Giant Steps Therapeutic Equestrian Center, Inc.

Giant Steps Therapeutic Equestrian Center, Inc. Consolidated Financial Statements Years Ended December 31, 2017 and 2016 RSM US Alliance member firms are separate and independent businesses and legal entities that are responsible for their own acts and omissions, and each are separate and independent from RSM US LLP. RSM US LLP is the U.S. member firm of RSM International, a global network of independent audit, tax, and consulting firms. Members of RSM US Alliance have access to RSM International resources through RSM US LLP but are not member firms of RSM International.

Table of Contents Independent Auditor's Report 1 Consolidated Financial Statements Consolidated Statements of Financial Position 3 Consolidated Statement of Activities for the year ended December 31, 2017 4 Consolidated Statement of Activities for the year ended December 31, 2016 5 Consolidated Statement of Functional Expenses for the year ended December 31, 2017 6 Consolidated Statement of Functional Expenses for the year ended December 31, 2016 7 Consolidated Statements of Cash Flows 8 Notes to Consolidated Financial Statements 9 Page

Consolidated Statements of Financial Position December 31, 2017 2016 Assets Current assets Cash and cash equivalents $ 856,389 $ 979,939 Accounts receivable 13,650 9,482 Pledges receivable 24,252 25,500 Prepaid expenses 5,641 - Total current assets 899,932 1,014,921 Non-current assets Investments 967,941 551,352 Property, equipment and improvements, net 597,723 649,610 Total non-current assets 1,565,664 1,200,962 Total assets $ 2,465,596 $ 2,215,883 Liabilities and net assets Current liabilities Accounts payable $ 8,741 $ 8,013 Accrued liabilities 16,562 1,079 Accrued vacation 23,883 23,792 Total current liabilities 49,186 32,884 Net assets Unrestricted Undesignated 1,108,300 1,442,691 Board designated 958,990 496,264 Total unrestricted net assets 2,067,290 1,938,955 Temporarily restricted net assets 349,120 244,044 Total net assets 2,416,410 2,182,999 Total liabilities and net assets $ 2,465,596 $ 2,215,883 See accompanying Notes to Consolidated Financial Statements 3

Consolidated Statement of Activities For the Year Ended December 31, 2017 Temporarily Unrestricted Restricted Total Revenues, gains and other support Contributions $ 777,493 $ 99,120 $ 876,613 Program fees, net of scholarship 119,936-119,936 Investment income 94,695-94,695 Income from fundraising activities 91,227-91,227 In-kind services and goods 42,033-42,033 Loss on disposal of property and equipment (2,940) - (2,940) Total revenues and gains 1,122,444 99,120 1,221,564 Reclassification of net assets (250,000) 250,000 - Net assets released from restriction 244,044 (244,044) - Total support and revenue 1,116,488 105,076 1,221,564 Expenses Program services 632,034-632,034 General and administrative 148,817-148,817 Fundraising 207,302-207,302 Total expenses 988,153-988,153 Change in net assets 128,335 105,076 233,411 Net assets at beginning of year 1,938,955 244,044 2,182,999 Net assets at end of year $ 2,067,290 $ 349,120 $ 2,416,410 See accompanying Notes to Consolidated Financial Statements 4

Consolidated Statement of Activities For the Year Ended December 31, 2016 Temporarily Unrestricted Restricted Total Revenues, gains and other support Contributions $ 486,576 $ 227,924 $ 714,500 Program fees, net of scholarship 121,951-121,951 Income from fundraising activities 184,110-184,110 Investment income 39,058-39,058 In-kind services and goods 29,669-29,669 Loss on disposal of property and equipment (5,483) - (5,483) Total revenues and gains 855,881 227,924 1,083,805 Net assets released from restriction 424,301 (424,301) - Total support and revenue 1,280,182 (196,377) 1,083,805 Expenses Program services 532,797-532,797 General and administrative 139,873-139,873 Fundraising 203,836-203,836 Total expenses 876,506-876,506 Change in net assets 403,676 (196,377) 207,299 Net assets at beginning of year as restated (Note J) 1,535,279 440,421 1,975,700 Net assets at end of year $ 1,938,955 $ 244,044 $ 2,182,999 See accompanying Notes to Consolidated Financial Statements 5

