| Revenue Recognition | Note
3 — Revenue Recognition The
Company recognizes revenue in accordance with Accounting Standard Codification 606, Revenue from Contracts with Customers (ASC 606),
which provides a five-step model for recognizing revenue from contracts with customers as follows:
● Identify
the contract with a customer
● Identify
the performance obligations in the contract
● Determine
the transaction price
● Allocate
the transaction price to the performance obligations in the contract
● Recognize
revenue when or as performance obligations are satisfied The
Company’s revenue is primarily derived from three categories of products and services, (i) the production and assembly of molded
plastic optics parts including polymer and glass parts, opto-mechanicals, thin film coating, diamond turned optics and optical systems
including electro-optics assembly, (“Products”) (ii) the manufacture of custom tooling used to manufacture molded products,
and (“Custom Tooling”) (iii) non-recurring engineering services (“Non-Recurring Engineering’). The Company’s
products are marketed and sold primarily to end-user commercial customers throughout the United States and Europe. Sales of products
and services are subject to economic conditions and may fluctuate based on changes in the industry, trade policies and financial markets. The
Company assesses the contract term as the period in which the parties to the contract have presently enforceable rights and obligations.
Certain customer contracts may provide for either party to terminate the contract upon written notice. Nature
of Products and Services Revenue
from the sale of molded plastic, polymer and glass parts, opto-mechanicals, thin film coating, diamond turned optic and optical systems
is recognized upon transfer of control to the customer, which is typically upon shipment. These sales do not meet the criteria for revenue
to be recognized over time. The Company has elected to treat shipping and handling activities related to contracts with customers as
costs to fulfill the promise to transfer the associated equipment and parts and not as a separate performance obligation. In
general, the Company recognizes revenue from tooling contracts upon delivery and acceptance by the customer, which signifies successful
completion of the contract. Revenue
from non-recurring engineering services is recognized upon completion of the negotiated services. These sales do not meet the criteria
for revenue to be recognized over time. Non-recurring engineering services are one-off items that are unique to programs such as expedite
fees or set-up fees which are billed upon completion of the task with payment terms of 30 - 60 days from date of invoice. SYNTEC
OPTICS HOLDINGS, INC. NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Note
3 — Revenue Recognition (Continued) Transaction
Price The
transaction price is the amount of consideration to which the Company expects to be entitled in exchange for transferring goods and services
to the customer. Revenue is recorded based on the transaction price, which includes fixed consideration. The Company’s contracts
do not include variable consideration. Contract
Balances The
timing of revenue recognition generally aligns with the right to invoice the customer. The Company records accounts receivable when it
has the unconditional right to issue an invoice and receive payment, regardless of whether revenue has been recognized. The balance in
accounts receivable at January 1, 2024 and 2023 was $ 6,800,064 5,925,724 0 348,095 0 18,750 0 460,865 Costs
to Obtain a Contract The
Company did not incur costs of obtaining contracts expected to benefit longer than one year. As a result, there are no Warranties The
buyer shall have thirty (30) days from the date of shipment to inspect and either accept or reject. If goods are rejected, written notice
of rejection and the specific reasons therefore must be sent to the Company within such thirty (30) day period after receipt. Failure
to reject goods or to notify the Company of errors, shortages, or other non-compliance with the agreement within such thirty (30) day
period shall constitute irrevocable acceptance of goods and admission that they fully comply with the agreement. Disaggregated
Revenues The
following table disaggregates revenue by revenue recognition methodologies as outlined above for the three and nine months ended September
30: Schedule
of Disaggregated Revenues
Three
Months Ended Nine
Months Ended
September
30, 2024 September
30, 2023 September
30, 2024 September
30, 2023
Products $ 7,807,975 $ 6,257,407 $ 20,690,178 $ 18,529,993
Custom
Tooling 15,443 211,350 394,148 1,325,411
Non-Recurring
Engineering 42,937 131,768 43,937 1,321,853
Total $ 7,866,355 $ 6,600,525 $ 21,128,263 $ 21,177,257 Syntec
Optics’ management periodically reviews its revenues by its consumer, communication, medical, and defense end-markets. The purpose
of this analysis is to determine its end market mix and identify trends. The following table disaggregates revenue as outlined above
for the three and nine months ended September 30:
Three
Months Ended Nine
Months Ended
September
30, 2024 September
30, 2023 September
30, 2024 September
30, 2023
Consumer $ 961,058 $ 1,646,128 $ 3,644,868 $ 5,056,648
Communication 2,305,316 492,439 6,068,421 1,950,826
Defense 2,021,659 1,961,166 4,442,457 6,467,556
Medical 2,578,322 2,500,792 6,972,517 7,702,227
Total $ 7,866,355 $ 6,600,525 $ 21,128,263 $ 21,177,257 SYNTEC
OPTICS HOLDINGS, INC. NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |
