Consolidated Financial Statements With Independent Auditors Report. June 30, 2015 and 2014

Transcription

1 Consolidated Financial Statements With Independent Auditors Report

2 Table of Contents Page Independent Auditors' Report 1 Consolidated Financial Statements Consolidated Statements of Financial Position 2 Consolidated Statements of Activities 3 Consolidated Statements of Cash Flows 4 Consolidated Statement of Functional Expenses Consolidated Statement of Functional Expenses Supplementary Information Independent Auditors' Report on Supplementary Information 23 Consolidating Statement of Financial Position Consolidating Statement of Financial Position Consolidating Statement of Activities Consolidating Statement of Activities

3 INDEPENDENT AUDITORS REPORT Board of Directors Partners Worldwide, Inc. and Affiliates Grand Rapids, Michigan We have audited the accompanying consolidated financial statements of Partners Worldwide, Inc. and Affiliates, which comprise the consolidated statements of financial position as of, and the related consolidated statements of activities, cash flows, and functional expenses for the years then ended, and the related notes to the consolidated financial statements. Management s Responsibility for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of these consolidated 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 consolidated 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 consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the consolidated 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 consolidated 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 consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Partners Worldwide, Inc. and Affiliates as of, and the changes in their consolidated net assets and cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. Grand Rapids, Michigan December 4, 2015

4 Consolidated Statements of Financial Position June 30, ASSETS: Cash and cash equivalents $ 1,543,146 $ 1,307,237 Investments 4,781,056 2,986,481 Pledges receivable 3,787,687 5,300,685 Field advances 149, ,768 Accounts receivable 3,855 8,312 Interest receivable 22,466 54,872 Prepaid expenses 29,427 54,012 Notes receivable 3,095,537 2,741,070 Property and equipment, net 827, ,152 Total Assets $ 14,240,105 $ 13,418,589 LIABILITIES AND NET ASSETS: Accounts payable $ 61,205 $ 87,483 Accrued expenses 94,848 82,213 Notes payable 700, ,000 Total Liabilities 856, ,696 Net assets: Unrestricted: Undesignated 6,626,549 6,380,326 Designated for future building needs 50,000 50,000 Designated for programs - 9,175 6,676,549 6,439,501 Temporarily restricted 6,707,503 6,509,392 Total Net Assets 13,384,052 12,948,893 Total Liabilities and Net Assets $ 14,240,105 $ 13,418,589 See notes to consolidated financial statements -2-

5 Consolidated Statements of Activities Year Ended June 30, Temporarily Temporarily Unrestricted Restricted Total Unrestricted Restricted Total SUPPORT AND REVENUE: Contributions $ 986,968 $ 3,948,285 $ 4,935,253 $ 2,249,665 $ 8,681,729 $ 10,931,394 Interest income 130, ,316 69,124-69,124 Investment income gain (loss) 168, ,381 (145,952) - (145,952) Donated services 257, , , ,845 Foreign currency translation adjustment (7,872) - (7,872) (1,206) - (1,206) Other revenues 145, ,890 1,376-1,376 Total support and revenue 1,680,921 3,948,285 5,629,206 2,509,852 8,681,729 11,191,581 Net Assets Released from Restriction 3,750,174 (3,750,174) - 4,079,365 (4,079,365) - Total Support, Revenue and Net Assets Released From Restrictions 5,431, ,111 5,629,206 6,589,217 4,602,364 11,191,581 EXPENSES Program services 4,417,298-4,417,298 3,476,790-3,476,790 Supporting activities: Management and general 298, , , ,076 Fund-raising 478, , , ,754 Total Expenses 5,194,047-5,194,047 4,227,620-4,227,620 Change in Net Assets 237, , ,159 2,361,597 4,602,364 6,963,961 Net Assets, Beginning of Year 6,439,501 6,509,392 12,948,893 4,077,904 1,907,028 5,984,932 Net Assets, End of Year $ 6,676,549 $ 6,707,503 $ 13,384,052 $ 6,439,501 $ 6,509,392 $ 12,948,893 See notes to consolidated financial statements -3-

6 Consolidated Statements of Cash Flows June 30, CASH FLOWS FROM OPERATING ACTIVITIES: Increase in net assets $ 435,159 $ 6,963,961 Adjustments to reconcile change in net assets to net cash provided (used) by operating activities: Depreciation expense 33,615 29,765 Foreign currency translation adjustment (7,872) (1,206) Increase in loan loss provision 110,000 37,500 Realized and unrealized gain (loss) on investments 97,703 (145,952) Changes in: Pledges receivable 1,509,891 (5,217,760) Field advances (8,619) (36,392) Accounts receivable (37,030) (57,424) Interest receivable 32,406 (21,751) Prepaid expenses 24,585 (24,352) Accounts payable 18,316 61,737 Accrued expenses 12,635 (3,068) Net Cash Provided by Operating Activities 2,220,789 1,585,058 CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment (36,007) (3,855) Notes issued (747,130) (2,051,702) Collections on notes 282, ,993 Proceeds from sale of investments (121,791) 123,293 Purchases of investments (1,770,487) (15,000) Net Cash Used by Investing Activities (2,392,752) (1,617,271) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from notes payable 400,000 - Net Cash Provided by Financing Activities 400,000 - Effect of Exchange Rate on Cash 7,872 1,206 Net Change in Cash and Cash Equivalents 235,909 (31,007) Cash and Cash Equivalents, Beginning of Year 1,307,237 1,338,244 Cash and Cash Equivalents, End of Year $ 1,543,146 $ 1,307,237 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid for interest (non capitalized) $ 5,625 $ 3,000 See notes to consolidated financial statements -4-

