Barrett & Scibelli, LLC

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1 R GRAPHIC COMMUNICATIONS CONFERENCE INTERNATIONAL BROTHERHOOD of TEAMSTERS AMERICA SCORES NEW ENGLAND, INCORPORATED FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS' REPORT AUGUST 31, 2016 AND 2015 B & S Barrett & Scibelli, LLC Certified Public Accountants UNION GCC/IBT LABEL 56

2 FINANCIAL STATEMENTS AUGUST 31, 2016 AND 2015 TABLE OF CONTENTS INDEPENDENT AUDITORS' REPORT FINANCIAL STATEMENTS Statements of Financial Position...3 Statements of Activities...4 Statements of Functional Expenses Statements of Cash Flows...7 NOTES TO FINANCIAL STATEMENTS

3 R B & S Barrett & Scibelli, LLC Certified Public Accountants INDEPENDENT AUDITORS' REPORT To the Board of Directors of America SCORES New England, Incorporated Jamaica Plain, Massachusetts We have audited the accompanying financial statements of America SCORES New England, Incorporated (a Massachusetts nonprofit organization), which comprise the statements of financial position as of August 31, 2016 and 2015, and the related statements of activities, functional expenses and cash flows for the years then ended, and the related notes to the financial statements. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors' Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. 8 Winchester Place, Suite 201, Winchester, MA T F UNION GCC/IBT GRAPHIC COMMUN ICA TIONS INTERNATIONALB R OTHER CE FEREN CON LABEL HOO D of TEAM STERS 56

4 Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of America SCORES New England, Incorporated, as of August 31, 2016 and 2015, and the changes in its net assets and its cash flows for the years then ended, in accordance with accounting principles generally accepted in the United States of America. Barrett & Scibelli, LLC Winchester, Massachusetts March 29,

5 STATEMENTS OF FINANCIAL POSITION AUGUST 31, 2016 AND 2015 ASSETS Assets Cash $ 149,420 $ 121,942 Grants and contributions receivable 203, ,068 Pledges receivable 443, ,150 Prepaid expenses and other assets 51,201 46,392 Property and equipment, net 3,247 8,392 Total assets $ 850,412 $ 872,944 LIABILITIES AND NET ASSETS Liabilities Accounts payable and accrued expenses $ 50,680 $ 33,609 Deferred revenue - 3,000 Security deposit - 4,000 Total liabilities 50,680 40,609 Net assets Unrestricted 291, ,835 Temporarily restricted 508, ,500 Total net assets 799, ,335 Total liabilities and net assets $ 850,412 $ 872,944 The accompanying notes are an integral part of the financial statements. 3

6 STATEMENTS OF ACTIVITIES FOR THE YEARS ENDED AUGUST 31, 2016 AND Temporarily Temporarily Unrestricted Restricted Total Unrestricted Restricted Total Revenue and support Corporation and foundation contributions $ 532,303 $ 73,000 $ 605,303 $ 547,461 $ 22,000 $ 569,461 Individual contributions 566, , , , ,876 Registration fees 39,696-39,696 27,500-27,500 Donated goods and services 57,563-57,563 38,595-38,595 Government contracts 2,600-2, , ,051 Interest income ,288-1,288 Other income ,500-1,500 Net assets released from restrictions 141,250 (141,250) - 144,850 (144,850) - Total support and revenue 1,340, ,750 1,647,631 1,525,121 (122,850) 1,402,271 Expenses Program services Soccer for Success 651, , , ,323 Soccer program , ,278 Writing program 148, , , ,576 Middle school program 298, , , ,432 Other programs 185, , , ,720 Total program services 1,283,937-1,283, , ,329 Supporting services Fundraising 249, , , ,484 General and administrative 147, , , ,915 Total supporting services 396, , , ,399 Total expenses 1,680,234-1,680,234 1,337,728-1,337,728 Change in net assets (339,353) 306,750 (32,603) 187,393 (122,850) 64,543 Net assets, beginning of year 630, , , , , ,792 Net assets, end of year $ 291,482 $ 508,250 $ 799,732 $ 630,835 $ 201,500 $ 832,335 The accompanying notes are an integral part of the financial statements. 4

