level 1:
Money market funds	$	10,576	$	(1)	$	—	$	10,575
Subtotal	10,576		(1)		—		10,575
Level 2:
Commercial paper	1,495		(1)		—		1,494
Corporate notes and bonds	6,044		(22)		—		6,022
US Treasuries	3,013		—		20		3,033
US Government agencies	1,007		—		—		1,007
Subtotal	11,559		(23)		20		11,556
Total	$	22,135	$	(24)	$	20	$	22,131

Unrealized losses related to investments are due to interest rate fluctuations as opposed to credit quality. In addition, we do not intend to sell, and it is not more likely than not that, we would be required to sell, any of our investments before recovery of their cost basis. As a result, there is no other-than-temporary impairment for these investments as of September 30, 2020.

6.Income Taxes

The effective tax rate used for interim periods is the estimated annual effective tax rate, based on current estimate of full year results, except that taxes related to specific events, if any, are recorded in the interim period in which they occur.

Income tax expense for the three- and six-months ended September 30, 2020 was approximately $28,000 and $62,000, or 3.4% and 4.8%, respectively, of pre-tax income as compared with an expense of approximately $1,000 and $25,000, or 0.1% and 0.6% of pre-tax loss for the three- and six-months ended September 30, 2019, respectively.

In assessing the realizability of our deferred tax assets, we review all available positive and negative evidence, including reversal of deferred tax liabilities, potential carrybacks, projected future taxable income, tax planning strategies and recent financial performance. As we have experienced a cumulative pre-tax loss over the trailing three years, we continue to maintain a valuation allowance against our deferred tax assets.

On March 27, 2020, the CARES Act was enacted in response to the Pandemic. The CARES Act contains numerous income tax provisions, such as relaxing limitations on the deductibility of interest and the use of net operating losses arising in taxable years beginning after December 31, 2017. The income tax provisions of the CARES Act had an immaterial impact on our current taxes, deferred taxes, and uncertain tax positions of the Company in the year ended March 31, 2020. The CARES

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Act also allows for the deferral of payroll taxes, as well as the immediate refund of federal Alternative Minimum Tax credits, which had previously been made refundable over a period of four years by the Tax Cuts and Jobs Act of 2017.

7.Commitments and Contingencies

Litigation and Other Contingencies

As a provider of traffic engineering services, hardware products, software and other various solutions for the traffic industry, the Company is, and may in the future from time to time, be involved in litigation relating to claims arising out of its operations in the normal course of business. While the Company cannot accurately predict the outcome of any such litigation, the Company is not a party to any legal proceeding, the outcome of which, in management’s opinion, individually or in the aggregate, would have a material effect on the Company’s unaudited condensed consolidated results of operations, financial position or cash flows.

8.Right-of-Use Assets and Lease Liabilities

We have various operating leases for our offices, office equipment and vehicles in the United States. These leases expire at various times through 2029. Certain lease agreements contain renewal options from 1 to 5 years, rent abatement, and escalation clauses that are factored into our determination of lease payments when appropriate.

As a result of the restructuring activities and the sale of Agriculture and Weather Analytics segment, the Company vacated the Grand Forks lease facility and has subleased the space to DTN, which expires on May 4, 2021. The Company recorded an impairment of $294,000 during the quarter ended June 30, 2020, representing the total expected shortfall in sublease income and estimated lease buyout as compared to its required payments for the lease under the remainder of the original lease term. Sublease income will be recognized on a straight-line basis over the term of the sublease.

The table below presents lease-related assets and liabilities recorded on the unaudited condensed consolidated balance sheet as follows:

	Classification	September 30, 2020
		(In thousands)
Assets
Operating lease right-of-use-assets - continuing operations	Right-of-use assets	$	12,035
Operating lease right-of-use-assets - discontinued operation	Asset held for sales - noncurrent	114
Total operating lease right-of-use-assets		$	12,149
Liabilities
Operating lease liabilities (short-term) - continuing operations	Accrued liabilities	$	1,931
Operating lease liabilities (short-term) - discontinued operation	Liabilities held for sales - current	94
		$	2,025
Operating lease liabilities (long-term) - continuing operations	Lease liabilities	10,992
Operating lease liabilities (long-term) - discontinued operation	Liabilities held for sales - noncurrent	310
		11,302
Total lease liabilities		$	13,327

Lease Costs

We recorded approximately $657,000 and $1,312,000 of lease costs in on our unaudited condensed consolidated statements of operations for the three- and six-months ended September 30, 2020 as compared to approximately $651,000 and $1,249,000 for the three- and six-months ended September 30, 2019, respectively. The Company currently has no variable lease costs. The Company recorded $27,000 and $45,000 of sublease income for the three- and six-months ended September 30, 2020, respectively, which was included in loss from discontinued operations on the unaudited condensed consolidated statement of operations.

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Supplemental Information

The table below presents supplemental information related to operating leases during the six months ended September 30, 2020 (in thousands, except weighted average information):

Cash paid for amounts included in the measurement of operating lease liabilities	$	1,383
Right-of-use assets obtained in exchange for new operating lease liabilities	$	310
Weighted average remaining lease term (in years)	6.4
Weighted average discount rate	4.9		%

Maturities of Lease Liabilities

Maturities of lease liabilities as of September 30, 2020 were as follows:

Fiscal Year Ending March 31,	Operating Leases		Sublease Income		Net Operating Lease
(In thousands)
2021	$	1,412	$	55	$	1,357
2022	2,583		9		2,574
2023	2,454				2,454
2024	2,256				2,256
2025	2,072				2,072
Thereafter	4,896				4,896
Total lease payments	15,673		$	64	$	15,609
Less imputed interest	(2,346)
Present value of future lease payments	13,327
Less current obligations under leases	(2,025)
Long-term lease obligations	$	11,302

9.Stock-Based Compensation

We currently maintain two stock incentive plans, the 2007 Omnibus Incentive Plan and the 2016 Omnibus Incentive Plan (the “2016 Plan”). Of these plans, we may only grant future awards from the 2016 Plan. The 2016 Plan allows for the issuance of stock options, stock appreciation rights, restricted stock, time-restricted stock units (“RSUs"), performance-based restricted stock units ("PSUs”), cash incentive awards and other stock-based awards. At September 30, 2020, there were approximately 1.8 million shares of common stock available for grant or issuance under the 2016 Plan. Total stock options vested and expected to vest were approximately 5.4 million as of September 30, 2020.

Stock Options

A summary of activity with respect to our stock options for the six months ended September 30, 2020 is as follows:

	Options	Weighted Average Exercise Price Per Share
	(In thousands)
Options outstanding at March 31, 2020	5,934	$	3.99
Exercised	(266)	2.55
Forfeited	(248)	4.88
Options outstanding at September 30, 2020	5,420	$	3.99

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Restricted Stock Units

A summary of activity with respect to our RSUs, which entitle the holder to receive one share of our common stock for each RSU upon vesting, for the six months ended September 30, 2020 is as follows:

	# of Shares		Weighted Average Price Per Share
	(In thousands)
RSUs outstanding at March 31, 2020	404		$	5.16
Vested	(123)		5.17
Forfeited	(6)		5.52
RSUs outstanding at September 30, 2020	$	275	$	5.15

Performance Stock Units

On June 30, 2020, the Company granted a total "target" number of 61,000 PSUs to our executive officers. Between 0% and 160% of the PSUs will be eligible to vest based on average annual performance during the three-year performance period relative to the revenues per share and cash flow from operations objectives to be established by the Compensation Committee at the beginning of each year. In addition, the final PSU vesting based on the revenues per share and cash flow from operations performance will be subject to a modifier between .75x-1.25x based on the Company's total shareholder return relative to the Russell 2000 during the performance period, for a maximum achievement percentage of 200% of the "target" number of PSUs. The PSUs are amortized over a derived service period of 3 years. The value and the derived service period of the PSUs were estimated using the Monte-Carlo simulation model. The following table summarizes the details of the performance options:

	# of Shares		Weighted Average Price Per Share
	(In thousands)
PSUs outstanding at March 31, 2020	—		$	—
Granted	61		5.47
PSUs outstanding at September 30, 2020	$	61	$	5.47

Stock-Based Compensation Expense

The following table presents stock-based compensation expense that is included in each line item on our unaudited condensed consolidated statements of operations:

	Three Months Ended September 30,				Six Months Ended September 30,
	2020		2019		2020		2019
	(In thousands)				(In thousands)
Cost of revenues	$	47	$	33	$	93	$	67
Selling, general and administrative expense	595		654		1,146		1,115
Research and development expense	25		18		50		36
Restructuring costs	—		—		42		—
(Loss) income from discontinued operations before gain on sale, net of tax	—		88		(57)		177
Total stock-based compensation	$	667	$	793	$	1,274	$	1,395

As of September 30, 2020, there was approximately $4.0 million, $1.0 million and $73,000 of unrecognized compensation expense related to unvested stock options, RSUs and PSUs, respectively. This expense is currently expected to be recognized over a weighted average period of approximately 2.5 years for stock options, 1.5 years for RSUs and 0.5 years for PSUs. If there are any modifications or cancellations of the underlying unvested awards, we may be required to accelerate, increase or cancel any remaining unearned stock-based compensation expense. Future stock-based compensation expense and unearned stock-based compensation will increase to the extent that we grant additional stock options, RSUs or other stock-based awards.

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Other Stock-Based Compensation Plans

We currently maintain an Employee Stock Purchase Plan (“ESPP”) which allows employees to have a percentage of their base compensation withheld to purchase the Company’s common stock at 95% of the lower of the fair market at the beginning of the offering period and on the last trading day of the offering period. There are two offering periods during a calendar year, which consist of the six months beginning each January 1 and July 1. Employees may contribute 1-15% of their eligible gross pay up to a $25,000 annual stock value limit. In June 2020 and June 2019, in the first offering period of Fiscal 2021 and 2020, 0 shares and 48,439 shares were purchased, respectively. 41,679 shares related to the first offering period of Fiscal 2021 were purchased in July 2020. The ESPP is considered a non-compensatory plan and accordingly, no compensation expense is recorded in connection with this benefit.

Deferred Compensation Plan

Effective October 1, 2020, the Company adopted the Iteris, Inc. Deferred Compensation Plan (the "DC Plan"). The DC Plan consists of two plans, one that is intended to be an unfunded arrangement for eligible employees who are part of a select group of management or highly compensated employees of the Company within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA, and one for the benefit of non-employee members of our board of directors. Key employees, including our executive officers, and our non-employee directors who are notified regarding their eligibility to participate and delivered the DC Plan enrollment materials are eligible to participate in the DC Plan. Under the DC Plan, we will provide participants with the opportunity to make annual elections to defer a percentage of their eligible cash compensation and equity awards. A participant is always 100% vested in his or her own elective cash deferrals and any earnings thereon. Elective deferrals of equity awards are credited to a bookkeeping account established in the name of the participant with respect to an equivalent number of shares of our common stock, and such credited shares are subject to the same vesting conditions as are applicable to the equity award subject to the election. The Company will establish a rabbi trust to finance our obligations under the DC Plan with corporate-owned life insurance policies on participants.

10.Stock Repurchase Program

On August 9, 2012, our Board of Directors approved a new stock repurchase program pursuant to which we may acquire up to $3.0 million of our outstanding common stock for an unspecified length of time. Under the program, we may repurchase shares from time to time in the open market and privately negotiated transactions and block trades, and may also repurchase shares pursuant to a 10b5-1 trading plan during our closed trading windows, to the extent such a 10b5-1 plan is in place. There is no guarantee as to the exact number of shares that will be repurchased. We may modify or terminate the repurchase program at any time without prior notice. On November 6, 2014, our Board of Directors approved a $3.0 million increase to the Company’s existing stock repurchase program, pursuant to which the Company may continue to acquire shares of its outstanding common stock from time to time for an unspecified length of time. For the three- and six-months ended September 30, 2020 and 2019, we did not repurchase any shares. From inception of the original stock repurchase program in August 2011 through September 30, 2020, we repurchased approximately 3,422,000 shares of our common stock for an aggregate price of approximately $5.6 million, at an average price per share of $1.63. As of September 30, 2020, all repurchased shares have been retired and resumed their status as authorized and unissued shares of our common stock. As of September 30, 2020, approximately $1.7 million remains available for the repurchase of our common stock under our current program.

11.Acquisition

On July 2, 2019, the Company completed the acquisition of AGI, a privately-held professional transportation engineering services firm headquartered in Tampa, Florida, with offices in Orlando (FL), Virginia Beach (VA) and Chadds Ford (PA). AGI assists municipalities in maximizing the effectiveness of their existing transportation networks through a collection of traffic management services to cost effectively improve the performance of roadway systems and address increased traffic demands, traffic congestion and delay. With a foundation of arterial timing plan development, AGI has expanded its services into active arterial monitoring and management with multiple public sector clients. AGI expanded the Company’s geographic footprint for smart mobility infrastructure management services in Florida, as well as in the Midwest and Mid-Atlantic region. AGI’s typical contracts are for traffic operations professional engineering services focused on transportation systems management and operations.

Pursuant to a Stock Purchase Agreement dated June 10, 2019 among the Company, AGI and the stockholders of AGI (the “Selling Shareholders”), the Company acquired all of the outstanding capital stock of AGI from the Selling Shareholders for an aggregate purchase price of $10.8 million, after working capital adjustments, payable in cash and stock, of which

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114,943 shares are being held in escrow for 18 months to secure performance of indemnification and other post-closing obligations of the Selling Shareholders.

The acquisition of AGI has been accounted for as a business combination. The fair value of the net assets acquired, and the excess of the consideration transferred over the aggregate of such fair values was recorded as goodwill.

The following tables summarize the purchase price allocation (in thousands) as of July 2, 2019:

Cash	$	664
Trade accounts receivable	905
Unbilled accounts receivable	347
Right-of-use assets	863
Property and equipment	357
Intangible assets	3,710
Goodwill	5,440
Other assets	161
Total assets acquired	12,447
Accounts payable	(378)
Accrued payroll and related expenses	(426)
Lease liabilities	(863)
Total liabilities assumed	(1,667)
Total purchase price	$	10,780

The fair values of the remaining AGI assets and liabilities noted above approximate their carrying values at July 2, 2019. There was no difference between the fair value of trade accounts receivables and the gross contractual value of those receivables. There are no contractual cash flows related to these receivables that are not expected to be collected. The Company believes the goodwill related to the acquisition was a result of the ability of the Company to leverage its technology in the broader market, as well as offering cross-selling market exposure opportunities. Goodwill from the acquisition of AGI is included within the Company’s Transportation Systems reporting unit and will be included in the annual review for impairment. The goodwill is fully deductible for tax purposes. The significant intangible assets identified in the purchase price allocation include customer relationships and non-compete agreements, which are amortized over their respective useful lives on a straight line basis which approximates the underlying cash flows. To value the customer relationships, the Company utilized the income approach, specifically a discounted cash-flow method known as the excess earnings method. The Company utilized the with and without method to derive the fair value of the non-compete agreement. The fair value estimates are based on a complex series of judgments about future events and uncertainties and rely heavily on estimates and assumptions. We believe the assumptions are representative of those a market participant would use in estimating fair value.

The following table presents the fair values and useful lives of the identifiable intangible assets acquired:

	Amount		Weighted Average  Useful Life
	(in thousands)		(in years)
Customer relationships	$	3,500	6
Non-compete agreement	210		3
Total intangible assets assumed	$	3,710

Acquisition-Related Costs

In connection with the acquisition, the Company agreed to grant $1.7 million in retention bonuses to the Selling Shareholders and other employees payable in the form of restricted stock units at $5.22 per share, and $570,000 in retention bonuses payable in cash, each vesting and payable over three years following the closing, provided such employees remain in our service on the first, second and third anniversary of the closing of the acquisition. For the three- and six-months ended September 30, 2020, the Company recorded approximately $173,000 and $352,000, as compared to $440,000 and $596,000 for three- and six-months ended September 30, 2019, respectively, as stock-based compensation and salaries expense to selling, general and administrative expense in the unaudited condensed consolidated statements of operations, related to these bonuses.

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Pro Forma Financial Information

The following pro forma information presents the consolidated results of operations of the Company and AGI for the six months ended September 30, 2019, as if the acquisition of AGI had been completed on April 1, 2018. There was no pro forma impact during the three- and six-months ended September 30, 2020 and for the three months ended September 30, 2019. These pro forma condensed consolidated financial results have been prepared for comparative purposes only and include certain adjustments that reflect pro forma results of operations, such as increased amortization for the fair value of acquired intangible assets and increased salaries expense related to the retention bonuses. The unaudited pro forma results do not reflect any operating efficiencies or potential cost savings that may result from the consolidation of the operations of the Company and AGI. Accordingly, these unaudited pro forma results are presented for informational purposes only and are not necessarily indicative of the results of operations that actually would have been achieved had the acquisition occurred as of April 1, 2018, nor are they intended to represent or be indicative of future results of operations:

​	Six Months Ended September 30, 2019
​	(In thousands)
Pro forma revenue	$	56,705
Pro forma net loss	$	(3,924)
Pro forma net loss per share:
Basic	$	(0.10)
Diluted	$	(0.10)

12.Business Segment Information

We currently operate in two reportable segments: Roadway Sensors and Transportation Systems.

The Roadway Sensors segment provides various advanced detection sensors and systems for traffic intersection management, communication systems and roadway traffic data collection applications. The Roadway Sensors product line uses advanced image processing technology and other techniques to capture and analyze sensor data through sophisticated algorithms, enabling vehicle, bicycle and pedestrian detection, as well as the transmission of both video images and data using various communication technologies. Our Roadway Sensors products include, among others, Vantage, VantageLive!, Vantage Next, VantagePegasus, VantageRadius, Vantage Vector, Velocity, SmartCycle, SmartCycle Bike Indicator, SmartSpan, VersiCam, PedTrax and P-Series products. Our Roadway Sensors segment also includes the sale of original equipment manufacturer (“OEM”) products for the traffic intersection markets, which include, among other things, traffic signal controllers and traffic signal equipment cabinets.

The Transportation Systems segment provides engineering and consulting services, managed services, performance measurement and traffic analytics solutions, as well as the development of transportation management and traveler information systems for the ITS industry. Our Transportation Systems services include planning, design, implementation, operation and management of surface transportation infrastructure systems. We perform analysis and study goods movement and commercial vehicle operations, as well as provide travel demand forecasting and systems engineering, and identify mitigation measures to reduce traffic congestion. Our Transportation Systems product line includes: Iteris Signal Performance Measures ("SPM"); our advanced traveler information system solution ClearRoute, our performance analytics solution ClearGuide; and our commercial vehicle operations and vehicle safety compliance platforms known as CVIEW-Plus, CheckPoint, UCRLink and inspect. The Transportation Systems segment also includes the operations of AGI beginning July 2, 2019 (see Note 11, Acquisition).

The accounting policies of our reportable segments are the same as those described in the summary of significant accounting policies (Note 1, Description of Business and Summary of Significant Accounting Policies). Certain corporate general and administrative expenses, including general overhead functions such as information systems, accounting, human resources, marketing, compliance costs and certain administrative expenses, as well as interest and amortization of intangible assets, are not allocated to the segments. The reportable segments are each managed separately because they manufacture and distribute distinct products or provide services with different processes. All reported segment revenues are derived from external customers. Our Chief Executive Officer, who is our chief operating decision maker (“CODM”), reviews financial information at the operating segment level. Our CODM does not review assets by segment in his resource allocation, and therefore, assets by segment are not disclosed below.

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The following table sets forth selected unaudited condensed consolidated financial information for our reportable segments for the three- and six-months ended September 30, 2020 and 2019:

	Roadway Sensors		Transportation Systems		Total
	(In thousands)
Three Months Ended September 30, 2020
Product revenues	$	14,135	$	2,130	$	16,265
Service revenues	155		12,836		12,991
Total revenues	14,290		14,966		29,256
Segment income	3,083		2,295		5,378
Three Months Ended September 30, 2019
Product revenues	12,480		1,315		13,795
Service revenues	75		12,716		12,791
Total revenues	12,555		14,031		26,586
Segment income	2,224		1,942		4,166

	Roadway Sensors		Transportation Systems		Total
	(In thousands)
Six Months Ended September 30, 2020
Product revenues	$	27,286	$	3,373	$	30,659
Service revenues	240		26,357		26,597
Total revenues	27,526		29,730		57,256
Segment income	6,194		4,559		10,753
Six Months Ended September 30, 2019
Product revenues	25,251		3,061		28,312
Service revenues	112		23,329		23,441
Total revenues	25,363		26,390		51,753
Segment income	4,556		3,508		8,064

The following table reconciles total segment income to unaudited condensed consolidated operating income (loss) from continuing operations before income taxes:

	Three Months Ended September 30,				Six Months Ended September 30,
	2020		2019		2020		2019
	(In thousands)				(In thousands)
Segment income:
Total income from reportable segments	$	5,378	$	4,166	$	10,753	$	8,064
Unallocated amounts:					​		​
Corporate expenses	(4,400)		(5,149)		(8,544)		(9,519)
Amortization of intangible assets	(230)		(230)		(460)		(296)
Restructuring charges	—		—		(619)		—
Operating income (loss)	$	748	$	(1,213)	$	1,130	$	(1,751)

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ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

This report, including the following discussion and analysis, contains forward-looking statements (within the meaning of the Private Securities Litigation Reform Act of 1995) that are based on our current expectations, estimates and projections about our business and our industry, and reflect management’s beliefs and certain assumptions made by us based upon information available to us as of the date of this report. When used in this report and the information incorporated herein by reference, the words “expect(s),” “feel(s),” “believe(s),” “intend(s),” “plan(s),” “should,” “will,” “may,” “anticipate(s),” “estimate(s),” “could,” “should,” and similar expressions or variations of these words are intended to identify forward-looking statements. These forward-looking statements include, but are not limited to, statements regarding our anticipated growth, sales, revenue, expenses, profitability, capital needs, backlog, manufacturing capabilities, the market acceptance of our products and services, competition, the impact of any current or future litigation, the impact of recent accounting pronouncements, the applications for and acceptance of our products and services, the status of our facilities and product development, the impact of the acquisition of Albeck Gerken, Inc. and the impact of the sale of our Agriculture and Weather Analytics segment. These statements are not guarantees of future performance and are subject to certain risks and uncertainties that could cause our actual results to differ materially from those projected. You should not place undue reliance on these forward-looking statements that speak only as of the date hereof. We encourage you to carefully review and consider the various disclosures made by us which describe certain factors which could affect our business, including in “Risk Factors” set forth in Part II. Item 1A of this report, before deciding to invest in our company or to maintain or increase your investment. We undertake no obligation to revise or update publicly any forward-looking statement for any reason, including to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Overview

General

We are a provider of smart mobility infrastructure management solutions. Municipalities, government agencies, and other transportation infrastructure providers use our solutions to monitor, visualize, and optimize mobility infrastructure to help ensure roads are safe, travel is efficient, and communities thrive.

Recent Developments

Impact of COVID-19 on Our Business

The COVID-19 pandemic (the “Pandemic”) has materially adversely impacted global economic conditions. Indeed, more than six months into the Pandemic, COVID-19 continues to have an unpredictable and unprecedented impact on the U.S. economy as federal, state and local governments react to this public health crisis with travel restrictions, quarantines and "stay-at-home" orders. The uncertainties caused by the Pandemic include, but are not limited to, supply chain disruptions, workplace dislocations, economic contraction, and downward pressure on some customer budgets and customer sentiment in general. While there has been no material impact to our results of operation of financial condition, nor any facility closures during the first six months of Fiscal 2021, we did experience some work delays due to the Pandemic. Should such delays become protracted or worsen the impacts of the Pandemic could materially impact our business, results of operations and financial condition. The extent of the impact of the Pandemic on our business and financial results and volatility of our stock price will depend largely on future developments, including the duration of the spread of the outbreak, the responses of government, the impact on capital and financial markets and the related impact on the financial circumstances of our customers, all of which are highly uncertain and cannot be reasonably estimated as of this report.

Given the uncertainties surrounding the impacts of the Pandemic on our future financial condition and results of operations, we have taken certain actions to preserve our liquidity, manage cash flow and strengthen our financial flexibility. Such actions included, reducing our discretionary spending, reducing capital expenditures, implementing restructuring activities that we expect would lead to approximately $1.2 million to $1.3 million in annualized savings, and reducing payroll costs, including employee furloughs, pay freezes and pay cuts.

On March 27, 2020, CARES Act was signed into law in the United States. The CARES Act provides relief to U.S. corporations through financial assistance programs and modifications to certain income tax provisions. The Company is applying certain beneficial provisions of the CARES Act, including the payroll tax deferral and the alternative minimum tax

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acceleration. For more information, refer to Note 6, Income Taxes, to our Unaudited Condensed Consolidated Financial Statements, including in Part I, Item 1 of this report.

