Statements of cash flows for the years ended December 31, 2020 and 2019

SEEDS OF PEACE, INC. STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2020 AND 2019

2020 2019

Cash flows from operating activities:

Increase/(decrease) in net assets (71,017)$ 167,272 $

Adjustments for non-cash items included in operating activities:

Depreciation and amortization 61,104 52,143

Loss/(gain) on investments (32,564) 721

Donation of investments (425,280) (258,922)

Bad debts 6,487 3,316

Amortization of pledge discount (8,978) -

Discount on pledges - 27,916

Changes in assets and liabilities:

Contributions receivable 684,020 (515,270)

Grants receivable 4,508 (11,147)

Other receivables (657) 18,431

Inventory - 1,653

Prepaid expenses 31,740 35,147

Security deposits 2,868 15,754

Accounts payable & accrued expenses (311,670) 53,918

Deferred income and refundable advances (13,720) Net cash provided/(used) by operating activities (59,439) (422,788)

Cash flows from investing activities:

Sale of investments

Purchase of investments

Purchase of property, equipment and intangibles Net cash provided/(used) by investing activities

Cash flows from financing activities 441,742 253,340 (479) (362,069) (20,000) (60,891) 421,263 (169,620)

Net increase/(decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of year

Cash and cash equivalents at end of year 361,824 (592,408)

2,283,023 2,875,431

2,644,847 $ 2,283,023 $

See accompanying notes to the financial statements. - 6 -

1. Nature of Activities and Summary of Significant Accounting Policies Organization: Seeds of Peace, Inc., (hereafter referred to as the Organization) is a not-for-profit corporation, incorporated in the State of Delaware on March 8, 1993. The primary purpose of the Organization is to empower young leaders from regions of conflict with the leadership skills required to advance reconciliation and coexistence. As young teens, they live together in a summer camp for three weeks to learn conflict management skills. After attending camp, the Organization provides participants with follow-up leadership training and dialogue through their college years, and after college, a graduate program to maintain cross-border network and dialogue.

Tax exempt status: The Organization has been granted tax-exempt status by the Internal Revenue Service under Internal Revenue Code Section 501(c)(3) on July 2, 1993. Accordingly, no provision for federal, state or local income taxes has been recorded. The Organization does not believe its financial statements include any uncertain tax positions.

Programs and services provided: The Organization’s six major program areas include the following: Seeds of Peace Camp – Summer leadership development program in Maine for teenagers and educators from communities divided by conflict; Middle East – Local initiatives for Camp alumni from Egypt, Israel, Jordan, and Palestine designed to reinforce relationships and build leadership skills; MultiRegional – Convening’s and fellowship programs in the Middle East, South Asia, and the United States for Camp alumni and other change-makers designed to accelerate their impact as they work to transform conflict; US Programs – Local initiatives for Camp alumni from the United States designed to reinforce relationships and build leadership skills; South Asia (SA) – Local initiatives for Camp alumni from Afghanistan, India, and Pakistan designed to reinforce relationships and build leadership skills; and Program Administration – Provides program administration and review of all program activities.

Major source of income: The Organization derives most of its income from contributions from individuals, corporations, foundations, government grants, program service revenue and special events.

Basis of accounting: The financial statements of the Organization have been prepared on the accrual basis of accounting and accordingly reflect all significant receivables, payables, and other liabilities.

Estimates and assumptions: Management uses estimates and assumptions in preparing these financial statements in accordance with generally accepted accounting principles. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could vary from the estimates that were used.

1. Nature of Activities and Summary of Significant Accounting Policies (continued) Change in accounting principle: In 2020, the Organization adopted FASB ASU 2014-09 Revenue from Contracts with Customers using the full retrospective approach. Analysis of various provisions of the standards resulted in no significant changes in the way the Organization recognizes revenue, and therefore no changes to the previously issued audited financial statements were required on a retrospective basis. The presentation and disclosures of revenue have been enhanced in accordance with the standard.

Net assets: Net assets, revenues, gains and losses are classified based on the existence or absence of donor or grantor-imposed restrictions. Accordingly, net assets and changes therein are classified and reported as follows: Net Assets Without Donor Restrictions - Net assets available for use in general operations and not subject to donor (or certain grantor) restrictions. This classification includes net assets designated by the board or management for a specified purpose. Net Assets With Donor Restrictions - Net assets subject to donor (or certain grantor) imposed restrictions. Some donor-imposed restrictions are temporary in nature, such as those that will be met by the passage of time or other events specified by the donor. Other donor-imposed restrictions are perpetual in nature (endowment), where the donor stipulates that resources be maintained in perpetuity.

