CRISIS TEXT LINE, INC. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
WITH SUPPLEMENTARY INFORMATION
YEARS ENDED DECEMBER 31, 2018 AND 2017
AND
INDEPENDENT AUDITORS’ REPORT
CRISIS TEXT LINE, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
Page
Independent Auditors’ Report 1
Consolidated Financial Statements
Statements of Financial Position 3
Statements of Activities 4
Statements of Functional Expenses 6
Statements of Cash Flows 8
Notes to Consolidated Financial Statements 9
Consolidating Supplementary Information for 2018
Statement of Financial Position 21
Statement of Activities 22
1
INDEPENDENT AUDITORS’ REPORT
To the Board of Directors
Crisis Text Line, Inc.
We have audited the accompanying consolidated financial statements of Crisis Text Line, Inc. and
Subsidiaries (the “Organization”), which comprise the consolidated statements of financial position as
of December 31, 2018 and 2017, 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.
Auditors’ 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 audit 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 Organization’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 Organization’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.
(Continued)
2
Opinion
In our opinion, the consolidated financial statements referred to above present fairly, in all material
respects, the financial position of Crisis Text Line, Inc. and Subsidiaries as of December 31, 2018 and
2017, and the changes in their net assets and their cash flows for the years then ended, in accordance
with accounting principles generally accepted in the United States of America.
Correction of Errors
As described in Note 12 to the consolidated financial statements, the Organization’s net assets as of
January 1, 2017 have been restated, which increased net assets, due to a correction of errors in a prior
year. Our opinion is not modified with respect to this matter.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
Report on Supplementary Information
Our audit was conducted for the purpose of forming an opinion on the consolidated financial statements
as a whole. The accompanying consolidating supplementary information shown on pages 21 and 22 is
presented for purposes of additional analysis and is not a required part of the consolidated financial
statements. Such information is the responsibility of management and was derived from and relates
directly to the underlying accounting and other records used to prepare the consolidated financial
statements. The information has been subjected to the auditing procedures applied in the audit of the
consolidated financial statements and certain additional procedures, including comparing and
reconciling such information directly to the underlying accounting and other records used to prepare
the consolidated financial statements or to the consolidated financial statements themselves, and other
additional procedures in accordance with auditing standards generally accepted in the United States of
America. In our opinion, the consolidating supplementary information is fairly stated in all material
respects in relation to the consolidated financial statements as a whole.
July 31, 2019
CRISIS TEXT LINE, INC. AND SUBSIDIARIE
S
CONSOLIDATED STATEMENTS OF FINANCIAL POSITIO
N
2018 2017
ASSETS
Cash and cash equivalents 11,399,386$ 1,391,036$
Certificates of deposit 366,903 229,410
Program revenue receivable 60,537 82,366
Contributions receivable 6,194,020 6,652,200
Prepaid expenses and other assets 102,326 139,277
Investment, at fair value 19,217,411 12,671,877
Inventory 28,619 -
Property and equipment, net 26,484 5,139
Security deposits 7,584 7,584
Total assets 37,403,270$ 21,178,889$
LIABILITIES AND NET ASSETS
Liabilities
Accounts payable and accrued expenses 352,363$ 209,929$
Deferred revenue 258,789 145,833
Deferred rent 95,800 -
Total liabilities 706,952 355,762
Commitments and contingencies
Net assets
Without donor restrictions 28,894,038 13,319,265
With donor restrictions 6,816,102 7,503,862
Noncontrolling interest 986,178 -
Total net assets 36,696,318 20,823,127
Total liabilities and net assets 37,403,270$ 21,178,889$
December 31,
See notes to consolidated financial statements.