7 STATEMENT OF FUNCTIONAL EXPENSES FOR THE YEAR ENDED AUGUST 31, 2016 Program Services Supporting Services Total Soccer for Writing Middle School Other Program General and Success Program Program Programs Services Fundraising Administrative Total Salaries and wages $ 242,955 $ 54,854 $ 109,399 $ 107,488 $ 514,696 $ 110,269 $ 54,547 $ 679,512 Payroll taxes and benefits 99,344 22,236 43,729 37, ,634 38,005 41, ,733 Accounting fees ,500 12,500 Advertising ,047-3,227 Affiliate fees 4, ,040 1,338 8,950 1, ,200 Bad debt expense ,050 Bank charges , ,809 Board expenses Conference and meetings 5, , ,155 10,131 Consultants ,947 1,247 4,658 10,395 7,842 22,895 Depreciation 2, , ,145 Dues and subscriptions 1, ,713 1,715 1,978 6,406 Equipment rental and maintenance 2, , , ,922 Insurance 1, ,901 1, ,305 Office supplies 1, ,794 1,213 1,191 4,198 Payroll service fees 2, , , ,798 Postage and delivery 1, ,207 1, ,869 Printing and reproduction , ,057 Program expenses 93,740 10,296 55,086 15, ,308-1, ,496 Rent, utilities and maintenance 16,286 3,298 7,225 5,081 31,890 4,988 14,862 51,740 Special events expense 1,514 1, ,030 56,680 1,564 61,274 Teacher and coach stipends 162,122 50,889 69,699 11, , ,159 Telecommunications 3, , ,187 1, ,320 Travel and meals 8, ,916 11,605 2,414 1,509 15,528 Total expenses $ 651,078 $ 148,661 $ 298,513 $ 185,685 $ 1,283,937 $ 249,202 $ 147,095 $ 1,680,234 The accompanying notes are an integral part of the financial statements. 5

8 STATEMENT OF FUNCTIONAL EXPENSES FOR THE YEAR ENDED AUGUST 31, 2015 Program Services Supporting Services Total Soccer for Soccer Writing Middle School Other Program General and Success Program Program Program Programs Services Fundraising Administrative Total Salaries and wages $ 90,580 $ 56,823 $ 53,006 $ 109,829 $ 72,348 $ 382,586 $ 95,580 $ 58,045 $ 536,211 Payroll taxes and benefits 42,639 29,482 23,027 45,153 23, ,995 29,832 19, ,736 Accounting fees ,500 12,500 Advertising , ,898 Affiliate fees 1,565 1,953 1,318 2,810 1,136 8,782 1, ,600 Bad debt expense Bank charges , ,506 Board expenses ,176 2,547 Conference and meetings 4, , ,129 6,364 Consultants ,092 8, ,884 Depreciation 1,222 1, , , ,357 Dues and subscriptions 1, , ,089 1, ,038 Equipment rental and maintenanc 1,936 1, , ,959 1,617 1,805 10,381 Insurance ,875 1, ,537 Office supplies ,549 1,882 2,463 6,894 Payroll service fees , ,203 4,930 Postage and delivery ,106 2,878 Printing and reproduction , ,390 Program expenses 46,058 30,297 5,688 50,270 16, ,821 13,013 4, ,600 Rent, utilities and maintenance 3,378 2,798 1,935 4,126 1,930 14,167 2,165 2,630 18,962 Special events expense , ,149 53,152-56,301 Teacher and coach stipends 67,651 54,408 39,878 52,312 5, , ,667 Telecommunications 1, , ,761 2, ,636 Travel and meals 12, , ,942 2, ,672 Total expenses $ 277,323 $ 183,278 $ 132,576 $ 275,432 $ 125,720 $ 994,329 $ 231,484 $ 111,915 $ 1,337,728 The accompanying notes are an integral part of the financial statements. 6

