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THE AMERICAN SOCIETY FOR AESTHETIC PLASTIC SURGERY, INC.

(A NONPROFIT CORPORATION) FINANCIAL STATEMENTS

FOR THE YEAR ENDED JUNE 30, 2016

(WITH COMPARATIVE TOTALS FOR 2015)


(A NONPROFIT CORPORATION) CONTENTS

June 30, 2016

Page INDEPENDENT AUDITOR’S REPORT 1 - 2 FINANCIAL STATEMENTS Statement of Financial Position 3 Statement of Activities 4 Statement of Cash Flows 5 Notes to Financial Statements 6 - 19 SUPPLEMENTARY INFORMATION Schedule of Revenues 20 Schedule of Program Expenses 21 - 22 Schedule of Supporting Expenses 23

INDEPENDENT AUDITOR’S REPORT To the Board of Directors The American Society for Aesthetic Plastic Surgery, Inc. (A Nonprofit Corporation) Garden Grove, California Report on the Financial Statements We have audited the accompanying financial statements of The American Society for Aesthetic Plastic Surgery, Inc. (the “Society”) which comprise the statement of financial position as of June 30, 2016, the related statements of activities and cash flows for the year 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. Auditor’s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. 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 involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s 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.

To the Board of Directors The American Society for Aesthetic Plastic Surgery, Inc. Independent Auditor’s Report Page 2 of 2 Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of The American Society for Aesthetic Plastic Surgery, Inc. as of June 30, 2016, and the changes in its net assets and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America. Report on Summarized Comparative Information We have previously audited the Society’s financial statements as of and for the year ended June 30, 2015, and we expressed an unmodified audit opinion on those audited financial statements in our report dated October 20, 2015. In our opinion, the summarized comparative information presented herein as of and for the year ended June 30, 2015, is consistent, in all material respects, with the audited financial statements from which it has been derived. Other Matters Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The accompanying supplementary information on pages 20 to 23 is presented for purposes of additional analysis and is not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audits of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole.

October 12, 2016

THE AMERICAN SOCIETY FOR AESTHETICPLASTIC SURGERY, INC.

(A NONPROFIT CORPORATION)STATEMENT OF FINANCIAL POSITION

For the Year Ended June 30, 2016(With Comparative Totals For the Year Ended June 30, 2015)

2016 2015Current assets

Cash and cash equivalents 2,821,636$ 3,162,188$ Investments 2,836,831 1,209,312 Accounts receivable

Trade 94,043 252,964 Related parties 43,484 99,613 Affiliated organizations - 3,950

Inventory 123,915 116,662 Prepaid expenses and other current assets 521,365 492,371

Total current assets 6,441,274 5,337,060

Investments 3,288,910 3,707,548 Property and equipment, net 3,797,651 4,019,313 Other assets 12,692 18,441

Total assets 13,540,527$ 13,082,362$

Current liabilitiesAccounts payable

Trade 352,568$ 817,158$ Related parties 51,662 57,275

Accrued expenses 195,939 222,896 Deferred revenue 2,935,236 2,516,109

Total current liabilities 3,535,405 3,613,438

Commitments, contingencies and related parties transactions

Net assets - unrestricted 10,005,122 9,468,924

Total liabilities and net assets 13,540,527$ 13,082,362$

ASSETS

LIABILITIES AND NET ASSETS

The accompanying notes are an integral part of these financial statements.3


(A NONPROFIT CORPORATION)STATEMENT OF ACTIVITIES


2016 2015

Net revenue and supportAdvertisements in printed materials 244,835$ 229,685$ Annual meeting 3,662,230 3,083,737 Annual meeting corporate support 260,610 278,000 Annual meeting educational grants 350,000 557,500 Candidate programs 54,765 49,173 Corporate support 1,052,875 991,927 Educational grants 255,000 195,000 Membership 2,366,897 2,261,005 RADAR project 37,017 757 Royalties and Aesthetic Surgery Journal reimbursement 647,067 613,493 Sales

Administrative reimbursements, advantage/endorsed program, and other 189,350 215,212 Brochures 125,034 129,042 Video, web and electronic media 344,796 363,855

Symposia 539,419 473,653

Total revenues and other support 10,129,895 9,442,039

Other incomeDividend and interest 86,679 67,351 Unrealized gain on investments 47,344 22,481

Total other income 134,023 89,832

Total net revenue and support 10,263,918 9,531,871

ExpensesProgram services

Annual meeting 2,482,610 1,971,089 Communications 962,714 1,111,249 Expenditures (cost of sales) 1,593,542 1,250,280 Officers and committee 383,269 487,003

5,422,135 4,819,621

Supporting servicesAdministrative 4,063,784 3,939,586 Government affairs 40,104 37,222 Grants and awards 1,345 2,811 Professional services 200,352 191,003

4,305,585 4,170,622

Total expenses 9,727,720 8,990,243

Change in net assets 536,198 541,628

Net assets, beginning of year 9,468,924 8,927,296

Net assets, end of year 10,005,122$ 9,468,924$



(A NONPROFIT CORPORATION)STATEMENT OF CASH FLOWS


2016 2015Cash flows provided by operating activities

Change in net assets 536,198$ 541,628$ AAdjustments to reconcile change in net assets to cash

provided by operating activitiesDepreciation and amortization 245,424 117,093 Change in operating assets and liabilities

Accounts receivableTrade 158,921 69,120 Related parties 56,129 (55,566) Affiliated organizations 3,950 1,360

Inventory (7,253) (14,447) Prepaid expenses and other current assets (28,994) 112,607 Other assets 5,749 - Accounts payable

Trade (464,590) 289,005 Related parties (5,614) 56,958

Accrued expenses (26,957) 1,246 Deferred revenue 419,128 294,187

Net cash provided by operating activities 892,091 1,413,191

Cash flows (used in) financing activities

Purchase of property and equipment (23,762) (4,170) Development of RADAR project - (447,000)

Net cash (used in) financing activities (23,762) (451,170)

Cash flows (used in) investing activitiesPurchases of investments (8,097,001) (3,045,863) Proceeds from sale and maturity of investments 6,888,120 2,778,381

Net cash (used in) investing activities (1,208,881) (267,482)

Net change in cash and cash equivalents (340,552) 694,539

Cash and cash equivalents, beginning of year 3,162,188 2,467,649

Cash and cash equivalents, end of year 2,821,636$ 3,162,188$



(A NONPROFIT CORPORATION) NOTES TO FINANCIAL STATEMENTS

June 30, 2016 and 2015

6

NOTE 1 - BUSINESS ACTIVITY

The American Society for Aesthetic Plastic Surgery, Inc. (the “Society”) operates as a nonprofit professional association representing the aesthetic plastic surgery profession. The mission of the Society is to advance the science and art of aesthetic plastic surgery among qualified plastic surgeons through support and direction of medical education and research, sponsorship of scientific meetings and dissemination of information on current aesthetic surgical techniques; to promote and encourage the highest standards of ethical conduct and responsible patient care among aesthetic plastic surgeons; to serve the public interest by providing accurate and timely information regarding aesthetic surgery; and to advance the medical profession and assure that aesthetic surgery maintains its proper place within the specialty of plastic surgery. The Society’s main source of revenue is derived from its annual meeting. In addition to annual meeting revenue, the Society receives revenue from membership dues and other sources. The Society’s main office and accounting records are located in Garden Grove, California. The Society also operates branch offices in New York, New York.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation The accompanying financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America. The Society reports information regarding its financial position and activities according to three classes of net assets: unrestricted net assets, temporarily restricted net assets and permanently restricted net assets, as follows:

Unrestricted net assets - Net assets that are not subject to donor-imposed restrictions and that may be expendable for any purpose in performing the primary objectives of the Society.

