FINANCIAL STATEMENTS AMVETS (AMERICAN VETERANS) NATIONAL HEADQUARTERS

FINANCIAL STATEMENTS AMVETS (AMERICAN VETERANS) NATIONAL HEADQUARTERS FOR THE YEAR ENDED AUGUST 31, 2017 WITH SUMMARIZED FINANCIAL INFORMATION FOR 2016

CONTENTS PAGE NO. INDEPENDENT AUDITOR'S REPORT 2-3 EXHIBIT A - Statement of Financial Position, as of August 31, 2017, with Summarized Financial Information for 2016 4 EXHIBIT B - Statement of Activities and Change in Net Assets, for the Year Ended August 31, 2017, with Summarized Financial Information for 2016 5 EXHIBIT C - Statement of Functional Expenses, for the Year Ended August 31, 2017, with Summarized Financial Information for 2016 6-7 EXHIBIT D - Statement of Cash Flows, for the Year Ended August 31, 2017, with Summarized Financial Information for 2016 8 NOTES TO FINANCIAL STATEMENTS 9-16 1

INDEPENDENT AUDITOR'S REPORT To the Board of Directors AMVETS (American Veterans) National Headquarters Lanham, Maryland We have audited the accompanying financial statements of AMVETS (American Veterans) National Headquarters (AMVETS), which comprise the statement of financial position as of August 31, 2017, and the related statements of activities and change in net assets, 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. Auditor s 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 auditor s 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. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of AMVETS as of August 31, 2017, and the change 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. 4550 MONTGOMERY AVENUE SUITE 650 NORTH BETHESDA, MARYLAND 20814 (301) 951-9090 FAX (301) 951-3570 WWW.GRFCPA.COM MEMBER OF CPAMERICA INTERNATIONAL, AN AFFILIATE OF HORWATH INTERNATIONAL MEMBER OF THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS' PRIVATE COMPANIES PRACTICE SECTION 2

Report on Summarized Comparative Information We have previously audited AMVETS' 2016 financial statements, and we expressed an unmodified audit opinion on those audited financial statements in our report dated December 2, 2016. In our opinion, the summarized comparative information presented herein as of and for the year ended August 31, 2016, is consistent, in all material respects, with the audited financial statements from which it has been derived. December 8, 2017 3

EXHIBIT A AMVETS (AMERICAN VETERANS) NATIONAL HEADQUARTERS STATEMENT OF FINANCIAL POSITION AS OF AUGUST 31, 2017 WITH SUMMARIZED FINANCIAL INFORMATION FOR 2016 ASSETS CURRENT ASSETS 2017 2016 Cash and cash equivalents $ 384,521 $ 972,308 Investments - Unorganized Departments 122,386 120,896 Accounts receivable 2,850 52,689 Pledges receivable 48,597 124,439 Prepaid and other receivables 69,083 72,903 FIXED ASSETS Total current assets 627,437 1,343,235 Furniture and equipment, net of accumulated depreciation and amortization of $2,670,072 and $2,617,564 in 2017 and 2016, respectively 396,047 421,215 OTHER ASSETS Investments - Life Membership Fund 7,413,454 6,489,892 TOTAL ASSETS $ 8,436,938 $ 8,254,342 CURRENT LIABILITIES LIABILITIES AND NET ASSETS Accounts payable and accrued liabilities $ 607,328 $ 372,483 Deferred revenue 34,097 34,309 NET ASSETS Total current liabilities 641,425 406,792 Unrestricted: General (1,814,844) (1,084,900) Board designated for Life Membership 8,443,114 7,792,792 Board designated for Unorganized Departments 122,386 120,896 Net investment in fixed assets 396,047 421,215 Total unrestricted net assets 7,146,703 7,250,003 Temporarily restricted 648,810 597,547 Total net assets 7,795,513 7,847,550 TOTAL LIABILITIES AND NET ASSETS $ 8,436,938 $ 8,254,342 See accompanying notes to financial statements. 4

