AUDITED FINANCIAL STATEMENTS THE ELM SHAKESPEARE COMPANY, INC. NEW HAVEN, CONNECTICUT YEARS ENDED DECEMBER 31, 2015 AND 2014

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1 AUDITED FINANCIAL STATEMENTS THE ELM SHAKESPEARE COMPANY, INC. NEW HAVEN, CONNECTICUT YEARS ENDED DECEMBER 31, 2015 AND 2014

2 CONTENTS Audited Financial Statements: Page Independent Auditors Report... 3 Statements of Financial Position... 5 Statements of Activities... 6 Statements of Cash Flows... 8 Notes to Financial Statements... 9 Supplemental Schedules... 14

3 Ansonia 158 Main Street, Suite 301 Ansonia, Connecticut P: Killingworth 166 Route 81 Killingworth, Connecticut P: New Haven 900 Chapel Street, Suite 620 New Haven, Connecticut P: Westport 611 Riverside Avenue Westport, Connecticut P: Principals Francis H. Michaud Jr. CPA John A. Accavallo CPA Sandra M. Woodbridge CPA Dominic L. Cusano MBA CPA Darin L. Offerdahl MBA CPA Guiding Successful People INDEPENDENT AUDITORS REPORT The Elm Shakespeare Company, Inc. P.O. Box New Haven, Connecticut We have audited the accompanying financial statements of The Elm Shakespeare Company, Inc. (a nonprofit organization), which comprise the statement of financial position as of December 31, 2015 and 2014, and the related statements of activities, functional expense and cash flow for the year 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 auditor s 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. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of The Elm Shakespeare Company, Inc. as December 31, 2015 and 2014, and the changes in its net assets and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America. Members of the American Institute of Certified Public Accountants Members of the Connecticut Society of Certified Public Accountants

4 Other Matter Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The schedule of functional expenses on pages 14 and 15 is presented for purposes of additional analysis and is not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. Michaud Accavallo Woodbridge & Cusano, LLC New Haven, Connecticut February 17,

5 STATEMENT OF FINANCIAL POSITION AS OF DECEMBER 31, 2015 AND 2014 December 31, ASSETS CURRENT ASSETS Cash and cash equivalents $ 100,550 $ 86,164 Accounts receivable 5,566 10,004 Other current assets 544 1,695 TOTAL CURRENT ASSETS 106,660 97,863 BUILDING, IMPROVEMENTS AND EQUIPMENT Equipment and furniture - 2,452 Less: Accumulated depreciation - (2,452) TOTAL EQUIPMENT AND IMPROVEMENTS - - LIABILITIES AND NET ASSETS TOTAL ASSETS $ 106,660 $ 97,863 CURRENT LIABILITIES Accounts payables and accrued expenses $ 4,500 $ 851 Deferred revenue 3,700 - TOTAL CURRENT LIABILITIES 8, NET ASSETS Unrestricted net assets 95,460 91,012 Temporarily restricted net assets 3,000 6,000 TOTAL NET ASSETS 98,460 97,012 TOTAL LIABILITIES AND NET ASSETS $ 106,660 $ 97,863 See notes to financial statements - 5 -

6 STATEMENT OF ACTIVITIES FOR THE YEAR ENDED DECEMBER 31, 2015 Unrestricted Temporarily Restricted Total SUPPORT AND REVENUES Grants and contributions $ 290,659 $ 7,500 $ 298,159 Program revenues and fees 33,014-33,014 Special events, net 36,091-36,091 Donated facilities and services 18,530-18,530 Net assets released from restriction 10,500 (10,500) - TOTAL SUPPORT AND REVENUES 388,794 (3,000) 385,794 EXPENSES Program 286, ,214 Management and general 52,738-52,738 Fundraising 45,394-45,394 TOTAL EXPENSES 384, ,346 INCREASE(DECREASE) IN NET ASSETS 4,448 (3,000) 1,448 NET ASSETS, BEGINNING OF YEAR 91,012 6,000 97,012 NET ASSETS, END OF YEAR $ 95,460 $ 3,000 $ 98,460 See notes to financial statements - 6 -

