WASHINGTON TRAILS ASSOCIATION FINANCIAL STATEMENTS (AUDITED) DECEMBER 31, 2014 AND 2013

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1 FINANCIAL STATEMENTS (AUDITED)

2 CONTENTS Independent Auditor s Report... 1 Page Financial Statements Statements of Financial Position... 2 Statements of Activities and Changes in Net Assets... 4 Statements of Functional Expenses... 6 Statements of Cash Flows... 8 Notes to Financial Statements... 9

3 Certified Public Accountants th Avenue Tel (206) Suite 1300 Fax (206) Seattle, WA MKD CPAs, PLLC INDEPENDENT AUDITOR S REPORT Board of Directors Washington Trails Association Seattle, Washington We have audited the accompanying financial statements of Washington Trails Association (a nonprofit organization), which comprise the statement of financial position as of December 31, 2014 and 2013, and the related statements of activities and changes in net assets, functional expenses, and cash flows for the years then ended, and the related notes to the financial statements. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these 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 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 financial statements are free of material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of 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 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 financial statements referred to above present fairly, in all material respects, the financial position of Washington Trails Association as of December 31, 2014 and 2013, 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. MKD CPAs, PLLC Seattle, Washington May 20, 2015

4 STATEMENTS OF FINANCIAL POSITION ASSETS CURRENT ASSETS Cash $ 1,732,216 $ 1,236,459 Accounts Receivable 140, ,211 Contribution Pledges Receivable, Short-Term 120,000 40,000 Prepaid Expenses 36,544 27,431 Total Current Assets 2,029,352 1,687,101 FIXED ASSETS Office Equipment 11,931 15,762 Vehicles 156, ,239 Total 168, ,001 Less Accumulated Depreciation (66,736) (68,423) Total Fixed Assets 101,357 66,578 OTHER ASSETS Contribution Pledges Receivable, Long-Term 100, ,000 Investments 2,627,114 2,073,427 Security Deposits 9,915 9,675 Total Other Assets 2,737,029 2,183,102 TOTAL ASSETS $ 4,867,738 $ 3,936,781 See accompanying notes

5 STATEMENTS OF FINANCIAL POSITION LIABILITIES AND NET ASSETS CURRENT LIABILITIES Accounts Payable $ 48,150 $ 55,939 Accrued Payroll and Related Liabilities 58,277 66,442 Accrued Vacation 43,153 36,598 Total Current Liabilities 149, ,979 DEFERRED RENT 7,476 9,125 Total Liabilities 157, ,104 NET ASSETS Unrestricted 1,947,533 1,504,632 Temporarily Restricted 1,918,204 1,569,100 Permanently Restricted 844, ,945 Total Net Assets 4,710,682 3,768,677 TOTAL LIABILITIES AND NET ASSETS $ 4,867,738 $ 3,936,781 See accompanying notes

6 STATEMENTS OF ACTIVITIES AND CHANGES IN NET ASSETS YEAR ENDED DECEMBER 31, 2014 Unrestricted Temporarily Restricted Permanently Restricted 2014 Total Support and Revenue: Support: Membership $ 449,321 $ - $ - $ 449,321 Donations and Grants 2,201, , ,000 2,891,959 In-Kind Contributions 18, ,363 Revenue: Trail Maintenance Contracts and Trip Fees 371, ,043 Washington Trails Magazine 7, ,369 Interest and Dividends 14,058 35,938-49,996 Change in Investments 1,487 58,845-60,332 Other Income 16, ,971 Total Support & Revenue 3,080, , ,000 3,865,354 Expenses Programs 2,352, ,352,258 General and Administrative 244, ,780 Endowments and Fundraising 326, ,311 Total Expenses 2,923, ,923,349 Changes before Release from Restrictions 156, , , ,005 Release from Restrictions 286,234 (286,234) - - Changes in Net Assets 442, , , ,005 Net Assets, Beginning of Year 1,504,632 1,569, ,945 3,768,677 Net Assets, End of Year $ 1,947,533 $ 1,918,204 $ 844,945 $ 4,710,682 See accompanying notes

