Setup Information

<Insert Facilitator's Name> 0.06

Peso? (1=Yes) 0 1.00 10.814 Mexican Pesos = 1.000 US Dollars

Income Information-Current Standards

Current Hi-Tech Broker

Production Current Production = Sales Forecast
Mid-Grade 2,532.00 3,798.00 3,798.00 Production can be increased by 50% and the broker also anticipates that same level
High-End 506.00 759.00 759.00 Production can be increased by 50%

Direct Materials ($)/Unit

Mid-Grade $ 140.00 $ 140.00 $ - There are no material costs for brokered units
High-End $ 250.00 $ 250.00 $ 250.00

Direct Labor ($/HR)/Unit $ 15.00 $ 40.00 $ 40.00 The labor rate is increased due to the technical skill level of operators

Labor Time (Hrs)/Unit

Mid-Grade $ 20.00 $ 4.00 $ - There are no labor times for brokered units and production times are 20% of original times
High-End $ 30.00 $ 4.00 $ 4.00 Production times are now equal to the mid-grade level

Direct Cost/Unit
Mid-Grade $ 440.00 $ 300.00 $ 360.00 The Broker cost for Mid-Grade is based on net FOB destination including shipping/tariffs
High-End $ 700.00 $ 410.00 $ 410.00

Price/Unit
Mid-Grade $ 509.00 $ 459.00 $ 459.00 Prices are reduced by 10% because supply is increased
High-End $ 879.00 $ 789.00 $ 789.00 Prices are reduced by 10% because supply is increased

Plant Overhead/Yr
Salaries $ 50,000.00 $ 95,000.00 $ 95,000.00 Need to add a 45,000 a year maintenance position for the equipment
Utilities $ 9,000.00 $ 27,000.00 $ 4,497.04 Utilities are expected to be 3 x's current at full production (150% above current levels) based on units produced
Benefits $ 103,730.00 $ 82,412.00 $ 21,644.00 Benefits are 10% of all wages (including direct labor)
Insurance $ 3,000.00 $ 15,000.00 $ 15,000.00 Insurance will increase by 12,000 with the addition of the equipment and building expansion
Property Taxes $ 975.00 $ 3,900.00 $ 3,900.00 Property taxes are 6.5%, assessment is 1% of original value, and that is on all plant/equipment
Depreciation $ 50,000.00 $ 466,666.67 $ 466,666.67 Buildings are at 30 years and Equipment is at 10 years, straight line
Supplies $ 6,000.00 $ 6,000.00 $ 6,000.00 Supply expense is miscellaneous and does not vary

Net Margin $ 265,282.00 $ 891,543.00 $ 663,663.00

Less Plant Overhead $ 222,705.00 $ 695,978.67 $ 612,707.70
Net Income Before Taxes $ 42,577.00 $ 195,564.33 $ 50,955.30
Less Income Tax Expense (42%) $ 17,882.34 $ 82,137.02 $ 21,401.22
Net Income After Taxes $ 24,694.66 $ 113,427.31 $ 29,554.07
 Balance Sheets
Current Hi-Tech
12/31/08 12/31/09 12/31/09

Cash $ 120,872.00 $ 168,492.00 $ 693,236.26

Accounts Receivable $ 212,361.35 $ 216,695.25 $ 292,766.63
Inventory $ 118,685.97 $ 119,571.47 $ 118,034.00
Pre-paid Insurance $ 1,250.00 $ 1,500.00 $ 7,500.00
TOTAL CURRENT ASSETS $ 453,169.31 $ 506,258.72 $ 1,111,536.88

Buildings $ 1,500,000.00 $ 1,500,000.00 $ 2,000,000.00

Less: Accumulated Depreciation $ (600,000.00) $ (650,000.00) $ (666,666.67)
Equipment $ 50,000.00 $ 50,000.00 $ 4,050,000.00
Less: Accumulated Depreciation $ (50,000.00) $ (50,000.00) $ (450,000.00)
TOTAL ASSETS $ 1,353,169.31 $ 1,356,258.72 $ 6,044,870.22

