PRS, INC. (a nonprofit organization) FINANCIAL STATEMENTS. Year Ended June 30, 2018 (with Summarized Comparative Information for June 30, 2017)

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1 (a nonprofit organization) FINANCIAL STATEMENTS (with Summarized Comparative Information for June 30, 2017)

2 TABLE OF CONTENTS Page INDEPENDENT AUDITORS' REPORT 1-2 FINANCIAL STATEMENTS Statement of Financial Position 3 Statement of Activities 4 Statement of Functional Expenses 5 Statement of Cash Flows 6-7 Notes to Financial Statements 8-23

3 700 NORTH FAIRFAX STREET, SUITE 400, ALEXANDRIA, VIRGINIA TEL FAX A PROFESSIONAL CORPORATION INDEPENDENT AUDITORS' REPORT To the Board of Directors PRS, Inc. Oakton, Virginia We have audited the accompanying financial statements of PRS, Inc. (PRS), which comprise the statement of financial position as of June 30, 2018, and the related statements of activities, functional expenses, and cash flows for the year then ended, and the related notes to the financial statements. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these 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 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 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 financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the 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 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. 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 financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

4 Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of PRS as of June 30, 2018, and the changes in its net assets and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America. Report on Summarized Comparative Information We have previously audited PRS' 2017 financial statements, and we expressed an unmodified audit opinion on those audited financial statements in our report dated September 29, In our opinion, the summarized comparative information presented herein as of and for the year ended June 30, 2017, is consistent, in all material respects, with the audited financial statements from which it has been derived. Alexandria, Virginia September 28, 2018

5 STATEMENT OF FINANCIAL POSITION (with Summarized Comparative Information as of June 30, 2017) 2018 Without Donor With Donor 2017 Restriction Restriction Total Total CURRENT ASSETS Cash $ 50,063 $ - $ 50,063 $ 28,284 Investments 54,473-54,473 58,672 Accounts receivable, net of allowance 775, , ,012 Promises to give - 117, , ,124 Prepaid expenses 30,034-30,034 29,585 TOTAL CURRENT ASSETS 910, ,035 1,027, ,677 PROPERTY AND EQUIPMENT, net 1,498,359-1,498, ,402 OTHER ASSETS Investments 1,680, ,277 1,824,603 1,869,393 Long-term promises to give, net of discount - 99,010 99, ,510 Deferred compensation 26,538-26,538 - Security deposit 41,400-41,400 35,119 TOTAL OTHER ASSETS 1,748, ,287 1,991,551 2,103,022 TOTAL ASSETS $ 4,156,903 $ 360,322 $ 4,517,225 $ 3,578,101 CURRENT LIABILITIES Accounts payable $ 177,202 $ - $ 177,202 $ 81,074 Line of credit 125, , ,000 Accrued expenses 344, , ,723 Deferred revenue 42,515-42,515 18,589 Custodial accounts 5,806-5,806 4,946 Deferred rent ,985 Deferred compensation 27,250-27,250 - Deferred tenant allowance 18,554-18,554 65,378 TOTAL CURRENT LIABILITIES 740, , ,695 LONG-TERM LIABILITIES Deferred tenant allowance, net of current portion 179, ,349 87,170 Deferred rent, net of current portion 96,710-96,710 13,732 TOTAL LONG-TERM LIABILITIES 276, , ,902 TOTAL LIABILITIES 1,016,889-1,016, ,597 COMMITMENTS AND CONTINGENCIES ASSETS LIABILITIES AND NET ASSETS NET ASSETS 3,140, ,322 3,500,336 2,796,504 TOTAL LIABILITIES AND NET ASSETS $ 4,156,903 $ 360,322 $ 4,517,225 $ 3,578,101 See Notes to Financial Statements

