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    March 2004

    This sample business plan has been made available to users ofBusiness Plan Pro, business planningsoftware published by Palo Alto Software, Inc. Names, locat ions and numbers may have been

    changed, and substantial portions of the original plan text may have been omitted to preserveconfidentiality and proprietary information.

    You are welcome to use this plan as a starting point to create your own, but you do not have

    permission to resell, reproduce, publish, distribute or even copy this plan as it exists here.

    Requests for reprints, academic use, and other dissemination of this sample plan should be emailed

    to the marketing department of Palo Alto Software at [email protected]. For productinformation visit our Website: www.paloalto.com or call: 1-800-229-7526.

    Copyright Palo Alto Software, Inc., 1995-2007 All rights reserved.

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    Confidentiality Agreement

    The undersigned reader acknowledges that the information provided by _______________ in thisbusiness plan is confidential; therefore, reader agrees not to disclose it without the express writtenpermission of _______________.

    It is acknowledged by reader that information to be furnished in this business plan is in all respectsconfidential in nature, other than information which is in the public domain through other means and

    that any disclosure or use of same by reader, may cause serious harm or damage to_______________.Upon request, this document is to be immediately returned to _______________.

    ___________________Signature___________________

    Name (typed or printed)___________________

    DateThis is a business plan. It does not imply an offering of securities.

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    Table of Contents

    1.0 Executive Summary.............................................................................................................................11.1 Mission........................................................................................................................................21.2 Keys to Success ........................................................................................................................31.3 Objectives ...................................................................................................................................3

    2.0 Company Summary.............................................................................................................................32.1 Start-up Summar ......................................................................................................................32.2 Company Locations and Faci lities ..........................................................................................52.2.1 Government Regulation..........................................................................................................5

    2.3 Company Ownership .................................................................................................................53.0 Products and Services........................................................................................................................5

    3.1 Product and Service Description.............................................................................................63.2 Competitive Comparison..........................................................................................................73.3 Sales Literature..........................................................................................................................83.4 Technolog ..................................................................................................................................93.5 Future Products and Services ..................................................................................................9

    4.0 Market Analysis Summar ................................................................................................................10

    4.1 Market Segmentation..............................................................................................................104.2 Target Market Segment Strategy...........................................................................................124.2.1 Market Growth.......................................................................................................................124.2.2 Market Needs .......................................................................................................................134.2.3 Market Trends.......................................................................................................................134.3 Service Business Analysis .....................................................................................................134.3.1 Business Participants ..........................................................................................................134.3.2 Distributing a Service...........................................................................................................14

    4.3.3 Competition and Buying Patterns.......................................................................................144.3.4 Main Competitors.................................................................................................................14

    5.0 Strategy and Implementation Summar ..........................................................................................145 1 Value Proposition 15

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    Table of Contents8.5 Projected Profit and Loss .......................................................................................................25

    8.6 Projected Cash Flow...............................................................................................................288.7 Projected Balance Sheet........................................................................................................318.8 Business Ratios.......................................................................................................................32

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    Mid-Atlantic Recycling

    1.0 Executive Summary

    Mid-Atlantic Recycling, LLC's area of business will be to collect, recycle/compost, and marketwaste from municipality waste processing plants for use use as a consumer good. This recycled

    product will meet two critical needs:

    1. It will give municipalities a feasible and cost effective alternative to landfilling the waste,

    and2. It will help meet the growing demand for organic soil enhancers and fertilizers. The material

    that will be recycled is human waste sludge.

    Our recycled waste will be targeted toward fertilizer manufacturers, nurseries, landscapers,farmers, government agencies, golf courses, and others. All of these potential customers willbenefit from the compost's numerous soil enhancing characteristics.

    Additionally, we will offer a service to waste processing plants owned by municipalities. Currently

    these plants face several issues regarding the disposal of human waste sludge. Landfills are fillingup and costs of disposal are rising. Also, due to recent legislation, as of 2008 many landfills will

    no longer be able to accept human waste sludge. Mid-Atlantic Recycling will solve this problemby accepting this waste at a nominal charge and recycling it into a useful product.

    Mid-Atlantic Recycling is entering a niche market in that human waste sludge has not beenrecycled on any sizeable scale in West Virginia or the Mid-Atlantic region. This is a unique and

    viable concept that addresses the needs of various customers and reaches an untapped marketwith tremendous growth potential.

    One of the most attractive aspects is that the business is projected to attain a strong cashposition and achieve profitability in the first year of operation. Due to a large need for these

    products and services, and a lack of direct competition, our projection of quick profitability isattainable.

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    Mid-Atlantic Recycling

    1.1 Mission

    Mid-Atlantic Recycling's mission is threefold. Our first responsibility is to ensure the financial well

    being of the business. Second, is to provide municipalities with an economical, alternative for the

    disposal of human waste sludge. Third, is to provide a top quality, recycled material to theconsumer so that they may benefit from compost's many good properties and organic elements.In addition, we hope to build in the consumer a positive feeling about the feasibility of using

    recycled human sludge as a fertilizer.

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    Mid-Atlantic Recycling

    1.2 Keys to Success

    The keys to success in our business are:

    Overcome perception issues that may exist with using compost made from human wastesludge.

    Establish and build relationships and trust with customers to help shield from future

    competition. Expand rapidly to control the market.

    Offer reasonable prices. Get investment.

    1.3 Objectives

    1. Flush sales for the first twelve months of operations and growing each year thereafter.2. Establish the recycling facility in Monroe County, WV; to include six composting units in

    2004.3. Open additional facilities in 2005 and 2006 to serve other areas of the state and the Mid-

    Atlantic region.4. Continue to market Mid-Atlantic Recycling by contacting and soliciting business from

    additional municipalities and compost using customers.

    2.0 Company Summary

    The legal name of the company will be Mid-Atlantic Recycling, LLC. Mid-Atlantic Recycling will be

    formed as a Limited Liability Company in West Virginia. Due to its tax benefits, a LLC will beadvantageous.

    2.1 Start-up Summar

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    Mid-Atlantic Recycling

    Table: Start-up

    Start-up

    Requirement

    Start-up Expense

    Legal $500

    Phone/uti li ties deposit $500

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    Mid-Atlantic Recycling

    2.2 Company Locations and Faci lities

    Mid-Atlantic Recycling will operate in Monroe County, WV, near the community of Lindside, WV.The Lindside location is approximately 10 miles from Peterstown, WV. The recycling facilities will

    be located on a 58+ acre property owned by company president, Oliver Pyne; 5 acres will be setaside for the recycling facility set up and operation. This site is ideal as it provides access tolocal municipalities and to Interstates 77 and 81. Also there is room for expansion as the

    business grows.

    Additionally, Mid-Atlantic Recycling's business location is located in a federally designated"historically underutilized business zone" or HUBZone. As discussed under the Competitive

    Comparison section below, this designation gives Mid-Atlantic Recycling certain advantages inselling to the government.

