NEW VENTURES, INC. FINANCIAL STATEMENTS AS OF JUNE 30, 2013 TOGETHER WITH INDEPENDENT AUDITORS REPORT

Transcription

1 NEW VENTURES, INC. FINANCIAL STATEMENTS AS OF JUNE 30, 2013 TOGETHER WITH INDEPENDENT AUDITORS REPORT

2 CONTENTS Page Financial Independent Auditors Report 1 Statement of Financial Position 3 Statement of Activities 4 Statement of Functional Expenses 5 Statement of Cash Flows 6 Notes to Financial Statements 7 Supplementary Information Schedule of State Awards Expended 15

3 FINANCIAL

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6 STATEMENT OF FINANCIAL POSITION June 30, 2013 ASSETS Current Assets: Cash and Cash Equivalents $ 384,008 Grants Receivable 41,647 Trade Accounts Receivable 209,534 Employee Receivables 10,235 Due from New Ventures Enterprises, Inc. 401,004 Prepaid Expenses 21,504 Inventory 26,576 Total Current Assets 1,094,508 Fixed Assets: Land 26,944 Buildings 1,115,231 Improvements 382,615 Horticultural 132,965 Vehicles 57,489 Furniture, Machinery and Equipment 615,857 Construction in Process 17,960 Less Accumulated Depreciation (1,815,125) Net Fixed Assets 533,936 Total Assets $ 1,628,444 LIABILITIES AND NET ASSETS Current Liabilities: Current Portion of Long-Term Debt $ 21,591 Current Portion Capital Lease 2,110 Accounts Payable 11,994 Accrued Payroll and Payroll Liabilities 75,227 Compensated Absences Payable 8,197 Rental Deposit 2,927 Other Accrued Expenses 10,423 Total Current Liabilities 132,469 Long-Term Debt, Net of Current Portion 56,166 Capital Lease, Net of Current Portion 6,727 Total Liabilities 195,362 Net Assets: Unrestricted 1,432,124 Temporarily Restricted 958 Total Net Assets 1,433,082 Total Liabilities and Net Assets $ 1,628,444 See notes to financial statements - 3 -

7 STATEMENT OF ACTIVITIES For The Year Ended June 30, 2013 Unrestricted Net Assets: Unrestricted Public Support, Revenue and Reclassifications: Public Support: Government Grants: Georgia Department of Labor $ 268,405 West Georgia Workforce Development 185,296 Total Public Support 453,701 Revenue: Production Income 1,328,790 Cleaning Service 291,979 Landscaping 160,262 Rental Income 43,961 Interest 1,272 Gain on Sale of Assets 2,133 Miscellaneous 8,546 Total Revenue 1,836,943 Net Assets Released from Restrictions 815 Total Unrestricted Public Support, Revenue and Reclassifications 2,291,459 Expenses: Program Services 1,688,455 Support Services 829,888 Total Expenses 2,518,343 (Decrease) in Unrestricted Net Assets (226,884) Temporarily Restricted Net Assets: Temporarily Restricted Government Grants: Government Grants: Troup County Board of Health 550 Total Government Grants 550 Net Assets Released from Restrictions (815) (Decrease) in Temporarily Restricted Net Assets (265) Total Change in Net Assets (227,149) Net Assets, Beginning of Year 1,626,858 Prior Period Adjustment 33,373 Net Assets, Beginning of Year (Restated) 1,660,231 Net Assets, End of Year $ 1,433,082 See notes to financial statements - 4 -

