CARINGBRIDGE Eagan, Minnesota

Transcription

1 Eagan, Minnesta FINANCIAL STATEMENTS Including Independent Auditrs' Reprt As f and Fr the Years Ended December 31,2012 and 2011

2 TABLE OF CONTENTS Independent Auditrs' Reprt 1 Statements Statements f Financial Psitin f Activities 2 3 Statements f Functinal Expense 4 Statements f Cash Flws 5 Ntes t Financial Statements 6-13

3 INDEPENDENT AUDITORS' REPORT VIRCHOW KRAUSE, LiP Bard f Directrs CaringBridge Eagan, Minnesta Baker Tilly Virchw Krause, LLP 225 S Sixrh Sr, Sre 23 Minneaplis, MN rei6n fax bakerrilly.cm Reprt n the Financial Statements We have audited the accmpanying financial statements f Caring Bridge (the "Organizatin"), which cmprise the statements f financial psitin as f December 31, 2012 and 2011, and the related statements f activities, functinal expenses and cash flws fr the years then ended, and the related ntes t the financial statements. Management's Respnsibility fr the Financial Statements Management is respnsible fr the preparatin and fair presentatin f these financial statements in accrdance with accunting principles generally accepted in the United States f America; this includes the design, implementatin, and maintenance f internal cntrl relevant t the preparatin and fair presentatin f financial statements that are free frm material misstatement, whether due t fraud r errr. Auditrs' Respnsibility Our respnsibility is t express an pinin n these financial statements based n ur audits. We cnducted ur audits in accrdance with auditing standards generally accepted in the United States f America. Thse standards require that we plan and perfrm the audits t btain reasnable assurance abut whether the financial statements are free frm material misstatement. An audit invlves perfrming prcedures t btain audit evidence abut the amunts and disclsures in the financial statements. The prcedures selected depend n the auditrs' judgment, including the assessment f the risks f material misstatement f the financial statements, whether due t fraud r errr. In making thse risk assessments, the auditr cnsiders internal cntrl relevant t the entity's preparatin and fair presentatin f the financial statements in rder t design audit prcedures that are apprpriate in the circumstances, but nt fr the purpse f expressing an pinin n the effectiveness f the entity's internal cntrl. Accrdingly, we express n such pinin. An audit als includes evaluating the apprpriateness f accunting plicies used and the reasnableness f significant accunting estimates made by management, as well as evaluating the verall presentatin f the financial statements. We believe that the audit evidence we have btained is sufficient and apprpriate t prvide a basis fr ur audit pinin. Opinin In ur pinin, the financial statements referred t abve present fairly, in all material respects, the financial psitin f the Organizatin as f December 31, 2012 and 2011, and the changes in its net assets and its cash flws fr the years then ended in accrdance with accunting principles generally accepted in the United States f America. 0(/.'h--T-tJ V!iduw k(1u( j _j up Minneaplis, Minnesta March 15, 2013 an inependent member f BAKER TILLY INTER.NATIONAL Page 1 An Affirmative Actin Equal Opprtunity Emplyer

4 STATEMENTS OF FINANCIAL POSITION As f December 31,2012 and 2011 ASSETS CURRENT ASSETS Cash and cash equivalents $ 3,794,336 $ 3,479,056 Accunts receivable 2,176 2,868 Inventry 6,582 16,701 Prepaid expenses 97, ,602 Ttal Current Assets 3,9,876 3,661,227 OTHER ASSETS Other assets 13,333 13,333 Fixed assets Furniture and equipment 694, ,250 Lease hld imprvements 23,531 23,531 Website and mbile phne applicatins 889, ,776 Wrk in prgress 140,404 46,645 Less: Amrtizatin and depreciatin (1,185,820) {941,402) Ttal Fixed Assets 562, ,8 Ttal Other Assets 575, ,133 TOTAL ASSETS $ 4,476,694 $ 4,122,360 LIABILITIES AND NET ASSETS CURRENT LIABILITIES Accunts payable $ 107,669 $ 76,641 Current prtin f capital lease 1,059 Accrued expenses 182, ,802 Ttal Current Liabilities 290, ,502 NET ASSETS Unrestricted 3,985,457 3,592,773 Temprarily restricted ,085 Permanently restricted 2,0 2,0 Ttal Net Assets 4,186,033 3,807,858 TOTAL LIABILITIES AND NET ASSETS $ 4,476,694 $ 4,122,360 See accmpanying ntes t financial statements. Page 2

