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Table of Contents
Executive Summary 1
Chart: Highlights........................................................................................................................2
Objectives........................................................................................................................................2
Keys to Success...............................................................................................................................3
Mission............................................................................................................................................3
Potential Risks.................................................................................................................................3
Company Summary 4
Company Ownership.......................................................................................................................5
Potential Conflict........................................................................................................................5
Start-up Summary............................................................................................................................6
Table: Start-up.............................................................................................................................6
Table: Start-up Funding..............................................................................................................8
Chart: Start-up............................................................................................................................7
Products 7
Product Description.........................................................................................................................7
Competitive Comparison.................................................................................................................8
Sourcing...........................................................................................................................................8
Technology.......................................................................................................................................9
Market Analysis Summary 9
Market Segmentation.....................................................................................................................11
Chart: Market Analysis (Pie)....................................................................................................12
Table: Market Analysis..............................................................................................................12
Target Market Segment Strategy...................................................................................................12
Industry Analysis...........................................................................................................................13
Barriers to Entry.......................................................................................................................14
Competition and Buying Patterns..................................................................................................14
Main Competitors......................................................................................................................14
Strategy and Implementation Summary 15
Value Proposition...........................................................................................................................15
Competitive Edge..........................................................................................................................15
Marketing Strategy........................................................................................................................16
Sales Strategy.................................................................................................................................16
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Sales Forecast...........................................................................................................................17
Chart: Sales Monthly.................................................................................................................17
Table: Sales Forecast................................................................................................................18
Milestones......................................................................................................................................19
Table: Milestones.......................................................................................................................19
Chart: Milestones......................................................................................................................20
Management Summary 20
Organizational Structure................................................................................................................20
Management Team.........................................................................................................................21
Personnel Plan...............................................................................................................................22
Table: Personnel........................................................................................................................22
Financial Plan 23
Important Assumptions..................................................................................................................23
Table: General Assumptions......................................................................................................24
Projected Cash Flow......................................................................................................................24
Chart: Cash...............................................................................................................................24
Table: Cash Flow......................................................................................................................25
Break-even Analysis......................................................................................................................26
Chart: Break-even Analysis.......................................................................................................27
Table: Break-even Analysis.......................................................................................................27
Projected Profit and Loss...............................................................................................................27
Table: Profit and Loss...............................................................................................................28
Chart: Profit Yearly...................................................................................................................30
Chart: Gross Margin Monthly...................................................................................................30
Chart: Gross Margin Yearly......................................................................................................31
Profit Monthly...........................................................................................................................31
Projected Balance Sheet................................................................................................................32
Table: Balance Sheet.................................................................................................................32
Business Ratios..............................................................................................................................33
Table: Ratios..............................................................................................................................34
Long-term Plan..............................................................................................................................36
Replay's Exit Strategy....................................................................................................................36
Appendix i
Table: Personnel ii
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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.
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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.
Chart: Highlights
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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.
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Keys to Success
The main keys to the success of the Company are:
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.
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.
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.
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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 has assembled a world class management team with proven ability and
direct experience in the Company's market segments.
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.
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.
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
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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.
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.
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.
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, $25,000 for
special consulting that may be required during start up and $50,000 each for local engineering
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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
Start-up
Requirements
Start-up Expenses
Legal & Accounting $50,000
Stationery etc. $5,000
Consultants $25,000
Lab Equipment $50,000
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Start-up Assets
Cash Required $645,000
Start-up Inventory $500,000
Other Current Assets $25,000
Long-term Assets $3,620,000
Total Assets $4,790,000
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Start-up Funding
Start-up Expenses to Fund $210,000
Start-up Assets to Fund $4,790,000
Total Funding Required $5,000,000
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Assets
Non-cash Assets from Start-up $4,145,000
Cash Requirements from Start-up $645,000
Additional Cash Raised $0
Cash Balance on Starting Date $645,000
Total Assets $4,790,000
Liabilities
Current Borrowing $0
Long-term Liabilities $800,000
Accounts Payable (Outstanding Bills) $0
Other Current Liabilities (interest-free) $0
Total Liabilities $800,000
Capital
Planned Investment
Founders $1,500,000
Investor $2,700,000
Additional Investment Requirement $0
Total Planned Investment $4,200,000
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Replay Plastics
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Replay Plastics
Chart: Start-up
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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.
