AGGATEWAY CORPORATION FINANCIAL STATEMENTS AND ...
AGGATEWAY CORPORATION FINANCIAL STATEMENTS AND INDEPENDENT AUDITOR’S REPORT DECEMBER 31, 2014 AND 2013
TABLE OF CONTENTS
Page No. INDEPENDENT AUDITOR’S REPORT
1-2
FINANCIAL STATEMENTS Statements of Financial Position
3
Statements of Activities
4
Statement of Functional Expenses, Year Ended December 31, 2014
5
Statements of Cash Flows
6
Notes to Financial Statements
7 - 10
1730 Rhode Island Avenue, NW Suite 800 Washington, DC 20036 (202) 296-3306 Fax: (202) 296-0059
Independent Auditor’s Report To the Board of Directors of AgGateway Corporation Washington, D.C. We have audited the accompanying statements of financial position of AgGateway Corporation, (a nonprofit organization), which comprise the statement of financial position as of December 31, 2014 and 2013, and the related statements of activities, 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 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 audits 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.
MEMBERS OF THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS COLUMBIA, MD LARGO, MD WASHINGTON, D.C.
AgGateway Corporation Page Two Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of AgGateway Corporation as of December 31, 2014 and 2013, and the changes in its net assets and its cash flows for the years then ended in conformity with the accounting principles generally accepted in the United States of America.
Washington, D.C. June 8, 2015
AGGATEWAY CORPORATION STATEMENTS OF FINANCIAL POSITION DECEMBER 31, 2014 AND 2013
ASSETS 2014 CURRENT ASSETS Cash and cash equivalents Accounts receivable Prepaid Total Current Assets TOTAL ASSETS
2013
$
174,996 184,402 28,849 388,247
$
380,971 121,765 2,361 505,097
$
388,247
$
505,097
37,000 118,290 61,915 217,205
$
52,850 601 210,367 61,915 7,000 332,733
LIABILITIES AND NET ASSETS CURRENT LIABILITIES Accounts payable Accrued expenses Council liabilities Trust accounts Deferred dues and subscription fees Total Current Liabilities
$
NET ASSETS Unrestricted net assets TOTAL LIABILITIES AND NET ASSETS
171,042 $
388,247
172,364 $
505,097
See independent auditor's report and accompanying notes to financial statements. -3-
AGGATEWAY CORPORATION STATEMENTS OF ACTIVITIES YEARS ENDED DECEMBER 31, 2014 AND 2013
2014 REVENUE AND SUPPORT Subscription fees Membership dues Program services Conference income Interest income Total Revenue and Support
$
EXPENSES Program services General and administration Total Expenses
$
1,738,218 342,383 2,080,601
CHANGE IN NET ASSETS (DEFICIT)
12,464
172,364 $
171,042
932,477 785,416 141,759 170,263 223 2,030,138
1,341,649 676,025 2,017,674
(1,322)
NET ASSETS, beginning of year NET ASSETS, end of year
955,634 819,085 93,163 211,198 199 2,079,279
2013
159,900 $
172,364
See independent auditor's report and accompanying notes to financial statements. -4-
AGGATEWAY CORPORATION STATEMENT OF FUNCTIONAL EXPENSES YEAR ENDED DECEMBER 31, 2014 (with comparative totals for 2013) Program Services
Audit ,accounting and legal Advertising and promotion Bank services Consulting expenses Council expense Dues and subscriptions Food and lodging Hosting and maintenance fees - AGIIS Insurance License and software fees Meeting expenses Office expenses Taxes and licenses Travel Total Expenses
Database and Enabling Operations
Conference and Marketing
$
$
2,945 4,744 435,130 10,000 787,983 7,938 2,675 9,677 $ 1,261,092
$
6,557 27,559 179,610 261,534 130 1,044 166 526 477,126
Total Program Services $
9,502 32,303 614,740 10,000 261,534 787,983 8,068 3,719 166 10,203 $ 1,738,218
Management and General $
$
17,728 2,092 7,425 235,681 12,000 150 2,796 674 7,359 8,800 198 47,480 342,383
See independent auditor's report and accompanying notes to financial statements. -5-
Total Expenses $
27,230 34,395 7,425 850,421 12,000 10,150 261,534 787,983 2,796 8,742 11,078 8,966 198 57,683 $ 2,080,601
2013 Expenses $
27,610 47,847 8,210 818,334 22,443 10,507 220,055 767,691 1,506 20,191 7,138 10,334 189 55,617 $ 2,017,672
AGGATEWAY CORPORATION STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2014 AND 2013
2014 CASH FLOWS FROM OPERATING ACTIVITIES Change in net assets (deficit) Adjustments to reconcile changes in net assets to net cash provided by operating activities: Decrease (increase) in: Accounts receivable Prepaid Expenses Increase (decrease) in: Accounts payable Accrued expenses Council liabilities Trust accounts Deferred revenue Net Cash Used by Operating Activities
$
NET CHANGE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS, beginning of year CASH AND CASH EQUIVALENTS, end of year
$
(1,322)
2013
$
12,464
(62,637) (26,488)
(18,611) (2,361)
(15,850) (601) (92,077) (7,000) (205,975)
5,471 (7,548) 80,532 (61,267) (48,549) (39,869)
(205,975)
(39,869)
380,971
420,840
174,996
$
See independent auditor's report and accompanying notes to financial statements. -6-
380,971
AGGATEWAY CORPORATION NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2014 AND 2013 NOTE A - ORGANIZATION AND NATURE OF ACTIVITIES AgGateway Corporation (the “Corporation”) was incorporated under the laws of the District of Columbia on October 14, 2005. The Corporation was organized for educating, promoting, and expanding participation in eBusiness by companies engaged in agriculture and agriculture related businesses. AgGateway Corporation’s mission is focused on both enabling eBusiness implementation and providing education and coordination. They do this by (i) Enabling eBusiness implementation which includes, but is not limited to establishing industry-wide eBusiness standards and guidelines, making implementation tools available, creating and maintaining common unique data identifiers, creating guides or “roadmaps” for companies to follow as they implement eBusiness, and encouraging cross-industry and international standard development and usage. (ii) Education and coordination includes promoting the value of eBusiness, providing specific eBusiness educational material, creating educational opportunities, providing project coordination, and providing a source of information for new and emerging technologies and how those technologies can be leveraged in agriculture. NOTE B - SIGNIFICANT ACCOUNTING POLICIES A summary of significant accounting policies follows: Basis of Accounting The financial statements are prepared using the accrual method of accounting, which recognizes revenue when assessed or earned and expenses when incurred. Basis of Presentation The Corporation reports information regarding its financial position and activities according to the following three classes of net assets: Unrestricted net assets – Net assets that are not subject to donor-imposed stipulations. Temporarily restricted net assets – Net assets subject to donor-imposed stipulations that may or will be met by either actions of the Corporation and/or the passage of time. When a restriction expires, temporarily restricted net assets are reclassified to unrestricted net assets and are reported in the statement of activities as net assets released from restrictions. Permanently restricted net assets – Net assets subject to donor-imposed stipulations that they be maintained permanently by the Corporation. The Corporation had no temporarily or permanently restricted net assets as of December 31, 2014 and 2013. -7-
AGGATEWAY CORPORATION NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2014 AND 2013 (continued) NOTE B - SIGNIFICANT ACCOUNTING POLICIES (continued) Cash and Cash Equivalents For financial statement purposes, the Corporation considers demand deposits and money market accounts to be cash and cash equivalents. Revenue Recognition Unconditional contributions are recorded as unrestricted, temporarily restricted, or permanently restricted revenue, depending on the existence and/or nature of any donor restrictions. Membership dues and subscription fees are pro-rated and recognized over the membership and subscription period. Program services and conference income are recognized in the year in which the revenue from these sources is earned. Use of Estimates The preparation of financial statements 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 revenue and expenses during the reporting period. Actual results could differ from those estimates. Functional Expense Allocations The costs of providing various programs and other activities have been summarized on a functional basis in the statements of activities. Accordingly, certain costs have been allocated among the programs and supporting services benefited. Reclassification Certain items in the 2013 financial statements have been reclassified to conform to the 2014 presentation. NOTE C – INDUSTRY SEGMENT COUNCIL LIABILITIES Independent segment councils that are affiliated with the Corporation perform special projects. Each council has its own charter and operates independently of the Corporation. The councils have been formed by members of the Corporation, and each council has its own specific purpose that aligns with the members’ interest in a particular area. Each council project is funded and operated by the members that participate in the council. The Corporation maintains the bank accounts and accounting of these funds, but has no variance authority over the funds, and at the project’s conclusion, if any funds remain, they are returned to the member councils. Cash that has been received and has not been disbursed is included in the Corporation’s cash balances and -8-
