Year 2010 2011 2012 2013 2014 2015

All figures are in $ million

Initial Investment -2.2
Marketing Spend
Sales 21.6 28 28 11 5
COGS 17.064 22.12 22.12 8.69 3.95
Gorss Profit 4.536 5.88 5.88 2.31 1.05
SG&A 1.80576 2.3408 2.3408 0.9196 0.418
Depreciation 0.44 0.44 0.44 0.44 0.44
Promotional Exp 0.3
EBIT 2.73024 3.2392 3.5392 1.3904 0.632
EBIT*(1-t) 1.638144 1.94352 2.12352 0.83424 0.3792
Change in WC 5.6484 1.6736 0 -4.4455 -1.569 -1.307
FCF from Operation -3.57026 0.70992 2.56352 5.71974 2.3882
FCF -2.2 -3.57026 0.70992 2.56352 5.71974 2.3882 1.307
NPV@9.93 -2.2 -3.24775 0.587458 1.929692 3.916619 1.487612 0.740591
NET NPV 3.214218
IRR 0.263274
Market Premium 6
Risk Free Rate 3.7

Notes Payable 10132000

Common Stock 22374930

Shareholder's equity 19671000

Total Equity 42045930

D/E 0.240975

L- Beta Debt Equity U- Beta

Micron 1.25 33 67 0.964862
STEC 1 0 100 1
San Disk 1.36 19 81 1.192208

Unlevered Beta for Industry 1.059243

Levered Beta for Flash Memory 1.198753
Flash Memory
Cost of Equity 10.89252 Debt 18
Cost Of Debt 9.25 Equity 82
WACC 9.930865
Sales Weight W- U Beta
4803 0.55055 0.531205
354 0.040578 0.040578
3567 0.408872 0.48746
8724 1.059243
 Flash Memory, Inc.
Historical / Forecast Balance Sheets (000s)

2007 2008 2009

Cash 2,536 2,218 2,934
3.29% 2.74% 3.29%
Accounts receivable 10,988 12,864 14,671
52.0 days 58.0 days 60.0 days
Inventories 9,592 11,072 11,509
56.0 days 59.1 days 58.0 days
Prepaid expenses 309 324 357
0.40% 0.40% 0.40%
Total current assets 23,425 26,478 29,471

Property, plant & equipment at cost 5,306 6,116 7,282

Less: Accumulated depreciation 792 1,174 1,633
Net property, plant & equipment 4,514 4,942 5,649

Total assets 27,939 31,420 35,120

60% Accounts payable 3,084 4,268 3,929

30.0 days 38.0 days 33.0 days
Notes payable 6,620 8,873 10,132

Accrued expenses 563 591 652

0.730% 0.730% 0.731%
Income taxes payable 151 9 167
10.01% 10.09% 9.98%
Other current liabilities 478 502 554
0.620% 0.620% 0.621%
Total current liabilities 10,896 14,243 15,434

Common stock at par value 15 15 15

Paid in capital in excess of par value 7,980 7,980 7,980
Retained earnings 9,048 9,182 11,691
Total shareholders' equity 17,043 17,177 19,686

Total liabilities & shareholders' equity 27,939 31,420 35,120

Number of shares outstanding 1,491,662 1,491,662 1,491,662

Capital expenditures
Depreciation expense rate
Shares issued under equity alternative
Net proceeds from stock issue / sh.
Gross proceeds from stock issue / sh.
Prime rate:
Base spread:

Notes payable % of A/R 60.25% 68.98% 69.06%

Interest coverage (EBIT) 8.94x 1.38x 6.74x
Debt to capital 0.28 0.34 0.34
 Factoring: N
Equity Issue: N

2010E 2011E 2012E

3,960 4,752 4,752
3.30% 3.30% 3.30%
19,726 23,671 23,671
60.0 days 60.0 days 60.0 days
13,865 16,638 16,638
52.0 days 52.0 days 52.0 days
480 576 576
0.40% 0.40% 0.40%
38,031 45,637 45,637

8,182 9,082 9,982

2,213 2,860 3,575
5,969 6,222 6,407

44,000 51,859 52,044

4,799 5,759 5,759

30.0 days 30.0 days 30.0 days
14,234 16,678 12,741

876 1,051 1,051

0.73% 0.73% 0.73%
229 272 275
10.00% 10.00% 10.00%
744 893 893
0.62% 0.62% 0.62%
20,882 24,654 20,719

15 15 15
7,980 7,980 7,980
15,122 19,210 23,330
23,117 27,205 31,325

44,000 51,859 52,044

1,491,662 1,491,662 1,491,662

 900 900 900
7.50% 7.50% 7.50%
300,000
$ 23.00
$ 25.00
3.250% 3.250% 3.250%
400 bp 400 bp 400 bp

