Audit Committee Charter

Organization

There shall be a committee of the board of directors known as the Audit Committee (the "Committee").

Composition

The Board of Directors (the "Board") shall appoint the Committee, composed of no less than three directors who shall be entirely "independent" as defined by Section 301 of the Sarbanes-Oxley Act of 2002 (the "Sox Act"), Section 10A(m)(3) of the Securities Exchange Act of 1934 (the "Exchange Act"), Rule 10A-3(b)(1) promulgated under Section 10A(m)(3) of the Exchange Act, and Rules 4200 and 4350(d)(2) of the Nasdaq Stock Market Rules:

SEC Rule 10A-3(b)(1)

Each member of the Committee:

• must be a member of the Board
  
  
• may not, other than as member of the Committee, the Board, or any other Board committee:

(i) accept, directly or indirectly, any consulting, advisory, or other compensatory fee from the Company or any of its subsidiaries (hereinafter, including parent, collectively "the Company"), provided that, unless the Rules of Nasdaq Stock Market provide otherwise, compensatory fees do not include fixed amount of compensation under a retirement plan for prior service (provided such is not contingent on future service)


(ii) be an affiliated person of the Company

Nasdaq Stock Market Rules:

4200(a)(15):

An "independent" director is any person who:

• is not officer or employee of the Company
  
  
• has no relationship which, in the opinion of the Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director
  
  
• has not been employed by the Company at any time during the past three years
  
  
• did not accept (includes Family Members: spouse, parents, children and siblings (blood, marriage or adoption) or anyone residing in the house) any compensation from the Company in excess of $100,000 during any period of 12 consecutive months within the past three years preceding the determination of independence, except:

– compensation for Board or Board committee service

– payments solely from investments in the Company's securities

– compensation to a Family Member who is an employee (other than an executive officer) of the Company

– benefits under a tax-qualified retirement plan, or non-discretionary compensation

– loans permitted under Section 13(k) of the Exchange Act

• is not a Family Member of an individual who is, or was during the last three years, employed as an executive officer of the Company
  
  
• is not himself/herself, nor is he/she the Family Member of a person who is, a partner, controlling shareholder or an executive officer of any other organization to which the Company made, or from which the Company received, payments for property or services in the current or any of the past three years that exceeded the greater of 5% of the recipient's consolidated gross revenues of that year, or $200,000, other than

– payments solely from investments in the Company's securities, or

– payments under non-discretionary charitable contribution matching programs

• is not himself/herself, nor is he/she the Family Member of a person who is, employed as an executive officer of another entity where at any time during the past three years any of the executive officers of the Company served on the compensation committee of the other entity
  
  
• is not himself/herself, nor is he/she the Family Member of a person who is, a partner of the Company's outside auditor, or was a partner or employee of the Company's outside auditor who worked on the Company's audit during any of the past three years

4350(d)(2):

In addition to satisfying Rule 4200(a)(15) and Rule 10A-3(b)(1) of the Exchange Act, each director on the Committee:

• shall not have participated in the preparation of the financial statements of the Company at any time during the past three years
  
  
• shall be able to read and understand fundamental financial statements, including the Company's balance sheet, income statement, and cash flow statement

 All members of the Committee shall have a working knowledge of basic finance and accounting practices, i.e., financially literate. At least one member of the Committee should have financial expertise as determined by the Board within the guidelines of Section 407 of the Sox Act and the rules as adopted by the Securities and Exchange Commission (the "SEC") thereunder. Such person shall be deemed the audit committee financial expert ("Financial Expert") (Item 407(d)(5) of Regulation S-K of the Exchange Act).

