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 postconsumer 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.

Need actual charts? We recommend using LivePlan as the easiest way to create graphs for your own business plan. Create your own business plan 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. 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 postconsumer 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. 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 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, $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.

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Start-up Funding
Start-up Expenses to Fund Start-up Assets to Fund Total Funding Required Assets Non-cash Assets from Start-up Cash Requirements from Start-up Additional Cash Raised Cash Balance on Starting Date Total Assets Liabilities and Capital Liabilities Current Borrowing Long-term Liabilities Accounts Payable (Outstanding Bills) Other Current Liabilities (interest-free) Total Liabilities Capital Planned Investment Founders Investor Additional Investment Requirement Total Planned Investment Loss at Start-up (Start-up Expenses)

Total Capital Total Capital and Liabilities Total Funding

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Start-up
Requirements Start-up Expenses Legal & Accounting Stationery etc. Consultants Lab Equipment Local Engineering Misc Start up Other Total Start-up Expenses Start-up Assets Cash Required Start-up Inventory Other Current Assets Long-term Assets Total Assets Total Requirements

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 inhouse 3.1 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. 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 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.

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 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 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 stateof-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. 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 pricesensitive, 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 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.

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Market Analysis
Year 1 Potential Customers Western PET Buyers Western HDPE Buyers Total Growth 1% 1% 0.57% 79 95 174 Year 2 80 95 175 Year 3 81 95 176 Year 4 82 95 177

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We recommend using LivePlan as the easiest way to create automatic financials for your own business plan. Create your own business plan 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 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 overabundance 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 postindustrial PET. Nor is there any non-captive extrusion of roll stock sheet. 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.

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-ofthe-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, costefficient, 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. 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.

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Sales Forecast
Year 1 Unit Sales Recycled Flake PET Extruded Roll Stock Sheet Extruded Strapping Total Unit Sales Unit Prices Recycled Flake PET Extruded Roll Stock Sheet Extruded Strapping Sales Recycled Flake PET Extruded Roll Stock Sheet 20,533,600 8,341,400 0 28,875,000 Year 1 $0.45 $0.70 $0.00 $9,240,120 Year 2 12,833,900 28,874,600 4,491,500 46,200,000 Year 2 $0.47 $0.74 $0.95 $6,064,018 Year 3 0 30,800,000 15,400,000 46,200,000 Year 3 $0.50 $0.77 $1.00 $0

30,80

15,40

46,20

$5,838,980 $21,222,831 $23,769,900 $24,95

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

$0 Year 1 $0.27 $0.27 $0.00 $5,441,404 $2,210,471 $0

$4,266,925 $15,400,000 $16,17 Year 2 $0.28 $0.28 $0.28 $3,571,033 $8,034,357 $1,257,620 Year 3 $0.29 $0.29 $0.30 $0 $8,998,605 $4,620,000

$15,079,100 $31,553,774 $39,169,900 $41,12

$9,44

$4,77

$7,651,875 $12,863,010 $13,618,605 $14,22

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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 Man n/a Senior M

n/a Senior M

n/a Senior M

n/a Senior M

n/a Senior M

n/a Senior M

n/a Senior M

$0 Senior M

n/a Senior M $0

n/a Senior M

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 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.

Personnel Plan
Year 1 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 $129,169 $116,664 $350,000 $164,066 $87,504 $25,522 $62,504 $18,228 $0 Year 2 $210,000 $183,750 $551,250 $295,513 $206,719 $68,906 $147,656 $49,219 $0 Year 3 $220,500 $192,938 $578,813 $310,078 $289,406 $96,469 $206,719 $68,906 $0

$23

$20

$60

$32

$30

$10

$21

$7

$953,657 $1,713,013 $1,963,829 $2,06

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 Name or title Name or title Subtotal Total People Total Payroll

$0 $0 $0 $72,000 $67,200 $67,200 $63,000 $29,200 $20,800 $15,600 $0 $27,200 $362,200 $0 $0 $0 51

$0 $0 $0 $110,000 $100,000 $100,000 $88,200 $45,938 $32,813 $32,813 $32,813 $42,840 $585,417 $0 $0 $0 57

$0 $0 $0 $121,000 $110,000 $110,000 $92,610 $48,235 $34,454 $34,454 $34,454 $44,982 $630,189 $0 $0 $0 69

$13

$12

$12

$9

$5

$3

$3

$3

$4

$67

$1,315,857 $2,298,430 $2,594,018 $2,74

Financial Plan Once the equipment arrives and is installed, production ramps up rather 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 an interest rate 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
Plan Month Current Interest Rate Long-term Interest Rate Tax Rate Other Year 1 1 12.00% 8.00% 30.00% 0 Year 2 2 12.00% 8.00% 30.00% 0 Year 3 3 12.00% 8.00% 30.00% 0

Ye

12.0

8.0

30.0

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Create your own business plan 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.

