Exhibit 1 Income Statements, 2007 - 2009 ($000s except earnings per share)

2007 2008 2009

Net sales $77,131 $80,953 $89,250

Cost of goods sold $62,519 $68,382 $72,424
Gross margin $14,612 $12,571 $16,826

Research and development $3,726 $4,133 $4,416

Selling, general and administrative $6,594 $7,536 $7,458
Operating income $4,292 $902 $4,952

Interest expense $480 $652 $735

Other income (expenses) -$39 -$27 -$35

Income before income taxes $3,773 $223 $4,182

Income taxes (a) $1,509 $89 $1,673

Net income $2,264 $134 $2,509

Earnings per share $1.52 $0.09 $1.68

(a) In years 2007 and after, Flash's effective combined federal and state income tax rate was 40%.
Exhibit 2 Balance Sheets, 2007 - 2009 ($000s except number of shares outstanding)

December 31,
2007 2008 2009

Cash $2,536 $2,218 $2,934

Accounts receivable $10,988 $12,864 $14,671
Inventories $9,592 $11,072 $11,509
Prepaid expenses $309 $324 $357
Total current assets $23,425 $26,478 $29,471

Property, plant & equipment at cost $5,306 $6,116 $7,282

Less: Accumulated depreciation $792 $1,174 $1,633
Net property, plant & equipment $4,514 $4,942 $5,649

Total assets $27,939 $31,420 $35,120

Accounts payable $3,084 $4,268 $3,929

Notes payable (a) $6,620 $8,873 $10,132
Accrued expenses $563 $591 $652
Income taxes payable (b) $151 $9 $167
Other current liabilities $478 $502 $554
Total current liabilities $10,896 $14,243 $15,434

Common stock at par value $15 $15 $15

Paid in capital in excess of par value $7,980 $7,980 $7,980
Retained earnings $9,048 $9,182 $11,691
Total shareholders' equity $17,043 $17,177 $19,686

Total liabilities & shareholders' equity $27,939 $31,420 $35,120

Number of shares outstanding 1,491,662 1,491,662 1,491,662

(a) Secured by accounts receivable.

(b) To avoid a penalty for underpayment of income taxes, Flash made equal estimated tax payments quarterly on the 15th of
April, June, September, and December of each year. The total of these four quarterly payments was required to equal at
least the lesser of (a) 90% of the taxes that would actually be incurred in the same year, or (b) 100% of the taxes due
on income of the prior year.

For informational purposes only:

Notes payable / accounts receivable 60.2% 69.0% 69.1%

Notes payable / shareholders' equity 38.8% 51.7% 51.5%
Notes payable / total capital 28.0% 34.1% 34.0%
Exhibit 3 Key Forecasting Assumptions and Relationships for 2010 Through 2012

Line Item

Cost of goods sold

Research and development
Selling, general and administrative
Interest expense
Other income (expenses)

Cash
Accounts receivable
Inventories
Prepaid expenses
Property, plant & equipment at cost
Accumulated depreciation

Accounts payable
Purchases
Accrued expenses
Income taxes payable
Other current liabilities
Relationships for 2010 Through 2012

Assumption or Ratio

81.10% of sales
5.0% of sales
8.36% of sales
Beginning of year debt balance × interest rate
$50,000 of expense each year

3.3% of sales
60 days sales outstanding
52 days of cost of good sold
0.4% of sales
Beginning PP&E at cost + capital expenditures
Beginning A/D + 7.5% of beginning PP&E at cost

30 days of purchases
60% of cost of goods sold
0.73% of sales
10% of income taxes expense
0.62% of sales
Exhibit 4 Selected Financial Information for Flash Memory, Inc., and Selected Competitors, 2007 through 2009

Flash Memory, Inc. Micron Technology

2007 2008 2009 30-Apr-10 (a) 2007 2008 2009 30-Apr-10 (a)

Sales ($ millions) 77 81 89 5,688 5,841 4,803

EPS ($) 1.52 0.09 1.68 -0.42 -2.10 -2.29 1.46
Dividend per share ($) -- -- -- -- -- --
Closing stock price ($) n/a n/a n/a 7.25 2.64 10.56 9.35
Shares outstanding (millions) 1.492 1.492 1.492 769.1 772.5 800.7 847.6
Book Value per share ($) 11.43 11.52 13.20 10.08 8.00 5.81 6.61
ROE 13.28% 0.78% 12.75% -4.13% -26.21% -39.43% 21.00%
Capitalization (book value)
Debt 28% 34% 34% 24% 31% 40% 33%
Equity 72% 66% 66% 76% 69% 60% 67%
Beta coefficient n/a 1.25

SanDisk Corporation STEC, Inc.

