AMERICA S BLOOD CENTERS AND AFFILIATE CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED MARCH 31, 2016 AND 2015

Transcription

1 CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED

2 TABLE OF CONTENTS YEARS ENDED INDEPENDENT AUDITORS REPORT 1 CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED STATEMENTS OF FINANCIAL POSITION 2 CONSOLIDATED STATEMENTS OF ACTIVITIES AND CHANGES IN NET ASSETS 3 CONSOLIDATED STATEMENTS OF CASH FLOWS 4 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 5 INDEPENDENT AUDITORS REPORT ON SUPPLEMENTARY INFORMATION 16 SUPPLEMENTARY INFORMATION SCHEDULE OF NATURAL EXPENSES 17

3 CliftonLarsonAllen LLP CLAconnect.com INDEPENDENT AUDITORS REPORT Board of Directors America s Blood Centers and Affiliate Washington, DC We have audited the accompanying consolidated financial statements of America s Blood Centers and its Subsidiary and Affiliate (The Foundation for America s Blood Centers), which comprise the consolidated statements of financial position as of March 31, 2016 and 2015, and the related consolidated statements of activities and changes in net assets and consolidated statements of cash flows for the years then ended, and the related notes to the consolidated financial statements. Management's Responsibility for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of these consolidated 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 consolidated 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 consolidated 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 consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the consolidated 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 consolidated 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 consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of America s Blood Centers and its Subsidiary and Affiliate as of March 31, 2016 and 2015, and the changes in their net assets and their cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. a CliftonLarsonAllen LLP Arlington, Virginia July 12, 2016 (1)

4 CONSOLIDATED STATEMENTS OF FINANCIAL POSITION ASSETS CURRENT ASSETS Cash and Cash Equivalents $ 1,014,608 $ 1,009,597 Accounts Receivable 85,463 22,046 Pledges Receivable, Current Portion 72, ,500 Prepaid Expenses and Other Assets 58,105 57,291 Other Receivables 3,735 4,203 Total Current Assets 1,234,411 1,229,637 INVESTMENTS 1,445,601 1,441,811 PROPERTY AND EQUIPMENT 1,433,956 1,228,224 Less: Accumulated Depreciation (860,052) (678,389) Net Property and Equipment 573, ,835 OTHER ASSETS Pledges Receivable, Noncurrent Portion, Net 17,260 83,200 Deferred Compensation 528, ,757 Total Assets $ 3,799,875 $ 4,183,240 LIABILITIES AND NET ASSETS CURRENT LIABILITIES Accounts Payable and Accrued Expenses $ 230,485 $ 299,992 Due to Members 50,084 - Deferred Revenue 75,056 73,487 Total Current Liabilities 355, ,479 LEASE DEPOSIT 11,806 11,806 DEFERRED LEASE INCENTIVE 23,750 26,750 DEFERRED COMPENSATION 528, ,757 Total Liabilities 919,880 1,290,792 NET ASSETS Unrestricted - Undesignated 1,017, ,816 Unrestricted - Board Designated - AIM - 87,313 Unrestricted - Board Designated - Other 334, ,254 Temporarily Restricted 395, ,093 Permanently Restricted 1,132,272 1,130,972 Total Net Assets 2,879,995 2,892,448 Total Liabilities and Net Assets $ 3,799,875 $ 4,183,240 See accompanying Notes to Consolidated Financial Statements. (2)

