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1.0 Executive Summary

The scrap tire recycling industry has been around for many years, but uses for recycled scrap
tire rubber are in the initial stage, as less than 20% of scrap tires are processed. Approximately
10% are incinerated, generally for power generation, although air quality issues are always a
concern as scrap tires, like coal, are dirty fuel. Approximately 4% of our scrap tires are
exported to other countries where the casings are used in retread plants or the used tires are
sold as is. Currently about 2% are processed into crumb rubber and used in molded products
and for modified rubberized asphalt applications, which provides a longer lasting and more
durable asphalt surface.
Stockpiles of scrap tires create health problems as they become breeding grounds for rodents,
snakes, and mosquitoes, and also are serious fire hazards. With approximately 250 million
scrap tires being generated annually in the United States and the existing piles estimated at
between 2-3 billion, this represents a serious problem.
ATP-Advanced Technology Pallets a Nevada Corporation (ATP), is proud to present its unique
and patented product the RST-PAL Pallet, a new pallet made from recycled scrap tire rubber.
The "RST-PAL Pallet" is strong, durable and reusable, providing an alternative to wooden pallets
and the expense associated with replacing, repairing and discarding wooden pallets. RST-PAL
Pallets might be serial numbered and bar-coded to insure tracking and retrieval so that they can
be used over and over again for many years.
The inventor, Dan Radke, has assigned to ATP all patent rights (to the approved and issued
patent USPTO # 08/680,476) to manufacture and market the RST-PAL pallets worldwide, in
perpetuity.
OUR MISSION
To provide cost effective and durable pallets to all industries and manufacturing.
THE EXISTING PROBLEM

Wood and plastic pallet life cycle is short and the cost is very high.
Wood pallets break and need repair or replacement every one or two trips.
Wood absorbs liquids, gains weight, breaks and splinters, and is difficult to clean.
Industries demand more durable and long lasting pallets.
Scrap tire stockpiles are an environmental hazard.
Current pallets made of wood, are consuming over 3.5 million trees annually.

THE SOLUTION

RST-PAL pallets are less costly to buy and maintain.

RST-PAL pallets are more durable and indestructible.
RST-PAL pallets can support 15 times the load of a similar wooden pallet.
RST-PAL pallets are rackable, stackable, more durable and longer lasting.
RST-PAL pallets are unique, made from recycled scrap tire rubber using a newly patented
process that includes rubber, recycled plastics and a binder system.

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RST-PAL pallets are guaranteed for years.

RST-PAL pallets have no competition worldwide.

TECHNOLOGY AND PROCESS

The materials process and the manufacturing of pallets are based on an approved
and issued patent (USPTO # 08/680,476).
International (PCT) patent protection filed.
Production line machinery is available and has been sourced.
Raw materials are readily available and have been sourced.
Flexible production line allows for building various pallet sizes, with high yield and quality.
Product is production "ready". All R&D and qualification complete.
Process based on modular capacity that allows for quick manufacturing expansion.
Factory is environmentally "clean" with no waste stream.
Prototypes have been built, tested, and qualified.

THE MARKET

U.S. consumption of pallets is 800 million a year (National Wooden Pallet and Container
Association, NWPCA).
RST-PAL pallets have the lowest life cycle cost compared to wood, aluminum, and plastic.
Global Pallets-leasing options available.
Marketing to focus on both closed and open loop distribution systems.
Worldwide markets and licensing opportunities (Internationally protected patents).
U.S. Government Agencies and Contractors markets.
U.S. government has mandated product replacement with recycled products first.

MARKET QUOTATIONS

"Quality, reusable multi-trip pallets instead of poorly constructed single user pallets" is
needed ASAP. (Reference: NWPCA)
Contractors doing business with the government are required to purchase "environmentally
friendly" and "recycled products" products first. (Reference: President Clinton Executive
order)

SALES

Prototypes were evaluated by different industries, including military and government

agencies with positive feedback.
Potential sales pending investment and production ramp up.
Environmental incentives to certain markets (Government sub-contractors).
All licenses, permits, governmental agencies acquired and in support of project.

PALLET COST COMPARISON - OVER FIVE YEARS

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Use of RST-PAL pallets demonstrates substantial savings, $22 for RST-PAL pallet vs.
$133 for total cost for wooden pallet, over 5 years. (See Topic 4.2 and 4.3.1).

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INVESTMENT REQUIRED AND USE OF FUNDS

$6M investment for 35% ownership estimated to reach profitability within 12-18 months.
From the second year forward, 50% of the net profit after tax will be distributed as
dividends to the shareholders (as long as it will not affect the planned expansion). The other
50% will be dedicated to growth.
Funds raised will be used for plant setup, operations, equipment, marketing and sales.

First year operation with two production lines is expected to produce 1,137,000 units, with a
projected net profit of over $8 million.
INVESTOR DISCUSSION

Projections reflect the return of the original investment in less than two years.
Approximately six times valuation, based on discounting of five years of net earnings to
present value.
Present Value of five years of projected net earnings at a 25% discount (incl. risk factor) is
$98 million.
Reaching less than 1% of the market share with five plants within five years.
Projected revenue of approximately $402 million.
Projected net profit (before taxes) of approximately $178 million.
Management Team - Strong and professional with highly specialized consultants.
Exit Strategy alternatives: (a) IPO after two years; (b) Acquisition; (c) Private ownership
with a long horizon of profits.
RST-PAL Pallets -- MANUFACTURED FROM RECYCLED SCRAP TIRE RUBBER
HELPING TO CLEAN UP AMERICA'S SCRAP TIRES

