Note 4 - Electric Bus Sales

12 Months Ended

Dec. 31, 2016

Notes to Financial Statements

Electric Bus Sales, Disclosure [Text Block]

NOTE

4

– ELECTRIC BUS SALES

On

April

19,

2012,

the Company entered into an Agreement (the “Agreement") with Wu’an Municipal People's Government ("Wu'an") and Handan Municipal People's Government ("Handan Government") regarding the establishment by Altair China of a manufacturing facility in the City of Wu'an, in Hebei Province in China. The Agreement also indicates the purchase by Wu'an and Handan of EV Buses beginning in late

2012

and continuing over

five

years, and the future purchase of electric taxis and energy storage systems.

Pursuant to the Agreement, on

January

6,

2013,

the Company, through its wholly-owned subsidiary, Northern Altair, entered into an EV Buses sale agreement with Wu’an Transport Bureau, the total contract price, with VAT included was

$25.1

million for

165

EV Buses equipped with high efficiency lithium battery.

No

EV Buses were delivered during the year ended

December

31,

2013.

Pursuant to the Agreement, on

May

13,

2014,

the Company, through its wholly-owned subsidiary, Northern Altair, entered into an EV Buses sale agreement with Handan City Public Transportation (“Handan”), the total contract price, with VAT included was

$44.5

million for

200

EV Buses.

During the year ended

December

31,

2014,

the Company delivered

153

EV Buses to Handan and recognized other income of

$28.4

million net of the fair value of the financial guarantee provided for Handan.

During the year ended

December

31,

2015,

the Company delivered

28

EV Buses to Wu’an and

47

EV Buses to Handan and recognized other income of

$11.3

million net of the fair value of the financial guarantee provided for Handan. The unearned financial guaranty premium will be amortized using straight-line amortization method over

10

years.

During the year ended

December

31,

2016,

the Company did

not

deliver any buses to Wu’an.

In connection with the bus sales to Handan, the Company agreed to provide to a

third

-party leasing entity a security deposit equals to

20%

of the contract price. The security deposit is refundable over a

ten

-year period when Handan completes its obligations to the

third

-party leasing entity. The difference between the present value of the refundable security deposit and the gross amount was recorded as current period expense and unearned interest income to the security deposit. The unearned interest income is being amortized straight line over the refund period of

10

years.

In addition, the Company agreed to pay an initial

8%

of the contract price for rebates and to make subsequent quarterly payments, for a

ten

-year period, to a

third

-party leasing company as an incentive. The net present value of the quarterly payments is recorded as current period expense. The difference between the present value of subsequent quarterly payments and the gross amount was recorded as unrecognized interest expense and then amortized over

ten

-year period.

In thousands except for bus delivered quantities:

	Years Ended December 31,
	2016		2015
Buses delivered		-		75
Other income- buses, gross	$	-	$	11,473
Financial guarantee premium		21		(54	)
Other income- buses, net		21		11,419

Other cost of buses purchased from related parties (Note

18)

		-		11,409
Security deposit expense		-		727
Rebates expense		-		1,412
Other expenses- buses	$	-	$	13,548