MAIN STREET PLUMBING

NAICS 238220: Plumbing, Heating, and

Air-Conditioning Contractors

Report Date: December, 2019

Developed by:

Foundation Advisors

717-234-9687

john@foundationadvisors.com

Vestimate®-Pro Business Value Report

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CONTENTS

I. SUMMARY VESTIMATE®-PRO VALUE AND SCORES

II. INTRODUCTION

III. INDUSTRY MARKET ENVIRONMENT

IV. FINANCIAL ANALYSIS

V. KEY PERFORMANCE INDICATORS (KPIs)

VI. HISTORICAL VESTIMATE®-PRO VALUES

VII. ABOUT THE DATA

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I. SUMMARY VESTIMATE®-PRO BUSINESS VALUE RESULTS DECEMBER, 2019

Detailed financial and market inputs can be found in sections III-IV-V.

MAIN STREET PLUMBING VALUES:Income approach values are rarely applied to firms with revenue of less than $2.5 million.

Asset Sale Value:Earnings Approach: $542,105Income Approach: $773,079

Equity Sale Value:Earnings Approach: $691,222 Income Approach: $922,196

Key Value Drivers:

Sales: $1,752,441

Sales Growth 2016-2018: 0.89%

Discretionary Owner Earnings: 14.95%

Discretionary Owner Earnings Growth 2016-2018: 9.41%

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Cash Flow:Current Ratio: 3.0

Days Payable: 3.8

Profitability:Owner Earnings: 3.0

Owner Earnings Growth: 5.0

Sales Growth: 5.0

Return on Assets: 4.6

Efficiency:Days Receivable: 4.2

Efficiency Index: 5.0

Debt-Risk:Modified Z-Score: 4.2

Interest Coverage: 5.0

Total Liabilities: Net Worth: 1.2

Market Opportunity:Market Opportunity Index: 2.2

Industry Market Growth: 1.0

SUMMARY KEY PERFORMANCE INDICATOR SCORES:

Tabulated results from these KPIs are integrated into Vestimate®-Pro value calculations. Detailed tables and chartssupporting these scores can be found in sections IV and V.

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II. INTRODUCTION

Bizminer Vestimate®-Pro reports help you understand the value of any firm simply and quickly. No other electronicvaluation tool organizes critical information with the level of data integrity and industry detail that results from theintegration of Bizminer’s widely-recognized industry financial and market analysis content and its derivative analysis of30,000 recent business transactions from the DealStats database. Both the Bizminer and DealStats datasets are keycomponents in the analytical toolbox of thousands of certified business valuation professionals.

Vestimate®-Pro data sources are distinct and transparent; our financial analysis is utilized by thousands of accounting,valuation, banking and business assistance professionals; by almost one hundred university libraries and by taxingagencies in multiple countries. You won’t find a lot of jargon and overblown claims in our Vestimate®-Pro BusinessValue Reports —just the hard analysis and clear answers you need.

Vestimate®-Pro analytical content is updated regularly using the same tested protocols applied to our Industry MarketTrend reports, which cover over 9000 industry classifications; and to the trusted industry financial analysis we presentfor more than 5000 lines of business. Uniquely among published electronic value calculations, the Vestimate®-Proanalysis integrates traditional financial metrics with market opportunity and growth analyses from Bizminer’srecognized Industry Market dataset.

Your Vestimate®-Pro report includes definitions of every line item and ratio, as well as a simple scoring interface thatcompares your firm’s performance to the industry peer group.

When you accessed your Vestimate-Pro Report, you chose a comparison peer group that most closely represents thecharacter of your firm. Your peer group is defined by a series of criteria that reflects your selections of:

Industry Segment: 238220: Plumbing, Heating, and Air-Conditioning ContractorsMarket Analysis Area: Harrisburg PA Metro AreaSales Class: $1m - $2.49m

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This report is additionally conditioned by the selection and active integration of 3 of three potential years of firm inputs.While the Vestimate®-Pro report offers integrated scoring of 13 financial and market KPIs, only those scored on P4were selected by the developer for activation.

The Vestimate®-Pro report is an informational tool, not a guide to action. Do not use the report in place of a certifiedvaluation, or as the basis of any specific business-related or other financial transaction. For that we recommendobtaining an appraisal from a business broker, a valuation from a certified valuation professional, or both. You shouldnot attempt to use Vestimate®-Pro to secure a business or personal loan. Be aware that the Vestimate®-Pro reportmay not consider market or firm idiosyncrasies that can influence the actual value or selling price.

Your Industry in Context: The NAICS Classification System

The industry you selected fits within the official NAICS (North American Industry Classification System) and Bizminer’sproprietary taxonomy, which breaks out more detailed industries classifications than the NAICS by adding up to eightdecimal digits after the NAICS-6 code. The selected industry fits into this hierarchy:

23: Construction2382: Building Equipment Contractors238220: Plumbing, Heating, and Air-Conditioning Contractors

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RATIO CATEGORIES

The Vestimate®-Pro Business Value Report benchmarks pivotal industry peer group financial ratio values against theperformance of your firm, then integrates the results into the overall analysis and calculations. These ratios (alsoknown as KPIs or Key Performance Indicators) fall into five categories:

Cash Flow/Solvency: Cash Flow ratios indicate a company’s ability to meet various levels of demand on cash andeasily obtainable cash resources against current and anticipated near-term payments due.