8 STATEMENT OF FUNCTIONAL EXPENSES For The Year Ended June 30, 2013 Program Services Support Services Business Management Total Rehabilitation Services and General Expenses Personnel Expenses: Wages and Salaries $ 220,066 $ 993,149 $ 407,449 $ 1,620,664 Payroll Taxes 16,153 72,397 63, ,558 Insurance - Employees 16,240 56,824 44, ,546 Other Benefits 2,879 2,787 11,964 17,630 Total Personnel Expenses 255,338 1,125, ,903 1,907,398 Operating Expenses: Contract Labor ,014 13,883 Production ,874 1, ,818 Professional Fees 4, ,806 97,892 Insurance - Building and Autos ,602 30,602 Depreciation ,716 65,716 Interest Expense - - 4,844 4,844 Utilities 2,790 33,723 16,521 53,034 Telephone 1,475 3,098 11,238 15,811 Repairs and Maintenance - 12,305 7,395 19,700 Automobile and Truck Expense 6,311 25,785-32,096 Equipment - Other 130 2, ,913 Safety and Medical Supplies - 2, ,494 Taxes and Licenses Office Supplies ,133 9,004 Postage and Printing 889-5,509 6,398 Bank Fees - - 1,885 1,885 Bad Debt - - 3,554 3,554 Janitorial - 4,544-4,544 Advertising and Promotional 2,415 1,760 11,571 15,746 Travel 2,606 10,431 3,014 16,051 Staff Training ,349 10,249 Dues and Subscriptions - - 8,670 8,670 Meals and Entertainment 756-2,324 3,080 Transportation and Trucking 10 12, ,076 Operating Leases Miscellaneous ,025 3,910 Total Operating Expenses 23, , , ,945 Total Expenses $ 279,256 $ 1,409,199 $ 829,888 $ 2,518,343 See notes to financial statements - 5 -

9 STATEMENT OF CASH FLOWS For The Year Ended June 30, 2013 Cash Flows From Operating Activities: Change in Net Assets $ (227,149) Adjustments to Reconcile Change in Net Assets to Net Cash Used in Operating Activities: Depreciation 65,716 (Increase) Decrease in Operating Assets: Grants Receivable 38,673 Trade Accounts Receivable (2,565) Employee Receivables 2,906 Other Receivables 9,631 Prepaid Expenses (4,973) Inventory 349 Increase (Decrease) in Operating Liabilities: Accounts Payable (7,981) Accrued Payroll and Payroll Taxes (11,621) Compensated Absences Payable (3,682) Other Accrued Expenses 10,147 Net Cash Used in Operating Activities (130,549) Cash Flows From Investing Activities: Purchases of Fixed Assets (11,004) Construction in Progress (17,960) Net Cash Used in Investing Activities (28,964) Cash Flows From Financing Activities: Repayments of Long-Term Debt (20,623) Repayments of Lease Payable (4,822) Net Cash Used in Financing Activities (25,445) Net Decrease in Cash (184,958) Cash, Beginning of Year 568,966 Cash, End of Year $ 384,008 Supplemental Disclosures: Interest Paid $ 4,844 See notes to financial statements - 6 -

10 NOTES TO FINANCIAL STATEMENTS June 30, NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES Nature of Business New Ventures, Inc. (the Organization) specializes in vocational rehabilitation services to persons with disabilities (who are not employable at the time of referral) of the Troup County, Georgia area, which include training, employment and opportunities for growth. Major funding for the program comes from contracts from the Georgia Department of Labor and West Georgia Workforce Development. These contracts restrict the use of the funds by the Organization to those expenditures which directly provide services as provided by the contracts between the governmental agencies and the Organization. Additionally, the Organization provides production related services to many industries, substantially all of whom are located in LaGrange, Georgia. Basis of Accounting The accompanying financial statements have been prepared on the accrual basis of accounting in accordance with generally accepted accounting principles. Financial Statement Presentation The financial statements have been prepared on the accrual basis of accounting in accordance with the accounting principles generally accepted in the United States of America. They are presented in accordance with the provisions of Accounting Standards Codification 958, Financial Statements of Not-For-Profit Organizations. Under the provisions of the Codification 958, net assets and revenues, expenses, gains and losses are classified based on the existence or absence of donor-imposed restrictions. Accordingly, the net assets of the Organization and changes therein are classified and reported as follows: Unrestricted Net Assets Net assets that are not subject to donor-imposed restrictions or otherwise limited by contractual arrangements with outside parties, but may be designated for specific purposes by action of the Board of Directors. Temporarily Restricted Net Assets Net assets that are subject to donor-imposed restrictions that can be fulfilled either by actions of the Organization pursuant to those stipulations and/or expire with the passage of time. Permanently Restricted Net Assets Net assets that are subject to donor-imposed restrictions that the Organization must maintain. Generally, the donors of these assets permit the Organization to use all or part of the income earned on the related investments for general or specific purposes. At June 30, 2013 the Organization had no permanently restricted net assets. Revenues are 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 on 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. Expirations of temporary restrictions on net assets (i.e., the donor-stipulated purpose has been fulfilled and/or the stipulated time period has elapsed) are reported as reclassifications between the applicable classes of net assets

