COACHELLA VALLEY RESCUE MISSION AND CVRM NMTC PROJECT HOLDINGS INDIO, CALIFORNIA

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1 INDIO, CALIFORNIA INDEPENDENT AUDITORS' REPORT, CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION DECEMBER 31, 2012 AND 2011

2 INDEPENDENT AUDITORS REPORT Board of Directors Coachella Valley Rescue Mission and CVRM NMTC Project Holdings Indio, California We have audited the accompanying consolidated statements of financial position of Coachella Valley Rescue Mission and CVRM NMTC Project Holdings (collectively, the Organization) as of December 31, 2012 and 2011, and the related consolidated statements of activities and changes in net assets, functional expenses and cash flows for the year ended December 31, 2012, and the related notes to the financial statements. The prior year summarized information has been derived from the Organization s 2011 financial statements and, in our report dated April 19, 2012, we expressed an unqualified opinion on those 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 rare free form 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 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. (1)

3 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 financial position of Coachella Valley Rescue Mission and CVRM NMTC Project Holdings (collectively, the Organization) as of December 31, 2012 and 2011, and the changes in net assets and cash flows for the year ended December 31, 2012 in accordance with accounting principles generally accepted in the United States of America. Our audits were conducted for the purpose of forming an opinion on the consolidated financial statements taken as a whole. The consolidating statements of financial position and consolidating statements of activities and changes in net assets are presented for purposes of additional analysis and are not a required part of the consolidated financial statements. Such information has been subjected to the auditing procedure applied in the audit of the consolidated financial statements and, in our opinion, is fairly stated in all material respects in relation to the consolidated financial statements taken as a whole. April 22, 2013 (2)

4 CONSOLIDATED STATEMENTS OF FINANCIAL POSITION DECEMBER 31, 2012 AND 2011 ASSETS CURRENT ASSETS Cash and cash equivalents $ 807,931 $ 424,190 Restricted cash 520,099 1,734,421 Accounts receivable 42,075 47,434 Restricted pledges receivable 51, ,715 Other receivables 3,158 2,680 Prepaid expenses 33,758 8,790 Total current assets 1,458,625 2,379,230 PROPERTY AND EQUIPMENT Land 20,000 20,000 Building 8,860,015 9,042,840 Improvements 233, ,364 Equipment and fixtures 972,572 1,025,492 Vehicles 228, ,035 10,314,971 10,595,731 Less accumulated depreciation (575,685) (560,500) Total property and equipment 9,739,286 10,035,231 OTHER ASSETS Land held for development 247, ,456 Capitalized costs, net 396, ,210 Note receivable 8,143,746 8,143,746 Total other assets 8,787,585 8,801,412 TOTAL ASSETS $ 19,985,496 $ 21,215,873 LIABILITIES AND NET ASSETS CURRENT LIABILITIES Accounts payable $ 27,418 $ 860,649 Accrued expenses 88,189 23,732 Note payable - current portion - 73,296 Total current liabilities 115, ,677 LONG TERM LIABILITIES Notes payable 10,982,400 12,209,801 Total liabilities 11,098,007 13,167,478 NET ASSETS Unrestricted 8,835,885 7,660,126 Temporarily restricted 51, ,269 Total net assets 8,887,489 8,048,395 TOTAL LIABILITIES AND NET ASSETS $ 19,985,496 $ 21,215,873 (The accompanying notes are an integral part of these consolidated financial statements) (3)

