Recycling Waste Materials Business Plan

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Table of Contents 1.0 Executive Summary....................................................................................................................................1 Chart: Highlights.......................................................................................................................................2 1.1 Objectives................................................................................................................................................2 1.2 Mission....................................................................................................................................................2 1.3 Keys to Success.......................................................................................................................................3 2.0 Company Summary.....................................................................................................................................3 2.1 Company Ownership..............................................................................................................................3 2.2 Start-up Summary...................................................................................................................................3 Table: Start-up...........................................................................................................................................4 Chart: Start-up...........................................................................................................................................5 2.3 Company Locations and Facilities..........................................................................................................5 2.3.1 Government Regulation...................................................................................................................5 3.0 Products and Services.................................................................................................................................5 3.1 Product and Service Description............................................................................................................7 3.2 Competitive Comparison........................................................................................................................8 3.3 Sales Literature.......................................................................................................................................9 3.4 Technology............................................................................................................................................10 3.5 Future Products and Services................................................................................................................10 4.0 Market Analysis Summary.......................................................................................................................11 4.1 Market Segmentation............................................................................................................................11 Table: Market Analysis...........................................................................................................................12 Chart: Market Analysis (Pie)..................................................................................................................12 4.2 Target Market Segment Strategy..........................................................................................................12 4.2.1 Market Needs.................................................................................................................................13 4.2.2 Market Trends................................................................................................................................13 4.2.3 Market Growth...............................................................................................................................14 4.3 Service Business Analysis....................................................................................................................14 4.3.1 Distributing a Service....................................................................................................................14 4.3.2 Competition and Buying Patterns..................................................................................................14 4.3.3 Main Competitors..........................................................................................................................15 4.3.4 Business Participants.....................................................................................................................15 5.0 Strategy and Implementation Summary...................................................................................................15 5.1 Value Proposition..................................................................................................................................15 5.2 Competitive Edge..................................................................................................................................16 5.3 Marketing Strategy................................................................................................................................16 5.3.1 Promotion Strategy........................................................................................................................17 5.3.2 Positioning Statement....................................................................................................................18 5.3.3 Pricing Strategy..............................................................................................................................18 5.4 Sales Strategy........................................................................................................................................18 5.4.1 Sales Forecast.................................................................................................................................18 Table: Sales Forecast..........................................................................................................................19 Chart: Sales Monthly..........................................................................................................................20 Chart: Sales by Year...........................................................................................................................20 5.5 Milestones.............................................................................................................................................21 Table: Milestones....................................................................................................................................21 Chart: Milestones....................................................................................................................................21 6.0 Web Plan Summary...................................................................................................................................22 6.1 Development Requirements..................................................................................................................22 Page 1
Table of Contents 7.0 Management Summary.............................................................................................................................22 7.1 Management Team................................................................................................................................23 7.2 Management Team Gaps......................................................................................................................23 7.3 Personnel Plan.......................................................................................................................................24 Table: Personnel......................................................................................................................................24 8.0 Financial Plan............................................................................................................................................24 8.1 Start-up Funding...................................................................................................................................24 Table: Start-up Funding..........................................................................................................................25 .....................................................................................................................................................................25 Table: Use of Funds................................................................................................................................26 8.3 Important Assumptions.........................................................................................................................26 Table: General Assumptions...................................................................................................................26 .....................................................................................................................................................................26 Table: Break-even Analysis....................................................................................................................27 Chart: Break-even Analysis....................................................................................................................27 8.5 Projected Profit and Loss......................................................................................................................28 Table: Profit and Loss.............................................................................................................................28 Chart: Profit Monthly..............................................................................................................................29 Chart: Profit Yearly.................................................................................................................................29 Chart: Gross Margin Monthly................................................................................................................30 Chart: Gross Margin Yearly...................................................................................................................30 8.6 Projected Cash Flow.............................................................................................................................31 Chart: Cash..............................................................................................................................................31 Table: Cash Flow....................................................................................................................................32 .....................................................................................................................................................................32 8.7 Projected Balance Sheet........................................................................................................................33 Table: Balance Sheet...............................................................................................................................33 8.8 Business Ratios.....................................................................................................................................33 Table: Ratios...........................................................................................................................................34 Table: Sales Forecast.........................................................................................................................................1 ...........................................................................................................................................................................1 Table: Personnel................................................................................................................................................2 ...........................................................................................................................................................................2 Table: General Assumptions.............................................................................................................................3 ...........................................................................................................................................................................3 Table: Profit and Loss.......................................................................................................................................4 ...........................................................................................................................................................................5 Table: Cash Flow..............................................................................................................................................6 Page 2