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Break-even Analysis
Monthly Units Break-even Monthly Revenue Break-even Assumptions: Average Per-Unit Revenue Average Per-Unit Variable Cost Estimated Monthly Fixed Cost

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.

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Need actual charts? We recommend using LivePlan as the easiest way to create graphs for your own business plan. Create your own business plan

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Need actual charts? We recommend using LivePlan as the easiest way to create graphs for your own business plan. Create your own business plan

Pro Forma Profit and Loss

Year 1 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 $0 $6,000 $0 $50,000 $0 $100,000 $15,079,100 $7,651,875 $953,657 $150,791 $733,102 $9,489,425 $5,589,676 37.07% Year 2 $31,553,774 $12,863,010 $1,713,013 $315,538 $1,501,893 $16,393,454 $15,160,320 48.05% Year 3 $39,169,900 $13,618,605 $1,963,829 $391,699 $1,871,678 $17,845,811 $21,324,090 54.44%

$41,12 $14,22

$2,06

$41

$1,96

$18,66 $22,46

54

$15

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

$0 $6,000 0.04%

$0 $50,000 0.16%

$0 $100,000 0.26%

$15 0

$362,200 $0 $241,740 $394,757 $6,000 $12,000 $16,000 $18,000 $678,560 $24,000 $60,000 $0 $1,813,257 12.02% $0 $90,661 $300,000 $390,661

$585,417 $0 $405,992 $689,529 $6,000 $15,000 $30,000 $25,000 $1,419,920 $25,000 $63,000 $0 $3,264,858 10.35% $0 $163,239 $330,000 $493,239

$630,189 $0 $562,908 $778,205 $8,000 $20,000 $35,000 $30,000 $1,762,646 $25,000 $66,150 $0 $3,918,098 10.00% $0 $195,905 $363,000 $558,905

$67

$56

$82

$2

$4

$3

$1,85

$2

$6

$4,10 9

$20

$39

$60

Other % Total Operating Expenses Profit Before Interest and Taxes EBITDA Interest Expense Taxes Incurred Net Profit Net Profit/Sales

2.59% $2,209,918 $3,379,758 $3,621,498 $60,568 $995,757 $2,323,433 15.41%

1.56% $3,808,097 $11,352,223 $11,758,215 $54,464 $3,389,328 $7,908,431 25.06%

1.43% $4,577,003 $16,747,087 $17,309,995 $48,064 $5,009,707 $11,689,316 29.84%

$4,86 $17,60

$18,16

$4

$5,26

$12,29

29

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.

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Pro Forma Cash Flow

Year 1 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 $0 $0 $0 Year 2 Year 3

$13,094,219 $29,385,192 $38,167,380 $40,87

$13,094,219 $29,385,192 $38,167,380 $40,87 $0 $0 $0 $0 $0 $0 $0 Year 1 $1,315,857 $0 $0 $0 $0 $0 $0 $0 Year 2 $2,298,430 $0 $0 $0 $0 $0 $0 $0 Year 3 $2,594,018

$13,094,219 $29,385,192 $38,167,380 $40,87

$2,74

$9,762,949 $20,983,849 $24,120,412 $25,47

$11,078,806 $23,282,279 $26,714,430 $28,21 $0 $0 $0 $79,200 $0 $0 $0 $80,000 $0 $0 $0 $80,000

$8

Purchase Other Current Assets Purchase Long-term Assets Dividends Subtotal Cash Spent Net Cash Flow Cash Balance

$0 $1,591,000 $0 $345,213 $990,213

$0 $3,229,000 $3,000,000 ($206,088) $784,125

$0 $0

$8,000,000 $10,00 $3,372,950 $4,157,075

$12,749,006 $29,591,279 $34,794,430 $38,29

$2,57

$6,72

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.

