KAY YOW CANCER FOUNDATION, INC. Raleigh, North Carolina AUDITED FINANCIAL STATEMENTS

Transcription

1 Raleigh, North Carolina AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED AUGUST 31, 2017 (With Comparative Totals for the Year Ended August 31, 2016)

2 CONTENTS PAGES Independent Auditor s Report 2-3 Exhibits: "A" Statements of Financial Position 4 "B" Statement of Activities and Changes in Net Assets 5 "C" Statements of Cash Flows 6 Notes to Financial Statements 7-15 Additional Information 16 Schedule: "1" Schedule of Functional Expenses 17

3 INDEPENDENT AUDITOR S REPORT Board of Directors Kay Yow Cancer Foundation, Inc. Raleigh, North Carolina Page 1 of 2 We have audited the accompanying financial statements of the Kay Yow Cancer Foundation, Inc. (a nonprofit organization), which comprise the statement of financial position as of August 31, 2017, and the related statements of activities and changes in net assets and cash flows 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. Auditor s 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.

4 3 Page 2 of 2 Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Kay Yow Cancer Foundation, Inc., as of August 31, 2017, 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. Report on Summarized Comparative Information We have previously audited the Kay Yow Cancer Foundation, Inc. s 2016 financial statements, and we expressed an unmodified audit opinion on those audited financial statements in our report dated February 27, In our opinion, the summarized comparative information presented herein as of and for the year ended August 31, 2016, is consistent, in all material respects, with the audited financial statements from which it has been derived. 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 page 17 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. Chapel Hill, North Carolina March 9, 2018

5 STATEMENTS OF FINANCIAL POSITION August 31, 2017 and EXHIBIT A ASSETS CURRENT ASSETS: Cash and equivalents $ 579,072 $ 686,826 Investments 2,061,289 1,955,821 Accounts receivable 214, ,284 Promises to give, net 27,500 - Prepaid expenses 28,334 23,847 Inventory, net 21,784 40,083 Other receivables TOTAL CURRENT ASSETS 2,932,793 3,016,861 PROPERTY AND EQUIPMENT: Computer equipment and software 5,868 56,940 Furniture and fixtures 27,874 27,874 Website 15,000-48,742 84,814 Less: accumulated depreciation (20,444) (66,635) TOTAL PROPERTY AND EQUIPMENT 28,298 18,179 OTHER ASSETS: Deposit 4,131 4,131 TOTAL ASSETS $ 2,965,222 $ 3,039,171 LIABILITIES AND NET ASSETS CURRENT LIABILITIES: Accounts payable and accrued expenses $ 8,370 $ 13,135 Grants payable - 278,750 Deferred rent 4,000 2,623 Deferred revenue 7,634 9,320 TOTAL CURRENT LIABILITIES 20, ,828 LONG-TERM LIABILITIES: Deferred rent, net 10,869 16,361 TOTAL LIABILITIES 30, ,189 NET ASSETS: Unrestricted 2,906,849 2,718,982 Temporarily restricted 27,500 - TOTAL NET ASSETS 2,934,349 2,718,982 TOTAL LIABILITIES AND NET ASSETS $ 2,965,222 $ 3,039,171 The accompanying Notes to Financial Statements are an integral part of these statements.

6 STATEMENT OF ACTIVITIES AND CHANGES IN NET ASSETS For the Year Ended August 31, 2017 (With Comparative Totals for the Year Ended August 31, 2016) 5 EXHIBIT B Temporarily Unrestricted Restricted Totals Totals SUPPORT AND REVENUE: Contributions and gifts $ 1,042,590 $ 27,500 $ 1,070,090 $ 855,048 Special events income 234, , ,640 Sale of merchandise, net of cost of sales 58,665-58,665 69,520 Royalties 218, , ,791 In-kind services ,793 Dividends and interest income 67,008-67,008 63,931 Realized loss on investments (5,392) - (5,392) (27,632) Unrealized gain on investments 80,491-80,491 68,710 TOTAL SUPPORT AND REVENUE 1,696,874 27,500 1,724,374 1,580,801 EXPENSES: Program services 1,186,690-1,186,690 1,087,603 Supporting services: General and administrative 75,602-75,602 68,066 Resource development 246, , ,118 TOTAL FUNCTIONAL EXPENSES 1,509,007-1,509,007 1,372,787 Loss from bad debts TOTAL EXPENSES 1,509,007-1,509,007 1,373,047 CHANGES IN NET ASSETS 187,867 27, , ,754 NET ASSETS - BEGINNING OF YEAR 2,718,982-2,718,982 2,511,228 NET ASSETS - END OF YEAR $ 2,906,849 $ 27,500 $ 2,934,349 $ 2,718,982 The accompanying Notes to Financial Statements are an integral part of these statements.

