THE GEORGE E. BROWN UNITED STATES-MEXICO FOUNDATION FOR SCIENCENon-Profit

The Foundation pursued legal action because the way in which the IMPI withdrew from our agreement was found to be illegal. The Mexican court agreed with our position, and by the end of 2021, the Foundation had received a favorable resolution on the 2020 lawsuit. This led to initial meetings with IMPI's renewed top management, but unfortunately, we were unable to reset the funds. In June 2022, the Foundation formally requested that the IMPI reset the funds in order to continue functioning under the agreement, as a legally developed addendum had been created to supplement the original agreement. There were hectic changes in top management at the Mexican Ministry of Economy and the IMPI in 2022, resulting in unproductive efforts from previous negotiations. Then, in July 2023, the Foundation submitted a second lawsuit to enforce the one won in 2021, which was accepted by the court. On 13 September 2024, the Foundation was notified by the court of a favorable resolution regarding this second lawsuit. The IMPI still has one final opportunity to contest this resolution, although the probability of changing the outcome is minimal. Consequently, the Foundation's executives and its Board of Governors resumed communication with the IMPI's legal team to accelerate the resetting of the funds and the collaboration agreement. This was unsuccessful. Although the final ruling generally favored the Foundation, FUMEC filed a direct appeal for constitutional protection, claiming that the returns generated should not be limited to December 2022 but should instead be accumulated and calculated until IMPI actually made the payment; that is, until the month of 2024 in which IMPI complied with the ruling handed down on July 1, 2024. The court revoked the contested trial of July 1, 2024, and issued a new ruling, reiterating the considerations regarding the period and the amounts that IMPI is obliged to pay to FUMEC, in order to fully restore FUMEC's infringed subjective right. In compliance with this ruling, on September 8, 2025, the court issued a new ruling considering that the Collaboration Agreement was still in force and that IMPI had not demonstrated that it had fulfilled its obligations. Consequently, and reiterating its previous ruling, the court granted IMPI a period of no more than four months to comply with the Collaboration Agreement. IMPI was therefore required to reimburse the principal funds of $5 million USD to FUMEC’s endowment and pay the returns due for the period from August 2020 to May 2024. Proposed completion date – 2Q2026. Contact person – Eugenio Marin, Executive Director

2023-001

Corrective Action: The Foundation pursued legal action as the way IMPI withdrew from our agreement was found illegal. The court in Mexico agreed with our position and by the end of 2021 the Foundation was notified with a favorable resolution on the lawsuit submitted in 2020, which led to initial meetings with the IMPI’s renewed top management but with no success in resetting the funds. In June 2022, the Foundation submitted a formal request to the IMPI to reset the funds to continue the functioning of the agreement since an addendum was legally developed to be added to the original agreement. Hectic changes in top management at the Ministry of Economy of Mexico and the IMPI occurred in 2022, which resulted in unproductive efforts from previous negotiations. Then in July 2023, the Foundation submitted a second lawsuit, accepted by the court, to enforce the previous one, won in 2021. On September 13th, 2024, the Foundation was notified by the court with a positive resolution regarding this second lawsuit. The IMPI still has a final opportunity to defend against this resolution, although its probabilities to change the outcome are minimum. From this, the Foundation’s executives and its Board of Governors are back on track on communicating with the legal team of the IMPI to accelerate the resetting of the funds and the collaboration agreement, looking to advance before the change of administration in Mexico. If the latter results unsuccessful the Foundation should have to wait by the end of 2024 to restart the actions before a possible new appointed director general of the IMPI. Proposed completion date – End of 1Q2025. Contact person – Eugenio Marin, Executive Director

