NOTE 2 – CONTRACTS RECEIVABLE AND RETAINAGE

The principal customers of the Company include major and large independent oil and gas companies, marine companies, and their contractors. Of our contracts receivable balance at March 31, 2014, $65.7 million, or 71.0%, is with three customers. Projects for these three customers consist of a deepwater hull and deck for one customer, two separate projects with fabrication and installation of offshore skids for another customer, and jackets, piles, and topsides for a deepwater Gulf of Mexico project for a third customer.

At March 31, 2014, the Company’s contracts receivable balance included a reserve for bad debt in the amount of $0.9 million, recorded in the third quarter 2013 in connection with a vessel upgrade and outfitting project.