FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016 FLORA FAMILY FOUNDATION

CONTENTS

Independent Auditors’ Report...... 1-2

Financial Statements

Statements of Financial Position ...... 3 Statements of Activities and Changes in Net Assets ...... 4 Statements of Cash Flows ...... 5

Notes to Financial Statements ...... 6-25 INDEPENDENT AUDITORS’ REPORT

To the Board of Directors of Flora Family Foundation

Report on the Financial Statements

We have audited the accompanying financial statements of Flora Family Foundation (a nonprofit organization), which comprise the statements of financial position as of December 31, 2017 and 2016, and the related statements of activities and changes in net assets and cash flows for the years 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.

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits 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 auditors’ 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.

1

Marcum LLP n 111 West Saint John Street n Suite 1010 n San Jose, California 95113 n Phone 669.232.9500 n Fax 669.232.9501 n marcumllp.com Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Flora Family Foundation as of December 31, 2017 and 2016, and the changes in its net assets and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

San Jose, CA October 29, 2018

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STATEMENTS OF FINANCIAL POSITION

DECEMBER 31, 2017 AND 2016

2017 2016

Assets Cash and cash equivalents$ 6,465,869 $ 5,665,901 Other assets -- 36,205 Excise tax receivable 68,832 247,681 Investments 107,757,727 101,053,706

Total Assets $ 114,292,428 $ 107,003,493

Liabilities and Net Assets

Liabilities Accounts payable and accrued expenses$ 77,869 $ 82,665 Grants payable 2,729,990 1,573,500 Deferred excise tax 240,000 58,348

Total Liabilities 3,047,859 1,714,513

Unrestricted Net Assets 111,244,569 105,288,980

Total Liabilities and Net Assets $ 114,292,428 $ 107,003,493

The accompanying notes are an integral part of these financial statements.

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STATEMENTS OF ACTIVITIES AND CHANGES IN NET ASSETS

FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

2017 2016

Investment Income Net realized and unrealized gains on investments$ 11,358,198 $ 2,842,496 Interest and dividends 808,501 679,940 fees (62,308) (70,183)

Net Investment Income 12,104,391 3,452,253

Expenses Grants approved 5,070,406 5,451,574 General and administrative 812,328 847,316

Total Expenses 5,882,734 6,298,890

Change in Net Assets Before Federal Excise Tax Expense 6,221,657 (2,846,637)

Federal Excise Tax Expense 266,068 18,090

Change in Net Assets 5,955,589 (2,864,727)

Unrestricted Net Assets - Beginning 105,288,980 108,153,707

Unrestricted Net Assets - Ending $ 111,244,569 $ 105,288,980

The accompanying notes are an integral part of these financial statements.

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STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

2017 2016

Cash Flows From Operating Activities Change in net assets $ 5,955,589 $ (2,864,727) Adjustments to reconcile change in net assets to net cash used by operating activities: Net realized and unrealized gains on investments (11,358,198) (2,842,496) Deferred excise taxes 181,652 (1,990) Changes in operating assets and liabilities: Other assets 36,205 (7,870) Excise tax receivable 178,849 (248) Accounts payable and accrued expenses (4,796) 28,389 Grants payable 1,156,490 402,500

Net Cash Used in Operating Activities (3,854,209) (5,286,442)

Cash Flows From Investing Activities Purchase of investments (24,511,496) (6,505,881) Proceeds from sale or maturity of investments 29,165,673 10,795,688

Net Cash Provided by Investing Activities 4,654,177 4,289,807

Net (Decrease) Increase in Cash and Cash Equivalents 799,968 (996,635)

Cash and Cash Equivalents - Beginning 5,665,901 6,662,536

Cash and Cash Equivalents - Ending $ 6,465,869 $ 5,665,901

Supplemental Cash Flow Disclosure Federal excise taxes paid $ 100,000 $ 20,000

The accompanying notes are an integral part of these financial statements.

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NOTES TO FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PURPOSE AND ORGANIZATION

The Flora Family Foundation (the “Foundation”) was established in December 1998 by William R. Hewlett with the “Statement of Purpose” to promote the well-being of people everywhere by supporting selected activities of charitable organizations and institutions as determined by members of the Board of Directors and the Family Council, with a belief that each individual has an obligation to go beyond one’s personal interests and be mindful of the broader concerns of humanity.

The Foundation has no geographic or subject area constraints upon awarding grants as long as they are consistent with the philanthropic interests of the Board of Directors and the Family Council and comply with the requirements of the Internal Revenue Service.

