9.15.22 OMA Finance Committee Meeting

OMA Finance Committee Meeting September 15, 2022 7:00 AM PT/ 8:00 AM MT/ 9:00 AM CT/ 10:00 AM PT Via computer, tablet, or smartphone https://obesitymedicine- org.zoom.us/j/89170461547?pwd=VGpPUE0xZmpPUUNkQjZ4YmRnWG5Ddz09 OMA BOT Participants: Doctors Harold Bays, Anthony Auriem a, Marisa Censani, and Lydia Alexander OMA Staff Participants : Teresa Fraker and Dana Stifter OMA Fiscal Partner Participants: • Greg Dickson, CPA from The Accounting Department for Nonprofits (OMA’s accounting firm) • Holly Baroway, CFP, Senior Vice President, Investments, Stifel/Baroway Finance Group (OMA’s investment firm) • Laura Leonardi, CPA, MBA, Manager, Assurance Service Group & Jason Fellows, CPA, Partner, Rubin Brown (OMA’s auditing firm)

Topic

Lead

Doc #

Introductions

Teresa Fraker

1 & 2

Review of 2021 Financial Audit Review of Investment Policy Edits

Laura Leonardi and Jason Fellows

3

Holly Baroway

Review of Current Investment Portfolio Holly Baroway Review of Current Finances Greg Dickson Conclude/Adjourn Teresa Fraker

Documents 1. OMA 2021 Auditor Communications Letter 2. OMA 2021 Year End Analysis Document 3. Investment Policy with Stifel Edits (September 2022)

OBESITY MEDICINE ASSOCIATION AUDITOR COMMUNICATIONS DECEMBER 31, 2021

DRAFT FOR

DISCUSSION PURPOSES ONLY

Members of the Board of Trustees Obesity Medicine Association Denver, Colorado

We have audited the consolidated financial statements of Obesity Medicine Association (the Association) as of and for the year ended December 31, 2021, and have issued our report thereon dated Date. Professional standards require that we provide you with information about our responsibilities under auditing standards generally accepted in the United States, as well as certain information related to the planned scope and timing of our audit. We have communicated such information in our letter to you dated June 17, 2022. Professional standards also require that we communicate to you the following information related to our audit. Qualitative Aspects Of Accounting Practices Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used are described in Note 1 to the consolidated financial statements. No new accounting policies were adopted, and the application of existing policies was not changed during the year ended December 31, 2021. We noted no transactions entered into during the year for which there was a lack of authoritative guidance or consensus. There are no significant transactions that have been recognized in the consolidated financial statements in a different period than when the transaction occurred. There are no instances where we consider a significant accounting practice that is acceptable under the applicable financial reporting framework not to be most appropriate to the particular circumstances of the Association. For purposes of this communication, professional standards require us to communicate to you significant unusual transactions identified during our audit. There were no significant unusual transactions identified as a result of our audit procedures that were brought to the attention of management. Accounting estimates are an integral part of the consolidated financial statements prepared by management and are based on management’s knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the consolidated financial statements and because of the possibility that future events affecting them may differ significantly from those expected. DRAFT FOR DISCUSSION PURPOSES ONLY

Members of the Board of Trustees Obesity Medicine Association

Page 2

The most sensitive estimates affecting the consolidated financial statements were: • Depreciable lives of property and equipment, which are based on assumptions about the ultimate useful life of each asset. • Functional expense allocations, which are based on allocation models using logical drivers of cost, such as personnel cost or square footage, across programs. The disclosures to the consolidated financial statements are neutral, consistent and clear. Certain financial statement disclosures can be particularly sensitive because of their significance to the users of the consolidated financial statements. The most sensitive disclosure affecting the consolidated financial statements is: • The disclosure of the fair value of the alternative investments in Note 2 to the consolidated financial statements. Circumstances That Affect The Form And Content Of The Auditors’ Report For purposes of this letter, professional standards require that we communicate any circumstances that affect the form and content of our auditors’ report. There were no circumstances that caused us to modify our auditors’ report. Matters Resulting In Consultation Outside The Engagement Team There were no significant matters which resulted in consultation outside of our engagement team. Difficulties Encountered In Performing The Audit We encountered no significant difficulties in dealing with management in performing and completing our audit. Corrected And Uncorrected Misstatements Professional standards require us to accumulate all misstatements identified during the audit, other than those that are trivial, and communicate them to the appropriate level of management. Further, professional standards require us to also communicate the effect of uncorrected misstatements related to prior periods on the relevant classes of transactions, account balances or disclosures, and the consolidated financial statements as a whole. We did not identify any uncorrected misstatement during our audit of the financial statements. DRAFT FOR DISCUSSION PURPOSES ONLY

Members of the Board of Trustees Obesity Medicine Association

Page 3

In addition, professional standards require us to communicate to you all material, corrected misstatements that were brought to the attention of management as a result of our audit procedures. The attached schedule identifies misstatements that we identified as a result of our audit procedures that were brought to the attention of, and corrected by, management. Disagreements With Management For purposes of this letter, professional standards define a disagreement with management as a financial accounting, reporting or auditing matter, whether or not resolved to our satisfaction, that could be significant to the consolidated financial statements or the auditors’ report. We are pleased to report that no such disagreements arose during the course of our audit. Management Representations We have requested certain representations from management that are included in the attached management representation letter. Management Consultations With Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a “second opinion” on certain situations. If a consultation involves application of an accounting principle to an entity’s financial statements or a determination of the type of auditors’ opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants. Other Audit Findings Or Issues We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the Association’s auditors. However, these discussions occurred in the normal course of our professional relationship, and our responses were not a condition to our retention. DRAFT FOR DISCUSSION PURPOSES ONLY

Members of the Board of Trustees Obesity Medicine Association

Page 4

This information is intended solely for the information and use of the Members of the Board of Trustees of the Association and is not intended to be and should not be used by anyone other than these specified parties.

[Date]

Attachments

DRAFT FOR

DISCUSSION PURPOSES ONLY

SCHEDULE OF UNCORRECTED MISSTATEMENTS

None noted for the year ended December 31, 2021

DRAFT FOR

DISCUSSION PURPOSES ONLY

SCHEDULE OF CORRECTED MISSTATEMENTS

Client:

35013.0000 - Obesity Medicine Association 2021 Audit - Obesity Medicine Association

Engagement: Trial Balance: Workpaper:

TB Database

3001 - Adjusting Journal Entries Report

Account

Description

W/P Ref

Debit

Credit

Adjusting Journal Entries JE # 2

5101

To accrue 2021 SBA-PPP Loan forgivness from debt to revenue

25900

N/P - SBA-PPP

205,600.00

RB7

PPP Loan Forgiveness

205,600.00 205,600.00

Total

205,600.00

DRAFT FOR

DISCUSSION PURPOSES ONLY

OBESITY MEDICINE ASSOCIATION CONSOLIDATED STATEMENTS DECEMBER 31, 2021

DRAFT FOR

DISCUSSION PURPOSES ONLY

Contents

Page Independent Auditors’ Report ...................................................... 1 - 3

Financial Statements Consolidated Statement Of Financial Position ...................................4 Consolidated Statement Of Activities..................................................5 Consolidated Statement Of Functional Expenses...............................6 Consolidated Statement Of Cash Flows ..............................................7 Notes To Consolidated Financial Statements ............................. 8 - 17 Supplementary Information ..........................................................18 Consolidating Statement Of Financial Position................................19 Consolidating Statement Of Activities ..............................................20 DRAFT FOR DISCUSSION PURPOSES ONLY Supplementary Information Independent Auditors’ Report On

Independent Auditors’ Report

Members of the Board of Trustees Obesity Medicine Association Denver, Colorado

Opinion We have audited the consolidated financial statements of Obesity Medicine Association (the Association), which comprise the consolidated statements of financial position as of December 31, 2021, and the related consolidated statements of activities, functional expenses and cash flows for the year then ended, and the related notes to the consolidated financial statements. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Association as of December 31, 2021, 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. Basis For Opinion We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Our responsibilities under those standards are further described in the Auditors’ Responsibilities For The Audit Of The Financial Statements section of our report. We are required to be independent of the Association and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Responsibilities Of Management 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. DRAFT FOR DISCUSSION PURPOSES ONLY

Members of the Board of Trustees Obesity Medicine Association

In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Association’s ability to continue as a going concern for one year after the date that the financial statements are available to be issued. Auditors’ Responsibilities For The Audit Of The Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with auditing standards generally accepted in the United States of America will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. In performing an audit in accordance with auditing standards generally accepted in the United States of America, we: • Exercise professional judgment and maintain professional skepticism throughout the audit. • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. • Obtain an understanding of internal control relevant to the audit 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 Association’s internal control. Accordingly, no such opinion is expressed. • Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. DRAFT FOR DISCUSSION PURPOSES ONLY

Page 2

Members of the Board of Trustees Obesity Medicine Association

• Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Association’s ability to continue as a going concern for a reasonable period of time. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings and certain internal control-related matters that we identified during the audit. DRAFT Month XX, 2022

DRAFT FOR

DISCUSSION PURPOSES ONLY

Page 3

OBESITY MEDICINE ASSOCIATION

CONSOLIDATED STATEMENT OF FINANCIAL POSITION December 31, 2021

Assets

Current Assets Cash Investments

$

653,814 7,327,510

Accounts receivable Prepaid expenses

87,678 40,047

8,109,049

Total Current Assets

35,405

Equipment, Net

8,144,454 $

Total Assets

Liabilities And Net Assets DRAFT FOR

Current Liabilities Accounts payable Accrued liabilities Deferred revenue

$

31,094 80,547

1,405,086 1,516,727 DISCUSSION PURPOSES ONLY Total Current Liabilities Net Assets With donor restrictions Without donor restrictions 11,590 6,616,137 6,627,727 Total Net Assets

8,144,454 $

Total Liabilities And Net Assets

See the notes to consolidated financial statements.

