BREAKTHROUGH URBAN MINISTRIES, INC.

Transcription

1 BREAKTHROUGH URBAN MINISTRIES, INC. Financial Statements With Independent Auditors Report

2 Table of Contents Page Independent Auditors' Report 1 Financial Statements Statements of Financial Position 3 Statements of Activities 4 Statements of Functional Expenses 6 Statements of Cash Flows 7 Notes to Financial Statements 8

3 INDEPENDENT AUDITORS' REPORT Board of Directors Breakthrough Urban Ministries, Inc. Chicago, Illinois We have audited the accompanying financial statements of Breakthrough Urban Ministries, Inc., which comprise the statements of financial position as of, and the related statements of activities, functional expenses and 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. Auditors' 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 audits 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 Breakthrough Urban Ministries, Inc. Chicago, Illinois Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Breakthrough Urban Ministries, Inc. as of, and the changes in its net assets, functional expenses and cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. Wheaton, Illinois November 26,

5 Statements of Financial Position June 30, ASSETS: Cash and cash equivalents $ 324,149 $ 217,379 Cash held in escrow 75,000 - Accounts receivable 106,129 73,639 Prepaid expenses and other assets 50,381 44,500 Contributions receivable net 338, ,899 Assets held for long-term purposes net 3,966,096 2,123,765 Property and equipment net 7,499,970 7,486,200 Total Assets $ 12,359,728 $ 10,465,382 LIABILITIES AND NET ASSETS: Liabilities: Accounts payable $ 11,863 $ 11,405 Accrued expenses 169, ,600 Deferred grant revenue 1,369,825 1,370,341 Long term debt 1,001,421 1,237,764 Total liabilities 2,552,318 2,813,110 Net assets: Unrestricted: Undesignated (accumulated deficit) 360,823 (85,867) Net investment in property and equipment 5,142,488 5,094,475 5,503,311 5,008,608 Temporarily restricted 4,304,099 2,643,664 Total net assets 9,807,410 7,652,272 Total Liabilities and Net Assets $ 12,359,728 $ 10,465,382 See notes to financial statements -3-

6 Statements of Activities Year Ended June 30, OPERATING ACTIVITIES: Change in Unrestricted Net Assets: Revenues, support and other income: Contributions $ 1,931,676 $ 1,771,385 Government grants 844, ,199 Fees 48,912 52,851 Gifts in kind 372, ,336 Other 19,156 12,697 Net assets released from restrictions: Satisfaction of time restrictions 353, ,672 Total revenue, support and other income 3,570,464 3,518,140 Expenses: Salaries 1,612,401 1,713,353 Fringe benefits and related taxes 500, ,081 Assistance to individuals 656, ,869 Fees for services 89, ,551 Advertising and promotion 95, ,791 Other 526, ,945 Total Expenses 3,481,168 3,718,590 Change in Net Assets from Operating Activities 89,296 (200,450) (continued) See notes to financial statements -4-

7 Statements of Activities (continued) Year Ended June 30, NON-OPERATING ACTIVITIES: Change in Unrestricted Net Assets: Revenues, support and reclassifications: Gain on disposal of property and equipment 15,000 - Net assets released from restrictions: Satisfaction of building fund restrictions 614, , , ,930 Expenses: Depreciation 224, ,512 Loss on disposal of property and equipment - 19,814 Total Expenses 224, ,326 Change in Unrestricted Net Assets from Non-Operating Activities 405, ,604 Total Change in Unrestricted Net Assets 494,703 (6,846) Change in Temporarily Restricted Net Assets: Revenues, support and reclassifications: General contributions 172, ,855 Capital campaign contributions 2,321, ,084 Write off of doubtful contributions receivable - (698,272) Gifts in kind 136,026 85,884 Net assets released from restrictions: Satisfaction of time restrictions (353,909) (370,672) Satisfaction of building fund restrictions (614,777) (456,930) Change in Temporarily Restricted Net Assets 1,660,435 (953,051) Change in Net Assets from Non-Operating Activities 2,065,842 (759,447) Total Change in Temporarily Restricted Net Assets 1,660,435 (953,051) Change in Net Assets 2,155,138 (959,897) Net Assets, Beginning of Year 7,652,272 8,612,169 Net Assets, End of Year $ 9,807,410 $ 7,652,272 See notes to financial statements -5-

