Income Statement – Sample Appraisal Report

Following is a summary of the revenues and expenses of the Company for the periods shown. Detailed financial statements are available in our workpapers.

Source: Internal Internal Internal Internal Internal
Basis: Accrual Accrual Accrual Accrual Accrual
12 months 12 months 12 months 12 months 10 months
*($000) Dec-05 Dec-06 Dec-07 Dec-08 Dec-09
REVENUE 4,218 3,403 5,851 7,303 8,239
Cost of Sales (excl depreciation) 2,484 2,165 3,519 4,578 4,378
Depreciation is COGS 184 144 103 112 94
Gross Profit 1,550 1,094 2,229 2,613 3,767
Gross Margin (% Sales) 36.70% 32.10% 38.10% 35.80% 45.70%
Operating Expenses 908 829 1,326 1,646 1,365
% Sales 21.50% 24.40% 22.70% 22.50% 16.60%
Officers’ Compensation 104 107 107 116 124
Operating Income 538 158 796 851 2,278
Depreciation                       (-) Interest Expense                 (-) Interest Income
Other Income(Expense)
NET INCOME BEFORE TAX 381 -95 730 632 2,258
Adjustments:
1  Depreciation 222 288 126 136 111
2  Amortization 0 0 0 0 0
3  Interest expense 3 4 2 1 0
4  Non-recurring expense 0 0 0 250 0
5  Annualizing adjustment 0 0 0 0 162
Adjusted EBITDA* 606 197 858 1,019 2,531
Annualized Revenue 4,218 3,403 5,851 7,303 9,784
Adj Earn’gs as a percent of Revenue 14.40% 5.80% 14.70% 14.00% 25.90%
Adjusted EBITDA* 606 197 858 1,019 2,531
Annualized Revenue 4,218 3,403 5,851 7,303 9,784
Adj Earn’gs as a percent of Revenue 14.40% 5.80% 14.70% 14.00% 25.90%


*The earnings basis is control EBITDA, earnings before interest, taxes, depreciation and amortization. Control basis means that the interest under consideration can affect certain discretionary items,including owners and officers compensation.
Adjusted EBT Dec-05 Dec-06 Dec-07 Dec-08 Oct-09
Adjusted EBITDA 606 197 858 1,019 2,531
Depreciation -222 -288 -126 -136 -133
 Amortization 0 0 0 0 0
Interest expense -3 -4 -2 -1 0
Adjusted EBT 381 -95 730 882 2,398



NOTES TO INCOME STATEMENT ADJUSTMENTS:

1-3   Depreciation, amortization and interest expenses are added back to arrive at EBITDA.

4     In FY 2008, the Company incurred a one-time expenditure amounting to $250,000 in an anechoic chamber, a piece of equipment built by the Company.

5      An adjustment is applied in order to annualize the most recent interim financial statements.

            No other income statement adjustments were considered necessary.