9 STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED AUGUST 31, 2016 AND Cash flows from operating activities Change in net assets $ (32,603) $ 64,543 Adjustments to reconcile change in net assets to net cash provided (used) by operating activities: Depreciation 5,145 6,357 Changes in: Grants and contributions receivable 289,974 (297,155) Pledges receivable (240,300) 124,100 Prepaid expenses and other assets (4,809) 11,624 Accounts payable and accrued expenses 17,071 4,008 Deferred revenue (3,000) 3,000 Net cash provided (used) by operating activities 31,478 (83,523) Cash flows from investing activities Payment of security deposit (4,000) - Purchase of property and equipment - (2,328) Net cash used by investing activities (4,000) (2,328) Net increase (decrease) in cash 27,478 (85,851) Cash, beginning of year 121, ,793 Cash, end of year $ 149,420 $ 121,942 The accompanying notes are an integral part of the financial statements. 7

10 NOTE A - ORGANIZATION AMERICA SCORES NEW ENGLAND, INCORPORATED NOTES TO FINANCIAL STATEMENTS - CONTINUED America SCORES New England, Incorporated (the Organization ) is a Massachusetts nonprofit organization which incorporated in The Organization's mission is to inspire and empower urban youth to lead healthy lives, be engaged students and have the confidence and character to make a difference in the world. The Organization partners with the Boston public schools to provide high-quality, team-based after-school programs that integrate soccer, academics and the arts. Under an affiliate agreement with America SCORES, the Organization has the right to use service marks and program materials and to participate in all America SCORES national program activities, tournaments, publications and events (See Note I). For the year ended August 31, 2016, the Organization combined the Soccer and Soccer for Success programs on the Statements of Activities and Functional Expenses. NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America. Estimates The presentation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Grants, Contributions and Pledges Receivable Unconditional promises to give are included in the financial statements as pledges receivable, subject to a discount, if applicable, and recorded in the appropriate net asset category, at the time a donor makes a promise that is, in substance, unconditional. The Organization evaluates its grants, contributions and pledges receivable for collectability on a periodic basis and establishes an allowance based on prior experience of write-offs and collections and current credit conditions. As of August 31, 2016 and 2015, the Organization considered its grants, contributions and pledges receivable to be fully collectible. Accordingly, no allowance for uncollectible amounts has been recorded. 8

11 NOTES TO FINANCIAL STATEMENTS - CONTINUED NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED Property and Equipment, Net Property and equipment is recorded at cost if purchased or at estimated fair value at the date of gift if donated, net of accumulated depreciation. Major additions and improvements are capitalized while maintenance and repairs, which do not extend the lives of the respective assets, are expensed in the year incurred. When property and equipment is retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the statements of activities for the respective period. Depreciation is computed using the straightline method over the estimated useful life of the related asset. Net Assets The Organization reports information regarding its financial position and activities according to the following three classes of net assets based on the existence or absence of donor-imposed restrictions: Unrestricted Net Assets Unrestricted net assets are resources that are not restricted by donors. Temporarily Restricted Net Assets Temporarily restricted net assets represent those resources that have been restricted by donors for specific purposes or for specific time periods. Net assets released from restrictions represent the satisfaction of the donor restricted purposes or the passage of time restriction. Permanently Restricted Net Assets Permanently restricted net assets represent resources subject to donor-imposed restrictions that they be maintained permanently by the Organization. As of August 31, 2016 and 2015, there were no permanently restricted net assets. Revenue and Support The Organization receives revenues and support from contributions, grants, special events and government contracts. Contributions received are recorded as unrestricted, temporarily restricted, or permanently restricted support depending on the existence and or the nature of any donor restrictions. Unrestricted contributions, including unconditional promises to give, are recognized as support in the period received or unconditionally pledged. Conditional promises to give are recognized as contributions when substantially all conditions are met. Contributions of noncash assets are reported at their estimated fair value. All other donor-restricted contributions are reported as increases in temporarily or permanently restricted net assets, depending on the nature of the restrictions. When a restriction expires, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statements of activities as net assets released from restrictions. Contributions restricted by the donor are reported as increases in unrestricted net assets if the restrictions are satisfied or expire in the same year in which the contributions are recognized. Special event revenue is recognized when the event has taken place. 9

