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 entire product produced.
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 tk1, 644 Million in sales the first year, we will see a first year net
profit of tk.252.08 Million. The owners are investing tk.54, 800,000 each, for a total of tk. 164.4
Million, and are securing a tk. 87, 680K long-term loan.
The Company is also seeking an investment of tk.295, 920, 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 tk. 2, 740 million have averaged 5.3 times
EBITDA, while transactions in the range of tk. 2, 740-27, 400 million have averaged over 7
times EBITDA. Further details can be found in the Financial Plan, below.


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 post-consumer beverage bottles from California based
recycling collectors, and has back up sources identified.
Technology employed may be unreliable or unproven
Replay will use a proven, patented technology that was developed by one of its principals
for the cleaning and recycling phase. The extrusion division will employ commercially
proven technology - the industry is employing unique recycled PET technology which is
used by prominent eastern U.S. manufacturers of PET extrusions.
There may not be a market for the Company's products
The Industry-wide experience of the Management Team has allowed them to
identify markets for the Company's products. Their expertise and reputations have
allowed them to obtain commitments for virtually all of the planned initial production.
The location may not be near enough to markets
The markets that have been identified are primarily in the western U.S., which will
provide a distinct advantage to the Company because of freight costs and delivery timing.
The Company may not be able to attract top management
The Company has assembled a world class management team with proven ability and
direct experience in the Company's market segments.
Company may not meet environmental standards
This environmentally-favorable venture provides for the development of technically
feasible and economically viable solutions to PET plastic beverage bottle recycling, as
well as environmentally aware in-house re-use practices which filter and return nearly all
of the process water to the production lines.
The Company may not be able to sell all of its production capability
Through the Senior Management's industry-wide contacts, the Company has identified
potential customers and received commitments for all of the production potential of the
initial facility.
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 6, 076.6 million taka and it will utilize bottle feed stock from
California, Oregon and Washington States, which collect over 26,420,000, 000 taka 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 thermo formers 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 tk.23, 016,000, which is mostly for on-site
contractor services during facility preparation. Tk. 5, 480,000 has been set aside for legal
and accounting, tk. 2, 740,000 for special consulting that may be required during start up
and 50,000 each for local engineering and lab equipment and supplies. Tk. 5,718,000
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 tk.396, 752,000
(excluding expensed items like consultants and engineering listed above). Aside from the
building itself, we need tk. 2,740,000 in machinery and fixtures, tk. 54, 800,000 of
inventory (plastic bottle feed stock) and cash to cover us through the initial year.



Start-up Funding
Start-up Expenses to Fund Tk. 23,016,000
Start-up Assets to Fund Tk. 524,984,000
Total Funding Required Tk. 548,000,000
Assets

Non-cash Assets from Start-up Tk.454,292 ,000
Cash Requirements from Start-up Tk.70,692,000
Additional Cash Raised Tk.0
Cash Balance on Starting Date Tk.70,692,000
Total Assets Tk.524,984,000
Liabilities and Capital

Liabilities

Current Borrowing Tk.0
Long-term Liabilities Tk.87,680,000
Accounts Payable (Outstanding Bills) Tk.0
Other Current Liabilities (interest-free) Tk.0
Total Liabilities 87,680,000
Capital

Planned Investment

Founders Tk.164,400,000
Investor Tk.295,920,000
Additional Investment Requirement Tk.0
Total Planned Investment Tk.460,320,000
Loss at Start-up (Start-up Expenses) (tk.23,016,000)
Total Capital Tk. 437,304,000
Total Capital and Liabilities Tk.524,984,000
Total Funding Tk.548,000,000

Start-up
Requirements

Start-up Expenses

Legal & Accounting Tk.5,480,000
Stationery etc. Tk.548,000
Consultants Tk. 2,740,000
Lab Equipment 5,480,000
Local Engineering 5,480,000
Misc Start up Tk.3,288,000
Other Tk.0
Total Start-up Expenses Tk.23,016,000
Start-up Assets

Cash Required Tk.70,692,000
Start-up Inventory Tk.54,800,000
Other Current Assets Tk.2,740,000
Long-term Assets Tk.396,752,000
Total Assets Tk.524,984,000
Total Requirements Tk.548,000,000

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
3.1 Product Description
Roll stock sheet will be sold to custom thermo formers 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
219,200,000 taka of PET bottles per annum. Replay' initial capacity will be 5,041,600,000 taka.
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 aluminum, 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 aluminum 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 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.
4.1 Target Market Segment Strategy
The Company has chosen its target markets because recycled PET (RPET) is in high demand as
flake resin by converters, as roll stock sheet used to produce high visibility packaging and as
high strength strapping for the lumber industry. Sales are price-sensitive, so that proximity to
markets and feed stock source provide a competitive edge. Replay Plastics identified an
opportunity to take advantage of both circumstances in the western United States.
RPET Flake
Total market demand is reported as 1.2 billion pounds per year. Since only 800 million pounds
are processed in the USA, consumers are forced to look at wide spec virgin PET (virgin resin
that is outside of spec but still usable) which is normally sold at a discount to virgin prices, but
still higher than recycled (RPET) pricing. Some manufacturers are also forced to import
materials from Mexico, India and South America. Some converters are being forced to use more
expensive virgin resin.
The current pricing for virgin resin is 0.65-0.73 per lb. and 0.42-.53 for RPET flake. The
spread between the two has traditionally been maintained at approximately 0.20 per lb.
PET Film & Sheet
The total reported market of extruded film and sheet is 872 million pounds, of which identified
industry usage of RPET is 160 million pounds.
The reported market demand (to replace virgin PS, PVC and PET) if RPET was available
is estimated at 1 billion pounds.
Current pricing for RPET sheet is 0.70-0.79 per lb.
RPET Strapping
The total reported domestic plastic strapping market is 240 million pounds. Of this market,
industry usage of virgin polypropylene is 132 million pounds and of PET is 108 million pounds.
It is generally accepted in the industry that less expensive strapping made from RPET could not
only take over the polypropylene strapping market, but convert as much of the much larger and
more expensive steel strapping market as RPET strapping was available.
Current pricing for RPET strapping is 0.90 -1.08 per lb.
4.2 Market Segmentation
The primary market can be broken down as follows.
Consumers of PET in:
California: 62
Oregon: 8
Washington: 9
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.