The Sox Act and the SEC Rules generally provide for a person, through education and experience (and the Board shall evaluate the totality of the individual's education and experience) who has the following attributes:

• understanding of GAAP and financial statements
  
  
• ability to assess the application of GAAP to the accounting for estimates, accruals and reserves
  
  
• experience preparing, auditing, analyzing or evaluating (or actively supervising these activities) financial statements with a breadth and level of complexity of accounting issues that are comparable to the Company's financial statements
  
  
• understanding of internal controls and procedures for financial reporting
  
  
• understanding audit committee functions

The Financial Expert shall have acquired such attributes through:

• education and experience as a principal financial officer, principal accounting officer, controller, public accountant or auditor, or experience in one or more positions that involve the performance of similar functions
  
  
• experience actively supervising a principal financial officer, principal accounting officer, controller, public accountant, auditor, or person performing similar functions
  
  
• experience overseeing or assessing the performance of companies or public accountants with respect to the preparation, auditing or evaluation of financial statements
  
  
• other relevant experience – the Company must disclose that relevant experience in its filings with the SEC

The Financial Expert is to assist the Committee in overseeing the audit process and carrying out the functions of the Committee. Whether the Committee has a Financial Expert or not is primarily a disclosure matter. The Committee members may enhance their knowledge and familiarity with finance and accounting by participating in educational programs.

The members of the Committee shall be elected by the Board at the annual organizational meeting of the Board, or until their successors shall be duly elected and qualified.The members of the Committee may designate a chairman by a majority vote of the full Committee, or the chairman of the Committee may otherwise be elected by the full Board.

Designating a member of the Committee as the Financial Expert will not affect the person's duties, obligations or liability as a Committee or Board member.It does not impose on the Financial Expert any duties, obligations or liabilities that are greater than the duties, obligations or liabilities imposed on such person as a member of the Committee.

Statement of Policy

The Committee shall provide assistance to the Board in fulfilling its responsibilities to the shareholders and the investment community relating to accounting, reporting practices, the quality and integrity of financial reports of the Company, approving related party transactions and shall have general responsibility for surveillance of internal controls, accounting and audit services to the Company, and disclosure controls and procedures.The Committee, and any member of the Committee, including any member determined to be a Financial Expert, does not prepare financial statements or perform audits, and its members are not auditors or certifiers of the Company's financial statements.To accomplish these ends, the Committee will maintain open communication between the Board, the independent auditors, the internal accountants, and management of the Company.

The Committee in assisting the Board in fulfilling its oversight responsibilities will include reviewing:

• the financial reports and other financial information provided by the Company to any governmental body or the public
  
  
• the Company's systems of internal controls regarding finance, accounting and legal compliance that management and the Board have established
  
  
• the Company's auditing, accounting, and financial reporting processes generally
  
  
• disclosure controls and procedures
  
  
• transactions involving the Company and any related persons

The Committee will attempt to encourage continuous improvement of, and will attempt to foster adherence to, the Company's policies, procedures and practices at all levels.

Duties and Responsibilities

The Committee's primary duties and responsibilities are to:

Independent Auditor/Audit

• appoint independent auditor
  
  
• determine the compensation and compensate the independent auditor
  
  
• terminate independent auditor when circumstances warrant
  
  
• pre-approve all audit and audit-related services; meet with the independent auditors to review the annual engagement letter, the scope of the proposed audit for the current year, and the audit procedures to be utilized; consider the fees for the audit; and at the conclusion thereof, review such audit,
  including any comments or recommendations of the independent auditors
  
  
• pre-approve all permitted non-audit services (prohibited non-audit services are set forth in Section 10(A)(g) of the Exchange Act)

– may delegate pre-approval authority to one or more designated members of the Committee provided decisions are presented to full Committee

– de minimus exception to pre-approval requirement if

(i) all non-audit services (not otherwise prohibited under Section 10(A)(g) of the Exchange Act) do not exceed 5% of total payments by the Company to the auditor for that fiscal year;

(ii) such services are not recognized as non-audit services at the time of the engagement; and

(iii) such services are promptly brought to the attention of the Committee and approved by the Committee or by delegated members prior to the completion of the audit

• oversee the independent auditor
  
  
• confirm and assure the independence of the independent auditors, including a review of all services and related fees provided by the independent auditors, and all other significant relationships the independent auditors may have with the Company; receive from the independent auditors a written statement delineating all relationships between the independent auditors and the Company, consistent with Independent Standards Board Standard 1, and actively engage in a dialogue with the independent auditors with respect to any disclosed relationships or services that may impact the objectivity and independence of the independent auditors
  
