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REVENUE AND CONTRACT ACCOUNTING | 6 Months Ended
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Jun. 30, 2024
Revenue from Contract with Customer [Abstract] |
REVENUE AND CONTRACT ACCOUNTING | NOTE 7 - 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 June 30, 2024 and December 31, 2023, contract assets on uncompleted contracts consisted of the following:
Schedule of contracts assets on uncompleted contracts |  |  |  |  |  |
|  | June 30, 2024 |  |  | December 31, 2023 |
Cumulative revenues recognized |  | $ | 9,317,704 |  |  | $ | 8,820,256 |
Less: Billings or cash received |  |  | (8,178,309 | ) |  |  | (8,178,309 | )
Contract assets |  | $ | 1,139,395 |  |  | $ | 641,947 |
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 June 30, 2024 and December 31, 2023, contract liabilities on uncompleted contracts and contract liabilities on services and consulting consisted of the following:
Schedule of contract liabilities on uncompleted contracts |  |  |  |  |  |
|  | June 30, 2024 |  |  | December 31, 2023 |
Billings and/or cash receipts on uncompleted contracts |  | $ | 1,264,658 |  |  | $ | 1,264,658 |
Less: Cumulative revenues recognized |  |  | (237,382 | ) |  |  | (199,976 | )
Contract liabilities, technology systems |  |  | 1,027,276 |  |  |  | 1,064,682 |
Contract liabilities, services and consulting |  |  | 2,649,291 |  |  |  | 601,561 |
Total contract liabilities, current |  | $ | 3,676,567 |  |  | $ | 1,666,243 |
Total contract liabilities, services and consulting, non-current |  | $ | 8,495,876 |  |  | $ | — |
Contract liabilities at December 31, 2023 were $1,666,243; of which $37,407 for technology systems and $442,610 in services and consulting have been recognized as of June 30, 2024. The Company expects to recognize all current contract liabilities within 12 months from the respective consolidated balance sheet date. In May 2024, the Company recorded an initial deferred revenue as a contract liability in the amount of $11,161,428 of which $199,008 related to a pilot program was immediately recognized as revenue (See Note 3). This contract liability resulted from a five-year contract with a customer where the Company received non-monetary consideration recorded as intangible assets (See Note 3). This transaction was accounted for under ASC 606-10-32-21 through ASC-606-10-32-24, Non-Cash Consideration. The performance obligations, which include various support and maintenance services will be recognized as revenue pro-rata over time during the five-year contract term. The current contract liabilities of $2,192,483 as of June 30, 2024 relate to the portion of the contract value the Company expects to recognize pro-rata within the next twelve months. The non-current contract liabilities of $8,495,876 as of June 30, 2024 represent the portion of the contract value that is expected to be recognized pro-rata beyond the next twelve months. If the Digital Image License Agreement is terminated prior to the completion of the five-year term, then the customer will pay for the maintenance and support services annually in cash. As of June 30, 2024 the balance in contract liabilities pertaining to the agreement is as follows:
Schedule of balance in contract liabilities |  |  |  |
Calendar Year |  |  | Amount |
| 2024 |  |  | $ | 1,096,241 |
| 2025 |  |  |  | 2,192,484 |
| 2026 |  |  |  | 2,192,484 |
| 2027 |  |  |  | 2,192,484 |
| 2028 |  |  |  | 2,192,484 |
| 2029 |  |  |  | 822,182 |
| Total CN agreement Contract Liabilities |  |  | $ | 10,688,359 |
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 June 30, 2024
Schedule of disaggregation of revenue |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Segments |  | Rail |  |  | Commercial |  |  | Government |  |  | Artificial Intelligence |  |  | Total |
Primary Geographical Markets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
North America |  | $ | 1,510,496 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 1,510,496 |
Major Goods and Service Lines |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Turnkey Projects |  | $ | 264,999 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 264,999 |
Maintenance and Support |  |  | 1,041,661 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,041,661 |
Algorithms |  |  | 203,836 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 203,836 |
|  | $ | 1,510,496 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 1,510,496 |
Timing of Revenue Recognition |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Goods transferred over time |  | $ | 264,999 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 264,999 |
Services transferred over time |  |  | 1,245,497 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,245,497 |
|  | $ | 1,510,496 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 1,510,496 |
For the Three Months Ended June 30, 2023
Segments |  | Rail |  |  | Commercial |  |  | Government |  |  | Artificial Intelligence |  |  | Total |
