Mission Clinics International, Inc. Financial Statements. For the year ended December 31, 2016

Transcription

1 Mission Clinics International, Inc. Financial Statements

2 Independent Accountants' Review Report November 16, 2017 To the Board of Directors Mission Clinics International, Inc. Royal Oak, MI We have reviewed the accompanying financial statements of Mission Clinics International, Inc. (a nonprofit organization), which comprise the statement of financial position as of December 31, 2016, and the related statements of activities, cash flows, and functional expenses for the year then ended, and the related notes to the financial statements. A review includes primarily applying analytical procedures to management s financial data and making inquiries of management. A review is substantially less in scope than an audit, the objective of which is the expression of an opinion regarding the financial statements as a whole. Accordingly, we do not express such an opinion. 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. Accountants Responsibility Our responsibility is to conduct the review engagement in accordance with Statements on Standards for Accounting and Review Services promulgated by the Accounting and Review Services Committee of the AICPA. Those standards require us to perform procedures to obtain limited assurance as a basis for reporting whether we are aware of any material modifications that should be made to the financial statements for them to be in accordance with accounting principles generally accepted in the United States of America. We believe that the results of our procedures provide a reasonable basis for our conclusion W. Long Lake Road, Suite 200 Troy, MI Phone: Fax:

3 Accountants Conclusion Based on our review, we are not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in accordance with accounting principles generally accepted in the United States of America. Puckett, Clement and Schellenberg, P.C. Troy, Michigan

4 Statement of Financial Position December 31, 2016 Assets Current Assets Cash $ 17,887 Marketable Securities 4,478 Prepaid Expenses 2,725 Total Current Assets 25,090 Property and Equipment Furniture, Fixtures and Equipment 30,302 Vehicles 18,647 Leasehold Improvements 13,892 Buildings 2,098,569 2,161,410 Less: Accumulated Depreciation (229,382) Land 10,000 Property and Equipment (Net) 1,942,028 Total Assets $ 1,967,118 Liabilities and Net Assets Liabilities Current Liabilities Accounts Payable $ 4,779 Credit Cards Payable 142 Total Current Liabilities 4,921 Long Term Liabilities - Note Payable 42,000 Total Liabilities 46,921 Net Assets Net Assets - Unrestricted 1,920,197 Total Liabilities and Net Assets $ 1,967,118 See Accompanying Notes and Independent Accountants' Review Report

5 Statement of Activities Unrestricted Total Revenue Contributions $ 565,149 $ 565,149 In-Kind Donations 9,780 9,780 Total Revenue 574, ,929 Expenses Program 141, ,510 Management and General 24,651 24,651 Fundraising 4,766 4,766 Total Expenses 170, ,927 Other Income (Expense) Dividend Income Interest Expense (4,711) (4,711) Gain on Sale of Assets 3,671 3,671 Unrealized Gain on Fair Market Value of Investments Total Other Income (Expense) (616) (616) Increase in Net Assets 403, ,386 Net Assets - Beginning 1,516,811 1,516,811 $ 1,920,197 $ 1,920,197 See Accompanying Notes and Independent Accountants' Review Report

6 Statement of Cash Flows Cash Flows From Operating Activities Increase in Net Assets $ 403,386 Adjustments to Reconcile Increase in Unrestricted Net Assets to Net Cash Provided by Operating Activities: Depreciation 52,744 Unrealized Gain on Fair Value of Investments (286) (Increase) Decrease in Assets: Prepaid Expenses 150 Increase (Decrease) in Liabilities: Accounts Payable 3,971 Credit Cards Payable 142 Net Cash Provided by Operating Activities 460,107 Cash Flows Used in Investing Activities Gain on Sale of Assets (3,671) Purchase of Property and Equipment (444,498) Net Cash Used In Investing Activities (448,169) Net Increase In Cash 11,938 Cash - Beginning of Year 5,949 Cash - End of Year $ 17,887 Supplemental Disclosures: Cash Paid for Interest $ 4,711 Schedule of Non-cash Investing and Financing Transactions Truck Sold to Construction Company for $5,000 Discount on Building Construction Costs $ 5,000 See Accompanying Notes and Independent Accountants' Review Report

7 Statement of Functional Expenses Management and Program General Fundraising Total Accounting $ 1,780 $ 6,713 $ 705 $ 9,198 Bank Charges 968 3,871-4,839 Bus Expense 4, ,159 Church Programs 1, ,404 Depreciation 50,777 1, ,744 Non-U.S. Employment Expenses 41,681 2,657-44,338 Legal and Professional 1, ,806 License and Fees 1, ,000 2,020 Local Travel 1, ,110 Office Supplies and Expense 3,347 4, ,844 Rent 7, ,780 Repairs and Maintenance 8, ,368 Supplies 4, ,362 Telephone 5,311 1,867-7,178 Travel 2,579 1,105-3,684 Truck Expense 1, ,606 Utilities 3, ,829 Website Total Functional Expenses $ 141,510 $ 24,651 $ 4,766 $ 170,927 See Accompanying Notes and Independent Accountants' Review Report