AGGATEWAY CORPORATION NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2014 AND 2013 (continued) NOTE C – INDUSTRY SEGMENT COUNCIL LIABILITIES (continued) an offsetting segment council liability is maintained as well. For the years ending December 31, 2014 and 2013, the balances in the segment council liability account totaled, $118,290 and $210,367, respectively. NOTE D – TRUST LIABILITIES Certain members of the Corporation have amounts that are due back to them. These amounts arise from various reasons including overpayments on the industry council liabilities that have not been returned to the members at the conclusion of the project. The Corporation holds those funds in trust for those members. The members can opt to have these amounts applied to membership dues, AGIIS subscription fees, future projects, or returned to them at some later date. For the years ending December 31, 2014 and 2013, the balances in the trust liability accounts were $61,915 and $61,915, respectively. NOTE E - INCOME TAXES The Corporation is a 501(c)(6) organization, exempt from federal income tax under Section 501(a) of the Internal Revenue Code. The Corporation is, however, subject to tax on business income unrelated to their exempt purpose. The Corporation believes that it has appropriate support for any tax positions taken, and as such, does not have any uncertain tax positions that are material to the financial statements or that would have an effect on its tax-exempt status. There are no unrecognized tax benefits or liabilities that need to be recorded. The Corporation’s income tax returns are subject to examination by the Internal Revenue Service for a period of three years from the date they were filed, except under certain circumstances. The Corporation’s Form 990 tax returns for the years 2011 through 2013 are open for a tax examination by the Internal Revenue Service, although no request has been made as of the date of theses financial statements.
-9-
AGGATEWAY CORPORATION NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2014 AND 2013 (continued) NOTE F – MANAGEMENT FEES The Corporation outsources all its managerial functions and has entered into management consulting agreements for key managerial positions within the Corporation, including the president and CEO, the vice president and chief operating officer, and the council planning and support lead. On January 1, 2014, the management consulting agreements were renewed for a one year period through December 31, 2014. For the years ended December 31, 2014 and 2013, management fees, including bonuses, totaled $686,282 and $712,430, respectively. NOTE G – HOSTING AND MAINTENANCE FEES On December 17, 2014, the Corporation entered into a master agreement for hosting and maintenance services with CSC Covansys Corporation (“CSC”). CSC agrees to provide the Corporation, and its authorized subscribers, access to the Ag Industry Identification System database (“AGIIS”). The terms of the agreement have been renewed for two years, starting January 1, 2015, with an option to be renewed for an additional twelve months. This agreement can be terminated, without cause, by giving 180 days notice to either party. The total hosting and maintenance fees include new subscribers and other maintenance fees, which are in addition to an annual base subscription fee. For the years ended December 31, 2014 and 2013, hosting and maintenance fees totaled $787,983 and $767,691, respectively. NOTE H - SUBSEQUENT EVENTS In preparing these financial statements, the Corporation’s management has evaluated events and transactions for potential recognition or disclosure through June 8, 2015 the date the financial statements were available to be issued. There were no additional events or transactions that were discovered during the evaluation that required further disclosure.
