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REVENUE AND CONTRACT ACCOUNTING
 3 Months Ended
Mar. 31, 2023
Revenue from Contract with Customer [Abstract]  
REVENUE AND CONTRACT ACCOUNTING

NOTE 6 - REVENUE AND CONTRACT ACCOUNTING

 

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 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 cost incurred to total estimated costs.

 

At March 31, 2023 and December 31, 2022, contract assets on uncompleted contracts consisted of the following:

 

        
  

March 31,

2023

  

December 31,

2022

 
Cumulative revenues recognized  $7,144,602   $5,934,205 
Less: Billings or cash received   (5,718,290)   (5,508,483)
Contract assets  $1,426,312   $425,722 

 

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, which recognizes revenues based on the ratio of the cost incurred to total estimated costs.

 

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.

 

At March 31, 2023 and December 31, 2022, contract liabilities on uncompleted contracts and contract liabilities on services and consulting consisted of the following:

 

        
  

March 31,

2023

  

December 31,

2022

 
Billings and/or cash receipts on uncompleted contracts  $323,207   $4,355,470 
Less: Cumulative revenues recognized   (262,988)   (4,144,018)
Contract liabilities, technology systems   60,219    211,452 
Contract liabilities, services and consulting   2,006,642    746,545 
Total contract liabilities  $2,066,861   $957,997 

 

Contract Liabilities at December 31, 2022 were $957,997; of which $151,233 for technology systems and $248,856 in services and consulting has been recognized as of March 31, 2023

 

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. 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 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 Three Months Ended March 31, 2023

  

                     
Segments  Rail   Commercial   Government   Artificial Intelligence   Total 
Primary Geographical Markets                         
                          
North America  $2,376,449   $28,831   $11,353   $227,655   $2,644,288 
                          
Major Goods and Service Lines                         
                          
Turnkey Projects  $1,827,764   $—   $—   $—   $1,827,764 
Maintenance and Support   548,685    28,831    11,353    —    588,869 
Algorithms   —    —    —    227,655    227,655 
   $2,376,449   $28,831   $11,353   $227,655   $2,644,288 
                          
Timing of Revenue Recognition                         
                          
Goods transferred over time  $1,827,764   $—   $—   $—   $1,827,764 
Services transferred over time   548,685    28,831    11,353    227,655    816,524 
   $2,376,449   $28,831   $11,353   $227,655   $2,644,288 

 

For the Three Months Ended March 31, 2022

 

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 
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