Cover
Cover | 9 Months Ended |
Sep. 30, 2023 | |
Cover [Abstract] | |
Document Type | S-1/A |
Amendment Flag | true |
Amendment Description | AMENDMENT NO. 2 |
Entity Registrant Name | DUOS TECHNOLOGIES GROUP, INC. |
Entity Central Index Key | 0001396536 |
Entity Tax Identification Number | 65-0493217 |
Entity Incorporation, State or Country Code | FL |
Entity Address, Address Line One | 7660 Centurion Parkway |
Entity Address, Address Line Two | Suite 100 |
Entity Address, City or Town | Jacksonville |
Entity Address, State or Province | FL |
Entity Address, Postal Zip Code | 33256 |
City Area Code | (904) |
Local Phone Number | 652-1637 |
Entity Filer Category | Non-accelerated Filer |
Entity Small Business | true |
Entity Emerging Growth Company | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 | Dec. 31, 2021 |
CURRENT ASSETS: | |||
Cash | $ 3,266,916 | $ 1,121,092 | $ 893,720 |
Accounts receivable, net | 258,874 | 3,418,263 | 1,738,543 |
Contract assets | 1,346,731 | 425,722 | 3,449 |
Inventory | 1,525,913 | 1,428,360 | 298,338 |
Prepaid expenses and other current assets | 355,978 | 441,320 | 354,613 |
Total Current Assets | 6,754,412 | 6,834,757 | 3,288,663 |
Property and equipment, net | 555,485 | 629,490 | 603,253 |
Operating lease right of use asset | 4,454,714 | 4,689,931 | 4,925,765 |
Security deposit | 550,000 | 600,000 | 600,000 |
Software development costs, net | 793,618 | 265,208 | |
OTHER ASSETS: | |||
Note receivable, net | 151,875 | ||
Patents and trademarks, net | 121,051 | 69,733 | 66,482 |
Total Other Assets | 1,066,544 | 334,941 | |
TOTAL ASSETS | 13,381,155 | 13,089,119 | 9,484,163 |
CURRENT LIABILITIES: | |||
Accounts payable | 619,765 | 2,290,390 | 1,044,500 |
Notes payable - financing agreements | 137,816 | 74,575 | 52,503 |
Accrued expenses | 275,277 | 453,023 | 618,093 |
Equipment financing payable-current portion | 22,851 | 80,335 | |
Operating lease obligations-current portion | 774,306 | 696,869 | 315,302 |
Contract liabilities | 1,588,928 | 957,997 | 1,829,311 |
Total Current Liabilities | 3,396,092 | 4,495,705 | 3,940,044 |
Equipment financing agreement, less current portion | 22,851 | ||
Operating lease obligations, less current portion | 4,310,853 | 4,542,943 | 4,739,783 |
Total Liabilities | 7,706,945 | 9,038,648 | 8,702,678 |
Commitments and Contingencies (Note 4) | |||
STOCKHOLDERS' EQUITY: | |||
Preferred stock, value | |||
Common stock: $0.001 par value; 500,000,000 shares authorized, 7,248,455 and 7,156,856 shares issued, 7,247,131 and 7,155,552 shares outstanding at September 30, 2023 and December 31, 2022, respectively | 7,248 | 7,156 | 4,111 |
Additional paid-in-capital | 66,267,057 | 56,562,600 | 46,431,874 |
Accumulated deficit | (60,442,653) | (52,361,834) | (45,497,051) |
Sub-total | 5,831,662 | 4,207,923 | 938,937 |
Less: Treasury stock (1,324 shares of common stock at September 30, 2023 and December 31, 2022) | (157,452) | (157,452) | (157,452) |
Total Stockholders' Equity | 5,674,210 | 4,050,471 | 781,485 |
Total Liabilities and Stockholders' Equity | 13,381,155 | 13,089,119 | 9,484,163 |
Convertible Series A Preferred Stock [Member] | |||
STOCKHOLDERS' EQUITY: | |||
Preferred stock, value | |||
Convertible Series B Preferred Stock [Member] | |||
STOCKHOLDERS' EQUITY: | |||
Preferred stock, value | 1 | ||
Convertible Series C Preferred Stock [Member] | |||
STOCKHOLDERS' EQUITY: | |||
Preferred stock, value | 2 | ||
Convertible Series D Preferred Stock [Member] | |||
STOCKHOLDERS' EQUITY: | |||
Preferred stock, value | 1 | 1 | |
Convertible Series E Preferred Stock [Member] | |||
STOCKHOLDERS' EQUITY: | |||
Preferred stock, value | 4 | ||
Convertible Series F Preferred Stock [Member] | |||
STOCKHOLDERS' EQUITY: | |||
Preferred stock, value | $ 5 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Sep. 30, 2023 | Dec. 31, 2022 | Dec. 31, 2021 |
Preferred Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 | |
Preferred Stock, Shares Authorized | 10,000,000 | 10,000,000 | 10,000,000 |
[custom:PreferredStocksSharesAvailableToBeDesignated-0] | 9,476,000 | ||
Common Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 | |
Common Stock, Shares Authorized | 500,000,000 | 500,000,000 | |
Common Stock, Shares, Issued | 7,248,455 | 7,156,856 | 4,111,047 |
Common Stock, Shares, Outstanding | 7,247,131 | 7,155,552 | 4,109,723 |
Treasury Stock, Common, Shares | 1,324 | 1,324 | |
[custom:PreferredStockSharesAvailableToBeDesignated-0] | 9,441,000 | ||
Convertible Series A Preferred Stock [Member] | |||
Temporary Equity, Par or Stated Value Per Share | $ 10 | ||
Temporary Equity, Shares Authorized | 500,000 | ||
Temporary Equity, Shares Outstanding | 0 | ||
Preferred Stock, Redemption Price Per Share | $ 6.30 | ||
Convertible Series B Preferred Stock [Member] | |||
Preferred Stock, Par or Stated Value Per Share | $ 1,000 | $ 1,000 | $ 1,000 |
Preferred Stock, Shares Authorized | 15,000 | 15,000 | 15,000 |
Preferred Stock, Redemption Price Per Share | $ 7 | $ 7 | |
Preferred Stock, Shares Outstanding | 0 | 0 | 851 |
Convertible Series C Preferred Stock [Member] | |||
Preferred Stock, Par or Stated Value Per Share | $ 1,000 | $ 1,000 | $ 1,000 |
Preferred Stock, Shares Authorized | 5,000 | 5,000 | 5,000 |
Preferred Stock, Redemption Price Per Share | $ 5.50 | $ 5.50 | $ 5.50 |
Preferred Stock, Shares Outstanding | 0 | 0 | 2,500 |
Convertible Series D Preferred Stock [Member] | |||
Preferred Stock, Par or Stated Value Per Share | $ 1,000 | $ 1,000 | |
Preferred Stock, Shares Authorized | 4,000 | 4,000 | |
Preferred Stock, Redemption Price Per Share | $ 3 | $ 3 | |
Preferred Stock, Shares Outstanding | 1,299 | 1,299 | 0 |
Series A Redeemable Convertible Preferred Stock [Member] | |||
Temporary Equity, Par or Stated Value Per Share | $ 10 | ||
Temporary Equity, Shares Authorized | 500,000 | ||
Temporary Equity, Shares Outstanding | 0 | 0 | |
Preferred Stock, Redemption Price Per Share | $ 6.30 | ||
Convertible Series E Preferred Stock [Member] | |||
Preferred Stock, Par or Stated Value Per Share | $ 1,000 | $ 1,000 | |
Preferred Stock, Shares Authorized | 30,000 | 30,000 | |
Preferred Stock, Redemption Price Per Share | $ 3 | ||
Preferred Stock, Shares Outstanding | 4,000 | 0 | |
Convertible Series F Preferred Stock [Member] | |||
Preferred Stock, Par or Stated Value Per Share | $ 1,000 | $ 1,000 | |
Preferred Stock, Shares Authorized | 5,000 | 5,000 | |
Preferred Stock, Redemption Price Per Share | $ 6.20 | ||
Preferred Stock, Shares Outstanding | 5,000 | 0 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
REVENUES: | ||||||
Total Revenues | $ 1,530,923 | $ 4,022,238 | $ 5,945,270 | $ 9,078,696 | $ 15,012,366 | $ 8,259,917 |
COST OF REVENUES: | ||||||
Total Cost of Revenues | 1,304,335 | 2,922,686 | 4,940,173 | 6,474,464 | 10,264,263 | 6,220,373 |
GROSS MARGIN | 226,588 | 1,099,552 | 1,005,097 | 2,604,232 | 4,748,103 | 2,039,544 |
OPERATING EXPENSES: | ||||||
Sales and marketing | 353,386 | 297,057 | 962,040 | 956,937 | 1,337,186 | 1,233,851 |
Research and development | 450,006 | 329,424 | 1,392,692 | 1,296,480 | 1,651,064 | 2,515,630 |
General and administration | 2,394,173 | 2,342,089 | 6,916,390 | 6,255,926 | 8,625,002 | 5,747,014 |
Total Operating Expenses | 3,197,565 | 2,968,570 | 9,271,122 | 8,509,343 | 11,613,252 | 9,496,495 |
LOSS FROM OPERATIONS | (2,970,977) | (1,869,018) | (8,266,025) | (5,905,111) | (6,865,149) | (7,456,951) |
OTHER INCOME (EXPENSES): | ||||||
Interest expense | (1,406) | (2,057) | (5,816) | (7,943) | (9,191) | (20,268) |
Other income, net | 24,647 | (53,993) | 191,022 | 698 | 9,557 | 1,468,318 |
Total Other Income (Expenses) | 23,241 | (56,050) | 185,206 | (7,245) | 366 | 1,448,050 |
NET LOSS | (2,947,736) | (1,925,068) | (8,080,819) | (5,912,356) | (6,864,783) | (6,008,901) |
Product [Member] | ||||||
REVENUES: | ||||||
Total Revenues | 705,849 | 2,709,899 | 3,404,107 | 6,273,213 | 11,190,292 | 5,871,666 |
COST OF REVENUES: | ||||||
Total Cost of Revenues | 883,836 | 2,176,761 | 3,723,151 | 5,016,551 | 8,376,649 | 4,728,197 |
Service, Other [Member] | ||||||
REVENUES: | ||||||
Total Revenues | 825,074 | 1,312,339 | 2,541,163 | 2,805,483 | 3,822,074 | 2,388,251 |
COST OF REVENUES: | ||||||
Total Cost of Revenues | $ 420,499 | $ 745,925 | $ 1,217,022 | $ 1,457,913 | $ 1,887,614 | $ 1,492,176 |
CONSOLIDATED STATEMENTS OF OP_2
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (Parenthetical) - $ / shares | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
Income Statement [Abstract] | ||||||
Earnings Per Share, Basic | $ (1.11) | $ (1.63) | ||||
Earnings Per Share, Diluted | $ (0.41) | $ (0.30) | $ (1.12) | $ (1.01) | $ (1.11) | $ (1.63) |
Weighted Average Number of Shares Outstanding, Basic | 6,175,193 | 3,694,293 | ||||
Weighted Average Number of Shares Outstanding, Diluted | 7,240,632 | 6,450,180 | 7,189,256 | 5,859,375 | 6,175,193 | 3,694,293 |
STATEMENTS OF CHANGES IN STOCKH
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Unaudited) - USD ($) | Preferred Stock B [Member] | Preferred Stock C [Member] | Preferred Stock D [Member] | Preferred Stock E [Member] | Preferred Stock F [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Treasury Stock, Common [Member] | Total |
Beginning balance, value at Dec. 31, 2020 | $ 2 | $ 3,536 | $ 41,525,872 | $ (39,488,150) | $ (157,452) | $ 1,883,808 | ||||
Beginning balance, shares at Dec. 31, 2020 | 1,705 | 3,535,339 | ||||||||
Stock options granted to employees | 262,411 | 262,411 | ||||||||
Series C Preferred stock issued for cash | $ 4 | 4,499,996 | 4,500,000 | |||||||
Series C Preferred stock issued for cash, shares | 4,500 | |||||||||
Series C preferred stock converted to common stock | $ (2) | $ 364 | (362) | |||||||
Series C preferred stock converted to common stock, shares | (2,000) | 363,636 | ||||||||
Common stock issued for cashless warrants exercised | $ 50 | (50) | ||||||||
Common stock issued for cashless warrants exercised, shares | 50,588 | |||||||||
Common stock issued for services | $ 24 | 144,143 | 144,167 | |||||||
Common stock issued for services, shares | 24,541 | |||||||||
Common stock issued for cashless employee stock options exercised | $ 15 | (15) | ||||||||
Common stock issued for cashless employee stock options exercised ,shares | 14,576 | |||||||||
Rounding-split in 2020 | $ 0 | 0 | 0 | |||||||
Rounding-split in 2020 ,shares | 367 | |||||||||
Series B preferred converted to common stock | $ (1) | $ 122 | (121) | |||||||
Series B convertible preferred converted to common stock, Shares | (854) | 122,000 | ||||||||
Net loss | (6,008,901) | |||||||||
Ending balance, value at Dec. 31, 2021 | $ 1 | $ 2 | $ 4,111 | 46,431,874 | (45,497,051) | (157,452) | 781,485 | |||
Ending balance, shares at Dec. 31, 2021 | 851 | 2,500 | 4,111,047 | |||||||
Stock options compensation | 250,577 | 250,577 | ||||||||
Stock issuance cost | (576,650) | (576,650) | ||||||||
Series C preferred stock converted to common stock | $ (2) | $ 455 | (453) | |||||||
Series C preferred stock converted to common stock, shares | (2,500) | 454,546 | ||||||||
Common stock issued for cash | $ 1,524 | 6,093,476 | 6,095,000 | |||||||
Common stock issued for cash, shares | 1,523,750 | |||||||||
Stock issued for services | $ 7 | 39,993 | 40,000 | |||||||
Stock issued for services, shares | 7,198 | |||||||||
Net loss | (2,644,616) | (2,644,616) | ||||||||
Ending balance, value at Mar. 31, 2022 | $ 1 | $ 6,097 | 52,238,817 | (48,141,667) | (157,452) | 3,945,796 | ||||
Ending balance, shares at Mar. 31, 2022 | 851 | 6,096,541 | ||||||||
Beginning balance, value at Dec. 31, 2021 | $ 1 | $ 2 | $ 4,111 | 46,431,874 | (45,497,051) | (157,452) | 781,485 | |||
Beginning balance, shares at Dec. 31, 2021 | 851 | 2,500 | 4,111,047 | |||||||
Series C preferred stock converted to common stock | $ (2) | $ 455 | (453) | |||||||
Series C preferred stock converted to common stock, shares | (2,500) | 454,546 | ||||||||
Series B preferred converted to common stock | $ (1) | $ 122 | (121) | |||||||
Series B convertible preferred converted to common stock, Shares | (851) | 121,572 | ||||||||
Series D preferred stock issued for cash | $ 1 | 1,298,999 | 1,299,000 | |||||||
Series D preferred stock issued for cash, shares | 1,299 | |||||||||
Stock options compensation | 819,191 | 819,191 | ||||||||
Common stock issued for cash | $ 2,425 | 8,798,579 | 8,801,004 | |||||||
Common stock issued for cash, shares | 2,425,752 | |||||||||
Stock issuance cost | (942,926) | (942,926) | ||||||||
Stock issued for services | $ 43 | 157,457 | 157,500 | |||||||
Stock issued for services, shares | 43,959 | |||||||||
Net loss | (6,864,783) | (6,864,783) | ||||||||
Ending balance, value at Dec. 31, 2022 | $ 1 | $ 7,156 | 56,562,600 | (52,361,834) | (157,452) | 4,050,471 | ||||
Ending balance, shares at Dec. 31, 2022 | 1,299 | 7,156,876 | ||||||||
Beginning balance, value at Mar. 31, 2022 | $ 1 | $ 6,097 | 52,238,817 | (48,141,667) | (157,452) | 3,945,796 | ||||
Beginning balance, shares at Mar. 31, 2022 | 851 | 6,096,541 | ||||||||
Stock options compensation | 188,232 | 188,232 | ||||||||
Stock issued for services | $ 10 | 39,990 | 40,000 | |||||||
Stock issued for services, shares | 10,668 | |||||||||
Net loss | (1,342,672) | (1,342,672) | ||||||||
Ending balance, value at Jun. 30, 2022 | $ 1 | $ 6,107 | 52,467,039 | (49,484,339) | (157,452) | 2,831,356 | ||||
Ending balance, shares at Jun. 30, 2022 | 851 | 6,107,209 | ||||||||
Stock options compensation | 153,367 | 153,367 | ||||||||
Stock issuance cost | (260,816) | (260,816) | ||||||||
Series D preferred stock issued for cash | $ 1 | 998,999 | 999,000 | |||||||
Series D preferred stock issued for cash, shares | 999 | |||||||||
Common stock issued for cash | $ 818 | 2,454,185 | 2,455,003 | |||||||
Common stock issued for cash, shares | 818,335 | |||||||||
Series B preferred stock converted to common stock | $ (1) | $ 122 | (121) | |||||||
Series B preferred stock converted to common stock, shares | (851) | 121,572 | ||||||||
Stock issued for services | $ 10 | 39,990 | 40,000 | |||||||
Stock issued for services, shares | 9,758 | |||||||||
Net loss | (1,925,068) | (1,925,068) | ||||||||
Ending balance, value at Sep. 30, 2022 | $ 1 | $ 7,057 | 55,852,643 | (51,409,407) | (157,452) | 4,292,842 | ||||
Ending balance, shares at Sep. 30, 2022 | 999 | 7,056,874 | ||||||||
Beginning balance, value at Dec. 31, 2022 | $ 1 | $ 7,156 | 56,562,600 | (52,361,834) | (157,452) | 4,050,471 | ||||
Beginning balance, shares at Dec. 31, 2022 | 1,299 | 7,156,876 | ||||||||
Series E preferred stock issued | $ 4 | 3,999,996 | 4,000,000 | |||||||
Series E preferred stock issued, shares | 4,000 | |||||||||
Stock options compensation | 75,128 | 75,128 | ||||||||
Stock issuance cost | (299,145) | (299,145) | ||||||||
Stock issued for services | $ 12 | 32,488 | 32,500 | |||||||
Stock issued for services, shares | 12,463 | |||||||||
Net loss | (2,143,683) | (2,143,683) | ||||||||
Ending balance, value at Mar. 31, 2023 | $ 1 | $ 4 | $ 7,168 | 60,371,067 | (54,505,517) | (157,452) | 5,715,271 | |||
Ending balance, shares at Mar. 31, 2023 | 1,299 | 4,000 | 7,169,339 | |||||||
Stock options compensation | 161,399 | 161,399 | ||||||||
Stock issuance cost | 281,500 | 281,500 | ||||||||
Stock issued for services | $ 6 | 32,494 | 32,500 | |||||||
Stock issued for services, shares | 5,645 | |||||||||
Stock issued under the Employee Stock Purchase Plan for cash and compensation | $ 66 | 183,199 | 183,265 | |||||||
Stock issued under the Employee Stock Purchase Plan for cash and compensation, shares | 65,561 | |||||||||
Net loss | (2,989,400) | (2,989,400) | ||||||||
Ending balance, value at Jun. 30, 2023 | $ 1 | $ 4 | $ 7,240 | 61,029,659 | (57,494,917) | (157,452) | 3,384,535 | |||
Ending balance, shares at Jun. 30, 2023 | 1,299 | 4,000 | 7,240,545 | |||||||
Series F preferred stock issued | $ 5 | 4,999,995 | 5,000,000 | |||||||
Series F preferred stock issued, shares | 5,000 | |||||||||
Stock options compensation | 164,118 | 164,118 | ||||||||
Stock issued for services | $ 8 | 40,557 | 40,565 | |||||||
Stock issued for services, shares | 7,910 | |||||||||
Stock compensation under ESPP | 32,728 | 32,728 | ||||||||
Net loss | (2,947,736) | (2,947,736) | ||||||||
Ending balance, value at Sep. 30, 2023 | $ 1 | $ 4 | $ 5 | $ 7,248 | $ 66,267,057 | $ (60,442,653) | $ (157,452) | $ 5,674,210 | ||
Ending balance, shares at Sep. 30, 2023 | 1,299 | 4,000 | 5,000 | 7,248,455 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
Cash from operating activities: | ||||
Net loss | $ (8,080,819) | $ (5,912,356) | $ (6,864,783) | $ (6,008,901) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||||
Bad debt expense | 0 | 76,046 | ||
Depreciation and amortization | 393,057 | 225,825 | 350,192 | 275,346 |
Loss on disposal of assets | 14,454 | |||
Stock based compensation | 499,590 | 592,177 | 819,191 | 262,411 |
Stock issued for services | 105,565 | 120,000 | 157,500 | 144,167 |
PPP loan forgiveness including accrued interest | (1,421,577) | |||
Amortization of operating lease right of use asset | 235,217 | 198,790 | 235,834 | 250,482 |
Changes in assets and liabilities: | ||||
Accounts receivable | 3,159,389 | (454,431) | (1,679,720) | (611,023) |
Note receivable | (151,875) | |||
Contract assets | (921,009) | (820,938) | (422,273) | 99,009 |
Inventory | (97,552) | (395,787) | (1,130,022) | (185,915) |
Prepaid expenses and other current assets | 543,793 | 15,539 | 266,539 | 423,905 |
Security deposit | 50,000 | (600,000) | ||
Accounts payable | (1,670,625) | 605,129 | 1,245,890 | 445,184 |
Accounts payable-related party | (7,700) | |||
Payroll taxes payable | (3,146) | |||
Accrued expenses | (178,081) | (136,180) | (165,069) | (408,692) |
Operating lease obligation | (154,653) | 60,668 | 184,728 | (127,816) |
Contract liabilities | 630,931 | 2,051,109 | (871,314) | 804,388 |
Net cash used in operating activities | (5,637,072) | (3,850,455) | (7,873,307) | (6,579,378) |
Cash flows from investing activities: | ||||
Purchase of patents/trademarks | (58,208) | (17,490) | (18,190) | (7,435) |
Purchase of software development | (640,609) | (87,700) | (281,783) | |
Purchase of fixed assets | (199,618) | (311,327) | (344,915) | (545,505) |
Net cash used in investing activities | (898,435) | (416,517) | (644,888) | (552,940) |
Cash flows from financing activities: | ||||
Repayments of insurance and equipment financing | (395,221) | (303,492) | (331,175) | (353,444) |
Repayment of finance lease | (22,851) | (69,325) | (80,335) | (89,618) |
Proceeds from common stock issued | 8,550,002 | 8,801,003 | ||
Stock issuance cost | (17,645) | (837,467) | (942,926) | |
Proceeds from shares issued under Employee Stock Purchase Plan | 117,048 | |||
Proceeds from preferred stock issued | 9,000,000 | 999,000 | 1,299,000 | 4,500,000 |
Net cash provided by financing activities | 8,681,331 | 8,338,718 | 8,745,567 | 4,056,938 |
Net increase in cash | 2,145,824 | 4,071,746 | 227,372 | (3,075,380) |
Cash, beginning of period | 1,121,092 | 893,720 | 893,720 | 3,969,100 |
Cash, end of period | 3,266,916 | 4,965,466 | 1,121,092 | 893,720 |
Supplemental Disclosure of Cash Flow Information: | ||||
Interest paid | 5,816 | 8,045 | 9,292 | 30,817 |
Taxes paid | 1,264 | 1,264 | ||
Supplemental Non-Cash Investing and Financing Activities: | ||||
Lease right of use asset and liability | 4,980,104 | |||
Notes issued for financing of insurance premiums | $ 458,452 | $ 353,244 | $ 353,244 | $ 363,005 |
NATURE OF OPERATIONS AND SUMMAR
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended | 12 Months Ended |
Sep. 30, 2023 | Dec. 31, 2022 | |
Accounting Policies [Abstract] | ||
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 1 – NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Operations Duos Technologies Group, Inc. (the “Company”), through its operating subsidiaries, Duos Technologies, Inc. (“Duos”) and TrueVue360, Inc. (“TrueVue360”) (collectively the “Company”), is a company that specializes in machine vision and artificial intelligence to analyze fast moving objects such as trains, trucks, automobiles, and aircraft. This technology can help improve safety, maintenance, and operating metrics. The Company is the inventor of the Railcar Inspection Portal (RIP) and is currently the rail industry leader for machine vision/camera wayside detection systems that include the use of Artificial Intelligence at speeds up to 125 mph. The RIP inspects a train at full speed from the top, sides, and bottom looking at FRA/AAR mandated safety inspection points. The system also detects illegal riders that assists law enforcement agencies. Each rail car is scanned with machine vision cameras and other sensors from the top, sides, and bottom and images are produced within seconds of passing that can be used by the customer to help prevent derailments, improve maintenance operations, and assist with security. The Company self-performs all aspects of hardware, software, IT, and Artificial Intelligence development and engineering and holds several patents and maintains significant intellectual property. The Company also has a proprietary portfolio of over 40 Artificial Intelligence “Use Cases” that automatically flag defects. The Company has deployed this system with several Class 1 and passenger customers and anticipates an increased demand in the future from rail operators, car owners, shippers, and law enforcement agencies. The Company has also developed the Automated Logistics Information System (ALIS) which automates gatehouse operations where trucks enter and exit large logistics and intermodal facilities. This solution also incorporates sensors and data points as necessary for each operation and directly interconnects with backend logistics databases and processes to streamline operations and significantly improve operations and security and, importantly, dramatically improves throughput on each lane on which the technology is deployed. The Company expects to deploy an upgraded Truck Inspection Portal (TIP) which uses the same technology and lessons learned from the ALIS and RIP systems. The Company’s strategy is to expand our existing customer base in the Class 1, short line, and passenger space in North America; expand our subscription offering to car owners and shippers; and expand operations to meet the demand from international customers. The Company has prepared to respond and scale if necessary to react to increased demand from potential regulations that may be imposed around wayside detection technology. In the future the Company may put more emphasis on the trucking and intermodal sector with an updated Truck Inspection Portal solution. The Company continues to focus on operational and technical excellence, customer satisfaction, and maintaining a highly skilled and performance-based work force. Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (all of which are of a normal recurring nature) considered necessary for a fair presentation have been included. Operating results for the nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023 or for any other future period. These unaudited consolidated financial statements and the unaudited condensed notes thereto should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 filed with the Securities and Exchange Commission (the “SEC”) on March 31, 2023. Principles of Consolidation The unaudited consolidated financial statements include Duos Technologies Group, Inc. and its wholly owned subsidiaries, Duos Technologies, Inc. and TrueVue360 Inc. All inter-company transactions and balances are eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from these estimates. The most significant estimates in the accompanying unaudited consolidated financial statements include the allowance on accounts receivable and notes receivable, valuation of common stock warrants received in exchange for an asset sale, valuation of deferred tax assets, valuation of intangible and other long-lived assets, estimates of net contract revenues and the total estimated costs to determine progress towards contract completion, valuation of inventory, estimates of the valuation of right of use assets and corresponding lease liabilities, valuation of warrants issued with debt and valuation of stock-based awards. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. Concentrations Cash Concentrations Cash is maintained at financial institutions and at times, balances may exceed federally insured limits. We have not experienced any losses related to these balances. As of September 30, 2023, the balance in one financial institution exceeded federally insured limits by approximately $ 2,768,466 . Any loss incurred or a lack of access to such funds could have a significant adverse impact on the Company’s consolidated financial condition, results of operation and cash flows. Significant Customers and Concentration of Credit Risk The Company had certain customers whose revenue individually represented 10% or more of the Company’s total revenue, or whose accounts receivable balances individually represented 10% or more of the Company’s total accounts receivable, as follows: For the nine months ended September 30, 2023, two customers accounted for 55 % and 29 % of revenues. For the nine months ended September 30, 2022, four customers accounted for 25 %, 21 %, 19 % and 19 % of revenues. In all cases, there are no minimum contract values stated. Each contract covers an agreement to deliver a Railcar Inspection Portal which, once accepted, must be paid in full, with 30 % or more being due and payable prior to delivery. The balances of the contracts are for service and maintenance which is paid annually in advance with revenues recorded ratably over the contract period. At September 30, 2023, three customers accounted for 52 %, 25 %, and 14 % of accounts receivable. At December 31, 2022, four customers accounted for 34 %, 31 %, 19 % and 10 % of accounts receivable. Much of the credit risk is mitigated since all the customers listed here are Class 1 railroads with a history of timely payments to us. Geographic Concentration For the nine months ended September 30, 2023, approximately 37 % of revenue was generated from three customers outside of the United States. For the nine months ended September 30, 2022, approximately 54 % of revenue was generated from four customers outside of the United States. These customers are Canadian and Mexican, and, for the nine months ended September 30, 2023, two of the three are Class 1 railroads operating in the United States. Significant Vendors and Concentration of Credit Risk In some instances, the Company relies on a limited pool of vendors for key components related to the manufacturing of its subsystems. These vendors are primarily focused on camera, server and lighting technologies integral to the Company’s solution. Where possible, the Company seeks multiple vendors for key components to mitigate vendor concentration risk. Fair Value of Financial Instruments and Fair Value Measurements The Company follows Accounting Standards Codification (“ASC”) 820, “Fair Value Measurements and Disclosures” (“ASC 820”), for assets and liabilities measured at fair value on a recurring basis. ASC 820 establishes a common definition for fair value to be applied to existing generally accepted accounting principles that requires the use of fair value measurements, establishes a framework for measuring fair value and expands disclosure about such fair value measurements. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, ASC 820 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below: Level 1: Observable inputs such as quoted market prices in active markets for identical assets or liabilities. Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data. Level 3: Unobservable inputs for which there is little or no market data, which require the use of the reporting entity’s own assumptions that the market participants would use in the valuation of the asset or liability based on the best available information. The Company analyzes all financial instruments with features of both liabilities and equity under the Financial Accounting Standard Board’s (“FASB”) accounting standard for such instruments. Under this standard, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The estimated fair value of certain financial instruments, including accounts receivable, prepaid expenses, accounts payable, accrued expenses and notes payable are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments. Accounts Receivable On January 1, 2023, the Company adopted ASC 326, “Financial Instruments - Credit Losses”. In accordance with ASC 326, an allowance is maintained for estimated forward-looking losses resulting from the possible inability of customers to make required payments (current expected losses). The amount of the allowance is determined principally on the basis of past collection experience and known financial factors regarding specific customers. Accounts receivable are stated at estimated net realizable value. Accounts receivable are comprised of balances due from customers net of estimated allowances for uncollectible accounts. In determining the collections on the account, historical trends are evaluated, and specific customer issues are reviewed to arrive at appropriate allowances. The Company reviews its accounts to estimate losses resulting from the inability of its customers to make required payments. Any required allowance is based on specific analysis of past due accounts and also considers historical trends of write-offs. Past due status is based on how recently payments have been received from customers. Inventory Inventory consists primarily of spare parts and consumables and long lead time components to be used in the production of our technology systems or in connection with maintenance agreements with customers. Any inventory deemed to be obsolete is written off. Inventory is stated at the lower of cost or net realizable value. Inventory cost is primarily determined using the weighted average cost method. Software Development Costs Software development costs incurred prior to establishing technological feasibility are charged to operations and included in research and development costs. The technological feasibility of a software product is established when the Company has completed all planning, designing, coding, and testing activities that are necessary to establish that the product meets its design specifications, including functionality, features, and technical performance requirements. Software development costs incurred after establishing technological feasibility for software sold as a perpetual license, as defined within ASC 985-20 (Software – Costs of Software to be Sold, Leased, or Marketed), are capitalized and amortized on a product-by-product basis when the product is available for general release to customers. Stock-Based Compensation The Company accounts for employee stock-based compensation in accordance with ASC 718-10, “ Share-Based Payment The Company estimates the fair value of stock options granted using the Black-Scholes option-pricing formula. This fair value is then amortized on a straight-line basis over the requisite service periods of the awards, which is generally the vesting period. The Company’s determination of fair value using an option-pricing model is affected by the stock price as well as assumptions regarding a number of highly subjective variables. The Company estimates volatility based upon the historical stock price of the Company and estimates the expected term for stock options using the simplified method for employees and directors and the contractual term for non-employees. The risk-free rate is determined based upon the prevailing rate of United States Treasury securities with similar maturities. Revenue Recognition The Company follows Accounting Standards Codification 606, Revenue from Contracts with Customers (“ASC 606”), that affects the timing of when certain types of revenues will be recognized. The basic principles in ASC 606 include the following: a contract with a customer creates distinct contract assets and performance obligations, satisfaction of a performance obligation creates revenue, and a performance obligation is satisfied upon transfer of control to a good or service to a customer. Revenue is recognized by evaluating our revenue contracts with customers based on the five-step model under ASC 606: 1. Identify the contract with the customer; 2. Identify the performance obligations in the contract; 3. Determine the transaction price; 4. Allocate the transaction price to separate performance obligations; and 5. Recognize revenue when (or as) each performance obligation is satisfied. The Company generates revenue from four sources: (1) Technology Systems (2) AI Technologies (3) Technical Support (4) Consulting Services Technology Systems For revenues related to technology systems, the Company recognizes revenue over time using a cost-based input methodology in which significant judgment is required to estimate costs to complete projects. These estimated costs are then used to determine the progress towards contract completion and the corresponding amount of revenue to recognize. Accordingly, the Company bases its revenue recognition 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. To accurately reflect revenue recognition based on the input method, the Company has adopted the implementation guidance as set out in ASC-606-10-55-187 through 192. 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 indirect 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 to be both probable and reasonably estimable. AI Technologies 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 is recognized as revenue ratably over the contracted maintenance term. Technical Support 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. Consulting Services The Company’s consulting services business generates revenues under contracts with customers from four sources: (1) Professional Services (consulting and auditing); (2) Software licensing with optional hardware sales; (3) Customer service training and (4) 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 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 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 the contract term. Multiple Performance Obligations and Allocation of Transaction Price Arrangements with customers may involve multiple performance obligations including project revenue and maintenance services in our Technology Systems business. Maintenance will occur after the project is completed and may be provided on an extended-term basis or on an as-needed basis. In our consulting services business, multiple performance obligations may include any of the above four sources. Training and maintenance on software products may occur after the software product sale while other services may occur before or after the software product sale and may not relate to the software product. Revenue recognition for a multiple performance obligations arrangement is as follows: Each performance obligation is accounted for separately when each has value to the customer on a standalone basis and there is Company specific objective evidence of selling price of each deliverable. For revenue arrangements with multiple deliverables, the Company allocates the total customer arrangement to the separate units of accounting based on their relative selling prices as determined by the price of the items when sold separately. Once the selling price is allocated, the revenue for each performance obligation is recognized using the applicable criteria under GAAP as discussed above for performance obligations sold in single performance obligation arrangements. A delivered item or items that do not qualify as a separate unit of accounting within the arrangement are combined with the other applicable undelivered items within the arrangement. The allocation of arrangement consideration and the recognition of revenue is then determined for those combined deliverables as a single unit of accounting. The Company sells its various services and software and hardware products at established prices on a standalone basis which provides Company specific objective evidence of selling price for purposes of performance obligations relative selling price allocation. The Company only sells maintenance services or spare parts based on its established rates after it has completed a system integration project for a customer. The customer is not required to purchase maintenance services. All elements in multiple performance obligations arrangements with Company customers qualify as separate units of account for revenue recognition purposes. Leases The Company follows ASC 842 “Leases”. This guidance requires lessees to recognize right-of-use (“ROU”) assets and lease liabilities for most operating leases. In addition, this guidance requires that lessors separate lease and non-lease components in a contract in accordance with the revenue guidance in ASC 606. The Company made an accounting policy election to not recognize short-term leases with terms of twelve months or less on the balance sheet and instead recognize the lease payments in expense as incurred. The Company has also elected to account for real estate leases that contain both lease and non-lease components as a single lease component. At the inception of a contract the Company assesses whether the contract is, or contains, a lease. The Company’s assessment is based on: (1) whether the contract involves the use of a distinct identified asset, (2) whether we obtain the right to substantially all the economic benefit from the use of the asset throughout the period, and (3) whether we have the right to direct the use of the asset. Operating ROU assets represent the right to use the leased asset for the lease term and operating lease liabilities are recognized based on the present value of minimum lease payments over the lease term at commencement date. As most leases do not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available at the lease commencement date to determine the present value of future payments. The lease term includes all periods covered by renewal and termination options where the Company is reasonably certain to exercise the renewal options or not to exercise the termination options. Operating lease expense is recognized on a straight-line basis over the lease term and is included in general and administration expenses in the consolidated statements of operations. Earnings (Loss) Per Share Basic earnings per share (EPS) are computed by dividing the net loss applicable to common stock by the weighted average number of common shares outstanding. Diluted net loss per common share is computed by dividing the net loss applicable to common stock by the weighted average number of common shares outstanding for the period and, if dilutive, potential common shares outstanding during the period. Potential common shares consist of the incremental common shares issuable upon the exercise or conversion of stock options, stock warrants, convertible debt instruments, convertible preferred stock or other common stock equivalents. Potentially dilutive securities are excluded from the computation if their effect is anti-dilutive. At September 30, 2023, there were (i) an aggregate of 80,091 outstanding warrants to purchase shares of common stock, (ii) employee stock options to purchase an aggregate of 1,217,775 shares of common stock, (iii) 433,000 common shares issuable upon conversion of Series D Convertible Preferred Stock, (iv) 1,333,334 common shares issuable upon conversion of Series E Convertible Preferred Stock, and (v) 806,452 common shares issuable upon conversion of Series F Convertible Preferred Stock, all of which were excluded from the computation of diluted net earnings per share because their inclusion would have been anti-dilutive. At September 30, 2022, there were (i) an aggregate of 1,376,466 outstanding warrants to purchase shares of common stock, (ii) employee stock options to purchase an aggregate of 926,266 shares of common stock and (iii) 333,000 common shares issuable upon conversion of Series D Convertible Preferred Stock, all of which were excluded from the computation of diluted net earnings per share because their inclusion would have been anti-dilutive. Recent Accounting Pronouncements From time to time, the FASB or other standards setting bodies will issue new accounting pronouncements. Updates to the FASB ASC are communicated through issuance of an Accounting Standards Update (“ASU”). In August 2020, the FASB issued an accounting pronouncement (ASU 2020-06) related to the measurement and disclosure requirements for convertible instruments and contracts in an entity's own equity. The pronouncement simplifies and adds disclosure requirements for the accounting and measurement of convertible instruments and the settlement assessment for contracts in an entity's own equity. This pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2023. The Company early adopted this pronouncement for our fiscal year beginning January 1, 2022, and it did not have a material effect on our audited consolidated financial statements. In May 2021, the FASB issued an accounting pronouncement (ASU 2021-04) related to modifications or exchanges of freestanding equity-classified written call options (such as warrants) that remain equity classified after modification or exchange. The pronouncement states that an entity should treat the modification as an exchange of the original instrument for a new instrument, and the effect of the modification should be calculated as the difference between the fair value of the modified instrument and the fair value of that instrument immediately before modification. An entity should then recognize the effect of the modification on the basis of the substance of the transaction, in the same manner as if cash had been paid as consideration. This pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2021. The pronouncement is applied prospectively to all modifications that occur after the initial date of adoption. We adopted this pronouncement for our fiscal year beginning January 1, 2022, and it did not have a material effect on our audited consolidated financial statements. Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying financial statements. | NOTE 1 – NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Operations Duos Technologies Group, Inc. (the “Company”), through its operating subsidiaries, Duos Technologies, Inc. (“Duos”) and TrueVue360, Inc. (“TrueVue360”) (collectively the “Company”), develops and deploys vision based analytical technology solutions that will help to transform precision railroading, logistics and inter-modal transportation operations. Additionally, these unique patented solutions can be employed into many other industries. The Company has developed the Railcar Inspection Portal (RIP) that provides both freight and transit railroad customers and select government agencies the ability to conduct fully automated inspections of trains while they are in transit. The system, which incorporates a variety of sophisticated optical technologies, illumination and other sensors, scans each passing railcar to create an extremely high-resolution image set from a variety of angles including the undercarriage. These images are then processed through various methods of artificial intelligence (“AI”) algorithms to identify specific defects and/or areas of interest on each railcar. This is all accomplished within minutes of a railcar passing through our portal. This solution has the potential to transform the railroad industry by increasing safety, improving efficiency and reducing costs. The Company has successfully deployed this system with several Class 1 railroad customers and anticipates an increased demand in the future. Government agencies can conduct digital inspections combined with the incorporated AI to improve rail traffic flow across borders which also directly benefits the Class 1 railroads through increasing their velocity. The Company has also developed the Automated Logistics Information System (ALIS) which automates and reduces/removes personnel from gatehouses where trucks enter and exit large logistics and intermodal facilities. This solution also incorporates sensors and data points as necessary for each operation and directly interconnects with backend logistics databases and processes to streamline operations and significantly improve operations and security and importantly dramatically improves the vehicle throughput on each lane on which the technology is deployed. The Company has built a portfolio of IP and patented solutions that creates “actionable intelligence” using two core native platforms called Centraco® and Praesidium™. All solutions provided include a variant of both applications. Centraco is designed primarily as the user interface to all our systems as well as the backend connection to third-party applications and databases through both Application Programming Interfaces (APIs) and Software Development Kits (SDKs). This interface is browser based and hosted within each one of our systems and solutions. It is typically also customized for each unique customer and application. Praesidium typically resides as middleware in our systems and manages the various image capture devices and some sensors for input into the Centraco software. The Company also developed a proprietary Artificial Intelligence (AI) software platform, Truevue360™ with the objective of focusing the Company’s advanced intelligent technologies in the areas of AI, deep machine learning and advanced multi-layered algorithms to further support our solutions. Through September 30, 2021, the Company also provided professional and consulting services for large data centers and had developed a system for the automation of asset information marketed as DcVue™. The Company had deployed its DcVue software at one beta site. This software was used by Duos’ consulting auditing teams. DcVue was based upon the Company’s OSPI patent which was awarded in 2010. The Company offered DcVue available for license to our customers as a licensed software product. The Company ceased offering this product in 2021. The Company’s strategy is to deliver operational and technical excellence to our customers, expand our RIP and ALIS solutions into current and new customers focused in the Rail, Logistics and U.S. Government Sectors, offer both one-time equipment sales and capital lease pricing models, and longer-term offer subscription pricing, to customers that increases recurring revenue, grows backlog and improves profitability, responsibly grow the business both organically and through selective acquisitions, and promote a performance-based work force where employees enjoy their work and are incentivized to excel and remain with the Company. Reclassifications The Company reclassified $ 850,999 of Series B Convertible Preferred Stock and $ 2,499,998 of Series C Convertible Preferred Stock as previously presented on the December 31, 2021 Consolidated Balance Sheet to additional paid-in capital to conform to the presentation at December 31, 2022 of new Series D Preferred Stock at par value rather than at stated value. There was no net effect on the total shareholders’ equity of such reclassification. The Company reclassified certain operating expenses for the year ended December 31, 2021 to conform to 2022 classification. There was no net effect on the total expenses of such reclassification. The following table reflects the reclassification adjustment effect for the year ended December 31, 2021: Schedule of reclassifications Before Reclassification After Reclassification For the Year Ended For the Year Ended December 31, December 31, 2021 2021 REVENUES: REVENUES: Technology systems $ 5,871,666 Technology systems $ 5,871,666 Technical support 2,388,251 Services and consulting 2,388,251 Total Revenue 8,259,917 Total Revenue 8,259,917 COST OF REVENUES: COST OF REVENUES: Technology systems 7,151,276 Technology systems 4,728,197 Technical support 1,369,985 Services and consulting 1,492,176 Overhead 2,297,826 — — Total Cost of Revenues 10,819,087 Total Cost of Revenues 6,220,373 GROSS MARGIN (2,559,170) GROSS MARGIN 2,039,544 OPERATING EXPENSES: OPERATING EXPENSES: Sales and marketing 1,233,851 Sales and marketing 1,233,851 Research and development 251,563 Research and development 2,515,630 General and administration 3,412,367 General and administration 5,747,014 Total Operating Expenses 4,897,781 Total Operating Expenses 9,496,495 LOSS FROM OPERATIONS $ (7,456,951 ) LOSS FROM OPERATIONS $ (7,456,951 ) Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Duos Technologies, Inc. and TrueVue360, Inc. All inter-company transactions and balances are eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from these estimates. The most significant estimates in the accompanying consolidated financial statements include the allowance on accounts receivable, valuation of deferred tax assets, valuation of intangible and other long-lived assets, estimates of net contract revenues and the total estimated costs to determine progress towards contract completion, valuation of inventory, estimates of the valuation of right of use assets and corresponding lease liabilities, valuation of warrants and valuation of stock-based awards. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. Concentrations Cash Concentrations Cash is maintained at financial institutions and at times, balances may exceed federally insured limits. We have not experienced any losses related to these balances. As of December 31, 2022, the Company had balances in a financial institution which combined exceeded federally insured limits by approximately $ 688,000 . Any loss incurred or a lack of access to such funds could have a significant adverse impact on the Company’s consolidated financial condition, results of operation and cash flows. Significant Customers and Concentration of Credit Risk The Company had certain customers whose revenue individually represented 10% or more of the Company’s total revenue, or whose accounts receivable balances individually represented 10% or more of the Company’s total accounts receivable, as follows: For the year ended December 31, 2022, four customers accounted for 42 %, 18 %, 14 % and 14 % of revenues. For the year ended December 31, 2021, a single customer accounted for 83 % of revenues. In all cases, there are no minimum contract values stated. Each contract covers an agreement to deliver a rail inspection portal which, once accepted, must be paid in full, with 30% or more being due and payable prior to delivery. The balances of the contracts are for service and maintenance which is paid annually in advance with revenues recorded ratably over the contract period. At December 31, 2022, four customers accounted for 34 %, 31 %, 19 % and 10 % of accounts receivable. At December 31, 2021, two customers accounted for 81 % and 10 % of accounts receivable. Much of the credit risk is mitigated since all of the customers listed here are Class 1 railroads with a history of timely payments to us. Geographic Concentration Approximately 41 % and 86 % of revenue in 2022 and 2021, respectively, is generated from customers outside of the United States. Significant Vendors and Concentration In some instances, the Company relies on a limited pool of vendors for key components related to the manufacturing of its subsystems. These vendors are primarily focused on camera, server and lighting technologies integral to the Company’s solution where possible, the Company seeks multiple vendors for key components to mitigate vendor concentration risk. Fair Value of Financial Instruments and Fair Value Measurements The Company follows Accounting Standards Codification (“ASC”) 820, “Fair Value Measurements and Disclosures” (“ASC 820”), for assets and liabilities measured at fair value on a recurring basis. ASC 820 establishes a common definition for fair value to be applied to existing generally accepted accounting principles that requires the use of fair value measurements, establishes a framework for measuring fair value and expands disclosure about such fair value measurements. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, ASC 820 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below: Level 1: Observable inputs such as quoted market prices in active markets for identical assets or liabilities Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data Level 3: Unobservable inputs for which there is little or no market data, which require the use of the reporting entity’s own assumptions that the market participants would use in the asset or liability based on the best available information. The Company analyzes all financial instruments with features of both liabilities and equity under the Financial Accounting Standard Board’s (“FASB”) accounting standard for such instruments. Under this standard, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The estimated fair value of certain financial instruments, including accounts receivable, prepaid expenses, accounts payable, accrued expenses and notes payable are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments. Accounts Receivable Accounts receivable are stated at estimated net realizable value. Accounts receivable are comprised of balances due from customers net of estimated allowances for uncollectible accounts. In determining the collections on accounts, historical trends are evaluated, and specific customer issues are reviewed to arrive at appropriate allowances. The Company reviews its accounts to estimate losses resulting from the inability of its customers to make required payments. Any required allowance is based on specific analysis of past due accounts and also considers historical trends of write-offs. Past due status is based on how recently payments have been received from customers. Inventory Inventory consists primarily of spare parts, consumables and long-lead components to be used in the production of our technology systems or in connection with maintenance agreements with customers. Inventory is stated at the lower of cost or net realizable value. Any inventory determined to be obsolete is written off. Inventory cost is primarily determined using the weighted average cost method. Property and Equipment Property and equipment are stated at cost, less accumulated depreciation. Depreciation is provided by the straight-line method over the estimated economic life of the property and equipment (three 3 to five 5 years). When assets are sold or retired, their costs and accumulated depreciation are eliminated from the accounts and any gain or loss resulting from their disposal is included in the statement of operations. Leasehold improvements are expensed over the shorter of the term of our lease or their useful lives. Software Development Costs Software development costs incurred prior to establishing technological feasibility are charged to operations and included in research and development costs. The technological feasibility of a software product is established when the Company has completed all planning, designing, coding, and testing activities that are necessary to establish that the product meets its design specifications, including functionality, features, and technical performance requirements. Software development costs incurred after establishing technological feasibility for software sold as a perpetual license, as defined within ASC 985-20 (Software – Costs of Software to be Sold, Leased, or Marketed) are capitalized and amortized on a product-by-product basis when the product is available for general release to customers. Patents and Trademarks Patents and trademarks which are stated at amortized cost, relate to the development of video surveillance security system technology and are being amortized over 17 years. Long-Lived Assets The Company evaluates the recoverability of its property, equipment, and other long-lived assets in accordance with FASB ASC 360-10-35-15 “Impairment or Disposal of Long-Lived Assets”, which requires recognition of impairment of long-lived assets in the event the net book values of such assets exceed the estimated future undiscounted cash flows attributable to such assets or the business to which such intangible assets relate. This guidance requires that long-lived assets and certain identifiable intangibles be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. Product Warranties The Company has a 90 -day warranty period for materials and labor after final acceptance of a project. If any parts are defective they are replaced under our vendor warranty which is usually 12 to 36 months. Final acceptance terms vary by customer. Some customers have a cure period for any material deviation and if the Company fails or is unable to correct any deviations, a full refund of all payments made by the customer will be arranged by the Company. As of December 31, 2022 and 2021, the warranty costs have been de-minimis, therefore no accrual of warranty liability has been made. Loan Costs Loan costs paid to lenders, or third parties are recorded as debt discounts to the related loans and amortized to interest expense over the loan term. Sales Returns Our systems are sold as integrated systems and there are no sales returns allowed. Revenue Recognition The Company follows Accounting Standards Codification 606, Revenue from Contracts with Customers (“ASC 606”), that affects the timing of when certain types of revenues will be recognized. The basic principles in ASC 606 include the following: a contract with a customer creates distinct contract assets and performance obligations, satisfaction of a performance obligation creates revenue, and a performance obligation is satisfied upon transfer of control to a good or service to a customer. Revenue is recognized by evaluating our revenue contracts with customers based on the five-step model under ASC 606: 1. Identify the contract with the customer; 2. Identify the performance obligations in the contract; 3. Determine the transaction price; 4. Allocate the transaction price to separate performance obligations; and 5. Recognize revenue when (or as) each performance obligation is satisfied. The Company generates revenue from four sources: (1) Technology Systems (2) AI Technologies (3) Technical Support (4) Consulting Services Technology Systems For revenues related to technology systems, the Company recognizes revenue over time using a cost-based input methodology in which significant judgment is required to estimate costs to complete projects. These estimated costs are then used to determine the progress towards contract completion and the corresponding amount of revenue to recognize. Accordingly, the Company now bases its revenue recognition 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. To accurately reflect revenue recognition based on the input method, the Company has adopted the implementation guidance as set out in ASC-606-10-55-187 through 192. 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 indirect 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. AI Technologies 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 is recognized as revenue ratably over the contracted maintenance term. Technical Support 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. Consulting Services The Company’s consulting services business generates revenues under contracts with customers from four sources: (1) Professional Services (consulting and auditing); (2) Software licensing with optional hardware sales; (3) Customer service training and (4) 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 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 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 the contract term. Multiple Performance Obligations and Allocation of Transaction Price Arrangements with customers may involve multiple performance obligations including project revenue and maintenance services in our Technology Systems business. Maintenance will occur after the project is completed and may be provided on an extended-term basis or on an as-needed basis. In our consulting services business, multiple performance obligations may include any of the above four sources. Training and maintenance on software products may occur after the software product sale while other services may occur before or after the software product sale and may not relate to the software product. Revenue recognition for a multiple performance obligations arrangement is as follows: Each performance obligation is accounted for separately when each has value to the customer on a standalone basis and there is Company specific objective evidence of selling price of each deliverable. For revenue arrangements with multiple deliverables, the Company allocates the total customer arrangement to the separate units of accounting based on their relative selling prices as determined by the price of the items when sold separately. Once the selling price is allocated, the revenue for each performance obligations is recognized using the applicable criteria under GAAP as discussed above for performance obligations sold in single performance obligation arrangements. A delivered item or items that do not qualify as a separate unit of accounting within the arrangement are combined with the other applicable undelivered items within the arrangement. The allocation of arrangement consideration and the recognition of revenue is then determined for those combined deliverables as a single unit of accounting. The Company sells its various services and software and hardware products at established prices on a standalone basis which provides Company specific objective evidence of selling price for purposes of performance obligations relative selling price allocation. The Company only sells maintenance services or spare parts based on its established rates after it has completed a system integration project for a customer. The customer is not required to purchase maintenance services. All elements in multiple performance obligations arrangements with Company customers qualify as separate units of account for revenue recognition purposes. Advertising The Company expenses the cost of advertising. During the years ended December 31, 2022 and 2021, there were no advertising costs. Stock Based Compensation The Company accounts for employee and non-employee stock-based compensation in accordance with ASC 718-10, “ Share-Based Payment The Company estimates the fair value of stock options granted using the Black-Scholes option-pricing formula. This fair value is then amortized on a straight-line basis over the requisite service periods of the awards, which is generally the vesting period. The Company’s determination of fair value using an option-pricing model is affected by the stock price as well as assumptions regarding a number of highly subjective variables. The Company estimates volatility based upon the historical stock price of the Company and estimates the expected term for employee stock options using the simplified method for employees and directors and the contractual term for non-employees. The risk-free rate is determined based upon the prevailing rate of United States Treasury securities with similar maturities. Income Taxes The Company accounts for income taxes in accordance with the Financial Accounting Standards Board FASB Accounting Standards Codification (“ASC”) 740, Income Taxes, which requires the recognition of deferred income taxes for differences between the basis of assets and liabilities for financial statement and income tax purposes. The deferred tax assets and liabilities represent the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. The Company evaluates all significant tax positions as required by ASC 740. As of December 31, 2022, the Company does not believe that it has taken any positions that would require the recording of any additional tax liability, nor does it believe that there are any unrealized tax benefits that would either increase or decrease within the next year. Any penalties and interest assessed by income taxing authorities are included in operating expenses. The federal and state income tax returns of the Company are subject to examination by the IRS and state taxing authorities, generally for three years after they were filed. Tax years 2019, 2020 and 2021 remain open for potential audit. Earnings (Loss) Per Share Basic earnings per share (EPS) are computed by dividing net loss applicable to common stock by the weighted average number of common shares outstanding. Diluted net loss per common share is computed by dividing the net loss applicable to common stock by the weighted average number of common shares outstanding for the period and, if dilutive, potential common shares outstanding during the period. Potential common shares consist of the incremental common shares issuable upon the exercise of stock options, stock warrants, convertible debt instruments, convertible preferred stock or other common stock equivalents. Potentially dilutive securities are excluded from the computation if their effect is anti-dilutive. At December 31, 2022, there was an aggregate of 147,591 outstanding warrants to purchase shares of common stock. At December 31, 2022, there was an aggregate of 926,266 employee stock options to purchase shares of common stock. At December 31, 2022, 433,000 common shares were issuable upon conversion of Series D Convertible Preferred Stock, all of which were excluded from the computation of dilutive earnings per share because their inclusion would have been anti-dilutive. At December 31, 2021, there was an aggregate of 1,376,466 outstanding warrants to purchase shares of common stock. At December 31, 2021, there was an aggregate of 431,266 employee stock options to purchase shares of common stock. At December 31, 2021, 121,571 common shares were issuable upon conversion of Series B Convertible Preferred Stock, all of which were excluded from the computation of dilutive earnings per share because their inclusion would have been anti-dilutive. Also, at December 31, 2021, 454,546 common shares were issuable upon conversion of Series C Convertible Preferred Stock, all of which were excluded from the computation of dilutive earnings per share because their inclusion would have been anti-dilutive. Leases In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-02, Leases (Topic 842). The updated guidance requires lessees to recognize right-of-use (“ROU”) assets and lease liabilities for most operating leases. In addition, the updated guidance requires that lessors separate lease and non-lease components in a contract in accordance with the new revenue guidance in ASC 606. This guidance is effective for interim and annual reporting periods beginning after December 15, 2018. The Company adopted this guidance effective January 1, 2019, using the modified retrospective method, whereby a cumulative effect adjustment was made as of the date of initial application. The Company also applied the package of practical expedients to leases that commenced before the effective date whereby the Company elected to not reassess the following: (i) whether any expired or existing contracts contain leases and (ii) initial direct costs for any existing leases. The Company made an accounting policy election to not recognize short-term leases with terms of twelve months or less on the balance sheet and instead recognize the lease payments in expense as incurred. The Company has also elected to account for real estate leases that contain both lease and non-lease components as a single lease component. The adoption of ASU 2016-02 did not materially affect our consolidated statement of operations or our consolidated statement of cash flows. For contracts entered into on or after the effective date, at the inception of a contract the Company assesses whether the contract is, or contains, a lease. The Company’s assessment is based on: (1) whether the contract involves the use of a distinct identified asset, (2) whether we obtain the right to substantially all the economic benefit from the use of the asset throughout the period, and (3) whether it has the right to direct the use of the asset. Operating ROU assets represent the right to use the leased asset for the lease term and operating lease liabilities are recognized based on the present value of minimum lease payments over the lease term at commencement date. As most leases do not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available at the lease commencement date to determine the present value of future payments. The lease term includes all periods covered by renewal and termination options where the Company is reasonably certain to exercise the renewal options or not to exercise the termination options. Operating lease expense is recognized on a straight-line basis over the lease term and is included in general and administrative expenses in the consolidated statements of operations. Recent Accounting Pronouncements From time to time, the FASB or other standards setting bodies will issue new accounting pronouncements. Updates to the FASB ASC are communicated through issuance of an Accounting Standards Update (“ASU”). In August 2020, the FASB issued an accounting pronouncement (ASU 2020-06) related to the measurement and disclosure requirements for convertible instruments and contracts in an entity's own equity. The pronouncement simplifies and adds disclosure requirements for the accounting and measurement of convertible instruments and the settlement assessment for contracts in an entity's own equity. This pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2023. During 2022, the Com |
LIQUIDITY
LIQUIDITY | 9 Months Ended | 12 Months Ended |
Sep. 30, 2023 | Dec. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
LIQUIDITY | NOTE 2 – LIQUIDITY As reflected in the accompanying consolidated financial statements, the Company had a net loss of $ 8,080,819 for the nine months ended September 30, 2023. During the same period, cash used in operating activities was $ 5,637,072 . The working capital surplus and accumulated deficit as of September 30, 2023, were $ 3,358,320 and $ 60,442,653 , respectively. In previous financial reports, the Company had raised substantial doubt about continuing as a going concern. This was principally due to a lack of working capital prior to underwritten offerings and private placements which were completed during the second, third and fourth quarters of 2022 as well as the first and third quarters of 2023. The Company was successful during 2022 in raising gross proceeds of over $10,100,000 from the sale of both common shares and Series D Preferred Stock. Additionally, late in the first quarter of 2023, the Company raised gross proceeds of $4,000,000 from the issuance of Series E Preferred Stock. In August 2023, the Company was successful in raising gross proceeds of $5,000,000 from the sale of Series F Convertible Preferred Stock. The Company was also successful in raising a further $2,500,000 from the sale of additional Series E Convertible Preferred Stock during November 2023. During the second quarter of 2023, the Company renewed its S-3 “shelf registration” statement allowing the Company to sell multiple forms of securities in addition to common shares. At the time of this filing, the Company estimates that it has available capacity on its shelf registration which it can utilize to bolster working capital and growth of the business. Additionally, the Company has capacity on Series D and Series E to bolster liquidity, if needed, via private placements. Although additional investment is not assured, the Company is comfortable that it would be able to raise sufficient capital to support expanded operations based on an anticipated increase in business activity. In the long run, the continuation of the Company as a going concern is dependent upon the ability of the Company to continue executing its business plan, generate enough revenue, and attain consistently profitable operations. Although the lingering effects of the global pandemic related to the coronavirus (Covid-19) continue to affect our operations, particularly in our supply chain, we now believe that this is expected to be an ongoing issue and our working capital assumptions reflect this new reality. The Company cannot currently quantify the uncertainty related to the ongoing supply chain delays or inflationary increases and their effects on our customers in the coming quarters. We have analyzed our cash flow under “stress test” conditions and have determined that we have sufficient liquid assets on hand, forthcoming with ongoing business or available via the capital markets to maintain operations for at least twelve months from the date of this report. In addition, management has been taking and continues to take actions including, but not limited to, elimination of certain costs that do not contribute to short term revenue, and re-aligning both management and staffing with a focus on improving certain skill sets necessary to build growth and profitability and focusing product strategy on opportunities that are likely to bear results in the relatively short term. The Company believes that, as described above, it will have sufficient sources of working capital to meet its obligations over the following twelve months. In the last twelve months the Company has seen growth in its contracted backlog as well as positive signs from new commercial engagements that indicate improvements in future commercial opportunities for both one-time capital and recurring services revenues. Management believes that, at this time, the conditions in our market space with ongoing contract delays, the consequent need to procure certain materials in advance of a binding contract and the additional time needed to execute on new contracts previously reported have put a strain on our cash reserves. However, proactive management of our existing contracts, recent stock offerings and private placements as well as the availability to raise capital via our shelf registration indicate there is no substantial doubt for the Company to continue as a going concern for a period of twelve months from the issuance date of this report. We continue executing the plan to grow our business and achieve profitability. The Company may selectively look at opportunities for fund raising in the future. Management has extensively evaluated our requirements for the next twelve months and has determined that the Company currently has sufficient cash and access to capital to operate for at least that period. While no assurance can be provided, management believes that these actions provide the opportunity for the Company to continue as a going concern and to grow its business and achieve profitability with access to additional capital funding. Ultimately the continuation of the Company as a going concern is dependent upon the ability of the Company to continue executing the plan described above which was put in place in late 2022 and will continue in 2023 and beyond. As a result, we expect to generate sufficient revenue and to attain profitable operations with less net cash used in operating activities in approximately the next twelve months. These consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. | NOTE 2 – LIQUIDITY As reflected in the accompanying consolidated financial statements, the Company had a net loss of $ 6,864,783 for the year ended December 31, 2022. During the same period, cash used in operating activities was $ 7,873,307 . The working capital surplus and accumulated deficit as of December 31, 2022, were $ 2,339,052 and $ 52,361,834 , respectively. In previous financial reports, the Company had raised substantial doubt about continuing as a going concern. This was principally due to a lack of working capital prior to an underwritten offering and a private placement which were completed during the first quarter of 2022 and during third and fourth quarters of 2022 as well as the first quarter of 2023. As previously noted, the Company raised $4,500,000 from existing shareholders through the issuance of Series C Convertible Preferred Stock during 2021. Additionally, the Company was successful during 2022 in raising gross proceeds of over $10,100,000 from the sale of both common shares and Series D Preferred Stock. Additionally, late in the first quarter of 2023, the Company raised gross proceeds of $4,000,000 from the issuance of Series E Preferred Stock (See Note 16). As part of its strategy, the Company will endeavor to utilize the Preferred Series E and the remainder of the Series D as additional funding mechanisms. Additionally, during the second quarter of 2023, the Company will again have access to its S-3 “shelf registration” statement allowing the Company to sell additional common shares. At the time of this document, the Company estimates that it has available capacity on its shelf registration which it can utilize to bolster working capital and growth of the business in the event it did not have an uptake in the preferred classes of shares previously noted. Although additional investment is not assured, the Company is comfortable that it would be able to raise sufficient capital to support expanded operations based on an anticipated increase in business activity. In the long run, the continuation of the Company as a going concern is dependent upon the ability of the Company to continue executing its business plan, generate enough revenue, and attain consistently profitable operations. Although the lingering effects of the global pandemic related to the coronavirus (Covid-19) continue to affect our operations, particularly in our supply chain, we now believe that this is expected to be an ongoing issue and our working capital assumptions reflect this new reality. The Company cannot currently quantify the uncertainty related to the ongoing supply chain issues and its effects on our customers in the coming quarters. We have analyzed our cash flow under “stress test” conditions and have determined that we have sufficient liquid assets on hand or available via the capital markets to maintain operations for at least twelve months from the date of this report. In addition, management has been taking and continues to take actions including, but not limited to, elimination of certain costs that do not contribute to short term revenue, and re-aligning both management and staffing with a focus on improving certain skill sets necessary to build growth and profitability and focusing product strategy on opportunities that are likely to bear results in the relatively short term. The Company believes that, with the combination of Series E Preferred Stock offering coupled with an S-3 shelf registration availability starting in the second quarter of 2023, it will have sufficient working capital to meet its obligations over the following twelve months. In the last twelve months the Company has seen significant growth in its contracted backlog as well as positive signs from new commercial engagements that indicate improvements in future commercial opportunities. Management believes that, at this time, the conditions in our market space with ongoing contract delays, the consequent need to procure certain materials in advance of a binding contract and the additional time needed to execute on new contracts previously reported have put a strain on our cash reserves. However, recent common stock offerings and private placements as well as the availability to raise capital via its shelf registration indicate there is no substantial doubt for the Company to continue as a going concern for a period of twelve months. We continue executing the plan to grow our business and achieve profitability. The Company may selectively look at opportunities for fund raising in the future. Management has extensively evaluated our requirements for the next 12 months and has determined that the Company currently has sufficient cash and access to capital to operate for at least that period. While no assurance can be provided, management believes that these actions provide the opportunity for the Company to continue as a going concern and to grow its business and achieve profitability with access to additional capital funding. Ultimately the continuation of the Company as a going concern is dependent upon the ability of the Company to continue executing the plan described above which was put in place in late 2022 and will continue in 2023 and beyond. As a result, we expect to generate sufficient revenue and to attain profitable operations with minimal cash use in the next 12 months. These consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. |
ACCOUNTS RECEIVABLE
ACCOUNTS RECEIVABLE | 12 Months Ended |
Dec. 31, 2022 | |
Receivables [Abstract] | |
ACCOUNTS RECEIVABLE | NOTE 3 – ACCOUNTS RECEIVABLE Accounts receivable were as follows at December 31, 2022 and 2021: Schedule of accounts receivable December 31, December 31, 2022 2021 Accounts receivable $ 3,418,263 $ 1,738,543 Allowance for doubtful accounts — — Accounts Receivable, Net $ 3,418,263 $ 1,738,543 The Company’s bad debt expense was zero 0 in 2022 and there was bad debt expense related to accounts receivable of $ 76,046 in 2021. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2022 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | NOTE 4 – PROPERTY AND EQUIPMENT The major classes of property and equipment are as follows at December 31, 2022 and 2021: Schedule of major classes of property and equipment December 31, December 31, 2022 2021 Furniture, fixtures and equipment $ 1,606,451 $ 1,264,001 Less: Accumulated depreciation (976,961 ) (660,748 ) Furniture, fixtures and equipment, Net $ 629,490 $ 603,253 Depreciation expense 319,928 and $ 269,978 , respectively. |
PATENTS AND TRADEMARKS
PATENTS AND TRADEMARKS | 12 Months Ended |
Dec. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
PATENTS AND TRADEMARKS | NOTE 5 – PATENTS AND TRADEMARKS Schedule of patents and trademarks December 31, December 31, 2022 2021 Patents and trademarks $ 326,145 $ 309,205 Less: Accumulated amortization (256,412 ) (242,723 ) Patents and trademarks, Net $ 69,733 $ 66,482 Amortization expense in 2022 and 2021 was $ 13,688 and $ 5,368 , respectively. |
SOFTWARE DEVELOPMENT COSTS
SOFTWARE DEVELOPMENT COSTS | 12 Months Ended |
Dec. 31, 2022 | |
Research and Development [Abstract] | |
