BUSINESS VALUATION REPORT SUBJECT BUSINESS: COMMERCIAL PRINTER SAMPLE REPORT WITH IDENTIFYING DATA DELETED

Prepared By DONALD SONNEMAN, ASA ABLEPLUS VALUATIONS 9715 Lorraine Way, #203 Santee, CA., 92071
Phone: (619)-334-3105 Fax: (619)-374-2358

AblePlus Valuations

BUSINESS VALUATION SAMPLE REPORT WITH IDENTIFYING DATA DELETED

Notes to Reader: Throughout this report, the company name is replaced with X Printing Corporation. to protect confidentiality. Address and location and competitor names are also deleted. This report was selected as a sample because it demonstrates competence with a moderate complexity. Other business valuation assignments can be substantially more complex. This sample report also demonstrates capability to research industries efficiently. Any expertise with this specific industry was developed strictly within a four week period of preparing this report. The industry trends section was written several years ago. Therefore comments about industry trends will not fit well with current reality, even though they accurately reflected this analysts viewpoints at that time. The original report had tables that prepared in grayscale. They have been replaced with color graphics more consistent with current technology and my current capability. The address and phone information for AblePlus Valuations has been updated to reflect current information.

Donald Sonneman, ASA AblePlus Valuations

9715 Lorraine Way, #203, Santee, CA 92071 Phone: (619)-334-3105 E-Mail: ds@companyvalu.com

(Date Deleted) Mr. (Name Deleted) President X Printer Corporation (Company Address Deleted) RE: VALUATION OF 100% CONTROLLING INTERESTS IN (COMPANY NAME DELETED)

Dear Mr. (Name Deleted): I have been asked by you to give my opinion of the fair market value of the above referenced interest in (Company Name Deleted): Fair Market Value is defined as the amount at which the business interest would change hands between a willing buyer and a willing seller when neither is acting under compulsion and when both have reasonable knowledge of the relevant facts. The Fair Market Value of the 100% Controlling interest in the Subject Company, as the valuation date is as follows: Fair Market Value of Business Equity Fair Market Value of Non-Operating Assets (Loans to Related Parties) Fair Market Value of Equity (Business and Non-Operating Equity Combined) $1,980,000 ($-0-) $1,980,000

The report that follows describes the facts and reasoning upon which my opinion is based. My estimate of value is subject to the attached Certification and Assumptions and Limiting Conditions. Respectfully submitted, Donald Sonneman, ASA

AblePlus Valuations

Table of Contents Letter of Transmittal 1 Table of Contents ...........2 Valuation Estimate and Reconciliation ............3 Assumptions and Limiting Conditions and Certification .......................................4 Valuation Introduction and Concepts.......................................................................................................................6 Description of the Subject Business.... 8 Industry Trends...9 Subject Business Strengths and Weaknesses.......12 Financial Condition of Subject Company..15 Overview of Valuation Approaches Used.........................................18 Market Approaches: Multiples of Sellers Discretionary Earnings.....19 Multiples of Revenues..................21 Income Approaches: Capitalization of Single Period Earnings...23 Excess Earnings Analysis...26 Discussion of Normalizing Adjustments....................28 Normalized Financial Statements....... 29 Addenda: Working Capital Analysis, Ratio Analysis, Qualifications of Appraiser31

AblePlus Valuations

SUMMARY OF VALUE INDICATORS FOR BUSINESS EQUITY VALUE

MARKET COMPARABLE APPROACHES (BASED ON SALE TRANSACTIONS) FAIR MARKET VALUE OF BUSINESS EQUITY MARKET BASED APPROACHES MULTIPLE OF SELLERS DISCRETIONARY CASH FLOW MULTIPLE OF REVENUE INCOME BASED APPROACHES CAPITALIZATION OF SINGLE PERIOD INCOME EXCESS EARNINGS ANALYSIS $1,983,000 $2,220,000 $1,569,000 $1,904,000

RECONCILIATION AND VALUATION ESTIMATE

Reconciliation Greatest emphasis is placed on the market based approaches which consider actual sales transactions. Least emphasis is placed on the Excess earnings analysis, which is considered least reliable among all available methods. Valuation Conclusion Based on consideration of the approaches above, the Fair Market Value of the Business Equity for the Subject Company as of the valuation date is as follows: $1,980,000

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ASSUMPTIONS AND LIMITING CONDITIONS AND CERTIFICATION

This appraisal report does not purport to be an all-inclusive list of all of the considerations undertaken in order to arrive at the opinion of value. This report is an appraisal report designed to give a conclusion of value. It is not an accounting report and it should not be relied on to disclose hidden assets or to verify financial reporting. It is an opinion of value of the specific assets and liabilities considered by AblePlus Valuations. The purpose of this appraisal report is to provide a valuation for information for a proposed sale transaction. For valuation purposes, AblePlus Valuations has reviewed financial information and other documents provided to us by (Name Deleted) of the (Company Name Deleted). The financial information and documents are believed to be reliable, but no responsibility is assumed for the accuracy of the documents and financial information. This Appraisal Report was prepared for the exclusive use of (Name Deleted) of the (Company Name Deleted). No reproduction, publication, distribution, or other use of this appraisal report for other than its stated purpose is authorized without prior consent of AblePlus Valuations and the undersigned appraiser. This appraiser assumes no responsibility for matters legal in character; ownership is assumed to be valid and marketable. All facts and data set forth in this report are true and accurate to the best of the appraiser's knowledge and belief. No matters affecting the conclusions have been knowingly withheld or omitted. The fee charged for this appraisal report is not contingent upon the value conclusion. This appraisal and its conclusions are subject to review upon the presentation of data which may have been undisclosed or not available at this writing. AblePlus Valuations and its employees and subcontractors have no present or contemplated future interest in the subject business valued in this appraisal report. I have no interest in or bias with respect to the Subject Company or the owners thereof. The undersigned appraiser is fully qualified to value businesses based on both experience and educational background. The detailed business valuation experience is reflected in the appraiser qualifications at the end of this report. The undersigned appraisers relevant educational background consists of the following: (1) 3 Basic courses through ASA and IBA, covering valuation of small and mid-sized businesses (2) Specialty courses through ASA, IBBA, IBA and Valuation Institute covering: Merger & Acquisition Valuations, Merger & Acquisition Financing, Technology Company Valuation, Valuing Intangibles, Discounted Cash Flow and Discount Rates, Control & Marketability. (3) Taxation Courses 54 continuing education courses taken while working as tax preparer. (4) Public utility accounting and valuation course, (5) Accounting, Cost Accounting, Economics I & Economics II, Engineering Economics (Same as Finance), Finance (graduate level). The undersigned appraiser further maintains my business valuations qualifications by subscribing and reviewing key business valuation periodicals. These periodicals provide information on changes in methodology of business valuation.

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ASSUMPTIONS AND LIMITING CONDITIONS AND CERTIFICATION (CONTINUED)

The undersigned appraiser is also currently certified under the continuing education programs of the American Society of Appraisers for the Real Property/Urban designation which he holds. The undersigned appraiser has prepared the valuation report in a manner intended to be consistent with the Uniform Standards of Professional Appraisal Practice (USPAP), the Principles of Appraisal Practice and Code of Ethics of the America Society of Appraisers.

______________________ Donald Sonneman, ASA SCREA AG003493

AblePlus Valuations

VALUATION INTRODUCTION AND CONCEPTS

SUBJECT OF VALUATION
A 100% Controlling Interest in (Company Name Deleted). DATE OF VALUE The Valuation date is as of (Valuation Date Deleted). PURPOSE OF THE REPORT The purpose of this appraisal report is to provide a valuation for information for a proposed sale transaction. USE OF THE REPORT This valuation report is intended to provide information in conjunction with a proposed sale transaction. The appraiser is not required to give further consultation, testimony, or make a court appearance with reference to the subject interest being valued, unless separate contractual arrangements have been made prior to such consultation, testimony or court appearance. USER This Appraisal Report was prepared for the exclusive use of (Name Deleted) of the (Company Name Deleted). No reproduction, publication, distribution, or other use of this appraisal report for other than its stated purpose is authorized without prior consent of AblePlus Valuations and the undersigned appraiser. BASIS OF VALUE: FAIR MARKET VALUE As used in this report, "fair market value" is defined as outlined in Treasury Regulations 25.2512-1 (gift tax), 20.231-1(b) (estate tax) and S1.170A-1 (c)(2) (charitable contributions). The definition is as follows: Fair Market Value is defined as the price at which the property would change hands between a willing buyer and a willing seller when the former is not under any compulsion to sell, both parties having a reasonable knowledge of the facts. Court decisions frequently state in addition that the hypothetical buyer and seller are assumed to be able, as well as willing, to trade and to be well informed about the property concerning the market for such property. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: (1) buyer and seller are typically motivated; (2) both parties are well-informed or well-advised, and each is acting in what he/she considers to be in their own best interest; (3) a reasonable time is allowed for exposure in the open market; (4) payment is made in terms of cash in United States dollars or in terms of financial arrangements comparable thereto; and (5) the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale. FAIR MARKET VALUE - VALUATION APPROACH Revenue Ruling 59-60 suggests that all relevant factors affecting fair market value should be considered in the valuation of closely-held business interests. The following factors, although not all-inclusive, are fundamental and require careful analysis in each case: (a) (b) (c) 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.

