2.        Charter

2.1        This charter is the written charter of the Audit Committee (the “Charter”).

3.        Composition

3.1        The Audit Committee will at all times consist of, at a minimum, two (2) directors.

3.2        Each of the members of the Audit Committee will meet the independence and qualification requirements as provided in the American Stock Exchange Company Guide, and applicable laws and regulations, including Rule 10A-3 of the rules and regulations promulgated under the Securities Exchange Act of 1934, as amended.

3.3        At least one (1) member of the Audit Committee will have accounting or related financial management expertise as required under the American Stock Exchange Company Guide.

3.4        At least one (1) member of the Audit Committee should, circumstances permitting, be an “audit committee financial expert” as that term is defined under Item 401(e) of Regulation S‑B.

3.5        The Nominating Committee will recommend nominees for appointment to the Audit Committee annually and as vacancies or newly created positions occur.  Audit Committee members will be appointed by the Board and may be removed by the Board at any time.

3.6         The Nominating Committee will recommend to the Board, and the Board will designate, the chair of the Audit Committee (the “Chair”).

3.7        The Chair will be responsible for leadership of the Audit Committee, including preparing the agenda, presiding over Audit Committee meetings, making Audit Committee assignments, and reporting the Audit Committee’s actions to the Board.

4.        Meetings

4.1        The Audit Committee will meet not less than on a quarterly basis, and as often as it deems necessary or appropriate, to perform its duties and responsibilities under the Charter, either in person or telephonically.

4.2        The Audit Committee may create subcommittees, each of which will report to the Audit Committee.

4.3        The Audit Committee will report to the full Board with respect to its meetings, and provide the Board with a copy of the minutes of all Audit Committee meetings.

4.4        The majority of the members of the Audit Committee constitute a quorum, and the Audit Committee will act at an in person or telephonic meeting only by majority vote.  The Audit Committee may also act by unanimous written consent.

4.5        The Audit Committee will meet separately, periodically, with management, with internal auditors (or other persons responsible for the internal audit function) and with the outside auditors.

5.        Audit Committee Responsibilities, Duties, and Powers

5.1        General

5.1.1        The Audit Committee’s principal responsibility is one of oversight.

5.1.2        Management is responsible for the Company’s financial reporting process including its system of internal control, and for the preparation of consolidated financial statements in accordance with generally accepted procedures designed to assure compliance with accounting standards and applicable laws accounting principles.  The Company’s independent auditors are responsible for auditing those financial statements.  Our responsibility is to monitor and review these processes.  It is not our duty or our responsibility to conduct auditing or accounting reviews or procedures.  We are not employees of the Company and we may not be, and we may not represent ourselves to be or to serve as, accountants or auditors by profession or experts in the fields of accounting or auditing.  Therefore, we have relied, without independent verification, on management’s representation that the financial statements have been prepared with integrity and objectivity and in conformity with accounting principles generally accepted in the United States of America and on the representations of the independent auditors included in their report on the Company’s financial statements.

5.1.3        Our oversight does not provide us with an independent basis to determine that management has maintained appropriate accounting and financial reporting principles or policies, or appropriate internal controls and regulations.  Furthermore, our considerations and discussions with management and the independent auditors do not assure that the Company’s financial statements are presented in accordance with generally accepted accounting principles, that the audit of our Company’s financial statements has been carried out in accordance with generally accepted auditing standards or that our Company’s independent accountants are in fact “independent.”

5.1.4        The Committee’s specific responsibilities, duties, and powers are set forth below.

5.2        Financial Statements and Other Financial Information

5.2.1        Annual Financial Statements.  The Audit Committee will review, evaluate, and discuss with outside auditors and with management the Company’s annual audited financial statements and other related information prior to filing or distribution.  The review should include discussion of the disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and the outside auditors’ opinion with respect to such financial statements, including reviewing the nature and extent of any significant changes in accounting principles or the application of such accounting principles.  The Committee will determine whether to recommend to the Board that the financial statements be included in the Company’s annual report on Form 10‑KSB for filing with the SEC.

5.2.2        Interim Financial Statements.  The Audit Committee will review and evaluate with outside auditors and with management, and require the outside auditors to review, the Company’s interim financial statements and other related information prior to filing or distribution.  The review should include discussion of the disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”  The Committee will determine whether to recommend to the Board that the financial statements be included in the Company’s annual report on Form 10-QSB for filing with the SEC.

5.2.3        Earnings Press Releases and Other Financial Information.  The Audit Committee will discuss with management the Company’s policies and practices regarding earnings press releases and supplemental information releases, as well as any financial information and earnings guidance, if any, provided by the Company to analysts and rating agencies.

5.3        Outside Auditors

5.3.1        Engagement and Retention.  The Audit Committee will select, compensate, oversee, retain, and, if appropriate, replace any outside auditors of the Company engaged for the purpose of preparing or issuing an audit report or performing other audit review or attest services for the issuer.  The outside auditors shall report directly to the Audit Committee.

5.3.2        Auditor Independence.  The Audit Committee will review and discuss with the outside auditors all significant relationships that the auditors and their affiliates have with the Company and its affiliates in order to determine the auditors’ independence.  The Audit Committee shall:  (i) request, receive and review on a periodic basis, a formal written statement from the outside auditors, consistent with the Independent Standards Board, Standard No. 1, delineating all relationships between the outside auditors and the Company and describing all services provided by the outside auditors and the related fees; (ii) discuss with the outside auditors any disclosed relationships or services that may impact the objectivity and independence of the outside auditors; and (iii) recommend that the Board take appropriate action in response to the outside auditors’ report to satisfy itself of the outside auditors’ independence.

