FY 2021 Audited Financial Statement

SAN GABRIEL VALLEY HABITAT FOR HUMANITY, INC. TABLE OF CONTENTS Page No. INDEPENDENT AUDITOR'S REPORT

1-2

FINANCIAL STATEMENTS Consolidated Statement of Financial Position Consolidated Statement of Activities Consolidated Statement of Functional Expenses Consolidated Statement of Cash Flows Notes to Financial Statements

3 4 5 6 7-19

SUPPLEMENTARY INFORMATION Supplemental Statement of Financial Position Supplemental Statement of Activities Supplemental Statement of Functional Expenses Supplemental Statement of Cash Flows Supplemental Schedule - Summary of Projects

20 21 22 23-24 25

INDEPENDENT AUDITOR’S REPORT To the Governing Board San Gabriel Valley Habitat for Humanity, Inc. Monrovia, California We have audited the accompanying consolidated financial statements of San Gabriel Valley Habitat for Humanity, Inc., which comprise the consolidated statement of financial position as of June 30, 2021 and 2020, and the related consolidated statements of activities, functional expenses and cash flows for the years then ended, and the related notes to the consolidated financial statements Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these consolidated 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 consolidated financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor's judgment, including assessing 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 consolidated 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 consolidated financial statements referred to above present fairly, in all material respects, the financial position of San Gabriel Valley Habitat for Humanity, Inc. as of June 30, 2021 and 2020, and the changes in its net assets and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

Other Matters Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The accompanying supplemental statements are presented for purposes of additional analysis and are not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the financial statements as a whole.

October 11, 2021 Pasadena, California

SAN GABRIEL VALLEY HABITAT FOR HUMANITY, INC. CONSOLIDATED STATEMENT OF FINANCIAL POSITION ASSETS 2021

CURRENT ASSETS Cash and cash equivalents Contributions receivable Mortgage loans receivable, current portion ReStore inventory Houses under construction Other assets

$

Total current assets PROPERTY AND EQUIPMENT - NET NONCURRENT ASSETS Intangible assets - net Mortgage loans receivable, less current portion Total noncurrent assets TOTAL ASSETS LIABILITIES AND NET ASSETS CURRENT LIABILITIES Accounts payable Accrued expenses and other liabilities Amounts held for others Line of credit Notes payable, current portion

JUNE 30,

1,206,795 148,591 129,185 131,153 5,046,998 438,212

$

2020 780,252 188,266 2,416,741 237,198 2,752,482 201,697

7,100,934

6,576,636

204,455

201,237

89,787 3,409,659

100,069 2,343,232

3,499,446

2,443,301

$

10,804,835

$

9,221,174

$

86,964 225,730 1,623 300,000 85,040

$

158,399 423,806 25,216 350,000 85,040

Total current liabilities

699,357

1,042,461

LONG-TERM LIABILITIES Notes payable, less current portion

2,722,558

1,376,116

TOTAL LIABILITIES

3,421,915

2,418,577

NET ASSETS Without donor restriction: Undesignated Board designated

1,789,714 5,046,998

3,667,162 2,752,482

6,836,712

6,419,644

546,208

382,953

7,382,920

6,802,597

Total without donor restriction With donor restriction TOTAL NET ASSETS TOTAL LIABILITIES AND NET ASSETS

$

The accompanying notes are an integral part of this statement.

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10,804,835

$

9,221,174

SAN GABRIEL VALLEY HABITAT FOR HUMANITY, INC. CONSOLIDATED STATEMENT OF ACTIVITIES FOR THE YEARS ENDED JUNE 30,

2021

SUPPORT AND REVENUE Contributions and grants $ In-kind contributions ReStore sales and donations Sales to homeowners Imputed interest income on mortgage loans Donated services Interest income Bad debt expense Gain on sale of mortgages Other income Net assets released from restrictions: Purpose restricted Time restricted Total support and revenue

1,245,022 1,894,039 2,438,666 239,083 24,841 16 920,531 143,450

With donor restriction $

237,383 45,842

Total expenses CHANGE IN NET ASSETS NET ASSETS AT BEGINNING OF YEAR $

446,480 -

Without donor restriction

Total $

(237,383) (45,842)

7,188,873

EXPENSES Program activities General and administrative Fundraising

NET ASSETS AT END OF YEAR

Without donor restriction

1,691,502 1,894,039 2,438,666 239,083 24,841 16 920,531 143,450

$

-

163,255

2020

1,273,340 1,528,897 1,867,942 2,866,092 139,415 2,364 3,506 980,329 140,009

With donor restriction $

2,298 57,913

7,352,128

8,862,105

382,953 -

Total $

(2,298) (57,913)

1,656,293 1,528,897 1,867,942 2,866,092 139,415 2,364 3,506 980,329 140,009 -

322,742

9,184,847

6,157,726 374,612 239,467

-

6,157,726 374,612 239,467

9,947,866 476,446 248,002

-

9,947,866 476,446 248,002

6,771,805

-

6,771,805

10,672,314

-

10,672,314

417,068

163,255

580,323

6,419,644

382,953

6,802,597

6,836,712

The accompanying notes are an integral part of this statement.