11 NOTES TO FINANCIAL STATEMENTS June 30, 2013 Use of 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, actual results could differ from those estimates. Cash and Equivalents For purposes of reporting cash flows, the Organization considers all cash accounts which are not subject to withdrawal restrictions or penalties, and certificates of deposit with original maturities of 90 days or less to be cash or cash equivalents. Contributions Contributions are recognized as revenue in the period received. Grant revenue is recognized as earned and expenses as incurred. Contributions of assets other than cash are recorded at fair value at the date of donation. In accordance with the provision of Accounting Standards Codification , Accounting for Contributions Received and Contributions Made, contributions that are restricted by the donor are reported as increases in unrestricted net assets if the restriction expires in the fiscal year in which the contributions are 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, temporarily restricted net assets are reclassified to unrestricted net assets. Revenue Recognition The Organization s revenues are from the following activities (1) production income, (2) landscaping and custodial services and (3) product sales. Industries in the LaGrange, Georgia area outsource certain production jobs to the Organization, revenues from these activities are based upon the pattern in which the revenue is earned or the obligation is fulfilled, on a contract-by-contract basis in accordance with milestones specified in each particular contract. The Organization provides landscaping and custodial services to local industries and organizations, revenue from these services are generally realized or realizable and earned when services have been rendered and collectability is reasonably assured. Revenue is recorded from product sales when title and risk of ownership have been transferred to the customer, which is typically upon delivery to the customer. Accounts Receivable Bad debts are written off as they are incurred, utilizing the direct write off method rather than the reserve method. Although this method is not in accordance with generally accepted accounting principles, it is the opinion of management that the difference in the two methods of recognizing bad debts would be immaterial to the financial statements. Substantially all amounts reflected as accounts receivables are expected to be collected within one year. Inventories Inventory is comprised of cleaning supplies, first aid kits and refill supplies. Inventories are stated at the lower of cost or market. Cost is determined using the first-in, first-out (FIFO) method

12 NOTES TO FINANCIAL STATEMENTS June 30, 2013 Property and Furnishings It is the Organization's policy to capitalize property and furnishings over $500. Purchased items are recorded at cost. Donated items are recorded at fair value. Lesser amounts are expensed. Property and furnishings purchased with funds from Rehabilitation Services contract are the property of the Georgia Department of Labor and are expensed at the time of purchase. Such property amounts have not been included in property and furnishings and the cumulative amount has not been determined. Estimated useful lives of the assets are: Building Building Improvements Horticulture Furniture, Machinery & Fixtures years years 7 10 years 5-7 years Advertising The Organization follows the policy of charging the costs of advertising to expense as incurred. At June 30, 2013, the Organization advertising cost amounted to $15,711. Concentration of Risk Support: Approximately 99 percent of the Organization s public support was provided by Georgia Department of Labor and West Georgia Workforce Development government grants. Production Income: Three national public companies represented approximately 50 percent total production income for the year ended June 30, Functional Allocation of Expenses The costs of providing the various programs and other activities have been summarized on a functional basis in the statement of activities. Costs are allocated between general and administrative and the appropriate program based on management s evaluation of the related benefits. General and administrative expenses include those expenses that are not directly identifiable with any other function but provide for the overall support and direction of the Organization. Compensated Absences The Organization accrues a liability for vested vacations to which the employees are entitled depending on the length of service and other factors. The accompanying financial statements include accrued vacation benefits of $8,197 as of June 30,

