EXHIBIT 99.2
VASO ACTIVE PHARMACEUTICALS, INC.
AUDIT COMMITTEE CHARTER
I. PURPOSE
The Vaso Active Pharmaceuticals, Inc. (the "Company") Audit Committee
("Committee") was established to assist the Board of Directors (the "Board") in
carrying out its oversight compliance with laws responsibilities that relate to
the Company`s accounting and financial reporting processes, audits of the
Company's financial statements, internal controls, and regulations and ethics.
This policy reaffirms that the Committee's duties are oversight in nature and
that the primary responsibility for financial reporting, internal control, and
compliance with laws, regulation, and ethics standards rests with the Company's
executive management and that the Company's external auditors are responsible
for auditing the Company's financial statements. The foregoing notwithstanding,
the Committee, in its capacity as the audit committee of the Board, has direct
responsibility for the appointment, compensation and oversight of the work of
any registered public accounting firm employed by the Company (including
resolution of disagreements between management and the auditor regarding
financial reporting) for the purpose of preparing or issuing an audit report or
related work. The Committee does not provide any expert or special assurances as
to the Company's financial statements or any professional certification as to
the external auditor's work.
The Committee has the power to conduct or authorize investigations into
any matters within the Committee's scope of responsibilities and to establish
procedures concerning the receipt, retention and treatment of complaints
regarding accounting, internal accounting controls or auditing matters and
confidential, anonymous employee submissions of concerns regarding questionable
accounting or auditing matters. The Committee is empowered to retain independent
counsel, accountants, or others to assist it in the conduct of any
investigation. The President, the Chief Financial Officer or the Corporate
Secretary of the Company shall provide, or arrange to provide, such other
information, data and services as the Committee may request. The Committee shall
conduct such interviews or discussions as it deems appropriate with personnel of
the Company, and/or others whose views would be considered helpful to the
Committee.
The Committee's prior approval is required for all auditing services
and non-audit services. However, in the event the aggregate amount of non-audit
services constitutes 5% or less of the total revenues paid by the Company to its
external auditor during the fiscal year in which non-audit services are
provided, if the Company did not recognize that these services were non-audit
services at the time of the engagement and the Committee is promptly notified of
this fact by the Company, if the Committee (or one or more members of the
Committee who are also members of the board to whom approval authority has been
delegated by the Committee) approves such non-audit services prior to their
completion, the requirement for Committee pre-approval may be waived.
II. MEMBERSHIP
The Committee members shall be appointed by, and serve at the
discretion of, the Board. Committee members shall serve until their successors
shall be duly elected and qualified and may be replaced by the Board at any
time. The Committee's chairperson (the "Chairperson") shall be designated by the
full Board or, if the Board does not do so, the Committee members shall elect a
Chairperson by a vote of a majority of the full Committee. The Committee shall
consist of at least three (3) or members of the Board. each of whom shall
satisfy the independence requirements of the American Stock Exchange.
All members of the Committee must be able to read and understand
fundamental financial statements, including a company's balance sheet, income
statement, and cash flow statement, and at least one member must have past
employment experience in finance or accounting, requisite professional
certification in accounting, or other comparable experience or background which
results in the member's financial sophistication, including being or having been
a chief executive officer, chief financial officer or other senior officer with
financial oversight responsibilities. In addition, the Committee will endeavor
to have one member who will be deemed to be an "audit committee financial
expert", as that term is defined by the U.S. Securities and Exchange Commission.
The Committee members may enhance their familiarity with finance and accounting
by participating in educational programs conducted by the Company or an outside
consultant. The Chairman and other members of the Committee shall be appointed
by the Board.
Vacancies occurring in the Committee may be filled by appointment of
the Chairman of the Board, after consultation with the Nominating and Corporate
Governance Committee of the Board, but no member of the Committee shall be
removed except by vote of a majority of directors present at any regular or
special meeting of the Board.
The Secretary of the Committee shall be appointed by the majority vote
of the Committee. The Secretary of the Committee shall prepare minutes of the
meetings, maintain custody of copies of data furnished to and used by the
Committee, and generally assist the Committee in connection with preparation of
agendas, notices of meetings and otherwise.