The Pandemic has had an impact on the Company’s human capital. While our main Santa Ana facility has remained open as our business is considered essential under the criteria specified by the State of California, “stay-at-home” orders and Pandemic restrictions imposed by local and state authorities have forced the majority of our employees to work remotely. The Company’s information technology infrastructure has proven sufficiently flexible to minimize disruptions in required duties and responsibilities. We believe that our system of internal control over financial reporting has not been fundamentally altered and that the effectiveness of the design and operation of internal controls remained materially consistent during the three- and six-month periods ended September 30, 2020. Additionally, we have been able to timely file financial reports. We believe we have the infrastructure to efficiently work remotely during the Pandemic. We do not expect to incur significant costs to safely reopen our facilities to all our employees.

Despite the Pandemic, we believe that the ITS industry in the US should continue to provide new opportunities for the Company although, in the near term, the pace of new opportunities emerging may be restrained and the start dates of awarded projects may be delayed. We believe that our expectations are valid and that our plans for the future continue to be based on reasonable assumptions.

Sale of Agriculture and Weather Analytics Segment

On May 5, 2020, the Company completed the sale of substantially all of our assets used in connection with our Agriculture and Weather Analytics segment to DTN, LLC (“DTN”), an operating company of TBG AG, a Swiss-based holding company, pursuant to the Purchase Agreement signed on May 2, 2020, in exchange for a total purchase consideration of $12.0 million in cash, subject to working capital adjustments. Upon closing on May 5, 2020, the Company received $10.5 million and deferred payments of $1.45 million and $50,000, which were included in prepaid expenses and other current assets, and other assets on the unaudited condensed consolidated balance sheets, respectively, will be paid by DTN at the 12-month and 18-month anniversaries of the closing date, subject to satisfactions of the conditions set forth in the Purchase Agreement relating to the transition of certain customers to DTN and the collection of certain receivables by DTN. The Purchase Agreement also provides for customary post-closing adjustments to the purchase price related to working capital at closing. The parties also entered into certain ancillary agreements at the closing of the transaction that will provide Iteris with ongoing access to weather and pavement data that it integrates into its transportation software products, and a joint development agreement under which the parties agreed to pursue future joint opportunities in the global transportation market.

The sale of the Agriculture and Weather Analytics segment was a result of the Company’s shift in strategy to focus on its mobility infrastructure management solutions and to capitalize on the potential for a future partnership upon the sale of this business component to DTN. We have determined that the Agriculture and Weather Analytics segment, which constituted one of our operating segments, qualifies as a discontinued operation in accordance with the criteria set forth in ASC 205-20, Presentation of Financial Statements – Discontinued Operations.

On May 5, 2020, the Company also entered into a transition services agreement (“TSA”) with DTN, pursuant to which the Company agreed to support the information technology and accounting functions of the Agriculture and Weather Analytics segment for a period up to 12 months and DTN agreed to provide the contract administration/account management services for certain contracts of the Company and other transition services. Either party may make any reasonable request to extend the period of time the other party shall provide a transition service beyond the initial service period or access to additional services that are necessary for the transition of the business operations. The Company earned $70,000 and $84,000 in income and incurred $24,000 and $27,000 in costs associated with the TSA for the three- and six-months ended September 30, 2020, respectively, which was included in loss from discontinued operations on the unaudited condensed consolidated statement of operations.

Non-GAAP Financial Measures

Adjusted income (loss) from continuing operations before interest, taxes, depreciation, amortization, stock-based compensation expense, and restructuring charges (“Adjusted EBITDA”) was approximately $2.0 million and $4.2 million for the three- and six-months ended September 30, 2020 as compared to approximately $633,000 and $1.1 million for the three- and six-months ended September 30, 2019, respectively.

When viewed with our financial results prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”) and accompanying reconciliations, we believe Adjusted EBITDA provides additional useful information to clarify and enhance the understanding of the factors and trends affecting our past performance and future prospects. We define

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these measures, explain how they are calculated and provide reconciliations of these measures to the most comparable GAAP measure in the table below. Adjusted EBITDA and the related financial ratios, as presented in this Quarterly Report on Form 10-Q (“Form 10-Q”), are supplemental measures of our performance that are not required by or presented in accordance with GAAP. They are not a measurement of our financial performance under GAAP and should not be considered as alternatives to net income or any other performance measures derived in accordance with GAAP, or as an alternative to net cash provided by operating activities as measures of our liquidity. The presentation of these measures should not be interpreted to mean that our future results will be unaffected by unusual or nonrecurring items.

We use Adjusted EBITDA non-GAAP operating performance measures internally as complementary financial measures to evaluate the performance and trends of our businesses. We present Adjusted EBITDA and the related financial ratios, as applicable, because we believe that measures such as these provide useful information with respect to our ability to meet our operating commitments.

Adjusted EBITDA and the related financial ratios have limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations include:

•They do not reflect our cash expenditures, future requirements for capital expenditures or contractual commitments;

•They do not reflect changes in, or cash requirements for, our working capital needs;

•Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements;

•They are not adjusted for all non-cash income or expense items that are reflected in our statements of cash flows;

•They do not reflect the impact on earnings of charges resulting from matters unrelated to our ongoing operations; and

•Other companies in our industry may calculate Adjusted EBITDA differently than we do, whereby limiting its usefulness as comparative measures.

Because of these limitations, Adjusted EBITDA and the related financial ratios should not be considered as measures of discretionary cash available to us to invest in the growth of our business or as a measure of cash that will be available to us to meet our obligations. You should compensate for these limitations by relying primarily on our GAAP results and using Adjusted EBITDA only as supplemental information. See our unaudited condensed consolidated financial statements contained in this Form 10-Q. However, in spite of the above limitations, we believe that Adjusted EBITDA and the related financial ratios are useful to an investor in evaluating our results of operations because these measures:

•Are widely used by investors to measure a company’s operating performance without regard to items excluded from the calculation of such terms, which can vary substantially from company to company depending upon accounting methods and book value of assets, capital structure and the method by which assets were acquired, among other factors;

•Help investors to evaluate and compare the results of our operations from period to period by removing the effect of our capital structure from our operating performance; and

•Are used by our management team for various other purposes in presentations to our Board of Directors as a basis for strategic planning and forecasting.

The following financial items have been added back to or subtracted from our net income when calculating Adjusted EBITDA:

•Interest expense may be useful to investors for determining current cash flow;

•Income tax expense may be useful to investors because it represents the taxes which may be payable for the period and the change in deferred taxes during the period, and may reduce cash flow available for use in our business;

•Depreciation may be useful to investors because it generally represents the wear and tear on our property and equipment used in our operations;

•Amortization expense may be useful to investors because it represents the estimated attrition of our acquired customer base and the diminishing value of product rights;

•Stock-based compensation may be useful to our investors for determining current cash flow;

•Restructuring charges may be useful to our investors in evaluating our core operating performance; and

•Acquisition costs may be useful to our investors in evaluating our core operating performance.

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Reconciliations of net income (loss) from continuing operations to Adjusted EBITDA and the presentation of Adjusted EBITDA as a percentage of total revenues were as follows:

	Three Months Ended September 30,						Six Months Ended September 30,
	2020			2019			2020			2019
	(In Thousands)						(In Thousands)
Net income (loss) from continuing operations	$	719		$	(1,051)		$	1,137		$	(1,588)
Income tax expense	28			1			62			25
Depreciation expense	182			203			367			380
Amortization expense	363			336			724			499
Stock-based compensation	667			704			1,331			1,218
Other adjustments:
Restructuring charges	—			—			619			—
Acquisition costs	—			440			—			596
Adjusted EBITDA	$	1,959		$	633		$	4,240		$	1,130
Percentage of total revenues	6.7		%	2.4		%	7.4		%	2.2		%

Business Segments

We currently operate in two reportable segments: Roadway Sensors and Transportation Systems.

The Roadway Sensors segment provides advanced detection sensors and systems for traffic intersection management, that collectively comprise our family of Vantage sensors, as well as communication systems and roadway traffic data collection applications that complement our Vantage sensor products. The Vantage product line uses advanced image processing technology and other techniques to capture and analyze sensor data through sophisticated algorithms, enabling vehicle, bicycle and pedestrian detection, as well as the transmission of both video images and data using various communication technologies. Our Roadway Sensors products include, among others, Vantage, VantageLive!, Vantage Next, VantagePegasus, VantageRadius, Vantage Vector, Velocity, SmartCycle, SmartCycle Bike Indicator, SmartSpan, VersiCam, PedTrax and P-Series products. In select territories, our Roadway Sensors segment also sells OEM products for the traffic intersection markets, which include, among other things, traffic signal controllers and traffic signal equipment cabinets.

The Transportation Systems segment includes engineering and consulting services, managed services, performance measurement and traffic analytics solutions, as well as the development of transportation management and traveler information systems for the ITS industry. Our Transportation Systems services include planning, design, development and implementation of software and hardware-based ITS systems that integrate sensors, video surveillance, computers and advanced communications equipment to enable public agencies to monitor, control and direct traffic flow, assist in the quick dispatch of emergency crews, and distribute real-time information about traffic conditions. Our services include planning, design, implementation, operation and management of surface transportation infrastructure systems. We perform analysis and study goods movement and commercial vehicle operations, as well as provide travel demand forecasting and systems engineering, and identify mitigation measures to reduce traffic congestion. The Transportation Systems segment also includes the operations of AGI beginning July 2, 2019 (see Note 11, Acquisition, to our Unaudited Condensed Consolidated Financial Statements, included in Part I, Item 1 of this report for further details on the acquisition of AGI). The Transportations Systems segment product line includes: Iteris Signal Performance Measures ("SPM"), Iteris ClearGuide, our performance measurement and analytics solution; our advanced traveler information system solution ClearRoute; and our commercial vehicle operations and vehicle safety compliance platforms known as ClearFleet, CVIEW-Plus, CheckPoint, UCRLink and inspect.

See Note 12, Business Segment Information, to our Unaudited Condensed Consolidated Financial Statements, included in Part I, Item 1 of this report, for further details on our reportable segments.

Critical Accounting Policies and Estimates

“Management’s Discussion and Analysis of Financial Condition and Results of Operations” is based on our unaudited condensed consolidated financial statements included herein, which have been prepared in accordance with GAAP. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported

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amounts of assets and liabilities and related disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, we evaluate these estimates and assumptions, include those related to revenue recognition, the collectability of accounts receivable and related allowance for doubtful accounts, projections of taxable income used to assess realizability of deferred tax assets, warranty reserves and other contingencies, costs to complete long-term contracts, indirect cost rates used in cost plus contracts, the valuation of inventories, the valuation of purchased intangible assets and goodwill, the valuation of investments, estimates of future cash flows used to assess the recoverability of long-lived assets and the impairment of goodwill, and fair value of our stock option awards used to calculate stock-based compensation. We base these estimates on historical experience and on various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. These estimates and assumptions by their nature involve risks and uncertainties, and may prove to be inaccurate. In the event that any of our estimates or assumptions are inaccurate in any material respect, it could have a material adverse effect on our reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

Recent Accounting Pronouncements

Refer to Note 1, Description of Business and Summary of Significant Accounting Policies, to our Unaudited Condensed Consolidated Financial Statements, included in Part I, Item 1 of this report for a discussion of applicable recent accounting pronouncements.

Analysis of Quarterly Results from Continuing Operations

Total Revenues. Total revenues are comprised of sales from our Roadway Sensors and Transportation Systems.

The following tables present our total revenues for the three- and six-months ended September 30, 2020 and 2019:

​	Three Months Ended September 30,				$ Increase (decrease)		% Change
​	2020		2019
	(In thousands, except percentages)
Product revenues	$	16,265	$	13,795	$	2,470	17.9	%
Service revenues	12,991		12,791		200		1.6	%
Total revenues	$	29,256	$	26,586	$	2,670	10.0	%

​	Six Months Ended September 30,				$ Increase (decrease)		% Change
​	2020		2019
	(In thousands, except percentages)
Product revenues	$	30,659	$	28,312	$	2,347	8.3	%
Service revenues	26,597		23,441		3,156		13.5	%
Total revenues	$	57,256	$	51,753	$	5,503	10.6	%

Product revenues primarily consist of Roadway Sensors product sales, but also include OEM products for the traffic signal markets, as well as Transportation Systems third-party product sales for installation under certain construction-type contracts. Product revenues for the three months ended September 30, 2020 increased 17.9% to $16.3 million, as compared to $13.8 million in the corresponding period in the prior year, primarily due to an increase in the volume of sales of our core Roadway Sensors video detection products, as well as an increase in Transportation Systems third-party product sales for installation under certain construction-type contracts. These increases were slightly offset by a decrease in unit sales from our distribution in Texas of certain OEM products for the traffic intersection market described below.

Service revenues primarily consist of Transportation Systems engineering services, but also includes service revenues generated by our Roadway Sensors segment. Service revenues for the three months ended September 30, 2020 increased 1.6% to $13 million, compared to $12.8 million in the corresponding period in the prior year.

Total revenues for the three months ended September 30, 2020 increased 10.0% to $29.3 million, compared to $26.6 million in the corresponding period in the prior year. The increase in total revenues was primarily due to an approximate 13.8% increase in Roadway Sensors revenues and approximately 6.7% increase in Transportation Systems revenues.

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Product revenues for the six months ended September 30, 2020 increased 8.3% to $30.7 million, as compared to $28.3 million in the corresponding period in the prior year, primarily due to an increase in the core Roadway Senor product sales, coupled with a slight increase in Transportation System third-party product sales for installation under certain construction-type contracts, offset by a decrease of OEM product sales.

Service revenues for the six months ended September 30, 2020 increased 13.5% to $26.6 million, compared to $23.4 million in the corresponding period in the prior year, primarily due to revenues from the operations of AGI and higher Transportation Systems traffic engineering service revenues.

Total revenues for the six months ended September 30, 2020 increased 10.6% to $57.3 million, compared to $51.8 million in the corresponding period in the prior year. The increase in total revenues was primarily due to an approximate 12.7% increase in Transportation Systems revenues and an approximate 8.5% increase in Roadway Sensors revenues.

Roadway Sensors revenues for the three months ended September 30, 2020 increased approximately $1.7 million or 13.8% to $14.3 million, compared to $12.6 million in the corresponding period in the prior year, primarily due to higher sales from our core video detection products, offset by lower unit sales from our distribution in Texas of certain OEM products for the traffic intersection market, which decreased by approximately $350,000 or 26.4%, to approximately $974,000. Roadway Sensors revenues for the six months ended September 30, 2020 increased approximately $2.2 million or 8.5% to $27.5 million, compared to $25.4 million in the corresponding period in the prior year, primarily due to higher sales from our core video detection products, offset by lower unit sales from our distribution in Texas of certain OEM products for the traffic intersection market, which decreased by approximately $849,000 or 26.9%, to approximately $2.3 million. While OEM products generally have lower gross margins than our core video detection products, we believe the offering of OEM products can benefit sales of our core products in Texas by providing a more comprehensive suite of traffic solutions for our customers. Roadway Sensors added approximately $17.2 million and $30.0 million of new bookings, or potential revenue under binding agreements, during the three- and six-months ended September 30, 2020. Roadway Sensors backlog increased to approximately $11.2 million as of September 30, 2020, compared to approximately $7.7 million as of September 30, 2019. Going forward, we plan to grow revenues by focusing on our core domestic traffic intersection market, and refine and deliver products that address the needs of this market, primarily our Vantage processors and camera systems and our Vantage Vector video/radar hybrid sensor, as well as our SmartCycle, Velocity, PedTrax and SmartSpan products.

Transportation Systems revenues for the three months ended September 30, 2020 increased approximately $0.9 million or 6.7% to $15.0 million, compared to $14.0 million in the corresponding period in the prior year. Transportation Systems revenues for the six months ended September 30, 2020 increased approximately $3.3 million or 12.7% to $29.7 million, compared to $26.4 million in the corresponding period in the prior year. Transportation Systems added approximately $17.3 million and $38.3 million of new bookings during the three- and six-months ended September 30, 2020. Transportation Systems backlog increased to approximately $61.9 million as of September 30, 2020, compared to approximately $58.3 million as of September 30, 2019. We plan to continue to focus on securing new contracts and to extend and/or continue our existing relationships with key agencies related to projects in their final project phases. While we believe our ability to obtain additional large contracts will contribute to overall revenue growth, the mix of sub-consulting content and third-party product sales will likely affect the related total gross profit from period to period, as total revenues derived from sub-consultants and third-party product sales generally have lower gross margins than revenues generated by our professional services.

Backlog is an operational measure representing future unearned revenue amounts believed to be firm that are to be earned under our existing agreements and are not included in deferred revenue on our unaudited condensed consolidated balance sheets. Backlog includes new bookings but does not include announced orders for which definitive contracts have not been executed. We believe backlog is a useful metric for investors, given its relevance to total orders, but there can be no assurances we will recognize revenue from bookings or backlog timely or ever.

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Gross Profit

The following tables present details of our gross profit for the three- and six-months ended September 30, 2020 and 2019:

	Three Months Ended September 30,						$ Increase		% Change
	2020			2019
	(In thousands, except percentages)
Product gross profit	$	6,933		$	6,244		$	689	11.0	%
Service gross profit	4,425			4,434			(9)		(0.2)	%
Total gross profit	$	11,358		$	10,678		$	680	6.4	%
Product gross margin as a % of product revenues	42.6		%	45.3		%
Service gross margin as a % of service revenues	34.1		%	34.7		%
Total gross margin as a % of total revenues	38.8		%	40.2		%

	Six Months Ended September 30,						$ Increase		% Change
	2020			2019
	(In thousands, except percentages)
Product gross profit	$	13,246		$	12,266		$	980	8.0	%
Service gross profit	8,980			7,996			984		12.3	%
Total gross profit	$	22,226		$	20,262		$	1,964	9.7	%
Product gross margin as a % of product revenues	43.2		%	43.3		%
Service gross margin as a % of service revenues	33.8		%	34.1		%
Total gross margin as a % of total revenues	38.8		%	39.2		%

Our product gross margin for the three months ended September 30, 2020 decreased approximately 270 basis points, as compared to the corresponding period in the prior year, primarily due to lower margin from our Transportation System third party product sales for installation under certain construction-type contracts that we classify as product sales. Our product gross margin for the six months ended September 30, 2020 decreased approximately 10 basis points, as compared to the corresponding periods in the prior year, primarily due to an increase in our Roadway Sensors core video detection products, which typically yields higher gross margins than our Roadway Sensors OEM sales and our Transportation Systems third-party product sales for installation under certain construction-type contracts that we classify as product sales.

Our service gross margin for the three- and six-months ended September 30, 2020 decreased approximately 60 and 30 basis points, respectively, as compared to the corresponding periods in the prior year, primarily due to an increase in the amount of subcontracting services and products. Subcontracting services and products generally result in lower gross margins than our workforce.

Our total gross margin for the three- and six-months ended September 30, 2020 decreased approximately 140 and 40 basis points, respectively, as compared to the corresponding periods in the prior year, primarily as a result of the revenue mix between our segments.

Selling, General and Administrative Expense

Selling, general and administration expense for the three months ended September 30, 2020 decreased approximately 13.4% to $9.2 million, compared to $10.7 million for the three months ended September 30, 2019. Selling, general and administration expense for the six months ended September 30, 2020 decreased approximately 9.3% to $18.0 million, compared to $19.8 million for the six months ended September 30, 2019. The decrease is primarily due to a decrease in bid and proposal activities in the Transportations Systems segment driven by the timing and size of certain opportunities in the current quarter compared with the same period a year ago.

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Research and Development Expense

Research and development expense for the three months ended September 30, 2020 was approximately $1.1 million, which was relatively consistent with the prior period expense of $1.0 million for the three months ended September 30, 2019. Research and development expense for the six months ended September 30, 2020 increased approximately 7.6% to $2.0 million, compared to $1.9 million for the six months ended September 30, 2019.

We plan to continue to invest in the development of further enhancements and functionality of our Iteris ClearMobility platform which includes among other things our software offering in our Transportation Systems segment, as well as our Vantage products family in our Roadway Sensors segment.

During Fiscal 2020, we successfully released Iteris ClearGuide, our state-of-the-art mobility intelligence software solutions, designed to help transportation agencies achieve safer, more efficient mobility for their networks. Certain development costs were capitalized into intangible assets in the unaudited condensed consolidated balance sheets; in both the current and prior year periods; however, certain costs did not meet the criteria for capitalization under GAAP and are included in research and development expense. Going forward, we expect to continue to invest in our software solutions. This continued investment may result in increases in research and development costs, as well as additional capitalized software in future periods.

Amortization of Intangible Assets

Amortization of intangible assets was approximately $230,000 for the three months ended September 30, 2020 and 2019. Amortization of intangible assets was approximately $460,000 and $296,000 for the six months ended September 30, 2020 and 2019, respectively. The increase was primarily due to amortization expenses related to intangible assets acquired as part of the AGI acquisition.

Interest Income

Interest income was approximately $43,000 and $48,000 for the three months ended September 30, 2020 and 2019, respectively. Interest income was approximately $97,000 and $81,000 for the six months ended September 30, 2020 and 2019, respectively.

Income Taxes

The effective tax rate used for interim periods is the estimated annual effective tax rate, based on current estimate of full year results, except that taxes related to specific events, if any, are recorded in the interim period in which they occur.

Income tax expense for the three- and six-months ended September 30, 2020 was approximately $28,000 and $62,000, or 3.4% and 4.8% of pre-tax income as compared with an expense of approximately $1,000 and $25,000, or 0.1% and 0.6% of pre-tax loss for the three- and six-months ended September 30, 2019, respectively.

In assessing the realizability of our deferred tax assets, we review all available positive and negative evidence, including reversal of deferred tax liabilities, potential carrybacks, projected future taxable income, tax planning strategies and recent financial performance. As we have experienced a cumulative pre-tax loss over the trailing three years, we continue to maintain a valuation allowance against our deferred tax assets.

On March 27, 2020, the CARES Act was enacted in response to the Pandemic. The CARES Act contains numerous income tax provisions, such as relaxing limitations on the deductibility of interest and the use of net operating losses arising in taxable years beginning after December 31, 2017. The income tax provisions of the CARES Act had an immaterial impact on our current taxes, deferred taxes, and uncertain tax positions of the Company in the year ended March 31, 2020. The CARES Act also allows for the deferral of payroll taxes, as well as the immediate refund of federal Alternative Minimum Tax credits, which had previously been made refundable over a period of four years by the Tax Cuts and Jobs Act of 2017.

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Liquidity and Capital Resources

Liquidity Outlook

We believe we will have adequate liquidity over the next 12 months to operate our business and to meet our cash requirements. As of September 30, 2020, we had cash and cash equivalents totaling approximately $15.6 million, and short-term investments of $22.2 million, resulting in a total liquidity position of approximately $37.8 million. We do not have a revolving credit facility. Our cash position will also be impacted by any capital expenditures or acquisitions we complete in the future.

As a result of the Pandemic, we have taken and will continue to take action to reduce costs, preserve liquidity and manage our cash flow. Such actions include, but are not limited to reducing our discretionary spending, reducing capital expenditures, implementing our restructuring activities that will lead to approximately $1.2 million to $1.3 million in annualized savings, and reducing payroll costs, including employee furloughs, pay freezes and pay cuts.

While the impact and duration of the Pandemic on our business is currently uncertain, the situation is expected to be temporary. In the longer term, we remain committed to increasing total shareholder returns through our investments in opportunities and initiatives to grow our business organically and through acquisitions that support our current strategies.

Cash Flows

We have historically financed our operations with a combination of cash flows from operations and the sale of equity securities. We expect to continue to rely on cash flows from operations and our cash reserves to fund our operations, which we believe to be sufficient to fund our operations for at least the next twelve months. However, we may need or choose to raise additional capital to fund potential future acquisitions and our future growth. We may raise such funds by selling equity or debt securities to the public or to selected investors or by borrowing money from financial institutions. If we raise additional funds by issuing equity or convertible debt securities, our existing stockholders may experience significant dilution, and any equity securities that may be issued may have rights senior to our existing stockholders. There is no assurance that we will be able to secure additional funding on a timely basis, on terms acceptable to us, or at all.

At September 30, 2020, we had $46.5 million in working capital, excluding current assets and liabilities held for sale, which included $15.8 million in cash, cash equivalents and restricted cash, as well as $22.2 million in short-term investments. This compares to working capital of $33.9 million at March 31, 2020, excluding current assets and liabilities held for sale, which included $14.4 million in cash, cash equivalents and restricted cash, as well as $11.6 million in short-term investments.

Operating Activities. Cash provided by operating activities of our continuing operations for the six months ended September 30, 2020 of $4.2 million was primarily the result of our net income from continuing operations of approximately $1.1 million and $3.0 million in non-cash items, primarily for noncash lease expense, deferred income taxes, depreciation, stock-based compensation, and amortization, offset by approximately $47,000 from changes in working capital. Cash used in operating activities from discontinued operations was $2.0 million.

