e3 PARTNERS MINISTRY FINANCIAL STATEMENTS With Independent Auditors Report March 31, 2013

Transcription

1 FINANCIAL STATEMENTS With Independent Auditors Report

2 Table of Contents Independent Auditors Report 1 Financial Statements Statement of Financial Position 3 Statement of Activities 4 Statement of Cash Flows 5 Notes to Financial Statements 6 Page

3 INDEPENDENT AUDITORS REPORT Board of Directors e3 Partners Ministry Plano, Texas We have audited the accompanying financial statements of e3 Partners Ministry, which comprise the statement of financial position as of, and the related statements of activities and cash flows for the fifteenmonth period 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 Board of Directors e3 Partners Ministry Plano, Texas Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of e3 Partner's Ministry as of, and the changes in its net assets and cash flows for the fifteen-month period then ended in accordance with accounting principles generally accepted in the United States of America. As discussed in Note 7, corrections were made to adjust beginning net assets and have been recorded as a prior period adjustment. Dallas, Texas July 30,

5 Statement of Financial Position ASSETS: Cash and cash equivalents $ 2,050,697 Investments 83,289 Accounts receivable net 45,166 Contributions receivable 47,240 Inventory 256,460 Prepaid expenses and other assets 636,505 Property and equipment net 1,043,445 Total Assets $ 4,162,802 LIABILITIES AND NET ASSETS: Liabilities: Accounts payable and other liabilities $ 394,884 Accrued expenses 37, ,948 Net assets: Unrestricted 765,435 Temporarily restricted 2,965,419 3,730,854 Total Liabilities and Net Assets $ 4,162,802 See notes to financial statements -3-

6 Statement of Activities For the Fifteen-Month Period Ended Temporarily Unrestricted Restricted Total SUPPORT AND REVENUE: Contributions $ 8,377,218 $ 13,135,330 $ 21,512,548 Product sales 1,216,142 1,216,142 Investment and other income 13,931 13,931 Total Support and Revenue 9,607,291 13,135,330 22,742,621 RECLASSIFICATIONS: Satisfaction of purpose restrictions 10,192,802 (10,192,802) - Expiration of time restrictions 94,481 (94,481) - Administrative assessments 1,944,966 (1,944,966) - 12,232,249 (12,232,249) - EXPENSES: Program activities: e3 Partners 15,745,806-15,745,806 e3 Resources 1,010,357-1,010,357 I am Second 2,944,793-2,944,793 19,700,956-19,700,956 Supporting activities: Management and general 2,584,851 2,584,851 Fund-raising 431, ,304 Total Expenses 22,717,111-22,717,111 Change in Net Assets (877,571) 903,081 25,510 Net Assets, Beginning of Period as Previously Stated 1,643,006 1,854,931 3,497,937 Prior Period Adjustment (Note 7) - 207, ,407 Net Assets, Beginning of Period as Restated 1,643,006 2,062,338 3,705,344 Net Assets, End of Period $ 765,435 $ 2,965,419 $ 3,730,854 See notes to financial statements -4-

7 Statement of Cash Flows For the Fifteen-Month Period Ended CASH FLOWS FROM OPERATING ACTIVITIES: Change in net assets $ 25,510 Adjustments to reconcile change in net assets to net cash provided (used) by operating activities: Depreciation and amortization 269,283 Realized and unrealized (gains)losses on investments (8,289) Changes in operating assets and liabilities: Accounts receivable 36,413 Contributions receivable 94,481 Inventory (124,587) Prepaid expenses and other assets (333,702) Accounts payable and other liabilities 229,379 Accrued expenses 14,478 Net Cash Provided by Operating Activities 202,966 CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment (139,329) Net Cash Used by Investing Activities (139,329) Net Change in Cash and Cash Equivalents 63,637 Cash and Cash Equivalents, Beginning of Year 1,987,060 Cash and Cash Equivalents, End of Year $ 2,050,697 See notes to financial statements -5-

