Rancho Cielo, Inc. Financial Statements With Independent Auditors Report

Rancho Cielo, Inc. Financial Statements With Independent Auditors Report September 30, 2014 and 2013

TABLE OF CONTENTS Independent Auditors Report... 1 Financial Statements Statements of Financial Position... 3 Statements of Activities and Changes in Net Assets... 4 Statements of Functional Expenses... 5 Statements of Cash Flows... 6 Notes to Financial Statements... 7

INDEPENDENT AUDITORS REPORT Board of Directors Rancho Cielo, Inc. Salinas, California We have audited the accompanying financial statements of Rancho Cielo, Inc. (a California nonprofit public benefit corporation), which comprise the statements of financial position as of September 30, 2014 and 2013, and the related statements of activities and changes in net assets, functional expenses and cash flows for the years 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. Auditors 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 audits 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 auditors 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 organization 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 organization 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. 1

Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Rancho Cielo, Inc. as of September 30, 2014 and 2013, and the changes in its net assets and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. Emphasis of Matter As discussed in Note 14 to the financial statements, Rancho Cielo, Inc. restated amounts previously reported as of and for the year ended September 30, 2013 to correct a misstatement. Our opinion is not modified with respect to this matter. PMB Helin Donovan, LLP Carmel, California June 17, 2015 2

STATEMENTS OF FINANCIAL POSITION SEPTEMBER 30, 2014 AND 2013 2013 2014 (as restated) ASSETS ASSETS Current assets Cash and cash equivalents $ 412,021 $ 372,730 Certificates of deposit 202,284 201,806 Accounts receivable 20,489 32,247 Grants and pledges receivable, current portion 71,950 68,503 Promise to give - land lease, current portion 60,000 60,000 Prepaid expenses 11,066 134 Inventory 21,459 19,696 Total current assets 799,269 755,116 Noncurrent assets Certificates of deposit 106,313 104,072 Grants and pledges receivable, net, less current portion 32,284 53,496 Promise to give - land lease, net, less current portion 1,116,347 1,120,651 Stewardship fund 267,435 248,985 Assets restricted for construction 1,702,464 1,936,242 Property and equipment, net 4,209,976 3,624,634 Total noncurrent assets 7,434,819 7,088,080 Total assets $ 8,234,088 $ 7,843,196 LIABILITIES AND NET ASSETS LIABILITIES Current liabilities Accounts payable $ 101,065 $ 105,176 Accrued wages and related liabilities 43,766 53,674 Deferred revenue - 450 Total current liabilities 144,831 159,300 NET ASSETS Unrestricted 5,041,170 4,514,210 Temporarily restricted 3,048,087 3,169,686 Total net assets 8,089,257 7,683,896 Total liabilities and net assets $ 8,234,088 $ 7,843,196 3 The accompanying notes are an integral part of these financial statements.

STATEMENTS OF ACTIVITIES AND CHANGES IN NET ASSETS (as restated) Temporarily Permanently Temporarily Permanently Unrestricted Restricted Restricted Total Unrestricted Restricted Restricted Total REVENUES AND SUPPORT Grants $ 193,280 $ 317,093 $ - $ 510,373 $ 100,815 $ 115,500 $ - $ 216,315 Contributions 358,128 323,400-681,528 344,825 1,185,188-1,530,013 Facility rental income 168,796 - - 168,796 163,900 - - 163,900 Donated services and materials 11,595 184,124-195,719 43,031 55,900-98,931 Program revenues 272,432 - - 272,432 492,084 - - 492,084 Total revenues and support 1,004,231 824,617-1,828,848 1,144,655 1,356,588-2,501,243 OTHER INCOME (EXPENSE) Special events, net of $54,884 and $99,166 in expenses in 2014 and 2013, respectively 290,645 - - 290,645 359,990 - - 359,990 Miscellaneous income 36,244 - - 36,244 41,856 - - 41,856 Interest income 10,518 - - 10,518 10,943 - - 10,943 Realized and unrealized income on investments 15,455 - - 15,455 16,378 - - 16,378 Total other income (expense) 352,862 - - 352,862 429,167 - - 429,167 NET ASSETS RELEASED FROM RESTRICTIONS 946,216 (946,216) - - 1,216,598 (1,216,598) - - Total revenues, support, other income and net assets released from restrictions 2,303,309 (121,599) - 2,181,710 2,790,420 139,990-2,930,410 EXPENSES Program 1,350,031 - - 1,350,031 1,945,471 - - 1,945,471 General and administrative 327,055 - - 327,055 414,050 - - 414,050 Fundraising 99,263 - - 99,263 106,541 - - 106,541 Total expenses 1,776,349 - - 1,776,349 2,466,062 - - 2,466,062 CHANGE IN NET ASSETS 526,960 (121,599) - 405,361 324,358 139,990-464,348 NET ASSETS Beginning of year, as restated 4,514,210 3,169,686-7,683,896 4,189,852 3,029,696-7,219,548 End of year $ 5,041,170 $ 3,048,087 $ - $ 8,089,257 $ 4,514,210 $ 3,169,686 $ - $ 7,683,896 4 The accompanying notes are an integral part of these financial statements.

