ST. FRANCIS ANIMAL RESCUE OF VENICE, INC. FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION. For the year ended December 31, 2016

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1 FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION For the year ended December 31, 2016

2 CONTENTS ACCOUNTANTS REVIEW REPORT... 1 PAGE FINANCIAL STATEMENTS Statement of Financial Position... 2 Statement of Activities... 3 Statement of Changes in Net Assets... 4 Statement of Cash Flows... 5 Notes to Financial Statements

3 Robinson, Hanks, Young and Roberts, P.A. Certified Public Accountants Eric W. Robinson, C.P.A. 133 South Harbor Drive Susan C. Hanks, C.P.A. Venice, Florida Sydney P. Young, C.P.A. Tel: Donna M. Roberts, C.P.A. Fax: ACCOUNTANTS REVIEW REPORT Board of Directors St. Francis Animal Rescue of Venice, Inc. Venice, Florida We have reviewed the accompanying statement of financial position of St. Francis Animal Rescue of Venice, Inc., as of December 31, 2016, and the related statements of activities, statement of changes in net assets, and the statement of cash flows for the year then ended. A review includes primarily applying analytical procedures to management s financial data and making inquiries of company management. A review is substantially less in scope than an audit, the objective of which is the expression of an opinion regarding the financial statements as a whole. Accordingly, we do not express such an opinion. Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America and for designing, implementing, and maintaining internal control relevant to the preparation and fair presentation of the financial statements. Our responsibility is to conduct the review in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. Those standards require us to perform procedures to obtain limited assurance that there are no material modifications that should be made to the financial statements. We believe that the results of our procedures provide a reasonable basis for our report. Based on our review, we are not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in conformity with accounting principles generally accepted in the United States of America. Robinson, Hanks, Young & Roberts, P.A. May 22,

4 STATEMENT OF FINANCIAL POSITION December 31, 2016 _ ASSETS Cash and cash equivalents $ 472,212 Beneficial interest in trust 1,110,370 Property and equipment (net) 423,899 TOTAL ASSETS $ 2,006,481 LIABILITIES AND NET ASSETS Accounts payable and accrued expenses $ 652 Net assets Unrestricted 895,459 Permanently restricted 1,110,370 2,005,829 TOTAL LIABILTIES AND NET ASSETS $ 2,006,481 2

5 STATEMENT OF ACTIVITIES _ Unrestricted Permanently Restricted Total REVENUES Donations $ 202,666 $ - $ 202,666 Special events (net) 9,974-9,974 Thrift store sales (net) 58,897-58,897 Wills, estates and trusts 425, ,632 Grants 2,500-2,500 Interest and dividends Amounts released from restrictions 38,999 (38,999) - Other income 1,185-1, ,853 (38,999) 700,854 FUNCTIONAL EXPENSES Program services 302, ,774 Management and general 13,920-13,920 Fundraising 7,435-7, , ,129 Excess of revenues over expenses (expenses over revenues) before depreciation, investments, and 415,724 (38,999) 376,725 change in beneficial interest Depreciation (20,462) - (20,462) Net investment income / (loss) - (11,667) (11,667) Change in value of beneficial interest in trust - 65,798 65,798 INCREASE (DECREASE) IN NET ASSETS $ 395,262 $ 15,132 $ 410,394 3

6 STATEMENT OF CHANGES IN NET ASSETS _ NET ASSETS - January 1, 2016 $ 1,595,435 Increase in net assets for the year ended December 31, ,394 NET ASSETS - December 31, 2016 $ 2,005,829 4

7 STATEMENT OF CASH FLOWS CASH FLOWS FROM OPERATING ACTIVITIES Donations received $ 202,666 Wills, estates, and other bequests received 425,632 Special events income collected (net) 9,974 Thrift store sales collected 58,897 Other income received 3,685 Operating Expenses (324,823) NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES 376,031 CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sales of investments 39,000 NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES 39,000 NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES - INCREASE IN CASH $ 415,031 CASH - JANUARY 1, 2016 $ 57,181 CASH - DECEMBER 31, 2016 $ 472,212 5

8 NOTE A - NATURE OF ORGANIZATION St. Francis Animal Rescue of Venice, Inc. is an entity which was incorporated (as not-forprofit) under the laws of the State of Florida. St. Francis Animal Rescue (the Organization) started in 1992, when a group of volunteers banded together to feed and spay/neuter a large colony of feral cats living at the North Jetty in Nokomis, Florida. As their efforts grew, they quickly realized the need to help stray, homeless, unwanted, and abandoned cats was widespread. St. Francis Animal Rescue of Venice, Inc also maintains a thrift store which supports the organization. NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Accounting The financial statements and notes are representations of the Organization s management which is responsible for their integrity and objectivity. The accounting policies conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the financial statements. 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, the actual results could differ from those estimates. Cash and Cash Equivalents The Organization considers all highly liquid investments with a maturity of three months or less to be cash equivalents. 6

