Q3-25 QBR

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Feb 20, 2024

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Page 1 of 4 Student: Valerie Barrett Q3-25 QBR What key concept or technique from the week’s readings were you able to utilize in the quarter’s decisions? In Q3, Hisco had a significant turnaround in numerous areas putting themselves back on the map for success and reaching the net income goal set by Mr. Sloane. In our readings, Biery (2013), acknowledges the key metrics when it comes to understanding the business and where a company stands against its competition. Since Q1 decisions put them way behind and in the negative right off the bat, each quarter decision was crucial on the basis of coming back from a large deficit and still being able to stand ground against Redex and Matek. As confirmed in Q2 the crucialness of role play calls, this quarter we took the $150k deal from Mr. Sloane when it came down to the solar panel project which put equity back into the business without hurting any metrics. After declining the investment deal with Ms. Victoria Cash in Q2, it was made clear that Hisco needed to have money put back into the company in order to decrease our debt and work towards meeting our metrics and net income goal for the year. The deal was $150k for a 10% ownership, which was a slightly higher percentage in ownership, but overall, worked in Hisco favor. Lastly it was brought to the attention of all that in Q4 an EC rollout will occur thus requesting a one-time initial investment of $50k, which if had put enough funding into research in Q1 & Q2 totalling $50k, that amount would not need to be funded in Q3. Unfortunately, in Q2, Hisco put no money towards funding, thus have to put $5k towards research and then added an additional $25k. Not sure what kind of difference that made, but funding research is essential to Hisco success. Without knowledge there is no power. The market can sustain a higher selling price as exemplified by Redex's total market share increase in Q3. Even with the decrease in market share for HISCO, the future remains bright as we have finalized a project to expand the market by 50% and will have the European pilot running by Q4. References Biery, M.E. (2013, Sept. 1). How healthy is your business? 6 ways to take its 'temperature.' Forbes. http://www.forbes.com/sites/sageworks/2013/09/01/how-healthy-is-your-business-using-industry- data-to-check-the-temperature/#26ca43e1704a

Page 2 of 4 Student: Valerie Barrett Using the Pre-Tax Net Income (Plan vs Actual + SRO) Walk Chart, explain all variances and explain the key drivers. Provide data to support your explanations. The Pre-Tax net Income (Plan vs. Actual+SRO) Walk Chart suggests that the company is moving in a favorable financial direction. Our planned pre-tax net income is currently at $641.6K, and the 50% tax rate puts us at $320.8K, just slightly above the lower margin of the goal. Now, with us only being in Q3, it is known that one more crucial quarter is left to align Hisco to fall right in the middle of the net income goal. The actual net income ending in Q3 is $597.9K, and after our 50% tax rate, it sits at $299K, just slightly below the $300K goal. The following financial decisions for Q4 will be crucial to meeting our goals for the year. The net difference between our income and the actual pre- tax plan is $21.8K, which concludes that Hisco is close to the plan. Looking through the chart over the quarters, we have noticed a change in more favorable variables that have affected and added to our net income. Using the Cash Flow Walk Chart, explain all sources/uses of cash and explain the key drivers. Provide data to support your explanations. Although the beginning cash flow for Q3 shows -$383.8K, reducing the end-quarter cash/debt by more than 50% has had a favorable impact. Key drivers to the excellent position at the end of the quarter include a $150K increase in common stock for 10% of the company in a negotiated added capital deal with Victoria Cash and our $150K equity transaction with Mr. Sloane for the solar panels; therefore, showing a $300K favorable variable in common stock for Q3. The significant jump in suitable variables for Net Income ($147.9K), Depreciation ($12.5K), Inventory ($127.7K) and common stock ($300K) offset our unfavorable variables in receivables (-$186K), AP (-$29.5) and (-$150K). to continue on the path of increasing our cash reserves, we must focus on collecting receivables and finding more efficient ways to manage our raw materials inventory. HISCO still has a large number of outstanding receivables. This should adjust as more revenue comes from prior and future quarter sales. For Q4, we plan to change the price to undercut Redex slightly. Is Hisco on track to meet or exceed its Net Income goal? As of Q3, Hisco is on track to meet the Net income goal set by Mr. Sloane of $300K to $400K. Our planned pre-tax net income is currently at $641.6K, and the 50% tax rate puts us at $320.8K, just

