EXHIBIT
14
CODE OF BUSINESS CONDUCT &
ETHICS
OF
AMERIRESOURCE
TECHNOLOGIES, INC.
Statement
by Chief Executive Officer:
Ethics
are important to AmeriResource Technologies, Inc. (“ARRT”) and each of its
officers, directors and employees. AmeriResource is committed to the highest
ethical standards and to conducting its business with the highest level of
integrity. An uncompromising adherence to ethical excellence is integral to
creating and sustaining a successful business. It provides the necessary strong
foundation on which AmeriResource is built and on which it can grow and
prosper.
Each
officer, director and employee of AmeriResource is responsible for the
consequences of his or her actions. We must each be the guardian of
AmeriResource ethics. Leaders in AmeriResource have the extra responsibility of
setting an example by their personal performance and an attitude that conveys
our ethical values. That example leads us to treat everyone with honesty and
respect.
If you
are unsure of the appropriate action, take advantage of our open door, informal
environment and raise your concerns with management or, if you are still
uncomfortable, follow the processes outlined in this Code of Business Conduct
& Ethics (“Code”).
/s/
Delmar Janovec
_______________________________________
Delmar
Janovec, Chief Executive Officer
CODE
OF BUSINESS CONDUCT & ETHICS
OF
AMERIRESOURCE
TECHNOLOGIES, INC.
INTERNAL CONTROL OVER
FINANCIAL REPORTING MEMORANDUM
As of and
for the fiscal year-ended December 31, 2007
As of the
end of the period covered by our audited consolidated financial statements, an
evaluation was carried out by the Company’s management, with the participation
of its President, of the effectiveness of the Company’s disclosure controls and
procedures. Based upon the evaluation, the President concluded that
the disclosure controls and procedures were effective as of the end of the
period covered by our audited consolidated financial statements. No
changes were made to the Company’s internal control over financial reporting as
of and for the fiscal year ended December 31, 2007.
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Management’s
Report on Internal Control Over Financial
Reporting
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The
management of the Company is responsible for establishing and maintaining
adequate internal control over financial reporting. The Company’s internal
control system was designed to provide reasonable assurance to the Company’s
management regarding the preparation and fair presentation of published
financial statements. AmeriResource Technologies president, executive officer
and “Certifying Officer” are responsible for establishing and maintaining
disclosure controls and procedures for AmeriResource. The Certifying Officer has
concluded (based on his evaluation of these controls and procedures as of a date
within 90 days of the filing of this report) that the design and operation of
AmeriResource disclosure controls and procedures (as defined in Rule 13a-14(c)
under the Securities Exchange Act of 1934) are effective and adequate, with the
exception of any notations as disclosed below.
All
internal control systems, no matter how well designed, have inherent
limitations, including the possibility of human error and the circumvention or
overriding of controls. Accordingly, even effective internal controls can
provide only reasonable assurances with respect to financial statement
preparation. Further because of changes in conditions, the effectiveness of
internal controls may vary over time.
Management
assessed the effectiveness of the company’s internal control over financial
reporting as of December 31, 2007. In making this assessment, it used the
criteria set forth by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO) in Internal
Control—Integrated Framework. Based on our assessment we
believe that, as of December 31, 2007, the Company’s internal control over
financial reporting is effective based on those criteria.
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A. Establishment
of Committees:
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1.
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The
Company currently does not have an audit
committee.
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CODE OF BUSINESS CONDUCT
& ETHICS
OF
AMERIRESOURCE TECHNOLOGIES, INC.
The
principles of this Code are expressed in broad statements to guide ethical
decision making. These statements provide a framework but they cannot and do not
dictate conduct to cover particular situations.
This Code
applies to all officers, directors, and employees of AmeriResource.
Ethics
AmeriResource
and each of its officers, directors and employees must conduct their affairs
with uncompromising honesty and integrity. Business ethics are no different than
personal ethics. The same high standard applies to both. As an AmeriResource
associate you are required to adhere to the highest standard regardless at all
times.
Officers,
directors and employees are expected to be honest, fair, respectful and ethical
in dealing with each other, with shareholders, clients, customers, vendors and
all other third parties. Doing the right thing means doing it right every
time.
