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PROMISE HOUSE, INC. 401K PLANFINANCIAL STATEMENTSANDINDEPENDENT AUDITORS’ REPORTDECEMBER 31, 2013

PROMISE HOUSE, INC. 401K PLANTABLE OF CONTENTSDECEMBER 31, 2013Independent Auditors’ Report .1 -2Statements of Net Assets Available for BenefitsDecember 31, 2013 and 2012 .3Statement of Changes in Net Assets Available for BenefitsFor the Year Ended December 31, 2013 .4Notes to Financial Statements .5 - 13Supplemental Schedule.14

PROMISE HOUSE INC. 401k PLANSTATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITSDECEMBER 31, 2013 and 2012Unaudited20122013ASSETSInvestments:Common collective trustMutual funds, at fair valueTotal Investments Receivables:Participant loansNet assets reflecting investments at fair valueAdjustment from fair value to contract value for fully benefitresponsive investment contractNET ASSETS AVAILABLE FOR BENEFITS125,714384,256509,970 6,60111,295516,571425,820(834) 515,737 The accompanying notes are an integral part of these financial statements.3119,048295,477414,525425,820

PROMISE HOUSE INC. 401k PLANSTATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITSFOR THE YEAR ENDED DECEMBER 31, 2013Additions:Contributions:Participants Earnings on Investments:Interest - participant loansInterest and dividendsNet appreciation in fair value of mutual fundsNet appreciation in common collective trustOther incomeNet Earnings on al Additions137,571Deductions:Benefits paid to participants and beneficiariesPlan expensesTotal Deductions46,87977547,654Net Increase In Net Assets Available For Plan Benefits89,917Net Assets Available for Benefits:Beginning of period425,820End of period The accompanying notes are an integral part of this financial statement.4515,737

PROMISE HOUSE, INC. 401K PLANNOTES TO FINANCIAL STATEMENTSDECEMBER 31, 2013Note 1. Plan DescriptionThe following description of the Promise House, Inc. (Organization) 401k Plan (Plan) provides onlygeneral information. The Organization is the Plan administrator and sponsor and State Street Bank andTrust Company is the Plan trustee. Participants should refer to the Plan agreement for a more completedescription of the Plan’s provisions.GeneralThe Plan was established as a defined contribution plan on January 1, 2007 and is subject to theprovisions of the Employee Retirement Income Security Act of 1974 (ERISA) and Section 401(a) ofthe Internal Revenue Code of 1986 (IRC).All employees of the Organization are eligible to participate upon completing the Plan’s eligibilityrequirements. Employees who have completed 6 months of service are eligible to participate.Employees receive credit for one month of service for each month in which they complete 1 hour ofservice.FundingThe Plan is a defined contribution plan wherein participants elect to reduce their compensation andhave such reductions contributed to the Plan on their behalf. Participants direct their investments innumerous investment options managed by ADP Retirement Services.Participating employees may contribute 1% to 80% of eligible compensation through payrolldeductions to the maximum amount permitted under applicable Internal Revenue Service provisions.Participants age 50 or over are allowed catch-up contributions. Rollover contributions to the Plan arealso allowed.The Organization may make a discretionary matching contribution. Participants must make electivedeferrals into the Plan and be employed on December 31 to receive a matching contribution. TheOrganization may make nonelective contributions to the Plan based on eligible earnings. TheOrganization did not make a discretionary matching or nonelective contribution for the year endedDecember 31, 2013.AllocationEach participant’s account is credited with the participant’s contribution and the Organization’s nondiscretionary matching contribution. Investment income or loss is allocated daily based on the ratio ofeach participant’s account balance at the end of each day. Any discretionary or profit sharingcontribution is made annually to participants employed on the last day of the Plan year.ForfeituresThe Organization may reduce employer contributions by forfeitures occurring during the Plan year thatare not used to pay Plan expenses. The Plan did not reduce employer contributions with forfeituresduring the Plan year. The Plan maintained a balance of 0 in the forfeiture account at December 31,2013 and 2012.5

PROMISE HOUSE, INC. 401K PLANNOTES TO FINANCIAL STATEMENTSDECEMBER 31, 2013Note 1. Plan Description (Continued)VestingEmployee contributions are 100% vested. Employer matching and nonelective contributions have thefollowing vesting schedule:Years of Vesting ServiceLess than 1At least 1 year, but less than 2At least 2 years, but less than 33 years or moreVested Interest0%33%66%100%TerminationAlthough the Organization has not expressed any intent to do so, management may terminate the Planat any time. Upon termination of service, a participant may elect to receive either a lump-sum amountequal to the value of his or her account, or one of various installment payments available under thePlan. In addition, upon termination of the Plan, participants’ vested interest in employer contributionsshall be 100%.Participant LoansParticipants may borrow from their fund accounts a minimum of 1,000 up to a maximum equal to thelesser of 50,000 or 50 percent of their account balance. Loan transactions are treated as a transfer to(from) the investment fund and from (to) the Participant Notes fund. Loan terms range from one tofive years or within a reasonable time if the purpose of the loan is to acquire a primary residence. Thebalance in the participant’s account secures the loan. The interest rate, unless otherwise determined bythe trustee is 5.25%. Principal and interest are repaid ratably through semi-monthly payrolldeductions.Payment of BenefitsOn retirement, death, disability, or termination of service, a participant may leave their account balancein the Plan or elect to receive a single lump-sum payment in cash. Participants are allowed to withdrawemployee account balances prior to termination of their employment under certain conditions specifiedin the Plan. Benefit payments are recorded when paid.Note 2. Summary of Significant Accounting PoliciesThis summary of significant accounting policies of the Plan is presented to assist in understanding thefinancial statements. The financial statements and notes are representations of the Plan’sadministrator, who is responsible for their integrity and objectivity. The accounting policies conformto accounting principles generally accepted in the United States of America (GAAP) and have beenconsistently applied in the preparation of the financial statements.6