SOFTWARE DEVELOPMENT COSTS | NOTE 6 – SOFTWARE DEVELOPMENT COSTS In 2018, the Company capitalized $ 60,000 , relating to the development of new software products. These software products were developed by a third party and had passed the preliminary project stage prior to capitalization. During 2022, the Company capitalized $ 281,783 of software products developed by a third party related to artificial intelligence products placed in service. Schedule of software development costs December 31, December 31, 2022 2021 Software development costs $ 341,784 $ 60,000 Less: Accumulated amortization (76,576 ) (60,000 ) Software Development Costs, net $ 265,208 $ — Amortization of software development costs in 2022 and 2021 was $ 16,576 and zero, 0 respectively. |
DEBT
DEBT | 9 Months Ended | 12 Months Ended |
Sep. 30, 2023 | Dec. 31, 2022 | |
Debt Disclosure [Abstract] | ||
DEBT | NOTE 3 – DEBT Notes Payable - Financing Agreements The Company’s notes payable relating to financing agreements classified as current liabilities consist of the following as of September 30, 2023 and December 31, 2022: Schedule of notes payable September 30, 2023 December 31, 2022 Notes Payable Principal Interest Principal Interest Third Party - Insurance Note 1 $ 2,736 8.73 % $ — — Third Party - Insurance Note 2 79,146 8.00 % 17,753 6.24 % Third Party - Insurance Note 3 8,045 — 16,094 — Third Party - Insurance Note 4 47,889 — 40,728 — Total $ 137,816 $ 74,575 The Company entered into an agreement on December 23, 2022 with its insurance provider by issuing a $ 26,484 note payable (Insurance Note 1) for the purchase of an insurance policy, secured by that policy with an annual interest rate of 8.73 % payable in monthly installments of principal and interest totaling $ 2,755 through October 23, 2023. The balance of Insurance Note 1 as of September 30, 2023 and December 31, 2022 was $ 2,736 and 0 zero, respectively. The Company entered into an agreement on April 15, 2022 with its insurance provider by issuing a note payable (Insurance Note 2) for the purchase of an insurance policy in the amount of $ 63,766 , secured by that policy with an annual interest rate of 6.24 % and payable in 11 monthly installments of principal and interest totaling $ 5,979 . The Company entered into an agreement on April 15, 2023 with its insurance provider by issuing a note payable (Insurance Note 2) for the purchase of an insurance policy in the amount of $ 142,734 , secured by that policy with an annual interest rate of 8.00 % and payable in 11 monthly installments of principal and interest totaling $ 13,501 . At September 30, 2023 and December 31, 2022, the balance of Insurance Note 2 was $ 79,146 and $ 17,753 , respectively. The Company entered into an agreement on September 15, 2022 with its insurance provider by issuing a note payable (Insurance Note 3) for the purchase of an insurance policy in the amount of $ 24,140 . The policy was renewed on February 3, 2023 and is payable in 12 monthly installments of $ 2,012 . At September 30, 2023 and December 31, 2022, the balance of Insurance Note 3 was $ 8,045 and $ 16,094 , respectively. The Company entered into an agreement on February 3, 2022 with its insurance provider by issuing a note payable for the purchase of an insurance policy in the amount of $ 242,591 with a down payment paid in the amount of $ 102,075 in the first quarter of 2022 and ten monthly installments of $ 20,073 . The Company received a refund on September 30, 2022 as a result of the annual audit of the policy resulting in the refund being applied to the outstanding amount of $ 53,175 . The policy renewed on February 3, 2023 and, in connection therewith, the Company issued a new note payable (Insurance Note 4) to the insurer in the amount of $ 293,520 ; with a down payment paid in the amount of $ 125,690 and payable in ten monthly installments of $ 23,976 . At September 30, 2023 and December 31, 2022, the balance of Insurance Note 4 was $ 47,889 and $ 40,728 , respectively. Equipment Financing The Company entered into an agreement on May 22, 2020 with an equipment financing company by issuing a $ 121,637 secured note, with an annual interest rate of 9.90 % and payable in monthly installments of principal and interest totaling $ 3,919 through June 1, 2023. At September 30, 2023 and December 31, 2022, the aggregate balance of this note was 0 zero and $ 22,851 , respectively. | NOTE 7 – DEBT Notes Payable – Insurance Premium Financing Agreements The Company’s notes payable relating to financing agreements classified as current liabilities consist of the following as of: Schedule of notes payable financing agreements December 31, 2022 December 31, 2021 Notes Payable Principal Interest Principal Interest Third Party - Insurance Note 1 $ — — $ 22,266 7.75 % Third Party - Insurance Note 2 17,753 6.24 % 12,667 6.24 % Third Party - Insurance Note 3 16,094 — 17,570 — Third Party - Insurance Note 4 40,728 — — — Total $ 74,575 $ 52,503 The Company entered into an agreement on December 23, 2021 with its insurance provider by issuing a $ 22,266 note payable (Insurance Note 1) for the purchase of an insurance policy, secured by that policy with an annual interest rate of 7.75 % payable in monthly installments of principal and interest totaling $ 2,104 through November 23, 2022. The balance of Insurance Note 1 as of December 31, 2022 and December 31, 2021 was zero and $ 22,266 , respectively. The Company entered into an agreement on April 15, 2021 with its insurance provider by issuing a note payable (Insurance Note 2) for the purchase of an insurance policy in the amount of $ 62,041 , secured by that policy with an annual interest rate of 6.24 % and payable in 10 monthly installments of principal and interest totaling $ 6,383 . The policy renewed on April 15, 2022 and, in connection therewith, the Company issued a new note payable to the insurer on April 15, 2022 in the amount $ 63,766 secured by that policy with an annual interest rate of 6.24 % and payable in 11 monthly installments of principal and interest totaling $ 5,979 . At December 31, 2022 and December 31, 2021, the balance of Insurance Note 2 was $ 17,753 and $ 12,667 , respectively. The Company entered into an agreement on September 15, 2021, with its insurance provider by issuing a note payable (Insurance Note 3) for the purchase of an insurance policy in the amount of $ 19,965 and payable in 10 monthly installments of $ 1,997 . The policy renewed on September 23, 2022 and, in connection therewith, the Company issued a new note payable to the insurer on September 23, 2022 in the amount $ 24,140 secured by that policy and payable in 12 monthly installments of principal totaling $ 2,012 . At December 31, 2022 and December 31, 2021, the balance of Insurance Note 3 was $ 16,094 and $ 17,570 , respectively. The Company entered into an agreement on February 3, 2021 with its insurance provider by issuing a note payable (Insurance Note 4) for the purchase of an insurance policy in the amount of $ 215,654 with a down payment paid in the amount of $37,000 on April 6, 2021 and ten monthly installments of $ 17,899 . The Company received a refund on October 5, 2021 for the annual audit of the policy resulting in the refund being applied to the outstanding amount of $35,787. The policy renewed on February 3, 2022 and, in connection therewith, the Company issued a new note payable to the insurer in the amount of $ 242,591 with a down payment paid in the amount of $41,854 and payable in ten monthly installments of $ 20,074 . At December 31, 2022 and December 31, 2021, the balance of Insurance Note 4 was $ 40,728 and zero, 0 respectively. Equipment Financing The Company entered into an agreement on August 26, 2019 with an equipment financing company by issuing a $ 147,899 note secured by the equipment being financed, with an annual interest rate of 12.72 % and payable in monthly installments of principal and interest totaling $ 4,963 through August 1, 2022. The Company entered into an additional agreement on May 22, 2020 with the same equipment financing company by issuing a $ 121,637 secured note, with an annual interest rate of 9.90 % and payable in monthly installments of principal and interest totaling $ 3,919 through June 1, 2023. At December 31, 2022 and December 31, 2021, the aggregate balance of these notes was $ 22,851 and $ 103,186 , respectively. At December 31, 2022, future minimum lease payments due under the equipment financing is as follows: Schedule of future minimum lease payments under finance lease Calendar year: Amount 2023 23,515 Total minimum equipment financing payments $ 23,515 Less: interest (664 ) Total equipment financing at December 31, 2022 $ 22,851 Less: current portion of equipment financing (22,851 ) Long-term portion of equipment financing $ — Notes Payable – PPP Loan On April 23, 2020, the Company entered into a promissory note (the “Note”) with BBVA USA, which provided for a loan in the amount of $ 1,410,270 (the “Loan”) pursuant to the Paycheck Protection Program (the “PPP”) under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The Loan had a two-year term and an interest at a rate of 1.00 % per annum (APR 1.014%). Monthly principal and interest payments were deferred for seven months after the date of disbursement and was extended an additional six months from the date of disbursement. The Loan could be prepaid at any time prior to maturity with no prepayment penalties. The Company applied for the PPP loan forgiveness and was granted forgiveness on February 1, 2021. The balance of the loan forgiveness associated with PPP was recognized in the Income Statement in “Other Income, net” during 2021. At December 31, 2022 and December 31, 2021, the loan balance was zero 0 and zero, 0 respectively. |
REVENUE AND CONTRACT ACCOUNTING
REVENUE AND CONTRACT ACCOUNTING | 9 Months Ended | 12 Months Ended |
Sep. 30, 2023 | Dec. 31, 2022 | |
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 September 30, 2023 and December 31, 2022, contract assets on uncompleted contracts consisted of the following: Schedule of contract assets on uncompleted contracts September 30, 2023 December 31, 2022 Cumulative revenues recognized $ 8,594,322 $ 5,934,205 Less: Billings or cash received (7,247,591 ) (5,508,483 ) Contract assets $ 1,346,731 $ 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 September 30, 2023 and December 31, 2022, contract liabilities on uncompleted contracts and contract liabilities on services and consulting consisted of the following: Schedule of contract liabilities on uncompleted contracts September 30, 2023 December 31, 2022 Billings and/or cash receipts on uncompleted contracts $ 972,908 $ 4,355,470 Less: Cumulative revenues recognized (199,976 ) (4,144,018 ) Contract liabilities, technology systems 772,932 211,452 Contract liabilities, services and consulting 815,996 746,545 Total contract liabilities $ 1,588,928 $ 957,997 Contract liabilities at December 31, 2022 were $ 957,997 ; of which $ 211,452 for technology systems and $ 636,822 in services and consulting have been recognized as of September 30, 2023. The Company expects to recognize all contract liabilities within 12 months from the respective 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 September 30, 2023 Schedule of disaggregation of revenue Segments Rail Commercial Government Artificial Intelligence Total Primary Geographical Markets North America $ 1,333,556 $ 19,220 $ — $ 178,147 $ 1,530,923 Major Goods and Service Lines Turnkey Projects $ 705,849 $ — $ — $ — $ 705,849 Maintenance and Support 627,707 19,220 — — 646,927 Algorithms — — — 178,147 178,147 $ 1,333,556 $ 19,220 $ — $ 178,147 $ 1,530,923 Timing of Revenue Recognition Goods transferred over time $ 705,849 $ — $ — $ — $ 705,849 Services transferred over time 627,707 19,220 — 178,147 825,074 $ 1,333,556 $ 19,220 $ — $ 178,147 $ 1,530,923 For the Three Months Ended September 30, 2022 Segments Rail Commercial Government Artificial Intelligence Total Primary Geographical Markets North America $ 3,765,312 $ 32,821 $ 23,245 $ 200,860 $ 4,022,238 Major Goods and Service Lines Turnkey Projects $ 2,689,393 $ — $ 3,024 $ — $ 2,692,417 Maintenance and Support 1,075,919 32,821 20,221 183,378 1,312,339 Algorithms — — — 17,482 17,482 $ 3,765,312 $ 32,821 $ 23,245 $ 200,860 $ 4,022,238 Timing of Revenue Recognition Goods transferred over time $ 2,689,393 $ — $ 3,024 $ — $ 2,692,417 Goods delivered at point in time — — — 17,482 17,482 Services transferred over time 532,250 32,821 20,221 183,378 768,670 Services delivered at point in time 543,669 — — — 543,669 $ 3,765,312 $ 32,821 $ 23,245 $ 200,860 $ 4,022,238 For the Nine Months Ended September 30, 2023 Segments Rail Commercial Government Artificial Intelligence Total Primary Geographical Markets North America $ 5,247,291 $ 90,432 $ 11,353 $ 596,194 $ 5,945,270 Major Goods and Service Lines Turnkey Projects $ 3,390,555 $ 13,552 $ — $ — $ 3,404,107 Maintenance and Support 1,856,736 76,880 11,353 — 1,944,969 Algorithms — — — 596,194 596,194 $ 5,247,291 $ 90,432 $ 11,353 $ 596,194 $ 5,945,270 Timing of Revenue Recognition Goods transferred over time $ 3,390,555 $ 13,552 $ — $ — $ 3,404,107 Services transferred over time 1,856,736 76,880 11,353 596,194 2,541,163 $ 5,247,291 $ 90,432 $ 11,353 $ 596,194 $ 5,945,270 For the Nine Months Ended September 30, 2022 Segments Rail Commercial Government Artificial Intelligence Total Primary Geographical Markets North America $ 8,087,759 $ 76,818 $ 214,124 $ 699,995 $ 9,078,696 Major Goods and Service Lines Turnkey Projects $ 5,885,477 $ (498 ) $ 153,462 $ — $ 6,038,441 Maintenance and Support 2,202,282 77,316 60,662 465,223 2,805,483 Algorithms — — — 234,772 234,772 $ 8,087,759 $ 76,818 $ 214,124 $ 699,995 $ 9,078,696 Timing of Revenue Recognition Goods transferred over time $ 5,885,477 $ (498 ) $ 153,462 $ — $ 6,038,441 Goods delivered at point in time — — — 234,772 234,772 Services transferred over time 1,545,578 77,316 60,662 465,223 2,148,779 Services delivered at point in time 656,704 — — — 656,704 $ 8,087,759 $ 76,818 $ 214,124 $ 699,995 $ 9,078,696 | NOTE 8 – REVENUES AND CONTRACT ACCOUNTING REVENUE 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: Schedule of contract assets on uncompleted contracts 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: Schedule of Contract Liabilities on Uncompleted Contracts 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 Schedule of Disaggregation of Revenue Segments Rail Commercial Petrochemical Government Banking/Other IT Artificial 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 Artificial 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. |
DEFERRED COMPENSATION
DEFERRED COMPENSATION | 12 Months Ended |
Dec. 31, 2022 | |
Compensation Related Costs [Abstract] | |
DEFERRED COMPENSATION | NOTE 9 – DEFERRED COMPENSATION As of December 31, 2022, and 2021, the Company has accrued $ 297,620 and $ 505,896 , respectively, of deferred compensation relating to individual agreements with the former CEO and sales staff, which are included in the accompanying consolidated balance sheet in accrued expenses. (See Note 10) |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended | 12 Months Ended |
Sep. 30, 2023 | Dec. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | ||
COMMITMENTS AND CONTINGENCIES | NOTE 4 – COMMITMENTS AND CONTINGENCIES Operating Lease Obligations On July 26, 2021, the Company entered into a new operating lease agreement for office and warehouse combination space of 40,000 square feet, with the lease commencing on November 1, 2021 and ending April 30, 2032. This new space combines the Company’s two separate work locations into one facility, which allows for greater collaboration and also accommodates a larger anticipated workforce and manufacturing facility. On November 24, 2021, the lease was amended to commence on December 1, 2021 and end on May 31, 2032. The Company recognized a ROU asset and operating lease liability in the amount of $ 4,980,104 at lease commencement. Rent for the first eleven months of the term was calculated based on 30,000 rentable square feet. The rent is subject to an annual escalation of 2.5%, beginning November 1, 2023. The Company made a security deposit payment in the amount of $ 600,000 on July 26, 2021. Per the contract, on the 18th month, the security deposit was reduced by $ 50,000 . The right of use asset balance at September 30, 2023, net of accumulated amortization, was $ 4,454,714 . As of September 30, 2023, the office and warehouse lease is the Company’s only lease with a term greater than twelve months. The office and warehouse lease has a remaining term of approximately 8.8 years and includes an option to extend for two renewal terms of five years each. The renewal options are not reasonably certain to be exercised, and therefore, they are not included when determining the lease term used to establish the right of use asset and lease liability. The Company also has several short-term leases, primarily related to equipment. The Company made an accounting policy election to not recognize short-term leases with terms of twelve months or less on the consolidated balance sheet and instead recognize the lease payments in expense as incurred. The Company has also elected to account for real estate leases that contain both lease and non-lease components (such as common area maintenance) as a single lease component. The following table shows supplemental information related to leases: Schedule of supplemental information related to leases Nine Months Ended September 30, 2023 2022 Lease cost: Operating lease cost $ 586,228 $ 582,989 Short-term lease cost $ 56,052 $ 26,127 Other information: Operating cash outflow used for operating leases $ 505,664 $ 323,750 Weighted average discount rate 9.0 % 9.0 % Weighted average remaining lease term 8.6 years 9.6 years As of September 30, 2023, future minimum lease payments due under our operating leases are as follows: Schedule of future minimum lease payments Amount Calendar year: 2023 $ 191,205 2024 779,087 2025 798,556 2026 818,518 2027 838,984 Thereafter 4,043,427 Total undiscounted future minimum lease payments 7,469,777 Less: Impact of discounting (2,384,618 ) Total present value of operating lease obligations 5,085,159 Current portion (774,306) Operating lease obligations, less current portion $ 4,310,853 Executive Severance Agreement Pursuant to a separation agreement with Gianni Arcaini, our former Chief Executive Officer and Chairman of the Board (the “Separation Agreement”), Mr. Arcaini’s employment with the Company ended on September 1, 2020 (“Separation Date”). The Separation Agreement provided that he would receive separation payments over a 36-month period equal to his base salary plus $ 75,000 as well as certain limited health and life insurance benefits. The Separation Agreement also contained confidentiality, non-disparagement and non-solicitation covenants and a release of claims by Mr. Arcaini. In accordance with the Separation Agreement, the Company paid to Mr. Arcaini the total sum of $ 747,788 . On March 1, 2021, the Company paid to Mr. Arcaini a lump-sum amount equal to the first six months of payments, or $ 124,631 , owed to Mr. Arcaini and the Company continued to pay him in semi-monthly installments for 30 months thereafter, as contemplated in Mr. Arcaini’s Separation Agreement. The remaining balance included in accrued expenses in the accompanying unaudited consolidated balance sheet is zero as of September 30, 2023. | NOTE 10 – COMMITMENTS AND CONTINGENCIES Operating Lease Obligations On July 26, 2021, the Company entered a new operating lease agreement for office and warehouse combination space of 40,000 square feet, with the lease commencing on November 1, 2021, and ending April 30, 2032. This new space combines the Company’s two separate work locations into one facility, which allows for greater collaboration and also accommodates a larger anticipated workforce and manufacturing facility. On November 24, 2021, the lease was amended to commence on December 1, 2021, and end on May 31, 2032. The Company recognized a ROU asset and operating lease liability in the amount of $ 4,980,104 at lease commencement. Rent for the first eleven months of the term was calculated based on 30,000 rentable square feet. The rent is subject to an annual escalation of 2.5%, beginning November 1, 2023. The Company made a security deposit payment in the amount of $ 600,000 on July 26, 2021. The right of use asset balance at December 31, 2022, net of amortization, was $ 4,689,931 . As of December 31, 2022, the office and warehouse lease is the Company’s only lease with a term greater than twelve months. The office and warehouse lease has a remaining term of approximately 9.5 years and includes an option to extend for two renewal terms of five years each. The renewal options are not reasonably certain to be exercised, and therefore, they are not included when determining the lease term used to establish the right-of use asset and lease liability. The Company also has several short-term leases, primarily related to equipment. The Company made an accounting policy election to not recognize short-term leases with terms of twelve months or less on the consolidated balance sheet and instead recognize the lease payments in expense as incurred. The Company has also elected to account for real estate leases that contain both lease and non-lease components (such as common area maintenance) as a single lease component. The following table shows supplemental information related to leases: Schedule of supplemental information related to leases Year Ended December 31, 2022 2021 Lease cost: Operating lease cost $ 782,591 $ 414,085 Short-term lease cost 33,751 21,628 Other information: Operating cash outflow used for operating leases 416,250 285,959 Weighted average discount rate 9.0 % 9.0 % Weighted average remaining lease term 9.5 years 10.4 years At December 31, 2022, future minimum lease payments due under the operating lease are as follows: Schedule of future minimum lease payments for non-cancellable operating leases As of December 31, 2022 Fiscal year: 2023 $ 696,869 2024 779,087 2025 798,556 2026 818,518 2027 838,984 Thereafter 4,043,427 Total undiscounted future minimum lease payments 7,975,441 Less: Impact of discounting (2,735,629 ) Total present value of operating lease liability 5,239,812 Current portion (696,869 ) Operating lease liability, less current portion $ 4,542,943 Executive Severance Agreement On April 1, 2018, the Company entered into an employment agreement (the “Arcaini Employment Agreement”) with Gianni B. Arcaini, pursuant to which Mr. Arcaini served as Chief Executive Officer and Chairman of the Board of Directors of the Company. Under the Arcaini Employment Agreement, Mr. Arcaini was paid an annual salary of $ 249,260 and an annual car allowance of $ 18,000 . In addition, as incentive-based compensation, Mr. Arcaini was entitled to 1 % of annual gross revenues of the Company and its subsidiaries. The Arcaini Employment Agreement had an initial term through March 31, 2020, subject to renewal for successive one-year terms unless either party gave notice of that party’s election to not renew to the other at least 60 days prior to the expiration of the then-current term. The Arcaini Employment Agreement was approved by the Compensation Committee. As previously disclosed, on July 10, 2020, the Company announced that Mr. Arcaini would retire from these positions, effective as of September 1, 2020 (the “CEO Transition”). In order to facilitate a transition of his duties, the Company and Mr. Arcaini entered into a separation agreement which became effective as of July 10, 2020 (the “Separation Agreement”). Pursuant to the Separation Agreement, Mr. Arcaini’s employment with the Company ended on September 1, 2020 and he will receive separation payments over a 36-month period equal to his base salary plus $ 75,000 as well as certain limited health and life insurance benefits. The Separation Agreement also contains confidentiality, non-disparagement and non-solicitation covenants and a release of claims by Mr. Arcaini who continued to serve as Chairman of the Board of Directors of the Company. The Corporate Governance and Nominating Committee did not submit Mr. Arcaini for re-election as a director and on November 19, 2020 at the Annual Shareholders meeting a new non-Executive Chairman was appointed. In accordance with the Separation Agreement, the Company will pay to Mr. Arcaini the total sum of $ 747,788 . Notwithstanding the foregoing, the status of Mr. Arcaini as a “Specified Employee” as defined in Internal Revenue Code Section 409A has the effect of delaying any payments to Mr. Arcaini under the Separation Agreement for six months after the Separation Date. On March 1, 2021, the Company paid to Mr. Arcaini a lump-sum amount equal to the first six months of payments, or $ 124,631 , owed to Mr. Arcaini and the Company will continue to pay him in semi-monthly installments for 30 months thereafter, as contemplated in Mr. Arcaini’s Separation Agreement. The remaining balance of approximately $ 228,673 as of December 31, 2022 is included in accrued expenses in the accompanying consolidated balance sheet. In addition, the Company will pay one-half of Mr. Arcaini’s current life insurance premiums for 36 months of approximately $ 1,200 per month and provide and pay for his health insurance for 36 months following the Separation Date of approximately $450 per month. Unvested options in the amount of 50,358 became exercisable and vested in their entirety on the Separation Date valued at $ 95,127 . The Company made payment of his attorneys’ fees for legal work associated with the negotiation and drafting of the Separation Agreement of approximately $ 17,000 . |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 11 – INCOME TAXES The Company maintains deferred tax assets and liabilities that reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The deferred tax assets (liabilities) at December 31, 2022 and 2021 consist of net operating loss carryforwards and differences in the book basis and tax basis of intangible assets. The items accounting for the difference between income taxes at the effective statutory rate and the provision for income taxes for the years ended December 31, 2022 and 2021 were as follows: Schedule of difference between income taxes at effective statutory rate and provision for income taxes Years Ended December 31, 2022 2021 Income tax benefit at U.S. statutory rate of 21% $ (1,441,624 ) $ (1,261,869 ) State income taxes (247,135 ) (216,321 ) Non-deductible expenses 201,521 64,553 Change in valuation allowance 1,487,238 1,413,637 Total provision for income tax $ — $ — The Company’s approximate net deferred tax assets as of December 31, 2022 and 2021 were as follows: Schedule of net deferred tax assets December 31, 2022 2021 Deferred Tax Asset (Liability): Net operating loss carryforward $ 9,772,854 $ 8,247,427 Intangible assets (32,656 ) 5,553 9,740,198 8,252,960 Valuation allowance (9,740,198 ) (8,252,960 ) Net deferred tax assets $ — $ — The gross operating loss carryforward was approximately $ 39,727,050 and $ 33,522,769 at December 31, 2022 and 2021, respectively. The Company provided a valuation allowance equal to the net deferred income tax assets for the years ended December 31, 2022, and 2021 because it was not known whether future taxable income will be sufficient to utilize the loss carryforward and other deferred tax assets. The increase in the valuation allowance was $ 1,487,238 in 2022. The potential tax benefit arising from the net operating loss carryforward of $ 4,357,876 from the period prior to January 1, 2018, will expire in 2037. The potential tax benefit arising from the net operating loss carryforward of $ 5,382,322 generated after January 1, 2018 can be carried forward indefinitely within the annual usage limitations. Additionally, the future utilization of the net operating loss carryforward to offset future taxable income is subject to an annual limitation as a result of ownership or business changes that may occur in the future. The Company has not conducted a study to determine the limitations on the utilization of these net operating loss carryforwards. If necessary, the deferred tax assets will be reduced by any carryforward that may not be utilized or expires prior to utilization as a result of such limitations, with a corresponding reduction of the valuation allowance. The Company does not have any uncertain tax positions or events leading to uncertainty in a tax position. The Company’s 2021, 2020 and 2019 Corporate Income Tax Returns are subject to Internal Revenue Service examination. |
STOCKHOLDERS_ EQUITY
STOCKHOLDERS’ EQUITY | 9 Months Ended | 12 Months Ended |
Sep. 30, 2023 | Dec. 31, 2022 | |
Equity [Abstract] | ||
STOCKHOLDERS’ EQUITY | NOTE 5 – STOCKHOLDERS’ EQUITY Series B Convertible Preferred Stock The following summary of certain terms and provisions of our Series B Convertible Preferred Stock (the “Series B Convertible Preferred Stock”) is subject to, and qualified in its entirety by reference to, the terms and provisions set forth in our certificate of designation of preferences, rights and limitations of Series B Convertible Preferred Stock (the “Series B Convertible Preferred Certificate of Designation”) as previously filed. Subject to the limitations prescribed by our articles of incorporation, our board of directors is authorized to establish the number of shares constituting each series of preferred stock and to fix the designations, powers, preferences, and rights of the shares of each of those series and the qualifications, limitations and restrictions of each of those series, all without any further vote or action by our stockholders. Our board of directors designated 15,000 of the 10,000,000 authorized shares of preferred stock as Series B Convertible Preferred Stock with a stated value of $ 1,000 per share. The shares of Series B Convertible Preferred Stock were validly issued, fully paid and non-assessable. Each share of Series B Convertible Preferred Stock was convertible at any time at the holder’s option into a number of shares of common stock equal to $ 1,000 divided by the conversion price of $ 7.00 per share. Notwithstanding the foregoing, we shall not effect any conversion of Series B Convertible Preferred Stock, with certain exceptions, to the extent that, after giving effect to an attempted conversion, the holder of shares of Series B Convertible Preferred Stock (together with such holder’s affiliates, and any persons acting as a group together with such holder or any of such holder’s affiliates) would beneficially own a number of shares of our common stock in excess of 4.99% (or, at the election of the purchaser, 9.99%) of the shares of our common stock then outstanding after giving effect to such exercise. The Series B Convertible Preferred Certificate of Designation does not prohibit the Company from waiving this limitation. Upon any liquidation, dissolution or winding-up of Company, whether voluntary or involuntary (a “Liquidation”), the holders shall be entitled to participate on an as-converted-to-common stock basis (without giving effect to the Beneficial Ownership Limitation) with holders of the common stock in any distribution of assets of the Company to the holders of the common stock. As of September 30, 2023 and December 31, 2022, respectively, there are zero 0 and zero 0 shares of Series B Convertible Preferred Stock issued and outstanding. Series C Convertible Preferred Stock The Company’s Board of Directors designated 5,000 shares as the Series C Convertible Preferred Stock (the “Series C Convertible Preferred Stock”). Each share of the Series C Convertible Preferred Stock has a stated value of $ 1,000 . The holders of the Series C Convertible Preferred Stock, the holders of the common stock and the holders of any other class or series of shares entitled to vote with the common stock shall vote together as one class on all matters submitted to a vote of shareholders of the Company. Each share of Series C Convertible Preferred Stock has 172 votes (subject to adjustment); provided that in no event may a holder of Series C Convertible Preferred Stock be entitled to vote a number of shares in excess of such holder’s Beneficial Ownership Limitation (as defined in the Certificate of Designation and as described below). Each share of Series C Convertible Preferred Stock is convertible, at any time and from time to time, at the option of the holder, into that number of shares of common stock (subject to the Beneficial Ownership Limitation) determined by dividing the stated value of such share ($1,000) by the conversion price, which is $ 5.50 (subject to adjustment). The Company shall not effect any conversion of the Series C Convertible Preferred Stock, and a holder shall not have the right to convert any portion of the Series C Convertible Preferred Stock, to the extent that after giving effect to the conversion sought by the holder such holder (together with such holder’s Attribution Parties (as defined in the Certificate of Designation)) would beneficially own more than 4.99% (or upon election by a holder, 19.99%) of the number of shares of common stock outstanding immediately after giving effect to the issuance of shares of common stock issuable upon such conversion (the “Beneficial Ownership Limitation”). All holders of the Series C Preferred Stock elected the 19.99% Beneficial Ownership Limitation. On February 26, 2021, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain existing investors in the Company (the “Purchasers”). Pursuant to the Purchase Agreement, the Purchasers purchased 4,500 shares of a newly authorized Series C Convertible Preferred Stock, and the Company received proceeds of $ 4,500,000 . The Purchase Agreement contains customary representations, warranties, agreements and indemnification rights and obligations of the parties. In January 2022, the 2,500 outstanding shares of Series C Convertible Preferred Stock were converted into 454,546 shares of common stock. As of September 30, 2023 and December 31, 2022, respectively, there were zero 0 and zero 0 shares of Series C Convertible Preferred Stock issued and outstanding. In connection with the Purchase Agreement, the Company also entered into a Registration Rights Agreement with the Purchasers. Pursuant to the Registration Rights Agreement, the Company filed with the SEC a registration statement covering the resale by the Purchasers of the shares of common stock into which the shares of Series C Convertible Preferred Stock were convertible. The Registration Rights Agreement contains customary representations, warranties, agreements and indemnification rights and obligations of the parties. Series D Convertible Preferred Stock On September 28, 2022, the Company amended its articles of incorporation to designate 4,000 shares as the Series D Convertible Preferred Stock (the “Series D Convertible Preferred Stock”). Each share of the Series D Convertible Preferred Stock has a stated value of $ 1,000 . The holders of the Series D Convertible Preferred Stock, the holders of the common stock and the holders of any other class or series of shares entitled to vote with the common stock shall vote together as one class on all matters submitted to a vote of shareholders of the Company. Each share of Series D Convertible Preferred Stock has 333 votes (subject to standard anti-dilution adjustment); provided that in no event may a holder of Series D Convertible Preferred Stock be entitled to vote a number of shares in excess of such holder’s Beneficial Ownership Limitation (as defined in the Certificate of Designation and as described below). Each share of Series D Convertible Preferred Stock is convertible, at any time and from time to time, at the option of the holder, into that number of shares of common stock (subject to the Beneficial Ownership Limitation) determined by dividing the stated value of such share ($1,000) by the conversion price, which is $ 3.00 (subject to adjustment). The Company shall not effect any conversion of the Series D Convertible Preferred Stock, and a holder shall not have the right to convert any portion of the Series D Convertible Preferred Stock, to the extent that after giving effect to the conversion sought by the holder such holder (together with such holder’s Attribution Parties (as defined in the Certificate of Designation)) would beneficially own more than 4.99% (or upon election by a holder, 19.99%) of the number of shares of common stock outstanding immediately after giving effect to the issuance of shares of common stock issuable upon such conversion (the “Beneficial Ownership Limitation”). All holders of the Series D Preferred Stock elected the 19.99% Beneficial Ownership Limitation. The Company shall reserve and keep available out of its authorized and unissued Common Stock, solely for the issuance upon the conversion of the Series D Convertible Preferred Stock, such a number of shares of Common Stock as shall from time to time be issuable upon the conversion of all of the shares of the Series D Convertible Preferred Stock then outstanding. Additionally, the Series D Convertible Preferred Stock does not have the right to dividends and in the event of an involuntary liquidation, the Series D shares shall be treated as a pro rata equivalent of common stock outstanding at the date of the liquidation event and have no liquidation preference. On September 30, 2022, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain existing investors in the Company (the “Purchasers”). Pursuant to the Purchase Agreement, the Purchasers purchased 999 shares of the newly authorized Series D Convertible Preferred Stock, and the Company received proceeds of $ 999,000 . The Purchase Agreement contains customary representations, warranties, agreements and indemnification rights and obligations of the parties. On October 29, 2022, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with a certain existing investor in the Company (the “Purchaser”). Pursuant to the Purchase Agreement, the Purchaser purchased 300 shares of the newly authorized Series D Convertible Preferred Stock, and the Company received proceeds of $ 300,000 . The Purchase Agreement contains customary representations, warranties, agreements and indemnification rights and obligations of the parties. In connection with such Purchase Agreements, the Company also entered into a Registration Rights Agreement with the Purchasers. Pursuant to the Registration Rights Agreement, the Company filed with the SEC a registration statement covering the resale by the Purchasers of the shares of common stock into which the shares of Series D Convertible Preferred Stock are convertible. The Registration Rights Agreement contains customary representations, warranties, agreements and indemnification rights and obligations of the parties. As of September 30, 2023 and December 31, 2022, respectively, there were 1,299 and 1,299 shares of Series D Convertible Preferred Stock issued and outstanding. Series E Convertible Preferred Stock The Company’s Board of Directors has designated 30,000 shares as the Series E Convertible Preferred Stock (the “Series E Convertible Preferred Stock”). Each share of the Series E Convertible Preferred Stock has a stated value of $ 1,000 . The holders of the Series E Convertible Preferred Stock, the holders of the common stock and the holders of any other class or series of shares entitled to vote with the common stock shall vote as one class on all matters submitted to a vote of shareholders of the Company. Each share of Series E Preferred Stock has 333 votes (subject to adjustment); provided that in no event may a holder of Series E Preferred Stock be entitled to vote a number of shares in excess of such holder’s Beneficial Ownership Limitation. Each share of Series E Convertible Preferred Stock is convertible, subject to shareholder approval (which has not yet been granted); at any time and from time to time, at the option of the holder, into that number of shares of common stock (subject to the Beneficial Ownership Limitation) determined by dividing the stated value of such share ($1,000) by the conversion price, which is $3.00 (subject to adjustment). The Company shall not effect any conversion of the Series E Convertible Preferred Stock, and the holder shall not have the right to convert any portion of the Series E Convertible Preferred Stock, to the extent that after giving effect to the conversion sought by the holder such holder (together with such holder’s Attribution Parties (as defined in the Certificate of Designation)) would beneficially own more than 4.99% (or upon election by a holder, 19.99%) of the number of shares of common stock outstanding immediately after giving effect to the issuance of shares of common stock issuable upon such conversion (the “Beneficial Ownership Limitation”). All holders of the Series E Convertible Preferred Stock elected the 19.99% Beneficial Ownership Limitation. The Company on March 27, 2023 entered into a Securities Purchase Agreement (the “Purchase Agreement”) with an existing investor in the Company (the “Purchaser”). Pursuant to the Purchase Agreement, the Purchaser purchased 4,000 shares of a newly authorized Series E Convertible Preferred Stock at a price of $ 1,000 per share, and the Company received proceeds of $ 4,000,000 . The Purchase Agreement contains customary representations, warranties, agreements and indemnification rights and obligations of the parties. The existing investor’s Purchase Agreement also provides that the Company will not, with certain exceptions, sell or issue common stock or Common Stock