Harmonic Hearing Co. Exhibit TN-1 TN-1 Financial Forecasts Forecasts Under Under Debt Debt Financing Financing Alternative
Year &ales - existing hearing aids &ales - ne, hearing aids Total sales
1 '!()$*%)((( '( '!()$*%)(((
'!1)"#")((( ')*!1)#(( '!")*#)#((
! '!1)*$1)((( '$)$(%)1# '!*)"$*)1#
" '!()"%)((( '+)#*()!%# '"()((%)!%#
# '*)+*)((( '1!)$(")#(( '"1)+()#((
$ '!)!")((( '1*)%%")((( '")((*)(((
% '1#)"**)((( '#)!"#)#( '"()*!!)#(
C& - existing hearing aids C& - ne, hearing aids &elling) general / administrative 0esearch / develoment Dereciation 0ent a2ments E34iment lease a2ments erating income 5nterest 5ncome be6ore income taxes 5ncome taxes Net income
'1!)#()*( '( '1()#"")!( '1)%(()((( '( '1)!1)#(( ')((()((( '1)$%)+(( '$!!)((( '++")+(( '!!*)$$ '$#$)$!"
'1!)*!+)%$( '1)!!()*(# '11)*1$)#1( '$(()((( '( '1)!+1)#( ')((()((( '!)!(%)1%# '$*)(*$ ')$%+)(*+ '+1()*+( '1)%$*)1++
'1")(1*)*"( '!)1(#)!"+ '1!)+%)*+$ '$(()((( '( '1)"%")%# ')((()((( '!)+%1)!1# '$)$*1 '!)!"*)$!" '1)1!*)#!$ ')1()(++
'1!)!*%)**( '")#()%%$ '1!)*$)#+ '$(()((( '( '1)#$!)(+ ')((()((( '")1$)+*1 '$1$)%!# '!)#1()"$ '1)1+!)"*" ')!1$)%$
'1)"#1)1( '$)!+")11# '1")"*)(*! '$(()((( '( '1)$#%)((1 ')((()((( '")!1*)1*1 '$1()1+" '!)%(%)+*% '1)$()%1$ ')""%)%1
'1())+$( '*)*!)%*( '1")"+)1( '$(()((( '1(()((( '1)%#$)"1 '( '$)(1)%1+ '$(!)((( '#)"(+)%1+ '1)*!+)!(" '!)#%()"1#
'$)*1")%( '11)+1)$* '1")(!+)+$( '$(()((( '1(()((( '1)*$1)*($ '( '#)#(")"+% '$(!)((( '")+(1)"+% '1)$$$)#(+ '!)!")+**
'( '( '!1*)(( '1!)+$% '1%)%*( '"+)1!+ '(!)!($
'( '( '**#)!1 '$+)1*! '"1)#1( '#")(#! '*(1)"1
'( '( '1)(*)+$ '!$)%11 ')(% '#+)"#* '1)1(%)(!(
'( '( '!%*)$#$ -'1+)!"% -'%%)$(* '$#)"(" '1)+")""1
'( '#(()((( '"$$)(1 -'1+)(!$ -'11#)1 '%1)+"# '1)"*#)+"(
'1(()((( '( '#)+#! -'"#$)%%! -'%")($" '( '!)*%)1%1
'1(()((( '( -'**)+*+ -'$+*)$*+ -'"1+)1" '( '!)+(!)"#
7 Dereciation - 0e4rchase o6 e34iment - 5nvestment in acco4nts receivable - 5nvestment in inventor2 8 7 5ncrease in acco4nts a2able 8 - 9rincial rea2ments Free cash 6lo, Terminal val4e - cash 6rom sale
