TRYING TO GET A REAL HANDLE ON SCI-PORT’S FINANCES IS NO EASY TASK
Understanding a financial statement is no easy task for a lay person. However, a quick review of the Sci-Port audit* raises many red flags for the 2016 fiscal year. The report includes comments on transactions after the end of the June 30 fiscal year which further reflect negatively on the economic viability of Sci- Port.
The audit report provides comparison totals for the 2015 and 2016 fiscal year, which are telling, to say the least. Current assets declined over $170,000 in the 2016 fiscal year, and the total assets were over $585,000 less; the total current liabilities increased by over $85,000.Sci-Port has added a new children’s museum, and the construction costs of $1.9 million dollars have strained its budget.”
More telling are the operating cash totals: On June 30, 2015, operating cash was almost $239,000, and a year later it was zero. That means that the cash flow for the 2016 fiscal year was in the red by $238,987.
In 2015 Sci-Port borrowed $250,000 against a line of credit; interest only was paid in 2015 and 2016. In January of this year, this line was converted into a promissory note of $270,000; this note is guaranteed by two current Sci- Port board members.
In September of last year, Sci-Port obtained a $100,000 loan from a company in which a board member is an officer and owner. Another loan was made to Sci-Port of $420,000 from the Sci-Port Foundation, which is a separate legal entity.
During the 2016 fiscal year, Sci-Port also used donor-restricted funds to cover the expenses of programs and operations. As of June 30, 2016, these funds should have totaled over $800,000; the actual cash on hand reflected a shortage of almost $350,000.
Sci-Port’s current liabilities on June 30, 2016, exceeded its current assets by over $677,000, which was an increase during the fiscal year by over $254,000. Based on these factors, the audit concluded that there was “uncertainty about Sci-Port’s ability to continue as a going concern.”
Sci-Port has added a new children’s museum, and the construction costs of $1.9 million dollars have strained its budget. The total benefit of this addition regarding increased attendance and revenue versus costs is an open question.
Sci-Port officials advise that since June the staff has been reorganized and operating costs reduced while efforts have been made to increase fund-raising. Like many other area nonprofit organizations, the stagnant local economy will be a challenge as well as the fall opening of the Shreveport Aquarium, which will no doubt compete with Sci-Port for visitors.
*The annual audit was conducted by Cook & Morehart, a Shreveport CPA firm that has conducted these audits since 2008.
John E. Settle, Jr. has been a resident of Shreveport since January 1977. His articles appear regularly in local publications. He can be reached at 742-5513 or e-mail to: firstname.lastname@example.org