H E A L T H Y H O W A R D, I N C .

F I N A N C I A L ST A T E M E N TS

JU N E 30, 2009
 H E A L T H Y H O W A R D, I N C .
JU N E 30, 2009

T A B L E O F C O N T E N TS

Page(s)

INDEPENDENT AUDITOR’S REPORT 1

Statement of Financial Position 2

Statement of Activities 3

Statement of Functional Expenses 4

Statement of Cash Flows 5

NOTES TO FINANCIAL STATEMENTS 6 – 11

  
Lindsey + Associates LLC  
Certified Public Accountants 

L indsey + Associates
 

 
606 Baltimore Avenue 
Suite 101 
Towson, MD 21204 
 
410.825.1994 phone 
301.596.1996 DC phone 
410.825.1997 fax 
 
www.acpafirm.com 
 

I N D E PE N D E N T A U D I T O R’S R E P O R T

The Board of Directors

We have audited the accompanying statement of financial position of Healthy Howard, Inc.
(the Organization), a nonprofit organization, as of June 30, 2009, and the related statements of
activities, functional expenses, and cash flows for the year then ended. These financial statements
are the responsibility of the Organization’s management.  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 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 audit provides 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 Healthy Howard, Inc. as of June 30, 2009, and changes in net
assets and its cash flows for the year then ended in conformity with accounting principles generally
accepted in the United States of America.

November 2, 2009

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 H E A L T H Y H O W A RD, I N C.
ST A T E M E N T O F F I N A N C I A L POSI T I O N
JU N E 30, 2009

ASSE TS

C ur rent Assets
Cash and cash equivalents $ 184,800
Investments 77,668

Total C urrent Assets $ 262,468

Furniture, fixtures and equipment 18,901

Less: Accumulated depreciation (1,890)
Net furniture, fixtures and equipment 17,011

Other Assets
Computer software and website 81,432
Less: Accumulated amortization (8,144)
Net Computer software and website 73,288

Total Assets $ 352,767

L I A B I L I T I ES A ND N E T ASSE TS
L I A B I L I T I ES

C ur rent L iabilities
Accounts payable and accrued expenses $ 53,565
Total C urrent L iabilities $ 53,565

Total L iabilities 53,565

N E T ASSE TS
Unrestricted 299,202
Temporarily restricted -
Permanently restricted -
Total Net Assets 299,202

Total L iabilities and Net Assets $ 352,767

See accompanying notes to financial statements.

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 H E A L T H Y H O W A RD, I N C.
ST A T E M E N T O F A C T I V I T I ES
F O R T H E Y E A R E N D E D JUN E 30, 2009

Temporarily
Unrestricted Restricted Total
Revenue and O ther Support
Contributions, grants and donations $ 252,389 $ 500,000 $ 752,389
Membership income 38,832 - 38,832
Miscellaneous 2,667 - 2,667
In-kind revenue 109,284 - 109,284
Net assets released from restrictions 550,000 (550,000) -

Total Revenues Gains, and O ther Support 953,172 (50,000) 903,172

E X PE NSES

Program services 346,683 - 346,683

Supporting services -
General and administrative 297,256 - 297,256
Fundraising 10,656 - 10,656

Total E xpenses 654,595 - 654,595

I N C R E ASE (D E C R E ASE) I N U NR EST R I C T E D N E T ASSE TS 298,577 (50,000) 248,577

C H A N G ES I N T E MPO R A RI L Y R EST R I C T E D N E T ASSE TS - - -

C H A N G ES I N PE R M A N E N T L Y R EST R I C T E D N E T ASSE TS - - -

I N C R E ASE (D E C R E ASE) I N N E T ASSE TS 298,577 (50,000) 248,577

N E T ASSE TS A T B E G I N NI N G O F Y E A R 625 50,000 50,625

N E T ASSE TS A T E N D O F Y E A R $ 299,202 $ - $ 299,202

See accompanying notes to financial statements.