STATEMENTS OF FUNCTIONAL EXPENSES General and General and Program Administrative Fundraising Total Program Administrative Fundraising Total EXPENSES Salaries $ 508,858 $ 223,219 $ 73,995 $ 806,072 $ 882,732 $ 275,881 $ 42,518 $ 1,201,131 Payroll taxes 52,446 14,745 8,318 75,509 76,109 22,173 3,742 102,024 Employee benefits 62,685 22,939 2,909 88,533 52,396 30,122 7,501 90,019 Total salaries and related expenses 623,989 260,903 85,222 970,114 1,011,237 328,176 53,761 1,393,174 Program costs 189,376 - - 189,376 420,465 - - 420,465 Depreciation 118,102 7,547-125,649 120,295 8,244-128,539 Insurance 106,021 11,143 1,706 118,870 106,345 8,661 1,026 116,032 Occupancy 94,002 9,940-103,942 80,070 21,283-101,353 Vehicle expense 57,106 5,549 306 62,961 52,171 790 204 53,165 Professional consultants 45,380 7,054-52,434 36,444 22,000 4,209 62,653 Supplies 43,736 5,280-49,016 55,074 - - 55,074 Repairs and maintenance 15,566 1,775-17,341 27,614 120 22 27,756 Printing and reproduction 5,065 1,656 8,881 15,602 6,850 8,823 25,763 41,436 Public relations 9,273 3,537 258 13,068 288 902 251 1,441 Office and postage 4,545 5,181 2,078 11,804 8,425 8,089 14,884 31,398 Travel and training 8,719 1,962 473 11,154 - - - - Bank charges 8,737 1,560 339 10,636 3,732 1,881 341 5,954 Security systems 9,332 898-10,230 1,954 1,076-3,030 Scholarships 8,772 - - 8,772 4,395 - - 4,395 Taxes and licenses 1,115 1,577-2,692 510 115 20 645 Equipment rental 1,195 1,493-2,688 9,602 2,424-12,026 Hospitality - - - - - 1,466 6,060 7,526 Total expenses $ 1,350,031 $ 327,055 $ 99,263 $ 1,776,349 $ 1,945,471 $ 414,050 $ 106,541 $ 2,466,062 5 The accompanying notes are an integral part of these financial statements.

STATEMENTS OF CASH FLOWS CASH FLOWS FROM OPERATING ACTIVITIES Change in net assets $ 405,361 $ 464,348 Adjustments to reconcile change in net assets to cash and equivalents provided by operating activities Contributions restricted for construction (365,088) (611,863) Unrealized and realized income on investments (15,455) (16,378) Change in discount on pledges and grants receivable (455) (6,746) Depreciation 125,649 128,539 Amortization of discount - promise to give, land lease 4,304 4,100 Investment income on certificates of deposit (478) (1,806) Change in operating assets and liabilities Accounts receivable 11,758 47,045 Grants and pledges receivable 18,220 32,991 Interest receivable - 2,579 Prepaid expenses (10,932) 24,302 Inventory (1,763) 7,636 Accounts payable (4,111) 53,767 Accrued wages and related liabilities (9,908) (22,806) Deferred revenue (450) (28,057) Net cash provided by operating activities 156,652 77,651 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property and equipment (710,991) (523,483) Reinvestment of investment income (5,236) (6,432) Assets restricted for construction 233,778 (31,179) Net cash used by investing activities (482,449) (561,094) CASH FLOWS FROM FINANCING ACTIVITIES Contributions restricted for construction 365,088 611,863 NET CHANGE IN CASH AND CASH EQUIVALENTS 39,291 128,420 CASH AND CASH EQUIVALENTS Beginning of year 372,730 244,310 End of year $ 412,021 $ 372,730 6 The accompanying notes are an integral part of these financial statements.

