GREENSPACE NCR, INC. FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS REPORT. December 31, 2009

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1 FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS REPORT

2 Financial Statements Contents Independent Auditors Report Financial Statements Statement of Financial Position Statement of Activities... 3 Statement of Cash Flows Notes to Financial Statements Supplemental Information Schedule of Functional Expenses

3 INDEPENDENT AUDITORS REPORT To the Board of Directors Greenspace NCR, Inc. We have audited the accompanying statement of financial position of Greenspace NCR, Inc. (the Organization) as of, and the related statements of activities and cash flows for the year then ended. These financial statements are the responsibility of the Organization s management. 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 of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Greenspace NCR, Inc. at, and the changes in its net assets and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The schedule of functional expenses for 2009 is presented for purposes of additional analysis and is not required as part of the financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the financial statements taken as a whole. HAN GROUP LLC August 31, 2010

4 Statement of Financial Position Assets Cash and cash equivalents $ 54,772 Grants and contributions receivable 109,867 Other receivable 8,813 Prepaid expenses and deposits 8,814 Property and equipment, net - Total assets $ 182,266 Liabilities and Net Assets Liabilities Accounts payable and accrued expenses $ 33,108 Total liabilities 33,108 Net Assets Unrestricted 77,222 Temporarily restricted 71,936 Total net assets 149,158 Total liabilities and net assets $ 182,266 See accompanying notes. 2

5 Statement of Activities Year Ended Temporarily Unrestricted Restricted Total Revenue and Support Contributions $ 170,223 $ 67,500 $ 237,723 Government grants 235, ,116 Program service fee income 56,000-56,000 Seminar income 18,219-18,219 Other income 10,962-10,962 Net assets released from restrictions: Satisfaction of purpose restrictions 91,862 (91,862) - Total revenue and support 582,382 (24,362) 558,020 Expenses Program services 350, ,626 Supporting services: Management and general 230, ,342 Fundraising 40,515-40,515 Total supporting services 270, ,857 Total expenses 621, ,483 Change in Net Assets (39,101) (24,362) (63,463) Net Assets, beginning of year restated 116,323 96, ,621 Net Assets, end of year $ 77,222 $ 71,936 $ 149,158 See accompanying notes. 3

6 Statement of Cash Flows Year Ended Cash Flows from Operating Activities Change in net assets $ (63,463) Adjustments to reconcile net income to net cash used in operating activities: Depreciation 574 Change in operating assets and liabilities: Increase in grants and contributions receivable (1,672) Increase in other receivable (7,243) Increase in prepaid expenses and deposits (5,287) Decrease in accounts payable and accrued expenses (25,672) Decrease in deferred revenue (235,257) Net cash used in operating activities (338,020) Net Decrease in Cash and Cash Equivalents (338,020) Cash and Cash Equivalents, beginning of year 392,792 Cash and Cash Equivalents, end of year $ 54,772 See accompanying notes. 4

7 Notes to Financial Statements 1. Nature of Operations Greenspace NCR, Inc. (the Organization) is a not-for-profit organization incorporated in Washington, D.C. on February 1, 1999 to provide the education, technical assistance and policy support necessary for the market transformation of the design, construction, and development of low-income housing and neighborhoods to green housing and sustainable communities. The Organization funds its program and supporting services primarily through foundation, corporate and individual contributions and government grants. The Organization changed its name from GreenHOME, Inc. to Greenspace NCR, Inc. on June 10, Summary of Significant Accounting Policies Basis of Accounting and Presentation The Organization s financial statements are prepared on the accrual basis of accounting and in accordance with accounting principles generally accepted in the United States. Cash and Cash Equivalents For the purpose of the statement of cash flows, the Organization considers as cash equivalents all highly liquid investments, which can be converted into known amounts of cash and have a maturity period of ninety days or less at the time of purchase. Grants and Contributions Receivable Grants and contributions receivable represent amounts due from the Organization s various revenue sources. The balance of grants and contributions receivable at has been deemed by management to be fully collectible within one year. If amounts become uncollectible, it is expensed when that determination is made. Property and Equipment Property and equipment is stated at cost and is being depreciated using the straight-line method over the estimated useful lives of the related assets of five years. Expenditures for minor and routine repairs and maintenance are expensed as incurred. Upon retirement or disposal of assets, the cost and accumulated depreciation are eliminated from the accounts and the resulting gain or loss is included in revenue or expense. 5