AblePlus Valuations

VALUATION INTRODUCTION AND CONCEPTS

Revenue Ruling 59-60 Factors (Continued): (d) (e) (f) (g) (h) 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 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 overthe counter."

Each of these factors is considered in the valuation process.

AblePlus Valuations

DESCRIPTION OF THE SUBJECT BUSINESS

Type of Business X Printer Corporation does high quality lithography printing services using color separations. To produce their work, they use 5 and 6 color sheet-fed presses, a comprehensive electronic prepress and a full-service bindery. Their range of products include catalogs, brochures, calendars, annual reports and other items requiring a high degree of quality control. Organizational Structure This company is structured as a California based C Corporation. The officers and their holdings of company stock are as follows: (Officers Names and % Ownership Deleted) The company employs approximately (Number Deleted) full time staff including a sales staff of (Number Deleted). Types of Facilities - The Subject Company occupies two adjacent buildings which are a mix of office space and industrial space. The premises is on a 25 year lease with approximately 20 years remaining. The lease is between related parties. The annual lease amount is equal to the annual debt service on the bank loan on the property. The lease rate is substantially higher than market rents for a similar office and industrial/warehouse space. Alternative space is readily available in the surrounding area. The facilities are 38 years old and leave little room for further expansion. Locational Characteristics: The company facilities are located in , a centrally located commercial neighborhood with good access to large concentration of small business, retailers and professional offices. The facility has its own off-street parking. Competition - The Subject Company is ranked number (Number Deleted) among the 25 largest printing firms within the County based on number of employees. The printers below are well located to serve the same trade areas and have somewhat similar range of services: (Competitor Name and Address Deleted) - Revenues of 21.6 million dollars annually and a staff of 190. The location is inferior for direct access by customers, but the facilities are in a recently developed industrial park located in the (Geographic Area Deleted). (Competitor Name and Address Deleted) - Revenues of 16 million dollars annually and a staff of 110. The location is superior for direct access by customers. (Competitor Name and Address Deleted) - Revenues of 11 million dollars annually and a staff of 92. The location is inferior for direct customer access and facility age is similar. (Competitor Name and Address Deleted) - Revenues of 2.7 million dollars annually and a staff of 33. The location is closer to downtown customers for direct customer access and the facility age is similar.

AblePlus Valuations

INDUSTRY TRENDS
The data provided here is a summary of data from the National Association of Printers and Lithographers (NAPL), the Digital Printing and Imaging Association (DPI) and other sources. Type of work The printing industry is called upon to handle a spectrum of work that falls between the following extremes: (1) Work requiring high quality of color control and large production runs - i.e. catalogs, brochures, annual reports (2) Work requiring less quality of color control and shorter production runs (i.e. 2,000 copies or less). The machinery and equipment investment is substantially higher for the first category of work. Conklin Litho falls primarily in this category. Technology Trends Changes in technology over the past 5 to 10 years, require a close look at obsolescence of equipment for any printer that has been in business for a decade or more. Newer methods are saving time and effort and reducing potential for error in each stage of the printing process. C Digital Color - Digital color systems are now in over 3,000 locations - This represent very rapid expansion of a relatively new technology. This process does not provide the same quality as lithography. However, for customers that can accept lesser quality, the major advantages are in price, speed and paper handling capability. The process is well suited to short runs (2,000 copies or less). Type creation & Preparation of Copy and Art - Desktop publishing using floppy or Syquest disks. Eventually internet data transmission. Printing and Postpress operations - computer to plate systems, and plates that are less light sensitive. Mechanicals - Being replaced by digital printing. Provides less opportunity for customer to see product in preliminary stages. Waterless ink - Less chemistry problems. Faster drying inks

Revenue Trends National Trends - Printing company revenues nationally are increasing at about 4% over 1996 (not adjusted for inflation), after increases of 8.5% in 1994, 8.7% in 1995 and 4.7% in 1996. The industry had its last decrease in this figure in 1991. Regional Trends - The western region revenues increased by 5.3% in 1996 and are projected to increase by 6.7% in 1997

AblePlus Valuations

INDUSTRY TRENDS (CONTINUED)

Revenue Trends (Continued) NAPL Forecast - Generally strong revenue projections for the future from printers - The National Association of Printing and Lithography surveys its membership. 49% of the respondents expect growth of sales revenues in excess of 5% in and another 21% expect growth in excess of 10%, while 31% expect a decrease in revenues. WEFA Forecast - The WEFA Industrial Monitor 1997 projects a 5% to 6% annual revenue growth over the next 10 years for the printing and publishing industry (which includes book publishers). Economic limitations on future revenue growth - Both business spending and consumer spending is a record levels which do not appear sustainable. Federal Reserve may elect to raise interest rates as a response (note to reader: this is written from the perspective available as of the 04/20/97 valuation date). Growth in Gross Domestic Product growth will began to slow and return to normal levels in the latter part of 1997 and early 1998. Technological Limitations on future revenue growth - Technology may erode and certainly will change the role of printers. Many associations are producing newsletters using in house desktop publishing where previously printers were used. Some catalogs and manuals are being replaced with CDs using CD-ROM technology rather than the printed page. Some vendors and associations are using internet web pages to replace much of their previously printed communication. Specific segments affected include real estate agencies, association, catalog houses. Additionally, the food/grocery industry downsizing the number of pages printed for their advertising campaigns. The intensity of these trends is difficult to foresee, but is considered more of a concern over the longer term, i.e. 10 years or more in the future. Pricing Trends Price index continuing upward - This reflects the prices commercial printers are able to charge for services. The price index increased by 2.8% in 1996, after increases of 1.3% for 1994 and 5.8% for 1995. The lower increase in 1996 probably reflects a normal reaction after an unusually high increase of 5.8% the previous year. During the recessionary years of 1991 and 1992 increases were 0.8 and 1.6% Paper Costs Paper prices fell by 1.9% in 1996 after doubling from 1993 to 1995, in spite of an improved economy. They appear to be stable for the foreseeable future. Operating Costs Better control of operating costs - A 1.4% increase in operating costs for 1996 following a 7.7% increase in 1995. Wages, Fringe Benefits and Overhead Modest wage, fringe benefit and overhead increases - Each cost category had increases ranging between 2.8% and 3.0% for 1996.

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AblePlus Valuations INDUSTRY TRENDS (CONTINUED)

Demand Indicators Total spending for print advertisements - Up by 8.7% in 1994 and 8.0% in 1995. Gross Domestic Product adjusted for inflation - Up by 3.5% in 1994, 2.1% in 1995 and 2.5% in 1996 (note: during 1991 this figure was negative 1.0%). Capacity utilization continuing and upward trend - 4th quarter 96 capacity utilization was at 85.7% up from 84.9% from the same quarter in 1995. Profitability Our data on profitability trends covers 1991 - 1995. The 1995 profit ratio is in the middle of the range between low profits in the early 1990's and a spike in profits in 1996.

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AblePlus Valuations

BUSINESS STRENGTHS SUBJECT COMPANY

In the evaluation of the subject business, there were several strengths of the business that a potential buyer would consider in estimating an appropriate purchase price for the business. They are as follows: Well established The company has a 25 year history and was established and operated under the same ownership for their entire history. Management and Staffing Depth (Strengths) The ownership and key management and staffing of the company has been very stable and is highly experienced. Two of the officers of the company (Names Deleted) have been in place for 15 years and Ted Higgins has been with the company for over 20 years. Key managers and staff have are also highly experienced. They include the following: President/CEO - Over 6 years as President/CEO, preceded by 12 years in a sales position in the company and 6 months in production. However, the company is also rich in other experienced staff. Sales Staff - Highest producing salesperson has 12 years in sales with the company. Another member of the sales Staff has been with the company for over 20 years. Accountant - With the company for 19 years. Production Manager - With the company for over 16 years. Lead Pressman - With the company for 7 years. Prepress Foreman With the company for 11 years. Estimating - With the company for 16 years. Cross trained production staff This allows the most cost effective use of staff during both peak periods and slow periods without requiring constant hiring, training and laying off of staff. A loyal customer base Over 95% of the companys business is from repeat customers. However, the addition of two new sales staff should also ensure a growing segment of new customers. Diverse customer base The company has a very diverse customer base which makes it less vulnerable to changes in an individual client relationship. Location The company is centrally located in an area that gives good access to heavy concentrations of companies within all areas of the county.

