Basis of Presentation and Organization and Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2014 |
Basis of Presentation and Organization and Significant Accounting Policies [Abstract] | |
Basis of Presentation and Organization | Basis of Presentation and Organization |
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Firma Holdings Corp. (“Firma Holdings” or the “Company”), formerly known as Tara Minerals Corp. and formerly a subsidiary of Tara Gold Resources Corp. (“Tara Gold”), consists of two business segments: mining and packaging technology. |
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Our mining business segment explores and develops mining properties which may be productive of gold, silver, copper, lead, zinc, iron, industrial metals, and other associated metals. Firma Holdings was incorporated in Nevada on May 12, 2006 and is in the exploration stage. |
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Tara Gold, which historically engaged in the exploration and development of mining properties in Mexico, divested its ownership in Firma Holdings in February 2015 by distributing out its ownership in Firma Holdings to its shareholders. |
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In 2006 Tara Gold, formed Firma Holdings when it determined that some investors, prefer lead, zinc and silver projects, rather than gold and silver projects, and that capital may be easier to obtain by separating gold properties from industrial metal properties. Although this was Tara Gold's intention when it formed Firma Holdings, Firma Holdings nevertheless has interests in properties which may be productive of gold or silver. Firma Holdings formed Adit Resources Corp. (“Adit”) in 2009 to hold the Picacho Groupings and to finance the exploration and development of the Picacho Groupings solely from the sale of Adit's securities. Adit in turns owns 99.99% of American Copper Mining, S.A. de C.V. (“ACM”) (See Note 15). Firma Holdings owns 99.9% of the common stock of American Metal Mining S.A. de C.V. (“AMM”), a Mexican corporation and 87% of the common stock of Adit. Firma Holdings' operations in Mexico are conducted through AMM and ACM, since Mexican law provides that only Mexican corporations are allowed to own mining properties. |
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Our packaging technology business segment owns the “SmartPacTM” technology. Purchased in May 2014, this technology can be used for the preservation and protection of fresh fruit, vegetables and flowers during extended periods of shipping and storage. The technology is comprised of patents, trademarks and other intellectual property pertaining to systems and methods for packaging bulk quantities of fresh produce and flowers incorporating modified atmosphere packaging. |
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The consolidated financial statements include the accounts of the Company and its subsidiaries. Variable interest entities (“VIE”) over which control is achieved through means other than voting rights and where the Company is considered the primary beneficiary are included in our consolidated financial statements in those periods in which this applies. When the Company is the primary beneficiary of the VIE, the Company consolidates the entity if control is achieved through means other than voting rights such as control of the Board, certain treasury activities, certain capital structures and contractual relationships. At December 31, 2014, the Company considered Tara Gold a VIE as defined above and has consolidated the related standalone financial statement of Tara Gold within the 2014 financial results. At December 31, 2013 the Company had no joint ventures or VIEs. |
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Unless otherwise indicated, all references to “Firma Holdings” or the “Company” include the properties and operations of Adit, AMM,ACM and Tara Gold. |
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The consolidated financial statements include the financial statements of the Company and its subsidiaries. All amounts are in U.S. dollars unless otherwise indicated. All significant inter-company balances and transactions have been eliminated in consolidation. |
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The reporting currency of Firma Holdings, Adit and Tara Gold is the U.S. dollar. The functional currency of AMM and ACM is the Mexican Peso. As a result, the financial statements of the subsidiaries have been re-measured from Mexican pesos into U.S. dollars using (i) current exchange rates for monetary asset and liability accounts, (ii) historical exchange rates for non-monetary asset and liability accounts, (iii) historical exchange rates for revenues and expenses associated with non-monetary assets and liabilities and (iv) the weighted average exchange rate of the reporting period for all other revenues and expenses. In addition, foreign currency transaction gains and losses resulting from U.S. dollar denominated transactions are eliminated. The resulting re-measurement gain (loss) is recorded to other comprehensive gain (loss). |
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Current and historical exchange rates are not indicative of what future exchange rates will be and should not be construed as such. |
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Relevant exchange rates used in the preparation of the financial statements for the AMM and ACM are as follows for the year ended December 31, 2014 and 2013. Mexican pesos per one U.S. dollar: |
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| 31-Dec-14 | | | | | | |
Current exchange rate | Ps. | 14.7348 | | | | | | |
Weighted average exchange rate for the year ended | Ps. | 13.3019 | | | | | | |
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| 31-Dec-13 | | | | | | |
Current exchange rate | Ps. | 13.0652 | | | | | | |
Weighted average exchange rate for the year ended | Ps. | 12.5439 | | | | | | |
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Estimates | Estimates |