7 Consolidated Statement of Functional Expenses Year Ended June 30, 2015 Supporting Activities Program Management Services and General Fund-raising Total Salaries $ 458,077 $ 104,469 $ 170,034 $ 732,580 Employee benefits 108,831 25,759 85, , , , , ,680 Home office costs: Printed materials 1,314 9,541 13,910 24,765 Promotion events/mailings 2,733 5,130 64,212 72,075 Travel 72,003 2,705 11,991 86,699 Operations 224, , , ,637 Professional fees 2,644 37,572 5,606 45,822 Training and education ,208 2,059 Facilities 22,327 5,226 17,053 44,606 Total home office costs 326, , , ,663 Field office costs: Donated services 257, ,238 Travel 546, ,376 Housing 1, ,217 Field office costs 200, ,526 Field equipment purchases Training and education 20, ,086 National staff costs 760, ,843 Food production 593, ,375 Small business development 567, ,649 Field development and planning 59, ,241 Other 516, ,702 Total field office costs 3,523, ,523,704 Total Expenses $ 4,417,298 $ 298,387 $ 478,362 $ 5,194,047 See notes to consolidated financial statements -5-

8 PARTNERS WORLDWIDE, INC. Consolidated Statement of Functional Expenses Year Ended June 30, 2014 Supporting Activities Program Management Services and General Fund-raising Total Salaries $ 284,653 $ 89,387 $ 175,150 $ 549,190 Employee benefits 97,888 30,469 82, , , , , ,199 Home office costs: Printed materials 875 7,486 3,548 11,909 Promotion events/mailings 827 3, , ,249 Travel 38,423 3,899 31,074 73,396 Operations 107,490 65,811 60, ,251 Professional fees 20,832 21,334 6,416 48,582 Training and education 1, ,119 2,770 Facilities 24,153 5,502 12,022 41,677 Total home office costs 193, , , ,834 Field office costs: Donated services 336, ,845 Travel 406, ,743 Housing 1, ,454 Field office costs 79, ,588 Field equipment purchases 12, ,315 Training and education 42, ,803 National staff costs 650, ,717 Food production 406, ,432 Health 26, ,674 Small business development 502, ,282 Field development and planning 80, ,293 Other 354, ,441 Total field office costs 2,900, ,900,587 Total Expenses $ 3,476,790 $ 228,076 $ 522,754 $ 4,227,620 See notes to consolidated financial statements -6-

9 1. NATURE OF ORGANIZATION: Partners Worldwide, Inc. (PW), a Michigan nonprofit corporation, was established for the purpose of promoting and enhancing international and domestic development of small business in developing communities and countries and creating jobs. PW operates as a charitable religious organization within the meaning of Section 501(c)(3) of the Internal Revenue Code (Code) and applicable state regulations and has been classified as a publicly supported organization, which is not a private foundation under Section 509(a) of the Code. It is exempt from federal and state income taxes and contributions by the public are deductible for income tax purposes. Partners Worldwide Canada (PWC), a Canada not for profit corporation, was established for the purpose of promoting and enhancing international and domestic development of small businesses in less developed communities and countries, creating jobs, and supporting the mission of PW. PW Entrepreneurs L3C (PWE), a Michigan corporation, was established for the purpose of promoting and enhancing international and domestic development of small businesses in less developed communities and countries, creating jobs, and supporting the mission of PW. Partners Worldwide Asia (PWA) Limited, a non-profit company located in Hong Kong, was established for the purpose of promoting and enhancing development of small businesses in Asia and supporting the mission of PW. 2. SIGNIFICANT ACCOUNTING POLICIES: BASIS OF ACCOUNTING The preparation of consolidated financial statements, in accordance with accounting principles generally accepted in the United States of America, requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from these estimates. The more significant accounting policies are summarized below. PRINCIPLES OF CONSOLIDATION The consolidated financial statements of Partners Worldwide, Inc. and Affiliates include the consolidating financial resources and activities of PW and its subsidiary organizations, PWC, PWE and PWA. Due to immaterial financial activity, PWA is not presented separately within the consolidating statements. All interorganization balances and transactions have been eliminated in the consolidation. CASH AND CASH EQUIVALENTS Cash and cash equivalents include bank and brokerage checking, savings and money market accounts. Certain items that meet the definition of cash equivalents but are part of a larger pool of investments are included in investments. From time to time, deposits may exceed federally insured limits. Partners Worldwide, Inc. and Affiliates have not experienced any loss on its cash and cash equivalents and does not believe that it is exposed to any significant credit risk related to these accounts. -7-

10 2. SIGNIFICANT ACCOUNTING POLICIES, continued: INVESTMENTS Investments are reported at fair value, as disclosed in Note 3. Realized and unrealized gains and losses are presented in the consolidated statement of activities as a change in unrestricted net assets unless designated as temporarily restricted by the donor. Donated investments are liquidated at market value on the date of donation. PLEDGES RECEIVABLE Unconditional pledges receivable are recognized as revenue in the period the pledge is made and as assets, decreases of liabilities or expenses depending on the form of the benefits to be received. Pledges receivable are stated at the amount management expects to collect from balances outstanding. Management provides for probable uncollectible amounts through a charge to earnings and a credit to a valuation allowance based on its evaluation of the status of individual accounts, past credit history with donors and the donors' current financial condition. Balances that are still outstanding after management has used reasonable collection efforts are written off through a charge to the valuation allowance and a credit to pledges receivable. PW considers pledges receivable to be fully collectible; accordingly, no allowance for doubtful promises to give has been recorded. If amounts become uncollectible, a provision for the potential loss will be charged to operations when that determination is made. Unconditional pledges receivable that are expected to be collected within one year are reported at net realizable value. Unconditional pledges receivable that are expected to be collected in future years are reported at the present value of their estimated future cash flows. The discounts on those amounts are computed using risk free interest rates applicable to the years in which the promises are expected to be received. This discount rate is based on yields of the various U.S. Treasury bills corresponding to the timing of the pledge commitment. Amortization of the discount is included in contributions revenue in the accompanying consolidated statements of activities. FIELD ADVANCES PW funds numerous projects in countries outside the United States. Field managers in those countries will request funding for approved projects. Field advances include amounts forwarded to those foreign bank accounts. As funds are spent, the field advance account is decreased and the various project expenses are recognized. ACCOUNTS RECEIVABLE Accounts receivable are stated at the amount management expects to collect from balances outstanding. Management has reviewed the balances that comprise the various categories of accounts receivable and determined such balances to be fully collectible. Accordingly, no provision for uncollectible accounts is included in the consolidated financial statements for years ending June 2015 and If amounts become uncollectible, a provision for the potential loss will be charged to operations when that determination is made. -8-

11 2. SIGNIFICANT ACCOUNTING POLICIES, continued: NOTES RECEIVABLE PW and PWE provide loan capital to qualified affiliates worldwide, who then manage funds locally by identifying and providing loans to entrepreneurs who have received business training, mentoring and coaching and are prepared to take their business to the next level. Notes receivable are reported net of any anticipated losses due to uncollectible accounts. The allowance for loan losses is based on management s evaluation of the collectability of the overall loan portfolio, including trends in historical loss experience, payment patterns from the borrowers, and general economic conditions. As of June 30, 2015, the allowance, totaling $300,000 for PW and $112,500 for PWE and are maintained at a level that, in management s judgment, is adequate to absorb potential losses inherent in the loan portfolios. PROPERTY AND EQUIPMENT, NET Property and equipment are stated at cost, if purchased. Donations of property and equipment are recorded as support as estimated fair value at the time received. Such donations are reported as unrestricted support unless the donor has restricted the donated asset to a specific purpose. Gifts of long-lived assets with explicit restrictions that specify how the assets are to be used and gifts of cash or other assets that must be used to acquire long-lived assets are reported as restricted support. Absent explicit donor stipulations about how long those long-lived assets must be maintained, PW reports expirations of donor restrictions when the donated or acquired long-lived assets are placed in service. PW follows the practice of capitalizing, at cost, all expenditures for fixed assets in excess of $2,500. Depreciation is computed using the straight-line method over the estimated useful life of the asset. CLASSES OF NET ASSETS The consolidated financial statements report amounts separately by classes of net assets as follows: Unrestricted net assets are those currently available at the discretion of the Board for use in the Partners Worldwide, Inc. and Affiliates' operations, Board designated amounts for use in future ministry and those resources invested in property and equipment. Temporarily restricted net assets are those contributed with donors restrictions for specific operating purposes or those with timing restrictions. PW temporarily restricted net assets consist of cash, pledges receivable and investments restricted for business growth and job creation program efforts throughout the world. -9-

