Fake-Company-QofE-FINAL

Sample Quality of Earnings Report: A Comprehensive
Analysis of Financial Performance

The report below is an example of Amplēo’s final deliverable for a quality of earnings report. You will find that the report is broken up into 7 different
sections:
1. Background, Overview, and Key Findings

2. Quality of Earnings
3. Financial Statements
4. Financial Performance
5. Working Capital
6. Appendix A: Scope of Procedures
7. Appendix B: Supporting Schedules
The report is designed to help investors, analysts, and other financial professionals gain a deeper understanding of the company's financial health
and performance. The example below showcases the level of detail and analysis that can be expected from a quality of earnings report, and how it
can be used to make informed investment or strategic decisions.
Although the financial information throughout this report is a completely FAKE (made up) company and the data is not real, nor was it derived from a
real company, the example report provides a valuable resource for anyone seeking to understand how a quality of earnings report is structured and
what kind of information it can provide.
Additional Resources:
Glossary: “What is Quality of Earnings (QofE)”
Blog: “How to Get a Quality of Earnings Report [& Why You Need One]”
1
Thinking of buying or selling a business and need
a Quality of Earnings Report?
Reach out to Amplēo today.

QofE@ampleo.com | www.ampleo.com/contact
2
DISCLOSURE
The financial informational throughout this report
is a completely FAKE (made up)
company. The data contained is not real, nor was it

derived from a real company.
Fake Company, LLC - FINANCIAL DUE DILIGENCE REPORT 3
Private & Confidential
Fake Company, LLC
Financial Due Diligence Report
February 14, 2023
Fake Company, LLC - FINANCIAL DUE DILIGENCE REPORT

February 14, 2023
Individual’s Name
Individual’s Title
Made Up Client
123 Main St.
Some City, UT 84000
Dear Mr./Mrs. Individual,
In accordance with our engagement letter dated January 5, 2023 (“Engagement Letter”), please find attached Amplēo’s (“Amplēo”, “our”, “we”, and “us”) financial due diligence
report (“Report”) reflecting the consulting procedures we performed in relation to the operational results and financial position of Fake Company, LLC (“Fake” or the “Company”)
and its potential acquisition from Made Up Client (“Cient”).
The analyses, inquiries, and procedures that we performed, as outlined in Appendix A of this Report, are based on transactions, records, and representations made by Fake’s
management. While there are no definitive requirements or procedures that constitute standards for due diligence, our work was conducted in accordance with the American
Institute of Certified Public Accountants’ (“AICPA”) Statement of Standards for Consulting Services No. 1. By acceptance of this Report, you acknowledge that the sufficiency of
the procedures performed is solely the responsibility of Client.
We make no representation or warranties regarding the Report or related services requested, including other matters that may have come to our attention had we performed
additional procedures, and we have no obligation to update our report for events occurring subsequent to the date of our report, or not disclosed to us by Fake. The services we
were engaged to perform do not constitute an audit in accordance with generally accepted accounting principles in the United States, legal or investment advice, an
examination of any type, an estimate of value, an accounting or tax opinion, or any other attestation or review services in accordance with the AICPA or other regulatory body.
As such, we express no opinion or any other form of assurance thereon. Our work cannot be relied upon to disclose error, fraud, or illegal acts that may exist.
This Report is solely for the information and use of Client. No portion of this Report, in whole or in part, shall be accessed by, referred to, distributed to, or relied upon by any
other party without Amplēo’s prior written consent. Such requests may require us to perform additional procedures.
We appreciate the opportunity to work with you.
[signature]
Partner
CFO Solutions, L.C. dba Amplēo

IMPORTANT NOTE FOR ANY INDIVIDUAL OR ENTITY NOT AUTHORIZED TO HAVE ACCESS TO THIS REPORT
Any individual or entity who is not an addressee of this Report or who has not executed a separate release letter with Amplēo is not authorized to view or have
access to this Report.
Shall any individual or entity who (1) is not an addressee of this Report or (2) has not executed a separate release letter with Amplēo, view or access this Report,
such individual or entity agrees to the following terms without modification or reservation:
• The individual or entity viewing or accessing this Report understands the work performed by Amplēo was performed in accordance with the
instructions and limited scope set out by our addressee Client and was performed for the sole benefit of such Client, and not for the use or benefit
of any other party.
• The individual or entity viewing or accessing this Report acknowledges the procedures performed may not include all procedures deemed
necessary for purposes of the reader.
• The individual or entity viewing or accessing this Report agrees that Amplēo, its partners, employees, and agents neither owe nor accept any duty
of responsibility to the Report, whether in contract or in tort (including without limitation, negligence and breach of statutory duty), and shall not be
liable in respect of any loss, damage or expense whatsoever in nature which is caused by any use the reader may choose to make of this Report, or
which is otherwise consequently relied upon, upon gaining access to the Report by the reader. Further the individual or entity agrees (1) that this
Report is not to be referred to or quoted, in whole or in part, in any prospectus, registration statement, offering circular, public filing, loan, or any
other agreement or document, and (2) not to distribute the Report without Amplēo’s prior consent.

Table of Contents
Section Page Number
Background, Overview, and Key Findings 8
Quality of Earnings (EBITDA) 12
Financial Statements 16
Financial Performance 22
Working Capital 32
Appendix A: Scope of Procedures 37
Appendix B: Supporting Schedules 41

Background, Overview, and Key Findings

OVERVIEW ($ IN USD) FY20 FY21 FY22 TTM Jan-23
Reported Revenues $ 38,401,371 $ 48,965,544 $ 58,116,502 $ 59,792,401

EBITDA, as defined $ 3,555,616 $ 5,774,292 $ 6,018,064 $ 6,498,773
Diligence-Adjusted EBITDA $ 3,557,618 $ 5,751,120 $ 6,083,925 $ 6,588,329
Adjusted EBITDA Margin 9.3% 11.7% 10.5% 11.0%
SCOPE OF PROCEDURES PERFORMED

The various procedures detailed in Appendix A, as agreed upon with Made Up Client, were performed on the financial information from January 1, 2020 through January 31, 2023,
provided by management of Company. Our commentary is solely based on the figures and supporting documentation that was provided to us, management’s representations, and
assumptions agreed upon with Fake.
COMPANY BACKGROUND, SYSTEMS, AND ACCOUNTING DEPARTMENT
Fake Company, LLC, ("Fake", or "Company") is an eCommerce company that specializes in selling widgets to consumers.
The Company was established in January 2018, is based out of Somewhere, UT, and is registered as a Delaware LLC.
The accounting department includes John Doe (CFO) and Jane Smith (Controller). Here is where we would type up information regarding the rest of the accounting team, roles, and the
closeout process.
The Company utilizes QuickBooks Online for its accounting system, Fishbowl for its inventory system, and the rest of this paragraph contains information regarding the systems that affect
the accounting and financial reports.


KEY FINDINGS
Company sells products through its website and other various eCommerce websites.
During the TTM period, the following key metrics were identified:
Gross margin was 52.7%.
Marketing and Advertising spend was 13.4% of revenue.
Revenue has grown from $48.97 in FY21M to $58.12M in FY22, or 18.7% growth. Revenue grew from $49.94M in TTM Jan-22 to $59.79M in TTM Jan-23, or 19.7% growth.
The Company's diligence-adjusted EBITDA ("Adjusted EBITDA") remained positive throughout the diligence periods. Adjusted EBITDA increased from $3.56M in FY20 to $5.75M in FY21
to $6.59M in the TTM Jan-23 period. These figures represent 9.3%, 11.7%, and 11.0% of revenues, respectively.


OTHER ITEMS
References to "Management" throughout this report consists of John Doe and Jane Smith.
Management represents that no past, current, or pending litigation exists.
We observed that the Company pays sales tax in various jurisdictions. However, we did not do additional analysis due to tax diligence–specifically Nexus footprint–was not included in the
scope.
Through the Report date, no subsequent events were noted by management that would require an accrual or disclosure on the balance sheet or income statement.

Quality of Earnings

Quality of Earnings: Adjusted EBITDA
QUALITY OF EARNINGS ($ in USD) FY20 FY21 FY22 TTM Jan-23

The table to the left summarizes the adjustments made to defined EBITDA for the 12
months ended December 31, 2020 ("FY20"), December 31, 2021 ("FY21"), December 31,
Net Income $ 3,498,693 $ 5,714,030 $ 5,949,913 $ 6,429,439
2022 ("FY22"), and January 31, 2023 ("TTM Jan-23").
+ Interest 37,685 40,063 39,201 40,383
+ Taxes 17,225 18,187 26,938 26,938 EBITDA & Adjusted EBITDA
+ Depreciation 2,012 2,012 2,012 2,012
The Company's diligence-adjusted EBITDA increased as follows: $3.56M in FY20, $5.75M
+ Amortization - - - - in FY21, $6.08M in FY22, and $6.59M during the TTM Jan-23 period. Adjusted EBITDA
EBITDA, as defined $ 3,555,616 $ 5,774,292 $ 6,018,064 $ 6,498,773 margin is represented as follows: 9.3% in FY20, 11.7% in FY21, 10.5% in FY22, and 11.0%
during the TTM Jan-23 period. Here is where we would add some verbiage regarding what
the primary drivers were for the slight fluctuations.
Management-Adjusted EBITDA
+ a ) Donations 198,000 217,800 239,580 241,577
+ b ) Personal Accountant 12,000 12,000 12,000 12,000
+ c ) Owner Compensation 137,503 154,028 171,280 172,979 a) Donations. Management represents that donations were made to local charities chosen
by the executives, and that this practice will cease post-transaction.
+ d ) Personal Travel 18,000 18,000 18,000 18,000
Total Management Adjustments $ 365,503 $ 401,828 $ 440,860 $ 444,556 b) Personal Accountant. The Company's accountant was utilized to process items for the
Management-Adjusted EBITDA $ 3,921,118 $ 6,176,120 $ 6,458,925 $ 6,943,329
owner's personal finances. These are considered nonbusiness related, and therefore an
adjustment has been entered. We gained comfort surrounding this adjustment by viewing a
haphazard selection of email communications between the owner and accountant, which
Diligence-Adjusted EBITDA
validate the personal nature. An estimate for time and compensation has been made to
+ e ) Recruiter Fees - 40,000 40,000 40,000 account for this adjustment, which we deemed appropriate.
+ f ) Transaction Expenses - 30,000 30,000 40,000
c) Owner Compensation. This adjustment is to add back the compensation that Owner
+ g ) Relocation Expenses 11,500 - 20,000 20,000
received. Owner and Buyer have agreed to a salary of $300k, for which a diligence
- h ) Rent & Lease - (120,000) (90,000) (80,000) adjustment has been made (refer to the section below).
- i ) Owner Compensation (375,000) (375,000) (375,000) (375,000)
d) Personal Travel. The Company paid for personal travel expenses. To get comfortable
Total Diligence Adjustments $ (363,500) $ (425,000) $ (375,000) $ (355,000) with these adjustments, we viewed a haphazard selection of the correlating expense
Diligence-Adjusted EBITDA $ 3,557,618 $ 5,751,120 $ 6,083,925 $ 6,588,329 records and journals.
Adjusted EBITDA margin 9.3% 11.7% 10.5% 11.0%