Temporarily restricted net assets - Net assets subject to donor-imposed restrictions that may or will be met either by actions of the Society and/or the passage of time. As the restrictions are satisfied, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the accompanying financial statements as net assets released from restrictions. The Society had no temporary restricted net assets as of June 30, 2016 and 2015.

Permanently restricted net assets - Net assets subject to donor-imposed restrictions requiring that the amounts contributed be invested in perpetuity. The investment income generated from these funds is available for general support of the Society’s programs and operations. The Society had no permanently restricted net assets as of June 30, 2016 and 2015.



June 30, 2016 and 2015

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NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Prior-Year Comparative Information The financial statements include certain prior-year summarized comparative information in total. Such information does not include sufficient detail to constitute a presentation in conformity with accounting principles generally accepted in the United States of America. Accordingly, such information should be read in conjunction with the Society’s financial statements for the year ended June 30, 2015, from which the summarized information was derived. Reclassifications of Financial Statement Presentation Certain reclassifications and title changes have been made to the 2015 financial statements to conform to the 2016 financial statement presentation. Such reclassifications and title changes had no effect on the net assets or results of activities as previously reported. Revenues and Support The Society records the following types of recognized revenue: Advertising, Annual Meeting, Annual Meeting Corporate Support, Annual Meeting Education Grants, Candidate Programs, Corporate Support, Educational Grants, Annual Membership Dues, Readily Available Digital Aesthetic Resource (RADAR) Project, Royalties and Aesthetic Surgery Journal Reimbursement, Sales, Symposia and Video and Electronic media. Advertisements in Printed Materials The Society issues a quarterly newsletter, annual Registration Brochure and Program Book, and onsite signage during the annual meeting, in which practitioners and companies may advertise at a designated fee. In addition, participants can purchase on-site signage to be displayed at annual meetings. Advertisements in printing materials are handled by the California office and billed only after the printing and mailing of the newsletters. Accordingly, revenue is recognized at this point in time. Advertisement revenue from signage to industry is recognized when the event has taken place. Annual Meeting, Annual Meeting Corporate Support, Annual Meeting Education Grants Revenue The Society holds annual meetings and offers courses at the annual meeting. Registration, course fees and fees for exhibit booths are recorded as revenue when the annual meeting has taken place. Candidate Programs, Corporate Support and Annual Membership Dues Revenue is recognized ratably over the period of service provided. Educational Grants Revenue is recognized when the contributions are made and services are rendered.



June 30, 2016 and 2015

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NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Revenues and Support (Continued) RADAR Project The Society’s RADAR Resource on the AnzuMedical (ART) iPad app and the new web version bring members the ability to create their very own medical library. Revenue is generated from CME Search and advertising. The ART is providing quarterly reports which detail each revenue category and performance and making quarterly payments to the Society, but only when cash is received. The Society recognizes revenue when the reports and payments are received from ART. Royalties and Aesthetic Surgery Journal (ASJ) Reimbursement Effective January 1, 2015, the Society entered into the Journal Publishing Agreement with Oxford University Press (“OUP”). This agreement continues through December 31, 2019. Each year, the Publisher will pay the Society a non-refundable advance against royalties calculated at the greatest of 95% (OUP) of the royalties earned in the prior year or the applicable minimum advance set forth in the agreement. For calendar years of 2016 and 2015, the agreement states the applicable guaranteed royalty to be $412,844 and $430,377, respectively. For the years ended June 30, 2016 and 2015, the applicable amounts were $421,610 and $450,946, respectively. Royalties are received on an annual (OUP) basis and each payment is recognized using the straight-line method over the applicable period. Sales Revenue is recognized when (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred, (iii) the price is fixed or determinable and (iv) collectability is reasonably assured. These terms are typically met upon shipment of merchandise to the member. The Society recognizes product sales revenue at the time goods are shipped and the risk of loss is transferred to the buyer. Symposia The Society offers its own symposia, independently from any other affiliated organizations. Registration and fees for exhibit booths are recorded as revenue when the symposium has taken place.



