ENERGIZED FOR STEM ACADEMY, INC. ANNUAL FINANCIAL, AND COMPLIANCE REPORT FOR THE FISCAL YEAR ENDED JULY 31, 2015 GEORGE EDWARD GRIGSBY, CPA ‘STAFFORD, TEXASENERGIZED FOR STEM ACADEMY, INC. TABLE OF CONTENTS: REPORT NAME Certificate of the Board Independent Auditor's Report General-Purpose Financial Statements ‘Statement of Financial Position Statement of Activities Statement of Cash Flows Notes to the Financial Statements Notes to the Financial Statements ‘Supplementary Data Schedule of Expenses for Campus #321 Schedule of Expenses for Campus #390 Schedule of Expenses for Campus #455 Schedule of Expenses for Campus #459 ‘Statement of Capital Assets for Campus #321 Statement of Capital Assets for Campus #390 ‘Statement of Capital Assets for Campus#455 Statement of Capital Assets for Campus #459 Budgetary Comparison Schedule Campus #321 Budgetary Comparison Schedule Campus #360 Budgetary Comparison Schedule Campus #455 Budgetary Comparison Schedule Campus #459 ‘Compliance and Internal Control Report on intemal Control over Financial Reporting and on ‘Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Govemment Auditing Standards ‘Schedule of Findings and Questioned Costs PAGE 13 4 15 16 47 18 19 20 21 24 25 27CERTIFICATE OF THE BOARD Name of Charter Holder: Energized for STEM Academy, Inc. Name of School: Energized for STEM Academy, Inc. HISD Campus Numbers: 321, 390, 455, and 459 We, the undersigned, certify that the attached Annual Financial and Compliance Report of Energized for STEM ACADEMY, Inc. was reviewed and x Approved Disapproved for the year ended July 31, 2015 at a meeting of the governing body of said Charter Holder on theX day oX » 2017, x x Signature of Board Secretary Signature of Board PresidentGEORGE EDWARD GRIGSBY, CPA 0, Box 1924 STAFFORD, TX m7 ‘Phoine: (281) 879-4442 Fas: (281) 979-443, Independent Auditor's Report ‘The Board of Directors Energized for STEM Academy, Inc. Report on the Financial Statements | have audited the accompanying financial statements of Energized for STEM Academy, Inc. (ESTEM) (a nonprofit organization), which comprise the statement of financial Position as of July 31, 2015, and the related statements of activities, functional ‘expenses, and cash flows for the year then ended, and the related notes to the financial statements. ‘Management's Responsibility for the Financial Statements Management is responsible for the preperation and fair presentation of these financial statements in accordance with accounting principles generally acoapted 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 My responsibilty is to express an opinion on these financial statements based on my audit. | conducted my audit in accordance with auciting standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that | 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, | 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. 1| believe that the audit evidence | have obtained is sufficient and appropriate to provide a basis for my audit opinion. Opinion In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of ESTEM as of July 31, 2016 and the changes in its net assets and its cash flows for the year then ended’ in accordance with accounting principles generally accepted in the United States of America, Other Matters Other Information My eudit was conducted for the purpose of forming an opinion on the financial statements as a whole, The accompanying Supplementary Schedules are presented for purposes of additional analysis as required by the Texas Education Agency and are not a required part of the financial statements. Such information is the responsibilty of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and ceriain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally acoepted in the United States of America. In ray opinion, the information is faitly stated, in all material respects, in relation to the: financial statements as a whole. Other Reporting Required by Government Auditing Standards 'n accordance with Govemment Auditing Standards, | have also issued my report dated February1.2016, on my consideration of ESTEM's intemal control over financial reporting and on my tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of my testing of intemal control over financial reporting and compliance and the results of that testing, and nat to provide an opinion on internal onirol over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Goverment Auditing Standards in considering ESTEM's intemal control over financial reporting and compliance. dhe ge Ect get Cet George Edward Grigsby CPA Stafford, Texas February 1, 2016GENERAL-PURPOSE FINANCIAL STATEMENTSEnergized for STEM Academy, inc. ‘Statement of Financial Position July 34, 2015 Assets Current Assets. Cash and Cash Equivalents $ 956,545, Dus From Affiliates 713,778 ‘Accounts Receivable 325,608 Total Current Assets 7,996,221 Property and Equipment (Net) 446,020, Total Assets. Zao, 241 Current Liabiitios Deferred Revenues 1,715,969 ‘Accounts Payable ‘318,862 Accrued Liabifties 189,625 Due To Affiliates 76,185 Due to Management 128,533 ‘Total Current Liabilities 349,376 Net Assets Unrestricted Deficit (641,212) ‘Temporarily Restricted 654,079 Total Net Assets 2.8857 Total Liabilities and Net Assots $2,442,241 See the accompanying notes to the financial statements. 3Energized for STEM Academy, Inc. ‘Statement of Activities For the Year Ended July 31, 2015 Temporarily Unrestricted Restricted Total Revenues and Other Support: aa ro Eee ee ‘Local Suppor 5740 _ Other Revenue from Local Sources S 164891 $ 144782 § 300,673 State Program Revenues: 5812 Foundation School Program + 4597512 4597,512 5820 Other State Grants & Fees = 215.384 215361 Total State Program Revenues 164881 4,957,655 122,546 Federal Program Revenues: oe i 5920 Title |, Part A, Regular Grant - 209,715 209,715 5920 Title Il, LEP Grant : 5,505 5,565 Total Federal Program Revenues = 215,280 275,280 Total Revenues Teaeot 6,172,935 3,537,826 Net Assets Released from Restrictions: Restrictions Satisfied by Payments 4,017,734 (4,017,734) ~ Total Revenues & Other Support 4,182,625 1,155,201 SSaT EE Expenses: 11 Instruction 2,912,422 - 2,912,422 13. Curriculum Dev, And Instructional Staff Dev. - - - 23 School Leadership 399,743 y 399,743, 30 Support Services - Students 74,242 - 74.203 33. Health Services - - - 34 Student (Pupil) Transportation 25,285 - 25265 35 Food Services - - - 86 Cocurricular/Exracurricular Activities 39.847 - 99,647 41 General Administration 90,420 - 90,420 51. Facilties Maintenance and Operations 986,261 - 986,261 52 Security & Monitoring Services 29,734 - 89,734 Total Expenses Change in Net Assots Net Deficit at Beginning of Year Net AssetsiDeficit at End of Year ENIEAE = a017.734 164,891 1,188, 7,320,092 184.691 1165201 1,320,092 (177,031) (1,190,t04)_ (1,307,226) S (12,140) $25,007 § 12,867 ‘See the accompanying notes to the financial statements. 4Energized for STEM Academy, inc. Statement of Cash Flows For the Year Ended July 31, 2018 Cash Flows from Operating Activities: Local Foundation School Program Payments Grant Payments Payments to Vendors for Goods and Services Rendered Payrnenis to Charter School Personnel for Services Rendered Interest Payments ‘Net Cash Provided by Operating Activities Gash Flows from investing Activities: Purchase of Land and Building Purchase of Equipment Net Cash Provided by Investing Activities Cash Flows from Financing Activities Issuance of Long-Term Debt Principal Payments on Long-Term Debt Net Cash Provided by Financing Activities Net Increase(decrease) in Cash Cash at Beginning of Year Cash at Ending of Year Reconeiliation of Change in Net Assets to Not Cash Provided by Operating Activities: Change in Net Assets Adjustments to Reconcile Change in Net Assets to Net Cash Provided by Operating Activities: Depreciation (increase) Decrease in Assets: Accounts Receivable Increase (Decreass)‘in Liabilities: ‘Accounts Payable Aconued Liabilities Net Cash Provided by Operating Activities, Interest Expense S 164,301 1,820,092 157,140 (647,893) 224,493, 90,397 See the accompanying notes to the financial statements. 