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GHDGodfrey Hammel, Danneels & Company, P.C.

Certified Public Accountants & Business Consultants

AMERICAN AUTOIMMUNE RELATED

DISEASES ASSOCIATION, INC.

FINANCIAL STATEMENTS

Year Ended September 30, 2011

An Independent Member of BKR International

AMERICAN AUTOIMMUNE RELATED DISEASES ASSOCIATION, INC.

TABLE OF CONTENTS

Page

INDEPENDENT AUDITOR'S REPORT 1

STATEMENT OF FINANCIAL POSITION

September 30, 2011

STATEMENT OF ACTIVITIES

For the Year Ended September 30, 2011

STATEMENT OF FUNCTIONAL EXPENSES

For the Year Ended September 30, 2011

STATEMENT OF CASH FLOWS

For the Year Ended September 30, 2011

NOTES TO FINANCIAL STATEMENTS

September 30, 2011 6-13

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INDEPENDENT AUDITOR'S REPORT

To the Board of Trustees

« American Autoimmune Related Diseases Association, Inc.

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We have audited the accompanying statement of financial position of American AutoimmuneRelated Diseases Association, Inc. (a Michigan not-for-profit corporation) as of September30, 2011, and the related statements of activities, functional expenses, and cash flows for theyear then ended. These financial statements are the responsibility of the management of

o American Autoimmune Related Diseases Association, Inc. Our responsibility is to express an5 opinion on these financial statements based on our audit.CN

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<j We conducted our audit in accordance with auditing standards generally accepted in the^ United States of America. Those standards require that we plan and perform the audit to

obtain reasonable assurance about whether the financial statements are free of material

misstatement. An audit includes examining, on a test basis, evidence supporting the amountsand disclosures in the financial statements. An audit also includes assessing the accountingprinciples used and significant estimates made by management, as well as evaluating theoverall financial statement presentation. We believe that our audit provides a reasonable basisfor our opinion.

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GHDGodfrey Hammel, Danneels & Company, P.C.

Certified Public Accountants & Business Consultants

In our opinion, the financial statements referred to above present fairly, in all materialrespects, the financial position of American Autoimmune Related Diseases Association, Inc.as of September 30, 2011, and the changes in its net assets and its cash flows for the year thenended in conformity with accounting principles generally accepted in the United States ofAmerica.

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St. Clair Shores, MichiganJanuary 20, 2012

1

An Independent Member of BKR International

AMERICAN AUTOIMMUNE RELATED DISEASES ASSOCIATIONSTATEMENT OF FINANCIAL POSITION

September 30,2011

ASSETS

Cash and cash equivalents $ 363,982Certificates ofdeposit 198,302Pledges receivable 47,000Deposits 4>500Property and equipment - net 200,365

Total Assets $ 814,149

LIABILITIES AND NET ASSETS

Liabilities:

Accounts payable $ 7,580Accrued wages 34,530Accrued retirement plan contributions 1,147

Total Liabilities 43>257

Net Assets:

Unrestricted 770,892

Total Liabilities and Net Assets $ 814,149

See accompanying notes.

AMERICAN AUTOIMMUNE RELATED DISEASES ASSOCIATION

STATEMENT OF ACTIVITIES

For the Year Ended September 30,2011

Support and Revenue:Contributions $ 641,383

Less: donor designations (35,000)Net contributions 606,383Contributed goods and services 1,027,150Fundraising income 98,913Interest and dividends 2,658

Total Support and Revenue 1,735,104

Expenses:Program services:

Education 638,912Public awareness 601,951Research 361,575

Total program services 1,602,438

Supporting services:Management and general 60,886Fund raising 55,852

Total supporting services 116,738Total Expenses 1,719,176

Change In Net Assets 15,928

Unrestricted Net Assets, Beginning of Year 754,964

Unrestricted Net Assets, End of Year $ 770,892

See accompanying notes.

AMERICAN AUTOIMMUNE RELATED DISEASES ASSOCIATION, INC.STATEMENT OF FUNTIONAL EXPENSES

For the Year Ended September 30,2011

iProgram Services

Total

Supporting

Manage

Services

Public Program ment and Fund

Education

$354,421

Awareness

$ 403,210

Research

$213,002

Services General

$ 32,702

Raising

$23,815

Total

In-Kind Goods and Services $ 970,633 $ 1,027,150

Other Expenses:

Wages 171,747 100,793 -272,540 7,840 9,190 289,570

Professional fees 3,500 - - 3,500 10,083 -13,583

Postageand shipping 6,097 4,648 -10,745 184 237 11,166

Public relations 31,523 45,580 -77,103 73 5,894 83,070

Printing and stationery 6,543 6,407 -12,950 51 196 13,197

Office supplies 1,774 1,721-

3,495 204 62 3,761

Operating supplies 3,435 270 -3,705 17 17 3,739

Dues and subscriptions 2,348 1,593 700 4,641 75 -4,716

Filing fees 328 605 -933 328 1,028 2,289

Equipmentrental andmaintenance 581 408 - 989 10 134 1,133

Telephone 2,071 2,071 -4,142 176 88 4,406

Insurance 840 840 - 1,680 840 840 3,360

State and national meetings 13,799 8,052 1,349 23,200 3,345 732 27,277

Travel 8,560 3,604 1,028 13,192 657 188 14,037

Depreciation 3,596 2,478 2,263 8,337 347 253 8,937

Payrolltaxes 9,426 6,496 5,933 21,855 911 663 23,429

Insurance - health 6,459 5,631 - 12,090 727 454 13,271

Fund raising - - - - -11,512 11,512

Board expenses - - - -1,384 -

1,384

Grants 3,250 - 137,300 140,550 - -140,550

Repairs and maintenance 685 436 -1,121 62 62 1,245

Utilities 2,194 2,194 - 4,388 187 93 4,668

Retirementplancontributions 5,735 4,914-

10,649 683 394 11,726

Miscellaneous - - - - - - -

Total Other Expenses 284,491 198,741 148,573 631,805 28,184 32,037 692,026

Total Functional Expenses $638,912 $ 601,951 $361,575 $ 1,602,438 $ 60,886 $ 55,852 $ 1,719,176

See accompanying notes.

4

AMERICAN AUTOIMMUNE RELATED DISEASES ASSOCIATION, INC.STATEMENT OF CASH FLOWS

For the Year Ended September 30,2011

Cash Flows From Operating Activities:Change in net assets $ 15,928Adjustments to reconcilechange in net assetsto cash provided by operating activities:

Depreciation 8,937Changes in operating assets and liabilitiesthat provided (used) cash:

Pledges receivable (47,000)Deposits (4,500)Accounts payable (11,308)Accrued wages 7,612Accrued retirement plan contributions 540

Net Cash Used by Operating Activities (29,791)

Cash Flows From Investing Activities:Maturity of certificates of deposit 197,057Purchase ofcertificatesofdeposit (198,302)Acquisition of fixed assets (1,892)

Net Cash Used for Investing Activities (3,137)

Net Decrease In Cash and Cash Equivalents (32,928)Cashand CashEquivalents at Beginning of Year 396,910

Cash and Cash Equivalents at End of Year $ 363,982

See accompanying notes.

AMERICAN AUTOIMMUNE RELATED DISEASES ASSOCIATION, INC.NOTES TO FINANCIAL STATEMENTS

September 30,2011

Note 1 - ORGANIZATION

American Autoimmune Related Diseases Association, Inc. was organized as anonprofit corporation under the laws of the State of Michigan in December, 1991 andstarted operations in July, 1992. The Organization was formed for the purpose oferadicating autoimmune diseases, and the physical, emotional, financial, and societalsuffering caused by these diseases, through research, education, and supportiveservices. The Organization's major sources of support and revenue include corporatecontributions as well as from the general public. In addition, the Organization holdsvarious fundraisers throughout the year to promote their cause.

Note 2 - SIGNIFICANT ACCOUNTING POLICIES

Financial Statement Presentation

Under Statement of Financial Accounting Standards Board Accounting StandardsCodification (FASB ASC) Topic No. 958, the Organization is required to reportinformation regarding its financial position and activities according to three classes ofnet assets (unrestricted net assets, temporarily restricted net assets, and permanentlyrestricted net assets) based upon the existence or absence ofdonor-imposed restrictions.

In accordance with FASB ASC Topic No. 958, contributions received by theOrganization are recorded as unrestricted, temporarily restricted, or permanentlyrestricted support, depending on the existence and/or nature of any donor restrictions.

A description of the three categories is as follows:

• Unrestricted Net Assets - The amount of net assets which are available for

general operations and are not subject to any donor-imposed restrictions.Revenues earned from program services provided, unrestricted contributions,investment income available for general operations, and all operating expensesare reported in this category.

AMERICAN AUTOIMMUNE RELATED DISEASES ASSOCIATION, INC.NOTES TO FINANCIAL STATEMENTS

September 30,2011

Note 2 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

• Temporarily Restricted Net Assets - The amount of net assets which are limitedto uses specified by donor-imposed restrictions. When donor restrictions expireor the nature and purpose of the restriction is accomplished, temporarilyrestricted net assets are reclassified to unrestricted net assets and reported in thestatement of activities as net assets released from restrictions. As of September30, 2011, the Organization had no temporarily restricted net assets.