6 STATEMENT OF ACTIVITIES Without Donor With Donor Restriction Restriction Total Total SUPPORT AND REVENUE Government contracts and grants $ 6,198,580 $ - $ 6,198,580 $ 5,725,541 Contributions and other grants 529,478 23, , ,004 Donated facilities and services 517, , ,518 Investment income 125, , ,624 Consumer fees 92,508-92,508 49,074 Miscellaneous 1,042,320-1,042,320 8,497 Net assets released from restrictions 125,791 (125,791) - - TOTAL SUPPORT AND REVENUE 8,631,864 (102,636) 8,529,228 7,057,258 EXPENSES Program 6,568,663-6,568,663 6,032,787 Management and general 976, , ,365 Fundraising 279, , ,970 TOTAL EXPENSES 7,825,396-7,825,396 7,165,122 CHANGE IN NET ASSETS 806,468 (102,636) 703,832 (107,864) NET ASSETS, beginning of year 2,333, ,958 2,796,504 2,904,368 NET ASSETS, end of year $ 3,140,014 $ 360,322 $ 3,500,336 $ 2,796,504 See Notes to Financial Statements

7 STATEMENT OF FUNCTIONAL EXPENSES Psychosocial Community Community Other Program Total Management Rehabilitation Housing Services CrisisLink Services Program and General Fundraising Total Total Salaries and wages $ 939,567 $ 221,626 $ 1,512,028 $ 472,358 $ 780,225 $ 3,925,804 $ 535,263 $ 141,460 $ 4,602,527 $ 4,125,408 Fringe benefits 96,006 19, ,077 39,465 93, ,022 64,109 8, , ,667 Payroll taxes 68,037 16, ,217 36,131 60, ,094 41,698 10, , ,018 TOTAL PERSONNEL EXPENSES 1,103, ,907 1,805, , ,127 4,649, , ,898 5,451,888 4,923,093 Occupancy 592,818 97,374 58,689 22, ,962 7, , ,556 Professional fees 58,001 9,010 63,721 35,883 31, , ,642 27, , ,401 Depreciation and amortization 45,844 40,886 22,810 6, ,165 27, , ,522 Rental and maintenance 58,184 2,610 17,481 5,688 4,989 88,952 13, ,806 99,162 Other 81,748 9,113 1, ,024 3,957 76, , ,089 Office supplies 28,553 4,209 10,563 12,599 6,396 62,320 66,959 7, , ,890 Travel 8,141 6,267 62, ,354 91,060 5, ,524 81,432 Communications 37,162-29,706 21,028 4,143 92,039 20, ,101 86,601 Insurance 11,762 5,659 8,620 2,376 5,229 33,646 9,523-43,169 37,974 Conference and training 10,315-8,049 1,055 1,434 20,853 7, ,280 31,241 Accounting ,316-32,316 46,489 Legal services ,721-8,619 7,527 Advertising , ,301 8,481 10,130 Donated services , , , ,485 Interest ,792-4,792 4,477 Loss on sale of asset , , ,834 - Bad debt expense 48-1, , ,749 19,053 OTHER EXPENSES 933, , , ,156 69,149 1,918, , ,923 2,373,508 2,242,029 TOTAL EXPENSES $ 2,037,009 $ 433,035 $ 2,091,233 $ 1,003,110 $ 1,004,276 $ 6,568,663 $ 976,912 $ 279,821 $ 7,825,396 $ 7,165,122 See Notes to Financial Statements

8 STATEMENT OF CASH FLOWS (with Comparative Information for the year ended June 30, 2017) CASH FLOWS FROM OPERATING ACTIVITIES Cash received from operations Support and revenue $ 8,360,497 $ 6,352,703 Investment income 61,092 51,744 Total cash received from operations 8,421,589 6,404,447 Cash used in operations Payments to employees and suppliers 7,328,431 6,460,693 Interest paid 4,792 4,477 Total cash disbursed by operations 7,333,223 6,465,170 NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES 1,088,366 (60,723) CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sale of investments 1,133,602 2,009,023 Purchase of investments (1,020,157) (1,962,972) Purchase of property (1,115,892) (39,863) Amounts received for member funds 1, Amounts paid out for member funds (747) (1,262) NET CASH (USED) PROVIDED BY INVESTING ACTIVITIES (1,001,587) 5,704 CASH FLOWS FROM FINANCING ACTIVITIES Borrowing from line of credit 3,985,000 3,272,000 Repayment of line of credit (4,050,000) (3,197,000) Payment of capital lease obligations - (5,679) NET CASH (USED) PROVIDED BY FINANCING ACTIVITIES (65,000) 69,321 NET INCREASE IN CASH 21,779 14,302 CASH, beginning of year 28,284 13,982 CASH, end of year $ 50,063 $ 28,284 NON-CASH INVESTING ACTIVITIES Unrealized gain in market value of investments $ (38,336) $ (17,389) Increase in investment value 38,336 17,389 $ - $ - See Notes to Financial Statements

