Catalina Island Chamber of Commerce and Visitors Bureau, Inc.
Notes to Financial Statements
June 30, 2023 and 2022
Note B- Summary of Significant Accounting Policies (continued) Cash and Cash Equivalents
For purposes of the statement of cash flows, CICCVB considers all highly liquid investments available for current use with an initial maturity of three months or less to be cash equivalents.
Fair Value of Financial Instruments
CICCVB has recorded in its financial statements certain financial instruments, none of which are held for trading purposes. CICCVB estimates that the fair value of all its financial instruments at June 30, 2023 and 2022, do not differ materially from the aggregate carrying value of its financial instruments recorded in the accompanying statement of financial position. The estimated fair value amounts have been determined by CICCVB using available market information and appropriate valuation methodologies.
Investments
Investments are stated at fair value (the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date). Investments are measured in accordance with FASB ASC 820-10, Fair Value Measurements, as disclosed in Note D.
Property and Equipment
CICCVB capitalizes expenditures for furniture, fixtures, and equipment. These assets are recorded at original cost.
Donated assets are recorded at the estimated fair market value on the date received. CICCVB has set the capitalization threshold for reporting property and equipment at $2,000. Depreciation is computed on the straight- line basis over the following estimated useful lives:
Website development 3 years
Computer equipment 5 years
Office furniture and equipment 5-10 years
Building improvements 5-10 years
When items of property and equipment are sold or retired, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is shown on the financial statements as other gains or losses.
Donated Services and Facilities
Unpaid volunteers have made contributions of their time in conjunction with CICCVB's programs and services The value of these contributions is not included in these financial statements, since they are not susceptible to objective measurement.
'ICCVB's Visitor Center occupies space at the Avalon Green Pier rent-free on a month-to-month agreement witl he City of Avalon. The landlord has estimated the approximate fair value of the annual rent to be $22,464. Th revenue and expense is reported in local government grant revenue in the statement of activities and rent expense in the statement of functional expenses, respectively.
Membership Dues
Membership dues received pertaining to all membership categories are recognized as revenue ratable over the term
Catalina Island Chamber of Commerce and Visitors Bureau, Inc.
Notes to Financial Statements
June 30, 2023 and 2022
Note B - Summary of Significant Accounting Policies (continued) Compensated Absences
CICCVB records compensated absences for accrued vacation for all full-time employees. The expense is recorded when earned.
trade conventions, and to perform other such activities as may be required by the City. During 2022/2023, TOT Ise of Estimate
Preparation of financial statements in accordance with U.S. generally accepted accounting principles necessitates the use of estimates of certain amounts. CICCVB uses estimates to determine the useful lives of fixed assets.
Estimates are also used to ascertain that all accounts receivable are collectible. It is reasonably possible these estimates may change in the near term.
CICCVB carries an estimated net receivable of $434,228 for TOT revenues to be received from the City for the fiscal year 2022/2023. This estimated "true-up" payment is calculated by the City of Avalon based on estimated TOT revenues for the fiscal year 2022/2023.
Federal and State Income Taxes
CICCVB is a California corporation granted exemption from federal income taxes under Section 501(C) (6) of the Internal Revenue Code, and from California franchise taxes under the General Nonprofit Corporation Law of the State of California. As such, CICCVB is not taxed on income derived from its exempt functions. However, it is subject to federal and California income taxes on unrelated trade or business income taxes, which is generated from CICCVB's activities not related to their stated exempt purposes.
Functional Allocation of Expenses
The costs of providing programs and other activities have been summarized on a functional basis in the Statement of Activities and the Statement of Functional Expenses. Accordingly, certain costs have been allocated among the programs and supporting services benefited.
CIC V as evaluates sequent events through November 2, 2023, which is the date the financial statements were available to be issued.
Note C- Cash and Cash Equivalents
As of June 30, 2023 and 2022, cash and cash equivalents consisted of the following:
2023 2022
Checking $ 219,781 $ 203,240
Money market 111,816 111,678
Petty cash 1,050 550
Total 332,647 315,468
Catalina Island Chamber of Commerce and Visitors Bureau, Inc.
Notes to Financial Statements
June 30, 2023 and 2022
Note D- Investments and Fair Value Measurement
CICCVB follows ASC 958-205, which establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below:
Level 1: Defined as observable inputs such as quoted prices for identical instruments in active markets; Level 2: Defined as inputs other than quoted prices in active markets that are directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and
Level 3: Defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant value drivers are observable.
As of June 30, 2023 and 2022, investments consist of the following, which are considered Level 1 in the fair value hierarchy:
Fair Value Measurements at June 30, 2023
Quoted Market
Investments, at fair value: Fair Value Prices (Level I) Demand deposit account 48,640 $ 48.640
Fixed income funds 37,713 37,713
Bond funds 23,602 23,602
Exchange traded funds 11,557 11,557
121,512 121,512
Fair Value Measurements at June 30, 2022
Quoted Market
Investments, at fair value: Fair Value Prices (Level I) Demand deposit account 69,281 69,281
Bond funds 23,752 23,752
Exchange traded funds 19,855 19,855
112,887 112,887
Interest income for the year ended June 30, 2023 was $1,497 and June 30, 2022 was $1,009.