8 Notes to Financial Statements 1. NATURE OF ORGANIZATION: e3 Partners Ministry (e3) is located in Plano, Texas, and is incorporated under the laws of the State of Texas as a not-for-profit religious corporation. e3 is a multi-denominational evangelistic and outreach organization to people throughout the world. e3's mission is to equip God's servants, evangelize people throughout the world, and establish churches in foreign countries. e3's primary source of revenue is from contributions from supporters of e3's ministry campaigns, staff support, and operations support. e3 extends its missions through it divisions: e3 Partners, e3 Resources, and I am Second. e3's mission's primary activity is recruiting and equipping volunteer missionaries to evangelize and plant churches through out the world through short-term mission trips. e3 International focuses on providing national leaders and new churches with training and materials necessary to disciple new believers and develop multiplying church. e3 Resources is a distributor of Christian faith-sharing tools, principally the EvangeCube, and is located in Franklin, Tennessee. I am Second is a movement meant to inspire people of all kinds to live for God and for others. e3 is a not-for-profit organization exempt from federal income taxes under section 501(c)(3) of the Internal Revenue Code (the Code), and as such are subject to income taxes only to the extent of unrelated business income. e3 has been classified as a publicly supported organization, which is not a private foundation, under Section 509(a) of the Code. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: The financial statements of e3 have been prepared on the accrual basis of accounting. The significant accounting policies followed are described below to enhance the usefulness of the financial statements to the reader. The preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. CASH AND CASH EQUIVALENTS Cash and cash equivalents consist of cash in checking and savings accounts. These accounts may, at times, exceed federally insured limits. e3 has not experienced any losses on such accounts and believes it is not exposed to any significant credit risk on cash and cash equivalents. INVESTMENTS Investments consist of a global mutual fund that is recorded at fair value based on readily determinable values which are considered Level 1 under the Fair Value Topic of the FASB ASC. The fair value of Level 1 securities is determined by reference to quoted market prices and other relevant information generated by market transactions. Realized and unrealized gains and losses are recorded in the statement of activities in the period in which they occur. Donated investments are recorded at fair value on the date of the gift. -6-

9 Notes to Financial Statements 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued: ACCOUNTS RECEIVABLE Accounts receivable are amounts due from organizations and companies who sell e3 products. The allowance for doubtful accounts, as of the, was $17,535 and is calculated based on a history of past writeoffs of accounts receivable. Individual accounts receivable are written off against the allowance when all methods of collection have been exhausted. Accounts receivable are generally considered past due when payment has not been received within the extended credit term limits. CONTRIBUTIONS RECEIVABLE Contributions receivable consist of unconditional promises made by donors to give to e3 in a future period. As of, all of the contributions were expected to be received during the year ending March 31, 2014, therefore, an allowance or discount on the contributions has not been recorded in the statement of financial position. INVENTORY Inventory is stated at the lower of cost or market using the average cost method, which approximates the firstin, first-out method, and is shown net of a reserve of $0 as of. Inventory consists primarily of EvangeCubes and other resources to support the ministry operations of e3. PREPAID EXPENSES AND OTHER ASSETS Prepaid expenses and other assets consists primarily of payments made in advance for future mission trips. PROPERTY AND EQUIPMENT Expenditures for property and equipment greater than $500 are capitalized at cost. Donated items are recorded at fair market value on the date of the gift. Depreciation is computed on the straight-line method over the estimated useful lives of the assets. Estimated useful lives range from three to forty years. Property held for sale is included in property and equipment and is stated at the lower of cost and net realizable value. CLASSES OF NET ASSETS The financial statements report amounts by class of net assets: Unrestricted net assets are currently available for operations under the direction of the board, including those preferenced to support the work of missionaries, and resources invested in property and equipment. Temporarily restricted net assets are stipulated by donors for specific operating purposes or for the specific programs of the e3. -7-