3
CRISIS TEXT LINE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF ACTIVITIES
YEAR ENDED DECEMBER 31, 2018
Without Donor With Donor Noncontrolling
Restrictions Restrictions interest Total
Support and revenues
Contributions 19,262,225$ 5,774,435$ -$ 25,036,660$
Contributions in-kind 1,033,266 - - 1,033,266
Program service revenue 1,787,510 - - 1,787,510
Investment income 277,443 - - 277,443
Miscellaneous 15,026 - - 15,026
Net assets released from restrictions 6,462,195 (6,462,195) - -
Total support and revenues 28,837,665 (687,760) - 28,149,905
Expenses
Program expenses
Crisis Counselor Community 2,211,251 - - 2,211,251
Supervision 3,519,073 - - 3,519,073
Engineering and Tech 3,086,213 - - 3,086,213
Data 761,211 - - 761,211
International Expansion 943,852 - - 943,852
Total program expenses 10,521,600 - - 10,521,600
Supporting services
Management and general 2,490,312 - - 2,490,312
Fundraising 250,980 - - 250,980
Total supporting services 2,741,292 - - 2,741,292
Total expenses 13,262,892 - - 13,262,892
Loris.ai
Operating costs - - (1,013,829) (1,013,829)
Change in net assets 15,574,773
(687,760) (1,013,829) 13,873,184
Issuance of common and preferred stock - - 2,000,007 2,000,007
Net assets, beginning of year
13,319,265 7,503,862 - 20,823,127
Net assets, end of year
28,894,038$ 6,816,102$ 986,178$ 36,696,318$
See notes to consolidated financial statements.
4
CRISIS TEXT LINE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF ACTIVITIES
YEAR ENDED DECEMBER 31, 2017
Without Donor With Donor
Restrictions Restrictions Total
Support and revenues
Contributions 886,026$ 1,700,000$ 2,586,026$
Contributions in-kind 1,323,967 - 1,323,967
Program service revenue 593,554 - 593,554
Investment income 106,216 - 106,216
Miscellaneous 9,816 - 9,816
Net assets released from restrictions 9,169,963 (9,169,963) -
Total support and revenues 12,089,542 (7,469,963) 4,619,579
Expenses
Program expenses
Crisis Counselor Community 2,788,745 - 2,788,745
Supervision 2,741,306 - 2,741,306
Engineering and Tech 2,359,405 - 2,359,405
Data 482,535 - 482,535
International Expansion 202,639 - 202,639
Total program expenses 8,574,630 - 8,574,630
Supporting services
Management and general 2,172,577 - 2,172,577
Fundraising 70,795 - 70,795
Total supporting services 2,243,372 - 2,243,372
Total expenses 10,818,002 - 10,818,002
Change in net assets 1,271,540 (7,469,963) (6,198,423)
Net assets, beginning of year, as restated
12,047,725 14,973,825 27,021,550
Net assets, end of year
13,319,265$ 7,503,862$ 20,823,127$
See notes to consolidated financial statements.
5
CRISIS TEXT LINE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF FUNCTIONAL EXPENSES
YEAR ENDED DECEMBER 31, 2018
Crisis
Counselor
Community Supervision
Engineering
and Tech Data
International
Expansion
Total
Program
Management
and General Fundraising
Total
Supporting Total Expenses
Personnel costs
Salaries 1,108,811$ 2,578,035$ 1,874,715$ 436,878$ 480,688$ 6,479,127$ 671,972$ 169,986$ 841,958$ 7,321,085$
Payroll taxes and benefits 413,161
750,164 361,925 96,545 151,558 1,773,353 374,484 53,128 427,612 2,200,965
Total personnel costs 1,521,972 3,328,199 2,236,640 533,423 632,246 8,252,480 1,046,456 223,114 1,269,570 9,522,050
Other expenses
Depreciation - - - - - - 25,093 - 25,093 25,093
Equipment purchases 216 4,615 1,494 1,797 17 8,139 1,967 - 1,967 10,106
Insurance - - - - 5,434 5,434 24,123 - 24,123 29,557
In-kind advertising expenses 220,616 - - - - 220,616 - 5,075 5,075 225,691
In-kind technology expenses - - 370,606 - 29,781
400,387 - - - 400,387
In-kind legal expenses - - - - 34,875 34,875 372,313 - 372,313 407,188
Office expenses 10,343 7,330 6,249 1,333 439 25,694 39,521 12,385 51,906 77,600
Professional fees 80,306 103,554 201,218 112,444 68,554 566,076 247,338 700 248,038 814,114
Rent and utilities 13,314 6,985 2,541 - - 22,840 527,305 - 527,305 550,145
Repairs and maintenance - - 311 - - 311 23,532 - 23,532 23,843
Marketing and public relations 15,234 268 - 29,966 1,606 47,074 9,277 3,414 12,691 59,765
Subscriptions 61,767 11,066 101,789 79,391 15,301 269,314 19,958 2,314 22,272 291,586
Tech support and hosting 12,265 - 123,384 1,080 139,679 276,408 9,456 - 9,456 285,864
Travel and meetings 44,467 57,019 41,981 1,777 15,920 161,164 140,588
3,978 144,566 305,730
Volunteer expenses 230,751 37 - - - 230,788 3,385 - 3,385 234,173
Total other expenses 689,279 190,874 849,573 227,788 311,606 2,269,120 1,443,856 27,866 1,471,722 3,740,842
Total expenses 2,211,251$ 3,519,073$ 3,086,213$ 761,211$ 943,852$ 10,521,600$ 2,490,312$ 250,980$ 2,741,292$ 13,262,892$
Program Expenses
Supporting Services
See notes to consolidated financial statements.