NOTE 1 ORGANIZATION Rancho Cielo, Inc. (Organization) is a California nonprofit public benefit corporation founded in 2000 for the purpose of establishing and maintaining a comprehensive system of prevention and intervention services for juvenile offenders in Monterey County to ensure public safety and allow successful reintegration into the community. The Organization is governed by a board of directors and receives contributions from individuals, corporations, local foundations as well as fees for services. The Organization provides educational programs for students who could not achieve their academic goals in a traditional school setting. The Organization also provides support services, vocational training and job placement services to at-risk youth. The grounds of the Organization also provide opportunities for recreation and outdoor activities for youth. NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of presentation The financial statements have been prepared on the accrual basis of accounting and use the following net asset classifications. Unrestricted net assets Net assets that are not subject to donor-imposed stipulations. Temporarily restricted net assets Net assets subject to donor-imposed stipulations that may or will be met either by actions of the Organization and/or the passage of time. Permanently restricted net assets Net assets to be held in perpetuity as directed by donors. As of September 30, 2014 and 2013, the Organization had no permanently restricted net assets. Use of estimates Preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of any contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include discounts on pledges receivable and promise to give - land lease and useful lives on property and equipment. Accordingly, actual results could differ from those estimates. Cash and cash equivalents Cash and equivalents includes currency on hand, cash in banks and money market instruments maturing within 90 days. Cash on deposit occasionally exceeds federally insured limits. The Organization believes it mitigates the risk of concentration by depositing at major financial institutions. The Organization has not experienced any losses in these accounts and believes they are not exposed to any significant credit risk with respect to cash. 7

NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Certificates of deposit Certificates of deposit are classified as current if they have a maturity date within one year of September 30, 2014 and 2013, respectively, and as noncurrent if they mature in greater than one year from September 30, 2014 and 2013, respectively. Accounts receivable Accounts receivable are composed of rental fees, service fees and miscellaneous sales and are stated at unpaid balances. Management believes that all accounts receivable are fully collectible, therefore, no allowance for doubtful accounts is recorded. All receivables are expected to be collected within one year. Grants and pledges receivable Grants and pledges receivable that are expected to be collected within one year are recorded at net realizable value. Grants and pledges receivable that are expected to be collected in future years are recorded at the present value of their estimated future cash flows. Grants and pledges receivable during the years ended September 30, 2014 and 2013 are discounted using rates between 2.5% and 3.5%. Amortization of these discounts is included in contributions revenue in the accompanying statements of activities and changes in net assets. Management believes that all grants and pledges receivable are fully collectible, therefore, no allowance for doubtful accounts is recorded. Inventory Inventory consists of donated vehicles and equipment held for sale or use and supplies for the Organization s job training program. The Organization records inventory at fair value when received. Property and equipment All acquisitions and major improvements of property and equipment in excess of $1,000 are capitalized. Maintenance and repairs which do not extend the useful life of the respective assets are expensed as incurred. Property and equipment is stated at cost or, if donated, at the approximate fair value at the date of donation. Depreciation is computed using the straight-line method over the estimated useful lives of the property and equipment, which ranges from 3 to 50 years. Financial instruments Financial instruments included in the Organization s statements of financial position include cash and cash equivalents, certificates of deposit, accounts receivable, grants and pledges receivable, promise to give - land lease, stewardship fund, accounts payable and accrued wages and related liabilities. Promise to give - land lease and Stewardship fund are reflected in the accompanying statements of financial position at their estimated fair values using methodologies described below. The carrying amounts represent a reasonable estimate of the corresponding fair values for all other financial instruments. Fair value measurements Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining fair value, the Organization considers the principal or most advantageous market in which it would transact, and considers assumptions that market participants would use when pricing the asset or liability. 8

NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) The three-level hierarchy for fair value measurements is defined as follows. Level 1 Valuation is based on observable inputs using quoted prices in active markets for identical assets or liabilities that are accessible at the measurement date. Level 2 Valuation is based on inputs from sources other than quoted prices in active markets that are either directly or indirectly observable as of the reporting date. This may include quoted prices for similar assets in an active market, quoted prices for similar assets in a market that is not active or valuation methods using models, interest rates and yield curves as observable inputs. Level 3 Valuation is based on unobservable inputs for the assets, reflecting the Organization s consideration about the assumptions that a market participant would use in pricing the asset or liability, to the extent that observable inputs (Levels 1 and 2) are not available. Level 3 assets and liabilities include situations where there is little or no market activity for the asset or liabilities, and significant management judgment or estimates are required. Stewardship fund is classified as Level 2 because it is valued using quoted prices in active markets, however, the Organization records the values based on the statements received from the Community Foundation of Monterey County (Community Foundation). Promise to give - land lease is classified as Level 3 because it is measured at fair value using significant unobservable inputs to determine rent and cost of living adjustments. While the Organization believes its valuation methods are appropriate and consistent with those used by other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. Those estimated values may differ significantly from the values that would have been used had a readily available market for such assets and liabilities existed, or had such assets and liabilities been liquidated, and these differences could be material to the financial statements. Contributions and grants All contributions and grants are considered to be available for unrestricted use unless specifically restricted by the donor or grantor. Amounts received that are designated for future periods or restricted by the donor or grantor for specific purposes are reported as temporarily restricted or permanently restricted support that increases those net asset classes. Donated services and materials The Organization records various types of in-kind contributions. Contributed services are recognized at fair value if the services received (a) create or enhance longlived assets or (b) require specialized skills, are provided by individuals possessing those skills and would typically need to be purchased if not provided by donation. Contributions of donated noncash assets are recorded at their fair values in the period received. The amounts reflected in the accompanying financial statements as in-kind contributions are offset by like amounts included in expenses or additions to property and equipment. 9

NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) A number of volunteers have made significant contributions of their time and talent to promote the Organization s programs and activities. No amounts have been recognized in the statements of activities for this time and talent because the recognition criteria have not been satisfied. Expense allocation Expenses relating to more than one function are allocated to program service, management and general and fundraising costs based on employee utilization or other appropriate usage factors. Income taxes The Organization is exempt from federal income taxes under Section 501(c)(3) of the Internal Revenue Code and from California franchise taxes under Section 23701d of the Revenue and Taxation Code. In addition, the Organization has been classified as an organization that is not a private foundation within the meaning of Section 509(a) and qualifies for deductible contributions as provided in Section 170(b)(1)(A)(vi). During the year ended September 30, 2010, the Organization adopted authoritative guidance on accounting for uncertainty in income taxes, which defines a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. As a result of the adoption, the Organization did not identify any uncertain tax positions that qualify for either recognition or disclosure in the financial statements. The Organization files tax returns in the U.S. federal and California jurisdictions. With few exceptions, the Organization is no longer subject to federal tax examinations by tax authorities for years ended before September 30, 2011. Reclassifications Certain prior year amounts have been reclassified to conform with current year financial statement presentation. NOTE 3 CASH AND CASH EQUIVALENTS Cash and cash equivalents consist of the following as of September 30. Cash in bank $ 1,589,425 $ 1,742,623 Money market accounts 318,812 317,011 Petty cash 900 500 1,909,137 2,060,134 Less amounts restricted for construction 1,497,116 1,687,404 $ 412,021 $ 372,730 10

