Independent Adoption Center, Inc.

Audited Financial Statements

For Year Ended December 31, 2012

Rubian Moss, CPA

A Professional Corporation
 Independent Adoption Center, Inc.

Financial Statements

Year ended December 31, 2012

Contents

Independent Auditors Report............................................................................... 1

Financial Statements
Statement of Financial Position........................................................................ 2
Statement of Activities...................................................................................... 3
Statement of Cash Flows.................................................................................. 4
Statement of Functional Expenses.................................................................... 5
Notes to Financial Statements........................................................................... 7
 Independent Auditors Report

Board of Directors
Independent Adoption Center, Inc.
Concord, California

We have audited the accompanying statement of financial position of the Independent Adoption Center,
Inc., a nonprofit tax-exempt corporation, as of December 31, 2012, and the related statement of
activities, statement of cash flows, and statement of functional expenses for the year then ended. These
financial statements are the responsibility of the Independent Adoption Center, Inc.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 the Independent Adoption Center, Inc. at December 31, 2012 and the results of its
activities 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.

Walnut Creek, California

April 26, 2013

1
 Independent Adoption Center, Inc.

Statement of Financial Position

As of December 31, 2012

Assets
Current assets:
Cash and cash equivalents $ 1,125,737
Accounts receivable, net (Note 2) 888,580
Prepaid expenses 179,775
Total current assets 2,194,092
Fixed assets, net (Note 3) 73,406
Deposits 43,553
Total assets $ 2,311,051

Liabilities and net assets

Current liabilities:
Accounts payable and accrued liabilities $ 141,037
Accrued vacations 148,964
Deferred revenue 46,030
Total current liabilities 336,031

Net assets 1,975,020

Total liabilities and net assets $ 2,311,051

See accompanying notes.

2
 Independent Adoption Center, Inc.

Statement of Activities

For the year ended December 31, 2012

Support and revenue

Support:
Foundations and corporations $ 49,395
Indivdual donations 4,038
Total support 53,433

Revenue:
Client fees 4,889,092
Domestic homestudy fees 429,005
Counseling fees 91,700
Birth Parent expense funding 85,045
Post adoption fees 25,050
Other revenue 8,237
Investment income 8,437
Client refunds (302,675)
Total revenue 5,233,891
Total support and revenue 5,287,324

Expenses
Program:
Concord 2,106,417
Los Angeles 699,796
Connecticut 2,312
Indiana 286,452
Georgia 399,323
North Carolina 388,005
Texas 214,105
New York 174,501
Florida 425
Total program expenses 4,271,336

Support:
Management and general 598,097
Fundraising 1,359
Total support expenses 599,456
Total expenses 4,870,792

Change in net assets 416,532

Net assets, beginning of year 1,558,488
Net assets, end of year $ 1,975,020

See accompanying notes.

3
 Independent Adoption Center, Inc.

Statement of Cash Flows

For the year ended December 31, 2012

Cash flows from operating activities:

Change in net assets $ 416,532
Adjustments to reconcile change in net assets
to net cash provided by operating activities:
Depreciation 9,162
Increase in accounts receivable (49,424)
Increase in prepaid expenses (78,783)
Increase in deposits (20,397)
Increase in accounts payable and accrued liabilities 13,781
Increase in accrued vacations 10,450
Increase in deferred revenue 12,000
Net cash provided by operating activities 313,321

Investing activities
Acquisition of fixed assets (59,427)
Net cash used in investing activities (59,427)

Net change in cash 253,894

Cash, beginning of year 871,843
Cash, end of year $ 1,125,737

See accompanying notes.

4
 Independent Adoption Center, Inc.

Statement of Functional Expenses

For the year ended December 31, 2012

Los North
Concord Angeles Connecticut Indiana Georgia Carolina Texas

Salaries $ 918,948 $ 385,951 $ - $ 138,531 $ 201,783 $ 195,342 $ 80,568

Payroll taxes 145,853 - - - 1,953 937 47
Employee benefits 108,346 26,590 - 23,494 25,431 22,434 11,352
Total personnel expenses 1,173,147 412,541 - 162,025 229,167 218,713 91,967
Professional services 133,082 89,713 200 5,256 20,854 18,405 7,204
Advertising 119,700 52,497 - 52,496 53,882 53,397 53,782
Insurance 53,690 323 - 348 323 323 323
Interest 123 - - 7 17 - -
Client education 24,733 11,911 - 2,965 2,973 3,041 1,495
Board expense - - - - - - -
Birth Parent expense 73,721 4,454 - 2,138 7,471 10,204 614
Rent 142,094 50,780 2,030 15,043 24,237 29,631 24,275
Office expense 54,750 4,782 - 8,837 12,078 14,490 5,538
Service fees 39,280 279 77 570 209 74 100
Equipment rental 36,313 8,535 - 8,770 5,151 3,096 1,874
Telephone 32,712 5,159 - 8,612 1,829 1,844 2,815
Printing - - - - - - -
Postage 52,438 5,618 5 4,054 6,653 5,292 821
Dues and subscriptions 4,530 640 - 843 1,335 685 64
Travel 30,042 38,238 - 5,845 15,080 14,635 16,459
Information technology 22,813 7,151 - 2,014 1,735 7,556 860
Staff development 1,353 741 - 531 460 - 250
Staff appreciation - - - - - - -
Agency services 2,630 674 - 1,591 675 375 1,379
Outreach 95,155 5,760 - 4,507 15,194 6,244 4,285
Depreciation 14,111 - - - - - -
Bad debt - - - - - - -
Total $ 2,106,417 $ 699,796 $ 2,312 $ 286,452 $ 399,323 $ 388,005 $ 214,105