Cash provided by operating activities of our continuing operations for the six months ended September 30, 2019 was primarily the result of our net loss of approximately $1.6 million, offset by approximately $1.3 million from changes in working capital and approximately $2.8 million in noncash items for noncash lease expense, deferred income taxes, depreciation, stock-based compensation, and amortization. Cash used in operating activities from discontinued operations was $2.7 million.

Investing Activities. Net cash used in investing activities of our continuing operations during the six months ended September 30, 2020 was primarily the result of purchases of approximately $23.7 million of short-term investments and approximately $288,000 of property and equipment purchases, coupled with approximately $416,000 of capitalized software development costs, primarily in the Roadway Sensors and Transportation Systems business segments related to VantageLive! and ClearGuide, respectively. These investments were partially offset by approximately $13.0 million in proceeds from the sale and maturity of short-term investments.

Net cash used in investing activities of our continuing operations during the six months ended September 30, 2019 was primarily the result of approximately $21.3 million purchases of short-term investments and approximately $246,000 of property and equipment purchases as well as $5.6 million in net cash paid for the AGI acquisition, coupled with approximately $522,000 of capitalized software development costs, primarily in the Roadway Sensors and Transportation Systems business segments related to VantageLive! and ClearGuide, respectively. These investments were partially offset by approximately $3.2 million in proceeds from the sale and maturity of short-term investment.

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Financing Activities. Net cash provided by financing activities of our continuing operations during the six months ended September 30, 2020 was the result of approximately $696,000 and $188,000 of cash proceeds from the exercises of stock options and purchase of ESPP shares, respectively.

Net cash provided by financing activities of our continuing operations during the six months ended September 30, 2019 was the result of approximately $26.8 million of net proceeds from the issuance of common stock in connection with the public offering. In addition, there was $172,000 of cash proceeds from the purchase of ESPP shares and approximately $81,000 of cash proceeds from the exercises of stock options.

Off Balance Sheet Arrangements

We did not have any material off balance sheet arrangements at September 30, 2020.

Seasonality

We have historically experienced seasonality, particularly with respect to our Roadway Sensors segment, which adversely affects such sales in our third and fourth fiscal quarters due to a reduction in intersection construction and repairs during the winter months due to inclement weather conditions, with the third fiscal quarter generally affected the most by inclement weather. We have also experienced seasonality, particularly with respect to our Transportation Systems segment, which adversely impacts our third fiscal quarter due to the increased number of holidays, causing a reduction in available billable hours.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

As a smaller reporting company, we are not required to provide the information required by Item 305 of Regulations S-K.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined in Exchange Act Rules 13a-15(e) and 15d-15(e). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective at the reasonable assurance level to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. Our management was required to apply its judgment in evaluating the cost-benefit relationship of such controls and procedures.

Changes in Internal Controls

During the fiscal quarter covered by this report, there has been no change in our internal controls over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting

Inherent Limitations on Internal Controls

A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of management override or improper acts, if any, have been detected. These inherent limitations

36

include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of simple errors. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Because of the inherent limitations in a cost-effective control system, misstatements due to management override, error or improper acts may occur and not be detected. Any resulting misstatement or loss may have an adverse and material effect on our business, financial condition and results of operations.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The information set forth in Note 7, Commitments and Contingencies, under the heading “Litigation and Other Contingencies” to our Unaudited Condensed Consolidated Financial Statements, included in Part I, Item 1 of this report, is incorporated herein by reference.

ITEM 1A.  RISK FACTORS

The reader is referred to Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended March 31, 2020, as filed with the U.S. Securities and Exchange Commission on June 9, 2020, for a discussion of factors that could materially affect our business, financial condition, results of operations, or future results in addition to the risk factors below:

The recent coronavirus outbreak has affected and could result in material harm to our business.

In March 2020, a global pandemic was declared by the World Health Organization related to the rapidly growing outbreak of COVID-19 (the “Pandemic”). The Pandemic is having an unprecedented impact on the U.S. economy as federal, state and local governments react to this public health crisis with travel restrictions, quarantines and “stay-at-home” orders. The uncertainties caused by the Pandemic include, but are not limited to, supply chain disruptions, workplace dislocations, economic contraction, and downward pressure on some customer budgets and customer sentiment in general. Continued impacts of the Pandemic have materially adversely impacted global economic conditions. The Pandemic could also affect government budgets and purchases of our products and services, as well as our suppliers, and delay material deliveries to and by us. Although we have taken steps to preserve liquidity, manage cash flows and strengthen financial flexibility, we cannot assure you that these steps will be successful, that these actions will not limit our growth or that we will not need to take further actions. The extent of the impact of the Pandemic on our business and financial results and volatility of our stock price will depend largely on future developments, including the duration of the spread of the outbreak, the impact on capital and financial markets and the related impact on the financial circumstances of our customers, all of which are highly uncertain and cannot be predicted. This situation is changing rapidly, and additional impacts may arise that we are not aware of currently.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On August 9, 2012, our Board of Directors approved a new stock repurchase program pursuant to which we may acquire up to $3 million of our outstanding common stock for an unspecified length of time. Under the program, we may repurchase shares from time to time in the open market and privately negotiated transactions and block trades, and may also repurchase shares pursuant to a 10b5-1 trading plan during our closed trading windows, to the extent such a 10b5-1 plan is in place. There is no guarantee as to the exact number of shares that will be repurchased. We may modify or terminate the repurchase program at any time without prior notice. On November 6, 2014, our Board of Directors approved a $3.0 million increase to the Company’s existing stock repurchase program, pursuant to which the Company may continue to acquire shares of its outstanding common stock from time to time for an unspecified length of time.

For the three- and six-months ended September 30, 2020, the Company did not repurchase any shares. From inception of the program in August 2011 through September 30, 2020, we repurchased approximately 3,422,000 shares of our common stock for an aggregate price of approximately $5.6 million, at an average price per share of $1.63. As of September 30, 2020, all repurchased shares have been retired and returned to their status as authorized and unissued shares of our common stock. As of September 30, 2020, approximately $1.7 million remains available for the repurchase of our common stock under our current program.

37

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

The following exhibits are filed or furnished herewith or are incorporated by reference to the location indicated.

Exhibit Number	Description	Where Located
2.1	Asset Purchase Agreement, dated May 2, 2020, by and among Iteris, Inc., ClearAg, Inc., and DTN, LLC*	Exhibit 2.1 to the registrant’s Current Report on Form 8-K as filed with the SEC on May 6, 2020
31.1	Certification of the Principal Executive Officer, as required pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith
31.2	Certification of the Principal Financial Officer, as required pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith
32.1	Certification of the Chief Executive Officer, as required pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Furnished herewith
32.2	Certification of the Chief Financial Officer, as required pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Furnished herewith
101.INS	Inline XBRL Instance Document – The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.	Filed herewith
101.SCH	Inline XBRL Taxonomy Extension Schema Document	Filed herewith
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document	Filed herewith
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document	Filed herewith
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document	Filed herewith
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document	Filed herewith

38

104.1 Cover Page Interactive Data File – The cover page interactive data file does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document Filed herewith

___________________________________

*    Pursuant to Item 601(b)(2) of Regulation S-K, certain exhibits and schedules have been omitted. The registrant hereby agrees to furnish supplementally a copy of any omitted exhibit or schedule to the SEC upon request.

39

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: November 4, 2020	ITERIS, INC.
	(Registrant)
	By	/s/ JOE BERGERA
		Joe Bergera
		Chief Executive Officer
		(Principal Executive Officer)
	By	/s/ DOUGLAS L. GROVES
		Douglas L. Groves
		Senior Vice President and Chief Financial Officer
		(Principal Financial Officer)

40

EX-31.1

EXHIBIT 31.1

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Joe Bergera, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Iteris, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 4, 2020
	/s/ JOE BERGERA
	Joe Bergera
	Chief Executive Officer
	(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Douglas L. Groves, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Iteris, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 4, 2020
	/s/ DOUGLAS L. GROVES
	Douglas L. Groves
	Senior Vice President and Chief Financial Officer
	(Principal Financial Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. §1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Iteris, Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2020 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Joe Bergera, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 4, 2020
	/s/ JOE BERGERA
	Joe Bergera
	Chief Executive Officer

A signed original of this written statement required by Section 906, or any other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. §1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Iteris, Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2020 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Douglas L. Groves, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 4, 2020
	/s/ DOUGLAS L. GROVES
	Douglas L. Groves
	Senior Vice President and Chief Financial Officer

A signed original of this written statement required by Section 906, or any other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Cover - shares	6 Months Ended
	Sep. 30, 2020	Oct. 14, 2020
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2020
Document Transition Report	false
Entity File Number	001-08762
Entity Registrant Name	ITERIS, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	95-2588496
Entity Address, Address Line One	1700 Carnegie Avenue, Suite 100
Entity Address, City or Town	Santa Ana,
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	92705
City Area Code	949
Local Phone Number	270-9400
Title of 12(b) Security	Common Stock, $0.10 par value
Trading Symbol	ITI
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		41,174,331
Entity Central Index Key	0000350868
Amendment Flag	false
Current Fiscal Year End Date	--03-31
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q2

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2020	Mar. 31, 2020
Current assets:
Cash and cash equivalents	$ 15,623	$ 14,217
Restricted cash	146	146
Short-term investments	22,164	11,556
Trade accounts receivable, net of allowance for doubtful accounts of $916 and $802 at September 30, 2020 and March 31, 2020, respectively	17,810	16,706
Unbilled accounts receivable	10,284	9,848
Inventories	3,193	3,040
Prepaid expenses and other current assets	4,163	2,040
Assets held for sale, current portion	15	1,476
Total current assets	73,398	59,029
Property and equipment, net	1,744	1,835
Right-of-use assets	12,035	12,598
Intangible assets, net	5,758	6,066
Goodwill	20,590	20,590
Other assets	1,449	1,213
Assets held for sale, noncurrent portion	114	626
Total assets	115,088	101,957
Current liabilities:
Trade accounts payable	8,810	8,101
Accrued payroll and related expenses	9,006	7,508
Accrued liabilities	4,113	3,665
Deferred revenue	5,003	4,413
Liabilities held for sale, current portion	486	2,828
Total current liabilities	27,418	26,515
Lease liabilities	11,302
Deferred income taxes	206	190
Unrecognized tax benefits	116	130
Liabilities held for sale, noncurrent portion	310	357
Total liabilities	39,042	38,830
Commitments and contingencies (Note 7)
Stockholders’ equity:
Preferred Stock, Value, Issued	0	0
Common stock, $0.10 par value: Authorized shares - 70,000 at June 30, 2020 and March 31, 2020 Issued and outstanding shares - 40,752 at June 30, 2020 and 40,713 at March 31, 2020	4,111	4,071
Additional paid-in capital	178,327	176,209
Accumulated deficit	(106,392)	(117,153)
Total stockholders' equity	76,046	63,127
Total liabilities and stockholders' equity	115,088	101,957
Continuing operations
Current liabilities:
Lease liabilities	$ 10,992	$ 11,638

XML

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) shares in Thousands, $ in Thousands	Sep. 30, 2020	Mar. 31, 2020
Statement of Financial Position [Abstract]
Trade accounts receivable, allowance for doubtful accounts (in dollars)	$ 916	$ 802
Preferred stock, par value (in dollars per share)	$ 1.00	$ 1.00
Preferred stock, authorized shares (in shares)	2,000	2,000
Preferred stock, issued shares (in shares)	0	0
Preferred stock, outstanding shares (in shares)	0	0
Common stock, par value (in dollars per share)	$ 100	$ 100
Common stock, authorized shares (in shares)	70,000	70,000
Common stock, outstanding shares (in shares)	41,110	40,713
Common stock, issued shares (in shares)	41,110	40,713

XML

Condensed Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Total revenues	$ 29,256	$ 26,586	$ 57,256	$ 51,753
Cost of revenues	17,898	15,908	35,030	31,491
Gross profit	11,358	10,678	22,226	20,262
Operating expenses:
Selling, general and administrative	9,246	10,678	17,969	19,814
Research and development	1,134	983	2,048	1,903
Amortization of intangible assets	230	230	460	296
Restructuring charges	0	0	619	0
Total operating expenses	10,610	11,891	21,096	22,013
Operating income (loss)	748	(1,213)	1,130	(1,751)
Non-operating income (expense):
Other (expense) income, net	(44)	115	(28)	107
Interest income, net	43	48	97	81
Income (loss) from continuing operations before income taxes	747	(1,050)	1,199	(1,563)
Provision for income taxes	(28)	(1)	(62)	(25)
Net income (loss) from continuing operations	719	(1,051)	1,137	(1,588)
Loss from discontinued operations before gain on sale, net of tax	(306)	(1,136)	(1,664)	(2,171)
Gain on sale of discontinued operations, net of tax	0	0	11,288	0
Net (loss) income from discontinued operations, net of tax	(306)	(1,136)	9,624	(2,171)
Net income (loss)	$ 413	$ (2,187)	$ 10,761	$ (3,759)
Income (loss) per share - basic:
Income (loss) per share from continuing operations (in dollars per share)	$ 0.02	$ (0.03)	$ 0.03	$ (0.04)
Income (loss) per share from discontinued operations (in dollars per share)	(0.01)	(0.03)	0.24	(0.06)
Net income (loss) per share (in dollars per share)	0.01	(0.06)	0.27	(0.10)
Income (loss) per share - diluted:
Income (loss) per share from continuing operations (in dollars per share)	0.02	(0.03)	0.03	(0.04)
Income (loss) per share from discontinued operations (in dollars per share)	(0.01)	(0.03)	0.23	(0.06)
Net income (loss) per share (in dollars per share)	$ 0.01	$ (0.06)	$ 0.26	$ (0.10)
Shares used in basic per share calculations (in shares)	40,989,000	40,493,000	40,860,000	37,397,000
Shares used in diluted per share calculations (in shares)	41,909,000	40,493,000	41,708,000	37,397,000
Product revenues
Total revenues	$ 16,265	$ 13,795	$ 30,659	$ 28,312
Cost of revenues	9,332	7,551	17,413	16,046
Service revenues
Total revenues	12,991	12,791	26,597	23,441
Cost of revenues	$ 8,566	$ 8,357	$ 17,617	$ 15,445

XML

Condensed Consolidated Statements of Cash Flows - USD ($)	6 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
Cash flows from operating activities
Net income (loss)	$ 10,761,000	$ (3,759,000)
Less: Net income (loss) from discontinued operations	9,624,000	(2,171,000)
Net income (loss) from continuing operations	1,137,000	(1,588,000)
Adjustments to reconcile net income (loss) from continuing operations to net cash provided by (used in) operating activities:
Right-of-use asset non-cash expense	563,000	730,000
Deferred income taxes	2,000	(19,000)
Depreciation of property and equipment	367,000	380,000
Stock-based compensation	1,331,000	1,218,000
Amortization of intangible assets	724,000	499,000
Other	47,000	0
Changes in operating assets and liabilities, net of effects of discontinued operation and acquisition:
Trade accounts receivable	(1,104,000)	986,000
Unbilled accounts receivable and deferred revenue	154,000	(279,000)
Inventories	(153,000)	374,000
Prepaid expenses and other assets	(859,000)	(919,000)
Trade accounts payable and accrued expenses	2,570,000	1,861,000
Operating lease liabilities	(561,000)	(680,000)
Net cash provided by operating activities - continuing operations	4,218,000	2,563,000
Net cash used in operating activities - discontinued operations	(2,027,000)	(2,726,000)
Net cash provided by (used in) operating activities	2,191,000	(163,000)
Cash flows from investing activities
Purchases of property and equipment	(288,000)	(246,000)
Purchase of short-term investments	(23,655,000)	(21,251,000)
Maturities of investments	13,000,000	3,175,000
Capitalized software development costs	(416,000)	(522,000)
Cash paid in business acquisition, net of cash acquired	0	(5,581,000)
Net cash used in investing activities - continuing operations	(11,359,000)	(24,425,000)
Net cash provided by (used in) investing activities - discontinued operations	9,690,000	(30,000)
Net cash used in investing activities	(1,669,000)	(24,455,000)
Cash flows from financing activities
Proceeds from stock option exercises	696,000	81,000
Proceeds from ESPP purchases	188,000	172,000
Proceeds from issuance of common stock, net of costs	0	26,751,000
Net cash provided by financing activities - continuing operations	884,000	27,004,000
Net cash provided by financing activities - discontinued operations	0	0
Net cash provided by financing activities	884,000	27,004,000
Increase in cash, cash equivalents and restricted cash	1,406,000	2,386,000
Cash, cash equivalents and restricted cash at beginning of period	14,363,000	7,071,000
Cash, cash equivalents and restricted cash at end of period	15,769,000	9,457,000
Supplemental cash flow information:
Income taxes	102,000	54,000
Supplemental schedule of non-cash investing and financing activities:
Lease liabilities arising from obtaining right-of-use assets	310,000	95,000
Deferred payment of purchase price	1,500,000	0
Issuance of common stock in connection with acquisition	$ 0	$ 4,535,000

XML

Condensed Consolidated Statements of Stockholders' Equity - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock	Additional Paid-In Capital	Accumulated Deficit
Balance at Mar. 31, 2019	$ 34,055	$ 3,338	$ 142,260	$ (111,543)
Balance (in shares) at Mar. 31, 2019		33,377
Increase (Decrease) in Stockholders' Equity
Stock option exercises	14	$ 1	13
Stock option exercises (in shares)		10
Issuance of shares pursuant to Employee Stock Purchase Plan	172	$ 5	167
Issuance of shares pursuant to Employee Stock Purchase Plan (in Shares)		48
Stock-based compensation	602		602
Issuance of shares pursuant - to vesting of restricted stock units, net of payroll withholding taxes (in shares)		2
Issuance of common stock in connection with public offering	26,751	$ 618	26,133
Issuance of common stock in connection with public offering (in shares)		6,183
Net income (loss)	(1,572)			(1,572)
Balance at Jun. 30, 2019	60,022	$ 3,962	169,175	(113,115)
Balance (in shares) at Jun. 30, 2019		39,620
Balance at Mar. 31, 2019	34,055	$ 3,338	142,260	(111,543)
Balance (in shares) at Mar. 31, 2019		33,377
Increase (Decrease) in Stockholders' Equity
Net income (loss)	(3,759)
Balance at Sep. 30, 2019	63,230	$ 4,057	174,475	(115,302)
Balance (in shares) at Sep. 30, 2019		40,571
Balance at Jun. 30, 2019	60,022	$ 3,962	169,175	(113,115)
Balance (in shares) at Jun. 30, 2019		39,620
Increase (Decrease) in Stockholders' Equity
Stock option exercises	67	$ 2	65
Stock option exercises (in shares)		23
Issuance of shares pursuant to Employee Stock Purchase Plan	793	$ 0	793
Issuance of shares pursuant to Employee Stock Purchase Plan (in Shares)		0
Stock-based compensation		$ 6	(6)
Share-based Payment Arrangement, Shares Withheld for Tax Withholding Obligation		59
Issuance of shares pursuant - to vesting of restricted stock units, net of payroll withholding taxes	4,535	$ 87	4,448
Issuance of shares pursuant - to vesting of restricted stock units, net of payroll withholding taxes (in shares)		869
Net income (loss)	(2,187)			(2,187)
Balance at Sep. 30, 2019	63,230	$ 4,057	174,475	(115,302)
Balance (in shares) at Sep. 30, 2019		40,571
Balance at Mar. 31, 2020	$ 63,127	$ 4,071	176,209	(117,153)
Balance (in shares) at Mar. 31, 2020	40,713	40,713
Increase (Decrease) in Stockholders' Equity
Stock option exercises	$ 74	$ 3	71
Stock option exercises (in shares)		27
Stock-based compensation	607		607
Issuance of shares pursuant - to vesting of restricted stock units, net of payroll withholding taxes		$ 1	(1)
Issuance of shares pursuant - to vesting of restricted stock units, net of payroll withholding taxes (in shares)		12
Net income (loss)	10,348			10,348
Balance at Jun. 30, 2020	74,156	$ 4,075	176,886	(106,805)
Balance (in shares) at Jun. 30, 2020		40,752
Balance at Mar. 31, 2020	$ 63,127	$ 4,071	176,209	(117,153)
Balance (in shares) at Mar. 31, 2020	40,713	40,713
Increase (Decrease) in Stockholders' Equity
Net income (loss)	$ 10,761
Balance at Sep. 30, 2020	$ 76,046	$ 4,111	178,327	(106,392)
Balance (in shares) at Sep. 30, 2020	41,110	41,110
Balance at Jun. 30, 2020	$ 74,156	$ 4,075	176,886	(106,805)
Balance (in shares) at Jun. 30, 2020		40,752
Increase (Decrease) in Stockholders' Equity
Stock option exercises	622	$ 24	598
Stock option exercises (in shares)		239
Issuance of shares pursuant to Employee Stock Purchase Plan	188	$ 4	184
Issuance of shares pursuant to Employee Stock Purchase Plan (in Shares)		42
Stock-based compensation	667		667
Issuance of shares pursuant - to vesting of restricted stock units, net of payroll withholding taxes		$ 8	(8)
Issuance of shares pursuant - to vesting of restricted stock units, net of payroll withholding taxes (in shares)		77
Net income (loss)	413			413
Balance at Sep. 30, 2020	$ 76,046	$ 4,111	$ 178,327	$ (106,392)
Balance (in shares) at Sep. 30, 2020	41,110	41,110

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Commitments and Contingencies

6 Months Ended

Sep. 30, 2020

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Litigation and Other Contingencies

As a provider of traffic engineering services, hardware products, software and other various solutions for the traffic industry, the Company is, and may in the future from time to time, be involved in litigation relating to claims arising out of its operations in the normal course of business. While the Company cannot accurately predict the outcome of any such litigation, the Company is not a party to any legal proceeding, the outcome of which, in management’s opinion, individually or in the aggregate, would have a material effect on the Company’s unaudited condensed consolidated results of operations, financial position or cash flows.

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Description of Business and Summary of Significant Accounting Policies

6 Months Ended

Sep. 30, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Description of Business and Summary of Significant Accounting Policies

Description of Business and Summary of Significant Accounting Policies

Description of Business

Iteris, Inc. (referred to collectively with its wholly-owned subsidiaries, ClearAg, Inc. and Albeck Gerken, Inc. ("AGI"), in this report as "Iteris," the "Company," "we," "our," and "us") is a provider of smart mobility infrastructure management solutions. Our solutions enable municipalities, transportation agencies, and other transportation infrastructure providers monitor, visualize, and optimize mobility infrastructure to help ensure roads are safe, travel is efficient, and communities thrive. As a pioneer in intelligent transportation systems ("ITS") technology, our intellectual property, products and software-as-a-service ("SaaS") offerings represent a comprehensive range of ITS solutions that we distribute to customers throughout the U.S. and internationally. We believe our products, solutions and services increase safety and decrease congestion within our communities, while also minimizing environmental impact. We continue to make significant investments to leverage our existing technologies and further expand both our advanced detection sensors and performance analytics systems in the transportation infrastructure market and we are always exploring strategic alternatives intended to optimize the value of our Company. Iteris was incorporated in Delaware in 1987 and has operated in its current form since 2004.

Recent Developments

COVID-19 Update

The COVID-19 pandemic (the “Pandemic”) has materially adversely impacted global economic conditions. Indeed, more than six months into the Pandemic, COVID-19 continues to have an unpredictable and unprecedented impact on the U.S. economy as federal, state and local governments react to this public health crisis with travel restrictions, quarantines and "stay-at-home" orders. The uncertainties caused by the Pandemic include, but are not limited to, supply chain disruptions, workplace dislocations, economic contraction, and downward pressure on some customer budgets and customer sentiment in general. While there has been no material impact during the first two quarters of the fiscal year ending March 31, 2021 (“Fiscal 2021”), we did experience some work delays due to the Pandemic. Should such conditions become protracted or worsen the Pandemic could impact our business, results of operations and financial condition. The extent of the impact of the Pandemic on our business and financial results and volatility of our stock price will depend largely on future developments, including the duration of the spread of the outbreak, the impact on capital and financial markets and the related impact on the budgets and financial circumstances of our customers, all of which are highly uncertain and cannot be reasonably estimated as of this report.

Given the uncertainties surrounding the impacts of the Pandemic on the Company's future financial condition and results of operations, the Company has taken certain actions to preserve its liquidity, manage cash flow and strengthen its financial flexibility. Such actions include, but are not limited to, reducing discretionary spending, reducing capital expenditures, implementing restructuring activities, and reducing payroll costs, including employee furloughs, pay freezes and pay cuts. Refer to Note 4, Restructuring Activities, for more information.

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act ("CARES Act") was signed into law in the United States. The CARES Act provides relief to U.S. corporations through financial assistance programs and modifications to certain income tax provisions. The Company is applying certain beneficial provisions of the CARES Act, including the payroll tax deferral and the alternative minimum tax acceleration. Refer to Note 6, Income Taxes, for more information.

