PRIDE TORONTO

FINANCIAL STATEMENTS

JULY 31, 2013

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Independent Auditors Report

To the Directors of Pride Toronto

We have audited the accompanying financial statements of Pride Toronto, which comprise the balance sheets as at July 31, 2013, July 31, 2012 and August 1, 2011 and the statements of operations and changes in net assets and cash flows for the years ended July 31, 2013 and July 31, 2012, and a summary of significant accounting policies and other explanatory information.

Managements Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with Canadian accounting standards for not-for-profit organizations, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with accordance with Canadian auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entitys 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 entitys internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of 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 in our audit is sufficient and appropriate to provide for a basis for our audit opinion.

Opinion In our opinion, the financial statements present fairly, in all material respects, the financial position of Pride Toronto as at July 31, 2013, July 31, 2012 and August 1, 2011 and the results of its operations, changes in net assets and its cash flows for the years ended July 31, 2013 and July 31, 2012 in accordance with Canadian accounting standards for not-for-profit organizations. Toronto Ontario Chartered Accountants October 7, 2013 Licensed Public Accountants

Marinucci & Company Chartered Accountants

171 John Street Suite 101 Toronto Ontario M5T 1X3 Tel 416 214 1555 Fax 416 596 1520 E-mail sam@marinucci.ca

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PRIDE TORONTO Balance Sheets as at July 31, 2013, July 31, 2012 and August 1, 2011 ` July 31 July 31 August 1 2013 2012 2011 ASSETS Current: Cash $ 313,279 $ 2,857 $ 25,853 Amounts receivable (Note 9) 346,874 477,871 237,289 Prepaid expenses 39,987 35,462 16,197 700,140 516,190 279,339 Capital assets, net (Note 5) 26,870 41,172 51,466 $ 727,010 $ 557,362 $ 330,805 LIABILITIES Current: Bank indebtedness (Note 4) $ - $ - $ 15,000 Accounts payable and accrued liabilities 66,981 117,121 188,112 Deferred in-kind sponsorships (Note 9) 7,732 31,753 - Current portion of capital lease obligations (Note 6) - 5,729 19,291 74,713 154,603 222,403 Capital lease obligations (Note 6) - - 6,303 74,713 154,603 228,706 Commitments (Note 7) NET ASSETS Accumulated surplus (Note 10) 652,297 402,759 102,099 $ 727,010 $ 557,362 $ 330,805

Approved by the Board Director Director

See accompanying Notes to Financial Statements

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PRIDE TORONTO Statements of Operations and Changes in Net Assets For the years ended July 31, 2013 and July 31, 2012

2013 2012 REVENUES Sponsorships (Note 9) $ 1,319,431 $ 1,188,659 Grants (Note 8) 592,260 451,532 Permits and fees 176,427 208,921 Beverage sales 140,953 150,005 Donations, fundraising and other 65,229 72,582 2,294,300 2,071,699 EXPENSES Media and promotion (Note 9) 456,576 420,301 Salaries and benefits 374,384 351,596 Festival infrastructure (Note 9) 282,557 238,457 Entertainment and events (Note 9) 180,844 169,110 Office and administration (Notes 4, 6 and 9) 171,510 121,347 Beverage cost of sales (Note 9) 153,130 137,346 Occupancy (Note 7) 153,014 148,095 Volunteer costs (Note 9) 124,631 45,430 Insurance 26,287 35,817 Communications and security 24,971 22,420 Community outreach, fundraising and bursaries 10,060 4,464 WorldPride 2014 Toronto (Note 10) 68,440 66,362 Amortization of capital assets (Note 5) 18,358 10,294 2,044,762 1,771,039 EXCESS OF REVENUES OVER EXPENSES 249,538 300,660 ACCUMULATED SURPLUS, beginning of year 402,759 102,099 ACCUMULATED SURPLUS, end of year $ 652,297 $ 402,759