5NOTES TO THE FINANCIAL STATEMENTS() Energized for STEM Academy, Inc. Notes to the Financial Statements July 34, 2015 ‘Summary of Significant Accounting Policies ‘The general-purpose financial statements of ESTEM Charter Holder (the corporation) were prepared in conformity with accounting principles generally accepted in the United States. The Financial Accounting Standards Board is the accepted standard setting body for establishing non-for-profit accounting and financial reporting principles. Corporate Operations Energized for STEM Academy, Inc. (ESTEM) started operations in July 2008 and was registered as a Texas Corporation May 22, 2008. ESTEM operates as a charter school through the Houston Independent School District (HISD) and is funded through an annual agreement with HISD. ESTEM is recognized as an exempt organization for federal income taxes under section 604 (c) (3) of the Internal Revenue Code, effective July 14, 2008. ESTEM operated 4 Altemative Education Campuses (AEC) and was funded through HISD contracts identified as ESTEM Central and ESTEM West. Reporting Entity The corporation is a not-for-profit organization incorporated in the State of ‘Texas in 2008 and exempt from federal income taxes pursuant to Section 5011(c)(3) of the Internal Revenue Code. The corporation is governed by a Board of Directors comprised of three members. The Board of Directors is selected pursuant fo the bylaws of the corporation and has the authority to make decisions, appoint the chief executive office of the corporation, and significantly influence operations. The Board of Directors has the primary accountability for the fiscal affairs of the corporation. Since the corporation received funding from local, state, and federal government sources, it must comply with the requirements of the entities providing those funds. ESTEM Central and ESTEM West The purpose of the Energized for Science, Technology, Engineering, and Mathematics Academy (ESTEM Central and ESTEM West) is to increase student achievement in Houston Independent Schoo! District by engaging and exposing students to innovative science and math instruction. 6Basis of Presentation ESTEMs financial statements have been prepared in conformity with generally accepted accounting principles as applied to non-profit ‘organizations in conjunction with the Texas Education Agency's Financial Accountability System Resource Guide. Use of Estimates The accompanying financial statements have been prepared using the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America. Accordingly, management made certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts as revenues and expenses during the reporting period. Actual results could differ from those estimates. Net Assets Net assets and revenues, expenses, gains and losses are classified based on the existence and nature or absence of donor-imposed restrictions. Restricted revenues whose restrictions are met in the same year as received are shown as unrestricted revenues. Accordingly, net assets of the organization and changes therein are classified and reported as follows; Unrestricted net assets — net assets that are not subject to donor imposed stipulations. Temporarily restricted — net assets subject to donor-imposed stipulations that may or will be met, either by actions of the corporation, the charter school and/or the passage of time. When a restriction expires, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restrictions. Permanently restricted net_assets — net assets required to be maintained in perpetuity with only the income to be used for the School's activities due to donor-imposed restrictions.Cash and Cash Equivalents For purposes of the statement of cash flows, the School considers all highly liquid investment instruments purchased with original maturities of three months or less to be cash equivalents. Property, Equipment, and Depreciation Property and equipment are stated at cost. Depreciation and amortization of property and equipment with a value of $6,000 or more are calculated using the straightine method