LNVB 2020 Audit

AUDIT REPORT FOR THE YEAR ENDED DECEMBER 31, 2020

Leave No Veteran Behind, Inc. Audit Report For the Year Ended December 31, 2020 Table of Contents

Independent Auditor's Report

1-2

Financial Statements: Statement of Financial Position

3

Statement of Activities

4

Statement of Functional Expenses Statement of Cash Flows Notes to the Financial Statements

5-6 7 8 - 16

INDEPENDENT AUDITOR’S REPORT Board of Directors Leave No Veteran Behind, Inc. Chicago, Illinois We have audited the accompanying financial statements of Leave No Veteran Behind, Inc., which comprise the statement of financial position as of December 31, 2020 and 2019, and the related statements of activities, 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 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 from 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 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 Leave No Veteran Behind, Inc. as of December 31, 2020 and 2019, and the changes in its net assets and cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

Change in Accounting Principle As discussed in Note 1 to the financial statements, Leave No Veteran Behind, Inc. adopted Financial Accounting Standards Board Accounting Standards Codification Topic 606 – Revenue from Contracts with Customers effective January 1, 2020, using the full retrospective method. Our opinion is not modified with respect to this matter.

November 15, 2021

-2-

Leave No Veteran Behind, Inc. Statement of Financial Position December 31,

2020

2019

Assets Cash Accounts receivable Grant receivable, current portion Due from officers Due from employees Prepaid insurance

$

184,722 246,981 140,000 336,975 2,900 619

$

47,582 105,306 140,000 336,218 2,900 1,527

Total current assets

912,197

633,533

Security deposit Grant receivable, noncurrent portion Computer equipment, net

619 4,978

619 120,317 -

Total assets

$

917,794

$

754,469

$

32,980 663,108 15,000 3,500

$

18,996 547,902 15,000 3,500

Liabilities and Net Assets (Deficit) Accounts payable Accrued liabilities Current portion of long-term debt Related party short-term advances Total current liabilities

714,588

585,398

Paycheck protection program loan

73,700

-

Long-term debt, net of current portion

212,400

77,500

Total liabilities

1,000,688

662,898

Net assets (deficit): With donor restrictions Without donor restrictions

172,483 (255,377)

360,317 (268,746)

(82,894)

91,571

Total net assets (deficit) Total liabilities and net assets (deficit)

See accompanying notes and independent auditor's report.

-3-

$

917,794

$

754,469

Leave No Veteran Behind, Inc. Statement of Activities December 31,

2020

2019

$ 1,064,193 109,790 9,763 134,633 7,357 287,834

$ 1,000,786 102,440 27,847 40,305 7,375 120,938

1,613,570

1,299,691

1,146,107 354,759 99,335

1,050,169 232,716 130,084

1,600,201

1,412,969

13,369

(113,278)

Change in net assets with donor restrictions: Revenue: Foundation contributions Net assets released from restriction

100,000 (287,834)

100,000 (120,938)

Change in net assets with donor restrictions

(187,834)

(20,938)

Change in total net assets (deficit)

(174,465)

(134,216)

91,571

225,787

Change in net assets (deficit) without donor restrictions: Revenue: Contract services Corporate contributions Individual contributions Foundation contributions Interest income Net assets released from restriction Total revenues without donor restrictions Expenses: Program services Administrative Fund-raising Total expenses Change in net assets (deficit) without donor restrictions

Net assets, beginning of the year Net assets (deficit), end of the year

$

See accompanying notes and independent auditor's report.

-4-

(82,894)

$

91,571

Leave No Veteran Behind, Inc. Statement of Functional Expenses For the Year Ended December 31, 2020

Program Services Officers' salaries Other salaries Veteran-provided services Payroll taxes and benefits Payroll processing fees Stipends Rent Insurance Telephone and internet services Professional fees Interest and bank charges Office supplies Travel and meals Auto expense Training Computer Depreciation Other program expense Miscellaneous Total expenses

Administrative

Fund-raising

111,250 31,258 887,801 22,123 44,716 13,017 3,024 2,872 4,000 26,046 -

$

55,625 91,653 41,753 6,517 7,425 8,336 13,749 100,790 229 528 3,318 2,988 2,244 1,076 18,528

$

55,625 15,629 11,061 425 15,090 1,443 54 8

$

$ 1,146,107

$

354,759

$

99,335

$ 1,600,201

$

See accompanying notes and independent auditor's report.

-5-

Total 222,500 138,540 887,801 74,937 6,517 7,425 53,052 14,174 115,880 229 13,545 7,785 5,914 4,000 2,244 1,076 26,046 18,536

Leave No Veteran Behind, Inc. Statement of Functional Expenses For the Year Ended December 31, 2019

Program Services Officers' salaries Other salaries Veteran-provided services Payroll taxes and benefits Payroll processing fees Stipends Rent Insurance Telephone and internet services Professional fees Interest and bank charges Office supplies Travel and meals Auto expense Training Computer Other program expense Miscellaneous Total expenses

Administrative

Fund-raising

111,250 88,478 761,524 20,097 563 26,854 2,199 5,444 1,177 15,212 17,371 -

$

55,625 44,239 16,539 5,273 8,186 19,267 55,555 1,501 224 6,776 10,691 735 8,105

$

55,625 44,239 10,049 15,503 2,874 88 1,706

$

$ 1,050,169

$

232,716

$

130,084

$ 1,412,969

$

See accompanying notes and independent auditor's report.

-6-

Total 222,500 176,956 761,524 46,685 5,273 563 8,186 26,854 19,267 71,058 1,501 2,423 15,094 11,956 15,212 735 17,371 9,811

Leave No Veteran Behind, Inc. Statement of Cash Flows For the Year Ended December 31,

2020 Cash flows from operating activities: Change in net assets (deficit) Adjustments to reconcile change in net assets to net cash from operating activities: Depreciation Change in assets and liabilities: Increase in accounts receivable Decrease in grant receivable Increase in due from employees Decrease in prepaid insurance Increase in security deposit Increase in accounts payable Increase in accrued liabilities

$

2019

(174,465)

$

(134,216)

1,076

-

(141,675) 120,317 (757) 908 13,984 115,206

(22,554) 120,938 (12,375) 954 (619) 8,955 94,501

Net cash from operating activities

(65,406)

55,584

Cash flows from investing activities - purchase of computer equipment

(6,054)

-

4,000 (4,000) 149,900 73,700 (15,000)

68,000 (72,900) (17,500)

Net cash from financing activities

208,600

(22,400)

Net change in cash

137,140

33,184

47,582

14,398

Cash flows from financing activities: Proceeds from related party short-term advances Repayments on related party short-term advances Proceeds from economic injury disaster loan Proceeds from paycheck protection program loan Payments on long-term debt

Cash, beginning of the year Cash, end of the year

$

184,722

$

47,582

Supplemental disclosures of cash flow information: Cash paid during the year for interest

$

-

$

363

See accompanying notes and independent auditor's report.

-7-

Leave No Veteran Behind, Inc. Notes to the Financial Statements

1. Summary of Significant Accounting Policies Purpose – Leave No Veteran Behind, Inc. (Organization) is an Illinois not-for-profit corporation. The Organization provides educational and employment services to veterans who face economic hardship. Through its innovative educational debt relief scholarship, community service, employment training, and job placement programs, Leave No Veteran Behind, Inc. invests in heroes who have honorably served our Nation and seek to continue their service as productive citizens in their communities.

Basis of Presentation – The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (hereafter referred to “U.S. GAAP”). In accordance with these principles, the Organization adheres to guidance provided by Accounting Standards Codification (ASC) No. 958-205. Under ASC 958-205, “Presentation of Financial Statements”, the Organization, if applicable, is required to report information regarding its financial position and activities according to two classes of net assets, namely without donor restrictions and with donor restrictions. Support that is restricted by donors as being available only in future accounting periods or for other specified events, is reported as with donor restrictions. Additionally, promises to give or pledges are recognized when the conditions of the promise or pledge have been substantially met by the Organization.

Donor-restricted support whose restrictions are met in the same reporting period are reported as without donor restrictions support.

Revenue and Expense Recognition – The financial statements of the Organization have been prepared on the accrual basis of accounting and, accordingly, all significant receivables, payables, and other liabilities have been reflected. Thus, revenue is recognized when earned and expenses are recognized when incurred.

Support Recognition – Contributions, received or pledged, are recorded as without donor restrictions unless specifically restricted by the donor. All donor-restricted contributions are reported as an increase in net assets with donor restrictions and are reclassified to net assets without donor restrictions as the restrictions are met.

In-Kind Services – Contributions of donated services or use of facilities that create or enhance non-financial assets or that require specialized skills are provided by individuals possessing those skills and would typically need to be purchased if not provided by donation, are recorded at their fair values in the period received. There were no in-kind services recognized at December 31, 2020, and December 31, 2019.

Use of Estimates – The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, activities, and the related disclosures at the date of the financial statements and during the reporting period. Actual results may differ from those estimates.