EXHIBIT B AMVETS (AMERICAN VETERANS) NATIONAL HEADQUARTERS STATEMENT OF ACTIVITIES AND CHANGE IN NET ASSETS FOR THE YEAR ENDED AUGUST 31, 2017 WITH SUMMARIZED FINANCIAL INFORMATION FOR 2016 REVENUE Unrestricted 2017 2016 Temporarily Restricted Total Total Fundraising revenue $ 1,360,103 $ - $ 1,360,103 $ 1,632,334 Membership dues: Annual membership dues 820,797-820,797 967,067 Life Membership dues 162,418-162,418 98,306 Contributions and grants 824,817 402,860 1,227,677 1,260,261 Convention 62,071-62,071 38,923 Silver Helmet 24,169-24,169 - Gain on sale of assets - - - 8,171 Investment income 556,512-556,512 352,089 Corporate sponsorship 138,716-138,716 340,861 Advertising revenue and other 18,406-18,406 125,655 Unorganized Departments 35,113-35,113 37,060 Net assets released from donor restrictions 351,597 (351,597) - - EXPENSES Total revenue 4,354,719 51,263 4,405,982 4,860,727 Program Services: Programs 937,182-937,182 1,059,818 Communications 514,454-514,454 707,229 Membership 479,689-479,689 371,134 Legislative 159,394-159,394 186,166 Convention 178,036-178,036 223,235 Silver Helmet 67,658-67,658 61,517 Commander 284,584-284,584 315,258 Unorganized Departments - - - 120,766 Total program services 2,620,997-2,620,997 3,045,123 Supporting Services: Management and General 1,378,632-1,378,632 1,368,796 Fundraising 458,390-458,390 558,227 Total supporting services 1,837,022-1,837,022 1,927,023 Total expenses 4,458,019-4,458,019 4,972,146 Change in net assets (103,300) 51,263 (52,037) (111,419) Net assets at beginning of year 7,250,003 597,547 7,847,550 7,958,969 NET ASSETS AT END OF YEAR $ 7,146,703 $ 648,810 $ 7,795,513 $ 7,847,550 See accompanying notes to financial statements. 5

STATEMENT OF FUNCTIONAL EXPENSES FOR THE YEAR ENDED AUGUST 31, 2017 WITH SUMMARIZED FINANCIAL INFORMATION FOR 2016 2017 Program Services Programs Communications Membership Legislative Convention Silver Helmet Salaries $ 255,426 $ 187,434 $ 222,217 $ 76,291 $ - $ - Payroll taxes and benefits 87,886 38,246 70,628 26,604 - - Printing and production 13,045 227,106 37,836 34,279 149 914 Consulting 6,068-26,763 6,892 774 - Utilities - - - - - - Accounting/audit - - - - - - Insurance - - - - - - Depreciation and amortization - - - - - - Telephone 717 10,000 - - - - Travel and entertainment 16,996 677 1,730 221 42,670 11,820 Legal fees - - - - - - Postage and delivery 4,809 73 29,697 818 - - Repairs and maintenance - 5,097 - - 1,547 - Supplies 286-4,196 49 - - Dues, fees and licenses - - - - - - Meetings and conventions 48,641 - - 6 114,650 44,313 Advertising and promotion 15,329 43,629 6,250 - - - Bank fees - - - - - - Payroll processing - - - - - - Equipment rental 312 - - - 3,111 - Telemarketing expenses 458,645 - - - - - Flag and chair - - - - - - Internet technology services 6,155 1,911 62,466 - - - Contributions - - - - - - Awards 15,675 100 5,670-150 10,611 Lease expense - - - - - - Band and color guard - - - - - - Miscellaneous expenses 7,192 181 12,236 14,234 14,985 - TOTAL $ 937,182 $ 514,454 $ 479,689 $ 159,394 $ 178,036 $ 67,658 See accompanying notes to financial statements. 6