Sales ($ millions) 3,986 3,351 3,567 189 227 354

EPS ($) 0.84 -8.82 1.83 3.71 0.20 0.09 1.47 1.29
Dividend per share ($) -- -- -- -- -- --
Closing stock price ($) 33.17 9.60 28.99 39.84 8.74 4.26 16.34 13.90
Shares outstanding (millions) 227.7 225.3 227.4 229.3 49.8 50.0 49.4 50.3
Book Value per share ($) 22.64 15.27 17.18 18.13 3.72 3.63 5.65 5.48
ROE 3.70% -57.74% 10.63% 17.87% 5.40% 2.36% 26.06% 18.90%
Capitalization (book value)
Debt 15% 22% 21% 19% 0% 0% 0% 0%
Equity 85% 78% 79% 81% 100% 100% 100% 100%
Beta coefficient 1.36 1.00

(a) Security analyst estimates for year-end EPS $ and Return on Equity; actual data on April 30, 2010, for all other items.
 Flash Memory, Inc.
Historical / Forecast Income Statements (000s)

2007 2008
Sales 77,131 80,953
4.96%
Cost of goods sold 62,519 68,382
81.06% 84.47%
Gross margin 14,612 12,571

Research and development 3,726 4,133

4.83% 5.11%
Selling, general and administrative 6,594 7,536
8.55% 9.31%
Operating income 4,292 902

Interest expense 480 652

Other income (expenses) (39) (27)

Income before income taxes 3,773 223

40% Income taxes 1,509 89

Net income 2,264 134
2.94% 0.17%

Earnings per share $ 1.52 $ 0.09

Current debt rate:

600 bp Factoring rate:
 2009 2010E 2011E 2012E
89,250 120,000 144,000 144,000
10.25% 34.45% 20.00% 0.00%
72,424 97,320 116,784 116,784
81.15% 81.10% 81.10% 81.10%
16,826 22,680 27,216 27,216

4,416 6,000 7,200 7,200

4.95% 5.00% 5.00% 5.00%
7,458 10,028 12,033 12,033
8.36% 8.36% 8.36% 8.36%
4,952 6,652 7,983 7,983

735 883 1121 1066

(35) (50) (50) (50)

4,182 5,719 6,812 6,866

1,673 2,288 2,725 2,747

2,509 3,431 4,087 4,120
2.81% 2.86% 2.84% 2.86%

$ 1.68 $ 2.30 $ 2.74 $ 2.76

Current debt rate: 7.25% 7.25% 7.25%

Factoring rate: 9.25% 9.25% 9.25%
 Flash Memory, Inc.
Historical / Forecast Balance Sheets (000s)

2007 2008
Cash 2,536 2,218
3.29% 2.74%
Accounts receivable 10,988 12,864
52.0 days 58.0 days
Inventories 9,592 11,072
56.0 days 59.1 days
Prepaid expenses 309 324
0.40% 0.40%
Total current assets 23,425 26,478

Property, plant & equipment at cost 5,306 6,116

Less: Accumulated depreciation 792 1,174
Net property, plant & equipment 4,514 4,942

Total assets 27,939 31,420

60% Accounts payable 3,084 4,268

30.0 days 38.0 days
Notes payable 6,620 8,873

Accrued expenses 563 591

0.730% 0.730%
Income taxes payable 151 9
10.01% 10.09%
Other current liabilities 478 502
0.620% 0.620%
Total current liabilities 10,896 14,243

Common stock at par value 15 15

Paid in capital in excess of par value 7,980 7,980
Retained earnings 9,048 9,182
Total shareholders' equity 17,043 17,177

Total liabilities & shareholders' equity 27,939 31,420

Number of shares outstanding 1,491,662 1,491,662

Capital expenditures
Depreciation expense rate
Shares issued under equity alternative
Net proceeds from stock issue / sh.
Gross proceeds from stock issue / sh.
Prime rate:
Base spread:

Notes payable % of A/R 60.25% 68.98%

Interest coverage (EBIT) 8.94x 1.38x
Debt to capital 0.28 0.34
 Factoring: N
Equity Issue: N

2009 2010E 2011E 2012E

2,934 3,960 4,752 4,752
3.29% 3.30% 3.30% 3.30%
14,671 19,726 23,671 23,671
60.0 days 60.0 days 60.0 days 60.0 days
11,509 13,865 16,638 16,638
58.0 days 52.0 days 52.0 days 52.0 days
357 480 576 576
0.40% 0.40% 0.40% 0.40%
29,471 38,031 45,637 45,637

7,282 8,182 9,082 9,982

1,633 2,213 2,860 3,575
5,649 5,969 6,222 6,407

35,120 44,000 51,859 52,044

3,929 4,799 5,759 5,759

33.0 days 30.0 days 30.0 days 30.0 days
10,132 14,234 16,678 12,741

652 876 1,051 1,051

0.731% 0.73% 0.73% 0.73%
167 229 272 275
9.98% 10.00% 10.00% 10.00%
554 744 893 893
0.621% 0.62% 0.62% 0.62%
15,434 20,882 24,654 20,719

