Communicare Inc.

“The Women's Transitional Housing facility was financed by a grant from the Kentucky Housing Corporation for $257,000, and use of this facility is restricted to transitional programs for 30 years in lieu of repayment of the grant (expiring in 2032). The Washington County Industries facility was financed by a grant from Washington County, Kentucky Government for $500,000, and use of this facility is restricted to the generation of jobs for low-income residents of Washington County for five years, in lieu of repayment of the grant (expiring in July 2017). Various properties were financed by capital advances from HUD. The terms of these advances are for the properties to provide housing to low income persons with disabilities for a set number of years. If the properties comply with this stipulation, these capital advances will not have to be repaid and do not bear interest. Failure to keep the housing available for low-income, disabled persons could result in HUD's billing the Organization for the entire capital advance outstanding plus interest since the date of the first advance. These commitments are collateralized by mortgages on these properties”

“Communicare and the affiliates are not-for-profit corporations as described in section 501(c)(3) of the internal revenue code and are exempt from federal income taxes on related income pursuant to section 501(a) of the code. As such, communicare and the affiliates are generally exempt from income taxes. However, communicare and the affiliates are required to file federal form 990 - return of organization exempt from income tax which is an informational return only. Accounting principles generally accepted in the united states of america require management to evaluate tax positions taken by the organization and recognize a tax liability if the organization has taken an uncertain tax position that more likely than not would not be sustained upon examination by various federal and state taxing authorities. Management has analyzed the tax positions taken by the organization, and has concluded that as of june 30, 2016 and 2015, there are no uncertain positions taken or expected to be taken that would require recognition of a liability or disclosure in the accompanying consolidated financial statements. The organization is subject to routine audits by taxing jurisdictions. However, as of the date the financial statements were issued, there were no audits for any tax periods in progress.”

“Loss on Disposal of Fixed Assets, Real Estate Held for Sale, and Pledge Rec -3,088. Communicare Industries Revenue 536,526.”

“Loss on Disposal of Fixed Assets, Real Estate Held for Sale, and Pledge Rec -3,088. Communicare Industries Expenses 536,526.”