8 Notes to the Financial Statements NOTE A: NATURE OF ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES Nature of Organization Mission Clinics International, Inc. (the Organization ) is a not-for-profit entity organized to provide medical care and church services to communities located in deprived areas around the world. The Organization operates out of office space in Royal Oak, Michigan that is donated by an affiliated church. Construction is underway for the Organization s first project in the Higueronal area of Panama, which will consist of a clinic, multi-use building, dormitory, administrator housing, and support buildings. Church services in Panama are conducted by a local minister, whose housing and salary are also provided by the Organization. Basis of Accounting The financial statements of Mission Clinics International, Inc. have been prepared on the accrual basis of accounting and, accordingly, reflect all significant receivables, payables, and other liabilities as of December 31, The Financial Accounting Standards Board (FASB) sets generally accepted accounting principles (GAAP) that the Organization follows to ensure they consistently report their financial condition, results of operations, and cash flows. These principles are contained within FASB s Accounting Standards Codification (ASC). Financial statement presentation follows the recommendations of the Financial Accounting Standards Board ASC , which requires the Organization 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. There were no temporarily restricted or permanently restricted net assets as of December 31, Use of Estimates The preparation of financial statements requires management to make certain estimates and assumptions that affect the reported amounts of assets, revenues and expenses during the reporting period. Actual results could differ from those estimates. See Independent Accountants Review Report

9 Notes to the Financial Statements NOTE A: NATURE OF ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES - CONTINUED Cash and Cash Equivalents The Organization considers all cash on hand and on deposit in financial institutions, certificates of deposit and money market accounts to be cash or cash equivalents. The Organization had no cash equivalents as of December 31, Marketable Securities Marketable securities at December 31, 2016 consisted of shares of Proctor & Gamble Company common stock at a fair market value of $4,478. For donated investments, cost is determined to be fair market value at the date of donation. The cost basis of the marketable securities at December 31, 2016 was $3,515 and an unrealized gain or loss was reported on the statement of activities. Fair Value The carry amounts reflected in the Organization s Statement of Financial Position for cash, marketable securities, prepaid expenses, accounts payable, credit cards payable and note payable approximate their respective fair values due to the short maturities of those items. Fair Value Measurements FASB Accounting Standards Codification 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. This hierarchy consists of three broad levels: Level 1 inputs consist of unadjusted quoted prices in active markets for identical assets and have the highest priority, Level 2 inputs consist of observable inputs other than quoted prices for identical assets, and Level 3 inputs have the lowest priority. The Organization uses appropriate valuation techniques based on the available inputs to measure the fair value of its investments. When available, the Organization measures fair value using Level 1 inputs because they generally provide the most reliable evidence of fair value. Level 3 inputs would be used only when Level 1 or Level 2 inputs were not available. See Independent Accountants Review Report

10 Notes to the Financial Statements NOTE A: NATURE OF ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES - CONTINUED The Organization s marketable securities are reported at fair value in the accompanying statement of financial position as of December 31, Fair Value Measurement at December 31, 2016 Quoted Market Prices Financial Asset: Fair Value (Level 1) Marketable Securities $ 4,478 $ 4,478 Income Taxes The Organization is a tax-exempt organization under Section 501(c)(3) of the Internal Revenue Code and, therefore, is not subject to federal or state income taxes. Furthermore, in a determination letter dated October 10, 2007, the Internal Revenue Service recognized the Organization as a church affiliated mission society exempt from filing an annual Form 990. Fixed Assets Fixed assets are stated on the basis of cost at date of purchase or fair value at the date of donation. The Organization capitalizes assets over $1,000 and determines on an individual basis whether or not to capitalize amounts between $500-$1,000. Depreciation is computed using the straight-line method over the estimated useful life of the assets. Estimated useful lives are as follows: Furniture, Fixtures and Equipment Vehicles Leasehold Improvements Buildings 3 to 7 years 7 years 10 to 39 years 39 years Support Support for the Organization is derived primarily from cash contributions from individuals, corporations, and religious groups. All contributions, whether cash or in-kind, are considered to be available for unrestricted use unless specifically restricted by the donor. See Independent Accountants Review Report