10 Notes to Financial Statements 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued: SUPPORT, REVENUE, AND EXPENSES Contributions are recorded when made, which may be when funds are received, unconditional promises are made, or ownership of other assets is transferred to e3. e3 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, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restrictions. Administrative assessments are included in net assets released from restrictions. Administratitve assessments range from 11%- 15% of the amount given, depending on the type of gift. e3 s policy is to record temporarily restricted contributions and net assets released from restrictions. e3 reports gifts of cash and other assets as unrestricted support when they are preferenced to support the work of missionaries. Total gifts preferenced for missionarysupport were $6,558,845 during the fifteen-month period and ending balances of $1,433,401 at the end of the fifteen-month period ended. Product sales revenue is recognized when the product is delivered to the customer, which is when it is considered to be earned. Sales are recorded net of sales discounts, returns, and allowances. Total sales discounts, returns, and allowances for the fifteen-month period ended March 31, 2012 were $34,581. Investment and other income is recognized when earned. Expenses are reported when costs are incurred in accordance with the accrual basis of accounting. FUNCTIONAL ALLOCATION OF EXPENSES The costs of providing various program services and supporting activities have been summarized on a functional basis in the statement of activities. Accordingly, certain costs, such as salaries and benefits and depreciation, have been allocated among the program services and supporting activities benefited. UNCERTAIN TAX POSITIONS The financial statement effects of a tax position taken or expected to be taken are recognized in the financial statements when it is more likely than not, based on the technical merits, that the position will be sustained upon examination. Interest and penalties, if any, are included in expenses in the statement of activities. As of, e3 had no uncertain tax positions that qualify for recognition or disclosure in the financial statements. e3's federal Exempt Organization Business Income Tax Returns (Form 990) for the years ended December 31, 2011, 2010, and 2009 are subject to examination by the IRS, generally for three years after they were filed. -8-

11 Notes to Financial Statements 3. PROPERTY AND EQUIPMENT NET: Property and equipment net as of, consists of: Land $ 145,000 Building 370,000 Software 940,643 Furniture, fixtures, and equipment 809,375 Leasehold improvements 94,960 Website development 6,460 Property held for sale 75,000 2,441,438 Less accumulated depreciation (1,397,993) $ 1,043, NET ASSETS: Unrestricted net assets as of, consist of: Operating $ (278,010) Equity in property and equipment 1,043,445 $ 765,435 Temporarily restricted net assets consist of: January 1, 2012 Contributions Reclassification Mission trips $ 429,216 $ 8,292,887 $ (7,616,693) $ 1,105,410 I am Second 287,557 3,449,009 (2,881,248) 855,318 Country projects 1,036,883 1,272,465 (1,475,684) 833,664 Other projects 91, ,969 (164,143) 48,787 Time restricted 216,721 - (94,481) 122,240 $ 2,062,338 $ 13,135,330 $ (12,232,249) $ 2,965,419-9-

12 Notes to Financial Statements 5. OPERATING LEASES: e3 leases office space and equipment under non-cancellable operating leases with lease terms ending through the year ending March 31, Total rent expense incurred during the fifteen-month period ended March 31, 2013, was $450,819. Future minimum lease payments are: Year Ending March 31, Thereafter $ $ 311, ,312 75,520 79,000 80,117 31, ,081 As part of the above operating lease, e3 is provided below market rent for its primary office in Plano, Texas. The difference between the rent paid and the fair value of the rent has been recorded contributions in the statement of activities. e3 received donated rent income of $200,400 during the fifteen-month period ended. 6. RETIREMENT PLAN: e3 sponsors a 403(b) plan (the Plan) covering all employees. The plan does not allow for employer contributions. 7. PRIOR PERIOD ADJUSTMENT: A prior period adjustment was made to correct an understatement of assets due to not accruing prepaid expenses and other assets for mission trips of $207,407 as of December 31, The net effect on ending net assets as of December 31, 2011 was an increase of $207, SUBSEQUENT EVENTS: Subsequent events have been evaluated through the date of the report, which represents the date the financial statements were available to be issued. Subsequent events after that date have not been evaluated. -10-