-8-

Leave No Veteran Behind, Inc. Notes to the Financial Statements (cont’d)

1. Summary of Significant Accounting Policies (cont’d) New Accounting Pronouncement – In May 2014, the Financial Accounting Standards Board issued ASU 2014-09, Revenue from Contracts with Customers (ASC 606). The new standard requires the Organization to reassess its revenue recognition policy to accurately depict the transfer of promised goods or services to customers. This guidance outlines a single, comprehensive model for accounting for revenue from contracts with customers. The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. This standard also includes expanded disclosure requirements that result in a company providing users of financial statements with comprehensive information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the company’s contracts with customers.

The Organization adopted the standard on January 1, 2020, using the full-retrospective method.

The Organization recognizes revenue in accordance with ASC 606, which provides a fivestep model for recognizing revenue from contracts with customers as follows: • • • • •

Identify the contract with the customer Identify the performance obligation Determine the transaction price Allocate the transaction price to the performance obligations in the contract Recognize revenue when or as performance obligations are satisfied

The Organization’s revenues that are subject to ASC 606 are primarily Contract Service revenues. Contract service revenue results primarily from the Chicago Public School Safe Passage Program and the Chicago Cook Workforce Partnership Contact Tracing Program.

Revenue for these programs are specified in the contract, and contain a single delivery element and revenue is recognized at a single point in time when the service is provided at which time payment is due. Contract service revenue is typically received at the time of the related performance obligation(s). Revenue earned at a point in time for the year ended December 31, 2020, was $1,064,193 ($1,000,786 for the year ended December 31, 2019).

Corporate, Individual and Foundation contributions are all considered to be contribution revenue and are accounted for under ASC Topic 958-605 and are no subject to ASC 606.

Likewise, investment income is scoped out of ASC 606.

The timing of revenue recognition, billings and cash collections over these contract fees results in billed accounts receivable on the statement of financial position. Fees are earned when the contract service is provided, at which time the customer is billed. The Organization has elected the practical expedient that allows it not to recognize a significant financing component as it anticipates payments will be made typically within 30-60 days. Accounts receivable at December 31, for the last three years are as follows: 2020 Accounts receivable

$

246,981

-9-

2019 $

105,306

2018 $

82,752

Leave No Veteran Behind, Inc. Notes to the Financial Statements (cont’d)

1. Summary of Significant Accounting Policies (cont’d) New Accounting Pronouncement (cont’d) Management has analyzed the provisions of ASC 606 and has concluded that the timing and amount of revenue recognized previously is consistent with how revenue is recognized under the new standard. Consequently, the adoption of ASC 606 did not have a significant impact on the Organization’s financial position, changes in net assets or cash flows, and no changes were required to previously reported revenues as a result of the adoption.

Functional Expenses – The costs of program and supporting activities have been summarized on a functional basis in the statement of activities. The statements of functional expenses present the natural classification detail of expenses by function. Accordingly, certain costs have been allocated among the programs and supporting services benefitted.

Expenses that can be identified with a specific program are applied to program service or supporting services directly. Other expenses that are attributed to more than one program or supporting function requires allocation on a reasonable basis. Officers’ salaries and other salaries are allocated based on estimated time spent by employee. Payroll taxes and benefits are allocated in proportion to officers and other salaries.

Accounts Receivable and Due From Employees – Accounts receivable represent amounts due from service contracts entered into with governmental agencies and are stated at the unpaid balances, less any allowance for doubtful accounts. It is the Organization’s policy to charge off uncollectible accounts receivable when management determines the receivable will not be collected. At December 31, 2020 and 2019, there was no balance in the allowance for doubtful accounts as the Organization determined the outstanding balance was fully collectible.

With respect to amounts due from employees, amounts are considered fully collectible.

Computer Equipment – Computer equipment is capitalized at cost. Depreciation has been provided on the straight-line method over a three-year estimated useful life.

Paycheck Protection Program Loan – In April of 2020, the Organization received $73,700 of proceeds in the form of a potentially forgivable loan under the CARES Act’s Paycheck Protection Program (PPP), which is administered by the U.S. Small Business Association (SBA). The Organization has elected to account for its potentially forgivable Paycheck Protection Program loan payable under Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 470, Debt.

Under this guidance, extinguishment of the loan would be recognized when the Organization has been legally released as the primary obligor of the loan. This would occur if and when the SBA approves the Organization’s forgiveness application.

Subsequent Events – Subsequent events have been evaluated through November 15, 2021, which is the date the financial statements were available to be issued.