7 STATEMENT OF ACTIVITIES FOR THE YEAR ENDED DECEMBER 31, 2014 Unrestricted Temporarily Restricted Total SUPPORT AND REVENUES Grants and contributions $ 258,546 $ 3,000 $ 261,546 Program revenues and fees 34,406-34,406 Special events, net 37,691-37,691 Donated facilities and services 18,700-18,700 Net assets released from restriction 8,000 (8,000) - TOTAL SUPPORT AND REVENUES 357,343 (5,000) 352,343 EXPENSES Program 300, ,420 Management and general 41,069-41,069 Fundraising 45,256-45,256 TOTAL EXPENSES 386, ,745 DECREASE IN NET ASSETS (29,402) (5,000) (34,402) NET ASSETS, BEGINNING OF YEAR 120,414 11, ,414 NET ASSETS, END OF YEAR $ 91,012 $ 6,000 $ 97,012 See notes to financial statements - 7 -

8 STATEMENT OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 Years Ended December 31, CASH FLOWS FROM OPERATING ACTIVITIES 12/31/ /31/2014 (Decrease) Increase in net assets 1,448 (34,402) (Increase) Decrease in operating assets: Accounts receivable 4,438 (5,487) Other current assets 1, Increase (Decrease) in operating liabilities: Accounts payables 3,649 (12) Deferred revenue 3,700 - NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES AND NET CHANGE IN CASH 14,386 (39,280) Cash and cash equivalents at beginning of year 86, ,444 CASH AND CASH EQUIVALENTS AT END OF YEAR $ 100,550 $ 86,164 See notes to financial statements - 8 -

9 NOTES TO THE FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2015 AND 2014 Note 1 - Summary of Significant Accounting Policies and Nature of Activities The Elm Shakespeare Company (The Organization ) is a multi-cultural theatre company committed to establishing a discourse with the New Haven community through the medium of Shakespeare's plays. The Organization provides, in collaboration with schools and other community partners, educational programs based on the work of Shakespeare. These programs are designed to develop the students linguistic, communicative and collaborative talents. The Organization also presents theatre performances free to the public each summer in a public park in New Haven. Additionally, the Organization presents other performances throughout the year in alternate spaces. Financial Statement Presentation The accompanying financial statements of the Organization have been prepared on the accrual basis of accounting. The Organization also reports information regarding its financial position and activities according to three classes of net assets; unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets. There were no permanently restricted net assets for the years ended December 31, 2015 and 2014, respectively. Use of Estimates The accounting and financial reporting policies of the Organization conform to generally accepted accounting principles. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of support, revenues and expenses during the reporting period. Actual results could differ from those estimates. Functional Allocation of Expenses The cost of providing the various programs and other activities has been summarized on the functional basis in the statement of activities. Accordingly, certain costs have been allocated among the program and supporting services benefited. Cash and Cash Equivalents and Credit Risk For purposes of the statement of cash flows, the Organization considers all short-term investments, with a maturity of three months or less when purchased, and money market mutual funds, to be cash equivalents. At December 31, 2015 and 2014, the deposit balances in banks were fully insured. Contributions Contributions are generally available for unrestricted use in the related year unless specifically restricted by the donor. Unconditional promises to give are recorded as received. Unconditional promises to give due in the next year are reflected as current promises to give and are recorded at their net realizable value. The Organization does not generally have unconditional promises to give due in subsequent years, but when they occur, they are reflected as long-term promises to give and are recorded at the present value of their net realizable value, using risk-free interest rates applicable to the year in which the promises are received to discount the amounts. Promises to give are received from various contributors and not necessarily related to any specific event. An allowance for uncollectible contributions is provided based on management's evaluation of potential uncollectible receivable

10 NOTES TO THE FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2015 AND 2014 Contributions that are restricted by the donor are reported as increases in unrestricted net assets if the restrictions expire in the fiscal year in which the contributions are recognized. 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. Grant Revenue Grants are generally considered to be exchange transactions in which the grantor requires the performance of specified activities. Entitlement to cost reimbursement grants is conditioned on the expenditure of funds in accordance with grant restrictions and, therefore, revenue is recognized to the extent of grant expenditures. Grant receipts in excess of revenues recognized are presented as deferred grant revenue, if it is expected that the excess will be spent pursuant to the terms of the grant. If the excess is not expected to be spent, it is considered an account payable. Receivables Receivables consist of grants and pledges that have not been received. The Organization has grants and pledges receivable from organizations and individuals that are deemed fully collectible. Accordingly, no allowance for doubtful accounts has been established for the years ended December 31, 2015 and Management periodically reviews the collectability of accounts receivable and, if necessary, establishes an allowance. Furniture, Equipment and Leasehold Improvements Furniture and equipment are capitalized at cost. It is our policy to capitalize expenditures for these items in excess of $500. Lesser amounts are expensed. Furniture and equipment are being depreciated over estimated useful lives of three to seven years, using the straight-line method. Donated Services The Organization recognizes donated services, materials and facilities if they create or enhance non-financial assets or requires specialized skills and would typically be purchased if not provided by donation. General volunteer services do not meet these criteria for recognition in the financial statement. Deferred Revenue Deferred revenue consists of grant revenues pledged to the Organization in advance. The Organization recognizes the revenue in the period when it is earned. Advertising Expense The cost of advertising is expensed as incurred. During the years ended December 31, 2015 and 2014, the Organization incurred $8,233 and $10,063 in advertising costs, respectively