8 Changes in inventor2 and acco4nts a2able 6or existing hearing aids onl2.
'"#)*+)**
Harmonic Hearing Co. Exhibit TN- Financial Forecasts Under E34it2 Financing Alternative
Year &ales - existing hearing aids &ales - ne, hearing aids Total sales
1 '!()$*%)((( '!)!$)((( '!!)+!)(((
'!1)"#")((( '%)##1)((( '!+)((#)(((
! '!1)*$1)((( '1()+"+)((( '")*1()(((
" '!()"%)((( '1#)#"*)((( '"#)+%#)(((
# '*)+*)((( '1)"#$)((( '"+)%#")(((
$ '!)!")((( '*)+$$)((( '#)(()(((
% '1#)"**)((( '!+)1(")((( '#")#+)(((
C& - existing hearing aids C& - ne, hearing aids &elling) general / administrative 0esearch / develoment Dereciation - ne, e34iment Dereciation - existing e34iment 0ent a2ments E34iment lease a2ments erating income 5nterest 5ncome be6ore income taxes 5ncome taxes Net income
'1!)#()*( '1)+)$*( '1)1)*( '1)%(()((( '1"()((( '1)1$%)((( '( '( '!)+%1)%$( '( '!)+%1)%$( '1)!#()!+* ')$1)!$
'1!)*!+)%$( ')*$+)!*( '1")("1)*(( '$(()((( '1%()((( '1)1$%)((( '( '( '$)!1%)($( '( '$)!1%)($( ')1"%)*(( '")1$+)$(
'1")(1*)*"( '")1$()$( '1#)"11)$(( '$(()((( '1*()((( '1)1$%)((( '( '( '%)%1)+"( '( '%)%1)+"( ')"%)"$( '")%++)"*(
'1!)!*%)**( '#)+(*)"( '1$)##1)((( '$(()((( '1*()((( '1)1$%)((( '( '( '*)1*()**( '( '*)1*()**( ')%*1)"++ '#)!++)!*1
'1)"#1)1( '*)1#!)*( '1%)+11)""( '$(()((( '1*()((( '1)1$%)((( '( '( '+)+1)1$( '( '+)+1)1$( '!)1#*)++" '$)1!)1$$
'1())+$( '11)((%)(*( '1*)%+)((( '$(()((( '"()((( '( '( '( '11)#!%)+$( '( '11)#!%)+$( '!)+)+($ '%)$1#)(#"
'$)*1")%( '1")*#+)#( '1+)$#!)1( '$(()((( '1()((( '( '( '( '1)$#")$"( '( '1)$#")$"( '")!()#%* '*)!#)($
'1)!(%)((( '%(()((( '1)11")(#* '"$$)(# '%+)(!1 '( '1)+%)*! '1)*")*##
'1)!!%)((( '1#()((( '1)#()1% '"(#)! '"!)1+! '( '!)+"!)+#+
'1)!"%)((( '#()((( '+!$)(!( '!(1)"1$ '1*()*"+ '( '#)(!+)**"
'1)!"%)((( '( '%%*)#+( '*)+1# '1!%)!"+ '( '#)*%$)#
'1)!"%)((( '( '++)$!" '$*)1+% '1$()+1* '( '$)"")#!
'"()((( '( '$(1)%1$ '1*)#$ '%$)+#" '( '%)(()(!#
'1()((( '( '#**)"! '+1)($1 '#")$!% '( '%)%!%)($
7 Dereciation - all e34iment - 5nvestment in e34iment - 5nvestment in acco4nts receivable - 5nvestment in inventor2 7 5ncrease in acco4nts a2able - 9rincial rea2ments Free cash 6lo, Terminal val4e - cash 6rom sale
'11$)+*)*%"
Harmonic Hearing Co. Exhibit TN-! 0eal Estate Transaction Cash 6lo,s to Fran: Thomas ,itho4t sale o6 b4ilding and land Year ( 5nitial investment -')1(()((( Ann4al cash 6lo, Total cash 6lo, -')1(()((( Net resent val4e at 1#;
1 '11#)"%% '11#)"%%
!
'1"()$(* '1"()$(*
" '1$%)*! '1$%)*!
#
'1+%)$! '1+%)$!
'+)(! '+)(!
