Executive SummaryThe 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 FundingStart-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 CapitalLiabilitiesCurrent Borrowing Tk.0 Long-term Liabilities Tk.87,680,000 Accounts Payable (Outstanding Bills) Tk.0 Other Current Liabilities (interest-free) Tk.0Total Liabilities £87,680,000 CapitalPlanned InvestmentFounders 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-upRequirementsStart-up ExpensesLegal & 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 AssetsCash 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

ProductsReplay 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 SummaryStrong 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 AnalysisYear 1 Year 2 Year 3 Year 4 Year 5

Potential Customers Growth CAGRWestern 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 materialRecycled 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 SummaryReplay 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 ForecastYear 1 Year 2 Year 3 Year 4 Year 5

Unit SalesRecycled 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 5Recycled 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 SalesRecycled 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 5Recycled 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 SalesRecycled 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.

MilestonesMilestone Start Date End Date Budget Manager DepartmentOrder Equipment 1/2/2005 1/31/2005 n/a Senior Mgmnt n/aSecure Location 1/2/2005 1/31/2005 n/a Senior Mgmnt n/aSecure Orders/Contracts 1/2/2005 1/31/2005 n/a Senior Mgmnt n/aSite Preparation 2/1/2005 2/25/2005 n/a Senior Mgmnt n/aHire Plant Manager 2/28/2005 3/15/2005 n/a Senior Mgmnt n/aReceive Equipment 2/28/2005 3/31/2005 n/a Senior Mgmnt n/aHire & Train Skilled Labor 4/15/2005 4/30/2005 n/a Senior Mgmnt n/aBegin Production 5/1/2005 5/1/2005 £0 Senior Mgmnt DepartmentHire & Train Unskilled Labor 4/30/2005 5/15/2005 n/a Senior Mgmnt n/aInstall Equipment 4/1/2005 4/30/2005 n/a Senior Mgmnt n/aTotals £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 PlanYear 1 Year 2 Year 3 Year 4 Year 5

Production PersonnelShift 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 Personnelcommission-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 PersonnelPresident 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 PersonnelName 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 PlanOnce 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 AssumptionsYear 1 Year 2 Year 3 Year 4 Year 5

Plan Month 1 2 3 4 5Current 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 AnalysisMonthly 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 LossYear 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 ExpensesSales and Marketing ExpensesSales 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 ExpensesGeneral 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 FlowYear 1 Year 2 Year 3 Year 4 Year 5

Cash ReceivedCash from OperationsCash 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 ReceivedSales 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 5Expenditures from OperationsCash 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 SpentSales 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 SheetYear 1 Year 2 Year 3 Year 4 Year 5

AssetsCurrent AssetsCash £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 AssetsLong-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 5Current LiabilitiesAccounts 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 AnalysisYear 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 AssetsAccounts 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 SalesSales 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 RatiosCurrent 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 5Net Profit Margin 15.41% 25.06% 29.84% 29.89% 29.66% n.aReturn on Equity 36.80% 70.47% 78.39% 71.45% 63.98% n.aActivity RatiosAccounts Receivable Turnover 7.60 7.60 7.60 7.60 7.60 n.aCollection Days 29 36 43 47 47 n.aInventory Turnover 15.76 18.81 15.43 15.28 15.36 n.aAccounts Payable Turnover 7.76 12.17 12.17 12.17 12.17 n.aPayment Days 27 27 28 29 29 n.aTotal Asset Turnover 1.78 2.32 2.24 2.08 1.91 n.aDebt RatiosDebt to Net Worth 0.34 0.21 0.17 0.15 0.13 n.aCurrent Liab. to Liab. 0.67 0.73 0.78 0.81 0.85 n.aLiquidity RatiosNet Working Capital £2,064,973 £4,070,396 £8,242,620 £11,018,388 £14,298,960 n.aInterest Coverage 55.80 208.44 348.43 422.50 519.44 n.aAdditional RatiosAssets to Sales 0.56 0.43 0.45 0.48 0.52 n.aCurrent Debt/Total Assets 17% 13% 11% 11% 10% n.aAcid Test 0.70 0.46 2.09 3.21 4.44 n.aSales/Net Worth 2.39 2.81 2.63 2.39 2.16 n.aDividend 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 ForecastMonth

1Month

2Month

3Month

4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Unit SalesRecycled 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 Flake PET £0.45 £0.00 £0.00 £0.00 £0.45 £0.45 £0.45 £0.45 £0.45 £0.45 £0.45 £0.45

Extruded Roll Stock Sheet

£0.70 £0.70 £0.70 £0.70 £0.70 £0.70 £0.70 £0.70 £0.70 £0.70 £0.70 £0.70

Extruded Strapping £0.95 £0.95 £0.95 £0.95 £0.95 £0.95 £0.95 £0.95 £0.95 £0.95 £0.95 £0.95

SalesRecycled 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 SalesRecycled 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 PlanMonth

1Month

2Month

3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Production PersonnelShift 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 Personnelcommission-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 PersonnelPresident £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 PersonnelName 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 12Current 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 £866,250

£1,892,900

£2,053,325

£2,053,325

£2,053,325

£2,053,325

£2,053,325

£2,053,325

Direct Cost of Sales £0 £0 £0 £0 £510,125

£1,020,250

£1,020,250

£1,020,250

£1,020,250

£1,020,250

£1,020,250

£1,020,250

Production Payroll £0 £0 £0 £0 £89,584 £123,439 £123,439 £123,439 £123,439 £123,439 £123,439 £123,439