5 CONSOLIDATED STATEMENTS OF ACTIVITIES AND CHANGES IN NET ASSETS YEARS ENDED Temporarily Permanently Temporarily Permanently Unrestricted Restricted Restricted Total Unrestricted Restricted Restricted Total REVENUE Membership Assessments $ 2,646,956 $ - $ - $ 2,646,956 $ 2,665,339 $ - $ - $ 2,665,339 Contributions 77, ,211 1, ,081 96, ,481 1, ,417 AIM , ,450 Administrative Support Services , ,441 Meetings and Workshops 381, , , ,958 Newsletter Income 47, ,108 40, ,545 Other Project Income 1, ,057 3, ,619 Sublease 74, ,863 71, ,636 Investment Income 14, ,009 73, ,708 Net Assets Released from Restrictions 177,479 (177,479) ,457 (221,457) - - Total Revenue 3,420,190 55,732 1,300 3,477,222 3,715,679 (31,976) 1,410 3,685,113 EXPENSES Program Services 189, , , ,937 Member Services 266, , , ,340 Government Affairs Meetings and Workshops 445, , , ,011 Scientific, Medical, and Technical 831, , , ,063 Foundation , ,125 Total Program Expenses 1,733, ,733,051 2,114, ,114,552 General and Administrative 1,738, ,738,154 1,763, ,763,900 Fundraising 18, ,470 41, ,074 Total Expenses 3,489, ,489,675 3,919, ,919,526 CHANGE IN NET ASSETS (69,485) 55,732 1,300 (12,453) (203,847) (31,976) 1,410 (234,413) Net Assets - Beginning of Year 1,421, ,093 1,130,972 2,892,448 1,625, ,069 1,129,562 3,126,861 NET ASSETS - END OF YEAR $ 1,351,898 $ 395,825 $ 1,132,272 $ 2,879,995 $ 1,421,383 $ 340,093 $ 1,130,972 $ 2,892,448 See accompanying Notes to Consolidated Financial Statements. (3)

6 CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED CASH FLOWS FROM OPERATING ACTIVITIES Change in Net Assets $ (12,453) $ (234,413) Adjustments to Reconcile Change in Net Assets to Net Cash Provided by (Used in) Operating Activities: Depreciation and Amortization Expense 181, ,124 Unrealized Gain (Loss) on Investments 14,894 (14,850) Realized Gain (Loss) on Investments 1,852 (30,938) Changes in Discount on Pledge Receivable (2,730) (2,730) Contributions Restricted to Long Term Investment (1,300) (1,410) Change in Assets and Liabilities: Accounts Receivable (63,417) 14,619 Other Receivables Pledges Receivable 132,670 36,935 Due from GSABC Prepaid Expenses and Other Assets (814) (1,584) Accounts Payable and Accrued Expenses (69,507) (43,334) Due to Members 50,084 - Deferred Revenue 1,569 12,403 Deferred Lease Incentive (3,000) (3,000) Net Cash Provided by (Used in) Operating Activities 229,979 (93,498) CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from Sale of Investments 228, ,444 Purchases of Investments (248,764) (704,380) Purchases of Property and Equipment (205,732) (177,710) Net Cash Used in Investing Activities (226,268) (694,646) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from Contributions Restricted for Investment in Endowment 1,300 1,410 Net Cash Provided by Financing Activities 1,300 1,410 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 5,011 (786,734) Cash and Cash Equivalents - Beginning of Year 1,009,597 1,796,331 CASH AND CASH EQUIVALENTS - END OF YEAR $ 1,014,608 $ 1,009,597 SUPPLEMENTAL INFORMATION Cash Paid for Taxes $ 4,160 $ 6,600 See accompanying Notes to Consolidated Financial Statements. (4)

7 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organizations America s Blood Centers (ABC) is a non-profit membership organization that was incorporated in Arizona in ABC s primary goal is to provide a forum for blood center administrators, medical directors, and senior management to exchange information, discuss pertinent issues, and work together to improve the quality and efficiency of service to hospitals, patients, and blood donors. Its membership is composed entirely of non-profit blood banks located throughout the United States and Canada. Blood Counts LLC, is a wholly owned subsidiary of ABC and is considered a disregarded entity for tax purposes. Activity related to ABC s AIM I software licensing agreement with NHS Blood and Transplant ( NHS ), is reported through Blood Counts LLC. As of March 31, 2016, this project was divested and all remaining assets were transferred to ABC see Note 15 for details. The Foundation for America s Blood Centers (the Foundation or FABC ) is a non-profit organization that was incorporated in Arizona in ABC established the Foundation to research public perceptions and motivations regarding blood donation and blood supply, conduct research on community health needs regarding blood services, disseminate research results to the general public and other interested parties, publicize and promote the need for volunteer blood donation and support for blood donation programs, and to coordinate national blood donor recruitment activities conducted in conjunction with local community blood programs. ABC controls the Foundation through a majority voting interest of the Foundation s Board of Directors, an economic interest, and inter-related management. In such circumstances, accounting principles generally accepted in the United States of America require that financial statements of the controlling organization be consolidated with the accounts of the controlled organization. Basis of Accounting and Principles of Consolidation The financial statements of ABC and Affiliate have been prepared on the accrual basis of accounting, and accordingly reflect all significant receivables, payables, and other liabilities. The financial statements include the accounts of the ABC and Foundation. All significant intraentity transactions and accounts are eliminated in consolidation. Cash and Cash Equivalents For financial statement purposes, ABC and the Foundation consider all funds held at depository institutions with an original maturity of 90 days or less to be cash equivalents. Accounts Receivable Accounts past due are individually analyzed for collectibility. When all collection efforts have been exhausted, the account is written off against bad debt expense. Management estimates that all receivables are fully collectible. Therefore, no allowance for doubtful accounts has been recognized. (5)