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The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management routinely makes judgments on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results could differ from those estimates. |
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Reclassifications | Reclassifications |
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Certain reclassifications, which have no effect on net loss, have been made in the prior period financial statements to conform to the current year presentation, specifically the reclassification of the Dixie Mining District to assets for sale or disposal due to that mining concessions sale in 2015. |
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Cash and Cash Equivalents | Cash and Cash Equivalents |
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For the Statements of Cash Flows, all highly liquid investments with maturity of three months or less are considered to be cash equivalents. There were no cash equivalents as of December 31, 2014 and December 31, 2013. |
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Fair Value Accounting | Fair Value Accounting |
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As required by the Fair Value Measurements and Disclosures Topic of the FASB ASC, fair value is measured based on a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted prices in active markets; (Level 2) inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. |
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The three levels of the fair value hierarchy are described below: |
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| Level 1 | Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; | | | | | | |
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| Level 2 | Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability; | | | | | | |
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| Level 3 | Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity). | | | | | | |
Concentrations | Concentrations |
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The Company maintains cash balances at highly-rated financial institutions in the United States. Each institution is insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000 for deposit accounts. The Company had one and none bank accounts in excess of $250,000, at December 31, 2014 and 2013, respectively. The Company has not experienced any losses in these accounts. |
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Recoverable Value-Added Taxes (IVA) and Allowance for Doubtful Accounts | Recoverable Value-Added Taxes (IVA) and Allowance for Doubtful Accounts |
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Impuesto al Valor Agregado taxes (IVA) are recoverable value-added taxes charged by the Mexican government on goods sold and services rendered at a rate of 16%. Under certain circumstances, these taxes are recoverable by filing a tax return and as allowed by the Mexican taxing authority. |
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Each period, receivables are reviewed for collectability. When a receivable has doubtful collectability we allow for the receivable until we are either assured of collection (and reverse the allowance) or assured that a write-off is necessary. |
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Our allowance in association with our receivable from IVA from our Mexico subsidiaries is based on our determination that the Mexican government may not allow the complete refund of these taxes. |
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| | December 31, 2014 | | | December 31, 2013 | |
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Allowance – recoverable value-added taxes | | $ | 1,436,115 | | | $ | 1,597,407 | |
Allowance – other receivables | | | 426,853 | | | | 348,433 | |
Total | | $ | 1,862,968 | | | $ | 1,945,840 | |
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Bad debt expense was $129,018 and $836,959 at December 31, 2014 and 2013, respectively. |
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Inventory | Inventory |
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Inventory is stated at the lower of cost (computed on a first-in, first-out basis) or market. The cost of finished goods includes the cost of raw material, direct and indirect labor, and other indirect manufacturing costs. The inventory as of December 31, 2014 consists of component parts for internally constructed product of the SmartPacTM product. |
Property, Plant, Equipment, Mine Development and Land | Property, Plant, Equipment, Mine Development and Land |
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Mining concessions and acquisitions, exploration and development costs relating to mineral properties with proven reserves are deferred until the properties are brought into production, at which time they will be amortized on the unit of production method based on estimated recoverable reserves. If it is determined that the deferred costs related to a property are not recoverable over its productive life, those costs will be written down to fair value as a charge to operations in the period in which the determination is made. The amounts at which mineral properties and the related deferred costs are recorded do not necessarily reflect present or future values. |
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The recoverability of the book value of each property is assessed annually for indicators of impairment such as adverse changes to any of the following: |
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• estimated recoverable ounces of copper, lead, zinc, silver or other precious minerals |
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• estimated future commodity prices |
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• estimated expected future operating costs, capital expenditures and reclamation expenditures |
