BEALE STREET CARAVAN, INC. (A NONPROFIT CORPORATION) FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION FOR THE YEARS ENDED JUNE 30, 2016 AND 2015

Transcription

1 (A NONPROFIT CORPORATION) FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION FOR THE YEARS ENDED JUNE 30, 2016 AND 2015

2 FINANCIAL STATEMENTS

3 CONTENTS Page FINANCIAL STATEMENTS Independent Auditor's Report Statements offinancial Position Statements of Activities Statements of Changes in Net Assets Statements of Cash Flows Notes to Financial Statements SUPPLEMENTARY INFORMATION Schedules of Functional Expenses

4 Whitehorn Tankersley & ~ Davis, PLLC CERTIFIED PUBLIC ACCOUNTANTS 670 Oakleaf Office Lane Memphis, TN (901) (901) FAX www. wtdc pa. com INDEPENDENT AUDITOR'S REPORT To the Board ofdirectors Beale Street Caravan, Inc. Memphis, Tennessee We have audited the accompanying financial statements of Beale Street Caravan, Inc. (a nonprofit organization) which comprise the statements of financial position as of June 30, 2016 and 2015, and the related statements of activities, changes in net assets and of 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. Auditor's Responsibility Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits 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. AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS AICPA DIVISION OF FIRMS: PRIVATE COMPANIES PRACTICE SECTION TENNESSEE SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS

5 2 Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position ofbeale Street Caravan, Inc. as of June 30,2016 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. Report on Supplementary Information Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The schedules of functional expenses on pages are presented for purposes of additional analysis and are not a required part ofthe 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 taken as a whole... February 15, 2017 Memphis, Tennessee

6 3 STATEMENTS OF FINANCIAL POSITION JUNE ASSETS CURRENT ASSETS Cash.... $ Accounts receivable Unconditional promises to give Grants receivable.... Prepaid expenses.... TOTAL CURRENT ASSETS.... PROPERTY AND EQUIPMENT Furniture and equipment.... Automobile Website development Less accumulated depreciation ,480 $ 108,655 1,363 2,823 30,625 15, , ,905 34,398 56,440 49,905 69,000 69,000 (1 13,839) ( ) ,971 MUSIC COLLECTIONS TOTAL ASSETS $ $ ,900 LIABILITIES AND NET ASSETS CURRENT LIABILITIES Accounts payable and accrued expenses $ Payroll taxes withheld and payable.... TOTAL CURRENT LIABILITIES.... NET ASSETS Unrestricted Temporarily restricted.... TOTAL NET ASSETS ,120 $ ,097 32, ,597 17, ,049 35, ,549 TOTAL LIABILITIES AND NET ASSETS $ 134,925 $ 199,900 See notes to financial statements

7 4 STATEMENTS OF ACTIVITIES YEAR ENDED JUNE UNRESTRICTED NET ASSETS Support and revenue Contributions $ 22,796 Grant revenue Underwriting Special event revenue, including $21,564 and $44,808 in-kind revenue in 2016 and 2015, respectively.... Production revenue In-kind revenue Total support and revenue 79,000 40,200 36,946 36,250 43, $ 9, ,400 32,500 62,507 25, ,966 Reclassifications Net assets released from restrictions - expiration of time and purpose restrictions..... Total support and revenue and reclassifications..... Expenses General and administrative Program services- radio production Fundraising, including $21,564 and $44,808 of in-kind expense in 2016 and 2015, respectively.... Total expenses CHANGE IN UNRESTRICTED NET ASSETS TEMPORARILY RESTRICTED NET ASSETS Support and revenue Contributions Reclassifications Net assets released from restrictions - expiration of time and purpose restrictions.... Total support and revenue and reclassifications.... CHANGE IN TEMPORARILY RESTRICTED NET ASSETS , , ,367 (61,952) 25,000 (28,000) (3.000) (3,000) ,966 72, , , ,000 (25,000) CHANGE IN NET ASSETS $ (64.952) $ 82,718 See notes to financial statements

8 5 STATEMENTS OF CHANGES IN NET ASSETS YEARS ENDED JUNE 30, 2016 AND 2015 UNRESTRICTED TEMPORARILY RESTRICTED TOTAL BALANCE, JUNE 30, $ 66,331 $ 32,500 Change in net assets ,000 BALANCE, JUNE 30, ,049 35,500 Change in net assets (61,952) (3,000) BALANCE, JUNE 30, $ 84,097 $ $ 98,831 82, ,549 (64,952) $ See notes to financial statements

