THE RON CLARK ACADEMY, INC. AUDITED …...We have audited the accompanying financial statements of The Ron Clark Academy, Inc. which comprise the statements of financial position as

THE RON CLARK ACADEMY, INC.

AUDITED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2014 AND 2013


TABLE OF CONTENTS

INDEPENDENT AUDITOR’S REPORT 3 FINANCIAL STATEMENTS:

Statements of Financial Position 4 Statements of Activities 5-6 Statements of Functional Expenses 7-8 Statements of Cash Flows 9 Summary of Accounting Policies 10-14 Notes to Financial Statements 15-20

INDEPENDENT AUDITOR’S REPORT

To the Board of Directors of The Ron Clark Academy, Inc. Atlanta, Georgia We have audited the accompanying financial statements of The Ron Clark Academy, Inc. which comprise the statements of financial position as of June 30, 2014 and June 30, 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 audit to obtain reasonable assurance about whether the financial statements are free from 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 The Ron Clark Academy, Inc. as of June 30, 2014 and June 30, 2013, and the results of its operations and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. Emphasis of Matter As discussed in Note 1 to the financial statements, the property and equipment and change in net assets were understated. Accordingly, amounts reported for property and equipment and change in net assets have been restated in the 2013 financial statements now presented, and an adjustment has been made to unrestricted net assets as of June 30, 2013 to correct the understatement. Our opinion is not modified with respect to that matter.

Dunwoody, Georgia October 21, 2014

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THE RON CLARK ACADEMY, INC.STATEMENTS OF FINANCIAL POSITION

See accompanying summary of accounting policies and notes to financial statements.

2014 2013

Cash and cash equivalents 1,381,584$ 656,828$ Cash restricted for long-term purposes (Notes 6 and 7) 1,111,987 1,147,715 Promises to give (Note 2) 18,500 41,536 Promises to give restricted for long-term purposes (Notes 2 and 7) 1,529,844 1,063,059 Program fees receivable 39,525 150,785 Prepaid expenses 6,996 50,636 Loan closing costs (Note 3) 16,043 25,529Property and equipment (Notes 4 and 6) 4,761,318 3,809,093Deposits 5,000 5,000

TOTAL ASSETS 8,870,796$ 6,950,181$

Accounts payable and accrued expenses 697,343$ 31,253$ Fair market value of interest rate swap derivative (Note 5) 66,682 82,998Notes payable (Note 6) 2,658,183 2,771,575

Total Liabilities 3,422,208 2,885,826

COMMITMENTS (Note 9)

NET ASSETS: Unrestricted 2,408,328 1,304,997 Unrestricted -board designated 379,765 176,874 Temporarily restricted (Note 7) 2,660,495 2,582,484

Total Net Assets 5,448,588 4,064,355

TOTAL LIABILITIES AND NET ASSETS 8,870,796$ 6,950,181$

ASSETS

LIABILITIES AND NET ASSETS

As of June 30,

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THE RON CLARK ACADEMY, INC.STATEMENT OF ACTIVITIES

FOR THE YEAR ENDED JUNE 30, 2014


TemporarilyUnrestricted Restricted TotalNet Assets Net Assets Net Assets

PUBLIC SUPPORT AND REVENUE: Contributions 443,126$ 1,837,578$ 2,280,704$ Contributed materials and services 113,971 - 113,971 Fundraising and special events, net of costs of

direct benefits to donors of $18,969 (374) - (374) Educator training 1,153,621 - 1,153,621 Educator's conference revenue 123,080 - 123,080 Tuition 436,599 - 436,599 Other 156,320 - 156,320

Total Public Support and Revenue before Transfers 2,426,343 1,837,578 4,263,921

Net Assets Released from Restrictions due to Satisfactionof Donor-imposed Requirements 1,759,567 (1,759,567) -

Total Public Support and Revenue 4,185,910 78,011 4,263,921

EXPENSES:Program 2,152,348 - 2,152,348 Management and general 476,713 - 476,713 Fundraising 266,943 - 266,943

Total Expenses 2,896,004 - 2,896,004

Unrealized gain on interest rate swap (Note 4) (16,316) - (16,316)

