WINGS OF HOPE EQUITHERAPY

FINANCIAL REPORT

JULY 31, 2022

 CONTENTS

Page

INDEPENDENT AUDITORS’ REPORT.....................................................................................................................1

FINANCIAL STATEMENTS

Statements of Financial Position .......................................................................................................... 3

Statements of Activities and Change in Net Assets ............................................................................ 4

Statements of Functional Expenses..................................................................................................... 6

Statements of Cash Flows .................................................................................................................... 8

Notes to Financial Statements .................................................................................................................. 9

 INDEPENDENT AUDITORS’ REPORT

To the Board of Directors

Wings of Hope Equitherapy
Cleburne, Texas

We have audited the accompanying financial statements of Wings of Hope Equitherapy (a nonprofit
organization), which comprise the statements of financial position as of July 31, 2022 and 2021, and the related
statements of activities and change in net assets, functional expenses, and cash flows for the years then
ended, and the related notes to the financial statements.
Opinion
We have audited the accompanying financial statements of Wings of Hope Equitherapy (a nonprofit
organization), which comprise the statements of financial position as of July 31, 2022 and 2021, and the
related statements of activities, functional expenses, and cash flows for the years then ended, and the
related notes to the financial statements.
In our opinion, the financial statements referred to above present fairly, in all material respects, the
financial position of Wings of Hope Equitherapy as of July 31, 2022 and 2021, 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.
Basis for Opinion
We conducted our audits in accordance with auditing standards generally accepted in the United States
of America. Our responsibilities under those standards are further described in the Auditor’s
Responsibilities for the Audit of the Financial Statements section of our report. We are required to be
independent of Wings of Hope Equitherapy and to meet our other ethical responsibilities in accordance
with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our audit opinion.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in
accordance with accounting principles generally accepted in the United States of America, and for 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.
In preparing the financial statements, management is required to evaluate whether there are conditions or
events, considered in the aggregate, that raise substantial doubt about Wings of Hope Equitherapy's ability
to continue as a going concern within one year after the date that the financial statements are available to
be issued.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance
and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing
standards will always detect a material misstatement when it exists. The risk of not detecting a material
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misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Misstatements are considered material if there is a substantial likelihood that, individually or in the
aggregate, they would influence the judgment made by a reasonable user based on the financial
statements.
In performing an audit in accordance with generally accepted auditing standards, we:
• Exercise professional judgment and maintain professional skepticism throughout the audit.
• Identify and assess the risks of material misstatement of the financial statements, whether due to
fraud or error, and design and perform audit procedures responsive to those risks. Such
procedures include examining, on a test basis, evidence regarding the amounts and disclosures
in the financial statements.
• Obtain an understanding of internal control relevant to the audit 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 Wings of Hope Equitherapy's internal control. Accordingly, no such
opinion is expressed.
• Evaluate the appropriateness of accounting policies used and the reasonableness of significant
accounting estimates made by management, as well as evaluate the overall presentation of the
financial statements.
• Conclude whether, in our judgment, there are conditions or events, considered in the aggregate,
that raise substantial doubt about Wings of Hope Equitherapy's ability to continue as a going
concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters,
the planned scope and timing of the audit, significant audit findings, and certain internal control related
matters that we identified during the audit.

Kellogg and Kellogg, P.C.

Fort Worth, Texas
January 4, 2023
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WINGS OF HOPE EQUITHERAPY

STATEMENTS OF FINANCIAL POSITION
JULY 31, 2022 AND 2021

2022 2021

ASSETS

CURRENT ASSETS
Cash and cash equivalents $ 1,037,827 $ 516,431
Accounts receivable, net of allowance for doubtful
accounts of $2,000 in 2022 and $320 in 2021 3,848 8,637
Prepaid expenses 26,243 46,174

Total current assets 1,067,918 571,242

PROPERTY, PLANT AND EQUIPMENT,

net of accumulated depreciation 383,035 342,856

TOTAL ASSETS $ 1,450,953 $ 914,098

LIABILITIES AND NET ASSETS

CURRENT LIABILITIES
Accounts payable $ 2,628 $ 4,494
Accrued liabilities 11,843 10,970
Paycheck Protection Program loan - 50,250
Deferred support - Special Events 105,039 94,394
Deferred program fees 3,339 4,204

Total current liabilities 122,849 164,312

NET ASSETS
Without donor restrictions:
Undesignated 1,261,871 749,786

With donor restrictions:

Purpose restricted 66,233 -

Total net assets 1,328,104 749,786

TOTAL LIABILITIES AND NET ASSETS $ 1,450,953 $ 914,098

The Notes to Financial Statements are an integral part of these statements.