8 Statements of Functional Expenses Year Ended June 30, Program Management Program Management Services and General Fund-raising Total Services and General Fund-raising Total SALARIES AND RELATED EXPENSES: Salaries $ 1,341,633 $ 58,146 $ 212,622 $ 1,612,401 $ 1,435,445 $ 74,121 $ 203,787 $ 1,713,353 Fringe benefits and related taxes 420,186 25,282 55, , ,481 24,121 49, ,081 Total salaries and related expenses 1,761,819 83, ,837 2,113,084 1,869,926 98, ,266 2,221,434 OTHER EXPENSES: Assistance to individuals 654,014 2, , ,869 1, ,869 Fees for services 67,486 11,290 10,423 89,199 70,307 29,869 78, ,551 Advertising and promotion 17, ,361 95,997 13, , ,791 Office expenses 56,297 11,947 7,788 76,032 43,668 9,738 11,350 64,756 Information technology 5,280 2, ,094 3, ,379 Occupancy 106,317 6,858 6, ,018 77,031 7,709 5,209 89,949 Conferences and meetings 6,349 2,140 2,280 10,769 2,258 2, ,984 Interest 46,957 7,826 7,826 62,609 49,658 8,276 8,276 66,210 Depreciation 186,848 19,502 18, , ,988 19,504 18, ,512 Insurance 46,345 4,645 4,370 55,360 32,780 2,509 1,738 37,027 Supplies and materials 76,692 1,388 1,116 79,196 56, ,159 Repairs and maintenance 32,112 1, ,775 96,899-4, ,230 Bank fees - 14,889-14,889-15,991-15,991 Subscriptions and dues 53,388 1,678 7,466 62,532 35,204 2,620 30,272 68,096 Operating other expenses - 1,173 1,060 2, Non operating other expenses , ,814 Total other expenses 1,355,276 89, ,295 1,592,454 1,361, , ,347 1,760,482 Total Expenses $ 3,117,095 $ 173,311 $ 415,132 $ 3,705,538 $ 3,231,664 $ 200,639 $ 549,613 $ 3,981,916 See notes to financial statements -6-

9 Statements of Cash Flows Year Ended June 30, CASH FLOWS FROM OPERATING ACTIVITIES: Changes in net assets $ 2,155,138 $ (959,897) Adjustments to reconcile change in net assets to net cash provided by (used in) operating activities: Contributions restricted for long-term purposes (2,000,747) (110,250) Change in allowance for doubtful contributions receivable (29,437) 698,272 Change in discount on contributions receivable (20,112) (75,118) Depreciation 224, ,512 (Gain) loss on disposal of property and equipment (15,000) 19,814 Donated property and equipment (136,026) (118,995) Change in: Accounts receivable (32,490) 6,697 Prepaid expenses and other assets (5,881) 13,223 Contributions receivable 187,440 59,791 Accounts payable 458 4,121 Accrued expenses (51,497) (18,377) Deferred grant revenue (516) 4,446 Net Cash Provided by (Used in) Operating Activities 275,700 (232,761) CASH FLOWS FROM INVESTING ACTIVITIES: Change in cash and cash equivalents held for long-term purposes (2,158,011) (439,608) Proceeds from sale of property and equipment 15,000 - Purchase of property and equipment (75,008) (277,780) Net Cash Used in Investing Activities (2,218,019) (717,388) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from contributions restricted for long-term purposes and collections on contributions receivable held for long-term purposes 2,360, ,964 Additional borrowings - 400,000 Payments on debt (236,343) (234,073) Net Cash Provided by Financing Activities 2,124, ,891 Net Change in Cash and Cash Equivalents 181,770 35,742 Cash and Cash Equivalents, Beginning of Year 217, ,637 Cash, Cash Equivalents and Cash Held in Escrow, End of Year $ 399,149 $ 217,379 SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITY: Cash paid for interest $ 62,541 $ 65,906 Purchase of property and equipment with debt $ 27,100 $ 25,000 See notes to financial statements -7-

