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Harmonic Hearing Co. Exhibit TN-1 Financial Forecasts Under Debt Financing Alternative

Year Sales - existing hearing aids Sales - new hearing aids Total sales

1 $30,687,000 $0 $30,687,000

2 $31,454,000 $2,831,500 $34,285,500

3 $31,861,000 $6,607,125 $38,468,125

4 $30,427,000 $9,580,375 $40,007,375

5 $28,298,000 $13,604,500 $41,902,500

6 $23,234,000 $18,774,000 $42,008,000

7 $15,488,000 $25,345,250 $40,833,250

COGS - existing hearing aids COGS - new hearing aids Selling, general & administrative Research & development Depreciation Rent payments Equipment lease payments Operating income Interest Income before income taxes Income taxes Net income

$13,502,280 $0 $10,544,320 $1,700,000 $0 $1,312,500 $2,000,000 $1,627,900 $633,000 $994,900 $338,266 $656,634

$13,839,760 $1,330,805 $11,816,510 $600,000 $0 $1,391,250 $2,000,000 $3,307,175 $628,086 $2,679,089 $910,890 $1,768,199

$14,018,840 $3,105,349 $13,297,896 $600,000 $0 $1,474,725 $2,000,000 $3,971,315 $622,681 $3,348,634 $1,138,536 $2,210,099

$13,387,880 $4,502,776 $13,826,529 $600,000 $0 $1,563,209 $2,000,000 $4,126,981 $616,735 $3,510,246 $1,193,484 $2,316,762

$12,451,120 $6,394,115 $14,482,083 $600,000 $0 $1,657,001 $2,000,000 $4,318,181 $610,194 $3,707,987 $1,260,716 $2,447,271

$10,222,960 $8,823,780 $14,492,120 $600,000 $100,000 $1,756,421 $0 $6,012,719 $603,000 $5,409,719 $1,839,304 $3,570,415

$6,814,720 $11,912,268 $14,039,960 $600,000 $100,000 $1,861,806 $0 $5,504,497 $603,000 $4,901,497 $1,666,509 $3,234,988

$0 $0 $318,002 $213,967 $127,780 $49,139 $203,306

$0 $0 $885,231 $69,183 $41,510 $54,053 $801,241

$0 $0 $1,028,926 $36,711 $22,027 $59,458 $1,107,030

$0 $0 $378,656 -$129,347 -$77,608 $65,404 $1,924,441

$0 $500,000 $466,201 -$192,036 -$115,221 $71,945 $1,485,940

$100,000 $0 $25,953 -$456,773 -$274,064 $0 $3,827,171

$100,000 $0 -$288,989 -$698,689 -$419,214 $0 $3,903,452

+ Depreciation - Repurchase of equipment - Investment in accounts receivable - Investment in inventory * + Increase in accounts payable * - Principal repayments Free cash flow Terminal value - cash from sale

* Changes in inventory and accounts payable for existing hearing aids only.

$45,289,828

Harmonic Hearing Co. Exhibit TN-2 Financial Forecasts Under Equity Financing Alternative

Year Sales - existing hearing aids Sales - new hearing aids Total sales

1 $30,687,000 $3,236,000 $33,923,000

2 $31,454,000 $7,551,000 $39,005,000

3 $31,861,000 $10,949,000 $42,810,000

4 $30,427,000 $15,548,000 $45,975,000

5 $28,298,000 $21,456,000 $49,754,000

6 $23,234,000 $28,966,000 $52,200,000

7 $15,488,000 $39,104,000 $54,592,000

COGS - existing hearing aids COGS - new hearing aids Selling, general & administrative Research & development Depreciation - new equipment Depreciation - existing equipment Rent payments Equipment lease payments Operating income Interest Income before income taxes Income taxes Net income

$13,502,280 $1,229,680 $12,212,280 $1,700,000 $140,000 $1,167,000 $0 $0 $3,971,760 $0 $3,971,760 $1,350,398 $2,621,362

$13,839,760 $2,869,380 $14,041,800 $600,000 $170,000 $1,167,000 $0 $0 $6,317,060 $0 $6,317,060 $2,147,800 $4,169,260

$14,018,840 $4,160,620 $15,411,600 $600,000 $180,000 $1,167,000 $0 $0 $7,271,940 $0 $7,271,940 $2,472,460 $4,799,480

$13,387,880 $5,908,240 $16,551,000 $600,000 $180,000 $1,167,000 $0 $0 $8,180,880 $0 $8,180,880 $2,781,499 $5,399,381

$12,451,120 $8,153,280 $17,911,440 $600,000 $180,000 $1,167,000 $0 $0 $9,291,160 $0 $9,291,160 $3,158,994 $6,132,166

$10,222,960 $11,007,080 $18,792,000 $600,000 $40,000 $0 $0 $0 $11,537,960 $0 $11,537,960 $3,922,906 $7,615,054