June 30, 2016 and 2015

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NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Revenues and Support (Continued) Video and Electronic Media The Society sells an Enhanced Practice Profile page (online product) to their members. Revenue is recognized straight line over a 12 months service period based on a calendar year agreement. Cash and Cash Equivalents For the purposes of the statement of cash flows, the Society considers all short-term, highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 revenue and expenses during the reporting period. Actual results could differ from those estimates. Investments Investments in marketable securities with readily determinable fair values and all investments in debt securities are recorded at fair value, based on quoted market prices, in the statement of financial position. Changes in unrealized gains and losses resulting from changes in fair value are reflected in the statement of activities. Dividend and interest income are accrued when earned. Accounts Receivable Accounts receivable is recorded at net realizable value and consists of amounts due from various members and corporate support. Management does not believe that there are any credit risks associated with these receivables and continually monitors these receivables for any reserve allowances. At June 30, 2016 and 2015, no allowance for doubtful accounts was deemed necessary by the management. Inventory Inventory is stated at the lower of cost or market using FIFO (first-in, first-out) and consists of educational and promotional items. As of June 30, 2016 and 2015, the management has determined that no reserve for obsolete inventory is necessary.



June 30, 2016 and 2015

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NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Property and Equipment Property and equipment are stated at cost, or if donated, at fair market value at the date of donation, less accumulated depreciation and amortization. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the various classes of property, as follows: Building and improvements 5 to 30 years Office equipment 5 to 10 years Computer equipment 3 to 7 years RADAR project 3 years Expenditures for major renewals and betterments that extend the useful lives of property and equipment are capitalized. Expenditures for maintenance and repairs are charged to expense as incurred. At the time of retirement or disposition of property and equipment, the cost and related accumulated depreciation and amortization are removed from the accounts and any resulting gain or loss is reflected in the statement of activities. During the year ended June 30, 2015, within the scope of the RADAR project, the Society had developed and delivered the RADAR App and the Resident App for a total combined cost of $447,000. Both products were launched in May 2015. The development cost was capitalized and included in the Statement of Financial Position at June 30, 2015 and 2016. The cost is to be amortized on straight-line basis over estimated useful life of 3 years. Amortization expense related to these apps is included in the Expenditures line under Program Services on the Statement of Activities for the year ended June 30, 2015 and 2016. For the years ended June 30, 2016 and 2015, depreciation and amortization expense amounted to $245,424 and $117,093, respectively. Impairment of Long-Lived Assets Impairment losses are recorded on long-lived assets and intangible assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amount. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. As of June 30, 2016 and 2015, management believes no indicators existed that would require an impairment to be recorded. Deferred Revenue Deferred revenue relates to membership dues, corporate support, fees for the Enhanced Practice Profile page and royalties received in advance of the next fiscal year.



June 30, 2016 and 2015

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NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Income Taxes The Society has been designated as tax-exempt under Internal Revenue Code Section 501(c)(6) and is also exempt from state franchise taxes under Section 23701(e) of the California Revenue and Taxation Code and is not generally subject to federal or state income taxes. However, the Society 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. No income tax provision has been recorded as, in the opinion of management, the net income from any unrelated trade or business is not material to the basic financial statements taken as a whole. The Society will recognize the impact of tax positions in the financial statements if that position is more likely than not of being sustained on audit, based on the technical merits of the position. To date, the Society has not recorded any uncertain tax positions. The Society recognizes potential accrued interest and penalties related to uncertain tax positions in income tax expense. During the years ended June 30, 2016 and 2015, the Society did not recognize any amount in potential interest and penalties associated with uncertain tax positions. The Society’s income tax returns are subject to examination for all tax years ended on or after June 30, 2011 with regards to the positions taken and results reported.