11 Notes to the Financial Statements NOTE A: NATURE OF ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES - CONTINUED Functional Allocation of Expenses The costs of providing the various programs and other activities have been summarized on a functional basis in the statements of activities and functional expenses. Accordingly, certain costs have been allocated among the programs and supporting services benefited as determined by management. Although the methods of allocation used are considered appropriate, other methods could be used that would produce different amounts. In-Kind Donations Any contributed services required to be recognized under GAAP are reflected in the financial statements at the fair value of the service received. Under accounting principles generally accepted in the United States of America, the contribution of services are recognized if the services received (a) create or enhance nonfinancial assets or (b) require specialized skills that are provided by individuals possessing those skills and would typically need to be purchased if not provided by donation. No contributed services were recorded by the Organization for the year ended December 31, 2016 because these items did not meet the criteria for recognition. The Royal Oak Church of Christ donated office space to the Organization in The estimated fair market rental value of the office space in 2016 was $9,780. Advertising The Organization uses advertising to promote its programs. The cost of advertising is expensed as incurred. During the year ended December 31, 2016, advertising totaled $658 and related to the Organization s website maintenance. NOTE B: CONCENTRATIONS OF CREDIT RISK The Organization maintains its cash balances in multiple financial institutions, both in the United States and in Panama. The balances in accounts at individual financial institutions in the United States were insured by the Federal Deposit Insurance Corporation up to $250,000 per deposit institution. Cash balances in excess of $250,000 at each individual financial institution, as well as cash balances held outside of the United States, are uninsured. At various times during the year, the Organization may have had deposits on hand in accounts at these See Independent Accountants Review Report

12 Notes to the Financial Statements NOTE B: CONCENTRATIONS OF CREDIT RISK CONTINUED institutions that were not insured because they exceeded the $250,000 deposit insurance limits. The Organization had no significant uninsured cash balances as of December 31, NOTE C: UNCERTAINTY IN INCOME TAXES The Organization has been classified as a not-for-profit organization and is taxexempt under Section 501(c)(3) of the Internal Revenue Code. The Organization adopted the recognition requirements for uncertain income tax positions as required by generally accepted accounting principles, with no cumulative effect adjustment required. As a faith-based organization, Mission Clinics International, Inc. is exempt from filing a reporting form with the IRS. The management of the Organization believes that, were the Organization to be examined by the Internal Revenue Service, its position as a faith-based organization would be sustained and there would be no adjustments that would have materially adverse impacts on the Organization s financial condition, results of operations or cash flows. Accordingly, the Organization has not recorded any reserves, or related accruals for interest and penalties for uncertain income tax positions at December 31, The Organization may be subject to random audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress. The Organization s policy is to classify income tax related interest and penalties, if any, in interest expense and penalties expense, respectively. The Organization had no income tax related interest expense or penalties for the year ended December 31, NOTE D: RELATED PARTIES AND CONTRIBUTION CONCENTRATION Members of the Board of Directors contributed $468,559 to the Organization during the year ended December 31, One specific Board Member s individual contributions represented approximately 81% of the total overall revenue of the Organization for the year ended December 31, In the Organization s current operational state, the loss of funding from this particular individual would have a significant negative impact on the Organization, such that the Organization would have significant difficulties in continuing to operate as a going concern without replacing this revenue. See Independent Accountants Review Report

13 Notes to the Financial Statements NOTE E: FOREIGN OPERATIONS The majority of the Organization's operations are conducted in Panama, which has adopted the U.S. Dollar as its functional currency. Additionally, the Panamanian Balboa is fixed at 1 to 1 with the U.S. Dollar. Therefore, the Organization believes it has no exposure to foreign exchange risk based on its operations in Panama. NOTE F: NOTE PAYABLE The Organization received $42,000 from Royal Oak Church of Christ that is scheduled to be repaid in monthly installments of $1,000 beginning after a medical clinic in Higueronal is operational, which is projected to be in September The promissory note does not specify a rate of interest. The entire amount of the loan was shown as long-term in accordance with these repayment terms. The estimated future repayments, assuming that the payments begin in October 2019, are as follows: NOTE G: OPERATING LEASE 2019 $ 3, , , , ,000 Total $ 42,000 The Organization is leasing a postage machine under an operating lease. The lease requires quarterly rental payments of $213. On July 15, 2015 the Organization renewed this lease for an additional thirty six months under the same terms as the original operating lease. The remaining balance of the lease was paid off in Future minimum lease payments are as follows: 2017 $ 1,278 Total $ 1,278 See Independent Accountants Review Report

14 Notes to the Financial Statements NOTE H: DATE OF MANAGEMENT S REVIEW Subsequent events were evaluated through November 16, 2017, which is the date the financial statements were available to be issued. See Independent Accountants Review Report