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AblePlus Valuations

BUSINESS STRENGTHS SUBJECT COMPANY History of Investment in new technology and more efficient practices In the printing industry, obsolescence is a particularly major concern for companies that have been in place for twenty years or more. In the early 1990's the company was among the first of the citys large printers to invest in the following: (1) A color separator so that the profits on this function can be kept inhouse rather than outsourcing this work and (2) Electronic Prepress Equipment which reduces the extent of manual labor in that process, (3) Training of clients in preparation of files for the electronic prepress process. Continuing investment in improved efficiency The most recent expenditures to improve efficiency include (1) Addition of a dryer and an aqueous coater to the 40" press to minimize drying time. This minimizes downtime for pressman and reduces storage requirements for jobs resulting in a 20% to 30% reduction in total time for most jobs., (2) Modifications to the bindery and rebuilding of folders, (3)Purchase of an upgraded computerized estimating system which speeds the estimating time by 300% and automatically selects the most appropriate press for each job. Future investments will include the addition of a 2 color press for to handle pages with text only which do not require for or 6 color work. Steadily growing Revenues and profitability for the company For the five fiscal years analyzed, the company experienced only one downturn in revenues during fiscal year 2 during the recession. Overall, the compound annual growth of revenues has been 4.8% during a period where a minimum of 3 years were during recessionary conditions and major shakeouts for the printing industry in (City Name Deleted). Positive Long Term Economic Trends for California and the County (Deleted paragraph describing retail sales, and the health of the retail and industrial markets within the county) Revenues Place the Firm among the Top 20 Printing Firms in (City Name Deleted) During the last four years of the period analyzed revenues have exceeded 5 million dollars and are expected to exceed 6 million dollars for next year. Good cost control in several areas of operating expenses The companys expenditures are below average for factory expense, materials and administrative expenses.

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AblePlus Valuations

BUSINESS WEAKNESSES - SUBJECT COMPANY

The strengths of the business substantially outweigh the weaknesses. The weaknesses are as follows: Current facilities limit growth Because of the limitation of the existing facilities, it will be difficult to increase the volume of the printing work by more than 25% above current levels. A move to a new location is anticipated no earlier than 5 years in the future. This restricts average growth to under 5% annually over the next 5 years. In an environment where (City Name Deleted) is recovering from recession this may serve as an artificial limit on growth, particularly four to five years from now. Rent paid for the existing structure exceeds market rent This is a related party lease. The terms of the lease are simply to pay two mortgage loans on the two facilities which are owned by related parties. One mortgage loan is a fixed payment and the other is variable interest. The current payments total $10,762/mo. or $0.72 per square foot. With a part of the payment being a variable interest loan, there is a risk of a maximum increase of up to $1,000 or 10% over time in smaller annual increments. Fair market rent for the current facility is in the $0.55 to $0.60 per square foot range. A move to a more suitable industrial park location would lower rent to $0.60 to $0.70 per square foot for a larger industrial facility with a higher percentage of administrative and production office space. Additional working capital is needed An estimated $159,000 in additional working capital is needed to be in the normal range for the level of revenues of the Subject Company. Factory payroll cost is well above average The management has made significant improvements in this area by improving technology (which reduces drying time and other down time) and by cross training staff to provide greater flexibility in using them for multiple tasks. The remaining difference may be attributable to higher than average wages paid to production staff, because of greater training investment and a desire to minimize turnover.

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AblePlus Valuations

FINANCIAL CONDITION SUBJECT COMPANY

In examining the financial condition of the Subject Company financial ratio data from the following sources were considered: (1) Printing Industries of America, (3) Robert Morris & Associates (RMA), (4) Dun & Bradstreet industry Norms and Key Business Ratios, (5) Financial Research Associates, (6) Tax and Financial Statement Benchmarks. Detailed spreadsheets of the data are in the addenda. INCOME STATEMENT ANALYSIS Profitability Historical Data During the five year period analyzed, the companys pre-tax profitability as a percentage of gross revenues was as follows: Actual Fiscal Year 1 0.7% Fiscal Year 2 2.7% Fiscal Year 3 2.0% Fiscal Year 4 0.9% Fiscal Year 5 3.0% Normal before tax profits Before tax profits are somewhat volatile, but partially reflects (1) Movement from a recessionary economy to recovery and (2) expenditures for technological change. Median before tax profits for printing firms in similar size range according to multiple sources appears to be in the 3.0% to 5.0% range, while profit leaders have a median profit of 9.0%. Current before tax profit is reasonably consistent with industry norms at 3.0%. During the next fiscal year, the company will have paid off a major equipment loan which will generate an additional 2.6% of before tax profits. Additionally, the firm is paying above fair market rent in a related party lease of their facilities. Fair market rent would add an additional 0.4% of before tax profits. This would indicate a 6.0% profit which is approximately double the median, but below the median for the profit leaders in the same size range based on revenues. If they elect to enhance their facility with a two color printer for text only, that expenditure will reduce profitability to the 4.0% to 5.0% range which is still in the normal range. Gross Profit slightly below median levels Gross Profit can be defined and analyzed in two different ways: (1) cost of good sold is labor and materials only and (2) cost of goods sold is labor, materials, direct supplies, outside processing and factory expense. Dun & Bradstreet and Financial Research Associates use the first definition in their ratio analysis and RMA and Printing Industries Associates favor the second definition. The company appears to be in the normal range using the first definition, but appears to have a slightly lower gross profit than the median using the more precise second definition of cost of goods sold. RMA reflects a 30% median gross profit for similar size printing companies, while Printing Industries Associates has 24.5% for all similar size companies and 27.5% for profit leaders. At 23.3% the Subject Company is slightly low. This is apparently primarily driven by the factory payroll which is substantial above the median even after substantial increases in efficiency over previous years. At the same time non-labor costs are kept below the median. Return on Assets This is an indicator of efficiency in use of assets to generate profit. Return on Assets before taxes appears to be in the normal range at 7.8%. Medians reported from several sources range from 5.7% to 8.6% with profit leaders generating a minimum of 29% for this indicator.

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AblePlus Valuations

FINANCIAL CONDITION SUBJECT COMPANY (CONTINUED)

Sales/Total Assets An indicator of efficiency of the firm. This indicator appears to be significantly above average at 2.59 vs. median figures from several sources in the 1.7 to 2.1 range. Salary of Officers This component is within the normal range. There appears to be a wide variation between medians reported from all sources, ranging for 3.6% to 7.0% and 8.4% for the most profitable. The Subject Company pays 4.5% of revenues to officers, which is within this wide range. Factory Payroll This cost component is higher than normal. The available data reflects a median of 25.51% of revenues for factory payroll for all similar size printers and 22.39% for profit leaders. The Subject Company is at substantially higher at 28.72% of gross revenues. The Subject Company has been reducing this component partially by reconfiguring machinery and equipment to reduce drying time and other downtime. The previous years figure was 32.54%. An offsetting benefit is that the company has a low staff turnover rate, perhaps consistent with company philosophy to pay higher wages to have a stable production work force. Factory Expense This cost component is slightly lower than normal reflecting good cost control. The available data reflects a median of 14.34% of revenues for factory payroll for all similar size printers and 13.22% for profit leaders. The Subject Company is at 13.52% of gross revenues. The Subject Company has been reducing this component partially by reconfiguring machinery and equipment to reduce drying time and other downtime. The previous years figure was 32.54%. Materials This cost component is also substantially lower than normal reflecting good cost control. The available data reflects a median of 35.69% of revenues for factory payroll for all similar size printers and 36.78% for profit leaders. The Subject Company is at 34.82% of gross revenues. The previous years figure was 32.77%. Advertising The Subject Company does substantially less advertising than industry norms. Median for all similar size companies is 0.46% while profit leader expend 0.30% of revenues. The Subject Company is expending only 0.16% of revenues. However, this may be compensated for by strong customer retention rates and above average selling expense for the company sales force. Selling Expense Selling expenses are slightly above the median for similar size companies, but not significantly. The company is in a transition phase of carefully redefining its customer base to focus on categories of customers that provide the most profitable types of printing jobs. The median cost for all similar size companies is 9.89% while profit leaders expend 8.86% of revenues. The Subject Company expending 10.42% of revenues. Administrative Expenses This area reflects increasing good cost control. The current expenditure level is consistent with profit leaders. Median cost for this component for similar size companies is 10.28% and 9.07% for profit leaders. The Subject Companys expenditures are at 8.84%.