5 CONSOLIDATED STATEMENT OF ACTIVITIES AND CHANGES IN NET ASSETS FOR THE YEAR ENDED DECEMBER 31, 2012 WITH COMPARATIVE TOTALS FOR THE YEAR ENDED DECEMBER 31, Unrestricted Temporarily Restricted 2012 Total Memorandum Only SUPPORT AND REVENUES Contributions and other cash donations $ 1,793,188 $ 1,406,466 $ 3,199,654 $ 2,001,365 Special events 43,335-43,335 22,365 Program income - 80,097 80,097 77,859 Grants and contracts - 285, ,345 1,768,045 Non-cash donations 1,270,284-1,270, ,129 Sales 193, , ,715 Other income 113, ,423 87,941 Reimbursement of construction costs ,585 3,414,187 1,771,908 5,186,095 4,902,004 NET ASSETS RELEASED FROM RESTRICTIONS Expiration and allocation of restrictions 2,108,573 (2,108,573) - - Total support and revenues 5,522,760 (336,665) 5,186,095 4,902,004 EXPENSES Program services 3,186,292-3,186,292 2,236,838 General and administrative 535, , ,981 Fundraising 519, , ,665 Special events 25,464-25,464 12,200 Total expenses 4,267,315-4,267,315 3,106,684 NON-OPERATING INCOME (EXPENSE) Interest income 41,747-41,747 20,089 Bad debt expense (3,151) - (3,151) (61,143) Gain (loss) on sale of property (54,356) - (54,356) 1,341,250 Demolition of building (61,875) - (61,875) - Other expense (2,051) - (2,051) - Total non-operating income (expense) (79,686) - (79,686) 1,300,196 INCREASE (DECREASE) IN NET ASSETS 1,175,759 (336,665) 839,094 3,095,516 NET ASSETS - BEGINNING OF YEAR 7,660, ,269 8,048,395 4,952,879 NET ASSETS - END OF YEAR $ 8,835,885 $ 51,604 $ 8,887,489 $ 8,048,395 (The accompanying notes are an integral part of these consolidated financial statements) (4)

6 FOR THE YEAR ENDED DECEMBER 31, 2012 CONSOLIDATED STATEMENT OF FUNCTIONAL EXPENSES WITH COMPARATIVE TOTALS FOR THE YEAR ENDED DECEMBER 31, 2011 Program Services General and Administrative 2012 Fundraising Special Events Total 2011 Memorandum Only Bank and credit card charges $ - $ 12,824 $ 1,425 $ - $ 14,249 $ 16,083 Benevolence 297, , ,066 Capital campaign ,356-15, ,510 Donation expense 2, ,148 1,297 Employee benefits 69,423 9,642 17,356-96,421 80,403 Employee expenses 1, ,987 3,850 Salaries, wages and payroll taxes 695, , ,400-1,103, ,803 Facility expenses 95, ,066 85,149 Food service 1,043,454 21, ,064, ,667 Fundraising direct mail , , ,022 Insurance 79,132 21,102 5, ,509 89,844 Interest expense - 135, ,782 23,043 Miscellaneous 2, , Office supplies 2,089 1,044 7,311-10,444 10,108 Postage and delivery 10,656-2,664-13,320 10,642 Printing and reproduction 6, ,542-17,349 21,052 Professional fees 119,980 4,153 4, ,397 80,061 Professional development 12, ,406 11,021 Programs and case management 58, ,347 38,964 Rent and lease 84,584 3, ,108 80,145 Special events ,464 25,464 12,200 Property taxes 24,255 1, ,950 9,988 Travel and entertainment 2, ,796 2,218 Utilities 142,664 7,926 7, , ,870 Vehicle 51,407 2,856 2,856-57,119 78,560 Total expenses before depreciation 2,802, , ,870 25,464 3,855,112 3,010,101 Depreciation and amortization 383,349 25,969 2, ,203 96,583 TOTAL EXPENSES $ 3,186,292 $ 535,804 $ 519,755 $ 25,464 $ 4,267,315 $ 3,106,684 (The accompanying notes are an integral part of these consolidated financial statements) (5)