9 STATEMENT OF CASH FLOWS (with Comparative Information for the year ended June 30, 2017) RECONCILIATION OF CHANGE IN NET ASSETS TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES CHANGE IN NET ASSETS $ 703,832 $ (107,864) ADJUSTMENTS TO RECONCILE CHANGE IN NET ASSETS TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES Depreciation and amortization 144, ,522 Non-cash occupancy costs 117,348 (76,362) Realized and unrealized gain on investments (64,456) (171,880) Loss on disposal of assets 105,834 - NET ADJUSTMENTS 302,827 (108,720) CHANGES IN ASSETS AND LIABILITIES AFFECTING OPERATIONS PROVIDING (USING) CASH ASSETS Accounts receivable, net of allowance (162,698) 90,048 Promises to give, net of discount 95, ,641 Prepaid expenses (449) 169,029 Deferred compensation (26,538) - Security deposits (6,281) - (100,377) 360,718 LIABILITIES Accounts payable 96,128 (26,449) Accrued expenses 34,780 (178,306) Deferred revenue 23,926 (102) Deferred compensation 27, ,084 (204,857) NET CHANGES IN ASSETS AND LIABILITIES 81, ,861 NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES $ 1,088,366 $ (60,723) See Notes to Financial Statements

10 1. ORGANIZATION, PURPOSE AND SIGNIFICANT ACCOUNTING POLICIES Organization and Purpose PRS, Inc. (PRS) is a Virginia nonprofit corporation established in 1963 to provide vocational and social rehabilitation programs for persons with serious mental illness in the DC Metropolitan area. A brief description of major programs include: The Psychosocial Rehabilitation program, also known as the Recovery Academy program, provides a curriculum-based day program that promotes movement out of PRS facility-based programming and into meaningful community alternatives such as work, volunteering and school. Co-occurring disorder services and assistance with transition to community-based activities are also offered. The Community Housing program provides non-time-limited housing and support to help clients live as independently as possible. Residents live in one of five supported housing residences operated by PRS. These supported housing residences provide 20 beds. The Community Services Program includes Employment Services and Mental Health Skills- Building Services (MHSS). Employment Services provides support and training for clients who want to be competitively employed in the community to help them choose, get and keep jobs. MHSS provides individually tailored, community-based intensive skill building and support services to meet each client s unique needs, abilities and goals; helps clients maintain their housing and maximize their stability. The CrisisLink program brings immediate help, hope and healing to empower individuals facing serious life challenges, suicidal thoughts, and emotional or situational problems through programs including: 24/7 Crisis & Suicide Prevention hotline, crisis textline, CareRing (outbound calling support program), and community training and community education. In addition to PRS' four key program areas, PRS staff work collaboratively, through contracts, with key community partners to provide other critical community services. Among these programs are Coordinated Specialty Care Services (CSC) and recovery-oriented treatment programs for youth and young adults with first episode psychosis. CSC offers skill teaching, case management, supported employment, supported education, family education and support, peer support and psychiatric services. Be Well, another collaborative program, integrates primary health care into behavioral health settings with the goal of improving physical health of adults living with serious mental illnesses

