GDS MANUFACTURING CORP.

UNDERLYING ASSUMPTIONS

1. Quantity sold is estimated to increase by 20% over the previous year.

2. Unit selling price is projected to increase by 10% over the previous year.

3. Employees' benefits are estimated at 20% of salaries and wages

4. Inventory at the end of the period is immaterial, hence, not recognized

5. Administrative as well as marketing and selling expenses ae projected o increase by 10% over the previous year.

6. Accounts receivable is estimated at 50% of sales for the quarter and collected in the suceeding quarter.

7. Debt to equity ratio is 40:60. Hence, short-term loan is obtained at about 40% of the capital requirement.

8. Interest rate is estimated at 12% per annum.

9. Income tax is computed at 30% of taxbale income.

10. Idle funds seemed to remain in the company's custody although in the actual, these are placed in
income yielding investments.
GDS MANUFACTURING CORP.
INITIAL CAPITAL REQUIREMENT

Property and Equipment

Factory equipment 500,000
Office improvement 200,000
Computer equipment 60,000
Service vehicle 200,000
Tables and chairs 50,000
Steel cabinet 20,000

Initial Working Capital 1,084,700

TOTAL 2,114,700

say 2,200,000

LOAN (40%) 880,000

EQUITY (60%) 1,320,000

GDS MANUFACTURING CORP.
MANPOWER COMPLEMENT

NO. OF MONTHLY YEAR 1

POSITION BASIC STAFF SALARY Q1 Q2 Q3 Q4 TOTAL YEAR 2 YEAR 3 YEAR 4 YEAR 5

Administrative
1 General Manager 20,000 1 20,000 60,000 60,000 60,000 60,000 240,000 264,000 290,400 319,440 351,384
2 Accountant 12,000 1 12,000 36,000 36,000 36,000 36,000 144,000 158,400 174,240 191,664 210,830
3 Cashier 10,000 1 10,000 30,000 30,000 30,000 30,000 120,000 132,000 145,200 159,720 175,692
4 Janitor/Messenger 8,000 1 8,000 24,000 24,000 24,000 24,000 96,000 105,600 116,160 127,776 140,554

TOTAL 150,000 150,000 150,000 150,000 600,000 ### 660,000### 726,000### 798,600### 878,460

Selling and Marketing

1 Marketing Supervisor 12,000 1 12,000 36,000 36,000 36,000 36,000 144,000 158,400 174,240 191,664 210,830
2 Marketing Staff 10,000 2 20,000 60,000 60,000 60,000 60,000 240,000 264,000 290,400 319,440 351,384

TOTAL 96,000 96,000 96,000 96,000 384,000 ### 422,400### 464,640### 511,104### 562,214
GDS MANUFACTURING CORP.
PRICE ANALYSIS

Direct Materials 30.00

Direct Labor 10.00
Factory Overhead
Supplies 2.00
Indirect labor 3.00
Light and water 3.00
Others (depreciation, maintenance, etc.) 2.00

Total 50.00

Markup (100%) 50.00

SELLING PRICE PER UNIT 100.00

GDS MANUFACTURING CORP.
LAPSING SCHEDULE

NO. OF UNIT TOTAL USEFUL YEAR 1

PARTICULARS UNIT COST AMOUNT LIFE Q1 Q2 Q3 Q4 TOTAL YEAR 2 YEAR 3 YEAR 4 YEAR 5

1 Factory equipment various 500,000 500,000 10 12,500 12,500 12,500 12,500 50,000 50,000 50,000 50,000 50,000

1 Office improvement lot 200,000 200,000 10 5,000 5,000 5,000 5,000 20,000 20,000 20,000 20,000 20,000
2 Computer equipment 3 20,000 60,000 5 3,000 3,000 3,000 3,000 12,000 12,000 12,000 12,000 12,000
3 Service vehicle 1 200,000 200,000 5 10,000 10,000 10,000 10,000 40,000 40,000 40,000 40,000 40,000
4 Tables and chairs 10 5,000 50,000 5 2,500 2,500 2,500 2,500 10,000 10,000 10,000 10,000 10,000
5 Steel cabinet 2 10,000 20,000 5 1,000 1,000 1,000 1,000 4,000 4,000 4,000 4,000 4,000