6
CRISIS TEXT LINE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF FUNCTIONAL EXPENSES
YEAR ENDED DECEMBER 31, 2017
Crisis
Counselor
Community Supervision
Engineering
and Tech Data
International
Expansion Total Program
Management and
General Fundraising
Total
Supporting Total Expenses
Personnel costs
Salaries 1,401,353$ 2,017,001$ 1,305,547$ 377,677$ 89,808$ 5,191,386$ 166,356$ 59,630$ 225,986$ 5,417,372$
Payroll taxes and benefits 108,717 166,457 121,464 28,580 6,929 432,147 951,510 4,944 956,454 1,388,601
Total personnel costs 1,510,070 2,183,458 1,427,011 406,257 96,737 5,623,533 1,117,866 64,574 1,182,440 6,805,973
Other expenses
Depreciation - - - - - - 13,553 - 13,553 13,553
Equipment purchases 6,332 5,983 22,208 2,750 - 37,273 2,723 - 2,723 39,996
Insurance - - - - - - 18,016 - 18,016 18,016
In-kind advertising expenses 257,172 257,172 - - - 514,344 2,800 - 2,800 517,144
In-kind technology expenses 105,737 105,737 - - - 211,474 - -
- 211,474
In-kind legal expenses - - - - 53,440 53,440 541,909 - 541,909 595,349
Office expenses 93,493 11,250 4,332 977 4,208 114,260 23,259 4,659 27,918 142,178
Professional fees 56,063 91,225 134,859 11,200 8,273 301,620 66,530 - 66,530 368,150
Recruitment and training 28,608 3,132 16,241 454 - 48,435 1,098 87 1,185 49,620
Rent and utilities 25,848 11,229 9,447 - - 46,524 331,046 - 331,046 377,570
Repairs and maintenance - - - - - - 18,428 - 18,428 18,428
Marketing and public relations 2,668 - 1,905 453 1,897 6,923 - - - 6,923
Subscriptions 65,616 184 229,476 32,709 - 327,985 7,235 459 7,694 335,679
Tech support and hosting 13,652 800 495,759 16,093 1,114 527,418 990 - 990 528,408
Travel and meetings 82,007 70,756 18,167 11,642 36,970 219,542 25,320 1,016 26,336 245,878
Volunteer expenses 541,479 380 - - - 541,859 1,804 - 1,804 543,663
Total other expenses 1,278,675 557,848 932,394 76,278 105,902 2,951,097 1,054,711 6,221 1,060,932 4,012,029
Total expenses 2,788,745$ 2,741,306$ 2,359,405$ 482,535$ 202,639$ 8,574,630$ 2,172,577$ 70,795$ 2,243,372$ 10,818,002$
Supporting Services
Program Expenses
See notes to consolidated financial statements.
7
2018 2017
Cash flows from operating activities
Change in net assets 13,873,184$ (6,198,423)$
Adjustments to reconcile change in net assets to net cash provided by
operating activities
Depreciation 25,093 13,553
Net realized and unrealized (gain) losses on investments (4,378) 95,812
Changes in assets and liabilities
Program revenue receivable 21,829 51,384
Contributions receivable 458,180 7,873,765
Prepaid expenses and other assets 36,958 (4,800)
Inventory (28,619) -
Security deposits - (6,549)
Accounts payable and accrued expenses 142,434 25,004
Deferred revenue 112,956 18,748
Deferred rent 95,800 -
Net cash provided by operating activities 14,733,437 1,868,494
Cash flows from investing activities
Purchase of property and equipment (46,438) -
Certificates of deposit (137,493) (107)
Purchase of investments (11,986,288) (6,482,776)
Proceeds from sale of investments 5,445,132 2,530,000
Net cash used in investing activities (6,725,087) (3,952,883)
Cash flows from financing activities
Proceeds from issuance of preferred stock 2,000,000 -
Net increase (decrease) in cash and cash equivalents
10,008,350 (2,084,389)
Cash and cash equivalents, beginning of year 1,391,036 3,475,425
Cash and cash equivalents, end of year
11,399,386$ 1,391,036$
Noncash investing and financing activities
Common stock receivable 7$ -
Year Ended December 31,
CRISIS TEXT LINE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
See notes to consolidated financial statements.