Table of Contents
Table: Balance Sheet.........................................................................................................................................7
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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 market waste 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, and 2. 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 will benefit 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 filling up 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 problem by 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 been recycled 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 market with tremendous growth potential. One of the most attractive aspects is that the business is projected to attain a strong cash position 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 is attainable. Our in-depth research pertaining to human waste's positive soil enhancement characteristics and its many potential uses is well advanced. The concept has been tested on a small scale and the results, upon analysis, were found to be a high quality compost. Research will be an ongoing process for the company; one particular area of interest is the possibility of qualifying the product as a fertilizer. In this case, the profitability of the product would nearly double. MidAtlantic Recycling is working with the West Virginia University Cooperative Extension Service to investigate the feasibility of selling the material as fertilizer. We already have an advance order for 500 tons, and one fertilizer manufacturer and a large landscaper have committed to purchasing 600 tons of our product annually. Additionally, various municipalities have expressed keen interest in paying us to accept their waste.
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Chart: Highlights
Highlights
$5,000,000 $4,500,000 $4,000,000 $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $0 Year 1 Year 2 Year 3
Sales Gross Margin Net Profit
1.1 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 Year 1. 3. Open additional facilities in Year 2 and Year 3 to serve other areas of the state and the MidAtlantic region. 4. Continue to market Mid-Atlantic Recycling by contacting and soliciting business from additional municipalities and compost using customers. 1.2 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 the consumer 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. Opportunity Rationale Human waste sludge has long been a waste problem for municipalities which operate waste processing plants. In metropolitan areas that handle large amounts of waste, human sludge is generally disposed in volume at municipal landfills. Driven by state and federal mandates, recycling and composting of municipal solid waste has increased dramatically during the past decade. There are nearly ten thousand curbside recycling programs in America, and nearly 15,000 drop-off centers for recyclable material. Mid-Atlantic Recycling's business model presents an opportunity to recycle a landfill bound waste, save the landfill space, and give the consumer the opportunity to benefit from the many positive properties of the composted material.
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Human waste sludge contains a high nutrient value which can be composted to produce a quality plant food and soil enhancer at far lower prices than chemical fertilizers currently on the market. 1.3 Keys to Success The keys to success in our business are: Overcome perception issues that may exist with using compost made from human waste sludge. 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.
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 be advantageous. 2.1 Company Ownership Mid-Atlantic Recycling is owned by its founder and president, Oliver Pyne. Mr. Pyne will be an active participant in management decisions. 2.2 Start-up Summary Our start-up costs will be $1,000,000. The funds will be primarily used for the following: Capital Asset Purchases Processing Plants 2 x $190,460 $380,920 Processing Plants built in-house 2 x $40,000 $80,000 Sheds 48'x72' 4 x $18,500 $74,000 Skid Truck 2 x $73,000 (avg price) $146,000 Backhoe $40,000 Front-end Loader 2 x $50,000 $100,000 Tandem Dump Trailer $6,000 Total $826,920 Detail of start-up assumptions are shown in the following tables and chart.
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Table: Start-up
Start-up
Requirements
Start-up Expenses Legal Phone/utilities deposits Licenses/tax deposit Insurance Brochures/sales literature Advertising Employee salaries Skid boxes, 15 @ $3,000 ea. Welding and cutting torch Furniture and supplies Website development Miscellaneous Total Start-up Expenses Start-up Assets Cash Required Start-up Inventory Other Current Assets Long-term Assets Total Assets Total Requirements $80,900 $0 $0 $826,920 $907,820 $1,000,000 $500 $500 $4,000 $1,000 $500 $2,500 $16,680 $45,000 $10,000 $5,000 $1,500 $5,000 $92,180
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Chart: Start-up
Start-up
$900,000 $800,000 $700,000 $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $0 Expenses Assets Investment Loans
2.3 Company Locations and Facilities 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 set aside for the recycling facility set up and operation. This site is ideal as it provides access to local 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 in selling to the government. As the business expands to additional counties in subsequent years, we will need to lease property on which to site our facilities. 2.3.1 Government Regulation Because Mid-Atlantic Recycling recycles a waste product and incorporates it into an environmental product, the company is under the potential jurisdiction of the Environmental Protection 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 licenses to operate its facilities. 3.0 Products and Services Our products and services offer needed solutions to municipalities and the market for organic soil enhancement products. Mid-Atlantic Recycling will be the market leader as the first company in the region to collect, compost, and recycle human waste sludge for use as a
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fertilizer and a soil enhancer. Mid-Atlantic Recycling realizes that consumers today are more conscious of recycling and of their environment. Because of this trend, there is a growing trend among consumers to move away from traditional chemical based fertilizers more natural organic materials. We will offer one major service and major product. Our major service will be to offer municipalities an alternative means for disposing of human waste sludges generated in waste treatment plants. Our major product will be recycled (composted) human waste sludge for use as a fertilizer. A sample of our compost has been analyzed by the West Virginia University Agricultural Service Laboratory. A copy of their analysis is attached to this business plan; this analysis verifies the very high quality of the material we will produce. According to West Virginia University, this material may qualify as a fertilizer in which case the material's value is much higher than if it is considered a compost.
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3.1 Product and Service Description Nationwide, many landfills are closing or exhausting their remaining capacity. However, due to environmental restrictions, zoning laws, and other regulatory and bureaucratic delays, very few new landfills are opening to offset the looming space crisis. Meanwhile municipal waste, including human waste sludge, continues to flow in greater volume. Handling their waste streams has become 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 of legislation 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 accepting the sludge will no longer be able to accept it. Additionally, it will be very impractical, and cost prohibitive, 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 become much, 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; the average 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 dramatically due 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 the waste 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 remove the sludge for them. The tipping fee, a fee for skid box rental, and a fee for picking up and returning 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 be a 3-day recycling process. At the end of the three days, the human waste sludge will be converted to a compost material safe for use in agricultural applications. Potential customers include turf farms, fertilizer manufacturers, golf courses, nurseries, landscapers, Government agencies, and homeowners.
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3.2 Competitive Comparison The Mid-Atlantic Recycling business model adds great value through both our service and our product. Our service, accepting human waste sludge from municipalities, partially relieves the burden on rapidly 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 more natural organic soil enhancements. Our product, composted human sludge, responds to this market trend. Compost has many advantages over traditional fertilizer. Traditional chemical fertilizer sells for approximately $250 per ton while our compost will be priced at around $50$100 per 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. The chemical 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. As demonstrated, 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 be intermittent 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 always be available for composting in large, dependable quantities, at one or a few locations, at a constant/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 and transportation 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. This inherently will result in a product that constantly changes in content and quality. In fact customers view other composts as being of unpredictable availability and unpredictable quality. Mid-Atlantic Recycling's compost will not have these deficiencies and will be viewed as the superior compost product. In addition to the above, the following paragraphs describe federal small business programs that Mid-Atlantic Recycling intends to take advantage of. These programs are available to us due to our location and the status of our owner as a Native American (minority). Mid-Atlantic Recycling will leverage these programs to ensure entry to the federal market. This information was taken from federal government Internet sites. The Historically Underutilized Business Zone (HUBZone) program: Firms in this program have the opportunity to negotiate sole source contracts and participate in restricted competition limited to HUBZone firms. Also, HUBZone firms are allowed a ten percent price evaluation preference in full and open competition. In such cases, the price offered by a HUBZone firm will be determined lower than the price offered by a non-HUBZone firm as long as the HUBZone firm's price is not more than 10% higher than the price offered by the otherwise lowest, responsive offeror. Companies can apply on-line at SBAs website for expedited HUBZone program admission. According to research done by the Iowa Department of Natural Resources, government entities are the largest single buyer of compost products.
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Small 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 adjustment for SDBs bidding as primes became effective October 1, 1998. Regulations mandate this approach 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 of Commerce 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 as subcontractors. 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 SDBcertified firms for a period of three years.
The 8(a) Program: SBAs 8(a) program, named for a section of the Small Business Act, is a business 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 agency also encourages them to participate in competitive acquisitions. 2. Federal acquisition policies encourage federal agencies to award a certain percentage of their 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 with certified 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 the effects of contract bundling, the combining of two or more contracts together into one large contract.
