Cover
Cover | 9 Months Ended |
Sep. 30, 2022 | |
Cover [Abstract] | |
Document Type | S-1 |
Amendment Flag | false |
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 | 32256 |
City Area Code | (904) |
Local Phone Number | 652-1637 |
Entity Filer Category | Non-accelerated Filer |
Entity Small Business | true |
Entity Emerging Growth Company | false |
Document Creation Date | Dec. 01, 2022 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
CURRENT ASSETS: | ||
Cash | $ 893,720 | $ 3,969,100 |
Accounts receivable, net | 1,738,543 | 1,244,876 |
Contract assets | 3,449 | 102,458 |
Inventory | 298,338 | 112,423 |
Prepaid expenses and other current assets | 354,613 | 374,203 |
Total Current Assets | 3,288,663 | 5,803,060 |
Property and equipment, net | 603,253 | 342,180 |
Operating lease right of use asset | 4,925,765 | 196,144 |
Security deposit | 600,000 | |
OTHER ASSETS: | ||
Patents and trademarks, net | 66,482 | 64,415 |
Total Other Assets | 66,482 | 64,415 |
TOTAL ASSETS | 9,484,163 | 6,405,799 |
CURRENT LIABILITIES: | ||
Accounts payable | 1,044,500 | 599,317 |
Accounts payable - related parties | 7,700 | |
Notes payable - financing agreements | 52,503 | 42,942 |
Payroll taxes payable | 0 | 3,146 |
Accrued expenses | 618,093 | 1,038,092 |
Equipment financing agreements-current portion | 80,335 | 89,620 |
Operating lease obligations-current portion | 315,302 | 202,797 |
PPP loan-current portion | 627,465 | |
Contract liabilities | 1,232,638 | 709,553 |
Deferred revenue | 596,673 | 315,370 |
Total Current Liabilities | 3,940,044 | 3,636,002 |
Equipment financing payable, less current portion | 22,851 | 103,184 |
Lease obligations, less current portion | 4,739,783 | |
PPP loan, less current portion | 782,805 | |
Total Liabilities | 8,702,678 | 4,521,991 |
STOCKHOLDERS' EQUITY: | ||
Preferred Stock, Value, Issued | ||
Common stock: $0.001 par value; 500,000,000 shares authorized, 4,111,047 and 3,535,339 shares issued, 4,109,723 and 3,534,015 shares outstanding at December 31, 2021 and December 31, 2020, respectively | 4,111 | 3,536 |
Additional paid-in-capital | 43,080,877 | 39,820,874 |
Total stock & paid-in-capital | 46,435,988 | 41,529,410 |
Accumulated deficit | (45,497,051) | (39,488,150) |
Sub-total | 938,937 | 2,041,260 |
Less: Treasury stock (1,324 shares of common stock at December 31, 2021 and December 31, 2020) | (157,452) | (157,452) |
Total Stockholders' Equity | 781,485 | 1,883,808 |
Total Liabilities and Stockholders' Equity | 9,484,163 | 6,405,799 |
Convertible Series A Preferred Stock [Member] | ||
STOCKHOLDERS' EQUITY: | ||
Preferred Stock, Value, Issued | ||
Convertible Series B Preferred Stock [Member] | ||
STOCKHOLDERS' EQUITY: | ||
Preferred Stock, Value, Issued | 851,000 | 1,705,000 |
Convertible Series C Preferred Stock [Member] | ||
STOCKHOLDERS' EQUITY: | ||
Preferred Stock, Value, Issued | $ 2,500,000 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Sep. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2017 |
Preferred Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 | $ 0.001 | |
Preferred Stock, Shares Authorized | 10,000,000 | 10,000,000 | 10,000,000 | |
Preferred Stock, Shares Designated | 9,476,000 | 9,480,000 | 9,480,000 | |
Common Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 | $ 0.001 | |
Common Stock, Shares Authorized | 500,000,000 | 500,000,000 | 500,000,000 | |
Common Stock, Shares, Issued | 7,058,198 | 4,111,047 | 3,535,339 | |
Common Stock, Shares, Outstanding | 7,056,874 | 4,109,723 | 3,534,015 | |
Treasury Stock, Common, Shares | 1,324 | 1,324 | 1,324 | 235 |
Convertible Series A Preferred Stock [Member] | ||||
Temporary Equity, Par or Stated Value Per Share | $ 10 | $ 10 | $ 10 | |
Temporary Equity, Shares Authorized | 500,000 | 500,000 | 500,000 | |
Temporary Equity, Shares Issued | 0 | 0 | 0 | |
Temporary Equity, Shares Outstanding | 0 | 0 | 0 | |
Preferred stock, conversion price per share | $ 6.30 | $ 6.30 | $ 6.30 | |
Convertible Series B Preferred Stock [Member] | ||||
Preferred Stock, Par or Stated Value Per Share | $ 0.001 | $ 1,000 | $ 1,000 | |
Preferred Stock, Shares Authorized | 15,000 | 15,000 | 15,000 | |
Preferred stock, conversion price per share | $ 7 | $ 7 | $ 7 | |
Preferred Stock, Shares Issued | 0 | 851 | 1,705 | |
Preferred Stock, Shares Outstanding | 0 | 851 | 1,705 | |
Convertible Series C Preferred Stock [Member] | ||||
Preferred Stock, Par or Stated Value Per Share | $ 0.001 | $ 1,000 | $ 1,000 | |
Preferred Stock, Shares Authorized | 5,000 | 5,000 | 5,000 | |
Preferred stock, conversion price per share | $ 5.50 | $ 5.50 | $ 5.50 | |
Preferred Stock, Shares Issued | 0 | 2,500 | 0 | |
Preferred Stock, Shares Outstanding | 0 | 2,500 | 0 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS (Annual) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
REVENUES: | ||
Total Revenues | $ 8,259,917 | $ 8,039,448 |
COST OF REVENUES: | ||
Total Cost of Revenues | 10,819,087 | 7,803,612 |
GROSS MARGIN | (2,559,170) | 235,836 |
OPERATING EXPENSES: | ||
Sales & marketing | 1,233,851 | 717,809 |
Research & development | 251,563 | 102,219 |
Administration | 3,412,367 | 6,050,236 |
Total Operating Expenses | 4,897,781 | 6,870,264 |
LOSS FROM OPERATIONS | (7,456,951) | (6,634,428) |
OTHER INCOME (EXPENSES): | ||
Interest expense | (20,268) | (150,137) |
Other income, net | 1,468,318 | 37,130 |
Total Other Income (Expenses) | 1,448,050 | (113,007) |
NET LOSS | $ (6,008,901) | $ (6,747,435) |
Basic & Diluted Net Loss Per Share | $ (1.63) | $ (2.03) |
Weighted Average Shares-Basic & Diluted | 3,694,293 | 3,320,193 |
Product [Member] | ||
REVENUES: | ||
Total Revenues | $ 5,871,666 | $ 5,964,801 |
COST OF REVENUES: | ||
Total Cost of Revenues | 7,151,276 | 5,642,880 |
Service, Other [Member] | ||
REVENUES: | ||
Total Revenues | 2,388,251 | 2,074,647 |
COST OF REVENUES: | ||
Total Cost of Revenues | 1,369,985 | 1,139,357 |
Overhead [Member] | ||
COST OF REVENUES: | ||
Total Cost of Revenues | $ 2,297,826 | $ 1,021,375 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) | Preferred Stock B [Member] | Preferred Stock C [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Treasury Stock [Member] | Total |
Beginning balance, value at Dec. 31, 2019 | $ 1,705,000 | $ 1,982 | $ 31,063,915 | $ (32,740,715) | $ (157,452) | $ (127,270) | |
Beginning balance, Shares at Dec. 31, 2019 | 1,705 | 1,982,039 | |||||
Stock options granted to employees | 351,970 | 351,970 | |||||
Common stock issued for services | $ 12 | 52,488 | 52,500 | ||||
Common stock issued, shares | 1,542,188 | ||||||
Modification of employee stock options | 102,800 | 102,800 | |||||
Stock issuance cost | (1,001,885) | (1,001,885) | |||||
Common stock issued | $ 1,542 | 9,251,586 | 9,253,128 | ||||
Common stock issued, shares | 11,112 | ||||||
Net loss | (6,747,435) | (6,747,435) | |||||
Ending balance, value at Dec. 31, 2020 | $ 1,705,000 | $ 3,536 | 39,820,874 | (39,488,150) | (157,452) | 1,883,808 | |
End balance, Shares at Dec. 31, 2020 | 1,705 | 3,535,339 | |||||
Series C preferred stock issued | 4,500,000 | ||||||
Net loss | (406,023) | (406,023) | |||||
Ending balance, value at Mar. 31, 2021 | $ 3,536 | (39,894,173) | (157,452) | 6,054,086 | |||
End balance, Shares at Mar. 31, 2021 | 3,535,339 | ||||||
Beginning balance, value at Dec. 31, 2020 | $ 1,705,000 | $ 3,536 | 39,820,874 | (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 | $ 4,500,000 | 4,500,000 | |||||
Series C preferred stock issued, Shares | 4,500 | ||||||
Series B preferred converted to common stock | $ (854,000) | $ 122 | 853,878 | ||||
Series B convertible preferred converted to common stock, Shares | (854) | 122,000 | |||||
Series C preferred converted to common stock | $ (2,000,000) | $ 364 | 1,999,636 | ||||
Series C preferred 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 | $ 25 | 144,142 | 144,166 | ||||
Common stock issued, 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 (367 shares) ,shares | 367 | ||||||
Net loss | (6,008,901) | (6,008,901) | |||||
Ending balance, value at Dec. 31, 2021 | $ 851,000 | $ 2,500,000 | $ 4,111 | 43,080,877 | (45,497,051) | (157,452) | 781,485 |
End balance, Shares at Dec. 31, 2021 | 851 | 2,500 | 4,111,047 | ||||
Beginning balance, value at Mar. 31, 2021 | $ 3,536 | (39,894,173) | (157,452) | 6,054,086 | |||
Beginning balance, Shares at Mar. 31, 2021 | 3,535,339 | ||||||
Common stock issued for cashless warrants exercised | $ 50 | ||||||
Common stock issued for cashless warrants exercised, shares | 50,588 | ||||||
Net loss | (2,952,880) | (2,952,880) | |||||
Ending balance, value at Jun. 30, 2021 | $ 3,586 | (42,847,053) | (157,452) | 3,178,068 | |||
End balance, Shares at Jun. 30, 2021 | 3,585,927 | ||||||
Stock options granted to employees | 62,590 | ||||||
Common stock issued for cashless employee stock options exercised | $ 15 | ||||||
Common stock issued for cashless employee stock options exercised ,shares | 14,576 | ||||||
Rounding-split in 2020 | |||||||
Rounding-split in 2020 (367 shares) ,shares | 367 | ||||||
Net loss | (2,450,437) | (2,450,437) | |||||
Ending balance, value at Sep. 30, 2021 | $ 3,612 | (45,297,490) | (157,452) | 865,221 | |||
End balance, Shares at Sep. 30, 2021 | 3,612,125 | ||||||
Beginning balance, value at Dec. 31, 2021 | $ 851,000 | $ 2,500,000 | $ 4,111 | $ 43,080,877 | (45,497,051) | (157,452) | 781,485 |
Beginning balance, Shares at Dec. 31, 2021 | 851 | 2,500 | 4,111,047 | ||||
Common stock issued for services | $ 7 | 40,000 | |||||
Stock issuance cost | (576,650) | ||||||
Common stock issued, shares | 7,198 | ||||||
Net loss | (2,644,616) | (2,644,616) | |||||
Ending balance, value at Mar. 31, 2022 | $ 6,097 | (48,141,667) | (157,452) | 3,945,796 | |||
End balance, Shares at Mar. 31, 2022 | 6,096,541 | ||||||
Common stock issued for services | $ 10 | 40,000 | |||||
Common stock issued, shares | 10,668 | ||||||
Net loss | (1,342,672) | (1,342,672) | |||||
Ending balance, value at Jun. 30, 2022 | $ 6,107 | (49,484,339) | (157,452) | 2,831,356 | |||
End balance, Shares at Jun. 30, 2022 | 6,107,209 | ||||||
Series B preferred converted to common stock | $ 122 | ||||||
Series B convertible preferred converted to common stock, Shares | 121,572 | ||||||
Common stock issued for services | $ 10 | 40,000 | |||||
Stock issuance cost | (260,816) | ||||||
Common stock issued, shares | 9,758 | ||||||
Net loss | (1,925,068) | (1,925,068) | |||||
Ending balance, value at Sep. 30, 2022 | $ 7,057 | $ (51,409,407) | $ (157,452) | $ 4,292,842 | |||
End balance, Shares at Sep. 30, 2022 | 7,056,874 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS 2 - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Cash from operating activities: | ||
Net loss | $ (6,008,901) | $ (6,747,435) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Bad debt expense (recovery) | 76,046 | (3,217) |
Depreciation and amortization | 275,346 | 222,514 |
Loss on disposal of assets | 14,454 | |
Stock based compensation | 262,411 | 351,970 |
Modification of employee stock options | 102,800 | |
Stock issued for services | 144,167 | |
PPP loan forgiveness including accrued interest | (1,421,577) | |
Interest expense related to debt discounts | 94,627 | |
Amortization of operating lease right of use asset | 250,482 | 234,001 |
Changes in assets and liabilities: | ||
Accounts receivable | (611,023) | 1,369,949 |
Contract assets | 99,009 | 1,273,462 |
Inventory | (185,915) | 112,423 |
Prepaid expenses and other current assets | 423,905 | 379,175 |
Security deposit | (600,000) | |
Accounts payable | 445,184 | (2,042,118) |
Accounts payable-related party | (7,700) | (5,091) |
Payroll taxes payable | (3,146) | (111,965) |
Accrued expenses | (408,692) | 697,320 |
Operating lease obligation | (127,816) | (239,688) |
Contract liabilities | 523,085 | 700,892 |
Deferred revenue | 281,303 | (621,058) |
Net cash used in operating activities | (6,579,378) | (4,231,439) |
Cash flows from investing activities: | ||
Purchase of patents/trademarks | (7,435) | (8,185) |
Purchase of fixed assets | (545,505) | (279,146) |
Net cash used in investing activities | (552,940) | (287,331) |
Cash flows from financing activities: | ||
Repayments of line of credit | (27,615) | |
Repayments of insurance and equipment financing | (353,444) | (260,983) |
Repayment of finance lease | (89,618) | (62,931) |
Repayment of notes payable | (1,000,000) | |
Proceeds from PPP loan | 1,410,270 | |
Proceeds from equipment financing | 121,637 | |
Proceeds from common stock issued | 9,253,128 | |
Issuance cost | (1,001,885) | |
Proceeds from preferred stock issued | 4,500,000 | |
Net cash provided by financing activities | 4,056,938 | 8,431,621 |
Net (decrease) increase in cash | (3,075,380) | 3,912,851 |
Cash, beginning of period | 3,969,100 | 56,249 |
Cash, end of period | 893,720 | 3,969,100 |
Supplemental Disclosure of Cash Flow Information: | ||
Interest paid | 30,817 | 33,698 |
Supplemental Non-Cash Investing and Financing Activities: | ||
Common stock issued for accrued BOD fees | 52,500 | |
Lease right of use asset and liability | 4,980,104 | |
Notes issued for financing of insurance premiums | $ 363,005 | $ 261,626 |
CONSOLIDATED BALANCE SHEETS 2 (
CONSOLIDATED BALANCE SHEETS 2 (Unaudited) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
CURRENT ASSETS: | |||
Cash | $ 4,965,466 | $ 893,720 | $ 3,969,100 |
Accounts receivable, net | 2,234,283 | 1,738,543 | 1,244,876 |
Contract assets | 824,387 | 3,449 | 102,458 |
Inventory | 694,125 | 298,338 | 112,423 |
Prepaid expenses and other current assets | 651,010 | 354,613 | 374,203 |
Total Current Assets | 9,369,271 | 3,288,663 | 5,803,060 |
Property and equipment, net | 695,800 | 603,253 | 342,180 |
Operating lease right of use asset | 4,726,975 | 4,925,765 | 196,144 |
Security deposit | 600,000 | 600,000 | |
OTHER ASSETS: | |||
Patents and trademarks, net | 78,872 | 66,482 | 64,415 |
Software development costs, net | 85,756 | ||
Total Other Assets | 164,628 | 66,482 | 64,415 |
TOTAL ASSETS | 15,556,674 | 9,484,163 | 6,405,799 |
CURRENT LIABILITIES: | |||
Accounts payable | 1,649,629 | 1,044,500 | 599,317 |
Notes payable - financing agreements | 102,256 | 52,503 | 42,942 |
Accrued expenses | 481,913 | 618,093 | 1,038,092 |
Equipment financing payable-current portion | 33,860 | 80,335 | 89,620 |
Operating lease obligations-current portion | 497,694 | 315,302 | 202,797 |
Contract liabilities | 3,880,422 | 1,829,311 | |
Total Current Liabilities | 6,645,774 | 3,940,044 | 3,636,002 |
Equipment financing payable, less current portion | 22,851 | 103,184 | |
Operating lease obligations, less current portion | 4,618,058 | 4,739,783 | |
Total Liabilities | 11,263,832 | 8,702,678 | 4,521,991 |
STOCKHOLDERS' EQUITY: | |||
Preferred Stock, Value, Issued | |||
Common stock: $0.001 par value; 500,000,000 shares authorized, 7,058,198 and 4,111,047 shares issued, 7,056,874 and 4,109,723 shares outstanding at September 30, 2022 and December 31, 2021, respectively | 7,057 | 4,111 | 3,536 |
Additional paid-in-capital | 55,852,643 | 46,431,874 | |
Total stock & paid-in-capital | 55,859,701 | 46,435,988 | 41,529,410 |
Accumulated deficit | (51,409,407) | (45,497,051) | (39,488,150) |
Sub-total | 4,450,294 | 938,937 | 2,041,260 |
Less: Treasury stock (1,324 shares of common stock at September 30, 2022 and December 31, 2021) | (157,452) | (157,452) | (157,452) |
Total Stockholders' Equity | 4,292,842 | 781,485 | 1,883,808 |
Total Liabilities and Stockholders' Equity | 15,556,674 | 9,484,163 | 6,405,799 |
Convertible Series A Preferred Stock [Member] | |||
STOCKHOLDERS' EQUITY: | |||
Preferred Stock, Value, Issued | |||
Convertible Series B Preferred Stock [Member] | |||
STOCKHOLDERS' EQUITY: | |||
Preferred Stock, Value, Issued | 851,000 | 1,705,000 | |
Convertible Series C Preferred Stock [Member] | |||
STOCKHOLDERS' EQUITY: | |||
Preferred Stock, Value, Issued | 2,500,000 | ||
Convertible Series D Preferred Stock [Member] | |||
STOCKHOLDERS' EQUITY: | |||
Preferred Stock, Value, Issued | $ 1 |
CONSOLIDATED BALANCE SHEETS 2_2
CONSOLIDATED BALANCE SHEETS 2 (Unaudited) (Parenthetical) - $ / shares | Sep. 30, 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 |
Preferred Stock, Shares Designated | 9,476,000 | 9,480,000 |
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 | 7,058,198 | 4,111,047 |
Common Stock, Shares, Outstanding | 7,056,874 | 4,109,723 |
Treasury Stock, Common, Shares | 1,324 | 1,324 |
Convertible Series A Preferred Stock [Member] | ||
Temporary Equity, Par or Stated Value Per Share | $ 10 | $ 10 |
Temporary Equity, Shares Authorized | 500,000 | 500,000 |
Temporary Equity, Shares Issued | 0 | 0 |
Temporary Equity, Shares Outstanding | 0 | 0 |
Preferred stock, conversion price per share | $ 6.30 | $ 6.30 |
Convertible Series B Preferred Stock [Member] | ||
Preferred Stock, Par or Stated Value Per Share | $ 0.001 | $ 1,000 |
Preferred Stock, Shares Authorized | 15,000 | 15,000 |
Preferred stock, conversion price per share | $ 7 | $ 7 |
Preferred Stock, Shares Issued | 0 | 851 |
Preferred Stock, Shares Outstanding | 0 | 851 |
Convertible Series C Preferred Stock [Member] | ||
Preferred Stock, Par or Stated Value Per Share | $ 0.001 | $ 1,000 |
Preferred Stock, Shares Authorized | 5,000 | 5,000 |
Preferred stock, conversion price per share | $ 5.50 | $ 5.50 |
Preferred Stock, Shares Issued | 0 | 2,500 |
Preferred Stock, Shares Outstanding | 0 | 2,500 |
Convertible Series D Preferred Stock [Member] | ||
Preferred Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 |
Preferred Stock, Shares Authorized | 4,000 | 4,000 |
Preferred stock, conversion price per share | $ 3 | $ 3 |
Preferred Stock, Shares Issued | 999 | 0 |
Preferred Stock, Shares Outstanding | 999 | 0 |
CONSOLIDATED STATEMENTS OF OP_2
CONSOLIDATED STATEMENTS OF OPERATIONS 3 (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
REVENUES: | ||||
Total Revenues | $ 4,022,238 | $ 1,740,457 | $ 9,078,696 | $ 4,543,879 |
COST OF REVENUES: | ||||
Total Cost of Revenues | 2,922,686 | 1,668,796 | 6,474,464 | 4,239,006 |
GROSS MARGIN | 1,099,552 | 71,661 | 2,604,232 | 304,873 |
OPERATING EXPENSES: | ||||
Sales and marketing | 297,057 | 361,820 | 956,937 | 1,024,872 |
Research and development | 329,424 | 332,469 | 1,296,480 | 1,163,341 |
General and Administration | 2,342,089 | 1,823,865 | 6,255,926 | 5,333,921 |
Total Operating Expenses | 2,968,570 | 2,518,154 | 8,509,343 | 7,522,134 |
LOSS FROM OPERATIONS | (1,869,018) | (2,446,493) | (5,905,111) | (7,217,261) |
OTHER INCOME (EXPENSES): | ||||
Interest expense | (2,057) | (4,819) | (7,943) | (16,580) |
Other income, net | (53,993) | 875 | 698 | 1,424,501 |
Total Other Income (Expenses) | (56,050) | (3,944) | (7,245) | 1,407,921 |
NET LOSS | $ (1,925,068) | $ (2,450,437) | $ (5,912,356) | $ (5,809,340) |
Net Loss Per Share | ||||
Basic | $ (0.30) | $ (0.68) | $ (1.01) | $ (1.63) |
Diluted | $ (0.30) | $ (0.68) | $ (1.01) | $ (1.63) |
Weighted Average Shares | ||||
Basic | 6,450,180 | 3,588,381 | 5,859,375 | 3,559,340 |
Diluted | 6,450,180 | 3,588,381 | 5,859,375 | 3,559,340 |
Product [Member] | ||||
REVENUES: | ||||
Total Revenues | $ 2,709,899 | $ 1,153,150 | $ 6,273,213 | $ 2,743,849 |
COST OF REVENUES: | ||||
Total Cost of Revenues | 2,176,761 | 1,363,127 | 5,016,551 | 3,162,866 |
Service, Other [Member] | ||||
REVENUES: | ||||
Total Revenues | 1,312,339 | 587,307 | 2,805,483 | 1,800,030 |
COST OF REVENUES: | ||||
Total Cost of Revenues | $ 745,925 | $ 305,669 | $ 1,457,913 | $ 1,076,140 |
STATEMENTS OF CHANGES IN STOCKH
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Unaudited) - USD ($) | Preferreds Stock B [Member] | Preferreds Stock C [Member] | Preferred Stock D [Member] | Common Stock [Member] | Additionals Paid In Capital [Member] | Retained Earnings [Member] | Treasury Stock [Member] | Total |
Beginning balance, value at Dec. 31, 2019 | $ 1,982 | $ (32,740,715) | $ (157,452) | $ (127,270) | ||||
Beginning balance, Shares at Dec. 31, 2019 | 1,982,039 | |||||||
Stock options granted to employees | 351,970 | |||||||
Stock issuance cost | (1,001,885) | |||||||
Stock issued for services | $ 12 | 52,500 | ||||||
Stock issued for services , shares | 11,112 | |||||||
Net loss | (6,747,435) | (6,747,435) | ||||||
Ending balance, value at Dec. 31, 2020 | $ 2 | $ 3,536 | $ 41,525,872 | (39,488,150) | (157,452) | 1,883,808 | ||
End balance, Shares at Dec. 31, 2020 | 1,705 | 3,535,339 | ||||||
Series C preferred stock converted to common stock, shares | 4,500 | |||||||
Stock options compensation | 76,301 | 76,301 | ||||||
Net loss | (406,023) | (406,023) | ||||||
Series C preferred stock issued | 5 | 4,499,995 | 4,500,000 | |||||
Ending balance, value at Mar. 31, 2021 | $ 2 | $ 5 | $ 3,536 | 46,102,168 | (39,894,173) | (157,452) | 6,054,086 | |
End balance, Shares at Mar. 31, 2021 | 1,705 | 4,500 | 3,535,339 | |||||
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 | |||||||
Common stock issued for cashless employee stock options exercised | $ 15 | |||||||
Common stock issued for cashless employee stock options exercised ,shares | 14,576 | |||||||
Rounding-split in 2020 | $ 0 | 0 | ||||||
Rounding-split in 2020 (367 shares) ,shares | 367 | |||||||
Common stock issued for cash less warrants exercised | $ 50 | |||||||
Common stock issued for cashless warrants exercised, shares | 50,588 | |||||||
Stock issued for services | $ 25 | 144,166 | ||||||
Series B preferred stock converted to common stock | $ 122 | |||||||
Series B preferred stock converted to common stock, shares | 122,000 | |||||||
Net loss | (6,008,901) | (6,008,901) | ||||||
Series C preferred stock issued | 4,500,000 | |||||||
Ending balance, value at Dec. 31, 2021 | $ 1 | $ 2 | $ 4,111 | 46,431,874 | (45,497,051) | (157,452) | 781,485 | |
End balance, Shares at Dec. 31, 2021 | 851 | 2,500 | 4,111,047 | |||||
Beginning balance, value at Mar. 31, 2021 | $ 2 | $ 5 | $ 3,536 | 46,102,168 | (39,894,173) | (157,452) | 6,054,086 | |
Beginning balance, Shares at Mar. 31, 2021 | 1,705 | 4,500 | 3,535,339 | |||||
Stock options compensation | 76,862 | 76,862 | ||||||
Common stock issued for cash less warrants exercised | $ 50 | (50) | ||||||
Common stock issued for cashless warrants exercised, shares | 50,588 | |||||||
Net loss | (2,952,880) | (2,952,880) | ||||||
Ending balance, value at Jun. 30, 2021 | $ 2 | $ 5 | $ 3,586 | 46,178,980 | (42,847,053) | (157,452) | 3,178,068 | |
End balance, Shares at Jun. 30, 2021 | 1,705 | 4,500 | 3,585,927 | |||||
Stock options granted to employees | 62,590 | 62,590 | ||||||
Common stock issued for services | $ 11 | 74,989 | 75,000 | |||||
Common stock issued for services, shares | 11,255 | |||||||
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 | ||||||||
Rounding-split in 2020 (367 shares) ,shares | 367 | |||||||
Net loss | (2,450,437) | (2,450,437) | ||||||
Ending balance, value at Sep. 30, 2021 | $ 2 | $ 5 | $ 3,612 | 46,316,544 | (45,297,490) | (157,452) | 865,221 | |
End balance, Shares at Sep. 30, 2021 | 1,705 | 4,500 | 3,612,125 | |||||
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 | ||||||
Stock options compensation | 250,577 | 250,577 | ||||||
Common stock issued for cash | $ 1,524 | 6,093,476 | 6,095,000 | |||||
Common stock issued for cash, shares | 1,523,750 | |||||||
Stock issuance cost | (576,650) | (576,650) | ||||||
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 | ||
End 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 | ||
End balance, Shares at Jun. 30, 2022 | 851 | 6,107,209 | ||||||
Stock options compensation | 153,367 | 153,367 | ||||||
Common stock issued for cash | $ 818 | 2,454,185 | 2,455,003 | |||||
Common stock issued for cash, shares | 818,335 | |||||||
Series D preferred stock issued for cash | $ 1 | 998,999 | 999,000 | |||||
Series D preferred stock issued for cash, shares | 999 | |||||||
Stock issuance cost | (260,816) | (260,816) | ||||||
Stock issued for services | $ 10 | 39,990 | 40,000 | |||||
Stock issued for services , shares | 9,758 | |||||||
Series B preferred stock converted to common stock | $ (1) | $ 122 | (121) | |||||
Series B preferred stock converted to common stock, shares | (851) | 121,572 | ||||||
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 | ||
End balance, Shares at Sep. 30, 2022 | 999 | 7,056,874 |
CONSOLIDATED STATEMENTS OF CA_2
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Cash from operating activities: | ||
Net loss | $ (5,912,356) | $ (5,809,340) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 225,825 | 281,220 |
Stock based compensation | 592,177 | 215,753 |
Stock issued for services | 120,000 | 75,000 |
PPP loan forgiveness including accrued interest | (1,421,577) | |
Bad debt expense | 76,046 | |
Changes in assets and liabilities: | ||
Accounts receivable | (454,431) | 631,948 |
Contract assets | (820,938) | (147,412) |
Inventory | (395,787) | 185,547 |
Security deposit | (600,000) | |
Operating lease right of use asset | 198,790 | 173,214 |
Prepaid expenses and other current assets | 15,539 | 79,331 |
Accounts payable | 605,129 | 378,853 |
Accounts payable-related party | (7,700) | |
Payroll taxes payable | (3,146) | |
Accrued expenses | (136,180) | 164,782 |
Operating lease obligation | 60,668 | (179,464) |
Contract liabilities | 2,051,109 | 384,277 |
Net cash used in operating activities | (3,850,455) | (5,522,668) |
Cash flows from investing activities: | ||
Purchase of patents/trademarks | (17,490) | (7,435) |
Purchase of software development | (87,700) | |
Purchase of fixed assets | (311,327) | (303,341) |
Net cash used in investing activities | (416,517) | (310,776) |
Cash flows from financing activities: | ||
Repayments of insurance and equipment financing | (303,492) | (311,442) |
Repayment of finance lease | (69,325) | (66,243) |
Proceeds from common stock issued | 8,550,002 | |
Issuance cost | (837,467) | |
Proceeds from preferred stock issued | 999,000 | 4,500,000 |
Net cash provided by financing activities | 8,338,718 | 4,122,315 |
Net (decrease) increase in cash | 4,071,746 | (1,711,129) |
Cash, beginning of period | 893,720 | 3,969,100 |
Cash, end of period | 4,965,466 | 2,257,971 |
Supplemental Disclosure of Cash Flow Information: | ||
Interest paid | 8,045 | 25,678 |
Taxes paid | 1,264 | |
Supplemental Non-Cash Investing and Financing Activities: | ||
Notes issued for financing of insurance premiums | $ 353,244 | $ 323,452 |
NATURE OF OPERATIONS AND SUMMAR
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Accounting Policies [Abstract] | ||