Profitability: Profitability ratios compare levels of return against various expense and balance sheet components tomeasure your performance against reasonable industry peer group standards, indicating bottom line performance.

Efficiency: Efficiency ratios measure your success in marshalling resources-at-hand to effectively manage variouscomponents of your business operations. These indicators often point toward specific actions that could enhance yourbottom line.

Debt-Risk: Debt-Risk ratios assess the appropriateness of a firm’s level of debt against the ability to pay, as well as therisk of insolvency.

Market Opportunity: These non-traditional financial metrics assess overall market vitality and opportunity.

Depending on subject firm inputs you make, the ratios will be scored against industry values for up to three recentcalendar years.

Financial ratios are calculated for the subject firm when you submit the necessary inputs. Firm ratio benchmarks arescored on a 1-5 scale based on their variance from industry peer group standards. While the report presents starredscores for ease of display, final value calculations are more finely calibrated and applied based on each percentagepoint of variance from the industry norm. For more details, see About the Data—Our Approach to Scoring.

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BUSINESS VALUE APPROACHES

Vestimate®-Pro reports develop both "asset sale" and "equity sale" values for earnings and revenue approach valuationmethods. These approaches are coupled with benchmarks for key financial ratios and market metrics which comparethe analyzed firm’s liquidity, profitability, efficiency, debt-risk performance and market opportunity to industry peergroup standards. The result is a meaningful analysis and final value estimates that make sense in the real world,providing useful information to valuation professionals, brokers, sellers, entrepreneurs, investors and advisors.

Asset Value Earnings Basis: This approach applies Price/Earnings multiples to actual firm earnings. The appliedPrice/Earnings multiples are specific to an industry multiple sales bracket (of four). Based on industry and firmfinancial inputs, a series of core KPIs specific to the industry peer sales class size (of fifteen) is then scored andapplied to adjust the base analysis and create a final value or value range. This approach generally assumes thatcurrent assets and all liabilities remain with the seller.

Asset Value Revenue Basis: This approach applies Price/Revenue multiples to actual firm income. The application ofmultiples and KPIs mirrors the protocols used for Asset Value Earnings Basis calculations: The applied Price/Revenuemultiples are also specific to an industry multiple sales bracket (of four). Based on industry and firm financial inputs, aseries of core KPIs specific to the industry peer sales class size (of fifteen) is then scored and applied to adjust thebase analysis and create a final value or value range. This approach generally assumes that liquid assets and allliabilities remain with the seller.

Equity Value Earnings Approach and Equity Value Revenue Basis Approach: Both Equity Value approaches use thesame initial calculations as the corresponding Asset Value Earnings Basis and Asset Value Revenue Basis approaches,but adjust the values with the difference between assets and liabilities from the balance sheet. These approaches aregenerally used for 100% sales of equity (stock) only.

Which to use? Owner-operated businesses are most commonly sold on an asset sale basis. Determination of the mostappropriate Approach or Basis should be made in conjunction with a broker or valuation professional acquainted withthe detailed specifics of the business and the purpose of the valuation.

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VALUATION DRIVERSWhile a broad range of factors affects every valuation, the core analysis often relies on three yardsticks: sales volume,sales growth and owner earnings. The larger these factors and the higher their growth, the higher the ultimate businessvalue tends to be.

Revenue volume is itself a differentiating factor in determining price multiples, whether Price/Sales or Price/Earnings.In general, multiples tend to increase with firm size on an industry-specific basis. In this case, the subject firm falls intothe revenue class A bracket of $<2.5m. (Multiples are divided into four revenue brackets.) Other key factors include notonly Sales and Owner Earnings as current multiples, but also the growth of each, as displayed in the chart:

2016-2018 Valuation Drivers ($)

1,736,918 1,749,451 1,752,441

239,426 238,185 261,953

0

1,000,000

2,000,000

1,500,000

500,000

2016 2017 2018

Sales Owner Earnings

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VALUATION DRIVERS (continued)

These factors are analyzed along with a scored set of financial metrics to develop final Vestimate®-Pro businessvalues. Firm financial data is benchmarked against industry peer group values for up to three years, depending oninputs. While all three years of industry data are displayed, only those years for which firm inputs were developed areshown and used in Vestimate®-Pro calculations.

Key Performance Indicators—Financial Ratios

To better understand your company’s operations, the Vestimate®-Pro Report calculates Key Performance Indicators(KPIs) for review and comparison to industry benchmarks.

KPIs (also known as financial ratios) are calculated on the basis of company-specific data linked to the correspondingvalues of the selected industry peer group. These and other derivative metrics that form the basis of our analysis aredeveloped from a variety of raw data sources detailed in the Methodology section of this report.