Page 4

OBESITY MEDICINE ASSOCIATION CONSOLIDATED STATEMENT OF ACTIVITIES For The Year Ended December 31, 2021

Without Donor With Donor Restrictions Restrictions

Total

Changes In Net Assets: Revenues, Gains And Other Support Membership services

$

— 2,216,214 $ — 1,454,884 — 67,605 — 15,514 — 205,600 — 635,336 — 4,595,197 — 44

$

2,216,214 1,454,884 67,605 15,514 205,600 635,336 4,595,197 44

Education and seminars

Publications Administration

Gain on PPP loan forgiveness

Contributions Investment return

Total Revenues, Gains And Other Support

Expenses

Program services: Education and seminars Membership services Marketing and sales

— 1,883,546 — 811,144 — 268,821 — 2,963,511

1,883,546 811,144 268,821 2,963,511

DRAFT FOR

Total Program Services

Supporting services: Administration

495,704 30,798 526,502

— 495,704 — 30,798 — 526,502

Board and executive committee Total Supporting Services DISCUSSION PURPOSES ONLY Total Expenses 3,490,013 — 3,490,013 Change In Net Assets Before Loss On Disposal 1,105,184 — 1,105,184 Loss On Disposal Of Property And Equipment (6,235) — (6,235) Changes In Net Assets 1,098,949 — 1,098,949

5,517,188

11,590

5,528,778

Net Assets - Beginning Of Year

$

6,616,137

11,590 $

6,627,727 $

Net Assets - End Of Year

See the notes to consolidated financial statements.

Page 5

OBESITY MEDICINE ASSOCIATION

CONSOLIDATED STATEMENT OF FUNCTIONAL EXPENSES For The Year Ended December 31, 2021

Program Services

Support Services

Education

Board And

Total

And Membership

Marketing And Sales

Total

Admini-

Executive Supporting

Seminars

Services

Program stration Committee Services

Total

Expenses Salaries and benefits

$

720,412

$

487,094 68,000

$

251,423

$

1,458,929

$

96,560

$

— 96,560 $

1,555,489 $

Advocacy Symposium

—

— — — — — — — — — — — — — — — — — — — — — —

68,000 189,441 612,404 194,048 6,266 76,025 64,434 2,843 — 6,127 89,989 90,237 17,203 — 6,327 46,794 — 4,774 — 22,407 — 1,500 5,763

— — —

— — —

— 68,000 — 189,441 — 612,404

189,441 612,404 180,000 4,000 76,025 29,916 — — 6,127 — — — — 4,325 28,838

— —

ROC

Contract labor

14,048 2,266 22,245 2,843 —

72,483 23,770

— 72,483 — 23,770

266,531 30,036 76,707 2,843 83,226 36,128 17,410 93,913 11,090 54,412 67,446 6,067 5,479 14,165 1,500 5,763 2,011 11,294

Supplies

One-day workshops

—

—

— 76,025

Rent

12,273

12,273

— 12,273

Printing

—

—

—

Bank charges Meetings Publications Promotions

— —

83,226

— 83,226

89,989 90,237 17,203 DRAFT FOR — 228

— — —

30,001

30,001

— — —

— 89,989 — 90,237

207

Postage

207

Legal

93,913 4,763 7,618 67,446 1,293 5,479

— 93,913 — 4,763 — 7,618 — 67,446 — 1,293 — 5,479

Equipment Database Accounting

1,774 13,059

4,897

— 2,387 — 22,407 — 1,500 5,763 DISCUSSION PURPOSES ONLY — Dues 2,387 Telephone — — — — — — — Accreditation expense — — — 22,407 Depreciation 14,165 — 14,165 Grants Travel — — — — — — Miscellaneous — — — — 2,011 10,497 — 2,011 Insurance 797 11,294 Total Expenses 1,883,546 $ 811,144 $ 268,821 $ 2,963,511 $ 495,704 $ 30,798 $ 526,502 $ 3,490,013 $

See the notes to consolidated financial statements.