2022-001

Reference Number 2022-001 / Compliance and IC over Compliance CFDA 66.202 Environmental Protection Agency Endowment Criteria: Per Endowment agreement and the related law establishing the Organization, the Organization was to obtain a one-to-one match from sources within Mexico for any contributions made by U.S. government agencies. Condition Found: On September 26, 2011, the Organization obtained a match from the Instituto Mexicano de la Propiedad Industrial ?IMPI? on behalf of the Mexican government. The match was in Mexican Peso equivalent of $5 million US Dollars based on that day?s exchange rates published on the date of the agreement by the Banco de Mexico in the Diario Oficial de la Federacion. During April 2020 IMPI notified the Organization that they will no longer provide the matching funds due to economic hardship related to covid 19. Context: The condition noted was identified as part of our review of federal awards. Effect: The Organization is in non-compliance with match requirements. Cause: IMPI will no longer match the funds due to economic hardship related to covid 19. Recommendation: It is recommended the Organization seek additional contributions sourced within Mexico. In addition, the Organization should contact the federal awarding agency to discuss possible alternative resolutions to this finding. Corrective Action: The Foundation pursued legal action as the way IMPI withdrew from our agreement was found illegal. The court in Mexico agreed with our position and by the end of 2021 the Foundation was notified with a favorable resolution on the lawsuit submitted in 2020, which led to initial meetings with IMPI?s renewed top management about restructuring the support programs that their contribution to our endowment would allow to fund, and with that to reestablish the agreement?s functionality. In June 2022 the Foundation submitted a formal request to IMPI to reset the funds to continue the functioning of the agreement since an addendum was legally developed to be added to the original agreement. Hectic changes in top management at the Ministry of Economy of Mexico and IMPI occurred in 2022, which has resulted in unproductive efforts from previous negotiations. Due to the latter, in July 2023, the Foundation has submitted a second lawsuit, accepted by the court, to enforce the previous one, won in 2021. IMPI has to respond with its official position to the court by the end of August 2023; the Foundation is expecting, based on its lawyer?s opinion, a positive outcome on the evidence analysis and final resolution of this lawsuit. Legal actions will be ending soon, and the Foundation and its Board of Governors would know what the next course of action and a concrete timeframe will be if the Foundation?s obtains a favorable result. Proposed completion date ? By the end of 2023 or 1Q2024. Contact person ? Eugenio Marin, Executive Director

2021-001

Reference Number 2021-001 / Compliance and IC over Compliance CFDA 66.202 Environmental Protection Agency Endowment Criteria: Per Endowment agreement and the related law establishing the Organization, the Organization was to obtain a one-to-one match from sources within Mexico for any contributions made by U.S. government agencies. Condition Found: On September 26, 2011, the Organization obtained a match from the Instituto Mexicano de la Propiedad Industrial ?IMPI? on behalf of the Mexican government. The match was in Mexican Pesos equivalent of $5 million US Dollars based on that day?s exchange rate published on the date of the agreement by the Banco de Mexico at Diario Oficial de la Federacion. During April 2020 IMPI notified the Organization that they will no longer provide the matching funds due to economic hardship related to Covid 19. Context: The condition noted was identified as part of our review of federal awards. Effect: The Organization is in non-compliance with match requirements. Cause: IMPI will no longer match the funds due to economic hardship related to Covid 19. Recommendation: It is recommended the Organization seek additional contributions sourced within Mexico. In addition, the Organization should contact the federal awarding agency to discuss possible alternative resolutions to this finding. Corrective Action: The Foundation pursued legal action due to the fact that the way IMPI withdrew from our agreement was found illegal. The court in Mexico agreed with our position and by the end of 2021 the Foundation was notified with a favorable resolution on the lawsuit submitted in 2020, which led to initial meetings with IMPI?s renewed top management about restructuring the support programs that their contribution to our endowment will allow to fund, and with that to reestablish the agreement?s functionality. The Foundation?s team have worked over 4 months on the design of a couple of programs IMPI has validated, and we have them ready. In June 2022 the Foundation submitted a formal request to IMPI to reset the funds to continue the functioning of the agreement since an addendum has been legally developed to be added to the original agreement, which establishes adding 11 million MXN ca. (US$0.56M) to the 69 million MXN ca. (US$3.54M) withdrawn. The latter will allow us to reset 80 million MXN ca. (US$4.0M) to compensate the interests that have not been paid to the Foundation since 2020, we found a common mechanism that fits IMPI?s and the Foundation?s governance framework. IMPI is in good will but now they have reached an impasse from directives established by the Ministry of Finance of Mexico in 2020. That Ministry (SHCP) must instruct IMPI with formal fund allocation under the same fiduciary mechanism. The Foundation?s Vice President holds close relationships in the current Mexican administration, so the Foundation prepared a technical dossier, and the Executive Director already had a meeting in August with a top-level official at SHCP, who has been debriefed and we are expecting his help in order to obtain the instruction needed from SHCP to allow IMPI to reset and allocate the funds with no legal liabilities or retaliation. Proposed completion date ? By the end of 2022 or early 2023. Contact person ? Eugenio Marin, Executive Director