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WINGS OF HOPE EQUITHERAPY

STATEMENT OF ACTIVITIES AND CHANGE IN NET ASSETS
FOR THE YEAR ENDED JULY 31, 2022

Net Assets Net Assets

Without Donor With Donor
Restrictions Restrictions Total

SUPPORT AND REVENUES

Contributions $ 91,884 $ - $ 91,884
Special events 723,245 - 723,245
Less direct expenses ( 41,862) - ( 41,862)
Net special events 681,383 - 681,383
Grant revenue 86,000 122,900 208,900
Workshops ( 575) - ( 575)
Program fees 49,514 - 49,514
Interest income 7,974 - 7,974
Paycheck Protection Program loan forgiven 50,250 - 50,250
Loss on disposal of assets ( 786) - ( 786)
Net assets released from restriction 56,667 ( 56,667) -

Total support and revenues 1,022,311 66,233 1,088,544

EXPENSES
Program services 354,010 - 354,010
Supporting services
Management and general 68,486 - 68,486
Fundraising 87,730 - 87,730

Total expenses 510,226 - 510,226

Change in net assets 512,085 66,233 578,318

NET ASSETS, beginning of year 749,786 - 749,786

NET ASSETS, end of year $ 1,261,871 $ 66,233 $ 1,328,104

The Notes to Financial Statements are an integral part of this statement.

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WINGS OF HOPE EQUITHERAPY

STATEMENT OF ACTIVITIES AND CHANGE IN NET ASSETS
FOR THE YEAR ENDED JULY 31, 2021

Net Assets Net Assets

Without Donor With Donor
Restrictions Restrictions Total

SUPPORT AND REVENUES

Contributions $ 204,945 $ - $ 204,945
Special events 147,335 - 147,335
Less direct expenses ( 1,067) - ( 1,067)
Net special events 146,268 - 146,268
Grant revenue 107,200 31,000 138,200
Workshops 15,174 - 15,174
Program fees 37,706 - 37,706
Investment income, net 2,975 - 2,975
Paycheck Protection Program loan forgiven 53,100 - 53,100
Other income 9,690 - 9,690
Net assets released from restriction 31,000 ( 31,000) -

Total support and revenues 608,058 - 608,058

EXPENSES
Program services 299,742 - 299,742
Supporting services
Management and general 63,338 - 63,338
Fundraising 67,725 - 67,725

Total expenses 430,805 - 430,805

Change in net assets 177,253 - 177,253

NET ASSETS, beginning of year 572,533 - 572,533

NET ASSETS, end of year $ 749,786 $ - $ 749,786

The Notes to Financial Statements are an integral part of this statement.

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WINGS OF HOPE EQUITHERAPY

STATEMENT OF FUNCTIONAL EXPENSES
FOR THE YEAR ENDED JULY 31, 2022

Program Services Supporting Services

Management Total
Program and General Fundraising Supporting Services Total

Employee salaries and benefits $ 193,395 $ 43,616 $ 75,031 $ 118,647 $ 312,042

Automobile expenses 1,938 - - - 1,938
Bad debt expense - 10,618 - 10,618 10,618
Bank fees - 1,107 - 1,107 1,107
Depreciation 48,213 - - - 48,213
Dues and subscriptions - 1,959 - 1,959 1,959
Horse care 53,252 - - - 53,252
Insurance 21,874 - - - 21,874
Postage and printing - 3,014 3,014 6,028 6,028
Professional fees - 7,500 - 7,500 7,500
Repairs and maintenance 5,465 - - - 5,465
Software support - - 9,685 9,685 9,685
Supplies 17,392 - - - 17,392
Telephone 2,845 418 - 418 3,263
Utilities 4,529 1,132 - 1,132 5,661
Other expenses 5,107 ( 878) - ( 878) 4,229

$ 354,010 $ 68,486 $ 87,730 $ 156,216 $ 510,226

The Notes to Financial Statements are an integral part of this statement.