over the estimated useful lives of the net assets, which range from three to twenty years. Donations of property and equipment are recorded at fair value at the date of donation. HISD agrees to provide (a) district adopted state textbooks at no cost; and (b) student desk and other appropriate furnishings as currently available at no cost. All file to HISD furnished supplies, equipment, furniture, materials and/or textbooks shall remain the sole property of HISD. Contributions ‘The school records unconditional contributions, including promises to give, as revenue when received. Conditional contributions are recognized as revenue when the conditions on which they depend have been substantially met. Contributions are recorded net of estimates of uncollectible amounts. The School reports gifts of cash and other assets 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 a purpose restriction is accomplished, temporarily restricted net asseis are reclassified to unrestricted net assets and reported in the statements of activities and changes in net assets as net assets released from restrictions. Gifts of properly and equipment are reported as unrestricted support unless explicit donor stipulations specify how the donated assets must be used@ Revenues Revenues from HISD are a flow-through from the State of Texas. Schoo! funds are eamned (a) based on reported attendance and (b) project-by- project approved reimbursable expenses. Revenues for (a) are recognized as eared and billed based on the monthly Average Daily Attendance (ADA). The billing rates per enrolled student are stipulated in the agreement. HISD's support per student (ADA billing) Is per school year, which is estimated at 180 school days. These anticipated allotments are disbursed quarterly, in advance, with the final settlement on or before the end of the school year; and (b) reimbursable expenses are recognized as earned when the related program expenditures are incurred. These reimbursable expenses afe project specific. Consequently, the use of these funds are temporarily restricted and released from restriction as the projects are completed. ‘Should the cumulative attendance rate fall below 96% for either campus, HISD has the option of implementing a revised payment schedule based on the actual cumulative attendance rate. Related Organizations Related organizations are excluded from the financial reporting entity because ESTEM’s accountability does not extend beyond its own actions. Audited financial statements are available from the respective organizations. Related organizations are described as follows: Academy for Accelerated Leaming (AAL), Energized for Excellence ‘Academy (EEA) and Inspired for Excellence Academy (IEA) are charter schools and have been organized by the same individuals. EEA and AAL share board members while IEA and ESTEM have the same board of directors, AAL, EEA and IEA maintain separate books and records, and separate bank accounts, from those of ESTEM. Title to all property owned by AL, EEA and IEA are recorded in their respective names. Educational Learning and Enrichment Center, Inc. (ELEC) is a for-profit organization owned by the School's Founder and Head of Schools.@) 4 ® Related Party Transactions From time to time non-interest bearing advances are made between these related organizations based on cash flow needs. The advances and repayments are approved by the Board but are not subject to any written agreements between the entities, The amount due from EEA and ELEC for operating expense reimbursements was $473,128 and $78,112. Due to Inspired was $76,185 and due to officers is $128,534. There is no independent guarantee of the collectability of the receivable due from the related entities, however based upon prior experience of the related party transactions, payments are being made on the outstanding balance. Management believes the related entity receivables are 100% collectible and therefore no allowance for bad debt has been recorded, EEA donated classroom space for some ESTEM West classes valued at $133,590. The