Pro Forma Balance Sheet

Year 1 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 $990,213 $1,984,881 $510,125 $25,000 $3,510,219 $5,211,000 $241,740 $4,969,260 Year 1 $784,125 $4,153,463 $857,534 $25,000 $4,157,075 $5,155,983 $907,907 $25,000 Year 2 Year 3

$6,728

$5,413

$953

$25

$5,820,122 $10,245,965 $13,120 $8,440,000 $647,732 $7,792,268 Year 2 $8,440,000 $1,210,640 $7,229,360 Year 3

$8,440

$1,773

$6,666

$8,479,479 $13,612,390 $17,475,325 $19,787

Accounts Payable Current Borrowing Other Current Liabilities Subtotal Current Liabilities Long-term Liabilities Total Liabilities Paid-in Capital Retained Earnings Earnings Total Capital Total Liabilities and Capital Net Worth

$1,445,246 $0 $0 $1,445,246 $720,800 $2,166,046 $4,200,000 ($210,000) $2,323,433

$1,749,726 $0 $0 $1,749,726 $640,800 $2,390,526 $4,200,000 ($886,567)

$2,003,345 $0 $0 $2,003,345 $560,800 $2,564,145 $4,200,000 ($978,136)

$2,102

$2,102 $480

$2,583 $4,200

$711

$7,908,431 $11,689,316 $12,292

$6,313,433 $11,221,864 $14,911,180 $17,204

$8,479,479 $13,612,390 $17,475,325 $19,787

$6,313,433 $11,221,864 $14,911,180 $17,204

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Ratio Analysis
Year 1 Year 2 Year 3 Year 4

Sales Growth Percent of Total Assets Accounts Receivable Inventory Other Current Assets Total Current Assets Long-term Assets Total Assets Current Liabilities Long-term Liabilities Total Liabilities Net Worth 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 Net Profit Margin

0.00% 23.41% 6.02% 0.29% 41.40% 58.60% 100.00% 17.04% 8.50% 25.54% 74.46% 100.00% 37.07% 22.36% 0.04% 22.41% 2.43 2.08 25.54% 52.57% 39.14% Year 1 15.41%

109.26% 30.51% 6.30% 0.18% 42.76% 57.24% 100.00% 12.85% 4.71% 17.56% 82.44% 100.00% 48.05% 22.63% 0.17% 35.98% 3.33 2.84 17.56% 100.68% 83.00% Year 2 25.06%

24.14% 29.50% 5.20% 0.14% 58.63% 41.37% 100.00% 11.46% 3.21% 14.67% 85.33% 100.00% 54.44% 24.36% 0.27% 42.75% 5.11 4.66 14.67% 111.99% 95.56% Year 3 29.84%

5.00% 27.36% 4.82% 0.13% 66.31% 33.69% 100.00% 10.62% 2.43% 13.05% 86.95% 100.00% 54.63% 24.16% 0.38% 42.80% 6.24 5.79 13.05% 102.08% 88.75% Year 4 29.89%

100

88

10

Y 2

Return on Equity 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

36.80% 7.60 29 15.76 7.76 27 1.78 0.34 0.67

70.47% 7.60 36 18.81 12.17 27 2.32 0.21 0.73

78.39% 7.60 43 15.43 12.17 28 2.24 0.17 0.78

71.45% 7.60 47 15.28 12.17 29 2.08 0.15 0.81

$2,064,973 $4,070,396 $8,242,620 $11,018,388 $14,29 55.80 0.56 17% 0.70 2.39 0.00 208.44 0.43 13% 0.46 2.81 0.38 348.43 0.45 11% 2.09 2.63 0.68 422.50 0.48 11% 3.21 2.39 0.81

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.

Appendix
Sales Forecast
Month Month Month Month 1 2 3 4 Month 5 Unit Sales Recycled Flake PET Extruded Roll Stock Sheet Extruded Strapping Total Unit Sales Unit Prices Recycled Flake PET Extruded Roll Stock Sheet Extruded Strapping Sales Recycled Flake PET Extruded Roll Stock Sheet Extruded Strapping Total Sales Direct Unit Costs Recycled Flake PET Extruded Roll Stock Sheet Extruded Strapping Direct Cost of Sales Recycled Flake PET Extruded Roll Stock Sheet Extruded Strapping $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $510,125 $0 $0 $0 $0 $850,226 $170,024 $0 $680,176 $340,075 $0 $680,176 $340,075 $0 $680,176 $340,075 $0 $680,176 $340,075 $0 0.00% 0.00% 0.00% $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 1,925,000 0 0 0 0 3,208,400 641,600 0 3,850,000 Month 6 $0.45 $0.70 $0.95 2,566,700 1,283,300 0 3,850,000 Month 7 $0.45 $0.70 $0.95 2,566,700 1,283,300 0 3,850,000 Month 8 $0.45 $0.70 $0.95 2,566,700 1,283,300 0 3,850,000 2,566,700 1,283,300 0 3,850,000 Month 6 Month 7 Month 8 Month 9 Month 10