    As the business expands to additional counties in subsequent years, we will need to leaseproperty on which to site our facilities.

    2.2.1 Government Regulation

    Because Mid-Atlantic Recycling recycles a waste product and incorporates it into anenvironmental product, the company is under the potential jurisdiction of the EnvironmentalProtection Agency. The recycling and sale of human waste may be regulated by federal or state

    authorities. Mid-Atlantic Recycling will obtain all required federal and state permits and licensesto operate its facilities.

    2.3 Company Ownership

    Mid-Atlantic Recycling is owned by its founder and president, Oliver Pyne. Mr. Pyne will be anactive participant in management decisions.

    3 0 Products and Services

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    Mid-Atlantic Recycling

    3.1 Product and Service Description

    Nationwide, many landfills are closing or exhausting their remaining capacity. However, due toenvironmental restrictions, zoning laws, and other regulatory and bureaucratic delays, very few

    new landfills are opening to offset the looming space crisis. Meanwhile municipal waste, includinghuman waste sludge, continues to flow in greater volume. Handling their waste streams hasbecome a major problem for most municipalities. With more waste created daily, landfills

    nationwide are rapidly facing a capacity crisis.

    In West Virginia this situation has been made even more critical due to recent passage oflegislation requiring that by 2008 only landfills lined with a very heavy duty liner will be able to

    accept human waste sludge. Thus, in the not too distant future, most landfills now acceptingthe sludge will no longer be able to accept it. Additionally, it will be very impractical, and costprohibitive, to install the required liner in working landfills. Therefore, options for disposing of

    human waste sludge are about to become very, very limited, which means disposal will becomemuch, much more costly.

    Considering this environment, we will offer municipalities an extremely valuable service -- an

    alternative means for disposal of their human waste sludge. Municipalities currently pay landfills a"tipping" fee to dispose of their waste. The tipping fee is typically $15 to $50 per ton; theaverage tipping fee in West Virginia is $32 per ton. As noted above, in the near future many

    landfills will stop receiving human waste sludge and prices are expected to increase dramaticallydue to simple supply and demand. Not only will tipping fees increase, but as municipalities have

    to go farther and farther afield to find accommodating landfills, transportation costs for thewaste will also increase. We will help them solve this problem, and ultimately save them, and

    their tax payers, money. We will place skid boxes at their waste treatment plants and removethe sludge for them. The tipping fee, a fee for skid box rental, and a fee for picking up andreturning the skid boxes will be paid to Mid-Atlantic Recycling by the municipalities. This will be

    done at a price competitive with or lower than what they are now paying.

    Mid-Atlantic Recycling will receive the sludge and recycle it using an organic composter. This will

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    Mid-Atlantic Recycling

    3.2 Competitive Comparison

    The Mid-Atlantic Recycling business model adds great value through both our service and ourproduct.

    Our service, accepting human waste sludge from municipalities, partially relieves the burden onrapidly filling landfills, and provides an alternative disposal channel to municipalities facing a

    legislative deadline which threatens to cut off their traditional means of disposing of the waste.

    As noted earlier, there is a trend in the market away from chemical fertilizers toward morenatural organic soil enhancements. Our product, composted human sludge, responds to this

    market trend. Compost has many advantages over traditional fertilizer. Traditional chemicalfertilizer sells for approximately $250 per ton while our compost will be priced at around $50-$100per ton. Our compost is similar to fertilizers; however, it reacts differently from most fertilizers.

    Compost releases nutrients over a long period of time, on average two to three months. Thechemical reaction in present fertilizers takes place immediately and usually lasts no longer than

    three to four weeks. After three to four weeks, the customer may have to buy more fertilizer,costing both time and money. On golf courses, when chemical fertilizer is applied, golf must

    cease for the day; however, when compost is applied, golf can continue uninterrupted. Asdemonstrated, compost has many advantages over traditional fertilizers.

    Our human sludge compost also has distinct advantages over other types of composts as well.To be a viable, lucrative, growing business, we must be a reliable source of compost supply to

    our customers. To serve the market and grow in it availability of our product cannot beintermittent or "hit and miss." We must be able to meet the demand every time within a

    reasonable delivery time. By the inherent nature of the business, human waste sludge will alwaysbe available for composting in large, dependable quantities, at one or a few locations, at aconstant/stable quality and at a stable cost. Other composts cannot compete with this in that

    similar quantities are not available from so few locations which increases their labor andtransportation costs related to collection. Additionally, if collection is from farms, they may use

    horse manure, poultry manure, cow manure, hog manure, etc. in varying quantities over time.

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    Mid-Atlantic RecyclingSmall Disadvantaged Business (SDB) program: This program offers several important

    incentives:

    1. Price evaluation adjustment: qualified SDBs receive a price evaluation adjustment of up to

    10 percent on procurements where mandated by regulation. The price evaluation adjustmentfor SDBs bidding as primes became effective October 1, 1998. Regulations mandate thisapproach in competitive acquisitions over the simplified acquisition threshold (usually

    $100,000) where the SIC Code for the prime contract is authorized by U.S. Department ofCommerce benchmarks. The price evaluation adjustment does not apply to 8(a) acquisitions

    and small business set-asides.

    2. Evaluation factor: qualified prime contractors can receive a credit when using SDBs assubcontractors. This evaluation factor for SDB participation became effective January 1,1999. The incentive applies only to competitive negotiated acquisitions over $500,000, or$1,000,000 in construction. Firms certified by the SBA as SDBs remain on the list of SDB-

    certified firms for a period of three years.

    The 8(a) Program: SBA s 8(a) program, named for a section of the Small Business Act, is abusiness development initiative that helps socially and economically disadvantaged Americans

    gain access to economic opportunity.

    1. Participants can receive sole-source contracts, up to a ceiling of $3 million for services.

    While SBA helps 8(a) firms build their competitive and institutional know-how, the agencyalso encourages them to participate in competitive acquisitions.

    2. Federal acquisition policies encourage federal agencies to award a certain percentage oftheir contracts to SDBs. To speed up the award process, the SBA has signed Memoranda of

    Understanding (MOUs) with 25 federal agencies allowing them to contract directly withcertified 8(a) firms.

    3. Recent changes permit 8(a) firms to form joint ventures and teams to bid on contracts. This

    enhances the ability of 8(a) firms to perform larger prime contracts and overcome theeffects of contract bundling, the combining of two or more contracts together into one large

    contract.

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    Mid-Atlantic Recycling

    3.4 Technology

    Composting is biological decomposition of organic materials. Bacteria, fungi, protozoans, insects,worms and other organisms typically play a part in the decomposition process. Composting is

    nature s means of recyc ling. It will turn grass clipping, leaves, vegetables, fruit and otherorganic materials into a very beneficial soil amendment. Composting is also an effective means ofreducing the amount of solid wastes going into our nation s landfills. Mid-Atlantic Recycling's

    process will greatly speed up the natural composting process.