Page 6

OBESITY MEDICINE ASSOCIATION CONSOLIDATED STATEMENT OF CASH FLOWS For The Year Ended December 31, 2021

Cash Flows From Operating Activities Changes in net assets

1,098,949 $

Adjustments to reconcile changes in net assets to net cash from operating activities: Depreciation

14,165 6,235

Loss on disposal of assets Net investment return Change in assets and liabilities: Accounts receivable

(635,336)

(58,636) (16,191) (9,823) 47,690 389,536 836,589

Prepaid expenses Accounts payable Accrued liabilities Deferred revenue

DRAFT FOR

Net Cash From Operating Activities

Cash Flows From Investing Activities Purchases of equipment

(31,681) (1,950,613)

Purchases of investments

Proceeds from sales of investments and other transactions DISCUSSION PURPOSES ONLY 826,418 Net Cash From Investing Activities (1,155,876) Net Change In Cash (319,287) Cash - Beginning Of Year 973,101 Cash - End Of Year 653,814 $

See the notes to consolidated financial statements.

Page 7

OBESITY MEDICINE ASSOCIATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2021

1. Nature Of Operations And Summary Of Significant Accounting Policies Organizations The Obesity Medicine Association (the Association) is a Colorado nonprofit corporation. The Association was organized primarily to advance and improve the standards of practice and quality of professional service in the field of obesity medicine. The Obesity Treatment Foundation (the Foundation) was incorporated in 2012 under the laws of the State of Colorado. The Foundation is a Colorado nonprofit corporation that was organized primarily to foster, fund and enable research in the field of obesity and to educate the public, professionals and government in the nature of obesity, including its etiologies, prevention, diagnosis, consequences and treatment. In prior years, the Association historically provided a portion of funding for the Foundation. In 2021, the Association did not provide direct support to the Foundation. Basis Of Consolidation The accompanying consolidated financial statements include both the Association and the Foundation (collectively, the Organizations). The Association has a controlling financial interest in the Foundation; thus, the Foundation is required by accounting principles generally accepted in the United States of America (U.S. GAAP) to be consolidated with the Association for reporting purposes. All significant intraorganizational accounts and transactions have been eliminated. Basis Of Accounting The consolidated financial statements have been prepared under U.S. GAAP using the accrual basis of accounting. DRAFT FOR DISCUSSION PURPOSES ONLY

Page 8

OBESITY MEDICINE ASSOCIATION Notes To Consolidated Financial Statements (Continued)

Net Assets Net assets, revenues and support, gains and losses are classified based on the existence or absence of donor- or grantor-imposed restrictions. Accordingly, net assets and changes therein are classified and reported as follows: • Net Assets Without Donor Restrictions - Net assets without donor restrictions are available for use in general operations and not subject to donor (or certain grantor) restrictions. • Net Assets With Donor Restrictions - Net assets with donor restriction are subject to donor- or certain grantor-imposed restrictions. Contributions restricted by donors are reported as increases in net assets without donor restrictions if the restrictions expire (that is, when a stipulated time restriction ends or purpose restriction is accomplished) in the reporting period in which the revenue is recognized. All other donor-restricted contributions are reported as increases in net assets with donor restrictions, depending on the nature of the restrictions. When a restriction expires, net assets with donor restrictions are reclassified to net assets without donor restrictions and reported in the statement of activities as net assets released from restrictions. Cash For purposes of the consolidated statement of cash flows, cash consists of demand and savings deposits at financial institutions. Accounts Receivable The Organizations review accounts receivable for collectability at year end. The allowance method is used to determine the uncollectible amounts. The allowance is based upon prior-years’ experience and management’s analysis of subsequent collections. No allowance was considered necessary at December 31, 2021. Investments And Investment Return Investments, other than investments in partnerships, are recorded at fair value and are generally comprised of securities purchased through a broker. Equity investments in partnerships are valued by an outsourced investment advisor, and the valuations are determined on a net asset value basis, using pricing information from administrators of underlying funds, the underlying funds themselves or the fund’s investment advisor. Management reviews the valuations and underlying inputs driving how investments are valued. See Note 2 for other disclosures. DRAFT FOR DISCUSSION PURPOSES ONLY

Page 9

OBESITY MEDICINE ASSOCIATION Notes To Consolidated Financial Statements (Continued)

Investment return includes dividends, interest and other investment income, in addition to realized and unrealized gains and losses on investments. Equipment The Organizations capitalize all costs in excess of $1,000 for the purchase of furniture and equipment. Depreciation is provided over the estimated useful lives of the assets on a straight-line basis. Donated assets are recorded at their fair value at the date of the donation and depreciated over the estimated useful life of the asset. Revenue Recognition The Association receives dues throughout the year and recognizes revenues as the dues are earned. Dues paid in advance are recorded as deferred revenue. The Association also received revenues from education courses and seminars. The transaction price is allocated to each event and service sold and is the amount of consideration to which the Association expects to be entitled in exchange for transferring services to the customer. All revenue is recognized over the period of time in which the services are provided to the customer and each service represents a single performance obligation. Payments for goods and services received in advance of the performance of related obligation are recognized as deferred revenue. Contributions received by the Foundation are recorded as with or without donor restrictions, depending on the existence and/or nature of any donor restrictions. Contributions are recognized as accounts receivable and revenue when a donor makes an unconditional promise to give. In-Kind Contributions And Contributed Services In-kind contributions are reflected as contributions at their fair value at the date of donation and are reported as unrestricted support unless explicit donor stipulations specify how donated assets must be used. The Organizations recognize the fair value of contributed services received if such services a) create or enhance nonfinancial assets or b) require specialized skills that are provided by individuals possessing those skills and would typically need to be purchased if not contributed. The Organizations receive services from volunteers who give their time to the Organizations’ support and fundraising campaigns, but which do not meet the criteria for financial statement recognition. DRAFT FOR DISCUSSION PURPOSES ONLY