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 1 – NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Operations Duos Technologies Group, Inc. (the “Company”), through its operating subsidiaries, Duos Technologies, Inc. and TrueVue360, Inc. (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 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. The Company also offers technical support services for the above products. 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 CAPEX and OPEX pricing models 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. 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, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022 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, 2021 filed with the Securities and Exchange Commission (the “SEC”) on March 31, 2022. Reclassifications The Company reclassified $ 850,999 2,499,998 The Company reclassified certain expenses for the three months ended September 30, 2021 to conform to the 2022 classification. There was no net effect on the total expenses of such reclassification. The following tables reflect the reclassification adjustment effect in the three months ended September 30, 2021: Schedule of Reclassifications Before Reclassification After Reclassification For the For the Three Months Ended Three Months Ended September 30, September 30, 2021 2021 REVENUES: REVENUES: Technology systems $ 1,153,150 Technology systems $ 1,153,150 Services and consulting 587,307 Services and consulting 587,307 Total Revenue 1,740,457 Total Revenue 1,740,457 COST OF REVENUES: COST OF REVENUES: Technology systems 1,869,812 Technology systems 1,363,127 Services and consulting 277,054 Services and consulting 305,669 Overhead 657,907 — — Total Cost of Revenues 2,804,773 Total Cost of Revenues 1,668,796 GROSS MARGIN (1,064,316 ) GROSS MARGIN 71,661 OPERATING EXPENSES: OPERATING EXPENSES: Sales and marketing 361,820 Sales and marketing 361,820 Research and development 57,000 Research and development 332,469 General and administration 963,357 General and administration 1,823,865 Total Operating Expenses 1,382,177 Total Operating Expenses 2,518,154 LOSS FROM OPERATIONS $ (2,446,493 ) LOSS FROM OPERATIONS $ (2,446,493 ) The Company reclassified certain expenses for the nine months ended September 30, 2021 to conform to the 2022 classification. There was no net effect on the total expenses of such reclassification. The following tables reflect the reclassification adjustment effect in the nine months ended September 30, 2021: Before Reclassification After Reclassification For the For the Nine Months Ended Nine Months Ended September 30, September 30, 2021 2021 REVENUES: REVENUES: Technology systems $ 2,743,849 Technology systems $ 2,743,849 Services and consulting 1,800,030 Services and consulting 1,800,030 Total Revenue 4,543,879 Total Revenue 4,543,879 COST OF REVENUES: COST OF REVENUES: Technology systems 4,979,667 Technology systems 3,162,866 Services and consulting 986,757 Services and consulting 1,076,140 Overhead 1,754,731 — — Total Cost of Revenues 7,721,155 Total Cost of Revenues 4,239,006 GROSS MARGIN (3,177,276 ) GROSS MARGIN 304,873 OPERATING EXPENSES: OPERATING EXPENSES: Sales and marketing 1,024,872 Sales and marketing 1,024,872 Research and development 197,164 Research and development 1,163,341 General and administration 2,817,949 General and administration 5,333,921 Total Operating Expenses 4,039,985 Total Operating Expenses 7,522,134 LOSS FROM OPERATIONS $ (7,217,261 ) LOSS FROM OPERATIONS $ (7,217,261 ) 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, 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, 2022, the balance in one financial institution exceeded federally insured limits by approximately $ $ 4,507,000 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, 2022, four customers accounted for 25 21 19 19 79 · Customer 1, termination can be made prior to delivery of products or services, in the case where either party breaches any of its obligations under the agreement between the parties. The non-defaulting party may terminate the agreement effective 15 Business Days following notice to the defaulting party, if the non-performance has not been cured within such period, and without prejudice to damages that could be claimed by the non-defaulting party. Either party may terminate the agreement if the other party becomes unable to pay its debts in the ordinary course of business; goes into liquidation (other than for the purpose of a genuine amalgamation or restructuring); has a receiver appointed over all or part of its assets; enters into a composition or voluntary arrangement with its creditors; or any similar event occurs in any jurisdiction, all to the extent permitted by law. · For Customer 2, prior to delivery of products or services, either party may terminate the agreement between the parties upon the other party’s material breach of a representation, warranty, term, covenant or undertaking in the agreement if, within 30 days following the delivery of a written notice to the defaulting party setting forth in reasonable detail the basis of such default, the defaulting party has not rectified such default to the reasonable satisfaction of the non-defaulting party. Failure to perform due to a force majeure condition shall not be considered a material default under the agreement. · For Customer 3, prior to delivery of products or services if the customer terminates the statement of work for convenience, no refund of any advance payments will be due to Customer 3. ln the event of a material breach by the Company, which breach is not cured, or cure has not begun within 30 days of written notice to the Company by Customer 3, Customer 3 may terminate this statement of work for cause. In the event of termination by Customer 3 for cause, the Company shall reimburse Customer 3 any unused prepaid fees on a pro rata basis. · For Customer 4, if the customer terminates the agreement for convenience, no refund of any advance payments, will be due to Customer 4 and the Company after taking appropriate mitigating actions, may submit to the Customer a claim for termination costs. Such costs will not exceed the unpaid balance of the contract. In the event of a material breach by Duos, which breach is not cured, or cure has not begun within 10 days of written notice to Duos by Customer 4, Customer 4 may terminate the agreement for cause. In the event of termination by Customer 4 for cause, Duos shall reimburse Customer for any costs, losses and damages suffered or incurred arising from such event of default. Duos has secured a Performance and Payment Bond for specific project work be undertaken by the Company for Customer 4. At September 30, 2022, two customers accounted for 42 36 81 10 Geographic Concentration For the nine months ended September 30, 2022, approximately 54 84 Significant Vendors and Concentration of Credit Risk At September 30, 2022, two vendors accounted for 18 14 14 For the nine months ended September 30, 2022, the Company had no suppliers exceeding 10 12 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 expense, 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. 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. Earnings (Loss) Per Share Basic earnings loss 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 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, 2022, there was an aggregate of 1,376,466 926,266 333,000 As of September 30, 2021, there was an aggregate of 1,376,466 431,266 243,571 818,182 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 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 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. Inventory cost is primarily determined using the weighted average cost method. 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 revenues from four sources: 1. Technology Systems; 2. AI Technology; 3. Technical Support; and 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 technology systems 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 direct 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 customer 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 the financial statements included in this prospectus, 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. Segment Information The Company operates in one reportable segment. Stock-Based Compensation The Company accounts for employee and non-employee stock-based compensation in accordance with ASC 718-10, “ Share-Based Payment Determining Fair Value Under ASC 718-10 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 the 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. 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 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. The Company early adopted this pronouncement for our fiscal year beginning January 1, 2022, and it did not have a material effect on our unaudited 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 will be 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 unaudited 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’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 CAPEX and OPEX pricing models 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. Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Reverse Stock Split All share and per share amounts have been presented to give retroactive effect to a 1-for-14 Reclassifications The Company reclassified certain operating expenses for the year ended December 31, 2020 to conform to 2021 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, 2020: Schedule of Reclassifications Before Reclassification After Reclassification For the Year Ended For the Year Ended December 31, December 31, 2020 2020 REVENUES: REVENUES: Technology systems $ 4,956,130 Technology systems $ 5,964,801 Technical support 1,801,043 Services and consulting 2,074,647 Consulting services 273,604 — — AI technologies 1,008,671 — — Total Revenue 8,039,448 Total Revenue 8,039,448 COST OF REVENUES: COST OF REVENUES: Technology systems 3,665,493 Technology systems 5,642,880 Technical support 1,109,741 Services and consulting 1,139,357 Consulting services 117,004 Overhead 1,021,375 AI technologies 360,817 — — Total Cost of Revenues 5,253,055 Total Cost of Revenues 7,803,612 GROSS MARGIN 2,786,393 GROSS MARGIN 235,836 OPERATING EXPENSES: OPERATING EXPENSES: Sales and marketing 717,809 Sales and marketing 717,809 Engineering 1,358,925 Research and development 102,219 Research and development 1,022,188 Administration 6,050,236 Administration 5,011,913 — — AI technologies 1,309,986 — — Total Operating Expenses 9,420,821 Total Operating Expenses 6,870,264 LOSS FROM OPERATIONS $ (6,634,428 ) LOSS FROM OPERATIONS $ (6,634,428 ) The Company reclassified inventory on the consolidated balance sheet for the year ended December 31, 2020 to conform to 2021 classification. During the year ended December 31, 2020, inventory had been presented on the consolidated balance sheet within “Prepaid expenses and other current assets.” There was no net effect on total current assets. 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, 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 December 31, 2021, balance in one financial institution exceeded federally insured limits by approximately $ 656,000 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, 2021 one customer accounted for 83 45 23 · For Customer 1, termination can be made, prior to delivery of products or services, in the case where either party breach any of its obligations under the agreement with the Company. The other party may terminate the agreement effective fifteen (15) Business Days following notice from the non-defaulting party, if the non-performance has not been cured within such period, and without prejudice to damages that could be claimed by the non-defaulting party. Either party may terminate the agreement if the other party becomes unable to pay its debts in the ordinary course of business; goes into liquidation (other than for the purpose of a genuine amalgamation or restructuring); has a receiver appointed over all or part of its assets; enters into a composition or voluntary arrangement with its creditors; or any similar event occurs in any jurisdiction, all to the extent permitted by law. · For Customer 2, prior to delivery of products or services, either party may terminate the agreement with the Company upon the other partys material breach of a representation, warranty, term, covenant or undertaking in the agreement if, within thirty (30) days following the delivery of a written notice to the defaulting party setting forth in reasonable detail the basis of such default, the defaulting party has not rectified such default to the reasonable satisfaction of the non-defaulting party. Failure to perform due to a force majeure condition shall not be considered a material default under the agreement. At December 31, 2021, two customers accounted for 81 10 56 30 Geographic Concentration Approximately 86 51 Significant Vendors and Concentration of Credit Risk At December 31, 2021, one vendor accounted for 14 36 Two suppliers accounted for approximately 21 11 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 expense, 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 and consumables 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. 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 5 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 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 value 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 12 36 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 Technology Systems As of January 1, 2018, the Company adopted Accounting Standards Update (“ASU”) 2014-89, 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 unrecognized 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. 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 estimated 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. (see Note 9) 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. Technical Support Maintenance and 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 as the services are provided. Revenue for maintenance and technical support provided on an extended-term basis is recognized ratably over the term of the contract. For sales arrangements that do not involve multiple elements such as professional services, which are of short-term duration, revenues are recognized when services are completed. Consulting Services The Company recognizes revenue from its IT asset management business in accordance with the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 985-605-25 which addresses revenue recognition for the software industry. The general criteria for revenue recognition under ASC 985-605 for our Company, which sells software licenses, which do not require any significant modification or customization, is that revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable and collectability is probable. The Company’s IT asset management business generates revenues from three sources: (1) Professional Services (consulting and auditing), (2) Software licensing with optional hardware sales and (3) Customer Service (training and maintenance support). For sales arrangements that do not involve multiple elements: (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. AI Technologies The Company has begun to derive revenue from applications that incorporate artificial intelligence (AI) in the form of predetermined algorithms to provide important operating information to the users of our systems. The revenue generated from these applications of AI consists of an annual application maintenance fee which will be recognized ratably over the year, plus fees for the design, development, testing and incorporation of new algorithms into the system which will be recognized upon completion of each deliverable. Multiple Elements Arrangements with customers may involve multiple elements including project revenue and maintenance services in our Intelligent 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 elements 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 element arrangement is as follows: Each element is accounted for separately when each element 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 element is recognized using the applicable criteria under GAAP as discussed above for elements sold in non-multiple element 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 multiple element 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 element arrangements with Company customers qualify as separate units of account for revenue recognition purposes. Deferred Revenue Deferred revenues represent billings or cash received in excess of revenue recognizable on service agreements that are not accounted for under the percentage of completion method. At December 31, 2021 and 2020, the balance of deferred revenue was $ 596,673 315,370 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. Turnkey, engineered projects; b. Associated maintenance and support services; c. Licensing and professional services related to auditing of data center assets; d. Predetermined algorithms to provide important operating information to the users of our systems. 2. We currently operate in North America including the United States, Mexico and Canada. 3. Our customers include rail transportation, commercial, petrochemical, government, banking and IT suppliers. 4. Our 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 two to three months in length; and b. Maintenance and support contracts ranging from one to five years in length. 5. Our goods and services are transferred over time. Quantitative: For the Year Ended December 31, 2021 Schedule of Disaggregation of Revenue Quantitative Segments Rail Commercial Petrochemical Government Banking/Other 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 Quantitative: For the Year Ended December 31, 2020 Segments Rail Commercial Petrochemical Government Banking IT Artificial Total Primary Geographical Markets North America $ 5,558,405 $ 298,705 $ 23,951 $ 687,293 $ 188,819 $ 273,604 $ 1,008,671 $ 8,039,448 Major Goods and Service Lines Turnkey Projects $ 4,131,155 $ 59,616 $ 33,363 $ 599,481 $ 132,515 $ — $ — $ 4,956,130 Maintenance & Support 1,427,250 239,089 (9,412 ) 87,812 56,304 — — 1,801,043 Data Center Auditing Services — — — — — 266,449 — 266,449 Software License — — — — — 7,155 — 7,155 Algorithms — — — — — — 1,008,671 1,008,671 $ 5,558,405 $ 298,705 $ 23,951 $ 687,293 $ 188,819 $ 273,604 $ 1,008,671 $ 8,039,448 Timing of Revenue Recognition Goods transferred over time $ 4,131,155 $ 59,616 $ 33,363 $ 599,481 $ 132,515 $ 273,604 $ 1,008,671 $ 6,238,405 Services transferred over time 1,427,250 239,089 (9,412 ) 87,812 56,304 — — 1,801,043 $ 5,558,405 $ 298,705 $ 23,951 $ 687,293 $ 188,819 $ 273,604 $ 1,008,671 $ 8,039,448 Advertising The Company expenses the cost of advertising. During the years ended December 31, 2021 and 2020, there were no Stock Based Compensation The Company accounts for employee stock-based compensation in accordance with ASC 718-10, “ Share-Based Payment Determining Fair Value Under ASC 718-10 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 the 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, 2021, 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 2018, 2019 and 2020 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, 2021, there was an aggregate of 1,376,466 431,266 121,571 454,546 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 electe |
LIQUIDITY
LIQUIDITY | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
LIQUIDITY | NOTE 2 – LIQUIDITY As reflected in the accompanying unaudited consolidated financial statements, the Company had a net loss of $ 5,912,356 3,850,455 2,723,497 51,409,407 During the previous 21 months, the Company has raised more than $13 million after fees and expenses, both from existing shareholders through the issuance of Series C Convertible Preferred Stock and in the first quarter of 2022, a follow-on common stock offering using its previously filed “shelf” registration. The Company also raised more than $3 million by issuing a combination of Series D Convertible Preferred Stock and common stock late in the third quarter and early in the fourth quarter of 2022. Although, further additional investment is not assured, the Company believes that it would be able to raise sufficient capital to support expanded operations based on an anticipated increase in business activity and the recent improvement in the capital markets. In the long run, the continuation of the Company as a going concern is dependent upon the ability of the Company to continue executing the plan described above, generate enough revenue, and eventually attain consistently profitable operations. Although the current global pandemic related to the coronavirus (COVID-19) has affected 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 pandemic and its lingering 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 to maintain operations for at least twelve months from the date of this report. A notable recent success is the “bonding” secured in the amount of approximately $8 million for a major project for which the Company recently received full “notice to proceed”. The Company was successful in securing a loan of $ 1,410,270 5.5 3.2 This gives us the capital required to fund the fundamental business changes that we are executing including organization, product alignment and market focus and maintenance of our overall business strategy. 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. During 2021, management took further significant actions including reorganizing our engineering and technical teams and selectively improving organizational efficiency to effectively grow the business in concert with the influx of business won in late 2021 and early 2022. The Company had experienced a significant slowdown in closing new projects due to cautious actions by current and potential clients as a result of COVID-19 but this appears to be abating as time passes. We continue to be successful in identifying new business opportunities and are focused on maintaining a backlog of projects. 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 events including an approximate $9 million injection of gross funds from the 2022 Offerings, significant recent orders and the overall stabilization of the business indicate that there is no longer substantial doubt for the Company to continue as a going concern for a period of twelve months from the issuance of this report. We will continue executing the plan to grow our business and eventually achieve profitability without the requirement to raise additional capital for existing operations for 2022 although we may do so to fund selective opportunities that may arise. Management has extensively evaluated our requirements for the next 12 months from the issuance date of this report and has determined that the Company currently has sufficient cash to operate for at least that period. | NOTE 2 – LIQUIDITY As reflected in the accompanying consolidated financial statements, the Company had a net loss of $ 6,008,901 6,579,378 651,381 45,497,051 As previously noted, the Company raised $4,500,000 from existing shareholders through the issuance of Series C Convertible Preferred Stock. 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 the plan described above, generate enough revenue, and attain consistently profitable operations. Although the current global pandemic related to the coronavirus (Covid-19) has affected our operations, particularly in 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 pandemic 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 to maintain operations for at least twelve months from the date of this report. A notable recent success is the approval of the Company for “bonding” in the amount of approximately $8 million for an upcoming major project. The Company was successful in securing a loan of $ 1,410,270 5,500,000 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 events including a $5.5M injection of funds from a sale of securities, significant recent orders and the overall stabilization of the business indicate that there is no longer substantial doubt for the Company to continue as a going concern for a period of twelve months from the issuance of this report. We continue executing the plan to grow our business and achieve profitability without the requirement to raise additional capital for existing operations for 2022 although we may do so to fund selective opportunities that may arise. Management has extensively evaluated our requirements for the next 12 months and has determined that the Company currently has sufficient cash to operate for at least that period. |
ACCOUNTS RECEIVABLE
ACCOUNTS RECEIVABLE | 12 Months Ended |
Dec. 31, 2021 | |
Receivables [Abstract] | |
ACCOUNTS RECEIVABLE | NOTE 3 – ACCOUNTS RECEIVABLE Accounts receivable were as follows at December 31, 2021 and 2020: Schedule of Accounts Receivable December 31, December 31, 2021 2020 Accounts receivable $ 1,738,543 $ 1,244,876 Allowance for doubtful accounts — — Accounts Receivable, Net $ 1,738,543 $ 1,244,876 There was bad debt expense related to accounts receivable of $ 76,046 3,217 |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | NOTE 4 – PROPERTY AND EQUIPMENT The major classes of property and equipment are as follow at December 31, 2021 and 2020: Major classes of property and equipment December 31, December 31, 2021 2020 Furniture, fixtures and equipment $ 1,264,001 $ 1,569,328 Less: Accumulated depreciation (660,748 ) (1,227,148 ) Furniture, fixtures and equipment, Net $ 603,253 $ 342,180 Depreciation expense 269,978 197,146 |
PATENTS AND TRADEMARKS
PATENTS AND TRADEMARKS | 12 Months Ended |
Dec. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
PATENTS AND TRADEMARKS | NOTE 5 – PATENTS AND TRADEMARKS Patents and trademarks 2021 2020 Patents and trademarks $ 309,205 $ 301,770 Less: Accumulated amortization (242,723 ) (237,355 ) Patents and trademarks, Net $ 66,482 $ 64,415 Amortization expense in 2021 and 2020 was $ 5,368 5,368 |
SOFTWARE DEVELOPMENT COSTS
SOFTWARE DEVELOPMENT COSTS | 12 Months Ended |
Dec. 31, 2021 | |
Research and Development [Abstract] | |
SOFTWARE DEVELOPMENT COSTS | NOTE 6 – SOFTWARE DEVELOPMENT COSTS In 2018, the Company capitalized $ 60,000 Schedule of Software Development Costs December 31, December 31, 2021 2020 Software development costs $ 60,000 $ 60,000 Less: Accumulated amortization (60,000 ) (60,000 ) Software Development Costs, net $ — $ — Amortization of software development costs in 2021 and 2020 was zero and $ 20,000 |
DEBT
DEBT | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
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, 2022 and December 31, 2021: Notes Payable - Financing Agreements September 30, 2022 December 31, 2021 Notes Payable Principal Interest Principal Interest Third Party - Insurance Note 1 $ 4,167 7.75 % $ 22,266 7.75 % Third Party - Insurance Note 2 35,232 6.24 % 12,667 6.24 % Third Party - Insurance Note 3 22,128 — 17,570 — Third Party - Insurance Note 4 40,729 — — — Total $ 102,256 $ 52,503 The Company entered into an agreement on December 23, 2021 with its insurance provider by issuing a $ 22,266 7.75 2,104 4,167 22,266 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 6.24 6,383 63,766 6.24 5,979 35,232 12,667 The Company entered into an agreement on September 15, 2021 with its insurance provider by issuing a note payable (Insurance 3) for the purchase of an insurance policy in the amount of $ 19,965 1,997 24,140 2,012 22,128 17,570 The Company entered into an agreement on February 3, 2021 with its insurance provider by issuing a note payable (Insurance 4) for the purchase of an insurance policy in the amount of $ 215,654 17,899 242,591 20,074 40,729 0 Equipment Financing The Company entered into an agreement on August 26, 2019 with an equipment financing company by issuing a $ 147,810 12.72 4,963 121,637 9.90 3,919 33,860 103,186 At September 30, 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 2022 11,757 2023 23,515 Total minimum equipment financing payments $ 35,272 Less: interest (1,412 ) Total equipment financing at September 30, 2022 $ 33,860 Less: current portion of equipment financing (33,860 ) Long term portion of equipment financing $ — | 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: Notes Payable - Financing Agreements December 31, 2021 December 31, 2020 Notes Payable Principal Interest Principal Interest Third Party - Insurance Note 1 $ 22,266 7.75 % $ 23,327 7.75 % Third Party - Insurance Note 2 12,667 6.24 % 10,457 5.26 % Third Party - Insurance Note 3 17,570 — 9,158 — Third Party - Insurance Note 4 — — — — Total $ 52,503 $ 42,942 The Company entered into an agreement on December 23, 2020 with its insurance provider by issuing a $ 23,327 7.75 2,416 22,266 7.75 2,104 22,266 23,327 The Company entered into an agreement on April 15, 2020 with its insurance provider by issuing a $ 51,379 5.26 5,263 62,041 6.24 6,383 12,667 10,457 The Company entered into an agreement on September 15, 2020 with its insurance provider by issuing a $ 13,796 19,965 1,997 17,570 9,158 The Company entered into an agreement on February 3, 2020 with its insurance provider by issuing a $ 165,375 13,726 215,654 17,899 0 0 Equipment Financing The Company entered into an agreement on August 26, 2019 with an equipment financing company by issuing a $ 147,810 12.72 4,963 121,637 9.90 3,919 103,186 192,804 At December 31, 2021, future minimum note payments due under the equipment financing agreements are as follows: Schedule of Future Minimum Lease Payments Under Finance Lease As of December 31, Amount 2022 86,735 2023 23,515 Total minimum equipment financing payments $ 110,250 Less: interest (7,064 ) Total equipment financing at December 31, 2021 $ 103,186 Less: current portion of equipment financing (80,335 ) Long-term portion of equipment financing $ 22,851 Notes Payable – PPP Loan Schedule of Notes Payable -PPP Loan December 31, 2021 December 31, 2020 Payable To Principal Interest Principal Interest PPP loan $ — $ 1,410,270 1 % Total — 1,410,270 Less current portion — (627,465 ) Long-term portion $ — $ 782,805 On April 23, 2020, the Company entered into a promissory note (the “Note”) with BBVA USA, which provides for a loan in the amount of $ 1,410,270 1.00 0 1,410,270 |