BASIS OF ACCOUNTING

The Foundation prepares its financial statements in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), which involves the application of the accrual method of accounting; consequently, revenues and gains are recognized when earned, and expenses and losses are recognized when incurred.

CLASSIFICATION OF NET ASSETS

U.S. GAAP requires that the Foundation report information regarding its financial position and activities according to three classes of net assets: unrestricted, temporarily restricted, and permanently restricted. Unrestricted net assets are resources available to support operations. Temporarily restricted net assets are resources that are restricted by a donor for use for a particular purpose or in a particular future period. Permanently restricted net assets are resources whose use is limited by donor-imposed restrictions that neither expire by being used in accordance with a donor's restriction nor by the passage of time. The Foundation does not presently have any net assets or activities meeting the definition of temporarily restricted or permanently restricted.

ESTIMATES

The preparation of financial statements in conformity with U.S. GAAP 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. The most significant estimates involve the valuation of non-marketable securities.

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NOTES TO FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The carrying amounts of cash and cash equivalents, receivables, and accounts payable approximate fair value because of the maturity of these instruments.

CASH AND CASH EQUIVALENTS

The Foundation considers all highly liquid investments with a maturity of three months or less from the date of purchase to be cash equivalents.

INVESTMENTS

Investments traded on national exchanges are recorded at fair value as determined by the exchanges’ quoted prices; unrealized gains and losses are included in the statements of activities and changes in net assets.

The Foundation also has investments with organizations that do not have readily determinable fair values available, and include limited partnerships and limited liability companies (Notes 2 and 3). Consequently, these investments are valued at their estimated fair value as reported to the Foundation by the general partners of the limited partnerships and the investment managers under the supervision of the respective funds’ Boards of Managers of those organizations. Accordingly, their values are based upon guidelines established by those organizations. Because these investments are not readily marketable, the estimated fair value is subject to uncertainty and, therefore, may differ from the value that would have been used had a ready market for the investment existed, and such differences could be material. The estimated fair values are reviewed and evaluated by the Foundation and the Foundation’s Investment Committee.

REVENUE RECOGNITION

Revenue is recognized in the period in which it is earned. The Foundation derives its revenue from the interest and dividends earned from its investments and from the change in fair value of its investment assets. Realized and unrealized gains (losses) and investment income (losses) derived from investment transactions are included as income in the year earned.

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NOTES TO FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

GRANT AWARDS

All grants are subject to the Foundation's Conflict of Interest Policy stated in Note 5 (RELATED PARTY TRANSACTIONS). Grant awards of $25,000 or more are recognized when the award is approved by the Board of Directors. Grant awards under $25,000 are recognized when approved by the President of the Foundation, except where Board approval is required due to the Foundation's Conflict of Interest Policy.

ACCRUED ANNUAL LEAVE

The Foundation’s employees may accumulate up to 20 hours per month of leave time and are entitled to payment of any unused time up to 480 hours upon separation from employment.

INCOME TAXES

The Foundation is a qualified organization exempt from federal income taxes and state franchise taxes under §501(c)(3) of the Internal Revenue Code (“IRC”) and §23701d of the California Revenue and Taxation Code, respectively. The Foundation also qualifies as a private foundation under the provisions of §509(a) of the IRC, and as such, is subject to either a 1% or 2% federal excise tax on its net investment income based upon the Foundation’s history of grants paid.

U.S. GAAP requires management to evaluate the tax positions taken and recognize a tax liability if the organization has taken an uncertain tax position that more likely than not would not be sustained upon examination by taxing authorities. Management has analyzed the tax positions taken and has concluded that as of December 31, 2017, there are no uncertain tax positions taken or expected to be taken that would require recognition of a tax liability (or asset) or disclosure in the financial statements. The Foundation is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress.

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NOTES TO FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

CONCENTRATIONS OF RISK

Financial instruments which potentially subject the Foundation to concentrations of credit risk consist principally of cash and short-term investments. Cash in bank accounts may, at times, exceed federally-insured limits. The Foundation has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk related to concentrations.

The Foundation invests in various investments that are not covered by federal . Investments are exposed to various risks such as interest rate, 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 Foundation’s balances and the amounts reported in the statements of financial position. The Foundation and the Foundation’s Investment Committee closely monitor all its investments.

NOTE 2 - FAIR VALUE MEASUREMENTS

The Foundation’s financial assets and liabilities carried at fair value have been classified, for disclosure purposes, based on a hierarchy that gives the highest ranking to fair values determined using unadjusted quoted prices in active markets for identical assets and liabilities (Level 1) and the lowest ranking to fair values determined using methodologies and models with unobservable inputs (Level 3). An asset’s or a liability’s classification is based on the lowest level input that is significant to its measurement. For example, a Level 3 fair value measurement may include inputs that are both observable (Levels 1 and 2) and unobservable (Level 3). The levels of the fair value hierarchy are as follows:

Level 1 - Values are unadjusted quoted prices for identical assets and liabilities in active markets accessible at the measurement date.

