Audit Committee Charter

Purpose

The purpose of the Cyber Holdings, Inc. (CHI) Audit Committee is to:

  • Oversee CHI’s accounting and financial reporting processes, CHI’s internal systems of control and audits of CHI’s financial statements.
  • Oversee CHI’s relationship with its independent accountants and/or auditors, including appointing or changing CHI’s accountants and/or auditors and ensuring their independence.
  • Provide oversight regarding significant financial matters, including CHI’s tax planning, treasury policies, currency exposures, dividends and share issuance and repurchases.
  • In carrying out Audit Committee functions, the Audit Committee must maintain free and open communication with CHI’s independent accountants and/or auditors and CHI’s management.

Appointment and Membership Requirements

The Audit Committee shall be made up of at least three (3) independent members of the Board of Directors, or such greater number as may be required by an exchange on which CHI’s common shares may ay some point become traded. Audit Committee members are appointed by the Board of Directors. The Board of Directors decides the Audit Committee’s exact number and can at any time remove or replace a Committee member. The Board of Directors will also make all determinations regarding satisfaction of the membership requirements described below.

The Audit Committee will, if and as required, comply with all applicable provisions of the Sarbanes-Oxley Act of 2002 and the rules and regulations of the Securities and Exchange Commission and The Nasdaq Stock Market, including those related to independence. At least one member of the Audit Committee must have past experience in finance or accounting, or comparable experience or background, which results in an understanding of GAAP, an ability to apply GAAP principles in assessing accounting policies, and experience in preparing and evaluating financial statements with a level of complexity comparable to CHI’s financial statements.

Each member of the Audit Committee must be able to read and understand fundamental financial statements, including CHI’s balance sheet, income statement and cash flow statement.

Responsibilities

The Audit Committee’s main responsibility is to oversee CHI’s financial reporting process (including CHI’s systems of internal controls). The Audit Committee believes that CHI’s policies and procedures should remain flexible in order to best react to changing conditions and circumstances. The following list includes the Audit Committee’s main recurring processes in carrying out its responsibilities. This list is intended as a guide, with the understanding that the Audit Committee can supplement it as appropriate, consistent with the requirements of the United States Securities and Exchange Commission and the Nasdaq.

  1. Hiring and Selection of Auditors. The Audit Committee will directly appoint, retain and compensate CHI’s independent accountants and/or auditors. These independent accountants and/or auditors will report directly to, and be responsible to, the Audit Committee.
  2. Approval of Audit and Non-Audit Services. The Audit Committee is responsible for overseeing services provided by the independent accountants and/or auditors, including establishing a policy to decide what services will be performed and the approval requirements for these services.
  3. Auditor Independence. The Audit Committee is responsible for making sure it reviews at least annually a formal written statement explaining all relationships between the outside accountants and/or auditors and CHI and its subsidiaries, consistent with the applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountants and/or auditor’s communications with the Audit Committee concerning independence. The Audit Committee will maintain an active dialogue with the independent accountants and/or auditors, covering any disclosed relationships or services that may impact their objectivity and independence. The Audit Committee will review all proposed hires by CHI or its subsidiaries of management level or higher individuals formerly employed by the independent accountants and/or auditors who provided services to CHI. The Audit Committee will take, or recommend to the Board of Directors that it take, appropriate actions to oversee the independence of CHI’s outside accountants and/or auditors.
  4. Oversight of Accountants and/or Auditors; Audit Plan. The Audit Committee will be responsible for CHI’s relationship with its independent accountants and/or auditors. The Audit Committee will discuss with the independent accountants and/or auditors the overall scope and plans for their audits and other financial reviews. The Audit Committee will oversee the rotation of the accountants and/or audit partners of CHI’s independent auditors as required by the Sarbanes-Oxley Act and the rules of the SEC. The Audit Committee will be responsible for reviewing and resolving any disagreements between CHI’s management and the independent accountants and/or auditors regarding financial controls or financial reporting.
  5. Internal Controls; Risk Assessment. The Audit Committee will discuss with management and the independent accountants and/or auditors the design, implementation, adequacy and effectiveness of CHI’s internal controls. The Audit Committee will also meet separately with the independent accountants and/or auditors, with and without management present, to discuss the results of their examinations. The Audit Committee will provide oversight over the system of internal controls, relying upon management’s and the independent accountants and/or auditors’ representations and assessments of, and recommendations regarding, these controls. The Audit Committee will review any required disclosures regarding CHI’s internal controls.
  6. Internal Audit Processes. The Audit Committee will review the appointment of an internal accountants and/or auditing executive and any significant issues raised in reports to management by the internal audit team. The Audit Committee will also provide oversight of the internal audit department objectives, its mission, responsibilities, independence, performance and annual plan.
  7. Quarterly and Annual Financial Statements. The Audit Committee will review and discuss, when required, the annual audited financial statements and quarterly financial statements with management. The Audit Committee will be responsible for making a recommendation to the Board of Directors as to whether CHI’s annual audited financial statements should be included in CHI’s Annual Report on Form 10-K when and/or if such documents are required.
  8. Proxy Report. The Audit Committee will, when and if required, prepare any report required to be prepared by it for inclusion in any proxy statement of CHI under SEC rules and regulations.
  9. Earnings Announcements. When and/or if required, the Audit Committee will review and discuss with management CHI’s quarterly earnings announcements and other public announcements regarding CHI’s results of operations.
  10. Critical Accounting Policies. The Audit Committee will obtain, review and discuss reports from the independent accountants and/or auditors about:
    • All critical accounting policies and practices which CHI will use, and the qualities of those policies and practices;
    • All alternative treatments of financial information within generally accepted accounting principles that the auditors have discussed with management officials of CHI, ramifications of the use of these alternative disclosures and treatments, the treatment preferred by the independent auditors and the reasons for favoring that treatment; and
    • Other material written communications between the independent accountants and/or auditors and CHI management, such as any management letter or schedule of unadjusted differences.
    • When and/or if required, the Audit Committee will also discuss with the independent accountants and/or auditors and then disclose those matters whose disclosure is required by SAS 61, including any difficulties the independent auditors encountered in the course of the audit work, any restrictions on the scope of the independent auditors’ activities or on their access to requested information, and any significant disagreements with management.
  11. CEO and CFO Certifications. When and/or if required, the Audit Committee will review the CEO and CFO disclosure and certifications under Sections 302 and 906 of the Sarbanes-Oxley Act.
  12. Related Party Transactions. The Audit Committee will review and approve all related party transactions.
  13. Anonymous Complaint Handling Process. The Audit Committee will have responsibility for establishment and oversight of processes and procedures for (a) the receipt, retention and treatment of complaints about accounting, internal accounting controls or audit matters and (b) confidential and anonymous submissions by employees concerning questionable accounting, auditing and internal control matters. All such relevant complaints and submissions must be reported to the Audit Committee.
  14. Ability to Investigate; Retention of Advisors. The Audit Committee has the power to investigate any matter brought to its attention, with full access to all CHI books, records, facilities and employees. The Audit Committee also has the power to retain independent counsel or other experts and advisors, and the Audit Committee will have funding sufficient for this purpose and the power to use such funding to compensate its counsel, experts and advisors.
  15. Review of CHI Policies. The Audit Committee will be responsible for reviewing and approving all changes to CHI’s Insider Trading Policy, Investment in Marketable Securities and Accounting for Marketable Securities Policy, Foreign Exchange and Accounting for Foreign Currency Hedges Policy, Code of Conduct and Global Signature and Spending Authority Policy. The Audit Committee will periodically review these policies with management and CHI’s compliance and securities counsel and implement such changes as are required to ensure these policies remain relevant and effective given changing legal and corporate governance requirements and goals.
  16. Review of Charter. The Audit Committee will review and reassess the adequacy of this charter at least once a year.