Equivalents (as defined in the Purchase Agreement) on or prior to December 31, 2023 that entitles any person to acquire shares of common stock at an effective price per share less than the then conversion price of the Series E Convertible Preferred Stock without the consent of the Purchaser. As of September 30, 2023 and December 31, 2022, respectively, there were 4,000 and 0 shares of Series E Convertible Preferred Stock issued and outstanding. In connection with the Series E Convertible Preferred Stock issuance, the Company accrued estimated costs and charged additional paid-in capital of $ 299,145 during the quarter ended March 31, 2023. The actual costs were only $ 17,645 , hence the excess of $ 281,500 was reversed during the quarter ended June 30, 2023. Series F Convertible Preferred Stock On August 2, 2023, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with an existing, accredited investor in the Company (the “Purchaser”). Pursuant to the Purchase Agreement, the Purchaser purchased 5,000 shares of a newly authorized Series F Convertible Preferred Stock (the “Series F Convertible Preferred Stock”), and the Company received proceeds of $ 5,000,000 . The Purchase Agreement contains customary representations, warranties, agreements and indemnification rights and obligations of the parties. The Company's Board of Directors designated 5,000 shares as the Series F Preferred Stock. Each share of Series F Preferred Stock is convertible, at any time and from time to time, at the option of the holder, into that number of shares of common stock (subject to the beneficial ownership limitation described below) determined by dividing the stated value of such share ($ 1,000 ) by the conversion price, which is $ 6.20 (subject to adjustment). The Company, however, shall not effect any conversion of the Series F Preferred Stock, and the holder shall not have the right to convert any portion of the Series F Preferred Stock, to the extent that after giving effect to the conversion sought by the holder such holder (together with such holder’s Attribution Parties (as defined in the Certificate of Designation)) would beneficially own more than 4.99% (or upon election by a holder, 19.99%) of the number of shares of common stock outstanding immediately after giving effect to the issuance of shares of common stock issuable upon such conversion. The purchasers of the Series F Preferred Stock have elected that their ownership limitation will be 19.99%. The holders of the Series F Preferred Stock, the holders of the common stock and the holders of any other class or series of shares entitled to vote with the common stock shall vote together as one class on all matters submitted to a vote of shareholders of the Company. Each share of Series F Preferred Stock has 161 votes (subject to adjustment); provided that in no event may a holder of Series F Preferred Stock be entitled to vote a number of shares in excess of such holder’s ownership limitation. The Company also agreed that it will not, with certain exceptions, sell or issue common stock or Common Stock Equivalents (as defined in the Purchase Agreement relating to the Series F Preferred Stock) on or prior to December 31, 2023 that entitles any person to acquire shares of common stock at an effective price per share less than the then conversion price of the Series F Preferred Stock without the consent of the holders. In connection with the Purchase Agreement, the Company also entered into a Registration Rights Agreement with the Purchasers. Pursuant to the Registration Rights Agreement, the Company filed with the SEC a registration statement covering the resale by the Purchasers of the shares of common stock into which the shares of Series C Convertible Preferred Stock were convertible. Subject to certain conditions, the Company must cause the registration statement to be declared effective by 90 days after closing (or in the event of a full review by the SEC, by 120 days). The Registration Rights Agreement contains customary representations, warranties, agreements and indemnification rights and obligations of the parties. The Registration Rights Agreement contains provisions for liquidated damages equal to 1% multiplied by the aggregate subscription amount paid, paid each month, in the event certain deadlines are missed. As of September 30, 2023 and December 31, 2022, respectively, there were 5,000 and 0 shares of Series F Convertible Preferred Stock issued and outstanding. Common stock issued Nine Months Ended September 30, 2022 On January 11, 2022, shareholders converted 710 and 1,790 shares of Series C Convertible Preferred Stock collectively with a stated value of $2.5 million owned by two entities related to each other with a conversion price of $ 5.50 per common share resulting in the issuance of 129,091 and 325,455 shares of the Company’s common stock. On February 3, 2022, the Company closed an offering of 1,325,000 shares of common stock in the amount of $ 5,300,000 or $ 4 per share before certain underwriting fees and offering expenses with net proceeds of $ 4,779,000 . On February 21, 2022, the Company closed on an “over-allotment” offering of 198,750 shares of common stock in the amount of $ 795,000 or $ 4 per share before certain underwriting fees and offering expenses with net proceeds of $ 739,350 . Both this and the previous offering were “takedowns” from a previously filed “shelf” registration statement for the offer of up to $ 50,000,000 in the aggregate of common stock, Preferred Stock, Debt Securities, Warrants, Rights or Units from time to time in one or more offerings. On March 31, 2022, the Company issued 7,198 shares of common stock for payment of board fees to four directors in the amount of $ 40,000 for services to the board which was expensed during the three months ended March 31, 2022. On June 30, 2022, the Company issued 10,668 shares of common stock for payment of board fees to four directors in the amount of $ 40,000 for services to the board which was expensed during the three months ended June 30, 2022. On August 25, 2022, 121,572 common shares were issued upon conversion of 851 shares of Series B Preferred Stock. On September 30, 2022, the Company issued 9,758 shares of common stock for payment of board fees to four directors in the amount of $ 40,000 for services to the board which was expensed during the three months ended September 30, 2022. On September 30, 2022, the Company closed an offering of 818,335 shares of common stock in the amount of $ 2,455,003 or $ 3 per share before certain placement agent fees and offering expenses with net proceeds of $ 2,194,187 . Nine Months Ended September 30, 2023 On March 31, 2023, the Company issued 12,463 shares of common stock for payment of board fees to three directors for a value of $ 32,500 for services to the board which was expensed during the three months ended March 31, 2023. The value of the shares is based on the March 31, 2023 grant date quoted trading price of $ 2.61 . On June 30, 2023, the Company issued 5,645 shares of common stock for payment of board fees to three directors for a value of $ 32,500 for services to the board which was expensed during the three months ended June 30, 2023. The value of the shares is based on the June 30, 2023 grant date quoted trading price of $ 5.76 . On June 30, 2023, the Company issued 65,561 shares of common stock to employees participating in the Company’s Employee Stock Purchase Plan at the end of a six-month offering period. The employee contributions totaled $ 117,048 for the six months ended June 30, 2023 and represented a purchase price of $ 1.79 per share. The purchase price for one share of Common Stock under the ESPP is equal to 85% of the fair market value of one share of Common Stock on the first trading day of the offering period or the purchase date, whichever is lower (see below). For the three months ended September 30, 2023, the Company has an accrued liability of $ 72,801 of employee contributions for the ESPP which may convert to shares of common stock upon the close of the offering period open from July 1, 2023 to December 31, 2023. The Company issued 7,910 shares of common stock for payment of board fees to four directors for a value of $ 40,565 for services to the board which was expensed during the three months ended September 30, 2023. The value of the shares is based on the September 29, 2023 grant date quoted trading price of $ 5.13 . Employee Stock Purchase Plan In the fourth quarter of 2022, the board of directors adopted an Employee Stock Purchase Plan (“ESPP”) which, was effective as of January 1, 2023 with a term of 10 years. The ESPP allows eligible employees to purchase shares of the Company's common stock at a discounted price, through payroll deductions from a minimum of 1% and up to 25% of their eligible compensation up to a maximum of $ 25,000 or the IRS allowable limit per calendar year. The Company’s Chief Financial Officer administers the ESPP in conjunction with approvals from the Company’s Compensation Committee, including with respect to the frequency and duration of offering periods, the maximum number of shares that an eligible employee may purchase during an offering period, and, subject to certain limitations set forth in the ESPP, the per-share purchase price. Currently, the maximum number of shares that can be purchased by an eligible employee under the ESPP is 10,000 shares per offering period and there are two six-month offering periods that begin in the first and third quarters of each fiscal year. The purchase price for one share of Common Stock under the ESPP is currently equal to 85 % of the fair market value of one share of Common Stock on the first trading day of the offering period or the purchase date, whichever is lower (look-back feature). Although not required by the ESPP, all payroll deductions received or held by the Company under the ESPP are segregated and deemed as “restricted cash” until the completion of the offering period and redemption of the applicable shares and those withheld amounts are recorded as liabilities. The ESPP employee contribution for the three months ended September 30, 2023 is 2% of total cash and is not deemed material, therefore it is not presented separately on the Balance Sheet as “restricted cash”. The maximum aggregate number of shares of the Common Stock that may be issued under the ESPP is 1,000,000 shares. Under ASC 718-50 “Employee Share Purchase Plans” the plan is considered a compensatory plan and the compensation for each six-month offering period is computed based upon the grant date fair value of the estimated shares to be purchased based on the estimated payroll deduction withholdings. The grant date fair value was computed as the sum of (a) 15 % purchase discount off of the grant date quoted trading price of the Company’s common stock and (b) the fair value of the look-back feature of the Company’s common stock on the grant date which consists of a call option on 85 % of a share of common stock and a put option on 15 % of a share of common stock. As of the three months ended September 30, 2023, the Company has an accrued liability of $ 72,801 of employee contributions for the ESPP which may convert to shares of common stock upon the close of the offering period open from July 1, 2023 to December 31, 2023. The liability is offset by restricted cash held by the Company in the same amount for employee contributions which the Company expects to convert to common stock upon closure of the offering period at December 31, 2023. Additionally, the Company recorded a stock-based expense associated with the ESPP for the three and nine months ended September 30, 2023 of $ 32,728 and $ 98,945 , respectively. The Company computed the fair value of the look-back feature call and put options for January 1, 2023 to September 30, 2023 using a Black Scholes option pricing model using the following assumptions: Schedule of black scholes option pricing model At September 30, 2023 Grant date share price $ 2.10 - $ 5.13 Grant date exercise price $ 1.79 - $ 4.36 Expected term 0.25 years - 0.5 years Expected volatility 89.7 % - 103.4 % Risk-free rate 4.76 % - 5.53 % Expected dividend rate 0 % During the offer period, the Company records stock-based compensation pro rata as expense and a credit to additional paid-in capital. The Company issued 65,561 common shares on the option exercise date of June 30, 2023. The following table discloses relevant information for the ESPP at September 30, 2023 and for nine months then ended. Schedule of stock-based compensation At Cash payment received from employee withholdings $ 189,849 Cash from employee withholdings used to purchase shares under ESPP (117,048 ) Cash and ESPP employee withholding liability $ 72,801 For the Nine Months ended September 30, 2023 Cash from employee withholdings used to purchase ESPP shares $ 117,048 Stock based compensation expense 98,945 Total increase to equity for nine months ended September 30, 2023 $ 215,993 Stock-Based Compensation Stock-based compensation expense recognized under ASC 718-10 for the nine months ended September 30, 2023 and 2022, was $ 400,645 and $ 592,177 , respectively, for stock options granted to employees. This expense is included in selling, general and administrative expenses in the unaudited consolidated statements of operations. Stock-based compensation expense recognized during the periods is based on the grant-date fair value of the portion of share-based payment awards that are ultimately expected to vest during the period. At September 30, 2023, the total compensation cost for stock options not yet recognized was $ 592,927 . This cost will be recognized over the remaining vesting term of the options ranging from nine months to two and one-half years. On May 12, 2021, the Board adopted, with shareholder approval, the 2021 Equity Incentive Plan (the “2021 Plan”) providing for the issuance of up to 1,000,000 shares of our common stock. The purpose of the 2021 Plan is to assist the Company in attracting and retaining key employees, directors and consultants and to provide incentives to such individuals to align their interests with those of our shareholders. During the third quarter of 2021, the shareholders approved the issuance of up to one million shares or share equivalents pursuant to the 2021 Plan. The Company filed an S-8 registration statement in concert with the 2021 Plan which was deemed effective on August 5, 2021. The plan covers a period of ten years. On January 1, 2022, the Company awarded certain senior management and key employees non-qualified stock options under the 2021 Plan. Specifically, a total of 665,000 options were awarded by the Company’s Compensation Committee and approved by the Board, with a strike price of $ 6.41 per share, a five-year term and vesting equally over a three-year period. The options serve as a retention tool and contain key provisions that the holder must remain in good standing with the Company. The options were valued on the grant date at $ 1,596,804 using a Black-Scholes model with the following assumptions: (1) expected term of 3.0 years using the simplified method, (2) expected volatility rate of 72 % based on historical volatility, (3) dividend yield of zero, and (4) a discount rate of 0.97 %. On April 1, 2023, the Board granted to certain key employees an aggregate of 353,117 non-qualified stock options with a strike price of $ 4.22 , a term of 5-years and 3-year vesting period. The options were granted prior to the certificates being issued subject to a pending modification of specific language contained within the option agreement pertaining to certain rights of the holder in the event of a merger or acquisition. The specific language was approved by the shareholders on May 17, 2023 after which the option certificates were issued with the modified language. The specific language had no bearing on the grant date nor on the valuation. Following the approval by the shareholders but prior to issuance of the certificates, one holder resigned from the Company and forfeited 60,000 unvested options leading to a net issuance during the quarter of 293,117 non-qualified stock options. The Company expects to take a charge of $ 567,569 during the vesting period. On July 1, 2023, the Company awarded 50,000 non-qualified stock options for a new employee, subject to final board approval, which have a 5-year term and a 3-year vesting period. On August 30, 2023, the Company awarded 70,000 non-qualified stock options for a new employee, subject to final board approval, which have a 5-year term and a 3-year vesting period. As of September 30, 2023, and December 31, 2022, options to purchase a total of 1,217,775 (net of forfeitures discussed below) shares of common stock and 926,266 shares of common stock were outstanding, respectively. At September 30, 2023, 581,325 options were exercisable. Of the total options issued, 269,658 and 271,266 options were outstanding under the 2016 Equity Incentive Plan, 882,636 and 495,000 were outstanding under the 2021 Plan and a further 160,000 and 160,000 non-plan options to purchase common stock were outstanding as of September 30, 2023 and December 31, 2022, respectively. The non-plan options were granted to four executives as hiring incentives, including the Company’s CEO in the fourth quarter of 2020. Schedule of stock option issuance of shares Weighted Average Average Remaining Aggregate Number of Exercise Contractual Intrinsic Options Price Term (Years) Value Outstanding at December 31, 2021 431,266 $ 4.98 3.4 $ — Granted 685,000 $ 6.41 4.0 $ — Forfeited (190,000 ) $ 6.41 — $ — Outstanding at December 31, 2022 926,266 $ 5.74 3.3 $ — Exercisable at December 31, 2022 404,599 $ 5.02 3.3 $ — Outstanding at December 31, 2022 926,266 $ 5.74 3.3 $ — Granted 353,117 $ 4.22 4.5 $ — Exercised/Forfeited/Expired (61,608 ) $ 4.48 — $ — Outstanding at September 30, 2023 1,217,775 $ 5.37 3.0 $ — Exercisable at September 30, 2023 581,325 $ 5.38 2.1 $ — Warrants Schedule of warrants outstanding Weighted Weighted Average Average Remaining Aggregate Number of Exercise Contractual Intrinsic Warrants Price Term (Years) Value Outstanding at December 31, 2021 1,376,466 $ 8.18 1.9 — Warrants expired, forfeited, cancelled or exercised (1,228,875 ) — — — Warrants issued — — — — Outstanding at December 31, 2022 147,591 $ 8.63 0.8 — Exercisable at December 31, 2022 147,591 $ 8.63 0.8 — Outstanding at December 31, 2022 147,591 $ 8.63 0.8 — Warrants expired, forfeited, cancelled or exercised (67,500 ) — — — Warrants issued — — — — Outstanding at September 30, 2023 80,091 $ 8.53 0.6 — Exercisable at September 30, 2023 80,091 $ 8.53 0.6 — | NOTE 12 – STOCKHOLDERS’ EQUITY Schedule of black scholes option pricing model 2016 Equity Plan We maintained the 2016 Equity Incentive Plan (the “2016 Plan”) for employees, officers, directors and other entities and individuals whose efforts contribute to our success. The 2016 Plan terminated pursuant to its terms on December 31, 2020, although all outstanding awards on such date continue in full force and effect. 2021 Equity Plan On May 12, 2021, the Board adopted, with shareholder approval as of July 15, 2021, the 2021 Equity Incentive Plan (the “2021 Plan”) providing for the issuance of up to 1,000,000 shares of our Common Stock. The purpose of the 2021 Plan is to assist the Company in attracting and retaining key employees, directors and consultants and to provide incentives to such individuals to align their interests with those of our shareholders. General Description of the 2021 Plan The following is a summary of the material provisions of the 2021 Plan and is qualified in its entirety by reference to the complete text of the 2021 Plan, which you are encouraged to read in full. Administration The 2021 Plan is administered by the Compensation Committee of the Board, which consists of three members of the Board, each of whom is a “non-employee director” within the meaning of Rule 16b-3 promulgated under the Exchange Act and an “outside director” within the meaning of Code Section 162(m). Among other things, the Compensation Committee has complete discretion, subject to the express limits of the 2021 Plan, to determine the directors, employees and nonemployee consultants to be granted an award, the type of award to be granted, the terms and conditions of the award, the form of payment to be made and/or the number of shares of Common Stock subject to each award, the exercise price of each option and base price of each stock appreciation right (“SAR”), the term of each award, the vesting schedule for an award, whether to accelerate vesting, the value of the Common Stock underlying the award, and the required withholding, if any. The Compensation Committee may amend, modify or terminate any outstanding award, provided that the participant’s consent to such action is required if the action would impair the participant’s rights or entitlements with respect to that award. The Compensation Committee is also authorized to construe the award agreements and may prescribe rules relating to the 2021 Plan. Notwithstanding the foregoing, the Compensation Committee does not have any authority to grant or modify an award under the 2021 Plan with terms or conditions that would cause the grant, vesting or exercise thereof to be considered nonqualified “deferred compensation” subject to Code Section 409A. Grant of Awards; Shares Available for Awards The 2021 Plan provides for the grant of stock options, SARs, performance share awards, performance unit awards, distribution equivalent right awards, restricted stock awards, restricted stock unit awards and unrestricted stock awards to non-employee directors, officers, employees and nonemployee consultants of the Company or its affiliates. We have reserved a total of 1,000,000 shares of Common Stock for issuance as or under awards to be made under the 2021 Plan. If any award expires, is cancelled, or terminates unexercised or is forfeited, the number of shares subject thereto is again available for grant under the 2021 Plan. Stock Options The 2021 Plan provides for either “incentive stock options” (“ISOs”), which are intended to meet the requirements for special federal income tax treatment under the Code, or “nonqualified stock options” (“NQSOs”). On May 12, 2021, the 2021 Plan was approved by shareholders and adopted by the board of directors. Stock options may be granted on such terms and conditions as the Compensation Committee may determine; provided, however, that the per share exercise price under a stock option may not be less than the fair market value of a share of the Company’s Common Stock on the date of grant and the term of the stock option may not exceed 10 years (110% of such value and five years in the case of an ISO granted to an employee who owns (or is deemed to own) more than 10% of the total combined voting power of all classes of capital stock of the Company or a parent or subsidiary of the Company). ISOs may only be granted to employees. In addition, the aggregate fair market value of our Common Stock covered by one or more ISOs (determined at the time of grant) which are exercisable for the first time by an employee during any calendar year may not exceed $ 100,000 . Any excess is treated as a NQSO. Stock Appreciation Rights An SAR entitles the participant, upon exercise, to receive an amount, in cash or stock or a combination thereof, equal to the increase in the fair market value of the underlying Common Stock between the date of grant and the date of exercise. SARs may be granted in tandem with, or independently of, stock options granted under the 2021 Plan. An SAR granted in tandem with a stock option (i) is exercisable only at such times, and to the extent, that the related stock option is exercisable in accordance with the procedure for exercise of the related stock option; (ii) terminates upon termination or exercise of the related stock option (likewise, the Common Stock option granted in tandem with a SAR terminates upon exercise of the SAR); (iii) is transferable only with the related stock option; and (iv) if the related stock option is an ISO, may be exercised only when the value of the stock subject to the stock option exceeds the exercise price of the stock option. An SAR that is not granted in tandem with a stock option is exercisable at such times as the Compensation Committee may specify. Performance Share and Performance Unit Awards Performance share and performance unit awards entitle the participant to receive cash or shares of our Common Stock upon the attainment of specified performance goals. In the case of performance units, the right to acquire the units is denominated in cash values. Restricted Stock Awards and Restricted Stock Unit Awards A restricted stock award is a grant or sale of Common Stock to the participant, subject to our right to repurchase all or part of the shares at their purchase price (or to require forfeiture of such shares if issued to the participant at no cost) in the event that conditions specified by the Compensation Committee in the award are not satisfied prior to the end of the time period during which the shares subject to the award may be repurchased by or forfeited to us. Our restricted stock unit entitles the participant to receive a cash payment equal to the fair market value of a share of Common Stock for each restricted stock unit subject to such restricted stock unit award, if the participant satisfies the applicable vesting requirement. Unrestricted Stock Awards An unrestricted stock award is a grant or sale of shares of our Common Stock to the participant that is not subject to transfer, forfeiture or other restrictions, in consideration for past services rendered to the Company or an affiliate or for other valid consideration. Amendment and Termination The Compensation Committee may adopt, amend and rescind rules relating to the administration of the 2021 Plan, and amend, suspend or terminate the 2021 Plan, but no such amendment, rescission, suspension or termination will be made that materially and adversely impairs the rights of any participant with respect to any award received thereby under the 2021 Plan without the participant’s consent, other than amendments that are necessary to permit the granting of awards in compliance with applicable laws. Series B Convertible Preferred Stock The following summary of certain terms and provisions of our Series B Convertible Preferred Stock (the “Series B Convertible Preferred Stock”) is subject to, and qualified in its entirety by reference to, the terms and provisions set forth in our certificate of designation of preferences, rights, and limitations of Series B Convertible Preferred Stock (the “Series B Convertible Preferred Certificate of Designation”) as previously filed. Subject to the limitations prescribed by our articles of incorporation, our board of directors is authorized to establish the number of shares constituting each series of preferred stock and to fix the designations, powers, preferences, and rights of the shares of each of those series and the qualifications, limitations and restrictions of each of those series, all without any further vote or action by our stockholders. Our board of directors has designated 15,000 of the 10,000,000 authorized shares of preferred stock as Series B Convertible Preferred Stock. The shares of Series B Convertible Preferred Stock are validly issued, fully paid and non-assessable. Each share of Series B Convertible Preferred Stock is convertible at any time at the holder’s option into a number of shares of common stock equal to $ 1,000 divided by the conversion price of $ 7.00 per share. Notwithstanding the foregoing, we shall not effect any conversion of Series B Convertible Preferred Stock, with certain exceptions, to the extent that, after giving effect to an attempted conversion, the holder of shares of Series B Convertible Preferred Stock (together with such holder’s affiliates, and any persons acting as a group together with such holder or any of such holder’s affiliates) would beneficially own a number of shares of our common stock in excess of 4.99% (or, at the election of the purchaser, 9.99%) of the shares of our common stock then outstanding after giving effect to such exercise. Effective November 24, 2017 (the “Effective Date”), the Company entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) and a Registration Rights Agreement (the “Registration Rights Agreement”) which included the issuance of 2,830 shares of Series B Convertible Preferred Stock worth $ 2,830,000 (including the conversion of liabilities at a price of $ 1,000 per Class B Unit). During 2021, 854 Series B shares were converted into 122,000 common shares. During the third quarter of 2022, 851 shares of Series B Convertible Stock were converted into 121,572 shares of common stock. As of December 31, 2022 and December 31, 2021, there are zero 0 and 851 shares, respectively, of Series B Convertible Preferred Stock issued and outstanding. Series C Convertible Preferred Stock On February 26, 2021, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain existing investors in the Company (the “Purchasers”). Pursuant to the Purchase Agreement, the Purchasers purchased 4,500 shares of a newly authorized Series C Convertible Preferred Stock (the “Series C Convertible Preferred Stock”), and the Company received proceeds of $ 4,500,000 . The Purchase Agreement contains customary representations, warranties, agreements and indemnification rights and obligations of the parties. Under the Purchase Agreement, the Company was required to hold a meeting of shareholders at the earliest practical date, and such meeting occurred on July 15, 2021. Nasdaq Marketplace Rule 5635(d) limits the number of shares of common stock (or securities that are convertible into common stock) without shareholder approval and the terms of the Series C Convertible Preferred Stock limit its convertibility to a number of shares less than the 20% limit, until the Stockholder Approval is obtained. The Company obtained shareholder approval (the “Stockholder Approval”) in order to issue shares of common stock underlying the Series C Convertible Preferred Stock at a price less than the greater of book or market value which equal 20% or more of the number of shares of common stock outstanding before the issuance. As described below, the terms of the Series C Convertible Preferred Stock limited its convertibility to a number of shares less than the 20% limit, until the Stockholder Approval was obtained. In connection with the Purchase Agreement, the Company also entered into a Registration Rights Agreement with the Purchasers. Pursuant to the Registration Rights Agreement, the Company filed with the SEC a registration statement covering the resale by the Purchasers of the shares of common stock into which the shares of Series C Convertible Preferred Stock are convertible. The Company caused the registration statement to be declared effective on June 3, 2021. The Registration Rights Agreement contains customary representations, warranties, agreements and indemnification rights and obligations of the parties. The Company’s Board of Directors has designated 5,000 shares as the Series C Convertible Preferred Stock. Each share of the Series C Convertible Preferred Stock has a stated value of $1,000. The holders of the Series C Convertible Preferred Stock, the holders of the common stock and the holders of any other class or series of shares entitled to vote with the common stock shall vote together as one class on all matters submitted to a vote of shareholders of the Company. Each share of Series C Convertible Preferred Stock had 172 votes (subject to adjustment); provided that in no event may a holder of Series C Convertible Preferred Stock be entitled to vote a number of shares in excess of such holder’s Beneficial Ownership Limitation (as defined in the Certificate of Designation and as described below). Each share of Series C Convertible Preferred Stock is convertible, at any time and from time to time, at the option of the holder, into that number of shares of common stock (subject to the Beneficial Ownership Limitation) determined by dividing the stated value of such share ($1,000) by the conversion price, which is $5.50 (subject to adjustment). The Company shall not effect any conversion of the Series C Convertible Preferred Stock, and a holder shall not have the right to convert any portion of the Series C Convertible Preferred Stock, to the extent that after giving effect to the conversion sought by the holder such holder (together with such holder’s Attribution Parties (as defined in the Certificate of Designation)) would beneficially own more than 4.99% (or upon election by a holder, 19.99%) of the number of shares of common stock outstanding immediately after giving effect to the issuance of shares of common stock issuable upon such conversion (the “Beneficial Ownership Limitation”). All holders of the Series C Preferred Stock elected the 19.99% Beneficial Ownership Limitation. In 2021, 2,000 Series C shares were converted into 363,636 common shares. In January 2022, the 2,500 outstanding shares of Series C Convertible Preferred Stock were converted into 454,546 shares of common stock. As of December 31, 2022 and December 2021, respectively, there were zero 0 and 2,500 shares of Series C Convertible Preferred Stock issued and outstanding. Series D Convertible Preferred Stock On September 28, 2022 the Company amended its articles of incorporation to designate 4,000 shares as the Series D Convertible Preferred Stock (the “Series D Convertible Preferred Stock”). Each share of the Series D Convertible Preferred Stock has a stated value of $1,000. The holders of the Series D Convertible Preferred Stock, the holders of the common stock and the holders of any other class or series of shares entitled to vote with the common stock shall vote together as one class on all matters submitted to a vote of shareholders of the Company. Each share of Series D Convertible Preferred Stock has 333 votes (subject to standard anti-dilution adjustment); provided that in no event may a holder of Series D Convertible Preferred Stock be entitled to vote a number of shares in excess of such holder’s Beneficial Ownership Limitation (as defined in the Certificate of Designation and as described below). Each share of Series D Convertible Preferred Stock is convertible, subject to shareholder approval (which has not yet been granted); at any time and from time to time, at the option of the holder, into that number of shares of common stock (subject to the Beneficial Ownership Limitation) determined by dividing the stated value of such share ($1,000) by the conversion price, which is $3.00 (subject to standard anti-dilution). The Company shall not effect any conversion of the Series D Convertible Preferred Stock, and a holder shall not have the right to convert any portion of the Series D Convertible Preferred Stock, to the extent that after giving effect to the conversion sought by the holder such holder (together with such holder’s Attribution Parties (as defined in the Certificate of Designation)) would beneficially own more than 4.99% (or upon election by a holder, 19.99%) of the number of shares of common stock outstanding immediately after giving effect to the issuance of shares of common stock issuable upon such conversion (the “Beneficial Ownership Limitation”). All holders of the Series D Preferred Stock have elected the 19.99% Beneficial Ownership Limitation. The Company shall, subject to shareholder approval, reserve and keep available out of its authorized and unissued Common Stock, solely for the issuance upon the conversion of the Series D Convertible Preferred Stock, such a number of shares of Common Stock as shall from time to time be issuable upon the conversion of all of the shares of the Series D Convertible Preferred Stock then outstanding. Additionally, the Series D Convertible Preferred Stock does not have the right to dividends and in the event of an involuntary liquidation, the Series D shares shall be treated as a pro rata equivalent of common stock outstanding at the date of the liquidation event and have no liquidation preference. On September 30, 2022, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain existing investors in the Company (the “Purchasers”). Pursuant to the Purchase Agreement, the Purchasers purchased 999 shares of the newly authorized Series D Convertible Preferred Stock (the “Series D Convertible Preferred Stock”), and 818,355 shares of common stock and the Company received gross proceeds of $ 3,454,003 with $ 999,000 related to the Series D sale at $ 1,000 per share. The Purchase Agreement contains customary representations, warranties, agreements and indemnification rights and obligations of the parties. On October 29, 2022, the Company sold to an existing investor in the Company and two other accredited investors in a private placement 83,667 shares of common stock at a price of $ 3.00 a share and 300 shares of Series D Convertible Preferred Stock at a price of $ 1,000 a share, resulting in gross proceeds of $ 551,001 to the Company with $ 300,000 of the proceeds related to the Series D sale. In connection with the Purchase Agreement, the Company also entered into a Registration Rights Agreement with the Purchasers. Pursuant to the Registration Rights Agreement, the Company filed with the SEC a registration statement covering the resale by the Purchasers of the shares of common stock issued pursuant to the Purchase Agreements and the shares of common stock into which the shares of Series D Convertible Preferred Stock are convertible. The Registration Rights Agreement contains customary representations, warranties, agreements and indemnification rights and obligations of the parties. Common stock issued for Private Placements, Preferred Stock Conversions, Services and Settlements 2022 Transactions On January 11, 2022, shareholders converted 710 and 1,790 for a total of 2,500 shares of Series C Convertible Preferred Stock collectively with a stated value of $2.5 million owned by two entities related to each other with a conversion price of $ 5.50 per common share resulting in the issuance of 129,091 and 325,455 shares of the Company’s common stock. On February 3, 2022, the Company closed an offering of 1,325,000 shares of common stock in the amount of $ 5,300,000 or $ 4 per share before certain underwriting fees and offering expenses with net proceeds of $ 4,779,000 . On February 21, 2022, the Company closed on an “over-allotment” offering of 198,750 shares of common stock in the amount of $ 795,000 or $ 4 per share before certain underwriting fees and offering expenses with net proceeds of $ 739,350 . Both this and the previous offering were “takedowns” from a previously filed “shelf” registration statement for the offer of up to $ 50,000,000 in the aggregate of common stock, Preferred Stock, Debt Securities, Warrants, Rights or Units from time to time in one or more offerings. On March 31, 2022, the Company issued 7,198 shares of common stock for payment of board fees to four directors in the amount of $ 40,000 for services to the board which was expensed during the three months ended March 31, 2022. On June 30, 2022, the Company issued 10,668 shares of common stock for payment of board fees to four directors in the amount of $ 40,000 for services to the board which was expensed during the three months ended June 30, 2022. On August 25, 2022, 121,572 common shares were issued upon conversion of 851 shares of Series B Preferred Stock. On September 30, 2022, the Company issued 9,758 shares of common stock for payment of board fees to four directors in the amount of $ 40,000 , or $4.09 per share based on the daily trading price, for services to the board which was expensed during the three months ended September 30, 2022. On December 30, 2022, the Company issued 16,335 shares of common stock for payment of board fees to four directors in the amount of $ 37,500 for services to the board which was expensed during the three months ended December 31, 2022. On September 30, 2022, we sold to certain existing investors in the Company in a private placement 818,335 shares of common stock at a price of $ 3.00 a share and 999 shares of Series D Preferred Stock at a price of $ 1,000 a share, resulting in the gross amount raised of $ 3,454,003 and we accrued estimated offering costs of $ 260,816 as of September 30, 2022. Subsequently, we adjusted the estimated offering costs to the actual amount of $ 257,240 . On October 29, 2022, we sold to an existing investor in the Company and two accredited investors in a private placement 83,667 shares of common stock at a price of $ 3.00 a share and 300 shares of Series D Preferred Stock at a price of $ 1,000 a share, resulting in the gross amount raised of $ 551,001 , including gross proceeds of $251,001 for common stock and $300,000 for Series D Preferred Stock, and recorded offering costs of $ 105,460 . 2021 Transactions The Company issued 4,032 shares of common stock on August 5, 2021 for payment of accrued board fees to four directors in the amount of $ 30,000 for services to the Board. The Company issued 7,223 shares of common stock on September 30, 2021 for payment of accrued board fees to five directors in the amount of $ 45,000 for services to the Board. The Company issued 3,726 shares of common stock on November 5, 2021 for payment of accrued board fees to four directors in the amount of $ 19,167 for services to the Board. The Company issued 9,560 shares of common stock on December 31, 2021 for payment of accrued board fees to four directors in the amount of $ 50,000 for services to the Board. Stock-Based Compensation Stock-based compensation expense recognized under ASC 718-10 for the year ended December 31, 2022 and 2021, was $ 819,191 and $ 262,411 , respectively, for stock options granted to employees and directors. This expense is included in general and administrative expenses in the consolidated statements of operations. Stock-based compensation expense recognized during the period is based on the value of the portion of share-based payment awards that is ultimately expected to vest during the period. At December 31, 2022, the total compensation cost for stock options that was not yet recognized was $ 426,004 . This cost will be recognized over the remaining vesting term of the options of approximately 3.3 years. Treasury Stock In August 2016, the Company’s Board of Directors approved a new class of Preferred Stock, “Series A”. For shareholders who invested in previous private placements, the Company was offering on a case-by-case basis, the ability to convert the existing amount invested into an equivalent amount in the Series A on the condition that they invest an equivalent additional amount in the Series A. In December of 2017, the Company redeemed all of the Series A and continues to hold 235 shares purchased for $ 148,000 as a part of the original transaction. In December 2018, the Company entered into an agreement with two shareholders to purchase shares from them at fair market value. The Company purchased 84 shares at $ 7.00 per shares and 140 shares at $ 6.30 per share. In 2019, the Company entered into an agreement with two shareholders to purchase shares from them at fair market value. The Company purchased 115 shares at $ 10.08 per shares and 753 shares at $ 9.09 per share. Accordingly, as of December 31, 2022, and 2021, the Company held 1,324 shares of Company Series A stock at an aggregate value of $ 157,452 . |