Note E- Property and Equipment
Property and equipment consist of the following as of June 30, 2023 and 2022:
2023 2022
Furniture and equipment 12,416 12,416
Leasehold improvements 122,485 122,485
Computer hardware 5,211 5,211
Website development 46,385 46,385
186,498 186,498
Less: accumulated depreciation (81,449) (77,452)
105,049 109,046
Depreciation expense for the year ended June 30, 2023 was $3,997 and June 30, 2022 was $3,649.
Catalina Island Chamber of Commerce and Visitors Bureau, Inc.
Notes to Financial Statements
June 30, 2023 and 2022
Note F - Grants
Effective March 15, 1994, CICCVB entered into an agreement with the City of Avalon to receive an amount equal to 22% of the Transient Occupancy Tax (TOT) collected by the city. Per the agreement, the funds are to be used to carry out promotional activities, on behalf of the City per City of Avalon Municipal Code.
For the year ended June 30, 2023, TOT revenue totaled $1,822,088 with receivables of $434,228. During the fiscal year 2022/20223, the City estimated TOT revenues for the fiscal year and issued 12 installments. Once accounts were reconciled for the year, the City determined CICCVB was due an additional $434,228.
For the year ended June 30, 2022, TOT revenue totaled $1,912,719 with receivables of $579,715. During the fiscal year 2021/2022, the City estimated TOT revenues for the fiscal year and issued 12 installments. Once accounts were reconciled for the year, the City determined CICCVB was due an additional $579,715.
For the years ended June 30, 2023 and 2022, TOT grant revenue represents 77% and 79%, respectively of operating revenues and 98% of receivables and 98% of receivables, respectively.
Note G - Lease Commitments
CICCVB's Visitor Center occupies space at the Avalon Green Pier rent-free on a 10-year lease agreement with the City of Avalon commencing on January 1, 2015. The property owner has estimated the approximate fair value of the annual rent to be $22,464. The revenue and expense is reported in local government grant revenue in the statement of activities and rent expense in the statement of functional expenses, respectively.
MICB noses panagement 231, 2027 with a mies um tease pay aene or 1,04 peneting September. 202. 'he lease now expires August 31
cost of living increase each year.
CCVB entered into an operating lease agreement for a copier beginning November 2021 for 60 months. T ase required fixed monthly payments of $176 plus sales tax at the applicable state, county, and city sales t The minimum future lease payments are as follows:
Year Ending June 30, Office Equipment Total
2024 $ 42,195 $ 2,106 44,301
2025 42,787 2,106 44,893
2026 32,165 2,106 34,271
2027 21,561 702 22,263
2028 3,611 3.611
$ 142,319 7,020 149,339
Note H - SBA PPP Loan
22725
Catalina Island Chamber of Commerce and Visitors Bureau, Inc.
Notes to Financial Statements
June 30, 2023 and 2022
Note I - Long Term Debt
On June 9, 2020, CICCVB successfully secured a $150,000 Small Business Association loan under the Economic Injury Disaster Loan program. Proceeds are to be used as working capital to alleviate injury caused by the disaster, n this case the COVID-19 pandemic. The loans is secured by deposit accounts, receivables, and equipment. It i ayable in monthly installments including principal and interest of $641 beginning 12 months from the date of th Year Ending June 30, Principal Interest Total
2024 3,679 4,013 $ 7,692
2025 3,782 3,910 7,692
2026 3,887 3,805 7,692
2027 3,995 3,697 7,692
2028 4,106 3,586 7,692
Thereafter 128,154 43.428 171,582
$ 147,603 62,440 $ 210,043
Note J-Risk and Uncertainties
CICCVB may be subject to credit risk to its cash and cash equivalent investments, which are placed with high credit-quality financial institutions. From time to time, CICCVB may have amounts on deposit in excess of the FDIC limits. Management believes CICCVB is not exposed to any significant credit risk on cash and cash equivalents. As of June 30, 2023 and 2022, account balances exceeded FDIC insurance limits by $76,310 and $59,291, respectively.
CICCVB's operations are solely on Catalina Island, California and are subject to fluctuations in the local economy.
Note K - Employee Pension Plan
CICCVB has a SIMPLE employee retirement plan covering qualified employees. Under the program, CICCVB contributes 3% of employee compensation. Total employer contributions to the plan were $13,902 and $11,906 for the years ended June 30, 2023 and 2022, respectively.
Note L- Liquid Resource Management
ongoing program activities as well as the conduct of services undertaken to support those activities to be general As of June 30, 2023, the following financial assets could readily be made available within one year of the balance sheet date to meet general expenditures:
Cash and cash equivalents $ 332,647
Investments not encumbered by board 121,512
Financial assets available for expenditures over next 12-months $ 454,159
Catalina Island Chamber of Commerce and Visitors Bureau, Inc.
Notes to Financial Statements
June 30, 2023 and 2022
Note L- Liquid Resource Management (continued)
In addition to the financial assets available to meet general expenditures over the next 12-months noted above, CICCVB has prepaid expenses and receivables that will likely be converted to cash or available for general expenditures during the normal course of next year's operations.
Note M - Prior Period Adjustment
he accompanying financial statements of CICCVB have been restated to correct an error made in the prior year The error relates to the misclassification of the City Rent Waiver revenue of $22,464 as without donor restrictions The revenue does in fact have donor restrictions and should be classified as such. The adjustment reduced net assets without donor restrictions by $22,464 and increased net assets with donor restrictions by $22,464. The restrictions are met each year during the year with the lease of the Green Pier Visitors' Center.