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Craig A. Smith & Associate, Inc. and MPS31), LLC Notes to Financial Statements Note 1 — Summary of Significant Accounting Policies Description of the Companv Craig A. Smith & Associates, Inc. ("Craig A. Smith") was incorporated on August 7, 1980 in the State of Florida. Craig A. Smith is engaged in the business of consulting engineering, surveying and underground utility locating. Craig A. Smith conducts business as an S Corporation. MPS3D, LLC ("MPS3D") was organized under the laws of the state of Florida, filed on January 6, 2004, effective January 5, 2004. MPS3D, LLC was organized to pursue the market for subsurface utility engineering (SUE) via the use of 3D radar tomography. An exclusive license was obtained from Witten Technologies, Inc. to use their patented Imaging System to detect and map underground utilities, buried obstructions and other buried items within the Dade, Palm Beach, Broward and Monroe Counties of Florida. Basis of Combination The accompanying financial statements include the accounts of Craig A. Smith and its affiliate MPS3D (the "Company") held under common control. All intercompany balances and transactions have been eliminated in the combined financial statements. Cash and Cash Eauivalents For purposes of the statement of cash flows, the Company considers all short-term investments with an original maturity of three months or less to be cash equivalents. Property and Equipment Property and equipment are stated and maintained at original historical cost less accumulated depreciation and amortization. Depreciation and amortization are provided using the straight-line method over the estimated useful lives of the related assets, which range from three to seven years. Routine maintenance, repairs and replacement costs are expensed as incurred and improvements that extend the useful life of the assets are capitalized. When assets are sold or otherwise disposed of, the cost and related accumulated depreciation are eliminated from the accounts and any resulting gain or loss is recognized in income. Assets Useful Lives Professional Equipment 5 years Vehicles 5 years Furniture, Fixtures & Office Equip. 7 years Computers 3 years Buildings 39 years Depreciation expense related to the above assets was $46,540 and $43,223 for the years ended December 31, 2014 and 2013 which is included in amortization / depreciation on the combined statement of income. For the years ended December 31, 2014 and 2013 amortization / depreciation on the combined statement of income also includes $6,000 and $6,000 of amortization expense related to a technology license, respectively. -6- 71