Arlington Food Assistance Center Financial Statements June 30, 2012 and 2011
Table of Contents
Independent Auditor’s Report
Financial Statements
Statements of Financial Position 1
Statements of Activities 2 - 3
Statements of Functional Expenses 4 - 5
Statements of Cash Flows 6
Notes to Financial Statements 7 - 16
Certified Public Accountants
5500 Cherokee Avenue, Suite 400 • Alexandria, Virginia 22312-2321 PHONE: 703.642.2700 Fax: 703.750.9258 Web: www.kwccpa.com
Members American Institute of Certified Public Accountants, Private Companies Practice Section and Virginia Society of Certified Accountants
Independent Auditor's Report
To the Board of DirectorsArlington Food Assistance CenterArlington, Virginia
We have audited the accompanying statements of financial position of Arlington Food Assistance Center (a not-for-profit organization) as of June 30, 2012 and 2011, and the related statements of activities, functional expenses, and cash flows for the years then ended. These financial statements are the responsibility of Arlington Food Assistance Center’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Arlington Food Assistance Center as of June 30, 2012 and 2011, and the changes in its net assets and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.
Alexandria, VirginiaOctober 25, 2012
Statements of Financial Position
Assets
Current assets
Cash and cash equivalents $ 722,038 $ 891,995
Certificates of deposits 495,247 50,036
Other receivables - 344
Pledges receivable, net of long-term portion 20,235 32,643
Prepaid expenses 20,830 12,477
Inventory of food available for distribution 32,096 53,306
Gift cards 294 815
1,290,740 1,041,616
Other assets
Investments 86,328 91,307
Pledges receivable, long-term portion - 2,000
86,328 93,307
Property and equipment
Land 261,901 261,901
Property and equipment, net 633,386 660,008
895,287 921,909
Total assets 2,272,355 2,056,832
Liabilities and net assets
Current liabilities
Accounts payable and accrued expenses 115,318 128,263
Capital lease obligation, net of long-term portion 997 1,667
116,315 129,930
Long-term liabilities
Security deposits held 2,200 2,200
Capital lease obligation - 997
2,200 3,197
Total liabilities 118,515 133,127
Net assets
Unrestricted 2,137,400 1,871,338
Temporarily restricted 16,440 52,367
Total net assets 2,153,840 1,923,705
Total liabilities and net assets $ 2,272,355 $ 2,056,832
Arlington Food Assistance Center
20112012June 30,
See accompanying notes and independent auditor's report.
1
Arlington Food Assistance Center
Statement of Activitiesfor the year ended June 30, 2012
Public support and revenue
Contributions
Capital campaign $ - $ 71,196 $ 71,196
General contributions 1,563,596 5,000 1,568,596
Special events, net of $73,836 expenses 106,294 45,143 151,437
1,669,890 121,339 1,791,229
Arlington County 365,400 - 365,400
Rental income 36,992 - 36,992
In-kind donations 2,043,281 2,575 2,045,856
Investment income 9,540 - 9,540
Net assets released from restriction 159,841 (159,841) -
Total public support and revenue 4,284,944 (35,927) 4,249,017
Expenses
Program services 3,452,309 - 3,452,309
Management and general 129,527 - 129,527
Fundraising 437,046 - 437,046
Total expenses 4,018,882 - 4,018,882
Change in net assets 266,062 (35,927) 230,135
Net assets, beginning of year 1,871,338 52,367 1,923,705
Net assets, end of year $ 2,137,400 $ 16,440 $ 2,153,840
TotalUnrestricted Restricted
Temporarily
See accompanying notes and independent auditor's report.
2
Arlington Food Assistance Center
Statement of Activitiesfor the year ended June 30, 2011
Public support and revenue
Contributions
Capital campaign $ - $ 146,784 $ 146,784
General contributions 1,375,237 9,500 1,384,737
Special events, net of $42,401 expenses 20,117 103,517 123,634
1,395,354 259,801 1,655,155
Arlington County 339,530 - 339,530
Rental income 36,256 - 36,256
In-kind donations 1,786,891 2,245 1,789,136
Investment income 19,083 - 19,083
Other income 30 - 30
Net assets released from restriction 312,677 (312,677) -
Total public support and revenue 3,889,821 (50,631) 3,839,190
Expenses
Program services 3,042,344 - 3,042,344
Management and general 125,774 - 125,774
Fundraising 294,348 - 294,348
Total expenses 3,462,466 - 3,462,466
Change in net assets 427,355 (50,631) 376,724
Net assets, beginning of year 1,443,983 102,998 1,546,981
Net assets, end of year $ 1,871,338 $ 52,367 $ 1,923,705
Total
Temporarily
RestrictedUnrestricted
See accompanying notes and independent auditor's report.