13 Fair Value of Financial Instruments New Ventures, Inc. NOTES TO FINANCIAL STATEMENTS June 30, 2013 The Organization applies Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) for fair value measurements of financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis. FASB ASC 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. FASB ASC also establishes a framework for measuring fair value and expands disclosures about fair value measurements (Note 12). Income Taxes The Organization is a not-for-profit organization that is exempt from income taxes under Section 501(c)(3) of the Internal Revenue Code and classified by the Internal Revenue Service as other than a private foundation. The Organization s Forms 990, Return of Organization Exempt from Income Tax, for the fiscal years ending June 30, 2009, 2010 and 2011 are subject to examination by the IRS, generally for three years after they were filed. 2. CASH Cash is composed of the following: LaGrange Banking Company, LaGrange, Georgia Money Market Account $ 252,541 Operating Account 49,162 Checking Account - Client Payroll 13,800 Total LaGrange Banking Company 315,503 Commercial Bank and Trust Company, LaGrange, Georgia Checking Account - Rehabilitation 67,805 Checking Account - Staff Payroll 500 Total Commercial Bank and Trust 68,305 Petty Cash 200 Total Cash and Cash Equivalents $ 384,008 The Organization maintains its cash balance at the above mentioned financial institutions. The Federal Deposit Insurance Corporation (FDIC) insures account balances up to $250,000. The Organization had uninsured balances of approximately $118,000 at June 30,

14 NOTES TO FINANCIAL STATEMENTS June 30, GRANTS RECEIVABLE At June 30, 2013, grants receivable consisted of the following: Georgia Department of Labor $ 5,659 West Central Georgia Workforce Development Corporation 35, INVENTORIES The components of inventories at June 30, 2013 are as follows: $ 41,647 State Use: First Aids Kits and Medical Supplies $ 5,769 Maintenance Pads 3,251 GOJO Products 16,793 Total State Use Inventory 25,813 Name Badges 763 Total Inventory $ 26, AVAILABLE LINE OF CREDIT At June 30, 2013, the Organization has a $300,000 line of credit with LaGrange Banking Company, LaGrange, Georgia. Interest is payable monthly at a fluctuating rate (4.95% at June 30, 2013). The line is secured by the Organization s property and is payable on demand. The agreement s maturity date is February 10, As of June 30, 2013, the outstanding balance on the line of credit was zero. 6. NOTE PAYABLE The Organization s note payable consists of the following: Note payable to LaGrange Banking Company, due in monthly installments of $2,054 including interest at a fixed rate of 4.50%, secured by Textile Solution Equipment, Final payment due November 10, $ 77,757 Less Current Portion (21,591) Long-Term Debt, Net of Current Portion $ 56,

15 NOTES TO FINANCIAL STATEMENTS June 30, 2013 Future scheduled maturities of note payable are as follows: 7. CAPITAL LEASES Year Ending June 30, 2014 $ 21, , , ,962 $ 77,757 The Organization leases equipment under capital lease agreements. The equipment is included in property and furnishings. As of June 30, 2013, the cost of the assets acquired under capital leases is $22,023 and the related accumulated depreciation is $9,904. The net book value at June 30, 2013 is $12,119. Depreciation expense related to the assets acquired by capital leases for the year ending June 30, 2013 total $4,405. Capital lease obligations consist of the following at June 30, 2013: Total $ 8,837 Less Current Portion (2,110) Long-Term Portion $ 6,727 The future minimum lease payments under these capital lease obligations and the net present value of the future minimum lease payments are as follows at June 30, 2013: Years Ending June 30, 2014 $ 2, , , ,260 Total future minimum lease payments 9,655 Less amount representing interest (818) Present value of future minimum lease payments $ 8,