Level 2 - Inputs include quoted prices for similar assets or liabilities in active markets, quoted prices from those willing to trade in markets that are not active, or other inputs that are observable or can be corroborated by market data for the term of the instrument. Such inputs include market interest rates and volatilities, spreads, and yield curves.

Level 3 - Certain inputs are unobservable (supported by little or no market activity) and significant to the fair value measurement. Unobservable inputs reflect the Foundation’s best estimate of what hypothetical market participants would use to determine a transaction price for the asset or liability at the reporting date.

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NOTES TO FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

NOTE 2 - FAIR VALUE MEASUREMENTS (CONTINUED)

The following is a description of the valuation methodologies used for assets measured at fair value. There have been no changes in the methodologies used at December 31, 2017 and 2016.

Fixed income and global equity mutual fund investments: These investments are valued at the closing price reported on the active market on which the individual securities are traded. Such securities are generally classified within Level 1 of the valuation hierarchy.

Money market mutual fund investments: The fair value of mutual funds is estimated using recently executed transactions or market price quotations (where observable). These funds are generally categorized in Level 2 of the fair value hierarchy.

Alternative Investments: Alternative investments consist of investments in various funds. The funds’ underlying investments are aggregated into distressed credit, global equities, private credit, private equities, and real property funds. The fair value of such investments is determined using the net asset value (NAV) per share as reported by the general partners of the limited partnerships and the investment managers under the supervision of the respective funds’ Boards of Managers of those limited liability companies.

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NOTES TO FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

NOTE 2 - FAIR VALUE MEASUREMENTS (CONTINUED)

The following tables provide information as of December 31, 2017 and 2016, about the Foundation’s financial assets measured at fair value on a recurring basis:

Assets at Fair Value as of December 31, 2017 Level 1 Level 2 Level 3 Total

Fixed income funds $ 10,467,157 $ -- $ -- $ 10,467,157 Global equity 12,485,883 -- -- 12,485,883 Money market -- 6,000,000 -- 6,000,000

Total Assets in the Fair Value Hierarchy $ 22,953,040 $ 6,000,000 $ -- 28,953,040

Investments measured at NAV * 78,804,687

Total Investments at Fair Value $ 107,757,727

Assets at Fair Value as of December 31, 2016 Level 1 Level 2 Level 3 Total

Fixed income funds $ 21,979,806 $ -- $ -- $ 21,979,806 Global equity 10,916,932 -- -- 10,916,932 Real property funds 1,611,593 -- -- 1,611,593

Total Assets in the Fair Value Hierarchy $ 34,508,331 $ -- $ -- 34,508,331

Investments measured at NAV * 66,545,375

Total Investments at Fair Value $ 101,053,706

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NOTES TO FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

NOTE 2 - FAIR VALUE MEASUREMENTS (CONTINUED)

*Certain investments that were measured at NAV per share (or its equivalent) have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the line item amounts presented in the statements of financial position.

The following table summarizes the investments whose net asset value approximates fair value, the related unfunded commitments, and redemption restrictions at December 31, 2017:

Total Unfunded Redemption Redemption Description Fair Value Commitments Frequency Notice Period

Distressed credit: Commonfund Global Distressed Investors, L.L.C. $ 433,568 $ 305,200 N/A N/A Davidson Kempner Distressed Opportunities International, Ltd. 6,801,268 -- N/A N/A Farallon Capital Institutional Partners, L.P. 6,600,293 -- N/A N/A Kildare European Partners II -- 3,000,000 N/A N/A Lone Star Fund V (U.S.), L.P. 556,913 -- N/A N/A Lone Star Fund VI (U.S.), L.P. 411,384 399,572 N/A N/A Lone Star Fund X 9,910 1,941,878 N/A N/A Lone Star U.S. Investments, L.P. 139,072 -- N/A N/A Torchlight Value Fund, Inc. 2,202,287 -- N/A N/A

17,154,695 5,646,650

Global equity: The Children’s Investment Fund 17,998,156 -- Tri-annually 120 days Parvus European Opportunities Fund 3,863,241 -- N/A N/A ValueAct Capital International I, L.P. 4,720,545 -- N/A N/A

26,581,942 --

Private credit: Barak Impact Finance Segregated Portfolio 658,500 -- N/A N/A Colchis P2P Income Fund, Ltd. 571,403 -- N/A N/A CIM Enterprise Loan Fund 507,331 -- N/A N/A

1,737,234 --

N/A - Not applicable, these funds are in private organizations with no redemption eligibility.

