TCK Providence, Inc. Financial Statements. Years Ended June 30, 2017 and 2016

Transcription

1 Financial Statements Years Ended June 30, 2017 and 2016

2 Table of Contents Independent Auditors' Report... 1 Financial Statements: Statements of Financial Position... 2 Statements of Activities... 3 Statements of Functional Expenses... 4 Statements of Cash Flows... 8 Notes to Financial Statements... 9

3 Independent Auditors Report Board of Directors TCK Providence, Inc. Winston Salem, North Carolina We have audited the accompanying financial statements TCK Providence, Inc. (the Organization ), which comprise the statements of financial position as of June 30, 2017 and 2016, 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 audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors 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. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of TCK Providence, Inc. as of June 30, 2017 and 2016, and the changes in its net assets and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America. Winston-Salem, North Carolina December 6,

4 Statements of Financial Position June 30, 2017 and ASSETS Current assets: Cash and cash equivalents $ 23,837 $ 1,604 Restricted cash 6,136 - Accounts receivable 64,814 68,238 Other receivables 34,356 15,434 Inventory 16,155 13, ,298 99,097 Property and equipment, net 143, ,950 Total assets $ 288,824 $ 310,047 LIABILITIES AND NET ASSETS (DEFICIT) Current liabilities: Accounts payable and accrued expenses $ 168,264 $ 72,279 Due to related party 102,020 - Checks issued in excess of bank balance - 58, , ,762 Other noncurrent liabilities: Due to related party 254, ,822 Unrestricted net assets (deficit) (236,176) 4,463 Total liabilities and net assets $ 288,824 $ 310,047 See accompanying notes. 2

5 Statements of Activities Years Ended June 30, 2017 and Changes in unrestricted net assets: Support: United Way $ 22,095 $ 14,743 Special event 78, Individuals and other groups 219, ,659 Foundations and trusts 185, ,000 In-kind donations 61,862 90,533 Revenues: Restaurant 656, ,262 Catering 910, ,707 School 35,106 31,836 Production 94, ,307 Other revenue 46,166 34,924 2,309,088 1,933,410 Expenses and losses: Program services 2,379,436 2,095,764 Administrative services 112,991 91,096 Fundraising 57,300 59,930 2,549,727 2,246,790 Decrease in unrestricted net assets (240,639) (313,380) Net assets transferred from Second Harvest Food Bank of Northwest North Carolina, Inc ,843 Net assets, beginning of year 4,463 - Net assets (deficit), end of year $ (236,176) $ 4,463 See accompanying notes. 3

6 Statement of Functional Expenses Year Ended June 30, 2017 Program Supporting Services Services Fundraising Total Personnel: Salaries $ 362,830 $ 26,212 $ 57,300 $ 446,342 Contract services 584, ,914 Payroll taxes 165, ,060 Retirement expense 6, ,689 Health and life insurance 40, ,835 1,160,328 26,212 57,300 1,243,840 Facilities: Utilities 11, ,923 Repairs and maintenance 32, ,207 Warehouse supplies 51, ,022 95, ,152 Operational: Food 506, ,340 Beverage 85, ,205 Smallwares/paper and plastic 70, ,609 Vehicle expense 3, ,633 Insurance 13, ,914 Uniforms 18, ,278 Square fees 10, ,185 Rent 183, ,996 Mileage reimbursement 1, ,583 Sales tax paid 79, ,278 Gratuity 3, ,477 Other 10, ,055 Miscellaneous school expenses 21, ,641 1,008, ,008,194 See accompanying notes. 4

7 Statement of Functional Expenses Year Ended June 30, 2017 (Continued) Program Supporting Services Services Fundraising Total Office: Office supplies $ 303 $ 130 $ - $ 433 Computer 4,835 4,835-9,670 Professional fees 2,429 46,150-48,579 Other office and administrative - 9,322-9,322 7,567 60,437-68,004 Other administrative: Advertising 24, ,501 Meals and entertainment 5,010 1,252-6,262 Bank service charges - 12,848-12,848 Catering - bad debt expense - 1,000-1,000 29,511 15,100-44,611 Training/development and mileage: Training and development 18,002 4,500-22,502 18,002 4,500-22,502 Total expenses before depreciation 2,318, ,249 57,300 2,482,303 Depreciation 60,682 6,742-67,424 $ 2,379,436 $ 112,991 $ 57,300 $ 2,549,727 See accompanying notes. 5