Total Expenses and Gain 2,879,688 - 2,879,688

CHANGE IN NET ASSETS 1,306,222 78,011 1,384,233

NET ASSETS:Net Assets at Beginning of Year, as Restated 1,481,871 2,582,484 4,064,355

End of year 2,788,093$ 2,660,495$ 5,448,588$

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THE RON CLARK ACADEMY, INC.STATEMENT OF ACTIVITIES



TemporarilyUnrestricted Restricted TotalNet Assets Net Assets Net Assets

PUBLIC SUPPORT AND REVENUE: Contributions 301,326$ 1,738,302$ 2,039,628$ Contributed materials and services 162,491 - 162,491 Fundraising and special events, net of costs of

direct benefits to donors of $9,076 2,566 - 2,566 Contributed travel 125,000 - 125,000 Educator training 1,015,269 - 1,015,269 Educator's conference revenue 168,204 - 168,204 Tuition 449,659 - 449,659 Insurance proceeds 101,250 - 101,250 Other 55,954 - 55,954

Total Public Support and Revenue before Transfers 2,381,719 1,738,302 4,120,021

Net Assets Released from Restrictions due to Satisfactionof Donor-imposed Requirements 630,658 (630,658) -

Total Public Support and Revenue 3,012,377 1,107,644 4,120,021

EXPENSES:Program 2,168,876 - 2,168,876 Management and general 363,939 - 363,939 Fundraising 360,970 - 360,970

Total Expenses 2,893,785 - 2,893,785

Unrealized loss on interest rate swap (Note 4) 82,998 - 82,998

Total Expenses and Losses 2,976,783 - 2,976,783

CHANGE IN NET ASSETS 35,594 1,107,644 1,143,238

NET ASSETS:Net Assets at Beginning of Year 1,446,277 1,474,840 2,921,117

End of year 1,481,871$ 2,582,484$ 4,064,355$

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THE RON CLARK ACADEMY, INC.STATEMENT OF FUNCTIONAL EXPENSES



ManagementProgram and General Fundraising Total

Compensation and related expenses 1,041,707$ 301,944$ 166,069$ 1,509,720$ Occupancy 271,847 15,103 15,103 302,053 Curriculum - Travel 217,833 - - 217,833 Program supplies 344,568 - - 344,568 Marketing - 17,264 17,264 34,528 Printing - - 42,341 42,341 Depreciation and amortization 172,304 9,572 9,572 191,448 Administrative 104,089 30,171 16,594 150,854 Interest - 102,659 - 102,659

Total Expenses 2,152,348$ 476,713$ 266,943$ 2,896,004$

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THE RON CLARK ACADEMY, INC.STATEMENT OF FUNCTIONAL EXPENSES



ManagementProgram and General Fundraising Total

Compensation and related expenses 917,694$ 215,928$ 215,928$ 1,349,550$ Occupancy 396,828 22,046 22,046 440,920 Curriculum - Travel 185,768 - - 185,768 Program supplies 400,265 - - 400,265 Marketing - 18,885 18,885 37,770 Printing - - 32,666 32,666 Depreciation and amortization 182,261 10,126 10,126 202,513 Administrative 86,060 47,794 61,319 195,173 Interest - 49,160 49,160

Total Expenses 2,168,876$ 363,939$ 360,970$ 2,893,785$

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THE RON CLARK ACADEMY, INC.STATEMENTS OF CASH FLOWS


2014 2013CASH FLOWS FROM OPERATING ACTIVITIES:Changes in net assets 1,384,233$ 1,143,238$ Adjustments to reconcile changes in net assets to net cash provided by (used in) operating activities: Depreciation and amortization 191,448 202,513 Change in discount for pledges receivable 16,121 (18,202) Donated property and equipment (64,870) (48,315) Contributions restricted for long term purposes (1,001,000) (470,350) Unrealized loss on interest rate swap (16,316) 82,998 (Increase) decrease in promises to give 23,036 44,464 (Increase) decrease in program fees receivable 111,260 (19,465) (Increase) decrease in prepaid expenses 43,640 29,162 Increase (decrease) in accounts payable and accruals (4,919) (42,015)