10 Notes to Financial Statements 1. NATURE OF ORGANIZATION: Breakthrough Urban Ministries, Inc. (Breakthrough) is a not-for-profit Illinois Corporation exempt from income taxes under section 501(c)(3) of the United States Internal Revenue Code. Breakthrough is not considered to be a private foundation and the primary source of revenue is from private donations. Breakthrough was formed in 1992 to meet the physical, emotional, mental, social and spiritual needs of people in the urban setting. Breakthrough seeks to demonstrate the compassion of Christ by partnering with those affected by poverty to build connections, develop skills & open doors of opportunity. Breakthrough envisions vibrant, healthy communities in which all people recognize their value as children of God through Christ and are growing toward their full potential. In Chicago's East Garfield Park, where disinvestment has left the neighborhood devoid of opportunity and full of broken dreams, Breakthrough Urban Ministries is restoring the broken networks of youth and families and empowering adults in the community to achieve self-sufficiency and break the cycle of poverty. The following are the services provided: Breakthrough operates two transitional housing shelters in East Garfield Park: the Breakthrough Ministry Center for men and the Breakthrough Joshua Center for women. Both facilities first aim to meet immediate needs of food and shelter by providing a clean and comfortable place to sleep and by serving breakfast, lunch and dinner. When guests arrive at Breakthrough, they receive a toiletry kit, a space to shower and are granted access to laundry facilities. Once the basic needs are addressed, guests are able to access a bevy of supportive services designed to help them along their path to self-reliance. Supportive services include on-site primary and mental health care, employment training and housing search assistance and placement. Breakthrough s Homeless Intervention program is designed to empower homeless adults to overcome poverty and enjoy the liberty of self-sufficiency in an environment that restores dignity to people who have already had so much stripped away. Neighborhood Transformation Breakthrough seeks to end cycles of poverty in the community by providing ways for people to connect into relational networks of support, to have access to resources and opportunities, and to contribute back to the community. A variety of services, events and resources are offered towards that end. Homeless Intervention Breakthrough Urban Ministries offers a new model for the delivery of homeless services. The organization is intentional about treating every person in need of its services with dignity and respect. When guests arrive at Breakthrough, they receive much more than a bed to sleep in they receive the tools necessary to achieve selfsufficiency. -8-

11 Notes to Financial Statements 1. NATURE OF ORGANIZATION, continued: Neighborhood Transformation, continued Through the Fresh Market, Breakthrough offers a dynamic food resource that aims to end hunger in the community. The Fresh Market provides groceries and various supplies to families in Breakthrough's target zone. Through the Fresh Market, community residents also have access to such services as legal aid, food stamps, housing, employment, financial management, GED, and family workshops. The Fresh Market also welcomes food and general supply donations. Youth Development Every day, Breakthrough surrounds youth with a network of caring adults to support their growth and expand their opportunities. The relationships that youth build with these adults provide positive influence and can make a huge difference in the life of a child. Breakthrough s youth initiatives began operation in 2000 and have grown to serve over 300 youth each year through programs which include preschool, middle and high school academic enrichment and spiritual development activities, along with athletic programs to engage youth physically. Educators have identified early childhood education as one of the most critical necessities for preparing urban youth for academic success. Breakthrough has two primary academic enrichment programs to help meet this need. Breakthrough Beginners, a pre-kindergarten program, equips young children with a strong academic foundation and fosters social and emotional development in youngsters. The Nettie Bailey Student Achievement Program, named after a local hero and public educator of 27 years, focuses on teaching literacy and is recognized by the Illinois State Board of Education as a 21st Century Community Learning Center. To address the spiritual development needs of students, program participants also have the option of participating in weekly Bible studies, led by staff and volunteers, to foster spiritual growth and lifetransforming experiences. To complement Breakthrough s academic and spiritual development efforts, the organization offers an extensive athletics program to engage young athletes in year-round sports leagues while teaching leadership, sportsmanship and promoting healthy lifestyles. 2. SIGNIFICANT ACCOUNTING POLICIES: BASIS OF ACCOUNTING The financial statements have been prepared on the accrual basis of accounting. 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 reported amounts and disclosures. Actual amounts could differ from these estimates. The significant accounting policies followed are described below. -9-

