Title: NOTE 1: ORGANIZATION
Accounting Policies: The accompanying financial statements are prepared on the accrual basis of accounting in accordance with U.S. generally accepted accounting principles.
De Minimis Rate Used: N
Rate Explanation: Traffick911 did not elect to use the 10% de minimis indirect cost rate.
Traffick911 is a nonprofit organization whose mission is to free youth from sex trafficking through trust-based relationships. Traffick911 is principally funded through contributions and federal awards.
Traffick911 was selected by the Office of the Governor in Texas to deliver the Voice & Choice Advocacy Program as a part of formally coordinated regional multi-disciplinary teams (MDT) in North Texas Counties. The Voice & Choice Advocacy program began to grow exponentially in 2017 when these MDTs formed, which include formal partnerships with law enforcement agencies, district attorney offices, juvenile justice departments, child advocacy centers, state child protective services, and others, who work collaboratively within agreed-upon county protocols in order to best serve child sex trafficking victims. Currently, Traffick911 provides services to Dallas, Tarrant, Collin, Denton, and Ellis counties, serving over 200 child sex trafficking victims every year.
Title: NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Policies: The accompanying financial statements are prepared on the accrual basis of accounting in accordance with U.S. generally accepted accounting principles.
De Minimis Rate Used: N
Rate Explanation: Traffick911 did not elect to use the 10% de minimis indirect cost rate.
ESTIMATES
The preparation of financial statements in conformity with U.S. generally accepted accounting principles 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.
FINANCIAL STATEMENT PRESENTATION
The accompanying financial statements are prepared on the accrual basis of accounting in accordance with U.S. generally accepted accounting principles. Net assets, revenues, expenses, gains, and losses are classified based on the existence or absence of donor imposed restrictions. Accordingly, net assets of Traffick911 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.
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 a 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.
INCOME TAXES
Traffick911 is an organization other than a private foundation exempt from Federal income taxes under IRS Code Section 501(c)(3). Therefore, no provision has been made for Federal income taxes in the accompanying financial statements. FIXED ASSETS
Fixed asset purchases of $5,000 and greater are recorded at cost. Contributions of fixed assets, other than software, valued at $5,000 and greater and contributed software with estimated useful lives greater than one year are recorded at their estimated fair value at the date of donation.
Depreciation on fixed assets is provided using the straight-line method over estimated useful lives of the respective assets, ranging from 3 to 5 years. Leasehold improvements are depreciated over the length of the lease. Upon sale or other disposition of assets, the cost and related accumulated depreciation are removed from the accounts and the resulting gain or loss, if any, is reflected as an increase or decrease in net assets without donor imposed restrictions. Maintenance and repairs are charged to expense and expenditures for improvements that extend the useful life of the assets are capitalized.
FEDERAL AWARDS AND CRYSTAL CHARITY BALL RECEIVABLE
Traffick911 has not recorded an allowance for uncollectible accounts because the receivables are considered to be 100% collectible. Traffick911 estimates allowances for uncollectible accounts by evaluating the creditworthiness, the historical collections, and the aging of the accounts. Once an account is deemed uncollectible, it is written off. Receivables are considered delinquent based on how recently payments have been received.
FEDERAL AWARDS
A significant portion of Traffick911’s revenue is derived from cost-reimbursable federal awards, which are conditioned upon certain performance requirements and/or the incurrence of allowable qualifying expenses. Amounts received are recognized as revenue when Traffick911 has incurred expenditures in compliance with specific contract or grant provisions. Traffick911 has contracts for cost reimbursable grants of $1,294,620 for which qualifying expenditures have not been incurred and accordingly have not been recognized at 31 December 2024.
CONTRIBUTIONS
Traffick911 recognizes contributions when cash, securities or other assets, an unconditional promise to give, or a notification of a beneficial interest is received. Conditional promises to give, those with measurable performance requirements or other barrier, and a right of return, are recognized when the conditions on which they depend have been met.
EVENT REGISTRATIONS
Revenue from event registrations are considered contributions because there is not a significant exchange element. Revenue is recognized upon receipt.
