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? South Platte Water Related Activities Program, Inc. Notes to Financial Statements , December 31, 2007, 2006 and 2005 1. NATURE OF ACTNITIES: ' South Platte Water Related Activities Program, Inc. (SPWRAP) is a membership supported not-for-profit cotporation, incorporated under the laws of Colorado on April 1, 2005. The primary purposes of SPWRAP are, i.) to assist in the recovery of species listed as threatened or endangered under the Endangered Species Act (ESA) through the development and operation of the Colorado component of the Platte River Recovery Implementation Program (PRRIP)in a manner that ensures the State of Coloradds comptiance with PRRIP, ii.) to negotiate with federal agencies, other states and t stakeholders on behalf of or in coordination with the State of Colorado in connection with implementation of the first increment of PRRIP and the formulation and implementation of future increments of PRRIP, and iii.) should the creation and implementation of PRR]P not be successful, assist in development and operation of a Colorado-Only Program or other programmatic ESA compiiance approach in Colorado. ? SPWRAP's primary sources of revenue are membership contributions from members, contributions and investment income. SPWRAP has five classes of inembership - Class A(Agricultural); Class 1(Industrial); Class M(Municipal); Class W(Water Conservancy and Water Conservation Districts) and Class X(Miscellaneous). Membership fees are self- ' assessed and are based upon specific factors and formulae outlined in each class membership agreement. The Internal Revenue Service has ruled that SWRAP qualifies under the provisions of Section 50Ic(3) of the Internal Revenue Code as an organization created for charitable, educational and scientific purposes and, therefore, is exempt from federal and state income taxes on related purpose income. Donations to SPWRAP are deductible by the donor as charitable ' contributions for federal income tax purposes. Management is not aware of any course of action or series of events that have occurred that might adversely affect this tax-exempt status. 2. SIGNIFICANT ACCOUNTING POLICIES: ? (a) Cash Equivalents: Cash equivalents are highly liquid investments with a maturity of three months or less when purchased. (b) Membership Receivables and Revenue: ' Membership is voluntary. Membership certificates are issued upon receipt of fu11 payment of self-assessed membership fees. Various members utilize their membership in SPWRAP to demonstrate its participation in PRRIP in order to document compliance of their respective projects with ESA section 7. Membership revenue is recorded as earned in the year received except for those membership remittances paid in advance which are ' recognized in the period to which they pertain. (c) Pension and Postretirement Beneftt Plans: SPWRAP has no employees and therefore has no pension or postretirement benefit plans. ? (d) AdvertisinQ: Advertising costs, if any, are expensed as incurred. (e) Use of Estimates: ' The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes. Actual results could differ from those estimates. ' (t) Recentlv Issued Accounting Standards: In September 2006, the Financial Accounting Standards Board issued SFAS 157, Fair Value Measurements. This statement defines fair value, establishes a frame work for measuring fair value, and expands disclosures about fair value measurements. SFAS No.157 is effective for fiscai years beginning after November 15, 2007. SPWRAP has not yet evaluated the impact of adopting SFAF No. 157. ' In February 2007, the Financial Accounting Standards Board issued SFAS 159, The Fair Value Option for Financial Assets and Financial Liabilities. This statement permits entities [o chose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value, and ' if elected, is effective for years beginning after November 15, 2007. SPWRAP has not evaluated whether it will adopt provisions of SFAS No. 159. ' 3. CONCENTRATION OF CREDIT RISK: SPWRAP has deposits with financial institutions that exceed federal depository insurance limits by approximately $1,594,000 at December 31, 2007.