AND TELEVISION COMMISSION, INC.

For the Year Ended September 30, 2022

1. Organization and Summary of Significant Accounting Policies, continued Advertising

The FTC expenses advertising costs as incurred. Total expenditures for advertising costs for the year ended September 30, 2022 were $16,692.

Donated Services

The FTC follows FASB ASC Topic 958-605, Not-for-Profit Entities, Revenue Recognition for donated services from volunteers, board members, and other third parties who assist in fund-raising and education programs and from professionals who donate services. The value of the contributed services should be recognized when they (a) create or enhance a nonfinancial asset or (b) require specialized skills, are provided by entities or persons possessing those skills, and would need to be purchased if they were not donated. Generally, the value of volunteer services to the FTC does not satisfy these criteria and is therefore not recognized in the financial statements.

Functional Allocation of Expenses

Costs of providing the FTC’s various programs and other activities have been summarized on a functional basis in the Statement of Activities. Costs are allocated among film and television promotion, education, and management and general based on a percentage of the related activities.

Scholarships

The FTC scholarships are paid to identified recipients of The Palm Beaches Student Showcase of Films.

Tax Status

The FTC is exempt from federal and state income taxes pursuant to Internal Revenue Code Section 501(c)(6) and Chapter 220.13 of the Florida Statues. Therefore, the financial statements do not reflect a provision for income taxes.

The FTC follows the guidance of FASB ASC 740-10, Accounting for Uncertainty in Income Taxes, which seeks to reduce the diversity in practice associated with certain aspects of measurement and recognition in accounting for income taxes. This standard prescribes a recognition threshold and measurement attribute for financial statement recognition and measurement of a tax position that an entity takes or expects to take in a tax return. An entity may only recognize or continue to recognize tax positions that meet a “more likely than not” threshold. The FTC assesses its income tax positions based on management’s evaluation of the facts, circumstances, and information available at the reporting date. Management does not believe that the FTC has any significant uncertain tax positions that would be material to the financial statements. Furthermore, there is no federal or state open-year tax return under audit.

For the Year Ended September 30, 2022

1. Organization and Summary of Significant Accounting Policies, continued Fair Value Measurement

The FTC follows FASB ASC 820, Fair Value Measurement. This standard defines fair value, establishes a framework for measuring fair value, establishes a fair value hierarchy based on the quality of inputs used to measure fair value, and requires expanded disclosures about fair value measurements of financial instruments.

The standard also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs when available. Observable inputs are those that market participants would use in pricing the asset or liability based on the best information available in the circumstances.

The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and lowest priority to unobservable inputs (Level 3). If inputs used to measure the financial instruments fall within different levels of the hierarchy, the categorization is based on the lowest level of input that is significant to the fair value measurement of the instrument.

The three levels of the fair value hierarchy are described below:

Level 1 - Inputs that utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the FTC has the ability to access.

Level 2 - Inputs that include quoted prices for similar assets and liabilities in active markets and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. Fair values for these instruments are estimated using pricing models or quoted prices of assets and liabilities of similar characteristics.

Level 3 - Inputs that are unobservable for the assets or liabilities, which are typically based on an entity’s own assumptions, as there is little, if any, related market activity.

The asset’s or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.

Recently Adopted Accounting Policies

As of October 1, 2021, the FTC adopted the provisions of FASB ASU Accounting Standards Update 202007—Not-for-Profit Entities (Topic 958): Presentation and Disclosures by Not-for-Profit Entities for Contributed Nonfinancial Assets. The purpose of the standard is to clarify the presentation and disclosure of contributed nonfinancial assets with an intention to provide the reader of the financial statements a clearer understanding of what type of nonfinancial assets were received and how they are used and recognized by the not-for-profit.

For the Year Ended September 30, 2022

1. Organization and Summary of Significant Accounting Policies, continued Recent Accounting Pronouncements

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). ASU 2016-02 replaces existing leasing rules with a comprehensive lease measurement and recognition standard and expanded disclosure requirements. ASU 2016-02 will require lessees to recognize most leases on their statement of financial position as “right of use assets” with corresponding liabilities. The standard does not take effect until the FTC's fiscal year ending September 30, 2023. Management is currently evaluating the magnitude and potential impact on the FTC’s financial statements.

Comparable Financial Information

The financial statements include certain prior-year summarized comparative information in total but not by net asset class. Such information does not include sufficient detail to constitute a presentation in conformity with accounting principles generally accepted in the United States of America. Accordingly, such information should be read in conjunction with the FTC’s financial statements for the year ended September 30, 2021, from which the summarized information was derived. Certain 2021 amounts may have been reclassified to conform to 2022 classifications with no effect on the previously reported change in net assets.

2. Liquidity and Availability of Resources

Financial assets available for general expenditure within one year, that is, without donor restrictions or other restrictions limiting their use comprise the following:

The FTC receives significant income from its Palm Beach County Contract (see Note 4), which covers the majority of its operating expenditures on a direct reimbursement basis. The Organization also receives grants and other income that may or may not be restricted for use in a particular program.

3. Fair Value Measurement

The following methods and assumptions were used by the FTC in estimating the fair value of financial instruments that were not disclosed under FASB ASC Topic 820.

 Cash equivalents – The carrying amount reported approximates fair value.

 Reimbursement due from Palm Beach County – The carrying amount approximates fair value due to the short term of the amounts due.

 Accounts payable, accrued expenses, and other liabilities – The carrying amount reported approximates fair value due to the short-term duration of the instruments.

For the Year Ended September 30, 2022

3. Fair Value Measurement, continued

The FTC has no assets or liabilities measured at fair value on a recurring basis under FASB ASC Topic 820, for 2022. There have been no changes in the methodologies used as of September 30, 2022.

