co-opportunity consumers cooperative, inc. shareholder...
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Co-opportunity Consumers Cooperative, Inc. Shareholder Disclosure Document
Executive Summary
Co-opportunity Consumers Cooperative, Inc. (aka “Co-opportunity Natural Foods”) is a California Cooperative corporation. It operates a consumer-owned natural foods grocery store, which is open to the public and is operated for the benefit of its member/owners. It was incorporated on January 6, 1976, and currently operates a 7,800 square foot grocery store in Santa Monica, employing roughly100 people and selling a full range of natural and organic foods and other household items. The Cooperative is financially strong and growing. Sales for FY 2015 were $24,050,850, the highest ever in the store’s history. The co-op has no long-term debt and has shown a profit the previous ten fiscal years. Its fiscal year ends in July on the 31st
day of the month. Its Articles of Incorporation and Bylaws will be furnished without charge to a member or prospective member upon written request specifying a valid California residency address.
The Cooperative’s principal officers are as follows: Dean Kubani, President; Jens
Koepke, Vice President; Ross Furukawa , Treasurer; Lynn Dickinson , Secretary.
The Cooperative is making an offering of preferred non-voting stock to its members for the primary purpose of raising capital to finance the opening of a new, second store in Culver City, CA.
The Offering
This offering is limited to current members of the Cooperative in good standing under the Co-op’s Bylaws. The securities are non-transferable and are only available for sale in California, to California residents.
Description of Securities Offered General: The voting power of the members is equal, with each member having one vote
only. The proprietary interests of the members are unequal as each member purchases varying amounts of shares of different types over time. The Cooperative currently issues Membership (Class “A”) shares, entitling holders to one vote and to participate in patronage refunds when they are available. Membership shares do not offer any dividends. They are redeemable upon the withdrawal of an owner’s membership. The Cooperative typically redeems the shares of withdrawing members within one month of withdrawal; however, if financially necessary, the Cooperative may take up to one year to make the payment, provided such payment doesn’t cause the Cooperative to be unable to meet its liabilities. The Cooperative does not levy any dues, assessments or transfer fees. It charges membership fees as specified in the Bylaws. In the case of a membership becoming inactive, the Cooperative may levy a reactivation fee equal to the
amount of deficiency in a given membership account. Members are not required to contribute any services to the Corporation.
If the articles or bylaws are amended so that any statement required by law on
outstanding membership certificates is no longer accurate, the board may cancel the outstanding certificates and issue in their place new certificates conforming to the articles or bylaws amendments. In this case, when new membership certificates are issued, the board may order holders of outstanding certificates to surrender and exchange them for new certificates within a reasonable time fixed by the board. The board may further provide that the holder of the certificate to be surrendered shall not be entitled to exercise any of the rights of membership until the certificate is surrendered, but such rights shall be suspended only after notice of the order is given to the holder of the certificate and only until the certificate is surrendered. The requirement to surrender outstanding certificates may be enforced by civil action.
Preferred Investment Shares: The Cooperative is offering members the opportunity to
purchase preferred non-voting investment shares of stock (Class “B”). Ownership of these preferred investment shares will entitle members to any dividend declared by the Board of Directors, and these shares will have preference as compared to the Membership (Class “A”) shares upon liquidation, but they have no other special rights or preferences. These are non-voting shares. The Cooperative will not distribute dividends if there is insufficient income in a given year. Dividends are cumulative for years when a dividend is declared but not paid. These securities have redemption rights and are more particularly described in Exhibit C: Certificate of Second Amendment of Articles of Incorporation of Co-opportunity Consumers Cooperative, Inc.
How These Securities will be Offered and Sold Purchaser Limitations: This offering is limited to Co-op members in good standing
as defined in the Co-op’s Bylaws. As part of the transaction, purchasers must verify that they have read and understood the disclosure documents, specifically including the risk factors, and that they acknowledge that their entire investment is at risk, and that they may lose their entire investment. These securities will be sold by the Co-op to its members in good standing without the use of agents or brokers.
Risk Factors
The most significant risk factors for the Cooperative and the investor are:
1. Restriction on Transferability: The Cooperative’s bylaws restrict the transfer of these shares and the exemptions for secondary trading available under Corporations Code §25104(h) are withheld. There may be other exemptions to cover private sales by the bona fide owner for his own account without advertising and without a broker dealer. NOTE: “It is unlawful to consummate a sale or transfer of this security or any interest therein, or to receive any consideration therefore, without the prior written consent of the Commissioner of Business Oversight of the State of California, except as permitted in the Commissioner’s Rules.”
2. The shares have redemption rights as specified in Exhibit C: Resolution of the Board
of Directors of Co-opportunity Consumers Cooperative, Inc.
3. Competition:
Santa Monica Location: The Cooperative continues to experience sales growth in its original Santa Monica location, although it competes with several grocery chains within a 5 mile radius. While competition has been significant, the Co-op has not experienced any discernible negative effect on its sales volume or sales growth trends. This is attributed to the membership relationship the patrons have with the organization.
4. Economic Conditions: The Cooperative has been profitable for the past ten fiscal years.
It currently does more sales per square foot of retail than the majority of national food co-ops and major national competitors (including Whole Foods and Trader Joes) . However, its value proposition is based on quality products and member relationships and not on low price. A deepening economic downturn could make it susceptible to sales erosion.
5. Outgrowing its Existing Facilities (Santa Monica location) The Cooperative’s Santa
Monica location currently transacts annual gross sales trending at over $24 million in a 9,100 square foot facility, which, at peak times, is overcrowded and has limited parking. The current lease on its store facility expires in November, 2025. The Co-op has an additional 5-year extension option, which if exercised, extends the current lease to November, 2030. The Co-op also occupies space in one other building that is used for offices and a meeting room.
While the existing Santa Monica location has shown robust growth and profitability for the past 10 years, the physical space and parking limitations could
potentially adversely affect future growth. Management’s financial planning has taken this into consideration.
6. Entering a New Trade Area (Culver City location): Another key risk factor is entering a
new trade area. Because it will take some time for customers to become familiar with the new store and adjust their shopping habits, the store is not expected to reach its mature sales level for at least four years.
This project will also require a significant investment of cash reserves and will involve borrowing additional funds to finance the project. It may also involve the risk that future sales volumes would be inadequate to service debt and/or to support operating expenses at that location. Management’s financial planning has taken this into consideration.
Management’s marketing and outreach efforts will focus on generating awareness and support of the new store through effective community and municipal linkage and outreach, new member drives (in Culver City site trade area), and other strategies to create new, loyal members and customers.
Business and Properties General Description of the Business The Cooperative operates a natural foods grocery store open seven days a week from 7
AM until 10 PM. It serves over 1,800 customers per day and employs approximately 100 people. It specializes in locally-sourced certified organic fresh produce, and it also carries a full line of natural groceries, meats, seafood, wines, beers, cheeses, body care products, and nutritional supplements. It also operates a full service in-store deli.
The Cooperative is owned by more than 15,000 of its customers who each purchase 12
refundable $25 Class “A” Membership Shares, as a condition of membership. The number of shares required for purchase rose from 4 shares in 1976 to 8 shares in 1995 and to 12 shares in 2013. This increasing share value reflects the increased benefits of membership and accounts for inflation. Shares are not transferrable, but they are redeemable upon withdrawal of membership. Ownership of the Membership Share entitles the owner to one vote in Co-op affairs and to financial benefits that include various member discounts on purchases made at the Co-op, as well as patronage refunds when profits warrant the latter.
The Cooperative has been in business since 1974 and at its current location since 1995. It
procures the products that it sells from a number of distributors and local farmers. It also produces in-house approximately 25% of the foods that it serves in its in- store deli. Plans for the new Culver City location include a large on-site kitchen designed to service both locations with a large percentage of total prepared deli foods produced in- house.
Company History and Organization
The Co-op began in the early 1970’s as a buying club organized by a small group of Los Angeles residents seeking natural and organic foods unavailable at that time through traditional grocery outlets. In time the group grew and opened a small storefront in West Los Angeles. By 1976, it had incorporated in California as a consumer cooperative corporation and opened a 3,000 sq. ft. store in Santa Monica. After several years of organizational changes and a sudden jump in size, the Co-op experienced financial reversals, eventually filing for Chapter 11 Bankruptcy in July 1977. In 1985, the Co-op hired an experienced general manager who turned the business around, saved the Co-op from closing, and increased sales from under 1 million (1985) to over 8 million (1994) in a location with only 3,000 sq. feet and 14 parking spaces.
In 1995 as sales and membership increased, it was necessary for the Co-op to make another major move to an even larger location—1525 Broadway—directly across the street from the then current store. Sales immediately grew in the new location to over 10 million in the first year. Sales continued to grow steadily from 1995 – 2010. From 2011 – 2012, a major store renovation was undertaken, after which sales growth accelerated further, reaching over $21 million/year by FY 2012.
The Co-op has never issued any stock other than the Membership Shares (Class “A”),
which all members are required to purchase. It is independently owned and operated by its members and has no affiliates.
Management Officers and Directors: The nine-person Board of Directors elects the officers (President,
Vice President, Secretary and Treasurer). Every year three Director seats are filled by vote of the membership of the Cooperative to maintain a total of nine directors on the Board. The current officers’ and directors’ CVs are attached at Exhibit A.
The position of director is minimally compensated, with compensation for all board
members, including officers, averaging $44,000 total, or roughly $5,000 per board member per year.
The Board is elected annually by the membership as a whole. Three directors are elected
each year.
Key Persons: In addition to the Board of Directors, the Cooperative is managed by a full time General Manager, Bruce Palma. His resume is attached at Exhibit B.
Arrangements with Officers, Directors and Key Persons The General Manager’s Employment Agreement is negotiated every five years, effective
August 1st on appropriate months. Year three of the agreement begins 08/01/14 and includes a compensation review. This agreement includes a Nondisclosure Agreement. The General Manager is required to have and has a succession plan in place, insuring that there will be a person ready to step into his role in the case of sudden death or disability. The Co-op has a $1,000,000 key person policy that covers it in the case of the General Manager’s death. The Co-op also has a $500,000 key person policy for the Store Manager, a key person designated and trained to fill the GM position in an emergency.
Disclosure of Management Relationships and Transactions
The Cooperative purchases inventory from a business which is owned by the store manager, one of the two key persons referenced above. Total purchases for Fiscal Year 2015 from this vendor were $118,554. Other than this, the Co-op does not transact any business with any Officer, Director or Key Person.
The Co-op will not use any offering proceeds to acquire assets from any Officer, Director
or Key Person, or from any associate of any of them. The offering proceeds will not be used to reimburse any Officer, Director, or Key Person for any services already rendered, assets previously transferred, or moneys loaned or advanced.
The Co-op has not made any loans to any Officer, Director or Key Person and will not
make any such loans. No Officer, Director or Key Person has guaranteed or co- signed any of the Co-operative’s bank debt or other obligations.
Suppliers
Co-opportunity is party to a number of group purchasing contracts negotiated by the National Co+op Grocers on behalf of Co-opportunity and over 135 other food co-ops throughout the US. This includes a national contract for favorable terms and pricing from United Natural Foods, Inc., the co-op’s primary supplier for goods, as well as numerous other vendors for services and goods purchased by the co-op. These contracts are negotiated and renewed nationally by NCG staff in the best interests of its member co- ops. Through this group-buying power the Cooperative is not, and will not be, dependent on a limited number of suppliers.
Customer Sales and Orders For the fiscal year ending 7/31/15, the Cooperative had sales in the amount of $
24,050,850 . An average basket size at the Cooperative is $35.91. There are no individual customers which account for a major portion of the Cooperative’s sales. The Cooperative’s sales show a regular if slight cycle, with sales slowing down in the summer quarter, building up through the autumn quarter and peaking in the spring quarter.
Competition
Approximately 65% of the Cooperative’s sales come from within the store’s trade area (extending between two and five miles). This area comprises Santa Monica, Venice, and portions of Los Angeles, Marina del Rey, and Pacific Palisades. The balance of the Cooperative’s sales comes primarily from within an additional 10 mile radius.
The Co-operative has continued to generate well above average customer count and
sales per square foot in its current facility, even with competition from several chain stores in its trade area. Available data shows that the co-op generates more sales-per- square-foot than the majority of other national co-ops, as well as its trade area competitors. Its principal competitor is Whole Foods. Whole Foods operates over 200 stores nationwide and is the recognized natural foods retailing leader. It operates five
stores within 5 miles of the Co-operative. Its closest store to the Co-op is .5 miles away. Another competitor is Trader Joe’s, a national chain with over 450stores that competes strongly on price. There are two Trader Joes within 5 miles of the Co-operative. Another competitor is Sprouts, a grocery chain offering a selection of natural and organic foods. There are three Sprouts locations in the Los Angeles area, the closest being approximately 4 miles away.
Co-opportunity’s competitive advantage stems from its unique cooperative business structure. Community ownership and operation—and the inherent trust that springs from this ownership model—form a brand barrier against the competition. The competition can compete in other areas (service, price, etc.), but cannot compete on the fact that the Co-op is owned by those it serves.
Community ownership creates a different relationship than is commonly found in privately or corporately owned grocery stores. It is a relationship typified by trust—trust that the Co-op will carry products that meet its owners’ needs and desires, and trust that the money spent at Co-opportunity will remain in the community.
The Co-op’s owners expect stringent product standards that support local agriculture, fair trade practices, and organic, non-GMO products. These expectations create a self- reinforcing loyalty to the store.. Co-opportunity places a strong emphasis on education about the products it carries by running a regular in-store demo program, and by producing and distributing an informative e-Newsletter on a bi-monthly basis, as well as utilizing social media platforms for product information and education. The Co-op also partners with other local groups in the community, e.g.: local non-profits, a local food bank, and other community organizations. .
Market Development, Branding and Developing our Consumer Base In addition to the competitive advantage gained from its cooperative business model, the
Co-op’s success is also largely attributed to its unique product selection, focusing on fresh, local, natural and organic quality products. It also is a destination for unique niche products not commonly found at its competitors. In addition to these attributes forming the foundation of the brand marketing strategy, the focus is also on conveying the fact that it is a community owned and operated resource where customers can connect with a larger group of like-minded individuals who support the cooperative business model and a healthy lifestyle, supported by quality products. The methods used to implement the strategy include educating customers and members on the collective value of a cooperative business. Part of this value includes knowing where our food comes from, who grows it, and how it is grown. The Co-op also emphasizes its strong relationships with local farmers and producers, an essential part of the Cooperative community. It expects to continue to communicate those messages in the coming 12 months.
New Culver City Store Marketing and Outreach In order to build awareness of the co-op difference and the new Culver City store, the Co-
op will also employ—in addition to conventional marketing strategies—a more grass-roots outreach strategy in the Culver City area. Working with the Culver City municipal economic development division, the Co-op will connect with various
neighborhood and business groups and associations to create excitement and awareness of the project, join new member/owners, raise member capital and generate new customers.
These branding and marketing activities have always been funded out of operating cash flows, and the Cooperative intends to fund them out of operating cash flows in the future as well.
Market Research and Development The Co-op management and staff work with various third-party IT consultants and
companies to continually improve IT functionality throughout its operations. All systems are assessed and adjusted for greater efficiency on an ongoing basis. New technology and software is utilized as needed to create innovative solutions throughout the organization.
Employees The Cooperative enjoys very positive labor relations. It is well-regarded as a desirable
workplace, with fair wages, meaningful work, extensive benefits (see below) and a values-based, family friendly workplace that is respectful of diversity and the employees’ personal lives.
The Co-op currently employs 103 employees. Of these, 79 are sales floor clerks, shift
leaders and assistant managers. Another 11 are middle managers, 6 are senior managers and the remaining 7 are engaged in administrative/marketing positions. The Cooperative does not anticipate any significant changes in the number of employees until the opening of its second store. At that time (or a few months prior) it anticipates adding between 70–100 new employees. Although the Cooperative has never experienced difficulty in attracting good employees, a number of strategies will be employed to staff the larger store, including the use of more advertising and hiring fairs.
The Co-op has strategically focused on cultivating staff satisfaction and high staff
morale. Staff turnover is roughly; this is well below the retail grocery store average. Of our 103 employees, 55 have been with us for at least 5 years, 30 have been with us at least 10 years, 20 have been with us at least 15 years, and 13 have been with us at least 20 years. Staff survey scores have consistently indicated very high staff satisfaction with benefits, pay and overall job enjoyment. This has resulted in a more authentic and engaging staff culture and customer service experience. Customer service and engagement is one of the Co-op’s primary competitive advantages, and one in which the Co-op consistently excels (based on third-party professional mystery shop and member survey data).
Staff Benefits The Co-op provides the following benefits to all full time staff:
· 85% employer paid premiums for Medical/Dental/Vision/Life insurance for each employee.
The Co-op provides the following benefits to all staff: · 401K plan with a 100% match up to 5% of employee’s salary for all employees. · Paid Time Off.