Consolidated Statement of Functional Expenses For the Year Ended December 31, 2017 Program General and Services Administrative Fundraising Total Payroll and payroll taxes $ 277,812 $ 62,966 $ 89,841 $ 430,619 Facility and horse management 104,761 - - 104,761 Depreciation expense 66,427 7,381 1,097 74,905 Insurance 56,686-5,075 61,761 Legal and professional 3,172 55,979-59,151 Rent 46,686 11,100-57,786 Supplies and equipment 5,605 1,900 41,783 49,288 Outside services 11,368 3,030 29,488 43,886 Repairs and maintenance 33,435 348-33,783 Advertising and promotion 8,307 610 9,757 18,674 Service fees 2,325-9,368 11,693 Awards - - 9,156 9,156 Communications 7,812 - - 7,812 Tax and license 552 2,827 1,352 4,731 Meals and entertainment 556 33 3,364 3,953 Travel 739 738 2,058 3,535 Postage and delivery 113 1,530 1,607 3,250 Printing and reproduction 44-2,407 2,451 Utilities 1,936 359-2,295 Training and conference 2,232-20 2,252 Dues and subscriptions 1,466 16 75 1,557 Interest expense - - 602 602 Meetings - - 252 252 Total $ 632,034 $ 148,817 $ 207,302 $ 988,153 See accompanying Consolidated Notes to Financial Statements 6

Consolidated Statement of Functional Expenses For the Year Ended December 31, 2016 Program General and Services Administrative Fundraising Total Payroll and payroll taxes $ 209,553 $ 56,258 $ 74,206 $ 340,017 Outside services 15,273 25,707 51,367 92,347 Facility and horse management 85,774 - - 85,774 Depreciation expense 62,667 6,920-69,587 Insurance 56,545-6,073 62,618 Rent 43,659 11,100-54,759 Supplies and equipment 12,155 4,834 32,625 49,614 Legal and professional 1,135 29,329-30,464 Service fees 4,224 2,001 8,739 14,964 Training and conference 12,836-250 13,086 Advertising and promotion 1,820 1,002 9,426 12,248 Repairs and maintenance 10,350 494 1,305 12,149 Travel 3,276 196 6,528 10,000 Awards - - 8,571 8,571 Communications 7,743 - - 7,743 Printing and reproduction 828-2,543 3,371 Postage and delivery 4 1,520 1,215 2,739 Utilities 2,163 352-2,515 Dues and subscriptions 1,450-50 1,500 Tax and license 472 160 446 1,078 Meals and entertainment 770-146 916 Meetings 100-346 446 Total $ 532,797 $ 139,873 $ 203,836 $ 876,506 See accompanying Consolidated Notes to Financial Statements 7

Consolidated Statements of Cash Flows For the Years Ended December 31, 2017 2016 Increase (decrease) in cash and cash equivalents Cash flows from operating activities Change in net assets $ 233,411 $ 207,299 Adjustments to reconcile change in net assets to net cash provided by operating activities: Depreciation 74,905 69,587 Loss on disposal of property and equipment 2,940 5,483 Realized losses on investments 2,418 698 Unrealized gains on investments (76,139) (30,083) Donated property (8,000) - Depreciable property exchanged for supplies 5,175 - (Increase) decrease in operating assets: Accounts receivable (4,168) 14,910 Pledges receivable 1,248 408,501 Prepaid expenses (5,641) - Increase (decrease) in operating liabilities: Accounts payable 728 830 Accrued liabilities 15,483 (4,872) Accrued vacation 91 8,827 Net cash provided by operating activities 242,451 681,180 Cash flows from investing activities Purchase of investments (759,633) (856,069) Sale of investments 416,765 334,102 Purchase of property, equipment and improvements (23,133) (54,282) Net cash used in investing activities (366,001) (576,249) Net increase (decrease) in cash and cash equivalents (123,550) 104,931 Cash and cash equivalents at beginning of year 979,939 875,008 Cash and cash equivalents at end of year $ 856,389 $ 979,939 Supplemental disclosures of cash flow information Cash paid during the year for interest $ 602 $ - See accompanying Notes to Consolidated Financial Statements 8