12 2. SIGNIFICANT ACCOUNTING POLICIES, continued: REVENUE AND SUPPORT Contributions are recorded when the cash is received, unconditional pledges are made or when ownership of donated assets is transferred. All contributions are considered available for unrestricted use, unless specifically restricted by the donor or subject to legal restrictions. Gifts of cash and other assets are reported as restricted support if they are received with donor stipulations that limit the use of donated assets. When a donor restriction expires, that is, when a stipulated time restriction ends or purpose restriction is accomplished, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the consolidated statement of activities as net assets released from restrictions. If the restriction is met in the same reporting period as received, the it is recorded as unrestricted. DONATED SERVICES Donated services that create or enhance nonfinancial assets or that require specialized skills, are provided by the individuals possessing those skills, and would typically need to be purchased if not provided by donation, are recorded at fair value in the period received. As of, donated services were recorded in the consolidated statements of activities in the amount of $257,238 and $336,845, respectively. In addition, many other volunteers have contributed significant amounts of time to PW without compensation. These contributions, although clearly substantial, are not recognized as contributions in the consolidated financial statements since the recognition criteria was not met. FUNCTIONAL ALLOCATION OF EXPENSES Expenses are recorded when incurred. The costs of providing the various program and supporting services have been summarized on a functional basis in the statements of activities and presented on the consolidated statements of functional expenses. Accordingly, certain costs have been allocated among the program and supporting services benefited. UNCERTAIN TAX POSITIONS The financial statement effects of a tax position taken or expected to be taken are recognized in the consolidated financial statements when it is more likely than not, based on the technical merits, that the position will be sustained upon examination. Interest and penalties, if any, are included in expenses in the consolidated statements of activities. As of, Partners Worldwide, Inc. and Affiliates had no uncertain tax positions that qualify for recognition or disclosure in the consolidated financial statements. PW files information tax returns in the U.S. and various states. PW is generally no longer subject to U.S. federal and state income tax examinations by tax authorities for years before

13 3. INVESTMENTS: Investments consist of the following: June 30, Market Market Cash equivalent fund $ 6,391 $ 203,926 Barnabas CT Balanced Fund 4,314,801 2,346,779 PWE investments 459, ,776 $ 4,781,056 $ 2,986,481 Investment income consists of the following: June 30, PW interest and dividend income $ 114,673 $ 100,165 PW realized gains on sale of investments 79, ,664 PW unrealized (losses) gains on investments (49,669) 18,994 PWE unrealized gains (losses) on investments 24,088 (447,775) 4. FAIR VALUE MEASUREMENTS: Level 1 - Unadjusted quoted prices in active markets for identical assets or liabilities. $ 168,381 $ (145,952) PW and PWE use appropriate valuation techniques to determine fair value based on inputs available. When available, PW and PWE measure fair values using Level 1 inputs because they generally provide the most reliable evidence of fair value. Level 3 inputs are only used when Level 1 or Level 2 inputs are not available. Level 2 - Quoted prices in markets that are not considered to be active or financial instruments for which all significant and inputs are observable, either directly or indirectly. Bond funds are valued using significant other inputs, including information from fund balances based on quoted market prices. Level 3 - Significant unobservable inputs which may include PW and PWE's own assumptions in determining fair value. PW's alternative investments funds are valued using information from fund managers based on quoted market prices or other valuation methods. PWE's investments held in U.S. and foreign companies are valued using information from the corporation financials based on PWE's pro-rata net asset value based on equity ownership. PWE's investments in foreign corporations are subject to various risk factors arising from the investment activities of the underlying vehicles including market, credit, and currency risk. Management reviews and evaluates the values provided by PW's fund manager and PWE's corporate manager's and agrees with the valuation methods and assumptions used in determining the fair value. -11-

14 4. FAIR VALUE MEASUREMENTS, continued: Fair values of assets are as follows: June 30, 2015: Barnabas CT Balanced Fund: Cash & equivalents 6,391 Quoted prices in active markets for Significant other Significant other identical assets observable inputs observable inputs Level 1 Level 2 Level 3 Total $ $ - $ - $ 6,391 Core fixed income - 514, ,867 Large cap equity 342, ,662 Small and mid cap equity 84, ,682 International equity 253, ,601 Emerging market equity 175, ,794 Private equities 218, ,443 Opportunistic fixed income - 561, ,494 Global asset allocation - 642, ,979 Global equities 650, ,278 Alternative funds , ,001 1,731,851 1,719, ,001 4,321,192 PWE Investments: Dignity Products LLC , ,419 Greenline Coffee LLC - - 5,445 5,445 Nova Bossa Corporation , ,864 Total Investments $ 1,731,851 $ 1,719,340 $ 1,329,865 $ 4,781,056 Following is a reconciliation of activity for assets measured at fair value based on significant unobservable inputs (Level 3): Level 3 Investments Balance at June 30, 2014 $ 901,886 Additions 397,914 Realized gain on sale of investments 15,991 Unrealized gains on investments 14,074 Balance at June 30, 2015 $ 1,329,