9 Beneficial Interest in Trust The Organization has been named the sole beneficiary of an irrevocable trust. This Trust provides that the income generated by the corpus of the Trust, to the extent needed, be distributed to the Organization. The Trust assets are held as investments in marketable securities and real property. The Trust s investments in marketable securities, with readily determinable fair values, and all investments in debt securities are reported at their fair values in the statement of financial position in the Beneficial Interest in Trust account. Unrealized gains and losses on these investments are included in the Change in Activities statement as Change in Value of Beneficial Interest in Trust. Investment income and gains restricted by a donor are reported as increases in unrestricted net assets if the restrictions are met (either by passage of time or by use) in the reporting period in which the income and gains are recognized. Short-term investments consist of debt securities with original maturities of twelve months or less. Long-term investments consist of debt securities with original maturities greater than twelve months. The Organization records all investments in debt and equity securities at fair market value based on quoted market prices. The annual investment income from the Trust is reported as investment income (loss) and includes realized and investment advisory fees, interest, and dividends on the Statement of Activities. Gains or losses on securities sold are computed on a specific identification basis. The Trust also owns real property that was purchased on December 18, The property address is 1915 Tamiami Trail South, Venice, FL The building is valued at cost in the Beneficial Interest in Trust account. Property and Equipment Property and equipment is stated at cost, if purchased, or estimated fair value at the date of receipt if acquired by gift. Depreciation is calculated using the straight-line method over the estimated useful lives of the respective assets. Estimated service lives range from 3 to 39 years. Major renewals and betterments are capitalized. Maintenance, repairs and minor renewals are expensed as incurred. It is the policy of the Organization to maintain all property and equipment in good condition. 7

10 Revenue Recognition The Organization recognizes donations when a written commitment from donors is received. Occasionally, the Organization receives revenue from other nonprofit organizations, and the Organization recognizes grant revenue when awarded on an unconditional basis. Income Taxes The Organization has been recognized by the Internal Revenue Service as a tax exempt organization under Section 501(c)(3) of the Internal Revenue Code. Income earned in furtherance of the Organization s tax-exempt purpose is exempt from federal and state income taxes. As such, no provision for income taxes has been made in the financial statements. Net Asset Classifications The Organization reports donations of cash and other assets as restricted support if received with donor stipulations that limit the use of the donated assets. When a donor imposed restriction expires, temporarily restricted assets are reclassified as unrestricted. Accordingly, net assets and changes therein are classified as follows: Unrestricted net assets Net assets not subject to donor-imposed stipulations. Temporarily restricted net assets Net assets, which are subject to donor-imposed stipulations that may or will be met by actions of the Organization and/or the passage of time. Permanently restricted net assets Net assets subject to donor-imposed stipulations that they be maintained permanently by the Organization. Generally, the donors of these assets permit the Organization to use all or part of the income earned on related investments for general or specific purposes. Revenue is reported as increases in unrestricted net assets unless use of the related assets is limited by donor-imposed restrictions. Expenses are reported as decreases in unrestricted net assets. Gains and losses and other assets or liabilities are reported as increases or decreases in unrestricted net assets unless their use is restricted by explicit donor stipulation or by law. Local grants are considered exchange transactions and are recorded as unrestricted revenue when earned. 8

11 Contributions received with donor-imposed restrictions that are met in the same year as received are reported as revenue of the unrestricted net asset class. Donated Services A considerable amount of unpaid volunteers have made significant contributions of their time to further the mission of the Organization. The value of the contributed time is not reflected in the financial statements, as it cannot be objectively measured. Functional Classification of Expenses The costs of providing the various programs and other activities have been summarized on a functional basis in the statement of activities. Accordingly, certain costs have been allocated among the programs and supporting services benefited based on direct usage or management s estimates of the benefit derived by each activity. The three classifications of expenses are program expenses, management and general expenses, and fundraising expenses. Subsequent Events In preparing these financial statements, the Organization has evaluated events and transactions for potential recognition or disclosure through May 22, 2017, the date on which the financial statements were available to be issued. 9

