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Table of Contents

1.0 Executive Summary...............................................................................................................................1


Chart: Highlights..................................................................................................................................2
1.1 Objectives..........................................................................................................................................2
1.2 Mission...............................................................................................................................................2
1.3 Keys to Success..................................................................................................................................2
1.4 Potential Risks...................................................................................................................................3
2.0 Company Summary...............................................................................................................................3
2.1 Company Ownership.........................................................................................................................4
2.1.1 Potential Conflict........................................................................................................................4
2.2 Start-up Summary..............................................................................................................................4
Table: Start-up Funding.......................................................................................................................5
Chart: Start-up......................................................................................................................................6
Table: Start-up.....................................................................................................................................6
3.0 Products..................................................................................................................................................6
3.1 Product Description...........................................................................................................................7
3.2 Competitive Comparison...................................................................................................................7
3.3 Sourcing.............................................................................................................................................7
3.4 Technology........................................................................................................................................8
4.0 Market Analysis Summary....................................................................................................................8
4.1 Target Market Segment Strategy.....................................................................................................10
4.2 Market Segmentation.......................................................................................................................10
Chart: Market Analysis (Pie).............................................................................................................11
Table: Market Analysis......................................................................................................................11
4.3 Industry Analysis.............................................................................................................................11
4.3.1 Barriers to Entry........................................................................................................................12
4.3.2 Competition and Buying Patterns.............................................................................................12
4.3.3 Main Competitors.....................................................................................................................12
5.0 Strategy and Implementation Summary...............................................................................................13
5.1 Value Proposition.............................................................................................................................13
5.2 Competitive Edge.............................................................................................................................13
5.3 Marketing Strategy...........................................................................................................................13
5.4 Sales Strategy...................................................................................................................................14
5.4.1 Sales Forecast............................................................................................................................14
Chart: Sales Monthly.....................................................................................................................15
Chart: Sales by Year......................................................................................................................15
Table: Sales Forecast.....................................................................................................................16
5.5 Milestones........................................................................................................................................16
Table: Milestones...............................................................................................................................16
Chart: Milestones...............................................................................................................................17
6.0 Management Summary........................................................................................................................17
6.1 Organizational Structure..................................................................................................................17
6.2 Management Team...........................................................................................................................17
6.3 Personnel Plan..................................................................................................................................18
Table: Personnel.................................................................................................................................19
Page 1

Table of Contents

7.0 Financial Plan.......................................................................................................................................19


7.1 Important Assumptions....................................................................................................................19
Table: General Assumptions..............................................................................................................20
7.2 Break-even Analysis........................................................................................................................20
Table: Break-even Analysis...............................................................................................................20
Chart: Break-even Analysis...............................................................................................................21
7.3 Projected Profit and Loss.................................................................................................................21
Chart: Profit Yearly............................................................................................................................21
Chart: Gross Margin Monthly............................................................................................................22
Chart: Gross Margin Yearly...............................................................................................................22
Table: Profit and Loss........................................................................................................................23
Chart: Profit Monthly.........................................................................................................................24
7.4 Projected Cash Flow........................................................................................................................25
Chart: Cash.........................................................................................................................................25
Table: Cash Flow...............................................................................................................................26
................................................................................................................................................................26
Table: Balance Sheet..........................................................................................................................27
7.6 Business Ratios................................................................................................................................27
Table: Ratios......................................................................................................................................28
7.7 Long-term Plan................................................................................................................................29
7.8 Replay's Exit Strategy......................................................................................................................29
Table: Sales Forecast...................................................................................................................................1
......................................................................................................................................................................1
Table: Personnel...........................................................................................................................................2
......................................................................................................................................................................3
Table: General Assumptions........................................................................................................................4
......................................................................................................................................................................4
Table: Profit and Loss..................................................................................................................................5
......................................................................................................................................................................6
Table: Cash Flow.........................................................................................................................................7
Table: Balance Sheet....................................................................................................................................8

Page 2

Replay Plastics

1.0 Executive Summary


The growing utilization of plastics in industrial and consumer applications, combined with
increased consumer awareness surrounding solid waste recycling, has led to an increased
demand for recycled plastic resins and products. One of the fastest growing types of collected
plastic materials for recycling is polyethylene terephthalate ("PET") from post-consumer
beverage and water bottles. Replay Plastics will capitalize on the opportunities in the recycled
resin and packaging markets through two main divisions: a Recycling Division and a
Packaging Division.
The Company will create a PET cleaning and refining plant located in the western United States
(all 16 major North American PET recycling plants are currently located in the eastern United
States or Canada). Its initial capacity will be 46 million pounds, and it will utilize post-consumer
bottle feed stock presently collected in California, Oregon and Washington States, which collect
over 200 million pounds per year. The Company will be vertically integrated, and use almost all
of its recycled material in its Packaging Division. Any surplus materials (clean flake) produced
will be sold to outside companies. The extruded sheet may then be sold to manufacturers, who
will thermoform it into high-visibility packaging or use it in other high value added
manufacturing operations. The strapping will be sold to companies who ship large packages or
pallets, such as the lumber milling industry. The Company currently has commitments
available from customers to purchase all of the product produced.
MANAGEMENT
Ben Braddock, President, has a 30-year history of experience encompassing all aspects of
Polymer Raw Material, Plastic Conversion Methods, and Venture Development. He has founded
successful ventures in the plastic converting industry, and assisted in the launch of five plastic
converting manufacturing plants. Sam McGuire, Executive VP and COO, is a graduate Engineer
with over 20 years experience in the post-consumer plastics recycling industry and is the
inventor of the primary cleaning & refining technology used in the process for this project. He
has received a patent for his technology and has been directly involved in over twenty-five
major post consumer plastics recycling projects. Carl R. Smith, CFO, has over 30 years
investment and merchant banking and management experience. He has assisted in raising over
$500 million and served as board member and/or officer in over 40 public and private
companies.
FINANCIAL SUMMARY
After a four month start-up period to build the recycling and packaging facilities, buy
equipment, and incorporate the business, Replay Plastics will begin a quick turnaround of
product. Sales will begin in May, and with over $15 Million in sales the first year, we will see a
first year net profit of $2.3 Million. The owners are investing $500,000 each, for a total of $1.5
Million, and are securing an $800K long-term loan.
The Company is also seeking an investment of $2,700,000 in order to begin operations. These
funds will be used for the purchase of one recycling line and one manufacturing line, for the set
up of the plant facilities and for working capital. An outside investor providing this amount
would receive 48% equity in Replay, and receive an IRR of 69% from simple dividends alone
over the next 5 years. At the end of that period, we will consider a public offering of stock or a
buy-out by a related business. Recent information on private sales of similar industry
companies has indicated that transactions under $25 million have averaged 5.3 times EBITDA,
while transactions in the range of $25-250 million have averaged over 7 times EBITDA. Further
details can be found in the Financial Plan, below.

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Replay Plastics

Chart: Highlights

1.1 Objectives
1. Sales passing $15 million in first year, $31 million in year 2, growing to $43 million.
2. Gross margin of 35% or more in first year, 45% in second year then 50% or more.
3. Net profit of 13% in year one, then exceeding 20% annually starting in year two.
1.2 Mission
Replay Plastics is a manufacturing company dedicated to converting waste plastic materials into
commercially viable products, utilizing environmentally friendly recycling and manufacturing
methods. We intend to make enough profit to generate a significant return for our investors
and to finance continued growth and continued development in quality products. We will also
maintain a friendly, fair, and creative work environment, which respects diversity, new ideas
and hard work.
1.3 Keys to Success
The main keys to the success of the Company are:

Secure Supply- Contract for supply of post-consumer bottles and post-industrial


manufacturing waste for PET raw material feed stock.
Marketing - Contractual arrangements for the sale of virtually all initial production.
Management - Strong senior management with extensive, broad-based, industry-specific
experience.

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Replay Plastics

1.4 Potential Risks


Unavailable or scarce raw material feed stock for production

Replay is confident that it has secured good availability of low cost post-consumer PET
bottles (feed stock) derived from post-consumer beverage bottles from California based
recycling collectors, and has back up sources identified.

Technology employed may be unreliable or unproven

Replay will use a proven, patented technology that was developed by one of its principals
for the cleaning and recycling phase. The extrusion division will employ commercially proven
technology - the industry is employing unique recycled PET technology which is used by
prominent eastern U.S. manufacturers of PET extrusions.

There may not be a market for the Company's products

The Industry-wide experience of the Management Team has allowed them to


identify markets for the Company's products. Their expertise and reputations have allowed
them to obtain commitments for virtually all of the planned initial production.

The location may not be near enough to markets

The markets that have been identified are primarily in the western U.S., which will provide a
distinct advantage to the Company because of freight costs and delivery timing.

The Company may not be able to attract top management

The Company has assembled a world class management team with proven ability and direct
experience in the Company's market segments.

Company may not meet environmental standards

This environmentally-favorable venture provides for the development of technically feasible


and economically viable solutions to PET plastic beverage bottle recycling, as well as
environmentally aware in-house re-use practices which filter and return nearly all of the
process water to the production lines.

The Company may not be able to sell all of its production capability

Through the Senior Management's industry-wide contacts, the Company has identified
potential customers and received commitments for all of the production potential of the
initial facility.

2.0 Company Summary


The Company will capitalize on the opportunities in the recycled resin and packaging markets
through two main divisions: a Recycling Division and a Packaging Division.