You must
also respect the rights of your fellow officers, directors and employees, as
well as third parties. Your actions must be free from discrimination, libel,
slander or harassment. Each person must be accorded equal opportunity,
regardless of age, race, sex, sexual preference, color, creed, religion,
national origin, marital status, veteran's status, handicap or
disability.
Misconduct
cannot be excused because it was directed or requested by another. In this
regard, you are expected to alert management whenever an illegal, dishonest or
unethical act is discovered or suspected. You will never be penalized for
reporting your discoveries or suspicions.
AmeriResource
conducts its affairs consistent with the applicable laws and regulations of the
states and countries where it does business. Business practices, customs and
laws differ from country to country. When conflicts arise between AmeriResource
ethical practices, and the practices, customs, and the laws of a country,
AmeriResource seeks to resolve them consistent with its ethical beliefs. If the
conflict cannot be resolved consistent with its ethical beliefs, AmeriResource
will not proceed with the proposed action giving rise to the conflict. These
ethical standards reflect who we are and are the standards by which we choose to
be judged.
A
violation of the standards contained in this Code of Business Conduct &
Ethics will result in corrective action, including possible
dismissal.
Loyalty
All
officers, directors and employees shall exhibit loyalty in all matters
pertaining to the affairs of AmeriResource or to whomever they may be rendering
a service. However, no officer, director or employee shall knowingly be a party
to any illegal or improper activity.
Conflicts
of Interest
You must
avoid any personal activity, investment or association which could appear to
interfere with good judgment concerning AmeriResource best interests. You may
not exploit your position or relationship with AmeriResource for personal gain.
You should avoid even the appearance of such a conflict. For example, there is a
likely conflict of interest if you:
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cause
AmeriResource to engage in business transactions with relatives or
friends;
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use
nonpublic AmeriResource, shareholder, client, customer or vendor
information for personal gain by you, relatives or friends (including
securities transactions based on such
information);
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have
more than a modest financial interest in AmeriResource shareholders,
vendors, customers, clients or
competitors;
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receive
a loan, or guarantee of obligations, from AmeriResource or a third party
as a result of your position at AmeriResource;
or
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compete,
or prepare to compete, with AmeriResource while still employed by
AmeriResource.
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There are
other situations in which a conflict of interest may arise. If you have concerns
about any situation, follow the steps outlined in the Section on “Reporting
Ethical Violations.”
Gifts,
Bribes and Kickbacks
Other
than for modest gifts given or received in the normal course of business
(including travel or entertainment), neither you nor your relatives may give
gifts to, or receive gifts from, Ameriresource shareholders, clients, customers
and vendors. Other gifts may be given or accepted only with prior approval of
your senior management. In no event should you put AmeriResource or yourself in
a position that would be embarrassing if the gift was made public.
Dealing
with government employees is often different than dealing with private persons.
Many governmental bodies strictly prohibit the receipt of any gratuities by
their employees, including meals and entertainment. You must be aware of and
strictly follow these prohibitions.
Any
associate who pays or receives bribes or kickbacks will be immediately
terminated and reported, as warranted, to the appropriate authorities. A
kickback or bribe includes any item intended to improperly obtain favorable
treatment.
Illegal
Acts
Every
officer, director and employee will obey the laws of the applicable
jurisdictions, will not counsel nor assist any person to act in any way contrary
to these laws, and will inform the appropriate individuals and authorities if
they become aware of illegal actions.
Loans
AmeriResource
is prohibited by the Sarbanes-Oxley Act of 2002 from directly or indirectly
extending credit to its officers and directors.
Improper
Influence on Audits
Officers
and directors of AmeriResource are prohibited from improperly influencing
Ameriresource auditors in the performance of an audit for the purpose of
rendering financial statements materially misleading.
If
AmeriResource is required to restate its financial statements due to material
noncompliance with any financial reporting requirement that is the result of
misconduct, each of AmeriResource chief executive officers and chief financial
officers must reimburse the Company for (1) any bonus, other incentive-based
compensation or equity-based compensation received by that individual from
AmeriResource during the 12-month period following the first use or filing of
the flawed document, and (2) any profits realized from the sale of securities of
AmeriResource during that same 12-month period.
