Assets Year Ended

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December 31, 20X2 Investment in BLMD Company Common Stock Balance, beginning of year $ 75,919,062 Realized gains/losses - Unrealized appreciation in estimated fair value 814,134 Shares distributed (2,200 shares) (204,600)

Balance, end of year $ 76,528,596

The amount of total gains or losses for the period included in changes in net assets attributable to the change in unrealized gains or losses relating to assets

still held at the reporting date $ 814,134

Gains and losses (realized and unrealized) included in changes in net assets for the period above are reported in net appreciation in fair value of investments in the Statement of Changes in Net Assets Available for Benefits.

Following is a description of the valuation methodologies used for assets measured at fair value. There have been no changes in the methodologies used at December 31, 20X2 and 20X1.

The BLMD Company common stock held by the Plan is valued at fair value based upon an independent appraisal. This appraisal was based upon a combination of the market and income valuation techniques consistent with prior years as illustrated in the following table.

Instrument Fair Value

Principal Valuation

Technique Unobservable Inputs BLMD company common stock $ 76,528,596 Income EBITDA

Net income Weighted average cost of capital Discount rate Discount for lack of marketability

Market Public comparables

Revenue multiple EBITDA multiple Discount for lack of marketability

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The valuation process involves the selection of an independent appraiser under contract for a term of three years with the right to cancel such contract at any time. Plan

management accumulates the data for the appraiser from historical and projected financial information of the Company. The appraiser prepares a preliminary report that plan management, along with the ESOP trustee, reviews in detail, discusses, and approves. The results of this process are documented in minutes of the plan fiduciary. The preceding methods described may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, although the Plan believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

E. Loan Payable

In 20XX, the Plan entered into a $30,000,000 term loan agreement with a bank. The proceeds of the loan were used to purchase Company common stock. Unallocated shares are collateral for the loan. Shares are released from collateral and allocated to participants as payments of principal and interest are made. The number of shares released in any year is the number of shares held as collateral, times the ratio of the current year payments divided by the total of this year’s payments, plus all future years’ principal and interest payments. This resulted in 23,772 shares being released and allocated for the plan year ended December 31, 20X2.

The agreement provides for the loan to be repaid over 15 years. The fair value of the note payable as of December 31, 20X2 and 20X1, was approximately $7,000,000 and

$10,000,000, respectively, determined by using interest rates currently available for issuance of debt with similar terms, maturity dates, and nonperformance risk. The scheduled amortization of the loan for the next 5 years is as follows: 20X3— $2,000,000; 20X4—$2,000,000; 20X5—$2,000,000; and 20X6—$1,396,867. The loan bears interest at the prime rate of the lender. For 20X2 and 20X1, the loan interest rate averaged 3.75 percent and 3.25 percent, respectively.

F. Company Advances

During the plan year ended December 31, 20X2, the Company advanced $156,393 in cash to the Trust to cover the Plan’s distribution obligations. This advance was an

interest-free loan to the Plan. No collateral has been taken for this loan. Plan Management believes that the loan complies with the requirements of Department of Labor Prohibited Transaction Class Exemption 80-26.

The proceeds of the loan were used to fund cash distributions to participants who were not eligible for the floor price protection (see note H). The advance was converted to a contribution as of December 31, 20X2.

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The Company paid a dividend to the ESOP of $1.35 per share or $1,099,081 during the year ended December 31, 20X2. A portion of the dividend on allocated shares and the prior year accrued employer contribution, totaling $1,166,371, was applied to debt service. This is reported as a transfer from the allocated accounts to the unallocated accounts on the Statement of Changes in Net Assets. As required by the plan document, the current appraised value of the shares returned to participant accounts in exchange for the use of such dividends was at least equal to the current value of such dividends.

H. Floor Price Protection

Distributions of stock are subject to a mandatory put to the Company. For participants who were are at least age 55 on May 1, 20X0, or whose balance is payable due to death or disability, the put option price is the greater of the current appraised value as of the plan year immediately preceding the distribution or the floor price. For all other participants, the put option price is the current appraised value.

For distributions of stock, fair value is guaranteed by the Company at the floor price. The floor price is the current appraised value of the stock as of May 1, 20X0, increased by four percent per year until such time as the current appraised value equals or exceeds the floor price. Once the current appraised value equals or exceeds the floor price, the floor price protection ceases, and all puts of stock will be paid using the current appraised value. As of December 31, 20X2 and 20X1, the current appraised values were $94.00 and $93.00 per share. The floor price for the same period was $117.74 and $113.21.

I. Related Party and Party in Interest Transactions

The Plan invests in Company common stock and has indebtedness guaranteed by the Company. These are related party and party-in-interest transactions. As described in note A, the Company paid all plan expenses. The Plan has a number of service providers. Such providers are parties in interest under ERISA.

J. Risks and Uncertainties

The Plan investments consist primarily of the Company’s common stock, which is exposed to various risks, such as interest rate, market, and credit risks, as well as

valuation assumptions based on earnings, cash flows, and other such techniques. Due to the level of risk associated with the investment in the common stock and to uncertainties inherent in the estimations and assumptions process, it is at least reasonably possible that changes in the value of the common stock will occur in the near term and that such changes could materially affect the amounts reported in the statement of net assets available for benefits.

K. Plan Termination

The Company reserves the right to terminate the Plan at any time, subject to Plan

provisions. Upon such termination of the Plan, the interest of each participant in the trust fund will be distributed to such participant or his or her beneficiary at the time prescribed by the Plan terms and the IRC. Upon termination of the Plan, the Employee Benefits

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Administration Committee should direct the Trustee to pay all liabilities and expenses of the trust fund and to sell shares of financed common stock held as collateral to the extent it determines such sale to be necessary in order to repay the loan.

L. Tax Status

The Plan has received a determination letter from the IRS dated June 30, 20XX, stating that the Plan is qualified under the IRC and, therefore, the related trust is exempt from taxation. Once qualified, the Plan is required to operate in conformity with the IRC to maintain its qualification. The Plan has been amended since receiving the determination letter. However, the Plan administrator believes that the Plan is currently designed, and being operated, in compliance with the applicable requirements of the IRC. Therefore, they believe that the Plan was qualified, and the related trust was tax-exempt as of the financial statement date.

Accounting principles generally accepted in the United States of America require plan management to evaluate tax positions taken by the plan and recognize a tax liability if the organization has taken an uncertain position that more likely than not would not be sustained upon examination by the [identify applicable taxing authorities]. The Plan is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress. The Plan administrator believes it is no longer subject to income tax examinations for years prior to 20XX.