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Replay Plastics

Recycling Division
Using a patented process, the Company will create a PET cleaning and refining plant located in
the western United States; we have chosen this region because all 16 major North American
PET recycling plants are currently located in the eastern United States or Canada, despite
western states' favorable recycling attitudes among consumers. Its initial annual capacity will
be 46 million pounds and it will utilize bottle feed stock from California, Oregon and Washington
States, which collect over 200,000,000 pounds per year. The Company will become totally
vertically integrated, and use all or almost all of its recycled material in its Packaging Division.
Any surplus material produced will be sold to outside companies.
Packaging Division
We will create a plant (actual facilities to be shared with the Recycling Division) to manufacture
extruded plastic roll stock sheet or high-strength strapping, employing state-of-the-art
technology developed to utilize recycled PET resin.
The extruded sheet will be primarily sold to thermoformers who will convert it into high visibility
packaging, as well as laminators and fabricators. The strapping will be sold to commercial users
for use as package or pallet strapping.
The Company currently has commitments from customers to purchase all of the initial
production capacity. Excess flake will be sold to outside customers.
2.1 Company Ownership
Replay Plastics is owned by the initial founders, B. Braddock, S. McGuire and C. Smith, who are
the proposed three executives of the operating entity. The plan was conceived and developed
by these individuals, with the intent to apply their extensive experience and contacts in the
industry to building a successful profitable corporation.
2.1.1 Potential Conflict
Our COO, Mr. Sam McGuire, the inventor and patent holder of the recycling process to be used
by the Company, is a principal in Company A of Chicago, IL. For many years, Company
has designed, manufactured and assembled plastic recycling equipment, and has given us
quotes on meeting our needs in this area.
After a thorough investigation, Replay has found that Company A is able to source or supply the
required equipment at considerably lower cost than any other company from which a quote was
available. Mr. McGuire has disclosed that Company A has included a smaller than normal
margin in their quote on goods they will manufacture, to cover overhead, contingency and
profit which might result in a small benefit to him. They have agreed to source all of the
equipment possible with no added margin.
Replay has concluded that the savings available outweigh any other consideration and that we
will purchase the cleaning and refining equipment from Company A.
2.2 Start-up Summary
Our start-up expenses are budgeted at $210,000, which is mostly for on-site contractor
services during facility preparation. $50,000 has been set aside for legal and accounting,

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Replay Plastics

$25,000 for special consulting that may be required during start up and $50,000 each for local
engineering and lab equipment and supplies. $30,000 has been set aside as a contingency for
the start up period.
Our largest Start-up Requirement is the building of the recycling and extrusion facility. Its final
value at completion is listed below as a long-term asset of $3,620,000 (excluding expensed
items like consultants and engineering listed above). Aside from the building itself, we need
$25,000 in machinery and fixtures, $500,000 of inventory (plastic bottle feed stock) and cash
to cover us through the initial year.
Table: Start-up Funding

Start-up Funding
Start-up Expenses to Fund
Start-up Assets to Fund
Total Funding Required

$210,000
$4,790,000
$5,000,000

Assets
Non-cash Assets from Start-up
Cash Requirements from Start-up
Additional Cash Raised
Cash Balance on Starting Date
Total Assets

$4,145,000
$645,000
$0
$645,000
$4,790,000

Liabilities and Capital


Liabilities
Current Borrowing
Long-term Liabilities
Accounts Payable (Outstanding Bills)
Other Current Liabilities (interest-free)
Total Liabilities

$0
$800,000
$0
$0
$800,000

Capital
Planned Investment
Founders
Investor
Additional Investment Requirement
Total Planned Investment

$1,500,000
$2,700,000
$0
$4,200,000

Loss at Start-up (Start-up Expenses)


Total Capital

($210,000)
$3,990,000

Total Capital and Liabilities

$4,790,000

Total Funding

$5,000,000

Page 5

Replay Plastics

Chart: Start-up

Table: Start-up

Start-up
Requirements
Start-up Expenses
Legal & Accounting
Stationery etc.
Consultants
Lab Equipment
Local Engineering
Misc Start up
Other
Total Start-up Expenses

$50,000
$5,000
$25,000
$50,000
$50,000
$30,000
$0
$210,000

Start-up Assets
Cash Required
Start-up Inventory
Other Current Assets
Long-term Assets
Total Assets

$645,000
$500,000
$25,000
$3,620,000
$4,790,000

Total Requirements

$5,000,000

3.0 Products
Replay Plastics will utilize two processes in the same facility to produce:

Cleaned and recycled plastic PET flake (RPET), recovered from post-consumer beverage
bottles and manufacturing waste produced by its sheet customers
Extruded roll stock sheet PET.

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Replay Plastics

Extruded PET high-strength strapping for securing large packages or pallet loads; each
using 100% RPET produced in-house

3.1 Product Description


Roll stock sheet will be sold to custom thermoformers primarily to be used to produce highvisibility packaging. It will also be sold to manufacturers of laminates and fabricated plastic
products.
High strength PET packaging strapping is used to secure packages or pallets in such industries
as lumber milling and corrugated and other paper production.
Both products will be extruded from post-consumer polyethylene terephthalate (PET)
bottles. The recycling programs in California, Washington and Oregon collect in excess of
200,000,000 pounds of PET bottles per annum. Replay' initial capacity will be 46,000,000
pounds.
Using a patented process, Replay will clean and refine the PET material from the post-consumer
bottle stock and post-industrial manufacturing waste. The PET flake resin produced will be
extruded into roll stock sheet or high-strength strapping.
Although the Company expects to convert all of its bottle feed stock into extruded products,
any surplus flake will be sold to outside manufacturers.
3.2 Competitive Comparison
While quality and delivery are important factors to our potential clients, price is most often the
determining factor in a buying decision. Good-quality packaging products manufactured from
recycled (less expensive) resins, as close as practical to the end customer's operations, will be
most competitive and achieve a significant market share. These factors have helped to
determine the business parameters of Replay Plastics.
3.3 Sourcing
In excess of 200,000,000 pounds of post-consumer PET beverage bottles are collected and
available as feed stock for manufacturers who can re-process this material into commercial
products. The Company has excellent relations with the firms and associations that collect and
distribute these materials and has been assured that its requirements will be available for the
foreseeable future.
The Company has entered negotiations with a California based source of post-consumer bottles
and is confident that sufficient volumes are available on a contract basis from this source to
satisfy its requirements. In addition, the Company intends to purchase production waste from
its sheet customers and blend it into its feed stock.
Currently, the majority of the post-consumer PET bottles collected in California, Oregon and
Washington are exported to China. The Chinese have absorbed the amounts surplus to the use
in North America. Their interest has kept the industry in the position of being able to maintain a
steady price range for this bottle stock. A significant percentage of all sales of such bottle stock
are managed by Plastics Recycling Corporation of California (PRCC), an industry funded
marketing agency which operates similarly to a co-operative. They accept bids from potential
buyers on behalf of the firms which act as "consolidators," which accumulate stocks from the

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Replay Plastics

smaller, individual bottle-recycling depots. Some amount of the available stocks are regularly
bought by recyclers in eastern North America who focus on the carpet manufacturers who use
RPET resin in their process, but the high cost of transport from the western U.S. makes eastern
sources more desirable.
Replay has a good relationship with Company B, one of the larger consolidators in
California. Company B has indicated a desire to contract to supply Replay with all of its raw
material needs. They prefer to deal with a local consumer such as Replay, rather than the
uncertainty and extra preparation requirements of the export market.
There are other sources of post-consumer feed stock known to Replay, and we are confident
that we will have sufficient materials available for our production needs.
3.4 Technology
Sam McGuire, a key member of our Management team, is one of the original innovators of
cleaning and refining technology for post-consumer PET, and we will be utilizing his patented
process in our recycling facility. Sam has worked in the establishment and operation of facilities
employing similar technologies over the last several years.
On the manufacturing side, Management has been an integral part of the advancement of
industry practices over the last twenty years or so, and includes in their knowledge base most,
if not all, of the state-of-the-art available equipment and manufacturing techniques.
4.0 Market Analysis Summary
Strong demand for recycled plastics is working in the industry's favor. Major users of plastic
packaging, apparently responding to consumer desires, have begun incorporating at least some
recycled plastic content in their products as part of the growing interest in recycling. Recycled
resin demand is on the rise as prices for the two major recycled resins, PET and HDPE, continue
to hold value or appreciate against their virgin counterparts.
In volume, PET is currently the number one recycled resin. Supply of recycled PET is in excess
of 800 million pounds per year. This figure is expected to grow, reaching over 1 billion pounds
during the next few years. The plastics industry has developed new markets and applications
for recycled resins from both post-consumer and post-industrial sources.
PET leads the recycled recovered resins as the most visible and valuable, and its use is
increasing. Of the total 3.7 billion pounds of PET consumed in 1997, just 16% was from
recycled sources. Of the more than 90 billion pounds of plastics produced annually in the United
States, less than 5% is from recycled sources. Plastics, after aluminium, represent the second
highest value material in the waste stream and have the highest projected growth rate.
Markets and uses for recycled plastics are rapidly expanding. Plastic containers are being
collected at the curb for recycling in nearly 500 communities, representing more than 4 million
households. U.S. demand for recycled plastic will continue to expand and new markets will
develop as technologies permit the efficient segregation and reprocessing of high-purity resins.
Improved quality of resins, environmental issues and higher prices for virgin resin will
contribute to growth.
Packaging is expected to be the largest market segment for recycled plastics, with sheet and
lumber following. Surveys indicate that Americans are increasingly willing to collect and