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WINGS OF HOPE EQUITHERAPY

STATEMENT OF FUNCTIONAL EXPENSES
FOR THE YEAR ENDED JULY 31, 2021

Program Services Supporting Services

Management Total
Program and General Fundraising Supporting Services Total

Employee salaries and benefits $ 167,709 $ 31,365 $ 57,430 $ 88,795 $ 256,504

Automobile expenses 1,861 - - - 1,861
Bad debt expense - 10,051 - 10,051 10,051
Bank fees - 1,679 - 1,679 1,679
Depreciation 36,491 - - - 36,491
Dues and subscriptions - 2,824 - 2,824 2,824
Horse care 53,306 - - - 53,306
Insurance 9,954 - - - 9,954
Marketing - - 4,800 4,800 4,800
Postage and printing - 3,039 3,039 6,078 6,078
Professional fees - 10,725 - 10,725 10,725
Repairs and maintenance 2,502 - - - 2,502
Software support - - 2,456 2,456 2,456
Supplies 3,439 78 - 78 3,517
Telephone 4,314 1,107 - 1,107 5,421
Utilities 4,038 1,010 - 1,010 5,048
Workshops and clinics 14,655 - - - 14,655
Other expenses 1,473 1,460 - 1,460 2,933

$ 299,742 $ 63,338 $ 67,725 $ 131,063 $ 430,805

The Notes to Financial Statements are an integral part of this statement.

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WINGS OF HOPE EQUITHERAPY

STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JULY 31, 2022 AND 2021

2022 2021

CASH FLOWS FROM OPERATING ACTIVITIES

Change in net assets $ 578,318 $ 177,253
Adjustments to reconcile change in net assets to
net cash provided by operating activities
Depreciation 48,213 36,491
Donated horses and equipment ( 4,000) ( 19,000)
Loss on disposal of assets 786 -
Forgiveness of Paycheck Protection Program loan ( 50,250) ( 53,100)
Changes in operating assets and liabilities
Accounts receivable 4,789 1,690
Prepaid expenses 19,931 ( 29,883)
Accounts payable ( 1,866) 2,670
Accrued liabilities 873 ( 1,476)
Deferred support - Special Event 10,645 ( 16,039)
Deferred program fees ( 865) 2,462

Net cash provided by operating activities 606,574 101,068

CASH FLOWS FROM INVESTING ACTIVITIES

Acquisition of property, plant and equipment ( 85,178) ( 20,393)

Net cash used in investing activities ( 85,178) ( 20,393)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from Paycheck Protection Program loan - 50,250

Net cash provided by financing activities - 50,250

Net increase in cash and cash equivalents 521,396 130,925

Cash and cash equivalents, beginning of year 516,431 385,506

Cash and cash equivalents, end of year $ 1,037,827 $ 516,431

SUPPLEMENTAL DISCLOSURE OF NON-CASH INFORMATION

Horses and equipment acquired via non-cash contributions $ 4,000 $ 19,000

The Notes to Financial Statements are an integral part of these statements.

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WINGS OF HOPE EQUITHERAPY

NOTES TO FINANCIAL STATEMENTS

NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations – Wings of Hope Equitherapy (the "Organization") is a nonprofit organization

incorporated in 1996 under the laws of the state of Texas. The Organization is located in Cleburne, Texas
and provides services to clients in several northeast Texas counties. The Organization’s mission is to
provide quality equine assisted activities to children and adults with unique physical, mental and
emotional challenges. Its revenues consist primarily of donations, grants, and fees charged to individual
equestrians. During 2016, the Board of Directors changed the fiscal year of the Organization to July 31.

During 2022, the Organization started an Equine Discovery Program which provides an opportunity for
corporations, non-profits, academic and civic communities to discover, create and develop while
partnering with a horse.

Basis of Accounting – The accompanying financial statements have been prepared on the accrual basis
of accounting in accordance with accounting principles generally accepted in the United States of
America.

Basis of Presentation – The financial statements of the Organization are presented in accordance with
generally accepted accounting principles applicable to not-for-profit organizations. Net assets, revenues,
gains, and losses are classified based on the existence or absence of donor-imposed restrictions, as
follows:

Net Assets without Donor Restrictions – Net assets available for use in general operations
and not subject to donor (or certain grantor) restrictions. The governing board has not
designated any net assets for specific use.

