L.A. GOAL

December 31, 2010

HENSIEK & CARON

INDEPENDENT AUDITOR’S REPORT

To The Board of Directors

L.A. Goal

We have audited the accompanying statement of financial position of L.A. Goal (a nonprofit organization) as of December 31, 2010, and the related statements of activities and changes in net assets, cash flows and functional expenses for the year then ended. These financial statements are the responsibility of the organization’s management. Our responsibility is to express an opinion on these financial statements, based on our audit.

We conducted our audit in accordance with U.S. generally accepted auditing standards. 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 L.A. Goal as of December 31, 2010, and the changes in its net assets and its cash flows for the year then ended, in conformity with U.S. generally accepted accounting principles.

a

March 10, 2011

L.A. GOAL STATEMENT OF ACTIVITIES AND CHANGES IN NET ASSETS FOR THE YEAR ENDED DECEMBER 31, 2010

Program Management Services & General Fundraising Total

Salaries $ 310,139 $ 19,655 $ 38,461 $ 368,255 Professional fees 72,733 13,450 -86,183 Program supplies and materials 64,018 --64,018 Insurance 47,679 4,049 4,774 56,502 Payroll taxes 24,922 1,616 1,924 28,462 Depreciation 16,443 5,481 -21,924 Utilities 11,178 2,096 699 13,973 Printing 11,249 797 199 12,245 Office expense 5,469 2,272 238 7,979 Postage 6,084 787 263 7,134 Vehicle expense 6,736 --6,736 Telephone 4,773 954 239 5,966 Maintenance 4,081 866 261 5,208 Licenses and fees 1,845 106 56 2,007 Website 132 23 6 161 Rent 1--1 Miscellaneous (11) --(11)

Total $ 587,471 $ 52,152 $ 47,120 $ 686,743

L.A. GOAL NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2010

Note 1 – Organization and Summary of Significant Accounting Policies

Organization

L.A. Goal (the Organization) was founded in 1969. The Organization’s educational, vocational and recreational programs provide opportunities for adults with developmental disabilities to increase their independence and employability. Through its art and outreach activities, The Organization educates the community about the abilities of people with developmental disabilities. The Organization's vision is to create a more open society where people with developmental disabilities can enjoy full inclusion, including employment, in their communities.

Public Support and Revenue Donations are recorded as made. All donations are considered to be available for unrestricted use unless specifically restricted by the donor.

Amounts received or promised that are designated for future periods or restricted by the donor for specific purposes are reported as temporarily or permanently restricted support that increases those net asset classes. When a temporary restriction expires, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restriction.

Donated securities and other non-cash donations are recorded at estimated fair values at the date of donation. Contributions of donated services that create or enhance non-financial assets or that require specialized skills, are provided by individuals possessing those skills, and would typically need to be purchased if not provided by donation, are recorded at their fair values in the period received.

The Organization derives revenue from the sale of paintings and craft items which are produced by its members.

Method of Accounting The Organization accounts for financial transactions on the accrual basis of accounting. To ensure observance of limitations and restrictions placed on the use of resources available to the Organization, its accounts are maintained in accordance with the principles of fund accounting.

Cash and Cash Equivalents For the purpose of the statement of cash flows, the Organization considers all highly liquid debt investments purchased with a maturity of three months or less to be cash equivalents. Cash and cash equivalents are recorded at cost.

Contributions Receivable The Organization uses the direct write off method to determine uncollectible receivables. The annual write off is based on prior years experience and management’s analysis of specific receivables. Management has determined that all receivables are collectible.

L.A. GOAL NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2010

Note 1 – Organization and Summary of Significant Accounting Policies (continued)

Inventory

The cost of materials used to produce paintings is expensed as incurred, and no inventory of these materials is maintained. The cost of certain other materials, primarily T-shirts and blank card stock, is capitalized until sold, and such inventory is stated at the lower of cost, market or donated value.

Investments

Investments are valued at fair value, with realized and unrealized gains and losses reflected in the statements of activities. The fair value of investments is based on quoted market values.

Property and Equipment

Property and equipment is stated at cost. Assets acquired by gift or bequest are stated at market value at the date of acquisition. It is the Organization’s policy to capitalize expenditures for these items in excess of $500. Depreciation is recorded, using the straight-line method over the following

The Organization is a nonprofit organization under Section 501(c)(3), and is not classified as a private foundation. Such organizations are not normally subject to income tax; therefore, no provision for income taxes is included in the statements.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Note 2 – Inventory

Inventory consists of the following: Raw materials $ 1,292 Finished goods 5,857 $ 7,149

L.A. GOAL NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2010

Note 3 – Investments

Investments consist of the following:

Aggregate Fair Value Cost

Marketable equity securities $ 2,612 $ 5,680 Certificates of deposit 50,168 50,168 Mutual funds 128,229 142,753

$ 181,009 $ 198,601

Investment returns are summarized as follows:

Interest and dividends $ 4,621 Net realized and unrealized gains 17,203

Total $ 21,824

Note 4 – Fair Value Measurements

Fair values of assets measured on a recurring basis at December 31, 2010 are as follows:

$ 181,009 $ 181,009 $ -$ -

Investments Fair values for investments are determined by reference to quoted market prices and other relevant

L.A. GOAL NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2010

Note 6 – Net Assets

In January 2000, the Board designated a portion of its unrestricted assets for long-term investment to function as a reserve fund. Income from these investments is added to the fund unless used by the board for operational purposes.

Note 7 – Lease

The Organization leases office space under a noncancelable leases expiring April 30, 2027. The lease provides for an annual lease payment of $1 plus certain in-kind services to Culver City. Management cannot readily determine the annual fair value of this lease therefore, it is not reflected in the accompanying financial statements.

Note 8 – Gifts in Kind

During the year ended December 31, 2010, the Organization benefited from more than 3,600 volunteer hours. In-kind professional services that meet the requirements for recognition in the financial statements were recorded and totaled $61,005. These donated services included $17,850 of services provided by a board member and spouse. In addition, the Organization received $31,887 in program supplies.

Note 9 – Royalties

The Organization has an agreement with V2 Recording, Inc. whereby they are to receive a portion of the proceeds generated from the sales of the “I Am Sam” soundtrack album. No royalties were received in the current year. Total royalties received to date are $130,374.

The Organization has another agreement with Starbright Publishing for the publication of a book written and illustrated by the Inside/Out artists. No royalties were received in the current year.

Note 10 – Subsequent Events

Subsequent events were evaluated through March 10, 2011, which is the date the financial statements were available to be issued.