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REVENUES AND CONTRACT ACCOUNTING
 12 Months Ended
Dec. 31, 2022
Revenue from Contract with Customer [Abstract]  
REVENUES AND CONTRACT ACCOUNTING

NOTE 8 – REVENUES 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 consolidated statements of operations line-item Services and Consulting.

 

Contract assets and contract liabilities on uncompleted contracts for revenues recognized over time are as follows:

 

Contract Assets

 

Contract assets on uncompleted contracts represent cumulative 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 costs incurred to total estimated costs.

 

At December 31, 2022 and 2021, contract assets on uncompleted contracts consisted of the following:

 

         
   2022   2021 
Cumulative revenues recognized  $5,934,205   $5,266,930 
Less: Billings or cash received   (5,508,483)   (5,263,481)
Contract Assets  $425,722   $3,449 

 

Contract Liabilities

 

Contract liabilities on uncompleted contracts represent billings and/or cash received that exceed cumulative revenues recognized on uncompleted contracts accounted for under the cost-to-cost input method.

 

Contract liabilities on services and consulting revenues represent billings and/or cash received in excess of revenue recognized on service agreements that are not accounted for under the cost-to-cost input method.

 

The Company expects to recognize all contract liabilities within 12 months from the consolidated balance sheet date.

 

At December 31, 2022 and 2021, contract liabilities on uncompleted contracts consisted of the following:

 

          
   2022   2021 
Billings and/or cash receipts on uncompleted contracts  $4,355,470   $4,473,726 
Less: Cumulative revenues   (4,144,018)   (3,041,088)
Contract liabilities, technology systems  $211,452   $1,232,638 
Contract Liabilities, services and consulting   746,545    596,673 
Total Contract Liabilities  $957,997   $1,829,311 

 

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. Technology Systems (Turnkey, engineered projects);

b. AI Technology (Associated maintenance and support services);

c. Technical Support (Licensing and professional services related to auditing of data center assets); and

d. Consulting Services (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 technology systems and equipment projects fall into two types:

a. Transfer of goods and services are over time.

b. Goods delivered at point in time.

5. Our services & maintenance 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 one to two quarters in length; and

b. Maintenance and support contracts ranging from one to five years in length.

 

Quantitative:

 

For the Year Ended December 31, 2022

 

                                 
Segments  Rail   Commercial   Petrochemical   Government   Banking/Other   IT
Suppliers		   Artificial
Intelligence		   Total 
Primary Geographical Markets                                
North America  $13,710,777   $115,443   $—   $237,414   $—   $—   $948,732   $15,012,366 
                                         
Major Goods and Service Lines                                        
Turnkey Projects  $10,789,693   $9,297   $—   $156,530   $—   $—   $234,772   $11,190,292 
Maintenance & Support   2,921,084    106,146    —    80,884    —    —    —    3,108,114 
Data Center Auditing Services   —    —    —    —    —    —    —    — 
Software License   —    —    —    —    —    —    —    — 
Algorithms   —    —    —    —    —    —    713,960    713,960 
   $13,710,777   $115,443   $—   $237,414   $—   $—   $948,732   $15,012,366 
                                         
Timing of Revenue Recognition                                        
Goods transferred over time  $10,789,693   $9,297   $—   $156,530   $—   $—   $234,772   $11,190,292 
Services transferred over time   2,921,084    106,146    —    80,884    —    —    713,960    3,822,074 
   $13,710,777   $115,443   $—   $237,414   $—   $—   $948,732   $15,012,366 

 

Quantitative:

 

For the Year Ended December 31, 2021

 

Segments  Rail   Commercial   Petrochemical   Government   Banking   IT
Suppliers		   Artificial
Intelligence		   Total 
Primary Geographical Markets                                
North America  $6,883,670   $213,517   $(867)  $314,030   $23,340   $134,717   $691,510   $8,259,917 
                                         
Major Goods and Service Lines                                        
Turnkey Projects  $5,255,491   $27,831   $—   $233,145   $1,537   $—   $—   $5,518,004 
Maintenance & Support   1,628,179    185,686    (867)   80,885    21,803    —    341,915    2,257,601 
Data Center Auditing Services   —    —    —    —    —    131,537    —    131,537 
Software License   —    —    —    —    —    3,180    —    3,180 
Algorithms   —    —    —    —    —    —    349,595    349,595 
   $6,883,670   $213,517   $(867)  $314,030   $23,340   $134,717   $691,510   $8,259,917 
                                         
Timing of Revenue Recognition                                        
Goods transferred over time  $5,255,491   $27,831   $—   $233,145   $1,537   $131,537   $349,595   $5,999,136 
Services transferred over time   1,628,179    185,686    (867)   80,885    21,803    3,180    341,915    2,260,781 
   $6,883,670   $213,517   $(867)  $314,030   $23,340   $134,717   $691,510   $8,259,917 

 

Segment Information

 

The Company operates in one reportable segment.