Exhibit 1 1992 Pro-forma Financial Statements

Balance Sheet as at December 31, 1991 and 1992

December 31, 1991 December 31, 1992

Change
(Actual) (Pro-forma)
Assets

Cash $113,000 $9,490 -$103,510

Accounts receivable 69,500 139,530 $70,030
Inventories-raw materials 55,000 75,450 $20,450
Inventories-finished goods 104,680 $104,680
Prepaid insurance 65,000 $65,000

Property, plant and equipment 212,500 1,120,000 $907,500

Accumulated depreciation -10,625 (56,000) -$45,375
Land 250,000 $250,000
Patent 100,000 75,000 -$25,000

Total assets $539,375 $1,783,150 $1,243,775

.
Liabilities and Owners' Equity
Taxes payable 10,900 9,950 -$950
Short term debt 200,000 $200,000
Deferred income taxes 26,730 $26,730
Notes payable (10%) 425,000 $425,000
Long-term debt (10%) 510,000 $510,000
Dividends payable 10,000 12,000 $2,000
Common stock 500,000 500,000 $0
Retained earnings 18,475 125,470 $106,995
Treasury stock -26,000 -$26,000

Total liabilities and owners' equity $539,375 $1,783,150 $1,243,775

Income Statement for the years ended Dec. 31,1991 and 1992
 December 31, 1991 December 31, 1992
(Actual) (Pro-forma)
Sales $754,500 $1,886,250
Material 195,000 452,700
Labor 275,000 660,000
Rent 50,000 25,000
Utilities 30,000 82,000
Depreciation 10,625 61,625
Gross margin 193,875 604,925
Advertising 22,500 70,000
Research and development 63,250
Insurance 32,500
Amortization of patent 25,000 25,000
Selling and administration expenses 75,000 195,750
Gain on sale of equipment 24,250
Interest expense 750 58,750
Prototypes 23,750
Legal fees 7,500
Income before taxes 39,375 183,925
Income taxes 10,900 64,930
Net income $28,475 $118,995

a
Finished goods inventory includes $5,000 of depreciation
 Income Statement for the years ended Dec. 31,1991 and 1992

December 31, December

1991 (Actual) 31, 1992
(Pro-forma)
Sales $754,500 $1,886,250

Material 195,000 452,700

Labor 275,000 660,000
Rent 50,000 25,000
Utilities 30,000 82,000
Depreciation 10,625 61,625
Gross margin 193,875 604,925
Advertising 22,500 70,000
Research and development 63,250
Insurance 32,500
Amortization of patent 25,000 25,000
Selling and administration expenses 75,000 195,750
Gain on sale of equipment 24,250
Interest expense 750 58,750
Prototypes 23,750
Legal fees 7,500
Income before taxes 39,375 183,925
Income taxes 10,900 64,930
Net income $28,475 $118,995
 Chemalite Inc. Cash Flow Statement for the year ending on 31/12/1992
Inflows Outflows Net Balance
Opening Cash Balance $113,000
Cash Flow from Operating Activities
Collected from Customer 1,816,220
Material 473,150
Adjustment for closing stock 99,680
Labor 660,000
Rent 25,000
Utilities 82,000
Advertising 70,000
Research and development 63,250
Insurance 97,500
Selling and administration expenses 195,750
Income taxes 39,150
10,740
Net Cashflow from Operating Activities

Cash Flow from Investing Activities

Purchase of Land and Building in Cash -425000
Purchase of Machinery -520000
Sale of Old Machinery 215500 -729500

Net Cashflow from Investing Activities (729,500)

Cash Flow from Financing Activities

Raising of Short Term Debt $200,000
Raising of Long Term Debt $510,000
Interest expense -58750
Less: Dividend Paid -10,000
Less: Purchase of Treasury Stock -26,000 $615,250
Net Cashflow from Financing Activities 615,250

(103,510)
Total Cash flow for the Year 9,490
Closing Balance of the Cash
 Debtors Account
Particular Dr Particular Cr
To Opening Balance 69,500 By Cash (cash collected) 1,816,220
To Sales (credit sale During the year) $1,886,250 By Closing Balance 139,530
1,955,750 1,955,750

Raw Inventory Account

Particular Dr Particular Cr
To Opening Balance 55,000 By Material Consumed 452,700
To Cash (Cash Purchase) 473,150 By Closing Balance 75,450
528,150 528,150

Finished Good Inventory Account

Particular Dr Particular Cr
To Opening Balance 0
To Cost of Production (inclusive of Dep.) 104,680 By Closing Balance 104,680
104,680 104,680

Prepaid Insurance Account

Particular Dr Particular Cr
To Opening Balance 0 By Income Statement 32,500
To Cash (paid during the year) 97,500 By Closing Balance 65,000
97,500 97,500