Improper
Use or Theft of AmeriResource Property
Every
officer, director and employee must safeguard AmeriResource property from loss
or theft, and may not take such property for personal use. AmeriResource
property includes confidential information, software, computers, office
equipment, and supplies. You must appropriately secure all AmeriResource
property within your control to prevent its unauthorized use. Using
AmeriResource computers or communications systems to access or distribute
personal/ “non-business related” information, data or graphics is strictly
prohibited.
Covering
Up Mistakes; Falsifying Records
Mistakes
should never be covered up, but should be immediately fully disclosed and
corrected. Falsification of any AmeriResource, client, customer, shareholder or
third party record is strictly prohibited.
Abuse
of AmeriResource, Shareholder, Client, Customer or Vendor
Information
You may
not use or reveal AmeriResource, shareholder, client, customer or vendor
confidential or proprietary information to others. This includes business
methods, pricing and marketing data, strategy, computer code, screens, forms,
experimental research, and information about AmeriResource current, former and
prospective shareholders, customers, clients and associates.
Gathering
Competitive Information
You may
not accept, use or disclose the confidential information of our competitors.
When obtaining competitive information, you must not violate our competitors’
rights. Particular care must be taken when dealing with competitors’ clients,
ex-clients and ex-employees. Never ask for confidential or proprietary
information. Never ask a person to violate a non-compete or non-disclosure
agreement. If you are uncertain, the Corporate Legal Department can assist
you.
Defamation
and Misrepresentation
Aggressive
marketing and selling should not include misstatements, innuendo or rumors about
our competition, their services, financial condition or officers and directors.
Do not make unsupportable promises concerning AmeriResource services or
financial condition. Additionally, intentional misstatements regarding AmeriResource,
our officers, directors or shareholders is strictly prohibited and will be
remedied with the appropriate legal recourse.
Use
of AmeriResource and Third Party Software
AmeriResource
and third party software may be distributed and disclosed only to officers,
directors and employees authorized to use it.
AmeriResource
and third party software may not be copied without specific authorization and
may only be used to perform assigned responsibilities.
All third
party software must be properly licensed. The license agreements for such third
party software may place various restrictions on the disclosure, use and copying
of software.
Fair
Dealing
No
AmeriResource officer, director or employee should take unfair advantage of
anyone through manipulation, concealment, abuse of privileged information,
misrepresentation of material facts, or any other unfair dealing
practice.
Fair
Competition and Antitrust Laws
AmeriResource
must comply with all applicable fair competition and antitrust laws. These laws
attempt to ensure that businesses compete fairly and honestly and prohibit
conduct seeking to reduce or restrain competition. If you are uncertain whether
a contemplated action raises unfair competition or antitrust issues, the
Corporate Legal Department can assist you.
Securities
Trading
It is
usually illegal to buy or sell securities using material information not
available to the public. Persons who give such undisclosed “inside” information
to others may be as liable as persons who trade securities while possessing such
information. Securities laws may be violated if you, or any relatives or friends
trade in securities of AmeriResource, or any of its shareholders, clients,
customers, or vendors, while possessing “inside” information. If you are
uncertain, the Corporate Legal Department can assist you.
Officers
and directors of AmeriResource are prohibited from trading during so-called
retirement fund “blackout” periods, which are those blackout periods that are
imposed on tax-qualified defined contribution plans, such as 401(k)
plans. Profits received from transactions in violation of this
provision are subject to recapture for the benefit of the Company.
Political
Contributions
No
company funds may be given directly to political candidates. You may, however,
engage in political activity with your own resources on your own
time.
Waivers
The Code
of Business Conduct & Ethics applies to all AmeriResource officers,
directors and employees. There shall be no waiver of any part of the Code,
except by a vote of the Board of Directors or a designated committee, which will
ascertain whether a waiver is appropriate and ensure that the waiver is
accompanied by appropriate controls designed to protect
AmeriResource.
In the
event that any waiver is granted, the waiver will be posted on the AmeriResource
website, thereby allowing the AmeriResource shareholders to evaluate the merits
of the particular waiver.
