EVERYGENERATIONMINISTRIES,INC. AUDITREPORT FortheFiscalYearEnded June30,2014 (WithComparativeTotalsfor2013) EVERYGENERATIONMINISTRIES,INC. FortheFiscalYearEndedJune30,2014 TableofContents Page IndependentAuditors’Report................................................................................................................................................................1 BasicFinancialStatements: StatementofFinancialPosition.....................................................................................................................................................2 StatementofActivities.......................................................................................................................................................................3 StatementofCashFlows...................................................................................................................................................................4 StatementofFunctionalExpenses................................................................................................................................................5 NotestoFinancialStatements.................................................................................................................................................................6 INDEPENDENTAUDITORS’REPORT BoardofDirectors EveryGenerationMinistries,Inc. Temecula,California ReportontheFinancialStatements We have audited the accompanying financial statements of Every Generation Ministries, Inc. (a nonprofit organization),whichcomprisethestatementoffinancialpositionasofJune30,2014and2013andtherelated statementsofactivities,functionalexpenses,andcashflowsfortheyearthenended,andtherelatednotesto thefinancialstatements. Management’sResponsibilityfortheFinancialStatements Management is responsible for the preparation and fair presentation of these financial statements in accordancewithaccountingprinciplesgenerallyacceptedintheUnitedStatesofAmerica;thisincludesthe design,implementation,andmaintenanceofinternalcontrolrelevanttothepreparationandfairpresentation offinancialstatementsthatarefreefrommaterialmisstatement,whetherduetofraudorerror. Auditor’sResponsibility Ourresponsibilityistoexpressanopiniononthesefinancialstatementsbasedonouraudits.Weconducted ourauditsinaccordancewithauditingstandardsgenerallyacceptedintheUnitedStatesofAmerica. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financialstatementsarefreeofmaterialmisstatement. Anauditinvolvesperformingprocedurestoobtainauditevidenceabouttheamountsanddisclosuresinthe financialstatements.Theproceduresselecteddependontheauditor’sjudgment,includingtheassessmentof therisksofmaterialmisstatementofthefinancialstatements,whetherduetofraudorerror.Inmakingthose 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,butnotforthepurposeofexpressinganopinionontheeffectivenessoftheentity’sinternal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accountingpoliciesusedandthereasonablenessofsignificantaccountingestimatesmadebymanagement,as wellasevaluatingtheoverallpresentationofthefinancialstatements. Webelievethattheauditevidencewehaveobtainedissufficientandappropriatetoprovideabasisforour auditopinion. Opinion Inouropinion,thefinancialstatementsreferredtoabovepresentfairly,inallmaterialrespects,thefinancial positionofEveryGenerationMinistries,Inc.asofJune30,2014and2013,andthechangesinitsnetassets anditscashflowsfortheyearthenendedinaccordancewithaccountingprinciplesgenerallyacceptedinthe UnitedStatesofAmerica. Murrieta,California September16,2014 1 EVERYGENERATIONMINISTRIES,INC. StatementofFinancialPosition June30,2014 June30, 2014 2013 $587,508 98,324 ‐ 6,301 ‐ 692,133 $569,292 ‐ 7,724 9,427 4,000 590,443 NoncurrentAssets Refundabledeposits Notesreceivable TotalNoncurrentAssets 3,702 ‐ 3,702 4,469 3,548 8,017 CapitalAssets Capitalassets,net TotalCapitalAssets 40,841 40,841 22,507 22,507 TotalAssets $736,676 $620,967 $ 13,894 432 3,722 18,048 $23,756 320 4,846 28,922 Long‐TermLiabilities Accruedvacation TotalLong‐TermLiabilities 45,171 45,171 40,334 40,334 TotalLiabilities 63,219 69,256 294,646 378,811 241,334 310,377 673,457 551,711 $ 736,676 $620,967 ASSETS CurrentAssets Cash Investments Accountsreceivable Prepaidexpenses Notesreceivable,currentportion