Quality of Earnings: Adjusted EBITDA
QUALITY OF EARNINGS ($ in USD) FY20 FY21 FY22 TTM Jan-23

Net Income $ 3,498,693 $ 5,714,030 $ 5,949,913 $ 6,429,439
e) Recruiter Fees. The Company paid a third party to hire two key employees during the
+ Interest 37,685 40,063 39,201 40,383 periods under diligence. As this is considered non-recurring, adjustments have been made
+ Taxes 17,225 18,187 26,938 26,938 to add these expenses back to EBITDA.
+ Depreciation 2,012 2,012 2,012 2,012
f) Transaction Expenses. In April 2021, the Company incurred costs related to a potential
+ Amortization - - - - transaction which was not completed. Starting in October 2022, the Company began
EBITDA, as defined $ 3,555,616 $ 5,774,292 $ 6,018,064 $ 6,498,773 exploring this option again. As these costs are related to this potential transaction and are
non-recurring in nature, adjustments have been made to remove them from EBITDA.
g) Relocation Expenses. The Company incurred costs to relocate to a new warehouse
+ a ) Donations 198,000 217,800 239,580 241,577 during 3Q 2020, and then again in Q3 2022. These are considered non-recurring in nature,
+ b ) Personal Accountant 12,000 12,000 12,000 12,000 and therefore adjustments have been made. To validate these adjustments, we viewed
invoices from third-party moving companies containing the details of items moved and the
+ c ) Owner Compensation 137,503 154,028 171,280 172,979
addresses of the warehouses.
+ d ) Personal Travel 18,000 18,000 18,000 18,000
Total Management Adjustments $ 365,503 $ 401,828 $ 440,860 $ 444,556 h) Rent & Lease. Leases for warehouse and office space began in October 2020 and
October 2022. Adjustments have been made to normalize EBITDA had the current lease
Management-Adjusted EBITDA $ 3,921,118 $ 6,176,120 $ 6,458,925 $ 6,943,329
been in place throughout the diligence period.
Diligence-Adjusted EBITDA i) Owner Compensation. This adjustment is for the agreed upon compensation of $300k
+ e ) Recruiter Fees - 40,000 40,000 40,000 between Owner and Buyer and includes a 25% payroll burden. Refer to the section above
regarding an adjustment made for the compensation that was incurred.
+ f ) Transaction Expenses - 30,000 30,000 40,000
+ g ) Relocation Expenses 11,500 - 20,000 20,000
- h ) Rent & Lease - (120,000) (90,000) (80,000)
- i ) Owner Compensation (375,000) (375,000) (375,000) (375,000)
Total Diligence Adjustments $ (363,500) $ (425,000) $ (375,000) $ (355,000)
Adjusted EBITDA margin 9.3% 11.7% 10.5% 11.0%

Quality of Earnings: Defined vs. Adjusted EBITDA
EBITDA TTM Jan-23 - Defined vs. Adjusted Defined vs.

$7,200,000 Adjusted EBITDA
$40,000 $20,000 The chart to the left

$7,000,000 $40,000
$18,000 summarizes the U.S.
$172,979
$(80,000) GAAP & diligence
adjustments, totaling
$6,800,000 $241,577 $12,000 $0.90M, made to
Reported EBITDA to
$6,588,329 arrive at Adjusted
$6,600,000 EBITDA for the TTM
$6,498,773 $(375,000)
Jan-23 period
$6,400,000
$6,200,000
$0
$6,000,000
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Financial Statements

Financial Statements: Income Statement - Adjusted
Income Statement - Adjusted % of Total Sales
($ IN USD) FY20 FY21 FY22 TTM Jan-23 FY20 FY21 FY22 TTM
Income Statement Summary
Product Sales 37,382,673 47,126,373 55,728,962 57,409,374 97% 96% 96% 96%
Discounts, Returns & Allowances (4,507,910) (5,555,103) (6,921,162) (7,067,503) -12% -11% -12% -12% Please refer below for analysis of the income statement. Amplēo analyzed any significant
Shipping & Delivery 5,526,608 7,394,274 9,308,702 9,450,530 14% 15% 16% 16% balances and fluctuations related to the periods under analysis. Amplēo reclassified some
Total Sales $ 38,401,371 $ 48,965,544 $ 58,116,502 $ 59,792,401 100% 100% 100% 100% income statement accounts for purposes of analysis.
Product COGS 11,346,200 14,218,388 16,580,075 17,221,960 30% 29% 29% 29%
Fulfillment 5,378,718 6,979,830 8,478,581 8,719,751 14% 14% 15% 15%

Management represents that revenue is recognized on an accrual basis, based on date of
shipment to the customer, expenses are recognized when incurred on an accrual basis, and
Shipping COGS 1,512,840 1,916,106 2,327,134 2,356,422 4% 4% 4% 4%
Costs of Goods Sold $ 18,237,758 $ 23,114,324 $ 27,385,790 $ 28,298,133 47% 47% 47% 47%
COGS are recorded to match the revenue recognized.
Gross Profit $ 20,163,613 $ 25,851,220 $ 30,730,712 $ 31,494,268 53% 53% 53% 53% Net Income
Net income increased from $3.50M in FY20 to $5.71M in FY21 to $6.43M through the TTM
Amortization - - - - 0% 0% 0% 0%
period. As a percentage of sales, net income increased from 9.1% in FY20 to 11.7% in FY21,
Bank & eComm Fees 1,966,150 2,507,036 2,975,565 3,061,371 5% 5% 5% 5%
and then decreased to 10.8% through the TTM period. The decrease in margin was primarily
Computer & IT 396,000 435,600 479,160 483,153 1% 1% 1% 1%
Contractors 24,120 28,944 34,733 35,312 0% 0% 0% 0%

driven by increases in Fulfillment COGS as well as in Salaries, Wages, & Benefits. Please
Depreciation 2,012 2,012 2,012 2,012 0% 0% 0% 0%
refer below for further analysis.
Donations 198,000 217,800 239,580 241,577 1% 0% 0% 0%
Dues & Subscriptions 82,800 95,220 109,503 110,872 0% 0% 0% 0%

Discounts, Returns & Allowances
Licenses, Permits & Insurance 405,030 506,288 632,859 646,044 1% 1% 1% 1%
The Company has a sixty-day return policy, as stated on its website. Management
Marketing & Advertising 5,834,772 6,376,250 8,119,700 7,988,278 15% 13% 14% 13% represents that an allowance for sales returns is established at 12% of the previous 60 days'
Other G&A 630,000 661,500 694,575 697,469 2% 1% 1% 1% sales.
Professional & Service Fees 268,800 371,056 505,583 518,955 0.7% 0.8% 0.9% 0.9%
Real Estate, Property & Sales Taxes 39,600 43,560 47,916 48,315 0% 0% 0% 0% Total Sales
Rent & Lease 135,000 180,000 210,000 220,000 0% 0% 0% 0% The Company offers widgets to consumers through the Company's website and other
Salaries, Wages & Benefits 6,497,425 8,487,205 10,378,559 10,655,273 17% 17% 18% 18% eCommerce websites. Sales grew from $38.40M in FY20 to $48.97M in FY21, or 27.5%
Supplies, Utilities & Repairs 100,800 105,840 111,132 111,595 0% 0% 0% 0% growth. Sales grew from $49.94M in TTM Jan-22 to $59.79M in TTM Jan-23, or 19.7%
Travel, Meals & Entertainment 29,500 51,000 134,000 137,500 0% 0% 0% 0% growth. Sales growth has been sustained via targeted marketing campaigns.
Operating Income $ 3,553,604 $ 5,781,910 $ 6,055,835 $ 6,536,544 9% 12% 10% 11%
Interest Expense (37,685) (40,063) (39,201) (40,383) 0% 0% 0% 0%
Other Expenses - (9,630) (39,783) (39,783) 0% 0% 0% 0%
Taxes (17,225) (18,187) (26,938) (26,938) 0% 0% 0% 0%
Net Income $ 3,498,693 $ 5,714,030 $ 5,949,913 $ 6,429,439 9% 12% 10% 11%

Income Statement Summary (continued)
Product Sales 37,382,673 47,126,373 55,728,962 57,409,374 97% 96% 96% 96%
Discounts, Returns & Allowances (4,507,910) (5,555,103) (6,921,162) (7,067,503) -12% -11% -12% -12% Costs of Goods Sold
Shipping & Delivery 5,526,608 7,394,274 9,308,702 9,450,530 14% 15% 16% 16% The Company utilizes FIFO for inventory costing and includes landed costs. Product COGS
Total Sales $ 38,401,371 $ 48,965,544 $ 58,116,502 $ 59,792,401 100% 100% 100% 100% is calculated using the following formula: beginning inventory value + purchases - ending
inventory value. To get comfortable with these calculations, we obtained a haphazard
Product COGS 11,346,200 14,218,388 16,580,075 17,221,960 30% 29% 29% 29%
Fulfillment 5,378,718 6,979,830 8,478,581 8,719,751 14% 14% 15% 15%

sample of invoices from product vendors and found them to be in compliance with US
GAAP. Product, fulfillment, and shipping costs make up 60.9%, 30.8%, and 8.3%,
Shipping COGS 1,512,840 1,916,106 2,327,134 2,356,422 4% 4% 4% 4%
respectively, of the total costs of goods sold during the TTM period. Compared to total
sales, these represent 28.8%, 14.6%, and 3.9% of the TTM period. In an actual QofE on an
Gross Profit $ 20,163,613 $ 25,851,220 $ 30,730,712 $ 31,494,268 53% 53% 53% 53% actual company, this paragraph will contain more detailed analysis surrounding these items,
including information around inventory obsolescence/reserves.
Amortization - - - - 0% 0% 0% 0%
Bank & eComm Fees 1,966,150 2,507,036 2,975,565 3,061,371 5% 5% 5% 5%

Bank & eComm Fees
Computer & IT 396,000 435,600 479,160 483,153 1% 1% 1% 1%
Contractors 24,120 28,944 34,733 35,312 0% 0% 0% 0%

