All historical information remains the same (through Year X-1). Use this new set of assumptions: Revenue growth: 30% Year X E 30% Year X + 1 E (PLEASE SHOW ME THE WORK)

1% improvement in Gross Margin for Year X E (from year X-1). No further change in the Gross Margin for Year X+1.

1% improvement in Selling in Year X E. Same level in Year X+1 E.

G&A remains constant on a common size basis.

$10,000 increase in R&D in X E.

Same R&D level in Year X+1 E.

Basic Shares outstanding 3,000,000.

A new section of the existing plant is constructed for $300,000. This new construction is depreciated over 30 years using the straight line method. All other depreciation remains the same for the years X E and X+1 E.

The plant is financed with a $300,000 10 year bond with a fixed interest payment of 10% annually.

The Company, for the first time, grants 500,000 options to various members of management with an exercise price of $1.00. These options are granted on the first day of Year X E.

There are no other options, warrants or convertible securities.

The average stock price for Year X E and Year X+1 E is projected to be $5.00.

All other interest payments, interest income and tax rates remain the same.

YearXE Year X+1E Year X-1 1,440,000 921,600 518,400 100.0% 64.0% 36.0% Revenue Cost of Goods Sold Gross Profit Selling General and Administrative Research and Development Depreciation and Amortization Total Operating Expenses 158.400 108,000 40,000 30,000 336,400 11.0% 7.5% 2.8% 2.1% 23.4% Operating Income 182,000 12.6% Interest costs Interest income 5,000 4,000 0.3% 0.3% Pre-Tax Income Tax (35%) Net Income Earnings Per Share - Basic Earnings Per Share - Diluted 181,000 63,350 117,650 0.04 12.6% 4.4% 8.2% $ 3,000,000 Shares Outstanding Shares For Diluted A Options Ex Price Stock Price 500,000 1.00 5.00 Proceeds New Share structure Buy Back Shares Shares for Diluted Calculations YearXE Year X+1E Year X-1 1,440,000 921,600 518,400 100.0% 64.0% 36.0% Revenue Cost of Goods Sold Gross Profit Selling General and Administrative Research and Development Depreciation and Amortization Total Operating Expenses 158.400 108,000 40,000 30,000 336,400 11.0% 7.5% 2.8% 2.1% 23.4% Operating Income 182,000 12.6% Interest costs Interest income 5,000 4,000 0.3% 0.3% Pre-Tax Income Tax (35%) Net Income Earnings Per Share - Basic Earnings Per Share - Diluted 181,000 63,350 117,650 0.04 12.6% 4.4% 8.2% $ 3,000,000 Shares Outstanding Shares For Diluted A Options Ex Price Stock Price 500,000 1.00 5.00 Proceeds New Share structure Buy Back Shares Shares for Diluted Calculations