Mid-Atlantic's owner is a Native American which will qualify him to participate in the SDB and 8(a) programs. The federal market is particularly appealing because the need for compost and fertilizer materials in highway and other federal construction projects is extremely large. 3.3 Sales Literature We will prepare a general brochure with information and maps about Mid-Atlantic Recycling's products and services for dissemination to potential customers, including both municipalities and compost users. Sales personnel will visit each potential customer with pricing, maps, and reminders of the facility. Sales literature will be very important, with the need to establish a high-quality look and feel in order to create a trusting sense of professionalism.
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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 natures means of recycling. It will turn grass clipping, leaves, vegetables, fruit and other organic materials into a very beneficial soil amendment. Composting is also an effective means of reducing the amount of solid wastes going into our nations landfills. MidAtlantic 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 will be 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 equipment manufacturer (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 Agricultural Service 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 placed into 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 International Paper 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 as the unit turns, the material slowly migrates toward the opposite end of the unit. During the composting 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. Temperature can be controlled to ensure optimum composting environment. Also, the moisture levels can be controlled to ensure optimum composting. After three days, the material has reached the opposite end of the unit where it is removed. Advantages of this recycling/composting method are as follows: Recycling is completed rapidly in three days. Other methods take 90 plus days. Waste materials in the unit are isolated from the environment. The manager has precise control of moisture, temperature, and aeration during the process to ensure the most efficient composting possible. In-vessel composting can maintain a rapid decomposition process year-round regardless of external ambient conditions. The material can be used for improvement of organic matter content and fertility of soil.
3.5 Future Products and Services In the future, Mid-Atlantic Recycling plans to expand by opening additional recycling facilities throughout West Virginia and beyond. We ultimately intend to become the method of choice for disposal of human sludges.
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4.0 Market Analysis Summary There are customers at both ends of our supply chain that will benefit from our services and products. 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 federal government for use in highway construction reseeding. Therefore, we have two basic market segments; those waste treatment facilities which will benefit from our services and consumers who 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, prevent the contamination of drinking water, and help farmers build healthier soils by recycling garbage and 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 Farm Resource.) 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 resurgence of 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 for traditional 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: Agriculture (for food and nonfood crops and sod farms). Landscapers (for industrial and commercial properties; golf courses, cemeteries, and athletic fields; landfill covers; and damaged soils). Nurseries (for plant and forest seedling crops and reforestation projects). Public agencies (for highway median strips, parks, recreational areas, and other public property). Residents (for home landscaping and gardening).
4.1 Market Segmentation The following table shows information regarding the number of potential customers in our target markets. This data is based on information taken from superpages.com. As reflected in the table, there are approximately 34 waste treatment plants in West Virginia. These are all potential customers for our collection service and sources of material for compost processing. Additionally, there are a total of 1,779 potential customers in the initial target market for our compost product. This includes 11 fertilizer manufacturers, approximately 30 sod/turf farms, 324 nurseries, 483 golf courses, and 931 landscapers.
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Table: Market Analysis
Market Analysis Year 1 Potential Customers Municipalities with treatment plant Compost users Other Total Growth 1% 5% 0% 4.91% 34 1,779 0 1,813 34 1,868 0 1,902 34 1,961 0 1,995 34 2,059 0 2,093 34 2,162 0 2,196 Year 2 Year 3 Year 4 Year 5 CAGR 0.00% 5.00% 0.00% 4.91%
Chart: Market Analysis (Pie)
Market Analysis (Pie)
Municipalities with treatment plant Compost users Other
4.2 Target Market Segment Strategy To target our customers, we examined the market trends. Mid-Atlantic Recycling's products target 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 health and 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 the makers of two widely used pesticides Diazinon and Chlorpyrifos to phase them out because of 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 numerous familiar products, including Ortho Lawn Insect Spray (Washington Post, Thursday, May 10, 2001).
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According to an executive with the Scotts Co. in Marysville, Ohio, the pace of research into organic 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 $10.4 billion, 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 $32 billion 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 that regenerative agricultural management systems based on organic fertilizer can preserve carbon and 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 corn/soybean growing region of the U.S. were to adopt these organic practices, they say, the percentage of estimated annual carbon dioxide released into the atmosphere from fossil fuel combustion in the nation could be reduced by one to two percent (USA Today, June 1999). Mid-Atlantic's products will help fill the growing need for organic fertilizers, and soil amendments, while helping to solve the problem of dwindling landfill space. 4.2.1 Market Needs Several companies compete in the fertilizer market. Their major selling points are performance and price. However, health conscious consumers have created growing competition between chemical and organic products. Mid-Atlantic Recycling's competition can be divided into two forms: direct and indirect. Our direct competitors would include other compost producers capable of producing sufficient product 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, toward natural organic soil enhancers. Thus the market for chemical fertilizer is decreasing while our market is increasing. 4.2.2 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 landfills which 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 as landfill space decreases dramatically. Our recycling service solves this problem for municipalities.
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The organic industry now boasts sales in excess of $9 billion at retail, with growth forecast to continue at 25% per year (http://lists.ibiblio.org/pipermail/marketfarming/2002October/000063.html). The demand for compost to use in organic farming and other applications is growing rapidly. 4.2.3 Market Growth The possibility of growth in this market is realistically huge. Consider the following simple facts: Municipalities must have an alternative means for disposing of human waste; we offer a great alternative to meet that need. Market trends are skewing more and more toward organic soil enhancements and away from chemical fertilizers; we meet this need as well. We have no direct competition in West Virginia and very little in the Mid-Atlantic region.
All of this means that Mid-Atlantic Recycling is poised to see tremendous growth. 4.3 Service Business Analysis Our service offers a feasible, even desirable, alternative to traditional means of disposing of human waste. Our product is a value added, soil enhancer that appeals to the growing environmental conscientiousness among consumers. Direct competition is almost nonexistent. We intend to position ourselves as the logical, economical choice for human waste disposal and compost production in West Virginia and the Mid-Atlantic region. 4.3.1 Distributing a Service Indirect competitors are those companies that offer only chemical soil enhancers and plant foods. 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 direct competition, they fall far short of current market expectations, and it will only be a matter of time 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 be certain to phase-in their own organic substitutes in place of the chemicals. This, in itself, presents a potential market for our compost. 4.3.2 Competition and Buying Patterns To be a player in the organic fertilizer and soil produce market, Mid-Atlantic Recycling identified market 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 also comparable, 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, that saves landfill space.
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4.3.3 Main Competitors As noted earlier, direct competitors are essentially non-existent in the Mid-Atlantic region. Our major indirect competitors are chemical fertilizer manufacturers. However, their products are more costly and do not address the market's trend toward organic, natural soil enhancers. Some municipalities have begun composting operations in an attempt to deal with waste disposal issues. They typically use a method in which sludge is placed on the ground in windrows which are turned periodically for aeration. This is an inefficient method of composting primarily because it is slow, taking 90 or more days, which means that availability is uncertain for consumers. Also, in this composting method high enough temperatures are not achieved to kill harmful bacteria and seeds that may sprout into weeds. Additionally, municipalities are not businesses, which means their marketing capabilities are limited. Their market primarily consists of local homeowners and businesses, which ignores the greater market. Also, this composting method requires a lot of ground space which restricts the operation. Finally, odor can be a problem for municipalities due to nearness of local residents or businesses. For these reasons, municipality composting efforts are not considered a competitive threat. 4.3.4 Business Participants Mid-Atlantic Recycling's direct competition includes companies that produce an organic soil enhancement product. Organic soil enhancers are no longer a niche market. They have grown into a strong sub-market in the fertilizer and soil enhancement industry, and they now present significant competition for chemical fertilizer competitors. Major direct competition includes FSH, makers of Holy Cow Compost, and Scott's, makers of Iron Bull. Other examples of competing products are Monkey-Doo, Roots Organic, and Milorganite, the original (75 years) sewage sludge based organic fertilizer. 5.0 Strategy and Implementation Summary We have clearly defined our target markets and have differentiated ourselves by offering a unique solution to our customers' needs. The primary focus of our marketing strategy must be to increase sales and profitability business quickly. This can be achieved by face-to-face contact, and an effective publicity and promotion campaign. 5.1 Value Proposition Our value proposition is two-fold.
Value proposition for municipalities: We offer a service that is a cost effective, budget saving 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 thermal stability, water retention, resistance to wind and water erosion, and tillage. Compost also decreases soil crusting, regulates storage and release of nutrients, enhances the development of beneficial microorganisms, builds up plant resistance to parasites and disease, and promotes faster root development. Plants and crops treated properly with compost may produce higher yields and have less weed growth. Chemical fertilizers do not offer this value.
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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 the customer's changing attitude toward organic fertilizer as opposed to chemical fertilizer. Elimination of disposal issues: Municipalities now have a waste that takes up landfill space. 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 customer time 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.
