Read the Case Study Attatched: Chang Dental Clinic

1. Prepare and Analyze a statement of cash flows for the years ending December 31, 2004 and December 31, 2005

CHANG DENTAL CLINIC Andrew Smith wrote this case under the supervision of Elizabeth MA. Grasby solely to provide material for class discussion. The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names and other identifying information to protect confidentiality. Richard Ivey School of Business Foundation prohibits any form of reproduction, storage or transmittal without its written permission Reproduction of this material is not covered under authorization by any reproduction rights organization. To order copies or request permission to reproduce materials, contact Ivey Publishing. Richard Ivey School of Business Foundation, clo Richard Ivey School of Business, The University of Western Ontario, London, Ontario, Canada, N6A 3K7 phone (519) 661-3208, fax (519) 661-3882 - mail cases@ivey.wo.ca. Copyright 2008, Richard Ivey School of Business Foundation Version: 2011-11-17 It was early January 2006, and Chris Miller was contemplating an opportunity to purchase and operate his first dental clinic, the Chang Dental Clinic. Miller had been working as an associate' since April 2003, and he believed it was time to run his own practice. Located in Petrolia, Ontario, Canada, the Chang Dental Clinic would provide Miller with an opportunity to "hit the ground running in his own dental practice. Taking over an established practice meant Miller would not have to attract new patients, hire staff, purchase all the needed equipment, or do a variety of other tasks needed to start a new practice. Through discussions with Stanley Chang, the current owner of the Chang Dental Clinic, Miller believed that Chang's practice could be a proper fit, but Miller still wanted to perform a thorough analysis of the Chang Dental Clinic to ensure this was a good decision. Miller knew he could find $190,000 for this investment through personal savings and loans from friends and family, but, with a purchase price of $510,000, he would need more funding. Since Miller had no interest in taking on partners, this additional financing would have to come from a bank. Miller had little past experience negotiating bank financing, so he wanted to assess the likelihood of obtaining the loan. THE DENTAL INDUSTRY In Ontario, there was a universal health care system, meaning that a large number of medical treatments and procedures were paid for by the government and not the patient as long as the patient was a resident of the province of Ontario. The dental industry, on the other hand, did not operate in the same manner. Dental treatments and procedures, for the most part, were not covered by the government so patients paid for their dental work. A large proportion of patients had health insurance plans. Although some insurance plans provided full dental coverage, most plans covered at least a portion of the treatment cost, requiring An associate is a fully licensed dentist who performs procedures on behalf of other dentists and receives a portion of the patients' billing. Upon hining, the associate negotiates his portion of the billing. The concept of universal health care in Canada began in Saskatchewan in 1946. By 1961, all 10 provinces, including Ontario, had implemented some form of universal health-care system. the patients to pay the remainder Generally, most practices would low insure companies time to pay but the patients were required to make payment immediately, and the Chang Dental Clinic wne different The prices charged for various tree relatively standard among different dents. This was due to the fact that the Ontario Dental Associative (ODA) put out a fee guide indicating the recommended price to chege for all potential procedures. Alhough adherence to this fee guide was not related the industry and it as a pudeline and met dentists followed it fairly closely . Currently. Chang followed the ODA fegade quite closely. and Miller expected to do the same. The recommended prices were reviewed by the DA on annual basis and were todas necessary The number of dentists practising was not specifically related either, although de limited number of positions ie dental school programs in Ontario did serve to let the number of practicing dentiste De this fact, there was so shortage of dentists in Cetario. In fact, in the communities, dentists readily accepted new patients some people were able to find a dentist in their regions. Also there were so restrictions as to where a dent could locate a practice the industry lended to be well-repulsted in this regard Generally, if an aes was already being fully serviced se practice would to open Apexctice would open in a particular we only if there was a clear need for another dentist Most dental practices