NOTE 4 GRANTS AND PLEDGES RECEIVABLE Grants and pledges receivable consist of the following as of September 30. Pledges receivable $ 280,283 $ 144,400 Grants receivable - 197,648 280,283 342,048 Discount to present value (1,049) (1,504) 279,234 340,544 Less amounts restricted for construction (175,000) (218,545) 104,234 121,999 Current 71,950 68,503 Noncurrent $ 32,284 $ 53,496 Grants and pledges receivable are due as follows. Receivable in less than one year $ 246,950 $ 287,048 Less restricted for construction (175,000) (170,000) 71,950 117,048 Receivable within one to five years 33,333 55,000 Less restricted for construction - (50,000) 33,333 5,000 Discount on present value (1,049) (1,504) Discount on amounts restricted for construction - 1,455 32,284 4,951 $ 104,234 $ 121,999 NOTE 5 PROMISE TO GIVE - LAND LEASE AND FAIR VALUE DISCLOSURES The Organization entered into a land lease agreement with the County of Monterey in 2006. The term of the lease is 49 years, with two 25 year options to renew. The annual lease payment is $1. An unconditional promise to give has been recorded to reflect the value of the use of the land based upon the value of the donated rent which has been determined to be $60,000 per year with a 4.5% cost of living increase at 10 year intervals. The future value of the donated rent has been discounted to its present value using a rate of 5.0%. For the years ended September 30, 2014 and 2013, the Organization recorded donated lease expense of $60,000, which is included in occupancy expenses in the accompanying statements of functional expenses. 11

NOTE 5 PROMISE TO GIVE LAND LEASE, NET AND FAIR VALUE DISCLOSURES (continued) Promise to give - land lease at September 30, 2014, are as follows. Receivable in less than one year $ 60,000 Receivable in one to five years 313,500 Receivable in more than five years 2,297,375 Total promises to give 2,670,875 Less discounts to net present value (1,494,528) Promise to give - land lease, net 1,176,347 Current 60,000 Noncurrent $ 1,116,347 The following tables present the fair value of the promise to give - land lease, net on the accompanying statements of financial position, as of September 30, by fair value hierarchy. (Level 3) (Level 3) Promise to give - land lease, net $ 1,176,347 $ 1,180,651 The following tables provide a rollforward of the land lease measured at fair value using significant unobservable inputs (Level 3) during the years ended September 30. Beginning balance $ 1,180,651 $ 1,184,751 Amortization of present value of promise to give 55,696 55,900 Donated lease expense (60,000) (60,000) Ending balance $ 1,176,347 $ 1,180,651 12

NOTE 6 STEWARDSHIP FUND AND FAIR VALUE DISCLOSURES The Organization has established stewardship fund with the Community Foundation for the benefit of the Organization and it can either take the annual payout as determined by the Community Foundation Board of Directors or the annual payout amount can be reinvested until the Organization requests it. The Organization has the option of withdrawing a portion or all of the fund's principal at any time upon written request by the Board of the Organization. The Community Foundation is acting as an investment agent, investing assets that continue to belong to the Organization. The following tables present the fair value of assets held at Community Foundation on the accompanying statements of financial position, as of September 30, by fair value hierarchy. (Level 2) (Level 2) Stewardship fund $ 267,435 $ 248,985 NOTE 7 ASSETS RESTRICTED FOR CONSTRUCTION The Organization segregates cash and other assets received with donor imposed restrictions that limit their use for long term purposes, such as construction. Assets restricted for construction, as of September 30, consist of the following. Cash and cash equivalents $ 1,497,116 $ 1,687,404 Certificates of deposit 30,348 30,293 Grants and pledges receivable 175,000 218,545 $ 1,702,464 $ 1,936,242 13

NOTE 8 PROPERTY AND EQUIPMENT Property and equipment, net, as of September 30, consists of the following. Buildings $ 2,108,373 $ 2,101,778 Land improvements 825,643 825,643 Furniture and equipment 81,316 81,316 Autos and trucks 66,245 63,745 3,081,577 3,072,482 Accumulated depreciation (756,566) (630,917) Subtotal 2,325,011 2,441,565 Construction in progress Recreation fields 1,729 1,729 Vocational center 292,663 265,562 Caretaker s house 91,779 81,532 Septic system 503,575 320,824 Transitional housing 995,219 513,422 Total construction in progress 1,884,965 1,183,069 $ 4,209,976 $ 3,624,634 NOTE 9 TEMPORARILY RESTRICTED NET ASSETS Temporarily restricted net assets, as of September 30, consist of the following. Promise to give - land lease, net $ 1,176,347 $ 1,180,651 Capital improvements 1,721,910 1,943,029 Youth programs and scholarships 149,830 46,006 $ 3,048,087 $ 3,169,686 14

