Steven M. Weinberg, C.P.A. Certified Public Accountants and Consultants

FINANCIAL STATEMENTS Steven M. Weinberg, C.P.A. Certified Public Accountants and Consultants

YEAR ENDED TABLE OF CONTENTS Page No. Independent Auditors Report 1 FINANCIAL STATEMENTS Statements of Financial Position 2 Statements of Activities and Changes in Net Assets 3 Statements of Functional Expenses 4 Statements of Cash Flows 5 Notes to the Financial Statements 6-10

Steven M. Weinberg, C.P.A. Certified Public Accountants and Consultants Empire State Building 350 Fifth Avenue Suite 7210 New York, New York 10118 Telephone (347) 296-8803 Facsimile (877) 270-0342 INDEPENDENT AUDITORS REPORT To The Board of Directors The Skin Cancer Foundation, Inc. We have audited the accompanying statements of financial position of The Skin Cancer Foundation, Inc. (the Foundation ) (a nonprofit organization) as of December 31, 2012, and the related statements of activities, functional expenses and cash flows for the year then ended. These financial statements are the responsibility of the Foundation s management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted 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 of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of The Skin Cancer Foundation, Inc. as of December 31, 2012, and the changes in its net assets and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. Steven M. Weinberg, CPA New York, New York May 16, 2013 1

STATEMENT OF FINANCIAL POSITION Unrestricted Board Total Temporarily Permanently 2012 Assets Undesignated Designated Unrestricted Restricted Restricted Total_ Cash and cash equivalents (Note 2) $ 813,482 $ --- $ 813,482 $ 320 $ --- $ 813,802 Investments (Notes 2 and 3) 4,908,274 1,500,000 6,408,274 --- 624,985 7,033,259 Contributions receivable net (Note 2&4) 583,250 --- 583,250 --- --- 583,250 Prepaid expenses and other assets 46,032 --- 46,032 --- --- 46,032 Due from (to) other funds (96,705) --- (96,705) 327,630 (230,925) 0 Property and equipment-net (Notes 2 & 5) 26,003 --- 26,003 2,456 --- 28,459 Total assets $6,280,336 $1,500,000 $7,780,336 $ 330,406 $ 394,060 $8,504,802 Liabilities and Net assets Accounts payable $ 55,056 $ --- $ 55,056 $ --- $ --- $ 55,056 Obligation under capital lease (Note 7) 19,769 --- 19,769 --- --- 19,769 Deferred lease payable (Note 7) 4,199 --- 4,199 --- --- 4,199 Deferred support 810,333 --- 810,333 --- --- 810,333 Total liabilities 889,357 0 889,357 0 0 889,357 Net Assets (Notes 2 and 7) Undesignated unrestricted 5,390,979 --- 5,390,979 --- --- 5,390,979 Board designated unrestricted --- 1,500,000 1,500,000 --- --- 1,500,000 Total unrestricted 5,390,979 1,500,000 6,890,979 0 0 6,890,979 Temporarily restricted --- --- --- 330,406 --- 330,406 Permanently restricted --- --- --- --- 394,060 394,060 Total net assets 5,390,979 1,500,000 6,890,979 330,406 394,060 7,615,445 Total liabilities and net assets $6,280,336 $1,500,000 $7,780,336 $ 330,406 $ 394,060 $8,504,802 See Independent Auditors Report and Accompanying Notes to the Financial Statements 2