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AblePlus Valuations

FINANCIAL CONDITION SUBJECT COMPANY (CONTINUED)

BALANCE SHEET ANALYSIS Quick Ratio Current liabilities are adequately covered by current assets. At 1.47 the companys quick ratio appears to be consistent with industry medians from four different data sources, but below profit leaders at 1.76% Sales/Working Capital This indicator is the more important measure of adequate working capital. Based on review of industry medians and ranges, this indicator should normally be between 8.0 and 15.0. The companys ratio as of 04/30/97 is 25.44. This indicates a substantial working capital deficit of $159,000. Sales/Fixed Asset This is an efficiency measure. It measures how efficiently fixed assets are being used to generate revenues. The company appears to be generating a low level of sales relative to their investment in fixed assets. Too high a ratio could reflect inadequate investment in changing technology. Too low a ratio, could reflect deficient marketing effort. The company has a ratio of 4.91 compared to a median from Printing Industries of America of 6.89 for similar size companies and 7.13 for profit leaders and 5.3 from RMA for similar size companies. This ratio has never been higher than 5.0 during the last four years of this analysis. Sales/Receivables Efficiency of collection is measured here. The companys ratio of 7.45 appears to be somewhat better than the figures reported by Printing Industries Association for both similar size companies (7.18) and profit leaders (7.07). Average Collection Period Again this is a measure of collection efficiency. There is a wide variation in median figures from data sources. The companys average collection period of 49 days falls within these figures and is slightly better than the figures reported by Printing Industries Association for both similar size companies (51 days) and profit leaders (52 days).

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AblePlus Valuations

VALUATION APPROACHES OVERVIEW COMMERCIAL PRINTING COMPANIES

Market Approach: Multiple of Sellers Discretionary Cash Flow (SDCF) Where it is possible to obtain the specifics of completed sale transactions, that is the best source of information for identifying how commercial printing firms are sold. That information was not directly available. It was feasible to find data several sales of printing companies with revenues from 1 million to 7 million in BIZCOMPS. The sellers discretionary cash flow method is most useful for valuations of companys with 20 employees or less, but is also used for somewhat larger companies. Market Approach: Multiple of Revenue Where it is possible to obtain the specifics of completed sale transactions, that is the best source of information for identifying how commercial printing firms are sold. It was feasible to find data several sales of printing companies with revenues from 1 million to 7 million in BIZCOMPS. The sale price for many sale transactions can be analyzed on a multiple of revenue basis. While this method does not explicitly consider earning or cash flow, the revenue multiple selected will often factor this in. This method is particularly convenient to use, because it does not require explicit information about cash flow or earnings. This is particularly convenient where: (1) businesses may be performing below normal, (2) may need substantial restructuring or (3) it is difficult to develop a reliable analysis of cash flow or earnings. Income Approach: Capitalization of Single Period Earnings The method involves the division of a single years income stream by a capitalization rate to estimate value. It is only reliable where the Subject Company has a stable revenue base, stable income and faces moderate long term growth (long term growth is over a 20 to 30 year period). The income stream capitalized was normalized pre-tax earnings. This method of calculation is described later in this report. Income Approach: Excess Earnings Method This method applies best to small businesses that are not complex. The subject business has 60 employees, is in a single location and does printing related business only. The excess earnings method, which is described in greater detail later in this report, is useful for estimating goodwill and other intangibles. Monthly Net Revenue Multipliers (Rule of Thumb) This rule of thumb method is cited in Glen Desmonds Handbook of Small Business Formulas. A rule of thumb method is only used where other methods are not available. Since other methods are available, this method is not presented in the analysis. This rule of thumb was only used as a check for reasonableness for the other methods used. Income Stream Analyzed - How many years earnings or cash flow Out of a five year history, a weighted average of the last 3 fiscal years of earnings is used. Greatest weight in put on the current year and least on the earliest year. Acquisition experts differ in identifying which years of cash flow to use. Some use the most recent years income only, others rely on recent trends. Little emphasis is placed on earlier historical data in estimating the cash flow. The reasoning is that a local competitive environment can and does change rapidly and earlier years do not properly reflect current market conditions. For the same reasons, i.e. volatility of market conditions, experts avoid valuing the business based on future potential and avoid use of discounted cash flow. This method (of relying only on recent history rather than on potential improved revenues and profit), prevents the buyer from paying for potential that the seller has failed to realize, and that the buyer must create through additional effort and additional investment. Placing greater emphasis on the more recent years, makes sense. Both revenue and profitability for the Subject Company have experienced some volatility over the past five years and overall market conditions have changed. Additionally, the efficiency of the production process and the cost of the factory payroll component have changed significantly in recent years.

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AblePlus Valuations

VALUATION - MULTIPLE OF SELLERS DISCRETIONARY EARNINGS

See the next page for a spreadsheet reflecting the details of this method. Sales Data and Trends When it is possible to obtain the specifics of completed sale transactions, that is the best source of information for identifying how these firms are sold. This method can be used most precisely if good comparable sales of similar companies are available. Several sales of printing firms with revenues in the 1 million to 7 million dollar range in the BIZCOMPS data base. The sales data base is entirely asset sales (tangible and intangible assets) where inventory, current assets and all liabilities are specifically excluded from the sale price. Out of the ten sales, six had revenues in the $1.0 to $6.9 million range and four were grouped around $600,000 in revenues. The focus for analysis was the six larger companies. The median multiple for the six larger companies was approximately 3.5 with a range of 2.3 to 4.1. The median was used for the starting point for the valuation estimate. Preliminary Valuation Estimate The median multiple of 3.5 for was adjusted downward based on positive and negative factors specific to the company which are listed on the next page. The final estimated multiple of 2.97 was applied to our estimate of sellers discretionary earnings (cash flow) after normalization adjustments and the addition of interest income, deduction of interest expense and add back of depreciation. This develops a preliminary value of: $2,188,000 (rounded). Adjustment for working capital less long term liabilities The net of existing working capital of $228,401 less long term liabilities of $433,160 must be added to this figure to estimate equity value. Business Equity Fair Market Value: $1,983,000 (rounded)

19

AblePlus Valuations
MULTIPLE OF SELLER'S DISCRETIONARY EARNINGS
ESTIMATE OF DISCRETIONARY CASH FLOW NORMALIZED PRE-TAX EARNINGS ADD BACK TYPICAL SINGLE OWNERS' COMPENSATION (6.5% OF WEIGHTED AVG. REVENUES) SUBTRACT INTEREST INCOME ADD BACK INTEREST EXPENSE ADD BACK NORMAL DEPRECIATION ADDITIONAL ANNUAL CAPITAL EXPENDITURES NEEDED (BEYOND HISTORICAL LEVEL) DISCRETIONARY CASH FLOW TO OWNER DATA ON MULTIPLIER OF SELLER'S DISCRETIONARY CASH FLOW (SDCF) REVENUES (MILLIONS) MULTIPLE OF SDCF SDCF AS % OF REVENUES SDCF OF SUBJECT BUSINESS (AFTER CUSTOMER LOSSES) 10 SALES ANALYZED -SIC 2752 MEDIAN MULTIPLE 3.5 ROUNDED $337,176 ROUNDED $80,000

($238) $88,372 $231,433 $0

$736,743

13.3%

BIZCOMPS DATA REVENUES $1 MILLION OR MORE MEDIAN LOW HIGH $2.54 $1.00 $6.90 3.5 2.3 4.1 14.9% 22.7% 19.5% 13.3%

UPWARD ADJUSTMENT FOR FOLLOWING FACTORS: -ESTABLISHED - 25 YEAR HISTORY -EXCEPTIONALLY EXPERIENCED STAFF -OVER 95% REPEAT CUSTOMERS -CONTINUED INVESTMENT IN NEW TECHNOLOGY -GOOD LOCATION FOR COUNTY WIDE SERVICE -GOOD COST CONTROL

DOWNWARD ADJUSTMENT -EXISTING FACILITY LIMITS EXPANSION POTENTIAL -WORKING CAPITAL IS BELOW AVERAGE -PAYROLL COST IS ABOVE AVERAGE -BELOW MEDIAN % SDCF (ALREADY CONSIDERED IN MULTIPLE OF SDCF)

VALUATION ESTIMATE MEDIAN MULTIPLE OF SELLER'S DISCRETIONARY EARNINGS OVERALL NET ADJUSTMENT FOR FACTORS ABOVE DOWNWARD BY 15% OF MEDIAN (CONSTRAINTS ON GROWTH & BELOW AVG. SDCF) ESTIMATED MULTIPLE OF SELLER'S DISCRETIONARY EARNINGS VALUE OF FORMULA ASSETS (ROUNDED) PLUS CURRENT NET WORKING CAPITAL PLUS LIABILITIES ASSUMED (NEGATIVE FIGURE) 3.50 (0.53)

2.97 $2,188,000 $228,401 ($433,160)

EQUITY VALUE OF BUSINESS (EXCLUDING NON-OPERATING ASSETS)