Market Analysis

Year 1 Year 2 Year 3 Year 4 Year 5

Potential Customers Growth

CAGR
Western PET Buyers 1% 79 80 81 82 83 1.24%
Western HDPE Buyers 1% 95 95 95 95 95 0.00%
Total 0.57% 174 175 176 177 178 0.57%
4.3 Industry Analysis
Currently there is no direct competition in the western United States for either of the two
divisions of the Company. Any production in the trading area remains captive and not available
to our target market.
The ability of the Company to obtain a source of post-consumer bottle stock is an integral
component of the strategy to vertically integrate operations and manufacture products in demand
by western consuming industries. Without the cleaning and refining division, it would be
difficult to source sufficient RPET flake resin at costs that would allow the Company to be
competitive.
4.3.1 Barriers to Entry
Limited Supply of raw material
Recycled PET (RPET) resins are in high demand, and demand is currently under-supplied. Many
manufacturers are delaying expansion because of uncertainty of supply. Entrants would have to
consider sourcing post-consumer or post-industrial waste and clean and refine it rather than
attempting to purchase flake on the open market. Even at that, there is not an over-abundance of
post-consumer or post industrial material in the marketplace.
Equipment costs are high and industry specific, resulting in a high exit cost.
Because of the scarcity of RPET flake, entrants may be forced to establish cleaning and refining
facilities for post-consumer bottles. The equipment required is costly and very industry specific.
It would not easily be re-sold as a system.
There is a market for used extrusion equipment, which normally sees 60-70% of new value being
realized.
Vertical integration is an important consideration and difficult to accomplish successfully.
Because of the scarcity of RPET resin, and to maximize profit potential, entrants must consider a
two-stage production facility. Cleaning and refining post-consumer bottles and extruding the
resulting flake into commercial products requires a management team such as Replay has, with a
broad range of expertise, experience, industry contacts and knowledge in both areas.
Firm contracts for supply and sales.
Replay Management's industry contacts will allow us to secure contracts for both supply of feed
stock and sale of finished goods.
Freight is a major cost of operations; proximity to source of supply and markets is crucial.
Hauling plastic materials is expensive so entrants will have to consider establishing facilities
close to materials and markets. Entrants with existing operations would have to consider new
separate facilities in many cases, reducing economies of scale and making management more
difficult.
4.3.2 Competition and Buying Patterns
There has been a strong demand (sellers' market) for our products for several years. Traditional
buying patterns in this industry are based on quality, price, reputation of manufacturer, freight
costs, delivery times and proximity to markets. During such a sellers' market, buying patterns are
often more influenced by availability.
4.3.3 Main Competitors
Currently in the western United States, there is no direct competition for cleaning and refining
post-consumer or post-industrial PET. Nor is there any non-captive extrusion of roll stock sheet.
The extruded sheet required by thermo formers 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-of-the-art recycling and extrusion
technology managed by decades of industry specific expertise to create a competitive advantage
for its clients. These processes will produce clean, cost-efficient, recycled raw material for
manufacturers of thermoform, laminate and other high value-added products, and high strength
packaging strapping for shippers of large products and pallets, thereby reducing costs and
creating a clear pricing edge among their competitors.
5.2 Competitive Edge
Replay Plastics' competitive edge rests with its proximity to its target markets, as well as the
industry knowledge, reputation and contacts of its senior management. Their many years of
direct experience have led them to identify this unique opportunity and put together the
technology and sources to take advantage of it. Their reputation in the specific market segment
will result in the achievement of long-term commitments for our production.
5.3 Marketing Strategy
The Company has chosen to focus on the production of plastic packaging materials from
recycled post-consumer beverage bottles. Because of the industry experience and expertise of the
management, we have identified a significant available market in the western United States. All
of our initial marketing strategy will be to secure contracts in that segment, and after reaching
full planned capacity, look to grow in concert with that segment and related markets. We see
little need at present for further market research and development, and will focus on continually
updating our production technology in an effort to remain in the forefront of our chosen
marketplace.
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.





Sales Forecast

Year 1 Year 2 Year 3 Year 4 Year 5
Unit Sales

Recycled Flake PET 20,533,600 12,833,900 0 0 0
Extruded Roll Stock Sheet 8,341,400 28,874,600 30,800,000 30,800,000 30,800,000
Extruded Strapping 0 4,491,500 15,400,000 15,400,000 15,400,000
Total Unit Sales 28,875,000 46,200,000 46,200,000 46,200,000 46,200,000
Unit Prices Year 1 Year 2 Year 3 Year 4 Year 5
Recycled Flake PET 0.45 0.47 0.50 0.52 0.55
Extruded Roll Stock Sheet 0.70 0.74 0.77 0.81 0.85
Extruded Strapping 0.00 0.95 1.00 1.05 1.10
Sales

Recycled Flake PET 9,240,120 6,064,018 0 0 0
Extruded Roll Stock Sheet 5,838,980 21,222,831 23,769,900 24,958,395 26,206,315
Extruded Strapping 0 4,266,925 15,400,000 16,170,000 16,940,000
Total Sales 15,079,100 31,553,774 39,169,900 41,128,395 43,146,315
Direct Unit Costs Year 1 Year 2 Year 3 Year 4 Year 5
Recycled Flake PET 0.27 0.28 0.29 0.31 0.32
Extruded Roll Stock Sheet 0.27 0.28 0.29 0.31 0.32
Extruded Strapping 0.00 0.28 0.30 0.31 0.33
Direct Cost of Sales