EXHIBIT C Commander Total Program Services Management and General Supporting Services Fundraising Total Supporting Services Total Expenses 2016 Total Expenses $ 130,904 $ 872,272 $ 331,262 $ - $ 331,262 $ 1,203,534 $ 1,325,941 22,681 246,045 108,328-108,328 354,373 336,115 179 313,508 2,929-2,929 316,437 473,291-40,497 87,610-87,610 128,107 93,759 5,272 5,272 48,920-48,920 54,192 41,836 - - 30,926-30,926 30,926 67,675 - - 85,254-85,254 85,254 79,971 - - 52,508-52,508 52,508 66,042-10,717 5,860-5,860 16,577 9,181 68,526 142,640 52,888-52,888 195,528 237,722 - - 5,619-5,619 5,619 3,375 1,603 37,000 1,876-1,876 38,876 153,050 2,332 8,976 40,765-40,765 49,741 59,915 467 4,998 29,514-29,514 34,512 85,434 - - 2,050-2,050 2,050 4,760 15,460 223,070 124,737-124,737 347,807 376,093-65,208 - - - 65,208 101,574 - - 73,617 900 74,517 74,517 45,936 - - - - - - 4,764-3,423 2,530-2,530 5,953 7,606-458,645 16,854 457,490 474,344 932,989 1,050,810 1,363 1,363 - - - 1,363 2,174-70,532 83,597-83,597 154,129 130,929 35,000 35,000 - - - 35,000 15,438 376 32,582 - - - 32,582 15,711 - - 36,442-36,442 36,442 33,266 - - - - - - 1,775 421 49,249 154,546-154,546 203,795 148,003 $ 284,584 $ 2,620,997 $ 1,378,632 $ 458,390 $ 1,837,022 $ 4,458,019 $ 4,972,146 See accompanying notes to financial statements. 7

EXHIBIT D AMVETS (AMERICAN VETERANS) NATIONAL HEADQUARTERS STATEMENT OF CASH FLOWS FOR THE YEAR ENDED AUGUST 31, 2017 WITH SUMMARIZED FINANCIAL INFORMATION FOR 2016 CASH FLOWS FROM OPERATING ACTIVITIES 2017 2016 Change in net assets $ (52,037) $ (111,419) Adjustments to reconcile change in net assets to net cash used by operating activities: Depreciation and amortization 52,508 66,042 Unrealized gain (152,846) (389,315) Realized (gain) loss (333,709) 308,377 Gain on disposal of fixed assets - (8,171) Decrease (increase) in: Accounts receivable 49,839 (12,066) Pledges receivable 75,842 63,115 Prepaid and other receivables 3,820 38,581 Increase (decrease) in: Accounts payable and accrued liabilities 234,845 (175,172) Deferred revenue (212) (14,723) Net cash used by operating activities (121,950) (234,751) CASH FLOWS FROM INVESTING ACTIVITIES Purchase of fixed assets (27,340) - Purchase of investments (1,921,615) (7,430,640) Proceeds from sale of investments 1,483,118 7,767,079 Net cash (used) provided by investing activities (465,837) 336,439 CASH FLOWS FROM FINANCING ACTIVITIES Payments on capital lease obligation - (7,496) Net cash used by financing activities - (7,496) Net (decrease) increase in cash and cash equivalents (587,787) 94,192 Cash and cash equivalents at beginning of year 972,308 878,116 CASH AND CASH EQUIVALENTS AT END OF YEAR $ 384,521 $ 972,308 SUPPLEMENTAL INFORMATION Interest Paid $ - $ 1,304 Forgiveness of Capital Lease Obligation $ - $ 58,977 See accompanying notes to financial statements. 8