Page 8

Replay Plastics

separate discarded packages, foregoing a degree of convenience to make products more


disposable, and even paying a premium for a recycled item.
Increasingly, communities are refusing to consider incineration until every effort is made first to
recycle; public sentiment is strongly in favor of products that can be recycled or are made of
recycled materials. In recent years, the household recycling rate of PET bottles has more than
doubled to 30% of all PET soft drink bottles sold. In fact, PET's recycling rate is the fastest
growing among all beverage containers. The future of PET recycling is even brighter than it has
been in the past. PET intrinsic scrap value is second only to aluminium among container
materials. The plastics industry has launched a research and development program aimed at
increasing PET recycling. According to the U.S. Environmental Protection Agency (EPA), plastic
soft drink bottles account for approximately 2% of the solid waste discarded in America. The
EPA has set a national goal to recycle 25% of the municipal solid waste stream and the industry
is committed to achieving its share of that important goal.
The recycling industry intends to accelerate the rate of plastic recycling as part of its
commitment to develop solutions to the solid waste problem. Industry analysts have projected
that 50% of all PET containers will be recycled by the year 2007. More plastics will be recycled
annually than any other recyclable material. Replay believes a significant answer to America's
waste problem lies in creating high value, recycled thermoformable sheet and other extruded
products for the packaging market.
Although more than 200 million pounds of PET post-consumer materials are collected in the
western United States each year, there is presently no local cleaning and refining facility
converting the bottles into resins suitable for re-manufacturing. Originally, recycled PET (RPET)
was used primarily in the carpet fiber industry, which is located along the eastern seaboard.
The early development of the RPET industry was therefore focused in the eastern USA,
with eastern states adopting the first bottle deposit laws that resulted in collection of postconsumer bottles that can be recycled. Recently, California, Oregon and Washington have
adopted bottle deposit programs, and accumulation of recyclable materials in those states has
begun. With all of the cleaning and recycling plants and the majority of consumers traditionally
located in the eastern part of the country, development of consumers of recycled flake and
down-line products, such as film and sheet, has been slow to develop in the West. A strong
demand for post-consumer bottles from Asia has prevented the buildup of inventories and
reduced the pressure for the collection industry to find or develop western markets.
There is currently no independent extrusion plant of recycled polyterephthalate (PET) sheet in
the western United States or Canada that services the roll stock requirements of major custom
and proprietary formers. With the development of the recycling industry for PET starting in the
eastern part of the country, and the preponderance of consumers of sheet there as well,
development of independent extrusion facilities using RPET has been slow to develop. It
appears that in order to attract such companies, local sources of RPET would have to
available. While there are customers in the West for the products, contracting a supply and
shipping it from the East makes the venture unattractive.
Our founders recognize that an opportunity exists and propose a vertically
integrated conversion facility that will employ state-of-the-art technologies to produce extruded
sheet and high strength strapping from 100% recycled PET post-consumer bottle stock, cleaned
and refined in our own facility.

Page 9

Replay Plastics

4.1 Target Market Segment Strategy


The Company has chosen its target markets because recycled PET (RPET) is in high demand as
flake resin by converters, as roll stock sheet used to produce high visibility packaging and as
high strength strapping for the lumber industry. Sales are price-sensitive, so that proximity to
markets and feed stock source provide a competitive edge. Replay Plastics identified an
opportunity to take advantage of both circumstances in the western United States.
RPET Flake
Total market demand is reported as 1.2 billion pounds per year. Since only 800 million pounds
are processed in the USA, consumers are forced to look at wide spec virgin PET (virgin resin
that is outside of spec but still usable) which is normally sold at a discount to virgin prices, but
still higher than recycled (RPET) pricing. Some manufacturers are also forced to import
materials from Mexico, India and South America. Some converters are being forced to use more
expensive virgin resin.
The current pricing for virgin resin is $0.65-0.73 per lb. and $0.42-.53 for RPET flake. The
spread between the two has traditionally been maintained at approximately $0.20 per lb.
PET Film & Sheet
The total reported market of extruded film and sheet is 872 million pounds, of which identified
industry usage of RPET is 160 million pounds.
The reported market demand (to replace virgin PS, PVC and PET) if RPET was available
is estimated at 1 billion pounds.
Current pricing for RPET sheet is $0.70-0.79 per lb.
RPET Strapping
The total reported domestic plastic strapping market is 240 million pounds. Of this market,
industry usage of virgin polypropylene is 132 million pounds and of PET is 108 million pounds.
It is generally accepted in the industry that less expensive strapping made from RPET could not
only take over the polypropylene strapping market, but convert as much of the much larger and
more expensive steel strapping market as RPET strapping was available.
Current pricing for RPET strapping is $0.90 -1.08 per lb.
4.2 Market Segmentation
The primary market can be broken down as follows.
Consumers of PET in:

California: 62
Oregon: 8
Washington: 9

Page 10

Replay Plastics

Consumers of HDPE in:


California: 73
Oregon: 10
Washington: 12
All information is based on industry research,and data provided by the American Plastics
Council.

Chart: Market Analysis (Pie)

Table: Market Analysis

Market Analysis
Potential Customers

Growth

Western PET Buyers


Western HDPE Buyers
Total

1%
1%
0.57%

Year 1

Year 2

Year 3

Year 4

Year 5

79
95
174

80
95
175

81
95
176

82
95
177

83
95
178

CAGR
1.24%
0.00%
0.57%

4.3 Industry Analysis


Currently there is no direct competition in the western United States for either of the two
divisions of the Company. Any production in the trading area remains captive and not available
to our target market.
The ability of the Company to obtain a source of post-consumer bottle stock is an integral
component of the strategy to vertically integrate operations and manufacture products in
demand by western consuming industries. Without the cleaning and refining division, it

Page 11

Replay Plastics

would be difficult to source sufficient RPET flake resin at costs that would allow the Company to
be competitive.
4.3.1 Barriers to Entry
Limited Supply of raw material
Recycled PET (RPET) resins are in high demand, and demand is currently under-supplied. Many
manufacturers are delaying expansion because of uncertainty of supply. Entrants would have to
consider sourcing post-consumer or post-industrial waste and clean and refine it rather than
attempting to purchase flake on the open market. Even at that, there is not an over-abundance
of post-consumer or post industrial material in the marketplace.
Equipment costs are high and industry specific, resulting in a high exit cost.
Because of the scarcity of RPET flake, entrants may be forced to establish cleaning and refining
facilities for post-consumer bottles. The equipment required is costly and very industry specific.
It would not easily be re-sold as a system.
There is a market for used extrusion equipment, which normally sees 60-70% of new value
being realized.
Vertical integration is an important consideration and difficult to accomplish
successfully.
Because of the scarcity of RPET resin, and to maximize profit potential, entrants must consider
a two-stage production facility. Cleaning and refining post-consumer bottles and extruding the
resulting flake into commercial products requires a management team such as Replay has, with
a broad range of expertise, experience, industry contacts and knowledge in both areas.
Firm contracts for supply and sales.
Replay Management's industry contacts will allow us to secure contracts for both supply of feed
stock and sale of finished goods.
Freight is a major cost of operations; proximity to source of supply and markets is
crucial.
Hauling plastic materials is expensive so entrants will have to consider establishing facilities
close to materials and markets. Entrants with existing operations would have to consider new
separate facilities in many cases, reducing economies of scale and making management more
difficult.
4.3.2 Competition and Buying Patterns
There has been a strong demand (sellers' market) for our products for several years.
Traditional buying patterns in this industry are based on quality, price, reputation of
manufacturer, freight costs, delivery times and proximity to markets. During such a sellers'
market, buying patterns are often more influenced by availability.
4.3.3 Main Competitors
Currently in the western United States, there is no direct competition for cleaning and refining
post-consumer or post-industrial PET. Nor is there any non-captive extrusion of roll stock sheet.

Page 12

Replay Plastics

The extruded sheet required by thermoformers is currently supplied by:

Advance Extrusion, Becker, MN


Kama, Pittsburgh, PA
Plasti-Shell Packaging, Gonzales, LA
Petco, Montreal, Canada
Klockner, VA

In a news release dated September 10, 2004, Itec Environmental Group, Inc. announced their
intention to open a PET and High Density Polyethelene (HDPE) recycling operation in Riverbank,
CA (east of San Francisco). The news release states that the Company's new and yet
unproven technology lets it work with bottle streams that others have to reject as too dirty.
This Company is familiar to our Management, and is not considered a significant factor in any of
our markets.
5.0 Strategy and Implementation Summary
Replay Plastics will utilize its strong industry-wide relationships to obtain significant contracts
for its production. Some business will be obtained directly by Management, while some amount
of product will be sold by sales agents well known to the Company who have proven their
effectiveness.
These industry-wide relationships will also provide the Company the ability to secure contracts
for the supply of its raw material at competitive pricing.
5.1 Value Proposition
In a vertically integrated environment, Replay will apply state-of-the-art recycling and extrusion
technology managed by decades of industry specific expertise to create a competitive
advantage for its clients. These processes will produce clean, cost-efficient, recycled raw
material for manufacturers of thermoform, laminate and other high value-added products, and
high strength packaging strapping for shippers of large products and pallets, thereby reducing
costs and creating a clear pricing edge among their competitors.
5.2 Competitive Edge
Replay Plastics' competitive edge rests with its proximity to its target markets, as well as the
industry knowledge, reputation and contacts of its senior management. Their many years of
direct experience have led them to identify this unique opportunity and put together the
technology and sources to take advantage of it. Their reputation in the specific market segment
will result in the achievement of long-term commitments for our production.
5.3 Marketing Strategy
The Company has chosen to focus on the production of plastic packaging materials from
recycled post-consumer beverage bottles. Because of the industry experience and expertise of
the management, we have identified a significant available market in the western United
States. All of our initial marketing strategy will be to secure contracts in that segment, and
after reaching full planned capacity, look to grow in concert with that segment and related
markets. We see little need at present for further market research and development, and will
focus on continually updating our production technology in an effort to remain in the forefront
of our chosen marketplace.

