2. Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2012

2. Summary of Significant Accounting Policies

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Financial Statement Presentation

The consolidated financial statements include the transactions of the Company and its subsidiaries. All inter-company accounts and transactions have been eliminated in consolidation.

Net Income/ (Loss) Per Common Share

Income/ (loss) per share of common stock is calculated by dividing the net income/ (loss) by the weighted average number of shares of common stock outstanding during the period. The Company has no potentially dilutive securities in 2012 and 2011. Accordingly, basic and dilutive income (loss) per common share are the same.

Use of Estimates

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 amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Foreign Currency Translation

The functional currency of the Company's operations in the UK is the British Pound Sterling. The financial statements of the Company were translated to US dollars using year-end exchange rates for the balance sheets and weighted average exchange rates for the statements of operations and statements of cash flows. Equity transactions were translated using historical rates. Foreign currency translation gains or losses as a result of fluctuations in the exchange rates are reflected in the statements of stockholders’ equity in total comprehensive income or loss.

Revenue Recognition

Sales revenues are generally recognized when an agreement exists and price is determinable, the products are shipped to the customers or services are rendered, net of discounts, returns and allowance and collectability is reasonably assured. In excess of 99% of both revenues generated and the cost of sale incurred relate to the EMS service offering (manufacturing of OEM customer products) with the remaining percentage of revenue and cost of sale relating to the provision of a market return and repair service.

Shipping and Handling Costs

The Company’s shipping costs are split between cost of goods sold and operating expenses for all periods presented. The amount included in operating expenses was $165,200 ($83,000 in 2011).

Warranty

All products manufactured are warranted to be of satisfactory quality, comply with specification and free from defects in components (subject to the Company being able to prove they comply with specification) and workmanship. The products are warranted for a period of 12 months from the date of delivery. In the event that product fails to comply with this warranty, within 5 days of receipt the customer can return the product for replacement or beyond this period return the product for repair. For items repaired, the cost of the repair is expensed at the time it is incurred. Axiom Manufacturing Services does not estimate how much will be warranted as the amount in the past has not been material.

Cash Equivalents

The Company considers highly liquid instruments with original maturity of three months or less to be cash equivalents

Trade Receivables

Trade receivables are stated at net realizable value. This value includes an appropriate allowance for estimated uncollectible accounts. The allowance is calculated based upon the level of past due accounts and the relationship with and financial status of our customers. The Company did not write off any bad debt during the years ended December 31, 2012 and 2011, and thus has not set an allowance for doubtful accounts for the year ended December 31, 2012

Inventory

Inventories are stated at the lower of cost or market value. Cost has been determined using the first-in, first-out method. Inventory quantities on-hand are regularly reviewed, and where necessary, reserves for excess and unusable inventories are recorded. Inventory consists of raw materials (components), work in progress and finished goods and is valued as follows: raw materials are valued at the standard cost of the material; both work in progress and finished goods are valued at the standard cost of the material used to

manufacture these products plus an allowance for labor and overhead utilized to get these products to their current stage of completion.

Property, plant and Equipment

Property, plant and equipment are recorded at cost, net of accumulated depreciation. Depreciation is computed on a straight-line basis over estimated useful lives of various asset classes as follows:

Building & building improvements			20 to 45 years
Machinery & equipment			5 to 10 years
Fixtures & fittings			3 to 8 years

Upon retirement or sale, the costs of the asset disposed and the related accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the determination of income. Repairs and maintenance costs are expensed as incurred. Annually, the Company routinely reviews its property and equipment for impairment, and accordingly, will write-down those assets to their estimated fair value.

