| Summary of Significant Accounting Policies | 3. Summary of Significant Accounting Policies
(a) Basis of Presentation The unaudited condensed consolidated
financial statements contained in this Quarterly Report on Form 10-Q have been prepared in accordance with the rules and regulations of
the Securities and Exchange Commission (“SEC”) and, therefore, certain information and disclosures normally included in annual
financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.
GAAP”) have been omitted. In the opinion of management, the information
reflects all adjustments necessary to make the results of operations for the interim periods a fair statement of such operations. All
such adjustments are of a normal recurring nature. Interim results are not necessarily indicative of results for the full year. The condensed
consolidated balance sheet as of December 31, 2021 has been derived from the audited consolidated financial statements at that date but
does not include all information and footnotes required by U.S. GAAP for complete financial statements. These unaudited condensed consolidated
financial statements should be read in conjunction with the audited financial statements included in the Company’s Annual Report
on Form 10-K for the fiscal year ended December 31, 2021.
(b) Use of Estimates The preparation of the unaudited condensed
consolidated financial statements in conformity with U.S. GAAP requires the Group to make estimates and assumptions that affect reported
amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated
financial statements as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ
from those estimates. Significant accounting estimates reflected in the Group’s unaudited condensed consolidated financial statements
include the allowance made for credit losses, inventory write-downs, the estimated useful lives of long-lived assets, the impairment of
goodwill, long-lived assets and project assets, valuation allowance of deferred tax assets, accrued warranty expenses, the grant-date
fair value of share-based compensation awards and related forfeiture rates, the lease discount rate, the purchase price allocation in
acquisition, and fair value of financial instruments. Changes in facts and circumstances may result in revised estimates. The current
economic environment has increased the degree of uncertainty inherent in those estimates and assumptions.
(c) Revenue Recognition The Group’s accounting practices
under Accounting Standards Codification (“ASC”) No. 606 are as followings: The Group generates revenue from sales
of PV components, roofing and solar energy systems installation, electricity revenue with Power Purchase Agreements (“PPAs”),
sales and leasing of EV, and others for the three months ended March 31, 2022 and 2021. Sale of PV components Revenue on sale of PV components is
recognized at a point in time following the transfer of control of such products to the customer, which typically occurs upon shipment
or acceptance of the customer depending on the terms of the underlying contracts. Revenue from roofing and solar energy systems installation
Revenue from roofing and solar energy system installation
is recognized over time . For revenue from solar energy system installation, the Company’s
principal performance obligation is to design and install a customize solar energy system, sometimes, reinstall the customer’s existing
solar energy system that is interconnected to the local power grid and for which permission to operate has been granted by a utility company
to the customer. For roofing the Company’s principal performance obligation is to design and build roof system per customer selection. All costs to obtain and fulfill contracts associated with
system sales and other product sales are expensed to cost of revenue when the corresponding revenue is recognized. The Company recognizes revenue using a cost-based input
method that recognizes revenue and gross profit as work is performed based on the relationship between actual costs incurred compared
to the total estimated cost of the contract. In applying cost-based input method, the Company uses the actual costs incurred to the total
estimated cost, to determine the Company’s progress towards contract completion and to calculate the corresponding amount of revenue
and gross profit to recognize. Electricity revenue with PPAs The Group sells energy generated by
PV solar power systems under PPAs. For energy sold under PPAs, the Group recognizes revenue each period based on the volume of energy
delivered to the customer (i.e., the PPAs off-taker) and the price stated in the PPAs. The Group has determined that none of the PPAs
contains a lease since (i) the purchaser does not have the rights to operate the PV solar power systems, (ii) the purchaser does not have
the rights to control physical access to the PV solar power systems, and (iii) the price that the purchaser pays is at a fixed price per
unit of output. Revenue from sales and leasing of EV The Group recognizes revenue from sales
of EV at a point in time following the transfer of control of such products to the customer, which typically occurs upon the delivery
to the customer for EV sales. The Group determined that the government grants related to sales of EV should be considered as part of the
transaction price because it is granted to the EV buyer and the buyer remains liable for such amount in the event the grants were not
received by the Group or returned due to the buyer violates the government grant terms and conditions. EV leasing revenue includes revenue
recognized under lease accounting guidance for direct leasing programs. The Group accounts for these leasing transactions as operating
leases under ASC 840 Leases, and revenues are recognized on a straight-line basis over the contractual term. Other revenue Other revenue mainly consisted of
revenue generated from sales of component and charging stations, engineering and maintenance service, shipping and delivery service and
other. Disaggregation of revenues The following table illustrates the
disaggregation of revenue by revenue stream and by geographical location for the three months ended March 31, 2022 and 2021:
Schedule of disaggregation of revenues
By revenue stream For the three months ended March 31, 2022 (Unaudited)
Sales of PV components Revenue from roofing and solar systems installation Electricity revenue with PPAs Automotive sales & leasing Others Total
Australia $ 28,024 $ – $ – $ – $ 142 $ 28,166
Italy – – 256 – – 256
United States – 8,789 – 525 141 9,455
United Kingdom – – 151 – – 151
Greece – – 507 – – 507
Total $ 28,024 $ 8,789 $ 914 $ 525 $ 283 $ 38,535
By revenue stream For the three months ended March 31, 2021 (Unaudited)
Sales of PV components Revenue from roofing and solar systems installation Electricity revenue with PPAs Automotive sales & leasing Others Total
Australia $ 28,909 $ – $ – $ – $ 216 $ 29,125
Italy – – 161 – – 161
United States – 3,030 – 384 243 3,657
United Kingdom – – 165 – – 165
Greece – – 514 – – 514
Total $ 28,909 $ 3,030 $ 840 $ 384 $ 459 $ 33,622 Contract balance The following table provides information
about contract assets and contract liabilities from contracts with customers:
Schedule of accounts receivables and contract liabilities
March 31, 2022 (Unaudited) December 31, 2021
Accounts receivable, net $ 24,543 $ 22,599
Contract assets $ 1,279 $ 1,621
Advance from customers $ 5,209 $ 4,924 The contract assets primarily relate
to the Group’s rights to consideration for work completed but not billed at the reporting date, primarily for the revenue from roofing
and solar energy systems installation in the United States. The contract assets are transferred to receivables when the rights become
unconditional after billing is issued. Advance from customers, which representing
a contract liability, represents mostly unrecognized revenue amount received from customers. Advance from customers is recognized as (or
when) the Group performs under the contract. During the three months ended March 31, 2022 and 2021, the Group recognized $ 4,924 1,377
(d) Recent Accounting Pronouncements In August 2020, the FASB issued ASU
No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s
Own Equity (Subtopic 815-40), Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. This guidance eliminates
the beneficial conversion feature and cash conversion models in Accounting Standards Codification (ASC or Codification) 470-20 that require
separate accounting for embedded conversion features in convertible instruments. This guidance also eliminates some of the conditions
that must be met for equity classification under ASC 815-40-25. The new guidance also requires entities to use the if-converted method
to calculate earnings per share (EPS) for all convertible instruments in the diluted EPS calculation and include the effect of potential
share settlement (if the effect is more dilutive) for instruments that may be settled in cash or shares, except for liability-classified
share-based payment awards. ASU No. 2020-06 is effective for annual periods beginning after 15 December 2021 and interim periods therein.
The Group adopted ASU No. 2020-06 on January 1, 2022. The adoption did not have a material impact on the Group’s consolidated financial
statements. Other significant accounting policies are detailed in “Note 3 - Summary of Significant Accounting Policies” of the Company
2021 Form 10-K. |
