COSTS INCURRED ON UNCOMPLETED CONTRACTS

9 Months Ended

Dec. 31, 2013

COSTS INCURRED ON UNCOMPLETED CONTRACTS

COSTS INCURRED ON UNCOMPLETED CONTRACTS

NOTE 5 - COSTS INCURRED ON UNCOMPLETED CONTRACTS

	December 31, 2013			March 31, 2013
Cost incurred on uncompleted contracts, beginning balance	$	6,180,839		$	10,879,743
Total cost incurred on contracts during the period	14,198,622			21,215,441
Less cost of sales, during the period	(15,539,675		)	(25,914,345		)
Cost incurred on uncompleted contracts, ending balance	$	4,839,786		$	6,180,839
Billings on uncompleted contracts, beginning balance	$	1,882,546		$	6,969,717
Plus: Total billings incurred on contracts, during the period	17,066,553			27,385,748
Less: Contracts recognized as revenue, during the period	(17,459,861		)	(32,472,919		)
Billings on uncompleted contracts, ending balance	$	1,489,238		$	1,882,546
Cost incurred on uncompleted contracts, ending balance	$	4,839,786		$	6,180,839
Billings on uncompleted contracts, ending balance	1,489,238			1,882,546
Costs incurred on uncompleted contracts, in excess of progress billings	$	3,350,548		$	4,298,293

Contract costs consist primarily of labor and materials and related overhead, to the extent that such costs are recoverable. Revenues associated with these contracts are recorded only when the amount of recovery can be estimated reliably and realization is probable.

As of December 31, 2013 and March 31, 2013, we had deferred revenues totaling $3,392,171 and $253,813, respectively. Deferred revenues represent customer prepayments on their contracts and completed contracts on which all revenue recognition criteria were not met. We record provisions for losses within costs of sales in our condensed consolidated statement of operations and comprehensive loss. We also receive advance billings and deposits representing down payments for acquisition of materials and progress payments on contracts. The agreements with our customers allow us to offset the progress payments against the costs incurred.

We continued to incur losses on a customer projects at December 31, 2013. These losses are included in our statement of operations for the nine months ended December 31, 2013. We have recognized approximately $1.8 million in contract losses in our financial statements for the nine months ended December 31, 2013. We are in dialogue with customers to remedy project design and production activities that have caused these losses. When product design and production require alteration we endeavor to secure change orders from our customers.