LINE OF CREDIT
LINE OF CREDIT | 12 Months Ended |
Dec. 31, 2021 | |
Debt Disclosure [Abstract] | |
LINE OF CREDIT | NOTE 8 – LINE OF CREDIT The Company assumed a line of credit with Wells Fargo Bank upon the merger with ISA on April 1, 2015. The line of credit provided for borrowings up to $ 40,000 0 0 |
CONTRACT ACCOUNTING
CONTRACT ACCOUNTING | 12 Months Ended |
Dec. 31, 2021 | |
Contractors [Abstract] | |
CONTRACT ACCOUNTING | NOTE 9 – CONTRACT ACCOUNTING Contract Assets Contract assets on uncompleted contracts represent costs and estimated earnings in excess of billings and/or cash received on uncompleted contracts accounted for under the percentage of completion contract method. At December 31, 2021 and 2020, contract assets on uncompleted contracts consisted of the following: Schedule of contract billings 2021 2020 Costs and estimated earnings recognized $ 5,266,930 $ 4,152,850 Less: Billings or cash received (5,263,481 ) (4,050,392 ) Contract Assets $ 3,449 $ 102,458 Contract Liabilities Contract liabilities on uncompleted contracts represent billings and/or cash received that exceed accumulated revenues recognized on uncompleted contracts accounted for under the percentage of completion contract method. At December 31, 2021 and 2020, contract liabilities on uncompleted contracts consisted of the following: 2021 2020 Billings and/or cash receipts on uncompleted contracts $ 4,473,726 $ 2,978,007 Less: Costs and estimated earnings recognized (3,041,088 ) (2,268,454 ) Contract Liabilities $ 1,232,638 $ 709,553 |
DEFERRED COMPENSATION
DEFERRED COMPENSATION | 12 Months Ended |
Dec. 31, 2021 | |
Compensation Related Costs [Abstract] | |
DEFERRED COMPENSATION | NOTE 10 – DEFERRED COMPENSATION As of December 31, 2021, and 2020, the Company has accrued $ 505,896 797,042 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | ||
COMMITMENTS AND CONTINGENCIES | NOTE 4 – 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 4,980,104 30,000 600,000 4,726,975 As of September 30, 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 9.6 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, 2022 2021 Lease cost: Operating lease cost $ 582,989 $ 214,470 Short-term lease cost 26,127 15,933 Other information: Operating cash outflow used for operating leases 323,750 220,721 Weighted average discount rate 9.0 % 12.0 % Weighted average remaining lease term 9.6 0.1 As of September 30, 2022, future minimum lease payments due under operating leases are as follows: Future minimum lease payments for non-cancelable operating leases Amount Calendar year: 2022 $ (7,970 ) 2023 696,869 2024 779,087 2025 798,556 2026 818,518 Thereafter 4,882,411 Total undiscounted future minimum lease payments 7,967,471 Less: Impact of discounting (2,851,719 ) Total present value of operating lease obligations 5,115,752 Current portion (497,694 ) Operating lease obligations, less current portion $ 4,618,058 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 provides that he will receive separation payments over a 36-month period equal to his base salary plus $ 75,000 In accordance with the Separation Agreement, the Company will pay to Mr. Arcaini the total sum of $ 747,788 124,631 291,730 1,200 | NOTE 11 – COMMITMENTS AND CONTINGENCIES Delinquent Payroll Taxes Payable The Company has paid its delinquent IRS payroll taxes, late fees and outstanding state of California payroll taxes in full. At December 31, 2021 and December 31, 2020, the state payroll taxes payable balance was 0 3,146 Operating Lease Obligations The Company had an operating lease agreement for office space of approximately 8,308 10,203 The Company entered a separate operating lease agreement of office and warehouse combination space of 4,400 The Company had approximately 14,603 On July 26, 2021, the Company entered a new operating lease agreement of office and warehouse combination space of 40,000 4,980,104 30,000 600,000 On November 1, 2021, the Company extended the leases of office space and warehouse space at its two prior facilities for a period of 30 days to accommodate delays moving to its new headquarters. The move was completed during 2021. The Company had approximately 40,000 As of December 31, 2021, 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 10.4 The following table shows supplemental information related to leases: Schedule of supplemental information related to leases Year Ended December 31, 2021 2020 Lease cost: Operating lease cost $ 414,085 $ 279,975 Short-term lease cost 21,628 21,341 Other information: Operating cash outflow used for operating leases 285,959 344,307 Weighted average discount rate 9.0 % 12.0 % Weighted average remaining lease term 10.4 0.8 At December 31, 2021, future minimum lease payments due under operating leases are as follows: Future minimum lease payments for non-cancelable operating leases As of December 31, 2021 Fiscal year: 2022 $ 315,302 2023 696,869 2024 779,087 2025 798,556 2026 818,518 Thereafter 4,803,472 Total undiscounted future minimum lease payments 8,211,804 Less: Impact of discounting (3,156,719 ) Total present value of operating lease liabilities 5,055,085 Current portion (315,302 ) Operating lease liability, less current portion $ 4,739,783 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 18,000 1 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 $ 75,000 747,788 124,631 479,000 1,200 50,358 95,127 17,000 |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 12 – 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 at December 31, 2021 and 2020 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, 2021 and 2020 were as follows: Difference between income taxes at effective statutory rate and provision for income taxes Years Ended December 31, 2021 2020 Income tax benefit at U.S. statutory rate of 21% $ (1,261,869 ) $ (1,416,961 ) State income taxes (216,321 ) (242,908 ) Non-deductible expenses 64,553 135,152 Change in valuation allowance 1,413,637 1,524,717 Total provision for income tax $ — $ — The Company’s approximate net deferred tax assets as of December 31, 2021 and 2020 were as follows: Net deferred tax assets December 31, 2021 2020 Deferred Tax Assets: Net operating loss carryforward $ 8,247,427 $ 6,807,482 Intangible assets 5,553 31,841 Allowance for bad debt — — 8,252,960 6,839,323 Valuation allowance (8,252,960 ) (6,839,323 ) Net deferred tax assets $ — $ — The gross operating loss carryforward was approximately $ 33,522,769 27,672,692 1,413,637 The potential tax benefit arising from the net operating loss carryforward of $ 4,357,876 3,848,467 The Company does not have any uncertain tax positions or events leading to uncertainty in a tax position. The Company’s 2020, 2019 and 2018 Corporate Income Tax Returns are subject to Internal Revenue Service examination. |
STOCKHOLDERS_ EQUITY
STOCKHOLDERS’ EQUITY | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Equity [Abstract] | ||
STOCKHOLDERS’ EQUITY | NOTE 5 – STOCKHOLDERS’ EQUITY Common stock issued On January 11, 2022, shareholders converted 710 1,790 5.50 On February 3, 2022, the Company closed an offering of 1,325,000 5,300,000 4 4,779,000 On February 21, 2022, the Company closed on an “over-allotment” offering of 198,750 795,000 4 739,350 50,000,000 On March 31, 2022, the Company issued 7,198 40,000 On June 30, 2022, the Company issued 10,668 40,000 On August 25, 2022, 121,572 851 On September 30, 2022, the Company issued 9,758 40,000 On September 30, 2022, the Company closed an offering of 818,335 2,455,003 3 2,194,187 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 10,000,000 1,000 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 7.00 2,830 2,830,000 1,000 851 121,572 0 851 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 have 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 $ 4,500,000 454,546 0 2,500 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, subject to shareholder approval (which has not yet been granted) for an increase in common stock; 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 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 the Company received proceeds of $ 999,000 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 D Convertible Preferred Stock are convertible. The Registration Rights Agreement contains customary representations, warranties, agreements and indemnification rights and obligations of the parties. Stock-Based Compensation Stock-based compensation expense recognized under ASC 718-10 for the nine months ended September 30, 2022 and 2021, was $ 592,177 215,753 653,018 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 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 6.41 1,563,708 3.5 72 0.97 As of September 30, 2022, and December 31, 2021, options to purchase a total of 926,266 431,266 271,266 271,266 160,000 160,000 During the third quarter of 2022, 80,000 78,726 During the third quarter of 2022, 20,000 Warrants No new warrants were issued during the first three quarters of 2022. At September 30, 2022 and December 31, 2021, warrants outstanding were 1,376,466 1,376,466 | NOTE 13 – STOCKHOLDERS’ EQUITY 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 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 Currently, there are 52 identified employees (including three executive officers, of which one is a director), four non-employee directors, and up to 50 other current or future staff members who would be eligible to receive stock options and/or shares of restricted stock under the 2021 Plan. Future new hires and additional non-employee directors and/or consultants would be eligible to participate in the 2021 Plan as well. 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”); provided, however, that ISOs may only be issued if our shareholders approve the 2021 Plan at the Annual Meeting. 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 more than 10% of the total combined voting power of all classes of capital stock 100,000 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. Certain Federal Income Tax Consequences of the 2021 Plan The following is a general summary of the federal income tax consequences under current U.S. tax law to the Company and to participants in the 2021 Plan who are individual citizens or residents of the United States for federal income tax purposes (“U.S. Participants”) of stock options, stock appreciation rights, restricted stock, performance shares, performance units, restricted stock units, distribution equivalent rights and unrestricted stock. It does not purport to cover all of the special rules including special rules relating to limitations on the ability of the Company to deduct the amounts for federal income tax purposes of certain compensation, special rules relating to deferred compensation, golden parachutes, participants subject to Section 16(b) of the Exchange Act or the exercise of a stock option with previously acquired shares of the Company’s Common Stock. For purposes of this summary, it is assumed that U.S. Participants will hold their shares of the Company’s Common Stock received under the 2021 Plan as capital assets within the meaning of Section 1221 of the Code. In addition, this summary does not address the non-U.S. state or local income or other tax consequences, or any U.S. federal non-income tax consequences, inherent in the acquisition, ownership, vesting, exercise, termination or disposition of an award under the 2021 Plan or shares of the Company’s Common Stock issued pursuant thereto. All participants are urged to consult with their own tax advisors concerning the tax consequences to them of an award under the 2021 Plan or shares of the Company’s Common Stock issued thereto pursuant to the 2021 Plan. A U.S. Participant does not recognize taxable income upon the grant of a NQSO or an ISO. Upon the exercise of a NQSO, the U.S. Participant recognizes ordinary income in an amount equal to the excess, if any, of the fair market value of the shares acquired on the date of exercise over the exercise price paid therefor under the NQSO, and the Company will generally be entitled to a deduction for such amount at that time. If the U.S. Participant later sells shares acquired pursuant to the exercise of a NQSO, the U.S. Participant recognizes long-term or short-term capital gain or loss, depending on the period for which the shares were held. Long-term capital gain is generally subject to more favorable tax treatment than ordinary income or short-term capital gain. Upon the exercise of an ISO, the U.S. Participant does not recognize taxable income. If the U.S. Participant disposes of the shares acquired pursuant to the exercise of an ISO more than two years after the date of grant and more than one year after the transfer of the shares to the U.S. Participant, the U.S. Participant recognizes long-term capital gain or loss, and the Company will not be entitled to a deduction. However, if the U.S. Participant disposes of such shares prior to the end of the required holding period, all or a portion of the gain is treated as ordinary income and the Company is generally entitled to deduct such amount. In addition to the tax consequences described above, a U.S. Participant may be subject to the alternative minimum tax, which is payable to the extent it exceeds the U.S. Participant’s regular tax. For this purpose, upon the exercise of an ISO, the excess of the fair market value of the shares over the exercise price paid therefor under the ISO is a preference item for alternative minimum taxable income determination purposes. In addition, the U.S. Participant’s basis in such shares is increased by such excess for purposes of computing the gain or loss on the disposition of the shares for alternative minimum tax purposes. A U.S. Participant does not recognize taxable income upon the grant of an SAR. The U.S. Participant has ordinary compensation income upon exercise of the SAR equal to the increase in the value of the underlying shares, and the Company will generally be entitled to a deduction for such amount. A U.S. Participant does not recognize taxable income upon the receipt of a performance share award until the shares are received. At such time, the U.S. Participant recognizes ordinary compensation income equal to the excess, if any, of the fair market value of the shares over any amount thereby paid for the shares, and the Company will generally be entitled to deduct such amount at such time. A U.S. Participant does not recognize taxable income upon the receipt of a performance unit award, restricted stock unit award or dividend equivalent right award until a cash payment is received. At such time, the U.S. Participant recognizes ordinary compensation income equal to the amount of cash received, and the Company will generally be entitled to deduct such amount at such time. A U.S. Participant who receives a grant of restricted stock generally recognizes ordinary compensation income equal to the excess, if any, of the fair market value of such shares of stock at the time the restriction lapses over any amount paid timely for the shares. Alternatively, the U.S. Participant may elect to be taxed on the fair market value of such shares at the time of grant. The Company thereby will generally be entitled to a deduction at the same time and in the same amount as the income required to be included by the U.S. Participant. A U.S. Participant recognizes ordinary compensation income upon receipt of the shares under an unrestricted stock award equal to the excess, if any, of the fair market value of the shares over any amount paid thereby for the shares, and the Company will generally be entitled to deduct such amount at such time. 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 10,000,000 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 7.00 2,830 2,830,000 1,000 851 1,705 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 2,500 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 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 have elected the 19.99% Beneficial Ownership Limitation. Common stock issued for warrants During the third quarter of 2020, 67,500 1,197 9,450 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. Common stock issued for services and settlements The Company issued 1,611 7,500 The Company issued 1,632 7,500 The Company issued 7,869 37,500 The Company issued 4,032 30,000 The Company issued 7,223 45,000 The Company issued 3,726 19,167 The Company issued 9,560 50,000 Stock-Based Compensation 262,411 454,770 95,166 1.5 Series B Convertible Preferred Stock A holder of Series B Convertible Preferred Stock converted 854 122,000 854,000 Series C Convertible Preferred Stock A holder of Series C Convertible Preferred Stock converted 1,500 272,727 1,500,000 A holder of Series C Convertible Preferred Stock converted 500 90,909 500,000 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 235 148,000 84 7.00 140 6.30 115 10.08 753 9.09 1,324 157,452 |
COMMON STOCK OPTIONS AND WARRAN
COMMON STOCK OPTIONS AND WARRANTS | 12 Months Ended |
Dec. 31, 2021 | |
Share-Based Payment Arrangement [Abstract] | |
COMMON STOCK OPTIONS AND WARRANTS | NOTE 14 – COMMON STOCK OPTIONS AND WARRANTS Options 2021 During the first quarter of 2021, the Company’s Board of Directors granted 20,000 4.32 52,758 7,685 45,073 2.75 During the second quarter of 2021, five former staff members and one contractor exercised 31,710 and forfeited 8,922 63,860 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. 2020 During the second quarter of 2020, 160,866 100 102,800 149,424 50 50 370,312 During the third quarter of 2020, 100,000 50 50 193,388 50,358 95,127 During the fourth quarter of 2020, 40,000 For 20,000 of those options, 50% of the options will vest on October 12, 2021 and the other 50% will vest on October 12, 2022. For the other 20,000 options, one-third will vest on November 23, 2021, the next third will vest on November 23, 2022 and the final third will vest on November 23, 2023. 91,574 Schedule of Options Activity Weighted Weighted Average Average Remaining Aggregate Exercise Contractual Intrinsic Shares Price Term (Years) Value Outstanding at December 31, 2019 163,010 $ 14.00 3.4 — Granted 450,290 $ 5.06 4.4 — Forfeited (161,402 ) $ 14.00 — — Outstanding at December 31, 2020 451,898 $ 5.06 4.4 7,200 Exercisable at December 31, 2020 212,832 $ 5.76 4.2 — Outstanding at December 31, 2020 451,898 $ 5.06 4.2 — Granted 20,000 $ 4.32 4.0 — Exercised/Forfeited (40,632 ) $ 14.00 — — Outstanding at December 31, 2021 431,266 $ 4.98 3.4 $197,506 312,310 $ 5.25 3.4 — Schedule of Fair Value Assumptions For the Years Ended 2021 2020 Risk free interest rate 0.18 0.18 0.26 Expected term in years 3.50 2.50 3.50 Dividend yield — — Volatility of common stock 91.6 68.00 86.24 Estimated annual forfeitures — — Warrants 2021 During the second quarter of 2021, warrants representing 205,574 7.70 9.25 11.14 50,588 2020 During the first quarter of 2020, 67,500 9.00 During the second quarter of 2020, 9,450 1,197 During the third quarter of 2020, 67,500 During the fourth quarter of 2020, 12,469 Schedule of Warrants Outstanding Weighted Weighted Average Average Remaining Aggregate Number of Exercise Contractual Intrinsic Warrants Price Term (Years) Value Outstanding at December 31, 2019 1,521,250 $ 8.78 3.9 — Warrants expired, forfeited, cancelled or exercised (23,116 ) Warrants issued 89,419 $ 9.02 2.2 — Outstanding at December 31, 2020 1,587,553 $ 8.62 2.0 — Exercisable at December 31, 2020 1,587,553 $ 8.69 2.0 — 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 — |
DEFINED CONTRIBUTION PLAN
DEFINED CONTRIBUTION PLAN | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
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 six months of service. During the nine months ended September 30, 2022, the Company matched 100% of the first 4% of eligible employee compensation that was contributed to the 401(k) Plan. For the nine months ended September 30, 2022, the Company recognized expense for matching cash contributions to the 401(k) Plan totaling $ 119,322 | NOTE 15 – 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 twelve months ended December 31, 2021, the Company matched 100% of the first 4% of eligible employee compensation that was contributed to the 401(k) Plan. For the twelve months ended December 31, 2021, the Company recognized expense for matching cash contributions to the 401(k) Plan totaling $ 111,759 |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Related Party Transactions [Abstract] | ||
RELATED PARTY TRANSACTIONS | NOTE 8 – 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 seven additional full-time contractors located in Slovakia at a cost of $ 16,250 25,583 7,480 20,986 0 93,422 | NOTE 16 – 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 25,583 7,480 8,231 20,986 93,422 335,334 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Subsequent Events [Abstract] | ||
SUBSEQUENT EVENTS | NOTE 9 – SUBSEQUENT EVENTS On October 29, 2022, the Company sold to an existing investor in the Company and two other accredited investors in a private placement a further 83,667 3.00 300 1,000 551,001 | NOTE 17 – SUBSEQUENT EVENTS On January 1, 2022, the Company awarded certain senior management and key employees non-qualified stock options under the 2021 Equity Incentive Plan previously approved by the shareholders. A total of 665,000 6.41 5 3 On January 11, 2022, a shareholder exercised a conversion of 710 1,790 2.5 5.50 129,091 325,455 On February 3, 2022, the Company closed an offering of 1,325,000 5,300,000 4,779,000 On February 21, 2022, the Company closed a “over-allotment” offering of 198,750 shares of common stock in the amount of $795,000 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 S3 “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. |
NATURE OF OPERATIONS, BASIS OF
NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Accounting Policies [Abstract] | ||
NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 1 – NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Operations Duos Technologies Group, Inc. (the “Company”), through its operating subsidiaries, Duos Technologies, Inc. and TrueVue360, Inc. (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 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. The Company also offers technical support services for the above products. 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 CAPEX and OPEX pricing models 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. 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, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022 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, 2021 filed with the Securities and Exchange Commission (the “SEC”) on March 31, 2022. Reclassifications The Company reclassified $ 850,999 2,499,998 The Company reclassified certain expenses for the three months ended September 30, 2021 to conform to the 2022 classification. There was no net effect on the total expenses of such reclassification. The following tables reflect the reclassification adjustment effect in the three months ended September 30, 2021: Schedule of Reclassifications Before Reclassification After Reclassification For the For the Three Months Ended Three Months Ended September 30, September 30, 2021 2021 REVENUES: REVENUES: Technology systems $ 1,153,150 Technology systems $ 1,153,150 Services and consulting 587,307 Services and consulting 587,307 Total Revenue 1,740,457 Total Revenue 1,740,457 COST OF REVENUES: COST OF REVENUES: Technology systems 1,869,812 Technology systems 1,363,127 Services and consulting 277,054 Services and consulting 305,669 Overhead 657,907 — — Total Cost of Revenues 2,804,773 Total Cost of Revenues 1,668,796 GROSS MARGIN (1,064,316 ) GROSS MARGIN 71,661 OPERATING EXPENSES: OPERATING EXPENSES: Sales and marketing 361,820 Sales and marketing 361,820 Research and development 57,000 Research and development 332,469 General and administration 963,357 General and administration 1,823,865 Total Operating Expenses 1,382,177 Total Operating Expenses 2,518,154 LOSS FROM OPERATIONS $ (2,446,493 ) LOSS FROM OPERATIONS $ (2,446,493 ) The Company reclassified certain expenses for the nine months ended September 30, 2021 to conform to the 2022 classification. There was no net effect on the total expenses of such reclassification. The following tables reflect the reclassification adjustment effect in the nine months ended September 30, 2021: Before Reclassification After Reclassification For the For the Nine Months Ended Nine Months Ended September 30, September 30, 2021 2021 REVENUES: REVENUES: Technology systems $ 2,743,849 Technology systems $ 2,743,849 Services and consulting 1,800,030 Services and consulting 1,800,030 Total Revenue 4,543,879 Total Revenue 4,543,879 COST OF REVENUES: COST OF REVENUES: Technology systems 4,979,667 Technology systems 3,162,866 Services and consulting 986,757 Services and consulting 1,076,140 Overhead 1,754,731 — — Total Cost of Revenues 7,721,155 Total Cost of Revenues 4,239,006 GROSS MARGIN (3,177,276 ) GROSS MARGIN 304,873 OPERATING EXPENSES: OPERATING EXPENSES: Sales and marketing 1,024,872 Sales and marketing 1,024,872 Research and development 197,164 Research and development 1,163,341 General and administration 2,817,949 General and administration 5,333,921 Total Operating Expenses 4,039,985 Total Operating Expenses 7,522,134 LOSS FROM OPERATIONS $ (7,217,261 ) LOSS FROM OPERATIONS $ (7,217,261 ) 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, 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, 2022, the balance in one financial institution exceeded federally insured limits by approximately $ $ 4,507,000 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, 2022, four customers accounted for 25 21 19 19 79 · Customer 1, termination can be made prior to delivery of products or services, in the case where either party breaches any of its obligations under the agreement between the parties. The non-defaulting party may terminate the agreement effective 15 Business Days following notice to the defaulting party, if the non-performance has not been cured within such period, and without prejudice to damages that could be claimed by the non-defaulting party. Either party may terminate the agreement if the other party becomes unable to pay its debts in the ordinary course of business; goes into liquidation (other than for the purpose of a genuine amalgamation or restructuring); has a receiver appointed over all or part of its assets; enters into a composition or voluntary arrangement with its creditors; or any similar event occurs in any jurisdiction, all to the extent permitted by law. · For Customer 2, prior to delivery of products or services, either party may terminate the agreement between the parties upon the other party’s material breach of a representation, warranty, term, covenant or undertaking in the agreement if, within 30 days following the delivery of a written notice to the defaulting party setting forth in reasonable detail the basis of such default, the defaulting party has not rectified such default to the reasonable satisfaction of the non-defaulting party. Failure to perform due to a force majeure condition shall not be considered a material default under the agreement. · For Customer 3, prior to delivery of products or services if the customer terminates the statement of work for convenience, no refund of any advance payments will be due to Customer 3. ln the event of a material breach by the Company, which breach is not cured, or cure has not begun within 30 days of written notice to the Company by Customer 3, Customer 3 may terminate this statement of work for cause. In the event of termination by Customer 3 for cause, the Company shall reimburse Customer 3 any unused prepaid fees on a pro rata basis. · For Customer 4, if the customer terminates the agreement for convenience, no refund of any advance payments, will be due to Customer 4 and the Company after taking appropriate mitigating actions, may submit to the Customer a claim for termination costs. Such costs will not exceed the unpaid balance of the contract. In the event of a material breach by Duos, which breach is not cured, or cure has not begun within 10 days of written notice to Duos by Customer 4, Customer 4 may terminate the agreement for cause. In the event of termination by Customer 4 for cause, Duos shall reimburse Customer for any costs, losses and damages suffered or incurred arising from such event of default. Duos has secured a Performance and Payment Bond for specific project work be undertaken by the Company for Customer 4. At September 30, 2022, two customers accounted for 42 36 81 10 Geographic Concentration For the nine months ended September 30, 2022, approximately 54 84 Significant Vendors and Concentration of Credit Risk At September 30, 2022, two vendors accounted for 18 14 14 For the nine months ended September 30, 2022, the Company had no suppliers exceeding 10 12 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 expense, 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. 