Bank and eComm Fees comprise of costs incurred for banking and credit card transactions.
Depreciation 2,012 2,012 2,012 2,012 0% 0% 0% 0%
When compared to the amount of total sales, these represent 5.1% of the diligence period.
Donations 198,000 217,800 239,580 241,577 1% 0% 0% 0%
During the periods under analysis, these remained between 11.8% and 12.5% of the total
expenses.
Marketing & Advertising 5,834,772 6,376,250 8,119,700 7,988,278 15% 13% 14% 13% Computer & IT
Other G&A 630,000 661,500 694,575 697,469 2% 1% 1% 1% When represented as a percentage of sales, these costs represent 0.8% to 1.0%. During the
Professional & Service Fees 268,800 371,056 505,583 518,955 0.7% 0.8% 0.9% 0.9% periods under analysis, these represent between 1.9% and 2.4% of the total expenses.
Real Estate, Property & Sales Taxes 39,600 43,560 47,916 48,315 0% 0% 0% 0%
Rent & Lease 135,000 180,000 210,000 220,000 0% 0% 0% 0% Licenses, Permits & Insurance
Salaries, Wages & Benefits 6,497,425 8,487,205 10,378,559 10,655,273 17% 17% 18% 18% We would add language here regarding the analysis of these costs incurred, including the
Supplies, Utilities & Repairs 100,800 105,840 111,132 111,595 0% 0% 0% 0% GAAP treatment of insurance premiums.
Travel, Meals & Entertainment 29,500 51,000 134,000 137,500 0% 0% 0% 0%
Operating Income $ 3,553,604 $ 5,781,910 $ 6,055,835 $ 6,536,544 9% 12% 10% 11%
Other Expenses - (9,630) (39,783) (39,783) 0% 0% 0% 0%
Taxes (17,225) (18,187) (26,938) (26,938) 0% 0% 0% 0%
Net Income $ 3,498,693 $ 5,714,030 $ 5,949,913 $ 6,429,439 9% 12% 10% 11%

Income Statement Summary (continued)
Product Sales 37,382,673 47,126,373 55,728,962 57,409,374 97% 96% 96% 96%
Discounts, Returns & Allowances (4,507,910) (5,555,103) (6,921,162) (7,067,503) -12% -11% -12% -12% Marketing & Advertising
Shipping & Delivery 5,526,608 7,394,274 9,308,702 9,450,530 14% 15% 16% 16% Marketing and advertising expenses are the second largest category of expenses. These
Total Sales $ 38,401,371 $ 48,965,544 $ 58,116,502 $ 59,792,401 100% 100% 100% 100% costs represent 35.1% of the total expenses during FY20, 31.8% during FY21, and 32.9% and
32.0% of the total expenses during the FY22 and TTM Jan-23 periods, respectively. As a
Product COGS 11,346,200 14,218,388 16,580,075 17,221,960 30% 29% 29% 29%
Fulfillment 5,378,718 6,979,830 8,478,581 8,719,751 14% 14% 15% 15%

percentage of sales, this represents 15.2%, 13.0%, 14.0%, and 13.4% during the FY20, FY21,
FY22, and TTM periods, respectively. These expenses primarily comprise fees paid to
Shipping COGS 1,512,840 1,916,106 2,327,134 2,356,422 4% 4% 4% 4%
vendors for affiliate management, events, tradeshows, influencers, public relations, and
referral management. With regards to year over year growth from TTM Jan-22 to TTM Jan-
Gross Profit $ 20,163,613 $ 25,851,220 $ 30,730,712 $ 31,494,268 53% 53% 53% 53% 23, sales increased 19.7% while marketing and advertising increased 18.3%. Previous year
over year growth in this category was higher than the sales growth, but in FY22 the
Amortization - - - - 0% 0% 0% 0%
Company made more strategic decisions regarding target advertising that lead to better
Bank & eComm Fees 1,966,150 2,507,036 2,975,565 3,061,371 5% 5% 5% 5%
ROAS.
Computer & IT 396,000 435,600 479,160 483,153 1% 1% 1% 1%
Contractors 24,120 28,944 34,733 35,312 0% 0% 0% 0%
Depreciation 2,012 2,012 2,012 2,012 0% 0% 0% 0%

Other G&A
Donations 198,000 217,800 239,580 241,577 1% 0% 0% 0%
This is where you would see verbiage surrounding what this category comprises, along with
some analysis.
Marketing & Advertising 5,834,772 6,376,250 8,119,700 7,988,278 15% 13% 14% 13% Professional & Service Fees
Other G&A 630,000 661,500 694,575 697,469 2% 1% 1% 1% Professional and service fees comprise primarily of legal and accounting fees. As a
Professional & Service Fees 268,800 371,056 505,583 518,955 0.7% 0.8% 0.9% 0.9% percentage of total sales, professional and service fees represent between 0.7% and 0.9%
Real Estate, Property & Sales Taxes 39,600 43,560 47,916 48,315 0% 0% 0% 0% during the periods under review. Here, you would see some specific examples and analysis
Rent & Lease 135,000 180,000 210,000 220,000 0% 0% 0% 0% of these costs.
Salaries, Wages & Benefits 6,497,425 8,487,205 10,378,559 10,655,273 17% 17% 18% 18%
Supplies, Utilities & Repairs 100,800 105,840 111,132 111,595 0% 0% 0% 0% Salaries, Wages & Benefits
Travel, Meals & Entertainment 29,500 51,000 134,000 137,500 0% 0% 0% 0% Salaries, Wages & Benefits are the largest category of expenses. Because of this, this
Operating Income $ 3,553,604 $ 5,781,910 $ 6,055,835 $ 6,536,544 9% 12% 10% 11% section would contain more in-depth analysis and language regarding what it comprises, as
well as the fluctuations.
Other Expenses - (9,630) (39,783) (39,783) 0% 0% 0% 0%
Taxes (17,225) (18,187) (26,938) (26,938) 0% 0% 0% 0%
Net Income $ 3,498,693 $ 5,714,030 $ 5,949,913 $ 6,429,439 9% 12% 10% 11%

Financial Statements: Balance Sheet - Adjusted
Balance Sheet - Adjusted % of Total Assets
($ IN USD) 12/31/2020 12/31/2021 12/31/2022 1/31/2023 FY20 FY21 FY22 YTD
Balance Sheet Summary
Cash 1,151,965 3,541,585 1,529,634 1,913,303 39% 18% 20% 20%
Accounts Receivable 73,654 121,849 129,832 146,219 1% 2% 2% 2%
Please refer below for analysis of the balance sheet. Amplēo analyzed any significant
Inventory 3,956,206 4,646,716 5,662,717 6,236,808 51% 68% 65% 65%
balances and fluctuations related to the periods under analysis. Amplēo adjusted some
Prepaid Expenses 609,864 753,899 988,679 1,258,406 8% 12% 13% 13%
balance sheet accounts for purposes of analysis. Refer to below for details.
Total Current Assets $ 5,791,689 $ 9,064,049 $ 8,310,862 $ 9,554,735 100% 100% 100% 100%
Accounts Receivable
Fixed Assets 5,976 3,964 1,952 1,784 0% 0% 0% 0% A detail of Accounts Receivable was obtained from QuickBooks and agreed to the GL. The
Total Assets $ 5,797,665 $ 9,068,013 $ 8,312,814 $ 9,556,520 100% 100% 100% 100% Company collects at the time of sale. Accounts Receivable represents the time between
sale and when the cash is received from the payment processor, which normally occurs
Accounts Payable 868,435 796,580 1,132,543 1,247,362 9% 14% 13% 13% within a week after the sale.
Credit Cards Payable 185,000 185,000 185,000 185,000 2% 2% 2% 2%
Payroll Liabilities 100,000 100,000 100,000 100,000 1% 1% 1% 1% Inventory
Accrued Expenses 365,919 452,339 593,208 755,043 5% 7% 8% 8% The Company contracts with a third party to manufacture their products. Inventory
Sales Tax Liabilities 176,785 218,537 286,594 364,781 2% 3% 4% 4% comprises units that are warehoused at Acme Company, a 3PL in Somewhere, AZ. Acme
Lines of Credit & ST Loans 1,000,000 1,500,000 250,000 250,000 17% 3% 3% 3% Company performs physical counts on a monthly basis, which are then reconciled to the GL
Total Current Liabilities $ 2,696,139 $ 3,252,456 $ 2,547,345 $ 2,902,186 36% 31% 30% 30% via Product COGS. Fishbowl is used for the inventory system.
Long-Term Debt 400,000 400,000 400,000 400,000 4% 5% 4% 4%

Prepaid Expenses
Other Non-Current Liabilities 50,000 50,000 50,000 50,000 1% 1% 1% 1%
Prepaid Expenses comprises of deposits made for goods and services to be received, such
Total Liabilities $ 3,146,139 $ 3,702,456 $ 2,997,345 $ 3,352,186 41% 36% 35% 35% as insurance policies and prepaid state taxes. A detailed schedule of these was obtained
from Management and they appear to be recorded and released according to US GAAP.
Shareholder Capital (5,750,000) (8,750,000) (14,750,000) (14,750,000) -96% -177% -154% -154%
However, Amplēo did not perform an audit to verify this. A detailed analysis and audit of the
Retained Earnings & NI 8,401,527 14,115,557 20,065,469 20,954,334 156% 241% 219% 219%
prepaid expenses is recommended to identify any potential exposure.
Total Liabilities & Equity $ 5,797,665 $ 9,068,013 $ 8,312,814 $ 9,556,520 100% 100% 100% 100%
Accounts Payable
An AP aging summary was obtained from QuickBooks, detailing what comprises this
balance during the periods under analysis. This was agreed to the GL. As of January 31,
2023, 93.4% of the total amount due was between current and 30 days past due.

Financial Statements: Balance Sheet - Adjusted
Balance Sheet - Adjusted % of Total Assets
($ IN USD) 12/31/2020 12/31/2021 12/31/2022 1/31/2023 FY20 FY21 FY22 YTD
Balance Sheet Summary (continued)
Cash 1,151,965 3,541,585 1,529,634 1,913,303 39% 18% 20% 20%
Accounts Receivable 73,654 121,849 129,832 146,219 1% 2% 2% 2%
Accrued Expenses
Inventory 3,956,206 4,646,716 5,662,717 6,236,808 51% 68% 65% 65%
Accrued Expenses include expenses that are recognized when incurred but not yet paid.
Prepaid Expenses 609,864 753,899 988,679 1,258,406 8% 12% 13% 13%
Management represents that these are recorded and released according to US GAAP.
However, Amplēo did not perform an audit to verify this. A detailed analysis and audit of the
Total Current Assets $ 5,791,689 $ 9,064,049 $ 8,310,862 $ 9,554,735 100% 100% 100% 100%
accrued expenses is recommended to identify any potential exposure.
Fixed Assets 5,976 3,964 1,952 1,784 0% 0% 0% 0%
Total Assets $ 5,797,665 $ 9,068,013 $ 8,312,814 $ 9,556,520 100% 100% 100% 100% Sales Tax Liabilities
We observed that the Company pays sales tax in various jurisdictions. However, we did not
Accounts Payable 868,435 796,580 1,132,543 1,247,362 9% 14% 13% 13% do additional analysis due to tax diligence–specifically Nexus footprint–was not included in
Credit Cards Payable 185,000 185,000 185,000 185,000 2% 2% 2% 2% the scope. A detailed audit is recommended to identify any possible deviations from GAAP,
Payroll Liabilities 100,000 100,000 100,000 100,000 1% 1% 1% 1% as well as any potential exposure.
Accrued Expenses 365,919 452,339 593,208 755,043 5% 7% 8% 8%
Sales Tax Liabilities 176,785 218,537 286,594 364,781 2% 3% 4% 4% Line of Credit & ST Loans
Lines of Credit & ST Loans 1,000,000 1,500,000 250,000 250,000 17% 3% 3% 3% The Company has a $3.00M line of credit with XYZ Bank, which is utilized to finance
Total Current Liabilities $ 2,696,139 $ 3,252,456 $ 2,547,345 $ 2,902,186 36% 31% 30% 30% inventory purchases. Management has made strategic decisions to use this line of credit to
during the historical periods under analysis. The maximum amount drawn during this
Long-Term Debt 400,000 400,000 400,000 400,000 4% 5% 4% 4%
timeframe was $1.50M in the month of Feb-21. As of Jan-23, this line of credit had a balance
Other Non-Current Liabilities 50,000 50,000 50,000 50,000 1% 1% 1% 1%
of $0.25M. Amplēo reviewed the bank statements to verify these balances.
Total Liabilities $ 3,146,139 $ 3,702,456 $ 2,997,345 $ 3,352,186 41% 36% 35% 35%
Long-Term Debt
Shareholder Capital (5,750,000) (8,750,000) (14,750,000) (14,750,000) -96% -177% -154% -154%
This comprises an SBA loan. Amplēo did not perform validation nor analysis surrounding
Retained Earnings & NI 8,401,527 14,115,557 20,065,469 20,954,334 156% 241% 219% 219%
the balances.
Total Liabilities & Equity $ 5,797,665 $ 9,068,013 $ 8,312,814 $ 9,556,520 100% 100% 100% 100%

