Annual report pursuant to Section 13 and 15(d)

Revenue

v3.19.1
Revenue
12 Months Ended
Dec. 31, 2018
Revenue Recognition and Deferred Revenue [Abstract]  
REVENUE
3. REVENUE

 

Change in Accounting Principle

 

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers (Topic 606)”. The guidance in this ASU affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards (for example, insurance contracts or lease contracts). This guidance requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services.

 

Beginning in January 2018, the Company adopted the provisions of ASU 2014-09 Topic 606 under the modified retrospective method, which requires a cumulative effect adjustment to the opening balance of retained earnings on the date of adoption. This approach was applied to contracts not completed as of December 31, 2017. No significant change to revenue recognition, as previously recognized, was identified. At date of adoption, there was no adjustment to retained earnings related to the adoption of ASU 2014-09. At date of adoption, there was no significant change to our past revenue recognition practices and therefore no adjustment to the opening balance of retained earnings was required.

 

Revenue Recognition

 

Net sales include products and shipping and handling charges, net of estimates for customer allowances. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring products. All revenue is recognized when we satisfy our performance obligations under the contract. We recognize revenue by transferring the promised products to the customer, with the majority of revenue recognized at the point in time the customer obtains control of the products. We recognize revenue for shipping and handling charges at the time the products are delivered to or picked up by the customer. The majority of our contracts have a single performance obligation and are short term in nature.

 

Revenues related to repair and maintenance services are recognized over time as services are provided. Payment for used vehicles, services, and merchandise are typically received at the point when control transfers to the customer or in accordance with payment terms customary to the business.

 

Accounts Receivable

 

Credit is extended based upon an evaluation of the customer’s financial condition. Accounts receivable are stated at their estimated net realizable value. The allowance for doubtful accounts is based on an analysis of customer accounts and our historical experience with accounts receivable write-offs.

 

The Company has elected the following practical expedients allowed under ASU 2014-09:

 

  Performance obligations are satisfied within one year from a given reporting date, consequently we omit disclosure of the transaction price apportioned to remaining performance obligations on open orders

 

Disaggregation of Revenue

 

Our revenues related to the following types of business were as follows for the periods ended December 31:

 

    Year Ended
December 31,
 
    2018     2017  
             
Automotive   $ 498,000     $ 10,038,460  
Aviation     -       -  
Other     265,173       -  
Total revenues   $ 763,173     $ 10,038,460  

 

Automotive Revenue – consists of sales of any of our E-GEN or E-100 platforms. We recognize revenue when control transfers upon shipment to customers in accordance with the new revenue standard as a sale.

 

Aviation – consists of sales of our SureFly multicopter. No sales have been recorded to date. We would recognize revenue when control transfers upon shipment to customers in accordance with the new revenue standard as a sale.

 

Other – consists of our former Delivery Service Protocol program, grant-related research work and non-warranty after-sales vehicle services. There were no significant changes to the timing or amount of revenue recognition as a result of our adoption of the new revenue standard.