Accounts Payable $ 79,916.68 $ 82,388.33 $ 126,895.00

Income Taxes Payable $ 16,988.22 $ 17,882.34 $ 82,137.02
Wages Payable $ 41,059.79 $ 43,220.83 $ 34,338.33
Current Portion of Notes Payable $ 27,132.06 $ 29,238.40 $ 29,238.40
TOTAL CURRENT LIABILITIES $ 165,096.76 $ 172,729.90 $ 272,608.75

Mortgage Note Payable $ 965,866.63 $ 936,628.23 $ 936,628.23

TOTAL LIABILITIES $ 1,130,963.39 $ 1,109,358.13 $ 1,209,236.98

Common Stock $ 10,000.00 $ 10,000.00 $ 4,510,000.00

Retained Earnings $ 212,205.93 $ 236,900.59 $ 325,633.24
TOTAL EQUITY $ 222,205.93 $ 246,900.59 $ 4,835,633.24
TOTAL LIABILITIES & EQUITY $ 1,353,169.31 $ 1,356,258.72 $ 6,044,870.22

Cash Flow Statements

Current Hi-Tech
12/31/2017 12/31/2017
OPERATING ACTIVITIES
Net Income $ 24,694.66 $ 113,427.31
Depreciation Expense $ 50,000.00 $ 466,666.67
Decrease (Increase) in Current Assets $ (5,469.41) $ (86,003.31)
Increase (Decrease) in Current Liabilities $ 7,633.14 $ 107,511.99
Cash flow from Operating Activities $ 76,858.40 $ 601,602.65

INVESTING ACTIVITIES
Capital Expenditures $ - $ (4,500,000.00)
Cash flow from Investing Activities $ - $ (4,500,000.00)

FINANCING ACTIVITIES
Issuance of stock $ - $ 4,500,000.00
Increase (Decrease) of Notes Payable $ (29,238.40) $ (29,238.40)
Cash flow from Financing Activities $ (29,238.40) $ 4,470,761.60

Total Cash Flow $ 47,620.00 $ 572,364.26

Beginning Cash Flow $ 120,872.00 $ 120,872.00
Ending Cash $ 168,492.00 $ 693,236.26

WACC FOR 12/31/08 5.61% ? ?

(use as discount rate for NPV calculations)

NPV ? ?
 Broker
12/31/09

$ 414,391.67
$ 292,766.63 DSO = 45 days
$ 136,454.30 The plant completes all work-in-process before year end inventory
$ 7,500.00 1/2 a year pre-paid
$ 851,112.60

$ 2,000,000.00 Hi-Tech & Broker reflect $500,000 increase in capital expenditure

$ (666,666.67) Current Building has been in use for 13 years
$ 4,050,000.00 Hi-Tech & Broker reflect $4M increase in capital expenditure
$ (450,000.00) Current equipment fully depreciated several years ago
$ 5,784,445.93

$ 36,399.75 A/P represents 2 months of purchases & 1 month of bills & Prop Tax
$ 21,401.22 All timing issues wash out (for simplicity)
$ 9,018.33 Wages are two weeks
$ 29,238.40
$ 96,057.71

$ 936,628.23 Building was financed Jan 1, 12 years ago at 7.5% and 80% LTV
$ 1,032,685.94

$ 4,510,000.00 Hi-Tech and Broker reflect issuance of additional 4.5M shares

$ 241,760.00
$ 4,751,760.00
$ 5,784,445.93

Broker
12/31/2017

$ 29,554.07
$ 466,666.67
$ (104,423.61)
$ (69,039.05)
$ 322,758.07

$ (4,500,000.00)
$ (4,500,000.00)

$ 4,500,000.00
$ (29,238.40)
$ 4,470,761.60

$ 293,519.67
$ 120,872.00
$ 414,391.67

?
Sales growth has slowed to 1%
Inflation is running at 3%