Financial Performance

Financial Performance: Revenue Summary & Sales by Channel
Revenue Summary & Sales by Channel

The charts on the following slides show the concentration of sales by channel. Please refer below for analysis.
The Company sells widgets to consumers through the Company's website and other eCommerce platforms.
A cash to revenue proof was performed to validate the sales amount recorded in the income statement. Cash deposits from the bank statements were traced to amounts recorded in the GL
to ensure the existence and accuracy of revenue recorded in FY20, FY21, and FY22, as well as the YTD 2023 period through January. The cash to revenue proof was able to agree cash
deposits to the amount recorded in the income statement with an immaterial difference for the TTM period. Please refer to the cash to revenue proof section for further details.
Management represents that revenue is recognized when shipped. It appears that the Company is recognizing revenue in compliance with GAAP, however, Amplēo did not perform an audit
of ASC 606 compliance. A detailed audit is recommended to identify any possible deviations from GAAP.
The Company increased net sales from $38.40M in FY20 to $48.97M in FY21, and then again to $58.12M in FY22. This equates to 27.5% and 18.7% growth, respectively. Sales grew from
$49.94M in TTM Jan-22 to $59.79M in TTM Jan-23, or 19.7% growth.
Due to the nature of the Company's business, bad debts are minimal. As of Jan-23, the total A/R amount represents approximately 4.3% of the previous month's sales. As of the date of this
report, the Company has not implemented an allowance for bad debt.
Refer to the Income Statement and Balance Sheet Summary sections for details surrounding the Discounts, Returns and Allowances.

Financial Performance: Revenue Summary & Sales by Channel
Sales by Channel % of Total Average %
($ IN USD) FY20 FY21 FY22 TTM Jan-23 FY20 FY21 FY22 TTM Average
Product Sales 37,382,673 47,126,373 55,728,962 57,409,374 97% 96% 96% 96% 96%
Discounts, Returns & Allowances (4,507,910) (5,555,103) (6,921,162) (7,067,503) -12% -11% -12% -12% -12%
Shipping & Delivery 5,526,608 7,394,274 9,308,702 9,450,530 14% 15% 16% 16% 16%
Total Product Income $ 38,401,371 $ 48,965,544 $ 58,116,502 $ 59,792,401 100% 100% 100% 100% 100%
Sales by Channel TTM Jan-23
$9,450,530
Product Sales
-$7,067,503
Discounts, Returns &

Allowances
Shipping & Delivery
$57,409,374

Financial Performance: Sales by Product
Sales by Product
The charts below and on the following slides show the sales data of the Company's top 10 SKUs based on the TTM period. We obtained a detail of SKU level sales data from Management
and materially agreed the balances to the income statement.
$ Sales
# Product Income Feb 2022 Mar 2022 Apr 2022 May 2022 Jun 2022 Jul 2022 Aug 2022 Sep 2022 Oct 2022 Nov 2022 Dec 2022 Jan 2023 TTM Oct-22 % FY21
1 Widget 1 $ 1,025,000 $ 859,000 $ 1,302,000 $ 968,000 $ 1,125,000 $ 1,154,000 $ 1,041,000 $ 785,000 $ 799,000 $ 878,000 $ 801,000 $ 874,000 $ 11,611,000 20% $ 12,090,932
2 Widget 2 39,000 25,000 57,000 54,000 55,000 68,000 95,000 62,000 51,000 69,000 54,000 41,000 670,000 1% 119,986
3 Widget 3 48,000 42,000 57,000 42,000 50,000 51,000 21,000 33,000 42,000 55,000 64,000 40,000 545,000 1% 403,123
4 Widget 4 55,000 25,000 12,000 7,000 7,000 51,000 52,000 38,000 40,000 48,000 45,000 50,000 430,000 1% 479,285
5 Widget 5 16,000 14,000 30,000 29,000 29,000 40,000 57,000 38,000 39,000 41,000 38,000 40,000 411,000 1% 60,144
6 Widget 6 41,000 33,000 46,000 42,000 42,000 38,000 35,000 32,000 29,000 32,000 31,000 25,000 426,000 1% 498,447
7 Widget 7 10,000 7,000 11,000 18,000 22,000 28,000 38,000 26,000 24,000 28,000 23,000 18,000 253,000 0% 36,685
8 Widget 8 10,000 9,000 13,000 10,000 11,000 11,000 11,000 9,000 8,000 10,000 10,000 9,000 121,000 0% 95,642
9 Widget 9 - - - - - - - 21,000 36,000 13,000 38,000 17,000 125,000 0% -
10 Widget 10 10,000 21,000 20,000 7,000 9,000 7,000 9,000 7,000 7,000 8,000 9,000 9,000 123,000 0% 76,390
Subtotal 1,254,000 1,035,000 1,548,000 1,177,000 1,350,000 1,448,000 1,359,000 1,051,000 1,075,000 1,182,000 1,113,000 1,123,000 14,715,000 26% 13,860,635
All others 3,673,197 3,747,408 3,406,410 3,453,105 3,261,805 3,059,605 2,948,578 3,302,691 3,414,827 3,436,893 3,782,015 5,207,840 42,694,374 74% 785,101
Total gross sales $ 4,927,197 $ 4,782,408 $ 4,954,410 $ 4,630,105 $ 4,611,805 $ 4,507,605 $ 4,307,578 $ 4,353,691 $ 4,489,827 $ 4,618,893 $ 4,895,015 $ 6,330,840 $ 57,409,374 100% $ 14,645,736
Quantity Sold
# Quantity Sold Feb 2022 Mar 2022 Apr 2022 May 2022 Jun 2022 Jul 2022 Aug 2022 Sep 2022 Oct 2022 Nov 2022 Dec 2022 Jan 2023 TTM Oct-22 % FY21
1 Widget 1 33,000 27,000 40,000 29,000 33,000 34,000 31,000 23,000 23,000 26,000 24,000 25,000 348,000 17% 381,885
2 Widget 2 1,232 765 1,651 1,538 1,509 1,966 3,444 1,954 1,452 2,341 1,619 962 20,433 1% 3,725
3 Widget 3 1,705 1,439 1,970 1,363 1,685 1,678 720 1,143 1,430 1,965 2,795 1,299 19,192 1% 14,320
4 Widget 4 1,879 771 394 234 234 1,905 1,723 1,237 1,265 1,628 1,569 1,723 14,562 1% 16,816
5 Widget 5 535 412 893 857 797 1,274 2,233 1,314 1,143 1,396 1,221 1,121 13,196 1% 1,893
6 Widget 6 1,259 973 1,349 1,219 1,152 1,100 1,012 882 817 981 1,096 744 12,584 1% 14,886
7 Widget 7 312 206 358 548 609 834 1,432 887 754 959 743 538 8,180 0% 1,164
8 Widget 8 599 505 729 575 610 646 663 537 467 589 607 512 7,039 0% 5,536
9 Widget 9 - - - - - - - 914 1,536 609 2,125 1,243 6,427 0% -
10 Widget 10 511 1,132 936 279 472 291 449 374 382 476 488 444 6,234 0% 3,806
Subtotal 41,032 33,203 48,280 35,613 40,068 43,694 42,676 32,242 32,246 36,944 36,263 33,586 455,847 23% 444,031
All others 135,475 129,596 120,323 117,154 110,359 108,538 116,032 123,810 121,924 136,253 151,086 183,809 1,554,359 77% 32,522
Total quantity sold 176,507 162,799 168,603 152,767 150,427 152,232 158,708 156,052 154,170 173,197 187,349 217,395 2,010,206 100% 476,553

Financial Performance: Sales by Product
Sales by Product (continued)
Price per Unit

# Sales Price Feb 2022 Mar 2022 Apr 2022 May 2022 Jun 2022 Jul 2022 Aug 2022 Sep 2022 Oct 2022 Nov 2022 Dec 2022 Jan 2023 TTM Oct-22 FY21
1 Widget 1 $ 31.06 $ 31.81 $ 32.55 $ 33.38 $ 34.09 $ 33.94 $ 33.58 $ 34.13 $ 34.74 $ 33.77 $ 33.38 $ 34.96 $ 33.36 $ 31.66
2 Widget 2 $ 31.66 $ 32.68 $ 34.52 $ 35.11 $ 36.45 $ 34.59 $ 27.58 $ 31.73 $ 35.12 $ 29.47 $ 33.35 $ 42.62 $ 32.79 $ 32.21
3 Widget 3 $ 28.15 $ 29.19 $ 28.93 $ 30.81 $ 29.67 $ 30.39 $ 29.17 $ 28.87 $ 29.37 $ 27.99 $ 22.90 $ 30.79 $ 28.40 $ 28.15
4 Widget 4 $ 29.27 $ 32.43 $ 30.46 $ 29.91 $ 29.91 $ 26.77 $ 30.18 $ 30.72 $ 31.62 $ 29.48 $ 28.68 $ 29.02 $ 29.53 $ 28.50
5 Widget 5 $ 29.91 $ 33.98 $ 33.59 $ 33.84 $ 36.39 $ 31.40 $ 25.53 $ 28.92 $ 34.12 $ 29.37 $ 31.12 $ 35.68 $ 31.15 $ 31.77
6 Widget 6 $ 32.57 $ 33.92 $ 34.10 $ 34.45 $ 36.46 $ 34.55 $ 34.58 $ 36.28 $ 35.50 $ 32.62 $ 28.28 $ 33.60 $ 33.85 $ 33.48
7 Widget 7 $ 32.05 $ 33.98 $ 30.73 $ 32.85 $ 36.12 $ 33.57 $ 26.54 $ 29.31 $ 31.83 $ 29.20 $ 30.96 $ 33.46 $ 30.93 $ 31.52
8 Widget 8 $ 16.69 $ 17.82 $ 17.83 $ 17.39 $ 18.03 $ 17.03 $ 16.59 $ 16.76 $ 17.13 $ 16.98 $ 16.47 $ 17.58 $ 17.19 $ 17.28
9 Widget 9 $ 22.98 $ 23.44 $ 21.35 $ 17.88 $ 13.68 $ 19.45
10 Widget 10 $ 19.57 $ 18.55 $ 21.37 $ 25.09 $ 19.07 $ 24.05 $ 20.04 $ 18.72 $ 18.32 $ 16.81 $ 18.44 $ 20.27 $ 19.73 $ 20.07
Cost per Unit