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NOTES TO FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

NOTE 2 - FAIR VALUE MEASUREMENTS (CONTINUED)

December 31, 2017 Total Unfunded Redemption Redemption Description Fair Value Commitments Frequency Notice Period

Private equity: Allied Inventors Fund, LLC $ 275,556 $ 22,969 N/A N/A ATA Ventures I, L.P. 10,589 30,000 N/A N/A Axiom Asia Private Capital Fund I, L.P. 488,067 118,966 N/A N/A Axiom Asia Private Capital Fund II, L.P. 831,892 113,129 N/A N/A Clean Growth Fund III, L.P. 499,217 70,000 N/A N/A Commonfund: Capital Partners VI, L.P. 1,357,627 264,750 N/A N/A Capital Private Equity Partners VII, L.P. 1,826,976 232,500 N/A N/A Capital Private Equity Partners VIII, L.P. 376,521 156,250 N/A N/A Capital International Partners V, L.P. 986,492 155,750 N/A N/A Capital International Partners VI, L.P. 858,770 185,000 N/A N/A Capital International Partners VII, L.P. 407,178 103,250 N/A N/A Capital Venture Partners VII, L.P. 1,039,960 41,000 N/A N/A Capital Venture Partners VIII, L.P. 1,003,784 50,000 N/A N/A Capital Venture Partners IX, L.P. 834,795 33,750 N/A N/A Elevar Equity III, L.P. 213,206 73,500 N/A N/A G2VP I, L.P. 26,770 220,000 N/A N/A IIF Financial Investor Fund II, L.L.C. 609,909 154,650 N/A N/A Legacy Venture III, L.L.C. 2,078,990 300,000 N/A N/A Legacy Venture IV, L.L.C. 3,948,936 80,000 N/A N/A Legacy Venture V (QP), L.L.C. 2,127,578 40,000 N/A N/A Legacy Ventures VIII, LLC 167,235 820,000 N/A N/A New Energy Capital 238,156 267,784 N/A N/A Rethink Education II, L.P. 118,117 124,471 N/A N/A SJF Ventures IV 25,102 315,000 N/A N/A TPG Alternative and Renewable Technologies Partners, L.P. 191,752 60,068 N/A N/A

20,543,175 4,032,787

N/A - Not applicable, these funds are in private organizations with no redemption eligibility.

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NOTES TO FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

NOTE 2 - FAIR VALUE MEASUREMENTS (CONTINUED)

December 31, 2017 Total Unfunded Redemption Redemption Description Fair Value Commitments Frequency Notice Period

Real asset funds: Alliance Fund II, L.P. $ 47,161 $ 170,000 N/A N/A Commonfund: Capital Natural Resources Partners VI, L.P. 577,806 32,250 N/A N/A Capital Natural Resources Partners VII, L.P. 739,707 36,750 N/A N/A Capital Natural Resources Partners VIII, L.P. 322,715 28,000 N/A N/A Capital Natural Resources Partners IX, L.P. 440,534 122,500 N/A N/A Capital Natural Resources Partners X, L.P. 392,261 680,000 N/A N/A Global Energy Efficiency and Renewable Energy Fund 401,488 69,577 N/A N/A Lone Star Real Estate Fund (U.S.), L.P. 122,384 171,223 N/A N/A Merit Energy Partners F-II, L.P. 496,204 -- N/A N/A M etropolitan Real Estate Partners: II, L.P. 614,320 150,000 N/A N/A III-B, L.P. 373,172 50,000 N/A N/A IV-A, L.P. 554,720 41,250 N/A N/A VII, L.P. 191,322 39,240 N/A N/A IX, L.P. 336,578 14,382 N/A N/A Europe, L.P. 38,181 35,703 N/A N/A Global I, L.L.C. 411,621 173,922 N/A N/A Global II, L.P. 609,462 186,657 N/A N/A Global III, L.P. 218,013 49,842 N/A N/A Global V, L.P. 279,753 48,550 N/A N/A SAF Investor, L.P. 225,824 101,582 N/A N/A TCI Real Estate Partners II 1,148,465 1,857,834 N/A N/A The Lyme Forest Fund IV TE, L.P. 245,950 25,000 N/A N/A

8,787,641 4,084,262 : Bracebridge Capital - BIL Ltd. - Class Y 4,000,000 -- N/A N/A

4,000,000 --

Total $ 78,804,687 $ 13,763,699

N/A - Not applicable, these funds are in private organizations with no redemption eligibility.

