NOTE 3 - CONTRACTS IN PROGRESS

Costs and estimated earnings in excess of billings on uncompleted contracts represent accumulated project expenses and fees which have not been invoiced to customers as of the date of the balance sheet. These amounts are stated on the balance sheet as Unbilled Receivables of $538,590 and $587,015 as of April 30, 2011 and October 31, 2010 respectively.

Billings in excess of cost and estimated earnings on uncompleted contracts represent project invoices billed to customers that have not been earned as of the date of the balance sheet. These amounts are stated on the balance sheet as Deferred Revenue of $1,435,804 and $443,853 as of April 30, 2011 and October 31, 2010 respectively.

Revenue received as part of sales of equipment includes a provision for warranty and is treated as deferred revenue, along with extended warranty sales, with these amounts amortized over either 12 months, 36 months or 60 months from the date of sale depending on the product purchased. These products are sold with Through Life Support for the said periods. These amounts are stated on the balance sheet as Deferred Revenue of $29,259 and $770,330 as of April 30, 2011 and October 31, 2010 respectively.