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PERSONS SERVICES CORP. <br />NOTES TO FINANCIAL STATEMENTS <br />DECEMBER 31, 2022 <br /> <br />20 <br /> <br /> <br /> <br />NOTE I – EARNINGS FROM CONTRACTS <br /> <br /> <br />Fixed-price 105,111,066$ <br />Cost-based 4,392,587 <br />Time and materials 563,500 <br />110,067,153$ <br /> <br /> <br />Each contract type presents advantages and disadvantages. Typically, fixed-price contracts involve more risk. <br />However, they offer the opportunity for additional profits if the contract is completed for less than estimated. <br />Cost-based reimbursement contracts involve less risk but often are less profitable. Under time and materials <br />arrangements, profit may vary if actual labor-hour costs vary significantly from negotiated rates. <br /> <br />NOTE J – RETIREMENT PLAN <br /> <br />The Company has a qualified profit-sharing plan with a 401(k) deferred compensation provision. Employees <br />are eligible to participate in the plan as long as they are at least 21 years of age and have completed one year of <br />service. The plan also provides for matching contributions by the Company generally equal to the lessor of <br />100% of the employee’s contribution or 4% of their compensation. Matching contributions to the plan were <br />$53,964 for the year ended December 31, 2022. The profit-sharing portion of the plan provides for elective <br />contributions by the Company in such amounts as management may determine. There were no elective <br />contributions to the plan for the year ending December 31, 2022. <br /> <br />NOTE K – RELATED-PARTY TRANSACTIONS <br /> <br />The Company pays rent for office and warehouse space in Mobile, Alabama and Houston, Texas to an LLC <br />owned by shareholders of the Company. The Company’s leases are month to month for the year ended <br />December 31, 2022, and total lease payments for the year were $322,173. <br /> <br />NOTE L – SUBSEQUENT EVENTS <br /> <br />Management has evaluated subsequent events through March 31, 2023, the date on which the financial <br />statement was available to be issued.