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 H E A L T H Y H O W A R D, I N C .
ST A T E M E N T O F F U N C T I O N A L E X PE NSES
F O R T H E Y E A R E N D E D JU N E 30, 2009

Supporting Services
Program General and
Services A dministrative F undraising Total
Accounting $ - $ 1,560 $ - $ 1,560
Administrative fees 20,000 - - 20,000
Advertising - 4,975 - 4,975
Amortization - 8,144 - 8,144
Conferences - 588 - 588
Depreciation - 1,890 - 1,890
Evaluation 35,000 - - 35,000
Insurance - 3,071 - 3,071
In-kind services - 109,284 - 109,284
Job postings/background checks - 1,252 - 1,252
Labs 2,928 - - 2,928
Legal fees - 326 - 326
Memberships and dues - 830 - 830
Miscellaneous - 367 - 367
Other fees 3,426 - - 3,426
Payroll taxes and benefits 39,974 18,481 - 58,455
Primary care provider fees 30,350 - - 30,350
Postage and mailing - 943 - 943
Prescriptions 1,608 - - 1,608
Printing and copying - 1,617 - 1,617
Registration fees - 25 - 25
Rent and utilities - 1,605 - 1,605
Repairs and maintenance - 820 - 820
Salaries and wages 213,139 127,111 10,656 350,906
Software licenses - 253 - 253
Staff development - 1,831 - 1,831
Supplies - 3,862 - 3,862
Telephone - 6,141 - 6,141
Translation and interpretation 208 - - 208
Travel - 1,455 - 1,455
Urgent care 50 - - 50
Web hosting - 825 - 825
Total $ 346,683 $ 297,256 $ 10,656 $ 654,595

See accompanying notes to financial statements.

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 H E A L T H Y H O W A RD, I N C.
ST A T E M E N T O F C ASH F L O WS
F O R T H E Y E A R E N D E D JUN E 30, 2009

C ash Flows F rom O perating Activities

Increase (decrease) in net assets $ 248,577
Adjustments to reconcile net increase (decrease) in net assets
to net cash provided by operating activities:
Depreciation and amortization 10,034
(Increase) decrease in accounts receivable -
Increase (decrease) in accounts payable 27,327
Increase (decrease) in accrued payables 26,238
Net cash provided (used) by operating activities 312,176

C ash Flows F rom Investing Activities

Purchases of capital equipment (100,333)
Purchases of long-term investments (350,446)
Proceeds from maturity of long-term investments 25,445
Withdrawals from investments 250,000
Interest income reinvested (2,667)
Net cash provided (used) by investing activities (178,001)

C ash Flows F rom Financing Activities

Net cash provided (used) by financing activities -

Net increase (decrease) in cash 134,175

C ash and cash equivalents at beginning of year 50,625

C ash and cash equivalents at end of year $ 184,800

Supplemental Information:
Interest expense paid $ -

Taxes paid $ -

See accompanying notes to financial statements.

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 H E A L T H Y H O W A R D, I N C .
N O T ES T O F I N A N C I A L ST A T E M E N TS
JU N E 30, 2009

N O T E 1 – SU M M A R Y O F SI G N I F I C A N T A C C O U N T I N G P O L I C I ES A N D G E N E R A L
INF ORM A TION

O rganization

Healthy Howard, Inc. (the “Organization”) is a non-stock corporation operating as a Public-Private

Health Care Program authorized pursuant to Chapter 627 of the Acts of the General Assembly of
2008, and approved by the Maryland Insurance Administration. The Organization is organized and
operated exclusively for charitable purposes as a non-profit Organization within the meaning of
section 501(c)(3) of the Internal Revenue Code of 1986, as amended. The Organization was created
for the purpose of providing medical and health-related services to uninsured low income citizens of
Howard County and engaging in charitable, scientific, literary, and educational pursuits associated
with this purpose.

The Organization administers the Healthy Howard Access Plan (the “Plan”), a health plan for low-

income uninsured residents of Howard County, Maryland. For a fee Plan members have access to
health services including, doctor visits and emergency room treatment, and low cost or free
prescriptions. The Plan is not a health insurance plan, but a program designed to provide basic
medical and preventive care at a greatly reduced cost to Plan members who would not otherwise be
able to afford health insurance. The plan provides access to health care only in Howard County,
Maryland and is only available to uninsured Howard County, Maryland residents that meet certain
income criteria. The Organization relies primarily on community partnerships and donations to
support its operations.

