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Note 3 - Revenue Recognition
 9 Months Ended
Sep. 27, 2025
Notes to Financial Statements  
Revenue from Contract with Customer [Text Block]

3.

Revenue Recognition

 

The Company records revenue under Financial Accounting Standard Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers. Revenue is recognized when we satisfy a performance obligation by transferring services promised in a contract to a customer, in an amount that reflects the consideration that we expect to receive in exchange for those services. Performance obligations in our contracts represent distinct or separate service streams that we provide to our customers.

 

We evaluate 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 derives its revenue from several sources. The Company’s Engineering Services and Life Sciences, Data and Solutions segments perform consulting and project solution services. The Healthcare segment specializes in long-term and short-term staffing and placement services to hospitals, schools and long-term care facilities amongst others. All of the Company’s segments perform staff augmentation services and derive revenue from permanent placement fees.

 

The following table presents our revenue disaggregated by revenue source for the thirteen and thirty-nine weeks ended September 27, 2025 and September 28, 2024:

 

  

Thirteen Weeks Ended

  

Thirty-Nine Weeks Ended

 
  

September 27,

2025

  

September 28,

2024

  

September 27,

2025

  

September 28,

2024

 

Specialty Health Care:

                

Time and Material

 $29,563  $26,114  $114,957  $100,530 

Permanent Placement Services

  436   440   1,147   1,138 

Total Specialty Health Care

 $29,999  $26,554  $116,104  $101,668 
                 

Engineering:

                

Time and Material

 $14,134  $11,810  $43,648  $34,273 

Fixed Fee

  17,280   12,357   46.430   35,907 

Total Engineering

  31,414  $24,167  $90,078  $70,180 
                 

Life Sciences, Data and Solutions:

                

Time and Material

 $5,977  $7,139  $17,891  $23,962 

Permanent Placement Services

  6   76   192   187 

Fixed Fee

  2,893   2,429   8,663   5,471 

Total Life Sciences, Data and Solutions

 $8,876  $9,644  $26,746  $29,620 
  $70,289  $60,365  $232,928  $201,468 

 

 

Time and Material

 

The Company’s Health Care segment predominantly recognizes revenue through time and material work while its Engineering and Life Sciences, Data and Solutions segments recognize revenue through both time and material and fixed fee work. The Company’s time and material contracts are typically based on the number of hours worked at contractually agreed upon rates, therefore revenue associated with these time and materials contracts are recognized based on hours worked at contracted rates.

 

Fixed Fee

 

From time to time and predominantly in our Engineering segment, the Company enters into contracts requiring the completion of specific deliverables. The Company has master services agreements with many of its customers that broadly define terms and conditions. Actual services performed under fixed fee arrangements are typically delivered under purchase orders that more specifically define terms and conditions related to that fixed fee project. While these master services agreements can often span several years, the Company’s fixed fee purchase orders are typically performed over six to nine month periods. In instances where project services are provided on a fixed-price basis, revenue is recorded in accordance with the terms of each contract. The Company recognizes revenue from performance obligations that are satisfied over time based on the Company’s efforts or inputs toward satisfying a performance obligation, relative to the total expected inputs to the satisfaction of such performance obligation. These inputs include the costs of equipment, installation, and labor, and milestones reached. From time-to-time, amounts paid in excess of revenue earned and recognized are recorded as deferred revenue. Some contracts also limit revenue and billings to specified maximum amounts. Provisions for contract losses, if any, are made in the period such losses are determined. For contracts where there is a specific deliverable and the work is not complete and the revenue is not recognized, the costs incurred are deferred as a prepaid asset. The associated costs are expensed when the related revenue is recognized.

 

Permanent Placement Services

 

The Company earns permanent placement fees from providing permanent placement services. These fees are typically based on a percentage of the compensation paid to the person placed with the Company’s client. The Company guarantees its permanent placements on a prorated basis for 90 days. In the event a candidate is not retained for the 90-day period, the Company will provide a suitable replacement candidate. In the event a replacement candidate cannot be located, the Company will provide a prorated refund to the client. An allowance for refunds, based upon the Company’s historical experience, is recorded in the financial statements.

 

Deferred Revenue

 

There was $6.2 million of deferred revenue as of September 27, 2025. Deferred revenue was $4.2 million as of December 28, 2024. Revenue is recognized when the service has been performed. Deferred revenue may be recognized over a period exceeding one year from the time it was recorded on the balance sheet, although this is an infrequent occurrence. For the thirteen week periods ended September 27, 2025, and September 28, 2024, the Company did not recognize any revenue that was included in deferred revenue at the beginning of the reporting period. For the thirty-nine weeks ended September 27, 2025 and September 28, 2024, the Company recognized revenue of $4.2 million and $1.9 million, respectively, that was included in deferred revenue at the beginning of the fiscal year.

 

 

Concentration

 

During the thirty-nine weeks ended September 27, 2025, the Company had two customers exceed 10% of consolidated revenue, representing 19.6% and 13.2% of consolidated revenue, respectively. During the thirty-nine weeks ended September 28, 2024, the Company had two customers exceed 10% of consolidated revenue, representing 18.7% and 14.1% of consolidated revenue, respectively. In both periods presented, the customers are included in the Company’s Specialty Health Care segment.