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Craig A. Smith & Associate, Inc. and MPS31), LLC Notes to Financial Statements NOTE 1 — NATURE OF THE COMPANIES & SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Description of the Companies 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 for tax purposes. 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 MPS31D (the "Companies") held under common control. All intercompany balances and transactions have been eliminated in the combined financial statements. Cash and Cash Equivalents For purposes of the statement of cash flows, the Companies consider 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 thirty-nine 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 $51,280 and $49,099 for the years ended December 31, 2016 and 2015 which is included in amortization / depreciation on the combined statements of income. Leasehold Improvements The general policy for leasehold improvements is that they are to be amortized over the shorter of the expected life of the leasehold improvement or the term of the lease. 11B.21 M