Subtotal 530,000 21,500 21,500 21,500 21,500 86,000### 86,000### 86,000### 86,000### 86,000

TOTAL 1,030,000 34,000 34,000 34,000 34,000 136,000 136,000 136,000 136,000 136,000
GDS MANUFACTURING CORP.
SCHEDULE OF COST OF SALES

YEAR 1
Q1 Q2 Q3 Q4 TOTAL YEAR 2 YEAR 3 YEAR 4 YEAR 5

QTY U. COST
YEAR 1 50,000 50.00 625,000 625,000 625,000 625,000 2,500,000

YEAR 2 60,000 55.00 3,300,000

YEAR 3 72,000 60.50 4,356,000

YEAR 4 86,400 66.55 5,749,920

YEAR 5 103,680 73.21 7,589,894

TOTAL 625,000 625,000 625,000 625,000 2,500,000 ### 3,300,000### 4,356,000### 5,749,920### 7,589,894
GDS MANUFACTURING CORP.
SCHEDULE OF SALES

YEAR 1
Q1 Q2 Q3 Q4 TOTAL YEAR 2 YEAR 3 YEAR 4 YEAR 5

QTY U. PRICE
YEAR 1 50,000 100.00 1,250,000 1,250,000 1,250,000 1,250,000 5,000,000

YEAR 2 60,000 110.00 6,600,000

YEAR 3 72,000 121.00 8,712,000

YEAR 4 86,400 133.10 11,499,840

YEAR 5 103,680 146.41 15,179,789

TOTAL 1,250,000 1,250,000 1,250,000 1,250,000 5,000,000 ### 6,600,000### 8,712,000### 11,499,840### 15,179,789 46,991,629

COLLECTIONS 625,000 1,250,000 1,250,000 1,250,000 4,375,000 6,400,000 8,448,000 11,151,360 14,719,795 45,094,155
GDS MANUFACTURING CORP.
SCHEDULE OF SELLING AND MARKETING EXPENSES

YEAR 1
TOTAL Q1 Q2 Q3 Q4 TOTAL YEAR 2 YEAR 3 YEAR 4 YEAR 5

Salaries and wages 2,344,358 96,000 96,000 96,000 96,000 384,000 422,400 464,640 511,104 562,214
Employees' benefits 468,872 19,200 19,200 19,200 19,200 76,800 84,480 92,928 102,221 112,443
Transportation 146,522 6,000 6,000 6,000 6,000 24,000 26,400 29,040 31,944 35,138
Representation 244,204 10,000 10,000 10,000 10,000 40,000 44,000 48,400 53,240 58,564
Miscellaneous 73,261 3,000 3,000 3,000 3,000 12,000 13,200 14,520 15,972 17,569

TOTAL 3,277,218 134,200 134,200 134,200 134,200 536,800 590,480 649,528 714,481 785,929
GDS MANUFACTURING CORP.
SCHEDULE OF ADMINISTRATIVE EXPENSES

YEAR 1
TOTAL Q1 Q2 Q3 Q4 TOTAL YEAR 2 YEAR 3 YEAR 4 YEAR 5

Salaries and wages 3,663,060 150,000 150,000 150,000 150,000 600,000 660,000 726,000 798,600 878,460
Employees' benefits 732,612 30,000 30,000 30,000 30,000 120,000 132,000 145,200 159,720 175,692
Rent expense 1,465,224 60,000 60,000 60,000 60,000 240,000 264,000 290,400 319,440 351,384
Light and water 732,612 30,000 30,000 30,000 30,000 120,000 132,000 145,200 159,720 175,692
Supplies expense 366,306 15,000 15,000 15,000 15,000 60,000 66,000 72,600 79,860 87,846
Communication 439,567 18,000 18,000 18,000 18,000 72,000 79,200 87,120 95,832 105,415
Taxes and licenses 146,522 6,000 6,000 6,000 6,000 24,000 26,400 29,040 31,944 35,138
Transportation 146,522 6,000 6,000 6,000 6,000 24,000 26,400 29,040 31,944 35,138
Fuel and oil 648,612 9,000 9,000 9,000 9,000 36,000 132,000 145,200 159,720 175,692
Repairs and maintenance 73,261 3,000 3,000 3,000 3,000 12,000 13,200 14,520 15,972 17,569
Representation 122,102 5,000 5,000 5,000 5,000 20,000 22,000 24,200 26,620 29,282
Insurance 73,261 3,000 3,000 3,000 3,000 12,000 13,200 14,520 15,972 17,569
Depreciation 430,000 21,500 21,500 21,500 21,500 86,000 86,000 86,000 86,000 86,000
Miscellaneous 73,261 3,000 3,000 3,000 3,000 12,000 13,200 14,520 15,972 17,569