Page 3 of 4 Student: Valerie Barrett slightly above the lower margin of the goal. Now, with us only being in Q3, it is known that one more crucial quarter is left to align Hisco to fall right in the middle of the net income goal. The actual net income ending in Q3 is $597.9K, and after our 50% tax rate, it sits at $299K, just slightly below the $300K goal. The following financial decisions for Q4 will be crucial to meeting our goals for the year. The net difference between our income and the actual pre-tax plan is $21.8K, which concludes that Hisco is close to the plan. Looking through the chart over the quarters, we have noticed a change in more favorable variables that have affected and added to our net income. A significant contribution to this growth was the funding and ownership deal with Ms. Victoria Cash. How has your R&D Project strategy impacted your results as expected? Have you made any modifications to your original R&D Project strategy? Unfortunately, due to the lack of thoroughness in the first half of the simulation, there were no additions to the R&D Project Strategy for Project 1 or Project 2. Fortunately, Project 3 was funded to expand the potential market by 50% by extending the use of the readers to other hospital duties. The unfavorable variance has been shown throughout earlier quarters, as well as the lack of funding for Projects 1 & 2 and any additional funding for Project 3. However, to sustain market growth without exhausting all other resources, Hisco invested over three quarters. The project is set to conclude in Q4 and offers continuing growth through FY’25. In Q3, the new and improved reader was finalized and ready for market. For Hisco, in Q4, it is set to produce a 50% increase in the available market, which is one of the areas we currently lack, so with that said, this implementation and success of our finances are of the utmost importance going into the end of the year, to set up for success come 2025. Discuss any supply chain challenges (people, productivity, material, or inspection) you might have experienced this quarter and your mitigation actions. In Q3, Hisco was neck and neck with our competitor, Redex. Our non-aggressiveness in executing mass hiring led to our fall in the labor force, which trickled down into idle production time, production ratio, and the limit of material, lines, and labor we produced. Even though we have improved on our direct variables that affected Cisco's net income at the end of this quarter, there were still poor decisions, even those made not soon enough, leading to a significant fall behind Redex. As the manager, waiting too long to approve and get the solar panels approved and rolling and the potential funding after a disastrous Q1 also played a part in our decline. Not only would we

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Page 4 of 4 Student: Valerie Barrett have received better terms of financing and ownership stake, but that decision could have kept us in line with Redex, making it a close race. The decision on how much to increase the reader's price was difficult, although our slight increase of $5.00 would have been a significantly smaller leap to lose business. What we needed to improve was our research funding and marketing funding. In Q2, we did not fund our research fund at all, thus making us weak in the reader world and not pouring money into there to enhance the reader, allowing Hisco to keep a low-priced, high-quality product. What learning can you take from the quarter that would benefit your career? How can you apply that learning to your current and/or future role? Q3 has educated managers and leadership on the importance of laying out a detailed current state of a company's financials and utilizing tools like our charts to determine where a manager's focus needs to be realigned to create a favorable impact on net income. Through years of dealing with payment terms, this quarter showed that having longer net payment terms can positively affect a company's cash flow, still allowing them to invest with that money, again showing a favorable impact on net income. In my current role, the ability to depict financials and see charts is outside the job criteria, but knowing what to look for and focus on will help in meetings held with leadership, showing competency in financial decision-making. This knowledge will be necessary for my long- term goal of becoming a manager or director in my line of work, as it will increase my value to the company, making space to be seen and heard. Moving forward, understanding these metrics will help in negotiations and compensation payouts, looking at every aspect of the project and not just the tiny area of land acquisition currently overseen by my position.

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