7 CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2012 WITH COMPARATIVE TOTALS FOR THE YEAR ENDED DECEMBER 31, Memorandum 2012 Only CASH FLOWS FROM OPERATING ACTIVITIES Increase in net assets $ 839,094 $ 3,095,516 Adjustments to reconcile increase in net assets to net cash provided by operating activities: Depreciation and amortization 412,203 96,583 (Gain) loss on sale of property 54,356 (1,341,250) (Increase) decrease in accounts receivable 5,359 (26,619) Decrease in grants receivable - 1,500,000 Decrease in restricted pledges receivable 110,111 75,925 (Increase) in other current assets (9,446) (4,102) (Increase) in capitalized costs - (414,819) Increase (decrease) in accounts payable (833,231) 815,479 Increase (decrease) in accrued expenses 64,457 (2,641) Decrease in deferred grant funds - (1,523,750) Net cash provided by operating activities 642,903 2,270,322 CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property and equipment - net (172,787) (8,543,827) Proceeds from sale of property - 1,844,936 Issuance of note receivable - (8,143,746) Net cash used by investing activities (172,787) (14,842,637) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from notes payable - 12,232,400 Principal payments on notes payable (1,300,697) (7,680) Net cash provided (used) by financing activities (1,300,697) 12,224,720 NET DECREASE IN CASH (830,581) (347,595) CASH - BEGINNING OF YEAR 2,158,611 2,506,206 CASH - END OF YEAR $ 1,328,030 $ 2,158,611 SUPPLEMENTAL CASH FLOW INFORMATION Cash consisted of the following at December 31: Cash and cash equivalents $ 807,931 $ 424,190 Restricted cash 520,099 1,734,421 $ 1,328,030 $ 2,158,611 (The accompanying notes are an integral part of these consolidated financial statements) (6)

8 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2012 AND ORGANIZATION The Coachella Valley Rescue Mission (the Organization) was organized on March 30, 1971 as a California non-profit Organization and is presently located near Indio. The primary purpose of the Organization is to operate a Christian mission and to provide food and shelter to the homeless in the Coachella Valley. The main sources of revenues are private donations and grants as well as reimbursements from the County of Riverside for services provided at the county overnight shelter. In August 2011, the Organization entered into a New Markets Tax Credit (NMTC) transaction to help finance the construction of its new facility. The new 43,000 square foot facility opened in November The Mission created CVRM NMTC Project Holdings (NMTC) for the sole purpose of facilitating the NMTC transaction as a Qualified Active Low Income Community Business (QALICB). NMTC Project Holdings holds the project property to be leased back to the Mission for the Mission s sole purpose of operating its business and furthering its mission to aid those less fortunate. The New Markets Tax Credit Program was designed to stimulate investment and economic growth in low-income communities by offering a seven-year, 39% federal tax credit for Qualified Equity Investments (QEI) made through investment vehicles know as Community Development Entities (CDE). CDEs use capital derived from tax credits to make loans to or investments in businesses and projects in low-income areas. As part of the transaction, the Organization committed to lend $8,143,746 to LCD New Markets Fund X, LLC, the Investment Fund. The amount borrowed at closing on August 25, 2011 amounted to $8,143,746, referred to as Loan A. (See Note 6 for terms on the loans.) Neither the Mission nor NMTC Project Holdings controls or has economic interest in the assets of either QEI or the CDEs. The QEI is controlled and wholly owned by Chase Bank and the Investment Fund controls and funds the CDE. To earn the tax credit the QEI must remain invested in the CDE for a seven-year period. The Mission and Chase Bank have entered into a put/call option agreement to take place at the end of the seven-year period. Under the agreement, Chase Bank can exercise a put option to sell all interest in the QEI for $1,000 to the Mission. If Chase Bank does not exercise the put option within 90 days of the seven-year period, the Mission can exercise a call option to purchase the interest of the QEI at an appraised fair market value. See Notes 3, 6 and 8 for further disclosure on NMTC transaction. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation The consolidated financial statements include all the accounts of Coachella Valley Rescue Mission and CVRM NMTC Project Holdings. All intra-entity transactions have been eliminated. Basis of Accounting The consolidated financial statements are prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America. (7)

