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UNDERWATER ENGINEERING SERVICES, INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2017 AND 2016 Note 2 - Summary of Significant Accounting Policies (cont'd.) New Accounting Pronouncements (cont'd.) ASU No. 2014-09 (cont'd.) The ASU provides that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. An entity should apply the following five-step process to recognize revenue: Step 1: Identify the contract with a customer. Step 2: Identify the performance obligations in the contract. Step 3: Determine the transaction price. Step 4: Allocate the transaction price to the performance obligations in the contract. Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation. For nonpublic entities, the amendments of ASU No. 2014-09 are effective for annual reporting periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019. Early application is permitted under certain circumstances. The Company has not yet determined if these ASUs will have a material effect on its financial statements. Note 3 - Concentrations of Credit Risk The Company maintains cash balances in various financial institutions which are insured by the Federal Deposit Insurance Corporation ("FDIC") for up to $250,000 per institution. From time to time, the Company's balances may exceed these limits. The Company's customer base consists principally of governmental agencies, municipalities, land developers and engineering firms. The Company's commercial customer base is susceptible to fluctuations in the real estate development and construction industry. The Company's governmental customer base may be susceptible to reduced purchasing ability in Tight of government budgeting constraints. At December 31, 2017 and for the year then ended, there were three major customers comprising approximately 59% of the Company's accounts receivable and there were two major customers comprising approximately 28% of the Company's revenues, respectively. At December 31, 2016 and for the year then ended, there were two major customers comprising approximately 28% and 28% of the Company's accounts receivable and revenues, respectively. 10