DEVELOPMENT IN GARDENING, INC. FINANCIAL STATEMENTS TOGETHER WITH THE INDEPENDENT AUDITORS REPORT YEAR ENDED DECEMBER 31, 2013

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1 FINANCIAL STATEMENTS TOGETHER WITH THE INDEPENDENT AUDITORS REPORT YEAR ENDED DECEMBER 31, 2013 NTRC, PC CERTIFIED PUBLIC ACCOUNTANTS

2 TABLE OF CONTENTS DECEMBER 31, 2013 PAGE INDEPENDENT AUDITOR S REPORT 1 FINANCIAL STATEMENTS Statement of Financial Position 2 Statement of Activities 3 Statement of Functional Expenses 4 Statement of Cash Flows 5 Notes to the Financial Statements 6 AUDITOR CONTACT INFORMATION 10

3 INDEPENDENT AUDITOR S REPORT To the Board of Trustees of Development in Gardening, Inc. We have audited the accompanying financial statements of Development in Gardening, Inc. (a nonprofit organization), which is comprised of the statement of financial position as of December 31, 2013, and the related statements of activities, functional expenses, and cash flows for the year then ended, and the related notes to the financial statements. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Development in Gardening, Inc. as of December 31, 2013, 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. NTRC, P.C. NTRC, PC Lithonia, Georgia August 8, 2014 CERTIFIED PUBLIC ACCOUNTANTS AND CONSULTANTS 3054 Panola Road, Suite H Lithonia, Georgia Phone Fax

4 STATEMENT OF FINANCIAL POSITION DECEMBER 31, 2013 ASSETS Cash $ 94,921 Accounts receivable 493 Prepaid expenses 4,464 Other current assets 5,164 Fixed assets 3,301 Investments 15,355 TOTAL ASSETS $ 123,698 LIABILITIES AND NET ASSETS LIABILITIES Accounts payable $ 7,618 TOTAL LIABILITIES 7,618 NET ASSETS Unrestricted net assets 116,080 TOTAL NET ASSETS 116,080 TOTAL LIABILITIES AND NET ASSETS $ 123,698 See auditor's report and accompanying notes to the financial statements 2

5 STATEMENT OF ACTIVITIES FOR THE YEAR ENDED DECEMBER 31, 2013 Temporarily Unrestricted Restricted Total PUBLIC SUPPORT AND REVENUE Contributions $ 173,234 $ 21,444 $ 194,678 Grant Income 10,000 89,764 99,764 In-kind contributions 106, ,920 Other revenue 11,002-11,002 TOTAL PUBLIC SUPPORT AND REVENUE 301, , ,364 Net assets released from restrictions 168,915 (168,915) - EXPENSES Program services 264, ,348 General and administrative 80,565-80,565 Fundraising 45,966-45,966 TOTAL EXPENSES 390, ,879 CHANGE IN NET ASSETS 79,192 (57,707) 21,485 NET ASSETS, BEGINNING OF YEAR 36,888 57,707 94,595 NET ASSETS, END OF YEAR $ 116,080 $ - $ 116,080 See auditor's report and accompanying notes to the financial statements 3

6 STATEMENT OF FUNCTIONAL EXPENSES FOR THE YEAR ENDED DECEMBER 31, 2013 Program General and Services Administrative Fundraising Total EXPENSES Salaries $ 78,037 $ 25,027 $ 15,016 $ 118,080 Payroll taxes 6,628 2,126 1,275 10,029 TOTAL COMPENSATION 84,665 27,153 16, ,109 Employee benefits 4,270 1, ,461 Bank charges 835 2, ,698 Taxes and licenses Professional fees 67,455 19, ,342 Computer and website Telephone 1,595 3,105-4,700 Travel 12,081 5,755 5,159 22,995 Events and promotions 11,027 1,187 16,015 28,229 Field supplies 40, ,670 Insurance - 2,427-2,427 Depreciation Occupancy 14,554 2,620 5,625 22,799 Printing 2,643 3, ,450 Other operating expenses 24,939 8,750 1,194 34,883 TOTAL EXPENSES $ 264,348 $ 80,565 $ 45,966 $ 390,879 See auditor's report and accompanying notes to the financial statements 4

7 STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2013 CASH FLOWS FROM OPERATING ACTIVITIES Increase/(Decrease) in net assets $ 21,485 Adjustments to reconcile to net cash provided by (used in) operating activities: Depreciation expense 777 Changes in assets and liabilities: (Increase) decrease in : Accounts receivable 44,812 Other current assets 193 Prepaid expenses (1,626) Increase (decrease) in: Accounts payable 4,629 NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 70,270 CASH FLOWS FROM INVESTING ACTIVITIES Cash paid for purchases of fixed assets (1,300) Investments (11,049) NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (12,349) NET CHANGE IN CASH 57,921 BEGINNING CASH 37,000 ENDING CASH $ 94,921 See auditor's report and accompanying notes to the financial statements 5

