Heuser Hearing & Language Academy Inc.

PART X, LINE 2:

“The institute and academy are not-for-profit entities exempt from income taxes under section 501(c)(3) of the internal revenue code (irc). Although the institute and academy are exempt from income taxes, any income generated from activities unrelated to their individual exempt purposes is subject to tax under irc section 511. The institute and academy generated no unrelated business income for the years ended may 31, 2014 and 2013. Hearing products is a for-profit entity and is subject to income taxes. Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. Gaap requires the organization to determine whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the consolidated financial statements. Under this guidance, the organization may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. Management evaluated the organization's tax positions and concluded that as of may 31, 2014 and 2013 the organization had taken no material uncertain tax positions. Management does not anticipate that the organization will be subject to examinations by u.s. Federal, state or local tax authorities for years before 2011.”