12 NOTES TO FINANCIAL STATEMENTS - CONTINUED NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED Revenue and Support - Continued Contributions of donated services that create or enhance nonfinancial assets or require specialized skills, are provided by individuals possessing those skills, and would typically need to be purchased if not provided by donation, are recorded at their fair value in the period in which the services are provided. Revenue from cost-reimbursement grants is recognized when the Organization has expended the program costs in accordance with the grant agreements. Revenue from this source is subject to audit and possible adjustments by the funding agencies. The effects of any such adjustments are recorded when reasonably determinable. Management believes that the effect of possible audit adjustments, if any, will not have a material effect on the accompanying financial statements. Income Taxes The Organization is exempt from federal income taxes as provided under Internal Revenue Code (IRC) Section 501(c)(3), and is not classified as a private foundation. Contributions made to the Organization are deductible by donors as provided in IRC Section 170. Accounting principles generally accepted in the United States of America prescribe the threshold a tax position is required to meet before being recognized in the financial statements. A liability for uncertain tax positions is recognized and recorded as a component of current income tax expense for differences between financial and income tax reporting positions which do not meet this threshold. Any interest and penalties related to uncertain tax positions are recorded as a component of income tax expense. The Organization has reviewed its tax positions that remain subject to examination by tax authorities and has not identified any material uncertain tax positions and thus has not recorded any liability at August 31, 2016 or The Organization's federal and state tax returns are subject to possible examination by taxing authorities until the expiration of the related returns statutes. In general, the federal and state tax returns have a three-year statute of limitation from the date the tax returns were due or filed, whichever is later. The Organization is no longer subject to examinations by tax authorities for years prior to 2012, and has no open examinations as of the date of these financial statements. Functional Allocation of Expenses The costs for providing for various programs and supporting services have been summarized on a functional basis in the statements of activities and the statements of functional expenses. Accordingly, certain costs have been allocated by management among the programs and supporting services benefited. Advertising The Organization expenses advertising costs as they are incurred. Advertising costs were $3,227 and $2,898 for the years ended August 31, 2016 and 2015, respectively. 10

13 NOTES TO FINANCIAL STATEMENTS - CONTINUED NOTE C PLEDGES RECEIVABLE Pledges receivable are due as follows as of August 31: Due in one year $ 294,450 $ 142,900 Due in two years 137,000 60,250 Due in three years 11,000 - Due in four years 1,000 - $ 443,450 $ 203,150 NOTE D PROPERTY AND EQUIPMENT, NET Property and equipment, net, consisted of the following at August 31: Furniture and fixtures $ 37,304 $ 37,304 Leasehold improvements 15,000 15,000 52,304 52,304 Less accumulated depreciation 49,057 43,912 $ 3,247 $ 8,392 NOTE E TEMPORARILY RESTRICTED NET ASSETS Temporarily restricted net assets are available for the following purposes on August 31, 2016 and 2015: Middle school program $ - $ 5,000 Soccer for Success 60,000 82,500 Time restricted 448, ,000 $508,250 $ 201,500 11