3
Arlington Food Assistance Center
Statement of Functional Expensesfor the year ended June 30, 2012
Personnel $ 490,341 $ 54,984 $ 270,942 $ 816,267
Benefits 56,002 6,906 16,767 79,675
Payroll taxes 43,724 4,682 22,389 70,795
590,067 66,572 310,098 966,737
Donated goods 2,057,392 - - 2,057,392
Food purchases 587,365 - - 587,365
Fundraising and public relations - 2,433 25,950 28,383
Interest expense 1,517 168 282 1,967
Program transportation 36,972 - - 36,972
Warehouse supplies 22,690 - - 22,690
Occupancy costs 28,990 393 664 30,047
Supplies 5,745 557 972 7,274.00
Professional fees 19,240 6,072 32,725 58,037
Depreciation 30,935 1,469 5,143 37,547
Equipment rental and maintenance 16,397 4,543 1,303 22,243
Insurance 6,778 1,297 145 8,220
Printing and publications 5,148 7,851 30,994 43,993
Taxes 5,149 251 450 5,850
Travel and meetings 1,775 1,914 421 4,110
Bank charges 256 1,479 5,566 7,301
Telecommunications 12,388 1,175 1,201 14,764
Postage and shipping 48 2,136 17,876 20,060
Accounting and audit fees - 11,250 - 11,250
Other expenses 23,457 19,967 3,256 46,680
Total functional expenses $ 3,452,309 $ 129,527 $ 437,046 $ 4,018,882
Management
Program and general Fundraising Total
See accompanying notes and independent auditor's report.
4
Arlington Food Assistance Center
Statement of Functional Expensesfor the year ended June 30, 2011
Personnel $ 460,603 $ 36,433 $ 138,474 $ 635,510
Benefits 40,791 2,123 6,418 49,332
Payroll taxes 42,311 2,626 11,589 56,526
543,705 41,182 156,481 741,368
Donated goods 1,736,141 - - 1,736,141
Food purchases 549,872 - - 549,872
Fundraising and public relations 554 4,747 14,435 19,736
Mortgage interest 11,289 402 680 12,371
Interest expense 2,301 221 428 2,950
Program transportation 25,335 - - 25,335
Warehouse supplies 25,474 - - 25,474
Occupancy costs 31,334 288 702 32,324
Supplies 5,117 534 826 6,477
Professional fees 22,979 15,666 47,162 85,807
Depreciation 25,514 828 1,655 27,997
Equipment rental and maintenance 14,341 3,990 1,590 19,921
Insurance 5,690 1,683 141 7,514
Printing and publications 2,359 28,026 40,054 70,439
Taxes 4,907 237 426 5,570
Travel and meetings 1,377 4,327 790 6,494
Bank charges 487 1,082 2,015 3,584
Telecommunications 8,668 515 995 10,178
Postage and shipping 276 7,341 20,800 28,417
Accounting and audit fees - 9,750 - 9,750
Other expenses 24,624 4,955 5,168 34,747
Total functional expenses $ 3,042,344 $ 125,774 $ 294,348 $ 3,462,466
TotalProgram
Management
and general Fundraising
See accompanying notes and independent auditor's report.