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. Earnings (Loss) Per Share Basic earnings loss 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 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, 2022, there was an aggregate of 1,376,466 926,266 333,000 As of September 30, 2021, there was an aggregate of 1,376,466 431,266 243,571 818,182 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 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 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. Inventory cost is primarily determined using the weighted average cost method. 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 revenues from four sources: 1. Technology Systems; 2. AI Technology; 3. Technical Support; and 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 technology systems 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 direct 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 customer 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 the financial statements included in this prospectus, 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. Segment Information The Company operates in one reportable segment. Stock-Based Compensation The Company accounts for employee and non-employee stock-based compensation in accordance with ASC 718-10, “ Share-Based Payment Determining Fair Value Under ASC 718-10 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 the 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. 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 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. The Company early adopted this pronouncement for our fiscal year beginning January 1, 2022, and it did not have a material effect on our unaudited 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 will be 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 unaudited 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’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 CAPEX and OPEX pricing models 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. Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Reverse Stock Split All share and per share amounts have been presented to give retroactive effect to a 1-for-14 Reclassifications The Company reclassified certain operating expenses for the year ended December 31, 2020 to conform to 2021 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, 2020: Schedule of Reclassifications Before Reclassification After Reclassification For the Year Ended For the Year Ended December 31, December 31, 2020 2020 REVENUES: REVENUES: Technology systems $ 4,956,130 Technology systems $ 5,964,801 Technical support 1,801,043 Services and consulting 2,074,647 Consulting services 273,604 — — AI technologies 1,008,671 — — Total Revenue 8,039,448 Total Revenue 8,039,448 COST OF REVENUES: COST OF REVENUES: Technology systems 3,665,493 Technology systems 5,642,880 Technical support 1,109,741 Services and consulting 1,139,357 Consulting services 117,004 Overhead 1,021,375 AI technologies 360,817 — — Total Cost of Revenues 5,253,055 Total Cost of Revenues 7,803,612 GROSS MARGIN 2,786,393 GROSS MARGIN 235,836 OPERATING EXPENSES: OPERATING EXPENSES: Sales and marketing 717,809 Sales and marketing 717,809 Engineering 1,358,925 Research and development 102,219 Research and development 1,022,188 Administration 6,050,236 Administration 5,011,913 — — AI technologies 1,309,986 — — Total Operating Expenses 9,420,821 Total Operating Expenses 6,870,264 LOSS FROM OPERATIONS $ (6,634,428 ) LOSS FROM OPERATIONS $ (6,634,428 ) The Company reclassified inventory on the consolidated balance sheet for the year ended December 31, 2020 to conform to 2021 classification. During the year ended December 31, 2020, inventory had been presented on the consolidated balance sheet within “Prepaid expenses and other current assets.” There was no net effect on total current assets. 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, 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 December 31, 2021, balance in one financial institution exceeded federally insured limits by approximately $ 656,000 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, 2021 one customer accounted for 83 45 23 · For Customer 1, termination can be made, prior to delivery of products or services, in the case where either party breach any of its obligations under the agreement with the Company. The other party may terminate the agreement effective fifteen (15) Business Days following notice from the non-defaulting party, if the non-performance has not been cured within such period, and without prejudice to damages that could be claimed by the non-defaulting party. Either party may terminate the agreement if the other party becomes unable to pay its debts in the ordinary course of business; goes into liquidation (other than for the purpose of a genuine amalgamation or restructuring); has a receiver appointed over all or part of its assets; enters into a composition or voluntary arrangement with its creditors; or any similar event occurs in any jurisdiction, all to the extent permitted by law. · For Customer 2, prior to delivery of products or services, either party may terminate the agreement with the Company upon the other partys material breach of a representation, warranty, term, covenant or undertaking in the agreement if, within thirty (30) days following the delivery of a written notice to the defaulting party setting forth in reasonable detail the basis of such default, the defaulting party has not rectified such default to the reasonable satisfaction of the non-defaulting party. Failure to perform due to a force majeure condition shall not be considered a material default under the agreement. At December 31, 2021, two customers accounted for 81 10 56 30 Geographic Concentration Approximately 86 51 Significant Vendors and Concentration of Credit Risk At December 31, 2021, one vendor accounted for 14 36 Two suppliers accounted for approximately 21 11 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 expense, 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 and consumables 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. 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 5 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 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 value 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 12 36 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 Technology Systems As of January 1, 2018, the Company adopted Accounting Standards Update (“ASU”) 2014-89, 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 unrecognized 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. 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 estimated 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. (see Note 9) 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. Technical Support Maintenance and 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 as the services are provided. Revenue for maintenance and technical support provided on an extended-term basis is recognized ratably over the term of the contract. For sales arrangements that do not involve multiple elements such as professional services, which are of short-term duration, revenues are recognized when services are completed. Consulting Services The Company recognizes revenue from its IT asset management business in accordance with the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 985-605-25 which addresses revenue recognition for the software industry. The general criteria for revenue recognition under ASC 985-605 for our Company, which sells software licenses, which do not require any significant modification or customization, is that revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable and collectability is probable. The Company’s IT asset management business generates revenues from three sources: (1) Professional Services (consulting and auditing), (2) Software licensing with optional hardware sales and (3) Customer Service (training and maintenance support). For sales arrangements that do not involve multiple elements: (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. AI Technologies The Company has begun to derive revenue from applications that incorporate artificial intelligence (AI) in the form of predetermined algorithms to provide important operating information to the users of our systems. The revenue generated from these applications of AI consists of an annual application maintenance fee which will be recognized ratably over the year, plus fees for the design, development, testing and incorporation of new algorithms into the system which will be recognized upon completion of each deliverable. Multiple Elements Arrangements with customers may involve multiple elements including project revenue and maintenance services in our Intelligent 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 elements 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 element arrangement is as follows: Each element is accounted for separately when each element 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 element is recognized using the applicable criteria under GAAP as discussed above for elements sold in non-multiple element 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 multiple element 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 element arrangements with Company customers qualify as separate units of account for revenue recognition purposes. Deferred Revenue Deferred revenues represent billings or cash received in excess of revenue recognizable on service agreements that are not accounted for under the percentage of completion method. At December 31, 2021 and 2020, the balance of deferred revenue was $ 596,673 315,370 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. Turnkey, engineered projects; b. Associated maintenance and support services; c. Licensing and professional services related to auditing of data center assets; d. Predetermined algorithms to provide important operating information to the users of our systems. 2. We currently operate in North America including the United States, Mexico and Canada. 3. Our customers include rail transportation, commercial, petrochemical, government, banking and IT suppliers. 4. Our 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 two to three months in length; and b. Maintenance and support contracts ranging from one to five years in length. 5. Our goods and services are transferred over time. Quantitative: For the Year Ended December 31, 2021 Schedule of Disaggregation of Revenue Quantitative Segments Rail Commercial Petrochemical Government Banking/Other 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 Quantitative: For the Year Ended December 31, 2020 Segments Rail Commercial Petrochemical Government Banking IT Artificial Total Primary Geographical Markets North America $ 5,558,405 $ 298,705 $ 23,951 $ 687,293 $ 188,819 $ 273,604 $ 1,008,671 $ 8,039,448 Major Goods and Service Lines Turnkey Projects $ 4,131,155 $ 59,616 $ 33,363 $ 599,481 $ 132,515 $ — $ — $ 4,956,130 Maintenance & Support 1,427,250 239,089 (9,412 ) 87,812 56,304 — — 1,801,043 Data Center Auditing Services — — — — — 266,449 — 266,449 Software License — — — — — 7,155 — 7,155 Algorithms — — — — — — 1,008,671 1,008,671 $ 5,558,405 $ 298,705 $ 23,951 $ 687,293 $ 188,819 $ 273,604 $ 1,008,671 $ 8,039,448 Timing of Revenue Recognition Goods transferred over time $ 4,131,155 $ 59,616 $ 33,363 $ 599,481 $ 132,515 $ 273,604 $ 1,008,671 $ 6,238,405 Services transferred over time 1,427,250 239,089 (9,412 ) 87,812 56,304 — — 1,801,043 $ 5,558,405 $ 298,705 $ 23,951 $ 687,293 $ 188,819 $ 273,604 $ 1,008,671 $ 8,039,448 Advertising The Company expenses the cost of advertising. During the years ended December 31, 2021 and 2020, there were no Stock Based Compensation The Company accounts for employee stock-based compensation in accordance with ASC 718-10, “ Share-Based Payment Determining Fair Value Under ASC 718-10 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 the 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, 2021, 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 2018, 2019 and 2020 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, 2021, there was an aggregate of 1,376,466 431,266 121,571 454,546 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 electe |
REVENUE
REVENUE | 9 Months Ended |
Sep. 30, 2022 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE | NOTE 6 - REVENUE 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 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, 2022 and December 31, 2021, contract assets on uncompleted contracts consisted of the following: Schedule Of Contract Assets On Uncompleted Contracts September 30, 2022 December 31, 2021 Cumulative revenues recognized $ 4,054,703 $ 5,266,930 Less: Billings or cash received 3,230,316 (5,263,481 ) Contract assets $ 824,387 $ 3,449 Contract Liabilities Contract liabilities, on uncompleted contracts represent billings and/or cash received that exceed accumulated 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 recognizable on service agreements that are not accounted for under the cost-to-cost method. At September 30, 2022 and December 31, 2021, 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, 2022 December 31, 2021 Billings and/or cash receipts on uncompleted contracts $ 5,653,169 $ 4,473,726 Less: Cumulative revenues recognized (2,451,836 ) (3,041,088 ) Contract liabilities, technology systems 3,201,333 1,232,638 Contract liabilities, services and consulting 679,089 596,673 Total contract liabilities $ 3,880,422 $ 1,829,311 Contract Liabilities at December 31, 2021 were $ 1,232,639 The Company expects to recognize all contract liabilities within 12 months from the consolidated balance sheet date. Disaggregation of Revenue The Company is following the guidance of ASC 606-10-55-296 and 297 for disaggregation of revenue. Accordingly, revenue has been disaggregated according to the nature, amount, timing and uncertainty of revenue and cash flows. We are providing qualitative and quantitative disclosures. Qualitative: 1. We have four distinct revenue sources: a. Technology Systems (Turnkey, engineered projects); b. AI Technology (Associated maintenance and support services); c. Technical Support (Licensing and professional services related to auditing of data center assets); and d. Consulting Services (Predetermined algorithms to provide important operating information to the users of our systems). 2. We currently operate in North America including the USA, Mexico and Canada. 3. Our customers include rail transportation, commercial, government, banking and IT suppliers. 4. Our 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 two to three months in length; and b. Maintenance and support contracts ranging from one to five years in length. 5. Transfer of goods and services are over time. 6. Goods delivered at point in time. Quantitative: For the Three Months Ended September 30, 2022 Disaggregation of Revenue 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 Three Months Ended September 30, 2021 Segments Rail Commercial Government Banking IT Suppliers Artificial Intelligence Total Primary Geographical Markets North America $ 1,303,662 $ 45,547 $ 52,866 $ (3,288 ) $ 945 $ 340,725 $ 1,740,457 Major Goods and Service Lines Turnkey Projects $ 984,313 $ — $ 32,645 $ — $ — $ 136,192 $ 1,153,150 Maintenance and Support 319,349 45,547 20,221 (3,288 ) 945 204,533 587,307 $ 1,303,662 $ 45,547 $ 52,866 $ (3,288 ) $ 945 $ 340,725 $ 1,740,457 Timing of Revenue Recognition Goods transferred over time $ 984,313 $ — $ 32,645 $ — $ — $ 136,192 $ 1,153,150 Services transferred over time 319,349 45,547 20,221 (3,288 ) 945 204,533 587,307 $ 1,303,662 $ 45,547 $ 52,866 $ (3,288 ) $ 945 $ 340,725 $ 1,740,457 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 For the Nine Months Ended September 30, 2021 Segments Rail Commercial Government Banking IT Suppliers Artificial Intelligence Total Primary Geographical Markets North America $ 3,527,736 $ 158,989 $ 198,153 $ 22,473 $ 134,717 $ 501,811 $ 4,543,879 Major Goods and Service Lines Turnkey Projects $ 2,311,530 $ — $ 137,490 $ 1,537 $ — $ — $ 2,450,557 Maintenance and Support 1,216,206 158,989 60,663 20,936 — 208,519 1,665,313 Data Center Auditing Services — — — — 131,537 — 131,537 Software License — — — — 3,180 — 3,180 Algorithms — — — — — 293,292 293,292 $ 3,527,736 $ 158,989 $ 198,153 $ 22,473 $ 134,717 $ 501,811 $ 4,543,879 Timing of Revenue Recognition Goods transferred over time $ 2,311,530 $ — $ 137,490 $ 1,537 $ 131,537 $ 208,519 2,790,613 Services transferred over time 1,216,206 158,989 60,663 20,936 3,180 293,292 1,753,266 $ 3,527,736 $ 158,989 $ 198,153 $ 22,473 $ 134,717 $ 501,811 $ 4,543,879 |
NATURE OF OPERATIONS AND SUMM_2
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
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”), 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’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 CAPEX and OPEX pricing models 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. | |
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, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022 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, 2021 filed with the Securities and Exchange Commission (the “SEC”) on March 31, 2022. | Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). |
Reverse Stock Split | Reverse Stock Split All share and per share amounts have been presented to give retroactive effect to a 1-for-14 | |
Reclassifications | Reclassifications The Company reclassified certain operating expenses for the year ended December 31, 2020 to conform to 2021 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, 2020: Schedule of Reclassifications Before Reclassification After Reclassification For the Year Ended For the Year Ended December 31, December 31, 2020 2020 REVENUES: REVENUES: Technology systems $ 4,956,130 Technology systems $ 5,964,801 Technical support 1,801,043 Services and consulting 2,074,647 Consulting services 273,604 — — AI technologies 1,008,671 — — Total Revenue 8,039,448 Total Revenue 8,039,448 COST OF REVENUES: COST OF REVENUES: Technology systems 3,665,493 Technology systems 5,642,880 Technical support 1,109,741 Services and consulting 1,139,357 Consulting services 117,004 Overhead 1,021,375 AI technologies 360,817 — — Total Cost of Revenues 5,253,055 Total Cost of Revenues 7,803,612 GROSS MARGIN 2,786,393 GROSS MARGIN 235,836 OPERATING EXPENSES: OPERATING EXPENSES: Sales and marketing 717,809 Sales and marketing 717,809 Engineering 1,358,925 Research and development 102,219 Research and development 1,022,188 Administration 6,050,236 Administration 5,011,913 — — AI technologies 1,309,986 — — Total Operating Expenses 9,420,821 Total Operating Expenses 6,870,264 LOSS FROM OPERATIONS $ (6,634,428 ) LOSS FROM OPERATIONS $ (6,634,428 ) The Company reclassified inventory on the consolidated balance sheet for the year ended December 31, 2020 to conform to 2021 classification. During the year ended December 31, 2020, inventory had been presented on the consolidated balance sheet within “Prepaid expenses and other current assets.” There was no net effect on total current assets. | |
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, 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, 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 | 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, 2022, the balance in one financial institution exceeded federally insured limits by approximately $ $ 4,507,000 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, 2022, four customers accounted for 25 21 19 19 79 · Customer 1, termination can be made prior to delivery of products or services, in the case where either party breaches any of its obligations under the agreement between the parties. The non-defaulting party may terminate the agreement effective 15 Business Days following notice to the defaulting party, if the non-performance has not been cured within such period, and without prejudice to damages that could be claimed by the non-defaulting party. Either party may terminate the agreement if the other party becomes unable to pay its debts in the ordinary course of business; goes into liquidation (other than for the purpose of a genuine amalgamation or restructuring); has a receiver appointed over all or part of its assets; enters into a composition or voluntary arrangement with its creditors; or any similar event occurs in any jurisdiction, all to the extent permitted by law. · For Customer 2, prior to delivery of products or services, either party may terminate the agreement between the parties upon the other party’s material breach of a representation, warranty, term, covenant or undertaking in the agreement if, within 30 days following the delivery of a written notice to the defaulting party setting forth in reasonable detail the basis of such default, the defaulting party has not rectified such default to the reasonable satisfaction of the non-defaulting party. Failure to perform due to a force majeure condition shall not be considered a material default under the agreement. · For Customer 3, prior to delivery of products or services if the customer terminates the statement of work for convenience, no refund of any advance payments will be due to Customer 3. ln the event of a material breach by the Company, which breach is not cured, or cure has not begun within 30 days of written notice to the Company by Customer 3, Customer 3 may terminate this statement of work for cause. In the event of termination by Customer 3 for cause, the Company shall reimburse Customer 3 any unused prepaid fees on a pro rata basis. · For Customer 4, if the customer terminates the agreement for convenience, no refund of any advance payments, will be due to Customer 4 and the Company after taking appropriate mitigating actions, may submit to the Customer a claim for termination costs. Such costs will not exceed the unpaid balance of the contract. In the event of a material breach by Duos, which breach is not cured, or cure has not begun within 10 days of written notice to Duos by Customer 4, Customer 4 may terminate the agreement for cause. In the event of termination by Customer 4 for cause, Duos shall reimburse Customer for any costs, losses and damages suffered or incurred arising from such event of default. Duos has secured a Performance and Payment Bond for specific project work be undertaken by the Company for Customer 4. At September 30, 2022, two customers accounted for 42 36 81 10 Geographic Concentration For the nine months ended September 30, 2022, approximately 54 84 Significant Vendors and Concentration of Credit Risk At September 30, 2022, two vendors accounted for 18 14 14 For the nine months ended September 30, 2022, the Company had no suppliers exceeding 10 12 | 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, 2021, balance in one financial institution exceeded federally insured limits by approximately $ 656,000 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, 2021 one customer accounted for 83 45 23 · For Customer 1, termination can be made, prior to delivery of products or services, in the case where either party breach any of its obligations under the agreement with the Company. The other party may terminate the agreement effective fifteen (15) Business Days following notice from the non-defaulting party, if the non-performance has not been cured within such period, and without prejudice to damages that could be claimed by the non-defaulting party. Either party may terminate the agreement if the other party becomes unable to pay its debts in the ordinary course of business; goes into liquidation (other than for the purpose of a genuine amalgamation or restructuring); has a receiver appointed over all or part of its assets; enters into a composition or voluntary arrangement with its creditors; or any similar event occurs in any jurisdiction, all to the extent permitted by law. · For Customer 2, prior to delivery of products or services, either party may terminate the agreement with the Company upon the other partys material breach of a representation, warranty, term, covenant or undertaking in the agreement if, within thirty (30) days following the delivery of a written notice to the defaulting party setting forth in reasonable detail the basis of such default, the defaulting party has not rectified such default to the reasonable satisfaction of the non-defaulting party. Failure to perform due to a force majeure condition shall not be considered a material default under the agreement. At December 31, 2021, two customers accounted for 81 10 56 30 Geographic Concentration Approximately 86 51 Significant Vendors and Concentration of Credit Risk At December 31, 2021, one vendor accounted for 14 36 Two suppliers accounted for approximately 21 11 |
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 expense, 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 expense, 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 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 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. 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 5 | |