June 30, 2016 and 2015

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NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Estimated Fair Value of Financial Instruments As defined in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic No. 820, Fair Value Measurements and Disclosures (“ASC 820”), fair value is the price that would be received to sell an asset or paid to transfer the liability in an orderly transaction between market participants at the measurement date. In determining fair value, the Society uses the market or income approach. Based on this approach, the Society utilizes certain assumptions about risk and or the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated or generally unobservable inputs. The Society utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. Based on the observability of the inputs used in the valuation techniques, the Society is required to provide the following information according to the fair value hierarchy. The fair value hierarchy ranks the quality and the reliability of the information used to determine fair values. As a basis for considering such assumptions, ASC 820 establishes a three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:

Level 1 – Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 – Include other inputs that are directly or indirectly observable in the marketplace. Level 3 – Unobservable inputs which are supported by little or no market activity.

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. For the fiscal years ended June 30, 2016 and 2015, the application of valuation techniques applied to similar assets and liabilities has been consistent. Financial instruments included in the Society’s statement of financial position include cash and cash equivalents, investments, accounts receivable, accounts payable and accrued expenses. The carrying amounts represent a reasonable estimate of fair values due to their short-term maturity.



June 30, 2016 and 2015

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NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Advertising The Society expenses advertising costs as incurred. For the years ended June 30, 2016 and 2015, advertising costs amounted to $167,323 and $150,618, respectively. Recent Accounting Pronouncements In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606). The new guidance established the principles to report useful information to users of the financial statements about the nature, timing, and uncertainty of revenue from contracts with customers. The new guidance affects any reporting organization that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards (for example, insurance contracts or lease contracts). For nonpublic companies and organizations (including not-for-profits), the new guidance will be required for annual reporting periods beginning after December 15, 2017, and interim and annual reporting periods after those reporting periods. Nonpublic companies and organizations may elect early application, but no earlier than the effective date for public entities. The Society does not believe the guidance will have material impact on the Society’s financial statements. In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”). ASU 2014-15 explicitly requires management to evaluate, at each annual or interim reporting period, whether there are conditions or events that exist which raise substantial doubt about an entity’s ability to continue as a going concern and to provide related disclosures. ASU 2014-15 is effective for annual periods ending after December 15, 2016, and annual and interim periods thereafter, with early adoption permitted. The adoption of ASU 2014-15 is not expected to have a material effect on the Society’s financial statements or disclosures. In February 2015, the FASB issued ASU No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis (“ASU 2015-02”). ASU 2015-02 significantly changes the consolidation analysis required under U.S. GAAP and will require reporting entities to reevaluate previous consolidation conclusions. ASU 2015-02 is effective for annual periods ending after December 15, 2016, with early adoption permitted. The adoption of ASU 2015-02 is not expected to have a material effect on the Society’s financial statements or disclosures.



June 30, 2016 and 2015

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NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Recent Accounting Pronouncements (Continued) In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”), which updates certain aspects of recognition, measurement, presentation and disclosure of financial instruments. ASU 2016-01 will be effective for the Society for fiscal years beginning after December 15, 2018. The Society is currently evaluating the impact of the adoption of this standard on its financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). This ASU establishes a right of use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. This ASU is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years beginning after December 15, 2020, with early adoption permitted. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Society is in the process of evaluating the impact of this accounting pronouncement on the Society’s financial statements and disclosures.

In August 2016, the FASB issued ASU No. 2016-14, Not-for-Profit Entities (Topic 958): Presentation of Financial Statements of Not-for-Profit Entities (“ASU 2016-14”), which focuses on improving the current net asset classification requirements and information presented in financial statements and notes that is useful in assessing a not-for-profit’s liquidity, financial performance, and cash flows. ASU 2016-14 is effective for fiscal years beginning after December 15, 2017 and early application is permitted. ASU 2016-14 should be applied on a retrospective basis in the year that it is first applied. Management is currently evaluating the impact of its pending adoption of the new standard on the financial statements.



