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, I Metric Engineering, Inc. and Subsidiary Notes to Consolidated Financial Statements June 30, 2008 NOT FOR PUBLIC INSPECTION / DO NOT COPY This financial statement is private and exempt from public inspection. or copying of public records pursuant to Florida Statutes 119.071 (I )(c). 1. Summary of Shmificant Accountinl! Policies This summary of significant accounting policies of Metric Engineering, Inc. and Subsidiary (the "Company") is presented to assist in understanding the Company's financial statements. These accounting policies conform to U.S. generally accepted accounting principles ("GAAP") and have been consistently applied in preparation of the financial statements. Business Activity Metric Engineering, Inc., a Florida corporation founded in July 1976, is a professional engineering firm providing consulting services in the areas of planning, engineering, design, and implementation. The Company's projects are specialized in consulting engineering. Principles of Consolidation The consolidated financial statements include the accounts of Metric Engineering, Inc. and its whol- ly owned subsidiary, Dynamic Corporate Consultants, Inc. All significant intercompany transac- tions and balances have been eliminated in consolidation. Method of Accounting The Company maintains its records on the cash basis. The accompanying financial statements reflect such adjustments as necessary to present the financial statements in accordance with U.S. generally accepted accounting principles. Consequently, these financial statements are presented on an accrual basis. Cash Equivalents For the purposes of the statement of cash flows, cash equivalents are considered to be those time deposits with a maturity of three months or less. Property and Equipment Property and equipment are carried at cost. Depreciation of property and equipment for financial reporting purposes is provided using straight line and accelerated methods over the following estimated useful lives: Years Furniture and fixtures Field equipment Auto and truck Leasehold improvements 5-7 5-7 5-7 5 -15 Depreciation for tax purposes is provided by the Modified Accelerated Cost Recovery System (MACRS). Expenditures for maintenance and repairs are expensed as incurred. Expenditures for betterments and renewals are capitalized. The carrying amount of assets sold or retired and related accumulated depreciation are eliminated from the accounts in the year of disposal and the resulting gain or loss is included in income. 5