NOTES TO FINANCIAL STATEMENTS AUGUST 31, 2017 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND GENERAL INFORMATION Organization - AMVETS (American Veterans) National Headquarters (AMVETS) is a not-for-profit organization created by an act of Congress under U.S. Code Title 36, Subtitle 1.2.2, Chapter 227, on June 23, 1947, as a federally chartered member corporation. The purposes of AMVETS are to uphold and defend the Constitution of the United States; to safeguard the principles of freedom, liberty and justice for all; to promote the cause of peace and goodwill among nations; to maintain inviolate the freedom of our country; and to preserve the fundamentals of democracy. AMVETS is organized with a National Headquarters and six geographical divisions that are composed of departments and posts in most states. AMVETS National Headquarters is located in Lanham, Maryland. Basis of presentation - The accompanying financial statements are presented on the accrual basis of accounting, and in accordance with FASB ASC 958, Not-for-Profit Entities. The financial statements include certain prior year summarized comparative information in total but not by net asset class. Such information does not include sufficient detail to constitute a presentation in conformity with generally accepted accounting principles. Accordingly, such information should be read in conjunction with AMVETS's financial statements for the year ended August 31, 2016, from which the summarized information was derived. Cash and cash equivalents - AMVETS considers all cash and other highly liquid investments with initial maturities of three months or less to be cash equivalents, excluding money market funds in the amount of $122,386. Bank deposit accounts are insured by the Federal Deposit Insurance Corporation (FDIC) up to a limit of $250,000. At times during the year, AMVETS maintains cash balances in excess of the FDIC insurance limits. Management believes the risk in these situations to be minimal. Investments - Investments are recorded at their readily determinable fair value. Interest, dividends, realized and unrealized gains and losses less management fees are included in investment income in the Statement of Activities and Change in Net Assets. Receivables - Accounts receivable and pledges receivable approximate fair value. Management considers all amounts to be fully collectible. Accordingly, an allowance for doubtful accounts has not been established. Fixed assets - Fixed assets in excess of $1,000 are capitalized and stated at cost. Fixed assets are depreciated on a straight-line basis over the following estimated useful lives of the related assets: Building Building improvements Furniture, fixtures and office equipment Membership database software Automobiles 30 years 3 to 10 years 3 to 10 years 4 years 3 to 5 years 9

NOTES TO FINANCIAL STATEMENTS AUGUST 31, 2017 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND GENERAL INFORMATION (Continued) Fixed assets (continued) - The cost of maintenance and repairs is recorded as expenses are incurred. Depreciation and amortization expense for the year ended August 31, 2017 totaled $52,508. Impairment of long-lived assets - Management reviews asset carrying amounts whenever events or circumstances indicate that such carrying amounts may not be recoverable. When considered impaired, the carrying amount of the assets is reduced, by a charge to Statement of Activities and Change in Net Assets, to its current fair value. Income taxes - AMVETS is exempt from Federal income taxes under Section 501(c)(19) of the Internal Revenue Code, other than for net unrelated business income. Accordingly, no provision for income taxes has been made in the accompanying financial statements. During the year ended August 31, 2017, AMVETS had no significant net unrelated business income. Uncertain tax positions - For the year ended August 31, 2017, AMVETS has documented its consideration of FASB ASC 740-10, Income Taxes, that provides guidance for reporting uncertainty in income taxes and has determined that no material uncertain tax positions qualify for either recognition or disclosure in the financial statements. Net asset classification - The net assets are reported in two self-balancing groups as follows: Unrestricted net assets include unrestricted revenue and contributions received without donor-imposed restrictions. These net assets are available for the operation of AMVETS and include both internally designated and undesignated resources. Amounts within this class of net assets have been designated in accordance with Board policy or AMVETS bylaws as follows: General - Funds that are available for support and operations in carrying out the aims and purpose of AMVETS, as defined in its charter. Life Membership - Funds that have been designated by the Board that represent life membership dues available for investment that allow investment income from the cumulative funds to be used for general purposes. Unorganized Department - Funds that have been designated by the Board representing a portion of members' dues in those states that, as yet, have not met AMVETS's criteria for operating an organized state department. The designated funds are to be utilized for developing those nondepartment states. Fixed Assets - Funds invested in net fixed assets. 10