June 30, 2016 and 2015

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NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Functional Expenses The costs of providing the various programs and other activities have been summarized on a functional basis in the statement of activities. Accordingly, certain costs have been allocated among the programs and supporting services benefited. Expenses as of June 30, 2016 and 2015 related to providing these programs are as follows: 2016 2015 Program $ 5,422,135 $ 4,819,621 Supporting services 4,305,585 4,170,622 Total expenses $ 9,727,720 $ 8,990,243

NOTE 3 - CONCENTRATION OF RISK

Concentration of Credit Risk Certain financial instruments held by the Society potentially subject the Society to concentrations of credit risk. These financial instruments include cash and cash equivalents, receivables, and investments.

Cash and cash equivalents generally consist of cash and money market funds. These securities are primarily held in two financial institutions, which from time to time, exceed amounts insured by the Federal Deposit Insurance Corporation (“FDIC”), and have original maturity dates of three months or less. Deposits held in a non-interest-bearing transaction account are aggregated with any interest-bearing deposits the owner may hold in the same ownership category, and the combined total insured up to $250,000. As of June 30, 2016 and 2015, the Society had deposits exceeding insured amounts by $2,173,688 and $2,621,230, respectively. The Society has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash.

With respect to trade receivables, the Society routinely assesses the financial strength of its customers and members and believes that the related credit risk exposure is limited. At June 30, 2016, two customers – New Beauty Magazine and Zalea - represented 37% and 15% of trade receivables, respectively. At June 30, 2015, three customers – Allergan, Tourism Montreal and Merz North America, - represented 24%, 21% and 17% of trade receivables, respectively.

Investment securities, in general, are exposed to various risks - such as interest rate, credit and overall market volatility. Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the value of investment securities will occur in the near term and such changes could materially affect the amounts reported in the financial statements. The Society attempts to limit its credit risk associated with investments by utilizing the expertise and processes of an outside investment consultant.



June 30, 2016 and 2015

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NOTE 4 - INVESTMENTS Investments are reported at fair market value and are comprised of the following as of June 30, 2016 and 2015:

2016 2015 Certificates of deposit due within one year $ 2,438,828 $ 921,122 Equity securities 398,003 288,190 Total current investments 2,836,831 1,209,312 Certificates of deposit due after one year through five years 2,660,962 3,358,654 Certificates of deposit due after five years through ten years 627,948 348,894

Total investments $ 6,125,741 $4,916,860

At June 30, 2016 and 2015, money market funds held in the investment portfolio were $2,535,621 and $2,752,340, respectively, and are included in cash and cash equivalents on the statement of financial position. As of June 30, 2016 and 2015, all the Society’s investments were classified as Level 1 within the valuation hierarchy. Total unrealized gain on investments for the years ended June 30, 2016 and 2015 amounted to $47,344 and $22,481, respectively.

NOTE 5 - PROPERTY AND EQUIPMENT

As of June 30, 2016 and 2015, property and equipment consisted of the following: 2016 2015 Buildings and improvements $ 1,721,462 $ 1,721,462 Office equipment 267,956 267,956 Computer equipment and peripheral 136,858 113,096

RADAR project 447,000 447,000 2,573,276 2,549,514 Less accumulated depreciation and amortization 884,558 639,134 1,688,718 1,910,380 Land 2,108,933 2,108,933 Total property and equipment, net $ 3,797,651 $ 4,019,313



June 30, 2016 and 2015

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NOTE 6 - COMMITMENTS AND CONTINGENCIES

Operating Leases The Society leases its New York office, as well as certain office equipment and software licensing, under various operating leases that expire through March 2019. Total rent and rental equipment expense totaled $115,763 and $109,673 for the years ended June 30, 2016 and 2015, respectively. The following is a schedule by years of future minimum rental payments under those operating leases that have a lease term in excess of one year as of June 30, 2016: Year Ending June 30, Equipment and Software Facilities Licensing Total 2017 $ 70,563 $ 70,815 $ 141,378 2018 11,818 66,706 78,524 2019 - 18,406 18,406