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Chart: Highlights

1.1 Mission
ATP is a manufacturing and marketing company dedicated to providing to all industries cost
effective and durable pallets made from recycled scrap tires. The manufacturing process and
the product are patent protected worldwide with no existing competition.
Pallet users, both manufacturers of commodities and industries that use pallets for their main
distribution, demand a more durable and longer lasting pallet to replace wooden pallets that
require constant repairing, replacing and discarding. The National Wooden Pallet and Container
Association states that a wooden pallet gives service for only one to two trips before having to
be repaired or replaced. Because of the short life cycle of wood (and plastic) pallets, pallet
users are forced to purchase pallets more often.
Scrap tire stockpiles throughout the United States represent dangerous environmental hazards
as they are breeding grounds for mosquitoes, rodents, and snakes, and create potential
hazards for fires, which are extremely dangerous and expensive to extinguish.
ATP will reduce scrap tire stockpiles hazards and will help to conserve some of the 3.5 million
trees harvested each year to manufacture wooden pallets. ATP will locate its manufacturing
plants in rural towns, near large metropolitan areas, where employment is needed the most.
ATP will earn profits and provide excellent return to its investors while at the same time
financing an aggressive growth of the company to increase production each year. ATP will also
maintain a friendly, fair, and creative work environment, which respects diversity, product
improvement, and hard work.

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1.2 Objectives
1. To establish two production lines at the first plant in Stamford, Texas in order to produce 1.2
million pallets annually, with projected net income (before taxes) in excess of $8 million.
2. To expand production annually by opening a plant with two additional lines of production
each year for years two through five.
3. Achieve targeted market share of 0.15% in the first production year to 0.75% by the end of
year five. (800 million pallets are manufactured and sold annually in the U.S.)
4. First year projected market share of 0.15% is expected to bring net profits of $8 million
(before taxes), and 0.75% of the market share in year five is projected to bring net profits
of $66 million. Accumulated profits (before taxes) are projected to be $173 million for the
first five years of production.
5. ATP will take advantage of the acute need for solutions to America's scrap tire problems,
and establish plants in different locations where scrap tires are abundantly available, while
taking advantage of benefits and subsidies offered by different State Government programs
for the remediation of scrap tires.
6. Develop foreign markets, through licensing agreements, especially in Europe and the Far
East, where similar acute problems of scrap tires exist.
1.3 Keys to Success
ATP will succeed for the following reasons:

An existing pallet market in the U.S. of over 800 million pallets sold annually. It is estimated
that approximately 60% are hardwood pallets; these users are ATP's targeted customers.
RST-PAL pallets have the lowest life cycle costs compared to wooden or plastic pallets.
RST-PAL pallets are patent protected, are durable and virtually indestructible, and can carry
in excess of 15 times the load of wooden pallets.
RST-PAL pallets are guaranteed for years.
Pallets are a well-known, necessary and established product; therefore there is no need to
penetrate the market with a totally new product. In fact, RST-PAL pallets are not a new
product at all, but are far superior, durable and longer lasting than anything comparable in
the market place. The advertising and marketing costs will remain low as the RST-PAL
pallets are introduced to pallet users through trade shows and conventions, with ATP's sales
representatives located in targeted marketing regions. The first targeted marketing region is
Dallas/Fort Worth, Texas, near the first plant in Stamford, Texas.
The U.S. government has mandated, through an executive order, a "buy recycled first" for
all government agencies and contractors, including the Department of Defense and
Department of Transportation. ATP will target federal and state agencies to market RST-PAL
pallets.

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2.0 Company Summary

A.T.P.-Advanced Technology Pallets (ATP) a Nevada Corporation was formed to create a joint
venture with the participation of the new investors and the current owners: RST Manufacturing
LLC and Elie Banensohn, ATP's Vice President.
ATP will manufacture and market worldwide the RST-PAL Pallet, made from a patent protected
new material that includes the use of recycled scrap tire rubber. The pallet will be an affordable
alternative to the high cost of purchasing, repairing, replacing, and discarding wooden pallets.
Pallet users purchasing RST-PAL pallets will realize substantial savings in their pallet costs.
ATP is a new entity with RST Manufacturing LLC, becoming a shareholder. RST Manufacturing
has invested in excess of $1 million to date, to complete research and development, prototypes,
and pre-production marketing of the pallets. Plant property in Stamford, Texas, initial
machinery, materials and supplies were purchased to bring the project to where it is today so
that we can move into production and marketing of the RST-PAL Pallets through ATP. RST will
transfer all assets to ATP. These efforts include the issuance of USPTO #08/680,476 in July
2002, a Utility Patent that will protect the unique material, and the product, RST-PAL Pallets.
All patent rights to manufacture and market the RST-PAL Pallets worldwide, are assigned in
perpetuity to ATP by the inventor and ATP's president, Dan Radke.
The Company's was formed as a Standard C Corporation under the laws of the State of Nevada.
The principal offices are presently located in Las Vegas, NV.
2.1 Company Ownership
Upon completion of the offering ATP a Nevada Corporation, will be owned by:

RST Manufacturing, LLC - 50%,

ATP's V.P.- Elie Banensohn - 15%,
The new investors (up to) - 35%

ATP is offering 35% of its shares to raise $6 million as additional capital needed for starting the
first plant (with two production lines), in Stamford, Texas. ATP National Headquarters is in Las
Vegas, Nevada and sales representatives will be positioned in targeted marketing areas.
The majority owner of RST Manufacturing LLC, is the inventor of the new material and the RSTPAL pallet, Mr. Dan R. Radke, the President of ATP.
The inventor, Dan Radke, has assigned all patent rights to ATP to manufacture and market the
RST-PAL pallets worldwide in perpetuity.