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7 CARING BRIDGE STATEMENTS OF CASH FLOWS Fr the Years Ended December 31, 2012 and CASH FLOWS FROM OPERATING ACTIVITIES Change in net assets $ 378,175 $ (395,990) Adjustments t recncile change in net assets t net cash flws frm Depreciatin and amrtizatin 246, ,361 Lss (gain) n dispsal and impairment f fixed assets (440) 9,090 Permanently restricted cntributin fr lng-term purpses (2,0) Changes in assets and liabilities: Accunts receivable ,827 Inventry 10, Prepaid expenses 64,820 (151,534) Accunts payable 31,028 (95,494) Deferred revenue (171,418) Accrued expenses (53,810) (141,575) Net cash flws frm perating activities 677,122 (882,465) CASH FLOWS FROM INVESTING ACTIVITIES Purchases f fixed assets (361,223) (251,829) Prceeds frm sale f fixed assets Prceeds frm shrt-term investments 204,8 Net cash flws frm investing activities (360,783) (46,841) CASH FLOWS FROM FINANCING ACTIVITIES Permanently restricted cntributin fr lng-term purpses 2,0 Payments n capital lease (1,059) (3,020) Net cash flws frm financing activities (1,059) 196,980 Net Change in Cash and Cash Equivalents 315,280 (732,326) CASH AND CASH EQUIVALENTS - Beginning f year 3,479,056 4,211,382 CASH AND CASH EQUIVALENTS - END OF YEAR $ 3,794,336 $ 3,479,056 SUPPLEMENTAL INFORMATION Cash paid fr interest $ 17 $ 208 See accmpanying ntes t financial statements. Page 5

8 As f and fr the Years Ended December 31, 2012 and 2011 NOTE 1 - Summary f Significant Accunting Plicies CaringBridge (the Organizatin) is a nnprfit ffering many ways t care fr each ther. CaringBridge is fr anyne facing any health cnditin: big r small, acute r lng term, available fr as lng as yu need. Peple are able t stay cnnected, leave wrds f hpe and encuragement and ffer supprt. CaringBridge primary services prvide persnal CaringBridge Sites and persnal CaringBridge SupprtPlanners that cnnect and impact millins f peple. Caring Bridge services are available t anyne, anywhere at n cst. At the heart f Caring Bridge, the Organizatin is abut caring fr each ther. Over a half a millin peple cnnect thrugh CaringBridge each day. CaringBridge is a cmmunity f grateful, engaged families and friends. These free services are made pssible by the genersity f dnrs within the CaringBridge cmmunity. Fr purpses f financial reprting, the Organizatin classifies resurces int three net assets categries pursuant t any dnr-impsed restrictins and applicable law. Accrdingly, the net assets f the Organizatin are classified in the accmpanying financial statements in the categries that fllw: Unrestricted Net Assets - Net assets that are nt subject t dnr-impsed stipulatins. Temprarily Restricted Net Assets - Net assets subject t dnr-impsed stipulatins that either expire by passage f time r can be fulfilled and remved by actins f the Organizatin pursuant t thse stipulatins. Permanently Restricted Net Assets - Net assets subject t dnr-impsed stipulatins that they be maintained permanently by CaringBridge. Revenue Recgnitin Revenues frm surces ther than cntributins are generally reprted as increases in unrestricted net assets. Expenses are reprted as decreases in unrestricted net assets. Cntributins are recgnized as revenues in the perid received and are reprted as increases in the apprpriate categries f net assets in accrdance with dnr restrictins. Expiratins f temprary restrictins n net assets (i.e., the dnr-stipulated purpse has been fulfilled and/r the stipulated time perid has elapsed) are reprted as net assets released frm restrictins between the applicable classes f net assets. Cnditinal prmises t give are nt recgnized until they becme uncnditinal, that is, when the cnditins n which they depend are substantially met. Cntributins received with dnr-impsed restrictins that are met in the same year as received are reprted as revenues f the temprarily restricted net asset class, and a release t unrestricted net assets is made t reflect the expiratin f such restrictins. Dnated services and facilities are recgnized as cntributins in accrdance with the accunting guidance if the services (a) create r enhance nnfinancial assets r (b) require specialized skills, and wuld therwise be purchased by the Organizatin. Revenue frm spnsrs (which was discntinued in 2011) is deferred and recgnized ver the perids t which the fees relate. Page 6