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A write-down to fair value is recorded when the expected future cash flow is less than the net book value of the property or when events or changes in the property indicate that carrying amounts are not recoverable. This analysis is completed as needed, and at least annually. As of the date of this filing no events have occurred that would require the write-down of any assets the Company intends to hold. In addition, the carrying amounts of the Company's mining properties are reviewed at each balance sheet date to determine whether there is any indication of impairment. If such indication of impairment exists, the asset's recoverable amount will be reduced to its estimated fair value. As of December 31, 2014 and 2013, respectively, no indications of impairment existed for any assets the Company intends to hold. |
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Certain mining plant and equipment included in mine development and infrastructure is depreciated on a straight-line basis over their estimated useful lives from 3 – 10 years. Other non-mining assets are recorded at cost and depreciated on a straight-line basis over their estimated useful lives from 3 – 10 years. |
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Intellectual Property | Intellectual Property |
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The Company capitalized the intellectual property underlying the SmartPacTM product. The intellectual property has an indefinite life and therefore under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 350-30-35 “General Intangibles Other than Goodwill, Subsequent Measurement” will not be amortized. The carrying amount of the Company's intellectual property is reviewed at each balance sheet date to determine whether there is any indication of impairment. If such indication of impairment exists, the asset's recoverable amount will be reduced to its estimated fair value. As of December 31, 2014 no indications of impairment existed for the intellectual property. |
Financial and Derivative Instruments | Financial and Derivative Instruments |
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The Company periodically enters into financial instruments. Upon entry, each instrument is reviewed for debt or equity treatment. In the event that the debt or equity treatment is not readily apparent, FASB ASC 480-10-S99 is consulted for temporary treatment. Once an event takes place that removes the temporary element the Company appropriately reclassifies the instrument to debt or equity. |
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The Company periodically assesses its financial and equity instruments to determine if they require derivative accounting. Instruments which may potentially require derivative accounting are conversion features of debt, equity, and common stock equivalents in excess of available authorized common shares, and contracts with variable share settlements. In the event of derivative treatment, the Company marks the instrument to market. |
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Revenue Recognition | Revenue Recognition |
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Revenue from the sale of concentrate and industrial metals will be recognized when ownership passes to the purchaser at which time the following conditions are met: |
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| i) | persuasive evidence that an agreement exists; | | | | | | |
| ii) | the risks and rewards of ownership pass to the purchaser including delivery of the product; | | | | | | |
| iii) | the selling price is fixed and determinable; or, | | | | | | |
| iv) | collectivity is reasonably assured. | | | | | | |
Reclamation and Remediation Costs (asset retirement obligations) | Reclamation and Remediation Costs (asset retirement obligations) |
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Reclamation costs are allocated to expense over the life of the related assets and are periodically adjusted to reflect changes in the estimated present value resulting from the passage of time and revisions to the estimates of either the timing or amount of the reclamation and abandonment costs. |
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Future remediation costs for processing plant and buildings are accrued based on management's best estimate, at the end of each period, of the undiscounted costs expected to be incurred at a site. Such cost estimates include, where applicable, ongoing remediation, maintenance and monitoring costs. Changes in estimates are reflected in earnings in the period an estimate is revised. There were no reclamation and remediation costs accrued as of December 31, 2014 or 2013. |
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Exploration Expenses and Technical Data | Exploration Expenses and Technical Data |
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Exploration costs not directly associated with proven reserves on our mining concessions are charged to operations as incurred. |
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Technical data, including engineering reports, maps, assessment reports, exploration samples certificates, surveys, environmental studies and other miscellaneous information, may be purchased for our mining concessions. When purchased for concessions without proven reserves the cost is considered research and development pertaining to a developing mine and is expensed when incurred. |
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Income Taxes | Income Taxes |
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Income taxes are provided for using the asset and liability method of accounting in accordance with the Income Taxes Topic of the FASB ASC. Deferred tax assets and liabilities are determined based on differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. A valuation allowance is established when necessary to reduce deferred tax assets to the amount expected to be realized by management. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The computation of limitations relating to the amount of such tax assets, and the determination of appropriate valuation allowances relating to the realization of such assets, are inherently complex and require the exercise of judgment. As additional information becomes available, management continually assesses the carrying value of our net deferred tax assets. |
