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 September 30, 2014, $57.6 million, or 70.0%, is with three customers. The significant projects for these three customers consist of a large deepwater hull and topside 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 September 30, 2014, the Company’s contracts receivable balance included an allowance for bad debt in the amount of $0.2 million. The Company collected $0.6 million during the fourth quarter 2014 related to a previously reserved contract receivable for a vessel upgrade and outfitting project.