Neads Inc.

“Neads' endowment consists of donor restricted funds established for a variety of purposes. As required by generally accepted accounting principles, net assets associated with endowment funds are classified and reported based on the existence or absence of donor-imposed or legal restrictions. The board of directors has interpreted state law as allowing the utilization of appreciation on permanently restricted assets unless explicit donor stipulations specify how net appreciation must be used. As a result of this interpretation, neads classifies as permanently restricted net assets (a) the original value of gifts donated to the permanent endowment, (b) the original value of subsequent gifts to the permanent endowment, and (c) accumulations to the permanent endowment made in accordance with the direction of the applicable donor gift instrument at the time the accumulation is added to the fund. The remaining portion of the donor-restricted endowment fund that is not classified in permanently restricted net assets is classified as temporarily restricted net assets until those amounts are appropriated for expenditure by neads in a manner consistent with the standard of prudence prescribed by state law. In accordance with the uniform prudent management of institutional funds act, neads may consider the following factors in making a determination to appropriate or accumulate donor-restricted endowment funds: the duration and preservation of the fund; the purposes of the ogranization and the donor-restricted endowment fund; general economic conditions; the possible effect of inflation and deflation; the expected total return from income and the appreciation of investments; other resources of the organization; and the investment policies of the organization. Neads has adopted investment and spending policies for its endowment assets that attempt to provide a predictable stream of funding for its programs while seeking to maintain the purchasing power of the endowment assets. Under this policy, as approved by the board, neads' investment committee shall seek to invest the endowment funds in such a manner that the investments will provide a spendable return consistent with a long-term goal of preserving the funds in real terms. Actual returns in any given year may vary from this amount. To satisfy its long-term rate-of-return objectives, neads relies on a total return strategy in which investment returns are achieved through both capital appreciation (realized and unrealized) and current yield (interest and dividend). Neads has invested in mutual funds that target a diversified asset allocation that places a greater emphasis on equity-based investments to achieve its long-term return objecteives within prudent risk constraints. Neads has a policy of appropriating for distribution each quarter actual income plus realized and unrealized gains. In establishing this policy, neads considered the long-term expected return on its endowment. This is consistent with neads objective to maintain the purchasing power of its endowment. From time to time, the fair value of assets associated with individual donor-restricted endowment funds may fall below the level that the donor imposed restrictions require neads to retain as a fund of perpetual duration. In accordance with generally accepted accounting principles, deficiencies of this nature are reported in unrestricted net assets. Such deficiencies amounted to $533,075 as of august 31, 2016.”

“Management annually reviews for uncertain tax positions along with any related interest and penalties and believes that neads has no uncertain tax positions that would have a material adverse effect, individually or in the aggregate upon neads statements of financial position, or the related statements of activities, or cash flows.”

“Special events direct expenses 16,071.”

“Special events direct expenses 16,071. Bad debt expense 3,000.”