It is NOT the Audit Committee’s responsibility to prepare and certify CHI’s financial statements, to guarantee the independent accountants and/or auditors’ report, or to guarantee other disclosures by CHI. These are the fundamental responsibilities of management and the independent auditors. The Audit Committee members are not full-time CHI employees and do not perform the functions of auditors and accountants.

Restrictions on Independent Auditors Services

CHI’s independent accountants and/or auditors cannot perform any of the following services for CHI:

  • Bookkeeping or other services related to CHI’s accounting records or financial statements;
  • Financial information systems design and implementation;
  • Appraisal or valuation services, fairness opinions or contribution-in-kind reports;
  • Actuarial services;
  • Internal audit outsourcing services;
  • Management or human resources functions;
  • Broker or dealer, investment adviser or investment banking services;
  • Legal services and expert services unrelated to the audit; and
  • Any other service that the Public Company Accounting Oversight Board of Directors determines, by regulation, would impair the independence of CHI’s accountants and/or auditors.

Compensation

The members of the Board of Directors not serving on the Audit Committee determine the amount of compensation, if any, that Audit Committee members receive for their services. Audit Committee members cannot receive any compensation from CHI except the compensation they receive for their services as members of the Board of Directors or any committee of the Board of Directors, and except for reimbursement of their expenses.

Meetings and Minutes

The Audit Committee will meet at least 4 times each year, and will keep minutes of each meeting. The Audit Committee decides when and where it will meet, and must deliver a copy of this schedule in advance to the Board of Directors.

Unless the Board of Directors or this Charter provides otherwise, the Audit Committee can make, alter or repeal rules for the conduct of its business. In the absence of these rules, the Audit Committee will conduct its business in the same way the Board of Directors conducts its business.

Delegation of Authority; Chair of Audit Committee

The Audit Committee can delegate to one or more members of the Audit Committee the authority to pre-approve audit and permissible non-audit services, as long as this pre-approval is presented to the full Audit Committee at its scheduled meetings.

The Audit Committee can delegate to one or more members of the Audit Committee the authority to pre-approve related party transactions, as long as this pre-approval is presented to the full Audit Committee at its scheduled meetings.

The Audit Committee cannot delegate its responsibilities to non-committee members.

The Audit Committee can appoint a chair of the committee, and can change its decision regarding who will be chair at any time.