12 Notes to Financial Statements 2. SIGNIFICANT ACCOUNTING POLICIES, continued: INTERMEDIATE MEASURE OF OPERATIONS Breakthrough presents its statements of activities using an intermediate measure of operations. Operating activities include support and revenue and expenses related to carrying out the organization s mission of demonstrating the compassion of Christ by partnering with those affected by poverty to build connections, develop skills and open doors of opportunity. Operating activities exclude 1) contributions (including contributions receivable) received for capital campaigns; 2) general contributions receivable 3) amortization of the discount and write off of contributions receivable; 4) expenditure of capital campaign funds; and 5) depreciation expense. RECLASSIFICATIONS Certain amounts in the prior year financial statements have been reclassified to agree to the current year presentation. CASH AND CASH EQUIVALENTS Cash and cash equivalents consists of bank deposits in federally insured accounts, bank collateralized accounts and money market funds in brokerage accounts. These accounts may, from time to time, exceed federally insured limits; however, Breakthrough has not experienced any loss on these accounts and does not believe it is exposed to any significant risk. CASH HELD IN ESCROW Certain financing arrangements related to the ongoing construction of the FamilyPlex project require compensating balances. Cash is held at banks in Breakthrough's name and will be used for the execution of the financing arrangements subsequent to year end as outlined in Note 11. CONTRIBUTIONS RECEIVABLE The promises to give are reflected at the present value of estimated future cash flows using discount rates determined when the pledge was originally made. In addition, the promises to give are reflected net of an allowance for uncollectible pledges based on management's estimates using current and prior donor history. Due to the unknown factors which may affect individual donors' future cash flows, it is reasonably possible that the estimated future cash flows of contributions receivable could increase or decrease by a material amount in the near term. PROPERTY AND EQUIPMENT NET Expenditures exceeding $5,000 for property, equipment and items that substantially increase the useful lives of existing assets are capitalized at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets, which range from three to thirty-nine years. -10-

13 Notes to Financial Statements 2. SIGNIFICANT ACCOUNTING POLICIES, continued: CLASSES OF NET ASSETS The financial statements report amounts separately by classes of net assets according to the presence or absence of donor-imposed stipulations. The net asset classes are as follows: Unrestricted net assets are those currently available for ministry purposes under the direction of the Board of Directors, those designated by the Board for a specific use and those invested in property and equipment. Temporarily restricted net assets are those contributed with donor stipulations for specific operating purposes or programs. They are not currently available for use in Breakthrough's ministries until commitments regarding their use have been fulfilled. When a purpose restriction is satisfied, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statements of activities as net assets released from restrictions. SUPPORT, REVENUES AND EXPENSES Support is recognized when contributions are made, which may be when cash is received, unconditional promises to give are made or ownership of other assets is transferred. Revenue is recognized when earned. Expenses are recorded when costs are incurred. Breakthrough reports gifts of materials, facilities 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 regarding how long those long-lived assets must be maintained, Breakthrough reports expirations of donor restrictions when the donated or acquired long-lived assets are placed in service. Breakthrough holds certain fund-raising events throughout the year at which donors receive complimentary lodging and/or meals. The cost of providing these benefits for the years ended, was $93,411 and $191,191, respectively. These costs have been netted against contributions. GOVERNMENT GRANTS Support funded by grants is recognized as Breakthrough performs the contracted services under grant agreements. Grant revenue is deferred and recognized as earned as the eligible expenses are incurred. Grant expenditures are subject to audit and acceptance by the granting agency and, as a result of such audit, adjustments could be reported. -11-