    As briefly described above, the human waste sludge used in Mid-Atlantic Recycling's process willbe picked up from municipalities in skid boxes provided by Mid-Atlantic Recycling. Accepting the

    waste, rental of the boxes, and transportation will all be sold as a service to the municipalities.

    Upon arrival at our recycling facility, the sludge will be placed into one of six organic in-vessel

    digesters. These vessels are proven for composting various types of animal manure. In addition,Mid-Atlantic Recycling's president, Oliver Pyne, has tested the unit' ability to successfully

    compost human waste. The material compost produced was tested by the equipmentmanufacturer (CV Organics, Inc. of White Springs, TN) and found to be a high quality compost.

    Additionally, the compost material was recently tested by West Virginia University AgriculturalService Laboratory and found to be an exceptional soil amendment.

    These recycling/composting units work as follows. The unit is 50 feet long. The sludge is placedinto one end of the unit. To make compost, additional dry fibrous material such as sawdust,

    wood chips, or bark must be added. We will acquire a steady supply of these from InternationalPaper Company.

    The unit turns slowly, making four revolutions per hour, to ensure that adequate oxygen gets to

    all of the composting material. Also, the unit is set on a very slight, 2 degree, angle so that asthe unit turns, the material slowly migrates toward the opposite end of the unit. During thecomposting process, the material heats up (due to the natural reaction) to temperatures of

    approximately 140 degrees Farenheit; this kills any harmful bacteria in the composting material.

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    Mid-Atlantic Recycling

    4.0 Market Analysis Summar

    There are customers at both ends of our supply chain that will benefit from our services andproducts. Municipalities will benefit from our service by having an alternative means of waste

    disposal. Other potential customers who will benefit from our compost product include turf farms,fertilizer manufacturers, nurseries, landscapers, golf courses, homeowners, and even the federalgovernment for use in highway construct ion reseeding. Therefore, we have two basic market

    segments; those waste treatment facilities which will benefit from our services and consumerswho will benefit from our product.

    The Worldwatch Institute reports that landfills are overflowing and the costs of disposing of

    sewage and garbage is rising. City leaders can relieve over extended municipal budgets, preventthe contamination of drinking water, and help farmers build healthier soils by recycling garbageand human waste back to farms. At least 13 U.S. states have 6 years or less before all of their

    landfills are completely full. (Paper 135: Recycling Organic Waste: From Urban Pollutant to FarmResource.) We offer a service by which municipalities can dispose of their waste without it

    having to be land filled anywhere. This is of great value to this customer.

    At the other end of our process are the users of our compost. According to Cornell University(www.cals.cornell.edu/dept/compost.feas.study.html) composting is experiencing a resurgenceof activity which is driven by increased understanding of the agronomic benefits of compost

    utilization, and rising disposal costs for municipal wastes. Also, according to Purdue University(www.ctic.purdue.edu/Core4/Nutrient/ManureMgt/Paper35.html) consumption of compost in the

    commercial market is growing due to people looking for a more organic or natural substitute fortraditional chemical fertilizers. Recycling is at the forefront of responding to this growth trend in

    the Mid-Atlantic USA. We will initially focus on selling compost to fertilizer manufacturers,nurseries, and landscapers. We already have commitments from a fertilizer manufacturer and a

    landscaper to purchase 600 tons per year or more of our compost material.

    Five major market segments for compost have been identified:

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    Mid-Atlantic Recycling

    Table: Market Analysis

    Market Anal ysi

    2004 2005 2006 2007 2008

    Potential Customer Growth CAGR

    Municipalities with treatment

    plant

    1% 34 34 34 34 34 0.00%

    Compost user 5% 1,779 1,868 1,961 2,059 2,162 5.00%

    Othe 0% 0 0 0 0 0 0.00%

    Total 4.91% 1,813 1,902 1,995 2,093 2,196 4.91%

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    Mid-Atlantic Recycling

    4.2 Target Market Segment Strategy

    To target our customers, we examined the market trends. Mid-Atlantic Recycling's productstarget buyers of organic fertilizers and soil enhancers. This market has grown significantly in

    recent years and we expect to capture a quarter of this multi billion-dollar market.

    This market growth is fueled by a more health conscious consumer. People are better informed

    about the potential side effects associated with chemical fertilizer products both to their healthand to the environment.

    The growth of a more organic approach to gardening comes at a time when chemical options are

    diminishing. In 2000, the federal Environmental Protection Agency reached agreement with themakers of two widely used pesticides Diazinon and Chlorpyrifos to phase them out becauseof health problems associated with overexposure. Popular brands of Diazinon include Ortho and

    Spectracide; Chlorpyrifos is marketed under the trade name Dursban and is included in numerousfamiliar products, including Ortho Lawn Insect Spray (Washington Post, Thursday, May 10,

    2001).

    According to an executive with the Scotts Co. in Marysville, Ohio, the pace of research intoorganic products continues feverishly, and their use is bound to increase.

    Sales of organic foods have risen sharply. Organic food sales at the retail level totaled $10.4billion, according to Katherine DiMatteo, executive director of the Organic Trade Association.

    This year, retail sales of organic foods are expected to exceed $15 billion with more than $32billion projected by 2009 (CNBC, Dec. 3, 2004).

    Findings from a 15-year study at the Kamlath Institute, Newton, Pa., might lead to a solution

    that could help reduce emissions of greenhouse gases. The researchers suggest thatregenerative agricultural management systems based on organic fertilizer can preserve carbonand nitrogen in the soil, thus reducing emissions. Moreover, they maintain that organic methods

    can produce the same yields as conventional systems that use synthetic fertilizer. If the major

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    Mid-Atlantic Recycling

    4.2.2 Market Needs

    Several companies compete in the fertilizer market. Their major selling points are performanceand price. However, health conscious consumers have created growing competition between

    chemical and organic products. Mid-Atlantic Recycling's competition can be divided into twoforms: direct and indirect.

    Our direct competitors would include other compost producers capable of producing sufficientproduct to supply the growing compost demand. There is no other compost producer in West

    Virginia that meets this need. Therefore, we have no direct competition in the state.Additionally, there are only a handful in the entire Mid-Atlantic USA; therefore, our direct

    competition on a regional basis is extremely limited.

    Our indirect competitors are fertilizer manufacturers (who also are a part of our target market).

    As noted elsewhere in this business plan, the trend is away from chemical fertilizers, towardnatural organic soil enhancers. Thus the market for chemical fertilizer is decreasing while our

    market is increasing.

    4.2.3 Market Trends

    Current trends in the market greatly favor the start-up of our recycling business.

    Laws have been passed in West Virginia placing greater restrictions of the types of landfillswhich can receive human waste sludge. These laws take effect in 2008. Municipalities are

    already seeking alternative means of disposal as disposal prices are expected to skyrocket aslandfill space decreases dramatically. Our recycling service solves this problem for municipalities.