9 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2012 AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Continued Net Asset Classification To ensure compliance with restrictions placed on its resources, the Organization s accounts are maintained in accordance with the principles of fund accounting. This is the procedure by which resources are classified for accounting reporting into funds established according to their nature and purposes. In financial statements, funds that have similar characteristics are combined into three net asset categories: unrestricted, temporarily restricted and permanently restricted. Unrestricted net assets are not restricted, or the donor-imposed restrictions have expired. The Organization records contributions as temporarily restricted if they are received with stipulations that limit their use either through purpose or time restrictions. When restrictions expire, that is, when a time restriction ends or a purpose restriction is fulfilled, temporarily restricted net assets are reported in the statement of activities as net assets released from restrictions. At December 31, 2011, the Organization had $388,269 in temporarily restricted funds relating to the completion of the new facility ($342,331), purchase of a vehicle ($35,645) and other donor specified programs ($10,293). At December 31, 2012, the Organization had $51,604 in temporarily restricted funds relating to pledges receivable. Permanently restricted net assets contain donor-imposed restrictions that stipulate the resources be maintained permanently, but permit the Organization to use, or expend part or all of the income derived from the donated assets for either specified or unspecified purposes. There are no permanently restricted net assets at December 31, 2012 and Estimates The preparation of financial statements in conformity with generally accepted accounting principles 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 For purposes of the statement of cash flows, the Organization considers all cash and other highly liquid investments with initial maturities of three months or less to be cash equivalents. Income Taxes The Organization is a not-for-profit organization that is exempt from federal income taxes under Internal Revenue Code Section 501(c)(3), and from California franchise taxes under related state tax regulations and classified by the Internal Revenue Service as other than a private foundation. The Organization may be subject to tax on income from any unrelated business operations. The Organization does not currently have any unrelated business operations. The Organization s returns are subject to examination by federal and state taxing authorities, generally for three years and four years, respectively, after they are filed. (8)

10 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2012 AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Continued Contributions Contributions, including unconditional promises to give, are recorded as made. All contributions are available for unrestricted use unless specifically restricted by the donor. Conditional promises to give are recognized when the conditions on which they depend are substantially met. Property and Equipment Property and equipment are stated at cost and are being depreciated using the straight-line and accelerated methods over their estimated useful lives. The Organization capitalizes assets with original costs greater than $500 and estimated useful lives greater than one year. Donations of property and equipment are recorded at their estimated fair value. The estimated useful lives of property and equipment are as follows: Building Improvements Equipment and fixtures Vehicles years years 5-7 years 5 years Capitalized Costs Capitalized costs related to the financing of NMTC in 2011 are stated at cost and amortized on the straight-line method over thirty years. Amortization expense for the years ended December 31, 2012 and 2011 amounted to $13,827 and $4,609, respectively. Functional Allocation of Expense The costs of providing the various programs and other services have been summarized on a functional basis in the statement of activities. Accordingly, certain indirect costs have been allocated among the programs and supporting services benefited. Volunteers A number of volunteers have made significant contributions of time to the Organization s program and support functions. The value of this contributed time does not meet the criteria for recognition of contributed services and accordingly, is not reflected in the accompanying financial statements. Credit Risk Financial instruments, which potentially subject the Organization to concentrations of credit risk, consist principally of temporary cash investments. The Organization maintains its cash in deposit accounts with high credit quality financial institutions which, at times, may exceed the federally insured limits on interest bearing accounts of $250,000 during the year. The Organization does not expect any losses in such accounts. (9)

11 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2012 AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Continued Prior Year Restatement The 2011 consolidating financial statements have been restated to reflect the correction for amortizing intangible asset (NMTC) and deferred income on sale of ground lease (Mission) over the period of 55 years instead of 7 years resulting in a restatement of $37,548. This transaction is eliminated in the consolidation and therefore has no impact of the consolidated financial statements. 3. OPERATING LEASES The Organization had three operating lease agreements for the leasing of the thrift store, photo copier and postage machine with various expiration dates through December Future minimum annual lease payments as of December 31, 2012 are as follows: 2013 $ 13, , , ,128 $ 37,386 As part of the transaction discussed in Note 1, NMTC entered into an agreement to lease its facility to the Mission to conduct its operations. The terms of the lease are from December 2011 through December NMTC has provided for a rent subsidy for first seven years of the lease through December The net lease payments, net of subsidies, amount to $119,000 per year through December Annual rent payments thereafter range from $424,450 to $789,603 per year from December 2019 through December These lease payments paid and received are eliminated in consolidation of these financial statements. 4. RETIREMENT PLAN The Organization has a 401(k) defined contribution benefit plan covering substantially all employees. The Organization made matching contributions of $12,525 and $8,766 for the years ended December 31, 2012 and 2011, respectively. 5. LINE OF CREDIT The Organization received a line of credit of $1,600,000 in January The line of credit was obtained to assist in the cash flows for the costs of construction of the new facility. The agreement had an interest rate of 4.239% over the index rate (one month LIBOR) and a maturity date of January This line of credit was converted into a term loan in December 2011 (See Note 7). The Organization has no line of credit agreement or outstanding balance at December 31, NOTE RECEIVABLE During the year ended December 31, 2011, the Organization issued a note receivable in the amount of $8,143,746 to LCD New Markets Fund X, LLC, the Investment Fund in connection with the development of NMTC Project Holdings. (See Note 1) The note bears interest at.50% per annum payable annually, with principal payments starting December 2018 through December 2036 in annual payments ranging from $159,269 to $608,193. (10)