Page 13

Replay Plastics

5.4 Sales Strategy


Because of the unique extensive experience and reputation of our Management in the
Company's chosen industry segment, we are able to identify all of the potential customers for
each of the products we will produce in our facility. While most of the production of flake is
ultimately intended to be used internally, we are confident that any developed surplus will be
sold immediately.
All of the production of the initial facility is committed for, and should there be any capacity not
consumed by these commitments, once again we are confident that the contacts of our senior
management will allow for the rapid sale of any such capacity.
If the Company grows faster than its prime customer base, additional capacity may be
developed. Mr. Braddock's many years of sales and sales development will be utilized to identify
additional customers and/or sales agents currently servicing the Company's target markets.
To market the products, the Company will use a number of sales agents/brokers well known to
the founders from business transactions over more than 10 years. All of these seasoned
veterans have a customer base of their own, having developed successful relationships with
their clientele over the years. Their customer base is currently demanding product so they can
expand upon their current base. Of course, they will expand that to new customers when
product is available from Replay. Those agents are located in:

Jacksonville, Florida
Houston, Texas
Chicago, Illinois
Louisville, Kentucky
Los Angeles, California
Vancouver, British Columbia

As stated, Ben Braddock, himself, is a strong marketing individual. Over his 30 years of
experience in the packaging and converting industry he has developed relationships with a
number of clients that are buyers of packaging materials. He has consulted to many and has
been personally responsible for sourcing raw materials and converted sheet for customers in
this industry.
Custom formers, extruders, laminators, and end user markets will be called upon by Ben and
the sales agent team to promote and generate demand from those that buy and use RPET
packaging materials.
5.4.1 Sales Forecast
The sales forecast is based on the assumption that we will sell all of the highest value extruded
products that we can produce. In addition, it is expected that there will be amounts of refined
flake surplus to our extrusion capacity. This flake will be sold to other manufacturing
companies. There is a continuing strong demand for flake and extruded products made from
recycled PET.
Cost of raw materials includes 24% allowance for price variation and 15% non-recoverable
waste.

Page 14

Replay Plastics

Chart: Sales Monthly

Chart: Sales by Year

Page 15

Replay Plastics

Table: Sales Forecast

Sales Forecast
Year 1

Year 2

Year 3

Year 4

Year 5

Recycled Flake PET


Extruded Roll Stock Sheet
Extruded Strapping
Total Unit Sales

20,533,600
8,341,400
0
28,875,000

12,833,900
28,874,600
4,491,500
46,200,000

0
30,800,000
15,400,000
46,200,000

0
30,800,000
15,400,000
46,200,000

0
30,800,000
15,400,000
46,200,000

Unit Prices
Recycled Flake PET
Extruded Roll Stock Sheet
Extruded Strapping

Year 1
$0.45
$0.70
$0.00

Year 2
$0.47
$0.74
$0.95

Year 3
$0.50
$0.77
$1.00

Year 4
$0.52
$0.81
$1.05

Year 5
$0.55
$0.85
$1.10

Recycled Flake PET


Extruded Roll Stock Sheet
Extruded Strapping
Total Sales

$9,240,120
$5,838,980
$0
$15,079,100

$6,064,018
$21,222,831
$4,266,925
$31,553,774

$0
$23,769,900
$15,400,000
$39,169,900

$0
$24,958,395
$16,170,000
$41,128,395

$0
$26,206,315
$16,940,000
$43,146,315

Direct Unit Costs


Recycled Flake PET
Extruded Roll Stock Sheet
Extruded Strapping

Year 1
$0.27
$0.27
$0.00

Year 2
$0.28
$0.28
$0.28

Year 3
$0.29
$0.29
$0.30

Year 4
$0.31
$0.31
$0.31

Year 5
$0.32
$0.32
$0.33

$5,441,404
$2,210,471
$0
$7,651,875

$3,571,033
$8,034,357
$1,257,620
$12,863,010

$0
$8,998,605
$4,620,000
$13,618,605

$0
$9,448,535
$4,774,000
$14,222,535

$0
$9,920,962
$5,082,000
$15,002,962

Unit Sales

Sales

Direct Cost of Sales


Recycled Flake PET
Extruded Roll Stock Sheet
Extruded Strapping
Subtotal Direct Cost of Sales

5.5 Milestones
Because the Company is a start-up, our milestones will surround the establishment of
continuing facilities, confirmation of sourcing and sales contracts, equipment acquisition and
installation, staffing and training, and initiating production.
Table: Milestones

Milestones
Milestone
Order Equipment
Secure Location
Secure Orders/Contracts
Site Preparation
Hire Plant Manager
Receive Equipment
Hire & Train Skilled Labor
Begin Production
Hire & Train Unskilled Labor
Install Equipment
Totals

Start Date
1/2/2005
1/2/2005
1/2/2005
2/1/2005
2/28/2005
2/28/2005
4/15/2005
5/1/2005
4/30/2005
4/1/2005

End Date
1/31/2005
1/31/2005
1/31/2005
2/25/2005
3/15/2005
3/31/2005
4/30/2005
5/1/2005
5/15/2005
4/30/2005

Budget
n/a
n/a
n/a
n/a
n/a
n/a
n/a
$0
n/a
n/a
$0

Manager
Senior Mgmnt
Senior Mgmnt
Senior Mgmnt
Senior Mgmnt
Senior Mgmnt
Senior Mgmnt
Senior Mgmnt
Senior Mgmnt
Senior Mgmnt
Senior Mgmnt

Department
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Department
n/a
n/a

Page 16

Replay Plastics

Chart: Milestones

6.0 Management Summary


The three founders form the senior management group. Several qualified candidates have been
identified for the position of plant manager. The balance of the employees will be hired and
trained during the equipment purchase and installation phase (first five months after funding).
Because the sales management function will be the responsibility of Ben Braddock, with
projected use of familiar sales agents, there are no plans for additional inside sales people or
managers.
Ben Braddock and Sam McGuire have agreed to remain with the Company for the foreseeable
future. In addition to their respective duties, they will each become totally familiar with all
aspects of Senior Management, and be in a position to take over for each other should the need
arise.
Carl Smith has agreed to remain with the Company for a minimum of two years, and will
assume the responsibility of locating and training a replacement before the end of his
employment.
6.1 Organizational Structure
The Organizational Structure of Replay Plastics is planned to be a simple and traditional one. All
recycling and manufacturing operations will report to the COO. All administrative and finance
functions will report to the CFO. Both the COO and CFO will report to the CEO, who will also
have the responsibility for Sales and Marketing.
6.2 Management Team
Ben Braddock, President and CEO, has a 30-year history of experience encompassing all
aspects of Polymer Raw Material, Plastic Conversion Methods, and Venture Development. He
founded Company C, a multi-cavity plastic injection molder container facility, and Company D, a

Page 17

Replay Plastics

solid phase pressure forming polypropylene (PP) food container facility. He also assisted in the
launch of five plastic converting manufacturing plants.
For the last fifteen years Ben has been an independent consultant in the plastics industry. His
clients have included [proprietary and confidential information removed].
Sam McGuire, Executive VP and COO, is a graduate engineer with over 20 years experience in
the post-consumer plastics recycling industry and is the inventor of the primary recycling
technology used in the process for this project. He has received a patent for his recycling
technologies and has been directly involved in over twenty-five major post consumer plastics
recycling projects. Sam has played a major role in the design and manufacture of
specific recycling equipment as well as playing a key management role in the design,
construction, installation, commissioning and operation of several independent recycling
businesses.
In 1998, Sam sold his interests in a medical waste treatment and plastics recycling business to
a public company (Company A) based in Chicago. Since that time he has served as Vice
President, International Business Development and Engineering for this Company. His primary
responsibilities over the past five years have included: the rollout of the corporate business
model to international countries; the licensing of intellectual property to joint venture
companies; managing the design and construction of medical waste treatment and plastics
recycling facilities and continuing business and technical support to the resulting joint venture
businesses throughout the world.
In the past five years, Sam has successfully completed projects in Brazil, Argentina, South
Africa, Japan and Australia totaling over $100 Million in investment.
Carl R. Smith, CFO, has over 30 years of investment, merchant banking and management
experience. He has assisted in raising over $500 million and served as board member and/or
officer in over 40 public and private companies.
Carl is the former CEO of E Corporation, Ltd., a company manufacturing plastic injection
molded products. Prior to 1993 he was a partner in two independent investment banking firms,
Company F and Company G. During his time at Company G, more than $450 million was raised
for client companies, and the assets grew to $50 million. Prior to forming Company G, Carl was
a principal and manager of several operating companies in industries such as plastics, mining
and oil and gas exploration.
6.3 Personnel Plan
The Company expects to have a head count of 53 (6 part-time) by the end of year one, 59 (9
part-time) in year two, and 73 (15 part-time) in year three through five at full capacity. We
have budgeted for labor rates ranging from $10 per hour for unskilled labor to $18 per hour for
machine operators and Maintenance Technicians. We expect to pay $20 per hour to
supervisors. We have also included 30% burden for benefits and employee costs, as well as a
25% bonus potential for all plant employees.