III. STRUCTURE AND MEETINGS
The Chairperson of the Committee shall preside at each meeting of the
Committee and, in consultation with the other members of the Committee, shall
set the frequency and length of each meeting and the agenda of items to be
addressed at each meeting. An agenda for the meeting will be circulated by the
Chairperson in advance of the meeting. The Committee will retain written minutes
of its meetings, which shall be filed with the minute books of the Company along
with minutes of Board meetings. The Committee shall meet four times per year on
a quarterly basis, or more frequently, as circumstances require. The Committee
may invite to its meetings management, internal auditors, the independent
auditors, and such other persons as the Committee deems appropriate in order to
carry out its responsibilities. The Committee may also exclude from its meetings
any persons it deems appropriate in order to carry out its responsibilities.
Management, the internal and external auditors should be invited to make
presentations to the Committee as necessary. In addition, the Committee, or at
least its Chairperson, should meet with the independent accountants and
management quarterly to review the Company's financial statements consistent
with the Committee's duties and responsibilities set forth herein.
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All meetings require the presence of a majority of the members of the
Committee to conduct business. Each Committee member shall have one vote. All
actions or determinations by the Committee must be by majority vote of the
members present. The Board shall have overall authority over all Committee
actions.
IV. DUTIES AND RESPONSIBILITIES
The Committee believes its policies and procedures should remain
flexible in order to best react to changing conditions and that the following
duties of the Committee are set forth as a guide with the understanding that the
Committee may diverge from this guide as appropriate given the circumstances. To
fulfill its responsibilities and duties, the Committee shall:
WITH RESPECT TO THE INDEPENDENT AUDITORS:
1. The Committee has the ultimate authority and responsibility to
appoint, evaluate, set compensation, oversee (including
resolution of disagreements between management and the
independent auditors regarding financial reporting) and, where
appropriate, replace the Company's independent auditors;
2. Have the sole authority to review in advance, and grant any
appropriate pre-approvals of the Company's relationship with
the independent auditor, including: (i) all auditing services
to be provided by the independent auditors; (ii) all non-audit
services to be provided by the independent auditors as
permitted by Section 10A of the Securities Exchange Act of
1934, as amended (the "Exchange Act"); (iii) all fees and
other terms of engagement for auditing and non-auditing
services. The Committee shall also review and approve
disclosures required to be included in the U.S. Securities and
Exchange Commission periodic reports filed under Section 13(a)
of the Exchange Act with respect to non-audit services;
3. Review the performance of the Company's independent auditors
on at least an annual basis;
4. On an annual basis, review and discuss with the independent
auditors all relationships the independent auditors have with
the Company in order to evaluate the independent auditor's
continued independence and to make recommendations to the
Board relating to the issues of independence. The Committee:
(i) shall ensure that the independent auditors submit to the
Committee on an annual basis a written statement (consistent
with Independent Standards Board Standards No. 1) delineating
all relationships and services that may impact the objectivity
and independence of the independent auditors; (ii) shall
discuss with the independent auditors any disclosed
relationship or services that may impact the objectivity and
independence of the independent auditors; and (iii) shall
satisfy itself as to the independent auditors' independence;
5. At least annually, obtain and review an annual report from the
independent auditor describing (i) the independent auditor's
internal quality control procedures and (ii) any material
issues raised by the most recent internal quality control
review, or peer review, of the independent auditors, or by any
inquiry or investigation by governmental or professional
authorities, within the preceding five years, respecting one
or more independent audits carried out by the independent
auditors, and any steps taken to deal with any such issues;
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6. Confirm that the lead auditor partner, or the lead audit
partner responsible for reviewing the audit, of the Company's
independent auditors has not performed audit services for the
Company for each of the five previous fiscal years;
7. Review all reports required to be submitted by the independent
auditors to the Committee under Section 10A of the Exchange
Act concerning (i) all critical accounting policies and
practices used; (ii) all alternative treatments of financial
information within GAAP that have been discussed with
management, the ramifications of such alternatives, and the
accounting treatment preferred by the independent auditors;
(iii) any other material communications with management; and
(iv) any information with respect to illegal acts in
accordance with said Section 10A;
8. Review auditor engagement letter and estimated fees;
9. Inquire if the independent auditors face any significant
litigation or disciplinary action by the U.S. Securities and
Exchange Commission;
10. Consider the report of the independent auditor's last peer
review conducted pursuant to a professional quality control
program;
11. Review, based upon the recommendation of the independent
auditors and the Audit Department, the scope and plan of the
work to be done by the independent auditors for each fiscal
year;
12. Review annually the results of internal audits and whether
recommendations made in the audits have been implemented by
management.