4. Contract with Palm Beach County

The FTC annually enters into an administrative services and administrative agency contract with the County. The contract provides that the FTC will perform, administer and, in certain cases, provide financial sponsorship for various functions, such as attracting and permitting film and television production, advertising, public relations, production marketing and trade shows, incorporating diversity in programing and operations, familiarization tours, and other projects and services to promote the growth of the film, television, digital media and still photography industry in the County. For the year ending September 30, 2022, the funding for this contract is provided by revenue generated from the 2nd, 3rd, 5th, and 6th cents of the Palm Beach County 6.00% Tourist Development Tax (also referred to as the "Bed Tax"). The contract, as amended, for the year ended September 30, 2022 was for an amount not to exceed $1,133,000.

In connection with the County contract, the FTC submits requests for reimbursement of allowable payments and expenditures and records the corresponding revenue as the request is approved and paid. Subsequent adjustments made in accordance with US GAAP to certain payments and expenditures may often create timing differences between the contract utilization according to the County and amounts reported in these financial statements. The fiscal year-end amounts and related adjustments are summarized as follows:

*Reconciling items include accrual basis transactions.

In addition to the $1,093,427 in funding from the contract with Palm Beach County, the FTC received Stimulus funding of $290,000 to be used for marketing purposes, as well as funding of $100,000 for tourism branded content. The reimbursement relating to these expenses follows the same process as other County contract expenses.

5. Grant Agreement

The FTC originally entered into a grant agreement with the DHED on March 11, 2003. The grant agreement has been renewed and extended through September 2022. The grant agreement provides the financial resources to support educational programs in the film and television industry in Palm Beach County and implement the Palm Beach County Film and TV Tech Prep Program in order to foster a stronger and more balanced economy in Palm Beach County. For the year ended September 30, 2022, the FTC received a total of $75,000 associated with this grant.

For the Year Ended September 30, 2022

6. Non-Contract Expenses

The FTC incurs certain expenses that are not reimbursed under the PBC contract or the DHED grant agreement. As of September 30, 2022 the total amount of non-contract and non-DHED expenses, less the in-kind, was $406,857.

7. Pension Plan

FTC approved the implementation of a 401(k), Profit - Sharing Plan (“Plan”). Full time employees who have completed one year of service are eligible to participate in the Plan. During 2022, the employer contributions are 10.86% of an eligible employee’s compensation, and employees are fully vested after three years of service. During the year ending September 30, 2022, the FTC contributed $56,446 for this 401(k) program.

8. Contributions, In-Kind

Contributed services are reflected as in-kind support, and expenses or assets in the accompanying financial statements. On behalf of the FTC, the County directly paid $65,619 of administrative expenses, $2,637 of inspector general expenses, and $33,194 of tax collector commission expenses for the year ended September 30, 2022. The County also provided office space valued at $34,515 to FTC in exchange for no payment. Amounts recorded for these County-provided expenses and office space are based upon reports from the County, and the estimated fair value rent for similar space in this market. In addition, FTC Board members contributed $650 in promotional and other miscellaneous services in exchange for membership dues, and various organizations contributed services in connection with the Student Showcase of Films totaling $68,418. Such in-kind support is recorded at amounts the FTC estimated it would have paid for these services.

9. Business and Credit Concentrations

The FTC receives contract funding from the County as reflected in the Statement of Activities. Direct funding by the County represents approximately 83% of the FTC's 2022 total revenue and support, and requires the fulfillment of certain conditions as set forth in the contract documents. Failure to fulfill such obligations could result in a reduction of future funding. A significant reduction in the level of this support could have a substantial effect on the FTC's programs and activities. Although there is a possibility of such an occurrence, Management believes this contingency to be remote, since by accepting the terms and conditions of the contracts, it will operate in accordance with the agreements. In addition, Management continually monitors the funding resources allocated by the County and adjusts the budget as necessary for ongoing sponsorship commitments through the FTC’s Sponsorship Committee.

The FTC uses an FDIC insured financial institution to maintain its cash, which at times may exceed FDIC insured limit. The FTC has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on such cash. As of September 30, 2022, the FTC did not have any uninsured deposits held in banks.

10. Subsequent Events

The FTC has evaluated subsequent events through March 2, 2023, the date on which the financial statements were available to be issued, and determined that there were no further disclosures required to be presented in these financial statements.

For the Year Ended September 30, 2022

SCHEDULE OF FUNCTIONAL EXPENSESCONTRACT AND NON-CONTRACT

See independent auditors' report.

& Thomas, LLC

Certified Public Accountants & Advisors

125 Butler Street  West Palm Beach, FL 33407

(561)689-6000  Fax (561) 689-6001  www.holyfieldandthomas.com

To the Board of Directors and Management of Palm Beach County Film and Television Commission, Inc.

West Palm Beach, Florida

Ladies and Gentlemen:

In planning and performing our audit of the financial statements of Palm Beach County Film and Television Commission, Inc. as of and for the year ended September 30, 2022, in accordance with auditing standards generally accepted in the United States of America, we considered Palm Beach County Film and Television Commission, Inc.’s internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Organization’s internal control. Accordingly, we do not express an opinion on the effectiveness of the Organization’s internal control.

Definitions Related to Internal Control Deficiencies

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the Organization’s financial statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

Our Responsibilities

Our consideration of internal control was for the limited purpose described in the first paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

* * *

This communication is intended solely for the information and use of management, those charged with governance and others within the Organization and is not intended to be and should not be used by anyone other than these specified parties.

Very truly yours,

Holyfield & Thomas, LLC

West Palm Beach, Florida March 2, 2023