Page 18

Replay Plastics

Table: Personnel

Personnel Plan
Year 1

Year 2

Year 3

Year 4

Year 5

$129,169
$116,664
$350,000
$164,066
$87,504
$25,522
$62,504
$18,228
$0
$953,657

$210,000
$183,750
$551,250
$295,513
$206,719
$68,906
$147,656
$49,219
$0
$1,713,013

$220,500
$192,938
$578,813
$310,078
$289,406
$96,469
$206,719
$68,906
$0
$1,963,829

$231,525
$202,585
$607,754
$325,582
$303,876
$101,292
$217,055
$72,351
$0
$2,062,020

$243,101
$212,714
$638,141
$341,861
$319,070
$106,357
$227,908
$75,969
$0
$2,165,121

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

$72,000
$67,200
$67,200
$63,000
$29,200
$20,800
$15,600
$0
$27,200
$362,200

$110,000
$100,000
$100,000
$88,200
$45,938
$32,813
$32,813
$32,813
$42,840
$585,417

$121,000
$110,000
$110,000
$92,610
$48,235
$34,454
$34,454
$34,454
$44,982
$630,189

$133,100
$121,000
$121,000
$97,241
$50,647
$36,176
$36,176
$36,176
$47,231
$678,747

$146,410
$133,100
$133,100
$102,103
$53,179
$37,985
$37,985
$37,985
$49,593
$731,440

Name or title
Name or title
Subtotal

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

Total People

51

57

69

69

69

$1,315,857

$2,298,430

$2,594,018

$2,740,767

$2,896,561

Production Personnel
Shift Supervisor
Maintainence Techs
Skilled Recycle Plant Labor
Unskilled Recycle Plant Labor
Extruder Operator (full time)
Extruder Operator (part time)
Production Assistant (full time)
Production Assistant (part time)
Name or Title or Group
Subtotal
Sales and Marketing Personnel
commission-basis - see P&L
Name or Title or Group
Subtotal
General and Administrative Personnel
President
Vice Pres COO
CFO
Plant Manager
Accountant
Clerk
Clerk
Clerk
Shipper Receiver
Subtotal
Other Personnel

Total Payroll

7.0 Financial Plan


Once the equipment is installed, production ramps up quickly, with sales beginning in the sixth
month after funding. Positive cash flow and net profit are achieved within the first year.
7.1 Important Assumptions

Replay has allowed for 30 days to collect receivables due to knowledge and experience with
customers in the industry.
Inventory turnover is predicted at 12 times, which is extremely conservative.
The personnel burden includes contribution by the Company to employee health care.
We have allowed for Accounts Receivable financing of 70% at interest of 12% per annum.
It is assumed that additional extrusion lines will be added in the second year, with down
payments of 33% at time of order and balance paid at time of shipment (see Cash Flow for
details). These will be purchased as long-term assets out of the cash flows of the business.

Page 19

Replay Plastics

General annual growth rates of 5% have been assumed on all sales prices and material and
labor costs.

Table: General Assumptions

General Assumptions
Plan Month
Current Interest Rate
Long-term Interest Rate
Tax Rate
Other

Year 1

Year 2

Year 3

Year 4

Year 5

1
12.00%
8.00%
30.00%
0

2
12.00%
8.00%
30.00%
0

3
12.00%
8.00%
30.00%
0

4
12.00%
8.00%
30.00%
0

5
12.00%
8.00%
30.00%
0

7.2 Break-even Analysis


With fixed costs of about $184,000 per month in the first year, and variable unit costs at
roughly 52% of prices, we need to produce and sell 715,963 units per month to break even. We
will far exceed the break-even point in our first full month of sales.
Table: Break-even Analysis

Break-even Analysis
Monthly Units Break-even
Monthly Revenue Break-even

715,962
$373,890

Assumptions:
Average Per-Unit Revenue
Average Per-Unit Variable Cost
Estimated Monthly Fixed Cost

$0.52
$0.27
$184,160

Page 20

Replay Plastics

Chart: Break-even Analysis

7.3 Projected Profit and Loss


The rapid growth of sales in year one and two is due primarily to increase in capacity over that
period, as we add new extrusion equipment. The plan assumes the sale of all production
capacity as it is added. The favorable gross margin projections are in part due to the vertical
integration of the two processes. Our Managements' ability to handle all initial sales and
marketing allows us to predict virtually no sales or marketing expense.
Chart: Profit Yearly

Page 21

Replay Plastics

Chart: Gross Margin Monthly

Chart: Gross Margin Yearly

Page 22

Replay Plastics

Table: Profit and Loss

Pro Forma Profit and Loss


Year 1

Year 2

Year 3

Year 4

Year 5

$15,079,100
$7,651,875
$953,657
$150,791
$733,102
$9,489,425

$31,553,774
$12,863,010
$1,713,013
$315,538
$1,501,893
$16,393,454

$39,169,900
$13,618,605
$1,963,829
$391,699
$1,871,678
$17,845,811

$41,128,395
$14,222,535
$2,062,020
$411,284
$1,965,261
$18,661,100

$43,146,315
$15,002,962
$2,165,121
$431,463
$2,063,524
$19,663,071

$5,589,676
37.07%

$15,160,320
48.05%

$21,324,090
54.44%

$22,467,295
54.63%

$23,483,244
54.43%

$0
$6,000
$0
$6,000
0.04%

$0
$50,000
$0
$50,000
0.16%

$0
$100,000
$0
$100,000
0.26%

$0
$150,000
$0
$150,000
0.36%

$0
$200,000
$0
$200,000
0.46%

$362,200
$0

$585,417
$0

$630,189
$0

$678,747
$0

$731,440
$0

$241,740
$394,757
$6,000
$12,000
$16,000
$18,000
$678,560
$24,000
$60,000
$0
$1,813,257

$405,992
$689,529
$6,000
$15,000
$30,000
$25,000
$1,419,920
$25,000
$63,000
$0
$3,264,858

$562,908
$778,205
$8,000
$20,000
$35,000
$30,000
$1,762,646
$25,000
$66,150
$0
$3,918,098

$562,908
$822,230
$8,000
$22,500
$40,000
$30,000
$1,850,778
$25,000
$69,458
$0
$4,109,621

$562,908
$868,968
$8,000
$25,000
$45,000
$30,000
$1,941,584
$25,000
$72,930
$0
$4,310,831

12.02%

10.35%

10.00%

9.99%

9.99%

$0
$90,661
$300,000
$390,661
2.59%

$0
$163,239
$330,000
$493,239
1.56%

$0
$195,905
$363,000
$558,905
1.43%

$0
$205,481
$399,300
$604,781
1.47%

$0
$215,542
$439,230
$654,772
1.52%

Total Operating Expenses

$2,209,918

$3,808,097

$4,577,003

$4,864,402

$5,165,603

Profit Before Interest and Taxes


EBITDA
Interest Expense
Taxes Incurred

$3,379,758
$3,621,498
$60,568
$995,757

$11,352,223
$11,758,215
$54,464
$3,389,328

$16,747,087
$17,309,995
$48,064
$5,009,707

$17,602,893
$18,165,801
$41,664
$5,268,369

$18,317,641
$18,880,549
$35,264
$5,484,713

Net Profit
Net Profit/Sales

$2,323,433
15.41%

$7,908,431
25.06%

$11,689,316
29.84%

$12,292,860
29.89%

$12,797,664
29.66%

Sales
Direct Cost of Sales
Production Payroll
Packaging
Sales Commission
Total Cost of Sales
Gross Margin
Gross Margin %
Operating Expenses
Sales and Marketing Expenses
Sales and Marketing Payroll
Advertising/Promotion
Travel
Total Sales and Marketing Expenses
Sales and Marketing %
General and Administrative Expenses
General and Administrative Payroll
Sales and Marketing and Other
Expenses
Depreciation
Payroll Burden
Office Equipment Rent
Office Supplies/Expense
Travel & Entertainment
Leased Vehicles
Utilities
Insurance
Misc Plant & Maintainence Supplies
Other
Total General and Administrative
Expenses
General and Administrative %
Other Expenses:
Other Payroll
Misc (contingency)
Prof Fees ( Includ legal & accounting)
Total Other Expenses
Other %

Page 23

Replay Plastics

Chart: Profit Monthly

Page 24

Replay Plastics

7.4 Projected Cash Flow


Cash flow is predicted to turn positive in the sixth month of operations, which is the tenth
month after funding. The Cash Flow table shows our planned repayment of the long-term loan,
as well as the purchase of new extrusion equipment in the first two year of the plan. Dividends
to founders and the outside investor are shown near the bottom of the table.

Chart: Cash

Page 25

Replay Plastics

Table: Cash Flow

Pro Forma Cash Flow


Year 1

Year 2

Year 3

Year 4

Year 5

$0
$13,094,219
$13,094,219

$0
$29,385,192
$29,385,192

$0
$38,167,380
$38,167,380

$0
$40,870,596
$40,870,596

$0
$42,880,693
$42,880,693

$0
$0
$0
$0
$0
$0
$0
$13,094,219

$0
$0
$0
$0
$0
$0
$0
$29,385,192

$0
$0
$0
$0
$0
$0
$0
$38,167,380

$0
$0
$0
$0
$0
$0
$0
$40,870,596

$0
$0
$0
$0
$0
$0
$0
$42,880,693

Year 1

Year 2

Year 3

Year 4

Year 5

$1,315,857
$9,762,949
$11,078,806

$2,298,430
$21,455,972
$23,754,402

$2,594,018
$23,696,920
$26,290,938

$2,740,767
$25,420,297
$28,161,064

$2,896,561
$26,836,546
$29,733,107

$0
$0
$0
$79,200
$0
$1,591,000
$0
$12,749,006

$0
$0
$0
$80,000
$0
$3,229,000
$3,000,000
$30,063,402

$0
$0
$0
$80,000
$0
$0
$8,000,000
$34,370,938

$0
$0
$0
$80,000
$0
$0
$10,000,000
$38,241,064

$0
$0
$0
$80,000
$0
$0
$10,000,000
$39,813,107

$345,213
$990,213

($678,211)
$312,002

$3,796,441
$4,108,444

$2,629,532
$6,737,976

$3,067,586
$9,805,562

Cash Received
Cash from Operations
Cash Sales
Cash from Receivables
Subtotal Cash from Operations
Additional Cash Received
Sales Tax, VAT, HST/GST Received
New Current Borrowing
New Other Liabilities (interest-free)
New Long-term Liabilities
Sales of Other Current Assets
Sales of Long-term Assets
New Investment Received
Subtotal Cash Received
Expenditures
Expenditures from Operations
Cash Spending
Bill Payments
Subtotal Spent on Operations
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out
Principal Repayment of Current Borrowing
Other Liabilities Principal Repayment
Long-term Liabilities Principal Repayment
Purchase Other Current Assets
Purchase Long-term Assets
Dividends
Subtotal Cash Spent
Net Cash Flow
Cash Balance