2020-001

Reference Number 2020-001 / Compliance and IC over Compliance CFDA 66.202 Environmental Protection Agency Endowment Criteria: Per Endowment agreement and the related law establishing the Organization, the Organization was to obtain a one-to-one match from sources within 1vlexico for any contributions made by U.S. government agencies. Condition Found: On September 26,201 I, the Organization obtained a match from the Instituto Mexicano de la Propiedad Industrial " IMPI" on behalf of the Mexican government. The match was in Mexican Peso equivalent of $5 million US Dollars based on that day's exchange rates published on the date of the agreement by the Banco de Mexico in the Diario Oficial de la Federacion. During April 2020 IMPI notified the Organization that they will no longer provide the matching funds due to economic hardship related to Covid 19. Context: The condition noted was identified as part of our review of federal awards. Effect: The Organization is in non-compliance with match require1nents. Cause: IMPI will no longer match the funds due to economic hardship related to Covid-19. Recommendation: It is recommended the Organization seek additional contributions sourced within Mexico. In addition, the Organization on should contact the federal awarding agency to discuss possible alternative resolutions to this finding. Corrective Action: In 2020 the Organization run a thorough analysis along with its Board of Governors to review the possible mismatching plight and consulted with its legal advisors about it. They have advised that the Organization must start looking for resources to match the endowment through different valid sources: Mexican Government Agencies, Mexican Private Sector, or Inten1ational Agencies. They concurred on the relevance to fulfill the mismatch caused by IMPI' s departure from the endowment since our agreements require matching fulfillment and compliance. To that respect, together, Board of Governors and Management already have a prospectus deck in place and a shortlist of potential endowers to continue our matching-fund strategy. We just started to approach those candidates and will continue doing so throughout the rest of 2021, taking into consideration the complicated economic situation that Mexico is in, due to the republican austerity policy of Mexico's current government and the global Covid-19 impact with its new waves and peaks all over the world. As well, we will contact the federal awarding agencies in the first half of 2022, hopefully with some positive results from our matching-fund strategy by then, to have their own perspectives to help us create a robust contingency plan for future compliance situations.

Reference Number 2019-01 / Compliance and IC over Compliance CFDA 47.U01 National Science Foundation Endowment CFDA 43.U01 National Aeronautics and Space Administration Endowment CFDA 10.U01 United States Department of Agriculture Endowment CFDA 66.202 Environmental Protection Agency Endowment Criteria: Per Endowment agreements and the related law establishing the Organization, the Organization was to obtain a one to one match from sources within Mexico for any contributions made by U.S. government agencies. Condition Found: On September 26, 2011, the Organization obtained a match from the Instituto Mexicano de la Propiedad Industrial ?IMPI? on behalf of the Mexican government. The match was in Mexican Peso equivalent of $5 million US Dollars based on that day?s exchange rates published on the date of the agreement by the Banco de Mexico in the Diario Oficial de la Federacion. As further noted on the IMPI agreement, the investments would be held in escrow under IMPI?s ownership, but the Organization would fully benefit from any excess funds generated by this contribution. The $5 million US dollar match translated to approximately $68,894,000 pesos on September 26, 2011. At December 31, 2019, the balance of the investment totaled $69,575,000 pesos, which totaled approximately $3,540,000 at the exchange rate at December 31 2019, possibly causing a shortage of approximately $1,460,000 in required matching funds. Context: The condition noted was identified as part of our review of federal awards. Effect: The shortage caused by exchange rate fluctuations may result in noncompliance with match requirements. Cause: Additional Mexican Pesos have not been increased to account for change in foreign currency value. Recommendation: I recommend the Organization consult with legal counsel to ensure that match in Mexican pesos fulfills grant agreement requirements and the Organization should seek additional contributions sourced within Mexico. In addition, the Organization should contact the federal awarding agencies to discuss possible resolutions to this finding. Corrective Action: We have run a first thorough analysis with our Board of Governors to review the possible mismatching plight and consulted with our legal advisors about it. They have advised that we should start looking for resources to match the endowment through different valid sources: Mexican Government Agencies, Mexican Private Sector, or International Agencies. They agree that the shortage, caused by exchange rate fluctuations to date, is an external factor, although our agreements require matching fulfillment and compliance. To that respect, together, Board of Governors and Management will start a matching fund campaign in January 2021 as legal advisors have recommended. We expect to have a shortlist of interested candidates by mid-2021 and hopefully start working in a grant agreement to add a new endower by the end of 2021, taking into consideration the complicated economic situation that Mexico is in, due to the republican austerity policy of Mexico?s new government and the global Covid-19 impact in all countries and organizations as well. In parallel we will contact the federal awarding agencies in 2021 to discuss possible resolutions to this finding to have different perspectives to comply with our responsibility.

2018-002

GSA_MIGRATION

2017-001

GSA_MIGRATION

2017-002

GSA_MIGRATION

GSA_MIGRATION