Cornerstone Television, Inc. and Subsidiary Consolidated Financial Statements Years Ended December 31, 2019 and 2018 with Independent Auditor’s Report Pursuing the profession while promoting the public good© www.md‐cpas.com CORNERSTONE TELEVISION, INC. AND SUBSIDIARY YEARS ENDED DECEMBER 31, 2019 AND 2018 TABLE OF CONTENTS Independent Auditor's Report Consolidated Financial Statements: Statements of Financial Position 1 Statements of Activities: - Year Ended December 31, 2019 3 - Year Ended December 31, 2018 4 Statements of Functional Expenses: - Year Ended December 31, 2019 5 - Year Ended December 31, 2018 6 Statements of Cash Flows 7 Notes to Consolidated Financial Statements 8 Independent Auditor’s Report Board of Directors We have audited the accompanying consolidated financial Cornerstone Television, Inc. statements of Cornerstone Television, Inc., a Pennsylvania and Subsidiary non-profit corporation, and, through the end of its ownership in 2019, its wholly-owned subsidiary, CTVN Harrisburg, LLC, (collectively, Cornerstone), which comprise the consolidated statements of financial position as of December 31, 2019 and 2018, and the related consolidated statements of activities, functional expenses, and cash flows for the years then ended, and the related notes to the consolidated financial statements. Management’s Responsibility for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of these consolidated 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 consolidated 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 consolidated 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 audits to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated 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 consolidated 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 consolidated financial statements. Pursuing the profession while promoting the public good© Pittsburgh | Harrisburg | Butler www.md‐cpas.com State College | Erie | Lancaster Board of Directors Cornerstone Television, Inc. and Subsidiary Independent Auditor’s Report Page 2 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 consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Cornerstone as of December 31, 2019 and 2018, and the changes in its net assets and its consolidated cash flows for the years then ended, in accordance with accounting principles generally accepted in the United States of America. Pittsburgh, Pennsylvania May 13, 2020 CORNERSTONE TELEVISION, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF FINANCIAL POSITION DECEMBER 31, 2019 AND 2018 2019 2018 Assets Current assets: Cash and cash equivalents $ 490,734 $ 1,332,087 Investments 3,569,333 3,396,883 Accounts receivable, net of allowance for doubtful accounts of $18,000 and $0, respectively 331,249 223,364 Inventory 96,499 114,675 Prepaid expenses and other current assets 22,590 16,239 Total current assets 4,510,405 5,083,248 Investments - restricted 1,500,000 1,500,000 Non-current assets: Tower and broadcasting equipment 6,508,442 7,934,498 Site development and land improvements 640,176 640,176 Buildings and improvements 2,795,334 2,708,262 Office furniture and equipment 538,221 569,389 Vehicles 79,468 79,468 Equipment purchase in progress 59,771 1,215,298 10,621,412 13,147,091 Less: accumulated depreciation and amortization (5,916,712) (8,300,188) 4,704,700 4,846,903 Land 66,785 66,785 Total non-current assets 4,771,485 4,913,688 Total Assets $ 10,781,890 $ 11,496,936 (Continued) See accompanying notes to consolidated financial statements. 1 CORNERSTONE TELEVISION, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF FINANCIAL POSITION DECEMBER 31, 2019 AND 2018 (Continued) 2019 2018 Liabilities and Net Assets Liabilities: Current liabilities: Accounts payable $ 288,572 $ 352,818 Line of credit 429,032 - Deferred revenue 18,612 34,100 Total current liabilities 736,216 386,918 Long-term liabilities: Annuities payable 12,439 12,646 Total long-term liabilities 12,439 12,646 Total Liabilities 748,655 399,564 Net Assets: Without donor restrictions: Undesignated 5,492,571 5,937,123 Board-designated - 191,988 Investment in fixed assets, net of related debt 4,342,453 4,913,688 Total without donor restrictions 9,835,024 11,042,799 With donor restrictions 198,211 54,573 Total Net Assets 10,033,235 11,097,372 Total Liabilities and Net Assets $ 10,781,890 $ 11,496,936 (Concluded) See accompanying notes to consolidated financial statements. 