16 NOTES TO FINANCIAL STATEMENTS June 30, GOVERNMENT GRANTS Unrestricted: Georgia Department of Labor $ 268,405 West Central Georgia Workforce Development Corporation 185,296 Total Unrestricted Government Grants 453,701 Temporary Restricted: Troup County Board of Health PENSION PLAN Total Government Grants $ 454,251 New Ventures, Inc. sponsors a pension benefit plan (New Ventures, Inc. 401(k) Plan) covering eligible employees. The plan allows eligible employees to defer a portion of their annual compensation. The Organization may make a matching contribution equal to a discretionary percentage, to be determined by the Organization, of the participant s elective deferrals. At June 30, 2013, the Organization s amount of contributions to the plan amounted to $17, WORK TRAINING INCENTIVES Individuals participating in the rehab training programs are classified as non-employees. Amounts received by those individuals are intended as a work training incentive and not compensation for services performed. 11. RELATED ORGANIZATION TRANSACTIONS The Organization has an agreement with New Ventures Enterprises, Inc. (NVE), a Georgia nonprofit organization, to provide administrative services, materials and supplies and facilities and equipment. NVE and the Organization have common management control. There were no related party transactions recorded for the year ending June 30, At June 30, 2013 the amount due from New Ventures Enterprises, Inc. was $401, TEMPORARILY RESTRICTED NET ASSETS During the year ending June 30, 2013, the Organization received additional contributions from Troup County Board of Health with stipulations that the funds be used to help support the Healthy Life Choices Program. At June 30, 2013, $815 of these funds had been expended, leaving a remaining balance of $ FAIR VALUE MEASUREMENT The Organization is required to measure fair value in accordance with generally accepted accounting principles and provide certain disclosures about fair value measurements. The Organization applies Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 820, Fair Value Measurements and Disclosures, as a framework for measuring fair value by providing a hierarchy for observable independent market inputs to unobservable market assumptions. The hierarchy consists of three levels, under FASB ASC and is described as follows:

17 NOTES TO FINANCIAL STATEMENTS June 30, 2013 Level 1 Inputs represent unadjusted quoted prices for identical assets and liabilities in active markets accessible at the measurement date. Level 2 Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3 Inputs are unobservable inputs used in the measurement of assets and liabilities. As of June 30, 2013, the Organization did not have financial assets that are measured at fair value on a recurring basis. The Organization has other financial instruments, such as cash, accounts receivable, inventories, accounts payable and other liabilities which have been excluded from the fair value hierarchy levels. Due to the short-term nature of these instruments, the carrying value of cash, accounts receivable, inventories, accounts payable and other liabilities approximate their fair values. The Organization did not have any other financial instruments with the scope of the fair value disclosure requirements as of June 30, PRIOR PERIOD ADJUSTMENT During the year ended June 30, 2013, management determined that accrued payroll at the beginning of the year was overstated by $33,373. As a result, unrestricted net assets were understated at June 30, SUBSEQUENT EVENTS The Organization has evaluated subsequent events through December 2, 2013, the financial statement issuance date, and determined that (i) no subsequent events have occurred that would require recognition in its financial statements for the year ended June 30, 2013; (ii) no other subsequent events have occurred that would require disclosure in the notes thereto

18 SUPPLEMENTAL INFORMATION

19 SCHEDULE OF STATE AWARDS EXPENDED For The Year Ended June 30, 2013 Due From West Central Due From Georgia Funding Agency/ Remaining Ending Department Development State Program Title/ Contract State Federal Total Award Balance Federal and State Award Balance of Labor Corporation Contract Period Number Award Award Award July 1, 2012 Revenues Expenditures June 30, 2013 June 30, 2013 June 30, 2013 Department of Labor Division of Rehabilitation Services (Vocational Rehabilitation) (7/1/2012-4/30/2013) C13M $ 67,392 $ 249,001 $ 316,393 $ - $ 257,384 $ 257,384 $ - $ - $ - Department of Labor Division of Rehabilitation Services (On-Going Support Services) (5/1/2013-6/30/2013) ,021-11,021-11,021 11,021-5,659 - West Central Georgia Development Corporation (Job Readiness Skills for Youth) (4/1/2012-3/31/2013) 09-YS-NV11 Modification Number NVI , , , , ,988 $ 78,413 $ 523,640 $ 602,053 $ - $ 453,701 $ 453,701 $ - $ 5,659 $ 35,