COMMON STOCK OPTIONS AND WARRAN
COMMON STOCK OPTIONS AND WARRANTS | 12 Months Ended |
Dec. 31, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
COMMON STOCK OPTIONS AND WARRANTS | NOTE 13 – COMMON STOCK OPTIONS AND WARRANTS Options 2022 During the first quarter of 2022, the Company’s Board of Directors granted 665,000 new stock options and in the third quarter granted a further 20,000 new stock options both with a strike price of $ 6.41 per share to 16 key employees. These options were awarded as a one-time award as a retention incentive and have a fair value of $ 1,596,804 for the January 1, 2022 awards and $ 33,096 for the July 1, 2022 award and carry a three-year vesting period. The issuance of these options generated stock option compensation expense in the year in the amount of $ 819,191 and a balance of unamortized stock option compensation expense of $ 426,004 , that is being expensed over the following 2.0 years. During the second quarter of 2022, three former staff members forfeited 110,000 non-qualified stock options. Additionally, during the third quarter of 2022, two employees forfeited 80,000 non-qualified stock options. 2021 During the first quarter of 2021, the Company’s Board of Directors granted 20,000 new stock options with a strike price of $ 4.32 per share to its new VP of Product Innovation. These options were awarded as a one-time award as a hiring incentive and have a fair value of $ 52,758 as of January 4, 2021. The issuance of these options generated stock option compensation expense in that quarter in the amount of $ 7,685 and a balance of unamortized stock option compensation expense of $ 45,073 , that is being expensed over the following 2.75 years. During the second quarter of 2021, five former staff members and one contractor exercised 31,710 and forfeited 8,922 non-qualified stock options. These transactions were ultimately consummated in the third quarter. Accordingly, in the third quarter the Company recorded a charge of $ 63,860 for the remaining unvested option which was offset by a credit of $1,270 for an over accrual recorded in the second quarter related to the forfeited options. During the third quarter of 2021, the shareholders approved the issuance of up to one million shares or share equivalents in the form of stock options for the purposes of share issuance for compensation to Board Members and grants to certain staff members for recruiting and retention. On July 14, 2021, the Company filed an S-8 registration statement in concert with the 2021 Equity Incentive Plan which was deemed effective on August 5, 2021. The plan covers a period of ten years. Schedule of options activity Weighted Weighted Average Average Remaining Aggregate Exercise Contractual Intrinsic Shares Price Term (Years) Value Outstanding at December 31, 2020 451,898 $ 5.06 4.2 — Granted 20,000 $ 4.32 4.0 — Forfeited (40,632 ) $ 14.00 — — Outstanding at December 31, 2021 431,266 $ 4.98 3.4 $ 197,506 Exercisable at December 31, 2021 312,310 $ 5.25 3.4 — Outstanding at December 31, 2021 431,266 $ 4.98 3.4 $ 197,506 Granted 685,000 $ 6.41 4.0 — Exercised/Forfeited (190,000 ) $ 6.41 — — Outstanding at December 31, 2022 926,266 $ 5.74 3.3 $ 0 Exercisable at December 31, 2022 404,599 $ 5.02 3.3 — The fair value of the incentive stock option grants for the years ended December 31, 2022 and 2021 were estimated using the following weighted- average assumptions: Schedule of fair value assumptions For the Years Ended 2022 2021 Risk free interest rate 0.97 – 3.15 % 0.18 % Expected term in years 3.25 - 3.50 3.50 Dividend yield — — Volatility of common stock 72 - 80 % 91.6 % Warrants 2022 During the fourth quarter of 2022, warrants held by 63 holders representing 1,228,875 shares expired. All of the expired warrants can no longer be exercised. 2021 During the second quarter of 2021, warrants representing 205,574 shares were exercised by seven holders. All the exercises were cashless exercises with exercise prices of $ 7.70 and stock prices ranging from $ 9.25 to $ 11.14 resulting in a total of 50,588 common shares. No new warrants were issued during the third and fourth quarter of 2021. Schedule of warrants outstanding Weighted Weighted Average Average Remaining Aggregate Number of Exercise Contractual Intrinsic Warrants Price Term (Years) Value Outstanding at December 31, 2020 1,587,553 $ 8.62 2.0 — Warrants expired, forfeited, cancelled or exercised (232,517 ) Warrants issued 21,430 $ 7.70 1.9 — Outstanding at December 31, 2021 1,376,466 $ 8.18 1.9 — Exercisable at December 31, 2021 1,376,466 $ 8.18 1.9 — Outstanding at December 31, 2021 1,376,466 $ 8.18 1.9 — Warrants expired, forfeited, cancelled or exercised (1,228,875 ) — Warrants issued 0 $ — — — Outstanding at December 31, 2022 147,591 $ 8.63 0.8 — Exercisable at December 31, 2022 147,591 $ 8.63 0.8 — |
DEFINED CONTRIBUTION PLAN
DEFINED CONTRIBUTION PLAN | 9 Months Ended | 12 Months Ended |
Sep. 30, 2023 | Dec. 31, 2022 | |
Retirement Benefits [Abstract] | ||
DEFINED CONTRIBUTION PLAN | NOTE 7 – DEFINED CONTRIBUTION PLAN The Company has a 401(k)-retirement savings plan (the “401(k) Plan”) covering all eligible employees. The 401(k) Plan allows employees to defer a portion of their annual compensation, and the Company may match a portion of the employees’ contributions generally after the first nine months of service. During the three months ended September 30, 2023, the Company matched 100% of the first 4% of eligible employee compensation that was contributed to the 401(k) Plan. For the three and nine months ended September 30, 2023, the Company recognized expense for matching cash contributions to the 401(k) Plan totaling $ 59,508 and $ 158,852 , respectively. | NOTE 14 – DEFINED CONTRIBUTION PLAN The Company has a 401(k)-retirement savings plan (the “401(k) Plan”) covering all eligible employees. The 401(k) Plan allows employees to defer a portion of their annual compensation, and the Company may match a portion of the employees’ contributions generally after the first six months of service. During the year ended December 31, 2022, the Company matched 100% of the first 4% of eligible employee compensation that was contributed to the 401(k) Plan. For the year ended December 31, 2022, the Company recognized expense for matching cash contributions to the 401(k) Plan totaling $ 155,766 . |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended | 12 Months Ended |
Sep. 30, 2023 | Dec. 31, 2022 | |
Related Party Transactions [Abstract] | ||
RELATED PARTY TRANSACTIONS | NOTE 8 – RELATED PARTY TRANSACTIONS There were no related party transactions for the periods reflected in this report. | NOTE 15 – RELATED PARTY TRANSACTIONS On August 1, 2012, the Company entered into an independent contractor master services agreement (the “Services Agreement”) with Luceon, LLC, a Florida limited liability company, owned by our former Chief Technology Officer, David Ponevac. The Services Agreement provided that Luceon would provide support services including management, coordination or software development services and related services to duos. In January 2019, additional services were contracted with Luceon for TrueVue360™ primarily for software development through the provision of 7 additional full-time contractors located in Slovakia at a cost of $ 16,250 for January initially, rising to $ 25,583 after fully staffed, per month starting February 2019. This was in addition to the existing contract of $ 7,480 per month for Duos for 4 full-time contractors which increased to $8,231 per month in June of 2019. During 2020 efforts in reducing cost, Luceon reduced its staff for the TrueVue360 software development team from a staff of 7 to 3 full-time employees at a cost of $11,666 per month starting June 1, 2020. As of January 1, 2021, the Company no longer records activities in TrueVue360 and has combined billings for a total of $ 20,986 per month. For the twelve months ended December 31, 2021 and 2020, the total amount expensed was $ 93,422 and $ 335,334 , respectively. The Company had no open accounts payable with Luceon at December 31, 2021. On May 14, 2021, the Company formally ended its relationship with Luceon in concert with the resignation of our Chief Technology Officer and as such there is no longer a related party relationship. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended | 12 Months Ended |
Sep. 30, 2023 | Dec. 31, 2022 | |
Subsequent Events [Abstract] | ||
SUBSEQUENT EVENTS | NOTE 10 – SUBSEQUENT EVENTS On November 9, 2023, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with an existing investor in the Company (the “Purchaser”). Pursuant to the Purchase Agreement, the Purchaser purchased 2,500 shares of authorized Series E Convertible Preferred Stock (the “Series E Convertible Preferred Stock”), at a price of $ 1,000 per share, and the Company received proceeds of $ 2,500,000 . The November Purchase Agreement also provides that the Company will not, with certain exceptions, sell or issue common stock or Common Stock Equivalents (as defined in the November Purchase Agreement) on or prior to June 30, 2024 that entitles any person to acquire shares of common stock at an effective price per share less than the then conversion price of the Series E Preferred Stock without the consent of the Purchasers. The conversion price of the Series E Preferred Stock currently is $ 3.00 per share (subject to adjustment). The Purchase Agreement contains customary representations, warranties, agreements and indemnification rights and obligations of the parties. In connection with the Purchase Agreement, the Company also entered into a Registration Rights Agreement with the Purchasers. Pursuant to the Registration Rights Agreement, the Company shall file with the SEC a registration statement covering the resale by the Purchasers of the shares of common stock into which the shares of Series E Preferred Stock are convertible. Subject to certain conditions, the Company must cause the registration statement to be declared effective by 90 days after closing (or in the event of a full review by the SEC, by 120 days). The Registration Rights Agreement contains customary representations, warranties, agreements and indemnification rights and obligations of the parties. Each share of Series E Convertible Preferred Stock is convertible, at any time and from time to time, at the option of the holder, into that number of shares of common stock (subject to the Beneficial Ownership Limitation) determined by dividing the stated value of such share ($ 1,000 ) by the conversion price, which is $ 3.00 (subject to standard anti-dilution provisions). The Company shall not affect any conversion of the Series E Convertible Preferred Stock, and the holder shall not have the right to convert any portion of the Series E Convertible Preferred Stock, to the extent that after giving effect to the conversion sought by the holder such holder (together with such holder’s Attribution Parties (as defined in the Certificate of Designation)) would beneficially own more than 4.99% (or upon election by a holder, 19.99%) of the number of shares of common stock outstanding immediately after giving effect to the issuance of shares of common stock issuable upon such conversion (the “Beneficial Ownership Limitation”). Each Purchaser elected the 19.99% Beneficial Ownership Limitation. The terms of the Series E Preferred Stock provide that, without shareholder approval (the "Stockholder Approval"), the Company may not issue upon the conversion of any shares of Series E Preferred Stock a number of shares of common stock which, when aggregated with any shares of common stock issued upon conversion of any other shares of Series E Preferred Stock, would exceed 1,430,484 (subject to adjustment). Such number represents 20% of the number of shares of common stock issued and outstanding upon the filing of the Series E Preferred Stock Certificate of Designation. To obtain the stockholder approval, the Company is required to hold a meeting of shareholders at the earliest practical date, but in no event later than 120 days after closing (or 150 days in the event of a review of the proxy statement by the Securities and Exchange Commission (the “SEC”)) to seek approval for the conversion of Series E Preferred Stock into common stock above the allowed amount. The terms of the Series E Preferred Stock limit its convertibility until the Company receives shareholder approval (the “Stockholder Approval”). If the Company does not obtain the Stockholder Approval at the first meeting, it is required to hold shareholder meetings every four months until the Stockholder Approval is obtained. In connection with the Purchase Agreement of Series F Convertible Preferred Stock, completed on August 2, 2023, certain protections existed for the investor if the Company completed a share offering with an equivalent common stock price of less than the $ 6.20 on or before December 31, 2023. In such an event, the investor of Series F Convertible Preferred Stock shall exchange the Series F shares for an equivalent to the lower common stock equivalent price for any transactions completed prior to December 31, 2023. In connection with the November 9, 2023 Series E Convertible Preferred Stock offering, the Company entered into an Exchange Agreement with the investor and issued an additional 5,000 shares of Series E Convertible Preferred Stock at $ 1,000 per share with $ 3.00 per common share equivalent in exchange for 5,000 outstanding and issued shares of Series F Convertible Preferred Stock. All shares of Series F Convertible Preferred Stock were held by a single shareholder. | NOTE 16 – SUBSEQUENT EVENTS On February 1, 2023, the board of directors authorized management to reserve an additional 150,000 shares of common stock for issuance under the 2021 Equity Incentive Plan at a strike price of $ 4.22 . The purpose of the additional shares is to serve as a retention tool for staff. On November 9, 2022 the board of directors adopted, subject to shareholder approval, the Employee Stock Purchase Plan (“ESPP”) which would become effective as of January 1, 2023. The ESPP provisions for the issuance of up to 1,000,000 common shares for eligible employees to purchase shares during designated offering periods under Section 423 of the Internal Revenue Code of 1986. Eligible employees are permitted to purchase shares equivalent of up to 15% of their eligible compensation with offering periods occurring twice per year whereby shares are purchased at 85% of the lower of the fair market value of common shares on the first trading date of the offering period or on the last trading day of the purchase period. On March 27, 2023, as previously disclosed, the Company sold to an existing, accredited investor in the Company in a private placement 4,000 shares of Series E Preferred Stock at a price of $1,000 a share, resulting in gross proceeds of $4,000,000 to the Company. The issuance of the Series E Preferred Stock was accompanied with a stock purchase agreement containing certain rights pertaining to the accredited investor and a registration rights agreement. The Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with an existing investor in the Company (the “Purchaser”). Pursuant to the Purchase Agreement, the Purchaser purchased 4,000 shares of a newly authorized Series E Convertible Preferred Stock (the “Series E Convertible Preferred Stock”), and the Company received proceeds of $4,000,000. The Purchase Agreement contains customary representations, warranties, agreements and indemnification rights and obligations of the parties. In connection with the Purchase Agreement, the Company also entered into a Registration Rights Agreement with the Purchasers. Pursuant to the Registration Rights Agreement, the Company shall file with the SEC a registration statement covering the resale by the Purchasers of the shares of common stock into which the shares of Series E Preferred Stock are convertible. Subject to certain conditions, the Company must cause the registration statement to be declared effective by 90 days after closing (or in the event of a full review by the SEC, by 120 days). The Registration Rights Agreement contains customary representations, warranties, agreements and indemnification rights and obligations of the parties. Under the Purchase Agreement, the Company is required to hold a meeting of shareholders at the earliest practical date, but in no event later than 120 days after closing (or 150 days in the event of a review of the proxy statement by the Securities and Exchange Commission (the “SEC”)). As described below, the terms of the Series E Preferred Stock limit its convertibility until the Company receives shareholder approval (the “Stockholder Approval”). If the Company does not obtain the Stockholder Approval at the first meeting, it is required to hold shareholder meetings every four months until the Stockholder Approval is obtained. The Company’s Board of Directors has designated 30,000 shares as the Series E Convertible Preferred Stock. Each share of the Series E Convertible Preferred Stock has a stated value of $1,000. The holder of the Series E Convertible Preferred Stock, the holder of the common stock and the holder of any other class or series of shares entitled to vote with the common stock shall vote as one class on all matters submitted to a vote of shareholders of the Company. Each share of Series E Convertible Preferred Stock is convertible, at any time and from time to time, at the option of the holder, into that number of shares of common stock (subject to the Beneficial Ownership Limitation) determined by dividing the stated value of such share ($1,000) by the conversion price, which is $3.00 (subject to standard anti-dilution other than provisions described below in the Purchase Agreement). The Company shall not effect any conversion of the Series E Convertible Preferred Stock, and the holder shall not have the right to convert any portion of the Series E Convertible Preferred Stock, to the extent that after giving effect to the conversion sought by the holder such holder (together with such holder’s Attribution Parties (as defined in the Certificate of Designation)) would beneficially own more than 4.99% (or upon election by a holder, 19.99%) of the number of shares of common stock outstanding immediately after giving effect to the issuance of shares of common stock issuable upon such conversion (the “Beneficial Ownership Limitation”). The holder of the Series E Preferred Stock, the holders of the common stock and the holders of any other class or series of shares entitled to vote with the common stock shall vote together as one class on all matters submitted to a vote of shareholders of the Company. Each share of Series E Preferred Stock has 333 votes (subject to adjustment); provided that in no event may a holder of Series E Preferred Stock be entitled to vote a number of shares in excess of such holder’s Beneficial Ownership Limitation (as defined in the Certificate of Designation). The Purchase Agreement also provides that the Company will not, with certain exceptions, sell or issue common stock or Common Stock Equivalents (as defined in the Purchase Agreement) on or prior to December 31, 2023 that entitles any person to acquire shares of common stock at an effective price per share less than the then conversion price of the Series E Preferred Stock without the consent of the Purchaser. The Registration Rights Agreement contains provisions for liquidated damages equal to 1% multiplied by the aggregate subscription amount paid, paid each month, in the event certain deadlines are missed. |
SALE OF ASSETS
SALE OF ASSETS | 9 Months Ended |
Sep. 30, 2023 | |
Sale Of Assets | |
SALE OF ASSETS | NOTE 9 – SALE OF ASSETS On June 29, 2023, the Company completed a transaction whereby it sold assets related to its Integrated Correctional Automation System (iCAS) business with a single customer. In the fourth quarter of 2022, the Company elected to not renew a support contract due to the limited nature of the business. The transaction was completed with a third-party buyer of which the Company’s former Chief Financial Officer is a director. Said former officer did not participate in the transaction on behalf of the Company. The assets of the iCAS business were sold for a convertible promissory note with a principal amount of $ 165,000 with a 10 % original issue discount as well as common stock purchase warrants. The note matures in 2 years from the date of sale and is convertible immediately through the later of the maturity date or payment by the borrower of the default amount, as defined in the note, into shares of the buyer’s common stock at a conversion price of $ 0.003 or 55,000,000 shares. The conversion of the note carries restrictions which include limiting conversion to the extent it would exceed 4.99% of the common stock outstanding of the buyer. The convertible promissory note is subject to standard anti-dilution provisions. The common stock purchase warrants are for a total of 55,000,000 common shares of the buyer at an exercise price of $ 0.01 per share. The warrants are subject to standard anti-dilution provisions. The warrants are not exercisable until on or after six months from the issuance date and no later than on or before the third anniversary of the issuance date. The Company may exercise the warrants at any time after the six-month anniversary of the issuance date on a cashless basis if there is no effective registration statement covering the resale of the Warrant Shares at prevailing market prices by the holder. The exercise of these warrants is subject to beneficial ownership limits of 4.99% which may be increased by the holder up to 9.99% as defined in the warrant . Given that the shares carried no intrinsic value at the time of the transaction and that the overall fair value is de minimis, the Company has not recorded the warrants associated with the transaction. The Company recognized a gain on sale of assets of $ 150,000 , which is included in other income. The original issue discount is being accrued into interest income over the term of the note. The note receivable was recorded as follows on September 30, 2023: Schedule of note receivable September 30, 2023 Convertible note receivable $ 165,000 Unamortized discount (13,125 ) Convertible note receivable, net $ 151,875 |
NATURE OF OPERATIONS AND SUMM_2
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2023 | Dec. 31, 2022 | |
Accounting Policies [Abstract] | ||
Nature of Operations | Nature of Operations Duos Technologies Group, Inc. (the “Company”), through its operating subsidiaries, Duos Technologies, Inc. (“Duos”) and TrueVue360, Inc. (“TrueVue360”) (collectively the “Company”), is a company that specializes in machine vision and artificial intelligence to analyze fast moving objects such as trains, trucks, automobiles, and aircraft. This technology can help improve safety, maintenance, and operating metrics. The Company is the inventor of the Railcar Inspection Portal (RIP) and is currently the rail industry leader for machine vision/camera wayside detection systems that include the use of Artificial Intelligence at speeds up to 125 mph. The RIP inspects a train at full speed from the top, sides, and bottom looking at FRA/AAR mandated safety inspection points. The system also detects illegal riders that assists law enforcement agencies. Each rail car is scanned with machine vision cameras and other sensors from the top, sides, and bottom and images are produced within seconds of passing that can be used by the customer to help prevent derailments, improve maintenance operations, and assist with security. The Company self-performs all aspects of hardware, software, IT, and Artificial Intelligence development and engineering and holds several patents and maintains significant intellectual property. The Company also has a proprietary portfolio of over 40 Artificial Intelligence “Use Cases” that automatically flag defects. The Company has deployed this system with several Class 1 and passenger customers and anticipates an increased demand in the future from rail operators, car owners, shippers, and law enforcement agencies. The Company has also developed the Automated Logistics Information System (ALIS) which automates gatehouse operations where trucks enter and exit large logistics and intermodal facilities. This solution also incorporates sensors and data points as necessary for each operation and directly interconnects with backend logistics databases and processes to streamline operations and significantly improve operations and security and, importantly, dramatically improves throughput on each lane on which the technology is deployed. The Company expects to deploy an upgraded Truck Inspection Portal (TIP) which uses the same technology and lessons learned from the ALIS and RIP systems. The Company’s strategy is to expand our existing customer base in the Class 1, short line, and passenger space in North America; expand our subscription offering to car owners and shippers; and expand operations to meet the demand from international customers. The Company has prepared to respond and scale if necessary to react to increased demand from potential regulations that may be imposed around wayside detection technology. In the future the Company may put more emphasis on the trucking and intermodal sector with an updated Truck Inspection Portal solution. The Company continues to focus on operational and technical excellence, customer satisfaction, and maintaining a highly skilled and performance-based work force. | Nature of Operations Duos Technologies Group, Inc. (the “Company”), through its operating subsidiaries, Duos Technologies, Inc. (“Duos”) and TrueVue360, Inc. (“TrueVue360”) (collectively the “Company”), develops and deploys vision based analytical technology solutions that will help to transform precision railroading, logistics and inter-modal transportation operations. Additionally, these unique patented solutions can be employed into many other industries. The Company has developed the Railcar Inspection Portal (RIP) that provides both freight and transit railroad customers and select government agencies the ability to conduct fully automated inspections of trains while they are in transit. The system, which incorporates a variety of sophisticated optical technologies, illumination and other sensors, scans each passing railcar to create an extremely high-resolution image set from a variety of angles including the undercarriage. These images are then processed through various methods of artificial intelligence (“AI”) algorithms to identify specific defects and/or areas of interest on each railcar. This is all accomplished within minutes of a railcar passing through our portal. This solution has the potential to transform the railroad industry by increasing safety, improving efficiency and reducing costs. The Company has successfully deployed this system with several Class 1 railroad customers and anticipates an increased demand in the future. Government agencies can conduct digital inspections combined with the incorporated AI to improve rail traffic flow across borders which also directly benefits the Class 1 railroads through increasing their velocity. The Company has also developed the Automated Logistics Information System (ALIS) which automates and reduces/removes personnel from gatehouses where trucks enter and exit large logistics and intermodal facilities. This solution also incorporates sensors and data points as necessary for each operation and directly interconnects with backend logistics databases and processes to streamline operations and significantly improve operations and security and importantly dramatically improves the vehicle throughput on each lane on which the technology is deployed. The Company has built a portfolio of IP and patented solutions that creates “actionable intelligence” using two core native platforms called Centraco® and Praesidium™. All solutions provided include a variant of both applications. Centraco is designed primarily as the user interface to all our systems as well as the backend connection to third-party applications and databases through both Application Programming Interfaces (APIs) and Software Development Kits (SDKs). This interface is browser based and hosted within each one of our systems and solutions. It is typically also customized for each unique customer and application. Praesidium typically resides as middleware in our systems and manages the various image capture devices and some sensors for input into the Centraco software. The Company also developed a proprietary Artificial Intelligence (AI) software platform, Truevue360™ with the objective of focusing the Company’s advanced intelligent technologies in the areas of AI, deep machine learning and advanced multi-layered algorithms to further support our solutions. Through September 30, 2021, the Company also provided professional and consulting services for large data centers and had developed a system for the automation of asset information marketed as DcVue™. The Company had deployed its DcVue software at one beta site. This software was used by Duos’ consulting auditing teams. DcVue was based upon the Company’s OSPI patent which was awarded in 2010. The Company offered DcVue available for license to our customers as a licensed software product. The Company ceased offering this product in 2021. The Company’s strategy is to deliver operational and technical excellence to our customers, expand our RIP and ALIS solutions into current and new customers focused in the Rail, Logistics and U.S. Government Sectors, offer both one-time equipment sales and capital lease pricing models, and longer-term offer subscription pricing, to customers that increases recurring revenue, grows backlog and improves profitability, responsibly grow the business both organically and through selective acquisitions, and promote a performance-based work force where employees enjoy their work and are incentivized to excel and remain with the Company. |
Reclassifications | Reclassifications The Company reclassified $ 850,999 of Series B Convertible Preferred Stock and $ 2,499,998 of Series C Convertible Preferred Stock as previously presented on the December 31, 2021 Consolidated Balance Sheet to additional paid-in capital to conform to the presentation at December 31, 2022 of new Series D Preferred Stock at par value rather than at stated value. There was no net effect on the total shareholders’ equity of such reclassification. The Company reclassified certain operating expenses for the year ended December 31, 2021 to conform to 2022 classification. There was no net effect on the total expenses of such reclassification. The following table reflects the reclassification adjustment effect for the year ended December 31, 2021: Schedule of reclassifications Before Reclassification After Reclassification For the Year Ended For the Year Ended December 31, December 31, 2021 2021 REVENUES: REVENUES: Technology systems $ 5,871,666 Technology systems $ 5,871,666 Technical support 2,388,251 Services and consulting 2,388,251 Total Revenue 8,259,917 Total Revenue 8,259,917 COST OF REVENUES: COST OF REVENUES: Technology systems 7,151,276 Technology systems 4,728,197 Technical support 1,369,985 Services and consulting 1,492,176 Overhead 2,297,826 — — Total Cost of Revenues 10,819,087 Total Cost of Revenues 6,220,373 GROSS MARGIN (2,559,170) GROSS MARGIN 2,039,544 OPERATING EXPENSES: OPERATING EXPENSES: Sales and marketing 1,233,851 Sales and marketing 1,233,851 Research and development 251,563 Research and development 2,515,630 General and administration 3,412,367 General and administration 5,747,014 Total Operating Expenses 4,897,781 Total Operating Expenses 9,496,495 LOSS FROM OPERATIONS $ (7,456,951 ) LOSS FROM OPERATIONS $ (7,456,951 ) | |
Principles of Consolidation | Principles of Consolidation The unaudited consolidated financial statements include Duos Technologies Group, Inc. and its wholly owned subsidiaries, Duos Technologies, Inc. and TrueVue360 Inc. All inter-company transactions and balances are eliminated in consolidation. | Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Duos Technologies, Inc. and TrueVue360, Inc. All inter-company transactions and balances are eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from these estimates. The most significant estimates in the accompanying unaudited consolidated financial statements include the allowance on accounts receivable and notes receivable, valuation of common stock warrants received in exchange for an asset sale, valuation of deferred tax assets, valuation of intangible and other long-lived assets, estimates of net contract revenues and the total estimated costs to determine progress towards contract completion, valuation of inventory, estimates of the valuation of right of use assets and corresponding lease liabilities, valuation of warrants issued with debt and valuation of stock-based awards. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from these estimates. The most significant estimates in the accompanying consolidated financial statements include the allowance on accounts receivable, valuation of deferred tax assets, valuation of intangible and other long-lived assets, estimates of net contract revenues and the total estimated costs to determine progress towards contract completion, valuation of inventory, estimates of the valuation of right of use assets and corresponding lease liabilities, valuation of warrants and valuation of stock-based awards. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. |
Concentrations | Concentrations Cash Concentrations Cash is maintained at financial institutions and at times, balances may exceed federally insured limits. We have not experienced any losses related to these balances. As of September 30, 2023, the balance in one financial institution exceeded federally insured limits by approximately $ 2,768,466 . Any loss incurred or a lack of access to such funds could have a significant adverse impact on the Company’s consolidated financial condition, results of operation and cash flows. Significant Customers and Concentration of Credit Risk The Company had certain customers whose revenue individually represented 10% or more of the Company’s total revenue, or whose accounts receivable balances individually represented 10% or more of the Company’s total accounts receivable, as follows: For the nine months ended September 30, 2023, two customers accounted for 55 % and 29 % of revenues. For the nine months ended September 30, 2022, four customers accounted for 25 %, 21 %, 19 % and 19 % of revenues. In all cases, there are no minimum contract values stated. Each contract covers an agreement to deliver a Railcar Inspection Portal which, once accepted, must be paid in full, with 30 % or more being due and payable prior to delivery. The balances of the contracts are for service and maintenance which is paid annually in advance with revenues recorded ratably over the contract period. At September 30, 2023, three customers accounted for 52 %, 25 %, and 14 % of accounts receivable. At December 31, 2022, four customers accounted for 34 %, 31 %, 19 % and 10 % of accounts receivable. Much of the credit risk is mitigated since all the customers listed here are Class 1 railroads with a history of timely payments to us. Geographic Concentration For the nine months ended September 30, 2023, approximately 37 % of revenue was generated from three customers outside of the United States. For the nine months ended September 30, 2022, approximately 54 % of revenue was generated from four customers outside of the United States. These customers are Canadian and Mexican, and, for the nine months ended September 30, 2023, two of the three are Class 1 railroads operating in the United States. Significant Vendors and Concentration of Credit Risk In some instances, the Company relies on a limited pool of vendors for key components related to the manufacturing of its subsystems. These vendors are primarily focused on camera, server and lighting technologies integral to the Company’s solution. Where possible, the Company seeks multiple vendors for key components to mitigate vendor concentration risk. | Concentrations Cash Concentrations Cash is maintained at financial institutions and at times, balances may exceed federally insured limits. We have not experienced any losses related to these balances. As of December 31, 2022, the Company had balances in a financial institution which combined exceeded federally insured limits by approximately $ 688,000 . Any loss incurred or a lack of access to such funds could have a significant adverse impact on the Company’s consolidated financial condition, results of operation and cash flows. Significant Customers and Concentration of Credit Risk The Company had certain customers whose revenue individually represented 10% or more of the Company’s total revenue, or whose accounts receivable balances individually represented 10% or more of the Company’s total accounts receivable, as follows: For the year ended December 31, 2022, four customers accounted for 42 %, 18 %, 14 % and 14 % of revenues. For the year ended December 31, 2021, a single customer accounted for 83 % of revenues. In all cases, there are no minimum contract values stated. Each contract covers an agreement to deliver a rail inspection portal which, once accepted, must be paid in full, with 30% or more being due and payable prior to delivery. The balances of the contracts are for service and maintenance which is paid annually in advance with revenues recorded ratably over the contract period. At December 31, 2022, four customers accounted for 34 %, 31 %, 19 % and 10 % of accounts receivable. At December 31, 2021, two customers accounted for 81 % and 10 % of accounts receivable. Much of the credit risk is mitigated since all of the customers listed here are Class 1 railroads with a history of timely payments to us. Geographic Concentration Approximately 41 % and 86 % of revenue in 2022 and 2021, respectively, is generated from customers outside of the United States. Significant Vendors and Concentration In some instances, the Company relies on a limited pool of vendors for key components related to the manufacturing of its subsystems. These vendors are primarily focused on camera, server and lighting technologies integral to the Company’s solution where possible, the Company seeks multiple vendors for key components to mitigate vendor concentration risk. |