-10-
TABLE OF CONTENTS
Page No. INDEPENDENT AUDITOR’S REPORT
1-2
FINANCIAL STATEMENTS Statements of Financial Position
3
Statements of Activities
4
Statement of Functional Expenses, Year Ended December 31, 2014
5
Statements of Cash Flows
6
Notes to Financial Statements
7 - 10
1730 Rhode Island Avenue, NW Suite 800 Washington, DC 20036 (202) 296-3306 Fax: (202) 296-0059
Independent Auditor’s Report To the Board of Directors of AgGateway Corporation Washington, D.C. We have audited the accompanying statements of financial position of AgGateway Corporation, (a nonprofit organization), which comprise the statement of financial position as of December 31, 2014 and 2013, and the related statements of activities, 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 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 audits 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.
MEMBERS OF THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS COLUMBIA, MD LARGO, MD WASHINGTON, D.C.
AgGateway Corporation Page Two Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of AgGateway Corporation as of December 31, 2014 and 2013, and the changes in its net assets and its cash flows for the years then ended in conformity with the accounting principles generally accepted in the United States of America.
Washington, D.C. June 8, 2015
AGGATEWAY CORPORATION STATEMENTS OF FINANCIAL POSITION DECEMBER 31, 2014 AND 2013
ASSETS 2014 CURRENT ASSETS Cash and cash equivalents Accounts receivable Prepaid Total Current Assets TOTAL ASSETS
2013
$
174,996 184,402 28,849 388,247
$
380,971 121,765 2,361 505,097
$
388,247
$
505,097
37,000 118,290 61,915 217,205
$
52,850 601 210,367 61,915 7,000 332,733
LIABILITIES AND NET ASSETS CURRENT LIABILITIES Accounts payable Accrued expenses Council liabilities Trust accounts Deferred dues and subscription fees Total Current Liabilities
$
NET ASSETS Unrestricted net assets TOTAL LIABILITIES AND NET ASSETS
171,042 $
388,247
172,364 $
505,097
See independent auditor's report and accompanying notes to financial statements. -3-
AGGATEWAY CORPORATION STATEMENTS OF ACTIVITIES YEARS ENDED DECEMBER 31, 2014 AND 2013
2014 REVENUE AND SUPPORT Subscription fees Membership dues Program services Conference income Interest income Total Revenue and Support
$
EXPENSES Program services General and administration Total Expenses
$
1,738,218 342,383 2,080,601
CHANGE IN NET ASSETS (DEFICIT)
12,464
172,364 $
171,042
932,477 785,416 141,759 170,263 223 2,030,138
1,341,649 676,025 2,017,674
(1,322)
NET ASSETS, beginning of year NET ASSETS, end of year
955,634 819,085 93,163 211,198 199 2,079,279
2013
159,900 $
172,364
See independent auditor's report and accompanying notes to financial statements. -4-
AGGATEWAY CORPORATION STATEMENT OF FUNCTIONAL EXPENSES YEAR ENDED DECEMBER 31, 2014 (with comparative totals for 2013) Program Services
Audit ,accounting and legal Advertising and promotion Bank services Consulting expenses Council expense Dues and subscriptions Food and lodging Hosting and maintenance fees - AGIIS Insurance License and software fees Meeting expenses Office expenses Taxes and licenses Travel Total Expenses
Database and Enabling Operations
Conference and Marketing
$
$
2,945 4,744 435,130 10,000 787,983 7,938 2,675 9,677 $ 1,261,092
$
6,557 27,559 179,610 261,534 130 1,044 166 526 477,126
Total Program Services $
9,502 32,303 614,740 10,000 261,534 787,983 8,068 3,719 166 10,203 $ 1,738,218
Management and General $
$
17,728 2,092 7,425 235,681 12,000 150 2,796 674 7,359 8,800 198 47,480 342,383
See independent auditor's report and accompanying notes to financial statements. -5-
Total Expenses $
27,230 34,395 7,425 850,421 12,000 10,150 261,534 787,983 2,796 8,742 11,078 8,966 198 57,683 $ 2,080,601
2013 Expenses $
27,610 47,847 8,210 818,334 22,443 10,507 220,055 767,691 1,506 20,191 7,138 10,334 189 55,617 $ 2,017,672
AGGATEWAY CORPORATION STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2014 AND 2013
2014 CASH FLOWS FROM OPERATING ACTIVITIES Change in net assets (deficit) Adjustments to reconcile changes in net assets to net cash provided by operating activities: Decrease (increase) in: Accounts receivable Prepaid Expenses Increase (decrease) in: Accounts payable Accrued expenses Council liabilities Trust accounts Deferred revenue Net Cash Used by Operating Activities
$
