Exeter Health Resources Inc. Self-Insurance Trust

Part X, Line 2:

“Resources, the Hospital, RVNA&H, Core and Matrix are not-for-profit organizations as described in Section 501(c)(3) of the Internal Revenue Code (the Code), and are exempt from federal income taxes on related income pursuant to Section 501(a) of the Code. Med Real is a not-for-profit organization as described in Section 501(c)(25) of the Code and is exempt from federal income taxes on related income pursuant to Section 501(a) of the Code. Management evaluated the tax positions of these entities and has concluded that they have maintained their tax-exempt status, do not have any significant unrelated business income, and have taken no uncertain tax positions that require adjustment to the consolidated financial statements. Convergent, Vx and Services are for-profit organizations and, in accordance with federal and state tax laws, file returns separate from that of Resources. In 2017 and 2016, no federal income taxes were charged to operations due to Convergent, Vx and Services either incurring an operating loss or utilizing net operating loss carryforwards from prior years. Management believes that it has appropriate support for the income tax positions taken and to be taken on tax returns, and that their accruals for tax liabilities are adequate for all open tax years based on an assessment of many factors including experience and interpretations of tax laws applied to the facts of each matter. These entities have concluded there are no significant uncertain tax positions requiring disclosure and there is no material liability for unrecognized tax benefits. It is the policy of these entities to recognize interest or any penalties related to unrecognized tax benefits in income tax expense. Convergent and Vx have net operating loss carryovers of approximately $2,700,000 at September 30, 2017. The net operating losses generate a potential deferred tax asset of $1,080,000 which is offset by a corresponding valuation allowance of the same amount.”