limited the number and type of services they performed. In general, a routine dental practice provided regular day to day services, des check-ups, to cleaning, cavity filling admin corrective treatments of the patient's needs were outside the one of the practice's usual weatments, the dentist would then refer the patient to a dentist who specialized in these procedure. For example, a patient who required the removal of wisdom och would be ceed to destal vurgos, esportiert sequiring treatment with the hope of providing the highest poble quality of care. This resulted amos dental practices maistaining relationship with specialized dentists who found on the area of patient care aking new patients and eventually reaching the point where this clinic needed to be open one more day cach weektherefore operating Monday to Thursday, Chang believed that these boars were sufficient and nince he had enjoyed having Fridays off, he had no intention of increasing the boun any further unless the member of patients go to a point that the reduced hours were damaging patient satisfaction As part of the original purchase agreem when Chang Wook ver the practice, there was transition period until fiscal 2004 began During this time the previous owner aprel to work part-time an associate to help Ching with the transition to ring the practice himself as well as help with some of the patient overflow. Chang yow to appreciate the help and found that the additional boues available to patients helped to improve overall patient satisfaction. So, when the transition period with the previous owner was finished at the beginning of fiscal 2004, ang hired a full time dalie. Similar to the previous owner's role, the associate Belped with patient overflow. performing some of the less aficult procedures. This dentale's Warted at the beginning of every fiscal year for the upcoming calycar Chang was will young compared to many practising dentists. Despite this, his patients indicated a high level of satisfaction with Chang' denatryskoll. Based on his age. Chang knew he would have to work to convince patients of his ability, which was probably what led him to strive for a high level of patient atti Chang believed his young age may have even give him a slighe avantage because it reduced patient" fears that he would soos retire, leaving them without a dertise Chang had been happy with the powth and overall performance of the practice since he had take it over sce lahibits 1 and 2 for financial statement, however, since he had always yeamed to be closer to friends and family, he decided to sell the practice so he could relocate to the wow where he grew.p. Montreal Chang's purchase of the practice hat included a purchase of the acts owned by the business and a component for goodwill Chang leo ndertook the remaining lease commitment of the business Miller's purchase of the practice included a purchase of the sets owned by the business, compent of prawill and the purchase of all standing lees, thereby eliminating a cost. Thus, Miller's purchase price was broken down follow 5 141.000 Lanchold improvement 65,000 Office and detalpplies inventory 8.000 Goodwill 290.000 Total S$10.00 This type of purchase was standard for dental practice. The authadvala, ba large part of the purchase price was associated with the prodwill of the business, which tenned from the practices partient list and the positive connection that the patients had with the practice. The customer patients, a dental practice were wally very loyal to the practice. This loyalty. Bowevet, was sily towards the dents within the practice ove patients became comfortable receiving care from and developing lationship with that particular practitioner. Despite this fact, when a practice was sold to a dentist med patients still remained loyal to the practice. This was because, unlike the beness customer relationship, there was a hassle associated with changing dentists, se most patients were hesitant to switch and would give new dentists a chce to prove themselves Ale to held even the world over 10 THE CHANG DENTAL CLINIC Stanley Chang had purchased the Petrolia Dental Clinie in May 2003. Chang had though it necessary to change the practices nume to the Chere Dental Clinie in order to indicate that there had been change in ownership and to make his name better known within the community At time of he had been splining his time between the two practices. The site of his other practice had lod is dentist to conclude that he should sell one of his clinics, e, the Petrolia practice and concentrate solely on the othet. Unfortunately, part of the equipment and set in the Parlia clinic were being lowed, and there were terms of five to fight years Tell ca the various leases. In order for the previous owner to be free of these les comments, the purchase was structured