R n I c. FINANCIAL STATEMENTS AND INDEPENDENT AUDITOR'S REPORT DECEMBER 31, 2015 AND 2014
TABLE OF CONTENTS Independent Auditor's Report 1 Financial Statements Statements of Financial Position 2 Statements of Activities and Change in Net Assets 3 Statements of Cash Flows 4 Statements of Functional Expenses 5 Notes to Financial Statements 7
4600 E!I.ST-WEST HIGHWAY " SUITE 300 BETHESDA, MD 20814 Telephone 301 830-7400 Facsimile 301 830-7401 Independent Auditors' Report To the Board of Directors Team River Runner, Inc. Rockville, Maryland We have audited the accompanying financial statements of Team River Runner, Inc., which comprise the statements of financial position as of December 31, 2015 and 2014, and the related statements of activities and change in net assets, cash flows, and functional expenses 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 auditors consider 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. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Team River Runner, Inc. as of December 31, 2015 and 2014 and the change in its net assets and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. JJ~ e~ Bethesda, Maryland January 11, 2017
TEAM RIVER RUNNER, INC. STATEMENT OF FINANCIAL POSITION ASSETS December 31, 2015 2014 CURRENT ASSETS Cash and Cash Equivalents $ 416,032 $ 203,852 Grants Receivable 10,983 Pledges Receivable, Net 35,148 Accounts Receivable 4,678 Prepaid Expenses 10,550 9,110 Supplies 1,861 379 Deposit 3,952 Total Current Assets 439,426 257,119 KAYAKS AND EQUIPMENT Kayaks and Boating Equipment 324,902 223,257 Vehicles 158,594 81,769 Furniture and Equipment 7,708 7,448 Less Accumulated Depreciation 278,352 198,558 Total Property and Equipment 212,852 113,916 $ 652,278 $ 371,035 LIABILITIES AND NET ASSETS CURRENT LIABILITIES Accounts Payable and Accrued Expenses $ 121,095 $ 61,583 Total Current Liabilities 121,095 61,583 NET ASSETS Unrestricted 505,462 308,811 Temporarily Restricted 25,721 641 Total Net Assets 531 '183 309,452 $ 652,278 $ 371,035 2
STATEMENTS OF ACTIVITIES AND CHANGE IN NET ASSETS Year Ended December 31, 2015 2014 Temporarily Temporarily REVENUE Unrestricted Restricted Total Unrestricted Restricted Total Contributions $ 265,945 $ 36,020 $ 301,965 $ 355,112 $ - $ 355,112 Grants 334,333 27,000 361,333 66,258-66,258 Special Event Revenue, Net of Expenses 398,531-398,531 242,835-242,835 998,809 63,020 1,061,829 664,205-664,205 Interest & Other Income 26,250-26,250 1,758-1,758 Net Assets Released from Restrictions - Satisfaction of Program Restrictions 37,940 {37,940) - 18,746 {18,746) 64,190 {37,940) 26,250 20,504 {18,746) 1,758 Total Revenue 1,062,999 25,080 1,088,079 684,709 (18,746) 665,963 EXPENSES Program 660,956-660,956 391,401-391,401 General and Administrative 153,786-153,786 200,683 200,683 Fundraising 51,606_ 51,606 48,395-48,395 Total Expenses 866,348 866,348 640,479 640,479 CHANGE IN NET ASSSETS 196,651 25,080 221,731 44,230 (18,746) 25,484 NET ASSETS, Beginning of Year 308,811 641-309,452 264,581 19,387 283,968 NET ASSETS, End of Year $ 505,462 $ 25,721 $ 531,183 $ 308,811 $ 641 $ 309,452 3
TEAM RIVER RUNNER, INC. STATEMENTS OF CASH FLOWS Year Ended December 31, 2015 2014 CASH FLOWS FROM OPERATING ACTIVITIES Change in Net Assets $ 221,731 $ 25,484 Adjustments to Reconcile Change in Net Assets to Net Cash Provided by Operating Activities Depreciation 79,794 42,987 Donated Vehicle (814) Loss on Uncollectible Pledges & Accounts Receivable 4,678 28,750 Change in: Grants Receivable (10,983) 10,000 Pledges Receivable 35,148 (20, 148) Accounts Receivable (4,678) Prepaid Expense (1,440) 2,060 Supplies (1,482) (379) Deposit 3,952 Accounts Payable and Accrued Expenses 59,512 42,034 Net Cash Provided by Operating Activities 390,910 125,296 CASH FLOWS FROM INVESTING ACTIVITIES Purchases of Kayaks and Equipment (178,730} (26,380} Net Cash Used in Investing Activities (178,730) (26,380) NET INCREASE IN CASH AND CASH EQUIVALENTS 212,180 98,916 CASH AND CASH EQUIVALENTS, Beginning of Year 203,852 104,936 CASH AND CASH EQUIVALENTS, End of Year $ 416,032 $ 203,852 4
STATEMENT OF FUNCTIONAL EXPENSES YEAR ENDED DECEMBER ~ 2015 General and Program Administrative Fund raising Total EXPENSES Program Expense $ 195,699 $ 240 $ 17,077 $ 213,016 Salaries and Benefits 116,751 51,219 16,148 184,118 Kayak Equipment and Supplies 82,204-80 82,284 Outside Services 75,602 6,537 664 82,803 Accounting (In-Kind) - 61,689-61,689 Depreciation 79,794 - - 79,794 Charitable Contributions 35,000 - - 35,000 Miscellaneous 1,486 7,616 621 9,723 Equipment Rental and Maintenance 27,548-1,739 29,287 Promotional Items 9,966 326 987 11,279 Rent 15,448 13,957 13,957 43,362 Awards 947-210 1,157 Telephone 357 7,272-7,629 Supplies 5,823 172 104 6,099 Dues and Subscriptions 2,784 80 19 2,883 Insurance 10,867 - - 10,867 Loss on Uncollectible Receivables - 4,678-4,678 Staff Development 680 - - 680 - Total Expenses $ 660,956 $ 153,786 $ 51,606 $ 866,348 5
