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REVENUE RECOGNITION
6 Months Ended
Nov. 30, 2024
REVENUE RECOGNITION  
REVENUE RECOGNITION

NOTE 2 - REVENUE RECOGNITION

 

The Company recognizes revenue in accordance with Accounting Standards Codification (ASC) 606, "Revenue from Contracts with Customers." Under ASC 606, revenue is recognized when control of the promised goods or services is transferred to customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. The Company follows a five-step process to recognize revenue:

 

 

1. 

Identify the contract with a customer: A contract is defined as an agreement between two or more parties that creates enforceable rights and obligations.

 

 

 

 

2. 

Identify the performance obligations in the contract: Performance obligations are promises in a contract to transfer distinct goods or services to the customer.

 

 

 

 

3. 

Determine the transaction price: The transaction price is the amount of consideration the Company expects to receive in exchange for transferring goods or services to the customer.

 

 

 

 

4. 

Allocate the transaction price to the performance obligations in the contract: The transaction price is allocated to each performance obligation based on the relative standalone selling prices of the goods or services being provided.

 

 

 

 

5. 

Recognize revenue when (or as) the Company satisfies a performance obligation: Revenue is recognized when control of the goods or services is transferred to the customer, which can occur over time or at a point in time.

 

Revenue Streams

 

The Company generates revenue from the following sources:

 

 

1.

Carbon Credit Sales: Revenue from the sale of carbon credits is recognized at a point in time when control of the carbon credits transfers to the customer, which typically occurs upon delivery.

 

 

 

 

2.

Subscription Services: Revenue from subscription services, which provide customers access to the Company's platform and related services, is recognized over time on a straight-line basis over the subscription period.

 

 

 

 

3.

Consulting Services: Revenue from consulting services is recognized over time as the services are performed. The Company measures progress toward completion using an input method based on hours incurred.

 

 

 

 

4.

NFT Sales: Revenue from the sale of NFTs (non-fungible tokens) representing tokenized carbon credits is recognized at a point in time when control of the NFTs transfers to the customer, which typically occurs upon delivery.

 

Accounts Receivable and Deferred Revenue

 

 

·

Accounts Receivable: Accounts receivable represent amounts due from customers for goods or services provided by the Company. Accounts receivable are recorded at the invoiced amount. As of November 30, 2024, accounts receivable were $0.

 

 

 

 

·

Deferred Revenue: Deferred revenue consists of advance payments received from customers for services to be provided in future periods. As of November 30, 2024, deferred revenue was $2,882,096. The deferred revenue related to the delivery of carbon credits is expected to be recognized in revenue over the contract period as the credits are delivered according to the schedule. Specifically, recognition will occur quarterly from Q2 2025 through Q1 2029, based on the quantities delivered in each period at the rate of $120 per credit.