# Cost Feb 2022 Mar 2022 Apr 2022 May 2022 Jun 2022 Jul 2022 Aug 2022 Sep 2022 Oct 2022 Nov 2022 Dec 2022 Jan 2023 TTM Oct-22 FY21
1 Widget 1 $ 8.24 $ 8.24 $ 8.24 $ 8.24 $ 8.24 $ 9.22 $ 9.22 $ 9.22 $ 9.44 $ 9.44 $ 9.44 $ 9.44
2 Widget 2 $ 10.64 $ 10.64 $ 10.64 $ 10.64 $ 10.64 $ 10.84 $ 10.84 $ 10.84 $ 10.84 $ 10.84 $ 10.84 $ 10.84
3 Widget 3 $ 4.19 $ 4.19 $ 4.19 $ 4.19 $ 4.19 $ 4.46 $ 4.46 $ 4.46 $ 4.46 $ 4.46 $ 4.46 $ 4.46
4 Widget 4 $ 4.57 $ 4.57 $ 4.57 $ 4.57 $ 4.57 $ 4.74 $ 4.74 $ 4.74 $ 4.74 $ 4.74 $ 4.74 $ 4.74
5 Widget 5 $ 10.25 $ 10.25 $ 10.25 $ 10.25 $ 10.25 $ 10.43 $ 10.43 $ 10.43 $ 10.43 $ 10.43 $ 10.43 $ 10.43
6 Widget 6 $ 8.59 $ 8.59 $ 8.59 $ 8.59 $ 8.59 $ 8.48 $ 8.48 $ 8.48 $ 8.48 $ 8.48 $ 8.48 $ 8.48
7 Widget 7 $ 10.41 $ 10.41 $ 10.41 $ 10.41 $ 10.41 $ 10.59 $ 10.59 $ 10.59 $ 10.59 $ 10.59 $ 10.59 $ 10.59
8 Widget 8 $ 4.49 $ 4.49 $ 4.49 $ 4.49 $ 4.49 $ 4.38 $ 4.38 $ 4.38 $ 4.38 $ 4.38 $ 4.38 $ 4.38
9 Widget 9 $ - $ - $ - $ - $ - $ - $ - $ 9.44 $ 9.44 $ 9.44 $ 9.44 $ 9.44
10 Widget 10 $ 5.96 $ 5.96 $ 5.96 $ 5.96 $ 5.96 $ 6.08 $ 6.08 $ 6.08 $ 6.08 $ 6.08 $ 6.08 $ 6.08
Margin per Unit

# Margin Feb 2022 Mar 2022 Apr 2022 May 2022 Jun 2022 Jul 2022 Aug 2022 Sep 2022 Oct 2022 Nov 2022 Dec 2022 Jan 2023 TTM Oct-22 FY21
1 Widget 1 73% 74% 75% 75% 76% 73% 73% 73% 73% 72% 72% 73%
2 Widget 2 66% 67% 69% 70% 71% 69% 61% 66% 69% 63% 68% 75%
3 Widget 3 85% 86% 86% 86% 86% 85% 85% 85% 85% 84% 81% 86%
4 Widget 4 84% 86% 85% 85% 85% 82% 84% 85% 85% 84% 83% 84%
5 Widget 5 66% 70% 70% 70% 72% 67% 59% 64% 69% 64% 66% 71%
6 Widget 6 74% 75% 75% 75% 76% 75% 75% 77% 76% 74% 70% 75%
7 Widget 7 68% 69% 66% 68% 71% 68% 60% 64% 67% 64% 66% 68%
8 Widget 8 73% 75% 75% 74% 75% 74% 74% 74% 74% 74% 73% 75%
9 Widget 9 59% 60% 56% 47% 31%
10 Widget 10 70% 68% 72% 76% 69% 75% 70% 68% 67% 64% 67% 70%

Financial Performance: Margins by Month
Margins by Month
The charts below and on the following slides show the sales data of the Company's gross and net margins by month for the TTM period.
Margins by Month
($ in USD) Feb 2022 Mar 2022 Apr 2022 May 2022 Jun 2022 Jul 2022 Aug 2022 Sep 2022 Oct 2022 Nov 2022 Dec 2022 Jan 2023 TTM Jan-23
Total Revenues $ 5,111,217 $ 4,975,202 $ 5,170,648 $ 4,795,708 $ 4,837,458 $ 4,706,923 $ 4,491,587 $ 4,583,566 $ 4,670,409 $ 4,817,990 $ 5,117,748 $ 6,513,945 $ 59,792,401
COGS & OpEx $

Product COGS 1,455,784 1,576,283 1,388,813 1,414,897 1,409,888 1,186,601 1,265,964 1,549,656 1,534,182 1,358,491 1,188,728 1,892,674 17,221,960
Fulfillment 736,556 672,266 678,883 721,189 700,025 753,141 707,842 665,126 667,167 748,860 735,795 932,901 8,719,751
Shipping COGS 183,568 216,903 197,248 192,428 181,332 188,658 191,469 200,555 177,541 201,419 183,077 242,224 2,356,422
Bank & eComm Fees 261,694 254,730 264,737 245,540 247,678 240,994 229,969 234,679 239,125 246,681 262,029 333,514 3,061,371
Computer & IT 39,930 39,930 39,930 39,930 39,930 39,930 39,930 39,930 39,930 39,930 39,930 43,923 483,153
Contractors 2,894 2,894 2,894 2,894 2,894 2,894 2,894 2,894 2,894 2,894 2,894 3,473 35,312
Depreciation 168 168 168 168 168 168 168 168 168 168 168 168 2,012
Donations 19,965 19,965 19,965 19,965 19,965 19,965 19,965 19,965 19,965 19,965 19,965 21,962 241,577
Dues & Subscriptions 9,125 9,125 9,125 9,125 9,125 9,125 9,125 9,125 9,125 9,125 9,125 10,494 110,872
Licenses, Permits & Insurance 52,738 52,738 52,738 52,738 52,738 52,738 52,738 52,738 52,738 52,738 52,738 65,923 646,044
Marketing & Advertising 643,338 875,146 642,695 745,130 635,774 746,838 464,516 483,172 503,320 664,213 872,275 711,861 7,988,278
Other G&A 57,881 57,881 57,881 57,881 57,881 57,881 57,881 57,881 57,881 57,881 57,881 60,775 697,469
Professional & Service Fees 72,899 68,099 61,699 28,099 28,099 28,099 28,099 48,099 38,099 38,099 38,099 41,470 518,955
Real Estate, Property & Sales Taxes 3,993 3,993 3,993 3,993 3,993 3,993 3,993 3,993 3,993 3,993 3,993 4,392 48,315
Rent & Lease 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 25,000 25,000 25,000 25,000 220,000
Salaries, Wages & Benefits 819,364 780,102 918,233 813,838 848,637 874,538 846,030 893,988 930,144 822,319 913,422 1,194,658 10,655,273
Supplies, Utilities & Repairs 9,261 9,261 9,261 9,261 9,261 9,261 9,261 9,261 9,261 9,261 9,261 9,724 111,595
Travel, Meals & Entertainment 9,250 10,000 10,750 11,500 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 137,500
Total COGS & OpEx $ $ 4,393,409 $ 4,664,484 $ 4,374,013 $ 4,383,576 $ 4,274,388 $ 4,241,825 $ 3,956,845 $ 4,298,230 $ 4,322,533 $ 4,313,037 $ 4,426,380 $ 5,607,136 $ 53,255,857

Margins by Month (continued)

The Company's gross margin remained steady during the TTM Jan-23 period, except for Sep-22 and Dec-22. During these months, the specific SKUs that were sold had high and lower
product costs than others, respectively. Net margin fluctuated from month largely due fluctuations in spending for Marketing and Advertising as well as Salaries, Wages and Benefits. Refer to
the Income Statement Summary for details.
Margins by Month
($ in USD) Feb 2022 Mar 2022 Apr 2022 May 2022 Jun 2022 Jul 2022 Aug 2022 Sep 2022 Oct 2022 Nov 2022 Dec 2022 Jan 2023 TTM Jan-23
Total Revenues $ 5,111,217 $ 4,975,202 $ 5,170,648 $ 4,795,708 $ 4,837,458 $ 4,706,923 $ 4,491,587 $ 4,583,566 $ 4,670,409 $ 4,817,990 $ 5,117,748 $ 6,513,945 $ 59,792,401
COGS & OpEx as a % of Revenue

