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HomeMy WebLinkAboutLINC Financial Audit June 2023L.I.N.C., INC. Financial Statements For the Years Ended June 30, 2023 and 2022 L.LN.C., INC. Table of Contents June 30, 2023 and 2022 Independent Accountants' Audit Report Statement of Financial Position Statement of Activities and Changes in Net Assets Statement of Functional Expenses Statement of Cash Flows Cl Notes to Financial Statements 6-10 Clement Goodson, CPA Lynn Taylor, CPA 763 S. Kerr Ave Wilmington, NC 28403 Phone 910-392-4650 Fax 910-392-3240 Independent Auditor's Report To the Board of Directors L.I.N.C, Inc. Wilmington, NC 28405 Report on the Financial Statements We have audited the accompanying financial statements of L.I.N.C., Inc., which comprise the statements of financial position as of June 30, 2023, and June 30, 2022, and the related statements of activities and changes in net assets, statements of 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. Auditor's Responsibility 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 from material misstatement. An audit involves perfonning procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's 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 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 L.I.N.C., Inc, as of June 30, 2023 and 2022, and the statements of activities and changes in net assets and cash flows for the years then ended, in accordance with accounting principles generally accepted in the United States of America. Goodson & Taylor, CPAs December 28, 2023 L.I.N.C., Inc. Statement of Financial Position June 30, 2023 and 2022 Assets Current Assets Cash in bank Grants and other receivables Other miscellaneous receivables Prepaid expenses Total Current Assets Non Current Assets Land and building Leasehold improvements Furnishings and equipment Vehicles ME building replacement Less: accumulated depreciation Total Non -Current Assets Total Assets Liabilities and Net Assets Current Liabilities Accounts payable Accrued payroll taxes Current portion of long term debt Total Current Liabilities Non Current Liabilities Note Payable -City of Wilmington Note Payable -City of Wilmington Note Payable -North Carolina Finance Housing Agency Note Payable -First Citizens Bank Note Payable -First Bank Note Payable -Live Oak Bank Note Payable -SBA Less: Current Portion Total Non Current Liabilities Total Liabilities Net Position (assets in excess of liabilities) Unrestricted -net position Total Net Position (assets in excess of liabilities) Total Liabilities and Net Position See notes to financial statements. 2 2022 $ 1,758,978 $ 1,243,009 484,035 186,836 10,772 4,485 286 286 2,254 071 1,434,616 740,882 280,198 1,258,105 1,251,305 141,823 141,307 64,156 62,134 49,000 49,000 2,253,966 1,783,944 (467,053) (425,803) 1,786,913 1358 141 $ 4,040,984 $ 2,792,757 $ 126,390 $ 92,173 7,781 7,911 43,262 23,107 177,433 123,191 550,000 550,000 455,647 - 549,596 549,596 178,893 195,217 64,612 71,175 - 140,000 150,000 149,900 (43,262) (23,107) 1,905,486 1,632,781 2,082,919 1,755,972 1,958,065 1,036,785 1,958 065 1,036,785 $ 4,040,984 $ 2,792,757 L.I.N.C., Inc. Statement of Activities and Changes in Net Assets For the Years Ended June 30, 2023 and 2022 Support and Revenues Program Service Revenue City of Wilmington County Grants New Hanover County ABC Board New Hanover Community Endowment Z Smith Reynolds Foundation NC Justice Center Other Grants United Way Contributions Rental Income -ME Roberts Fundraising Other Income Interest Income TOTAL SUPPORT AND REVENUES EXPENSES Program services Supporting services -Administration TOTAL EXPENSES Change in net position Net position -beginning of year Net position -end of year See notes to financial statements. 3 2023 2022 2,150,882 1,477,975 69,785 78,606 46,757 - 100,000 149,000 - - 60,000 30,000 80,000 1,116,538 474,938 72,280 28,614 59,342 72,555 56,332 45,800 24,113 30,259 145,646 - 6,322 162 4,026,997 2,348,909 2,778,798 1,816,839 326,919 312,697 3,105,717 2,129,536 921,280 219,373 1,036,785 817,412 $ 1,958,065 $ 1,036,785 L.I.N.C., Inc. Statement of Functional Expenses For the Years Ended June 30, 2023 and 2022 Expenses Salaries Payroll taxes and workmen's compensation Consulting & professional Program costs & client supplies Bad Debt Advertising Travel Training Insurance Rent and occupancy Office operations Event expenses Utilities and telephone Depreciation Other Expenses Interest Total Expenses Support Program Services - Services Administrative Total 2022 $ 1,517,005 $ 312,974 $ 1,829,979 $ 1,168,860 199,834 - 199,834 118,324 56,737 13,945 70,682 71,429 422,570 - 422,570 301,165 4,002 - 4,002 - 8,820 - 8,820 7,001 42,638 - 42,638 27,269 37,953 - 37,953 27,514 52,876 - 52,876 64,647 161,999 - 161,999 96,393 31,147 - 31,147 80,537 14,136 - 14,136 24,037 105,970 - 105,970 75,739 41,250 - 41,250 40,000 68,479 - 68,479 11,173 13,382 - 13,382 15,448 $ 2,778,798 $ 326,919 $ 31105,717 $ 2,129,53 See notes to financial statements. 