Annual Report  2013  Management Discussion & Analysis (ii) International Structure  (iii) General  (i) CRA Re-Assessment  We face competition with other investment entities Operational and Financial Risk Factors Relating toOur Business  We are subject to tax related risks employees. Failure to manage effectively any future growth or to execute on our business plans to add new Private Company Partners  could have a material adverse effect on our business, reputation, financial condition and results of operations.  Alaris competes with a large number of private equity funds and mezzanine funds, investment banks, equity and non-equity based  investment funds, and other sources of financing, including the public capital markets. Some of our competitors, particularly those  operating in the United States, are substantially larger and have considerably greater financial resources and more diverse funding  structures than Alaris. Competitors may have a lower cost of funds and many have access to funding sources and unique structures  that are not available to Alaris. In addition, some of our competitors may have higher risk tolerances or different risk assessments,  which could allow them to consider a wider variety of investments and establish more relationships and build their market shares.  There is no assurance that the competitive pressures that we face will not have a material adverse effect on our business, financial  condition and results of operations. Also, as a result of this competition, we may not be able to take advantage of attractive investment  opportunities and there can be no assurance that Alaris will be able to identify and make investments that satisfy our business  objectives or that we will be able to meet our business goals. In February 2014, we received a Notice of Reassessment wherein the CRA reassessed us and denied the deduction of certain non- capital losses (“Non-Capital Losses”) claimed by us for the taxation year ended July 14, 2009. Alaris has received legal (tax) advice  that it should be entitled to deduct the Non-Capital Losses and that all tax filings to date are correct; as such, Alaris is of the opinion  that its tax filings to date are correct and will withstand any reassessment by the CRA. Accordingly, Alaris will vigorously defend its tax  filing position and will file a notice of objection within 90 days from the date of the Notice of Reassessment. Upon filing a Notice of  Objection, Alaris will be required to pay 50% of the assessed tax liability (plus interest). Alaris' total assessed tax liability (as described  in the Notice of Reassessment) is $3.6 million and Alaris paid a deposit of approximately $1.8 million on that amount, with the remaining  amount not payable until the dispute with the CRA is resolved and only if the result is not in Alaris' favor. We may also be reassessed  with respect to the deduction of its Non-Capital Losses in all of its tax filings subsequent to July 14, 2009. In such event, Alaris'  aggregate total assessed tax liability (including interest) would be approximately $25 million and the total aggregate deposits Alaris  would be required to pay in order to contest such reassessments would be approximately $12.5 million, with the remaining amount not  payable until the dispute with the CRA is resolved and only if the result is not in Alaris' favor. Alaris has adequate capital available to  it to pay the maximum amount of all tax liabilities it could incur if it was reassessed on all of its tax filings to date and if these  reassessments were ultimately upheld through the tax adjudication process. Alaris has established Alaris Coop and Alaris USA for the purpose of financing and entering into arrangements with potential Private  Company Partners in the United States and other jurisdictions. Our corporate structure for this purpose was implemented having  regard to the corporate and tax laws and regulations of Canada, The Netherlands and the United States, as well as the income tax  conventions between those countries to date, and our understanding of the current administrative practices and policies of the taxation  authorities of each such jurisdiction. Such laws, regulations and conventions are subject to change from time to time. There is a  possibility that such a change may be made, including with retroactive or retrospective effect. In addition, such structure is subject to  assessment and possible adjustment by any of the taxation authorities of such jurisdictions. Although we are of the view that the  corporate structure has been implemented correctly and is being managed and monitored properly, there can be no assurance that  the tax authorities of such jurisdictions will agree. If such tax authorities successfully challenge any aspect of our financing and  corporate structure, our operating results could be adversely affected.  In addition to our Non-Capital Losses, Alaris has various unclaimed scientific research and experimental development expenditure  pools and other deductions and credits available to it for Canadian federal income tax purposes. These unclaimed deductions and  credits are subject to assessment and possible downward adjustment by Canadian tax authorities. Although we are of the view that  all expenses and tax credits claimed by us are reasonable and deductible and have been correctly determined, there can be no  assurance that the Canadian taxation authorities will agree. 28 