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<br />NOTE 1. <br /> <br />SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) <br /> <br />Property and Equipment <br /> <br />Property and equipment is recorded at cost. Expenditures for major betterments and <br />additions are charged to the asset accounts, while replacements, maintenance and <br />repairs that do not improve or extend the lives of the respective assets are charged to <br />expense currently. <br /> <br />Depreciation and Amortization <br /> <br />Depreciation is computed by the straight-line method using various rates based on the <br />estimated useful lives of the assets which range from five to seven years. <br />Amortization of leasehold improvements is computed on the straight-line method over <br />the shorter of the estimated useful lives of the assets or the term of the lease. The <br />range of estimated useful lives is as follows: <br /> <br />Office equipment <br />Transportation equipment <br />Furniture and fixtures <br />Machinery and equipment <br />Leasehold improvements <br /> <br />5 years <br />5 years <br />7 years <br />7 years <br />15 years <br /> <br />Concentration of Credit Risk and Major Customers <br /> <br />From time to time, the Company maintains cash and certificate of deposit balances <br />with financial institutions in excess of federally insured limits. <br /> <br />The Company's contract receivables are unsecured; however, the Company retains its <br />lien rights in the event that payment is not received. At December 31, 2009, four <br />customers accounted for approximately 67% of contract receivables. At December <br />31, 2008, three customers accounted for approximately 72% of contract receivables. <br /> <br />For the year ended December 31, 2009, two customers accounted for approximately <br />51 % of contract revenues. For the year ended December 31, 2008, one customer <br />accounted for approximately 32% of contract revenues. <br /> <br />Employee Benefit Plan <br /> <br />The Company maintains a qualified pension plan ("the Plan ") under Section 40 I (k) of <br />the Internal Revenue Code in which all eligible employees may annually contribute up <br />to the statutory maximum amount. Company contributions are determined at the <br />discretion of management. For the years ended December 31, 2009 and 2008, <br />management elected not to match employee contributions or make additional <br />contributions to the Plan. Accordingly, no retirement plan contribution expense was <br />incurred in 2009 and 2008. <br /> <br />6 <br />