FARM SANCTUARY, INC. Watkins Glen, New York FINANCIAL REPORT. For the year ended December 31, And three-month period ended December 31, 2011

Transcription

1 Watkins Glen, New York FINANCIAL REPORT For the year ended December 31, 2012 And three-month period ended December 31, 2011

2 TABLE OF CONTENTS FOR THE TWELVE-MONTH PERIOD ENDED DECEMBER 31, 2012 AND THE THREE-MONTH PERIOD ENDED DECEMBER 31, 2011 Independent Auditor s Report Statements of Financial Position... 3 Statements of Activities... 4 Statement of Functional Expenses - Twelve-month period ended December 31, a Statement of Functional Expenses - Three-month period ended December 31, a Statements of Cash Flows... 7 Notes to Financial Statements

3 John H. Dietershagen, C.P.A. Jerry E. Mickelson, C.P.A. Thomas K. Van Derzee, C.P.A. Debbie Conley Jordan, C.P.A. Patrick S. Jordan, C.P.A. Duane R. Shoen, C.P.A. Lesley L. Horner, C.P.A. D. Leslie Spurgin, C.P.A. Ciaschi Dietershagen Little Mickelson & Company, LLP Certified Public Accountants and Consultants Frederick J. Ciaschi, C.P.A. INDEPENDENT AUDITOR S REPORT Board of Directors Farm Sanctuary, Inc. Watkins Glen, New York We have audited the accompanying financial statements of Farm Sanctuary, Inc. (Farm Sanctuary), a nonprofit organization, which comprise the Statements of Financial Position as of December 31, 2012 and 2011 and the related Statements of Activities, Functional Expenses, and Cash Flows for the twelve-month and three-month periods 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 audits. We conducted our audits 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 of 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 CORTLAND ITHACA WATKINS GLEN 39 Church Street Cortland, New York fax East State Street ~ Suite 500 Ithaca, New York fax West Fourth Street Watkins Glen, New York fax

4 Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Farm Sanctuary, Inc., as of December 31, 2012 and 2011, and the changes in its net assets and its cash flows for the year and three-month period then ended, in accordance with accounting principles generally accepted in the United States of America. August 8, 2013 Ithaca, New York - 2 -

5 STATEMENTS OF FINANCIAL POSITION DECEMBER 31, ASSETS Current Assets: Cash and cash equivalents $ 3,576,103 $ 2,986,132 Investments 3,496,608 3,007,938 Inventory 59,928 74,539 Prepaid expenses 182,472 44,441 Accounts receivable 7, ,257 Accrued interest receivable 39,384 36,965 Contributions receivable 403, ,035 Unconditional promises to give 225, ,200 Total Current Assets 7,991,462 6,830,507 Unconditional promises to give, net of discount -0-20,000 Land, buildings, and equipment, less accumulated depreciation of $2,349,366 and $2,041,721, respectively 4,602,057 4,050,401 Total Assets $ 12,593,519 $ 10,900,908 LIABILITIES AND NET ASSETS Current Liabilities: Accounts payable $ 320,132 $ 191,004 Accrued liabilities 139, ,019 Deposits 4,349 3,150 Total Liabilities 463, ,173 Net Assets: Unrestricted - Undesignated 10,300,686 8,681,044 - Board Designated 1,375,459 1,375,459 Total Unrestricted 11,676,145 10,056,503 Temporarily Restricted 453, ,232 Total Net Assets, as Restated 12,129,583 10,592,735 Total Liabilities and Net Assets $ 12,593,519 $ 10,900,908 See Independent Auditor's Report and Notes to Financial Statements - 3 -