8
9
CRISIS TEXT LINE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1 - ORGANIZATION AND NATURE OF ACTIVITIES
Crisis Text Line, Inc. (“CTL, Inc.”), a not-for-profit organization, was incorporated in the State of
New York on April 2, 2012. CTL, Inc.’s primary purpose is to use technology and data innovations
to pioneer new approaches to support people in need. CTL, Inc.’s major program services include
the following:
Crisis Counselor Community - all costs associated with recruiting and retaining volunteers;
development and training and cultural competencies in the community to appropriately
communicate with and promote CTL, Inc. as a service to all communities.
Supervision - a dedicated group of paid supervisors that service and manage crisis counselors and
oversee all texters on the CTL, Inc. platform.
Engineering and Tech - coding, refining, and supporting the CTL, Inc. texting platform.
Data – a dedicated group of data scientists that collect and share statistical data and develop metrics
from texting activity and crisis counselor demographics.
International Expansion - all costs associated with setting up partnerships with organizations
outside of the United States to expand texting services globally.
On October 20, 2015, CTL, Inc. formed a wholly owned limited liability company organized in
New York, called Crisis Text Line International, LLC (“CTLI”). To date, there has been no activity
in CTLI. On October 18, 2018, final paperwork was submitted to the New York State Department
of State to dissolve CTLI.
Effective January 9, 2018, CTL, Inc. acquired all of the 5,300,000 authorized shares of the Class
B common stock of Loris.ai, Inc. (“Loris.ai”), a for-profit company incorporated in the state of
Delaware. Loris ai’s purpose is to leverage CTL, Inc.’s de-escalation techniques, emotional
intelligence strategies, and training experience to develop real-time training software for customer
service agents.
CTL, Inc. receives its support primarily from donations from foundations and individuals.
10
CRISIS TEXT LINE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Consolidation
The consolidated financial statements include the accounts of CTL, Inc., its wholly owned
subsidiary, CTLI, and its majority owned subsidiary, Loris.ai (collectively, the “Organization”).
All intercompany transactions and balances have been eliminated in consolidation
Basis of Presentation
The accompanying consolidated financial statements of the Organization have been prepared on
the accrual basis of accounting in accordance with accounting principles generally accepted in the
United States of America (“GAAP”).
The consolidated financial statement presentation is in accordance with Financial Accounting
Standards Board Accounting Standards Codification (“FASB ASC”) 958, “Not-for-Profit
Entities,” as amended by Accounting Standards Update (“ASU”) No. 2016-14, “Presentation of
Financial Statements of Not-for-Profit Entities”. The Organization adopted ASU 2016-14 for the
year ended December 31, 2018 and has applied the amendments retrospectively to the 2017
consolidated financial statements and related footnotes. There have been no reclassifications in the
accompanying financial statements as a result of this adoption.
Under ASC 958, as amended, the Organization is required to report information regarding its
financial position and activities according to two classes of net assets: those without donor
restrictions and those with donor restrictions. Net assets without donor restrictions are those net
assets that are not subject to donor-imposed restrictions. Net assets with donor restrictions are
subject to donor stipulations that limit the use of their contributions which either expire by the
passage of time or when used for specified purposes.
Other major changes resulting from ASU 2016-14 include (a) requiring that all nonprofits present
an analysis of expenses by function and nature in either the statement of activities, a separate
statement, or in the notes and disclose a summary of the allocation methods used to allocate costs,
(b) requiring the disclosure of quantitative and qualitative information regarding liquidity and
availability of resources, (c) presenting investment return net of external and direct internal
investment expenses, and (d) modifying other financial statement reporting requirements and
disclosures intended to increase the usefulness of nonprofit financial statements.
11
CRISIS TEXT LINE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Noncontrolling Interests
GAAP requires that noncontrolling interests in subsidiaries be reported in the net asset section of
a company’s consolidated statements of financial position.
