REVENUES

9 Months Ended

Sep. 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 September 30, 2024, the Company recognized $6,607 of revenue over time, as compared to $9,900 during the three months ended September 30, 2023. Additionally, the Company recognized $4,304 and $1,553 of revenue at a point in time from the sale of our products during the three months ended September 30, 2024, and September 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 $2,455 and $2,063 of service revenue during the three months ended September 30, 2024, and September 30, 2023, respectively.

During the nine months ended September 30, 2024, the Company recognized $15,447 of revenue over time, as compared to $24,635 during the nine months ended September 30, 2023. Additionally, the Company recognized $10,394 and $8,656 of revenue at a point in time from the sale of our products during the nine months ended September 30, 2024, and September 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 $6,678 and $6,014 of service revenue during the nine months ended September 30, 2024, and September 30, 2023, respectively.

During the three months ended September 30, 2024, the Company recognized approximately $220 of revenue that was classified as deferred revenue as of December 31, 2023, as compared to $2,569 of revenue recognized during the three months ended September 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 nine months ended September 30, 2024, the Company recognized approximately $2,688 of revenue that was classified as deferred revenue as of December 31, 2023, as compared to $8,535 of revenue recognized during the nine months ended September 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 September 30, 2024, one customer represented approximately 20% 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 September 30, 2024, two customers represented approximately 26% and 10% of the Company’s revenue. For the three months ended September 30, 2023, two customers represented approximately 55% and 12% of the Company’s revenue.

For the nine months ended September 30, 2024, one customer represented approximately 11% of the Company’s revenue. For the nine months ended September 30, 2023, two customers represented approximately 44% and 20% 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 nine months ended September 30, 2024, and September 30, 2023, were insignificant.

The following table presents our revenues disaggregated by revenue discipline:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2024		2023 (As Restated)		2024		2023 (As Restated)
Products	$	8,456	$	9,390	$	19,163	$	27,277
Services		2,455		2,063		6,678		6,014
Total revenue	$	10,911	$	11,453	$	25,841	$	33,291

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

Lease revenues (Topic 842)

ASC 842 revenues pertain to revenues and expenses related to the leasing of electric generators.

The Company accounts for such rentals as operating leases. The lease terms are included in the Company’s contracts, and the determination of whether the Company’s contracts contain leases generally does not require significant assumptions or judgments. The Company’s lease revenues do include variable lease payments based on hours. Revenues attributable to the variable lease payments are recognized when earned. There were no leasing revenues arising from variable lease payments during the three and nine months ended September 30, 2024, and 2023. For the three and nine months ended September 30, 2024, leasing revenues were $559 and $1,305, respectively, and are included in revenue from products. For the three and nine months ended September 30, 2023, leasing revenues were $246 and $719, respectively, and are included in revenue from products.

The Company does not provide an option for the lessee to purchase the rented equipment at the end of the lease. Lessees do not provide residual value guarantees on rented equipment.

The Company expects to derive significant future benefits from its equipment following the end of the rental term. The Company recognizes revenue over the contractual period of performance of the rental term.

The following table presents our lease revenues:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2024		2023		2024		2023
Revenues - leases
Fixed lease revenue	$	559	$	246	$	1,305	$	719
Total revenues - leases	$	559	$	246	$	1,305	$	719