AMG International, Inc. Financial Statements For the Years Ended December 31, 2016 and December 31, 2015

Transcription

1 Financial Statements For the Years Ended December 31, 2016 and December 31, 2015

2 Table of Contents For the Years Ended December 31, 2016 and December 31, 2015 Page No. Independent Auditor s Report 3 Financial Statements Statements of Financial Position... 5 Statements of Activities 7 Statements of Changes in Net Assets 8 Statements of Cash Flows. 9 Notes to Financial Statements...11

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5 Statements of Financial Position December 31, 2016 and December 31, 2015 Nonexpendable Endowment Total Total Operating Trust Fund Current Assets: Cash $ 448,124 $ 52,420 $ - $ 500,544 $ 1,090,846 Due from Related Parties 214, , ,715 Investments 795,037 1,507,078 1,504,972 3,807,087 3,971,293 Total Current Assets 1,457,526 1,559,498 1,504,972 4,521,996 5,315,854 Property and Equipment at Cost Less Accumulated Depreciation: 244, , ,925 Other Assets: Hospital in Greece 2,273, ,273,993 2,273,993 AMG Publishers, Inc. 100, , ,000 Note Receivable - Related Party 1,738, ,738,646 1,730,294 Note Receivable - Investments held at Chattanooga Christian Community Foundation , ,685 69,894 Intellectual Properties - less Accumulated Amortization 347, , ,381 Investment in The Cosmovision Center 1,511, ,511,089 1,511,089 Dr. Zodhiates Books 57, ,245 57,532 Other Real Estate 155, , ,580 Total Other Assets 6,183, ,685 6,504,666 6,274,763 Total Assets $ 7,885,976 $ 1,559,498 $ 1,825,657 $ 11,271,131 $ 11,857,542 The accompanying notes are an integral part of these financial statements. 5

6 Statements of Financial Position December 31, 2016 and December 31, 2015 Nonexpendable Endowment Total Total Operating Trust Fund Current Liabilities: Accounts Payable and Accrued Expenses $ 191,478 $ - $ - $ 191,478 $ 365,428 Notes Payable - Due in One Year 138, , ,065 Notes Payable - Investments held at Chattanooga Christian Community Foundation - Current Portion 26, ,499 43,395 Revocable Gifts and Annuity Contracts - 636, , ,294 Total Current Liabilities 356, , ,307 1,193,182 Long-Term Liabilities: Notes Payable - Investments held at Chattanooga Christian Community Foundation - Less Current Portion ,499 Total Long-Term Liabilities ,499 Total Liabilities 356, , ,307 1,219,681 Net Assets: Without Donor Restrictions Undesignated 7,208, ,208,565 7,275,888 Equity in Property & Equipment 244, , ,539 Board Designated - 286, , ,925 Total Unrestricted 7,453, ,968-7,740,002 8,119,352 With Donor Restrictions 76, ,265 1,825,657 2,538,822 2,518,509 Total Net Assets 7,529, ,233 1,825,657 10,278,824 10,637,861 Total Liabilities & Net Assets $ 7,885,976 $ 1,559,498 $ 1,825,657 $ 11,271,131 $ 11,857,542 The accompanying notes are an integral part of these financial statements. 6

7 Statements of Activities For the Years Ended December 31, 2016 and December 31, 2015 Nonexpendable Endowment Total Total Operating Trust Fund Support and Revenue: Contributions $ 6,262,643 $ - $ 294 $ 6,262,937 $ 6,259,232 Bequests and Legacies 479, , ,696 Annuities and Gift Trusts 349, ,939 - Gain(Loss) on Investments 21,958 62,742 30, ,748 (89,316) Other 268, ,076 10,528 Total Support and Revenue 7,382,183 62,742 30,342 7,475,267 6,791,140 Expenses Program Services: Children's Work & Relief 2,113, ,113,988 2,023,907 Radio & Television Evangelism 324, , ,119 Missionary Projects and Support 3,934, ,934,700 3,439,453 Total Program Services 6,373, ,373,024 5,833,479 Supporting Services: General and Administrative 201, , , ,074 Cost for Generating Support 894, , ,916 Interest Expense (Income), Net 3, ,009 5,534 Total Supporting Services 1,098, ,342-1,461,280 1,224,524 Total Expenses 7,471, ,342-7,834,304 7,058,003 Change in Net Assets $ (89,779) $ (299,600) $ 30,342 $ (359,037) $ (266,863) The accompanying notes are an integral part of these financial statements. 7

8 Statements of Changes in Net Assets For the Years Ended December 31, 2016 and December 31, 2015 Nonexpendable Endowment Total Total Operating Trust Fund Net Assets - Beginning of Year $ 7,619,713 $ 1,222,833 $ 1,795,315 $ 10,637,861 $ 10,904,724 Change in Net Assets (89,779) (299,600) 30,342 (359,037) (266,863) Net Assets - End of Year $ 7,529,934 $ 923,233 $ 1,825,657 $ 10,278,824 $ 10,637,861 The accompanying notes are an integral part of these financial statements. 8