15 15 15 15
7,980 7,980 7,980 7,980
11,691 15,122 19,210 23,330
19,686 23,117 27,205 31,325

35,120 44,000 51,859 52,044

1,491,662 1,491,662 1,491,662 1,491,662

0.04
 900 900 900
7.50% 7.50% 7.50%
300,000
$ 23.00
$ 25.00
3.250% 3.250% 3.250%
400 bp 400 bp 400 bp

69.06% 72.16% 70.46% 53.83%

6.74x 7.53x 7.12x 7.49x
0.34 0.38 0.38 0.29
Flash Memory, Inc.
Cost of Capital Calculation

Book Value per

share Stock Price
Micron Technology $ 6.61 $ 9.35
SanDisk Corp. $ 18.13 $ 39.84
STEC, Inc. $ 5.48 $ 13.90

Flash Memory, Inc.

D = target % of debt 18.00%

E = target % of equity 82.00%
βD = assumed debt beta 0.00
βA = average asset beta for industry 1.052
βE = re-levered equity beta 1.283

Rf = risk-free rate 3.70%

MRP = assumed market risk premium 6.00%

Ke = Flash's cost of equity 11.40% rf+b*risk premium

Kd = Flash's cost of debt 7.25%

T = Income tax rate 40.00%

WACC 10.12%
0.1012

D%*Cost of Debt*(1-Tax)+E%*cost of equity, 4

 Shares Book Value of Market Value Book Value of
Outstanding Equity (calc) of Equity (calc) Debt to Cap % Debt (calc) Levered Beta
847.6 5602.6 7925.1 33.0% 2759.5 1.25
229.3 4157.2 9135.3 19.0% 975.1 1.36
50.3 275.6 699.2 0.0% 0.0 1.00

26% 74%

Ba*(1/E%)-Bd*(D%/E%)

11.40%

risk premium
Prime Rate 3.25%
10.13% Base Spread 400
Tax 40%
10.13% 10.12898%
10.12898%

E%*cost of equity, 4
Assumed Debt Asset Beta
Beta E / V (calc) (calc)
0.00 74% 0.927
0.00 0.904 1.229
0.00 1.000 1.000

1.052
Average Asset Beta

0.9271620214
1.2288288147
1

4% 7.25%
 Flash Memory, Inc.
Evaluation of Investment Proposal

2010 2011
Sales $21,600

Cost of goods sold (incl. depreciation) $17,064

79.0%
Research & development $0

Selling, general & administrative $1,805

8.36%
Promotion expenses $300
Income before taxes $2,431
40% less taxes $972
Net Income $1,459

Investment in equipment ($2,200)

Depreciation expense $440
Change in net working capital ($5,648)
Cash flow from operations ($2,200) ($3,749)
6/1/2010 7/1/2011

10.12% NPV @ 10.12% cost of capital $3,139

IRR 26.07%

Working Capital Requirements 2010 2011

Incremental cash: ($713)

3.30%
Incremental A/R: ($3,551)
60.0 days
Incremental Inventory: ($2,431)
52.0 days
Prepaid expenses: ($86)
 0.40%
60% Accounts payable: $842
30.0 days
Accrued expenses: $158
0.73%
Other current liabilities $134
0.62%

Total Change in NWC: ($5,648)

 2012 2013 2014 2015
$28,000 $28,000 $11,000 $5,000

$22,120 $22,120 $8,690 $3,950

79.0% 79.0% 79.0% 79.0%
$0 $0 $0 $0

$2,340 $2,340 $919 $418

8.36% 8.36% 8.36% 8.36%

$3,540 $3,540 $1,391 $632

$1,416 $1,416 $556 $253
$2,124 $2,124 $834 $379

$440 $440 $440 $440

($1,673) $0 $4,445 $1,569 $1,307
$891 $2,564 $5,720 $2,388 $1,307
7/1/2012 7/1/2013 7/1/2014 7/1/2015 12/31/2015

2012 2013 2014 2015 2016

($211) $0 $561 $198 $165

3.30% 3.30% 3.30% 3.30% 3.30%
($1,052) $0 $2,795 $986 $822
60.0 days 60.0 days 60.0 days 60.0 days 60.0 days
($720) $0 $1,913 $675 $563
52.0 days 52.0 days 52.0 days 52.0 days 52.0 days
($26) $0 $68 $24 $20
 0.40% 0.40% 0.40% 0.40% 0.40%
$249 $0 ($662) ($234) ($195)
30.0 days 30.0 days 30.0 days 30.0 days 30.0 days
$47 $0 ($124) ($44) ($37)
0.73% 0.73% 0.73% 0.73% 0.73%
$40 $0 ($105) ($37) ($31)
0.62% 0.62% 0.62% 0.62% 0.62%