Extruded PET high-strength strapping for securing large packages or pallet loads; each
using 100% RPET produced in-house
Product Description
Roll stock sheet will be sold to custom thermoformers primarily to be used to produce high-
visibility packaging. It will also be sold to manufacturers of laminates and fabricated plastic
products.
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High strength PET packaging strapping is used to secure packages or pallets in such industries as
lumber milling and corrugated and other paper production.
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.
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.
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
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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
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.
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.
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
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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
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 post-consumer
bottles that can be recycled. Recently, California, Oregon and Washington have adopted bottle
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Replay Plastics
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.
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.
Market Segmentation
The primary market can be broken down as follows.
California: 62
Oregon: 8
Washington: 9
California: 73
Oregon: 10
Washington: 12
All information is based on industry research,and data provided by the American Plastics
Council.
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Market Analysis
Year 1 Year 2 Year 3 Year 4 Year 5
Potential Growth CAGR
Customers
Western PET 1% 79 80 81 82 83 1.24%
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Buyers
Western HDPE 1% 95 95 95 95 95 0.00%
Buyers
Total 0.57% 174 175 176 177 178 0.57%
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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.
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.
RPET Strapping
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Replay Plastics
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.
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 would be difficult
to source sufficient RPET flake resin at costs that would allow the Company to be competitive.
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.
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Replay Plastics
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.
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.
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.
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Replay Plastics
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.
These industry-wide relationships will also provide the Company the ability to secure contracts
for the supply of its raw material at competitive pricing.
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.
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
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Replay Plastics
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.
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.
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
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Replay Plastics
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.
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.
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Sales Forecast
Year 1 Year 2 Year 3 Year 4 Year 5
Unit Sales
Recycled Flake 20,533,600 12,833,900 0 0 0
PET
Extruded Roll 8,341,400 28,874,600 30,800,000 30,800,000 30,800,000
Stock Sheet
Extruded 0 4,491,500 15,400,000 15,400,000 15,400,000
Strapping
Total Unit Sales 28,875,000 46,200,000 46,200,000 46,200,000 46,200,000
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Sales
Recycled Flake $9,240,120 $6,064,018 $0 $0 $0
PET
Extruded Roll $5,838,980 $21,222,831 $23,769,900 $24,958,395 $26,206,315
Stock Sheet
Extruded $0 $4,266,925 $15,400,000 $16,170,000 $16,940,000
Strapping
Total Sales $15,079,100 $31,553,774 $39,169,900 $41,128,395 $43,146,315
Direct Cost of
Sales
Recycled Flake $5,441,404 $3,571,033 $0 $0 $0
PET
Extruded Roll $2,210,471 $8,034,357 $8,998,605 $9,448,535 $9,920,962
Stock Sheet
Extruded $0 $1,257,620 $4,620,000 $4,774,000 $5,082,000
Strapping
Subtotal Direct $7,651,875 $12,863,010 $13,618,605 $14,222,535 $15,002,962
Cost of Sales
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
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Chart: Milestones
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.
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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.
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 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.
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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.
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.
