MARIAN HOMES, INC.

FINANCIAL STATEMENTS
WITH
INDEPENDENT AUDITORS REPORT
For the Years Ended
December 31, 2013 and 2012

MARIAN HOMES, INC.

FINANCIAL STATEMENTS
Table of Contents
Page
Independent Auditors Report............................................................................................................ 1
Financial Statements:
Statements of Financial Position ................................................................................................ 3
Statements of Activities ............................................................................................................... 4
Statements of Functional Expenses ............................................................................................ 5
Statements of Cash Flows ........................................................................................................... 6
Notes to Financial Statements ........................................................................................................ 7-14

INDEPENDENT AUDITORS REPORT

To the Board of Directors

Marian Homes, Inc.
Fairfax, Virginia
We have audited the accompanying financial statements of Marian Homes, Inc. a nonprofit
organization, which comprise the statements of financial position as of December 31, 2013 and 2012,
and the related statements of activities, functional expenses, and cash flows for the years then ended,
and the related notes to the financial statements.
Managements 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 controls relevant to the preparation
and fair presentation of financial statements that are free from material misstatement, whether due to
fraud or error.
Auditors 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 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 auditors 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 entitys
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.

Marian Homes, Inc.

Independent Auditors Report
Page 2
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the
financial position of Marian Homes, Inc. as of December 31, 2013 and 2012, and the changes in its
net assets and its cash flows for the years then ended in accordance with accounting principles
generally accepted in the United States of America.

DeLeon & Stang

DeLeon & Stang, CPAs
Gaithersburg, Maryland
April 8, 2014

MARIAN HOMES INC.

Statements of Financial Position
December 31, 2013 and 2012
ASSETS
2013
Assets:
Cash
Investments
Prepaid expenses and deposits
Property and equipment, at cost, net of
accumulated depreciation
Land
Total assets

31,075
138,776
5,109

2012
$

451,949
259,700
$

886,609

47,431
42,363
464,675
259,700

814,169

LIABILITIES AND NET ASSETS

Liabilities:
Deferred revenues
Notes payable, net of note discounts

4,786
315,456

352,466

Total liabilities

320,242

352,466

Net assets:
Unrestricted
Temporarily restricted

566,067
300

461,703
-

Total net assets

566,367

461,703

Total liabilities and net assets

886,609

See Accompanying Notes to the Financial Statements

Page 3

814,169

MARIAN HOMES INC.

Statements of Activities
For the Years Ended December 31, 2013 and 2012
2013

2012

Unrestricted Net Assets

Revenue and Support:
Contributions
Rental income
Investment income
Fundraising
Discount on notes payable
In-kind services
Total unrestricted revenue and support

71,041
45,600
24,524
13,832
-

51,482
35,750
3,758
20,122
55,047
3,625

154,997

169,784

36,460

45,455

11,542
2,631

10,798
2,178

50,633

58,431

104,364

111,353

300

300

Change in net assets

104,664

111,353

Net assets, beginning of year

461,703

350,350

Expenses:
Program services
Supporting services:
General and administrative
Fundraising
Total expenses
Change in unrestricted net assets
Temporarily Restricted Net Assets
Contributions and grants
Change in temporarily restricted net assets

Net assets, end of year

566,367

See Accompanying Notes to the Financial Statements

Page 4

461,703

MARIAN HOMES INC.

Statements of Functional Expenses
For the Years Ended December 31, 2013 and 2012
2013

Depreciation
Mortgage interest
Professional fees
Real estate taxes
Repairs and maintenance
Other
Insurance
Printing and copying
Postate and mailing
Supplies
Telephone
Registration fees
Total Expenses

Program Services
Marian
Regina
Total
House
House
Programs
$
6,862
$
8,470
$ 15,332
8,200
5,290
13,490
5,318
5,318
446
297
743
789
788
1,577
$
16,297
$
20,163
$ 36,460