• Permanently Restricted Net Assets - The amount of net assets which result fromdonor gifts and bequests that create permanent endowment funds. According tothe donor's instructions, income, gain, or losses from the permanently restrictednet assets should also be classified as such or reclassified to the unrestricted or

temporarily restricted categories. As of September 30, 2011, the Organizationhad no permanently restricted net assets.

Cash and Cash EquivalentsFor the purposes of the statement of cash flows, the Organization considers all highlyliquid investments purchased with an original maturity of ninety days or less to be cashequivalents.

Contributions Receivable

The Organization records pledges (contributions) in accordance with FinancialAccounting Standards Board Accounting Standard Codification (FASB ASC) Topic958. Under FASB ASC Topic No. 958, unconditional promises to give cash and otherassets to the Organization are reported at fair value at the date the promise is received.Conditional promises to give and indications of intentions to give are reported at fairvalue at the date the related conditions are substantially met. Contributions are reportedas either temporarily or permanently restricted support if they are received with donorstipulations 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 as unrestricted net assets and arereported in the statements of activities as net assets released from restrictions. Donor-restricted contributions whose restrictions are met within the same period as thecontributions are received are reported as unrestricted contributions in theaccompanying statements of activities.

No allowance for uncollectible pledges has been provided as all pledges were receivedwithin one month after the year end.

AMERICAN AUTOIMMUNE RELATED DISEASES ASSOCIATION, INC.NOTES TO FINANCIAL STATEMENTS

September 30,2011

Note 2 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Agency TransactionsCertain donor pledges and contributions are designated for the benefit of othernonprofit agencies. Such designations are gross contributions received, to arrive at netcontributions since the Organization does not have various power over thecontributions. Amounts collected under these arrangements but not yet distributed inaccordance with donor stipulations are recorded as "Undistributed DonorDesignations". As of September 30, 2011, there were no undistributed donordesignations.

Property and Equipment and DepreciationPurchased property is stated at cost. Donated property is stated at fair value at the dateof the gift. Depreciation is computed using straight-line and accelerated methods overthe estimated useful lives of the assets. It is the Organization's policy to capitalizeproperty and equipment purchases greater than $500. Expenditures for maintenance,repairs and minor renewals are charged to expense as incurred. Management annuallyreviews these assets for impairment.

Donated Materials and Services

Contributions of donated non-cash assets are recorded at their fair values in the periodreceived. Contributions of donated services that create or enhance non-financial assetsor that require specialized skills are provided by individual possessing those skills, andwould typically need to be purchased if not provided by donation, are recorded at theirfair values in the period received. In addition, many individuals volunteer their timeand perform a variety of tasks that assist the Organization in its mission, but theseservices do not meet the criteria for recognition as contributed services.

Income Taxes

The Organization is a nonprofit corporation described in Internal Revenue CodeSection 501(c)(3) and as such is exempt from income tax under Section 501(a).

AMERICAN AUTOIMMUNE RELATED DISEASES ASSOCIATION, INC.NOTES TO FINANCIAL STATEMENTS

September 30,2011

Note 2 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Income Taxes (Continued)

In July 2006, the Financial Accounting Standards Board (FASB) issued InterpretationNo. 48, Accounting for Uncertainty in Income Taxes (FIN 48), an interpretation ofStatement of Financial Accounting Standards (SFAS) No. 109, Accountingfor IncomeTaxes, both of which are superseded by FASB ASC Topic 740. FASB ASC Topic 740is effective for the Organization's year ended September 30, 2011, and theOrganization adopted FASB ASC Topic 740 as of October 1, 2009. FASB ASC Topic740 prescribes the minimum recognition threshold and measurement attribute fordisclosure of tax positions previously taken or expected to be taken on an income taxreturn, in order for those tax positions to be recognized in the Organization's financialstatements. Under the FASB ASC Topic 740, the Organization's continued status as anexempt organization is considered to be a "tax position" in that the Organization mustadhere to various requirements to remain tax-exempt. In addition, any Organizationactivities that may subject it to "unrelated business taxable income" are also consideredtax positions. Management has analyzed the Organization'smaterial tax positions as ofOctober 1, 2009, and as of September 30, 2011 and has determined that no materialuncertaintax positions exist that require recognition or disclosure in the accompanyingfinancial statements.

With few exceptions, the Organization is no longer subject to U.S. Federal income taxexaminations by tax authorities for years before 2007.

Use ofEstimates

The preparation of financial statements using generally accepted accounting principlesrequires management to make estimates and assumptions that affect certain reportedamounts and disclosures. Accordingly, actual results could differ from those estimates.

The Organization maintains its cash balances in insured financial institutions. Fromtime to time throughout the year, balances may exceed amounts insured by the FederalDeposit Insurance Corporation. Management does not believe the Organization isexposed to any unusual credit risk on uninsured balances.