STATEMENT OF ACTIVITIES AND CHANGES IN NET ASSETS YEAR ENDED Unrestricted Public Support and Revenues (Note 2) Board Total Temporarily Permanently 2012 Undesignated Designated Unrestricted Restricted_ Restricted Total_ Public Support Grants Foundation and corporate grants $ 2,278,305 $ --- $ 2,278,305 $ 555,833 $ --- $ 2,834,138 Public Support Contributions 81,598 --- 81,598 --- --- 81,598 Public information and medical education 527,131 --- 527,131 --- --- 527,131 Contributions In-Kind 3,689,877 --- 3,689,877 --- --- 3,689,877 Fundraising events (net of direct expenses of $228,970) 290,417 --- 290,417 --- --- 290,417 Net assets released from restrictions Satisfaction of program restrictions 491,617 --- 491,617 (491,617) --- 0 Total Public Support 7,358,945 --- 7,358,945 64,216 --- 7,423,161 Expenses (Notes 2 and 6) Program services Public and medical education 6,318,745 --- 6,318,745 --- 57,241 6,375,986 Grants and fellowships 222,493 --- 222,493 --- --- 222,493 Total program services 6,541,238 --- 6,541,238 --- 57,241 6,598,479 Supporting services Management and general 271,101 --- 271,101 --- --- 271,101 Fundraising 454,925 --- 454,925 --- --- 454,925 Total supporting services 726,026 --- 726,026 --- --- 726,026 Total expenses 7,267,264 --- 7,267,264 --- 57,241 7,324,505 Change in net assets before revenues 91,681 --- 91,681 0 ( 57,241) 98,656 Revenues Unrealized gain on securities 223,279 --- 223,279 --- 23,985 247,264 Net realized gain on sale of securities 100,129 --- 100,129 --- 10,756 110,885 Net Investment income 209,468 --- 209,468 --- 22,500 231,968 Equipment lease buyout 24,905 --- 24,905 --- 0 24,905 Total Revenues 557,781 --- 557,781 --- 57,241 615,022 Change in net assets 649,462 --- 649,462 0 0 713,678 Net assets beginning 4,741,517 1,500,000 6,241,517 266,190 394,060 6,901,767 Net assets end $5,390,979 $1,500,000 $6,890,979 $ 330,406 $ 394,060 $7,615,445 See Independent Auditors Report and Accompanying Notes to the Financial Statements 3

STATEMENT OF CASH FLOWS YEAR ENDED CASH FLOWS FROM OPERATING ACTIVITIES Change in net assets $ 713,678 Adjustments to reconcile change in net assets to net cash provided by operating activities Depreciation 48,520 Realized gain on investments ( 110,885) Investment income (net) ( 231,967) Unrealized gain on investments ( 247,266) (Increase) decrease in operating assets Contributions receivable ( 135,250) Other receivables 14,681 Prepaid expenses and other assets 625 Increase (decrease) in operating liabilities Accounts payable ( 70,261) Deferred support 48,832 Deferred lease payable ( 16,798) Net cash provided by operating activities 13,909 CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sale of investments 7,002,841 Purchases of investments ( 6,927,454) Net cash provided by investing activities 75,387 CASH FLOWS FROM FINANCING ACTIVITIES Principal payments on obligations under capital lease ( 12,390) Net cash provided by financing activities ( 12,390) Net decrease in cash and cash equivalents 76,906 Cash and cash equivalents beginning 736,896 Cash and cash equivalents ending $ 813,802 See Independent Auditors Report and Accompanying Notes to the Financial Statements 5

NOTES TO FINANCIAL STATEMENTS 1. ORGANIZATION The Skin Cancer Foundation, Inc. ( Foundation ) is a not-for-profit organization incorporated in New York State in 1977, whose purpose is conducting public and medical education programs regarding the incidence, morbidity and mortality of skin cancer. This is accomplished by the development and distribution of informational materials to the general public, the media and the medical professions. Additionally, the Foundation provides support for medical training and research to help reduce skin cancer. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying financial statements have been prepared on the accrual basis in accordance with generally accepted accounting principles. The financial statements are presented in accordance with the provisions of FASB Statements No. 116, Accounting for Contributions Received and Contributions Made and No. 117, Financial Statements of Not-for-Profit Organizations, and the AICPA Audit and Accounting Guide for Not-for-Profit Organizations (the Guide ). Under the provisions of FASB Statements Nos. 116 and 117 and the Guide, net assets and revenues, expenses, gains and losses are classified based on the existence or absence of donorimposed restrictions. Accordingly, the net assets of the Foundation and changes therein are classified and reported as follows: Unrestricted net assets net assets not subject to donor-imposed stipulations. Temporarily restricted net assets net assets subject to donor-imposed stipulations that may or will be met either by actions of the Foundation and/or the passage of time. Permanently restricted net assets net assets subject to donor-imposed stipulations that they be maintained permanently by the Foundation. Generally, the donors of these assets permit the Foundation to use all or part of the income earned on related investments for general or specific purposes. Revenues are reported as increases in unrestricted net assets unless use of the related assets is limited by donor-imposed restrictions. Expenses are reported as decreases in the unrestricted net assets. Gains and losses on investments and other assets or liabilities are reported as increases or decreases in unrestricted net assets unless their use is restricted by explicit donor stipulation or by law. Expirations of temporary restrictions on net assets (i.e., the donor-stipulated purpose has been fulfilled and/or the stipulated time period has elapsed) are reported as net assets released from restrictions. Promises to Give Contributions are recognized when the donor makes a promise to give to the Foundation that is, in substance, unconditional. Contributions that are restricted by the donor are reported as increases in unrestricted net assets if the restrictions expire in the fiscal year in which the contributions are recognized. All other donor-restricted contributions are reported as increases in temporarily or permanently restricted net assets depending on the nature of the restrictions. When a restriction expires by either the actions of the Foundation or the passage of time, temporarily or permanently restricted net assets are released and reclassified to unrestricted net assets. 6