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, where the donor stipulates that resources be maintained
in perpetuity. Donor-imposed restrictions are released when the restriction expires, that is,
when the stipulated time has elapsed, when the stipulated purpose for which the resource
was restricted has been fulfilled, or both.

Use of Estimates – The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and 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.

Contributions – Unconditional contributions are recognized when pledged and recorded as net assets
without donor restrictions or net assets with donor restrictions, depending on the existence and/or nature
of any donor-imposed restrictions. Conditional promises to give are recognized when the conditions on
which they depend are substantially met. Gifts of cash and other assets are reported with donor restricted
support if they are received with donor stipulations that limit the use of the donated assets.

When a restriction expires, that is, when a stipulated time restriction ends or a purpose restriction is
accomplished, net assets with donor restrictions are reclassified to net assets without donor restrictions
and reported in the statement of activities as net assets released from restrictions. Donor-restricted
contributions whose restrictions are met in the same reporting period are reported as net assets without
donor restriction support. Donations of property and equipment are recorded as support at their estimated
fair value at the date of donation.
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WINGS OF HOPE EQUITHERAPY

NOTES TO FINANCIAL STATEMENTS

NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (continued)

Contributions (continued) – Contributions restricted for the acquisition of land, buildings, and equipment
are reported as net assets without donor restriction upon acquisition of the assets and the assets are
placed in service.

In 2022, a horse was donated to the Organization with an estimated fair value of $4,000. In 2021,
bathroom renovation costs were donated to the Organization with an estimated fair value of $19,000. The
renovations and horses were recorded as a contribution on the acquisition date. The renovations costs
are included in building improvements and the horses are included in the Organization’s property, plant
and equipment.

For the fiscal year ended July 31, 2022, contributed horse care and program expenses totaling $9,501
were received and recorded in contributions and program expenses. For the fiscal year ended July 31,
2021, contributed horse care and program expenses totaling $12,485 were received and recorded in
contributions and program expenses. Additionally, billboard advertising with a value of $4,800 was
contributed and is recorded as a contribution and marketing expense.

Contributed services are reflected in the financial statements at the fair value of the services received if
the services received (a) create or enhance non-financial assets or (b) require specialized skills that are
provided by individuals possessing those skills and would typically need to be purchased if not provided
by donation. Many individuals volunteer significant time and perform a variety of tasks that help the
Organization’s operations and its programs. The value of this contributed time is not reflected in the
accompanying financial statements because it does not meet the above criteria.

Grants – The Organization received several grants throughout the year. Any donor-supplied restrictions
are reported accordingly, but they did not include any additional restrictive covenants or requirements.

Revenue Recognition – Revenue from workshop and program fees are recognized when services are
rendered. Revenues for special events are recognized on the date of the event. Payments received in
advance are deferred until the services are rendered or the special event occurs.

Advertising Costs – Advertising costs are expensed as incurred and amounted to approximately $0 and
$4,800 for the years ended July 31, 2022 and 2021, respectively.

Cash and Cash Equivalents – For purposes of the statement of cash flows, the Organization considers
all cash and liquid investments with initial maturities of ninety days or less to be cash and cash
equivalents. The Organization occasionally has deposits in excess of federally insured limits.
Management evaluates each financial institution on a regular basis and does not anticipate any losses on
the excess deposits.

Accounts Receivable – Accounts receivable consist of program fees. Management periodically

evaluates accounts receivable and writes off accounts when they are deemed uncollectible. Management
considers an account past due when it is more than 90 days past its due date. In considering the
allowance for doubtful accounts, management considers past payment history, creditworthiness of the
customer and other factors. The Organization will charge off amounts it deems to be uncollectible after
exhausting multiple collection attempts. Accounts receivable are presented net of an allowance for
doubtful accounts of $2,000 and $320 as July 31, 2022 and 2021, respectively. Bad debt expense was
approximately $10,600 and $10,100 for the years ended July 31, 2022 and 2021, respectively.
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WINGS OF HOPE EQUITHERAPY

NOTES TO FINANCIAL STATEMENTS

NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (continued)

Property, Plant and Equipment – Property, plant, and equipment are recorded at cost if purchased, or
at estimated fair value as of the date of donation. The Organization capitalizes expenditures for these
assets in excess of $500 and with an estimated useful life greater than one year. The costs of
maintenance and repairs are charged to expense as incurred.

