Chemalite case

Sheet1

Chemalite, Inc. Chemalite, Inc.

Balance Sheet Pro Forma Balance Sheet

Dec-03 December 30

Assets (Six Operating Months) (Full Year) Assumption 2004 2005 2006

Cash $ 113,000 21% 181,000 Per CFS 331,266 587,753 908,241

Accounts receivable 69,500 13% $ 139,000 % of Sales 9.2% 173,685 217,025 271,179 Days sales outstanding. 10.9 33.62

Inventories 55,000 10% 55,000 Constant 137,448 171,746 214,602 COGS/Inventory 3.55 102.95

Total current assets $ 237,500 44% 375,000 $ 375,000 642,400 976,524 1,394,022

Machinery (net) 201,875 37% 191,250 Full Depreciation 170,000 148,750 127,500

Patent 100,000 19% 100,000 Full Amortation at beginning of year 75,000 50,000 25,000

Total assets $ 539,375 100% 666,250 887,400 1,175,274 1,546,522

Liabilities

Total liabilities $ - 0 0% 0 Bank loan paid off - 0 - 0 - 0

Equity

Common stock $ 500,000 93% 500,000 No additional stock 500,000 500,000 500,000 No additional stock

Retained earnings 39,375 7% 166,250 Net Income 387,400 675,274 1,046,522 no dividends paid

Total equity $ 539,375 100% $ 666,250 887,400 1,175,274 1,546,522

Total L&E $ 539,375 100% $ 666,250 887,400 1,175,274 1,546,522

- 0 - 0 - 0 External Financing Needed

Chemalite, Inc. Chemalite, Inc. Chemalite, Inc.

Income Statement Income Statement Pro Forma Income Statement

Year Ending Dec-03 Year Ending Dec-03 Year Ending December 30 Assumption

(Six Operating Months) (Full Year) 2,004 2,005 2,006

Sales $ 754,500 100% $ 1,509,000 100% 1,885,542 2,356,043 2,943,949 Grow sales at 24.9% calculated Sust Growth Ratio

Less: Expenses (cash)

Advertising 22,500 3% 45,000 3% 56,229 70,260 87,792 main status quo spending

Manufacturing 350,000 46% 700,000 46% 874,672 1,092,929 1,365,649

Corporate 80,000 11% 160,000 11% 199,925 249,812 312,148

Interest 750 0% 1,500 0% - 0 - 0 - 0 no debt due to cash on hand

Materials 195,000 26% 390,000 26% 487,317 608,918 760,862

Prototypes 23,750 3% - 0 0% - 0 - 0 - 0

Legal 7,500 1% - 0 0% - 0 - 0 - 0

679,500 90% 1,296,500 86% 1,618,143 2,021,919 2,526,451 Total cash expenses

Expenses (noncash)

Depreciation 10,625 1% 21,250 1% 21,250 21,250 21,250

Amortization 25,000 3% 25,000 2% 25,000 25,000 25,000

35,625 5% 46,250 3% 46,250 46,250 46,250 Total Expenses Non Cash

Net Income $ 39,375 5% 166,250 11% 221,150 287,874 371,248

Chemalite, Inc. Chemalite, Inc.

Cash Flow Statement Pro Forma Cash Flow Statement

Year June-04 Year Ending December 30

(Full Year) $ 2,004 $ 2,005 $ 2,006

Cash from operations

Net Income $ 166,250 $ 221,150 $ 287,874 $ 371,248

Amortization 25000 $ 25,000 $ 25,000 $ 25,000

Depreciation 21250 $ 21,250 $ 21,250 $ 21,250

Prototype 23750 $ - 0 $ - 0 $ - 0

A/R (139,000) $ (34,685) $ (43,340) $ (54,154)

Inventory (55,000) $ (82,448) $ (34,298) $ (42,856)

42,250 $ 150,266 $ 256,487 $ 320,488

Cash from investments

Machines (212,500) 212,500 $ - 0 $ - 0 $ - 0

Prototype (23,750) $ - 0 $ - 0 $ - 0

(236,250) $ - 0 $ - 0 $ - 0

Net Change (194,000) $ 150,266 $ 256,487 $ 320,488

Beginning Cash 375000 $ 181,000 $ 331,266 $ 587,753

Ending Cash $ 181,000 $ 331,266 $ 587,753 $ 908,241

ROE (net income / equity) ROE 25.0%

RR ( inverse of divident ratio) RR 1

Dvidend R (net earning / dividend) DR 0

Sustainable growth rate (ROE x RR) SGR 25.0%

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