so that Chang tokave the lease comments the equipment and paid one della for the business. As the less expired and the practice greu, Ching beges purchasing some of the set med in the practice. When Chang had initially looked purchasing this dental clinic, he had be cut of school for the you and was looking for a practice of his own. An acquaintance had indicated an intention to sell his practice and Chang besan discussing the opportunity with him, eventually buying the practice. Upon taking over the practice, the dental clinic was only open these days work at the time. Chang did not believe that the number of patients was sufficient increase the clink's hours. Chver time, Chang gw the business practically 3 to 50 detal the the end of the Geely PETROLIA, ONTARIO Miller had no previous experience running his own business, however, as part of his dental degree, de had in courses on how to opera dental practice. These courses outlined important aspects of using With a population of 5.222prople." Petrolia was a small town located in Southwestem Ontario Petrolia in such as the basic practices for keeping accounting records for the business Miller was confident ated close to the Canada United States bordet, about a 15-20 minute drive from Santia, Ontario, that these courses, along with the practical edge pained from working for her dental practices and a bow drive from London, Ontario (see Exhibit 3 for a map of Petrolia's location. The wenge would help to overcome his lack of experience household income in Petrella was approximately 363,000, as compared to an average beschuld income of approximately SIR.000 in Samia and Son 200 in London, lactating the Chang Dental Clink there were the EXPECTATIONS FOR THE FUTURE Miller was confident that the book over the practice, even as the new owner and practicing dentist, the ed in sales et vould equate to half the percentage grow in sales from fiscal 2004 to fool 2005 CHRIS MILLER Associate fees, dental supplies and artery fees varied, based on the evened. Miller projected hat, in fact 2006, de plecare datory few remain the same proportion of talen a in fiscal 2005. Miller believed he could do more of the work imell, and he expected to reduce the Chris Miller grated from the University of Toronto in April 2003 with a degree in dealurpery sociate feeste 15 percent of projected 2006 Mitleidered all other costs he fined and wich, they wuld not wory with a late. He also teipated that the preactice would suit incat any ere central to becoming a dentist, Some of these cones were taught using the traditional lecture style but other count involved pretical applications of sales creating moulds of people's teeth Our spect of Miller's actice was performing procedures en patients part of free clinic held at the When projecting the frical 2006 balance sheet, Miller bleved that the aging of receivable diary school Dental todo el pacte de procedures on the patients who came to inventory and secounts payable would remain unchanged from fiscal 2005. Prepaid expenses were also the freedink-ranging from simple teeth cleaning to fining the patients, to filling cavities expected to remain the same out as infocad 2005. No foedsets were expected to be purchased woldering the proming year tipo graduation, comme petite for many dentistry school graduates, Miller started his career working as an ace for the dentin. This wowed Miller to gain more experience performing Resliring the financing will certainly be requiel Miller spoke to his bank's basicer to variety of different procedureswhile still having we wih who for around patient care a some information about the financing. The lanserted that the pencil ting ang Miletan opportunity to be more shot how a dostal price was pret, cible for financing could be a 10-year-tornoon which the principal would be repayable in equal firhand how the butine ide of the clink perted, from booking inte, to managing staff to buying does the last day of each The Interest would be applicant the counting records. deducing the principal payment and would be paid the same ones the newly principal payment Miller wel se for three differential practice with large uden om to be repaid Other Burkchures were expected to 5500 yearly. Finally, Mille pluted to Wild Miller was agaikly pay deansch upodlie facher while we worked sem 5140,000 per year from the price in order to cover his peliving expen days a week Monday to Thursday force detit, Priday on Saturday for her and Sunday for the et le was long before is work whole lepe is toll on Miller, sevmemery I hop Miller would take Pury 1, 2016 for him to give is Sunday jah 2001, hipidoen alge pot of his valent dhe end Miller decided that he was the prefer year for the www would be having pulmony in ving, Miller vete bodule hack a bulunher working from Monday For my Thunday only THE