8 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Pledges Receivable Grants and contributions are recognized when a donor makes a promise to give to the Foundation that is, in substance, unconditional. Donor-restricted grants and contributions are reported as increases in temporarily or permanently restricted net assets depending on the nature of the restrictions. When a restriction expires, temporarily restricted net assets are reclassified to unrestricted net assets. Management believes the amount of pledges receivable is fully collectible and no allowance for doubtful accounts is deemed necessary. Investments Investments are comprised of marketable securities and are reported at fair value. Investment securities, in general, are exposed to various risks, such as interest rate, credit, and overall market volatility. Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect the amounts reported in future statements of activities. Property and Equipment Property and equipment with a cost greater than $2,500 is capitalized as property and equipment. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the respective assets, which range from three to five years. Leasehold improvements are amortized over the shorter of the lease term or useful life of the asset. Net Assets Resources are classified for accounting and reporting purposes into net asset groups established according to their nature and purpose and based on the existence or absence of donor-imposed restrictions. The net assets groups are as follows: Unrestricted Net Assets: Undesignated: represents funds available at management s discretion to fund ABC s and the Foundation s general operations. Designated: represents funds designated by ABC s Board of Directors to be used for future uncertainties, contingencies and special projects. Temporarily Restricted Net Assets - represents resources received for member association programs (i.e., advertising campaigns, public awareness and marketing initiatives, awards, and scholarships) that are restricted as to their use and resources to be received in future periods. ABC and the Foundation classify all such resources received as temporarily restricted and reports amounts released from restrictions when expenditures are incurred or when the time period has elapsed. Permanently Restricted Net Assets represents contributions received or pledged through the endowment campaign that are permanently restricted from use. (6)

9 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Uniform Prudent Management of Institutional Funds Act During 2008 the District of Columbia enacted the Uniform Prudent Management of Institutional Funds Act (UPMIFA). In August 2008 the FASB released FASB Staff Position on UPMIFA which provides guidance on the classification of endowment fund net assets for states that have enacted versions of UPMIFA. Under UPMIFA all unappropriated endowment fund assets are considered restricted. The Foundation s spending policy stipulates that all earnings in any given year be spent for the established purpose of the endowment fund. Revenue Recognition ABC recognizes newsletter subscription revenue on a monthly basis over the term of the subscription. Membership assessments are allocated to revenue on a monthly basis during the year. Both ABC and its affiliate immediately recognized unrestricted contributions and interest earned on funds held on deposit. Advertising Costs All advertising costs are expensed as incurred. Advertising costs for the years ended March 31, 2016 and 2015, totaled $4,350 and $4,620, respectively. Allocation of Expenses ABC and its affiliate allocate salaries and benefits, travel, consulting fees, and certain other costs to each department based on actual resources used in each program area. Occupancy expense, depreciation and amortization, and other fixed expenses are considered to be supporting costs of the various programs of ABC and are classified as General and Administrative expenses. The Foundation classifies all expenses related to the awarding of grants and other operating activities as General and Administrative expenses. It allocates all expenses on grant awards to a separate expense function. Income Tax Status ABC is exempt from the payment of federal income taxes on its exempt activities under Section 501(c)(6) of the Internal Revenue Code. The Foundation is exempt from federal income taxes under Section 501(c)(3) of the Internal Revenue Code and is classified as an organization that is not a private foundation. ABC had advertising revenue subject to unrelated business income tax for the years ended March 31, 2016 and ABC and the Foundation have adopted a policy that clarifies the accounting for uncertainty in income taxes recognized in an entity s financial statements. The policy prescribes a recognition threshold and measurement principles for the financial statement recognition and measurement of tax positions taken or expected to be taken on a tax return that are not certain to be realized. The implementation of this policy had no impact on the Organizations financial statements as of and for the years ended March 31, 2016 and (7)