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NOTES TO FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

NOTE 2 - FAIR VALUE MEASUREMENTS (CONTINUED)

The following table summarizes the investments whose net asset value approximates fair value, the related unfunded commitments, and redemption restrictions at December 31, 2016:

Total Unfunded Redemption Redemption Description Fair Value Commitments Frequency Notice Period

Distressed credit: Commonfund Global Distressed Investors, L.L.C. $ 538,113 $ 305,200 N/A N/A Davidson Kempner Distressed Opportunities International, Ltd. 4,385,186 -- N/A N/A Farallon Capital Institutional Partners, L.P. 4,246,212 -- N/A N/A Kildare European Partners II -- 3,000,000 N/A N/A Lone Star Fund V (U.S.), L.P. 850,413 -- N/A N/A Lone Star Fund VI (U.S.), L.P. 430,046 399,572 N/A N/A Lone Star Fund X (8,023) 2,000,000 N/A N/A Lone Star U.S. Investments, L.P. 213,390 -- N/A N/A Torchlight Value Fund, Inc. 1,957,522 -- N/A N/A

12,612,859 5,704,772

Global equity: Parvus European Opportunities Fund 3,166,467 -- N/A N/A The Children’s Investment Fund 14,107,000 -- Tri-annually 120 days ValueAct Capital International I, L.P. 4,385,030 -- N/A N/A

21,658,497 --

Private credit: Barak Impact Finance Segregated Portfolio 615,350 -- N/A N/A Colchis P2P Income Fund, Ltd. 542,585 -- N/A N/A

1,157,935 --

N/A - Not applicable, these funds are in private organizations with no redemption eligibility.

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NOTES TO FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

NOTE 2 - FAIR VALUE MEASUREMENTS (CONTINUED)

December 31, 2016 Total Unfunded Redemption Redemption Description Fair Value Commitments Frequency Notice Period Private equity: Allied Inventors Fund, LLC $ 242,389 $ 74,843 N/A N/A ATA Ventures I, L.P. 14,084 30,000 N/A N/A Axiom Asia Private Capital Fund I, L.P. 775,995 118,966 N/A N/A Axiom Asia Private Capital Fund II, L.P. 911,568 112,984 N/A N/A Clean Growth Fund III, L.P. 422,787 132,000 N/A N/A Commonfund: Capital Private Equity Partners VI, L.P. 1,956,300 274,750 N/A N/A Capital Private Equity Partners VII, L.P. 2,051,301 276,250 N/A N/A Capital Private Equity Partners VIII, L.P. 336,502 212,500 N/A N/A Capital International Partners V, L.P. 1,397,267 155,750 N/A N/A Capital International Partners VI, L.P. 1,036,592 220,000 N/A N/A Capital International Partners VII, L.P. 337,740 172,000 N/A N/A Capital Venture Partners VII, L.P. 1,196,751 51,000 N/A N/A Capital Venture Partners VIII, L.P. 1,096,299 62,500 N/A N/A Capital Venture Partners IX, L.P. 802,437 41,250 N/A N/A Elevar Equity III, L.P. 112,224 140,750 N/A N/A IIF Financial Investor Fund II, L.L.C. 797,506 154,650 N/A N/A Legacy Venture III, L.L.C. 2,297,671 300,000 N/A N/A Legacy Venture IV, L.L.C. 4,185,851 120,000 N/A N/A Legacy Venture V (QP), L.L.C. 2,035,085 80,000 N/A N/A Legacy Ventures VIII, LLC 53,410 940,000 N/A N/A New Energy Capital 205,196 299,312 N/A N/A Rethink Education II, L.P. 38,386 202,316 N/A N/A SJF Ventures IV 32,492 315,000 N/A N/A TPG Alternative and Renewable Technologies Partners, L.P. 122,335 104,764 N/A N/A

22,458,168 4,591,585

N/A - Not applicable, these funds are in private organizations with no redemption eligibility.

