T No 1 2 3 4 5 6 7 A-1 A-2 8 9 10 11 A-3

Particulars

12 13 A-4 A-5 14 A-6 A-7 A-8 15 16 A-9 17 C-3 C-4

Opening Land and building New machinery bought Sale of old machines Insurance premium for Fixed assets and bss disruption Dividend of 1991 paid Repurchase of shares Long-term debt capital raised Sales Finished goods consumption Finished goods at End of the year Raw materials purchase Labour expense incurred Rent expense and paid Utilities paid for Depreciation expense Old m/c New m/c Building Advertising expense paid for R&D expense paid for Insurance expense Amortization of patent Selling & administration exp Trf of old m/c to sale of Fixed assets A.c Profit on sale of Fixed Assets to IS Interest expense income tax expense Income tax paid to Federal Government Debtors collected Finished Goods - depreciation adjustment Short-term debt taken Trf of net profits to Retained Earnings Dividend for 1992 113,000 69,500

Prepaid Cash AR Inv - RM Inv - FG Insurance Machinery 113,000 69,500 55,000 0 0 212,500

55,000

212,500

Exhibit 1 Chemalite, Inc. Balance Sheet as at December 31, 1991 and 1992 31-Dec-91 31-Dec-92 (Actual) (Pro forma) Assets Cash Accounts receivable Inventry- Raw Materials Inventry- Finished goods Prepaid insurance $113,000 69,500 55,000 $9,490 139,530 75,450 104,680 65,000

Income Statement for the years ended D

Change 103,510 (70,030) (20,450) (104,680) (65,000) Sales Materials Labor Rent

o o o o

I o i i

PPE 212,500 1,120,000 (907,500) Less: Acc. Deprn. (10,625) (56,000) 45,375 Land 250,000 (250,000) Patent 100,000 75,000 25,000 Total assets _ $539,375 1,783,150 -1,243,775 Liabilities and SE Taxes payable Short term debt Deferred income taxes Notes payable (10%) Long-term debt (10%) Dividends payable Common stock Retained earnings Treasury stock

utilities Depreciation Gross profit Advertising R&D Insurance Amortization of patent Selling & admin exp Gain on sale of eqpt Interest expense Prototypes Legall fees Income before taxes less: Income taxes Net income

o f o f f f f f f

10,900 10,000 500,000 18,475 $539,375 124,500 10,900 113,600

9,950 950 200,000 (200,000) 26,730 (26,730) 425,000 (425,000) 510,000 (510,000) 12,000 (2,000) 500,000 125,470 (106,995) (26,000) 26,000 1,783,150 -1,243,775 384,660 36,680 347,980 (260,160) (25,780) (234,380)

Operating current assets Operating current liabilities Net operating WC

Acc. Dep. Machinery Land -10,625

Acc dep Building Building 0 0

Taxes ST Patent payable debt 0 100,000 10,900

Deferred Notes LT IT payable debt 0 0 0

-10,625

0 100,000

10,900

Exhibit 2 Chemalite, Inc. atement for the years ended Dec. 31, 1991 and 1992 31-Dec-91 31-Dec-92 (Actual) (Pro forma) $754,500 195,000 275,000 50,000 $1,886,250 452,700 660,000 25,000 CFS (Direct method)

Chemalite, Inc. Statement of Cash Flows for the y (Indirect method)

30,000 10,625 193,875 22,500 25,000 75,000 750 23,750 7,500 39,375 10,900 28,475

82,000 61,625 604,925 70,000 63,250 32,500 25,000 195,750 (24,250) 58,750 183,925 64,930 118,995 CFFO

Dividend Common Retained Treasury payable Stock Earnings Stock 10,000 500,000 18,475

Sale of old m/c

Revenue Expenses 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

10,000

500,000

18,475

Chemalite, Inc. nt of Cash Flows for the year 1992 ndirect method)