9 6 STATEMENTS OF CASH FLOWS YEAR ENDED JUNE CASH FLOWS FROM OPERATING ACTIVITIES Cash received from donors.... Cash paid to suppliers and employees.... NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES Payments for purchase of property and equipment NET CASH (USED) BY INVESTING ACTIVITIES..... NET CHANGE IN CASH CASH, BEGINNING OF YEAR CASH, END OF YEAR $ 204,963 ( ) (66,133) (12,042) (12,042) (78,175) 108,655 $ 30,480 $ 301,151 (171,038) (49,905) (49,905) 80, $ 108,655 RECONCILIATION OF CHANGE IN NET ASSETS TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES CHANGE IN NET ASSETS $ (64,952) $ 82,718 ADJUSTMENTS TO RECONCILE CHANGE IN NET ASSETS TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES Depreciation.... (Increase) decrease in assets: Accounts receivable Promises to give.... Grants receivable Prepaid expenses Increase (decrease) in liabilities: Accounts payable and accrued expenses ,507 1,460 (15,125) (23) 12,230 1,287 8,485 16,280 1, NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES $ (66.133) $ See notes to financial statements

10 7 NOTES TO FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 2016 AND 2015 NOTE 1- DESCRIPTION OF ACTIVITIES AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES DESCRIPTION OF ACTIVITIES - Beale Street Caravan, Inc. ("BSCI"), located in Memphis, Tennessee, is a not-for-profit Tennessee corporation organized to produce and distribute a noncommercial Blues radio show worldwide for the advancement of American culture and education. BSCI was organized on September 18, 2000 and began operations on September 19, 2000 as a result of a reorganization agreement entered into with the Blues Foundation (the "Foundation") on that date. ACCOUNTING BASIS- The accompanying financial statements have been prepared on the accrual basis of accounting. Under this basis of accounting, support and revenue are recognized in the period earned and expenses are recognized when incurred. Cash contributions are recognized as revenue when received. USE OF ESTIMATES - The preparation of the 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 amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. BASIS OF PRESENTATION- Financial statement presentation follows Financial Accounting Standards Board Accounting Standards Codification ("F ASB ASC") , Not-for-Profit Organizations - Presentation of Financial Statements. Under FASB ASC , BSCI is required to report 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. Temporarily restricted net assets at each year end are generally available for use during the next fiscal year. PROMISES TO GIVE- Unconditional promises to give are recognized as revenues or gains in the period received and as assets, decreases of liabilities or expenses depending upon the form of the benefits received. Any conditional promises to give are recognized when the conditions on which they depend are substantially met. Promises to give are subject to credit risk, since the donor's ability to meet the obligation may be affected by economic developments in a specific industry or geographic region. BSCI uses the allowance method to determine uncollectible promises to give. Management provides for any probable uncollectible amounts through a charge to earnings and a credit to the allowance for doubtful accounts based on its assessment of the current status of the promise. Balances still outstanding after management has used reasonable collection efforts are written offthrough a charge to the allowance for doubtful accounts and a credit to promises to give.

11 8 NOTES TO FINANCIAL STATEMENTS- CONTINUED YEARS ENDED JUNE 30, 2016 AND 2015 NOTE 1- DESCRIPTION OF ACTIVITIES AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES- CONTINUED PROMISES TO GIVE- continued The allowance, if any, is based on prior years' experience and management's analysis of specific promises made, and it is at least reasonably possible that a change in the estimate will occur in the near term. No allowance for uncollectible promises to give was necessary at June 30,2016 or PROPERTY AND EQUIPMENT- Effective July 1, 2015, BSCI put in place a capitalization policy whereby only property and equipment purchased with a value greater than or equal to $500 and expected useful life of greater than one year are recorded at cost plus the cost of additions and those improvements greater than or equal to $500 which materially increase the useful lives of the assets. Donated property and equipment are recorded at their estimated fair value at the date of the gift. These estimates are based on information obtained by management from donors or other sources and, it is a least reasonably possible that a change in estimate could occur in the near term. There was no donated property for the years ended June 30, 2016 or Assets donated with explicit restrictions regarding their use and contributions of cash that must be used to acquire property and equipment are reported as restricted support. Absent donor stipulations regarding how long these donated assets must be maintained, BSCI reports expiration of donor restrictions when the donated or acquired assets are placed in service as instructed by the donor. BSCI reclassifies temporarily restricted net assets to unrestricted net assets at that time. Repair and maintenance costs are expensed as incurred. Depreciation is computed using the straight-line method over the estimated useful life of the related asset. MUSIC COLLECTIONS- BSCI capitalizes music collections at cost for those items considered to have future value for educational or public service purposes. Such amounts are not depreciated due to their cultural and historic value. REVENUE RECOGNITION- Support received or receivable is recorded as unrestricted, temporarily restricted or permanently restricted support, depending on the existence and/or nature of any donor restrictions. Support that is restricted by the donor is reported as an increase in unrestricted net assets if the restriction expires in the reporting period in which the support is recognized. All other donor-restricted support is reported as an increase in temporarily or permanently restricted net assets, depending on the nature ofthe restriction. When a 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. All contributions are considered to be available for unrestricted use unless specifically restricted by the donor. IN-KIND DONATIONS- Donated services are recognized as contributions in accordance with F ASB ASC , Contributions Received, if the services create or enhance nonfinancial assets or require specialized skills, are performed by people with those skills and would otherwise be