Depreciation
Mortgage interest
Professional fees
Real estate taxes
Repairs and maintenance
Other
Insurance
Printing and copying
Postate and mailing
Registration fees
Total Expenses

Program Services
Marian
Regina
Total
House
House
Programs
$
5,308
$
8,086
$ 13,394
8,106
8,751
16,857
1,813
1,988
3,801
556
5,362
5,918
200
1,495
1,695
56
56
1,805
1,929
3,734
$
17,788
$
27,667
$ 45,455

Supporting Services
General and
Administrative
Fundraising
$
269
$
7,965
397
2,238
1,401
458
393
665
292
70
25
$
11,542
$
2,631
2012
Supporting Services
General and
Administrative
Fundraising
$
268
$
7,000
106
2,178
2,772
600
27
25
$
10,798
$
2,178

See Accompanying Notes to the Financial Statements

Page 5

MARIAN HOMES INC.

Statements of Cash Flows
For the Years Ended December 31, 2013 and 2012
Cash Flows From Operating Activities:
Change in unrestricted net assets
Adjustments to reconcile change in net assets
to net cash provided by operating activities:

2013
$

Discount on mortgage notes payable

Amortization of discount on notes payable
Depreciation expense
Net realized and unrealized gain on investments
(Increase) decrease in prepaid expenses and deposits
Decrease in accounts payable
Increase in deferred revenues
Net cash provided by operating activities

2012

104,664

111,353

13,490
15,601
(19,154)
(5,109)
4,786

(55,047)
12,408
13,662
(860)
2,267
(39,198)
-

114,278

44,585

(77,259)
(2,875)

7,618
(21,650)

(80,134)

(14,032)

(50,500)
-

(367,815)
323,750

(50,500)

(44,065)

(16,356)

(13,512)

47,431

60,943

Cash Flows From Investing Activities:

(Purchases) sales of investments
Purchases of property and equipment
Net cash used in investing activities
Cash Flows From Financing Activities:
Principal payments on mortgage notes payable
Proceeds from borrowings on notes payable
Net cash used in financing activities
Net decrease in cash
Cash at beginning of year
Cash at end of year

31,075

47,431

Supplemental Information
Cash paid for mortgage interest

4,451

See Accompanying Notes to the Financial Statements

Page 6

MARIAN HOMES, INC.

Notes to Financial Statements
December 31, 2013 and 2012

NOTE 1 -

ORGANIZATION
Marian Homes, Inc. is a non-profit organization incorporated on February 22, 1996
under the State Code of the Commonwealth of Virginia. The purpose of the entity is to
provide housing to the mentally disadvantaged and assist them in becoming productive
members of the community.

NOTE 2 -

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting
The accompanying financial statements have been prepared on the accrual basis of
accounting. Accordingly, revenue and related assets are recognized when earned and
expenses and related liabilities are recognized when the obligations are incurred.
Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities and
the disclosure of contingent assets and liabilities at the date of the financial statements,
and the reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Basis of Presentation
The accounts are maintained in accordance with the principles of net asset accounting,
whereby resources are classified into net asset classes established according to the
nature and, purpose restrictions placed by donors on the use of such resources.
Accordingly, all financial transactions have been recorded and reported by net asset
classes as follows:

Unrestricted net assets - Net assets not subject to donor-imposed stipulations.

Temporarily restricted net assets - Net assets subject to donor-imposed

stipulations that may or will be met by actions of Marian Homes Inc. and/or
the passage of time.

Permanently restricted net assets - Net assets subject to donor-imposed

stipulations that they be maintained in perpetuity by Marian Homes, Inc.

Donor imposed temporarily restricted net assets at December 31, 2013 and 2012 were
$300 and $0. There were no Permanently restricted net assets at December 31, 2013
and 2012.
Page 7

MARIAN HOMES, INC.

