COMMUNITY FORESTRY INTERNATIONAL, INC. TABLE OF CONTENTS. Accountants Compilation Report 1. Statements of Financial Position 2

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2 TABLE OF CONTENTS PAGE Accountants Compilation Report 1 Financial Statements Statements of Financial Position 2 Statements of Activities 3 Statements of Cash Flows 4 Statement of Functional Expenses 5 Notes to Financial Statements 6-9

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4 STATEMENTS OF FINANCIAL POSITION JUNE 30, 2010 AND 2009 ASSETS Cash $ 27,006 $ 143,328 Equipment - net (Note 3) 1,570 2,629 Total Assets $ 28,576 $ 145,957 LIABILITIES AND NET ASSETS Accounts payable $ - $ 212 Accrued payroll taxes 1,346 - Accrued vacation 10,601 10,601 Total Liabilities 11,947 10,813 Net Assets Unrestricted 16, ,144 Total Net Assets 16, ,144 Total Liabilities and Net Assets $ 28,576 $ 145,957 See accompanying notes - 2 -

5 STATEMENTS OF ACTIVITIES FOR THE YEARS ENDED JUNE 30, 2010 AND Unrestricted Net Assets Revenue: Foundation grant $ 7,762 $ 227,137 Contributions 106,650 59,907 Interest income Release or expiration of time restrictions - - Total revenue 114, ,266 Expenses: Program 184, ,875 Management and general 48,449 74,524 Total expenses 232, ,399 Change in Unrestricted Net Assets (118,515) (89,133) Change in Net Assets (118,515) (89,133) Net Assets, Beginning of Year 135, ,277 Net Assets, End of Year $ 16,629 $ 135,144 See accompanying notes - 3 -

6 STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED JUNE 30, 2010 AND Reconciliation of decrease in net assets to net cash flows from operating activities Decrease in net assets $ (118,515) $ (89,133) Depreciation 1,059 1,208 Changes in: Grants receivable - 1,044 Prepaid expenses - 2,300 Accounts payable (212) (97) Accrued payroll taxes 1,346 - Net cash used by operations (116,322) (84,678) Net Decrease in Cash (116,322) (84,678) Cash, Beginning of Year 143, ,006 Cash, End of Year $ 27,006 $ 143,328 See accompanying notes - 4 -

7 STATEMENT OF FUNCTIONAL EXPENSES FOR THE YEAR ENDED JUNE 30, 2010 WITH COMPARATIVE TOTALS FOR THE YEAR ENDED 2009 Program Management Total Total Services and General Salaries and wages $ 85,200 $ 21,300 $ 106,500 $ 169,500 Payroll taxes 6,999 1,750 8,749 13,043 Employee benefits 10,976 2,744 13,720 24,271 Total payroll expenses 103,175 25, , ,814 Small grants 42,625-42,625 - Contract labor 9,164 9,163 18,327 19,170 Professional fees 3,000 3,000 6,000 8,490 Expendable equipment 1,311-1, Insurance - 2,037 2,037 2,045 Occupancy 4,500 4,500 9,000 16,200 Office supplies Office expense 3, ,490 97,110 Program supplies 6,925-6,925 4,817 Postage and delivery ,117 Printing expense Repairs and maintenance Telephone 1,834 1,835 3,669 4,038 Travel 7,865-7,865 12,669 Depreciation - 1,059 1,059 1,208 Total Expenses - June 30, 2010 $ 184,478 $ 48,449 $ 232,927 Total Expenses - June 30, 2009 $ 301,875 $ 74,524 $ 376,399 See accompanying notes - 5 -