DECISION Miller wey blending with open winged tremendously Millenew that for any ople, avione della fe, so he always Miller we wypowo whether way to put the Chan Dalinw. with med please sue of the pre Mikro how peod 16.00, mended to be hely certain the produce Willy to know his parents mocha publiking question and sewing a parenterest in the Net ther of the why did this make the expetite mare please for Miller, lut i pedals his patient. pulty Amed with the wind with me industry data (se Tsh 4 for industry Miller down to be helye Selfoss, www.fr pos www.rome Deprenew.dore.com, Moby 2.2008 Agree Store The Town or Office Wolper 21, 2008 Alaperating pedancow with heation or better and Sou Canadelle modeller 21 20 and shados de openen 2008 The 2007, INCOME STATEMENT For the year ended December 31 Exhibit 2 BALANCE SHEET As at December 31 2005 2004 2003 2005 2004 2003 FEE REVENUE 5812,97 $ 600,00 5 287,281 ASSETS Current Assets 105,436 29,526 2,627 $43673 46,942 41.248 666 5.2% 1.646 59,031 46.544 40,098 39,000 127,700 Accounts receivable lavesty Prepaid expenses Total Current Assets 40.500 33,205 59.542 42.411 21.126 17430 10.735 3.10 3.500 10616 14,193 2 10.456 29.428 186 9,051 Long-term Assets Fedte Less Accumulated fie amets Ne feed 1984 030.995 M400 (19.120 41.454 OPERATING EXPENSES: Associate fees Salaries and be Dental upplies liquipment Hentilities Laborey free General and office Premier Automobile Telephone Profesionales Interest and bank.com Profesional development Licence, fees and Haddebo recovered Amortion TOTAL EXPENSES 27,721 KAO 7015 13.59 Total Long term Asset TOTAL ASSETS 1.612 2.05 17.01 349 22 1 0.647) 2 202. AS LIABILITIES AND OWNER'S EQUITY Liabile Bank indeed Accounts payable Total Liabilities S48579 10.929 10,929 S.ME 39 10.724 10,703 201 R17 16,394 5.1441 5.187.000 NET INCOME Sve Charente Cine OWNER'S EQUITY 5. Chang, Capital 87.112 77.2.36 11,66 TOTAL LIABILITIES AND OWNER'S EQUITY Exhibit Exhibit KEY INDUSTRY RATIOS LOCATION OF PETROLIA 2005 2004 2003 Lake Huron el DE RATIO Percentage of Total Assets Cash Accounts receivable Inventory 230 3.7% 0.4% 42.9% 15.25 22:34 6.8% 0.4% 453% 128 20.4% 689 0.6% 47.4% 13.4 BUT London USA . Patlets 3.0% 41 1 2.046 41.04 101N 2.7 3.8% Percentage of Total Liabilities and Equity Accounts payable Le Equity Percentage of Total Sales: Operating pen Niet inome before Current Add terie 9.74 03 19.1% 18% 0.7 08 0.7 06 Wed Lake Erle NA Apoy NA NA NA NIA NA NA NA NA Se 15 TI 990 7929 12. My R 31 159 1 153 13 121 Totalno CHANG DENTAL CLINIC Andrew Smith wrote this case under the supervision of Elizabeth MA. Grasby solely to provide material for class discussion. The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names and other identifying information to protect confidentiality. Richard Ivey School of Business Foundation prohibits any form of reproduction, storage or transmittal without its written permission Reproduction of this material is not covered under authorization by any reproduction rights organization. To order copies or request permission to reproduce materials, contact Ivey Publishing. Richard Ivey School of Business Foundation, clo Richard Ivey School of Business, The University of Western Ontario, London, Ontario, Canada, N6A 3K7 phone (519) 661-3208, fax (519) 661-3882 - mail cases@ivey.wo.ca. Copyright 2008, Richard Ivey School of Business Foundation Version: 2011-11-17 It was early January 2006, and Chris Miller was contemplating an opportunity to purchase and operate his first dental clinic, the Chang Dental Clinic. Miller had been working as an associate' since April 2003, and he believed it was time to run his own practice. Located in Petrolia, Ontario, Canada, the Chang Dental Clinic would provide Miller with an opportunity to "hit the ground running in his own dental practice. Taking over an established practice meant Miller would not have to attract new patients, hire staff, purchase all the needed equipment, or do a variety of other tasks needed to start a new practice. Through discussions with Stanley Chang, the current owner of the Chang Dental Clinic, Miller believed that Chang's practice could be a proper fit, but Miller still wanted to perform a thorough analysis of the Chang Dental Clinic to ensure this was a good decision. Miller knew he could find $190,000 for this investment through personal savings and loans from friends and family, but, with a purchase price of $510,000, he would need more funding. Since Miller had no interest in taking on partners, this additional financing would have to come from a bank. Miller had little past experience negotiating bank financing, so he wanted to assess the likelihood of obtaining the loan. THE DENTAL INDUSTRY In Ontario, there was a universal health care system, meaning that a large number of medical treatments and procedures were paid for by