Cash equivalents: For purposes of the statements of financial position and the statements of cash flows, the Organization considers as cash equivalents money market funds and all highly liquid resources, such as certificates of deposit with an original maturity of three months or less.

Inventory: Inventory of merchandise purchased by, or donated to, the Organization for sale at the camp store, or auction at one of its special events, is valued at the lower of cost or market.

Property, equipment and intangibles: The Organization capitalizes certain property, equipment and intangibles with estimated lives of three years or more. Property, equipment and intangibles are stated at cost or donated value, less accumulated depreciation. Depreciation and amortization is computed on the straight-line and accelerated basis over the respective assets’ estimated useful lives of five to ten years. Expenditures for maintenance and repairs are charged to current operations.

1. Nature of Activities and Summary of Significant Accounting Policies (continued) Revenue recognition: The Organization recognizes contributions when cash, noncash assets, or unconditional promises to give are received. Conditional promises to give, which have a measurable performance or other barrier and a right of return, are not recognized until the conditions on which they depend have been met. Amounts received prior to the meeting of these conditions are reported as deferred income or refundable advances in the statements of financial position. At December 31, 2020 and 2019, the Organization did not have any conditional pledges that were not recognized. All contributions are considered available for the Organization’s general programs unless specifically restricted by the donor. Amounts received that are designated for future periods or restricted by the donor are reported as support with donor restrictions and increases in net assets with donor restrictions. Contributions received with restrictions that are met in the same reporting period are reported as support without donor restrictions and increases in net assets without donor restrictions.

Investment income and gains restricted by donors are reported as increases in net assets without donor restrictions if the restrictions are met (either a stipulated time period ends or a purpose restriction is accomplished) in the reporting period in which the income and gains are recognized. When a restriction expires, net assets with donor restrictions are reclassified to net assets without donor restrictions.

The Organization receives grants from governmental agencies. Depending upon the terms of the grant, it can be either an exchange transaction or a contribution. In accordance with grant provisions, the grant can be an expense reimbursement grant which requires that approved expenses be incurred prior to reimbursement by the grantor. Other grants permit advances of grant funds or full payment of grant funds at the start of the grant. If the grant is an exchange type grant, all unreimbursed expenses, for approved purposes, as of year-end are recorded as receivables and any unexpended advances are recorded as either refundable advances or deferred income. If the grant is a contribution, it is recognized in accordance with the contribution recognition policy described above. During the year ended December 31, 2020, the Organization received $597,333 of Paycheck Protection Program funds from the U.S. Small Business Administration. Management has determined that the correct model to follow is the grant model and that the purpose-related conditions imposed on the grant were met by year-end. Therefore, the full amount has been recognized as revenue. The amount is included with government grants in the statement of activities for the year ended December 31, 2020.

1. Nature of Activities and Summary of Significant Accounting Policies (continued) Revenue recognition (continued): Camp fees and program service revenue relate to fees received in exchange for program services. Revenue is recognized when the program service is provided. Any revenue received which has not been earned is recorded as deferred income.

The Organization receives special events revenue which contains both an exchange component and a conditional contribution component. Both components are recognized when the event takes place. Any event revenue received in advance of the event is recorded as deferred income.

Receivables: Receivables that are expected to be collected within one year are recorded at their net realizable value. Receivables that are expected to be collected in future years are recorded at the present value of estimated future cash flows. Receivables are written-off as bad debts in the year deemed uncollectible and are reported as such in the statements of expenses by function and natural classification.

Investments: All marketable debt and equity securities and mutual funds are measured at fair value on a recurring basis and are reported at their fair market values as of December 31, 2020 and 2019 in the statements of financial position.

The Organization initially records the investments it receives as a donation at the fair value as of the dates the investments are donated to the Organization and thereafter carries such investments at current fair values.