The Company assessed the impacts of the Pandemic on the estimates and assumptions used in preparing these unaudited condensed consolidated financial statements. The estimates and assumptions used in these assessments were based on management’s judgment and may be subject to change as new events occur and additional information is obtained. In particular, there is significant uncertainty about the duration and extent of the impact of the Pandemic and its resulting impact on global economic conditions. If economic conditions caused by the Pandemic do not recover as currently estimated by management, the Company’s financial condition, cash flows and results of operations may be materially impacted. See below for areas that required more judgments and estimates as a result of the Pandemic. The Company will continue to assess the effect on its operations by monitoring the spread of the Pandemic and the actions implemented to combat the virus throughout the world and its assessment of the impact of the Pandemic may change.

Inventory Valuation

The Company values inventory at the lower of cost or net realizable value. Cost is determined using the first-in, first-out method. Net realizable value is determined by estimated expected selling prices based on anticipated recovery rates for slow-moving and obsolete inventory and other factors, such as market conditions, expected channel of distribution and current consumer demand and preferences.

Accounts Receivable

Accounts receivable are recorded net of an allowance for doubtful accounts. The Company estimates the allowance for doubtful accounts based on an analysis of the aging of accounts receivable, assessment of collectability, including any known or anticipated bankruptcies, customer-specific circumstances and an evaluation of current economic conditions.

Goodwill and Other Long-Lived Assets

The Company reviews its goodwill and other long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may be impaired. Impairment losses are measured and recorded for the excess of carrying value over its fair value, estimated based on expected future cash flows and other quantitative and qualitative factors. The Company performed a qualitative assessment of its goodwill to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying value and noted no indicators of impairment at September 30, 2020. The Company also reviewed its other long-lived assets and noted no indicators of impairment related to the Pandemic.

Sale of Agriculture and Weather Analytics Segment

On May 5, 2020, the Company completed the sale of substantially all of our assets used in connection with our Agriculture and Weather Analytics segment to DTN, LLC (“DTN”), an operating company of TBG AG, a Swiss-based holding company, pursuant to an Asset Purchase Agreement (the “Purchase Agreement”) signed on May 2, 2020, in exchange for a total purchase consideration of $12.0 million in cash, subject to working capital adjustments. Upon closing on May 5, 2020, the Company received $10.5 million in cash and $1.45 million and $50,000 will be paid by DTN at the 12-month and 18-month anniversaries of the closing date, respectively, subject to satisfactions of the conditions set forth in the Purchase Agreement relating to the transition of certain customers to DTN and the collection of certain receivables by DTN. See Note 3, Discontinued Operations, for further details on the sale of the Agriculture and Weather Analytics segment.

Restructuring Activities

On April 30, 2020, in connection with the sale of the Agriculture and Weather Analytics segment, the Board of Directors of Iteris, Inc. approved restructuring activities to better position the Company for increased profitability and growth. Restructuring charges of approximately $1.5 million were incurred for separation costs for certain employees who did not transition to DTN, additional positions that were eliminated to right-size the cost structure of the Company, and the impairment of certain lease-related assets. See Note 4, Restructuring Activities, for further details on the restructuring activities.

Basis of Presentation

Our unaudited condensed consolidated financial statements include the accounts of Iteris, Inc. and its subsidiaries, and have been prepared in accordance with the rules of the U.S. Securities and Exchange Commission (“SEC”) for interim reporting, which permit certain footnotes or other financial information that are normally required by generally accepted accounting principles in the U.S. (“GAAP”) to be condensed or omitted. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and related notes included in its Annual Report on Form 10-K for the fiscal year ended March 31, 2020 (“Fiscal 2020”), filed with the SEC on June 9, 2020. All intercompany accounts and transactions have been eliminated in consolidation. The results of operations for the three- and six-month periods ended September 30, 2020 are not necessarily indicative of the results to be expected for Fiscal 2021 or any other periods.

During the first quarter of Fiscal 2021, the Company completed the sale of its Agriculture and Weather Analytics segment for total cash consideration of $12.0 million, subject to certain working capital adjustments and transaction costs. The Agriculture and Weather Analytics segment’s results of operations and related cash flows have been reclassified to loss from discontinued operations, respectively, for all periods presented. The assets and liabilities of the Agriculture and Weather Analytics segment have been reclassified to assets held for sale and liabilities held for sale, respectively, in the unaudited condensed consolidated balance sheet as of March 31, 2020. See Note 3, Discontinued Operations, for further information.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires our management to make certain 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 the reporting period. Actual results could differ from those estimates. Significant estimates made in the preparation of the consolidated financial statements include the collectability of accounts receivable and related allowance for doubtful accounts, projections of taxable income used to assess realizability of deferred tax assets, warranty reserves and other contingencies, costs to complete long-term contracts, indirect cost rates used in cost plus contracts, the valuation of inventories, the valuation of purchased intangible assets and goodwill, the valuation of investments, estimates of future cash flows used to assess the recoverability of long-lived assets and the impairment of goodwill, and fair value of our stock option awards used to calculate stock-based compensation.

Revenue Recognition

Product revenue related contracts with customers begin when we acknowledge a purchase order for a specific customer order of product to be delivered in the near term. These purchase orders are short-term in nature. Product revenue is recognized at a point in time upon shipment or upon customer receipt of the product, depending on shipping terms. The Company determined that this method best represents the transfer of goods as transfer of control typically occurs upon shipment or upon customer receipt of the product.

Service revenues, primarily derived from the Transportation Systems segment, are primarily from long-term engineering and consulting service contracts with governmental agencies. These contracts generally include performance obligations in which control is transferred over time. We recognize revenue on fixed fee contracts, over time, using the proportion of actual costs incurred to the total costs expected to complete the contract performance obligation. The Company determined that this method best represents the transfer of services as the proportion closely depicts the efforts or inputs completed towards the satisfaction of a fixed fee contract performance obligation. Time & Materials (“T&M”) and Cost Plus Fixed Fee (“CPFF”) contracts are considered to involve variable consideration. However, contractual performance obligations with these fee types qualify for the “Right to Invoice” practical expedient. Under this practical expedient, the Company is allowed to recognize revenue, over time, in the amount to which the Company has a right to invoice. In addition, the Company is not required to estimate such variable consideration upon inception of the contract and reassess the estimate each reporting period. The Company determined that this method best represents the transfer of services as, upon billing, the Company has a right to consideration from a customer in an amount that directly corresponds with the value to the customer of the Company’s performance completed to date.

Service revenues also consist of revenues derived from maintenance support and the use of the Company’s service platforms and APIs on a subscription basis. We generate this revenue from fees for maintenance and support, monthly active user fees, SaaS fees, and hosting and storage fees. In most cases, the subscription or transaction arrangement is a single performance obligation comprised of a series of distinct services that are substantially the same and that have the same pattern of transfer (i.e., distinct days of service). The Company applies a time-based measure of progress to the total transaction price, which results in ratable recognition over the term of the contract. The Company determined that this method best represents the transfer of services as the customer obtains equal benefit from the service throughout the service period.

The Company accounts for individual goods and services separately if they are distinct performance obligations, which often requires significant judgment based upon knowledge of the products and/or services, the solution provided and the structure of the sales contract. In SaaS agreements, we provide a service to the customer that combines the software functionality, maintenance and hosting into a single performance obligation. In product-related contracts, a purchase order may cover different products, each constituting a separate performance obligation.

We generally estimate variable consideration at the most likely amount to which we expect to be entitled and in certain cases based on the expected value, which requires judgment. We include estimated amounts in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Our estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of our anticipated performance and all information (historical, current and forecasted) that is reasonably available to us. We review and update these estimates on a quarterly basis.

The Company’s typical performance obligations include the following:

Performance Obligation	When Performance Obligation is Typically Satisfied	When Payment is Typically Due	How Standalone Selling Price is Typically Estimated
Product Revenues
Standard purchase orders for delivery of a tangible product	Upon shipment (point in time)	Within 30 days of delivery	Observable transactions
Engineering services where the deliverable is considered a product	As work is performed (over time)	Within 30 days of services being invoiced	Estimated using a cost-plus margin approach
Service Revenues
Engineering and consulting services	As work is performed (over time)	Within 30 days of services being invoiced	Estimated using a cost-plus margin approach
SaaS	Over the course of the SaaS service once the system is available for use (over time)	At the beginning of the contract period	Estimated using a cost-plus margin approach

Disaggregation of Revenue

The Company disaggregates revenue from contracts with customers into reportable segments and the nature of the products and services. See Note 12, Business Segment Information, for our revenue by reportable segments.

Trade Accounts Receivable and Contract Balances

We classify our right to consideration in exchange for goods and services as either a receivable or a contract asset. A receivable is a right to consideration that is unconditional (i.e. only the passage of time is required before payment is due). We present such receivables in trade accounts receivable, net, in our unaudited condensed consolidated balance sheets at their net estimated realizable value.

The Company maintains an allowance for doubtful accounts to provide for the estimated amount of receivables that will not be collected. If warranted, the allowance is increased by the Company’s provision for doubtful accounts, which is charged against income. All recoveries on receivables previously charged off are included in income, while direct charge-offs of receivables are deducted from the allowance.

A contract asset is a right to consideration that is conditional upon factors other than the passage of time. Contract assets are presented as unbilled accounts receivable on the accompanying unaudited condensed consolidated balance sheets. For example, we would record a contract asset if we record revenue on a professional services engagement, but are not entitled to bill until we achieve specified milestones.

Our contract assets and refund liabilities are reported in a net position on a contract basis at the end of each reporting period. Refund liabilities are consideration received in advance of the satisfaction of performance obligations.

Contract Fulfillment Costs

The Company evaluates whether or not we should capitalize the costs of fulfilling a contract. Such costs would be capitalized when they are not within the scope of other standards and: (1) are directly related to a contract; (2) generate or enhance resources that will be used to satisfy performance obligations; and (3) are expected to be recovered. As of September 30, 2020 and March 31, 2020, there was approximately $2,073,000 and $1,236,000, respectively, of contract fulfillment costs, which are presented in the accompanying unaudited condensed consolidated balance sheets as prepaid and other current assets. These costs primarily relate to the satisfaction of performance obligations related to the set up of SaaS platforms. These costs are amortized on a straight-line basis over the estimated useful life of the SaaS platform.

Transaction Price Allocated to the Remaining Performance Obligations

As of September 30, 2020 and March 31, 2020, the aggregate amount of transaction price allocated to remaining performance obligations was immaterial, primarily as a result of the termination provisions within our contracts, which make the duration of the accounting term of the contract one year or less.

Deferred Revenue

Deferred revenue in the accompanying unaudited condensed consolidated balance sheets is comprised of refund liabilities related to billings and consideration received in advance of the satisfaction of performance obligations.

Concentration of Credit Risk

Financial instruments that potentially subject us to a concentration of credit risk consist principally of cash and cash equivalents and trade accounts receivable.

Cash and cash equivalents consist primarily of demand deposits and money market funds maintained with several financial institutions. Deposits held with banks may exceed the amount of insurance provided on such deposits. Generally, these deposits may be redeemed upon demand and are maintained with high quality financial institutions, and therefore are believed to have minimal credit risk.

Our accounts receivable are primarily derived from billings with customers located throughout North America, as well as in Europe and South America. We generally do not require collateral or other security from our domestic customers. We maintain an allowance for doubtful accounts for potential credit losses, which losses have historically been within management’s expectations.

We currently have, and historically have had, a diverse customer base. For the three- and six-months ended September 30, 2020 and 2019, no individual customer represented greater than 10% of our total revenues. As of September 30, 2020 and March 31, 2020, no individual customer represented greater than 10% of our total accounts receivable.

Fair Values of Financial Instruments

The fair value of cash equivalents, receivables, accounts payable and accrued expenses approximate carrying value because of the short period of time to maturity. Our investments are measured at fair value on a recurring basis.

The framework for measuring fair value and related disclosure requirements about fair value measurements are provided in Financial Accounting Standard Board (“FASB”) Accounting Standards Codification (“ASC”) 820, Fair Value Measurements (“ASC 820”). This pronouncement defines fair value as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The fair value hierarchy prescribed by ASC 820 contains three levels as follows:

Level 1—Quoted prices in active markets for identical assets or liabilities.

Level 2—Observable inputs other than quoted prices in active markets for identical assets or liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3—Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability.

Cash, Cash Equivalents and Restricted Cash

Cash and cash equivalents consist of cash and short-term investments with initial maturities of 90 days or less.

As of September 30, 2020 and March 31, 2020, restricted cash was $146,000 and $146,000, respectively, related to cash restricted for shares purchased under the Employee Stock Purchase Plan ("ESPP") (see Note 9, Stock-Based Compensation, for further details on the ESPP).

Cash, cash equivalents and restricted cash presented in the accompanying unaudited condensed consolidated statements of cash flows consist of the following (in thousands):

	September 30, 2020		March 31, 2020
Cash and cash equivalents	$	15,623	$	14,217
Restricted cash	146		146
	$	15,769	$	14,363

Investments

The Company’s investments are classified as either held-to-maturity, available-for-sale or trading, in accordance with FASB ASC 320 – Investments – Debt and Equity Securities. Held-to-maturity securities are those securities that the Company has the positive intent and ability to hold until maturity. Trading securities are those securities that the Company intends to sell in the near term. All other securities not included in the held-to-maturity or trading category are classified as available-for-sale. Held-to-maturity securities are recorded at amortized cost, which approximates fair market value. Trading securities are carried at fair value with unrealized gains and losses charged to earnings. Available-for-sale securities are carried at fair value with unrealized gains and losses recorded within accumulated other comprehensive loss as a separate component of stockholders’ equity. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs, where available (see Note 5, Fair Value Measurements). As of September 30, 2020 and March 31, 2020, all of our investments are available-for-sale. Under FASB ASC 320-10-35, a security is considered to be other-than-temporarily impaired if the present value of cash flows expected to be collected are less than the security’s amortized cost basis (the difference being defined as the “Credit Loss”) or if the fair value of the security is less than the security’s amortized cost basis and the investor intends, or will be required, to sell the security before recovery of the security’s amortized cost basis. If an other-than-temporary impairment exists, the charge to earnings is limited to the amount of Credit Loss if the investor does not intend to sell the security, and will not be required to sell the security, before recovery of the security’s amortized cost basis. Any remaining difference between fair value and amortized cost is recognized in other comprehensive loss, net of applicable taxes. The Company evaluates whether the decline in fair value of its investments is other-than-temporary at each quarter-end. This evaluation consists of a review by management, and includes market pricing information and maturity dates for the securities held, market and economic trends in the industry and information on the issuer’s financial condition and, if applicable, information on the guarantors’ financial condition. Factors considered in determining whether a loss is temporary include the length of time and extent to which the investment’s fair value has been less than its cost basis, the financial condition and near-term prospects of the issuer and guarantors, including any specific events which may influence the operations of the issuer and the Company’s intent and ability to retain the investment for a reasonable period of time sufficient to allow for any anticipated recovery of fair value.

Allowance for Doubtful Accounts

The collectability of our accounts receivable is evaluated through review of outstanding invoices and ongoing credit evaluations of our customers’ financial condition. In cases where we are aware of circumstances that may impair a specific customer’s ability to meet its financial obligations subsequent to the original sale, we will record an allowance against amounts due, and thereby reduce the net recognized accounts receivable to the amount we reasonably believe will be collected. We also maintain an allowance based on our historical collections experience. When we determine that collection is not likely, we write off accounts receivable against the allowance for doubtful accounts.

Inventories

Inventories consist of finished goods, work-in-process and raw materials and are stated at the lower of cost or net realizable value. Cost is determined using the first-in, first-out method.

Property and Equipment

Property and equipment are recorded at cost and are depreciated using the straight-line method over the estimated useful life ranging from three to eight years. Leasehold improvements are depreciated over the term of the related lease or the estimated useful life of the improvement, whichever is shorter.

Intangible Assets

Intangible assets with determinable economic lives are carried at cost, less accumulated amortization. Amortization is computed over the estimated useful life of each asset on a straight-line basis. The Company determines the useful lives of identifiable intangible assets after considering the specific facts and circumstances related to each intangible asset. Factors the Company considers when determining useful lives include the contractual term of any agreement related to the asset, the historical performance of the asset, the Company's long-term strategy for using the asset, any laws or other local regulations which could impact the useful life of the asset and other economic factors, including competition and specific market conditions.

Goodwill and Long-Lived Assets

We perform an annual qualitative assessment of our goodwill during the fourth fiscal quarter, or more frequently, to determine if any events or circumstances exist, such as an adverse change in business climate or a decline in overall industry demand, that would indicate that it would more likely than not reduce the fair value of a reporting unit below its carrying amount, including goodwill. If events or circumstances do not indicate that the fair value of a reporting unit is below its carrying amount, then goodwill is not considered to be impaired and no further testing is required; if otherwise, we compare the fair value of our reporting unit to its carrying value, including goodwill. If the carrying amount of a reporting unit exceeds the reporting unit’s fair value, the amount by which the carrying value of the goodwill exceeds its implied fair value, if any, is recognized as an impairment loss. We monitor the indicators for goodwill impairment testing between annual tests. As of September 30, 2020, there were no indicators of goodwill impairment.

We test long-lived assets and purchased intangible assets (other than goodwill) for impairment if we believe indicators of impairment exist. We determine whether the carrying value of an asset or asset group is recoverable, based on comparisons to undiscounted expected future cash flows the asset or asset group is expected to generate. If an asset is not recoverable, we record an impairment loss equal to the amount by which the carrying value of the asset exceeds its fair value. We primarily use the income valuation approach to determine the fair value of our long-lived assets and purchased intangible assets. During the three months ended June 30, 2020, we recorded $313,000 in impairment charges related to right-of-use assets and leasehold improvements directly resulting from the restructuring activities. There was no additional impairment or restructuring charges during the three months ended September 30, 2020. See Note 4, Restructuring Activities, for further details on the restructuring activities.

Income Taxes

We utilize the asset and liability method of accounting for income taxes, under which deferred taxes are determined based on the temporary differences between the financial statement and tax basis of assets and liabilities using tax rates expected to be in effect during the years in which the basis differences reverse. A valuation allowance is recorded when it is more-likely-than-not that some or all of the deferred tax assets will not be realized, which increases our income tax expense in the period such determination is made. As such, as of September 30, 2020, we determined it was appropriate to record a full valuation allowance against our deferred tax assets. We will continuously reassess the appropriateness of maintaining a valuation allowance.

Income tax positions must meet a more-likely-than-not recognition threshold to be recognized. Income tax positions that previously failed to meet the more-likely-than-not threshold are recognized in the first subsequent financial reporting period in which that threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not threshold are derecognized in the first subsequent financial reporting period in which that threshold is no longer met.

Stock-Based Compensation

We record stock-based compensation in our unaudited condensed consolidated statements of operations as an expense, based on the estimated grant date fair value of our stock-based awards, whereby such fair values are amortized over the requisite service period. Our stock-based awards are currently comprised of common stock options, restricted stock units and performance stock units. The fair value of our common stock option awards is estimated on the grant date using the Black-

Scholes-Merton option-pricing formula. The fair value of our performance stock unit awards is estimated on the grant date using a Monte Carlo simulation model. While the use of these models meets established requirements, the estimated fair values generated by the models may not be indicative of the actual fair values of our awards as it does not consider certain factors important to those awards to employees, such as continued employment and periodic vesting requirements, as well as limited transferability. The fair value of our restricted stock units is based on the closing market price of our common stock on the grant date. If there are any modifications or cancellations of the underlying unvested stock-based awards, we may be required to accelerate, increase or cancel any remaining unearned stock-based compensation expense.

Research and Development Expenditures

Research and development expenditures are charged to expense in the period incurred.

Warranty

We generally provide a one- to three-year warranty from the original invoice date on all products, materials and workmanship. Products sold to various original equipment manufacturer customers sometimes carry longer warranties. Defective products will be either repaired or replaced, usually at our option, upon meeting certain criteria. We accrue a provision for the estimated costs that may be incurred for product warranties relating to a product as a component of cost of sales at the time revenue for that product is recognized. The accrued warranty reserve is included within accrued liabilities in the accompanying unaudited condensed consolidated balance sheets. We do not provide any service-type warranties.

Repair and Maintenance Costs

We incur repair and maintenance costs in the normal course of business. Should the repair or maintenance result in a permanent improvement to one of our leased facilities, the cost is capitalized as a leasehold improvement and amortized over its useful life or the remainder of the lease period, whichever is shorter. Non-permanent repair and maintenance costs are charged to expense as incurred.

Comprehensive Income (Loss)

The difference between net income and comprehensive income for the three- and six-months ended September 30, 2020 and between net loss and comprehensive loss for the three- and six-months ended September 30, 2019 was de minimis.

Recent Accounting Pronouncements

In June 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments—Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments. This standard update requires that certain financial assets be measured at amortized cost net of an allowance for estimated credit losses such that the net receivable represents the present value of expected cash collection. In addition, this standard update requires that certain financial assets be measured at amortized cost reflecting an allowance for estimated credit losses expected to occur over the life of the assets. The estimate of credit losses must be based on all relevant information including historical information, current conditions and reasonable and supportable forecasts that affect the collectability of the amounts. In November 2019, the FASB issued ASU 2019-10, Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815) and Leases (Topic 842): Effective Dates, which defers the effective date of ASU 2016-13 to fiscal years beginning after December 15, 2022 for all entities except SEC reporting companies that are not smaller reporting companies. As a smaller reporting company, ASU 2016-13 will now be effective for our fiscal year 2024 beginning April 1, 2023; however, early adoption is permitted. We are currently evaluating the timing and impact of adopting ASU 2016-13 on our unaudited condensed consolidated financial statements.

In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirement for Fair Value Measurements (“ASU 2018-13”), which modifies the disclosure requirements on fair value measurements. This update is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019, and early adoption is permitted. The Company adopted this update effective April 2020. The adoption of this ASU did not have a material impact on the Company’s financial statements.

In August 2018, the FASB issued ASU No. 2018-15, Intangibles—Goodwill and Other—Internal Use Software (subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract ("ASU 2018-15"), which clarifies the accounting for implementation costs in cloud computing arrangements. This update is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019, and early

adoption is permitted. The Company adopted this update effective April 2020. The adoption of this ASU did not have a material impact on the Company’s financial statements.In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes. The ASU removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. This ASU is effective for fiscal years beginning after December 15, 2020, including interim periods within that fiscal year, with early adoption permitted. The Company early adopted this update effective July 2020. The adoption of this ASU did not have a material impact on the Company’s financial statements.

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Supplementary Financial Information

6 Months Ended

Sep. 30, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Supplementary Financial Information

Supplemental Financial Information

Inventories

The following table presents details of our inventories:

	September 30, 2020		March 31, 2020
	(In thousands)
Materials and supplies	$	1,720	$	1,380
Work in process	27		162
Finished goods	1,446		1,498
	$	3,193	$	3,040

Property and Equipment.

The following table presents details of our property and equipment, net:

	September 30, 2020		March 31, 2020
	(In thousands)
Equipment	$	6,500	$	6,222
Leasehold improvements	2,966		2,911
Accumulated depreciation	(7,722)		(7,298)
	$	1,744	$	1,835

Depreciation expense was approximately $182,000 and $367,000 for the three- and six-months ended September 30, 2020, respectively, and $203,000 and $380,000 for the three- and six-months ended September 30, 2019, respectively. Approximately $56,000 and $117,000 of the depreciation expense was recorded to cost of revenues, and approximately $126,000 and $250,000 was recorded to operating expenses, respectively, in the unaudited condensed consolidated statements of operations for the three- and six-months ended September 30, 2020. Approximately $65,000 and $130,000 of the depreciation expense was recorded to cost of revenues, and approximately $138,000 and $250,000 was recorded to operating expenses, respectively, in the unaudited condensed consolidated statements of operations for the three- and six-months ended September 30, 2019.

Intangible Assets

There are no indefinite lived intangible assets on our unaudited condensed consolidated balance sheets. The following table presents details of our net intangible assets:

	September 30, 2020						March 31, 2020
	Gross Carrying Amount		Accumulated Amortization		Net Book Value		Gross Carrying Amount		Accumulated Amortization		Net Book Value
	(In thousands)
Technology	$	1,286	$	(1,286)	$	—	$	1,286	$	(1,286)	$	—
Customer contracts / relationships	3,750		(979)		2,771		3,750		(688)		3,062
Trade names and non-compete agreements	770		(648)		122		770		(613)		157
Capitalized software development costs	4,839		(1,974)		2,865		4,423		(1,576)		2,847
Total	$	10,645	$	(4,887)	$	5,758	$	10,229	$	(4,163)	$	6,066

Amortization expense for intangible assets subject to amortization was approximately $363,000 and $724,000 for the three- and six-months ended September 30, 2020, respectively, and $336,000 and $499,000 for the three- and six-months ended September 30, 2019, respectively. Approximately $133,000 and $264,000 of the intangible asset amortization was recorded to cost of revenues and approximately $230,000 and $460,000, was recorded to amortization expense for the three- and six-months ended September 30, 2020, respectively, in the unaudited condensed consolidated statements of operations. Approximately $106,000 and $203,000 of the intangible asset amortization was recorded to cost of revenues and approximately $230,000 and $296,000 was recorded to amortization expense for the three- and six-months ended September 30, 2019, respectively, in the unaudited condensed consolidated statements of operations.