Page 26

Replay Plastics

7.5 Projected Balance Sheet


The vertical integration, immediate sales contracts and rapid ramp up of production combine to
project a Net Worth at the end of year one in excess of the total invested capital. By staying on
plan, the Company will achieve rapid growth compared to invested capital.
Table: Balance Sheet

Pro Forma Balance Sheet


Year 1

Year 2

Year 3

Year 4

Year 5

$990,213
$1,984,881
$510,125
$25,000
$3,510,219

$312,002
$4,153,463
$1,371,937
$25,000
$5,862,402

$4,108,444
$5,155,983
$914,828
$25,000
$10,204,254

$6,737,976
$5,413,782
$942,406
$25,000
$13,119,164

$9,805,562
$5,679,403
$1,004,139
$25,000
$16,514,104

$5,211,000
$241,740
$4,969,260
$8,479,479

$8,440,000
$647,732
$7,792,268
$13,654,670

$8,440,000
$1,210,640
$7,229,360
$17,433,614

$8,440,000
$1,773,548
$6,666,452
$19,785,616

$8,440,000
$2,336,456
$6,103,544
$22,617,648

Year 1

Year 2

Year 3

Year 4

Year 5

Accounts Payable
Current Borrowing
Other Current Liabilities
Subtotal Current Liabilities

$1,445,246
$0
$0
$1,445,246

$1,792,005
$0
$0
$1,792,005

$1,961,634
$0
$0
$1,961,634

$2,100,776
$0
$0
$2,100,776

$2,215,144
$0
$0
$2,215,144

Long-term Liabilities
Total Liabilities

$720,800
$2,166,046

$640,800
$2,432,805

$560,800
$2,522,434

$480,800
$2,581,576

$400,800
$2,615,944

Paid-in Capital
Retained Earnings
Earnings
Total Capital
Total Liabilities and Capital

$4,200,000
($210,000)
$2,323,433
$6,313,433
$8,479,479

$4,200,000
($886,567)
$7,908,431
$11,221,864
$13,654,670

$4,200,000
($978,136)
$11,689,316
$14,911,180
$17,433,614

$4,200,000
$711,180
$12,292,860
$17,204,040
$19,785,616

$4,200,000
$3,004,040
$12,797,664
$20,001,704
$22,617,648

Net Worth

$6,313,433

$11,221,864

$14,911,180

$17,204,040

$20,001,704

Assets
Current Assets
Cash
Accounts Receivable
Inventory
Other Current Assets
Total Current Assets
Long-term Assets
Long-term Assets
Accumulated Depreciation
Total Long-term Assets
Total Assets
Liabilities and Capital
Current Liabilities

7.6 Business Ratios


Standard business ratios are included in the following table, along with comparison ratios for
the Thermoplastic Materials industry (SIC Code 2821.02). The ratios show a plan for healthy
growth. Our return on investment increases each year and will allow for new equipment to be
financed internally should the Company choose to do so. While the ratios indicate rapid growth
and profitability, it may be explained in part by the fact of the integration of three business
sections into the one facility. Our ratios differ significantly from the rest of the industry because
of our ability to use low-cost recycled materials to manufacture our products.

Page 27

Replay Plastics

Table: Ratios

Ratio Analysis
Year 1

Year 2

Year 3

Year 4

Year 5

n.a.

109.26%

24.14%

5.00%

4.91%

Industry
Profile
9.27%

Accounts Receivable
Inventory
Other Current Assets
Total Current Assets
Long-term Assets
Total Assets

23.41%
6.02%
0.29%
41.40%
58.60%
100.00%

30.42%
10.05%
0.18%
42.93%
57.07%
100.00%

29.57%
5.25%
0.14%
58.53%
41.47%
100.00%

27.36%
4.76%
0.13%
66.31%
33.69%
100.00%

25.11%
4.44%
0.11%
73.01%
26.99%
100.00%

24.83%
11.53%
32.03%
68.39%
31.61%
100.00%

Current Liabilities
Long-term Liabilities
Total Liabilities
Net Worth

17.04%
8.50%
25.54%
74.46%

13.12%
4.69%
17.82%
82.18%

11.25%
3.22%
14.47%
85.53%

10.62%
2.43%
13.05%
86.95%

9.79%
1.77%
11.57%
88.43%

26.62%
25.26%
51.88%
48.12%

100.00%
37.07%
22.36%

100.00%
48.05%
22.63%

100.00%
54.44%
24.36%

100.00%
54.63%
24.16%

100.00%
54.43%
24.37%

100.00%
28.02%
15.89%

0.04%
22.41%

0.17%
35.98%

0.27%
42.75%

0.38%
42.80%

0.48%
42.45%

0.17%
2.46%

2.43
2.08
25.54%
52.57%
39.14%

3.27
2.51
17.82%
100.68%
82.74%

5.20
4.74
14.47%
111.99%
95.79%

6.24
5.80
13.05%
102.08%
88.76%

7.46
7.00
11.57%
91.40%
80.83%

1.79
1.22
57.88%
2.22%
5.28%

Sales Growth
Percent of Total Assets

Percent of Sales
Sales
Gross Margin
Selling, General & Administrative
Expenses
Advertising Expenses
Profit Before Interest and Taxes
Main Ratios
Current
Quick
Total Debt to Total Assets
Pre-tax Return on Net Worth
Pre-tax Return on Assets
Additional Ratios

Year 1

Year 2

Year 3

Year 4

Year 5

Net Profit Margin


Return on Equity

15.41%
36.80%

25.06%
70.47%

29.84%
78.39%

29.89%
71.45%

29.66%
63.98%

n.a
n.a

7.60
29
15.76
7.76
27
1.78

7.60
36
13.67
12.17
27
2.31

7.60
43
11.91
12.17
29
2.25

7.60
47
15.32
12.17
29
2.08

7.60
47
15.41
12.17
29
1.91

n.a
n.a
n.a
n.a
n.a
n.a

0.34
0.67

0.22
0.74

0.17
0.78

0.15
0.81

0.13
0.85

n.a
n.a

$2,064,973
55.80

$4,070,396
208.44

$8,242,620
348.43

$11,018,388
422.50

$14,298,960
519.44

n.a
n.a

0.56
17%
0.70
2.39
0.00

0.43
13%
0.19
2.81
0.38

0.45
11%
2.11
2.63
0.68

0.48
11%
3.22
2.39
0.81

0.52
10%
4.44
2.16
0.78

n.a
n.a
n.a
n.a
n.a

Activity Ratios
Accounts Receivable Turnover
Collection Days
Inventory Turnover
Accounts Payable Turnover
Payment Days
Total Asset Turnover
Debt Ratios
Debt to Net Worth
Current Liab. to Liab.
Liquidity Ratios
Net Working Capital
Interest Coverage
Additional Ratios
Assets to Sales
Current Debt/Total Assets
Acid Test
Sales/Net Worth
Dividend Payout

Page 28

Replay Plastics

7.7 Long-term Plan


The plan calls for maximum production rate for flake in the sixth month from funding.
Approximately one third of that production will be converted into extruded sheet beginning
approximately at the same time. A second sheet extruder, which will also consume one third of
the flake produced, is planned to be added at the end of year one, coming on line mid year two.
A third extruder, which is planned to produce high-strength strapping, is expected to come on
line late in year two. By the beginning of year three, it is expected that all of the 46,200,000
lbs. of RPET cleaned & recycled annually will be converted into extruded products. Up until this
time, excess flake produced will be sold to other extruder companies.
The plan assumes a 5% increase in the sales price of all products and a 5% increase in the cost
of raw materials and labor in each of years 2 through 5.
The result of the above is rapid growth in revenue and profit through year three, and moderate
growth in years four and five, assuming no expansion of capacity during that time.
7.8 Replay's Exit Strategy
Management is indifferent as to the question of looking to sell the Company after 4-5 years or
retaining ownership and the resulting annual cash flow. They will look to the investors for their
direction and will generally support their wishes.
Recent information on private sales of similar industry companies has indicated that
transactions under $25 million have averaged 5.3 times EBITDA, while transactions in the range
of $25-250 million have averaged over 7 times EBITDA.
Such multiples would put the potential sales price of Replay, after 4-5 years of operation, in
excess of $100 million based on current projections.

