Asu Enterprise Partners

“The Organization accounts for income taxes using the asset and liability approach, which can result in recording tax provisions or benefits in periods different than the periods in which such taxes are paid or benefits realized. Deferred income taxes are recorded for the difference between the book and tax basis of various assets and liabilities, which can provide for current recognition of expected tax benefits from temporary differences that will result in deductible amounts in future years. It has been determined by the IRS that EP qualifies as a tax-exempt organization under Section 501(c)(3) as described in Sections 509(a)(1) and 170(b)(1)(A)(iv) of the Internal Revenue Code (IRC), and accordingly, there is no provision for income taxes in the accompanying consolidated financial statements. EP has been classified as an organization that is a public charity. University Realty (UR), Skysong Innovations (SI), and all sole member LLCs under UR and SI are treated as disregarded entities for income tax purposes, and accordingly, all income and expenses are reported through EP for the years ended June 30, 2018 and June 30, 2017. AzTE Ventures, Co. is not a tax-exempt organization and its income and expenses are not passed through to EP for tax purposes. Ventures reports its activities through its own tax forms. For tax purposes, income determined to be unrelated business income by any member of the group regarded as a tax-exempt organization would be taxable. Tax positions taken related to the Organization's tax-exempt status and other miscellaneous tax positions have been reviewed. Management is of the opinion that material positions taken by the Organization would be upheld under examination. Accordingly, the Organization has not recorded an income tax liability for uncertain tax positions as of June 30, 2018 and 2017, and does not anticipate a significant change for the following twelve months. The Organization is subject to tax examination by the federal and Arizona state jurisdictions, which generally remain open for three and four years, respectively.”

“Schedule D, Part XI, Line 2d ASUF Revenue $(220,888,918) ASURE Revenue $(821,296) RCASU Revenue $(672,130) Reserve Subsidy $1,055,183 Service Agreement - Cost Reimbursement $(11,568,654) Change in Swap $(1,730,117) Investment Rental expenses $ 2,303,131 Eliminations between outside entities $1,758,539 -------------- TOTAL $230,564,262 Schedule D, Part XI, Line 4B Shared Services Allocation $9,722,942”

“Schedule D, Part XII, Line 2D ASUF Expenses $(137,604,092) ASURE Expenses $(1,326,737) RCASU Expenses $(1,282,104) AzTE Ventures Expenses $(1,309) Eliminations between outside entities $1,758,539 Rounding $(2) -------------- TOTAL $(138,455,705) Schedule D, Part XII, Line 4B Investment Rental Expenses $2,303,131 Reserve Subsidy $1,055,183 EP Service Agreement - Cost Reimbursement $(3,592,492) UR Service Agreement - Cost Reimbursement $(550,000) Skysong Innovations Service Agreement - Cost Reimbursement $(7,426,162) -------------- TOTAL $(8,210,340)”