($1,673) $0 $4,445 $1,569 $1,307

 Flash Memory, Inc.
Historical / Forecast Income Statements (000s)
(updated to include investment project)
2007 2008
Sales 77,131 80,953
4.96%
Cost of goods sold 62,519 68,382
81.06% 84.47%
Gross margin 14,612 12,571

Research and development 3,726 4,133

4.83% 5.11%
Selling, general and administrative 6,594 7,536
8.55% 9.31%
Operating income 4,292 902

Interest expense 480 652

Other income (expense) (39) (27)

Income before income taxes 3,773 223

40% Income taxes 1,509 89

Net income 2,264 134
2.94% 0.17%

Earnings per share $ 1.52 $ 0.09

Current debt
600 bp
 2009 2010E 2011E 2012E
89,250 120,000 165,600 172,000
10.25%
72,424 97,320 133,848 138,904
81.15% 81.10% 80.83% 80.76%
16,826 22,680 31,752 33,096

4,416 6,000 7,200 7,200

4.95% 5.00% 4.35% 4.19%
7,458 10,028 13,838 14,373
8.36% 8.36% 8.36% 8.36%
4,952 6,652 10,714 11,523

735 965 1416 1470

(35) (50) (50) (50)

4,182 5,638 9,248 10,004

1,673 2,255 3,699 4,001

2,509 3,383 5,549 6,002
2.81% 2.82% 3.35% 3.49%

$ 1.68 $ 2.27 $ 3.72 $ 4.02

Current debt rate: 7.25% 7.25% 7.25%

Factoring rate: 9.25% 9.25% 9.25%
 Flash Memory, Inc.
Historical / Forecast Balance Sheets (000s)

2007 2008
Cash 2,536 2,218
3.29% 2.74%
Accounts receivable 10,988 12,864
52.0 days 58.0 days
Inventories 9,592 11,072
56.0 days 59.1 days
Prepaid expenses 309 324
0.40% 0.40%
Total current assets 23,425 26,478

Property, plant & equipment at cost 5,306 6,116

Less: Accumulated depreciation 792 1,174
Net property, plant & equipment 4,514 4,942

Total assets 27,939 31,420

60% Accounts payable 3,084 4,268

30.0 days 38.0 days
Notes payable 6,620 8,873

Accrued expenses 563 591

0.73% 0.73%
Income taxes payable 151 9
10.01% 10.09%
Other current liabilities 478 502
0.62% 0.62%
Total current liabilities 10,896 14,243

Common stock at par value 15 15

Paid in capital in excess of par value 7,980 7,980
Retained earnings 9,048 9,182
Total shareholders' equity 17,043 17,177

Total liabilities & shareholders' equity 27,939 31,420

Number of shares outstanding 1,491,662 1,491,662

Capital expenditures
Depreciation expense rate
Shares issued under equity alternative
Net proceeds from stock issue / sh.
Prime rate:
Spread (bp):

Notes payable % of A/R 60.25% 68.98%

Interest coverage (EBIT) 8.94x 1.38x
Debt to capital 0.28 0.34
 Factoring: N
Equity Issue: N (if chosen, also enter Y on Forecast B

2009 2010E 2011E 2012E

2,934 $3,960 $5,465 $5,676
3.29% 3.30% 3.30% 3.30%
14,671 $19,726 $27,222 $28,274
60.0 days 60.0 days 60.0 days 60.0 days
11,509 $13,865 $19,069 $19,789
58.0 days 52.0 days 52.0 days 52.0 days
357 $480 $662 $688
0.40% 0.40% 0.40% 0.40%
29,471 38,031 52,418 54,427

7,282 10,382 11,282 12,182

1,633 2,213 3,300 4,455
5,649 8,169 7,982 7,727

35,120 46,200 60,400 62,154

3,929 4,799 6,601 6,850

33.0 days 30.0 days 30.0 days 30.0 days
10,132 16,487 22,576 17,962

652 876 1,209 1,256

0.73% 0.73% 0.73% 0.73%
167 226 370 400
9.98% 10.00% 10.00% 10.00%
554 744 1,027 1,066
0.62% 0.62% 0.62% 0.62%
15,434 23,131 31,782 27,534

15 15 15 15
7,980 7,980 7,980 7,980
11,691 15,074 20,622 26,624
19,686 23,068 28,617 34,619

35,120 46,200 60,400 62,154

1,491,662 1,491,662 1,491,662 1,491,662

 (see 'Forecast IS' tab)

(see 'Forecast IS' tab)

(see 'Forecast IS' tab)

69.06% 83.58% 82.93% 63.53%

6.74x 7.53x 7.12x 7.49x
0.34 0.42 0.44 0.34
hosen, also enter Y on Forecast BS)