good earth resources

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Table of Contents

Page 1

1.0 Executive Summary.............................................................................................................................1Chart: Highlights ......................................................................................................................3

1.1 Objectives ...................................................................................................................................31.2 Mission ........................................................................................................................................31.3 Keys to Success ........................................................................................................................4

2.0 Company Summary.............................................................................................................................42.1 Company Ownership .................................................................................................................42.2 Start-up Summary ......................................................................................................................4

Table: Start-up .........................................................................................................................5Table: Start-up Funding ..........................................................................................................6Chart: Start-up .........................................................................................................................7

2.3 Company Locations and Facilities ..........................................................................................72.3.1 Rail Spur Purchase at D&L Landfill.............................................................................7

3.0 Services................................................................................................................................................73.1 Service Description ...................................................................................................................83.2 Competitive Comparison ..........................................................................................................83.3 Sales Literature ..........................................................................................................................93.4 Technology..................................................................................................................................93.5 Future Services ..........................................................................................................................9

3.5.1 New York City Waste Stream ....................................................................................104.0 Market Analysis Summary................................................................................................................11

4.1 Market Segmentation ..............................................................................................................114.1.1 Market Trends .............................................................................................................114.1.2 Value Enhancing Factors ...........................................................................................12

4.2 Target Market Segment Strategy...........................................................................................124.2.1 Market Trends .............................................................................................................13

Table: Market Analysis................................................................................................13Chart: Market Analysis (Pie) ......................................................................................14

4.2.2 Market Growth .............................................................................................................145.0 Sales Forecast ..................................................................................................................................15

Chart: Sales Monthly.............................................................................................................16Table: Sales Forecast ..........................................................................................................16

6.0 Management Summary ....................................................................................................................176.1 Organizational Structure..........................................................................................................176.2 Management Team .................................................................................................................176.3 Management Team Gaps .......................................................................................................186.4 Personnel Plan .........................................................................................................................19

Table: Personnel ...................................................................................................................197.0 Strategy and Implementation Summary ..........................................................................................19

7.1 Competitive Edge....................................................................................................................197.2 Milestones ................................................................................................................................20

Table: Milestones..................................................................................................................207.3 Marketing Strategy ..................................................................................................................20

8.0 Financial Plan ....................................................................................................................................218.1 Important Assumptions............................................................................................................21

Table: General Assumptions ...............................................................................................218.2 Break-even Analysis................................................................................................................22

Table of Contents

Page 2

Chart: Break-even Analysis .................................................................................................22Table: Break-even Analysis .................................................................................................22

8.3 Projected Profit and Loss .......................................................................................................23Table: Profit and Loss ..........................................................................................................23

8.4 Projected Cash Flow ...............................................................................................................24Table: Cash Flow ..................................................................................................................24

8.5 Projected Balance Sheet ........................................................................................................25Table: Balance Sheet ...........................................................................................................25

8.6 Business Ratios .......................................................................................................................25Table: Ratios .........................................................................................................................26

Table: Sales Forecast ...............................................................................................................................1Table: Personnel ........................................................................................................................................2Table: General Assumptions ....................................................................................................................3Table: Profit and Loss ...............................................................................................................................4Table: Cash Flow .......................................................................................................................................5Table: Balance Sheet ................................................................................................................................6

Good Earth Resources, Inc.

Page 1

1.0 Executive Summary

Objective

Nationwide, many landfills are closing or exhausting their remaining capacity, yet due toenvironmental restrictions, zoning laws, and other regulatory and bureaucratic delays, pitifullyfew new landfills are opening to offset the looming space crisis. Meanwhile municipal wastecontinues to flow in greater volume. Handling the nation's waste stream has become a majorproblem for most municipalities. With more waste created daily, landfills nationwide are rapidlyfacing a capacity crisis. Landfills are akin to owning a reverse gold mine.

Good Earth Resources, Inc. (GER) has been formed to provide a solution for municipal wasteproblem in the St. Louis, Missouri area and capitalize on the lucrative benefits of possessingfully permitted landfills.

The Operation

There are four components in this operation: purchase two landfills; sort and recycle incomingwaste; import an out-of-state waste stream; and convert landfill gas to either electricity or afuel alternative.

GER will purchase the landfills, one in Eastern Missouri (Martin Creek Landfill) and one in SouthernIllinois (Barton Sanitary Landfill). Both landfills are near St. Louis, Missouri and the initial wastestream for both landfills will emanate from the St. Louis area.

At both landfills, all waste will be sorted and recyclables removed. The remainder will becompacted, baled, and buried in the landfills. Today, only 10% of the landfills nationwide performthese functions, the remainder preferring to dump raw waste into their landfills, therebyignoring a substantial source of income.

GER will accept direct delivery of waste to its landfills, dispatch its own road tractors to bringmore distant waste, and rail-haul waste from New York City and Chicago. Hauling Missouriwaste assures GER a steady waste stream, independent of other sources, to meet its incomeprojections in the first month of operations. Initially, GER expects to accept as much as 1,540tons to its landfills daily.

Unique Features

At the landfills incoming waste will be dumped into receiving facilities designed to containwaste vapors, control vectors, and house machinery. The waste is moved onto conveyersfrom which employee-sorters remove all paper, cardboard, glass, plastic, and metals. These willbe sold for a substantial profit, and the remainder compressed into two-thirds cubic yard bales.Bales will be stacked in a large, PVC-wrapped cell in the landfill that allows efficient capture ofthe methane gas. Most landfills do none of this.

Removing recyclable materials and baling the remaining organic waste adds considerable value toGER's asset base, the permitted property, by reducing the volume thereby adding to the life ofthe landfill. Further, recyclable sales add to gross revenues.

Landfill Valuation

Landfills are valued by the volume of waste in cubic yards ("air yards") that can be deposited


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into the permitted area. By compacting, the deposited volume is increased five-fold. Forinstance, the Martin Creek landfill permit covers an area of 42 acres to accept 3,612,000 cubicyards. 2,000 cubic yards of loose waste buried daily without compaction would fill the landfill in6+ years. By recycling, compacting and baling, 2,000 yards is reduced to 220 cubic yards andthe life of the landfill is extended to 32 years. This increases both value and gross income.

The current fee per cubic yard of waste is $11.33 ($34.00 per ton) in the St. Louis area. 2,000cubic yards/day of loose waste for 42 acres generates $35,328,000 in 6+ years. By recycling,compacting and baling, the same area can be used for 32 years and generates $176,640,000or daily volume can be increased. Sorting and compacting costs are minor in comparison to thevaluation increase, and recyclables offset these expenses.

Company Objectives

Anticipating agreements from waste haulers, GER expects to collect 940 tons daily for Barton inthe first months of operations. This generates in excess of $5,500,000 revenues per year. Anadditional 600 tons/day for Martin Creek, transported to Barton during Martin Creek'sconstruction, adds $4,000,000 more. Investors can expect an outstanding annual return aswell as ownership in a profitable business with dividends in the first year.

GER principals will seek other sources of waste to augment this projected waste stream, such asNew York City, Chicago, and other large municipalities. Rail spurs are part of this plan and,once operational, will facilitate the incoming flow of waste from distant cities.

Within twelve months of commencing operations, GER will collect the methane gas and convert itto saleable energy in the form of either electricity sold into the national grid or methanol forsale as a gasoline alternative. This will augment annual revenues.

Management

The principals of GER are experienced in every aspect of this business and are founding thiscompany to meet the growing need for sought-after landfills in the St. Louis area, as well as tooperate a profitable business.

Don Smith, co-founder of GER, has extensive experience in waste collection, landfill operation,and waste handling. He operated three of Chicago's major landfills during the mid 1980s, aswell as one in Gary, Indiana. Later he managed a hazardous waste facility in Scott City, Missouri.His expertise in working with the Department of Natural Resources resulted in the landfill permitthat the property now possesses. He constructed and operated a municipal waste transferstation in Wellston, Missouri in 1984.

John App, co-founder of GER, has a strong background in finance and marketing and willconcentrate on developing the out-of-state waste stream sources from New York City andChicago. Mr. App has owned and operated several businesses over the years as well as servingas a founding board member of Capital Bank of Carlsbad, California, being elected to theOrange County California Board of Education in 1974, and being a founding member of the OrangeCounty California Marine Institute at Dana Point, California.

G. Calvin Rathbone, Esq. serves as corporate counsel to GER and with a strong salesbackground, will also assist in developing out of state waste stream sources. Mr. Rathbone'sprevious experience includes manager of sales and marketing for a company providingequipment for the exploration and production of oil and gas.