6 STATEMENTS OF ACTIVITIES FOR THE TWELVE MONTH AND THREE MONTH PERIODS ENDING DECEMBER 31, Changes in Unrestricted Net Assets: Support: Contributions $ 8,428,310 $ 2,646,490 Grants 326,558 35,360 Total Support 8,754,868 2,681,850 Revenues: Merchandise sales, net Special events and visitor programs Interest and dividends Other Gain on sale of investments Unrealized gain on investments Gain on destruction of assets 31,439 41, , , ,766 37,292 32,064 21,757 60,022 15, ,657 28, ,196 Net assets released from restrictions 377,313 52,094 Total Revenues 1,551, ,995 Total Unrestricted Support and Revenues 10,306,169 3,306,845 Expenses: Program services 6,795,658 1,720,425 Supporting services 662, ,591 Fundraising 1,228, ,865 Total Expenses 8,686,527 2,118,881 Increase in Unrestricted Net Assets 1,619,642 1,187,964 Changes in Temporarily Restricted Net Assets: Contributions 147,877 29,679 Grants 146, Net Assets released from restrictions (377,313) (52,094) (Decrease) in Temporarily Restricted Net Assets (82,794) (22,415) Increase in Net Assets 1,536,848 1,165,549 Net Assets, as Restated, December 31, Net Assets, as Restated, December 31, 10,592,735 9,427,186 $ 12,129,583 $ 10,592,735 See Independent Auditor's Report and Notes to Financial Statements - 4 -

7 STATEMENT OF FUNCTIONAL EXPENSES FOR THE TWELVE MONTH PERIOD ENDED DECEMBER 31, 2012 Program Services Rescue, Education Research, Total Shelter and Legislative Investigation Program and Adoption Outreach Action and Action Services Payroll $ 1,663,962 $ 1,077,950 $ 113,647 $ 535,259 $ 3,390,818 Supplies 41,418 87,370 1,284 12, ,879 Telephone 21,497 25, ,050 52,106 Postage 3, ,875 2,944 53, ,446 Printing (258) 229,257 2,721 24, ,731 Travel 113, ,517 3,961 23, ,991 Utilities 97,577 22, , ,608 Animal care and rehabilitation 1,050,721 1,050,721 Events and campaigns 86, ,437 4,172 72, ,449 Lobbying 5,459 5,459 Insurance 40,437 37,999 9,297 87,733 Miscellaneous other 44, ,923 3,094 22, ,031 Mailing and processing 118, , ,698 Property taxes 22,356 11,178 33,534 Accounting -0- Legal fees Repairs and maintenance 65,522 20, ,511 Total Expenses Before Depreciation 3,252,126 2,323, , ,503 6,495,625 Depreciation 183, ,538 6, ,033 Total Expenses $ 3,435,305 $ 2,433,571 $ 138,963 $ 787,819 $ 6,795,658 See Independent Auditor's Report and Notes to Financial Statements - 5 -

8 Supporting Services Fundraising Total $ 268,507 $ 379,218 $ 4,038,543 10,035 34, ,602 4,866 12,472 69,444 9, , ,636 11, , ,140 41,443 43, ,551 9,009 2, ,075 1,050,721 1,520 64, ,676 5,459 8, , , , , , ,165 33,534 36,878 36,878 16,729 17,639 1,424 1,359 89, ,920 1,222,158 8,370,703 9,475 6, ,824 $ 662,395 $ 1,228,474 $ 8,686,527-5a -

9 STATEMENT OF FUNCTIONAL EXPENSES FOR THE THREE MONTH PERIOD ENDING DECEMBER 31, 2011 Program Services Rescue, Education Research, Total Shelter and Legislative Investigation Program and Adoption Outreach Action and Action Services Payroll $ 341,654 $ 318,977 $ 17,600 $ 112,346 $ 790,577 Supplies 18,380 8, ,730 29,635 Telephone 4,687 4, ,758 11,940 Postage , ,205 49,726 Printing , ,723 67,223 Travel 36,087 42,252 2,556 9,148 90,043 Utilities 25,999 5, ,082 Animal care and rehabilitation 229, ,046 Events and campaigns 3, , , ,161 Insurance 9,611 5,742 3,746 19,099 Miscellaneous outsourcing -0- Miscellaneous other 3,088 20, ,301 33,715 Mailing and processing 17, ,279 27,237 Property taxes 5,323 2,661 7,984 Accounting -0- Legal fees Repairs and maintenance 41,314 10, ,850 54,142 Total Expenses Before Depreciation 719, ,076 25, ,635 1,668,635 Depreciation 26,696 21,357 3,737 51,790 Total Expenses $ 746,540 $ 713,433 $ 25,080 $ 235,372 $ 1,720,425 See Independent Auditor's Report and Notes to Financial Statements - 6 -