Page 29

Appendix
Table: Sales Forecast

Sales Forecast
Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

0
0
0
0

0
0
0
0

0
0
0
0

0
0
0
0

1,925,000
0
0
1,925,000

3,208,400
641,600
0
3,850,000

2,566,700
1,283,300
0
3,850,000

2,566,700
1,283,300
0
3,850,000

2,566,700
1,283,300
0
3,850,000

2,566,700
1,283,300
0
3,850,000

2,566,700
1,283,300
0
3,850,000

2,566,700
1,283,300
0
3,850,000

Unit Sales
Recycled Flake PET
Extruded Roll Stock Sheet
Extruded Strapping
Total Unit Sales

0%
0%
0%

Unit Prices

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

Recycled Flake PET

$0.45

$0.00

$0.00

$0.00

$0.45

$0.45

$0.45

$0.45

$0.45

$0.45

$0.45

$0.45

Extruded Roll Stock Sheet

$0.70

$0.70

$0.70

$0.70

$0.70

$0.70

$0.70

$0.70

$0.70

$0.70

$0.70

$0.70

Extruded Strapping

$0.95

$0.95

$0.95

$0.95

$0.95

$0.95

$0.95

$0.95

$0.95

$0.95

$0.95

$0.95

Recycled Flake PET

$0

$0

$0

$0

$866,250

$1,443,780

$1,155,015

$1,155,015

$1,155,015

$1,155,015

$1,155,015

$1,155,015

Extruded Roll Stock Sheet

$0

$0

$0

$0

$0

$449,120

$898,310

$898,310

$898,310

$898,310

$898,310

$898,310

Extruded Strapping

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Total Sales

$0

$0

$0

$0

$866,250

$1,892,900

$2,053,325

$2,053,325

$2,053,325

$2,053,325

$2,053,325

$2,053,325

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

$0.27
$0.27
$0.27

$0.27
$0.27
$0.27

$0.27
$0.27
$0.27

$0.27
$0.27
$0.27

$0.27
$0.27
$0.27

$0.27
$0.27
$0.27

$0.27
$0.27
$0.27

$0.27
$0.27
$0.27

$0.27
$0.27
$0.27

$0.27
$0.27
$0.27

$0.27
$0.27
$0.27

$0.27
$0.27
$0.27

Recycled Flake PET

$0

$0

$0

$0

$510,125

$850,226

$680,176

$680,176

$680,176

$680,176

$680,176

$680,176

Extruded Roll Stock Sheet

$0

$0

$0

$0

$0

$170,024

$340,075

$340,075

$340,075

$340,075

$340,075

$340,075

Extruded Strapping

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Subtotal Direct Cost of Sales

$0

$0

$0

$0

$510,125

$1,020,250

$1,020,250

$1,020,250

$1,020,250

$1,020,250

$1,020,250

$1,020,250

Sales

Direct Unit Costs


Recycled Flake PET
Extruded Roll Stock Sheet
Extruded Strapping

0.00%
0.00%
0.00%

Direct Cost of Sales

Page 1

Appendix
Table: Personnel

Personnel Plan
Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

Production Personnel
Shift Supervisor
Maintainence Techs
Skilled Recycle Plant Labor
Unskilled Recycle Plant Labor
Extruder Operator (full time)
Extruder Operator (part time)
Production Assistant (full time)
Production Assistant (part time)
Name or Title or Group
Subtotal

$0
$0
$0
$0
$0
$0
$0
$0
$0
$0

$0
$0
$0
$0
$0
$0
$0
$0
$0
$0

$0
$0
$0
$0
$0
$0
$0
$0
$0
$0

$0
$0
$0
$0
$0
$0
$0
$0
$0
$0

$12,500
$14,583
$43,750
$0
$10,938
$0
$7,813
$0
$0
$89,584

$16,667
$14,583
$43,750
$23,438
$10,938
$3,646
$7,813
$2,604
$0
$123,439

$16,667
$14,583
$43,750
$23,438
$10,938
$3,646
$7,813
$2,604
$0
$123,439

$16,667
$14,583
$43,750
$23,438
$10,938
$3,646
$7,813
$2,604
$0
$123,439

$16,667
$14,583
$43,750
$23,438
$10,938
$3,646
$7,813
$2,604
$0
$123,439

$16,667
$14,583
$43,750
$23,438
$10,938
$3,646
$7,813
$2,604
$0
$123,439

$16,667
$14,583
$43,750
$23,438
$10,938
$3,646
$7,813
$2,604
$0
$123,439

$16,667
$14,583
$43,750
$23,438
$10,938
$3,646
$7,813
$2,604
$0
$123,439

Sales and Marketing Personnel


commission-basis - see P&L
Name or Title or Group
Subtotal

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

$2,000
$1,800
$1,800
$0
$0
$0
$0
$0
$0
$5,600

$2,000
$1,800
$1,800
$0
$0
$0
$0
$0
$0
$5,600

$2,000
$1,800
$1,800
$0
$0
$0
$0
$0
$0
$5,600

$2,000
$1,800
$1,800
$7,000
$0
$0
$0
$0
$0
$12,600

$8,000
$7,500
$7,500
$7,000
$3,650
$2,600
$0
$0
$3,400
$39,650

$8,000
$7,500
$7,500
$7,000
$3,650
$2,600
$0
$0
$3,400
$39,650

$8,000
$7,500
$7,500
$7,000
$3,650
$2,600
$2,600
$0
$3,400
$42,250

$8,000
$7,500
$7,500
$7,000
$3,650
$2,600
$2,600
$0
$3,400
$42,250

$8,000
$7,500
$7,500
$7,000
$3,650
$2,600
$2,600
$0
$3,400
$42,250

$8,000
$7,500
$7,500
$7,000
$3,650
$2,600
$2,600
$0
$3,400
$42,250

$8,000
$7,500
$7,500
$7,000
$3,650
$2,600
$2,600
$0
$3,400
$42,250

$8,000
$7,500
$7,500
$7,000
$3,650
$2,600
$2,600
$0
$3,400
$42,250

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

50

50

51

51

51

51

51

51

$5,600

$5,600

$5,600

$12,600

$129,234

$163,089

$165,689

$165,689

$165,689

$165,689

$165,689

$165,689

General and Administrative Personnel


President
Vice Pres COO
CFO
Plant Manager
Accountant
Clerk
Clerk
Clerk
Shipper Receiver
Subtotal
Other Personnel
Name or title
Name or title
Subtotal
Total People
Total Payroll

Page 2

Appendix

Page 3

Appendix
Table: General Assumptions

General Assumptions
Plan Month
Current Interest Rate
Long-term Interest Rate
Tax Rate
Other

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

10

11

Month 12
12

12.00%

12.00%

12.00%

12.00%

12.00%

12.00%

12.00%

12.00%

12.00%

12.00%

12.00%

12.00%

8.00%

8.00%

8.00%

8.00%

8.00%

8.00%

8.00%

8.00%

8.00%

8.00%

8.00%

8.00%

30.00%

30.00%

30.00%

30.00%

30.00%

30.00%

30.00%

30.00%

30.00%

30.00%

30.00%

30.00%

Page 4

Appendix
Table: Profit and Loss

Pro Forma Profit and Loss


Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

Sales

$0

$0

$0

$0

$866,250

$1,892,900

$2,053,325

$2,053,325

$2,053,325

$2,053,325

$2,053,325

$2,053,325

Direct Cost of Sales

$0

$0

$0

$0

$510,125

$1,020,250

$1,020,250

$1,020,250

$1,020,250

$1,020,250

$1,020,250

$1,020,250

Production Payroll

$0

$0

$0

$0

$89,584

$123,439

$123,439

$123,439

$123,439

$123,439

$123,439

$123,439

Packaging

$0

$0

$0

$0

$8,663

$18,929

$20,533

$20,533

$20,533

$20,533

$20,533

$20,533

Sales Commission

$0

$0

$0

$0

$43,313

$93,041

$99,458

$99,458

$99,458

$99,458

$99,458

$99,458

Total Cost of Sales

$0

$0

$0

$0

$651,684

$1,255,659

$1,263,680

$1,263,680

$1,263,680

$1,263,680

$1,263,680

$1,263,680

Gross Margin
Gross Margin %

$0

$0

$0

$0

$214,566

$637,241

$789,645

$789,645

$789,645

$789,645

$789,645

$789,645

0.00%

0.00%

0.00%

0.00%

24.77%

33.66%

38.46%

38.46%

38.46%

38.46%

38.46%

38.46%

Operating Expenses
Sales and Marketing Expenses
Sales and Marketing Payroll
Advertising/Promotion
Travel

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$500

$500

$500

$500

$500

$500

$500

$500

$500

$500

$500

$500

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Total Sales and Marketing


Expenses
Sales and Marketing %

$500

$500

$500

$500

$500

$500

$500

$500

$500

$500

$500

$500

0.00%

0.00%

0.00%

0.00%

0.06%

0.03%

0.02%

0.02%

0.02%

0.02%

0.02%

0.02%

General and Administrative


Expenses
General and Administrative Payroll

$5,600

$5,600

$5,600

$12,600

$39,650

$39,650

$42,250

$42,250

$42,250

$42,250

$42,250

$42,250

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$20,145

$20,145

$20,145

$20,145

$20,145

$20,145

$20,145

$20,145

$20,145

$20,145

$20,145

$20,145

$1,680
$500

$1,680
$500

$1,680
$500

$3,780
$500

$38,770
$500

$48,927
$500

$49,707
$500

$49,707
$500

$49,707
$500

$49,707
$500

$49,707
$500

$49,707
$500

$1,000

$1,000

$1,000

$1,000

$1,000

$1,000

$1,000

$1,000

$1,000

$1,000

$1,000

$1,000

$0

$0

$0

$0

$2,000

$2,000

$2,000

$2,000

$2,000

$2,000

$2,000

$2,000

$1,500

$1,500

$1,500

$1,500

$1,500

$1,500

$1,500

$1,500

$1,500

$1,500

$1,500

$1,500

$0

$0

$0

$0

$38,981

$85,181

$92,400

$92,400

$92,400

$92,400

$92,400

$92,400

$2,000

$2,000

$2,000

$2,000

$2,000

$2,000

$2,000

$2,000

$2,000

$2,000

$2,000

$2,000

$5,000

$5,000

$5,000

$5,000

$5,000

$5,000

$5,000

$5,000

$5,000

$5,000

$5,000

$5,000

Sales and Marketing and Other


Expenses
Depreciation
Payroll Burden
Office Equipment Rent

30%

Office Supplies/Expense
Travel & Entertainment
Leased Vehicles
Utilities
Insurance
Misc Plant & Maintainence
Supplies
Other
Total General and Administrative
Expenses