7 STATEMENTS OF ACTIVITIES AND CHANGES IN NET ASSETS YEAR ENDED DECEMBER 31, 2013 Unrestricted Temporarily Restricted Permanently Restricted 2013 Total Support and Revenue: Support: Membership $ 463,790 $ - $ - $ 463,790 Donations and Grants 1,451, , ,155 2,130,172 In-Kind Contributions 23, ,555 Revenue: Trail Maintenance Contracts and Trip Fees 375, ,504 Washington Trails Magazine 10, ,638 Interest and Dividends 4,984 28,551-33,535 Change in Investments 2, , ,542 Other Income 14, ,777 Total Support & Revenue 2,346, , ,155 3,269,513 Expenses Programs 1,952, ,952,297 General and Administrative 207, ,413 Endowments and Fundraising 273, ,155 Total Expenses 2,432, ,432,865 Changes before Release from Restrictions (86,413) 715, , ,648 Release from Restrictions 453,797 (304,481) (149,316) - Changes in Net Assets 367, ,425 57, ,648 Net Assets, Beginning of Year 1,137,248 1,157, ,106 2,932,029 Net Assets, End of Year $ 1,504,632 $ 1,569,100 $ 694,945 $ 3,768,677 See accompanying notes

8 STATEMENTS OF FUNCTIONAL EXPENSES YEAR ENDED DECEMBER 31, 2014 Program Expenses Outreach, Publications & Website Trail Advocacy Trail Maintenance Youth Program General & Administrative Endowments & Fundraising 2014 Total Personnel Expenses $ 498,351 $ 67,819 $ 753,377 $ 194,428 $ 195,937 $ 180,139 $ 1,890,051 Program and Office Support 64,323 8,345 75,878 24,591 27,636 22, ,778 Printing and Publications 148, , , ,298 Volunteer Appreciation 1, ,153 2,587 4,856 5,612 34,473 Trailwork Supplies ,699 26, ,064 Cost of Merchandise 16, ,345 Insurance 1, , ,381 Promotion and Advertising 3, ,827 15,400 Information Technology 60,682 5,850 18,891 5,159 10,055 6, ,840 Travel 6,878 1,933 35,276 11,957 1,448 1,146 58,638 Professional Fees 91,335 3,306 75,888 6,112 2,434 38, ,944 Depreciation , ,724 Bank, Investment, and CC Fees 12, ,764 1, ,366 52,413 Total Expenses: $ 905,386 $ 88,271 $ 1,084,369 $ 274,232 $ 244,780 $ 326,311 $ 2,923,349 See accompanying notes

9 STATEMENTS OF FUNCTIONAL EXPENSES YEAR ENDED DECEMBER 31, 2013 Program Expenses Outreach, Publications & Website Trail Advocacy Trail Maintenance Youth Program General & Administrative Endowments & Fundraising 2013 Total Personnel Expenses $ 383,829 $ 73,243 $ 607,367 $ 170,322 $ 133,985 $ 156,716 $ 1,525,462 Program and Office Support 50,386 8,265 96,480 18,525 17,644 24, ,462 Printing and Publications 155, , ,717 14, ,737 Volunteer Appreciation 1, ,083 1, ,272 Trailwork Supplies 81-94,001 32, ,117 Cost of Merchandise 12, ,872 Insurance 1, , ,590 Promotion and Advertising 14, , ,299 28,138 Information Technology 49,899 3,906 30,161 6,982 30,802 7, ,509 Travel 4,337 3,712 35,856 5, ,402 Professional Fees 10, ,990 7,149 19,575 28,604 76,022 Depreciation , ,324 Bank, Investment, and CC Fees 15, ,137 1, ,891 48,958 Total Expenses: $ 701,611 $ 90,978 $ 914,232 $ 245,476 $ 207,413 $ 273,155 $ 2,432,865 See accompanying notes

10 STATEMENTS OF CASH FLOWS YEARS ENDED CASH FLOWS FROM OPERATING ACTIVITIES Increase in Net Assets $ 942,005 $ 836,648 Adjustments to Reconcile Increase in Net Assets to Net Cash Provided by Operating Activities: Depreciation 28,724 13,324 Gain on Disposals of Assets - 6,082 Change in Assets and Liabilities: Accounts Receivable 242,619 (21,862) Employee Advances - 1,670 Contribution Pledges Receivable (80,000) (140,000) Prepaid Expenses (9,113) (4,656) Deposits (240) 500 Accounts Payable (7,789) 19,426 Accrued Payroll and Related Liabilities (8,165) 1,011 Accrued Vacation 6,555 (3,684) Deferred Rent (1,649) 2,309 Net Cash Provided by Operating Activities: 1,112, ,768 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of Investments (553,687) (427,279) Purchase of Fixed Assets (63,503) (55,387) Net Cash Used in Investing Activities: (617,190) (482,666) NET CHANGE IN CASH 495, ,102 CASH Beginning of Year 1,236,459 1,008,357 End of Year $ 1,732,216 $ 1,236,459 See accompanying notes