See accompanying Notes to Financial Statements

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PRIDE TORONTO Statements of Cash Flows For the years ended July 31, 2013 and July 31, 2012 2013 2012 Cash generated (used in): OPERATING ACTIVITIES Excess of revenues over expenses $ 249,538 $ 300,660 Add (deduct) items not involving cash: Amortization of capital assets 18,358 10,294 Impact on cash of changes in non-cash working capital items: Amounts receivable 130,997 (208,829) Prepaid expenses (4,525) (19,265) Accounts payable and accrued liabilities (50,140) (70,991) Deferred revenues (24,021) - 320,207 11,869 FINANCING ACTIVITIES Increase (decrease) in bank indebtedness - (15,000) Repayment of capital lease obligations (5,729) (19,865) (5,729) (34,865) INVESTING ACTIVITIES Purchase of capital assets (4,056) - INCREASE (DECREASE) IN CASH 310,422 (22,996) CASH, beginning of year 2,857 25,853 CASH, end of year $ 313,279 $ 2,857

See accompanying Notes to Financial Statements

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PRIDE TORONTO Notes to Financial Statements July 31, 2013 1. ORGANIZATION AND OPERATIONS

Pride Toronto (PRIDE) is a not-for-profit organization incorporated without share capital on March 19, 1999 under the laws of Ontario to promote the LGBTTIQQ2SA (Lesbian, Gay, Bisexual, Transsexual, Transgender, Intersex, Queer/Questioning, 2spirited, Allies) communities. As a not-for-profit organization, PRIDE is exempt from income taxes under the Income Tax Act (Canada).

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES These financial statements are the representation of management and have been prepared in accordance with Canadian accounting standards for not-for-profit organizations in Part III of the CICA Handbook and include the following significant accounting policies. The impact of the change in basis of accounting is set out in Note 3. Basis of accounting The accounts are prepared using the accrual basis of accounting, whereby revenues and expenses are recognized in the year they are earned or incurred respectively, whether or not such transactions have been settled by the receipt or payment of money.

Revenue recognition Revenues are recognized when received or receivable if the amount to be received can be reasonably estimated and collection is reasonably assured. PRIDE follows the deferral method of accounting for contributions, including grants. Under the deferral method, grants and contributions received in the year for expenditures to be incurred in the following year are recorded as deferred revenues on the balance sheet. Non-monetary exchanges of goods and services are recorded at the fair market value of consideration received, as agreed upon by PRIDE and its vendors. Capital assets Capital assets are recorded at cost and are amortized over their estimated useful lives. The annual amortization rates and methods are as follows: Equipment 20% declining balance Furniture and fixtures 20% declining balance Computer equipment 20% declining balance Equipment under capital leases computers 20% declining balance Capital asset expenditures individually in excess of $1,000 are capitalized.

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PRIDE TORONTO Notes to Financial Statements July 31, 2013 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Financial instruments PRIDE initially measures its financial assets and financial liabilities at fair value. It subsequently measures all its financial assets and financial liabilities at amortized cost. The financial assets subsequently measured at amortized cost include cash and amounts receivable. The financial liabilities subsequently measured at amortized cost include accounts payable and accrued liabilities. Contributed services Volunteers contribute many hours annually to assist PRIDE in carrying out its activities. Because of the difficulty of determining their fair value, contributed services are not recognized in the financial statements.

Measurement uncertainty The preparation of financial statements in conformity with Canadian accounting standards for not-for-profit organizations requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. These estimates are reviewed periodically and adjustments are made to revenues and expenses as appropriate in the period they become known.

3. IMPACT OF THE CHANGE IN BASIS OF ACCOUNTING

PRIDE has elected to apply Canadian accounting standards for not-for-profit organizations. These financial statements are the first financial statements for which PRIDE has applied Canadian accounting standards for not-for-profit organizations. The financial statements for the year ended July 31, 2013 were prepared in accordance with the accounting principles and provisions set out in Section 1501, First-time Adoption by Not-for-Profit Organizations, for first-time adopters of this basis of accounting. First-time adoption of this new basis of accounting had no impact on PRIDEs assets, liabilities, revenues and expenses or on net assets for the years ended July 31, 2013 and July 31, 2012 or on net assets at August 1, 2011, the date of transition. PRIDE made none of the voluntary elections on transition. The opening balance sheet at August 1, 2011 is identical to the balance sheet at July 31, 2011 as reported under the former basis of accounting.