2 CORNERSTONE TELEVISION, INC. AND SUBSIDIARY CONSOLIDATED STATEMENT OF ACTIVITIES YEAR ENDED DECEMBER 31, 2019 Without Donor With Donor Restrictions Restrictions Total Revenues and Other Support: Contributions and bequests $ 1,873,683 $ 166,306 $ 2,039,989 Broadcasting and production 1,715,080 - 1,715,080 Other revenues 623,392 - 623,392 Total revenues and other support 4,212,155 166,306 4,378,461 Net assets released from restrictions (operating) 22,668 (22,668) - 4,234,823 143,638 4,378,461 Expenses: Program 3,437,618 - 3,437,618 Support services: Management and general 984,100 - 984,100 Fundraising 823,438 - 823,438 Total support services 1,807,538 - 1,807,538 Total expenses 5,245,156 - 5,245,156 Gain (Loss) from Operations (1,010,333) 143,638 (866,695) Non-Operating Activities: Gain (loss) on investments 577,829 - 577,829 Gain (loss) on sale of assets 31,300 - 31,300 Gain (loss) on disposal of obsolete assets (806,571) - (806,571) Total non-operating income (loss) (197,442) - (197,442) Change in Net Assets (1,207,775) 143,638 (1,064,137) Net Assets: Beginning of year 11,042,799 54,573 11,097,372 End of year $ 9,835,024 $ 198,211 $ 10,033,235 See accompanying notes to consolidated financial statements. 3 CORNERSTONE TELEVISION, INC. AND SUBSIDIARY CONSOLIDATED STATEMENT OF ACTIVITIES YEAR ENDED DECEMBER 31, 2018 Without Donor With Donor Restrictions Restrictions Total Revenues and Other Support: Contributions and bequests $ 2,202,143 $ 19,457 $ 2,221,600 Broadcasting and production 1,430,744 - 1,430,744 Other revenues 786,778 - 786,778 Total revenues and other support 4,419,665 19,457 4,439,122 Net assets released from restrictions (operating) 23,859 (23,859) - 4,443,524 (4,402) 4,439,122 Expenses: Program 3,462,801 - 3,462,801 Support services: Management and general 1,312,218 - 1,312,218 Fundraising 846,297 - 846,297 Total support services 2,158,515 - 2,158,515 Total expenses 5,621,316 - 5,621,316 Gain (Loss) from Operations (1,177,792) (4,402) (1,182,194) Non-Operating Activities: Gain (loss) on investments (76,190) - (76,190) Gain (loss) on sale of assets - - - Gain (loss) on disposal of obsolete assets 1,715 - 1,715 Total non-operating income (loss) (74,475) - (74,475) Change in Net Assets (1,252,267) (4,402) (1,256,669) Net Assets: Beginning of year 12,295,066 58,975 12,354,041 End of year $ 11,042,799 $ 54,573 $ 11,097,372 See accompanying notes to consolidated financial statements. 4 CORNERSTONE TELEVISION, INC. AND SUBSIDIARY STATEMENT OF FUNCTIONAL EXPENSES YEAR ENDED DECEMBER 31, 2019 Management Program and General Fundraising Total Salaries and wages $ 1,394,942 $ 422,457 $ 275,631 $ 2,093,030 Employee benefits 224,334 163,106 58,925 446,365 Grants and allocations 561,784 - - 561,784 Outside services 256,430 119,100 51,069 426,599 Office expenses 162,107 32,583 93,580 288,270 Equipment rental and maintenance 188,901 34,352 16,622 239,875 Occupancy 193,160 23,985 - 217,145 Printing and publications 36 1,782 160,360 162,178 Travel 9,538 7,297 12 16,847 Depreciation 312,012 - - 312,012 Interest and bank fees - 32,292 - 32,292 Miscellaneous 13,621 8,168 1,905 23,694 Bad debt - 18,000 - 18,000 Premiums and promotions - 12,838 50,565 63,403 Insurance 3,177 62,577 - 65,754 Guests and honorariums 34,431 15 114,769 149,215 Exempt Organization Business Taxes - 45,548 - 45,548 Purpose restricted disbursements 17,880 - - 17,880 Program fees and acquisition costs 65,265 - - 65,265 Total Expenses $ 3,437,618 $ 984,100 $ 823,438 $ 5,245,156 See accompanying notes to consolidated financial statements. 5 CORNERSTONE