Corporate Financial Statements

Corporate and Financial Resources

RGII is a financially sound and fiscally responsible company. Its accounting policies and procedures are consistent with Generally Accepted Accounting Principles (GAAP) and all government regulations. Over the past 6 years, management has been able to successfully manage revenue growth of nearly 4000%. Based upon its year-to-date results and currently funded contracts, the Company is projected to generate over $26 million in revenue. Based upon both our historical and present financial results/position as well as our financial projections, RGII will continue to generate return on sales and net margins well in excess of the industry standards. These margins coupled with our successful collection efforts on accounts receivable have resulted in very positive cash flow, a major problem with small companies. Additionally, the Company’s liquidity and leverage ratios greatly exceed industry standards, particularly for small growing companies.

Through successful management and monitoring of our tremendous growth, Company management has been able to generate the necessary working capital to ensure that the Company is able to continue to grow while relying less on external financing sources. In fact, at August 31, 2001, RGII's available working capital was approximately $2.3 million. Given our ability to generate working capital, RGII is able to effectively operate while maintaining an average borrowing rate of approximately 20% of its existing $4.0 million line-of-credit. As such, RGII has approximately $3.2 million of unused borrowing capacity on its line-of-credit.

As noted above, RGII Technologies, Inc. has been able to successfully generate working capital to be utilized in financing the Company operations. Management closely monitors the Company’s performance against its budget and industry standards to ensure RGII is profitable and is continually building its working capital. Additionally, management employs a wide variety of cash management tools/services to assist us in monitoring and managing our bank cash balances and investments to maximize cash flow and working capital. These services have allowed our rapidly growing company to succeed in an ever-changing competitive environment. Our corporate philosophy, and one of our corporate goals, is to build working capital sufficient to lessen our reliance on external financing sources.

RGII maintains an impeccable credit history and has an excellent reputation with both our customers and the financial community. The Company maintains a $4.0 million line-of-credit with a large national bank and maintains an excellent working relationship with our financial institution.

RGII is a strong, financially dynamic company with significant positive cash flow and more than adequate working capital. We believe that our impeccable financial condition, coupled with our available resources, allows RGII to eliminate any perceived risks associated with contracting with a “small” business.

RGII’s audit financial statements for CY1999 and CY2000 are included as Appendix 2. The statements were audited by McGladrey and Pullen, LLP, the 8th largest accounting firm in the United States. Their findings attest to RGII’s operations conforming with Generally Accepted Accounting Principals (GAAP).

Best Write-ups	PTO FMEUS Proposal

Corporate & Financial Resources	November 2001

RGII Proprietary & Confidential	Page 1

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birchumj

2002-01-22

Dell Computer Corporation