· A 20% discount on all purchases (10% for non-member staff). · Yearly bonuses (contingent upon profitability and fiscal soundness).
The following benefits are employer paid for managers and long-term & non- management staff:
· Long-term care insurance (managers & non-management staff with 10 yrs. of service). · Short and Long-term disability & some extra life insurance (managers, assistant
managers and non-management staff with 15 yrs. of experience).
Properties The Co-op leases the following properties:
· Its store facility at 1525 Broadway, Santa Monica. · Additional office and staff meeting room at 1448 15th St, Santa Monica. · Storage space at 1501 Broadway, Santa Monica.
Governmental Regulation
The Co-op’s business, products, services and properties are not subject to material regulation by any governmental agency. However, it is required to have operating licenses, including Los Angeles County Health Department permits, and a beer/wine license. The Co-op has been operating for over 41 years; the chances of losing its health department permits are remote, as is the chance of losing its business license. Beer and wine sales account for roughly 1% of totals store sales. Loss of that license would thereby result in a loss of just over $262,385 in annual sales. That amount would be mitigated by the reduced wages paid to employees in the Beer/Wine department and the freeing up of space now used for those sales to be used for the sale of other products.
Use of Proceeds
Proceeds from the preferred share offering will be used to finance the opening of an additional facility in Culver City, CA, in line with the Co-operative's stated ends. All costs associated with the offering, such as legal expenses, accounting expenses and advertising, will be paid out of the Cooperative’s current overhead.
There is no minimum amount of proceeds that must be raised before the Co-op uses any
of the proceeds of this offering. However, the Co-op may wait on using the funds if there are unforeseen problems with the current site. In that case, the Co-op will retain the funds in a designated, interest-bearing account until the right location is identified.
Use of Equity Not Contingent Upon Current Project Equity raised from this preferred shares offering will be used to fund the opening of a
second co-op location in Culver City. Certain factors could cause the Co-op to not approve full project implementation and completion in FY 2017. These could include, but are not limited to: site design issues, significant changes in project plans and financial projections, lack of sufficient financing (developer and/or Co-op), etc. If the Co-op does not approve this particular project implementation, the funds raised (preferred shares equity) will be retained by the Co-op in a designated interest-bearing account to be used to fund a future project of a similar nature and scope and in the short-term to pay dividends on preferred shares
Selected Financial Information
The following table summarizes certain financial information from the Cooperative’s2013, 2014, 2015 audited and/or CPA reviewed financial statements. Purchasers should read this table in conjunction with the consolidated projections summary for the project and preferred shares projections, as well as the Cooperative’s financial statements attached hereto as Exhibit D.
SELECTED FINANCIAL DATA STATEMENT OF OPERATIONS
Profit & Loss
Year Ending % of Year
Ending % of Year Ending % of Year
Ending % of 9 months YR to Date % of
7/31/2012 Sales 7/31/2013 Sales 7/31/2014 Sales 7/31/2015 Sales 4/30/2016 Sales
Sales $21,221,215 100.0 $22,367,849
100.0 $23,260,295 100.0 $23,735,808
100.0 $17,723,895 100.0
Cost of Goods 13,570,621 63.9 14,183,294
63.4 14,678,740 63.1 14,760,191
62.2 10,924,030 61.6
Gross Margin 7,650,594 36.1 8,184,555
36.6 8,581,555 36.9 8,975,617
37.8 6,799,865 38.4
Operating Expense 7,424,034
35.0 7,700,728 34.4 8,153,410
35.1 8,448,113 35.6 6,300,420
35.5 Operating Income 226,560
1.1 483,827 2.2 428,145
1.8 527,504 2.2 499,445
2.8
Interest Expense -41,449 (0.2) -14,906
(0.1) 0 - 0 - 0 -
Other Income 29,788 0.1 52,638
0.2 121,350 0.5 137,379
0.6 32,422 0.2
Other Expense 0 - 0 - -10,900 (0.0) -11,424
(0.0) 0 -
Escheated Membership Shares
0 - 0 - 0 - 826,609
3.5 0 -
Loss on disposal of property and equipment
-26,992 (0.1) -11,804
(0.1) -20,274 (0.1) -6,002
(0.0) 0 -
Pre-Tax Income 187,907 0.9 509,755
2.3 518,321 2.2 1,474,066
6.2 531,867 3.0
Provision for Income Taxes -18,801
(0.1) -41,985 (0.2) -202,470
(0.9) -97,982 (0.4) -42
(0.0)
Net Income 169,106 0.8 467,770
2.1 315,851 1.4 1,376,084
5.8 531,825 3.0
Balance Sheet Data: Working Capital $1,549,200 $1,777,012 $2,407,326 $3,059,534 $3,875,688 Total Assets $5,789,967 $5,873,582 $6,246,679 $6,723,260 $6,988,719 Long Term Liabilities $513,268 $0 $0 $12,756 $6,378 Total Liabilities $2,014,409 $1,466,066 $1,559,921 $1,691,482 $1,342,056 Net Worth $3,775,558 $4,407,516 $4,686,758 $5,031,778 $5,646,663
CAPITALIZATION as of 07/31/15 The following table sets forth the Cooperative’s capitalization as of 07/31/2015:
Owner’s Equity: Actual
Maximum
Membership Shares $1,619,951
$25,000,00
($25 per share)
Total Capitalization $1,619,951 $25,000,00
Outstanding Securities There are no outstanding securities, except the $25 Membership shares. These shares,
according to the Articles of Incorporation and Bylaws, have voting rights and rights to patronage refunds when they are available, but they have no dividend rights.
Management’s Discussion and Analysis of Certain Relevant Factors
The Cooperative does not have and does not anticipate having any cash flow or liquidity problems in the next 12 months. It is not in default on any note, loan, lease or other indebtedness or financing arrangement. None of its trade payables is more than 45 days old. It is not subject to any unsatisfied judgments, liens, or settlement obligations. Its financial statements do not show any losses from operations.
The Co-op has posted positive net income from 2005 through the most recent fiscal year
(2015). Management does not judge there to be changes in the underlying economics of the Co-op’s Santa Monica location, which will have a significant impact upon the Co-op's results of operation in the next 12 months.
Based on the sales distribution patterns of the existing Santa Monica store (as determined by a customer transaction survey conducted in January 2014), the development of the Culver City site might displace 5% of the existing store’s customers. Management’s projections of the Santa Monica location sales have taken this into account.
The Co-op meets its current cash requirements out of operating cash flows. It currently
operates regularly with roughly 31 days of available operating cash. The Co-op currently carries no long-term debt, but will require additional financing (other than cash reserves and member equity) to fund the opening of the Culver City location.
A detailed Market Study and Sales Forecast was prepared by a professional analyst to
determine the feasibility of opening an additional facility in the planned location. Sales projections (within multi-year financials) for the first 5 years show sufficient volume to support adequate cash flow and liquidity to service all debt, Class “B” dividend payments, and redemption of membership shares upon member withdrawal.
Management will address any negative deviation from sales and financial projections by monitoring labor hours and expenses and adjusting as needed to ensure positive cash flows.
Certain Legal Proceedings
Insolvency There have been no petitions for bankruptcy, receivership, or a similar insolvency
proceedings filed by or against the Co-op or any Officer, Director, or key person within the past five years, either in an individual capacity or in his/her management capacity of any business.
Criminal Proceedings Neither the Co-op, nor any Officer, Director or key person has been named as the subject
of a pending criminal proceeding or been convicted in a criminal proceeding, excluding traffic violations or other minor offenses.
Civil Proceedings Neither the Co-op, nor any Officer, Director, or key person is currently the subject of any
pending civil action, or has been the subject of a court order, judgment, or decree in the last five years related to his or her involvement in any type of business, securities, or banking activity.
Administrative Proceedings Neither the Co-op, nor any Officer, Director, or key person is the subject of a threatened
or pending administrative proceeding related to his or her involvement in any type of business, securities, or banking activity. No government agency, administrative agency, or administrative court has imposed an administrative finding, order, decree, or sanction against the Co-op or any Officer, Director, or key person in the last five years as a result of his or her involvement in any type of business, securities, or banking activity.
Self-Regulatory Proceedings No self-regulatory agency imposed a sanction against the Co-op or any Officer, Director,
or key person in the last five years as a result of his or her involvement in any type of business, securities, or banking activity. Neither the Co-op, nor any Officer, Director, or key person is the subject of a threatened or pending proceeding by a self- regulatory organization, related to his or her involvement in any type of business, securities, or banking activity.
ADDITIONAL INFORMATION
Security holders will receive an annual account statement indicating the number and value of
their shares and any accumulated dividends. In addition, holders will receive an annual 1099-DIV form. All Co-op members receive the Co-op’s annual report by e-mail or have access to it on the Co-op website or in the store. Annual financials are available to all members by request no later than one hundred twenty days after the close of the Co-operative’s fiscal year (7/31). If the Cooperative’s Articles of Incorporation or Bylaws are amended so that any statement required on this disclosure statement pursuant
List of Exhibits
Exhibit A – Certificate of Second Amendment Exhibit B – Officers’ and Directors’ CV’s Exhibit C – Board Resolutions Exhibit D – Financial Information
DEAN A. KUBANI
PROFESSIONAL EXPERIENCE Director, Office of Sustainability and the Environment City of Santa Monica, CA Responsible for all aspects of sustainability program and policy development, implementation and enforcement for city of 90,000 · Manage $4.5 million annual budget and supervise 19 staff members
2006-present
· Direct the operations of staff in the areas of climate action planning, resource conservation,energy and green building, urban runoff and watershed management, hazardous materials,toxics use reduction, environmental remediation and all aspects of the Santa MonicaSustainable City Plan
· Advisor to regional and international planning organizations and state and local governmentagencies on a variety of environmental and sustainable policy issues
Senior Environmental Analyst 1999-2006 Environmental Analyst 1994-1999 City of Santa Monica, CA Santa Monica Sustainable City Program Coordinator. Responsible for sustainable program and policy development, implementation, evaluation, and outreach for city of 90,000 · Coordinated sustainability program for city government operations, including greenhouse
gas emission reductions, sustainable procurement programs and toxics use reductionprograms
· Responsible for data collection, monitoring and reporting on community sustainabilityindicators
· Facilitated community sustainability efforts through partnerships between the citygovernment and community organizations, institutions and non-governmental organizations
· Staff liaison to the Santa Monica Task Force on the Environment and Sustainable City TaskForce
Environmental Policy Consulting and Internships 1993-1994 Climate Institute - Washington, DC Natural Resources Defense Council (NRDC) - Los Angeles, CA Heal the Bay - Santa Monica, CA Conducted environmental policy research, environmental program development, problem solving and scientific research for non-profit environmental organizations Senior Project Geologist 1990 - 1993 Staff Geologist 1987-1988 California Environmental - Westlake Village, CA Directed operations of numerous sub-contractors and field scientific staff during environmental investigations of large commercial developments and industrial sites for mid-sized environmental geological consulting firm
· Managed and performed all phases of research, exploration, and reporting for over 100environmental site assessments and remedial investigations
· Designed and installed systems for characterization and remediation of soil and groundwatercontaminant plumes
· Prepared technical scientific reports, workplans, and project proposals for government
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EDUCATION
1989 Post-Graduate Study - Environmental Geology University of New South Wales, Sydney, Australia
1988 Post-Graduate Study - Structural Geology and Tectonics
Victoria University of Wellington, New Zealand
1987 BA - Geology University of California, Santa Barbara
1980 - 1983 Undergraduate Study - Architecture
California Polytechnic State University, San Luis Obispo AFFILIATIONS AND ADVISORY POSITIONS
University of Southern California Center for Sustainable Cities The Center for Sustainable Cities engages in multidisciplinary research and education on the environmental, social and economic sustainability challenges facing metropolitan regions, and contributes to the development of public policy that improves the natural and human environment of cities
· Board of Advisors (2004 - 2010) · Board Executive Committee (2006 - 2010)
Santa Monica Bay Restoration Commission The SMBRC was established by an act of the California Legislature in 2002 to monitor, assess, coordinate and advise the activities of state programs and oversee funding that affects the beneficial uses, restoration and enhancement of Santa Monica Bay and its watersheds
· Governing Board - alternate Santa Monica representative (2006 - 2012) · Executive Committee - alternate Santa Monica representative (2006 –2012)
Santa Monica Bay Restoration Foundation The SMBRF is a non-profit public benefit corporation that provides fundraising for research, planning and implementation of activities that lead to the restoration and enhancement of Santa Monica Bay
· Board of Directors – (2013) Green Cities California Green Cities California is a collaborative effort among nine jurisdictions with the mission of accelerating the adoption of sustainability policies and programs through collaborative action at the local and state level
· Founding member (2007) · Steering committee (2008 – present)
International Sustainable Indicators Network International organization established to increase the visibility and understanding of best practices related to sustainability measurement and indicators
· Advisory Board (2001-2008) Institute for Market Transformation to Sustainability Non-profit organization whose mission is to foster and accelerate the global free market transformation to sustainability
· Board of Directors (2004-2011) Southern California Association of Governments Regional planning agency for Southern California based in Los Angeles, CA
· State of the Region Benchmark Task Force member (1998-2008) Westside Urban Forum Organization that promotes discussion and debate about planning, growth and development on the Westside of Los Angeles
· Board of Directors (2001-2003) Green Team Project Non-profit organization that promotes sustainable practices at the neighborhood level in programs throughout the United States
· Advisory Board (1999-2005) Sustainable Works Non-profit environmental education organization based in Santa Monica that promotes sustainability to residents, students, schools and businesses in the region
· Board of Advisors (2007 - 2011) Ocean Charter School Independent elementary and middle school (K-8) chartered by the Los Angeles Unified School District and located in Marina del Rey, CA
· President, Board of Trustees (2008 - 2011) · Governance Committee (2005 - 2011) · Member of School Founders Group
Co-Opportunity Cooperatively owned natural food grocery store in Santa Monica, CA
· Board of Directors (2001 - present) · Board President (2014 - current) · Board Secretary (2007-2009) · Board Vice President (2004-2007) · Board Treasurer (2003-2004, 2012-2013)
Twin Pines Cooperative Foundation Non-profit foundation that provides grants to support the development of cooperative enterprises including food, housing and health cooperatives and credit unions
· Board of Trustees (2012 - present)
SELECTED PRESENTATIONS AND LECTURES Presentations
GreenTown: The Future of Community; Chicago, IL; October 2009 – Keynote presentation – Sustainable Communities – Where We’ve Been and Where We’re Going
GreenTown: The Future of Community; Aurora, IL; October 2008 – Keynote presentation – Community Sustainability
Community Indicators Consortium International Conference; Burlington, VT; December 2006 – Linking Government and Community Performance for Sustainability
American Planning Association National Planning Conference; San Francisco, CA; March 2005 – Community Indicators In Planning
Community Indicators Consortium International Conference; Reno, NV; March 2004 – Community Indicators in Local Government
Natural Step National Conference; San Francisco, CA; May 2002 – Moving Toward Sustainability and Measuring Sustainability in Santa Monica- A Case Study
American Planning Association National Planning Conference; New York, NY; April 2000 - The Natural Step to Sustainability
President’s Council on Sustainable Development National Town Meeting; Detroit, MI; May 1999 – Sustainability at the Local Level: A Case Study of Santa Monica’s Sustainable City Program
Cambridge Center for Adult Education Community Symposium; Cambridge, MA; April 1999 – Keynote Presentation: The Santa Monica Sustainable City Program
Pathways to Sustainability International Conference; Newcastle, Australia; June 1997 Measuring Sustainability in Santa Monica
Lectures
Mr. Kubani is a frequent lecturer at universities and colleges on sustainability at the municipal and community level and sustainability indicators. He has delivered lectures at the following institutions:
· University of Southern California, Sustainable Cities Doctoral Program and
Undergraduate Geography Program · University of California Los Angeles, Graduate School of Architecture, Graduate
School of Urban Planning, and Extension Program · University of California Santa Barbara · California Polytechnic University Pomona, Graduate School of Urban and Regional
Planning · California State University Northridge, Graduate Urban Planning Program · Claremont Graduate University, School of Politics and Policy · Utah State University · Pitzer College · University of Texas, School of Architecture · Occidental College, Urban and Environmental Policy Institute · Pepperdine University
Jens Benjamin Koepke
I. EDUCATION
UCLA School of Law
Legal: Juris Doctor degree, June 1990; Admitted to California Bar, December 1990 CUMULATIVE AVERAGE: 84.15 — A average (@ top 10%) UCLA Law Review: Associate Editor (1989-90) Federal Communications Law Journal: Comment Editor (1989-90); Asst.
Managing Editor (1988-89); Associate Member (1987-88) UCLA Moot Court Honors Program: Participant
Undergraduate: Texas A&M University
B. A. (Journalism), May 1987, summa cum laude (1 of 51 in university) Graduation with University Honors (1 of 20 in entire university class) GPA: 3.92 (#1 in Dept. for 1986-87 & top 1% of university class) Senior thesis: accepted and read at the SW Symposium for Journalism and Mass Communication (Oct. 11-12, 1987) — Awarded 1st Prize as best
II. ACADEMIC POSITIONS
paper in symposium.
