EDWIN GOULD SERVICES FOR CHILDREN AND FAMILIES CONSOLIDATED FINANCIAL STATEMENTS AND AUDITOR S REPORT JUNE 30, 2016

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1 EDWIN GOULD SERVICES FOR CHILDREN AND FAMILIES CONSOLIDATED FINANCIAL STATEMENTS AND AUDITOR S REPORT

2 TABLE OF CONTENTS Independent Auditor s Report Exhibit A - Consolidated Balance Sheet B - Consolidated Statement of Activities C - Consolidated Statement of Cash Flows Notes to Consolidated Financial Statements Schedule 1 - Consolidating Schedule of Functional Expenses 2 - Consolidating Balance Sheet 3 - Consolidating Schedule of Activities

3 Independent Auditor s Report Board of Directors Edwin Gould Services for Children and Families Report on the Consolidated Financial Statements We have audited the accompanying consolidated financial statements of Edwin Gould Services for Children and Families, which comprise the consolidated balance sheet as of June 30, 2016, and the related consolidated statements of activities and cash flows for the year 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 audit. We conducted our audit 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 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. Auditors Auditors and Consultants and Consultants Serving Serving the Health the Health Care & Care Not for & Not Profit for Sectors Profit Sectors 655 Third 655 Avenue, Third Avenue, 12th Floor, 12th New Floor, York, New NY York, NY (212) (212) / Fax (212) / Fax (212) / /

4 2. 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. 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 financial position of Edwin Gould Services for Children and Families as of June 30, 2016, and the changes in their net assets and their cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America. Emphasis of Matter The accompanying financial statements have been prepared assuming that Edwin Gould Services for Children and Families will continue as a going concern. As discussed in Note 13 to the financial statements, Edwin Gould Services for Children and Families has suffered recurring losses and has a net assets deficiency. This condition raises substantial doubt about Edwin Gould Services for Children and Families ability to continue as a going concern. Management s plans in regard to this matter are also described in Note 13. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Our opinion is not modified with respect to this matter. Opinion on Supplementary Information Our audit was conducted for the purpose of forming an opinion on the consolidated financial statements as a whole. The information included in Schedules 1 through 3 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 information is fairly stated in all material respects in relation to the consolidated financial statements taken as a whole. December 1, 2016

5 EXHIBIT A CONSOLIDATED BALANCE SHEET ASSETS Current assets Cash and cash equivalents $ 719,539 Accounts receivable - net 5,710,652 Prepaid expenses and other current assets 132,796 Total current assets 6,562,987 Fixed assets Buildings and apartments 2,880,350 Leasehold improvements 1,058,152 Equipment 729,217 Furniture and fixtures 738,880 Total fixed assets 5,406,599 Accumulated depreciation and amortization (2,087,945) Fixed assets - net 3,318,654 Other Security deposits 307,415 Total assets $ 10,189,056

6 CONSOLIDATED BALANCE SHEET EXHIBIT A -2- LIABILITIES AND NET ASSETS Current liabilities Accounts payable and accrued expenses $ 1,960,009 Accrued compensation 820,009 Due to foster parents 379,114 Advances from government agencies 325,042 Current maturities of long-term debt 888,468 Line of credit 980,000 Due to New York City Administration for Children's Services (ACS) and other funding sources 1,117,545 Total current liabilities 6,470,187 Long-term liabilities Deferred rent 1,047,286 Long-term debt, less current maturities 1,813,735 Due to New York City Administration for Children's Services (ACS) 1,254,364 Total long-term liabilities 4,115,385 Total liabilities 10,585,572 Net assets (deficit) (Exhibit B) Unrestricted (401,516) Permanently restricted 5,000 Total net assets (deficit) (396,516) Total liabilities and net assets $ 10,189,056 See independent auditor's report. The accompanying notes are an integral part of these statements.