Depreciation is computed on a straight-line basis over estimated useful lives as follows:

Estimated Lives

Buildings and improvements 5 - 39 years

Land improvements 5 - 7 years
Furniture, equipment, trucks and trailers 3 - 10 years
Horses and tack 7 years

The fence bordering the Organization’s land and its neighbor’s happens to be built on the neighbor’s
property instead of at the dividing line. Currently, 0.18 acres of the neighbor’s property is on the
Organization’s side of the fence.

Accrued Expenses – Various expenses of the Organization that were incurred before July 31, 2022 and
2021, but paid afterward have been accrued and reported as accrued expenses. This includes all payroll
related expenses, except those of compensated absences because the amount cannot be reasonably
estimated at this time.

Fair Value of Financial Instruments – The Organization determines the fair value of financial
instruments by reference to various market data and other valuation techniques, as appropriate. Unless
otherwise disclosed, the fair values of financial instruments approximate their recorded values, due
primarily to their short-term nature. The Organization considers investments with maturities of 90 days or
less when purchased to be cash equivalents.

Income Taxes – The Organization is recognized by the Internal Revenue Service as tax-exempt under
Section 501(c) (3) of the Internal Revenue Code (the “CODE”), except to the extent it has unrelated
business income. For the year ended July 31, 2022, the Organization had no unrelated business income.
For the year ended July 31, 2021, the Organization had unrelated business income of approximately
$5,900. The Organization’s unrelated business income is derived from its Equine Discovery Program. The
Organization is not recognized as a private foundation within the meaning of Section 509 (a) (1) of the
Code.

The Organization has concluded that it does not have any unrecognized tax benefits resulting from
current or prior period tax positions. Accordingly, no additional disclosures have been made on the
financial statements regarding ASC 740, Income Taxes. The Organization does not have any outstanding
interest or penalties, and none have been recorded in the statements of activities and change in net
assets for the years ended July 31, 2022 and 2021.

In the normal course of business, the Organization is subject to examination by taxing authorities. The
Organization’s tax returns for the years after July 31, 2018 are open, by statute, for review by authorities.
However, at present, there are no ongoing income tax audits or unresolved disputes with various tax
authorities.
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WINGS OF HOPE EQUITHERAPY

NOTES TO FINANCIAL STATEMENTS

NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (continued)

Functional Allocation of Expenses – The costs of providing programs and other activities have been
summarized on a functional basis in the statement of activities and the statement of functional expenses.
Expenses which are easily and directly associated with a particular program or supporting service are
charged directly to that functional area. Certain other expenses have been allocated to the program and
supporting services benefitted based on time devoted by the Organization staff.

NOTE 2 – LIQUIDITY AND AVAILABILITY OF FINANCIAL ASSETS

The following reflects the Organization’s financial assets as of the statement of financial position date,
reduced by amounts not available for general use because of contractual of donor-imposed restrictions
within one year of the statement of financial position date. Amounts available include donor restricted
amounts that are available for general expenditures in the following year.

2022 2021

Financial assets at year-end:

Cash and cash equivalents $ 1,037,827 $ 516,431
Accounts receivable 3,848 8,637
Less amounts not available to be used within one year:
Donor restrictions for specific purposes ( 66,233) -

Financial assets available to meet cash needs

for general expenditure within one year $ 975,510 $ 525,068

NOTE 3 – PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consist of the following at July 31:

2022 2021

Land $ 71,296 $ 71,296

Buildings and improvements 539,603 481,319
Furniture and fixtures 16,914 7,936
Equipment and vehicles 198,491 180,575
Horses 32,500 30,500

858,804 771,626
Less accumulated depreciation ( 475,769) ( 428,770)

$ 383,035 $ 342,856

Depreciation expense was approximately $48,200 and $36,500 for the years ended July 31, 2022 and
2021, respectively.
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WINGS OF HOPE EQUITHERAPY

NOTES TO FINANCIAL STATEMENTS

NOTE 4 – PAYCHECK PROTECTION PROGRAM LOANS

On April 10, 2020, the Organization was granted a loan (the “Loan”) from Happy State Bank in the
amount of $53,100, pursuant to the Paycheck Protection Program (the “PPP”) under Division A, Title I of
the CARES Act, which was enacted March 27, 2020.