10 Supporting Services Fundraising Total $ 47,437 $ 80,249 $ 918, , ,580 14,058 7,695 41,035 98,456 2,892 46, ,953 3,536 5,963 99, , ,046 2, ,654 19,099 21,382 21,382 51,480 32, , ,166 48,923 7,984 19,525 19,525 4,744 4,769 1,253 1,278 56, , ,331 2,065,489 1, ,392 $ 163,591 $ 234,865 $ 2,118,881-6a -

11 STATEMENTS OF CASH FLOWS FOR THE TWELVE MONTH AND THREE MONTH PERIODS ENDING DECEMBER 31, Cash Flows from Operating Activities: Increase in net assets Adjustments to reconcile increase in net assets to net cash provided by operating activities: Depreciation (Gain) on sale of investments Donated stock (Gain) on destruction of equipment Unrealized (gain) on investments Changes in operating assets and liabilities: Inventory $ 1,536,848 $ 1,165, ,824 53,392 (60,022) (15,463) (47,613) (16,001) (300) (111,196) (221,657) (28,543) 14,611 (18,483) Prepaid expenses (138,031) 18,297 Accounts receivable 179,266 (176,312) Contributions receivable (107,933) (296,035) Promises to give (7,808) (108,900) Accrued interest receivable (2,419) (7,817) Accounts payable Accrued liabilities Deposits 129,128 7,376 25,436 6,575 1,199 (1,138) Net Cash Provided by Operating Activities Cash Flows from Investing Activities: Purchase of investments Proceeds from sale of investments Proceeds from insurance on destroyed fixed assets Purchase of land, buildings, and equipment Net Cash (Used) by Investing Activities Cash Flows from Financing Activities: Net Increase in Cash and Cash Equivalents 1,616, ,301 (1,670,157) (584,481) 1,510, ,544 16, ,809 (884,141) (448,710) (1,026,558) (298,838) , ,463 Cash and Cash Equivalents - Beginning of Period, as Restated 2,986,132 2,813,669 Cash and Cash Equivalents - End of Period $ 3,576,103 $ 2,986,132 Donation of stock received Net book value of fixed assets destroyed by fire $ 47,613 $ 16,001 $ -0- $ 44,613 See Independent Auditor's Report and Notes to Financial Statements - 7 -

12 NOTES TO FINANCIAL STATEMENTS FOR THE TWELVE-MONTH PERIOD ENDED DECEMBER 31, 2012 AND THE THREE-MONTH PERIOD ENDED DECEMBER 31, 2011 Note 1 - Summary of Significant Accounting Policies Nature of Activities Farm Sanctuary, Inc. (Farm Sanctuary) was organized in Delaware in 1986 as a not-for-profit, nonstock corporation. Farm Sanctuary provides rescue and care for abused and neglected farm animals and provides adoption service and information on farm animal care, educates and disseminates information on farm animal issues, conducts cruelty investigations and assists authorities in farm animal cruelty cases, and monitors legislative action, working with legislators on federal and state bills. Farm Sanctuary is supported primarily through donor contributions and grants. In 2011, Farm Sanctuary, LLC (Limited Liability Corporation) was formed for the purpose of holding title to property that was transferred to Farm Sanctuary (see Note 12). Farm Sanctuary, LLC is a single member LLC with Farm Sanctuary being its single member. For tax and financial reporting purposes the LLC is considered a disregarded entity and all tax and financial information of the LLC is reported by Farm Sanctuary. In 2011, Farm Sanctuary, Inc. changed its year end from September 30 to December 31. Basis of Accounting The financial statements have been prepared on the accrual basis of accounting and accordingly reflect all significant receivables, payables, and other liabilities. Financial Statement Presentation Farm Sanctuary complies with the provisions of the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 958 Not-for-Profit Entities. Under FASB ASC 958, Farm Sanctuary Inc. is required to report information regarding its financial position and activities according to three classes of net assets: unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles includes the use of estimates that affect the financial statements. Accordingly, actual results could differ from those estimates. Contributions Farm Sanctuary accounts for contributions in accordance with the recommendations of the FASB ASC 958 Not-for-Profit Entities. Under FASB ASC 958, contributions received are recorded as unrestricted, temporarily restricted, or permanently restricted support, depending on the existence or nature of any donor restrictions. Contributions restricted by the donor are reported as increases in unrestricted net assets if the restrictions expire in the reporting period in which the support is recognized. All other donor-restricted contributions are reported as increases in temporarily or permanently restricted net assets, depending on the nature of the restriction. When a 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. Property and Equipment All acquisitions of property and equipment and all expenditures for repairs, maintenance, and betterments costing $2,000 or more that materially prolong (one year or greater) the useful lives of assets are capitalized. Property and equipment are carried at cost or, if donated, at the approximate fair value at the date of donation. Depreciation is computed using the straight-line method over three to 39 years