See accompanying notes.

5
 Independent Adoption Center, Inc.

Statement of Functional Expenses (continued)

For the year ended December 31, 2012

Total Management Total

New York Florida Program and General Fundraising Support Total

Salaries $ 43,554 $ - $ 1,964,677 $ 346,708 $ - $ 346,708 $ 2,311,385

Payroll taxes 209 - 148,999 26,294 - 26,294 175,293
Employee benefits 5,209 - 222,856 39,327 - 39,327 262,183
Total personnel expenses 48,972 - 2,336,532 412,329 - 412,329 2,748,861
Professional services 5,306 - 280,020 12,535 - 12,535 292,555
Advertising 36,747 - 422,501 - - - 422,501
Insurance 55 - 55,385 9,774 - 9,774 65,159
Interest - - 147 - - - 147
Client education 1,343 - 48,461 - - - 48,461
Board expense - - - 1,852 - 1,852 1,852
Birth Parent expense - - 98,602 - - - 98,602
Rent 13,916 425 302,431 53,369 - 53,369 355,800
Office expense 4,167 - 104,642 18,471 - 18,471 123,113
Service fees 213 - 40,802 7,202 - 7,202 48,004
Equipment rental 320 - 64,059 11,304 - 11,304 75,363
Telephone 159 - 53,130 9,376 - 9,376 62,506
Printing - - - 11,036 - 11,036 11,036
Postage 96 - 74,977 13,231 - 13,231 88,208
Dues and subscriptions 231 - 8,328 - - - 8,328
Travel 59,368 - 179,667 - - - 179,667
Information technology 87 - 42,216 7,449 - 7,449 49,665
Staff development - - 3,335 - - - 3,335
Staff appreciation - - - 16,854 - 16,854 16,854
Agency services 38 - 7,362 - - - 7,362
Outreach 3,483 - 134,628 - 1,359 1,359 135,987
Depreciation - - 14,111 2,490 - 2,490 16,601
Bad debt - - - 10,825 - 10,825 10,825
Total $ 174,501 $ 425 $ 4,271,336 $ 598,097 $ 1,359 $ 599,456 $ 4,870,792

See accompanying notes.

6
 Independent Adoption Center, Inc.

Notes to Financial Statements

For the year ended December 31, 2012

1. Organization and Summary of Significant Accounting Policies

Organization
Independent Adoption Center, Inc. (IAC) is a California nonprofit public benefit corporation incorporated
on October 27, 1982. IACs primary mission is to offer guidance, education, and counseling in the field of
infertility, reproductive alternatives, and adoption, and to provide full service adoption and foster care
services. Specifically, IAC provides group and private counseling and educational programs to prospective
parents facing infertility problems and considering medical treatments, adoption, or other forms of
reproductive alternatives, and facilitate private adoptions, licensed full-service agency adoption, foster care,
and pre-adoption and post-adoption services.

Basis of Accounting
The accompanying financial statements have been prepared on the accrual basis of accounting in accordance
with accounting principles generally accepted in the United States of America.

Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the amounts reported in the financial statements
and accompanying notes. Actual results could differ from those estimates.

Functional Allocation of Operating Expenses

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 programs and supporting
services benefited.

Income Taxes
The Internal Revenue Service and the California Franchise Tax Board have determined that IAC is exempt
from federal and state income taxes under Internal Revenue Code Section 501(c)(3) and the California
Revenue and Taxation Code Section 23701(d). IAC did not have any taxable unrelated business income
during the year ended December 31, 2012.

Cash and Cash Equivalents

Cash consists of checking and savings accounts in large financial institutions. Financial instruments that
potentially subject IAC to concentrations of credit risk include cash and cash equivalents. Cash deposits are
generally federally insured in limited amounts. Cash is stated at fair market value.

7
 Independent Adoption Center, Inc.

Notes to Financial Statements (continued)

1. Organization and Summary of Significant Accounting Policies (continued)

Net Assets
IAC reports gifts of cash as restricted support if they are received with donor stipulations that limit the use of
the donated assets. When a donor restriction expires, that is, when a stipulated time restriction ends or
purpose restriction is accomplished, temporarily restricted net assets are reclassified to unrestricted net assets
and reported in the statement of activities and changes in net assets as net assets released from restrictions.