14 NOTES TO FINANCIAL STATEMENTS - CONTINUED NOTE E TEMPORARILY RESTRICTED NET ASSETS CONTINUED During the years ended August 31, 2016 and 2015, temporarily restricted net assets were released from restrictions by incurring expenses satisfying the purpose and time restriction specified by donors as follows: Soccer program $ - $ 500 Writing program Middle school program 5,000 1,000 Soccer for Success 52,500 62,500 Time restricted 83,750 80,350 $ 141,250 $144,850 NOTE F LEASE COMMITMENTS The Organization leases office facilities in Jamaica Plain, Massachusetts under a non-cancellable operating lease expiring in July In addition to the base rent, the lease requires additional rent for the Organization's proportionate share of the real estate taxes and operating expenses. The Organization sublet a portion of its office facility to a tenant under a sublease agreement which ended in December The tenant was responsible for a fixed rent including 40% of certain operating expenses. For the years ended August 31, 2016 and 2015, sublease rental income, including operating expenses, totaled $13,542 and $42,132, respectively. The Organization currently utilizes this space for operational purposes. Rent expense, utilities and maintenance, presented net of sublease rental income in the accompanying financial statements, was $51,740 and $18,962 for the years ended August 31, 2016 and 2015, respectively. Additionally, the Organization leases office equipment under a non-cancellable operating lease expiring in December 2017 at $399 per month. The expense is included in equipment rental and maintenance in the accompanying financial statements. Future minimum lease rentals for the year ending August 31 are as follows: 2017 $ 56, , , , ,961 Total $ 264,345 12

15 NOTES TO FINANCIAL STATEMENTS - CONTINUED NOTE G DONATED GOODS AND SERVICES The value of donated goods and services are reported in the accompanying financial statements as donated goods and services revenue with offsetting expenses included in program expenses. For the years ended August 31, 2016 and 2015, donated goods and services are as follows: Soccer equipment $ 48,843 $ 27,668 Legal services 7,800 8,625 Support services 920 2,302 $ 57,563 $ 38,595 NOTE H RETIREMENT PLAN The Organization has a 401(k) retirement plan covering all eligible employees. The Organization makes matching contributions up to 4% of eligible compensation. Total matching contributions for the years ended August 31, 2016 and 2015 totaled $19,128 and $12,836, respectively, and are included on the statements of functional expenses in payroll taxes and benefits. NOTE I - RELATED PARTY TRANSACTIONS The Organization is charged an annual license fee by America SCORES (see Note A), currently based on the number of students served. Total fees to America SCORES were $11,200 and $10,600, respectively, for the years ended August 31, 2016 and During the years ended August 31, 2016 and 2015, the Organization received contributions of $706,456, or 43% of total support and revenue, and $399,643, or 28% of total support and revenue, respectively, from members of the Board of Directors. During the years ended August 31, 2016 and 2015, 59% and 22%, respectively, of grants and contributions receivable and pledges receivable were due from members of the Board of Directors. NOTE J - CONCENTRATIONS The Organization maintains its cash in accounts that are federally insured. At times, the balances in the insured accounts may exceed federal limits. The Organization has not experienced any losses in such accounts and does not believe it is exposed to any significant credit risks. 13

16 NOTES TO FINANCIAL STATEMENTS - CONTINUED NOTE K - CONTINGENCIES Periodically, the Organization may be involved in various claims and legal actions arising in the normal course of operations. In the opinion of Management, based upon current facts and circumstances and on consultation with legal counsel, losses, if any, from those matters, are covered by insurance or are immaterial to the financial position of the Organization. NOTE L - SUBSEQUENT EVENTS On September 1, 2016, the Organization (transferee) entered into an asset transfer and assumption agreement (the agreement) with One Hen, Inc. (transferor), an exempt organization and public charity. The agreement includes the transfer of substantially of the assets of the transferor to the transferee. As consideration for the transfer of assets, transferee agrees to receive and manage the assets in good faith and in accordance with the agreement and consistent with transferor s exempt purpose. The assets transferred include curriculum and copyright, teacher training materials, trademarks, URL s, book royalty fees, records, restricted cash and personal property. Management has evaluated subsequent events through March 29, 2017, the date the financial statements were approved and authorized for issuance by management, and determined that, other than as disclosed herein, there are no subsequent events that would require recognition or disclosure in the notes to the financial statements. 14