Coral Inc. ("Coral") is a wholly owned subsidiary of an SEC registrant. Coral has a contract (the "Contract") with the Weinberg Institute ("Institute"), which is a privately funded research institute with the stated mission of using genomics to treat and cure diseases.

Under the Contract (which has a term of ten years), Coral serves as the administrator of the "Lab," which is a multiple-unit campus consisting of buildings that Institute uses to conduct research. As administrator of the Lab, Coral provides Institute a single, distinct combined bundle of services (the "Lab Administration") that comprises all the activities necessary to administer the Lab and conduct research therein. To provide the Lab Administration, Coral employs approximately 15,000 personnel (including administrators, scientists, researchers, technicians, etc.) that administer and maintain the Lab infrastructure and conduct the research performed therein. Research is conducted via multiple individual "Research Programs."

Coral is compensated by Institute under the Contract on a cost-plus-fixed-fee basis. In accordance with this payment structure, Institute reimburses Coral (via a prefunded bank account, meaning cash is paid by the Institute before costs are incurred by Coral) for all expenses incurred by Coral in its provision of the Lab Administration (including all labor-related costs associated with Coral's employees, such as salaries, benefits, and severance, etc.), and Institute additionally pays Coral a predetermined annual fixed fee (as established within the Contract terms). The annual fixed fee does not fluctuate with changes in the costs incurred by Coral. In other words, regardless of the costs incurred by Coral in its provision of the Lab Administration (all of which are reimbursed by Institute), the fixed annual fee that Coral receives does not change.

Additional information related to Coral's operations and the Contract is as follows:

Coral is the legal employer of all the personnel that it employs. In its role as employer, Coral is responsible for all activities normally associated with a legal employer, including (but not limited to) the following:

• Coral is responsible for hiring all employees, and it is the legal counterparty to the employee in each individual's employment contract.
• Coral is responsible for evaluating employee performance, and it has the discretion to terminate employees who are not performing well.
• Coral is responsible for handling and resolving employee complaints, including any potential lawsuits that may arise during the course of employment.
• Coral is legally obligated to pay its employees, even if it does not receive reimbursement from Institute. (However, Coral has never failed to receive adequate prefunded reimbursement from Institute for all of its allowable expenses.)

Coral also manages employee compensation, including decisions regarding salary, benefits, and merit/equity adjustments. However, because the Contract involves the use of personnel for the benefit of a private entity, the Contract sets certain restrictions and minimum requirements regarding the manner in which Coral must manage its employee workforce, including the following relevant terms:

• Institute determines a maximum employee salary, which is commensurate with certain established rates Institute offers its employees. Although Coral has the ability to pay its employees more than this established rate, any salary in excess of this established rate is not reimbursable by Institute. In practice, Coral does not employ any personnel to which it pays more than the maximum rate established by Institute.
• Institute determines the minimum level of annual paid vacation days and annual paid holidays that must be provided to Coral's employees.
• Institute must approve all changes in the fringe benefits offered to Coral's employees, such as new types of insurance coverage, changes in premium levels and eligibility for coverage, revisions to retirement plans, and bonus programs.

Coral cannot use its employees for any tasks other than the Lab Administration and cannot transfer its employees to its corporate parent's other subsidiaries. In addition, Coral does not employ any personnel other than those who perform the Lab Administration under the Contract.

The Contract specifies the overall number of employees that Coral must employ each year during the Contract's term. Coral must employ between 85 percent and 115 percent of this number to be contractually compliant.

Institute establishes specific job skill requirements that it requires Coral's employees to have, but Institute does not review and approve the individual employees hired by Coral.

In the event that the Contract is terminated and Institute appoints a new vendor to administer the Lab, the employees of Coral must be transferred to employment with the new vendor. The validity of this transfer provision is demonstrated by the fact that Coral inherited its employees from Institute's previous vendor when Coral initially secured the Contract to be the administrator for the Lab.

The Contract contains a detailed statement of work (SOW) that lists and describes all the activities that are required to be performed by Coral's employees. Institute must approve all changes, additions, or deletions to the SOW.

• The SOW includes detailed descriptions of each of the specific Research Programs that are to be undertaken at the Lab by Coral's employees. The Research Programs have been developed, planned, and approved by Institute.
• The SOW also describes the administrative tasks (e.g., janitorial, maintenance) to be performed by Coral's employees to maintain the Lab infrastructure.

All costs incurred by Coral must be in accordance with an established "Budget." The Budget contains detailed funding information for all of the individual Research Programs and administrative tasks at the Lab.

The Budget is formally updated and approved by Institute annually, but it is a fluid document that is continuously reviewed and updated by Institute throughout the year to respond to its shifting priorities. For example, if Institute believes that "Research Program X" has a need for a specific employee skill set that is currently working on "Research Program Y," Institute can adjust the Budget to move that employee skill set and the related labor costs from "Research Program Y" to "Research Program X."

Institute has the sole and unilateral ability to adjust the Budget as it deems necessary.

The work of Coral's employees is overseen by Institute Representatives (IRs). The IRs are Institute employees that work at the Lab, and they are responsible for ensuring that the work of Coral's employees (including the Research Programs) is in accordance with the SOW and the Budget.

Institute holds title to all resources, systems, furniture, etc. used by Coral to deliver the Lab Administration.

Your team has been appointed as Coral's advisor. Analyze the information provided above and use the guidance in ASC 606, Revenue from Contracts with Customers, to determine whether Coral is a principal or an agent in the Contract to provide Lab Administration to Institute; and therefore, whether Coral should recognize revenue on a gross or net basis.