NOTES TO FINANCIAL STATEMENTS AUGUST 31, 2017 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND GENERAL INFORMATION (Continued) Net asset classification (continued) - Temporarily restricted net assets include revenue and contributions subject to donorimposed stipulations that will be met by the actions of AMVETS and/or the passage of time. When a restriction expires, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the Statement of Activities and Change in Net Assets as net assets released from restrictions. Revenue recognition - Deferred revenue consists of member dues and conference and meeting registrations. Membership dues are assessed on an annual basis and are billed twice a year. AMVETS recognizes member dues based on the timing of cash receipts. Collections in the fourth quarter of the fiscal year are deferred, and collections in the first three quarters are recognized in the period received. AMVETS recognizes conference and meeting revenue when the related event has occurred. Fundraising revenue represent the gross receipts, recorded on an accrual basis, as reported to AMVETS under solicitation agreements with fundraisers (see Note 9). Contributions and grants are recorded as revenue in the year notification is received from the donor. Temporarily restricted contributions and grants are recognized as unrestricted support only to the extent of actual expenses incurred in compliance with the donor-imposed restrictions and satisfaction of time restrictions. Such funds in excess of expenses incurred are shown as temporarily restricted net assets in the accompanying financial statements. Use of estimates - The preparation of the 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 at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Accordingly, actual results could differ from those estimates. Functional allocation of expenses - The costs of providing the various programs and other activities have been summarized on a functional basis in the Statement of Activities and Change in Net Assets. Accordingly, certain costs have been allocated among the programs and supporting services benefited. Risks and uncertainties - AMVETS invests in various investment securities. Investment securities are exposed to various risks such as interest rates, market and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect the amounts reported in the accompanying financial statements. Fair value measurement - AMVETS adopted the provisions of FASB ASC 820, Fair Value Measurement. FASB ASC 820 defines fair value, establishes a framework for measuring fair value, establishes a fair value hierarchy based on the quality of inputs (assumptions that market participants would use in pricing assets and liabilities, including assumptions about risk) used to measure fair value, and enhances disclosure requirements for fair value measurements. 11

NOTES TO FINANCIAL STATEMENTS AUGUST 31, 2017 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND GENERAL INFORMATION (Continued) Fair value measurement (continued) - AMVETS accounts for a significant portion of its financial instruments at fair value or considers fair value in their measurement. New accounting pronouncements (not yet adopted) - In August 2016, the FASB issued ASU 2016-14, Presentation of Financial Statements of Notfor-Profit Entities (Topic 958), intended to improve financial reporting for not-for-profit entities. The ASU will reduce the current three classes of net assets into two: with and without donor restrictions. The change in each of the classes of net assets must be reported on the Statement of Activities and Change in Net Assets. The ASU also requires various enhanced disclosures around topics such as board designations, liquidity, functional classification of expenses, investment expenses, donor restrictions, and underwater endowments. The ASU is effective for years beginning after December 15, 2017. Early adoption is permitted. The ASU should be applied on a retrospective basis in the year the ASU is first applied. While the ASU will change the presentation of AMVETS's financial statements, it is not expected to alter AMVETS's reported financial position. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) (ASU 2014-09). The ASU establishes a comprehensive revenue recognition standard for virtually all industries under generally accepted accounting principles in the United States (U.S. GAAP) including those that previously followed industry-specific guidance. The guidance states that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The FASB issued ASU 2015-14 in August 2015 that deferred the effective date of ASU 2014-09 by a year thus the effective date is fiscal years beginning after December 15, 2018. Early adoption is permitted. AMVETS has not yet selected a transition method and is currently evaluating the effect that the updated standard will have on the financial statements. In 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The ASU changes the accounting treatment for operating leases by recognizing a lease asset and lease liability at the present value of the lease payments in the Statement of Financial Position and disclosing key information about leasing arrangements. The ASU is effective for private entities for fiscal years beginning after December 15, 2019. Early adoption is permitted. The ASU should be applied at the beginning of the earliest period presented using a modified retrospective approach. AMVETS plans to adopt the new ASUs at the required implementation dates. 2. INVESTMENTS Investments consisted of the following at August 31, 2017: Fair Value Common stocks $ 3,229,933 Exchange traded funds/closed-end funds 4,183,521 TOTAL INVESTMENTS $ 7,413,454 12