7 EXHIBIT B CONSOLIDATED STATEMENT OF ACTIVITIES YEAR ENDED Temporarily Permanently Unrestricted Restricted Restricted Total Revenue Government program services $ 29,961,959 $ 29,961,959 Public support 81,891 81,891 Special events revenue $ 20,836 Less direct costs of special events (850) 19,986 19,986 Interest and dividends 4,015 4,015 Miscellaneous 193, ,698 Net assets released from restrictions 70,000 $ (70,000) Total revenue 30,331,549 (70,000) 30,261,549 Expenses Program services Permanency services 10,079,107 10,079,107 ACS preventive services 6,356,203 6,356,203 Other preventive services 2,418,651 2,418,651 Medical and psychological services 1,619,379 1,619,379 Office for People With Developmental Disabilities (OPWDD) 6,737,816 6,737,816 Kingsland Services Fund, Inc. 1,194 1,194 Total program services 27,212,350 27,212,350

8 CONSOLIDATED STATEMENT OF ACTIVITIES EXHIBIT B -2- YEAR ENDED Temporarily Permanently Unrestricted Restricted Restricted Total Expenses (continued) Supporting services Management and general $ 3,125,214 $ 3,125,214 Fund raising 163, ,258 Total supporting services 3,288,472 3,288,472 Total expenses (including interest expense of $185,402) 30,500,822 30,500,822 Change in net assets (Exhibit C) (169,273) $ (70,000) (239,273) Net assets (deficit) - beginning of year (232,243) 70,000 $ 5,000 (157,243) Net assets (deficit) - end of year (Exhibit A) $ (401,516) $ - $ 5,000 $ (396,516) See independent auditor's report. The accompanying notes are an integral part of these statements.

9 EXHIBIT C CONSOLIDATED STATEMENT OF CASH FLOWS YEAR ENDED Cash flows from operating activities Change in net assets (Exhibit B) $ (239,273) Adjustments to reconcile change in net assets to net cash provided by operating activities Depreciation and amortization 307,106 Decrease (increase) in assets Accounts receivable (102,123) Prepaid expenses and other current assets 13,463 Security deposits (2,270) Increase (decrease) in liabilities Accounts payable, accrued expenses and compensation and deferred rent 479,352 Due to foster parents (151,802) Advances from government agencies 263,001 Due to New York City Administration for Children's Services (ACS) and other funding sources (22,601) Net cash provided by operating activities 544,853 Cash flows from investing activities Fixed asset purchases (168,634) Cash flows from financing activities Principal payments on long-term debt (398,792) Repayment on line of credit (210,000) Net cash used by financing activities (608,792) Net change in cash and cash equivalents (232,573) Cash and cash equivalents - beginning of year 952,112 Cash and cash equivalents - end of year $ 719,539 Supplemental disclosure of cash flow information Cash paid during the year for interest $ 185,402 See independent auditor's report. The accompanying notes are an integral part of these statements.

10 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - NATURE OF ORGANIZATION Edwin Gould Services for Children and Families ( EGSCF ) is a voluntary, not-for-profit agency. EGSCF provides a wide range of programs, including preventive services, educational and vocational training, permanency and adoption services, residential group care, health and medical care, and psychiatric and psychological services in metropolitan New York. The community-based preventive services include counseling services for victims of domestic violence, services to families and children residing in city-owned and managed apartments, and services to incarcerated mothers and their families. EGSCF receives significant support through government contracts in addition to support received from other sources. The operations of EGSCF are dependent upon the continuation of government contracts. EGSCF has full voting interest in Kingsland Services Fund, Inc. ( Kingsland ), a not-for-profit corporation. Kingsland owns shares in two real estate co-op properties that were donated to Kingsland by the Edwin Gould Foundation. EGSCF presently occupies these properties and pays the maintenance fees directly to the property management companies. EGSCF and Kingsland are collectively referred to as the Companies. The Companies were incorporated as separate not-for-profit corporations under the laws of the State of New York and are exempt from income taxes under Section 501(c)(3) of the Internal Revenue Code. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of accounting - The financial statements are prepared on the accrual basis of accounting. Basis of consolidation - All material intercompany balances and transactions have been eliminated in the consolidation. Use of estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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. Cash and cash equivalents - Cash and cash equivalents include investments in highly liquid securities with maturities, when acquired, of three months or less.