As of September 30, 2020, future estimated amortization expense is as follows:

Year Ending March 31,
(In thousands)
2021	$	731
2022	1,373
2023	1,149
2024	912
2025	849
Thereafter	744
	$	5,758

Warranty Reserve Activity

Warranty reserve is recorded as accrued liabilities in the accompanying unaudited condensed consolidated balance sheets. The following table presents activity related to the warranty reserve:

​	Six Months Ended September 30,
​	2020		2019
​	(In thousands)
Balance at beginning of fiscal year	$	416	$	463
Additions charged to cost of sales	152		372
Warranty claims	(128)		(340)
Balance at end of reporting period	$	440	$	495

Earnings Per Share

The following table sets forth the computation of basic and diluted net income (loss) per share:

​	Three Months Ended September 30,				Six Months Ended September 30,
​	2020		2019		2020		2019
​	(In thousands, except per share amounts)				(In thousands, except per share amounts)
Numerator:
Net income (loss) from continuing operations	$	719	$	(1,051)	$	1,137	$	(1,588)
Net income (loss) from discontinued operations, net of tax	(306)		(1,136)		9,624		(2,171)
Net income (loss)	$	413	$	(2,187)	$	10,761	$	(3,759)
Denominator:
Weighted average common shares used in basic computation	40,989		40,493		40,860		37,397
Dilutive stock options	920		—		848		—
Weighted average common shares used in diluted computation	41,909		40,493		41,708		37,397
Basic:	​		​		​		​
Net income (loss) per share from continuing operations:	$	0.02	$	(0.03)	$	0.03	$	(0.04)
Net income (loss) per share from discontinued operations:	$	(0.01)	$	(0.03)	$	0.24	$	(0.06)
Net income (loss) per basic share	$	0.01	$	(0.06)	$	0.27	$	(0.10)
Diluted:
Net income (loss) per share from continuing operations:	$	0.02	$	(0.03)	$	0.03	$	(0.04)
Net income (loss) per share from discontinued operations:	$	(0.01)	$	(0.03)	$	0.23	$	(0.06)
Net income (loss) per diluted share	$	0.01	$	(0.06)	$	0.26	$	(0.10)

The following instruments were excluded for purposes of calculating weighted average common share equivalents in the computation of diluted net income (loss) per share as their effect would have been anti-dilutive:

	Three Months Ended September 30,		Six Months Ended September 30,
	2020	2019	2020	2019
	(In thousands)		(In thousands)
Stock options	2,887	5,039	2,889	5,050
Restricted stock units	106	438	158	282

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Discontinued Operations

6 Months Ended

Sep. 30, 2020

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

Discontinued Operations

On May 5, 2020, the Company completed the sale of substantially all of our assets used in connection with our Agriculture and Weather Analytics segment to DTN, LLC (“DTN”), an operating company of TBG AG, a Swiss-based holding company, pursuant to the Purchase Agreement signed on May 2, 2020, in exchange for a total purchase consideration of $12.0 million in cash, subject to working capital adjustments. Upon closing on May 5, 2020, the Company received $10.5 million. The deferred payments of the purchase price of $1.45 million and $50,000, which were included in prepaid expenses and other current assets, and other assets on the unaudited condensed consolidated balance sheets, respectively, will be paid by DTN at the 12-month and 18-month anniversaries of the closing date, subject to satisfaction of the conditions set forth in the Purchase Agreement relating to the transition of certain customers to DTN and the collection of certain receivables by DTN. The Purchase Agreement also provides for customary post-closing adjustments to the purchase price related to working capital at closing. The parties also entered into certain ancillary agreements at the closing of the transaction that will provide Iteris with ongoing access to weather and pavement data that it integrates into its transportation software products, and a joint development agreement under which the parties agreed to pursue future joint opportunities in the global transportation market.

The sale of the Agriculture and Weather Analytics segment was a result of the Company’s shift in strategy to focus on its smart mobility infrastructure management solutions and to capitalize on the potential for a future partnership upon the sale of this business component to DTN. We have determined that the Agriculture and Weather Analytics segment, which constituted one of our operating segments, qualifies as a discontinued operation in accordance with the criteria set forth in ASC 205-20, Presentation of Financial Statements – Discontinued Operations.

On May 5, 2020, the Company also entered into a transition services agreement (“TSA”) with DTN, pursuant to which the Company agreed to support the information technology and accounting functions of the Agriculture and Weather Analytics segment for a period up to 12 months and DTN agreed to provide the contract administration/account management services for certain contracts of the Company and other transition services. Either party may make any reasonable request to extend the period of time the other party shall provide a transition service beyond the initial service period or access to additional services that are necessary for the transition of the operations and business. The Company earned approximately $70,000 and $84,000 in income and incurred approximately $24,000 and $27,000 in costs associated with the TSA for the three- and six-months ended September 30, 2020, respectively, which were included in loss from discontinued operations on the unaudited condensed consolidated statement of operations.

The related assets and liabilities of the Agriculture and Weather Analytics segment were reclassified to assets held for sale and liabilities held for sale, respectively, as of March 31, 2020 on the unaudited condensed consolidated balance sheets. The following table is a summary of major classes of assets and liabilities held for sale:

	March 31, 2020
	(In thousands)
Assets
Trade accounts receivable, net of allowance for doubtful accounts	$	863
Unbilled accounts receivable	504
Prepaid expenses and other current assets	109
Total assets held for sale, current portion	1,476
Property and equipment, net	107
Right-of-use assets	446
Other classes of assets that are not major	73
Total assets held for sale, noncurrent	626
Total assets held for sale	$	2,102
Liabilities
Trade accounts payable	$	254
Accrued liabilities	91
Accrued payroll and related expenses	933
Deferred revenue	1,550
Total liabilities held for sale, current position	2,828
Lease liabilities	357
Total liabilities held for sale	$	3,185

The results of operations for the Agriculture and Weather Analytics segment were included in net income (loss) from discontinued operations on the Company's unaudited condensed consolidated statements of operations. The following table provides information regarding the results of discontinued operations:

	Three Months Ended September 30,				Six Months Ended September 30,
	2020		2019		2020		2019
Service revenue	$	—	$	1,295	$	695	$	2,736
Cost of service revenues	—		590		349		1,207
Gross profit	—		705		346		1,529
Operating expenses:
Selling, general and administration	230		839		746		1,772
Research and development	—		1,002		407		1,928
Restructuring charges	—		—		837		—
Total operating expenses	230		1,841		1,990		3,700
Operating loss from discontinued operations	(230)		(1,136)		(1,644)		(2,171)
Other (expense) income, net	(29)		—		27		—
Loss from discontinued operation before income tax	(259)		(1,136)		(1,617)		(2,171)
Income tax	(47)		—		(47)		—
Net loss from discontinued operations	(306)		(1,136)		(1,664)		(2,171)
Gain on disposal of discontinued operations before income tax	—		—		11,315		—
Income tax expense on gain on disposal	—		—		(27)		—
Gain on disposal of discontinued operations after income tax	—		—		11,288		—
Net income (loss) from discontinued operations	$	(306)	$	(1,136)	$	9,624	$	(2,171)

The following table provides information on the gain recorded on the sale of the Agriculture and Weather Analytics segment for the three- and six-months ended September 30, 2020. These amounts reflect the closing balance sheet of the Agriculture and Weather Analytics segment upon the closing of the sale on May 5, 2020 (in thousands).

Initial proceeds from sale, net of transaction costs	$	9,440
Closing working capital adjustment	250
Deferred payments of purchase price	1,500
Total consideration, net of transaction costs	11,190
Trade accounts receivable, net of allowance for doubtful accounts	1,060
Unbilled accounts receivable	488
Other classes of assets that are not major	194
Total Agriculture and Weather Analytics segment assets	1,742
Trade accounts payable	349
Deferred revenue	1,518
Total Agriculture and Weather Analytics segment liabilities	1,867
Gain on sale of Agriculture and Weather Analytics segment	$	11,315

The initial proceeds were net of transaction costs of approximately $1.1 million.

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Restructuring Activities

6 Months Ended

Sep. 30, 2020

Restructuring and Related Activities [Abstract]

Restructuring Activities

Restructuring ActivitiesOn April 30, 2020, in connection with the sale of the Agriculture and Weather Analytics segment, the Board of Directors of Iteris, Inc. approved restructuring activities to better position the Company for increased profitability and growth, and the Company incurred total restructuring charges of approximately $1.5 million, primarily resulting from a separation for

certain employees who did not transition to DTN, additional positions that were eliminated to right-size the cost structure of the Company and lease impairment related to our Grand Forks, North Dakota facility.

There were no restructuring and severance costs for the three months ended September 30, 2020. The following table presents the restructuring and severance costs for our reportable segments, as well as corporate expenses, for the six months ended September 30, 2020. (in thousands):

	Roadway Sensors		Transportation Systems		Agriculture and Weather Analytics		Corporate		Total
Severance and benefits	$	110	$	43	$	524	$	428	$	1,105
Lease impairment and other costs	—		—		313		38		351
Total restructuring and severance costs	$	110	$	43	$	837	$	466	$	1,456

During the six months ended September 30, 2020, approximately $619,000 of the restructuring costs were recorded to restructuring charges in the unaudited condensed consolidated statements of operations, and approximately $837,000 of the restructuring costs were recorded to loss from discontinued operations in the unaudited condensed consolidated statements of operations.

As of September 30, 2020, we have accrued approximately $247,000 for severance and benefits related to the restructuring activities in accrued payroll and related expenses on the unaudited condensed consolidated balance sheet. Our restructuring activities during the three- and six-months ended September 30, 2020 were as follows (in thousands):

Balance at March 31, 2020	$	—
Charged to expenses	1,105
Cash payments	(661)
Balance at June 30, 2020	$	444
Cash payments	(197)
Balance at September 30, 2020	$	247

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Fair Value Measurements

6 Months Ended

Sep. 30, 2020

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

We measure fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Fair value measurements are based on a three tier hierarchy that prioritizes the inputs used to measure fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets for identical assets and liabilities; Level 2, defined as observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities or prices quoted in inactive markets; and Level 3, defined as unobservable inputs that are significant to the fair value of the asset or liability, and for which little or no market data exists, therefore requiring management to utilize its own assumptions to provide its best estimate of what market participants would use in valuing the asset or liability.

We did not have any material financial assets or liabilities measured at fair value on a recurring basis using Level 3 inputs as of September 30, 2020 or March 31, 2020. Our non-financial assets, such as goodwill, intangible assets and property and equipment, are measured at fair value on a nonrecurring basis, generally when there is a transaction involving those assets such as a purchase transaction, a business combination or an adjustment for impairment. No non-financial assets were measured at fair value at September 30, 2020 and March 31, 2020.

The following tables present the Company’s financial assets that are recorded at fair value on a recurring basis, segregated among the appropriate levels within the fair value hierarchy:

	As of September 30, 2020
	(In thousands)
	Amortized Cost		Gross Unrealized Loss		Gross Unrealized Gain		Estimated Fair Value
Level 1:
Money market funds	$	4,190	$	—	$	—	$	4,190
Subtotal	4,190		—		—		4,190
Level 2:
Commercial paper	10,197		—		1		10,198
Corporate notes and bonds	2,255		—		2		2,257
US Treasuries	9,710		(1)		—		9,709
Subtotal	22,162		(1)		3		22,164
Total	$	26,352	$	(1)	$	3	$	26,354

	As of March 31, 2020
	(In thousands)
	Amortized Cost		Gross Unrealized Loss		Gross Unrealized Gain		Estimated Fair Value
Level 1:
Money market funds	$	10,576	$	(1)	$	—	$	10,575
Subtotal	10,576		(1)		—		10,575
Level 2:
Commercial paper	1,495		(1)		—		1,494
Corporate notes and bonds	6,044		(22)		—		6,022
US Treasuries	3,013		—		20		3,033
US Government agencies	1,007		—		—		1,007
Subtotal	11,559		(23)		20		11,556
Total	$	22,135	$	(24)	$	20	$	22,131

Unrealized losses related to investments are due to interest rate fluctuations as opposed to credit quality. In addition, we do not intend to sell, and it is not more likely than not that, we would be required to sell, any of our investments before recovery of their cost basis. As a result, there is no other-than-temporary impairment for these investments as of September 30, 2020.

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Income Taxes

6 Months Ended

Sep. 30, 2020

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The effective tax rate used for interim periods is the estimated annual effective tax rate, based on current estimate of full year results, except that taxes related to specific events, if any, are recorded in the interim period in which they occur.

Income tax expense for the three- and six-months ended September 30, 2020 was approximately $28,000 and $62,000, or 3.4% and 4.8%, respectively, of pre-tax income as compared with an expense of approximately $1,000 and $25,000, or 0.1% and 0.6% of pre-tax loss for the three- and six-months ended September 30, 2019, respectively.

In assessing the realizability of our deferred tax assets, we review all available positive and negative evidence, including reversal of deferred tax liabilities, potential carrybacks, projected future taxable income, tax planning strategies and recent financial performance. As we have experienced a cumulative pre-tax loss over the trailing three years, we continue to maintain a valuation allowance against our deferred tax assets.

On March 27, 2020, the CARES Act was enacted in response to the Pandemic. The CARES Act contains numerous income tax provisions, such as relaxing limitations on the deductibility of interest and the use of net operating losses arising in taxable years beginning after December 31, 2017. The income tax provisions of the CARES Act had an immaterial impact on our current taxes, deferred taxes, and uncertain tax positions of the Company in the year ended March 31, 2020. The CARES

Act also allows for the deferral of payroll taxes, as well as the immediate refund of federal Alternative Minimum Tax credits, which had previously been made refundable over a period of four years by the Tax Cuts and Jobs Act of 2017.

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Right-of-Use Assets and Lease Liabilities

6 Months Ended

Sep. 30, 2020

Lessee Disclosure [Abstract]

Right-of-Use Assets and Lease Liabilities

Right-of-Use Assets and Lease Liabilities

We have various operating leases for our offices, office equipment and vehicles in the United States. These leases expire at various times through 2029. Certain lease agreements contain renewal options from 1 to 5 years, rent abatement, and escalation clauses that are factored into our determination of lease payments when appropriate.

As a result of the restructuring activities and the sale of Agriculture and Weather Analytics segment, the Company vacated the Grand Forks lease facility and has subleased the space to DTN, which expires on May 4, 2021. The Company recorded an impairment of $294,000 during the quarter ended June 30, 2020, representing the total expected shortfall in sublease income and estimated lease buyout as compared to its required payments for the lease under the remainder of the original lease term. Sublease income will be recognized on a straight-line basis over the term of the sublease.

The table below presents lease-related assets and liabilities recorded on the unaudited condensed consolidated balance sheet as follows:

	Classification	September 30, 2020
		(In thousands)
Assets
Operating lease right-of-use-assets - continuing operations	Right-of-use assets	$	12,035
Operating lease right-of-use-assets - discontinued operation	Asset held for sales - noncurrent	114
Total operating lease right-of-use-assets		$	12,149
Liabilities
Operating lease liabilities (short-term) - continuing operations	Accrued liabilities	$	1,931
Operating lease liabilities (short-term) - discontinued operation	Liabilities held for sales - current	94
		$	2,025
Operating lease liabilities (long-term) - continuing operations	Lease liabilities	10,992
Operating lease liabilities (long-term) - discontinued operation	Liabilities held for sales - noncurrent	310
		11,302
Total lease liabilities		$	13,327

Lease Costs

We recorded approximately $657,000 and $1,312,000 of lease costs in on our unaudited condensed consolidated statements of operations for the three- and six-months ended September 30, 2020 as compared to approximately $651,000 and $1,249,000 for the three- and six-months ended September 30, 2019, respectively. The Company currently has no variable lease costs. The Company recorded $27,000 and $45,000 of sublease income for the three- and six-months ended September 30, 2020, respectively, which was included in loss from discontinued operations on the unaudited condensed consolidated statement of operations.

Supplemental Information

The table below presents supplemental information related to operating leases during the six months ended September 30, 2020 (in thousands, except weighted average information):

Cash paid for amounts included in the measurement of operating lease liabilities	$	1,383
Right-of-use assets obtained in exchange for new operating lease liabilities	$	310
Weighted average remaining lease term (in years)	6.4
Weighted average discount rate	4.9		%

Maturities of Lease Liabilities

Maturities of lease liabilities as of September 30, 2020 were as follows:

Fiscal Year Ending March 31,	Operating Leases		Sublease Income		Net Operating Lease
(In thousands)
2021	$	1,412	$	55	$	1,357
2022	2,583		9		2,574
2023	2,454				2,454
2024	2,256				2,256
2025	2,072				2,072
Thereafter	4,896				4,896
Total lease payments	15,673		$	64	$	15,609
Less imputed interest	(2,346)
Present value of future lease payments	13,327
Less current obligations under leases	(2,025)
Long-term lease obligations	$	11,302

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Stock-Based Compensation

6 Months Ended

Sep. 30, 2020

Share-based Payment Arrangement [Abstract]

Stock-Based Compensation

Stock-Based Compensation

We currently maintain two stock incentive plans, the 2007 Omnibus Incentive Plan and the 2016 Omnibus Incentive Plan (the “2016 Plan”). Of these plans, we may only grant future awards from the 2016 Plan. The 2016 Plan allows for the issuance of stock options, stock appreciation rights, restricted stock, time-restricted stock units (“RSUs"), performance-based restricted stock units ("PSUs”), cash incentive awards and other stock-based awards. At September 30, 2020, there were approximately 1.8 million shares of common stock available for grant or issuance under the 2016 Plan. Total stock options vested and expected to vest were approximately 5.4 million as of September 30, 2020.

Stock Options

A summary of activity with respect to our stock options for the six months ended September 30, 2020 is as follows:

	Options	Weighted Average Exercise Price Per Share
	(In thousands)
Options outstanding at March 31, 2020	5,934	$	3.99
Exercised	(266)	2.55
Forfeited	(248)	4.88
Options outstanding at September 30, 2020	5,420	$	3.99

Restricted Stock Units

A summary of activity with respect to our RSUs, which entitle the holder to receive one share of our common stock for each RSU upon vesting, for the six months ended September 30, 2020 is as follows:

	# of Shares		Weighted Average Price Per Share
	(In thousands)
RSUs outstanding at March 31, 2020	404		$	5.16
Vested	(123)		5.17
Forfeited	(6)		5.52
RSUs outstanding at September 30, 2020	$	275	$	5.15

Performance Stock Units

On June 30, 2020, the Company granted a total "target" number of 61,000 PSUs to our executive officers. Between 0% and 160% of the PSUs will be eligible to vest based on average annual performance during the three-year performance period relative to the revenues per share and cash flow from operations objectives to be established by the Compensation Committee at the beginning of each year. In addition, the final PSU vesting based on the revenues per share and cash flow from operations performance will be subject to a modifier between .75x-1.25x based on the Company's total shareholder return relative to the Russell 2000 during the performance period, for a maximum achievement percentage of 200% of the "target" number of PSUs. The PSUs are amortized over a derived service period of 3 years. The value and the derived service period of the PSUs were estimated using the Monte-Carlo simulation model. The following table summarizes the details of the performance options:

	# of Shares		Weighted Average Price Per Share
	(In thousands)
PSUs outstanding at March 31, 2020	—		$	—
Granted	61		5.47
PSUs outstanding at September 30, 2020	$	61	$	5.47

Stock-Based Compensation Expense

The following table presents stock-based compensation expense that is included in each line item on our unaudited condensed consolidated statements of operations:

	Three Months Ended September 30,				Six Months Ended September 30,
	2020		2019		2020		2019
	(In thousands)				(In thousands)
Cost of revenues	$	47	$	33	$	93	$	67
Selling, general and administrative expense	595		654		1,146		1,115
Research and development expense	25		18		50		36
Restructuring costs	—		—		42		—
(Loss) income from discontinued operations before gain on sale, net of tax	—		88		(57)		177
Total stock-based compensation	$	667	$	793	$	1,274	$	1,395

As of September 30, 2020, there was approximately $4.0 million, $1.0 million and $73,000 of unrecognized compensation expense related to unvested stock options, RSUs and PSUs, respectively. This expense is currently expected to be recognized over a weighted average period of approximately 2.5 years for stock options, 1.5 years for RSUs and 0.5 years for PSUs. If there are any modifications or cancellations of the underlying unvested awards, we may be required to accelerate, increase or cancel any remaining unearned stock-based compensation expense. Future stock-based compensation expense and unearned stock-based compensation will increase to the extent that we grant additional stock options, RSUs or other stock-based awards.

Other Stock-Based Compensation Plans

We currently maintain an Employee Stock Purchase Plan (“ESPP”) which allows employees to have a percentage of their base compensation withheld to purchase the Company’s common stock at 95% of the lower of the fair market at the beginning of the offering period and on the last trading day of the offering period. There are two offering periods during a calendar year, which consist of the six months beginning each January 1 and July 1. Employees may contribute 1-15% of their eligible gross pay up to a $25,000 annual stock value limit. In June 2020 and June 2019, in the first offering period of Fiscal 2021 and 2020, 0 shares and 48,439 shares were purchased, respectively. 41,679 shares related to the first offering period of Fiscal 2021 were purchased in July 2020. The ESPP is considered a non-compensatory plan and accordingly, no compensation expense is recorded in connection with this benefit.

Deferred Compensation Plan

Effective October 1, 2020, the Company adopted the Iteris, Inc. Deferred Compensation Plan (the "DC Plan"). The DC Plan consists of two plans, one that is intended to be an unfunded arrangement for eligible employees who are part of a select group of management or highly compensated employees of the Company within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA, and one for the benefit of non-employee members of our board of directors. Key employees, including our executive officers, and our non-employee directors who are notified regarding their eligibility to participate and delivered the DC Plan enrollment materials are eligible to participate in the DC Plan. Under the DC Plan, we will provide participants with the opportunity to make annual elections to defer a percentage of their eligible cash compensation and equity awards. A participant is always 100% vested in his or her own elective cash deferrals and any earnings thereon. Elective deferrals of equity awards are credited to a bookkeeping account established in the name of the participant with respect to an equivalent number of shares of our common stock, and such credited shares are subject to the same vesting conditions as are applicable to the equity award subject to the election. The Company will establish a rabbi trust to finance our obligations under the DC Plan with corporate-owned life insurance policies on participants.

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Stock Repurchase Program	6 Months Ended
	Sep. 30, 2020
Equity [Abstract]
Stock Repurchase Program	Stock Repurchase ProgramOn August 9, 2012, our Board of Directors approved a new stock repurchase program pursuant to which we may acquire up to $3.0 million of our outstanding common stock for an unspecified length of time. Under the program, we may repurchase shares from time to time in the open market and privately negotiated transactions and block trades, and may also repurchase shares pursuant to a 10b5-1 trading plan during our closed trading windows, to the extent such a 10b5-1 plan is in place. There is no guarantee as to the exact number of shares that will be repurchased. We may modify or terminate the repurchase program at any time without prior notice. On November 6, 2014, our Board of Directors approved a $3.0 million increase to the Company’s existing stock repurchase program, pursuant to which the Company may continue to acquire shares of its outstanding common stock from time to time for an unspecified length of time. For the three- and six-months ended September 30, 2020 and 2019, we did not repurchase any shares. From inception of the original stock repurchase program in August 2011 through September 30, 2020, we repurchased approximately 3,422,000 shares of our common stock for an aggregate price of approximately $5.6 million, at an average price per share of $1.63. As of September 30, 2020, all repurchased shares have been retired and resumed their status as authorized and unissued shares of our common stock. As of September 30, 2020, approximately $1.7 million remains available for the repurchase of our common stock under our current program.

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Acquisition

6 Months Ended

Sep. 30, 2020

Business Combinations [Abstract]

Acquisition

Acquisition

On July 2, 2019, the Company completed the acquisition of AGI, a privately-held professional transportation engineering services firm headquartered in Tampa, Florida, with offices in Orlando (FL), Virginia Beach (VA) and Chadds Ford (PA). AGI assists municipalities in maximizing the effectiveness of their existing transportation networks through a collection of traffic management services to cost effectively improve the performance of roadway systems and address increased traffic demands, traffic congestion and delay. With a foundation of arterial timing plan development, AGI has expanded its services into active arterial monitoring and management with multiple public sector clients. AGI expanded the Company’s geographic footprint for smart mobility infrastructure management services in Florida, as well as in the Midwest and Mid-Atlantic region. AGI’s typical contracts are for traffic operations professional engineering services focused on transportation systems management and operations.

Pursuant to a Stock Purchase Agreement dated June 10, 2019 among the Company, AGI and the stockholders of AGI (the “Selling Shareholders”), the Company acquired all of the outstanding capital stock of AGI from the Selling Shareholders for an aggregate purchase price of $10.8 million, after working capital adjustments, payable in cash and stock, of which

114,943 shares are being held in escrow for 18 months to secure performance of indemnification and other post-closing obligations of the Selling Shareholders.