Page 10

OBESITY MEDICINE ASSOCIATION Notes To Consolidated Financial Statements (Continued)

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, expenses, gains, losses and other changes in net assets during the reporting period. Actual results could differ from those estimates. Payment Protection Program In 2021, the Association obtained a loan under the Paycheck Protection Program (the PPP), which was fully forgiven. Pursuant to the provisions of the Accounting Standards Codification 2018-08, Not-for-Profit Entities - Clarifying the Scope and Accounting Guidance for Contributions Received and Contributions Made (Topic 958) , management recognized the PPP loan forgiveness as a gain once loan forgiveness was received. Income Taxes The Association is exempt from federal income tax under Section 501(c)(6) of the Internal Revenue Code (IRC). However, income from certain activities not directly related to the Association’s tax-exempt purpose is subject to taxation as unrelated business income. Taxes on unrelated taxable business activities in 2021 are not material. The Foundation is exempt from federal income tax under Section 501(c)(3) of IRC. However, income from certain activities not directly related to the Foundation’s tax-exempt purpose is subject to taxation as unrelated business income. The Foundation did not incur taxes on unrelated taxable business activities in 2021. Advertising Expense The Organizations expense advertising costs as they are incurred. Advertising expenses consist primarily of marketing expenses for the educational seminars. Total advertising expense of $39,418 in 2021 is included in education and seminars expense. DRAFT FOR DISCUSSION PURPOSES ONLY

Page 11

OBESITY MEDICINE ASSOCIATION Notes To Consolidated Financial Statements (Continued)

Functional Allocation Of Expenses The costs of supporting the various programs and other activities have been summarized on a functional basis in the accompanying consolidated financial statements. Certain other costs that benefit multiple functional areas have been allocated across programs and supporting services as determined by management on an equitable basis, based on estimates of time and effort spent on the related functional area. Subsequent Events Management evaluates subsequent events through the date the consolidated financial statements are available for issue, which is the date of the Independent Auditors’ Report.

2.

Cash And Investments Deposits

The Federal Deposit Insurance Corporation (FDIC) insurance is $250,000 per depositor. At various times during the year, the balance at the financial institution exceeded the FDIC limits. Investments Other than investments in partnerships, investments are held by a brokerage firm, with investments insured by the Securities Investor Protection Corporation to a maximum of $500,000 per eligible account. Investments consist of the following at December 31, 2021: DRAFT FOR DISCUSSION PURPOSES ONLY Cost Market $ $

Money market funds Equity securities Corporate bonds U.S. Treasury notes

825,742 2,427,454 805,146 426,040 1,344,982 645,508

825,742 3,069,464 832,799 423,349 1,370,454 805,702

Government agency bonds

Other investments

6,474,872 $

7,327,510 $

Page 12

OBESITY MEDICINE ASSOCIATION Notes To Consolidated Financial Statements (Continued)

For the year ended December 31, 2021, investment return consists of the following: Other net investment income 143,827 $ Net unrealized/realized gain on investments 491,509 Total Investment Return 635,336 $ The Financial Accounting Standards Board Accounting Standards Codification topic, Fair Value Measurements , defines fair value 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. This topic also specifies a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value: Level 1 Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Organizations have the ability to access. Level 2 Inputs to the valuation methodology include: DRAFT FOR • Quoted prices for similar assets or liabilities in active markets • Quoted prices for identical or similar assets or liabilities in inactive markets • Inputs other than quoted prices that are observable for the asset or liability • Inputs that are derived principally from or corroborated by observable market 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 full term of the asset or liability. Level 3 Inputs to the valuation methodology are unobservable and significant to the fair value measurement. DISCUSSION PURPOSES ONLY

Page 13

OBESITY MEDICINE ASSOCIATION Notes To Consolidated Financial Statements (Continued)

The asset or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. The methods may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Organizations believe the valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