5.3 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.
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5.3.1 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 sustained profitability. 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 an excellent 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 similarly seek 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 their effectiveness before further implementation. Internet: We will have a content heavy website geared toward educating potential customers about the benefits of our products and services. All literature, business cards, etc. will include our website and e-mail address information. Alliances: We intend to form alliances with fertilizer manufacturers to use our product in their fertilizer and/or distribute our product for us.
Second Phase Promotions
Publicity: As the business grows and expands we will continue to seek publicity through news media to tout our successes. Advertising: We will continue to make face-to-face contact with customers and potential customers. Mail-outs will be done again within a few months of start up. The second round of mail outs will be updated to reflect the benefits provided to customers thus far. Such mail-outs will be sent periodically. Internet: We will continue to have a comprehensive website. The website will be updated to provide responses to frequently asked questions. After the first six months, and certainly after the first year, we will evaluate the viability of having target clients advertise on our site, and conversely, we will evaluate viability of advertising on our target clients websites (if applicable). Alliances: We will continue to seek mutually beneficial and complementary alliances with manufacturers where applicable.
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5.3.2 Positioning Statement For municipalities seeking an answer to their waste disposal problems, Mid-Atlantic Recycling is the 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 dependable provider of low cost and consistent high quality compost products. 5.3.3 Pricing Strategy The going rate per ton for compost is $50 and up. This price is low enough to ensure rapid growth 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 on the front end of the industry growth in this region. However, according to the West Virginia University Cooperative Extension Service, we may be able 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 to municipalities. Tipping fees are generally $15 and up per ton. Additionally, we will charge competitive skid box rental fees and transportation costs. 5.4 Sales Strategy Mid-Atlantic Recycling's sales strategy is relatively straightforward. Get the word out about our products and services to potential customers, educate them as to the value added by our products and services, and the product/service will sell itself. Our present management team will become the main sales force when operations begin. MidAtlantic Recycling's sales force will increase as business demand permits. In the first six to twelve months of operations, our sales team will focus its efforts on municipalities, fertilizer manufacturers, farmers, small nurseries and other related companies. The team will promote the products based on their environmental strengths and extended duration. Mid-Atlantic Recycling will use other channels of selling after the first year. Face-to-face contact and direct mail selling are part of the selling plan. 5.4.1 Sales Forecast The table below outlines the sales forecast and cost of goods sold. The forecast is based on reasonable sales projections within this very large market. An additional revenue stream will be the collection and removal of sawdust, wood chip, and bark from 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 and placing 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 doubles in each of those years.
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Table: Sales Forecast
Sales Forecast Year 1 Unit Sales Sawdust collection services in hours Waste acceptance in tons Compost sales in tons Total Unit Sales Unit Prices Sawdust collection services in hours Waste acceptance in tons Compost sales in tons Sales Sawdust collection services in hours Waste acceptance in tons Compost sales in tons Total Sales Direct Unit Costs Sawdust collection services in hours Waste acceptance in tons Compost sales in tons Direct Cost of Sales Sawdust collection services in hours Waste acceptance in tons Compost sales in tons Subtotal Direct Cost of Sales $9,542 $9,576 $103,432 $122,550 $9,925 $23,328 $264,600 $297,853 $10,322 $46,656 $555,710 $612,688 $190,848 $191,520 $738,800 $1,121,168 Year 1 $0.71 $0.90 $7.00 $198,509 $466,560 $1,890,000 $2,555,069 Year 2 $0.74 $0.90 $7.35 $206,438 $933,120 $3,969,360 $5,108,918 Year 3 $0.77 $0.90 $7.72 13,440 10,640 14,776 38,856 Year 1 $14.20 $18.00 $50.00 13,440 25,920 36,000 75,360 Year 2 $14.77 $18.00 $52.50 13,440 51,840 72,000 137,280 Year 3 $15.36 $18.00 $55.13 Year 2 Year 3
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Chart: Sales Monthly
Sales Monthly
$120,000
$100,000
$80,000
Sawdust collection services in hours Waste acceptance in tons Compost sales in tons
$60,000
$40,000
$20,000
$0 Month 2 Month 4 Month 6 Month 8 Month 10 Month 12
Chart: Sales by Year
Sales by Year
$5,000,000 $4,500,000 $4,000,000 $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $0 Year 1 Year 2 Year 3
Sawdust collection services in hours Waste acceptance in tons Compost sales in tons
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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
Milestones Milestone Complete business plan Recieve all funding Site preparation Form LLC Composter set up Order/fabricate composters Hire staff Begin production Totals Start Date 10/7/2003 11/24/2003 3/1/2004 2/15/2004 3/15/2004 2/15/2004 3/1/2004 3/15/2004 End Date 12/1/2003 2/29/2004 3/15/2004 3/15/2004 3/30/2004 3/30/2004 5/30/2004 3/30/2005 Budget $0 $0 $0 $500 $0 $480,000 $16,680 $0 $497,180 Manager O. Pyne O. Pyne O. Pyne O. Pyne O. Pyne O. Pyne O. Pyne O. Pyne Department Department Department Department Department Department Department Department Department
Chart: Milestones
Milestones
Complete business plan Recieve all funding Site preparation Form LLC Composter set up Order/fabricate composters Hire staff Begin production Q4 `03 Q1 `04 Q2 Q3 Q4 Q1 `05
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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 and services. A site that is too flashy, or tries to use too much of the latest Shockwave or Flash technology 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 customers about feasibility and the potential uses of our products and services. 6.1 Development Requirements Our website will be initially developed with few technical resources. A hosting provider will host the site and provide the technical back end. A website design firm will design all website graphics and layout. 7.0 Management Summary Mr. Oliver Pyne is the mind behind Mid-Atlantic Recycling. He saw the need for human waste sludge to be recycled and used in several different and environmentally beneficial ways. With the development, determination, motivation, and persistence of everyone involved, Mid-Atlantic Recycling will be the leading producer of composted human waste sludge in West Virginia and a leader 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 University and has spent 30 years in the farming and agriculture industry. He has extensively researched 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 has experience 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, the responsibilities 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 successful company.
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7.1 Management Team The responsibilities involved in the company Mid-Atlantic Recycling are great and abundant. Mid-Atlantic Recycling's main purpose is to appeal to municipalities by offering a human waste disposal alternative, and to environmentally conscious minded consumers by developing products that include recycled human waste. Each executive member will have several responsibilities that are imperative to fulfill the duties in producing such unique products. As founder and president of Mid-Atlantic Recycling, Mr. Oliver Pyne will be responsible for the entire operation. Some of his duties will include overseeing the areas held by the other company executives, as well as the output produced by other employees. He will be in charge of the company's public relations. He will also have the job of hiring dedicated people and ensuring employees put their best efforts into the production of Mid-Atlantic Recycling's products. He will have the lead role in making decisions that concern the well being of MidAtlantic Recycling. Mr. Sam Cole has an important job as operations manager. His job will be crucial in the growth of Mid-Atlantic Recycling. He will ensure that day-to-day operations are conducted such that materials are received, methods and processes are standardized, and production is maximized to ensure uniform production of compost materials. This duty will entail establishing a good working relationship with production line employees because without them Mid-Atlantic Recycling's products will not be produced. Mr. Alexander Main will be responsible for Mid-Atlantic Recycling's financial management operations including accounts payable, accounts receivables, and bookkeeping. 7.2 Management Team Gaps To assist in sales and marketing, Mid-Atlantic Recycling plans to utilize the services of Blevins Consulting, LLC, a management consultant firm based in West Virginia. Blevins Consulting specializes in business planning, marketing planning, training, website design and marketing, and marketing to the federal government. Marketing and sales will play an important role in convincing consumers to switch from their old products 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 of Blevins duties will include writing press releases, coordinating print and radio press, monitoring the competition, making presentations to potential clients, and studying the markets to identify customers' needs and determine how to best appeal to those needs.
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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, 3 truck 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 6 laborers, 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 collected will be used in the composting process. In addition to the above, Mid-Atlantic Recycling plans to hire a local trucking firm to deliver compost 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 in the first year of operation. Table: Personnel
Personnel Plan Year 1 Management/supervisory Production labor Sawdust collection team Other Total People Total Payroll $106,044 $186,889 $81,120 $0 22 $374,053 Year 2 $250,992 $338,688 $176,646 $0 44 $766,326 Year 3 $527,083 $711,245 $183,712 $0 88 $1,422,040
8.0 Financial Plan Our financial plan is based on receiving several loans to purchase/fabricate the production equipment, provide initial operating capital, and establish the customer base. We will achieve profitability early in the first year and due to the expected high growth rate, we will realize strong profits on sales by year three. 8.1 Start-up Funding The start-up funding will be provided as follows: Owner equity investment of in the form of a loan 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 fund sponsored by three West Virginia counties: Mercer, Greenbrier, and Monroe. The balance of funding will be provided through an SBA guaranteed loan. Details of funding are shown in the table below.
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Table: Start-up Funding
Start-up Funding Start-up Expenses to Fund Start-up Assets to Fund Total Funding Required Assets Non-cash Assets from Start-up Cash Requirements from Start-up Additional Cash Raised Cash Balance on Starting Date Total Assets $826,920 $80,900 $0 $80,900 $907,820 $92,180 $907,820 $1,000,000
Liabilities and Capital
Liabilities Current Borrowing Long-term Liabilities Accounts Payable (Outstanding Bills) Other Current Liabilities (interest-free) Total Liabilities Capital $0 $850,000 $0 $0 $850,000
Planned Investment Owner Other Additional Investment Requirement Total Planned Investment Loss at Start-up (Start-up Expenses) Total Capital $150,000 $0 $0 $150,000 ($92,180) $57,820
Total Capital and Liabilities Total Funding
$907,820 $1,000,000
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8.2 Use of Funds

