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<br />BUDGET CONSTRUCTION CO., INC. AND BUDGET HOLDINGS, LLC <br />NOTES TO THE COMBINED FINANCIAL STATEMENTS <br />Years Ended December 31, 2007 and 2006 <br /> <br />NOTE 18 - Surety indemnity agreement: <br /> <br />In the ordinary course of business, The Company may obtain surety bonds, that are provided to certain <br />customers to comply with contract provisions and performance under the contracts. <br /> <br />In the event of non-performance by The Company under a contract resulting in a paid loss by the <br />surety, and based upon the terms and conditions of the indemnity agreement signed by The Company <br />and the individual indemnitors, The Company and the individual indemnitors may be liable to the <br />surety for those amounts paid on behalf of The Company. <br /> <br />NOTE 19 - Backlog: <br /> <br />The following schedule summarizes changes in backlog on contracts during the year ended <br />December 31, 2007. Backlog represents the amount of revenue The Company expects to realize from <br />uncompleted contracts in progress at year end and from contractual agreements on which work has not <br />yet begun: <br /> <br />Backlog balance at December 31, 2006: <br /> <br />$ 8,580,150 <br /> <br />New contracts during the year ended December 31, 2007: <br /> <br />Contract revenues earned during the year ended December 31,2007: <br /> <br />26,574,275 <br />35,154,425 <br />(20,778,801) <br /> <br />Backlog balance at December 31,2007: <br /> <br />$ 14,375,624 <br /> <br />The Company is generally required to furnish performance and payment surety bonds to contract owners. <br />During the year ended December 31, 2007, certain surety company issued $17,306,528 of new surety <br />bonds to contract owners. The bonds are secured by receivables from bonded contracts and a general <br />guarantee from The Company. Also, the surety company required a personal guarantee from The <br />Company's stockholders. At December 31, 2007, surety bonds for contracts totaling $24,494,621 had <br />been issued with a current backlog amount of $11 ,263,902. <br /> <br />As of March 10, 2008, The Company entered into various construction and engineering contracts <br />with projected revenues of$5,439,965. <br /> <br />17 <br /> <br />Benitez & Company. CPA', <br />