Recycled Flake PET 5,441,404 3,571,033 0 0 0
Extruded Roll Stock Sheet 2,210,471 8,034,357 8,998,605 9,448,535 9,920,962
Extruded Strapping 0 1,257,620 4,620,000 4,774,000 5,082,000
Subtotal Direct Cost of Sales 7,651,875 12,863,010 13,618,605 14,222,535 15,002,962
5.5 Milestones
Because the Company is a start-up, our milestones will surround the establishment of continuing
facilities, confirmation of sourcing and sales contracts, equipment acquisition and installation,
staffing and training, and initiating production.



Milestones
Milestone Start Date End Date Budget Manager Department
Order Equipment 1/2/2005 1/31/2005 n/a Senior Mgmnt n/a
Secure Location 1/2/2005 1/31/2005 n/a Senior Mgmnt n/a
Secure Orders/Contracts 1/2/2005 1/31/2005 n/a Senior Mgmnt n/a
Site Preparation 2/1/2005 2/25/2005 n/a Senior Mgmnt n/a
Hire Plant Manager 2/28/2005 3/15/2005 n/a Senior Mgmnt n/a
Receive Equipment 2/28/2005 3/31/2005 n/a Senior Mgmnt n/a
Hire & Train Skilled Labor 4/15/2005 4/30/2005 n/a Senior Mgmnt n/a
Begin Production 5/1/2005 5/1/2005 0 Senior Mgmnt Department
Hire & Train Unskilled Labor 4/30/2005 5/15/2005 n/a Senior Mgmnt n/a
Install Equipment 4/1/2005 4/30/2005 n/a Senior Mgmnt n/a
Totals

0



Management Summary
The three founders form the senior management group. Several qualified candidates have been
identified for the position of plant manager. The balance of the employees will be hired and
trained during the equipment purchase and installation phase (first five months after funding).
Because the sales management function will be the responsibility of Ben Braddock, with
projected use of familiar sales agents, there are no plans for additional inside sales people or
managers.
Ben Braddock and Sam McGuire have agreed to remain with the Company for the foreseeable
future. In addition to their respective duties, they will each become totally familiar with all
aspects of Senior Management, and be in a position to take over for each other should the need
arise.
Carl Smith has agreed to remain with the Company for a minimum of two years, and will assume
the responsibility of locating and training a replacement before the end of his employment.
6.1 Organizational Structure
The Organizational Structure of Replay Plastics is planned to be a simple and traditional one. All
recycling and manufacturing operations will report to the COO. All administrative and finance
functions will report to the CFO. Both the COO and CFO will report to the CEO, who will also
have the responsibility for Sales and Marketing.
6.2 Management Team
Ben Braddock, President and CEO, has a 30-year history of experience encompassing all
aspects of Polymer Raw Material, Plastic Conversion Methods, and Venture Development. He
founded Company C, a multi-cavity plastic injection molder container facility, and Company
D, a 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 Year 2 Year 3 Year 4 Year 5
Production Personnel

Shift Supervisor Tk.129,169 Tk.210,000 Tk.220,500 Tk.231,525 Tk.243,101
Maintenance Techs Tk.116,664 Tk.183,750 Tk.192,938 Tk.202,585 Tk.212,714
Skilled Recycle Plant Labor Tk.350,000 Tk.551,250 Tk.578,813 Tk.607,754 Tk.638,141
Unskilled Recycle Plant Labor Tk.164,066 Tk.295,513 Tk.310,078 Tk.325,582 Tk.341,861
Extruder Operator (full time) Tk.87,504 Tk.206,719 Tk.289,406 Tk.303,876 Tk.319,070
Extruder Operator (part time) Tk.25,522 Tk.68,906 Tk.96,469 Tk.101,292 Tk.106,357
Production Assistant (full time) Tk.62,504 Tk.147,656 Tk.206,719 Tk.217,055 Tk.227,908
Production Assistant (part
time)
Tk18,228 Tk.49,219 Tk.68,906 Tk.72,351 Tk.75,969
Name or Title or Group Tk.0 Tk.0 Tk.0 Tk.0 Tk.0
Subtotal Tk.953,657 Tk.1,713,013 Tk.1,963,829 Tk.2,062,020 Tk.2,165,121
Sales and Marketing Personnel

commission-basis - see P&L Tk.0 Tk.0 Tk.0 Tk.0 Tk.0
Name or Title or Group Tk.0 Tk.0 Tk.0 Tk.0 Tk.0
Subtotal Tk.0 Tk.0 Tk.0 Tk.0 Tk.0
General and Administrative
Personnel
President Tk.72,000 Tk.110,000 Tk.121,000 Tk.133,100 Tk.146,410
Vice Pres COO Tk.67,200 Tk.100,000 Tk.110,000 Tk.121,000 Tk.133,100
CFO Tk.67,200 Tk.100,000 Tk.110,000 Tk.121,000 Tk.133,100
Plant Manager Tk.63,000 Tk.88,200 Tk.92,610 Tk.97,241 Tk.102,103
Accountant Tk.29,200 Tk.45,938 Tk.48,235 Tk.50,647 Tk.53,179
Clerk Tk.20,800 Tk.32,813 Tk.34,454 Tk.36,176 Tk.37,985
Clerk Tk.15,600 Tk.32,813 Tk.34,454 Tk.36,176 Tk.37,985
Clerk Tk.0 Tk.32,813 Tk.34,454 Tk.36,176 Tk.37,985
Shipper Receiver Tk.27,200 Tk.42,840 Tk.44,982 Tk.47,231 Tk.49,593
Subtotal Tk.362,200 Tk.585,417 Tk.630,189 Tk.678,747 Tk.731,440
Other Personnel