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect certain reported amounts and
disclosures. Accordingly, actual results could differ from those estimates.
Cash and Cash Equivalents
Cash balances in banks are insured by the Federal Deposit Insurance Corporation subject to certain
limitations. For consolidated financial statement purposes, the Organization considers all highly
liquid investments with an initial maturity of three months or less to be cash equivalents.
Contributions Receivable
Contributions receivable are unconditional promises to give that are recognized as contributions
when the promise is received. Contributions receivable are recorded at net realizable value if
expected to be collected in one year and, if material, multiyear receivables are recorded at the
present value of their estimated future cash flow. If applicable, amortization of the discount is
included in contribution revenue. The allowance for uncollectible contributions receivable is
determined based on management’s evaluation of the collectability of individual promises. There
were no significant contributions that management deemed to be uncollectible as of December 31,
2018 and 2017.
Investments
Investments are carried at fair value. Fair value is the price that would be received to sell an asset
in an orderly transaction between market participants at the measurement date. Realized and
unrealized gains and losses are reflected in the consolidated statement of activities. To satisfy its
long-term rate-of-return objectives, the Organization relies on a total return strategy in which
investment returns are achieved through both capital appreciation (realized and unrealized) and
current yield (interest and dividends). The Organization purchases fixed income securities and
Treasury bonds to achieve its long-term and short-term return objectives, while maintaining
portfolio stability and preserving capital. Donated securities are recorded at their fair market value
on the date received.
12
CRISIS TEXT LINE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Fair Value
GAAP establishes a framework for measuring fair value. That framework provides 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). Under GAAP, the three levels of the fair value hierarchy are described as follows:
Level 1: Inputs to the valuation methodology are unadjusted quoted prices for identical assets
or liabilities in active markets that the Organization has the ability to access.
Level 2: Inputs to the valuation methodology include:
Quoted prices for similar assets or liabilities in active markets;
Quoted prices for identical or similar assets or liabilities in inactive markets;
Inputs other than quoted prices that are observable for the asset or liability; and
Inputs that are derived principally from or corroborated by observable market data by
correlation or other means.
If the asset or liability has a specified (contractual) term, the Level 2 input must be observable
for substantially the full term of the asset or liability.
Level 3: Unobservable inputs that reflect management’s own assumptions.
Property and Equipment
Office furniture, equipment and software are carried at cost if purchased, or if acquired in-kind, at
their fair market value at the date of the gift. Any expenditure over $1,000 in these categories is
capitalized. Fixed assets are depreciated using the straight-line basis over the estimated useful lives
of the assets.
13
CRISIS TEXT LINE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Program Service Fees
The Organization provides 24/7 crisis counselor services to various communities through
partnership agreements. In addition, it provides a premium data dashboard that updates daily and
offers the ability to filter, aggregate, and analyze statistical data. Program service fees paid in
advance totaled $198,789 and $145,833 at December 31, 2018 and 2017, respectively. Program
service fees are recognized at the time such services are performed.
Contribution Revenue
Contributions, including unconditional promises to give, are recognized when received. All
contributions are reported as increases in unrestricted net assets unless use of the contributed assets
is specifically restricted by the donor.
In-Kind Contributions
Contributions of donated noncash assets are recorded at fair value in the period received.
Contributions of donated services that create or enhance nonfinancial assets, or that require
specialized skills, provided by individuals possessing those skills and typically required to be
purchased if not provided by donation, are recorded at fair value in the period received.
Functional Allocation of Expenses
The consolidated financial statements report certain categories of expenses that are attributed to
more than one supporting function. As such, some expenses require allocation that properly reflects
shared costs at a reasonable basis that is consistently applied. The Organization, uses a direct
allocation of personnel costs that include eligible employee benefits, taxes and salaries, etc. based
upon the time spent on functional areas. Specific expenses related to technology, professional fees,
and travel are directly charged to the function they are related. Administrative costs including
general liability and business operations are directly charged as management overhead.
14
CRISIS TEXT LINE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Accounting for Income Taxes
CTL, Inc. is exempt from income taxes under Section 501(c)(3) of the Internal Revenue Code.
Accordingly, no provision for federal, state or local income taxes has been recorded.