Net Cash Provided by (Used in) Operating Activities 682,633 904,028

CASH FLOWS FROM INVESTING ACTIVITIES: Change in cash restricted for long-term purposes 35,728 (1,105,893) Purchases of property and equipment (398,307) (146,905)

Net Cash Provided by (Used in) Investing Activities (362,579) (1,252,798)

CASH FLOWS FROM FINANCING ACTIVITIES: Collections of contributions restricted for long term purposes 518,094 382,661 Payment of principal on notes payable (113,392) (46,329) Payment of loan closing costs - (28,456)

Net Cash Provided by (Used in) Financing Activities 404,702 307,876

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 724,756 (40,894)

CASH AND CASH EQUIVALENTS:Beginning of year 656,828 697,722

End of year 1,381,584$ 656,828$

SUPPLEMENTAL INFORMATION: Income taxes paid -$ -$ Interest paid 102,659$ 49,160$

For the Year EndedJune 30,

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SUMMARY OF ACCOUNTING PRINCIPLES

ORGANIZATION The Ron Clark Academy, Inc., (the “Organization”), is a private, nonprofit middle school and educator training facility located in Southeast Atlanta that promotes innovation and inspires its students through energetic teaching balanced by a strict code of discipline. Each year 3,000 educators from around the world visit the Academy to learn how to replicate the school’s style, philosophy and success in their own classrooms. The Organization is funded primarily through contributions and service fees, including tuition, educator training and educator conferences.

These financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). The Organization's net assets, revenue, support and expenses are classified based on the existence or absence of donor-imposed restrictions into three classes: permanently restricted, temporarily restricted and unrestricted net assets.

In addition, the Organization’s Board of Directors has established certain funds (unrestricted board designated net assets) to help to ensure the long-term financial stability of the Organization and position it to respond to varying economic conditions and changes affecting the Organization’s financial position and the ability of the Organization to continuously carry out its mission.

PUBLIC SUPPORT AND REVENUE RECOGNITION Support is recognized in the year received at its fair market value. Contributions with donor-imposed restrictions are reported as restricted-support. The satisfaction or expiration of donor-imposed restrictions is recorded as a transfer from restricted to unrestricted net assets in the year the satisfaction or expiration occurs.

STATEMENT OF CASH FLOWS Cash and cash equivalents include all highly liquid temporary investments with a maturity of three months or less.

Non-monetary transactions – The Organization incurred debt of $2,817,904 during the fiscal year ended June 30, 2013, to purchase land and building.

PROMISES TO GIVE Unconditional promises to give are presented at their present value. Promises to give expected to be received more than one year in the future are discounted to their present value using a risk-free interest rate corresponding to the due date of the pledge. At June 30, 2014 and 2013, this discount was $25,490 and $9,370.

Management believes all promises to give are fully collectible and no allowance for uncollectible pledges is deemed necessary at June 30, 2014 and 2013.

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PROMISES TO GIVE (Concluded) The Organization is the recipient of a multi-year promise to give which is conditional on certain deliverables by the Organization each year. The Organization records this revenue each year when the contribution is received or when the deliverables are met, whichever comes first. The balance of this unrecorded pledge at June 30, 2014 and 2013 is $600,000 and $800,000 respectively.

PROGRAM FEES RECEIVABLE Program fees receivable consist mainly of amounts due from educator training fees. The Organization does not charge interest on past due payments. Management evaluates the need to write-off a receivable based on its review of accounts receivable and historical collection experience. The Organization believes that all program fees receivable will be fully collected. Accordingly, no allowance for doubtful accounts is considered necessary.

PROPERTY AND EQUIPMENT Property and equipment are stated at cost, or if donated, at estimated fair value at the date of donation. Any donations of property and equipment are also recorded as support in the statement of activities at their estimated fair value. Depreciation is computed over the estimated useful lives (3-40 years) of the assets using the straight-line method.

Acquisitions of property and equipment or repairs, maintenance or betterments that materially prolong useful lives of assets are capitalized.