12 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2012 AND NOTES PAYABLE - MISSION The Mission s two notes payable at December 31, 2012 and 2011 consisted of the following: Line of credit was converted to term loan (See Note 5) with monthly principal payments of $5,208, plus interest, with unpaid principal payable December 31, The loan s interest rate is 3.968% over the index rate (one month LIBOR) and is secured by the new facility. (This loan was paid in full by a donor contribution in April 2012.) $ - $ 1,250,000 Vehicle loan with monthly principal and interest payments of $1,128 with a maturity date of February The loan s interest rate is 5.99% and is secured by the vehicle. (This loan was paid in full by the Mission in April 2012.) - 50,697 $ - $ 1,300, NOTES PAYABLE NMTC NMTC s two notes payable at December 31, 2012 and 2011 consisted of the following: Note payable (Loan A) payable to LCD New Markets Fund X, LLC, the Investment Fund in original amount of $8,143,476. Annual interest payments at.50%, with principal payments starting December 2018 through December 2036 in annual payments ranging from $159,269 to $608,193. Loan secured by new facility. $ 8,143,746 $ 8,143,746 Note Payable (Loan B) payable to LCD New Markets Fund X, LLC, the Investment Fund in original amount of $2,828,654. Annual interest payments at 2.67%, with principal payments starting December 2018 through December 2027 in annual payments ranging from $83,477 to $400,071. Loan secured by new facility. 2,838,654 2,838,654 $10,982,400 $10,982,400 (11)

13 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2012 AND NEW FACILITY In January, 2005 the Organization purchased 7.76 acres of land adjacent to the existing facility for $730,000 plus $20,000 for an option paid in The land purchase was paid in full in This parcel of land was purchased in part to build a new larger shelter to accommodate the increasing need of the homeless and needy population. In 2007 the Organization started a capital campaign called Building New Beginnings of which the focus is to raise $12 million. In January 2011, the Organization started construction on the new facility and the County of Riverside purchased two parcels of land held for development from the Organization for $1,852,000, resulting in a gain of $1,341,250. The County of Riverside will be leasing back one of the parcels to the Organization for $1 per year for 55 years with one option to renew for 10 years. The construction was completed in November 2011 and the operations were moved to this new facility on November 17, The total costs of the new facility, including the equipment, furniture, fixtures and improvements, amounted to approximately $9.6 million. 10. SUBSEQUENT EVENTS The Organization evaluated all potential subsequent events as of April 22, 2013 when the financial statements were authorized and available to be issued. No additional subsequent events or transactions, other than those discussed below, were identified after December 31, 2012 or as of April 22, 2013 that require disclosure to the financial statements. The Organization received a $1 million temporarily restricted donation in March 2013 to be available to pay the costs for constructing a 5000 square foot building on the site of their former location. The estimated costs of constructing this Annex is $1 million. All earnings on this $1 million donation will be unrestricted and be available for operating expenses as needed. (12)