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NOTES TO FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

NOTE 2 - FAIR VALUE MEASUREMENTS (CONTINUED)

December 31, 2016 Total Unfunded Redemption Redemption Description Fair Value Commitments Frequency Notice Period

Real asset funds: Alliance Fund II, L.P. $ 50,948 $ 200,000 N/A N/A Commonfund: Capital Natural Resources Partners VI, L.P. 737,441 32,250 N/A N/A Capital Natural Resources Partners VII, L.P. 786,959 95,191 N/A N/A Capital Natural Resources Partners VIII, L.P. 348,328 44,982 N/A N/A Capital Natural Resources Partners IX, L.P. 348,601 198,750 N/A N/A Capital Natural Resources Partners X, L.P. 112,265 910,000 N/A N/A Global Energy Efficiency and Renewable Energy Fund 315,126 193,113 N/A N/A Lone Star Real Estate Fund (U.S.), L.P. 123,783 171,223 N/A N/A Merit Energy Partners F-II, L.P. 515,500 -- N/A N/A M etropolitan Real Estate Partners: II, L.P. 782,425 150,000 N/A N/A III-B, L.P. 778,932 50,000 N/A N/A IV-A, L.P. 675,616 41,250 N/A N/A VII, L.P. 239,848 44,884 N/A N/A IX, L.P. 376,467 66,551 N/A N/A Europe, L.P. 104,495 37,003 N/A N/A Global I, L.L.C. 545,016 194,330 N/A N/A Global II, L.P. 729,095 197,586 N/A N/A Global III, L.P. 240,821 52,979 N/A N/A Global V, L.P. 318,230 70,565 N/A N/A SAF Investor, L.P. 215,089 135,540 N/A N/A TCI Real Estate Partners II 178,185 2,828,626 N/A N/A The Lyme Forest Fund IV TE, L.P. 134,746 124,500 N/A N/A

8,657,916 5,839,323

Total $ 66,545,375 $ 16,135,680

N/A - Not applicable, these funds are in private organizations with no redemption eligibility.

Distressed credit: This class includes funds whose objectives are to generate positive absolute returns on capital through investments, long and short, in the securities and other financial instruments of companies that (i) are experiencing financial stress or are overleveraged; (ii) are attempting to complete an out-of-court restructuring; (iii) are involved in a bankruptcy, liquidation, or similar proceeding; and/or (iv) are involved in substantial litigation.

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NOTES TO FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

NOTE 2 - FAIR VALUE MEASUREMENTS (CONTINUED)

Global equity: This class includes funds that invest, reinvest and trade in securities, and that seek to achieve superior absolute returns. Investment objectives include taking long and short positions in equity and debt securities (and their derivatives) globally.

Private credit: This class includes funds whose objectives include (i) investing in debt or equity tranches of collateralized obligations issued by vehicles that hold similar fixed-income securities; (ii) providing asset backed debt to businesses both within and outside the United States.

Private equity: This class includes funds that invest in private equities and venture capital investments both within and outside the United States and whose objectives include the following:

. Allocating capital among a select group of well-regarded investment managers on both a primary and a secondary fund basis in addition to augmenting programs with select co- investment opportunities.

. Building venture capital programs consisting of top managers diversified by stage, strategy, geography, industry and vintage year; providing long-term investment returns while encouraging members to give proceeds to designated charities.

Real asset funds: This class includes funds that invest in both domestic and international markets. In general, the funds were formed with the following objectives:

. To investment directly and indirectly in office, multifamily, industrial and other commercial real estate properties or other commercial real estate investments, as well as in select residential properties, in real estate-related securities, or in sponsors or managers of real estate investment funds.

. To make superior investments in private transactions primarily in the following areas: o Oil and natural gas production, development and gathering o Oilfield services o Other opportunities that include power, energy infrastructure, alternative energy, mining and timber

Absolute return fund: This class is invested in a fund whose objective is to achieve absolute returns primarily by seeking investment opportunities arising from inefficiencies in financial markets worldwide. In general, the fund seeks this objective through investing and trading primarily in fixed income securities worldwide and in derivatives relating to those securities. The fund also seeks opportunities in other financial and currency markets, and uses options, forward contracts, swaps and other derivatives, and equities in its investment program.

18 FLORA FAMILY FOUNDATION

NOTES TO FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

NOTE 3 - INVESTMENTS

Investments consist of the following at December 31:

2017 2016

Distressed credit: Commonfund Global Distressed Investors, L.L.C. $ 433,568 $ 538,113 Davidson Kempner Distressed Opportunities International, Ltd. 6,801,268 4,385,186 Farallon Capital Institutional Partners, L.P. 6,600,293 4,246,212 Lone Star Fund V (U.S.), L.P. 556,913 850,413 Lone Star Fund VI (U.S.), L.P. 411,384 430,046 Lone Star Fund X 9,910 (8,023) Lone Star U.S. Investments, L.P. 139,072 213,390 Torchlight Value Fund, Inc. 2,202,287 1,957,522