Lecturer, Fall 1998 - Spring 2014 Media Law, Journalism Dept. California State Univ. - Northridge
Teaching Assistant, 1990
Lecturer, 1996-97 (Fall & Spring Sem.) Media Law, Communications Dept. California State Univ. - Fullerton
Teaching Assistant, 1988-89
Prof. Geoff Cowan, Media Law Legal Research & Writing
UCLA Communications Studies Dept. UCLA School of Law
III. PUBLICATIONS
A. Journal Articles Heinke, Koepke & Bandlow, “First Amendment in the Electronic Age: Free Speech vs. Market Regulation,” chapter 12 in Securities in the Electronic Age (3rd ed. 2002 Glasser)
Vanderet, Koepke & Bloom, “Media Law and Defamation Torts: Recent Developments,” Tort & Insurance Law Journal 333 (1992)
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Koepke, “Reporter Privilege: Shield or Sword? Applying a Modified Breach of Contract Standard When a Newsperson ‘Burns’ a Confidential Source,” 42 Federal Communication Law Journal 277 (1990)
Koepke, “The University of California Hate Speech Policy: A Good Heart in Ill-Fitting Garb,” 12 COMM/ENT 599 (1990)
Koepke, “Article Digest,” 40 Federal Communications Law Journal 433 (1988) (reviewing Osborn, “The Reporter’s Confidentiality Privilege: Updating the Empirical Evidence After a Decade of Subpoenas” (1985))
Koepke, “The Legal Status of Reporter Privilege in Texas,” 3 Southwestern Mass Communication Journal 33 (1987)
B. Magazine and Newspaper Articles
"Do Not Pass Go, Do Not File an Appeal," Los Angeles Daily Journal (October 8, 2013)
When Is a Judgment Truly Appealable? We'll Soon Know,” Los Angeles Daily Journal (September
3, 2013)
'Lost' Idea-Theft Claim Goes Down the Hatch,” Los Angeles Daily Journal (April 24, 2013)
“Fatal and sanctionable: Filing an untimely anti-SLAPP motion,” Los Angeles Daily Journal (February 21, 2012)
“Getting your appeal off the ground is not as easy as it sounds,” Los Angeles Daily Journal
(September 1, 2011)
“You Stole My Idea - Contract Claim or Just Copyright?” Los Angeles Daily Journal (June 1, 2011)
Instructions Manual, Los Angeles Daily Journal (June 9, 2009)
Don’t Lose Track: Handling Jury Instructions at Trial, "Appellate Tips for Trial Lawyers" (a newsletter of the Los Angeles County Bar Association), Vol. 1, No. 10 (October 2008)
Writers Blocked, Los Angeles Daily Journal (March 20, 2008)
What Triggers Your Time to Appeal: It's Not Sexy, But You Better Understand It, ABTL Report (Summer 2007)
Case Furthers Trend Limiting Post-Appeal Judge Challenges, Los Angeles Daily Journal (December 8, 2005)
Ruling Shows How to Identify Trade Secrets for Discovery, Los Angeles Daily Journal (November 7, 2005)
Not So Fast – A Stipulated Reversal of Judgment Belies Its Name, ABTL Report (Summer 2005)
An Agreement Does Not A Stipulated Reversal Make, Los Angeles Daily Journal (February 9, 2005)
Koepke, “Traveling by Train,” Healthy Outlook, Fall 1995
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Editorials in the Los Angeles Daily Journal, San Diego Union-Tribune, Minneapolis Star-Tribune, San Francisco Daily Journal
Various stories in The Battalion (Texas A&M University Newspaper)
IV. SELECTED EMPLOYMENT HISTORY
Morris Polich & Purdy (L.A.) — Partner (11/10 - ) — Co-leader of appellate practice group. Manage all aspects of a law and motion and appellate practice, from meeting with prospective clients to preparing briefs and arguing motions and appeals, with particular emphasis in the media and intellectual property law arena.
Greines, Martin, Stein & Richland (L.A.) — Associate (7/01-11/10) — Manage all aspects of a law and motion and appellate practice, from meeting with prospective clients to preparing briefs and arguing motions and appeals, with particular emphasis in the media and intellectual property law arena.
Richman, Mann, Chizever, Phillips & Duboff (L.A.) — Associate (3/94-6/01) — Conducted all aspects of a litigation practice, from meeting with prospective clients to handling trials and appeals, including a precedent-setting reversal reported in Lance Camper Mfg. Corp v. Republic Indemnity Co., 44 Cal. App. 4th 194 (1996).
O’Melveny & Myers (L.A.) — Litigation Associate (9/90-2/92) — Handled all aspects of a litigation practice, including discovery, research, drafting of motions and briefs, settlement negotiations, depositions and conducted a trial in federal court in a precedent-setting communications law case, reported in WestStar Cable Television, Inc. v. Sierra East Television, Inc., 776 F. Supp. 1405 (E.D. Cal 1991).
American Civil Liberties Union (S.F.) — Legal Extern (8/89-12/89) — Conducted research, drafting, client intake and factual research.
Rep. Alan B. Mollohan (D-W. Va.) — Congressional Intern (Spring 1986) — Did legislative research and tracking of legislation, wrote speeches and press releases, and oodles of constituent mail.
The Battalion — Staff Writer, City Editor and Asst. City Editor (Spring 1985-Spring 1987) Chosen best editor for 1986-87. — Covered state politics and focused on in-depth reporting as a staff writer; generated
assignments, worked with reporters, edited stories, did page layout, and was involved with daily news budgeting as an editor.
V. SKILLS & INTERESTS
Speak fluent German and passable French. Have traveled extensively in the U.S., Europe, Australasia, Asia and Mexico. Enjoy all sports, especially tennis; yoga; backpacking; photography; music.
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Sahaja Douglass - Curriculum Vitae
EDUCATION
1999 Certified Yoga Teacher, Santa Barbara Yoga Center, Santa Barbara, CA (Lisa Walford and Erich Schiffmann)
1995 M.A Antioch University, Marina Del Rey, CA - Clinical Psychology
1986 B.A. Hamilton College, Clinton, NY - Psychology and French
1982 The Dalton School, Manhattan, NY
PROFESSIONAL EXPERIENCE
2001-Present
Marriage and Family Therapist MFC 38423
2008-Present
Board Member, Co-opportunity Consumers Cooperative, Inc. Secretary of the BOD (2012-2013). Treasurer of the BOD (2014-Present). Chair, Nominating Committee (2013). Chair, Audit Committee(2014).
2006-2009
Founding Owner, Conscious Conception and Pregnancy. Created and facilitated Conscious Conception and Pregnancy programs that incorporated meditation, counseling, yoga, nutrition and environmental health for individuals and couples wanting to invite a child into their family.
1989-1995
Founding Owner, Pet Excursions Animal Care Service. Managed twelve employees and catered to clients in the entertainment industry. Services included: Dog Training, Pet Sitting and Socialization Mountain Hikes. Clients included: Johnny Depp, Kate Moss, Hugh Grant, Elizabeth Hurley, Dyan Cannon.
MFT IINTERNSHIPS (1995-1999)
Santa Monica Unified School District (8/98-1/99): Provided individual and group therapy with students at Santa Monica Alternative School(SMASH) and Santa Monica High School. Provided individual therapy at John Muir Elementary School. Assessed student’s problems, advised teachers and school staff regarding how to respond to various students’ behavioral problems, conducted in-person and telephone interviews with students’ parents.
Private Practice of Pricilla Taylor (12/97-12/98): Facilitated individual therapy with adult clients seeking greater self-awareness and help with relationship problems.
Private Practice of Lori Grapes (6/96-12/97: Facilitated therapy with individual adult clients experiencing relationship problems. Used various therapeutic modalities, including psychodynamic and behavioral/cognitive.
Westside Academy (2/97-8/97): Responsible for on site individual counseling with children in grades 1-8. Students had IEP’s and were diagnosed with Attention Deficit Disorder, Learning Disorders and/or Serious Emotional Disturbances. Conducted intakes and behavior modification and play therapy with students.
The Julia Ann Singer Center (3/96-8/97): Intern in the Autism Nursery, Family Therapy Program and Family Stress Program. Co-facilitated groups with abused children or children at risk for abuse. Facilitated therapy for adults and families, wrote assessment and treatment plans, including diagnosis and progress reports.
Campion Counseling Center, a project of Ocean Park Community Center (5/95-4/96): Individual, group and family counseling, including diagnosis, assessment and treatment according to interpersonal and family theories. Conducted client intakes, formulated therapeutic goals, treatment plans, and written progress reports. Facilitated weekly counseling groups and individual therapy at Santa Monica High School and Olympic High School. Facilitated weekly individual therapy on site at Campion Counseling for women and children who experienced domestic violence.
PUBLISHED ARTICLES
Douglass, Sahaja. “Conscious Conception: The Ultimate Invitation.” Bamboo Magazine (Spring, 2011), p.11-13.
Annual contributing writer, Parent POP Literary Magazine. 2012-2014. Creative non-fiction stories provided upon request.
SERVICE AND AFFILIATIONS
Chair, Harvard-Westlake Party Book (2013-Present): Managed fundraiser comprised of 70 events, 150 hosts, and 450 registered guests. Created marketing campaign, created website content, oversaw all communication with hosts, guests and school administration.
Chair, PSONE Party Book (2010-2012): Managed fundraiser comprised of 35 events, 70 hosts, and 175 registered guests. Created marketing campaign, created website content, oversaw all communication with hosts, guests and school administration.
Chair, Annual Fundraising Benefit for Best Friends Animal Society (1992-1995): Created annual fundraiser for Best Friends Animal Society and chaired the first three events at premier venues in Los Angeles.
Volunteer, Harvard-Westlake School (2012-2014): Bookstore, Library and Special Events.
Volunteer, PSONE Elementary School (2006-present): Classroom, Parent Pop Photo Column, School Photographer, Field Trips, Parent-in-Residence Program, Food Preparation, Special Events.
COMMUNITY SERVICE
IAM Integrated Amrita Meditation Assistant: Mata Amritanandamayi Center Summer Tour (2014) Assisted IAM teacher, demonstrated yoga poses, educated program participants utilizing materials provided by the MA Center.
Seva Desk Team member: Mata Amritanandamayi Center Summer Tour (2011-2013) Organized volunteers for on-site security, food preparation and other departmental needs.
Co-leader: Mata Amritanandamayi Center Summer Tour Staff Food (1997-2010): Solicited donations, organized volunteers and cooked food for 300 members of Amma’s tour staff.
Cook, Mother’s Kitchen (2007-2008): cooked 20 gallons of chili each week for the homeless at the Ocean Park Community Center Homeless Shelter.
Yoga Teacher: Santa Monica, YMCA (1998). Taught a twice-weekly hatha yoga class for adults, with an emphasis on standing poses and correct form.
MEMBERSHIPS (Past and Present)
CAMFT GPALA Yogaworks Ohr Ha Torah Santa Monica YMCA Tower 26 Triathlon Club Joanne Baron Acting School Lee Strassbourg Acting School
INTERESTS
Iyengar Yoga, meditation, swimming, cycling, creative non-fiction writing, reading, photography, animals, nature, anything in which my husband and children participate.
Steve Bornstein Consulting
Profile STEVE BORNSTEIN
Steve Bornstein has been a consultant to individuals and senior management in private corporations and public interest groups for the past 24 years. As a facilitator of success, growth and change, Steve provides tools to help clients clarify purpose and goals and identify the most effective ways to achieve them. His strengths include transition coaching, mentoring rising stars, Strategic Team Planning, and ongoing management and leadership support. He has assisted numerous clients in defining and achieving their goals through the exploration and selection of strategic solutions, developing clearly defined action plans, facilitating organizational restructuring, and building advisory boards. He likes to say he is a “Resultant” not a consultant.
Public interest clients include American Public Health Association,
Green Cross International; City of Santa Monica; Otis College of Art and Design; New West Charter Middle School, Liberty Hill Foundation; Global Green USA, Global Footprint Network, A Place Called Home; Friends of the Earth, Environmental Defense Fund; Latino Museum of Art, History, and Culture; Union of Concerned Scientists; The Lemelson Foundation; TreePeople; Coalition for Clean Air; Environment Now, Compton Family Health Collaborative; Tarrant County Public Health, California Coalition for Childhood Immunization; The Wellness Community; and California Parkinson’s Caucus.
Corporate clients include Sony Pictures Entertainment, Gemstar-TV Guide, Porter
Novelli, Corbis, InfoSpace, Jamdat, BIC USA, Methanex, Higher Octave Music, Sybersound Records, The Todd-AO Corporation, Jenny Craig International, Turner Pictures, Propaganda Films, Hollywood Digital, and Work Records. Steve has also coached executives at Warner Music Group, Intel, Yahoo!, and Electronic Arts.
Steve has served as CEO, Sunrise Films; Sr. Vice President Programming and
Feature Film Acquisitions, Lorimar Home Video; and Chief Operating Officer, Lion's Gate Films. In all of these positions he was involved in the development and implementation of business plans for new ventures or corporate reorganizations. He is also an instructor for the department of entertainment studies at UCLA Extension and Center for Cultural Innovation. Steve is currently a Board Member of Co-Opportunity Consumers Cooperative Inc. and a Taproot Foundation Account Director and Project Manager.
Steve received an MBA from the Stanford Graduate School of Business, an MS in
civil and environmental engineering from the University of Pennsylvania, and an MA in Psychology at the University of Santa Monica.
Steve has successfully completed three treks in the Himalayas. He practices yoga and
hikes regularly.
Lynn Dickinson
Executive Communications Professional & College Faculty Writing, Psychology, and Internet Expertise
Education:
Master of Arts (MA) Spiritual Psychology University of Santa Monica – 2002
Master of Professional Writing (MPW) University of Southern California – 1993
Master of Arts (MA) Communications Management (with distinction) Annenberg School for Communication at USC – 1991
Bachelor of Arts (BA) Philosophy & Radio/TV/Film Wayne State University in Detroit (magna cum laude) – 1987
Employment History:
Adjunct Professor – Media Studies Santa Monica College Feb 2013 – Present
Teach media studies courses to undergraduate students.
Consultant – Online Course Development Jan. 2009 – Present Provide online content strategy for award-winning entertainment industry professionals and educators in developing all aspects of bringing their course offerings into an online arena.
Associate Partner & Regional Executive Director – Content Strategy & Creation MarchFIRST - Santa Monica, CA October 1999 – April 2001
MarchFIRST was a leading internet consulting firm consisting of 10,000 professionals in 70 offices in 14 countries, serving over 60 of the Fortune 100 as clients. The Santa Monica office was considered to be the company’s Entertainment & Media Headquarters and had been designated a “Broadband Center of Excellence.” MarchFIRST ceased operations in April 2001.
Established initial marchFIRST Content Strategy & Creation team to identify, articulate and fulfill client brand strategies online. Developed regional capability, generating nearly $11,000,000 in newly billable revenue within first nine months.
Included:
· Determining the full scope of all Editorial/Content department offerings · Establishing all criteria, standards, editorial deliverables & Best Practices documents · Developing Content/Editorial methodologies (emphasis on user centric models) · Creating all Organizational Charts, Staffing Plans and Departmental Budgets · Developing all departmental job descriptions and career path aspects
L. Dickinson Resume page 2
· Recruiting, hiring, training, mentoring and supervising all Senior Content Strategists, Content Strategists, Staff Writers, Editors, Proofreaders, Coordinators and Assistants (in house and remote)
· Internal Communications - establishing, overseeing and evaluating collaborations and developing involvement and support amongst internal corporate divisions by educating all non-content marchFIRST staff and business development professionals as to the viability and scope of the new offerings
· Successful integration of Editorial/Content methodology into existing marchFIRST project methodology
· Oversight of creative communications work (internal and external communications for both Business-to-Business and Business-to-Consumer initiatives) for dozens of high profile clients: ATT Broadband, NBCi.com, Warner Home Video, Sony (Uville), Toyota, Amgen, Allergan, Mazda and more
· Prioritize and organize department workload across multiple, high-profile clients, to ensure completion of all client tasks and project milestones by internal and external deadlines
· Public speaking, representing Communications/Content/Editorial/Brand Strategy expertise at multiple industry conferences and events, including WebLA, Web2000, WebFest Los Angeles, and eMediatainment World
Editorial Director Hollywood.com - Santa Monica, CA Nov. 1995 – Oct. 1997
Established the original editorial department for this leading movie and entertainment online destination site. Included all aspects of launching the original Website and building it out to over 1,000,000 pages. Managed all staff, produced multiple live Webcast events, and negotiated deals with third party content providers. Oversaw two site redesigns and stewarded the site through two sales to new owners (including Times Mirror).