9 As f and fr the Years Ended December 31,2012 and 2011 NOTE 1 - Summary f Significant Accunting Plicies (Cntinued) Cash and Cash Equivalents CaringBridge defines cash and cash equivalents as highly liquid, shrt-term investments with a maturity at the date f acquisitin f three mnths r less. Cash in excess f FDIC and similar insurance cverages are subject t the usual banking risks f funds in excess f thse limits. Inventries Inventries cnsist f articles fr sale in the nline stre, prmtinal items, and brchures. They are valued at cst. Accunts Receivable Receivables have been adjusted fr all knwn uncllectible accunts. Management determines whether an allwance fr dubtful accunts is necessary by identifying past due accunts and cnsidering histrical experience. Receivables are written ff when deemed uncllectible. N allwance fr dubtful accunts is cnsidered necessary as f December 31, 2012 and Fixed Assets Prperty and equipment purchased are capitalized at cst r in the case f dnated equipment at estimated market value n the date f the gift. Depreciatin is cmputed using the straight-line methd ver the estimated useful lives f the assets (3 years fr the website and mbile phne applicatins and 3 t 7 years fr furniture and equipment). Leasehld imprvements are being amrtized ver the shrter f the expected life f the asset r the perid f the lease. The Organizatin capitalizes additins in excess f $5. Website develpment csts are capitalized if they significantly enhance the capability r capacity f CaringBridge's website. Mbile phne applicatin csts are capitalized fr new platfrms and fr enhancements that significantly upgrade the capability f the mbile applicatin. Csts capitalized include external direct csts f materials and services and internal payrll and payrll-related csts. Any csts during the preliminary prject stage r related t training r maintenance is expensed as incurred. Capitalizatin ceases when the prjects are substantially cmplete and ready fr their intended use. The capitalizatin and nging assessment f recverability f develpment csts requires cnsiderable judgment by management with respect t certain external factrs, including, but nt limited t, technlgical and ecnmic feasibility, and estimated ecnmic life. When the prjects are ready fr their intended use, the Cmpany amrtizes such csts ver their estimated useful lives f three years. Estimated amrtizatin expense fr the website and mbile phne applicatins are $169,324, $149,577, $107,079 and $20,034 fr the years ending December 31, 2013, 2014, 2015, and 2016, respectively. The Organizatin had wrk in prgress f $140,404 related t CaringBridge 5.0 sftware at Decem ber 31, It is anticipated this prject will be cmpleted March 2013 at a ttal cst f apprximately $240,404. The Organizatin had wrk in prgress f $46,645 related t their SupprtPlanner sftware at December 31, This prject was cmpleted June 2012 at a ttal cst f $194,1. Cntributins f fixed assets related t the website are reprted as increases in temprarily restricted net assets. Restrictins are cnsidered met and an apprpriate amunt reclassified t unrestricted net assets, ver the useful life f the website. Page 7

10 As f and fr the Years Ended December 31, 2012 and 2011 NOTE 1 - Summary f Significant Accunting Plicies (Cntinued) Research and Develpment Csts Research and develpment csts are expensed as incurred. Research and develpment csts are included in the statements f functinal expenses described as website develpment and supprt and includes csts expended related t website develpment and mbile phne applicatin prjects which have nt met the requirement fr capitalizatin. Incme Tax Status The Internal Revenue Service has determined that CaringBridge is exempt frm federal incme tax under Sectin 501(c)(3) f the U.S. Internal Revenue Cde. It is als exempt frm state incme tax. Hwever, any unrelated business incme may be subject t taxatin. The Organizatin fllws the accunting standards fr cntingencies in evaluating uncertain tax psitins. This guidance prescribes recgnitin threshld principles fr the financial statement recgnitin f tax psitins taken r expected t be taken n a tax return that are nt certain t be realized. N liability has been recgnized by the Organizatin fr uncertain tax psitins as f December 31, 2012 and The Organizatin's tax returns are subject t review and examinatin by federal and state authrities. The tax returns fr the current year as well as fiscal years 29 thrugh 2011 are pen t examinatin by federal and state authrities. Any interest and penalties wuld be included in incme tax expense n the statements f activities. Functinal Expense Allcatin The csts f prviding the prgrams and ther activities have been summarized n a functinal basis in the statement f activities. Accrdingly, certain csts have been allcated amng the prgrams and supprting services benefited. All expenses are allcated based n an analysis f persnnel time and resurces utilized fr the related activities based n the best estimates f management. Fair Value f Financial Instruments CaringBridge categrizes assets and liabilities carried at fair value n a recurring basis, based n the pririty f the inputs t the valuatin technique, int a three-level fair value hierarchy. The fair value hierarchy gives the highest pririty t quted prices in active markets fr identical assets r liabilities (Level 1) and the lwest pririty t unbservable inputs (Level 3). If the inputs used t measure the financial instruments fall within different levels f the hierarchy, the categrizatin is based n the lwest level input that is significant t the fair value measurement f the instrument. At December 31, 2012 and 2011, CaringBridge des nt have any assets r liabilities carried at fair value n a recurring basis.. The carrying amunts f cash and cash equivalents, receivable, prepaid expenses and ther assets, ther receivables, accunts payable, and accrued liabilities apprximate fair value because f the shrt-term maturity f these financial instruments. Use f Estimates The preparatin f financial statements in cnfrmity with accunting principles generally accepted in the United States f America requires management t make estimates and assumptins that affect the reprted amunts f assets and liabilities and disclsure f cntingent assets and liabilities at the date f the financial statements and the reprted amunts f revenues and expenses during the reprting perid. Actual results culd differ frm thse estimates. Significant estimates and assumptins include the allcatins t the varius functinal expense categries. Page 8