KPls are useful measures of the overall financial and operational health and growth of your business. These samemeasures are commonly utilized by business coaches, financial professionals and potential business acquirers in avariety of real world settings. The Vestimate®-Pro report applies KPI scoring to the calculation of business worth asvariance-based values to which various weights are assigned based on the specific metric, years of inputs andvariance.

In addition to detailing KPI variances and applying a calibrated weight to each percent of difference from industry peergroup standards, we use an intuitive five-star scoring system to communicate firm performance against industry peergroup standards. Except for Days Payable and Days Receivable, KPIs are scored on a “higher is better” basis. Thescoring approach is also detailed in the Methodology section (VII) of this report.

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III. INDUSTRY MARKET ENVIRONMENT

Market Population Demographics:

The Main Street Plumbing competitive industry market area analysis is based on the Harrisburg PA Metro Area. Totalpopulation in the market area is 565,008 in 248,264 households with a median age of 40. The adult age breakdown is:Millennials (20-34): 19.54%; Gen Xers (35-54): 25.91%; Boomers (55-74): 23.26%.

30.9% of the population boasts a bachelor’s degree or higher; another 8.4% holds an associate degree.

Median housing value in the market area is $175,600, while the median rent level is $903 per month. Per capita incomein the market area is $32,315, while average (mean) household income is $71,910 and median household income is$55,840. 27.84% of market area households earn over one hundred thousand dollars per year.

Industry Market Context:

In this market area, the Plumbing, Heating, and Air-Conditioning Contractors industry includes 271 operations; 246independent firms and 25 branch establishments. Among the independent firms, 226 fall within the small businessdefinition of single site firms with fewer than twenty-five employees. Total industry employment is 2,473; Of these,1,167 are employed in small business operations of fewer than 25 employees. The average industry operation has 9employees.

In 2018, industry operations in the market area accounted for a total market volume of $494,407,106. Of that, theindustry market small business segment accounts for $233,308,974 in sales. The small business share of the totalmarket has decreased from 47.19% to 44.03% since 2016.

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INDUSTRY MARKET ENVIRONMENT (continued)Most recent annual Main Street Plumbing sales are $1,752,441. By contrast, average annual industry site sales are$1,824,380. Median site sales are $765,204. Market area small business sales average $1,032,341. Average annualindustry site sales have decreased by 4.10% in the three calendar years 2016 to 2018; market area average smallbusiness sales increased by 6.19% during the same period.

Main Street Plumbing sales rank 67 of 248 industry operations in the market area—a percentile rating of 73. Main StreetPlumbing holds a 0.35% share of market sales, which remained flat percentage points since 2016.

The Plumbing, Heating, and Air-Conditioning Contractors industry captures $736 in sales per person at the nationallevel, while market area sales per person is $875.00. US industry sales per household are $1,771. By contrast, marketarea sales per household are calculated at $2,025.00. This and related indicators (e.g., Sales per Person or Sales perBusiness Establishment) may suggest whether the local industry market is saturated or under‐served, reflectingopportunities for firm expansion or growth. Only one or two of these metrics may be relevant to the specific industry orfirm, depending on its customer target. This valuation does not include a calculated Sales per Household score in thecase of most B-to-B industries. Where a local market has been selected, the sales per household variance is applied asa Market Opportunity Index metric to value calculations.

32 independent industry startups and new branch operations were identified in the market area at the end of 2018,creating a new operation rate of 11.81% in the most recent analysis year , higher than the national industry rate of5.97%. Unusually low new operation rates can indicate market saturation or lack of perceived opportunity, while highrates suggest both opportunity and the recognition of it.

Over 2017-2018, 10.80% of industry establishments in this market area ceased operation. US industry cessation rateswere 10.74%.

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INDUSTRY FIRMIndustry Market Benchmarks 2016 2017 2018 2016 2017 2018FTE Employees 10 10 10 9 9 9Sales per Employee 186,952 190,673 199,265 192,991 194,383 194,716FTE Average Wage 59,973 57,936 58,942 43,256 43,856 44,100Industry Peer Group Firms Analyzed 17,329 15,946 16,222 Industry Market Average Site Sales 1,902,372 1,725,535 1,824,380 1,736,918 1,749,451 1,752,441Industry Market Gross Volume 494,616,816 431,383,755 494,407,106 Market Sales/Household 2,026 1,760 2,025 US Sales/Household 1,762 1,735 1,771

INDUSTRY MARKET ANALYSIS

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IV. FINANCIAL ANALYSIS

Introduction

The three tables in this section display selected Profit-Loss and Balance Sheet line items which are applied to theVestimate®-Pro Business Value analysis. The tables present line items in dollar values; as a per cent of total Revenueor Assets; and as percentage of the firm’s variance from industry peer group averages based on your selections:

NAICS 238220 Plumbing, Heating, and Air-Conditioning ContractorsSales Class: $1m - $2.49m

In addition to metrics from the traditional financial statement, the tables display values for full-time equivalentemployees (for the calculation of Sales per Employee); full-time equivalent Average Annual Wage (for the calculation ofthe Efficiency Ratio, i.e., Sales per Employee/Average Annual Wage); and Owner Replacement Compensation and 1xExpense Addbacks for the accurate calculation of Owner Earnings.