Name or title Tk.0 Tk.0 Tk.0 Tk.0 Tk.0
Name or title Tk.0 Tk.0 Tk.0 Tk.0 Tk.0
Subtotal Tk.0 Tk.0 Tk.0 Tk.0 Tk.0
Total People 51 57 69 69 69
Total Payroll Tk.1,315,857 Tk.2,298,430 Tk.2,594,018 Tk.2,t740,767 Tk.2,896,561

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

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 Rate 8.00% 8.00% 8.00% 8.00% 8.00%
Tax Rate 30.00% 30.00% 30.00% 30.00% 30.00%
Other 0 0 0 0 0
7.2 Break-even Analysis
With fixed costs of about 184,000 per month in the first year, and variable unit costs at roughly
52% of prices, we need to produce and sell 715,963 units per month to break even. We will far
exceed the break-even point in our first full month of sales.



Break-even Analysis
Monthly Units Break-even 715,962
Monthly Revenue Break-even 373,890
Assumptions:

Average Per-Unit Revenue 0.52
Average Per-Unit Variable Cost 0.27
Estimated Monthly Fixed Cost 184,160
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.









Pro Forma Profit and Loss

Year 1 Year 2 Year 3 Year 4 Year 5
Sales 15,079,100 31,553,774 39,169,900 41,128,395 43,146,315
Direct Cost of Sales 7,651,875 12,863,010 13,618,605 14,222,535 15,002,962
Production Payroll 953,657 1,713,013 1,963,829 2,062,020 2,165,121
Packaging 150,791 315,538 391,699 411,284 431,463
Sales Commission 733,102 1,501,893 1,871,678 1,965,261 2,063,524
Total Cost of Sales 9,489,425 16,393,454 17,845,811 18,661,100 19,663,071
Gross Margin 5,589,676 15,160,320 21,324,090 22,467,295 23,483,244
Gross Margin % 37.07% 48.05% 54.44% 54.63% 54.43%
Operating Expenses

Sales and Marketing Expenses

Sales and Marketing Payroll 0 0 0 0 0
Advertising/Promotion 6,000 50,000 100,000 150,000 200,000
Travel 0 0 0 0 0
Total Sales and Marketing Expenses 6,000 50,000 100,000 150,000 200,000
Sales and Marketing % 0.04% 0.16% 0.26% 0.36% 0.46%
General and Administrative Expenses

General and Administrative Payroll 362,200 585,417 630,189 678,747 731,440
Sales and Marketing and Other Expenses 0 0 0 0 0
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 Rent 6,000 6,000 8,000 8,000 8,000
Office Supplies/Expense 12,000 15,000 20,000 22,500 25,000
Travel & Entertainment 16,000 30,000 35,000 40,000 45,000
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 & Maintainence Supplies 60,000 63,000 66,150 69,458 72,930
Other 0 0 0 0 0
Total General and Administrative
Expenses
1,813,257 3,264,858 3,918,098 4,109,621 4,310,831
General and Administrative % 12.02% 10.35% 10.00% 9.99% 9.99%
Other Expenses:

Other Payroll 0 0 0 0 0
Misc (contingency) 90,661 163,239 195,905 205,481 215,542
Prof Fees ( Includ legal & accounting) 300,000 330,000 363,000 399,300 439,230
Total Other Expenses 390,661 493,239 558,905 604,781 654,772
Other % 2.59% 1.56% 1.43% 1.47% 1.52%
Total Operating Expenses 2,209,918 3,808,097 4,577,003 4,864,402 5,165,603
Profit Before Interest and Taxes 3,379,758 11,352,223 16,747,087 17,602,893 18,317,641
EBITDA 3,621,498 11,758,215 17,309,995 18,165,801 18,880,549
Interest Expense 60,568 54,464 48,064 41,664 35,264
Taxes Incurred 995,757 3,389,328 5,009,707 5,268,369 5,484,713
Net Profit 2,323,433 7,908,431 11,689,316 12,292,860 12,797,664
Net Profit/Sales 15.41% 25.06% 29.84% 29.89% 29.66%
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.



Pro Forma Cash Flow

Year 1 Year 2 Year 3 Year 4 Year 5
Cash Received

Cash from Operations

Cash Sales 0 0 0 0 0
Cash from Receivables 13,094,219 29,385,192 38,167,380 40,870,596 42,880,693
Subtotal Cash from Operations 13,094,219 29,385,192 38,167,380 40,870,596 42,880,693
Additional Cash Received

Sales Tax, VAT, HST/GST Received 0 0 0 0 0
New Current Borrowing 0 0 0 0 0
New Other Liabilities (interest-free) 0 0 0 0 0
New Long-term Liabilities 0 0 0 0 0
Sales of Other Current Assets 0 0 0 0 0
Sales of Long-term Assets 0 0 0 0 0
New Investment Received 0 0 0 0 0
Subtotal Cash Received 13,094,219 29,385,192 38,167,380 40,870,596 42,880,693
Expenditures Year 1 Year 2 Year 3 Year 4 Year 5
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 20,983,849 24,120,412 25,478,360 26,824,280
Subtotal Spent on Operations 11,078,806 23,282,279 26,714,430 28,219,127 29,720,842
Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out 0 0 0 0 0
Principal Repayment of Current Borrowing 0 0 0 0 0
Other Liabilities Principal Repayment 0 0 0 0 0
Long-term Liabilities Principal Repayment 79,200 80,000 80,000 80,000 80,000
Purchase Other Current Assets 0 0 0 0 0
Purchase Long-term Assets 1,591,000 3,229,000 0 0 0
Dividends 0 3,000,000 8,000,000 10,000,000 10,000,000
Subtotal Cash Spent 12,749,006 29,591,279 34,794,430 38,299,127 39,800,842
Net Cash Flow 345,213 (206,088) 3,372,950 2,571,469 3,079,852
Cash Balance 990,213 784,125 4,157,075 6,728,544 9,808,396
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 Year 2 Year 3 Year 4 Year 5
Assets

