Alignn Number Font Clipboard C38 G H 1 Flash Memory, Inc. 2 3 Exhibit TN-4 Change in Forecasted Financial Statements due to Acceptance of Investment in New Product Line 5 Financial Statement Account ($000s) 6 Actual Forecast CO - 2007 2008 2009 2010 2011 012 9 10 Sales $21,600 $28,000 11 Cost of goods sold (includes equipment depreciation) 12 Research and development 13 Selling, general and administrative (includes launch) $300 14 Increase in operating income 15 16 Cash (3.3% of sales) 17 Accounts receivable (60 DSO) 18 Inventories (52 days of COGS) 19 Prepaid expenses (0.4% of sales) 20 Net property, plant & equipment $2,200 $1,760 $1,320 21 22 Accounts payable (30 days of purchases 23 Accrued expenses (0.73% of sales) 24 Other current liabilities (0.62% of sales) 25 26 27 28 For informational purposes only: 29 30 NWC % of sales + 31 32 33 34 35 36 37 38 Pro Forma Stets Base Case New Product Forecast Combined Pro Forma Stmts + Type here to search O DELLNavigation Flash Memory Case Forecasting Assumptions leader Base Case Forecasting Information - Use a 365-day year Cost of Goods Sold (COGS) 81.10% of sales Research and Development (R&D) 5.0% of sales Selling, general and administrative (SG&A) 8.36% of sales Interest expense (9.25%) Beginning of year debt balance * interest rate Other income (expense) $50,000 of expense each year Cash 3.3% of sales Accounts receivable 60 days sales outstanding Inventories 52 days of COGS Prepaid expenses 0.4% of sales Property, plant and equipment at cost (PP&E) Beginning PP&E at cost + CAPEX Accumulated depreciation (A/D) Beginning A/D + 7.5% of beginning PP&E Accounts payable 30 days of purchases Purchases 60% of COGS Accrued expenses 0.73% of sales Income taxes payable 10% of income tax expense Other current liabilities 0.62% of sales Tax rate 40% CAPEX $900,000 per year (Entered as $900) Notes payable Plug figure New Product Tab Bought machine for $2.2 million with 5-year life Sales promotion cost (2011 only) $300,000 (Entered as $300] Depreciation - Cost / Average Life COGS 79% of sales (You must determine current year Notes payable to determine interest expense for next year's forecast) Footer O DELLLE Copy ~ BIU- - A- SEE E Merge & Center ~ $ ~ % " Conditional For Paste Formatting ~ Tab Format Painter Font Alignment Number Clipboard G50 B D E G Actual Forecast 35 2007 2008 2009 2010 2011 2012 36 37 38 Cash $2,536 $2,218 $2,934 39 Accounts receivable $10,988 $12,864 $14,671 40 Inventories $9,592 $11,072 $11,509 41 Prepaid expenses $309 $324 $357 42 Total current assets $23,425 $26, 478 $29,471 43 44 Property, plant & equipment at cost $5,306 $6, 116 $7,282 45 Less. Accumulated depreciation $792 $1, 174 $1,633 46 Net property, plant & equipment $4,514 $4.942 $5,649 47 48 Total assets $27,939 $31,420 $35, 120 49 50 Accounts payable $3,084 $4,268 $3,929 51 Notes payable $6.620 $8 873 $10, 132 52 Accrued expenses $563 $591 $652 53 Income taxes payable $151 $9 $167 54 Other current liabilities $478 $502 $554 55 Total current liabilities $10,896 $14,243 $15,434 56 57 Common stock at $0.01 per share par value $15 $15 $15 58 Paid in capital in excess of par value $7,980 $7,980 $7,980 59 Retained earnings $9.048 $9,182 $11,691 60 Total shareholders' equity $17,043 $17.17 7 $19,686 61 62 Total liabilities & shareholders' equity $27,939 $31 420 $35,120 63 64 Number of shares outstanding 1,491,662 1,491,662 1,491,662 65 66 Book value per share $11.43 $11.52 $13.20 67 68 Return on equity 13.3% 0.8% 12.7% 59 Interest coverage ratio (times) 8.9 1 4 6.7 70 Notes payable / accounts receivable 60.2% 69.0% 69.1% 71 Notes payable / shareholders' equity 38.8% 51.7% 51.5% 72 Total liabilities / shareholders' equity 63.9% 82.9% 78.4% Pro Forma Stmts Base Case New Product Forecast Combined Pro Forma Stmts Type here to search O DELLConditional Format as [B) Copy ~ BI U E - CA . EE EE Merge & Center ~ $ ~ % 9 68 20 Formatting Table Paste Format Painter Alignment Number Font Clipboard B63 X D G H 34 Actual Forecast 35 2011 2012 2008 2010 36 2007 2009 37 38 Cash $2.536 $2,218 $2,934 39 Accounts receivable $10,988 $12,864 $14,671 40 Inventories $9,592 $11,072 $11 509 41 Prepaid expenses $309 $324 $357 42 Total current assets $23,425 $26,478 $29,471 43 44 Property, plant & equipment at cost $5,306 $6, 116 $7,282 45 Less: Accumulated depreciation $792 $1,174 $1,633 46 Net property, plant & equipment $4,514 $4.942 $5.649 47 48 Total assets $27,939 $31,420 $35,120 49 50 Accounts payable $3,084 $4,268 $3,929 51 Notes payable $6,620 $8,873 $10,132 52 Accrued expenses $563 $591 $652 53 Income taxes payable $151 $9 $167 54 Other current liabilities $478 $502 $554 55 Total current liabilities $10,896 $14,243 $15,434 56 57 Common stock at $0.01 per share par value $15 $15 $15 58 Paid in capital in excess of par value $7,980 57,980 $7.980 59 Retained earnings $9,048 $9 18 $11.691 60 Total shareholders equity $17,043 $17.177 $19.686 61 62 Total liabilities & shareholders equity $27.939 $31,420 $35,120 63 Number of shares outstanding 1,491,662 1,491,662 1.491,662 65 66 Book value per share $11.43 $11 52 $13.20 67 68 Return on equity 13 3% 0.8% 12 70 69 Interest coverage ratio (times) 8.9 14 67 70 Notes payable / accounts receivable 60.2% 69 0% 69.1% 71 Notes payable / shareholders' equity 38.8% 51.7% 51 5% 72 Total liabilities / shareholders' equity $3.9% 82.9% 78.4% 73 74 75 + Pro Forma Stmts Base Case New Product Forecast Combined Pro Forma Stmts + 9 Type here to search O BELL