15 4. FAIR VALUE MEASUREMENTS, continued: Fair values of assets are as follows: June 30, 2014: Barnabas CT Balanced Fund: Cash & equivalents 203,926 Quoted prices in active markets for Significant other Significant other identical assets observable inputs observable inputs Level 1 Level 2 Level 3 Total $ $ - $ - $ 203,926 Core fixed income - 273, ,785 Large cap equity 296, ,390 Small and mid cap equity 73, ,630 International equity 155, ,750 Emerging market equity 18, ,203 Global equities 262, ,074 Private equities 151, ,139 Opportunistic fixed income - 316, ,840 Global asset allocation - 332, ,858 Alternative funds , ,110 1,161, , ,110 2,550,705 PWE Investments: Dignity Products LLC , ,922 Greenline Coffee LLC ,000 15,000 Nova Bossa Corporation - - 5,854 5, , ,776 Total Investments $ 1,161,112 $ 923,483 $ 901,886 $ 2,986,481 Following is a reconciliation of activity for assets measured at fair value based on significant unobservable inputs (Level 3): Level 3 Investments Balance at June 30, 2013 $ 1,335,531 Realized gain on sale of investments 10,357 Unrealized losses on investments (444,002) Balance at June 30, 2014 $ 901,

16 4. FAIR VALUE MEASUREMENTS, continued: PWE adopted the updated Net Asset Value (NAV) provisions of the Fair Value Measurements and Disclosures topic of the FASB ASC. PWE uses the NAV to determine the fair value of all underlying investments which do not have readily determinable fair value. These statements are consistent with the measurement principles or attributes of an investment company. The following table lists Level 3 investments by major category. Total Dignity Greenline Nova June 30, Products Coffee Bossa Investment Category 2015 LLC LLC Corporation Strategy Creating employment opportunities in a rural community through coconut processing and supported by related product sales. Creating employment opportunities in an underserved community through establishing a selfsustaining Coffee Shop, supported by store sales. Creating employment opportunities for underserved citizens through establishing a waterless car wash and saving water through a dry wash process. Fair Value Determined Using NAV $ 459,864 $ 454,419 $ 5,445 $ - Remaining Life N/A N/A N/A Unfunded Commitments $ - $ - $ - $ - Timing to Draw Down N/A N/A N/A Redemption Terms None None None Redemption Restrictions None None None -14-

17 4. FAIR VALUE MEASUREMENTS, continued: PWE adopted the updated Net Asset Value (NAV) provisions of the Fair Value Measurements and Disclosures topic of the FASB ASC. PWE uses the NAV to determine the fair value of all underlying investments which do not have readily determinable fair value. These statements are consistent with the measurement principles or attributes of an investment company. The following table lists Level 3 investments by major category. Total Dignity Greenline Nova June 30, Products Coffee Bossa Investment Category 2014 LLC LLC Corporation Strategy Creating employment opportunities in a rural community through coconut processing and supported by related product sales. Creating employment opportunities in an underserved community through establishing a selfsustaining Coffee Shop, supported by store sales. Creating employment opportunities for underserved citizens through establishing a waterless car wash and saving water through a dry wash process. Fair Value Determined Using NAV $ 435,776 $ 414,922 $ 15,000 $ 5,854 Remaining Life N/A N/A N/A Unfunded Commitments $ - $ - $ - $ - Timing to Draw Down Redemption Terms Redemption Restrictions N/A N/A N/A None None None None None None -15-

18 5. PLEDGES RECEIVABLE: Pledges receivable are expected to be collected in the following periods: June 30, Less than one year $ 1,747,575 $ 1,654,107 One year to five years 2,060,000 3,700,000 3,807,575 5,354,107 Less present value discount (19,888) (53,422) Net $ 3,787,687 $ 5,300,685 The discount to present value was calculated using the approximate yield on a three-year Treasury bill, equal to 1.01 and 0.88 for pledges receivable as of, respectively, PW considers pledges receivable to be fully collectible; accordingly, no allowance for doubtful promises to give has been recorded. If amounts become uncollectible, a provision for the potential loss will be charged to operations when that determination is made. 6. NOTES RECEIVABLE: PW and PWE encourages job creation in developing countries by providing below market loan capital to incountry lending affiliates, who in turn provide loans to small through middle market businesses. The unsecured notes receivable are due from unrelated entities and consist of the following: Note receivable from a third-party organization in Ghana, bearing interest at 12% and maturing in September Note receivable from a third-party organization in Nigeria, bearing interest at 12% and maturing in June Note receivable from a third-party organization in Ghana, bearing interest at 2.5% and maturing in August Note receivable from a third-party organization in Ghana, bearing interest at 6% and maturing in November Note receivable from a third-party organization in Liberia, bearing interest at 4.5% and maturing in September Note receivable from a third-party organization in Uganda with interest payments paid annually in advance at a rate of 6%. The note is due in February June 30, $ 400,930 $ 395, , , , , , , , , , ,

