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REVENUE
 9 Months Ended
Sep. 30, 2024
Revenue from Contract with Customer [Abstract]  
REVENUE

  2. REVENUE

 

Disaggregation of Revenue

 

The following tables present the Company’s revenue disaggregated by contract type and revenue recognition method:

 

    Three months ended
September 30,		     Nine months ended
September 30,		  
    2024     2023     2024     2023  
Government subcontracts   $ 16,986,106     $ 15,375,337     $ 48,951,748     $ 50,550,256  
                                 
Prime government contracts     1,673,483       3,943,723       7,056,711       8,062,682  
Commercial contracts     760,290       1,080,309       3,302,897       4,350,654  
    $ 19,419,879     $ 20,399,369     $ 59,311,356     $ 62,963,592  

 

    Three months ended
September 30,		     Nine months ended
September 30,		  
    2024     2023     2024     2023  
Revenue recognized using over time revenue recognition model   $ 19,092,000     $ 20,053,771     $ 58,558,552     $ 59,353,845  
                                 
Revenue recognized using point in time revenue recognition model     327,879       345,598       752,804       3,609,747  
    $ 19,419,879     $ 20,399,369     $ 59,311,356     $ 62,963,592  

 

Favorable/(Unfavorable) Adjustments to Gross Profit

 

We review our Estimates at Completion (“EAC”) at least quarterly. Due to the nature of the work required to be performed on many of the Company’s performance obligations, the estimation of total revenue and cost at completion is complex, subject to many inputs, and requires significant judgment by management on a contract-by-contract basis. As part of this process, management reviews information including, but not limited to, any outstanding key contract matters, progress towards completion and the related program schedule, identified risks and opportunities, and the related changes in estimates of revenues and costs. The risks and opportunities relate to management’s judgment about the ability and cost to achieve the schedule, consideration of customer-directed delays or reductions in scheduled deliveries, technical requirements, customer activity levels, and related variable consideration. Management must make assumptions and estimates regarding contract revenue and costs, including estimates of labor productivity and availability, the complexity and scope of the work to be performed, the availability and cost of materials including any impact from changing costs or inflation, the length of time to complete the performance obligation, the availability and timing of funding from our customer, and overhead cost rates, among others.

 

Changes in estimates of net sales, cost of sales, and the related impact to operating profit on contracts recognized over time are recognized on a cumulative catch-up basis, which recognizes the cumulative effect of the profit changes on current and prior periods based on a performance obligation’s percentage-of-completion in the current period. A significant change in one or more of these estimates could affect the profitability of one or more of our performance obligations. Our EAC adjustments also include the establishment of, and changes to, loss provisions for our contracts accounted for on a percentage-of-completion basis.

 

Net EAC adjustments had the following impact on our gross profit during the nine months ended September 30, 2024 and 2023:

 

    Nine months ended  
    September 30,
2024		     September 30,
2023		  
Favorable adjustments   $ 1,835,489     $ 2,383,071  
Unfavorable adjustments     (4,059,160 )     (3,396,171 )
Net adjustments   $ (2,223,671 )   $ (1,013,100 )

 

 

Transaction Price Allocated to Remaining Performance Obligations

 

As of September 30, 2024, the aggregate amount of transaction price allocated to the remaining performance obligations was approximately $91.5 million. This represents the amount of revenue the Company expects to recognize in the future on contracts with unsatisfied or partially satisfied performance obligations as of September 30, 2024.