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TGSV ENTERPRISES, INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2017 12 BACKLOG The following schedule shows a reconciliation of backlog representing the amount of revenue the Company expects to be realized in future periods from signed contracts at December 31, 2017: Backlog at December 31, 2016 $ 6,436,596 New contracts, change orders and adjustments to contracts 28,979,373 Less: Contract revenues earned for the year December 31, 2017 14,693,367 Backlog at December 31, 2017 $ 20,722,602 The Company has a contract as of December 31, 2017, amounting to $138,000 for which work had not commenced. In addition, during the period from January 1, 2018 to February 22, 2018, the Company signed a contract amounting to approximately $58,100. The Company is generally required to furnish performance and payment surety bonds to contract owners. The bonds are secured by receivables from bonded contracts and a general guarantee from the Company. During the year ended December 31, 2017, the Surety Company issued approximately $17,801,000 of new bonds to contract owners. At December 31, 2017, surety bonds for contracts approximating $39,115,000 had been issued with a current estimated backlog amount of $14,261,000. Of the $20,722,602 backlog amount, approximately $16,150,000 has been subcontracted to various specialty subcontractors. The Company’s policy requires a surety bond from certain subcontractors for contracts in excess of $300,000, or at management’s discretion. At December 31, 2017, surety bonds from subcontractors aggregated approximately $8,724,100. No accrued liability was considered necessary by management for financial guarantees related to the non-bonded subcontractors. The Surety Company requires a general agreement of indemnification from the Company’s stockholders. See independent accountants’ review report. -15-