$

546,208

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$

7,382,920

$

(1,810,209)

322,742

(1,487,467)

8,229,853

60,211

8,290,064

6,419,644

$

382,953

$

6,802,597

SAN GABRIEL VALLEY HABITAT FOR HUMANITY, INC. CONSOLIDATED STATEMENT OF FUNCTIONAL EXPENSES FOR THE YEAR ENDED JUNE 30,

2021 Program Services Building materials, supplies, and other $ Salaries and benefits Professional fees Interest expense Equipment Occupancy Tithes and dues Depreciation and amortization Newsletter Conference travel Bank charges Supplies Telephone Postage Insurance Printing Mortgage discounts Other $

General & Administrative Fundraising

2,985,202 $ 1,707,262 140,715 23,694 74,223 693,242 122,704 60,381 17,413 27,865 33,787 11,122 33,219 29,291 143,464 4,900 49,242 6,157,726 $

$ 229,148 53,416 4,778 46,782 15,030 1,169 2,148 894 3,597 229 14,758 648 2,015 374,612 $

The accompanying notes are an integral part of this statement.

$ 157,354 4,410 44,210 -

Total

General & Administrative Fundraising

2,985,202 $ 2,093,764 194,131 23,694 83,411 784,234 122,704

5,749,221 $ 1,681,615 239,007 32,789 115,817 730,645 112,038

90,441 17,413 29,034 37,333 12,910 40,413 29,749 167,944 6,196 53,232

54,174 18,589 42,976 21,005 13,812 30,361 34,961 104,528 268 916,080 49,980

6,771,805 $

9,947,866 $

15,030 1,398 894 3,597 229 9,722 648 1,975 239,467 $

Program Services

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2020

$ $ 252,288 122,337 93,157 15,750 15,750 45,524 45,524 14,550 4,774 3,630 4,571 8,345 1,288 13,692 2,283 16,594

14,550 4,774 2,955 4,571 8,345 1,288 9,031 2,283 16,594

Total 5,749,221 2,056,240 332,164 32,789 147,317 821,693 112,038 83,274 18,589 52,524 27,590 22,954 47,051 37,537 127,251 4,834 916,080 83,168

476,446 $ 248,002 $ 10,672,314

1,206,795

SAN GABRIEL VALLEY HABITAT FOR HUMANITY, INC. CONSOLIDATED STATEMENT OF CASH FLOWS

2021

CASH FLOWS FROM OPERATING ACTIVITIES CHANGE IN NET ASSETS

$

JUNE 30,

580,323

$

2020

(1,487,467)

Adjustments to reconcile the change in net assets to cash used for operating activities: Imputed interest income on mortgage loans, net of discounts Depreciation and amortization expense Amortized interest Gain on sale of mortgages Mortgages issued through escrow Debt paid through escrow Discounts on new notes receivable

(239,083) 90,441 21,481 (920,531) -

(139,415) 83,274 32,789 (980,329) (1,891,840) (840,000) 916,080

Changes in operating assets and liabilities: Contributions receivable ReStore inventory Houses under construction Other assets Accounts payable Accrued expenses and other liabilities Amounts held for others

39,675 106,045 (498,004) (236,515) (71,435) (198,076) (23,593)

(130,353) 34,792 965,113 (2,855) 48,995 214,460 (44,190)

(1,349,272)

(3,220,946)

CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from the sale of investments Mortgage payments received Proceeds from the sale of mortgages Purchase of fixed assets

153,481 1,840,750 (83,377)

150,000 230,489 1,990,056 (91,823)

CASH PROVIDED BY INVESTING ACTIVITIES

1,910,854

2,278,722

CASH USED FOR OPERATING ACTIVITIES

CASH FLOWS FROM FINANCING ACTIVITIES Additional borrowing on line of credit Principal payments on line of credit Principal payments on note payable

300,000 (350,000) (85,039)

350,000 (85,040)

CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES

(135,039)

264,960

NET INCREASE (DECREASE) IN CASH

426,543

(677,264)

CASH AT BEGINNING OF YEAR

780,252

CASH AT END OF YEAR

1,457,516

$

1,206,795

$

$ $ $

2,212 1,400,000

$ $ $

780,252

SUPPLEMENTAL DISCLOSURE: CASH PAID FOR INTEREST CASH PAID FOR INCOME TAXES LAND RECEIVED FOR NOTE PAYABLE The accompanying notes are an integral part of this statement.

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-

SAN GABRIEL VALLEY HABITAT FOR HUMANITY, INC. NOTES TO FINANCIAL STATEMENTS JUNE 30, 2021 AND 2020 NATURE OF ORGANIZATION San Gabriel Valley Habitat for Humanity (SGV Habitat) was incorporated in California in 1990 as a nonprofit corporation. SGV Habitat is exempt from federal income taxes under Section 501(c)(3) of the Internal Revenue Code (the Code), and is also exempt from state income taxes. SGV Habitat has been classified as a publicly supported organization, which is not a private foundation, under Section 509(a) of the Code. Contributions made by the public are deductible for income tax purposes.

SGV Habitat is an affiliate of Habitat for Humanity International, Inc. (Habitat International), a nondenominational Christian nonprofit organization whose purpose is to create decent, affordable housing for those in need, and to make decent shelter a matter of conscience with people everywhere. Although Habitat International assists with information resources, training, publications, prayer support, and in other ways, SGV Habitat is primarily and directly responsible for its own operations.

SGV Habitat's primary source of income consists of sales of homes, along with cash and in-kind contributions.