AMERICAN AUTOIMMUNE RELATED DISEASES ASSOCIATION, INC.NOTES TO FINANCIAL STATEMENTS

September 30,2011

Note 2 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Fair Value Measurements

FASB ASC Topic No. 820 defines fair value, establishes a framework for measuringfair value under accounting principles generally accepted in the United States, andenhances disclosures about fair value measurements. FASB ASC Topic No. 820applies whenever other financial reporting standards require (or permit) assets orliabilities to be measured at fair value and, therefore, does not expand the use of fairvalue in any new circumstances. Fair value is defined as the exchange price that wouldbe received to sell an asset or paid to transfer a liability in the principal or mostadvantageous market for the asset or liability in an orderly transaction (i.e., not a forcedtransaction, such as a liquidation or distressed sale) between market participants at themeasurement date.

FASB ASC Topic 820 clarifies that fair value should be based on the assumptionsmarket participants would use when pricing an asset or liability and establishes a fairvalue hierarchy that prioritizes the information used to develop those assumptions. Thefair value hierarchy gives the highest priority to quoted prices in active markets (level 1measurements) and the lowest priority to unobservable data (level 3 measurements).

The three levels of the fair value hierarchy under FASB ASC Topic No. 820 aredescribed as follows:

Level 1 - Inputs to the valuation methodology are unadjusted quoted prices foridentical assets or liabilities in active markets that the organization has the ability toaccess. Inputs to the valuation methodology include, quoted prices for similarassets or liabilities in active markets, quoted prices for identical or similar assets orliabilities in inactive markets.

Level 2 - Inputs other than quoted prices that are observable for the asset orliability. Inputs that are derived principally from or corroborated by observablemarket data by correlation or other means. If the asset or liability has a specified(contractual) term, the level 2 input must be observable for substantially the fullterm of the asset or liability.

Level 3 - Inputs to the valuation methodology are unobservable and significant tothe fair value measurement.

10

AMERICAN AUTOIMMUNE RELATED DISEASES ASSOCIATION, INC.NOTES TO FINANCIAL STATEMENTS

September 30,2011

Note 3 - PROPERTY AND EQUIPMENT

Property and equipment consist of the following at September 30, 2011:

Land

BuildingFurniture and fixtures

Total

Less: Accumulated depreciation

Net Property and Equipment, Net

Note 4 - INVESTMENTS

Investments consist of certificates of deposit recorded at fair market value and includethe following maturities at September 30, 2011:

Bank of America; interest at .75% annually;original issue date November 19, 2010;matures November 19,2011. $ 95,104

Comerica Bank; interest at .25% annually;original issue date January 26,2011; maturesJanuary 26, 2012. 103,198

Total Investments $ 198,302

$ 25,000233,339

58,524

316,863

116,498

$ 200,365

11

AMERICAN AUTOIMMUNE RELATED DISEASES ASSOCIATION, INC.NOTES TO FINANCIAL STATEMENTS

September 30,2011

Note 5 - FAIR VALUE MEASUREMENTS

The fair value of assets measured on a recurring basis at September 30, 2011 are asfollows:

QuotedPrices in

Active

Markets

For Identical

SignificantOther

Observable

SignificantUnobservable

Fair

Value

Assets

(Level 1)Inputs

(Level 2)Inputs

(Level 3)

Certificates of

deposit $ 198,302 $ $ 198,302 $

Total Investments $ 198,302 $ $ 198,302 $

The following methods and assumptions were used by the Organization in estimatingits fair value disclosures for financial statements:

• Certificates of deposit investments: The fair values are based on the underlyingcash originally invested in the certificate.

Note 6 - RETIREMENT PLAN

The Organization maintains a 403(B) defined contribution plan which coverssubstantially all employees. Employees can make annual salary deferrals up to$16,500. In addition, allowable "catch up" deferrals, for participants aged 50 and over,of $5,500 can be made. The Organization will match 100% of the first 20% of theparticipant's deferral contribution.

Employer matching contributions to the Plan for the plan year ended September 30,2011 were $11,726.

Note 7 - CONCENTRATION OF GRANTS

Approximately $175,000 of net contributions in the Statement of Activities wasprovided through various grants from a single corporate contributor.

12

AMERICAN AUTOIMMUNE RELATED DISEASES ASSOCIATION, INC.NOTES TO FINANCIAL STATEMENTS

September 30,2011

Note 8 - SUBSEQUENT EVENTS

In preparing these financial statements, management has evaluated, for potentialrecognition or disclosure, significant events or transactions that occurred during theperiod subsequent to September 30, 2011, the most recent statement of financialposition presented therein, through January 20, 2012, the date the financial statementswere issued. No such significant events or transactions were identified.

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