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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended
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Jun. 30, 2023
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] |
Basis of presentation |
(a) | Basis of presentation
The accompanying consolidated balance sheet as of December 31, 2022, which has been derived from audited financial statements, and the unaudited condensed consolidated financial statements as of June 30, 2023 and for the six months ended June 30, 2023 and 2022 have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and disclosures, which are normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), have been condensed or omitted pursuant to such rules and regulations. Management believes that the disclosures made are adequate to provide a fair presentation. The interim financial information should be read in conjunction with the financial statements and the notes for the fiscal year ended December 31, 2022. The results of operations for the six months ended June 30, 2023 are not necessarily indicative of the results for the full year or any future periods.
Use of estimates |
(b) | Use of estimates
The preparation of the unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires the Company 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 Company’s unaudited condensed consolidated financial statements include provision for doubtful accounts, lower of cost and net realizable value of inventories, impairment losses for long-lived assets and investments, valuation allowance for deferred tax assets and fair value measurement for share-based compensation expense, convertible promissory notes and warrants. 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.
Revenue recognition |
(c) | Revenue recognition
The Company recognizes revenue when goods or services are transferred to customers in an amount that reflects the consideration which it expects to receive in exchange for those goods or services. In determining when and how revenue is recognized from contracts with customers, the Company performs the following five-step analysis: (i) identification of a contract with the customer; (ii) determination of performance obligations; (iii) measurement of the transaction price; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation. The Company generates revenue primarily through sales of light-duty ECVs, sales of ECV parts, and sales of off-road electric vehicles. Revenue is recognized at a point in time once the Company has determined that the customer has obtained control over the product. Revenue is recognized net of return allowance and any taxes collected from customers, which are subsequently remitted to governmental authorities. Significant judgement is required to estimate return allowances. The Company reasonably estimate the possibility of return based on the historical experience, changes in judgments on these assumptions and estimates could materially impact the amount of net revenues recognized. Shipping and handling costs for product shipments occur prior to the customer obtaining control of the goods are accounted for as fulfilment costs rather than separate performance obligations and recorded as sales and marketing expenses. The following table disaggregates the Company’s revenues by product line for the six months ended June 30, 2023 and 2022:
|  | For the Six Months Ended June 30, |
|  | 2023 |  |  | 2022 |
Vehicles sales |  | $ | 7,226,049 |  |  | $ | 4,852,930 |
Spare-parts sales |  |  | 344,702 |  |  |  | 84,626 |
Other service income |  |  | 137,313 |  |  |  | 97,766 |
Net revenues |  | $ | 7,708,064 |  |  | $ | 5,035,322 |
The Company’s revenues are derived from Europe, Asia and America. The following table sets forth disaggregation of revenue by customer location.
|  | For the Six Months Ended June 30, |
|  | 2023 |  |  | 2022 |
Primary geographical markets |  |  |  |
Europe |  | $ | 5,531,486 |  |  | $ | 2,963,630 |
Asia |  |  | 2,079,876 |  |  |  | 1,644,209 |
America |  |  | 96,702 |  |  |  | 427,483 |
Total |  | $ | 7,708,064 |  |  | $ | 5,035,322 |
Contract Balances Timing of revenue recognition was once the Company has determined that the customer has obtained control over the product. Accounts receivable represent revenue recognized for the amounts invoiced and/or prior to invoicing when the Company has satisfied its performance obligation and has an unconditional right to the payment. Contractual liabilities primarily represent the Company’s obligation to transfer additional goods or services to a customer for which the Company has received consideration. The consideration received remains a contractual liability until goods or services have been provided to the customer. For the six months ended June 30, 2023 and 2022, the Company recognized $479,499 and $1,038,005 revenue that was included in contractual liabilities as of December 31, 2022 and 2021, respectively. The following table provides information about receivables and contractual liabilities from contracts with customers:
|  | June 30, 2023 |  |  | December 31, 2022 |
Accounts receivable, net |  | $ | 2,646,333 |  |  | $ | 565,398 |
Contractual liabilities |  | $ | 3,314,661 |  |  | $ | 2,388,480 |
Recently issued accounting standards pronouncements |
(d) | Recently issued accounting standards pronouncement
Except for the ASUs (“Accounting Standards Updates”) issued but not yet adopted disclosed in “Note 2 (z) Recent Accounting Standards” of the Company 2022 Form 10-K, there is no ASU issued by the FASB that is expected to have a material impact on the Company’s consolidated results of operations or financial position.

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