Fair Value of Financial Instruments and Fair Value Measurements | Fair Value of Financial Instruments and Fair Value Measurements The Company follows Accounting Standards Codification (“ASC”) 820, “Fair Value Measurements and Disclosures” (“ASC 820”), for assets and liabilities measured at fair value on a recurring basis. ASC 820 establishes a common definition for fair value to be applied to existing generally accepted accounting principles that requires the use of fair value measurements, establishes a framework for measuring fair value and expands disclosure about such fair value measurements. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, ASC 820 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below: Level 1: Observable inputs such as quoted market prices in active markets for identical assets or liabilities. Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data. Level 3: Unobservable inputs for which there is little or no market data, which require the use of the reporting entity’s own assumptions that the market participants would use in the valuation of the asset or liability based on the best available information. The Company analyzes all financial instruments with features of both liabilities and equity under the Financial Accounting Standard Board’s (“FASB”) accounting standard for such instruments. Under this standard, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The estimated fair value of certain financial instruments, including accounts receivable, prepaid expenses, accounts payable, accrued expenses and notes payable are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments. | Fair Value of Financial Instruments and Fair Value Measurements The Company follows Accounting Standards Codification (“ASC”) 820, “Fair Value Measurements and Disclosures” (“ASC 820”), for assets and liabilities measured at fair value on a recurring basis. ASC 820 establishes a common definition for fair value to be applied to existing generally accepted accounting principles that requires the use of fair value measurements, establishes a framework for measuring fair value and expands disclosure about such fair value measurements. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, ASC 820 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below: Level 1: Observable inputs such as quoted market prices in active markets for identical assets or liabilities Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data Level 3: Unobservable inputs for which there is little or no market data, which require the use of the reporting entity’s own assumptions that the market participants would use in the asset or liability based on the best available information. The Company analyzes all financial instruments with features of both liabilities and equity under the Financial Accounting Standard Board’s (“FASB”) accounting standard for such instruments. Under this standard, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The estimated fair value of certain financial instruments, including accounts receivable, prepaid expenses, accounts payable, accrued expenses and notes payable are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments. |
Accounts Receivable | Accounts Receivable On January 1, 2023, the Company adopted ASC 326, “Financial Instruments - Credit Losses”. In accordance with ASC 326, an allowance is maintained for estimated forward-looking losses resulting from the possible inability of customers to make required payments (current expected losses). The amount of the allowance is determined principally on the basis of past collection experience and known financial factors regarding specific customers. Accounts receivable are stated at estimated net realizable value. Accounts receivable are comprised of balances due from customers net of estimated allowances for uncollectible accounts. In determining the collections on the account, historical trends are evaluated, and specific customer issues are reviewed to arrive at appropriate allowances. The Company reviews its accounts to estimate losses resulting from the inability of its customers to make required payments. Any required allowance is based on specific analysis of past due accounts and also considers historical trends of write-offs. Past due status is based on how recently payments have been received from customers. | Accounts Receivable Accounts receivable are stated at estimated net realizable value. Accounts receivable are comprised of balances due from customers net of estimated allowances for uncollectible accounts. In determining the collections on accounts, historical trends are evaluated, and specific customer issues are reviewed to arrive at appropriate allowances. The Company reviews its accounts to estimate losses resulting from the inability of its customers to make required payments. Any required allowance is based on specific analysis of past due accounts and also considers historical trends of write-offs. Past due status is based on how recently payments have been received from customers. |
Inventory | Inventory Inventory consists primarily of spare parts and consumables and long lead time components to be used in the production of our technology systems or in connection with maintenance agreements with customers. Any inventory deemed to be obsolete is written off. Inventory is stated at the lower of cost or net realizable value. Inventory cost is primarily determined using the weighted average cost method. | Inventory Inventory consists primarily of spare parts, consumables and long-lead components to be used in the production of our technology systems or in connection with maintenance agreements with customers. Inventory is stated at the lower of cost or net realizable value. Any inventory determined to be obsolete is written off. Inventory cost is primarily determined using the weighted average cost method. |
Property and Equipment | Property and Equipment Property and equipment are stated at cost, less accumulated depreciation. Depreciation is provided by the straight-line method over the estimated economic life of the property and equipment (three 3 to five 5 years). When assets are sold or retired, their costs and accumulated depreciation are eliminated from the accounts and any gain or loss resulting from their disposal is included in the statement of operations. Leasehold improvements are expensed over the shorter of the term of our lease or their useful lives. | |
Software Development Costs | Software Development Costs Software development costs incurred prior to establishing technological feasibility are charged to operations and included in research and development costs. The technological feasibility of a software product is established when the Company has completed all planning, designing, coding, and testing activities that are necessary to establish that the product meets its design specifications, including functionality, features, and technical performance requirements. Software development costs incurred after establishing technological feasibility for software sold as a perpetual license, as defined within ASC 985-20 (Software – Costs of Software to be Sold, Leased, or Marketed), are capitalized and amortized on a product-by-product basis when the product is available for general release to customers. | Software Development Costs Software development costs incurred prior to establishing technological feasibility are charged to operations and included in research and development costs. The technological feasibility of a software product is established when the Company has completed all planning, designing, coding, and testing activities that are necessary to establish that the product meets its design specifications, including functionality, features, and technical performance requirements. Software development costs incurred after establishing technological feasibility for software sold as a perpetual license, as defined within ASC 985-20 (Software – Costs of Software to be Sold, Leased, or Marketed) are capitalized and amortized on a product-by-product basis when the product is available for general release to customers. |
Patents and Trademarks | Patents and Trademarks Patents and trademarks which are stated at amortized cost, relate to the development of video surveillance security system technology and are being amortized over 17 years. | |
Long-Lived Assets | Long-Lived Assets The Company evaluates the recoverability of its property, equipment, and other long-lived assets in accordance with FASB ASC 360-10-35-15 “Impairment or Disposal of Long-Lived Assets”, which requires recognition of impairment of long-lived assets in the event the net book values of such assets exceed the estimated future undiscounted cash flows attributable to such assets or the business to which such intangible assets relate. This guidance requires that long-lived assets and certain identifiable intangibles be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. | |
Product Warranties | Product Warranties The Company has a 90 -day warranty period for materials and labor after final acceptance of a project. If any parts are defective they are replaced under our vendor warranty which is usually 12 to 36 months. Final acceptance terms vary by customer. Some customers have a cure period for any material deviation and if the Company fails or is unable to correct any deviations, a full refund of all payments made by the customer will be arranged by the Company. As of December 31, 2022 and 2021, the warranty costs have been de-minimis, therefore no accrual of warranty liability has been made. | |
Loan Costs | Loan Costs Loan costs paid to lenders, or third parties are recorded as debt discounts to the related loans and amortized to interest expense over the loan term. | |
Sales Returns | Sales Returns Our systems are sold as integrated systems and there are no sales returns allowed. | |
Revenue Recognition | Revenue Recognition The Company follows Accounting Standards Codification 606, Revenue from Contracts with Customers (“ASC 606”), that affects the timing of when certain types of revenues will be recognized. The basic principles in ASC 606 include the following: a contract with a customer creates distinct contract assets and performance obligations, satisfaction of a performance obligation creates revenue, and a performance obligation is satisfied upon transfer of control to a good or service to a customer. Revenue is recognized by evaluating our revenue contracts with customers based on the five-step model under ASC 606: 1. Identify the contract with the customer; 2. Identify the performance obligations in the contract; 3. Determine the transaction price; 4. Allocate the transaction price to separate performance obligations; and 5. Recognize revenue when (or as) each performance obligation is satisfied. The Company generates revenue from four sources: (1) Technology Systems (2) AI Technologies (3) Technical Support (4) Consulting Services Technology Systems For revenues related to technology systems, the Company recognizes revenue over time using a cost-based input methodology in which significant judgment is required to estimate costs to complete projects. These estimated costs are then used to determine the progress towards contract completion and the corresponding amount of revenue to recognize. Accordingly, the Company bases its revenue recognition 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. To accurately reflect revenue recognition based on the input method, the Company has adopted the implementation guidance as set out in ASC-606-10-55-187 through 192. 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 indirect 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 to be both probable and reasonably estimable. AI Technologies 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 is recognized as revenue ratably over the contracted maintenance term. Technical Support 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. Consulting Services The Company’s consulting services business generates revenues under contracts with customers from four sources: (1) Professional Services (consulting and auditing); (2) Software licensing with optional hardware sales; (3) Customer service training and (4) 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 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 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 the contract term. | Revenue Recognition The Company follows Accounting Standards Codification 606, Revenue from Contracts with Customers (“ASC 606”), that affects the timing of when certain types of revenues will be recognized. The basic principles in ASC 606 include the following: a contract with a customer creates distinct contract assets and performance obligations, satisfaction of a performance obligation creates revenue, and a performance obligation is satisfied upon transfer of control to a good or service to a customer. Revenue is recognized by evaluating our revenue contracts with customers based on the five-step model under ASC 606: 1. Identify the contract with the customer; 2. Identify the performance obligations in the contract; 3. Determine the transaction price; 4. Allocate the transaction price to separate performance obligations; and 5. Recognize revenue when (or as) each performance obligation is satisfied. The Company generates revenue from four sources: (1) Technology Systems (2) AI Technologies (3) Technical Support (4) Consulting Services Technology Systems For revenues related to technology systems, the Company recognizes revenue over time using a cost-based input methodology in which significant judgment is required to estimate costs to complete projects. These estimated costs are then used to determine the progress towards contract completion and the corresponding amount of revenue to recognize. Accordingly, the Company now bases its revenue recognition 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. To accurately reflect revenue recognition based on the input method, the Company has adopted the implementation guidance as set out in ASC-606-10-55-187 through 192. 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 indirect 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. AI Technologies 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 is recognized as revenue ratably over the contracted maintenance term. Technical Support 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. Consulting Services The Company’s consulting services business generates revenues under contracts with customers from four sources: (1) Professional Services (consulting and auditing); (2) Software licensing with optional hardware sales; (3) Customer service training and (4) 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 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 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 the contract term. |
Multiple Performance Obligations and Allocation of Transaction Price | Multiple Performance Obligations and Allocation of Transaction Price Arrangements with customers may involve multiple performance obligations including project revenue and maintenance services in our Technology Systems business. Maintenance will occur after the project is completed and may be provided on an extended-term basis or on an as-needed basis. In our consulting services business, multiple performance obligations may include any of the above four sources. Training and maintenance on software products may occur after the software product sale while other services may occur before or after the software product sale and may not relate to the software product. Revenue recognition for a multiple performance obligations arrangement is as follows: Each performance obligation is accounted for separately when each has value to the customer on a standalone basis and there is Company specific objective evidence of selling price of each deliverable. For revenue arrangements with multiple deliverables, the Company allocates the total customer arrangement to the separate units of accounting based on their relative selling prices as determined by the price of the items when sold separately. Once the selling price is allocated, the revenue for each performance obligation is recognized using the applicable criteria under GAAP as discussed above for performance obligations sold in single performance obligation arrangements. A delivered item or items that do not qualify as a separate unit of accounting within the arrangement are combined with the other applicable undelivered items within the arrangement. The allocation of arrangement consideration and the recognition of revenue is then determined for those combined deliverables as a single unit of accounting. The Company sells its various services and software and hardware products at established prices on a standalone basis which provides Company specific objective evidence of selling price for purposes of performance obligations relative selling price allocation. The Company only sells maintenance services or spare parts based on its established rates after it has completed a system integration project for a customer. The customer is not required to purchase maintenance services. All elements in multiple performance obligations arrangements with Company customers qualify as separate units of account for revenue recognition purposes. | Multiple Performance Obligations and Allocation of Transaction Price Arrangements with customers may involve multiple performance obligations including project revenue and maintenance services in our Technology Systems business. Maintenance will occur after the project is completed and may be provided on an extended-term basis or on an as-needed basis. In our consulting services business, multiple performance obligations may include any of the above four sources. Training and maintenance on software products may occur after the software product sale while other services may occur before or after the software product sale and may not relate to the software product. Revenue recognition for a multiple performance obligations arrangement is as follows: Each performance obligation is accounted for separately when each has value to the customer on a standalone basis and there is Company specific objective evidence of selling price of each deliverable. For revenue arrangements with multiple deliverables, the Company allocates the total customer arrangement to the separate units of accounting based on their relative selling prices as determined by the price of the items when sold separately. Once the selling price is allocated, the revenue for each performance obligations is recognized using the applicable criteria under GAAP as discussed above for performance obligations sold in single performance obligation arrangements. A delivered item or items that do not qualify as a separate unit of accounting within the arrangement are combined with the other applicable undelivered items within the arrangement. The allocation of arrangement consideration and the recognition of revenue is then determined for those combined deliverables as a single unit of accounting. The Company sells its various services and software and hardware products at established prices on a standalone basis which provides Company specific objective evidence of selling price for purposes of performance obligations relative selling price allocation. The Company only sells maintenance services or spare parts based on its established rates after it has completed a system integration project for a customer. The customer is not required to purchase maintenance services. All elements in multiple performance obligations arrangements with Company customers qualify as separate units of account for revenue recognition purposes. |
Advertising | Advertising The Company expenses the cost of advertising. During the years ended December 31, 2022 and 2021, there were no advertising costs. | |
Stock-Based Compensation | Stock-Based Compensation The Company accounts for employee stock-based compensation in accordance with ASC 718-10, “ Share-Based Payment The Company estimates the fair value of stock options granted using the Black-Scholes option-pricing formula. This fair value is then amortized on a straight-line basis over the requisite service periods of the awards, which is generally the vesting period. The Company’s determination of fair value using an option-pricing model is affected by the stock price as well as assumptions regarding a number of highly subjective variables. The Company estimates volatility based upon the historical stock price of the Company and estimates the expected term for stock options using the simplified method for employees and directors and the contractual term for non-employees. The risk-free rate is determined based upon the prevailing rate of United States Treasury securities with similar maturities. | Stock Based Compensation The Company accounts for employee and non-employee stock-based compensation in accordance with ASC 718-10, “ Share-Based Payment The Company estimates the fair value of stock options granted using the Black-Scholes option-pricing formula. This fair value is then amortized on a straight-line basis over the requisite service periods of the awards, which is generally the vesting period. The Company’s determination of fair value using an option-pricing model is affected by the stock price as well as assumptions regarding a number of highly subjective variables. The Company estimates volatility based upon the historical stock price of the Company and estimates the expected term for employee stock options using the simplified method for employees and directors and the contractual term for non-employees. The risk-free rate is determined based upon the prevailing rate of United States Treasury securities with similar maturities. |
Income Taxes | Income Taxes The Company accounts for income taxes in accordance with the Financial Accounting Standards Board FASB Accounting Standards Codification (“ASC”) 740, Income Taxes, which requires the recognition of deferred income taxes for differences between the basis of assets and liabilities for financial statement and income tax purposes. The deferred tax assets and liabilities represent the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. The Company evaluates all significant tax positions as required by ASC 740. As of December 31, 2022, the Company does not believe that it has taken any positions that would require the recording of any additional tax liability, nor does it believe that there are any unrealized tax benefits that would either increase or decrease within the next year. Any penalties and interest assessed by income taxing authorities are included in operating expenses. The federal and state income tax returns of the Company are subject to examination by the IRS and state taxing authorities, generally for three years after they were filed. Tax years 2019, 2020 and 2021 remain open for potential audit. | |
Earnings (Loss) Per Share | Earnings (Loss) Per Share Basic earnings per share (EPS) are computed by dividing the net loss applicable to common stock by the weighted average number of common shares outstanding. Diluted net loss per common share is computed by dividing the net loss applicable to common stock by the weighted average number of common shares outstanding for the period and, if dilutive, potential common shares outstanding during the period. Potential common shares consist of the incremental common shares issuable upon the exercise or conversion of stock options, stock warrants, convertible debt instruments, convertible preferred stock or other common stock equivalents. Potentially dilutive securities are excluded from the computation if their effect is anti-dilutive. At September 30, 2023, there were (i) an aggregate of 80,091 outstanding warrants to purchase shares of common stock, (ii) employee stock options to purchase an aggregate of 1,217,775 shares of common stock, (iii) 433,000 common shares issuable upon conversion of Series D Convertible Preferred Stock, (iv) 1,333,334 common shares issuable upon conversion of Series E Convertible Preferred Stock, and (v) 806,452 common shares issuable upon conversion of Series F Convertible Preferred Stock, all of which were excluded from the computation of diluted net earnings per share because their inclusion would have been anti-dilutive. At September 30, 2022, there were (i) an aggregate of 1,376,466 outstanding warrants to purchase shares of common stock, (ii) employee stock options to purchase an aggregate of 926,266 shares of common stock and (iii) 333,000 common shares issuable upon conversion of Series D Convertible Preferred Stock, all of which were excluded from the computation of diluted net earnings per share because their inclusion would have been anti-dilutive. | Earnings (Loss) Per Share Basic earnings per share (EPS) are computed by dividing net loss applicable to common stock by the weighted average number of common shares outstanding. Diluted net loss per common share is computed by dividing the net loss applicable to common stock by the weighted average number of common shares outstanding for the period and, if dilutive, potential common shares outstanding during the period. Potential common shares consist of the incremental common shares issuable upon the exercise of stock options, stock warrants, convertible debt instruments, convertible preferred stock or other common stock equivalents. Potentially dilutive securities are excluded from the computation if their effect is anti-dilutive. At December 31, 2022, there was an aggregate of 147,591 outstanding warrants to purchase shares of common stock. At December 31, 2022, there was an aggregate of 926,266 employee stock options to purchase shares of common stock. At December 31, 2022, 433,000 common shares were issuable upon conversion of Series D Convertible Preferred Stock, all of which were excluded from the computation of dilutive earnings per share because their inclusion would have been anti-dilutive. At December 31, 2021, there was an aggregate of 1,376,466 outstanding warrants to purchase shares of common stock. At December 31, 2021, there was an aggregate of 431,266 employee stock options to purchase shares of common stock. At December 31, 2021, 121,571 common shares were issuable upon conversion of Series B Convertible Preferred Stock, all of which were excluded from the computation of dilutive earnings per share because their inclusion would have been anti-dilutive. Also, at December 31, 2021, 454,546 common shares were issuable upon conversion of Series C Convertible Preferred Stock, all of which were excluded from the computation of dilutive earnings per share because their inclusion would have been anti-dilutive. |
Leases | Leases The Company follows ASC 842 “Leases”. This guidance requires lessees to recognize right-of-use (“ROU”) assets and lease liabilities for most operating leases. In addition, this guidance requires that lessors separate lease and non-lease components in a contract in accordance with the revenue guidance in ASC 606. The Company made an accounting policy election to not recognize short-term leases with terms of twelve months or less on the balance sheet and instead recognize the lease payments in expense as incurred. The Company has also elected to account for real estate leases that contain both lease and non-lease components as a single lease component. At the inception of a contract the Company assesses whether the contract is, or contains, a lease. The Company’s assessment is based on: (1) whether the contract involves the use of a distinct identified asset, (2) whether we obtain the right to substantially all the economic benefit from the use of the asset throughout the period, and (3) whether we have the right to direct the use of the asset. Operating ROU assets represent the right to use the leased asset for the lease term and operating lease liabilities are recognized based on the present value of minimum lease payments over the lease term at commencement date. As most leases do not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available at the lease commencement date to determine the present value of future payments. The lease term includes all periods covered by renewal and termination options where the Company is reasonably certain to exercise the renewal options or not to exercise the termination options. Operating lease expense is recognized on a straight-line basis over the lease term and is included in general and administration expenses in the consolidated statements of operations. | Leases In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-02, Leases (Topic 842). The updated guidance requires lessees to recognize right-of-use (“ROU”) assets and lease liabilities for most operating leases. In addition, the updated guidance requires that lessors separate lease and non-lease components in a contract in accordance with the new revenue guidance in ASC 606. This guidance is effective for interim and annual reporting periods beginning after December 15, 2018. The Company adopted this guidance effective January 1, 2019, using the modified retrospective method, whereby a cumulative effect adjustment was made as of the date of initial application. The Company also applied the package of practical expedients to leases that commenced before the effective date whereby the Company elected to not reassess the following: (i) whether any expired or existing contracts contain leases and (ii) initial direct costs for any existing leases. The Company made an accounting policy election to not recognize short-term leases with terms of twelve months or less on the balance sheet and instead recognize the lease payments in expense as incurred. The Company has also elected to account for real estate leases that contain both lease and non-lease components as a single lease component. The adoption of ASU 2016-02 did not materially affect our consolidated statement of operations or our consolidated statement of cash flows. For contracts entered into on or after the effective date, at the inception of a contract the Company assesses whether the contract is, or contains, a lease. The Company’s assessment is based on: (1) whether the contract involves the use of a distinct identified asset, (2) whether we obtain the right to substantially all the economic benefit from the use of the asset throughout the period, and (3) whether it has the right to direct the use of the asset. Operating ROU assets represent the right to use the leased asset for the lease term and operating lease liabilities are recognized based on the present value of minimum lease payments over the lease term at commencement date. As most leases do not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available at the lease commencement date to determine the present value of future payments. The lease term includes all periods covered by renewal and termination options where the Company is reasonably certain to exercise the renewal options or not to exercise the termination options. Operating lease expense is recognized on a straight-line basis over the lease term and is included in general and administrative expenses in the consolidated statements of operations. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements From time to time, the FASB or other standards setting bodies will issue new accounting pronouncements. Updates to the FASB ASC are communicated through issuance of an Accounting Standards Update (“ASU”). In August 2020, the FASB issued an accounting pronouncement (ASU 2020-06) related to the measurement and disclosure requirements for convertible instruments and contracts in an entity's own equity. The pronouncement simplifies and adds disclosure requirements for the accounting and measurement of convertible instruments and the settlement assessment for contracts in an entity's own equity. This pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2023. The Company early adopted this pronouncement for our fiscal year beginning January 1, 2022, and it did not have a material effect on our audited consolidated financial statements. In May 2021, the FASB issued an accounting pronouncement (ASU 2021-04) related to modifications or exchanges of freestanding equity-classified written call options (such as warrants) that remain equity classified after modification or exchange. The pronouncement states that an entity should treat the modification as an exchange of the original instrument for a new instrument, and the effect of the modification should be calculated as the difference between the fair value of the modified instrument and the fair value of that instrument immediately before modification. An entity should then recognize the effect of the modification on the basis of the substance of the transaction, in the same manner as if cash had been paid as consideration. This pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2021. The pronouncement is applied prospectively to all modifications that occur after the initial date of adoption. We adopted this pronouncement for our fiscal year beginning January 1, 2022, and it did not have a material effect on our audited consolidated financial statements. Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying financial statements. | Recent Accounting Pronouncements From time to time, the FASB or other standards setting bodies will issue new accounting pronouncements. Updates to the FASB ASC are communicated through issuance of an Accounting Standards Update (“ASU”). In August 2020, the FASB issued an accounting pronouncement (ASU 2020-06) related to the measurement and disclosure requirements for convertible instruments and contracts in an entity's own equity. The pronouncement simplifies and adds disclosure requirements for the accounting and measurement of convertible instruments and the settlement assessment for contracts in an entity's own equity. This pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2023. During 2022, the Company did not issue any convertible instruments or contracts and does not foresee any such issuances in the near future. In May 2021, the FASB issued an accounting pronouncement (ASU 2021-04) related to modifications or exchanges of freestanding equity-classified written call options (such as warrants) that remain equity classified after modification or exchange. The pronouncement states that an entity should treat the modification as an exchange of the original instrument for a new instrument, and the effect of the modification should be calculated as the difference between the fair value of the modified instrument and the fair value of that instrument immediately before modification. An entity should then recognize the effect of the modification on the basis of the substance of the transaction, in the same manner as if cash had been paid as consideration. This pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2021. During 2022, the Company did not issue any equity classified written call options or warrant during the year and does not foresee any issuances in the near future. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, In March 2022, the FASB issued ASU No. 2022-02, Financial Instruments-Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying financial statements. |
Basis of Presentation | Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (all of which are of a normal recurring nature) considered necessary for a fair presentation have been included. Operating results for the nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023 or for any other future period. These unaudited consolidated financial statements and the unaudited condensed notes thereto should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 filed with the Securities and Exchange Commission (the “SEC”) on March 31, 2023. |
NATURE OF OPERATIONS AND SUMM_3
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Schedule of reclassifications | Schedule of reclassifications Before Reclassification After Reclassification For the Year Ended For the Year Ended December 31, December 31, 2021 2021 REVENUES: REVENUES: Technology systems $ 5,871,666 Technology systems $ 5,871,666 Technical support 2,388,251 Services and consulting 2,388,251 Total Revenue 8,259,917 Total Revenue 8,259,917 COST OF REVENUES: COST OF REVENUES: Technology systems 7,151,276 Technology systems 4,728,197 Technical support 1,369,985 Services and consulting 1,492,176 Overhead 2,297,826 — — Total Cost of Revenues 10,819,087 Total Cost of Revenues 6,220,373 GROSS MARGIN (2,559,170) GROSS MARGIN 2,039,544 OPERATING EXPENSES: OPERATING EXPENSES: Sales and marketing 1,233,851 Sales and marketing 1,233,851 Research and development 251,563 Research and development 2,515,630 General and administration 3,412,367 General and administration 5,747,014 Total Operating Expenses 4,897,781 Total Operating Expenses 9,496,495 LOSS FROM OPERATIONS $ (7,456,951 ) LOSS FROM OPERATIONS $ (7,456,951 ) |
ACCOUNTS RECEIVABLE (Tables)
ACCOUNTS RECEIVABLE (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Receivables [Abstract] | |
Schedule of accounts receivable | Schedule of accounts receivable December 31, December 31, 2022 2021 Accounts receivable $ 3,418,263 $ 1,738,543 Allowance for doubtful accounts — — Accounts Receivable, Net $ 3,418,263 $ 1,738,543 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Property, Plant and Equipment [Abstract] | |
Schedule of major classes of property and equipment | Schedule of major classes of property and equipment December 31, December 31, 2022 2021 Furniture, fixtures and equipment $ 1,606,451 $ 1,264,001 Less: Accumulated depreciation (976,961 ) (660,748 ) Furniture, fixtures and equipment, Net $ 629,490 $ 603,253 |
PATENTS AND TRADEMARKS (Tables)
PATENTS AND TRADEMARKS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of patents and trademarks | Schedule of patents and trademarks December 31, December 31, 2022 2021 Patents and trademarks $ 326,145 $ 309,205 Less: Accumulated amortization (256,412 ) (242,723 ) Patents and trademarks, Net $ 69,733 $ 66,482 |
SOFTWARE DEVELOPMENT COSTS (Tab
SOFTWARE DEVELOPMENT COSTS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Research and Development [Abstract] | |
Schedule of software development costs | Schedule of software development costs December 31, December 31, 2022 2021 Software development costs $ 341,784 $ 60,000 Less: Accumulated amortization (76,576 ) (60,000 ) Software Development Costs, net $ 265,208 $ — |
DEBT (Tables)
DEBT (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2023 | Dec. 31, 2022 | |
Debt Disclosure [Abstract] | ||
Schedule of notes payable | Schedule of notes payable September 30, 2023 December 31, 2022 Notes Payable Principal Interest Principal Interest Third Party - Insurance Note 1 $ 2,736 8.73 % $ — — Third Party - Insurance Note 2 79,146 8.00 % 17,753 6.24 % Third Party - Insurance Note 3 8,045 — 16,094 — Third Party - Insurance Note 4 47,889 — 40,728 — Total $ 137,816 $ 74,575 | Schedule of notes payable financing agreements December 31, 2022 December 31, 2021 Notes Payable Principal Interest Principal Interest Third Party - Insurance Note 1 $ — — $ 22,266 7.75 % Third Party - Insurance Note 2 17,753 6.24 % 12,667 6.24 % Third Party - Insurance Note 3 16,094 — 17,570 — Third Party - Insurance Note 4 40,728 — — — Total $ 74,575 $ 52,503 |
Schedule of future minimum lease payments under finance lease | Schedule of future minimum lease payments under finance lease Calendar year: Amount 2023 23,515 Total minimum equipment financing payments $ 23,515 Less: interest (664 ) Total equipment financing at December 31, 2022 $ 22,851 Less: current portion of equipment financing (22,851 ) Long-term portion of equipment financing $ — |
REVENUE AND CONTRACT ACCOUNTI_2
REVENUE AND CONTRACT ACCOUNTING (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2023 | Dec. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | ||
Schedule of contract assets on uncompleted contracts | Schedule of contract assets on uncompleted contracts September 30, 2023 December 31, 2022 Cumulative revenues recognized $ 8,594,322 $ 5,934,205 Less: Billings or cash received (7,247,591 ) (5,508,483 ) Contract assets $ 1,346,731 $ 425,722 | Schedule of contract assets on uncompleted contracts 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 |
Schedule of contract liabilities on uncompleted contracts | Schedule of contract liabilities on uncompleted contracts September 30, 2023 December 31, 2022 Billings and/or cash receipts on uncompleted contracts $ 972,908 $ 4,355,470 Less: Cumulative revenues recognized (199,976 ) (4,144,018 ) Contract liabilities, technology systems 772,932 211,452 Contract liabilities, services and consulting 815,996 746,545 Total contract liabilities $ 1,588,928 $ 957,997 | Schedule of Contract Liabilities on Uncompleted Contracts 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 |
