Business Council for Peace Inc REPORT ON FINANCIAL STATEMENTS

Business Council for Peace, Inc. REPORT ON FINANCIAL STATEMENTS For the years ended September 30, 2007 and 2006 GREGORY N. FERRARIS, CPA, LLC BUSINESS COUNCIL FOR PEACE, INC. REPORT ON FINANCIAL STATEMENTS Years ended September 30,2007 and 2006 CONTENTS Page Auditor's Report Financial Statements Statement of Financial Position Statement of Activities and Change in Net Assets 3 4 5 6 7 8 - II Statement of Cash Flows Schedule of Functional Expenses Notes to Financial Statements GREGORY N. FERRARIS, CPA, LLC GREGORYN. FERRARIS,CPA,LLC CERTIFIED PUBLIC ACCOUNTANT 108 Main Street, P.o. Box 1168 Sag Harbor, New York 11963 (631) 725-0145 Facsimile (631) 725-1904 INDEPENDENT AUDITOR'S REPORT Board of Directors Business Council for Peace, Inc. New York, New York I have audited the accompanying comparative statement of financial position of the Business Council for Peace, Inc. (a not-for-profit organization) as of September 30, 2007 and 2006, and the related comparative statement of activities, cash flows, and comparative statement of functional expenses for the years then ended. These financial statements are the responsibility of the Organization's management. My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that I 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. I believe that my audit provides a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Business Council for Peace, Inc. as of September 30, 2007 and 2006, and the changes in net assets and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. n--,.~ January 28,2008 Sag Harbor, New York J. Gregory N. Ferraris, CPA, LLC J ~ BUSINESS COUNCIL FOR PEACE, INC. COMPARATIVE STATEMENT OF FINANCIAL POSITION September 30, 2007 ASSETS CURRENT ASSETS Cash and cash equivalents Investments, at fair market value Grant receivable Licensing agreement receivable Prepaid expense Total current assets OTHER ASSETS Security deposit Total assets $ 2006 $ 93,537 47,307 200,000 $ - 1,254 342,098 95,388 90,000 250,000 44,000 794 480,182 3,450 345,548 $ 480,182 LIABILITIES AND NET ASSETS CURRENT LIABILITIES Accounts payable Accrued expenses Total current liabilities Total liabilities NET ASSETS Unrestricted Temporarily restricted Total net assets Total liabilities and net assets $ $ 3,102 6,500 9,602 9,602 $ 1,558 5,500 7,058 7,058 335,946 - 246,995 335,946 345,548 $ 226,129 473,124 480,182 The accompanying notes are an integral part of the financial statements. GREGORY N. F~RRARIS, CPA, LLC BUSINESS COUNCIL FOR PEACE, INC. COMP ARA TIVE STATEMENT OF ACTIVITIES Years ended September 30, Unrestricted SUPPORT AND REVENUE Fundraising Contributions Dues Pop-up events Interest Other Grant $ 190,751 79,636 34,650 25,934 4,276 1,609 Temporarily Restricted $ $ 48,602 Total 2007 190,751 128,238 34,650 25,934 4,276 1,609 $ 2006 109,643 228,584 25,650 1,361 1,338 Licensing agreement Capital loss on sale of securities Total support and revenue Net assets released from restrictions: Total support, revenue and net assets released from restrictions OPERATING Program EXPENSES - - 48,602 (274,731) (175) 385,283 295,000 80,000 741,576 ( 175) 336,681 274,731 611 ,412 (226,129) 385,283 741,576 375,421 - General and administrative Fundraising Total operating expenses Excess of support and revenue over operating expenses NET ASSETS, beginning of year NET ASSETS, end of year $ 45,372 101,668 522,461 - 375,421 45,372 101,668 522,461 238,181 31,493 61,767 331,441 88,951 246,995 335,946 $ (226,129) 226,129 (137,178) 473,124 $ 335,946 $ 410,135 62,989 473,124 - The accompanying notes are an integral part of the financial statements. GREGORY N. F~RRARIS, CPA,LLC BUSINESS COUNCIL FOR PEACE, INC. COMPARATIVE STATEMENT OF CASH FLOWS Years ended September 30, 2007 CASH FLOWS FROM OPERATING ACTIVITIES: Change in net assets Adjustments to reconcile change in net assets to net cash provided by (used in) operating activities Realized loss on sale of securities Change in asset accounts effecting cash from operations: Grant receivable Licensing agreement receivable Prepaid expense Security deposit Change in liability accounts affecting cash from operations: Accounts payable Accrued expense Net cash provided by (used in) operating activities CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of investments Purchase of securities Proceeds from sale of securities Net cash provided by (used in) for investment activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents, beginning of year Cash and cash equivalents, end of year $ $ (137,178) $ 2006 410,135 175 50,000 44,000 (40) (3,450) 1,544 1,000 (43,949) (250,000) (44,000) (794) 332 2,500 118,173 