General Plan of Action


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At this time, the principals of GER are seeking a $16,469,951 net investment to:

1. Purchase both the Martin Creek and Barton landfills.2. Augment the daily waste stream to Barton landfill by hauling waste.3. Install sorting and compacting machinery at Barton to maximize landfill life.4. Complete the construction of Martin Creek landfill.5. Lease or purchase machinery and vehicles needed for operations.6. Build two transfer stations to collect waste in Missouri cities.7. Utilize methane generated to augment revenues.

1.1 Objectives

1. Sales in excess of $6,000,000 ($11,000,000 with an additional 600 tons/day designatedfor Martin Creek) for the first twelve months of operations by augmenting the incomingwaste to Barton landfill and growing each year thereafter.

2. Build the recycling facility at Barton with at least one compactor/baler installed androom for expansion to two compactor/balers.

3. Construct Martin Creek landfill and extend the landfill permit to include an additional 80acres.

4. Purchase property to renovate an existing, abandoned rail spur near Barton landfill.Construction will require approximately ninety days.

5. Continue to market Martin Creek and Barton by contacting and soliciting business fromadditional cities and hauling firms, including out-of-state sources.

1.2 Mission


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In the instance where some waste haulers would normally direct waste to other landfills, GER willhaul that waste from certain designated transfer stations to either of its two landfills. This willbenefit both parties, since it will lower GER customer's costs, and through GER's more efficienttransportation, will provide an additional waste stream to GER.

GER will remove and sell all recyclable materials. At the landfills, GER will accept used vehicletires for income. Every aspect of this operation not only increases the cash flow, but alsoprotects the environment. GER principals will take the necessary steps to utilize every resourceto ensure environmental protection.

1.3 Keys to Success

1. Concentrate on bringing to Martin Creek and Barton as much waste capacity as possible.2. Process the waste stream as efficiently and profitably as possible. Strive to reduce

down time and stoppages.3. Operate the landfill operation as efficiently and safely as possible using every method to

increase profits yet maintain a high concern for the environment.4. Maintain family-like atmosphere for all associated with GER, co-workers and customers

alike.

2.0 Company Summary

GER intends to operate two landfills, Martin Creek and Barton. At both landfills, waste will besorted to remove 99% of all recyclable materials. The remaining waste will be compacted intobales and deposited into the landfills.

Six months to one year after starting operations, management will commence capturing methanegas generated in the landfill and utilize it for commercial purposes as well as to generate allelectricity for the landfill operations. (See Section on Operations for details on use of landfillgas).

2.1 Company Ownership

GER is a Missouri Corporation with ownership held in the following manner. There are threeprincipals, one with operational duties and control, one with administrative duties and control,and a corporate counsel. Investors will receive an ownership percentage of the corporation,board of director seats, and first-out status of any liquidity plan. Ownership percentage will bebased on investment and contribution.

2.2 Start-up Summary

The principals seek $4,000,000 net in investor funds.

In phase one, the first funds will be utilized to close escrow on both Martin Creek and Bartonlandfills. Barton is a fully operational business. Hauling waste from the transfer stations willimmediately augment the waste stream and revenues.


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At Martin Creek, the construction phase involves complying with current state ordinances,installing additional monitoring wells, submitting a financial instrument, obtaining insurance,leasing equipment, and completing site development. This will require between seven andtwelve months.

In phase two, management will install conveyers, compactors, and the baling systems. A permitto recycle incoming waste will be readily obtainable, since both states are eager to comply withfederal requirements mandating recycling. Construction of this facility will require approximatelysix months.

Each site will have a facility to house a compactor/baler and expansion space for a second balingsystem. These facilities will be built after cash flow is assured and initial operations commence.Both landfills will have identical equipment.

Included in the purchase will be the rail spur sites and outlying transfer stations for bothBarton and Martin Creek. Ongoing income will support rail spur renovation.

Table: Start-up

Start-up

Requirements

Start-up Expenses

Legal $10,000

Insurance $10,672

Total Start-up Expenses $20,672

Start-up Assets

Cash Required $129,328

Other Current Assets $350,000

Long-term Assets $7,000,000

Total Assets $7,479,328

Total Requirements $7,500,000


Page 6

Table: Start-up Funding

Start-up Funding

Start-up Expenses to Fund $20,672

Start-up Assets to Fund $7,479,328

Total Funding Required $7,500,000

Assets

Non-cash Assets from Start-up $7,350,000

Cash Requirements from Start-up $129,328

Additional Cash Raised $0

Cash Balance on Starting Date $129,328

Total Assets $7,479,328

Liabil ities and Capital

Liabil ities

Current Borrowing $3,500,000

Long-term Liabil ities $0

Accounts Payable (Outstanding Bills) $0

Other Current Liabil ities (interest-free) $0

Total Liabil ities $3,500,000

Capital

Planned Investment

Investment Amount $4,000,000

Other $0

Additional Investment Requirement $0

Total Planned Investment $4,000,000

Loss at Start-up (Start-up Expenses) ($20,672)

Total Capital $3,979,328

Total Capital and Liabil ities $7,479,328

Total Funding $7,500,000


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2.3 Company Locations and Facilities

GER intends to purchase the adjacent 293 acres to Martin Creek for the following reasons. TheMissouri and Southern Rail line runs through this property and a rail spur can be constructed toaccept rail cars loaded with waste from distant sources, (New York and Chicago). Owning thisproperty will allow GER to haul waste from the rail spur to the landfill on company roads ratherthan using county roads. The property is an abandoned Barite strip mine with diminished landvalue, and may eventually be permitted as a landfill. It constitutes an additional buffer for thelandfill.

2.3.1 Rail Spur Purchase at D&L Landfill

An abandoned rail spur and receiving facility is situated a quarter of a mile from the Bartonlandfill. GER will purchase this property in order to accept waste from distant municipalities.Funds for this purchase and its renovation have been allocated.

3.0 Services

Martin Creek and Barton landfills are close, easy-access locations for St. Louis metropolitanarea waste hauling firms to dispose of solid municipal waste. By sending GER road tractors tohaul waste to its sites from more distant waste transfer stations, the tonnage starting with thefirst day of operations will be assured.

Receiving facilities are enclosed buildings into which all incoming waste is dumped. This waste willbe hand sorted removing 99% of all recyclables, then compacted, baled, and moved to the


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landfill.

The bales will form "bale cells" which include conduits for landfill gas capture. Each cell will besealed in order to create an anaerobic environment for optimum gas generation and vectorcontrol.

After constructing the recycling facility and obtaining a permit, used tires will be crumbled andused throughout the landfill instead of crushed rock (inside bale cells to protect gas conduits, onlandfill roads, and in the drainage system). Currently used tires generate an income of $1.75 to$2.00 per tire. Approximately 30,000 to 43,000 tires can be used per acre of landfill. Thiseliminates the cost of rock and requires no additional space for disposal.

Each bale cell will be wrapped with 60 mil polyvinyl chloride (PVC) sheets and sealed on allsides to trap and collect methane gas generated. Landfill gas is 55% methane (CH4), 45%carbon dioxide (C02), with trace amounts of nitrogen (N). The gas is cleaned, dried, andseparated with membranes and filters. The methane can be used as fuel for electrical generatorson site, providing substantial electricity savings.

Sales of electricity into the electrical grid is an alternate source of income for GER. Althoughlarge electric generators represent a significant capital investment, there is ample return oninvestment to warrant such expenditure. This option has the potential of adding approximately$4,000,000+ annually to the gross income.

Another process requiring different equipment and a significant capital investment is reformingthe methane into methanol and food-grade C02. This process requires filtering, scrubbing, andbottling C02 for use in food and carbonated drinks and methanol for use as fuel, solvents, andwindshield washer fluid.

In bulk form, methanol sales can generate $0.48 per gallon. As a vehicle fuel, this product iscalled M-85 and contains a mixture of 85% methanol and 15% gasoline and is used in vehiclesthat have dual configured engines. As the price of gasoline skyrockets, this method has morepotential for an excellent adjunct profit center. All major automobile manufacturers offerassembly-line automobiles capable of using both M-85 and regular gasoline products in thesame vehicle.