7 STATEMENTS OF CASH FLOWS For the Years Ended August 31, 2017 and EXHIBIT C CASH FLOWS FROM OPERATING ACTIVITIES: Changes in net assets $ 215,367 $ 207,754 Adjustments to reconcile changes in net assets to net cash used in operating activities: Depreciation 6,931 5,067 Realized loss on investments 5,392 27,632 Unrealized gain on investments (80,491) (68,710) Donated securities (4,967) - Increase (decrease) in cash arising from changes in assets and liabilities: Accounts receivable 96,240 59,215 Promises to give, net (27,500) - Prepaid expenses (4,487) 5,489 Inventory, net 18,299 (29,334) Other receivables (770) - Accounts payable and accrued expenses (4,765) (2,629) Grants payable (278,750) (277,412) Deferred rent (4,115) (4,769) Deferred revenue (1,686) 263 NET CASH USED IN OPERATING ACTIVITIES (65,302) (77,434) CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition of property and equipment (17,050) (4,479) Purchases of investments (412,644) (1,074,671) Sales of investments 387, ,187 NET CASH USED IN INVESTING ACTIVITIES (42,452) (487,963) NET DECREASE IN CASH AND EQUIVALENTS (107,754) (565,397) CASH AND EQUIVALENTS - BEGINNING OF YEAR 686,826 1,252,223 CASH AND EQUIVALENTS - END OF YEAR $ 579,072 $ 686,826 SUPPLEMENTAL DISCLOSURE: Noncash contributions: Donated services and materials $ 25,000 $ 36,918 Donated securities $ 4,967 $ - The accompanying Notes to Financial Statements are an integral part of these statements.

8 7 NOTES TO FINANCIAL STATEMENTS Page 1 of 9 NATURE OF ACTIVITIES The Kay Yow Cancer Foundation, Inc. (the Foundation ) was incorporated on December 5, 2007, as a nonprofit corporation committed to being a part of finding an answer in the fight against cancers affecting women through raising money for scientific research, assisting the underserved, and unifying people for a common cause. The Foundation is funded primarily through contributions from individuals, organizations, and foundations nationwide. Funding also includes special events run by the Foundation, as well as by grassroots groups all over the country. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Basis of Accounting. The Foundation s financial statements are presented on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States of America ( U.S. GAAP ). Accordingly, support and revenues are recognized when earned, and expenses are recognized when the obligation is incurred. The Foundation reports gifts of cash and other assets as restricted support if they are received with donor stipulations that limit the use of the donated assets. When a donor restriction expires, that is, when a stipulated time restriction ends or purpose restriction is accomplished, restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities and changes in net assets as net assets released from restrictions. B. Cash and Equivalents. Cash and equivalents consist of monies on deposit at financial institutions and short-term investments with original maturity dates of three months or less. At times, the Foundation places deposits with high-quality financial institutions that may be in excess of federally insured amounts. The Foundation has not experienced any financial loss related to such deposits. C. Investments. Investments in marketable securities are stated at fair value based on readily available published values. Donated securities are recorded at fair value at the date of gift. D. Accounts and Other Receivables. Accounts and other receivables are recorded at net realizable value and primarily consist of royalties from the sale of merchandise. The Foundation provides an allowance for doubtful accounts equal to the estimated losses that are expected be incurred during collection. The allowance is based on historical collection experience and a review by management of the current status of the existing receivables. As of August 31, 2017 and 2016, all receivables were deemed collectible by management.