The bulk of our Start-up funding will be used for capital asset purchases, listed in the table below. Table: Use of Funds
Use of Funds Use Processing Plants 2 x $190,460 Processing Plants built in-house 2 x $40,000 Skid Truck 2 x $73,000 (avg price) Sheds 48'x72' 4 x $18,500 Backhoe Front-end Loader 2 x $50,000 Tandem Dump Trailer Total Amount $380,920 $80,000 $146,000 $74,000 $40,000 $100,000 $6,000 $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 Year 1 Plan Month Current Interest Rate Long-term Interest Rate Tax Rate Other 1 7.00% 7.00% 25.00% 0 Year 2 2 7.00% 7.00% 25.00% 0 Year 3 3 7.00% 7.00% 25.00% 0
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8.4 Break-even Analysis

The chart and table below contain the break-even analysis for Mid-Atlantic Recycling. Table: Break-even Analysis
Break-even Analysis Monthly Units Break-even Monthly Revenue Break-even Assumptions: Average Per-Unit Revenue Average Per-Unit Variable Cost Estimated Monthly Fixed Cost $28.85 $3.15 $56,029 2,180 $62,905
Chart: Break-even Analysis
Break-even Analysis
$60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $0 ($10,000) ($20,000) ($30,000) ($40,000) ($50,000) 0 400 800 1200 1600 2000 2400 2800 3200 3600 4000 4400
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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. Table: Profit and Loss
Pro Forma Profit and Loss Year 1 Sales Direct Cost of Sales Other Costs of Goods Total Cost of Sales Gross Margin Gross Margin % $1,121,168 $122,550 $0 $122,550 $998,618 89.07% Year 2 $2,555,069 $297,853 $0 $297,853 $2,257,215 88.34% Year 3 $5,108,918 $612,688 $0 $612,688 $4,496,230 88.01%
Expenses Payroll Sales and Marketing and Other Expenses Depreciation Rent Utilities Insurance Payroll Taxes Maintanence and Repair Other Total Operating Expenses Profit Before Interest and Taxes EBITDA Interest Expense Taxes Incurred Net Profit Net Profit/Sales $374,053 $12,000 $165,384 $0 $18,000 $18,000 $56,108 $4,800 $24,000 $672,345 $326,273 $491,657 $57,217 $67,264 $201,792 18.00% $766,326 $24,000 $325,384 $40,000 $36,000 $36,000 $114,949 $9,600 $48,000 $1,400,259 $856,956 $1,182,340 $52,956 $201,000 $603,000 23.60% $1,422,040 $48,000 $645,384 $100,000 $72,000 $72,000 $213,306 $20,000 $96,000 $2,688,730 $1,807,500 $2,452,884 $48,223 $439,819 $1,319,458 25.83%
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Chart: Profit Monthly
Profit Monthly
$30,000 $25,000 $20,000 $15,000 $10,000 $5,000 $0 ($5,000) ($10,000) ($15,000) Month 1 Month 3 Month 5 Month 7 Month 9 Month 11 Month 2 Month 4 Month 6 Month 8 Month 10 Month 12
Chart: Profit Yearly
Profit Yearly
$1,400,000 $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 $0 Year 1 Year 2 Year 3
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Chart: Gross Margin Monthly
Gross Margin Monthly