$1,983,241 $1,983,000 ROUNDED

20

AblePlus Valuations

VALUATION - MULTIPLE OF REVENUES

See the next page for a spreadsheet reflecting the details of this method and the Bizcomps sale transaction data. Sales Data and Trends When it is possible to obtain the specifics of completed sale transactions, that is the best source of information for identifying how these firms are sold. This method can be used most precisely if good comparable sales of similar companies are available. Several sales of printing firms with revenues in the 1 million to 7 million dollar range in the BIZCOMPS data base. The sales data base is entirely asset sales (tangible and intangible assets) where inventory, current assets and all liabilities are specifically excluded from the sale price. Out of the ten sales, six had revenues in the $1.0 to $6.9 million range and four were grouped around $600,000 in revenues. The focus for analysis was the six larger companies. The median multiple for the six larger companies was approximately 0.65 with a range of 0.45 to 0.77. The median was used for the starting point for the valuation estimate. When using the median multiple as a starting point, it is important to understand that this revenue multiple is paid assuming typical sellers discretionary cash flow will be realized. If significantly below normal sellers discretionary cash flow is expected to be generated, then a buyer will adjust the revenue multiplier downward. If significantly above normal sellers discretionary cash flow is expected to be generated, then a buyer will adjust the revenue multiplier upward. Preliminary Valuation Estimate The median multiple of 0.65 for was adjusted downward based on positive and negative factors specific to the company which are listed on the next page. The final estimated multiple of 0.44 was applied to our estimate of sellers discretionary earnings (cash flow) after normalization adjustments and the addition of interest income, deduction of interest expense and add back of depreciation. This develops a preliminary value of: $2,425,000 (rounded). Adjustment for working capital less long term liabilities The net of existing working capital of $228,401 less long term liabilities of $433,160 must be added to this figure to estimate equity value. Business Equity Fair Market Value: $2,220,000 (rounded)

21

AblePlus Valuations

MULTIPLE OF GROSS REVENUE

SUBJECT COMPANY: ANNUAL GROSS REVENUE (NORMALIZED) $5,521,000 BIZCOMPS DATA REVENUES $1 MILLION OR MORE MEDIAN LOW HIGH $2.54 $1.00 $6.90 0.65 0.45 0.77 19.5% 14.9% 22.7% 13.3% 0.65

REVENUES MULTIPLE OF GROSS REVENUES SDCF AS % OF REVENUES SDCF OF SUBJECT BUSINESS 10 SALES ANALYZED -SIC 2752 MEDIAN MULTIPLE

UPWARD ADJUSTMENT FOR FOLLOWING FACTORS: -ESTABLISHED - 25 YEAR HISTORY -EXCEPTIONALLY EXPERIENCED STAFF -OVER 95% REPEAT CUSTOMERS -CONTINUED INVESTMENT IN NEW TECHNOLOGY -GOOD LOCATION FOR COUNTY WIDE SERVICE -GOOD COST CONTROL

DOWNWARD ADJUSTMENT -EXISTING FACILITY LIMITS EXPANSION POTENTIAL -WORKING CAPITAL IS BELOW AVERAGE -PAYROLL COST IS ABOVE AVERAGE -BELOW MEDIAN % SDCF

VALUATION ESTIMATE MEDIAN MULTIPLE OF REVENUES OVERALL ADJUSTMENT FOR FACTORS ABOVE (DOWNWARD BY 20% OF MEDIAN) ESTIMATED MULTIPLE OF REVENUES ESTIMATED NORMALIZED REVENUES VALUE OF FORMULA ASSETS (ROUNDED) PLUS CURRENT NET WORKING CAPITAL PLUS LIABILITIES ASSUMED (NEGATIVE FIGURE IF APPLICABLE)

0.65 (0.21) 0.44 $5,521,000 $2,425,000 ROUNDED $228,401 ($433,160)

EQUITY VALUE OF BUSINESS (EXCLUDING NON-OPERATING ASSETS)

$2,220,241 $2,220,000

ROUNDED

SALE TRANSACTION DATA - BIZCOMPS ASSET SALES

BUSINESS TYPE PRINTER - COMMERCIAL PRINTER - COMMERCIAL PRINTER - COMMERCIAL PRINTER - COMMERCIAL ANNUAL GROSS REVENUES $606,000 $630,000 $637,000 $600,000 SELLER'S DISCRETIONARY CASH FLOW AS % OF REVENUES 41.4% 29.8% 25.7% 20.8% SALE PRICE $471,000 $355,000 $330,000 $338,000 SALE DATE 11/30/1992 3/31/1994 1/1/1992 4/30/1995 GROSS REVENUE MULTIPLIER 0.78 0.56 0.52 0.56 SELLER'S DISCRETIONARY CASH FLOW MULTIPLIER 1.88 1.89 2.01 2.70

SIC 2752 2752 2752 2752

2752 2752 2752 2752 2752 2752

PRINTER - COMMERCIAL PRINTING SHOP PRINTER - COMMERCIAL PRINTING SHOP PRINTER - COMMERCIAL PRINTER - COMMERCIAL MEDIAN ALL MEDIAN REVENUES UNDER $1 MILLION MEDIAN REVENUES $1 MILLION OR MORE

$1,386,000 $1,283,000 $1,000,000 $3,800,000 $6,900,000 $3,700,000 $1,141,500 $618,000

22.7% 22.1% 20.0% 19.1% 15.8% 14.9% 21.4% 27.8%

$1,074,000 $829,000 $450,000 $2,900,000 $4,500,000 $2,000,000

8/31/1989 6/30/1991 7/31/1994 1/1/1992 2/28/1993 5/31/1996 MEDIAN ALL

0.77 0.65 0.45 0.76 0.65 0.54 0.60 0.56

3.41 2.93 2.25 4.00 4.14 3.64 2.82 1.95

MEDIAN REVENUES UNDER $1 MILLION MEDIAN REVENUES $1 MILLION OR MORE

$2,543,000

19.5%

0.65

3.52

22

AblePlus Valuations

VALUATION CAPITALIZATION OF SINGLE PERIOD EARNINGS

The method involves the division of a single years income stream by a capitalization rate to estimate value. This method is only reliable where the Subject Company has a reasonably stable revenue base, stable income and faces moderate long term growth (long term growth is over a 20 to 30 year period). The income stream capitalized was normalized pre-tax earnings. This method of calculation is described later in this report. The analysis is presented in the spreadsheet below and on the next two pages. This capitalization process develops a preliminary value of: $1,728,000 (rounded). Adjustment for shortage of working capital The working capital shortage of $159,000 is subtracted from the preliminary value above to estimate equity value. Business Equity Fair Market Value: $1,569,000 (rounded)

23

AblePlus Valuations

CAPITALIZATION OF SINGLE PERIOD EARNINGS - PAGE 1 OF 2 (INCOME APPROACH)

NORMALIZED PRE-TAX EARNINGS ESTIMATED CAPITALIZATION RATE (BASED ON TWO ESTIMATES BELOW) PRELIMINARY VALUE OF BUSINESS (ROUNDED) ADD EXCESS ASSETS (I.E. EXCESS WORKING CAPITAL) SUBTRACT ASSET SHORTAGES (I.E. WORKING CAPITAL) VALUE OF BUSINESS EQUITY $337,000 19.5%

$1,728,000 $0 ($159,000) $1,569,000

ESTIMATE OF CAPITALIZATION RATE USING JAMES SCHILT FACTORS

RISK FREE RATE ESTIMATED RISK PREMIUM ESTIMATED CAPITALIZATION RATE 6.0% 13.5% 19.5%

JAMES SCHILT FACTORS

CATEGORY 1 DESCRIPTION -ESTABLISHED BUSINESS -STRONG TRADE POSITION -WELL FINANCED -DEPTH OF MANAGEMENT -PAST STABLE EARNINGS -PREDICATABLE FUTURE -ESTABLISHED BUSINESS -MORE COMPETITIVE INDUSTRY -WELL FINANCED -DEPTH OF MANAGEMENT -PAST STABLE EARNINGS -REASONABLY PREDICTABLE FUTURE -HIGHLY COMPETITIVE -LITTLE CAPITAL REQUIRED TO ENTER -NO MANAGEMENT DEPTH -ELEMENT OF RISK IS HIGH -SMALL BUSINESSES DEPENDENT ON SKILLS OF 1 OR 2 PEOPLE -CYLICAL BUSINESSES -FUTURE EARNINGS COULD DEVIATE MARKEDLY FROM PAST -SMALL 1 PERSON BUSINESSES, PERSONAL SERVICE -TRANSFERABILITY OF INCOME TO NEW OWNER IS QUESTIONABLE RISK PREMIUM 6% - 10%

11 - 15%

16% - 20%

21 - 25%

26% - 30%

24

AblePlus Valuations

CAPITALIZATION OF SINGLE PERIOD EARNINGS - PAGE 2 OF 2 (INCOME APPROACH)