TOTAL 9,112,924 359,500 359,500 359,500 359,500 1,438,000 1,665,600 1,823,560 1,997,316 2,188,448
GDS MANUFACTURING CORP.
PROJECTED COMMON-SIZED INCOME STATEMENT

YEAR 1
TOTAL Q1 Q2 Q3 Q4 TOTAL YEAR 2 YEAR 3 YEAR 4 YEAR 5

SALES 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%

COST OF SALES 50.00% 50.00% 50.00% 50.00% 50.00% 50.00% 50.00% 50.00% 50.00% 50.00%

GROSS PROFIT 50.00% 50.00% 50.00% 50.00% 50.00% 50.00% 50.00% 50.00% 50.00% 50.00%

OPERATING EXPENSES
Selling and marketing expenses 6.97% 10.74% 10.74% 10.74% 10.74% 10.74% 8.95% 7.46% 6.21% 5.18%
Administrative expenses 19.39% 28.76% 28.76% 28.76% 28.76% 28.76% 25.24% 20.93% 17.37% 14.42%
Interest expense 0.22% 2.11% 2.11% 2.11% 2.11% 2.11% 0.00% 0.00% 0.00% 0.00%

Total 26.59% 41.61% 41.61% 41.61% 41.61% 41.61% 34.18% 28.39% 23.58% 19.59%

INCOME BEFORE TAX 23.41% 8.39% 8.39% 8.39% 8.39% 8.39% 15.82% 21.61% 26.42% 30.41%

PROVISION FOR INCOME TAX (35%) 7.02% 2.52% 2.52% 2.52% 2.52% 2.52% 4.75% 6.48% 7.93% 9.12%

NET INCOME 16.39% 5.87% 5.87% 5.87% 5.87% 5.87% 11.07% 15.13% 18.49% 21.28%
GDS MANUFACTURING CORP.
PROJECTED COMMON-SIZED BALANCE SHEET

YEAR 1
Q1 Q2 Q3 Q4 YEAR 2 YEAR 3 YEAR 4 YEAR 5
ASSSETS
Current Assets
Cash 18.33% 22.90% 27.15% 31.12% 32.28% 56.21% 69.85% 77.71%
Accounts receivable 31.49% 30.36% 29.32% 28.34% 35.29% 27.87% 22.53% 18.82%
Total Current Assets 49.82% 53.26% 56.47% 59.46% 67.57% 84.08% 92.38% 96.53%

Property and Equipment

Leasehold improvement 10.08% 9.72% 9.38% 9.07% 8.56% 5.12% 3.13% 1.98%
Service vehicle 10.08% 9.72% 9.38% 9.07% 8.56% 5.12% 3.13% 1.98%
Computer equipment 3.02% 2.91% 2.81% 2.72% 2.57% 1.54% 0.94% 0.59%
Furniture and equipment 3.53% 3.40% 3.28% 3.17% 2.99% 1.79% 1.10% 0.69%
Total 26.70% 25.75% 24.86% 24.03% 22.67% 13.56% 8.31% 5.26%
Accumulated depreciation 1.71% 3.30% 4.78% 6.17% 11.64% 10.44% 8.53% 6.74%
Net Book Value 24.99% 22.45% 20.08% 17.87% 11.04% 3.12% -0.22% -1.49%