FUNCTIONAL ALLOCATION OF EXPENSES
The financial statements report certain categories of expenses that are attributed to more than one program or supporting function. Therefore, some expenses require allocation on a reasonable basis that is consistently applied. Wages, benefits, payroll taxes, office lease, office utilities and taxes, staff care and retreat, and depreciation are allocated based on estimates of time and effort by personnel. Travel and mileage, professional services, fees, dues and subscriptions, office supplies, postage and printing, cell phone service, and other expenses are allocated based on management’s knowledge and review of individual transactions.
LEASES
Traffick911 determines if an arrangement is or contains a lease at inception. Leases are included in right of use (ROU) assets and operating lease obligation in the statement of financial position. ROU assets and lease obligations reflect the present value of the future minimum lease payments over the lease term. Operating lease expense is recognized on a straight-line basis over the lease term. Traffick911 does not report ROU assets and leases liabilities for its short-term leases (leases with a term of 12 months or less). Instead, the lease payments of those leases are reported as lease expense on a straight-line basis over the lease term.
SUBSEQUENT EVENTS
Traffick911 has evaluated subsequent events for disclosure through the date of the Independent Auditor’s Report, the date the financial statements were available to be issued.
Title: NOTE 3: CONCENTRATIONS
Accounting Policies: The accompanying financial statements are prepared on the accrual basis of accounting in accordance with U.S. generally accepted accounting principles.
De Minimis Rate Used: N
Rate Explanation: Traffick911 did not elect to use the 10% de minimis indirect cost rate.
Funding from one grantor accounted for 61% of Traffick911’s total revenue for the year and 44% of total receivables at year end.
At year end, Traffick911 had deposits in excess of FDIC coverage of $316,667. '
Title: NOTE 4: CONTINGENCY
Accounting Policies: The accompanying financial statements are prepared on the accrual basis of accounting in accordance with U.S. generally accepted accounting principles.
De Minimis Rate Used: N
Rate Explanation: Traffick911 did not elect to use the 10% de minimis indirect cost rate.
Traffick911 receives grants for specific purposes that are subject to grantor review. Such reviews could result in a request for reimbursement by the grantor if unallowable costs are identified. Traffick911’s management believes that any liability for reimbursement which could arise as the result of these audits would not be material to the financial position of Traffick911.
Title: NOTE 5: LEASES
Accounting Policies: The accompanying financial statements are prepared on the accrual basis of accounting in accordance with U.S. generally accepted accounting principles.
De Minimis Rate Used: N
Rate Explanation: Traffick911 did not elect to use the 10% de minimis indirect cost rate.
Traffick911 evaluated current contracts to determine which met the criteria of a lease. The ROU assets represent Traffick911’s right to use underlying assets for the lease term, and the lease obligation represents Trafficik911’s obligation to make lease payments arising from these leases. The ROU asset and lease obligation, all of which arise from operating leases, were calculated based on the present value of future lease payments over the lease terms. The discount rate applied to calculate lease obligation as of 31 December 2024 was 5%, based on Traffick911’s estimated incremental borrowing rate.
Traffick911’s operating leases consist of leases for office space located in Addison, Texas. For the year ended 31 December 2024, total operating lease cost was approximately $113,000, excluding contributed rent of $30,000. As of 31 December 2024, the remaining lease term for Traffick911’s operating leases was 15 months.
See the Notes to the SEFA for chart/table
Title: NOTE 6: CONTRIBUTED FACILITIES
Accounting Policies: The accompanying financial statements are prepared on the accrual basis of accounting in accordance with U.S. generally accepted accounting principles.
De Minimis Rate Used: N
Rate Explanation: Traffick911 did not elect to use the 10% de minimis indirect cost rate.
Traffick911 was provided facilities at below market rate for office space as a part of a noncancellable lease agreement through March 2026. Traffick911 recognized $30,000 in office lease expense for contributed facilities during the year ended 31 December 2024. Using publicly available commercial real estate rental listings, Traffick911 estimated the monthly rental payments to be $2,500 less than market value. The contribution revenue related to these facilities was recorded in 2021 when the lease was signed. The amount of contributed rent over the remaining lease term is reported as contributed facilities use receivable in the statement of financial position, and the related office lease expense is recorded straight line over the life of the lease in the statement of activities. The contributed space is used for Traffick911’s program activities.