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2.2 Start-up Summary

The following summary table shows the projected start-up costs during the seven months
needed to get into production. It includes the supply of specific machinery and equipment
needed for the production lines. The start-up costs are to be financed by the money raised
through this Private Placement Memorandum Offer.
The funds sought for opening the plant with two production lines is $6 million with projected net
profits, in the first year of over $7 million. Alternatively, as a minimum plan, we could open with
one line of production with funds of $4 million. In this case, the projected net profit, in the first
year is over $3 million. In either case, about $750,000 will be available as working capital for
the first six months of operations (after the plant is in production).
Management expects to begin production in approximately 180-200 days from funding as
detailed in the Start-Up table.
Long-term Assets
Equipment and Machinery
Plant Improvements
LV Truck
Plant Vehicle
Total Equipment and Plant

$3,827,800
$200,000
$3,000
$2,400
$4,033,200

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Table: Start-up
Start-up

Requirements

Start-up Expenses
Legal
Fees & Commissions
Management (2)
Employee Salaries (office, plant, sales)
Consultants (up to 5)
Accounting
Travel (airfare/rentals/hotels, etc.)
Office supply & equipment
Insurance
Telephone
House Rental
Plant Utilities
Marketing
Expensed Office Equipment
Other (incl. overseas)
Total Start-up Expenses

$37,000
$720,000
$117,300
$51,500
$57,000
$7,500
$75,000
$15,000
$7,500
$4,100
$3,000
$4,000
$45,000
$15,000
$54,000
$1,212,900

Start-up Assets
Cash Required
Start-up Inventory
Other Current Assets
Long-term Assets
Total Assets

$753,900
$0
$0
$4,033,200
$4,787,100

Total Requirements

$6,000,000

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Table: Start-up Funding

Start-up Funding
Start-up Expenses to Fund
Start-up Assets to Fund
Total Funding Required

$1,212,900
$4,787,100
$6,000,000

Assets
Non-cash Assets from Start-up
Cash Requirements from Start-up
Additional Cash Raised
Cash Balance on Starting Date
Total Assets

$4,033,200
$753,900
$0
$753,900
$4,787,100

Liabilities and Capital

Liabilities
Current Borrowing
Long-term Liabilities
Accounts Payable (Outstanding Bills)
Other Current Liabilities (interest-free)
Total Liabilities

$0
$0
$0
$0
$0

Capital

Planned Investment
P.P.M. Offering
Investor 2
Other
Additional Investment Requirement
Total Planned Investment
Loss at Start-up (Start-up Expenses)
Total Capital

$6,000,000
$0
$0
$0
$6,000,000
($1,212,900)
$4,787,100

Total Capital and Liabilities

$4,787,100

Total Funding

$6,000,000

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Chart: Start-up

3.0 Products
ATP's product - the RST-PAL pallet is a unique and revolutionary pallet made from a new, patent
protected, material of recycled scrap tires, a small amount of recycled plastic and a bonding
process. The function specifications of our pallets are identical to the existing wooden pallets
(e.g. sizes, four ways entry, upper deck coverage etc.) except that RST-PAL pallets are much
more durable and longer lasting which makes penetration into the existing markets less
difficult. The patented process and product gives our RST-PAL pallets the following advantages
over the existing pallets:

RST-PAL pallets are less costly to buy and maintain.

RST-PAL pallets are more durable and indestructible.
RST-PAL pallets carry 15 times the load of a similar wood pallet.
RST-PAL pallets are rackable, stackable, and longer lasting than wooden pallets.
RST-PAL pallets do not absorb liquids and are easy to clean.
RST-PAL pallets are guaranteed for years.
RST-PAL pallets have NO competition.
RST-PAL pallets are environmentally friendly and are, themselves, a recyclable product.
RST-PAL pallets are made of recycled scrap tire rubber material using a newly patented
process which includes rubber, recycled plastics, and a binder system.

It is a rare occasion when a company can make a significant contribution to our

environment as well as create an important long awaited product that will provide
substantial cost savings for its users and allow them the opportunity to use and
promote environmentally friendly, recycled products.
According to a study by the Business Communications Services, Norwalk, CT., wooden pallets
will come under increasing challenges from alternative pallet materials such as corrugated
cardboard, plastic, and metal. The study, titled "The Changing Competitive Pallet Industry",