NOTE 10 DONATED SERVICES AND MATERIALS The following is a summary of donated services and material during the years ended September 30. Capital General Youth Improve- 2014 Operations Programs ments Vehicles Total Fixed assets $ - $ - $ - $ 2,500 $ 2,500 Land lease 16,709 38,987 - - 55,696 Supplies 4,051 6,935 116,250-127,236 Professional services - - 9,318-9,318 Maintenance and repairs - 969 - - 969 20,760 46,891 125,568 2,500 195,719 Special events - 24,951 - - 24,951 $ 20,760 $ 71,842 $ 125,568 $ 2,550 $ 220,670 Capital General Youth Improve- 2013 Operations Programs ments Vehicles Total Fixed assets $ - $ - $ - $ 10,300 $ 10,300 Land lease 16,770 39,130 - - 55,900 Supplies 172 8,069 200-8,441 Tools and equipment - 6,507 - - 6,507 Music Program - 11,200 - - 11,200 Professional services - 1,070 - - 1,070 Maintenance and repairs - - 5,513-5,513 16,942 65,976 5,713 10,300 98,931 Special events - 78,566 - - 78,566 $ 16,942 $ 144,542 $ 5,713 $ 10,300 $ 177,497 15

NOTE 11 LEASING ACTIVITIES The Organization leases a portion of its facilities in Salinas, California to several tenants under non-cancellable operating lease agreements on multi-year and month-to-month arrangements requiring total monthly payments of approximately $13,000 expiring through June 2017. Rental income for the years ended September 30, 2014 and 2013 totaled $168,796 and $163,900, respectively. Future minimum rental income on operating lease agreements as of September 30, 2014 is as follows. 2015 $ 133,200 2016 21,200 2017 13,500 $ 167,900 NOTE 12 RELATED PARTY TRANSACTIONS A vice president on the board of directors owns five companies that provide construction, materials and related services to the Organization. During the years ended September 30, 2014 and 2013, the Organization paid $133,612 and $486,943, respectively, to these companies. Amounts due to these companies, as of September 30, 2014 and 2013, was $18,518 and $12,107, respectively. Approximately $62,067 and $76,420 in contributions were received from members of the board of directors during the years ended September 30, 2014 and 2013, respectively. NOTE 13 RETIREMENT PLAN In June 2010, the board of directors approved a Simple Individual Retirement Account plan, which is available to employees who are 18 years of age, have completed one year of service, and have worked 1000 hours or more in the plan year. In November 2010, the plan was implemented and in February 2011 the board of directors approved a match of 1% of the eligible employees contributions. The Organization currently matches up to 3% of employee contribution. During the years ended September 30, 2014 and 2013, employer contributions aggregated $10,767 and $4,118 respectively. 16

NOTE 14 PRIOR PERIOD ADJUSTMENT The Organization s financial statements as of October 1, 2012 and 2013 have been restated due to a miscalculation of restricted funds released related to transitional housing resulting in a reclassification of $319,840 from unrestricted net assets to temporarily restricted net assets in 2012 and $473,645 from temporarily restricted net assets to unrestricted net assets in 2013. Temporarily restricted net assets at October 1, 2012, as previously reported $ 2,709,856 Cumulative prior period adjustment 319,840 Temporarily restricted net assets at October 1, 2012, as restated 3,029,696 Change in temporarily restricted net assets for the year ended September 30, 2013, as previously reported 613,635 Cumulative prior period adjustment (473,645) Temporarily restricted net assets at September 30, 2013, as restated $ 3,169,686 Unrestricted net assets at October 1, 2012, as previously reported $ 4,509,692 Cumulative prior period adjustment (319,840) Unrestricted net assets at October 1, 2012, as restated 4,189,852 Change in unrestricted net assets for the year ended September 30, 2013, as previously reported (149,287) Cumulative prior period adjustment 473,645 Unrestricted net assets at September 30, 2013, as restated $ 4,514,210 NOTE 15 SUBSEQUENT EVENTS The Organization has evaluated subsequent events for potential recognition and/or disclosure through June 17, 2015, the date which the financial statements were available to be issued, no such events exist. 17