Flash Sports & Media Holdings, Inc. Revenue Disclosure

NOTE 3 – REVENUE FROM CONTRACTS WITH CUSTOMERS

 

The Company recognizes revenue predominantly from the sale of equipment systems, construction design-build, and from other various immaterial contracts with customers from its CEA and Commercial sectors. The table below presents the revenue by source for the years ended December 31, 2025 and 2024:

 

		Years ended December 31,
		CEA								Commercial								Total
		2025				2024				2025				2024				2025				2024
Equipment systems		$	8,860,619			$	12,245,675			$	70,607			$	—				8,751,226				12,245,675
Construction design-build			2,709,642				3,230,037				5,757,810				15,374,790				8,467,451				18,604,827
Other			76,673				352,798				104,088				—				180,761				352,798
Total revenues and other income		$	11,466,934			$	15,828,510			$	5,932,505			$	15,374,790			$	17,399,438			$	31,203,300
Relative percentage			66	%			51	%			34	%			49	%			100	%			100	%

 

Under ASC Topic 606, Revenue from Contracts with Customers, a performance obligation is a promise in a contract with a customer, to transfer a distinct good or service to the customer. Equipment systems contracts are lump sum contracts, which require the performance of some, or all, of the obligations under the contract for a specified amount. Service revenue contracts, which include both architectural and engineering designs, generally contain multiple performance obligations which can span across multiple phases of a project and are generally set forth in the contract as distinct milestones. The majority of construction design-build contracts have a single performance obligation, as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contracts and, therefore, not distinct. Some contracts have multiple performance obligations, most commonly due to the contract covering multiple phases of the project life cycle (design and construction).

 

The transaction price for service contracts and construction design-build contracts is allocated to each distinct performance obligation and recognized as revenue when, or as, each performance obligation is satisfied. When there are multiple performance obligations under the same service contract, the Company allocates the transaction price to each performance obligation based on the standalone selling price. In general, payment is fixed at the time of the contract and are not subject to discounts, incentives, payment bonuses, credits, and penalties, unless negotiated in an amendment.

When establishing the selling price to the customer, the Company uses various observable inputs. For equipment systems, the stand-alone selling price is determined by forecasting the expected costs of the products, and then adding in the appropriate margins established by the contract. For service revenues and construction design-build revenues, the Company estimates the selling price by reference to certain physical characteristics of the project, which include the facility size, the complexity of the design, and the mechanical systems involved, which are indicative of the scope and complexity of those services. Significant judgments are typically not required with respect to the determination of the transaction price based on the nature of the selling prices of the products and services delivered and the collectability of those amounts. Accordingly, the Company does not consider estimates of variable consideration to be constrained. Warranty in respect of equipment are directly handled by the manufacturers of the equipment and company does not incur any warranty cost. There are no warranties in respect of the other segments of operations.

 

The Company recognizes equipment systems, services, and construction design-build revenues when the performance obligation with the customer is satisfied. For satisfaction of equipment system revenues the control of the promised good happens either on shipment or on delivery of goods at the delivery point identified by the customer, the Company recognizes revenue when the shipment is made unless a notice of non delivery is received from the customer within the agreed time. For service revenues, satisfaction occurs as the services related to the distinct performance obligations are rendered or completed in exchange for consideration in an amount for which the Company is entitled. The time period between recognition and satisfaction of performance obligations is generally within the same reporting period; thus, there are no material unsatisfied or partially unsatisfied performance obligations for product or service revenues at the end of the reporting period.

 

Construction design-build revenues are recognized as the Company’s obligations are satisfied over time, using the ratio of project costs incurred to estimated total costs for each contract because of the continuous transfer of control to the customer as all of the work is performed at the customer’s site and, therefore, the customer controls the asset as it is being constructed. This continuous transfer of control to the customer is further supported by clauses in the contract that allow the customer to unilaterally terminate the contract for convenience, pay the Company for costs incurred plus a reasonable profit and take control of any work in process. This cost-to-cost measure is used for our construction design-build contracts because management considers it to be the best available measure of progress on these contracts.