STATEMENT OF FUNCTIONAL EXPENSES YEAR ENDED DECEMBER ;li, 2014 General and Pro9ram Administrative Fundraisin!ij Total EXPENSES Program Expense $ 128,921 $ 2,078 $ 50 $ 131,049 Salaries and Benefits 145,001 45,921 25,884 216,806 Kayak Equipment and Supplies 22,020 - - 22,020 Outside Services 100 43,929 5,387 49,416 Accounting (In-Kind) - 46,113-46,113 Depreciation 42,987 - - 42,987 Miscellaneous 9,297 1,329 3,806 14,432 Equipment Rental and Maintenance 12,533-600 13,133 Promotional Items 6,695 1,283 3,745 11,723 Rent 7,796 20,004 7,796 35,596 Awards 95-466 561 Telephone 471 9,645-10,116 Supplies 3,596 1,086 661 5,343 Dues and Subscriptions 649 520-1,169 Insurance 11 '170 - - 11 '170 Loss on Uncollectible Pledges - 28,750-28,750 Staff Development 70-25 - 95 Total Expenses $ 391,401 $ 200,683 $ 48,395 $ 640,479 6
NOTES TO FINANCIAL STATEMENTS DECMEBER 31, 2015 AND 2014 NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING PRINCIPLES Organization Team River Runner, Inc. (TRR), was incorporated in the state of Maryland on August 25, 2005. The purposes for which the corporation is organized are exclusively charitable and include the promotion of health and healing for disabled veterans through white water boating and other related activities. This includes working in partnership with the Wounded Warrior Project and Disabled Sports USA to assist recuperating veterans at Walter Reed Army Medical Center (WRAMC). Basis of Accounting The financial statements have been prepared using the accrual basis of accounting. Accordingly, revenue is recognized when earned and expenses are recognized when the obligation is incurred. Estimates Management uses estimates and assumptions in preparing these financial statements in conformity with accounting principles generally accepted in the United States of America. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could vary from the estimates that were used. Cash and Cash Equivalents Cash and cash equivalents include cash in banks and money market accounts. TRR had uninsured deposits totaling approximately $181,000 in excess of the Federal Deposit Insurance Corporation (FDIC) limits at December 31,2015. Receivables TRR records receivables net of an allowance for doubtful accounts when necessary. The allowance is determined based on a review of the estimated collectibility of the specific accounts, plus a general provision based on historical loss experience and existing economic conditions. Uncollectible amounts are charged-off against the allowance for doubtful accounts once management determines a grant, pledge, or an account or a portion thereof, to be worthless. TRR recognized $4,768 and $0 of losses on uncollectible grants and accounts receivable for the years ended December 31, 2015 and 2014, respectively. Management believes its remaining grants and accounts receivable to be fully collectible. 7
NOTES TO FINANCIAL STATEMENTS DECMEBER 31. 2015 AND 2014 NOTE 1- ORGANIZATION AND SIGNIFICANT ACCOUNTING PRINCIPLES (Continued) Grants and Pledges Receivable Grant and pledges receivable represent unconditional promises to give cash to TRR. Unconditional promises to give that are expected to be collected within one year are reflected as current pledges receivable and are recorded at their net realizable values in the period in which TRR is notified by the grantor or donor of his or her commitment to make a contribution. The need for an allowance is determined based on a review of the estimated collectability of the specific accounts, plus a general provision based on historical loss experience and existing economic conditions. Uncollectible amounts are charged off against the allowance for uncollectible grant or pledges once management determines an account, or a portion thereof, to be uncollectible. TRR recognized $0 and $28,750 of losses on uncollectible pledges receivable for the years ended December 31, 2015 and 2014, respectively. The allowance for uncollectible pledges at December 31,2015 and 2014 was $0. Kayaks and Equipment Kayaks and equipment with acquisition costs in excess of $500 are recorded at cost, or, in the case of donated property, estimated fair market value at the date of donation. Items that cost less than $500 are recorded as expense when purchased. Depreciation is computed on the straight-line method over estimated useful lives of 5 to 7 years. Maintenance and repairs are expensed when incurred. Depreciation expense for the years ended December 31, 2015 and 2014 was $79,794 and $42,987, respectively. Income Taxes TRR is exempt from income taxes under Section 501(c)(3) of the Internal Revenue Code (IRC) and is not a private foundation. TRR did not have any unrelated business income for the years ended December 31, 2015 and 2014; therefore, no income tax expense is recognized in the