The acquisition of AGI has been accounted for as a business combination. The fair value of the net assets acquired, and the excess of the consideration transferred over the aggregate of such fair values was recorded as goodwill.

The following tables summarize the purchase price allocation (in thousands) as of July 2, 2019:

Cash	$	664
Trade accounts receivable	905
Unbilled accounts receivable	347
Right-of-use assets	863
Property and equipment	357
Intangible assets	3,710
Goodwill	5,440
Other assets	161
Total assets acquired	12,447
Accounts payable	(378)
Accrued payroll and related expenses	(426)
Lease liabilities	(863)
Total liabilities assumed	(1,667)
Total purchase price	$	10,780

The fair values of the remaining AGI assets and liabilities noted above approximate their carrying values at July 2, 2019. There was no difference between the fair value of trade accounts receivables and the gross contractual value of those receivables. There are no contractual cash flows related to these receivables that are not expected to be collected. The Company believes the goodwill related to the acquisition was a result of the ability of the Company to leverage its technology in the broader market, as well as offering cross-selling market exposure opportunities. Goodwill from the acquisition of AGI is included within the Company’s Transportation Systems reporting unit and will be included in the annual review for impairment. The goodwill is fully deductible for tax purposes. The significant intangible assets identified in the purchase price allocation include customer relationships and non-compete agreements, which are amortized over their respective useful lives on a straight line basis which approximates the underlying cash flows. To value the customer relationships, the Company utilized the income approach, specifically a discounted cash-flow method known as the excess earnings method. The Company utilized the with and without method to derive the fair value of the non-compete agreement. The fair value estimates are based on a complex series of judgments about future events and uncertainties and rely heavily on estimates and assumptions. We believe the assumptions are representative of those a market participant would use in estimating fair value.

The following table presents the fair values and useful lives of the identifiable intangible assets acquired:

	Amount		Weighted Average  Useful Life
	(in thousands)		(in years)
Customer relationships	$	3,500	6
Non-compete agreement	210		3
Total intangible assets assumed	$	3,710

Acquisition-Related Costs

In connection with the acquisition, the Company agreed to grant $1.7 million in retention bonuses to the Selling Shareholders and other employees payable in the form of restricted stock units at $5.22 per share, and $570,000 in retention bonuses payable in cash, each vesting and payable over three years following the closing, provided such employees remain in our service on the first, second and third anniversary of the closing of the acquisition. For the three- and six-months ended September 30, 2020, the Company recorded approximately $173,000 and $352,000, as compared to $440,000 and $596,000 for three- and six-months ended September 30, 2019, respectively, as stock-based compensation and salaries expense to selling, general and administrative expense in the unaudited condensed consolidated statements of operations, related to these bonuses.

Pro Forma Financial Information

The following pro forma information presents the consolidated results of operations of the Company and AGI for the six months ended September 30, 2019, as if the acquisition of AGI had been completed on April 1, 2018. There was no pro forma impact during the three- and six-months ended September 30, 2020 and for the three months ended September 30, 2019. These pro forma condensed consolidated financial results have been prepared for comparative purposes only and include certain adjustments that reflect pro forma results of operations, such as increased amortization for the fair value of acquired intangible assets and increased salaries expense related to the retention bonuses. The unaudited pro forma results do not reflect any operating efficiencies or potential cost savings that may result from the consolidation of the operations of the Company and AGI. Accordingly, these unaudited pro forma results are presented for informational purposes only and are not necessarily indicative of the results of operations that actually would have been achieved had the acquisition occurred as of April 1, 2018, nor are they intended to represent or be indicative of future results of operations:

​	Six Months Ended September 30, 2019
​	(In thousands)
Pro forma revenue	$	56,705
Pro forma net loss	$	(3,924)
Pro forma net loss per share:
Basic	$	(0.10)
Diluted	$	(0.10)

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Business Segment Information

6 Months Ended

Sep. 30, 2020

Segment Reporting [Abstract]

Business Segment Information

Business Segment Information

We currently operate in two reportable segments: Roadway Sensors and Transportation Systems.

The Roadway Sensors segment provides various advanced detection sensors and systems for traffic intersection management, communication systems and roadway traffic data collection applications. The Roadway Sensors product line uses advanced image processing technology and other techniques to capture and analyze sensor data through sophisticated algorithms, enabling vehicle, bicycle and pedestrian detection, as well as the transmission of both video images and data using various communication technologies. Our Roadway Sensors products include, among others, Vantage, VantageLive!, Vantage Next, VantagePegasus, VantageRadius, Vantage Vector, Velocity, SmartCycle, SmartCycle Bike Indicator, SmartSpan, VersiCam, PedTrax and P-Series products. Our Roadway Sensors segment also includes the sale of original equipment manufacturer (“OEM”) products for the traffic intersection markets, which include, among other things, traffic signal controllers and traffic signal equipment cabinets.

The Transportation Systems segment provides engineering and consulting services, managed services, performance measurement and traffic analytics solutions, as well as the development of transportation management and traveler information systems for the ITS industry. Our Transportation Systems services include planning, design, implementation, operation and management of surface transportation infrastructure systems. We perform analysis and study goods movement and commercial vehicle operations, as well as provide travel demand forecasting and systems engineering, and identify mitigation measures to reduce traffic congestion. Our Transportation Systems product line includes: Iteris Signal Performance Measures ("SPM"); our advanced traveler information system solution ClearRoute, our performance analytics solution ClearGuide; and our commercial vehicle operations and vehicle safety compliance platforms known as CVIEW-Plus, CheckPoint, UCRLink and inspect. The Transportation Systems segment also includes the operations of AGI beginning July 2, 2019 (see Note 11, Acquisition).

The accounting policies of our reportable segments are the same as those described in the summary of significant accounting policies (Note 1, Description of Business and Summary of Significant Accounting Policies). Certain corporate general and administrative expenses, including general overhead functions such as information systems, accounting, human resources, marketing, compliance costs and certain administrative expenses, as well as interest and amortization of intangible assets, are not allocated to the segments. The reportable segments are each managed separately because they manufacture and distribute distinct products or provide services with different processes. All reported segment revenues are derived from external customers. Our Chief Executive Officer, who is our chief operating decision maker (“CODM”), reviews financial information at the operating segment level. Our CODM does not review assets by segment in his resource allocation, and therefore, assets by segment are not disclosed below.

The following table sets forth selected unaudited condensed consolidated financial information for our reportable segments for the three- and six-months ended September 30, 2020 and 2019:

	Roadway Sensors		Transportation Systems		Total
	(In thousands)
Three Months Ended September 30, 2020
Product revenues	$	14,135	$	2,130	$	16,265
Service revenues	155		12,836		12,991
Total revenues	14,290		14,966		29,256
Segment income	3,083		2,295		5,378
Three Months Ended September 30, 2019
Product revenues	12,480		1,315		13,795
Service revenues	75		12,716		12,791
Total revenues	12,555		14,031		26,586
Segment income	2,224		1,942		4,166

	Roadway Sensors		Transportation Systems		Total
	(In thousands)
Six Months Ended September 30, 2020
Product revenues	$	27,286	$	3,373	$	30,659
Service revenues	240		26,357		26,597
Total revenues	27,526		29,730		57,256
Segment income	6,194		4,559		10,753
Six Months Ended September 30, 2019
Product revenues	25,251		3,061		28,312
Service revenues	112		23,329		23,441
Total revenues	25,363		26,390		51,753
Segment income	4,556		3,508		8,064

The following table reconciles total segment income to unaudited condensed consolidated operating income (loss) from continuing operations before income taxes:

	Three Months Ended September 30,				Six Months Ended September 30,
	2020		2019		2020		2019
	(In thousands)				(In thousands)
Segment income:
Total income from reportable segments	$	5,378	$	4,166	$	10,753	$	8,064
Unallocated amounts:					​		​
Corporate expenses	(4,400)		(5,149)		(8,544)		(9,519)
Amortization of intangible assets	(230)		(230)		(460)		(296)
Restructuring charges	—		—		(619)		—
Operating income (loss)	$	748	$	(1,213)	$	1,130	$	(1,751)

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Description of Business and Summary of Significant Accounting Policies (Policies)

6 Months Ended

Sep. 30, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Inventory Valuation

Inventory Valuation

The Company values inventory at the lower of cost or net realizable value. Cost is determined using the first-in, first-out method. Net realizable value is determined by estimated expected selling prices based on anticipated recovery rates for slow-moving and obsolete inventory and other factors, such as market conditions, expected channel of distribution and current consumer demand and preferences.

Inventories

Inventories consist of finished goods, work-in-process and raw materials and are stated at the lower of cost or net realizable value. Cost is determined using the first-in, first-out method.

Accounts Receivable

Accounts Receivable

Accounts receivable are recorded net of an allowance for doubtful accounts. The Company estimates the allowance for doubtful accounts based on an analysis of the aging of accounts receivable, assessment of collectability, including any known or anticipated bankruptcies, customer-specific circumstances and an evaluation of current economic conditions.

Allowance for Doubtful Accounts

The collectability of our accounts receivable is evaluated through review of outstanding invoices and ongoing credit evaluations of our customers’ financial condition. In cases where we are aware of circumstances that may impair a specific customer’s ability to meet its financial obligations subsequent to the original sale, we will record an allowance against amounts due, and thereby reduce the net recognized accounts receivable to the amount we reasonably believe will be collected. We also maintain an allowance based on our historical collections experience. When we determine that collection is not likely, we write off accounts receivable against the allowance for doubtful accounts.

Goodwill and Other Long-Lived Assets

Goodwill and Other Long-Lived Assets

The Company reviews its goodwill and other long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may be impaired. Impairment losses are measured and recorded for the excess of carrying value over its fair value, estimated based on expected future cash flows and other quantitative and qualitative factors. The Company performed a qualitative assessment of its goodwill to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying value and noted no indicators of impairment at September 30, 2020. The Company also reviewed its other long-lived assets and noted no indicators of impairment related to the Pandemic.

Basis of Presentation

Basis of Presentation

Our unaudited condensed consolidated financial statements include the accounts of Iteris, Inc. and its subsidiaries, and have been prepared in accordance with the rules of the U.S. Securities and Exchange Commission (“SEC”) for interim reporting, which permit certain footnotes or other financial information that are normally required by generally accepted accounting principles in the U.S. (“GAAP”) to be condensed or omitted. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and related notes included in its Annual Report on Form 10-K for the fiscal year ended March 31, 2020 (“Fiscal 2020”), filed with the SEC on June 9, 2020. All intercompany accounts and transactions have been eliminated in consolidation. The results of operations for the three- and six-month periods ended September 30, 2020 are not necessarily indicative of the results to be expected for Fiscal 2021 or any other periods.

During the first quarter of Fiscal 2021, the Company completed the sale of its Agriculture and Weather Analytics segment for total cash consideration of $12.0 million, subject to certain working capital adjustments and transaction costs. The Agriculture and Weather Analytics segment’s results of operations and related cash flows have been reclassified to loss from discontinued operations, respectively, for all periods presented. The assets and liabilities of the Agriculture and Weather Analytics segment have been reclassified to assets held for sale and liabilities held for sale, respectively, in the unaudited condensed consolidated balance sheet as of March 31, 2020. See Note 3, Discontinued Operations, for further information.

Use of Estimates

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires our management to make certain 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 the reporting period. Actual results could differ from those estimates. Significant estimates made in the preparation of the consolidated financial statements include the collectability of accounts receivable and related allowance for doubtful accounts, projections of taxable income used to assess realizability of deferred tax assets, warranty reserves and other contingencies, costs to complete long-term contracts, indirect cost rates used in cost plus contracts, the valuation of inventories, the valuation of purchased intangible assets and goodwill, the valuation of investments, estimates of future cash flows used to assess the recoverability of long-lived assets and the impairment of goodwill, and fair value of our stock option awards used to calculate stock-based compensation.

Revenue Recognition

Revenue Recognition

Product revenue related contracts with customers begin when we acknowledge a purchase order for a specific customer order of product to be delivered in the near term. These purchase orders are short-term in nature. Product revenue is recognized at a point in time upon shipment or upon customer receipt of the product, depending on shipping terms. The Company determined that this method best represents the transfer of goods as transfer of control typically occurs upon shipment or upon customer receipt of the product.

Service revenues, primarily derived from the Transportation Systems segment, are primarily from long-term engineering and consulting service contracts with governmental agencies. These contracts generally include performance obligations in which control is transferred over time. We recognize revenue on fixed fee contracts, over time, using the proportion of actual costs incurred to the total costs expected to complete the contract performance obligation. The Company determined that this method best represents the transfer of services as the proportion closely depicts the efforts or inputs completed towards the satisfaction of a fixed fee contract performance obligation. Time & Materials (“T&M”) and Cost Plus Fixed Fee (“CPFF”) contracts are considered to involve variable consideration. However, contractual performance obligations with these fee types qualify for the “Right to Invoice” practical expedient. Under this practical expedient, the Company is allowed to recognize revenue, over time, in the amount to which the Company has a right to invoice. In addition, the Company is not required to estimate such variable consideration upon inception of the contract and reassess the estimate each reporting period. The Company determined that this method best represents the transfer of services as, upon billing, the Company has a right to consideration from a customer in an amount that directly corresponds with the value to the customer of the Company’s performance completed to date.

Service revenues also consist of revenues derived from maintenance support and the use of the Company’s service platforms and APIs on a subscription basis. We generate this revenue from fees for maintenance and support, monthly active user fees, SaaS fees, and hosting and storage fees. In most cases, the subscription or transaction arrangement is a single performance obligation comprised of a series of distinct services that are substantially the same and that have the same pattern of transfer (i.e., distinct days of service). The Company applies a time-based measure of progress to the total transaction price, which results in ratable recognition over the term of the contract. The Company determined that this method best represents the transfer of services as the customer obtains equal benefit from the service throughout the service period.

The Company accounts for individual goods and services separately if they are distinct performance obligations, which often requires significant judgment based upon knowledge of the products and/or services, the solution provided and the structure of the sales contract. In SaaS agreements, we provide a service to the customer that combines the software functionality, maintenance and hosting into a single performance obligation. In product-related contracts, a purchase order may cover different products, each constituting a separate performance obligation.

We generally estimate variable consideration at the most likely amount to which we expect to be entitled and in certain cases based on the expected value, which requires judgment. We include estimated amounts in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Our estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of our anticipated performance and all information (historical, current and forecasted) that is reasonably available to us. We review and update these estimates on a quarterly basis.

The Company’s typical performance obligations include the following:

Performance Obligation	When Performance Obligation is Typically Satisfied	When Payment is Typically Due	How Standalone Selling Price is Typically Estimated
Product Revenues
Standard purchase orders for delivery of a tangible product	Upon shipment (point in time)	Within 30 days of delivery	Observable transactions
Engineering services where the deliverable is considered a product	As work is performed (over time)	Within 30 days of services being invoiced	Estimated using a cost-plus margin approach
Service Revenues
Engineering and consulting services	As work is performed (over time)	Within 30 days of services being invoiced	Estimated using a cost-plus margin approach
SaaS	Over the course of the SaaS service once the system is available for use (over time)	At the beginning of the contract period	Estimated using a cost-plus margin approach

Disaggregation of Revenue

The Company disaggregates revenue from contracts with customers into reportable segments and the nature of the products and services. See Note 12, Business Segment Information, for our revenue by reportable segments.

Trade Accounts Receivable and Contract Balances

We classify our right to consideration in exchange for goods and services as either a receivable or a contract asset. A receivable is a right to consideration that is unconditional (i.e. only the passage of time is required before payment is due). We present such receivables in trade accounts receivable, net, in our unaudited condensed consolidated balance sheets at their net estimated realizable value.

The Company maintains an allowance for doubtful accounts to provide for the estimated amount of receivables that will not be collected. If warranted, the allowance is increased by the Company’s provision for doubtful accounts, which is charged against income. All recoveries on receivables previously charged off are included in income, while direct charge-offs of receivables are deducted from the allowance.

A contract asset is a right to consideration that is conditional upon factors other than the passage of time. Contract assets are presented as unbilled accounts receivable on the accompanying unaudited condensed consolidated balance sheets. For example, we would record a contract asset if we record revenue on a professional services engagement, but are not entitled to bill until we achieve specified milestones.

Our contract assets and refund liabilities are reported in a net position on a contract basis at the end of each reporting period. Refund liabilities are consideration received in advance of the satisfaction of performance obligations.

Contract Fulfillment Costs

The Company evaluates whether or not we should capitalize the costs of fulfilling a contract. Such costs would be capitalized when they are not within the scope of other standards and: (1) are directly related to a contract; (2) generate or enhance resources that will be used to satisfy performance obligations; and (3) are expected to be recovered. As of September 30, 2020 and March 31, 2020, there was approximately $2,073,000 and $1,236,000, respectively, of contract fulfillment costs, which are presented in the accompanying unaudited condensed consolidated balance sheets as prepaid and other current assets. These costs primarily relate to the satisfaction of performance obligations related to the set up of SaaS platforms. These costs are amortized on a straight-line basis over the estimated useful life of the SaaS platform.

Transaction Price Allocated to the Remaining Performance Obligations

As of September 30, 2020 and March 31, 2020, the aggregate amount of transaction price allocated to remaining performance obligations was immaterial, primarily as a result of the termination provisions within our contracts, which make the duration of the accounting term of the contract one year or less.

Deferred Revenue

Deferred Revenue

Deferred revenue in the accompanying unaudited condensed consolidated balance sheets is comprised of refund liabilities related to billings and consideration received in advance of the satisfaction of performance obligations.

Concentration of Credit Risk

Concentration of Credit Risk

Financial instruments that potentially subject us to a concentration of credit risk consist principally of cash and cash equivalents and trade accounts receivable.

Cash and cash equivalents consist primarily of demand deposits and money market funds maintained with several financial institutions. Deposits held with banks may exceed the amount of insurance provided on such deposits. Generally, these deposits may be redeemed upon demand and are maintained with high quality financial institutions, and therefore are believed to have minimal credit risk.

Our accounts receivable are primarily derived from billings with customers located throughout North America, as well as in Europe and South America. We generally do not require collateral or other security from our domestic customers. We maintain an allowance for doubtful accounts for potential credit losses, which losses have historically been within management’s expectations.

We currently have, and historically have had, a diverse customer base.

Fair Values of Financial Instruments

Fair Values of Financial Instruments

The fair value of cash equivalents, receivables, accounts payable and accrued expenses approximate carrying value because of the short period of time to maturity. Our investments are measured at fair value on a recurring basis.

The framework for measuring fair value and related disclosure requirements about fair value measurements are provided in Financial Accounting Standard Board (“FASB”) Accounting Standards Codification (“ASC”) 820, Fair Value Measurements (“ASC 820”). This pronouncement defines fair value as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The fair value hierarchy prescribed by ASC 820 contains three levels as follows:

Level 1—Quoted prices in active markets for identical assets or liabilities.

Level 2—Observable inputs other than quoted prices in active markets for identical assets or liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3—Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability.

Cash, Cash Equivalents and Restricted Cash

Cash, Cash Equivalents and Restricted Cash

Cash and cash equivalents consist of cash and short-term investments with initial maturities of 90 days or less.

Investments

Investments

The Company’s investments are classified as either held-to-maturity, available-for-sale or trading, in accordance with FASB ASC 320 – Investments – Debt and Equity Securities. Held-to-maturity securities are those securities that the Company has the positive intent and ability to hold until maturity. Trading securities are those securities that the Company intends to sell in the near term. All other securities not included in the held-to-maturity or trading category are classified as available-for-sale. Held-to-maturity securities are recorded at amortized cost, which approximates fair market value. Trading securities are carried at fair value with unrealized gains and losses charged to earnings. Available-for-sale securities are carried at fair value with unrealized gains and losses recorded within accumulated other comprehensive loss as a separate component of stockholders’ equity. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs, where available (see Note 5, Fair Value Measurements). As of September 30, 2020 and March 31, 2020, all of our investments are available-for-sale. Under FASB ASC 320-10-35, a security is considered to be other-than-temporarily impaired if the present value of cash flows expected to be collected are less than the security’s amortized cost basis (the difference being defined as the “Credit Loss”) or if the fair value of the security is less than the security’s amortized cost basis and the investor intends, or will be required, to sell the security before recovery of the security’s amortized cost basis. If an other-than-temporary impairment exists, the charge to earnings is limited to the amount of Credit Loss if the investor does not intend to sell the security, and will not be required to sell the security, before recovery of the security’s amortized cost basis. Any remaining difference between fair value and amortized cost is recognized in other comprehensive loss, net of applicable taxes. The Company evaluates whether the decline in fair value of its investments is other-than-temporary at each quarter-end. This evaluation consists of a review by management, and includes market pricing information and maturity dates for the securities held, market and economic trends in the industry and information on the issuer’s financial condition and, if applicable, information on the guarantors’ financial condition. Factors considered in determining whether a loss is temporary include the length of time and extent to which the investment’s fair value has been less than its cost basis, the financial condition and near-term prospects of the issuer and guarantors, including any specific events which may influence the operations of the issuer and the Company’s intent and ability to retain the investment for a reasonable period of time sufficient to allow for any anticipated recovery of fair value.

Property and Equipment

Property and Equipment

Property and equipment are recorded at cost and are depreciated using the straight-line method over the estimated useful life ranging from three to eight years. Leasehold improvements are depreciated over the term of the related lease or the estimated useful life of the improvement, whichever is shorter.

Intangible Assets

Intangible Assets

Intangible assets with determinable economic lives are carried at cost, less accumulated amortization. Amortization is computed over the estimated useful life of each asset on a straight-line basis. The Company determines the useful lives of identifiable intangible assets after considering the specific facts and circumstances related to each intangible asset. Factors the Company considers when determining useful lives include the contractual term of any agreement related to the asset, the historical performance of the asset, the Company's long-term strategy for using the asset, any laws or other local regulations which could impact the useful life of the asset and other economic factors, including competition and specific market conditions.

Goodwill and Long-Lived Assets

Goodwill and Long-Lived Assets

We perform an annual qualitative assessment of our goodwill during the fourth fiscal quarter, or more frequently, to determine if any events or circumstances exist, such as an adverse change in business climate or a decline in overall industry demand, that would indicate that it would more likely than not reduce the fair value of a reporting unit below its carrying amount, including goodwill. If events or circumstances do not indicate that the fair value of a reporting unit is below its carrying amount, then goodwill is not considered to be impaired and no further testing is required; if otherwise, we compare the fair value of our reporting unit to its carrying value, including goodwill. If the carrying amount of a reporting unit exceeds the reporting unit’s fair value, the amount by which the carrying value of the goodwill exceeds its implied fair value, if any, is recognized as an impairment loss. We monitor the indicators for goodwill impairment testing between annual tests. As of September 30, 2020, there were no indicators of goodwill impairment.

We test long-lived assets and purchased intangible assets (other than goodwill) for impairment if we believe indicators of impairment exist. We determine whether the carrying value of an asset or asset group is recoverable, based on comparisons to undiscounted expected future cash flows the asset or asset group is expected to generate. If an asset is not recoverable, we record an impairment loss equal to the amount by which the carrying value of the asset exceeds its fair value. We primarily use the income valuation approach to determine the fair value of our long-lived assets and purchased intangible assets. During the three months ended June 30, 2020, we recorded $313,000 in impairment charges related to right-of-use assets and leasehold improvements directly resulting from the restructuring activities. There was no additional impairment or restructuring charges during the three months ended September 30, 2020. See Note 4, Restructuring Activities, for further details on the restructuring activities.

Income Taxes

Income Taxes

We utilize the asset and liability method of accounting for income taxes, under which deferred taxes are determined based on the temporary differences between the financial statement and tax basis of assets and liabilities using tax rates expected to be in effect during the years in which the basis differences reverse. A valuation allowance is recorded when it is more-likely-than-not that some or all of the deferred tax assets will not be realized, which increases our income tax expense in the period such determination is made. As such, as of September 30, 2020, we determined it was appropriate to record a full valuation allowance against our deferred tax assets. We will continuously reassess the appropriateness of maintaining a valuation allowance.

Income tax positions must meet a more-likely-than-not recognition threshold to be recognized. Income tax positions that previously failed to meet the more-likely-than-not threshold are recognized in the first subsequent financial reporting period in which that threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not threshold are derecognized in the first subsequent financial reporting period in which that threshold is no longer met.

Stock-Based Compensation

Stock-Based Compensation

We record stock-based compensation in our unaudited condensed consolidated statements of operations as an expense, based on the estimated grant date fair value of our stock-based awards, whereby such fair values are amortized over the requisite service period. Our stock-based awards are currently comprised of common stock options, restricted stock units and performance stock units. The fair value of our common stock option awards is estimated on the grant date using the Black-

Scholes-Merton option-pricing formula. The fair value of our performance stock unit awards is estimated on the grant date using a Monte Carlo simulation model. While the use of these models meets established requirements, the estimated fair values generated by the models may not be indicative of the actual fair values of our awards as it does not consider certain factors important to those awards to employees, such as continued employment and periodic vesting requirements, as well as limited transferability. The fair value of our restricted stock units is based on the closing market price of our common stock on the grant date. If there are any modifications or cancellations of the underlying unvested stock-based awards, we may be required to accelerate, increase or cancel any remaining unearned stock-based compensation expense.

