HOPE FUNDS FOR CANCER RESEARCH FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 WITH INDEPENDENT AUDITORS' REPORTS

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1 FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 216 AND 215 WITH INDEPENDENT AUDITORS' REPORTS

2 TABLE OF CONTENTS PAGE Independent Auditors' Report Stateents of Financial Position Stateents of Activities and Changes in Net Assets Stateents of Functional Expenses Stateents of Cash Flows Notes to Financial Stateents 1& &

3 GoLDEN, GoRMLY & CoMPANY, Lro.. CERTIFIED PUBLIC ACCOUNIANIS & BUSINESS CONSUL I ANTS 55 CHERRY LANE, 2A - PO BOX 15 - WAKEFIELD. RHODE ISLAND 288 ROBERIC.GOLDEN,CPA BRIAN P GORMLY, CPA TELEPHONE (41) FAX (41) INDEPENDENT AUDITORS' REPORT To the Board of Trustees Hope Funds for Cancer Research Newport, Rhode Island We have audited the acpanying financial stateents of Hope Funds for Cancer Research (a non-profit organization), which prise the stateents of financial position as of Deceber 31, 216 and 215, and the related stateents of activities and change in net assets, functional expenses and cash flows for the years then ended and the related notes to the financial stateents. Manageenf s Responsibility for the Financial Stateents Manageent is responsible for the preparation and fair presentation of these financial stateents in acrdance with acunting principles generally accepted in the United States of Aerica; this includes the design, ipleentation and aintenance of internal ntrol relevant to the preparation and fair presentation of financial stateents that are free fro aterial isstateent, whether due to fraud or error Auditor's Responsibility Our responsibility is to express an opinion on these financial stateents based on our audits.. We nducted our audits in acrdance with auditing standards generally accepted in the United States of Aerica. Those standards require that we plan and perfor the audits to obtain reasonable assurance about whether the financial stateents are free fro aterial isstateent. An audit involves perforing procedures to obtain audit evidence about the aounts and disclosures in the financial stateents. The procedures selected depend on the auditor's judgent, including the assessent of the risks of aterial isstateent of the financial stateents, whether due to fraud or error. In aking those assessents, the auditor nsiders internal ntrol relevant to the entity's preparation and fair presentation of the financial stateents in order to design audit procedures that are appropriate in the circustances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal ntrol.. Acrdingly, we express no such opinion. An audit also includes evaluating the appropriateness of acunting policies used and the reasonableness of significant acunting estiates ade by anageent, as well as evaluating the overall financial stateent presentation.

4 We believe that the audit evidence obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial stateents referred to above present fairly, in all aterial respects, the financial position of Hope Funds for Cancer Research as of Deceber 31, 216 and 215, and the changes in its net assets and its cash flows for the years then ended, in acrdance with acunting principles generally accepted in the United States of Aerica. Golden, Gorly & Copany, Ltd. February 23, 217

5 STATEMENTS OF FINANCIAL POSITION DECEMBER 31, 216 AND ASSETS-- DECEMBER 31, CURRENT ASSETS: Cash and Cash Equivalents $ 1, 189,75 $ 781,283 Investent Acunts 1,159,412 1,282,517 Current Portion of Contributions Receivable 55,5 53,75 Prepaid Expense 1,71 65,778 Total Current Assets 2,414,697 2, 183,328 OTHER ASSETS Contributions Receivable 5, 5, TOTAL ASSETS $ 2,464,697 $ 2,233,328 --L I A B I L I T I E S A N D N E T A S S E T S-- DECEMBER 31, CURRENT LIABILITIES: Current Portion of Fellowships Payable $ 477,278 $ 537, Deferred Revenue 29,5 Total Current Liabilities 477, ,5 LONG-TERM LIABILITIES: Fellowships Payable 317, 624,778 Total Liabilities 794,278 1,191,278 NET ASSETS: Unrestricted 395, ,5 Teporarily Restricted 1,275, 726, Total Net Assets 1,67,41'9 1,42,5 TOTAL LIABILITIES AND NET ASSETS $ 2,464,697 $ 2,233,328 The acpanying notes are an integral part of these financial stateents