WITH RESPECT TO FINANCIAL STATEMENTS AND INFORMATION:
13. Review and discuss with management the Company's audited
annual financial statements and independent auditors' opinions
with respect to the statements, including the nature of any
changes in accounting principles or their application;
14. Review and discuss with management the Company's interim
quarterly financial statements and independent auditors'
opinions with respect to the statements, including the nature
of any changes in accounting principles or their application;
15. Review significant accounting policies, policy decisions and
changes, along with significant accounting, reporting or
operational issues;
16. Review the financial statements to be issued with management
and with the independent auditors to determine whether the
independent auditors are satisfied with the disclosure and
content of the financial statements to be presented to the
shareholders prior to the release of the each quarterly
financial report to shareholders;
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17. Make a recommendation to the Board regarding the inclusion of
interim and annual financial statements in the Company's
filings with the U.S. Securities and Exchange Commission based
on its review of such financial statements with management and
the independent auditors;
18. Discuss with independent auditors the matters to be discussed
by Statement on Accounting Standards No. 61, as amended,
relating to the conduct of the audit;
19. Ensure that management maintains reliability and integrity of
accounting policies and financial reporting and that
management establishes and maintains processes to assure
adequate systems of internal control;
20. Disclose in the Company's annual proxy or information
statement, the existence of the Committee and the Committee
charter and the extent to which the Committee has satisfied
its responsibilities during the prior year in compliance with
its charter;
21. Disclose the Committee's approval of any non-audit services in
the Company's public reports with the U.S. Securities and
Exchange Commission;
22. Review the management letter issued by the external auditors
and management's response;
23. Review fees paid for audit and consulting services;
24. Recommend to the Board, if appropriate, that the Company's
annual audited financial statements be included in the
Company's annual report for filing with the U.S. Securities
and Exchange Commission;
25. Prepare the report required by the U.S. Securities and
Exchange Commission to be included in the Company's annual
proxy statement and any other Committee reports required by
applicable securities laws or stock exchange listing
requirements or rules;
26. Discuss earnings press releases, as well as financial
information and earnings guidance provided to analysts and
rating agencies.
WITH RESPECT TO PERIODIC AND ANNUAL REVIEWS:
27. Periodically review separately with each of management, the
independent auditors and the Audit Department (i) any
significant disagreement between management and the
independent auditors or the Audit Department in connection
with the preparation of the financial statements, (ii) any
difficulties encountered during the course of the audit
(including any restrictions on the scope of work or access to
required information), and (iii) management's response to
each;
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28. Periodically discuss with the independent auditor, without
management being present, (i) their judgments about the
quality, appropriateness and acceptability of the Company's
accounting principles and financial disclosure practices, as
applied in its financial reporting, and (ii) the completeness
and accuracy of the Company's financial statements;
29. Consider and approve, if appropriate, significant changes in
the Company's accounting principles and financial disclosure
practices as suggested by the independent auditors, management
or the Audit Department. Review with the independent auditors,
management and the Audit Department, at appropriate intervals,
the extent to which any changes or improvements in accounting
or financial practices, as approved by the Committee, have
been implemented;
30. Review with management, the independent auditors, the Audit
Department and the Company's counsel, as appropriate, any
legal, regulatory or compliance matters that could have a
significant impact on the Company's financial statements,
including significant changes in accounting standards or rules
as promulgated by the Financial Accounting Standards Board,
the U.S. Securities and Exchange Commission or other
regulatory authorities with relevant jurisdiction;
31. Obtain and review an annual report from management relating to
the accounting principles used in preparation of the Company's
financial statements (including those policies for which
management is required to exercise discretion or judgments
regarding the implementation thereof).
WITH RESPECT TO DISCUSSIONS WITH MANAGEMENT:
32. Review and discuss with management the Company's earnings
press releases (including the use of "pro forma" or "adjusted"
non-GAAP information) as well as financial information and
earnings guidance provided to analysts and rating agencies;
33. Review and discuss with management all material off-balance
sheet transactions, arrangements, obligations (including
contingent obligations) and other relationships of the Company
with unconsolidated entities or other persons, that may have a
material current of future effect on financial condition,
changes in financial condition, results of operations,
liquidity, capital resources, capital reserves or significant
components of revenues or expenses;
34. Inquire about the application of the Company's accounting
policies and its consistency from period to period, and the
compatibility of these accounting policies with generally
accepted accounting principles, and (where appropriate) the
Company's provisions for future occurrences which may have a
material impact on the financial statements of the Company;
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35. Review and discuss with management (i) the Company's major
financial risk exposures and the steps management has taken to
monitor and control such exposures (including management's
risk assessment and risk management policies), and (ii) the
program that management has established to monitor compliance
with its Code of Ethics for principal executive officers,
directors and employees (the "Code");
36. Review and discuss with management all disclosures made by the
Company concerning any material changes in the financial
conditions or operations of the Company;
37. Obtain explanations from management for unusual variances in
the Company's annual financial statements from year to year,
and review annually the independent auditors' letter of the
recommendations to management and management's response.