Loris.ai accounts for deferred taxes using the asset and liability method as specified by ASC 740,
“Income Taxes”. Deferred income tax assets and liabilities are determined based on differences
between the financial statement reporting and the tax basis of assets and liabilities, operating losses
and tax credit carryforwards. Deferred income taxes are measured using the enacted tax rates and
laws that are anticipated to be in effect when the differences are expected to reverse. The
measurement of deferred income tax assets is reduced, if necessary, by a valuation allowance for
any tax benefits which are not expected to be realized. The effect on deferred income tax assets
and liabilities of a change in tax rates is recognized in the period that such tax rate changes are
enacted.
Reclassifications
Certain amounts relating to the prior year have been reclassified to conform to the current year’s
presentation. The reclassifications had no effect on net assets.
Subsequent Events
These consolidated financial statements were approved by management and available for issuance
on July 31, 2019. Management has evaluated subsequent events through this date.
3 - CONTRIBUTIONS RECEIVABLE
Contributions receivable consisted of the following:
December 31,
2018 2017
Amount due in less than one year $ 5,444,020 $ 5,510,533
Amount due from one to five years 750,000 1,141,667
$ 6,194,020 $ 6,652,200
15
CRISIS TEXT LINE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4 - INVESTMENTS
Investments at fair value consisted of fixed income securities at December 31, 2018 and 2017, all
of which are classified as Level 1, in accordance with the fair value hierarchy discussed in Note 2.
Net investment income (including interest income from the certificate of deposit) consisted of the
following:
Year Ended December 31,
2018 2017
Interest and dividends $ 273,065 $ 202,028
Net unrealized and realized gains (losses) 4,378 (95,812)
Net investment income $ 277,443 $ 106,216
5 - PROPERTY AND EQUIPMENT
Property and equipment consisted of the following:
December 31,
2018 2017
Equipment $ 71,611 $ 38,580
Furniture and fixtures 19,230 5,823
90,841 44,403
Less - Accumulated depreciation 64,357 39,264
$ 26,484 $ 5,139
Depreciation expense amounted to $25,093 and $13,553 for the years ended December 31, 2018
and 2017, respectively.
6 - CONCENTRATIONS
For the year ended December 31, 2018, three donors accounted for 68% of total support and
revenues.
16
CRISIS TEXT LINE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7 - IN-KIND CONTRIBUTIONS
Contributions in-kind that are included in the consolidated financial statements consisted of the
following:
Year Ended December 31,
2018 2017
Type of Service Received
Value of Services
Advertising $ 225,691 $ 517,144
Technology 400,387 211,474
Legal:
Gibson, Dunn and Crutcher LLP* 318,872 541,909
Steptoe and Johnson LLP 53,441 53,440
Kestenberg Siegal Lipkus LLP 34,875 -
$ 1,033,266 $ 1,323,967
*A Board member of CTL, Inc. is a partner with this law firm.
8 - COMMITMENTS AND CONTINGENCIES
Leases
The Organization leases 11,000 sq. ft. of office space under a noncancelable operating lease set to
expire on September 30 2026. As of December 31, 2018, the minimum aggregate annual rental
commitments are approximately as follows:
Year Ending
December 31,
2019 $ 660,357
2020 678,517
2021 697,176
2022 716,348
2023 739,063
Thereafter 2,970,692
17
CRISIS TEXT LINE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
8 - COMMITMENTS AND CONTINGENCIES (Continued)
Leases (Continued)
In lieu of a security deposit for the office lease, the Organization was required to provide the
landlord with a standby letter of credit issued. As part of the amended lease agreement for the 7
th
floor office space, the landlord required an increase in the amount of $137,500 for a total of
$366,667. The letter of credit is currently in the process of renewal with the Bank of America.
Total rent expense was $525,168 and $331,694 for the years ended December 31, 2018 and 2017,
respectively.
Litigation
The Organization was a plaintiff (and defendant by counterclaim) in a lawsuit in Canada, involving
a trademark dispute. On June 12, 2019, the parties signed a confidential conditional settlement
agreement resolving the matter. The settlement is immaterial in relation to the consolidated
financial statements taken as a whole.
9 - RETIREMENT PLAN
The Organization established a defined contribution pension plan covering substantially all of its
employees. Pension expenses under this plan were $174,690 and $132,263 for the years ended
December 31, 2018 and 2017, respectively.