17,154,695 12,612,859 Global equity: Aperio 1,659,008 1,412,588 Frontier MFG Global Equity Fund 10,826,875 9,504,344 The Children’s Investment Fund 17,998,156 14,107,000 Parvus European Opportunities Fund 3,863,241 3,166,467 ValueAct Capital International I, L.P. 4,720,545 4,385,030

39,067,825 32,575,429 Private credit: Barak Impact Finance Segregated Portfolio 658,500 615,350 Colchis P2P Income Fund, Ltd. 571,403 542,585 CIM Enterprise Loan Fund 507,331 --

1,737,234 1,157,935

19 FLORA FAMILY FOUNDATION

NOTES TO FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

NOTE 3 - INVESTMENTS (CONTINUED)

2017 2016 Fixed income: Blackrock Liquidity Funds $ 6,000,000 $ -- Blackrock U.S. Debt Fund B -- 13,422,468 Latino Credit Union -- 204,073 Pimco Income Fund 7,011,299 -- Pimco Real Return Bond Fund 2,903,576 7,620,623 Self Help Credit Union -- 204,129 TIAA-CREF Social Choice Bond Fund 552,282 528,513

16,467,157 21,979,806 Private equity: Allied Inventors Fund, LLC 275,556 242,389 ATA Ventures I, L.P. 10,589 14,084 Axiom Asia Private Capital Fund I, L.P. 488,067 775,995 Axiom Asia Private Capital Fund II, L.P. 831,892 911,568 Clean Fund -- -- Clean Growth Fund III, L.P. 499,217 422,787 Commonfund Capital Private Equity Partners VI, L.P. 1,357,627 1,956,300 Commonfund Capital Private Equity Partners VII, L.P. 1,826,976 2,051,301 Commonfund Capital Private Equity Partners VIII, L.P. 376,521 336,502 Commonfund Capital International Partners V, L.P. 986,492 1,397,267 Commonfund Capital International Partners VI, L.P. 858,770 1,036,592 Commonfund Capital International Partners VII, L.P. 407,178 337,740 Commonfund Capital Venture Partners VII, L.P. 1,039,960 1,196,751 Commonfund Capital Venture Partners VIII, L.P. 1,003,784 1,096,299 Commonfund Capital Venture Partners IX, L.P. 834,795 802,437 Elevar Equity III, L.P. 213,206 112,224 G2VP I, L.P. 26,770 -- IIF Financial Investor Fund II, L.L.C. 609,909 797,506 Legacy Venture III, L.L.C. 2,078,990 2,297,671 Legacy Venture IV, L.L.C. 3,948,936 4,185,851 Legacy Venture V (QP), L.L.C. 2,127,578 2,035,085 Legacy Venture VIII, L.L.C. 167,235 53,410 New Energy Capital 238,156 205,196 Rethink Education II, L.P. 118,117 38,386 SJF Ventures IV 25,102 32,492 TPG Alternative and Renewable Technologies Partners, L.P. 191,752 122,335

20,543,175 22,458,168

20 FLORA FAMILY FOUNDATION

NOTES TO FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

NOTE 3 - INVESTMENTS (CONTINUED)

2017 2016 Real asset funds: Alliance Fund II, L.P. $ 47,161 $ 50,948 Commonfund Capital Natural Resource Partners VI, L.P. 577,806 737,441 Commonfund Capital Natural Resource Partners VII, L.P. 739,707 786,959 Commonfund Capital Natural Resource Partners VIII, L.P. 322,715 348,328 Commonfund Capital Natural Resource Partners IX, L.P. 440,534 348,601 Commonfund Capital Natural Resource Partners X, L.P. 392,261 112,265 Global Energy Efficiency and Renewable Energy Fund 401,488 315,126 Lone Star Real Estate Fund (U.S.), L.P. 122,384 123,783 Merit Energy Partners F-II, L.P. 496,204 515,500 Metropolitan Real Estate Partners II, L.P. 614,320 782,425 Metropolitan Real Estate Partners III-B, L.P. 373,172 778,932 Metropolitan Real Estate Partners IV-A, L.P. 554,720 675,616 Metropolitan Real Estate Partners VII, L.P. 191,322 239,848 Metropolitan Real Estate Partners IX, L.P. 336,578 376,467 Metropolitan Real Estate Partners Europe, L.P. 38,181 104,495 Metropolitan Real Estate Partners Global I, L.L.C. 411,621 545,016 Metropolitan Real Estate Partners Global II, L.P. 609,462 729,095 Metropolitan Real Estate Partners Global III, L.P. 218,013 240,821 Metropolitan Real Estate Partners Global V, L.P. 279,753 318,230 SAF Investor, L.P. 225,824 215,089 TCI Real Estate Partners II 1,148,465 178,185 The Lyme Forest Fund IV TE, L.P. 245,950 134,746 Vanguard REIT Fund -- 1,611,593