9 Statements of Cash Flows For the Years Ended December 31, 2016 and December 31, 2015 Nonexpendable Endowment Total Total Operating Trust Fund Cash Flows From Operating Activities: Change in Net Assets $ (89,779) $ (299,600) $ 30,342 $ (359,037) $ (266,863) Adjustments to Reconcile Change in Net Cash Used by Operating Activities: Depreciation & Amortization 19, ,312 32,629 (Increase) Decrease In: Accounts Receivable ,500 Prepaid & Other Assets 20, , ,263 (Decrease) Increase In: Payables, Accrued Expenses, - and Advances (173,950) - - (173,950) 122,720 Net Cash Provided (Used) by Operating Activities (223,529) (299,600) 30,342 (492,787) 300,249 Cash Flows From Investment Activities: Net Changes In: Note and Other Receivables 39,350 - (250,791) (211,441) 32,052 Investments (368,032) 311, , ,206 13,602 Property & Equipment 3, ,144 - Net Cash Provided (Used) by Investment Activities (325,538) 311,789 (30,342) (44,091) 45,654 The accompanying notes are an integral part of these financial statements. 9

10 Statements of Cash Flows For the Years Ended December 31, 2016 and December 31, 2015 Nonexpendable Endowment Total Total Operating Trust Fund Cash Flows From Financing Activities: Net Changes In: Notes Payable (43,395) (10,029) - (53,424) (193,095) Net Cash Provided (Used) by Financing Activities (43,395) (10,029) - (53,424) (193,095) Net Increase (Decrease) in Cash and Cash Equivalents (592,462) 2,160 - (590,302) 152,808 Cash and Cash Equivalents at Beginning of Year 1,040,586 50,260-1,090, ,038 Cash and Cash Equivalents at End of Year $ 448,124 $ 52,420 $ - $ 500,544 $ 1,090,846 Supplemental Cash Flow Information: Interest Expense $ 3,009 $ - $ - $ 3,009 $ 5,534 The accompanying notes are an integral part of these financial statements. 10

11 Notes to the Financial Statements For the Years Ended December 31, 2016 and 2015 Note 1 Nature of activities and summary of significant accounting policies: Method of Accounting: AMG International, Inc. (AMG) uses the accrual basis of accounting for reporting purposes. Nature of Activities: AMG International, Inc., Advancing the Ministries of the Gospel, is an interdenominational Christian mission agency ministering in over 30 countries worldwide. AMG s mission is to advance with compassion the command of Christ to evangelize and make disciples around the world through national workers and in partnership with likeminded Christians. AMG provides child sponsorship, at-home ministries, international media ministries, mission volunteer opportunities, healthcare, newspaper evangelism, and support to worldwide missions and missionaries. Estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and 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. Cash and Cash Equivalents: AMG considers all short-term debt securities purchased with a maturity of three months or less and not held in trust to be cash equivalents. Financial Statement Presentation: Management has elected not to consolidate with AMG the financial statements of AMG Publishers, Inc., which is a wholly owned for-profit subsidiary corporation. The carrying value of the investment in AMG Publishers, Inc. is the cost basis of the stock. Generally accepted accounting principles of the United States require consolidated financial statements whenever a company has a controlling financial interest in the voting stock of another company. Generally, a company has controlling interest in another company if it owns more than fifty percent of the outstanding shares of that company. Management has determined that separate reporting better facilitates financial reporting for federal and state requirements. AMG also carries its investments in St. Luke s Hospital and the Cosmovision Center in Greece on the cost basis. Income Taxes: AMG is exempt from income taxes under Internal Revenue Code Section 501(c)(3) and is classified as an organization other than a private foundation. Donated Services and Supplies: AMG receives various donated services that range from limited participation of individuals in administrative services of foreign projects to active participation in AMG s various programs and activities. The value of these services has not been recorded in the financial statements because they do not meet the definition for recognition under generally accepted accounting principles. Contributions: AMG follows the Not-For-Profit Entities subtopic and Revenue Recognition subtopic of the FASB Accounting Standards Codification with respect to contributions. In accordance with these subtopics, contributions received are recorded as without donor restrictions or with donor restrictions support depending on the existence or nature of any donor restrictions. 11

