American Fortune Mergers

This sample Valuation was generated by American Fortune Business Valuations, LLC
505 Third Street, Suite 301, Louisville, KY 40202 www.fortunebta.com
Comprehensive Valuation
Sample Industries, Inc.
As of June 30, 2010
Prepared for:
Timothy Jones, CEO
Prepared by:
Brian S. Mazar, MBA, AVA, CBI
American Fortune Business Valuations, LLC
505 Third Street, Suite 301
Louisville, KY 40202
The information contained herein is of a confidential nature and is intended for the
exclusive use of the persons or firm for whom it was prepared. Reproduction,
publication or dissemination of all or portions hereof may not be made without prior
approval from American Fortune Business Valuations, LLC

Timothy Jones, CEO
123 Main Street, Suite 2252
San Diego, CA 92126
RE: Sample Industries, Inc.
Dear Timothy Jones, CEO:
At your request, we have performed a valuation engagement, as defined in the Statement on Standards for
Valuation Services (SSVS) of the American Institute of Certified Public Accountants, of 100.00% of the
common stock of Sample Industries, Inc. as of June 30, 2010. This valuation was performed solely to
assist in the matter of Estate Planning; the resulting estimate of value should not be used for any other
purpose or by any other party for any purpose. This valuation engagement was conducted in accordance
with the SSVS. The estimate of value that results from a valuation engagement is expressed as a
conclusion of value.
Based on our analysis as described within this valuation report, the estimate of value of 100.00% of the
common stock of Sample Industries, Inc. as of June 30, 2010 was $16,800,000, as summarized below.
This conclusion is subject to the Statement of Assumptions and Limiting Conditions presented later in this
report and to our Representations also presented later in this report. We have no obligation to update this
report or our conclusion of value for information that comes to our attention after the date of this report.
Respectfully,
(Signature)
(Date)

Discount & Capitalization Rate Estimates 28
— Table of Contents —
OBJECTIVE 1
EXTERNAL SOURCES OF INFORMATION 2
INTERNAL SOURCES OF INFORMATION 2
ASSUMPTIONS AND LIMITING CONDITIONS 3
COMPANY BACKGROUND 4
Company Identification 4
Nature and History of the Company 4
Stock Classes and Ownership 4
Management Team 4
Product and Service Information 4
Market Data and Analysis/Competition 4
Governmental or Regulatory Environment 5
Key Customers and Suppliers 5
Marketing Strategy 5
Business Risks 5
Current Operations 5
Company Expectations 5
Other Observations 5
NATIONAL ECONOMIC AND INDUSTRY CONDITIONS 6
General Economic Conditions and Outlook 6
Industry Conditions and Outlook 6
HISTORICAL AND NORMALIZED FINANCIAL STATEMENTS 7
Summary Historical Income Statements 7
Income Statement Adjustments 7
Normalized Historical Income Statements 8
Summary Historical Balance Sheets 8
Balance Sheet Adjustments 9
Normalized Historical Balance Sheets 9
Summary Historical Statements of Cash Flows 10
Normalized Earnings and Net Cash Flow Summary 11
Normalized Interim Financial Statements 12
ANALYSIS OF HISTORIC FINANCIAL STATEMENTS 14
Business Common-Size Financial Statements 14
Business vs. Industry Common-Size Financial Statements 16
Business Financial Ratio Analysis 19
Business vs. Industry Financial Ratio Comparison 22
VALUATION OF SAMPLE INDUSTRIES, INC. 24
Overview of Valuation Approaches and Methods 25
Preferred Stock Valuation 26
Net Asset Value 27
Liquidation Value 27

Capitalization of Earnings 29
Discounted Future Earnings 30
Projection Summary 30
Summary Income Statement Projections 31
Summary Balance Sheet Projections 31
Summary Retained Earnings Projections 32
Summary Cash Flow Projections 32
Summary Sources & Uses of Funds Projections 32
Overview of Projection Assumptions 32
Revenue & Expense Assumptions 32
Fixed Asset Depreciation Assumptions 33
Disposals of Existing Fixed Assets 33
Fixed Asset Purchases 34
Existing Notes Receivable Assumptions 34
Amortization of Intangible Assets 34
Existing Notes Payable Assumptions 34
Fixed Asset Purchase Financing Assumptions 35
Dividends Assumptions 35
Discounted Future Earnings Value Calculations 36
Comparative Company Method 36
Search for Comparatives 37
Comparable Companies from the Completed Transactions Database 37
Comparable Companies from the Pratt's Stats Database 38
Comparable Companies from the BIZCOMPS Database 38
Price to Earnings Multiple 38
Price to Revenue Multiple 38
Price to Gross Cash Flow Multiple 38
Mergerstat Price to Earnings Multiple 39
Completed Transactions Price to Earnings Multiple 39
Completed Transactions Price to Revenue Multiple 39
Completed Transactions Price to Cash Flow from Operations Multiple 39
Completed Transactions Price to Assets Multiple 40
Completed Transactions Price to Stockholders' Equity Multiple 40
Pratt's Stats Equity Price to Net Sales Multiple 40
Pratt's Stats Equity Price to Gross Cash Flow Multiple 40
Pratt's Stats Equity Price to EBT Multiple 41
Pratt's Stats Equity Price to Net Income Multiple 41
Pratt's Stats Deal Price to Net Revenue Multiple 41
Pratt's Stats Deal Price to EBITDA Multiple 41
Pratt's Stats Deal Price to EBIT Multiple 42
BIZCOMPS Sales Price to Revenue Multiple 42
BIZCOMPS Sales Price to Seller's Discretionary Cash Flow Multiple 42
Capitalization of Excess Earnings 43
Multiple of Discretionary Earnings 45
Conclusions of Value 46

This sample Valuation was generated by American Fortune Mergers & Acquisitions, LLC
5
Objective
Our objective was to estimate the Fair Market Value of 100.00% of Sample Industries, Inc. (the “Company”) as of
June 30, 2010. We were engaged by Timothy Jones, CEO, Sample Industries, Inc. to issue a detailed report. The
Company is a C-Corporation and is organized under the laws of California. It is primarily engaged in the
business of Manufacturing of Sporting Goods and operates under the trade name of Sample's Sporting Equipment.
The standard of value used in our valuation of Sample Industries, Inc. is Fair Market Value. Fair Market Value is
the price, in cash or equivalent, that a buyer could reasonably be expected to pay, and a seller could reasonably be
expected to accept, if the business were exposed for sale on the open market for a reasonable period of time, with
both buyer and seller being in possession of the pertinent facts and neither being under any compulsion to act.
The purpose of this valuation is Estate Planning. This report is prepared for Timothy Jones, CEO, Sample
Industries, Inc. and should not be used by others. This report is dated_______.
Our opinion of Fair Market Value relied on a “value in use” or going concern premise. This premise assumes that
the Company is an ongoing business enterprise with management operating in a rational way with a goal of
maximizing shareholder value.
Our analysis considers those facts and circumstances present at the Company at the Valuation Date. Our opinion
would most likely be different if another Valuation Date was used. There were no restrictions or limitations in the
scope of our work or in the data available for analysis, and no hypothetical assumptions were used.
To arrive at our conclusion of Fair Market Value, we performed the following procedures:
* Collected the Company's relevant historic financial statements.
* Analyzed the historic financial statements by calculating financial ratios and common-size financial
statements for each historic year in order to identify trends.
* Compared the Company's financial ratios and common-size financial statements to industry guideline
data to identify any significant variances.
* Assisted management in preparing a 5 year projection of the financial statements based on
management's assumptions as to the Company's future outlook.
* Developed risk-adjusted Capitalization and Discount Rates to apply to the Company's historic and
projected earnings, respectively.
* Collected and analyzed transactional data from comparable companies within the same industry.
* Adjusted historic earnings to eliminate the effects of excess and discretionary expenses, nonoperating
revenues and expenses, and non-transferable revenue streams.
* Applied Asset, Income, Market, and Other valuation approaches to determine an estimate of Total Entity
Value. The following methods were considered under each approach:
1. Asset Approach
Net Asset Value and Liquidation Value
2. Income Approach
Capitalization of Earnings and Discounted Future Earnings.
3. Market Approach
Price to Earnings, Price to Revenue, Price to Gross Cash Flow, Price to Cash Flow from
Operations, Price to Seller's Discretionary Cash Flow, Price to Dividends, Price to Book
Value, Price to Total Assets and Price to Stockholders' Equity.

6
4. Other
Capitalization of Excess Earnings and Multiple of Discretionary Earnings
* Selected the most reasonable Total Entity Value from the range of values established in the valuation
methods and then applied any appropriate discounts to arrive at our conclusion of the estimated Fair
Market Value of the interest.
External Sources of Information
To aid us in our analysis of the Company, we consulted a number of publicly available sources of information.
Numerous financial publications and databases were consulted including Business Statistics, Standard & Poor's
Industry Surveys, Mergerstat Review, U.S. Financial Data, Standard & Poor's Register of Corporations, Directors,
and Executives, and Value Line Investment Survey.
Internal Sources of Information
To aid us in our analysis of the Company, we interviewed the following personnel:

7
Assumptions and Limiting Conditions
This valuation is subject to the following assumptions and limiting conditions:
1. Information, estimates, and opinions contained in this report are obtained from sources considered to be
reliable. However, we assume no liability for such sources.
2. The Company and its representatives warranted to us that the information they supplied was complete and
accurate to the best of their knowledge and that the financial statement information reflects the Company's results
of operations and financial condition in accordance with generally accepted accounting principles, unless
otherwise noted. Information supplied by management has been accepted as correct without further verification,
(and we express no opinion on that information).
3. Possession of this report, or a copy thereof, does not carry with it the right of publication of all or part of it, nor
may it be used for any purpose by anyone but the client without the previous written consent of the client or us and,
in any event, only with proper attribution.
4. We are not required to give testimony in court, or be in attendance during any hearings or depositions, with
reference to the company being valued, unless previous arrangements have been made.
5. The various estimates of value presented in this report apply to this valuation only and may not be used out of
the context presented herein. This valuation is valid only for the purpose or purposes specified herein.
6. (This valuation assumes that the Company will continue to operate as a going concern, and that the character
of its present business will remain intact.)
7. The valuation contemplates facts and conditions existing as of the valuation date. Events and conditions
occurring after that date have not been considered, and we have no obligation to update our report for such events
and conditions.
8. We have assumed that there is full compliance with all applicable federal, state, and local regulations and laws
unless otherwise specified in this report.
9. This report was prepared under the direction of Brian S. Mazar, MBA, CBI. Neither the professionals who
worked on this engagement nor American Fortune Mergers & Acquisitions, LLC have any present or
contemplated future interest in Sample Industries, Inc., any personal interest with respect to the parties involved,
or any other interest that might prevent us from performing an unbiased valuation. Our compensation is not
contingent on an action or event resulting from the analyses, opinions, or conclusions in, or the use of, this report.