Enforcement
Procedures
The Code
must be supported with clear, orderly, and reasonable enforcement procedures if
AmeriResource is to discipline persons who violate the Code. Enforcement
procedures must be equitable to all parties. They must ensure no actions are
taken in an arbitrary or malicious manner.
Reporting
Ethical Violations
Your
conduct can reinforce an ethical atmosphere and positively influence the conduct
of fellow officers, directors and employees. If you are powerless to stop
suspected misconduct or discover it after it has occurred, you should report it
to the appropriate level of management. If you are still concerned after
speaking with management or feel uncomfortable speaking with them (for whatever
reason), you may send a complaint evidencing the violation to the chief
executive officer of AmeriResource Technologies, Inc. at 3440 East Russell Road,
Suite 217, Las Vegas, NV 89120. Your complaint will be dealt with confidentially
and you have AmeriResource commitment that you will be protected from
retaliation.
The
complaint must:
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be
against a single individual; and
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cite
the specific clause of the Code that is alleged to have been violated;
and
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describe
the specific action in question;
and
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describe
in general terms, the substantial negative effect of that action upon
ARRT, the public, or an individual;
and
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contain
a statement that the specific action of the accused in question is not
already or imminently (to the best knowledge of the complainant(s)) the
subject of legal proceedings; and
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contain
a signed statement that the facts are true to the best knowledge of the
complainant(s).
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The chief
executive officer, or his representative, will review the complaint to determine
if it meets the above criteria. If it does not, it will be returned to the
complainant(s) for possible change and re-submission. If the specific action of
the accused is the subject of legal proceedings, no further action will be taken
until those proceedings are concluded. If the complaint is not rejected then,
subject to legal advice, the accused person will be notified (by registered mail
to last known address), provided with a copy of the complaint, and allowed
thirty (30) days to prepare a written rebuttal of the complaint if so desired.
The rebuttal should address the same points as the complaint, and must also
include a statement that the facts contained in the rebuttal are true to the
best knowledge of the accused. The chief executive officer, or his
representative, shall review the complaint and, if available, the rebuttal, to
determine if there is
sufficient evidence to hold a full hearing. If it is determined that a full
hearing is warranted, the full information will be forwarded to a three-member
Hearing Committee appointed within thirty (30) days of the receipt of the
rebuttal or at the last date allowed for receipt of the rebuttal.
The
Hearing Process
The
Hearing Committee will attempt to interview, at the expense of AmeriResource,
the complainant(s), and the accused, plus any other parties with relevant
information. The number of people interviewed, and the extent of the effort to
secure interviews, is a matter of judgment by the Hearing Committee. The Hearing
Committee will decide if the accused may be present during the interviews. If
the accused is not allowed to be present during the interviews, the accused
shall be provided with notes documenting the substance of the interviews. The
accused will be afforded the opportunity for a full hearing, with the
complainant(s) present if desired by the accused. The Hearing Committee should
have the services of legal counsel available as required. The accused, and the
complainant(s), may obtain counsel at their own expense, if either or both
desire. The Hearing Committee, after full and complete deliberation, will rule
in writing as to the individual case. Additional rules and procedures shall be
established by the Hearing Committee as required in their judgment. The ruling
of the Hearing Committee may be:
1. a
clearing of charges; or
2. a
warning statement to the accused; or
3.
termination of the accuser’s position; or
4. such
other ruling as the Hearing Committee in its discretion sees fit.
The
Hearing Committee will prepare an opinion on the particular case that will cover
the facts of the case, the action taken, and the reason for that action. This
will be reviewed by the Board of Directors of AmeriResource and by legal counsel
at the discretion of the Board of Directors. When approved, this opinion will be
sent to the accused, who may consider exercising the Appeal Process. Due
diligence should be used to provide this opinion to the accused within 120 days
of the receipt of the complaint by the Hearing Committee. If this is not
possible, a letter should be sent to the chief executive officer of
AmeriResource, with copies to the accused and complainant(s), requesting an
extension of this limit, and stating the reason for this request.
The
Appeal Process
If not
satisfied with the ruling of the Hearing Committee, the accused may appeal to
the chief executive officer of AmeriResource within 30 days of issuance of the
Hearing Committee opinion. If appealed, the following procedure will be
used:
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1.