$6,814,720 $14,859,520 $19,653,120 $600,000 $10,000 $0 $0 $0 $12,654,640 $0 $12,654,640 $4,302,578 $8,352,062

$1,307,000 $700,000 $1,114,058 $466,052 $279,031 $0 $1,927,283 $1,284,855

$1,337,000 $150,000 $1,250,172 $405,322 $243,193 $0 $3,943,959

$1,347,000 $50,000 $936,030 $301,416 $180,849 $0 $5,039,884

$1,347,000 $0 $778,590 $228,915 $137,349 $0 $5,876,225

$1,347,000 $0 $929,634 $268,197 $160,918 $0 $6,442,253

$40,000 $0 $601,716 $128,256 $76,954 $0 $7,002,035

$10,000 $0 $588,432 $91,061 $54,637 $0 $7,737,206

+ Depreciation - all equipment - Investment in equipment - Investment in accounts receivable - Investment in inventory + Increase in accounts payable - Principal repayments Free cash flow Terminal value - cash from sale

$116,928,874

Harmonic Hearing Co. Exhibit TN-3 Real Estate Transaction Cash flows to Frank Thomas without sale of building and land Year 0 Initial investment -$2,100,000 Annual cash flow Total cash flow -$2,100,000 Net present value at 15%

1 $115,477 $115,477

2

3

$140,608 $140,608

4 $167,832 $167,832

5

$197,263 $197,263

$229,023 $229,023

.2(x-8699384) $9,047,702

11309628

-$1,329,652

After tax cash flow from year 7 sale required to earn an after tax rate of return of 15%: Additional NPV required $1,329,652 Future value factor (15%, 7 years) 2.660020 Required receipts in year 7 $3,536,902

¥3,536,900.75

Sale price required in year 7 to receive this after tax cash flow: Original purchase price $10,500,000 - Accumulated depreciation $1,800,616 Book value $8,699,384 Sale price received in year 7 - Book value Taxable gain on sale x Capital gain tax rate Capital gains tax paid

$11,309,628 $8,699,384 $2,610,244 20.0% $522,049

Sale price received in year 7 - Capital gains tax paid - Mortgage balance paid Net cash receipts on sale

$11,309,628 $522,049 $7,250,677 $3,536,902

10787579+

$10,787,579

6 $263,242 $263,242

7 $300,059 $300,059

Harmonic Hearing Co. Exhibit TN-4 Equity Ownership Proportion Required by Comet Capital Cash flows to Comet Capital Year Capital investment Annual cash flow Total cash flow Net present value at 25%

0 -$28,050,000 -$28,050,000

1

2

3

4

5

6

7

$1,284,855 $1,284,855

$2,629,306 $2,629,306

$3,359,923 $3,359,923

$3,917,483 $3,917,483

$4,294,835 $4,294,835

$4,668,023 $4,668,023

$5,158,137 $5,158,137

-$18,301,713

After tax cash flow from year 7 sale required to earn an after tax rate of return of 25%: Additional NPV required $18,301,713 Future value factor (25%, 7 years) 4.768372 Required receipts in year 7 $87,269,367 Required cash flow to Comet Capital at the end of year 7 to produce a 25% internal rate of return on investment

$87,269,367

Terminal value of company at the end of year 7

$116,928,874

Comet's required ownership proportion = Comet's required value ÷ terminal value Residual terminal value at the end of year 7 for Burns and Irvine Residual ownership proportion of Burns and Irvine

74.63% $29,659,506 25.37%

Harmonic Hearing Co. Exhibit TN-5 Return on Ownership Interest of Harriet Burns and Richard Irvine Debt Financing Alternative Cash flows Year Initial investment Annual cash flow Repurchase of building & land Repayment of A/R & inventory loans Terminal value of company Total cash flow Internal rate of return Net present value at 25% Net present value at 30% Net present value at 35% Net present value at 40% Net present value at 45%

0 -$200,000

1

-$200,000

2

3

4

5

6

$203,306

$801,241

$1,107,030

$1,924,441

$1,485,940

$3,827,171

$203,306

$801,241

$1,107,030

$1,924,441

$1,485,940

$3,827,171

2

3

4

5

6

$642,428

$1,314,653

$1,679,961

$1,958,742

$2,147,418

$2,334,012

$642,428

$1,314,653

$1,679,961

$1,958,742

$2,147,418

$2,334,012

7 $3,903,452 -$11,309,628 -$6,700,000 $45,289,828 $31,183,652

227.35% $9,860,358 $7,770,909 $6,199,026 $5,001,197 $4,077,313

Equity Financing Alternative Cash flows Year Initial investment Annual cash flow Residual terminal value of company Total cash flow Internal rate of return Net present value at 25% Net present value at 30% Net present value at 35% Net present value at 40% Net present value at 45%

0 -$250,000

-$250,000 330.41% $10,844,193 $8,672,204 $7,029,142 $5,769,282 $4,790,858

1

7 $2,579,069 $29,659,506 $32,238,575