3.1 Service Description

Landfill tipping (dumping) fees are $34.00/ton ($11.33/yd) in St. Louis and nearbymunicipalities. In nearby Washington County, GER will provide landfill dumping for $28.00/ton($9.33/yd). Tipping fees in Bond County, Illinois, the location of Barton landfill, are considerablylower at $18.00/ton ($6.50/yd) since the owners have not raised rates in over six years. GERwill address rate increases at Barton after acquiring the business.

3.2 Competitive Comparison

There are several types of competitors:

1. Currently there are two landfills operating in St. Louis County, and two in Illinois acrossthe Mississippi River twenty-five miles from downtown St. Louis. Waste trucks cross theriver daily to the Illinois landfills. Round trip for a truck generally requires an hour and a


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half. At the landfills, roads are muddy in the fall, spring, and winter and dusty in thesummer. Here is where the majority of waste truck breakdowns occur due to puncturedtires, stalling, and mechanical problems. Both Martin Creek and Barton landfills will havepaved dumping areas. Operation hours will be longer as well (6 AM to 8 PM daily and 6 AMto 2 PM on Saturdays). In the four hours after other landfills are closed, GER landfillswill attract hauling firms whose trucks have been delayed during the day, or whose pickuproutes are longer.

2. A city-owned transfer station on the south side of St. Louis operated by USA Wastewill continue to service the southern side of the city. The charge for outside wastecompanies to dump at this facility is $35.93/ton. The facility is managed by USAWaste under contract with the city of St. Louis. Collected waste is hauled to a landfillowned by USA Waste in Milan, Illinois. Fees for the two landfills in Illinois are $34.00 perton. USA Waste inquired about diverting a portion of their waste stream to Barton. However, the owners of Barton declined as they did not desire to add additionalemployees that an increased waste stream would require.

3.3 Sales Literature

GER will prepare maps and information about Martin Creek and Barton for dissemination tousers. Sales personnel will visit each nearby waste hauler with pricing, maps, and reminders ofthe facility. Especially noted will be hours of operation, free coffee and sodas for drivers, savingson driving distances, and all other benefits users can obtain when using GER's facilities.

3.4 Technology

GER intends to lease the most modern equipment for its operation. This will include powerfulbalers, shredders, and conveyers. Much of this equipment has been used in the recyclingindustry over the past 10-20 years and has been modified to handle normal waste streammaterial.

Initially trucks, loaders, and tractors will be leased. In time, GER will purchase these vehicles.Should it opt to construct the methanol reformation facility, the vehicles GER purchases will havemethanol fuel engines allowing the use of either methanol or conventional fuels.

New technology to assist in landfill gas generation continues to be developed. Cleaner gas,new processes, and techniques enhance GER's capability of using landfill gas more effectively.

GER intends to install monitoring systems at the landfill to allow managers and officers to observeactivity, verify trucks and loads by remote access and computers.

3.5 Future Services

After the landfill has been operating for at least six months, GER will commence collectingmethane gas to power electrical generators. During the first six months, the primary effort will bespent stabilizing the basic operation and working out start-up problems. Subsequently,


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decisions regarding the final utilization of methane will be made.

Marketing programs will commence to bring in baled waste from cities such as Chicago, Boston,Cleveland, New York, Washington, Providence, Hartford, Newark, and Philadelphia, as well asother Missouri municipalities and markets, such as Fort Leonard Wood, a U.S. Army baseapproximately 85 miles from the landfill in Rolla, Missouri. All of these locations have increasingproblems with burgeoning waste and fewer available landfills. Rail-hauling baled waste isexpected to be a significant profit center for GER.

New York City's residential waste fees are normally $140.00 per ton (currently being held at anartificially low price by city government), whereas St. Louis fees are $34.00 per ton. The railaccess at both GER landfills allow importation of this high profit waste stream. Rail shippingcosts are approximately $7.00 per ton, thus facilitating reasonable means to import thisprofitable source of income in a manner that does not attract attention by using surface roads.

Income from methane gas generation will be gravy for an already lucrative waste and recyclingbusiness. Nationwide electrical and gasoline shortages add an urgency to utilize this valuablebyproduct. The American Methanol Institute has been helpful in providing information regardingmethane reformation into methanol.

The cost of waste removal is expected to rise dramatically over the next decade. GERselected its landfill sites in rural locations, yet reasonably close to a major population center tocapitalize on the growing need for landfills. Martin Creek and Barton are optimally situated totake advantage of the impending rising costs and landfill closure crisis.

GER intends to defuse any public concern by maintaining highly sanitary facilities that useozone generators to eliminate odors, insects, and rodents. Baled waste does not cause thelandfill to have the messy, littered appearance of traditional landfills. Baled waste is dense,and, with paper and other recyclables removed, there is minimal blowing waste to litter thearea. The "active" area is covered by earth and Poly Vinyl Chloride (PVC) sheets, thusreducing odor, vectors, birds, and insects.

3.5.1 New York City Waste Stream

Every five days New York City's garbage could fill Yankee Stadium. New York City has beenwrestling with its garbage disposal for many years now. Its only landfill, Fresh Kills on StatenIsland, recently closed. With this closure, its problem has reached crisis proportions. New YorkUSA Waste personnel are scrambling to find a "home" for their never-ending waste. It is theintent of Good Earth Resources to import a portion of this lucrative waste stream. New YorkCity residents and businesses are charged in excess of $1.5 billion per year to dispose of theirgarbage. New York City pays $46.00 cubic yard ($140.00/ton) to dispose its waste, while therate in St. Louis is $11.33 cubic yard ($34.00/ton).

Currently most of the New York City waste stream is exported via truck and barge. Necessarily,the truck traffic passes through New Jersey and its residents, greatly dissatisfied with thistraffic, continually seek means to stop it. Furthermore, destination states such as Virginia,Pennsylvania, and others also wish to limit waste truck traffic and waste importation. Thispresents an unusual opportunity for GER. By using rail-hauling and on-site rail spurs, there will beminimal awareness on imported waste. Income from 1,000 tons per day from New York City toeach GER landfill will increase the return on investment significantly.


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4.0 Market Analysis Summary

Barton landfill will be in a positive cash flow condition at close of escrow. During the firstmonth of operations, GER road tractors will haul waste from transfer stations in the cities ofSt. Louis and St. Charles to the landfill at the rate of 690 tons per day. This will supplement thelocal waste stream of 250 tons per day to bring the total to over 940 tons per day. Anadditional 600 tons per day is available from sources near Martin Creek landfill and until MartinCreek construction is complete, GER intends to haul this waste to Barton as well.

With commitments from St. Louis waste collection firms and local hauling firms, GER expects toattain the break-even mark within the first 60 to 90 days after assuming ownership. Once thisbenchmark is passed, primary focus will be on generating more customers both in the local St.Louis, Washington, Jefferson, and St. Francis Counties.

Martin Creek landfill will require a period of seven to twelve months of construction to becomeoperational. By that time, GER will be able to direct sufficient waste from St. Louis and othermunicipalities to Martin Creek to create a positive cash flow in the first month of operation.

4.1 Market Segmentation

GER personnel plan to contact waste generators, such as food processing plants, breweries(Anheuser Busch), pet food manufacturers (Purina Dog Chow), restaurants, and financialinstitutions. Marketing personnel will contact each waste hauler in this part of Missouri andIllinois, alerting them to GER locations, hours and rates.

4.1.1 Market Trends

The most important market trend, landfill closures, favors GER. There are fewer and fewerlandfills, while more and more families are moving to suburban locations, discouraging newlandfills from opening and expediting the closure of those currently in use. The "nimby" (not in myback yard) cry prevents new landfills from being permitted or significantly slowing the process.State governments refuse to override citizens who adamantly fight landfill construction near theirhomes even at the prospect of even higher waste collection charges. Neither Martin Creek norBarton landfills have to experience a public hearing phase. Public opposition to landfills andtransfer stations serves to push waste disposal costs higher with transportation to more distantlandfills.

Of the companies focused on the profitable business of waste removal, only a minor number havedeveloped an efficient method to remove the gas generated from buried waste. Ninety-eightpercent of landfills use earth as a cover ("cut and fill") rather than PVC covering. This reducesgas purity and volume. Older waste burial practices cause gas retrieval to be difficult andexpensive, while the bale cell system GER intends to use will capture the majority of the gas.Sealed cells reduce leachate leakage and water table contamination. Gas production willprovide revenues for many years to come.

The U.S. Environmental Protection Agency's Office of Solid Waste identifies by name and locationNon-Hazardous Waste landfills throughout the United States and U.S. territories every severalyears. 1986 was the first year this census was taken and there were 7,683 landfills identified.