.>x-*$++!*"? '+)("%)%(
11!(+$*
-'1)!+)$#
A6ter tax cash 6lo, 6rom 2ear % sale re34ired to earn an a6ter tax rate o6 ret4rn o6 1#;< Additional N9= re34ired '1)!+)$# F4t4re val4e 6actor >1#;) % 2ears? .$$((( 0e34ired receits in 2ear % '!)#!$)+(
@!)#!$)+((.%#
&ale rice re34ired in 2ear % to receive this a6ter tax cash 6lo,< riginal 4rchase rice '1()#(()((( - Acc4m4lated dereciation '1)*(()$1$ oo: val4e '*)$++)!*" &ale rice received in 2ear % - oo: val4e Taxable gain on sale x Caital gain tax rate Caital gains tax aid
'11)!(+)$* '*)$++)!*" ')$1()"" (.(; '#)("+
&ale rice received in 2ear % - Caital gains tax aid - Bortgage balance aid Net cash receits on sale
'11)!(+)$* '#)("+ '%)#()$%% '!)#!$)+(
1(%*%#%+7
'1()%*%)#%+
$ '$!)" '$!)"
% '!(()(#+ '!(()(#+
Harmonic Hearing Co. Exhibit TN-" E34it2 ,nershi 9roortion 0e34ired b2 Comet Caital Cash 6lo,s to Comet Caital Year Caital investment Ann4al cash 6lo, Total cash 6lo,
-'*)(#()(((
Net resent val4e at #;
-'1*)!(1)%1!
( -'*)(#()(((
1 '1)*")*## '1)*")*##
')$+)!($ ')$+)!($
! '!)!#+)+! '!)!#+)+!
" '!)+1%)"*! '!)+1%)"*!
# '")+")*!# '")+")*!#
$ '")$$*)(! '")$$*)(!
% '#)1#*)1!% '#)1#*)1!%
A6ter tax cash 6lo, 6rom 2ear % sale re34ired to earn an a6ter tax rate o6 ret4rn o6 #;< Additional N9= re34ired '1*)!(1)%1! F4t4re val4e 6actor >#;) % 2ears? ".%$*!% 0e34ired receits in 2ear % '*%)$+)!$% 0e34ired cash 6lo, to Comet Caital at the end o6 2ear % to rod4ce a #; internal rate o6 ret4rn on investment
'*%)$+)!
%$Terminal val4e o6 coman2 at the end o6 2ear %
'11$)+*)*%"
Comets re34ired o,nershi roortion Comets re34ired val4e 0esid4al terminal val4e at the end o6 2ear % 6or 4rns and 5rvine 0esid4al o,nershi roortion o6 4rns and 5rvine
terminal val4e
÷
%".$!; '+)$#+)#($ #.!%;
Harmonic Hearing Co. Exhibit TN-# 0et4rn on ,nershi 5nterest o6 Harriet 4rns and 0ichard 5rvine Debt Financing Alternative
Cash 6lo,s Year 5nitial investment Ann4al cash 6lo, 0e4rchase o6 b4ilding / land 0ea2ment o6 A0 / inventor2 loans Terminal val4e o6 coman2 Total cash 6lo, 5nternal rate o6 ret4rn Net resent val4e at #; Net resent val4e at !(; Net resent val4e at !#; Net resent val4e at "(; Net resent val4e at "#;
( -'(()(((
-'(()(((
1
!
"
#
$
'(!)!($
'*(1)"1
'1)1(%)(!(
'1)+")""1
'1)"*#)+"(
'!)*%)1%1
'(!)!($
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'1)1(%)(!(
'1)+")""1
'1)"*#)+"(
'!)*%)1%1
% '!)+(!)"# -'11)!(+)$* -'$)%(()((( '"#)*+)** '!1)1*!)$#
%.!#; '+)*$()!#* '%)%%()+(+ '$)1++)($ '#)((1)1+% '")(%%)!1!
Equity Financing Alternative
Cash 6lo,s Year 5nitial investment Ann4al cash 6lo, 0esid4al terminal val4e o6 coman2 Total cash 6lo, 5nternal rate o6 ret4rn Net resent val4e at #; Net resent val4e at !(; Net resent val4e at !#; Net resent val4e at "(; Net resent val4e at "#;
( -'#()(((
-'#()((( !!(."1; '1()*"")1+! '*)$%)(" '%)(+)1" '#)%$+)* '")%+()*#*
1
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"
#
$
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'1)$%+)+$1
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% ')#%+)($+ '+)$#+)#($ '!)!*)#%#