11 2. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Accounts receivable and allowance for doubtful accounts - The Companies record receivables based on established contracts and rates for services provided. Receivables are charged to bad debt expense when they are determined to be uncollectible based upon a periodic review of the accounts by management. Factors used to determine whether an allowance should be recorded include the age of the receivable and a review of payments subsequent to year end. Interest is not charged on outstanding receivables. Accounts receivable are recorded net of allowances for doubtful accounts of $400,000 as of June 30, Fixed assets - The Companies capitalize all purchases of property and equipment equal to or in excess of $1,000 with estimated useful lives in excess of one year. Fixed assets are stated at cost. Depreciation is recorded on a straight-line basis over the estimated useful lives of the assets which range from 3 to 25 years. Amortization of leasehold improvements has been provided over the lesser of the estimated useful lives of the assets or the related lease term. Due to foster parents - Due to foster parents represents amounts due for services provided in the prior month. Advances from government agencies - Advances from government agencies represent government contract receipts in excess of amounts recognized. Due to New York City Administration for Children s Services (ACS) and other funding sources - Due to ACS represents accrual for audits and draft audits by ACS and other funding sources and roll forward estimates for periods not yet audited. Net assets - Unrestricted net assets are those whose use by the Companies has not been restricted by donors. Temporarily restricted net assets are those whose use by the Companies has been limited by donors to a specific time period or purpose. Permanently restricted net assets have been restricted by donors to be maintained by the Companies in perpetuity. Government program services - Government program services revenue is accounted for at established billing rates for care days/service units rendered. Such reimbursement rates are subject to change and retroactive adjustment on the basis of review by the government agencies responsible for such funding. Provisions for settlements are accrued on an estimated basis in the period in which the related services are rendered. Final determination of reimbursement rates is subject to audit and review. Any differences between estimated reimbursement and any subsequent revisions thereto are included in operations in the year of such review or settlement.

12 3. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Contributions - Unconditional contributions, including promises to give cash and other assets, are reported at fair value at the date the contribution is received. The gifts are reported as temporarily restricted or permanently restricted support if they are received with donor stipulations that limit the use of the donated assets. When a donor restriction expires, that is, when a stipulated time restriction ends or purpose restriction is accomplished, temporarily restricted net assets are reclassified as unrestricted net assets and reported in the consolidated statement of activities as net assets released from restrictions. Advertising - Advertising costs are expensed as incurred. Rent expense - Rent is recorded in accordance with generally accepted accounting principles. The impact of reflecting rent on the straight-line basis is recorded when material. Pass-through expenses - Pass-through expenses include payments to foster parents and others for services and goods they provided for foster children. Client-related services - Client-related services include payments to providers for services provided directly to clients. Functional expenses - The costs of providing the Companies programs and other activities have been summarized on a functional basis. Accordingly, certain costs have been allocated among the programs and supporting services benefited. Uncertainty in income taxes - The Companies have determined that there are no material uncertain tax positions that require recognition or disclosure in the consolidated financial statements. Periods ending June 30, 2013 and subsequent remain subject to examination by applicable taxing authorities. Subsequent events - Subsequent events have been evaluated through December 1, 2016, which is the date the consolidated financial statements were available to be issued.

13 4. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 3 - ACCOUNTS RECEIVABLE - GOVERNMENT PROGRAM SERVICES Accounts receivable from government agencies are as follows: New York City Administration for Children s Services $ 3,717,550 New York City Human Resources Administration 304,598 Office of the Criminal Justice Coordinator 157,459 New York State Office for People With Developmental Disabilities 1,299,681 Medicaid 290,735 Other 340,629 6,110,652 Less allowance for doubtful accounts (400,000) $ 5,710,652 NOTE 4 - LINE OF CREDIT EGSCF had a line of credit that expired on January 31, The line of credit was not renewed after its expiration. The executed line of credit is for $1,500,000. The agreement requires interest to be charged at a rate equal the bank s prime rate plus 2% (3.75% at June 30, 2016). The line of credit is secured by all the assets of EGSCF. The outstanding balance is $980,000 as of June 30, EGSCF is subject to certain covenants which, among other things, maintain a minimum debt service ratio and minimum net worth. In addition, there are reporting requirements as well. EGSCF was not in compliance as of June 30, 2016 and is in the process of obtaining a forbearance from the financial institution. NOTE 5 - TEMPORARILY RESTRICTED NET ASSETS Temporarily restricted net assets were released from donor restrictions by incurring expenses satisfying the restricted purpose specified by donor as follows: Steps to End Family Violence $ 70,000

14 5. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 6 - PERMANENTLY RESTRICTED NET ASSETS Permanently restricted net assets as of June 30, 2016 consist of the following: Endowment funds - general operations $ 5,000 NOTE 7 - GOVERNMENT PROGRAM SERVICES Government program services revenue, including pass-through from the federal government, consists of the following for the year ended June 30, 2016: United States Department of Health and Human Services $ 238,265 New York City Administration for Children s Services 18,173,124 New York City Human Resources Administration 1,301,008 Office of the Criminal Justice Coordinator 536,725 New York State Office for People With Developmental Disabilities 7,612,516 Medicaid 1,654,463 Office of Victim Services 143,598 Other 302,260 $ 29,961,959 NOTE 8 - PENSION PLAN EGSCF has a profit-sharing plan covering substantially all of its employees meeting certain eligibility requirements. Contributions to the plan are discretionary. There was no expense for the year ended June 30, 2016.