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 | |
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 value 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 12 36 | |
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 revenues from four sources: 1. Technology Systems; 2. AI Technology; 3. Technical Support; and 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 technology systems 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 direct 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 customer 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 the financial statements included in this prospectus, 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 Technology Systems As of January 1, 2018, the Company adopted Accounting Standards Update (“ASU”) 2014-89, 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 unrecognized 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. 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 estimated 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. (see Note 9) 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. Technical Support Maintenance and 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 as the services are provided. Revenue for maintenance and technical support provided on an extended-term basis is recognized ratably over the term of the contract. For sales arrangements that do not involve multiple elements such as professional services, which are of short-term duration, revenues are recognized when services are completed. Consulting Services The Company recognizes revenue from its IT asset management business in accordance with the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 985-605-25 which addresses revenue recognition for the software industry. The general criteria for revenue recognition under ASC 985-605 for our Company, which sells software licenses, which do not require any significant modification or customization, is that revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable and collectability is probable. The Company’s IT asset management business generates revenues from three sources: (1) Professional Services (consulting and auditing), (2) Software licensing with optional hardware sales and (3) Customer Service (training and maintenance support). For sales arrangements that do not involve multiple elements: (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. AI Technologies The Company has begun to derive revenue from applications that incorporate artificial intelligence (AI) in the form of predetermined algorithms to provide important operating information to the users of our systems. The revenue generated from these applications of AI consists of an annual application maintenance fee which will be recognized ratably over the year, plus fees for the design, development, testing and incorporation of new algorithms into the system which will be recognized upon completion of each deliverable. Multiple Elements Arrangements with customers may involve multiple elements including project revenue and maintenance services in our Intelligent 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 elements 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 element arrangement is as follows: Each element is accounted for separately when each element 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 element is recognized using the applicable criteria under GAAP as discussed above for elements sold in non-multiple element 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 multiple element 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 element arrangements with Company customers qualify as separate units of account for revenue recognition purposes. |
Deferred Revenue | Deferred Revenue Deferred revenues represent billings or cash received in excess of revenue recognizable on service agreements that are not accounted for under the percentage of completion method. At December 31, 2021 and 2020, the balance of deferred revenue was $ 596,673 315,370 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. Turnkey, engineered projects; b. Associated maintenance and support services; c. Licensing and professional services related to auditing of data center assets; d. Predetermined algorithms to provide important operating information to the users of our systems. 2. We currently operate in North America including the United States, Mexico and Canada. 3. Our customers include rail transportation, commercial, petrochemical, government, banking and IT suppliers. 4. Our 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 two to three months in length; and b. Maintenance and support contracts ranging from one to five years in length. 5. Our goods and services are transferred over time. Quantitative: For the Year Ended December 31, 2021 Schedule of Disaggregation of Revenue Quantitative Segments Rail Commercial Petrochemical Government Banking/Other 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 Quantitative: For the Year Ended December 31, 2020 Segments Rail Commercial Petrochemical Government Banking IT Artificial Total Primary Geographical Markets North America $ 5,558,405 $ 298,705 $ 23,951 $ 687,293 $ 188,819 $ 273,604 $ 1,008,671 $ 8,039,448 Major Goods and Service Lines Turnkey Projects $ 4,131,155 $ 59,616 $ 33,363 $ 599,481 $ 132,515 $ — $ — $ 4,956,130 Maintenance & Support 1,427,250 239,089 (9,412 ) 87,812 56,304 — — 1,801,043 Data Center Auditing Services — — — — — 266,449 — 266,449 Software License — — — — — 7,155 — 7,155 Algorithms — — — — — — 1,008,671 1,008,671 $ 5,558,405 $ 298,705 $ 23,951 $ 687,293 $ 188,819 $ 273,604 $ 1,008,671 $ 8,039,448 Timing of Revenue Recognition Goods transferred over time $ 4,131,155 $ 59,616 $ 33,363 $ 599,481 $ 132,515 $ 273,604 $ 1,008,671 $ 6,238,405 Services transferred over time 1,427,250 239,089 (9,412 ) 87,812 56,304 — — 1,801,043 $ 5,558,405 $ 298,705 $ 23,951 $ 687,293 $ 188,819 $ 273,604 $ 1,008,671 $ 8,039,448 | |
Advertising | Advertising The Company expenses the cost of advertising. During the years ended December 31, 2021 and 2020, there were no | |
Stock Based Compensation | Stock-Based Compensation The Company accounts for employee and non-employee stock-based compensation in accordance with ASC 718-10, “ Share-Based Payment Determining Fair Value Under ASC 718-10 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 the 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 stock-based compensation in accordance with ASC 718-10, “ Share-Based Payment Determining Fair Value Under ASC 718-10 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 the 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, 2021, 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 2018, 2019 and 2020 remain open for potential audit. | |
Earnings (Loss) Per Share | Earnings (Loss) Per Share Basic earnings loss 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 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, 2022, there was an aggregate of 1,376,466 926,266 333,000 As of September 30, 2021, there was an aggregate of 1,376,466 431,266 243,571 818,182 | 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, 2021, there was an aggregate of 1,376,466 431,266 121,571 454,546 |
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 administrative 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 unaudited 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 will be 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 unaudited 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. We plan to adopt this pronouncement for our fiscal year beginning January 1, 2022, and we do not expect it to have a material effect on our 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 will be applied prospectively to all modifications that occur after the initial date of adoption. We plan to adopt this pronouncement for our fiscal year beginning January 1, 2022, and we do not expect it to have a material effect on our 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. |
NATURE OF OPERATIONS, BASIS O_2
NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Accounting Policies [Abstract] | ||
Nature of Operations | Nature of Operations Duos Technologies Group, Inc. (the “Company”), through its operating subsidiaries, Duos Technologies, Inc. and TrueVue360, Inc. (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 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. The Company also offers technical support services for the above products. 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 CAPEX and OPEX pricing models 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. | |
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, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022 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, 2021 filed with the Securities and Exchange Commission (the “SEC”) on March 31, 2022. | Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). |
Reclassifications | Reclassifications The Company reclassified $ 850,999 2,499,998 The Company reclassified certain expenses for the three months ended September 30, 2021 to conform to the 2022 classification. There was no net effect on the total expenses of such reclassification. The following tables reflect the reclassification adjustment effect in the three months ended September 30, 2021: Schedule of Reclassifications Before Reclassification After Reclassification For the For the Three Months Ended Three Months Ended September 30, September 30, 2021 2021 REVENUES: REVENUES: Technology systems $ 1,153,150 Technology systems $ 1,153,150 Services and consulting 587,307 Services and consulting 587,307 Total Revenue 1,740,457 Total Revenue 1,740,457 COST OF REVENUES: COST OF REVENUES: Technology systems 1,869,812 Technology systems 1,363,127 Services and consulting 277,054 Services and consulting 305,669 Overhead 657,907 — — Total Cost of Revenues 2,804,773 Total Cost of Revenues 1,668,796 GROSS MARGIN (1,064,316 ) GROSS MARGIN 71,661 OPERATING EXPENSES: OPERATING EXPENSES: Sales and marketing 361,820 Sales and marketing 361,820 Research and development 57,000 Research and development 332,469 General and administration 963,357 General and administration 1,823,865 Total Operating Expenses 1,382,177 Total Operating Expenses 2,518,154 LOSS FROM OPERATIONS $ (2,446,493 ) LOSS FROM OPERATIONS $ (2,446,493 ) The Company reclassified certain expenses for the nine months ended September 30, 2021 to conform to the 2022 classification. There was no net effect on the total expenses of such reclassification. The following tables reflect the reclassification adjustment effect in the nine months ended September 30, 2021: Before Reclassification After Reclassification For the For the Nine Months Ended Nine Months Ended September 30, September 30, 2021 2021 REVENUES: REVENUES: Technology systems $ 2,743,849 Technology systems $ 2,743,849 Services and consulting 1,800,030 Services and consulting 1,800,030 Total Revenue 4,543,879 Total Revenue 4,543,879 COST OF REVENUES: COST OF REVENUES: Technology systems 4,979,667 Technology systems 3,162,866 Services and consulting 986,757 Services and consulting 1,076,140 Overhead 1,754,731 — — Total Cost of Revenues 7,721,155 Total Cost of Revenues 4,239,006 GROSS MARGIN (3,177,276 ) GROSS MARGIN 304,873 OPERATING EXPENSES: OPERATING EXPENSES: Sales and marketing 1,024,872 Sales and marketing 1,024,872 Research and development 197,164 Research and development 1,163,341 General and administration 2,817,949 General and administration 5,333,921 Total Operating Expenses 4,039,985 Total Operating Expenses 7,522,134 LOSS FROM OPERATIONS $ (7,217,261 ) LOSS FROM OPERATIONS $ (7,217,261 ) | |
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, 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, 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 | 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, 2022, the balance in one financial institution exceeded federally insured limits by approximately $ $ 4,507,000 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, 2022, four customers accounted for 25 21 19 19 79 · Customer 1, termination can be made prior to delivery of products or services, in the case where either party breaches any of its obligations under the agreement between the parties. The non-defaulting party may terminate the agreement effective 15 Business Days following notice to the defaulting party, if the non-performance has not been cured within such period, and without prejudice to damages that could be claimed by the non-defaulting party. Either party may terminate the agreement if the other party becomes unable to pay its debts in the ordinary course of business; goes into liquidation (other than for the purpose of a genuine amalgamation or restructuring); has a receiver appointed over all or part of its assets; enters into a composition or voluntary arrangement with its creditors; or any similar event occurs in any jurisdiction, all to the extent permitted by law. · For Customer 2, prior to delivery of products or services, either party may terminate the agreement between the parties upon the other party’s material breach of a representation, warranty, term, covenant or undertaking in the agreement if, within 30 days following the delivery of a written notice to the defaulting party setting forth in reasonable detail the basis of such default, the defaulting party has not rectified such default to the reasonable satisfaction of the non-defaulting party. Failure to perform due to a force majeure condition shall not be considered a material default under the agreement. · For Customer 3, prior to delivery of products or services if the customer terminates the statement of work for convenience, no refund of any advance payments will be due to Customer 3. ln the event of a material breach by the Company, which breach is not cured, or cure has not begun within 30 days of written notice to the Company by Customer 3, Customer 3 may terminate this statement of work for cause. In the event of termination by Customer 3 for cause, the Company shall reimburse Customer 3 any unused prepaid fees on a pro rata basis. · For Customer 4, if the customer terminates the agreement for convenience, no refund of any advance payments, will be due to Customer 4 and the Company after taking appropriate mitigating actions, may submit to the Customer a claim for termination costs. Such costs will not exceed the unpaid balance of the contract. In the event of a material breach by Duos, which breach is not cured, or cure has not begun within 10 days of written notice to Duos by Customer 4, Customer 4 may terminate the agreement for cause. In the event of termination by Customer 4 for cause, Duos shall reimburse Customer for any costs, losses and damages suffered or incurred arising from such event of default. Duos has secured a Performance and Payment Bond for specific project work be undertaken by the Company for Customer 4. At September 30, 2022, two customers accounted for 42 36 81 10 Geographic Concentration For the nine months ended September 30, 2022, approximately 54 84 Significant Vendors and Concentration of Credit Risk At September 30, 2022, two vendors accounted for 18 14 14 For the nine months ended September 30, 2022, the Company had no suppliers exceeding 10 12 | 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, 2021, balance in one financial institution exceeded federally insured limits by approximately $ 656,000 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, 2021 one customer accounted for 83 45 23 · For Customer 1, termination can be made, prior to delivery of products or services, in the case where either party breach any of its obligations under the agreement with the Company. The other party may terminate the agreement effective fifteen (15) Business Days following notice from the non-defaulting party, if the non-performance has not been cured within such period, and without prejudice to damages that could be claimed by the non-defaulting party. Either party may terminate the agreement if the other party becomes unable to pay its debts in the ordinary course of business; goes into liquidation (other than for the purpose of a genuine amalgamation or restructuring); has a receiver appointed over all or part of its assets; enters into a composition or voluntary arrangement with its creditors; or any similar event occurs in any jurisdiction, all to the extent permitted by law. · For Customer 2, prior to delivery of products or services, either party may terminate the agreement with the Company upon the other partys material breach of a representation, warranty, term, covenant or undertaking in the agreement if, within thirty (30) days following the delivery of a written notice to the defaulting party setting forth in reasonable detail the basis of such default, the defaulting party has not rectified such default to the reasonable satisfaction of the non-defaulting party. Failure to perform due to a force majeure condition shall not be considered a material default under the agreement. At December 31, 2021, two customers accounted for 81 10 56 30 Geographic Concentration Approximately 86 51 Significant Vendors and Concentration of Credit Risk At December 31, 2021, one vendor accounted for 14 36 Two suppliers accounted for approximately 21 11 |
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 expense, 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 expense, 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. |
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. |
Earnings (Loss) Per Share | Earnings (Loss) Per Share Basic earnings loss 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 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, 2022, there was an aggregate of 1,376,466 926,266 333,000 As of September 30, 2021, there was an aggregate of 1,376,466 431,266 243,571 818,182 | 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, 2021, there was an aggregate of 1,376,466 431,266 121,571 454,546 |
Accounts Receivable | 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 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 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. Inventory cost is primarily determined using the weighted average cost method. | |
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 revenues from four sources: 1. Technology Systems; 2. AI Technology; 3. Technical Support; and 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 technology systems 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 direct 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 customer 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 the financial statements included in this prospectus, 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 Technology Systems As of January 1, 2018, the Company adopted Accounting Standards Update (“ASU”) 2014-89, 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 unrecognized 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. 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 estimated 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. (see Note 9) 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. Technical Support Maintenance and 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 as the services are provided. Revenue for maintenance and technical support provided on an extended-term basis is recognized ratably over the term of the contract. For sales arrangements that do not involve multiple elements such as professional services, which are of short-term duration, revenues are recognized when services are completed. Consulting Services The Company recognizes revenue from its IT asset management business in accordance with the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 985-605-25 which addresses revenue recognition for the software industry. The general criteria for revenue recognition under ASC 985-605 for our Company, which sells software licenses, which do not require any significant modification or customization, is that revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable and collectability is probable. The Company’s IT asset management business generates revenues from three sources: (1) Professional Services (consulting and auditing), (2) Software licensing with optional hardware sales and (3) Customer Service (training and maintenance support). For sales arrangements that do not involve multiple elements: (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. AI Technologies The Company has begun to derive revenue from applications that incorporate artificial intelligence (AI) in the form of predetermined algorithms to provide important operating information to the users of our systems. The revenue generated from these applications of AI consists of an annual application maintenance fee which will be recognized ratably over the year, plus fees for the design, development, testing and incorporation of new algorithms into the system which will be recognized upon completion of each deliverable. Multiple Elements Arrangements with customers may involve multiple elements including project revenue and maintenance services in our Intelligent 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 elements 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 element arrangement is as follows: Each element is accounted for separately when each element 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 element is recognized using the applicable criteria under GAAP as discussed above for elements sold in non-multiple element 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 multiple element 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 element arrangements with Company customers qualify as separate units of account for revenue recognition purposes. |
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. | |
Segment Information | Segment Information The Company operates in one reportable segment. | |
Stock-Based Compensation | Stock-Based Compensation The Company accounts for employee and non-employee stock-based compensation in accordance with ASC 718-10, “ Share-Based Payment Determining Fair Value Under ASC 718-10 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 the 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 stock-based compensation in accordance with ASC 718-10, “ Share-Based Payment Determining Fair Value Under ASC 718-10 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 the 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. |
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 administrative 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 unaudited 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 will be 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 unaudited 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. We plan to adopt this pronouncement for our fiscal year beginning January 1, 2022, and we do not expect it to have a material effect on our 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 will be applied prospectively to all modifications that occur after the initial date of adoption. We plan to adopt this pronouncement for our fiscal year beginning January 1, 2022, and we do not expect it to have a material effect on our 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. |
NATURE OF OPERATIONS AND SUMM_3
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Accounting Policies [Abstract] | ||
Schedule of Reclassifications | Schedule of Reclassifications Before Reclassification After Reclassification For the For the Three Months Ended Three Months Ended September 30, September 30, 2021 2021 REVENUES: REVENUES: Technology systems $ 1,153,150 Technology systems $ 1,153,150 Services and consulting 587,307 Services and consulting 587,307 Total Revenue 1,740,457 Total Revenue 1,740,457 COST OF REVENUES: COST OF REVENUES: Technology systems 1,869,812 Technology systems 1,363,127 Services and consulting 277,054 Services and consulting 305,669 Overhead 657,907 — — Total Cost of Revenues 2,804,773 Total Cost of Revenues 1,668,796 GROSS MARGIN (1,064,316 ) GROSS MARGIN 71,661 OPERATING EXPENSES: OPERATING EXPENSES: Sales and marketing 361,820 Sales and marketing 361,820 Research and development 57,000 Research and development 332,469 General and administration 963,357 General and administration 1,823,865 Total Operating Expenses 1,382,177 Total Operating Expenses 2,518,154 LOSS FROM OPERATIONS $ (2,446,493 ) LOSS FROM OPERATIONS $ (2,446,493 ) The Company reclassified certain expenses for the nine months ended September 30, 2021 to conform to the 2022 classification. There was no net effect on the total expenses of such reclassification. The following tables reflect the reclassification adjustment effect in the nine months ended September 30, 2021: Before Reclassification After Reclassification For the For the Nine Months Ended Nine Months Ended September 30, September 30, 2021 2021 REVENUES: REVENUES: Technology systems $ 2,743,849 Technology systems $ 2,743,849 Services and consulting 1,800,030 Services and consulting 1,800,030 Total Revenue 4,543,879 Total Revenue 4,543,879 COST OF REVENUES: COST OF REVENUES: Technology systems 4,979,667 Technology systems 3,162,866 Services and consulting 986,757 Services and consulting 1,076,140 Overhead 1,754,731 — — Total Cost of Revenues 7,721,155 Total Cost of Revenues 4,239,006 GROSS MARGIN (3,177,276 ) GROSS MARGIN 304,873 OPERATING EXPENSES: OPERATING EXPENSES: Sales and marketing 1,024,872 Sales and marketing 1,024,872 Research and development 197,164 Research and development 1,163,341 General and administration 2,817,949 General and administration 5,333,921 Total Operating Expenses 4,039,985 Total Operating Expenses 7,522,134 LOSS FROM OPERATIONS $ (7,217,261 ) LOSS FROM OPERATIONS $ (7,217,261 ) | Schedule of Reclassifications Before Reclassification After Reclassification For the Year Ended For the Year Ended December 31, December 31, 2020 2020 REVENUES: REVENUES: Technology systems $ 4,956,130 Technology systems $ 5,964,801 Technical support 1,801,043 Services and consulting 2,074,647 Consulting services 273,604 — — AI technologies 1,008,671 — — Total Revenue 8,039,448 Total Revenue 8,039,448 COST OF REVENUES: COST OF REVENUES: Technology systems 3,665,493 Technology systems 5,642,880 Technical support 1,109,741 Services and consulting 1,139,357 Consulting services 117,004 Overhead 1,021,375 AI technologies 360,817 — — Total Cost of Revenues 5,253,055 Total Cost of Revenues 7,803,612 GROSS MARGIN 2,786,393 GROSS MARGIN 235,836 OPERATING EXPENSES: OPERATING EXPENSES: Sales and marketing 717,809 Sales and marketing 717,809 Engineering 1,358,925 Research and development 102,219 Research and development 1,022,188 Administration 6,050,236 Administration 5,011,913 — — AI technologies 1,309,986 — — Total Operating Expenses 9,420,821 Total Operating Expenses 6,870,264 LOSS FROM OPERATIONS $ (6,634,428 ) LOSS FROM OPERATIONS $ (6,634,428 ) |