Notes to Financial Statements (continued)
December 31, 2013 and 2012
NOTE 2 -

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Investments
Investments in marketable securities with readily determinable fair values are classified
as available-for-sale investments and are reported at their fair values in the statements
of financial position. Unrealized gains and losses are included in the statements of
activities with realized gains or losses. Realized gains or losses from the sale of
marketable securities have been determined on the specific identification method.
Certificates of deposit investments are recorded at cost, which approximates fair
value.
Property and Equipment
Property and equipment purchased with a cost basis greater than $2,000 are
capitalized at cost when acquired and depreciated.
Property and Land:
5028 Prestwick Drive and addition

13119 Pebble Lane and renovation

Computer equipment
Less: accumulated depreciation
Total property and equipment, net
5028 Prestwick Drive Land
13119 Pebble Lane Land
Total land

2013
230,975

2012
336,675

344,484
575,459
1,343
576,802

495,609
832,284
1,343
833,627

(124,853)

(109,252)

451,949

724,375

105,700
154,000
259,700

105,700
154,000
259,700

Depreciation expense for the years ended December 31, 2013 and 2012 was $15,601
and $13,662, respectively.

Page 8

MARIAN HOMES, INC.

Notes to Financial Statements (continued)
December 31, 2013 and 2012
NOTE 2 -

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Revenue and Support
Contributions are recorded at fair value as revenue when promises to give are
received. Donor-restricted contributions whose restrictions are met in the same
reporting period are reported as unrestricted revenue.
Rental Income
Rental income is recognized when received in the period in which the payments
relate. Rental payments received in advance are recorded as deferred rental income,
and recognized in the period to which the payments relate.
In-Kind Contributions
Contributions of services are recognized in the financial statements if the services
require specialized skills and are provided by individuals possessing those skills, and
would typically need to be purchased if not provided by donation. Otherwise,
volunteer services are not recorded in the financial statements as these contributions
do not meet the requirements to be recorded as revenue and expense.
Expense Allocation
The costs of providing various programs and other activities have been summarized
on a functional basis in the Statements of Activities and in the Statements of
Functional Expenses. Accordingly, certain costs have been allocated among the
programs and supporting services benefited.
Income Taxes
Marian Homes, Inc. is a tax-exempt organization under Section 501(c)(3) of the
Internal Revenue Code (IRC). No provision for income taxes has been established, as
Marian Homes Inc. has no unrelated business activity, as debt-financed rental income
is exempt when used for exempt purposes.
Marian Homes Inc. has determined that there are no uncertain tax positions which
require accrual or disclosure under Accounting Standards Codification 740-10.
Federal and state tax returns may be subject to audit for three years after filing, hence
Marian Homes Inc.s tax returns for 2010 onward are open to tax examination.

Page 9

MARIAN HOMES, INC.

Notes to Financial Statements (continued)
December 31, 2013 and 2012
NOTE 2 -

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Functional Allocation of Expenses
The costs of providing Marian Homes, Inc.s programs are summarized on a
functional basis on the statements of activity and their details are reported in the
statements of functional expenses.
Reclassification
Certain reclassifications have been made to the 2012 financial statements to enhance
comparability with 2013.
Subsequent Events
Management has evaluated subsequent events for potential recognition and disclosure
through April 8, 2014, the date the financial statements were available for issuance.

NOTE 3 -

INVESTMENTS
The cost and fair values of investments at December 31, 2013 and 2012 are as
follows:
2013
Mutual Funds:
ICMAX
JATTX
UMBMX
VILLX

As of
01/01/2013
$ 12,685
12,837
16,791
-

Purchases
$ 15,600
22,000
29,000
35,274

Reinvested
Earnings
$
305
1,590
3,013
705

Sale
$ (29,874)
-

Realized
Gain
$ 1,284
-

Unrealized
Gain
$
7,473
8,700
1,392

Total

$ 101,874

$ (29,874)

$ 1,284

As of
01/01/2012

Purchases

Reinvested
Earnings

Realized
Gain

Unrealized
Gain

$
$

$
$

$
$

$
$

$
$

42,313

5,613

17,565

Fair
Value
$

43,900
57,504
37,371

$ 138,775

2012

Mutual Funds:
Total

40,000
40,000

1,910
1,910

Sale
$
$

403
403

All investments as of December 31, 2013 and 2012 are deemed Level 1 investments.