8
Company Background
Company Identification
Sample Industries, Inc. is a C-Corporation organized under the laws of California and located at 123 Main Street,
Suite 2252, San Diego, CA, 92126. The Company can be categorized under the Standard Industrial Classification
(SIC) Code of 3949 and North American Industry Classification System (NAICS) Code of .
Nature and History of the Company
Established in 1989, the Company is primarily engaged in the business of Manufacturing of Sporting Goods and
operates under the trade name of Sample's Sporting Equipment.
Stock Classes and Ownership
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Management Team
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Product and Service Information
Market Data and Analysis/Competition
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Governmental or Regulatory Environment
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Key Customers and Suppliers
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Marketing Strategy
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Business Risks
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Current Operations
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Company Expectations
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Other Observations
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National Economic and Industry Conditions
General Economic Conditions and Outlook
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Industry Conditions and Outlook
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27,450 42,700 61,000 79,299 97,599
Historical and Normalized Financial Statements
Summary Historical Income Statements
2005 2006 2007 2008 2009
Net Sales Revenue 25,302,860 26,494,580 28,043,400 29,219,270 31,541,420
Total Cost of Goods Sold
Gross Profit
20,165,679 21,681,757 22,263,336 22,943,789 23,870,297
Total Selling Expenses
5,137,181 4,812,823 5,780,064 6,275,481 7,671,123
749,750 813,180 917,500 997,500 1,316,990
Total General & Administrative Expenses
Income From Operations
3,037,730 2,486,432 3,319,075 3,616,368 4,129,399
Total Other Revenues and Expenses
1,349,701 1,513,211 1,543,489 1,661,613 2,224,734
Income Before Taxes
(623,774) (613,150) (563,153) (533,769) (486,062)
Total Income Taxes
725,927 900,061 980,336 1,127,844 1,738,672
Net Income
283,111 351,024 382,331 439,859 678,082
442,816 549,037 598,005 687,985 1,060,590
COMMENTS:
Income Statement Adjustments
Add/(deduct) income adjustments:
Nonoperating income
2005 2006 2007 2008 2009
(20,000) (30,000) (40,000) (50,000) (60,000)
Total income adjustments
Add/(deduct) expense adjustments:
Officer/Owner's Compensation
(20,000) (30,000) (40,000) (50,000) (60,000)
(50,000) (75,000) (100,000) (125,000) (150,000)
Research and development (5,000) (5,000) (10,000) (15,000) (20,000)
Less: Nonoperating expense (10,000) (20,000) (30,000) (40,000) (50,000)
Total expense adjustments
Total income & expense adjustments before tax
(65,000) (100,000) (140,000) (180,000) (220,000)
45,000 70,000 100,000 130,000 160,000
Less: Tax effect *
Total Adjustments net of Tax effect
17,550 27,300 39,001 50,701 62,401

12
Normalized Historical Income Statements
2005 2006 2007 2008 2009
Gross Profit
20,165,679 21,681,757 22,263,336 22,943,789 23,870,297
5,137,181 4,812,823 5,780,064 6,275,481 7,671,123
749,750 813,180 917,500 997,500 1,316,990
2,982,730 2,406,432 3,209,075 3,476,368 3,959,399
1,404,701 1,593,211 1,653,489 1,801,613 2,394,734
Income Before Taxes
(633,774) (623,150) (573,153) (543,769) (496,062)
Total Income Taxes
770,927 970,061 1,080,336 1,257,844 1,898,672
Net Income
300,661 378,324 421,332 490,560 740,483
470,266 591,737 659,005 767,284 1,158,189
Summary Historical Balance Sheets
ASSETS
Total Current Assets 4,956,423 5,427,189 6,388,104 7,147,785 7,509,604
Net Fixed Assets 5,142,852 4,962,042 4,634,661 5,534,900 5,363,423
Total Long-Term Investments 3,904,180 3,583,210 3,672,670 2,204,390 1,651,210
Net Intangible Assets 245,670 236,340 227,010 217,680 208,350
Total Other Noncurrent Assets
2005 2006 2007 2008 2009
LIABILITIES & STOCKHOLDERS' EQUITY
550,000 710,000 770,000 780,000 790,000
Total Assets 14,799,125 14,918,781 15,692,445 15,884,755 15,522,587
Total Current Liabilities 2,663,694 2,817,600 3,464,091 3,797,653 3,555,398
Total Long-Term Debt 5,990,265 5,734,045 5,317,415 4,896,531 4,257,082
Total Other Long-Term Liabilities 27,000 27,000 27,000 27,000 27,000
Total Liabilities
Stockholders' Equity:
8,680,959 8,578,645 8,808,506 8,721,184 7,839,480
Preferred stock 800,000 800,000 850,000 850,000 850,000
Common stock 2,780,000 2,780,000 3,000,000 3,000,000 3,000,000
Retained earnings
Total Stockholders' Equity
2,538,166 2,760,136 3,033,939 3,313,571 3,833,107
Total Liabilities & Stockholders' Equity
6,118,166 6,340,136 6,883,939 7,163,571 7,683,107
14,799,125 14,918,781 15,692,445 15,884,755 15,522,587
COMMENTS:

13
Balance Sheet Adjustments
2005 2006 2007 2008 2009
Nonoperating assets 60,000 70,000 80,000 90,000 100,000
Normalization adjustment (60,000) (70,000) (80,000) (90,000) (100,000)
Adjusted balance 0 0 0 0 0
Nonoperating liabilities 27,000 27,000 27,000 27,000 27,000
Normalization adjustment (27,000) (27,000) (27,000) (27,000) (27,000)
Adjusted balance 0 0 0 0 0
Net Adjustments:
Asset Adjustments (60,000) (70,000) (80,000) (90,000) (100,000)
Less: Liability Adjustments (27,000) (27,000) (27,000) (27,000) (27,000)
Less: Common & Preferred Stock Adjustments
Retained Earnings Adjustment (33,000)
0 0 0 0 0
(43,000) (53,000) (63,000) (73,000)
Normalized Historical Balance Sheets
ASSETS
2005 2006 2007 2008 2009
Net Fixed Assets 5,142,852 4,962,042 4,634,661 5,534,900 5,363,423
490,000 640,000 690,000 690,000 690,000
Total Assets 14,739,125 14,848,781 15,612,445 15,794,755 15,422,587
Total Long-Term Debt 5,990,265 5,734,045 5,317,415 4,896,531 4,257,082
Total Other Long-Term Liabilities 0 0 0 0 0
Total Liabilities
8,653,959 8,551,645 8,781,506 8,694,184 7,812,480
Preferred stock 800,000 800,000 850,000 850,000 850,000
Common stock 2,780,000 2,780,000 3,000,000 3,000,000 3,000,000
Retained earnings
2,505,166 2,717,136 2,980,939 3,250,571 3,760,107
6,085,166 6,297,136 6,830,939 7,100,571 7,610,107
14,739,125 14,848,781 15,612,445 15,794,755 15,422,587

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Summary Historical Statements of Cash Flows
2005 2006 2007 2008 2009
Net Cash Flow From Operations 981,516 862,646 1,430,146 1,600,486
Net Cash Flow From Investments (633,999) (1,046,000) (740,000) (406,999)
Net Cash Flow From Financing
Net Cash Flow
(438,081) 189,579 (686,075) (1,184,348)
Cash at Beginning of Year
(90,564) 6,225 4,071 9,139
Cash at End of Year
313,943 223,379 229,604 233,675
223,379 229,604 233,675 242,814
COMMENTS:

15
Normalized Earnings and Net Cash Flow Summary
Total income & expense adjustments before tax
2005 2006 2007 2008 2009
45,000 70,000 100,000 130,000 160,000
Less: Tax effect * 17,550 27,300 39,001 50,701 62,401
Less: Adjustment to Historic Tax 0 0 0 0 0
Plus: adjustments to net of tax items
Net adjustments
0 0 0 0 0
Plus: Historic net income
27,450 42,700 61,000 79,299 97,599
Normalized Net income
442,816 549,037 598,005 687,985 1,060,590
Plus: Normalized income taxes
470,266 591,737 659,005 767,284 1,158,189
Normalized EBT
300,661 378,324 421,332 490,560 740,483
Plus: Normalized interest expense
770,927 970,061 1,080,336 1,257,844 1,898,672
Normalized EBIT
678,434 674,560 656,923 648,429 603,982
Plus: Normalized depr. & amort.
1,449,361 1,644,621 1,737,259 1,906,273 2,502,654
Normalized EBITDA
973,569 1,120,139 1,266,711 1,289,091 1,110,806
2,422,930 2,764,760 3,003,970 3,195,364 3,613,460
Historic net change in cash (90,564) 6,225 4,071 9,139
Plus: Net adjustments + Adj. to Depr., Amort. & Div.
Normalized Net cash flow
42,700 61,000 79,299 97,599
(47,864) 67,225 83,370 106,738
Historic income from operations 1,513,211 1,543,489 1,661,613 2,224,734
Total operating adjustments 80,000 110,000 140,000 170,000
Normalized operating income 1,593,211 1,653,489 1,801,613 2,394,734
Less: Tax based on selected tax rate 541,692 562,186 612,548 814,210
Plus: Normalized depr. & amort. from oper. (net of tax) 739,292 836,029 850,800 733,132
Less: Normalized fixed asset purchases 929,999 930,000 2,180,000 929,999
Less: Normalized changes in net working capital ** 539,080 953,640 548,660 572,830
Normalized Free cash flow
Normalized Net income
321,732 43,692 (688,795) 810,827
591,737 659,005 767,284 1,158,189
Plus: Normalized depreciation & amortization 1,120,139 1,266,711 1,289,091 1,110,806
Less: Normalized fixed asset purchases 929,999 930,000 2,180,000 929,999
Less: Normalized changes in net working capital ** 539,080 953,640 548,660 572,830
Plus: Changes in short-term notes payable (13,550) 485,030 (97,680) (107,890)
Plus: Changes in current long-term notes payable 145,206 160,411 224,292 85,785
Plus: Changes in long-term notes payable (256,220) (416,630) (420,884) (639,449)
Less: Preferred Dividends
Free Cash Flow available to Equity
80,000 85,000 85,000 85,000
38,233 185,887 (1,051,557) 19,612

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Normalized Interim Financial Statements
Interim Financial Statements for 6 months dated June 2010 were available and included in this analysis. These
statements along with any adjustments are summarized below:
Interim Income Statement & Adjustments
Interim Normalization Normalized
Jun 2010 Adjustments
Net Sales Revenue
Jun 2010
18,924,689 0 18,924,689
Total Cost of Goods Sold 13,731,824 0 13,731,824
Total Selling Expenses 867,197 0 867,197
Total General & Administrative Expenses 2,446,093 0
2,446,093
1,879,575 0
1,879,575
(184,800) 0
Income Before Taxes
(184,800)
1,694,775 0
Total Income Taxes
1,694,775
275,592 0
Net Income
275,592
1,419,183 0 1,419,183
COMMENTS:

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Interim Balance Sheet & Adjustments Interim Normalization Normalized
Jun 2010 Adjustments
ASSETS
Jun 2010
Total Current Assets 9,122,730 0 9,122,730
Net Fixed Assets 4,554,828 0 4,554,828
Total Long-Term Investments 1,640,341 0 1,640,341
Net Intangible Assets 203,666 0 203,666
Total Other Noncurrent Assets 790,000 0
Total Assets
790,000
16,311,565 0 16,311,565
Total Current Liabilities 3,303,998 0 3,303,998
Total Long-Term Debt 3,855,277 0 3,855,277
Total Other Long-Term Liabilities 50,000 0
Total Liabilities
50,000
7,209,275 0
7,209,275
Preferred stock 850,000 0 850,000
Common stock 3,000,000 0 3,000,000
Retained earnings 5,252,290 0
5,252,290
9,102,290 0
9,102,290
16,311,565 0 16,311,565
COMMENTS:

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Analysis of Historic Financial Statements
Business Common-Size Financial Statements
This analysis includes a review of the Company's common-size income statement and balance sheet percentages
on an unadjusted and a normalized basis. In order to portray the relative size of financial statement items for
comparison over time, each line item in the common-size income statements is expressed as a percentage of total
revenue and each line item in the common-size balance sheets is expressed as a percentage of total assets. A
summary of the normalized common-size income statements and balance sheets is presented below.
Unadjusted Business Common-Size Statements
2005 2006 2007 2008 2009
Income Data:
Net sales 100.00% 100.00% 100.00% 100.00% 100.00%
Gross profit 20.30% 18.17% 20.61% 21.48% 24.32%
Operating expenses 14.97% 12.45% 15.11% 15.79% 17.27%
Operating profit 5.33% 5.71% 5.50% 5.69% 7.05%
All other expenses (net) 2.47% 2.31% 2.01% 1.83% 1.54%
Profit Before Tax 2.87% 3.40% 3.50% 3.86% 5.51%
Assets:
Cash & equivalents 5.53% 5.95% 10.01% 12.74% 14.60%
Trade receivables (net) 13.54% 13.59% 12.66% 13.98% 14.72%
Inventory 13.51% 15.89% 17.11% 17.41% 18.13%
All other current assets 0.91% 0.95% 0.93% 0.87% 0.92%
Total Current Assets 33.49% 36.38% 40.71% 45.00% 48.38%
Fixed assets (net) 34.75% 33.26% 29.53% 34.84% 34.55%
Intangibles (net) 1.66% 1.58% 1.45% 1.37% 1.34%
All other noncurrent assets 30.10% 28.78% 28.31% 18.79% 15.73%
Total Noncurrent Assets 66.51% 63.62% 59.29% 55.00% 51.62%
Total Assets 100.00% 100.00% 100.00% 100.00% 100.00%
Liabilities & Net Worth:
Notes payable short-term 1.27% 1.17% 4.20% 3.54% 2.92%
Current maturity of long-term Debt 3.58% 4.53% 5.33% 6.67% 7.38%
Trade payables 8.33% 8.32% 7.83% 8.37% 8.34%
Income taxes payable 2.19% 2.25% 2.13% 2.45% 1.73%
All other current liabilities 2.62% 2.62% 2.59% 2.88% 2.53%
Total Current Liabilities 18.00% 18.89% 22.07% 23.91% 22.90%
Long-term debt 40.48% 38.44% 33.89% 30.83% 27.43%
Deferred taxes 0.00% 0.00% 0.00% 0.00% 0.00%
All other noncurrent liabilities 0.18% 0.18% 0.17% 0.17% 0.17%
Net worth 41.34% 42.50% 43.87% 45.10% 49.50%
Total Liabilities & Net Worth 100.00% 100.00% 100.00% 100.00% 100.00%

15
Normalized Business Common-Size Statements
2005 2006 2007 2008 2009
Income Data:
Net sales 100.00% 100.00% 100.00% 100.00% 100.00%
Gross profit 20.30% 18.17% 20.61% 21.48% 24.32%
Operating expenses 14.75% 12.15% 14.71% 15.31% 16.73%
Operating profit 5.55% 6.01% 5.90% 6.17% 7.59%
All other expenses (net) 2.50% 2.35% 2.04% 1.86% 1.57%
Profit Before Tax 3.05% 3.66% 3.85% 4.30% 6.02%
Assets:
Cash & equivalents 5.55% 5.98% 10.06% 12.81% 14.70%
Trade receivables (net) 13.60% 13.65% 12.73% 14.06% 14.82%
Inventory 13.57% 15.96% 17.20% 17.51% 18.25%
All other current assets 0.91% 0.95% 0.93% 0.88% 0.92%
Total Current Assets 33.63% 36.55% 40.92% 45.25% 48.69%
Fixed assets (net) 34.89% 33.42% 29.69% 35.04% 34.78%
Intangibles (net) 1.67% 1.59% 1.45% 1.38% 1.35%
All other noncurrent assets 29.81% 28.44% 27.94% 18.33% 15.18%
Total Noncurrent Assets 66.37% 63.45% 59.08% 54.75% 51.31%
Total Assets 100.00% 100.00% 100.00% 100.00% 100.00%
Liabilities & Net Worth:
Notes payable short-term 1.27% 1.17% 4.22% 3.56% 2.94%
Current maturity of long-term Debt 3.60% 4.55% 5.35% 6.71% 7.43%
Trade payables 8.37% 8.36% 7.87% 8.42% 8.39%
Income taxes payable 2.20% 2.26% 2.14% 2.47% 1.74%
All other current liabilities 2.63% 2.64% 2.60% 2.89% 2.55%
Total Current Liabilities 18.07% 18.98% 22.19% 24.04% 23.05%
Long-term debt 40.64% 38.62% 34.06% 31.00% 27.60%
Deferred taxes 0.00% 0.00% 0.00% 0.00% 0.00%
All other noncurrent liabilities 0.00% 0.00% 0.00% 0.00% 0.00%
Net worth 41.29% 42.41% 43.75% 44.96% 49.34%
Total Liabilities & Net Worth 100.00% 100.00% 100.00% 100.00% 100.00%
COMMENTS:

16
Business vs. Industry Common-Size Financial Statements
Sample Industries, Inc.'s unadjusted and normalized common-size financial statements from the most recent
historic year have been compared to composite, industry common-size financial statements from the Sporting and
Athletic Goods Manufacturing industry. To compare the business and industry statements and measure the
differences quantitatively, a variance from industry and 5 year average variance from industry have been
calculated for each line item.
The source for the industry data used in both the common-size statement and financial ratio comparisons is RMA
Annual Statement Studies using NAICS Code number 339920. The industry data is categorized by Sales size of
$10MM to $25MM. The date of this industry information is 2009 with 39 different companies contained in the
sample.
Although industry statistics are a useful source of general analytical data, there can be significant variation in the
reporting practices and operational methods of companies within a given industry. Therefore, industry statistics
as used throughout this report should not be regarded as absolute norms or standards.

17
RMA - Unadjusted Business vs. Industry
Common-Size Statements, Current Year
Business
2009
Industry
2009 Variance
5 Yr
Average
Variance
Income Data:
Net sales 100.0000% 100.0%
Gross profit 24.3208% 34.5% -29.50% -39.20%
Operating expenses 17.2674% 28.8% -40.04% -47.51%
Operating profit 7.0534% 5.7% 23.74% 2.77%
All other expenses (net) 1.5410% 1.8% -14.39% 12.84%
Profit Before Tax 5.5123% 3.9%
Assets:
Cash & equivalents 14.6034% 3.1% 371.08% 215.03%
Trade receivables (net) 14.7230% 26.1% -43.59% -47.51%
Inventory 18.1349% 42.6% -57.43% -61.48%
All other current 0.9173% 3.4% -73.02% -73.11%
Total Current Assets 48.3786% 75.2%
Fixed assets (net) 34.5524% 13.9% 148.58% 140.20%
Intangibles (net) 1.3422% 7.5% -82.10% -80.26%
All other noncurrent 15.7268% 3.4% 362.55% 615.88%
Total Noncurrent Assets 51.6214% 24.8%
Total Assets 100.0000% 100.0%
Liabilities:
Notes payable short-term 2.9225% 17.9% -83.67% -85.37%
Current maturity of long-term Debt 7.3819% 2.0% 269.09% 174.91%
Trade payables 8.3401% 14.4% -42.08% -42.79%
Income taxes payable 1.7259% 0.2% 762.94% 975.37%
All other current liabilities 2.5344% 12.6% -79.89% -78.97%
Total Current Liabilities 22.9047% 47.1%
Long-term debt 27.4251% 8.9% 208.15% 284.38%
Deferred taxes 0.0000% 0.3% -100.00% -100.00%
All other noncurrent liabilities 0.1739% 3.9% -95.54% -95.49%
Net worth 49.4963% 39.8% 24.36% 11.71%
Total Liabilities & Net Worth 100.0000% 100.0%

18
RMA - Normalized Business vs. Industry
Common-Size Statements, Current Year
Business
2009
Industry
2009 Variance
5 Yr
Average
Variance
Income Data:
Net sales 100.0000% 100.0%
Gross profit 24.3208% 34.5% -29.50% -39.20%
Operating expenses 16.7284% 28.8% -41.92% -48.85%
Operating profit 7.5923% 5.7% 33.20% 9.54%
All other expenses (net) 1.5727% 1.8% -12.63% 14.83%
Profit Before Tax 6.0196% 3.9%
Assets:
Cash & equivalents 14.6981% 3.1% 374.13% 216.77%
Trade receivables (net) 14.8185% 26.1% -43.22% -47.23%
Inventory 18.2525% 42.6% -57.15% -61.27%
All other current 0.9233% 3.4% -72.85% -72.97%
Total Current Assets 48.6922% 75.2%
Fixed assets (net) 34.7764% 13.9% 150.19% 141.46%
Intangibles (net) 1.3509% 7.5% -81.99% -80.16%
All other noncurrent 15.1804% 3.4% 346.48% 604.14%
Total Noncurrent Assets 51.3078% 24.8%
Total Assets 100.0000% 100.0%
Liabilities:
Notes payable short-term 2.9414% 17.9% -83.57% -85.29%
Current maturity of long-term Debt 7.4297% 2.0% 271.49% 176.40%
Trade payables 8.3942% 14.4% -41.71% -42.50%
Income taxes payable 1.7371% 0.2% 768.53% 980.93%
All other current liabilities 2.5508% 12.6% -79.76% -78.87%
Total Current Liabilities 23.0532% 47.1%
Long-term debt 27.6029% 8.9% 210.15% 286.34%
Deferred taxes 0.0000% 0.3% -100.00% -100.00%
All other noncurrent liabilities 0.0000% 3.9% -100.00% -100.00%
Net worth 49.3439% 39.8% 23.98% 11.43%
Total Liabilities & Net Worth 100.0000% 100.0%
COMMENTS:

19
Business Financial Ratio Analysis
As part of the valuation, various financial ratios have been calculated from each year's unadjusted and normalized
financial statements as presented in this report. These ratios measure Sample Industries, Inc.'s liquidity positions,
coverage capacity, leverage/capitalization, operating efficiency and equity performance.
Unadjusted Business Financial Ratios:
2005 2006 2007 2008 2009
Liquidity Ratios:
Current 1.86 1.93 1.84 1.88 2.11
Quick 1.06 1.03 1.03 1.12 1.28
Accounts receivable turnover 12.62 13.07 14.11 13.16 13.80
Days' receivable 28.52 27.55 25.51 27.36 26.08
Inventory turnover 10.08 9.15 8.29 8.30 8.48
Days' inventory 35.70 39.35 43.42 43.38 42.45
Accounts payable turnover 16.35 17.47 18.12 17.26 18.44
Days' payable 22.01 20.60 19.86 20.86 19.52
Working capital turnover 11.04 10.15 9.59 8.72 7.98
Inventory as a % of Total current assets 40.35% 43.67% 42.03% 38.68% 37.49%
Total current assets as a % of Total assets 33.49% 36.38% 40.71% 45.00% 48.38%
Coverage Ratios:
Times interest earned 2.07 2.33 2.49 2.74 3.88
Current portion of long-term debt coverage 2.67 2.47 2.23 1.87 1.89
Principal & Interest coverage 2.07 1.79 5.81 1.57 1.39
Preferred dividend coverage 5.54 6.86 7.04 8.09 12.48
Leverage/Capitalization Ratios:
Fixed assets to Tangible net worth 0.88 0.81 0.70 0.80 0.72
Total debt to Tangible net worth 1.48 1.41 1.32 1.26 1.05
Short-term debt to Total debt 30.68% 32.84% 39.33% 43.55% 45.35%
Short-term debt to Net worth 43.54% 44.44% 50.32% 53.01% 46.28%
Total debt to Total assets 58.66% 57.50% 56.13% 54.90% 50.50%
Operating Ratios:
Percent return on Tangible net worth 12.36% 14.75% 14.73% 16.24% 23.26%
Percent return on Total assets 4.91% 6.03% 6.25% 7.10% 11.20%
Net sales to Net fixed assets 4.92 5.34 6.05 5.28 5.88
Net sales to Total assets 1.71 1.78 1.79 1.84 2.03
Percent Depr., Amort. to Net sales 3.85% 4.23% 4.52% 4.41% 3.52%
Percent Officer salaries to Net sales 1.38% 1.51% 1.60% 1.71% 1.74%
Fixed asset turnover 5.00 5.45 6.14 5.36 6.03
Total sales to Net worth 4.21 4.26 4.13 4.14 4.21
Percent Operating cost 47.89% 47.59% 47.66% 47.29% 46.46%
Percent Net profit 1.75% 2.07% 2.13% 2.35% 3.36%
Revenue growth percentage 5.01% 5.26% 4.40% 8.89%
Equity Ratios:
Net book value per share of Preferred stock 5.87 6.10 6.66 6.95 7.47
Net book value per share of Common stock 0.63 0.66 0.73 0.76 0.83
Percent earnings payout 62.69% 52.68% 46.63% 53.63% 46.75%
Percent earnings retention 37.31% 47.32% 53.37% 46.37% 53.25%
Dividends per Common share 0.03 0.03 0.03 0.04 0.06

20
Normalized Business Financial Ratios:
2005 2006 2007 2008 2009
Liquidity Ratios:
Current 1.86 1.93 1.84 1.88 2.11
Quick 1.06 1.03 1.03 1.12 1.28
Accounts receivable turnover 12.62 13.07 14.11 13.16 13.80
Days' receivable 28.52 27.55 25.51 27.36 26.08
Inventory turnover 10.08 9.15 8.29 8.30 8.48
Days' inventory 35.70 39.35 43.42 43.38 42.45
Accounts payable turnover 16.35 17.47 18.12 17.26 18.44
Days' payable 22.01 20.60 19.86 20.86 19.52
Working capital turnover 11.04 10.15 9.59 8.72 7.98
Inventory as a % of Total current assets 40.35% 43.67% 42.03% 38.68% 37.49%
Total current assets as a % of Total assets 33.63% 36.55% 40.92% 45.25% 48.69%
Coverage Ratios:
Times interest earned 2.14 2.44 2.64 2.94 4.14
Current portion of long-term debt coverage 2.72 2.53 2.30 1.94 1.98
Principal & Interest coverage 2.14 1.87 6.16 1.69 1.48
Preferred dividend coverage 5.88 7.40 7.75 9.03 13.63
Fixed assets to Tangible net worth 0.88 0.82 0.70 0.80 0.72
Total debt to Tangible net worth 1.48 1.41 1.33 1.26 1.06
Short-term debt to Total debt 30.78% 32.95% 39.45% 43.68% 45.51%
Short-term debt to Net worth 43.77% 44.74% 50.71% 53.48% 46.72%
Total debt to Total assets 58.71% 57.59% 56.25% 55.04% 50.66%
Operating Ratios:
Percent return on Tangible net worth 13.20% 16.01% 16.36% 18.27% 25.65%
Percent return on Total assets 5.23% 6.53% 6.92% 7.96% 12.31%
Net sales to Net fixed assets 4.92 5.34 6.05 5.28 5.88
Net sales to Total assets 1.72 1.78 1.80 1.85 2.05
Percent Depr., Amort. to Net sales 3.85% 4.23% 4.52% 4.41% 3.52%
Percent Officer salaries to Net sales 1.19% 1.23% 1.25% 1.28% 1.27%
Fixed asset turnover 5.00 5.45 6.14 5.36 6.03
Total sales to Net worth 4.23 4.29 4.16 4.18 4.25
Percent Operating cost 47.83% 47.51% 47.55% 47.16% 46.30%
Percent Net profit 1.86% 2.23% 2.35% 2.63% 3.67%
Revenue growth percentage 5.01% 5.26% 4.40% 8.89%
Equity Ratios:
Total net assets per share of Preferred stock 5.84 6.06 6.60 6.88 7.40
Net book value per share of Common stock 0.63 0.66 0.72 0.75 0.82
Percent earnings payout 58.28% 48.28% 41.67% 47.39% 42.50%
Percent earnings retention 41.72% 51.72% 58.33% 52.61% 57.50%
Dividends per Common share 0.03 0.03 0.03 0.04 0.06

21
Financial Ratios Notes and Discussion of Trends:
1. Liquidity ratios measure the short-term ability of a company to meet its maturing obligations.
2. Coverage ratios measure the degree of protection for long-term creditors and investors and the margin by
which certain obligations of a company can be met.
3. Leverage/capitalization ratios measure the amount of a company's operations that are financed from debt
versus financed from equity.
4. Operating ratios measure the efficiency and productivity of a company using the resources that are available
and the returns on sales and investments.
5. Equity ratios measure the performance of assets and earnings in relation to common and preferred equity.
COMMENTS:

22
Business vs. Industry Financial Ratio Comparison
Sample Industries, Inc.'s financial ratios calculated from the most recent, unadjusted and normalized financial
statements have been compared to composite, industry financial ratios using the same source of industry data as
presented in the Business vs. Industry Common-Size Financial Statement Comparison. To compare the business
and industry ratios and measure the differences quantitatively, a variance from industry and 5 year average
variance from industry have been calculated for each ratio.
Again, it should be noted that although industry statistics are a useful source of general analytical data, there can be
significant variations in the reporting practices and operational methods of companies within a given industry.
Therefore, industry statistics as used throughout this report should not be regarded as absolute norms or standards.
RMA - Unadjusted Business vs. Industry Ratios,
Current Year
Liquidity Ratios:
Business Industry 5 Yr Average
2009 2009 Variance Variance
Current ratio 2.1122 1.8 17.34% 6.95%
Quick ratio 1.2804 0.7 82.91% 57.69%
Accounts receivable turnover 13.8013 7.6 81.60% 75.69%
Inventory turnover 8.4797 3.6 135.55% 146.11%
Accounts payable turnover 18.4384 13.9 32.65% 26.11%
Working capital turnover 7.9767 8.2 -2.72% 15.80%
Coverage Ratios:
Times interest earned 3.8787 3.0 29.29% -9.90%
Current portion of long-term debt coverage ratio 1.8950 1.8 5.28% 23.71%
Fixed assets to Tangible net worth 0.7175 0.4 79.38% 94.97%
Total debt to Tangible net worth 1.0488 1.7 -38.31% -23.40%
Operating Ratios:
Percent return on Tangible net worth 23.2606% 12.4% 87.59% 31.18%
Percent return on Total assets 11.2009% 4.2% 166.69% 68.98%
Net sales to Net fixed assets 5.8808 19.3 -69.53% -71.53%
Net sales to Total assets 2.0320 1.9 6.95% -3.75%
Percent Depr. Amort. to Net sales 3.5217% 1.3% 170.90% 215.78%
Percent Officer salaries to Net sales 1.7437% 0.0% 0.00% 0.00%

23
RMA - Normalized Business vs. Industry Ratios,
Current Year
Liquidity Ratios:
Business Industry 5 Yr Average
2009 2009 Variance Variance
Current ratio 2.1122 1.8 17.34% 6.95%
Quick ratio 1.2804 0.7 82.91% 57.69%
Accounts receivable turnover 13.8013 7.6 81.60% 75.69%
Inventory turnover 8.4797 3.6 135.55% 146.11%
Accounts payable turnover 18.4384 13.9 32.65% 26.11%
Working capital turnover 7.9767 8.2 -2.72% 15.80%
Coverage Ratios:
Times interest earned 4.1436 3.0 38.12% -4.65%
Current portion of long-term debt coverage ratio 1.9802 1.8 10.01% 27.58%
Fixed assets to Tangible net worth 0.7246 0.4 81.15% 96.50%
Total debt to Tangible net worth 1.0555 1.7 -37.91% -23.04%
Operating Ratios:
Percent return on Tangible net worth 25.6516% 12.4% 106.87% 44.34%
Percent return on Total assets 12.3110% 4.2% 193.12% 85.51%
Net sales to Net fixed assets 5.8808 19.3 -69.53% -71.53%
Net sales to Total assets 2.0451 1.9 7.64% -3.24%
Percent Depr., Amort. to Net sales 3.5217% 1.3% 170.90% 215.78%
Percent Officer salaries to Net sales 1.2682% 0.0% 0.00% 0.00%
COMMENTS:

24
Valuation of Sample Industries, Inc.
The objective of this valuation is to estimate the Fair Market Value of 100.00% of the common stock of
Sample Industries, Inc. as of June 30, 2010 for the purpose as set forth in this Valuation Report.
The standard of value used in our valuation of Sample Industries, Inc. is Fair Market Value. Fair Market
Value is the price, in terms of cash or equivalent, that a buyer could reasonably be expected to pay, and a
seller could reasonably be expected to accept, if the business were exposed for sale on the open market for
a reasonable period of time, with both buyer and seller being in possession of the pertinent facts and
neither being under any compulsion to act.
There is a large number of factors to consider when estimating the common stock value of any business
entity. These factors vary for each valuation depending on the unique circumstances of the business
enterprise and general economic conditions that exist at the effective date of the valuation. However,
fundamental guidelines of the factors to consider in any valuation have been established. The most
commonly used valuation guidelines are derived from the Internal Revenue Service's Revenue Ruling 59-
60. Revenue Ruling 59-60 states that in the valuation of the stock of closely held businesses, the
following factors, although not all inclusive, are fundamental and require careful consideration in each
case:
The nature of the business and the history of the enterprise from its inception.
The economic outlook in general and the condition and outlook of the specific industry in
particular.
The book value of the stock and the financial condition of the business.
The earning capacity of the company.
The dividend-paying capacity.
Whether or not the enterprise has goodwill or other intangible value.
Sales of the stock and the size of the block of stock to be valued.
The market price of stocks of corporations engaged in the same or a similar line of business
having their stocks actively traded in a free and open market, either on an exchange or over-the-
counter.
Based on circumstances unique to Sample Industries, Inc. as of June 30, 2010, additional factors have
been considered.
COMMENTS:
In addition to providing general valuation guidelines, Revenue Ruling 59-60 outlines other considerations
and techniques for valuing the stock of closely held businesses. The techniques are commonly divided into
general approaches, i.e., the Asset, Income, Market, and Other approaches. Specific methods are
then used to estimate the value of the total business entity under each approach. Our conclusion of Fair
Market Value is determined based on the results of these methods and the specific circumstances
surrounding the interest being valued.

