Note 3. Accounts Receivable – Project Revenue and Project Costs

The total accounts receivable from the ENEC and FANR contracts was approximately $0.8 million at September 30, 2011 and December 31, 2010. These amounts represent approximately 99 percent and 83 percent of the total accounts receivable reported of approximately $0.8 million and $1.0 million at September 30, 2011 and December 31, 2010, respectively.

Total unbilled accounts receivable included in the accompanying consolidated balance sheets and reported in accounts receivable of approximately $0.5 million at September 30, 2011 and December 31, 2010 is for work that was billed to our clients in October 2011 and January 2011, respectively. Foreign currency transaction exchange losses were approximately $17,000 and $3,000 for the three months ended September 30, 2011 and 2010, respectively, which is reported in the caption other income and expense on the accompanying consolidated statement of operations. Foreign currency transaction exchange losses were approximately $18,000 and $6,000 for the nine months ended September 30, 2011 and 2010, which is reported in the caption other income and expenses on the accompanying consolidated statement of operations. Translation gains and losses for the nine months ended September 30, 2011 and December 31, 2010 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 $116,000 and $26,000 for the three months ended September 30, 2011 and 2010, respectively and approximately $454,000 and $695,000 for the nine months ended September 30, 2011 and 2010, 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 $91,000 and $80,000 at September 30, 2011 and December 31, 2010, respectively.

We expect to continue to provide strategic advisory services to Abu Dhabi during the five-year term of these consulting agreements and also expect the variation of revenue we earn from these contracts to continue. 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.

The provisions in the GCC and Kuwait contracts obligate 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 recognizes milestone payments from the GCC as revenue when the Company achieves the underlying contractual milestone. Milestone payments are 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 is involved in achieving each of the milestones. These milestones represent the culmination of discrete earnings processes, and the amount of each milestone payment is reasonable in relation with the level of effort associated with the achievement of the milestone. Each milestone payment is nonrefundable and non-creditable when made. Furthermore, these milestones are considered substantive because the consideration earned from the achievement of each milestone (a) is commensurate with the Company’s performance to achieve the milestone, (b) relates solely to past performance, and (c) is reasonable relative to all of the deliverables and payment terms (including other potential milestone consideration) within the arrangement. Total revenue recognized from this GCC contract for the three months and nine months ended September 30, 2011 was approximately $0.3 million and $1.4 million, respectively. For our consulting work with Kuwait, total revenue recognized for the three months and nine months ended September 30, 2011 was approximately $0.3 million and $0.7 million for the three months and nine months ended September 30, 2010.