11 1. ORGANIZATION, PURPOSE AND SIGNIFICANT ACCOUNTING POLICIES (Continued) Significant Accounting Policies (Continued) Basis of Accounting PRS prepares its financial statements on the accrual basis of accounting. Revenues are recognized in the period in which they are earned; expenses are recognized in the period in which they are incurred. Summarized Comparative Information The financial statements include certain prior-year summarized comparative information in total 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 (U.S. GAAP). Accordingly, such information should be read in conjunction with PRS' financial statements for the year ended June 30, 2017, from which the summarized information was derived. Cash and Cash Equivalents For the purpose of reporting on the statement of cash flows, cash includes interest bearing and noninterest bearing demand deposit accounts. PRS does not consider the short-term investments contained in its investment portfolio to be cash equivalents. There are no cash equivalents as of June 30, 2018 and Promises to Give Unconditional promises to give are recognized as support in the period the promise is made. Promises to give are expected to be fully collectible, and as of June 30, 2018 and 2017, no allowance for doubtful promises to give has been established. Discounts on these amounts are computed using risk-adjusted interest rates applicable to the years in which the promises are received. Amortization of the discounts is included in contribution revenue. Donor-restricted support is reported as an increase in net assets with donor restriction. When a restriction expires (that is, when a stipulated time restriction ends or purpose restriction is accomplished), net assets with donor restriction are reclassified to net assets without donor restriction and reported in the statement of activities as net assets released from restrictions

12 1. ORGANIZATION, PURPOSE AND SIGNIFICANT ACCOUNTING POLICIES (Continued) Significant Accounting Policies (Continued) Accounts Receivable Accounts receivable consists principally of amounts due to PRS for government and private contracts and services performed. No interest is accrued on receivables. A provision for doubtful accounts has been established using the allowance method based on management's evaluation of the collectability of receivables. Accounts receivable are considered past due if payments are not received within 30 days of the invoice date. Management records an allowance based on the history of collectability and its efforts to collect outstanding balances. Management will write off receivables when they are deemed to be uncollectible after efforts to collect are exhausted. Management believes the allowance for doubtful accounts of $0 as of June 30, 2018 and 2017, is adequate. Property and Equipment Property and equipment are reflected in the financial statements at cost. PRS capitalizes all fixed assets with a purchase price of $1,000 or greater. Depreciation is computed using the straight line method over the estimated useful lives of the assets. Routine repairs and maintenance are expensed as incurred. Investments Investments are recorded at fair value. income in the statement of activities. Unrealized gains and losses are included in investment PRS invests in a professionally managed portfolio that contains money market funds, mutual funds and exchange traded products. Such investments are exposed to various risks such as market and credit risk. Due to the level of risk associated with such investments and the level of uncertainty related to changes in the value of such investments, it is at least reasonably possible that changes in risks in the near term would materially affect investment balances and the amounts reported in the financial statements. Money market funds held in PRS' investment portfolio are available for the PRS' short term cash needs which may arise from time to time. Custodial Accounts Custodial accounts are consumer funds held in a custodial capacity to be disbursed in accordance with consumer instructions

13 1. ORGANIZATION, PURPOSE AND SIGNIFICANT ACCOUNTING POLICIES (Continued) Significant Accounting Policies (Continued) Deferred Revenue Revenues billed or collected for which the services or function have not been fulfilled are reflected as deferred revenue. Classes of Assets In accordance with U.S. GAAP, net assets are classified into two categories: net assets without donor restriction and net assets with donor restriction. Net assets without donor restriction include operating net assets which are available for the general operations of PRS, as well as a Board designated Capital Expenditure and Emergency Fund with net assets set aside for capital expenditures or emergency use. Net assets with donor restriction include net assets which are subject to donor-imposed restrictions for support of a particular program activity or represent contributions received from donors to be held in perpetuity. PRS maintains assets with donor restriction that consist of amounts contributed to fund various programs and projects. PRS does not maintain any assets that are held in perpetuity as of June 30, 2018 and Adoption of New Accounting Standard PRS has adopted the financial statement presentation and disclosure standards contained in the Financial Accounting Standards Board Accounting Standards Update , Presentation of Financial Statements for Not-for-Profit Entities, modifying ASC 958. The change has been applied as of June 30, 2018 with no effect on beginning net assets. Revenue Recognition Contributions are recorded as without donor restriction or with donor restriction support. Categorization is based upon the existence and/or nature of donor restrictions. Support that is restricted by the donor is reported as an increase in net assets without donor restriction if the nature of the restrictions is met within the reporting period. All other donor-restricted support is reported as an increase in net assets with donor restriction and then reclassified to net assets without donor restriction when the restrictions expire. Revenue from cost-type grants and contracts is recognized on the basis of reimbursable costs incurred during the period. Revenue from services is recognized as the services are performed