SECOND ESTIMATE OF CAPITALIZATION RATE USING BUILD-UP APPROACH RISK FREE RATE (LONG TERM TREASURIES) EQUITY RISK PREMIUM - STOCKS OVER BONDS (FROM 1960 FORWARD ONLY) RISK PREMIUM FOR SIZE (2% TO 6%) COMPANY SPECIFIC RISK FACTORS (FINANCIAL RISK, DIVERSIFICATION, MGMT. DEPTH) NEXT YEAR'S NET CASH FLOW DISCOUNT RATE INCREMENT BY WHICH NET EARNINGS RATE EXCEEDS NET CASH FLOW (1% TO 6%) NET AFTER TAX EARNINGS DISCOUNT RATE SUBTRACT GROWTH RATE NET AFTER TAX EARNINGS CAP RATE FOR NEXT YEAR DIVIDE BY (1-TAX RATE): PRE-TAX EARNINGS CAP RATE FOR NEXT YEAR DIVIDE BY 1+ LONG TERM GROWTH RATE NET EARNINGS CAP RATE FOR CURRENT YEAR 6.3% 4.0% 3.0% 1.0% VERY LOW RISK

14.3% 3.0%

17.3% -5.0% 12.3% 60.0% 20.5% 105.0% 19.5%

25

AblePlus Valuations

VALUATION EXCESS EARNINGS

Intangible assets add value to a business in addition to the value of the underlying tangible assets. Goodwill is one of several intangible assets that may exist in business enterprises. It is generally considered to exist as a result of reputation, customer base, long establishment, or other intangible attributes that may have economic value. Nearly, all businesses have goodwill; the issue is whether or not a particular business enterprise's goodwill has economic value. The conceptual basis of this method is that a business with intangible assets will generate two types of fair market returns on assets: (1) A Fair Market Return on tangible assets and (2) A Fair Market Return on intangible assets. For small businesses (like our Subject Company) these two components add up to the pretax income. For larger businesses net free cash flow may be more appropriate. The method assumes that any excess return above the Fair Market Return on tangible assets can be used to estimate the value of intangible assets. Then business equity is estimated by summing the net tangible assets (tangible assets minus liabilities) plus the intangible assets. This method has many critics and it is only typically applied to small businesses. Some practitioners rarely use the excess earnings method, others give it lesser emphasis. Where other methods are available, there is ample valuation literature that indicates it should be given lesser emphasis. The method was developed by the Treasury department during the 1920s as a means of estimating goodwill for businesses that went through forced closure as a result of prohibition. Primary challenges to the method include the following: (1) Estimating the Fair Market Return (cap rates) for intangible assets Little available data supporting cap rate estimates, (2) Debate about which income stream should be analyzed, (3) Debate about how to normalize the income stream, (4) Debate about the definition of Net Tangible Assets. The following page reflects our calculation in a spreadsheet format as well as the factors considered in estimating the intangibles capitalization rate (using two different methods).

26

AblePlus Valuations

EXCESS EARNINGS ANALYSIS

NORMALIZED PRE-TAX EARNINGS (ROUNDED) NET TANGIBLE ASSETS MULTIPLIED BY: REASONABLE RATE OF RETURN OF TANGIBLE ASSETS EARNINGS ON NET TANGIBLE ASSETS EXCESS EARNINGS DIVIDED BY: CAPITALIZATION RATE ON INTANGIBLE ASSETS = INDICATED VALUE OF INTANGIBLE ASSETS (ROUNDED) PLUS MARKET VALUE OF NET TANGIBLE ASSETS (ROUNDED) PLUS VALUE OF NON-OPERATING ASSETS MINUS ASSET SHORTAGES: WORKING CAPITAL DEFECIT BUSINESS EQUITY VALUE BY EXCESS EARNINGS METHOD ESTIMATE OF INTANGIBLE CAPITALIZATION RATE CAPITALIZATION RATE ESTIMATE 25.0% CAPITALIZATION RATE RANGE: 20 - 35% MAJOR FACTORS AFFECTING LEVEL OF INTANGIBLE ASSET VALUE (1=BEST, 3=WORST) LONGEVITY OF BUSINESS EASE OF ENTRY COMPETITION COMPETITIVE EDGE FACILITIES MANAGEMENT QUALITY GROWTH PROSPECTS GENERAL RISK OF THIS BUSINESS HIGH FIXED COSTS OVERALL RISK RATING 1 1 2 2 1 2 2 3 1.75 $1,191,000 10.0% $119,100 $119,100 $217,900 25.0% $872,000 $872,000 $1,191,000 $0 ($159,000) ROUNDED $1,904,000 $337,000

27

AblePlus Valuations

NORMALIZATION ADJUSTMENTS TO FINANCIAL STATEMENTS

The income statement is normalized by review of each income and expense line item to ensure that they reflect normal business operating expenses. Non-operational expenses or non-recurring costs that are not expected in future years are adjusted out of the income statement. Other common adjustments include owner/officer compensation, depreciation based on fair market value and rent between related parties. The balance sheet is normalized by review of major asset and liability categories to ensure that they accurately reflect the fair market value. Accounts receivable is analyzed to determine collectibility, loans to related parties are examined in that light. Fixed assets are adjusted to reflect Fair Market Value rather than book value. Working capital is examined relative to industry norms. To normalize the balance sheet the following adjustments were made: Fixed Assets - Economic rather than book depreciation was used. Major assets were depreciated based on their estimated market value. The remaining assets are each several orders of magnitude smaller dollar value individually than the major assets. The value of the remaining fixed assets was estimated by using 40% of the acquisition price as a proxy for market value. No real estate is owned by the company. Receivables - No adjustments were needed on the audited statements. All receivables are considered collectible (less the allowance for bad debts). No notes from shareholders were included. All non-trade receivables were eliminated. Payables - No adjustments were needed. The payables included a note payable to a shareholder. This related party payable is fully documented with all terms specified and consistent with market rates.

The balance sheet reflects a generally healthy company with the exception of a working capital deficit. The normalized income statement and balance sheet follow this page.

28

AblePlus Valuations

NORMALIZED INCOME STATEMENT

FISCAL YR. 1 % INCREASE OVER PRIOR YR. SALES COST OF SALES DIRECT MATERIALS LABOR COSTS DIRECT SUPPLIES OUTSIDE PROCESSING FACTORY EXPENSES GROSS PROFIT SELLING GENERAL & ADMINISTRATIVE EXPENSES PRE-TAX OPERATING INCOME $4,809,204 100.0% FISCAL YR. 2 11.6% $5,367,522 100.0% HISTORICAL INCOME DATA FISCAL YR. FISCAL YR. 3 4 -4.6% $5,121,780 100.0% 3.6% $5,303,942 100.0% FISCAL YR. 5 9.6% $5,811,465 100.0%

$1,267,155 $1,387,063 $121,211 $455,826 $384,536 $1,193,413 $1,159,257 $34,156

26.3% 28.8% 2.5% 9.5% 8.0% 24.8% 24.1% 0.7%

$1,434,045 $1,602,986 $138,152 $424,255 $482,582 $1,285,502 $1,138,090 $147,412

26.7% 29.9% 2.6% 7.9% 9.0% 23.9% 21.2% 2.7%

$1,278,011 $1,530,600 $164,340 $342,528 $451,326 $1,354,975 $1,254,358 $100,617

25.0% 29.9% 3.2% 6.7% 8.8% 26.5% 24.5% 2.0%

$1,239,335 $1,721,069 $192,166 $489,775 $457,822 $1,203,775 $1,153,703 $50,072

23.4% 32.4% 3.6% 9.2% 8.6% 22.7% 21.8% 0.9%

$1,569,005 $1,676,595 $230,762 $453,901 $528,600 $1,352,602 $1,176,273 $176,329

27.0% 28.8% 4.0% 7.8% 9.1% 23.3% 20.2% 3.0%

3 YR. WEIGHTED AVG. PRE-TAX EARINGS ADJUSTMENTS: NON-RECURRING PAYMENT ON KIMORI 6 COLOR PAID OFF @ $12,700/MO. LOWER RENT TO FAIR MKT. RENT ADD BACK ACTUAL DEPRECIATION SUBTRACT NORMALIZED DEPRECIATION NORMALIZED PRE-TAX EARNINGS

$123,310

FISCAL YR. 3

FISCAL YR. 4

FISCAL YR. 5

$152,400

$152,400

$152,400

$152,400

$24,000 $306,068 ($231,433) $337,176

$24,000 $286,631 ($231,433) $332,218 FISCAL YR. 3 6.5%

$24,000 $256,898 ($231,433) $251,941 FISCAL YR. 4 4.8%

$24,000 $306,068 ($231,433) $427,369 FISCAL YR. 5 7.4%

NORMALIZED PRE-TAX EARNINGS AS % OF REVENUES 3 YR. WEIGHTED AVG. REVENUE $5,521,271

29

AblePlus Valuations

BALANCE SHEET - PER BOOKS AND NORMALIZED

CURRENT ASSETS OTHER ASSETS FIXED ASSETS TOTAL ASSETS CURRENT LIABILITIES LONG TERM LIABILITIES TOTAL LIABILITIES NET TANGIBLE ASSETS AS OF VALUATION DATE BOOK NORMALIZED $956,997 $889,218 $6,817 $1,004,173 $1,967,987 $660,817 $433,160 $1,093,977 $874,010 $6,817 $1,388,601 $2,284,636 $660,817 $433,160 $1,093,977 $1,190,659 SEE CALCULATIONS BELOW LESS $67,779 IN NON-TRADE RECEIVABLES

