STARRY, Inc. (STARRY) is a nonprofit organization chartered in May 2001. STARRY’s primary mission is to support children, youth, and parents in crisis through services that protect, educate, and promote strong families. Program activities at STARRY include counseling services and foster care. During 2023, operations for Northstar Counseling, a subsidiary for-profit organization, began to provide counseling services for individuals that do not meet federal program eligibility requirements while simultaneously supporting STARRY in their mission to provide sustainable services to children and families at no cost. Northstar Counseling provides fee for service Telehealth Counseling across the state of Texas. The fiscal 2025 financial activity for Northstar Counseling was not material to the financial statements and therefore, has not been consolidated.
BASIS OF ACCOUNTING STARRY uses the accrual basis of accounting, which recognizes revenue when earned, regardless of when cash is received, and expenses when incurred, regardless of when cash is paid. ESTIMATES The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. FINANCIAL STATEMENT PRESENTATION The accompanying financial statements are prepared on the accrual basis of accounting in accordance with U.S. generally accepted accounting principles. Net assets, revenues, expenses, gains, and losses are classified based on the existence or absence of donor imposed restrictions. Accordingly, net assets of STARRY and changes therein are classified and reported as follows: Net Assets Without Donor Restrictions: Net assets available for use in general operations and not subject to donor (or certain grantor) restrictions. Net Assets With Donor Restrictions: Net assets subject to donor (or certain grantor) imposed restrictions. Some donor imposed restrictions are temporary in nature, such as those that will be met by the passage of time or other events specified by the donor. Other donor imposed restrictions are perpetual in nature, where the donor stipulates that resources be maintained in perpetuity. Donor imposed restrictions are released when a restriction expires, that is when the stipulated time has elapsed, when the stipulated purpose for which the resource was restricted has been fulfilled, or both. NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES SUBSEQUENT EVENTS STARRY has evaluated subsequent events for disclosure through the date of the Independent Auditor’s Report, the date the financial statements were available to be issued. INCOME TAXES STARRY is exempt from federal income taxes under Section 501(c)(3) of the Internal Revenue Code, except to the extent it has any unrelated business income. Accordingly, no provision for federal income taxes has been accrued. CONTRIBUTIONS Unconditional grants and contributions received are recorded at fair value on the date of the award as with donor restrictions or without donor restrictions depending on the existence and/or nature of any donor imposed restrictions. Conditional promises to give are not recognized until the conditions upon which they depend are substantially met. REVENUE FROM CONTRACTS WITH CUSTOMERS Revenue from contracts with customers consists of federal and state fee for service contracts. Revenue from fee for service contracts is derived from contracts with various host sites to provide counseling sessions and family assistance. Revenue from these contracts is recognized at a point in time when the services are completed. Services are invoiced the month after completion and payment is typically received within 30 days. In general, revenue recognized does not have a significant financing component because payments terms are relatively short. COST REIMBURSEMENT AWARDS A significant portion of STARRY’s revenue is derived from cost-reimbursable federal and state awards, which are conditioned upon certain performance requirements and/or the incurrence of allowable qualifying expenses. Amounts received are recognized as revenue when STARRY has incurred expenditures in compliance with specific grant provisions. Amounts received prior to incurring qualifying expenditures are reported as unearned revenue in the statement of financial position. STARRY has contracts for cost reimbursable grants of $1,391,250 for which qualifying expenditures have not been incurred. RECEIVABLES STARRY considers all recorded receivables to be fully collectible. Accordingly, no allowance for doubtful accounts is required. NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES LEASES STARRY determines if an arrangement is or contains a lease at inception. Leases are included in right of use (ROU) assets and operating lease obligations in the statement of financial position. ROU assets and lease obligations reflect the present value of the future minimum lease payments over the lease term. Operating lease expense is recognized on a straight-line basis over the lease term. STARRY does not report ROU assets and lease obligations for its short-term leases (leases with a term of 12 months or less). Instead, the lease payments of those leases are reported as lease expense on a straight-line basis over the lease term. Non-lease components, such as common area maintenance charges, are separated from lease components based on the terms of the related lease. Variable lease costs, such as insurance and property taxes, and non-lease components are expensed as incurred within the occupancy account. FUNCTIONAL ALLOCATION OF EXPENSES The financial statements report certain categories of expenses that are attributed to more than one program or supporting function. Therefore, expenses require allocation on a reasonable basis that is consistently applied. Expenses that are identifiable to a program are allocated to that specific program. The expense categories that are allocated are payroll and related, technology, equipment lease, and other, which are based on estimates of time and effort spent by personnel; occupancy, communications, and utilities, which are allocated based on usage of space; and professional fees, transportation and travel, insurance, mail, postage and promotional, office supplies, conferences and training, and repairs and maintenance, which are based on knowledge of the individual accounts and transactions.