14 1. ORGANIZATION, PURPOSE AND SIGNIFICANT ACCOUNTING POLICIES (Continued) Donated Services Donated materials and services represent the estimated fair value of materials and services provided. The contributions of services are recognized if the services received create non-financial assets or require specialized skills provided by individuals possessing those skills and would typically need to be purchased if not provided by donation. Income Taxes PRS is exempt from federal income taxes under Section 501(c)(3) of the Internal Revenue Code (IRC), and has been classified by the Internal Revenue Service (IRS) as other than a private foundation within the meaning of Section 509(a)(1) of the IRC. The organization is, however, subject to income taxes on net profits generated by activities defined as unrelated business activities under applicable tax law. PRS has not engaged in any such activities during the years ended June 30, 2018 and In accounting for uncertainty in income taxes, accounting standards require an entity to recognize the financial statement impact of a tax position when it is more-likely-than-not that the position will not be sustained upon examination. Management evaluated the PRS's tax positions and concluded there are no uncertain tax positions that require adjustment to the financial statements to comply with the provisions of this guidance. Estimates The preparation of financial statements in conformity with U.S. GAAP 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. PRS participates in a number of federally assisted programs which are subject to financial and compliance audits by the federal agencies or their representatives. As such, there is a possibility that questioned costs might result from such an audit in the future. Functional Expense Allocation Expenses are charged directly to programs in general categories based on specific identification. Certain costs such as salaries, fringe benefits, payroll taxes, occupancy, professional fees, depreciation and amortization, rental and maintenance, other, office supplies, travel, communications, insurance, conference and training, legal services, advertising, and bad debt have been allocated to programs, management and general, and fundraising expenses based on level of effort

15 1. ORGANIZATION, PURPOSE AND SIGNIFICANT ACCOUNTING POLICIES (Continued) Reclassification Certain account balances within the prior year financial statements have been reclassified to conform to the current year financial statement presentation. Liquidity PRS maintains a liquid cash balance in checking accounts in an amount necessary to meet its anticipated expenditures for the next 30 days. Cash in excess of this amount is invested in short-term investments. PRS has secured a line of credit up to $500,000 to help manage cash flow. The outstanding balance is $125,000 as of the year ended June 30, The line of credit expires August 5, PRS reconciles the balance of financial assets subject to donor restrictions monthly, based on restricted amounts used and received. Restricted cash and investments are separately identified and monitored as part of PRS's monthly financial reporting process. PRS's financial assets available within one year to meet cash needs for general expenditures through June 30, 2019 are as follows: Financial Assets Cash $ 50,063 Investments 1,879,076 Accounts receivable 775,710 Promises to give 216,045 Total financial assets $ 2,920,894 Less amounts not available within one year Purpose restricted net assets (144,277) Time restricted net assets (216,045) Board designated net assets (1,704,036) Financial assets available within one year to meet cash needs for general expenditures within one year $ 856,

