Let’s examine some of the primary categories in the Assets section of this Statement of Financial Position and provide explanations and insights along the way. We’ll begin with the Current assets, which are cash, cash equivalents or assets theo- retically expected to be converted into cash within the com- ing 12 months. Of course, the pandemic caused some strange timing occurrences. Cash is primarily comprised of money in ALOA’s various bank accounts, none of which are in the Cayman Islands, Isle of Man or other tax havens. This also includes the $165,200 Payroll Protection Program loan proceeds, which appears in the liability section of this statement. Our Year-Over- Year (YOY) cash position remained strong because of robust membership dues collection, the PPP loan and cost mitigation. As a reminder, our cash position is relatively strong at year end because we typically have collected a large inflow of dues in November and December of the current year (which are actually prepayments for the following year). But we need to live off this pile of cash for the following 10 months until the next annual dues billing cycle. We also had collected a large chunk of cash associated with prepayments of booth fees for the SAFETECH and ALOA conventions. Most exhibitors largely rolled over these fees to the following year when we were forced to withdraw from these events. Accounts Receivable (A/R) is money that others owe to ALOA and is comprised primarily of amounts invoiced by ALOA (for membership dues, events, store stuff, etc.) but not yet paid. You’ll notice in this YOY category comparison that the A/R amount is drastically reduced because we were not in- voicing as we would under normal circumstances. Inventory includes everything from office supplies, educa- tional class materials, books and products (such as logo cloth- ing) sold through the ALOA store. Starting in March 2020, purchases were minimized, and we generally did not replenish them except when essential. Due from Affiliate represents reimbursable monies that ALOA has temporarily advanced on behalf of the ALOA Scholarship Foundation (ASF). ALOA performs limited pri- marily bookkeeping services on behalf of ASF, which does not maintain its own staff. ALOA charges a small annual fee for such services. Prepaid Expenses represent instances where ALOA is re- quired to pay (usually partially) for something in advance. An example would be a deposit of some kind that is con- tractually obligated as part of an event agreement and/or related activities scheduled for a future date. This can also include yearly insurance policies, often paid in advance to WWW.ALOA.ORG avail of discounts. Such expenses are ultimately allocated and proportionately charged to the appropriate expense category monthly. Total current assets are the sum of all current assets, and this category decreased about 11% YOY. Fortunately, for reasons already explained, the cash component actually grew and re- mains, by far, the largest portion of the current assets category. This bodes well for ALOA’s liquidity. Property and Equipment We’ve explained the upper Current Assets section, so let’s visit the lower half of the Assets portion of the Statement of Financial Position, where we’ll find the Property and Equipment section of Assets. Property and equipment: Land Building and improvements Furniture and equipment Less accumulated depreciation Property and equipment, net Total assets 97,500 885,955 240,622 _________ 1,224,077 (636,198) _________ 587,879 _________ 2,048,157 97,500 894,160 262,445 _________ 1,254,105 (621,265) _________ 632,840 _________ 2,277,282 Land means just what it says; when a property is purchased, the land portion of the purchase is listed separately on the Statement of Financial Position at original acquisition cost of the land portion. This practice is consistent with how land would be handled on a for-profit company’s balance sheet. Notice that the YOY number is unchanged and does not even attempt to reflect the dynamic current market value of this land. You can imagine the chaos that would ensue if com- panies were required to annually update this asset’s value at market price. Building and Improvements is where we park the origi- nal acquisition cost of the building portion of the property, since land is a separate category. As time goes on, small re- pairs and improvements are expensed, but major improve- ments to the building are capitalized. Any such capitaliza- tion increases the “book” value of the building. That’s why this category’s description is Building and Improvements. For instance, let’s say that the owner replaces the worn-out roof with a new one that has a 20-year expected useful life. OCTOBER 2021 KEYNOTES 13