LIQUIDITY The following table reflects SGV Habitat's financial assets as of June 30, 2021 and 2020, reduced by amounts not available for general expenditure within one year. Financial assets are considered unavailable when illiquid or not convertible to cash within one year, assets held for others, restricted by donors, or set aside by the Governing Board. The Board designations could be drawn upon if the Board approves of the action.

2021 Cash Contributions receivable Mortgage loans receivable, current portion Less: Amounts held for others Net assets with purpose restrictions

$

June 30,

1,206,795 148,591 129,185

$

(1,623) (428,158) $

1,054,790

2020 780,252 188,266 2,416,741 (25,216) (237,111)

$

3,122,932

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements of SGV Habitat have been prepared on the accrual basis of accounting in accordance with generally accepted accounting principles in the United States of America. Certain prior year amounts have been reclassified to conform to current year presentation. A summary of significant accounting policies follows, to enhance the usefulness of the financial statements to the reader.

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SAN GABRIEL VALLEY HABITAT FOR HUMANITY, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2021 AND 2020 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) CONSOLIDATION In accordance with GAAP, the financial statements of San Gabriel Valley Habitat for Humanity, Inc., SGVHFH Funding Company, LLC, and Neighborhood Housing Partners, Inc. are consolidated into the financial statements of San Gabriel Valley Habitat for Humanity, Inc. All material intercompany transactions as of June 30, 2021 and 2020 have been eliminated.

CASH AND CASH EQUIVALENTS Cash consists of cash on hand and cash on deposit. For purposes of the statement of cash flows, SGV Habitat considers all short-term investments with a maturity of three months or less to be cash.

Financial instruments that potentially subject SGV Habitat to concentrations of credit risk consist principally of cash deposits at financial institutions and investments in marketable securities. At times, balances in SGV Habitat's cash and investment accounts exceeded the Federal Deposit Insurance Corporation (FDIC) or Securities Investors Protection Corporation (SIPC) limits.

CONTRIBUTIONS RECEIVABLE Contributions receivable represent unconditional promises-to-give, which are recognized as income when received and recorded at fair value based upon estimated future cash flows. All contributions receivable are expected to be collected within one year.

MORTGAGE LOANS RECEIVABLE Mortgage loans receivable consist of non-interest bearing mortgage loans from homeowners that are secured by real estate and are received in monthly installments over the lives of the respective mortgages. Rent payments received before loans become effective are applied as deposits towards the buyer's purchase price through escrow. These non-interest bearing mortgages are recorded at their net realizable value and have been discounted at the inception of each mortgage based upon prevailing market rates for low-income housing. This rate is recommended by Habitat International and does not approximate current market conditions. Utilizing the effective interest method, this discount is recognized as interest income over the terms of the mortgages.

Certain grants provided by local governments or institutional investors (donating entities) would be required to be repaid to the donating entity in the event the projects for which the grants were provided are sold by the homeowners within a specified time period, between 5 and 45 years. These contingent obligations of the homeowners range from approximately $6,000 to $110,000 and are documented in the form of silent second and third trust deeds held

by SGV Habitat (CalHome - restricted) or outside of SGV Habitat.

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SAN GABRIEL VALLEY HABITAT FOR HUMANITY, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2021 AND 2020 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) ALLOWANCE FOR LOAN LOSSES Before a mortgage is issued, the candidate is carefully screened for financial condition, cash flow, and ability to meet the loan repayment schedule. This screening is done to identify qualified borrowers who can repay the mortgages and mitigate the default rate on mortgages receivable. Loans are classified as delinquent when payments are 30 days overdue. At June 30, 2021 and 2020, no loans were past due. Because the mortgages are heavily discounted when recorded and the value of the collateral is in excess of the discounted mortgages, losses resulting from non-payment are not likely. Also, because of the contingent obligations in that the homeowners are liable for the second and third trust deeds on the properties (see MORTGAGE LOANS RECEIVABLE), the default rate of these mortgages is very low. However, if a loan becomes delinquent for more than 90 days and management determines that the homeowner will be unable to repay the mortgage balance, SGV Habitat will commence with foreclosure procedures.

RESTORE INVENTORY ReStore (RS) inventory consists of purchased items and donated building materials available for sale to the general public; the recorded value of donated inventory is estimated based on prior year sales to approximate the gift-in-kind fair value when received.

AMOUNTS HELD FOR OTHERS During the fiscal year ending June 30, 2020, SGV Habitat entered into an agreement with AmeriNat to service a majority of SGV Habitat's mortgage loans receivable. As the mortgage servicer, AmeriNat (agent) collects the monthly mortgage payments, HOA dues and property taxes from borrowers, and remits the payments to the respective principal.

SGV Habitat also sold a portfolio of its mortgage loans receivable to East West Bank, but remains the servicer of the loan. SGV Habitat collects the payments as per the original lending agreement and remits the payments to East West Bank. In the event that collections are delinquent, East West Bank may substitute a previously sold loan with a different loan held by SGV Habitat, as per the terms of the agreement with East West Bank. The amounts held for others balances at June 30, 2021 and 2020 consist primarily of escrow funds held for borrowers that have not yet been transferred to AmeriNat. PROPERTY AND EQUIPMENT Property and equipment are reported at cost, or if donated, at the fair market value on the date received. Depreciation is computed on a straight-line basis over estimated useful lives of 3 to 5 years. Maintenance and repairs are recorded as expenses in the year incurred, and renewals and betterments exceeding $1,000 are capitalized.

