DAYSTAR LIFE CENTER, INC....DAYSTAR LIFE CENTER, INC. Financial Statements with Independent Auditors’ Report For the Years Ended August 31, 2018 and 2017DAYSTAR LIFE CENTER, INC

DAYSTAR LIFE CENTER, INC.

Financial Statements with

Independent Auditors’ Report

For the Years Ended August 31, 2018 and 2017


Table of Contents

August 31, 2018 and 2017

INDEPENDENT AUDITORS’ REPORT .............................................................................1 - 2 FINANCIAL STATEMENTS Statement s of Financial Position .......................................................................................3 Statement s of Activities ....................................................................................................4 Statements of Changes in Net Assets ................................................................................5 Statements of Cash Flows .................................................................................................6 Statement of Functional Expenses ....................................................................................7 Notes to Financial Statements ...........................................................................................8 - 13

2018 2017

Cash 364,987$ 373,938$

Cash restricted for capital acquisitions 1,549,283 28,391

Certificates of deposit 52,171 77,050

Investments 87,941 19,765

Grants and awards receivable 130,084 15,750

Prepaid expenses 150 150

Unconditional promises to give 63,094 74,707

Land 297,391 290,808

Construction in progress 243,564 60,377

Property and equipment, net of

accumulated depreciation 172,299 210,522

Total assets 2,960,964$ 1,151,458$

Liabilities

Accounts payable and accrued expenses 143,462$ 21,025$

Total liabilities 143,462 21,025

Net Assets

Unrestricted 1,161,408 1,021,572

Temporarily restricted 1,656,094 108,861

Total net assets 2,817,502 1,130,433

Total liabilities and net assets 2,960,964$ 1,151,458$

3

Liabilities and Net Assets

Assets


Statements of Financial Position

August 31, 2018 and 2017

See accompanying notes to financial statements.

Statements of Activities

Year Ended August 31, 2018

(with comparative total for 2017)

Temporarily 2018 2017

Unrestricted Restricted Total Total

Support and Revenue

Contributions and bequests 403,148$ -$ 403,148$ 326,041$

Capital campaign contributions - 1,607,146 1,607,146 350,000

In-kind contributions 441,465 - 441,465 366,877

Fundraising events 113,324 - 113,324 125,145

Grants and awards 187,328 158,000 345,328 212,479

Community Development Block

Grant - forgiveness of debt - - - 205,000

Interest and investment income 5,282 3,784 9,066 4,629

Unrealized gain on investments 4,835 - 4,835 1,597

Thrift shop sales - - - 85,526

Other income 852 - 852 1,585

Donated services 149,035 - 149,035 194,544

Donated use of facilities 17,004 4,167 21,171 34,496

Total support and revenue 1,322,273 1,773,097 3,095,370 1,907,919

Net assets released from restrictions 36,607 (36,607) - -

Total support, revenue, and

assets released from restrictions 1,358,880 1,736,490 3,095,370 1,907,919

Operating Expenses

Program services 1,317,348 - 1,317,348 1,351,772

Management and general 29,093 - 29,093 28,548

Fundraising 61,860 - 61,860 49,118

Total expenses 1,408,301 - 1,408,301 1,429,438

(Decrease) increase in net assets (49,421) 1,736,490 1,687,069 478,481

Transfer for purchase of capital assets 189,257 (189,257) - -

Net assets at beginning of year 1,021,572 108,861 1,130,433 651,952

Net assets at end of year 1,161,408$ 1,656,094$ 2,817,502$ 1,130,433$


4


2018 2017

Unrestricted net assets:

Unrestricted operating support and revenue 1,322,273$ 1,527,628$

Unrestricted operating expenses (1,408,301) (1,429,438)

Net assets released from restrictions 36,607 73,253

Transfer for purchase of capital assets 189,257 351,185

Increase in unrestricted net assets 139,836 522,628

Temporarily restricted net assets:

Grant allocation 158,000 25,450

Contributions 1,607,146 350,000

Interest income 3,784 -

Donated use of facilities 4,167 4,841

Net assets released from restrictions (36,607) (73,253)

Transfer for purchase of capital assets (189,257) (351,185)

Increase (decrease) in temporarily restricted net assets 1,547,233 (44,147)

Increase in net assets 1,687,069 478,481

Net assets at beginning of year 1,130,433 651,952

Net assets at end of year 2,817,502$ 1,130,433$

5


Statements of Changes in Net Assets

Years Ended August 31, 2018 and 2017


2018 2017

Cash flows from operating expenses

Change in net assets 1,687,069$ 478,481$

Adjustments to reconcile change in net assets

to net cash provided by operating activities

Depreciation 38,223 40,549

Loss on disposal of capital assets - 1,168

Unrealized gains on investments (5,224) (1,601)

Forgiveness of debt on Community Development Block Grant - (205,000)

Donation of investments (62,092) (9,207)

(Increase) decrease in grants and awards receivables (114,334) 53,363

Decrease in prepaid expenses - 1,150

Decrease in unconditional promises to give 11,613 10,938

Increase (decrease) in accounts payable and accrued expenses 122,437 (11,174)

Net cash provided by operating activities 1,677,692 358,667

Cash flows from investing activities

Redemption of certificates of deposit 25,641 -

Certificate of deposit interest reinvested (762) (853)

Investment dividends reinvested (860) -

Purchase of capital assets (189,770) (351,185)

Net cash (used in) investing activities (165,751) (352,038)

Net increase in cash and cash equivalents 1,511,941 6,629

Cash at beginning of year 402,329 395,700

Cash at end of year 1,914,270$ 402,329$

Supplemental information on non-cash transactions:Donation of investments 62,092$ 9,207$

Forgiveness of debt on Community Development Block Grant -$ 205,000$

6


Statements of Cash Flows



Program Management 2018 2017Services and General Fundraising Total Total

Salaries and related expenses 205,838$ 8,936$ 16,885$ 231,659$ 256,762$ Pension expense 15,589 640 1,310 17,539 21,281 Bike locks and lights 2,540 - - 2,540 6,750 Bus tokens 14,841 - - 14,841 10,536 Clothing 6,115 - - 6,115 9,382 Clothing - in-kind 76,654 - - 76,654 60,590 Depreciation 36,312 1,911 - 38,223 40,549 Development - - 25,170 25,170 14,000 Education and training 1,330 - - 1,330 1,878 Education and training - clients 2,303 - - 2,303 3,842 Food 53,634 176 - 53,810 72,953 Food - in-kind 329,234 - - 329,234 232,230 Fundraising - - 16,411 16,411 14,347 Insurance 2,941 444 - 3,385 3,435 Household items 368 - - 368 6,031 Household items - in-kind 18,421 - - 18,421 47,831 Loss on disposal of assets - - - - 1,168 Maintenance and repair 5,481 314 - 5,795 12,698 Medical - client 2,540 - - 2,540 1,324 Miscellaneous 2,119 1,779 - 3,898 8,683 Other client services - - - - 2,342 Personal hygiene 5,944 - - 5,944 19,389 Personal hygiene - in-kind 14,018 - - 14,018 10,551 Personal identification 20,733 - - 20,733 17,838 Postage 1,208 73 - 1,281 1,422 Professional services 8,170 10,253 - 18,423 16,050 Professional services - in-kind 143,691 3,260 2,084 149,035 194,544 Rent 40,042 - - 40,042 57,084 Rent and mortgage assistance 61,879 - - 61,879 37,979 Supplies 5,269 277 - 5,546 7,441 Supplies - in-kind 3,138 - - 3,138 15,676 Traveler's aid 36,610 - - 36,610 35,740 Utilities - client 174,761 - - 174,761 153,704 Utilities 19,565 1,030 - 20,595 24,238 Vehicle expense - client 1,021 - - 1,021 3,024 Vehicle expense 5,039 - - 5,039 6,146

Total 1,317,348$ 29,093$ 61,860$ 1,408,301$ 1,429,438$

7



Statement of Functional Expenses

Year Ended August 31, 2018

(with comparative total for 2017)


Notes to Financial Statements


8

1. SUMMARY OF SIGNIFICANT ACCCOUNTING POLICIES

Center and Purpose Daystar Life Center, Inc., (the Center) was founded in August 1982 and incorporated in August 1992, as a Florida not-for-profit corporation. The Center operates primarily to provide financi al assistance and other non-financial basic needs services to families and individuals who demonstrate need. The Center provides qualifying clients with rent, utility, personal identification, medical prescription, transportation , traveler’s aid, food, clothing, client mail services, tax preparation assistance, advocacy, information referrals and other reasonable requests. Key to the Center’s success is the amount of donated services by individuals performing interviewing and other services on a volunteer basis.

Basis of Accounting The accompanying financial statements have been prepared using the accrual basis of accounting with generally accepted accounting principles. Net assets, revenues, expenses, gains and losses are classified based on the existence or absence of donor-imposed restrictions. Accordingly, net assets of the Center and changes therein are classified and reported as follows:

Unrestricted net assets – Includes net assets that are not subject to donor-imposed stipulations and include designated net assets.

Temporarily restricted net assets – Includes gifts for which donor-imposed restrictions have not been met and promises to give for which the ultimate purpose of the proceeds is not permanently restricted.

Permanently restricted net assets – Includes gifts, trusts, and pledges that require, by donor restriction, that the corpus be invested in perpetuity and only the income be made available for operations in accordance with donor restrictions and gifts that have been donor stipulated.

Cash Equivalents For the purposes of reporting cash flows, the Center considers all liquid investments in money market and savings accounts with maturities of three months or less to be cash equivalents.

Investments Investments consist of donated stocks and are carried at their fair values in the statement of financial position in accordance with current accounting literature. Donations of investments are recorded as contributions at their estimated fair value at the date of donation. Gains and losses on market value adjustments are recognized as the market fluctuates and recorded in the statement of activities. The Center defines fair value in accordance with accounting principles generally accepted in the United States of America, which specify a hierarchy of valuation techniques. The disclosure of fair value estimates in the hierarch is based on whether the significant inputs into the valuation are observable. In determining the level of hierarchy in which the estimate is disclosed, the highest priority is given to unadjusted quoted prices in active markets and the lowest priority to unobservable inputs that reflect the Center’s significant market assumptions.



9

1. SUMMARY OF SIGNIFICANT ACCCOUNTING POLICIES (CONTINUED)

Investments (continued) The Center measures investments at fair value on a recurring basis. The following is a brief description of the type of valuation information (inputs) that qualifies a financial asset for each level:

Level 1 – Unadjusted quoted market prices for identical assets in active markets which are accessible by the Center.

Level 2 – Observable prices in active markets for similar assets or liabilities. Prices for identical or similar assets or liabilities in markets that are not active. Market inputs that are not directly observable but are derived from or corroborated by observable market data.

Level 3 – Unobservable inputs based on the Center’s own judgment as to assumptions a market participant would use, including inputs derived from extrapolation and interpolation that are not corroborated by observable market data.

The Center evaluates the various types of financial assets to determine the appropriate fair value hierarchy based upon trading activity and the observability of market inputs.

Property and Equipment Property and equipment are stated at cost or, for donations, at fair market value, as of the date received. Depreciation is calculated using the straight-line method over the estimated useful lives of the related assets, which range from four to twenty years. Expenditures with a cost in excess of $750 and with an estimated useful life in excess of one year are capitalized. Gifts of long-lived assets are reported as unrestricted support.

Contributions Contributions, including unconditional promises to give, are recorded when made. All contributions are available for unrestricted use unless specifically restricted by the donor. Conditional promises to give are recognized when the conditions on which they depend are substantially met.

Contributions that are restricted by the donor are reported as an increase in unrestricted net assets if the restriction expires in the reporting period in which the contribution is recognized. All other donor restricted contributions are reported as an increase in temporarily restricted net assets. When a restriction expires, temporarily restricted net assets are reclassified to unrestricted net assets.

Thrift Shop The Center operated a small thrift shop at a donated site (until May 2017). The intent of the thrift shop was to provide a venue to sell excess donation items to customers at a good value and provide Center clients with needed goods. The shop was also intended to supply a modest stream of income to the Center for general operation of the organization.

In-kind Contributions Donations of food, clothing , personal hygiene products, and household goods are not recognized as revenue until the time of distribution, which is generally within a few days of the date of receipt. As a result, the Center does not record such gifts as inventory.



10

1. SUMMARY OF SIGNIFICANT ACCCOUNTING POLICIES (CONTINUED)

Donated Services The Center receives a significant amount of donated services from unpaid volunteers who assist in interviewing, general operations, fundraising and other special projects. However, these services do not require specialized skills as defined in the standards and are not recorded in the accompanying financial statements. Volunteers have contributed approximately 23,000 hours. If the criteria for recognition were met, approximately $430,000 of additional contributions and program service expenses would be recognized in the Statement of Activities for the year ended August 31, 2018.

Income Taxes The Center is exempt from U.S. Federal income tax under Section 501(c)(3) of the Internal Revenue Code and has been determined not to be a private foundation. The Center did not conduct unrelated business activities; therefore, no provision has made for federal income taxes in the accompanying financial statements.

Functional Allocation of Expenses The costs of providing the various programs and other activities are presented in the statement of functional expenses and have been summarized on a functional basis in a separate statement of activities. Accordingly, certain costs have been allocated among the programs and supporting services benefited.

Reclassifications Certain reclassifications have been made to the 2017 financial statements to be in conformity with the 2018 presentation.

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 certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

2. UNCONDITIONAL PROMISE TO GIVE

Effective April 1994, the Center entered into a 20-year lease agreement with the Diocese of St. Petersburg for use of its facility for a period of 20 years for $1 per year. The use of the facilities at below market rates was recognized as a contribution in 1994, measured by the fair market value of the contribution, and a corresponding unconditional promise to give was recorded. The asset is being amortized over the remaining term of the lease. The lease stipulated that the facility must be used for the original purpose for which the Center was organized.

Effective August 23, 2001, the Center entered into an addendum to the lease agreement which extended the lease term for an additional 10 years to March 28, 2024. A third addendum was signed to allow the Center to make alterations and improvements to the property, which were made and funded through the Community Development Block Grants received from the City of St. Petersburg.



11

2. UNCONDITIONAL PROMISE TO GIVE (CONTINUED)

Future amounts of unconditional promise to give, net of discount, are estimated as follows:

Less than 1 year $15,780 1 – 5 years 56,544 72,324 Unamortized discount ( 9,230)

$63,094 3. GRANTS AND AWARDS RECEIVABLE

Grants and awards receivable consist of the following at August 31, 2018 and 2017:

2018 2017 Pinellas County $ 15,750 $15,750 Allegany Franciscan Ministries 110,000 - City of St. Petersburg 4,334 -

$130,084 $15,750 4. INVESTMENTS

Investments consist of the following at August 31, 2018 and 2017:

2018 2017 Stocks and mutual funds $87,941 $19,765

The Center records all investments at fair market value and they are classified as level 1 in the fair value hierarchy. Investment earnings consist of the net unrealized gains of $5,224 and $1,597 during 2018 and 2017 respectively.

5. PROPERTY AND EQUIPMENT

Property and equipment consists of the following at August 31, 2018 and 2017:

2018 2017 Leasehold improvements $554,828 $554,828 Furniture, fixtures and equipment 72,747 72,747 Vehicle s 27,798 27,798 655,373 655,373 Less accumulated depreciation (483,074) (444,851)

Net property and equipment $172,299 $210,522

6. MORTGAGE NOTES PAYABLE

In January 2002, the Center entered into an agreement with the City of St. Petersburg to construct an addition to and to rehabilitate its current facility. As a part of this agreement the Center executed a non-interest -bearing mortgage note in the amount of $205,000 through the Community Development Block Grant (CDBG) Program.



12

6. MORTGAGE NOTES PAYABLE (CONTINUED)

The Diocese of St. Petersburg joined the Center as a mortgagor on the mortgage note; however, the Center holds a leasehold interest in the property by virtue of its lease agreement with the Diocese. During 2016 the Center had fully complied with the terms and conditions of the agreement resulting in the forgiveness of debt on the mortgage note. The $205,000 note was forgiven on October 5, 2016.

7. RESTRICT ED NET ASSETS

At August 31, 2018 and 2017, temporarily restricted net assets consist of the following:

2018 2017 Long-lived assets – use of facility $ 63,094 $ 74,707 Capital acquisition account 1,445,488 23,815 Allegany Franciscan Ministries 142,471 - Senior Citizens Services, Inc. 5,041 - White Family Foundation grant - 6,389 Foundation for a Healthy St. Petersburg grant - 3,950 $1,656,094 $108,861 The Center has no permanently restricted net assets.

8. IN-KIND CONTRIBUTIONS

Components of in-kind contributions for the years ended August 31, 2018 and 2017 are as follows:

2018 2017 Food $329,234 $232,230 Clothing 76,654 60,590 Personal items and other 35,577 74,057 Rent 21,171 34,496

Total in-kind contributions $462,636 $401,373

9. DONATED SERVICES

Components of donated professional services for the years ended August 31, 2018 and 2017 are as follows: 2018 2017 Skilled labor $ 88,446 $129,464 Accounting 49,718 53,855 Computer consultant 8,788 11,225

Marketing 2,083 -

Total donated services $149,035 $194,544



13

10. RETIREMENT PLAN

During December 2005, the Center was approved to participate in the Archdiocese o f Miami/Dio cese of St. Petersburg/Dio cese of Venice Pension Plan (the “Plan”). The effective date of participation was July 1, 2001. The Plan is a non-contributory, defined benefit plan. Specific retirement benefits are paid based on years of service and other criteria. The Center incurred retirement expenses of $17,539 and $21,281 in 2018 and 2017, respectively .

11. CONCENTRATION OF RISK

Financial instruments that potentially subject the Center to concentrations of credit risk consist primarily of cash. The Federal Deposit Insurance Corporation (FDIC) currently insures bank deposit accounts up to $250,000 per depositor. At August 31, 2018, the Center had $1,401,913 in cash balances that exceeded the insurance coverage provided by the FDIC. At August 31, 2018, the Center had $298,680 of funds in the Diocesan Savings and Loan Bank which is self-insured by the Diocese of St. Petersburg but not by FDIC.

12. COMMITMENTS

The Center has entered into two contract s for the construction of a new building, a building construction contract in the amount of $2,141,898 and an architectural services contract in the amount of $104,550 . As of August 31, 2018, the Center had incurred $107,570 of costs towards the building contract and $91,959 towards the architectural services contract . These amounts are included in the construction in progress balance in these financial statements. $104,472 of these amounts are included in accounts payable at August 31, 2018.

13. SUBSEQUEN T EVENTS

Management has evaluated subsequent events through December 11, 2018, the date on which the financial statements were available to be issued.

In November 2018, the Center sold their existing property, to an unrelated buyer, for $1,600,000 . At the sale closing, the Center entered into a lease agreement with the buyer that allows them to lease the existing building for $1 per month, for up to twelve months.

Documents

DAYSTAR LIFE CENTER, INC....DAYSTAR LIFE CENTER, INC. Financial Statements with Independent Auditors’ Report For the Years Ended August 31, 2018 and 2017DAYSTAR LIFE CENTER, INC