25
Overview of Valuation Approaches and Methods
As previously specified, various approaches have been used to value Sample Industries, Inc.. These
approaches, described below, are the: 1) Asset Approach, 2) Income Approach, 3) Market Approach, and
4) Other.
The Asset Approach is generally considered to yield the minimum benchmark of value for an operating
enterprise. The most common methods within this approach are Net Asset Value and Liquidation Value.
Net Asset Value represents net equity of the business after assets and liabilities have been adjusted to their
fair market values. The Liquidation Value of the business represents the present value of the estimated
net proceeds from liquidating the Company's assets and paying off its liabilities.
The Income Approach serves to estimate value by considering the income (benefits) generated by the asset
over a period of time. This approach is based on the fundamental valuation principle that the value of a
business is equal to the present worth of the future benefits of ownership. The term income does not
necessarily refer to income in the accounting sense but to future benefits accruing to the owner. The most
common methods under this approach are Capitalization of Earnings and Discounted Future Earnings.
Under the Capitalization of Earnings method, normalized historic earnings are capitalized at a rate that
reflects the risk inherent in the expected future growth in those earnings. The Discounted Future Earnings
method discounts projected future earnings back to present value at a rate that reflects the risk inherent in
the projected earnings.
The Market Approach compares the subject company to the prices of similar companies operating in the
same industry that are either publicly traded or, if privately-owned, have been sold recently. A common
problem for privately owned businesses is a lack of publicly available comparable data.
The Other methods consist of valuation methods that cannot be classified into one of the previously
discussed approaches. The methods utilized in the Other Approach are Capitalization of Excess Earnings
and Multiple of Discretionary Earnings. Commonly referred to as the “formula method,” the
Capitalization of Excess Earnings method determines the value of tangible and intangible assets separately
and combines these component values for an indication of total entity value. Under the Multiple of
Discretionary Earnings method, the entity is valued based on a multiple of “discretionary earnings,” i.e.,
earnings available to the owner who is also a manager. Both of these methods are normally used to value
small businesses and professional practices.
The methods utilized under each approach are presented and discussed in the following sections.
COMMENTS:

26
Preferred Stock Valuation
The value of Sample Industries, Inc.'s preferred stock based on market yields for comparable preferred
stocks is estimated to be $1,200,000. In the preferred stock valuation, Sample Industries, Inc.'s preferred
dividends are divided by the market yield on comparable preferred stocks to determine Total Entity Value
as shown below.
Book
2009 Market
Per Share Analysis:
Preferred stock dividends 85,000 85,000
Preferred stock shares 1,000,000 1,000,000
Dividends per share 0.09 0.09
Valuation Analysis:
Preferred stock dividends 85,000 85,000
Yield on preferred stock 10.00% 7.00%
Preferred stock value 850,000 1,214,286
Selected fair market value of preferred stock 1,200,000

Net Asset Value
The Net Asset Value of Sample Industries, Inc. is estimated to be $13,304,898. The Net Asset Value
method assumes that the value of a business will be realized by the hypothetical sale of its net assets as
part of a going concern. In our analysis, assets and liabilities from the most recent historic, unadjusted
balance sheet have been adjusted to their individual tax bases. Assets and liabilities were further adjusted
to their individual appraised values. A tax adjustment in the amount of $2,686,969 was then estimated
based on the difference between the appraised value and the tax basis of assets and liabilities using an
effective tax rate of 39.00%. The net result is the total entity value.
Liquidation Value
The Liquidation Value of Sample Industries, Inc. is estimated to be $9,413,963. Liquidation Value is
defined as the present value of the net cash remaining if all assets are sold in a quick and orderly,
piecemeal sale and all liabilities are paid at face value with the proceeds. In our analysis, the appraised
value of individual assets and liabilities have been adjusted to reflect the value that could be obtained in a
quick and orderly liquidation. A tax adjustment in the amount of $199,270 was then estimated based on
the difference between the appraised value and the tax basis of assets and liabilities using an effective tax
rate of 39.00%. In addition, estimated liquidation costs in the amount of $273,802 have been deducted.
The net result is the total entity value. See the Liquidation Value schedule for detailed value calculations
and the Estimated Liquidation Cost schedule for the calculation of estimated liquidation costs.

Discount & Capitalization Rate Estimates
For purposes of this analysis, various risk rates applicable to historic and projected earnings have been
estimated. Generally stated, these risk-adjusted rates reflect the expected rate of return attainable on
alternative investment opportunities with comparable risk.
First, a Discount Rate applicable to the Discounted Future Earnings valuation method has been calculated.
This Discount Rate is then converted into a Capitalization Rate for use in the Capitalization of Earnings
valuation method. These calculations are summarized in the table below.
Build-Up Model, Risk Factors:
Risk-Free Rate 5.00%
Market Equity Risk Premium 20.00%
Size Premium
Discount Rate
7.00%
32.00%
Less: Long-term growth in EBT 19.62%
Capitalization Rate 12.38%
Divided by: 1 + Long-term growth in EBT 119.62%
Historic Earnings Capitalization Rate 10.35%
Historic Excess Earnings Capitalization Rate 15.35%
In developing the Discount and Capitalization Rates to apply to the benefit stream of Sample Industries,
Inc., the Build-Up Model was used. The Build-Up Model is based on a combination of risk factors
including a Risk-Free Rate, a Market Equity Risk Premium, a Size Premium and other identifiable risk
factors specific to the subject company. When added together, these risk factors provide an indication of
the Discount Rate for the subject company. This Discount Rate represents the total return, in terms of cash
flows and appreciation in value that an investor would require in order to make an equity investment in the
subject company.
COMMENT: Provide an explanation of each of the risk factors identified in the Build-Up Method and
document the source of the data. The Long-Term U.S. Treasury Bond yield to maturity prevailing on the
date of (or within the week of) the effective date of the valuation is commonly used to represent the Risk-
Free Rate. The Market Equity Risk Premium is the return in excess of the Risk-Free Rate that an average
equity investor would require. The Size Premium is generally used if the subject company is significantly
smaller than the companies used in the formulation of the Market Equity Risk Premium. Document all
other incremental risk factors identified in the development of the discount rate. Please note that the
Build-Up Model is normally used for small companies or if no valid comparable company data is
available. If no valid comparable company data is available, that fact should be disclosed here.

Capitalization of Earnings
The Capitalization of Earnings method arrives at an estimate of value by dividing current normalized
operations, which are weighted and averaged to approximate future earnings expectations, by a
capitalization rate. As shown below, The Total Entity Value of Sample Industries, Inc. based on the
Capitalization of Earnings method is estimated to be $16,515,764. In the Capitalization of Earnings
method, weighted average, normalized EBT is divided by the capitalization rate, 10.35%, to determine
Total Entity Value. See the Income Statement Adjustments section for a listing of any adjustments made
to historic earnings and the Discount & Capitalization Rates section for the capitalization rate calculations.
Capitalization of Earnings Normalized Weighting Weighted
EBT Factor
Fiscal Year End 2005
Earnings
770,927 1.0 770,927
Fiscal Year End 2006 970,061 2.0 1,940,122
Fiscal Year End 2007 1,080,336 3.0 3,241,008
Fiscal Year End 2008 1,257,844 4.0 5,031,376
Fiscal Year End 2009 1,898,672 5.0 9,493,360
Annualized 2010 2,551,924 6.0
Sum of Weighted earnings
15,311,544
35,788,337
Divided by: Sum of weighting factors
Weighted average earnings
21.0
1,704,207
Divided by: Historic capitalization rate
Operating value
10.35%
16,465,764
Plus: Net nonoperating assets
Total entity value
50,000
16,515,764
Net nonoperating assets in the amount of $50,000 have been added in the determination of Total Entity
Value under this method because net nonoperating assets do not contribute to the earnings capacity of the
business. See the Net Asset Value schedule for the presentation of net nonoperating assets.

Discounted Future Earnings
The underlying premise for this valuation method is the basic valuation principle that an investment in a
business is worth the present value of all the future benefits it will produce for its owner(s), with each
expected future benefit discounted back to present value at a discount rate that reflects the risk (degree of
uncertainty) that those benefits may not be realized. Therefore, the application of this method requires a
determination of the present value of an expected future income stream that the business generates for that
owner.
To determine the expected future income stream, we assisted management in preparing management's
projections of the financial statements for the first 5 years after the valuation date. An overall
summary of the projections is presented below, followed by the individual statements in condensed
format. (See the Projection Assumptions and Projection schedules for complete details.)
Projection Summary
Net sales revenue
2010 2011 2012 2013 2014
33,029,158 34,605,870 36,277,151 38,049,272 39,928,935
Gross profit 8,786,958 9,013,109 9,924,264 10,471,079 10,954,328
EBITDA 4,816,427 5,091,663 5,234,499 5,524,740 5,853,442
EBIT 3,134,636 3,389,456 4,119,426 4,374,930 4,585,538
EBT 2,551,925 2,737,234 3,592,857 4,008,691 4,346,829
Net income 1,600,057 1,716,245 2,252,721 2,513,449 2,725,462
Annualized Net cash flow 1,854,383 (655,071) 15,088 425,585 392,914
Total current assets 9,864,523 9,069,023 8,727,707 8,601,179 9,529,292
Net fixed assets 3,690,518 5,747,645 6,067,620 6,090,000 5,931,429
Net other assets 2,492,913 2,435,195 2,376,085 2,315,253 2,285,557
Total assets 16,047,955 17,251,863 17,171,412 17,006,432 17,746,277
Total current liabilities 4,364,282 4,790,572 5,008,326 4,293,206 4,286,752
Total long-term debt 3,285,537 3,290,033 1,950,466 1,328,883 797,450
Total liabilities 7,649,819 8,080,605 6,958,792 5,622,089 5,084,202
Total Equity 8,398,136 9,171,258 10,212,619 11,384,344 12,662,075
Net working capital 5,500,241 4,278,452 3,719,381 4,307,974 5,242,539
Federal Income tax before NOL adjustment 824,272 884,126 1,160,493 1,294,807 1,404,026
Plus: NOL tax adjustment 0 0 0 0 0
Federal Income Tax Expense 824,272 884,126 1,160,493 1,294,807 1,404,026
Income from operations 2,886,448 3,262,294 4,057,707 4,319,194 4,481,356
Less: Tax based on selected tax rate 981,392 1,109,180 1,379,620 1,468,526 1,523,661
Plus: Depr. & Amort. from operations 1,681,791 1,702,207 1,115,073 1,149,810 1,267,905
Less: Annualized Fixed asset purchases (447) 3,750,000 1,500,000 1,200,000 1,100,000
Less: Annualized Changes in Net Working capital ** (461,889) (243,672) (443,677) (682,719) 387,927
Free Cash Flow 4,049,183 348,993 2,736,837 3,483,196 2,737,673