8 NOTES TO FINANCIAL STATEMENTS NOTE 1: ORGANIZATIONAL INFORMATION Community Forestry International, Inc. (the Organization ) is a not-for-profit corporation organized in California in The Organization assists rural communities in Asia to regenerate forests by helping policy makers, development agencies, and professional foresters develop the legal instruments, human resource capacities, and negotiation processes and methods to support resident resource managers. NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Accounting The accompanying financial statements have been prepared on the accrual basis of accounting. Classification and Reporting of Net Assets The Organization reports information about its financial position and activities in three classes of net assets: unrestricted, temporarily restricted, and permanently restricted. Unrestricted Net Assets Unrestricted net assets are those net assets which are received without donor restriction or those net assets for which donor restrictions have been fulfilled. Temporarily Restricted Net Assets: Temporarily restricted funds are used to account for contributions which have been restricted by donors to certain uses or periods of time. At June 30, 2010 and 2009, the Organization had no temporarily restricted net assets. Permanently Restricted Net Assets: Permanently restricted net assets are those net assets restricted in perpetuity by the donor. At June 30, 2010 and 2009, the Organization had no permanently restricted net assets

9 NOTES TO FINANCIAL STATEMENTS NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Recognition of Donor Restrictions Contributions received are recorded as unrestricted, temporarily restricted, or permanently restricted support depending on the existence or nature of any donor restrictions. Contributions received and expended in the same year are recorded as unrestricted net assets. Grants The Organization s grants contain budgetary restrictions and are recorded as revenue when the funds are expended. The excess of expenditures over grant funds received is recorded as grants receivable from the granting agency when the revenue has been earned and does not exceed the contract award. Cash For the purposes of the Statements of Cash Flows, the Organization considers cash to be cash on hand, in checking and in savings accounts. Equipment The Organization records property and equipment at cost if purchased or at fair market value at time of contribution if donated and depreciates these assets using the straight-line method over their estimated useful lives, estimated at 5 years for equipment. Assets with a cost of $1,000 or more and an estimated useful life of more than one year are capitalized. Income Taxes The Organization is exempt from income tax liability under Section 501(c)(3) of the Internal Revenue Code and Section 23701d of the California Revenue and Taxation Code. The Organization is not considered a private foundation. The Organization does not have any income that it believes would subject it to unrelated business income taxes; nor is it aware of any uncertain tax positions at June 30, 2010 and Accordingly, there is no provision or liability for income taxes in these financial statements

10 NOTES TO FINANCIAL STATEMENTS NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Functional Expenses The Organization has allocated the costs of providing the Organization s programs under three functional classifications. Program service expenses consist of costs incurred in connection with providing services and conducting its programs. Supporting service expense consists of costs incurred in connection with the overall activities of the Organization. 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, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities at the date of the financial statements and the reporting period. Actual results could differ from those estimates. Estimates and assumptions include, but are not limited to: Functional expense allocation Depreciable lives of fixed assets It is a least reasonably possible that the significant estimates used will change within the next year. Comparative Information The financial statements include certain prior year summarized comparative information in total but not by allocable amounts. Such information does not include sufficient detail to constitute a presentation in conformity with generally accepted accounting principles. Accordingly, such information should be read in conjunction with the Organization s financial statements for the year ended June 30,

11 NOTES TO FINANCIAL STATEMENTS NOTE 3: EQUIPMENT Equipment with a cost of $6,038 at June 30, 2010 and $6,038 at June 30, 2009 is shown net of accumulated depreciation of $4,468 and $3,409 at June 30, 2010 and 2009, respectively. NOTE 4: RELATED PARTY The Organization leases on a month to month basis a separate office located on the premises of two ex-officio board members who are also employees. The Organization remits monthly payments to the mortgage holder. Payments for the years ended June 30, 2010 and 2009 totaled $9,000 and $16,200, respectively. NOTE 5: RETIREMENT PLAN The Organization has a 403(b) retirement plan. Employees who have attained age 21 are eligible to participate. The Organization contributes up 12% of the employee s salary or up to the maximum allowed by law, whichever is less. The Organization contributed $13,720 and $24,271 in the years ended June 30, 2010 and 2009, respectively. NOTE 6: CONCENTRATION OF RISK Grants The Organization received one contribution and one grant from a foundation that represents 90% and 75% of its total revenue for the years ended June 30, 2010 and 2009, respectively. NOTE 7: SUBSEQUENT EVENTS Management has evaluated subsequent events through November 15, 2010, which is the date the financial statements were available to be issued. Management has determined no subsequent events requiring disclosure or significantly impacting disclosure have occurred