Research and Development Expenditures

Research and Development Expenditures

Research and development expenditures are charged to expense in the period incurred.

Warranty

Warranty

We generally provide a one- to three-year warranty from the original invoice date on all products, materials and workmanship. Products sold to various original equipment manufacturer customers sometimes carry longer warranties. Defective products will be either repaired or replaced, usually at our option, upon meeting certain criteria. We accrue a provision for the estimated costs that may be incurred for product warranties relating to a product as a component of cost of sales at the time revenue for that product is recognized. The accrued warranty reserve is included within accrued liabilities in the accompanying unaudited condensed consolidated balance sheets. We do not provide any service-type warranties.

Repair and Maintenance Costs

Repair and Maintenance Costs

We incur repair and maintenance costs in the normal course of business. Should the repair or maintenance result in a permanent improvement to one of our leased facilities, the cost is capitalized as a leasehold improvement and amortized over its useful life or the remainder of the lease period, whichever is shorter. Non-permanent repair and maintenance costs are charged to expense as incurred.

Comprehensive Income (Loss)

Comprehensive Income (Loss)

The difference between net income and comprehensive income for the three- and six-months ended September 30, 2020 and between net loss and comprehensive loss for the three- and six-months ended September 30, 2019 was de minimis.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In June 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments—Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments. This standard update requires that certain financial assets be measured at amortized cost net of an allowance for estimated credit losses such that the net receivable represents the present value of expected cash collection. In addition, this standard update requires that certain financial assets be measured at amortized cost reflecting an allowance for estimated credit losses expected to occur over the life of the assets. The estimate of credit losses must be based on all relevant information including historical information, current conditions and reasonable and supportable forecasts that affect the collectability of the amounts. In November 2019, the FASB issued ASU 2019-10, Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815) and Leases (Topic 842): Effective Dates, which defers the effective date of ASU 2016-13 to fiscal years beginning after December 15, 2022 for all entities except SEC reporting companies that are not smaller reporting companies. As a smaller reporting company, ASU 2016-13 will now be effective for our fiscal year 2024 beginning April 1, 2023; however, early adoption is permitted. We are currently evaluating the timing and impact of adopting ASU 2016-13 on our unaudited condensed consolidated financial statements.

In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirement for Fair Value Measurements (“ASU 2018-13”), which modifies the disclosure requirements on fair value measurements. This update is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019, and early adoption is permitted. The Company adopted this update effective April 2020. The adoption of this ASU did not have a material impact on the Company’s financial statements.

In August 2018, the FASB issued ASU No. 2018-15, Intangibles—Goodwill and Other—Internal Use Software (subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract ("ASU 2018-15"), which clarifies the accounting for implementation costs in cloud computing arrangements. This update is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019, and early

adoption is permitted. The Company adopted this update effective April 2020. The adoption of this ASU did not have a material impact on the Company’s financial statements.In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes. The ASU removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. This ASU is effective for fiscal years beginning after December 15, 2020, including interim periods within that fiscal year, with early adoption permitted. The Company early adopted this update effective July 2020. The adoption of this ASU did not have a material impact on the Company’s financial statements.

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Description of Business and Summary of Significant Accounting Policies (Tables)

6 Months Ended

Sep. 30, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of typical performance obligations

The Company’s typical performance obligations include the following:

Performance Obligation	When Performance Obligation is Typically Satisfied	When Payment is Typically Due	How Standalone Selling Price is Typically Estimated
Product Revenues
Standard purchase orders for delivery of a tangible product	Upon shipment (point in time)	Within 30 days of delivery	Observable transactions
Engineering services where the deliverable is considered a product	As work is performed (over time)	Within 30 days of services being invoiced	Estimated using a cost-plus margin approach
Service Revenues
Engineering and consulting services	As work is performed (over time)	Within 30 days of services being invoiced	Estimated using a cost-plus margin approach
SaaS	Over the course of the SaaS service once the system is available for use (over time)	At the beginning of the contract period	Estimated using a cost-plus margin approach

Schedule of cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash presented in the accompanying unaudited condensed consolidated statements of cash flows consist of the following (in thousands):

	September 30, 2020		March 31, 2020
Cash and cash equivalents	$	15,623	$	14,217
Restricted cash	146		146
	$	15,769	$	14,363

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Supplementary Financial Information (Tables)

6 Months Ended

Sep. 30, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of inventories

The following table presents details of our inventories:

	September 30, 2020		March 31, 2020
	(In thousands)
Materials and supplies	$	1,720	$	1,380
Work in process	27		162
Finished goods	1,446		1,498
	$	3,193	$	3,040

Schedule of property and equipment, net

The following table presents details of our property and equipment, net:

	September 30, 2020		March 31, 2020
	(In thousands)
Equipment	$	6,500	$	6,222
Leasehold improvements	2,966		2,911
Accumulated depreciation	(7,722)		(7,298)
	$	1,744	$	1,835

Schedule of net intangible assets

The following table presents details of our net intangible assets:

	September 30, 2020						March 31, 2020
	Gross Carrying Amount		Accumulated Amortization		Net Book Value		Gross Carrying Amount		Accumulated Amortization		Net Book Value
	(In thousands)
Technology	$	1,286	$	(1,286)	$	—	$	1,286	$	(1,286)	$	—
Customer contracts / relationships	3,750		(979)		2,771		3,750		(688)		3,062
Trade names and non-compete agreements	770		(648)		122		770		(613)		157
Capitalized software development costs	4,839		(1,974)		2,865		4,423		(1,576)		2,847
Total	$	10,645	$	(4,887)	$	5,758	$	10,229	$	(4,163)	$	6,066

Schedule of future estimated amortization expense

As of September 30, 2020, future estimated amortization expense is as follows:

Year Ending March 31,
(In thousands)
2021	$	731
2022	1,373
2023	1,149
2024	912
2025	849
Thereafter	744
	$	5,758

Schedule of warranty reserve activity

The following table presents activity related to the warranty reserve:

​	Six Months Ended September 30,
​	2020		2019
​	(In thousands)
Balance at beginning of fiscal year	$	416	$	463
Additions charged to cost of sales	152		372
Warranty claims	(128)		(340)
Balance at end of reporting period	$	440	$	495

Schedule of computation of basic and diluted net loss per share

The following table sets forth the computation of basic and diluted net income (loss) per share:

​	Three Months Ended September 30,				Six Months Ended September 30,
​	2020		2019		2020		2019
​	(In thousands, except per share amounts)				(In thousands, except per share amounts)
Numerator:
Net income (loss) from continuing operations	$	719	$	(1,051)	$	1,137	$	(1,588)
Net income (loss) from discontinued operations, net of tax	(306)		(1,136)		9,624		(2,171)
Net income (loss)	$	413	$	(2,187)	$	10,761	$	(3,759)
Denominator:
Weighted average common shares used in basic computation	40,989		40,493		40,860		37,397
Dilutive stock options	920		—		848		—
Weighted average common shares used in diluted computation	41,909		40,493		41,708		37,397
Basic:	​		​		​		​
Net income (loss) per share from continuing operations:	$	0.02	$	(0.03)	$	0.03	$	(0.04)
Net income (loss) per share from discontinued operations:	$	(0.01)	$	(0.03)	$	0.24	$	(0.06)
Net income (loss) per basic share	$	0.01	$	(0.06)	$	0.27	$	(0.10)
Diluted:
Net income (loss) per share from continuing operations:	$	0.02	$	(0.03)	$	0.03	$	(0.04)
Net income (loss) per share from discontinued operations:	$	(0.01)	$	(0.03)	$	0.23	$	(0.06)
Net income (loss) per diluted share	$	0.01	$	(0.06)	$	0.26	$	(0.10)

Schedule of instruments excluded in the computation of diluted net loss per share

The following instruments were excluded for purposes of calculating weighted average common share equivalents in the computation of diluted net income (loss) per share as their effect would have been anti-dilutive:

	Three Months Ended September 30,		Six Months Ended September 30,
	2020	2019	2020	2019
	(In thousands)		(In thousands)
Stock options	2,887	5,039	2,889	5,050
Restricted stock units	106	438	158	282

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Discontinued Operations (Tables)

6 Months Ended

Sep. 30, 2020

Discontinued Operations and Disposal Groups [Abstract]

Summary of major classes of assets and liabilities held for sale

The related assets and liabilities of the Agriculture and Weather Analytics segment were reclassified to assets held for sale and liabilities held for sale, respectively, as of March 31, 2020 on the unaudited condensed consolidated balance sheets. The following table is a summary of major classes of assets and liabilities held for sale:

	March 31, 2020
	(In thousands)
Assets
Trade accounts receivable, net of allowance for doubtful accounts	$	863
Unbilled accounts receivable	504
Prepaid expenses and other current assets	109
Total assets held for sale, current portion	1,476
Property and equipment, net	107
Right-of-use assets	446
Other classes of assets that are not major	73
Total assets held for sale, noncurrent	626
Total assets held for sale	$	2,102
Liabilities
Trade accounts payable	$	254
Accrued liabilities	91
Accrued payroll and related expenses	933
Deferred revenue	1,550
Total liabilities held for sale, current position	2,828
Lease liabilities	357
Total liabilities held for sale	$	3,185

The results of operations for the Agriculture and Weather Analytics segment were included in net income (loss) from discontinued operations on the Company's unaudited condensed consolidated statements of operations. The following table provides information regarding the results of discontinued operations:

	Three Months Ended September 30,				Six Months Ended September 30,
	2020		2019		2020		2019
Service revenue	$	—	$	1,295	$	695	$	2,736
Cost of service revenues	—		590		349		1,207
Gross profit	—		705		346		1,529
Operating expenses:
Selling, general and administration	230		839		746		1,772
Research and development	—		1,002		407		1,928
Restructuring charges	—		—		837		—
Total operating expenses	230		1,841		1,990		3,700
Operating loss from discontinued operations	(230)		(1,136)		(1,644)		(2,171)
Other (expense) income, net	(29)		—		27		—
Loss from discontinued operation before income tax	(259)		(1,136)		(1,617)		(2,171)
Income tax	(47)		—		(47)		—
Net loss from discontinued operations	(306)		(1,136)		(1,664)		(2,171)
Gain on disposal of discontinued operations before income tax	—		—		11,315		—
Income tax expense on gain on disposal	—		—		(27)		—
Gain on disposal of discontinued operations after income tax	—		—		11,288		—
Net income (loss) from discontinued operations	$	(306)	$	(1,136)	$	9,624	$	(2,171)

The following table provides information on the gain recorded on the sale of the Agriculture and Weather Analytics segment for the three- and six-months ended September 30, 2020. These amounts reflect the closing balance sheet of the Agriculture and Weather Analytics segment upon the closing of the sale on May 5, 2020 (in thousands).

Initial proceeds from sale, net of transaction costs	$	9,440
Closing working capital adjustment	250
Deferred payments of purchase price	1,500
Total consideration, net of transaction costs	11,190
Trade accounts receivable, net of allowance for doubtful accounts	1,060
Unbilled accounts receivable	488
Other classes of assets that are not major	194
Total Agriculture and Weather Analytics segment assets	1,742
Trade accounts payable	349
Deferred revenue	1,518
Total Agriculture and Weather Analytics segment liabilities	1,867
Gain on sale of Agriculture and Weather Analytics segment	$	11,315

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Restructuring Activities (Tables)

6 Months Ended

Sep. 30, 2020

Restructuring and Related Activities [Abstract]

Summary of restructuring and severance costs for our reportable segments, as well as corporate expenses

The following table presents the restructuring and severance costs for our reportable segments, as well as corporate expenses, for the six months ended September 30, 2020. (in thousands):

	Roadway Sensors		Transportation Systems		Agriculture and Weather Analytics		Corporate		Total
Severance and benefits	$	110	$	43	$	524	$	428	$	1,105
Lease impairment and other costs	—		—		313		38		351
Total restructuring and severance costs	$	110	$	43	$	837	$	466	$	1,456

Summary of restructuring activities

Our restructuring activities during the three- and six-months ended September 30, 2020 were as follows (in thousands):

Balance at March 31, 2020	$	—
Charged to expenses	1,105
Cash payments	(661)
Balance at June 30, 2020	$	444
Cash payments	(197)
Balance at September 30, 2020	$	247

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Fair Value Measurements (Tables)

6 Months Ended

Sep. 30, 2020

Fair Value Disclosures [Abstract]

Schedule of financial assets that are recorded at fair value on a recurring basis

The following tables present the Company’s financial assets that are recorded at fair value on a recurring basis, segregated among the appropriate levels within the fair value hierarchy:

	As of September 30, 2020
	(In thousands)
	Amortized Cost		Gross Unrealized Loss		Gross Unrealized Gain		Estimated Fair Value
Level 1:
Money market funds	$	4,190	$	—	$	—	$	4,190
Subtotal	4,190		—		—		4,190
Level 2:
Commercial paper	10,197		—		1		10,198
Corporate notes and bonds	2,255		—		2		2,257
US Treasuries	9,710		(1)		—		9,709
Subtotal	22,162		(1)		3		22,164
Total	$	26,352	$	(1)	$	3	$	26,354

	As of March 31, 2020
	(In thousands)
	Amortized Cost		Gross Unrealized Loss		Gross Unrealized Gain		Estimated Fair Value
Level 1:
Money market funds	$	10,576	$	(1)	$	—	$	10,575
Subtotal	10,576		(1)		—		10,575
Level 2:
Commercial paper	1,495		(1)		—		1,494
Corporate notes and bonds	6,044		(22)		—		6,022
US Treasuries	3,013		—		20		3,033
US Government agencies	1,007		—		—		1,007
Subtotal	11,559		(23)		20		11,556
Total	$	22,135	$	(24)	$	20	$	22,131

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Right-of-Use Assets and Lease Liabilities (Tables)

6 Months Ended

Sep. 30, 2020

Lessee Disclosure [Abstract]

Schedule of lease-related assets and liabilities recorded on the unaudited condensed consolidated balance sheet

The table below presents lease-related assets and liabilities recorded on the unaudited condensed consolidated balance sheet as follows:

	Classification	September 30, 2020
		(In thousands)
Assets
Operating lease right-of-use-assets - continuing operations	Right-of-use assets	$	12,035
Operating lease right-of-use-assets - discontinued operation	Asset held for sales - noncurrent	114
Total operating lease right-of-use-assets		$	12,149
Liabilities
Operating lease liabilities (short-term) - continuing operations	Accrued liabilities	$	1,931
Operating lease liabilities (short-term) - discontinued operation	Liabilities held for sales - current	94
		$	2,025
Operating lease liabilities (long-term) - continuing operations	Lease liabilities	10,992
Operating lease liabilities (long-term) - discontinued operation	Liabilities held for sales - noncurrent	310
		11,302
Total lease liabilities		$	13,327

Schedule of supplemental information related to operating leases

The table below presents supplemental information related to operating leases during the six months ended September 30, 2020 (in thousands, except weighted average information):

Cash paid for amounts included in the measurement of operating lease liabilities	$	1,383
Right-of-use assets obtained in exchange for new operating lease liabilities	$	310
Weighted average remaining lease term (in years)	6.4
Weighted average discount rate	4.9		%

Schedule of undiscounted cash flows

Maturities of lease liabilities as of September 30, 2020 were as follows:

Fiscal Year Ending March 31,	Operating Leases		Sublease Income		Net Operating Lease
(In thousands)
2021	$	1,412	$	55	$	1,357
2022	2,583		9		2,574
2023	2,454				2,454
2024	2,256				2,256
2025	2,072				2,072
Thereafter	4,896				4,896
Total lease payments	15,673		$	64	$	15,609
Less imputed interest	(2,346)
Present value of future lease payments	13,327
Less current obligations under leases	(2,025)
Long-term lease obligations	$	11,302

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Stock-Based Compensation (Tables)

6 Months Ended

Sep. 30, 2020

Share-based Payment Arrangement [Abstract]

Summary of activity with respect to stock options

A summary of activity with respect to our stock options for the six months ended September 30, 2020 is as follows:

	Options	Weighted Average Exercise Price Per Share
	(In thousands)
Options outstanding at March 31, 2020	5,934	$	3.99
Exercised	(266)	2.55
Forfeited	(248)	4.88
Options outstanding at September 30, 2020	5,420	$	3.99

Summary of activity with respect to RSUs

A summary of activity with respect to our RSUs, which entitle the holder to receive one share of our common stock for each RSU upon vesting, for the six months ended September 30, 2020 is as follows:

	# of Shares		Weighted Average Price Per Share
	(In thousands)
RSUs outstanding at March 31, 2020	404		$	5.16
Vested	(123)		5.17
Forfeited	(6)		5.52
RSUs outstanding at September 30, 2020	$	275	$	5.15

Summary of activity with respect to PSUs

The following table summarizes the details of the performance options:

	# of Shares		Weighted Average Price Per Share
	(In thousands)
PSUs outstanding at March 31, 2020	—		$	—
Granted	61		5.47
PSUs outstanding at September 30, 2020	$	61	$	5.47

Schedule of stock-based compensation expense

The following table presents stock-based compensation expense that is included in each line item on our unaudited condensed consolidated statements of operations:

	Three Months Ended September 30,				Six Months Ended September 30,
	2020		2019		2020		2019
	(In thousands)				(In thousands)
Cost of revenues	$	47	$	33	$	93	$	67
Selling, general and administrative expense	595		654		1,146		1,115
Research and development expense	25		18		50		36
Restructuring costs	—		—		42		—
(Loss) income from discontinued operations before gain on sale, net of tax	—		88		(57)		177
Total stock-based compensation	$	667	$	793	$	1,274	$	1,395

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Acquisition (Tables)

6 Months Ended

Sep. 30, 2020

Business Combinations [Abstract]

Schedule of purchase price allocation

The following tables summarize the purchase price allocation (in thousands) as of July 2, 2019:

Cash	$	664
Trade accounts receivable	905
Unbilled accounts receivable	347
Right-of-use assets	863
Property and equipment	357
Intangible assets	3,710
Goodwill	5,440
Other assets	161
Total assets acquired	12,447
Accounts payable	(378)
Accrued payroll and related expenses	(426)
Lease liabilities	(863)
Total liabilities assumed	(1,667)
Total purchase price	$	10,780

Schedule of fair values and useful lives of the identifiable intangible assets

The following table presents the fair values and useful lives of the identifiable intangible assets acquired:

	Amount		Weighted Average  Useful Life
	(in thousands)		(in years)
Customer relationships	$	3,500	6
Non-compete agreement	210		3
Total intangible assets assumed	$	3,710

Schedule of pro forma financial information

​	Six Months Ended September 30, 2019
​	(In thousands)
Pro forma revenue	$	56,705
Pro forma net loss	$	(3,924)
Pro forma net loss per share:
Basic	$	(0.10)
Diluted	$	(0.10)

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Business Segment Information (Tables)

6 Months Ended

Sep. 30, 2020

Segment Reporting [Abstract]

Schedule of selected unaudited condensed consolidated financial information for reportable segments

The following table sets forth selected unaudited condensed consolidated financial information for our reportable segments for the three- and six-months ended September 30, 2020 and 2019:

	Roadway Sensors		Transportation Systems		Total
	(In thousands)
Three Months Ended September 30, 2020
Product revenues	$	14,135	$	2,130	$	16,265
Service revenues	155		12,836		12,991
Total revenues	14,290		14,966		29,256
Segment income	3,083		2,295		5,378
Three Months Ended September 30, 2019
Product revenues	12,480		1,315		13,795
Service revenues	75		12,716		12,791
Total revenues	12,555		14,031		26,586
Segment income	2,224		1,942		4,166

	Roadway Sensors		Transportation Systems		Total
	(In thousands)
Six Months Ended September 30, 2020
Product revenues	$	27,286	$	3,373	$	30,659
Service revenues	240		26,357		26,597
Total revenues	27,526		29,730		57,256
Segment income	6,194		4,559		10,753
Six Months Ended September 30, 2019
Product revenues	25,251		3,061		28,312
Service revenues	112		23,329		23,441
Total revenues	25,363		26,390		51,753
Segment income	4,556		3,508		8,064

Schedule of reconciles total segment income (loss) to unaudited condensed consolidated loss from continuing operations before income taxes

The following table reconciles total segment income to unaudited condensed consolidated operating income (loss) from continuing operations before income taxes:

	Three Months Ended September 30,				Six Months Ended September 30,
	2020		2019		2020		2019
	(In thousands)				(In thousands)
Segment income:
Total income from reportable segments	$	5,378	$	4,166	$	10,753	$	8,064
Unallocated amounts:					​		​
Corporate expenses	(4,400)		(5,149)		(8,544)		(9,519)
Amortization of intangible assets	(230)		(230)		(460)		(296)
Restructuring charges	—		—		(619)		—
Operating income (loss)	$	748	$	(1,213)	$	1,130	$	(1,751)

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Description of Business and Summary of Significant Accounting Policies (Details)			3 Months Ended			6 Months Ended		12 Months Ended
	May 05, 2020 USD ($)	Apr. 30, 2020 USD ($)	Sep. 30, 2020 USD ($) customer	Jun. 30, 2020 USD ($)	Sep. 30, 2019 USD ($) customer	Sep. 30, 2020 USD ($)	Sep. 30, 2019 USD ($)	Mar. 31, 2020 USD ($) customer	Mar. 31, 2019 USD ($)
Significant accounting policies
Restructuring charges		$ 1,500,000	$ 0		$ 0	$ 619,000	$ 0
Contract Fulfillment Costs
Capitalized contract fulfillment costs			2,073,000			2,073,000		$ 1,236,000
Cash, Cash Equivalents and Restricted Cash
Restricted cash related to the shares purchased			146,000			146,000		146,000
Cash and cash equivalents			15,623,000			15,623,000		14,217,000
Restricted cash			146,000			146,000		146,000
Cash, cash and cash equivalents and Restricted cash			15,769,000		$ 9,457,000	15,769,000	9,457,000	$ 14,363,000	$ 7,071,000
Goodwill and Long-Lived Assets
Loss on impairment of goodwill						0
Impairment charges				$ 313,000
Warranty
Cash paid in business acquisition, net of cash acquired			$ 0			$ 0	$ 5,581,000
No individual customer
Concentration of Credit Risk
Number of customers | customer			0					0
Net sales and contract revenues | Customer | No individual customer
Concentration of Credit Risk
Number of customers | customer					0
Minimum
Warranty
Warranty period						1 year
Minimum | Property and equipment
Property and Equipment, net
Useful life						3 years
Minimum | Net sales and contract revenues | Customer | No individual customer
Concentration of Credit Risk
Percentage of concentration risk			10.00%		10.00%
Minimum | Total accounts receivable | Customer | No individual customer
Concentration of Credit Risk
Percentage of concentration risk			10.00%					10.00%
Maximum
Warranty
Warranty period						3 years
Maximum | Property and equipment
Property and Equipment, net
Useful life						8 years
Agriculture and Weather Analytics segment
Significant accounting policies
Restructuring charges		$ 1,500,000
Agriculture and Weather Analytics segment | Held for sale
Significant accounting policies
Total purchase consideration	$ 12,000,000.0		$ 12,000,000.0			$ 12,000,000.0
Proceeds from Divestiture of Businesses	10,500,000					$ 9,440,000
Agriculture and Weather Analytics segment | Held for sale | 12-month anniversaries of the closing date
Significant accounting policies
Amount receivable from sale of segment	1,450,000
Agriculture and Weather Analytics segment | Held for sale | 18-month anniversaries of the closing date
Significant accounting policies
Amount receivable from sale of segment	$ 50,000

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Supplemental Financial Information - Inventories , Property and Equipment (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Mar. 31, 2020
Inventories
Materials and supplies	$ 1,720		$ 1,720		$ 1,380
Work in process	27		27		162
Finished goods	1,446		1,446		1,498
Total inventories	3,193		3,193		3,040
Property and Equipment, net
Accumulated depreciation	(7,722)		(7,722)		(7,298)
Property and equipment, net	1,744		1,744		1,835
Depreciation	182	$ 203	367	$ 380
Equipment
Property and Equipment, net
Gross	6,500		6,500		6,222
Leasehold improvements
Property and Equipment, net
Gross	2,966		2,966		$ 2,911
Cost of revenues
Property and Equipment, net
Depreciation	56	65	117	130
Operating expenses
Property and Equipment, net
Depreciation	$ 126	$ 138	$ 250	$ 250

