Noblis Inc.

Part X, Line 2

“Text to the organization's fin 48 (asc 740) footnote: noblis, inc. Is exempt from federal income tax under irc section 501(c)(3) and 170(b)(1)(a)(vi), though it is subject to tax on income unrelated to its exempt purpose, unless that income is otherwise excluded by the code. Noblis' for-profit subsidiary entities are as follows: noblis esi llc, a wholly-owned llc disregarded for u.s. Income tax purposes and national security partners, inc. ("nsp, inc.") the taxable c-corporation and 50 percent owner of noblis nsp llc, an entity taxable as a partnership. The organization has processes presently in place to ensure the maintenance of its tax-exempt status; to identify and report unrelated income; to determine its filing and tax obligations in jurisdictions for which it has nexus; and to identify and evaluate other matters that may be considered tax positions. The tax years ending september 30, 2016, october 4, 2015, october 5, 2014, and september 29, 2013 are still open to audit for both federal and state purposes. The organization has determined that there are no material uncertain tax positions that require recognition or disclosure in the financial statements. Noblis, inc. And nsp, inc. Have a net operating loss that can be utilized to offset its taxable income. A valuation allowance is established when necessary to reduce deferred tax assets to amounts expected to be realized. Income tax expense represents the current tax provision for the period and the change during the period in deferred tax assets and liabilities and is included in general and adminsitrative expense in accompanying consolidated financial statements. The organization follows guidance that clarifies the accounting for uncertainty in tax positions taken or expected to be taken in a tax return,including issues related to financial statement recognition and measurement. The guidance provides that the tax effects from an uncertain tax position can only be recognized in the financial statements if the position is "more-likely-than-not" to be sustained if the position were to be challenged by a taxing authority. The assessment of the tax position is based solely on the technical merits of the position, without regard to the likelihood that the tax position may be challenged.”