Summary Income Statement Projections
2010 2011 2012 2013 2014
Gross Profit
24,242,201 25,592,762 26,352,887 27,578,193 28,974,607
8,786,958 9,013,109 9,924,264 10,471,079 10,954,328
1,486,312 1,557,264 1,632,472 1,712,217 1,796,802
4,414,198 4,193,551 4,234,085 4,439,668 4,676,170
2,886,448 3,262,294 4,057,707 4,319,194 4,481,356
Income Before Taxes
(334,523) (525,060) (464,850) (310,503) (134,527)
Total Income Taxes
2,551,925 2,737,234 3,592,857 4,008,691 4,346,829
Net Income
951,868 1,020,988 1,340,136 1,495,242 1,621,367
1,600,057 1,716,245 2,252,721 2,513,449 2,725,462
Summary Balance Sheet Projections
2010 2011 2012 2013 2014
ASSETS
Net Fixed Assets 3,690,518 5,747,645 6,067,620 6,090,000 5,931,429
LIABILITIES & STOCKHOLDERS'
665,000 641,250 618,688 597,253 576,890
Total Assets 16,047,955 17,251,863 17,171,412 17,006,432 17,746,277
EQUITY
Total Long-Term Debt 3,285,537 3,290,033 1,950,466 1,328,883 797,450
Total Other Long-Term Liabilities 0 0 0 0 0
Total Liabilities
7,649,819 8,080,605 6,958,792 5,622,089 5,084,202
Preferred stock 850,000 850,000 850,000 850,000 850,000
Common stock 3,000,000 3,000,000 3,000,000 3,000,000 3,000,000
Retained earnings
4,548,136 5,321,258 6,362,619 7,534,344 8,812,075
8,398,136 9,171,258 10,212,619 11,384,344 12,662,075
16,047,955 17,251,863 17,171,411 17,006,432 17,746,277

Summary Retained Earnings Projections
2010 2011 2012 2013 2014
Retained Earnings Beginning of Period 5,252,290 4,548,136 5,321,258 6,362,619 7,534,344
Additions:
Normalized net income for the year 180,874 1,716,245 2,252,721 2,513,449 2,725,462
Deductions:
Normalized preferred dividends 85,000 85,000 85,000 85,000 85,000
Normalized Common dividends
Retained Earnings End of Period 4,548,136 5,321,258 6,362,619 7,534,344 8,812,075
Summary Cash Flow Projections
800,029 858,123 1,126,361 1,256,725 1,362,731
Net Cash Flow From Financing
2010 2011 2012 2013 2014
Net Cash Flow From Operations 2,606,472 3,688,210 3,871,899 4,368,404 3,556,738
Net Cash Flow From Investments 50,000 (3,750,000) (1,461,000) (1,161,000) (1,061,000)
Net Cash Flow
(1,451,162) (593,281) (2,395,811) (2,781,819) (2,102,824)
Cash at Beginning of Period
1,205,310 (655,071) 15,088 425,585 392,914
Cash at End of Period
891,887 2,097,197 1,442,126 1,457,214 1,882,799
2,097,197 1,442,126 1,457,214 1,882,799 2,275,714
Summary Sources & Uses of Funds Projections
2010 2011 2012 2013 2014
Total Internally Generated Cash 736,048 (1,072,368) 1,151,193 1,777,438 946,864
Total Cash from External Financing
Net Cash Flow 1,205,310 (655,071) 15,088 425,585 392,914
Overview of Projection Assumptions
In preparing the preceding financial statement projections, management made various assumptions about
expected future revenues, expenses, assets, liabilities and equity. These assumptions were made after
gathering and analyzing data that affects the future economic outlook of the Company. This data was
derived from sources such as the normalized financial statements, publicly available information and
other economic materials.
This section of the report provides a broad overview of the Projection Assumptions and has been prepared
to emphasize items considered significant to the overall understanding of the projections.
Revenue & Expense Assumptions
Net Sales Revenues over the past 5 historic years have grown at a compound average annual rate of
469,262 417,297 (1,136,105) (1,351,853) (553,950)
5.66%. Future Net Sales Revenues are projected to grow at an estimated, compound average annual rate

of 4.83%, starting from a base amount of $31,541,420 and growing to $33,029,158 in the first projected
year and $39,928,935 in projected year 5.
Total Cost of Goods Sold over the past 5 historic years has averaged 79.02% of Net Sales Revenues for
each respective year and was 75.68% of Net Sales Revenues in the most recent historic fiscal year, 2009.
Total Cost of Goods Sold has been projected to be $24,242,201, or 73.40% of Net Sales Revenues in the
first projected year and $28,974,607, or 72.57% of Net Sales Revenues in projected year 5. On average,
Total Cost of Goods Sold has been projected to be 73.01% of each year's respective Net Sales Revenues.
Total Selling Expenses over the past 5 historic years have averaged 3.38% of Net Sales Revenues for
each respective year and were 4.18% of Net Sales Revenues in the most recent historic fiscal year, 2009.
Total Selling Expenses have been projected to be $1,486,312, or 4.50% of Net Sales Revenues in the first
projected year and $1,796,802, or 4.50% of Net Sales Revenues in projected year 5. On average, Total
Selling Expenses have been projected to be 4.50% of each year's respective Net Sales Revenues.
Total General & Administrative Expenses over the past 5 historic years have grown at a compound
average annual rate of 7.34%. Total General & Administrative Expenses are projected to grow at an
estimated, compound average annual rate of 1.78%, starting from a base amount of $4,281,111 and
growing to $4,414,198 in the first projected year and $4,676,170 in projected year 5.
Cash Equivalents have been projected using the Manual Input method. Annual interest income is
projected to be earned at the rate of 5.0% of the projected account balance in each projected year.
Fixed Asset Depreciation Assumptions
Depreciation Expense and Accumulated Depreciation on fixed assets have been estimated over the
term of the projected financial statements.
Projected depreciation on existing fixed assets and any fixed asset purchases is based on the terms
presented in the following table.
Book Original Salvage Depreciation
Fixed Asset Accounts Value Life (years) (% of Cost ) Method
Plant 1,373,810 15 0.0% Straight Line
Equipment 1,069,124 7 0.0% Straight Line
Vehicles 638,464 5 0.0% Straight Line
Furniture and fixtures 473,430 7 0.0% Straight Line
Land 1,000,000 0 0.0% Straight Line
Disposals of Existing Fixed Assets
Fixed Asset Disposals and any related Gain / (Loss) on Sale of Fixed Assets have been estimated for
existing fixed assets over the term of the projected financial statements. The projected Fixed Asset
Disposal assumptions are presented in the following table.
Aggregate Aggregate Start Spread Average Age
Equipment 20.0% 15.0% 3 3 2
Fixed Asset Accounts Disposals Proceeds Year Over of Disposals

Fixed Asset Purchases
After estimating projected depreciation on existing fixed assets and estimating disposals of existing fixed
assets, it has been assumed that the Company would be required to purchase new fixed assets in order to
provide the capacity to support projected sales revenues. Therefore, in an attempt to maintain a minimum
Fixed Asset Turnover Ratio of approximately 0.00 in each projected year, the following fixed asset
purchases are assumed to be made.
Please note that all Fixed Asset Purchases are assumed to be depreciated based on the terms specified in
the Fixed Asset Depreciation Assumptions table.
2010 2011 2012 2013 2014
Plant 0 0 250,000 250,000 250,000
Equipment 0 0 500,000 350,000 350,000
Vehicles 0 0 500,000 400,000 300,000
Furniture and fixtures 0 0 250,000 200,000 200,000
Land
Total Fixed Asset Purchases 0
0 0 0 0 0
3,750,000 1,500,000 1,200,000 1,100,000
Existing Notes Receivable Assumptions
Note receivable in the amount of $114,558 with an interest rate of 10.0% has 54 monthly installment
payments remaining. The installments consist of equal payments where the principal and interest portions
of the payment vary with each installment.
Amortization of Intangible Assets
Goodwill is assumed to be amortized to Amortization Expense over a period of 30 projected years.
Intangibles are assumed to be amortized to Amortization Expense over a period of 15 projected years.
Existing Notes Payable Assumptions
Short-term note payable - bank in the amount of $114,558 with an interest rate of 10.0% has 54 monthly
installment payments remaining. The installments consist of equal payments where the principal and
interest portions of the payment vary with each installment.
Short-term note payable - related party in the amount of $280,964 with an interest rate of 10.0% has 30
monthly installment payments remaining. The installments consist of equal payments where the principal
and interest portions of the payment vary with each installment.
Long-term note payable - ABC Bank in the amount of $2,974,214 with an interest rate of 12.0% has 42
monthly installment payments remaining. The installments consist of equal payments where the principal
and interest portions of the payment vary with each installment.
Long-term note payable - ACME Bank in the amount of $921,087 with an interest rate of 12.0% has 78

monthly installment payments remaining. The installments consist of equal principal payments with
monthly interest charged on the outstanding balance.
Long-term note payable - First Nat. Bank in the amount of $1,017,149 with an interest rate of 10.0% has
54 monthly installment payments remaining. The installments consist of equal payments where the
principal and interest portions of the payment vary with each installment.
Fixed Asset Purchase Financing Assumptions
In projected year 3, 40.0% of total fixed asset purchases $1,500,000 would be financed. A new loan in the
amount of $600,000 would be added in that year. This loan would have an interest rate of 10.0% and
would be repaid in 60 monthly installments. The installments consist of equal payments where the
Dividends Assumptions
Preferred Stock Dividends are assumed to be paid at the rate of 10.0% of the preferred stock balance in
each projected year.
Common Stock Dividends are assumed to be paid at the rate of 50.0% of net income in each projected
year.

