Exhibit 1 1992 Pro-forma Financial Statements

Balance Sheet as at December 31, 1991 and 1992

December 31, 1991 December 31, 1992

(Actual) (Pro-forma)
Assets

Cash $113,000 $9,490

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

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

Accumulated depreciation -10,625 (56,000)
Land 250,000
Patent 100,000 75,000

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

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

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

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
Change

Material 195,000 452,700

Labor 275,000 660,000
-$103,510 Rent 50,000 25,000
$70,030 Utilities 30,000 82,000
$20,450 Depreciation 10,625 61,625
$104,680 Gross margin 193,875 604,925
$65,000 Advertising 22,500 70,000
Research and development 63,250
$907,500 Insurance 32,500
-$45,375 Amortization of patent 25,000 25,000
$250,000 Selling and administration expenses 75,000 195,750
-$25,000 Gain on sale of equipment 24,250
Interest expense 750 58,750
$1,243,775 Prototypes 23,750
Legal fees 7,500
Income before taxes 39,375 183,925
-$950 Income taxes 10,900 64,930
$200,000 Net income $28,475 $118,995
$26,730
$425,000
$510,000
$2,000
$0
$106,995
-$26,000

$1,243,775
 Chemalite Inc. Cash Flow Statement for the year ending on 31/12/1992
Inflows Outflows Net Balance
Opening Cash Balance 113000
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 200000
Raising of Long Term Debt 510000
Interest expense -58750
Less: Dividend Paid -10,000
Less: Purchase of Treasury Stock -26,000 615250
615,250
Net Cashflow from Investing Activities
(103,510)
Total Cash flow for the Year 9,490
Closing Balance of the Cash
 Debtors Account
Particular Dr
To Opening Balance 69,500
To Sales (credit sale During the year) 1886250
1,955,750

Raw Inventory Account

Particular Dr
To Opening Balance 55,000
To Cash (Cash Purchase) 473,150
528,150

Finished Good Inventory Account

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

Prepaid Insurance Account

Particular Dr
To Opening Balance 0
To Cash (paid during the year) 97,500
97,500

PPE Account
Particular Dr
To Opening Balance 212,500
To Cash (purchase of Building) 300,000
To Notes Payable (pending amount) 300,000
To Cash (purchase of machine) 520,000
To Profit earned on asset sale 24,250
1,356,750

Accumulated Depreciation Account

Particular Dr
To Dep. Written off for old machinery 21,250
To Closing Balance 56,000
77,250

Land Account
Particular Dr
To Opening Balance 0
To Cash (Purchase during the year) 125,000
To Notes Payable (to be paid) 125,000
250,000
 Patent Account
Particular Dr
To Opening Balance 100,000

100,000

Income Tax Payable Account

Particular Dr
To Deffered Tax 26,730
To Cash 39,150
To Closing Balance 9,950
75,830

Deffered Income tax Account

Particular Dr

To Closing Balance 26,730

26,730

Short Term Debt Account

Particular Dr

To Closing Balance 200,000

200,000

Notes Payable Account

Particular Dr

To Closing Balance 425,000

425,000

Long Term Debt Account

Particular Dr

To Closing Balance 510,000

510,000

Dividend Payable Account

Particular Dr
To Cash (paid during the year) 10,000
To Closing Balance 12,000
22,000

Equity Account
Particular Dr
To Closing Balance 500,000
500,000

Retained Earning Account

Particular Dr
To Dividend Payable 12,000
To Closing Balance 125,470
137,470

Treasury Account
Particular Dr
To Opening Balance 0
By Cash (purchased during the year) 26,000
26,000
 Debtors Account
Particular Cr
By Cash (cash collected) 1,816,220
By Closing Balance 139,530
1,955,750

Raw Inventory Account

Particular Cr
By Material Consumed 452,700
By Closing Balance 75,450
528,150

shed Good Inventory Account

Particular Cr

By Closing Balance 104,680

104,680

Prepaid Insurance Account

Particular Cr
By Income Statement 32,500
By Closing Balance 65,000
97,500

PPE Account
Particular Cr
By Depreciation (written Off) 21,250
By Cash (Sale of Old Assets) 215,500

By Closing Balance 1,120,000

1,356,750

umulated Depreciation Account

Particular Cr
By Opening Balance 10,625
By P&L A/C (5000 Dep including in inventory) 66,625
77,250

Land Account
Particular Cr

By Closing Balance 250,000

250,000
 Patent Account
Particular Cr
By Income Statement 25,000
By Closing Balance 75,000
100,000

ncome Tax Payable Account

Particular Cr
By Opening Balance 10,900

By P&L A/c (tax for the year) 64,930

75,830

effered Income tax Account

Particular Cr
By Opening Balance 0
By tax payable 26,730
26,730

Short Term Debt Account

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

Notes Payable Account

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

Long Term Debt Account

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

Dividend Payable Account

Particular Cr
By Opening Balance 10,000
By Dividend declared for the year 12,000
22,000

Equity Account
Particular Cr
 By Opening Balance 500,000

500,000

Retained Earning Account

Particular Cr
By Opening Balance 18,475
By Income statement 118,995
137,470

Treasury Account
Particular Cr

By Closing Balance 26,000

26,000
 Chemalite Inc. Cash Flow Statement for the year ending on 31/12/1992
Particular
Opening Cash Balance
Cash Flow from Operating Activities
Net Profit 118995
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 26730
25780

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

Cash Flow from Financing Activities

Raising of Short Term Debt 200000
Raising of Long Term Debt 510000
Less: Dividend Paid -10000
Less: Interest Paid -58,750
Less: Purchase of Treasury Stock -26,000 615250

Net Cashflow from Investing Activities

Total Cash flow for the Year

Closing Balance of the Cash
on 31/12/1992
Net Balance
113000

10,740

(729,500)

615,250

(103,510)
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