Current Assets

Cash 990,213 784,125 4,157,075 6,728,544 9,808,396
Accounts Receivable 1,984,881 4,153,463 5,155,983 5,413,782 5,679,403
Inventory 510,125 857,534 907,907 953,302 1,000,075
Other Current Assets 25,000 25,000 25,000 25,000 25,000
Total Current Assets 3,510,219 5,820,122 10,245,965 13,120,628 16,512,874
Long-term Assets

Long-term Assets 5,211,000 8,440,000 8,440,000 8,440,000 8,440,000
Accumulated Depreciation 241,740 647,732 1,210,640 1,773,548 2,336,456
Total Long-term Assets 4,969,260 7,792,268 7,229,360 6,666,452 6,103,544
Total Assets 8,479,479 13,612,390 17,475,325 19,787,080 22,616,418
Liabilities and Capital Year 1 Year 2 Year 3 Year 4 Year 5
Current Liabilities

Accounts Payable 1,445,246 1,749,726 2,003,345 2,102,240 2,213,914
Current Borrowing 0 0 0 0 0
Other Current Liabilities 0 0 0 0 0
Subtotal Current Liabilities 1,445,246 1,749,726 2,003,345 2,102,240 2,213,914
Long-term Liabilities 720,800 640,800 560,800 480,800 400,800
Total Liabilities 2,166,046 2,390,526 2,564,145 2,583,040 2,614,714
Paid-in Capital 4,200,000 4,200,000 4,200,000 4,200,000 4,200,000
Retained Earnings (210,000) (886,567) (978,136) 711,180 3,004,040
Earnings 2,323,433 7,908,431 11,689,316 12,292,860 12,797,664
Total Capital 6,313,433 11,221,864 14,911,180 17,204,040 20,001,704
Total Liabilities and Capital 8,479,479 13,612,390 17,475,325 19,787,080 22,616,418
Net Worth 6,313,433 11,221,864 14,911,180 17,204,040 20,001,704
7.6 Business Ratios
Standard business ratios are included in the following table, along with comparison ratios for the
Thermoplastic Materials industry (SIC Code 2821.02). The ratios show a plan for healthy
growth. Our return on investment increases each year and will allow for new equipment to be
financed internally should the Company choose to do so. While the ratios indicate rapid growth
and profitability, it may be explained in part by the fact of the integration of three business
sections into the one facility. Our ratios differ significantly from the rest of the industry because
of our ability to use low-cost recycled materials to manufacture our products.

Ratio Analysis

Year 1 Year 2 Year 3 Year 4 Year 5 Industry Profile
Sales Growth 0.00% 109.26% 24.14% 5.00% 4.91% 9.27%
Percent of Total Assets

Accounts Receivable 23.41% 30.51% 29.50% 27.36% 25.11% 24.83%
Inventory 6.02% 6.30% 5.20% 4.82% 4.42% 11.53%
Other Current Assets 0.29% 0.18% 0.14% 0.13% 0.11% 32.03%
Total Current Assets 41.40% 42.76% 58.63% 66.31% 73.01% 68.39%
Long-term Assets 58.60% 57.24% 41.37% 33.69% 26.99% 31.61%
Total Assets 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Current Liabilities 17.04% 12.85% 11.46% 10.62% 9.79% 26.62%
Long-term Liabilities 8.50% 4.71% 3.21% 2.43% 1.77% 25.26%
Total Liabilities 25.54% 17.56% 14.67% 13.05% 11.56% 51.88%
Net Worth 74.46% 82.44% 85.33% 86.95% 88.44% 48.12%
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, General & Administrative
Expenses
22.36% 22.63% 24.36% 24.16% 24.37% 15.89%
Advertising Expenses 0.04% 0.17% 0.27% 0.38% 0.48% 0.17%
Profit Before Interest and Taxes 22.41% 35.98% 42.75% 42.80% 42.45% 2.46%
Main Ratios

Current 2.43 3.33 5.11 6.24 7.46 1.79
Quick 2.08 2.84 4.66 5.79 7.01 1.22
Total Debt to Total Assets 25.54% 17.56% 14.67% 13.05% 11.56% 57.88%
Pre-tax Return on Net Worth 52.57% 100.68% 111.99% 102.08% 91.40% 2.22%
Pre-tax Return on Assets 39.14% 83.00% 95.56% 88.75% 80.84% 5.28%
Additional Ratios Year 1 Year 2 Year 3 Year 4 Year 5

Net Profit Margin 15.41% 25.06% 29.84% 29.89% 29.66% n.a
Return on Equity 36.80% 70.47% 78.39% 71.45% 63.98% n.a
Activity Ratios

Accounts Receivable Turnover 7.60 7.60 7.60 7.60 7.60 n.a
Collection Days 29 36 43 47 47 n.a
Inventory Turnover 15.76 18.81 15.43 15.28 15.36 n.a
Accounts Payable Turnover 7.76 12.17 12.17 12.17 12.17 n.a
Payment Days 27 27 28 29 29 n.a
Total Asset Turnover 1.78 2.32 2.24 2.08 1.91 n.a
Debt Ratios

Debt to Net Worth 0.34 0.21 0.17 0.15 0.13 n.a
Current Liab. to Liab. 0.67 0.73 0.78 0.81 0.85 n.a
Liquidity Ratios