Notes to Consolidated Financial Statements Years Ended December 31, 2017 and 2016 Note A. Nature of Activities Giant Steps Therapeutic Equestrian Center, Inc. ( Giant Steps ) was incorporated in 1997 under the laws of the State of California for the charitable purpose of bringing the proven benefits of therapeutic horseback riding to physically, developmentally, and/or cognitively disabled individuals. Giant Steps has since added ground breaking work programming for individuals living with emotional disabilities. Giant Steps is open to people of all ages with disabilities who reside in the Bay Area Counties. It is a Premier Accredited Center Member of the Professional Association of Therapeutic Horsemanship ( PATH ) which provides safety standards to its members. Giant Steps instructors are certified by PATH. Giant Steps support comes primarily from special events, individual donors contributions and private grants. Giant Steps receives no government funding. Giant Steps Charity Classic, Inc. (the Classic ) was incorporated on February 20, 2014 under the laws of the State of California for the charitable purpose of operating the Giant Steps Charity Classic horse show and gala. Contributions, revenues and expenses related to this event are recorded on the books of the Classic. The net proceeds from the Classic specifically and exclusively support Giant Steps. Together, these organizations are known as (the Center ). Note B. Summary of Significant Accounting Policies Principles of consolidation The accompanying consolidated financial statements include the accounts of the Center and the Classic. Both organizations share the same Board of Directors and Executive Director. All material inter-company accounts and transactions have been eliminated during the consolidation process. Basis of presentation The accompanying consolidated financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America ( GAAP ). Net assets, revenues, expenses, gains and losses are classified based on the existence or absence of donor-imposed restrictions. Accordingly, net assets of the Center and changes therein are classified and reported as follows: Unrestricted - Unconditional promises to give by donors without any use or time restrictions. Investment earnings are recorded as unrestricted net assets for certain temporarily restricted funds and for certain endowment funds in accordance with donor stipulations. Board designated Unrestricted net assets that the board has set aside for specific purposes. The board must provide approval to use these funds with a two-thirds majority vote. The board at its discretion can change the stipulations under which these funds can be utilized. 9

Notes to Consolidated Financial Statements Years Ended December 31, 2017 and 2016 Note B. Summary of Significant Accounting Policies (continued) Basis of presentation (continued) Temporarily restricted - Unconditional promises to give by donors that specify a specific use or the occurrence of a certain future event. When a restriction is met, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restriction. Permanently restricted - Unconditional promises to give by donors that specify that the assets donated be maintained to provide a permanent source of income. If the donor does not restrict the allowed use of the income, the Center may determine the income's availability to the Center's operations. Currently, there are no permanently restricted assets. Cash and cash equivalents Cash equivalents are considered to be short-term, highly liquid investments with original maturities of three months or less, except when a restriction is imposed which limits the investment's use to long-term. Cash is held in demand accounts at banks, and cash balances may exceed the federally insured amounts during the year. Investments Investments, which are comprised of mutual funds and exchange traded funds, are carried at fair value. Unrealized gains and losses are included in the consolidated statements of activities. Investment earnings restricted by a donor are reported as increases in unrestricted net assets if the restrictions are met (either by passage of time or by use) in the reporting period in which the earnings are recognized. Accounts receivable Accounts receivable represent amounts billed but not yet collected. The Center uses the allowance method to reserve for uncollectible accounts. Management periodically evaluates the allowance. At December 31, 2017 and 2016, management determined that no material allowance was necessary. It is the Center s policy to charge off uncollectible accounts receivable when management determines the receivable will not be collected. Property, equipment and improvements Property, equipment and improvements are stated at cost. Depreciation is computed under the straight-line method over the estimated useful lives of the assets, which range from 3 to 20 years. Leasehold improvements are depreciated using the straight-line method over the lesser of the estimated useful lives or the term of the lease agreement during the year of acquisition. 10

Notes to Consolidated Financial Statements Years Ended December 31, 2017 and 2016 Note B. Summary of Significant Accounting Policies (continued) Property, equipment and improvements (continued) Donated property is recorded at the estimated fair value at the date of receipt. Such donations are reported as unrestricted support unless the donor has restricted the donated asset to a specific purpose. Assets donated with explicit restrictions regarding their use and contributions of cash that must be used to acquire property and equipment are reported as temporarily restricted. It is the Center's policy to capitalize property and equipment over $2,500. Revenue recognition Revenue from exchange transactions Revenues from equine assisted therapy classes are recognized as revenue when the classes are held. Contributions and contributed services Contributions received and unconditional promises to give are measured at their fair values and are reported as an increase in net assets. The Center reports gifts and other assets as restricted support if they are received with donor stipulations that limit the use of the donated assets. When a donor restriction expires, that is, when a stipulated time restriction ends or purpose restriction is accomplished, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the consolidated statements of activities and changes in net assets as net assets released from restriction. Temporarily restricted contributions whose donor-imposed restrictions are fulfilled or expire within the same reporting period are reported as unrestricted contributions. Verifiable pledges for contributions are recorded as pledges receivable. Contributions receivable are recorded at net realizable value. The Center uses the allowance method to reserve for uncollectible accounts and management periodically evaluates the allowance. At December 31, 2017 and 2016, management determined that no material allowance was necessary. Donated services provided by instructors and the farrier were valued at $15,188 and $15,645 for the years ended December 31, 2017 and 2016, respectively. These services are recognized in the consolidated statements of activities as in-kind services and goods. A large number of individuals perform significant amounts of voluntary services to benefit the Center s program services and in its fundraising campaigns. During 2017 and 2016, approximately 8,864 and 8,394 volunteer hours were donated to the Center. However, since the value of these services do not meet the criteria to be recorded as in-kind, the donated services are not reflected in the consolidated financial statements. 11