4. FINANCIAL INSTRUMENTS

Cash consists of cash on hand and on deposit in bank accounts held at a major Canadian bank. The fair value of PRIDE`s amounts receivable and accounts payable and accrued liabilities approximates their carrying value due to the relatively short term to maturity of those instruments. PRIDE is exposed to various risks through its financial instruments. Credit risk on amounts receivable is mitigated by close monitoring of outstanding balances and assessment of estimated realizable value.

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PRIDE TORONTO Notes to Financial Statements July 31, 2013 4. FINANCIAL INSTRUMENTS (continued)

PRIDE has available a demand revolving line of credit in the amount of $300,000 bearing interest at the bank prime rate plus 2.50%. This credit facility is secured by a general security agreement. The bank covenant includes an obligation to maintain a balanced budget annually. At July 31, 2013, PRIDE was in compliance with this bank covenant. Interest expense of $ nil (2012 - $4,393) on the line of credit is classified as general and administration expense in the statement of operations and changes in net assets.

5. CAPITAL ASSETS

Cost Accumulated Net Book Value amortization June 30 June 30 July 1 2013 2012 2011 Equipment $ 24,662 $ 17,632 $ 7,030 $ 8,788 $ 10,984 Furniture and fixtures 7,719 5,322 2,397 2,995 3,746 Computer equipment 18,881 12,495 6,386 3,066 3,833 51,262 35,449 15,813 14,849 18,563 Equipment under capital Leases- computers 55,299 44,241 11,058 26,323 32,903 $ 102,505 $ 79,690 $ 26,871 $ 41,172 $ 51,466

Amortization expense for 2013 includes $5,265 (2012 - $ 6,580) of amortization on equipment under capital leases and a $10,000 impairment loss incurred on computer equipment.

6. CAPITAL LEASE OBLIGATIONS

Interest of $ 155 (2012 - $ 2,200) was paid on capital leases during the year. This interest is classified as general and administration expense in the statement of operations and changes in net assets.

7. COMMITMENTS

PRIDE has entered into a lease agreement to rent its office space until March 31, 2015 and a lease for an office photocopier. Lease payments to the expiry date of these leases are as follows:

2014 $ 147,121 2015 98,405

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PRIDE TORONTO Notes to Financial Statements July 31, 2013

8. GRANTS REVENUES 2013 2012 Government of Canada: Canadian Heritage $ 102,300 $ 52,100 Province of Ontario: Ministry of Tourism Tourism Development Fund 350,000 275,625 City of Toronto: Economic Development Major Cultural Organization grant 139,960 123,807 $ 592,260 $ 451,532 9. IN KIND SPONSORSHIPS

In accordance with PRIDEs accounting policy, non-monetary exchanges of goods and services are recorded in the accounts at the fair value of the goods and services supplied by vendors. Revenues include in kind sponsorship goods and services received of $632,547 (2012 - $531,781), with the corresponding expense amounts classified as follows: 2013 2012

Media and promotion $ 437,734 $ 395,460 Entertainment and events - 70,544 Beverage cost of sales 51,840 50,277 Volunteer costs 87,550 13,500 Festival infrastructure - 2,000 Office and administration 55,423 - $ 632,547 $ 531,781

In addition, PRIDE received in-kind sponsorships of rail travel and food credits totaling $7,732, which are available for use in the 2014 fiscal year. These sponsorships are classified as amounts receivable and deferred in-kind sponsorships on the balance sheet as at July 31, 2013, and will be recognized as sponsorships revenues and the corresponding expense when the credits are used.

10. WORLDPRIDE 2014 TORONTO

The accumulated surplus at July 31, 2013 of $652,297 was generated from operating surpluses from the last 3 fiscal years, to allow for an anticipated deficit budget in the 2014 fiscal year as a result of the additional scope and scale of production of WorldPride 2014 Toronto.