Financial Line Item Definitions

Revenue: Business revenue includes receipts from core business operations. Interest Income and Other income (suchas rents and royalties) are detailed separately for most operations.

Officers Compensation: Salary, wages stock bonuses and other compensation paid to officers for personal servicesrendered.

Depreciation: Non-cash expenses allocated to the current portion of depreciated, amortized and depleted property.

Operating Income: Gross Margin minus Operating Expenses defined as the sum of individual expense line items.

Interest Expense: Interest paid on loans and equivalents during the year.

After Tax Net Profit: Represents net profit after income taxes.

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FINANCIAL ANALYSIS (continued)Discretionary Owner Earnings: Sums Officer Compensation, Depreciation and related non-cash expenses and NetProfit before business taxes to represent a practical measure of total return to owners.

Owner Replacement Compensation: In cases of owner operation, the projected cost to replace owner labor with a non-owner/operator wage-compensated executive.

1x Expense Addbacks: Non-repetitive annual expenses which could reasonably be normalized as profit.

Accounts Receivable: A short-term asset (collected within one year) in the form of accounts or notes receivable, andusually representing a credit for a completed sale or loan.

Total Current Assets: The sum of a firm's cash, accounts and notes receivable, inventory, prepaid expenses andmarketable securities convertible to cash within a single operating cycle.

Totals Assets: The sum of current assets and fixed assets such as plant and equipment.

Accounts Payable: Invoices due to suppliers within the current business cycle.

Current Liabilities: Measurable debt owed within one year, including accounts, loans and notes payable, accruedliabilities and taxes due.

Net Worth: Current assets plus fixed assets minus current and long-term liabilities.

FTE Employees: Full-time equivalent employees.

FTE Average Wage: Average wage of full-time equivalent employees.

Industry Peer Group Firms Analyzed: Number of firms in the industry peer group data pool.

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INDUSTRY FIRMIncome-Expense 2016 2017 2018 2016 2017 2018Revenue 1,797,919 1,840,458 1,885,795 1,736,918 1,749,451 1,752,441Officers Compensation 131,248 137,114 138,795 110,225 116,091 98,334Depreciation 22,114 23,006 23,384 19,760 20,652 24,189Operating Income 107,156 99,569 118,051 111,015 103,428 146,811Interest Expense 6,832 7,178 7,355 7,055 7,401 6,902Pre Tax Net Profit 105,359 97,360 116,165 109,441 101,442 144,4301x Expense Addbacks 0 0 5,000Owner Replacement Compensation 0 0 10,000Owner Earnings 258,721 257,480 278,344 239,426 238,185 261,953Balance Sheet 2016 2017 2018 2016 2017 2018Accounts Receivable 111,948 135,495 139,734 101,697 125,244 96,277Total Current Assets 248,475 300,762 310,141 230,479 282,766 216,496Total Assets 393,905 482,534 488,411 355,407 444,036 343,598Accounts Payable 58,298 70,595 69,306 57,646 69,943 55,898Current Liabilities 126,641 153,784 154,827 124,685 151,828 118,480Total Liabilities 202,468 246,623 239,615 201,164 245,319 194,481Net Worth 191,437 235,911 248,796 154,243 198,717 149,117

FINANCIAL ANALYSIS ($)

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INDUSTRY FIRMIncome-Expense 2016 2017 2018 2016 2017 2018Revenue 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%Officers Compensation 7.30% 7.45% 7.36% 6.35% 6.64% 5.61%Depreciation 1.23% 1.25% 1.24% 1.14% 1.18% 1.38%Operating Income 5.96% 5.41% 6.26% 6.39% 5.91% 8.38%Interest Expense 0.38% 0.39% 0.39% 0.41% 0.42% 0.39%Pre Tax Net Profit 5.86% 5.29% 6.16% 6.30% 5.80% 8.24%Owner Earnings 14.39% 13.99% 14.76% 13.78% 13.61% 14.95%Balance Sheet 2016 2017 2018 2016 2017 2018Accounts Receivable 28.42% 28.08% 28.61% 28.61% 28.21% 28.02%Total Current Assets 63.08% 62.33% 63.50% 64.85% 63.68% 63.01%Total Assets 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%Accounts Payable 14.80% 14.63% 14.19% 16.22% 15.75% 16.27%Current Liabilities 32.15% 31.87% 31.70% 35.08% 34.19% 34.48%Total Liabilities 51.40% 51.11% 49.06% 56.60% 55.25% 56.60%Net Worth 48.60% 48.89% 50.94% 43.40% 44.75% 43.40%

FINANCIAL ANALYSIS (%)

