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NOTE A – HISTORY OF ORGANIZATION <br />Persons Services Corp. (the Company) was formed on January 1, 2000, under the laws of the state of <br />Alabama. On January 1, 2018, the company elected to convert from a Limited Liability Company to a S <br />Corporation. The primary business activity of the Company is the performance of plumbing, construction <br />services, and disaster reconstruction services mainly in Southeastern United States. The Company is <br />headquartered in Mobile, Alabama. <br />NOTE B – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES <br />Cash and cash equivalents <br />Cash and cash equivalents include cash on hand, demand deposits with banks and all highly liquid <br />investments with original maturities of three months or less. The Company also considers investments in <br />money market funds to be cash equivalents. <br />Revenue and Cost Recognition <br />The construction of industrial, commercial and disaster recovery contracts are considered single <br />performance obligations that are satisfied over time. Payment is also due overtime in installments, based on <br />project phases as specified in the contracts, with a final payment due at the time the contracts are completed, <br />and the customer accepts the property. <br />The Company recognizes revenues from fixed -price and modified fixed -price industrial and commercial <br />construction contracts using the cost -to-cost input method, which measures progress toward completion <br />based on the percentage of cost incurred to date to es timated total cost for each contract. Contract costs <br />inputs include all direct material and labor costs and those indirect costs related to contract performance, <br />such as indirect labor, supplies, tools, and repairs. Costs of inefficiencies or wasted resour ces (material or <br />labor) are excluded when measuring progress and are expensed as incurred. <br />Revenue from disaster recovery contracts with fixed -priced and modified fixed -price terms are also <br />recognized using the cost -to-cost input method. However, the costs of administration and supervision and <br />other indirect costs are excluded from measuring the progress toward completion. <br />Management believes the methods selected represent the best proxies available to measure the progress <br />toward completion of contracts. <br />Because of inherent uncertainties in estimating costs, it is at least reasonably possible that the estimates used <br />will change within the near term. <br />9