11 NOTES TO FINANCIAL STATEMENTS NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of the Organization Washington Trails Association (the Organization) is a non-profit organization incorporated in the State of Washington in 1973 for the purpose of protecting and expanding Washington s diverse trail system through: 1. Education via the publication of Washington Trails Magazine, the Organization s website, social media, and other outreach programs; 2. Trail advocacy by representing trail users in discussions with land managers and legislators; 3. Trail maintenance through the Organization and coordination of trail work parties at various trail sites throughout Washington; and 4. Youth programs that connect young people with the outdoors. Basis of Presentation The accompanying financial statements of the Organization have been prepared on the accrual basis. The Organization adheres to the disclosure requirements of the FASB ASC , Balance Sheet. Accordingly, the net assets and revenues, expenses, gains and losses are classified into categories, based on the existence or absence of donor-imposed restrictions. The categories are unrestricted, temporarily restricted, and permanently restricted net assets. Permanently restricted net assets include gifts, trusts, income and gains whose use by the Organization is limited by donor-imposed stipulations that neither expire by passage of time nor can be fulfilled or otherwise removed by actions of the Organization. Such net assets consist primarily of the fair value of the contribution at the time of contribution. Temporarily restricted net assets include gifts, trusts, income and gains which have either a time or use restriction but which may ultimately be expended for the donor-restricted purpose. Unrestricted net assets are free from donor-imposed restrictions and are all the remaining net assets of the Organization. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the 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. Contributed Support The Organization recognizes all contributed support received as income in the period received. Contributions are considered available for unrestricted use unless restricted by the donor. Restricted support is reported as an increase in temporarily or permanently restricted net assets depending on the nature of the restriction. When a restriction is met or expires, the related temporarily restricted net assets are released to unrestricted net assets. Restricted support is reported directly as an increase in unrestricted net assets if the restriction is met or expires in the reporting period in which the support is received

12 NOTES TO FINANCIAL STATEMENTS NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) In-Kind Support Contributed goods and services are recorded as in-kind contributions at their estimated fair values at the date of donation. Contributed services are recorded only if the services received create or enhance long lived assets or require specialized skills, are provided by individuals possessing those skills, and would typically need to be purchased if not provided by donation. Goods contributed to the Organization during the years ended December 31, 2014 and 2013 that are reflected in the financial statements are $18,363 and $23,555, respectively, and relate mostly to tools and gear to support programs. Additionally, the Organization receives a significant amount of contributed time that does not meet the recognition policy described above. Approximately 120,000 and 108,000 volunteer hours were contributed to the Organization during the years ended December 31, 2014 and 2013, respectively. Accordingly, the value of this contributed time has not been determined and is not reflected in the accompanying financial statements. Accounts Receivable Accounts receivable are related to work performed for federal and state agencies for trail maintenance. The amounts are deemed to be fully collectible by management, thus, there is no allowance for doubtful accounts. Fixed Assets The Organization capitalizes expenditures for equipment, furniture and software at cost (for items purchased) or fair value at the time of receipt (for donated items). If the donor attaches a stipulation as to how long a contributed asset must be used, the contribution is recorded as restricted support. In the absence of such stipulations, contributions of fixed assets are recorded as unrestricted support. Depreciation is provided by the straight-line method over estimated useful lives ranging from three to ten years. Purchases and improvements in excess of $5,000 are capitalized. Depreciation expense for the years ended December 31, 2014 and 2013 were $28,724 and $13,324, respectively. Investments The Organization follows FASB ASC , Investments Debt and Equity Securities. Under the guidance, investments in marketable securities with readily determinable fair values and all investments in debt securities are reported at their fair value on the statement of financial position. Unrealized gains and losses are included in the change in net assets. Investment income and gains restricted by a donor are reported as increases in unrestricted net assets if the restrictions are met (either by passage of time or by use) in the reporting period in which the income and gains are recognized