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VARIANCEIncome-Expense 2016 2017 2018Revenue 0.00% 0.00% 0.00%Officers Compensation -13.07% -10.87% -23.72%Depreciation -7.52% -5.90% 11.65%Operating Income 7.24% 9.28% 33.83%Interest Expense 6.45% 9.52% 1.61%Pre Tax Net Profit 7.52% 9.61% 33.79%Owner Earnings -4.21% -2.68% 1.27%Balance Sheet 2016 2017 2018Accounts Receivable 0.68% 0.45% -2.06%Total Current Assets 2.80% 2.17% -0.77%Total Assets 0.00% 0.00% 0.00%Accounts Payable 9.59% 7.67% 14.65%Current Liabilities 9.12% 7.29% 8.78%Total Liabilities 10.12% 8.10% 15.37%Net Worth -10.70% -8.46% -14.80%

FINANCIAL ANALYSIS (VARIANCE)

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V. KEY PERFORMANCE INDICATORS—FINANCIAL RATIOS AND MARKET ANALYSIS

Introduction

To better understand your company’s operations, the Vestimate®-Pro Report calculates Key Performance Indicators(KPIs) for review and comparison to industry benchmarks.

KPIs (also known as financial ratios) are calculated on the basis of company-specific data linked to the correspondingvalues of the selected industry peer group. These and other derivative metrics that form the basis of our analysis aredeveloped from a variety of raw data sources detailed in the Methodology section of this report.

KPls are useful measures of the overall financial and operational health and growth of your business. These samemeasures are commonly utilized by business coaches, financial professionals and potential business acquirers in avariety of real world settings. The Vestimate®-Pro report applies KPI scoring to the calculation of business worth asvariance-based values to which various weights are assigned based on the specific metric, years of inputs andvariance.

In addition to detailing KPI variances and applying a calibrated weight to each percent of difference from industry peergroup standards, we use an intuitive five-star scoring system to communicate firm performance against industry peergroup standards. Except for Days Payable and Days Receivable, KPIs are scored on a “higher is better” basis. Thescoring approach is also detailed in the About the Data>Methodology section (VII) of this report.

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INDUSTRY FIRM VARIANCECash Flow 2016 2017 2018 2016 2017 2018 2016 2017 2018Current Ratio 1.96 1.96 2.00 1.85 1.86 1.83 -5.69% -4.98% -8.64%Days Payable 20.76 24.64 23.78 20.71 25.35 19.94 -0.26% 2.88% -16.15%Profitability Discretionary Owner Earnings 14.39% 13.99% 14.76% 13.78% 13.61% 14.95% -4.21% -2.68% 1.27%Return on Assets 26.75 20.18 23.78 30.79 22.85 42.03 15.11% 13.21% 76.76%Growth 2016-18 2016-18 2016-18DOE Growth 7.58% 9.41% 24.05%Average Annual Sales Growth -4.10% 0.89% 121.80%Efficiency Days Receivable 22.73 26.87 27.05 21.37 26.13 20.05 -5.98% -2.75% -25.87%Efficiency Index 3.12 3.29 3.38 4.46 4.43 4.42 43.13% 34.68% 30.60%Debt-Risk Modified Z-Score 6.97 6.11 6.64 7.04 6.08 8.02 0.90% -0.48% 20.73%Interest Coverage 18.92 17.08 19.23 36.74 34.97 41.46 94.16% 104.80% 115.59%Total Liabilities: Net Worth 1.06 1.05 0.96 1.30 1.23 1.30 23.04% 17.57% 35.86%Market Opportunity US Local Industry Market Growth (2016-18) 7.14% -0.04%Market Opportunity Index 0.87 0.99 0.87

KEY PERFORMANCE INDICATORS—FINANCIAL AND INDUSTRY MARKET ANALYSIS(continued)This report reflects the developer selection of calendar year values which are weighted as follows:

3-year Option: 2016: 25%; 2017: 25%; 2018: 50%

Weighted KPI values are applied to the value analysis to assure representation in each category. Scores are derivedfrom the variance and growth percentages displayed in the table below and charts on the following pages. KPI chartsfollow.

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Current Ratio:

3.0

Current Assets/Current Liabilities: Measures current assets available to covercurrent liabilities, a test of near-term solvency. The Current Ratio indicates theextent to which cash on hand and disposable assets can pay off near termliabilities. Higher is better unless it constrains necessary investment.

CASH FLOW-LIQUIDITY KPIS

Days Payable:

3.8

365/(Cost of Sales/Accounts Payable ratio). Reflects the average number ofdays for each payable before payment is made. High ratios may indicate cashflow difficulties.

Industry Your Firm

1.96

1.96

2.00

1.85

1.86

1.83

2016

2017

2018

0 1 2 3

Industry Your Firm

20.76

24.64

23.78

20.71

25.35

19.94

2016

2017

2018

0 10 20 30

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Owner Earnings %3.0

Owner Earnings equals [Officer Compensation+Pre-Tax NetProfit+Depreciation+1x Addbacks]/Revenue.

PROFITABILITY KPIS

Owner Earnings Growth (2016-2018)5.0

Compares change in Owner Earnings at the firm and industry levels. Highermulti-year growth in firm-specific owner earnings revenue relative to the USindustry average growth is an indicator of accelerated performance.