16 2. CASH Cash as of June 30, 2018 and 2017 consisted of the following: Checking $ 49,813 $ 27,859 Petty cash Cash on hand $ 50,063 $ 28,284 The bank balances were fully insured within the Federal Deposit Insurance Corporation insurance limits as of June 30, 2018 and deposit 3. ACCOUNTS RECEIVABLE Receivables at June 30, 2018 and 2017 consisted of the following: Services performed $ 723,026 $ 556,113 Contracts and grants 52,684 56, PROMISES TO GIVE $ 775,710 $ 613,012 Promises to give as of June 30, 2018 and 2017 consisted of unconditional pledges and are due as follows: 2018 Receivable in Less than One to one year five years Total Promises to give $ 117,035 $ 100,000 $ 217,035 Less: discount to present value at 1% - (990) (990) Total $ 117,035 $ 99,010 $ 216,

17 4. PROMISES TO GIVE (Continued) 2017 Receivable in Less than One to one year five years Total Promises to give $ 113,124 $ 200,000 $ 313,124 Less: discount to present value at.5% - (1,490) (1,490) Total $ 113,124 $ 198,510 $ 311, PROPERTY AND EQUIPMENT A summary of information related to property and depreciation for the years ended June 30, 2018 and 2017 is as follows: June 30, 2018 Estimated useful life Accumulated Depreciation (years) Cost depreciation expense Book Value Land $ 57,660 $ - $ - $ 57,660 Vehicles ,890 (103,099) 4,039 12,791 Furniture and equipment ,254 (238,142) 8,427 47,112 Building ,738 (154,674) 8, ,064 Building improvements ,102 (288,470) 24, ,632 Computer equipment and software ,101 (123,183) 12,409 2,918 Leasehold improvements ,337,157 (277,975) 86,638 1,059,182 $ 2,683,902 $ (1,185,543) $ 144,101 $ 1,498,

18 5. PROPERTY AND EQUIPMENT (Continued) June 30, 2017 Estimated useful life Accumulated Depreciation (years) Cost depreciation expense Book Value Land $ 57,660 $ - $ - $ 57,660 Vehicles ,844 (125,013) 3,366 16,831 Furniture and equipment ,425 (204,795) 10,042 13,630 Equipment under capital lease ,920 (24,920) 5,538 - Building ,738 (146,506) 8, ,232 Building improvements ,887 (264,050) 21, ,837 Computer equipment and software ,101 (110,774) 14,631 15,327 Leasehold improvements ,389 (763,504) 76, , INVESTMENTS $ 2,271,964 $ (1,639,562) $ 139,522 $ 632,402 Investments are recorded at fair value and consist of the following as of June 30, 2018 and 2017: 2018 Unrealized Fair Appreciation Cost Value (Depreciation) Money market funds $ 54,473 $ 54,473 $ - Mutual funds Market neutral 138, ,454 (4,092) Large value 127, ,366 3,601 Nontraditional bond 94,319 94,312 (7) Small value 87,983 93,081 5,098 Foreign small/mid blend 118, ,527 3,040 Foreign large growth 208, ,820 6,415 Mid-cap growth 122, , Emerging markets 80,360 90,531 10,171 Large growth 105, ,658 24,449 Ultrashort bond 94,050 94,040 (10) Energy limited partnership 68,625 67,523 (1,102) Small growth 89,701 96,084 6,383 Mid-cap value 114, ,767 7,

19 6. INVESTMENTS (Continued) 2018 Unrealized Fair Appreciation Cost Value (Depreciation) Mutual funds (Continued) Foreign small/mid growth $ 70,125 $ 75,472 $ 5,347 Exchange-traded products 238, ,329 (2,544) $ 1,814,239 $ 1,879,076 $ 64, Unrealized Fair Market Appreciation Cost Value (Depreciation) Money market funds $ 58,672 $ 58,672 $ - Mutual funds Small growth 76,310 77, High yield bond 57,673 57, Market neutral 238, ,846 1,301 Large value 114, ,790 2,380 Nontraditional bond 219, , Small value 76,310 77,463 1,153 Foreign large growth 152, ,730 4,120 World bond 210, ,554 (1,851) Short-term bond 95,657 95,434 (223) Mid-cap growth 95,300 96,748 1,448 Emerging markets 76,325 78,618 2,293 Mid-cap value 95,502 96,570 1,068 Foreign small/mid growth 57,200 59,832 2,632 Foreign large blend 76,325 79,070 2,745 Large growth 114, ,227 2,817 Exchange-traded products 95,712 91,342 (4,370) $ 1,910,676 $ 1,928,065 $ 17,389 The Board has designated and set aside a portion of its investment portfolio for capital expenditures and emergency fund use. For the years ended June 30, 2018 and 2017, Board designated funds were $1,704,036 and $1,668,833, respectively