Schedule of disaggregation of revenue | Schedule of disaggregation of revenue Segments Rail Commercial Government Artificial Intelligence Total Primary Geographical Markets North America $ 1,333,556 $ 19,220 $ — $ 178,147 $ 1,530,923 Major Goods and Service Lines Turnkey Projects $ 705,849 $ — $ — $ — $ 705,849 Maintenance and Support 627,707 19,220 — — 646,927 Algorithms — — — 178,147 178,147 $ 1,333,556 $ 19,220 $ — $ 178,147 $ 1,530,923 Timing of Revenue Recognition Goods transferred over time $ 705,849 $ — $ — $ — $ 705,849 Services transferred over time 627,707 19,220 — 178,147 825,074 $ 1,333,556 $ 19,220 $ — $ 178,147 $ 1,530,923 For the Three Months Ended September 30, 2022 Segments Rail Commercial Government Artificial Intelligence Total Primary Geographical Markets North America $ 3,765,312 $ 32,821 $ 23,245 $ 200,860 $ 4,022,238 Major Goods and Service Lines Turnkey Projects $ 2,689,393 $ — $ 3,024 $ — $ 2,692,417 Maintenance and Support 1,075,919 32,821 20,221 183,378 1,312,339 Algorithms — — — 17,482 17,482 $ 3,765,312 $ 32,821 $ 23,245 $ 200,860 $ 4,022,238 Timing of Revenue Recognition Goods transferred over time $ 2,689,393 $ — $ 3,024 $ — $ 2,692,417 Goods delivered at point in time — — — 17,482 17,482 Services transferred over time 532,250 32,821 20,221 183,378 768,670 Services delivered at point in time 543,669 — — — 543,669 $ 3,765,312 $ 32,821 $ 23,245 $ 200,860 $ 4,022,238 For the Nine Months Ended September 30, 2023 Segments Rail Commercial Government Artificial Intelligence Total Primary Geographical Markets North America $ 5,247,291 $ 90,432 $ 11,353 $ 596,194 $ 5,945,270 Major Goods and Service Lines Turnkey Projects $ 3,390,555 $ 13,552 $ — $ — $ 3,404,107 Maintenance and Support 1,856,736 76,880 11,353 — 1,944,969 Algorithms — — — 596,194 596,194 $ 5,247,291 $ 90,432 $ 11,353 $ 596,194 $ 5,945,270 Timing of Revenue Recognition Goods transferred over time $ 3,390,555 $ 13,552 $ — $ — $ 3,404,107 Services transferred over time 1,856,736 76,880 11,353 596,194 2,541,163 $ 5,247,291 $ 90,432 $ 11,353 $ 596,194 $ 5,945,270 For the Nine Months Ended September 30, 2022 Segments Rail Commercial Government Artificial Intelligence Total Primary Geographical Markets North America $ 8,087,759 $ 76,818 $ 214,124 $ 699,995 $ 9,078,696 Major Goods and Service Lines Turnkey Projects $ 5,885,477 $ (498 ) $ 153,462 $ — $ 6,038,441 Maintenance and Support 2,202,282 77,316 60,662 465,223 2,805,483 Algorithms — — — 234,772 234,772 $ 8,087,759 $ 76,818 $ 214,124 $ 699,995 $ 9,078,696 Timing of Revenue Recognition Goods transferred over time $ 5,885,477 $ (498 ) $ 153,462 $ — $ 6,038,441 Goods delivered at point in time — — — 234,772 234,772 Services transferred over time 1,545,578 77,316 60,662 465,223 2,148,779 Services delivered at point in time 656,704 — — — 656,704 $ 8,087,759 $ 76,818 $ 214,124 $ 699,995 $ 9,078,696 | Schedule of Disaggregation of Revenue Segments Rail Commercial Petrochemical Government Banking/Other IT Artificial 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 Artificial 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 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2023 | Dec. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Schedule of supplemental information related to leases | Schedule of supplemental information related to leases Nine Months Ended September 30, 2023 2022 Lease cost: Operating lease cost $ 586,228 $ 582,989 Short-term lease cost $ 56,052 $ 26,127 Other information: Operating cash outflow used for operating leases $ 505,664 $ 323,750 Weighted average discount rate 9.0 % 9.0 % Weighted average remaining lease term 8.6 years 9.6 years | Schedule of supplemental information related to leases Year Ended December 31, 2022 2021 Lease cost: Operating lease cost $ 782,591 $ 414,085 Short-term lease cost 33,751 21,628 Other information: Operating cash outflow used for operating leases 416,250 285,959 Weighted average discount rate 9.0 % 9.0 % Weighted average remaining lease term 9.5 years 10.4 years |
Schedule of future minimum lease payments | Schedule of future minimum lease payments Amount Calendar year: 2023 $ 191,205 2024 779,087 2025 798,556 2026 818,518 2027 838,984 Thereafter 4,043,427 Total undiscounted future minimum lease payments 7,469,777 Less: Impact of discounting (2,384,618 ) Total present value of operating lease obligations 5,085,159 Current portion (774,306) Operating lease obligations, less current portion $ 4,310,853 | Schedule of future minimum lease payments for non-cancellable operating leases As of December 31, 2022 Fiscal year: 2023 $ 696,869 2024 779,087 2025 798,556 2026 818,518 2027 838,984 Thereafter 4,043,427 Total undiscounted future minimum lease payments 7,975,441 Less: Impact of discounting (2,735,629 ) Total present value of operating lease liability 5,239,812 Current portion (696,869 ) Operating lease liability, less current portion $ 4,542,943 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Schedule of difference between income taxes at effective statutory rate and provision for income taxes | Schedule of difference between income taxes at effective statutory rate and provision for income taxes Years Ended December 31, 2022 2021 Income tax benefit at U.S. statutory rate of 21% $ (1,441,624 ) $ (1,261,869 ) State income taxes (247,135 ) (216,321 ) Non-deductible expenses 201,521 64,553 Change in valuation allowance 1,487,238 1,413,637 Total provision for income tax $ — $ — |
Schedule of net deferred tax assets | Schedule of net deferred tax assets December 31, 2022 2021 Deferred Tax Asset (Liability): Net operating loss carryforward $ 9,772,854 $ 8,247,427 Intangible assets (32,656 ) 5,553 9,740,198 8,252,960 Valuation allowance (9,740,198 ) (8,252,960 ) Net deferred tax assets $ — $ — |
STOCKHOLDERS_ EQUITY (Tables)
STOCKHOLDERS’ EQUITY (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2023 | Dec. 31, 2022 | |
Equity [Abstract] | ||
Schedule of black scholes option pricing model | Schedule of black scholes option pricing model At September 30, 2023 Grant date share price $ 2.10 - $ 5.13 Grant date exercise price $ 1.79 - $ 4.36 Expected term 0.25 years - 0.5 years Expected volatility 89.7 % - 103.4 % Risk-free rate 4.76 % - 5.53 % Expected dividend rate 0 % | Schedule of black scholes option pricing model |
Schedule of stock-based compensation | Schedule of stock-based compensation At Cash payment received from employee withholdings $ 189,849 Cash from employee withholdings used to purchase shares under ESPP (117,048 ) Cash and ESPP employee withholding liability $ 72,801 For the Nine Months ended September 30, 2023 Cash from employee withholdings used to purchase ESPP shares $ 117,048 Stock based compensation expense 98,945 Total increase to equity for nine months ended September 30, 2023 $ 215,993 | |
Schedule of stock option issuance of shares | Schedule of stock option issuance of shares Weighted Average Average Remaining Aggregate Number of Exercise Contractual Intrinsic Options Price Term (Years) Value Outstanding at December 31, 2021 431,266 $ 4.98 3.4 $ — Granted 685,000 $ 6.41 4.0 $ — Forfeited (190,000 ) $ 6.41 — $ — Outstanding at December 31, 2022 926,266 $ 5.74 3.3 $ — Exercisable at December 31, 2022 404,599 $ 5.02 3.3 $ — Outstanding at December 31, 2022 926,266 $ 5.74 3.3 $ — Granted 353,117 $ 4.22 4.5 $ — Exercised/Forfeited/Expired (61,608 ) $ 4.48 — $ — Outstanding at September 30, 2023 1,217,775 $ 5.37 3.0 $ — Exercisable at September 30, 2023 581,325 $ 5.38 2.1 $ — | Schedule of options activity Weighted Weighted Average Average Remaining Aggregate Exercise Contractual Intrinsic Shares Price Term (Years) Value Outstanding at December 31, 2020 451,898 $ 5.06 4.2 — Granted 20,000 $ 4.32 4.0 — Forfeited (40,632 ) $ 14.00 — — Outstanding at December 31, 2021 431,266 $ 4.98 3.4 $ 197,506 Exercisable at December 31, 2021 312,310 $ 5.25 3.4 — Outstanding at December 31, 2021 431,266 $ 4.98 3.4 $ 197,506 Granted 685,000 $ 6.41 4.0 — Exercised/Forfeited (190,000 ) $ 6.41 — — Outstanding at December 31, 2022 926,266 $ 5.74 3.3 $ 0 Exercisable at December 31, 2022 404,599 $ 5.02 3.3 — |
Schedule of warrants outstanding | Schedule of warrants outstanding Weighted Weighted Average Average Remaining Aggregate Number of Exercise Contractual Intrinsic Warrants Price Term (Years) Value Outstanding at December 31, 2021 1,376,466 $ 8.18 1.9 — Warrants expired, forfeited, cancelled or exercised (1,228,875 ) — — — Warrants issued — — — — Outstanding at December 31, 2022 147,591 $ 8.63 0.8 — Exercisable at December 31, 2022 147,591 $ 8.63 0.8 — Outstanding at December 31, 2022 147,591 $ 8.63 0.8 — Warrants expired, forfeited, cancelled or exercised (67,500 ) — — — Warrants issued — — — — Outstanding at September 30, 2023 80,091 $ 8.53 0.6 — Exercisable at September 30, 2023 80,091 $ 8.53 0.6 — | Schedule of warrants outstanding Weighted Weighted Average Average Remaining Aggregate Number of Exercise Contractual Intrinsic Warrants Price Term (Years) Value Outstanding at December 31, 2020 1,587,553 $ 8.62 2.0 — Warrants expired, forfeited, cancelled or exercised (232,517 ) Warrants issued 21,430 $ 7.70 1.9 — Outstanding at December 31, 2021 1,376,466 $ 8.18 1.9 — Exercisable at December 31, 2021 1,376,466 $ 8.18 1.9 — Outstanding at December 31, 2021 1,376,466 $ 8.18 1.9 — Warrants expired, forfeited, cancelled or exercised (1,228,875 ) — Warrants issued 0 $ — — — Outstanding at December 31, 2022 147,591 $ 8.63 0.8 — Exercisable at December 31, 2022 147,591 $ 8.63 0.8 — |
COMMON STOCK OPTIONS AND WARR_2
COMMON STOCK OPTIONS AND WARRANTS (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2023 | Dec. 31, 2022 | |
Share-Based Payment Arrangement [Abstract] | ||
Schedule of options activity | Schedule of stock option issuance of shares Weighted Average Average Remaining Aggregate Number of Exercise Contractual Intrinsic Options Price Term (Years) Value Outstanding at December 31, 2021 431,266 $ 4.98 3.4 $ — Granted 685,000 $ 6.41 4.0 $ — Forfeited (190,000 ) $ 6.41 — $ — Outstanding at December 31, 2022 926,266 $ 5.74 3.3 $ — Exercisable at December 31, 2022 404,599 $ 5.02 3.3 $ — Outstanding at December 31, 2022 926,266 $ 5.74 3.3 $ — Granted 353,117 $ 4.22 4.5 $ — Exercised/Forfeited/Expired (61,608 ) $ 4.48 — $ — Outstanding at September 30, 2023 1,217,775 $ 5.37 3.0 $ — Exercisable at September 30, 2023 581,325 $ 5.38 2.1 $ — | Schedule of options activity Weighted Weighted Average Average Remaining Aggregate Exercise Contractual Intrinsic Shares Price Term (Years) Value Outstanding at December 31, 2020 451,898 $ 5.06 4.2 — Granted 20,000 $ 4.32 4.0 — Forfeited (40,632 ) $ 14.00 — — Outstanding at December 31, 2021 431,266 $ 4.98 3.4 $ 197,506 Exercisable at December 31, 2021 312,310 $ 5.25 3.4 — Outstanding at December 31, 2021 431,266 $ 4.98 3.4 $ 197,506 Granted 685,000 $ 6.41 4.0 — Exercised/Forfeited (190,000 ) $ 6.41 — — Outstanding at December 31, 2022 926,266 $ 5.74 3.3 $ 0 Exercisable at December 31, 2022 404,599 $ 5.02 3.3 — |
Schedule of fair value assumptions | Schedule of fair value assumptions For the Years Ended 2022 2021 Risk free interest rate 0.97 – 3.15 % 0.18 % Expected term in years 3.25 - 3.50 3.50 Dividend yield — — Volatility of common stock 72 - 80 % 91.6 % | |
Schedule of warrants outstanding | Schedule of warrants outstanding Weighted Weighted Average Average Remaining Aggregate Number of Exercise Contractual Intrinsic Warrants Price Term (Years) Value Outstanding at December 31, 2021 1,376,466 $ 8.18 1.9 — Warrants expired, forfeited, cancelled or exercised (1,228,875 ) — — — Warrants issued — — — — Outstanding at December 31, 2022 147,591 $ 8.63 0.8 — Exercisable at December 31, 2022 147,591 $ 8.63 0.8 — Outstanding at December 31, 2022 147,591 $ 8.63 0.8 — Warrants expired, forfeited, cancelled or exercised (67,500 ) — — — Warrants issued — — — — Outstanding at September 30, 2023 80,091 $ 8.53 0.6 — Exercisable at September 30, 2023 80,091 $ 8.53 0.6 — | Schedule of warrants outstanding Weighted Weighted Average Average Remaining Aggregate Number of Exercise Contractual Intrinsic Warrants Price Term (Years) Value Outstanding at December 31, 2020 1,587,553 $ 8.62 2.0 — Warrants expired, forfeited, cancelled or exercised (232,517 ) Warrants issued 21,430 $ 7.70 1.9 — Outstanding at December 31, 2021 1,376,466 $ 8.18 1.9 — Exercisable at December 31, 2021 1,376,466 $ 8.18 1.9 — Outstanding at December 31, 2021 1,376,466 $ 8.18 1.9 — Warrants expired, forfeited, cancelled or exercised (1,228,875 ) — Warrants issued 0 $ — — — Outstanding at December 31, 2022 147,591 $ 8.63 0.8 — Exercisable at December 31, 2022 147,591 $ 8.63 0.8 — |
SALE OF ASSETS (Tables)
SALE OF ASSETS (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Sale Of Assets | |
Schedule of note receivable | Schedule of note receivable September 30, 2023 Convertible note receivable $ 165,000 Unamortized discount (13,125 ) Convertible note receivable, net $ 151,875 |
NATURE OF OPERATIONS AND SUMM_4
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details - Schedule of reclassifications) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
Product Information [Line Items] | ||||||
Total Revenues | $ 1,530,923 | $ 4,022,238 | $ 5,945,270 | $ 9,078,696 | $ 15,012,366 | $ 8,259,917 |
Total Cost of Revenues | 1,304,335 | 2,922,686 | 4,940,173 | 6,474,464 | 10,264,263 | 6,220,373 |
GROSS MARGIN | 226,588 | 1,099,552 | 1,005,097 | 2,604,232 | 4,748,103 | 2,039,544 |
Sales and marketing | 353,386 | 297,057 | 962,040 | 956,937 | 1,337,186 | 1,233,851 |
Research and development | 450,006 | 329,424 | 1,392,692 | 1,296,480 | 1,651,064 | 2,515,630 |
Administration | 2,394,173 | 2,342,089 | 6,916,390 | 6,255,926 | 8,625,002 | 5,747,014 |
Total Operating Expenses | 3,197,565 | 2,968,570 | 9,271,122 | 8,509,343 | 11,613,252 | 9,496,495 |
LOSS FROM OPERATIONS | (2,970,977) | (1,869,018) | (8,266,025) | (5,905,111) | (6,865,149) | (7,456,951) |
Previously Reported [Member] | ||||||
Product Information [Line Items] | ||||||
Total Revenues | 8,259,917 | |||||
Total Cost of Revenues | 10,819,087 | |||||
GROSS MARGIN | (2,559,170) | |||||
Sales and marketing | 1,233,851 | |||||
Research and development | 251,563 | |||||
Administration | 3,412,367 | |||||
Total Operating Expenses | 4,897,781 | |||||
LOSS FROM OPERATIONS | (7,456,951) | |||||
Revision of Prior Period, Adjustment [Member] | ||||||
Product Information [Line Items] | ||||||
Total Revenues | 8,259,917 | |||||
Total Cost of Revenues | 6,220,373 | |||||
GROSS MARGIN | 2,039,544 | |||||
Sales and marketing | 1,233,851 | |||||
Research and development | 2,515,630 | |||||
Administration | 5,747,014 | |||||
Total Operating Expenses | 9,496,495 | |||||
LOSS FROM OPERATIONS | (7,456,951) | |||||
Product [Member] | ||||||
Product Information [Line Items] | ||||||
Total Revenues | 705,849 | 2,709,899 | 3,404,107 | 6,273,213 | 11,190,292 | 5,871,666 |
Total Cost of Revenues | 883,836 | 2,176,761 | 3,723,151 | 5,016,551 | 8,376,649 | 4,728,197 |
Product [Member] | Previously Reported [Member] | ||||||
Product Information [Line Items] | ||||||
Total Revenues | 5,871,666 | |||||
Total Cost of Revenues | 7,151,276 | |||||
Product [Member] | Revision of Prior Period, Adjustment [Member] | ||||||
Product Information [Line Items] | ||||||
Total Revenues | 5,871,666 | |||||
Total Cost of Revenues | 4,728,197 | |||||
Service, Other [Member] | ||||||
Product Information [Line Items] | ||||||
Total Revenues | 825,074 | 1,312,339 | 2,541,163 | 2,805,483 | 3,822,074 | 2,388,251 |
Total Cost of Revenues | $ 420,499 | $ 745,925 | $ 1,217,022 | $ 1,457,913 | $ 1,887,614 | 1,492,176 |
Service, Other [Member] | Previously Reported [Member] | ||||||
Product Information [Line Items] | ||||||
Total Revenues | 2,388,251 | |||||
Total Cost of Revenues | 1,369,985 | |||||
Service, Other [Member] | Revision of Prior Period, Adjustment [Member] | ||||||
Product Information [Line Items] | ||||||
Total Revenues | 2,388,251 | |||||
Total Cost of Revenues | 1,492,176 | |||||
Overhead [Member] | Previously Reported [Member] | ||||||
Product Information [Line Items] | ||||||
Total Cost of Revenues | $ 2,297,826 |
NATURE OF OPERATIONS AND SUMM_5
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Product Information [Line Items] | |||||
Stock Issued During Period, Value, Conversion of Convertible Securities | |||||
Cash, Uninsured Amount | $ 2,768,466 | $ 688,000 | |||
[custom:ProductWarrantyPeriod] | 90 days | ||||
Advertising Expense | $ 0 | ||||
Class of Warrant or Right, Outstanding | 80,091 | 1,376,466 | 147,591 | 1,376,466 | |
Share-Based Payment Arrangement, Option [Member] | |||||
Product Information [Line Items] | |||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Outstanding, Number | 1,217,775 | 926,266 | 926,266 | 431,266 | 451,898 |
Patents And Trademarks [Member] | |||||
Product Information [Line Items] | |||||
Property, Plant and Equipment, Useful Life | 17 years | ||||
Minimum [Member] | |||||
Product Information [Line Items] | |||||
Property, Plant and Equipment, Useful Life | 3 years | ||||
[custom:ProductWarrantyPeriod] | 12 months | ||||
Maximum [Member] | |||||
Product Information [Line Items] | |||||
Property, Plant and Equipment, Useful Life | 5 years | ||||
[custom:ProductWarrantyPeriod] | 36 months | ||||
Revenue Benchmark [Member] | Geographic Concentration Risk [Member] | UNITED STATES | |||||
Product Information [Line Items] | |||||
[custom:ConcentrationRiskPercentage] | 41% | 86% | |||
Customer 1 [Member] | Revenue Benchmark [Member] | Customer Concentration Risk [Member] | |||||
Product Information [Line Items] | |||||
[custom:ConcentrationRiskPercentage] | 55% | 25% | 42% | ||
Customer 1 [Member] | Accounts Receivable [Member] | Customer Concentration Risk [Member] | |||||
Product Information [Line Items] | |||||
[custom:ConcentrationRiskPercentage] | 52% | 34% | 81% | ||
Customer 2 [Member] | Revenue Benchmark [Member] | Customer Concentration Risk [Member] | |||||
Product Information [Line Items] | |||||
[custom:ConcentrationRiskPercentage] | 29% | 21% | 18% | ||
Customer 2 [Member] | Accounts Receivable [Member] | Customer Concentration Risk [Member] | |||||
Product Information [Line Items] | |||||
[custom:ConcentrationRiskPercentage] | 25% | 31% | 10% | ||
Customer 3 [Member] | Revenue Benchmark [Member] | Customer Concentration Risk [Member] | |||||
Product Information [Line Items] | |||||
[custom:ConcentrationRiskPercentage] | 19% | 14% | |||
Customer 3 [Member] | Revenue Benchmark [Member] | Customer Concentration Risk [Member] | UNITED STATES | |||||
Product Information [Line Items] | |||||
[custom:ConcentrationRiskPercentage] | 37% | ||||
Customer 3 [Member] | Accounts Receivable [Member] | Customer Concentration Risk [Member] | |||||
Product Information [Line Items] | |||||
[custom:ConcentrationRiskPercentage] | 14% | 19% | |||
Customer 4 [Member] | Revenue Benchmark [Member] | Customer Concentration Risk [Member] | |||||
Product Information [Line Items] | |||||
[custom:ConcentrationRiskPercentage] | 19% | 14% | |||
Customer 4 [Member] | Revenue Benchmark [Member] | Customer Concentration Risk [Member] | UNITED STATES | |||||
Product Information [Line Items] | |||||
[custom:ConcentrationRiskPercentage] | 54% | ||||
Customer 4 [Member] | Accounts Receivable [Member] | Customer Concentration Risk [Member] | |||||
Product Information [Line Items] | |||||
[custom:ConcentrationRiskPercentage] | 10% | ||||
Customer [Member] | Revenue Benchmark [Member] | Customer Concentration Risk [Member] | |||||
Product Information [Line Items] | |||||
[custom:ConcentrationRiskPercentage] | 30% | 83% | |||
Series B Preferred Convertible Stock [Member] | |||||
Product Information [Line Items] | |||||
Stock Issued During Period, Value, Conversion of Convertible Securities | $ 850,999 | ||||
Series C Preferred Convertible Stock [Member] | |||||
Product Information [Line Items] | |||||
Stock Issued During Period, Value, Conversion of Convertible Securities | $ 2,499,998 | ||||
Series D Convertible Preferred Stock [Member] | |||||
Product Information [Line Items] | |||||
[custom:ConvertibleCommonSharesIssuedUponConversion-0] | 433,000 | ||||
[custom:ConversionOfStockSharesConverted] | 433,000 | 333,000 | |||
Series B Convertible Preferred Stock [Member] | |||||
Product Information [Line Items] | |||||
[custom:ConvertibleCommonSharesIssuedUponConversion-0] | 121,571 | ||||
Series C Convertible Preferred Stock [Member] | |||||
Product Information [Line Items] | |||||
[custom:ConvertibleCommonSharesIssuedUponConversion-0] | 454,546 | ||||
Series E Convertible Preferred Stock [Member] | |||||
Product Information [Line Items] | |||||
[custom:ConversionOfStockSharesConverted] | 1,333,334 | ||||
Series F Convertible Preferred Stock [Member] | |||||
Product Information [Line Items] | |||||
[custom:ConversionOfStockSharesConverted] | 806,452 |
LIQUIDITY (Details Narrative)
LIQUIDITY (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||
Net Income (Loss) Attributable to Parent | $ 2,947,736 | $ 1,925,068 | $ 8,080,819 | $ 5,912,356 | $ 6,864,783 | $ 6,008,901 |
Net Cash Provided by (Used in) Operating Activities | 5,637,072 | $ 3,850,455 | 7,873,307 | 6,579,378 | ||
[custom:WorkingCapitalSurplus-0] | 3,358,320 | 3,358,320 | 2,339,052 | |||
Retained Earnings (Accumulated Deficit) | $ 60,442,653 | $ 60,442,653 | $ 52,361,834 | $ 45,497,051 |
ACCOUNTS RECEIVABLE (Details- S
ACCOUNTS RECEIVABLE (Details- Schedule of accounts receivable) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Receivables [Abstract] | ||
Accounts receivable | $ 3,418,263 | $ 1,738,543 |
Allowance for doubtful accounts | ||
Accounts Receivable, Net | $ 3,418,263 | $ 1,738,543 |
ACCOUNTS RECEIVABLE (Details Na
ACCOUNTS RECEIVABLE (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Receivables [Abstract] | ||
Accounts Receivable, Credit Loss Expense (Reversal) | $ 0 | $ 76,046 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details-Schedule of major classes of property and equipment) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 | Dec. 31, 2021 |
Property, Plant and Equipment [Abstract] | |||
Furniture, fixtures and equipment | $ 1,606,451 | $ 1,264,001 | |
Less: Accumulated depreciation | (976,961) | (660,748) | |
Furniture, fixtures and equipment, Net | $ 555,485 | $ 629,490 | $ 603,253 |
PROPERTY AND EQUIPMENT (Detai_2
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation, Depletion and Amortization | $ 319,928 | $ 269,978 |
PATENTS AND TRADEMARKS (Details
PATENTS AND TRADEMARKS (Details - Schedule of patents and trademarks) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 | Dec. 31, 2021 |
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Patents and trademarks | $ 326,145 | $ 309,205 | |
Less: Accumulated amortization | (256,412) | (242,723) | |
Patents and trademarks, Net | $ 121,051 | $ 69,733 | $ 66,482 |
PATENTS AND TRADEMARKS (Detai_2
PATENTS AND TRADEMARKS (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization of Intangible Assets | $ 13,688 | $ 5,368 |
SOFTWARE DEVELOPMENT COSTS (Det
SOFTWARE DEVELOPMENT COSTS (Details - Schedule of software development costs) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Research and Development [Abstract] | ||
Software development costs | $ 341,784 | $ 60,000 |
Less: Accumulated amortization | (76,576) | (60,000) |
Software Development Costs, net | $ 265,208 |
SOFTWARE DEVELOPMENT COSTS (D_2
SOFTWARE DEVELOPMENT COSTS (Details Narrative) - USD ($) | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2018 | |
Research and Development [Abstract] | |||||
[custom:CapitalizedSoftwareDevelopmentCostsForSoftwareSoldToCustomer-0] | $ 60,000 | ||||
Payments to Develop Software | $ 640,609 | $ 87,700 | $ 281,783 | ||
[custom:AmortizationOfIntangibleAssets1] | $ 16,576 | $ 0 |
DEBT (Details - Schedule of not
DEBT (Details - Schedule of notes payable - financing agreements) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 | Dec. 31, 2021 |
Short-Term Debt [Line Items] | |||
Notes Payable, Principal | $ 137,816 | $ 74,575 | $ 52,503 |
Third Party Insurance Note One [Member] | |||
Short-Term Debt [Line Items] | |||
Notes Payable, Principal | $ 2,736 | $ 22,266 | |
Notes Payable, Interest | 8.73% | 7.75% | |
Third Party Insurance Note Two [Member] | |||
Short-Term Debt [Line Items] | |||
Notes Payable, Principal | $ 79,146 | $ 17,753 | $ 12,667 |
Notes Payable, Interest | 8% | 6.24% | 6.24% |
Third Party Insurance Note Three [Member] | |||
Short-Term Debt [Line Items] | |||
Notes Payable, Principal | $ 8,045 | $ 16,094 | $ 17,570 |
Third Party Insurance Note Four [Member] | |||
Short-Term Debt [Line Items] | |||
Notes Payable, Principal | $ 47,889 | $ 40,728 |
DEBT (Details - Schedule of n_2
DEBT (Details - Schedule of notes payable - related parties) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 | Dec. 31, 2021 |
Debt Disclosure [Abstract] | |||
2023 | $ 23,515 | ||
Total minimum equipment financing payments | 23,515 | ||
Less: interest | (664) | ||
Total equipment financing at December 31, 2022 | 22,851 | ||
Less: current portion of equipment financing | (22,851) | $ (80,335) | |
Long-term portion of equipment financing | $ 22,851 |
DEBT (Details Narrative)
DEBT (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||||||||||||||||
Apr. 15, 2023 | Feb. 03, 2023 | Dec. 23, 2022 | Sep. 15, 2022 | Apr. 15, 2022 | Feb. 03, 2022 | Apr. 15, 2021 | Apr. 06, 2021 | Feb. 03, 2020 | Sep. 23, 2022 | Dec. 23, 2021 | Sep. 15, 2021 | May 22, 2020 | Apr. 23, 2020 | Aug. 26, 2019 | Mar. 31, 2022 | Sep. 30, 2022 | Sep. 30, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | Feb. 03, 2021 | |
Short-Term Debt [Line Items] | |||||||||||||||||||||
Notes Payable | $ 242,591 | ||||||||||||||||||||
[custom:PurchaseOfInsurancePolicy] | 242,591 | ||||||||||||||||||||
[custom:DownPaymentPaid] | $ 102,075 | ||||||||||||||||||||
[custom:InsuranceMonthlyInstallments] | $ 20,073 | ||||||||||||||||||||
Proceeds from Deposits with Other Institutions | $ 53,175 | ||||||||||||||||||||
Promissory Note [Member] | Paycheck Protection Program [Member] | |||||||||||||||||||||
Short-Term Debt [Line Items] | |||||||||||||||||||||
Debt Instrument, Face Amount | $ 1,410,270 | ||||||||||||||||||||
Debt Instrument, Interest Rate During Period | 1% | ||||||||||||||||||||
Third Party Insurance Note One [Member] | |||||||||||||||||||||
Short-Term Debt [Line Items] | |||||||||||||||||||||
Notes Payable | $ 26,484 | $ 22,266 | $ 2,736 | $ 0 | $ 22,266 | ||||||||||||||||
Derivative, Fixed Interest Rate | 8.73% | 7.75% | |||||||||||||||||||
Debt Instrument, Periodic Payment | $ 2,755 | $ 2,104 | |||||||||||||||||||
Third Party Insurance Note Two [Member] | |||||||||||||||||||||
Short-Term Debt [Line Items] | |||||||||||||||||||||
Notes Payable | $ 142,734 | $ 63,766 | $ 62,041 | 79,146 | 17,753 | 12,667 | |||||||||||||||
Derivative, Fixed Interest Rate | 8% | 6.24% | 6.24% | ||||||||||||||||||
Debt Instrument, Periodic Payment | $ 13,501 | $ 5,979 | $ 6,383 | ||||||||||||||||||
Third Party Insurance Note Three [Member] | |||||||||||||||||||||
Short-Term Debt [Line Items] | |||||||||||||||||||||
Notes Payable | $ 24,140 | $ 24,140 | $ 19,965 | 8,045 | 16,094 | 17,570 | |||||||||||||||
Debt Instrument, Periodic Payment | $ 2,012 | $ 2,012 | $ 1,997 | ||||||||||||||||||
Third Party Insurance Note Four [Member] | |||||||||||||||||||||
Short-Term Debt [Line Items] | |||||||||||||||||||||
Notes Payable | $ 293,520 | 47,889 | 40,728 | 0 | $ 215,654 | ||||||||||||||||
Debt Instrument, Periodic Payment | 23,976 | $ 17,899 | $ 20,074 | ||||||||||||||||||
[custom:DownPaymentPaid] | $ 125,690 | ||||||||||||||||||||
Equipment Financing [Member] | |||||||||||||||||||||
Short-Term Debt [Line Items] | |||||||||||||||||||||
Notes Payable | $ 121,637 | $ 147,899 | $ 0 | 22,851 | 103,186 | ||||||||||||||||
Derivative, Fixed Interest Rate | 9.90% | 12.72% | |||||||||||||||||||
Debt Instrument, Periodic Payment | $ 3,919 | $ 4,963 | |||||||||||||||||||
Notes Payable [Member] | |||||||||||||||||||||
Short-Term Debt [Line Items] | |||||||||||||||||||||
Notes Payable | $ 0 | $ 0 |
REVENUE AND CONTRACT ACCOUNTI_3
REVENUE AND CONTRACT ACCOUNTING (Details - Contract assets) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 | Dec. 31, 2021 |
Revenue from Contract with Customer [Abstract] | |||
Cumulative revenues recognized | $ 8,594,322 | $ 5,934,205 | $ 5,266,930 |
Less: Billings or cash received | (7,247,591) | (5,508,483) | (5,263,481) |
Contract Assets | 1,346,731 | 425,722 | 3,449 |
Contract assets | $ 1,346,731 | $ 425,722 | $ 3,449 |
REVENUE AND CONTRACT ACCOUNTI_4
REVENUE AND CONTRACT ACCOUNTING (Details - Contract liabilities) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 | Dec. 31, 2021 |
Revenue from Contract with Customer [Abstract] | |||
Billings and/or cash receipts on uncompleted contracts | $ 972,908 | $ 4,355,470 | $ 4,473,726 |
Less: Cumulative revenues recognized | (199,976) | (4,144,018) | (3,041,088) |
Contract liabilities, technology systems | 772,932 | 211,452 | 1,232,638 |
Contract liabilities, services and consulting | 815,996 | 746,545 | 596,673 |
Total Contract Liabilities | 1,588,928 | 957,997 | 1,829,311 |
Contract liabilities, technology systems | 772,932 | 211,452 | 1,232,638 |
Total contract liabilities | $ 1,588,928 | $ 957,997 | $ 1,829,311 |
REVENUE AND CONTRACT ACCOUNTI_5
REVENUE AND CONTRACT ACCOUNTING (Details -Disaggregated revenue) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
Disaggregation of Revenue [Line Items] | ||||||
Revenue | $ 1,530,923 | $ 4,022,238 | $ 5,945,270 | $ 9,078,696 | $ 15,012,366 | $ 8,259,917 |
Goods Transferred Over Time [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 705,849 | 2,692,417 | 3,404,107 | 6,038,441 | 11,190,292 | 5,999,136 |
Services Transferred Over Time [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 825,074 | 768,670 | 2,541,163 | 2,148,779 | 3,822,074 | 2,260,781 |
Goods Delivered At Point In Time [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 17,482 | 234,772 | ||||
Services Delivered At Point In Time [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 543,669 | 656,704 | ||||
Turnkey Projects [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 705,849 | 2,692,417 | 3,404,107 | 6,038,441 | 11,190,292 | 5,518,004 |
Maintenance And Support [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 646,927 | 1,312,339 | 1,944,969 | 2,805,483 | 3,108,114 | 2,257,601 |
Data Center Auditing Services [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 131,537 | |||||
Software License [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 3,180 | |||||
Algorithms [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 178,147 | 17,482 | 596,194 | 234,772 | 713,960 | 349,595 |
Rail [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 1,333,556 | 3,765,312 | 5,247,291 | 8,087,759 | 13,710,777 | 6,883,670 |
Rail [Member] | Goods Transferred Over Time [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 705,849 | 2,689,393 | 3,390,555 | 5,885,477 | 10,789,693 | 5,255,491 |
Rail [Member] | Services Transferred Over Time [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 627,707 | 532,250 | 1,856,736 | 1,545,578 | 2,921,084 | 1,628,179 |
Rail [Member] | Goods Delivered At Point In Time [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | ||||||
Rail [Member] | Services Delivered At Point In Time [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 543,669 | 656,704 | ||||
Rail [Member] | Turnkey Projects [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 705,849 | 2,689,393 | 3,390,555 | 5,885,477 | 10,789,693 | 5,255,491 |
Rail [Member] | Maintenance And Support [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 627,707 | 1,075,919 | 1,856,736 | 2,202,282 | 2,921,084 | 1,628,179 |
Rail [Member] | Data Center Auditing Services [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | ||||||
Rail [Member] | Software License [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | ||||||
Rail [Member] | Algorithms [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | ||||||
Commercial [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 19,220 | 32,821 | 90,432 | 76,818 | 115,443 | 213,517 |
Commercial [Member] | Goods Transferred Over Time [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 13,552 | (498) | 9,297 | 27,831 | ||
Commercial [Member] | Services Transferred Over Time [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 19,220 | 32,821 | 76,880 | 77,316 | 106,146 | 185,686 |
Commercial [Member] | Goods Delivered At Point In Time [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | ||||||
Commercial [Member] | Services Delivered At Point In Time [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | ||||||
Commercial [Member] | Turnkey Projects [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 13,552 | (498) | 9,297 | 27,831 | ||
Commercial [Member] | Maintenance And Support [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 19,220 | 32,821 | 76,880 | 77,316 | 106,146 | 185,686 |
Commercial [Member] | Data Center Auditing Services [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | ||||||
Commercial [Member] | Software License [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | ||||||
Commercial [Member] | Algorithms [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | ||||||
Petrochemical [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | (867) | |||||
Petrochemical [Member] | Goods Transferred Over Time [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | ||||||
Petrochemical [Member] | Services Transferred Over Time [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | (867) | |||||
Petrochemical [Member] | Turnkey Projects [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | ||||||
Petrochemical [Member] | Maintenance And Support [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | (867) | |||||
Petrochemical [Member] | Data Center Auditing Services [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | ||||||
Petrochemical [Member] | Software License [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | ||||||
Petrochemical [Member] | Algorithms [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | ||||||
Governments [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 23,245 | 11,353 | 214,124 | 237,414 | 314,030 | |
Governments [Member] | Goods Transferred Over Time [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 3,024 | 153,462 | 156,530 | 233,145 | ||
Governments [Member] | Services Transferred Over Time [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 20,221 | 11,353 | 60,662 | 80,884 | 80,885 | |
Governments [Member] | Goods Delivered At Point In Time [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | ||||||
Governments [Member] | Services Delivered At Point In Time [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | ||||||
Governments [Member] | Turnkey Projects [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 3,024 | 153,462 | 156,530 | 233,145 | ||
Governments [Member] | Maintenance And Support [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 20,221 | 11,353 | 60,662 | 80,884 | 80,885 | |
Governments [Member] | Data Center Auditing Services [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | ||||||
Governments [Member] | Software License [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | ||||||
Governments [Member] | Algorithms [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | ||||||
Banking Other [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 23,340 | |||||
Banking Other [Member] | Goods Transferred Over Time [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 1,537 | |||||
Banking Other [Member] | Services Transferred Over Time [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 21,803 | |||||
Banking Other [Member] | Turnkey Projects [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 1,537 | |||||
Banking Other [Member] | Maintenance And Support [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 21,803 | |||||
Banking Other [Member] | Data Center Auditing Services [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | ||||||
Banking Other [Member] | Software License [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | ||||||
Banking Other [Member] | Algorithms [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | ||||||
IT Suppliers [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 134,717 | |||||
IT Suppliers [Member] | Goods Transferred Over Time [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 131,537 | |||||
IT Suppliers [Member] | Services Transferred Over Time [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 3,180 | |||||
IT Suppliers [Member] | Turnkey Projects [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | ||||||
IT Suppliers [Member] | Maintenance And Support [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | ||||||
IT Suppliers [Member] | Data Center Auditing Services [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 131,537 | |||||
IT Suppliers [Member] | Software License [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 3,180 | |||||
IT Suppliers [Member] | Algorithms [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | ||||||
AI [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 948,732 | |||||
AI [Member] | Goods Transferred Over Time [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 234,772 | |||||
AI [Member] | Services Transferred Over Time [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 713,960 | |||||
AI [Member] | Turnkey Projects [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 234,772 | |||||
AI [Member] | Maintenance And Support [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | ||||||
AI [Member] | Data Center Auditing Services [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | ||||||
AI [Member] | Software License [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | ||||||
AI [Member] | Algorithms [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 713,960 | |||||
Artificial Intelligence [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 178,147 | 200,860 | 596,194 | 699,995 | 691,510 | |
Artificial Intelligence [Member] | Goods Transferred Over Time [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 349,595 | |||||
Artificial Intelligence [Member] | Services Transferred Over Time [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 178,147 | 183,378 | 596,194 | 465,223 | 341,915 | |
Artificial Intelligence [Member] | Goods Delivered At Point In Time [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 17,482 | 234,772 | ||||
Artificial Intelligence [Member] | Services Delivered At Point In Time [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | ||||||
Artificial Intelligence [Member] | Turnkey Projects [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | ||||||
Artificial Intelligence [Member] | Maintenance And Support [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 183,378 | 465,223 | 341,915 | |||
Artificial Intelligence [Member] | Data Center Auditing Services [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | ||||||
Artificial Intelligence [Member] | Software License [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | ||||||
Artificial Intelligence [Member] | Algorithms [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 178,147 | 17,482 | 596,194 | 234,772 | 349,595 | |
North America [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 1,530,923 | 4,022,238 | 5,945,270 | 9,078,696 | 15,012,366 | 8,259,917 |
North America [Member] | Rail [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 1,333,556 | 3,765,312 | 5,247,291 | 8,087,759 | 13,710,777 | 6,883,670 |
North America [Member] | Commercial [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 19,220 | 32,821 | 90,432 | 76,818 | 115,443 | 213,517 |
North America [Member] | Petrochemical [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | (867) | |||||
North America [Member] | Governments [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 23,245 | 11,353 | 214,124 | 237,414 | 314,030 | |
North America [Member] | Banking Other [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 23,340 | |||||
North America [Member] | IT Suppliers [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 134,717 | |||||
North America [Member] | AI [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | $ 948,732 | |||||
North America [Member] | Artificial Intelligence [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | $ 178,147 | $ 200,860 | $ 596,194 | $ 699,995 | $ 691,510 |
DEFERRED COMPENSATION (Details
DEFERRED COMPENSATION (Details Narrative) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Compensation Related Costs [Abstract] | ||
Deferred Compensation Liability, Current | $ 297,620 | $ 505,896 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES (Details - Schedule of supplemental information related leases) - USD ($) | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | ||||
Operating lease cost | $ 586,228 | $ 582,989 | $ 782,591 | $ 414,085 |
Short term lease Cost | 56,052 | 26,127 | 33,751 | 21,628 |
Operating cash outflow used for operating leases | $ 505,664 | $ 323,750 | $ 416,250 | $ 285,959 |
Operating Lease, Weighted Average Discount Rate, Percent | 9% | 9% | 9% | 9% |
Operating Lease, Weighted Average Remaining Lease Term | 8 years 7 months 6 days | 9 years 7 months 6 days | 9 years 6 months | 10 years 4 months 24 days |
COMMITMENTS AND CONTINGENCIES_3
COMMITMENTS AND CONTINGENCIES (Details - Schedule of future minimum lease payments) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 | Nov. 24, 2021 |
Commitments and Contingencies Disclosure [Abstract] | |||
2024 | $ 779,087 | $ 696,869 | |
2025 | 798,556 | 779,087 | |
2026 | 818,518 | 798,556 | |
2027 | 838,984 | 818,518 | |
2027 | 838,984 | ||
Thereafter | 4,043,427 | ||
Total undiscounted future minimum lease payments | 7,469,777 | 7,975,441 | |
Less: Impact of discounting | (2,384,618) | (2,735,629) | |
Total present value of operating lease obligations | 5,085,159 | 5,239,812 | $ 4,980,104 |
Current portion | (774,306) | (696,869) | |
Operating lease obligations, less current portion | 4,310,853 | $ 4,542,943 | |
2023 | 191,205 | ||
Thereafter | $ 4,043,427 |
COMMITMENTS AND CONTINGENCIES_4
COMMITMENTS AND CONTINGENCIES (Details Narrative) | 1 Months Ended | 9 Months Ended | 12 Months Ended | ||||||
Nov. 24, 2021 USD ($) ft² | Jul. 26, 2021 USD ($) ft² | Jul. 10, 2020 USD ($) shares | Apr. 30, 2018 USD ($) | Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | Mar. 01, 2021 USD ($) | |