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states the lost market share for wood "will be a direct result of environmental concerns, and the
successful introduction of pallet leasing and alternative pallets made from new materials". The
study said corrugated pallets were chosen "because of their easy disposal and their light
weight, although they are slightly more expensive and more susceptible to damage than wood.
The study predicts market share growth for corrugated to jump from 5.6 million units in 1991
to 20 million by 2001. It predicts plastic pallets will grow from 0.9 million units to 1.5 million in
2001. Growth for wood pallets was estimated at 1.4% per year over the next ten years.
According to the National Wooden Pallet Container Association (NWPCA), its Strategic Planning
Committee suggests that its members educate pallet users toward using higher quality,
reusable multi-trip pallets instead of cheaper single use pallets. From a list of 62 potential
threats to the wooden pallet industry, the committee chose lumber supply/raw material
availability as the top threat. Other top threats identified by the committee include frozen
thinking on the part of the industry, demonstrated by an unwillingness to recognize or adapt to
the new realities of the marketplace, and environmentalists, a threat recently demonstrated by
the draft Executive Order which would have banned wood pallets from use by the Federal
Government.
A Clinton Administration Executive Order entitled "Federal Recycling, Acquisition and Use of
Environmentally Preferable Products and Services" requires government agencies and those
doing business under government contract to begin using "environmentally preferable" products
made from recycled materials.
Paul Evanko, principal and vice president, St. Orge Company, York, PA, stated, "Pallets must
adhere to a high quality standard". "Poor quality pallets carry a hidden cost beyond the price
paid and customers should be encouraged to purchase the best quality they can". "Alternative
materials including plastic, recycled and composite materials will emerge and pallet users will
seek these pallets because of limited storage space, efficient handling weight and full four-way
entry," Evanko contends. "Wood will still be predominant," Evanko said, "but there is a niche for
alternative materials in the distribution flows".
The Earth Works Group, Berkeley, CA states; "U.S. companies could be spending up to $1.75
billion dollars a year just to throw wooden pallets into landfills". The Pallet Container Research
Laboratory at Virginia Polytechnic Institute and State University, Blacksburg, VA states
"calculations show the annual wooden pallet production in the U.S. is using in excess of 3.5
million trees".
3.1 Innovative Technology
Background (*)
A major technological obstacle, which the recycled rubber market must overcome, is the nature
of the rubber itself. Rubber used in the manufacturing of tires is vulcanized (rubber + sulfur)
combined in the presence of heat and thermo set (formed into shape by steam and pressure also referred to as a "cured" product). To date, no technology has been able to devulcanize
rubber (break the carbon-sulfur bonds).
As such, thermo set rubber cannot chemically bond with any other polymer (rubber or plastic)
to a degree anywhere approaching the uncured rubber. If, however current research is able to
remove this obstacle, a very significant market will be opened.
(*) Scrap Tire Management Council, 1400 K Street, Washington, D.C.

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Current usage
Today's usage of scrap tire rubber reaches about 7% of the annually accumulated scrap tires.
Each year, about 250 million scrap tires accumulate throughout the U.S. This quantity of tires
represents 3.75 billion pounds of crumb rubber from which only 262 million pounds (7%) are
recycled and another 187 million pounds (5%) are used as tire derived fuel (TDF), which is a
dirty fuel like coal, and requires strict EPA controls, is only being burned in a few states.
According to the Scrap Tire Management Council there were seven markets listed for recycled
scrap tire rubber. These markets without exception utilize crumb rubber with all of the steel,
wire, and textile removed, as an additive to rubber-modified asphalt (25%); pneumatic tires
(25%); athletic fields (20%); bound rubber products (15%); friction material (5%); molded
rubber products (5%); and molded rubber/plastic products (5%).
The new technology and the patent
Mr. Dan Radke has overcome the obstacle mentioned in the article, (para.1) above. Mr. Radke's
invention of this "unique new material" through formulation and different particle sized recycled
scrap tire rubber has created a tough, durable, hard and rigid material from which RST-PAL
pallets are manufactured. The process is absolutely unique as proven by the issue of the utility
patent protecting the pallet and process of making thereof. This unique and strong material and
the usage of it for making pallets will save pallet users throughout the world millions of dollars
annually in costs associated with purchasing, repairing, replacing and discarding broken wooden
pallets.
4.0 Market Analysis Summary
U.S. yearly consumption of pallets is 800 million a year, costing over $10 billion (according to
National Wooden Pallet and Container Association). Our first market will be a 200 miles radius
area around Dallas/Fort Worth in which the yearly consumption is 60 million pallets. Our
markets for the RST-PAL pallets are all industries and users of pallets. About 300 interested
users for our RST-PAL pallets (each of them buying over 100,000 pallets/yr) were contacted.

RST-PAL pallets have the lowest life cycle cost compared to hard wood and plastic.
Global Pallets leasing.
Closed and open loop systems.
Worldwide markets and licensing opportunities (Internationally patent protection filed).
U.S. Defense and Transportation Departments market. U.S. government has mandated
product replacement with recycled products.

ATP's target in the first year is to produce 1.14 million pallets with two lines of production
(constitutes 0.15% of the market), reach sales of $22 million, and ATP projects to earn profits
of over $8 million (before tax).
The growth projection for the next five years is to add a new plant with two lines each year,
reaching production in excess of six million pallets by the fifth year, (0.75% of the market), with
sales projected at $143 million and profits before taxes of over $66 million.

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4.1 Market Segmentation

Due to the fact that ATP's projected plan is to open a new plant each year over the next five
years, and to capture 0.15% to 0.75% of the U.S. pallet market, our main growth problem will
be the limited abilities to supply the potential demand. Although we segmented the market into
six groups we cannot indicate the percentage of growth for each segment, as the growth is not
linear. The percentage represents our relative emphasis of this segment.
Yearly Pallet Users - Potential Customers

Total Yearly
1,137,024 2,467,584 3,701,376 4,935,168 6,168960
Production
% of the Pallet
0.143
0.308
0.463
0.617
0.771
Market
Total: Five year production =18,410,112. % of the pallet market =0.46
Table: Market Analysis

Market Analysis

Potential Customers
Up to 10,000 pallets yearly
10,000 - 50,000 pallets yearly
50,000 - 100,000 pallets yearly
100,000 - 250,000 pallets
yearly
250,000 - 500,000 pallets
yearly
Over 500,000 pallets yearly
Total

Year 1

Year 2

Year 3

Year 4

Year 5

5%
5%
10%

50,000
100,000
200,000

150,000
200,000
220,000

250,000
450,000
700,000

400,000
450,000
800,000

500,000
500,000
900,000

77.83%
49.53%
45.65%

20%

250,000

500,000

700,000

1,000,000

1,250,000

49.53%

25%

250,000

650,000

750,000

1,100,000

1,250,000

49.53%

35%
52.62%

287,024
1,137,024

747,584
2,467,584

851,376
3,701,376

1,185,168
4,935,168

1,768,960
6,168,960

57.56%
52.62%

Growth

CAGR

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Chart: Market Analysis (Pie)

