NOTE

REVENUE FROM CONTRACTS WITH CUSTOMERS

The following table represents a disaggregation of revenue from contracts with customers for the

three

months ended

March 31, 2019

and

March 31, 2018:

	Three Months Ended
Category	March 31, 2019		March 31, 2018
Aerospace	$	212,728	$	3,873,833
Industrial		1,568,453		3,246,082
Research		834,933		861,200
Point in time		852,561		1,172,718
Net Revenue	$	3,468,675	$	9,153,833

Judgment is required to evaluate assumptions including the amount of net contract revenues and the total estimated costs to determine our progress towards contract completion and to calculate the corresponding amount of revenue to recognize.

Changes in estimates for sales of systems occur for a variety of reasons, including but

not

limited to (i) build accelerations or delays, (ii) product cost forecast changes, (iii) cost related change orders or add-ons, or (iv) changes in other information used to estimate costs. Changes in estimates

may

have a material effect on the Company’s consolidated statements of operations. The table below outlines the impact on revenue of net changes in estimated transaction prices and input costs for systems related sales contracts (both increases and decreases) for the

three

months ended

March 31, 2019

and

2018,

as well as the number of projects that comprise such changes. Also included in the table is the net change in estimate as a percentage of the aggregate revenue for such projects.

	Three Months Ended		Three Months Ended
(In thousands)	March 31, 2019		March 31, 2018
Increase in revenue from net changes in transaction prices	$	9	$	15
(Decrease) increase in revenue from net changes in input cost estimates	$	(181)	$	894
Net (decrease) increase in revenue from net Changes in estimates	$	(172)	$	909

Number of projects		21		10

Net change in estimate as a percentage of aggregate revenue for associated projects		(.2%)		2.1%

For the

three

months ended

March 31, 2019

and

March 31, 2018,

revenue (decreased) increased by (

$172,000

) and

$909,000,

respectively, from net changes in transaction prices, input cost estimates, product cost overruns and product cost forecast changes related to redesign of certain systems.

Contract Assets and Liabilities

Contract assets consist of (i) retainage which represent the earned, but unbilled, portion for which payment is deferred by the customer until certain contractual milestones are met; and (ii) unbilled receivables which represent revenue that has been recognized in advance of billing the customer, which is common for long-term contracts. Contract liabilities consist of customer advances and billings in excess of revenue recognized.

During the

three

months ended

March 31, 2019

and

2018,

the decrease in contract assets of approximately

$.3

million and

$4.7

million, respectively, was primarily driven by additional billed receivables during the period, for those projects that certain milestones had been reached.