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CRA CARE CENTERS. INC. <br />SUMMARY OF SIGNIFICANT FORECAST ASSUMPTIONS <br />AND ACCOUNTING POLICIES <br />FOR THE YEARS ENDING MARCH 31, 2001-2005 <br />NOTE 8.OPERATING EXPENSES <br />Expenses are based on comparable facilities and are inflated using the McGraw-Hill DRI indices for the <br />Health Care Industry. <br />NOTE 9 - INCOME TAXES <br />The Facility is organized as a corporation organized under Sub -chapter "S" of the Internal Revenue Code. <br />Therefore, all income taxes will be paid by the stockholders. <br />NOTE 10 - SENSITIVITY ANALYSIS <br />As indicated in Note 7 above, the projected revenues and expenses are based on occupancies reflected <br />on Note 6. The following occupancy percentages are expected for the facility revenues and expenses to <br />breakeven, <br />NOI Breakeven <br />2001 2002 2003 2004 2005 <br />Percent Occupancy 91.52% 76.71% 73.76% 72.46% 71.29% <br />Cash Flaw Breakeven <br />2001 2002 2003 2'004 2005 <br />Percent Occupancy 82.23% 70,13% 67.74% 66.82% 66.02% <br />ff the CDBG loans are financed at 8%, net income will be as follows: <br />2001 20027003 2004 2005 <br />Net Income (Loss) (678,428) 124.020 249.396 289.907 329.855 <br />4 <br />