NOTES TO FINANCIAL STATEMENTS AUGUST 31, 2017 2. INVESTMENTS (Continued) Included in investment income are the following for the year ended August 31, 2017: Interest and dividends $ 103,927 Unrealized gain 152,846 Realized gain 333,709 Management fees (33,970) TOTAL INVESTMENT INCOME $ 556,512 Investments consist of funds designated in accordance with Board policy or AMVETS's bylaws for the Life Membership Fund and the Unorganized Departments. At August 31, 2017, designated investments comprised $7,413,454 and $122,386 in the Life Membership Fund and the Unorganized Departments, respectively. 3. FIXED ASSETS Fixed assets consisted of the following at August 31, 2017: Land $ 199,134 Building 1,290,672 Building improvements 393,101 Furniture and fixtures 316,990 Office equipment 266,031 Membership database software 509,865 Automobiles 90,326 Total fixed assets 3,066,119 Less: Accumulated depreciation and amortization (2,670,072) NET FIXED ASSETS $ 396,047 4. COPIER LEASES In 2013, AMVETS entered into a capital lease obligation for copiers, which was set to expire in 2018. During 2016, AMVETS entered into an operating lease agreement for new copiers to replace those acquired with the capital lease. Under this arrangement, the new vendor agreed to settle the outstanding balance on AMVETS' capital lease. Accordingly, the capital lease asset and capital lease liability were written off during 2016. Future minimum lease payments at August 31, 2017 on the new copier lease are as follows: Year Ending December 31, 2018 $ 26,187 2019 26,187 2020 26,187 2021 8,729 $ 87,290 13

NOTES TO FINANCIAL STATEMENTS AUGUST 31, 2017 5. TEMPORARILY RESTRICTED NET ASSETS Temporarily restricted net assets consisted of the following at August 31, 2017: Time Restricted $ 48,598 Leadership Conference and Career Centers 1,200 Arizona Memorial Fund 23,908 Aultman Fund 200 Commander's Project 29,537 Warrior Transition Workshop 1,883 Miscellaneous Programs 269 Call of Duty 543,215 TOTAL TEMPORARILY RESTRICTED NET ASSETS $ 648,810 The following temporarily restricted net assets were released from donor restrictions by incurring expenses (or through the passage of time), which satisfied the restricted purposes specified by the donors: Passage of Time $ 28,559 Warrior Transition Workshops 48,852 Commander's Project 35,000 Call of Duty 238,455 Other 731 TOTAL NET ASSETS RELEASED FROM DONOR RESTRICTIONS $ 351,597 6. ALLOCATION OF JOINT COSTS AMVETS conducts telemarketing and other fundraising campaigns that include appeals for contributions as well as program components. As required by FASB ASC 958, Not-for-Profit Entities, AMVETS allocates the cost of the campaigns to the supported functional categories. The cost of these campaigns totaled $933,889 for the year ended August 31, 2017. The campaign expenses are allocated as follows at August 31, 2017: Programs $ 458,645 Fundraising 458,390 Management and General 16,854 TOTAL CAMPAIGN EXPENSES $ 933,889 7. RETIREMENT PLAN AMVETS maintains a 401(k) profit-sharing plan and trust retirement plan for all employees who meet certain age and length of service requirements. Under the terms of the plan, AMVETS matches 150% of the participant's deferral up to the first 4% of salary deferred by each participant. Retirement expense for the year ended August 31, 2017 totaled $45,577. 14