Discounted Future Earnings Value Calculations
The Total Entity Value of Sample Industries, Inc. based on the Discounted Future Earnings method is
estimated to be $18,002,037 as shown below. In the Discounted Future Earnings method, EBT has been
projected for 5 years and each year's earnings have been discounted back to present value using an annual
discount rate of 32.00% and end-of-year discounting calculations.
Because it is assumed that the business will continue as a going concern beyond the term of the
projections, a terminal value (also referred to as residual value) has been calculated based on EBT from
projected year 5. These residual earnings are first capitalized using the capitalization rate of 12.38% and
then that quantity is discounted back to present value using the discount rate of 32.00%.
Discounted Future Earnings Projected Discount Present
EBT Factor
Annualized 2010
Value
2,551,925 0.757576 1,933,278
FY 2011 2,737,234 0.573921 1,570,956
FY 2012 3,592,857 0.434789 1,562,135
FY 2013 4,008,691 0.329385 1,320,403
FY 2014 4,346,829 0.249534 1,084,682
Terminal value of EBT ** 42,000,625 0.249534
Operating value
10,480,584
17,952,037
Total entity value
50,000
18,002,037
End-of-Year discount factors are based on the Discount Rate of: 32.00%
Terminal value is based on the Capitalization Rate of: * 12.38%
The sum of the individual present values, including the present value of the terminal value, equals the
estimate of Total Entity Value. See the Discount and Capitalization Rates section for the discount rate
calculations.
Net nonoperating assets of $50,000 have been added in the determination of Total Entity Value under this
method because net nonoperating assets do not contribute to the earnings capacity of the business. See
the Net Asset Value schedule for the presentation of net nonoperating assets.
Comparative Company Method
The notion behind the comparative company method is that prices of publicly traded stocks in the same or
a similar industry provide objective evidence as to values at which investors are willing to buy and sell
interests in companies in that industry.
In applying the comparative company valuation method, the consultant usually computes a value multiple
for each comparative company. The appropriate multiple is then determined and adjusted for the unique
aspects of the company being valued. This multiple is then applied to the company being valued to arrive
at an estimate of value for the appropriate ownership interest. A value multiple represents a ratio that
uses a comparative company's stock price as the numerator and a measure of the comparative company's
operating results (or financial position) as the denominator. Value multiples are usually computed on a
per share basis, but can also be determined by dividing a company's total common stock market value by

its total annual earnings or other measure. The most well known value multiple is price/earnings (P/E)
whereby a company's stock price is divided by its earnings per share. The process of computing the value
multiples normally consists of the following procedures:
1. Determination of the appropriate stock price for each comparative company. This represents the
numerator of the multiple.
2. Determination of the measure of operating results (earnings, gross cash flow, etc.) for the
appropriate time period or financial position as of the valuation date. This represents the
denominator of the multiple.
The application of this method depends on the selection of publicly traded comparative companies that
are similar enough to Sample Industries, Inc. so as to provide a meaningful comparison. The following is
a discussion of the search for comparative publicly traded companies as it applies to Sample Industries,
Inc.
Search for Comparatives
P/E P/R P/GCF P/D P/BV P/NAV BETA
Comparable Companies:
NYSE Traded Company 10.20 0.60 7.20 0.00 0.00 0.00 0.00
Amex Listed Company 7.70 0.70 6.80 0.00 0.00 0.00 0.00
Closely Held Company 8.40 1.20 7.90 0.00 0.00 0.00 0.00
Average 8.77 0.83 7.30 0.00 0.00 0.00 0.00
Median 8.40 0.70 7.20 0.00 0.00 0.00 0.00
Standard Deviation 1.05 0.26 0.45 0.00 0.00 0.00 0.00
Coefficient of variation 1.11 0.07 0.21 0.00 0.00 0.00 0.00
Selected 8.80 0.60 7.30 0.00 0.00 0.00 0.00
Comparable Companies from the Completed Transactions Database
Prime Time Sports, Inc. (Pensylvania)
American PassTime Sporting Goods (California)
Mergerstat Review Database
Transaction Number % Number
Toys & Recreational Products 2009 13.8 2 0.0% 0
Industry Classification of Seller: Year P/E of Co. Premium of Co.

Comparable Companies from the Pratt's Stats Database
Distributor of Excess Inventories of Sports Equipment and Accessories
Manufacturer - Physical Education, Athletic and Recreational Products
Comparable Companies from the BIZCOMPS Database
Mfg-Wood Putters
Mfg-Outdoor Products
Mfg-Recreational Equip.
Price to Earnings Multiple
The Total Entity Value of Sample Industries, Inc. based on the Price to Earnings Multiple method is
estimated to be $22,506,931. In the Price to Earnings Multiple method, normalized EBT from the most
recent historic year times the Price to Earnings Multiple of 8.8 equals the estimate of Total Entity Value.
See the Market Comparables Valuation schedule for detailed value calculations.
Price to Revenue Multiple
The Total Entity Value of Sample Industries, Inc. based on the Price to Revenue Multiple method is
estimated to be $19,867,495. In the Price to Revenue Multiple method, normalized Net Revenue from the
most recent historic year times the Price to Revenue Multiple of 0.6 equals the estimate of Total Entity
Value. See the Market Comparables Valuation schedule for detailed value calculations.
Price to Gross Cash Flow Multiple
The Total Entity Value of Sample Industries, Inc. based on the Price to Gross Cash Flow Multiple method
is estimated to be $24,007,485. In the Price to Gross Cash Flow Multiple method, normalized Gross Cash
Flow (i.e., adjusted net income plus depreciation and amortization) from the most recent historic year times
the Price to Gross Cash Flow Multiple of 7.3 equals the estimate of Total Entity Value. See the Market
Comparables Valuation schedule for detailed value calculations.

Mergerstat Price to Earnings Multiple
The Total Entity Value of Sample Industries, Inc. based on the Price to Earnings Multiple from the
Mergerstat database is estimated to be $22,124,372. In the Price to Earnings Multiple method,
normalized Net Income from the most recent historic year times the Mergerstat Price to Earnings Multiple
of 13.8 equals the estimate of Total Entity Value. See the Market Comparables Valuation schedule for
detailed value calculations.
Completed Transactions Price to Earnings Multiple
The Total Entity Value of Sample Industries, Inc. based on the selected Price to Earnings Multiple from
the Completed Transactions database is estimated to be $16,210,566. In the Price to Earnings Multiple
method, normalized Net Income from the most recent historic year times the selected Price to Earnings
Multiple of 10.10 equals the estimate of Total Entity Value. See the Market Comparables Valuation
schedule for detailed value calculations.
Completed Transactions Price to Revenue Multiple
The Total Entity Value of Sample Industries, Inc. based on the selected Price to Revenue Multiple from
the Completed Transactions database is estimated to be $19,867,495. In the Price to Revenue Multiple
method, normalized Net Revenue from the most recent historic year times the selected Price to Revenue
Multiple of 0.60 equals the estimate of Total Entity Value. See the Market Comparables Valuation
schedule for detailed value calculations.
Completed Transactions Price to Cash Flow from Operations Multiple
The Total Entity Value of Sample Industries, Inc. based on the selected Price to Cash Flow from
Operations Multiple from the Completed Transactions database is estimated to be $14,646,244. In the
Price to Cash Flow From Operations Multiple method, normalized Cash Flow from Operations from the
most recent historic year times the selected Price to Cash Flow From Operations Multiple of 5.60 equals
the estimate of Total Entity Value. See the Market Comparables Valuation schedule for detailed value
calculations.

Completed Transactions Price to Assets Multiple
The Total Entity Value of Sample Industries, Inc. based on the selected Price to Assets Multiple from the
Completed Transactions database is estimated to be $16,220,799. In the Price to Assets Multiple method,
the appraised value of Operating Assets times the selected Price to Assets Multiple of 0.70 equals the
estimate of Total Entity Value. The appraised value of Operating Assets is defined here as the appraised
value of Total Assets less nonoperating assets as presented in the Net Asset Value schedule. See the
Market Comparables Valuation schedule for detailed value calculations.
Completed Transactions Price to Stockholders' Equity Multiple
The Total Entity Value of Sample Industries, Inc. based on the selected Price to Stockholders' Equity
Multiple from the Completed Transactions database is estimated to be $15,991,867. In the Price to
Stockholders' Equity Multiple method, the value of Operating Stockholders' Equity times the selected
Price to Stockholders' Equity Multiple of 1.00 equals the estimate of Total Entity Value. The value of
Operating Stockholders' Equity is defined here as Total Stockholders' Equity less net nonoperating assets
as presented in the Net Asset Value schedule. See the Market Comparables Valuation schedule for
detailed value calculations.
Pratt's Stats Equity Price to Net Sales Multiple
The Total Entity Value of Sample Industries, Inc. based on the selected Equity Price to Net Sales Multiple
from the Pratt's Stats database is estimated to be $16,564,579. In the Equity Price to Net Sales Multiple
method, normalized Net Sales from the most recent historic year times the selected Equity Price to Net
Sales Multiple of 0.50 equals the estimate of Operating Value. See the Pratt's Stats Market Comparables
Valuation schedule for detailed value calculations.
Pratt's Stats Equity Price to Gross Cash Flow Multiple
The Total Entity Value of Sample Industries, Inc. based on the selected Equity Price to Gross Cash Flow
Multiple from the Pratt's Stats database is estimated to be $19,019,077. In the Equity Price to Gross Cash
Flow Multiple method, normalized Net Income plus Noncash Charges (i.e., depreciation and amortization
expense) from the most recent historic year times the selected Equity Price to Gross Cash Flow Multiple of
5.78 equals the estimate of Operating Value. See the Pratt's Stats Market Comparables Valuation schedule
for detailed value calculations.

business.. See the Net Asset Value schedule for the presentation of net nonoperating assets.
Pratt's Stats Equity Price to EBT Multiple
The Total Entity Value of Sample Industries, Inc. based on the selected Equity Price to Earnings Before
Taxes (EBT) Multiple from the Pratt's Stats database is estimated to be $16,305,756. In the Equity Price
to EBT Multiple method, normalized Earnings Before Taxes from the most recent historic year times the
selected Equity Price to EBT Multiple of 6.37 equals the estimate of Operating Value. See the Pratt's
Stats Market Comparables Valuation schedule for detailed value calculations.
Pratt's Stats Equity Price to Net Income Multiple
The Total Entity Value of Sample Industries, Inc. based on the selected Equity Price to Net Income
Multiple from the Pratt's Stats database is estimated to be $10,642,371. In the Equity Price to Net Income
Multiple method, normalized Net Income from the most recent historic year times the selected Equity Price
to Net Income Multiple of 6.62 equals the estimate of Operating Value. See the Pratt's Stats Market
Pratt's Stats Deal Price to Net Revenue Multiple
The Total Entity Value of Sample Industries, Inc. based on the selected Deal Price to Net Revenue
Multiple from the Pratt's Stats database is estimated to be $12,709,302. In the Deal Price to Net Revenue
Multiple method, normalized Net Revenue from the most recent historic year times the selected Deal Price
to Net Revenue Multiple of 0.50 results in the Invested Capital Value. Then the Market Value of Long-
Term Debt of $3,855,277 is deducted to determine the estimate of Operating Value. See the Pratt's Stats
Market Comparables Valuation schedule for detailed value calculations.
Pratt's Stats Deal Price to EBITDA Multiple
The Total Entity Value of Sample Industries, Inc. based on the selected Deal Price to EBITDA Multiple
from the Pratt's Stats database is estimated to be $21,529,120. In the Deal Price to EBITDA Multiple
method, normalized EBITDA from the most recent historic year times the selected Deal Price to EBITDA
Multiple of 5.26 results in the Invested Capital Value. Then the Market Value of Long-Term Debt of
$3,855,277 is deducted to determine the estimate of Operating Value. See the Pratt's Stats Market