Title: NOTE 7: FIXED ASSETS
Accounting Policies: The accompanying financial statements are prepared on the accrual basis of accounting in accordance with U.S. generally accepted accounting principles.
De Minimis Rate Used: N
Rate Explanation: Traffick911 did not elect to use the 10% de minimis indirect cost rate.
See the Notes to the SEFA for chart/table
Title: NOTE 8: EMPLOYEE BENEFIT PLAN
Accounting Policies: The accompanying financial statements are prepared on the accrual basis of accounting in accordance with U.S. generally accepted accounting principles.
De Minimis Rate Used: N
Rate Explanation: Traffick911 did not elect to use the 10% de minimis indirect cost rate.
Traffick911 provides a retirement benefit plan to its employees. Employees may contribute to the plan via payroll deductions and Traffick911 may make matching contributions at a discretionary rate. Traffick911 did not make any employer contributions to the plan during 2024.
Title: NOTE 9: LIQUIDITY AND AVAILABILITY
Accounting Policies: The accompanying financial statements are prepared on the accrual basis of accounting in accordance with U.S. generally accepted accounting principles.
De Minimis Rate Used: N
Rate Explanation: Traffick911 did not elect to use the 10% de minimis indirect cost rate.
See the Notes to the SEFA for chart/table
As a part of Traffick911’s liquidity management, it has a policy to structure its financial assets to be available as its general expenditures, liabilities, and other obligations come due. The policy is that monthly revenues are to cover monthly expenses. Monthly revenues and expenditures are deposited in and deducted from Traffick911’s operating account.
See Note 13 for details regarding the nature of donor imposed restrictions on net assets.
Traffick911 has an existing line of credit totaling $40,000 which can be drawn upon in the event of an unanticipated liquidity need. Traffick911 made no draws on the line of credit during the year, and there was no balance outstanding at year end.
Title: NOTE 10: CONTRIBUTED SERVICES
Accounting Policies: The accompanying financial statements are prepared on the accrual basis of accounting in accordance with U.S. generally accepted accounting principles.
De Minimis Rate Used: N
Rate Explanation: Traffick911 did not elect to use the 10% de minimis indirect cost rate.
Traffick911 receives donated services from unpaid volunteers. These volunteers provide services to help around the office. These services are valued at approximately $1,624 and have not been recognized in the accompanying statement of activities, as they do not meet the requirements for recognition.
Title: NOTE 11: CRYSTAL CHARITY BALL RECEIVABLE
Accounting Policies: The accompanying financial statements are prepared on the accrual basis of accounting in accordance with U.S. generally accepted accounting principles.
De Minimis Rate Used: N
Rate Explanation: Traffick911 did not elect to use the 10% de minimis indirect cost rate.
See the Notes to the SEFA for chart/table
Title: NOTE 12: RELATED PARTY TRANSACTIONS
Accounting Policies: The accompanying financial statements are prepared on the accrual basis of accounting in accordance with U.S. generally accepted accounting principles.
De Minimis Rate Used: N
Rate Explanation: Traffick911 did not elect to use the 10% de minimis indirect cost rate.
During the year ended 31 December 2024, Traffick911’s board and staff contributed $165,171
Title: NOTE 13: NET ASSETS WITH DONOR RESTRICTIONS
Accounting Policies: The accompanying financial statements are prepared on the accrual basis of accounting in accordance with U.S. generally accepted accounting principles.
De Minimis Rate Used: N
Rate Explanation: Traffick911 did not elect to use the 10% de minimis indirect cost rate.
See the Notes to the SEFA for chart/table
Title: NOTE 14: FUNCTIONAL EXPENSES
Accounting Policies: The accompanying financial statements are prepared on the accrual basis of accounting in accordance with U.S. generally accepted accounting principles.
De Minimis Rate Used: N
Rate Explanation: Traffick911 did not elect to use the 10% de minimis indirect cost rate.
See the Notes to the SEFA for chart/table