72.16% 70.46% 53.83%

7.53x 7.12x 7.49x
0.38 0.38 0.29
 Flash Memory, Inc.
Historical / Forecast Income Statements (000s)

2007 2008 2009

Sales 77,131 80,953 89,250
4.96% 10.25%
Cost of goods sold 62,519 68,382 72,424
81.06% 84.47% 81.15%
Gross margin 14,612 12,571 16,826

Research and development 3,726 4,133 4,416

4.83% 5.11% 4.95%
Selling, general and administrative 6,594 7,536 7,458
8.55% 9.31% 8.36%
Operating income 4,292 902 4,952

Interest expense 480 652 735

Other income (expenses) (39) (27) (35)

Income before income taxes 3,773 223 4,182

40% Income taxes 1,509 89 1,673

Net income 2,264 134 2,509
2.94% 0.17% 2.81%

Earnings per share $ 1.52 $ 0.09 $ 1.68

Current debt rate:

600 bp Factoring rate:
 2010E 2011E 2012E
120,000 144,000 144,000
34.45% 20.00% 0.00%
97,320 116,784 116,784
81.10% 81.10% 81.10%
22,680 27,216 27,216

6,000 7,200 7,200

5.00% 5.00% 5.00%
10,028 12,033 12,033
8.36% 8.36% 8.36%
6,652 7,983 7,983

883 1121 1066

(50) (50) (50)

5,719 6,812 6,866

2,288 2,725 2,747

3,431 4,087 4,120
2.86% 2.84% 2.86%

$ 2.30 $ 2.74 $ 2.76

7.25% 7.25% 7.25%

9.25% 9.25% 9.25%
 Flash Memory, Inc.
Historical / Forecast Income Statements (000s)
(updated to include investment project)
2007
Sales 77,131

Cost of goods sold 62,519

81.06%
Gross margin 14,612

Research and development 3,726

4.83%
Selling, general and administrative 6,594
8.55%
Operating income 4,292

Interest expense 480

Other income (expense) (39)

Income before income taxes 3,773

40% Income taxes 1,509

Net income 2,264
2.94%

Earnings per share $ 1.52

600 bp
 2008 2009 2010E 2011E 2012E
80,953 89,250 120,000 165,600 172,000
4.96% 10.25%
68,382 72,424 97,320 133,848 138,904
84.47% 81.15% 81.10% 80.83% 80.76%
12,571 16,826 22,680 31,752 33,096

4,133 4,416 6,000 7,200 7,200

5.11% 4.95% 5.00% 4.35% 4.19%
7,536 7,458 10,028 13,838 14,373
9.31% 8.36% 8.36% 8.36% 8.36%
902 4,952 6,652 10,714 11,523

652 735 965 1416 1470

(27) (35) (50) (50) (50)

223 4,182 5,638 9,248 10,004

89 1,673 2,255 3,699 4,001

134 2,509 3,383 5,549 6,002
0.17% 2.81% 2.82% 3.35% 3.49%

$ 0.09 $ 1.68 $ 2.27 $ 3.72 $ 4.02

Current debt rate: 7.25% 7.25% 7.25%

Factoring rate: 9.25% 9.25% 9.25%
 Flash Memory, Inc.
Historical / Forecast Income Statements (000s)
(updated to include investment project)
2007 2008 2009 2010E 2011E 2012E
Sales 77131 80953 89250 120000 165600 172000
0.049552 0.102492
Cost of goods sold 62519 68382 72424 97320 133848 138904
0.810556 0.844712 0.811473 0.811 0.808261 0.807581
Gross margin 14612 12571 16826 22680 31752 33096

Research and develo 3726 4133 4416 6000 7200 7200

0.048307 0.051054 0.049479 0.05 0.043478 0.04186
Selling, general and a 6594 7536 7458 10027.56 13838.04 14372.84
0.085491 0.093091 0.083563 0.083563 0.083563 0.083563
Operating income 4292 902 4952 6652.437 10713.96 11523.16

Interest expense 480 652 735 964.9253 1416.026 1469.517

Other income (expen -39 -27 -35 -50 -50 -50

Income before income 3773 223 4182 5637.512 9247.937 10003.64

0.4 Income taxes 1509.2 89.2 1672.8 2255.005 3699.175 4001.457

Net income 2263.8 133.8 2509.2 3382.507 5548.762 6002.185
0.02935 0.001653 0.028114 0.028188 0.033507 0.034896

Earnings per share 1.517636 0.089699 1.682151 2.26761 3.719852 4.023824

Current debt rate: 0.0725 0.0725 0.0725

600 Factoring rate: 0.0925 0.0925 0.0925