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The
Board of Directors, at its next scheduled meeting, or at a special
meeting, shall review the opinion, and any other information available,
and shall determine if:
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a
substantive procedural error has been committed by the Hearing Committee, or
substantial new evidence has been produced.
The
accused and the complainant are permitted legal counsel at the Board of
Directors appeal session. The Board of Directors shall determine if, in its sole
judgment, one of the two above noted criteria have been established, in which
case the council shall refer the matter back to the previous or a new Hearing
Committee for further proceedings.
The
decision of the Board of Directors shall be final and there shall be no further
appeal.
Publication
and Record Retention
After the
Appeal Process and any further proceedings have been exhausted, or after
completion of the time allowed to initiate an Appeal Process, the opinion will
be published on AmeriResource website, if the ruling was the termination of the
accused, and will be published at the request of the accused, if the ruling was
a clearing of charges or issue of warning statement.
The
record of the Hearing Committee and all appropriate supporting documentation
will be retained by AmeriResource for two years. Response to queries may include
statistical information that does not reveal detail about a specific complaint,
such as the number of complaints processed, provided the approval of the Board
of Directors is obtained, or responses may include copies of information
previously published. Any other information may be released only with the
written permission of the Board of Directors, the accused, and the
accuser(s).
3. Whistle
Blower Policy:
The
Whistle Blower Policy is incorporated into the Ethics Policy. (Item
#2).
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A. Cash
Handling Procedures to ensure safeguarding of Assets and segregation of
Duties as prescribed by Company
policy.
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1.
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Collection
of Cash Payments is nonexistent in that almost all collections are paid
through automated systems such as PayPal or personal credit or debit
cards.
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2.
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Collection
of Check Payments is extremely limited, however, when encountered
standard
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Company
policy and procedures are followed.
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3.
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Collection
of Credit Card Payments follows strict guidelines enforced by all major
credit card companies in addition to those established in Company policy
and procedures. In addition, many collections of this type are
transacted through PayPal or other credit facilities established primarily
for purposes of paying and collection on items purchased over the
internet.
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4.
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Deposits
and Cash Reconciliations:
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Cash and
cash equivalents represent cash and short-term, highly liquid investments with
original maturities of three months or less and amounts in-transit from banks
for customer credit and debit cards. The process of transferring these funds
usually takes between one to two business days and is classified as cash and
cash equivalents on our Consolidated Balance Sheets.
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A. Inventory
Procedures to ensure safeguarding of assets and segregation of duties as
prescribed by Company Policy.
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1.
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Policies
and procedures for Inventory Receiving, Shipping, obsolete, damaged
goods:
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Inventory
is valued using the cost method, which values inventory at the lower of cost or
market. Cost is determined using the first-in, first-out (“FIFO”) method. Market
is determined based on the estimated net realizable value, which generally is
the merchandise selling price. We review our inventory levels in order to
identify slow-moving merchandise and damaged items and use markdowns to clear
merchandise.
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2.
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Policies
and procedures for inventory counts are controlled by recognized and
industry approved bar-coding system. Additional policies and
procedures are outlined in Company procedure manuals and operating guides,
including a monthly inventory (last Thursday) of every
item.
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3. Policies
and procedures for inventory valuation:
Inventory
is valued using the cost method, which values inventory at the lower of cost or
market.
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4.
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Storage
of inventory to ensure safeguarding of assets is controlled by a strict
set of guidelines detailed in the Company policy and procedures
manual.
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Intangible
Assets:
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A. Intangible
Assets: (FAS-142)
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1.
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Amortization
of Assets (finite):
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The
Company has an intangible asset policy in place to ensure that all intangible
assets are amortized and reported accurately in the financial
statements. All intangible assets are reviewed and scrutinized by the
Chief Financial Officer and Chief Executive Officer.
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2.
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Amortization
Useful Lives:
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The
Company has an intangible asset policy in place to ensure the useful lives of
our assets are determined in conjunction with industry
standards. Intangible assets are stated at cost and amortized over
the estimated useful lives using the straight line method as
follows:
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Processes, development (Hardware, Software, Kiosk):
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15
years
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Non-Compete Agreements (Term of the agreements):
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3
years
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3.