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Supplementary Financial Information - Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Mar. 31, 2020
Intangible Assets
Gross Carrying Amount	$ 10,645		$ 10,645		$ 10,229
Accumulated Amortization	(4,887)		(4,887)		(4,163)
Net Book Value	5,758		5,758		6,066
Amortization expense	363	$ 336	724	$ 499
Amortization recorded to cost of revenues	133	106	264	203
Amortization of intangible assets	230	$ 230	460	$ 296
Technology
Intangible Assets
Gross Carrying Amount	1,286		1,286		1,286
Accumulated Amortization	(1,286)		(1,286)		(1,286)
Customer contracts / relationships
Intangible Assets
Gross Carrying Amount	3,750		3,750		3,750
Accumulated Amortization	(979)		(979)		(688)
Net Book Value	2,771		2,771		3,062
Trade names and non-compete agreements
Intangible Assets
Gross Carrying Amount	770		770		770
Accumulated Amortization	(648)		(648)		(613)
Net Book Value	122		122		157
Capitalized software development costs
Intangible Assets
Gross Carrying Amount	4,839		4,839		4,423
Accumulated Amortization	(1,974)		(1,974)		(1,576)
Net Book Value	$ 2,865		$ 2,865		$ 2,847

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Supplementary Financial Information - Future Estimated Amortization Expense (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Mar. 31, 2020
Future estimated amortization expense
2021	$ 731
2022	1,373
2023	1,149
2024	912
2025	849
Thereafter	744
Net Book Value	$ 5,758	$ 6,066

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Supplementary Financial Information - Warranty Reserve Activity (Details) - USD ($) $ in Thousands	6 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
Activity related to warranty reserve
Balance at beginning of fiscal year	$ 416	$ 463
Additions charged to cost of sales	152	372
Warranty claims	(128)	(340)
Balance at end of reporting period	$ 440	$ 495

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Supplementary Financial Information - Earnings (loss) Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended				6 Months Ended
	Sep. 30, 2020	Jun. 30, 2020	Sep. 30, 2019	Jun. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Numerator:
Net income (loss) from continuing operations	$ 719		$ (1,051)		$ 1,137	$ (1,588)
Net income (loss) from discontinued operations, net of tax	(306)		(1,136)		9,624	(2,171)
Net income (loss)	$ 413	$ 10,348	$ (2,187)	$ (1,572)	$ 10,761	$ (3,759)
Denominator:
Weighted average common shares used in basic computation (in shares)	40,989,000		40,493,000		40,860,000	37,397,000
Dilutive stock options (in shares)	920,000				848,000
Weighted average common shares used in diluted computation (in shares)	41,909,000		40,493,000		41,708,000	37,397,000
Basic:
Net income (loss) per share from continuing operations (in dollars per share)	$ 0.02		$ (0.03)		$ 0.03	$ (0.04)
Net income (loss) per share from discontinued operations (in dollars per share)	(0.01)		(0.03)		0.24	(0.06)
Net income (loss) per share (in dollars per share)	0.01		(0.06)		0.27	(0.10)
Diluted:
Net income (loss) per share from continuing operations (in dollars per share)	0.02		(0.03)		0.03	(0.04)
Net income (loss) per share from discontinued operations (in dollars per share)	(0.01)		(0.03)		0.23	(0.06)
Net income (loss) per share (in dollars per share)	$ 0.01		$ (0.06)		$ 0.26	$ (0.10)

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Supplementary Financial Information - Earnings (loss) Per Share Excluded weighted average (Details) - shares shares in Thousands	3 Months Ended		6 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Stock options
Shares excluded in the computation of loss from continuing operations per share
Shares excluded in the computation of loss from continuing operations per share	2,887	5,039	2,889	5,050
Restricted stock units
Shares excluded in the computation of loss from continuing operations per share
Shares excluded in the computation of loss from continuing operations per share	106	438	158	282

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Discontinued Operations (Details) - Held for sale - Agriculture and Weather Analytics segment - USD ($) $ in Thousands		3 Months Ended	6 Months Ended
	May 05, 2020	Sep. 30, 2020	Sep. 30, 2020
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Total purchase consideration	$ 12,000	$ 12,000	$ 12,000
Initial proceeds from sale, net of transaction costs	10,500		9,440
Transition services agreement
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Revenue from related party		70	84
Costs from transaction with related party		$ 24	$ 27
12-month anniversaries of the closing date
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Amount receivable from sale of segment	1,450
18-month anniversaries of the closing date
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Amount receivable from sale of segment	$ 50

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Discontinued Operations - Assets and liabilities held for sale (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Mar. 31, 2020
Assets
Total assets held for sale, current portion	$ 15	$ 1,476
Total assets held for sale, noncurrent	114	626
Liabilities
Total liabilities held for sale, current position	486	2,828
Held for sale | Agriculture and Weather Analytics segment
Assets
Trade accounts receivable, net of allowance for doubtful accounts	1,060	863
Unbilled accounts receivable	488	504
Prepaid expenses and other current assets		109
Total assets held for sale, current portion		1,476
Property and equipment, net		107
Right-of-use assets		446
Other classes of assets that are not major	194	73
Total assets held for sale, noncurrent		626
Total assets held for sale	1,742	2,102
Liabilities
Trade accounts payable	349	254
Accrued liabilities		91
Accrued payroll and related expenses		933
Deferred revenue	1,518	1,550
Total liabilities held for sale, current position		2,828
Lease liabilities		357
Total liabilities held for sale	$ 1,867	$ 3,185

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Discontinued Operations - Results of operations included in net income (loss) from discontinued operations (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Operating expenses:
Other (expense) income, net	$ (44)	$ 115	$ (28)	$ 107
Income tax	(47)	0	(47)	0
Gain on disposal of discontinued operations after income tax	0	0	11,288	0
Net (loss) income from discontinued operations, net of tax	(306)	(1,136)	9,624	(2,171)
Held for sale | Agriculture and Weather Analytics segment
Results of discontinued operations
Service revenue	0	1,295	695	2,736
Cost of service revenues	0	590	349	1,207
Gross profit	0	705	346	1,529
Operating expenses:
Selling, general and administration	230	839	746	1,772
Research and development	0	1,002	407	1,928
Restructuring charges	0	0	837	0
Total operating expenses	230	1,841	1,990	3,700
Operating loss from discontinued operations	(230)	(1,136)	(1,644)	(2,171)
Other (expense) income, net	(29)	0	27	0
Loss from discontinued operation before income tax	(259)	(1,136)	(1,617)	(2,171)
Net loss from discontinued operations	(306)	(1,136)	(1,664)	(2,171)
Gain on disposal of discontinued operations before income tax	0	0	11,315	0
Income tax expense on gain on disposal	0	0	(27)	0
Gain on disposal of discontinued operations after income tax	0	0	11,288	0
Net (loss) income from discontinued operations, net of tax	$ (306)	$ (1,136)	$ 9,624	$ (2,171)

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Discontinued Operations - Gain recorded on sale (Details) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
	May 05, 2020	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Mar. 31, 2020
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Deferred payments of purchase price				$ 1,500	$ 0
Held for sale | Agriculture and Weather Analytics segment
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Initial proceeds from sale, net of transaction costs	$ 10,500			9,440
Closing working capital adjustment				250
Deferred payments of purchase price				1,500
Proceeds from sale of business, closing working capital adjustment and deferred payments of purchase price				11,190
Trade accounts receivable, net of allowance for doubtful accounts		$ 1,060		1,060		$ 863
Unbilled accounts receivable		488		488		504
Other classes of assets that are not major		194		194		73
Total assets held for sale		1,742		1,742		2,102
Trade accounts payable		349		349		254
Deferred revenue		1,518		1,518		1,550
Total liabilities held for sale		1,867		1,867		$ 3,185
Gain on disposal of discontinued operations before income tax		0	$ 0	$ 11,315	$ 0
Transaction costs		$ 1,100

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Restructuring Activities (Details) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
	Apr. 30, 2020	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Restructuring and Related Activities [Abstract]
Total restructuring charges	$ 1,500	$ 0	$ 0	$ 619	$ 0

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Restructuring Activities - Restructuring and severance costs for our reportable segments (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Sep. 30, 2020	Jun. 30, 2020	Sep. 30, 2020
Restructuring Cost and Reserve [Line Items]
Severance and benefits		$ 1,105	$ 1,105
Lease impairment and other costs			351
Total restructuring and severance costs			1,456
Restructuring costs were recorded to restructuring charges	$ 619
Agriculture and Weather Analytics
Restructuring Cost and Reserve [Line Items]
Restructuring costs were recorded to restructuring charges	$ 837
Segment income: | Roadway Sensors
Restructuring Cost and Reserve [Line Items]
Severance and benefits			110
Total restructuring and severance costs			110
Segment income: | Transportation Systems
Restructuring Cost and Reserve [Line Items]
Severance and benefits			43
Total restructuring and severance costs			43
Segment income: | Agriculture and Weather Analytics
Restructuring Cost and Reserve [Line Items]
Severance and benefits			524
Lease impairment and other costs			313
Total restructuring and severance costs			837
Corporate
Restructuring Cost and Reserve [Line Items]
Severance and benefits			428
Lease impairment and other costs			38
Total restructuring and severance costs			$ 466

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Restructuring Activities - Restructuring activities (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Sep. 30, 2020	Jun. 30, 2020	Sep. 30, 2020
Restructuring Reserve [Roll Forward]
Restructuring Reserve, Beginning Balance	$ 444	$ 0	$ 0
Charged to expenses		1,105	1,105
Cash payments	(197)	(661)
Restructuring Reserve, Ending Balance	$ 247	$ 444	$ 247

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Fair Value Measurements (Details)	3 Months Ended
	Sep. 30, 2020 USN ($)	Sep. 30, 2020 USD ($)	Jun. 30, 2020 USD ($)	Mar. 31, 2020 USD ($)
Non-financial assets measured at fair value
Non-financial assets measured at fair value		$ 0	$ 0
Amortized Cost		26,352,000		$ 22,135,000
Gross Unrealized Loss		(1,000)		(24,000)
Gross Unrealized Gain		3,000		20,000
Estimated Fair Value		26,354,000		22,131,000
Other-than-temporary impairment of investments	$ 0
Level 1:
Non-financial assets measured at fair value
Amortized Cost		4,190,000		10,576,000
Gross Unrealized Loss				(1,000)
Estimated Fair Value		4,190,000		10,575,000
Level 1: | Money market funds
Non-financial assets measured at fair value
Amortized Cost		4,190,000		10,576,000
Gross Unrealized Loss				(1,000)
Estimated Fair Value		4,190,000		10,575,000
Level 2:
Non-financial assets measured at fair value
Amortized Cost		22,162,000		11,559,000
Gross Unrealized Loss		(1,000)		(23,000)
Gross Unrealized Gain		3,000		20,000
Estimated Fair Value		22,164,000		11,556,000
Level 2: | Commercial paper
Non-financial assets measured at fair value
Amortized Cost		10,197,000		1,495,000
Gross Unrealized Loss				(1,000)
Gross Unrealized Gain		1,000
Estimated Fair Value		10,198,000		1,494,000
Level 2: | Corporate notes and bonds
Non-financial assets measured at fair value
Amortized Cost		2,255,000		6,044,000
Gross Unrealized Loss				(22,000)
Gross Unrealized Gain		2,000
Estimated Fair Value		2,257,000		6,022,000
Level 2: | US Treasuries
Non-financial assets measured at fair value
Amortized Cost		9,710,000		3,013,000
Gross Unrealized Loss		(1,000)
Gross Unrealized Gain		0		20,000
Estimated Fair Value		$ 9,709,000		3,033,000
Level 2: | US Government agencies
Non-financial assets measured at fair value
Amortized Cost				1,007,000
Estimated Fair Value				$ 1,007,000

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Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Reconciliation of income tax (benefit) provision to taxes computed at U.S. federal statutory rates
Expense (benefit) for income taxes	$ 28	$ 1	$ 62	$ 25
Income tax expense (benefit) as a percentage of pre-tax loss	3.40%	0.10%	4.80%	0.60%

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Right-of-Use Assets and Lease Liabilities (Details) $ in Thousands	3 Months Ended				6 Months Ended
	Sep. 30, 2020 USD ($)	Sep. 30, 2020 USN ($)	Jun. 30, 2020 USD ($)	Sep. 30, 2019 USD ($)	Sep. 30, 2020 USD ($)	Sep. 30, 2020 USN ($)	Sep. 30, 2019 USD ($)	Mar. 31, 2020 USD ($)
Assets
Total operating lease right-of-use-assets	$ 12,149,000				$ 12,149,000
Liabilities
Operating lease liabilities (short-term)	2,025,000				2,025,000
Operating lease liabilities (long-term)	11,302,000				11,302,000
Total lease liabilities	13,327,000				13,327,000
Lease Costs
Lease costs	657,000			$ 651,000	1,312,000		$ 1,249,000
Variable lease costs	0
Sublease income		$ 27				$ 45
Restatement
Operating Lease
Impairment of lease			$ 294,000
Continuing operations
Assets
Total operating lease right-of-use-assets	$ 12,035,000				$ 12,035,000
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List]	us-gaap:OtherAssets				us-gaap:OtherAssets
Liabilities
Operating lease liabilities (short-term)	$ 1,931,000				$ 1,931,000
Operating lease liabilities (long-term)	$ 10,992,000				$ 10,992,000			$ 11,638,000
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List]	us-gaap:AccountsPayableAndAccruedLiabilitiesCurrent				us-gaap:AccountsPayableAndAccruedLiabilitiesCurrent
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List]	us-gaap:OperatingLeaseLiabilityNoncurrent				us-gaap:OperatingLeaseLiabilityNoncurrent
Discontinued operation
Assets
Total operating lease right-of-use-assets	$ 114,000				$ 114,000
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List]	us-gaap:OtherAssets				us-gaap:OtherAssets
Liabilities
Operating lease liabilities (short-term)	$ 94,000				$ 94,000
Operating lease liabilities (long-term)	$ 310,000				$ 310,000
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List]	us-gaap:LiabilitiesOfDisposalGroupIncludingDiscontinuedOperationCurrent				us-gaap:LiabilitiesOfDisposalGroupIncludingDiscontinuedOperationCurrent
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List]	us-gaap:OtherLongTermDebtNoncurrent				us-gaap:OtherLongTermDebtNoncurrent
Minimum
Operating Lease
Renewal option term	1 year				1 year
Maximum
Operating Lease
Renewal option term	5 years				5 years

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Right-of-Use Assets and Lease Liabilities - Supplemental Information (Details) $ in Thousands	3 Months Ended
	Sep. 30, 2020 USD ($)
Supplemental Information
Cash paid for amounts included in the measurement of operating lease liabilities	$ 1,383
Right-of-use assets obtained in exchange for new operating lease liabilities	$ 310
Weighted average remaining lease term (in years)	6 years 4 months 24 days
Weighted average discount rate	4.90%

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Right-of-Use Assets and Lease Liabilities - Undiscounted Cash Flows (Details) $ in Thousands	Sep. 30, 2020 USD ($)
Operating Leases
2021	$ 1,412
2022	2,583
2023	2,454
2024	2,256
2025	2,072
Thereafter	4,896
Total lease payments	15,673
Less imputed interest	(2,346)
Total lease liabilities	13,327
Less current obligations under leases	(2,025)
Lease liabilities	11,302
Sublease Income
2021	55
2022	9
Total lease payments	64
Net Operating Lease
2021	1,357
2022	2,574
2023	2,454
2024	2,256
2025	2,072
Thereafter	4,896
Total lease payments	15,609
Discontinued Operations
Operating Leases
Less current obligations under leases	(94)
Lease liabilities	$ 310

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Stock-Based Compensation - Stock Options (Details) shares in Thousands	3 Months Ended	6 Months Ended
	Sep. 30, 2020 plan $ / shares shares	Sep. 30, 2020 $ / shares shares
Stock-Based Compensation
Number of stock incentive plans | plan	2
Vested and expected to vest at the end of the period (in shares)	5,400	5,400
Stock options
Number of Shares
Options outstanding at the beginning of the period (in shares)		5,934
Exercised (in shares)		(266)
Forfeited (in shares)		(248)
Options outstanding at the end of the period (in shares)	5,420	5,420
Weighted Average Exercise Price Per Share
Options outstanding at the beginning of the period (in dollars per share) | $ / shares		$ 3.99
Exercised (in dollars per share) | $ / shares		2.55
Forfeited (in dollars per share) | $ / shares		4.88
Options outstanding at the end of the period (in dollars per share) | $ / shares	$ 3.99	$ 3.99
2016 Plan
Stock-Based Compensation
Authorized for future issuance under stock incentive plans (in shares)	1,800	1,800

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Stock-Based Compensation - Restricted Stock Units (Details) - Restricted stock units - $ / shares	3 Months Ended	6 Months Ended
	Sep. 30, 2020	Sep. 30, 2020
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares of common stock receivable upon vesting of each RSU (in shares)	1
Number of Shares
Options outstanding at the beginning of the period (in shares)		404,000
Vested (in shares)		(123,000)
Forfeited (in shares)		(6,000)
Options outstanding at the end of the period (in shares)	275,000	275,000
Weighted Average Price Per Share
Options outstanding at the beginning of the period (in dollars per share)		$ 5.16
Vested (in dollars per share)		5.17
Forfeited (in dollars per share)		5.52
Options outstanding at the end of the period (in dollars per share)	$ 5.15	$ 5.15

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Stock-Based Compensation - Performance Stock Units (Details) shares in Thousands	3 Months Ended	6 Months Ended
	Sep. 30, 2020 $ / shares shares	Sep. 30, 2020 $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Maximum achievement percentage		2
Performance Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Performance period		3 years
Service period		3 years
Number of Shares
Options outstanding at the beginning of the period (in shares)		0
Granted (in shares)		61
Options outstanding at the end of the period (in shares)	61	61
Weighted Average Price Per Share
Options outstanding at the beginning of the period (in dollars per share) | $ / shares		$ 0
Granted (in dollar per share) | $ / shares		5.47
Options outstanding at the end of the period (in dollars per share) | $ / shares	$ 5.47	$ 5.47
Minimum | Performance Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage	0.00%
Maximum | Performance Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage	160.00%
Executive officers | Performance Stock Units
Number of Shares
Granted (in shares)	61

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Stock-Based Compensation - Stock Based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Stock-Based Compensation
Total stock-based compensation	$ 667	$ 793	$ 1,274	$ 1,395
Stock options
Stock-Based Compensation
Unrecognized compensation expense related to unvested stock options	4,000		$ 4,000
Weighted average period over which compensation expense is expected to be recognized			2 years 6 months
Restricted stock units
Stock-Based Compensation
Unrecognized compensation expense related to unvested RSUs	1,000		$ 1,000
Weighted average period over which compensation expense is expected to be recognized			1 year 6 months
Phantom Share Units (PSUs)
Stock-Based Compensation
Unrecognized compensation expense related to unvested RSUs	73		$ 73
Weighted average period over which compensation expense is expected to be recognized			6 months
Cost of revenues
Stock-Based Compensation
Total stock-based compensation	47	33	$ 93	67
Selling, general and administrative expense
Stock-Based Compensation
Total stock-based compensation	595	654	1,146	1,115
Research and development expense
Stock-Based Compensation
Total stock-based compensation	25	18	50	36
Restructuring costs
Stock-Based Compensation
Total stock-based compensation	0		42
(Loss) income from discontinued operations before gain on sale, net of tax
Stock-Based Compensation
Total stock-based compensation	$ 0	$ 88	$ (57)	$ 177

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Stock-Based Compensation - Other Stock-Based Compensation Plans (Details) - ESPP $ in Thousands				1 Months Ended
	Jun. 30, 2020 shares	Jun. 30, 2019 shares	Jan. 01, 2018 USD ($) offering_Period	Jul. 31, 2020 shares
Other Stock-Based Compensation Plans
Purchase price of common stock (as a percent)			95.00%
Number of offering periods | offering_Period			2
Duration of offering period (in months)			6 months
Annual stock value | $			$ 25
Number of share repurchases | shares	0	48,439		41,679
Minimum
Other Stock-Based Compensation Plans
Employer matching contribution (as a percent)			1.00%
Maximum
Other Stock-Based Compensation Plans
Employer matching contribution (as a percent)			15.00%

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Stock Repurchase Program (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions		110 Months Ended
	Nov. 06, 2014	Sep. 30, 2020	Aug. 09, 2012
Stock Repurchase Program
Number of shares acquired (in shares)		3,422
Value of common stock repurchased		$ 5.6
Average price per share of common stock repurchased (in dollars per share)		$ 1.63
Value of common stock available for repurchase under current program		$ 1.7
August 2012 Program
Stock Repurchase Program
Increase in the authorized amount for repurchase of common stock	$ 3.0
August 2012 Program | Maximum
Stock Repurchase Program
Value of common stock approved under stock repurchase program			$ 3.0

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Acquisition (Details) - AGI $ in Millions	Jul. 02, 2019 USD ($) shares
Purchased intangible assets
Purchase price | $	$ 10.8
Number of shares held in escrow account (in shares) | shares	114,943
Period in which shares held in escrow account	18 months

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Acquisition - Purchase price allocation (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Mar. 31, 2020	Jul. 02, 2019
Acquisition
Intangible assets			$ 3,710
Goodwill	$ 20,590	$ 20,590
AGI
Acquisition
Cash			664
Trade accounts receivable			905
Unbilled accounts receivable			347
Right-of-use assets			863
Property and equipment			357
Intangible assets			3,710
Goodwill			5,440
Other assets			161
Total assets acquired			12,447
Accounts payable			(378)
Accrued payroll and related expenses			(426)
Lease liabilities			(863)
Total liabilities assumed			(1,667)
Total purchase price			$ 10,780

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Acquisition - Fair values and useful lives of the identifiable intangible assets (Details) $ in Thousands	Jul. 02, 2019 USD ($)
Intangible Assets
Total intangible assets assumed	$ 3,710
Customer relationships
Intangible Assets
Total intangible assets assumed	$ 3,500
Weighted average useful life	6 years
Non-compete agreement
Intangible Assets
Total intangible assets assumed	$ 210
Weighted average useful life	3 years

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Acquisition - Acquisition-Related Costs (Details) - AGI - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended		6 Months Ended
	Jul. 02, 2019	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Acquisition
Retention bonuses	$ 1,700
Per share amount of granted shares (in dollars per share)	$ 5.22
Amount of retention bonuses payable in cash	$ 570
Vesting period	3 years
Stock based compensation and salaries expense		$ 173	$ 440	$ 352	$ 596

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Acquisition - Pro Forma Financial Information (Details) $ / shares in Units, $ in Thousands	6 Months Ended
	Sep. 30, 2019 USD ($) $ / shares
Business Combinations [Abstract]
Pro forma revenue | $	$ 56,705
Pro forma net loss | $	$ (3,924)
Pro forma net loss per share:
Basic (in dollars per share) | $ / shares	$ (0.10)
Diluted (in dollars per share) | $ / shares	$ (0.10)

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Business Segment Information - Business Segments (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Sep. 30, 2020 USD ($) segment	Sep. 30, 2019 USD ($)	Sep. 30, 2020 USD ($)	Sep. 30, 2019 USD ($)
Business Segments
Number of reportable segments | segment	2
Total revenues	$ 29,256	$ 26,586	$ 57,256	$ 51,753
Segment income	748	(1,213)	1,130	(1,751)
Segment income:
Business Segments
Total revenues	29,256	26,586	57,256	51,753
Segment income	5,378	4,166	10,753	8,064
Product revenues
Business Segments
Total revenues	16,265	13,795	30,659	28,312
Product revenues | Segment income:
Business Segments
Total revenues	16,265	13,795	30,659	28,312
Service revenues
Business Segments
Total revenues	12,991	12,791	26,597	23,441
Service revenues | Segment income:
Business Segments
Total revenues	12,991	12,791	26,597	23,441
Roadway Sensors | Segment income:
Business Segments
Total revenues	14,290	12,555	27,526	25,363
Segment income	3,083	2,224	6,194	4,556
Roadway Sensors | Product revenues | Segment income:
Business Segments
Total revenues	14,135	12,480	27,286	25,251
Roadway Sensors | Service revenues | Segment income:
Business Segments
Total revenues	155	75	240	112
Transportation Systems | Segment income:
Business Segments
Total revenues	14,966	14,031	29,730	26,390
Segment income	2,295	1,942	4,559	3,508
Transportation Systems | Product revenues | Segment income:
Business Segments
Total revenues	2,130	1,315	3,373	3,061
Transportation Systems | Service revenues | Segment income:
Business Segments
Total revenues	$ 12,836	$ 12,716	$ 26,357	$ 23,329

XML

Business Segment Information - Reconciliation of Total Segment (Details) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
	Apr. 30, 2020	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Segment income:
Operating income (loss)		$ 748	$ (1,213)	$ 1,130	$ (1,751)
Unallocated amounts:
Amortization of intangible assets		(230)	(230)	(460)	(296)
Restructuring charges	$ (1,500)	0	0	(619)	0
Segment income:
Segment income:
Operating income (loss)		5,378	4,166	10,753	8,064
Unallocated amounts:
Unallocated amounts:
Corporate expenses		(4,400)	(5,149)	(8,544)	(9,519)
Amortization of intangible assets		(230)	(230)	(460)	(296)
Restructuring charges		$ 0	$ 0	$ (619)	$ 0