10 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES (CONTINUED) Fair Value Measurements Statement of Financial Accounting Standards, Fair Value Measurements, defines fair value, establishes a framework for measuring fair value, establishes a fair value hierarchy based on the quality of inputs used to measure fair value, and requires expanded disclosures about fair value measurements. ABC and the Foundation account for a significant portion of their financial instruments at fair value or consider fair value in their measurement. ABC and the Foundation account for certain financial assets and liabilities at fair value under various accounting literature, including, Accounting for Certain Investments Held by Not-for-Profit Organizations. ABC and the Foundation also account for certain assets at fair value under applicable industry guidance. Fair Value Hierarchy In accordance with Fair Value Measurements, ABC and the Foundation have categorized their financial instruments, based on the priority of the inputs to the valuation technique, into a three-level fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure the financial instruments fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument. Financial assets and liabilities recorded on the Consolidated Statements of Financial Position are categorized based on the inputs to the valuation techniques as follows: Level 1 Financial assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market that ABC and the Foundation have the ability to access. Level 2 Financial assets and liabilities whose values are based on quoted prices in markets that are not active or model inputs that are observable either directly or indirectly for substantially the full term of the asset or liability. Level 2 inputs include, among others, quoted prices for similar assets or liabilities in active market or non-active market. Level 3 Financial assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs reflect management s own assumptions about the assumptions a market participant would use in pricing the asset or liability. (8)

11 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES (CONTINUED) Use of Estimates 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 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. Reclassification Certain amounts in the year 2015 have been reclassified for comparative purposes to conform to the presentation in year These reclassifications have no effect on the previously reported change in net assets or net asset balance as of March 31, Subsequent Events In preparing these financial statements, ABC and the Foundation have evaluated events and transactions for potential recognition or disclosure through July 12, 2016, the date the financial statements were available for issuance. NOTE 2 CONCENTRATIONS OF CREDIT RISK Financial instruments that subject ABC and the Foundation to a concentration of credit risk consist of cash and cash equivalents deposited with financial institutions and investments managed by investment manager which may, at times, exceed federally insured limits. NOTE 3 PLEDGES RECEIVABLE Pledges receivable, which are recorded at the present value of estimated future cash flows using a discount rate of 2% on contributions received during the years ended March 31, 2016 and 2015, consist of the following at March 31: Receivable in Less than One Year $ 72,500 $ 136,500 Receivable in More than One Year 20,000 90,000 92, ,500 Less: Discount to Net Present Value (2,740) (6,800) Net Pledge Receivables $ 89,760 $ 219,700 (9)

12 NOTE 4 INVESTMENTS Investments are reported at their fair market value. In general, investments are exposed to various risks, such as interest rate, credit, and overall market volatility risk. Due to the level of risk associated with certain investments, it is reasonably possible that changes in the values of investments will occur in the near term and that such changes could materially affect amounts reported in future consolidated statements of activities. Investments are stated at a fair value and consist of the following at March 31: Cost Fair Value Cost Fair Value CDs, Corporate Bonds, REITs, Treasuries and ETF's $ 886,197 $ 887,331 $ 861,964 $ 873,806 Equities 246, , , ,007 Money Market Funds 145, , , ,998 Total $ 1,278,161 $ 1,445,601 $ 1,259,477 $ 1,441,811 Investment income consists of the following at March 31: Interest and Dividends $ 30,755 $ 27,920 Realized Gain (Loss) on Investments (1,852) 30,938 Unrealized Gain (Loss) on Investments (14,894) 14,850 Investment Income $ 14,009 $ 73,708 NOTE 5 DEFERRED COMPENSATION PLAN ABC maintains a deferred compensation plan for certain highly compensated employees. To fund this obligation, ABC has purchased various investments that provide for the deferred compensation. ABC accrues as additional compensation investment earnings. NOTE 6 FAIR VALUE MEASUREMENTS ABC and the Foundation use fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. For additional information on how ABC and the Foundation measure fair value, refer to Note 1 Summary of Significant Accounting Policies. (10)

