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

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, 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.

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:

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

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

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 Apr il 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:

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.

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.