NOTES TO FINANCIAL STATEMENTS AUGUST 31, 2017 8. CONTINGENCIES AMVETS has entered into agreements with several hotels to provide conference facilities and room accommodations for certain meetings through 2019. The agreements contain various clauses whereby AMVETS is liable for liquidated damages in the event of cancellation or lower than anticipated attendance. The management of AMVETS does not believe that any losses will be incurred under these contracts. As of August 31, 2017, the maximum possible amount of liquidated damages was approximately $430,800. 9. FUNDRAISING AGREEMENTS In April 2013, AMVETS entered into a new agreement with Heritage Company to continue to provide direct marketing and related services on an ongoing basis. The term of the agreement is from May 16, 2013 to August 31, 2016. Under this agreement, Heritage Company charges AMVETS an hourly rate for its services. Regardless of collection efforts on pledges received, Heritage Company guaranteed to pay AMVETS $625,000 for the first year of the campaign. AMVETS signed a new agreement with Heritage Company during 2016 extending the term of the arrangement through August 31, 2018. In December 2013, AMVETS entered into an agreement with Harris Connect, LLC to provide various fundraising services, including direct mail and telemarketing solicitations. The original agreement was valid through December 1, 2018. Harris Connect, LLC charged AMVETS a flat monthly fee for these services. In September 2015, AMVETS and Harris Connect, LLC mutually agreed to discontinue their relationship. During the year ended August 31, 2017, AMVETS collected $41,485 of outstanding pledges raised by Harris Connect, LLC, and wrote off $47,282 in pledges raised by Harris Connect, LLC which were deemed uncollectible. For the year ended August 31, 2017, gross revenue collected by these fundraisers and direct expenses for solicitation, production of the yearbook, and direct mail campaigns are reported in the accompanying Statement of Activities and Change in Net Assets as fundraising revenue and telemarketing expenses, respectively. AMVETS allocated a portion of the costs to programs (see Note 6). At August 31, 2017, the balance in the bank account maintained by Heritage Company was $6,206, and is included in cash and cash equivalents in the accompanying Statement of Financial Position. 10. RELATED PARTY AMVETS is related to the following organizations: AMVETS National Service Foundation AMVETS Charities AMVETS does not have a controlling interest in either of these organizations. However, the National Commander and Executive Director of AMVETS are members of the Board of Trustees of the AMVETS National Service Foundation and AMVETS Charities. On September 1, 2016, AMVETS received a grant for $750,000 from the AMVETS National Service Foundation, to be paid monthly at $50,000 per month, plus four quarterly installments of $37,500. As of August 31, 2017, there was no remaining balance owed on this grant. 15

NOTES TO FINANCIAL STATEMENTS AUGUST 31, 2017 11. FAIR VALUE MEASUREMENT In accordance with FASB ASC 820, Fair Value Measurement, AMVETS has categorized its financial instruments, based on the priority of the inputs to the valuation technique, into a threelevel fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure the financial instruments fall within different levels of hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument. Investments recorded in the Statement of Financial Position are categorized based on the inputs to valuation techniques as follows: Level 1. These are investments where values are based on unadjusted quoted prices for identical assets in an active market AMVETS has the ability to access. Level 2. These are investments where values are based on quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, or model-based valuation techniques that utilize inputs that are observable either directly or indirectly for substantially the full-term of the investments. Level 3. These are investments where inputs to the valuation methodology are unobservable and significant to the fair value measurement. Following is a description of the valuation methodology used for investments measured at fair value. There have been no changes in the methodologies used at August 31, 2017. Common stocks - Valued at the closing price reported on the active market in which the individual securities are traded. Exchange traded funds/closed-end funds - Fair value is equal to the reported net asset value of the fund, which is the price at which additional shares can be obtained. The table below summarizes, by level within the fair value hierarchy, AMVETS' investments as of August 31, 2017: Level 1 Level 2 Level 3 Total Asset Class: Common stocks $ 3,229,933 $ - $ - $ 3,229,933 Exchange traded funds/closedend funds 4,183,521 - - 4,183,521 TOTAL $ 7,413,454 $ - $ - $ 7,413,454 12. SUBSEQUENT EVENTS In preparing these financial statements, AMVETS has evaluated events and transactions for potential recognition or disclosure through December 8, 2017, the date the financial statements were issued. 16