13 NOTE 6 FAIR VALUE MEASUREMENTS (CONTINUED) The following table presents ABC and the Foundation s fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of March 31: 2016 Level 1 Level 2 Level 3 Total Assets: Investments CDs, Corporate Bonds, REITs, Treasuries and ETF's $ - $ 887,331 $ - $ 887,331 Equities 412, ,943 Money Market Funds 145, ,327 Total Investments $ 558,270 $ 887,331 $ - $ 1,445,601 Deferred Compensation Plan Equities $ 182,104 $ - $ - $ 182,104 Government Bonds 29, ,727 Corporate Bonds - 27,237-27,237 Mutual Funds 289, ,631 Total Deferred Compensation Plan $ 501,462 $ 27,237 $ - $ 528,699 Liabilities Deferred Compensation Payable $ 501,462 $ 27,237 $ - $ 528, Level 1 Level 2 Level 3 Total Assets: Investments CDs, Corporate Bonds, REITs, Treasuries and ETF's $ - $ 873,806 $ - $ 873,806 Equities 422, ,007 Money Market Funds 145, ,998 Total Investments $ 568,005 $ 873,806 $ - $ 1,441,811 Deferred Compensation Plan Equities $ 386,530 $ - $ - $ 386,530 Government Bonds 118, ,574 Corporate Bonds - 58,798-58,798 Mutual Funds 314, ,855 Total Deferred Compensation Plan $ 819,959 $ 58,798 $ - $ 878,757 Liabilities Deferred Compensation Payable $ 819,959 $ 58,798 $ - $ 878,757 (11)

14 NOTE 7 PROPERTY AND EQUIPMENT Property and equipment consist of the following at March 31: Furniture $ 23,053 $ 23,053 Leasehold Improvements 129, ,243 Office Equipment 1,281,660 1,075,928 1,433,956 1,228,224 Less: Accumulated Depreciation and Amortization 860, ,389 Total Property and Equipment $ 573,904 $ 549,835 NOTE 8 COMMITMENTS Leases ABC is obligated under an operating lease for office space through May 31, The lease contains provisions for a base rate to remain the same throughout the life of the lease and to share operating expenses at prorated 18.3%. Rent expense for the years ended March 31, 2016 and 2015, was $170,435 and $171,435, respectively. The following are the future minimum lease commitments as of March 31: Year Ending March 31, 2017 $ 166, $ 27, ,758 Hotel Contracts ABC has committed to hotel space for future meetings and workshops. These contracts specify that, if canceled, ABC may be subject to cancellation penalties totaling approximately $345,000 as of March 31, Management believes the risk of loss due to cancellation is minimal. Employment Contract On September 7, 2013, ABC signed an agreement of employment with its CEO for a term of thirty-six (36) months, which includes a severance clause. (12)

15 NOTE 9 OFFICE SUBLEASE ABC entered into a sublease agreement effective January 1, 2014 and expiring May 31, 2017 with a tenant for office space in the Headquarters building. Future minimum sublease payments under the sublease as of March 31: Years Ending March 31, 2017 $ 78, $ 13,472 91,706 NOTE 10 RELATED PARTY TRANSACTIONS In conjunction with the close-out of the AIM project (see Note 15), a portion of the remaining assets transferred to ABC will be distributed to the members. The total amount due to members was $50,084 as of March 31, NOTE 11 PENSION PLAN ABC maintains a defined contribution 401(k) pension plan for its employees with one year of service. Employer contributions to the plan are at the discretion of the Board of Directors. Pension expense for the years ended March 31, 2016 and 2015, was $154,495 and $159,408, respectively. NOTE 12 TEMPORARILY RESTRICTED NET ASSETS The temporarily restricted net assets consisted of the following at March 31: Purpose Restricted: cgmp $ 1,991 $ 5,000 Member Initiatives Programs 10,030 - Nigeria Project 2,450 2,450 ITxM Award Technical Operations 22,527 22,527 ABC Speakers Bureau 5,165 5,165 Micro Donation Campaign 5,000 5,000 ABC API Educational Programs 261, ,251 Total Purpose Restricted 308, ,393 Time Restricted: 87, ,700 $ 395,825 $ 340,093 (13)

