REVENUE

3 Months Ended

Mar. 31, 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 March 31,
	2024		2023
Government subcontracts	$	15,001,768	$	18,672,893
Prime government contracts		2,781,881		1,408,034
Commercial contracts		1,297,494		1,935,741
	$	19,081,143	$	22,016,668

	Three months ended March 31,
	2024		2023
Revenue recognized using over time revenue recognition model	$	18,870,366	$	20,630,230
Revenue recognized using point in time revenue recognition model		210,777		1,386,438
	$	19,081,143	$	22,016,668

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 three months ended March 31, 2024 and 2023:

	Three months ended
	March 31, 2024			March 31, 2023
Favorable adjustments	$	912,487		$	825,981
Unfavorable adjustments		(2,085,348	)		(1,546,986	)
Net adjustments	$	(1,172,861	)	$	(721,005	)

Transaction Price Allocated to Remaining Performance Obligations

As of March 31, 2024, the aggregate amount of transaction price allocated to the remaining performance obligations was approximately $103.6 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 March 31, 2024.