20 6. INVESTMENTS (Continued) Investment income consisted of the following for the years ended June 30, 2018 and 2017: Interest and dividends $ 61,092 $ 51,743 Unrealized and realized gain on investments 64, , FAIR VALUE MEASUREMENTS $ 125,548 $ 223,624 PRS records investments based on fair value on a recurring basis. Financial accounting and reporting standards define fair value as the price that would be received to sell an asset or paid to transfer a liability (i.e., the exit price) in an orderly transaction between market participants at the measurement date. The standards emphasize that fair value is a market-based measurement, not an entity specific measurement. Therefore, a fair value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, the standards established a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent from the reporting entity (observable inputs that are classified within level 1 and 2 of the hierarchy) and the reporting entity s own assumptions about market participant assumptions (unobservable inputs classified within level 3 of the hierarchy). Level 1 inputs utilize unadjusted quoted prices in active markets for identical assets or liabilities that PRS has the ability to access at the measurement date. Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the assets or liabilities, either directly or indirectly. Level 2 inputs may include quoted prices for similar assets or liabilities in active markets, as well as inputs that are observable for the assets or liabilities (other than quoted prices), such as interest rates, foreign exchange rates and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs 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 determination of the fair value level within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. PRS assessment of the significance of the particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the assets or liabilities. All investments as of June 30, 2018 and 2017 were considered to be classified as level 1 investments

21 8. NET ASSETS WITH DONOR RESTRICTION A summary of net assets with donor restriction for the years ended June 30, 2018 and 2017 is as follows: 2018 Balance at Revenue and Balance at June 30, 2017 Support Released June 30, 2018 Hope Fund $ 156,594 $ - $ 18,816 $ 137,778 Mt. Vernon Kiwanis St. Lukes (Comm ed scholarships) 2,515-1, McLean Rotary (Tysons RA equip) 278 2, ,210 PTG 1, ,000 Shenny Tomato Pledge 300, , ,000 Grainger Foundation 1,858-1,858 - Individual donations 250 2,255 1, Community Foundation for Northern Virginia - Care-Ring - 17,900-17,900 Total $ 462,958 $ 23,155 $ 125,791 $ 360, Balance at Revenue and Balance at June 30, 2016 Support Released June 30, 2017 Hope Fund $ 201,439 $ 8,350 $ 53,195 $ 156,594 Hunt Grant - Client Scholarships Washington Forest Foundation 9,620-9,620 - Mt. Vernon Kiwanis - 1, D.C. DBH Peer Grant 1,741-1,741 - St. Lukes (Comm ed scholarships) 1,525 2,000 1,010 2,515 McLean Rotary (Tysons RA equip) Arlington County Medical Society PTG 1, ,000 Shenny Tomato pledge 400, , ,000 Grainger Foundation - 5,000 3,142 1,858 Individual donations Total $ 616,217 $ 16,620 $ 169,879 $ 462,