In general, investments are exposed to various risks, such as interest rate, credit and overall market volatility risk. Due to the level of risk associated with certain investments, it is reasonably possible that changes in the values of the investments will occur in the near term and that such changes could materially affect the investment balances and the amounts reported in the consolidated statement of financial position. As of December 31, 2021, investments consisted of the following and are valued at fair value as noted below: Quoted Prices In Active Significant Significant Year Ended Markets For Other Unobservable December 31, Identical Observable Inputs Description 2021 Assets (Level 1) Inputs (Level 2) (Level 3) Corporate bonds 832,799 $ — $ 832,799 $ $ — Money markets 825,742 825,742 — — Government agency bonds 1,370,454 — 1,370,454 — U.S. Treasury notes 423,349 — 423,349 — Equity securities 3,069,464 3,069,464 — — Total 6,521,808 $ 3,895,206 $ 2,626,602 $ $ — Fair Value Measurements At Reporting Date Using DRAFT FOR DISCUSSION PURPOSES ONLY

Page 14

OBESITY MEDICINE ASSOCIATION Notes To Consolidated Financial Statements (Continued)

In addition to the investments above, the Association holds certain investments that are not actively traded on public markets. In accordance with U.S. GAAP, these other investments have not been included in the leveling table above. Other details related to these investments are summarized as follows:

Information As Of December 31, 2021

Redemption Frequency

Net Asset

Unfunded If Currently Redemption

Description

Value Commitments

Eligible Notice Period

Multi-strategy fund (a) Private equity fund (b)

$

360,563 445,139

$

— Semi-annual

95 Days

—

Quarterly*

—

$

805,702

$

—

* Subject to board approval and is not a guarantee of future liquidity (a) The fund focuses on generating attractive, low-volatility returns in a consistent and repeatable manner with limited dependence on the broader debt and equity markets. It also focuses on high-quality, institutional hedge fund managers who invest in historically uncorrelated strategies such as relative value, equity market neutral/low net equity, event driven and distressed credit securities and does not typically invest in more volatile or directional long/short equity. (b) The fund focuses on an innovative private equity investment program designed to provide immediate access to investments and services generally available only to large institutional investors. The fund seeks to provide investors with consistent risk-adjusted returns and low volatility while focusing on primary, secondary and direct investment opportunities predominately in the U.S. but also in Europe, Asia and the emerging markets. The main objective of the fund is to manage liquidity and maintain and high investment level of time, while also providing diversification over vintage years and individual portfolio managers. DRAFT FOR DISCUSSION PURPOSES ONLY

Page 15

OBESITY MEDICINE ASSOCIATION Notes To Consolidated Financial Statements (Continued)

3.

Availability And Liquidity The Organizations have a liquidity policy that states that the Organizations will maintain six months or greater of operating expenses in reserves. The following represents the Organizations’ financial assets available for general expenditures within one year at December 31, 2021: Financial assets at year end: Cash 653,814 $ Accounts receivable 87,678 Investments 7,327,510 Total Financial Assets 8,069,002

Less amounts not available to be used within one year: Restricted by donor with time or purpose restrictions

11,590

Financial assets available to meet general expenditures over the next 12 months

8,057,412 $

As of December 31, 2021, the Organizations had $8,057,412 in financial assets available to meet operating cash needs for general expenditures within one year of the consolidated statement of financial position date. DRAFT FOR Related Party Transactions At December 31, 2021, the Foundation owed the Association $3,472. DISCUSSION PURPOSES ONLY 5. Equipment Equipment and accumulated depreciation at December 31, 2021 is as follows: Equipment 106,016 $ Accumulated depreciation (70,611) Net Equipment 35,405 $ 4.

Depreciation expense was $14,165 for the year ended December 31, 2021 .

Page 16

OBESITY MEDICINE ASSOCIATION Notes To Consolidated Financial Statements (Continued)

6.

Operating Leases The Association entered into a lease for office space that commenced on November 1, 2020 and expires on August 31, 2022. Rent expense incurred by the Organizations in 2021 was $76,707. Future minimum lease payments for 2022 are $54,200. Retirement Plan The Association has a 401(k) defined contribution plan covering substantially all employees. The Association matches a portion of the employee’s contributions to the plan. The employer expense was $47,423 in 2021. Concentrations Of Risk The Association’s membership and the Foundation’s donation base are comprised mostly of obesity medicine physicians and members who provide services to physicians. Revenues are derived from membership dues/contributions from these groups and conferences sponsored by the Association for those individuals. As such, the Association’s revenues are dependent on the financial health of the obesity medicine industry. DRAFT FOR

7.

8.