13 NOTES TO FINANCIAL STATEMENTS NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Investments (continued) For the years ended December 31, investments were held for the following purposes: Bond Account (Vanguard) - general purpose $ 221,061 $ 211,715 Washington Trails Endowment 58,766 56,773 Greg Ball Trail Fund 960, ,021 Stusser Fund 165, ,720 Youth Endowment 818, ,198 Impact Fund 402,139 - $ 2,627,114 $ 2,073,427 Included in the cash balance is a money market account, with year-ending December 31, 2014 and 2013 balances of $419,154 and $301,815, respectively. Contract Revenues The Organization enters into contracts with local, state and federal entities for which it is reimbursed a portion of its expenses for leading volunteer work parties, including all necessary leadership, training, and supplies. Promotions and Advertising The Organization expenses the cost of advertising as incurred, and totaled $969 and $1,146 for the years ended December 31, 2014 and 2013, respectively. There were $8,813 and $5,395 of promotional In-Kind contributions, for the years ended December 31, 2014 and 2013, respectively; and $5,618 and $21,596 of promotional items, for the years ended December 31, 2014 and 2013, respectively. Program Costs Certain operating costs have been allocated among program services, general and administration, and endowments and fundraising expenses based on labor hours attributable to each area of operations. Functional Expenses All expenses relate to the operation of the Organization. The costs of providing various program and supporting services have been summarized on a functional basis in the statement of activities. Accordingly, certain costs have been allocated among the program and supporting services benefited. Federal Income Taxes The Organization is exempt from income taxes under Section 501 ( c ) ( 3 ) of the Internal Revenue Code and has been classified by the Internal Revenue Service as a not for profit organization and is not classified as a private foundation within the meaning of Section 509 (a) of the Internal Revenue Code

14 NOTES TO FINANCIAL STATEMENTS NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Federal Income Taxes (continued) The Organization is subject to unrelated business income taxes on net income derived from selling non-mission-related advertising space in Washington Trails Magazine and the Organization s website. No provision for federal income taxes has been provided because advertising operations provided no taxable income after expenses for the year. Management evaluated the Organization s tax positions and concluded that the Organization had taken no uncertain tax positions that require adjustment to the financial statements. The Organization s income tax returns are generally subject to review and examination by federal tax authorities for the previous three years. Deferred Rent The Organization has entered into an operating lease agreement for its office that contains provisions for future rent increases. In accordance with accounting principles generally accepted in the United States of America, the Organization records monthly rent expense equal to the total of the payments due over the lease terms, divided by the number of months of the lease terms. The difference between rent expense recorded and the amount paid is credited, or charged to deferred rent. Reclassification Certain items previously reported in the financial statements have been reclassified to conform to the current financial statement presentation. The reclassifications had no effect on net assets or the change in net assets as of December 31, NOTE 2 PLEDGES RECEIVABLE Pledges are expected to be realized in the following time frame: In One Year or Less $ 120,000 $ 40,000 Between One Year and Five Years 100, ,000 $ 220,000 $ 140,000 The amounts are deemed to be fully collectible by management, thus, there is no allowance for uncollectible pledges. As of December 31, 2014, 100% of the pledges consisted of pledges from two donors