NET CHANGE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS, beginning of year CASH AND CASH EQUIVALENTS, end of year
$
(1,322)
2013
$
12,464
(62,637) (26,488)
(18,611) (2,361)
(15,850) (601) (92,077) (7,000) (205,975)
5,471 (7,548) 80,532 (61,267) (48,549) (39,869)
(205,975)
(39,869)
380,971
420,840
174,996
$
See independent auditor's report and accompanying notes to financial statements. -6-
380,971
AGGATEWAY CORPORATION NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2014 AND 2013 NOTE A - ORGANIZATION AND NATURE OF ACTIVITIES AgGateway Corporation (the “Corporation”) was incorporated under the laws of the District of Columbia on October 14, 2005. The Corporation was organized for educating, promoting, and expanding participation in eBusiness by companies engaged in agriculture and agriculture related businesses. AgGateway Corporation’s mission is focused on both enabling eBusiness implementation and providing education and coordination. They do this by (i) Enabling eBusiness implementation which includes, but is not limited to establishing industry-wide eBusiness standards and guidelines, making implementation tools available, creating and maintaining common unique data identifiers, creating guides or “roadmaps” for companies to follow as they implement eBusiness, and encouraging cross-industry and international standard development and usage. (ii) Education and coordination includes promoting the value of eBusiness, providing specific eBusiness educational material, creating educational opportunities, providing project coordination, and providing a source of information for new and emerging technologies and how those technologies can be leveraged in agriculture. NOTE B - SIGNIFICANT ACCOUNTING POLICIES A summary of significant accounting policies follows: Basis of Accounting The financial statements are prepared using the accrual method of accounting, which recognizes revenue when assessed or earned and expenses when incurred. Basis of Presentation The Corporation reports information regarding its financial position and activities according to the following three classes of net assets: Unrestricted net assets – Net assets that are not subject to donor-imposed stipulations. Temporarily restricted net assets – Net assets subject to donor-imposed stipulations that may or will be met by either actions of the Corporation and/or the passage of time. When a restriction expires, temporarily restricted net assets are reclassified to unrestricted net assets and are reported in the statement of activities as net assets released from restrictions. Permanently restricted net assets – Net assets subject to donor-imposed stipulations that they be maintained permanently by the Corporation. The Corporation had no temporarily or permanently restricted net assets as of December 31, 2014 and 2013. -7-
AGGATEWAY CORPORATION NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2014 AND 2013 (continued) NOTE B - SIGNIFICANT ACCOUNTING POLICIES (continued) Cash and Cash Equivalents For financial statement purposes, the Corporation considers demand deposits and money market accounts to be cash and cash equivalents. Revenue Recognition Unconditional contributions are recorded as unrestricted, temporarily restricted, or permanently restricted revenue, depending on the existence and/or nature of any donor restrictions. Membership dues and subscription fees are pro-rated and recognized over the membership and subscription period. Program services and conference income are recognized in the year in which the revenue from these sources is earned. Use of Estimates The preparation of financial statements 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 revenue and expenses during the reporting period. Actual results could differ from those estimates. Functional Expense Allocations The costs of providing various programs and other activities have been summarized on a functional basis in the statements of activities. Accordingly, certain costs have been allocated among the programs and supporting services benefited. Reclassification Certain items in the 2013 financial statements have been reclassified to conform to the 2014 presentation. NOTE C – INDUSTRY SEGMENT COUNCIL LIABILITIES Independent segment councils that are affiliated with the Corporation perform special projects. Each council has its own charter and operates independently of the Corporation. The councils have been formed by members of the Corporation, and each council has its own specific purpose that aligns with the members’ interest in a particular area. Each council project is funded and operated by the members that participate in the council. The Corporation maintains the bank accounts and accounting of these funds, but has no variance authority over the funds, and at the project’s conclusion, if any funds remain, they are returned to the member councils. Cash that has been received and has not been disbursed is included in the Corporation’s cash balances and -8-