5
Arlington Food Assistance Center
Statements of Cash Flows
for the year ended June 30,
Cash flows from operating activities
Change in net assets $ 230,135 $ 376,724
Adjustments to reconcile change in net assets to net cash
provided by operating activities
Realized and unrealized gain in investment account (2,066) (10,166)
Donated property and equipment - (23,580)
Donated gift cards (received) used 521 (55)
Donated stock received (3,912) (7,594)
Depreciation 37,547 27,997
(Increase) decrease in operating assets
Other receivables 344 1,580
Pledges receivable 14,408 82,695
Prepaid expenses (8,353) 6,601
Inventory of food available for distribution 21,210 (15,393)
Increase (decrease) in operating liabilities
Accounts payable and accrued expenses (12,945) 54,554
Net cash provided by operating activities 276,889 493,363
Cash flows from investing activities
Purchase of certificates of deposit and reinvestments (445,211) (50,036)
Purchase of investments and reinvestments (2,003) (30,128)
Purchase of property and equipment (10,925) (17,614)
Proceeds from certificate of deposit maturity - 146,495
Proceeds from donated investments sold 12,960 -
Net cash provided (used) by investing activities (445,179) 48,717
Cash flows from financing activities
Principal repayment of lease obligation (1,667) (662)
Principal repayment of mortgage payable - (273,114)
Net cash used by financing activities (1,667) (273,776)
Net increase (decrease) in cash and cash equivalents (169,957) 268,304
Cash and cash equivalents, beginning of year 891,995 623,691
Cash and cash equivalents, end of year $ 722,038 $ 891,995
Supplemental cash flow information
Interest paid $ 1,967 $ 15,321
2012 2011
See accompanying notes and independent auditor's report.
6
Arlington Food Assistance Center Notes to Financial StatementsJune 30, 2012 and 2011
See independent auditor's report.
7
1. Organization
Arlington Food Assistance Center (AFAC) is a not-for-profit organization with a mission to collect, handle and distribute both perishable and non-perishable food products to hungry people in Arlington, Virginia. AFAC assists by relieving the food budget of clients, helps prevent homelessness and allows clients to make other necessary purchases without sacrificing their health, housing and nutritional needs. AFAC fits neatly into the comprehensive system of service delivery that characterizes the work done by the agencies and churches in Arlington. AFAC provides groceries to families and individuals referred by the Arlington County Department of Human Services, other social service agencies, and the churches of Arlington. AFAC obtains surplus food at a minimal cost from the Capital Area Food Bank and at no cost from private donors, local bakeries, supermarkets, farmers' markets and food drives. In addition to the daily food distribution at 2708 South Nelson Street, AFAC delivers food to various senior citizen apartment complexes in Arlington County.
AFAC is the sole owner of 2708 South Nelson Street LLC. This partnership owns the facility in which AFAC operates. These financial statements include the accounts of 2708 South Nelson Street LLC and all intercompany transactions have been eliminated.
2. Summary of significant accounting policies
Basis of accounting
The financial statements of AFAC are prepared using the accrual method of accounting. In accordance with this method of accounting, revenue is recognized in the period in which it is earned and expenses are recognized in the period in which they are incurred. All revenue and expenses which are applicable to future periods have been presented as deferred revenue or prepaid expenses on the accompanying statements of financial position.
Financial statement presentation
AFAC is required to report information regarding its financial position and activities according to three classes of net assets: unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets. At June 30, 2012 and 2011, AFAC had no permanently restricted net assets.
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 of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Arlington Food Assistance Center Notes to Financial StatementsJune 30, 2012 and 2011
See independent auditor's report.
8
2. Summary of significant accounting policies (continued)
Cash and cash equivalents
For purposes of the statements of cash flows, AFAC considers all cash and unrestricted highly liquid investments with an initial maturity of three months or less to be cash equivalents. Certificates of deposit are not included in cash and cash equivalents. Investor’s Deposit Accounts (IDA) are interest bearing checking accounts. Unlimited FDIC insurance for noninterest-bearing transaction accounts became effective on December 31, 2010 and continues through December 31, 2012. FDIC insurance on interest bearing accounts is $250,000 per depositor, per insured bank. For the years ended June 30, 2012 and 2011, AFAC diversified its bank accounts to ensure that all cash was covered by the FDIC.
Inventory
The majority of the food distributed by AFAC is donated. This activity is recorded in the financial statements as a contribution on per-pound values established by Feeding America. AFAC also supplements its donated food supply by purchasing nutritious food items and perishable items not normally donated to AFAC, these items are valued at lower of cost or market.
