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.

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:

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.

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

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

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:

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.

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

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.