Promoted to:
Marketing and Research Director Oct. 1997 – Oct 1999
Marketing director during the launch of a nationwide, in-theatre, trailer campaign. Conceived and implemented various co-branded sponsorship promotions with clients such as Microsoft, Proctor & Gamble, and M&M Mars. Included user research and business development.
L. Dickinson Resume page 3
Tour Publicist Imaginary Entertainment, West Hollywood, CA March 1991 – Nov. 1995
Tour publicity for rock parody artist, “Weird Al” Yankovic. Included initiating all local media (electronic and print) coverage, promotions and publicity stunts and events during multiple tours of the U.S. and Canada. Also all handled fan and media relations.
Campus Publicist Warner Bros. Films, Burbank, CA Sept. 1985 – May. 1993
Handled all feature film promotions and publicity on 14 college campuses in the metropolitan Detroit (undergrad) and then Los Angeles (grad school) areas. Included conceiving and implementing stunts, garnering media (electronic and print) coverage, hosting campus preview screenings, assisting at celebrity press junkets and major motion picture red-carpet premieres.
Of Possible Additional Interest:
Member - Board of Directors May 2003 – Present Co-opportunity – Santa Monica’s Natural Foods Grocer
Immediate past President of the Board of Directors (my two year term ended in January, 2012) of this $19 million per year for-profit company with oversight of a $3 million full-store remodel. Previously chaired the General Manager hiring committee.
Residence Coordinator Fall 1988 – Spring 1993 University of Southern California
Live-in supervisor of Resident Advisor staff in Honors Student Housing and Special Interest Student Housing. Included crisis intervention, dispute mediation, activity programming, disciplinary reviews, and student teaching (EDCO 440 Introduction to Paraprofessional Counseling).
Carl Fredlin
RESUME Employment Director of Facilities History: Green Dot Public Schools, Inc. 2006 – present
Manage staff of nine. Budget responsibly for the maintenance, security, transportation, housekeeping, security, and food services of 21 high schools and middle schools. Overall responsibility for home office operations and third party vendors. ▪ Manage maintenance staff of eight and a maintenance manager. ▪ Negotiated transportation and food service contracts as well as office equipment contracts. ▪ Developed emergency preparedness plans and disaster communications systems for schools and home office. ▪ Responsible for space planning and programming for home office and all schools. ▪ Responsible for remodel of a school in Memphis. ▪ In process of setting up refurbishment of school in Tacoma.
Administrative Services: Facilities and Project Manager, Canon Business Solutions, Inc. 1991 – 2005 Managed staff of 21, including three supervisors. Budget responsibility for facilities, all telecommunications, building security, fleet, office leases, relocations, asset management, ergonomics (ADA) and safety. ▪ Three-time winner of Circle of Excellence, awarded 2000, 1998, 1996. ▪ Developed facility design for corporate and branch offices. Managed facility selection, leasehold improvement negotiations, general and sub-contractors for construction, space planning, and communications infrastructure including relocations. Completed on schedule, on or under budget, with no loss of operational effectiveness. ▪ Developed space inventory and property lease tracking system. Increased negotiation leverage at lease renewal, resulting in consistently better lease terms. ▪ Reorganized department. Retained internal customer satisfaction; reduced staff expense 65%. ▪ Improved staff morale through team development, training and mentoring programs. ▪ Developed corporate emergency preparedness plan. ▪ Instituted emergency response teams and recovery program: Power backup, search/rescue, triage, first aid, etc., to ensure continuation of essential functions in case of major disaster. ▪ As Corporate Safety Officer, implemented/enforced OSHA standards, safety training, injury & illness prevention, hazard communication as per state and federal regulations. Orchestrated response to Northridge earthquake with little down time to red-tagged office. ▪ Developed tracking for 1500 telephone and data lines. Improved cost monitoring and resource management, resulting in a more streamlined and reliable system. ▪ Achieved seamless integration of multiple telephone system peripherals. Significantly improved service to end users. Developed internal diagnostics & repair skills, sharply reducing end-user down time. Saved approximately 50% in repairs and maintenance costs.
Page 2: Carl Fredlin
Education: ▪ Newark College of Engineering, ▪ Purchasing & Materiel Mgmt, UCLA, Certificate ▪ Civilian Emergency Response Team, L.A. City Fire Dept., Certificate
Memberships: ▪ International Facility Management Association (IFMA)
Community ▪ Board of directors, past president, Co-Opportunity Consumers Cooperative, Inc., Involvement: ▪ Disaster Communications Services (DCS), L.A. County Sheriff’s Dept. (Malibu).
▪ Active member, Emergency Volunteer Air Corp, Santa Monica ▪ Active member, Topanga Disaster Response Team, Topanga Canyon ▪ Member, Civilian Emergency Response Team, (CERT), Los Angeles City Fire Dept.
Personal: ▪ Licensed Amateur Radio (HAM) operator (KG6VCH). Hobbies include photography.
References: ▪ Excellent references upon request.
Ross Furukawa
Summary
Energetic publishing and software entrepreneur with over 20 years in publishing, media and software management. Created 5 small/medium sized businesses. Directly managed staff (under 40). Turned around financial challenges. Developed new products and systems in new markets in challenging economies. Strong strategic thinker, clear communicator and team builder.
Areas of Expertise
General Management Sales Management Publishing/workflow software systems Online Media strategies Advertising and Marketing in changing media environments Local news generation and dissemination Seawater desalination Digital Advertising Platforms Digital Publishing/Website development
Experience 2001-Present Santa Monica Daily Press, Publisher/CEO Created a successful daily newspaper, website, newsletter and brand from the ground up on the Westside of Los Angeles. -Responsible for all aspects of the startup company including sales, marketing, news generation, delivery methods, online strategy, human resources, design. -Started a local news media company in a highly competitive market. -Created, procured and trained staff in digital publishing systems, online systems. -Hired, trained and managed advertising sales staff that genearated revenues $1.5M in 7 years. -Developed business strategies to compete in an aggressive, changing media environment. -Created specialty publications in partnership with the City of Santa Monica, LA Marathon, Santa Monica Malibu Unified School District, and many others. -Developed and created the #1 news website on the Westside of Los Angeles, smdp.com. -Developed a multi-platform advertising network for small news publishers (Westside Network), totaling over 8M views per month.
1999-2001 Rim Data Systems, Owner/Sales Manager, California and Arizona Outside software sales to the Southern California, Northern California and Arizona territories for home builders, public/private. -Responsible for direct sales of a 6-module, back office software solution to the homebuilding industry. -Sold and managed accounts to clients including Beazer Homes, Standard Pacific Homes, Shea Homes and Pulte Homes, multiple divisions over multiple states. -Created and sold package/add-on solutions including support contracts, training and upgrades. -Managed the downstream sales process of installation, support and migration. -Played and instrumental part in the negotiation and sale of the company to Buildnet.
1998-1999 Mineral Water Development, Pty Ltd., US Operations Manager Created a US Sales and Service office for an international new technology water company. -Created all print, online, sales and technical collateral for new technology reverse osmosis systems. -Supported sales efforts and support for private water desalination plants in Florida, Texas. -Assisted in sales presentations, client meetings, trade shows. -Traveled extensively throughout South Africa, Europe, and the US.
1993-1998 Aspen Daily News, General Manager General Manager for a daily newspaper in Aspen, Colorado. -Managed 40 employees with $4.5 million net revenue. -Responsible for total company performance including sales, news, delivery, strategy, revenue, and expenses. -Promoted from Sales Executive to Sales Manager to General Manager.
Education Arizona State University, BA Communication, 1992 DHP, Reverse Osmosis Plant Management Seminar, 1998
Current Boards Immediate Past President, Board of Directors, Coopportunity Natural Grocers Cooperative ($22M) Former Vice President, Executive Board of Directors, Santa Monica YMCA ($12M) Board of Directors, Boys and Girls Clubs of Santa Monica ($4M) Chairman, Second Thursday CEO Networking Group
Associations Member, Santa Monica Chamber of Commerce Member, Surfrider Foundation Member, Associated Press
Ricardo Chavira
Summmary: Branding and marketing director with record of revenue-driving results across digital and offline platforms.
Experience: Marketing Director, Project Paradigm Santa Monica, CA (3/2015-Present)
· Report to the CEO/Founder. Develop the Paradigm brand as one that engages the kindness, creativity, and innovation of youth to solve important societal problems. Drive youth registrations in the Paradigm Challenge.
· Direct short, medium, and long-term strategic brand marketing plans. Oversee tactical implementation that successfully bring plans to fruition. Measure effectiveness of plans against goals and objectives.
· Create, manage, and align internal communications strategy for diverse database of 50,000 registrants, educators, non-profits, and partners. Develop unique online communication channels and content for each audience.
· Direct external communications for tangible results. Manage social media communication channels. Lead the design and creation of all online and offline marketing assets. Oversee SEO, and paid media.
· Serve as liaison in strategic partnerships with non-profits, schools, teachers, private businesses, governmental organizations and other stakeholders in order to advance external reputation and contest registrations.
· Utilize organic and word-of-mouth marketing channels for high ROI initiatives. Brought CPA down more than 50%. · Established automated marketing channels, like $40,000 per month in free Google Grants account. Increased
number of youth registrants in the inaugural Paradigm Challenge contest from 3,000 to 45,000.
Branding & Marketing Director, Co-opportunity Santa Monica, CA (1/2011-2/2015) Highlights:
· Achieved highest sales level in our 40 year history via comprehensive brand marketing strategy. · Led a major rebranding project resulting in the creation of an award-winning logo, and branded apparel that
achieved product placement on a national T.V. spot. · Developed "community owned and operated" tagline for a repeatable message that left memorable brand impact
on employees and larger Co-op community. Directed creation of new website. · Produced new branded content, including a slideshow on our history, co-op videos, and store blog. · Managed media relations for favorable coverage in trade publications, on local television, and CNN. · Curated community outreach events, like our lectures about the initiative to label Genetically Engineered
foods in California. · Directed the design and production of highly visible communications campaigns around complex food
issues. Oversaw creation of supporting materials for these campaigns. · Doubled email newsletter open rates with improved content and graphics, mobile-friendly communications,
and improved database management. · More than quadrupled our total Facebook fans and Twitter followers. Created Instagram and Pinterest presence.
Responsibilities: · Reported to GM. Drove revenue, membership sales, and brand loyalty in a highly competitive retail landscape. Found
cause-marketing events and co-marketing opportunities that connected with new audiences. · Created excitement around our digital brand experience that acquired and retained members, shoppers, and staff. · Oversaw all online and offline marketing tactics including: SEO, SEM, social media, print, POS, and radio. · Managed active survey program. Leveraged member, customer and employee data to drive long-term affinity. · Identified long-term needs and opportunities for expanding awareness of the Co-op brand. · Drove marketing communications strategy, tying it to our goal of effectively reaching stakeholders while achieving
business objectives. Developed and executed big ideas to engage members and staff in innovative ways. · Leveraged member, employee, and vendor stories to communicate memorable messages. Worked closely with
board on a number of initiatives. Oversaw retail promotional calendar.
Marketing and Communications Contractor Los Angeles, CA (520/09-12/2010) · Assisted small, local businesses with their marketing and communications needs. Wrote and edited copy, press
releases, and more. Worked with graphic designers to create onsite, online, and printed marketing collateral.
Membership Marketing Manager; Los Angeles County Museum of Art Los Angeles, CA (3/2007– 1/2009) Highlights:
· Conceptualized, organized, and directed an array of community programs and events that promoted LACMA throughout L.A. Enlisted support and participation elected officials, galleries, artists, and non-profits.
· Broadened scope of arts programming by fostering relationships with L.A.’s leading Latino graffiti artists. Attracted new, diverse audience by building events around L.A.’s rich history of public street art.
· Exceeded revenue goals without exceeding budget. Harnessed the unique stories and voices of our members and staff to create meaningful content for use across various communications channels.
· Improved ability to predict marketing programs’ success by working with data analysts to create new reports. · Managed onsite market research program. Used insights to tailor marketing plans for each customer segment.
Responsibilities: · Reported to AVP of membership & onsite services. Managed and developed four direct reports, as well as dozens
of museum volunteers when they assisted with departmental needs like onsite events and call-a-thons. · Led marketing and communications strategies to recruit and retain members, grow onsite visits, member count,
and increase donations to the Annual Fund. Responsible for direct mail and telemarketing efforts. · Responsible for multi-faceted marketing strategy of online, print, and social media for the 66,000 stakeholders
who made up our membership base. Created museum’s first Facebook page and Twitter feed. · Wrote, edited, and managed all member-related communications on lacma.org in monthly print newsletters, and in
online communications. Wrote/edited copy and worked with graphic designers to create an array of marketing collateral in support of exhibitions, membership, and institution.
Marketing Communications Manager; RE/MAX of California & Hawaii Palos Verdes, CA (7/2004– 3/2007) Highlights:
· Led internal communication efforts that inspired and engaged the more than 20,000 affiliates throughout our region by partnering with franchise owners to articulate regional goals, strategies, and aspirational culture.
· Oversaw launch of RE/MAX University in the region. Led Marcomm strategies that spurred program adoption. · Led and created region’s first Hispanic initiative for better brand awareness and greater market share. · Implemented internal communications calendar and region’s first online internal newsletter. · Grew agent count by 2,400 (more than 10%) via improved marketing and communications strategies. · Raised record amount for sponsorship of regional events. Managed audience relations. Interfaced with event staff.
Responsibilities: · Planned, monitored, and evaluated projects to promote our services, including bilingual materials. · Communicated corporate brand strategy into tactical marketing initiatives at the office level. · Wrote award-winning copy for ads, website, and other materials. Managed regional marketing budget.
Communications and Marketing Coordinator; MUND Group Mexico City, Mexico (5/2003– 5/2004) · Assisted with creation of surveys and polls for clients’ market research needs. Wrote weekly bulletins on
Mexico/U.S. affairs to help guide survey formulation process. Led consumer focus groups of 15 people. · Managed multiple teams of interviewers to carry out Mexico-specific demographic analyses. Disseminated
findings to media contacts, along with suggested story ideas. Authored articles based on findings for publication in Spanish language media.
Mexico City Bureau News Assistant; The Dallas Morning News Mexico City, Mexico (6/2002– 5/2003) · Researched background material. Arranged and conducted interviews on behalf of our reporters. · Wrote articles and feature-length stories. Co-authored articles.
Education: University of Notre Dame— Notre Dame, IN (8/1998– 5/2002) B.A, Business Administration and Marketing; Mendoza School of Business
Additional Skills: Fluent in spoken and written Spanish. Expert in MS Office, SEO, SEM and CMS.
Matt Amsden Matt Amsden is one of the world's premier raw food chefs. He founded the world's first raw food meal delivery service, in 2000, which still thrives today. Matt also co-founded one of the world's premier raw eateries, Rawvolution, in Santa Monica, California. Matt is the author of the best-selling RAWvolution: Gourmet Living Cuisine (Harper Collins, 2006), as well as The RAWvolution Continues (Simon & Schuster, 2013), which earned a major literary award for social and environmental justice, in 2014. Matt has two young sons and lives in the mountains of Los Angeles, California.
Bruce Palma
SUMMARY OF QUALIFICATIONS
· 30 years management, supervisory and operational experience in natural foods retail cooperative.
· 8.5 years’ experience as General Manager for Co-Opportunity. · Proven ability to handle multiple demands, execute and complete projects and
goals. · Proven ability to drive sales and profits in a highly competitive retail environment. · Excellent verbal, written and interpersonal skills. Strong team player. · Natural leader with ability to motivate and inspire others. · Exceptional customer service skills.
PROFESSIONAL EXPERIENCE
CO-OPPORTUNITY, Santa Monica, CA
GENERAL MANAGER 2006 – PRESENT
· Full decision-making authority, budgeting (approx. 9 million annually) and P&L responsibility.
· Increased year-end profitability 120% in first fiscal year in position (over previous fiscal year).
· Maintained consistent profitability for 8 consecutive fiscal years since assuming GM position.
· Implemented and directed a 2.5 million full-store remodel in 2011, resulting in an immediate 16% sales increase after completion.
· Increased sales while in position to currently one of the highest sales-per-square- ft. totals in national grocery, co-op and natural foods industry.
· Full responsibility for long and short-term strategic planning. · Direct supervision and leadership of Human Resources, Finance, Operations,
Branding and Purchasing functions. · National Cooperative Grocer’s Association (NCGA) Designated Representative
(2003-Present). Full responsibility for all NCGA meeting participation and membership requirements.
· Active participation at all co-op Board meetings.
STORE MANAGER 2004 – 2005
· Supervise and lead staff of 10 senior managers and 85 employees. Facilitate and lead management team meetings.
· Oversee store operations including, payroll, cost of goods, department margins, equipment, fixtures and store merchandising.
· Implemented and coordinated “Co-op Advantage” storewide branding and merchandising plan. Increased customer redemption of NCGA coupons over 100% from previous promotion.
· Coordinated newsletter and website production and budgets.
OPERATIONS MANAGER 2003 — 2004
· Initiated and implemented successful turnaround of floral department, resulting in immediate change from 10 - 30% monthly loss to consistent profitability.