 

Contract modifications through change orders, claims and incentives are routine in the performance of the Company’s construction design-build contracts to account for changes in the contract specifications or requirements. In most instances, contract modifications are not distinct from the existing contract due to the significant integration of services provided in the contract and are accounted for as a modification of the existing contract and performance obligation. Either the Company or its customers may initiate change orders, which may include changes in specifications or designs, manner of performance, facilities, equipment, materials, sites and period of completion of the work. Change orders that are unapproved as to both price and scope are evaluated as claims. The Company considers claims to be amounts in excess of approved contract prices that the Company seeks to collect from its customers or others for customer-caused delays, errors in specifications and designs, contract terminations, change orders that are either in dispute or are unapproved as to both scope and price, or other causes of unanticipated additional contract costs.

 

The timing of when the Company bills customers on long-term construction design-build contracts is generally dependent upon agreed-upon contractual terms, which may include milestone billings based on the completion of certain phases of the work, or when services are provided. When as a result of contingencies, billings cannot occur until after the related revenue has been recognized; the result is unbilled revenue, which is included in contract assets. Additionally, the Company may receive advances or deposits from customers before revenue is recognized; the result is deferred revenue, which is included in contract liabilities. Retainage subject to conditions other than the passage of time are included in contract assets and contract liabilities. The payment terms are predominantly based on a standard credit period of 30 days on submission of the proof of completion of work. The contract in certain cases also provides for advances being received which are dealt with in the manner discussed herein.

 

Contract assets represent revenues recognized in excess of amounts paid or payable (contract receivables) to the Company on uncompleted contracts. Contract liabilities represent the Company’s obligation to perform on uncompleted contracts with customers for which the Company has received payment or for which contract receivables are outstanding.

The following table provides information about contract assets and contract liabilities from contracts with customers:

 

 

		December 31,
		2025				2024
Contract assets
Revenue recognized in excess of amounts paid or payable (contract receivables) to the Company on uncompleted contracts (contract asset), excluding retainage		$	4,034,280			$	3,757,641
Retainage included in contract assets due to being conditional on something other than solely passage of time			-				375,176
Less:-Contract receivable write-off			(4,034,280	)			-
Total contract assets		$	-			$	4,132,817
Contract liabilities
Payments received or receivable (contract receivables) in excess of revenue recognized on uncompleted contracts (contract liability), excluding retainage		$	13,353,976			$	13,930,251
Retainage included in contract liabilities due to being conditional on something other than solely passage of time			103,381				163,925
Total contract liabilities		$	13,457,357			$	14,094,176

 

Of the $14,094,176 in total contract liabilities at December 31, 2024, $2,102,857 related to one customer that was recognized as revenue in 2025.

 

For equipment systems contracts, the Company’s predominant policy is to collect deposits from customers at the beginning of the contract and the balance of the contract payment prior to shipping. The Company does, in some cases, collect deposits or retainers as down payments on service contracts. Consumable products orders may be paid for in advance of shipment or for recurring customers with credit, payment terms of 30 days or less may be extended by the Company. Customer payments that have been collected prior to the performance obligation being recognized are recorded as customer deposit liabilities on the balance sheet. When the performance obligation is satisfied and all the criteria for revenue recognition are met, revenue is recognized. In certain situations when the customer has paid the deposit and services have been performed but the customer chooses not to proceed with the contract, the Company is entitled to keep the deposit and recognize revenue. Customer deposits are non-interest-bearing and do not accrue interest payable to customers.

 

During the year ended December 31, 2025, the Company recognized an impairment loss of $4,034,280 on contract assets arising from contracts with customers primarily arising out of work having been completed and revenue recognized in line with the accounting policy but the certainty of collection or right to adjust with advances received not established. The impairment was determined based on management’s assessment of the estimated recoverable amounts considering the Company’s planned merger in the first quarter of 2026, which indicated that the carrying value of certain contract assets was no longer recoverable. The impairment loss has been recognized in general and administrative expenses in the accompanying consolidated statement of operations in accordance with ASC 340-40.

 

During the year ended December 31, 2025, the Company discontinued its service operations, including architectural and engineering design services, as part of the disposition and wind-down of its Services segment. As a result, service revenues are not anticipated in future periods. Refer to Note 4 – Discontinued Operations for further details.