The Loan, which was in the form of a Note dated April 10, 2020, matures on April 10, 2022 and bears
interest at a rate of 1.0% per annum, payable monthly commencing on October 10, 2020. The Note may
be prepaid by the Company at any time prior to maturity with no prepayment penalties. Funds from the
Loan may only be used for payroll costs, costs used to continue group health care benefits, mortgage
payments, rent, utilities, and interest on other debt obligations incurred before February 15, 2020. The
Company intends to use the entire Loan amount for qualifying expenses. Under the terms of the PPP,
certain amounts of the Loan may be forgiven if they are used for qualifying expenses as described in the
CARES Act.

The loan was forgiven by the SBA on March 31, 2021 and is included in Support and Revenues as
Paycheck Protection Program loan forgiven for the year ended July 31, 2021.

On February 18, 2021, the Organization was granted a loan (the “Second Draw PPP Loan”) from Happy
State Bank in the amount of $50,250, under Second Draw provisions of the PPP as authorized by the
Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (the “Economic Aid Act”). The
amount of loan forgiveness could be reduced if the borrow terminates employees or reduces salaries
below a certain threshold during the Second Draw Cover Period and does not qualify for certain safe
harbors. The unforgiven portion of the Second Draw PPP loan, if any, is payable within five years from
the date of the Second Draw PPP loan with a deferral of payments of principal or interest until the amount
of loan forgiveness is approved by the SBA. If the Organization does not apply for forgiveness, payments
begin approximately 16 months after the loan date and bear interest at 1.0% per annum.

The loan was forgiven by the SBA on February 2, 2022 and is included in Support and Revenues as
Paycheck Protection Program loan forgiven for the year ended July 31, 2022.

NOTE 5 – NET ASSETS WITH DONOR RESTRICTIONS

As of July 31, net assets with donor restrictions are available for the following purposes:

2022 2021

Equipment acquisitions and renovations $ 66,233 $ -

During 2022 and 2021, net assets were released from donor restrictions by incurring expenses satisfying
the restricted purposes specified by donors as follows:

2022 2021

Horse care $ 10,000 $ -

Tack purchases 2,500 -
Equipment acquisitions and renovations 44,167 31,000

Total restrictions released $ 56,667 $ 31,000

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WINGS OF HOPE EQUITHERAPY

NOTES TO FINANCIAL STATEMENTS

NOTE 6 – INCOME TAXES

The (benefit) provision for income taxes consists of the following:

2022 2021

Current,
Federal $ - $ -
State - -
Deferred - -

$ - $ -

Deferred tax assets (liabilities) at July 31, 2022 and 2021, respectively, are comprised of the following:

2022 2021

Gross deferred tax assets $ 7,600 $ 3,800

Gross deferred tax liabilities - -

7,600 3,800
Less valuation allowance ( 7,600) ( 3,800)

Net deferred tax asset $ - $ -

There is uncertainty about when the Organization will incur net unrelated business income and create a
tax liability; therefore, a valuation allowance was established to reduce the net deferred tax asset to zero.

The change in the valuation allowance that occurred during the years is as follows:

Valuation allowance, July 31, 2020 $ -

Change in valuation 3,800

Valuation allowance, July 31, 2021 3,800

Change in valuation for additional net operating loss 3,800

Valuation allowance, July 31, 2022 $ 7,600

The Organization has net operating loss carryforwards to future years of approximately $36,000. These
loss carryforwards will ultimately expire in 2042.

NOTE 7 – COVID-19

During March 2020, the World Health Organization declared the novel strain of coronavirus (COVID-19) a
global pandemic and recommended containment and mitigation measures worldwide. As a result of this
declaration, the Organization closed its operations to riders for approximately six months during 2020.
Additionally, the Organization’s changed its major fundraising event in August 2020 to a virtual event,
instead of an in-person event. The extent of COVID-19’s effect on the Organization’s operational and
financial performance will depend on future developments, including the duration, spread and the
intensity of the pandemic, all of which are uncertain and difficult considering the rapidly evolving
landscape.
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WINGS OF HOPE EQUITHERAPY

NOTES TO FINANCIAL STATEMENTS

NOTE 8 – SUBSEQUENT EVENTS

Management has reviewed and evaluated material subsequent events from the balance sheet date of
July 31, 2022 through the financial statements issue date of January 4, 2023. All appropriate subsequent
event disclosures, if any, have been made to the financial statements.