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In 1992 the document was updated and showed a decline to 5,345 landfills. In 1995, thedocument was updated once again and showed a further decline in landfills to 3,581. (SourceU.S. Environmental Protection Agency website http://www.epa.gov/epaoswer/non-hw/muncpl/landfilVtflist). This report substantiates the increasing value of a landfill permit and the increasingdifficulty to obtain a permit to dispose of municipal waste. The trend is obviously favorable forowners of landfills that are available to accept waste. It will not be many years before ratesincrease substantially and even local waste fees will skyrocket.

4.1.2 Value Enhancing Factors

As mentioned, landfills are becoming more and more scarce, especially on the easternseaboard. Those possessing permitted landfills own virtual gold mines as values continue torise. Martin Creek landfill has 284 acres with 42 acres currently permitted by the MissouriDepartment of Natural Resources. Barton Sanitary landfill has 300 acres and a permitted areaof 65 acres and is permitted by the State of Illinois Environmental Protection Agency.

Martin Creek will treble in valuation when construction is complete. A typical landfill with finalpermits ready for operation carries a price tag from $6-7 million, and, in some cases, more.

Over the past decade, recycling has reached every household in the United States. Manymunicipalities have mandatory recycling laws. It makes economic sense for people to removerecyclables from the waste stream. This is a practice that can help preserve the earth'sresources. Even when citizens remove the majority of recyclables, an operation such as isproposed in this plan will remove an additional 25% of the volume in white paper, cardboard,glass, plastic, ferrous, and aluminum. GER is performing the ultimate "recycling" by enclosingthe baled waste and capturing the gas to be used for productive, profitable means. By using thisoften-wasted energy, our national dependency on fossil fuels may diminish, albeit slightly. Eachbale cell generates methane for years after closure.

Several factors, then, accrue to the benefit of GER. Owning landfills with rail access in theheartland of the USA, landfill closures, population growth, rising waste removal costs, technologyadvances, and continued fossil fuel dependency adds up to excellent market growth andexemplary value in return for each invested dollar and hour of effort. Landfill gas capture willprovide income long after the waste operation ceases.

4.2 Target Market Segment Strategy

There are two large national players operating in practically every major city in the UnitedStates, Associated Waste and USA Waste Technologies. Both are NYSE listed and both exceed$1 billion per year in revenues. Their operations include collecting waste, both business andresidential, operating transfer stations and landfills.

GER intends to work with both USA Waste and Associated Waste. It may appear that GER will bein competition with these companies, however, in the St. Louis area, the landfills owned byUSA Waste are in Illinois, some 30 miles (60 miles round trip) and 40 miles (80 miles round trip)from the city. Associated Waste manages a landfill in St. Louis owned by the Catholic Churchdue to close in less than eighteen months. Associated also owns a landfill in Roxana, Illinoissomewhat more distant than the USA Waste landfills.

USA Waste has offered to provide GER with nearly 700 tons/day of waste in the vicinity of


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Martin Creek. It has also inquired about purchasing Martin Creek landfill at a future date. Asmentioned previously, USA Waste approached the present owners of Barton to acceptoverflow waste as it attempts to reduce the waste flow to its Milan, Illinois landfill.

GER has contacted local hauling companies for some or all of their business. For thesecompanies, a favorable location with more favorable hours of operation will be of benefit to theowners who realize a closer landfill and longer hours will help increase their profitability.

Currently there is a proposal for several small municipalities in Eastern Missouri to join in an effortto develop a landfill property to meet their collective needs for the next twenty fiveyears. With a projected cost of $37,250,000 there is staunch opposition to the project. The factthat local government would consider such a high cost project underscores the value of MartinCreek and Barton.

4.2.1 Market Trends

Landfills or transfer stations are selected, if dumping fees are the same, solely due to theproximity of the waste hauler's route to their facility. Most likely, Martin Creek or Barton willnot capture the business from hauling firms whose facilities are more than 100 miles distant,unless they need to dump their load after the closing hours of the other facilities. On the otherhand, the hauling firms whose routes are close to the landfill will find these locations a boon totheir business.

Both Martin Creek and Barton will accept waste on Saturdays. Small trucks and local residentswill utilize the facility during this time. Rates for this type of waste are generally higher thanfor commercial waste hauling firms.

Table: Market Analysis

Market Analysis

Year 1 Year 2 Year 3 Year 4 Year 5

Potential Customers Growth CAGR

Small Haulers 15% 700 805 926 1,065 1,225 15.02%

Big Three Haulers 10% 1,280 1,408 1,549 1,704 1,874 10.00%

Private 25% 100 125 156 195 244 24.98%

Total 12.59% 2,080 2,338 2,631 2,964 3,343 12.59%


Page 14

4.2.2 Market Growth

As mentioned in preceding sections, Associated Waste and USA Waste Technologies are the twomajor firms in the waste business nationwide. Both are NYSE listed. Their operations includecollecting residential and commercial waste, operating transfer stations, and operating landfills.

Total daily waste collected in the metropolitan St. Louis area, that includes St. Louis city andCounty, St. Charles County, and Jefferson County, is estimated at between 12,000 and 16,000yards per day. GER can immediately take 10% of this waste stream daily without competitiveconcern. In time GER expects to obtain a greater percentage of this waste stream.

Local counties include: Washington; St. Francois; Jefferson; St. Genevieve; Iron; and Madison.Each of these counties has waste collection services.

Washington County trucks drive a round trip distance of 104 miles to a transfer station in St.Genevieve City, St.Genevieve county, Missouri where it is then trucked to DeSoto, Illinois, around trip distance of 146 miles.

St. Francois trucks drive a round trip distance of 92 miles to a transfer station in St.Genevieve city, St. Genevieve County, Missouri where it is then trucked to DeSoto, Illinois. St.Genevieve trucks drive to a nearby transfer station in St. Genevieve city St. GenevieveCounty, Missouri where it is then trucked to DeSoto, Illinois.

Jefferson County trucks drive to a transfer station in Barnhart, Jefferson County, where it istrucked to Weber Landfill in St. Louis, a round trip of 70 miles or across the Mississippi to EastSt. Louis, Illinois, a round trip of 90 miles.

Iron County waste trucks pickup waste and drive to Fredericktown Transfer Station, a round tripof 56 miles, where it is trucked to Butler County Landfill, Poplar Bluff, Missouri, a round trip of


Page 15

80 miles.

Madison trucks pickup waste and drive to Fredericktown, Madison County Transfer Station whereit is trucked to Butler County Landfill, Poplar Bluff, Missouri.

The distance Washington County trucks would travel to Martin Creek is 18 miles round trip vs.104 miles. The distance St. Francois County trucks would travel to Martin Creek is 36 miles roundtrip vs. 92 miles. The distance St. Genevieve County trucks would travel to Martin Creek is 72miles round trip vs. 144 miles. The distance Jefferson County trucks would travel to Martin Creekis 22 to 75 miles round trip vs. 90 miles. The distance Iron County trucks would travel toMartin Creek is 44 miles round trip vs. 56 miles. The distance Madison County trucks would travelto Martin Creek is 68 miles round trip vs. 80 miles.

In every case these county trucks would save time and mileage by using Martin Creek. Thistranslates into money saved for the each county or hauling company. At present there are nolong-term contracts that would prevent a change to Martin Creek.

These counties produce the following amounts of waste daily:

· Washington: 80-120 yards.· St. Francois: 250-300 yards.· Jefferson: 2,000 yards.· St. Genevieve:250 yards.· Iron: 60 yards.· Madison: 60-80 yards.· Total: 2,700 to 2,800 yards per day from local counties.

5.0 Sales Forecast

The following table and chart outline our proposed sales, which is divided between the estimatedsales generated by each of the two landfills.