    The organic industry now boasts sales in excess of $9 billion at retail, with growth forecast tocontinue at 25% per year (http://lists.ibiblio.org/pipermail/marketfarming/2002-

    October/000063.html). The demand for compost to use in organic farming and other applicationsis growing rapidly

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    Mid-Atlantic Recycling

    4.3.2 Distributing a Service

    Indirect competitors are those companies that offer only chemical soil enhancers and plantfoods. Mid-Atlantic Recycling feels that these companies are an indirect form of competition

    because though the products they promote attempt to give the same results as our directcompetition, they fall far short of current market expectations, and it will only be a matter oftime until these companies' products will be out-dated. Even so, Mid-Atlantic Recycling does

    acknowledge that as these companies' products become outdated, many companies will becertain to phase-in their own organic substitutes in place of the chemicals. This, in itself,

    presents a potential market for our compost.

    4.3.3 Competition and Buying Patterns

    To be a player in the organic fertilizer and soil produce market, Mid-Atlantic Recycling identifiedmarket needs to gain an overall competitive advantage. The following explains our product 's

    competitive advantages. Our product is:

    Organic: Our organic product allows us to be responsive to the dominant market trend. We

    offer all of the advantages that organic products have over chemical competitors. Comparable application times: Based on the West Virginia University laboratory analysis,

    our product is comparable in potency to chemical fertilizer. Thus the application time is alsocomparable, which saves money and labor since there is no need to purchase and apply

    additional products. Recycled: This part of our product has to do with marketing. We are a company that cares

    about the consumer and the environment. We offer a valuable product, at low cost, thatsaves landfill space.

    4.3.4 Main Competitors

    As noted earlier, direct competitors are essentially non-existent in the Mid-Atlantic region. Ourmajor indirect competitors are chemical fertilizer manufacturers However their products are

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    Mid-Atlantic Recycling

    5.1 Value Proposition

    Our value proposition is two- fold.

    Value proposition for municipalities: We offer a service that is a cost effective, budgetsaving means to addressing a growing waste disposal problem.

    Value proposition for end users of compost material: Compost is a valuable soil

    amendment that improves many soil properties, such as porosity, structural and thermalstability, water retention, resistance to wind and water erosion, and tillage. Compost also

    decreases soil crusting, regulates storage and release of nutrients, enhances thedevelopment of beneficial microorganisms, builds up plant resistance to parasites and

    disease, and promotes faster root development. Plants and crops treated properly withcompost may produce higher yields and have less weed growth. Chemical fertilizers do notoffer this value.

    5.2 Competitive Edge

    The competitive edges we have are summarized as follows.

    Cost: The price of our compost product is much less than chemical fertilizers. Organic product: We offer an organic product which is responsive to current market trends.

    This includes all of the advantages organics offer over chemicals.

    Recycled: Recycled products characterize a "caring company" and are more appealing to thecustomer's changing att itude toward organic fertilizer as opposed to chemical fertilizer.

    Elimination of disposal issues: Municipalities now have a waste that takes up landfillspace. Our service recycles the waste which saves valuable landfill space.

    More effective between application times: Normal times between applications can range

    from two to four weeks. Our product lasts for many months, thereby saving the customertime and money (no additional expenditure for more product).

    HUBZone location: Provides advantage in selling to the government. SDB and 8(a) certifications: Provide additional advantages in selling to the government

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    Mid-Atlantic Recycling

    5.3.1 Sales Forecast

    The table below outlines the sales forecast and cost of goods sold. The forecast is based onreasonable sales projections within this very large market.

    An additional revenue stream will be the collection and removal of sawdust, wood chip, and barkfrom the International Paper Company on a full time basis; the contract for this work has been

    won. The sawdust materials collected will be used in the composting process.

    The high growth is based on our plans to expand by increasing operations in Monroe County andplacing similar facilities in other areas of the West Virginia. We anticipate that by 2005 we will

    have two such facilities and by 2006 we anticipate having four. Thus our sales forecast doublesin each of those years.

    Table: Sales Forecast

    Sales Forecast

    FY 2005 FY 2006 FY 2007

    Unit SaleSawdust collection services in hour 13,440 13,440 13,440

    Waste acceptance in ton 10,640 25,920 51,840

    Compost sales in ton 14,776 36,000 72,000

    Total Unit Sale 38,856 75,360 137,280

    Unit Prices FY 2005 FY 2006 FY 2007

    Sawdust collection services in hour $14.20 $14.77 $15.36

    Waste acceptance in ton $18.00 $18.00 $18.00

    Compost sales in ton $50.00 $52.50 $55.13

    Sale

    Sawdust collection services in hour $190,848 $198,509 $206,438

    Waste acceptance in ton $191,520 $466,560 $933,120

    C t l i t $738 800 $1 890 000 $3 969 360

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    Mid-Atlantic Recycling

    5.4 Marketing Strategy

    The marketing strategy is the core of the main strategy:

    1. Emphasize high value, high quality products and services.2. Build a relationship oriented business.3. Focus on municipalities, fertilizer manufacturers, landscapers, nurseries, and the federal

    government as key initial markets.

    5.4.1 Promotion Strategy

    Our promotional strategy will be two-fold: first phase promotion will focus on before, during, and

    six months following our opening; the second phase of promotion will deal with the long term.The purpose of the first phase is to assist with rapid market entry to ensure early and sustainedprofitability. The purpose of the second phase is to ensure long-term growth and help propel us

    toward achieving our goal of expanding state wide and across the Mid-Atlantic region.

    First Phase Promotions

    Publicity: We will send news releases to all of the major newspapers in West Virginia.Publication of news articles about Mid-Atlantic Recycling will lend great credibility and be anexcellent way to let all target markets know about this new, innovative business and the

    solutions it provides for municipalities and users of compost or fertilizers. We will similarlyseek publicity in the form of news stories from local (eastern West Virginia) radio and

    television stations. Advertising: We will utilize direct mail and face-to-face promotional strategies to raise

    awareness about our products and services in the target markets. Newspaper advertising

    may also be used. Radio and television ads are not certain, we will evaluate theireffectiveness before further implementat ion.

    Internet: We will have a content heavy website geared toward educating potentialcustomers about the benefits of our products and services All literature business cards

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    Mid-Atlantic Recycling

    5.4.2 Positioning Statement

    For municipalities seeking an answer to their waste disposal problems, Mid-Atlantic Recycling isthe service of choice and trusted strategic ally who gives them a cost effective solution.

    For users of fertilizer and soil amendment products, Mid-Atlantic Recycling is a dependableprovider of low cost and consistent high quality compost products.

    5.4.3 Pricing Strategy

    The going rate per ton for compost is $50 and up. This price is low enough to ensure rapidgrowth in the market yet still provide a very healthy profit, given that we have no direct

    competition and chemical fertilizer is much more expensive. This is possible because we are onthe front end of the industry growth in this region.

