LNVB 2021 Financial Statement

AUDIT REPORT FOR THE YEAR ENDED DECEMBER 31, 2021

Leave No Veteran Behind, Inc. Audit Report For the Year Ended December 31, 2021 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 - 15

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, 2021 and 2020, and the related statements of activities, functional expenses and cash flows for the years then ended, and the related notes to the financial statements.

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, 2021 and 2020, 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.

Basis for Opinion We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of Leave No Veteran Behind, Inc. and to meet our other ethical responsibilities in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for 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.

In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about Leave No Veteran Behind, Inc.’s ability to continue as a going concern within one year after the date that the financial statements are available to be issued.

Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards will always detect a material misstatement when it exists.

The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

In performing an audit in accordance with generally accepted auditing standards, we: •

Exercise professional judgment and maintain professional skepticism throughout the audit.

•

Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks.

Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

•

Obtain an understanding of internal control relevant to the audit 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 Leave No Veteran Behind, Inc.’s internal control.

Accordingly, no such opinion is expressed.

•

Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.

•

Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about Leave No Veteran Behind, Inc.’s ability to continue as a going concern for a reasonable period of time.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control related matters that we identified during the audit.

March 22, 2023

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

2021

2020

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

$ 1,096,936 212,118 7,961

Total current assets

1,317,015

912,197

619 3,677

619 4,978

Security deposit Computer equipment, net Total assets

$

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

$ 1,321,311

$

917,794

$

$

32,980 663,108 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

31,052 82,280 15,000 128,332

714,588

-

73,700

197,400

212,400

Total liabilities

325,732

1,000,688

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

629,201 366,378

172,483 (255,377)

995,579

(82,894)

Paycheck Protection Program loan Long-term debt, net of current portion

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

See accompanying notes and independent auditor's report.

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$ 1,321,311

$

917,794

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

2021

2020

$ 1,522,998 74,503 8,733 355,865

$ 1,064,193 109,790 9,763 134,633

73,700 230,005 243,282

7,357 287,834

2,509,086

1,613,570

1,505,515 285,023 96,793

1,146,107 354,759 99,335

1,887,331

1,600,201

621,755

13,369

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

700,000 (243,282)

100,000 (287,834)

Change in net assets with donor restrictions

456,718

(187,834)

1,078,473

(174,465)

(82,894)

91,571

Change in net assets (deficit) without donor restrictions: Revenue: Contract services Corporate contributions Individual contributions Foundation contributions Gain on extinguishment of Paycheck Protection Program loan Gain on forgiveness of accrued payroll liability Interest income Net assets released from restrictions Total revenues without donor restrictions Expenses: Program services Administrative Fund-raising Total expenses Change in net assets (deficit) without donor restrictions

Change in total net assets (deficit) Net assets (deficit), beginning of the year Net assets (deficit), end of the year

$

See accompanying notes and independent auditor's report.

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995,579

$

(82,894)

Leave No Veteran Behind, Inc. Statement of Functional Expenses For the Year Ended December 31, 2021

Program Services Officers' salaries Other salaries Veteran-provided services Payroll taxes and benefits Payroll processing fees 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

85,000 63,251 1,259,529 30,494 27,926 979 98 5,936 2,486 9,995 19,821 -

$

42,500 31,625 30,181 7,038 7,325 4,141 21,285 94,036 90 810 20,032 10,384 2,741 2,377 10,458

$

42,500 31,625 15,854 6,249 488 77

$

$ 1,505,515

$

285,023

$

96,793

$ 1,887,331

$

See accompanying notes and independent auditor's report.

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Total 170,000 126,501 1,259,529 76,529 7,038 7,325 32,067 21,285 95,015 90 908 32,217 13,358 9,995 2,741 2,377 19,821 10,535

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 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.

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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 Cash Flows For the Year Ended December 31,

2021 Cash flows from operating activities: Change in net assets (deficit) Adjustments to reconcile change in net assets to net cash from operating activities: Depreciation Gain on extinguishment of Paycheck Protection Program loan Gain on forgiveness of accrued payroll liability Forgiveness of related party short-term advances Change in assets and liabilities: (Increase) decrease in accounts receivable Decrease in grant receivable (Increase) decrease in due from officers (Increase) decrease in due from employees (increase) decrease in prepaid insurance Increase (decrease) in accounts payable Increase (decrease) in accrued liabilities

$ 1,078,473

2020

$

(174,465)

2,377

1,076

(73,700) (230,005) (3,500)

-

34,863 140,000 336,975 2,900 (7,342) (1,928) (350,823)

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

Net cash from operating activities

928,290

(65,406)

Cash flows from investing activities - purchase of computer equipment

(1,076)

(6,054)

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

(15,000)

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

Net cash from financing activities

(15,000)

208,600

Net change in cash

912,214

137,140

184,722

47,582

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

$ 1,096,936

See accompanying notes and independent auditor's report.

