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PERSONS SERVICES CORP. <br />NOTES TO FINANCIAL STATEMENTS <br />DECEMBER 31, 2022 <br />NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) <br />12 <br />Income Taxes <br />The Company has elected to be treated as an S corporation effective January 1, 2018. An S corporation is not a <br />taxpaying entity for federal or state income tax purposes. Accordingly, no income tax expense has been <br />recorded in the statements. All income or losses will be reported on the individual shareholders’ income tax <br />returns. <br />As of December 31, 2022, the Company had no uncertain tax positions that require either recognition or <br />disclosure in the Company’s financial statement. <br />NOTE C – CONCENTRATION OF CREDIT RISK <br />Financial instruments, which potentially subject the Company to concentrations of credit risk, consist <br />principally of cash and contract receivables. The Company maintains a portion of its cash in bank deposit <br />accounts at financial institutions. The balances, at times, may exceed federally insured limits. At December 31, <br />2022, the balances did not exceed the Federal Deposit Insurance Corporation’s (FDIC) insured amount. <br />The Company generates substantially all its revenue from diversified segments of the commercial, industrial, <br />and residential construction industry. Although the Company’s construction contracts are made with various <br />customers, revenues from contracts with fourteen customers represented approximately 73% of total revenues <br />for the year ended December 31, 2022. <br />The Company, in the normal course of business, operating primarily in the southeastern region of the United <br />States, extends credit to its customers based on various terms. The Company had outstanding receivables from <br />businesses in this area of $26,233,115 as of December 31, 2022. Most of the receivables represent unpaid <br />billings from uncollateralized construction work. However, the Company can place liens on projects that are <br />unpaid. <br />Receivables from contracts in progress equaled $25,461,147 or 9 7 % of total receivables as of December <br />31, 2022.