Deferred Compensation Arrangement with Individual, Excluding Share-Based Payments and Postretirement Benefits [Line Items] | |||||||||
[custom:AreaOfLease] | ft² | 40,000 | ||||||||
Operating Lease, Liability | $ 4,980,104 | $ 5,085,159 | $ 5,239,812 | ||||||
[custom:RentableSpace] | ft² | 30,000 | 30,000 | |||||||
Security Deposit | $ 600,000 | 550,000 | 600,000 | $ 600,000 | |||||
Operating Lease, Right-of-Use Asset | $ 4,980,104 | 4,454,714 | 4,689,931 | 4,925,765 | |||||
Accrued Liabilities, Current | 275,277 | 453,023 | 618,093 | ||||||
Increase (Decrease) in Security Deposits | $ 50,000 | 50,000 | $ (600,000) | ||||||
Chief Executive Officer [Member] | |||||||||
Deferred Compensation Arrangement with Individual, Excluding Share-Based Payments and Postretirement Benefits [Line Items] | |||||||||
Salary and Wage, Officer, Excluding Cost of Good and Service Sold | $ 249,260 | ||||||||
[custom:AnnualCarAllowance] | $ 18,000 | ||||||||
[custom:PercentageOfGrossRevenue] | 1% | ||||||||
[custom:AdditionalCompensationToBePaidInSeparationPayments-0] | $ 75,000 | 75,000 | |||||||
[custom:OnetimeChargeToBePaidOverThirtySixMonthTermOfSeparationAgreement-0] | 747,788 | $ 747,788 | |||||||
[custom:PaymentOneOfSeparationAgreement-0] | $ 124,631 | ||||||||
Accrued Liabilities, Current | $ 228,673 | ||||||||
[custom:PaymentTwoSeparationAgreementForLifeInsurance-0] | $ 1,200 | ||||||||
[custom:NumberOfUnvestedOptionsThatBecameExercisableAsOfSeparationDate-0] | shares | 50,358 | ||||||||
[custom:ValueOfUnvestedOptionsThatBecameExercisableAsOfSeparationDate-0] | $ 95,127 | ||||||||
Legal Fees | $ 17,000 |
INCOME TAXES (Details - Schedul
INCOME TAXES (Details - Schedule of provision for income taxes) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | ||
Income tax benefit at U.S. statutory rate of 21% | $ (1,441,624) | $ (1,261,869) |
State income taxes | (247,135) | (216,321) |
Non-deductible expenses | 201,521 | 64,553 |
Change in valuation allowance | 1,487,238 | 1,413,637 |
Total provision for income tax |
INCOME TAXES (Details - Sched_2
INCOME TAXES (Details - Schedule of deferred tax assets) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Income Tax Disclosure [Abstract] | ||
Net operating loss carryforward | $ 9,772,854 | $ 8,247,427 |
Intangible assets | (32,656) | 5,553 |
Gross deferred tax assets | 9,740,198 | 8,252,960 |
Valuation allowance | (9,740,198) | (8,252,960) |
Net deferred tax assets |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | ||
Operating Loss Carryforwards | $ 39,727,050 | $ 33,522,769 |
Valuation Allowance, Deferred Tax Asset, Increase (Decrease), Amount | 1,487,238 | |
Tax Credit Carryforward, Amount | 4,357,876 | |
[custom:PotentialTaxBenefitArisingFromNetOperatingLossCarryforwardWithinAnnualUsageLimitations-0] | $ 5,382,322 |
STOCKHOLDERS_ EQUITY (Details N
STOCKHOLDERS’ EQUITY (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||||||||||||||||||||||||||||||||
Aug. 30, 2023 | Aug. 02, 2023 | Jul. 02, 2023 | Jun. 30, 2023 | Apr. 02, 2023 | Mar. 27, 2023 | Oct. 29, 2022 | Aug. 25, 2022 | Feb. 21, 2022 | Feb. 03, 2022 | Jan. 11, 2022 | Jan. 02, 2022 | Nov. 05, 2021 | Aug. 05, 2021 | May 12, 2021 | Feb. 26, 2021 | Nov. 24, 2017 | Dec. 30, 2022 | Sep. 30, 2022 | Jan. 31, 2022 | Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Dec. 31, 2022 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2021 | Mar. 31, 2021 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2018 | Sep. 29, 2023 | Sep. 28, 2022 | Dec. 31, 2020 | Dec. 31, 2017 | |
Class of Stock [Line Items] | ||||||||||||||||||||||||||||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Number of Shares Available for Grant | 1,000,000 | 1,000,000 | ||||||||||||||||||||||||||||||||||||
Preferred Stock, Shares Authorized | 10,000,000 | 10,000,000 | 10,000,000 | 10,000,000 | 10,000,000 | |||||||||||||||||||||||||||||||||
Debt Instrument, Convertible, Conversion Price | $ 0.003 | $ 0.003 | ||||||||||||||||||||||||||||||||||||
Common Stock, Shares, Issued | 7,248,455 | 7,156,856 | 7,248,455 | 7,156,856 | 4,111,047 | |||||||||||||||||||||||||||||||||
Share Price | $ 4 | $ 4 | $ 3 | $ 3 | $ 3 | |||||||||||||||||||||||||||||||||
Conversion of Stock, Shares Issued | 710 | |||||||||||||||||||||||||||||||||||||
Common Stock, Convertible, Conversion Price, Increase | $ 5.50 | |||||||||||||||||||||||||||||||||||||
Stock Issued During Period, Shares, New Issues | 198,750 | 1,325,000 | 818,335 | |||||||||||||||||||||||||||||||||||
Stock Issued During Period, Value, New Issues | $ 795,000 | $ 5,300,000 | $ 2,455,003 | |||||||||||||||||||||||||||||||||||
Proceeds from Issuance Initial Public Offering | 739,350 | $ 4,779,000 | 2,194,187 | |||||||||||||||||||||||||||||||||||
Common Stock Issued, Employee Trust, Deferred | $ 50,000,000 | |||||||||||||||||||||||||||||||||||||
Stock Issued During Period, Value, Issued for Services | $ 40,565 | $ 32,500 | $ 32,500 | $ 40,000 | $ 40,000 | $ 40,000 | $ 157,500 | |||||||||||||||||||||||||||||||
[custom:ConvertedToCommonStockShares] | 121,572 | |||||||||||||||||||||||||||||||||||||
[custom:AccruedOfferingCosts-0] | $ 260,816 | 260,816 | 260,816 | |||||||||||||||||||||||||||||||||||
Deferred Offering Costs | $ 105,460 | $ 257,240 | $ 257,240 | 257,240 | ||||||||||||||||||||||||||||||||||
Share-Based Payment Arrangement, Expense | 32,728 | $ 25,000 | $ 98,945 | |||||||||||||||||||||||||||||||||||
[custom:EmployeeServiceShareBasedCompensationNonvestedAwardsTotalCompensationCostNotYetRecognizedPeriod2-0] | $ 426,004 | $ 426,004 | ||||||||||||||||||||||||||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Period | 3 years 3 months 18 days | |||||||||||||||||||||||||||||||||||||
Treasury Stock, Common, Shares | 1,324 | 1,324 | 1,324 | 235 | ||||||||||||||||||||||||||||||||||
Treasury Stock, Common, Value | 157,452 | $ 157,452 | 157,452 | $ 157,452 | $ 157,452 | $ 148,000 | ||||||||||||||||||||||||||||||||
Preferred Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 | $ 0.001 | |||||||||||||||||||||||||||||||||||
[custom:ActualCosts] | 17,645 | |||||||||||||||||||||||||||||||||||||
Investment Company, Preferred Share, Amount Repurchased to NAV, Excess (Less) | $ 281,500 | |||||||||||||||||||||||||||||||||||||
Accrued Liabilities and Other Liabilities | 72,801 | 72,801 | ||||||||||||||||||||||||||||||||||||
[custom:FairMarketValuePercentage] | 85% | |||||||||||||||||||||||||||||||||||||
Shares, Issued | 1,000,000 | 1,000,000 | ||||||||||||||||||||||||||||||||||||
[custom:TotalCompensationCostForStockOptions-0] | $ 592,927 | 592,927 | ||||||||||||||||||||||||||||||||||||
Share-Based Payment Arrangement, Noncash Expense | $ 499,590 | $ 592,177 | $ 819,191 | $ 262,411 | ||||||||||||||||||||||||||||||||||
Share-Based Payment Arrangement, Option [Member] | ||||||||||||||||||||||||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||||||||||||||||||||||||
Share Price | $ 1.79 | $ 1.79 | ||||||||||||||||||||||||||||||||||||
Stock Issued During Period, Shares, Issued for Services | 65,561 | |||||||||||||||||||||||||||||||||||||
Employee Stock Ownership Plan (ESOP), Cash Contributions to ESOP | $ 117,048 | |||||||||||||||||||||||||||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Expected Term | 3 years 6 months | |||||||||||||||||||||||||||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Expected Volatility Rate | 91.60% | |||||||||||||||||||||||||||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Outstanding, Number | 926,266 | 1,217,775 | 926,266 | 926,266 | 1,217,775 | 926,266 | 926,266 | 431,266 | 451,898 | |||||||||||||||||||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Exercisable, Number | 581,325 | 404,599 | 581,325 | 404,599 | 312,310 | |||||||||||||||||||||||||||||||||
Non Qualified Stock Options [Member] | ||||||||||||||||||||||||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||||||||||||||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Grants in Period | 70,000 | 50,000 | 353,117 | |||||||||||||||||||||||||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Number of Shares Available for Grant | 1,596,804 | |||||||||||||||||||||||||||||||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 4.22 | $ 6.41 | ||||||||||||||||||||||||||||||||||||
[custom:OptionsToPurchaseSharesOfCommonStock] | 665,000 | |||||||||||||||||||||||||||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Expected Term | 3 years | |||||||||||||||||||||||||||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Expected Volatility Rate | 72% | |||||||||||||||||||||||||||||||||||||
Sensitivity Analysis of Fair Value, Transferor's Interests in Transferred Financial Assets, Impact of Other than 10 or 20 Percent Adverse Change in Discount Rate, Percent | 0.97% | |||||||||||||||||||||||||||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Forfeited in Period | 60,000 | |||||||||||||||||||||||||||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Nonvested, Number | 293,117 | |||||||||||||||||||||||||||||||||||||
Share-Based Payment Arrangement, Noncash Expense | $ 567,569 | |||||||||||||||||||||||||||||||||||||
Shareholders One [Member] | ||||||||||||||||||||||||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||||||||||||||||||||||||
Payments for Repurchase of Common Stock | $ 115 | $ 84 | ||||||||||||||||||||||||||||||||||||
Accelerated Share Repurchases, Final Price Paid Per Share | $ 10.08 | $ 7 | ||||||||||||||||||||||||||||||||||||
Shareholders Two [Member] | ||||||||||||||||||||||||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||||||||||||||||||||||||
Payments for Repurchase of Common Stock | $ 753 | $ 140 | ||||||||||||||||||||||||||||||||||||
Accelerated Share Repurchases, Final Price Paid Per Share | $ 9.09 | $ 6.30 | ||||||||||||||||||||||||||||||||||||
Private Placement [Member] | ||||||||||||||||||||||||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||||||||||||||||||||||||
Partners' Capital Account, Units, Sold in Private Placement | 83,667 | 818,335 | ||||||||||||||||||||||||||||||||||||
Sale of Stock, Price Per Share | $ 3 | $ 3 | $ 3 | $ 3 | ||||||||||||||||||||||||||||||||||
Director [Member] | ||||||||||||||||||||||||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||||||||||||||||||||||||
Stock Issued During Period, Shares, Issued for Services | 16,335 | 9,758 | 10,668 | 7,198 | ||||||||||||||||||||||||||||||||||
Stock Issued During Period, Value, Issued for Services | $ 37,500 | $ 40,000 | $ 40,000 | $ 40,000 | ||||||||||||||||||||||||||||||||||
Board of Directors Chairman [Member] | ||||||||||||||||||||||||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||||||||||||||||||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 4.32 | |||||||||||||||||||||||||||||||||||||
Stock Issued During Period, Shares, Issued for Services | 3,726 | 4,032 | 7,223 | 9,560 | ||||||||||||||||||||||||||||||||||
Stock Issued During Period, Value, Issued for Services | $ 19,167 | $ 30,000 | $ 45,000 | $ 50,000 | ||||||||||||||||||||||||||||||||||
Share-Based Payment Arrangement, Expense | $ 7,685 | |||||||||||||||||||||||||||||||||||||
Employees And Directors [Member] | ||||||||||||||||||||||||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||||||||||||||||||||||||
Share-Based Payment Arrangement, Expense | $ 400,645 | $ 592,177 | $ 819,191 | $ 262,411 | ||||||||||||||||||||||||||||||||||
Purchase Agreement [Member] | ||||||||||||||||||||||||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||||||||||||||||||||||||
Proceeds from Issuance of Convertible Preferred Stock | $ 4,500,000 | |||||||||||||||||||||||||||||||||||||
Convertible Series B Preferred Stock [Member] | ||||||||||||||||||||||||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||||||||||||||||||||||||
Preferred Stock, Shares Authorized | 15,000 | 15,000 | 15,000 | 15,000 | 15,000 | |||||||||||||||||||||||||||||||||
Preferred Stock, Shares Issued | 0 | 0 | ||||||||||||||||||||||||||||||||||||
Preferred Stock, Shares Outstanding | 0 | 0 | 0 | 0 | 851 | |||||||||||||||||||||||||||||||||
[custom:ConvertedToCommonStockShares] | 851 | |||||||||||||||||||||||||||||||||||||
Preferred Stock, Par or Stated Value Per Share | $ 1,000 | $ 1,000 | $ 1,000 | $ 1,000 | $ 1,000 | |||||||||||||||||||||||||||||||||
Preferred Stock, Redemption Price Per Share | 7 | $ 7 | $ 7 | |||||||||||||||||||||||||||||||||||
Series B Convertible Preferred Stock [Member] | ||||||||||||||||||||||||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||||||||||||||||||||||||
Conversion of Stock, Amount Converted | $ 1,000 | $ 1,000 | ||||||||||||||||||||||||||||||||||||
Debt Instrument, Convertible, Conversion Price | $ 7 | $ 7 | $ 7 | $ 7 | ||||||||||||||||||||||||||||||||||
Conversion of Stock, Shares Converted | 851 | 854 | ||||||||||||||||||||||||||||||||||||
Debt Conversion, Converted Instrument, Shares Issued | 121,572 | 122,000 | ||||||||||||||||||||||||||||||||||||
[custom:ConvertedToCommonStockShares] | 851 | |||||||||||||||||||||||||||||||||||||
Series B Convertible Preferred Stock [Member] | Equity Unit Purchase Agreements [Member] | ||||||||||||||||||||||||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||||||||||||||||||||||||
Conversion of Stock, Amount Converted | $ 2,830,000 | |||||||||||||||||||||||||||||||||||||
Preferred Stock, Shares Issued | 2,830 | |||||||||||||||||||||||||||||||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 1,000 | |||||||||||||||||||||||||||||||||||||
Series C Convertible Preferred Stock [Member] | ||||||||||||||||||||||||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||||||||||||||||||||||||
Conversion of Stock, Shares Converted | 2,500 | 2,000 | ||||||||||||||||||||||||||||||||||||
Debt Conversion, Converted Instrument, Shares Issued | 454,546 | 363,636 | ||||||||||||||||||||||||||||||||||||
Series C Convertible Preferred Stock [Member] | Purchase Agreement [Member] | ||||||||||||||||||||||||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||||||||||||||||||||||||
Preferred Stock, Shares Issued | 4,500 | |||||||||||||||||||||||||||||||||||||
Proceeds from Issuance of Convertible Preferred Stock | $ 4,500,000 | |||||||||||||||||||||||||||||||||||||
Convertible Series C Preferred Stock [Member] | ||||||||||||||||||||||||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||||||||||||||||||||||||
Preferred Stock, Shares Authorized | 5,000 | 5,000 | 5,000 | 5,000 | 5,000 | |||||||||||||||||||||||||||||||||
Preferred Stock, Shares Outstanding | 0 | 0 | 0 | 0 | 2,500 | |||||||||||||||||||||||||||||||||
Conversion of Stock, Shares Issued | 1,790 | |||||||||||||||||||||||||||||||||||||
Preferred Stock, Par or Stated Value Per Share | $ 1,000 | $ 1,000 | $ 1,000 | $ 1,000 | $ 1,000 | |||||||||||||||||||||||||||||||||
Preferred Stock, Voting Rights | Each share of Series C Convertible Preferred Stock has 172 votes | |||||||||||||||||||||||||||||||||||||
Preferred Stock, Redemption Price Per Share | $ 5.50 | $ 5.50 | $ 5.50 | $ 5.50 | $ 5.50 | |||||||||||||||||||||||||||||||||
[custom:SeriesCPreferredConvertedToCommonStockShares] | 454,546 | |||||||||||||||||||||||||||||||||||||
Series D Convertible Preferred Stock [Member] | Purchase Agreement [Member] | ||||||||||||||||||||||||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||||||||||||||||||||||||
Preferred Stock, Shares Issued | 999 | 999 | 999 | |||||||||||||||||||||||||||||||||||
Proceeds from Issuance of Convertible Preferred Stock | $ 999,000 | |||||||||||||||||||||||||||||||||||||
Proceeds from Issuance or Sale of Equity | $ 3,454,003 | |||||||||||||||||||||||||||||||||||||
Share Price | $ 1,000 | $ 1,000 | $ 1,000 | |||||||||||||||||||||||||||||||||||
Series D Convertible Preferred Stock [Member] | Private Placement [Member] | ||||||||||||||||||||||||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||||||||||||||||||||||||
Preferred Stock, Shares Issued | 300 | |||||||||||||||||||||||||||||||||||||
Proceeds from Issuance of Convertible Preferred Stock | $ 300,000 | |||||||||||||||||||||||||||||||||||||
Proceeds from Issuance or Sale of Equity | $ 551,001 | |||||||||||||||||||||||||||||||||||||
Share Price | $ 1,000 | |||||||||||||||||||||||||||||||||||||
Common Stock [Member] | ||||||||||||||||||||||||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||||||||||||||||||||||||
Stock Issued During Period, Shares, Issued for Services | 9,758 | |||||||||||||||||||||||||||||||||||||
Common Stock [Member] | Employee Stock Purchase Plan [Member] | ||||||||||||||||||||||||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||||||||||||||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Purchase Price of Common Stock, Percent | 15% | |||||||||||||||||||||||||||||||||||||
Common Stock [Member] | Three Directors [Member] | ||||||||||||||||||||||||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||||||||||||||||||||||||
Stock Issued During Period, Shares, Issued for Services | 5,645 | 12,463 | ||||||||||||||||||||||||||||||||||||
Stock Issued During Period, Value, Issued for Services | $ 32,500 | $ 32,500 | ||||||||||||||||||||||||||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Per Share Weighted Average Price of Shares Purchased | $ 5.76 | $ 5.76 | $ 2.61 | |||||||||||||||||||||||||||||||||||
Common Stock [Member] | Four Directors [Member] | ||||||||||||||||||||||||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||||||||||||||||||||||||
Stock Issued During Period, Shares, Issued for Services | 7,910 | |||||||||||||||||||||||||||||||||||||
Stock Issued During Period, Value, Issued for Services | $ 40,565 | |||||||||||||||||||||||||||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Per Share Weighted Average Price of Shares Purchased | $ 5.13 | |||||||||||||||||||||||||||||||||||||
Common Stock [Member] | Purchase Agreement [Member] | ||||||||||||||||||||||||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||||||||||||||||||||||||
Common Stock, Shares, Issued | 818,355 | 818,355 | 818,355 | |||||||||||||||||||||||||||||||||||
Common Stock [Member] | Private Placement [Member] | ||||||||||||||||||||||||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||||||||||||||||||||||||
Partners' Capital Account, Units, Sold in Private Placement | 83,667 | |||||||||||||||||||||||||||||||||||||
Sale of Stock, Price Per Share | $ 3 | |||||||||||||||||||||||||||||||||||||
Series D Preferred Stock [Member] | ||||||||||||||||||||||||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||||||||||||||||||||||||
Share Price | $ 1,000 | $ 1,000 | $ 1,000 | $ 1,000 | ||||||||||||||||||||||||||||||||||
Stock Issued During Period, Shares, Other | 300 | 999 | ||||||||||||||||||||||||||||||||||||
Proceeds from Issuance of Private Placement | $ 551,001 | $ 3,454,003 | ||||||||||||||||||||||||||||||||||||
Convertible Series D Preferred Stock [Member] | ||||||||||||||||||||||||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||||||||||||||||||||||||
Preferred Stock, Shares Authorized | 4,000 | 4,000 | 4,000 | 4,000 | ||||||||||||||||||||||||||||||||||
Preferred Stock, Shares Outstanding | 1,299 | 1,299 | 1,299 | 1,299 | 0 | |||||||||||||||||||||||||||||||||
Preferred Stock, Par or Stated Value Per Share | $ 1,000 | $ 1,000 | $ 1,000 | $ 1,000 | ||||||||||||||||||||||||||||||||||
Preferred Stock, Voting Rights | Each share of Series D Convertible Preferred Stock has 333 votes | |||||||||||||||||||||||||||||||||||||
Preferred Stock, Redemption Price Per Share | $ 3 | $ 3 | $ 3 | |||||||||||||||||||||||||||||||||||
Preferred Stock, Convertible, Conversion Price | $ 3 | $ 3 | ||||||||||||||||||||||||||||||||||||
Convertible Series E Preferred Stock [Member] | ||||||||||||||||||||||||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||||||||||||||||||||||||
Preferred Stock, Shares Authorized | 30,000 | 30,000 | 30,000 | 30,000 | ||||||||||||||||||||||||||||||||||
Preferred Stock, Shares Issued | 4,000 | |||||||||||||||||||||||||||||||||||||
Preferred Stock, Shares Outstanding | 4,000 | 0 | 4,000 | 0 | ||||||||||||||||||||||||||||||||||
Preferred Stock, Par or Stated Value Per Share | $ 1,000 | $ 1,000 | $ 1,000 | $ 1,000 | $ 1,000 | |||||||||||||||||||||||||||||||||
Preferred Stock, Voting Rights | Each share of Series E Preferred Stock has 333 votes | |||||||||||||||||||||||||||||||||||||
Preferred Stock, Redemption Price Per Share | $ 3 | $ 3 | ||||||||||||||||||||||||||||||||||||
Adjustments to Additional Paid in Capital, Stock Issued, Issuance Costs | $ 299,145 | |||||||||||||||||||||||||||||||||||||
Series E Convertible Preferred Stock [Member] | ||||||||||||||||||||||||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||||||||||||||||||||||||
Proceeds from Issuance of Convertible Preferred Stock | $ 4,000,000 | |||||||||||||||||||||||||||||||||||||
Series F Convertible Preferred Stock [Member] | ||||||||||||||||||||||||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||||||||||||||||||||||||
Proceeds from Issuance of Convertible Preferred Stock | $ 5,000,000 | |||||||||||||||||||||||||||||||||||||
Share Price | $ 6.20 | $ 6.20 | ||||||||||||||||||||||||||||||||||||
[custom:SeriesFPreferredConvertiblePreferredStockShares] | 5,000 | |||||||||||||||||||||||||||||||||||||
Convertible Series F Preferred Stock [Member] | ||||||||||||||||||||||||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||||||||||||||||||||||||
Preferred Stock, Shares Authorized | 5,000 | 5,000 | 5,000 | 5,000 | ||||||||||||||||||||||||||||||||||
Preferred Stock, Shares Outstanding | 5,000 | 0 | 5,000 | 0 | ||||||||||||||||||||||||||||||||||
Preferred Stock, Par or Stated Value Per Share | $ 1,000 | $ 1,000 | $ 1,000 | $ 1,000 | ||||||||||||||||||||||||||||||||||
Preferred Stock, Voting Rights | Each share of Series F Preferred Stock has 161 votes | |||||||||||||||||||||||||||||||||||||
Preferred Stock, Redemption Price Per Share | $ 6.20 | $ 6.20 | ||||||||||||||||||||||||||||||||||||
Preferred Stock, Convertible, Conversion Price | $ 6.20 | $ 6.20 | ||||||||||||||||||||||||||||||||||||
Share-Based Payment Arrangement, Option [Member] | ||||||||||||||||||||||||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||||||||||||||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Terms of Award | not exceed 10 years | |||||||||||||||||||||||||||||||||||||
Common Stock, Voting Rights | more than 10% of the total combined voting power of all classes of capital stock | |||||||||||||||||||||||||||||||||||||
[custom:AggregateFairMarketValueOfOurCommonStockNotExceed] | $ 100,000 | |||||||||||||||||||||||||||||||||||||
Call Option [Member] | Employee Stock Purchase Plan [Member] | ||||||||||||||||||||||||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||||||||||||||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Purchase Price of Common Stock, Percent | 85% | |||||||||||||||||||||||||||||||||||||
Put Option [Member] | Employee Stock Purchase Plan [Member] | ||||||||||||||||||||||||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||||||||||||||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Purchase Price of Common Stock, Percent | 15% | |||||||||||||||||||||||||||||||||||||
Two Thousands Twenty One Equity Incentive Plan [Member] | ||||||||||||||||||||||||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||||||||||||||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Grants in Period | 1,000,000 | |||||||||||||||||||||||||||||||||||||
2021 Equity Incentive Plan [Member] | ||||||||||||||||||||||||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||||||||||||||||||||||||
Stock Issued During Period, Shares, New Issues | 1,000,000 | |||||||||||||||||||||||||||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Outstanding, Number | 882,636 | 495,000 | 882,636 | 495,000 | ||||||||||||||||||||||||||||||||||
Plan 2016 [Member] | ||||||||||||||||||||||||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||||||||||||||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Outstanding, Number | 269,658 | 271,266 | 269,658 | 271,266 | ||||||||||||||||||||||||||||||||||
Non Plan [Member] | ||||||||||||||||||||||||||||||||||||||
Class of Stock [Line Items] | ||||||||||||||||||||||||||||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Outstanding, Number | 160,000 | 160,000 | 160,000 | 160,000 |
COMMON STOCK OPTIONS AND WARR_3
COMMON STOCK OPTIONS AND WARRANTS (Details - Schedule of options activity) - Share-Based Payment Arrangement, Option [Member] - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||
Outstanding at the beginning of the year | 926,266 | 431,266 | 451,898 | ||
Weighted average exercise price, Outstanding beginning balance | $ 5.74 | $ 4.98 | $ 5.06 | ||
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term | 3 years | 3 years 3 months 18 days | 3 years 4 months 24 days | 4 years 2 months 12 days | |
Aggregate intrinsic value, Outstanding beginning balance | $ 0 | $ 197,506 | $ 0 | ||
Number of options, Granted | 353,117 | 685,000 | 20,000 | ||
Weighted average exercise price, Granted | $ 4.22 | $ 6.41 | $ 4.32 | ||
[custom:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsGrantedWeightedAverageRemainingContractualTerm2] | 4 years 6 months | 4 years | 4 years | ||
Number of options, Forfeited | (190,000) | (40,632) | |||
Weighted average exercise price, Cancelled/Forfeited | $ 4.48 | $ 6.41 | $ 14 | ||
Outstanding at the ending of the year | 926,266 | 1,217,775 | 926,266 | 431,266 | 451,898 |
Weighted average exercise price, Outstanding ending balance | $ 5.37 | $ 5.74 | $ 4.98 | $ 5.06 | |
Aggregate intrinsic value, Outstanding ending balance | $ 0 | $ 197,506 | $ 0 | ||
Exercisable at end of period | 581,325 | 404,599 | 312,310 | ||
Weighted average exercise price, Exercisable at end of period | $ 5.38 | $ 5.02 | $ 5.25 | ||
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Exercisable, Weighted Average Remaining Contractual Term | 2 years 1 month 6 days | 3 years 3 months 18 days | 3 years 4 months 24 days | ||
Aggregate intrinsic value, Exercisable | $ 0 | $ 0 |
COMMON STOCK OPTIONS AND WARR_4
COMMON STOCK OPTIONS AND WARRANTS (Details - Schedule of fair value assumptions) - Share-Based Payment Arrangement, Option [Member] | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Risk Free Interest Rate | 0.18% | ||
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Expected Term | 3 years 6 months | ||
Dividend yield | 0% | ||
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Expected Volatility Rate | 91.60% | ||
Minimum [Member] | |||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Risk Free Interest Rate | 4.76% | 0.97% | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Expected Term | 3 months | 3 years 3 months | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Expected Volatility Rate | 89.70% | 72% | |
Maximum [Member] | |||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Risk Free Interest Rate | 5.53% | 3.15% | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Expected Term | 6 months | 3 years 6 months | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Expected Volatility Rate | 103.40% | 80% |
COMMON STOCK OPTIONS AND WARR_5
COMMON STOCK OPTIONS AND WARRANTS (Details - Schedule of activity of warrants) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Jan. 11, 2022 | Dec. 31, 2022 | Sep. 30, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||
Warrants issued | 710 | |||||
Warrant [Member] | ||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||
Outstanding at the beginning of the year | 147,591 | 1,376,466 | 1,587,553 | |||
Weighted average exercise price, Outstanding beginning balance | $ 8.63 | $ 8.18 | $ 8.62 | |||
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term | 7 months 6 days | 9 months 18 days | 1 year 10 months 24 days | 2 years | ||
Aggregate intrinsic value, Outstanding beginning balance | $ 0 | $ 0 | $ 0 | |||
Warrants expired, forfeited, cancelled or exercised | (1,228,875) | (67,500) | (1,228,875) | (232,517) | ||
Warrants issued | 0 | 0 | 21,430 | |||
Weighted average exercise price, Warrants issued | $ 0 | $ 0 | $ 7.70 | |||
[custom:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsOutstandingWeightedAverageRemainingContractualTermWarrantsIssued] | 1 year 10 months 24 days | |||||
Outstanding at the ending of the year | 147,591 | 80,091 | 147,591 | 1,376,466 | 1,587,553 | |
Weighted average exercise price, Outstanding ending balance | $ 8.63 | $ 8.63 | $ 8.18 | $ 8.62 | ||
Aggregate intrinsic value, Outstanding ending balance | $ 0 | $ 0 | $ 0 | $ 0 | ||
Exercisable at end of period | 147,591 | 80,091 | 147,591 | 1,376,466 | ||
Weighted average exercise price, Exercisable at end of period | $ 8.63 | $ 8.53 | $ 8.63 | $ 8.18 | ||
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Exercisable, Weighted Average Remaining Contractual Term | 7 months 6 days | 9 months 18 days | 1 year 10 months 24 days | |||
Aggregate intrinsic value, Exercisable | $ 0 | $ 0 | $ 0 | |||
[custom:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsOutstandingWeightedAverageRemainingContractualBeginning] | 1 year 10 months 24 days |
COMMON STOCK OPTIONS AND WARR_6
COMMON STOCK OPTIONS AND WARRANTS (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||||||||||
Jul. 02, 2022 | Jan. 02, 2022 | Jan. 04, 2021 | Sep. 30, 2023 | Dec. 31, 2022 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Jun. 30, 2021 | Mar. 31, 2021 | Sep. 30, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | Feb. 21, 2022 | Feb. 03, 2022 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||||||||
Share-Based Payment Arrangement, Expense | $ 32,728 | $ 25,000 | $ 98,945 | ||||||||||||
Share Price | $ 3 | $ 4 | $ 4 | ||||||||||||
Options [Member] | Former Staff [Member] | |||||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Forfeited in Period | 110,000 | 8,922 | |||||||||||||
Proceeds from Issuance or Sale of Equity | $ 63,860 | ||||||||||||||
Options [Member] | Two Employees [Member] | |||||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Forfeited in Period | 80,000 | ||||||||||||||
Warrant [Member] | |||||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Expirations in Period | 1,228,875 | 67,500 | 1,228,875 | 232,517 | |||||||||||
Warrant [Member] | Seven Holder [Member] | |||||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||||||||
[custom:WarrantExercised] | 205,574 | ||||||||||||||
[custom:WarrantExercisePrice] | $ 7.70 | ||||||||||||||
[custom:TotalCommonStock] | 50,588 | ||||||||||||||
Warrant [Member] | Seven Holder [Member] | Minimum [Member] | |||||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||||||||
Share Price | $ 9.25 | ||||||||||||||
Warrant [Member] | Seven Holder [Member] | Maximum [Member] | |||||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||||||||
Share Price | $ 11.14 | ||||||||||||||
Management [Member] | |||||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Grants in Period, Gross | 20,000 | 665,000 | |||||||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 6.41 | ||||||||||||||
Stock or Unit Option Plan Expense | $ 33,096 | $ 1,596,804 | |||||||||||||
Share-Based Payment Arrangement, Expense | $ 819,191 | ||||||||||||||
Unamortized Debt Issuance Expense | $ 426,004 | $ 426,004 | |||||||||||||
Share-Based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition | 2 years | ||||||||||||||
Board of Directors Chairman [Member] | |||||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Grants in Period, Gross | 20,000 | ||||||||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 4.32 | ||||||||||||||
Stock or Unit Option Plan Expense | $ 52,758 | ||||||||||||||
Share-Based Payment Arrangement, Expense | $ 7,685 | ||||||||||||||
Unamortized Debt Issuance Expense | $ 45,073 | ||||||||||||||
Share-Based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition | 2 years 9 months |
DEFINED CONTRIBUTION PLAN (Deta
DEFINED CONTRIBUTION PLAN (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended |
Sep. 30, 2023 | Sep. 30, 2023 | Dec. 31, 2022 | |
Retirement Benefits [Abstract] | |||
Defined Benefit Plan, Service Cost | $ 59,508 | $ 158,852 | $ 155,766 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended | ||||
Jun. 30, 2019 | Feb. 28, 2019 | Jan. 31, 2019 | Dec. 31, 2021 | Dec. 31, 2020 | Jan. 02, 2021 | |
[custom:RelatedPartyCost] | $ 25,583 | $ 16,250 | $ 93,422 | $ 335,334 | ||
[custom:AccountsPayableRelatedPartyCurrentAndNoncurrent-0] | $ 20,986 | |||||
Contractors [Member] | ||||||
[custom:RelatedPartyCost] | $ 7,480 |
STOCKHOLDERS' EQUITY (Details -
STOCKHOLDERS' EQUITY (Details - Schedule of black sholes option pricing model) - Share-Based Payment Arrangement, Option [Member] - $ / shares | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Expected Term | 3 years 6 months | ||
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Expected Volatility Rate | 91.60% | ||
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Risk Free Interest Rate | 0.18% | ||
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Expected Dividend Rate | 0% | ||
Minimum [Member] | |||
[custom:ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsSharePrice] | $ 2.10 | ||
[custom:ShareBasedCompensationArrangementByShareBasedPaymentsAwardFairValueAssumptionsExercisePrice] | $ 1.79 | ||
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Expected Term | 3 months | 3 years 3 months | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Expected Volatility Rate | 89.70% | 72% | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Risk Free Interest Rate | 4.76% | 0.97% | |
Maximum [Member] | |||
[custom:ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsSharePrice] | $ 5.13 | ||
[custom:ShareBasedCompensationArrangementByShareBasedPaymentsAwardFairValueAssumptionsExercisePrice] | $ 4.36 | ||
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Expected Term | 6 months | 3 years 6 months | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Expected Volatility Rate | 103.40% | 80% | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Risk Free Interest Rate | 5.53% | 3.15% |
STOCKHOLDERS' EQUITY (Details_2
STOCKHOLDERS' EQUITY (Details - Schedule of stock-based compensation) | 9 Months Ended |
Sep. 30, 2023 USD ($) | |
Subsequent Events [Abstract] | |
Cash payment received from employee withholdings | $ 189,849 |
Cash from employee withholdings used to purchase shares under ESPP | (117,048) |
Cash and ESPP employee withholding liability | 72,801 |
Cash from employee withholdings used to purchase ESPP shares | 117,048 |
Stock based compensation expense | 98,945 |
Total increase to equity for nine months ended September 30, 2023 | $ 215,993 |
STOCKHOLDERS' EQUITY (Details_3
STOCKHOLDERS' EQUITY (Details - Schedule of options activity) - Share-Based Payment Arrangement, Option [Member] - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||
Outstanding at the beginning of the year | 926,266 | 431,266 | 451,898 | ||
Weighted average exercise price, Outstanding beginning balance | $ 5.74 | $ 4.98 | $ 5.06 | ||
[custom:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsOutstandingWeightedAverageRemainingContractualTerm1] | 3 years 3 months 18 days | 3 years 4 months 24 days | |||
Aggregate intrinsic value, Outstanding beginning balance | $ 0 | $ 0 | |||
Number of options, Granted | 353,117 | 685,000 | 20,000 | ||
Weighted average exercise price, Granted | $ 4.22 | $ 6.41 | $ 4.32 | ||
[custom:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsGrantedWeightedAverageRemainingContractualTerm2] | 4 years 6 months | 4 years | 4 years | ||
Number of options, Forfeited | (61,608) | (190,000) | |||
Weighted average exercise price, Forfeited | $ 4.48 | $ 6.41 | $ 14 | ||
Outstanding at the ending of the year | 926,266 | 1,217,775 | 926,266 | 431,266 | 451,898 |
Weighted average exercise price, Outstanding ending balance | $ 5.37 | $ 5.74 | $ 4.98 | $ 5.06 | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term | 3 years | 3 years 3 months 18 days | 3 years 4 months 24 days | 4 years 2 months 12 days | |
Aggregate intrinsic value, Outstanding ending balance | $ 0 | $ 0 | $ 0 | ||
Exercisable at end of period | 581,325 | 404,599 | 312,310 | ||
Weighted average exercise price, Exercisable at end of period | $ 5.38 | $ 5.02 | $ 5.25 | ||
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Exercisable, Weighted Average Remaining Contractual Term | 2 years 1 month 6 days | 3 years 3 months 18 days | 3 years 4 months 24 days |
STOCKHOLDERS' EQUITY (Details_4
STOCKHOLDERS' EQUITY (Details - Schedule of activity of warrants) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Jan. 11, 2022 | Dec. 31, 2022 | Sep. 30, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||
Conversion of Stock, Shares Issued | 710 | |||||
Warrant [Member] | ||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||
Outstanding at the beginning of the year | 147,591 | 1,376,466 | 1,587,553 | |||
Weighted average exercise price, Outstanding beginning balance | $ 8.63 | $ 8.18 | ||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term | 7 months 6 days | 9 months 18 days | 1 year 10 months 24 days | 2 years | ||
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instrument Other than Option, Nonvested, Intrinsic Value, Beginning Balance | ||||||
Number of warrants, Warrants expired, forfeited, cancelled or exercised | (1,228,875) | (67,500) | (1,228,875) | (232,517) | ||
[custom:WarrantsExpiredForfeitedCancelledOrExercised] | $ 0 | |||||
Conversion of Stock, Shares Issued | 0 | 0 | 21,430 | |||
[custom:WarrantsExchangedForCommonStockWeightedAverageExercisePrice] | $ 0 | $ 0 | $ 7.70 | |||
Outstanding at the ending of the year | 147,591 | 80,091 | 147,591 | 1,376,466 | 1,587,553 | |
Weighted average exercise price, Outstanding ending balance | $ 8.63 | $ 8.53 | $ 8.63 | $ 8.18 | ||
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instrument Other than Option, Nonvested, Intrinsic Value, Ending Balance | ||||||
Exercisable at end of period | 147,591 | 80,091 | 147,591 | 1,376,466 | ||
Weighted average exercise price, Exercisable at end of period | $ 8.63 | $ 8.53 | $ 8.63 | $ 8.18 | ||
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Exercisable, Weighted Average Remaining Contractual Term | 7 months 6 days | 9 months 18 days | 1 year 10 months 24 days | |||
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Exercisable, Intrinsic Value | $ 0 | $ 0 | $ 0 |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - USD ($) | 9 Months Ended | 12 Months Ended | |||||||
Nov. 09, 2023 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | Feb. 01, 2023 | Nov. 09, 2022 | Feb. 21, 2022 | Feb. 03, 2022 | |
Subsequent Event [Line Items] | |||||||||
Shares, Issued | 1,000,000 | ||||||||
Share Price | $ 3 | $ 4 | $ 4 | ||||||
[custom:SecurityPurchaseAgreementDescription] | Pursuant to the Purchase Agreement, the Purchaser purchased 4,000 shares of a newly authorized Series E Convertible Preferred Stock (the “Series E Convertible Preferred Stock”), and the Company received proceeds of $4,000,000. The Purchase Agreement contains customary representations, warranties, agreements and indemnification rights and obligations of the parties. | ||||||||
Proceeds from Issuance of Preferred Stock and Preference Stock | $ 9,000,000 | $ 999,000 | $ 1,299,000 | $ 4,500,000 | |||||
Preferred Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 | |||||||
Contract with Customer, Liability, Current | 1,588,928 | $ 957,997 | $ 1,829,311 | ||||||
[custom:ContractLiabilitiesTechnologiesSystems-0] | 772,932 | $ 211,452 | $ 1,232,638 | ||||||
[custom:ConsultingRecognized] | $ 636,822 | ||||||||
Series E Preferred Stock [Member] | |||||||||
Subsequent Event [Line Items] | |||||||||
Preferred Stock, Par or Stated Value Per Share | $ 1,000 | ||||||||
Preferred Stock, Redemption Price Per Share | 3 | ||||||||
Series F Convertible Preferred Stock [Member] | |||||||||
Subsequent Event [Line Items] | |||||||||
Share Price | $ 6.20 | ||||||||
Employee Stock Purchase Plan [Member] | |||||||||
Subsequent Event [Line Items] | |||||||||
Shares, Issued | 1,000,000 | ||||||||
Subsequent Event [Member] | |||||||||
Subsequent Event [Line Items] | |||||||||
Shares, Issued | 150,000 | ||||||||
Share Price | $ 4.22 | ||||||||
Subsequent Event [Member] | Series E Convertible Preferred Stock [Member] | |||||||||
Subsequent Event [Line Items] | |||||||||
Shares, Issued | 5,000 | ||||||||
Share Price | $ 1,000 | ||||||||
Preferred Units, Authorized | 2,500 | ||||||||
Proceeds from Issuance of Preferred Stock and Preference Stock | $ 2,500,000 | ||||||||
[custom:ConversionPrice-0] | $ 3 | ||||||||
[custom:ConversionShares-0] | 1,430,484 | ||||||||
Shares Issued, Price Per Share | $ 3 | ||||||||
Subsequent Event [Member] | Series F Convertible Preferred Stock [Member] | |||||||||
Subsequent Event [Line Items] | |||||||||
[custom:StockExchangeShares-0] | 5,000 |
SALE OF ASSETS (Details)
SALE OF ASSETS (Details) | Sep. 30, 2023 USD ($) |
Sale Of Assets | |
Convertible note receivable | $ 165,000 |
Unamortized discount | (13,125) |
Convertible note receivable, net | $ 151,875 |
SALE OF ASSETS (Details Narrati
SALE OF ASSETS (Details Narrative) | 9 Months Ended |
Sep. 30, 2023 USD ($) $ / shares shares | |
Sale Of Assets | |
[custom:PrincipalAmount] | $ | $ 165,000 |
[custom:OriginalIssueDiscount] | 10% |
Debt Instrument, Convertible, Conversion Price | $ / shares | $ 0.003 |
Common Stock Dividends, Shares | shares | 55,000,000 |
[custom:PurchaseOfCommonStockWarrants] | shares | 55,000,000 |
Warrant, Exercise Price, Increase | $ / shares | $ 0.01 |
Gain (Loss) on Sale of Assets and Asset Impairment Charges | $ | $ 150,000 |