FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2011 and 2010
December 31, 2011 and 2010 CONTENTS Independent Auditors Report 1 Financial Statements Statements of Financial Position 2 Statements of Activities and Changes in Net Assets 3 Statements of Cash Flows 4 Statements of Functional Expenses 5 Notes to Financial Statements 6-7
MICHAEL J. McINERNEY, LLC A Certified Public Accounting Firm 9250 Glenwood mailing address: Overland Park, Kansas 66212 P.O. Box 6034 (913) 262-5050 Leawood, Kansas 66206 (913) 262-5060 Fax e-mail: mike@mcinerneycpa.com INDEPENDENT AUDITORS REPORT To the Board of Directors We have audited the accompanying statements of financial position of Charlie s House, Inc., (formerly The Safety Spot, Inc.) (a nonprofit organization) as of December 31, 2011 and 2010 and the related statements of activities and changes in net assets, functional expenses and cash flows for the years then ended. These financial statements are the responsibility of Organization s management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit 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 includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, financial position of Charlie s House, Inc. as of December 31, 2011 and 2010 and its changes in net assets and its cash flows for the years then ended in conformity with accounting principals generally accepted in the United States of America. Michael J. McInerney, LLC Overland Park, Kansas July 26, 2012 1
STATEMENTS OF FINANCIAL POSITION As of December 31, 2011 and 2010 ASSETS 2011 2010 CURRENT ASSETS Cash $ 229,714 $ 95,273 Contributions Receivable 483,500 8,560 Total current assets 713,214 103,833 FIXED ASSETS Office equipment 7,310 4,995 Accumulated depreciation ( 2,702) ( 1,665) 4,608 3,330 TOTAL ASSETS $ 717,822 $ 107,163 LIABILITIES AND NET ASSETS CURRENT LIABILITIES Accounts payable $ 3,902 $ 2,843 Total current liabilities 3,902 2,843 NET ASSETS Unrestricted 40,656 60,334 Temporarily restricted 673,264 43,986 Total net assets 713,920 104,320 TOTAL LIABILITIES AND NET ASSETS $ 717,822 $ 107,163 The accompanying notes are an integral part of these statements. 2
STATEMENTS OF ACTIVITIES AND CHANGES IN NET ASSETS For The Years Ended December 31, 2011 and 2010 UNRESTRICTED NET ASSETS 2011 2010 SUPPORT AND REVENUE Foundations and corporate contributions $ 15,000 $ 36,270 Individual contributions 47,248 10,435 Special events 17,467 11,338 In-kind contributions 50,598 1,396 Net assets released from restrictions 41,272 69,964 Total support and revenue 171,585 129,403 EXPENSES Program services 118,816 71,443 Supporting services Administrative 16,266 18,585 Fundraising 56,181 13,653 Total supporting services 72,447 32,238 Total expenses 191,263 103,681 Change in unrestricted net assets ( 19,678) 25,722 TEMPORARILY RESTRICTED NET ASSETS Foundations and corporate contributions 670,550 45,050 Net assets released from restrictions ( 41,272) ( 69,964) Change in temporarily restricted net assets 629,278 ( 24,914) Change in net assets 609,600 808 NET ASSETS, beginning of year 104,320 103,512 NET ASSETS, end of period $ 721,920 $ 104,320 The accompanying notes are an integral part of these statements. 3
STATEMENTS OF CASH FLOWS For The Years Ended December 31, 2011 and 2010 Cash flows from operating activities 2011 2010 Change in net assets $ 609,600 $ 808 Adjustments to reconcile change in net assets to net cash used in operating activities: Depreciation 1,038 999 (Increase) decrease in: Contributions receivable (474,940) ( 8,410) Increase (decrease) in: Accounts payable 1,058 2,012 Net cash from (used in) operating activities 136,756 ( 4,591) Cash flows from investing activities Additions to office equipment ( 2,315) -- Net cash (used in) investing activities ( 2,315) -- Net increase (decrease) in cash 134,441 ( 4,591) Cash at beginning of year 95,273 99,864 Cash at end of period $ 229,714 $ 95,273 The accompanying notes are an integral part of these statements. 4
STATEMENTS OF FUNCTIONAL EXPENSES For The Year Ended December 31, 2011 and 2010 2011 Program Supporting Services Services Administrative Fundraising Total Total Contract labor $ 41,850 $ 10,825 $ 5,580 $ 16,405 $ 58,255 Depreciation 674 260 104 364 1,038 Fundraising -- -- 48,818 48,818 48,818 Insurance 4,111 1,897 316 2,213 6,324 Meals 554 213 85 298 852 Miscellaneous expense 1,959 754 301 1,055 3,014 Office supplies 1,155 444 178 622 1,777 Postage & delivery 652 251 100 351 1,003 Printing 1,686 -- -- -- 1,686 Professional fees 1,830 704 281 985 2,815 Program expenses 61,923 -- -- -- 61,923 Telephone 2,171 834 334 1,169 3,339 Travel 251 84 84 168 419 Total Functional Expenses $ 118,816 $ 16,266 $ 56,181 $ 72,447 $ 191,263 2010 Program Supporting Services Services Administrative Fundraising Total Total Advertising $ 714 $ -- $ 786 $ 786 $ 1,500 Building expense 5,140 1,469 734 2,203 7,343 Contract labor 41,632 7,843 5,280 13,123 54,755 Depreciation 200 400 399 799 999 Fundraising -- -- 3,465 3,465 3,465 Insurance 2,476 1,143 191 1,334 3,810 Meals 676 225 225 450 1,126 Miscellaneous expense -- 975 -- 975 975 Office supplies 1,505 579 232 811 2,316 Postage & delivery 248 95 38 133 381 Printing 554 -- -- -- 554 Professional fees 12,924 4,971 1,989 6,960 19,884 Program expenses 3,331 -- -- -- 3,331 Taxes & licenses -- 100 -- 100 100 Telephone 2,043 785 314 1,099 3,142 Total Functional Expenses $ 71,443 $ 18,585 $ 13,653 $ 32,238 $ 103,681 The accompanying notes are an integral part of these statements. 5