NORMALIZATION ADJUSTMENTS BOOK VALUE TOTAL FIXED ASSETS $1,004,173 MAJOR FIXED ASSETS OTHER FIXED ASSETS FIXED ASSET TOTALS $907,895 $96,278 $1,004,173

FMV ADJUSTED

$896,000 $492,601 $1,388,601

ACQUISITION PRICE FURNITURE & FIXTURES MACHINERY & EQUIPMENT LEASEHOLD IMPROVEMENTS TOTAL MAJOR FIXED ASSETS 6 COLOR KIMORI ELECTRONIC PREPRESS SCRIPRIP SELECTSET 5 COLOR KIMORI $880,202 $341,319 $71,340 $537,017 $38,608 $2,964,638 $58,134 $3,061,380 BOOK VALUE $381,422 $22,753 $29,725 $474,365 FMV $475,000 $125,000 $31,000 $265,000 FMV OTHER FIXED ASSETS $1,231,502 $492,601

30

AblePlus Valuations

ADDENDA WORKING CAPITAL ANALYSIS RATIO ANALYSIS BALANCE SHEET RATIO ANALYSIS INCOME STATEMENT APPRAISER QUALIFICATIONS

31

AblePlus Valuations

WORKING CAPITAL ANALYSIS

CURRENT ASSETS CURRENT LIABILITIES NET WORKING CAPITAL CURRENT REVENUES SALES TO WORKING CAPITAL REQUIRED WORKING CAPITAL (AT RATIO OF 15.0 SALES TO WORKING CAPITAL) WORKING CAPITAL AS OF VALUATION DATE WORKING CAPITAL DEFECIT ROUNDED AS OF VALUATION DATE $889,218 $660,817 $228,401 $5,811,465 25.44 $387,431

$228,401 $159,030 $159,000

Ratio Analysis Details - The tables on the next page reflect the ratio analysis of the balance sheet and income statement data considered in evaluating the Subject Companys financial condition.

32

AblePlus Valuations

BALANCE SHEET FINANCIAL RATIOS

INDUSTRY BENCHMARKS

PRINTING INDUSTRIES OF AMERICA (PIA) SALES $3 TO $6 MILLION

SUBJECT COMPANY FINANCIAL RATIOS

QUICK RATIO N/AV 2.21 7.13 7.07 52 42.0 31.4 - 54.8 N/AV N/AV N/AV N/AV N/AV N/AV 7.2 5.7 - 9.0 N/AV N/AV N/AV N/AV N/AV N/AV 5.3 3.3 - 7.8 N/AV N/AV N/AV N/AV N/AV N/AV 2.1 1.6 - 2.7 N/AV N/AV 1.9 1.1 - 4.3 3.0 2.2 - 5.9 1.7 N/AV 9.8 N/AV 13.9 214.5 - 7.6 10.0 18.9 - 6 N/AV N/AV N/AV N/AV 12.8

MEDIAN ALL SIZE COS. 1.24

MEDIAN PROFIT LEADERS 1.76

TAX & FINANCIAL RMA -SIC 2752 DUN & BRADSTREET FINANCIAL RESEARCH. ASSOCIATES STATEMENT SALES $5 TO 10 MILLION SIC 2752 - ALL SIZE COS. 25% MOST PROFITABLE ASSETS 500K TO 1,000K BENCHMARKS RANGE RANGE RANGE RANGE COMMERCIAL & LOWER TO LOWER TO LOWER TO LOWER TO OTHER PRINTING UPPER UPPER UPPER UPPER ASSETS MEDIAN QUARTILE MEDIAN QUARTILE MEDIAN QUARTILE MEDIAN QUARTILE 1,000 TO 5,000 K 1.1 0.7 - 1.6 1.4 0.8 - 2.5 1.9 1.1 - 4.3 1.4 1.1 - 3.0 N/AV 17.05 2.59 4.91 7.45 74.3 22.49 2.22 3.63 7.57 100.6

FIVE YR. - FISCAL YEAR HISTORY YR. 5 YR. 4 YR. 3 YR. 2 YR. 1 1.47 1.34 1.35 1.40 1.82 16.63 2.46 4.73 8.32 77.2 17.71 2.56 4.87 6.98 74.9 10.16 2.48 5.02 8.05 72.7

SALES/WORKING CAPITAL

N/AV

SALES/TOTAL ASSETS

2.23

SALES/NET FIXED ASSETS

6.89

SALES/RECEIVABLES

7.18

AVERAGE COLLECTION PERIOD

51

INCOME STATEMENT FINANCIAL RATIOS

INDUSTRY BENCHMARKS

PRINTING INDUSTRIES OF AMERICA (PIA) SALES $3 TO $6 MILLION MEDIAN PROFIT LEADERS 9.43% 4.80% N/AV N/AV N/AV 15.46%

SUBJECT COMPANY FINANCIAL RATIOS

MEDIAN ALL SIZE COS.

TAX & FINANCIAL RMA -SIC 2752 DUN & BRADSTREET FINANCIAL RESEARCH. ASSOCIATES STATEMENT SALES $5 TO 10 MILLION SIC 2752 - ALL SIZE COS. 25% MOST PROFITABLE ASSETS 500K TO 1,000K BENCHMARKS RANGE RANGE RANGE RANGE COMMERCIAL & LOWER TO LOWER TO LOWER TO LOWER TO OTHER PRINTING UPPER UPPER UPPER UPPER ASSETS MEDIAN QUARTILE MEDIAN QUARTILE MEDIAN QUARTILE MEDIAN QUARTILE 1,000 TO 5,000 K N/AV 4.24% N/AV 1.3%

FIVE YR. - FISCAL YEAR HISTORY YR. 5 YR. 4 YR. 3 YR. 2 YR. 1 3.03% 0.94% 1.96% 2.75% 0.71%

BEFORE TAX PROFIT (OPERATING INCOME) 20.86% N/AV N/AV N/AV N/AV N/AV

3.03%

RETURN ON ASSETS (BEFORE TAXES & INTEREST) N/AV 1.8% - 12.8% 6.8% 5.7% 1.2% - 16.8%

9.14%

N/AV

N/AV

N/AV

N/AV

9.37%

1.81% RECENT YRS. ONLY

RETURN ON ASSETS (BEFORE TAXES) N/AV N/AV N/AV 41.1%

N/AV

53.20%

29.2% - 128.0%

8.60%

0.9% - 16.9%

7.1%

7.8%

2.1% RECENT YRS. ONLY

GROSS PROFIT (USING MATERIALS & LABOR ONLY AS COST OF GOODS SOLD) 27.6% 30.1% N/AV N/AV

N/AV

N/AV

64.7%

N/AV

45.0%

N/AV

N/AV

44.15% 44.18% 45.16% 43.42% 44.81%

GROSS PROFIT (USING MATERIALS & LABOR, DIRECT SUPPLIES, OUTSIDE PROCESSING & FACTORY EXPENSE AS COST OF GOODS SOLD) N/AV 3.6% 2.4% - 5.9%

24.5%

N/AV

N/AV

N/AV

N/AV

N/AV

N/AV

23.27% 22.70% 26.46% 23.95% 24.82%

OFFICERS COMPENSATION (SALARY, BONUS, COMMISSION)

N/AV

N/AV

N/AV

8.4%

N/AV

7.0%

N/AV

6.3%

4.5% RECENT YRS. ONLY

33

AblePlus Valuations

INCOME STATEMENT FINANCIAL RATIOS (CONTINUED)

INDUSTRY BENCHMARKS

PRINTING INDUSTRIES OF AMERICA (PIA) SALES $3 TO $6 MILLION MEDIAN PROFIT LEADERS 0.30% 1.98% 13.22% 22.39% 36.78% 8.86% 9.07% N/AV N/AV N/AV N/AV N/AV N/AV N/AV N/AV N/AV N/AV N/AV N/AV N/AV N/AV N/AV N/AV N/AV N/AV N/AV N/AV N/AV N/AV N/AV N/AV N/AV N/AV N/AV N/AV N/AV N/AV N/AV N/AV N/AV N/AV N/AV N/AV N/AV N/AV N/AV N/AV N/AV N/AV N/AV N/AV 2.32% N/AV 3.77% N/AV N/AV N/AV N/AV N/AV 0.66% N/AV 0.69% N/AV

SUBJECT COMPANY FINANCIAL RATIOS

MEDIAN ALL SIZE COS.