19 6. NOTES RECEIVABLE, continued: Note receivable from a third-party organization in Swaziland, bearing interest at 9.5% and maturing in March Note receivable from a third-party organization in Mozambique with interest payments paid annually in advance at a rate of 5%. The note is due in April 2017, and is available for annual renewal. Note receivable from a third-party organization in Uganda with interest payments paid annually in advance at a rate of 2%. The note is due in February 2017, and is available for annual renewal. Note receivable from a third-party organization in Kenya, bearing interest at 4% and maturing in July Note receivable from a third-party organization in Mozambique with interest payments paid annually in advance at a rate of 4%. The note is due in November 2016, and is available for annual renewal. Note receivable from a third-party organization in Kenya, bearing interest at 5.5% and maturing in December Note receivable from a third-party organization in Kenya, bearing interest at 6% and maturing in December Note receivable from a third-party organization in Zimbabwe with interest payments paid annually in advance at a rate of 5%. The note is due in February 2017, and is available for annual renewal. Note receivable from a third-party organization in Ghana due in full in November 2015, including interest at 5%. Note receivable from a third-party organization in U.S.A., bearing interest at 15% and maturing in June Note receivable from a financial institution in Uganda, due in quarterly installments of $9,026, including interest at 5%. The note is due in December June 30, , , , , , , , , , , ,000-50,000 50,000 20,000 20, ,000-26,413 Less: Provision for loan losses (412,500) (302,500) $ 3,095,537 $ 2,741,

20 6. NOTES RECEIVABLE, continued: Partners Worldwide, Inc. and Affiliates adopted the provisions of the Receivables topic of the FASB ASC. These provisions require disclosures about the credit quality of financing receivables and the allowance for credit losses. PW and PWE provide loan capital to qualified affiliates world wide, who then manage funds locally by identifying and providing loans to entrepreneurs who have received business training, mentoring, and coaching and are prepared to take their business to the next level. PW and PWE determined their allowance for estimated losses on these Global notes by looking at historical default rates and analyzing the aging of the past due notes. The aging of the Global loan portfolio by classes of notes consist of the following: Classes of notes Not in repayment Current Less than 240 days past due Greater than 240 days but less than 2 years past due Greater than 2 years less than 5 years past due Greater than 5 years past due Total As of June 30, 2015: Global Notes $ - $ 3,508,037 $ - $ - $ - $ - $ 3,508,037 Allowance for Doubtful Accounts (412,500) $3,095,537 As a percentage of total loan portfolio 0.00% % 0.00% 0.00% 0.00% 0.00% % Changes in allowance for estimated losses on loans in the aggregate for the year ended June 30, 2015, is presented as follows: Balance, beginning $ 302,500 Provisions charged to expense 75,000 Loans previously charged off and recovered 35,000 $ 412,

21 6. NOTES RECEIVABLE, continued: Classes of notes Not in repayment Current Less than 240 days past due Greater than 240 days but less than 2 years past due Greater than 2 years less than 5 years past due Greater than 5 years past due Total As of June 30, 2014: Global Notes $ - $ 3,043,570 $ - $ - $ - $ - $ 3,043,570 Allowance for Doubtful Accounts (302,500) $2,741,070 As a percentage of total loan portfolio 0.00% % 0.00% 0.00% 0.00% 0.00% % Changes in allowance for estimated losses on loans in the aggregate for the year ended June 30, 2014, is presented as follows: Balance, beginning $ 300,000 Provisions charged to expense 28,750 Loans charged off (26,250) $ 302,

22 6. NOTES RECEIVABLE, continued: The allowance for estimated losses on loans by portfolio segment as of, is presented as follows: Global Global Notes Notes Allowance for loans individually evaluated for impairment $ - $ - Allowance for loans collectively evaluated for impairment 412, ,500 $ 412,500 $ 302,500 Loans individually evaluated for impairment $ - $ - Loans collectively evaluated for impairment 3,508,037 3,043,570 $ 3,508,037 $ 3,043,570 Allowance as a percentage of loans individually evaluated for impairment N/A N/A Allowance as a percentage of loans collectively evaluated for impairment 12% 10% 12% 10% For each class of financing receivables, the following presents the recorded investment by credit quality indicator as of : Global Global Notes Notes Performing $ 3,508,037 $ 3,043,570 Nonperforming - - $ 3,508,037 $ 3,043,570 For Global notes, the credit quality indicator is performance determined by delinquency status. Delinquency status is updated quarterly by the PW and PWE s loan issuer/loan committee. -20-