15 6. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 9 - COMMITMENTS AND CONTINGENCIES EGSCF is committed under various noncancelable operating leases for office space and group homes. Total rent expense for the year ended June 30, 2016 amounted to $2,136,102. The leases expire at various dates through August 31, 2025 and provide for minimum annual rentals as follows: Year Ending June $ 1,902, ,585, ,691, ,751, ,782,582 Thereafter 7,216,405 $ 15,930,680 The leases provide that escalations be paid for increases in real estate taxes and operating expenses. Laws and regulations governing Medicaid and other government programs are complex and subject to interpretation. Noncompliance with such laws and regulations could result in fines, penalties and exclusion from the Medicaid and other government agency programs. The Companies are responsible to report to and are regulated by various governmental third parties, among which are the Centers for Medicare and Medicaid Services (CMS), the New York Office for People With Developmental Disabilities (OPWDD), New York City Administration for Children s Services (ACS) and New York City Human Resources Administration (HRA). These agencies, as well as the New York State Office of the Attorney General s Medicaid Fraud Control Unit (MFCU), the Internal Revenue Service, the New York State Office of the Attorney General s Charities Bureau, the New York State Department of Health s Independent Office of Medicaid Inspector General (OMIG), and other agencies have the right to audit fiscal as well as programmatic compliance requirements.

16 7. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 9 - COMMITMENTS AND CONTINGENCIES (continued) The Companies have entered into a payment plan with ACS for $1,404,364 of recoupments. The minimum payments due are as follows: 2017 $ 100, , , , ,000 Thereafter 854,364 $ 1,354,364 The Companies are involved in various claims and legal actions arising in the ordinary course of business. Management is of the opinion that the ultimate outcome of these matters is not expected to have a material adverse impact on the financial position of the Companies or the results of their operations. EGSCF is currently under litigation with 103 East 125 th Street Realty Corp. against the Company for breach of a lease agreement dated October 10, Damages claimed are $4,150,079. And EGSCF had asserted a counterclaim in the amount of $6,000,000. The result of the litigation is undetermined as of June 30, Future payment for this lease is not included in the rental future payout schedule due to the pending litigation. NOTE 10 - FUNCTIONAL EXPENSES Expenses are functionalized as follows: Program service expenses $ 27,212,350 Management and general 3,125,214 Fund raising 163,258 Direct costs of special events 850 Total expenses $ 30,501,672 NOTE 11 - MORTGAGES PAYABLE EGSCF entered into mortgage loan agreement in the amount of $1,033,806 maturing November 1, Principal payments of $5,743 are due monthly plus interest calculated at 5.20% per annum. The balance on this loan at June 30, 2016 was $717,922.

17 8. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 11 - MORTGAGES PAYABLE (continued) The loan is secured by mortgages on the land, building and fixtures of the Bronx property. The loan terms include certain financial reporting requirements, which were not met as of the date the financial statements were available to be issued. Scheduled future principal payments are as follows: Year Ending June $ 68, , , , ,920 Thereafter 373,322 $ 717,922 In July 2013, EGSCF entered into a 15-year mortgage for the purchase of a Queens property for a new IRA Program. The loan was in the amount of $754,441 and matures July Principal payments of $4,191 are due monthly, plus interest calculated at 4.10% per annum. The balance on this loan at June 30, 2016 was $607,745. The loan is secured by mortgage on the land, building and fixtures of the Queens property. The mortgage is subject to covenants which require EGSCF to maintain a minimum debt service coverage ratio. EGSCF was not in compliance as of June 30, 2016, and this loan was reported as a current liability as of June 30, Scheduled future principal payments based on the loan agreement are as follows: 2017 $ 50, , , , ,296 Thereafter 356,265 $ 607,745