TAX & FINANCIAL RMA -SIC 2752 DUN & BRADSTREET FINANCIAL RESEARCH. ASSOCIATES STATEMENT SALES $5 TO 10 MILLION SIC 2752 - ALL SIZE COS. 25% MOST PROFITABLE ASSETS 500K TO 1,000K BENCHMARKS RANGE RANGE RANGE RANGE COMMERCIAL & LOWER TO LOWER TO LOWER TO LOWER TO OTHER PRINTING UPPER UPPER UPPER UPPER ASSETS MEDIAN QUARTILE MEDIAN QUARTILE MEDIAN QUARTILE MEDIAN QUARTILE 1,000 TO 5,000 K N/AV 2.30% N/AV N/AV N/AV N/AV N/AV

FIVE YR. - FISCAL YEAR HISTORY YR. 5 YR. 4 YR. 3 YR. 2 YR. 1 0.16% 0.17% 0.16% 0.15% 2.40% RECENT YRS. ONLY 13.52% 12.94% RECENT YRS. ONLY 28.72% 32.54% RECENT YRS. ONLY 34.82% 32.77% RECENT YRS. ONLY 10.42% 10.43% RECENT YRS. ONLY 8.84% 10.51% RECENT YRS. ONLY

ADVERTISING EXPENSE

0.46%

RENT

1.79%

FACTORY EXPENSE

14.34%

FACTORY PAYROLL

25.51%

MATERIALS

35.69%

SELLING EXPENSE

9.89%

ADMINISTRATIVE EXPENSE

10.28%

34

Donald Sonneman, ASA AblePlus Valuations

9715 Lorraine Way, #203, Santee, CA 92071 Phone: (619)-224-3105 Website: companyvalu.com E-mail: ds@companyvalu.com

BUSINESS VALUATION: QUALIFICATIONS

Manufacturing Sector: Specialized high tech metal producer - $230 million Manufacturer of Power Supplies Revenues $3 million Wastepaper processing/wholesaler Revenues $2 million Winery Revenues $10 million Chrome Plating - $2.5 million Communications/Broadcasting: Television Station group Revenues of $30 million Film Library Revenues of $25 million Small Scale Publishing companies Revenues of $500,000 Other familiarity with the communications industry: The valuation of a power supply manufacturer required research into the telecommunications industry. The telecommunications industry contributes 30% to 50% of the demand for power supplies. Engineering & Design: Engineering Firm Revenues of $2 million Exhibit Production/Design Revenues of $2.5 million Medical Related and Medical Laboratory Services: Specialty Surgical Practice Revenues of $1.7 Million Dental Practices Revenues of $300,000 to $600,000 Medical Laboratory Revenues of $800,000 Consumer oriented Retail and Service Businesses: Regional Grocery Chain - Revenues of several $Billion Grocery Stores Revenues $600,000 to $10.6 Million Auto Dealers Revenues of $20 million to $400 million . Motorcycle Dealer - Revenues - of $2 million Truck Accessory Retailer Revenues - of $6 million Commercial Printers Revenues of $2 to $10 million Emergency Animal Shelter Revenues of $3 million Fitness Centers (Group of four) - Revenues of $700,000 Day Camp Revenues of $500,000 Financial Services for Youth From business plan Wholesale/Distribution Wholesaler of Office Supplies Revenues of $15 million Smaller Businesses: Gift Shops, Publication Clipping Service, Liquor Store, Fabric Store, Spa Cover Mfg., Carwash, Restaurant/Bar

Appraisal Reviews Subcontracts to IRS Reviewed appraisals of large estates (up to several hundred million dollars). Include some reviews of appraisals by national and/or high profile firms. Both business and real estate interests. Prepared alternate valuation report as needed.

Other Related Analysis

Control and Marketability Discount Analysis Purpose: Estate and Gift Tax, Withdrawal of partner, owner (Over 80 of these analyses). Valuation of partial interests, minority interests, undivided interests. Entities: Corporations (C Corp., S Corp. and LLC) General Partnerships Limited Partnerships, Family Limited Partnerships Undivided Interests Underlying Asset Categories: Securities portfolios, real estate, promissory notes, demand notes, commodity pools. Related Valuation tasks Non-Compete Covenant Employment Agreement Deferred Compensation Management Contracts Secured and Unsecured Debt Blockage Discounts

Combined Business Valuation and Commercial Real Estate Appraisal

Hospitality & Senior Living/Care Facilities: Hotels Full Service, Limited Service and Resort Hotels (proposed and existing facilities) Revenues of $400,000 to $9 Million Assisted Living Facilities Residential Alzheimer Assisted Living Facilities Revenues up to $2.6 Million (proposed and existing facilities) Nursing homes Revenues up to $3.9 Million Other: Vineyards - $400,000 revenues

Donald Sonneman, ASA Experience and Education

Diversified Background
Current occupation: Business valuation, commercial real estate appraisal. Previous occupations: Income tax preparation, grant/proposal writing and engineering. Education: Degrees in mechanical engineering and financial planning, supplemented with substantial finance and valuation education.

Educational Degrees and Professional Designations/Affiliations

BS Mechanical Engineering - Illinois Institute of Technology CFP (Certified Financial Planner Degree) - Denver College for Financial Planning ASA Designation (Accredited Senior Appraiser) - Real Property/Urban, American Society of Appraisers (#015326). To obtain the designation requires appraisal experience, review of narrative reports and appraisal education.

Publications
Business Valuation Review (Journal published by the ASA): The Single Customer Business Valuation of a Captive Business (March 2000 issue) Business Valuation Controversies and Choices: Understand Them & Their Impact on Value (June 2000 issue) Blockage Discounts for Large Blocks of Publicly Traded Stocks Benchmark Data to Test for Reasonableness (December 2000 issue) Appraisal Journal (The most highly regarded national publication for real estate appraisers): Variables That Influence Hotel Parking Demand (Jan. 1999 issue) The Challenges of Appraising Residential Alzheimers Assisted Living Facilities (Jan. 2000 issue) Challenges in Appraising Simple Warehouse Properties, (April 2001 issue) Appraisal Institute Appraising Industrial Properties (2005). Paid consultant, developing portions of two chapters of book by multiple authors.

Advanced and Specialized Business Valuation Education

Mergers & Acquisitions of Mid-Sized Companies (Course 300 International Business Brokers Association) Merger & Acquisition Financing (Course 300 International Business Brokers Association) Valuation Institute (Fulcrum Information Services) Focus on Merger & Acquisition topics. Includes case studies and presentations on start-up companies, internet companies, break-up analysis and leveraged buyout analysis. Faculty included top M & A specialists from such highly regarded firms as Arthur Andersen LLP, KPMG LLP, Houlihan Lokey Howard & Zukin, Broadview International LLC. ($15.4 Billion in transactions during 1999) and Brueggeman & Johnson, P.C. Valuing Technology Companies (Master Class, Institute of Business Appraisers) Covered TV stations, Radio Stations, Telecommunications and Computer Services Valuing Intangibles (Institute of Business Appraisers) Advanced Topics, i.e. Discounted Cash Flow, Discount Rate/ Capitalization Rate Estimation, Intangible Assets, ESOP valuation, Dissenting Stockholder Fair Value, Control & Marketability Discounts (BV 204 American Society of Appraisers)

Donald Sonneman, ASA Experience and Education

Other Business Valuation Education

Principles of Valuation Beginning course - Business Valuation (BV201 - American Society of Appraisers) Appraisal of Small Businesses & Professional Practices - (BV205 - American Society of Appraisers) How to Value Mid Size and Smaller Businesses, Using Transaction Data to Value Closely Held Businesses (Institute of Business Appraisers) ASA 1995 Conference Seminars Topics: Capital Markets, Bankruptcy Court Viewpoint, Trends in Deal Structuring, Fairness Opinions

Finance and Taxation Courses

Part of BS Mechanical Engineering Degree Program: Accounting, Economics I & Economics II, Engineering Economics (Same as Finance) Finance (Graduate Level, Heriot Watt University) Part of Certified Financial Planner Degree Program (Denver College of Financial Planning): Financial Planning, Insurance/Risk Management, Tax Planning & Management, Investments, Retirement & Estate Planning Taxation 54 continuing education courses and seminars covering taxation of real estate, businesses, estates and trusts (Inland Society of Tax Consultants, National Association of Enrolled Agents, CA Association of Enrolled Agents) Principles of Public Utilities Operations & Mgmt. (Including Valuation Methods & Accounting Methods) Course from Public Utility Reports, Inc.

Litigation Support Related Education

Condemnation on Trial: Mock trial, goodwill and real estate appraisal (International Right of Way Association) Litigation Valuation (Appraisal Institute) Attorneys, Appraisers & Real Estate (Appraisal Institute) Expert Witness Class (Oregon Dept. of Revenue)

Licenses/Certifications
Certified General Real Estate Appraiser - State of California (AG003493) State Certified General Appraiser - State of Oregon (C000476) Inactive Status Registered Appraiser - State of Oregon (required for County Assessors & Revenue Dept. Appraisers) Certifications/Registrations for previous occupations (no longer current): Registered Tax Preparer (Cal.) Registered Investment Advisor (Cal.) Life and Disability Agent (Cal.) Variable License (Cal.) Series 7 NASD Securities License Note: Qualifications as a commercial real estate appraiser also available upon request.