IMPAIRMENT OF LONG-LIVED ASSETS Management evaluates the recoverability of the investment in long-lived assets on an ongoing basis and recognizes any impairment in the year of determination. The fair value is determined by comparing the estimated undiscounted future cash flows attributable to the assets in question to their carrying amounts. If the estimated undiscounted net cash flows are less than the long-lived asset’s carrying amount, an impairment loss is recognized. Long-lived assets were tested for impairment as of June 30, 2014 and June 30, 2013, and no adjustment was considered necessary.

EXPENSE RECOGNITION All expenses are recognized in the statement of activities as decreases in unrestricted net assets.

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INCOME TAXES The Organization is exempt from income taxes under section 501(c) (3) of the Internal Revenue Code. Accordingly, no income taxes are reflected in the accompanying financial statements. In addition, the Organization has been classified as an entity that is not a private foundation within the meaning of Section 509(a) of the Internal Revenue Code.

USE OF ESTIMATES The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual amounts could differ from those estimates. Significant estimates include the functional allocation of expenses and the impairment valuation of long-lived assets.

DONATED MATERIALS AND SERVICES Donated materials and services relate primarily to technology equipment and services contributed primarily by corporate sponsors and the Organization’s founder for use by students in the classroom. Donated equipment (materials) and donated services totaled $18,684 and $95,287, respectively, for the year ended June 30, 2014. Donated equipment (materials) and donated services totaled $64,587 and $97,904, respectively, for the year ended June 30, 2013.

The Organization’s founder performs teaching, management and fundraising services for the Organization. The Organization pays the founder a nominal salary for these services. The Organization estimates the value of the founder’s donated services and includes this amount as in-kind contributions and payroll expenses and are included in the amounts above. The Organization’s estimate for 2014 and 2013 approximated $88,233 and $86,400, respectively.

Donated travel is air travel contributed by another major corporate sponsor for use toward the Organization’s travel curriculum.

Many individuals volunteer time and perform a variety of tasks that assist the Organization with various administrative and program tasks. The value of these services has not been reflected in these financial statements since they do not meet the criteria for recognition.

FUNCTIONAL ALLOCATION OF EXPENSES The Organization allocates its expenses on a functional basis among their various programs and support services. Expenses that can be identified with a specific program and support services are allocated directly according to their natural expenditure classification. Indirect expenses have been allocated primarily based on salary expenditures and square footage.

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FAIR VALUES OF FINANCIAL INSTRUMENTS The Organization’s financial instruments are receivables, accounts payable and accrued expenses and notes payable. Program fees receivable and accounts payable and accrued expenses approximate their fair value based on their short term nature. Promises to give are estimated by discounting the future cash flows using current rates and are carried at the estimated collectible amount. Notes payable are carried at the amounts of principal due on these obligations.

FAIR VALUE MEASUREMENTS For assets and liabilities that are valued at fair value, the Organization applies fair value measurement standards for financial reporting, which defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. The fair value standard established 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 to measure fair value are as follows:

Level 1 - Quoted prices in active markets for identical assets or liabilities.

Level 2 - Observable inputs other than quoted prices included in level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3 – Inputs are unobservable inputs for the asset that are supported by little or no market activity and that are significant to the fair value of the underlying asset.

DERIVATIVE INSTRUMENTS The Organization’s interest rate swap agreement is recorded at fair value in the accompanying statements of financial position and the net gain or loss resulting from the change in fair value during the year is recorded in the accompanying statements of activities. The amounts were recorded based on calculated mathematical approximations of market values using certain assumptions regarding past, present and future market conditions.

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UNCERTAIN TAX POSITIONS The Organization recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authority, based on the technical merits of the position. As of June 30, 2014 and 2013, there are no known items which would result in a material accrual related to where the Organization has federal or state attributable tax positions. Generally, the taxing authorities have three years to examine a tax return from the later of the filing date or the extended due date.

CONCENTRATIONS The Organization maintains multiple bank accounts with multiple financial institutions which, at times, may exceed federally insured limits.

