AUDITED FINANCIAL STATEMENTS OF

LIVELIHOOD BASIX, INC.

(A NOT-FOR-PROFIT CORPORATION)

YEARS ENDED MARCH 31, 2016 AND 2015

SCIARABBA WALKERtt~

CERTIFIED PUBLIC ACCOUNTANTS

B USINESS CONSULTANTS

To the Board of Directors Livelihood BASIX, Inc. Ithaca, New York 14850

INDEPENDENT AUDITOR'S REPORT

We have audited the accompanying financial statements of Livelihood BASIX, Inc. (a not-for­profit corporation), which comprise the statements of financial position as of March 31, 2016 and 2015, and the related statements of activities and cash flows for the years then ended, and the related notes to the financial statements.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

410 East Upland Road Ithaca, New York 14850 607-272-5550 I 607-273-6357 (Fax)

839 State Route 13 Cortland, New York 13045

www.swcllp.com

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Livelihood BAS IX, Inc., as of March 31 , 2016 and 2015, and the changes in its net assets and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

J~ i/Ju1J. /II Sciarabba Walker & Co., LLP

Ithaca, New York June 28, 2016

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LIVELIHOOD BASIX, INC. STATEMENTS OF FINANCIAL POSITION

MARCH31,

CURRENT ASSETS: Cash and cash equivalents Accounts receivable Support receivable Advances-contract services Certificate of deposit

TOT AL CURRENT ASSETS

OTHER ASSETS: Certificate of deposit

TOT AL ASSETS

ASSETS

2016

$ 1,567,647

441,565 240,336

10,000 2,259,548

$ 2,259,548

LIABILITIES AND NET ASSETS

CURRENT LIABILITIES: Accounts payable Accrued salaries and payroll taxes Contracts payable

TOT AL CURRENT LIABILITIES

NET ASSETS: Unrestricted Temporarily restricted

SDC grant Ford Foundation grant

Total temporarily restricted TOTAL NET ASSETS

TOT AL LIABILITIES AND NET ASSETS

See accompanying notes.

$

$

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2016

339 231

191,900 192,470

969,172

839,643 258,263

1,097,906 2,067,078

2,259,548

2015

$ 1,761,078 2,060

1,763,726 576,732

4,103,596

10,000

$ 4,113,596

$

$

2015

2,768 3,674

23,831 30,273

821,611

2,919,412 342,300

3,261,712 4,083,323

4,113,596

LIVELIHOOD BASIX, INC STATEMENTS OF ACTIVITIES

Years Ended March 31,

2016 2015 UNRESTRICTED NET ASSETS: EARNED INCOME:

Interest income $ 945 $ 1,663 TOTAL EARNED INCOME 945 1,663

CONTRIBUTED INCOME: Other income 30,740 Other contributions 2,005

TOT AL CONTRIBUTED INCOME 32,745

RECLASSIFICATIONS: Net assets released from restrictions 2,163,806 1,340,891

TOTAL UNRESTRICTED SUPPORT AND RECLASSIFICATIONS 2,164,751 1,375,299

PROGRAM EXPENSES: Contract services-ALPs 1,864,038 1,084,272

Less: fees paid to Livelihood BASIX ( 192,725) ( 100,771) Contract services-Ford Foundation 84,037 Travel 53,461 57,924 Retainer expenses 47,432 46,560 Other program expenses 87,619 33,186

TOT AL PROGRAM EXPENSES 1,943,862 1,121,171 General and administration expenses 73,328 24,408

TOT AL EXPENSES 2,017,190 1,145,579

CHANGE IN UNRESTRICTED NET ASSETS 147,561 229,720

TEMPORARILY RESTRICTED NET ASSETS: Ford Foundation grant 350,000 SDC grant 1,536,986

Grant income 1,886,986 RECLASSIFICATIONS:

Net assets released from restrictions ( 2,163,806) ( 1,340,891) NET CHANGE IN TEMPORARILY

RESTRICTED NET ASSETS ( 2,163,806) 546,095

NET CHANGE IN NET ASSETS ( 2,016,245) 775,815

NET ASSETS, beginning of year 4,083,323 3,307,508

NET ASSETS, end of year $ 2,067,078 $ 4,083,323

See accompanying notes. - 4 -

LIVELIHOOD BASIX, INC STATEMENTS OF CASH FLOWS

Years Ended March 31,

CASH FLOWS FROM OPERATING ACTIVITIES:

2016

Change in net assets $ ( 2,016,245) $ Adjustments to reconcile change in net assets

to net cash (used in) provided by operating activities: Changes in accounts receivable Changes in support receivable Changes in advances-contract services Changes in accounts payable Changes in accrued salaries and payroll taxes Changes in contracts payable NET CASH (USED IN)

PROVIDED BY OPERA TING ACTIVITIES

NET CHANGE IN CASH AND CASH EQUIVALENTS

CASH, beginning of year

CASH, end of year

SUPPLEMENT AL CASH FLOW lNFORMA TION:

Cash paid during the year for: Interest Taxes

See accompanying notes. - 5 -

2,060 1,322,161

336,396 ( 2,429) ( 3,443)

168,069

( 193,431)

( 193,431)

1,761,078

$ 1,567,647 $

$ $

2015

775,815

569,794 ( 312,975) ( 3,987)

1,654 23,831

1,054,132

1,054,132

706,946

1,761,078

LIVELIHOOD BASIX, INC NOTES TO FINANCIAL STATEMENTS

Years Ended March 31, 2016 and 2015

A. Summary of Significant Accounting Policies

Nature of Organization - Livelihood BASIX, Inc. (LBI) is a not-for-profit organization located in Ithaca, NY, whose purpose is to provide high quality and deeply committed global technical assistance to promote and transform the lives of the poor. LBI is currently working on projects in various countries in Africa.

Income Taxes - LBI is exempt from federal income tax under Internal Revenue Code Section 501(c)(3). LBI accounts for income taxes in accordance with FASB Accounting Standards Codification (ASC) 740, Income Taxes. The guidance regarding uncertainty in income taxes prescribes a minimum recognition threshold a tax position is required to meet before being recognized in the financial statements.

Cash and Cash Equivalents - For cash flow purposes, LBI considers all unrestricted highly liquid investments with a maturity of 3 months or less when purchased to be cash equivalents.

Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

Financial Statement Presentation - LBI reports information regarding its financial position and activities according to three classes of net assets: unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets.

Promises to Give - Contributions are recognized when the donor makes a promise to give to LBI that is, in substance, unconditional. Promises to give are recorded at the time the promise to give is made, at the present value of the expected future contribution. Contributions that are restricted by the donor are reported as increases in unrestricted net assets if the restrictions expire in the fiscal year in which the contributions are recognized. All other donor-restricted contributions are reported as increases in temporarily or permanently restricted net assets depending on the nature of the restrictions. When a restriction expires, temporarily restricted net assets are reclassified to unrestricted net assets. LBI uses the allowance method to determine uncollectible unconditional promise receivables. The allowance is based on prior years' experience and management's analysis of specific promises made. The allowance was $0 as of March 31, 2016 and 2015.

B. Concentration of Credit Risk

At times during the year, LBI will have bank deposits in excess of the FDIC insured limits.

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C. Restrictions on Net Assets

Temporarily restricted net assets are available for the following purposes or periods:

African Livelihoods Partnership Friends of PRADAN

D. Promises to Give

$ 2016 839,643 258,263

The promises to give of $441,565 as of March 31, 2016 are considered a reasonable estimate of their fair value at March 31, 2016.

E. Related Parties

During the year ended March 31, 2016, LBI had six related-party transactions as a result of the ALPs project as mandated by the donor:

1. An amount of $339,581 in direct and indirect funding to BASICS Ltd., two of whose board members are directors in LBI.

2. An amount of $66,290 in direct and indirect funding to P AMIGA, whose general manager is a director in LBI.

3. An amount of $223,000 in direct and indirect funding to BASIX Consulting and Technology Services, Ltd., whose dean is a director in LBI.

4. An amount of $35,996 in direct and indirect funding to ILRT, whose dean is a director in LBI.

5. An amount of $70,000 in direct and indirect funding to PRADAN, an organization in which a board member is also a director in LBI.

6. An amount of $500,000 in direct and indirect funding to LBT in Tanzania, an organization in which a board member is also a director in LBI. The executive director of LBI is also a board member of this organization.

During the year ended March 31, 2015, LBI had four related-party transactions as a result of the ALPs project as mandated by the donor:

1. An amount of $608,077 in direct and indirect funding to BASICS Ltd., two of whose board members are directors in LBI.

2. An amount of $25,000 in direct and indirect funding to the Center for Innovation, whose vice president and chief technology officer is a director in LBI.

3. An amount of $125,795 in direct and indirect funding to PAMIGA, whose general manager is a director in LBI.

4. An amount of $5,305 in direct and indirect funding to The Livelihood School, whose dean is a director in LBI.

F. Concentrations

For the year ended March 31, 2015, 8 8 percent of LBI' s revenue was from two donors.

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G. Released from Restrictions

H.

The following funds were released from restrictions in the years ended March 31,

SDC grant Project expenses-ALPs Overhead contribution ALPs cell Travel expenses

Total SDC grant · Ford Foundation grant

Project expenses Overhead contribution

Total Ford Foundation grant Total

Subsequent Events

2016

$ 1,864,036 138,272 24,000 53,461

2,079,769

84,037

84,037 $ 2,163,806

2015

$ 1,060,272 190,995 24,000 57,924

1,333,191

7,700 7,700

$ 1,340,891

Management has evaluated subsequent events through June 28, 2016, the date when the financial statements were available to be issued, and there are no subsequent events that require disclosure.

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