42,693 (5,680) 5,505 42,518 (1,431) 95,388 93,957 $ (90,000) (90,000) 28,173 67,215 95,388 Supplemental data of cash flow information: Cash paid for interest: Cash paid for taxes: $ $ 29 $ $ - The accompanying notes are an integral part of the financial statements. GREGORY N. F~RRARIS, CPA, LLC BUSINESS COUNCIL FOR PEACE, INC. COMPARATIVE STATEMENT OF FUNCTIONAL EXPENSES Years ended September 30, 2007 PROGRAM EXPENSES Afghanistan Rwanda Iraq Middle East Member recruitment and other Total program expenses GENERAL AND ADMINISTRATIVE EXPENSES Independent contractors Paypal and Auctionpay expense Accounting Insurance Payroll taxes Postage and shipping Rent - storage facility Office supplies Telephone and telecommunications Other Equip rental and maintenance Bank fees Legal fees Total general and administrative expenses FUNDRAISING EXPENSES Gala event Other Grant development Total fundraising expenses $ 168,332 174,767 440 $ 2006 131,265 66,346 2,580 1,847 36,143 238,181 - $ 31,882 375,421 $ $ 15,173 12,271 6,500 2,630 2,338 1,766 1,585 1,262 615 489 486 257 $ 12,768 8,493 5,500 1,359 268 607 205 152 2,141 31,493 - $ 45,372 $ $ 80,969 20,699 $ - $ 101,668 $ 50,416 9,286 2,065 61,767 The accompanying notes are an integral part of the financial statements. 7 GREGORY N. FERRARIS, CPA, LLC BUSINESS COUNCIL FOR PEACE, INC. NOTES TO FINANCIAL STATEMENTS Years ended September 30,2007 and 2006 Nature of Organization The Business Council for Peace, Inc. (Bpeace) is a nonprofit organization exempt from federal income taxes under Section 501(c)(3) of the Internal Revenue Code. The Organization's purpose is to organize women worldwide to volunteer to help women in regions of conflict and post conflict build businesses to sustain their families and strengthen their abilities to foster peace. I - SIGNIFICANT ACCOUNTING POLICIES The financial statements have been prepared on the accrual basis. The significant accounting policies are described as follows: Fund Accounting and Net Asset Classifications In accordance with Statement of Financial Accounting Standards (SFAS) No. 117, "Financial Statements of Not-for-Profit Organizations," the Organization is required to report information regarding its financial position and activities according to three classes of net assets: permanently restricted net assets, temporarily restricted net assets, and unrestricted net assets. . Permanently restricted net assets contain donor-imposed restrictions that stipulate the resources be maintained permanently, but permit the Organization to use, or expend part or all of the income derived from the donated assets for either specified or unspecified purposes. . Temporarily restricted net assets contain donor-imposed restrictions that permit the Organization to use or expend the assets as specified. The restrictions are satisfied either by the passage of time or by actions of the Organization. Unrestricted net assets are not restricted by donors, or the donor-imposed restrictions have expired. . Support Recognition In accordance with Statement of Financial Accounting Standards (SFAS) No. 116, "Contributions Received by a Not-for-Profit Organization," the Organization records contributions as permanently restricted, temporarily restricted, or unrestricted support depending on the existence and/or nature of any donor restrictions. Cash and Cash Equivalents For the purpose of the statement of cash flows, the Organization considers all unrestricted highly liquid investments purchased with maturity of three months or less to be cash equivalents. Investments The organization has adopted SFAS No. 124, Accounting for Certain Investments Held by Not-forProfit Organziations. Under SFAS No. 124, investments in marketable securities with readily determinable fair market values and all investments in debt securities are reported at their fair values in the statement of financial position. Unrealized gains and losses (if any) are included the change in net assets. GREGORyN. 8 FERRARIS, CPA, LLC --....... BUSINESS COUNCIL FOR PEACE, INC. NOTES TO FINANCIAL STATEMENTS Years ended September 30, 2007 and 2006 I - SIGNIFICANT ACCOUNTING POLICIES (continued) Property, Plant and Equipment Currently, the Organization owns no property, plant and equipment. The Organization's volunteer members use their own computers, phones, etc. and outside contractors are hired for other office needs. Donated Services Approximately 60 volunteer members of the Organization have donated their professional time to provide pro bono consulting services and training to the Afghan and Rwandan entrepreneurs in the Bpeace program. Volunteer members who travel to Afghanistan and Rwanda for consulting and training missions pay for their own travel and accommodations. Some administration of the Organization is also performed by volunteers. The value of contributed professional time and travel is not reflected in these statements since it is not susceptible to objective measurement or valuation and does not meet the criteria of SFAS No. 116. Management has estimated that the valuation of donor time and services provided to the Organization to be in excess of$600,000. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities and amounts of support and expense during the reporting period. Actual results could differ from those estimates. Functional Expense Allocation Expenses have been classified by specific functions where ascertainable. Those expenses that cannot be specifically identified by function type have been allocated to functions based upon management's best estimate of usage. Prior Year Comparative Information The financial statements include certain prior-year summarized comparative information in total but not by net asset class. Such information does not include sufficient detail to constitute a presentation in conformity with accounting principles generally accepted in the United States of America. Accordingly, such information should be read in conjunction with the Organization's audited financial statements for the year ended September 30, 2006, from which the summarized information was derived. 2 -INVESTMENTS At September 30, 2007, investments are stated at fair value and consist of one certificate of deposit at an insured financial institution as follows: Fair Cost Market Value Maturitv Certificate of deposit Total $ 47.307 $ 47.307 $ 47.307 $ 47.307 3/20/08 GREGORyN. - - FERRARIS, CPA, LLC BUSINESS COUNCIL FOR PEACE, INC. NOTES TO FINANCIAL STATEMENTS Years ended September 30,2007 and 2006 3 - GRANT RECEIVABLE The Organization was awarded a grant from the US Dept of State in the amount of $250,000 for the year ended December 31, 2006. The Organization received $50,000 from this award during the year ended December 3 I, 2007. Grant Receivable Donor Award Purpose Sept. 30. 2007 US Dept of State Afghan Woman Award Program Total 4 - LICENSING AGREEMENT RECEIVABLE On June 9, 2006 the Organization entered into a licensing agreement with the Center for International Private Enterprise ("CIPE") to provide exclusive and unlimited use of Afghanistan training materials. In consideration for use of theses material, CIPE has agreed to pay the Organization a licensing fee in the amount of$80,000 payable as follows: Licensing fees and rights to modules Production of video modules Written/printed workbooks and electronic files Professional services in training Total $ 36,000 10,500 13,500 ---1.Q.,000 $ 80.000 $ $ 250.000 250.000 $ 200.000 200.000 ~ As of September 30, 2006, the Organization received $36,000 in funding. The remaining $44,000 was received during the fiscal year ended September 30,2007. 5 -NET ASSETCLASSIFICATJON For the year ended September 30, 2007 the Organization used $274,731 and $68,808 of temporarily restricted and unrestricted funds respectively to fund temporarily restricted activities. The Organization recorded the following activity in temporarily restricted net assets as of September 30, 2007 and for the year then ended as follows: EXl!enditures Afghanistan Rwanda Iraq Total $ $ 168,332 174,767 440 343.539 10 GREGORY N. FERRARIS, CPA, LLC BUSINESS COUNCIL FOR PEACE, INC. NOTES TO FINANCIAL STATEMENTS Years ended September 30,2007 and 2006 6 - FUND-RAISING ACTIVITIES The activities of the Organization are supported primarily through memberships, contributions, and fund-raising activities. 7 - COMMITMENTS AND CONTINGENCIES Contracts The Organization entered into a guarantee agreement on July 6, 2007 with the Fina Bank SA Rwanda, ("Fina Bank") where the Organization and Fina Bank are developing a loan program for the Organization's associates (Rwandan Businesswoman) to access loans from Fina Bank to finance costs related to growing their business. The aggregate principal amount of all loans to be provided by Fina Bank shall not, at anyone time, exceed two times the deposit amount made by the Organization with Fina Bank. The Organization deposit amounts held by Fina Bank will accrue interest at a rate of 4% per annum. The Organization will guarantee up to fifty (50%) percent ofFina Bank's net losses of principal for anyone borrower. This contract will expire five years from the date of the contract. As of the date of this report, Fina Bank had not issued any financing to any Organization associates and therefore there are no guarantee contingencies. 11 GREGORY N. FERRARIS, CPA, LLC