INTANGIBLE ASSETS Intangible assets are reported at cost. Amortization is computed on a straight-line basis over the estimated useful life.

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SAN GABRIEL VALLEY HABITAT FOR HUMANITY, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2021 AND 2020 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) NET ASSETS SGV Habitat reports information regarding its financial position and activities according to two classes of net assets: without donor restriction and with donor restriction, as described below: Without donor restriction includes funds which are expendable for the support of SGV Habitat's operations.

With donor restriction includes funds which donors have restricted for specific purposes and/or specific timetables.

REVENUE RECOGNITION Effective July 1, 2020, SGV Habitat adopted Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (Topic 606) and all subsequently issued clarifying ASU’s which replaced most existing revenue recognition guidance in GAAP. The new guidance requires SGV Habitat to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which SGV Habitat expects to be entitled in exchange for those goods or services. The new guidance also requires expanded disclosures related to the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers.

The adoption of this new guidance was done using the modified retrospective method. SGV Habitat applied the new guidance using the practical expedient provided in Topic 606 that allows the guidance to be applied only to contracts that were not complete as of July 1, 2020. Results for reporting periods beginning after July 1, 2020 are presented under Topic 606 while prior periods amounts are not adjusted and continue to be reported in accordance with legacy GAAP. There was no significant effect on the financial statements related to the adoption of this new standard which would require a cumulative effect adjustment to net assets at the date of adoption under the modified retrospective method.

SGV Habitat’s material revenue-generating activities and related accounting policies are as follows: ReStore Sales and Sales to Homeowners SGV Habitat recognizes revenue on the sale of goods to customers at its ReStore locations and on the sale of homes at a point in time. Revenue is recognized when the title to goods is passed to its customers or homeowners, in an amount that reflects the consideration SGV Habitat expects to be entitled to in exchange for those products.

Contributions Contributions are recorded when cash or unconditional promises-to-give have been received, or when ownership of donated assets is transferred to SGV Habitat. SGV Habitat records contributions as restricted if donors restrict their use for a specific purpose or time or both. When donor restrictions expire, that is, when the purpose restriction is fulfilled or the time restriction expires, net assets with donor restriction are reclassified to net assets without donor restriction and reported in the statement of activities as net assets released from restrictions. It is SGV Habitat's policy to record donor restricted contributions received and expended in the same accounting period as contributions without donor restrictions.

When contributions are restricted by donors for the acquisition of property or other long-lived assets, the restriction is considered to be met when the property or other long-lived asset is acquired.

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SAN GABRIEL VALLEY HABITAT FOR HUMANITY, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2021 AND 2020 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) REVENUE RECOGNITION (continued) In-kind Contributions SGV Habitat receives donated building materials and various other building supplies for use in the construction of houses. Such donations are recorded in the statement of activities as in-kind contributions at their estimated fair value on the date received. Assets received with explicit restrictions regarding their use are reported as increases in net assets with donor restriction.

Absent donor stipulations regarding how long those donated assets must be maintained, SGV Habitat reports expirations of donor restrictions when the amounts are expended as instructed by the donor.

SGV Habitat reclassifies net assets with donor restriction to net assets without donor restriction at that time. During the years ended June 30, 2021 and 2020, in-kind contributions amounted to $1,894,039 and $1,528,897, and donated services amounted to $24,841 and $2,364, respectively.

PAYCHECK PROTECTION PROGRAM LOAN During the years ended June 30, 2021 and 2020, SGV Habitat received Paycheck Protection Program (PPP) funding in the amount of $497,689 and $486,280, respectively. The loans are administered by the Small Business Administration (SBA), as a result of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, and the Economic Aid Act passed by Congress. The loans bear interest at a rate of 1% per annum, and are forgivable if certain conditions are met, including, but not limited to, specified expenditure requirements and maintaining staffing levels.

Due to the forgiveness element of the loans, SGV Habitat has elected to treat the proceeds as conditional contributions from the government, in accordance with GAAP. As of June 30, 2021, all of the conditions for loan forgiveness had been met and the proceeds are included in contribution and grant revenues for the years ended June 30, 2021 and 2020.

FUNCTIONAL ALLOCATION OF EXPENSES The financial statements report certain categories of expenses that are attributable to more than one program or supporting function. Therefore, these expenses require allocation on a reasonable basis that is consistently applied. The expenses that are allocated include personnel expenses, and office and occupancy, which are allocated on a basis of time and efforts.

DONATED SERVICES SGV Habitat receives substantial donated architectural, construction, and legal services in conjunction with home construction and sales to homeowners. Contributed services are recognized as in-kind contributions in accordance with Topic of the Financial Accounting Standards Board (FASB) Accounting Standards Codification of Accounting for Contributions Received and Contributions Made, if the services (a) create or enhance nonfinancial assets, or (b) require specialized skills, that would otherwise be purchased by SGV Habitat.

In addition to donated services recorded in the financial statements, many other individuals routinely provide voluntary services to the overall work of SGV Habitat. These services have a significant impact on making the housing program effective. However, the value of these services is not reflected in the financial statements because it does not meet the criteria described above.