9 8 NOTES TO FINANCIAL STATEMENTS Page 2 of 9 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) E. Promises to Give Unconditional promises to give are recognized as support and assets in the period received. Conditional promises to give are recognized when the conditions on which they depend are substantially met. Unconditional promises to give that are expected to be collected within one year are recorded at net realizable value. Unconditional promises to give that are expected to be collected in future years are recorded at the present value of their estimated future cash flows. F. Inventory. Inventory consists of clothing from the Nike Kay Yow Collection and other athletic apparel. The carrying value of inventories is based on the lower of cost or market at year-end. Cost is determined using the first-in first-out method. G. Property and Equipment. Property and equipment are stated at cost for purchased assets and at fair value on the date of the gift for donated assets. Property and equipment are capitalized if the life is expected to be greater than one year and if the cost exceeds $1,000. Depreciation is calculated using the straight-line method over estimated useful lives of three to seven years. The Foundation reports gifts of land, buildings, and equipment as unrestricted support unless explicit donor stipulations specify how the donated assets must be used. Gifts of long-lived assets with explicit restrictions that specify how the assets are to be used and gifts of cash or other assets that must be used to acquire long-lived assets are reported as restricted support. Absent explicit donor stipulations about how long those long-lived assets must be maintained, the Foundation reports expirations of donor restrictions when the donated or acquired long-lived assets are placed in service. The Foundation maintains memorabilia celebrating Coach Yow, including awards, honors, special personal items, and other items commemorating her accomplishments. Memorabilia items acquired either through purchase or donation are not capitalized. Purchases of memorabilia items are recorded as decreases in unrestricted net assets if purchased with unrestricted assets and as decreases in temporarily restricted net assets if purchased with donorrestricted assets. Contributions of memorabilia items are not recognized in the statement of activities and changes in net assets. H. Grants. Grant expenditures are recognized in the period the grant is approved, provided the grant is not subject to significant future conditions. Conditional grants are recognized as grant expense and as a grant payable in the period in which the terms of the conditions are met. Grants payable that are expected to be paid in future years are recorded at the present value of expected future payments.

10 9 NOTES TO FINANCIAL STATEMENTS Page 3 of 9 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) I. Net Assets. Unrestricted - Resources of the Foundation that are not restricted by donors or grantors as to use or purpose. These resources include amounts generated from operations, undesignated gifts, and investments in property and equipment. Temporarily Restricted - Resources that carry a donor-imposed restriction that permit the Foundation to use or expend the donated assets for a specific purpose. The restrictions are satisfied by the passage of time or by actions of the Foundation. J. Marketing and Promotion. The Foundation expenses marketing and promotion costs as incurred. Marketing and promotion expense totaled $72,797 and $148,787, for the years ended August 31, 2017 and 2016, respectively. K. Income Tax Status. The Foundation is an exempt organization under Section 501(c)(3) of the Internal Revenue Code, and is classified as other than a private foundation. It is also exempt from North Carolina income and franchise taxes under the North Carolina Non-Profit Corporation Act. The Foundation reports any interest and penalties related to unrecognized tax positions as miscellaneous expense. L. Estimates. The preparation of financial statements in conformity with U.S. GAAP 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 revenue and expenses during the reporting period. Accordingly, actual results could differ from those estimates. INVESTMENTS The Foundation s investments at August 31, 2017 and 2016, are comprised of the following: Cost Market Value Cost Market Value U.S. Government securities $ 249,213 $ 246,137 $ 236,880 $ 236,786 Corporate debt securities 228, , , ,330 Mutual funds 1,507,738 1,587,181 1,475,057 1,468,705 $ 1,985,520 $ 2,061,289 $ 1,960,543 $ 1,955,821

11 10 NOTES TO FINANCIAL STATEMENTS Page 4 of 9 INVESTMENTS (CONTINUED) As of August 31, 2017, the total accumulated market appreciation was $75,769. Realized losses of $5,392, unrealized gains of $80,491, and investment fees of $18,704 were reported for the year ended August 31, As of August 31, 2016, the total accumulated market depreciation was $4,722. Realized losses of $27,632, unrealized gains of $68,710, and investment fees of $16,577 were reported for the year ended August 31, FAIR VALUE OF ASSETS U.S. GAAP defines fair value 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. It also establishes a fair value hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are those that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Foundation. Unobservable inputs reflect the Foundation s assumptions about the inputs market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The fair value hierarchy is categorized into three levels based on the inputs as follows: Level 1 - Valuations based on unadjusted quoted prices in active markets for identical assets as of the reporting date. Level 2 - Valuations based on inputs other than quoted prices, which are either directly or indirectly observable as of the reporting date, are valued at prices for similar assets or liabilities in markets not active, or determined through the use of models or other valuation methodologies. Level 3 Pricing inputs are unobservable and include situations where there is little, if any, market activity for the asset. Fair value for these assets is determined using valuation methodologies that consider a range of factors, including but not limited to the price at which the asset was acquired, the nature of the assets, local market conditions, trading values on public exchanges for comparable securities, current and projected operating performance and financing transactions subsequent to the acquisition of the asset. The inputs into the determination of fair value require significant management judgment. Due to the inherent uncertainty of these estimates, these values may differ materially from the values that would have been used had a ready market for these assets existed.