TotalCurrentAssets LIABILITIESANDNETASSETS Liabilities CurrentLiabilities Accountspayable Creditcardpayable Accruedexpenses TotalCurrentLiabilities NetAssets Unrestricted Temporarilyrestricted TotalNetAssets TotalLiabilitiesandNetAssets 2 Seeaccompanyingnotesandauditors'report. EVERYGENERATIONMINISTRIES,INC. StatementofActivities FortheFiscalYearEndedJune30,2014 FortheFiscalYearEndedJune30, 2014 Temporarily Unrestricted Restricted Total 2013 Total REVENUES,GAINS,ANDOTHERSUPPORT Contributions Events InterestIncome Grants In‐KindDonations NetAssetsReleasedFromRestrictions $431,150 163,636 827 127,000 4,000 753,078 $482,666 10,000 ‐ 328,846 ‐ (753,078) $913,816 173,636 827 455,846 4,000 ‐ $1,032,867 152,716 1,544 370,157 2,850 ‐ 1,479,691 68,434 1,548,125 1,560,134 1,104,151 123,098 199,130 ‐ ‐ ‐ 1,104,151 123,098 199,130 1,156,654 109,995 157,868 1,426,379 ‐ 1,426,379 1,424,517 CHANGEINNETASSETS 53,312 68,434 121,746 135,617 NETASSETSATBEGINNINGOFYEAR 241,334 310,377 551,711 416,094 NETASSETSATENDOFYEAR $294,646 $378,811 $673,457 $551,711 TotalRevenues,Gains,andOtherSupport EXPENSES ProgramServices ManagementandGeneral Fundraising TotalExpenses 3 Seeaccompanyingnotesandauditors'report. EVERYGENERATIONMINISTRIES,INC. StatementofCashFlows FortheFiscalYearEndedJune30,2014 FortheFiscalYearEndedJune30, 2014 2013 CASHFLOWSFROMOPERATINGACTIVITIES ChangeinNetAssets $121,746 $135,617 6,766 (4,000) 6,945 ‐ 7,724 3,126 ‐ (2,784) (1,493) 672 (9,862) 112 (1,124) 14,332 (4) 733 124,488 154,018 767 7,548 4,911 (98,324) ‐ (26,011) (26) 3,999 ‐ ‐ (9,387) ‐ (111,109) (5,414) 4,837 14,136 NETINCREASE(DECREASE)INCASH 4,837 18,216 14,136 162,740 BEGINNINGCASH 569,292 406,552 ENDINGCASH $587,508 $569,292 Adjustmentstoreconcileincrease(decrease)innet assetstonetcashprovided(used)byoperating: Depreciationexpense Donationofequipment (Increase)decreaseinoperatingassets: Accountsreceivable Prepaidexpenses Ministryadvances Increase(decrease)inoperatingliabilities: Accountspayable Creditcardpayable Accruedexpenses NETCASHPROVIDED/(USED)BYOPERATINGACTIVITIES CASHFLOWSFROMINVESTINGACTIVITIES Paymentstowardsrefundabledeposits Paymentsreceivedonnotesreceivable Proceedsfromsaleofassets Purchaseofinvestments Purchaseofleaseholdimprovements Purchaseofvehicle NETCASHPROVIDED/(USED)BYINVESTINGACTIVITIES CASHFLOWSFROMFINANCINGACTIVITIES Increase(decrease)inaccruedvacation NETCASHPROVIDED/(USED)BYFINANCINGACTIVITIES Seeaccompanyingnotesandauditors'report. 4 EVERYGENERATIONMINISTRIES,INC. StatementofFunctionalExpenses FortheFiscalYearEndedJune30,2014 Program Services Ministry EXPENSES Salariesandothercompensation Grantstoorganizations,individuals Travel Otheremployeebenefits Feesforservice Eventexpenses Payrolltaxes Occupancy Advertisingandpromotion Conference,conventionsandmeetings Officesupplies Pensionplancontributions Depreciationexpense Insurance Informationtechnology Interest Totals FortheFiscalYearEndedJune30, 2014 Supporting Services Management and Total Expenses General Fundraising 2013 Total Expenses $ 421,284 376,734 116,242 48,904 9,249 26,056 20,037 20,268 26,503 12,487 7,076 7,416 4,588 4,014 3,004 289 $ 87,570 ‐ ‐ 8,598 13,276 ‐ 4,165 4,216 ‐ 654 1,471 675 954 834 625 60 $ 112,408 ‐ 9,055 12,596 15,245 26,056 5,346 5,412 6,507 887 1,888 557 1,224 1,071 802 76 $621,262 376,734 125,297 70,098 37,770 52,112 29,548 29,896 33,010 14,028 10,435 8,648 6,766 5,919 4,431 425 $581,860 444,504 94,681 69,606 49,358 42,621 32,414 26,285 21,957 21,800 12,974 8,438 6,945 5,923 5,020 131 $ 1,104,151 $ 123,098 $ 199,130 $1,426,379 $ 1,424,517 Seeaccompanyingnotesandauditors'report. 5 EVERYGENERATIONMINISTRIES,INC. NotestoFinancialStatements June30,2014 NOTE1–NATUREOFACTIVITIESANDSIGNIFICANTACCOUNTINGPOLICIES NatureofActivities TheOrganizationisaColoradononprofitcorporationwhichwasformedOctober6,1993,inordertoassist churchesinEasternEurope,LatinAmericaandtheMiddleEastindevelopingeffectiveministriesforchildren, youth,andtheirfamilies.TheOrganizationseekstoestablishministrycentersinmajormetropolitanareasto provideinnovativeleadershipdevelopmentandqualityministryresources. BasisofPresentation TheOrganization’spolicyistoprepareitsfinancialstatementsontheaccrualbasisofaccounting.Thismeans that revenues are recorded when earned, rather than when received, and expenses are recorded