$100,000 $90,000 $80,000 $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $0 Month 1 Month 3 Month 5 Month 7 Month 9 Month 11 Month 2 Month 4 Month 6 Month 8 Month 10 Month 12
Chart: Gross Margin Yearly
Gross Margin Yearly
$4,500,000 $4,000,000 $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $0 Year 1 Year 2 Year 3
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8.6 Projected Cash Flow The chart and table below project increasing cash flow throughout the first three years of plan implementation. 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 anticipated need for outside financing. The row labelled "Long-term Liabilities Principal Repayment" reflects repayment of the SBA guaranteed 504 Debenture Program loan.
Chart: Cash
Cash
$240,000 $210,000 $180,000 $150,000 $120,000 $90,000 $60,000 $30,000 $0 Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Net Cash Flow Cash Balance
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Table: Cash Flow
Pro Forma Cash Flow Year 1 Cash Received Year 2 Year 3
Cash from Operations Cash Sales Cash from Receivables Subtotal Cash from Operations Additional Cash Received Sales Tax, VAT, HST/GST Received New Current Borrowing New Other Liabilities (interest-free) New Long-term Liabilities Sales of Other Current Assets Sales of Long-term Assets New Investment Received Subtotal Cash Received Expenditures Expenditures from Operations Cash Spending Bill Payments Subtotal Spent on Operations Additional Cash Spent Sales Tax, VAT, HST/GST Paid Out Principal Repayment of Current Borrowing Other Liabilities Principal Repayment Long-term Liabilities Principal Repayment Purchase Other Current Assets Purchase Long-term Assets Dividends Subtotal Cash Spent Net Cash Flow Cash Balance $0 $0 $0 $60,859 $0 $0 $20,000 $812,388 $178,574 $259,474 $0 $0 $0 $65,258 $0 $800,000 $30,000 $2,535,705 ($147,161) $112,313 $0 $0 $0 $69,976 $0 $1,600,000 $40,000 $4,832,702 ($20,373) $91,940 $374,053 $357,477 $731,530 $766,326 $874,121 $1,640,447 $1,422,040 $1,700,686 $3,122,726 $0 $0 $0 $0 $0 $0 $0 $990,962 Year 1 $0 $0 $0 $0 $0 $0 $0 $2,388,544 Year 2 $0 $0 $0 $0 $0 $0 $0 $4,812,329 Year 3 $448,467 $542,495 $990,962 $1,022,028 $1,366,516 $2,388,544 $2,043,567 $2,768,762 $4,812,329
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8.7 Projected Balance Sheet The following table projects healthy growth in sales and net worth. Table: Balance Sheet
Pro Forma Balance Sheet Year 1 Assets Year 2 Year 3
Current Assets Cash Accounts Receivable Inventory Other Current Assets Total Current Assets Long-term Assets Long-term Assets Accumulated Depreciation Total Long-term Assets Total Assets Liabilities and Capital Current Liabilities Accounts Payable Current Borrowing Other Current Liabilities Subtotal Current Liabilities Long-term Liabilities Total Liabilities Paid-in Capital Retained Earnings Earnings Total Capital Total Liabilities and Capital Net Worth $35,957 $0 $0 $35,957 $789,141 $825,098 $150,000 ($112,180) $201,792 $239,612 $1,064,710 $239,612 $75,059 $0 $0 $75,059 $723,883 $798,943 $150,000 $59,612 $603,000 $812,612 $1,611,555 $812,612 $145,579 $0 $0 $145,579 $653,908 $799,486 $150,000 $622,612 $1,319,458 $2,092,070 $2,891,557 $2,092,070 $826,920 $165,384 $661,536 $1,064,710 Year 1 $1,626,920 $490,768 $1,136,152 $1,611,555 Year 2 $3,226,920 $1,136,152 $2,090,768 $2,891,557 Year 3 $259,474 $130,206 $13,494 $0 $403,174 $112,313 $296,731 $66,359 $0 $475,403 $91,940 $593,320 $115,528 $0 $800,789
8.8 Business Ratios The following table outlines some of the more important ratios from the Recycling, waste materials industry. The final column, Industry Profile, details specific ratios based on the industry as it is classified by the Standard Industry Classification (SIC) code, 4953.9905.
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Table: Ratios
Ratio Analysis Sales Growth Percent of Total Assets Accounts Receivable Inventory Other Current Assets Total Current Assets Long-term Assets Total Assets Current Liabilities Long-term Liabilities Total Liabilities Net Worth Percent of Sales Sales Gross Margin Selling, General & Administrative Expenses Advertising Expenses Profit Before Interest and Taxes Main Ratios Current Quick Total Debt to Total Assets Pre-tax Return on Net Worth Pre-tax Return on Assets Additional Ratios Net Profit Margin Return on Equity Activity Ratios Accounts Receivable Turnover Collection Days Inventory Turnover Accounts Payable Turnover Payment Days Total Asset Turnover Debt Ratios Debt to Net Worth Current Liab. to Liab. Liquidity Ratios Net Working Capital Interest Coverage Additional Ratios Assets to Sales Current Debt/Total Assets Acid Test Sales/Net Worth Dividend Payout Year 1 n.a. Year 2 127.89% Year 3 99.95% Industry Profile 7.24%
12.23% 1.27% 0.00% 37.87% 62.13% 100.00% 3.38% 74.12% 77.50% 22.50%
18.41% 4.12% 0.00% 29.50% 70.50% 100.00% 4.66% 44.92% 49.58% 50.42%
20.52% 4.00% 0.00% 27.69% 72.31% 100.00% 5.03% 22.61% 27.65% 72.35%
4.89% 0.35% 31.71% 36.95% 63.05% 100.00% 18.58% 26.10% 44.68% 55.32%
100.00% 89.07% 72.77% 0.00% 29.10%
100.00% 88.34% 64.88% 0.00% 33.54%
100.00% 88.01% 61.97% 0.00% 35.38%
100.00% 34.70% 14.39% 0.25% 1.59%
11.21 10.84 77.50% 112.29% 25.27% Year 1 18.00% 84.22%
6.33 5.45 49.58% 98.94% 49.89% Year 2 23.60% 74.21%
5.50 4.71 27.65% 84.09% 60.84% Year 3 25.83% 63.07%
1.10 0.89 63.47% 1.16% 3.16%
n.a n.a
5.17 57 10.91 10.94 27 1.05
5.17 51 7.46 12.17 22 1.59
5.17 53 6.74 12.17 23 1.77
n.a n.a n.a n.a n.a n.a
3.44 0.04
0.98 0.09
0.38 0.18
n.a n.a
$367,217 5.70
$400,344 16.18
$655,210 37.48
n.a n.a
0.95 3% 7.22 4.68 0.10
0.63 5% 1.50 3.14 0.05
0.57 5% 0.63 2.44 0.03
n.a n.a n.a n.a n.a
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Page 35
Appendix
Table: Sales Forecast
Sales Forecast Month 1 Unit Sales Sawdust collection services in hours Waste acceptance in tons Compost sales in tons Total Unit Sales 1,120 200 277 1,597 1,120 400 555 2,075 1,120 600 833 2,553 1,120 800 1,111 3,031 1,120 1,080 1,500 3,700 1,120 1,080 1,500 3,700 1,120 1,080 1,500 3,700 1,120 1,080 1,500 3,700 1,120 1,080 1,500 3,700 1,120 1,080 1,500 3,700 1,120 1,080 1,500 3,700 1,120 1,080 1,500 3,700 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Unit Prices Sawdust collection services in hours Waste acceptance in tons Compost sales in tons
Month 1 $14.20 $18.00 $50.00
Month 2 $14.20 $18.00 $50.00
Month 3 $14.20 $18.00 $50.00
Month 4 $14.20 $18.00 $50.00
Month 5 $14.20 $18.00 $50.00
Month 6 $14.20 $18.00 $50.00
Month 7 $14.20 $18.00 $50.00
Month 8 $14.20 $18.00 $50.00
Month 9 $14.20 $18.00 $50.00
Month 10 $14.20 $18.00 $50.00
Month 11 $14.20 $18.00 $50.00
Month 12 $14.20 $18.00 $50.00
Sales Sawdust collection services in hours Waste acceptance in tons Compost sales in tons Total Sales $15,904 $3,600 $13,850 $33,354 $15,904 $7,200 $27,750 $50,854 $15,904 $10,800 $41,650 $68,354 $15,904 $14,400 $55,550 $85,854 $15,904 $19,440 $75,000 $110,344 $15,904 $19,440 $75,000 $110,344 $15,904 $19,440 $75,000 $110,344 $15,904 $19,440 $75,000 $110,344 $15,904 $19,440 $75,000 $110,344 $15,904 $19,440 $75,000 $110,344 $15,904 $19,440 $75,000 $110,344 $15,904 $19,440 $75,000 $110,344
Direct Unit Costs Sawdust collection services in hours Waste acceptance in tons Compost sales in tons Direct Cost of Sales Sawdust collection services in hours Waste acceptance in tons Compost sales in tons Subtotal Direct Cost of Sales 5.00% 5.00% 14.00%
Month 1 $0.71 $0.90 $7.00
Month 2 $0.71 $0.90 $7.00
Month 3 $0.71 $0.90 $7.00
Month 4 $0.71 $0.90 $7.00
Month 5 $0.71 $0.90 $7.00
Month 6 $0.71 $0.90 $7.00
Month 7 $0.71 $0.90 $7.00
Month 8 $0.71 $0.90 $7.00
Month 9 $0.71 $0.90 $7.00
Month 10 $0.71 $0.90 $7.00
Month 11 $0.71 $0.90 $7.00
Month 12 $0.71 $0.90 $7.00
$795 $180 $1,939 $2,914
$795 $360 $3,885 $5,040
$795 $540 $5,831 $7,166
$795 $720 $7,777 $9,292
$795 $972 $10,500 $12,267
$795 $972 $10,500 $12,267
$795 $972 $10,500 $12,267
$795 $972 $10,500 $12,267
$795 $972 $10,500 $12,267
$795 $972 $10,500 $12,267
$795 $972 $10,500 $12,267
$795 $972 $10,500 $12,267
Page 1
Appendix
Table: Personnel
Personnel Plan Month 1 Management/supervisory Production labor Sawdust collection team Other Total People 0% 0% 0% 0% $8,837 $11,168 $6,760 $0 15 Month 2 $8,837 $13,401 $6,760 $0 18 Month 3 $8,837 $14,900 $6,760 $0 20 Month 4 $8,837 $16,380 $6,760 $0 22 Month 5 $8,837 $16,380 $6,760 $0 22 Month 6 $8,837 $16,380 $6,760 $0 22 Month 7 $8,837 $16,380 $6,760 $0 22 Month 8 $8,837 $16,380 $6,760 $0 22 Month 9 $8,837 $16,380 $6,760 $0 22 Month 10 $8,837 $16,380 $6,760 $0 22 Month 11 $8,837 $16,380 $6,760 $0 22 Month 12 $8,837 $16,380 $6,760 $0 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