the government and not the patient as long as the patient was a resident of the province of Ontario. The dental industry, on the other hand, did not operate in the same manner. Dental treatments and procedures, for the most part, were not covered by the government so patients paid for their dental work. A large proportion of patients had health insurance plans. Although some insurance plans provided full dental coverage, most plans covered at least a portion of the treatment cost, requiring An associate is a fully licensed dentist who performs procedures on behalf of other dentists and receives a portion of the patients' billing. Upon hining, the associate negotiates his portion of the billing. The concept of universal health care in Canada began in Saskatchewan in 1946. By 1961, all 10 provinces, including Ontario, had implemented some form of universal health-care system. the patients to pay the remainder Generally, most practices would low insure companies time to pay but the patients were required to make payment immediately, and the Chang Dental Clinic wne different The prices charged for various tree relatively standard among different dents. This was due to the fact that the Ontario Dental Associative (ODA) put out a fee guide indicating the recommended price to chege for all potential procedures. Alhough adherence to this fee guide was not related the industry and it as a pudeline and met dentists followed it fairly closely . Currently. Chang followed the ODA fegade quite closely. and Miller expected to do the same. The recommended prices were reviewed by the DA on annual basis and were todas necessary The number of dentists practising was not specifically related either, although de limited number of positions ie dental school programs in Ontario did serve to let the number of practicing dentiste De this fact, there was so shortage of dentists in Cetario. In fact, in the communities, dentists readily accepted new patients some people were able to find a dentist in their regions. Also there were so restrictions as to where a dent could locate a practice the industry lended to be well-repulsted in this regard Generally, if an aes was already being fully serviced se practice would to open Apexctice would open in a particular we only if there was a clear need for another dentist Most dental practices limited the number and type of services they performed. In general, a routine dental practice provided regular day to day services, des check-ups, to cleaning, cavity filling admin corrective treatments of the patient's needs were outside the one of the practice's usual weatments, the dentist would then refer the patient to a dentist who specialized in these procedure. For example, a patient who required the removal of wisdom och would be ceed to destal vurgos, esportiert sequiring treatment with the hope of providing the highest poble quality of care. This resulted amos dental practices maistaining relationship with specialized dentists who found on the area of patient care aking new patients and eventually reaching the point where this clinic needed to be open one more day cach weektherefore operating Monday to Thursday, Chang believed that these boars were sufficient and nince he had enjoyed having Fridays off, he had no intention of increasing the boun any further unless the member of patients go to a point that the reduced hours were damaging patient satisfaction As part of the original purchase agreem when Chang Wook ver the practice, there was transition period until fiscal 2004 began During this time the previous owner aprel to work part-time an associate to help Ching with the transition to ring the practice himself as well as help with some of the patient overflow. Chang yow to appreciate the help and found that the additional boues available to patients helped to improve overall patient satisfaction. So, when the transition period with the previous owner was finished at the beginning of fiscal 2004, ang hired a full time dalie. Similar to the previous owner's role, the associate Belped with patient overflow. performing some of the less aficult procedures. This dentale's Warted at the beginning of every fiscal year for the upcoming calycar Chang was will young compared to many practising dentists. Despite this, his patients indicated a high level of satisfaction with Chang' denatryskoll. Based on his age. Chang knew he would have to work to convince patients of his ability, which was probably what led him to strive for a high level of patient atti Chang believed his young age may have even give him a slighe avantage because it reduced patient" fears that he would soos retire, leaving them without a dertise Chang had been happy with the powth and overall performance of the practice since he had take it over sce lahibits 1 and 2 for financial