when incurred,notwhentheyarepaid. ComparativeFinancialInformation Thefinancialstatementsincludecertainprioryearsummarizedcomparativeinformationintotalbutnotby netassetclass.Suchinformationdoesnotincludesufficientdetailtoconstituteapresentationinconformity with GAAP. Accordingly, such information should be read in conjunction with the Organization’s financial statementsfortheyearendedJune30,2014,fromwhichthesummarizedinformationwasderived. RecognitionofRevenue TheprimarysourceofrevenuetotheOrganizationisdonations. Fundraisingrevenues,whichconsistofagolftournamentandauctiondinner,arerecordedwhentheevent occurs. Contributions received are recorded as unrestricted, temporarily restricted, or permanently restricted support depending on the existence and/or nature of any donor restrictions. The Organization has not receivedanycontributionswithdonor‐imposedrestrictionsthatwouldresultinpermanentlyrestrictednet assets. Unrestricted: These generally result from revenues generated by receiving unrestricted contributions,providingservices,andreceivinginterestfrominvestmentslessexpensesincurredin providingprogramrelatedservices,raisingcontributionsandperformingadministrativefunctions. Temporarily Restricted: The Organization reports gifts of cash and other assets as temporarily restrictedsupportwhentheyarereceivedwithdonorstipulationsthatlimittheuseofthedonated assets.Whenthedonorrestrictionexpires,i.e.thestipulatedtimerestrictionendsorthepurposeof therestrictionisaccomplished,temporarilyrestrictednetassetsarereclassifiedtounrestrictednet assetsandreportedintheStatementofActivitiesasnetassetsreleasedfromrestrictions. DonatedServices The Organization’s accounting policy for donated materials and equipment is to record these items as contributions at their estimated fair market value at the date they are received. Contributions of donated services that create or enhance non financial assets or that require specialized skills, are provided by individualspossessingthoseskills,andwouldtypicallyneedtobepurchasedifnotprovidedbydonation,are recordedatthefairvaluesofintheperiodreceived. 6 EVERYGENERATIONMINISTRIES,INC. NotestoFinancialStatements June30,2014 NOTE1–NATUREOFACTIVITIESANDSIGNIFICANTACCOUNTINGPOLICIES(continued) PropertyandEquipment Propertywithacostof$2,000orgreateriscapitalizedandrecordedasadditionstopropertyandequipment. Donated property is recorded at the estimated fair value at the date of the gift. Management considers donations of capital equipment as unrestricted, unless explicit time or purpose restrictions are imposed. Furnitureandequipmentisdepreciatedusingthestraight‐linemethodoveranestimatedusefullifeofseven years. Maintenance and repair costs are charged to expense as incurred. Leasehold improvements are depreciatedusingthestraight‐linemethodoveranestimatedusefullifeofsevenyears.Computerequipment andsoftwareandvehiclesaredepreciatedusingthestraight‐linemethodoveranestimatedusefullifeoffive years. CashandCashEquivalents TheOrganizationconsiderscashonhandandcertificatesofdepositwithmaturitydatesofthreemonthsor lessatthedateofinvestmenttobecashandcashequivalents. ConcentrationofRisk The Organization maintains its cash in various accounts at several financial institutions. At various times during the year, the amount on deposit with a single financial institution may exceed federal depository insurancelimits.AtJune30,2014,theOrganizationdidnotexceedthefederaldepositinsurancelimits. Estimates Thepreparationoffinancialstatementsinconformitywithgenerallyacceptedaccountingprinciplesrequires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly,actualresultscoulddifferfromthoseestimates. IncomeTaxes TheOrganizationisanon‐profitpublic‐benefitcorporationandhasbeenrecognizedastax‐exemptpursuant toSection501(c)(3)oftheInternalRevenueCodeandSection23701doftheCaliforniaRevenueandTaxation Code.Accordingly,noprovisionhasbeenmadeforincometaxes.Managementhasevaluateditstaxpositions andthecertaintyastowhetherthosepositionswillbesustainedintheeventofanauditbytaxingauthorities at the federal and state levels. The primary tax positions evaluated are related to the Organization's continued qualification as a tax‐exempt organization and whether there are unrelated business income activities conducted that would be taxable. Management has