board chairman of EEA (a related entity), served as legal counsel and management consultant for ESTEM. There is a written agreement. The legal counseliconsuliant was paid $34,000. There were no unpaid or outstanding fees at July 31, 2015, Property and Equipment Property and equipment as of July 31, 2015 is as follows: Land Improvements $ 303,909 Building and Improvements 203,432 Furniture and Equipment 439,708 Leasehold Improvement 469,238 Total Property and Equipment 1,416,287 Less: Accumulated Depreciation (970,267) Net Property and Equipment $446,020 Depreciation of property and equipment for the year ended July 31, 2015 ‘was $157,111. Operating Leases In July 2011, ESTEM Central entered a Lease Agreement with HISD (funding agency) for the Grimes School building located at 9220 Jutland Road, for a monthly lease of $14,816. 10@ m (8) @) ‘The lease is for the period July 14, 2011 to July 13, 2016. ESTEM West utilizes space owned by ELEC at 6107 Bissonnet Street at no cost to ESTEM. In-kind rent income of $133,590 is recorded as local revenues. Future minimum lease payments related to operating leases are detailed as follows: Year Ended July 31, Jutland Total 2016 $177,792 “$177,792 Total $477,792 $177,792 Total rental expense for the year ended July 31, 2015 was $177,792. Legal Issues ESTEM had no outstanding legal claims. Commitments and Contingencies ESTEM receives pass-through funds from HISD that are governed by various statues and regulations. State program funding is based primarily on student attendance; data submitted to HISD and is subject to audit and adjustments. The programs administered by ESTEM have complex compliance requirements, and should State or Federal auditors discover areas of noncompliance, charter school funds may be subject to refund. Concentrations of Credit Risk Arising from Cash Deposits in Excess of Insured Limits ESTEM maintains its cash accounts in one financial institution located in Houston. The accounts ate insured by the Federal Deposit Insurance Corporation up to $250,000 each. At July 31, 2015 $616,148 of ESTEM's cash balances were not fully insured. Campus Locations ‘The charter holder operates 2 campuses (Central campus located at 9220 Jutland Street and West campus at 6107 Bissonnet Street) in Houston, Texas. "1(10) Health Care Coverage (11) (12) (13) (14) During the year ended July 31, 2046, eligible employees of the charter school, who elected to participate, were covered by a Health Insurance Plan (the Plan). Employees become eligible upon completion of their probationary period (90 days) and pay $139.69 towards the cost of their health care premiums. Employees may enroll family members and pay the required premiums. Premiums were paid to licensed insurers. Deferred Revenue ESTEM records the quarterly advances of ADA funds received as uneamed income. As income is eamed, it is removed from deferred revenue and recorded in current income. Income Taxes No provision for federal income taxes has been made due to the tax- exempt status of ESTEM under Intemal Revenue Code 501 (c )(3). ESTEM has also been classified as an entity that is not a private foundation within the meaning of Section S09(a) and qualifies for deductible contributions as provided in Section 170(b)(1)(A)(f). ESTEM's Forms 990, Retum of Organization Exempt from Income Tax, for the years ending 2013, 2014 and 2045 are subject to examination by the IRS, generally for three years after they are filed. Management Fee Liability ESTEM computed and recorded a liability of approximately $100,000, the value of unpaid management fees due to the Head of Schools. The liability occurred because ESTEM did not pay a salary to the Head of schools. Subsequent Events The date through which subsequent events have been evaluated is February 1, 2016, which is the date the financial statements were available to be issued. E-stem entered into a new 5 year lease agreement with HISD for the Grimes Schoo! building in September 2015 for $15, 337 per month. 