Industry Your Firm

14.39%

13.99%

14.76%

13.78%

13.61%

14.95%

2016

2017

2018

0 5 10 15 20

Industry Your Firm

7.58%

9.41%

7.5

8

8.5

9

9.5

Industry Your Firm

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Annual Sales Growth (2016-2018)5.0

Compares change in annual sales at the firm and industry levels. Higher multi-year growth in firm sales relative to national industry annual average growth is anindicator of firm momentum.

PROFITABILITY KPIS (CONTINUED)

Return on Assets:

4.6

Pre-Tax Net Profit/Total Assets. A critical indicator of profitability. Companieswhich use their assets efficiently tend to show a ratio higher than the industrynorm. This ratio can be used as a predictor of the company's ability to withstandchanges in prices or market conditions. The ratio may appear higher for smallbusinesses due to owner compensation draws accounted as net profit.

Industry Your Firm

-4.10%

0.89%

-6

-4

-2

2

0

Industry Your Firm

Industry Your Firm

26.75

20.18

23.78

30.79

22.85

42.03

2016

2017

2018

0 20 40 60

Days Receivables:

4.2

365/(Business Revenue/Receivables). Reflects the number of days thatreceivables are outstanding. Higher than average ratios may indicate a problemin the collection process. Target average or lower.

EFFICIENCY KPIS

Efficiency Index:

5.0

This index calculates the firm’s efficiency as measured by a Sales perEmployee/Average Annual Wage calculation. The result is compared to theselected market average, providing a more sophisticated efficiency indicatorthan a stand-alone Sales per Employee metric. Higher is better.

Industry Your Firm

22.73

26.87

27.05

21.37

26.13

20.05

2016

2017

2018

0 10 20 30

Industry Your Firm

3.12

3.29

3.38

4.46

4.43

4.42

2016

2017

2018

0 2 4 6

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Modified Z-Score:

4.2

A modified form of the Altman Z-Score which evaluates default risk. Themodified Z-Score substitutes Discretionary Owner Earnings for Net Profit and NetWorth for Retained Earnings to better capture small business operations. In allcases higher (at or above the industry level) is desired. Modified Z-Scorecalculations for this industry are:([Operating Income/Total Assets]*6.72) + ([Net Worth/Total Liabilities]*1.05) +([Working Capital/Total Assets]*6.5) + ([Discretionary Owner Earnings/TotalAssets]*3.26)

DEBT-RISK KPIS

Interest Coverage:

5.0

[Earnings before Interest, Income Taxes due, Depreciation-Amortization]/Interestexpense. Assesses financial stability by examining whether a company isprofitable enough to pay interest expense. A ratio >1.00 is desirable.

Industry Your Firm

6.97

6.11

6.64

7.04

6.08

8.02

2016

2017

2018

0 5 10

Industry Your Firm

18.92

17.08

19.23

36.74

34.97

41.46

2016

2017

2018

0 20 40 60

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Total Liabilities: Net Worth:

1.2

Total liabilities/Net Worth. This ratio helps to clarify the total risk impact of debt.Total liability levels should be comfortably less than Net Worth except in specialcircumstances. The most advantageous ratios are around or somewhat belowindustry norms, balancing current and long term liability values.

DEBT-RISK KPIS (continued)

Industry Your Firm

1.06

1.05

0.96

1.30

1.23

1.30

2016

2017

2018

0 0.5 1 1.5 2

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Market Opportunity Index

2.2

A calculated index which compares local market and US Sales per Household,indicating the level of market saturation where balance between Market and USlevels where equilibrium=1.00. The metric is most relevant in retail and serviceindustries, and is not calculated where the selected market is national. A higherindex indicates more opportunity.

MARKET OPPORTUNITY KPIS

Industry Market Growth (2016-18):

1.0

Higher multi-year higher growth in market industry revenue volume (not firm-specific) relative to the US industry is often an opportunity indicator.

0.87

0.99

0.87

0.5

0.6

0.7

0.8

0.9

1.0

1.1

2016 2017 2018

Index

US Local

7.14%

-0.04%0.00

10.00

5.00

-5.00US Local

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MAIN STREET PLUMBING VALUES:Income approach values are rarely applied to firms with revenue of less than $2.5 million.

Final Vestimate®-Pro Values:Asset Sale Value: Earnings Approach: $542,105Asset Sale Value: Income Approach: $773,079

Historical Trend Values (excludes growth KPIs):

2016 Asset Sale Value: Earnings Approach: $467,490 2017 Asset Sale Value: Earnings Approach: $436,651 2018 Asset Sale Value: Earnings Approach: $542,105

2016 Asset Sale Value: Income Approach: $730,847 2017 Asset Sale Value: Income Approach: $747,162 2018 Asset Sale Value: Income Approach: $773,079

VI. HISTORICAL VESTIMATE®-PRO BUSINESS VALUESBecause the absence of legacy year growth analysis, growth metrics are not included in the value trend analysis forprior years. Current year value may reflect additional active year values and integrated KPIs selected by the developer.As a result, the historical values here may not represent a 100% apples-to-apples comparison.