Basis of A ccounting

The financial statements of the Organization are prepared on the accrual basis of accounting.
Under this method, revenues of the Organization are recognized when earned rather than when
received and expenses are recognized when incurred rather than when paid.

The Organization accounts for contributions received and made in accordance with the
Statement of F inancial Accounting Standards (S F AS) No. 116. Contributions received are recorded
as unrestricted, temporarily restricted, or permanently restricted support, depending on the existence
and/or nature of any grantor and donor - imposed restrictions.

The Organization reports information regarding its financial position and activities in
accordance with the Statement of F inancial Accounting Standards (S F AS) No. 117. This includes
reporting financial position and activities according to three classes of net assets: unrestricted net
assets, temporarily restricted net assets, and permanently restricted net assets.

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 H E A L T H Y H O W A R D, I N C .
N O T ES T O F I N A N C I A L ST A T E M E N TS
JU N E 30, 2009

N O T E 1 – SU M M A R Y O F SI G N I F I C A N T A C C O U N T I N G P O L I C I ES A N D G E N E R A L
I N F O R M A T I O N - continued

Income Recognition

Contribution, grant income and donations is recognized when the grantor makes a promise to
give to the Organization that is, in substance, unconditional. Contributions which are restricted by
the donor are reported as increases in unrestricted net assets if the restriction expires in the same year
in which the contributions are recognized. All other donor restricted contributions are reported as
increases in temporarily or permanently restricted net assets depending on the nature of the
restrictions. When a restriction expires, temporarily restricted net assets are reclassified to
unrestricted net assets.

Estimates

The preparation of financial statements in conformity with generally accepted accounting

principles requires management to make estimates and assumptions that affect certain reported
amounts and disclosures. Accordingly, actual results could differ from those estimates.

Contributed Services

The value, if material, of contributed services (in-kind services) meeting the requirements for
recognition in the financial statements has been recorded in the financial statements at the fair market
value of services provided.

F air V alues of F inancial Instruments

When applicable the following methods and assumptions are used by the Organization in
estimating its fair value disclosures for financial instruments.

Cash, cash equivalents, short-term investments, and promises to give due in less than one
year: The carrying amounts reported in the statement of financial position approximate fair
values because of the short maturities of those instruments.

Short-term investments: The fair values of short-term investments are based on quoted
market prices for those or similar investments.

Long-term investments: The fair values of long-term investments are based on quoted
market prices for those or similar investments.

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 H E A L T H Y H O W A R D, I N C .
N O T ES T O F I N A N C I A L ST A T E M E N TS
JU N E 30, 2009

N O T E 1 – SU M M A R Y O F SI G N I F I C A N T A C C O U N T I N G P O L I C I ES A N D G E N E R A L
I N F O R M A T I O N – continued

F unctional A llocation of E xpenses

The costs of providing the various programs and other activities have been summarized on a
functional basis in the statement of activities. Accordingly, certain costs have been allocated among
the programs and supporting services benefited. The Organization allocates certain indirect costs to
program support. Certain grantors do not allow for indirect cost reimbursement. The Organization,
in these instances, pays for unallowable indirect costs from unrestricted funds.

Income T axes

The Organization is exempt from income taxes under section 501(c)(3) of the Internal
Revenue Service Code, and has not been classified as a private foundation. Consequently, there is
no provision for income taxes.

C ash and C ash E quivalents

Cash and investments with maturities of 90 days or less are considered cash and cash
equivalents for financial statement presentation purposes.

F urniture, F ixtures and E quipment

Furniture, fixtures and equipment are recorded at cost or fair market value if donated and are
depreciated over their estimated useful lives of five or seven years using the straight line method.

A mortization

Amortization is computed using the straight line method for financial statement purposes.
The following useful lives have been assigned to the amortizable intangible assets: Website design
and software, 5 years.

Membership Dues

The Organization’s membership is for a calendar year and is renewed annually as long as

membership criteria are met. Monthly membership dues are based on family size and household
income. Membership fees vary from $50 to $115 per month. Membership fees are recorded as
income when received.