12 11 NOTES TO FINANCIAL STATEMENTS Page 5 of 9 FAIR VALUE OF ASSETS (CONTINUED) As required by U.S. GAAP, assets are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Foundation s investments are classified as Level 1 and Level 2 as of August 31, 2017, and No assets or liabilities were classified as Level 3. The following table summarizes the assets of the Foundation for which fair values are determined on a recurring basis as of August 31, 2017: Level 1 Level 2 Level 3 Total U.S. Government securities $ - $ 246,137 $ - $ 246,137 Corporate debt securities - 227, ,971 Mutual funds: Fixed Income 503, ,310 Large-Cap Growth 211, ,353 International 177, ,482 Large-Cap Value 163, ,543 Real Estate 139, ,799 Long-Short 135, ,861 Mid-Cap Growth 68, ,539 Mid-Cap Blend 63, ,521 Futures 45, ,456 Multialternative 32, ,298 Small-Cap Growth 16, ,588 Small-Cap Blend 16, ,058 Bank Loan 13, ,373 $ 1,587,181 $ 474,108 $ - $ 2,061,289

13 12 NOTES TO FINANCIAL STATEMENTS Page 6 of 9 FAIR VALUE OF ASSETS (CONTINUED) The following table summarizes the assets of the Foundation for which fair values are determined on a recurring basis as of August 31, 2016: Level 1 Level 2 Level 3 Total U.S. Government securities $ - $ 236,786 $ - $ 236,786 Corporate debt securities - 250, ,330 Mutual funds: Fixed Income 471, ,673 Large-Cap Growth 258, ,665 Large-Cap Value 168, ,687 International 122, ,108 Real Estate 107, ,960 Mid-Cap Blend 88, ,409 Mid-Cap Growth 61, ,147 Futures 45, ,688 Small-Cap Blend 30, ,811 Small-Cap Growth 30, ,724 Commodities 29, ,674 Bank Loan 26, ,883 Multialternative 26, ,276 DEFERRED REVENUE $ 1,468,705 $ 487,116 $ - $ 1,955,821 Deferred revenue consists of registration fees paid in advance for the Foundation s golf event, held in September of each year. As of August 31, 2017 and 2016, the Foundation had deferred revenues totaling $7,634 and $9,320, respectively, relating to this event. TEMPORARILY RESTRICTED NET ASSETS At August 31, 2017, temporarily restricted net assets consisted of time restricted promises to give from two donors.

14 13 NOTES TO FINANCIAL STATEMENTS Page 7 of 9 ROYALTIES Royalties represent amounts received from the sale of the Nike Kay Yow Collection items under a contractual agreement between the Foundation and Nike, Inc. As part of the agreement, the Foundation allows Nike, Inc., to use one of the Foundation s trademarked logos on merchandise. In return, awareness of the Foundation s mission is heightened, and the Foundation receives a predetermined percentage of the proceeds from the sale of the merchandise. The Foundation does not assist or participate in the sale of that merchandise. Accordingly, the royalties received are not subject to unrelated business income tax. The royalties for the years ended August 31, 2017 and 2016, were $218,861 and $317,791, respectively. SPECIAL EVENTS The Foundation regularly holds special events with the specific objective of promoting and publicizing the charitable, educational, and research activities of the Foundation. Net proceeds from special events for the years ended August 31, 2017 and 2016, are as follows: Special events income $ 234,651 $ 231,640 Special events expenses (82,128) (81,757) Net special events income $ 152,523 $ 149,883 OPERATING LEASE In February 2013, the Foundation entered into an 84-month operating lease agreement for office space in Raleigh, North Carolina. The term of the lease commenced on May 1, 2013, and expires April 30, Monthly payments commenced in September 2013 at $2,066 per month, and rise in increments to $4,820 per month by the expiration of the lease. Deferred rent under the agreement totaled $14,869 and $18,984, for the years ended August 31, 2017 and 2016, respectively. Rent expense related to the lease totaled $49,933 for the years ended August 31, 2017 and Future minimum lease payments are as follows: Year ending August 31, 2018 $ 55, , ,556 Total future minimum lease payments $ 151,011