18 9. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 11 - MORTGAGES PAYABLE (continued) In November 2014, EGSCF entered into a 15-year mortgage for the purchase of a Manhattan property for a new IRA Program. The loan was in the amount of $1,181,621 and matures July Principal payments of $6,565 are due monthly, plus interest calculated at 5.00% per annum. The balance on this loan at June 30, 2016 was $1,056,895. The loan is secured by mortgage on the land, building and fixtures of the Manhattan property. The loan terms include certain financial reporting requirements, which were not met as of the date the financial statements were available to be issued. Scheduled future principal payments are as follows: 2017 $ 78, , , , ,775 Thereafter 663,020 $ 1,056,895 NOTE 12 - LOANS PAYABLE In August 2011, June 2013 and April 2015, EGSCF entered into various loans for equipment purchases, renovations and capital expenditures on properties. The loans are secured by all the assets of EGSCF, and payable over 5 years with monthly payments of principal plus interest calculated between 3.75% and 4.75%. The loans mature between August 1, 2016 and June 14, The balance due at June 30, 2016 is $319, $ 133, , , ,371 $ 319,641

19 10. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 13 - FINANCIAL CONDITION AND MANAGEMENT S PLAN (UNAUDITED) During the fiscal period , Edwin Gould has recorded recurring losses on its financial report. As of June 30, 2016, the financial statements reflect a net asset deficit. Edwin Gould management team has redoubled its effort to ensure the losses are at minimal and eventually a surplus by implementing an expanded deficit reduction plan and expanding fund raising department. Deficit expense reduction has resulted in the closing of Day Hab/Mount Vernon in November 2015 and reduction in some administrative overhead costs. Management has also embarked on subleasing unused space (8,000 square feet) which was projected to yield over $200,000 in annual revenue. In 2017/18, Edwin Gould will rigorously pursue foundation and other private dollars to supplement program revenue while 3 additional staff will be added to the fund development department. Management has also taken other initiatives to grow government revenue by diversifying its program service portfolio. Funding for Domestic Violence Shelter, DYCD Transitional Housing and Family Enrichment Center programs are currently being pursued in fiscal year 2017.

20 SCHEDULE 1 CONSOLIDATING SCHEDULE OF FUNCTIONAL EXPENSES YEAR ENDED Program Services Supporting Services ACS Other Medical and Kingsland Management Permanency Preventive Preventive Psychological Services and Fund Services Services Services Services OPWDD Fund, Inc. Total General Raising Total Salaries and wages $ 2,814,550 $ 3,937,776 $ 1,579,250 $ 594,850 $ 3,740,148 $ 12,666,574 $ 1,755,141 $ 110,602 $ 14,532,317 Fringe benefits 497, , ,808 92, ,581 2,270, ,266 4,234 2,534,712 Medical services 378,383 1, , ,223 Purchase of services 124, , ,278 17, , , ,073 2,080 1,177,512 Legal and auditing 231,112 33,557 13,757 5,585 93, , , ,064 Consumable supplies 47,929 47,316 25, , , ,064 43,805 2, ,321 Rent 334, , , , ,907 1,886, ,809 15,913 2,136,102 Insurance 39, ,572 52,856 14, , ,236 39,943 2, ,293 Repairs and maintenance 12,980 22,973 5,293 1, , , ,677 Equipment rental 126,007 58,534 25,396 14,219 76, ,304 46, ,061 Telephone 112,898 94,140 20, ,360 82, ,181 11, ,869 Travel 52,370 46,490 26,262 1,284 24, ,418 7, ,726 Dues, licenses and subscriptions 17,468 18,289 15,513 30, ,907 $ ,041 21,803 19, ,613 Utilities 60,880 71,019 9,873 9,957 67, ,532 1, ,476 Staff training 2,490 6,805 10, ,142 34,812 6, ,180 Pass-through expenses 5,098,273 5,098,273 5,098,273 Client related services 402, ,550 77, , , ,149 Advertising 1,409 1,477 2, ,350 8,185 15,246 23,431 Printing and postage 3,492 2, ,342 8, ,741 Interest 125, ,536 58, ,402 Other 20,060 2,680 2, ,540 1,094 93, ,597 1, ,574 Total expenses before depreciation and amortization 9,999,564 6,356,203 2,418,651 1,612,271 6,605,525 1,194 26,993,408 3,037, ,258 30,193,716 Depreciation and amortization 79,543 7, , ,942 88, ,106 Total functional expenses $ 10,079,107 $ 6,356,203 $ 2,418,651 $ 1,619,379 $ 6,737,816 $ 1,194 $ 27,212,350 $ 3,125,214 $ 163,258 $ 30,500,822 See independent auditor's report.