· Monitored, controlled and effectively reduced expenses in various areas of operations including, printing, labor, donations, computers and outside services.
· Hired, trained, supervised and evaluated staff of 3 Night Store Managers. · Worked with graphic designers and other professionals on external building
design, signage and promotional materials. HUMAN RESOURCES MANAGER 2001 — 2004
· Mediated and resolved employee disputes and counseled employees on various personnel issues.
· Administered Health, Dental/Vision, COBRA, 401k, benefits and incentive plans. Assisted GM in choosing cost-effective plans and terms.
· Developed and led storewide training in customer service. · Orientated and trained employees in cooperatives, store policies, safety and
customer service. Produced and wrote staff newsletter.
PRICE COORDINATOR 1994 — 2000
· Implemented store’s first POS system, resulting in reduced labor, streamlining of operations and greater pricing accuracy.
· Responsible for price integrity and maintenance of all items in store, shelf tags, signage, weekly and monthly sales and promotions.
· Assisted GM and buyers with price imaging and product margins.
NIGHT STORE MANAGER 1988 — 1994
· Supervised all staff during absence of GM and department heads. · Opened and closed store, responsible for nightly deposits, operations and
security. Handled all customer complaints and requests.
CASHIER SUPERVISOR 1986 — 1994
· Promoted to cashier supervisor after one year of employment. · Hired, trained, scheduled and evaluated staff of 8-12. · Responsible for programming, troubleshooting and maintenance of register and
PLU system. Cash drawer balancing and reconciliation.
CASHIER 1985 — 1986
EDUCATION / SPECIALIZED TRAINING
UCLA Extension · Leading and Motivating Employees
SANTA MONICA COLLEGE · Various undergraduate and major degree courses (Incl: Business 1, Accounting 1,
Business Communications) · Awarded Scholarship in Music
RISING STARS 1 & 2
· Natural Foods Leadership Development for Department & Store Managers ZING TRAIN • Customer Service Training for Trainers
BRONX HIGH SCHOOL OF SCIENCE/ SANTA MONICA HIGH SCHOOL · Diploma
TECHNOLOGY
Windows XP, Office, Word, Excel, Microsoft Retail, Adobe PhotoShop
Resolutions of the Board of Directors of
Co-opportunity Consumer Cooperative, Inc.
WHEREAS, Co-opportunity Consumer Cooperative is authorized in its Articles of Incorporation to issue a total of 2,000,000 shares of capital stock, of which 1,000,000 shares are common stock, known as "membership shares" and 1,000,000 shares are preferred non-voting stock, and none of such preferred shares have been issued;
NOW, THEREFORE, BE IT RESOLVED, that the directors of Co-opportunity Consumer Cooperative deem it to be i n the best interests of the Co-opportunity Consumer Cooperative to issue and sell to its members-in-good-stand ing, in 2014-2015, a total of 7,800 preferred, non- voting, shares of its capital stock. The purchase price of the shares shall be: $50 per share for 2,000 Series 1 shares; and $1,000 per share for 1,400 Series 2 shares; and $1,000 per share for 1,500 Series 3 shares. None of these shares are transferable except as provided in this resolution and the Bylaws of Co-opportunity Consumer Cooperative.
RESOLVED, FURTHER, that the Series l, 2, and 3 preferred, non-voting shares are redeemable at the option of the holder, but the Cooperative shall have up to one year to pay for the redeeming member's shares from the date that member gives the Secretary of the Cooperative written notice of redem ption. The dividend rate shall be set annually by the Board of Directors, but shall be subject to quarterl y review and adjustment at the discretion of the Board. Series l, 2, and 3 dividends are cumulative and shall be declared annually.
RESOLVED, FURTHER, that the Series 1, 2 and 3 shares shall have the following minimum retention periods during which period the cooperative may not repurchase the shares: Seriesl: No minimum retention; Series 2: Four years; Series 3: Five years. Following the minimum retention period the cooperative may, at its discretion, repurchase the shares issued in a given series at the original purchase price plus any accrued and unpaid dividends. The dividend rate shall be set annually by the Board of Directors, but shall be subject to quarterly review and adjustment at the discretion of the Board.
RESOLVED, FURTHER, that, in connection with such issuance, the officers of Co-opportunity Consumer Cooperative, Inc. be, and they hereby are, authorized, directed, and empowered to cause to be prepared and mailed for filing with the California Commissioner of Corporations on behalf of the Co-oportunity Consumer Cooperative, Inc. an application for qualification of the securities by permit, pursuant to Corp. Code § 25113;
RESOLVED, FURTHER, that, subject and pursuant to Corp. Code § 25113, the Co-opportunity Consumer Cooperative Inc. be, and it hereby is, authorized and directed to issue up to a total of 7,800 preferred shares of its capital stock to its subscribing members for the purchase prices set out herein, subject to the Cooperative's receipt of a permit from the California Commissioner of Corporations authorizing such issuance.
RESOLVED FURTHER, that the President and Secretary of Co-opportunity Consumer Cooperative be, and they hereby are, authorized and directed to receive the consideration
described above from the subscribing members and to credit the value of such consideration to the capital account of Co-oppotiunity Consumer Cooperative.
--- ---------- ------- ----- -- ----------- Page 2 ·--- - ------------- ----- ---- -- ---- -----
Resolutions of the Board of Directors of
Co-opportunity Consumer Cooperative, Inc.
WHEREAS, Co-opportunity Consumer Cooperative is authorized in its Articles of Incorporation to issue a total of 2,000,000 shares of capital stock, of which 1,000,000 shares are common stock, known as “membership shares” and 1,000,000 shares are preferred non-voting stock, and none of such preferred shares have been issued; and
WHEREAS, the Board of Directors of Co-opportunity Consumers Cooperative previously established various prices for each of the three series of preferred non-voting shares; and
WHEREAS, the California Department of Business Oversight has recommended that the price of shares not exceed $500.00 per share; and
WHEREAS, all other rights, preferences, privileges and restrictions previously set out by resolution of this Board remain in effect,
NOW, THEREFORE, BE IT RESOLVED, that the directors of Co-opportunity Consumer Cooperative deem it to be in the best interests of the Co-opportunity Consumer Cooperative to set the price of all preferred non-voting shares, issued and sold to its members-in-good-standing, in 2015-2016, at $500.00 per share. RESOLVED FURTHER, that the President and Secretary of Co-opportunity Consumer Cooperative be, and they hereby are, authorized and directed to receive the consideration described above from the subscribing members and to credit the value of such consideration to the capital account of Co-opportunity Consumer Cooperative. Resolutions adopted pursuant to unanimous approval per minutes dated 11/18/2015.
CO-OPPORTUNITY CONSUMERS' COOPERATIVE, INC.
FINANCIAL STATEMENTS
FOR THE YEAR ENDED JULY 31, 2013
TABLE OF CONTENTS
Page
INDEPENDENT ACCOUNTANTS' REVIEW REPORT 1
FINANCIAL STATEMENTS
Balance Sheet 2 - 3
Statement of Income 4
Statement of Members' Equity 5
Statement of Cash Flows 6 - 7
NOTES TO FINANCIAL STATEMENTS 8 - 15
rbz.LLP CERTIFIED PUBLIC ACCOUNTANTS I BUSINESS ADVISORS
INDEPENDENT ACCOUNTANTS' REVIEW REPORT
To the Members of CO-OPPORTUNITY CONSUMERS' COOPERATIVE, INC. Santa Monica, California
We have reviewed the accompanying balance sheet of Co-opportunity Consumers' Cooperative, Inc. (a California corporation) (the "Cooperative") as of July 31, 2013, and the related statements of income, members' equity and cash flows for the year then ended. A review includes primarily applying analytical procedures to management's financial data and maki ng inquiries of Cooperative management. A review is substantially less in scope than an audit, the objective of which is the expression of an opinion regarding the financial statements as a whole. Accordingly, we do not express such an opinion.
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 designing, implementing, and maintaining internal control relevant to the preparation and fair presentation of the financial statements.
Our responsibility is to conduct the review in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. Those standards require us to perform procedures to obtain limited assurance that there are no material modifications that should be made to the financial statements. We believe that the results of our procedures provide a reasonable basis for our report.
Based on our review, we are not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in conformity with accounting principles generally accepted in the United States of America.
October 17, 2013
t 310.478 .4148 www.rbz.c om f 310.312.0358 11766 Wilshire Boulevard, Ninth Floor Los Angeles, California 90025-1586
CO-OPPORTUNITY CONSUMERS' COOPERATIVE, INC. BALANCE SHEET
JULY 31, 2013
ASSETS
Current Assets Cash
$ 1,485,128
Certificates of deposit 600,000 Inventories 821,244 Prepaid expenses and other 140,768 Prepaid income taxes 37,064 Deferred income taxes 103,761
3,187,965
Property and Equipment, net 2,398,829
Other Assets Deposits
154,754
Investment in NCGA 131,791 Deferred income taxes 243
286,788 $ 5,873,582
See accompanying independent accountants' review report and notes to financial statements. 2
CO-OPPORTUNITY CONSUMERS' COOPERATIVE, INC.
BALANCE SHEET
JULY 31, 2013
LIABILITIES AND MEMBERS' EQUITY
Current Liabilities Note payable $ 2,610 Accounts payable and accrued expenses 671,509 Accrued wages and payroll taxes 649,436 Patronage refunds payable 87,398
1,410,953
Deferred Income Taxes 55,113
Total Liabilities 1,466,066
Commitments (Notes 2 and 5)
Members' Equity Class A membership shares
2,210,014
Retained earnings 2,197,502
4,407,516 $ 5,873,582
See accompanying independent accountants' review report and notes to financial statements. 3
CO-OPPORTUNITY CONSUMERS' COOPERATIVE, INC.
STATEMENT OF INCOME
FOR THE YEAR ENDED JULY 31, 2013
Sales, net $ 22,367,849
Cost of Sales 14,183,294
Gross Profit 8,184,555
General and Administrative Expenses 7,700,728
Income from Operations 483,827
Other Income (Expense) Interest and other income
19,547
NCGA declared patronage dividend 33,091 Loss on disposal of property and equipment (11,804) Interest expense (14,906)
25,928
Income before Provision for Income Taxes 509,755
Provision for Income Taxes 41,985
Net Income $ 467,770
See accompanying independent accountants' review report and notes to financial statements. 4
CO-OPPORTUNITY CONSUMERS' COOPERATIVE, INC.
STATEMENT OF MEMBERS' EQUITY
FOR THE YEAR ENDED JULY 31, 2013
Class A Membership Shares Number Amount
Retained Earnings Total
Balance, August 1, 2012 82,587 $ 2,064,655 $ 1,710,903 $ 3,775,558 Net Income - - 467,770 467,770
Shares Issued 6,281 157,019 - 157,019
Shares Redeemed and Canceled (355) (11,660) - (11,660)
Patronage Refunds - - (349,591) (349,591)
Retained Patronage Refunds - - 262,193 262,193
Unclaimed Patronage Refunds - - 106,227 106,227
Balance, July 31, 2013 88,513 $ 2,210,014 $ 2,197,502 $ 4,407,516
See accompanying independent accountants' review report and notes to financial statements. 5
CO-OPPORTUNITY CONSUMERS' COOPERATIVE, INC.
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED JULY 31, 2013
Cash Flows from Operating Activities Net income Adjustments to reconcile net income to net cash
provided by operating activities Depreciation and amortization
$ 467,770
425,727 NCGA declared patronage dividend (33,091) Loss on disposal of property and equipment 11,804 Deferred income taxes (Increase) decrease in operating assets
Inventories
(19,298)
(67,657) Prepaid expenses and other (8,561) Prepaid income taxes (10,034) Deposits
Increase (decrease) in operating liabilities Accounts payable and accrued expenses
(31,413)
(8,993) Accrued wages and payroll taxes 78,034
Net Cash Provided by Operating Activities 804,288
Cash Flows from Investing Activities Proceeds from certificates of deposit
600,000
Purchases of property and equipment (266,691) Dividends received from investment in NCGA 8,842
Net Cash Provided by Investing Activities 342,151
Cash Flows from Financing Activities Principal payments on notes payable
(654,443)
Shares issued 157,019 Shares redeemed and canceled (11,660) Patronage refunds paid (26,903) Unclaimed patronage refunds 88,604
Net Cash Used in Financing Activities (447,383)
Net Increase in Cash 699,056
Cash, Beginning of Year 786,072
Cash, End of Year $ 1,485,128
See accompanying independent accountants' review report and notes to financial statements. 6
CO-OPPORTUNITY CONSUMERS' COOPERATIVE, INC.
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED JULY 31, 2013
SUPPLEMENTAL DISCLOSURES
Cash Paid during the Year for:
Income taxes $ 72,000
Interest $ 14,906
Noncash Financing Activities Unclaimed patronage refunds reclaimed from cash $ 88,604 Unclaimed patronage refunds reclaimed from patronage refunds payable 17,623
Total unclaimed patronage refunds reclaimed $ 106,227
See accompanying independent accountants' review report and notes to financial statements. 7
CO-OPPORTUNITY CONSUMERS' COOPERATIVE, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED JULY 31, 2013 NOTE 1 - NATURE OF OPERATIONS
Co-opportunity Consumers' Cooperative, Inc. (the "Cooperative") was incorporated in California in 1976. The Cooperative, located in Santa Monica, California, operates a member-owned food store open to its members and the general public.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates
Management uses estimates and assumptions in preparing financial statements. 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 differ from these estimates.
Cash Equivalents
The Cooperative considers financial instruments with original maturities of 90 days or less to be cash equivalents. There were no cash equivalents at July 31, 2013.
Inventories
Inventories are stated at the lower of cost (determined on the first-in, first-out method) or fair value.
Property and Equipment
Property and equipment are carried at cost. Depreciation of property and equipment is computed using the straight-line method over the following estimated useful lives:
Computer equipment 5 - 7 years Furniture and fixtures 5 - 7 years Leasehold improvements 15 years
Normal repairs and maintenance are expensed as incurred, whereas significant charges which materially increase values or extend useful lives are capitalized and depreciated or amortized over the estimated useful lives of the related assets.
8
CO-OPPORTUNITY CONSUMERS' COOPERATIVE, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED JULY 31, 2013 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Impairment of Long-Lived Assets
Management reviews each asset or asset group for impairment whenever events or circumstances indicate that the carrying value of an asset or asset group may not be recoverable, but at least annually. No impairment provision was recorded by the Cooperative during the year.
Investment in NCGA
The Cooperative owns an equity interest in National Cooperative Grocers Association ("NCGA"). Management records patronage dividends declared by NCGA as income and an increase to the investment. Management reduces the investment when patronage dividends are received from NCGA.
Revenue Recognition
The Cooperative recognizes revenue at the point of sale for retail sales. The Cooperative offers its customers various sales incentive programs that include discounts and rebates. Sales discounts are recorded as a reduction of sales at the time of purchase.
Advertising
Advertising expense for the year amounted to $15,179.
Income Taxes
The Cooperative is a California corporation that is taxed under the provisions subject to corporations under the Internal Revenue Code ("IRC"). Under those provisions, the Cooperative must pay federal corporate income taxes on its taxable income. Due to the Cooperative's member-owned structure, provisions under Section 1381 of the IRC allow the Cooperative to deduct its patronage dividend from its taxable income as long as certain requirements are met.
9
CO-OPPORTUNITY CONSUMERS' COOPERATIVE, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED JULY 31, 2013 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Income Taxes (Continued)
The Cooperative accounts for income taxes under ASC Topic Income Taxes, which prescribes an asset and liability approach. Under the asset and liability method, deferred income tax assets and liabilities are recognized for the expected future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and the respective tax bases. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Valuation allowances are established, when necessary, to reduce deferred income tax assets to the amount expected to be realized.
The Cooperative’s federal income tax and informational returns for tax years ending July 31, 2010, and subsequent remain subject to examination by the Internal Revenue Service. The returns for California, the Cooperative’s only state jurisdiction, remain subject to examination by the California Franchise Tax Board for tax years ending July 31, 2009, and subsequent.
Members' Equity
The Cooperative is authorized to issue two classes of shares: Class A Membership shares and Class B Investment shares. Class A shares are voting shares, and the Cooperative is authorized to issue up to 100,000 Class A shares. Class B shares are non-voting shares, and in the event of dissolution or bankruptcy of the Cooperative, Class B shares will have preference over Class A shares. The Cooperative is authorized to issue up to 1,000,000 Class B shares. There were no Class B shares outstanding at July 31, 2013.
A new member must purchase at least one Class A share at the time of application for membership. Currently, the Board of Directors has determined that a minimum of eight Class A shares must be purchased over an eight-year period and members must purchase at least one Class A share annually. If members fail to make the minimum annual share purchase, the membership becomes inactive.
Patronage Refunds
The Cooperative computes annual patronage refunds based on the net income attributable to the patronage of its members. This allocation is computed by applying the percentage of membership sales to total sales for the year. The determined patronage refund amount is allocated and distributed to members in good standing in proportion to their patronage and in such a manner as to constitute patronage dividends within the meaning of federal income tax law.
10
CO-OPPORTUNITY CONSUMERS' COOPERATIVE, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED JULY 31, 2013 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Patronage Refunds (Continued)
Unclaimed patronage refunds represent patronage refunds issued to members that were never cashed. After certain steps as required by California law, including public notice, the Cooperative is able to reclaim as member equity the unclaimed patronage refunds. The Cooperative reclaimed unclaimed patronage refunds totaling $106,227 during the year representing amounts from five prior years.
Concentrations
Occasionally, the Cooperative's bank balances exceed FDIC-insured limits. The Cooperative has not experienced and does not anticipate any losses related to cash held in these accounts.
The Cooperative is under contract with a supplier through July 31, 2015 requiring the Cooperative to use that supplier as the primary distributor for certain products. In exchange, the Cooperative receives volume discounts. For the year ended July 31, 2013, this supplier accounted for approximately 39% of total purchases. This supplier accounted for approximately 49% of the accounts payable balance at July 31, 2013.
Reclassifications
Certain 2012 balances have been reclassified in order to conform to the 2013 presentation.
Subsequent Events
The Cooperative has evaluated events subsequent to July 31, 2013, to assess the need for potential recognition or disclosure in the financial statements. Such events were evaluated through October 17, 2013, the date the financial statements were available to be issued. Based upon this evaluation, it was determined no subsequent events occurred that require recognition or additional disclosure in the financial statements.
11
CO-OPPORTUNITY CONSUMERS' COOPERATIVE, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED JULY 31, 2013 NOTE 3 - PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
Computer equipment $ 186,756 Furniture and fixtures 1,729,615 Leasehold improvements 1,623,864
3,540,235
Accumulated depreciation and amortization (1,141,406)
$ 2,398,829 NOTE 4 - NOTE PAYABLE
Details of the note payable are as follows:
Equipment finance agreement with Southern California Edison to acquire energy efficient equipment, payable in monthly installments of $338 at an interest rate of 0%, maturing March 2014, secured by the equipment. $ 2,610
NOTE 5 - COMMITMENTS
The Cooperative has a long-term lease for its store facility. Base rent is estimated at $45,000 per month triple net, terminating in November 2025. The base rent is subject to annual increases based on the change in the local Consumer Price Index. In addition, the Cooperative has operating leases for office space and certain office equipment expiring at various dates through 2016.
12
CO-OPPORTUNITY CONSUMERS' COOPERATIVE, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED JULY 31, 2013 NOTE 5 - COMMITMENTS (Continued)
The scheduled minimum lease payments under the lease terms are as follows:
Year Ending July 31, Facilities Equipment Total
$ 7,599,741 $ 27,081 $ 7,626,822
Rent expense under these noncancelable leases was $564,921 for the year. NOTE 6 - RETIREMENT PLAN
The Cooperative participates in a defined contribution retirement plan under IRC Section 401(k) covering all employees who meet eligibility requirements. Currently, the employees' contributions are treated as a salary reduction and are not subject to income taxes. The Cooperative may make contributions on the employees' behalf but is not required to. During the current year, the Cooperative contributed $68,975 to the plan.
NOTE 7 - INCOME TAXES
The provision (benefit) for income taxes is as follows:
Current income taxes
2014 $ 563,956 $ 11,142 $ 575,098 2015 581,042 10,291 591,333 2016 589,568 5,648 595,216 2017 597,903 - 597,903 2018 615,840 - 615,840
Thereafter 4,651,432 - 4,651,432
Federal $ 36,816 State 24,467
Deferred income taxes
61,283
Federal (13,392) State (5,906)
(19,298)
Provision for income taxes $ 41,985
13
CO-OPPORTUNITY CONSUMERS' COOPERATIVE, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED JULY 31, 2013 NOTE 7 - INCOME TAXES (Continued)
Deferred income tax assets and (liabilities) are as follows:
Current
Deferred income tax assets and liabilities result from temporary differences between income for financial reporting purposes and taxable income. These differences arose principally from accelerated depreciation, accrued vacation, gift certificate breakage, capitalization of inventory costs for tax purposes, patronage refund carryforward and charitable contribution carryforward.
NOTE 8 - RELATED PARTY
The Cooperative purchases certain inventory from a business which is owned by the store manager. Total purchases for the year from this vendor were $134,350.
14
Accrued vacation $ 52,518 Gift certificate breakage 29,566 Inventory capitalization 19,701 State taxes 1,976
103,761
Deferred Contribution carryforward
15,564 Patronage refund carryforward 32,941 Depreciation and amortization (103,292) State taxes (83)
(54,870)
$ 48,891
CO-OPPORTUNITY CONSUMERS' COOPERATIVE, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED JULY 31, 2013 NOTE 9 - PATRONAGE REFUNDS
The Cooperative has accrued patronage refunds of $349,591 for the year. The Cooperative may distribute 20% to 100% of the patronage refunds. Refunds under $2.50 were not issued. The Cooperative has elected to distribute 25% of the refunds as cash to its members.
Earnings available for patronage refunds were calculated as follows:
Gross sales for the year $ 22,935,283
Sales to members 15,729,057
Percentage of member sales to gross sales 68.58 %
Income before provision for income taxes $ 509,755
Percentage of member sales to net sales 68.58 %
Income available for patronage refunds $ 349,591
Patronage refunds declared by Board of Directors $ 349,591
Patronage refunds, retained at 75% $ 262,193
15
CO-OPPORTUNITY CONSUMERS COOPERATIVE, INC.
FINANCIAL STATEMENTS
July 31, 2014 and 2013
C O N T E N T S
Independent Auditor's Report........................................................................................................... 1
Balance Sheets ................................................................................................................................ 3
Statements of Income ...................................................................................................................... 4
Statements of Members’ Equity ....................................................................................................... 5
Statements of Cash Flows ............................................................................................................... 6
Notes to Financial Statements ......................................................................................................... 7
INDEPENDENT AUDITOR’S REPORT
To the Board of Directors Co-opportunity Consumers Cooperative, Inc. Santa Monica, California
We have audited the accompanying financial statements of Co-opportunity Consumers Cooperative, Inc., which comprise the balance sheet as of July 31, 2014, and the related statements of income, members’ equity, and cash flows for the year then ended, and the related notes to the financial statements.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes 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.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements 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 the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Co-opportunity Consumers Cooperative, Inc. as of July 31, 2014, and the results of its operations and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.
New York Office: Washington DC Office: 230 Park Avenue, 10th Floor 400 North Washington Street New York, NY 10146 Second Floor P: (212) 551-1724 Alexandria, VA 22314 F: (262) 522-7550 P: (703) 519-0990
Wisconsin Office: 2110 Luann Lane Madison, WI 53713 P: (608) 274-4020 F: (608) 274-0775
www.wegnercpas.com [email protected]
(888) 204-7665
See accompanying notes. 3
Prior Period Financial Statements
The financial statements of Co-opportunity Consumers Cooperative, Inc. as of July 31, 2013, were reviewed by other auditors whose report dated October 17, 2013, stated they were not aware of any material modifications that should be made to those statements for them to be in accordance with accounting principles generally accepted in the United States of America. However, a review is substantially less in scope than an audit and does not provide a basis for the expression of an opinion on the financial statements as a whole.
Wegner CPAs, LLP Madison, Wisconsin October 15, 2014
See accompanying notes. 3
CO-OPPORTUNITY CONSUMERS COOPERATIVE, INC.
BALANCE SHEETS July 31, 2014 (Audited) and 2013 (Reviewed)
2014 2013 ASSETS CURRENT ASSETS
Cash
$ 1,491,346
$ 1,485,128 Certificates of deposit 1,400,000 600,000 Accounts receivable 373 - Inventory 789,855 821,244 Prepaid expenses 184,673 215,785 Prepaid income taxes - 37,064 Deferred income taxes 45,000 103,761
Total current assets 3,911,247 3,262,982
Equipment and leasehold improvements - net 2,073,880 2,398,829
OTHER ASSETS Equity and deposits in other cooperatives
178,520
131,791
Security deposits 52,000 52,000 Long-term deposits 31,032 27,737 Deferred income taxes -
243
Total other assets 261,552 211,771
Total assets $ 6,246,679 $ 5,873,582
LIABILITIES AND MEMBERS' EQUITY CURRENT LIABILITIES
Accounts payable
$ 623,142
$ 671,509 Accrued expenses 678,604 649,436 Income taxes payable 32,625 - Patronage dividend payable 169,550 87,398 Note payable -
2,610
Total current liabilities 1,503,921 1,410,953
OTHER LIABILITIES Deferred income taxes 56,000 55,113
Total liabilities 1,559,921 1,466,066
MEMBERS' EQUITY Class A Membership shares, $25 par value,
1,000,000 shares authorized, 93,537 and 88,401 shares issued and outstanding
2,338,437
2,210,014
Retained patronage 1,212,490 1,056,495 Retained earnings 1,135,831 1,141,007
Total members' equity 4,686,758 4,407,516
Total liabilities and members' equity $ 6,246,679 $ 5,873,582
CO-OPPORTUNITY CONSUMERS COOPERATIVE, INC.
See accompanying notes.
5
STATEMENTS OF INCOME Years ended July 31, 2014 (Audited) and 2013 (Reviewed)
2014 2013
Amount Percent Amount Percent SALES REVENUE
Gross sales $ 23,638,938 101.63 $ 22,935,283 102.54 Discounts (378,643) (1.63) (567,434) (2.54)
Sales 23,260,295 100.00 22,367,849 100.00
Cost of goods sold 14,678,740 63.11 14,183,294 63.41
Gross margin 8,581,555 36.89 8,184,555 36.59
EXPENSES Personnel
5,402,343
23.23
5,103,750
22.82
Occupancy 1,162,910 5.00 1,127,872 5.04 Administrative expenses 477,757 2.05 474,397 2.12 Operating expenses 465,264 2.00 403,250 1.80 Depreciation 456,022 1.96 425,727 1.90 Promotions 94,624 0.41 54,447 0.24 Governance 94,490 0.41 111,285 0.50
Total operating expenses 8,153,410 35.06 7,700,728 34.42
Operating income 428,145 1.83 483,827 2.17
OTHER INCOME (EXPENSE) Interest and dividend income
58,042
0.25
35,567
0.16
Other income 63,308 0.27 27,699 0.12 Interest expense - - (14,906) (0.07) Loss from disposal of assets (20,274) (0.09) (11,804) (0.05) Other expense (10,900) (0.05) (10,628) (0.05)
Total other income (expense) 90,176 0.38 25,928 0.11
Net income before income taxes 518,321 2.21 509,755 2.28
Provision for income taxes (202,470) (0.87) (41,985) (0.19)
Net income $ 315,851 1.34 $ 467,770 2.09 See accompanying notes.
CO-OPPORTUNITY CONSUMERS COOPERATIVE, INC.
See accompanying notes.
5
STATEMENTS OF MEMBERS' EQUITY Years ended July 31, 2014 (Audited) and 2013 (Reviewed)
Class A Membership Retained Retained
Shares Patronage Earnings Total
Balances July 31, 2012 $ 2,064,655 $ 882,907 $ 916,600 $ 3,864,162
Shares issued 157,019 - - 157,019 Shares redeemed (11,660) - - (11,660) Unclaimed patronage dividends - (88,605) 106,228 17,623 Net income - - 467,770 467,770 Patronage dividend declared - 349,591 (349,591) - Patronage dividend payable - (87,398) - (87,398)
Balances July 31, 2013 2,210,014 1,056,495 1,141,007 4,407,516
Shares issued 141,748 - - 141,748 Shares redeemed (13,325) - - (13,325) Unclaimed patronage dividends - (13,555) 18,073 4,518 Net income - - 315,851 315,851 Patronage dividend declared - 339,100 (339,100) - Patronage dividend payable - (169,550) - (169,550)
Balances July 31, 2014 $ 2,338,437 $ 1,212,490 $ 1,135,831 $ 4,686,758
CO-OPPORTUNITY CONSUMERS COOPERATIVE, INC.
See accompanying notes.
5
STATEMENTS OF CASH FLOWS Years ended July 31, 2014 (Audited) and 2013 (Reviewed)
2014 2013 CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 315,851 $ 467,770 Adjustments to reconcile net income to net cash flows from operating activities
Depreciation 456,022 425,727 Loss from disposal of assets 20,274 11,804 Deferred income taxes 59,891 (19,298) (Increase) decrease in assets
Accounts receivable (373) - Inventory 31,389 (67,657) Prepaid expenses 31,112 (54,470) Prepaid income taxes 37,064 (10,034) Long-term deposits (3,295) (8,561) Equity and deposits in other cooperatives (46,729) (1,192)
Increase (decrease) in liabilities Accounts payable (48,368) (8,993) Accrued expenses 29,168 78,034 Income taxes payable 32,625 -
Net cash flows from operating activities 914,631 813,130
CASH FLOWS FROM INVESTING ACTIVITIES Purchases of certificates of deposit (800,000) - Redemptions of certificates of deposit - 600,000 Purchases of equipment and leasehold improvements (151,347) (266,691)
Net cash flows from investing activities (951,347) 333,309
CASH FLOWS FROM FINANCING ACTIVITIES Payments on note payable (2,610) (654,444) Membership shares issued 141,748 157,019 Membership shares redeemed (13,325) (11,660) Patronage dividends paid (82,880) (26,903) Unclaimed patronage dividends -
88,605
Net cash flows from financing activities 42,933 (447,383)
Net change in cash 6,217 699,056
Cash - beginning of year 1,485,128 786,072
Cash - end of year $ 1,491,346 $ 1,485,128
SUPPLEMENTARY INFORMATION Cash payments for interest $ - $ 14,906 Cash paid for income taxes 65,000 72,000 Non-cash financing transactions
Patronage dividend payable 169,550 87,398 Unclaimed patronage dividends 4,518 17,623
See accompanying notes.
CO-OPPORTUNITY CONSUMERS COOPERATIVE, INC. NOTES TO FINANCIAL STATEMENTS
July 31, 2014 (Audited) and 2013 (Reviewed)
7
Co-opportunity Consumers Cooperative, Inc. (Cooperative) is a corporation that has operated a Cooperative grocery store in Santa Monica, California since 1976. Substantially all revenue is derived from retail sales of groceries. The significant accounting policies followed are described below to enhance the usefulness of the financial statements to the reader.
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Inventory
Inventory, which consists of grocery items held for resale, is valued at the lower of cost or market. Cost is determined using the first-in, first-out (FIFO) method.
Equipment and Leasehold Improvements
The cost of equipment and leasehold improvements in excess of $1,000 is capitalized at cost and depreciated using the straight-line method over the following estimated useful lives:
Computer equipment and software 3 to 7 years Furniture and fixtures 3 to 7 years Leasehold improvements 7 to 15 years
Income Tax Status
The Cooperative is taxed on non-patronage earnings and any patronage earnings not paid or allocated to the members. Income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due plus deferred taxes. Deferred taxes are recognized for differences between the basis of assets and liabilities for financial statement and income tax purposes. The deferred tax liabilities represent the future tax return consequences of those differences, which will either be taxable when the assets are used or liquidated.
The Cooperative’s federal tax returns are subject to examination by the Internal Revenue Service, generally for three years after they are filed. With few exceptions, the Cooperative is no longer subject to such examinations for tax years before 2010.
Advertising
Advertising costs are expensed as incurred. Advertising expense was $35,267 and $15,179 for the years ended July 31, 2014 and 2013.
Presentation of Sales Taxes
The State of California, as well as Los Angeles County and the City of Santa Monica, imposes sales tax on some of the Cooperative’s sales to nonexempt customers. The sales tax rate is 9.5% for nonfood items. The Cooperative collects those taxes from customers and remits the entire amount to the State. The Cooperative’s accounting policy is to exclude the taxes collected and remitted to the State from sales and cost of goods sold.
CO-OPPORTUNITY CONSUMERS COOPERATIVE, INC. NOTES TO FINANCIAL STATEMENTS
July 31, 2014 (Audited) and 2013 (Reviewed)
8
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Estimates
The preparation of financial statements requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
Reclassifications
Certain amounts in the prior-year financial statements have been reclassified for comparative purposes to conform with the presentation in the current-year financial statements.
Date of Management’s Review
Management has evaluated subsequent events through October 15, 2014, the date which the financial statements were available to be issued.
NOTE 2 – EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Equipment and leasehold improvements at July 31, 2014 and 2013 consisted of the following:
2014 2013
Computer equipment and software $ 196,954 $ 186,756 Equipment and fixtures 1,794,378 1,729,615 Leasehold improvements 1,620,964 1,623,864
Equipment and leasehold improvements 3,612,296 3,540,235 Accumulated depreciation (1,538,416) (1,141,406)
Equipment and leasehold improvements - net $ 2,073,880 $ 2,398,829
NOTE 3 – EQUITY AND DEPOSITS IN OTHER COOPERATIVES
Equity and deposits in other cooperatives at July 31, 2014 and 2013 consisted of $178,520 and $131,791 invested in National Cooperative Grocers Association (NCGA). The investment in NCGA is not readily marketable. The investment is recorded at cost and may be redeemed at face value only at the discretion of NCGA’s board of directors.
NOTE 4 – NOTE PAYABLE
The note payable at July 31, 2013 consisted of an interest-free note of $2,610 payable to Southern California Edison that required monthly payments of $338. The note was paid in March 2014.
CO-OPPORTUNITY CONSUMERS COOPERATIVE, INC. NOTES TO FINANCIAL STATEMENTS
July 31, 2014 (Audited) and 2013 (Reviewed)
9
NOTE 5 – MEMBERSHIP SHARES
The Cooperative is authorized to issue two classes of shares: Class A Membership shares and Class B Investment shares. Class A shares are voting shares, and Class B shares are nonvoting shares. In the event of dissolution or bankruptcy of the Cooperative, Class B shares will have preference over Class A shares. The Cooperative is authorized to issue up to 1,000,000 Class A shares and 1,000,000 Class B shares. There were no Class B shares outstanding at July 31, 2014 and 2013.
Members must purchase at least twelve Class A shares over an twelve-year period to receive the benefits of membership, including patronage dividends, and at least one share at a cost of $25 must be purchased annually.
NOTE 6 – INCOME TAXES
The provision for income taxes for the years ended July 31, 2014 and 2013 consisted of the following components:
2014 2013 Current federal income tax expense
$ 108,287
$ 36,816
Current state income tax expense 34,292 24,467 Deferred tax expense (benefit) 59,891 (19,298)
Provision for income taxes $ 202,470 $ 41,985
The income tax provision differs from the expense that would result from applying statutory rates to income before income taxes primarily because of the tax benefits of graduated rates and the use of accelerated depreciation methods for income tax purposes.
The Cooperative’s total deferred tax asset, deferred tax asset valuation allowance, and deferred tax liability at July 31, 2014 and 2013 were as follows:
2014 2013 Deferred tax asset Deferred tax asset valuation allowance Deferred tax liability
$ 45,000
- (56,000)
$ 104,004
- (55,113)
Net deferred tax asset (liability) $ (11,000) $ 48,891
Deferred taxes are recognized for temporary differences between the basis of assets and liabilities for financial statement and income tax purposes. The differences relate primarily to using accelerated depreciation methods for income tax purposes.
CO-OPPORTUNITY CONSUMERS COOPERATIVE, INC. NOTES TO FINANCIAL STATEMENTS
July 31, 2014 (Audited) and 2013 (Reviewed)
10
NOTE 7 – RETIREMENT PLAN
The Cooperative sponsors a 401(k) savings plan that is available to all employees who meet eligibility requirements. The Cooperative makes elective contributions to the plan. The Cooperative made elective contributions of 5% and 3% of employees’ compensation for the years ended July 31, 2014 and 2013.
Total plan contributions by the Cooperative were $173,139 and $68,975 for the years ended July 31, 2014 and 2013. The 2014 contribution also included $55,229 related to employee compensation from prior years.
NOTE 8 – LEASING ARRANGEMENTS
The Cooperative leases space for its retail operation. The lease runs through November 2025 and requires monthly payments of $46,044. The rent is subject to annual increases based on the local consumer price index. The Cooperative also leases office space in Santa Monica. The lease runs through January 2016 and currently requires monthly payments of $1,427.
The Cooperative also has various leases for retail and office equipment. The leases run through February 2016 and require payments totaling $1,432 per month.
Rent expense for all leases for the years ended July 31, 2014 and 2013 was $585,634 and $564,921.
Future minimum lease payments for the five subsequent years ending July 31 are as follows:
NOTE 9 – CONCENTRATIONS
Purchasing Agreement
The Cooperative has an agreement through the NCGA with United Natural Food, Inc. (UNFI). The Cooperative agrees to use UNFI as its primary grocery supplier in exchange for additional purchase discounts. UNFI provides approximately 41% of the value of items purchased for resale. As part of this agreement the Cooperative, along with other natural food Cooperatives in the West, is a member of the Joint Liability Fund (JLF) coordinated by NCGA. At July 31, 2014 and 2013, the Cooperative had a deposit with JLF for $31,032 and $27,737. In order to obtain better terms with UNFI the members of the JLF have guaranteed the debt of the other members to UNFI. If a member were to default on its debt, the other members would each be responsible for a share of the debt based on their total purchases from UNFI. The total liability of the Cooperative could exceed the amount of the deposit with JLF.
2015 $ 592,076 2016 595,224 2017 597,903 2018 615,840 2019 634,315
CO-OPPORTUNITY CONSUMERS COOPERATIVE, INC. NOTES TO FINANCIAL STATEMENTS
July 31, 2014 (Audited) and 2013 (Reviewed)
11
NOTE 9 – CONCENTRATIONS (continued)
Concentration of Credit
The Cooperative maintains cash balances at one financial institution based in Beverly Hills, California and another financial institution based in Washington, DC. The Federal Deposit Insurance Corporation insures accounts at each institution up to $250,000. At July 31, 2014 and 2013, the Cooperative’s uninsured cash balances totaled $1,305,973 and $1,070,881.
NOTE 10 – RELATED PARTY TRANSACATIONS
The Cooperative purchases inventory from a business which is owned by one of its managers. Total purchases from this vendor were $121,272 and $134,350 for the years ended July 31, 2014 and 2013.
CO-OPPORTUNITY CONSUMERS COOPERATIVE, INC.
FINANCIAL STATEMENTS
July 31, 2015 and 2014
C O N T E N T S
Independent Auditor's Report.............................................................................:............................. 1
Balance Sheets ................................................................................................................................ 3
Statements of Income ...................................................................................................................... 4
Statements of Members' Equity ....................................................................................................... 5
Statements of Cash Flows ............................................................................................................... 6
Notes to Financial Statements ......................................................................................................... 7
h
61tlAl"d ou.. Beyond the numbers.Tl•
"'Wegner CPAs
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors Co-opportunity Consumers Cooperative, Inc. Santa Monica, California
We have audited the accompanying financial statements of Co-opportunity Consumers Cooperative, Inc., which comprise the balance sheets as of July 31, 2015 and 2014, and the related statements of income, members' equity, and cash flows for the years then ended, and the related notes to the financial statements. We have also audited Co-opportunity Consumers Cooperative, lnc.'s internal control over financial reporting as of July 31, 2015, based on criteria established in the 2013 Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes 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. Co-opportunity Consumers Cooperative, lnc.'s management is also responsible for its assertion about the effectiveness of internal control over financial reporting, included in the accompanying Management's Assessment of Internal Controls.
Auditor's Responsibility
Our responsibility is to express an opinion on these financial statements and Co-opportunity Consumers Cooperative, lnc.'s internal control over financial reporting based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and our audit of internal control over financial reporting in accordance with attestation standards established by the American Institute of Certified Public Accountants. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free from material misstatement and whether effective internal control over financial reporting was maintained in all material respects.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements 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 the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. An audit of internal control over financial reporting involves obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control over financial reporting based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that the audit evidence we obtained is sufficient and appropriate to provide a basis for our audit opinions.
New York Office: 230 Park Avenue, 101 Floor New York, NY 10146 P: (212) 551-1724 F: (262) 522-7550
Washington DC Office: 400 North Washington Street Second Floor Alexandria, VA 22314 P: (703) 519-0990
Wisconsin Office: 2110 Luann Lane Madison, WI 53713 P: (608) 274-4020 F: (608) 274-0775
www.wegnercpas.com [email protected]
(888) 204-7665
Wtf
Definition and Inherent Limitations of Internal Control over Financial Reporting
An entity's internal control over financial reporting is a process effected by those charged with governance, management, and other personnel, designed to provide reasonable assurance regarding the preparation of reliable financial statements in accordance with accounting principles generally accepted in the United States of America. An entity's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the entity; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and the receipts and expenditures of the entity are being made only in accordance with authorizations of management and those charged with governance; and (3) provide reasonable assurance regarding prevention, or timely detection and correction, of unauthorized acquisition, use, or disposition of the entity's assets that could have a material effect on the financial statements.
Because of inherent limitations, internal control over financial reporting may not prevent, or detect and correct misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Opinions
Inour opinion, the financial statements referred to in the first paragraph present fairly, in all material respects, the financial position of Co-opportunity Consumers Cooperative, Inc. as of July 31, 2015 and 2014, and the results of its operations and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. Also in our opinion, Co-opportunity Consumers Cooperative, Inc. maintained, in all material respects, effective internal control over financial reporting as of July 31, 2015.
u Cl LJ.P Wegner CPAs, LLP Madison, Wisconsin October 13, 2015
See accompanying notes. 3
CO-OPPORTUNITY CONSUMERS COOPERATIVE, INC. BALANCE SHEETS
July 31, 2015 and 2014
2015 2014 ASSETS CURRENT ASSETS
Cash $ 645,546 $ 1,491,346 Certificates of deposit 3,001,217 1,400,000 Accounts receivable 373 Inventory 831,842 789,855 Prepaid expenses 193,594 184,673 Prepaid income taxes 5,628 Deferred income taxes 37,000 45,000
Total current assets
4,714,827
3,911,247
Equipment and leasehold improvements - net 1,714,904 2,073,880
OTHER ASSETS Equity and deposits in other cooperatives
210,251
178,520
Security deposits 52,000 52,000 Long-term deposits 31,278 31,032 Total other assets 293,529 261,552
Total assets
$ 6,723,260
$ 6,246,679
LIABILITIES AND MEMBERS' EQUITY CURRENT LIABILITIES
Accounts payable $ 598,282 $ 623,142 Accrued expenses 709,906 678,604 Income taxes payable 24,960 32,625 Patronage dividend payable 312,578 169,550 Current portion of note payable 9,567
Total current liabilities
1,655,293
1,503,921
OTHER LIABILITIES
Note payable less current portion 3,189 Deferred income taxes 33,000 56,000
Total liabilities
1,691,482
1,559,921
MEMBERS' EQUITY Class A Membership shares, $25 par value,
1,000,000 shares authorized, 64,798 and 93,537 shares issued and outstanding
1,619,951
2,338,437
Retained patronage 2,150,224 1,212,490 Retained earnings 1,261,603 1,135,831
Total members' equity
5,031,778
4,686,758
Total liabilities and members' equity
$ 6,723,260
$ 6,246,679
See accompanying notes. 4
CO-OPPORTUNITY CONSUMERS COOPRATIVE, INC. STATEMENTS OF INCOME
Years ended July 31, 2015 and 2014
2015 2014
Amount Percent Amount Percent SALES REVENUE
Gross sales $ 24,050,850 101.33 $ 23,638,938 101.63 Discounts (315,042} (1.33) {378,643} (1.63)
Sales 23,735,808 100.00 23,260,295 100.00
Cost of goods sold 14,760,191 62.19 14,678,740 63.11
Gross margin
8,975,617
37.81
8,581,555
36.89
EXPENSES Personnel 5,580,818 23.51 5,402,343 23.23 Occupancy 1,171,039 4.93 1,162,910 5.00 Administrative expenses 557,692 2.35 477,757 2.05 Operating expenses 462,224 1.95 465,264 2.00 Depreciation 449,485 1.89 456,022 1.96 Promotions 142,738 0.60 94,624 0.41 Governance 84,117 0.35 94,490 0.41
Total operating expenses
8,448,113
35.58
8,153,410
35.06
Operating income 527,504 2.23 428,145 1.83
OTHER INCOME (EXPENSE) Interest and dividend income 58,763 025 58,042 0.25 Escheated membership shares 826,609 3.48 Other income 78,616 0.33 63,308 0.27 Loss from disposal of assets (6,002) (0.03) (20,274) (0.09) Other expense p 1,424} {0.05) {10,900} {0.05}
Total other income (expense) 946,562 3.98 90,176 0.38
Net income before income taxes 1,474,066 6.21 518,321 2.21
Provision for ·income taxes {97,982} {0.41} {202,470) {0.87)
Net income $ 1,376,084 5.80 $ 315,851 1.34
See accompanying notes. 5
CO-OPPORTUNITY CONSUMERS COOPERATIVE, INC. STATEMENTS OF MEMBERS' EQUITY
Years ended July 31, 2015 and 2014
Class A Membership Retained Retained
Shares Patronage Earnings Total
Balances July 31, 2013 $ 2,210,014 $ 1,056,495 $ 1,141,007 $ 4,407,516
Shares issued 141,748 141,748 Shares redeemed (13,325) (13,325) Unclaimed patronage dividends (13,555) 18,073 4,518 Net income 315,851 315,851 Patronage dividend declared 339,100 (339,100) Patronage dividend payable {169,550) (169,550)
Balances July 31, 2014 2,338,437 1,212,490 1,135,831 4,686,758
Shares issued 130,020 130,020 Shares redeemed (21,897) (21,897) Escheated membership shares (826,609) (826,609) Net income 1,376,084 1,376,084 Patronage dividend declared 1,250,312 (1,250,312) Patronage dividend payable {312,578) (312,578
Balances July 3j, 2015 $ 1,619,951 $ 2,150,224 $ 1,261,603 $ 5,031,778
See accompanying notes. 6
CO-OPPORTUNITY CONSUMERS COOPERATIVE, INC. STATEMENTS OF CASH FLOWS
Years ended July 31, 2015 and 2014
2015 2014 CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 1,376,084 $ 315,851 Adjustments to reconcile net income to net cash flows from operating activities
Deprecation 449,485 456,022 Loss from disposal of assets 6,002 20,274 Deferred income taxes (15,000) 59,891 Escheated membership shares (826,609) (increase) decrease in assets
Accounts receivable 373 (372) Inventory (41,987) 31,389 Prepaid expenses (8,921) 31,112 Prepaid income taxes (5,628) 37,064 Long term-deposits (246) (3,295) Equity and deposits in other cooperatives (31,731) (46,729)
Increase (decrease) in liabilities Accounts payable (24,860) (48,368) Accrued expenses 31,302 29,168 Income taxes payable {7,665l 32,625
Net cash flows from operating activities 900,599 914,632
CASH FLOWS FROM INVESTING ACTIVITIES Purchases of and interest retained in certificates of deposit (1,601,217) (800,000) Proceeds from sale of equipment 5,373 Purchases of equipment and leasehold improvements (101,884) {151,347)
Net cash flows from investing activities (1,697,728) (951,347)
CASH FLOWS FROM FINANCING ACTIVITIES Payments on note payable (1,551) (2,610) Proceeds from issuance of note payable 14,307 Membership shares issued 130,020 141,748 Membership shares redeemed (21,897) (13,325) Patronage dividends paid (169,550) (82,880)
Net cash flows from financing activities
{48,671l
42,933
Net change in cash (845,800) 6,218
Cash - beginning of year 1,491,346 1,485,128 Cash - end of year $ 645,546
$ 1,491,346 SUPPLEMENTARY INFORMATION
Cash paid for income taxes Non-cash financing transactions
$ 77,345 $ 65,000
Patronage dividend payable 312,578 169,550
7
CO-OPPORTUNITY CONSUMERS COOPERATIVE, INC. NOTES TO FINANCIAL STATEMENTS
July 31, 2015 and 2014
Co-opportunity Consumers Cooperative,Inc.(Cooperative) is a corporation that has operated a Cooperative grocery store in Santa Monica, California since 1976. Substantially all revenue is derived from retail sales of groceries. The significant accounting policies followed are described below to enhance the usefulness of the financial statements to the reader.
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Inventory
Inventory, which consists of grocery items held for resale, is valued at the lower of cost or market. Cost is determined using the first-in, first-out (FIFO) method.
Equipment and Leasehold Improvements
The cost of equipment and leasehold improvements in excess of $1,000 is capitalized at cost and depreciated using the straight-line method over the following estimated useful lives:
Computer equipment and software Furniture and fixtures Leasehold improvements
Income Tax Status
3 to 7 years 3 to 7 years
7 to 15 years
The Cooperative is taxed on non-patronage earnings and any patronage earnings not paid or allocated to the members. Income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due plus deferred taxes. Deferred taxes are recognized for differences between the basis of assets and liabilities for financial statement and income tax purposes. The deferred tax liabilities represent the future tax return consequences of those differences, which will either be taxable when the assets are used or liquidated.
The Cooperative's federal tax returns are subject to examination by the Internal Revenue Service, generally for three years after they are filed. With few exceptions, the Cooperative is no longer subject to such examinations for tax years before 2011.
Estimates
Management uses estimates and assumptions in preparing financial statements. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenue and expenses. Actual results could differ from estimates.
Presentation of Sales Taxes
The State of California , as well as Los Angeles County and the City of Santa Monica, imposes sales tax on some of the Cooperative's sales to nonexempt customers. The sales tax rate is 9.5% for nonfood items. The Cooperative collects those taxes from customers and remits the entire amount to the State. The Cooperative's accounting policy is to exclude the taxes collected and remitted to the State from sales and cost of goods sold.