8 Statement of Functional Expenses Year Ended June 30, 2016 Program Supporting Services Services Fundraising Total Personnel: Salaries $ 432,024 $ 27,602 $ 57,300 $ 516,926 Contract services 429, ,490 Payroll taxes 97,837 1,890-99,727 Retirement expense 1, ,264 Health and life insurance 13, , ,212 29,492 57,300 1,061,004 Facilities: Utilities 7, ,431 Repairs and maintenance 66, ,571 Warehouse supplies 41, , , ,747 Operational: Food 415, ,327 Beverage 55, ,519 Smallwares/paper and plastic 58, ,193 Vehicle expense 1, ,384 Insurance 8, ,085 Uniforms 17, ,759 Square fees 5, ,197 Rent 121, ,738 Mileage reimbursement 2, ,780 Taxes and licenses 14, ,086 Sales tax paid 54, ,022 Gratuity 2, ,630 Other 60, ,545 Miscellaneous school expenses 20, , ,480-2, ,110 See accompanying notes. 6

9 Statement of Functional Expenses Year Ended June 30, 2016 (Continued) Program Supporting Services Services Fundraising Total Office: Office supplies $ 403 $ 173 $ - $ 576 Computer 9,284 9,284-18,568 Professional fees ,081-12,717 Other office and administrative - 18,389-18,389 10,323 39,927-50,250 Other administrative: Advertising 33, ,889 Meals and entertainment 3, ,985 Bank service charges - 6,168-6,168 37,077 6,965-44,042 Training/development and mileage: Training and development 7,590 1,897-9,487 7,590 1,897-9,487 Total expenses before depreciation 1,980,429 78,281 59,930 2,118,640 Depreciation 115,335 12, ,150 $ 2,095,764 $ 91,096 $ 59,930 $ 2,246,790 See accompanying notes. 7

10 Statements of Cash Flows Years Ended June 30, 2017 and Cash flows from operating activities: Decrease in net assets $ (240,639) $ (313,380) Adjustments to reconcile increase in net assets to net cash provided by operating activities: Depreciation 67, ,150 (Increase) decrease in: Accounts receivable 3,424 (68,238) Other receivables (18,922) (15,434) Inventory (2,334) (13,821) Increase (decrease) in: Accounts payable and accrued expenses 95,985 72,279 Due to related party 181, ,822 Net cash provided (used) by operating activities 86,852 (35,622) Cash flows from investing activities: Purchases of property and equipment - (21,257) Cash flows from financing activities: Increase (decrease) in: Restricted cash (6,136) - Checks issued in excess of bank balance (58,483) 58,483 Net cash provided (used) by financing activities (64,619) 58,483 Net increase in cash 22,233 1,604 Cash and cash equivalents, beginning of year 1,604 - Cash and cash equivalents, end of year $ 23,837 $ 1,604 Supplemental cash flow information: Property and equipment transferred from Second Harvest Food Bank of Northwest North Carolina, Inc. $ - $ 317,843 See accompanying notes. 8

11 Notes to Financial Statements Notes to Financial Statements Nature of Business TCK Providence, Inc. ("TCKP" or the Organization ) is a 501(c)(3) nonprofit organization established to provide culinary training, hunger relief, and social enterprise opportunities, through its restaurant and catering operations, to the community. TCKP is the wholly owned subsidiary of Second Harvest Food Bank of Northwest North Carolina ( Second Harvest ) and has various transactions with this entity throughout the year (Note 4). The Organization operates the Triad Community Kitchen Training program to provide food service training to individuals. The Organization also operates a production kitchen that manufactures prepackaged food products for purchase and distribution by various food banks within North Carolina. Significant Accounting Policies Basis of accounting The Organization's financial statements are presented on the accrual basis of accounting. Financial statement presentation Classification of net assets Net assets of the Organization are classified as unrestricted. Unrestricted net assets consist of assets, net of liabilities, related to the Organization's regular activities, which are available at the discretion of the Board of Directors to carry out the mission of the Organization. Temporarily restricted net assets represent those amounts, which are donor restricted for specific purposes. A donor s restriction is met when a stipulated time restriction ends or a special purpose restriction is accomplished. Temporarily restricted net assets received and consumed in the same period are reflected in unrestricted operating activities. Temporarily restricted net assets are transferred to unrestricted net assets as the net assets are released from restriction. Permanently restricted net assets result from contributions from donors who place restrictions on the use of funds, which mandate that the principal be invested in perpetuity. The principal is reported as a permanently restricted net asset. Earnings, gains, and losses on permanently restricted net assets are classified as unrestricted unless specifically restricted by the donor or by applicable state law. All of TCKP s net assets are unrestricted at June 30, 2017 and Support TCKP accounts for support received as unrestricted, temporarily restricted, or permanently restricted support depending on the existence and nature of any donor restrictions. Contributions classified as temporarily restricted support are reclassified to unrestricted support upon expiration of any restrictions. Additionally, TCKP receives inkind support from various donors and Second Harvest. TCKP received in-kind contributions of $61,862 and $90,533 for the years ended June 30, 2017 and 2016, respectively. 9