12SUPPLEMENTARY DATAEnergized for STEM Academy, Inc. ‘Schedule of Expenses by Campus Campus #321 For the year ended July 31, 2015 Object Code Expenses 6100 Payroll Costs $ 529,416 6200 Professional and Contracted Servi 233,242 6300 ‘Supplies and Materials 20,592 6400 Other Operating Costs 91,467, Total Expenses See the accompanying notes to the financial statements. 13Energized for STEM Academy, linc. Schedule of Expenses by Campus Campus #390 For the year ended July 34, 2015 QbjectCode Expenses 6100 Payroll Costs $ 691,648 6200 Professional and Contracte 334,252 6300 ‘Supplies and Materials 61,833 6400 Other Operating Costs 83,859 Total Expenses $__ 1,171,592 See the accompanying notes to the financial statements, 14Energized for STEM Academy, linc. ‘Schedule of Expenses by Campus ‘Campus #455 For the year ended July 31, 2015 Object Code _ Expenses 6100 Payroll Costs $675,593 6200 Professional and Contracted Services 385,359 6300 Supplies and Materials 42,997 6400 Other Operating Costs 187,938 Total Expenses (S_4291,685 ‘See the accompanying notes to the financial statements. 15Objoct Cote 6100 6200 6300 6400 Energized for STEM Academy, linc. ‘Schedule of Exponses by Campus Campus #459 For the year ended July 34, 2015 Expenses Payroll Costs Professional and Contracted Services ‘Supplies and Materials Ciher Operating Costs Total Expenses. $ 408,712 196,894 19,986 55,948 S_679.540_ See the accompanying notes to the financial statements. 161510 1520 1539 Energized for STEM Academy, Inc. ‘Schedule of Capital Assets ‘Campus #321 Forthe year ended July 34, 2015 ership Interest Total_Local State Federal Land and improvements € - 5 = 6 eb Cie Buildings and Bulding Equipment : : 2 s Furniture and Equipment 708 - Ta78 - Leasehold improvement Z = 7 Tolal Property and Equipment Sessa Ss 2 Ses ‘See the accompanying notes to the financial statements. 7Energized for STEM Academy, Inc. Schedule of Capital Assets Campus #390 Forthe year ended July 34, 2015 Ownership interest Total Local___‘State 1510 Land Improvements 8 166361 $ - $ 166,361 1520 Buildings and Building Equipment 411,352 - 111,352 1539 Furniture and Equipment 183,924 - 183,924 1520 Leasehold improvements 271,606 = 271,506 ‘Total Property and Equipment SMS SS 3.243 See the accompanying notes to the financial statements. 181610 +1620 1630 120 Energized for STEM Academy, Inc. ‘Schedule of Capital Assets Campus #455 For the year ended July 34, 2015 Ownership Interest Total Local___‘Stato Land Improvements $ 197548 § = - $ 137,548 Buildings and Building Equipment 92,080 - 92,080 Fumiture and Equipment 148,037 - 148,037 Leasehold improvements 188,744 = 168,744 Total Property and Equipment 5 506,409 5“ § 66,400 ee ES ‘See the accompanying notes to the financial statements. 19Energized for STEM Academy, Inc. Schedule of Capital Assets ‘Campus #459 For the year ended July 31, 2015 Ownership Interest Total___Local___State 1510 Land and Improvements $ -S -8 - 1520 Buildings and Building Equipment - a - 1539 Fumiture and Equipment 44,860 - 44,860 1520 Leasehold improvements = - - ‘Total Property and Equipment 5_ Ho Ss - $8 e607 ‘See the accompanying notes to the financial statements. 20Energized for STEM Academy, Inc. ‘Budgetary Comparison Schedule ‘Campus #821 For the year ended July 4, 2015 Verance Budgeted Amounts ‘Actual from Final riginat___—Finat__Amounts__ Budget venues and Other Suopert: Local Support: ‘5740 Other Revenue rom Local Sources S$ 7en00 s__s0.00o $727 aaa) Total Local Support 73,000 20,000___.287, Z State Program Revonues: 5812 Foundation Schoo! Program 00.000 waco wasss | ns 15820 Other State Gran & Fees Distr. by HISD 37.500 3596080770 53,820, Total State Program Revenues 57,500 ——915,960 8030564375, Federal Program Revenues: 5820 Federal Revenues Dstbuted by HISD 17.200 s7s70___35875___18,705 Total Federal Program Revenues "7.200 TAO 35875187 Total Revenues & Other Support 188,700 1.015.120 08 ECE Expenses: “11 Inston 7oss00 85.8602 SIS 25.823 13 Curicatum Development ar lnsructional 7 é : 23. School Leaders zego mason zeae TTB) 30 Support Sonices- Students 53.000 sao00 S895 135 $34 Student Transportation 5000 5000 4512 95) 35 Food Sawices : 7 : 136 Go-CuricularExtracuricula Actes 10,000 10,000 9.240 (760) 41 General Administration 22,800 280 B98 em ‘51 Faclity Plant Maintenance end Operations ‘50,000 ssopoo 21875 B,77S 52 Security & Montorng 25,000 2300 22397 (03) Total Expenses 705400 __7e4,c00___ T4717 ‘Change in Not Assets zar210 728,00 —~78750 (49,080) Not Assets at Baginning of Year s09s01) _@.106.501) 2.709.389) ot Assets at End of Year 511888821) $ (1.878.401) § 2.500868) § (652260 See the accompanying notes to the financial statements. 