14 SUPPLEMENTARY INFORMATION

15 SCHEDULE 1 - CONSOLIDATING STATEMENT OF FINANCIAL POSITION DECEMBER 31, 2012 Coachella Valley Rescue Mission CVRM NMTC Project Holdings Eliminating Entries Consolidated Total ASSETS CURRENT ASSETS Cash and cash equivalents $ 789,911 $ 18,020 $ - $ 807,931 Restricted cash - 520, ,099 Accounts receivable 86,427 - (44,352) 42,075 Restricted pledges receivable 51, ,604 Other receivables 3, ,158 Prepaid expenses 33, ,758 Total current assets 964, ,119 (44,352) 1,458,625 PROPERTY AND EQUIPMENT Land 20, ,000 Building 291,358 8,568,657-8,860,015 Improvements 59, , ,874 Equipment and fixtures 30, , ,572 Vehicles 228, , ,386 9,685,585-10,314,971 Less accumulated depreciation (199,801) (375,884) - (575,685) Total property and equipment 429,585 9,309,701-9,739,286 OTHER ASSETS Land held for development 247, ,456 Capitalized costs, net - 396, ,383 Note receivable 8,143, ,143,746 Investment - NMTC 405,974 - (405,974) - Intangible asset, net - 685,333 (685,333) - Total other assets 8,797,176 1,081,716 (1,091,307) 8,787,585 TOTAL ASSETS $ 10,191,619 $ 10,929,536 $ (1,135,659) $ 19,985,496 Continued (13)

16 SCHEDULE 1 - CONSOLIDATING STATEMENT OF FINANCIAL POSITION DECEMBER 31, 2012 Continued Coachella Valley Rescue Mission CVRM NMTC Project Holdings Eliminating Entries Consolidated Total LIABILITIES AND NET ASSETS CURRENT LIABILITIES Accounts payable $ 27,303 $ 44,467 $ (44,352) $ 27,418 Accrued expenses 88, ,189 Note payable - current portion Deferred income on sale of gound lease 685,333 - (685,333) - Total current liabilities 800,825 44,467 (729,685) 115,607 LONG TERM LIABILITIES Notes payable - 10,982,400-10,982,400 Total liabilities 800,825 11,026,867 (729,685) 11,098,007 NET ASSETS Unrestricted 9,339,190 (97,331) (405,974) 8,835,885 Temporarily restricted 51, ,604 Total net assets 9,390,794 (97,331) (405,974) 8,887,489 TOTAL LIABILITIES AND NET ASSETS $ 10,191,619 $ 10,929,536 $ (1,135,659) $ 19,985,496 (14)

17 SCHEDULE 2 - CONSOLIDATING STATEMENT OF FINANCIAL POSITION DECEMBER 31, 2011 Coachella Valley Rescue Mission CVRM NMTC Project Holdings (Restated) Eliminating Entries (Restated) Consolidated Total ASSETS CURRENT ASSETS Cash and cash equivalents $ 406,079 $ 18,111 $ - $ 424,190 Restricted cash 226,554 1,507,867-1,734,421 Accounts receivable 126,886 - (79,452) 47,434 Restricted pledges receivable 161, ,715 Other receivables 2, ,680 Prepaid expenses 8, ,790 Total current assets 932,704 1,525,978 (79,452) 2,379,230 PROPERTY AND EQUIPMENT Land 20, ,000 Building 546,613 8,496,227-9,042,840 Improvements 154, , ,364 Equipment and fixtures 93, ,607-1,025,492 Vehicles 178, , ,466 9,602,265-10,595,731 Less accumulated depreciation (531,879) (28,621) - (560,500) Total property and equipment 461,587 9,573,644-10,035,231 OTHER ASSETS Land held for development 247, ,456 Capitalized costs, net - 410, ,210 Note receivable 8,143, ,143,746 Investment - NMTC 405,974 - (405,974) - Intangible asset - 698,103 (698,103) - Total other assets 8,797,176 1,108,313 (1,104,077) 8,801,412 TOTAL ASSETS $ 10,191,467 $ 12,207,935 $ (1,183,529) $ 21,215,873 Continued (15)