Product COGS 28.5% 31.7% 26.9% 29.5% 29.1% 25.2% 28.2% 33.8% 32.8% 28.2% 23.2% 29.1% 28.8%
Fulfillment 14.4% 13.5% 13.1% 15.0% 14.5% 16.0% 15.8% 14.5% 14.3% 15.5% 14.4% 14.3% 14.6%
Shipping COGS 3.6% 4.4% 3.8% 4.0% 3.7% 4.0% 4.3% 4.4% 3.8% 4.2% 3.6% 3.7% 3.9%
Bank & eComm Fees 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1% 5.1%
Computer & IT 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.9% 0.9% 0.9% 0.8% 0.8% 0.7% 0.8%
Contractors 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1%
Depreciation 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Donations 0.4% 0.4% 0.4% 0.4% 0.4% 0.4% 0.4% 0.4% 0.4% 0.4% 0.4% 0.3% 0.4%
Dues & Subscriptions 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2%
Licenses, Permits & Insurance 1.0% 1.1% 1.0% 1.1% 1.1% 1.1% 1.2% 1.2% 1.1% 1.1% 1.0% 1.0% 1.1%
Marketing & Advertising 12.6% 17.6% 12.4% 15.5% 13.1% 15.9% 10.3% 10.5% 10.8% 13.8% 17.0% 10.9% 13.4%
Other G&A 1.1% 1.2% 1.1% 1.2% 1.2% 1.2% 1.3% 1.3% 1.2% 1.2% 1.1% 0.9% 1.2%
Professional & Service Fees 1.4% 1.4% 1.2% 0.6% 0.6% 0.6% 0.6% 1.0% 0.8% 0.8% 0.7% 0.6% 0.9%
Real Estate, Property & Sales Taxes 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1%
Rent & Lease 0.3% 0.3% 0.3% 0.3% 0.3% 0.3% 0.3% 0.3% 0.5% 0.5% 0.5% 0.4% 0.4%
Salaries, Wages & Benefits 16.0% 15.7% 17.8% 17.0% 17.5% 18.6% 18.8% 19.5% 19.9% 17.1% 17.8% 18.3% 17.8%
Supplies, Utilities & Repairs 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.1% 0.2%
Travel, Meals & Entertainment 0.2% 0.2% 0.2% 0.2% 0.2% 0.3% 0.3% 0.3% 0.3% 0.2% 0.2% 0.2% 0.2%
Total COGS & OpEx % of Revenue 86.0% 93.8% 84.6% 91.4% 88.4% 90.1% 88.1% 93.8% 92.6% 89.5% 86.5% 86.1% 89.1%
Gross Margin $ $ 2,735,309 $ 2,509,750 $ 2,905,705 $ 2,467,194 $ 2,546,213 $ 2,578,523 $ 2,326,312 $ 2,168,229 $ 2,291,519 $ 2,509,220 $ 3,010,148 $ 3,446,146 $ 31,494,268
Gross Margin % 53.5% 50.4% 56.2% 51.4% 52.6% 54.8% 51.8% 47.3% 49.1% 52.1% 58.8% 52.9% 52.7%
Net Margin $ $ 717,808 $ 310,718 $ 796,635 $ 412,132 $ 563,070 $ 465,098 $ 534,742 $ 285,336 $ 347,876 $ 504,953 $ 691,368 $ 906,809 $ 6,536,544
Net Margin % 14.0% 6.2% 15.4% 8.6% 11.6% 9.9% 11.9% 6.2% 7.4% 10.5% 13.5% 13.9% 10.9%

Margins by Month (continued)

The Company's gross margin remained steady during the TTM Jan-23 period, except for Sep-22 and Dec-22. During these months, the specific SKUs that were sold had high and lower
product costs than others, respectively. Net margin fluctuated from month largely due fluctuations in spending for Marketing and Advertising as well as Salaries, Wages and Benefits. Refer to
the Income Statement Summary for details.
Revenue and COGS

$7,000,000
$6,000,000
$5,000,000
$4,000,000
$3,000,000
$2,000,000
$1,000,000
$-
Feb 2022 Mar 2022 Apr 2022 May 2022 Jun 2022 Jul 2022 Aug 2022 Sep 2022 Oct 2022 Nov 2022 Dec 2022 Jan 2023
Total Revenues Product COGS Fulfillment Shipping COGS

Financial Performance: Proof of Cash
PROOF OF CASH ($ IN USD) FY20 FY21 FY22 YTD TTM Jan-23

Proof of Cash
January 3,220,000 4,100,000 5,200,000 6,500,000 6,500,000
We performed a proof of cash for the fiscal year ended December 31, 2020, and the 1
February 3,200,000 4,000,000 5,100,000 5,100,000
month ended January 31, 2023. A proof of cash is not a substitute for an audit and is only
March 3,175,000 4,250,000 5,000,000 5,000,000
intended to provide insight into whether reported revenues are consistent with cash
April 3,250,000 4,050,000 4,975,000 4,975,000 receipts.
May 3,300,000 4,175,000 5,075,000 5,075,000
The Company utilizes two bank accounts: one with Made Up Bank One that is utilized as an
June 3,650,000 4,260,000 4,975,000 4,975,000
operating account, and one with Made Up Bank Two that is utilized as a savings account.
July 3,350,000 4,178,000 4,900,000 4,900,000
August 3,150,000 4,000,000 5,100,000 5,100,000 Upon reviewing the AR aging detail, we noted that payment terms are generally due on
September 3,165,000 3,980,000 5,055,000 5,055,000 receipt. Payment is primarily received via credit card.
October 3,175,000 3,915,000 5,265,000 5,265,000
Revenue Adjustments
November 3,200,000 4,267,000 4,950,000 4,950,000
December 3,225,000 4,100,000 5,000,000 5,000,000 • Revenues were obtained directly from QuickBooks.
Total Deposits per Bank Statements $ 39,060,000 $ 49,275,000 $ 60,595,000 $ 6,500,000 $ 61,895,000 • Cash deposits were obtained from the monthly bank statements for each of the bank
accounts and tied out to the respective bank reconciliations.
Less: Beginning AR (98,353) (73,654) (121,849) (128,455) (128,455) • Cash receipts were adjusted to reflect the lag between the recognition of revenue and
Add: Ending AR 73,654 121,849 129,832 146,219 146,219
receipt of cash by the Company (i.e., the change in accounts receivable) and other non-
revenue deposits. Non-revenue deposits comprise of intercompany transfers between
Less: Non-Revenue Deposits (650,000) (400,000) (2,250,000) - (2,250,000)
bank accounts.
Estimated Revenues $ 38,385,301 $ 48,923,195 $ 58,352,983 $ 6,517,764 $ 59,662,764 • Non-revenue deposits consist primarily of deposits from Company bank accounts.
Revenue per GL $ 38,401,371 $ 48,965,544 $ 58,116,502 $ 6,513,945 $ 59,792,401 We materially agreed the adjusted cash inflows per the bank statements to reported
revenues for the periods under analysis.
Variance - Proof of Cash $ (16,070) $ (42,349) $ 236,481 $ 3,819 $ (129,637)
Percentage Variance 0.0% -0.1% 0.4% 0.1% -0.2%

Financial Performance: Vendor Concentration
Vendor Concentration
Amplēo obtained from QuickBooks a detailed listing of expenditures by vendor related to costs of goods sold from Jan-20 to Jan-23. The table and chart to the left summarize amounts paid
to the top 5 vendors in the TTM Jan-23 period, including a comparison to the amounts paid to the same vendor in historical periods.
COGS Expenditures by Vendor % of Total

Vendor 1 4,000,000 8,000,000 9,000,000 9,250,000 22% 35% 33% 33%

Top 5 Vendors (COGS) TTM Jan-23
Vendor 2 5,000,000 6,000,000 7,000,000 7,500,000 27% 26% 26% 27%
Vendor 3 3,500,000 3,000,000 3,500,000 4,000,000 19% 13% 13% 14% 13% Vendor 1
Vendor 4 2,000,000 2,000,000 3,500,000 3,000,000 11% 9% 13% 11%
Vendor 5 1,000,000 1,000,000 500,000 750,000 5% 4% 2% 3% 3% Vendor 2

33%
all others 2,737,758 3,114,324 3,885,790 3,798,133 15% 13% 14% 13%
COGS Vendors $ 18,237,758 $ 23,114,324 $ 27,385,790 $ 28,298,133 100% 100% 100% 100% 11% Vendor 3
Vendor 4
14% Vendor 5
26% all others

Working Capital

Working Capital: Summary
Adjusted NWC - RECAST ($ IN USD) Jan 2021 Jan 2022 Jan 2023
Net Working Capital Analysis
Accounts Receivable 79,088 128,455 146,219
Inventory 4,441,525 4,675,408 6,236,808 Adjusted Net Working Capital has increased overall during the periods under analysis from
Prepaid Expenses 745,433 934,645 1,258,406 $2.34M as of Jan-21 to $4.74M as of Jan-23. The 12, 6, and 3-month averages have equaled
Accounts Payable (974,969) (801,499) (1,247,362) $4.31M, $4.33M, and $4.47M, respectively. The Company's adjusted Net Working Capital has
Credit Cards Payable (185,000) (185,000) (185,000) increased over time primarily due to increases in Inventory, as well as decreases in Lines of
Payroll Liabilities (100,000) (100,000) (100,000) Credit. Amplēo also noted that Accounts Payable increased.
Accrued Expenses (447,260) (560,787) (755,043)
Sales Tax Liabilities (216,083) (270,931) (364,781) • DSO: Days sales outstanding (90-day average) increased from 0.7 in Jan-21 to 0.9 in Jan-
Lines of Credit & ST Loans (1,000,000) (1,500,000) (250,000) 22, and then decreased to 0.8 in Jan-23. The fluctuations were primarily driven by the
Adjusted NWC (cash/debt-free) $ 2,342,735 $ 2,320,292 $ 4,739,247 timing of deposits received by merchant processors.
12-Month Target 1,972,809 2,138,035 4,310,654 • DPO: Days payable outstanding (90-day average) decreased from 18.0 in Jan-21 to 12.0 in
6-Month Target 2,095,815 2,094,644 4,326,704 Jan-22, and then increased to 15.0 in Jan-23. The fluctuations were driven by timing of
3-Month Target 2,094,394 2,219,611 4,467,015 payments made to vendors.
• DOH: Days inventory outstanding (90-day average) decreased from 82.0 in Jan-21 to 70.0
in Jan-22, and then increased to 75.0 in Jan-23. Inventory Turns (12-month average)
Working Capital Factors Jan 2021 Jan 2022 Jan 2023
increased from 4.4x in Jan-21 to 5.2x in Jan-22, and then decreased to 4.9x in Jan-23.
DSO (90-day) 0.7 0.9 0.8
DPO (90-day) 18.0 12.0 15.0 We found the DSO, DPO, and inventory key ratios to all be within industry benchmarks.
DOH (90-day) 82.0 70.0 75.0
Prepaid Expenses as % of Sales (90-day) 19.3% 19.3% 19.3% We obtained month-end inventory reports from Management and found that these reports
Accrued Expenses as % of Sales (90-day) 11.6% 11.6% 11.6% agreed with the balance sheet.
Net Working Capital Ratio 1.8x 1.7x 2.6x
Inventory Turns (LTM) 4.4x 5.2x 4.9x Please see the tables and graph below for further analysis of adjusted Net Working Capital.
Cash Conversion Cycle 64.7 58.9 60.8

Adjusted Net Working Capital by month

10,000,000
8,000,000
6,000,000
4,000,000
2,000,000
(2,000,000)
(4,000,000)
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan
2021 2021 2021 2021 2021 2021 2021 2021 2021 2021 2021 2021 2022 2022 2022 2022 2022 2022 2022 2022 2022 2022 2022 2022 2023
Accounts Receivable Inventory Prepaid Expenses Accounts Payable

Credit Cards Payable Payroll Liabilities Accrued Expenses Sal es Tax Liabilities
Lines of Credit & ST Loans Adjusted NWC (cash/debt-free)

DSO, DPO, DOH

(90-day)
100.0
80.0
60.0
40.0
20.0
0.0
Jan 2021
Jan 2022
Jan 2023
May 2021
May 2022
Mar 2021
Mar 2022
Sep 2021
Sep 2022
Nov 2021
Nov 2022
Jul 2021
Jul 2022
DSO (90-day) DPO (90-day) DOH (90-day)
NWC Ratio, Inventory Turns, and Cash Conversion Cycle