24Enorgized for STEM Academy, nc. Budgetary Comparison Scheaulo ‘campus #380 For the yoar ended July 4, 2015 Variance Budgetod Amounts ——Actual.-—_from Final Original ___Final___ Amounts ‘Revenues and Other Sumport: Local Support: 5740 Other Revenue tom Local Sources $1800 $7500 $8370 § 38579 Total Local Support 7500 7.500 48.579 38,879 ‘State Program Revenues: 5812 Foundation Schoo Program 1.365000 1.355.000 1,381,880 15.850 5820 Otter StateGrants& Fees Dist. by HISD 31,600 353 were 4155 ‘oat State Program Revenues 71388500 1.400.300 1401 394 7.084 Federal Program Revenues: 15020 Fedetal Revenues Distrbutod by HiSO m0 _7o200___75.570 2m Total Federal Program Revenues 79.200 70200 75,570 5.570 Total Revenues & Other Support 474200 1478,000_ 125.353 45.388 Expenses: 41 Instrveton 85,000 65,900 705.63 40.883 22 Sohool Leader 14350043600 143,674 174 30. Support Servioss- Students 4.500 1.500 1486 « 24 Student Transporation 2800 2500 2082 (650) 35. Foot Services “ : - = 35 Co-CuricularEtracuriula Aeties 3500 are me 41 General Admiitration 20,300 110 51 Faclity Maintenance and Operatons zesi7 — sr6i7 52 Security & Montoing 22078 on, ‘Total Expenses 1,051,000 7,644,600 i,f745e2 127; ‘Change in Nat Ascot 423200 485500 351741 (1.768) Net Assets at Beginning of Ye 04669 05.588 1.131272 ss 5as Not Assets at End of Year S227. $80_ 5 7206,180_§ 1488013 __24aane ‘See the accompanying notes to the financial statements. 22Enorglzed for STEM Academy, ne ‘Budgetary Comparison Schedule ‘Campus #455 For the year ended July 24,2015 Variance Budgeted Amounts ‘Actual from Final or Final Amounts __Bu ‘avenues and Other Support: Local Support: 5740 Other Revenue fom Local Soueas Smo $350 s__ ster $_arsay ‘otal Local Support 83,500 S107 1.823) State Program Revenue 5812 Foundation School Program 2005000 2.006.000 2020880 15,860 15820 OherSate Grants & Fecs Ost. by HISD 138,806 138,505 1az.134 3528, ‘otal State Program Revenues ag.506 2.743.506 2r62.004 70.488 Federal Program Revenues: 15920 Federal Revenues Dstrbued by HISD sues ores ts3.s67 __7at8 Total Federal Program Revenues 1786 81,728 463.557 Total Revenues & Other Support 2682 2316.782 2870.98 Expenses: 31 Inston 7es000 795,000 gases 3,188 24 Instructional Lesdership 7500 7.500 = 500) 23. Schoa!Leaderstip zis0o 1500208 (4s) 30° Support Senioes Students wm a0 23.428 6) ‘34 Student Transporation 7900 17000 18,488 188 35. Foot Services : - : 38 Co-CuricularEtracuriasta Actes 25000 2500023873 AaT) 41 General Administration 73500 ©8500-2818) 51 Fac Maintenance and Operations zaos0o 230000 321,105 8,08, 2 Socury & Monitring 5000 25.000 ___—23,200 00) Total Expenses 17.200 1475200 1201.85 112.665 ‘Change in Net Assets 1.tae.se2 1,139582 1,087,058 62.538) Not Assots at Beginning of Year 226132 725,192 278.288.1854 Not Assets at End of Year E_hasayea_§ tseyoe 6 7386.50 G18. See the accompanying notes to the financial statements. 23Energized for STEM Academy, Inc. Budgetary Comparison Schedule Campus #450, For the yearend July 3, 2018 Varianes Budgated Amounts ‘Actual fom Final Ofigina| __Final_frounts__—_—Badget ‘Revenues. and Othe Support Local Support: 5740 Other Revenue rom Local Soures S500 s 6500 $s _2o265 § Pact Total Local Support 6.500 650023256, 2785 State Program Revenues: ‘5812 Foundation School Progam 300000 az500 AST 1397 5220 Other Stato Grants. & Fees Dietib. ty HISD 17.700, 7700 ___ 17829 @ “otal State Program Revenues 17,700 3,200 922.068, 388, Foderal Program Revenues: 5320 Federal Reverwes Dissbuted by SO 144 sigon___s0.755, “otal Feral Program