IAC reports information regarding their financial position and activities according to three classifications of
net assets: unrestricted, temporarily restricted, and permanently restricted net assets.

At December 31, 2012, IAC had no temporarily or permanently restricted net assets.

Contributions
All contributions are considered to be available for unrestricted use unless specifically restricted by the
donor. Amounts received that are designated for future periods or are restricted by the donor for specific
purposes are reported as temporarily restricted net support that increase that net asset class. Unconditional
promises to give, which do not state a due date, are presumed to be time-restricted by the donor until
received and are reported as temporarily restricted net assets.

A donor restriction expires when a stipulated time restriction ends, when an unconditional promise with an
implied time restriction is collected, or when a specific purpose restriction is accomplished. Upon expiration,
temporarily restricted net assets are reclassified to unrestricted net assets and are reported in the statement of
activities as net assets released from restrictions. Restricted contributions received in the same year in which
the restrictions are met are reported as unrestricted contributions.

2. Accounts Receivable
Accounts receivable at December 31, 2012 consist of the following:

Amount
Adoption fees $ 971,720
Allowance for doubtful accounts (83,140)
Net $ 888,580

8
 Independent Adoption Center, Inc.

Notes to Financial Statements (continued)

3. Fixed Assets
IAC follows the practice of capitalizing, at cost, all expenditures for fixed assets with a capitalization
threshold of $500. Donated equipment is recorded at its estimated fair market value. Depreciation is
computed on a straight-line basis over the useful lives of the assets, which ranges from three to ten years.

Fixed assets at December 31, 2012 consist of the following:

Amount
Furniture and equipment $ 395,762
Accumulated depreciation (322,356)
Net $ 73,406

Depreciation expense for the year ended December 31, 2012 was $9,162.

4. Operating Leases
IAC leases office space, parking spaces, and equipment under the following lease agreements:

IAC leased office space at 391 Taylor Boulevard, Suite 100, Pleasant Hill, California for a monthly rent of
$13,075. The lease expired in July 2012. The lease expense for the year ended December 31, 2012 was
$106.994.

IAC leases office space at 2300 Clayton Road, Suite 1150, Concord, California for a starting monthly rent of
$17,723. The lease expires on July 31, 2022. The lease expense for the year ended December 31, 2012 was
$41,735.

IAC leases office space and parking spaces at 5777 West Century Boulevard, Suite 1450, Los Angeles,
California for a starting monthly rent of $5,870. The lease expires on November 30, 2014. The lease expense
for the year ended December 31, 2012 was $64,411.

IAC leases office space at 2118 Walsh Avenue, Suite 200, Santa Clara, California for a monthly rent of $550.
The lease expires on December 31, 2013. The lease expense for the year ended December 31, 2012 was
$6,600.

IAC leases office space at 11030 Raven Ridge Road, Suite 109, Raleigh, North Carolina for a starting
monthly rent of $2,804. The lease expires on July 31, 2015. The lease expense for the year ended December
31, 2012 was $34,074.

9
 Independent Adoption Center, Inc.

Notes to Financial Statements (continued)

4. Operating Leases (continued)

IAC leases office space at 5162 E. Stop 11 Road, Suite 1, Indianapolis, Indiana for a monthly rent of $1,380.
The lease expires on March 31, 2018. The lease expense for the year ended December 31, 2012 was $16,560.

IAC leases office space at 2060 East Exchange Place, Suite 140-160, Tucker, Georgia for a starting monthly
rent of $2,801. The lease expires on November 30, 2016. The lease expense for the year ended December 31,
2012 was $28,514.

IAC leases office space at 5555 West Loop South, Suite 308, Bellaire, Texas for a monthly rent of $1,866.
The lease expires on December 31, 2014. The lease expense for the year ended December 31, 2012 was
$22,397.

IAC leases two copier/printers from The Swenson Group for a monthly rent of $3,052. The lease expires on
April 30, 2015. The lease expense for the year ended December 31, 2012 was $38,341.

IAC leases other copiers, printers, and postage meters from various vendors. The combined lease expense for
the year ended December 31, 2012 was $42,192.

The following is a schedule, by year, of future minimum lease payments at December 31, 2012:

Year Amount

Minimum lease payments 2013 $ 470,786

Minimum lease payments 2014 422,658
Minimum lease payments 2015 320,255
Minimum lease payments 2016 289,571
Minimum lease payments 2017 263,494
Minimum lease payments Thereafter 1,161,257
$ 2,928,021

5. Subsequent Events
IAC has evaluated all subsequent events through April 26, 2013, the date through which the financial
statements were available to be issued. There were no subsequent events that require recognition or
disclosure in the financial statements.

10