Total $ 82,381 $ 155,927 $ 238,308

Consulting, Service and Employment Agreements The Society has entered into agreements with certain consultants and service providers to perform certain services. The agreements continue through various dates through June 2019. A summary of future commitments is as follows based on agreements with Drs. Nahai, Kenkel and Anzu (RADAR): Year Ending June 30,

2017 $ 216,000 2018 126,000 2019 36,000 Total $ 378,000



June 30, 2016 and 2015

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NOTE 7 - RETIREMENT PLAN The Society has a 401(k) plan covering substantially all of its employees. There is no age or service requirement in order for an employee to participate in the 401(k) plan. Employees are eligible to contribute up to 15% of pre-tax annual compensation. Contributions by the Society are strictly discretionary. Employees who are employed by the Society on the last day of each calendar year who have in excess of 1,000 service hours are eligible to share in any discretionary contributions. The Society’s contributions to the 401(k) plan totaled $138,434 and $132,730 for the years ended June 30, 2016 and 2015, respectively.

NOTE 8 - RELATED PARTY TRANSACTIONS AND CONTRIBUTIONS

The Society established the Aesthetic Surgery Education and Research Foundation (the "Foundation") in 1993. Certain officers of the Society are members of the Foundation's Board of Directors. The mission of the Foundation is to advance the practice of aesthetic surgery by providing the enhancement of patient and public welfare, research, public service/education, plastic surgery education and the profession's public image. For the years ended June 30, 2016 and 2015, the Society did not make any donations to the Foundation. Accounts receivable from the Foundation totaled $1,684 and $6,177 as of June 30, 2016 and 2015. The Society provides management and accounting services for an agreed-upon fee for the Society of Plastic Surgical Skin Care Specialists (“SPSSCS”). For the years ended June 30, 2016 and 2015, the Society received management fees from this affiliated organization of $87,531 and $93,139, respectively, and these fees are reflected in sales - administrative reimbursements and other on the statement of activities. Accounts receivable from SPSSCS as of June 30, 2016 and 2015 totaled $41,800 and $93,436, respectively. The Society entered into a public relations service agreement with The International Society for Aesthetic Plastic Surgery (“ISAPS”) which expired in June 2015. Revenue from this agreement for the year ended June 30, 2015 totaled $43,450. As of June 30, 2015, accounts receivable from ISAPS totaled $3,950.



June 30, 2016 and 2015

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NOTE 9 - LITIGATION In the normal course of business, the Society may become a party to litigation. Management believes there are no asserted or unasserted claims or contingencies that would have a significant impact on the financial statements of the Society as of June 30, 2016.

NOTE 10 - SUBSEQUENT EVENTS Management evaluated all activity through October 12, 2016 (the issue date of the financial statements) and concluded that no subsequent events have occurred that would require recognition in the financial statements or disclosures in the notes to the financial statements.

SUPPLEMENTARY INFORMATION


(A NONPROFIT CORPORATION)SCHEDULE OF REVENUES


2016 2015

Advertisements in printed materials 244,835$ 229,685$ Annual meeting

Registration 1,235,396 1,102,326 Teaching courses 688,634 575,812 Exhibit fees 1,738,200 1,405,599

Total annual meeting 3,662,230 3,083,737

Annual meeting corporate support 260,610 278,000 Annual meeting educational grants 350,000 557,500 Candidate programs 54,765 49,173 Corporate support 1,052,875 991,927 Educational grants 255,000 195,000

Membership Dues 2,350,173 2,237,111 Application fees 16,724 23,894

Total membership 2,366,897 2,261,005

RADAR project 37,017 757 Royalties and Aesthetic Surgery Journal reimbursement 647,067 613,493 Sales