Net Working Capital 2,064,973 4,070,396 8,242,620 11,018,388 14,298,960 n.a
Interest Coverage 55.80 208.44 348.43 422.50 519.44 n.a
Additional Ratios

Assets to Sales 0.56 0.43 0.45 0.48 0.52 n.a
Current Debt/Total Assets 17% 13% 11% 11% 10% n.a
Acid Test 0.70 0.46 2.09 3.21 4.44 n.a
Sales/Net Worth 2.39 2.81 2.63 2.39 2.16 n.a
Dividend Payout 0.00 0.38 0.68 0.81 0.78 n.a
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
1
Month
2
Month
3
Month
4
Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
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
Sheet
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
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
1
Month
2
Month
3
Month
4
Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Recycled

0.45 0.00 0.00 0.00 0.45 0.45 0.45 0.45 0.45 0.45 0.45 0.45
Flake PET
Extruded
Roll Stock
Sheet

0.70 0.70 0.70 0.70 0.70 0.70 0.70 0.70 0.70 0.70 0.70 0.70
Extruded
Strapping
0.95 0.95 0.95 0.95 0.95 0.95 0.95 0.95 0.95 0.95 0.95 0.95
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
Sheet

0 0 0 0 0 449,120 898,310 898,310 898,310 898,310 898,310 898,310
Extruded
Strapping
0 0 0 0 0 0 0 0 0 0 0 0
Total Sales

0 0 0 0 866,250 1,892,900 2,053,325 2,053,325 2,053,325 2,053,325 2,053,325 2,053,325
Direct Unit
Costs
Month
1
Month
2
Month
3
Month
4
Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Recycled
Flake PET
0.00% 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
Sheet
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
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
Direct Cost
of Sales
Recycled
Flake PET
0 0 0 0 510,125 850,226 680,176 680,176 680,176 680,176 680,176 680,176
Extruded
Roll Stock
Sheet

0 0 0 0 0 170,024 340,075 340,075 340,075 340,075 340,075 340,075
Extruded
Strapping
0 0 0 0 0 0 0 0 0 0 0 0
Subtotal
Direct Cost
of Sales

0 0 0 0 510,125 1,020,250 1,020,250 1,020,250 1,020,250 1,020,250 1,020,250 1,020,250

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
Labor
0 0 0 0 0 23,438 23,438 23,438 23,438 23,438 23,438 23,438
Extruder Operator (full
time)
0 0 0 0 10,938 10,938 10,938 10,938 10,938 10,938 10,938 10,938
Extruder Operator (part
time)
0 0 0 0 0 3,646 3,646 3,646 3,646 3,646 3,646 3,646
Production Assistant
(full time)
0 0 0 0 7,813 7,813 7,813 7,813 7,813 7,813 7,813 7,813
Production Assistant
(part time)
0 0 0 0 0 2,604 2,604 2,604 2,604 2,604 2,604 2,604
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
Sales and Marketing

Personnel
commission-basis - see
P&L
0 0 0 0 0 0 0 0 0 0 0 0
Name or Title or Group

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
General and
Administrative
Personnel

President

2,000 2,000 2,000 2,000 8,000 8,000 8,000 8,000 8,000 8,000 8,000 8,000
Vice Pres COO

1,800 1,800 1,800 1,800 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500
CFO

1,800 1,800 1,800 1,800 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500
Plant Manager

0 0 0 7,000 7,000 7,000 7,000 7,000 7,000 7,000 7,000 7,000
Accountant

0 0 0 0 3,650 3,650 3,650 3,650 3,650 3,650 3,650 3,650
Clerk

0 0 0 0 2,600 2,600 2,600 2,600 2,600 2,600 2,600 2,600
Clerk

0 0 0 0 0 0 2,600 2,600 2,600 2,600 2,600 2,600
Clerk

0 0 0 0 0 0 0 0 0 0 0 0
Shipper Receiver

0 0 0 0 3,400 3,400 3,400 3,400 3,400 3,400 3,400 3,400
Subtotal

5,600 5,600 5,600 12,600 39,650 39,650 42,250 42,250 42,250 42,250 42,250 42,250
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

General Assumptions

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9
Month
10
Month
11
Month
12
Plan Month

1 2 3 4 5 6 7 8 9 10 11 12
Current Interest
Rate
12.00% 12.00% 12.00% 12.00% 12.00% 12.00% 12.00% 12.00% 12.00% 12.00% 12.00% 12.00%
Long-term
Interest Rate
8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00%
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

Pro Forma Profit and Loss

Month
1
Month
2
Month
3
Month
4
Month
5
Month 6 Month 7 Month 8 Month 9
Month
10
Month
11
Month
12
Sales

0 0 0 0
866,25
0
1,892,9
00
2,053,3
25
2,053,3
25
2,053,3
25
2,053,3
25
2,053,3
25
2,053,3
25
Direct Cost of
Sales
0 0 0 0
510,12
5
1,020,2
50
1,020,2
50
1,020,2
50
1,020,2
50
1,020,2
50
1,020,2
50
1,020,2
50
Production Payroll

0 0 0 0 89,584 123,439 123,439 123,439 123,439 123,439 123,439 123,439
Packaging

0 0 0 0 8,663 18,929 20,533 20,533 20,533 20,533 20,533 20,533
Sales Commission

0 0 0 0 43,313 93,041 99,458 99,458 99,458 99,458 99,458 99,458
Total Cost of Sales

0 0 0 0
651,68
4
1,255,6
59
1,263,6
80
1,263,6
80
1,263,6
80
1,263,6
80
1,263,6
80
1,263,6
80
Gross Margin