Primary Geographical Markets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
North America |  | $ | 1,537,286 |  |  | $ | 42,381 |  |  | $ | — |  |  | $ | 190,392 |  |  | $ | 1,770,059 |
Major Goods and Service Lines |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Turnkey Projects |  | $ | 856,942 |  |  | $ | 13,552 |  |  | $ | — |  |  | $ | — |  |  | $ | 870,494 |
Maintenance and Support |  |  | 680,344 |  |  |  | 28,829 |  |  |  | — |  |  |  | — |  |  |  | 709,173 |
Algorithms |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 190,392 |  |  |  | 190,392 |
|  | $ | 1,537,286 |  |  | $ | 42,381 |  |  | $ | — |  |  | $ | 190,392 |  |  | $ | 1,770,059 |
Timing of Revenue Recognition |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Goods transferred over time |  | $ | 856,942 |  |  | $ | 13,552 |  |  | $ | — |  |  | $ | — |  |  | $ | 870,494 |
Services transferred over time |  |  | 680,344 |  |  |  | 28,829 |  |  |  | — |  |  |  | 190,392 |  |  |  | 899,565 |
|  | $ | 1,537,286 |  |  | $ | 42,381 |  |  | $ | — |  |  | $ | 190,392 |  |  | $ | 1,770,059 |
For the Six Months Ended June 30, 2024
Segments |  | Rail |  |  | Commercial |  |  | Government |  |  | Artificial Intelligence |  |  | Total |
Primary Geographical Markets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
North America |  | $ | 2,581,176 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 2,581,176 |
Major Goods and Service Lines |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Turnkey Projects |  | $ | 534,854 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 534,854 |
Maintenance and Support |  |  | 1,643,283 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,643,283 |
Algorithms |  |  | 403,039 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 403,039 |
|  | $ | 2,581,176 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 2,581,176 |
Timing of Revenue Recognition |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Goods transferred over time |  | $ | 534,854 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 534,854 |
Services transferred over time |  |  | 2,049,322 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 2,046,322 |
|  | $ | 2,581,176 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 2,581,176 |
For the Six Months Ended June 30, 2023
Segments |  | Rail |  |  | Commercial |  |  | Government |  |  | Artificial Intelligence |  |  | Total |
Primary Geographical Markets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
North America |  | $ | 3,913,735 |  |  | $ | 71,212 |  |  | $ | 11,353 |  |  | $ | 418,047 |  |  | $ | 4,414,347 |
Major Goods and Service Lines |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Turnkey Projects |  | $ | 2,684,706 |  |  | $ | 13,552 |  |  | $ | — |  |  | $ | — |  |  | $ | 2,698,258 |
Maintenance and Support |  |  | 1,229,029 |  |  |  | 57,660 |  |  |  | 11,353 |  |  |  | — |  |  |  | 1,298,042 |
Algorithms |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 418,047 |  |  |  | 418,047 |
|  | $ | 3,913,735 |  |  | $ | 71,212 |  |  | $ | 11,353 |  |  | $ | 418,047 |  |  | $ | 4,414,347 |
Timing of Revenue Recognition |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Goods transferred over time |  | $ | 2,684,706 |  |  | $ | 13,552 |  |  | $ | — |  |  | $ | — |  |  | $ | 2,698,258 |
Services transferred over time |  |  | 1,229,029 |  |  |  | 57,660 |  |  |  | 11,353 |  |  |  | 418,047 |  |  |  | 1,716,089 |
|  | $ | 3,913,735 |  |  | $ | 71,212 |  |  | $ | 11,353 |  |  | $ | 418,047 |  |  | $ | 4,414,347 |

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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 -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 9 -Publisher FASB -URI https://asc.fasb.org/1943274/2147479806/606-10-50-9 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 10 -Publisher FASB -URI https://asc.fasb.org/1943274/2147479806/606-10-50-10 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 15 -Publisher FASB -URI https://asc.fasb.org/1943274/2147479806/606-10-50-15 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479806/606-10-50-12 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479806/606-10-50-12 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12 -Subparagraph (c) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479806/606-10-50-12 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12 -Subparagraph (d) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479806/606-10-50-12 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12 -Subparagraph (e) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479806/606-10-50-12 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 13 -Subparagraph (b)(2) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479806/606-10-50-13 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Name Accounting Standards Codification -Topic 606 -Publisher FASB -URI https://asc.fasb.org/606/tableOfContent + Details
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