15 14 NOTES TO FINANCIAL STATEMENTS Page 8 of 9 MERCHANDISE SALES Sales from merchandise are reported net of cost of goods sold. Sales for the years ended August 31, 2017 and 2016, are as follows: Merchandise sales $ 137,611 $ 135,427 Cost of goods sold (78,946) (65,907) Net merchandise sales $ 58,665 $ 69,520 DONATED SERVICES AND MATERIALS The Foundation recognizes donated services that create or enhance nonfinancial assets or that require specialized skills, and would typically need to be purchased if not provided by donation. During the year ended August 31, 2017, the Foundation received $25,000 of donated materials. During the year ended August 31, 2016, the Foundation received $1,793 in donated marketing and legal services, and $35,125 of donated materials. Although not recognized in the accompanying financial statements, a significant amount of various other services have been contributed by volunteers towards the general operation and success of the Foundation. INCOME TAXES The Foundation records revenue on merchandise sales. This revenue is considered unrelated business income. The Foundation files federal and state income tax returns and records in the financial statements the corresponding income tax payable and expense for taxes owed on the unrelated business income. No payments were made and no expenses were incurred for tax owed on the unrelated business income for the years ended August 31, 2017 and CONCENTRATIONS Nike, Inc., provided royalties and contributions totaling 13% and 29% of the Foundation s total support and revenue for the years ended August 31, 2017 and 2016, respectively. For the years ended August 31, 2017 and 2016, 100% and 94% of accounts receivable were from Nike, Inc., respectively. COMMITMENTS During the year ending August 31, 2015, the Foundation awarded a conditional grant totaling $1,000,000 to be paid out in equal installments over a four year period. The funds are conditional based on the Foundation raising a specified amount. The Foundation met this condition in the first three years, and recognized $250,000 in grants expense for each of the three years. The remaining amount will be recognized and paid out as the conditions are met in 2018.

16 15 NOTES TO FINANCIAL STATEMENTS Page 9 of 9 FUNCTIONAL ALLOCATION OF EXPENSES The costs of providing various programs and other activities have been summarized on a functional basis in the statement of activities and changes in net assets. Accordingly, certain indirect costs have been allocated between the programs and supporting services benefited based on management s estimates. RECLASSIFICATIONS Certain reclassifications have been made to the 2016 financial statements in order to conform to the 2017 presentation. Such reclassifications had no effect on net assets. PRIOR YEAR INFORMATION The statements of activities and changes in net assets include certain prior-year summarized comparative information in total but not by net asset class. Such information does not include sufficient detail to constitute a presentation in conformity with U.S. GAAP. Accordingly, such information should be read in conjunction with the Foundation's financial statements for the year ended August 31, 2016, from which the summarized information was derived. SUBSEQUENT EVENTS Management has evaluated subsequent events for recognition or disclosure through March 9, 2018, the date the financial statements were available to be issued. Management did not identify any events that occurred subsequent to year-end that require disclosure in the financial statements.

17 16 ADDITIONAL INFORMATION For the Years Ended August 31, 2017 and 2016

18 SCHEDULE OF FUNCTIONAL EXPENSES For the Year Ended August 31, 2017 (With Comparative Totals for the Year Ended August 31, 2016) 17 SCHEDULE 1 Supporting Services Program Management Resource Services and General Development Totals Totals Salaries and compensation $ 399,941 $ 43,896 $ 43,896 $ 487,733 $ 371,860 Grants 350, , ,338 Professional fees 86,724 6,678 6, ,080 96,559 Special events ,128 82,128 81,757 Marketing and promotion 11, ,099 72, ,787 Travel and meetings 57, ,972 71,532 60,465 Service fees 47,794 5,043 6,441 59,278 47,488 Employee benefits 46,666 5,122 5,122 56,910 46,910 Program event expense 44,591-10,981 55,572 28,628 Building, rental, and maintenance 41,937 4,603 4,603 51,143 53,212 Payroll taxes 29,522 3,240 3,240 36,002 30,291 Miscellaneous 22,715 2,378 3,243 28,336 12,714 Technology and website 16, ,907 7,691 Telephone and internet 10,372 1,127 1,127 12,626 11,806 Office supplies and expense 8, ,949 10,721 7,872 Depreciation 5, ,931 5,067 Insurance 5, ,812 5,405 Postage and shipping 1, ,098 2,499 4,251 Taxes and penalties Total functional expenses $ 1,186,690 $ 75,602 $ 246,715 $ 1,509,007 $ 1,372,787 See Independent Auditor's Report.