    However, according to the West Virginia University Cooperative Extension Service, we may beable to analyze and register our material as a fertilizer. In that case the price per ton will be in

    the $100 per ton range still well below the rate of $250 per ton charged for manufactured

    chemical fertilizers; given this scenario, the sales figures below are very conservative.

    Additionally, we will be priced at market rates for the waste disposal service we offer tomunicipalities. Tipping fees are generally $15 and up per ton. Additionally, we will charge

    competitive skid box rental fees and transportation costs.

    5.5 Milestones

    The following table lists important program milestones, with dates and managers in charge, and

    budgets for each. The milestone schedule indicates our emphasis on planning for implementation.

    Table: Milestones

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    Mid-Atlantic Recycling

    6.0 Web Plan Summary

    Our website will be the virtual business card and portfolio for the company, as well as its online

    "home." The website needs to be a simple, well designed, website that stays current with the

    latest trends and provides information to the customers and information on our products andservices. A site that is too flashy, or tries to use too much of the latest Shockwave or Flashtechnology can be overdone, and cause potential clients to look elsewhere for products or

    information. Our website will be an important means by which we can educate potential

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    Mid-Atlantic Recycling

    7.0 Management Summar

    Mr. Oliver Pyne is the mind behind Mid-Atlantic Recycling. He saw the need for human wastesludge to be recycled and used in several different and environmentally beneficial ways. With the

    development, determination, motivation, and persistence of everyone involved, Mid-AtlanticRecycling will be the leading producer of composted human waste sludge in West Virginia and aleader in the Mid-Atlantic region.

    The management team of Mid-Atlantic Recycling will be comprised of the following executive

    positions:

    President: Oliver Pyne. Mr. Pyne has a degree in Agriculture from West Virginia Universityand has spent 30 years in the farming and agriculture industry. He has extensivelyresearched and tested this composting process to ensure that it works with human waste

    sludge, and is thoroughly familiar with the process from start to finish. Mr. Pyne hasexperience in the operation, fabrication and maintenance of heavy equipment. This ability will

    be critical to the success of the business. Operations Manager: Sam Cole. Mr. Cole has operated a landscaping firm for 7 years and is

    intimately familiar with the uses of compost materials as well as the markets. Controller: Alexander Main. Mr. Main has a background in business and management and will

    handle administrative details such as taxes, check writing and bookkeeping.

    At Mid-Atlantic Recycling, the management team believes that this unique way of recycling will

    change the way consumers look at fertilize and compost products. As with any company, theresponsibilities and duties of the management team are very important and cannot be taken

    lightly. Mid-Atlantic Recycling's management will work together as a team to create a successfulcompany.

    7.1 Management Team

    The responsibilities involved in the company Mid-Atlantic Recycling are great and abundant Mid-

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    Mid-Atlantic Recycling

    7.2 Management Team Gaps

    To assist in sales and marketing, Mid-Atlantic Recycling plans to utilize the services of BlevinsConsulting, LLC, a management consultant firm based in West Virginia. Blevins Consulting

    specializes in business planning, marketing planning, training, website design and marketing, andmarketing to the federal government.

    Marketing and sales will play an important role in convincing consumers to switch from their oldproducts to Mid-Atlantic Recycling's products. Blevins will help create the need for our products

    and services while at the same time capturing the attention of the consumers' targeted. Some ofBlevins duties will include writing press releases, coordinating print and radio press, monitoring

    the competition, making presentations to potential clients, and studying the markets to identifycustomers' needs and determine how to best appeal to those needs.

    7.3 Personnel Plan

    The Personnel Plan reflects the staffing levels required to manage and achieve the anticipated

    levels of production, and establish the customer base needed to achieve the revenues projected

    and reach profitability.

    We have projected a staff of 22 employees in 2004. This includes the owner, 2 managers, 3truck drivers, 4 equipment operators, 2 laborers, 2 metal workers, and 1 secretary; this staff of

    15 will operate the recycling facility. In addition, a staff of seven, including one supervisor and 6laborers, will provide sawdust, wood chip, and bark removal at the International Paper Company

    on a full time basis; the contract for this work has been won. The sawdust materials collectedwill be used in the composting process.

    In addition to the above, Mid-Atlantic Recycling plans to hire a local trucking firm to delivercompost materials to customers. This is expected to result in the creation of two additional jobs.

    Therefore the total employment impact of this venture is expected to be the creation of 24 jobs

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    Mid-Atlantic Recycling

    8.1 Start-up Funding

    The start-up funding will be provided as follows: Owner equity investment of in the form of aloan from the Regional Council of Governments Revolving Loan Fund; this loan is secured by the

    owner's real estate assets. The Regional Revolving Loan Fund is an economic development fundsponsored by three West Virginia counties: Mercer, Greenbrier, and Monroe.

    The balance of funding will be provided through an SBA guaranteed loan. Details of funding areshown in the table below.

    Table: Start-up Funding

    Start-up Funding

    Start-up Expenses to Fund $92,180

    Start-up Assets to Fund $907,820

    Total Funding Required $1,000,000

    Asset

    Non-cash Assets from Start-up $826,920

    Cash Requirements from Start-up $80,900

    Additional Cash Raised $0

    Cash Balance on Starting Date $80,900

    Total Asset $907,820

    Liabilities and Capital

    Liabilitie

    Current Borrowing $0

    Long-term Liabili ties $850,000

    Accounts Payable (Outstanding Bills) $0

    Other Current Liabili ties (interest-free) $0

    Total Liabili tie $850,000

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    Mid-Atlantic Recycling

    Table: Use of Funds

    Use of Funds

    Use Amount

    Processing P lants 2 x $190,460 $380,920

    Processing Plants bui lt in-hou se 2 x

    $40,000

    $80,000

    Skid Truck 2 x $73,000 (avg price) $146,000

    Sheds 48'x72' 4 x $18,500 $74,000

    Backhoe $40,000

    Front-end Loader 2 x $50 ,000 $1 00,0 00

    Tandem Dump Traile $6,000

    Total $826,920

    8.3 Important Assumptions

    The table below presents some assumptions used in the financial calculations of this business

    plan.

    Table: General Assumptions

    General Assumptions

    FY 2005 FY 2006 FY 2007

    Plan Month 1 2 3

    Current Interest Rate 7.00% 7.00% 7.00%

    Long-term Interest Rate 7.00% 7.00% 7.00%

    Tax Rate 25.00% 25.00% 25.00%

    Othe 0 0 0

    8.4 Break-even Analysis

    The chart and table below contain the break even analysis for Mid Atlantic Recycling

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    Mid-Atlantic Recycling

    8.5 Projected Profit and Loss

    The following table summarizes our anticipated profit and loss for the first three years. A monthly

    profit and loss projection for the first year of operations is included in the appendices.