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NOTES TO FINANCIAL STATEMENTS

NOTE 1 – PRIOR PERIOD ADJUSTMENT The statement of financial position and statement of activities have been restated to adjust the impairment valuation of its school property. During the year ended June 30, 2013, the Organization purchased its school land and building. Initially, an impairment loss of $837,808 was recognized because the purchase price of the property exceeded its fair market value. After this initial adjustment, new consideration was given to the property’s recoverability by reviewing its positive net cash flows over its useful life. This net cash flow exceeded the original purchase price and, therefore, resulted in an increase to the Organization’s property and equipment (assets) and change in unrestricted net assets for the year ended June 30, 2013 of $837,808.

NOTE 2 – UNCONDITIONAL PROMISES TO GIVE A summary of promises to give is as follows for the years ended June 30:

2014 2013 Receivable in less than one year $ 528,718 $ 729,798 Receivable in one to five years 1,045,117 384,167 Total unconditional promises to give 1,573,835 1,113,965

Less: discounts to net present value (using an interest rate of 2.5% (25,491) (9,370)

Net unconditional promises to give $ 1,548,344 $ 1,104,595 NOTE 3 – LOAN CLOSING COSTS Loan closing costs consist of the following at June 30:

2014 2013 Loan closing costs $ 28,456 $ 28,456 Less accumulated amortization (12,413) (2,927) Loan closing costs, net $ 16,043 $ 25,529

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NOTE 4 – PROPERTY AND EQUIPMENT A summary of property and equipment is as follows for the years ended June 30:

2014 2013 Land $ 427,436 $ 427,436 Buildings and improvements 3,033,866 3,033,866 Furniture and fixtures 373,029 363,342 Equipment 456,836 355,485 Website 126,400 126,400 Artwork 81,557 81,557 Construction in progress 1,208,426 185,277 5,707,550 4,573,363 Less accumulated depreciation (930,598) (764,270) Total property and equipment $ 4,776,952 $ 3,809,093

NOTE 5 – INTEREST RATE SWAP AGREEMENT The Organization entered into an interest rate swap agreement to reduce the impact of changes in interest rates on its floating rate long-term debt. This agreement effectively changes the Organization’s interest rate exposure on $2,658,183 and $2,771,575 of its floating rate debt to a fixed rate of 4.17% as of June 30, 2014 and 2013, respectively. The swap agreement was entered into in April 2013 and terminates in January 2018. The Organization is exposed to a credit loss in the event of non-performance by the other party to the interest rate swap agreement. The Organization does not anticipate nonperformance by the counter-party based on the fact that the counter-party is a financial institution with a S&P BBB+ subordinated debt rating.

The interest rate swap liability consists of the following at June 30:

2014 2013 Balance, beginning of year $ 82,998 $ 82,998 Interest swap payments made during year (22,217) - Change in fair value 5,901 - Balance, end of year $ 66,682 $ 82,998

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NOTE 6 – NOTES PAYABLE Notes payable consist of the following as of June 30:

2014 2013

Note payable with bank; effective interest rate of bank’s prime rate plus 3%; monthly payments of principal and interest; due in full January 2018; collateralized by cash, real estate and equipment of the Organization and personal guarantees by the Organization’s founder $ 1,831,119 $ 1,909,231

Note payable with bank; effective interest rate of bank’s prime rate plus 3%; monthly payments of principal and interest; due in full January 2018; collateralized by cash, real estate and equipment of the Organization and personal guarantees by the Organization’s founder 827,064 862,344

$ 2,658,183 $ 2,771,575 Maturities of notes payable consist of the following for the year ending June 30, 2014:

2015 $ 107,000 2016 111,000 2017 115,000 2018 2,325,183

$ 2,658,183

Also, related to the two notes above, the bank required the Organization to establish and maintain multiple cash accounts at its bank for various reasons, carrying a minimum balance of approximately $1,000,000 derived from the collection of its promises to give related to the construction of its new facility. Any collections of the promises to give in excess of this amount must also be maintained in these bank accounts.