NOTES TO FINANCIAL STATEMENTS 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) In-Kind Contributions In addition to receiving cash contributions, the Foundation receives in-kind contributions from various donors for materials used in conjunction with public service announcements and benefit events. It is the policy of the Foundation to record the estimated fair market value of certain inkind donations as an expense in its financial statements, and similarly increase donations by a like amount. For the year ended December 31, 2012, $3,689,877 of in-kind contributions is included in support and revenue and $3,689,877 is included in the statement of functional expenses respectively. Accounting Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and judgments that affect the reported amounts of assets and liabilities and disclosures of contingencies at the date of the financial statements, and the reported amounts of revenues and expenses recognized during the reporting period. Actual results could differ from those estimates. Cash and cash equivalents Cash consists of the Foundation s checking accounts. At December 31, 2012, the Foundation s checking accounts held approximately $564,000 in excess of federal insurance coverage. Contributions receivable Unconditional contributions receivable are recognized as revenues in the period the pledge is received. At December 31, 2012, all contributions receivable are scheduled for collection within one year. Management believes that all contributions receivable are collectible; accordingly, there is no allowance for uncollectible accounts. Investments Investments in marketable equity securities, mutual funds and all debt securities are recorded at fair value. Concentrations of Risk Financial instruments which potentially subject the Foundation to concentrations of credit risk consist of cash and temporary investments, and investments in debt and equity securities. The Foundation places its cash and marketable securities with creditworthy, high quality financial institutions. Though the market value of investments is subject to fluctuations on a year-to-year basis, the Foundation believes that the investment policy is prudent for the long-term welfare of the Foundation. Property and equipment Physical assets are stated at cost, if purchased, or fair value if donated. The Foundation is computing depreciation on a straight-line basis over the estimated useful lives of furniture and equipment (3-5 year) and leasehold improvements (10 year). Normal repair and maintenance expenses are charged to operations as incurred. Functional expenses Functional expenses have been allocated between Program Services and Supporting Services based on the Foundation s analysis of personnel time and space utilized for the related activities. 7

NOTES TO FINANCIAL STATEMENTS 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Income tax status The Foundation is exempt from federal income tax under Section 501 (c) (3) of the Internal Revenue Code. It is also exempt from state income taxes. 3. INVESTMENTS Investments as of December 31, 2012 are composed of the following: Fair Unrealized Cost Market Value Gain/(Loss) Money market account $ 721,653 $ 721,653 $ 0 Equity and debt securities Common stocks 355,302 372,107 16,805 Mutual funds 5,638,807 5,939,499 300,692 Total equity and debt securities 5,994,109 6,311,606 317,497 Total investments $6,715,762 $7,033,259 $ 317,497 Net investment income and net realized and unrealized gains/(losses) were as follows: 2012 Investment income $ 282,558 Investment expenses ( 50,589) Net investment income $ 231,969 Net realized gains 110,885 Change in unrealized gains 247,264 $ 358,149 8

NOTES TO FINANCIAL STATEMENTS 4. CONTRIBUTIONS RECEIVABLE Contributions receivable consist of the following: Contributions: Unrestricted $583,250 Contributions receivable are expected to be collected within the next year. 5. PROPERTY AND EQUIPMENT Property and equipment consists of the following: Machinery and equipment $ 214,176 Furniture and fixtures 64,234 278,410 Less: Accumulated depreciation 249,951 Depreciation expense for the year ended December 31, 2012 is $48,520. $ 28,459 6. FUNCTIONAL EXPENSES Functional expenses are allocated between Program Services and Supporting Services as described in Note 2. Total Expenses for the year ended December 31, 2012 amounts to $7,267,264, of which expenditures for Program Services accounts for approximately 90% of total expenditures, with the remaining 10% allocated to Supporting Services. Supporting Services is comprised of Management and General and Fundraising. Management and General expenditures accounts for approximately 4% of total expenditures, with Fundraising accounting for the remaining 6% of total expenditures. 7. COMMITMENTS On June 1, 2011, the Foundation entered into a new non-cancelable operating lease agreement expiring in January 2018 with an annual rate of $199,260 until November 30, 2014, increasing to $219,186 beginning December 1, 2014 until January 31, 2018, and is subject to tax and economic escalations. As part of the prior lease agreement that was entered into on March 30, 2006 was a rent concession in the amount of $79,094, which is recorded as a deferred lease payable. The foundation is amortizing the rent concession of $79,094 as the difference between the monthly rent actually being paid and the straight-line amount of $13,944 per month over the life of the lease. At December 31, 2012, deferred lease payable was $4,199 and rent expense for the year ended December 31, 2012 was $182,714. 9