statement, however, since he had always yeamed to be closer to friends and family, he decided to sell the practice so he could relocate to the wow where he grew.p. Montreal Chang's purchase of the practice hat included a purchase of the acts owned by the business and a component for goodwill Chang leo ndertook the remaining lease commitment of the business Miller's purchase of the practice included a purchase of the sets owned by the business, compent of prawill and the purchase of all standing lees, thereby eliminating a cost. Thus, Miller's purchase price was broken down follow 5 141.000 Lanchold improvement 65,000 Office and detalpplies inventory 8.000 Goodwill 290.000 Total S$10.00 This type of purchase was standard for dental practice. The authadvala, ba large part of the purchase price was associated with the prodwill of the business, which tenned from the practices partient list and the positive connection that the patients had with the practice. The customer patients, a dental practice were wally very loyal to the practice. This loyalty. Bowevet, was sily towards the dents within the practice ove patients became comfortable receiving care from and developing lationship with that particular practitioner. Despite this fact, when a practice was sold to a dentist med patients still remained loyal to the practice. This was because, unlike the beness customer relationship, there was a hassle associated with changing dentists, se most patients were hesitant to switch and would give new dentists a chce to prove themselves Ale to held even the world over 10 THE CHANG DENTAL CLINIC Stanley Chang had purchased the Petrolia Dental Clinie in May 2003. Chang had though it necessary to change the practices nume to the Chere Dental Clinie in order to indicate that there had been change in ownership and to make his name better known within the community At time of he had been splining his time between the two practices. The site of his other practice had lod is dentist to conclude that he should sell one of his clinics, e, the Petrolia practice and concentrate solely on the othet. Unfortunately, part of the equipment and set in the Parlia clinic were being lowed, and there were terms of five to fight years Tell ca the various leases. In order for the previous owner to be free of these les comments, the purchase was structured so that Chang tokave the lease comments the equipment and paid one della for the business. As the less expired and the practice greu, Ching beges purchasing some of the set med in the practice. When Chang had initially looked purchasing this dental clinic, he had be cut of school for the you and was looking for a practice of his own. An acquaintance had indicated an intention to sell his practice and Chang besan discussing the opportunity with him, eventually buying the practice. Upon taking over the practice, the dental clinic was only open these days work at the time. Chang did not believe that the number of patients was sufficient increase the clink's hours. Chver time, Chang gw the business practically 3 to 50 detal the the end of the Geely PETROLIA, ONTARIO Miller had no previous experience running his own business, however, as part of his dental degree, de had in courses on how to opera dental practice. These courses outlined important aspects of using With a population of 5.222prople." Petrolia was a small town located in Southwestem Ontario Petrolia in such as the basic practices for keeping accounting records for the business Miller was confident ated close to the Canada United States bordet, about a 15-20 minute drive from Santia, Ontario, that these courses, along with the practical edge pained from working for her dental practices and a bow drive from London, Ontario (see Exhibit 3 for a map of Petrolia's location. The wenge would help to overcome his lack of experience household income in Petrella was approximately 363,000, as compared to an average beschuld income of approximately SIR.000 in Samia and Son 200 in London, lactating the Chang Dental Clink there were the EXPECTATIONS FOR THE FUTURE Miller was confident that the book over the practice, even as the new owner and practicing dentist, the ed in sales et vould equate to half the percentage grow in sales from fiscal 2004 to fool 2005 CHRIS MILLER Associate fees, dental supplies and artery fees varied, based on the evened. Miller projected hat, in fact 2006, de plecare datory few remain the same proportion of talen a in fiscal 2005. Miller believed he could do more of the work imell, and he expected to reduce the Chris Miller grated from the University of Toronto in April 2003 with a degree in dealurpery sociate feeste 15 percent of projected 2006 Mitleidered all other costs he fined and wich, they wuld not wory with a late. He also teipated that the preactice would suit incat any ere central