- 10 -

Leave No Veteran Behind, Inc. Notes to the Financial Statements (cont’d)

2. Liquidity and Availability The following represents the Organization’s financial assets available to meet general expenditures over the next twelve months at December 31: 2020 Financial assets at year-end: Cash Accounts receivable Grant receivable expected to be collected in next fiscal year

$

184,722 246,981

2019 $

140,000

Financial assets available to meet general expenditures over the next twelve months

$

571,703

47,582 105,306 140,000

$

292,888

The Organization’s goal is generally to maintain financial assets to meet six months of general operational expenses (approximately $325,000) and one month of veteran-provided services expense (approximately $60,000). Veteran-provided services costs are subject to reimbursement from funding agencies, and the Organization typically is reimbursed within one month of incurring the related costs. The Organization has in the past procured short-term advances, including those from related parties, to help meet cash flow needs. The Organization actively seeks out donations from foundations to help fund operations.

3. Due from Employees At the end of 2015, the audited financial statements reflected employee advances of $68,017.

By the end of 2016, those advances rose to $191,240. Upon review, Management and the Board realized that the two employees who were advanced the monies were entitled to deferred salary, in accordance with a Board action dating back to before 2015. To document this understanding, the Board drafted a “Retroactive Salary Agreement”, which was ratified in January 2019. The total of the advances at December 31, 2020 and 2019, were $336,975 and $336,218, respectively.

The agreement stipulates that the two employees in question were entitled to deferred compensation to be paid over time at the Board’s direction and discretion, as cash flow permitted.

At December 31, 2020, and 2019, in conformity with the “Retroactive Salary Agreement”, accrued salaries aggregating $520,448 and $472,018, respectively, are included with accrued liabilities on the statement of financial position.

- 11 -

Leave No Veteran Behind, Inc. Notes to the Financial Statements (cont’d)

3. Due from Employees (cont’d) For financial statement presentation purposes, the receivable and related accrued liability have been reflected separately. If presented on a net basis, the employee advances net balance payable at December 31, 2020, would be $183,473 (net balance payable of $135,800 at December 31, 2019).

4. Grant Receivable The final installment of an unconditional grant receivable of $140,000 per year for four years is due in less than one year and is reported at its gross amount at December 31, 2020. The net present value discount of $19,683 at December 31, 2019, was recognized as income in the year ended December 31, 2020.

5. Computer Equipment 2020 Computer equipment Accumulated depreciation

2019

$

25,422 (20,444)

$

19,369 (19,369)

$

4,978

$

-

There was depreciation expense of $1,076 for December 31, 2020 (no depreciation expense for December 31, 2019).

6. Long-Term Debt The Organization has an unrestricted “program-related investment” loan from a local foundation. This is an interest free loan. As of December 31, 2020, and 2019, the outstanding balance was $77,500 and $92,500, respectively. According to the debt agreement, the principal is to be repaid in ten annual installments of $15,000 due on or before December 15 of each year commencing in 2015. The Organization did not make its first payment until December 2016, and then paid only $12,500 in 2018 and 2017, which is $2,500 less than the required payment under terms of the agreement for each year. The Organization paid the remaining $2,500 due with the 2017 payment along with the 2019 installment in June 2019 and paid $15,000 installment for 2020 in August 2020 and is considered in good standing at December 31, 2020.

- 12 -

Leave No Veteran Behind, Inc. Notes to the Financial Statements (cont’d)

6. Long-Term Debt (cont’d) The Organization obtained an economic injury disaster loan with the SBA dated August 5, 2020, with an original balance of $150,000. The loan will accrue interest at 2.75 per annum.

The note requires monthly payments of $641, including interest, commencing August 5, 2022, and maturing on August 5, 2051, but may be prepaid without penalty at any time. Future maturities of the note payable are as follows: Year Ending December 31, 2021 2022 2023 2024 2025 Thereafter

Amount $

1,493 3,654 3,756 3,860 137,237

$

150,000

The Organization entered into a $73,700 loan agreement dated April 28, 2020, with a financial institution, to provide for working capital needs, with principal due in monthly installments including interest at 1%. The loan was obtained under the Paycheck Protection Program (PPP) administered by the SBA. Payments commence the earlier of (a) forgiveness determination by the SBA or (b) ten months after the expiration of the Borrower’s covered period, which is 24 weeks after the loan disbursement date. Under the Program rules, the loan will be 100% forgiven if the Organization meets certain conditions. Subsequent to year end, the Organization filed the application to request that the loan be forgiven and received notification of full forgiveness in April 2021.

- 13 -

Leave No Veteran Behind, Inc. Notes to the Financial Statements (cont’d)

7. Related Party Short-Term Advances The Organization received a short-term advance from a Board member totaling $15,500 in November 2017 to assist with cash flow for payroll and repaid $12,000 prior to December 31, 2017. The remaining balance of $3,500 is outstanding and is reported as a related party short- term advance at December 31, 2020 and 2019.