Page 16

Table: Sales Forecast

Sales Forecast

Year 1 Year 2 Year 3

Unit Sales

690 tons/day x 26 days 215,280 241,750 267,350

250 tons/day x 22 days 66,000 66,000 66,000

Other 0 0 0

Total Unit Sales 281,280 307,750 333,350

Unit Prices Year 1 Year 2 Year 3

690 tons/day x 26 days $24.00 $24.00 $24.00

250 tons/day x 22 days $18.00 $18.00 $18.00

Other $0.00 $0.00 $0.00

Sales

690 tons/day x 26 days $5,166,720 $5,802,000 $6,416,400

250 tons/day x 22 days $1,188,000 $1,188,000 $1,188,000

Other $0 $0 $0

Total Sales $6,354,720 $6,990,000 $7,604,400

Direct Unit Costs Year 1 Year 2 Year 3

690 tons/day x 26 days $0.30 $0.12 $0.12

250 tons/day x 22 days $0.32 $0.15 $0.15

Other $0.00 $0.00 $0.00

Direct Cost of Sales

690 tons/day x 26 days $63,722 $28,171 $31,154

250 tons/day x 22 days $21,300 $9,600 $9,600

Other $0 $0 $0

Subtotal Direct Cost of Sales $85,022 $37,771 $40,754


Page 17

6.0 Management Summary

The initial management team depends on the founders themselves, and a small cadre ofprofessionals. As GER grows, it will add additional consulting help, engineering, sales, andmarketing.

6.1 Organizational Structure

GER has two founding principals whose duties will be divided between operations andadministrative/sales. Once operations commence, GER will hire supervisors trained to assumeresponsibility for operations while the principals oversee the business.

One of the principals, Don Smith, has two adult sons who currently work with him at SmithEnvironmental Services. Both will take the Missouri and Illinois courses offered by each state'slandfill regulatory division for landfill supervisors and will assume supervisorial positions at thelandfills.

6.2 Management Team

Co-founder Don Smith currently owns and operates Smith Environmental Services, one of thelargest subsurface soil remediating businesses in Missouri with contracts throughout the state. In1983 Smith built a transfer station in Wellston, Missouri, a St. Louis suburb that accepted waste,removed recyclables, baled and hauled it to the same landfill in Washington County that GERhas under contract, Martin Creek. At that time, he obtained the landfill-operating permit from theMissouri Department of Natural Resources and commenced operation. The facility was fullyoperational 16 years ago. After a partnership dissolution and the subsequent closure of MartinCreek, Smith became manager of three landfills in Chicago, Illinois for Land and Lakes, Inc. Priorto his departure, however, the business was fully operational and generating a reasonable cashflow.

Smith has a full operating familiarity with all of the equipment to be used in GER operations. Hehas worked with the companies who manufacture various components and suggestednumerous design changes in their equipment, many of which continue to be in use to this day.

After his departure from the original Martin Creek operation, Smith took a position with Landand Lakes, Inc of Chicago and eventually supervised the operation of three Chicago landfills forthe company. All three of these landfills were in permit violation by the Illinois StateDepartment of Natural Resources prior to Smith's involvement. Within months under hissupervision, all permit violations were cleared. Additionally, he stopped the landfills pollution ofthe Little Calumet River. This river is no longer polluted and is safe for fishing and boating.Later he worked for D & D Disposal to operate their Gary, Indiana landfill. During these periods hebecame familiar with all forms of disposal, tire shredding, hauling, and landfill problems.

Between 1990 and 1994 Smith operated a hazardous waste treatment, storage, & disposalfacility (TSD) for Industrial Fuels & Resources, Inc. Through his stewardship in this venture,the business went from a $600,000 annual loss prior to his joining the company to an $800,000net profit on gross sales of $6,000,000+ in the first year, and growing from 33 employees to130 employees. The business was sold in 1994 to Environmental Services of America, Inc.


Page 18

(Missouri Division). Smith continued to operate the facility through 1995.

After leaving he founded Smith Environmental Services that he currently owns and operates.Smith Environmental has remediated several hundred sub-surface tank sites and hazardouswaste spills throughout Missouri, both private and municipal owned.

Co-founder John App met Smith in 1984 and has maintained a business relationship since thattime. App owned several mobile home parks, one in House Springs, Missouri. Others were inTucson, Arizona (four), and Las Vegas, Nevada. App also owned and operated Corporate PensionFunding, Inc. a licensed California Mortgage Brokerage firm. This business operated during thelate 1970's and early 1980's and funded many mortgages with millions of dollars in privatepension money.

Recently App was International Marketing Manager for a computer Compact Disk (CD) DuplicatingTower manufacturing firm based in Rome, Italy. App has a sales and management backgroundboth in business and the military, where he was an officer and Marine Aviator for the U.S. MarineCorps and served as helicopter pilot and maintenance test pilot in Vietnam. He was extensivelytrained in maintenance procedures and is an asset to GER with his extensive engineering andmarketing experience. He was educated at Brown University, Providence, Rhode Island.

App will operate the sales and marketing team for GER as well as perform management dutiesas administrative principal.

G. Calvin Rathbone serves as Corporate Counsel and is a member of the California State Bar.He has specialized in c ivil litigation, including commercial, products liability, toxic litigation, andenvironmental issues. Rathbone served in the U.S. Marine Corps as a Marine Aviator and MarineAir Group Operations officer in the Republic of Vietnam. Prior to entering law, he was aprofessional airline pilot with a major airline and manager of sales and marketing fora manufacturer of severe service control valves for use in the exploration and production of oiland gas. He is a graduate of Carnegie Mellon University and Western State University Collegeof Law. Rathbone will assist in the New York City marketing effort where he has numerousbusiness and personal contacts.

Curtis E. Smith will be one of the landfill supervisors and has 23 years experience in all aspects oflandfill operations. He worked for Resource Recycling 1984-1985 and assisted his father, DonSmith, constructing the facility, installing equipment, and starting the recycling center inWellston, Missouri. He managed the second shift during that period. He is a certified HarrisPress baler operator (the compactor/baler GER intends to install at each location). Between 1989and 1994, he was supervisor of operations at D&D Disposal, Chicago, IL where he managed 45laborers performing recycling and waste baling.

6.3 Management Team Gaps

One of the first positions filled will be for a qualified bookkeeper and financial manager for in-house fiscal and payroll management. This individual will continually advise the principals ofaccounts payable and receivable, as well as payroll matters. GER will seek out competentmanagement as the operation becomes more mature to allow the principals the opportunity toseek out and develop new sites for expansion. GER intends to employ permanent salespersonnel to maintain contact with major cities' waste commissions.


Page 19

6.4 Personnel Plan

The following table summarizes GER's personnel expenditures for the first three years at BartonLandfill. There are also truckers and the employees at Martin Creek constructing that property.

Table: Personnel

Personnel Plan


Office Clerks (2) @$76.00/Day $47,424 $49,972 $52,470

Operators (6) @ $100/day $187,200 $196,560 $206,388

Laborers (1) @ $80/day $24,960 $26,208 $27,518

Maintenance Mechanic (1) @ $100/day $31,200 $32,670 $34,398

Supervisors (3) @ $140/day $131,040 $137,592 $144,471

Managers (2) @ $5000/month $120,000 $126,000 $132,300

Total People 15 15 15

Total Payroll $541,824 $569,002 $597,545

7.0 Strategy and Implementation Summary

After opening and stabilizing operations, management will establish contact with the New YorkCity Residential Waste Department and NYC Trade Waste Association. Contact will also beestablished with officials and corporations in Chicago, Philadelphia, Washington DC, Cleveland,and other cities on the Eastern Seaboard.

Fort Leonard Wood, the U.S. Army base at Rolla, Missouri approximately 85 miles from MartinCreek generates approximately 275 tons of waste per day. This is a local opportunity that is upfor bid every few years.

Recycling, in order to maximize profits, require holding materials until spot prices reachprofitable levels. Following are typical spot price variations for recyclables. GER will constructwarehouses to hold materials in anticipation of the highest spot prices.

Glass recycling redemption varies between $14 and $39/ton.

Ferris metal redemption value fluctuates widely between $30/ton to as much as $120/ton.Currently it is $78/ton.

Non-ferrous metal (aluminum) is $54/ton. Corrugated redemption value is $107/ton. Newsprintis between $68 to $100/ton. Non-segregated, shredded and baled plastic is $9/ton. Pure white(no printing) paper is a premium at $229/ton.

7.1 Competitive Edge

GER intends to offer clean facilities with easily accessible paved roads as opposed to dusty ormuddy, foul-smelling landfills. GER will maintain the same price structure as competing landfills,but with longer hours of operation. The savings to the waste collection companies will be


Page 20

driving time, fuel, wear and tear on the vehicle, and longer hours of operation.

7.2 Milestones

The accompanying table lists important program milestones, with dates and managers incharge, and budgets for each. The milestone schedule indicates GER's emphasis on planning forimplementation.

What the table doesn't show is the commitment behind it. The GER business plan includescomplete provisions for plan-vs.-actual analysis, and it will hold monthly follow-up meetingsevery month to discuss the variance and course corrections.