4 L.I.N.C., Inc. Statement of Cash Flows For the Years Ended June 30, 2023 and 2022 2023 2022 Cash Flows from Operating Activities Increase (Decrease) in Net Position $ 921,280 $ 219,373 Adjustments to reconcile Net Position to net cash provided by operating activities Depreciation 41,250 40,000 (Increase) Decrease in operating activities Accounts receivable (303,486) (9,199) Increase (Decrease) in operating liabilities Accounts payable 34,730 (32,943) Payroll taxes (130) 3,587 Net Cash Provided by Operating Activities 693,644 220,818 Cash flows provided (used) by Capital Activities Purchase of fixed assets (470,022) (64,581) Net Cash Provided by Capital Activities (470,022) (64,581) Cash flows provided (used) by Financing Activities Proceeds from long term debt 460,249 0 Repayment of long term debt (29,136) (17,471) Net Cash Provided by Financing Activities 431,113 (17,471) Net Increase in cash and cash equivalents 654,735 138,766 Beginning cash and cash equivalents 1,104,243 1,104,243 Ending cash and cash equivalents $1,758,978 $1,243,009 Supplemental Information Interest Income $6,322 Interest Expense $13,303 See notes to financial statements. L.I.N.C., Inc. Notes to Financial Statements June 30, 2023 and 2022 Note 1. Organization Nature of Activities L.I.N.C., Inc., Wilmington, North Carolina is a nonprofit corporation organized in North Carolina. L.I.N.C., Inc. provides shelter and services to men and women who have been released from local jails, state and federal prisons and on occasions, young adults who have been released from detention centers. Additionally, the organization provides services for children who are at risk due to parental incarceration. Note 2. Summary of Significant Accounting The significant accounting policies now followed are described below to enhance the usefulness of the financial statements to the reader. Basis of Accounting The financial statements of L.I.N.C., Inc. have been prepared on the accrual basis of accounting and, accordingly, reflect all significant receivables, payables, and other liabilities. Basis of Presentation The financial statement presentation follows the recommendations of the Financial Accounting Standards Board in its Statement of Financial Accounting Standards (SFAS) No. 117, Financial Statements of Not -for -Profits Organizations. Under SFAS No. 117, L.I.N.C., Inc., is required to report information regarding its financial positions and activities in three classes of net assets: unrestricted net assets, temporarily restricted net assets and permanently restricted net assets. Use of estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Estimates also affect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Classes of Net Assets The financial statements report amounts separately by class of net position. a) Unrestricted operations amounts are those currently available at the discretion of the board for use in the organization's operations. b) Temporarily restricted amounts are those which are stipulated by donors for specific purposes. All contributions are considered available for unrestricted use, unless specifically restricted by the donor or subject to other legal restrictions. Cash and cash equivalents Operating cash and cash investments include all cash on hand, demand deposits, and certificates of deposit with original maturity dates of less than ninety days. Grants Receivable Grants receivables include amounts due on grants from various agencies. Revenue is recorded as earned when eligibility requirements are met. These receivables are due within one year. An allowance for uncollectible amounts has not been recorded due to past collection history. Property and Depreciation Property and equipment in excess of $150 is recorded at cost and donated assets are capitalized at fair market value. Depreciation of equipment is provided over the estimated useful lives of the respective assets using the straight-line method of depreciation. Estimated lives for equipment is 5-7 years. Donated Materials and Services Donated materials, property and equipment are reflected as contributions at their estimated value at date of receipt. No amounts have been reflected in the financial statements for donated services in as much as no objective basis is available to measure the value of such services. Volunteers donate time in administration and other activities. The following table reflects the time contributed by volunteers for the year ended June 30, 2023 and 2022. Board Members 2023 Hours contributed 396 Board Members 2023 Hours contributed 342 Allocation of expenses The costs of providing the various programs and supporting activities of the organization have been summarized on a functional basis in the statement of activities. Accordingly, certain costs have been allocated among the program and supporting