11 As f and fr the Years Ended December 31, 2012 and 2011 NOTE 2 - Lease Cmmitments On Octber 1, 28, CaringBridge signed an perating lease fr ffice space. The lease is a 63-mnth lease with escalating payments with the first three mnths free. Rental expense is recgnized n a straight-line basis ver the life f the lease. On Octber 1, 26, CaringBridge signed an perating lease fr ffice space. The lease is a 60-mnth lease with escalating payments with the first tw mnths free. Rental expense is recgnized n a straight-line basis ver the life f the lease. This lease expired in Ttal rent expense fr the years ended December 31, 2012 and 2011 under the tw leases was $227,392 and $211,992, respectively. The difference between the amunt paid and the amunt expensed are included in accrued expenses at yearend. Future minimum lease payments under the lease are as fllws: Year ending December 31: Ttal Future Minimum Rental Payments $ 275,487 22,985 $ 298,472 During 27, CaringBridge entered int a capital lease fr a cpier. The asset is included in equipment as fllws at Decem ber 31 : Equipment Less: Accumulated amrtizatin $ 13,423 $ (13,423) 13,423 (12,304) Ttal $===O $==1d:,119 The cpier lease required mnthly payments f $269 thrugh its expiratin in April Page 9

12 As f and fr the Years Ended December 31,2012 and 2011 NOTE 3 - In-Kind Cntributins CaringBridge recrds in-kind cntributins at fair value at the date f dnatin. The fair value f these services has been recrded as cntributin revenue n the statement f activities and in the related expense accunt n the statements f activities r in fixed assets n the balance sheet if the useful life f the cntributed asset is greater than ne year. In-kind cntributins cnsisted f the fllwing during the years ended December 31, 2012 and 2011, respectively: Dnated prfessinal services Dnated hsting services $ 414,176 $ ,976 3,379 $ 415,071 $==263=,=,35=5 NOTE 4 - Net Assets Temprarily restricted dnatins received in 2012 and 2011 f $9,250 and $10,0, respectively, related t the develpment f the SupprtPlanner and Mbile Applicatin. All the cntributed temprarily restricted net assets were released frm restrictin in 2012 as the SupprtPlanner and Mbile Applicatins are in service. A permanently restricted dnatin was received during 2011 in the amunt f $2,0 fr the establishment f an endwment. See Nte 5. NOTE 5 - Endwment Funds As required by generally accepted accunting principles, net assets assciated with the Organizatin's endwment funds are classified and reprted based n the existence r absence f dnr impsed restrictins. Interpretatin f Relevant Law The Organizatin's Bard f Directrs has interpreted the Unifrm Prudent Management f Institutinal Funds Act (UPMIFA) as requiring the preservatin f the fair value f the riginal gift as f the gift date f the dnr-restricted endwment funds absent explicit dnr stipulatins t the cntrary. As a result f this interpretatin, the Organizatin classifies as permanently restricted net assets (a) the riginal value f gifts dnated t the permanent endwment, (b) the riginal value f subsequent gifts t the permanent endwment, and (c) accumulatins t the permanent endwment made in accrdance with the directin f the applicable dnr gift instrument at the time the accumulatin is added t the fund. Page 10

