Revenue Recognition

In accordance with ASC, Topic 606, Revenue from Contracts with Customers, revenue is recognized when control of the promised goods or services is transferred to its customers. The amount of revenue recognized reflects the consideration to which we expect to be entitled to receive in exchange for these goods and services.

The core principle of the standard is that we should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services. To achieve that core principle, we apply the following five step model:

1.Identify the contract with the customer; 

2.Identify the performance obligations in the contract; 

3.Determine the transaction price; 

4.Allocate the transaction price to the performance obligations in the contract; and 

5.Recognize revenue when (or as) each performance obligation is satisfied. 

The Company recognizes revenue when: (1) persuasive evidence of an arrangement exists; (2) delivery has completed; (3) the selling price is fixed or determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on management’s judgments regarding the fixed nature of the selling prices of the products delivered and the collectability of those amounts. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related revenue is recorded.

Food & Beverage and Delivery

We provide food and beverage sales and delivery services. Control of services is passed to customers when the food and beverages are transferred to the customers. Transaction price includes mainly delivery fees from delivery services. Payments were received upon receipt of delivery orders. For food and beverage sales and delivery services, we recognize revenue when control of an order of food and beverages is transferred to the customers. Payment terms are short-term in nature. The Company defers any revenue for which the product has not been delivered or services not yet rendered or are subjected to refund until such time that the Company and the customer jointly determine that the product has been delivered or services have been rendered or no refund will be required. Revenue is recognized at a point in time upon the customers received the delivered products.

Graphite Trading

Revenue from sale of graphite products is recognized at the point in time when the control of graphite product is transferred to customers. Transaction price is the sales price agreed with customers net of estimated costs of returns and allowance. Performance obligation is satisfied when customers obtained control of graphite products, and when all significant contractual obligations of the Company have been satisfied, typically upon completion of delivery.

Products are generally sold on open accounts under credit terms customary to the geographic region of distribution. The Company performs ongoing credit evaluations of the customers and generally does not require collateral to secure the accounts receivable.

IT Supporting Services

The Company operates a mobile platform of ordering and delivery services for restaurants and supermarket mainly in Macau. Performance obligation is satisfied when the transactions of delivery services in the mobile platform are closed. Revenue is recognized at a point in time upon such performance obligation is satisfied. Transaction price was the service charge agreed with customers.