14 Notes to Financial Statements 2. SIGNIFICANT ACCOUNTING POLICIES, continued: GIFTS IN KIND Donated Material, Stock and Equipment Donations of material, stock and equipment are recorded as support at their estimated fair value as of the date of donation. Donated Services Breakthrough recognizes donated services that create or enhance non-financial assets or that require specialized skills, are provided by individuals possessing those skills and would typically need to be purchased if not provided by donation. Significant contributions of personnel and time are provided to Breakthrough by individuals as a means of accomplishing its goals. Without these contributions, the ministry of Breakthrough would not be as effective. It is Breakthrough s policy not to record these contributions in the financial statements because they do not meet the criteria of skilled services required to be recorded. Total gifts in kind are as follows: June 30, Material, stock and equipment: Food $ 297,675 $ 308,228 Stock 74,570 22,045 Services: Other goods and supplies - 43,482 Professional/legal services 136, ,465 $ 508,271 $ 514,220 FUNCTIONAL ALLOCATION OF EXPENSES The costs of providing the various program services and supporting activities have been summarized on a functional basis in the statements of activities. Accordingly, certain costs have been allocated among the program services and supporting activities benefited based on estimated time of personnel, square footage and usage of services and supplies. 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 statements of activities. As of, Breakthrough had no uncertain tax positions that qualify for recognition or disclosure in the financial statements. Breakthrough files information tax returns and is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress. Management believes Breakthrough is no longer subject to examinations for years prior to

15 Notes to Financial Statements 3. CONTRIBUTIONS RECEIVABLE: Contributions receivable consists of unrestricted donor pledges for the support of various ministry programs. The pledges are due to be collected according to the schedule below and are reported as contributions receivable and temporarily restricted net assets (due to the time restriction) in the statements of financial position and are recognized as temporarily restricted contributions in the statements of activities. June 30, Amounts due in: Less than one year $ 304,624 $ 325,547 One to five years 50, , , ,397 Less unamortized discount (2,436) (11,500) Less allowance for uncollectible pledges (14,185) (39,998) $ 338,003 $ 519, PROPERTY AND EQUIPMENT NET: Property and equipment consists of: June 30, Land $ 182,500 $ 182,500 Building 6,226,082 6,226,082 Building and leasehold improvements 838, ,608 Vehicles 105, ,291 Furniture and equipment 197, ,745 7,550,117 7,626,226 Accumulated depreciation (1,591,486) (1,443,226) Construction in progress 1,541,339 1,303,200 $ 7,499,970 $ 7,486,200 Net investment in property and equipment consists of: Property and equipment $ 7,499,970 $ 7,486,200 Less secured long term debt (1,001,421) (1,037,764) Less deferred grant revenue (1,328,961) (1,328,961) Less accrued construction costs included with accrued expenses (27,100) (25,000) $ 5,142,488 $ 5,094,

16 Notes to Financial Statements 5. ASSETS HELD FOR LONG-TERM PURPOSES: Assets held for long-term purposes consist of both contributions receivable and cash and cash equivalents donor restricted to the current capital campaign and other capital projects. During 2008, Breakthrough began the Dream Big capital campaign for the purpose of purchasing and renovating the Breakthrough Joshua Center and to the future construction of the FamilyPlex. The FamilyPlex will be a holistic, integrated solution to a variety of inter-connected and long lasting urban problems. Promises to give are due to be collected according to the schedule below and are reported as contributions receivable as a component of assets held for long-term purposes and temporarily restricted net assets (due to both time and purpose restrictions) in the statements of financial position and recognized as temporarily restricted contributions in the statements of activities. Assets held for long-term purposes consist of the following: June 30, Cash and cash equivalents $ 3,143,314 $ 985,303 Contributions receivable 822,782 1,138,462 $ 3,966,096 $ 2,123,765 Contributions receivable are expected to be collected as follows: June 30, Amounts due in: Less than one year $ 593,970 $ 819,713 One to five years 277, , ,232 1,250,713 Less unamortized discount (13,600) (24,648) Less allowance for uncollectible pledges (34,850) (87,603) $ 822,782 $ 1,138,