Notes to Consolidated Financial Statements Years Ended December 31, 2017 and 2016 Note B. Summary of Significant Accounting Policies (continued) Income taxes The Center is a nonprofit organization and is exempt from federal and state income taxes under Section 501(c)(3) of the Internal Revenue Code and California Revenue and Taxation Code Section 23701(d). However, the Center is subject to income taxes on any net income that is derived from a trade or business, regularly carried on, and not in furtherance of the purposes for which it was granted exemption, commonly referred to as unrelated business income. No income tax provision has been recorded since management determined that the Center had no unrelated business income. The Center determines whether its tax positions are "more-likely-than-not" to be sustained upon examination by the applicable taxing authority based on the technical merits of the positions. As of December 31, 2017, the Center has reviewed its tax positions and has concluded no reserve for uncertain tax positions is required. The Center s exempt organization information returns are subject to review through three years after the date of filing for federal and four years after the date of filing for state. Use of estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions based on management's knowledge and experience. Those estimates affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported amounts of revenue, support and expenses. The use of management's estimates primarily relates to the collectability of accounts receivable and contributions receivable, depreciable lives of property, equipment and improvements, and indirect functional expense allocations. Actual results could differ from those estimates. Reclassifications Certain prior year amounts have been reclassified to conform to the current year presentation. These reclassifications had no impact on previously reported results of operations or net assets. Recent accounting pronouncements In August 2016, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) 2016-14, Presentation of Financial Statements of Not-for-Profit Entities, which makes targeted changes to the not-for-profit financial reporting model. Under the new ASU, the existing three-category classification of net assets (i.e. unrestricted, temporarily restricted, and permanently restricted) will be replaced with a model that combines temporarily restricted and permanently restricted into a single category called "net assets with donor restrictions." Differences in the nature of donor restrictions will be disclosed in the notes, with an emphasis on how and when the resources can be used. 12

Notes to Consolidated Financial Statements Years Ended December 31, 2017 and 2016 Note B. Summary of Significant Accounting Policies (continued) Recent accounting pronouncements (continued) The guidance for classifying deficiencies in endowment funds ("underwater endowments") and on accounting for the lapsing of restrictions on gifts to acquire property, plant, and equipment have also been clarified. New disclosures will highlight restrictions on the use of resources that make otherwise liquid assets unavailable for meeting near-term financial requirements. Entities will be required to disclose (on the face of the statement or in notes) the extent to which the balance sheet comprises financial assets, the extent to which those assets can be converted to cash within one year, and any limitations that would preclude their current use. This ASU is effective for fiscal years beginning after December 15, 2017, with early application permitted. This ASU should be applied on a retrospective basis in the year that the ASU is first applied. The Center is evaluating the impact of this standard on the consolidated financial statements. Note C. Investments Investments stated at fair value as of December 31 are as follows: Gross Gross Unrealized Unrealized Fair Cost Gains Losses Value December 31, 2017 Mutual funds $ 626,768 $ 104,184 $ (1,096) $ 729,856 Exchange traded funds 239,239 13 (1,167) 238,085 $ 866,007 $ 104,197 $ (2,263) $ 967,941 December 31, 2016 Mutual funds $ 288,973 $ 31,969 $ - $ 320,942 Exchange traded funds 232,295 - (1,885) 230,410 $ 521,268 $ 31,969 $ (1,885) $ 551,352 The following schedule summarizes the investment income and its classification in the statements of activities for the years ended December 31: 2017 2016 Dividends and interest $ 20,974 $ 9,673 Net realized losses (2,418) (698) Net unrealized gains 76,139 30,083 Total investment income $ 94,695 $ 39,058 13