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9 HOPEFUNDSFORCANCERRESEARCH STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 216 AND CASH FLOWS FROM OPERATING ACTIVITIES: Change in Net Assets $ 628,369 $ (13,45) Changes in Operating Assets and Liabilities: Contributions Receivable Prepaid Expenses Deferred Revenue Fellowships Payable Net Cash Provided Fro Operating Activities (1,75) 55,68 (29,5) Q67,5) 284, ,8 (5,377) 21,7 316,81 _ 374,799 CASH FLOWS FROM INVESTING ACTIVITIES: Investent Acunts INCREASE (DECREASE) IN CASH CASH - BEGINNING OF YEAR 123, 15 47, ,283 (339,79) 35,9 746,274 CASH - END OF YEAR $ 1,189,75 $ 781,283 The acpanying notes are an integral part of these financial stateents - 7 -

10 NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 216 AND 215 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES NATURE OF OPERATIONS Hope Funds for Cancer Research (the Hope Funds), a non-profit rporation, was organized under the General Laws of the State of Rhode Island on October 5, 26 for the purpose of enuraging investigation of innovative cancer treatent, prevention and detection and to increase knowledge relating to cancer care, especially for the ost difficult-to-treat cancers, through philanthropic support of scientific and edical research.. BASIS OF ACCOUNTING The acpanying financial stateents of the Hope Funds have been prepared on the accrual basis of acunting which regnizes revenue when earned and expenses when incurred and nfor to acunting principles generally accepted in the United States of Aerica as applicable to not-for-profit entities. INCOME TAXES The Hope Funds qualifies as a tax-exept organization under Section 51(c) (3) of the Internal Revenue Code. The Hope Funds is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress. The Hope Funds is required to file and does file tax returns with the Internal Revenue Service and other taxing authorities. Generally, the Hope Funds' tax returns reain open for three years for federal ine tax exainations. Furtherore, the Hope Funds has deterined it does not have any uncertain ine tax positions that aterially ipact the financial stateents or related disclosures. FINANCIAL STATEMENT PRESENTATION The Hope Funds is required to report inforation regarding its financial position and activities acrding to three classes of net assets: unrestricted net assets, teporarily restricted net assets, and peranently restricted net assets In addition, the Hope Funds is required to present a stateent of cash flows FUNCTIONAL ALLOCATION OF EXPENSES The sts of providing the various progras and supporting services have been suarized on a functional basis in the acpanying stateents of activities. Acrdingly, certain expenses have been allocated aong the progras and supporting services in reasonable ratios deterined by anageent

11 NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 216 AND 215 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD) CONTRIBUTIONS Contributions received are rerded as unrestricted, teporarily restricted, or peranently restricted support depending on the existence and/or nature of any donor restrictions. Restricted net assets are reclassified to unrestricted net assets upon satisfaction of the tie or purpose restrictions. However, if a restriction is fulfilled in the sae tie period in which the ntribution is received, the organization reports the support as unrestricted ESTIMATES The preparation of financial stateents in nfority with generally accepted acunting principles requires anageent to ake estiates and assuptions that affect the reported aounts of assets and liabilities and disclosure of ntingent assets and liabilities at the date of the financial stateents and the reported aounts of revenues and expenses during the reporting period. Actual results uld differ fro those estiates. DONATED SERVICES Donated services are regnized as ntributions in acrdance with acunting standards at their fair arket value, if the services: 1) create or enhance nonfinancial assets; or 2) require specialized skills and are perfored by people with those skills or would otherwise be purchased by the Hope Funds. The Hope Funds receives donated services for legal, acunting, design, website developent and event planning activities.. Since the Hope Funds is an entirely volunteer organization, any individuals volunteer their tie and perfor a variety of professional and adinistrative tasks that greatly assist the Hope Funds perfor its daily operations. No aounts have been reflected in the acpanying financial stateents since these donated services do not eet the criteria for regnition. ADVERTISING AND MARKETING COSTS Advertising and arketing sts are expensed as incurred.. Advertising and arketing expense for the years ended Deceber 31, 216 and 215 totaled $6,45 and $694, respectively. FAIR VALUE MEASUREMENTS The Hope Funds applies generally accepted acunting principles for fair value easureents of financial assets that are regnized or disclosed at fair value in the financial stateents on a recurring basis.. GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between arket participants at the easureent date Fair value is best deterined based on independent quoted arket prices.. GAAP establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to easure fair value. The hierarchy gives the highest priority - 9 -