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SAN GABRIEL VALLEY HABITAT FOR HUMANITY, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2021 AND 2020 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) USE OF ESTIMATES The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

FAIR VALUE MEASUREMENTS Accounting principles generally accepted in the United States of America require that items recorded at fair market value be valued as level one, two or three, based on various inputs and methodologies as described below: Level 1 - quoted prices and active markets for identical holdings Level 2 - significant observable market-based inputs, other than Level 1 quoted prices, or unobservable inputs that are based on comparable market data Level 3 - significant observable inputs that are not based on comparable market data INCOME TAXES SGV Habitat operates as a nonprofit corporation under section 501(c)(3) of the Internal Revenue Code and is exempt from federal and state income taxes; accordingly, no provision is made for current or deferred income taxes. SGV Habitat uses the same accounting methods for tax and financial reporting.

JOINT COST ALLOCATION SGV Habitat incurs costs that are shared by program, management and general, and fundraising activities. The amount allocated to each area depends upon the purpose, audience and content of each medium used. SGV Habitat determined the allocation based on both current and historical data.

MORTGAGE LOANS RECEIVABLE A concentration of credit risk may arise from the mortgage loans receivable. The discount rate is recommended by Habitat International and does not approximate current market conditions.

Utilizing the effective interest method, the discount is recognized over the term of the mortgage as interest income.

As of June 30, 2021, there were no loan defaults.

During the year ended June 30, 2021 SGV Habitat sold 9 mortgages for $1,840,750 with aggregate face values of $2,272,141 and discounts on the notes in the amount of $1,351,922.

This resulted in a gain of $920,531 for the year ended June 30, 2021.

During the year ended June 30, 2020 SGV Habitat sold 13 mortgages for $1,990,056 with aggregate face values of $2,426,919 and discounts on the notes in the amount of $1,417,192.

This resulted in a gain of $980,329 for the year ended June 30, 2020.

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SAN GABRIEL VALLEY HABITAT FOR HUMANITY, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2021 AND 2020 MORTGAGE LOANS RECEIVABLE (continued) Mortgage loans receivable consisted of: 2021 Euclid Avenue, Duarte Burkett Road, El Monte Orange Street, Glendale Gardena Avenue, Glendale Pacific Avenue, Glendale Palmer Avenue, Glendale Kenwood Street, Glendale Sherman Avenue, Monrovia Geneva Street, Glendale Chestnut Street, Glendale Desiderio, Pasadena Lomita, Glendale A Brush with Kindness exterior home repairs

$

June 30,

16,097 10,306 24,392 57,456 287,479 1,512,187 363,859 409,064 135,000 1,044,239 360,000 124,788

$

4,344,867 Less discount at rates ranging from 7.38% to 8.18%

3,538,844

19,453 836 25,768 31,234 76,604 304,291 1,569,928 385,704 414,602 135,000 2,197,474 1,870,565 125,538 7,156,997

(806,023) $

2020

(2,397,024) $

4,759,973

The future amounts to be received under mortgage loans receivable outstanding at June 30, 2021 are: 2022 2023 2024 2025 2026 Thereafter

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$

129,185 118,241 104,551 102,468 97,932 3,792,490

$

4,344,867

SAN GABRIEL VALLEY HABITAT FOR HUMANITY, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2021 AND 2020 HOUSES UNDER CONSTRUCTION Houses under construction are stated at cost, which is lower than the fair market value.

Houses under construction consisted of: 2021 Howard, Pasadena Manzanita, Pasadena Collegian, Monterey Park Baldwin Park, Baldwin Park Olive, Baldwin Park Torch, Baldwin Park Olive, Altadena Angeleno, Azusa Desideio, Pasadena A Brush with Kindness

June 30,

2020

$

127,738 1,106,500 731,182 574,414 567,241 1,471,642 38,002 6,750 414,345 9,184

$

58,744 1,074,258 691,637 543,905 374,754 9,184

$

5,046,998

$

2,752,482

PROPERTY AND EQUIPMENT Property and equipment consisted of: 2021 Office equipment Vehicles Software Leasehold improvements

$

Less accumulated depreciation Net property and equipment

$

June 30,

76,969 151,606 4,000 1,050,391

$

74,388 143,106 985,920

1,282,966

1,203,414

1,078,511

1,002,177

204,455

$

Depreciation expense for the years ended June 30, 2021 and 2020 was $80,159 and $76,117, respectively.

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2020

201,237

SAN GABRIEL VALLEY HABITAT FOR HUMANITY, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2021 AND 2020 INTANGIBLE ASSETS Intangible assets consisted of: 2021 Website Loan costs Less accumulated amortization

June 30,

2020

$

11,800 $ 110,893 (32,906)

11,800 110,893 (22,624)

$

89,787 $

100,069

Amortization expense for the years ended June 30, 2021 and 2010 was $10,282 and $7,157, respectively.

NOTES PAYABLE 2021 Note secured by real property in Baldwin Park, California, noninterest bearing; paid back upon SGV Habitat's sale through the issuance of loans to buyers

$

Note secured by mortgage loans receivable; noninterest bearing; monthly payments of $7,087; maturing October 2042 Less discount on notes payable

June 30,

1,410,000

$

-

1,590,069

1,675,108

3,000,069

1,675,108

(192,471) $

2020

2,807,598

(213,952) $

1,461,156

The discount on notes payable is amortized based on the interest method over the life of the loans.

Amortized interest for the years ended June 30, 2021 and 2020 was $21,481 and $32,789, respectively, and is included in interest expense.