6.0x 66.0
5.0x 64.0
4.0x
62.0
3.0x
60.0
2.0x
1.0x 58.0
0.0x 56.0
Jan 2021
Jan 2022
Jan 2023
May 2021
May 2022
Mar 2021
Mar 2022
Sep 2021
Sep 2022
Jul 2021
Jul 2022
Nov 2021
Nov 2022
Net Working Capital Ratio Inventory Turns (LTM) Cash Conversion Cycle

Search for Unrecorded Liabilities: Summary
URL Findings
a) The below invoices were chosen by selecting twelve of the largest as well as haphazard cash disbursements from February 1, 2023 through March 14, 2023 (the date this search was
performed) out of the GL detail - Bank Account Checking x9999, which is the primary bank account used for all operating expenses. We obtained a copy of the invoices for each selection
from QuickBooks, and tied the balance w/o/e. We scanned through each invoice verifying the service date to ensure they related to or not to period ending January 31, 2023. We noted no
exception.
b) We performed a search as of January 31, 2023 and found all to be appropriately accrued.
a
Amount Amount Appropriately Appropriately
Date of Amount of relating to relating to Accrued Not Accrued
Item # Check # Invoice # Payable to Check Check period ending period after Accrued for in Account # Amount Amount Differences
1/31/2023 1/31/2023
1 9629783 466545654614 Vendor 1/4/2023 400,000 400,000 Advertising and Marketing 400,000 -
2 7615400 165534-165 Vendor 12/6/2022 320,000 320,000 Credit Card 320,000 -
3 7384775 13515.0.2 Vendor 1/11/2023 280,000 280,000 280,000 -
4 6363145 6549 Vendor 12/20/2022 220,000 100,894 119,106 Credit Card 100,894 119,106 -
5 604582 asdf12324 Vendor 12/9/2022 185,000 185,000 Advertising and Marketing 185,000 -
6 7304046 z96873 Vendor 1/4/2023 136,000 136,000 136,000 -
7 2443919 Dec-351573 Vendor 12/5/2022 100,000 100,000 Research and Development 100,000 -
8 3863660 xyz123abc Vendor 12/1/2022 88,000 88,000 Professional Fees 88,000 -
9 4061552 6546-354654-16 Vendor 12/29/2022 72,000 72,000 Shipping COGS 72,000 -
10 9924826 9848965 Vendor 1/3/2023 58,000 58,000 Advertising and Marketing 58,000 -
-
Total Tested $ 1,859,000 Total Error $ - b
Total Disbursements $ 5,000,000
Percent Tested 37.2%

Appendix A: Scope of Procedures

I. Entities Covered: Fake Company, LLC (“Fake” or the “Company”)
II. Analysis Period: Twelve months ended January 31, 2023 (TTM Jan-23), and fiscal years ended December 31, 2022, 2021, and 2020 (FY22, FY21, and FY20 respectively)
III. Diligence Procedures
1. Business Overview
a. Confirm entity structure, organizational structure, & revenue-generating activities
b. Discuss accounting policies and procedures, including key systems utilized, the roles/responsibilities of individuals in the accounting department, and
internal controls
c. Review historical financial statements, identify material or high-risk areas, and evaluate compliance with US GAAP
d. Discuss potential growth opportunities
e. Review and discuss nature of all related party transactions
2. Revenues
a. Obtain an understanding of revenue and revenue recognition policies, including sales channels, seasonality, discounts/warranties/refunds, and deferred
revenue, if any
b. Select a sample of revenue transactions and obtain supporting documentation to evaluate compliance with US GAAP/ASC 606
c. Perform a revenue trend analysis for total sales, and by primary products or product categories
d. Perform a proof of cash: classify cash inflows from all bank accounts between operating and non-operating activities to reconcile with revenues reported
e. Discuss any significant customer concentrations

III. Diligence Procedures (continued)
3. Cost of Goods Sold/Operating Expenses/Margins

a. Obtain an understanding of cost of goods sold, disaggregated among product costs, service costs, as well as any shipping/handling or misc. direct costs
b. Perform a gross margin trend analysis
c. Obtain an understanding of operating expenses, disaggregated among ordinary business expenses as well as any management/other fees or allocations
d. Perform a trend analysis for operating expenses
e. Discuss any significant vendor concentrations
4. Quality of Earnings
a. Investigate non-recurring, non-operational, and other unusual transactions or events, and determine their impact on/calculate normalized EBITDA. This
includes, but is not limited to:
i. Cash receipts from non-revenue items
ii. Management fees or any allocation-based expenses
iii. Salaries, wages, equity distributions, and/or benefits paid to owners and key executives
iv. Legal/professional expenses related to unusual business or market events, including any transaction-related costs
v. Personal expenses
b. Adjust EBITDA for any identified deviations from US GAAP
c. Obtain explanations and examine supporting documentation, where material and applicable, for any management-proposed adjustments
5. Working Capital
a. Perform a review of working capital accounts to identify normalizing factors, to support buyer's negotiation of a "peg" amount for purchase price adjustment
purposes
6. Accounts Receivable
a. Obtain a detail of accounts receivable and agree to the general ledger
b. Identify and discuss any aged receivables
c. Discuss policies and procedures around bad debts/allowances/credit memos
d. Obtain a schedule of write-offs and credit memos to evaluate appropriateness of revenue recognition for material amounts, if any

III. Diligence Procedures (continued)
7. Inventory
a. Obtain detailed inventory listing by product/product classifications and agree to the general ledger
b. Analyze inventory composition by product, product classification, or product type (raw materials, work in process, finished goods, as applicable), including
costing methodology
c. Select a sample of inventory items and obtain supporting documentation to validate cost and to evaluate compliance with US GAAP
d. Discuss supply chain, lead times, warehouse concentrations, and other market factors, and their impact on inventory turnover
e. Discuss policies and procedures around inventory obsolescence/reserves
8. Accounts Payable/Accrued Expenses

a. Obtain a detail of accounts payable and agree to the general ledger
b. Obtain an explanation of any unusual accrued expenses
c. Inquire regarding any unrecorded payroll-related expenses, including vacation time and performance & non-performance based incentive payments
d. Identify and discuss any aged payables
e. Perform a search for unrecorded liabilities to evaluate compliance with US GAAP
9. Other Assets/Liabilities
a. Obtain a schedule prepaid assets to evaluate compliance with US GAAP
b. Discuss the nature of any other assets or liabilities
10. Miscellaneous
a. Inquire regarding any past, current, or pending litigation and background/underlying circumstances
b. Inquire regarding any off-balance sheet liabilities, contingent liabilities, or other financial guarantees and commitments
c. Inquire regarding any subsequent transactions or events that may have a material impact on the Company’s ongoing operations or financial results

Appendix B: Supporting Schedules

Appendix B: Schedules – EBITDA Adjustments
EBITDA ADJUSTMENTS BY MONTH ($ IN USD) Feb 2022 Mar 2022 Apr 2022 May 2022 Jun 2022 Jul 2022 Aug 2022 Sep 2022 Oct 2022 Nov 2022 Dec 2022 Jan 2023 TTM Jan-23
Net Sales $ 5,111,217 $ 4,975,202 $ 5,170,648 $ 4,795,708 $ 4,837,458 $ 4,706,923 $ 4,491,587 $ 4,583,566 $ 4,670,409 $ 4,817,990 $ 5,117,748 $ 6,513,945 $ 59,792,401
Net Income $ 710,127 $ 289,364 $ 775,143 $ 415,732 $ 547,783 $ 474,106 $ 517,942 $ 231,940 $ 341,328 $ 525,347 $ 711,762 $ 888,864 $ 6,429,439
Interest 3,611 3,525 4,019 2,202 2,412 3,868 3,868 3,274 2,412 3,868 3,868 3,458 40,383
Taxes - 962 - - - - - 29,514 (3,537) - - - 26,938
Depreciation 168 168 168 168 168 168 168 168 168 168 168 168 2,012
Amortization - - - - - - - - - - - - -
EBITDA, as defined $ 713,906 $ 294,019 $ 779,330 $ 418,101 $ 550,363 $ 478,141 $ 521,978 $ 264,896 $ 340,370 $ 529,383 $ 715,797 $ 892,490 $ 6,498,773
Donations 19,965 19,965 19,965 19,965 19,965 19,965 19,965 19,965 19,965 19,965 19,965 21,962 241,577
Personal Accountant 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 12,000
Owner Compensation 13,975 14,158 13,034 14,304 14,935 13,834 14,935 14,654 14,432 14,931 14,954 14,834 172,979
Personal Travel 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 18,000
Total Management Adjustments $ 36,440 $ 36,623 $ 35,499 $ 36,769 $ 37,400 $ 36,299 $ 37,400 $ 37,119 $ 36,897 $ 37,396 $ 37,419 $ 39,296 $ 444,556
Management-Adjusted EBITDA $ 750,345 $ 330,642 $ 814,829 $ 454,870 $ 587,763 $ 514,440 $ 559,378 $ 302,015 $ 377,267 $ 566,779 $ 753,216 $ 931,785 $ 6,943,329
Recruiter Fees - 40,000 - - - - - - - - - - 40,000
Transaction Expenses - - - - - - - - 10,000 10,000 10,000 10,000 40,000
Relocation Expenses - - - - - - - 20,000 - - - - 20,000
Rent & Lease (10,000) (10,000) (10,000) (10,000) (10,000) (10,000) (10,000) (10,000) - - - - (80,000)
Owner Compensation (31,250) (31,250) (31,250) (31,250) (31,250) (31,250) (31,250) (31,250) (31,250) (31,250) (31,250) (31,250) (375,000)
Total Diligence Adjustments $ (41,250) $ (1,250) $ (41,250) $ (41,250) $ (41,250) $ (41,250) $ (41,250) $ (21,250) $ (21,250) $ (21,250) $ (21,250) $ (21,250) $ (355,000)
Diligence-Adjusted EBITDA $ 709,095 $ 329,392 $ 773,579 $ 413,620 $ 546,513 $ 473,190 $ 518,128 $ 280,765 $ 356,017 $ 545,529 $ 731,966 $ 910,535 $ 6,588,329
Adjusted EBITDA margin 13.9% 6.6% 15.0% 8.6% 11.3% 10.1% 11.5% 6.1% 7.6% 11.3% 14.3% 14.0% 11.0%