15 NOTES TO FINANCIAL STATEMENTS NOTE 3 ENDOWMENT FUNDS The Organization s endowments consist of five individual funds established for a variety of purposes. Four of the funds are held by The Seattle Foundation under the terms of agreements with the Organization that specify the Organization as the sole beneficiary of the funds. Even though these funds are classified as agency funds, The Seattle Foundation maintains legal ownership and variance power over these assets. These agency funds are commingled with other funds held by The Seattle Foundation, and invested in accordance with The Seattle Foundation s investment policy, which specifies a diversified asset allocation to equity, fixed income, and other investment vehicles. The five established endowment funds are: 1. The Washington Trails Endowment Fund, created by the Organization in 1998, to support general operations or board-designated projects. This endowment (defined as a quasi-endowment), and its income/loss, are classified as Unrestricted Net Assets. 2. The Greg Ball Trail Fund, created by the Organization in 2004, to honor the memory of the Trail Maintenance program founder. The original gift, future contributions, gains and losses, and interest and dividends are all restricted to support trail maintenance activities. This endowment (defined as a term endowment), and its income/loss, are all classified as Temporarily Restricted Net Assets. 3. The Stusser Fund, created in 2006 from a contribution to the Organization. The original gift, future contributions, gains and losses, and interest and dividends are all restricted to support the Organization s communications program. This endowment (defined as a term endowment), and its income/loss, are all classified as Temporarily Restricted Net Assets. 4. The Youth Endowment Fund, created in 2008 from a contribution to the Organization. The original gift and future contributions to this fund are permanently restricted. The revenues generated from the endowment are restricted to support the Organization s youth program. This endowment (defined as a permanent endowment), is classified as a Permanently Restricted Net Asset; its income/loss are classified as Temporarily Restricted Net Assets. 5. The Impact Fund, created in 2014 from a contribution to the Organization, to support boarddesignated projects. This endowment (defined as a quasi-endowment), and its income/loss, are classified as Unrestricted Net Assets. This endowment is not held by The Seattle Foundation. The Organization classifies as permanently restricted net assets (a) the original value of donor-restricted endowment contributions, (b) and accumulations of return thereon in accordance with the applicable donor gift instrument, if any. Any portion of a donor-restricted endowment fund that is not classified in permanently restricted net assets is classified as temporarily restricted net assets until such amounts are appropriated for expenditure by the Organization in a manner consistent with the Organization s policies

16 NOTES TO FINANCIAL STATEMENTS NOTE 3 ENDOWMENT FUNDS (CONTINUED) Endowment net assets consist of the following at December 31: December 31, 2014 Temporarily Permanently Total Net Unrestricted Restricted Restricted Assets Donor-Restricted $ - $ 1,252,203 $ 844,945 $ 2,097,148 Board Designated 460, ,905 Total Net Assets $ 460,905 $ 1,252,203 $ 844,945 $ 2,558,053 December 31, 2013 Temporarily Permanently Total Net Unrestricted Restricted Restricted Assets Donor-Restricted $ - $ 1,211,003 $ 694,945 $ 1,905,948 Board Designated 56, ,773 Total Net Assets $ 56,773 $ 1,211,003 $ 694,945 $ 1,962,721 Changes in endowment net assets for the years ended December 31, 2014, are as follows: Unrestricted - Designated December 31, 2014 Temporarily Restricted Permanently Restricted Total Net Assets Endowment, Beginning of Year $ 56,773 $ 1,211,003 $ 694,945 $ 1,962,721 Contributions/Gifts to Fund 402,400 28, , ,955 Interest & Dividends, net 8,768 35,938 44,706 Realized Gain/(Loss) 2,342 53,211-55,553 Unrealized Change (8,531) 5,634 - (2,897) Total Receipts 404, , , ,317 Distributions to WTA - (54,396) - (54,396) Investment Mgmt Fees (263) (8,600) - (8,863) Seattle Foundation Fee (584) (19,142) - (19,726) Total Disbursements (847) (82,138) - (82,985) Endowment, End of Year $ 460,905 $ 1,252,203 $ 844,945 $ 2,558,

17 NOTES TO FINANCIAL STATEMENTS NOTE 3 ENDOWMENT FUNDS (CONTINUED) Changes in endowment net assets for the years ended December 31, 2013, are as follows: Unrestricted - Designated December 31, 2013 Temporarily Restricted Permanently Restricted Total Net Assets Endowment, Beginning of Year $ 50,461 $ 988,716 $ 394,945 $ 1,434,122 Contributions/Gifts to Fund , , ,696 Interest & Dividends, net ,551-29,499 Realized Gain/(Loss) 1,307 39,565-40,872 Unrealized Change 5, , ,560 Total Receipts 8, , , ,627 Distributions to WTA (1,817) (46,208) - (48,025) Investment Mgmt Fees (265) (8,032) - (8,297) Seattle Foundation Fee (531) (16,175) - (16,706) Total Disbursements (2,613) (70,415) - (73,028) Endowment, End of Year $ 56,773 $ 1,211,003 $ 694,945 $ 1,962,721 NOTE 4 NET ASSETS Following is a summary of net assets as of December 31, 2014: December 31, 2014 Temporarily Permanently Total Net Unrestricted Restricted Restricted Assets Operating: Undesignated $ 1,486,628 $ - $ - $ 1,486,628 Major Gifts - 616, ,000 Individual Grants - 50,000-50,000 WTA Endowment 58, ,766 Greg Ball Trail Fund - 962, ,711 Stusser Fund - 165, ,902 Youth Endowment - 123, , ,536 Impact Fund 402, ,139 Total Net Assets $ 1,947,533 $ 1,918,204 $ 844,945 $ 4,710,