Investment income (interest and dividends) is recognized as revenue in the period earned, and gains and losses (realized and unrealized) are recognized in the period they occur. Donated services and facilities: Services and facilities are donated to the Organization by various individuals and organizations. Only those items whose value can be objectively determined or meet the criteria for being recognized as contributions in accordance with GAAP, are included in the accompanied financial statements. For the years ended December 31, 2020 and 2019, $0 and $14,500, respectfully, was respectively, and reported as contributions in-kind on the accompanying statements of activities and consisted of donated labor for camp security, consulting, medical services, and independent impact evaluation. Functional 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 expenses by function and natural classification. Accordingly, certain costs have been allocated among the programs and supporting services benefited. The expenses that are allocated include salaries and related expenses and consultants and outside contractors based on estimated time and effort and all other expenses based on usage. The Organization classifies expenses, which are not directly related to a specific program, as Management and General expenses.

2. Fair Value Measurement of Investments

The Financial Accounting Standards Board (FASB) requires enhanced disclosures about investments that are measured and reported at fair value. FASB establishes a hierarchal disclosure framework which prioritizes and ranks the level of market price observability used in measuring investments at fair value. Market price observability is impacted by a number of factors, including the type of investment and the characteristics specific to the investment. Investments with readily available active quoted prices, or for which fair value can be measured from actively quoted prices, generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value. Investments measured and reported at fair value are classified and disclosed in one of the following categories: Level 1: Investments falling within Level 1 of the fair value hierarchy are valued using inputs based upon quoted prices in active markets for identical investments. Investments that are typically included in Level 1 are listed equity securities, publicly traded mutual funds, and exchange traded funds. Level 2: Investments falling within Level 2 of the fair value hierarchy are valued using significant observable inputs other than prices quoted in active markets. Examples of Level 2 inputs are model-driven prices, quoted prices for similar investments in active markets, and quoted prices for identical or similar investments in inactive markets. Investments that are typically included in Level 2 are municipal bonds, corporate bonds, and government debt securities Level 3: Investments falling within Level 3 of the fair value hierarchy are valued using methodology that is unobservable and significant to the fair value measurement. Level 3 inputs require significant management judgment or estimation. Investments that are typically included in this category are investments in limited partnerships, and investments in private companies or unregistered securities. The investment’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. During the years ended December 31, 2020 and 2019, all of the Organization’s investments were Level 1 investments.

3. Cash and Cash Equivalents

Cash and cash equivalents include cash that is reserved as a compensating balance for a line of credit as part of a lease stipulation as well as cash that is restricted for an endowment. As of December 31, 2020 and 2019, the components of cash and cash equivalents are as follows:

2020 2019 Unrestricted cash $ 1,773,418 $ 1,751,558 Money market funds: Unrestricted 791,112 466,729 Restricted for endowment 15,516 - Restricted for compensating balance 64,801 64,736 Total $ 2,644,847 $ 2,283,023

4. Contributions Receivable

Long term pledges are discounted as of December 31, 2020 and 2019. As of December 31, 2020 and 2019, pledges are expected to be realized in the following periods:

2020 2019 In one year or less $ 586,455 $ 1,143,289 Between one to two years 164,000 158,673 Between two to three years 20,000 139,000 Between three to four years - 20,000 770,455 1,460,962 Less: unamortized discount ( 73,543) ( 82,521) $ 696,912 $ 1,378,441

5. Property, Equipment and Intangibles

Property, equipment and intangibles by major class consisted of the following at December 31, 2020 and 2019:

2020 2019

Depreciable: Furniture and fixtures $ 39,540 $ 39,540 Equipment & software 240,102 240,102 Leasehold improvements 777,959 777,959 Website design 143,029 95,678 Less: accumulated depreciation and amortization ( 977,408) ( 916,304) $ 223,222 $ 236,975 Non-Depreciable: Construction in Progress $ 20,000 $ 47,351 Depreciation and amortization expense amounted to $61,104 and $52,143 in 2020 and 2019, respectively.