Pratt's Stats Deal Price to EBIT Multiple
The Total Entity Value of Sample Industries, Inc. based on the selected Deal Price to EBITDA Multiple
from the Pratt's Stats database is estimated to be $14,877,142. In the Deal Price to EBIT Multiple
method, normalized EBIT from the most recent historic year times the selected Deal Price to EBIT
Multiple of 5.96 results in the Invested Capital Value. Then the Market Value of Long-Term Debt of
$3,855,277 is deducted to determine the estimate of Operating Value. See the Pratt's Stats Market
BIZCOMPS Sales Price to Revenue Multiple
The Total Entity Value of Sample Industries, Inc. based on the selected Sales Price to Revenue Multiple
from the BIZCOMPS database is estimated to be $24,871,557. In the Sales Price to Revenue Multiple
method, normalized Net Revenue from the most recent historic year times the selected Sales Price to
Revenue Multiple of 0.63 results in the Operating Value Before Net Assets. Then, Current Assets of
$9,122,730, Long-Term Investments of $2,093,341, and Other Noncurrent Assets (except Nonoperating
Assets) of $893,666 are added and Total Liabilities (except Nonoperating Liabilities) $7,159,275 are
deducted to determine the estimate of Operating Value. See the BIZCOMPS Market Comparables
Valuation schedule for detailed value calculations.
BIZCOMPS Sales Price to Seller's Discretionary Cash Flow Multiple
The Total Entity Value of Sample Industries, Inc. based on the selected Sales Price to Seller's
Discretionary Cash Flow Multiple from the BIZCOMPS database is estimated to be $17,843,341. In the
Sales Price to Seller's Discretionary Cash Flow Multiple method, the Seller's Discretionary Cash Flow
from the most recent historic year times the selected Sales Price to Seller's Discretionary Cash Flow
Multiple of 3.39 results in the Operating Value Before Net Assets. Then, Current Assets of $9,122,730,
Long-Term Investments of $2,093,341, and Other Noncurrent Assets (except Nonoperating Assets) of
$893,666 are added and Total Liabilities (except Nonoperating Liabilities) $7,159,275 are deducted to
determine the estimate of Operating Value. See the BIZCOMPS Market Comparables Valuation schedule
for detailed value calculations.
business.. See the Net Asset Value schedule for the presentation of net nonoperating assets.

Capitalization of Excess Earnings
Usually, intangible assets are not reported on the balance sheet unless purchased. However, the existence
of and the value for any intangible assets should be considered. A number of methodologies have been
developed to estimate intangible assets of a business. One commonly used method is the excess earnings
method. The excess earnings method was developed by the U.S. Treasury Department in 1920 in
Appeals and Review Memorandum 34 (ARM34). Its current version is found in Revenue Ruling 68-609.
The excess earnings method is commonly used in valuing small businesses and professional practices. The
Internal Revenue Service suggests that it is to be used only when no better basis exists for separately
estimating the value of the intangible assets.
The model for the excess earnings method computes the company's equity value based on the "appraised"
value of tangible assets plus an additional amount for intangible assets. A company's tangible assets
should provide a current return to the owner. Since there are risks associated with owning the company's
assets, the rate of return on those assets should be commensurate with the risks involved. That rate of
return should be either the prevailing industry rate of return required to attract capital to that industry or
an appropriate rate above the risk-free rate. Any returns produced by the company above the rate on
tangible assets are considered to arise from intangible assets. Accordingly, the weighted average
capitalization rate for tangible assets and intangible assets should be equivalent to the capitalization rate
of the entire company.
In using the excess earnings method, a reasonable rate of return on net tangible assets was first calculated
based on the cost of borrowing against those assets plus the cost of equity required to support the
remaining investment in those assets, as shown in the following schedule.
Percent of
Cost Total Capital Weighted
Required Return on Debt 4.88% 23.8% 1.16%
Required Return on Equity 10.35% 76.2%
Rate of Return on Net Tangible Assets
7.88%
9.04%
(See the Rate of Return on Net Tangible Assets schedule for the calculation of the required return on
debt.)
Then, weighted average, normalized EBT is compared to the reasonable rate of return. Excess earnings
are defined as the difference between the weighted average earnings and the "normal" return. These
excess earnings are then capitalized using the excess earnings capitalization rate of 15.35%. Therefore,
capitalized excess earnings are an estimate of intangible value. This intangible value is then added to the
appraised value of net tangible equity to estimate Total Entity Value. See the Income Statement
Adjustments section for a listing of any adjustments made to historic earnings, the Discount and
Capitalization Rates section for the excess earnings capitalization rate and the Net Asset Value schedule
for the appraised value of net tangible equity.

As shown below, the Total Entity Value of Sample Industries, Inc. based on the Capitalization of Excess
Earnings approach is estimated to be $17,621,902.
Capitalization of Excess Earnings Normalized Weighting Weighted
EBT Factor
Earnings
770,927 1.0 770,927
Fiscal Year End 2006 970,061 2.0 1,940,122
Fiscal Year End 2007 1,080,336 3.0 3,241,008
Fiscal Year End 2008 1,257,844 4.0 5,031,376
Fiscal Year End 2009 1,898,672 5.0 9,493,360
Annualized 2010 2,551,924 6.0
15,311,544
35,788,337
21.0
Net tangible assets
1,704,207
15,738,201
Multiplied by: Rate of return on net tangible assets
Normal return on net tangible assets
9.04%
1,422,733
Weighted average earnings 1,704,207
Less: Normal return on net tangible assets
Excess Earnings
1,422,733
281,473
Divided by: Excess earnings capitalization rate
Intangible value
15.35%
1,833,701
Plus: Net tangible assets
Operating value
15,738,201
17,571,902
Total entity value
50,000
17,621,902

Multiple of Discretionary Earnings
The multiple of discretionary earnings method is best suited to businesses where the salary and perquisites
of an owner represent a significant portion of the total benefits generated by the business and/or the
business is typically run by an owner/manager. Discretionary earnings is equal to the Company's earnings
before: income taxes, nonoperating income and expenses, nonrecurring income and expenses,
depreciation and amortization, interest income or expense, and owners' total compensation for services
that could be provided by an owner/manager. Buyers and sellers of very small closely held businesses
tend to think in terms of income to replace their previous paycheck or income to support their family.
They look at the total discretionary earnings to see if it is sufficient to pay all the operating expenses of
the business, carry the debt structure necessary to buy and/or operate the business, and provide an
adequate wage.
The total entity value of Sample Industries, Inc. using the Multiple of Discretionary Earnings method is
estimated to be $6,474,862 as shown below.
Multiple of Discretionary Earnings Normalized Weighting Weighted
EBT Factor
Earnings
770,927 1.0 770,927
Fiscal Year End 2006 970,061 2.0 1,940,122
Fiscal Year End 2007 1,080,336 3.0 3,241,008
Fiscal Year End 2008 1,257,844 4.0 5,031,376
Fiscal Year End 2009 1,898,672 5.0 9,493,360
Annualized 2010 2,551,924 6.0
15,311,544
35,788,337
21.0
1,704,207
Plus: Normalized owner's salary & benefits 183,750
Plus: Normalized interest expense 582,710
Plus: Normalized depreciation & amortization expense 1,681,791
Less: Normalized interest income 248,187
Less: Required capital expenditures
Discretionary earnings
929,999
2,974,272
Multiplied by: Value multiple
Value of operating assets
1.5
4,461,407
Plus: Normalized net working capital 7,271,427
Plus: Net nonoperating assets 50,000
Less: Interest-bearing debt
Total entity value
5,307,972
6,474,862
See the Valuation Multiple Development Worksheet for the factors considered in the development of the
selected valuation multiple. Also see the most recent normalized balance sheet for the presentation of
normalized net working capital and the Net Asset Value schedule for the presentation of interest-bearing
debt.

Conclusions of Value
Weighted
Method Value Weight Value
Net Asset Value 13,304,898 0.0 0
Liquidation Value 9,413,963 0.0 0
Capitalization of Earnings 16,515,764 0.0 0
Discounted Future Earnings 18,002,037 1.0 18,002,037
Discounted Net Cash Flow 2,271,015 0.0 0
Price to Earnings Multiple 22,506,931 0.0 0
Price to Revenue Multiple 19,867,495 0.0 0
Price to Gross Cash Flow Multiple 24,007,485 0.0 0
Price to Dividends Multiple 0 0.0 0
Price to Book Value Multiple 0 0.0 0
Price to Net Asset Value Multiple 0 0.0 0
Mergerstat Price to Earnings Multiple 22,124,372 0.0 0
Completed Transactions Price to Earnings Multiple 16,210,566 0.0 0
Completed Transactions Price to Revenue Multiple 19,867,495 0.0 0
Completed Transactions Price to CFO Multiple 14,646,244 0.0 0
Completed Transactions Price to Assets Multiple 16,220,799 0.0 0
Completed Transactions Price to Equity Multiple 15,991,867 0.0 0
Pratt's Stats Equity Price to Net Revenue Multiple 16,564,579 0.0 0
Pratt's Stats Equity Price to Gross Cash Flow Multiple 19,019,077 0.0 0
Pratt's Stats Equity Price to EBT Multiple 16,305,756 0.0 0
Pratt's Stats Equity Price to Net Income Multiple 10,642,371 0.0 0
Pratt's Stats Equity Price to Discr. Earnings Mult. 0 0.0 0
Pratt's Stats Deal Price to Net Revenue Multiple 12,709,302 0.0 0
Pratt's Stats Deal Price to EBITDA Multiple 21,529,120 0.0 0
Pratt's Stats Deal Price to EBIT Multiple 14,877,142 0.0 0
BIZCOMPS Price to Net Revenue Multiple 24,871,557 0.0 0
BIZCOMPS Price to Seller's Discr. Cash Flow Mult. 17,843,341 0.0 0
Capitalization of Excess Earnings 17,621,902 0.0 0
Multiple of Discretionary Earnings 6,474,862 0.0 0
Sum of weighted values 18,002,037
Divided by: Sum of weights 1.0
Weighted average total entity value 18,002,037
Selected total entity value 18,000,000
Less: Fair market value of preferred stock 1,200,000
Fair market value of common equity 16,800,000
See the respective supporting schedules for the individual value calculations.

Appendix 1 — Representations
The following factors guided our work during this engagement:
 The analyses, opinions, and conclusions of value included in this report are subject to the
assumptions and limiting conditions specified previously in this report, and they are our personal
analyses, opinions, and conclusion of value.
 The economic and industry data included in this report were obtained from sources that we
believed to be reliable. We have not performed any corroborating procedures to substantiate that
data.
 This engagement was performed in accordance with the American Institute of Certified Public
Accountants Statement on Standards for Valuation Services.
 We have previously identified the parties for whom this information and report have been
prepared. This valuation report is not intended to be, and should not be, used by anyone other
than those parties.
 Our compensation for this engagement is not contingent on the outcome of this valuation.
 We have no obligation to update this report or our opinion of value for information that comes to
our attention after the report date.
(Signature) (Date)

American Fortune Mergers

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