EXHIBIT 99.1
Audit Committee Charter
of
OnLine Power Supply, Inc.
I. Membership
The audit committee shall be composed of a minimum of three members. As
long as the Company is designated a Small Business, the audit committee may
include one member who is an officer of the company and two members who are
independent, outside directors; however, a majority of the members must be
independent of management at all times. When the Small Business designation
changes, or at the discretion of the Board of Directors, all audit
committee members shall be independent directors as defined by the SEC.
Committee members who are independent directors or others serving on the
committee shall be free from relationships that may, in the opinion of the
Board of Directors, interfere with their ability to exercise independent
judgment as a committee member. Each member of the audit committee shall be
capable of reading and understanding fundamental financial statements,
including a company's balance sheet, income statement, and cash flow
statement or be able to do so within a reasonable period of time after his
or her election to serve on the committee.
A former officer of the company may serve on the audit committee during
this period of small business status (even though the former officer is
receiving pension or deferred compensation payments from the company) if,
in the opinion of the Board of Directors, the former officer is able to
exercise independent judgment and will significantly assist the committee
to function by furnishing information about the company and its operations.
However, at all times, a majority of the committee members will be outside
directors not formerly serving in any capacity within the company.
The members of the Committee shall be nominated and elected to serve on the
committee by the Board of Directors. The initial committee members will be
the Chief Executive Officer of the Company and two independent directors.
The organizational meeting will be held to adopt the charter and to appoint
the initial members who will serve until their successors shall be duly
qualified and elected. Unless a chairman is elected by the full Board of
Directors, the members of the Committee may designate a chairman by
majority vote of the full Committee membership. Vacancies may be filled by
the Board of Directors until a replacement member can be duly elected.
II. Purpose
The primary purpose of the audit committee is to assist the Board of
Directors in fulfilling its oversight responsibilities and to accomplish a
higher level of compliance for financial reporting by the company. The
functions of the audit committee shall include: (1) review of the outside
audit efforts of the independent auditors and appraise the overall scope of
the audit process, (2) monitor the company's financial reporting process
and evaluate the internal accounting control system, (3) consult and
communicate with the independent auditors, financial officer(s) and senior
management providing a consistent flow of ideas and recommendations for
improvements in the reporting system to and from the Board of Directors,
management and the outside accountants.
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III. Meetings
The committee shall meet at least annually, or more frequently as
circumstances dictate or at the special request of the chairman of the
committee. As part of its job to foster open communication, the committee
should meet at least annually with the Chief Financial Officer and the
independent accountants to discuss any matters that the committee or each
of these groups believe should be discussed privately. In addition, the
committee, or at least its chairman, should meet at least quarterly with
the independent accountants and corporate management to review the
Company's financials as prescribed in Article IV.3 below.
IV. Responsibilities
To fulfill its responsibilities the Audit Committee shall:
Documents/Reports Review
1. Review this Charter annually and update it as conditions dictate.
2. Review the Company's annual financial report (10-K) or other financial
information prior to submission to the SEC, or any financial
information to be made public, including any certification, report,
opinion, or review rendered by the independent accountants.
3. Review with the Chief Financial Officer and, if the Committee believes
it to be advisable, the independent accountants, the 10-Q's and 10-K's
prior to their filing. The Chairman of the Committee may represent the
entire committee for purposes of these reviews.
4. The committee shall issue a report to the Board of Directors
disclosing whether (1) the committee has reviewed and discussed the
audited financial statements with management; (2) the committee has
discussed with the independent accountants the matters required to be
discussed by SAS 61, as may be modified or supplemented; (3) the
committee has received the written disclosures and the letter from the
independent accountants required by ISB Standard No. 1, as may be
modified or supplemented, and has discussed with the accountants the
accountants' independence: and 4) whether, based on the review and
discussions referred to in (1)-(3) above, the committee recommended to
the Board that the financial statements be included in the Annual
Report on Form 10- K or 10-KSB for the last fiscal year for filing
with the SEC. These disclosures shall appear over the printed names of
each member of the committee, and shall be included in the Company's
proxy statement, if said proxy statement relates to an annual meeting
of shareholders at which directors are to be elected (or special
meeting or written consents in lieu of such meeting). The disclosures
shall be made at least once a year.
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Independent Accountants
5. The independent accountants are ultimately accountable to the Board of
Directors, but they are also responsible for informing and advising
the Audit Committee on matters as prescribed by this charter and
directive. The Audit Committee will insure the compliance with the
rules of independence and recommend changes to the Board of Directors
when necessary. As representatives of the shareholders, the Board of
Directors has the ultimate authority and responsibility to select,
evaluate, and where appropriate, replace the outside accountants (or
in the alternative, to nominate an outside accountant to be proposed
for shareholder approval in any proxy statement).
6. After conferring with management, recommend to the Board of Directors
the selection of the independent accountants, considering their
independence and effectiveness, and approve the auditing fees and
other compensation to be paid to the independent accountants. On an
annual basis, the Committee should discuss with the outside
accountants all significant relationships or services that the
accountants have that may affect their objectivity and independence to
serve as the corporation's independent accountants and to obtain from
the accountants a written statement setting forth any relationships
between the accountants and the Company as prescribed in ISB Standard
No. 1.
7. Review the performance of the independent accountants and, after
consultation with management, recommend discharge of the independent
accountants when circumstances warrant.
8. Receive copies of the annual comments from the independent auditors on
accounting practices and policies and systems of control of the
Company, and review with them any questions, comments or suggestions
they may have relating thereto.
9. Take, or recommend that the Board take, appropriate action to oversee
the independence of the independent accountants.
Financial Reporting Processes
10. Consider and approve, if appropriate, material changes to the
Company's auditing and accounting principles and practices as
suggested by the independent accountants, management, or the internal
accounting department.
11. Make or cause to be made, from time to time, such other examinations
or reviews as the Committee may deem advisable with respect to the
adequacy of the systems of internal controls and accounting practices
of the Company and with respect to current accounting trends and
developments, and take such action with respect thereto as may be
deemed appropriate by the Committee.
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Process Improvement
12. Establish a regular system of reporting by management to the Audit
Committee and reporting procedures for the independent accountants and
internal accounting department.
13. As part of the annual audit process, review the scope of the audit to
be performed by the independent accountants.
14. Review any significant disagreements between management and the
independent accountants in connection with the preparation of the
financial statements, including the use of estimates in the accounting
process or the necessity for exercising disclosure judgments when
reporting any financial transaction or preparing footnote disclosures
to the financial statements.
15. Review, at least annually, the then current and future programs of the
internal accounting department, including the procedure for assuring
implementation of accepted recommendations made by the auditors, and
review the implementation of any accepted recommendations.
Compliance
16. Review the status of corporate compliance with all laws, regulations
and internal control procedures by receiving regularly scheduled
reports from management, legal counsel and other third parties as
determined by the committee. The committee should stay informed on
major legislative and regulatory developments that could materially
and adversely impact the Company's contingent liabilities and risks.
Be informed about future compliance issues and assure changes to
incorporate new policies to address emerging financial reporting
issues or conditions.
17. Perform any other activities consistent with this Charter, as amended,
the Company's articles and by-laws, other governing Federal and state
laws, and finally as the committee or the Board of Directors deems
necessary or appropriate.
Approved: /s/ Kris M. Budinger
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Kris M. Budinger, Director
(original officer signing Charter in 2000)
Approved: /s/ Thomas Glaza
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Thomas Glaza, Director
Approved: /s/ Ron Mathewson
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Ron Mathewson, Director