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Goodwill
(indefinite useful life):
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Goodwill
is not amortized but reviewed for impairment in accordance with applying the
recognition and measurement provisions in paragraphs 4-11 (FAS 142) within the
statement. An intangible asset that is not subject to amortization
shall be tested for impairment annually, or more frequently if events or changes
in circumstances indicate that the asset might be impaired (See paragraph 5
within the statement for impairment indicators). Impairment is
defined as a condition that exists when the carrying amount of goodwill exceeds
its implied fair value. If the carrying amount of an intangible asset
exceeds its fair value, an impairment loss shall be recognized in an amount
equal to that excess.
The
two-step impairment test (See paragraphs 19-22) shall be used to identify
potential goodwill impairment and measure the amount of a goodwill impairment
loss to be recognized. If the fair value of a reporting unit exceeds
its carrying amount, goodwill of the reporting unit is considered not impaired,
thus the second step of the impairment test is unnecessary. If the
carrying amount of a reporting unit exceeds its fair value, the second step of
the goodwill impairment test shall be performed to measure the amount of
impairment loss, if any. The fair value of an asset
is the amount at which that asset could be bought or sold in a current
transaction between willing parties, that is, other than in a forced or
liquidation sale. Quoted market prices in active markets are the best
evidence of fair value and shall be used as the basis for the measurement, if
available (FAS 142).
Under FAS
142 (See paragraph 24:25), if quoted market prices are not available, the
estimate of fair value shall be based on the best information available,
including prices for similar assets and liabilities and the results of using
other valuation techniques. A present value technique is often the
best available technique with which to estimate the fair value of a group of net
assets.
If a
present value technique is used to measure fair value, estimates of future cash
flows used in that technique shall be consistent with the objective of measuring
fair value. In estimating the fair value of a reporting unit, a
valuation technique based on multiples of earnings or revenue of a similar
performance measure may be used if that technique is consistent with the
objective of measuring fair value. Use of multiples of earnings or
revenue in determining the fair value of a reporting unit may be appropriate,
for example, when the fair value of an entity that has comparable operations and
economic characteristics is observable and the relevant multiples of the
comparable entity are known.
The
Company tests for impairment follow FAS-142 in that the fair market value of an
asset is the amount at which the asset could be bought or sold in a current
transaction between willing parties other than forced or liquidated
sale. Quoted market prices are the basis for this
evaluation.
Fixed
Assets:
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A. Fixed
Assets: (FAS-144)
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1.
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Capitalization of Assets:
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The
Company has a fixed asset policy in place to ensure that all appropriate assets
are capitalized and reported accurately in the financial
statements. All capital expenditures greater than $1,000 are reviewed
and scrutinized by the Chief Financial Officer & Chief Executive
Officer.
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2.
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Fixed Asset Useful Lives:
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The
Company has a fixed asset policy in place to ensure the useful lives of our
assets are determined in conjunction with industry
standards. Property, plant and equipment are stated at cost and
depreciated over the estimated useful lives or lease term, if less, using the
straight line method as follows:
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Buildings and improvements:
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28
to 40 years
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Computer equipment:
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4
to 7 years
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Furniture,
fixtures, and equipment
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3
to 7 years
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Leasehold Improvements
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5
to 10 years
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3.
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Disposals and Gains/Losses on the sale of
assets:
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Sales of
assets to third parties result in either a gain or loss on the sale of
assets. Where proceeds are greater than the net book value of the
asset (historical cost less accumulated depreciation) a gain is
recorded. Conversely, where proceeds are less than the net book value
of the asset, a loss on sale of assets is recorded.
Accounts Payable/Accrued
Expenses:
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A. Accounts
Payable Procedures to ensure segregation of
duties.
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1. Invoice
Processing:
Payments
to vendors are scheduled according to the purchasing terms. Scheduled
payments are reviewed and approved by appropriate personnel prior to or soon
after the initiation of the payment run. Manual checks are reviewed
and approved by appropriate personnel prior to or soon after
initiation. Use of check stock is reconciled to the invoice payments
prior to or soon after the initiation.
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2.
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Segregation
of duties:
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The
authority to print checks is segregated from the ability to sign
them.