22 9. DONATED FACILITIES AND SERVICES Fairfax County and Virginia Hospital Center provide free rent for program service sites in Mt. Vernon and Arlington, Virginia on behalf of PRS. As required by U.S. GAAP, PRS recorded donated facilities support in the amount of $355,004 and $434,033 for the years ended June 30, 2018 and 2017, respectively. The CrisisLink Hotline and textline is a 24 hour service and depends on the support of individuals who donate their time. As required by U.S. GAAP, PRS recorded donated services in the amount of $162,635 and $238,485 for the years ended June 30, 2018 and 2017, respectively. Many volunteers have donated significant amounts of their time to PRS program services. The value of these contributions has not been reflected in the financial statements, as they did not meet the criteria for recognition, nor is a practical estimate available. 10. GOVERNMENT CONTRACTS AND GRANTS Government contracts and grants revenue is as follows for the years ended June 30, 2018 and 2017: Fairfax County $ 2,854,099 $ 2,615,643 Medicaid 1,389,906 1,405,221 Arlington Community Services Board 460, ,229 Loudoun County 397, ,854 United States Department of Housing and Urban Development 379, ,581 Virginia Department for Aging and Rehabilitative Services 287, ,707 DC Rehabilitation Services Administration 188, ,548 CCFP Grant 130, ,454 United States Department of Agriculture 70,631 65,927 Regional DAD Program 19,475 46,665 City of Alexandria 15,000 15,000 DC Department of Behavioral Health 5,267 8,412 City of Falls Church 1,074 1,300 $ 6,198,580 $ 5,725,

23 11. EMPLOYEE BENEFIT PLANS PRS offers a 403(b) deferred annuity plan for eligible employees. All employees are eligible to participate and make contributions to the plan as of the first day of employment. However, employees must work a minimum of one year and contribute a minimum of 3% to the plan in order to be eligible for employer matching funds. PRS matches employee contributions of 3% up to a maximum of 5% of eligible compensation. For the years ended June 30, 2018 and 2017, PRS contributed $114,920 and $118,202 respectively. PRS also sponsors a deferred compensation plan under IRC Section 457(f). Eligible employees may elect to have amounts, subject to statutory limits, which are annually adjusted, withheld from their compensation and contributed to funds established for the employee's benefit. PRS does not contribute to the plan. Deferred compensation assets held by PRS under the plan total $26,538 for the year ended June 30, 2018 and have been reflected within the statement of financial position as an asset and corresponding liability. Additionally, amounts totaling $712 as of June 30, 2018, have not been funded to the plan, but have been accrued. 12. CONCENTRATIONS - REVENUE For the years ended June 30, 2018 and 2017, PRS received $4,244,005 (50%) and $4,020,866 (57%), of total support and revenue from two sources, respectively. Consequently, any material declines in funding from these sources could have a significant negative impact on PRS' financial condition. 13. COMMITMENTS AND CONTINGENCIES Revolving Line of Credit PRS has a $500,000 line of credit with BB&T bank at a variable interest rate of 4.25% as of June 30, 2018 that will mature on August 5, The line of credit is secured by PRS' contract with Fairfax - Falls Church Community Services Board and by a priority interest in PRS' accounts receivable. As of June 30, 2018 and 2017, the outstanding balance on the line of credit was $125,000 and $190,000, respectively. Interest expense related to this line of credit for the years ended June 30, 2018 and 2017 was $4,792 and $3,359, respectively. Employment Agreement PRS has entered into an employment agreement which includes a severance package. Under the terms of the agreement the organization could be required to pay severance of up to $90,207 under circumstances of termination without cause

24 13. COMMITMENTS AND CONTINGENCIES (Continued) Office Lease - Fairfax, Virginia PRS has an operating lease agreement for space in Fairfax, VA. The term for the lease agreement is from September 1, 2017 through January 31, Rent payments did not begin until February 1, Rent expense was $41,660 for the year ended June 30, The estimated future minimum lease payments under the lease agreement as of June 30, 2018 are as follows: For the fiscal years ended: 2019 $ 101, , , , , and thereafter 1,350,923 $ 2,252,159 Office Lease - Oakton, Virginia PRS has an operating lease agreement for space in Oakton, VA. The term for the lease agreement is from April 1, 2018 through March 31, Rent expense was $48,633 for the year ended June 30, The estimated future minimum lease payments under the lease agreement as of June 30, 2018 are as follows: For the fiscal years ended: 2019 $ 49, , , , , and thereafter 1,376,376 $ 2,265,

25 14. SUBSEQUENT EVENTS In preparing these financial statements, the organization has evaluated events and transactions for potential recognition or disclosure through September 28, 2018, the date the financial statements were available to be issued