Schedule of Disaggregation of Revenue Quantitative | Disaggregation of Revenue 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 Three Months Ended September 30, 2021 Segments Rail Commercial Government Banking IT Suppliers Artificial Intelligence Total Primary Geographical Markets North America $ 1,303,662 $ 45,547 $ 52,866 $ (3,288 ) $ 945 $ 340,725 $ 1,740,457 Major Goods and Service Lines Turnkey Projects $ 984,313 $ — $ 32,645 $ — $ — $ 136,192 $ 1,153,150 Maintenance and Support 319,349 45,547 20,221 (3,288 ) 945 204,533 587,307 $ 1,303,662 $ 45,547 $ 52,866 $ (3,288 ) $ 945 $ 340,725 $ 1,740,457 Timing of Revenue Recognition Goods transferred over time $ 984,313 $ — $ 32,645 $ — $ — $ 136,192 $ 1,153,150 Services transferred over time 319,349 45,547 20,221 (3,288 ) 945 204,533 587,307 $ 1,303,662 $ 45,547 $ 52,866 $ (3,288 ) $ 945 $ 340,725 $ 1,740,457 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 For the Nine Months Ended September 30, 2021 Segments Rail Commercial Government Banking IT Suppliers Artificial Intelligence Total Primary Geographical Markets North America $ 3,527,736 $ 158,989 $ 198,153 $ 22,473 $ 134,717 $ 501,811 $ 4,543,879 Major Goods and Service Lines Turnkey Projects $ 2,311,530 $ — $ 137,490 $ 1,537 $ — $ — $ 2,450,557 Maintenance and Support 1,216,206 158,989 60,663 20,936 — 208,519 1,665,313 Data Center Auditing Services — — — — 131,537 — 131,537 Software License — — — — 3,180 — 3,180 Algorithms — — — — — 293,292 293,292 $ 3,527,736 $ 158,989 $ 198,153 $ 22,473 $ 134,717 $ 501,811 $ 4,543,879 Timing of Revenue Recognition Goods transferred over time $ 2,311,530 $ — $ 137,490 $ 1,537 $ 131,537 $ 208,519 2,790,613 Services transferred over time 1,216,206 158,989 60,663 20,936 3,180 293,292 1,753,266 $ 3,527,736 $ 158,989 $ 198,153 $ 22,473 $ 134,717 $ 501,811 $ 4,543,879 | Schedule of Disaggregation of Revenue Quantitative Segments Rail Commercial Petrochemical Government Banking/Other 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 Quantitative: For the Year Ended December 31, 2020 Segments Rail Commercial Petrochemical Government Banking IT Artificial Total Primary Geographical Markets North America $ 5,558,405 $ 298,705 $ 23,951 $ 687,293 $ 188,819 $ 273,604 $ 1,008,671 $ 8,039,448 Major Goods and Service Lines Turnkey Projects $ 4,131,155 $ 59,616 $ 33,363 $ 599,481 $ 132,515 $ — $ — $ 4,956,130 Maintenance & Support 1,427,250 239,089 (9,412 ) 87,812 56,304 — — 1,801,043 Data Center Auditing Services — — — — — 266,449 — 266,449 Software License — — — — — 7,155 — 7,155 Algorithms — — — — — — 1,008,671 1,008,671 $ 5,558,405 $ 298,705 $ 23,951 $ 687,293 $ 188,819 $ 273,604 $ 1,008,671 $ 8,039,448 Timing of Revenue Recognition Goods transferred over time $ 4,131,155 $ 59,616 $ 33,363 $ 599,481 $ 132,515 $ 273,604 $ 1,008,671 $ 6,238,405 Services transferred over time 1,427,250 239,089 (9,412 ) 87,812 56,304 — — 1,801,043 $ 5,558,405 $ 298,705 $ 23,951 $ 687,293 $ 188,819 $ 273,604 $ 1,008,671 $ 8,039,448 |
ACCOUNTS RECEIVABLE (Tables)
ACCOUNTS RECEIVABLE (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Receivables [Abstract] | |
Schedule of Accounts Receivable | Schedule of Accounts Receivable December 31, December 31, 2021 2020 Accounts receivable $ 1,738,543 $ 1,244,876 Allowance for doubtful accounts — — Accounts Receivable, Net $ 1,738,543 $ 1,244,876 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
Major classes of property and equipment | Major classes of property and equipment December 31, December 31, 2021 2020 Furniture, fixtures and equipment $ 1,264,001 $ 1,569,328 Less: Accumulated depreciation (660,748 ) (1,227,148 ) Furniture, fixtures and equipment, Net $ 603,253 $ 342,180 |
PATENTS AND TRADEMARKS (Tables)
PATENTS AND TRADEMARKS (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Patents and trademarks | Patents and trademarks 2021 2020 Patents and trademarks $ 309,205 $ 301,770 Less: Accumulated amortization (242,723 ) (237,355 ) Patents and trademarks, Net $ 66,482 $ 64,415 |
SOFTWARE DEVELOPMENT COSTS (Tab
SOFTWARE DEVELOPMENT COSTS (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Research and Development [Abstract] | |
Schedule of Software Development Costs | Schedule of Software Development Costs December 31, December 31, 2021 2020 Software development costs $ 60,000 $ 60,000 Less: Accumulated amortization (60,000 ) (60,000 ) Software Development Costs, net $ — $ — |
DEBT (Tables)
DEBT (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Debt Disclosure [Abstract] | ||
Notes Payable - Financing Agreements | Notes Payable - Financing Agreements September 30, 2022 December 31, 2021 Notes Payable Principal Interest Principal Interest Third Party - Insurance Note 1 $ 4,167 7.75 % $ 22,266 7.75 % Third Party - Insurance Note 2 35,232 6.24 % 12,667 6.24 % Third Party - Insurance Note 3 22,128 — 17,570 — Third Party - Insurance Note 4 40,729 — — — Total $ 102,256 $ 52,503 | Notes Payable - Financing Agreements December 31, 2021 December 31, 2020 Notes Payable Principal Interest Principal Interest Third Party - Insurance Note 1 $ 22,266 7.75 % $ 23,327 7.75 % Third Party - Insurance Note 2 12,667 6.24 % 10,457 5.26 % Third Party - Insurance Note 3 17,570 — 9,158 — Third Party - Insurance Note 4 — — — — Total $ 52,503 $ 42,942 |
Schedule of Future Minimum Lease Payments Under Finance Lease | Schedule of Future Minimum Lease Payments Under Finance Lease Calendar year: Amount 2022 11,757 2023 23,515 Total minimum equipment financing payments $ 35,272 Less: interest (1,412 ) Total equipment financing at September 30, 2022 $ 33,860 Less: current portion of equipment financing (33,860 ) Long term portion of equipment financing $ — | Schedule of Future Minimum Lease Payments Under Finance Lease As of December 31, Amount 2022 86,735 2023 23,515 Total minimum equipment financing payments $ 110,250 Less: interest (7,064 ) Total equipment financing at December 31, 2021 $ 103,186 Less: current portion of equipment financing (80,335 ) Long-term portion of equipment financing $ 22,851 |
Schedule of Notes Payable -PPP Loan | Schedule of Notes Payable -PPP Loan December 31, 2021 December 31, 2020 Payable To Principal Interest Principal Interest PPP loan $ — $ 1,410,270 1 % Total — 1,410,270 Less current portion — (627,465 ) Long-term portion $ — $ 782,805 |
CONTRACT ACCOUNTING (Tables)
CONTRACT ACCOUNTING (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Contractors [Abstract] | |
Schedule of contract billings | Schedule of contract billings 2021 2020 Costs and estimated earnings recognized $ 5,266,930 $ 4,152,850 Less: Billings or cash received (5,263,481 ) (4,050,392 ) Contract Assets $ 3,449 $ 102,458 Contract Liabilities Contract liabilities on uncompleted contracts represent billings and/or cash received that exceed accumulated revenues recognized on uncompleted contracts accounted for under the percentage of completion contract method. At December 31, 2021 and 2020, contract liabilities on uncompleted contracts consisted of the following: 2021 2020 Billings and/or cash receipts on uncompleted contracts $ 4,473,726 $ 2,978,007 Less: Costs and estimated earnings recognized (3,041,088 ) (2,268,454 ) Contract Liabilities $ 1,232,638 $ 709,553 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Schedule of supplemental information related to leases | Schedule of supplemental information related to leases Nine Months Ended September 30, 2022 2021 Lease cost: Operating lease cost $ 582,989 $ 214,470 Short-term lease cost 26,127 15,933 Other information: Operating cash outflow used for operating leases 323,750 220,721 Weighted average discount rate 9.0 % 12.0 % Weighted average remaining lease term 9.6 0.1 | Schedule of supplemental information related to leases Year Ended December 31, 2021 2020 Lease cost: Operating lease cost $ 414,085 $ 279,975 Short-term lease cost 21,628 21,341 Other information: Operating cash outflow used for operating leases 285,959 344,307 Weighted average discount rate 9.0 % 12.0 % Weighted average remaining lease term 10.4 0.8 |
Future minimum lease payments for non-cancelable operating leases | Future minimum lease payments for non-cancelable operating leases Amount Calendar year: 2022 $ (7,970 ) 2023 696,869 2024 779,087 2025 798,556 2026 818,518 Thereafter 4,882,411 Total undiscounted future minimum lease payments 7,967,471 Less: Impact of discounting (2,851,719 ) Total present value of operating lease obligations 5,115,752 Current portion (497,694 ) Operating lease obligations, less current portion $ 4,618,058 | Future minimum lease payments for non-cancelable operating leases As of December 31, 2021 Fiscal year: 2022 $ 315,302 2023 696,869 2024 779,087 2025 798,556 2026 818,518 Thereafter 4,803,472 Total undiscounted future minimum lease payments 8,211,804 Less: Impact of discounting (3,156,719 ) Total present value of operating lease liabilities 5,055,085 Current portion (315,302 ) Operating lease liability, less current portion $ 4,739,783 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Difference between income taxes at effective statutory rate and provision for income taxes | Difference between income taxes at effective statutory rate and provision for income taxes Years Ended December 31, 2021 2020 Income tax benefit at U.S. statutory rate of 21% $ (1,261,869 ) $ (1,416,961 ) State income taxes (216,321 ) (242,908 ) Non-deductible expenses 64,553 135,152 Change in valuation allowance 1,413,637 1,524,717 Total provision for income tax $ — $ — |
Net deferred tax assets | Net deferred tax assets December 31, 2021 2020 Deferred Tax Assets: Net operating loss carryforward $ 8,247,427 $ 6,807,482 Intangible assets 5,553 31,841 Allowance for bad debt — — 8,252,960 6,839,323 Valuation allowance (8,252,960 ) (6,839,323 ) Net deferred tax assets $ — $ — |
COMMON STOCK OPTIONS AND WARR_2
COMMON STOCK OPTIONS AND WARRANTS (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of Options Activity | Schedule of Options Activity Weighted Weighted Average Average Remaining Aggregate Exercise Contractual Intrinsic Shares Price Term (Years) Value Outstanding at December 31, 2019 163,010 $ 14.00 3.4 — Granted 450,290 $ 5.06 4.4 — Forfeited (161,402 ) $ 14.00 — — Outstanding at December 31, 2020 451,898 $ 5.06 4.4 7,200 Exercisable at December 31, 2020 212,832 $ 5.76 4.2 — Outstanding at December 31, 2020 451,898 $ 5.06 4.2 — Granted 20,000 $ 4.32 4.0 — Exercised/Forfeited (40,632 ) $ 14.00 — — Outstanding at December 31, 2021 431,266 $ 4.98 3.4 $197,506 312,310 $ 5.25 3.4 — |
Schedule of Fair Value Assumptions | Schedule of Fair Value Assumptions For the Years Ended 2021 2020 Risk free interest rate 0.18 0.18 0.26 Expected term in years 3.50 2.50 3.50 Dividend yield — — Volatility of common stock 91.6 68.00 86.24 Estimated annual forfeitures — — |
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, 2019 1,521,250 $ 8.78 3.9 — Warrants expired, forfeited, cancelled or exercised (23,116 ) Warrants issued 89,419 $ 9.02 2.2 — Outstanding at December 31, 2020 1,587,553 $ 8.62 2.0 — Exercisable at December 31, 2020 1,587,553 $ 8.69 2.0 — 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 — |
NATURE OF OPERATIONS, BASIS O_3
NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Accounting Policies [Abstract] | ||
Schedule of Reclassifications | Schedule of Reclassifications Before Reclassification After Reclassification For the For the Three Months Ended Three Months Ended September 30, September 30, 2021 2021 REVENUES: REVENUES: Technology systems $ 1,153,150 Technology systems $ 1,153,150 Services and consulting 587,307 Services and consulting 587,307 Total Revenue 1,740,457 Total Revenue 1,740,457 COST OF REVENUES: COST OF REVENUES: Technology systems 1,869,812 Technology systems 1,363,127 Services and consulting 277,054 Services and consulting 305,669 Overhead 657,907 — — Total Cost of Revenues 2,804,773 Total Cost of Revenues 1,668,796 GROSS MARGIN (1,064,316 ) GROSS MARGIN 71,661 OPERATING EXPENSES: OPERATING EXPENSES: Sales and marketing 361,820 Sales and marketing 361,820 Research and development 57,000 Research and development 332,469 General and administration 963,357 General and administration 1,823,865 Total Operating Expenses 1,382,177 Total Operating Expenses 2,518,154 LOSS FROM OPERATIONS $ (2,446,493 ) LOSS FROM OPERATIONS $ (2,446,493 ) The Company reclassified certain expenses for the nine months ended September 30, 2021 to conform to the 2022 classification. There was no net effect on the total expenses of such reclassification. The following tables reflect the reclassification adjustment effect in the nine months ended September 30, 2021: Before Reclassification After Reclassification For the For the Nine Months Ended Nine Months Ended September 30, September 30, 2021 2021 REVENUES: REVENUES: Technology systems $ 2,743,849 Technology systems $ 2,743,849 Services and consulting 1,800,030 Services and consulting 1,800,030 Total Revenue 4,543,879 Total Revenue 4,543,879 COST OF REVENUES: COST OF REVENUES: Technology systems 4,979,667 Technology systems 3,162,866 Services and consulting 986,757 Services and consulting 1,076,140 Overhead 1,754,731 — — Total Cost of Revenues 7,721,155 Total Cost of Revenues 4,239,006 GROSS MARGIN (3,177,276 ) GROSS MARGIN 304,873 OPERATING EXPENSES: OPERATING EXPENSES: Sales and marketing 1,024,872 Sales and marketing 1,024,872 Research and development 197,164 Research and development 1,163,341 General and administration 2,817,949 General and administration 5,333,921 Total Operating Expenses 4,039,985 Total Operating Expenses 7,522,134 LOSS FROM OPERATIONS $ (7,217,261 ) LOSS FROM OPERATIONS $ (7,217,261 ) | Schedule of Reclassifications Before Reclassification After Reclassification For the Year Ended For the Year Ended December 31, December 31, 2020 2020 REVENUES: REVENUES: Technology systems $ 4,956,130 Technology systems $ 5,964,801 Technical support 1,801,043 Services and consulting 2,074,647 Consulting services 273,604 — — AI technologies 1,008,671 — — Total Revenue 8,039,448 Total Revenue 8,039,448 COST OF REVENUES: COST OF REVENUES: Technology systems 3,665,493 Technology systems 5,642,880 Technical support 1,109,741 Services and consulting 1,139,357 Consulting services 117,004 Overhead 1,021,375 AI technologies 360,817 — — Total Cost of Revenues 5,253,055 Total Cost of Revenues 7,803,612 GROSS MARGIN 2,786,393 GROSS MARGIN 235,836 OPERATING EXPENSES: OPERATING EXPENSES: Sales and marketing 717,809 Sales and marketing 717,809 Engineering 1,358,925 Research and development 102,219 Research and development 1,022,188 Administration 6,050,236 Administration 5,011,913 — — AI technologies 1,309,986 — — Total Operating Expenses 9,420,821 Total Operating Expenses 6,870,264 LOSS FROM OPERATIONS $ (6,634,428 ) LOSS FROM OPERATIONS $ (6,634,428 ) |
REVENUE (Tables)
REVENUE (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Revenue from Contract with Customer [Abstract] | ||
Schedule Of Contract Assets On Uncompleted Contracts | Schedule Of Contract Assets On Uncompleted Contracts September 30, 2022 December 31, 2021 Cumulative revenues recognized $ 4,054,703 $ 5,266,930 Less: Billings or cash received 3,230,316 (5,263,481 ) Contract assets $ 824,387 $ 3,449 | |
Schedule of Contract Liabilities on Uncompleted Contracts | Schedule of Contract Liabilities on Uncompleted Contracts September 30, 2022 December 31, 2021 Billings and/or cash receipts on uncompleted contracts $ 5,653,169 $ 4,473,726 Less: Cumulative revenues recognized (2,451,836 ) (3,041,088 ) Contract liabilities, technology systems 3,201,333 1,232,638 Contract liabilities, services and consulting 679,089 596,673 Total contract liabilities $ 3,880,422 $ 1,829,311 | |
Disaggregation of Revenue | Disaggregation of Revenue 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 Three Months Ended September 30, 2021 Segments Rail Commercial Government Banking IT Suppliers Artificial Intelligence Total Primary Geographical Markets North America $ 1,303,662 $ 45,547 $ 52,866 $ (3,288 ) $ 945 $ 340,725 $ 1,740,457 Major Goods and Service Lines Turnkey Projects $ 984,313 $ — $ 32,645 $ — $ — $ 136,192 $ 1,153,150 Maintenance and Support 319,349 45,547 20,221 (3,288 ) 945 204,533 587,307 $ 1,303,662 $ 45,547 $ 52,866 $ (3,288 ) $ 945 $ 340,725 $ 1,740,457 Timing of Revenue Recognition Goods transferred over time $ 984,313 $ — $ 32,645 $ — $ — $ 136,192 $ 1,153,150 Services transferred over time 319,349 45,547 20,221 (3,288 ) 945 204,533 587,307 $ 1,303,662 $ 45,547 $ 52,866 $ (3,288 ) $ 945 $ 340,725 $ 1,740,457 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 For the Nine Months Ended September 30, 2021 Segments Rail Commercial Government Banking IT Suppliers Artificial Intelligence Total Primary Geographical Markets North America $ 3,527,736 $ 158,989 $ 198,153 $ 22,473 $ 134,717 $ 501,811 $ 4,543,879 Major Goods and Service Lines Turnkey Projects $ 2,311,530 $ — $ 137,490 $ 1,537 $ — $ — $ 2,450,557 Maintenance and Support 1,216,206 158,989 60,663 20,936 — 208,519 1,665,313 Data Center Auditing Services — — — — 131,537 — 131,537 Software License — — — — 3,180 — 3,180 Algorithms — — — — — 293,292 293,292 $ 3,527,736 $ 158,989 $ 198,153 $ 22,473 $ 134,717 $ 501,811 $ 4,543,879 Timing of Revenue Recognition Goods transferred over time $ 2,311,530 $ — $ 137,490 $ 1,537 $ 131,537 $ 208,519 2,790,613 Services transferred over time 1,216,206 158,989 60,663 20,936 3,180 293,292 1,753,266 $ 3,527,736 $ 158,989 $ 198,153 $ 22,473 $ 134,717 $ 501,811 $ 4,543,879 | Schedule of Disaggregation of Revenue Quantitative Segments Rail Commercial Petrochemical Government Banking/Other 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 Quantitative: For the Year Ended December 31, 2020 Segments Rail Commercial Petrochemical Government Banking IT Artificial Total Primary Geographical Markets North America $ 5,558,405 $ 298,705 $ 23,951 $ 687,293 $ 188,819 $ 273,604 $ 1,008,671 $ 8,039,448 Major Goods and Service Lines Turnkey Projects $ 4,131,155 $ 59,616 $ 33,363 $ 599,481 $ 132,515 $ — $ — $ 4,956,130 Maintenance & Support 1,427,250 239,089 (9,412 ) 87,812 56,304 — — 1,801,043 Data Center Auditing Services — — — — — 266,449 — 266,449 Software License — — — — — 7,155 — 7,155 Algorithms — — — — — — 1,008,671 1,008,671 $ 5,558,405 $ 298,705 $ 23,951 $ 687,293 $ 188,819 $ 273,604 $ 1,008,671 $ 8,039,448 Timing of Revenue Recognition Goods transferred over time $ 4,131,155 $ 59,616 $ 33,363 $ 599,481 $ 132,515 $ 273,604 $ 1,008,671 $ 6,238,405 Services transferred over time 1,427,250 239,089 (9,412 ) 87,812 56,304 — — 1,801,043 $ 5,558,405 $ 298,705 $ 23,951 $ 687,293 $ 188,819 $ 273,604 $ 1,008,671 $ 8,039,448 |
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, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
Product Information [Line Items] | ||||||
Total Revenues | $ 4,022,238 | $ 1,740,457 | $ 9,078,696 | $ 4,543,879 | $ 8,259,917 | $ 8,039,448 |
Total Cost of Revenues | 2,922,686 | 1,668,796 | 6,474,464 | 4,239,006 | 10,819,087 | 7,803,612 |
GROSS MARGIN | 1,099,552 | 71,661 | 2,604,232 | 304,873 | (2,559,170) | 235,836 |
Research and development | 329,424 | 332,469 | 1,296,480 | 1,163,341 | 251,563 | 102,219 |
Administration | 2,342,089 | 1,823,865 | 6,255,926 | 5,333,921 | ||
Total Operating Expenses | 2,968,570 | 2,518,154 | 8,509,343 | 7,522,134 | 4,897,781 | 6,870,264 |
LOSS FROM OPERATIONS | (1,869,018) | (2,446,493) | (5,905,111) | (7,217,261) | (7,456,951) | (6,634,428) |
Product [Member] | ||||||
Product Information [Line Items] | ||||||
Total Revenues | 2,709,899 | 1,153,150 | 6,273,213 | 2,743,849 | 5,871,666 | 5,964,801 |
Total Cost of Revenues | 2,176,761 | 1,363,127 | 5,016,551 | 3,162,866 | 7,151,276 | 5,642,880 |
Service, Other [Member] | ||||||
Product Information [Line Items] | ||||||
Total Revenues | 1,312,339 | 587,307 | 2,805,483 | 1,800,030 | 2,388,251 | 2,074,647 |
Total Cost of Revenues | $ 745,925 | 305,669 | $ 1,457,913 | 1,076,140 | 1,369,985 | 1,139,357 |
Overhead [Member] | ||||||
Product Information [Line Items] | ||||||
Total Cost of Revenues | $ 2,297,826 | 1,021,375 | ||||
Previously Reported [Member] | ||||||
Product Information [Line Items] | ||||||
Total Revenues | 1,740,457 | 4,543,879 | 8,039,448 | |||
Total Cost of Revenues | 2,804,773 | 7,721,155 | 5,253,055 | |||
GROSS MARGIN | (1,064,316) | (3,177,276) | 2,786,393 | |||
Sales and marketing | 361,820 | 1,024,872 | 717,809 | |||
Engineering | 1,358,925 | |||||
Research and development | 57,000 | 197,164 | 1,022,188 | |||
Administration | 963,357 | 2,817,949 | 5,011,913 | |||
AI technologies | 1,309,986 | |||||
Total Operating Expenses | 1,382,177 | 4,039,985 | 9,420,821 | |||
LOSS FROM OPERATIONS | (2,446,493) | (7,217,261) | (6,634,428) | |||
Previously Reported [Member] | Product [Member] | ||||||
Product Information [Line Items] | ||||||
Total Revenues | 1,153,150 | 2,743,849 | 4,956,130 | |||
Total Cost of Revenues | 1,869,812 | 4,979,667 | 3,665,493 | |||
Previously Reported [Member] | Technology Service [Member] | ||||||
Product Information [Line Items] | ||||||
Total Revenues | 1,801,043 | |||||
Total Cost of Revenues | 1,109,741 | |||||
Previously Reported [Member] | Service, Other [Member] | ||||||
Product Information [Line Items] | ||||||
Total Revenues | 587,307 | 1,800,030 | 273,604 | |||
Total Cost of Revenues | 277,054 | 986,757 | 117,004 | |||
Previously Reported [Member] | A I Technologies [Member] | ||||||
Product Information [Line Items] | ||||||
Total Revenues | 1,008,671 | |||||
Total Cost of Revenues | 360,817 | |||||
Previously Reported [Member] | Overhead [Member] | ||||||
Product Information [Line Items] | ||||||
Total Cost of Revenues | 657,907 | 1,754,731 | ||||
Revision of Prior Period, Adjustment [Member] | ||||||
Product Information [Line Items] | ||||||
Total Revenues | 1,740,457 | 4,543,879 | 8,039,448 | |||
Total Cost of Revenues | 1,668,796 | 4,239,006 | 7,803,612 | |||
GROSS MARGIN | 71,661 | 304,873 | 235,836 | |||
Sales and marketing | 361,820 | 1,024,872 | 717,809 | |||
Research and development | 332,469 | 1,163,341 | 102,219 | |||
Administration | 1,823,865 | 5,333,921 | 6,050,236 | |||
Total Operating Expenses | 2,518,154 | 7,522,134 | 6,870,264 | |||
LOSS FROM OPERATIONS | (2,446,493) | (7,217,261) | (6,634,428) | |||
Revision of Prior Period, Adjustment [Member] | Product [Member] | ||||||
Product Information [Line Items] | ||||||
Total Revenues | 1,153,150 | 2,743,849 | 5,964,801 | |||
Total Cost of Revenues | 1,363,127 | 3,162,866 | 5,642,880 | |||
Revision of Prior Period, Adjustment [Member] | Technology Service [Member] | ||||||
Product Information [Line Items] | ||||||
Total Revenues | 2,074,647 | |||||
Revision of Prior Period, Adjustment [Member] | Service, Other [Member] | ||||||
Product Information [Line Items] | ||||||
Total Revenues | 587,307 | 1,800,030 | ||||
Total Cost of Revenues | $ 305,669 | $ 1,076,140 | 1,139,357 | |||
Revision of Prior Period, Adjustment [Member] | Overhead [Member] | ||||||
Product Information [Line Items] | ||||||
Total Cost of Revenues | $ 1,021,375 |
NATURE OF OPERATIONS AND SUMM_5
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Disaggregation of Revenue) (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
Product Information [Line Items] | ||||||
Revenue | $ 4,022,238 | $ 1,740,457 | $ 9,078,696 | $ 4,543,879 | $ 8,259,917 | $ 8,039,448 |
Goods Transferred Over Time [Member] | ||||||
Product Information [Line Items] | ||||||
Revenue | 2,692,417 | 1,153,150 | 6,038,441 | 2,790,613 | 5,999,136 | 6,238,405 |
Services Transferred Over Time [Member] | ||||||
Product Information [Line Items] | ||||||
Revenue | 768,670 | 587,307 | 2,148,779 | 1,753,266 | 2,260,781 | 1,801,043 |
Turnkey Projects [Member] | ||||||
Product Information [Line Items] | ||||||
Revenue | 2,692,417 | 1,153,150 | 6,038,441 | 2,450,557 | 5,518,004 | 4,956,130 |
Maintenance And Support [Member] | ||||||
Product Information [Line Items] | ||||||
Revenue | 1,312,339 | 587,307 | 2,805,483 | 1,665,313 | 2,257,601 | 1,801,043 |
Data Center Auditing Services [Member] | ||||||
Product Information [Line Items] | ||||||
Revenue | 131,537 | 131,537 | 266,449 | |||
Software License [Member] | ||||||
Product Information [Line Items] | ||||||
Revenue | 3,180 | 7,155 | ||||
Algorithms [Member] | ||||||
Product Information [Line Items] | ||||||
Revenue | 17,482 | 234,772 | 293,292 | 349,595 | 1,008,671 | |
Rail [Member] | ||||||
Product Information [Line Items] | ||||||
Revenue | 3,765,312 | 1,303,662 | 8,087,759 | 3,527,736 | 6,883,670 | 5,558,405 |
Rail [Member] | Goods Transferred Over Time [Member] | ||||||
Product Information [Line Items] | ||||||
Revenue | 2,689,393 | 984,313 | 5,885,477 | 2,311,530 | 5,255,491 | 4,131,155 |
Rail [Member] | Services Transferred Over Time [Member] | ||||||
Product Information [Line Items] | ||||||
Revenue | 532,250 | 319,349 | 1,545,578 | 1,216,206 | 1,628,179 | 1,427,250 |
Rail [Member] | Turnkey Projects [Member] | ||||||
Product Information [Line Items] | ||||||
Revenue | 2,689,393 | 984,313 | 5,885,477 | 2,311,530 | 5,255,491 | 4,131,155 |
Rail [Member] | Maintenance And Support [Member] | ||||||
Product Information [Line Items] | ||||||
Revenue | 1,075,919 | 319,349 | 2,202,282 | 1,216,206 | 1,628,179 | 1,427,250 |
Rail [Member] | Data Center Auditing Services [Member] | ||||||
Product Information [Line Items] | ||||||
Revenue | ||||||
Rail [Member] | Software License [Member] | ||||||
Product Information [Line Items] | ||||||
Revenue | ||||||
Rail [Member] | Algorithms [Member] | ||||||
Product Information [Line Items] | ||||||
Revenue | ||||||
Commercial [Member] | ||||||
Product Information [Line Items] | ||||||
Revenue | 32,821 | 45,547 | 76,818 | 158,989 | 213,517 | 298,705 |
Commercial [Member] | Goods Transferred Over Time [Member] | ||||||
Product Information [Line Items] | ||||||
Revenue | (498) | 27,831 | 59,616 | |||
Commercial [Member] | Services Transferred Over Time [Member] | ||||||
Product Information [Line Items] | ||||||
Revenue | 32,821 | 45,547 | 77,316 | 158,989 | 185,686 | 239,089 |
Commercial [Member] | Turnkey Projects [Member] | ||||||
Product Information [Line Items] | ||||||
Revenue | (498) | 27,831 | 59,616 | |||
Commercial [Member] | Maintenance And Support [Member] | ||||||
Product Information [Line Items] | ||||||
Revenue | 32,821 | 45,547 | 77,316 | 158,989 | 185,686 | 239,089 |
Commercial [Member] | Data Center Auditing Services [Member] | ||||||
Product Information [Line Items] | ||||||
Revenue | ||||||
Commercial [Member] | Software License [Member] | ||||||
Product Information [Line Items] | ||||||
Revenue | ||||||
Commercial [Member] | Algorithms [Member] | ||||||
Product Information [Line Items] | ||||||
Revenue | ||||||
Petrochemical [Member] | ||||||
Product Information [Line Items] | ||||||
Revenue | (867) | 23,951 | ||||
Petrochemical [Member] | Goods Transferred Over Time [Member] | ||||||
Product Information [Line Items] | ||||||
Revenue | 33,363 | |||||
Petrochemical [Member] | Services Transferred Over Time [Member] | ||||||
Product Information [Line Items] | ||||||
Revenue | (867) | (9,412) | ||||
Petrochemical [Member] | Turnkey Projects [Member] | ||||||
Product Information [Line Items] | ||||||
Revenue | 33,363 | |||||
Petrochemical [Member] | Maintenance And Support [Member] | ||||||
Product Information [Line Items] | ||||||
Revenue | (867) | (9,412) | ||||
Petrochemical [Member] | Data Center Auditing Services [Member] | ||||||
Product Information [Line Items] | ||||||
Revenue | ||||||
Petrochemical [Member] | Software License [Member] | ||||||
Product Information [Line Items] | ||||||
Revenue | ||||||
Petrochemical [Member] | Algorithms [Member] | ||||||
Product Information [Line Items] | ||||||
Revenue | ||||||
Government [Member] | ||||||
Product Information [Line Items] | ||||||
Revenue | 23,245 | 52,866 | 214,124 | 198,153 | 314,030 | 687,293 |
Government [Member] | Goods Transferred Over Time [Member] | ||||||
Product Information [Line Items] | ||||||
Revenue | 3,024 | 32,645 | 153,462 | 137,490 | 233,145 | 599,481 |
Government [Member] | Services Transferred Over Time [Member] | ||||||
Product Information [Line Items] | ||||||
Revenue | 20,221 | 20,221 | 60,662 | 60,663 | 80,885 | 87,812 |
Government [Member] | Turnkey Projects [Member] | ||||||
Product Information [Line Items] | ||||||
Revenue | 3,024 | 32,645 | 153,462 | 137,490 | 233,145 | 599,481 |
Government [Member] | Maintenance And Support [Member] | ||||||
Product Information [Line Items] | ||||||
