TABLE OF CONTENTS PAGE Independent Auditors Report 1 Financial Statements Statements of Financial Position 2 Statements of Activities 3 Statements of Cash Flows 4 Statement of Functional Expenses 5 Notes to Financial Statements 6-9
STATEMENTS OF FINANCIAL POSITION JUNE 30, 2012 AND 2011 ASSETS 2012 2011 Cash and cash equivalents $ 610,094 $ 364,519 Grants receivable 200,000 200,000 Prepaid expenses 2,922 26,702 Equipment - net (Note 3) 102 658 Total Assets $ 813,118 $ 591,879 LIABILITIES AND NET ASSETS Accounts payable $ - $ 625 Accrued payroll taxes 17,347 245 Accrued vacation 10,601 10,601 Total Liabilities 27,948 11,471 Net Assets Unrestricted 585,170 580,408 Temporarily restricted (Note 4) 200,000 - Total Net Assets 785,170 580,408 Total Liabilities and Net Assets $ 813,118 $ 591,879 See accompanying notes - 2 -
STATEMENTS OF ACTIVITIES FOR THE YEARS ENDED JUNE 30, 2012 AND 2011 Temporarily 2012 2011 Unrestricted Restricted Total Total Revenue: Foundation grants $ 595,418 $ 200,000 $ 795,418 $ 221,248 Contributions 1,198-1,198 696,100 Interest income 440-440 238 Gain on sale of investments 3,008-3,008 - Total revenue 600,064 200,000 800,064 917,586 Expenses: Program 484,312-484,312 272,004 Management and general 110,990-110,990 81,803 Total expenses 595,302-595,302 353,807 Change in Net Assets 4,762 200,000 204,762 563,779 Net Assets, Beginning of Year 580,408-580,408 16,629 Net Assets, End of Year $ 585,170 $ 200,000 $ 785,170 $ 580,408 See accompanying notes - 3 -
STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED JUNE 30, 2012 AND 2011 2012 2011 Reconciliation of Increase in Net Assets to net cash flows from operating activities Change in net assets $ 204,762 $ 563,779 Depreciation 556 912 Gain on sale of investments (3,008) - Changes in: Grants receivable - (200,000) Prepaid expenses 23,780 (26,702) Accounts payable (625) 625 Accrued payroll taxes 17,102 (1,101) Net cash provided by Operating Activities 242,567 337,513 Cash Flows from Investing Activities: Proceeds from sale of investments 503,008 - Purchase of investments (500,000) - Net Cash Provided by Investing Activities 3,008 - Net Increase in Cash 245,575 337,513 Cash and Cash Equivalents, Beginning of Year 364,519 27,006 Cash and Cash Equivalents, End of Year $ 610,094 $ 364,519 See accompanying notes - 4 -
STATEMENT OF FUNCTIONAL EXPENSES FOR THE YEAR ENDED JUNE 30, 2012 WITH COMPARATIVE TOTALS FOR THE YEAR ENDED 2011 Program Management Total Total Services and General 2012 2011 Salaries and wages $ 214,787 $ 53,697 $ 268,484 $ 201,660 Payroll taxes 15,790 3,948 19,738 15,889 Employee benefits 37,365 9,341 46,706 31,318 Total payroll expenses 267,942 66,986 334,928 248,867 Program expenses 120,089-120,089 - Contract labor 18,271 18,270 36,541 14,606 Professional fees 8,402 8,401 16,803 14,390 Expendable equipment 5,695-5,695 - Insurance - 2,047 2,047 2,047 Meetings and conferences 20,292 1,068 21,360 15,509 Occupancy 8,281 8,281 16,562 18,395 Office supplies - 1,641 1,641 1,748 Office expense 3,727 196 3,923 3,001 Program supplies 3,750-3,750 3,375 Postage and delivery 685-685 984 Printing expense 84-84 - Publications - - - 4,015 Repairs and maintenance - 488 488 454 Telephone 3,055 3,056 6,111 4,496 Travel 24,039-24,039 21,008 Depreciation - 556 556 912 Total Expenses - June 30, 2012 $ 484,312 $ 110,990 $ 595,302 Total Expenses - June 30, 2011 $ 272,004 $ 81,803 $ 353,807 See accompanying notes - 5 -
NOTES TO FINANCIAL STATEMENTS NOTE 1: ORGANIZATIONAL INFORMATION Community Forestry International, Inc. (the Organization ) is a not-for-profit corporation organized in California in 1999. The Organization assists rural communities in Asia to regenerate forests by helping policy makers, development agencies, and professional foresters develop the legal instruments, human resource capacities, and negotiation processes and methods to support resident resource managers. NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Accounting The accompanying financial statements have been prepared on the accrual basis of accounting. Classification and Reporting of Net Assets The Organization reports information about its financial position and activities in three classes of net assets: unrestricted, temporarily restricted, and permanently restricted. Unrestricted Net Assets Unrestricted net assets are those net assets which are received without donor restriction or those net assets for which donor restrictions have been fulfilled. Temporarily Restricted Net Assets: Temporarily restricted net assets consist of contributions and other inflows of funds temporarily subject to donor-imposed restrictions. The restrictions are temporary in that they are expected to expire with the passage of time or be satisfied and removed by the actions of the Organization that fulfill donor stipulations. The Organization had no temporarily restricted net assets at June 30, 2011. Permanently Restricted Net Assets: Permanently restricted net assets are those net assets restricted in perpetuity by the donor. At June 30, 2012 and 2011, the Organization had no permanently restricted net assets. - 6 -