DISCUSSION PURPOSES ONLY

Page 17

Supplementary Information

DRAFT FOR

DISCUSSION PURPOSES ONLY

Independent Auditors’ Report On Supplementary Information

Members of the Board of Trustees Obesity Medicine Association Denver, Colorado

We have audited the consolidated financial statements of Obesity Medicine Association as of and for the year ended December 31, 2021 and have issued our report thereon dated Month XX, 2022, which contained an unmodified opinion on those financial statements. Our audit was performed for the purpose of forming an opinion on the financial statements as a whole. The consolidating financial statements are presented for the purposes of additional analysis and are 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 audit 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. DRAFT Month XX, 2022 DRAFT FOR DISCUSSION PURPOSES ONLY

Page 18

OBESITY MEDICINE ASSOCIATION

CONSOLIDATING STATEMENT OF FINANCIAL POSITION December 31, 2021

Association Foundation Eliminations

2021

Current Assets Cash Investments

$

546,281 7,327,510

$

107,533

$

—

$

653,814

— —

— 7,327,510

Accounts receivable Due from related party Prepaid expenses Total Current Assets

87,678 3,472 40,047

—

87,678

— (3,472)

—

—

—

40,047

8,004,988

107,533

(3,472)

8,109,049

Equipment, net

35,405

—

—

35,405

$

8,040,393

$

107,533

(3,472) $

$

8,144,454

Total Assets

31,094 80,547 Liabilities DRAFT FOR $ $

Current Liabilities Accounts payable Accrued liabilities Due to related party Deferred revenue

— — 3,472 — 3,472

$

— —

$

31,094 80,547

—

(3,472)

—

1,405,086 1,516,727 DISCUSSION PURPOSES ONLY — 1,405,086 Total Current Liabilities (3,472) 1,516,727 Net Assets With donor restrictions Without donor restrictions — 11,590 — 11,590 6,523,666 6,523,666 92,471 104,061 — 6,616,137 — 6,627,727 Total Net Assets Net Assets

$

8,040,393

$

107,533

(3,472) $

$

8,144,454

Total Liabilities And Net Assets

Page 19

OBESITY MEDICINE ASSOCIATION CONSOLIDATING STATEMENT OF ACTIVITIES For The Year Ended December 31, 2021

Association Foundation Eliminations

2021

Changes In Net Assets: Revenues, Gains And Other Support Membership services

2,216,214 $ 1,454,884

$

— — — — —

$ — 2,216,214 $ — 1,454,884 — 67,605 — 15,514

Education and seminars

Publications Administration

67,605 15,514 205,600

Gain on PPP loan forgiveness

—

205,600

Contributions

—

44

—

44

Investment return, net

635,227 4,595,044

109 153

— 635,336 — 4,595,197

Total Revenues, Gains And Other Support

Expenses

Program services Education and seminars Membership services Marketing and sales

1,882,046 811,144 268,821 2,962,011

1,500 — — 1,500

— 1,883,546 — 811,144 — 268,821 — 2,963,511

797 DRAFT FOR

Total Program Services

Supporting services Administration

494,907 25,773 520,680

— 495,704 — 30,798 — 526,502

Board and executive committee Total Supporting Services DISCUSSION PURPOSES ONLY 5,025 5,822 Total Expenses 3,482,691 7,322 — 3,490,013 Change In Net Assets Before Loss On Disposal 1,112,353 (7,169) — 1,105,184 Loss On Disposal Of Property And Equipment (6,119) (116) — (6,235) Changes In Net Assets 1,106,234 (7,285) — 1,098,949

5,417,432

111,346

— 5,528,778

Net Assets - Beginning Of Year

$ — 6,627,727 $

6,523,666 $

104,061 $

Net Assets - End Of Year

Page 20

7173 S. Havana St #600-130 Centennial, CO 80112 P: 303.770.2526 | F: 303.779.4834 obesitymedicine.org

INVESTMENT POLICY FOR “INVESTMENT ACCOUNT ASSETS”

Commented [TF1]: Add an approved date & a date that the policy should be reviewed or “sunset”.

I. INVESTMENT OVERSIGHT A. Purpose: OMA recognizes the need to further the field of obesity medicine and the need for adequate financing to meet this goal. OMA recognizes there are multiple sources of financing including investment income. OMA’s goal is to make investment decisions that enhance its ability to both operationally and strategically further the field of obesity medicine. OMA therefore supports this investment policy which recognizes the retention and investment of funds to meet the future needs of the Association. B. Investment Goals: Over theestablished investment horizonof 5-7 years, it is thegoal of OMA to: • Absolute Exceedanabsolute return equal to the rate of inflation, measuredby theConsumer Price Index (CPI), plus 5%annually (over a rolling5-year timehorizon). • Relative Exceed the returnof indiceswithanappropriateamount of risk basedupon specific asset type (e.g. StandardandPoor’s 500, BarclaysAggregateBond Index) andpeer groupanalysis. Recognizing that there is no risk-freeway toearn the target objectiveover a full market cycle, the Investment Committeeand its Investment Advisers shall strive to improve the likelihoodof achieving that target returnwithan amount of investment risk that is reasonable andappropriate for anendowment of its sizeand scope. C. The OMA Finance Committee, chaired by the Secretary/Treasurer, is responsible for overseeing the management of OMA investments and for making recommendations to the OMA Board of Trustees regarding investment policy. According to the OMA Bylaws, the Finance Committee is comprised of the Secretary/Treasurer, two Board of Trustee members appointed by the Board of Trustees, and the Executive Director who shall be a nonvoting member. D. The Committee shall meet on a minimum of a semi-annual basis to: 1. Review the investment reports and asset allocations 2. Make recommendations to the Board on the investment policy 3. Provide direction to the Portfolio Manager, as necessary E.C.The OMA Executive Director shall serve as the primary liaison to the Portfolio Manager and make recommendations to the Finance Committee regarding investment policy, as necessary. F.D.The OMA Secretary/Treasurer and Executive Director are responsible for reviewing the