PPE Account
Particular Dr Particular Cr
To Opening Balance 212,500 By Depreciation (written Off) 21,250
To Cash (purchase of Building) 300,000 By Cash (Sale of Old Assets) 215,500
To Notes Payable (pending amount) 300,000
To Cash (purchase of machine) 520,000
To Profit earned on asset sale 24,250 By Closing Balance 1,120,000
1,356,750 1,356,750

Accumulated Depreciation Account

Particular Dr Particular Cr
To Dep. Written off for old machinery 21,250 By Opening Balance 10,625
To Closing Balance 56,000 By P&L A/C (5000 Dep including in inventory) 66,625
77,250 77,250

Land Account
Particular Dr Particular Cr
To Opening Balance 0
To Cash (Purchase during the year) 125,000
To Notes Payable (to be paid) 125,000 By Closing Balance 250,000
250,000 250,000

Patent Account
Particular Dr Particular Cr
To Opening Balance 100,000 By Income Statement 25,000
By Closing Balance 75,000
100,000 100,000

Income Tax Payable Account

Particular Dr Particular Cr
To Deffered Tax 26,730 By Opening Balance 10,900
To Cash 39,150
To Closing Balance 9,950 By P&L A/c (tax for the year) 64,930
75,830 75,830

Deffered Income tax Account

Particular Dr Particular Cr
By Opening Balance 0
To Closing Balance 26,730 By tax payable 26,730
26,730 26,730

Short Term Debt Account

Particular Dr Particular Cr
By Opening Balance 0
To Closing Balance 200,000 By Cash (Loan Raised) 200,000
200,000 200,000

Notes Payable Account

Particular Dr Particular Cr
By Opening Balance 0
By PPE 300,000
To Closing Balance 425,000 By Land 125,000
425,000 425,000

Long Term Debt Account

Particular Dr Particular Cr
By Opening Balance 0
To Closing Balance 510,000 By Cash (Loan Raised) 510,000
510,000 510,000

Dividend Payable Account

Particular Dr Particular Cr
To Cash (paid during the year) 10,000 By Opening Balance 10,000
To Closing Balance 12,000 By Dividend declared for the year 12,000
22,000 22,000

Equity Account
Particular Dr Particular Cr
By Opening Balance 500,000
To Closing Balance 500,000
500,000 500,000

Retained Earning Account

Particular Dr Particular Cr
To Dividend Payable 12,000 By Opening Balance 18,475
To Closing Balance 125,470 By Income statement 118,995
137,470 137,470
 Treasury Account
Particular Dr Particular Cr
To Opening Balance 0
By Cash (purchased during the year) 26,000 By Closing Balance 26,000
26,000 26,000
 Chemalite Inc. Cash Flow Statement for the year ending on 31/12/1992
Particular Net Balance
Opening Cash Balance $113,000
Cash Flow from Operating Activities
Net Profit $118,995
Add: Depreciation 61,625
Add: Amortisation 25,000
Add: Interest Paid 58,750
Less: Gain on Sale of Equipement -24,250 240,120

Adjustment for Change in Current Asset

Increase in Account Receivables -70030
Increase in Inventory of Raw Material -20450
Increase in Inventory of Finished Goods -99680
Increase in Prepaid Exp. -65000 (255,160)

Adjustment for Change in Current Liabilities

Decrease in Tax Payable -$950
Increase in Deffered Tax $26,730
$25,780

Net Cashflow from Operating Activities 10,740

Cash Flow from Investing Activities

Purchase of Land and Building in Cash -425000
Purchase of Machinery -520000
Sale of Old Machinery 215500 -729500

Net Cashflow from Investing Activities (729,500)

Cash Flow from Financing Activities

Raising of Short Term Debt $200,000
Raising of Long Term Debt $510,000
Less: Dividend Paid -10000
Less: Interest Paid -58,750
Less: Purchase of Treasury Stock -26,000 $615,250

Net Cashflow from Investing Activities 615,250

Total Cash flow for the Year (103,510)
Closing Balance of the Cash 9,490
Particular Amount 3 Table 2 Table
Wood 10000 6000 4000
Labour 5000 3000 2000
Supplies 200 120 80
Depreciation 500 300 200
Total Cost 15700 9420 6280
Output 5
Cost per table 3140

Sold 3 table at a price of 8000

Cost of Good Sold 9420

Closing Inventory 6280

Method A
Sales 24000
Opening stock 0
Add: goods manufactured during the year 15700
Less: Closing Stock 6280
Cost of good sold 9420
Gross Profit 14580

Method B
Sales 24000
Cost of Good Sold 9420
Gross Profit 14580