Page 10

Fair
Value
$ 42,313
$ 42,313

MARIAN HOMES, INC.

Notes to Financial Statements (continued)
December 31, 2013 and 2012
NOTE 3 -

INVESTMENTS (Continued)
The Financial Accounting Standards Board Accounting Standards Codification Topic
820 establish a framework for measuring fair value. That framework provides a fair
value hierarchy that prioritizes the inputs to valuation techniques used to measure fair
value. The hierarchy gives the highest priority to unadjusted quoted prices in active
markets for identical assets or liabilities (Level 1 measurements) and the lowest
priority to unobservable inputs (Level 3 measurements).
The fair values of mutual fund investments are determined by utilizing quoted market
prices in active markets (Level 1) for identical securities because quoted prices are
readily available.

NOTE 4 -

NOTES PAYABLE
On October 31, 2008, Marian Homes Inc. entered into an agreement with KOVAR
Corporation for a mortgage note in the amount of $155,000. The note is
collateralized by the 5028 Prestwick Drive property. The note matures on September
30, 2018, is non-interest bearing, and is repayable in 120 equal monthly payments of
approximately $1,292. The note payable is included in the statements of financial
position at discounted values of $64,968 and $76,236 at December 31, 2013 and
2012, respectively, which represents a present value at rate of 5.95% of the remaining
monthly payments. Interest expense imputed on the note was $4,232 and $4,881 for
the years ended December 31, 2013 and 2012, respectively.
On March 15, 2012, Marian Homes Inc. entered into an agreement with KOVAR
Corporation for a second mortgage note in the amount of $150,000. The note is
collateralized by the 5028 Prestwick Drive property. The note matures on March 15,
2022, is non-interest bearing, and is repayable in 120 equal monthly payments of
approximately $1,250. The note payable is included in the statements of financial
position at a discounted values of $107,352 and $118,385 at December 31, 2013 and
2012, respectively, which represents the present value at a rate of 3.5% of the
remaining monthly payments. Interest expense imputed on the note was $3,968 and
$3,227 for the years ended December 31, 2013 and 2012, respectively.
On March 15, 2012, Marian Homes Inc. entered into an agreement with KOVAR
Corporation for a mortgage note in the amount of $200,000. The note is
collateralized by the 13119 Pebble Lane property. The note matures on March 15,
2022, is non-interest bearing, and is repayable in 120 equal monthly payments of
approximately $1,267. The note payable is included in the statements of financial
position at discounted values of $143,136 and $157,845 at December 31, 2013 and
2012, respectively, which represents the present value at a rate of 3.5% of the
remaining monthly payments. Interest expense imputed on the note was $5,290 and
$4,300 for the year ended December 31, 2013 and 2012, respectively.
Page 11

MARIAN HOMES, INC.

Notes to Financial Statements (continued)
December 31, 2013 and 2012
NOTE 4 - NOTES PAYABLE (continued)
On March 23, 2010 Marian Homes Inc. entered into an agreement with Chimes
Foundation, Incorporated for a note payable of $370,000. The note was collateralized
by the 13119 Pebble Lane property. The note was due to mature on March 31, 2030 and
carried a six percent interest rate, and was repayable in 240 equal monthly payments of
approximately $2,650. This note was repaid in March of 2012 through the proceeds of
the two mortgages obtained from KOVAR Corporation. Interest expense related to this
note was $4,451 for the year ended December 31, 2012.
Future minimum payments as of December 31, 2013 are as follows:

Year Ended December 31,

2014
2015
2016
2017
Thereafter

First Mortgage
5028 Prestwick
Drive Property
$
15,500
15,500
15,500
15,500
12,917

