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New words:
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achieved, acquire, acquiring, Aircraft, allocation, auditing, bank, Bayberry, Benchmark, Bulletin, CACI, Certificate, commencement, Covenant, customary, decreased, deductible, depend, Director, division, duration, EF, effected, eligible, executed, exemption, expensed, extinguish, face, failure, favor, forecasted, foreign, forfeited, Glen, governmental, growing, Gunnar, Holdback, Hour, Hutton, imposed, incurrence, Industry, infringing, investment, Jay, Joseph, June, KC, Lakehurst, Laurie, Lease, Lexington, LP, membership, mentioned, mitigation, monitor, Morton, NAVAIR, noncurrent, Order, outbreak, pandemic, Perpsecta, Perspecta, prevent, proprietary, protect, quickly, reach, Realty, recoverable, removed, replaced, representative, respond, restated, Restrictive, retroactively, reverse, SAB, salary, split, spread, stockholder, Subcontract, subsection, superseded, technological, trade, trading, tranche, unadjusted, underwriting, underwritten, unpredictable, unrelated, unvested, uplisting, vest, vested, workforce, Wright
Financial report summary
?Risks
- We lack a long-term operating history on which to evaluate our consolidated business and determine if we will be able to execute our business plan, and we can give no assurance that our operations will result in sustained profitability.
- We have historically suffered net losses, and we may not be able to sustain profitability.
- We rely upon a few, select key employees who are instrumental to our ability to conduct and grow our business. In the event any of those key employees would no longer be affiliated with the Company, and we did not replace them with equally capable replacements, it may have a material detrimental impact on our ability to successfully operate our business.
- Certain key members of our management team lack significant public company experience in their positions and our executive management team has limited time working together.
- We may have difficulty raising additional capital, which could deprive us of necessary resources.
- You may experience dilution, subordination of stockholder rights, preferences, and privileges, and decrease in market price of our common stock as a result of our financing efforts.
- Failure to effectively manage any future any future growth could place strains on our managerial, operational, and financial resources and could adversely affect our business and operating results.
- We generate substantially all of our revenue from contracts with the United States federal, state, and local governments which are subject to a number of challenges and risks that may adversely impact our business, prospects, financial condition, and operating results.
- We operate in an industry that is highly regulated and unexpected changes in laws could have a significant adverse impact on our business.
- USG contracts contain numerous provisions that are unfavorable to us.
- If we are unable to maintain successful relationships with our teaming partners, our ability to market, sell, and distribute our services will be limited, and our business, financial position, and results of operations will be harmed.
- We are exposed to the credit risk of some of our teaming partners, which could result in material losses.
- Our business could be adversely affected by changes in spending levels or budgetary priorities of the federal, state, and local governments or by the imposition by the USG of sequestration in the absence of an approved budget or continuing resolution.
- If we fail to establish and maintain important relationships with government entities and agencies, our ability to successfully bid for new business may be adversely affected.
- We derive significant revenue from contracts and task orders awarded through a competitive bidding process. If we are unable to consistently win new awards over any extended period, our business and prospects will be adversely affected.
- Our business may suffer if we or our employees are unable to obtain the security clearances or other qualifications needed to perform services for our customers.
- If our prime contractors fail to maintain their relationships with the applicable governmental agency and fulfill their contractual obligations, our performance as a subcontractor and our ability to obtain future business could be materially and adversely impacted and our actual results could differ materially and adversely from those anticipated.
- The USG’s appropriation process and other factors may delay the collection of our receivables, and our business may be adversely affected if we cannot collect our receivables in a timely manner.
- The USG may change its procurement or other practices in a manner adverse to us.
- Our contracts and administrative processes and systems are subject to audits and cost adjustments by the USG, which could reduce our revenue, disrupt our business, or otherwise adversely affect our operating results.
- We may not receive the full amounts authorized under the contracts included in our backlog, which could reduce our revenue in future periods below the levels anticipated.
- Without additional Congressional appropriations, some of the contracts included in our backlog will remain unfunded, which could materially and adversely affect our future operating results.
- Employee misconduct, including security breaches, could result in the loss of customers and our suspension or debarment from contracting with the USG.
- We face intense competition and could fail to gain market share from our competitors, which could adversely affect our business, financial condition, and results of operations.
- Systems failures may disrupt our business and have an adverse effect on our operating results.
- Our failure to adequately protect our confidential information and proprietary rights may harm our competitive position.
- Our annual revenue and operating results could be volatile due to the unpredictability of the USG’s budgeting process and policy priorities.
- We may lose money or generate less than anticipated profits if we do not accurately estimate the cost of an engagement which is conducted on a fixed-price basis.
- Our earnings and margins may vary based on the mix of our contracts and programs.
- Inflation may cause the Fed to increase interest rates thereby increasing our interest expense.
- We may have difficulty identifying and executing acquisitions on favorable terms and therefore may grow more slowly than we historically have grown.
- We may have difficulty integrating the operations of any companies we acquire, which could cause actual results to differ materially and adversely from what we anticipated.
- We have substantial investments in recorded goodwill as a result of prior acquisitions and a change in future business conditions could cause these investments to become impaired, requiring substantial write-downs that would reduce our operating income.
- Servicing our debt requires a significant amount of cash, and we may not have sufficient cash flow from our business to pay our substantial debt.
- Future sales or potential sales of our common stock in the public market could cause our share price to decline.
- Because we will not pay dividends on our common stock in the foreseeable future, holders of common stock will only benefit from owning common stock if it appreciates.
- Low Trading Price of Common Stock on the NYSE American
- Our failure to meet the continued listing requirements of the NYSE American could result in a delisting of our common stock and subject us to the penny stock rules.
- We are an “emerging growth company” and will be able to avail ourselves of reduced disclosure requirements applicable to emerging growth companies, which could make our common stock less attractive to investors.
- Unanticipated changes in our tax provisions or exposure to additional income tax liabilities could affect our financial condition and profitability and we may take tax positions that the Internal Revenue Service or other tax authorities may contest.
- Anti-takeover provisions in our charter documents and Nevada law could discourage, delay, or prevent a change in control of our Company and may affect the trading price of our common stock.
- Our Amended and Restated Articles of Incorporation and Amended and Restated Bylaws contain an exclusive forum provision, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees, or agents.
- Our management collectively owns a substantial amount of our common stock.
- If we fail to establish and maintain an effective system of internal control or disclosure controls and procedures are not effective, we may not be able to report our financial results accurately and timely or to prevent fraud. Any inability to report and file our financial results accurately and timely could harm our reputation and adversely impact the trading price of our common stock.
Management Discussion
- conjunction with the unaudited consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q.
- Total revenue was $11,335,053 for the three months ended March 31, 2024 as compared to total revenue of $9,937,013 for the three months ended March 31, 2023. The increase of $1,398,040 or 14%, was driven primarily by contributions from the inorganic revenues derived from the GTMR acquisition that occurred late in Q1 2023, partially offset by negative organic growth.
- Total cost of revenues was $6,819,632 for the three months ended March 31, 2024 as compared to total cost of revenues of $5,899,231 for the three months ended March 31, 2023. The increase of $920,401, or 16%, is in line with the change in revenue noted above due to the GTMR acquisition and higher direct costs on lower margin projects.