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NOTE 7 – RESTRICTED NET ASSETS As of June 30, temporarily restricted net assets, included in cash and receivables, consisted of the following donor designated contributions:

2014 2013 Capital campaign (for the construction of a new teacher training facility) $ 2,641,831 $ 2,523,554 Staff development - 5,000 Wireless sponsorship 664 17,930 Scholarships – timing restrictions 18,000 36,000 $ 2,660,495 $ 2,582,484

NOTE 8 – ECONOMIC DEPENDENCY During the years ended June 30, 2014, the Organization received $1,000,000 from one donor, representing approximately 24% of the total revenue. This amount is included in pledges receivable as of June 30, 2014.

NOTE 9 – COMMITMENTS The Organization leased its facility under an operating lease that extended through 2013. The landlord was the founder of the Organization. The founder leased the facility to the Organization for the exact amount of the founder’s mortgage payment. During the year ended June 30, 2013, the Organization purchased this property and therefore the lease was terminated. Rent expense for the year ended June 30, 2013 approximated $130,000.

During the year ended June 30, 2014, the Organization entered into an agreement with a general contractor for the construction of its new teacher training facility in the amount of $3,786,750. As of June 30, 2014, approximately $1,005,000 of this total contract had been incurred and is included in Construction in Progress on the Statement of Financial Position.

NOTE 10 – RELATED PARTY TRANSACTIONS For the years ended June 30, 2014 and 2013, the Organization’s founder made contributions totaling $16,293 and $26,588, respectively. The Organization’s founder also donated his services, as noted in the Donated Materials and Services section of the Summary of Accounting Policies. Also, the Organization paid its founder a nominal salary of $16,600 and $15,600 for teaching, management and fundraising services for the years ended June 30, 2014 and 2013, respectively. Additionally, an entity under control and owned by the founder of the Organization provides fulfillment and clearinghouse services for sales of branded merchandise. This entity coordinates all sales and collections and submits the sales proceeds, net of costs, to the

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NOTE 10 – RELATED PARTY TRANSACTIONS (Concluded) Organization on a monthly basis. For the years ended June 30, 2014 and 2013, the Organization received approximately $39,000 and $43,000, respectively, in net sales proceeds from this entity.

Also, as noted in Note 8, the Organization leased its facility from an entity owned by the Organization’s founder until January 2013. The Organization purchased this property from this entity owned by the Organization’s founder in January 2013 by paying off the founder’s loan for $2,847,208. There was no cash made by the Organization’s founder on the transaction. The Organization's Board of Trustees made the decision to purchase the properties to place the Organization in a better cash position and to help the Organization in qualifying for a construction loan to expand the Organization’s Educator training facilities. The Organization also assumed a mortgage payment that is substantially less than the previous rent payment and the Organization stopped accruing real estate taxes due to its exempt status for real estate tax purposes as a non-profit.

For the year ended June 30, 2014 and 2013, board members of the Organization made contributions totaling $78,577 and $22,360, respectively.

Included in pledges receivable at June 30, 2014 and 2013 are $282,067 and $594,050, respectively, due from the Organization’s founder and board members.

NOTE 11 – CONTINGENCY The Organization depends heavily on grants and contributions to support ongoing operations. To the extent economic conditions negatively impact future contribution levels, the Organization’s ability to continue at its current level of activity could be substantially impacted.

NOTE 12 – GEORGIA GOAL SCHOLARSHIP FUNDS The Organization is a participant in the Georgia GOAL Scholarship Program (GOAL), which is a non-profit organization that provides scholarships to students in Georgia to attend private K-12 schools of their parents’ choice. GOAL is funded by Georgia taxpayers who can choose to make a donation and also receive a tax credit. These donations can be restricted for a specific participating school. The Organization will, in turn, identify students that are eligible for these scholarships under the GOAL guidelines and coordinate the completion of the necessary applications. Once approved, GOAL issues the scholarship. At June 30, 2014 and 2013, the Organization had $204,632 and $133,651, respectively, in available GOAL funds designated for the use of future tuition for its students.

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NOTE 13– SUBSEQUENT EVENTS Subsequent events have been evaluated through the audit report date, which is the date the financial statements were available to be issued.

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Documents

THE RON CLARK ACADEMY, INC. AUDITED …...We have audited the accompanying financial statements of The Ron Clark Academy, Inc. which comprise the statements of financial position as