23 7. PROPERTY AND EQUIPMENT: Property and equipment consist of the following: June 30, Land $ 350,000 $ 350,000 Building 529, ,420 Equipment 128, ,114 Software 30,825-1,038,541 1,002,534 Accumulated depreciation and amortization (210,997) (177,382) $ 827,544 $ 825, NOTES PAYABLE: PW has an unsecured note payable with a third party, with interest at 1%, payable quarterly. The principal balance, totaling $600,000, is due in full upon maturity in December The proceeds of the loan were used to make below-market loans to benefit nonprofit organizations in Kenya and Uganda (see Note 6). PW has an unsecured note payable with a third party, with interest at 1.5%, payable quarterly. The principal balance, totaling $100,000, is due in full upon maturity in August The proceeds of the loan were used to make below-market loans to benefit nonprofit organizations in Ghana (see Note 6). 9. RETIREMENT PLAN: PW has a defined contribution retirement plan for substantially all of its employees who meet the eligibility requirements. Contributions to the plan are at the discretion of management. PW's current policy is to make contributions equal to 4% of qualified wages. Contributions were $25,564 and $30,236 in 2015 and 2014, respectively. 10.TEMPORARILY RESTRICTED NET ASSETS: Temporarily restricted net assets consist of the following: June 30, Global $ 4,925,670 $ 4,945,967 Africa 1,194, ,347 Latin America 509, ,886 Asia 69, ,816 North America 9,107 57,376 $ 6,707,503 $ 6,509,

24 11.MAJOR FUNDING SOURCE: In fiscal year 2015, one major donor provided approximately 25% of PW's public support and revenue. In fiscal year 2014, one major donor provided approximately 35% of PW's public support and revenue. 12.SUBSEQUENT EVENTS: Subsequent events have been evaluated through the report date, which represents the date the consolidated financial statements were available to be issued. Subsequent events after that date have not been evaluated. -22-

25 SUPPLEMENTARY INFORMATION

26 INDEPENDENT AUDITORS REPORT ON SUPPLEMENTARY INFORMATION Board of Directors Partners Worldwide, Inc. Grand Rapids, Michigan We have audited the consolidated financial statements of Partners Worldwide, Inc. and Affiliates as of and for the years ended, and our report thereon dated December 4, 2015, which expressed an unmodified opinion on those consolidated financial statements, appears on page 1. We conducted our audits for the purpose of forming an opinion on the consolidated financial statements as a whole. The consolidating statements of financial position and activities are presented for purposes of additional analysis of the consolidated financial statements rather than to present the financial position, results of operations, and cash flows of the individual organizations. The consolidating information has been subjected to the auditing procedures applied in the audits of the consolidated financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the consolidated financial statements or to the consolidated 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 consolidated financial statements as a whole. Grand Rapids, Michigan December 4, 2015

27 Consolidating Statement of Financial Position June 30, 2015 PW US PW Canada PW Canada PWE Total US $ CAN $ US $ US $ Eliminations US $ ASSETS: Cash and cash equivalents $ 1,157,384 $ 55,748 $ 45,254 $ 340,508 $ - $ 1,543,146 Investments 4,321, ,864-4,781,056 Pledges receivable 3,790, (3,107) 3,787,687 Field advances 149, ,387 Accounts receivable 22,960 4,460 3,620 55,832 (78,557) 3,855 Interest receivable 15, ,796-22,466 Prepaid expenses 29, ,427 Notes receivable 2,171, ,835-3,095,537 Investment in affiliate 1,361, (1,361,860) - Property and equipment, net 827, ,544 Total Assets $ 13,847,920 $ 60,208 $ 48,874 $ 1,786,835 $ (1,443,524) $ 14,240,105 LIABILITIES AND NET ASSETS: Accounts payable $ 106,326 $ 18,011 $ 14,621 $ 21,922 $ (81,664) $ 61,205 Accrued expenses 94, ,848 Notes payable 700, ,000 Total Liabilities 901,174 18,011 14,621 21,922 (81,664) 856,053 Net assets: Unrestricted: Undesignated 6,189,243 42,197 34,253 1,764,913 (1,361,860) 6,626,549 Designated for future building needs 50, ,000 Designated for programs ,239,243 42,197 34,253 1,764,913 (1,361,860) 6,676,549 Temporarily restricted 6,707, ,707,503 Total Net Assets 12,946,746 42,197 34,253 1,764,913 (1,361,860) 13,384,052 Total Liabilities and Net Assets $ 13,847,920 $ 60,208 $ 48,874 $ 1,786,835 $ (1,443,524) $ 14,240,105 See notes to consolidated financial statements -24-

28 Consolidating Statement of Financial Position June 30, 2014 PW US PW Canada PW Canada PWE Total US $ CAN $ US $ US $ Eliminations US $ ASSETS: Cash and cash equivalents $ 951,968 $ 68,146 $ 63,860 $ 291,409 $ - $ 1,307,237 Investments 2,550, ,776-2,986,481 Pledges receivable 5,300, ,300,685 Field advances 140, ,768 Accounts receivable 41,534 4,106 3,848 - (37,070) 8,312 Interest receivable 21, ,121-54,872 Prepaid expenses 54, ,012 Notes receivable 1,748, ,955-2,741,070 Investment in affiliate 1,336, (1,336,860) - Property and equipment, net 825, ,152 Total Assets $ 12,971,293 $ 72,528 $ 67,965 $ 1,753,261 $ (1,373,930) $ 13,418,589 LIABILITIES AND NET ASSETS: Accounts payable $ 83,020 $ - $ - $ 41,533 $ (37,070) $ 87,483 Accrued expenses 82, ,213 Notes payable 300, ,000 Total Liabilities 465, ,533 (37,070) 469,696 Net assets: Unrestricted: Undesignated 5,937,493 72,528 67,965 1,711,728 (1,336,860) 6,380,326 Designated for future building needs 50, ,000 Designated for programs 9, ,175 5,996,668 72,528 67,965 1,711,728 (1,336,860) 6,439,501 Temporarily restricted 6,509, ,509,392 Total Net Assets 12,506,060 72,528 67,965 1,711,728 (1,336,860) 12,948,893 Total Liabilities and Net Assets $ 12,971,293 $ 72,528 $ 67,965 $ 1,753,261 $ (1,373,930) $ 13,418,589 See notes to consolidated financial statements -25-

