Annual report pursuant to Section 13 and 15(d)

REVENUES AND CONTRACT ACCOUNTING

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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.