Revenue | 20,221 | 20,221 | 60,662 | 60,663 | 80,885 | 87,812 |
Government [Member] | Data Center Auditing Services [Member] | ||||||
Product Information [Line Items] | ||||||
Revenue | ||||||
Government [Member] | Software License [Member] | ||||||
Product Information [Line Items] | ||||||
Revenue | ||||||
Government [Member] | Algorithms [Member] | ||||||
Product Information [Line Items] | ||||||
Revenue | ||||||
Banking/Other [Member] | ||||||
Product Information [Line Items] | ||||||
Revenue | 23,340 | 188,819 | ||||
Banking/Other [Member] | Goods Transferred Over Time [Member] | ||||||
Product Information [Line Items] | ||||||
Revenue | 1,537 | 132,515 | ||||
Banking/Other [Member] | Services Transferred Over Time [Member] | ||||||
Product Information [Line Items] | ||||||
Revenue | 21,803 | 56,304 | ||||
Banking/Other [Member] | Turnkey Projects [Member] | ||||||
Product Information [Line Items] | ||||||
Revenue | 1,537 | 132,515 | ||||
Banking/Other [Member] | Maintenance And Support [Member] | ||||||
Product Information [Line Items] | ||||||
Revenue | 21,803 | 56,304 | ||||
Banking/Other [Member] | Data Center Auditing Services [Member] | ||||||
Product Information [Line Items] | ||||||
Revenue | ||||||
Banking/Other [Member] | Software License [Member] | ||||||
Product Information [Line Items] | ||||||
Revenue | ||||||
Banking/Other [Member] | Algorithms [Member] | ||||||
Product Information [Line Items] | ||||||
Revenue | ||||||
It Suppliers [Member] | ||||||
Product Information [Line Items] | ||||||
Revenue | 945 | 134,717 | 134,717 | 273,604 | ||
It Suppliers [Member] | Goods Transferred Over Time [Member] | ||||||
Product Information [Line Items] | ||||||
Revenue | 131,537 | 131,537 | 273,604 | |||
It Suppliers [Member] | Services Transferred Over Time [Member] | ||||||
Product Information [Line Items] | ||||||
Revenue | 945 | 3,180 | 3,180 | |||
It Suppliers [Member] | Turnkey Projects [Member] | ||||||
Product Information [Line Items] | ||||||
Revenue | ||||||
It Suppliers [Member] | Maintenance And Support [Member] | ||||||
Product Information [Line Items] | ||||||
Revenue | 945 | |||||
It Suppliers [Member] | Data Center Auditing Services [Member] | ||||||
Product Information [Line Items] | ||||||
Revenue | 131,537 | 131,537 | 266,449 | |||
It Suppliers [Member] | Software License [Member] | ||||||
Product Information [Line Items] | ||||||
Revenue | 3,180 | 3,180 | 7,155 | |||
It Suppliers [Member] | Algorithms [Member] | ||||||
Product Information [Line Items] | ||||||
Revenue | ||||||
Artificial Intelligence [Member] | ||||||
Product Information [Line Items] | ||||||
Revenue | 691,510 | 1,008,671 | ||||
Artificial Intelligence [Member] | Goods Transferred Over Time [Member] | ||||||
Product Information [Line Items] | ||||||
Revenue | 349,595 | 1,008,671 | ||||
Artificial Intelligence [Member] | Services Transferred Over Time [Member] | ||||||
Product Information [Line Items] | ||||||
Revenue | 341,915 | |||||
Artificial Intelligence [Member] | Turnkey Projects [Member] | ||||||
Product Information [Line Items] | ||||||
Revenue | ||||||
Artificial Intelligence [Member] | Maintenance And Support [Member] | ||||||
Product Information [Line Items] | ||||||
Revenue | 341,915 | |||||
Artificial Intelligence [Member] | Data Center Auditing Services [Member] | ||||||
Product Information [Line Items] | ||||||
Revenue | ||||||
Artificial Intelligence [Member] | Software License [Member] | ||||||
Product Information [Line Items] | ||||||
Revenue | ||||||
Artificial Intelligence [Member] | Algorithms [Member] | ||||||
Product Information [Line Items] | ||||||
Revenue | 349,595 | 1,008,671 | ||||
North America [Member] | ||||||
Product Information [Line Items] | ||||||
Revenue | 4,022,238 | 1,740,457 | 9,078,696 | 4,543,879 | 8,259,917 | 8,039,448 |
North America [Member] | Rail [Member] | ||||||
Product Information [Line Items] | ||||||
Revenue | 3,765,312 | 1,303,662 | 8,087,759 | 3,527,736 | 6,883,670 | 5,558,405 |
North America [Member] | Commercial [Member] | ||||||
Product Information [Line Items] | ||||||
Revenue | 32,821 | 45,547 | 76,818 | 158,989 | 213,517 | 298,705 |
North America [Member] | Petrochemical [Member] | ||||||
Product Information [Line Items] | ||||||
Revenue | (867) | 23,951 | ||||
North America [Member] | Government [Member] | ||||||
Product Information [Line Items] | ||||||
Revenue | $ 23,245 | 52,866 | $ 214,124 | 198,153 | 314,030 | 687,293 |
North America [Member] | Banking/Other [Member] | ||||||
Product Information [Line Items] | ||||||
Revenue | 23,340 | 188,819 | ||||
North America [Member] | It Suppliers [Member] | ||||||
Product Information [Line Items] | ||||||
Revenue | $ 945 | $ 134,717 | 134,717 | 273,604 | ||
North America [Member] | Artificial Intelligence [Member] | ||||||
Product Information [Line Items] | ||||||
Revenue | $ 691,510 | $ 1,008,671 |
NATURE OF OPERATIONS AND SUMM_6
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 1 Months Ended | 9 Months Ended | 12 Months Ended | |||
Jan. 31, 2020 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Product Information [Line Items] | ||||||
Reverse split | 1-for-14 | |||||
Cash, Uninsured Amount | $ 4,507,000 | $ 656,000 | ||||
Concentration of Credit Risk | 21% | |||||
Product warranty Period | 90 days | |||||
Deferred Revenue | $ 596,673 | $ 315,370 | ||||
Advertising cost | $ 0 | $ 0 | ||||
Number of Warrants Outstanding | 1,376,466 | 1,376,466 | 1,376,466 | |||
Series B Convertible Preferred Stock [Member] | ||||||
Product Information [Line Items] | ||||||
Number of Shares upon Conversion | 243,571 | 121,571 | ||||
Series C Convertible Preferred Stock [Member] | ||||||
Product Information [Line Items] | ||||||
Number of Shares upon Conversion | 818,182 | 454,546 | ||||
Share-Based Payment Arrangement, Option [Member] | ||||||
Product Information [Line Items] | ||||||
Number of incentive stock options | 926,266 | 431,266 | 431,266 | 451,898 | 163,010 | |
Patents And Trademarks [Member] | ||||||
Product Information [Line Items] | ||||||
Estimated economic life of the property and equipment | 17 years | |||||
Minimum [Member] | ||||||
Product Information [Line Items] | ||||||
Estimated economic life of the property and equipment | 3 years | |||||
Product warranty Period | 12 months | |||||
Maximum [Member] | ||||||
Product Information [Line Items] | ||||||
Estimated economic life of the property and equipment | 5 years | |||||
Product warranty Period | 36 months | |||||
UNITED STATES | ||||||
Product Information [Line Items] | ||||||
Concentration of Credit Risk | 86% | 51% | ||||
Accounts Payable [Member] | ||||||
Product Information [Line Items] | ||||||
Concentration of Credit Risk | 10% | |||||
Customer 1 [Member] | Revenue Benchmark [Member] | ||||||
Product Information [Line Items] | ||||||
Concentration of Credit Risk | 19% | 83% | 45% | |||
Customer 1 [Member] | Accounts Receivable [Member] | ||||||
Product Information [Line Items] | ||||||
Concentration of Credit Risk | 42% | 81% | 56% | |||
Customer 2 [Member] | Revenue Benchmark [Member] | ||||||
Product Information [Line Items] | ||||||
Concentration of Credit Risk | 19% | 79% | 23% | |||
Customer 2 [Member] | Accounts Receivable [Member] | ||||||
Product Information [Line Items] | ||||||
Concentration of Credit Risk | 36% | 10% | 30% | |||
Vendor One [Member] | Accounts Payable [Member] | ||||||
Product Information [Line Items] | ||||||
Concentration of Credit Risk | 18% | 14% | 36% | |||
Supplier Concentration Risk One [Member] | ||||||
Product Information [Line Items] | ||||||
Concentration of Credit Risk | 11% |
LIQUIDITY (Details Narrative)
LIQUIDITY (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
Net income | $ 1,925,068 | $ 2,450,437 | $ 5,912,356 | $ 5,809,340 | $ 6,008,901 | $ 6,747,435 |
Net cash used in operations | 3,850,455 | $ 5,522,668 | 6,579,378 | 4,231,439 | ||
Working capital deficit | (2,723,497) | (2,723,497) | 651,381 | |||
Accumulated deficit | 51,409,407 | 51,409,407 | 45,497,051 | $ 39,488,150 | ||
Secured loan | 1,410,270 | 1,410,270 | 1,410,270 | |||
Net proceeds debt | 5,500,000 | 5,500,000 | ||||
Working capital deficit | $ 2,723,497 | 2,723,497 | $ (651,381) | |||
Series D Convertible Preferred Stock [Member] | ||||||
Net proceeds debt | $ 3,200,000 |
ACCOUNTS RECEIVABLE (Details- S
ACCOUNTS RECEIVABLE (Details- Schedule of Accounts Receivable) - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Receivables [Abstract] | ||
Accounts receivable | $ 1,738,543 | $ 1,244,876 |
Allowance for doubtful accounts | ||
Accounts Receivable, Net | $ 1,738,543 | $ 1,244,876 |
ACCOUNTS RECEIVABLE (Details Na
ACCOUNTS RECEIVABLE (Details Narrative) - USD ($) | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
Receivables [Abstract] | ||||
Recovery of bad debt expense | $ 76,046 | |||
Bad debt expense | $ (76,046) | $ (76,046) | $ 3,217 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details-Schedule of major classes of property and equipment) Details - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Property, Plant and Equipment [Abstract] | |||
Furniture, fixtures and equipment | $ 1,264,001 | $ 1,569,328 | |
Less: Accumulated depreciation | (660,748) | (1,227,148) | |
Furniture, fixtures and equipment, Net | $ 695,800 | $ 603,253 | $ 342,180 |
PROPERTY AND EQUIPMENT (Detai_2
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation | $ 269,978 | $ 197,146 |
PATENTS AND TRADEMARKS (Details
PATENTS AND TRADEMARKS (Details - Schedule of patents and trademarks) (Details - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Patents and trademarks | $ 309,205 | $ 301,770 | |
Less: Accumulated amortization | (242,723) | (237,355) | |
Patents and trademarks, Net | $ 78,872 | $ 66,482 | $ 64,415 |
PATENTS AND TRADEMARKS (Detai_2
PATENTS AND TRADEMARKS (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization of patents | $ 5,368 | $ 5,368 |
SOFTWARE DEVELOPMENT COSTS (Det
SOFTWARE DEVELOPMENT COSTS (Details - Schedule of Software Development Costs) - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Research and Development [Abstract] | ||
Software development costs | $ 60,000 | $ 60,000 |
Less: Accumulated amortization | (60,000) | (60,000) |
Software Development Costs, net |
SOFTWARE DEVELOPMENT COSTS (D_2
SOFTWARE DEVELOPMENT COSTS (Details Narrative) - USD ($) | 12 Months Ended | |||
Dec. 31, 2021 | Dec. 31, 2020 | Sep. 30, 2022 | Dec. 31, 2018 | |
Research and Development [Abstract] | ||||
Capitalized development of new software products | $ 85,756 | $ 60,000 | ||
Amortization expense of software development costs | $ 20,000 | $ 20,000 |
DEBT (Details - Schedule of Not
DEBT (Details - Schedule of Notes Payable - Financing Agreements) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Short-Term Debt [Line Items] | |||
Notes Payable, Principal | $ 102,256 | $ 52,503 | $ 42,942 |
Third Party Insurance Note One [Member] | |||
Short-Term Debt [Line Items] | |||
Notes Payable, Principal | $ 4,167 | $ 22,266 | $ 23,327 |
Notes Payable, Interest | 7.75% | 7.75% | 7.75% |
Third Party Insurance Note Two [Member] | |||
Short-Term Debt [Line Items] | |||
Notes Payable, Principal | $ 35,232 | $ 12,667 | $ 10,457 |
Notes Payable, Interest | 6.24% | 6.24% | 5.26% |
Third Party Insurance Note Three [Member] | |||
Short-Term Debt [Line Items] | |||
Notes Payable, Principal | $ 22,128 | $ 17,570 | $ 9,158 |
Third Party Insurance Note Four [Member] | |||
Short-Term Debt [Line Items] | |||
Notes Payable, Principal | $ 40,729 | $ 0 | $ 0 |
DEBT (Details - Schedule of N_2
DEBT (Details - Schedule of Notes Payable - Related Parties) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Debt Disclosure [Abstract] | |||
2022 | $ 11,757 | $ 86,735 | |
2023 | 23,515 | 23,515 | |
Total minimum equipment financing payments | 35,272 | 110,250 | |
Less: interest | (1,412) | (7,064) | |
Total equipment financing at September 30, 2022 | 33,860 | 103,186 | |
Less: current portion of equipment financing | (33,860) | (80,335) | $ (89,620) |
Long term portion of equipment financing | $ 22,851 | $ 103,184 |
DEBT (Details - Schedule of N_3
DEBT (Details - Schedule of Notes Payable - PPP Loan) - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Short-Term Debt [Line Items] | ||
Total | $ 1,410,270 | |
Less current portion | (627,465) | |
Long term portion | 782,805 | |
P P P Loan [Member] | Related Party One [Member] | ||
Short-Term Debt [Line Items] | ||
Total | $ 1,410,270 | |
Interest Rate | 1% |
DEBT (Details Narrative)
DEBT (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended | |||||||||||||||||
Apr. 15, 2022 | Apr. 15, 2021 | Apr. 06, 2021 | Apr. 15, 2020 | Feb. 03, 2020 | Sep. 23, 2022 | Dec. 23, 2021 | Sep. 15, 2021 | Dec. 23, 2020 | May 22, 2020 | Apr. 23, 2020 | Aug. 26, 2019 | Dec. 31, 2021 | Sep. 30, 2022 | Feb. 03, 2022 | Nov. 15, 2021 | Feb. 03, 2021 | Dec. 31, 2020 | Sep. 15, 2020 | |
Short-Term Debt [Line Items] | |||||||||||||||||||
Notes payable outstanding balance | $ 242,591 | $ 215,654 | |||||||||||||||||
Monthly installments of principal and interest | $ 20,074 | ||||||||||||||||||
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 outstanding balance | $ 62,041 | $ 22,266 | $ 23,327 | $ 22,266 | $ 4,167 | $ 23,327 | |||||||||||||
Interest rate | 7.75% | 7.75% | |||||||||||||||||
Monthly installments of principal and interest | $ 2,104 | $ 2,416 | |||||||||||||||||
Third Party Insurance Note Two [Member] | |||||||||||||||||||
Short-Term Debt [Line Items] | |||||||||||||||||||
Notes payable outstanding balance | $ 63,766 | $ 62,041 | $ 51,379 | 22,266 | 12,667 | 35,232 | 10,457 | ||||||||||||
Interest rate | 6.24% | 6.24% | 5.26% | 6.24% | |||||||||||||||
Monthly installments of principal and interest | $ 5,979 | $ 6,383 | $ 5,263 | $ 2,104 | |||||||||||||||
Third Party Insurance Note Three [Member] | |||||||||||||||||||
Short-Term Debt [Line Items] | |||||||||||||||||||
Notes payable outstanding balance | $ 24,140 | $ 19,965 | 17,570 | 22,128 | 9,158 | $ 13,796 | |||||||||||||
Monthly installments of principal and interest | $ 2,012 | 1,997 | |||||||||||||||||
Third Party Insurance Note Four [Member] | |||||||||||||||||||
Short-Term Debt [Line Items] | |||||||||||||||||||
Notes payable outstanding balance | 165,375 | 0 | 40,729 | $ 215,654 | 0 | ||||||||||||||
Monthly installments of principal and interest | $ 17,899 | $ 13,726 | $ 1,997 | 17,899 | |||||||||||||||
Equipment Financing [Member] | |||||||||||||||||||
Short-Term Debt [Line Items] | |||||||||||||||||||
Notes payable outstanding balance | $ 121,637 | $ 147,810 | 103,186 | $ 33,860 | 192,804 | ||||||||||||||
Interest rate | 9.90% | 12.72% | |||||||||||||||||
Monthly installments of principal and interest | $ 3,919 | $ 4,963 | |||||||||||||||||
Notes Payable [Member] | |||||||||||||||||||
Short-Term Debt [Line Items] | |||||||||||||||||||
Notes payable outstanding balance | $ 0 | $ 1,410,270 |
LINE OF CREDIT (Details Narrati
LINE OF CREDIT (Details Narrative) - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 | Apr. 02, 2015 |
Line Of Credit Wells Fargo Bank [Member] | |||
Short-Term Debt [Line Items] | |||
Line of credit | $ 0 | $ 0 | $ 40,000 |
CONTRACT ACCOUNTING (Details -
CONTRACT ACCOUNTING (Details - Schedule of costs and estimated earnings) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Contractors [Abstract] | |||
Costs and estimated earnings recognized | $ 4,054,703 | $ 5,266,930 | $ 4,152,850 |
Less: Billings or cash received | 3,230,316 | (5,263,481) | (4,050,392) |
Contract Assets | 824,387 | 3,449 | 102,458 |
Billings and/or cash receipts on uncompleted contracts | $ 5,653,169 | 4,473,726 | 2,978,007 |
Less: Costs and estimated earnings recognized | (3,041,088) | (2,268,454) | |
Contract Liabilities | $ 1,232,638 | $ 709,553 |
DEFERRED COMPENSATION (Details
DEFERRED COMPENSATION (Details Narrative) - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Compensation Related Costs [Abstract] | ||
Accrued deferred compensation | $ 505,896 | $ 797,042 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES (Details - Schedule of Supplemental Information Related Leases) - USD ($) | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | ||||
Operating lease cost | $ 582,989 | $ 214,470 | $ 414,085 | $ 279,975 |
Short term lease Cost | 26,127 | 15,933 | 21,628 | 21,341 |
Operating cash outflow used for operating leases | $ 323,750 | $ 220,721 | $ 285,959 | $ 344,307 |
Weighted average discount rate | 9% | 12% | 9% | 12% |
Weighted average remaining lease term | 9 years 7 months 6 days | 1 month 6 days | 10 years 4 months 24 days | 9 months 18 days |
COMMITMENTS AND CONTINGENCIES_3
COMMITMENTS AND CONTINGENCIES (Details - Schedule of Future Minimum Lease Payments) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 | Nov. 24, 2021 |
Commitments and Contingencies Disclosure [Abstract] | |||
2022 | $ 7,970 | $ 315,302 | |
2023 | 696,869 | 696,869 | |
2024 | 779,087 | 779,087 | |
2025 | 798,556 | 798,556 | |
2026 | 818,518 | 818,518 | |
Thereafter | 4,882,411 | 4,803,472 | |
Total undiscounted future minimum lease payments | 7,967,471 | 8,211,804 | |
Less: Impact of discounting | (2,851,719) | (3,156,719) | |
Total present value of operating lease obligations | 5,115,752 | 5,055,085 | $ 4,980,104 |
Current portion | (497,694) | (315,302) | |
Operating lease obligations, less current portion | 4,618,058 | 4,739,783 | |
2022 | $ (7,970) | $ (315,302) |
COMMITMENTS AND CONTINGENCIES_4
COMMITMENTS AND CONTINGENCIES (Details Narrative) | 1 Months Ended | 12 Months Ended | ||||||||
Jul. 10, 2020 USD ($) shares | Apr. 03, 2019 ft² | Jun. 01, 2018 ft² | Jul. 26, 2021 USD ($) ft² | Apr. 30, 2018 USD ($) | Dec. 31, 2021 USD ($) ft² | Dec. 31, 2020 USD ($) ft² | Sep. 30, 2022 USD ($) | Nov. 24, 2021 USD ($) | Mar. 02, 2021 USD ($) | |
Loss Contingencies [Line Items] | ||||||||||
Payroll taxes payable | $ 0 | $ 3,146 | $ 78,726 | |||||||
Area of Lease | ft² | 40,000 | 40,000 | 14,603 | |||||||
Operating lease liability | $ 5,055,085 | 5,115,752 | $ 4,980,104 | |||||||
Rentable Space | ft² | 30,000 | |||||||||
Security Deposit payment | $ 600,000 | |||||||||
Remaining lease term | 10 years 4 months 24 days | |||||||||
Accrued Liabilities, Current | $ 618,093 | $ 1,038,092 | 481,913 | |||||||
Operating lease right of use asset | 4,925,765 | $ 196,144 | 4,726,975 | $ 4,980,104 | ||||||
Chief Executive Officer [Member] | ||||||||||
Loss Contingencies [Line Items] | ||||||||||
Annual salary | $ 249,260 | |||||||||
Annual Car allowance | $ 18,000 | |||||||||
Percentage of gross revenue | 1% | |||||||||
Compensation to be paid in addition to base salary in separation payments | $ 75,000 | |||||||||
One-time charge which will be amortized in equal amounts over the 36-month term of the separation agreement | 747,788 | |||||||||
Lump sum payment owed under separation agreement | $ 124,631 | |||||||||
Accrued Liabilities, Current | $ 479,000 | $ 291,730 | ||||||||
Current life insurance | $ 1,200 | |||||||||
Unvested options amount | shares | 50,358 | |||||||||
Value of unvested options exercisable | $ 95,127 | |||||||||
Legal Fees | $ 17,000 | |||||||||
Minimum [Member] | ||||||||||
Loss Contingencies [Line Items] | ||||||||||
Area of Lease | ft² | 8,308 | |||||||||
Minimum [Member] | FLORIDA | ||||||||||
Loss Contingencies [Line Items] | ||||||||||
Area of Lease | ft² | 4,400 | |||||||||
Maximum [Member] | ||||||||||
Loss Contingencies [Line Items] | ||||||||||
Area of Lease | ft² | 10,203 |
INCOME TAXES (Details - Schedul
INCOME TAXES (Details - Schedule of provision for income taxes) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | ||
Income tax benefit at U.S. statutory rate of 21% | $ (1,261,869) | $ (1,416,961) |
State income taxes | (216,321) | (242,908) |
Non-deductible expenses | 64,553 | 135,152 |
Change in valuation allowance | 1,413,637 | 1,524,717 |
Total provision for income tax | $ 0 | $ 0 |
INCOME TAXES (Details - Sched_2
INCOME TAXES (Details - Schedule of deferred tax assets) - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Income Tax Disclosure [Abstract] | ||
Net operating loss carryforward | $ 8,247,427 | $ 6,807,482 |
Intangible assets | 5,553 | 31,841 |
Allowance for bad debt | ||
Gross deferred tax assets | 8,252,960 | 6,839,323 |
Valuation allowance | (8,252,960) | (6,839,323) |
Net deferred tax assets |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | ||
Gross operating loss carry forward | $ 33,522,769 | $ 27,672,692 |
Increase in tax asset valuation allowance | 1,413,637 | |
Potential tax benefit arising from net operating loss carryforward | 4,357,876 | |
Potential tax benefit arising from net operating loss carryforward within annual usage limitations | $ 3,848,467 |
STOCKHOLDERS_ EQUITY (Details N
STOCKHOLDERS’ EQUITY (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||||||||||||||||||||
Feb. 03, 2022 | Jan. 11, 2022 | Nov. 05, 2021 | Aug. 05, 2021 | May 12, 2021 | Nov. 24, 2017 | Sep. 30, 2022 | Aug. 25, 2022 | Feb. 21, 2022 | Jan. 31, 2022 | Feb. 26, 2021 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2021 | Mar. 31, 2021 | Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2017 | |
Class of Stock [Line Items] | |||||||||||||||||||||||||||
Shares available for grant | 1,563,708 | 1,563,708 | 1,563,708 | 1,000,000 | |||||||||||||||||||||||
Preferred stock authorized | 10,000,000 | 10,000,000 | 10,000,000 | 10,000,000 | 10,000,000 | 10,000,000 | |||||||||||||||||||||
Strike price | $ 6.41 | $ 6.41 | $ 6.41 | ||||||||||||||||||||||||
Stock issued for services | $ 40,000 | $ 40,000 | $ 40,000 | $ 144,166 | $ 52,500 | ||||||||||||||||||||||
Total compensation cost for stock options | $ 95,166 | ||||||||||||||||||||||||||
Vesting term | 1 year 6 months | ||||||||||||||||||||||||||
Treasury stock shares | 1,324 | 1,324 | 1,324 | 1,324 | 1,324 | 1,324 | 235 | ||||||||||||||||||||
Treasury stock | $ 157,452 | $ 157,452 | $ 157,452 | $ 157,452 | $ 157,452 | $ 157,452 | $ 148,000 | ||||||||||||||||||||
Conversion shares | 710 | ||||||||||||||||||||||||||
Conversion price | $ 5.50 | ||||||||||||||||||||||||||
Number of shares issued at shares | 1,325,000 | 818,335 | 198,750 | ||||||||||||||||||||||||
Common stock issued for services, value | $ 5,300,000 | $ 2,455,003 | $ 795,000 | $ 9,253,128 | |||||||||||||||||||||||
Share price | $ 4 | $ 3 | $ 4 | $ 3 | $ 3 | ||||||||||||||||||||||
Proceeds from offering cost | $ 4,779,000 | $ 2,194,187 | $ 739,350 | ||||||||||||||||||||||||
Aggregate common stock | $ 50,000,000 | ||||||||||||||||||||||||||
Converted to common stock shares | 121,572 | ||||||||||||||||||||||||||
Preferred stock, par value | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 | |||||||||||||||||||||
Total compensation cost | $ 653,018 | $ 653,018 | $ 653,018 | ||||||||||||||||||||||||
Options to purchase shares of common stock | 665,000 | ||||||||||||||||||||||||||
Expected term | 3 years 6 months | ||||||||||||||||||||||||||
Expected volatility | 72% | ||||||||||||||||||||||||||
Discount rate | 0.97% | ||||||||||||||||||||||||||
Payroll taxes payable | $ 78,726 | $ 78,726 | $ 3,146 | $ 78,726 | $ 0 | $ 3,146 | |||||||||||||||||||||
Options awarded employee | $ 20,000 | ||||||||||||||||||||||||||
Warrants outstanding | 1,376,466 | 1,376,466 | 1,376,466 | 1,376,466 | 1,376,466 | 1,376,466 | |||||||||||||||||||||
Common Stock [Member] | |||||||||||||||||||||||||||
Class of Stock [Line Items] | |||||||||||||||||||||||||||
Converted to common stock shares | 851 | ||||||||||||||||||||||||||
Converted to common stock shares | 121,572 | ||||||||||||||||||||||||||
Share-Based Payment Arrangement, Option [Member] | |||||||||||||||||||||||||||
Class of Stock [Line Items] | |||||||||||||||||||||||||||
Number of options issued | 20,000 | 450,290 | |||||||||||||||||||||||||
Number of forfeited options | 161,402 | ||||||||||||||||||||||||||
Expected term | 3 years 6 months | ||||||||||||||||||||||||||
Expected volatility | 91.60% | ||||||||||||||||||||||||||
Number of incentive stock options | 926,266 | 926,266 | 431,266 | 451,898 | 926,266 | 431,266 | 431,266 | 451,898 | 163,010 | ||||||||||||||||||
Employee Stock Option 1 [Member] | |||||||||||||||||||||||||||
Class of Stock [Line Items] | |||||||||||||||||||||||||||
Number of incentive stock options | 80,000 | 80,000 | 80,000 | ||||||||||||||||||||||||
Warrant [Member] | |||||||||||||||||||||||||||
Class of Stock [Line Items] | |||||||||||||||||||||||||||
Strike price | $ 9 | ||||||||||||||||||||||||||
Number of options expired | 12,469 | 1,197 | |||||||||||||||||||||||||
Warrants outstanding | 1,376,466 | 1,376,466 | 1,376,466 | 1,376,466 | |||||||||||||||||||||||
Shareholders One [Member] | |||||||||||||||||||||||||||
Class of Stock [Line Items] | |||||||||||||||||||||||||||
Repurchase of common stock | $ 115 | $ 84 | |||||||||||||||||||||||||
Market value of stock repurchased | $ 10.08 | $ 7 | |||||||||||||||||||||||||
Shareholders Two [Member] | |||||||||||||||||||||||||||
Class of Stock [Line Items] | |||||||||||||||||||||||||||
Repurchase of common stock | $ 753 | $ 140 | |||||||||||||||||||||||||
Market value of stock repurchased | $ 9.09 | $ 6.30 | |||||||||||||||||||||||||
Series B Convertible Preferred Stock [Member] | |||||||||||||||||||||||||||
Class of Stock [Line Items] | |||||||||||||||||||||||||||
Conversion of preferred stock | $ 854,000 | ||||||||||||||||||||||||||
Converted to common stock shares | 122,000 | ||||||||||||||||||||||||||
Common Stock [Member] | |||||||||||||||||||||||||||
Class of Stock [Line Items] | |||||||||||||||||||||||||||
Conversion of preferred stock | $ 1,500,000 | ||||||||||||||||||||||||||
Stock issued for services , shares | 9,758 | 10,668 | 7,198 | 11,112 | |||||||||||||||||||||||
Stock issued for services | $ 10 | $ 10 | $ 7 | $ 25 | $ 12 | ||||||||||||||||||||||
Converted to common stock shares | 272,727 | ||||||||||||||||||||||||||
Number of shares issued at shares | 24,541 | 1,542,188 | |||||||||||||||||||||||||
Common stock issued for services, value | $ 1,542 | ||||||||||||||||||||||||||
Series C Convertible Preferred Stock [Member] | |||||||||||||||||||||||||||
Class of Stock [Line Items] | |||||||||||||||||||||||||||
Conversion of preferred stock | $ 500,000 | ||||||||||||||||||||||||||
Converted to common stock shares | 90,909 | ||||||||||||||||||||||||||
Board of Directors Chairman [Member] | |||||||||||||||||||||||||||
Class of Stock [Line Items] | |||||||||||||||||||||||||||
Strike price | $ 4.32 | ||||||||||||||||||||||||||
Number of options issued | 20,000 | ||||||||||||||||||||||||||
Stock issued for services , shares | 3,726 | 4,032 | 7,223 | 7,869 | 1,632 | 1,611 | 9,560 | ||||||||||||||||||||
Stock issued for services | $ 19,167 | $ 30,000 | $ 45,000 | $ 37,500 | $ 7,500 | $ 7,500 | $ 50,000 | ||||||||||||||||||||
Stock-based compensation expense | $ 7,685 | ||||||||||||||||||||||||||
Employees And Directors [Member] | |||||||||||||||||||||||||||
Class of Stock [Line Items] | |||||||||||||||||||||||||||
Stock-based compensation expense | $ 592,177 | $ 215,753 | $ 262,411 | $ 454,770 | |||||||||||||||||||||||
Director [Member] | |||||||||||||||||||||||||||
Class of Stock [Line Items] | |||||||||||||||||||||||||||
Stock issued for services , shares | 10,668 | 7,198 | |||||||||||||||||||||||||
Stock issued for services | $ 40,000 | $ 40,000 | |||||||||||||||||||||||||
Purchase Agreement [Member] | |||||||||||||||||||||||||||
Class of Stock [Line Items] | |||||||||||||||||||||||||||
Proceeds from issuance of preffeed stock | $ 4,500,000 | $ 999,000 | |||||||||||||||||||||||||
Series B Convertible Preferred Stock [Member] | |||||||||||||||||||||||||||
Class of Stock [Line Items] | |||||||||||||||||||||||||||
Preferred stock, shares issued | 15,000 | 15,000 | 15,000 | 15,000 | |||||||||||||||||||||||
Preferred stock authorized | 10,000,000 | ||||||||||||||||||||||||||