STARRY participates in a number of federal and state financial assistance programs. These programs are subject to financial and compliance audits by the grantors and regulatory authorities. The purpose of these audits is to ensure compliance with conditions relating to the granting of funds and other reimbursement regulations. Management believes that any liability for reimbursement which could arise as the result of these audits would not be significant.
As a part of STARRY’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. The policy is that monthly revenues are to cover monthly expenses. Monthly revenues and expenditures are deposited in and deducted from STARRY’s operating account. Financial assets available for general expenditure within one year from the statement of financial position date, comprise the following: NOTE 4: LIQUIDITY AND AVAILABILITY Cash $2,220,384 Federal and state award receivables 382,424 Pledges and other receivables 93,054 2,695,862 Less: donor restricted for specific purpose restriction (45,796) $2,650,066
Funding from two government agencies accounted for 94% of total revenue and 80% of total receivables due at fiscal year end. Counseling services account for 68% of STARRY’s total revenue.
CONTRACT BALANCES Contract receivables consist of STARRY’s right to payment from customers for services that have been provided to the customers for counseling sessions. STARRY had contract receivables from counseling sessions of $0 at 31 August 2025 and $99,981 at 31 August 2024. DISAGGREGATION OF REVENUE FROM CONTRACTS WITH CUSTOMERS The following table disaggregates STARRY’s revenue based on performance obligations satisfied at a point in time during the fiscal year: Fee for service contracts-federal and state awards $5,484,538
STARRY evaluated current contracts to determine which met the criteria of a lease. The ROU assets represent STARRY’s right to use underlying assets for the lease term, and the lease obligations represent STARRY’s obligation to make lease payments arising from the leases. The ROU assets and lease obligations, all of which arise from operating leases, were calculated based on the present value of future lease payments over the lease terms. The weighted average discount rate applied to calculate the lease obligations was 4.15%. STARRY’s operating leases consists of leases for office space located within Central Texas and equipment leases that expire in fiscal years 2026 through 2029. The weighted average number of remaining months under the leases is 30. Future maturities of lease liabilities are presented below, for the years ending 31 August: NOTE 7: LEASES 2026 $173,079 2027 83,621 2028 78,674 2029 25,249 Less: present value discount (11,980) $348,643 As of 31 August 2025, ROU assets relating to the operating leases were as follows: Cost $922,927 Less: accumulated amortization (582,855) $340,072 For the fiscal year, components of operating lease cost were as follows: Short-term lease payments $171,840 Lease payments for ROU lease obligations - office space 258,379 430,219 Lease payments for ROU lease obligations - equipment lease 33,180 $463,399 Supplemental cash flow information related to leases: Cash paid for amounts included in the measurement of lease obligations: Operating cash flows from operating leases $259,817 ROU assets recognized in fiscal 2025: Operating leases $24,447
Net assets subject to purpose restrictions at year end: Family and youth success program $35,000 Postpartum healing cycles 5,400 Other 5,396 $45,796 Satisfaction of purpose restrictions during the year: Education on Healthy Child Development $114,081 Georgetown Family Resource Center 26,469 Carver center 12,804 Family and youth success program 7,500 Other 1,478 $162,332
STARRY participates in a defined contribution pension plan. The plan covers all employees who meet certain eligibility requirements. STARRY contributed approximately $205,000 to the plan during the fiscal year.
Subsequent to year end STARRY signed new lease agreements with commitments of approximately $571,000.