0 0 0 0
214,56
6
637,241 789,645 789,645 789,645 789,645 789,645 789,645
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
Sales and

Marketing
Expenses
Sales and
Marketing Payroll
0 0 0 0 0 0 0 0 0 0 0 0
Advertising/Promo
tion
500 500 500 500 500 500 500 500 500 500 500 500
Travel

0 0 0 0 0 0 0 0 0 0 0 0
Total Sales and
Marketing
Expenses

500 500 500 500 500 500 500 500 500 500 500 500
Sales and
Marketing %
0.00% 0.00% 0.00% 0.00% 0.06% 0.03% 0.02% 0.02% 0.02% 0.02% 0.02% 0.02%
General and
Administrative
Expenses

General and
Administrative
Payroll

5,600 5,600 5,600
12,60
0
39,650 39,650 42,250 42,250 42,250 42,250 42,250 42,250
Sales and
Marketing and
Other Expenses

0 0 0 0 0 0 0 0 0 0 0 0
Depreciation

20,145 20,145 20,145
20,14
5
20,145 20,145 20,145 20,145 20,145 20,145 20,145 20,145
Payroll Burden
30
%
1,680 1,680 1,680 3,780 38,770 48,927 49,707 49,707 49,707 49,707 49,707 49,707
Office Equipment
Rent
500 500 500 500 500 500 500 500 500 500 500 500
Office
Supplies/Expense
1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000
Travel &
Entertainment
0 0 0 0 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000
Leased Vehicles

1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500
Utilities

0 0 0 0 38,981 85,181 92,400 92,400 92,400 92,400 92,400 92,400
Insurance

2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000
Misc Plant &
Maintainence
Supplies
15
%
5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000
Other

0 0 0 0 0 0 0 0 0 0 0 0
Total General and
Administrative
Expenses

37,425 37,425 37,425 46,525
149,54
6
205,902 216,501 216,501 216,501 216,501 216,501 216,501
General and
Administrative %
0.00% 0.00% 0.00% 0.00% 17.26% 10.88% 10.54% 10.54% 10.54% 10.54% 10.54% 10.54%
Other Expenses:

Other Payroll

0 0 0 0 0 0 0 0 0 0 0 0
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
legal &
accounting)

25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000
Total Other
Expenses
26,871 26,871 26,871 27,326 32,477 35,295 35,825 35,825 35,825 35,825 35,825 35,825
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
Expenses
64,796 64,796 64,796 74,351
182,52
3
241,697 252,826 252,826 252,826 252,826 252,826 252,826
Profit Before
Interest and Taxes
(64,79
6)
(64,79
6)
(64,79
6)
(74,35
1)
32,043 395,544 536,818 536,818 536,818 536,818 536,818 536,818
EBITDA

(44,65
1)
(44,65
1)
(44,65
1)
(54,20
6)
52,188 415,689 556,963 556,963 556,963 556,963 556,963 556,963
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
6)
(21,01
2)
(20,99
9)
(23,85
2)
8,079 117,142 159,538 159,551 159,564 159,578 159,591 159,604
Net Profit

(49,06
0)
(49,02
9)
(48,99
8)
(55,65
6)
18,850 273,332 372,255 372,286 372,317 372,348 372,378 372,409
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%

Pro Forma Cash Flow

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Cash
Received
Cash from
Operations
Cash Sales

0 0 0 0 0 0 0 0 0 0 0 0
Cash from
Receivable
s

0 0 0 0 28,875
900,47
2
1,898,24
8
2,053,32
5
2,053,32
5
2,053,32
5
2,053,32
5
2,053,32
5
Subtotal
Cash from
Operations

0 0 0 0 28,875
900,47
2
1,898,24
8
2,053,32
5
2,053,32
5
2,053,32
5
2,053,32
5
2,053,32
5
Additional
Cash
Received

Sales Tax,
VAT,
HST/GST
Received
0.00
%
0 0 0 0 0 0 0 0 0 0 0 0
New
Current
Borrowing

0 0 0 0 0 0 0 0 0 0 0 0
New Other
Liabilities
(interest-
free)

0 0 0 0 0 0 0 0 0 0 0 0
New Long-
term
Liabilities

0 0 0 0 0 0 0 0 0 0 0 0
Sales of
Other
Current
Assets

0 0 0 0 0 0 0 0 0 0 0 0
Sales of
Long-term
Assets

0 0 0 0 0 0 0 0 0 0 0 0
New
Investment
Received

0 0 0 0 0 0 0 0 0 0 0 0
Subtotal
Cash
Received

0 0 0 0 28,875
900,47
2
1,898,24
8
2,053,32
5
2,053,32
5
2,053,32
5
2,053,32
5
2,053,32
5
Expenditur
es
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Expenditur
es from
Operations

Cash
Spending
5,600 5,600 5,600 12,600 129,234
163,08
9
165,689 165,689 165,689 165,689 165,689 165,689
Bill
Payments
777 23,314 23,283 23,242 37,250
494,36
0
1,684,85
8
1,495,23
5
1,495,20
4
1,495,17
3
1,495,14
2
1,495,11
2
Subtotal
Spent on
6,377 28,914 28,883 35,842 166,484
657,44
9
1,850,54
7
1,660,92
4
1,660,89
3
1,660,86
2
1,660,83
1
1,660,80
1
Operations
Additional
Cash Spent
Sales Tax,
VAT,
HST/GST
Paid Out

0 0 0 0 0 0 0 0 0 0 0 0
Principal
Repayment
of Current
Borrowing

0 0 0 0 0 0 0 0 0 0 0 0
Other
Liabilities
Principal
Repayment

0 0 0 0 0 0 0 0 0 0 0 0
Long-term
Liabilities
Principal
Repayment

6,600 6,600 6,600 6,600 6,600 6,600 6,600 6,600 6,600 6,600 6,600 6,600
Purchase
Other
Current
Assets