8 Notes to Financial Statements 2. Summary of Significant Accounting Policies (continued) Classification of Net Assets Unrestricted net assets represent funds that are not subject to donor-imposed stipulations and are available for support of the Organization s operations. Temporarily restricted net assets represent funds subject to donor-imposed restrictions that are met either by actions of the Organization or the passage of time. At December 31, 2009, temporarily restricted net assets were comprised of $67,500 for Catalyzing Affordable Green Success Project and $4,436 for Greening DC Retail and Restaurant Program. Revenue Recognition Unconditional contributions are recognized as revenue when received or promised and are reported as temporarily restricted support if they are received with donor stipulations that limit the use of donated assets. When a donor restriction expires, that is, when a stipulated time restriction ends or purpose restriction is accomplished, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restrictions. Temporarily restricted net assets are reported as unrestricted net assets if the restrictions are met in the same period received. Grants revenue under cost reimbursable government grants is recognized based upon direct costs incurred plus allowable indirect costs. Revenue recognized but not received from the granting agency is included in grants and contributions receivable in the statement of financial position. Conversely, revenue received in advance of incurring allowable direct and indirect costs is reported as refundable advances in the statement of financial position. Revenue from all other sources is recognized when earned. Donated Services A substantial number of volunteers have donated significant amounts of time to the Organization and its programs and activities. However, these donated services are not reflected in the accompanying financial statements since they do not meet the criteria for recognition. Functional Allocation of Expenses The costs of providing the various programs and other activities have been summarized on a functional basis in the accompanying statement of activities. Accordingly, certain costs have been allocated among the program and supporting services benefited. Certain management and staff expenses have been allocated to program and supporting services on the basis of time spent. 6

9 Notes to Financial Statements 2. Summary of Significant Accounting Policies (continued) Use of Estimates The preparation 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 the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. New Accounting Pronouncements In July 2009, the Financial Accounting Standards Board (the FASB) issued accounting guidance to establish the FASB Accounting Standards Codification (ASC or the Codification) to become the source of authoritative U.S. generally accepted accounting principles (GAAP) recognized by the FASB to be applied by nongovernmental entities. All other accounting literature not included in the Codification will be considered non-authoritative. The Codification does not change current U.S. GAAP. References to authoritative U.S. GAAP literature in the Organization s financial statements and the notes thereto in this report have been updated to include the Codification. Effective January 1, 2009, the Organization applied the enhanced recognition and disclosure provisions of ASC 820, Fair Value Measurements and Disclosures. ASC 820 defines fair value, requires expanded disclosures about fair value measurements, and establishes a three-level hierarchy for fair value measurements based on the observable inputs to the valuation of an asset or liability at the measurement date. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 prioritizes the inputs to the valuation techniques used to measure fair value by giving the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements), and lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The application of ASC 820 did not have a significant impact on the Organization s net assets. The fair value of financial assets and liabilities are presented in accordance with established guidelines. Management believes that the carrying value of all financial instruments which are short-term in nature approximates market value. In July 2006, the FASB issued FASB ASC , Income Taxes, which clarifies the accounting for uncertainty in income taxes recognized in an entity s financial statements. It prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. It also provides guidance on derecognition of tax benefits, classification on the statement of financial position, interest and penalties, accounting in interim periods, disclosure, and transition. Effective January 1, 2009, the Organization adopted the provisions of ASC The implementation of this standard had no impact on the Organization s financial statements. 7

