Minutes of the Regular Meeting of NMSBIC, September 18, 2025

A meeting of the New Mexico Small Business Investment Corporation was called to order on this date at 9:01 a.m. via teleconference. A quorum was established.

Members Present:
Mr. Joshua Smith, Chair
Ms. Anne Beckett, Vice Chair
Mr. Robert Valdiviez, Secretary/Treasurer
Mr. Arsenio Garduño, designee of Hon. Laura M. Montoya, NM State Treasurer
Ms. Sayuri Yamada
Ms. Kristina Alley (joined at 9:07 am)
Mr. Joshua Grassham

Members Excused: None

Executive Director/Financial Adviser to Board: Mr. Russell Cummins

Board Legal Counsel: Mr. Randall McDonald

Guests Present:
Mr. Jake Dopson, Assurance Partner/Shareholder, Pulakos CPAs
Mr. Ryan Thorpe, Assurance Partner, Pulakos CPAs
Mr. Rodrigo Vargas, Assurance Senior, Pulakos CPAs
Dee Brescia, Brescia Consulting LLC (joined at 9:25 am)

MEETING CHAIR

Chair Smith was in attendance. He was travelling and unsure how reliable his connection would be. Ms. Beckett agreed to chair the meeting.

REVIEW AND ACCEPTANCE OF AGENDA

Mr. Valdiviez moved to accept the agenda, as published. Ms. Yamada seconded the motion, which passed unanimously by roll call vote.

BOARD MINUTES

Mr. Grassham moved to accept the Board Minutes for August 15, 2025, as presented. Ms. Yamada seconded the motion, which passed unanimously by roll call vote.

PULAKOS CPAs AUDIT PRESENTATION

Mr. Cummins introduced Jake Dopson, Ryan Thorpe, and Rodrigo Vargas of Pulakos CPAs. Mr. Cummins said the audit process was very smooth this year. He thanked Dee Brescia, and Messrs. Dopson, Thorpe and Vargas, for their work.

Mr. Dopson described how the audit includes a risk assessment and sampling techniques. The auditors look for areas that have high dollar volume, high number of transactions, or are unusual or non-routine. From there, the auditors weight audit procedures toward those areas. The idea is to have a more efficient and effective audit by pointing audit procedures toward areas that might be more susceptible to misstatement. He noted there was not much activity for the equity investments, so the debt program is where a large amount of time was spent. The auditors are also required to gain an understanding of the overall internal control structure as part of the audit. Mr. Dopson said ultimately the financial statements are the responsibility of NMSBIC, and the auditors’ responsibility is to issue an opinion on the financial statements. NMSBIC management is also responsible for establishing and maintaining an effective system of internal controls.

Mr. Dopson said the auditors did not come across any instances of anything considered improper or fraudulent, nor were there any instances of opinion shopping. He said there were some post-closing entries which are normal because of when reports are received from equity partners. However, there were no audit adjustments, which should give the board comfort that good, clean, financial information is being provided on an interim basis to make decisions and manage the organization.

Mr. Smith asked about the calculation to determine materiality. Mr. Dopson said he couldn’t give a hard number, nor would he want to disclose to management what the materiality threshold is. The auditors use some different measures and also subjectively consider what a reasonable user of the financial statements would consider to be a material misstatement.

Mr. Dopson said the auditors are not providing a management letter. A management letter would be issued if the auditors came across any internal control deficiencies or best practices that rose to a level that would require communication in writing. The auditors did not come across anything like that. The auditors will transmit copies of the audit directly to state authorities, as required by board to provide additional transparency to those governing bodies.

Mr. Dopson said the auditors make sure to maintain a healthy level of professional skepticism, but nonetheless, they appreciate being able to work with NMSBIC and being a part of NMSBIC’s mission. The end result is Pulakos CPAs will be issuing an unmodified opinion, which is a clean opinion and the best opinion you can get. The opinion does extend to supplementary information at the end of the audit report but does not extend to management’s discussion and analysis. Finally, there is an additional report on internal controls over financial reporting that is required under government accounting standards.

Mr. Dopson presented slides with information regarding the audit process and highlights of NMSBIC’s performance for the fiscal year ended June 30, 2025. He noted an increase in the cost to run the organization, which was primarily due to a consulting contract with the Bureau of Business and Economic Research for a study requested by the board. He then referred to a page showing management and general expenses were ¼ of 1% of total assets and represents a modest cost for the work that NMSBIC does.

Chair Beckett asked if the auditors look at activity governed by the lending agreements, such as the DreamSpring agreement. Mr. Dopson responded that the auditors review all of NMSBIC’s lending agreements and are familiar with the agreements. This includes amendments and changes each year. Audit procedures are geared toward making sure activity matches up with the underlying agreements. Mr. Smith said it was a great question, and he is glad to hear there is a second set of eyes to make sure we are compliant with the loan documents.

Mr. Cummins said thank you to the Pulakos team and Dee Brescia. He noted there is a very short amount of time to complete the audit, he appreciates the amount of work done in that short time.

NMSBIC DRAFT AUDITED FINANCIAL STATEMENTS INCLUDING REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Mr. Cummins referred to the audited financial statements in the board package. He said highlights had been provided by Mr. Dopson and offered to answer any questions. There were no questions.

Mr. Valdiviez moved to accept the NMSBIC audited financial statements as presented. Mr. Grassham seconded the motion, which passed unanimously by roll call vote.

Messrs. Dopson, Thorpe and Vargas left the meeting.

NMSBIC DRAFT ANNUAL REPORT

Mr. Cummins referred to the draft NMSBIC Annual Report in the board package. He reviewed the business success stories and provided highlights from the report. He noted a loan was added in De Baca County last year, and NMSBIC has now provided funding for small business loans in 32 of 33 New Mexico counties.

Mr. Cummins referred to the section of the report with “Desired Changes to the Corporation”. He said he wanted to highlight this section, and noted the report indicates the NMSBIC board of directors is not requesting any desired changes.

Chair Beckett asked how widely the report is distributed. Mr. Cummins said NMSBIC is required to provide report to the Governor and the Legislative Finance Committee. Each year the report is also provided to the State Investment Council and the Department of Finance and Administration. The report is made available to the public on NMSBIC’s website.

Mr. Smith said it’s his understanding there is a national CDFI conference each year, and asked Mr. Cummins if there might be value in attending. Mr. Cummins said he would look into it.

Mr. Garduño moved to accept the NMSBIC Annual Report as presented. Ms. Yamada seconded the motion, which passed unanimously by roll call vote.

ADJOURNMENT

Chair Beckett moved to adjourn at 9:57 a.m. Mr. Valdiviez seconded the motion, which passed unanimously by roll call vote.

ADJOURNMENT: 9:57 a.m.