Second Mortgage
5028 Prestwick
Drive Property
$
15,000
15,000
15,000
15,000
63,750

13119 Pebble
Lane Property
$
20,000
20,000
20,000
20,000
85,000

74,917

123,750

165,000

Total
50,500
50,500
50,500
50,500
161,667

363,667

Amortization expense related to the discount of the above notes was $13,490 and
$12,408 as of December 31 2013 and 2012, respectively, and is anticipated to be
$48,211 in the aggregate for the years ended December 31, 2014 through 2022 as
follows:

Year Ended December 31,

2014
2015
2016
2017
Thereafter
Total

First Mortgage
5028 Prestwick
Drive Property
$
3,543
2,812
2,036
1,213
345

Second Mortgage
5028 Prestwick
Drive Property
$
3,575
3,169
2,748
2,312
4,594

13119 Pebble
Lane Property
$
4,767
4,225
3,664
3,083
6,125

Interest
Expense
$
11,885
10,206
8,448
6,608
11,064

9,949

Page 12

16,398

21,864

48,211

MARIAN HOMES, INC.

Notes to Financial Statements (continued)
December 31, 2013 and 2012
NOTE 5-

VIRGINIA PROPERTY ASSESSMENT VALUES

The assessed values of the properties owned by Marian Homes, Inc. per the Virginia
State Department of Assessments for 2013, are as follows:
Property:
5028 Prestwick Drive-Building
5028 Prestwick Drive-Land
13119 Pebble Lane-Building
13119 Pebble Lane-Land
Total

NOTE 6-

2013
$ 225,350
347,000
285,870
174,000
$ 1,032,220

2012
$ 200,020
340,000
250,420
169,000
$ 959,440

IN-KIND CONTRIBUTIONS
During the year ended December 31, 2012, Marian Homes, Inc. received in-kind legal
services valued at $3,625 related to closing costs associated with mortgages outlined in
Note 4. There were no in-kind services rendered in 2013.

NOTE 7-

RENTAL INCOME
Marian Homes, Inc. maintains two operating leases with Chimes of Virginia, Inc. a
Virginia non-profit corporation.
The first lease, which permits the occupancy of 5028 Prestwick Drive, provides for a
twenty-one year term, which commenced August 14th, 1998. The original lease was
amended on June 1, 2010, to provide a monthly rental payment of $1,350. The lease
was renegotiated in April 2013, and currently provides monthly lease payments of
$2,150, with a new 15-year term.
The second lease, which permits the occupancy of 13119 Pebble Lane, provides for a
5-year term, which commenced March 23, 2010. The lease requires $1,850 monthly
rental payments provided the Organization maintains full occupancy of the premises.
Per the lease agreement, full occupancy is defined as five occupants with disabilities.
If the property does not maintain full occupancy, the monthly rental payment is reduced
on a pro-rata basis. Chimes Corporation shall have three successive options to renew
this lease for a further term of five years.

Page 13

MARIAN HOMES, INC.

Notes to Financial Statements (continued)
December 31, 2013 and 2012
NOTE 7-

RENTAL INCOME (Continued)

Five year future anticipated lease receipts as of December 31, 2013 are as follows:

Year Ended December 31,

2014
2015
2016
2017
2018

NOTE 8-

5028 Prestwick
Drive Property
$
25,800
25,800
25,800
25,800
25,800
$
129,000

13119 Pebble
Lane Property
$
22,200
5,550
$
27,750

CONCENTRATIONS
The Organization received approximately 29% and 21% of its total revenue from
Chimes Corporation as of December 31, 2013 and 2012. Chimes Corporation is the
sole lessee of the Prestwick Drive and Pebble Lane properties, and its rental payments
are recognized as rental income on the statement of activities.
Investment income was approximately 16% of the Marian Homes, Inc.s total revenue
for the year ended December 31, 2013.
The Organization received approximately 12% of its unrestricted contributions from
donations through CFC for the year ended December 31, 2013.

Page 14