| Summary of Significant Accounting Policies | 2.
Summary of Significant Accounting Policies (a)
Basis of Presentation The
accompany unaudited condensed consolidated financial statements of the Group are prepared in conformity with accounting principles generally
accepted in the United States of America (“U.S. GAAP”). The unaudited condensed consolidated financial statements do not
include all the information and disclosures required in the annual financial statements and should be read in conjunction with the Group’s
consolidated financial statements as of December 31, 2023 and accompanying notes in the Company’s Annual Report on Form 10-K for
the fiscal year ended December 31, 2023. In
the opinion of the management, the accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments,
which are necessary for a fair presentation of financial results for the quarterly periods presented. The Company believes that the disclosures
are adequate to make the information presented not misleading. The accompanying unaudited condensed consolidated financial statements
have been prepared using the same accounting policies as used in the preparation of the Group’s consolidated financial statements
for the year ended December 31, 2023. The results of operations for the six months ended June 30, 2024 and 2023 are not necessarily indicative
of the results for the full years or any future periods. (b)
Revenue Recognition The
Group’s accounting practices under Accounting Standards Codification (“ASC”) No. 606, “Revenue from Contracts
with Customers” (“ASC 606” or “Topic 606”) are as followings: Sales
of EVs and kits The
Group generates revenue from sales of EVs and kits, which are electric drive system kits that are integrated into shuttle buses sold
to the customers. EV buyers in California are entitled to government grants when they purchase EV that qualify for certain government
grant project. The Group applies for and collects such government grants on behalf of the customers. Accordingly, customers only pay
the amount after deducting government grants. The
Group recognizes revenue on sales of EVs and kits 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. The Group determined that the government grants 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. Sales
of Transit Buses The
Group recognizes revenue on sales of transit buses 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 when the Company can objectively demonstrate that the criteria specified in
the contractual acceptance provisions are achieved prior to delivery. In cases where the Company cannot objectively demonstrate that
the criteria specified in the contractual acceptance provisions have been achieved prior delivery, revenue is recognized upon acceptance
by the customer. The Group determined that the government grants should be considered as part of the transaction price because it is
granted to the transit buses 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. Lease
of EVs 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 842 Leases, and revenues are recognized on a straight-line basis over the contractual
term. Sales
of forklifts Revenue
on sale of forklifts is recognized at a point in time following the transfer of control of such products to the customer, which typically
occurs upon delivery or acceptance of the customer depending on the terms of the underlying contracts. Other
revenue Other
revenue consists of maintenance service, sales of component and charging stations, sales of forklifts, shipping and delivery fees and
others. For maintenance service, revenues are recognized on a straight-line basis over the contractual term. For sales of component and
charging stations, shipping and delivery fees and others, the Group recognizes revenue at a point in time following the transfer of control
of such products or services to the customer, which typically occurs upon the delivery to the customer. Disaggregation
of revenues The
Group disaggregates its revenue by four primary categories: sales of transit buses, sales of EVs, lease of EVs, sales of forklifts and
others. The
following is a summary of the Group’s disaggregated revenues: Schedule
of Disaggregated Revenues
June
30, 2024 June
30, 2023 June
30, 2024 June
30, 2023
Three Months Ended Six Months Ended
June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023
Sales of transit buses $ 10,585 $ — $ 19,116 $ —
Sales of EVs 233 717 483 1,868
Lease of EVs 45 125 90 215
Sales of Forklifts — 57 39 270
Others 1,169 259 1,724 586
Total $ 12,032 $ 1,158 $ 21,452 $ 2,939 The
following is a summary of the Group’s disaggregated revenues by timing of revenue recognition:
June
30, 2024 June
30, 2023 June
30, 2024 June
30, 2023
Three Months Ended Six Months Ended
June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023
Point in time $ 11,692 $ 904 $ 20,894 $ 2,460
Over time 340 254 5 58 479
Total $ 12,032 $ 1,158 $ 21,452 $ 2,939 A
contract liability is the Group’s obligation to transfer goods or services to a customer for which the Group has received
consideration (or an amount of consideration is due) from the customer. The Group records contract liabilities as advance from
customers and deferred income. As of June 30, 2024 and December 31, 2023, the balances of contract liabilities were $ 5,042 2,743 313 (c) Leases Lessor
Accounting During
the year ended December 31, 2023, the Group amended agreements with the customers related to the leased EVs to renew the lease term.