Property and equipment
Property and equipment is recorded at cost if purchased and at fair value if donated. AFAC’s policy is to capitalize purchases of property and equipment with a cost of $1,000 or more. Depreciation is computed using the straight-line method over the useful lives.
Compensated absences
Employees of AFAC are entitled to paid vacation depending on job classification, length of service and other factors. As of June 30, 2012 and 2011, compensated absences of $20,403 and $17,215 are included in accounts payable and accrued expenses in the accompanying statement of financial position.
Contributions
Contributions received are measured at their fair values and are reported as an increase in net assets. AFAC reports gifts of cash and other assets as restricted support if they are received with donor stipulations that limit the use of the donated assets, or if they are designated as support for future periods. When a donor restriction expires, that is, when a stipulated time restriction ends or purpose restriction is accomplished, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restrictions. Donor-restricted contributions whose restrictions are met in the same reporting period are reported as unrestricted support.
Arlington Food Assistance Center Notes to Financial StatementsJune 30, 2012 and 2011
See independent auditor's report.
9
2. Summary of significant accounting policies (continued)
Pledges receivable
AFAC reports unconditional promises to give as contributions. Unconditional promises to give are recognized as revenue in the period pledged. Conditional promises to give are recognized as unrestricted revenue when the donor imposed conditions on which they depend are substantially met. If pledges are expected to be collected in less than one year, they are recorded at the estimated amount to be ultimately realized. If pledges are to be paid to the organization over a period of years, they are recorded at the present value of their estimated cash flows using the prime rate as of the fiscal year-end in the year of the donation. An allowance has been recorded. Substantially all pledges receivable consist of promises made to the capital campaign.
Bad debts
For the years ended June 30, 2012 and 2011, management provided for potential uncollectible amounts through an allowance for doubtful accounts.
In-kind support
A substantial number of volunteers donate time to AFAC’s program services. The donated services arean integral part of AFAC’s purpose but are not reflected in the financial statements because the services do not require specialized skills as defined by U.S. generally accepted accounting principles. Donated property is reflected as a revenue or asset at the fair market value of the property on date of donation. In kind support is detailed in Note 11 of these financial statements.
Functional classification of expenses
The costs of providing program services are summarized on a functional basis in the accompanying financial statements. Expenses have been charged to programs and supporting services directly, if applicable, or on the basis of periodic time and expense studies.
Fair value of financial assets and liabilities
Financial assets with carrying values approximating fair value include cash and cash equivalents, certificates of deposits, other receivables, pledges receivable, prepaid expenses, inventory and gift cards.Financial liabilities with carrying values approximating fair value include accounts payable and accrued expenses and all debt instruments. The carrying value of these financial assets and liabilities approximates fair value due to their short maturities and any associated interest rates approximate current market rates.
Arlington Food Assistance Center Notes to Financial StatementsJune 30, 2012 and 2011
See independent auditor's report.
10
2. Summary of significant accounting policies (continued)
Income taxes
Arlington Food Assistance Center is exempt from federal income tax as a non-profit organization described in Section 501(c)(3) of the Internal Revenue Code and is classified as an organization other than a private foundation. The Organization did not have a liability for unrelated business income for the years ended June 30, 2012 and 2011.
The Organization is subject to taxation in the U.S. and a small number of state and local jurisdictions. The material jurisdictions subject to potential examination by taxing authorities include the U.S. andVirginia. Management does not believe that the ultimate outcome of any future examinations of open tax years will have a material impact on the Organization’s results of operations. Tax years that remain subject to examination by the IRS are fiscal years 2009 through 2012.
3. Cash and cash equivalents
Cash and cash equivalents as of June 30, 2012 and 2011 consisted of the following:
Checking accounts $ 404,026 $ 309,314
IDA accounts 54,999 123,262
Money market accounts 263,013 459,419
$ 722,038 $ 891,995
2012 2011
Arlington Food Assistance Center Notes to Financial StatementsJune 30, 2012 and 2011
See independent auditor's report.
11
4. Certificates of deposits
As of June 30, 2012 AFAC held ten certificates of deposit with maturity dates ranging from August 16, 2012 to June 9, 2013 and interest rates ranging from 0.449% to 1.154%. It is management’s intent to hold the certificates through the original maturity date and as such, they are recorded at the amortized cost value at June 30, 2012 and 2011. All certificates are fully covered by the Federal Deposit Insurance Corporation.