12 Notes to Financial Statements Cash and cash equivalents The Organization considers all unrestricted, liquid financial instruments with an original maturity of three months or less to be cash equivalents. Cash is considered unrestricted with the exception of one account which contains $6,136 as of June 30, 2017.The cash relates to a grant received from donor to be used to buy restaurant equipment. Accounts receivable Accounts receivable are uncollateralized obligations of customers that are stated at the amount billed and are due within 30 days. Management individually reviews all accounts receivable aged in excess of 30 days from invoice date and, based on assessment of current creditworthiness, estimates the portion, if any, of the balance that is uncollectible. As of June 30, 2017 and 2016, management determined that a reserve was not considered necessary. Inventory Inventories of food and serving supplies are valued at the lower of cost, on a first-in, first-out basis, or market. Property and equipment Significant long-lived assets and improvements are stated at cost except for donated equipment, which is stated at fair value at the date of the gift. Such donations are reported as unrestricted support unless the donor has restricted the donated asset for a specific purpose. Assets donated with explicit restrictions regarding their use and contributions of cash that must be used to acquire property and equipment are reported as restricted support. Absent donor stipulations, TCKP reports expirations of donor restrictions when the donated assets are placed in service. TCKP reclassifies temporarily restricted net assets to unrestricted net assets at that time. Expenditures for maintenance, repairs and minor renewals are charged to expense as incurred. Depreciation of property and equipment is charged over the estimated useful lives of the respective assets on a straight-line basis. Donated services TCKP recognizes revenue from donated services, which create or enhance nonfinancial assets or require specialized skills. The recognized value of these services is based on rates commensurate with the type of services performed. Additionally, TCKP receives a significant amount of skilled contributed time, which does not meet the recognition criteria. Accordingly, the value of this contributed time has not been determined and is not reflected in the accompanying financial statements. Functional expenses The costs of the Organization's programs and supporting services have been reported on a functional basis. This basis provides for the allocation of certain costs between program and supporting services based on estimates made by management. Income tax status The Organization is exempt from federal income tax under Section 501(c)(3) of the Internal Revenue Code, and is also exempt from North Carolina income tax. Therefore, a provision has not been recorded for federal or state income taxes in the accompanying financial statements. The Organization has determined that it does not have any material unrecognized tax benefits or obligations as of June 30, 2017 and Concentrations Financial instruments that potentially subject the Organization to concentrations of credit risk consist principally of accounts receivable. The Organization has two customers that account for 72% of the accounts receivable balance as of June 30, The Organization had three customers that accounted for 70% of the accounts receivable balance as of June 30,

13 Notes to Financial Statements Management s 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, the 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. Reclassifications Certain amounts from the 2016 financial statements have been reclassified to conform to the 2017 presentation. Total net assets and change in net assets are unchanged due to the reclassifications. Subsequent events The Organization evaluated the effect subsequent events would have on the financial statements through December 6, 2017, which is the date the financial statements were available to be issued. Property and Equipment Property and equipment consists of the following at June 30, 2017: Smallwares $ 1,454 $ 1,454 Equipment 326, ,221 Vehicles 7,516 7,516 Software 3,909 3, , ,100 Accumulated depreciation (195,574) (128,150) $ 143,526 $ 210,950 Related-Party Transactions At June 30, 2017 and 2016, the Organization has net payables due to Second Harvest of $356,736 and $174,822, respectively. During the years ended June 30, 2017 and 2016, the Organization received contributed services of $61,862 and $63,400 from Second Harvest. Contributed services are for administrative and fundraising employee salaries that are shared by the two organizations. The value of the services is the pay rate for each employee times the amount of hours spent working on behalf of the organization which is deemed by management to be a reasonable basis for measurement. The Organization received contributed revenue of $187,980 and production income of $67,039 from Second Harvest during the year ended June 30, The Organization also received $47,020 in donations from individuals that were received by Second Harvest on behalf of the organization. During the year ended June 30, 2016, the Organization received a contribution of property and equipment from Second Harvest valued at $317,843 that was appropriately recorded as an equity transfer between related entities. This contribution was recorded at the net book value of the assets at the time of transfer. 11

14 Notes to Financial Statements Operating Lease During 2017, the Organization leased restaurant space under an operating lease agreement. Monthly lease payments are $4,500 plus a percentage of gross sales for the month ranging from 1% to 3%. The lease agreement automatically renews every two years under the same terms unless the landlord or tenant provides the other party with a written notice of termination. Total rent expense under this lease agreement was $183,996 and $121,738 for the years ended June 30, 2017 and 2016, respectively. Future minimum annual rental payments due under the lease as of June 30, 2017 are as follows: 2018 $ 13,500 $ 13,500 12