Since there was no grant of additional right-of-use assets, the Group did not account for the modified lease agreements as new leases
but accounted for the original lease and the modified lease agreements as a combined lease. The Group reviewed the combined lease agreements
and considered that (i) the lease term represents for the major part (greater than 75%) of the economic life of the underlying equipment;
and (ii) the present value of the sum of lease payments and any residual value guaranteed by the lessee that has not already been included
in lease payments equals or exceeds substantially (greater than 90%) all of the fair value of the underlying asset. The
modified EV lease agreements are thus accounted for as sales-type leases. Under sales-type lease accounting, at the commencement date,
the lessor recognizes a net investment in the lease, based on the estimated fair value of the underlying leased assets at contract inception,
and derecognizes the underlying assets with the difference recorded as selling profit or loss arising from the lease, and interest income
from the lease is recognized over the lease term. The
net investment in leases was $ 391 272 nil 99 (d)
Business Combination Business
combinations are recorded using the acquisition method of accounting and, accordingly, the acquired assets and liabilities are recorded
at their fair market value at the date of acquisition. Any excess of acquisition cost over the fair value of the acquired assets and
liabilities, including identifiable intangible assets, is recorded as goodwill. The Group charges acquisition-related costs that are
not part of the purchase price consideration to general and administrative expenses as they are incurred. Those costs typically include
transaction and integration costs, such as legal, accounting, and other professional fees. According
to Business Combination (Topic 805) the Group performs a screen test to evaluate whether a transaction should be accounted for as an
acquisition and/or disposal of a business versus assets. In order for a purchase to be considered an acquisition of a business, and receive
business combination accounting treatment, the set of transferred assets and activities must include, at a minimum, an input and a substantive
process that together significantly contribute to the ability to create outputs. If substantially all of the fair value of the gross
assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets, then the set of transferred
assets and activities is not a business. (e)
Fair Value Measurement The
Group measures at fair value certain of its financial and non-financial assets and liabilities by using a fair value hierarchy that prioritizes
the inputs to valuation techniques used to measure fair value. Fair value is the price that would be received to sell an asset or paid
to transfer a liability in an orderly transaction between market participants at the measurement date, essentially an exit price, based
on the highest and best use of the asset or liability. The levels of the fair value hierarchy are:
● Level
1 — Quoted market prices in active markets for identical assets or liabilities.
● Level
2 — Significant other observable inputs (e.g., quoted prices for similar items in active markets, quoted prices for identical
or similar items in markets that are not active, inputs other than quoted prices that are observable, such as interest rate and yield
curves, and market-corroborated inputs).
● Level
3 — Unobservable inputs in which there is little or no market data, which require the reporting unit to develop its own assumptions. The
Group uses quoted market prices to determine the fair value when available. If quoted market prices are not available, the Group measures
fair value using valuation techniques that use, when possible, current market-based or independently-sourced market parameters, such
as interest rates. The
carrying values of the Group’s financial instruments, including cash and cash equivalents, accounts receivable, prepaid expenses
and other current assets, accounts payables, accrued liabilities and advance from customers, approximate their fair values due to the
short-term nature of these instruments. (f)
Product Warranties Products
Warranties on EVs and Kits The
Group provides warranties on all vehicles or components sold in addition to pass through warranties from third party component suppliers.
The Group accrues a warranty reserve for the products sold by the Group, which includes the Group’s best estimate of the projected
costs to repair or replace items under warranties. These estimates are based on actual claims incurred to date and an estimate of the
nature, frequency and costs of future claims. These estimates are inherently uncertain given the Group’s relatively short history
of sales, and changes to the Group’s historical or projected warranty experience may cause material changes to the warranty reserve
in the future. The Group considers the warranty provided is not providing incremental service to customers rather an assurance to the
quality of the vehicle, and therefore is not a separate performance obligation and should be accounted for in accordance with ASC 460,
Guarantees. Products
Warranties on transit buses and batteries The
Group provides a limited warranty to customers on vehicles, battery systems and components. The limited warranty ranges from one to 12
years depending on the components. Pursuant to these warranties, the Group will repair, replace, or adjust the parts on the products
that are defective in factory supplied materials or workmanship. The Group records a warranty reserve for the products sold at the point
of revenue recognition, which includes the best estimate of the projected costs to repair or replace items under the limited warranty.
These estimates are based on actual claims incurred to date and an estimate of the nature, frequency and costs of future claims. These
estimates are inherently uncertain given the relatively short history of sales. Changes to the historical or projected warranty experience
may cause material changes to the warranty reserve in the future. The portion of the warranty reserve expected to be incurred within
the next 12 months is included within warranty reserve - short term liabilities while the remaining balance is included within warranty
reservice - long term liabilities on the balance sheets. Warranty
expense is recorded as a component of cost of sales in the condensed consolidated statements of operations. The balance of warranty reserves
was $ 14,698 289 (g)
Assets Held-for-Sale The
Group classifies assets to be sold as assets held for sale when (i) the management has approved and commits to a plan to sell the asset,
(ii) the asset is available for immediate sale in its present condition and is ready for sale, (iii) an active program to locate a buyer
and other actions required to sell the asset have been initiated, (iv) the sale of the asset is probable, (v) the asset is being actively
marketed for sale at a price that is reasonable in relation to its current fair value, and (vi) it is unlikely that significant changes
to the plan will be made or that the plan will be withdrawn. Assets classified as held for sale are recorded at the lower of the carrying
amount or fair value less the cost to sell and are reflected as held-for-sale leased assets in the consolidated balance sheets. (h)
Goodwill The
Group assess goodwill for impairment on annual basis in accordance with ASC 350-20, Intangibles – Goodwill and Other: Goodwill,
which permits the Group to first assess qualitative factors to determine whether it is “more likely than not” that the fair
value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the quantitative
impairment test. If this is the case, the quantitative goodwill impairment test is required. If it is more likely-than-not that the fair
value of a reporting unit is greater than its carrying amount, the quantitative goodwill impairment test is not required. Quantitative
goodwill impairment test is used to identify both the existence of impairment and the amount of impairment loss, compares the fair value
of a reporting unit with its carrying amount, including goodwill. If the fair value of the reporting unit is greater than its carrying
amount, goodwill is not considered impaired. If the fair value of the reporting unit is less than its carrying amount, an impairment
loss shall be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. During
the six months ended June 30, 2024, the Group identified impairment indicator resulted from the Company’s continuous decreasing
stock price since January 2024 and performed interim goodwill impairment testing. The Group recorded an impairment on goodwill of $ 4,271 |