Table: Milestones

Milestones

Milestone Start Date End Date Budget Manager Department

Complete Incorporation 4/2/1999 4/2/1999 $500 John O'Neal Administrative

Offer on Landfil l 6/15/2000 7/31/2001 $5,000 John O'Neal Administrative

Start Landfil l Permit Process 8/1/2001 8/1/2003 $300,000 John/Don Administrative

Business Plan 5/1/2001 5/15/2001 $5,000 John O'Neal Administrative

Seismic Testing 6/30/2000 8/1/2001 $20,000 Don Smith Operations

Totals $330,500

7.3 Marketing Strategy

Good Earth Resources personnel will call on hauling firms to advise them of GER's facility, andprovide maps to the site, hours, and pricing.

GER will offer similar tipping fees charged by other landfills, yet emphasize time and fuelsavings, wear and tear savings, and longer operating hours to all users. GER will considercontractual incentives in certain instances and circumstances to increase profitability. Haulingwaste with GER road tractors should provide financial incentive to St. Louis waste collectionfirms. This is a simple, intuitive solution, not employed by other landfills.

GER will attempt to secure tonnage from eastern seaboard and Midwestern c ities. GER willoffer price incentives in order to win long-term contracts with many of these municipalities. BothMartin Creek and Barton will each be able to handle in excess of 1,000 tons per day hauled intothe respective rail spurs.


Page 21

8.0 Financial Plan

The purchase of Barton landfill at the onset is essential. Since Barton is currently operating, itallows GER the opportunity to augment the current waste stream by hauling from St. Louis andSt. Charles, Missouri. The present owners of Barton have been ready to retire for severalyears and have lost interest in increasing this business. This affords GER the opportunity tobuild both businesses using Barton's cash flow and customer base. GER can solicit additionalbusiness in anticipation of Martin Creek's opening day. Prior to opening, waste would betransported to Barton. Thus, at Martin Creek's opening, there will be excellent revenuesources on the first day of business.

8.1 Important Assumptions

The financial plan depends on important assumptions, most of which are shown in the tables.GER expects a 30 to 45 day lag between services rendered and payment receipt because ofthe nature of the business. Interest rates, tax rates, and personnel burden are based onconservative assumptions.

Some of the more important underlying assumptions are:

· GER assumes to be able to obtain the final Missouri Department of Natural Resourcespermit for operation of the landfill.

· GER assumes, of course, that there are no unforeseen changes in technology to makelandfills obsolete.

· A recessionary economy would not have an major negative effect on the cash flow,however there may be adjustments in both income and expenses should the recessionbe extensive and long-term. Even during a recession municipalities generate trash andit must be removed to a landfill. This is a recession-proof business that flourishes ingood times and bad.

Table: General Assumptions

General Assumptions


Plan Month 1 2 3

Current Interest Rate 8.00% 8.00% 8.00%

Long-term Interest Rate 8.00% 8.00% 8.00%

Tax Rate 2.50% 0.00% 2.50%

Other 0 0 0


Page 22

8.2 Break-even Analysis

This chart and table summarize the break-even analysis. GER expects to break even shortly aftercommencing operations as a result of GER personnel going to the hauler's transfer stations andusing GER road tractors and divert the waste stream. Each trailer holds 80 yards. The monthlyunits refers to the number of trailer loads with approximately 27 tons (80 yards). Totaltruckloads for 690 tons daily is 673 loads per month, six days per week easily provided byseven road tractors.

Table: Break-even Analysis

Break-even Analysis

Monthly Units Break-even 11,417

Monthly Revenue Break-even $257,928

Assumptions:

Average Per-Unit Revenue $22.59

Average Per-Unit Variable Cost $0.30

Estimated Monthly Fixed Cost $254,477


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8.3 Projected Profit and Loss

GER projected profit and loss is shown on the following table, with sales at $6,354,720 the firstyear and increasing each year thereafter. Due to expenditures in the first year, initial profits arelower in comparison to the second year. Once Martin Creek landfill is fully constructed, profitsrise dramatically. This chart reflects 940 tons per day to Barton. GER has verbal commitmentsto bring in this amount starting with the first day of ownership. The Martin Creek Profit & LossStatement in the Appendix shows 600 tons per day diverted to Barton in the first year and in the13th month delivered to Martin Creek. By hauling to Barton during Martin Creek's constructionphase, GER will both increase profits and secure this business for Martin Creek at the time it isready to accept its own waste stream. The additional 600 tons per day provides an additionalsales potential of between $4,492,800 on the low side and $5,241,600 on the high side,depending on the length of contract with this transfer station agreed upon.

Table: Profit and Loss

Pro Forma Profit and Loss


Sales $6,354,720 $6,990,000 $7,604,400

Direct Cost of Sales $85,022 $37,771 $40,754

Geothermal Mat $0 $0 $0

Total Cost of Sales $85,022 $37,771 $40,754

Gross Margin $6,269,698 $6,952,229 $7,563,646

Gross Margin % 98.66% 99.46% 99.46%

Expenses

Payroll $541,824 $569,002 $597,545

Sales and Marketing and Other Expenses $1,901,908 $2,019,908 $2,029,908

Depreciation $0 $0 $0

Truck Rental $280,800 $280,800 $280,800

Util ities $14,400 $14,400 $14,400

Insurance $64,392 $64,392 $64,392

Telephone $12,000 $12,000 $12,000

Payroll Taxes $238,403 $250,361 $262,920

Other $0 $0 $0

Total Operating Expenses $3,053,727 $3,210,863 $3,261,965

Profit Before Interest and Taxes $3,215,971 $3,741,366 $4,301,681

EBITDA $3,215,971 $3,741,366 $4,301,681

Interest Expense $43,287 $89,530 $101,582

Taxes Incurred $67,731 $0 $105,002

Net Profit $3,104,953 $3,651,836 $4,095,097

Net Profit/Sales 48.86% 52.24% 53.85%


Page 24

8.4 Projected Cash Flow

Cash flow projections are shown in the table below.

Table: Cash Flow

Pro Forma Cash Flow


Cash Received

Cash from Operations

Cash Sales $1,588,680 $1,747,500 $1,901,100

Cash from Receivables $3,984,939 $5,164,414 $5,627,780

Subtotal Cash from Operations $5,573,619 $6,911,914 $7,528,880

Additional Cash Received

Sales Tax, VAT, HST/GST Received $0 $0 $0

New Current Borrowing $596,090 $0 $0

New Other Liabil ities (interest-free) $0 $0 $0

New Long-term Liabil ities $448,692 $448,692 $448,692

Sales of Other Current Assets $0 $0 $0

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

New Investment Received $7,548,000 $0 $0

Subtotal Cash Received $14,166,401 $7,360,606 $7,977,572

Expenditures Year 1 Year 2 Year 3

Expenditures from Operations

Cash Spending $541,824 $569,002 $597,545

Bill Payments $2,486,914 $2,762,588 $2,900,038

Subtotal Spent on Operations $3,028,738 $3,331,590 $3,497,583

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out $0 $0 $0

Principal Repayment of Current Borrowing $3,500,000 $300,000 $296,090

Other Liabil ities Principal Repayment $0 $0 $0

Long-term Liabil ities Principal Repayment $0 $0 $0

Purchase Other Current Assets $0 $0 $0

Purchase Long-term Assets $5,002,281 $0 $0

Dividends $0 $0 $0

Subtotal Cash Spent $11,531,019 $3,631,590 $3,793,673

Net Cash Flow $2,635,382 $3,729,015 $4,183,899

Cash Balance $2,764,710 $6,493,725 $10,677,624


Page 25

8.5 Projected Balance Sheet

The following table shows the projected balance sheet for Good Earth Resources.