At December 31, 2018, the Organization owed an employee $2,000 for short-term advances made to the Organization. During 2019, the Organization received additional short-term advances from employees and Board members totaling $68,000 and made repayments totaling $72,900. During 2020, the Organization received short-term advances and made repayments totaling $4,000 to assist with cash flow for payroll. The net overpayment to the employee of $2,900 at December 31, 2020, is reported as an employee receivable.

8. Income Tax Status The Organization is incorporated as a not-for-profit corporation as described in Section 501(c)(3) of the Internal Revenue Code, and is exempt from income taxes, except to the extent of any unrelated business income. There was no unrelated business income for the years ended December 31, 2020 or 2019. Accordingly, no provision for income tax is included in the financial statements. All years under the statute of limitations (2017-2019) are open for examination.

9. Concentration of Risk – Accounts Receivable and Revenue In 2020, the Organization received 50% and 11% from two governmental agencies. In 2019, the Organization received 67% of its total revenue from a single governmental agency.

Accounts receivable outstanding from these two agencies at the end of the year ended December 31, 2020, were 24% and 66% of total accounts receivable. Accounts receivable outstanding from this single agency at the end of the year ended December 31, 2019, was 53% of total accounts receivable.

- 14 -

Leave No Veteran Behind, Inc. Notes to the Financial Statements (cont’d)

10. Going Concern The financial statements were prepared on a going concern basis. The going concern basis assumes that the Organization will continue in operation in the foreseeable future and will be able to realize its assets and discharge its liabilities and commitments in the normal course of operations.

As presented in the statement of financial position and the statement of activities, the Organization has reported a net deficit in net assets without donor restrictions of $222,894 and $268,746 for the years ended December 31, 2020, and 2019, respectively.

In order to address the financial deficit, the Organization is continuing to seek additional grants and contributions. During 2018, the Organization received a four-year pledge to support general operations for $560,000, payable in four annual installments of $140,000, with the first installment received in 2018. The remaining installment is reported with net assets with donor restrictions at its net present value of $140,000 at December 31, 2020. During 2020, the Organization secured funding from the Paycheck Protection Program of $73,700 and a loan of $150,000 from the SBA, and in 2021 the Organization received forgiveness of its Paycheck Protection Program loan of $73,700. The Organization is also working to reduce expenses and manage its cash flow by implementing payment plans with large invoices, reducing administrative costs, including travel and meeting charges, and performing an immediate review of the vouchering process to ensure all allowable administrative and overhead expenses are being charged to grants under the Safe Passage and Contract Tracing programs.

As described above, management has a reasonable expectation that the Organization will be able to continue as a going concern within one year from the date these financial statements were available to be issued.

11. Concentration of Credit Risk The Organization maintains its cash in bank deposit accounts which, at times, may exceed federally insured limits. The Organization has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash and cash equivalents.

12. Risks and Uncertainties As a result of the spread of COVID-19, there are economic uncertainties that exist which could have a negative financial impact on the Organization, including the potential for reduction in program income and grants and contributions. Management is monitoring the situation and will adjust expense levels and assess its financial assets as needed to mitigate negative impacts of the pandemic.

- 15 -

Leave No Veteran Behind, Inc. Notes to the Financial Statements (cont’d)

13. Future Accounting Standards Leases – During 2016, the Financial Accounting Standards Board issued new standards relating to lease accounting. The new standard will require the Association to recognize on its statement of financial position, the asset and liability of their leasing agreements relating to the rights and obligations created by the leases. The standard will be effective for fiscal 2023. The Organization has not determined the effect of adopting the new standard.

Contributed Nonfinancial Assets – The Financial Accounting Standards Board (FASB) issued ASU 2020-07, Not-for-Profit Entities (Topic 958) – Presentation and Disclosures by Not-for-Profit Entities for Contributed Nonfinancial Assets. This update improves generally accepted accounting principles (GAAP) by increasing the transparency of contributed nonfinancial assets for not-for-profit entities (NFP’s) through enhancements to presentation and disclosure. Entities will be required to present contributed nonfinancial assets as a separate line item in the statement of activities, apart from contributions of cash and other financial assets. Along with the new presentation, additional disclosure requirements about contributed nonfinancial assets for NFP’s will be required, including additional disclosure requirements for recognized contributed services. This ASU becomes effective for annual periods beginning after June 15, 2021, on a retrospective basis. The Organization has not determined the effect of adopting the new standard.

- 16 -