18 NOTES TO FINANCIAL STATEMENTS NOTE 4 NET ASSETS (CONTINUED) Following is a summary of net assets as of December 31, 2013: December 31, 2013 Temporarily Permanently Total Net Unrestricted Restricted Restricted Assets Operating: Undesignated $ 1,447,859 $ - $ - $ 1,447,859 Major Gifts - 270, ,000 Board Contributions Corporate Grants Individual Grants - 88,097-88,097 WTA Endowment 56, ,773 Greg Ball Trail Fund - 937, ,122 Stusser Fund - 165, ,720 Youth Endowment - 108, , ,106 Total Net Assets $ 1,504,632 $ 1,569,100 $ 694,945 $ 3,768,677 NOTE 5 RETIREMENT PLAN Subject to the Plan s provisions, regular employees are eligible to enroll in a SIMPLE-IRA with up to a 3% match of employee contributions. This benefit is limited to employees who have received $5,000 gross compensation after six months of continuous employment. Employer contributions made for the years ended December 31, 2014 and 2013 were $33,434 and $23,259, respectively. NOTE 6 LEASE OBLIGATION Seattle Office Lease: The Organization moved into its present office facilities located in Seattle, Washington in January The lease expires May 31, Monthly payments were $9,345 during the year ended December 31, Terms of the lease agreement include two 5 year options to renew. Vancouver, WA Office Lease: The Organization also leases an office space in Vancouver, Washington. The lease began on August 15, 2012, and will terminate on August 31, Monthly payments for the term of the lease are $500. Storage Space Lease: The Organization leases storage space in the Mt. Baker neighborhood of Seattle, Washington. The lease began on May 9, 2014, and will terminate on May 31, Monthly payments for the term of the lease are $

19 NOTES TO FINANCIAL STATEMENTS NOTE 6 LEASE OBLIGATION (CONTINUED) Copier Machine Lease: The Organization leases a copier machine. The lease began January 8, 2013, and will terminate May 31, Minimum monthly payments for the term of the lease are $449. Aggregate minimum future lease payments are as follows for the years ended December 31: 2015 $ 127, , ,386 $ 186,529 Rent expense in aggregate was $137,487 and $130,260 for the years ended December 31, 2014 and 2013, respectively. Included in rent expense are month-to-month storage fees of $8,784 and $5,581 for the years ended December 31, 2014 and 2013, respectively. NOTE 7 FAIR VALUE MEASUREMENTS The standards establish a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows: Level 1 Quoted prices in active markets for identical assets and liabilities. Level 2 Observable inputs other than quoted prices included in Level 1, such as quoted prices for markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. The following table sets forth by level, within the fair value hierarchy, the Company s financial assets and liabilities at fair value as of December 31, 2014: Assets at Fair Value Total Level 1 Level 2 Level 3 Investments $ 2,627,114 $ 2,627,114 $ - $

20 NOTES TO FINANCIAL STATEMENTS NOTE 7 FAIR VALUE MEASUREMENTS (CONTINUED) The following table sets forth by level, within the fair value hierarchy, the Company s financial assets and liabilities at fair value as of December 31, 2013: Assets at Fair Value Total Level 1 Level 2 Level 3 Investments $ 2,073,427 $ 2,073,427 $ - $ - NOTE 8 CONCENTRATION OF CREDIT RISK The Organization s financial instruments that are exposed to concentrations of credit risk consist of cash, accounts receivable, and contribution pledges receivable. The Organization places its cash with financial institutions. At times, such balances may be in excess of the Federal Deposit Insurance Corporation insured limits. The Organization believes it is not exposed to any significant credit risk on its cash accounts. NOTE 9 SUBSEQUENT EVENTS The Organization has performed an evaluation of subsequent events through May 20, 2015, which is the date the financial statements were available to be issued, and has determined that there are no subsequent events that require disclosure