6. Investments and Related Income

The Organization’s investments are stated at fair values, based on quoted prices in active markets (all Level 1 Measurements), and consist of marketable securities and mutual funds. Fair values and unrealized appreciation/(depreciation) at December 31, 2020 and 2019 are summarized as follows: 2020 2019 Fair market values $ 383,800 $ 367,219 Less: Cost ( 362,835) ( 362,356) Unrealized appreciation/ (depreciation) $ 20,965 $ 4,863 The statements of activities summarize the investment return for the years ended December 31, 2020 and 2019, as follows:

2020 2019

Without Donor Restrictions:

Interest/dividend income (*) $ 2,025 $ 5,595

Gains/(losses) 11,973 ( 721) With Donor Restrictions:

Dividend income (*) 16,656 7,513

Gains/(losses) 20,591 - Total investment income $ 51,245 $ 12,387

* Includes income earned from money market funds

7. Endowment

The Organization’s endowment is comprised of funds for future program support. Its endowment includes only donor-restricted funds. 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 restrictions. The Board of Directors of the Organization has interpreted the New York Prudent Management of Institutional Funds Act (NYPMIFA) as requiring the preservation of the fair value of the original gift as of the gift date of the donor-restricted endowment funds absent explicit donor stipulations to the contrary. As a result of this interpretation, the Organization classifies as net assets with donor restrictions (a) the original value of gifts donated to the donor-restricted endowment, (b) the original value of subsequent gifts to the donor-restricted endowment, and (c) accumulations to the donor-restricted endowment made in accordance with the direction of the applicable donor gift instrument at the time the accumulation is added to the fund. When amounts are appropriated for expenditure by the Organization in a manner consistent with the standard of prudence prescribed by NYPMIFA, the Organization reclassifies net assets with donor restrictions to net assets without donor restrictions. In accordance with NYPMIFA, the Organization considers the following factors in making a determination to appropriate or accumulate donor-restricted endowment funds: (1) the duration and preservation of the various funds, (2) the purposes of the donor-restricted endowment funds, (3) general economic conditions, (4) the possible effect of inflation and deflation, (5) the expected total return from income and the appreciation of the investments, (6) other resources of the Organization, and (7) the Organization’s investment policies.

7. Endowment (continued)

Investment Return Objectives, Risk Parameters and Strategies. The Organization has adopted investment and spending policies, approved by the Board of Directors, for endowment assets that attempt to provide a predictable stream of funding to programs supported by its endowment funds while also maintaining the purchasing power of those endowment assets over the long-term. Accordingly, the investment process seeks to achieve an after-cost total real rate of return, including investment income, with acceptable levels of risk.

Endowment assets are invested in a mix that is intended to result in a consistent inflation-protected rate of return that has sufficient liquidity to make an annual distribution, if appropriate, while growing the funds if possible. Therefore, the Organization expects its endowment assets, over time, to produce an average rate of return of approximately 1% annually. Actual returns in any given year may vary from this amount. Investment risk is measured in terms of the total endowment fund; investment assets and allocation between asset classes and strategies are managed in order not to expose the fund to unacceptable levels of risk.

Spending Policy. The donor restriction states that annual distributions from the investment account can be made to support the facilitator training course in Jerusalem. For the first five years, the aggregate distribution is not allowed to exceed the greater of $20,000 or 5% of the total fair market value of the account. After these five years have ended, the aggregate distribution can not exceed the greater of $25,000 or 7% of the total fair market value of the account. The Organization expects the current spending policy to allow its endowment funds to grow at a nominal average rate of 1% annually, which is consistent with the Organization’s objective to maintain the purchasing power of the endowment assets as well as to provide additional real growth through investment return.

Changes and composition of endowment net assets for the years ended December 31, 2020 and 2019 are as follows:

2020 2019

Donor restricted endowment, beginning of year $ 362,069 $ 354,556 Investment return 37,247 7,513 Donor restricted endowment, end of year $ 399,316 $ 362,069

8. Commitments and Contingencies

Office lease: The Organization leases office space at 370 Lexington Avenue, NY, NY, under a non-cancelable lease that was extended until March 31, 2022. In accordance with the lease agreement, the Organization has outstanding an irrevocable letter of credit with a bank in the amount of $63,512 as of December 31, 2020 and 2019.

Camp lease: The Organization leases property located in Pleasant Lake, Otisfield, Maine, under a non-cancelable lease. In lieu of rent payments, the Lessor had agreed to accept up to $200,000 in leasehold improvements made by the Organization during the term of the lease. As of September 30, 2001, the Organization exceeded $200,000 in capital improvements and accordingly was not required to pay the $50,000 annual rent. During the 2002 fiscal year, the Lessor agreed to forgo receiving all future rent as long as the Organization continues to maintain and make capital improvements on the property. The Organization expects to continue making capital improvements on the property and therefore does not expect to make any future rent payments.