NOTES TO FINANCIAL STATEMENTS 7. COMMITMENTS (CONTINUED) Future minimum lease payments under the operating lease as of December 31, 2012 are as follows: Year Ending December 31 2013 $ 199,260 2014 200,921 2015 219,186 2016 219,186 2017 219,186 2018 18,266 Total $1,076,005 The Foundation is the lessee of equipment under capital leases expiring August 31, 2013 and February 28, 2015. The asset and liability under the capital leases is recorded at the fair market value of the asset. The cost and accumulated depreciation of the equipment at December 31, 2012 amounted to $49,383 and $18,856 respectively. Depreciation of the assets under the capital leases is included in depreciation expense. Future minimum lease payments under the capital leases as of December 31, 2012 are as follows: Year Ending December 31 Total Phone System Copier 2013 10,396 1,640 8,756 2014 8,756 0 8,756 2015 2,188 0 2,188 Total minimum lease payments 21,340 1,640 19,700 Less amount representing interest ( 1,571) ( 150) ( 1,421) Present value of minimum lease payments $19,769 $1,490 $18,279 8. NET ASSETS Unrestricted net assets consist of the following: Designated for expansion of programs and facilities $1,500,000 Undesignated 5,390,979 Total unrestricted net assets $6,890,979 The Foundation received approximately $1,832,000 from two separate bequests in prior years. The Board of Directors decided that a reserve in the amount of $1,500,000 of bequest monies be set aside for future contingencies, including expansion of the Foundation s programs, facilities and other needs that may be designated by the board. The Board does not intend to use these funds for the Foundation s normal operations. Temporarily restricted net assets are available for the following purposes: Public information and medical education $ 330,406 Permanently restricted net assets consist of the following: Permanent endowment fund, the income from which is available for the development of educational materials. $ 394,060 10

STATEMENT OF FUNCTIONAL EXPENSES Program Services Supporting Services Public & Grants and Fellowships Total Total Medical Program Management Support 2012 Education Unrestricted Services and General Fundraising Services Total Research and fellowship $ --- $ 222,493 $ 222,493 $ --- $ --- $ --- $ 222,493 Public and medical education 835,608 --- 835,608 --- --- --- 835,608 Seminars and conferences 130,905 --- 130,905 --- --- --- 130,905 Outsource fees and expenses 1,263,164 --- 1,263,164 266,479 420,393 686,872 1,950,036 In-Kind Contributions (Note 2) 3,689,877 --- 3,689,877 --- --- --- 3,689,877 Rent 166,416 --- 166,416 1,005 15,293 16,298 182,714 Electricity 21,173 --- 21,173 128 1,946 2,074 23,247 Insurance 15,024 --- 15,024 91 1,381 1,472 16,496 Repairs and maintenance 6,847 --- 6,847 41 629 670 7,517 Equipment rental 10,082 --- 10,082 61 926 987 11,069 Telephone 4,088 --- 4,088 25 375 400 4,488 Office supplies 23,398 --- 23,398 141 2,151 2,292 25,690 Postage and shipping 8,209 --- 8,209 50 754 804 9,013 Professional fees 9,290 --- 9,290 56 854 910 10,200 Board meetings 1,072 --- 1,072 6 99 105 1,177 Dues and subscriptions 3,611 --- 3,611 22 332 354 3,965 Computer expense 57,727 --- 57,727 348 5,304 5,652 63,379 Interest and bank charges 2,582 --- 2,582 16 237 253 2,835 Taxes and fees 1,249 --- 1,249 8 114 122 1,371 Miscellaneous 4,477 --- 4,477 27 412 439 4,916 Administrative 19,808 --- 19,808 120 1,820 1,940 21,748 Total expenses before depreciation 6,274,607 222,493 6,497,100 268,624 453,020 721,644 7,218,744 Depreciation expense 44,138 --- 44,138 2,477 1,905 4,382 48,520 Total expenses $6,318,745 $ 222,493 $6,541,238 $ 271,101 $ 454,925 $726,026 $7,267,264 See Independent Auditors Report and Accompanying Notes to the Financial Statements 4

FINANCIAL STATEMENTS