Table: Personnel
Personnel Plan
Year 1 Year 2 Year 3 Year 4 Year 5
Production Personnel
Shift Supervisor $129,169 $210,000 $220,500 $231,525 $243,101
Maintainence Techs $116,664 $183,750 $192,938 $202,585 $212,714
Skilled Recycle Plant $350,000 $551,250 $578,813 $607,754 $638,141
Labor
Unskilled Recycle $164,066 $295,513 $310,078 $325,582 $341,861
Plant Labor
Extruder Operator $87,504 $206,719 $289,406 $303,876 $319,070
(full time)
Extruder Operator $25,522 $68,906 $96,469 $101,292 $106,357
(part time)
Production Assistant $62,504 $147,656 $206,719 $217,055 $227,908
(full time)
Production Assistant $18,228 $49,219 $68,906 $72,351 $75,969
(part time)
Name or Title or $0 $0 $0 $0 $0
Group
Subtotal $953,657 $1,713,013 $1,963,829 $2,062,020 $2,165,121
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General and
Administrative
Personnel
President $72,000 $110,000 $121,000 $133,100 $146,410
Vice Pres COO $67,200 $100,000 $110,000 $121,000 $133,100
CFO $67,200 $100,000 $110,000 $121,000 $133,100
Plant Manager $63,000 $88,200 $92,610 $97,241 $102,103
Accountant $29,200 $45,938 $48,235 $50,647 $53,179
Clerk $20,800 $32,813 $34,454 $36,176 $37,985
Clerk $15,600 $32,813 $34,454 $36,176 $37,985
Clerk $0 $32,813 $34,454 $36,176 $37,985
Shipper Receiver $27,200 $42,840 $44,982 $47,231 $49,593
Subtotal $362,200 $585,417 $630,189 $678,747 $731,440
Other Personnel
Name or title $0 $0 $0 $0 $0
Name or title $0 $0 $0 $0 $0
Subtotal $0 $0 $0 $0 $0
Total People 51 57 69 69 69
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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.
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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.
General annual growth rates of 5% have been assumed on all sales prices and material
and labor costs.
General Assumptions
Year 1 Year 2 Year 3 Year 4 Year 5
Plan Month 1 2 3 4 5
Current Interest Rate 12.00% 12.00% 12.00% 12.00% 12.00%
Long-term Interest 8.00% 8.00% 8.00% 8.00% 8.00%
Rate
Tax Rate 30.00% 30.00% 30.00% 30.00% 30.00%
Other 0 0 0 0 0
Chart: Cash
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Cash from
Operations
Cash Sales $0 $0 $0 $0 $0
Cash from $13,094,219 $29,385,192 $38,167,380 $40,870,596 $42,880,693
Receivables
Subtotal Cash $13,094,219 $29,385,192 $38,167,380 $40,870,596 $42,880,693
from Operations
Additional Cash
Received
Sales Tax, VAT, $0 $0 $0 $0 $0
HST/GST
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Received
New Current $0 $0 $0 $0 $0
Borrowing
New Other $0 $0 $0 $0 $0
Liabilities
(interest-free)
New Long-term $0 $0 $0 $0 $0
Liabilities
Sales of Other $0 $0 $0 $0 $0
Current Assets
Sales of Long- $0 $0 $0 $0 $0
term Assets
New Investment $0 $0 $0 $0 $0
Received
Subtotal Cash $13,094,219 $29,385,192 $38,167,380 $40,870,596 $42,880,693
Received
Expenditures
from Operations
Cash Spending $1,315,857 $2,298,430 $2,594,018 $2,740,767 $2,896,561
Bill Payments $9,762,949 $21,455,972 $23,696,920 $25,420,297 $26,836,546
Subtotal Spent on $11,078,806 $23,754,402 $26,290,938 $28,161,064 $29,733,107
Operations
Additional Cash
Spent
Sales Tax, VAT, $0 $0 $0 $0 $0
HST/GST Paid
Out
Principal $0 $0 $0 $0 $0
Repayment of
Current
Borrowing
Other Liabilities $0 $0 $0 $0 $0
Principal
Repayment
Long-term $79,200 $80,000 $80,000 $80,000 $80,000
Liabilities
Principal
Repayment
Purchase Other $0 $0 $0 $0 $0
Current Assets
Purchase Long- $1,591,000 $3,229,000 $0 $0 $0
term Assets
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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.