16 NOTE 13 PERMANENTLY RESTRICTED NET ASSETS The Foundation s permanently restricted net asset consists of the following at March 31: Endowment Campaign $ 1,089,562 $ 1,088,562 Bianco Lecture Series Campaign 42,710 42,410 $ 1,132,272 $ 1,130,972 NOTE 14 ENDOWMENT The Foundation has two donor-restricted endowment funds established for the purposes of providing income to support the Foundation s operations and to create an endowment for the Bianco Lecture Series. As required by U.S. GAAP, net assets of the endowment funds are classified and reported based on the existence or absence of donor-imposed restrictions. The Board of Directors of the Foundation interpreted the District of Columbia Uniform Prudent Management of Institutional Funds Act (UPMIFA) as requiring the preservation of the fair value of the original gifts as of the gift date of the donor-restricted endowment funds absent explicit donor stipulations to the contrary. As a result of this interpretation, the Foundation classifies as permanently restricted net assets (a) the original value of gifts donated to the permanent endowment, (b) the original value of subsequent gifts to the permanent endowment, and (c) accumulations to the permanent endowment made in accordance with the direction of the applicable donor gift instrument at the time the accumulation is added to the funds. The Foundation s endowment investment policy is focused on preservation of capital as well as providing income for operations. Amounts are invested in stock, mutual funds and cash equivalents and the endowment net assets and activity consist of the following: Temporarily Permanently Unrestricted Restricted Restricted Total Endowment Funds as of March 31, 2014 $ - $ - $ 1,129,562 $ 1,129,562 Contributions - - 1,410 1,410 Endowment Funds as of March 31, ,130,972 1,130,972 Contributions - - 1,300 1,300 Endowment Funds as of March 31, 2016 $ - $ - $ 1,132,272 $ 1,132,272 The Foundation s spending policy stipulates that all earnings in any given year be spent for the established purposes of the endowment fund. (14)

17 NOTE 15 AIM PROJECT ABC had a licensing agreement with NHS Blood and Transplant ( NHS ), a UK company, to have a non-transferable, royalty-free license to use, copy, and modify software (AIM I) and share its usage and related data with certain participants in North America and Europe. NHS retained the ownership of the AIM I software at all times. Activity for this project was reported as part of Blood Counts LLC, a wholly owned subsidiary of ABC. As of March 31, 2016, this project was divested and all remaining assets were transferred to ABC. (15)

18 CliftonLarsonAllen LLP CLAconnect.com INDEPENDENT AUDITORS REPORT ON SUPPLEMENTARY INFORMATION Board of Directors America s Blood Centers and Affiliate Washington, DC We have audited the consolidated financial statements of America s Blood Center and its Subsidiary and Affiliate as of and for the years ended March 31, 2016 and 2015, and our report thereon dated July 12, 2016, which expressed an unmodified opinion on those consolidated financial statements, appears on page 1. Our audits were conducted for the purpose of forming an opinion on the consolidated financial statements as a whole. The Schedule of Natural Expenses 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 consolidated financial statements. The information has been subjected to the auditing procedures applied in the audit of the consolidated financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the consolidated financial statements or to the consolidated 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 consolidated financial statements as a whole. a CliftonLarsonAllen LLP Arlington, Virginia July 12, 2016 (16)

19 SCHEDULE OF NATURAL EXPENSES YEARS ENDED (See Independent Auditors Report on Supplementary Information) EXPENSES Salaries and Benefits $ 2,190,636 $ 2,380,264 Audit Expense 32,464 31,431 Committee Development Expense 1,560 1,355 Consulting/Professional Services Expense 328,797 53,769 Co-location IT Expense 23, ,300 CTA Funds Returned - 64,505 Depreciation and Amortization Expense 181, ,124 Grant Expense Institutional Membership and Publications 23,279 24,819 Insurance, Taxes, and Fees 55,159 49,758 Marketing Expense 39,385 62,423 Meetings Expense 169, ,004 Miscellaneous Office Expense 327 4,466 Office Supplies 21,765 52,241 OnBoarding Fees 67,936 17,622 Postage and Delivery Charges 3,954 5,260 Printing, Copying, and Design 9,791 9,604 Public Relations Expense 13,785 7,949 Rent Expense 170, ,435 Repairs and Maintenance - 5,360 Staff Development Expense 22,930 20,107 Telephone 38,917 45,397 Travel Expense 94, ,833 Total Expenses $ 3,489,675 $ 3,919,526 (17)