Note 3. Accounts Receivable – Project Revenue and Reimbursable Project Costs

ENEC and FANR Projects

The total accounts receivable from the ENEC and FANR contracts was approximately $0.6 million and $0.3 million at December 31, 2012 and 2011, respectively. These amounts represent approximately 97 percent and 100 percent of the total accounts receivable reported at December 31, 2012 and 2011, respectively. Approximately 98 percent and 78 percent of the total revenues reported for the years ended December 31, 2012 and 2011 were from the ENEC and FANR contracts.

Total unbilled accounts receivable included in the accompanying consolidated balance sheets and reported in accounts receivable of approximately $0.2 million at December 31, 2012 and 2011, respectively, is for work that was billed to our clients in January 2013 and January 2012, respectively. Foreign currency transaction exchange losses and translation gains and losses for the years ended December 31, 2012 and 2011, were not significant.

Travel costs and other reimbursable costs under these contracts are reported in the accompanying statement of operations as both revenue and cost of consulting services provided, and totaled approximately $0.5 million for the years ended December 31, 2012 and 2011, respectively. The total travel and other reimbursable expenses that have not been reimbursed to us and are included in total accounts receivable reported above from our consulting contracts were approximately $0.1 million at December 31, 2012 and 2011.

Under these agreements, revenue will be recognized on a time and expense basis. We periodically discuss our consulting work with ENEC and FANR, who will review the work we perform, and our reimbursable travel expenses, and accept our monthly invoicing for services and reimbursable expenses. We expect the variation of revenue we earn from these contracts to continue. The termination date of our agreement with ENEC was extended to December 31, 2013, and for FANR was extended to December 31, 2014. These termination dates can be extended upon agreement by both parties.

The provisions in the GCC and Kuwait contracts in 2011 obligated them to pay the Company milestone payments contingent on the achievement of certain substantive deliverables under the contract. The final work product we delivered under the contract with the GCC was to issue a feasibility report on regional cooperation in the development of civilian nuclear power for electricity and water desalination. These milestone events included completion of meetings with all GCC members; delivery of assumptions and methodology; submittal of a discussion paper; delivery of a preliminary report and delivery of a final feasibility report to the GCC members. The Company recognized milestone payments from the GCC as revenue when the Company achieved the underlying contractual milestones. Milestone payments were not dependent on any other future activities or achievement of any other future milestones. The achievement of each of the contractual milestones was substantively at risk and contingent at the effective date of the contract. Substantial effort was involved in achieving each of the milestones. These milestones represent the culmination of discrete earnings processes, and the amount of each milestone payment was reasonable in relation with the level of effort associated with the achievement of the milestone. Each milestone payment was nonrefundable and non-creditable when made. Furthermore, these milestones were considered substantive because the consideration earned from the achievement of each milestone (a) was commensurate with the Company’s performance to achieve the milestone, (b) relates solely to past performance, and (c) was reasonable relative to all of the deliverables and payment terms (including other potential milestone consideration) within the arrangement. Total revenue recognized from the GCC contract for the year ended December 31, 2011 was approximately $1.4 million. For our consulting work with Kuwait, total revenue recognized for the year ended December 31, 2011, was approximately $0.3 million. The GCC and Kuwait contracts were both completed in 2011.