3. Recording:
Generally
the obligation to pay is recorded upon the receipt the invoice, at the invoice
date, which is the same month as the product/service is
received/consummated. All unvouchered receipts are accrued in the
period in which the liability is incurred.
4. Vendor
Review & Approval:
Vendor
information is input or adjusted by personnel outside of the A/P
function. Setup process ensures that duplicate vendors cannot be set
up in the system. Unauthorized purchasing activity subjects the
company to loss; thus, all payments in excess of $100 are reviewed by the
President for approval.
5.
Expense reports:
Employees
are properly notified as to the company policy regarding limitations of
authorized expenses. Individual Managers review all expense reports within the
parameters of their authority. The President reviews and approves all
expense reports.
Notes Payable:
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A. Note
Payable Procedures to ensure segregation of
duties.
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1.
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Drafting
and execution of new agreements can only be drafted, assigned or approved
by the President or Chief Executive
Officer.
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2.
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Evaluation
of agreements under FAS 133, EITF 00-27, & EITF 00-19. Under EITF
00-27, having collateral larger than the face of the note to satisfy a
default condition would be considered a “contingent” conversion option
requiring a “triggering event” before recognition is required. The
triggering event would be a default. At December 31, 2007, and as of April
15, 2008, the Company was not in
default.
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Operating
& Capital Leases
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A. Methodology
of Operating and Capital Leases
(FAS-13)
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1. Operating
Leases:
The
Company (lessee) retains only the right to use the property for all operating
leases. At the end of the lease period, the Company (lessee) returns
the property to the vendor (lessor). Since the Company (lessee) does
not assume the risk of ownership, the lease expense is treated as an operating
expense in the income statement and the lease does not affect the balance
sheet.
2. Capital
Leases:
The
Company (lessee) recognizes the property both as an asset and a liability (for
the lease payments) on the balance sheet. The Company records
depreciation each year on the asset and also deducts the interest expense
component of the lease payment each year. In accordance with the
FASB, capital leases are recorded if any one of the four conditions below is
met:
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(a)
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if
the lease life exceeds 75% of the life of the
asset
|
|
(b)
|
if
there is a transfer of ownership to the lessee at the end of the lease
term
|
|
(c)
|
if
there is an option to purchase the asset at a "bargain price" at the end
of the lease term.
|
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(d)
|
if
the present value of the lease payments, discounted at an appropriate
discount rate, exceeds 90% of the fair market value of the
asset.
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Stockholders’
equity
|
|
A. Common
Stock Instrument Issuances:
|
1. Stock
Options:
Stock
options are issued in accordance with Board of Directors approved
minutes. The value of stock options are based on a ten day average
market close price calculated upon inception.
2. Dividends:
Dividends,
either cash or additional stock, are paid in accordance with Board of Directors
approved minutes.
Warrants
are issued in accordance with Board of Directors approved minutes, issued along
with preferred stock entitling the holder to purchase a specific amount of
securities at a specific price. In the case that the price of the security rises
to above that of the warrant's exercise price, then the investor can buy the
security at the warrant's exercise price and resell it for a profit. Otherwise,
the warrant will simply expire or remain unused. .
Revenue
Recognition
|
|
1.
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The
Company recognizes revenue from services provided once all of the
following criteria for revenue recognition have been
met:
|
|
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a. Pervasive
evidence of an agreement exists
|
|
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b. The
services have been delivered
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|
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c. The
price is fixed and determinable and not subject to refund or
adjustment
|
|
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d. Collection
of the amounts due is reasonably
assured
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Cost of
Goods Sold is determined through standard accounting principles and procedures
totaling the actual purchase price, general / administrative and associated
direct costs. Overhead and administrative costs are recognized when
incurred and direct event costs and expenses are recognized during the period in
which the event they are associated with occurs. In standard accounting
practices, gross margin can be calculated by subtracting the cost of goods sold
from total sales.
The Chief
Financial Officer and Chief Executive Officer perform a review on an annual
basis to ensure revenue and expenses are appropriately stated. Other than as
described above, there was no change in the Company’s internal control over
financial reporting during the Company’s most recently completed fiscal year
that has materially affected, or is reasonably likely to materially affect, the
Company’s internal control over financial reporting.