17 Notes to Financial Statements 6. DEFERRED GRANT REVENUE: During 2008, Breakthrough received a grant of $175,000 from the Federal Home Loan Bank of Chicago. The grant carries with it certain conditions that, if not met, will result in a repayment requirement. Although Breakthrough anticipates compliance with the grant terms, the conditional nature of the grant requires that it be treated as deferred revenue until such point that it becomes unconditional at the end of the 15 year term. The agreement has a 15 year term and is non-interest bearing. Because similar programs do not bear interest, it is not necessary to impute interest on this agreement. In September 2008, Breakthrough entered into a Redevelopment Agreement (RDA) with the City of Chicago (City) for the renovation of the building to be used as the Breakthrough Ministry Center. This RDA was negotiated over the course of fiscal year The RDA obligated the City to reimburse Breakthrough up to $1,153,961 from tax-increment financing (TIF) dollars for eligible expenses that qualified as TIF-funded improvements related to the renovation of the building. These funds were used to pay down Breakthrough's construction line of credit in March The TIF agreement has a 15 year term and is non-interest bearing. Because similar programs do not bear interest, it is not necessary to impute interest on this agreement. Similar to the other government grant revenue, the conditional nature of the loan requires that it be treated as deferred revenue until such point that it becomes unconditional at the end of the 15 year term. Breakthrough received grants of $40,864 and $41,155 during June 2013 and 2012, respectively, related to programs that were conducted in July 2013 and 2012, respectively. 7. LONG TERM DEBT: Long term debt consists of: Unsecured line of credit payable to a third party, quarterly interest only payments at 2.0%. Unpaid principal and interest was paid at time of maturity in December Mortgage payable with monthly principal and interest payments at a fixed rate of 5.85%. Unpaid principal and interest is due February The mortgage is secured by real property in Chicago, Illinois. June 30, $ - $ 200,000 1,001,421 1,037,764 The outstanding long term debt balance of $1,001,421 is set to mature in February As of June 30, 2013, Breakthrough was in compliance with all debt covenants. $ 1,001,421 $ 1,237,

18 Notes to Financial Statements 8. TEMPORARILY RESTRICTED NET ASSETS: Temporarily restricted net assets are available for the following programs: June 30, Assets held for long-term purposes-net $ 3,966,096 $ 2,123,765 General contributions receivable (no purpose restrictions) 338, ,899 $ 4,304,099 $ 2,643, LEASE COMMITMENTS: Breakthrough has equipment leases that expire through June Rent expense for these leases, included in the statements of activities, was $13,616 and $12,034 for the years ended, respectively. The future minimum rental payments required under operating leases are as follows: Year ending June 30, 2014 $ 20, , , ,240 $ 57, RETIREMENT PLAN: Breakthrough has a 401(k) plan for the benefit of substantially all employees. The plan provides for a discretionary matching contribution and a discretionary employee contribution under a deferred compensation arrangement. During both years ended, Breakthrough contributed $0 to the plan. 11. SUBSEQUENT EVENTS: As of November 13, 2013, Breakthrough obtained approximately $15,740,000 in financing for the above mentioned FamilyPlex project. The financing will consist of New Market Tax Credits, Tax Increment Funds and private party loans. In order to facilitate the securing of the financing, Breakthrough created a subsidiary, Breakthrough Holdings Inc. (Holdings), in June Holdings is a 501(c)(2) not-for-profit affiliated corporation of which Breakthrough is the sole member. In future years, the activity of both organizations will be combined for financial statement purposes. Subsequent events have been evaluated through the report date, which represents the date the financial statements were available to be issued. Subsequent events after that date have not been evaluated. -16-