Mo

2,5

1,2

0 1,925,000

3,8

Month Month Month Month 1 2 3 4 Month 5 $0.45 $0.70 $0.95 $0.00 $0.70 $0.95 $0.00 $0.70 $0.95 $0.00 $0.70 $0.95 $0.45 $0.70 $0.95

Month 9 Month 10 $0.45 $0.70 $0.95 $0.45 $0.70 $0.95

Mo

$0 $866,250 $1,443,780 $1,155,015 $1,155,015 $1,155,015 $1,155,015 $1,1 $0 $0 $0 $0 $449,120 $0 $898,310 $0 $898,310 $0 $898,310 $0 $898,310 $0

$8

$0 $866,250 $1,892,900 $2,053,325 $2,053,325 $2,053,325 $2,053,325 $2,0 Month 6 $0.27 $0.27 $0.27 Month 7 $0.27 $0.27 $0.27 Month 8 $0.27 $0.27 $0.27 Month 9 Month 10 $0.27 $0.27 $0.27 $0.27 $0.27 $0.27

Month Month Month Month 1 2 3 4 Month 5 $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

Mo

$6

$3

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 $1,0

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Personnel Plan
Month Month Month Month 1 2 3 4 Month 5 Month 6 Month 7 Month 8 Month 9 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 $2,000 $2,000 $2,000 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $2,000 $1,800 $1,800 $7,000 $0 $0 $0 $0 $0 $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 $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 $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 $16,667 $14,583 $43,750 $23,438 $10,938 $3,646 $7,813 $2,604 $0 $16,667 $14,583 $43,750 $23,438 $10,938 $3,646 $7,813 $2,604 $0 $16,667 $14,583 $43,750 $23,438 $10,938 $3,646 $7,813 $2,604 $0 $16,667 $14,583 $43,750 $23,438 $10,938 $3,646 $7,813 $2,604 $0 $16,667 $14,583 $43,750 $23,438 $10,938 $3,646 $7,813 $2,604 $0 Month 10

$89,584 $123,439 $123,439 $123,439 $123,439 $123,439 $

$5,600 $5,600 $5,600 $12,600

Other Personnel Name or title Name or title Subtotal Total People Total Payroll $0 $0 $0 3 $0 $0 $0 3 $0 $0 $0 3 $0 $0 $0 4 $0 $0 $0 50 $0 $0 $0 50 $0 $0 $0 51 $0 $0 $0 51 $0 $0 $0 51 $0 $0 $0 51

$5,600 $5,600 $5,600 $12,600 $129,234 $163,089 $165,689 $165,689 $165,689 $165,689 $

General Assumptions
Month Month Month Month Month Month Month Month Month Month 1 2 3 4 5 6 7 8 9 10 Plan Month Current Interest Rate Long-term Interest Rate Tax Rate Other
Pro Forma Profit and Loss
Month 1 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 30% $5,600 $0 $20,145 $1,680 $5,600 $0 $20,145 $1,680 $5,600 $0 $20,145 $1,680 $12,600 $0 $20,145 $3,780 $39,650 $0 $20,145 $38,770 $39,650 $0 $20,145 $48,927 $42,250 $0 $20,145 $49,707 $42,250 $0 $20,145 $49,707 $42,250 $0 $20,145 $49,707 $42,250 $0 $20,145 $49,707 $0 $500 $0 $500 0.00% $0 $500 $0 $500 0.00% $0 $500 $0 $500 0.00% $0 $500 $0 $500 0.00% $0 $500 $0 $500 0.06% $0 $500 $0 $500 0.03% $0 $500 $0 $500 0.02% $0 $500 $0 $500 0.02% $0 $500 $0 $500 0.02% $0 $500 $0 $500 0.02% $0 $0 $0 $0 $0 $0 $0 0.00% Month 2 $0 $0 $0 $0 $0 $0 $0 0.00% Month 3 $0 $0 $0 $0 $0 $0 $0 0.00% Month 4 $0 $0 $0 $0 $0 $0 $0 0.00% Month 5 $866,250 $510,125 $89,584 $8,663 $43,313 $651,684 $214,566 24.77% Month 6 $1,892,900 $1,020,250 $123,439 $18,929 $93,041 $1,255,659 $637,241 33.66% Month 7 $2,053,325 $1,020,250 $123,439 $20,533 $99,458 $1,263,680 $789,645 38.46% Month 8 $2,053,325 $1,020,250 $123,439 $20,533 $99,458 $1,263,680 $789,645 38.46% Month 9 $2,053,325 $1,020,250 $123,439 $20,533 $99,458 $1,263,680 $789,645 38.46% Month 10 $2,053,325 $1,020,250 $123,439 $20,533 $99,458 $1,263,680 $789,645 38.46%

