REVENUES

12 Months Ended

Dec. 31, 2021

Revenue from Contract with Customer [Abstract]

REVENUES

NOTE 4. REVENUES

Disaggregation of Revenue

Revenue by type consists of the following:

	Years Ended December 31,
	2021		2020
Revenue type
Product revenue	$	2,419,822	$	1,506,055
Shipping revenue		227,089		94,099
Subscription revenue		-		1,786
Service income		36,686		2,129
	$	2,683,597	$	1,604,069

Contract Liabilities

The Company recognizes a contract liability when a consideration is received, or if the Company has the unconditional right to receive consideration, in advance of satisfying the performance obligation. A contract liability is the Company’s obligation to transfer goods or services to a customer for which the Company has received consideration, or an amount of consideration is due from the customer. The table below details the activity in the Company’s contract liabilities as of December 31, 2021 and 2020. The balance at the end of each period is reported as contract liability in the Company’s consolidated balance sheet.

	December 31,			December 31,
	2021			2020
Balance, beginning of period	$	24,000		$	-
Additions		-			183,319
Transfer to revenue		(24,000	)		(159,319	)
Balance, end of period	$	-		$	24,000

Warranty Reserve

The Company records a reserve for warranty repairs upon the initial delivery of vehicles to its dealer network. The Company provides a product warranty on each vehicle including powertrain, battery pack and electronics package. Such warranty matches the product warranty provided by its supply chain for warranty parts for all unaltered vehicles and is not considered a separate performance obligation. The supply chain warranty does not cover warranty-based labor needed to replace a part under warranty. Warranty reserves include management’s best estimate of the projected cost of labor to repair/replace all items under warranty. The Company reserves a percentage of all dealer-based sales to cover an industry-standard warranty fund to support dealer labor warranty repairs. Such percentage is recorded as a component of cost of revenues in the statement of operations. As of December 31, 2021 and 2020, warranty reserves were recorded within accrued expenses of $240,517 and $43,278, respectively.

AYRO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS