VALLEY PUBLIC TELEVISION, INC. DBA VALLEYPBS FINANCIAL

VALLEY PUBLIC TELEVISION, INC. DBA VALLEYPBS

FINANCIAL STATEMENTS June 30, 2020 and 2019


CONTENTS Page INDEPENDENT AUDITOR'S REPORT 1 FINANCIAL STATEMENTS Statements of Financial Position 2 Statements of Activities 3 Statements of Functional Expenses 4 - 5 Statements of Cash Flows 6 - 7 Notes to Financial Statements 8 - 19

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INDEPENDENT AUDITOR'S REPORT

To the Board of Directors Valley Public Television, Inc. dba ValleyPBS Fresno, California

We have audited the accompanying financial statements of Valley Public Television, Inc. dba ValleyPBS (the "Station"), a non-profit organization, which comprise the statements of financial position as of June 30, 2020 and 2019, and the related statements of activities, functional expenses and cash flows for the years 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 audits. We conducted our audits 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 Valley Public Television, Inc. dba ValleyPBS, as of June 30, 2020 and 2019, and the changes in its net assets and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

February 13, 2021 Roseville, California

2020 2019Current assets:

Cash and cash equivalentsUnrestricted cash and cash equivalents 620,222$ 402,121$ Restricted cash available for current use (Note 5) 243,334 61,273

Total cash and cash equivalents 863,556 463,394

Accounts receivable 131,147 151,197 Pledges receivable, net (Note 4) 77,792 96,413 Spectrum Repack receivable (Note 21) - 60,204Inventory 22,324 25,488Prepaid expenses 129,265 297,293

Total current assets 1,224,084 1,093,989

Endowment fund (Note 16) 219,370 216,796 Property and equipment, net (Note 7) 2,167,115 2,444,369

Total assets 3,610,569$ 3,755,154$

Current liabilities:Accounts payable 159,118$ 196,715$ Accrued expenses 63,587 92,330 Deferred revenue (Note 8) 404,668 509,284 Line of credit (Note 21) 133,179 134,561Contracts payable, current portion (Note 10) - 16,500Notes payable, current portion (Note 9) 29,856 13,487

Total current liabilities 790,408 962,877

Notes payable, less current portion (Note 9) 605,560 561,392

Total liabilities 1,395,968 1,524,269

Net assets:Without donor restrictions:

Board designated endowment (Note 15) 11,623 11,623 Undesignated (Note 15) 1,905,181 1,992,399

With donor restrictions (Note 15) 297,797 226,863

Total net assets 2,214,601 2,230,885

Total liabilities and net assets 3,610,569$ 3,755,154$

LIABILITIES AND NET ASSETS

ASSETS


STATEMENTS OF FINANCIAL POSITIONJune 30, 2020 and 2019

The accompanying notes are an integral partof these financial statements.

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Without Donor With Donor Without Donor With Donor Restrictions Restrictions Total Restrictions Restrictions Total

Revenue and support: Membership contributions 1,504,837$ -$ 1,504,837$ 1,516,279$ -$ 1,516,279$ Community service grants 1,041,830 - 1,041,830 1,024,170 - 1,024,170 Underwriting 180,773 - 180,773 248,068 - 248,068 Production grants - - - 103,080 - 103,080 Ready to Learn grants 488,899 - 488,899 681,856 - 681,856 Other grants 595,660 - 595,660 166,008 - 166,008 Spectrum Repack - - - 244,269 - 244,269 Special events 92,439 - 92,439 201,668 - 201,668 Other production income 514,000 - 514,000 54,653 - 54,653 Bequests 4,000 90,050 94,050 96,000 - 96,000 Other 6,881 - 6,881 7,387 - 7,387 Net return on investments 207 2,574 2,781 177 6,982 7,159 Donated materials,

services and facilities 472,751 - 472,751 652,328 - 652,328 Net assets released from

restrictions: Grant expenditures 21,690 (21,690) - 50,000 (50,000) -

Total revenue and support 4,923,967 70,934 4,994,901 5,045,943 (43,018) 5,002,925

Expenses: Program services:

Programming and production 1,749,923 - 1,749,923 1,515,632 - 1,515,632 Broadcast operations 481,711 - 481,711 543,141 - 543,141 Program information and 703,940 - 703,940 997,157 - 997,157

Supporting services: Fundraising and membership 685,707 - 685,707 855,676 - 855,676 Management and general 988,726 - 988,726 978,999 - 978,999

Total program and supporting services expenses 4,610,007 - 4,610,007 4,890,605 - 4,890,605

Depreciation 401,178 - 401,178 513,154 - 513,154

Total expenses 5,011,185 - 5,011,185 5,403,759 - 5,403,759

Change in net assets (87,218) 70,934 (16,284) (357,816) (43,018) (400,834)

Net assets, beginning of year 2,004,022 226,863 2,230,885 2,361,838 269,881 2,631,719

Net assets, end of year 1,916,804$ 297,797$ 2,214,601$ 2,004,022$ 226,863$ 2,230,885$


STATEMENTS OF ACTIVITIESFor the Years Ended June 30, 2020 and 2019

2020 2019


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Programming Program Programming Programand Broadcast Information and Broadcast Information

Production Operations and Outreach Total Production Operations and Outreach Total

Salaries and benefits 151,093$ 258,838$ 207,515$ 617,446$ 276,657$ 355,437$ 299,561$ 931,655$

Telephone charges - - - - 473 1,081 390 1,944

Tower and equipment lease - 13,338 - 13,338 3,336 17,871 - 21,207

Rental equipment - 1,500 - 1,500 1,838 - - 1,838

Repairs and maintenance - 111,443 - 111,443 2,449 73,868 1,400 77,717

Utilities - 54,535 - 54,535 - 56,548 - 56,548

Mileage reimbursement - - - - 521 31 3,441 3,993

Travel and training - 114 78 192 4,330 1,314 354 5,998

Food and beverage - 324 22,388 22,712 3,917 - 36,356 40,273

Postage 114 696 - 810 672 82 95 849

Regular printing 436 - - 436 1,547 37 4,369 5,953

Materials and supplies 361 1,130 27,398 28,889 1,135 582 27,315 29,032

Professional services 26,688 30,326 9,576 66,590 33,776 28,966 33,148 95,890

Advertising and promotion 1,000 1,289 - 2,289 - - 1,379 1,379

Audio and video tape - - - - 149 - - 149

Props and sets 517 - - 517 2,248 - - 2,248

Closed captioning 7,668 - - 7,668 3,091 - - 3,091

Other programming costs 51,082 - - 51,082 70,371 - - 70,371

PBS programming costs 1,104,740 - - 1,104,740 1,048,049 - - 1,048,049

Custom programming costs 395,407 - - 395,407 36,000 - - 36,000

Premium expense 3,000 - - 3,000 - - - -

Taxes and licenses - 1,543 - 1,543 4 728 - 732

Dues and subscriptions 2,156 6,635 234 9,025 10,586 3,725 - 14,311

Legal fees - - - - 739 - - 739

Personnel recruitment - - - - - 351 735 1,086

Bank charges - - - - 1,325 1,654 1,281 4,260

Interest expense 5,661 - - 5,661 11,258 - - 11,258

Donated materials, services and facilities - - 436,751 436,751 - - 587,333 587,333

Miscellaneous expense - - - - 1,161 866 - 2,027

Subtotal 1,749,923 481,711 703,940 2,935,574 1,515,632 543,141 997,157 3,055,930

Depreciation - 401,178 - 401,178 - 513,154 - 513,154

Total program services expenses 1,749,923$ 882,889$ 703,940$ 3,336,752$ 1,515,632$ 1,056,295$ 997,157$ 3,569,084$

2020 Program Services 2019 Program Services


STATEMENTS OF FUNCTIONAL EXPENSESFor the Years Ended June 30, 2020 and 2019


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Fundraising Management Fundraising Managementand and and and

Membership General Total Membership General Total

Salaries and benefits 304,909$ 310,283$ 615,192$ 483,577$ 434,923$ 918,500$ Telephone charges 30 13,742 13,772 713 7,930 8,643 Tower and equipment lease - - - - 2,995 2,995 Rental equipment 5,341 12,225 17,566 10,939 - 10,939 Repairs and maintenance - 36,623 36,623 581 30,940 31,521 Utilities - 83,281 83,281 - 94,380 94,380 Mileage reimbursement - - - 664 371 1,035 Travel and training 3,498 27,423 30,921 8,469 6,100 14,569 Food and beverage 7,000 15,056 22,056 7,484 4,931 12,415 Direct mail 96,242 - 96,242 99,193 - 99,193 Bulk mail postage 11,300 - 11,300 8,350 55 8,405 Postage 6,735 14,306 21,041 20,300 1,280 21,580 Regular printing 27,134 686 27,820 30,879 9,203 40,082 Materials and supplies 3,389 35,412 38,801 11,785 5,717 17,502 Professional services 39,107 221,636 260,743 44,286 85,768 130,054 Talent fees - - - 600 - 600 Advertising and promotion 14,373 1,619 15,992 8,591 235 8,826 Premium expense 127,001 323 127,324 89,706 - 89,706 Telemarketing expense 1,584 - 1,584 2,543 87 2,630 Volunteer expense 81 - 81 151 - 151 Taxes and licenses - 6,551 6,551 269 6,488 6,757 Dues and subscriptions 4,086 19,972 24,058 5,055 35,071 40,126 Legal fees - 9,436 9,436 - 14,535 14,535 Audit fees - 22,500 22,500 - 28,000 28,000 Insurance - 59,538 59,538 - 43,907 43,907 Personnel recruitment - 25 25 201 52,556 52,757 Bank charges 33,864 2,155 36,019 21,206 6,367 27,573 Bad debt - 36,614 36,614 - - - Interest expense - 34,361 34,361 - 38,316 38,316 Donated materials, services and facilities - 18,000 18,000 - 37,995 37,995 Miscellaneous expense 33 6,959 6,992 134 30,849 30,983

Total supporting services expenses 685,707$ 988,726$ 1,674,433$ 855,676$ 978,999$ 1,834,675$

Total expenses 5,011,185$ 5,403,759$


STATEMENTS OF FUNCTIONAL EXPENSES (CONTINUED)For the Years Ended June 30, 2020 and 2019

2020 Supporting Services 2019 Supporting Services


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2020 2019Cash flows from operating activities:

Unrestricted cash received from members, grantors and other support 4,453,424$ 4,668,605$

Cash paid to vendors and employees (4,010,382) (4,449,292) Interest income received 2,781 7,159 Interest expense paid (40,022) (49,574)

Net cash provided by operating activities 405,801 176,898

Cash flows from investing activities:Purchases of property and equipment (105,924) (181,102) Additions to construction in progress - (236,222) Change in restricted endowment cash, noncurrent (2,574) (6,982)

Net cash used in investing activities (108,498) (424,306)

Cash flows from financing activities:Cash received for Spectrum Repack 60,204 358,253 Payments on contract payable (16,500) (60,069) Net payments on line of credit (1,382) (84,787) Proceeds from notes payable 77,946 - Principal payments on notes payable (17,409) (11,724)

Net cash provided by financing activities 102,859 201,673

Net increase (decrease) in cash 400,162 (45,735)

Unrestricted cash, beginning of year 402,121 485,407Restricted cash available for current use, beginning of year 61,273 23,722

Cash, beginning of year 463,394 509,129

Unrestricted cash, end of year 620,222 402,121 Restricted cash available for current use, end of year 243,334 61,273

Cash, end of year $ 863,556 $ 463,394


STATEMENTS OF CASH FLOWSFor the Years Ended June 30, 2020 and 2019


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2020 2019Reconciliation of change in net assets

to net cash provided by operating activities:

Change in net assets (16,284)$ (400,834)$ Adjustments to reconcile change in net assets

to net cash provided by operating activities:Depreciation and amortization 401,178 513,154 Donated equipment and services (18,000) (27,000) Cash received for Spectrum Repack (60,204) (358,253) Change in operating assets and liabilities:

Accounts receivable 20,050 91,652 Pledges receivable 18,621 (3,500) Spectrum Repack receivable 60,204 113,984 Inventory 3,164 2,273 Prepaid expenses 168,028 (235,964) Accounts payable (37,597) 118,034 Accrued expenses (28,743) (117,932) Deferred revenue (104,616) 481,284

Net cash provided by operating activities 405,801$ 176,898$

Supplemental schedule of non-cash investing and financing activities:

Donated equipment and services 18,000$ 27,000$

For the Years Ended June 30, 2020 and 2019


STATEMENTS OF CASH FLOWS (CONTINUED)


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NOTES TO FINANCIAL STATEMENTS June 30, 2020 and 2019

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NOTE 1: NATURE OF OPERATIONS

Valley Public Television, Inc. dba ValleyPBS (the "Station") is a nonprofit corporation incorporated in 1977 under the laws of the State of California. Its purpose is to enrich the lives of Central Valley residents through programs and services that foster citizenship, celebrate culture, encourage exploration, and leverage the joy of learning and the power of diverse perspectives. The Station is supported primarily through individual contributions, corporate underwriting, and grants supporting programming, local productions, and educational outreach services.

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting The financial statements of the Station have been prepared on the accrual basis of accounting and accordingly reflect all significant receivables, payables, and other liabilities.

Basis of Presentation In August 2016, the Financial Accounting Standards Board issued Accounting Standards Update 2016-14 Not-for-Profit Entities Presentation of Financial Statements of Not-for-Profit Entities. The amendments in this update are designed to improve the presentation of net asset classification requirements and the information presented in financial statements and notes about a not-for-profit entity's liquidity, financial performance, and cash flows. The Station has adopted the provision as of June 30, 2019.

The Station presents its financial statements in accordance with FASB ASC Topic 958, Subtopic 210 (FASB ASC 958-210), Presentation of Financial Statements of Not-for-Profit Entities. Under FASB ASC 958-210, the Organization is required to report information regarding its financial position and activities according to the following two classes of net assets:

Net assets without donor restrictions - Net assets that are not subject to stipulations.

Net assets with donor restrictions - Net assets that are subject to stipulations that will be met by actions or the passage of time.

Revenues and gains and losses on investments are reported as changes in net assets without donor restrictions unless use of the related assets is limited by donor-imposed restrictions. Expenses are reported as changes in net assets without donor restrictions. Expirations of donor restrictions on net assets are reported as reclassifications between the applicable classes of net assets.

Contributions without donor restrictions are reported as revenues which increase net assets without donor restrictions. Expirations of donor restrictions on contributions whose restrictions are met in the same reporting period have been reported as without donor restrictions.



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NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Cash and Cash Equivalents The Station considers all highly liquid investments with an original maturity date of three months or less to be cash equivalents. The Station has adopted the provisions of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 230 as revised by Accounting Standards Update (ASU) 2016-18, Statement of Cash Flows (Topic 230), Restricted Cash. ASU 2016-18 requires that the statement of cash flows explain the total change in cash and restricted cash during the year. The Station has retrospectively adopted ASU 2016-18 as of June 30, 2020.

Concentration of Credit Risk Financial instruments which potentially subject the Station to concentrations of credit risk consist principally of cash and contribution receivables. The Station does not generally require collateral for these receivables and operations are dependent upon these contributions. The Station's contributors are primarily located within seven counties in the Central Valley from Merced to Bakersfield and are dependent upon the economy of the broadcast areas. The Station maintains its cash and cash equivalents in multiple bank deposit accounts which, at times, exceed the $250,000 per depositor Federal Deposit Insurance Corporation insured limits. Cash and cash equivalents exceeding federally insured limits totaled $209,678 and $148,841 at June 30, 2020 and 2019, respectively.

Inventory Inventory consists of membership thank you gifts, and books and supplies for Ready to Learn educational workshops. Inventory is stated at the lower of cost or fair market value under the first-in, first-out method of valuation.

Property and Equipment Property and equipment in excess of $2,500 are capitalized and are stated at cost or, if donated, at fair market value at the date of receipt. The Station provides for depreciation over the estimated useful lives of the assets using the straight-line method. The estimated lives of these assets range from 3 to 32 years. Maintenance and repairs are charged to expense as incurred. Renewals and betterments which extend the useful lives of assets are capitalized.

Equipment purchased with grant funds from the National Telecommunications and Information Administration is to revert to that agency if the Station wishes to dispose of the equipment within 10 years from the date of the grant, which varies for each piece of equipment depending upon when the grant was funded to purchase the equipment.

Programming Rights Programming broadcast rights in excess of $3,000 are capitalized and expensed on a pro-rata basis over the period covered by the contract. All Public Broadcasting Service ("PBS") program rights and other contracts less than $3,000 are expensed annually as purchased.

Revenue Recognition In accordance with the provisions of FASB ASC 958-605, Not-for-Profit – Revenue Recognition, unconditional contributions are generally recognized as revenues or gains in the period received and as assets, decreases of liabilities, or expenses depending on the form of the benefits received. Conditional contributions are recorded when the conditions on which they depend are substantially met. Unconditional promises to give (pledges) are recognized as revenues after the initial payment on a membership or capital campaign pledge has been received. The receivable for the remaining payments and the corresponding revenue are recognized concurrently.



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Revenue Recognition (Continued) Receivable balances are stated at unpaid balance, less an allowance for doubtful accounts.

The Station provides for losses on receivable balance using the allowance method. This method is based on experience and other circumstances which may affect the collectability of the balance. Uncollectible receivables are charged off when management determines the receivable will not be collected.

In June 2018, the FASB issued ASU No. 2018-08 "Not-for-Profit Entities (Topic 958)". The

ASU provides an update to clarify and improve the scope and the accounting guidance for contributions received and contributions made. The amendments in this update should assist entities in (1) evaluating whether transactions should be accounted for as contributions (nonreciprocal transactions) within the scope of Topic 958, Not-for-Profit Entities, or as exchange (reciprocal) transactions subject to other guidance and (2) determining whether a contribution is conditional. The Station has retrospectively adopted the provision as of June 30, 2020 with no effect to previously reported net asset balances.

Sustainer Giving Program The Station has a sustainer membership program that enables donors to sign up to donate

an ongoing set monthly amount and their membership will automatically renew each year unless the donor chooses to stop or change their membership at any time. These contributions qualify as intentions to give under FASB ASC 958-605 and are recognized as revenues upon receipt.

Certain sustainer memberships may include an initial pledge for an annual amount paid in

monthly installments for one year, to fulfill the initial pledge, and then continuing the same monthly contributions until the donor chooses to stop or change the amount. The initial one year pledge qualifies as a promise to give under FASB ASC 958-605 and is recognized at the time of the pledge. The continuing contributions taking place after the fulfillment of the initial pledge revert to regular sustainer memberships and qualify as intentions to give under FASB ASC 958-605 and are recognized as revenues upon receipt.

Non-Cash Gifts

The Station reports the fair market values of gifts of land, buildings, and equipment as unrestricted support unless explicit donor stipulations specify how the donated assets must be used. Gifts of long-lived assets with explicit restrictions that specify how the assets are to be used and gifts of cash or other assets that must be used to acquire long-lived assets are reported as restricted support. Absent explicit donor stipulations about how long those long-lived assets must be maintained, the Station reports expirations of donor restrictions when the donated or acquired long-lived assets are placed in service.

Donated Services Donated services are recognized as contributions in accordance with FASB ASC 958-

605, if the services (a) create or enhance non-financial assets or (b) require specialized skills, are performed by people with those skills, and would otherwise be purchased by the Station. Volunteers also provide assistance in program and supporting services throughout the year that are not recognized as contributions in the financial statements since the recognition criteria under FASB ASC 958-605 are not met.

Advertising Expenses

The Station uses advertising to promote its programs and fundraising events, and the costs of the advertising are expensed as incurred.



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

Income Taxes

The Station is exempt from income taxes under the provisions of the Internal Revenue Code (IRC) Section 501(c)(3) and from franchise taxes under the provisions of the California Revenue and Taxation Code Section 23701d, except as they may be levied for unrelated business income. After they are filed, the Station's income tax returns remain subject to examination by taxing authorities generally three years for federal returns and four years for state returns. In addition, the Station has been determined not to be a private foundation within the meaning of Section 509(a) of the IRC.

Use of Estimates

The presentation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Accordingly, actual results could differ from those estimates.

Commitments and Contingencies Certain funds received by the Station come with donor restrictions or compliance

requirements. Funding sources may, from time to time, request a return of funds. It is the Station's policy, as an organization exempt under IRC Section 501(c)(3), that upon satisfaction of donor restrictions or compliance requirements, such gifts are irrevocable. Strict adherence with its specific tax-exempt purpose requires that the Station avoid issues of inurnment and other activities, which could lead to intermediate sanctions. The Board of Directors reviews such instances on a case-by-case basis.

Endowment During 2018, the Station established an endowment fund that holds investments that are

subject to restrictions of gift instruments which require that the principal be invested in perpetuity and that the investment income, including net realized gains and losses, be used to support the mission of the endowment fund which is to provide cash flow for operations in future years, as well as providing a strong financial basis for future needs. As required by generally accepted accounting principles, net assets associated with endowment funds are classified and reported based on the existence or absence of donor-imposed restrictions.

The Board of Directors has interpreted the Uniform Prudent Management of Institutional

Funds Act ("UPMIFA") as requiring the preservation of the fair value of the original gift as of the gift date of the donor-restricted endowment funds absent explicit donor stipulations to the contrary. As a result of this interpretation, the Station classifies as permanently restricted net assets (a) the original value of gifts donated to the permanent endowment, (b) the original value of subsequent gifts to the permanent endowment, and (c) accumulations to the permanent endowment made in accordance with the direction of the applicable donor gift instrument at the time the accumulation is added to the fund. The remaining portion of the donor-restricted endowment fund that is not classified in permanently restricted net assets is classified as temporarily restricted net assets until those amounts are appropriated for expenditure in a manner consistent with the standard of prudence prescribed by UPMIFA.



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Endowment (Continued) In accordance with UPMIFA, the following factors are considered in making a determination to appropriate or accumulate donor-restricted endowment funds: (1) the duration and preservation of the fund, (2) the purposes of the Station and the donor-restricted endowment fund, (3) general economic conditions, (4) the possible effect of inflation and deflation, (5) the expected total return from income and the appreciation of investments, (6) other resources of the Station, and (7) the investment policies of the Station.

The Station is in the process of adopting the investment and spending polices for the endowment fund.

Upcoming Accounting Pronouncements In May 2014, the FASB issued ASU No. 2014-09 "Revenue from Contracts with Customers (Topic 606)". The ASU provides guidance over the core principle of recognizing revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 will supersede the revenue recognition requirements in FASB ASC 605, "Revenue Recognition", and most industry-specific guidance throughout the Industry Topics of the FASB ASC. The purpose of the new standard is to clarify the principles for recognizing revenue and to develop a common revenue standard for U.S. GAAP and International Financial Reporting Standards (IFRS). For non-public entities, the amendments in this update are effective for annual reporting periods beginning after December 15, 2017, and interim periods beginning after December 15, 2018. Early adoption is permitted. In May 2020, the FASB voted to defer the effective date of ASU No. 2014-09 "Revenue from Contracts with Customers" for all entities by one year. Management is evaluating the impact on the financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The new standard will supersede much of the existing authoritative literature for leases. Under ASU 2016-02, a lessee will be required to recognize right-to-use assets and liabilities on their statement of financial position for all leases with lease terms of more than twelve months. The amendments in the update are effective for annual reporting periods beginning after December 15, 2020. Early application is permitted. Management is evaluating the impact on the financial statements.

Reclassifications Certain amounts in the 2019 financial statements have been reclassified, with no effect to change in net assets, to conform to the 2020 financial statement presentation.

Subsequent Events Events and transactions have been evaluated for potential recognition or disclosure through February 13, 2021, the date that these financial statements were available to be issued.

NOTE 3: LIQUIDITY AND AVAILABILITY OF FINANCIAL ASSETS

As part of the Station's liquidity management, it has a policy to structure its financial assets to be available as its general expenditures, liabilities and other obligations come due.



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NOTE 3: LIQUIDITY AND AVAILABILITY OF FINANCIAL ASSETS (CONTINUED)

The Station's financial assets available within one year of the balance sheet date for general expenditures are as follows:

2020 2019

Cash and cash equivalents 620,224$ 402,121$

Accounts receivable 131,147 151,197

Pledges receivable, net 77,792 96,413

Spectrum Repack receivable (Note 21) - 60,204

829,163 709,935

Less those unavailable for general

expenditure within one year, due to purpose

restrictions stipulated by donors (90,000) (21,690)

Financial assets available to meet cash

need for expenditures within one year 739,163$ 688,245$

NOTE 4: PLEDGES RECEIVABLE

Pledges receivable expected to be received in one year or less consist of the following at June 30, 2020 and 2019:

2020 2019

Pledges receivable 86,436$ 107,125$

Less estimated uncollectible pledges (8,644) (10,712)

Pledges receivable, net 77,792$ 96,413$

NOTE 5: RESTRICTED CASH

Restricted cash consists of the following at June 30, 2020 and 2019:

2020 2019Available for current use:

Grant funds $ 243,334 $ 61,723

NOTE 6: BROADCAST LICENSES

Broadcast licenses consist of legal fees incurred to establish or renew broadcast licenses. The costs to acquire the licenses were capitalized and amortized over the license periods. As of June 30, 2015, the licenses were fully amortized.

2020 2019

Broadcast licenses $ 19,138 $ 19,138 Less accumulated amortization 19,138 19,138

Broadcast licenses, net $ - $ -



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NOTE 7: PROPERTY AND EQUIPMENT

Property and equipment consists of the following as of June 30, 2020 and 2019:

2020 2019

Land $ 217,653 $ 217,653 Construction in progress - 1,377,557Bakersfield Channel 18 585,103 585,104Building 1,566,931 1,465,073Tower equipment 2,244,296 866,739Broadcast equipment 2,354,891 2,350,741Production equipment 1,418,834 1,418,834Office furniture and equipment 197,689 179,771 Vehicles and related equipment 125,216 125,216

8,710,613 8,586,688

Less accumulated depreciation 6,543,498 6,142,319

Property and equipment, net $ 2,167,115 $ 2,444,369

Depreciation expense totaled $401,178 and $513,154 for the years ended June 30, 2020 and 2019, respectively.

NOTE 8: DEFERRED REVENUE

Deferred revenue consists of advances received but not yet disbursed or used in operating activities and of grant or other funds received for pending projects. Revenue is deferred when cash, receivables, or other assets are realized prior to the services being completed. Deferred revenue totaled $404,668 and $509,284, as of June 30, 2020 and 2019, respectively.

NOTE 9: NOTES PAYABLE

Notes payable consists of the following as of June 30, 2020 and 2019:

2020 2019Note payable to Bank of the Sierra, interest at 5% for the first 7 years with monthly principal and interest payments of $3,533, then 5.25% for the remaining term with monthly principal and interest payments of $3,602, secured by a first deed of trust, maturing in June 2042 $ 561,368 $ 574,879

Note payable to PG&E, interest at 0% with monthly principal payments of $1,299, maturing in March 2025 74,048 -

Total notes payable 635,416 574,879

Less current portion 29,856 13,487

Total notes payable, less current portion $ 605,560 $ 561,392



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NOTE 9: NOTES PAYABLE (CONTINUED)

The following is a schedule of five-year maturities as of June 30, 2020:

Year Ending June 30: 2021 $ 29,856 2022 30,5962023 31,3752024 32,1242025 28,726

Thereafter 482,739

Total $ 635,416

NOTE 10: CONTRACTS PAYABLE

The Station has entered into payment contracts for the purchase of equipment with two vendors during 2017. The contracts payable balance was $16,500 at June 30, 2019. The contracts payable balance was paid in full as of June 30, 2020.

NOTE 11: REVOLVING LINE-OF-CREDIT

The Station has available a $150,000 line-of-credit from Bank of the Sierra maturing in August 2023. Advances on this line-of-credit bear interest at .375% above Wall Street Journal prime rate with interest-only payments until maturity date. There was no balance due on this line-of-credit at June 30, 2020 and 2019.

During 2018, the Station secured a commercial equity line of credit from Bank of the Sierra in the amount of $498,000. See Note 21 FCC Spectrum Repack for additional information.

NOTE 12: OPERATING LEASE

The Station rents office equipment under an operating lease agreement which expires April 2021. The Station also leases the right to utilize towers and transmitter buildings under operating lease agreements which expire in September 2019 and November 2022.

Rental expense for the years ended June 30, 2020 and 2019, was $21,235 and $24,202, respectively.

The following is a schedule of future minimum noncancelable operating lease payments:

Year Ending June 30: 2021 $ 23,237 2022 15,042

Total $ 38,279



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NOTE 13: GRANTS

The following are production, development, educational services, other educational services and other grants received during the years ended June 30, 2020 and 2019:

2020 2019

Development grants $ 95,660 $ 166,008 Production grants - 103,080Educational services grants 480,899 681,856Other educational services grants 8,000 -Other grants 500,000 -

Total 1,084,559$ 950,944$

NOTE 14: CORPORATION FOR PUBLIC BROADCASTING GRANTS

The Corporation for Public Broadcasting ("CPB") is a private, nonprofit, grant-making organization responsible for funding more than 1,000 television and radio stations. CPB distributes annual Community Service Grants ("CSGs") to qualifying public telecommunications entities. CSGs are used to augment the financial resources of public broadcasting stations and thereby enhance the quality of programming and expand the scope of public broadcasting services. Each CSG may be expended over one or two federal fiscal years as described in the Communications Act, 47 United States Code Annotated Section 396(k)(7), (1983) Supplement. Each grant must be expended within two years of the initial grant authorization.

According to the Communications Act, funds may be used at the discretion of recipients. The Station uses these funds for purposes relating primarily to production and acquisition of programming. Also, the CSGs may be used to sustain activities begun with CSGs awarded in prior years.

The CSGs are reported on the accompanying financial statements as unrestricted operating funds; however, certain guidelines must be satisfied in connection with application for and use of the CSGs to maintain eligibility and compliance requirements. These guidelines pertain to the use of CSG funds, recordkeeping, audits, financial reporting, and licensee status with the Federal Communications Commission. The Station recognized CSG grants as revenue in the amounts of $1,003,543 and $985,916 for the years ended June 30, 2020 and 2019, respectively. The Station recognized Interconnect grants as revenue in the amounts of $19,505 and $18,775 for the years ended June 30, 2020 and 2019, respectively. The Station recognized Universal Service Support grants as revenue in the amount of $18,782 and $18,575 for the years ended June 30, 2020 and 2019.



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NOTE 15: NET ASSETS

At June 30, 2020, net assets without donor restrictions totaled $1,916,809, of which $11,623 is board designated for the endowment. At June 30, 2019, net assets without donor restrictions totaled $2,004,022, of which $11,623 is designated for the endowment. Net assets with donor restrictions are restricted for the following purposes at June 30, 2020 and 2019:

2020 2019

Subject to expenditure for specified purpose:Capital expenditures 90,000$ -$ Valley's Gold Kids Outreach - 21,690

90,000 21,690

Subject to spending policy and appropriation:

Endowment interest 9,569 6,995

Not subject to appropriation or expenditure:

Original donor-restricted endowment gifts

required to be retained in perpetuity 198,228 198,178

Total net assets with donor restrictions 297,797$ 226,863$

NOTE 16: ENDOWMENT FUND

During 2018, the Station established an Endowment Fund. Prior to the establishing of the Endowment Fund, the Station had previously received $4,503 to fund an endowment and the Board had designed $11,623 to fund an endowment. The following is a reconciliation of the beginning and ending balances of the donor-restricted endowment for the years ended June 30, 2020 and 2019:

Without Donor With Donor Restrictions Restrictions Total

Balance at June 30, 2018 11,623$ 198,191$ 209,814$ Interest and dividends - 6,982 6,982

Balance at June 30, 2019 11,623 205,173 216,796 Contributions - 50 50Interest and dividends - 2,574 2,574

Balance at June 30, 2020 11,623$ 207,797$ 219,420$

At June 30, 2020, the Endowment Fund held a $209,553 certificate of deposit and $9,867 in cash. At June 30, 2019, the Endowment Fund held a $206,980 certificate of deposit and $9,816 in cash.



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NOTE 17: DONATED SERVICES, MATERIALS AND EQUIPMENT

For the years ended June 30, 2020 and 2019, the Station received donated services amounting to $454,751 and $588,718, respectively, from various local marketing, promotion and other professionals. Donated materials, such as operating supplies, amounted to $36,610 for the year ended June 30, 2019. These amounts are reported as expenses according to functional classification. Donated equipment received for the years ended June 30, 2020 and 2019 amounted to $18,000 and $27,000, respectively, and are capitalized at fair market value as of the date received.

NOTE 18: RELATED PARTY TRANSACTIONS

A Director of the Station is also the President and Chief Executive Officer of the Gar and Esther Tootelian Charitable Foundation, a Foundation that pledged donations to the Station during the fiscal years ended June 30, 2020 and 2019, totaling $50,150 and $53,110, respectively.

NOTE 19: RETIREMENT PLAN

The Station has a 403(b) plan in which employees are eligible to participate upon hire, and employees then become eligible for a discretionary employer match after they have been employed for 90 days by the Station. Employees must work a minimum of 1,000 hours per year to be eligible to defer earnings to the plan. The employer match for the years ended June 30, 2020 and 2019 totaled $3,275 and $12,585, respectively.

NOTE 20: BEQUEST

The Station was a beneficiary of a charitable trust that had yet to be liquidated and distributed. During 2018, the trust sold all the real property and as of June 30, 2018, the charitable trust held cash. During 2020, the trust disbursed the liquidated assets and the Station received a distribution of $90,000, which is restricted for capital expenditures.

NOTE 21: FCC SPECTRUM REPACK

As required by the Federal Communications Commission (FCC) as part of the Spectrum Auction Repack, the Station is currently in the process of moving to a new channel assignment. The Spectrum Act requires that the FCC reimburse costs reasonably incurred by licensees that are reassigned to new channels. During 2019, the Station received $358,253 from the FCC and $60,204 was receivable from the FCC at June 30, 2019. The Station is in Phase 1 of the FCC Spectrum Repack and transitioned to the new channel on October 15, 2018. During 2020, the Station received $60,204 from the FCC and there was no remaining receivable from the FCC at June 30, 2020.

During 2018, in conjunction with Spectrum Repack the Station secured a commercial equity line of credit from Bank of the Sierra in the amount of $498,000. The equity line of credit matures on July 10, 2024 and advances have an interest rate of 4.625%. The line of credit is secured by the real property at 1544 Van Ness Ave, Fresno, California. As of June 30, 2020 and 2019, the line of credit has a balance of $133,179 and $134,561, respectively.

During 2018, in conjunction with Spectrum Repack the Station secured a term loan in the amount of $502,000 from Bank of the Sierra. The term loan matures on January 10, 2019, and has an interest rate of 5.0% on borrowings from the term loan. The term loan is secured by the real property at 1544 Van Ness Ave, Fresno, California. As of June 30, 2019, the term loan has matured and no amounts were outstanding.



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NOTE 22: CARES ACT

During the year ended June 30, 2020, the Station recognized The Coronavirus Aid, Relief, and Economic Security (CARES) Act grant as revenue in the amount of $200,000 received from CPB.

In May 2020, the Station was granted a loan from Bank of the Sierra in the amount of $300,000 under the Paycheck Protection Program ("PPP") as part of the CARES Act. The note and accrued interest are forgivable after 24 weeks as long as the borrower uses the loan proceeds for eligible purposes, including payroll, benefits, rent and utilities, and maintains its payroll levels. As of June 30, 2020, the Station had met the conditions for loan forgiveness in the amount of $300,000 and is included in other grants in the statement of activities.

NOTE 23: RISKS AND UNCERTAINTIES

The COVID-19 coronavirus outbreak in the United States has caused business disruption through mandated and voluntary closings of businesses. While the disruption is currently expected to be temporary, there is considerable uncertainty around the duration. However, the related financial impact and duration cannot be reasonably estimated at this time.

Documents

VALLEY PUBLIC TELEVISION, INC. DBA VALLEYPBS FINANCIAL