13 NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE TWELVE-MONTH PERIOD ENDED DECEMBER 31, 2012 AND THE THREE-MONTH PERIOD ENDED DECEMBER 31, 2011 Cash and Cash Equivalents For purposes of the Statement of Cash Flows, Farm Sanctuary considers all unrestricted highly liquid investments with an initial maturity of three months or less to be cash equivalents. Investments Investments consist of U.S. Savings Bonds, U.S. Treasury notes, corporate bonds, equities, mutual funds, and certificates of deposit with original maturities greater than three months and are carried at fair value. Unrealized gains and losses are included in the change in net assets in the accompanying Statements of Activities. Inventory Valuation Inventory is stated at cost of quantity on hand. Donated Services A substantial number of volunteers have donated significant amounts of time, services, and materials on Farm Sanctuary s behalf. The value of this contributed time and services has not been reflected in the financial statements, inasmuch as no objective basis is available to measure the value of such services and it does not meet the criteria for recognition under FASB ASC 958. Income Tax Status Farm Sanctuary is exempt from federal income tax under Section 501(c)(3) of the Internal Revenue Code. In addition, Farm Sanctuary qualifies for the charitable contribution deduction under Section 170(b)(1)(A) and has been classified as an organization other than a private foundation under Section 590(a)(2). Farm Sanctuary s Forms 990, Return of Organization Exempt from Income Tax, for the periods ending September 30, 2010 and 2011 and December 31, 2011 are subject to examination by the IRS, generally for three years after they were filed. Donated Assets Donated marketable securities and other noncash donations are recorded as contributions at estimated fair value at the date of donation. Functional Allocation of Expenses The costs of providing various programs and other activities have been summarized on a functional basis in the Statements of Activities and in the Statements of Functional Expenses. Accordingly, certain costs have been allocated among the programs and supporting services benefited. Designation of Unrestricted Net Assets Board designated net assets include a shelter reserve created by the Board of Directors. This amount has been set aside to provide a reserve restricted specifically for use related to the safety and well-being of sanctuary animals. Evaluation of Subsequent Events Farm Sanctuary has evaluated event transactions occurring between December 31, 2012 and August 8, 2013, which is the date the financial statements were available to be issued, for possible disclosure and recognition in the financial statements. Refer to Note 13. Note 2 - Concentration of Credit Risk Farm Sanctuary maintains cash balances at several financial institutions. From time to time, Farm Sanctuary may have bank deposits in excess of the Federal Deposit Insurance Corporation (FDIC) insurance limits