  
• resolve any management/auditor disagreements
  
  
• review with management and the independent auditors the completion of the annual examination, any significant changes in the independent auditors' audit plan, any difficulties or disputes with management encountered during the course of the audit, and other matters related to the content of the audit, which are to be communicated to the Committee
  
  
• establish policies and procedures for pre-approval of audit and non-audit services provided by independent auditors (see Exhibit A attached)
  
  
• review and discuss with management and the independent auditors the financial statements of the Company including an analysis of the auditor's judgment as to the quality of the Company's accounting principles
  
  
• recommend to the Board whether, based on the review and discussions described in this Charter, the financial statements should be included in the Annual Report on Form 10-K
  
  
• review and discuss with management and the independent auditors (a) any material financial or non-financial arrangements of the Company which do not appear on the financial statements of the Company; and (b) any transactions or courses of dealing with parties related to the Company which transactions are significant in size or involve terms or other aspects that differ from those that would likely be negotiated with independent parties, and which arrangements or transactions are relevant to an understanding of the Company's financial statements
  
  
• review and discuss with management and the independent auditors the accounting policies which may be viewed as critical, and review and discuss any significant changes in the accounting policies of the Company and accounting and financial reporting proposals that may have a significant impact on the Company's financial reports

Related Party Transactions

• review, approval and monitoring of transactions involving the Company and any "related persons" (executive officers, directors and their Family Members, or shareholders who own 5% of more of the common stock of the Company) that meet the minimum threshold required by the SEC for disclosure, currently $120,000
  
  
• review of related party transactions, includes, as applicable:

– the basis and rationale for considering and entering into the transaction

– alternatives to the related party transaction

– whether the transaction is on terms at least as favorable to unaffiliated third parties; if an employment relationship is involved, then whether any such arrangement is available to employees generally

– the potential for the transaction to lead to an actual or apparent conflict of interest, and whether there are any safeguards that could be imposed to prevent any conflict of interest

– the overall fairness of the transaction to all parties concerned, including our shareholders

• related party transactions are strictly construed and would have to signficicantly further the interest of and be a benefit to the Company and its shareholders
  
  
• procedures for review of related party transactions include:

– disclosure of any potential related party transaction to the Audit Committee

+ source could be the related party, any member of the Board, or any executive officer

– if any member of the Audit Committee appears to have a conflict or is otherwise involved in the transaction, such member would be recused from any deliberations and decisions relating to the transaction

• related party transactions should be approved in advance; but if not practicable, must be ratified as promptly as possible
  
  
• periodic monitoring of related party transactions to ensure there are no new circumstances that would lend themselves to requiring modification or termination of the transaction

Administrative

• create an agenda for the upcoming year
  
  
• review and update this Charter periodically, at least annually, as conditions dictate
  
  
• maintain minutes and other records of meetings and activities of the Committee
  
  
• review the powers of the Committee, and report and make recommendations to the Board on its responsibilities
  
  
• conduct or authorize investigations into any matters within the Committee's scope of responsibilities; the Committee shall be empowered to retain independent counsel, accountants, or others to assist it in the conduct of any investigation
  
  
• consider such other matters in relation to the financial affairs of the Company and its accounts as the Committee may, at its discretion, determine to be advisable
  
  
• perform such other functions as assigned by law, the Company's charter or bylaws, or the Board
  
  
• the duties and responsibilities of a member of the Committee are in addition to those duties set out for a member of the Board

Financial Processes and Reporting

• review with the independent auditors and with the Company's financial and accounting personnel, the adequacy and effectiveness of the accounting and financial controls of the Company, and elicit any recommendations for the improvement of such internal control procedures, or particular areas where new or more detailed controls or procedures are desirable; particular emphasis should be given to the adequacy of such internal controls and computerized information systems controls and security, to expose any payments, transactions or procedures that might be deemed illegal or otherwise improper; periodically consult with the independent auditors out of the presence of management about internal controls
  