Commented [DW2]: Per Dr. Lazarus, Section C & D should be deleted as they pertain to items already in the Bylaws. Instead it should read for the OMA Finance Committee – refer to the Bylaws for Finance Committee.

1

7173 S. Havana St #600-130 Centennial, CO 80112 P: 303.770.2526 | F: 303.779.4834 obesitymedicine.org

investment reports and reporting to the Board on a minimum of a semi-annual basis. II. INVESTMENT PROGRAM AND FINANCIAL TRANSACTIONS A. The primary financial goal of the OMA is to maintain a reserve in excess of six months of operating expenses in cash and cash equivalents with FDIC-insured banks and accounts. Once this goal is achieved, excess funds may be invested as described below. B. Investment Guidelines A. Diversification of Risk: TheFund strives tominimizemany investment risks through diversification of asset classes. Such asset class diversification should reflect an attention to portfolio volatility, interest rate fluctuation, limited liquidity or transparency, sector or security concentration, currency and other macro economic factors, and geopolitical and catastrophic event risk. TheFund shall not attempt to time themarket. Thus, generally investment policy decisions will bemade with a five (5) – ten (10) year time horizon. Any changes in asset allocationwill bemade in phases over time tominimize the effects of inadvertent market timing. The number of phases and time between themshall be coordinated between the Investment Committee and the Investment Adviser. C. Asset AllocationAsset Bands: TheFund and itsAdvisers shall respect the asset class constraints described below for each broad asset class. Asset AllocationBands (as a%of the entireFund portfolio) Asset Class Minimum% Maximum% Global Equities (US and Intl.) 20% 70% Global Fixed Income (>1 year) 20% 60% Alternative Investments 0% 35% Cash (<1 year) 50% 20% D. Asset Mix: Investments will be made for the purpose of providing the maximum return within the constraints described. The assets must be invested in a financially prudent manner. All investments will be made within the guidelines of quality, marketability and diversification mandated by OMA. The manager is to implement these policies so to achieve a return, after fees, superior to return of the target asset mix, without additional risk

Commented [DW3]: Commented [BH(C4R3]:

Commented [DW5]: Board would like clarification on the numbers that are highlighted on pages 2, 3, and 4. Should the percentages all be the same?

2

7173 S. Havana St #600-130 Centennial, CO 80112 P: 303.770.2526 | F: 303.779.4834 obesitymedicine.org

as measured by the variability of returns. The guideline for the portfolio investment mix shall be based on the following criteria: • The equity portion of the portfolio will be managed within a band of 35%--75% of total investments. The equity performance will be measured against the appropriate Russell Indices. • The fixed income portion will be managed within a band of 35%--55% of total investments. The fixed income performance will be measured against the Ishares Barclays Aggregate Bond Index. • Alternative Investments: The portfolio shall consider the inclusion of "Alternative Investments" for the purpose of diversification and risk management, not solely for the purpose of seeking outsized returns. Thus, the potential impact on overall portfolio risk of specific alternative investments should be considered before investment. "Alternative Investments" includes assets with lower correlation to equity and/or fixed income, including: high yield debt, hedge funds, hedge funds of funds, commodities and natural resources, real estate, and private equity. Such investments might be accessed through a variety of structures, including private placements, mutual funds, exchange traded funds, structured notes and other issues. i. It is understood that some private investment structures do not offer immediate liquidity. Private asset investments for OMA will not have more than a 12-month soft lock period with periodic liquidity thereafter. • The cash reserve and cash equivalent portion will be managed within a band of 200%-3020% of total investments. E. Target Mix: Asset mix within the above ranges will be determined by the portfolio manager’s outlook and strategy to maximize the return on investment monies. In general, the objective of the investment policy is to produce a balanced portfolio with a target mix of investments of 60% equities and 40% fixed income instruments. Deviations from the investment strategy must be approved by the Board of Trustees in advance. F. Restrictions: The portfolio manager may not invest OMA funds in the following manner: • Purchases on margin or secure margin loans on any holding • Short sales • Interest rate future contracts

Formatted: Highlight

Commented [DW6]: Board would like clarification on the numbers that are highlighted on pages 2, 3, and 4. Should the percentages all be the same?

Formatted: Highlight Formatted: Highlight

3