12 Notes to the Financial Statements For the Years Ended December 31, 2016 and 2015 Note 1 Nature of activities and summary of significant accounting policies (cont.): Allocation of Expenses: The cost of providing various programs and other activities have been summarized on a functional basis in the financial statements. Accordingly, certain costs have been allocated among the programs and supporting services benefited. All expenses are allocated based on an estimate of where time and efforts are made and benefits are received. Concentration of Risk: Financial instruments, which potentially subject AMG to concentrations of credit risk, consist primarily of cash and cash equivalents, investment securities and notes receivable. Cash and cash equivalents include demand deposits totaling $500,544 and $1,090,846 at December 31, 2016 and 2015 respectively, at a high credit quality financial institution. These deposits possess credit risk to the extent they exceed federally insured limits. The exposure to concentrations of credit risk relative to investment securities is limited due to AMG s investment objectives and policies, as adopted by its Board of Directors. The investment policies prohibit the acquisition of certain securities and require, among other things, that securities be diversified and meet certain quality criteria. Nonexpendable Trust: Gift trusts and annuities have been combined in the financial statements. Gift trusts represent resources donor restricted by future annuity payments due to the donor and by possible revocation of the gift until death of the donor or donors. Annuities represent resources donor restricted by future annuity payments due to the donors until death of the donor or donors. Affiliated Organizations: AMG is affiliated with other organizations located in Canada, Greece, Germany, and Holland. AMG International acts as agent for AMG Canada and the agencies overseas served by AMG Canada. AMG International certifies that funds received have been disbursed as designated. These affiliated organizations activities are reflected in the financial statements only to the extent that contributions are made to AMG International sponsored foreign programs. Related Party: AMG Publishers, Inc. is a wholly owned for-profit corporation which sells books, Bibles, reference books, auditory and E-books. Adoption of Recent Accounting Pronouncement: On August 18, 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update , Presentation of Financial Statements for Not-for-Profit Entities (ASU ), which is intended to improve how a not-for-profit (NFP) entity classifies its net assets, as well as the information it presents in its financial statements about its (1) liquidity and availability of resources, (2) expenses and investment return, and (3) cash flows. ASU is effective for annual financial statements for fiscal years beginning after December 15, 2017; however, NFPs may, under certain conditions, early adopt ASU AMG has chosen to early adopt ASU as of the first day of The adoption required no restatements. Note 2 Retirement Plan: Employees of AMG are covered by a defined contribution retirement plan. Contributions to the plan totaled $83,824 for 2016 and $89,398 for

13 Notes to the Financial Statements For the Years Ended December 31, 2016 and 2015 Note 3 Property and Equipment: Property and equipment are recorded at cost. Donated property and equipment is recorded at fair market value as of the date of the donation. When property and equipment are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the activities for the respective period. Depreciation is computed using the straight-line and declining balance methods over estimated useful lives of five to thirty-one years. Depreciation expense for the years ended December 31, 2016 and December 31, 2015 was $19,312 and $32,629 respectively. Note 4 Advertising: AMG follows the policy of charging costs of advertising to expenses as incurred. Note 5 Books and Bibles: During 2010, AMG purchased Dr. Zodhiates personal library of books and Bibles. They were valued at $57,245 and $57,532 for the years ended December 31, 2016 and 2015 respectively. Note 6 Fair Value of Financial Instruments: AMG applies generally accepted accounting principles (GAAP) for fair value measurements of financial assets that are recognized or disclosed at fair value in the financial statements on a recurring basis. GAAP defines fair value as the 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. AMG s financial instruments are cash and cash equivalents, investments, notes receivable, unearned revenue, accounts payable, accrued expenses, notes payable, and obligations related to the revocable gifts and annuity contracts. The recorded values of cash and cash equivalents, unearned revenue, accounts payable, and accrued expenses approximate their fair values based on their short-term nature. The recorded values of notes receivable, notes payable, and obligations related to the revocable gifts and annuity contracts approximate their fair values, as interest approximates market rates. Note 7 Fair Value Measurement: AMG s investments are reported at fair value in the accompanying statements of financial position. The methods used to measure fair value may produce an amount that may not be indicative of net realizable value or reflective of future fair values. Furthermore, although AMG believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date. The fair value measurement accounting literature establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. This hierarchy consists of three broad levels. Level - 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets Level - 2 inputs to the valuation methodology include quoted prices for similar assets or liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the same term of the financial instrument Level 3 inputs to the valuation methodology are unobservable and significant to the fair value measurements A financial instrument s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. 13