13 As f and fr the Years Ended December 31, 2012 and 2011 NOTE 5 - Endwment Funds (Cntinued) The remaining prtin f the dnr-restricted endwment fund that is nt classified in permanently restricted net assets is classified as temprarily restricted net assets until thse amunts are apprpriated fr expenditure by the Organizatin in a manner cnsistent with the standard f prudence prescribed by UPMIFA. In accrdance with UPMIFA, the Organizatin cnsiders the fllwing factrs in making a determinatin t apprpriate r accumulate dnr-restricted endwment funds: (1) The duratin and preservatin f the fund (2) The purpses f the Organizatin and the dnr-restricted endwment fund (3) General ecnmic cnditins (4) The pssible effect f inflatin and deflatin (5) The expected ttal return frm incme and the appreciatin f investments (6) Other resurces f the Organizatin (7) The investment plicies f the Organizatin Return Objectives and Risk Parameters The Organizatin has adpted investment and spending plicies fr endwment assets that attempt t minimum risk f investments with certain percent available withut penalty. Investments shuld generate incme t supprt the missin f CaringBridge. The primary investment bjectives are t achieve lngterm ttal return, t preserve the principal f the fund by reinvesting incme and t prduce a cnsistent stream f investment incme. Endwment assets include thse assets f dnr-restricted funds that the Organizatin must hld in perpetuity r fr a dnr-specified perid(s). As f December 31, 2012 and 2011, the Organizatin had n bard-designated funds. Strategies Emplyed fr Achieving Objectives T satisfy its lng-term rate-f-return bjectives, the Organizatin relies n a cnservative strategy. The balance f the endwment shuld be invested in fixed incme vehicles. The guiding criteria fr the chice f investment vehicle are safety and yield. The guiding criteria fr liquidity wuld be that the spendable amunt determined by the Endwment Fund Plicy Statement is liquid t be withdrawn in January each year. Page 11

14 As f and fr the Years Ended Decem ber 31, 2012 and 2011 NOTE 5 - Endwment Funds (Cntinued) Spending Plicy and Hw the Investment Objectives Relate t Spending Plicy The Organizatin has a plicy fr apprpriating fr distributin each year, which must be n less than three percent (3%) and n greater than six percent (6%). The Organizatin will determine the spendable amunt fr its endwment funds fr the upcming budget year fllwing the clse f the September 30 quarter by calculating the average fair market value f its endwment funds, calculated ver twelve quarters ending with the September 30 quarter, and multiplying that average value by the applicable Spending Percentage. In establishing this plicy, the Organizatin cnsidered the lng-term expected return n its endwment. Depending n the fund ttal return, the Organizatin may nt meet a psitive grwth rate each year based n market cnditins. Hwever management has determined this is a cnservative and apprpriate benchmark fr the Organizatin's intentins related t the grwth and preservatin f the funds. The Organizatin will nt calculate an annual spendable amunt fr any fund which, as f September 30, has fallen belw 90 percent f the aggregate value f all gifts t that fund. This is cnsistent with the Organizatin's bjective t maintain the purchasing pwer f the endwment assets held in perpetuity r fr a specified term as well as t prvide additinal real grwth thrugh new gifts and investment return. Endwment and Restricted Net Asset Cmpsitin by Type f Fund December 31, 2012 Temprarily Permanently Unrestricted Restricted Restricted Ttal Rger and Hazel Perkins Endwment Fund $ $ 576 $ 2,0 $ 2,576 December 31,2011 Temprarily Permanently Unrestricted Restricted Restricted Ttal Rger and Hazel Perkins Endwment Fund $ $ 85 $ 2,0 $ 2,085 Changes in Endwment Net Assets Year Ended December 31,2012 Temprarily Permanently Unrestricted Restricted Restricted Ttal Endwment, beginning f year $ $ 85 $ 2,0 $ 2,085 Endwment gift Investment incme Apprpriatin fr expenditures Endwment, end f year $ $ 576 $ 2,0 $ 2,576 Page 12

15 As f and fr the Years Ended December 31, 2012 and 2011 NOTE 5 - Endwment Funds (Cntinued) Year Ended December 31,2011 Temprarily Permanently Unrestricted Restricted Restricted Ttal Endwment, beginning f year Endwment gift Investment incme Apprpriatin fr expenditures $ $ $ $ 2,0 2, Endwment, end f year $ $ 85 $ 2,0 $ 2,085 Funds with Deficiencies Frm time t time, the fair value f assets assciated with individual dnr-restricted endwment funds may fall belw the level that the dnr r UPMIFA requires the Organizatin t retain as a fund f perpetual duratin. There were n such deficiencies at December 31, 2012 and NOTE 6 - Retirement Plans The Organizatin's retirement plan, Caring Bridge 401 (k) Plan, cvers all eligible emplyees. The plan prvides fr a nn-elective 1% emplyer cntributin and a 50% matching cntributin up t 4%. Emplyer cntributins ttaled $124,015 and $120,208 fr the years ended December 31, 2012 and 2011, respectively. NOTE 7 - Subsequent Events The Organizatin has evaluated subsequent events thrugh March 15, 2013 which is the date that the financial statements were apprved and available t be issued. Page 13