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-

$

184,722

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, 2021 and 2020.

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.

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

1. Summary of Significant Accounting Policies (cont’d) Revenue from Contracts with Customers – The Organization recognizes revenue in accordance with ASU 2014-09, Revenue from Contracts with Customers (ASC 606), which provides a five-step 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, 2021, was $1,522,998 ($1,064,193 for the year ended December 31, 2020).

Corporate, Individual and Foundation contributions are all considered to be contribution revenue and are accounted for under ASC Topic 958-605 and are not 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: 2021

Accounts receivable

$

212,118

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2020 $

246,981

2019 $

105,306

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

1. Summary of Significant Accounting Policies (cont’d) 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 – 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, 2021 and 2020, there was no balance in the allowance for doubtful accounts as the Organization determined the outstanding balance was 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 March 22, 2023, which is the date the financial statements were available to be issued.

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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: 2021 Financial assets at year-end: Cash Accounts receivable Grant receivable expected to be collected in next fiscal year

2020

$ 1,096,936 212,118

$

-

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

$ 1,309,054

184,722 246,981 140,000

$

571,703

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, was $336,975.

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, in conformity with the “Retroactive Salary Agreement”, accrued salaries aggregating $524,988 are included with accrued liabilities on the statement of financial position. Payroll taxes accrued on the accrued salaries totaled $41,992 at December 31, 2020.

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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 have been $183,473.

In 2021, the Board and the two management employees approved an agreement whereby the Board would forgive the employees for advances made by the Organization and the two management employees would forgive the Organization for amounts owed under the retroactive salary agreement. The net effect of this agreement was to recognize in the statement of activities a net gain on the forgiveness of the accrued payroll liability of $230,005 for the year ended December 31, 2021, determined as follows: Cancellation of accrued salaries Reduction of accrued payroll taxes Reversal of balance due from officers

$

524,988 41,992 (336,975)

Gain on forgiveness of accrued payroll liability

$

230,005

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. This final installment was received in November 2021.

5. Computer Equipment 2021 Computer equipment Accumulated depreciation

2020

$

26,498 (22,821)

$

25,422 (20,444)

$

3,677

$

4,978

There was depreciation expense of $2,377 for December 31, 2021 ($1,076 for December 31, 2020).

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

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, 2021 and 2020, the outstanding balance was $62,500 and $77,500, 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.

The Organization paid $15,000 installments for 2020 and 2021 in August 2020 and April 2021, respectively, and is considered in good standing at December 31, 2021.

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, 2022 2023 2024 2025 2026 Thereafter

Amount $

1,493 3,654 3,756 3,860 3,968 133,269

$

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. The Organization filed the application to request that the loan be forgiven and received notification of full forgiveness in April 2021, and recognized a gain on the extinguishment of the Paycheck Protection Program loan in the 2021 statement of activities.

Although the PPP loan was forgiven, the SBA could perform a further examination of the application. Any disallowed claims resulting from such an examination could become a liability to the Organization.

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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 was outstanding at December 31, 2020. During 2021, the balance was forgiven by the Board member and converted to a contribution on the statement of activities in 2021.

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. The balance was written off in 2021.

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, 2021 or 2020. Accordingly, no provision for income tax is included in the financial statements. All years under the statute of limitations (2018-2020) are open for examination.

9. Concentration of Risk – Accounts Receivable and Revenue In 2021, the Organization received 26% and 15% of its total revenue from two governmental agencies. In 2020, the Organization received 50% and 14% of its total revenue from the same two governmental agencies. Accounts receivable outstanding from these two agencies at the end of the year ended December 31, 2021, were 22% and 44% of total accounts receivable.

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.

In 2021, the Organization received donations from one donor totaling 20% of total revenue.

10. 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.

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

11. 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 the year ended December 31, 2022. 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.

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