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CO-OPPORTUNITY CONSUMERS COOPERATIVE, INC. NOTES TO FINANCIAL STATEMENTS
July 31, 2015 and 2014
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Advertising
Advertising costs are expensed as incurred. Advertising expense was $66,762 and $35,267 for the years ended July 31, 2015 and 2014.
Date of Management's Review
Management has evaluated subsequent events through October 13, 2015, the date which the financial statements were available to be issued.
NOTE 2 - RELATED PARTY TRANSACATIONS
The Cooperative purchases inventory from a business which is owned by one of its managers. Total purchases from this vendor were $118,544 and $121,272 for the years ended July 31, 2015 and 2014.
NOTE 3 - EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Equipment and leasehold improvements at July 31, 2015 and 2014 consisted of the following:
2015 2014 Computer equipment and software
$ 190,445
$ 196,954
Equipment and fixtures 1,822,361 1,794,378 Leaseholds improvements 1,640,900 1,620,964
Equipment and leasehold improvements 3,653,706 3,612,296 Accumulated depreciation (1,938,802) (1,538,416) Equipment and leasehold improvements-net
$ 1,714,904
$ 2,073,880
NOTE 4 - EQUITY AND DEPOSITS IN OTHER COOPERATIVES
Equity and deposits in other cooperatives at July 31, 2015 and 2014 consisted of $210,251 and $178,520 invested in National Cooperative Grocers (NCG). The investment in NCG is not readily marketable. The investment is recorded at cost and may be redeemed at face value only at the discretion of NCG's board of directors.
NOTE 5 - NOTE PAYABLE
The note payable at July 31, 2015 consisted of an interest-free loan of $12,756 payable to Southern California Edison with required monthly payments of $797. Future minimum principal payments are $9,567 and $3,189 for the years ended July 31, 2016 and 2017.
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CO-OPPORTUNITY CONSUMERS COOPERATIVE, INC. NOTES TO FINANCIAL STATEMENTS
July 31, 2015 and 2014
NOTE 6 - MEMBERSHIP SHARES
The Cooperative is authorized to issue two classes of shares: Class A Membership shares and Class B Investment shares. Class A shares are voting shares, and Class B shares are nonvoting shares. In the event of dissolution or bankruptcy of the Cooperative, Class B shares will have preference over Class A shares. The Cooperative is authorized to issue up to 1,000,000 Class A shares and 1,000,000 Class B shares. There were no Class B shares outstanding at July 31, 2015 and 2014. Members must purchase at least twelve Class A shares over an twelve-year period to receive the benefits of membership, including patronage dividends, and at least one share at a cost of $25 must be purchased annually.
NOTE 7 - INCOME TAXES
The provision for income taxes for the years ended July 31, 2015 and 2014 consisted of the following components:
2015 2014
Current federal income tax expense
$ 90,840
$ 108,287
Current state income tax expense 22,142 34,292 Deferred tax expense (benefit) (15,000) 59,891
Provision for income taxes $ 97,982 $ 202,470 ====:::::::::: ==
The income tax provision differs from the expense that would result from applying statutory rates to income before income taxes primarily because of the tax benefits of graduated rates and the use of accelerated depreciation methods for income tax purposes.
The Cooperative's total deferred tax asset, deferred tax asset valuation allowance, and deferred tax liability at July 31, 2015 and 2014 were as follows:
2015 2014
Deferred tax asset
$ 37,000
$ 45,000
Deferred tax asset valuation allowance Deferred tax liability (33,000) (56,000)
Net deferred tax asset (liability) $ 4,000 $ (11,000) =======:::::::::: ==
Deferred taxes are recognized for temporary differences between the basis of assets and liabilities for financial statement and income tax purposes. The differences relate primarily to using accelerated depreciation methods for income tax purposes.
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CO-OPPORTUNITY CONSUMERS COOPERATIVE, INC. NOTES TO FINANCIAL STATEMENTS
July 31, 2015 and 2014
NOTE 8 - OPERATING LEASING ARRANGEMENTS
The Cooperative leases space for its retail operation. The lease runs through November 2025 and requires monthly payments of $46,044. The rent is subject to annual increases based on the local consumer price index. The Cooperative also leases office space in Santa Monica. The lease runs through January 2016 and currently requires monthly payments of $1,427.
The Cooperative also has various leases for retail and office equipment. The leases run through February 2016 and require payments totaling $1,432 per month.
Rent expense for all leases for the years ended July 31, 2015 and 2014 was $600,564 and $585,634.
Future minimum lease payments for the five subsequent years ending July 31 are as follows:
NOTE 9 - CONCENTRATIONS
Purchasing Agreement
The Cooperative has an agreement through the NCG with United Natural Food, Inc. (UNFI}. The Cooperative agrees to use UNFI as its primary grocery supplier in exchange for additional purchase discounts. UNFI provides approximately 42% of the value of items purchased for resale.
As part of this agreement the Cooperative, along with other natural food Cooperatives in the West, is a member of the Joint Liability Fund (JLF} coordinated by NCG. At July 31, 2015 and 2014, the Cooperative had a deposit with JLF for $31,278 and $31,032. In order to obtain better terms with UNFI the members of the JLF have guaranteed the debt of the other members to UNFI. Ifa member were to default on its debt, the other members would each be responsible for a share of the debt based on their total purchases from UNFI. The total liability of the Cooperative could exceed the amount of the deposit with JLF.
Concentration of Credit
The Cooperative maintains cash balances at one financial institution based in Beverly Hills, California and another financial institution based in Washington, DC." The Federal Deposit Insurance Corporation insures accounts at each institution up to $250,000. At July 31, 2015 and 2014, the Cooperative's uninsured cash balances totaled $415,549 and $1,305,973.
2016 $ 596,537 2017 599,216 2018 617,153 2019 635,230 2020 653,345
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CO-OPPORTUNITY CONSUMERS COOPERATIVE, INC. NOTES TO FINANCIAL STATEMENTS
July 31, 2015 and 2014
NOTE 10 - RETIREMENT PLAN
The Cooperative sponsors a 401(k) savings plan that is available to alt employees who meet eligibility requirements. The Cooperative makes elective contributions to the plan. The Cooperative made elective contributions of 5% of employees' compensation for the years ended July 31, 2015 and 2014. Total plan contributions by the Cooperative were $125,214 and $173,139 for the years ended July 31, 2015 and 2014. The 2014 contribution also included $55,229 related to employee compensation from prior years.
Sales 33,907,214 100% 39,473,131 100% 42,089,968 100% 45,485,676 100% 47,759,960 100% 50,147,958 100% 52,655,356 100%
COGS 21,370,805 63.0% 24,693,131 62.6% 26,351,139 62.6% 28,465,682 62.6% 29,888,966 62.6% 31,383,414 62.6% 32,952,585 62.6%
Gross Profit 12,536,409 37.0% 14,780,000 37.4% 15,738,830 37.4% 17,019,994 37.4% 17,870,994 37.4% 18,764,544 37.4% 19,702,771 37.4%
G&A 12,254,980 36.1% 13,902,851 35.2% 14,879,587 35.4% 15,928,944 35.0% 16,736,049 35.0% 17,496,101 34.9% 18,292,936 34.7%
EBITDA 281,429 0.8% 877,150 2.2% 859,243 2.0% 1,091,051 2.4% 1,134,945 2.4% 1,268,443 2.5% 1,409,835 2.7%
Depreciation 1,108,422 3.3% 836,849 2.1% 844,087 2.0% 901,900 2.0% 812,602 1.7% 813,660 1.6% 829,235 1.6%
EBIT (826,993) -2.4% 40,301 0.1% 15,156 0.0% 189,150 0.4% 322,343 0.7% 454,783 0.9% 580,600 1.1%
Interest (86,594) (106,589) -0.3% (96,002) -0.2% (84,900) -0.2% (73,260) -0.2% (61,054) -0.1% (48,256) -0.1%
EBT (913,588) -2.7% (66,288) -0.2% (80,846) -0.2% 104,250 0.2% 249,083 0.5% 393,729 0.8% 532,344 1.0%
Taxes - 0.0% - 0.0% - 0.0% - 0.0% - 0.0% - 0.0% - 0.0%
Net Income (913,588) -2.7% (66,288) -0.2% (80,846) -0.2% 104,250 0.2% 249,083 0.5% 393,729 0.8% 532,344 1.0%
Year End Cash
Balance 2,310,448 2,905,889 3,469,887 3,643,374 3,719,902 4,671,258 5,751,281
Debt Coverage Analysis:
Cash Avail For
Debt
Svc (EBITDA) 281,429 877,150 859,243 1,091,051 1,134,945 1,268,443 1,409,835
Annual Debt
Service (304,680) (335,263) (335,777) (336,316) (336,881) (337,474) (338,095)
DSCR (Debt Service Coverage Ratio) 0.92 2.62 2.56 3.24 3.37 3.76 4.17
Debt Service Summary Loan Rate
Bank Loan 4.75% 4.75% 4.75% 4.75% 4.75% 4.75% 4.75%
Amount Term (Yrs)
Bank Loan 2,500,000$ 10 304,680$ 335,263$ 335,777$ 336,316$ 336,881$ 337,474$ 338,095$
Total 2,500,000$ 304,680$ 335,263$ 335,777$ 336,316$ 336,881$ 337,474$ 338,095$
7 Year Pro Forma Profit and Loss Statement-- Scenario A: $1,500,000 Shares Sold
2017 2018 2019 2020 2021 2022 2023
Year 7
Interest Rate Sensitivity
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6
Equity - Preferred Class "B" Shares
Investor Shares balance 1,400,000 1,400,000 1,400,000 750,000 - - -
Dividend (94,250) (92,500) (92,500) (76,250) (30,000) - -
Investor Shares - dividends (cumulative) (94,250) (186,750) (279,250) (355,500) (385,500) (385,500) (385,500)
Investor Class "B" Share series 1 - Balance beginning of period 100,000
Investor Class "B" Share series 1 % redeemed (opening balance) 100%
Investor Class "B" Share series 1 - Redeemed (100,000)
Investor Class "B" Share series 1 - Balance at end of period -
Investor Class "B" Share series 1 - Rate 1.0%
dividend 1,750
Investor Class "B" Share series 2 - Balance beginning of period 650,000 650,000 650,000 650,000 - -
Investor Class "B" Share series 2 % redeemed (opening balance) 0% 0% 0% 100% 0% 0%
Investor Class "B" Share series 2 - Redeemed - - - (650,000) - -
Investor Class "B" Share series 2 - Balance at end of period 650,000 650,000 650,000 - - -
Investor Class "B" Share series 2 - Rate 2.5% 2.5% 2.5% 2.5% 2.5% 2.5%
dividend 32,500 32,500 32,500 16,250 - -
Investor Class "B" Share series 3 - Balance beginning of period 750,000 750,000 750,000 750,000 750,000 - -
Investor Class "B" Share series 3 % redeemed (opening balance) 0% 0% 0% 0% 100% 0% 0%
Investor Class "B" Share series 3 - Redeemed - - - - (750,000) - -
Investor Class "B" Share series 3 - Balance at end of period 750,000 750,000 750,000 750,000 - - -
Investor Class "B" Share series 3 - Rate 4.0% 4.0% 4.0% 4.0% 4.0% 4.0% 4.0%
dividend 60,000 60,000 60,000 60,000 30,000 - -
7 Year Pro Forma Preferred Shares (Share redemption and dividend payments) Scenario A: $1,500,000 Shares Sold
2017 2018 2019 2020 2021 2022 2023Year 7Year 1 Year 2 Year 3 Year 4 Year 5 Year 6
Sales 33,907,214 100% 39,473,131 100% 42,089,968 100% 45,485,676 100% 47,759,960 100% 50,147,958 100% 52,655,356 100%
COGS 21,370,805 63.0% 24,693,131 62.6% 26,351,139 62.6% 28,465,682 62.6% 29,888,966 62.6% 31,383,414 62.6% 32,952,585 62.6%
Gross Profit 12,536,409 37.0% 14,780,000 37.4% 15,738,830 37.4% 17,019,994 37.4% 17,870,994 37.4% 18,764,544 37.4% 19,702,771 37.4%
G&A 12,254,980 36.1% 13,902,851 35.2% 14,879,587 35.4% 15,928,944 35.0% 16,736,049 35.0% 17,496,101 34.9% 18,292,936 34.7%
EBITDA 281,429 0.8% 877,150 2.2% 859,243 2.0% 1,091,051 2.4% 1,134,945 2.4% 1,268,443 2.5% 1,409,835 2.7%
Depreciation 1,108,422 3.3% 836,849 2.1% 844,087 2.0% 901,900 2.0% 812,602 1.7% 813,660 1.6% 829,235 1.6%
EBIT (826,993) -2.4% 40,301 0.1% 15,156 0.0% 189,150 0.4% 322,343 0.7% 454,783 0.9% 580,600 1.1%
Interest (34,638) -0.1% (42,636) -0.1% (38,401) -0.1% (33,960) -0.1% (29,304) -0.1% (24,422) 0.0% (19,302) 0.0%
EBT (861,631) -2.5% (2,335) 0.0% (23,245) -0.1% 155,190 0.3% 293,039 0.6% 430,361 0.9% 561,298 1.1%
Taxes - 0.0% - 0.0% - 0.0% - 0.0% - 0.0% - 0.0% - 0.0%
Net Income (861,631) -2.5% (2,335) 0.0% (23,245) -0.1% 155,190 0.3% 293,039 0.6% 430,361 0.9% 561,298 1.1%
Year End Cash
Balance 2,359,052 3,051,798 3,713,102 3,252,643 2,735,063 3,873,531 5,141,949
Debt Coverage Analysis:
Cash Avail For
Debt
Svc (EBITDA) 281,429 877,150 859,243 1,091,051 1,134,945 1,268,443 1,409,835
Annual Debt
Service (121,872) (134,105) (134,311) (134,526) (134,752) (134,989) (135,238)
DSCR (Debt Service Coverage Ratio) 2.31 6.54 6.40 8.11 8.42 9.40 10.42
Debt Service Summary Loan Rate
Bank Loan 4.75% 4.75% 4.75% 4.75% 4.75% 4.75% 4.75%
Amount Term (Yrs)
Bank Loan 1,000,000$ 10 121,872$ 134,105$ 134,311$ 134,526$ 134,752$ 134,989$ 135,238$
Total 1,000,000$ 121,872$ 134,105$ 134,311$ 134,526$ 134,752$ 134,989$ 135,238$
Year 7
Interest Rate Sensitivity
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6
7 Year Pro Forma Profit and Loss Statement--Scenario B: $3,000,000 Shares Sold
2017 2018 2019 2020 2021 2022 2023
Equity - Preferred Class "B" Shares
Investor Shares balance 2,900,000 2,900,000 2,900,000 1,500,000 - - -
Dividend (191,750) (190,000) (190,000) (155,000) (60,000) - -
Investor Shares - dividends (cumulative) (191,750) (381,750) (571,750) (726,750) (786,750) (786,750) (786,750)
Investor Class "B" Share series 1 - Balance beginning of period 100,000
Investor Class "B" Share series 1 % redeemed (opening balance) 100%
Investor Class "B" Share series 1 - Redeemed (100,000)
Investor Class "B" Share series 1 - Balance at end of period -
Investor Class "B" Share series 1 - Rate 1.0%
dividend 1,750
Investor Class "B" Share series 2 - Balance beginning of period 1,400,000 1,400,000 1,400,000 1,400,000 - -
Investor Class "B" Share series 2 % redeemed (opening balance) 0% 0% 0% 100% 0% 0%
Investor Class "B" Share series 2 - Redeemed - - - (1,400,000) - -
Investor Class "B" Share series 2 - Balance at end of period 1,400,000 1,400,000 1,400,000 - - -
Investor Class "B" Share series 2 - Rate 2.5% 2.5% 2.5% 2.5% 2.5% 2.5%
dividend 70,000 70,000 70,000 35,000 - -
Investor Class "B" Share series 3 - Balance beginning of period 1,500,000 1,500,000 1,500,000 1,500,000 1,500,000 - -
Investor Class "B" Share series 3 % redeemed (opening balance) 0% 0% 0% 0% 100% 0% 0%
Investor Class "B" Share series 3 - Redeemed - - - - (1,500,000) - -
Investor Class "B" Share series 3 - Balance at end of period 1,500,000 1,500,000 1,500,000 1,500,000 - - -
Investor Class "B" Share series 3 - Rate 4.0% 4.0% 4.0% 4.0% 4.0% 4.0% 4.0%
dividend 120,000 120,000 120,000 120,000 60,000 - -
Year 7Year 1 Year 2 Year 3 Year 4 Year 5 Year 6
7 Year Pro Forma Preferred Shares (Share redemption and dividend payments) Scenario B: $3,000,000 Shares Sold
2017 2018 2019 2020 2021 2022 2023