4.2 Target Market Segment Strategy

The following table demonstrates the cost savings that will be realized when a company
converts its wooden pallet inventory to RST-PAL pallets.
Currently new hardwood pallets, (example: 40"x48", four-way entry, 80% top deck coverage)
are sold from $12 to $24 per pallet depending on the geographical area where you are
purchasing your pallets, and the always fluctuating cost of hardwood. For the purpose of this
chart we show the lowest price for large quantities of hardwood pallets at $10.
CHEP Pallet, Inc., the largest pallet leasing company in the world currently pays $23.50 to
construct its pallets.
A pallet user of 100,000 new pallets per year will be saving over $3 million within 5 years using
our RST-PAL pallets.
Year 1
Year 2
Year 3
Year 4
Year 5
Total 5 year
Company A buys 100,000
$1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $5,000,000
pallets/year @$10.00
Company B buys 100,000
RST-PAL pallets @$18.50 $1,850,000 $0
$0
$0
$0
$1,850,000
(One time purchase)
TOTAL SAVINGS
$3,150,000

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The table demonstrates that big users will realize huge savings. For example, one poultry
processing plant that purchases one million pallets per year (about the production of one ATP
plant) will realize savings of over $31 million within five years which will encourage them to
convert their wooden pallet inventory to RST-PAL pallets.
Big users, as mentioned above, might accelerate our growth plan even quicker. This is the
reason that strategically, our marketing efforts will concentrate towards the big users. Our
marketing effort will be directed also to all government agencies including the U.S. military.
Contractors doing business with the government should be using "environmentally preferable"
products, (President Clinton Executive order).
4.2.1 Sample of Advertisment Content

RST-PAL PALLETS
COMING SOON
THE NEW SOLUTION TO COSTLY
REPAIRS AND REPLACEMENT OF
WOODEN PALLETS
RST-PAL pallets are not affected by heat or cold. Won't rot, split or mildew
STRONG & IMPACT RESISTANT, No more rusty nails, splinters, broken boards and
runners
RST-PAL PALLETS are 100% Recyclable, made from post consumer waste. No disposal
costs
RST-PAL pallets, offering a new solution to an old problem

RST-PAL pallets made from new tough materials = virtually indestructible.

RST-PAL pallets are tougher, longer lasting pallets.
Many years of repeated usage make RST-PAL pallets the best buy.
Close your pallet repair facilities, our pallets don't break.
Stronger and more durable than wood or plastic.
Easily trackable with bar coding or electronic chip.

RECYCLE / RE-USE of RST-PAL pallets represents a great innovation to the pallet industry with a
major cost savings.
RST-PAL pallets address important environmental issues; help clean up America's growing scrap
tire problem and conserve valuable timber resources by using old tires to transport America's
commodities to consumers.

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4.3 Industry Analysis

The pallet industry's computation of the cost of a pallet includes the costs of production,
maintenance and repairs, and discarding of the broken pallet. In the last decade, materials
other than wood were introduced to the pallet industry like plastic, metal and corrugated
cardboard, but still over 90% remain wood.
More than eight hundred million wooden pallets are constructed each year in the U.S.,
according to the National Wooden Pallet and Container Association (NWPCA). Most wooden
pallets must be replaced or repaired after only one to two trips. It is estimated that over 3.5
million trees are used each year for pallet production, and most of these pallets end up in
landfills, burned, or composted.
For years pallet users have been asking NWPCA members to build stronger and more durable
pallets that would last longer, but nothing has changed. Pallet manufacturers favor the ongoing
replacement prevalent in the industry.
The Recycled Scrap Tire industry generates more than two hundred fifty million scrap tires
annually in the United States, one scrap tire for every American. These scrap tires are piling up,
adding to the existing stockpile of an estimated two to three billion scrap tires located across
the nation causing dangerous environmental hazards. Most states have adopted emergency
scrap tire programs to help solve the growing problem of accumulations of scrap tires. The state
of Texas has a scrap tire program; collecting and processing more than two hundred thousand
tons of scrap tire rubber annually. Currently Texas has more than three million tons of shredded
scrap tire rubber on the ground, available to end-users.
ATP with its RST-PAL pallet product will utilize Texas' scrap tires to manufacture pallets at its
first plant in Stamford, TX. The RST-PAL pallets will provide tough and durable pallets to pallet
users while helping clean up the scrap tire problem.
ATP's patented material and the manufacturing process to make pallets from scrap tires is the
ultimate solution to the problems presented above: a) stronger and more durable pallets; b)
reducing scrap tire stockpiles; c) saving trees. The use of RST-PAL pallets provides an
excellent cost effective price, competitive to hardwood pallet prices.
The table in Topic 4.2 demonstrates the savings for a pallet user that purchases 100,000 pallets
annually, when converting from wood to RST-PAL pallets. It shows savings over a five year
period of more than $3 million. This saving comes on top of other benefits of using the RST-PAL
pallets including: more durable and indestructible, carries 15 times the load of wooden pallets,
rackable and stackable, will not absorb liquids (can be stored outside), and guaranteed for
years. ATP's first plant is located in Stamford, Texas, a rural community that is badly in need of
economic development and new jobs. Stamford is approximately 150 miles from our first
targeted marketing area the Dallas/Ft.Worth Metroplex.