10

12.00% 12.00% 12.00% 12.00% 12.00% 12.00% 12.00% 12.00% 12.00% 12.00% 8.00% 0 8.00% 0 8.00% 0 8.00% 0 8.00% 0 8.00% 0 8.00% 0 8.00% 0 8.00% 0 8.00% 0

30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00%

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 % Total Operating Expenses Profit Before Interest and Taxes EBITDA Interest Expense Taxes Incurred Net Profit Net Profit/Sales 15%

$500 $1,000 $0 $1,500 $0 $2,000 $5,000 $0 $37,425 0.00%

$500 $1,000 $0 $1,500 $0 $2,000 $5,000 $0 $37,425 0.00%

$500 $1,000 $0 $1,500 $0 $2,000 $5,000 $0 $37,425 0.00%

$500 $1,000 $0 $1,500 $0 $2,000 $5,000 $0 $46,525 0.00%

$500 $1,000 $2,000 $1,500 $38,981 $2,000 $5,000 $0 $149,546 17.26%

$500 $1,000 $2,000 $1,500 $85,181 $2,000 $5,000 $0 $205,902 10.88%

$500 $1,000 $2,000 $1,500 $92,400 $2,000 $5,000 $0 $216,501 10.54%

$500 $1,000 $2,000 $1,500 $92,400 $2,000 $5,000 $0 $216,501 10.54%

$500 $1,000 $2,000 $1,500 $92,400 $2,000 $5,000 $0 $216,501 10.54%

$500 $1,000 $2,000 $1,500 $92,400 $2,000 $5,000 $0 $216,501 10.54%

$0 $1,871 $25,000 $26,871 0.00% $64,796 ($64,796) ($44,651) $5,289 ($21,026) ($49,060) 0.00%

$0 $1,871 $25,000 $26,871 0.00% $64,796 ($64,796) ($44,651) $5,245 ($21,012) ($49,029) 0.00%

$0 $1,871 $25,000 $26,871 0.00% $64,796 ($64,796) ($44,651) $5,201 ($20,999) ($48,998) 0.00%

$0 $2,326 $25,000 $27,326 0.00% $74,351 ($74,351) ($54,206) $5,157 ($23,852) ($55,656) 0.00%

$0 $7,477 $25,000 $32,477 3.75% $182,523 $32,043 $52,188 $5,113 $8,079 $18,850 2.18%

$0 $10,295 $25,000 $35,295 1.86% $241,697 $395,544 $415,689 $5,069 $117,142 $273,332 14.44%

$0 $10,825 $25,000 $35,825 1.74% $252,826 $536,818 $556,963 $5,025 $159,538 $372,255 18.13%

$0 $10,825 $25,000 $35,825 1.74% $252,826 $536,818 $556,963 $4,981 $159,551 $372,286 18.13%

$0 $10,825 $25,000 $35,825 1.74% $252,826 $536,818 $556,963 $4,937 $159,564 $372,317 18.13%

$0 $10,825 $25,000 $35,825 1.74% $252,826 $536,818 $556,963 $4,893 $159,578 $372,348 18.13%

Pro Forma Cash Flow

Month 1 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 $5,600 $777 $5,600 $23,314 $5,600 $23,283 $12,600 $23,242 $129,234 $37,250 $163,089 $494,360 $165,689 $165,689 $165,689 $165,689 0.00% $0 $0 $0 $0 $0 $0 $0 $0 Month 1 $0 $0 $0 $0 $0 $0 $0 $0 Month 2 $0 $0 $0 $0 $0 $0 $0 $0 Month 3 $0 $0 $0 $0 $0 $0 $0 $0 Month 4 $0 $0 $0 $0 $0 $0 $0 $28,875 Month 5 $0 $0 $0 $0 $0 $0 $0 $900,472 Month 6 $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 $0 $28,875 $28,875 $0 $900,472 $900,472 $0 $0 $0 $0 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10

