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 June 30, 2014, $45.2 million, or 70.1%, is with three customers. The significant projects for these three customers consist of a deepwater hull for one customer, two separate projects with fabrication and installation of offshore skids for a second customer, and jackets, piles, and topsides for a deepwater Gulf of Mexico project for a third customer.

At June 30, 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.