In March 2021, SGV Habitat entered into a note payable agreement with the City of Baldwin Park in the amount of $1,410,000 in exchange for land located in Baldwin Park to be used to build 12 affordable housing units. Upon completion of the affordable housing units, the total note payable of $1,410,00 will be divided equitably based on the number of units completed and assumed by each purchaser of an affordable housing unit. The agreement between SGV Habitat and the City of Baldwin Park requires all units to be sold by December 2024. No units were completed or sold for this project as of June 30, 2021.

The future minimum payments at June 30, 2021 are as follows: 2022 2023 2024 2025 2026 Thereafter

-15-

$

85,040 85,040 85,040 1,495,040 85,040 1,164,869

$

3,000,069

SAN GABRIEL VALLEY HABITAT FOR HUMANITY, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2021 AND 2020 NOTES PAYABLE (continued) Interest expense for the years ended June 30, 2021 and 2020 was $23,694 and $32,789, respectively.

Management believes SGV Habitat was in compliance with all loan covenants for the years ended June 30, 2021 and 2020.

LINE OF CREDIT SGV Habitat has a line of credit agreement with East West Bank with a maximum limit of $1,250,000. The line bears interest at the bank's prime lending rate, with a floor of 3.25%. Additional borrowings on the line during the years ended June 30, 2021 and 2020 were $300,000 and $350,000, respectively.

Principal payments on the line of credit during the years ended June 30, 2021 and 2020 were $350,000 and $0, respectively. The outstanding principal balance on the line of credit as of June 30, 2021 and 2020 was $300,000 and $350,000, respectively.

COMMITMENTS At June 30, 2021 and 2020, SGV Habitat had executed commitments for various building related services totaling $20,488 and $132,923, respectively. As of June 30, 2021 and 2020, $0 and $19,078 had been completed, respectively.

RENTAL INCOME SGV Habitat subleases its Atwater Village, California property to two different tenants. The monthly lease rates range between $5,400 to $5,725 over the duration of the leases. The leases expire in August 2021 and October 2023.

At June 30, 2021, future minimum payments to be received are as follows: 2022 2023 2024

$

46,348 45,788 15,642

$

107,778

Rental income for the years ended June 30, 2021 and 2020 was approximately $66,582 and $61,150, respectively, and is included in other income.

LEASE COMMITMENTS SGV Habitat leases various office equipment and two vehicles with total monthly payments of $3,200. The leases expire between May 2023 through June 2025.

-16-

SAN GABRIEL VALLEY HABITAT FOR HUMANITY, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2021 AND 2020 LEASE COMMITMENTS (continued) SGV Habitat also rents four properties in California located in the cities of Azusa, Atwater Village, Duarte and Monrovia. The total monthly payments are $59,009 and are adjusted based on the specific lease agreement. The leases expire between November 2023 and March 2025, respectively.

At June 30, 2021, future minimum payments are as follows: 2022 2023 2024 2025

$

799,966 817,982 674,386 403,087

$

2,695,421

Lease expense for the years ended June 30, 2021 and 2020 was approximately $646,900 and $714,000, respectively, and is included in occupancy on the Statement of Functional Expenses.

RETIREMENT PLAN Upon employment, all employees of SGV Habitat are eligible to participate in the San Gabriel Valley Habitat for Humanity, Inc.'s non-ERISA 403(b) plan (the Plan). Employees may contribute a portion of their salaries to the Plan as the legal limits allow. The Plan is non-ERISA, and therefore not permitted to have employer contributions. A change in this policy would require a Board resolution and an amendment and restatement of the Plan.

SALE OF HOMES No homes were sold during the year ended June 30, 2021.

During the year ended June 30, 2020, SGV Habitat sold six Habitat homes. Mortgages totaling $1,891,840 were issued through escrow.

RELATED PARTY TRANSACTIONS SGV Habitat annually remits a portion of its contributions (excluding in-kind contributions) to Habitat International. These funds are used to construct homes in economically depressed areas around the world. During the years ended June 30, 2021 and 2020, SGV Habitat contributed to Habitat International $60,000 and $10,000, respectively for this purpose. SGV Habitat also paid Habitat International fees for stewardship and organizational sustainability totaling $25,000 and $25,000 for the years ended June 30, 2021 and 2020, respectively, which are included in tithes and dues on the statement of functional expenses.

On September 30, 2019, SGV Habitat issued a promissory note to a related party, Neighborhood Housing Partners, Inc, in the amount of $10,000. The note is a zero-interest note, payable in 36 months. The outstanding balance on the note as of June 30, 2021 and 2020 was $10,000, which has been eliminated through consolidation.

-17-

SAN GABRIEL VALLEY HABITAT FOR HUMANITY, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2021 AND 2020 RELATED PARTY TRANSACTIONS (continued) On June 30, 2021, SGV Habitat issued two promissory notes to a related party, Neighborhood Housing Partners, Inc, in the total amount of $300,000. The notes bear interest at a rate equivalent to SGV Habitat's interest rate on its line of credit, payable by April 2022. The outstanding balance on the note as of June 30, 2021 was $300,000, which has been eliminated through consolidation.

BOARD DESIGNATED NET ASSETS The Board designated net assets totaling $5,046,998 and $2,752,482 for the years ended June 30, 2021 and 2020, respectively, to pay for current housing projects.