Reverse 31404 3149420755 (739) Total Rovenves & Other Support 355 604 Bist sa2087 08 Expenses: 11 stucion arm000 argo 6235 (65.750) 23 School Leadechip 1.700 4700 1.888 168 30 Support Gensces Students 18,000 1a000 18:25 108 53 Host Servees 2 : : : 34 Student Tranepotation 600 600 570 oo 35 Food Services - z 7 = 38 Co-Curiclerxtacureua Aces 3000 300020 (39) 41 General Adinitaton zs00 2250 38,105, 45506 ‘1 Facity Maintenance and Operations 130.000 rang 172765 42565 2 Secunty& Montoring 23000 23900 22.081, 29) Total Exponses T7800 57180067050 1740 (Change in Not Assets (22.106) (319605) 7,489) 158 ot Agsots st Bogining af Yoar 319,00 419360 (6.90) 7.750) Not Ascot at End of Year 5 o0a746) $ (200240) $605 849) (105.567) See the accompanying notes to the financial statements. 24COMPLIANCE AND INTERNAL CONTROLGEORGE EDWARD GRIGSBY, CPA P.0.Box 16 STAFFORD, TX. nar Phone: (281) 879-4442 Fax: 281) 879-4463 INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS To: the Board of Directors and Management I have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of Inspired for Excellence Academy Inc ESTEM (a nonprofit organization), which comprise the statement of financial position as of July 31, 2015, and the related statements of activities, and cash flows for the year then ended, and the related notes fo the financial statements, and have issued my report thereon dated February 1, 2016. Infernal Gontrol Over Financial Reporting In planning and performing my audit of the financial statements, | considered ESTEM's intemal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of (IEA’s) internal control. Accordingly, | do not express an opinion on the effectiveness of (IEA's) internal control. A deficiency in intemal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibilty that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or'a combination of deficiencies, in intemal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. My consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in intemal control that might be material weaknesses or significant deficiencies. Given these limitations, during my audit | did not identify any deficiencies in intemal control that | consider to be material weaknesses. However, material weaknesses may exist that have not been identified. 25Compliance and Other Matters As part of obtaining reasonable assurance about whether ESTEM's financial statements are free from material misstatement, | performed tests of its ‘compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an pinion on compliance with those provisions was not an objective of my audit, and accordingly, | do not express such an opinion. The results of my tests disclosed no instances of noncompliance or other matiers that are required to be reported under Goverment Auditing Standards. However | noted certain matters that I reported to management in my management letter dated February 1, 2016. Purpose of this Report The purpose of this report is solely to describe the scope of my testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the organization's internal control or on compliance. This report is an integral part of an audit performed in accordance with Goverment Auditing Standards in considering the organization's intemal Control and compliance. Accordingly, this communication is not suitable for any other purpose. Mares — Lan oe George Edward Grigsby, CPA Stafford TX February 1, 2016 26Energized for STEM Academy, Inc. Schedule of Findings and Questioned Costs For the year ended July 31, 2015 Summary of Auditor's Results Type of auditor's report issued on the financial statements: Unmodified. Significant deficiencies identified that were not considered to be material weaknesses: None. Material weaknesses identified: None. Noncompliance material to the financial statements: None. Findings disclosed by the audit of the financial statements which the auditor is required fo report: None. Federal Awards: Auditee did not mest the $500,000 threshold for a Single Audit, Findings related to the Financial Statements None noted. ar