Page 2
Appendix
Table: General Assumptions
General Assumptions Month 1 Plan Month Current Interest Rate Long-term Interest Rate Tax Rate Other 1 7.00% 7.00% 25.00% 0 Month 2 2 7.00% 7.00% 25.00% 0 Month 3 3 7.00% 7.00% 25.00% 0 Month 4 4 7.00% 7.00% 25.00% 0 Month 5 5 7.00% 7.00% 25.00% 0 Month 6 6 7.00% 7.00% 25.00% 0 Month 7 7 7.00% 7.00% 25.00% 0 Month 8 8 7.00% 7.00% 25.00% 0 Month 9 9 7.00% 7.00% 25.00% 0 Month 10 10 7.00% 7.00% 25.00% 0 Month 11 11 7.00% 7.00% 25.00% 0 Month 12 12 7.00% 7.00% 25.00% 0
Page 3
Appendix
Table: Profit and Loss
Pro Forma Profit and Loss Month 1 Sales Direct Cost of Sales Other Costs of Goods Total Cost of Sales $33,354 $2,914 $0 $2,914 Month 2 $50,854 $5,040 $0 $5,040 Month 3 $68,354 $7,166 $0 $7,166 Month 4 $85,854 $9,292 $0 $9,292 Month 5 $110,344 $12,267 $0 $12,267 Month 6 $110,344 $12,267 $0 $12,267 Month 7 $110,344 $12,267 $0 $12,267 Month 8 $110,344 $12,267 $0 $12,267 Month 9 $110,344 $12,267 $0 $12,267 Month 10 $110,344 $12,267 $0 $12,267 Month 11 $110,344 $12,267 $0 $12,267 Month 12 $110,344 $12,267 $0 $12,267
Gross Margin Gross Margin %
$30,440 91.26%
$45,814 90.09%
$61,188 89.52%
$76,562 89.18%
$98,077 88.88%
$98,077 88.88%
$98,077 88.88%
$98,077 88.88%
$98,077 88.88%
$98,077 88.88%
$98,077 88.88%
$98,077 88.88%
Expenses Payroll Sales and Marketing and Other Expenses Depreciation Rent Utilities Insurance Payroll Taxes Maintanence and Repair Other 15% 15% $26,765 $1,000 $13,782 $0 $1,500 $1,500 $4,015 $400 $2,000 $28,998 $1,000 $13,782 $0 $1,500 $1,500 $4,350 $400 $2,000 $30,497 $1,000 $13,782 $0 $1,500 $1,500 $4,575 $400 $2,000 $31,977 $1,000 $13,782 $0 $1,500 $1,500 $4,797 $400 $2,000 $31,977 $1,000 $13,782 $0 $1,500 $1,500 $4,797 $400 $2,000 $31,977 $1,000 $13,782 $0 $1,500 $1,500 $4,797 $400 $2,000 $31,977 $1,000 $13,782 $0 $1,500 $1,500 $4,797 $400 $2,000 $31,977 $1,000 $13,782 $0 $1,500 $1,500 $4,797 $400 $2,000 $31,977 $1,000 $13,782 $0 $1,500 $1,500 $4,797 $400 $2,000 $31,977 $1,000 $13,782 $0 $1,500 $1,500 $4,797 $400 $2,000 $31,977 $1,000 $13,782 $0 $1,500 $1,500 $4,797 $400 $2,000 $31,977 $1,000 $13,782 $0 $1,500 $1,500 $4,797 $400 $2,000
Total Operating Expenses Profit Before Interest and Taxes EBITDA Interest Expense Taxes Incurred
$50,962
$53,530
$55,254
$56,956
$56,956
$56,956
$56,956
$56,956
$56,956
$56,956
$56,956
$56,956
($20,522) ($6,740) $4,930 ($6,363)
($7,716) $6,066 $4,901 ($3,154)
$5,934 $19,716 $4,872 $266
$19,606 $33,388 $4,843 $3,691
$41,121 $54,903 $4,813 $9,077
$41,121 $54,903 $4,784 $9,084
$41,121 $54,903 $4,754 $9,092
$41,121 $54,903 $4,724 $9,099
$41,121 $54,903 $4,694 $9,107
$41,121 $54,903 $4,664 $9,114
$41,121 $54,903 $4,634 $9,122
$41,121 $54,903 $4,603 $9,129
Net Profit Net Profit/Sales
($19,089) -57.23%
($9,463) -18.61%
$797 1.17%
$11,073 12.90%
$27,231 24.68%
$27,253 24.70%
$27,275 24.72%
$27,298 24.74%
$27,320 24.76%
$27,343 24.78%
$27,366 24.80%
$27,388 24.82%
Page 4
Appendix
Page 5
Appendix
Table: Cash Flow
Pro Forma Cash Flow Month 1 Cash Received Cash from Operations Cash Sales Cash from Receivables Subtotal Cash from Operations Additional Cash Received Sales Tax, VAT, HST/GST Received New Current Borrowing New Other Liabilities (interest-free) New Long-term Liabilities Sales of Other Current Assets Sales of Long-term Assets New Investment Received Subtotal Cash Received Expenditures Expenditures from Operations Cash Spending Bill Payments Subtotal Spent on Operations Additional Cash Spent Sales Tax, VAT, HST/GST Paid Out Principal Repayment of Current Borrowing Other Liabilities Principal Repayment Long-term Liabilities Principal Repayment Purchase Other Current Assets Purchase Long-term Assets Dividends Subtotal Cash Spent Net Cash Flow Cash Balance $0 $0 $0 $4,911 $0 $0 $0 $32,179 ($18,838) $62,062 $0 $0 $0 $4,940 $0 $0 $0 $49,198 ($28,189) $33,873 $0 $0 $0 $4,968 $0 $0 $0 $55,532 ($7,828) $26,045 $0 $0 $0 $4,997 $0 $0 $0 $62,783 $2,421 $28,466 $0 $0 $0 $5,026 $0 $0 $0 $68,673 $16,827 $45,293 $0 $0 $0 $5,056 $0 $0 $0 $77,550 $18,590 $63,883 $0 $0 $0 $5,085 $0 $0 $0 $74,394 $35,950 $99,834 $0 $0 $0 $5,115 $0 $0 $0 $74,401 $35,943 $135,777 $0 $0 $0 $5,145 $0 $0 $0 $74,408 $35,936 $171,712 $0 $0 $0 $5,175 $0 $0 $0 $74,416 $35,928 $207,640 $0 $0 $0 $5,205 $0 $0 $0 $74,423 $35,921 $243,561 $0 $0 $0 $5,235 $0 $0 $20,000 $94,431 $15,913 $259,474 $26,765 $503 $27,268 $28,998 $15,260 $44,258 $30,497 $20,067 $50,564 $31,977 $25,808 $57,785 $31,977 $31,670 $63,647 $31,977 $40,517 $72,494 $31,977 $37,331 $69,308 $31,977 $37,309 $69,286 $31,977 $37,287 $69,264 $31,977 $37,264 $69,241 $31,977 $37,241 $69,218 $31,977 $37,219 $69,196 0.00% $0 $0 $0 $0 $0 $0 $0 $13,342 Month 1 $0 $0 $0 $0 $0 $0 $0 $21,009 Month 2 $0 $0 $0 $0 $0 $0 $0 $47,704 Month 3 $0 $0 $0 $0 $0 $0 $0 $65,204 Month 4 $0 $0 $0 $0 $0 $0 $0 $85,500 Month 5 $0 $0 $0 $0 $0 $0 $0 $96,140 Month 6 $0 $0 $0 $0 $0 $0 $0 $110,344 Month 7 $0 $0 $0 $0 $0 $0 $0 $110,344 Month 8 $0 $0 $0 $0 $0 $0 $0 $110,344 Month 9 $0 $0 $0 $0 $0 $0 $0 $110,344 Month 10 $0 $0 $0 $0 $0 $0 $0 $110,344 Month 11 $0 $0 $0 $0 $0 $0 $0 $110,344 Month 12 $13,342 $0 $13,342 $20,342 $667 $21,009 $27,342 $20,362 $47,704 $34,342 $30,862 $65,204 $44,138 $41,362 $85,500 $44,138 $52,002 $96,140 $44,138 $66,206 $110,344 $44,138 $66,206 $110,344 $44,138 $66,206 $110,344 $44,138 $66,206 $110,344 $44,138 $66,206 $110,344 $44,138 $66,206 $110,344 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Page 6
Appendix
Table: Balance Sheet
Pro Forma Balance Sheet Month 1 Assets Starting Balances Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Current Assets Cash Accounts Receivable Inventory Other Current Assets Total Current Assets Long-term Assets Long-term Assets Accumulated Depreciation Total Long-term Assets Total Assets Liabilities and Capital $826,920 $0 $826,920 $907,820 $826,920 $13,782 $813,138 $898,418 Month 1 $826,920 $27,564 $799,356 $888,631 Month 2 $826,920 $41,346 $785,574 $890,010 Month 3 $826,920 $55,128 $771,792 $901,638 Month 4 $826,920 $68,910 $758,010 $932,799 Month 5 $826,920 $82,692 $744,228 $951,811 Month 6 $826,920 $96,474 $730,446 $973,980 Month 7 $826,920 $826,920 $826,920 $826,920 $826,920 $110,256 $124,038 $137,820 $151,602 $165,384 $716,664 $702,882 $689,100 $675,318 $661,536 $996,141 $1,018,294 $1,040,440 $1,062,579 $1,064,710 Month 8 Month 9 Month 10 Month 11 Month 12 $80,900 $0 $0 $0 $80,900 $62,062 $20,012 $3,206 $0 $85,280 $33,873 $49,858 $5,544 $0 $89,275 $26,045 $70,508 $7,883 $0 $104,436 $28,466 $91,158 $10,221 $0 $129,846 $45,293 $116,002 $13,494 $0 $174,789 $63,883 $130,206 $13,494 $0 $207,583 $99,834 $130,206 $13,494 $0 $243,534 $135,777 $130,206 $13,494 $0 $279,477 $171,712 $130,206 $13,494 $0 $315,412 $207,640 $130,206 $13,494 $0 $351,340 $243,561 $130,206 $13,494 $0 $387,261 $259,474 $130,206 $13,494 $0 $403,174
Current Liabilities Accounts Payable Current Borrowing Other Current Liabilities Subtotal Current Liabilities Long-term Liabilities Total Liabilities Paid-in Capital Retained Earnings Earnings Total Capital Total Liabilities and Capital Net Worth $0 $0 $0 $0 $850,000 $850,000 $150,000 ($92,180) $0 $57,820 $907,820 $57,820 $14,598 $0 $0 $14,598 $845,089 $859,687 $150,000 ($92,180) ($19,089) $38,731 $898,418 $38,731 $19,213 $0 $0 $19,213 $840,150 $859,362 $150,000 ($92,180) ($28,551) $29,269 $888,631 $29,269 $24,763 $0 $0 $24,763 $835,181 $859,944 $150,000 ($92,180) ($27,755) $30,065 $890,010 $30,065 $30,316 $0 $0 $30,316 $830,184 $860,500 $150,000 ($92,180) ($16,682) $41,138 $901,638 $41,138 $39,272 $0 $0 $39,272 $825,157 $864,430 $150,000 ($92,180) $10,549 $68,369 $932,799 $68,369 $36,088 $0 $0 $36,088 $820,102 $856,189 $150,000 ($92,180) $37,802 $95,622 $951,811 $95,622 $36,066 $0 $0 $36,066 $815,016 $851,082 $150,000 ($92,180) $65,077 $122,897 $973,980 $122,897 $36,044 $0 $0 $36,044 $809,901 $845,946 $36,023 $0 $0 $36,023 $804,757 $840,779 $36,001 $0 $0 $36,001 $799,582 $835,583 $35,979 $0 $0 $35,979 $794,377 $830,356 $35,957 $0 $0 $35,957 $789,141 $825,098
$150,000 $150,000 $150,000 $150,000 $150,000 ($92,180) ($92,180) ($92,180) ($92,180) ($112,180) $92,375 $119,695 $147,038 $174,403 $201,792 $150,195 $177,515 $204,858 $232,223 $239,612 $996,141 $1,018,294 $1,040,440 $1,062,579 $1,064,710 $150,195 $177,515 $204,858 $232,223 $239,612
Page 7