NET ASSETS WITH DONOR RESTRICTION Net assets subject to purpose restrictions are available for: 2021 Howard building project CalHome Re-Use Pasadena ADU project

$

June 30,

344,377 60,000 23,781

$

2020 44,761 192,350

428,158

237,111

118,050

100,000 45,842

118,050

145,842

Net assets subject to time restrictions are available for: Howard building project General

Total net assets with donor restrictions:

$

546,208

$

382,953

RISKS AND UNCERTAINTIES In March 2020, the World Health Organization declared the spread of Coronavirus disease (COVID-19) a worldwide pandemic. The COVID-19 pandemic is having significant effects on global, national, and local markets, supply chains, businesses, and communities. Specific to SGV Habitat, COVID-19 may impact various parts of its operations and financial results. SGV Habitat is taking appropriate actions to mitigate the negative impact; however, the full impact of COVID-19 is unknown and cannot be reasonably estimated as of October 11, 2021.

-18-

SAN GABRIEL VALLEY HABITAT FOR HUMANITY, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2021 AND 2020 SUBSEQUENT EVENTS SGV Habitat has evaluated subsequent events through October 11, 2021, the date at which the financial statements were issued. Based on its evaluation, management has determined the following require disclosure: On July 14, 2021, Neighborhood Housing Partners closed escrow on 4042 Mason Road Unit D, in El Monte California for a purchase price of $500,000. Neighborhood Housing Partners deposited $271,000 prior to the year ended June 30, 2021, which is included in other assets.

During July 2021, SGV Habitat sold two homes in Monterey Park, California and Pasadena, California. Total proceeds from the sales were $1,120,050.

During August 2021, SGV Habitat sold a home in Baldwin Park, California. Total proceeds from the sale were $544,526.

During September 2021, SGV Habitat sold one home in Baldwin Park, California. Total proceeds from the sale were $580,000.

-19-

SUPPLEMENTARY INFORMATION

SAN GABRIEL VALLEY HABITAT FOR HUMANITY, INC. STATEMENT OF FINANCIAL POSITION SUPPLEMENTAL SCHEDULE JUNE 30, 2021

ASSETS Cash and cash equivalents Contributions receivable Mortgage loans receivable ReStore inventory Houses under construction Other assets Property and equipment - net Intangible assets - net TOTAL ASSETS LIABILITIES AND NET ASSETS Accounts payable Accrued expenses and other liabilities Amounts held for others Line of credit Notes payable Net assets without donor restriction Undesignated Board designated Net assets with donor restriction TOTAL LIABILITIES AND NET ASSETS

The accompanying notes are an integral part of this statement.

SGV Habitat and SGVHFH Funding Company, LLC

Neighborhood Housing Partners, Inc.

Elimination Entries

Total

$

1,171,484 148,591 3,538,844 131,153 5,046,998 477,212 204,455 89,787

$

35,311 271,000 -

$

$ (310,000) -

1,206,795 148,591 3,538,844 131,153 5,046,998 438,212 204,455 89,787

$

10,808,524

$

306,311

$

(310,000) $

10,804,835

86,964 $ 225,730 1,623 300,000 2,807,598

310,000

$

-

86,964 225,730 1,623 300,000 2,807,598

$

1,793,403 5,046,998 546,208 $

10,808,524

-20-

(310,000)

(3,689) $

306,311

$

$

-

1,789,714 5,046,998 546,208

(310,000) $

10,804,835

SAN GABRIEL VALLEY HABITAT FOR HUMANITY, INC. STATEMENT OF ACTIVITIES SUPPLEMENTAL SCHEDULE FOR THE YEAR ENDED JUNE 30, 2021

SUPPORT AND REVENUE Contributions and grants In-kind contributions ReStore sales and donations Imputed interest income on mortgage loans Donated services Interest income Gain on sale of mortgages Other income

SGV Habitat and SGVHFH Funding Company, LLC $

Total support and revenue

1,691,502 1,894,039 2,438,666 239,083 24,841 16 920,531 143,450

Neighborhood Housing Partners, Inc. $

-

Elimination Entries $

-

Total $

1,691,502 1,894,039 2,438,666 239,083 24,841 16 920,531 143,450

7,352,128

-

-

7,352,128

EXPENSES Program Management and general Fundraising

6,157,726 372,747 239,467

1,865 -

-

6,157,726 374,612 239,467

Total expenses

6,769,940

1,865

-

6,771,805

582,188

(1,865)

-

580,323

6,804,421

(1,824)

-

6,802,597

(3,689) $

-

CHANGE IN NET ASSETS NET ASSETS AT BEGINNING OF YEAR NET ASSETS AT END OF YEAR

The accompanying notes are an integral part of this statement.

$

7,386,609

-21-

$

$

7,382,920

SAN GABRIEL VALLEY HABITAT FOR HUMANITY, INC. SUPPLEMENTAL STATEMENT OF FUNCTIONAL EXPENSES FOR THE YEAR ENDED JUNE 30, 2021 SGV Habitat and SGVHFH Funding Company, LLC Program Services Building materials, supplies, and other Salaries and benefits Professional fees Interest expense Equipment Occupancy Tithes and dues Depreciation and amortization Newsletter Conference travel Bank charges Supplies Telephone Postage Insurance Printing Other

$

2,985,202 $ 1,707,262 140,715 23,694 74,223 693,242 122,704 60,381 17,413 27,865 33,787 11,122 33,219 29,291 143,464 4,900 49,242

$

6,157,726 $

General & Administrative $ 229,148 52,301 4,778 46,782 15,030 1,169 1,398 894 3,597 229 14,758 648 2,015 372,747 $

The accompanying notes are an integral part of this statement.