Table: Balance Sheet

Pro Forma Balance Sheet


Assets

Current Assets

Cash $2,764,710 $6,493,725 $10,677,624

Accounts Receivable $781,101 $859,188 $934,708

Other Current Assets $350,000 $350,000 $350,000

Total Current Assets $3,895,811 $7,702,912 $11,962,331

Long-term Assets

Long-term Assets $12,002,281 $12,002,281 $12,002,281

Accumulated Depreciation $0 $0 $0

Total Long-term Assets $12,002,281 $12,002,281 $12,002,281

Total Assets $15,898,092 $19,705,193 $23,964,612

Liabil ities and Capital Year 1 Year 2 Year 3

Current Liabil ities

Accounts Payable $221,029 $227,602 $239,323

Current Borrowing $596,090 $296,090 $0

Other Current Liabil ities $0 $0 $0

Subtotal Current Liabil ities $817,119 $523,692 $239,323

Long-term Liabil ities $448,692 $897,384 $1,346,076

Total Liabil ities $1,265,811 $1,421,076 $1,585,399

Paid-in Capital $11,548,000 $11,548,000 $11,548,000

Retained Earnings ($20,672) $3,084,281 $6,736,117

Earnings $3,104,953 $3,651,836 $4,095,097

Total Capital $14,632,281 $18,284,117 $22,379,214

Total Liabil ities and Capital $15,898,092 $19,705,193 $23,964,612

Net Worth $14,632,281 $18,284,117 $22,379,214

8.6 Business Ratios

The following table compares the estimated ratios to the Standard Industry Code #4953, SolidWaste Landfill.


Page 26

Table: Ratios

Ratio Analysis

Year 1 Year 2 Year 3 Industry Profi le

Sales Growth n.a. 10.00% 8.79% 7.24%

Percent of Total Assets

Accounts Receivable 4.91% 4.36% 3.90% 7.22%

Other Current Assets 2.20% 1.78% 1.46% 25.93%

Total Current Assets 24.50% 39.09% 49.92% 33.95%

Long-term Assets 75.50% 60.91% 50.08% 66.05%

Total Assets 100.00% 100.00% 100.00% 100.00%

Current Liabil ities 5.14% 2.66% 1.00% 17.37%

Long-term Liabil ities 2.82% 4.55% 5.62% 23.19%

Total Liabil ities 7.96% 7.21% 6.62% 40.56%

Net Worth 92.04% 92.79% 93.38% 59.44%

Percent of Sales

Sales 100.00% 100.00% 100.00% 100.00%

Gross Margin 98.66% 99.46% 99.46% 31.67%

Selling, General & Administrative Expenses 48.74% 47.76% 45.73% 14.70%

Advertising Expenses 2.05% 2.00% 1.97% 0.29%

Profit Before Interest and Taxes 50.61% 53.52% 56.57% 2.51%

Main Ratios

Current 4.77 14.71 49.98 1.24

Quick 4.77 14.71 49.98 0.84

Total Debt to Total Assets 7.96% 7.21% 6.62% 62.44%

Pre-tax Return on Net Worth 21.68% 19.97% 18.77% 2.35%

Pre-tax Return on Assets 19.96% 18.53% 17.53% 6.25%

Additional Ratios Year 1 Year 2 Year 3

Net Profit Margin 48.86% 52.24% 53.85% n.a

Return on Equity 21.22% 19.97% 18.30% n.a

Activity Ratios

Accounts Receivable Turnover 6.10 6.10 6.10 n.a

Collection Days 57 57 57 n.a

Accounts Payable Turnover 12.25 12.17 12.17 n.a

Payment Days 27 30 29 n.a

Total Asset Turnover 0.40 0.35 0.32 n.a

Debt Ratios

Debt to Net Worth 0.09 0.08 0.07 n.a

Current Liab. to Liab. 0.65 0.37 0.15 n.a

Liquidity Ratios

Net Working Capital $3,078,692 $7,179,220 $11,723,009 n.a

Interest Coverage 74.29 41.79 42.35 n.a

Additional Ratios

Assets to Sales 2.50 2.82 3.15 n.a

Current Debt/Total Assets 5% 3% 1% n.a

Acid Test 3.81 13.07 46.08 n.a

Sales/Net Worth 0.43 0.38 0.34 n.a

Dividend Payout 0.00 0.00 0.00 n.a

Appendix

Page 1

Table: Sales Forecast

Sales Forecast

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

Unit Sales

690 tons/day x 26 days 0% 17,940 17,940 17,940 17,940 17,940 17,940 17,940 17,940 17,940 17,940 17,940 17,940

250 tons/day x 22 days 0% 5,500 5,500 5,500 5,500 5,500 5,500 5,500 5,500 5,500 5,500 5,500 5,500

Other 0% 0 0 0 0 0 0 0 0 0 0 0 0

Total Unit Sales 23,440 23,440 23,440 23,440 23,440 23,440 23,440 23,440 23,440 23,440 23,440 23,440

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

690 tons/day x 26 days $24.00 $24.00 $24.00 $24.00 $24.00 $24.00 $24.00 $24.00 $24.00 $24.00 $24.00 $24.00

250 tons/day x 22 days $18.00 $18.00 $18.00 $18.00 $18.00 $18.00 $18.00 $18.00 $18.00 $18.00 $18.00 $18.00

Other $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00

Sales

690 tons/day x 26 days $430,560 $430,560 $430,560 $430,560 $430,560 $430,560 $430,560 $430,560 $430,560 $430,560 $430,560 $430,560

250 tons/day x 22 days $99,000 $99,000 $99,000 $99,000 $99,000 $99,000 $99,000 $99,000 $99,000 $99,000 $99,000 $99,000

Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Sales $529,560 $529,560 $529,560 $529,560 $529,560 $529,560 $529,560 $529,560 $529,560 $529,560 $529,560 $529,560

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

690 tons/day x 26 days 0.00% $2.08 $0.13 $0.13 $0.13 $0.13 $0.13 $0.13 $0.13 $0.13 $0.13 $0.13 $0.13

250 tons/day x 22 days 0.00% $2.27 $0.15 $0.15 $0.15 $0.15 $0.15 $0.15 $0.15 $0.15 $0.15 $0.15 $0.15

Other 0.00% $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00

Direct Cost of Sales

690 tons/day x 26 days $37,396 $2,393 $2,393 $2,393 $2,393 $2,393 $2,393 $2,393 $2,393 $2,393 $2,393 $2,393

250 tons/day x 22 days $12,500 $800 $800 $800 $800 $800 $800 $800 $800 $800 $800 $800

Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Subtotal Direct Cost of Sales $49,896 $3,193 $3,193 $3,193 $3,193 $3,193 $3,193 $3,193 $3,193 $3,193 $3,193 $3,193

Appendix

Page 2

Table: Personnel

Personnel Plan


Office Clerks (2) @$76.00/Day 0% $3,952 $3,952 $3,952 $3,952 $3,952 $3,952 $3,952 $3,952 $3,952 $3,952 $3,952 $3,952

Operators (6) @ $100/day 0% $15,600 $15,600 $15,600 $15,600 $15,600 $15,600 $15,600 $15,600 $15,600 $15,600 $15,600 $15,600

Laborers (1) @ $80/day 0% $2,080 $2,080 $2,080 $2,080 $2,080 $2,080 $2,080 $2,080 $2,080 $2,080 $2,080 $2,080

Maintenance Mechanic (1) @ $100/day 0% $2,600 $2,600 $2,600 $2,600 $2,600 $2,600 $2,600 $2,600 $2,600 $2,600 $2,600 $2,600

Supervisors (3) @ $140/day 0% $10,920 $10,920 $10,920 $10,920 $10,920 $10,920 $10,920 $10,920 $10,920 $10,920 $10,920 $10,920

Managers (2) @ $5000/month 0% $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000

Total People 15 15 15 15 15 15 15 15 15 15 15 15

Total Payroll $45,152 $45,152 $45,152 $45,152 $45,152 $45,152 $45,152 $45,152 $45,152 $45,152 $45,152 $45,152

Appendix

Page 3

Table: General Assumptions

General Assumptions


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

Current 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%

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% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

Other 0 0 0 0 0 0 0 0 0 0 0 0

Appendix

Page 4

Table: Profit and Loss

Pro Forma Profit and Loss


Sales $529,560 $529,560 $529,560 $529,560 $529,560 $529,560 $529,560 $529,560 $529,560 $529,560 $529,560 $529,560

Direct Cost of Sales $49,896 $3,193 $3,193 $3,193 $3,193 $3,193 $3,193 $3,193 $3,193 $3,193 $3,193 $3,193

Geothermal Mat $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Cost of Sales $49,896 $3,193 $3,193 $3,193 $3,193 $3,193 $3,193 $3,193 $3,193 $3,193 $3,193 $3,193

Gross Margin $479,664 $526,367 $526,367 $526,367 $526,367 $526,367 $526,367 $526,367 $526,367 $526,367 $526,367 $526,367

Gross Margin % 90.58% 99.40% 99.40% 99.40% 99.40% 99.40% 99.40% 99.40% 99.40% 99.40% 99.40% 99.40%

Expenses

Payroll $45,152 $45,152 $45,152 $45,152 $45,152 $45,152 $45,152 $45,152 $45,152 $45,152 $45,152 $45,152

Sales and Marketing and Other

Expenses

$157,659 $157,659 $157,659 $157,659 $157,659 $157,659 $157,659 $157,659 $157,659 $157,659 $157,659 $167,659

Depreciation $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Truck Rental $23,400 $23,400 $23,400 $23,400 $23,400 $23,400 $23,400 $23,400 $23,400 $23,400 $23,400 $23,400

Utilities $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200

Insurance $5,366 $5,366 $5,366 $5,366 $5,366 $5,366 $5,366 $5,366 $5,366 $5,366 $5,366 $5,366

Telephone $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000

Payroll Taxes 44% $19,867 $19,867 $19,867 $19,867 $19,867 $19,867 $19,867 $19,867 $19,867 $19,867 $19,867 $19,867

Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Operating Expenses $253,644 $253,644 $253,644 $253,644 $253,644 $253,644 $253,644 $253,644 $253,644 $253,644 $253,644 $263,644

Profit Before Interest and Taxes $226,020 $272,723 $272,723 $272,723 $272,723 $272,723 $272,723 $272,723 $272,723 $272,723 $272,723 $262,723

EBITDA $226,020 $272,723 $272,723 $272,723 $272,723 $272,723 $272,723 $272,723 $272,723 $272,723 $272,723 $262,723

Interest Expense $249 $860 $1,470 $2,081 $2,691 $3,302 $3,913 $4,523 $5,134 $5,744 $6,355 $6,965

Taxes Incurred $67,731 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Net Profit $158,040 $271,863 $271,252 $270,642 $270,031 $269,421 $268,810 $268,200 $267,589 $266,979 $266,368 $255,758

Net Profit/Sales 29.84% 51.34% 51.22% 51.11% 50.99% 50.88% 50.76% 50.65% 50.53% 50.42% 50.30% 48.30%

Appendix

Page 5

Table: Cash Flow

Pro Forma Cash Flow


Cash Received

Cash from Operations

Cash Sales $132,390 $132,390 $132,390 $132,390 $132,390 $132,390 $132,390 $132,390 $132,390 $132,390 $132,390 $132,390

Cash from Receivables $0 $13,239 $397,170 $397,170 $397,170 $397,170 $397,170 $397,170 $397,170 $397,170 $397,170 $397,170

Subtotal Cash from Operations $132,390 $145,629 $529,560 $529,560 $529,560 $529,560 $529,560 $529,560 $529,560 $529,560 $529,560 $529,560

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 $54,190 $54,190 $54,190 $54,190 $54,190 $54,190 $54,190 $54,190 $54,190 $54,190 $54,190

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

New Long-term Liabilities $37,391 $37,391 $37,391 $37,391 $37,391 $37,391 $37,391 $37,391 $37,391 $37,391 $37,391 $37,391

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 $5,848,000 $1,700,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Subtotal Cash Received $6,017,781 $1,937,210 $621,141 $621,141 $621,141 $621,141 $621,141 $621,141 $621,141 $621,141 $621,141 $621,141

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

Expenditures from Operations

Cash Spending $45,152 $45,152 $45,152 $45,152 $45,152 $45,152 $45,152 $45,152 $45,152 $45,152 $45,152 $45,152

Bill Payments $10,879 $322,574 $212,565 $213,176 $213,786 $214,397 $215,008 $215,618 $216,229 $216,839 $217,450 $218,394

Subtotal Spent on Operations $56,031 $367,726 $257,717 $258,328 $258,938 $259,549 $260,160 $260,770 $261,381 $261,991 $262,602 $263,546

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 $3,500,000 $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 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Purchase Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Purchase Long-term Assets $2,422,018 $319,933 $150,833 $218,833 $145,833 $196,033 $465,833 $220,133 $313,333 $13,333 $278,083 $258,083

Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Subtotal Cash Spent $5,978,049 $687,659 $408,550 $477,161 $404,771 $455,582 $725,993 $480,903 $574,714 $275,324 $540,685 $521,629

Net Cash Flow $39,732 $1,249,551 $212,591 $143,980 $216,370 $165,559 ($104,852) $140,238 $46,427 $345,817 $80,456 $99,512

Cash Balance $169,060 $1,418,611 $1,631,202 $1,775,182 $1,991,551 $2,157,110 $2,052,259 $2,192,497 $2,238,924 $2,584,741 $2,665,197 $2,764,710

Appendix

Page 6

Table: Balance Sheet

Pro Forma Balance Sheet


Assets Starting Balances

Current Assets

Cash $129,328 $169,060 $1,418,611 $1,631,202 $1,775,182 $1,991,551 $2,157,110 $2,052,259 $2,192,497 $2,238,924 $2,584,741 $2,665,197 $2,764,710

Accounts Receivable $0 $397,170 $781,101 $781,101 $781,101 $781,101 $781,101 $781,101 $781,101 $781,101 $781,101 $781,101 $781,101

Other Current Assets $350,000 $350,000 $350,000 $350,000 $350,000 $350,000 $350,000 $350,000 $350,000 $350,000 $350,000 $350,000 $350,000

Total Current Assets $479,328 $916,230 $2,549,712 $2,762,303 $2,906,283 $3,122,652 $3,288,211 $3,183,360 $3,323,598 $3,370,025 $3,715,842 $3,796,298 $3,895,811

Long-term Assets

Long-term Assets $7,000,000 $9,422,018 $9,741,951 $9,892,784 $10,111,617 $10,257,450 $10,453,483 $10,919,316 $11,139,449 $11,452,782 $11,466,115 $11,744,198 $12,002,281

Accumulated Depreciation $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Long-term Assets $7,000,000 $9,422,018 $9,741,951 $9,892,784 $10,111,617 $10,257,450 $10,453,483 $10,919,316 $11,139,449 $11,452,782 $11,466,115 $11,744,198 $12,002,281

Total Assets $7,479,328 $10,338,248 $12,291,663 $12,655,087 $13,017,900 $13,380,102 $13,741,694 $14,102,676 $14,463,047 $14,822,807 $15,181,957 $15,540,496 $15,898,092

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 $315,489 $205,460 $206,050 $206,641 $207,231 $207,821 $208,411 $209,001 $209,592 $210,182 $210,772 $221,029

Current Borrowing $3,500,000 $0 $54,190 $108,380 $162,570 $216,760 $270,950 $325,140 $379,330 $433,520 $487,710 $541,900 $596,090

Other Current Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Subtotal Current Liabilities $3,500,000 $315,489 $259,650 $314,430 $369,211 $423,991 $478,771 $533,551 $588,331 $643,112 $697,892 $752,672 $817,119

Long-term Liabilities $0 $37,391 $74,782 $112,173 $149,564 $186,955 $224,346 $261,737 $299,128 $336,519 $373,910 $411,301 $448,692

Total Liabilities $3,500,000 $352,880 $334,432 $426,603 $518,775 $610,946 $703,117 $795,288 $887,459 $979,631 $1,071,802 $1,163,973 $1,265,811

Paid-in Capital $4,000,000 $9,848,000 $11,548,000 $11,548,000 $11,548,000 $11,548,000 $11,548,000 $11,548,000 $11,548,000 $11,548,000 $11,548,000 $11,548,000 $11,548,000

Retained Earnings ($20,672) ($20,672) ($20,672) ($20,672) ($20,672) ($20,672) ($20,672) ($20,672) ($20,672) ($20,672) ($20,672) ($20,672) ($20,672)

Earnings $0 $158,040 $429,903 $701,155 $971,797 $1,241,828 $1,511,249 $1,780,060 $2,048,259 $2,315,848 $2,582,827 $2,849,195 $3,104,953

Total Capital $3,979,328 $9,985,368 $11,957,231 $12,228,483 $12,499,125 $12,769,156 $13,038,577 $13,307,388 $13,575,587 $13,843,176 $14,110,155 $14,376,523 $14,632,281

Total Liabilities and Capital $7,479,328 $10,338,248 $12,291,663 $12,655,087 $13,017,900 $13,380,102 $13,741,694 $14,102,676 $14,463,047 $14,822,807 $15,181,957 $15,540,496 $15,898,092

Net Worth $3,979,328 $9,985,368 $11,957,231 $12,228,483 $12,499,125 $12,769,156 $13,038,577 $13,307,388 $13,575,587 $13,843,176 $14,110,155 $14,376,523 $14,632,281

good earth resources

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