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CONTRACT ASSETS AND LIABILITIES

9 Months Ended

Jun. 30, 2024

NOTE 17 – CONTRACT ASSETS AND LIABILITIES

Project contracts typically provide for a schedule of billings on percentage of completion of specific tasks inherent in the fulfillment of the Company’s performance obligation(s). The schedules for such billings usually do not precisely match the schedule on which costs are incurred. As a result, contract revenue recognized in the statements of operations can and usually does differ from amounts that can be billed to the customer at any point during the contract. Amounts by which cumulative contract revenue recognized on a contract as of a given date exceeds cumulative billings and unbilled receivables to the customer under the contract are reflected as a current asset in the condensed consolidated balance sheets under the caption “Contract assets.” Amounts by which cumulative billings to the customer under a contract as of a given date exceed cumulative contract revenue recognized are reflected as a current liability in the condensed consolidated balance sheets under the caption “Contract liabilities.” Conditional retainage represents the portion of the contract price withheld until the work is substantially complete for assurance of the Company’s obligations to complete the job.

The following is a summary of the Company’s uncompleted contracts:

	June 30, 2024			September 30, 2023

Costs incurred on uncompleted contracts	$	11,775,728		$	12,523,552
Estimated gross profit		2,549,303			3,085,350
		14,325,031			15,608,902
Applicable billings to date		(15,111,577	)		(14,850,020	)
Net (billings in excess of costs)/earnings in excess of billings, Ending balance	$	(786,546	)	$	758,882

For the three and nine months ended June 30, 2024 and 2023, the Company recognized revenue of $18,625 and $0, and $905,319 and $369,835, respectively, that was previously included in the beginning balance of contract liabilities.

The following table summarizes the net activity of the contract assets and contract liabilities for the three- and six-month periods ended June 30, 2024 and 2023.

	June 30, 2024			June 30, 2023			June 30, 2024			June 30, 2023
	For the three months ended						For the nine months ended
	June 30, 2024			June 30, 2023			June 30, 2024			June 30, 2023
Costs and Estimated Earnings in Excess of Billings on Uncompleted Contracts
Contract asset, beginning balance	$	1,979,679		$	794,416		$	1,739,201		$	781,819
Changes in revenue billed, contract price or cost estimates		(864,619	)		(227,901	)		(624,141	)		(215,304	)
Contract asset, net, ending balance	$	1,115,060		$	566,515		$	1,115,060		$	566,515
Billings in Excess of Costs and Estimated Earnings on Uncompleted Contracts
Contract liability, beginning balance		(1,899,409	)	$	(924,856	)		(980,319	)	$	(369,890	)
Changes in revenue billed, contract price or cost estimates		(2,197	)		185,894			(921,287	)		(369,072	)
Contract liability, ending balance	$	(1,901,606	)	$	(738,962	)	$	(1,901,606	)	$	(738,962	)
Net Billings in Excess of Costs and Estimated Earnings on Uncompleted Contracts
Net billings in excess of costs, beginning balance	$	80,270		$	(130,440	)	$	758,882		$	411,929
Changes in revenue billed, contract price or cost estimates		(866,816	)		(42,007	)	$	(1,545,428	)		(584,376	)
Net billings in excess of costs, ending balance	$	(786,546	)	$	(172,447	)	$	(786,546	)	$	(172,447	)