Fundraising $ 157,354 4,410 44,210 15,030 1,398 894 3,597 229 9,722 648 1,975 239,467 $

Total

Elimination Entries

Neighborhood Housing Partners, Inc. Program Services

2,985,202 $ 2,093,764 193,016 23,694 83,411 784,234 122,704

-

90,441 17,413 29,034 36,583 12,910 40,413 29,749 167,944 6,196 53,232

General & Administrative $

-

6,769,940 $

-

-22-

$ 1,115 750 -

$

1,865 $

Fundraising -

Total $

-

Total Expenses

$ 1,115 750 -

$

1,865 $

-

$

-

2,985,202 2,093,764 194,131 23,694 83,411 784,234 122,704 90,441 17,413 29,034 37,333 12,910 40,413 29,749 167,944 6,196 53,232

$

6,771,805

SAN GABRIEL VALLEY HABITAT FOR HUMANITY, INC. STATEMENT OF CASH FLOWS SUPPLEMENTAL SCHEDULE FOR THE YEAR ENDED JUNE 30, 2021 SGV Habitat and SGVHFH Funding Company, LLC

CASH FLOWS FROM OPERATING ACTIVITIES CHANGE IN NET ASSETS

$

582,188

Neighborhood Housing Partners, Inc. $

(1,865) $

Elimination Entries -

Total $

580,323

Adjustments to reconcile change in net assets to net cash used for operating activities: Imputed interest income on mortgage loans, net of discounts Depreciation and amortization expense Amortized interest Gain on sale of mortgages Changes in operating assets and liabilities: Contributions receivable ReStore inventory Houses under construction Other assets Accounts payable Accrued expenses Amounts held for others

(239,083) 90,441 21,481 (920,531)

CASH USED FOR OPERATING ACTIVITIES

-

-

(239,083) 90,441 21,481 (920,531)

-

39,675 106,045 (498,004) 34,485 (70,286) (198,076) (23,593)

(271,000) (1,149) -

-

39,675 106,045 (498,004) (236,515) (71,435) (198,076) (23,593)

(1,075,258)

(274,014)

-

(1,349,272)

-

CASH FLOWS FROM INVESTING ACTIVITIES Loans issued to related party Mortgage payments received Proceeds from the sale of mortgages Purchase of fixed assets

(300,000) 153,481 1,840,750 (83,377)

-

300,000 -

153,481 1,840,750 (83,377)

CASH PROVIDED BY INVESTING ACTIVITIES

1,610,854

-

300,000

1,910,854

The accompanying notes are an integral part of this statement.

-23-

SAN GABRIEL VALLEY HABITAT FOR HUMANITY, INC. STATEMENT OF CASH FLOWS (CONTINUED) SUPPLEMENTAL SCHEDULE FOR THE YEAR ENDED JUNE 30, 2021 SGV Habitat and SGVHFH Funding Company, LLC

Neighborhood Housing Partners, Inc.

CASH FLOWS FROM FINANCING ACTIVITIES Additional borrowing on line of credit Principal payments on line of credit Additional borrowing from related party Principal payments on long term debt

300,000 (350,000) (85,039)

300,000 -

(300,000) -

300,000 (350,000) (85,039)

CASH USED FOR FINANCING ACTIVITIES

(135,039)

300,000

(300,000)

(135,039)

NET INCREASE IN CASH

400,557

25,986

-

426,543

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR

770,927

9,325

-

780,252

CASH AND CASH EQUIVALENTS AT END OF YEAR

Elimination Entries

Total

$

1,171,484

$

35,311

$

-

$

1,206,795

$ $ $

2,212 1,400,000

$ $ $

-

$ $ $

-

$ $ $

2,212 1,400,000

SUPPLEMENTAL DISCLOSURE: CASH PAID FOR INTEREST CASH PAID FOR INCOME TAXES LAND RECEIVED FOR NOTE PAYABLE

The accompanying notes are an integral part of this statement.

-24-

SAN GABRIEL VALLEY HABITAT FOR HUMANITY, INC. SUMMARY OF PROJECTS SUPPLEMENTAL SCHEDULE JUNE 30, 2021 The following is a schedule of projects and their status at June 30, 2021:

Number of units Status of construction Title vesting Status of occupancy of homeowner Project valued as

Manzanita, Pasadena

Howard, Pasadena

Baldwin Park, Baldwin Park

Collegian, Monterey Park

Olive St., Baldwin Park

Olive Ave, Altadena

Torch, Baldwin Park

Angelino, Azusa

Desideio, Pasadena

2

2

1

1

1

1

12

4

1

Completed

Pre-Development

Completed

Completed

Completed

SGV Habitat

City of Pasadena

SGV Habitat

SGV Habitat

SGV Habitat

SGV Habitat

SGV Habitat

City of Azua

SGV Habitat

Occupied

Not occupied

Not occupied

Not occupied

Not occupied

Not occupied

Not occupied

Not occupied

Not occupied

Construction in progress

Construction in progress

Construction in progress

Construction in progress

Construction in progress

Construction in progress

Construction in progress

Construction in progress

Construction in progress

The accompanying notes are an integral part of this statement.

-25-

Pre-Development Pre-Development Pre-Development

Completed