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4.3.1 Competition and Buying Patterns

There is NO direct competition to RST-PAL pallets and no similar pallets exist today. The
inventor, Dan Radke, has granted, in perpetuity, to ATP Corp the sole rights of utilizing the
patent worldwide. This patent (USPTO # 08/680,476) gives very wide protection to the
revolutionary invention of special material and to the process of making pallets.
The "competition" comes from pallets made of other materials like wood and plastic. Pallet
users that use hardwood pallets do not use pallets made of corrugated cardboard. The table
below demonstrates the cost comparison among the different pallets:
PALLET COST COMPARISONS - OVER 5 YEARS (in USD)
Pallet: Made
of
Hardwood
Plastic
RST-PAL

Unit
Price
12 - 24
39 - 89
19 - 25

Repair
Cost/yr*
120*
0
0

Replace. u/p x Recycle

4
$1/yr
48 - 96
5
156 - 356
5
0
0

Total
Cost
185 - 245
200 - 450
19 - 25

Average
Cost
215
325
22

(*) Six repairs per year costing $4 each x 5 years.

The table clearly shows that costs over five years of the hardwood pallet is almost ten times
that of RST-PAL pallets. In addition to the savings, there are other advantages such as the
guarantee, no need to repair, can be stored outside (no liquids are absorbed), washable
(important in the food industry), rackable and stackable, strong and indestructible. Bar-coding
and electronic chips can be molded into the pallet to allow for specific inventory information
regarding what is loaded on the pallet and for tracking.
There is no competition to RST-PAL pallets. There is no competitor making pallets from recycled
rubber. ATP anticipates that our limited production will cause our five years expansion plan to
be revised in order to meet the demand. Our first plant is expected to produce approximately
1.14 million pallets in the first year and 1.23 million from the second year forward. While the
market for pallets is in excess of 800 million annually, ATP expects to capture about 0.15% of
the market in the first year, and 0.75% after five years to meet our projections. This takes a
great part of the risk out of the project.
ATP has already explored opening a subsidiary company that will lease or lease to own pallets
to companies. This will enable ATP to compete with CHEP Pallet Corporation, which leases
wooden pallets. CHEP has about 300 branches in the U.S. and also operates in foreign
countries. Leasing RST-PAL pallets would be very profitable, as our pallets do not require
repairs.

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5.0 Strategy and Implementation Summary

Due to the increased lifecycle and interchangeability of the RST-PAL pallets with existing
wooden pallets, ATP's customers derive value from utilizing these innovative products in a
number of ways. First and foremost, using and replacing the user's wooden pallet inventory
with RST-PAL pallets eliminates ongoing maintenance and replacement costs.
Another value is the longevity RST-PAL pallets offer. RST-PAL pallets have the longest life-cycle
regardless of hot, cold, or wet climates or in environments where maintenance is difficult. RSTPAL Pallets will not rot, which is a common problem for wooden pallets.
RST-PAL pallets are manufactured from recycled materials mainly scrap automotive tires. Each
1,000 pallets use 25 tons of scrap tires from landfills, (31,000 tons or 62,000 pounds per plant
per year).
RST-PAL pallets will help save hardwood forests currently used to manufacture wooden pallets,
reduce greenhouse gases, use significant amounts of waste plastics and scrap tires from
landfills and storage facilities, and reduce pallet users costs while increasing profits.
5.1 Competitive Edge
ATP's most important competitive edge is based on the unique and patented material used to
manufacture the RST-PAL pallets. The process, the unique material, and the use of the material
to manufacture pallets are protected by the issued utility patent that will prevent duplication or
"copycat" competition.
RST-PAL pallets are manufactured from recycled scrap tires. Federal law and most State
Governments require agencies and contractors to purchase recycled products first, as mandated
by "buy recycled products first". ATP has already presented RST-PAL pallets to the Army, Air
Force Exchange System, (AAFES) located in Texas and throughout the Pacific Rim, and AAFES is
interested in purchasing pallets, which will increase their pallet lifecycle, which in the long run is
less costly than wooden pallets. We will focus on different government agencies including the
Department of Defense and Department of Transportation to introduce and market RST-PAL
pallets.
RST-PAL pallets can be power washed or steam cleaned which is a critical factor in the food
industry, such as in poultry and meat processing plants, which must maintain sanitized
production areas. RST-PAL pallets do not absorb liquids as wooden pallets and they can be
stored outside without occupying expensive indoor space.
The RST-PAL pallets are a "triple green" product. They are manufactured from recycled
materials, and can be recycled in the event they ever wear out, and they will help conserve our
nation's forests while helping clean up America's scrap tire problems.

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The RST-PAL pallets will be the best cost/performance pallets in the market. The summary of
advantages that our pallets have in comparison to existing material pallets such as hardwood,
plastic, corrugated cardboard, and aluminum, are:
1.
2.
3.
4.
5.
6.
7.
8.

Much less cost to buy and maintain.