$1,898,248 $2,053,325 $1,898,248 $2,053,325

$2,053,325 $2,053,325 $2,053,325 $2,053,325

$1,898,248 $2,053,325 Month 7 Month 8

$2,053,325 $2,053,325 Month 9 Month 10

$1,684,858 $1,495,235

$1,495,204 $1,495,173

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

$6,377

$28,914

$28,883

$35,842

$166,484

$657,449

$1,850,547 $1,660,924

$1,660,893 $1,660,862

$0 $0 $0 $6,600 $0 $0 $0 $12,977 ($12,977) $632,023

$0 $0 $0 $6,600 $0 $0 $0 $35,514 ($35,514) $596,509

$0 $0 $0 $6,600 $0 $0 $0 $35,483 ($35,483) $561,026

$0 $0 $0 $6,600 $0 $0 $0 $42,442 ($42,442) $518,585

$0 $0 $0 $6,600 $0 $0 $0 $173,084 ($144,209) $374,376

$0 $0 $0 $6,600 $0 $0 $0 $664,049 $236,423 $610,798

$0 $0 $0 $6,600 $0 $0 $0

$0 $0 $0 $6,600 $0 $0 $0

$0 $0 $0 $6,600 $0 $0 $0

$0 $0 $0 $6,600 $0 $568,000 $0

$1,857,147 $1,667,524 $41,101 $385,801

$1,667,493 $2,235,462 $385,832 ($182,137)

$651,899 $1,037,700

$1,423,532 $1,241,395

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Pro Forma Balance Sheet
Month 1 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 Accounts Payable Current Borrowing Other Current Liabilities Subtotal Current Liabilities Long-term Liabilities Total Liabilities Paid-in Capital Retained Earnings Earnings Total Capital Total Liabilities and Capital $0 $0 $0 $0 $800,000 $800,000 $22,538 $0 $0 $22,538 $793,400 $815,938 $22,508 $0 $0 $22,508 $786,800 $809,308 $22,478 $0 $0 $22,478 $780,200 $802,678 $22,147 $0 $0 $22,147 $773,600 $437,980 $1,635,016 $1,445,395 $1,445,365 $1,445,335 $1,445,305 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $3,620,000 $3,620,000 $3,620,000 $3,620,000 $3,620,000 $3,620,000 $3,620,000 $3,620,000 $3,620,000 $3,620,000 $4,188,000 $0 $20,145 $40,290 $60,435 $80,580 $100,725 $120,870 $141,015 $161,160 $181,305 $201,450 $645,000 $0 $500,000 $25,000 $632,023 $0 $500,000 $25,000 $596,509 $0 $500,000 $25,000 $561,026 $0 $500,000 $25,000 $518,585 $0 $500,000 $25,000 $374,376 $610,798 $651,899 $1,037,700 $1,423,532 $1,241,395 Starting Balances Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10

$837,375 $1,829,803 $1,984,881 $1,984,881 $1,984,881 $1,984,881 $255,063 $25,000 $510,125 $25,000 $510,125 $25,000 $510,125 $25,000 $510,125 $25,000 $510,125 $25,000

$1,170,000 $1,157,023 $1,121,509 $1,086,026 $1,043,585 $1,491,813 $2,975,726 $3,171,905 $3,557,706 $3,943,538 $3,761,401

$3,620,000 $3,599,855 $3,579,710 $3,559,565 $3,539,420 $3,519,275 $3,499,130 $3,478,985 $3,458,840 $3,438,695 $3,986,550 $4,790,000 $4,756,878 $4,701,219 $4,645,591 $4,583,005 $5,011,088 $6,474,856 $6,650,890 $7,016,546 $7,382,233 $7,747,951 Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10

$437,980 $1,635,016 $1,445,395 $1,445,365 $1,445,335 $1,445,305 $767,000 $760,400 $753,800 $747,200 $740,600 $734,000

$795,747 $1,204,980 $2,395,416 $2,199,195 $2,192,565 $2,185,935 $2,179,305

$4,200,000 $4,200,000 $4,200,000 $4,200,000 $4,200,000 $4,200,000 $4,200,000 $4,200,000 $4,200,000 $4,200,000 $4,200,000 ($210,000) ($210,000) ($210,000) ($210,000) ($210,000) ($210,000) $0 ($49,060) ($98,089) ($147,087) ($202,743) ($183,892) ($210,000) $89,440 ($210,000) $461,695 ($210,000) ($210,000) ($210,000)

$833,981 $1,206,298 $1,578,645

$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 $4,790,000 $4,756,878 $4,701,219 $4,645,591 $4,583,005 $5,011,088 $6,474,856 $6,650,890 $7,016,546 $7,382,233 $7,747,951

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

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