12 9 NOTES TO FINANCIAL STATEMENTS- CONTINUED YEARS ENDED JUNE 30, 2016 AND 2015 NOTE 1 -DESCRIPTION OF ACTIVITIES AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES- CONTINUED IN-KIND DONATIONS- continued purchased by the organization. During the years ended June 3 0, 2016 and 2015, contributed services, including advertising, totaling $23,023 and $49,614, respectively, met the criteria for recognition under F ASB ASC In-kind donations of goods and materials and use of facilities are recorded at their estimated fair value at date of contribution. These estimates are based on information obtained by management from donors and other sources and, it is at least reasonably possible that a change in the estimate will occur in the near term. In-kind donations of goods totaled $21,564 and $14,638 and in-kind donations of use of facilities totaled $20,200 and $5,615 during 2016 and 2015, respectively. ADVERTISING- BSCI expenses advertising costs as incurred. Advertising costs totaled $4,866 and $28,670 during 2016 and 2015, respectively. There were no in-kind advertising costs during year ended June 30, During the year ended June 30, 2015, advertising costs from in-kind contributions totaled $28,670. FUNCTIONAL ALLOCATION- The allocation of expenses by function involves certain estimates by management and, it is at least reasonably possible, that a change in the estimate may occur in the near term. MUSIC PRODUCTION COSTS - Production costs to produce record masters for BSCI's radio program are expensed as incurred since there is no assurance that such costs will be recovered from future radio revenues. Production costs incurred were $24,984 and $12,636 in 2016 or 2015, respectively. STATEMENT OF CASH FLOWS- For purposes of the Statement of Cash Flows, BSCI's policy is to consider all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. There were no cash equivalents at June 30, 2016 and SUBSEQUENT EVENTS- BSCI's management evaluated subsequent events through the auditor's report date, which is the date the financial statements were available for issuance. NOTE 2- TAX EXEMPT STATUS The Internal Revenue Service has issued a determination letter indicating that, under Section 501(c)(3) ofthe Internal Revenue Code of 1986, BSCI will be treated as an organization not subject to income taxes. In addition, BSCI has been determined by the Internal Revenue Service as an organization that is not a private foundation under Section 509(a) of the Internal Revenue Code.

13 10 NOTES TO FINANCIAL STATEMENTS- CONTINUED YEARS ENDED JUNE 30, 2016 AND 2015 NOTE 2- TAX EXEMPT STATUS- CONTINUED BSCI follows the provisions offasb ASC , Accounting for Uncertainty in Income Taxes, which requires the computation of any current income tax assets or liabilities only consider tax positions that are more likely than not (defined as greater than 50% chance) to be sustained if the taxing authorities examined the positions. BSCI is subject to income tax examination by taxing authorities for years ending after June 30, NOTE 3- LEASE COMMITMENT On June 1, 2015, BSCI entered into a three year lease agreement for office space from a related party with a monthly rental of$1,300 for the first 12 months and $1,500 for the remaining 24 months. In addition to monthly rental payments, BSCI is required to make monthly payments for their proportionate share ofthe basic costs ofthe building. This lease is effective from June 1, 2015 to May 31,2018. BSCI paid a total of$17,574 and $1,300 to this related party for rent and other related costs during the years ended June 30, 2016 and 2015, respectively. Future minimum lease payments under the above operating lease with an initial lease term of one year or greater are as follows: YEAR ENDING JUNE AMOUNT $ 18,000 16,500 $ 34,500 Rent expense under lease commitments totaled $15,800 and $15,160 during 2016 and 2015, respectively. NOTE 4 -RESTRICTIONS ON NET ASSETS Temporarily restricted net assets are available for the following purposes or restrictions: Restricted for future years' operations iphone App development $ 25,000 7,500 $ 32,500 $ 28, $

