COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS

9 Months Ended

Jan. 31, 2013

Costs and Estimated Earnings On Uncompleted Contracts

COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS

NOTE 3 - COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS

The asset, “Costs and estimated earnings in excess of billings on uncompleted contracts”, represents revenue recognized in excess of amounts billed. The liability, “Billings in excess of costs and estimated earnings on uncompleted contracts”, represents billings in excess of revenue recognized. Costs and estimated earnings on uncompleted contracts consist of the following at January 31, 2013 and April 30, 2012:

	January 31, 2013			April 30, 2012
Costs incurred on uncompleted contracts	$	75,637,034		$	76,682,610
Provision for loss on uncompleted contracts		(46,485	)		(1,886,896	)
Estimated contract profit		796,670			2,242,232
		76,387,219			77,037,946
Less:  billings to date		77,055,437			79,291,760
Total	$	(668,218	)	$	(2,253,814	)
Costs and estimated earnings in excess of billings on uncompleted  contracts	$	1,019,220		$	1,340,379
Billings in excess of cost and estimated earnings on uncompleted contracts		1,687,438			3,594,193
Total	$	(668,218	)	$	(2,253,814	)

Revisions in the estimated gross profits on contracts and contract amounts are made in the period in which circumstances requiring the revisions become known. During the three and nine months ended January 31, 2013, the effect of such revisions in estimated contract profits resulted in an increase to gross profits of approximately $349,000 (approximately $0.05 per common share) and $1,679,000 (approximately $0.24 per common share). The increase in gross profit includes approved change orders received on one project in the Trenton Operations of approximately $1,486,000 for the nine months ended January 31, 2013.

During the three and nine months ended January 31, 2012, the effect of such revisions in estimated contract profits on projects currently in progress resulted in a decrease to gross profits of approximately $4,785,000 (approximately $0.69 per common share) and $3,108,000 (approximately $0.45 per common share), respectively, from that which would have been reported had the revised estimates been used as the basis of recognition for contract profits in prior periods. This decrease in gross profit includes a provision of $1,015,465 for the total loss anticipated on certain long term contracts as the revisions to such estimates indicated a loss. The primary reason for the decrease in the gross profit is due to significant adjustments to expected profits on three projects in the Trenton Operations during the three months ended January 31, 2012. The estimates and related costs incurred for these three projects increased significantly this quarter while the Company continues to complete these projects. The cumulative reduction in the Trenton Operations profit on these three projects was approximately $5 million, the impact of which was recorded in the third quarter ended January 31, 2012.

Although management believes it has established adequate procedures for estimating costs to complete open contracts, additional costs could occur on contracts prior to completion.