INTERNET CORPORATION FOR ASSIGNED NAMES AND NUMBERS
FINANCIAL STATEMENTS
FOR THE PERIOD FROM SEPTEMBER 30, 1998
(date of inception) TO JUNE 30, 1999
AND
ACCOUNTANTS’ COMPILATION REPORT
Board of Directors
Internet Corporation for Assigned Names and Numbers
Marina Del Ray, California
We have compiled the accompanying statement of financial position of Internet Corporation for Assigned Names and Numbers (a nonprofit organization) as of June 30, 1999, and the related statement of activities for the period from September 30, 1998 (date of inception) to June 30, 1999, in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute for Certified Public Accountants.
A compilation is limited to presenting in the form of financial statements information that is the representation of management. We have not audited or reviewed the accompanying financial statements and, accordingly, do not express an opinion or any other form of assurance on them.
Johanson & Yau Accountancy Corporation
September 21, 1999
INTERNET CORPORATION FOR
ASSIGNED NAMES AND NUMBERS
STATEMENT OF FINANCIAL POSITION
JUNE 30, 1999
ASSETS
INTERNET CORPORATION FOR
ASSIGNED NAMES AND NUMBERS
STATEMENT OF FINANCIAL POSITION
JUNE 30, 1999
LIABILITIES AND NET ASSETS
INTERNET CORPORATION FOR
ASSIGNED NAMES AND NUMBERS
STATEMENT OF ACTIVITIES
FOR THE PERIOD FROM SEPTEMBER 30, 1998
(date of inception) TO JUNE 30, 1999
INTERNET CORPORATION FOR
ASSIGNED NAMES AND NUMBERS
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM SEPTEMBER 30, 1998
(date of inception) TO JUNE 30, 1999
INTERNET CORPORATION FOR
ASSIGNED NAMES AND NUMBERS
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999
NOTE 1 – ORGANIZATION
Internet Corporation for Assigned Names and Numbers (the Organization) was established in September 1998 under the laws of the State of California. The Organization is in the process of applying for a non-profit status under 501(c)(3) of the Internal Revenue Code of 1986 and related California statutes and is awaiting approval.
The Organization coordinates a select set of the Internet’s technical management functions such as the assignment of protocol parameters, the management of the domain name system, the allocation of IP address space, and the management of the root server system.
The Organization generates income from fees from domain name registrars and related accreditation activities plus contributions and grants. The Organization’s budget for the fiscal year ended June 2000 provides for a surplus of $1,600,000 which will be used to cover the fiscal 1999 deficit plus create an operating reserve. In addition, subsequent to the balance sheet date, the organization arranged for short-term loans totaling $800,000 to be used for working capital purposes.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Method - The Organization accounts for all transactions using the accrual method of accounting under which revenues and expenses are recognized when earned or incurred.
Contributions - The Organization complies with Statement of Financial Accounting Standards (SFAS) No. 116, "Accounting for Contributions Received and Made." In accordance with SFAS No. 116, contributions received are recorded as unrestricted, temporarily restricted, or permanently restricted support depending on the existence and/or nature of any donor restrictions.
Income Taxes - The Organization has applied for tax exempt status under IRC Section 501(c)(3). These financial statements assume that such status will be granted and, as such, no provision for federal and state income taxes has been reflected.
Financial Statement Presentation - The Organization complies with Statement of Financial Accounting Standards (SFAS) No. 117. "Financial Statements of Not-for-Profit Organizations." Under SFAS No. 117, the Organization is required to report information regarding its financial position and activities according to three classes of net assets: unrestricted net assets: temporarily restricted net assets, and permanently restricted net assets. The Organization currently has no permanently restricted net assets. In addition, a statement of cash flows must be presented.
Use of Estimates – The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities and the date of the financial statements and the reported amounts o f revenues and expenses during the reporting period. Actual results could differ from those estimates.
INTERNET CORPORATION FOR
ASSIGNED NAMES AND NUMBERS
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999
Continued
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)
Property and Equipment – Property and equipment are recorded at cost and depreciated over their estimated useful lives using the declining balance method. Depreciation expense for the eight months ended June 30, 1999 was $2,318.
NOTE 3 – OPERATING LEASE
The company entered into an agreement for the sublease of office space effective in January 1999 and expiring in September 2003. The lease is cancelable by the sublessor under certain conditions. Future minimum payments are as follows:
Year ended
June 30
2000 $ 27,007
2001 27,007
2002 27,007
2003 27,007
2004 6,752
$114,780
NOTE 4 – RELATED PARTY TRANSACTIONS
The Organization pays consulting fees and travel expenses to a company which is owned by a principal member of the Organization’s management. These fees and expenses include reimbursements of several affiliated individuals performing services for the Organization. Consulting fees and travel expenses for the eight months ended June 30, 1999 were $223,696. Accounts payable at June 30, 1999 includes $101,943 in consulting and travel expenses.