activities using an objective basis such as time spent. Tax Status L.I.N.C., Inc. qualifies as a tax-exempt organization under Internal Revenue Code Section 501(c) (3) of the U.S. Internal Revenue Code. Accordingly, gifts to the Organization may be deductible and the organization's income related to its exempt purpose is not subject to income tax. Revenues and Expenses Unrestricted contributions are recognized when cash or ownership of donated assets is unconditionally promised to the organization. Temporarily restricted contributions are recognized as contribution income in the statement of activities when cash or ownership of donated assets is unconditionally 7 promised to the organization and subsequently released to the unrestricted fund when expenses have been incurred in satisfaction of those restrictions. Other income is recognized when earned. Expenses are recognized when incurred in accordance with the accrual basis of accounting. The organization reports gifts of land, buildings, and equipment as unrestricted support unless explicit donor stipulations specify how the donated assets must be used. Gifts of long-lived assets with explicit restrictions that specify how the assets are to be used and gifts of cash or other assets that must be used to acquire long-lived assets are recorded as restricted support. Unless the donor stipulated otherwise, the organization reports expirations of donor restrictions when the donated or acquired long-lived assets are placed in service. Note 3. Long Term Notes Payable The organization entered into an agreement with the City of Wilmington to borrow funds for the soft costs of developing a transitional housing facility. As of June 30, 2023, the Organization has borrowed $550,000. There is no interest on the loan, and it is due and payable when permanent financing is arranged for the facility. 2. The organization has borrowed funds from the State Employees Credit Union in the amount of $549,596, which in 2013 was refinanced with the North Carolina Housing Finance Agency with a principal amount of $550,000. Currently the loan has an interest rate of 0%. Currently no payments are being made on this loan. The principal amount is not due until March 1, 2043. 3. The organization has borrowed funds from First Citizens Bank in the amount of $178,893. The interest rate on this loan is 4.0% with monthly payments of $1,890. The current portion due on this loan for the next fiscal year is $15,391. The future repayment for this loan for the next five years is as follows: Principal Interest Total 2023-2024 $15,391 $7,289 $22,680 2024-2025 15,982 6,698 22,680 2025-2026 16,436 6,244 22,680 2026-2027 16,890 5,790 22,680 2027-2028 17,231 5,449 22,680 2028-and future 96,963 29,200 126,163 Total $178,893 $60,670 $239,563 4. The organization has borrowed funds from First Bank for land and a building in the original amount of $92,000. The balance as of June 30, 2023, is $64,612. The interest rate on the loan is 4.25% with monthly payments of $695. The current portion due on this loan for the next fiscal year is $5,594. The future repayment for this loan for the next five years is as follows: Principal Interest Total 2023-2024 $ 5,594 $ 2,746 $ 8,340 2024-2023 $ 59,018 $ 1,465 $ 60,483 $ 64,612 $ 4,211 $ 68,823 The Organization has borrowed $140,000 from Live Oak Bank. The loan proceeds were part of a government loan known as the Payroll Protection Program. The organization has applied for forgiveness of the loan, and it was approved in the subsequent fiscal year. As of June 30, 2023, the loan was paid in full. 6. The Organization has borrowed $150,000 from the Small Business Administration. The loan proceeds were used to supplement working capital due to the Pandemic. The payment terms are as follows. Payments will start July 30, 2023, with a total monthly payment of $641.00 which includes interest at 2.75%. The term of the loan is 30 years. Principal and interest payments for the next five years are as follows: Principal Interest Total 2023-2024 3,869 3,823 7,692 2024-2025 3,976 3,716 7,692 2025-2026 4,088 3,604 7,692 2026-2027 4,204 3,488 7,692 2027-2028 4,323 3,369 7,692 2028-and future 129,540 47,190 176,730 Total $ 150,000 $ 65,190 $ 215,190 7. The Organization has borrowed $460,250 from the City of Wilmington for the property at 909-915 N. 4th St. in Wilmington, NC. The terms of the note require 300 monthly payments of $1,534 without any interest. Payments for the next fiscal years are as follow: Principal Interest Total 2023-2024 18,408 - 18,408 2024-2025 18,408 - 18,408 2025-2026 18,408 - 18,408 2026-2027 18,408 - 18,408 2027-2028 18,408 - 18,408 2028-and future 363,607 - 363,607 Total $ 455,647 $ - $ 455,647 Note 4. Subsequent Events The Organization has evaluated its subsequent events (events occurring after June 30. 2023) through December 28, 2023, which represents the date the financial statements were issued. 10