Break-even Analysis
Assumptions:
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Operating Expenses
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n
Travel $0 $0 $0 $0 $0
Total Sales and $6,000 $50,000 $100,000 $150,000 $200,000
Marketing Expenses
Sales and Marketing 0.04% 0.16% 0.26% 0.36% 0.46%
%
General and
Administrative
Expenses
General and $362,200 $585,417 $630,189 $678,747 $731,440
Administrative
Payroll
Sales and Marketing $0 $0 $0 $0 $0
and Other Expenses
Depreciation $241,740 $405,992 $562,908 $562,908 $562,908
Payroll Burden $394,757 $689,529 $778,205 $822,230 $868,968
Office Equipment $6,000 $6,000 $8,000 $8,000 $8,000
Rent
Office $12,000 $15,000 $20,000 $22,500 $25,000
Supplies/Expense
Travel & $16,000 $30,000 $35,000 $40,000 $45,000
Entertainment
Leased Vehicles $18,000 $25,000 $30,000 $30,000 $30,000
Utilities $678,560 $1,419,920 $1,762,646 $1,850,778 $1,941,584
Insurance $24,000 $25,000 $25,000 $25,000 $25,000
Misc Plant & $60,000 $63,000 $66,150 $69,458 $72,930
Maintainence
Supplies
Other $0 $0 $0 $0 $0
Total General and $1,813,257 $3,264,858 $3,918,098 $4,109,621 $4,310,831
Administrative
Expenses
General and 12.02% 10.35% 10.00% 9.99% 9.99%
Administrative %
Other Expenses:
Other Payroll $0 $0 $0 $0 $0
Misc (contingency) $90,661 $163,239 $195,905 $205,481 $215,542
Prof Fees ( Includ $300,000 $330,000 $363,000 $399,300 $439,230
legal & accounting)
Total Other Expenses $390,661 $493,239 $558,905 $604,781 $654,772
Other % 2.59% 1.56% 1.43% 1.47% 1.52%
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Profit Monthly
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Pro Forma
Balance Sheet
Year 1 Year 2 Year 3 Year 4 Year 5
Assets
Current Assets
Cash $990,213 $312,002 $4,108,444 $6,737,976 $9,805,562
Accounts $1,984,881 $4,153,463 $5,155,983 $5,413,782 $5,679,403
Receivable
Inventory $510,125 $1,371,937 $914,828 $942,406 $1,004,139
Other Current $25,000 $25,000 $25,000 $25,000 $25,000
Assets
Total Current $3,510,219 $5,862,402 $10,204,254 $13,119,164 $16,514,104
Assets
Long-term Assets
Long-term Assets $5,211,000 $8,440,000 $8,440,000 $8,440,000 $8,440,000
Accumulated $241,740 $647,732 $1,210,640 $1,773,548 $2,336,456
Depreciation
Total Long-term $4,969,260 $7,792,268 $7,229,360 $6,666,452 $6,103,544
Assets
Total Assets $8,479,479 $13,654,670 $17,433,614 $19,785,616 $22,617,648
Current Liabilities
Accounts Payable $1,445,246 $1,792,005 $1,961,634 $2,100,776 $2,215,144
Current Borrowing $0 $0 $0 $0 $0
Other Current $0 $0 $0 $0 $0
Liabilities
Subtotal Current $1,445,246 $1,792,005 $1,961,634 $2,100,776 $2,215,144
Liabilities
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Liabilities
Total Liabilities $2,166,046 $2,432,805 $2,522,434 $2,581,576 $2,615,944
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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.