2016-2018 HISTORICAL VALUE TREND ($)

467,490

436,651

542,105

730,847747,162

773,079

400,000

500,000

600,000

700,000

800,000

2016 2017 2018

Earnings Approach Income Approach

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VII. ABOUT THE DATAVestimate®-Pro Methodology

Vestimate®-Pro business values are based on transactional multiples, industry financial and market trend analysis applied to our proprietarycalculation protocols.

Bizminer develops and publishes financial statement averages for about five thousand US industry classifications. Industry and sales class-specificdata from Bizminer's industry financial analysis content is integrated into final Vestimate®-Pro calculations. That content has been accepted in USTax Court and is utilized by thousands of accounting, valuation, banking and business assistance professionals; by almost one hundred universitylibraries and by taxing agencies in multiple countries.

This core Bizminer content is integrated with Price/Earnings and Price/Sales multiples derived from almost 30,000 business transactions collectedby DealStats. Bizminer conducts intensive cleaning for outliers in the DealStats transaction database at the NAICS-6 level after segregating the databy industry and size, scouring for outliers and creating four sized tiers (<$2.5m; $2.5m-$25m; $25m-plus and industry-wide) to develop multipliersused with our own enterprise sales and average industry performance content. Price/Earnings and Price/Revenue multiples are derived for fiveintervals: [Low]-[Quartile 1]-[Median]-[Quartile 2]-[High]. A series of core KPIs representing all five critical KPI categories (Cash Flow/Liquidity;Profitability; Efficiency; Debt-Risk; Market Opportunity) are then scored and applied using Bizminer’s proprietary algorithms to calculate a finalbusiness values or value range.

KPI variances for all selected years are applied to determine the KPI score. With two exceptions, all scored KPIs used for this value report arecalculated using our Standard Scoring methodology, that is, higher is generally better:

+/-10% from average= 3+11% to +20% above average= 4>20% above average= 5+11% to +20% below average= 2>20% below average= 1

Days Payable uses a Balanced Scoring framework, that is, closer to the industry standard is best, so that no variance from industry values wouldreceive 5 stars. Days Receivable uses Reverse Scoring, where lower than the industry standard is better; 20% below the industry standard, forexample, would receive 5 stars.

Displayed scoring is based on a scale of 1-5, with 5 being "best" and 1 being "worst". All percentages are shown as a variance from the industry peergroup average.

Variances are also applied with more finely calibrated and weighted differentials to the final Vestimate ®-Pro business value calculations; weightvalues are assigned for each percentage point of variance for each KPI.

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METHODOLOGY (continued)Final business values also incorporate one time income-expense addbacks noted by the report developer, which may not be visible in formal financialstatements.

The Vestimate®-Pro Business Value Report offers a choice of timelines to apply to the analysis when displaying your report. You can choose to baseyour final valuations and KPI scores on one, two or three years of performance. If you input three years of firm data, the Profile analysis will considerall three years by default. The years are weighted in the KPI analysis as follows:

3-year Option: 2016: 20%; 2017: 20%; 2018: 60%2-year Option: 2017: 33.3%; 2018: 67.7%1-year Option: 2018: 100%

Market Analysis Values

The analysis integrates industry market volume trends, an industry site sales growth yardstick and a market penetration index developed at nationaland local levels in Bizminer’s Industry Market Trend report series. That content integrates the industry and custom market area selection with firmperformance and scores the results.

Sales-related calculations are developed with firm‐level data which is integrated with BizMiner’s internally generated Sales per Employee projections.SPE data is both industry‐ and location‐specific; values are updated monthly by the application of US Census data and five industry and consumerprice and productivity indices from the Bureau of Labor Statistics and other federal agencies.

The Sales per Household metric integrates Census data with Bizminer’s industry market sales calculations to produce Sales per Household valuesapplied to the Market Opportunity Index. Although it is displayed in tables, the Market Opportunity Index is not applied to scoring or business valuecalculations where the selected market is US (due to lack of a market comparison), or where the industry is overwhelmingly B-to-B, including theseparent NAICS and their offspring: 11; 21; 31-32-33 (except 3118; 311991; 323111; 323113); 33; 42; 481; 482; 483111; 483211; 486; 493; 512; 533; 55;5611; 5612.

Cessation rates track the experience of business establishments, firms, small businesses, branches and startups doing business at the start of thetime series, and still in operation today. Firms which relocate but maintain independent operations are considered survivors if they do not move outof the jurisdiction being analyzed. Firms which become subsidiary locations, or whose location is terminated, are grouped with others which ceasedoperation. Any business entity which does not evidence ongoing operations (for example, by registering with government agencies, credit reportingservices or business directories) is considered to have ceased viable operations and is classified in the "ceased operation" category.

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KPI SCORINGIn most cases, the variance for each metric measures the percentage difference between input firm ratios and the industry average. The Sales perHousehold Market Opportunity Index and Location Quotient compare local and national market data to determine the variance between the two.

Each variance results in a Score of 1-5 (5 being best) for each year of each selected ratio. The application of the Variances to the Score depends onthe specific metric; in most cases higher is better (Standard Scoring); in some, lower (Reverse Scoring) is better; in a few, closest to the industryaverage (Balanced Scoring) is best.

