4. Customer Concentrations and Accounts Receivable

Accounts receivables are presented on the Condensed Consolidated Balance Sheets, net of estimated credit losses. The Company applies the aging method by pooling receivables based on levels of delinquency and applying historical loss rates on what has been historically uncollectible by aging categories. The historical loss rate is adjusted for current conditions and reasonable and supportable forecasts of future losses, as necessary. Additionally, the allowance for credit loss calculation includes subjective adjustments for qualitative risk factors that could likely cause estimated credit losses to differ from historical experience. The factors include assessments of various economic conditions, significant events that occurred, geographic location, size and credit ratings of the customers. The Company may also record a specific reserve for individual accounts when the Company becomes aware of specific customer circumstances, such as in the case of a bankruptcy filing or deterioration in the customer’s operating results or financial position. Accounts deemed uncollectible are written off against the allowance for credit loss.

In accordance with Accounting Standard Codification (“ASC”) 326, the Company evaluates the collectability of outstanding accounts receivable balances to determine an allowance for credit loss that reflects its best estimate of the current expected credit losses (“CECL”) on a quarterly basis.

Changes in the CECL allowance for accounts receivable are as follows (in thousands):

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E-Finity Distributed Generation (“E-Finity”), Lone Star Power Solutions, LLC (“Lone Star”) and Cal Microturbine, three of the Company’s domestic distributors, accounted for 15%, 14% and 11% of revenue for the three months ended December 31, 2024, respectively. Cal Microturbine accounted for 17% of revenue for the three months ended December 31, 2023. E-Finity and Lone Star accounted for 16% and 13% of revenue for the nine months ended December 31, 2024, respectively. E-Finity and Cal Microturbine accounted for 14% and 11% of revenue for the nine months ended December 31, 2023, respectively.

Additionally, Pan American Energy SL, one of the Company’s international direct customers, Cal Microturbine, Lone Star and E-Finity accounted for 16%, 15%, 14% and 12% of accounts receivable as of December 31, 2024, respectively. Supernova Energy Services SAS (“Supernova”), one of the Company’s international distributors, and Capstone Engineered Solutions (“CES”), one of the Company’s national accounts, accounted for 14% and 11% of accounts receivable as of March 31, 2024, respectively. The Company recorded a credit loss expense of $0.2 million and zero during the three months ended December 31, 2024 and 2023, respectively. The Company recorded a credit loss expense of $0.6 million and zero during the nine months ended December 31, 2024 and 2023, respectively.

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