8 NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2013 NOTE A - NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES Nature of Operations Development in Gardening, Inc. (the Organization) is a nonprofit organization formed to improve the nutrition and health of HIV-affected and at-risk populations around the world through sustainable gardening. The Organization empowers communities to develop sustainable community gardens, improving the nutrition and quality of life for people living with HIV-AIDS, orphans, pregnant women and other vulnerable populations in developing nations. This is accomplished by teaching people in agriculture and nutrition and providing resources to create projects that enable communities to meet their own needs. Method of Reporting The accompanying financial statements have been prepared using the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America. The Organization categorizes net assets as unrestricted, temporarily restricted or permanently restricted based on stipulations made by the donor. Accordingly, the Organization reports gifts of cash and other assets as restricted support if they are received with donor stipulations that limit the use of the donated assets. When a donor restriction expires, that is, when a stipulated time restriction ends or purpose restriction is accomplished, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restrictions. All contributions and unconditional promises to give which do not have donor restrictions as to purpose or time are classified as unrestricted and is reported as an increase in unrestricted net assets if the restrictions expire in the fiscal year in which the contributions are recognized. Equipment It is the Organization s policy to capitalize property and equipment over $500. Lesser amounts are expensed. Furniture and equipment are recorded at cost. Depreciation is computed on a straight-line basis over the estimated useful lives of the assets. Estimated useful lives are as follows: furniture, seven years; vehicles, five years; and computer equipment, five years. Income Tax Development in Gardening, Inc. qualifies as a tax-exempt organization under Section 501(c) (3) of the Internal Revenue Code and, therefore, requires no provision for income taxes. In addition, the Organization has been determined by the Internal Revenue Service not to be a private foundation within the meaning of Section 509(a) of the Internal Revenue Code. As defined by Financial Accounting Standards Board Accounting Standards Codification (ASC) Topic 740, Income Taxes, no provision or liability for materially uncertain tax positions was deemed necessary by management. Therefore, no provision or liability for uncertain tax positions has been included in these financial statements. 6

9 NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2013 NOTE A - NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (Continued) Concentration of Credit Risk Cash and cash equivalents consist of demand deposits with a single financial institution. The balances in the Organization s bank accounts, as reflected in the bank s records, are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000. None of the cash balances were uninsured as of December 31, Compensated Absences No accrual of compensated absences has been made in the financial statements because the amount cannot be reasonably estimated. Functional Allocation of Expenses The costs of providing the various programs and other activities are summarized on a functional basis in the statements of activities. Accordingly, certain costs have been allocated among the various programs and supporting services benefited. Estimates The preparation of financial statements in conformity with 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 The Organization considers all cash investments and highly liquid investments with maturities of three months or less to be cash equivalents. Investments The Organization s investments consist of marketable securities which are classified as available for sale. Securities classified as available for sale are carried in the financial statements at fair value. Realized gains and losses are included in earnings; unrealized holding gains and losses are included in other revenue. Unrealized holding gains for the year ended December 31, 2013 totaled $11,049. NOTE B - PROPERTY AND EQUIPMENT Components of property and equipment consist of the following at December 31, 2013: Equipment $ 4,320 Less accumulated depreciation (1,019) $ 3,301 Depreciation expense for the year ended December 31, 2013 was $777. 7

10 NOTE C - ECONOMIC DEPENDENCY DEVELOPMENT IN GARDENING, INC. NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2013 The Organization depends heavily on contributions for its revenue. Accordingly, the ability of certain contributors to continue giving amounts comparable with the current year may be dependent upon current and future overall economic conditions. While the Organization s Board of Directors believes that the Organization s resources are sufficient to continue its programs, its ability to do so and the extent to which it continues, may be dependent on the above factors. NOTE D DONATED FACILITIES AND SERVICES The Organization records the value of donated goods, facilities, and services when there is an objective basis available to measure their value. The Organization received the following during the year: Donated printing and reproduction $ 6,300 Donated event food and auction items 9,900 Donated housing, facilities and venues 17,210 Donated professional services 34,200 Donated field materials 15,000 Donated services 24,310 Total $ 106,920 NOTE E - COMMITMENTS AND CONTINGENCIES Grants and contracts often require the fulfillment of certain conditions as set forth in the instrument or agreement. Failure to fulfill the conditions could result in the return of funds to grantors. Although return of funds is a possibility, management of the Organization deems the contingency unlikely. Grants and contracts are subject to audit by the grantor. The grantor has the authority to determine liabilities or limit or suspend participation in the various sponsored programs. NOTE F DEFINED CONTRIBUTION PLAN The Organization has a defined contribution plan (the Plan) covering all employees who are twenty-one years old or older and have at least one year of service. The Organization can make discretionary matching contributions as either a percentage of the employee s contribution or a flat dollar amount. No matching contributions were made for the year ended December 31, Pension expense totaled $770. NOTE G FAIR VALUE GAAP defines fair value and establishes a hierarchy for reporting the reliability of input measurements used to assess fair value. The hierarchy prioritizes fair value measurements based on the types of inputs used in the valuation technique. The highest priority is given to unadjusted quoted prices in active markets for identical assets (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The Organization s investments are measured at fair value on a recurring basis using Level 1 inputs. The carrying amounts of financial instruments, including cash and cash equivalents, accounts receivable, accounts payable approximate fair value due to the short maturity of these instruments. 8

11 NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2013 NOTE H TEMPORARY RESTRICTION ON NET ASSETS Temporary restrictions on net assets at the end of the year are related to funds raised through campaigns, grants, and contributions. Net assets were released from donor restrictions by incurring expenses satisfying the restricted purposes as follows: Projects in Kenya $ 62,607 Projects in Uganda 19,112 Donor Trips 20,094 Projects in Burkina Faso 67,102 Total $ 168,915 NOTE I SUBSEQUENT EVENTS Management has evaluated subsequent events through August 8, 2014, the date which the financial statements were available to be issued and determined that no additional adjustments and/or disclosures are required. 9

12 John Pitts, CPA NTRC, P.C Panola Road, Suite H Lithonia, GA Telephone: Fax: jpitts@ntrccpa.com AUDITOR CONTACT INFORMATION