5. Pledges receivable
Pledges receivable are collectible over a one to four year period. For the years ended June 30, 2012 and 2011 an allowance of $1,065 and $1,823 was recorded. A summary of net pledges receivable as of June 30 was as follows:
Net pledges due in
Less than one year $ 20,235 $ 34,643
One to four years - 2,000
$ 20,235 $ 36,643
2012 2011
6. Investments
AFAC maintains its investments at fair market value, based on quoted prices in active markets, and accordingly, recognizes the gains or losses that result from market fluctuations for the period in which fluctuations occur. Purchased investments are initially recorded at cost and donated investments at fair value on date of receipt. Unrealized gains and losses are included in the statement of activities and changes in net assets.
Investment income for the years ended June 30, 2012 and 2011 consisted of the following:
Realized and unrealized gains $ 2,066 $ 10,166
Interest and dividend income 8,331 9,390
Investment fees (857) (473)
$ 9,540 $ 19,083
2012 2011
Arlington Food Assistance Center Notes to Financial StatementsJune 30, 2012 and 2011
See independent auditor's report.
12
6. Investments (continued)
In accordance with FASB ASC 820-10, Arlington Food Assistance Center classifies its investment into Level 1, which refers to securities valued using quoted prices from active markets for identical assets; Level 2, which refers to securities not traded on an active market but for which observable market inputs are readily available; and Level 3, which refers to securities valued based on significant unobservable inputs. Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Fair value measurements at June 30, 2012 and 2011 consisted of the following:
Total assets
at fair value
Certificates of deposits $ 495,247 $ - $ - $ 495,247
Cash 102 - 189 291
Domestic equity stocks - - 42,613 42,613
Real estate investment trusts - - 9,813 9,813
Bonds
High yield - - 7,734 7,734
Interim-term - - 25,877 25,877
$ 495,349 $ - $ 86,226 $ 581,575
Level 1 Level 2 Level 3
2012
Total assets
at fair value
Certificate of deposit $ 50,036 $ - $ - $ 50,036
Cash - - 1,033 1,033
Domestic equity stocks 8,013 - 42,638 50,651
Real estate investment trusts - - 8,813 8,813
Bonds
High yield - - 7,488 7,488
Interim-term - - 23,322 23,322
$ 58,049 $ - $ 83,294 $ 141,343
2011
Level 1 Level 2 Level 3
AFAC limits its credit risk by diversifying its investments in a portfolio aimed to maximize the fund’s growth.
Arlington Food Assistance Center Notes to Financial StatementsJune 30, 2012 and 2011
See independent auditor's report.
13
7. Inventory of food available for distribution
At June 30, 2012 and 2011 inventory consisted of $32,096 and $53,306, respectively. Donated food is valued based upon the fair market value of the foods, as published by Feeding America. At June 30, 2012and 2011 the approximate wholesale value of one pound of donated food was $1.60.
8. Rental income
AFAC rents a portion of its warehouse to Arlington Street People’s Assistance Network, Inc. (ASPAN). AFAC received $36,992 and $36,256 in rental income from ASPAN for the years ended June 30, 2012 and 2011. ASPAN’s lease continues through December 31, 2017. The future minimum rental income on noncancellable leases for the years ending June 30 is as follows:
2013 $ 37,744
2014 38,511
2015 39,291
2016 40,092
Thereafter 60,366
$ 216,004
9. Property and equipment
A summary of information relative to property depreciation as of June 30, 2012 was as follows:
Useful
life
Land $ 261,901 $ - $ -
Building and improvements 679,085 87,146 17,747 15-39 years
Vehicles 64,469 58,114 4,767 5 years
Equipment 85,326 55,207 12,594 5-10 years
Software 7,600 2,627 2,439 3 years$ 1,098,381 $ 203,094 $ 37,547
Accumulated Depreciation
Cost depreciation expense
Arlington Food Assistance Center Notes to Financial StatementsJune 30, 2012 and 2011
See independent auditor's report.