AGGATEWAY CORPORATION NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2014 AND 2013 (continued) NOTE C – INDUSTRY SEGMENT COUNCIL LIABILITIES (continued) an offsetting segment council liability is maintained as well. For the years ending December 31, 2014 and 2013, the balances in the segment council liability account totaled, $118,290 and $210,367, respectively. NOTE D – TRUST LIABILITIES Certain members of the Corporation have amounts that are due back to them. These amounts arise from various reasons including overpayments on the industry council liabilities that have not been returned to the members at the conclusion of the project. The Corporation holds those funds in trust for those members. The members can opt to have these amounts applied to membership dues, AGIIS subscription fees, future projects, or returned to them at some later date. For the years ending December 31, 2014 and 2013, the balances in the trust liability accounts were $61,915 and $61,915, respectively. NOTE E - INCOME TAXES The Corporation is a 501(c)(6) organization, exempt from federal income tax under Section 501(a) of the Internal Revenue Code. The Corporation is, however, subject to tax on business income unrelated to their exempt purpose. The Corporation believes that it has appropriate support for any tax positions taken, and as such, does not have any uncertain tax positions that are material to the financial statements or that would have an effect on its tax-exempt status. There are no unrecognized tax benefits or liabilities that need to be recorded. The Corporation’s income tax returns are subject to examination by the Internal Revenue Service for a period of three years from the date they were filed, except under certain circumstances. The Corporation’s Form 990 tax returns for the years 2011 through 2013 are open for a tax examination by the Internal Revenue Service, although no request has been made as of the date of theses financial statements.
-9-
AGGATEWAY CORPORATION NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2014 AND 2013 (continued) NOTE F – MANAGEMENT FEES The Corporation outsources all its managerial functions and has entered into management consulting agreements for key managerial positions within the Corporation, including the president and CEO, the vice president and chief operating officer, and the council planning and support lead. On January 1, 2014, the management consulting agreements were renewed for a one year period through December 31, 2014. For the years ended December 31, 2014 and 2013, management fees, including bonuses, totaled $686,282 and $712,430, respectively. NOTE G – HOSTING AND MAINTENANCE FEES On December 17, 2014, the Corporation entered into a master agreement for hosting and maintenance services with CSC Covansys Corporation (“CSC”). CSC agrees to provide the Corporation, and its authorized subscribers, access to the Ag Industry Identification System database (“AGIIS”). The terms of the agreement have been renewed for two years, starting January 1, 2015, with an option to be renewed for an additional twelve months. This agreement can be terminated, without cause, by giving 180 days notice to either party. The total hosting and maintenance fees include new subscribers and other maintenance fees, which are in addition to an annual base subscription fee. For the years ended December 31, 2014 and 2013, hosting and maintenance fees totaled $787,983 and $767,691, respectively. NOTE H - SUBSEQUENT EVENTS In preparing these financial statements, the Corporation’s management has evaluated events and transactions for potential recognition or disclosure through June 8, 2015 the date the financial statements were available to be issued. There were no additional events or transactions that were discovered during the evaluation that required further disclosure.
-10-