21 SCHEDULE 2 CONSOLIDATING BALANCE SHEET ASSETS Edwin Gould Services for Kingsland Total Children and Services Before Total Families Fund, Inc. Eliminations Eliminations Consolidated Current assets Cash and cash equivalents $ 683,082 $ 36,457 $ 719,539 $ 719,539 Accounts receivable - net 5,710,652 5,710,652 5,710,652 Prepaid expenses and other current assets 125,786 7, , ,796 Due from Edwin Gould Services for Children and Families 624, ,328 $ (624,328) Total current assets 6,519, ,795 7,187,315 (624,328) 6,562,987 Fixed assets Buildings and apartments 2,880,350 2,880,350 2,880,350 Leasehold improvements 1,058,152 1,058,152 1,058,152 Equipment 729, , ,217 Furniture and fixtures 738, , ,880 Total fixed assets 5,406,599 5,406,599 5,406,599 Accumulated depreciation and amortization (2,087,945) (2,087,945) (2,087,945) Fixed assets - net 3,318,654 3,318,654 3,318,654 Other Security deposits 307, , ,415 Total assets $ 10,145,589 $ 667,795 $ 10,813,384 $ (624,328) $ 10,189,056

22 CONSOLIDATING BALANCE SHEET SCHEDULE 2-2- LIABILITIES AND NET ASSETS Edwin Gould Services for Kingsland Total Children and Services Before Total Families Fund, Inc. Eliminations Eliminations Consolidated Current liabilities Accounts payable and accrued expenses $ 1,960,009 $ 1,960,009 $ 1,960,009 Accrued compensation 820, , ,009 Due to foster parents 379, , ,114 Advances from government agencies 325, , ,042 Current maturities of long-term debt 980, , ,000 Line of credit 888, , ,468 Due to New York City Administration for Children's Services (ACS) and other funding sources 1,117,545 1,117,545 1,117,545 Due to Kingsland Services Fund, Inc. 624, ,328 $ (624,328) Total current liabilities 7,094,515 7,094,515 (624,328) 6,470,187 Long-term liabilities Deferred rent 1,047,286 1,047,286 1,047,286 Long-term debt, less current maturities 1,813,735 1,813,735 1,813,735 Due to New York City Administration for Children's Services (ACS) 1,254,364 1,254,364 1,254,364 Total long-term liabilities 4,115,385 4,115,385 4,115,385 Total liabilities 11,209,900 11,209,900 (624,328) 10,585,572 Net assets (deficit) Unrestricted (1,069,311) $ 667,795 (401,516) (401,516) Permanently restricted 5,000 5,000 5,000 Total net assets (deficit) (1,064,311) 667,795 (396,516) (396,516) Total liabilities and net assets $ 10,145,589 $ 667,795 $ 10,813,384 $ (624,328) $ 10,189,056 See independent auditor's report.

23 SCHEDULE 3 CONSOLIDATING SCHEDULE OF ACTIVITIES YEAR ENDED Edwin Gould Services for Kingsland Total Children and Services Before Total Families Fund, Inc. Eliminations Eliminations Consolidated Revenue Government program services $ 29,961,959 $ 29,961,959 $ 29,961,959 Public support 81,891 81,891 81,891 Special events revenue $ 20,836 Less direct costs of special events (850) 19,986 19,986 19,986 Interest and dividends 2,444 $ 1,571 4,015 4,015 Miscellaneous 193, , ,698 Total revenue 30,259,978 1,571 30,261,549 30,261,549 Expenses Program services Permanency services 10,079,107 10,079,107 10,079,107 ACS preventive services 6,356,203 6,356,203 6,356,203 Other preventive services 2,418,651 2,418,651 2,418,651 Medical and psychological services 1,619,379 1,619,379 1,619,379 Office for People With Developmental Disabilities (OPWDD) 6,737,816 6,737,816 6,737,816 Kingsland Services Fund, Inc. 1,194 1,194 1,194 Total program services 27,211,156 1,194 27,212,350 27,212,350 Supporting services Management and general 3,125,214 3,125,214 3,125,214 Fund raising 163, , ,258 Total supporting services 3,288,472 3,288,472 3,288,472 Total expenses 30,499,628 1,194 30,500,822 30,500,822 Change in net assets (239,650) 377 (239,273) (239,273) Net assets (deficit) - beginning of year (824,661) 667,418 (157,243) (157,243) Net assets (deficit) - end of year $ (1,064,311) $ 667,795 $ (396,516) $ (396,516) See independent auditor's report.