TOTAL ASSETS 74.81% 75.71% 76.55% 77.33% 78.61% 87.20% 92.16% 95.04%

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities
Loans payable 44.33% 42.75% 41.28% 39.91% 0.00% 0.00% 0.00% 0.00%

Stockholders' Equity
Capital stock 50.38% 48.58% 46.91% 45.35% 42.78% 25.59% 15.67% 9.92%
Retained Earnings 3.70% 7.13% 10.33% 13.32% 43.82% 59.95% 70.04% 76.35%
Total Stockholders' Equity 54.08% 55.72% 57.24% 58.67% 86.60% 85.54% 85.72% 86.27%

TOTAL LIABILITIES & STOCKHOLDERS'

EQUITY 98.41% 98.47% 98.52% 98.57% 86.60% 85.54% 85.72% 86.27%
NET PRESENT VALUE
DISCOUNTED
NET INCOME PV FACTOR PRESENT CUMULATIVE PAYBACK
AT 12% VALUE VALUE PERIOD

YEAR 1 293,720 0.893 262,292 262,292 1

YEAR 2 730,744 0.797 582,403 844,695 1
YEAR 3 1,318,038 0.712 938,443 1,783,138 0.81
YEAR 4 2,126,686 0.636 1,352,572 3,135,711
YEAR 5 3,230,863 0.567 1,831,899 4,967,610

TOTAL 4,967,610 2.81

INVESTMENT 1,700,000

NET PRESENT VALUE 3,267,610

GDS MANUFACTURING CORP.
PROJECTED CASH FLOW STATEMENT

YEAR 1
TOTAL Q1 Q2 Q3 Q4 TOTAL YEAR 2 YEAR 3 YEAR 4 YEAR 5

CASH BALANCE, BEGINNING 0 0 363,900 471,330 578,760 0 686,190 754,640 2,196,376 4,457,146

CASH RECEIPTS:
Collection of receivables 45,094,155 625,000 1,250,000 1,250,000 1,250,000 4,375,000 6,400,000 8,448,000 11,151,360 14,719,795
Initial/Additional investment 1,000,000 1,000,000 1,000,000
Loan proceeds 880,000 880,000 880,000

Total 46,974,155 2,505,000 1,250,000 1,250,000 1,250,000 6,255,000 6,400,000 8,448,000 11,151,360 14,719,795

TOTAL CASH AVAILABLE 46,974,155 2,505,000 1,613,900 1,721,330 1,828,760 6,255,000 7,086,190 9,202,640 13,347,736 19,176,941

CASH DISBURSEMENTS:
Acquisition of property and equipment 1,030,000 1,030,000 - - - 1,030,000
Cost of sales 23,245,814 612,500 612,500 612,500 612,500 2,450,000 3,250,000 4,306,000 5,699,920 7,539,894
Marketing expenses 3,277,218 134,200 134,200 134,200 134,200 536,800 590,480 649,528 714,481 785,929
Administrative expenses 8,682,924 338,000 338,000 338,000 338,000 1,352,000 1,579,600 1,737,560 1,911,316 2,102,448
Income tax 1,915,367 - 31,470 31,470 31,470 94,410 31,470 313,176 564,874 911,437

Total 38,151,322 2,114,700 1,116,170 1,116,170 1,116,170 5,463,210 5,451,550 7,006,264 8,890,590 11,339,708

BALANCE BEFORE LOAN SERVICING 8,822,833 390,300 497,730 605,160 712,590 791,790 1,634,640 2,196,376 4,457,146 7,837,233

LOAN SERVICING
Principal 880,000 880,000
Interest 105,600 26,400 26,400 26,400 26,400 105,600 - ### - ### - -