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Table: Ratios
Ratio
Analysis
Year 1 Year 2 Year 3 Year 4 Year 5 Industr
y
Profile
Sales Growth n.a. 109.26% 24.14% 5.00% 4.91% 9.27%
Percent of
Total Assets
Accounts 23.41% 30.42% 29.57% 27.36% 25.11% 24.83%
Receivable
Inventory 6.02% 10.05% 5.25% 4.76% 4.44% 11.53%
Other Current 0.29% 0.18% 0.14% 0.13% 0.11% 32.03%
Assets
Total Current 41.40% 42.93% 58.53% 66.31% 73.01% 68.39%
Assets
Long-term 58.60% 57.07% 41.47% 33.69% 26.99% 31.61%
Assets
Total Assets 100.00% 100.00% 100.00% 100.00% 100.00% 100.00
%
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Percent of
Sales
Sales 100.00% 100.00% 100.00% 100.00% 100.00% 100.00
%
Gross Margin 37.07% 48.05% 54.44% 54.63% 54.43% 28.02%
Selling, 22.36% 22.63% 24.36% 24.16% 24.37% 15.89%
General &
Administrativ
e Expenses
Advertising 0.04% 0.17% 0.27% 0.38% 0.48% 0.17%
Expenses
Profit Before 22.41% 35.98% 42.75% 42.80% 42.45% 2.46%
Interest and
Taxes
Main Ratios
Current 2.43 3.27 5.20 6.24 7.46 1.79
Quick 2.08 2.51 4.74 5.80 7.00 1.22
Total Debt to 25.54% 17.82% 14.47% 13.05% 11.57% 57.88%
Total Assets
Pre-tax 52.57% 100.68% 111.99% 102.08% 91.40% 2.22%
Return on Net
Worth
Pre-tax 39.14% 82.74% 95.79% 88.76% 80.83% 5.28%
Return on
Assets
Activity
Ratios
Accounts 7.60 7.60 7.60 7.60 7.60 n.a
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Receivable
Turnover
Collection 29 36 43 47 47 n.a
Days
Inventory 15.76 13.67 11.91 15.32 15.41 n.a
Turnover
Accounts 7.76 12.17 12.17 12.17 12.17 n.a
Payable
Turnover
Payment Days 27 27 29 29 29 n.a
Total Asset 1.78 2.31 2.25 2.08 1.91 n.a
Turnover
Debt Ratios
Debt to Net 0.34 0.22 0.17 0.15 0.13 n.a
Worth
Current Liab. 0.67 0.74 0.78 0.81 0.85 n.a
to Liab.
Liquidity
Ratios
Net Working $2,064,97 $4,070,39 $8,242,62 $11,018,38 $14,298,96 n.a
Capital 3 6 0 8 0
Interest 55.80 208.44 348.43 422.50 519.44 n.a
Coverage
Additional
Ratios
Assets to 0.56 0.43 0.45 0.48 0.52 n.a
Sales
Current 17% 13% 11% 11% 10% n.a
Debt/Total
Assets
Acid Test 0.70 0.19 2.11 3.22 4.44 n.a
Sales/Net 2.39 2.81 2.63 2.39 2.16 n.a
Worth
Dividend 0.00 0.38 0.68 0.81 0.78 n.a
Payout
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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.
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.
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Appendix
Table: Sales Forecast
Sales Forecast
Month Month Month Month Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
1 2 3 4
Unit Sales
Recycled Flake PET 0% 0 0 0 0 1,925,000 3,208,400 2,566,700 2,566,700 2,566,700 2,566,700 2,566,700 2,566,700
Extruded Roll Stock 0% 0 0 0 0 0 641,600 1,283,300 1,283,300 1,283,300 1,283,300 1,283,300 1,283,300
Sheet
Extruded Strapping 0% 0 0 0 0 0 0 0 0 0 0 0 0
Total Unit Sales 0 0 0 0 1,925,000 3,850,000 3,850,000 3,850,000 3,850,000 3,850,000 3,850,000 3,850,000
Unit Prices Month Month Month Month Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
1 2 3 4
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 $0.70 $0.70 $0.70 $0.70 $0.70 $0.70 $0.70 $0.70 $0.70 $0.70 $0.70 $0.70
Sheet
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
Sales
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 $0 $0 $0 $0 $0 $449,120 $898,310 $898,310 $898,310 $898,310 $898,310 $898,310
Sheet