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Stock Based Compensation | Stock Based Compensation |
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Stock based compensation is accounted for using the Equity-Based Payments to Non-Employee's Topic of the FASB ASC, which establishes standards for the accounting of transactions in which an entity exchanges its equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity's equity instruments or that may be settled by the issuance of those equity instruments. We determine the value of stock issued at the date of grant. We also determine, at the date of grant, the value of stock at fair market value or the value of services rendered (based on contract or otherwise), whichever is more readily determinable. |
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Shares issued to employees are expensed upon issuance. |
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Stock based compensation for employees is accounted for using the Stock Based Compensation Topic of the FASB ASC. We use the fair value method for equity instruments granted to employees and will use the Black-Scholes model for measuring the fair value of options, if issued. The stock based fair value compensation is determined as of the date of the grant or the date at which the performance of the services is completed (measurement date) and is recognized over the vesting periods. |
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Comprehensive Gain (Loss) | Comprehensive Gain (Loss) |
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Total accumulated comprehensive gain (loss) and the components of accumulated other comprehensive gain (loss) are presented in the Consolidated Statements of Shareholders' (Deficit) Equity. Accumulated other comprehensive gain (loss) is composed of foreign currency translation adjustment effects and unrealized gains or losses on the fair value of stock investments. |
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Net Loss per Common Share | Net Loss per Common Share |
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Earnings per share is calculated in accordance with the Earnings per Share Topic of the FASB ASC. The weighted-average number of common shares outstanding during each period is used to compute basic earnings (loss) per share. Diluted earnings per share is computed using the weighted average number of shares plus dilutive potential common shares outstanding. Potentially dilutive common shares consist of employee stock options, warrants, and other convertible securities, and are excluded from the diluted earnings per share computation in periods where the Company has incurred a net loss. During the years ended December 31, 2014 and 2013, respectively, the Company incurred a net loss, resulting in no dilutive common shares. |
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Recently adopted and recently issued accounting guidance | Recently adopted and recently issued accounting guidance |
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Issued |
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In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, "Revenue from Contracts with Customers," (“ASU 2014-09”) which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in accounting principles generally accepted in the United States of America (“U.S. GAAP”) when it becomes effective. The new standard is effective for the Company on January 1, 2017. Early application is not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that ASU 2014-09 will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting. |
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Adopted |
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In June 2014, the FASB issued ASU No. 2014-10, “Development Stage Entities (Topic 915), Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, "Consolidation” (“ASU 2014-10”). The amendments in ASU 2014-10 removes the definition of a development stage entity from the Master Glossary of the Accounting Standards Codification, thereby removing the financial reporting distinction between development stage entities and other reporting entities from U.S. GAAP. In addition, the amendments eliminate the requirements for development stage entities to: (i) present inception-to-date information in the statements of income, cash flows, and shareholder equity; (ii) label the financial statements as those of a development stage entity; (iii) disclose a description of the development stage activities in which the entity is engaged; and (iv) disclose in the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage. The presentation and disclosure requirements in ASC Topic 915, "Development Stage Entities" are no longer required for interim and annual reporting periods beginning after December 15, 2014. The revised consolidation standards will take effect in annual periods beginning after December 15, 2015, however, early adoption is permitted. The Company has elected to early adopt the provisions of ASU 2014-10 for these audited consolidated financial statements. |
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In August 2014, the FASB issued ASU 2014-15, “Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern”. The new standard provides guidance as to management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern and to provide related footnote disclosures. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. Early adoption is permitted. The adoption of this standard is not expected to have a material impact on the Company's financial statements. The Company has elected to early adopt the provisions of ASU 2014-15 for these audited consolidated financial statements. |
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Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the American Institute of Certified Public Accountants, and the SEC, did not, or are not believed by management to, have a material impact on the Company's present or future financial position, results of operations or cash flows. |
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