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    Mid-Atlantic Recycling

    Table: Profit and Loss

    Pro Forma Profit a nd Los

    FY 2005 FY 2006 FY 2007

    Sale $1,121,168 $2,555,069 $5,108,918

    Direct Cost of Sale $122,550 $297,853 $612,688

    Other Costs of Goods $0 $0 $0

    Total Cost of Sales $122,550 $297,853 $612,688

    Gross Margin $998,618 $2,257,215 $4,496,230

    Gross Margin % 89.07% 88.34% 88.01%

    Expense

    Payroll $374,053 $766,326 $1,422,040

    Sal es and Marketi ng and Other Expenses $12,000 $24,000 $48,000

    Depreciation $165,384 $325,384 $645,384

    Rent $0 $40,000 $100,000

    Util itie $18,000 $36,000 $72,000

    Insurance $18,000 $36,000 $72,000

    Payroll Taxe $56,108 $114,949 $213,306

    Maintanence and Repair $4,800 $9,600 $20,000

    Othe $24,000 $48,000 $96,000

    Total Operating Expense $672,345 $1,400,259 $2,688,730

    Profi t Before Interest and Taxe $326,273 $856,956 $1,807,500

    EBITDA $491,657 $1,182,340 $2,452,884

    Interest Expense $57,217 $52,956 $48,223

    Taxes Incurred $67,264 $201,000 $439,819

    Net Profit $201,792 $603,000 $1,319,458

    Net Profit/Sale 18.00% 23.60% 25.83%

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    Mid-Atlantic Recycling

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    Mid-Atlantic Recycling

    8.6 Projected Cash Flow

    The chart and table below project increasing cash flow throughout the first three years of plan

    implementat ion. The second and third years of operation reflect large long-term asset purchases

    which reflects our intent to expand the business by opening additional facilities in those years.This expansion will be funded by business revenue with no antic ipated need for outside financing.

    The row labelled "Long-term Liabilities Principal Repayment" reflects repayment of the SBA

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    Mid-Atlantic Recycling

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    Mid-Atlantic Recycling

    Table: Cash Flow

    Pro Forma Cash Flow

    FY 2005 FY 2006 FY 2007

    Cash Received

    Cash from Operation

    Cash Sale $448,467 $1,022,028 $2,043,567

    Cash from Receivables $542,495 $1,366,516 $2,768,762

    Subtotal Cash from Operations $990,962 $2,388,544 $4,812,329

    Additional Cash Received

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

    New Current Borrowing $0 $0 $0

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

    New Long-term Liabil itie $0 $0 $0

    Sales of Other Current Assets $0 $0 $0

    Sales of Long-term Asset $0 $0 $0

    New Investment Received $0 $0 $0

    Subtotal Cash Received $990,962 $2,388,544 $4,812,329

    Expenditures FY 2005 FY 2006 FY 2007

    Expenditures from Operation

    Cash Spending $374,053 $766,326 $1,422,040

    Bill Payment $357,477 $843,317 $1,684,617

    Subtotal Spent on Operation $731,530 $1,609,643 $3,106,657

    Additional Cash Spent

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

    Principal Repayment of Current Borrowing $0 $0 $0

    Other Liabil ities Principal Repayment $0 $0 $0

    Long-term Li abi li ties Pri ncipal Repayment $60,859 $65,258 $69,976

    Purchase Other Current Asset $0 $0 $0

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    Mid-Atlantic Recycling

    8.7 Projected Balance Sheet

    The following table projects healthy growth in sales and net worth.

    Table: Balance Sheet

    Pro Forma Bal ance Sheet

    FY 2005 FY 2006 FY 2007

    Asset

    Current Asset

    Cash $259,474 $143,117 $138,814

    Accounts Receivable $130,206 $296,731 $593,320

    Inventory $13,494 $32,796 $67,463

    Other Current Asset $0 $0 $0

    Total Current Asset $403,174 $472,644 $799,597

    Long-term Assets

    Long-term Assets $826,920 $1,626,920 $3,226,920

    Accumulated Depreciation $165,384 $490,768 $1,136,152Total Long-term Assets $661,536 $1,136,152 $2,090,768

    Total Asset $1,064,710 $1,608,796 $2,890,365

    Liabili ties and Capital FY 2005 FY 2006 FY 2007

    Current Liabilitie

    Accounts Payable $35,957 $72,301 $144,387

    Current Borrowing $0 $0 $0

    Other Current Liabili tie $0 $0 $0

    Subtotal Current Liabil ities $35,957 $72,301 $144,387

    Long-term Liabili ties $789,141 $723,883 $653,908

    Total Liabili tie $825,098 $796,184 $798,294

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    Mid-Atlantic Recycling

    8.8 Business Ratios

    The following table outlines some of the more important ratios from the Recycling, wastematerials industry. The final column, Industry Profile, details spec ific ratios based on the industry

    as it is classified by the Standard Industry Classification (SIC) code, 4953.9905.

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    Mid-Atlantic Recycling

    Table: Ratios

    Ratio Analysi

    FY 2005 FY 2006 FY 2007 Industry Profi le

    Sales Growth 0.00% 127.89% 99.95% 7.24%

    Percent of Total Assets

    Accounts Receivable 12.23% 18.44% 20.53% 4.89%

    Inventory 1.27% 2.04% 2.33% 0.35%

    Other Current Asset 0.00% 0.00% 0.00% 31.71%

    Total Current Asset 37.87% 29.38% 27.66% 36.95%Long-term Assets 62.13% 70.62% 72.34% 63.05%

    Total Asset 100.00% 100.00% 100.00% 100.00%

    Current Liabil i tie 3.38% 4.49% 5.00% 18.58%

    Long-term Liabili ties 74.12% 45.00% 22.62% 26.10%

    Total Liabili tie 77.50% 49.49% 27.62% 44.68%

    Net Worth 22.50% 50.51% 72.38% 55.32%

    Percent of Sale

    Sale 100.00% 100.00% 100.00% 100.00%

    Gross Margin 89.07% 88.34% 88.01% 34.70%

    Selling, General & Administrative Expense 72.77% 64.88% 61.97% 14.39%

    Advertising Expenses 0.00% 0.00% 0.00% 0.25%

    Profit Before Interest and Taxe 29.10% 33.54% 35.38% 1.59%

    Main Ratio

    Current 11.21 6.54 5.54 1.10

    Quic 10.84 6.08 5.07 0.89

    Total Debt to Total Asset 77.50% 49.49% 27.62% 63.47%

    Pre-tax Return on Net Worth 112.29% 98.94% 84.09% 1.16%

    Pre-tax Return on Asset 25.27% 49.98% 60.87% 3.16%

    Additional Ratio FY 2005 FY 2006 FY 2007

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    Mid-Atlantic RecyclingDividend Payout 0.10 0.05 0.03 n.a