14 NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE TWELVE-MONTH PERIOD ENDED DECEMBER 31, 2012 AND THE THREE-MONTH PERIOD ENDED DECEMBER 31, 2011 Note 3 - Investments Investments consisted of the following at December 31,: 2012 Fair Unrealized Cost Value Gain (Loss) Stocks on hand $ 616 $ 671 $ 55 Corporate bonds 2,422,289 2,483,576 61,287 U.S. Savings Bonds 13,648 17,152 3,504 Equity mutual funds 703, , ,960 Certificates of deposit 175, ,813 10,245 $ 3,315,557 $ 3,496,608 $ 181, Fair Unrealized Cost Value Gain (Loss) Stocks on hand $ 616 $ 662 $ 46 Equities 3,927 4, Corporate bonds 1,975,563 1,895,960 (79,603) U.S. Savings Bonds 13,648 17,000 3,352 Equity mutual funds 602, ,209 7,161 Certificates of deposit 452, ,894 28,152 $ 3,048,544 $ 3,007,938 $ (40,606) The fair value of certificates of deposit is estimated by the investment broker/dealer using a matrix based on interest rates and penalties for early withdrawal. The estimated fair value may not reflect the actual price that would be received if the certificates of deposit were to be sold prior to maturity. Market Risk Future changes in market prices may make a financial instrument less valuable. Ownership interest is subject to the risk of loss from a decrease in value due to interest rate fluctuations which may result in a decline that is other than temporary. Note 4 - Fair Value Measurements FASB ASC 820, Fair Value Measurements and Disclosures, establishes a framework for measuring fair value. That framework establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 Measurements) and the lowest priority to unobservable inputs (Level 3 Measurements). The three levels of the fair value hierarchy under FASB ASC 820 are as follows: Level 1 - Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Farm Sanctuary has the ability to access

15 NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE TWELVE-MONTH PERIOD ENDED DECEMBER 31, 2012 AND THE THREE-MONTH PERIOD ENDED DECEMBER 31, 2011 Level 2 - Inputs to the valuation methodology include: Quoted prices for similar assets or liabilities in active markets; Quoted prices for identical or similar assets or liabilities in inactive markets; Inputs other than quoted prices that are observable for the asset or liability; Inputs derived principally from or corroborated observable market data by correlation or other means. If the asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability. Level 3 - Inputs to the valuation methodology are unobservable and significant to the fair value measurement. The asset s or liability s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. The following table sets forth by level, within the fair value hierarchy, Farm Sanctuary s cash equivalents and investments from its investment portfolio, at fair value at December 31,: 2012 Level 1 Level 2 Level 3 Total Cash equivalents $ 2,368,762 $ $ $ 2,368,762 Investments: Certificates of deposit 185, ,813 Corporate bonds and notes 2,483,576 2,483,576 U.S. Savings Bonds 17,152 17,152 Equities Equity mutual funds 809, ,396 Total Investments 3,293, , ,496,608 Total Fair Value $ 5,662,405 $ 202,965 $ -0- $ 5,865, Level 1 Level 2 Level 3 Total Cash equivalents $ 2,401,169 $ $ $ 2,401,169 Investments: Certificates of deposit 480, ,894 Corporate bonds and notes 1,895,960 1,895,960 U.S. Savings Bonds 17,000 17,000 Equities 4,875 4,875 Equity mutual funds 609, ,209 Total Investments 2,510, , ,007,938 Total Fair Value $ 4,911,213 $ 497,894 $ -0- $ 5,409,

16 NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE TWELVE-MONTH PERIOD ENDED DECEMBER 31, 2012 AND THE THREE-MONTH PERIOD ENDED DECEMBER 31, 2011 Note 5 - Accounts Receivable Accounts receivable consisted of the following at December 31,: Insurance reimbursement $ -0- $ 171,801 Employee receivables 1,898 15,456 Other receivables 6, Total Accounts Receivable $ 7,991 $ 187,257 No allowance for doubtful accounts has been recorded, as management believes receivables are fully collectible. Note 6 - Promises to Give Unconditional promises to give consist of funds committed by various donors during the year. These funds are expected to be received as follows: December 31, 2012 December 31, 2011 Receivable in less than one year $ 225,008 $ 197,200 Receivable in one to five years -0-20,000 Total Unconditional Promises to Give 225, ,200 Less discounts to net present value Net unconditional promises to give 225, ,200 Less receivable in less than one year (225,008) (197,200) Long-term Unconditional Promises to Give $ -0- $ 20,000 Unconditional promises to give in more than one year have not been discounted because the discount is considered immaterial to the financial statements. Unconditional promises to give are deemed 100% collectible by Farm Sanctuary and therefore, no allowance for uncollectible accounts has been recorded. Note 7 - Land, Buildings, and Equipment Land, buildings, and equipment consisted of the following at: December 31, 2012 Accumulated Book Assets Cost Depreciation Value Land $ 285,283 $ -0- $ 285,283 Buildings and improvements 5,355,249 1,517,843 3,837,406 Equipment 1,171, , ,917 Software 138, ,526 19,451 Totals $ 6,951,423 $ 2,349,366 $ 4,602,