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
Direct Unit Costs Month Month Month Month Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
1 2 3 4
Recycled Flake PET 0.00% $0.27 $0.27 $0.27 $0.27 $0.27 $0.27 $0.27 $0.27 $0.27 $0.27 $0.27 $0.27
Extruded Roll Stock 0.00% $0.27 $0.27 $0.27 $0.27 $0.27 $0.27 $0.27 $0.27 $0.27 $0.27 $0.27 $0.27
Sheet
Extruded Strapping 0.00% $0.27 $0.27 $0.27 $0.27 $0.27 $0.27 $0.27 $0.27 $0.27 $0.27 $0.27 $0.27
i
Replay Plastics
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 $0 $0 $0 $0 $12,500 $16,667 $16,667 $16,667 $16,667 $16,667 $16,667 $16,667
Maintainence Techs $0 $0 $0 $0 $14,583 $14,583 $14,583 $14,583 $14,583 $14,583 $14,583 $14,583
Skilled Recycle Plant Labor $0 $0 $0 $0 $43,750 $43,750 $43,750 $43,750 $43,750 $43,750 $43,750 $43,750
Unskilled Recycle Plant $0 $0 $0 $0 $0 $23,438 $23,438 $23,438 $23,438 $23,438 $23,438 $23,438
Labor
Extruder Operator (full $0 $0 $0 $0 $10,938 $10,938 $10,938 $10,938 $10,938 $10,938 $10,938 $10,938
time)
Extruder Operator (part $0 $0 $0 $0 $0 $3,646 $3,646 $3,646 $3,646 $3,646 $3,646 $3,646
time)
Production Assistant (full $0 $0 $0 $0 $7,813 $7,813 $7,813 $7,813 $7,813 $7,813 $7,813 $7,813
time)
Production Assistant (part $0 $0 $0 $0 $0 $2,604 $2,604 $2,604 $2,604 $2,604 $2,604 $2,604
time)
Name or Title or Group $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal $0 $0 $0 $0 $89,584 $123,439 $123,439 $123,439 $123,439 $123,439 $123,439 $123,439
Other Personnel
Name or title $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Name or title $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total People 3 3 3 4 50 50 51 51 51 51 51 51
Total Payroll $5,600 $5,600 $5,600 $12,600 $129,234 $163,089 $165,689 $165,689 $165,689 $165,689 $165,689 $165,689
ii
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General
Assumptions
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month Month Month
10 11 12
Plan Month 1 2 3 4 5 6 7 8 9 10 11 12
Current Interest 12.00% 12.00% 12.00% 12.00% 12.00% 12.00% 12.00% 12.00% 12.00% 12.00% 12.00% 12.00%
Rate
Long-term 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00%
Interest Rate
Tax Rate 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00%
Other 0 0 0 0 0 0 0 0 0 0 0 0
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Gross Margin $0 $0 $0 $0 $214,56 $637,241 $789,645 $789,645 $789,645 $789,645 $789,645 $789,645
6
Gross Margin % 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
General and
Administrative
Expenses
General and $5,600 $5,600 $5,600 $12,600 $39,650 $39,650 $42,250 $42,250 $42,250 $42,250 $42,250 $42,250
Administrative
Payroll
Sales and Marketing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
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Other Expenses:
Other Payroll $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Misc (contingency) $1,871 $1,871 $1,871 $2,326 $7,477 $10,295 $10,825 $10,825 $10,825 $10,825 $10,825 $10,825
Prof Fees ( Includ $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000
legal & accounting)
Total Other $26,871 $26,871 $26,871 $27,326 $32,477 $35,295 $35,825 $35,825 $35,825 $35,825 $35,825 $35,825
Expenses
Other % 0.00% 0.00% 0.00% 0.00% 3.75% 1.86% 1.74% 1.74% 1.74% 1.74% 1.74% 1.74%