10 - NET ASSETS WITH DONOR RESTRICTIONS
The following summarizes the changes in temporarily restricted net assets:
Released Balance,
Balance, from December 31,
Program January 1, 2018, Contributions Restrictions 2018
Data $ - $ 699,435 $ - $ 699,435
International expansion 100,000 - (50,000) 50,000
Time restriction 6,750,000 5,000,000 (5,858,333) 5,891,667
Other 653,862 75,000 (553,862) 175,000
Total $ 7,503,862 $ 5,774,435 $ (6,462,195) $ 6,816,102
18
CRISIS TEXT LINE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
10 - NET ASSETS WITH DONOR RESTRICTIONS (Continued)
Balance, Released Balance,
January 1, 2017, from December 31,
Program as Restated Contributions Restrictions 2017
Data $ 536,480 $ - $ (536,480) $ -
International expansion - 100,000 - 100,000
Time restriction 13,783,483 1,600,000 (8,633,483) 6,750,000
Other 653,862 - - 653,862
Total $ 14,973,825 $ 1,700,000 $ (9,169,963) $ 7,503,862
11 - LIQUIDITY AND AVAILABILITY OF FINANCIAL ASSETS
The Organization’s financial assets due within one year of the date of these financial statements
that are available for general expenditures, including grant funded activities, are as follows:
Cash and cash equivalents $ 11,399,386
Certificates of deposit 366,903
Program revenue receivable 60,537
Contributions receivable 6,194,020
Investments, at fair value 19,217,411
Total financial assets as of December 31, 2018 $ 37,238,257
Less - amounts due in one to five years 750,000
Total financial assets available within one year $ 36,488,257
The Organization’s goal is to maintain liquidity to meet operational and strategic needs. Ongoing
liquidity needs of the Organization are monitored to ensure that minimum cash flow requirements
are met. A liquidity account is also established within the investment portfolio that is not less than
three months of working capital. This amount was approximately $3.6 million for the year ended
December 31, 2018 to assure same-day availability of money necessary to fund daily operations on
a planned or as-needed basis.
19
CRISIS TEXT LINE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
12 - CORRECTION OF ERRORS
In reviewing its net assets at January 1, 2017, the Organization realized that incorrect accounting
treatment was applied to the recognition of contribution revenue. Management had previously
determined that a number of contributions were conditional due to reporting requirements
associated with them and, accordingly, did not recognize the full amount of contribution revenue.
Upon further review, management determined that the possibility that such conditions will not be
met are remote, and the full amount of contribution revenue should have been recognized.
Accordingly, the Organization’s net assets at January 1, 2017 have been restated and increased as
follows:
Temporarily
Unrestricted Restricted Total
Net assets at January 1, 2017, as
previously reported
$ 10,028,855
$ 2,072,912
$ 12,101,767
Adjustments:
To recognize contributions previously
deemed conditional
-
13,925,965
13,925,965
To adjust deferred revenue for
unconditional contributions
595,956
397,862
993,818
To adjust classification of net assets 1,422,914 (1,422,914) -
Net assets, January 1, 2017, as restated $ 12,047,725 $ 14,973,825 $ 27,021,550
13 - LORIS.AI
Common and Preferred Stock
Upon inception in 2018, Loris.ai authorized and issued various shares. Total authorized Class A
voting shares are 4,700,000 with a par value of $0.00001 per share, of which 700,000 are issued to
the CEO of CTL, Inc. and outstanding at December 31, 2018. Total authorized Class B voting
shares are 5,300,000 with a par value of $0.00001 per share, of which 5,300,000 are issued to CTL,
Inc. and outstanding at December 31, 2018. Total authorized Preferred shares are 2,500,000 with
a par value of $0.00001 per share, of which 2,500,000 are issued and outstanding at December 31,
2018. Total capital of $2,000,000 was raised by the Preferred shareholders during the year ended
December 31, 2018.
20
CRISIS TEXT LINE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
13 - LORIS.AI (Continued)
Deferred Tax Asset
Deferred tax assets have been provided for deductible temporary differences related to net
operating losses. Management has determined that these deferred tax assets have no net realizable
value until realization is assured. Management believes this net realizable value at December 31,
2018 is deemed appropriate due to the uncertainty of future taxable income of Loris.ai.
Due to the United States tax legislation enacted in December 2017, the corporate tax rate was
reduced to 21% from 35%. This revised tax rate was used by management in calculating the net
deferred tax assets and the effect on the deferred tax balances for the federal and state taxes
applicable to Loris.ai.