PROMISE HOUSE, INC. 401K PLANNOTES TO FINANCIAL STATEMENTSDECEMBER 31, 2013Note 2. Summary of Significant Accounting Policies (Continued)EstimatesThe preparation of financial statements in conformity with GAAP requires the plan administrator tomake estimates and assumptions that affect certain reported amounts and disclosures. Actual resultscould differ from those estimates.Risks and UncertaintiesThe Plan invests in various investment securities. Investment securities are exposed to various risks,such as interest rate, market, and credit risks. Due to the level of risk associated with certaininvestment securities, it is at least reasonably possible that changes in the values of investmentsecurities will occur in the near term and that such changes could materially affect participants’account balances and the amounts reported in the statement of net assets available for benefits.Investment Valuation and Income RecognitionInvestments are reported at fair value. Fair value is the price that would be received to sell an asset orpaid to transfer a liability in an orderly transaction between market participants at the measurementdate.Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on theaccrual basis. Dividends are recorded on the ex-dividend date. Net appreciation includes the Plan’sgains and losses on investments bought and sold as well as held during the year.Investment ContractsInvestment contracts held by a defined contribution plan are required to be reported at fair value.Contract value is the relevant measurement attributable to fully benefit-responsive investmentcontracts because contract value is the amount participants would receive if they were to initiatepermitted transactions under the terms of the Plan.The Plan invested in investment contracts through a collective trust in 2013 and 2012. Contract valuefor this collective trust was based on the net asset value of the fund as reported by the trustee, InvescoNational Trust Company (Invesco). The statements of net assets available for benefits present the fairvalue of the investment contracts, as well as the adjustment of the fully benefit-responsive investmentcontracts from fair value to contract value for the year ended December 31, 2013.Notes Receivable From ParticipantsNotes receivable from participants are measured at their unpaid principal balance plus any accrued butunpaid interest. Interest income is recorded on the accrual basis. Related fees are recorded asadministrative expenses and are expensed as they are incurred. No allowance for credit losses had beenrecorded as of December 31, 2013 or 2012. If a participant ceases to make loan repayments and theplan administrator deems the participant loan to be in default, the participant loan balance is reducedand a benefit payment is recorded.7

PROMISE HOUSE, INC. 401K PLANNOTES TO FINANCIAL STATEMENTSDECEMBER 31, 2013Note 2. Summary of Significant Accounting Policies (Continued)Administration of the PlanCertain administrative expenses of the Plan may be paid by the Organization. The Plan is not requiredto reimburse the Organization for any administrative expenses paid by the Organization. Expenses notpaid by the Organization are paid by the Plan.Date of Management’s ReviewSubsequent events have been evaluated for potential recognition or disclosure through October 10,2014, which is the date the financial statements were available to be issued.Note 3. Income Tax StatusThe Plan received a letter dated March 31, 2008 from the IRS identifying the Plan as acceptable undersection 401 of the IRC. In the opinion of the plan administrator, the Plan is currently being operated inaccordance with the Plan agreement and in conformity with the applicable provisions of the IRC andtherefore exempt from federal income taxes. Therefore, no provision for income taxes has beenincluded in the Plan’s financial statements.GAAP require plan management to evaluate tax positions taken by the plan and recognize a taxliability or asset if the organization has taken an uncertain position that more likely than not would notbe sustained upon examination by the IRS. The plan is subject to routine audits by taxing jurisdictions;however, there are currently no audits for any tax periods in progress. The plan administrator believesit is no longer subject to income tax examinations for years prior to 2010.Note 4. Party-in-InterestCertain Plan investments are units of common/collective trust funds managed by State Street Bank &Trust Company through their ADP Retirement Services program. These transactions qualify as partyin-interest transactions; however, they are exempt from the ERISA prohibited transaction rules.Note 5. InvestmentsInvestments representing 5% or more of the Plan’s net assets at December 31, 2013 are as follows:T. Rowe Price Retirement 2040 - RInvesco Stable AssetT. Rowe Price Retirement 2010 - RT. Rowe Price Retirement 2020 - R 8137,37985,08247,96731,691