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Table: Balance Sheet.........................................................................................................................................7

Sales Gross Margin Net Profit

Table: Market Analysis

Chart: Market Analysis (Pie)

Market Analysis (Pie)

Municipalities with treatment plant Compost users Other

Second Phase Promotions

Table: Sales Forecast

Chart: Sales Monthly

$0 Month 2 Month 4 Month 6 Month 8 Month 10 Month 12

Chart: Sales by Year

Table: Start-up Funding

Liabilities and Capital

Total Capital and Liabilities Total Funding

8.2 Use of Funds

8.4 Break-even Analysis

Chart: Break-even Analysis

Chart: Profit Monthly

Chart: Profit Yearly

Chart: Gross Margin Monthly

Gross Margin Monthly

Chart: Gross Margin Yearly

Gross Margin Yearly

Net Cash Flow Cash Balance

Table: Cash Flow

Pro Forma Cash Flow Year 1 Cash Received Year 2 Year 3

Pro Forma Balance Sheet Year 1 Assets Year 2 Year 3

100.00% 89.07% 72.77% 0.00% 29.10%

100.00% 88.34% 64.88% 0.00% 33.54%

100.00% 88.01% 61.97% 0.00% 35.38%

100.00% 34.70% 14.39% 0.25% 1.59%

11.21 10.84 77.50% 112.29% 25.27% Year 1 18.00% 84.22%

6.33 5.45 49.58% 98.94% 49.89% Year 2 23.60% 74.21%

5.50 4.71 27.65% 84.09% 60.84% Year 3 25.83% 63.07%

1.10 0.89 63.47% 1.16% 3.16%

5.17 57 10.91 10.94 27 1.05

5.17 51 7.46 12.17 22 1.59

5.17 53 6.74 12.17 23 1.77

n.a n.a n.a n.a n.a n.a

0.95 3% 7.22 4.68 0.10

0.63 5% 1.50 3.14 0.05

0.57 5% 0.63 2.44 0.03

n.a n.a n.a n.a n.a

Month 1 $14.20 $18.00 $50.00

Month 2 $14.20 $18.00 $50.00

Month 3 $14.20 $18.00 $50.00

Month 4 $14.20 $18.00 $50.00

Month 5 $14.20 $18.00 $50.00

Month 6 $14.20 $18.00 $50.00

Month 7 $14.20 $18.00 $50.00

Month 8 $14.20 $18.00 $50.00

Month 9 $14.20 $18.00 $50.00

Month 10 $14.20 $18.00 $50.00

Month 11 $14.20 $18.00 $50.00

Month 12 $14.20 $18.00 $50.00

Month 1 $0.71 $0.90 $7.00

Month 2 $0.71 $0.90 $7.00

Month 3 $0.71 $0.90 $7.00

Month 4 $0.71 $0.90 $7.00

Month 5 $0.71 $0.90 $7.00

Month 6 $0.71 $0.90 $7.00