8,787,641 10,269,509

Absolute return fund: Bracebridge Capital BIL Ltd. - Class Y 4,000,000 --

4,000,000 --

Total $ 107,757,727 $ 101,053,706

21 FLORA FAMILY FOUNDATION

NOTES TO FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

NOTE 4 - FEDERAL EXCISE TAX

The Foundation prudently pays estimated federal excise taxes during the year at the 2% rate. The provision for federal excise tax was calculated at 2% and 1% for the years ended December 31, 2017 and 2016, respectively. Deferred excise taxes arise primarily from the difference in the tax accounting basis of investments and this temporary difference is provided at the 2% tax rate at December 31, 2017 and 1% at December 31, 2016. The change in deferred excise taxes is due to the net market fluctuations in investments in 2017 and 2016.

The components of the federal excise tax expense (benefit) are as follows:

2017 2016

Current federal excise tax expense $ 84,416 $ 19,752 Deferred federal excise tax (benefit) liability 181,652 (1,662)

Total $ 266,068 $ 18,090

The Tax Reform Act of 1984 requires that certain minimum distributions be made in accordance with a specified formula. For the years ended December 31, 2017 and 2016, the Foundation made charitable distributions in excess of the required minimum. As of December 31, 2017, the Foundation has estimated carry forwards to meet future charitable distribution requirements which expire as follows:

For the Years Ending December 31, Amount 2019 $ 795,204 2020 499,623 2021 441,703

Total $ 1,736,530

22 FLORA FAMILY FOUNDATION

NOTES TO FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

NOTE 5 - RELATED PARTY TRANSACTIONS

Some Directors of the Foundation and/or the spouse/domestic partner and/or family members of some Directors and/or employees of the Foundation are also board members, officers, or employees of organizations that have been awarded grants from the Foundation. For the year ended December 31, 2017, $548,000 was awarded to seven such separate organizations and for the year ended December 31, 2016, $110,000 was awarded to three such separate organizations.

The Foundation’s Conflict of Interest Policy is as follows:

“No Director, Family Council member, or employee will take part in any Foundation decision that benefits him or her or his or her immediate or extended family materially. Nor may a Director, Family Council member or employee take part in any Foundation decision that directly benefits an organization with which the Director, Family Council member or employee, his/her spouse or domestic partner, parent, or child has a formal relationship.”

The Foundation also has a matching gift policy that will match, at the individual’s choice, $1 for every $1, $2 for every $1, or $3 for every $1 donated by directors, employees, or members of the Family Council up to a maximum of $15,000 for each individual. For the years ended December 31, 2017 and 2016, the Foundation made $382,556 and $286,140, respectively, of such matching gifts.

NOTE 6 - RETIREMENT PLAN

The Foundation has a defined contribution plan (the “Plan”) established under IRC §403(b). The Plan covers all employees who work 50% of full-time or more. The Foundation contributes up to 15% of each eligible employee’s annual compensation. For the years ended December 31, 2017 and 2016, the Foundation contributed $52,908 and $54,527, respectively, to the Plan.

23 FLORA FAMILY FOUNDATION

NOTES TO FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

NOTE 7 - COMMITMENTS

GRANTS

The following table lists grant awards by year authorized and the year that they are expected be paid:

For the Years Ending December 31, 2018 2019 Total

2015 $ 113,500 $ -- $ 113,500 2016 656,500 -- 656,500 2017 1,894,990 65,000 1,959,990

Total $ 2,664,990 $ 65,000 $ 2,729,990

The Foundation does not discount grant awards payable over more than one year as the majority of the grants awarded are expected to be paid within one year.

LEASE

The Foundation had a lease agreement with the William and Flora Hewlett Foundation for its office space at a monthly rent of $1,400 through April 2018. This lease has been renewed. It expires April 2020 and monthly rent of $1,400 remains the same.

The following is a schedule of future minimum lease commitments as of December 31:

For the Years Ending December 31, Amount 2018 $ 16,800 2019 16,800 2020 5,600

Total $ 39,200

Rent expense for the years ended December 31, 2017 and 2016, was $16,800 each year.

24 FLORA FAMILY FOUNDATION

NOTES TO FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

NOTE 8 - SUBSEQUENT EVENTS

The Foundation has evaluated all subsequent events through October 29, 2018, the date the financial statements were available to be issued. No events requiring recognition or disclosure in the financial statements have been identified.

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