18 SCHEDULE 2 - CONSOLIDATING STATEMENT OF FINANCIAL POSITION DECEMBER 31, 2011 Continued Coachella Valley Rescue Mission (Restated) CVRM NMTC Project Holdings (Restated) Eliminating Entries (Restated) Consolidated Total LIABILITIES AND NET ASSETS CURRENT LIABILITIES Accounts payable $ 73,208 $ 866,893 $ (79,452) $ 860,649 Accrued expenses 23, ,732 Note payable - current portion 73, ,296 Deferred income on sale of gound lease 698,103 - (698,103) - Total current liabilities 868, ,893 (777,555) 957,677 LONG TERM LIABILITIES Notes payable 1,227,401 10,982,400-12,209,801 Total liabilities 2,095,740 11,849,293 (777,555) 13,167,478 NET ASSETS Unrestricted 7,707, ,642 (405,974) 7,660,126 Temporarily restricted 388, ,269 Total net assets 8,095, ,642 (405,974) 8,048,395 TOTAL LIABILITIES AND NET ASSETS $ 10,191,467 $ 12,207,935 $ (1,183,529) $ 21,215,873 (16)

19 SCHEDULE 3 - CONSOLIDATING STATEMENT OF ACTIVITIES AND CHANGES IN NET ASSETS FOR THE YEAR ENDED DECEMBER 31, 2012 Coachella Valley Rescue Mission CVRM NMTC Project Holdings Eliminating Entries Consolidated Total SUPPORT AND REVENUES Contributions and other cash donations $ 3,199,654 $ - $ - $ 3,199,654 Special events 43, ,335 Program income 80, ,097 Grants and contracts 285, ,345 Non-cash donations 1,270, ,270,284 Sales 193, ,957 Other income 158, ,000 (164,270) 113,423 Reimbursement of construction costs Total support and revenues 5,231, ,000 (164,270) 5,186,095 EXPENSES Program services 2,891, ,200 (164,270) 3,186,292 General and administrative 419, , ,804 Fundraising 519, ,755 Special events 25, ,464 Total expenses 3,855, ,711 (164,270) 4,267,315 NON-OPERATING INCOME (EXPENSE) Interest income 41, ,747 Bad debt expense (3,151) - - (3,151) Gain (loss) on sale of property (54,356) - - (54,356) Demolition of building (61,875) (61,875) Other expense (2,051) - - (2,051) Total non-operating income (expense) (80,424) (79,686) - INCREASE (DECREASE) IN NET ASSETS 1,295,067 (455,973) - 839,094 NET ASSETS - BEGINNING OF YEAR, RESTATED 8,095, ,642 (405,974) 8,048,395 NET ASSETS - END OF YEAR $ 9,390,794 $ (97,331) $ (405,974) $ 8,887,489 (17)

20 SCHEDULE 4 - CONSOLIDATING STATEMENT OF ACTIVITIES AND CHANGES IN NET ASSETS FOR THE YEAR ENDED DECEMBER 31, 2011 Coachella Valley Rescue Mission (Restated) CVRM NMTC Project Holdings (Restated) Eliminating Entries (Restated) Consolidated Total SUPPORT AND REVENUES Contributions and other cash donations $ 2,001,365 $ - $ - $ 2,001,365 Special events 22, ,365 Program income 77, ,859 Grants and contracts 1,768, ,768,045 Non-cash donations 666, ,129 Sales 172, ,715 Other income 92,198 9,917 (14,174) 87,941 Reimbursement of construction costs 105, ,585 Total support and revenues 4,906,261 9,917 (14,174) 4,902,004 EXPENSES Program services 2,212,402 38,610 (14,174) 2,236,838 General and administrative 81,413 20, ,981 Fundraising 755, ,665 Special events 12, ,200 Total expenses 3,061,680 59,178 (14,174) 3,106,684 NON-OPERATING INCOME (EXPENSE) Interest income 18,160 1,929-20,089 Bad debt expense (61,143) - - (61,143) Gain on sale of property 1,341, ,341,250 Total non-operating income (expense) 1,298,267 1,929-1,300,196 - INCREASE (DECREASE) IN NET ASSETS 3,142,848 (47,332) - 3,095,516 - NET ASSETS - BEGINNING OF YEAR 4,952, ,952,879 EQUITY TRANSFER - 405,974 (405,974) - NET ASSETS - END OF YEAR $ 8,095,727 $ 358,642 $ (405,974) $ 8,048,395 (18)