14 11 NOTES TO FINANCIAL STATEMENTS- CONTINUED YEARS ENDED JUNE 30, 2016 AND 2015 NOTE 5- CONCENTRATIONS BSCI receives substantially all of its support from corporate and private contributions and state or local grant funding. Grant funding generally requires the fulfillment of certain conditions as set forth in the instrument of grant. Failure to fulfill the grant conditions could result in the return of funds to grantors. The ability of BSCI' s grantors and contributors to continue making grants and contributions comparable to the present level depends upon many factors, including current and future economic conditions. The continuation of BSCI's programs may be dependent upon the above factors. NOTE 6- RELATED PARTY TRANSACTIONS In addition to the lease commitment and expense to a related party as described in Note 3, BSCI normally receives contributions from and incurs additional expenses to members of its Board of Directors and other closely related parties. Included in support and revenue, including in-kind, on the accompanying statements of activities are contributions of$124,913 and $103,134 in 2016 and 2015, respectively, from these related parties; included in expenses, including in-kind, are $53,698 and $47,271 to these related parties in fiscal years 2016 and 2015, respectively. Included in receivables, including promises to give, on the accompanying statements of financial position are receivables from these related parties of $25,000 and $12,500 at June 30, 2016 and 2015, respectively. In addition, beginning in late fiscal year 2013 and forward, an entity associated with one of the board members has begun providing accounting general ledger and related services to BSCI, generally without charge. Included in the above is approximately $23,000 and $20,900 ofin-kind revenue and expense estimated as the value of such services for fiscal years 2016 and 2015, respectively. During the year ended June 30, 2016, BSCI entered into an agreement with another non-profit entity to produce a series of podcasts featuring blues artists, blues music, and like subject matter. Under this agreement, the other entity will fully own all rights, title, and copyright to the podcasts and will split evenly any distribution fees received where BSCI is the original and actual distributor of the podcast. Production revenue of$24,500 was received during the year ended June 30, 2016 from this other entity and is included in production revenue in the accompanying statement of activities.

15 SUPPLEMENTARY INFORMATION

16 12 SCHEDULE OF FUNCTIONAL EXPENSES YEAR ENDED JUNE 30, 2016 GENERAL AND ADMINISTRATIVE RADIO FUND RAISING Dues and subscriptions $ 791 $ $ Entertainment Insurance ,092 3,092 In-kind expenses ,123 10,100 21,564 Postage and shipping Parking - office , Office expense ,109 Payroll ,240 38,500 52,660 Payroll taxes ,247 2,945 4,066 Professional fees.... 8,405 Software licenses fee Radio distribution ,761 Radio production ,984 Radio talent ,510 Special events ,374 Supplies - office.... 1,093 Travel Office space costs, including rent.... 8,787 8,787 Publicity ,685 Depreciation.... 1,872 10,635 Marketing I Advertising ,866 Miscellaneous expense Consulting ,000 Bank service charges $ 115,680 $ 142,224 $ TOTAL $ ,184 64, ,398 19, ,400 8,258 8,405 12,761 24,984 13,510 11,374 1, ,574 10,685 12,507 4, , $ 348,367

17 13 SCHEDULE OF FUNCTIONAL EXPENSES YEAR ENDED JUNE 30, 2015 GENERAL AND ADMINISTRATIVE RADIO FUND RAISING Dues and subscriptions $ 61 $ $ Entertainment Insurance ,638 4,914 In-kind expenses ,369 3,690 44,808 Postage and shipping Parking - office , Office expense ,056 Payroll ,385 41,938 19,144 Payroll taxes ,208 1,503 Professional fees ,855 Software licenses fee ,436 Radio distribution ,566 Radio production ,636 Radio talent ,847 Special events.... 5,264 Supplies - office Travel.... 2,250 Office space costs, including rent ,154 12,463 Publicity ,620 Depreciation ,564 7, Marketing I Advertising ,791 Miscellaneous expense Consulting ,000 Bank service charges $ 72,655 $ 118,414 ~ 71,179 TOTAL $ ,552 69, ,840 8,056 72,467 5,586 4,855 1,436 11,566 12,636 7,847 5, ,250 16,617 5,620 12,230 5, ,000 5 $