REVENUES

6 Months Ended

Jun. 30, 2024

Revenue from Contract with Customer [Abstract]

REVENUES

3. REVENUES

Nature of the Company’s products and services

The Company’s principal products and services include electric power systems and equipment, distributed energy resources, power generation equipment and mobile EV charging solutions.

Products

The Company’s Electrical Infrastructure business provides electric power systems and equipment and distributed energy resources that help customers effectively and efficiently protect, control, transfer, monitor and manage their electric energy needs.

The Company’s Critical Power business provides customers with power generation equipment and the Company’s suite of mobile e-Boost electric vehicle charging solutions.

Services

Power generation systems represent considerable investments that require proper maintenance and service in order to operate reliably during a time of emergency. The Company’s power maintenance programs provide preventative maintenance, repair and support service for the Company’s customers’ power generation systems.

The timing of revenue recognition, customer billings and cash collections results in accounts receivable, contract assets and deferred revenue at the end of each reporting period. Contract assets include unbilled amounts typically resulting from revenue recognized exceeding amounts billed to customers for contracts utilizing an input method based on the proportion of labor hours incurred as compared to the total estimated labor hours for the fixed-fee contract performance obligations. The Company bills customers as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals, upon achievement of contractual milestones or upon deliveries.

The Company’s principal source of revenue is derived from sales of products and fees for services. The Company measures revenue based upon the consideration specified in the customer arrangement, and revenue is recognized when the performance obligations in the customer arrangement are satisfied. Changes in deferred revenue are generally as a result of the Company’s normal operating cycle and the effect of cumulative catch-up adjustments arising from a change in the measure of progress or a contract modification identified at each reporting period.

A performance obligation is a promise in a contract to transfer a distinct product or service to the customer. The transaction price of a contract is allocated to each distinct performance obligation and recognized as revenue when or as the customer receives the benefit of the performance obligation. Customers typically receive the benefit of the Company’s products when the risk of loss or control for the product transfers to the customer and for services as they are performed. Under ASC 606, revenue is recognized when a customer obtains control of promised products or services in an amount that reflects the consideration the Company expects to receive in exchange for those products or services. To achieve this core principle, the Company applies the following five steps:

1) Identify the contract with a customer

A contract with a customer exists when (i) the Company enters into an enforceable contract with a customer that defines each party’s rights regarding the products or services to be transferred and identifies the payment terms related to these products or services, (ii) the contract has commercial substance and, (iii) the Company determines that collection of substantially all consideration for products or services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration. The Company applies judgment in determining the customer’s ability and intention to pay, which is based on a variety of factors including the customer’s historical payment experience or, in the case of a new customer, published credit and financial information pertaining to the customer.

2) Identify the performance obligations in the contract

Performance obligations promised in a contract are identified based on the products or services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the product or service either on its own or together with other resources that are readily available from third parties or from the Company, and are distinct in the context of the contract, whereby the transfer of the products or services is separately identifiable from other promises in the contract. To the extent a contract includes multiple promised products or services, the Company must apply judgment to determine whether promised products or services are capable of being distinct and distinct in the context of the contract. If these criteria are not met the promised products or services are accounted for as a combined performance obligation.

3) Determine the transaction price

The transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring products or services to the customer. The customer payments are generally due in 30 days.

4) Allocate the transaction price to performance obligations in the contract

If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative standalone selling price basis. The Company determines standalone selling price based on the price at which the performance obligation is sold separately. If the standalone selling price is not observable through past transactions, the Company estimates the standalone selling price taking into account available information such as market conditions and internally approved pricing guidelines related to the performance obligations.

5) Recognize revenue when or as the Company satisfies a performance obligation

The Company satisfies performance obligations either over time or at a point in time. Revenue is recognized at the time the related performance obligation is satisfied by transferring a promised product or service to a customer.

During the three months ended June 30, 2024, the Company recognized $4,676 of revenue over time, as compared to $8,224 during the three months ended June 30, 2023. Additionally, the Company recognized $1,664 and $4,058 of revenue at a point in time from the sale of our products during the three months ended June 30, 2024, and June 30, 2023, respectively.

Service revenues include maintenance contracts that are recognized over time based on the contract term and repair services which are recognized as services are delivered. The Company recognized $2,235 and $1,890 of service revenue during the three months ended June 30, 2024, and June 30, 2023, respectively.

During the six months ended June 30, 2024, the Company recognized $8,833 of revenue over time, as compared to $14,683 during the six months ended June 30, 2023. Additionally, the Company recognized $6,097 and $7,155 of revenue at a point in time from the sale of our products during the six months ended June 30, 2024, and June 30, 2023, respectively.

Service revenues include maintenance contracts that are recognized over time based on the contract term and repair services which are recognized as services are delivered. The Company recognized $4,223 and $3,952 of service revenue during the six months ended June 30, 2024, and June 30, 2023, respectively.

During the three months ended June 30, 2024, the Company recognized approximately $98 of revenue that was classified as deferred revenue as of December 31, 2023, as compared to $3,334 of revenue recognized during the three months ended June 30, 2023, that was classified as deferred revenue as of December 31, 2022, resulting primarily from the progress made on the various active contracts during the respective reporting periods.

During the six months ended June 30, 2024, the Company recognized approximately $2,477 of revenue that was classified as deferred revenue as of December 31, 2023, as compared to $5,966 of revenue recognized during the six months ended June 30, 2023, that was classified as deferred revenue as of December 31, 2022, resulting primarily from the progress made on the various active contracts during the respective reporting periods.

The Company manages its accounts receivable credit risk by performing credit evaluations and monitoring amounts due from the Company’s customers. The Company had certain customers whose revenue individually represented 10% or more of the Company’s total revenue, or whose accounts receivable balances individually represented 10% or more of the Company’s total accounts receivable.

As of June 30, 2024, one customer represented approximately 11% of the Company’s accounts receivable. As of December 31, 2023, one customer represented approximately 23% of the Company’s accounts receivable.

For the three months ended June 30, 2024, one customer represented approximately 10% of the Company’s revenue. For the three months ended June 30, 2023, one customer represented approximately 65% of the Company’s revenue.

For the six months ended June 30, 2024, one customer represented approximately 16% of the Company’s revenue. For the six months ended June 30, 2023, two customers represented approximately 60% and 10% of the Company’s revenue.

Return of a product requires that the buyer obtain permission in writing from the Company. When the buyer requests authorization to return material for reasons of their own, the buyer will be charged for placing the returned goods in saleable condition, restocking charges and for any outgoing and incoming transportation paid by the Company. The Company warrants title to the products, and warrants the products on date of shipment to the buyer, to be of the kind and quality described in the contract, merchantable, and free of defects in workmanship and material. Returns and warranties during the three and six months ended June 30, 2024, and June 30, 2023, were insignificant.

The following table presents our revenues disaggregated by revenue discipline:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2024		2023 (As Restated)		2024		2023 (As Restated)
Products	$	4,105	$	10,392	$	10,707	$	17,886
Services		2,235		1,890		4,223		3,952
Total revenue	$	6,340	$	12,282	$	14,930	$	21,838

See “Note 9 - Business Segment and Geographic Information”.