Notes to Consolidated Financial Statements Years Ended December 31, 2017 and 2016 Note D. Fair Value Measurement The framework for measuring fair value provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1) and the lowest priority to unobservable inputs (level 3). The three levels of the fair value hierarchy under FASB ASC 820 are described as follows: Level 1: Level 2: Level 3: Valuation based on quoted market prices in active markets for identical assets or liabilities that the Center has the ability to access. Valuations based on pricing inputs that are other than quoted prices in active markets which are either directly or indirectly observable. Valuations are derived from other valuation methodologies, including pricing models, discounted cash flow models, and similar techniques. The categorization of an investment within the hierarchy is based on the pricing transparency of the investment and does not necessarily correspond to the Center's perceived risk of that investment. The following table presents the Center's financial assets that are measured at fair value on a recurring basis as of December 31, 2017: Significant Significant Quoted Observable Unobservable Prices Inputs Inputs (Level 1) (Level 2) (Level 3) Total Mutual funds $ 729,856 $ - $ - $ 729,856 Exchange traded funds 238,085 - - 238,085 $ 967,941 $ - $ - $ 967,941 The following table presents the Center's financial assets that are measured at fair value on a recurring basis as of December 31, 2016: Significant Significant Quoted Observable Unobservable Prices Inputs Inputs (Level 1) (Level 2) (Level 3) Total Mutual funds $ 320,942 $ - $ - $ 320,942 Exchange traded funds 230,410 - - 230,410 $ 551,352 $ - $ - $ 551,352 14

Notes to Consolidated Financial Statements Years Ended December 31, 2017 and 2016 Note E. Property, Equipment and Improvements Property, equipment and improvements consist of the following as of December 31: 2017 2016 Leasehold improvements $ 940,741 $ 937,085 Equipment 127,584 131,037 Website and software 51,792 51,792 Vehicles 46,500 46,500 Horses 30,660 24,560 Total depreciable assets 1,197,277 1,190,974 Accumulated depreciation (599,554) (541,364) $ 597,723 $ 649,610 Depreciation expense for the years ended December 31, 2017 and 2016 amounted to $74,905 and $69,587, respectively. Note F. Temporarily Restricted Net Assets Temporarily restricted net assets are summarized by the following restriction categories as of December 31: 2017 2016 Youth programming $ 337,975 $ 197,320 Scholarship 6,159 22,555 Veteran program 4,986 16,600 Veterinary emergency fund - 7,569 $ 349,120 $ 244,044 15

Notes to Consolidated Financial Statements Years Ended December 31, 2017 and 2016 Note G. Fundraising Activities The Center carries out several fundraising events during the year. The results of these events are as follows for the years ended December 31: 2017 2016 Contributions from the Charity Classic $ 226,940 $ 140,950 Contributions from other fundraising events 74,629 72,087 Other revenue from an exchange of goods or services 91,227 96,375 Total fundraising event revenue 392,796 309,412 Total fundraising event expenses (114,014) (114,948) Net fundraising event income $ 278,782 $ 194,464 Note H. Operating Leases The Center has an operating lease for office space. The office lease is a month-to-month lease with a monthly payment of $925. On an annual basis for the years ended December 31, 2017 and 2016, the lessor has made a donation to the Center of a 50% monthly rent reduction. The Center has an operating lease for the riding facility which expires in May 2019. The Center has two renewable options for five years each to extend the lease to May 2029. Lease payments are at $3,000 per month, increasing $50 per month on each anniversary date of the lease up to $3,200. The Center leases various equipment with annual payments of $643, the leases expire in June 2020. Future minimum rental payments for the years ending December 31 are as follows: 2018 $ 41,173 2019 19,226 2020 576 Total rent expense amounted to $57,786 and $54,759 during 2017 and 2016, respectively. $ 60,975 16

Notes to Consolidated Financial Statements Years Ended December 31, 2017 and 2016 Note I. Concentration of Credit Risk At various times during the years ended December 31, 2017 and 2016, the Center had with financial institutions deposits in excess of the Federal Deposit Insurance Corporation ( FDIC ) insurance limit of $250,000. The Center had cash on deposit in excess of the FDIC insured amount of approximately $195,000 at December 31, 2017. Note J. Prior Period Adjustment Originally stated unrestricted net assets of $1,698,095 at December 31, 2015 was decreased by $162,816 to correct an error that was identified during the current period. The adjusted unrestricted net assets balance at December 31, 2015 is $1,535,279. The error that was corrected related to an incorrect amount of depreciation expense based on incorrect lives and methodologies recognized for years prior to 2016. Originally stated change in net assets for the year ended December 31, 2016 of $241,621 was decreased by $34,322 to $207,299, to correct the depreciation lives and methods error. Originally stated depreciation expense for the year ended December 31, 2016 of $35,265 was increased by $34,322 to $69,587. Originally stated net property, equipment and improvements on the consolidated balance sheet of $846,748 for the year ended December 31, 2016 decreased by the prior period adjustment of $162,816 and the increase in depreciation expense of $34,322 for a total decrease of $197,138 to $649,610. Note K. Subsequent Events The Center evaluated subsequent events from January 1, 2018 through July 5, 2018, the date which the consolidated financial statements were available to be issued. 17