Approach to Scored KPIs:Owner Earnings (%)-StandardAnnual Sales Growth Sales-StandardIndustry Market Volume-StandardSales per Household Market Opportunity Index-StandardEfficiency Index-StandardDays Receivable-ReverseCurrent Ratio-StandardCurrent Liabilities:Net Worth-ReverseTotal Liabilities:Net Worth-ReverseModified Z‐Score-StandardInterest Coverage: Standard

Scoring Calculations:Standard (basically higher is better)

+/-10% from average= 3+11% to +20% above average= 4>20% above average= 5+11% to +20% below average= 2>20% below average= 1

Reverse (lower is better)+/-10% from average= 3+11% to +20% above average= 2>20% above average= 1+11% to +20% below average= 4>20% below average= 5

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DATA SOURCESBizMiner data is widely accepted for industry analytical work, benchmarking, valuations, forensics and litigation. BizMiner content is accepted in USTax Court (Bauer vs. IRS: T.C. Memo. 2012-156) and is utilized by state, provincial and national taxing agencies in the US and Canada.

Raw data analyzed for BizMiner reports is sourced from an array of the nation's government and private statistical sources. None of these raw datasources creates the final measures reflected in BizMiner industry profiles. In total, BizMiner accesses over a billion sourced data points from 15million business operations for each of its twice annual updates covering a 3-5 year time series. Historical data and BizMiner algorithms are used toinform and test projections for non-reporting firms. Data elements are sourced specifically from:

IRS SOI Corporation Tax BookIRS Statistics of IncomeUS Economic CensusUS Census Quarterly Financial ReportsUS Census County Business PatternsBureau of Labor Statistics Monthly Employment ReportsBureau of Labor Statistics Monthly Unemployment ReportsBureau of Labor Statistics Annual Wage SurveyBureau of Labor Statistics Industry Productivity ReportsBureau of Labor Statistics Price IndicesNational Agricultural Statistical ServiceUS Census Quarterly Financial ReportsUS Census Retail Trade ReportInfoGroup, Inc.DealStatsCredit Reporting AgenciesAmerican Community Survey

While 100% firm coverage is desirable for analysis purposes, the greatest value of BizMiner reports rests in discerning patterns of activity, which arereflected in the large samples used to develop our reports. The overall current coverage of the databases surpasses 13 million active businessoperations at any point in time.

Contact Bizminer at: 2601 Market Street, Camp Hill PA 17011: www.bizminer.com.

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VESTIMATE® USE: TERMS AND CONDITIONSThis report is authorized for in-house use by the purchaser and other individuals licensed or authorized by Bizminer®. No other persons in thelicensing organization or its contractors may access, analyze, utilize or review Licensed Content. Licensees are permitted to utilize the content withbona fide third-party end-user clients as part of significantly value-added reports or projects. For example, content may be included as part of acustom business plan, broker communications with prospective buyers, custom valuation report individually developed and integrated byprofessional licensees for bona fide end user clients, or as part of a personalized financial review with counseling conducted by an accountant orconsultant. The number of clients or client entities to which permitted uses apply is not limited.

Limitations on Use: If you use Licensed Content in a manner that exceeds any of the limitations below, you are in breach of these Terms. If yourneeds exceed these limitations, you may qualify for a separate Extended Electronic License with Bizminer. Any such use without a separatelynegotiated Extended Commercial Subscription constitutes a breach of this License Agreement.

Access to Licensed Content is subject to the following restrictions:

The creation of files or databases which aggregate Licensed Content for in-house use is limited to part or all of 25 Licensed Content reports.

Content can NOT be harvested for integration into either Subscriber or third-party end user databases. "Harvested" content includes data which isloaded without a current due diligence need or immediate, active client engagement.

Use or integration of Licensed Content in any electronic database or engine for either front end or back-end use with third party clients, or for anyonline use or integration, displayed or otherwise, is strictly prohibited unless such use or display is confined to authorized Users.

Distribution of any Licensed Content beyond bona fide third party end-user clients as described above is prohibited, including distribution ateducational, marketing or other quasi-public or by-invitation public events; any electronic or other posting on a web site or in any other electronicformat aside from bona fide end user clients as detailed above; distribution of Licensed Content reports or data in whole or part without the additionof significant value-added materials or delivery of significant value-added services in addition to the licensed report or content. Otherwise, data re-sale or re-engineering, web or electronic-based commerce or distribution or re-sale to anyone outside your organization is not permitted.

As is the case with any databases this large, some errors are inevitable. Some firms are missed and specific information on others is lacking fromthe database. Not all information received is uniform or complete, resulting in the need to develop projection algorithms for specific industrysegments and metrics in some report series. No representation is made as to the accuracy of the databases utilized or the results of subsequentanalyses. Neither the Bizminer® nor its resellers have undertaken independent primary research to confirm the accuracy of the data utilized in theProfile analyses. Neither the Bizminer® nor its resellers are responsible for conclusions drawn or decisions made based upon this data or analysis. Inno event will Bizminer® or its resellers be liable for any damages, direct, indirect, incidental or consequential resulting from the use of the informationcontained in Bizminer® reports.

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