EBITDA ADJUSTMENTS BY MONTH ($ IN USD) Jan 2022 Feb 2022 Mar 2022 Apr 2022 May 2022 Jun 2022 Jul 2022 Aug 2022 Sep 2022 Oct 2022 Nov 2022 Dec 2022 FY22
Net Sales $ 4,838,046 $ 5,111,217 $ 4,975,202 $ 5,170,648 $ 4,795,708 $ 4,837,458 $ 4,706,923 $ 4,491,587 $ 4,583,566 $ 4,670,409 $ 4,817,990 $ 5,117,748 $ 58,116,502
Net Income $ 409,338 $ 710,127 $ 289,364 $ 775,143 $ 415,732 $ 547,783 $ 474,106 $ 517,942 $ 231,940 $ 341,328 $ 525,347 $ 711,762 $ 5,949,913
Interest 2,276 3,611 3,525 4,019 2,202 2,412 3,868 3,868 3,274 2,412 3,868 3,868 39,201
Taxes - - 962 - - - - - 29,514 (3,537) - - 26,938
Depreciation 168 168 168 168 168 168 168 168 168 168 168 168 2,012
Amortization - - - - - - - - - - - - -
Donations 19,965 19,965 19,965 19,965 19,965 19,965 19,965 19,965 19,965 19,965 19,965 19,965 239,580
Personal Travel 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 18,000
Recruiter Fees - - 40,000 - - - - - - - - - 40,000
Transaction Expenses - - - - - - - - - 10,000 10,000 10,000 30,000
Relocation Expenses - - - - - - - - 20,000 - - - 20,000
Rent & Lease (10,000) (10,000) (10,000) (10,000) (10,000) (10,000) (10,000) (10,000) (10,000) - - - (90,000)

Net Sales $ 3,858,619 $ 3,866,070 $ 4,300,828 $ 4,163,289 $ 4,300,886 $ 4,129,122 $ 4,045,061 $ 3,980,758 $ 4,135,987 $ 4,177,462 $ 4,105,018 $ 3,902,444 $ 48,965,544
Net Income $ 442,185 $ 41,641 $ 598,110 $ 393,122 $ 740,772 $ 522,372 $ 380,297 $ 601,031 $ 852,192 $ 224,159 $ 548,027 $ 370,121 $ 5,714,030
Interest 3,868 3,868 3,274 2,276 3,611 3,525 4,019 2,202 2,412 3,868 3,868 3,274 40,063
Taxes - - 962 - - - - - - - - 17,225 18,187
Depreciation 168 168 168 168 168 168 168 168 168 168 168 168 2,012
Amortization - - - - - - - - - - - - -
Donations 18,150 18,150 18,150 18,150 18,150 18,150 18,150 18,150 18,150 18,150 18,150 18,150 217,800
Personal Travel 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 18,000
Recruiter Fees - 40,000 - - - - - - - - - - 40,000
Transaction Expenses - - - 30,000 - - - - - - - - 30,000
Relocation Expenses - - - - - - - - - - - - -
Rent & Lease (10,000) (10,000) (10,000) (10,000) (10,000) (10,000) (10,000) (10,000) (10,000) (10,000) (10,000) (10,000) (120,000)

Net Sales $ 3,196,402 $ 3,159,374 $ 3,285,303 $ 3,195,419 $ 3,276,789 $ 3,244,675 $ 3,280,316 $ 3,175,184 $ 3,118,113 $ 3,159,919 $ 3,153,007 $ 3,156,870 $ 38,401,371
Net Income $ 405,966 $ 359,984 $ 240,591 $ 157,558 $ 380,638 $ 270,541 $ 299,476 $ 437,872 $ 8,414 $ 415,723 $ 242,077 $ 279,852 $ 3,498,693
Interest 4,019 2,202 2,412 3,868 3,868 3,274 2,276 3,611 3,525 4,019 2,202 2,412 37,685
Taxes - - - - - - - - - - - 17,225 17,225
Depreciation 168 168 168 168 168 168 168 168 168 168 168 168 2,012
Amortization - - - - - - - - - - - - -
Donations 16,500 16,500 16,500 16,500 16,500 16,500 16,500 16,500 16,500 16,500 16,500 16,500 198,000
Personal Travel 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 18,000
Recruiter Fees - - - - - - - - - - - - -
Transaction Expenses - - - - - - - - - - - - -
Relocation Expenses - - - - - - - 5,000 6,500 - - - 11,500
Rent & Lease - - - - - - - - - - - - -

Appendix B: Schedules – Graphs
Revenue and Gross Margin

$7,000,000 70.0%
$6,000,000 60.0%
$5,000,000 50.0%
$4,000,000 40.0%
$3,000,000 30.0%
$2,000,000 20.0%
$1,000,000 10.0%
$- 0.0%
19
20
21
22
9
2
9
2
19
20
21
22
23
9
2
9
2
-1
-2
-2
-2
-1
-2
-2
-2
v-1
v-2
v-2
v-2
l-1
l-2
l-2
l-2
n-
n-
n-
n-
n-
p-
p-
p-
p-
ar
ar
ar
ar
ay
ay
ay
ay
Ju
Ju
Ju
Ju
No
No
No
No
Ja
Ja
Ja
Ja
Ja
Se
Se
Se
Se
M
M
M
M
Total Sales Total COGS Gross Margin Linear (Total Sales) Linear (Total COGS) Linear (Gross Margin)

Revenue and Inventory

$7,000,000
$6,000,000
$5,000,000
$4,000,000
$3,000,000
$2,000,000
$1,000,000
$-
19
20
21
22
9
2
9
2
19
20
21
22
23
9
2
9
2
-1
-2
-2
-2
-1
-2
-2
-2
v-1
v-2
v-2
v-2
l-1
l-2
l-2
l-2
n-
n-
n-
n-
n-
p-
p-
p-
p-
ay
ay
ay
ay
ar
ar
ar
ar
Ju
Ju
Ju
Ju
No
No
No
No
Ja
Ja
Ja
Ja
Ja
Se
Se
Se
Se
M
M
M
M
Total Sales Inventory

Revenue and Expenses

$7,000,000 $1,400,000
$6,000,000 $1,200,000
$5,000,000 $1,000,000
$4,000,000 $800,000
$3,000,000 $600,000
$2,000,000 $400,000
$1,000,000 $200,000
$- $-
No 9
No 0
No 1
No 2
9
2
9
2
M 9
M 0
M 1
M 2
23
9
2
M 9
M 0
M 1
M 2
1
2
-1
-2
-2
-2
1
2
-1
-2
-2
-2
v-1
v-2
v-2
v-2
l-1
l-2
l-2
l-2
n-
n-
n-
n-
n-
p-
p-
p-
p-
ay
ay
ay
ay
ar
ar
ar
ar
Ju
Ju
Ju
Ju
Ja
Ja
Ja
Ja
Ja
Se
Se
Se
Se
Total Sales Marketing & Advertising Sal aries, Wages & Benefits

Are you ready to get a Quality of Earnings
Report?
Reach out to Amplēo today.

QofE@ampleo.com | www.ampleo.com/contact


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Sample Quality of Earnings Report: A Comprehensive

Analysis of Financial Performance

1. Background, Overview, and Key Findings

Reach out to Amplēo today.

The financial informational throughout this report

is a completely FAKE (made up)

company. The data contained is not real, nor was it

February 14, 2023

Fake Company, LLC - FINANCIAL DUE DILIGENCE REPORT

Dear Mr./Mrs. Individual,

We appreciate the opportunity to work with you.

Fake Company, LLC - FINANCIAL DUE DILIGENCE REPORT 5

Fake Company, LLC - FINANCIAL DUE DILIGENCE REPORT 6

Background, Overview, and Key Findings 8

Quality of Earnings (EBITDA) 12

Appendix A: Scope of Procedures 37

Appendix B: Supporting Schedules 41

Fake Company, LLC - FINANCIAL DUE DILIGENCE REPORT 7

Fake Company, LLC - FINANCIAL DUE DILIGENCE REPORT 8

OVERVIEW ($ IN USD) FY20 FY21 FY22 TTM Jan-23

Reported Revenues $ 38,401,371 $ 48,965,544 $ 58,116,502 $ 59,792,401

SCOPE OF PROCEDURES PERFORMED

COMPANY BACKGROUND, SYSTEMS, AND ACCOUNTING DEPARTMENT

Fake Company, LLC - FINANCIAL DUE DILIGENCE REPORT 9

OVERVIEW ($ IN USD) FY20 FY21 FY22 TTM Jan-23

Reported Revenues $ 38,401,371 $ 48,965,544 $ 58,116,502 $ 59,792,401

Fake Company, LLC - FINANCIAL DUE DILIGENCE REPORT 10

OVERVIEW ($ IN USD) FY20 FY21 FY22 TTM Jan-23

Reported Revenues $ 38,401,371 $ 48,965,544 $ 58,116,502 $ 59,792,401

Management represents that no past, current, or pending litigation exists.

Fake Company, LLC - FINANCIAL DUE DILIGENCE REPORT 11

Fake Company, LLC - FINANCIAL DUE DILIGENCE REPORT 12

QUALITY OF EARNINGS ($ in USD) FY20 FY21 FY22 TTM Jan-23

Fake Company, LLC - FINANCIAL DUE DILIGENCE REPORT 13

QUALITY OF EARNINGS ($ in USD) FY20 FY21 FY22 TTM Jan-23

Fake Company, LLC - FINANCIAL DUE DILIGENCE REPORT 14

EBITDA TTM Jan-23 - Defined vs. Adjusted Defined vs.

$40,000 $20,000 The chart to the left

Fake Company, LLC - FINANCIAL DUE DILIGENCE REPORT 16

Fulfillment 5,378,718 6,979,830 8,478,581 8,719,751 14% 14% 15% 15%

Contractors 24,120 28,944 34,733 35,312 0% 0% 0% 0%

Dues & Subscriptions 82,800 95,220 109,503 110,872 0% 0% 0% 0%

Interest Expense (37,685) (40,063) (39,201) (40,383) 0% 0% 0% 0%

Other Expenses - (9,630) (39,783) (39,783) 0% 0% 0% 0%

Taxes (17,225) (18,187) (26,938) (26,938) 0% 0% 0% 0%

Net Income $ 3,498,693 $ 5,714,030 $ 5,949,913 $ 6,429,439 9% 12% 10% 11%

Fake Company, LLC - FINANCIAL DUE DILIGENCE REPORT 17

Fulfillment 5,378,718 6,979,830 8,478,581 8,719,751 14% 14% 15% 15%

Bank & eComm Fees 1,966,150 2,507,036 2,975,565 3,061,371 5% 5% 5% 5%

Contractors 24,120 28,944 34,733 35,312 0% 0% 0% 0%

Operating Income $ 3,553,604 $ 5,781,910 $ 6,055,835 $ 6,536,544 9% 12% 10% 11%

Interest Expense (37,685) (40,063) (39,201) (40,383) 0% 0% 0% 0%

Other Expenses - (9,630) (39,783) (39,783) 0% 0% 0% 0%

Taxes (17,225) (18,187) (26,938) (26,938) 0% 0% 0% 0%

Net Income $ 3,498,693 $ 5,714,030 $ 5,949,913 $ 6,429,439 9% 12% 10% 11%

Fake Company, LLC - FINANCIAL DUE DILIGENCE REPORT 18

Fulfillment 5,378,718 6,979,830 8,478,581 8,719,751 14% 14% 15% 15%

Contractors 24,120 28,944 34,733 35,312 0% 0% 0% 0%

Depreciation 2,012 2,012 2,012 2,012 0% 0% 0% 0%