Regional leases: The Organization has several short-term, non-cancelable leases for office space in the Middle East and South Asia.

As of December 31, 2020, the minimum aggregate annual rentals for all existing long-term leases are as follows: Year ended December 31, 2021 - $ 296,929 2022 - 75,496 Total $ 372,425

Total rent expense charged to operations for the years ended December 31, 2020 and 2019 was $387,846 and $419,249, respectively.

Insurance coverage: The Organization maintains its cash, cash equivalents, and investments in various accounts. The Federal Deposit Insurance Corporation (FDIC) insures bank deposits up to $250,000 per financial institution. The Securities Investor Protection Corporation insures cash and securities, including money market funds, up to $500,000 per financial institution. At times, the balances of the accounts may have exceeded the insured limits during the years ended December 31, 2020 and 2019.

9. Pension Plan

On February 1, 2002 the Organization adopted a salary reduction, 401(K) retirement plan that is funded by voluntary employee contributions and discretionary employer contributions. The plan was converted to a tax-deferred 403(b) plan in 2010. Organization contributions to the plan amounted to $13,850 and $15,308 for the years ended December 31, 2020 and 2019, respectively

10. Liquidity and Availability of Financial Assets

The Organization regularly monitors liquidity required to meet its operating needs and other obligations as they come due. In the event of an unanticipated liquidity need, the Organization also could draw upon $250,000 of an available line of credit (as further discussed in Note 11). For purposes of analyzing resources available to meet general expenditures over a 12month period, the Organization considers all expenditures related to its ongoing activities to be general expenditures. Amounts available for general expenditures over a 12-month period include donor-restricted amounts that are available for ongoing programmatic and support expenditures. The following reflects the Organization’s financial assets, as of December 31, 2020 and 2019, reduced by amounts not available for general use within one year because of contractual, donor-imposed, or internal restrictions and designations: 2020 2019

Financial assets Cash and cash equivalents $ 2,644,847 $ 2,283,023 Receivables, net 733,166 1,418,546 Investments 383,800 367,219 Total financial assets 3,761,813 4,068,788 Less those unavailable for general expenditures within one year: Cash restricted for compensating balance ( 64,801) ( 64,736) Cash restricted for endowment ( 15,516) - Investments restricted for endowment ( 383,800) ( 362,069) Receivables scheduled to be collected in more than one year ( 110,457) ( 235,152) Financial assets available to meet cash needs for general expenditures within one year $ 3,187,239 $ 3,406,831

11. Loans and Notes Payable

The Organization has a $250,000 credit line with a financial institution that matures on June 30, 2021 and is secured by all present and future personal property and fixtures of the Organization. Interest is to be paid monthly on the outstanding balance based on two percent above the prime rate in effect.

As of December 31, 2020 and 2019, the Organization had no outstanding loan balances.

12. COVID-19

During the year ended December 31, 2020, the Organization was negatively affected by COVID-19. This was due to lockdowns and social distancing. The effect was that the summer camp program and the annual fundraising gala had to be cancelled which resulted in a decrease in program service revenue and special event revenue from prior year levels. The effects on revenue were partially mitigated by cost cutting measures and conducting program activities virtually. The Organization expects the downturn to be temporary.

13. Government Grants

The Organization was awarded various government grants to support its programs. Total revenue, by grantor, during the years ended December 31, 2020 and 2019 is as follows:

2020 2019 US Department of State $ 82,813 $ 115,945 US Small Business Administration 597,333 - Onondaga County 20,000 16,052 $ 700,146 $ 131,997

14. Net Assets With Donor Restrictions

As of December 31, 2020 and 2019, net assets with donor restrictions are available as follows:

2020 2019

Subject to passage of time or purpose: Campership, Seeds and other $ 308,938 $ 263,752 Facilitator training 14,694 383 Multinational programming 910,515 963,035 Scholarships, internships mediation and education 170,720 202,603 2020 operations - 111,494 2021 operations 74,163 92,366 2022 operations 54,023 70,638 $ 1,533,053 $ 1,704,271

Endowment: Subject to spending policy and appropriation Total 399,316 362,069 $ 1,932,369 $ 2,066,340