Total Operating $64,796 $64,796 $64,796 $74,351 $182,52 $241,697 $252,826 $252,826 $252,826 $252,826 $252,826 $252,826
Expenses 3
Profit Before ($64,79 ($64,79 ($64,79 ($74,35 $32,043 $395,544 $536,818 $536,818 $536,818 $536,818 $536,818 $536,818
Interest and Taxes 6) 6) 6) 1)
EBITDA ($44,65 ($44,65 ($44,65 ($54,20 $52,188 $415,689 $556,963 $556,963 $556,963 $556,963 $556,963 $556,963
1) 1) 1) 6)
Interest Expense $5,289 $5,245 $5,201 $5,157 $5,113 $5,069 $5,025 $4,981 $4,937 $4,893 $4,849 $4,805
Taxes Incurred ($21,02 ($21,01 ($20,99 ($23,85 $8,079 $117,142 $159,538 $159,551 $159,564 $159,578 $159,591 $159,604
6) 2) 9) 2)
Net Profit ($49,06 ($49,02 ($48,99 ($55,65 $18,850 $273,332 $372,255 $372,286 $372,317 $372,348 $372,378 $372,409
0) 9) 8) 6)
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Net Profit/Sales 0.00% 0.00% 0.00% 0.00% 2.18% 14.44% 18.13% 18.13% 18.13% 18.13% 18.14% 18.14%
Cash from
Operations
Cash Sales $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Cash from $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
Receivables
Subtotal Cash $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
from Operations
Additional Cash
Received
Sales Tax, VAT, 0.00% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
HST/GST Received
New Current $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Borrowing
New Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Liabilities
(interest-free)
New Long-term $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Liabilities
Sales of Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Current Assets
Sales of Long-term $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Assets
New Investment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Received
Subtotal Cash $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
Received
Expenditures Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
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
Bill Payments $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
Subtotal Spent on $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
Operations
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Additional Cash
Spent
Sales Tax, VAT, $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
HST/GST Paid Out
Principal $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Repayment of
Current Borrowing
Other Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Principal
Repayment
Long-term $6,600 $6,600 $6,600 $6,600 $6,600 $6,600 $6,600 $6,600 $6,600 $6,600 $6,600 $6,600
Liabilities
Principal
Repayment
Purchase Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Current Assets
Purchase Long- $0 $0 $0 $0 $0 $0 $0 $0 $0 $568,000 $0 $1,023,000
term Assets
Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Cash $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
Spent
Net Cash Flow ($12,977) ($35,514) ($35,483) ($42,442) ($144,209) $236,423 $41,101 $385,801 $385,832 ($182,137) $385,894 ($637,076)
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
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Pro
Forma
Balance
Sheet
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month Month Month
10 11 12
Assets Starting
Balances
Current
Assets
Cash $645,00 $632,02 $596,50 $561,02 $518,58 $374,37 $610,79 $651,89 $1,037,7 $1,423,5 $1,241,3 $1,627,2 $990,21