NOTES TO FINANCIAL STATEMENTS Years Ended December 31, 2011 and 2010 NOTE A ORGANIZATION, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization Charlie s House, Inc. was organized as The Safety Spot, Inc. in November 2007, to prevent injuries to children in and around the home. Charlie's House is part of a 501 (c)(3) not for profit organization. Basis of Presentation The Organization s accounts are maintained on the accrual method of accounting. Accordingly, revenues and expenses are recorded as they are incurred. The organization reports 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, which are based upon the existence and nature of donor-imposed restrictions. Cash - The Organization maintains cash balances at a financial institution in the metropolitan Kansas City area. Accounts are insured by the Federal Deposit Insurance Corporation up to $250,000. There were no uninsured balances at December 31, 2011 and 2010. Cash Flows - For purposes of the statement of cash flows, the organization considers highly liquid investments purchased with an initial maturity of three months or less to be cash equivalents. The carrying value of cash and cash equivalents approximates fair value because of the short maturities of those financial instruments. Use of Estimates - The preparation of financial statements in conformity with generally accepted accounting principals require management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the financial statements, and revenues and expenses during the reporting period. Actual results could differ from those estimates. Income taxes - The Organization is exempt from federal income taxes under Section 501(c) (3) of the Internal Revenue Code. Consequently, no income taxes have been provided in the accompanying financial statements. Depreciation Property and equipment are carried at cost. Purchases are depreciated over their estimated useful lives by use of the straight-line method. The useful lives for purpose of computing depreciation are: Office equipment 5 Years Contributions All contributions are considered to be available for unrestricted use unless specifically restricted by the donor. Amounts received that are designated for future periods or restricted by the donor for specific purposes are reported as temporary restricted or permanently restricted support that increases those net asset classes. When a temporary restriction expires, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statements of activities as net assets released from restrictions. The organization had no permanently restricted net assets in 2011 or 2010. Contributions Receivable The Organization uses the allowance method to determine uncollectible contributions receivable. The Organization considers all contributions receivable at December 31, 2011 and 2010 to be fully collectible and, therefore, did not provide for an allowance for uncollectible contributions 6
NOTES TO FINANCIAL STATEMENTS (Continued) Years Ended December 31, 2011 and 2010 Functional expenses - The Organization allocates its expenses on a functional basis among its program and support services. Expenses that can be identified with a specific program and support service are allocated directly according to their natural expenditure classification. Other expenses that are common to several functions are allocated by management s estimate of resources devoted to the program or support service. Donated services The Organization recognizes donated services that create or enhance non-financial assets or that require specialized skills, are provided by individuals possessing those skills, and would typically need to be purchased if not provided by donation. NOTE B RESTRICTED ASSETS The temporarily restricted net assets of Charlie s House, Inc. are contributions with donor-imposed stipulations. These stipulations are removed when Charlie s House, Inc. expends the donated funds for the purposes specified. The following represents assets restricted as to use at December 31, 2011. Assets restricted as to use: Acquisition of house $ 625,168 Educational outreach 17,000 Website development 9,560 Program expenses 21,536 Total restricted assets $ 673,264 NOTE C SUBSEQUENT EVENT In April, 2011 the organization entered into an agreement to lease land for the construction of a safe house. The initial lease term is for 40 years with two additional ten year options and provides for annual rental of $1 plus the cost of any taxes and fees. Subsequent events have been evaluated through July 26, 2012, which was the first date for which the financial statements were available to be issued. 7