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REVENUE | 3 Months Ended
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Mar. 31, 2022
Revenue from Contract with Customer [Abstract] |
REVENUE | NOTE 6 - REVENUE Revenue Recognition and Contract Accounting The Company generates revenue from four sources: (1) Technology Systems; (2) AI Technology which is included in the consolidated statements of operations line-item Technology systems; (3) Technical Support; and (4) Consulting Services which is included in the unaudited consolidated statements of operations line-item Services and consulting. Technology Systems The Company constructs intelligent technology systems consisting of materials and labor under customer contracts. Revenues and related costs on technology systems revenue are recognized based on ASC 606-10-25-27, where control of a good or service transfers over time if the entity’s performance does not create an asset with an alternative use to the entity and the entity has an enforceable right to payment for performance completed to date including a profit margin or reasonable return on capital. Control is deemed to pass to the customer instantaneously as the goods are manufactured and revenue is recognized accordingly. In addition, the Company has adopted ASC 606-10-55-21 such that if the cost incurred is not proportionate to the progress in satisfying the performance obligation, we adjust the input method to recognize revenue only to the extent of the cost incurred. Therefore, the Company will recognize revenue at an equal amount to the cost of the goods to satisfy the performance obligation. Under this method, contract revenues are recognized over the performance period of the contract in direct proportion to the costs incurred. Costs include direct material, direct labor, subcontract labor and other allocable direct costs. All un-allocable indirect costs and corporate general and administrative costs are also charged to the periods as incurred. Any recognized revenues that have not been billed to a customer are recorded as an asset in “contract assets”. Any billings of customers more than recognized revenues are recorded as a liability in “contract liabilities”. However, in the event a loss on a contract is foreseen, the Company will recognize the loss when such loss is determined. A contract is considered complete when all costs except insignificant items have been incurred and the installation is operating according to specifications or has been accepted by the customer. The Company has contracts in various stages of completion. Such contracts require estimates to determine the appropriate cost and revenue recognition. Cost estimates are reviewed periodically on a contract-by-contract basis throughout the life of the contract such that adjustments to the profit resulting from revisions are made cumulative to the date of the revision. Significant management judgments and estimates, including the estimated costs to complete projects, must be made and used in connection with the revenue recognized in the accounting period. Current estimates may be revised as additional information becomes available. Artificial Intelligence The Company has revenue from applications that incorporate artificial intelligence (AI) in the form of predetermined algorithms which provide important operating information to the users of our systems. The revenue generated from these applications of AI consists of a fixed fee related to the design, development, testing and incorporation of new algorithms into the system, which is recognized as revenue at a point in time upon acceptance, as well as an annual application maintenance fee, which revenue is recognized ratably over the contracted maintenance term. Technical Support Maintenance and technical support services are provided on both an as-needed and extended-term basis and may include providing both parts and labor. Maintenance and technical support provided outside of a maintenance contract are on an as-requested basis, and revenue is recognized over time as the services are provided. Revenue for maintenance and technical support provided on an extended-term basis is recognized over time ratably over the term of the contract. For sales arrangements that do not involve multiple performance obligations such as professional services, which are of short-term duration, revenues are recognized when services are completed. Consulting Services The Company’s consulting services business generates revenues under contracts with customers from three sources: (1) Professional Services (consulting and auditing); (2) Software licensing with optional hardware sales; and (3) Customer Service (training and maintenance support).
| (1) | Revenues for professional services, which are of short-term duration, are recognized when services are completed;
| (2) | For all periods reflected in this report, software license sales have been one-time sales of a perpetual license to use our software product and the customer also has the option to purchase third-party manufactured handheld devices from us if they purchase our software license. Accordingly, the revenue is recognized at a point in time upon delivery of the software and delivery of the hardware, as applicable, to the customer;
| (3) | Training sales are one-time upfront short-term training sessions and are recognized at a point in time after the service has been performed; and
| (4) | Maintenance/support is an optional product sold to our software license customers under one-year contracts. Accordingly, maintenance payments received upfront are deferred and recognized over time ratably over the contract term.
Contract assets and contract liabilities on uncompleted contracts for revenues recognized over time are as follow: Contract Assets Contract assets on uncompleted contracts represent revenues recognized in excess of billings and/or cash received on uncompleted contracts accounted for under the cost-to-cost input method, which recognizes revenue based on the ratio of cost incurred to total estimated costs. At March 31, 2022 and December 31, 2021, contract assets on uncompleted contracts consisted of the following:
Schedule Of Contract Assets On Uncompleted Contracts |  |  |  |  |  |
|  | March 31, 2022 |  |  | December 31, 2021 |
Cumulative revenues recognized |  | $ | 348,826 |  |  | $ | 5,266,930 |
Less: Billings or cash received |  |  | (81,154 | ) |  |  | (5,263,481 | )
Contract assets |  | $ | 267,672 |  |  | $ | 3,449 |
Contract Liabilities Contract liabilities, on uncompleted contracts represent billings and/or cash received that exceed accumulated revenues recognized on uncompleted contracts accounted for under the cost-to-cost input method, which recognizes revenues based on the ratio of the cost incurred to total estimated costs. Contract liabilities, services and consulting revenues represent billings or cash received in excess of revenue recognizable on service agreements that are not accounted for under the cost to cost method. At March 31, 2022 and December 31, 2021, contract liabilities on uncompleted contracts and contract liabilities on services and consulting consisted of the following:
Schedule of Contract Liabilities on Uncompleted Contracts |  |  |  |  |  |
|  | March 31, 2022 |  |  | December 31, 2021 |
Billings and/or cash receipts on uncompleted contracts |  | $ | 2,243,607 |  |  | $ | 4,273,726 |
Less: Cumulative revenues recognized |  |  | (1,387,734 | ) |  |  | (3,041,088 | )
Contract liabilities, technologies systems |  |  | 855,873 |  |  |  | 1,232,638 |
Contract liabilities, services and consulting |  |  | 1,508,145 |  |  |  | 596,673 |
Total contract liabilities |  | $ | 2,364,018 |  |  | $ | 1,829,311 |
The Company expects to recognize all contract liabilities within 12 months from the consolidated balance sheet date. Disaggregation of Revenue The Company is following the guidance of ASC 606-10-55-296 and 297 for disaggregation of revenue. Accordingly, revenue has been disaggregated according to the nature, amount, timing and uncertainty of revenue and cash flows. We are providing qualitative and quantitative disclosures. Qualitative:
| 1. | We have four distinct revenue sources:
| a. | Turnkey, engineered projects;
| b. | Associated maintenance and support services;
| c. | Licensing and professional services related to auditing of data center assets; and
| d. | Predetermined algorithms to provide important operating information to the users of our systems.