11 NOTES TO THE FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2015 AND 2014 Income Tax Status The Organization is a not-for-profit Organization that is exempt from income taxes under Section 501(c) (3) of the Internal Revenue Code. The Organization is also exempt from State income taxes. Accordingly, no provision for income taxes has been made in the financial statements. The Organization is subject to tax on unrelated business income, if incurred, as well as certain state filing fees. The Organization has concluded that there are no uncertain tax positions that would require recognition in the financial statements. If the Organization were to incur an income tax liability in the future, interest on any income tax liability would be reported as interest expense and penalties would be reported as income taxes. The Organization s conclusions regarding uncertain tax positions may be subject to review and adjustment at a later date based on ongoing analysis of tax laws, regulations and interpretations thereof as well as other factors. Generally, federal and state authorities may examine the Organization's tax returns for three years from the date of filing. Consequently, income tax returns for years prior to 2011 are no longer subject to examination by taxing authorities. Note 2 - Special Event Revenue The Organization conducted special events during each of the years ended December 31, 2015 and 2014 that generated total gross special event revenue of $43,767 and $51,430, respectively. Gross revenue from the events includes the amount paid by the donor for the stated fair market value of the services received by the donor at the event. Total costs related to the events are $13,176 and $13,739, respectively. Costs related to events are combined with gross special event revenue in the statement of activities. Net special events revenue included in the Statement of Activities for the years ended December 31, 2015 and 2014 is $36,091 and $37,691, respectively. Note 3 - Donated Facilities and Services The amounts for the years ended December 31, 2015 and 2014 are as follows: Advertising $ 9,473 $ 9,560 Program supplies 9,057 9,140 $ 18,530 $ 18,

12 NOTES TO THE FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2015 AND 2014 Note 4 - Leases Operating Leases The Organization entered into an operating lease agreement for office equipment. Future minimum lease payments on the leased equipment are as follows: 2016 $ $ 2,079 Rental expense for the years ended December 31, 2015 and 2014 was $3,091 and $2,963, respectively. Note 5 - Temporarily Restricted Net Assets As of the year ended December 31, 2015 and 2014, temporarily restricted net assets consist of the following: Capacity building $ 3,000 $ 6,000 Note 6 - Subsequent Events Subsequent events were considered through February 17, 2016, which is the date the financial statements were available to be issued

13 Supplemental Schedules

14 SCHEDULE OF FUNCTIONAL EXPENSES FOR THE YEAR ENDED DECEMBER 31, 2015 Program Management and General Fund Raising Total Functional Expense Salaries $ 154,825 $ 13,236 $ 31,463 $ 199,524 Employee benefits 13, ,390 Payroll taxes 14,157 1,260 2,087 17,504 Supplies 56, ,696 Fundraising activities - - 2,268 2,268 Donated facilities and services 9,057-9,473 18,530 Marketing costs 8, ,233 Contracted services 11, ,142 Actor housing and transportation 13, ,909 Insurance 3,901 3,692-7,593 Office expense - 29,122-29,122 Payroll processing ,753 Professional fees - 4,300-4,300 Telephone TOTAL FUNCTIONAL EXPENSE $ 286,214 $ 52,738 $ 45,394 $ 384,

15 SCHEDULE OF FUNCTIONAL EXPENSES FOR THE YEAR ENDED DECEMBER 31, 2014 Program Management and General Fund Raising Total Functional Expense Salaries $ 155,418 $ 13,287 $ 31, ,289 Employee benefits 13, ,185 Payroll taxes 13,992 1,245 2,063 17,300 Supplies 65, ,968 Fundraising activities - - 1,816 1,816 Donated facilities and services 9,140-9,560 18,700 Marketing costs 10, ,063 Contracted services 13, ,430 Actor housing and transportation 12, ,979 Insurance 4,187 3,961-8,148 Office expense - 16,223-16,223 Payroll processing 2,058 1, ,989 Professional fees - 4,200-4,200 Telephone TOTAL FUNCTIONAL EXPENSE $ 300,420 $ 41,069 $ 45,256 $ 386,