12 HOPEFUNDSFORCANCERRESEARCH NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 216 AND 215 NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD) FAIR VALUE MEASUREMENTS (CONTD) to unadjusted quoted prices in active arkets for identical assets or liabilities (Level 1 easureents) and the lowest priority to easureents involving unobservable inputs (Level 3 easureents).. The three levels of the fair value hierarchy are as follows: Level 1 inputs are quoted prices (unadjusted) in active arkets for identical assets or liabilities that the Hope Funds has the ability to access at the easureent date. Level 2 inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.. Level 3 inputs are unobservable inputs for the asset or liability As of Deceber 31, 216, the Investent Acunt balance of $1,159,412 was valued using Level 1 inputs. See Note 13 for additional inforation.. SUBSEQUENT EVENTS The Hope Funds nsiders the acunting treatents, and the related disclosures in the current year's financial stateents, that ay be required as the result of all events or transactions that occur after the year-end through the date of the independent auditors' report, February 23, 217. RECLASSIFICATION Certain prior year inforation in the acpanying financial stateents has been reclassified to nfor to the current-year's presentation.. NOTE 2 - CASH AND CASH EQUIVALENTS For the purposes of the acpanying stateents of cash flows, the Hope Funds nsiders all highly liquid financial instruents purchased with a aturity of three onths or less to be cash equivalents, with the exception of cash and cash equivalents held in investent acunts. Funds are kept in institutions in regular checking and oney arket acunts At Deceber 31, 216 the cash was invested as follows: Checking Acunt with Bank of Newport Money Market Acunt with Bank of Newport Money Market Acunt with Washington Trust Checking Acunt with J P Morgan Chase Savings Acunt with J P Morgan Chase Total Cash Balances $ 12,51 687,41 25,39 1,84 139,86 $1,189,75-1 -

13 NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 216AND 215 NOTE 3 - CONTRIBUTIONS RECEIVABLE Contributions Receivable represents donations pledged, but not received, by Deceber 31, The Hope Funds believes the aount to be fully llectible.. The following are aturities of the ntributions receivable for each of the next five years and in the aggregate: Year Ended Deceber 31, Total Aount $ 55,5 5, $ 15,5 NOTE 4 - PREPAID EXPENSES Prepaid expense represents the Hope Funds prepayent aounts for the following expense categories: Prepaid policy preiu for its property and liability policy Prepaid deposits to secure Gala venue for 217 Prepaid deposits to secure Gala suppliers and catering for 217 Office rent security deposit $ 375 9, $ 1,

14 NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 216 AND 215 NOTE 5-FELLOWSHIPS PAYABLE The Hope Funds nducts a postdoctoral petition each year and awards fellowships typically vering three-year periods. The Hope Funds acunts for payents to a grantee institution in respect of Fellowship Expense by rerding such expense in the full aount at the tie the itent is ade with the grantee institution. In 216, the Hope Funds awarded 3 new three-year grants for total itents of $463,5 Two previously awarded grants and one currently awarded grant were reduced during the year at the respective Fellow's request as to ter or aount, lowering previous grant itents by $78,5. Due to the Hope Funds itent to pay the fellowships in the near ter no present value disunts have been applied. Awards payable as of Deceber 31, 216 total $794,278 are expected to be paid as follows: Year Ended Deceber 31. Aount 217 $ 477, , Total $ 794,278 NOTE 6 - NET ASSETS - UNRESTRICTED & TEMPORARILY RESTRICTED Net Assets - Unrestricted net assets represent net assets set aside by the Board of Trustees that represent support raised in advance to fund future fellowship awards. Future three-year Fellowships will be awarded to postdoctoral scientists who propose to work on highly innovative research projects that challenge the traditional paradigs of understanding the causes, echaniss, progression, disease arkers or risk factors of the ost difficult to treat cancers. Net Assets -Teporarily Restricted represent net assets which are donor restricted for naed fellowships to be paid in future years. The balance of $1,275, as of Deceber 31, 216 nsisted of $9, pledged and received towards the establishent of an endowed fellowship and $375, received towards naed fellowships that had not yet been disbursed