Packaging £0 £0 £0 £0 £8,663 £18,929 £20,533 £20,533 £20,533 £20,533 £20,533 £20,533

Sales Commission £0 £0 £0 £0 £43,313 £93,041 £99,458 £99,458 £99,458 £99,458 £99,458 £99,458

Total Cost of Sales £0 £0 £0 £0 £651,684

£1,255,659

£1,263,680

£1,263,680

£1,263,680

£1,263,680

£1,263,680

£1,263,680

Gross Margin £0 £0 £0 £0 £214,566 £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 ExpensesSales and Marketing Payroll £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0

Advertising/Promotion £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 ExpensesGeneral and Administrative

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

PayrollSales and Marketing and Other Expenses

£0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0

Depreciation £20,145 £20,145 £20,145 £20,145 £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 £149,546 £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

(£64,796)

(£64,796)

(£64,796)

(£74,351) £32,043 £395,544 £536,818 £536,818 £536,818 £536,818 £536,818 £536,818

EBITDA (£44,651)

(£44,651)

(£44,651)

(£54,206) £52,188 £415,689 £556,963 £556,963 £556,963 £556,963 £556,963 £556,963

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 (£21,026)

(£21,012)

(£20,999)

(£23,852) £8,079 £117,142 £159,538 £159,551 £159,564 £159,578 £159,591 £159,604

Net Profit (£49,060)

(£49,029)

(£48,998)

(£55,656) £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 FlowMonth 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Cash ReceivedCash from OperationsCash Sales £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 Cash from Receivables £0 £0 £0 £0 £28,875 £900,47

2 £1,898,248

£2,053,325

£2,053,325

£2,053,325

£2,053,325

£2,053,325

Subtotal Cash from Operations

£0 £0 £0 £0 £28,875 £900,472

£1,898,248

£2,053,325

£2,053,325

£2,053,325

£2,053,325

£2,053,325

Additional Cash ReceivedSales Tax, VAT,

0.00%

£0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0

HST/GST ReceivedNew 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 £900,472

£1,898,248

£2,053,325

£2,053,325

£2,053,325

£2,053,325

£2,053,325

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

Expenditures from OperationsCash 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 £1,684,858

£1,495,235

£1,495,204

£1,495,173

£1,495,142

£1,495,112

Subtotal Spent on Operations

£6,377 £28,914 £28,883 £35,842 £166,484 £657,449

£1,850,547

£1,660,924

£1,660,893

£1,660,862

£1,660,831

£1,660,801

Additional Cash SpentSales 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 £1,023,000

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 £1,857,147

£1,667,524

£1,667,493

£2,235,462

£1,667,431

£2,690,401

Net Cash (£12,977 (£35,514 (£35,483 (£42,442 (£144,209 £236,42 £41,101 £385,801 £385,832 (£182,137 £385,894 (£637,076

Flow ) ) ) ) ) 3 ) )Cash Balance £632,023 £596,509 £561,026 £518,585 £374,376 £610,79

8 £651,899 £1,037,700

£1,423,532

£1,241,395

£1,627,288 £990,213

Pro Forma Balance SheetMonth 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 £1,037,700

£1,423,532

£1,241,395

£1,627,288 £990,213

Accounts Receivable £0 £0 £0 £0 £0 £837,375 £1,829,8

03 £1,984,881

£1,984,881

£1,984,881

£1,984,881

£1,984,881

£1,984,881

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

£1,170,000

£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

£4,147,294

£3,510,219

Long-term AssetsLong-term Assets

£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

£4,188,000

£5,211,000

Accumulated Depreciation

£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

£3,620,000

£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

£3,966,405

£4,969,260

Total Assets

£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

£8,113,699

£8,479,479

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 LiabilitiesAccounts Payable £0 £22,538 £22,508 £22,478 £22,147 £437,980 £1,635,0

16 £1,445,395

£1,445,365

£1,445,335

£1,445,305

£1,445,276

£1,445,246

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 £1,635,016

£1,445,395

£1,445,365

£1,445,335

£1,445,305

£1,445,276

£1,445,246

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 £2,395,416

£2,199,195

£2,192,565

£2,185,935

£2,179,305

£2,172,676

£2,166,046

Paid-in Capital

£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

£4,200,000

£4,200,000

Retained Earnings

(£210,000)

(£210,000)

(£210,000)

(£210,000)

(£210,000)

(£210,000)

(£210,000)

(£210,000)

(£210,000)

(£210,000)

(£210,000)

(£210,000)

(£210,000)

Earnings £0 (£49,060) (£98,089) (£147,087)

(£202,743)

(£183,892) £89,440 £461,695 £833,981 £1,206,2

98 £1,578,645

£1,951,024

£2,323,433

Total Capital

£3,990,000

£3,940,940

£3,891,911

£3,842,913

£3,787,257

£3,806,108

£4,079,440

£4,451,695

£4,823,981

£5,196,298

£5,568,645

£5,941,024

£6,313,433

Total Liabilities and Capital

£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

£8,113,699

£8,479,479

Net Worth £3,990,000

£3,940,940

£3,891,911

£3,842,913

£3,787,257

£3,806,108

£4,079,440

£4,451,695

£4,823,981

£5,196,298

£5,568,645

£5,941,024

£6,313,433