5.3.3        Pre-Approval of Audit and Non-Audit Services.  The Audit Committee will pre-approve all engagement letters and fees for all auditing services (including providing comfort letters in connection with securities underwritings) and all non-audit services performed by the outside auditors, subject to any exceptions to this pre-approval requirement under applicable SEC rules.  This pre-approval authority may be delegated to one or more members of the Committee, and any such member or members shall report any decisions made under that delegation to the full Committee at its next scheduled meeting.  The Committee shall not approve any non-audit services by outside auditors that are prohibited by SEC rules or AMEX Listing Rules.  The Audit Committee may adopt policies and procedures regarding these pre-approval requirements.

5.3.4        Report on Auditor’s Internal Control Procedures and Peer Review.  The Audit Committee will obtain and review a report by the outside auditors’ describing:  (i) the outside auditors’ internal quality control procedures and (ii) any material issues raised by the most recent internal quality-control review or peer review of the outside auditors, or by any inquiry or investigation by governmental or professional authorities, within the preceding five (5) years, with respect to one or more outside audits carried out by the outside auditors, and any steps taken to deal with any such issues.

5.3.5        Audit Scope, Plan, and Procedures.  The Audit Committee will review the outside auditors’ audit plan, including discussing scope, staffing, locations, reliance upon management, and internal audit and general audit approach.  Receive confirmation from the outside auditors that no limitations have been placed on the scope or nature of their audit scope, plan, or procedures.

5.3.6        Relationship Between Auditors and Management During Audit.  The Audit Committee will review the results of any material difficulties, differences, or disputes with management encountered during the course of the audit or reviews and responsible for overseeing the resolution of such difficulties, differences, and disputes.

5.3.7        Significant Findings and Management Responses.  The Audit Committee will review significant findings prepared by the outside auditors and the Company’s accounting department together with management’s responses to such findings.

5.3.8        Critical Accounting Policies.  The Audit Committee will review and discuss all critical accounting policies identified to the Committee by the outside auditors.

5.3.9        Alternative Treatments.  The Audit Committee will review the alternative treatments of financial information under generally accepted accounting principles discussed by the outside auditors with management, the ramifications of each treatment, and the method preferred by the Company’s outside auditors.

5.3.10        Judgments About Accounting Principles.  Consider the outside auditors’ judgments about the quality and appropriateness of the Company’s accounting principles as applied in its financial reporting.

5.3.11        SAS 61 Communications.  The Audit Committee will discuss certain matters required the outside auditor’s judgments as to the quality, not just the acceptability, of the Company’s accounting principles and such other matters that required to be communicated to audit committees in accordance with AICPA SAS 61, including

5.3.12        Section 10A Assurances.  The Audit Committee will obtain from the outside auditors assurance that they have complied with Section 10A of the Securities Exchange Act of 1934, as amended, and the rules promulgated under that statute.

5.3.13        Audit Partner Rotation.  The Audit Committee will require the rotation of the outside auditors’ lead audit partner and concurring partner no less than every five (5) years or more frequently if required, and other “audit partners” as may be required by SEC rules, the Public Company Accounting Oversight Board or the AMEX Listing Rules.

5.3.14        Hiring Former Employees of Auditor.  The Audit Committee may adopt policies and procedures regarding the hiring of employees or former employees of the Company’s independent auditing firm.

5.4        Internal Controls and Procedures

5.4.1        Integrity of Financial Controls.  The Audit Committee, in consultation with the management, the outside auditors, and the Chief Financial Officer, will consider the integrity of the Company’s financial reporting internal controls and procedures, including, but not limited to, any controls or procedures arising in connection with Section 404 of the Sarbanes-Oxley Act of 2002.

5.4.2        Risk Assessment and Management.  The Audit Committee will discuss significant financial risk exposures (whether financial, operating, or otherwise) and the guidelines and policies that management has implemented to monitor, control, and report such exposures.

5.5        Accounting Department

5.5.1        Budget and Related Items.  The Audit Committee will review the budget, plan, changes in plan, activities, organizational structure, and qualifications of the Company’s accounting department, as needed.

5.5.2        Appointment of CFO.  The Audit Committee will review the appointment and performance of the Chief Financial Officer, and review financial and accounting personnel succession planning with the Company.

5.5.3        Significant Findings.  The Audit Committee will review significant findings prepared by the Company’s accounting department together with management’s response and follow-up to these findings.

5.6        Other Audit Committee Responsibilities, Duties, and Powers

5.6.1        Annual Report.  The Audit Committee will prepare an annual report of the Audit Committee for inclusion in the Company’s annual proxy statement.

5.6.2        Receipt of Complaints and Concerns Regarding Accounting and Audit Matters.  The Audit Committee will establish procedures for (i) the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or audit matters; and (ii) the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters.

5.6.3        General Investigative Powers.  The Audit Committee may investigate any matter brought to the Committee’s attention related to financial, accounting or audit matters, or any other matter that the Committee deems appropriate in fulfilling its responsibilities under the Charter.

6.        Miscellaneous

6.1        The Audit Committee will be given the resources and assistance necessary to discharge its responsibilities, including unrestricted access to Company personnel and documents.  The Audit Committee will also have the authority to engage and obtain advice and assistance from internal or external legal, accounting or other advisors, as it deems necessary or appropriate.  The Audit Committee will have the sole authority to retain and terminate any advisor used to assist the Audit Committee on matters within its sphere of responsibility, including the sole authority to approve fees and other retention terms.

6.2        At least annually, the Audit Committee will review and assess the adequacy of the Charter and recommend any proposed changes to the Nominating and Governance Committee.

6.3        At least annually, the Audit Committee will evaluate its own performance and report to the Board on such evaluation.