More durable and indestructible.
Carries 15x the load of a similar wood pallet.
The pallets are rackable and stackable.
Made of recycled material.
The pallet and the process are patent protected worldwide.
Guaranteed for years.
The supply of the raw material (scrap tires) is available and accessible throughout the
country, and most States have legislated scrap tire cleanup programs that offer subsidies
and grants to help remediate their scrap tire problems.
9. An electronic chip for pallet identification and load identification will be available with RSTPAL pallets, and this can be done because of the strength and rigidity of the pallet, which is
practically indestructible.
5.2 Marketing Strategy
The RST-PAL pallet is positioned uniquely as all industries and manufacturers use pallets to
transport everything from commodities to equipment and parts. The main segmentation among
the users is found in how they use pallets. The Power industry uses in excess of twenty million
pallets annually, government owned poultry processing plants use more than ten million pallets
annually, 3M Corporation purchased seven million pallets in one year alone, and the beverage
industry uses in excess of fifty million pallets annually. There are also thousands of companies
using anywhere from hundreds of thousands to millions of pallets annually including, chemical
companies, bag cement, building materials, grocery, paint companies, and many others.
Our first targeted customers are those that use a "closed loop" distribution system, where they
manufacture and/or distribute products using their own fleet, where loaded pallets can be
dropped and returned when unloaded, to be utilized over and over again. We also will target
government entities, agencies, and contractors both Federal and State.
Our marketing strategy is based on informing and introducing the RST-PAL pallet to pallet
buyers across the country and in different industries. We can accomplish this at a rapid pace by
showcasing the pallets at selected trade shows and conventions. Samples will be available as
well as brochures and videotapes explaining the benefits of the RST-PAL pallet. Our first
targeted marketing territory will be the Dallas/Ft.Worth Metroplex, concentrating on those
companies using a "closed loop" system for distribution.
The marketing will convey the advantages, benefits and the quality of our product in every
picture, every promotion, and every publication. Pallet users have been screaming for years for
the wooden pallet industry to make a longer lasting more durable pallet, but their request has
fallen on deaf ears, as the pallet builders would rather build a less sturdy pallet so that it will
fail after only a few trips, requiring the customer to purchase more pallets. The RST-PAL pallet
is a solution to the high cost of purchasing, maintaining and discarding wooden pallets. Our
marketing efforts will not only focus on educating purchasing agents of companies, but also in
making presentations to company board of directors, demonstrating the cost savings and
benefits of using RST-PAL pallets. As was shown in a previous example, a company purchasing
100,000 pallets per year when converting to RST-PAL pallets will save in excess of $3 million
over five years. With such convincing statistics, we anticipate universal acceptance of RST-PAL
pallets.

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ATP - Advanced Technology Pallets

5.3 Sales Strategy

As stated, ATP will sell pallets as they are manufactured. Pre-production marketing efforts have
been on going for the last year. We have established a sales plan, however our production will
dictate how quickly our sales team will expand. One company we have contacted expects to
purchase 22 million pallets during the next two years. If we were to capture a large contract,
our production schedule would be sold out for a number of years. Another sales company that
markets products exclusively to the power industry, would like to have an exclusive to sell our
pallets to power companies, and they estimate they can sell a minimum of 1.2 million pallets
annually. We have approached many companies on the benefits of using RST-PAL pallets,
including; 3-M Corporation, Coca-Cola, Pepsi, Snapple, Anhauser Busch, Hunts Wesson, Kraft
Foods, S.E. Rycoff, Albertsons, Kroger Foods, Associated Foods, H.E.B. Foods, Purina Pet Foods,
manufacturers of charcoal briquettes, flour and cereal mills, salt processors, building materials,
including bagged sand and cement, plaster and even chemical companies.
Our concept is to introduce the RST-PAL pallets to many industries, and ATP will do that from
our National Marketing Headquarters in Las Vegas, Nevada. The Las Vegas Visitors and
Convention Authority will provide a great arena in which to showcase and demonstrate the RSTPAL pallets, as virtually every important convention and trade show now meets in Las Vegas.
This business plan calls for the company to grow itself. The Texas plant will be the first, and we
expect new plants to be opened in years two, three, four and five. Some future plant site work
has been completed, however we will locate the plants in States with positive scrap tire
programs, some of which may provide subsidies for using scrap tire rubber to manufacture new
products. In addition, our company policy will be to establish plants near massive scrap tire
piles, and in rural communities where a good labor force exists but jobs are not plentiful and
economic development will benefit the community.
ATP Corp. is the worldwide licensee to manufacture and market pallets. We have already had
several foreign entities show interest in either becoming distributors or manufacturers through
a foreign license arrangement. We have held discussions with a group from China, Japan,
Taiwan and South Africa and are in contact with a group in Spain that is interested in our
technology.
It is our intent to move our Stamford, TX plant into full production, and utilize the same team of
key employees and consultants to open new plants over the next five years. Whereas our
Business Plan provides for future plants being financed internally from company profits,
additional capital can be raised through the licensing of foreign companies wishing to
manufacture and market pallets in those countries.

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ATP - Advanced Technology Pallets

5.3.1 Sales Forecast

Our sales forecast is based on the following assumptions. We expect our production will be sold
as soon as it is ready, as the forecasted production is much less than the anticipated demand.
Our product is not seasonal and will be continually manufactured throughout the year. We will
operate in three shifts (except during training in first two months).
Our sales force will start taking orders sixty days prior to production. The initial selling price is
low in order to introduce the pallets to many different manufacturers and industries. However
we expect to raise prices at the rate of 5% per year (which is less than the rate of increase of
the wooden pallets).
Regarding the "direct cost of sales" (COG), we assume the costs of materials will remain the
same for us, due to discounts we will receive for the quantities of materials that we consume
which should offset rising costs. We can also reduce our costs by doing some manufacturing
processes ourselves, such as mixing and batching the binders at our plant, and by cutting the
scrap tire rubber from chips to our required specifications.
We've calculated production labor costs, including salaries, taxes, and benefits to be $1.31 per
pallet. The break down of production personnel is presented in the Personnel table, Production
Personnel category, and the resultant figures appear in the Profit and Loss table under Sales,
Production Payroll.
The Sales Forecast table for the first 12 months appears in the appendix.
Table: Sales Forecast