29 Consolidating Statement of Activities Year Ended June 30, 2015 Unrestricted Temporarily Restricted PW US PW Canada PW Canada PWE Total PW US PW Canada PW Canada PWE Total Total US $ CAN $ US $ US $ Eliminations US $ US $ CAN $ US $ US $ Eliminations US $ US $ SUPPORT AND REVENUE: Contributions $ 915,335 $ 169,440 $ 144,352 $ - $ (72,719) $ 986,968 $ 3,948,285 $ - $ - $ - $ - $ 3,948,285 $ 4,935,253 Interest income , , ,316 Net income/loss from Affiliate 25, (25,000) Donated services 257, , ,238 Investment income 144, , , ,381 Foreign currency translation adjustment - - (7,872) - - (7,872) (7,872) Other revenues 139, ,778 (31,956) 145, ,890 Total support and revenue 1,480, , , ,182 (129,675) 1,680,921 3,948, ,948,285 5,629,206 Net Assets Released from Restriction 3,750, ,750,174 (3,750,174) (3,750,174) - Total Support, Revenue and Net Assets Released From Restrictions 5,231, , , ,182 (129,675) 5,431, , ,111 5,629,206 EXPENSES Program services 4,250, , , ,997 (104,675) 4,417, ,417,298 Supporting activities: Management and general 275,435 26,941 22, , ,387 Fund-raising 463,060 17,961 15, , ,362 Total Expenses 4,988, , , ,997 (104,675) 5,194, ,194,047 Change in Net Assets 242,575 (30,331) (33,712) 53,185 (25,000) 237, , , ,159 Net Assets, Beginning of Year 5,996,668 72,528 67,965 1,711,728 (1,336,860) 6,439,501 6,509, ,509,392 12,948,893 Net Assets, End of Year $ 6,239,243 $ 42,197 $ 34,253 $ 1,764,913 $ (1,361,860) $ 6,676,549 $ 6,707,503 $ - $ - $ - $ - $ 6,707,503 13,384,052 See notes to consolidated financial statements -26-

30 Consolidating Statement of Activities Year Ended June 30, 2014 Unrestricted Temporarily Restricted PW US PW Canada PW Canada PWE Total PW US PW Canada PW Canada PWE Total Total US $ CAN $ US $ US $ Eliminations US $ US $ CAN $ US $ US $ Eliminations US $ US $ SUPPORT AND REVENUE: Contributions $ 2,172,612 $ 100,316 $ 98,109 $ - $ (21,056) $ 2,249,665 $ 8,681,729 $ - $ - $ - $ - $ 8,681,729 $ 10,931,394 Interest income ,124-69, ,124 Net income/loss from Affiliate (558,600) , Donated services 336, , ,845 Investment income 301, (447,775) - (145,952) (145,952) Foreign currency translation adjustment - - (1,206) - - (1,206) (1,206) Other revenues 86, (84,911) 1, ,376 Total support and revenue 2,338, ,316 96,903 (378,651) 452,633 2,509,852 8,681, ,681,729 11,191,581 Net Assets Released from Restriction 4,079, ,079,365 (4,079,365) (4,079,365) - Total Support, Revenue and Net Assets Released From Restrictions 6,418, ,316 96,903 (378,651) 452,633 6,589,217 4,602, ,602,364 11,191,581 EXPENSES Program services 3,398,695 56,570 55, ,737 (105,967) 3,476, ,476,790 Supporting activities: Management and general 208,049 20,477 20, , ,076 Fund-raising 509,403 13,651 13, , ,754 Total Expenses 4,116,147 90,698 88, ,737 (105,967) 4,227, ,227,620 Change in Net Assets 2,302,185 9,618 8,200 (507,388) 558,600 2,361,597 4,602, ,602,364 6,963,961 Net Assets, Beginning of Year 3,694,483 62,910 59,765 2,219,116 (1,895,460) 4,077,904 1,907, ,907,028 5,984,932 Net Assets, End of Year $ 5,996,668 $ 72,528 $ 67,965 $ 1,711,728 $ (1,336,860) $ 6,439,501 $ 6,509,392 $ - $ - $ - $ - $ 6,509,392 12,948,893 See notes to consolidated financial statements -27-