10 Notes to Financial Statements 2. Summary of Significant Accounting Policies (continued) New Accounting Pronouncements (continued) Effective, the Organization applied the guidance in ASC 855, Subsequent Events, which establishes general standards of accounting for, and disclosure of, events that occur after the statement of financial position date but before financial statements are issued or are available to be issued. ASC 855 also requires that disclosure of the date through which an entity has evaluated subsequent events. This guidance was adopted by the Organization in 2009 and did not have a material impact on the Organization s financial statements. Appropriate disclosures are presented in Note Prior Period Adjustment Certain understatements of previously reported program service fee income, grants and contributions receivable, consulting expenses, and accounts payable and accrued expenses were discovered during the current year audit. Accordingly, adjustments of $54,250 and $45,883 were made during the year ended to increase grants and contributions receivable, and accounts payable and accrued expenses, respectively, at the beginning of the year. A corresponding entry was made to increase previously reported unrestricted net assets by $8,367, and the beginning unrestricted net assets at January 1, 2009 was restated in the accompanying statement of activities. 4. Concentration The Organization maintains cash deposits with major banks which from time to time may exceed federally insured limits. Management periodically assesses the financial condition of the institutions and believes that the risk of any loss is minimal. 5. Property and Equipment The Organization held the following property and equipment at : Computer equipment $ 2,866 Total property and equipment 2,866 Less: accumulated depreciation (2,866) Property and equipment, net $ - 8

11 Notes to Financial Statements 6. Commitments Government Grants Funds that the Organization receives from government agencies are subject to audit under the provisions of the grant agreements. The ultimate determination of amounts received under the government grants is based upon the allowance of costs reported to and accepted by the oversight agency. Until such grant agreements are closed out, there exists a contingency to refund any amount received in excess of allowable costs. Management is of the opinion that no material liability exists. Operating Leases In January 2009, the Organization entered into a month-to-month lease agreement for office space. The lease may be terminated with a 30 day written notice. Office rent for the year ended was $12,000. Subsequent to year end, the Organization entered into a one year office lease agreement commencing on May 5, The terms of the agreement states that there are no monthly rental payments required from the Organization. 7. Income Taxes The Organization is recognized as a tax-exempt organization under Section 501(c)(3) of the Internal Revenue Code and is exempt from income taxes except for taxes on unrelated business activities. No tax expense was recorded in the accompanying financial statements for the year ended December 31, 2009 as there were no unrelated business activities. The Organization recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. The Organization does not believe its financial statements include any uncertain tax positions. 8. Subsequent Events In preparing these financial statements, the Organization has evaluated events and transactions for potential recognition or disclosure through August 31, 2010, the date the financial statements were available to be issued. 9

12 SUPPLEMENTAL INFORMATION

13 Schedule of Functional Expenses _ Program Services Management and General Fundraising Total Supporting Services Total Professional and consulting fees $ 139,144 $ 155,549 $ 7,753 $ 163,302 $ 302,446 Salaries 101,986 47,501 28,766 76, ,253 Training 55,091 2,335-2,335 57,426 Employee benefits 6,587 13,842 1,909 15,751 22,338 Payroll taxes 7,626 4,784 2,087 6,871 14,497 Rent and utilities - 12,715-12,715 12,715 Travel and meals ,669-10,669 11,251 Conferences, conventions and meetings - 4,353-4,353 4,353 Telephone and internet - 3,881-3,881 3,881 Office expenses and supplies - 3,010-3,010 3,010 Technology costs 134 2,778-2,778 2,912 Insurance - 1,762-1,762 1,762 Dues and subscriptions 10 1,693-1,693 1,703 Postage, shipping and delivery 1, ,229 Depreciation Education and outreach Other expenses 1,242 1,361-1,361 2,603 Overhead allocation 37,210 (37,210) - (37,210) - Total $ 350,626 $ 230,342 $ 40,515 $ 270,857 $ 621,483 10