14
9. Property and equipment (continued)
A summary of information relative to property depreciation as of June 30, 2011 was as follows:
Useful
life
Land $ 261,901 $ - $ -
Building 672,017 69,399 17,171 39 years
Vehicles 64,469 53,347 6,947 5 years
Equipment 82,319 42,613 3,691 5-10 years
Software 6,750 188 188 3 years$ 1,087,456 $ 165,547 $ 27,997
Accumulated Depreciation
Cost depreciation expense
10. Mortgage loan payable
The office and warehouse building was secured by a mortgage. The loan was paid in full during the year ended June 30, 2011.
Mortgage expense was $12,371 for the year ended June 30, 2011.
11. In-kind support
Donated food and assetsFood donations are received from local groceries, bakeries and food bank distributors. Donated food is valued based upon the fair market value of the foods, as published by Feeding America. For the years ended June 30, 2012 and 2011, the approximate wholesale value of one pound of donated food was $1.60.During 2012, AFAC collected 1,322,681 pounds of food and collected 1,144,439 pounds of food in 2011.
During 2012, AFAC received stock donations, gift cards, and other items to assist in its day to day operations.
Arlington Food Assistance Center Notes to Financial StatementsJune 30, 2012 and 2011
See independent auditor's report.
15
11. In-kind support (continued)
As of June 30, 2012 and 2011, AFAC recorded the following in kind donations:
Food, net spoilage $ 2,039,489 $ 1,754,302 Gift cards 2,365 2,245 Other in-kind 4,002 32,589
$ 2,045,856 $ 1,789,136
20112012
Donated servicesIn accordance with financial accounting standards, the financial statements reflect only those donated services requiring specific expertise which AFAC would otherwise need to purchase. In addition, many individuals volunteer their time and perform a variety of tasks that assist AFAC. Volunteers assisted in food collection, distribution and administrative assistance. In 2011 and 2010, AFAC volunteer hours were valued at $20 per hour. No amounts have been recognized in the financial statements for these volunteer hours because they do not meet the criteria for recognition. For the year ended June 30, 2012 and 2011, volunteer hours and value of hours were as follows:
Program 22,872 $ 457,443
Administrative 1,945 38,900
24,817 $ 496,343
Program 22,826 $ 456,520
Administrative 3,836 76,710
26,662 $ 533,230
(rounded) Value of hours
2012
2011
Hours worked
Value of hours
Hours worked
(rounded)
12. Retirement benefits
AFAC participates in the Paychex 401(k) Retirement Plan. This defined contribution plan covers all employees who meet eligibility requirements. Employees may elect to defer up to the statutory limits, while AFAC may make discretionary contributions based on the participant’s salary. AFAC’s retirement expense for the year ended June 30, 2012 was $5,582. No employer contributions were made for the year ended June 30, 2011.
Arlington Food Assistance Center Notes to Financial StatementsJune 30, 2012 and 2011
See independent auditor's report.
16
13. Temporarily restricted net assets
Net assets are temporarily restricted for specific events or programs as well as for future periods. Restrictions on these assets are removed when expenses are incurred. Temporarily restricted net assets included the following at June 30, 2012 and 2011:
Capital campaign $ 51,055 $ 71,196 $ 111,370 $ 10,881
General contributions 497 5,000 232 5,265
Special events - 45,143 45,143 -
In-kind donations 815 2,575 3,096 294
$ 52,367 $ 123,914 $ 159,841 $ 16,440
2011ReleasesAdditions2011
14. Service providing agreements
For the year ended June 30, 2012 and 2011, the common law employees of the organization were leased from Paychex Business Solutions, Inc., a Professional Employer Organization. AFAC retained its status of employer and control over day-to-day job duties over all common law employees.
15. Line of credit
AFAC has a $100,000 business line of credit, secured by the land and its building. Interest is applied at a variable rate of the Bank’s Prime Rate plus 0.5% per annum to be adjusted monthly, not to decrease below a fixed minimum rate of 4.75%. Payments are required monthly. No amounts were outstanding as of June 30, 2012.
16. Subsequent events
AFAC assessed events occurring subsequent to June 30, 2012 through October 25, 2012 the date the financial statements were available to be issued, for potential recognition and disclosure in the financial statements. No events have occurred that would require adjustment to or disclosure in the financial statements.