12 NOTE C Beneficial Interest in Trust The following summarizes the cost basis, market value and financial statement value of the Beneficial Interest in Trust account as of December 31, 2016: Cost Fair Market Value Financial Statement Value Exchange Traded Funds $ 483,011 $ 540,030 $ 540,030 Cash and Corporate Fixed Income Securities 305, , , , , ,476 Real property at 1915 S Tamiami Trail $ 257, ,894 $ 1,110,370 All investments were valued using quoted market prices in active markets for identical assets (level 1 fair value inputs). The real property was valued at historical cost as a Level 3 financial asset, as the fair market value of this property would be difficult to determine without an annual appraisal of the property. The following schedule summarizes the components of net investment income as reported in the statement of activities for the year ended December 31, 2016: Investment Income (Loss) Interest and dividend income $ 21,321 Net realized gains (losses) (27,326) Investment advisory fees (5,662) $ (11,667) 10

13 NOTE D FAIR VALUE OF FINANCIAL ASSETS AND LIABILTIES Effective January 1, 2009, the Organization adopted Financial Accounting Standards Board (FASB) Codification Section 820 on Fair Value Measurements, which provides a framework for measuring fair value under U.S. GAAP. This standard applies to all financial instruments that are being measured and reported on a fair value basis. As defined in the Standard, fair value is the exchange price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining fair value, the Organization uses various methods including market, income, and cost approaches. Based on these approaches, the Organization utilizes certain assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and/or the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. The Organization utilizes valuation techniques that maximize the use of observable inputs and minimizes the use of unobservable inputs. Based on the observability of the inputs used in the valuation techniques, the Organization is required to provide the following information according to the fair value hierarchy. The fair value hierarchy ranks the quality and reliability of the information used to determine fair values. Financial assets and liabilities carried at fair value are classified and disclosed in one of the following three categories: Level 1 Valuations for assets and liabilities traded in active exchange markets, such as the New York Stock Exchange. Level 1 also includes U.S. Treasury and federal agency securities and federal agency mortgage-backed securities, which are traded by dealers or brokers in active markets. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities. Level 2 Valuations for assets and liabilities traded in less active dealer or broker markets. Valuations are obtained from third party pricing services for identical or similar assets or liabilities. Level 3 Valuations for assets and liabilities that are derived from other valuation methodologies, including option pricing models, discounted cash flow models, and similar techniques, and not based on market exchange, dealer, or broker traded transactions. Level 3 valuations incorporate certain assumptions and projections in determining the fair value assigned to such assets or liabilities. 11

14 In determining the appropriate levels, the Organization performed a detailed analysis of the assets and liabilities that are subject to the fair value standard. At this reporting period, the Organization had a portion of the Beneficial Interest in Trust valued at Level 3, related to the real estate owned by the Trust. NOTE E Property and Equipment The Organization capitalizes, at cost, all property and equipment purchased for more than $1,000. Acquisitions of less than $1,000 per item are charged to operating expense as incurred. Significant information concerning fixed assets is as follows: Land $ 40,000 Buildings 275,036 Automobiles 17,300 Furniture & Fixtures 11,881 Equipment 33,715 Improvements 207, ,486 Less: accumulated depreciation (161,587) $ 423,899 Capitalized property is depreciated over its estimated useful life by using the straight-line method of depreciation. Depreciation expense for the year ended December 31, 2016 amounted to $20,

15 NOTE F FUNCTIONAL EXPENSES Functional expense classification within the statement of activities consists of the following for the year ended December 31, 2016: Program Services Management & General Fundraising Total FUNCTIONAL EXPENSES: Advertising $ - $ - $ Animal Supplies 19, ,806 Bank Service Charges 2, ,068 Building Services 9, ,802 Conferences and meetings Insurance 9, ,093 Independent Contractors Legal & Professional - 11,450-11,450 Office and related 5, ,987 Payroll 164, ,419 Postage & Freight - - 3,331 3,331 Stationary & Publications - - 3,611 3,611 Taxes - Other 1, ,503 Taxes - Payroll 12, ,479 Telephone - 1,594-1,594 Utilities 5, ,263 Veterinary 71, ,698 $ 302,774 $ 13,920 $ 7,435 $ 324,129 13

16 NOTE G CONCENTRATIONS OF CREDIT AND ECONOMIC RISK Financial instruments, which potentially subject the Organization to concentrations of credit risk, consist principally of cash and cash equivalents and investments. The Organization maintains cash and cash equivalent balances with financial institutions and at times, the balances may exceed FDIC insurance limits. There was uninsured cash of $222,212 as of 12/31/16. 14