17 NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE TWELVE-MONTH PERIOD ENDED DECEMBER 31, 2012 AND THE THREE-MONTH PERIOD ENDED DECEMBER 31, 2011 December 31, 2011 Accumulated Book Assets Cost Depreciation Value Land $ 285,283 $ -0- $ 285,283 Buildings and improvements 4,337,095 1,349,774 2,987,321 Equipment 972, , ,029 Software 138,977 98,620 40,357 Construction in process 358, ,411 Totals $ 6,092,122 $ 2,041,721 $ 4,050,401 Depreciation expense for the periods ended December 31, 2012 and 2011 amounted to $315,824 and $53,392, respectively. Note 8 - Program and Supporting Services The following program and supporting services are included in the accompanying financial statements: Rescue, Shelter, and Adoption Providing rescue, rehabilitation, and care for abused and neglected farm animals, as well as offering services involving adoptions, animal placement assistance, and animal care information. Education and Outreach Providing programs and disseminating literature and information to educate the public about farm animal issues. Programs include farm tours, education centers, conferences, speaking events, free literature distribution, volunteer and internship programs for hands-on experience, and community outreach events. Legislative Action Monitoring federal and state legislation, informing the public on legislation involving farm animals, and working with legislators on federal and state bills. Research, Investigation, and Action Conducting investigations of farm animal facilities, assisting police, attorneys, and humane enforcement officers in farm animal cruelty cases, encouraging communities to increase legal protection for farm animals, and encouraging consumers and businesses to consider farm animal issues in their decision-making processes. Supporting Services Providing general support services for Farm Sanctuary s program services including mail processing, mailing list maintenance, accounting, charity registrations, and personnel matters. Fundraising Promoting Farm Sanctuary and developing membership programs to maintain and increase membership donations, grant applications, and general fundraising projects

18 NOTES TO FINANCIAL STATEMENTS (CONTINUED) FOR THE TWELVE-MONTH PERIOD ENDED DECEMBER 31, 2012 AND THE THREE-MONTH PERIOD ENDED DECEMBER 31, 2011 Note 9 - Joint Costs of Activities which Include a Fundraising Appeal Farm Sanctuary achieves some of its programmatic and general goals via direct mail campaigns which include requests for contributions. Costs that were not directly attributable to either the program or the fundraising component of these activities were $770,525 and $164,468 for the twelve month period ending December 31, 2012 and the three month period ending December 31, 2011, respectively. Note 10 - Restatement of Net Assets Education and outreach $ 259,923 $ 53,587 Research, investigation and action 59,736 32,512 Fundraising 450,866 78,369 Total $ 770,525 $ 164,468 Beginning net assets were restated by $156,556 and $19,060, when management discovered unrecorded revenue of $156,556 and $19,060 from the three month period ending December 31, 2011 and the twelve month period ending September 30, 2011, respectively. The effect on the financial statements increased beginning net assets, cash equivalents, and revenue in the amount and prior periods described above. Note 11 - Board Designated Net Assets Board designated net assets are available for the following purposes at December 31,: Restricted Shelter Fund $ 1,375,459 $ 1,375,459 Note 12 - Temporarily Restricted Net Assets Temporarily restricted net assets are available for the following purposes at December 31,: Melrose Small Animal Hospital $ 77,276 $ 495,701 Duck and Goose Pond 10,852 10,852 Legislative Fund 70,791 10,000 Shelter Projects -0-19,679 Run-in Cattle Shed 25, Rescue Transport Vehicle 3, Compassionate Communities-General 16, Compassionate Communities-Ad Campaign 102, Someone, Not Something Project-General 106, Someone, Not Something Project-Researcher 40, Total $ 453,438 $ 536,232 Note 13 - Loan Management Account As of the report release date, Farm Sanctuary, Inc. is considering the use of a Loan Management Account of an amount not to exceed $2.5 million with interest rates at LIBOR plus 2.25% collateralized by certain eligible assets held at an affiliate of the lender