WITH RESPECT TO THE INTERNAL AUDIT FUNCTION AND INTERNAL CONTROLS:
38. Review, based upon the recommendation of the independent
auditors and the head of the Audit Department, the scope and
plan of the work to be done by the Audit Department;
39. Review and approve the appointment and replacement of the head
of the Audit Department, and review and discuss on an annual
basis the performance and qualifications of the Audit
Department (both senior internal auditing executive and staff)
with management;
40. In consultation with the independent auditors and the Audit
Department, (a) review on an annual basis the adequacy of the
Company's internal audit scope, audit plans, control structure
and system, and relevant processes and the procedures designed
to insure compliance with laws and regulations, and (b)
discuss the responsibilities, budget and staffing needs of the
Audit Department;
41. Review with management, the Audit Department and the
independent auditors any significant risks or exposures the
Company may face, and to assess the steps management has taken
to minimize such risks to the Company. Particular emphasis
shall be given to adequacy of controls to expose related-party
transactions and any payments, transactions or procedures that
might be deemed illegal or improper;
42. Periodically review the processes and procedures for
management's monitoring of any significant risks or exposures
the Company may face. With the foregoing in mind, the
Committee will review reports submitted by management and give
guidance and direction, at least once per year, on how risk
management is to be conducted;
43. Establish procedures for (i) the receipt, retention and
treatment of complaints received by the Company regarding
accounting, internal accounting controls or auditing matters,
and (ii) the confidential, anonymous submission by employees
of the Company of concerns regarding questionable accounting
or auditing matters.
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COMPLIANCE WITH LAWS, REGULATIONS AND ETHICS:
44. Review reports and other information to gain reasonable
assurance that the Company is in compliance with pertinent
laws and regulations, is conducting its affairs ethically, and
is maintaining effective controls against conflict of interest
and fraud;
45. Review the Company `s policies relating to compliance with
laws, regulations, ethics, conflict of interest; misconduct,
or fraud and the resolution of such cases;
46. Review the Company's policies and processes for compliance
with U.S. and foreign country export controls, laws and
regulations, including, but not limited to the Foreign Corrupt
Practices Act and the USA Patriot Act;
47. Review compliance reports received from regulators and
consider legal and regulatory matters that may have a material
impact on the financial statements;
48. Review external auditor's reports that relate to the
monitoring of compliance with the Company's policies on
business ethics;
49. Review policies and procedures covering officers' expense
accounts and perquisites, including their use of corporate
assets, and consider the results of any review of these areas
by internal or external auditors.
OTHER MATTERS:
50. Review and approve all related-party transactions;
51. Review and approve (i) any change or waiver in the Company's
Code, and (ii) any disclosure made on Form 8-K regarding such
change or waiver.
52. Establish the policy for the Company's hiring of employees or
former employees of the independent auditors who were engaged
on the Company's account;
53. Review any management decision to seek a second opinion from
independent auditors other than the Company's regular
independent auditors with respect to any significant
accounting issue;
54. Perform any other activities consistent with this Charter, the
Company's By-laws and governing law as the Committee or the
Board deems necessary or appropriate.
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V. PERFORMANCE EVALUATION
The Committee shall annually review and reassess the adequacy of this
Charter and the performance of the Committee, and recommend any proposed changes
to the Board.
VI. REPORTING
The Committee shall make regular reports to the Board with respect to
the Committee's activities and determinations including, without limitation, the
result of the Company's annual audit and minutes of the Committee's meetings.
The report shall provide an overview of the Committee's activities, findings of
importance, conclusions, recommendations, and items that require follow-up or
action by the Board. Presentations may be made at more frequent intervals if
deemed necessary by the Committee or as requested by the Board.
VII. AUTHORITY TO ENGAGE ADVISORS
The Committee shall have the authority to obtain advice and seek assistance from
internal or external legal, accounting or other advisors as it determines
necessary to carry out its duties and responsibilities.
VIII. COMPENSATION
The compensation of members of the Committee may be determined from
time to time by resolution of the Board. Members of the Committee shall be
reimbursed for all reasonable expenses incurred in attending such meetings.
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