Administrative reimbursements, advantage/endorsed program,and other 189,350 215,212

Brochures 125,034 129,042 Video, web and electronic media 344,796 363,855

Total sales 659,180 708,109

Symposia 539,419 473,653

Other incomeInterest 86,679 67,351 Unrealized gain on investments 47,344 22,481

Total other income 134,023 89,832

Total net revenue and support 10,263,918$ 9,531,871$



(A NONPROFIT CORPORATION)SCHEDULE OF PROGRAM EXPENSES


2016 2015

Annual meeting expensesAdvertising 62,695$ 63,067$ Annual meeting corporate support 75,234 89,809Annual meeting education grants 312,498 486,462 Audio visual 242,634 54,383Business meetings 17,477 20,325Committee meetings 16,130 15,664Coordination 80,835 92,220Educational programs 168,480 92,801Exhibits 372,322 230,049Exhibit booth 51,234 26,180Hotel 3,790 2,400Materials 17,230 31,393Media and press 8,271 5,901Miscellaneous 38,156 65,410Registration 139,424 84,118Security 21,270 21,072Space rental fee 65,625 14,417Speakers - 3,223Special events 407,127 369,844Teaching courses 382,178 202,351

Total annual meeting expenses 2,482,610$ 1,971,089$

Communications expensesAesthetic Surgery Journal publication 224,387$ 252,614$ Clipping services 2,284 1,598Market research 133,951 135,125Media Training 6,124 - Miscellaneous 37,516 10,094News summaries - 14,192Newsletter and miscellaneous publications 71,516 55,310Press releases 64,084 75,570Rebranding project (Smart Beauty Guide) 221,019 350,300Website 201,833 216,446

Total communications expenses 962,714$ 1,111,249$



(A NONPROFIT CORPORATION)SCHEDULE OF PROGRAM EXPENSES


2016 2015

Expenditures (cost of sales)Advantage/Endorsed member services 1,452$ 1,244$ Advertising 104,628 87,551 ASJ affiliate costs 99,142 34,575 Brochure 48,142 58,281Candidate program 13,509 13,773Content license fees 8,000 0Corporate support 210,141 205,636Educational grants 244,500 187,500Membership 186,023 156,941Other cost of goods and services 63,857 68,074 RADAR resource project 51,370 32,855RADAR and Resident platform amortization 149,000 24,834 Symposia 413,778 378,697Video and electronic media - 319

Total expenditures (cost of sales) 1,593,542$ 1,250,280$

Officers and committee expensesTraveling professor program 35,706$ 20,270$ Interim meetings 20,561 7,738Miscellaneous committees 13,332 17,904Officers 130,073 150,615Strategic planning 183,597 290,476

Total officers and committee expenses 383,269$ 487,003$



(A NONPROFIT CORPORATION)SCHEDULE OF SUPPORTING EXPENSES


2016 2015

Administrative expensesBank charges 214,329$ 161,414$ Capitalization policy - office equipment 23,901 20,059Depreciation and amortization 96,424 92,259Employee benefits 491,741 500,403Insurance 64,981 65,244IT support 312,949 151,561Maintenance and repairs 12,876 14,906Miscellaneous 71,906 52,699Office equipment rental 23,314 22,220Payroll taxes 182,872 193,070Postage, shipping and electronics 16,857 17,813Professional development and training 56,144 90,648Property, sales taxes and business licenses 60,446 55,982Rent 92,449 87,453Salaries 2,253,026 2,321,186Supplies 15,791 22,563Utilities, telephone and internet 73,778 70,106

Total administrative expenses 4,063,784$ 3,939,586$

Grants and awards 1,345$ 2,811$

Government affairs 40,104$ 37,222$

Professional services expensesAccounting 64,008$ 52,581$ Donation 200 - Legal 136,144 138,422

Total professional services expenses 200,352$ 191,003$


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