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    Appendix

    Page 1

    Table: Sales Forecast

    Sales Forecast

    Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb

    Unit Sales

    Sawdust collection services in hours 1,120 1,120 1,120 1,120 1,120 1,120 1,120 1,120 1,120 1,120 1,120 1,120

    Waste acceptance in tons 200 400 600 800 1,080 1,080 1,080 1,080 1,080 1,080 1,080 1,080

    Compost sales in tons 277 555 833 1,111 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500

    Total Unit Sales 1,597 2,075 2,553 3,031 3,700 3,700 3,700 3,700 3,700 3,700 3,700 3,700

    Unit Prices Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb

    Sawdust collection services in hours $14.20 $14.20 $14.20 $14.20 $14.20 $14.20 $14.20 $14.20 $14.20 $14.20 $14.20 $14.20

    Waste acceptance in tons $18.00 $18.00 $18.00 $18.00 $18.00 $18.00 $18.00 $18.00 $18.00 $18.00 $18.00 $18.00

    Compost sales in tons $50.00 $50.00 $50.00 $50.00 $50.00 $50.00 $50.00 $50.00 $50.00 $50.00 $50.00 $50.00

    Sales

    Sawdust collection services in hours $15,904 $15,904 $15,904 $15,904 $15,904 $15,904 $15,904 $15,904 $15,904 $15,904 $15,904 $15,904

    Waste acceptance in tons $3,600 $7,200 $10,800 $14,400 $19,440 $19,440 $19,440 $19,440 $19,440 $19,440 $19,440 $19,440

    Compost sales in tons $13,850 $27,750 $41,650 $55,550 $75,000 $75,000 $75,000 $75,000 $75,000 $75,000 $75,000 $75,000

    Total Sales $33,354 $50,854 $68,354 $85,854 $110,344 $110,344 $110,344 $110,344 $110,344 $110,344 $110,344 $110,344

    Direct Unit Costs Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb

    Sawdust collection services in hours 5.00% $0.71 $0.71 $0.71 $0.71 $0.71 $0.71 $0.71 $0.71 $0.71 $0.71 $0.71 $0.71

    Waste acceptance in tons 5.00% $0.90 $0.90 $0.90 $0.90 $0.90 $0.90 $0.90 $0.90 $0.90 $0.90 $0.90 $0.90

    Compost sales in tons 14.00% $7.00 $7.00 $7.00 $7.00 $7.00 $7.00 $7.00 $7.00 $7.00 $7.00 $7.00 $7.00

    Direct Cost of Sales

    Sawdust collection services in hours $795 $795 $795 $795 $795 $795 $795 $795 $795 $795 $795 $795

    Waste acceptance in tons $180 $360 $540 $720 $972 $972 $972 $972 $972 $972 $972 $972

    Compost sales in tons $1,939 $3,885 $5,831 $7,777 $10,500 $10,500 $10,500 $10,500 $10,500 $10,500 $10,500 $10,500

    Subtotal Direct Cost of Sales $2,914 $5,040 $7,166 $9,292 $12,267 $12,267 $12,267 $12,267 $12,267 $12,267 $12,267 $12,267

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    Appendix

    Page 2

    Table: Personnel

    Personnel Plan

    Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb

    Management/supervisory 0% $8,837 $8,837 $8,837 $8,837 $8,837 $8,837 $8,837 $8,837 $8,837 $8,837 $8,837 $8,837

    Production labor 0% $11,168 $13,401 $14,900 $16,380 $16,380 $16,380 $16,380 $16,380 $16,380 $16,380 $16,380 $16,380

    Sawdust collection team 0% $6,760 $6,760 $6,760 $6,760 $6,760 $6,760 $6,760 $6,760 $6,760 $6,760 $6,760 $6,760

    Other 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

    Total People 15 18 20 22 22 22 22 22 22 22 22 22

    Total Payroll $26,765 $28,998 $30,497 $31,977 $31,977 $31,977 $31,977 $31,977 $31,977 $31,977 $31,977 $31,977

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    Appendix

    Page 3

    Table: General Assumptions

    General Assumptions

    Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb

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

    Current Interest Rate 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00%

    Long-term Interest Rate 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00%

    Tax Rate 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00%

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

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    Appendix

    Page 4

    Table: Profit and Loss

    Pro Forma Profit and Loss

    Mar Apr May Jun Jul Aug Sep Oc Nov Dec Jan Feb

    Sales $33,354 $50,854 $68,354 $85,854 $110,344 $110,344 $110,344 $110,344 $110,344 $110,344 $110,344 $110,344

    Direct Cost of Sales $2,914 $5,040 $7,166 $9,292 $12,267 $12,267 $12,267 $12,267 $12,267 $12,267 $12,267 $12,267

    Other Costs of Goods $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

    Total Cost of Sales $2,914 $5,040 $7,166 $9,292 $12,267 $12,267 $12,267 $12,267 $12,267 $12,267 $12,267 $12,267

    Gross Margin $30,440 $45,814 $61,188 $76,562 $98,077 $98,077 $98,077 $98,077 $98,077 $98,077 $98,077 $98,077

    Gross Margin % 91.26% 90.09% 89.52% 89.18% 88.88% 88.88% 88.88% 88.88% 88.88% 88.88% 88.88% 88.88%

    Expenses

    Payroll $26,765 $28,998 $30,497 $31,977 $31,977 $31,977 $31,977 $31,977 $31,977 $31,977 $31,977 $31,977

    Sales and Marketing and Other

    Expenses

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

    Depreciation $13,782 $13,782 $13,782 $13,782 $13,782 $13,782 $13,782 $13,782 $13,782 $13,782 $13,782 $13,782

    Rent $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

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

    Insurance $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500

    Payroll Taxes 15% $4,015 $4,350 $4,575 $4,797 $4,797 $4,797 $4,797 $4,797 $4,797 $4,797 $4,797 $4,797

    Maintanence and Repair 15% $400 $400 $400 $400 $400 $400 $400 $400 $400 $400 $400 $400

    Other $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000

    Total Operating Expenses $50,962 $53,530 $55,254 $56,956 $56,956 $56,956 $56,956 $56,956 $56,956 $56,956 $56,956 $56,956

    Profit Before Interest and Taxes ($20,522) ($7,716) $5,934 $19,606 $41,121 $41,121 $41,121 $41,121 $41,121 $41,121 $41,121 $41,121

    EBITDA ($6,740) $6,066 $19,716 $33,388 $54,903 $54,903 $54,903 $54,903 $54,903 $54,903 $54,903 $54,903

    Interest Expense $4,930 $4,901 $4,872 $4,843 $4,813 $4,784 $4,754 $4,724 $4,694 $4,664 $4,634 $4,603

    Taxes Incurred ($6,363) ($3,154) $266 $3,691 $9,077 $9,084 $9,092 $9,099 $9,107 $9,114 $9,122 $9,129

    Net Profit ($19,089) ($9,463) $797 $11,073 $27,231 $27,253 $27,275 $27,298 $27,320 $27,343 $27,366 $27,388

    Net Profit/Sales -57.23% -18.61% 1.17% 12.90% 24.68% 24.70% 24.72% 24.74% 24.76% 24.78% 24.80% 24.82%

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    Appendix

    Page 5

    Table: Cash Flow

    Pro Forma Cash Flow

    Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb

    Cash Received

    Cash from Operations

    Cash Sales $13,342 $20,342 $27,342 $34,342 $44,138 $44,138 $44,138 $44,138 $44,138 $44,138 $44,138 $44,138

    Cash from Receivables $0 $667 $20,362 $30,862 $41,362 $52,002 $66,206 $66,206 $66,206 $66,206 $66,206 $66,206

    Subtotal Cash from Operations $13,342 $21,009 $47,704 $65,204 $85,500 $96,140 $110,344 $110,344 $110,344 $110,344 $110,344 $110,344

    Additional Cash Received

    Sales Tax , VAT, HST/GST Received 0.00% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

    New Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

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

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

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

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

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

    Subtotal Cash Received $13,342 $21,009 $47,704 $65,204 $85,500 $96,140 $110,344 $110,344 $110,344 $110,344 $110,344 $110,344

    Expenditures Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb

    Expenditures from Operations

    Cash Spending $26,765 $28,998 $30,497 $31,977 $31,977 $31,977 $31,977 $31,977 $31,977 $31,977 $31,977 $31,977

    Bill Payments $503 $15,260 $20,067 $25,808 $31,670 $40,517 $37,331 $37,309 $37,287 $37,264 $37,241 $37,219

    Subtotal Spent on Operations $27,268 $44,258 $50,564 $57,785 $63,647 $72,494 $69,308 $69,286 $69,264 $69,241 $69,218 $69,196

    Additional Cash Spent

    Sales Tax , VAT, HST/GST Paid Ou $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 $4,911 $4,940 $4,968 $4,997 $5,026 $5,056 $5,085 $5,115 $5,145 $5,175 $5,205 $5,235

    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 $0 $0 $0

    Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $20,000

    Subtotal Cash Spent $32,179 $49,198 $55,532 $62,783 $68,673 $77,550 $74,394 $74,401 $74,408 $74,416 $74,423 $94,431

    Net Cash Flow ($18,838) ($28,189) ($7,828) $2,421 $16,827 $18,590 $35,950 $35,943 $35,936 $35,928 $35,921 $15,913

    Cash Balance $62,062 $33,873 $26,045 $28,466 $45,293 $63,883 $99,834 $135,777 $171,712 $207,640 $243,561 $259,474

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    Appendix

    Page 6

    Table: Balance Sheet

    Pro Forma Balance Sheet

    Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb

    Assets Starting Balances

    Curren t Assets

    Cash $80,900 $62,062 $33,873 $26,045 $28,466 $45,293 $63,883 $99,834 $135,777 $171,712 $207,640 $243,561 $259,474

    Accounts Receivable $0 $20,012 $49,858 $70,508 $91,158 $116,002 $130,206 $130,206 $130,206 $130,206 $130,206 $130,206 $130,206

    Inventory $0 $3,206 $5,544 $7,883 $10,221 $13,494 $13,494 $13,494 $13,494 $13,494 $13,494 $13,494 $13,494

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

    Total Current Assets $80,900 $85,280 $89,275 $104,436 $129,846 $174,789 $207,583 $243,534 $279,477 $315,412 $351,340 $387,261 $403,174

    Long -term Assets

    Long-term Assets $826,920 $826,920 $826,920 $826,920 $826,920 $826,920 $826,920 $826,920 $826,920 $826,920 $826,920 $826,920 $826,920

    Accumulated Depreciation $0 $13,782 $27,564 $41,346 $55,128 $68,910 $82,692 $96,474 $110,256 $124,038 $137,820 $151,602 $165,384

    Total Lo ng-term Assets $82 6,920 $8 13,13 8 $7 99,35 6 $7 85 ,57 4 $7 71 ,79 2 $ 758 ,0 10 $ 744 ,2 28 $73 0,446 $71 6,664 $70 2,882 $68 9,1 00 $67 5,3 18 $ 66 1,5 36

    Total Assets $90 7,820 $8 98,41 8 $8 88,63 1 $8 90 ,01 0 $9 01 ,63 8 $ 932 ,7 99 $ 951 ,8 11 $97 3,980 $99 6,141 $1,01 8,294 $1,04 0,4 40 $1,06 2,5 79 $1,06 4,7 10

    Liabilities and Capital Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb

    Current Liabilities

    Accounts Payable $0 $14,598 $19,213 $24,763 $30,316 $39,272 $36,088 $36,066 $36,044 $36,023 $36,001 $35,979 $35,957

    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 $14,598 $19,213 $24,763 $30,316 $39,272 $36,088 $36,066 $36,044 $36,023 $36,001 $35,979 $35,957

    L ong -term L ia bilitie s $85 0,000 $8 45,08 9 $8 40,15 0 $8 35 ,18 1 $8 30 ,18 4 $ 825 ,1 57 $ 820 ,1 02 $81 5,016 $80 9,901 $80 4,757 $79 9,5 82 $79 4,3 77 $ 78 9,1 41

    Total Liabilities $850,000 $859,687 $859,362 $859,944 $860,500 $864,430 $856,189 $851,082 $845,946 $840,779 $835,583 $830,356 $825,098

    Paid-in Capital $150,000 $150,000 $150,000 $150,000 $150,000 $150,000 $150,000 $150,000 $150,000 $150,000 $150,000 $150,000 $150,000

    Retain ed Earnin gs ($ 92,180 ) ($ 92,18 0) ($ 92,18 0) ($92 ,1 80) ($92 ,1 80) ($9 2,180 ) ($9 2,180 ) ($9 2,180 ) ($9 2,180 ) ($9 2,180 ) ($9 2,180 ) ($9 2,180 ) ($11 2,180 )

    Earnings $0 ($19,089) ($28,551) ($27,755) ($16,682) $10,549 $37,802 $65,077 $92,375 $119,695 $147,038 $174,403 $201,792

    Total Capital $57,820 $38,731 $29,269 $30,065 $41,138 $68,369 $95,622 $122,897 $150,195 $177,515 $204,858 $232,223 $239,612

    To ta l L ia bil itie s a nd Ca pita l $ 90 7,8 20 $ 89 8,4 18 $ 88 8,6 31 $ 89 0,0 10 $ 90 1,6 38 $ 93 2,7 99 $ 95 1,8 11 $ 97 3,9 80 $ 99 6,1 41 $ 1,0 18 ,2 94 $ 1,0 40 ,4 40 $ 1,0 62 ,5 79 $ 1,0 64 ,7 10

    Net Worth $57,820 $38,731 $29,269 $30,065 $41,138 $68,369 $95,622 $122,897 $150,195 $177,515 $204,858 $232,223 $239,612