Exhibit 1 Operating Statements for Years Ending December 31, 2001–2003, and for First

Quarter 2004 (thousands of dollars)

2001 2002 2003 First Quarter 2004

Net sales $1,697 $2,013 $2,694 $ 718a

Cost of goods sold
Beginning inventory 183 239 326 418
Purchases 1,278 1,524 2,042 660
$1,461 $1,763 $2,368 $1,078
Ending inventory 239 326 418 556
Total cost of goods sold $1,222 $1,437 $1,950 $522
Gross profit 475 576 744 196
Operating expenseb 425 515 658 175
Interest expense 13 20 33 10
Net income before taxes $37 $41 $53 $11
Provision for income taxes 6 7 9 2
Net income $31 $34 $44 $9

Source: Case author.

a
In the first quarter of 2003 sales were $698,000 and net income was $7,000.
b
Operating expenses include a cash salary for Mark Cartwright of $75,000 in 2001, $85,000 in 2002, $95,000 in 2003, and
$22,000 in the first quarter of 2004. Cartwright also received some of the perquisites commonly taken by owners of privately
held businesses.
Exhibit 2 Balance Sheets at December 31, 2001–2003, and March 31, 2004 (thousands of
dollars)

2001 2002 2003 First Quarter 2004

Cash $58 $48 $41 $31

Accounts receivable, net 171 222 317 345
Inventory 239 326 418 556
Current assets $468 $596 $776 $932
Property, net 126 140 157 162
Total assets $594 $736 $933 $1,094

Notes payable, bank $ -- $146 $233 $247

Notes payable, Stark 105 -- -- --
Notes payable, trade -- -- -- 157
Accounts payable 124 192 256 243
Accrued expenses 24 30 39 36
Long-term debt, current portion 7 7 7 7
Current liabilities $260 $375 $535 $690
Long-term debt 64 57 50 47
Total liabilities $324 $432 $585 $737
Net worth 270 304 348 357
Total liabilities and net worth $594 $736 $933 $1,094

Source: Case author.

Exhibit 1 Operating Statements for Years Ending December 31, 2001–2003, and for First Quarter 2004 (thousands of dollar

2001 2002 2003

Net sales $1,697 $2,013 $2,694

Cost of goods sold
Beginning inventory 183 239 326
Purchases 1,278 1,524 2,042
$1,461 $1,763 $2,368
Ending inventory 239 326 418
Total cost of goods sold $1,222 72% $1,437 71% $1,950
Gross profit 475 576 744
Operating expenseb 425 25.04% 515 25.58% 658
EBIT 50 61 86
Interest expense 13 20 33
Net income before taxes $37 $41 $53
Provision for income taxes 6 7 9
Net income $31 $34 $44

Source: Case author.

a
In the first quarter of 2003 sales were $698,000 and net income was $7,000.
b
Operating expenses include a cash salary for Mark Cartwright of $75,000 in 2001, $85,000 in 2002, $95,000 in 2003, and $22,000 in the first quarter of 2004. C
some of the perquisites commonly taken by owners of privately held businesses.
arter 2004 (thousands of dollars)

First Quarter 2004 AVERAGE 2004 % of sales

718 $3,600

418
660
$1,078
556
72% $522 73% 72% 2592 0.72
196 1008 0.28
24.42% 175 24.37% 25% 900 0.25
21 108 0.03
10 49 N/A
$11 59
2 9.75
$9 49.25 Add. Net Worth

d $22,000 in the first quarter of 2004. Cartwright also received

2005 % of sales

4500

3240 0.72
1260 0.28
1125 0.25
135 0.03
66
69
12.25
56.75 Add. Net Worth
Exhibit 2 Balance Sheets at December 31, 2001–2003, and March 31, 2004 (thousands of dollars)

2001 % of sales 2002 % of sales 2003 % of sales

Cash $58 3% $48 2% $41 2%

Accounts receivable, net 171 10% 222 11% 317 12%
Inventory 239 14% 326 16% 418 16%
Current assets $468 28% $596 30% $776 29%
Property, net 126 7% 140 7% 157 6%
Total assets $594 35% $736 37% $933 35%

Notes payable, bank $ -- $146 $233

Notes payable, Stark 105 -- --
Notes payable, trade -- -- --
Accounts payable 124 7% 192 10% 256 10%
Accrued expenses 24 1% 30 1% 39 1%
Long-term debt, current portion 7 7 7
Current liabilities $260 $375 $535
Long-term debt 64 57 50
Total liabilities $324 $432 $585
Net worth 270 304 348
Total liabilities and net worth $594 $736 $933

Source: Case author.

First Quarter 2004 Avg % Sales ssumption 2004 2005

$31 2% 0.02 72 90
345 11% 0.11 396 495
556 15% 0.15 540 675
$932 29% 0.28 1008 1260
162 7% 0.07 252 315
$1,094 35% 0.35 1260 1575

$247 416.75 583

-- 0 0
157 0 0
243 9% 0.1 360 450
36 1% 0.01 36 45
7 7 7
$690 403 502
47 43 36
$737 446 538
357 397.25 454
$1,094 843.25 992

EFN 416.75 583

INTEREST 49 66