Income Taxes

Deferred taxes are provided on an asset and liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss carry forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the difference between the reported amounts of assets and liabilities and their tax basis. 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. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

Fair Value of Financial Instruments

The carrying amounts of the Company's financial instruments, which include cash, accounts receivable, accounts payable, and accrued expenses are representative of their fair values due to the short-term maturity of these instruments.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentration of credit risk consist primarily of cash and accounts receivable. The Company maintains cash balances at financial institutions within the UK which are insured by the Financial Services Authority up to limits of approximately $138,200. The Company also maintains cash balances at financial institutions which, from time to time, may exceed Federal Deposit Insurance Corporation insured limits of $250,000 for banks located in the US. Balances at financial institutions within the UK that are not insured and in excess of the Financial Services Authority limits amounted to$138,200 and $132,000 at December 31, 2012 and 2011 respectively. As of December 31, 2012 and 2011, the Company did not have any deposits in excess of the federally insured limit in its US banks. The Company has not experienced any losses with regard to its bank accounts and believes it is not exposed to any risk of loss on its cash bank accounts.

Accounts receivable are unsecured and are derived from revenues earned from customers located in the UK. Five customers represent seventy percent (70%) and seventy six percent (76%) of sales respectively in 2012 and 2011. Five customers represent seventy five percent (75%) and sixty nine percent (69%) of Accounts Receivable respectively in 2012 and 2011. The majority of revenue is generated from the UK.

Advertising Costs

The Company expenses advertising costs when incurred. Advertising costs incurred amounted to $25,600 and $26,900 for December 31, 2012 and 2011 respectively.

Comprehensive Income

The Company's comprehensive income for the year ended December 31, 2012 and 2011 includes foreign currency translation gains.

Funding Arrangements

The Company has an invoice discounting facility provided by its bankers under which the bank advances up to 80% of the value of qualifying invoices on presentation. This is repaid when the customer settles the invoice with the remaining 20% released to the Company less bank charges at this time. The Company is responsible for collecting the debt. Security for advances under this facility is provided by a charge over the accounts receivable of the Company. Axiom Manufacturing Services accounts for this as a transfer of receivables as a secured borrowing with pledge of collateral. Management believes that this treatment complies with guidance provided in FASB ASC 860-30-25. Borrowings on this facility amounted to $0.3 million and $1.3 million December 31, 2012 and 2011, respectively. Borrowings are included within ‘Line of Credit’ on the balance sheet. Interest expense amounted to $0.008 million and $0.04 million for the years ending December 31, 2012 and 2011. The interest charged on this facility is included within interest expense under ‘Other Income and Expenses’. Charges incurred amounted to $0.2 for both the years ended December 31, 2012 and 2011. Charges are included within ‘Operating Expenses’ in the statement of operations and comprehensive income.

Line of Credit

The components of this balance sheet account are shown below:

	December 31, 2012	December 31, 2011
	US $'000	US $'000

Current Account	3,226	251
Deposit Account	49	47
Invoice Finance	(304)	(1,315)
Unpresented Checks	(78)	(8)

Total	2,893	(1,025)

Critical Accounting Policies

The Company considers revenue recognition and the valuation of accounts receivable, allowance for doubtful accounts, and inventory and reserves as its significant accounting policies. Some of these policies require management to make estimates and assumptions that may affect the reported amounts in the Company's financial statement

Restructuring

To downsize and streamline operations and rationalize manufacturing facilities, the Company has periodically recorded restructuring costs.

Recent Accounting Pronouncements

In June 2009, the FASB established the Accounting Standards Codification (“Codification” or “ASC”) as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in accordance with generally accepted accounting principles in the United States (“GAAP”). Rules and interpretive releases of the Securities and Exchange Commission (“SEC”) issued under authority of federal securities laws are also sources of GAAP for SEC registrants. Existing GAAP was not intended to be changed as a result of the Codification, and accordingly the change did not impact our financial statements. The ASC does change the way the guidance is organized and presented.

We reviewed all other recently issued accounting pronouncements and determined these have no current applicability to the Company or their effect on the financial statements would not have been significant.

- Definition

The entire disclosure for all significant accounting policies of the reporting entity.

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OXFORD TECHNOLOGIES INC 10-K