Conversion of preferred stock | $ 1,000 | $ 1,000 | |||||||||||||||||||||||||
Conversion price | $ 7 | $ 7 | $ 7 | $ 7 | |||||||||||||||||||||||
Series B Convertible Preferred Stock [Member] | Equity Unit Purchase Agreements [Member] | |||||||||||||||||||||||||||
Class of Stock [Line Items] | |||||||||||||||||||||||||||
Preferred stock, shares issued | 2,830 | ||||||||||||||||||||||||||
Conversion of preferred stock | $ 2,830,000 | ||||||||||||||||||||||||||
Strike price | $ 1,000 | ||||||||||||||||||||||||||
Convertible Series B Preferred Stock [Member] | |||||||||||||||||||||||||||
Class of Stock [Line Items] | |||||||||||||||||||||||||||
Preferred stock, shares issued | 0 | 0 | 1,705 | 0 | 851 | 1,705 | |||||||||||||||||||||
Preferred stock authorized | 15,000 | 15,000 | 15,000 | 15,000 | 15,000 | 15,000 | |||||||||||||||||||||
Preferred stock, shares outstanding | 0 | 0 | 1,705 | 0 | 851 | 1,705 | |||||||||||||||||||||
Preferred stock, par value | $ 0.001 | $ 0.001 | $ 1,000 | $ 0.001 | $ 1,000 | $ 1,000 | |||||||||||||||||||||
Convertible Series B Preferred Stock [Member] | Director [Member] | |||||||||||||||||||||||||||
Class of Stock [Line Items] | |||||||||||||||||||||||||||
Preferred stock, par value | $ 1,000 | $ 1,000 | $ 1,000 | ||||||||||||||||||||||||
Convertible Series C Preferred Stock [Member] | |||||||||||||||||||||||||||
Class of Stock [Line Items] | |||||||||||||||||||||||||||
Preferred stock, shares issued | 0 | 0 | 0 | 0 | 2,500 | 0 | |||||||||||||||||||||
Preferred stock authorized | 5,000 | 5,000 | 5,000 | 5,000 | 5,000 | 5,000 | |||||||||||||||||||||
Preferred stock, shares outstanding | 0 | 0 | 0 | 0 | 2,500 | 0 | |||||||||||||||||||||
Conversion shares | 1,790 | ||||||||||||||||||||||||||
Preferred stock, par value | $ 0.001 | $ 0.001 | $ 1,000 | $ 0.001 | $ 1,000 | $ 1,000 | |||||||||||||||||||||
Series C preferred converted to common stock, shares | 454,546 | ||||||||||||||||||||||||||
Warrant [Member] | |||||||||||||||||||||||||||
Class of Stock [Line Items] | |||||||||||||||||||||||||||
Number of options issued | 67,500 | ||||||||||||||||||||||||||
Number of options expired | 1,197 | ||||||||||||||||||||||||||
Number of forfeited options | 9,450 | ||||||||||||||||||||||||||
Series B Preferred Stock [Member] | |||||||||||||||||||||||||||
Class of Stock [Line Items] | |||||||||||||||||||||||||||
Converted to common stock shares | 854 | ||||||||||||||||||||||||||
Series C Preferred Stock [Member] | |||||||||||||||||||||||||||
Class of Stock [Line Items] | |||||||||||||||||||||||||||
Converted to common stock shares | 1,500 | ||||||||||||||||||||||||||
Series C Convertible Preferred Stock [Member] | |||||||||||||||||||||||||||
Class of Stock [Line Items] | |||||||||||||||||||||||||||
Converted to common stock shares | 500 | ||||||||||||||||||||||||||
Share-Based Payment Arrangement, Option [Member] | |||||||||||||||||||||||||||
Class of Stock [Line Items] | |||||||||||||||||||||||||||
Common stock on the date of grant, term of the stock option | not exceed 10 years | ||||||||||||||||||||||||||
Voting rights | more than 10% of the total combined voting power of all classes of capital stock | ||||||||||||||||||||||||||
Aggregate fair market value of common stock | $ 100,000 | ||||||||||||||||||||||||||
Two Thousands Twenty One Equity Incentive Plan [Member] | |||||||||||||||||||||||||||
Class of Stock [Line Items] | |||||||||||||||||||||||||||
Issuance of Common stock under Awards | 1,000,000 | ||||||||||||||||||||||||||
Plan 2021 [Member] | |||||||||||||||||||||||||||
Class of Stock [Line Items] | |||||||||||||||||||||||||||
Number of shares issued at shares | 1,000,000 | ||||||||||||||||||||||||||
2016 Plan [Member] | |||||||||||||||||||||||||||
Class of Stock [Line Items] | |||||||||||||||||||||||||||
Number of incentive stock options | 271,266 | 271,266 | 271,266 | 271,266 | |||||||||||||||||||||||
Non Plan [Member] | |||||||||||||||||||||||||||
Class of Stock [Line Items] | |||||||||||||||||||||||||||
Number of incentive stock options | 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 ($) | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Outstanding at the beginning of the year | 451,898 | 163,010 | |
Outstanding at the beginning of the year | $ 5.06 | $ 14 | |
Outstanding | 4 years 2 months 12 days | 4 years 4 months 24 days | 3 years 4 months 24 days |
Granted | 20,000 | 450,290 | |
Granted | $ 4.32 | $ 5.06 | |
Granted | 4 years | 4 years 4 months 24 days | |
Forfeited | (161,402) | ||
Forfeited | $ 14 | ||
Outstanding at end of period | 431,266 | 451,898 | 163,010 |
Outstanding at end of period | $ 4.98 | $ 5.06 | $ 14 |
Outstanding | $ 197,506 | $ 7,200 | |
Exercisable at end of period | 312,310 | 212,832 | |
Exercisable at end of period | $ 5.25 | $ 5.76 | |
Exercisable | 3 years 4 months 24 days | 4 years 2 months 12 days | |
Exercisable | |||
Cancelled/Forfeited | (40,632) | ||
Cancelled/Forfeited | $ 14 | ||
Outstanding | 3 years 4 months 24 days |
COMMON STOCK OPTIONS AND WARR_4
COMMON STOCK OPTIONS AND WARRANTS (Details - Schedule of Fair Value Assumptions) | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Expected term in years | 3 years 6 months | ||
Volatility of common stock | 72% | ||
Share-Based Payment Arrangement, Option [Member] | |||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Risk free interest rate | 0.18% | ||
Expected term in years | 3 years 6 months | ||
Dividend yield | |||
Volatility of common stock | 91.60% | ||
Estimated annual forfeitures | |||
Share-Based Payment Arrangement, Option [Member] | Minimum [Member] | |||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Risk free interest rate | 0.18% | ||
Expected term in years | 2 years 6 months | ||
Volatility of common stock | 68% | ||
Share-Based Payment Arrangement, Option [Member] | Maximum [Member] | |||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Risk free interest rate | 0.26% | ||
Expected term in years | 3 years 6 months | ||
Volatility of common stock | 86.24% |
COMMON STOCK OPTIONS AND WARR_5
COMMON STOCK OPTIONS AND WARRANTS (Details - Schedule of activity of warrants) - USD ($) | 12 Months Ended | |||
Jan. 11, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Warrants issued | 710 | |||
Warrant [Member] | ||||
Outstanding at the beginning of the year | 1,587,553 | 1,521,250 | ||
Outstanding at the beginning of the year | $ 8.62 | $ 8.78 | ||
Outstanding at end of period | 1 year 10 months 24 days | 2 years | 3 years 10 months 24 days | |
Outstanding | ||||
Warrants expired, forfeited, cancelled or exercised | (232,517) | (23,116) | ||
Warrants issued | 21,430 | 89,419 | ||
Warrants issued | $ 7.70 | $ 9.02 | ||
Warrant issued | 1 year 10 months 24 days | 2 years 2 months 12 days | ||
Outstanding at end of period | 1,376,466 | 1,587,553 | 1,521,250 | |
Outstanding at end of period | $ 8.18 | $ 8.62 | $ 8.78 | |
Exercisable at end of period | 1,376,466 | 1,587,553 | ||
Exercisable at end of period | $ 8.18 | $ 8.69 | ||
Exercisable at end of period | 1 year 10 months 24 days | 2 years | ||
Exercisable | ||||
Outstanding at the beginning of the year | 2 years |
COMMON STOCK OPTIONS AND WARR_6
COMMON STOCK OPTIONS AND WARRANTS (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||||||
Jun. 30, 2021 | Mar. 31, 2021 | Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Feb. 21, 2022 | Feb. 03, 2022 | Mar. 31, 2020 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||||||||
Strike price | $ 6.41 | |||||||||||
Proceeds from Issuance or Sale of Equity | $ 999,000 | $ 4,500,000 | $ 4,500,000 | |||||||||
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 | 8,922 | |||||||||||
Proceeds from Issuance or Sale of Equity | $ 63,860 | |||||||||||
Share-Based Payment Arrangement, Option [Member] | ||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||||||||
Options granted | 20,000 | 450,290 | ||||||||||
Options forfeited | 161,402 | |||||||||||
Warrant [Member] | ||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||||||||
Strike price | $ 9 | |||||||||||
Warrant issued | 67,500 | 9,450 | 67,500 | |||||||||
Warrants expired | 12,469 | 1,197 | ||||||||||
Warrant [Member] | Seven Holder [Member] | ||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||||||||
Warrant exercised | 205,574 | |||||||||||
Warrant exercise price | $ 7.70 | |||||||||||
Total common stock | 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 | |||||||||||
Board of Directors Chairman [Member] | ||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||||||||
Options granted | 20,000 | |||||||||||
Strike price | $ 4.32 | |||||||||||
Stock option plan expense | $ 52,758 | |||||||||||
Stock-based compensation expense | 7,685 | |||||||||||
Unamortized expense | $ 45,073 | |||||||||||
Total compensation cost for stock options not yet recognized, period | 2 years 9 months | |||||||||||
Key Staff Members Officers And Directors [Member] | Share-Based Payment Arrangement, Option [Member] | ||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||||||||
Options forfeited | 160,866 | |||||||||||
Options granted, value | $ 102,800 | |||||||||||
Key Staff Members Officers And Directors [Member] | Share-Based Payment Arrangement, Option [Member] | Transaction One [Member] | ||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||||||||
Options granted | 149,424 | |||||||||||
Options granted, value | $ 370,312 | |||||||||||
Key Staff Members Officers And Directors [Member] | Share-Based Payment Arrangement, Option [Member] | Share-Based Payment Arrangement, Tranche One [Member] | ||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||||||||
Vesting percentage | 100% | |||||||||||
Key Staff Members Officers And Directors [Member] | Share-Based Payment Arrangement, Option [Member] | Vested On 1 January 2021 [Member] | Transaction One [Member] | ||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||||||||
Vesting percentage | 50% | |||||||||||
Key Staff Members Officers And Directors [Member] | Share-Based Payment Arrangement, Option [Member] | Vested On 1 January 2022 [Member] | Transaction One [Member] | ||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||||||||
Vesting percentage | 50% | |||||||||||
Chief Executive Officer [Member] | Share-Based Payment Arrangement, Option [Member] | ||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||||||||
Options granted | 100,000 | |||||||||||
Options granted, value | $ 193,388 | |||||||||||
Chief Executive Officer [Member] | Share-Based Payment Arrangement, Option [Member] | Vest On 1 September 2021 [Member] | ||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||||||||
Vesting percentage | 50% | |||||||||||
Chief Executive Officer [Member] | Share-Based Payment Arrangement, Option [Member] | Vest On 1 September 2022 [Member] | ||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||||||||
Vesting percentage | 50% | |||||||||||
Former Chief Executive Officer [Member] | Share-Based Payment Arrangement, Option [Member] | ||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||||||||
Options vested | 50,358 | |||||||||||
Unamortized portion of option charged in amount | $ 95,127 | |||||||||||
Two New Key Employees [Member] | Share-Based Payment Arrangement, Option [Member] | ||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||||||||
Options granted | 40,000 | |||||||||||
Options granted, value | $ 91,574 | |||||||||||
Vesting description | For 20,000 of those options, 50% of the options will vest on October 12, 2021 and the other 50% will vest on October 12, 2022. For the other 20,000 options, one-third will vest on November 23, 2021, the next third will vest on November 23, 2022 and the final third will vest on November 23, 2023. |
DEFINED CONTRIBUTION PLAN (Deta
DEFINED CONTRIBUTION PLAN (Details Narrative) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Retirement Benefits [Abstract] | ||
Cash contributions | $ 119,322 | $ 111,759 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | 1 Months Ended | 9 Months Ended | 12 Months Ended | ||||||
Sep. 30, 2019 | Jun. 30, 2019 | Feb. 28, 2019 | Jan. 31, 2019 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Jan. 02, 2021 | |
Related party cost | $ 8,231 | $ 25,583 | $ 16,250 | $ 0 | $ 93,422 | $ 93,422 | $ 335,334 | ||
Accounts payable | $ 20,986 | ||||||||
Contractors [Member] | |||||||||
Related party cost | $ 7,480 | $ 7,480 |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - USD ($) | 1 Months Ended | 2 Months Ended | 12 Months Ended | ||||||||
Feb. 03, 2022 | Feb. 03, 2022 | Jan. 11, 2022 | Jan. 03, 2022 | Oct. 29, 2022 | Oct. 29, 2022 | Sep. 30, 2022 | Feb. 21, 2022 | Feb. 21, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Subsequent Event [Line Items] | |||||||||||
Option vesting term | 1 year 6 months | ||||||||||
Issuance of shares | 1,325,000 | 818,335 | 198,750 | ||||||||
Issuance of stock value | $ 5,300,000 | $ 2,455,003 | $ 795,000 | $ 9,253,128 | |||||||
Share price | $ 4 | $ 4 | $ 3 | $ 4 | $ 4 | ||||||
Series C Convertible Preferred Stock [Member] | |||||||||||
Subsequent Event [Line Items] | |||||||||||
Conversion of converted shares | 500 | ||||||||||
Subsequent Event [Member] | |||||||||||
Subsequent Event [Line Items] | |||||||||||
Conversion of converted shares | 710 | ||||||||||
Number of shares issued | 129,091 | ||||||||||
Issuance of shares | 1,325,000 | ||||||||||
Issuance of stock value | $ 5,300,000 | ||||||||||
Net proceeds | $ 4,779,000 | ||||||||||
Subsequent event, description | Company closed a “over-allotment” offering of 198,750 shares of common stock in the amount of $795,000 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 S3 “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. | ||||||||||
Subsequent Event [Member] | Private Placement [Member] | |||||||||||
Subsequent Event [Line Items] | |||||||||||
Private placement sold | 83,667 | ||||||||||
Share price | $ 3 | $ 3 | |||||||||
Subsequent Event [Member] | Series C Convertible Preferred Stock [Member] | |||||||||||
Subsequent Event [Line Items] | |||||||||||
Conversion of converted shares | 1,790 | ||||||||||
Conversion of stock, amount converted | $ 2,500,000 | ||||||||||
Conversion price | $ 5.50 | ||||||||||
Subsequent Event [Member] | Common Stock [Member] | |||||||||||
Subsequent Event [Line Items] | |||||||||||
Number of shares issued | 325,455 | ||||||||||
Subsequent Event [Member] | Series D Preferred Stock [Member] | |||||||||||
Subsequent Event [Line Items] | |||||||||||
Number of shares issued | 300 | ||||||||||
Share price | $ 1,000 | $ 1,000 | |||||||||
Gross proceeds private placement | $ 551,001 | ||||||||||
Non Qualified Stock Options [Member] | Subsequent Event [Member] | |||||||||||
Subsequent Event [Line Items] | |||||||||||
Options granted | 665,000 | ||||||||||
Strike Price | $ 6.41 | ||||||||||
Options term | 5 years | ||||||||||
Option vesting term | 3 years |
NATURE OF OPERATIONS, BASIS O_4
NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Product Information [Line Items] | ||||||
Convertible Stock | ||||||
Cash, Uninsured Amount | $ 4,507,000 | $ 4,507,000 | $ 656,000 | |||
Concentration of Credit Risk | 21% | |||||
Number of Warrants Outstanding | 1,376,466 | 1,376,466 | 1,376,466 | 1,376,466 | ||
Share-Based Payment Arrangement, Option [Member] | ||||||
Product Information [Line Items] | ||||||
Number of incentive stock options | 926,266 | 926,266 | 431,266 | 431,266 | 451,898 | 163,010 |
UNITED STATES | ||||||
Product Information [Line Items] | ||||||
Concentration of Credit Risk | 86% | 51% | ||||
Accounts Payable [Member] | ||||||
Product Information [Line Items] | ||||||
Concentration of Credit Risk | 10% | |||||
Customer 3 [Member] | UNITED STATES | ||||||
Product Information [Line Items] | ||||||
Concentration of Credit Risk | 84% | |||||
Customer 3 [Member] | Revenue Benchmark [Member] | ||||||
Product Information [Line Items] | ||||||
Concentration of Credit Risk | 25% | |||||
Customer 4 [Member] | UNITED STATES | ||||||
Product Information [Line Items] | ||||||
Concentration of Credit Risk | 54% | |||||
Customer 4 [Member] | Revenue Benchmark [Member] | ||||||
Product Information [Line Items] | ||||||
Concentration of Credit Risk | 21% | |||||
Customer 1 [Member] | Revenue Benchmark [Member] | ||||||
Product Information [Line Items] | ||||||
Concentration of Credit Risk | 19% | 83% | 45% | |||
Customer 1 [Member] | Accounts Receivable [Member] | ||||||
Product Information [Line Items] | ||||||
Concentration of Credit Risk | 42% | 81% | 56% | |||
Customer 2 [Member] | Revenue Benchmark [Member] | ||||||
Product Information [Line Items] | ||||||
Concentration of Credit Risk | 19% | 79% | 23% | |||
Customer 2 [Member] | Accounts Receivable [Member] | ||||||
Product Information [Line Items] | ||||||
Concentration of Credit Risk | 36% | 10% | 30% | |||
Vendor One [Member] | Accounts Payable [Member] | ||||||
Product Information [Line Items] | ||||||
Concentration of Credit Risk | 18% | 14% | 36% | |||
Vendor Two [Member] | Accounts Payable [Member] | ||||||
Product Information [Line Items] | ||||||
Concentration of Credit Risk | 14% | |||||
Suppliers One [Member] | Accounts Payable [Member] | ||||||
Product Information [Line Items] | ||||||
Concentration of Credit Risk | 12% | |||||
Series B Preferred Convertible Stock [Member] | ||||||
Product Information [Line Items] | ||||||
Convertible Stock | $ 850,999 | |||||
Series C Preferred Convertible Stock [Member] | ||||||
Product Information [Line Items] | ||||||
Convertible Stock | $ 2,499,998 | |||||
Series D Convertible Preferred Stock [Member] | ||||||
Product Information [Line Items] | ||||||
Convertible common shares issued upon conversion | 333,000 | 333,000 | ||||
Series B Convertible Preferred Stock [Member] | ||||||
Product Information [Line Items] | ||||||
Convertible common shares issued upon conversion | 243,571 | 121,571 | ||||
Series C Convertible Preferred Stock [Member] | ||||||
Product Information [Line Items] | ||||||
Convertible common shares issued upon conversion | 818,182 | 454,546 |
REVENUE (Details - Contract Ass
REVENUE (Details - Contract Assets) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Revenue from Contract with Customer [Abstract] | |||
Cumulative revenues recognized | $ 4,054,703 | $ 5,266,930 | $ 4,152,850 |
Less: Billings or cash received | 3,230,316 | (5,263,481) | (4,050,392) |
Contract assets | $ 824,387 | $ 3,449 | $ 102,458 |
REVENUE (Details - Contract Lia
REVENUE (Details - Contract Liabilities) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Revenue from Contract with Customer [Abstract] | |||
Billings and/or cash receipts on uncompleted contracts | $ 5,653,169 | $ 4,473,726 | $ 2,978,007 |
Less: Cumulative revenues recognized | (2,451,836) | (3,041,088) | |
Contract liabilities, technology systems | 3,201,333 | 1,232,638 | |
Contract liabilities, services and consulting | 679,089 | 596,673 | |
Total contract liabilities | $ 3,880,422 | $ 1,829,311 |
REVENUE (Details -Disaggregated
REVENUE (Details -Disaggregated Revenue) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
Disaggregation of Revenue [Line Items] | ||||||
Revenue | $ 4,022,238 | $ 1,740,457 | $ 9,078,696 | $ 4,543,879 | $ 8,259,917 | $ 8,039,448 |
Goods Transferred Over Time [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 2,692,417 | 1,153,150 | 6,038,441 | 2,790,613 | 5,999,136 | 6,238,405 |
Goods Delivered At Point In Time [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 17,482 | 234,772 | ||||
Services Transferred Over Time [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 768,670 | 587,307 | 2,148,779 | 1,753,266 | 2,260,781 | 1,801,043 |
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 | 2,692,417 | 1,153,150 | 6,038,441 | 2,450,557 | 5,518,004 | 4,956,130 |
Maintenance And Support [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 1,312,339 | 587,307 | 2,805,483 | 1,665,313 | 2,257,601 | 1,801,043 |
Algorithms [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 17,482 | 234,772 | 293,292 | 349,595 | 1,008,671 | |
Data Center Auditing Services [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 131,537 | 131,537 | 266,449 | |||
Software License [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 3,180 | 7,155 | ||||
Rail [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 3,765,312 | 1,303,662 | 8,087,759 | 3,527,736 | 6,883,670 | 5,558,405 |
Rail [Member] | Goods Transferred Over Time [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 2,689,393 | 984,313 | 5,885,477 | 2,311,530 | 5,255,491 | 4,131,155 |
Rail [Member] | Goods Delivered At Point In Time [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | ||||||
Rail [Member] | Services Transferred Over Time [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 532,250 | 319,349 | 1,545,578 | 1,216,206 | 1,628,179 | 1,427,250 |
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 | 2,689,393 | 984,313 | 5,885,477 | 2,311,530 | 5,255,491 | 4,131,155 |
Rail [Member] | Maintenance And Support [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 1,075,919 | 319,349 | 2,202,282 | 1,216,206 | 1,628,179 | 1,427,250 |
Rail [Member] | Algorithms [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | ||||||
Rail [Member] | Data Center Auditing Services [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | ||||||
Rail [Member] | Software License [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | ||||||
Commercial [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 32,821 | 45,547 | 76,818 | 158,989 | 213,517 | 298,705 |
Commercial [Member] | Goods Transferred Over Time [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | (498) | 27,831 | 59,616 | |||
Commercial [Member] | Goods Delivered At Point In Time [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | ||||||
Commercial [Member] | Services Transferred Over Time [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 32,821 | 45,547 | 77,316 | 158,989 | 185,686 | 239,089 |
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 | (498) | 27,831 | 59,616 | |||
Commercial [Member] | Maintenance And Support [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 32,821 | 45,547 | 77,316 | 158,989 | 185,686 | 239,089 |
Commercial [Member] | Algorithms [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | ||||||
Commercial [Member] | Data Center Auditing Services [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | ||||||
Commercial [Member] | Software License [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | ||||||
Government [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 23,245 | 52,866 | 214,124 | 198,153 | 314,030 | 687,293 |
Government [Member] | Goods Transferred Over Time [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 3,024 | 32,645 | 153,462 | 137,490 | 233,145 | 599,481 |
Government [Member] | Goods Delivered At Point In Time [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | ||||||
Government [Member] | Services Transferred Over Time [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 20,221 | 20,221 | 60,662 | 60,663 | 80,885 | 87,812 |
Government [Member] | Services Delivered At Point In Time [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | ||||||
Government [Member] | Turnkey Projects [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 3,024 | 32,645 | 153,462 | 137,490 | 233,145 | 599,481 |
Government [Member] | Maintenance And Support [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 20,221 | 20,221 | 60,662 | 60,663 | 80,885 | 87,812 |
Government [Member] | Algorithms [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | ||||||
Government [Member] | Data Center Auditing Services [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | ||||||
Government [Member] | Software License [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | ||||||
A I [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 200,860 | 340,725 | 699,995 | 501,811 | ||
A I [Member] | Goods Transferred Over Time [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 136,192 | 208,519 | ||||
A I [Member] | Goods Delivered At Point In Time [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 17,482 | 234,772 | ||||
A I [Member] | Services Transferred Over Time [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 183,378 | 204,533 | 465,223 | 293,292 | ||
A I [Member] | Services Delivered At Point In Time [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | ||||||
A I [Member] | Software License [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | ||||||
A I [Member] | Turnkey Projects [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 136,192 | |||||
A I [Member] | Maintenance And Support [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 183,378 | 204,533 | 465,223 | 208,519 | ||
A I [Member] | Algorithms [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 17,482 | 234,772 | 293,292 | |||
A I [Member] | Data Center Auditing Services [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | ||||||
Bankings [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | (3,288) | 22,473 | ||||
Bankings [Member] | Goods Transferred Over Time [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 1,537 | |||||
Bankings [Member] | Services Transferred Over Time [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | (3,288) | 20,936 | ||||
Bankings [Member] | Software License [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | ||||||
Bankings [Member] | Turnkey Projects [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 1,537 | |||||
Bankings [Member] | Maintenance And Support [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | (3,288) | 20,936 | ||||
Bankings [Member] | Algorithms [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | ||||||
Bankings [Member] | Data Center Auditing Services [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | ||||||
It Suppliers [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 945 | 134,717 | 134,717 | 273,604 | ||
It Suppliers [Member] | Goods Transferred Over Time [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 131,537 | 131,537 | 273,604 | |||
It Suppliers [Member] | Services Transferred Over Time [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 945 | 3,180 | 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 | 945 | |||||
It Suppliers [Member] | Algorithms [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | ||||||
It Suppliers [Member] | Data Center Auditing Services [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 131,537 | 131,537 | 266,449 | |||
It Suppliers [Member] | Software License [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 3,180 | 3,180 | 7,155 | |||
Software License [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 3,180 | |||||
North America [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 4,022,238 | 1,740,457 | 9,078,696 | 4,543,879 | 8,259,917 | 8,039,448 |
North America [Member] | Rail [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 3,765,312 | 1,303,662 | 8,087,759 | 3,527,736 | 6,883,670 | 5,558,405 |
North America [Member] | Commercial [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 32,821 | 45,547 | 76,818 | 158,989 | 213,517 | 298,705 |
North America [Member] | Government [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 23,245 | 52,866 | 214,124 | 198,153 | 314,030 | 687,293 |
North America [Member] | A I [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | $ 200,860 | 340,725 | $ 699,995 | 501,811 | ||
North America [Member] | Bankings [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | (3,288) | 22,473 | ||||
North America [Member] | It Suppliers [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | $ 945 | $ 134,717 | $ 134,717 | $ 273,604 |
REVENUE (Details Narrative)
REVENUE (Details Narrative) | 9 Months Ended |
Sep. 30, 2022 USD ($) | |
Revenue from Contract with Customer [Abstract] | |
Contract Liabilities | $ 1,232,639 |