14 Notes to the Financial Statements For the Years Ended December 31, 2016 and 2015 Note 7 Fair Value Measurement (cont.): The following table presents the financial instruments carried at fair value as of December 31, 2016 and 2015 by caption on the statement of financial position by the valuation hierarchy defined above: Fair Value Measurements at December 31, 2016 and 2015 Using: Quoted Prices in Active Markets for Identical Assets Assets (Level 1) Operating Fund: U.S. Government Securities $ 795,037 $ 427,005 Chattanooga Christian Community Foundation - Stocks and Mutual Funds 1,504,972 1,725,421 Gift Trust and Annuity Funds: Stocks and Money Market 1,507,078 1,818,867 Total Investments $ 3,807,087 $ 3,971,293 Note 8 Intellectual Property: AMG has obtained the right to Dr. Zodhiates literary works which are being amortized using the straight-line method over the estimated useful life of 20 years Intellectual Property Cost $ 579,048 $ 579,048 Accumulated Amortization (231,620) (202,667) Total $ 347,428 $ 376,381 Note 9 Related Party Transactions: Notes Receivable consisted of a promissory note issued by AMG Publisher s, Inc. for the purchase of assets. Promissory note issued by AMG Publishers, Inc. to AMG International for the purchase price of assets $ 1,738,646 $ 1,730,294 AMG provides office and warehouse space and administrative support and oversight to AMG Publisher s, Inc. For the years ended December 31, 2016 and 2015, AMG allocated and charged AMG Publisher s, Inc. $208,004 and $229,024 respectively. 14

15 Notes to the Financial Statements For the Years Ended December 31, 2016 and 2015 Note 10 Hospital in Greece: AMG owns 92.92% of stock in St. Luke s Hospital in Thessaloniki, Greece. St. Luke s is a 240 bed, fully-equipped hospital serving the physical and spiritual needs of the residents of Greece and adjacent countries. AMG carries St. Luke s on the cash basis at a cost of $2,273,993. Note 11 Line of Credit: AMG has a line of credit not to exceed $558,000 at any one time for the purpose of short-term working capital with Branch Banking & Trust Company. Interest is due monthly, computed at the bank s one month LIBOR + 3%.. For the years ended December 31, 2016 and 2015 the outstanding loan balance was carried on the books of the wholly owned subsidiary, AMG Publishers and the balance was $182,381 and $690,631 respectively. Note 12 Notes Payable: Notes payable at December 31 consisted of the following: Ted Spriopoulos - 0% interest $ 138,065 $ 138,065 Note 13 Notes Payable Related to Investments Held at Chattanooga Christian Community Foundation: Notes payable at December 31 consisted of the following: Note payable in monthly installments of $3,867 at 6% interest, due July 1, $ 26,499 $ 69,894 Less: Current Portion (26,499) (43,395) Long Term Portion of Notes Payable $ - $ 26,499 Annual maturities are as follows: 2017 $ 26,499 - $ 26,499 15

16 Notes to the Financial Statements For the Years Ended December 31, 2016 and 2015 Note 14 Canadian Contributions: Canadian funds contributions were received as follows: (Reported in Canadian Dollars) Bundles of Love $ 2,425 $ 1,853 Child Care Ministry 37,338 36,645 Disaster Relief 5, Leprosy 4,012 3,685 Medical Ministry Projects 1,453 - Missionaries 22,925 19,014 Newspaper Evangelism 3, National Workers 6,135 3,232 St. Luke's Hospital Sales World Wide Missions 30,395 39,884 Total Contributions $ 114,132 $ 107,126 Note 15 Lease Commitments: AMG has leased equipment with a term of 60 months. The future minimum lease payments are as follows for the years ending December 31: 2017 $ 43, , , ,152 $ 92,131 Note 16 Subsequent Events: Management has evaluated events and transactions that occurred through February 27, 2017, which is the date the financial statements were available to be issued, for possible disclosure and recognition in the financial statements. No subsequent events were noted by AMG. 16

17 Notes to the Financial Statements For the Years Ended December 31, 2016 and 2015 Note 17 Liquidity and Availability: AMG has a goal to maintain cash and cash equivalents on hand to meet 60 days of normal operating expenses, which are, on average, approximately $864,000. AMG prepares an annual budget that is reviewed and approved by the Board of Directors in advance of the upcoming year. Quarterly meetings are held to review internal financial statements and budget to actual comparisons. AMG does not commit to expenditures if cash is not available to pay the expenditures. The availability of financial assets at December 31, 2016 to meet cash needs for general expenditures within 60 days were as follows: Cash and Cash Equivalents $ 448,124 Due From Related Parties 214,365 Investments 612,656 Total $ 1,275,145 Note 18 Net Assets Without Donor Restrictions: The components of net assets without donor restrictions at December 31, 2016 were as follows: Undesignated $ 7,208,565 Equity in Property and Equipment 244,469 Designated by the Board 286,968 Total Net Assets Without Donor Restrictions $ 7,740,002 The objective of board designations is to set aside funds to be drawn upon to pay existing annuities resulting from events outside the typical life cycle of converting financial assets to cash or settling financial liabilities. Note 19 Net Assets With Donor Restrictions: The components of net assets with donor restrictions at December 31, 2016 were as follows: Annuity Trust $ 636,265 Donated Land 76,900 Endowment Fund 1,825,657 Total Net Assets With Donor Restrictions $ 2,538,822 17