| 2. | We currently operate in North America including the USA, Mexico and Canada.
| 3. | Our customers include rail transportation, commercial, government, banking and IT suppliers.
| 4. | Our contracts are fixed price and fall into two duration types:
| a. | Turnkey engineered projects and professional service contracts that are less than one year in duration and are typically two to three months in length; and
| b. | Maintenance and support contracts ranging from one to five years in length.
| 5. | Transfer of goods and services are over time.
| 6. | Goods delivered at point in time.
Quantitative: For the Three Months Ended March 31, 2022
Disaggregation of Revenue |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Segments |  | Rail |  |  | Commercial |  |  | Government |  |  | Artificial Intelligence |  |  | Total |
Primary Geographical Markets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
North America |  | $ | 1,007,273 |  |  | $ | 17,300 |  |  | $ | 152,142 |  |  | $ | 262,601 |  |  | $ | 1,439,316 |
Major Goods and Service Lines |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Turnkey Projects |  | $ | 520,657 |  |  | $ | (498 | ) |  | $ | 131,921 |  |  | $ | — |  |  | $ | 652,080 |
Maintenance and Support |  |  | 486,616 |  |  |  | 17,798 |  |  |  | 20,221 |  |  |  | 131,412 |  |  |  | 656,047 |
Software License |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Algorithms |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 131,189 |  |  |  | 131,189 |
|  | $ | 1,007,273 |  |  | $ | 17,300 |  |  | $ | 152,142 |  |  | $ | 262,601 |  |  | $ | 1,439,316 |
Timing of Revenue Recognition |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Goods transferred over time |  | $ | 520,657 |  |  | $ | (498 | ) |  | $ | 131,921 |  |  | $ | — |  |  | $ | 652,080 |
Goods delivered at point in time |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 131,189 |  |  |  | 131,189 |
Services transferred over time |  |  | 486,616 |  |  |  | 17,798 |  |  |  | 20,221 |  |  |  | 131,412 |  |  |  | 656,047 |
|  | $ | 1,007,273 |  |  | $ | 17,300 |  |  | $ | 152,142 |  |  | $ | 262,601 |  |  | $ | 1,439,316 |
For the Three Months Ended March 31, 2021
Segments |  | Rail |  |  | Commercial |  |  | Government |  |  | Banking |  |  | IT Suppliers |  |  | Artificial Intelligence |  |  | Total |
Primary Geographical Markets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
North America |  | $ | 1,757,446 |  |  | $ | 55,842 |  |  | $ | 28,560 |  |  | $ | 22,829 |  |  | $ | 132,977 |  |  | $ | 157,100 |  |  | $ | 2,154,754 |
Major Goods and Service Lines |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Turnkey Projects |  | $ | 1,323,322 |  |  | $ | — |  |  | $ | 8,339 |  |  | $ | 1,537 |  |  | $ | — |  |  | $ | — |  |  | $ | 1,333,198 |
Maintenance and Support |  |  | 434,124 |  |  |  | 55,842 |  |  |  | 20,221 |  |  |  | 21,292 |  |  |  | — |  |  |  | — |  |  |  | 531,479 |
Data Center Auditing Services |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 130,592 |  |  |  | — |  |  |  | 130,592 |
Software License |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 2,385 |  |  |  | — |  |  |  | 2,385 |
Algorithms |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 157,100 |  |  |  | 157,100 |
|  | $ | 1,757,446 |  |  | $ | 55,842 |  |  | $ | 28,560 |  |  | $ | 22,829 |  |  | $ | 132,977 |  |  | $ | 157,100 |  |  | $ | 2,154,754 |
Timing of Revenue Recognition |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Goods transferred over time |  | $ | 1,323,322 |  |  | $ | — |  |  | $ | 8,339 |  |  | $ | 1,537 |  |  | $ | 132,977 |  |  | $ | — |  |  | $ | 1,466,175 |
Goods delivered point in time |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 157,100 |  |  |  | 157,100 |
Services transferred over time |  |  | 434,124 |  |  |  | 55,842 |  |  |  | 20,221 |  |  |  | 21,292 |  |  |  | — |  |  |  | — |  |  |  | 531,479 |
|  | $ | 1,757,446 |  |  | $ | 55,842 |  |  | $ | 28,560 |  |  | $ | 22,829 |  |  | $ | 132,977 |  |  | $ | 157,100 |  |  | $ | 2,154,754 |

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- Definition The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -URI https://asc.fasb.org/topic&trid=49130388 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 10 -URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130551-203045 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 13 -Subparagraph (b)(2) -URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130556-203045 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130554-203045 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 9 -URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130550-203045 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (e) -URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130554-203045 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130554-203045 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (d) -URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130554-203045 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 15 -URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130558-203045 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (c) -URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130554-203045 + Details
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