0 3 9 6 5 6 8 9 00 32 95 88 3
Accounts $0 $0 $0 $0 $0 $837,37 $1,829,8 $1,984,8 $1,984,8 $1,984,8 $1,984,8 $1,984,8 $1,984,8
Receivabl 5 03 81 81 81 81 81 81
e
Inventory $500,00 $500,00 $500,00 $500,00 $500,00 $255,06 $510,12 $510,12 $510,12 $510,12 $510,12 $510,12 $510,12
0 0 0 0 0 3 5 5 5 5 5 5 5
Other $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000
Current
Assets
Total $1,170,0 $1,157,0 $1,121,5 $1,086,0 $1,043,5 $1,491,8 $2,975,7 $3,171,9 $3,557,7 $3,943,5 $3,761,4 $4,147,2 $3,510,2
Current 00 23 09 26 85 13 26 05 06 38 01 94 19
Assets
Long-term
Assets
Long-term $3,620,0 $3,620,0 $3,620,0 $3,620,0 $3,620,0 $3,620,0 $3,620,0 $3,620,0 $3,620,0 $3,620,0 $4,188,0 $4,188,0 $5,211,0
Assets 00 00 00 00 00 00 00 00 00 00 00 00 00
Accumula $0 $20,145 $40,290 $60,435 $80,580 $100,72 $120,87 $141,01 $161,16 $181,30 $201,45 $221,59 $241,74
ted 5 0 5 0 5 0 5 0
Depreciati
on
Total $3,620,0 $3,599,8 $3,579,7 $3,559,5 $3,539,4 $3,519,2 $3,499,1 $3,478,9 $3,458,8 $3,438,6 $3,986,5 $3,966,4 $4,969,2
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Long-term 00 55 10 65 20 75 30 85 40 95 50 05 60
Assets
Total $4,790,0 $4,756,8 $4,701,2 $4,645,5 $4,583,0 $5,011,0 $6,474,8 $6,650,8 $7,016,5 $7,382,2 $7,747,9 $8,113,6 $8,479,4
Assets 00 78 19 91 05 88 56 90 46 33 51 99 79
Liabilities Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month Month Month
and 10 11 12
Capital
Current
Liabilities
Accounts $0 $22,538 $22,508 $22,478 $22,147 $437,98 $1,635,0 $1,445,3 $1,445,3 $1,445,3 $1,445,3 $1,445,2 $1,445,2
Payable 0 16 95 65 35 05 76 46
Current $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Borrowing
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Current
Liabilities
Subtotal $0 $22,538 $22,508 $22,478 $22,147 $437,98 $1,635,0 $1,445,3 $1,445,3 $1,445,3 $1,445,3 $1,445,2 $1,445,2
Current 0 16 95 65 35 05 76 46
Liabilities
Long-term $800,00 $793,40 $786,80 $780,20 $773,60 $767,00 $760,40 $753,80 $747,20 $740,60 $734,00 $727,40 $720,80
Liabilities 0 0 0 0 0 0 0 0 0 0 0 0 0
Total $800,00 $815,93 $809,30 $802,67 $795,74 $1,204,9 $2,395,4 $2,199,1 $2,192,5 $2,185,9 $2,179,3 $2,172,6 $2,166,0
Liabilities 0 8 8 8 7 80 16 95 65 35 05 76 46
Paid-in $4,200,0 $4,200,0 $4,200,0 $4,200,0 $4,200,0 $4,200,0 $4,200,0 $4,200,0 $4,200,0 $4,200,0 $4,200,0 $4,200,0 $4,200,0
Capital 00 00 00 00 00 00 00 00 00 00 00 00 00
Retained ($210,00 ($210,00 ($210,00 ($210,00 ($210,00 ($210,00 ($210,00 ($210,00 ($210,00 ($210,00 ($210,00 ($210,00 ($210,00
Earnings 0) 0) 0) 0) 0) 0) 0) 0) 0) 0) 0) 0) 0)
Earnings $0 ($49,060 ($98,089 ($147,08 ($202,74 ($183,89 $89,440 $461,69 $833,98 $1,206,2 $1,578,6 $1,951,0 $2,323,4
) ) 7) 3) 2) 5 1 98 45 24 33
Total $3,990,0 $3,940,9 $3,891,9 $3,842,9 $3,787,2 $3,806,1 $4,079,4 $4,451,6 $4,823,9 $5,196,2 $5,568,6 $5,941,0 $6,313,4
Capital 00 40 11 13 57 08 40 95 81 98 45 24 33
Total $4,790,0 $4,756,8 $4,701,2 $4,645,5 $4,583,0 $5,011,0 $6,474,8 $6,650,8 $7,016,5 $7,382,2 $7,747,9 $8,113,6 $8,479,4
Liabilities 00 78 19 91 05 88 56 90 46 33 51 99 79
and
Capital
Net $3,990,0 $3,940,9 $3,891,9 $3,842,9 $3,787,2 $3,806,1 $4,079,4 $4,451,6 $4,823,9 $5,196,2 $5,568,6 $5,941,0 $6,313,4
Worth 00 40 11 13 57 08 40 95 81 98 45 24 33
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