15%

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$37,425

$37,425

$37,425

$46,525

$149,546

$205,902

$216,501

$216,501

$216,501

$216,501

$216,501

$216,501

Page 5

Appendix
General and Administrative %

0.00%

0.00%

0.00%

0.00%

17.26%

10.88%

10.54%

10.54%

10.54%

10.54%

10.54%

10.54%

Other Expenses:
Other Payroll

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$1,871

$1,871

$1,871

$2,326

$7,477

$10,295

$10,825

$10,825

$10,825

$10,825

$10,825

$10,825

$25,000

$25,000

$25,000

$25,000

$25,000

$25,000

$25,000

$25,000

$25,000

$25,000

$25,000

$25,000

$26,871

$26,871

$26,871

$27,326

$32,477

$35,295

$35,825

$35,825

$35,825

$35,825

$35,825

$35,825

0.00%

0.00%

0.00%

0.00%

3.75%

1.86%

1.74%

1.74%

1.74%

1.74%

1.74%

1.74%

$64,796

$64,796

$64,796

$74,351

$182,523

$241,697

$252,826

$252,826

$252,826

$252,826

$252,826

$252,826

Profit Before Interest and Taxes

($64,796)

($64,796)

($64,796)

($74,351)

$32,043

$395,544

$536,818

$536,818

$536,818

$536,818

$536,818

$536,818

EBITDA

($44,651)

($44,651)

($44,651)

($54,206)

$52,188

$415,689

$556,963

$556,963

$556,963

$556,963

$556,963

$556,963

Misc (contingency)
Prof Fees ( Includ legal &
accounting)
Total Other Expenses
Other %
Total Operating Expenses

Interest Expense
Taxes Incurred
Net Profit
Net Profit/Sales

$5,289

$5,245

$5,201

$5,157

$5,113

$5,069

$5,025

$4,981

$4,937

$4,893

$4,849

$4,805

($21,026)

($21,012)

($20,999)

($23,852)

$8,079

$117,142

$159,538

$159,551

$159,564

$159,578

$159,591

$159,604

($49,060)

($49,029)

($48,998)

($55,656)

$18,850

$273,332

$372,255

$372,286

$372,317

$372,348

$372,378

$372,409

0.00%

0.00%

0.00%

0.00%

2.18%

14.44%

18.13%

18.13%

18.13%

18.13%

18.14%

18.14%

Page 6

Appendix
Table: Cash Flow

Pro Forma Cash Flow


Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

Cash Sales

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Cash from Receivables

$0

$0

$0

$0

$28,875

$900,472

$1,898,248

$2,053,325

$2,053,325

$2,053,325

$2,053,325

$2,053,325

Subtotal Cash from Operations

$0

$0

$0

$0

$28,875

$900,472

$1,898,248

$2,053,325

$2,053,325

$2,053,325

$2,053,325

$2,053,325

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

New Other Liabilities (interest-free)

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

New Long-term Liabilities

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Sales of Other Current Assets

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Sales of Long-term Assets

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

New Investment Received

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Subtotal Cash Received

$0

$0

$0

$0

$28,875

$900,472

$1,898,248

$2,053,325

$2,053,325

$2,053,325

$2,053,325

$2,053,325

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

Cash Received
Cash from Operations

Additional Cash Received


Sales Tax, VAT, HST/GST Received
New Current Borrowing

Expenditures

0.00%

Expenditures from Operations


Cash Spending

$5,600

$5,600

$5,600

$12,600

$129,234

$163,089

$165,689

$165,689

$165,689

$165,689

$165,689

$165,689

$777

$23,314

$23,283

$23,242

$37,250

$494,360

$1,684,858

$1,495,235

$1,495,204

$1,495,173

$1,495,142

$1,495,112

$6,377

$28,914

$28,883

$35,842

$166,484

$657,449

$1,850,547

$1,660,924

$1,660,893

$1,660,862

$1,660,831

$1,660,801

Sales Tax, VAT, HST/GST Paid Out

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Principal Repayment of Current Borrowing

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Other Liabilities Principal Repayment

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$6,600

$6,600

$6,600

$6,600

$6,600

$6,600

$6,600

$6,600

$6,600

$6,600

$6,600

$6,600

Purchase Other Current Assets

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Purchase Long-term Assets

$0

$0

$0

$0

$0

$0

$0

$0

$0

$568,000

$0

$1,023,000

Bill Payments
Subtotal Spent on Operations
Additional Cash Spent

Long-term Liabilities Principal Repayment

Dividends
Subtotal Cash Spent
Net Cash Flow

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$12,977

$35,514

$35,483

$42,442

$173,084

$664,049

$1,857,147

$1,667,524

$1,667,493

$2,235,462

$1,667,431

$2,690,401

($12,977)

($35,514)

($35,483)

($42,442)

($144,209)

$236,423

$41,101

$385,801

$385,832

($182,137)

$385,894

($637,076)

Page 7

Appendix
Cash Balance

$632,023

$596,509

$561,026

$518,585

$374,376

$610,798

$651,899

$1,037,700

$1,423,532

$1,241,395

$1,627,288

$990,213

Table: Balance Sheet

Pro Forma Balance Sheet


Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

$645,000
$0
$500,000
$25,000
$1,170,000

$632,023
$0
$500,000
$25,000
$1,157,023

$596,509
$0
$500,000
$25,000
$1,121,509

$561,026
$0
$500,000
$25,000
$1,086,026

$518,585
$0
$500,000
$25,000
$1,043,585

$374,376
$837,375
$255,063
$25,000
$1,491,813

$610,798
$1,829,803
$510,125
$25,000
$2,975,726

$651,899
$1,984,881
$510,125
$25,000
$3,171,905

$1,037,700
$1,984,881
$510,125
$25,000
$3,557,706

$1,423,532
$1,984,881
$510,125
$25,000
$3,943,538

$1,241,395
$1,984,881
$510,125
$25,000
$3,761,401

$1,627,288
$1,984,881
$510,125
$25,000
$4,147,294

$990,213
$1,984,881
$510,125
$25,000
$3,510,219

$3,620,000
$0
$3,620,000
$4,790,000

$3,620,000
$20,145
$3,599,855
$4,756,878

$3,620,000
$40,290
$3,579,710
$4,701,219

$3,620,000
$60,435
$3,559,565
$4,645,591

$3,620,000
$80,580
$3,539,420
$4,583,005

$3,620,000
$100,725
$3,519,275
$5,011,088

$3,620,000
$120,870
$3,499,130
$6,474,856

$3,620,000
$141,015
$3,478,985
$6,650,890

$3,620,000
$161,160
$3,458,840
$7,016,546

$3,620,000
$181,305
$3,438,695
$7,382,233

$4,188,000
$201,450
$3,986,550
$7,747,951

$4,188,000
$221,595
$3,966,405
$8,113,699

$5,211,000
$241,740
$4,969,260
$8,479,479

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

$0
$0
$0
$0

$22,538
$0
$0
$22,538

$22,508
$0
$0
$22,508

$22,478
$0
$0
$22,478

$22,147
$0
$0
$22,147

$437,980
$0
$0
$437,980

$1,635,016
$0
$0
$1,635,016

$1,445,395
$0
$0
$1,445,395

$1,445,365
$0
$0
$1,445,365

$1,445,335
$0
$0
$1,445,335

$1,445,305
$0
$0
$1,445,305

$1,445,276
$0
$0
$1,445,276

$1,445,246
$0
$0
$1,445,246

$800,000
$800,000

$793,400
$815,938

$786,800
$809,308

$780,200
$802,678

$773,600
$795,747

$767,000
$1,204,980

$760,400
$2,395,416

$753,800
$2,199,195

$747,200
$2,192,565

$740,600
$2,185,935

$734,000
$2,179,305

$727,400
$2,172,676

$720,800
$2,166,046

Paid-in Capital
Retained Earnings
Earnings
Total Capital
Total Liabilities and Capital

$4,200,000
($210,000)
$0
$3,990,000
$4,790,000

$4,200,000
($210,000)
($49,060)
$3,940,940
$4,756,878

$4,200,000
($210,000)
($98,089)
$3,891,911
$4,701,219

$4,200,000
($210,000)
($147,087)
$3,842,913
$4,645,591

$4,200,000
($210,000)
($202,743)
$3,787,257
$4,583,005

$4,200,000
($210,000)
($183,892)
$3,806,108
$5,011,088

$4,200,000
($210,000)
$89,440
$4,079,440
$6,474,856

$4,200,000
($210,000)
$461,695
$4,451,695
$6,650,890

$4,200,000
($210,000)
$833,981
$4,823,981
$7,016,546

$4,200,000
($210,000)
$1,206,298
$5,196,298
$7,382,233

$4,200,000
($210,000)
$1,578,645
$5,568,645
$7,747,951

$4,200,000
($210,000)
$1,951,024
$5,941,024
$8,113,699

$4,200,000
($210,000)
$2,323,433
$6,313,433
$8,479,479

Net Worth

$3,990,000

$3,940,940

$3,891,911

$3,842,913

$3,787,257

$3,806,108

$4,079,440

$4,451,695

$4,823,981

$5,196,298

$5,568,645

$5,941,024

$6,313,433

Assets

Starting Balances

Current Assets
Cash
Accounts Receivable
Inventory
Other Current Assets
Total Current Assets
Long-term Assets
Long-term Assets
Accumulated Depreciation
Total Long-term Assets
Total Assets
Liabilities and Capital
Current Liabilities
Accounts Payable
Current Borrowing
Other Current Liabilities
Subtotal Current Liabilities
Long-term Liabilities
Total Liabilities

Page 8