At December 31, 2018, Loris.ai had a net operating loss carryforward of approximately
$1 million which may be utilized to offset any future taxable income through 2038.
Subsequent Events
In February 2019, Loris.ai’s Board of Directors approved the 2018 Incentive Compensation Plan
(the "2018 Plan") enabling Loris.ai to grant stock-based awards to employees, directors and
consultants. The 2018 Plan provides for the awards of incentive stock options, stock appreciation
rights, dividend equivalent rights, restricted stock, restricted stock units and other stock-based
awards. Awards generally vest equally over a period of four years from the grant date. Vesting is
accelerated under a change in control of Loris.ai or in the event of death or disability to the
recipient. In the event of termination, any unvested shares or options are forfeited. Loris.ai has
reserved and made available 1,500,000 shares of common stock for issuance under the 2018 Plan.
CONSOLIDATING SUPPLEMENTARY INFORMATION
Crisis Text Crisis Text Line Adjustments/
Line, Inc. Loris.ai, Inc. International, LLC Eliminations Consolidated
ASSETS
Cash and cash equivalents
$ 10,375,420 $ 1,023,966 $ - $ - $ 11,399,386
Certificates of deposit
366,903 - - - 366,903
Program revenue receivable 60,537
- - - 60,537
Contributions receivable
6,203,763 - - (9,743) 6,194,020
Prepaid expenses and other assets
91,533 10,846 - (53) 102,326
Investment, at fair value
19,217,411 - - - 19,217,411
Investment in Loris.ai, Inc.
53 - - (53) -
Inventory
28,619 - - - 28,619
Property and equipment, net
26,484 - - - 26,484
Security deposits
7,584 - - - 7,584
Total assets
36,378,307$ 1,034,812$ -0-$ (9,849)$ 37,403,270$
LIABILITIES AND NET ASSETS
Liabilities
Accounts payable and accrued expenses
$ 348,535 $ 13,624 $ - $ (9,796) $ 352,363
Deferred revenue
198,789 60,000 - - 258,789
Deferred rent
95,800 - - - 95,800
Total liabilities
643,124 73,624 - (9,796) 706,952
Net assets
Without donor restrictions
28,919,081 - - (25,043) 28,894,038
With donor restrictions
6,816,102 - - - 6,816,102
Noncontrolling interest
- 961,188 - 24,990 986,178
Total net assets
35,735,183 961,188 - (53) 36,696,318
Total liabilities and net assets
36,378,307$ 1,034,812$ -0-$ (9,849)$ 37,403,270$
CRISIS TEXT LINE, INC. AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF FINANCIAL POSITION
DECEMBER 31, 2018
See Independent Auditors' Report.
21
Crisis Text Crisis Text Line Adjustments/
Line, Inc. Loris.ai, Inc. International, LLC Eliminations Consolidated
Support and revenues
Contributions
$ 25,036,660 $ - $ - $ - $ 25,036,660
Contributions in-kind
1,033,266 - - - 1,033,266
Program service revenue 1,787,510
- - - 1,787,510
Investment income
277,443 - - - 277,443
Miscellaneous
40,069 - - (25,043) 15,026
28,174,948 - - (25,043) 28,149,905
Expenses
Program expenses
Crisis Counselor Community
2,211,251 - - - 2,211,251
Supervision
3,519,073 - - -
3,519,073
Engineering and Tech
3,086,213 - - -
3,086,213
Data
761,211 - - -
761,211
International Expansion
943,852 - - -
943,852
Total program expenses
10,521,600 - - - 10,521,600
Supporting services
Management and general
2,490,312 - - - 2,490,312
Fundraising
250,980 - - - 250,980
Total supporting services
2,741,292 - - - 2,741,292
Total expenses
13,262,892 - - - 13,262,892
Loris.ai
Operating costs
- (1,038,872) - 25,043 (1,013,829)
Change in net assets
14,912,056 (1,038,872) - - 13,873,184
Issuance of common and preferred stock
- 2,000,060 - (53)
2,000,007
Net assets, beginning of year
20,823,127 - - -
20,823,127
Net assets, end of year
35,735,183$ 961,188$ -0-$ (53)$ 36,696,318$
CRISIS TEXT LINE, INC. AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF ACTIVITIES
YEAR ENDED DECEMBER 31, 2018
See Independent Auditors' Report.
22