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 H E A L T H Y H O W A R D, I N C .
N O T ES T O F I N A N C I A L ST A T E M E N TS
JU N E 30, 2009

N O T E 1 – SU M M A R Y O F SI G N I F I C A N T A C C O U N T I N G P O L I C I ES A N D G E N E R A L
I N F O R M A T I O N – continued

A dvertising

Expenses for advertising and fundraising are expensed as incurred. The cost of materials
designed to generally promote the Organization’s programs is considered advertising. At June 30,
2009 $4,975 was expensed for advertising expenses.

N O T E 2 – C ASH

As of June 30, 2009 all cash deposits are insured by FDIC.

N O T E 3 - I N V EST M E N TS

As of June 30, 2009 the Organization had the following investments:

Type of Investment Cost Fair Value

Certificate of Deposit
Columbia Bank $ 77,668 $ 77,668
$ 77,668 $ 77,668

N O T E 4 – I N T A N G I B L E ASSE TS

During the year ended June 30, 2009, the Organization acquired an electronic application for
medical benefits for $68,000.  The Organization also spent $13,432 to develop the Organization’s 
website. These amounts were recorded as intangible assets and are being amortized over a 5 year life
for book purposes.

The amortization expense for the year ended June 30, 2009 is $8,144. The accumulated
amortization is $8,144 as of June 30, 2009.

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 H E A L T H Y H O W A R D, I N C .
N O T ES T O F I N A N C I A L ST A T E M E N TS
JU N E 30, 2009

N O T E 4 – I N T A N G I B L E ASSE TS - continued

The remaining estimated amortization expense is:

Year Ended Amount

2010 $ 16,286
2011 16,286
2012 16,286
2013 16,286
2014 8,144
Total $ 73,288

N O T E 5 – A C C O U N TS PA Y A B L E A N D A C C R U E D E X PE NSES

As of June 30, 2009 the balance of accounts payable and accrued expenses is $51,330 and is
comprised of the following:

Accounts payable $ 27,109

Accrued expenses 26,238
AVS Liability 218
Total $ 53,565

N O T E 6– O P E R A T I N G L E ASES

The Organization leases office space in Columbia, Maryland. The lease is for one year
through January 31, 2010 and is renewable on an annual basis. Future minimum lease payments
are as follows:

Year Ended Amount

2010 $ 2,246
Total $ 2,246

Rent expense for the year ended June 30, 2009 was $1,605.

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 H E A L T H Y H O W A R D, I N C .
N O T ES T O F I N A N C I A L ST A T E M E N TS
JU N E 30, 2009

N O T E 7 – C O N T I N G E N C I ES

Grants

The Organization receives grants from time-to-time. Expenditures from certain grants are
subject to audit by the grantor, and the Organization is contingently liable to refund amounts
received in excess of allowable expenditures. In the opinion of the Organization’s management, no
material refunds will be required as a result of disallowed expenditures.

Member Costs

The Organization may have incurred plan member costs for the year ended June 30, 2009 that
have not yet been reported to the Organization. The magnitude of these plan member costs, if any,
cannot  be  reasonably  estimated  and  therefore  are  not  recorded  on  the  Organization’s  financial 
statements. A liability for incurred but not reported (IBNR) costs may be reported in future years.

N O T E 8 – C O N T R I B U T E D SE R V I C ES

During the year ended June 30, 2009, legal services and office space was donated to the
Organization valued at $109,284. The Organization has recorded the value of these donated services
as in-kind services (revenue and other support) and in-kind expenses. In addition, many individuals
volunteer their time and perform a variety of tasks that assist the Organization, but these services do
not meet the criteria for recognition as contributed services.

N O T E 9 – C O N C E N T R A T I O NS

Approximately 63% or $500,000 of the Organization’s total support and revenues came from
Howard County during the year ended June 30, 2009.

N O T E 10 – SU BSE Q U E N T E V E N T

Subsequent to June 30, 2009, the Organization reserved $26,000 for MHIP, $50,000 for
vaccines and $75,000 for urgent care to cover member costs that may have been incurred but not yet
reported to the Organization.

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