0 0 0 0 0 0 0 0 0 0 0 0
Purchase
Long-term
Assets

0 0 0 0 0 0 0 0 0 568,000 0
1,023,00
0
Dividends

0 0 0 0 0 0 0 0 0 0 0 0
Subtotal
Cash Spent
12,977 35,514 35,483 42,442 173,084
664,04
9
1,857,14
7
1,667,52
4
1,667,49
3
2,235,46
2
1,667,43
1
2,690,40
1
Net Cash
Flow
(12,97
7)
(35,51
4)
(35,48
3)
(42,44
2)
(144,20
9)
236,42
3
41,101 385,801 385,832
(182,137
)
385,894
(637,076
)
Cash
Balance
632,02
3
596,50
9
561,02
6
518,58
5
374,376
610,79
8
651,899
1,037,70
0
1,423,53
2
1,241,39
5
1,627,28
8
990,213

Pro Forma Balance Sheet

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9
Month
10
Month
11
Month
12
Assets
Starting
Balances
Current
Assets
Cash 645,000 632,023 596,509 561,026 518,585 374,376 610,798 651,899
1,037,7
00
1,423,5
32
1,241,3
95
1,627,2
88
990,213
Accounts
Receivable
0 0 0 0 0 837,375
1,829,8
03
1,984,8
81
1,984,8
81
1,984,8
81
1,984,8
81
1,984,8
81
1,984,8
81
Inventory 500,000 500,000 500,000 500,000 500,000 255,063 510,125 510,125 510,125 510,125 510,125 510,125 510,125
Other
Current
Assets
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
Total
Current
Assets
1,170,0
00
1,157,0
23
1,121,5
09
1,086,0
26
1,043,5
85
1,491,8
13
2,975,7
26
3,171,9
05
3,557,7
06
3,943,5
38
3,761,4
01
4,147,2
94
3,510,2
19
Long-term
Assets
Long-term
Assets
3,620,0
00
3,620,0
00
3,620,0
00
3,620,0
00
3,620,0
00
3,620,0
00
3,620,0
00
3,620,0
00
3,620,0
00
3,620,0
00
4,188,0
00
4,188,0
00
5,211,0
00
Accumulat
ed
Depreciati
on
0 20,145 40,290 60,435 80,580 100,725 120,870 141,015 161,160 181,305 201,450 221,595 241,740
Total
Long-term
Assets
3,620,0
00
3,599,8
55
3,579,7
10
3,559,5
65
3,539,4
20
3,519,2
75
3,499,1
30
3,478,9
85
3,458,8
40
3,438,6
95
3,986,5
50
3,966,4
05
4,969,2
60
Total
Assets
4,790,0
00
4,756,8
78
4,701,2
19
4,645,5
91
4,583,0
05
5,011,0
88
6,474,8
56
6,650,8
90
7,016,5
46
7,382,2
33
7,747,9
51
8,113,6
99
8,479,4
79
Liabilities
and
Capital

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9
Month
10
Month
11
Month
12
Current
Liabilities
Accounts
Payable
0 22,538 22,508 22,478 22,147 437,980
1,635,0
16
1,445,3
95
1,445,3
65
1,445,3
35
1,445,3
05
1,445,2
76
1,445,2
46
Current
Borrowing
0 0 0 0 0 0 0 0 0 0 0 0 0
Other
Current
Liabilities
0 0 0 0 0 0 0 0 0 0 0 0 0
Subtotal
Current
Liabilities
0 22,538 22,508 22,478 22,147 437,980
1,635,0
16
1,445,3
95
1,445,3
65
1,445,3
35
1,445,3
05
1,445,2
76
1,445,2
46
Long-term
Liabilities
800,000 793,400 786,800 780,200 773,600 767,000 760,400 753,800 747,200 740,600 734,000 727,400 720,800
Total
Liabilities
800,000 815,938 809,308 802,678 795,747
1,204,9
80
2,395,4
16
2,199,1
95
2,192,5
65
2,185,9
35
2,179,3
05
2,172,6
76
2,166,0
46
Paid-in
Capital
4,200,0
00
4,200,0
00
4,200,0
00
4,200,0
00
4,200,0
00
4,200,0
00
4,200,0
00
4,200,0
00
4,200,0
00
4,200,0
00
4,200,0
00
4,200,0
00
4,200,0
00
Retained
Earnings
(210,00
0)
(210,00
0)
(210,00
0)
(210,00
0)
(210,00
0)
(210,00
0)
(210,00
0)
(210,00
0)
(210,00
0)
(210,00
0)
(210,00
0)
(210,00
0)
(210,00
0)
Earnings 0
(49,060
)
(98,089
)
(147,08
7)
(202,74
3)
(183,89
2)
89,440 461,695 833,981
1,206,2
98
1,578,6
45
1,951,0
24
2,323,4
33
Total
Capital
3,990,0
00
3,940,9
40
3,891,9
11
3,842,9
13
3,787,2
57
3,806,1
08
4,079,4
40
4,451,6
95
4,823,9
81
5,196,2
98
5,568,6
45
5,941,0
24
6,313,4
33
Total
Liabilities
and
Capital
4,790,0
00
4,756,8
78
4,701,2
19
4,645,5
91
4,583,0
05
5,011,0
88
6,474,8
56
6,650,8
90
7,016,5
46
7,382,2
33
7,747,9
51
8,113,6
99
8,479,4
79
Net Worth
3,990,0
00
3,940,9
40
3,891,9
11
3,842,9
13
3,787,2
57
3,806,1
08
4,079,4
40
4,451,6
95
4,823,9
81
5,196,2
98
5,568,6
45
5,941,0
24
6,313,4
33