NOTES TO FINANCIAL STATEMENTS NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Recognition of Donor Restrictions Contributions received are recorded as unrestricted, temporarily restricted, or permanently restricted support depending on the existence or nature of any donor restrictions. Contributions received and expended in the same year are recorded as unrestricted net assets. Cash and Cash Equivalents For the purposes of the Statements of Cash Flows, the Organization considers cash to be cash on hand, in checking and in savings accounts having original maturities of three months or less. Grants Receivable Certain of the Organization s grants contain budgetary restrictions and are recorded as revenue when the funds are expended. The excess of expenditures over grant funds received is recorded as grants receivable from the granting agency when the revenue has been earned and does not exceed the contract award. The Organization records other grants as receivable when fulfilling additional requirements are not deemed onerous. Management believes the grants receivable are fully collectible within a year; consequently, management has not provided for an allowance for uncollectible grants receivable. Equipment The Organization records property and equipment at cost if purchased or at fair market value at time of contribution if donated and depreciates these assets using the straight-line method over their estimated useful lives, estimated at 5 years for equipment. Assets with a cost of $1,000 or more and an estimated useful life of more than one year are capitalized. Income Taxes The Organization is exempt from income tax liability under Section 501(c)(3) of the Internal Revenue Code and Section 23701d of the California Revenue and Taxation Code. The Organization is not considered a private foundation. The Organization does not have any income that it believes would subject it to unrelated business income taxes; nor is it aware of any uncertain tax positions at June 30, 2012 and 2011, or for any year for which the statute remains open. Accordingly, there is no provision or liability for income taxes in these financial statements. Fair Value of Financial Instruments The fair value of grants receivable, prepaid expenses, and liabilities approximates carrying value because of the short term nature of these items. - 7 -
NOTES TO FINANCIAL STATEMENTS NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Functional Expenses The Organization has allocated the costs of providing the Organization s programs based upon functional classifications. Direct costs are charged directly to the appropriate program. Indirect costs are allocated using proportion of shared costs. Program service expenses consist of costs incurred in connection with providing services and conducting its programs. Supporting service expense consists of costs incurred in connection with the overall activities of the Organization. The allocations are based upon current data. Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities at the date of the financial statements and the reporting period. Actual results could differ from those estimates. Estimates and assumptions include, but are not limited to, functional expense allocation. It is a least reasonably possible that the significant estimates used will change within the next year. Comparative Information The financial statements include certain prior year summarized comparative information in total but not by allocable amounts. Such information does not include sufficient detail to constitute a presentation in conformity with generally accepted accounting principles. Accordingly, such information should be read in conjunction with the Organization s financial statements for the year ended June 30, 2011. NOTE 3: EQUIPMENT Equipment with a cost of $6,038 at June 30, 2012 and 2011 is shown net of accumulated depreciation of $5,936 and $5,380 at June 30, 2012 and 2011, respectively. NOTE 4: TEMPORARILY RESTRICTED NET ASSETS Temporarily restricted net assets at June 30, 2012 were comprised of $200,000 restricted for the purpose of reducing emissions from deforestation and degradation. - 8 -
NOTES TO FINANCIAL STATEMENTS NOTE 5: RELATED PARTY The Organization leases on a month to month basis a separate office located on the premises of two ex-officio board members who are also employees. Payments for the years ended June 30, 2012 and 2011 totaled $16,562 and $18,395, respectively. NOTE 6: RETIREMENT PLAN The Organization has a 403(b) retirement plan. Employees who have attained age 21 are eligible to participate. The Organization contributes up 12% of the employee s salary or up to the maximum allowed by law, whichever is less. The Organization contributed $46,706 and $31,318 in the years ended June 30, 2012 and 2011, respectively. Subsequent to year end, the Organization closed the 403(b) retirement plan, see Footnote 8. NOTE 7: CONCENTRATION OF RISK Grants During the year ended June 30, 2012, the Organization included in revenue a grant representing approximately 74% and one representing approximately 25% of total revenue. During the year ended June 30, 2011, the Organization received one grant representing approximately 55% and one representing approximately 21% of its total revenue for the year then ended. NOTE 8: SUBSEQUENT EVENTS Management has evaluated subsequent events through January 31, 2013, which is the date the financial statements were available to be issued. Management has determined no subsequent events requiring disclosure or significantly impacting disclosure have occurred except: In August 2012, the Organization closed the 403(b) retirement plan and will offer a simplified employee pension individual retirement account to employees. - 9 -