15 NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 216AND 215 NOTE 7 - REVENUE AND SUPPORT The Hope Funds' ajor fors of support include direct ntributions by individuals, rporations and foundations towards its Annual Fund and Special Events to raise funds for Fellowships as welt as serving to honor luinaries in the field of cancer research, treatent and philanthropy. NOTE 8 - SPECIAL EVENTS Since its Inaugural Awards Gala in August 27, Hope Funds has held its Awards Gala annually.. In 28, 29, 21 and 212, the Awards Gala was held at Marble House in Newport, RI. In 211, the Awards Gala was held at the Union Club in New York City. In 213 and 215, the Awards Gala was held at the Metropolitan Museu of Art in New York City. In 214, the Awards Gala was held at the Breakers in Newport, RI and, in 216, the Awards Gala was held at the Els in Newport, RI The 217 Awards Gala is scheduled to be held at the Els in Newport, RI. The Awards Gala event is held to celebrate the Hope Funds' itent to enurage innovative cancer treatent and early-state detection for the ost understudied and difficult to treat cancers. It also has provided a foru for scientific discussion and presentations, and raised funds for future Fellowships. The event annually brings together ore than 12 trustees, advisors, scientists, physicians and friends of the Hope Funds for Cancer Research. In 216, four distinguished individuals were honored for their llective achieveents and itents. The postdoctoral Fellows also were given an outstanding foru in which to present their research findings.. In 216, the Hope Funds hosted successful panel discussions in Rancho Sante Fe, CA, Newport, RI and in New York City Mebers of the panels included Hope Funds Fellows and senior cancer researchers.. Guests fro industry and acadeia et with scientists, physicians, business people and philanthropists The panels are used to showcase the work and achieveents of the Fellows, their Mentors and Advisors In 216, the Hope Funds held a scientific nvening in New York City to eorate the 1Qth anniversary of the organization's founding.. Sponsorship of the Convening has been included in Special Events Ine, while the entire expense in the aount of $11,857 for the Convening has been charged to Prograatic Expenses

16 NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 216 AND 215 NOTE 8 - SPECIAL EVENTS (CONTD) Gross proceeds fro the Special Events in 216 fro sources including ticket prices, rporate support and individual donations totaled $421,633. Total sts for these events aounted to $313, 199 However, it is estiated that 33% of the total guests at these events were Fellows, Mentors and Honors, who do not pay. In addition to the Convening expense, Hope Funds estiates that ore than $7, of the total sts is prograatic in nature, which reduces the sts for these events to $141,342 or 33% of ntributions to the Special Events. NOTE 9 - SCIENCE, MEDICAL & RESEARCH INFORMATION AND COMMUNICATIONS Expenses in this category aounted to $56,989 in 216 and $72, 171 in 215. The Hope Funds expanded opportunities for its Fellows and Aluni-Fellows to present their research findings in public forats and to key-opinion-leaders in the field of cancer research. NOTE 1-SUPPLEMENTAL CASH FLOW INFORMATION Cash flows fro operating activities as reported in the acpanying stateents of cash flows for the years-ended Deceber 31, 216 and 215, reflect no cash payent for interest or taxes NOTE 11 - COMMITMENTS AND CONTINGENCIES The Hope Funds entered into a lease for office space in Newport, RI beginning March 1, 216 for a period of 12 onths. It is the intention of the Hope Funds to renew this lease under siilar ters after the expiration of the current ter. The iniu lease payents due under these leases are as follows: Year Ended Deceber 31, 217 Aount $ 2. Total rent paid for property leases for the year ended Deceber was $12,1 NOTE 12- CONCENTRATION OF CREDIT RISK The Hope Funds aintains its cash balances at several financial institutions in aounts which, at ties, ay be in excess of federally insured liits Manageent believes that the Hope Funds faces no significant risk of loss relating to a failure of one of the financial institutions.. Additionally, Hope Funds is currently ipleenting a policy to nsolidate cash balances to its Investent Acunts

17 NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 216 AND 215 NOTE 13 - INVESTMENT ACCOUNTS The Hope Funds aintains investent acunts that ntain various securities, which are carried at their fair value for financial stateent purposes (See Note 1 ).. It is the Hope Funds' investent policy to purchase and hold to aturity in the near ter highly rated securities to fund itted and future fellowships.. The aggregate st and fair values of investent securities held as of Deceber 31, 216 are as follows: Fair Value Cost Unrealized Gain (Loss) Cash equivalents $ 163,253 $ 163,253 $ Certificates of Deposit 13, 13 13,4 126 Corporate Bonds 369, ,458 (4,792) ETF's and Closed-End Funds 265,65 253,753 11,852 Mutual Funds 347, ,361 (1,63) $ 1,159,412 $ 1,153,829 $ 5,583 As portrayed above, ncentration of the Hope Funds' investents in excess of 1% of the fair value of its portfolio included approxiately 14 % invested in Cash Equivalents, 23% in ETF's and Closed-End Funds, 3% in Mutual Funds and 32% in Corporate Bonds. NOTE 14 - INVESTMENT RETURN Coponents of investent return are as follows: Investent Securities Interest, Dividends & Capital Gain Realized Losses Unrealized Gains Manageent Fees Total Investent Return $ 21,926 (5,54) 14,779 (5,841) $ 25,