  
• review the internal accounting functions of the Company
  
  
• review the financial statements contained in the annual report to shareholders and other filings with the SEC and other published documents containing the Company's financial statements and consider whether the information contained in these documents is consistent with the disclosure and content of the financial statements; review any changes in accounting principles; review press releases with respect to annual financial reports
  
  
• consider and review with management and the chief financial officer:

– significant findings during the year, including the status of previous audit recommendations and management's responses thereto

– any difficulties encountered in the course of the audit, including any restrictions on the scope of the work or access to required information

– any changes required in the planned scope of the audit

– the internal accounting department budget and staffing

• review and concur on the appointment, replacement, reassignment, or dismissal of chief financial officer or other director of internal accounting (or auditing)
  
  
• review accounting and financial human resources and succession planning within the Company
  
  
• inquire of management, the chief financial officer or the director of internal accounting (or auditing), and the independent auditors about significant risks or exposures, and assess the steps management has taken to minimize such risks to the Company
  
  
• review policies and procedures and general controls relating to officers' expense accounts and perquisites, including the use of corporate assets, and consider the results of any review of these areas by the internal accounting department or the independent auditors
  
  
• review legal and regulatory matters that may have a material impact on the financial statements, related Company compliance policies, and programs and reports received from regulators
  
  
• review with management, the independent auditors, and the internal accounting department the interim financial reports before such are filed with the SEC or other regulators; review press releases with regard to interim financial reports
  
  
• review any internal reports to management prepared by the internal accounting department and management's response

Reports and Meetings with Management, Auditors, and Internal Accountants

• meet with the chief financial officer or director of internal accounting (or auditing), the independent auditors, and management in separate executive sessions to discuss any matters that the audit committee or these groups should discuss privately with the audit committee
  
  
• prepare a letter for inclusion in the annual report that describes the audit committee's composition and responsibilities and how they were discharged

Complaints and Anonymity

• establish procedures for receipt, retention and resolution of complaints and protection of whistleblowers

– complaints received by the Company regarding accounting, internal accounting controls and auditing matters

– procedures for confidential, anonymous submission by employees relating to concerns regarding questionable accounting or auditing matters

Meetings

The Committee shall meet at least four times annually, or more frequently as circumstances dictate. In addition, to satisfy its responsibilities, the Committee should meet at least annually with management, the members or head of the internal accounting department, and the independent auditors, in separate and/or joint executive sessions with a combination of any of the aforementioned parties to discuss any matters that the Committee or each of these groups believe should be discussed in order to strengthen the effectiveness of the Committee, and to provide for accountability among the Company's Committee, outside directors, and management, and to enhance the reliability and credibility of financial statements of the Company.

Further, the Committee, or at least its chairman, should meet with the independent auditors and management quarterly to review the Company's financial statements, consistent with the Company's requirements in filing quarterly reports and annual reports as otherwise set forth in this Charter. Special meetings may be called by the chairman of the Committee, or at the request of the independent auditors.

The Committee shall report to the full Board with respect to its meetings.

The majority of the members of the Committee shall constitute a quorum. The Committee may meet in person, by telephone conference call or by any other means permitted by this Charter or the Florida Business Corporation Act ("FBCA").Without a meeting, the Committee may act by unanimous written consent of all Committee members or by any other means permitted by this Charter or the FBCA.

Investigations

The Committee shall have the authority to conduct or authorize investigations into any matters within its scope of responsibilities, and shall have the authority to retain and the Board to provide funds to compensate outside advisors to assist in the conduct of any investigation.

Limitations

The Committee is responsible for the duties set forth in this Charter, but is not responsible for either the preparation of the financial statements or the auditing of the financial statements.Management has the responsibility for preparing the financial statements and implementing internal controls, and the design, implementation and oversight of the disclosure controls and procedures, and management's report on internal controls.The independent accountants have the responsibility for auditing the financial statements and management's assessment of the effectiveness of the Company's internal controls and testing and evaluating the design and operating effectiveness of internal controls to be satisfied that management's assessment and conclusions are correct.The review of the financial statements by the Committee is not an audit.The audit is performed by the independent outside auditors.In carrying out its responsibilities, the Committee believes its policies and procedures should remain flexible in order to best react to a changing environment.