accompanying financial statements. TRR believes that it has appropriate support for any tax positions taken, and, as such, does not have any uncertain tax positions that are material to the financial statements. TRR recognizes interest expense and penalties on uncertain tax positions in general and administrative expenses on the statements of activities and change in net assets. There is no provision in these financial statements for penalties and interest on uncertain tax positions for the years ended December 31, 2015 and 2014. Tax years prior to 2012 are no longer subject to examination by the IRS and the state of Maryland. Net Assets TRR's net assets are classified into two categories: unrestricted and temporarily restricted. All contributions are considered to be available for unrestricted use unless specifically restricted by the donor or by law. 8
NOTES TO FINANCIAL STATEMENTS DECMEBER 31. 2015 AND 2014 NOTE 1- ORGANIZATION AND SIGNIFICANT ACCOUNTING PRINCIPLES (Continued) Revenue Recognition TRR reports gifts of cash and other assets as restricted support if they are received with donor stipulations that limit the use of the donated assets. When a donor 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 and change in net assets as net assets released from restrictions. Restrictive support, where the restriction has been satisfied during the year, is classified as unrestricted support. TRR received $63,020 and $0 in temporarily restricted revenue during the years ended December 31, 2015 and 2014, respectively. Public support is recorded as revenue when contributions, which include unconditional promises to give, are pledged. Grants receivable are all due with one year and all are collectible based on subsequent receipts. Contributed Services There are numerous volunteers who have volunteered their time to TRR. The value of such services is not reflected in the accompanying financial statements. Under FASB Accounting Standard (FASC) topic on Contributions, only contributed services of a professional nature (e.g., legal and accounting) are recorded at their estimated fair value. Functional Allocation of Expenses The costs of providing the various programs and other activities have been summarized on a functional basis in the statements of activities and change in net assets. Accordingly, certain costs have been allocated among the programs and supporting services benefitted. Subsequent Events TRR has evaluated events and transactions for potential recognition or disclosure through January 11, 2017, the date the financial statements were available to be issued. NOTE 2- IN-KIND CONTRIBUTIONS For the years ended December 31, 2015 and 2014, TRR received benefit from donated materials of approximately $0 and $6,958 and donated accounting services and rent of approximately $81,889 and $62,118, respectively. The value of donations has been reflected on the accompanying statements of activities and change in net assets as contributions revenue and program, management and general, and fundraising expenses. 9
NOTES TO FINANCIAL STATEMENTS DECMEBER 31.2015 AND 2014 NOTE 3- TEMPORARILY RESTRICTED NET ASSETS Temporarily restricted net assets consist of the unexpended portion of restricted contributions and grants received by TRR. These contributions and grants are restricted for the following programs: December 31, 2015 2014 Reno, Nevada Site National Leadership Conference Key Largo Outta Sight Clinic Montana Outta Sight Clinic $ 494 15,402 5,000 4,825 $ 641 $ 25,721 $ 641 NOTE 4- COMMITMENTS During 2013, TRR entered into a 3-year lease for office space in Falls Church, Virginia which was set to expire on April 30, 2016. Base monthly rental payments at inception were $1,976, and increase approximately 4.0 percent per year. TRR also pays its share of operating expenses and real estate taxes over the base year. In March 2015, the lease was terminated by TRR as part of a move to separate office space and early termination fees of $15,000 were paid. No future minimum lease payments relating to this lease were required as of December 31, 2015. Rent expense totaling $43,362 and $35,596 was recognized during the years ended December 31, 2015 and 2014, respectively. In August 2015, a former TRR employee filed a lawsuit against TRR alleging incomplete compensation regarding the employee's services provided prior to the employee's resignation. Although TRR does not believe the plaintiff's allegations were merited, the two parties reached a settlement in November 2015. Per the terms of the agreement, payments related to the settlement were paid in full as of November 30, 2015. The settlement has been recorded in Accounts Payable and Accrued Expenses on the Statements of Financial Position, General and Administrative Expenses on the Statements of Activities and Outside Services on the 2015 Statement of Functional Expenses. 10