determined that all income tax positions are more likely than not of being sustained upon potential audit or examination; therefore, no disclosures of uncertainincometaxpositionsarerequired.TheOrganizationfilesinformationalreturnsintheU.S.federal jurisdictionandthestateofCalifornia. FairValueofFinancialInstruments The following methods and assumptions were used by the Organization in estimating its fair value disclosures for financial instruments: Cash and Accounts Payable as reported in the balance sheet approximatefairvaluebecauseoftheshortmaturitiesofthoseinstruments. FunctionalExpenses Thecostsofprovidingthevariousprogramsandotheractivitieshavebeensummarizedonafunctionalbasis inthecombiningstatementofactivities.Accordingly,certaincostshavebeenallocatedamongtheprograms andsupportingservicesbasedonthebenefitsderived. 7 EVERYGENERATIONMINISTRIES,INC. NotestoFinancialStatements June30,2014 NOTE2–CAPITALASSETS CapitalassetsasofJune30,2014consistedofthefollowing: Balance, July1,2013 Additions Retirements Balance, June30,2014 Capitalassetsbeingdepreciated: Furnitureandequipment Computerequipmentandsoftware Leaseholdimprovements Vehicles Totalcapitalassetsbeingdepreciated Accumulateddepreciationfor: Furnitureandequipment Computerequipmentandsoftware Leaseholdimprovements Vehicles Totalaccumulateddepreciation $19,085 11,789 9,387 34,791 75,052 $4,000 ‐ ‐ 26,011 30,011 $11,585 11,789 ‐ 8,989 32,363 $11,500 ‐ 9,387 51,813 72,700 (18,670) (11,788) (670) (21,417) (52,545) (286) ‐ (1,341) (5,139) (6,766) (11,169) (11,788) ‐ (4,495) (27,452) (7,787) ‐ (2,011) (22,061) (31,859) CapitalAssets,Net $22,507 $23,245 $4,911 $40,841 NOTE3–OPERATINGLEASE On January 7, 2013, the Organization renewed a previous two‐year lease agreement for office space in Temecula,California.Thetermsoftheleaseincludemonthlypaymentsof$1,689beginningFebruary1,2013 through January 31, 2018. The terms of the lease agreement incorporates predetermined increases each year. This agreement contains no bargain purchase option. Lease payments totaled $21,733 for the year ended June 30, 2014. The Organizationalsosubmitted a refundable deposit of $3,189 associated withthis leaseagreement. NOTE4–RETIREMENTPLAN The Organization has established a SIMPLE IRA retirement plan, whereby all eligible employees may contribute to a SIMPLE IRA of their choice under a salary reduction agreement. The Organization has providedformatchingcontributionstobemadeforupto3%ofgrosscompensation.TheOrganizationpaid $7,060inmatchingcontributionsfortheyearendedJune30,2014. NOTE5–RELATEDPARTYTRANSACTIONS TheOrganizationisaffiliatedwithorganizationsinothercountriestoprovideministryservices.Inaddition to the support provided to the preceding affiliated organizations, an employee of the Organization is a memberoftheboardofdirectorsofeachaffiliatedorganization. 8 EVERYGENERATIONMINISTRIES,INC. NotestoFinancialStatements June30,2014 NOTE5–RELATEDPARTYTRANSACTIONS(continued) The Organization made donationsto each of theorganizations listedbelow duringthe year ended June 30, 2014: Country AffiliateName Donation Romania EchiparePentruGeneratia $28,123 Ukraine EGM‐Ukraine 15,615 Chile MinisterioParaCadaGeneracion 11,675 Peru MinisterioParaCadaGeneracion‐Peru 17,002 Mexico MinisterioParaCadaGeneracion‐Mexico 13,302 Poland MisjaPokolen 30,000 Hungary RemaAlapitvany 19,572 Belarus ShizeniaPololeniem 20,500 Total $155,789 NOTE6–TEMPORARILYRESTRICTEDNETASSETS Temporarilyrestrictednetassetsarecomprisedofthefollowingamounts: MissionarySupport: Bruda $ 3,063 Chapman 3,335 Cox 11,589 Fridrikh 204 Manishimwe 48 Norkaitis 15,679 Overstreet 22,998 Zhukov (125) NationalMinistryTeams: Poland 10,000 Argentina 151 Peru 400 EastAfrica 334 Benevolence 200 Grants: LatinAmericaMatchingGrant 24,200 SiroccoProject 46,646 HeartofAfrica(EastAfrica) 50,997 ArabicCurriculum 67,748 SpanishCurriculum 15,337 InternetCurriculum 15,927 TitusProject 70,645 VBSCurriculum 8,395 ShortTermMinistry 11,040 Totaltemporarilyrestrictednetassets $378,811 9 EVERYGENERATIONMINISTRIES,INC. NotestoFinancialStatements June30,2014 NOTE7–SUBSEQUENTEVENTS EventssubsequenttoJune30,2014havebeenevaluatedthroughSeptember16,2014,thedateatwhichthe Organization’sauditedfinancialstatementswereavailabletobeissued.Noeventsrequiringdisclosureshave occurredthroughthisdate. 10