to becoming a dentist, Some of these cones were taught using the traditional lecture style but other count involved pretical applications of sales creating moulds of people's teeth Our spect of Miller's actice was performing procedures en patients part of free clinic held at the When projecting the frical 2006 balance sheet, Miller bleved that the aging of receivable diary school Dental todo el pacte de procedures on the patients who came to inventory and secounts payable would remain unchanged from fiscal 2005. Prepaid expenses were also the freedink-ranging from simple teeth cleaning to fining the patients, to filling cavities expected to remain the same out as infocad 2005. No foedsets were expected to be purchased woldering the proming year tipo graduation, comme petite for many dentistry school graduates, Miller started his career working as an ace for the dentin. This wowed Miller to gain more experience performing Resliring the financing will certainly be requiel Miller spoke to his bank's basicer to variety of different procedureswhile still having we wih who for around patient care a some information about the financing. The lanserted that the pencil ting ang Miletan opportunity to be more shot how a dostal price was pret, cible for financing could be a 10-year-tornoon which the principal would be repayable in equal firhand how the butine ide of the clink perted, from booking inte, to managing staff to buying does the last day of each The Interest would be applicant the counting records. deducing the principal payment and would be paid the same ones the newly principal payment Miller wel se for three differential practice with large uden om to be repaid Other Burkchures were expected to 5500 yearly. Finally, Mille pluted to Wild Miller was agaikly pay deansch upodlie facher while we worked sem 5140,000 per year from the price in order to cover his peliving expen days a week Monday to Thursday force detit, Priday on Saturday for her and Sunday for the et le was long before is work whole lepe is toll on Miller, sevmemery I hop Miller would take Pury 1, 2016 for him to give is Sunday jah 2001, hipidoen alge pot of his valent dhe end Miller decided that he was the prefer year for the www would be having pulmony in ving, Miller vete bodule hack a bulunher working from Monday For my Thunday only THE DECISION Miller wey blending with open winged tremendously Millenew that for any ople, avione della fe, so he always Miller we wypowo whether way to put the Chan Dalinw. with med please sue of the pre Mikro how peod 16.00, mended to be hely certain the produce Willy to know his parents mocha publiking question and sewing a parenterest in the Net ther of the why did this make the expetite mare please for Miller, lut i pedals his patient. pulty Amed with the wind with me industry data (se Tsh 4 for industry Miller down to be helye Selfoss, www.fr pos www.rome Deprenew.dore.com, Moby 2.2008 Agree Store The Town or Office Wolper 21, 2008 Alaperating pedancow with heation or better and Sou Canadelle modeller 21 20 and shados de openen 2008 The 2007, INCOME STATEMENT For the year ended December 31 Exhibit 2 BALANCE SHEET As at December 31 2005 2004 2003 2005 2004 2003 FEE REVENUE 5812,97 $ 600,00 5 287,281 ASSETS Current Assets 105,436 29,526 2,627 $43673 46,942 41.248 666 5.2% 1.646 59,031 46.544 40,098 39,000 127,700 Accounts receivable lavesty Prepaid expenses Total Current Assets 40.500 33,205 59.542 42.411 21.126 17430 10.735 3.10 3.500 10616 14,193 2 10.456 29.428 186 9,051 Long-term Assets Fedte Less Accumulated fie amets Ne feed 1984 030.995 M400 (19.120 41.454 OPERATING EXPENSES: Associate fees Salaries and be Dental upplies liquipment Hentilities Laborey free General and office Premier Automobile Telephone Profesionales Interest and bank.com Profesional development Licence, fees and Haddebo recovered Amortion TOTAL EXPENSES 27,721 KAO 7015 13.59 Total Long term Asset TOTAL ASSETS 1.612 2.05 17.01 349 22 1 0.647) 2 202. AS LIABILITIES AND OWNER'S EQUITY Liabile Bank indeed Accounts payable Total Liabilities S48579 10.929 10,929 S.ME 39 10.724 10,703 201 R17 16,394 5.1441 5.187.000 NET INCOME Sve Charente Cine OWNER'S EQUITY 5. Chang, Capital 87.112 77.2.36 11,66 TOTAL LIABILITIES AND OWNER'S EQUITY Exhibit Exhibit KEY INDUSTRY RATIOS LOCATION OF PETROLIA 2005 2004 2003 Lake Huron el DE RATIO Percentage of Total Assets Cash Accounts receivable Inventory 230 3.7% 0.4% 42.9% 15.25 22:34 6.8% 0.4% 453% 128 20.4% 689 0.6% 47.4% 13.4 BUT London USA . Patlets 3.0% 41 1 2.046 41.04 101N 2.7 3.8% Percentage of Total Liabilities and Equity Accounts payable Le Equity Percentage of Total Sales: Operating pen Niet inome before Current Add terie 9.74 03 19.1% 18% 0.7 08 0.7 06 Wed Lake Erle NA Apoy NA NA NA NIA NA NA NA NA Se 15 TI 990 7929 12. My R 31 159 1 153 13 121 Totalno