Total 985,600 26,400 26,400 26,400 26,400 105,600 880,000

### - ### - -

CASH BALANCE, ENDING 7,837,233 363,900 471,330 578,760 686,190 686,190 754,640
### 2,196,376
### 4,457,146 7,837,233

LOAN BALANCE 880,000 880,000 880,000 880,000 880,000 - ### - ### - -

GDS MANUFACTURING CORP.
PROJECTED BALANCE SHEET

YEAR 1
Q1 Q2 Q3 Q4 YEAR 2 YEAR 3 YEAR 4 YEAR 5
ASSSETS
Current Assets
Cash 363,900 471,330 578,760 686,190 754,640 2,196,376 4,457,146 7,837,233
Accounts receivable 625,000 625,000 625,000 625,000 825,000 1,089,000 1,437,480 1,897,474
Total Current Assets 988,900 1,096,330 1,203,760 1,311,190 1,579,640 3,285,376 5,894,626 9,734,707

Property and Equipment

Factory equipment 500,000 500,000 500,000 500,000 500,000 500,000 500,000 500,000
Leasehold improvement 200,000 200,000 200,000 200,000 200,000 200,000 200,000 200,000
Service vehicle 200,000 200,000 200,000 200,000 200,000 200,000 200,000 200,000
Computer equipment 60,000 60,000 60,000 60,000 60,000 60,000 60,000 60,000
Furniture and equipment 70,000 70,000 70,000 70,000 70,000 70,000 70,000 70,000
Total 1,030,000 1,030,000 1,030,000 1,030,000 1,030,000 1,030,000 1,030,000 1,030,000
Accumulated depreciation 34,000 68,000 102,000 136,000 272,000 408,000 544,000 680,000
Net Book Value 996,000 962,000 928,000 894,000 758,000 622,000 486,000 350,000

TOTAL ASSETS 1,984,900 2,058,330 2,131,760 2,205,190 2,337,640 3,907,376 6,380,626 10,084,707

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities
Income tax payable 31,470 31,470 31,470 31,470 313,176 564,874 911,437 1,384,655
Loans payable 880,000 880,000 880,000 880,000 - - - -
Total Current Liabilities 911,470 911,470 911,470 911,470 313,176 564,874 911,437 1,384,655

Stockholders' Equity
Capital stock 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000
Retained Earnings 73,430 146,860 220,290 293,720 1,024,464 2,342,502 4,469,189 7,700,051
Total Stockholders' Equity 1,073,430 1,146,860 1,220,290 1,293,720 2,024,464 3,342,502 5,469,189 8,700,051

TOTAL LIABILITIES & STOCKHOLDERS'

EQUITY 1,984,900 2,058,330 2,131,760 2,205,190 2,337,640 3,907,376 6,380,626 10,084,707
- - - - - - - -
GDS MANUFACTURING CORP.
PROJECTED INCOME STATEMENT

YEAR 1
TOTAL Q1 Q2 Q3 Q4 TOTAL YEAR 2 YEAR 3 YEAR 4 YEAR 5

SALES 46,991,629 1,250,000 1,250,000 1,250,000 1,250,000 5,000,000 6,600,000 8,712,000 11,499,840 15,179,789

COST OF SALES 23,495,814 625,000 625,000 625,000 625,000 2,500,000 3,300,000 4,356,000 5,749,920 7,589,894

GROSS PROFIT 23,495,814 625,000 625,000 625,000 625,000 2,500,000 3,300,000 4,356,000 5,749,920 7,589,894

OPERATING EXPENSES
Selling and marketing expenses 3,277,218 134,200 134,200 134,200 134,200 536,800 590,480 649,528 714,481 785,929
Administrative expenses 9,112,924 359,500 359,500 359,500 359,500 1,438,000 1,665,600 1,823,560 1,997,316 2,188,448
Interest expense 105,600 26,400 26,400 26,400 26,400 105,600 - - - -

Total 12,495,741 520,100 520,100 520,100 520,100 2,080,400 2,256,080 2,473,088 2,711,797 2,974,376

INCOME BEFORE TAX 11,000,073 104,900 104,900 104,900 104,900 419,600 1,043,920 1,882,912 3,038,123 4,615,518

INCOME TAX EXPENSE (30%) 3,300,022 31,470 31,470 31,470 31,470 125,880 313,176 564,874 911,437 1,384,655
`

NET INCOME 7,700,051 73,430 73,430 73,430 73,430 293,720 730,744 1,318,038 2,126,686 3,230,863