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Craig A Smith and Associates, Inc. Notes to Financial Statements December 31, 2017 NOTES A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Operations Craig A Smith & Associates, Inc. is an S Corporation that performs utility locations based on Feasibility Studies in conjunction with the applicable contract. Basis ofAccountine The financial statements are prepared on the accounting basis used for the S Corporation Tax return; deprecation of equipments computed in accordance with the accelerated cost recovery system required by the Internal Revenue Code. This method differs from the generally accepted qccounting principle ofcomputing depreciation over the estimated useful lives ofthe assets. Use of Estimates The preparation of financial statements in conformity with the tax basis of accounting requires management of make estimate and assumptions that affect reported amounts and disclo:mres. Accordingly, actual result could differ from those estimates. Federal Income Taxes Federal Income taxes are not payable by, or provided for, the Stockholders. Stockholders are taxed individually on their share of earnings. Corporate net revenue is allocated equally to the shareholders after allowing for shareholders guaranteed payments. Uncertain Tax Positions Management has determined that the S Corporation does not have any uncertain tax positions and associated unrecognized benefits or liabilities that materially impact the financial statements or related disclosures. Since tax matters are subject to some degree ofuncertainty, there can be no assurance the S Corporation's tax returns will not be challenged by the taxing authorities and that the S Corporation or its shareholders will not be subject to additional tax, penalties, and interest as a result of such challenge. Generally, the S Corporation's tax returns remain open for three years for federal income tax examination. Revenue Recoenition The S Corporation recognizes income when its funding has actually been received by the bank. Since funding is based on performance, management anticipates no significant losses under these arrangements and accordingly no provision has been made for future losses on contracts outstanding not yet funded by the bank. NOTE B - SUBSEQUENT EVENTS Management has evaluated subsequent events through December 31, 2017, the date which the financial statements were available to be issued 123