Sales Forecast
Year 1

Year 2

Year 3

Year 4

Year 5

$21,034,944
$852,768
$21,887,712

$47,932,819
$1,850,688
$49,783,507

$75,494,190
$2,776,032
$78,270,222

$105,691,866
$3,701,376
$109,393,242

$138,720,574
$4,626,720
$143,347,294

Year 1
$1,421,305
$1,023,341
$7,390,786
$9,835,432

Year 2
$3,084,480
$2,220,826
$16,039,296
$21,344,602

Year 3
$4,626,720
$3,331,238
$24,058,944
$32,016,902

Year 4
$6,168,960
$4,441,651
$32,078,592
$42,689,203

Year 5
$7,711,200
$5,552,064
$40,098,240
$53,361,504

Sales
RST-PAL pallets
Subsidies
Total Sales
Direct Cost of Sales
Recycled Rubber
Recycled Plastic
Binders System
Subtotal Direct Cost of Sales

Page 22

ATP - Advanced Technology Pallets

Chart: Sales Monthly

Chart: Sales by Year

Page 23

ATP - Advanced Technology Pallets

5.3.2 Pallet Users

PALLET USERS, Dallas / FT. Worth Area
ANNUAL PALLET USAGE.
The following list of pallet users was contacted and the new RST-PAL Pallet was introduced to
each user, receiving excellent interest. Another 22 users were also visited. The Total yearly
estimated usage of pallets in the DFW area is 60 million.
American Home Food
Purina Mills Inc.
S.E. Raycoff & Co.
Pepsico
Winn-Dixie
Dannon Yogurt
Mrs. Crocketts
Bunge Foods
K-Klean Chemicals Co.
First Food Inc.
DSC Inc
Dallas City Packing
Athena Products
Americana Inc.
Speaco Foods
Quaker Oats
AutoWax
Pilgrims Pride
Builders Concrete
GAF Corp.

185,000
180,000
130,000
75,000
130,000
45,000
15,000
60,000
22,000
11,000
10,000
8,000
16,000
45,000
17,000
345,000
10,000
35,000
15,000
60,000

Paris Business Forms

Texas Ready Mix
Dr. Pepper
Coca-Cola bottling
Miller Brewing Co.
Ardmore Food
Champion Dairy Pack
DAP Inc.
HPC Lab.
Featherlite Build Prod.
Dal-Tile Corp
Borden Inc.
Ashland Chemical
Texas Instruments
State Fair Foods
Bartush-Shnltfu
Frito Lay
Oakfarm Dairies
Hardros Chemicals
Alpine Frozen

25,000
55,000
300,000
130,000
95,000
20,000
25,000
9,000
40,000
55,000
20,000
30,000
39,000
130,000
78,000
7,000
55,000
30,000
50,000
50,000

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ATP - Advanced Technology Pallets

PALLET USERS, HOUSTON Area

General Foods Mfg
Fastner Mfg. Co.
Ella Crew Production
Diamond-Kuhn Paint
Lone Star Brewing
Uncle Ben's
Cal-Tex Citrus
Cordell Brick
Colorex Co.
Cellcote Co.
BJ Industrial
Amy's Foods
Advetech Int.
Anheuser Busch

91,000
30,000
40,000
40,000
435,000
325,000
20,000
50,000
130,000
10,000
20,000
30,000
20,000
100,000

Gardner Asphalt Corp.

Erie Mfg.Corp.
Distribution Int'l
L&H Packing
CSA Ltd. Inc
Vaneco Products
Corev America
Champion Coating
Celotex Corp.
BTL Speciality Resins
Baby's Natural
American Rice
Adams Valves

60,000
70,000
100,000
60,000
90,000
20,000
10,000
40,000
260,000
40,000
20,000
110,000
30,000

5.4 Milestones
The following table lists important project milestones during the pre-production start-up period,
with dates and managers in charge, and budgets for each milestone. The milestone schedule
indicates our emphasis on planning for implementation.
The production schedule is based on three shifts. During the first month only one shift will be in
operation, in the second month, two shifts, and from the third month, a full three shifts of
production. During the start-up period, the employees will be located and trained.
The municipality of Stamford, Texas will assist us in recruiting about seventy employees. There
is an adequate work force within the surrounding communities, which will enable us to choose
quality people.
Table: Milestones

Milestones
Milestone
Updating the Business Plan
Secure the funds - PPM
Site selection
Plant improvement
Legal Agreements
Accounting system
Ordering equipment
Testing the production line
Consult. - Government affairs
Consult. - Advert. & Marketing
Consult. - Machinery acquisition
Consult. - Machinery line stand-up
Consult. - Binder system
Totals

Start Date
5/1/2003
6/1/2003
1/2/2003
8/1/2003
5/1/2003
5/1/2003
7/15/2003
12/15/2003
8/1/2003
8/1/2003
7/15/2003
12/1/2003
8/1/2003

End Date
5/31/2003
7/31/2003
4/15/2003
11/30/2003
12/31/2003
12/31/2003
8/15/2003
12/31/2003
12/31/2003
12/31/2003
8/15/2003
12/31/2003
11/30/2003

Budget
$1,000
$70,000
$0
$200,000
$37,000
$7,500
$3,827,800
$7,000
$10,000
$10,000
$10,000
$10,000
$10,000

Manager
Radke-Banensohn
Radke-Banensohn
Radke-Banensohn
TBA
Lyne Rushforth
Richard Dickinson
Radke-Banensohn
Richard Turner
Shayne Del Cohen
William Welter
Gene Pitzer
Richard Turner
Steven Garbukas

Department
Management
Management
Management
Operations
Legal
Accounting
Management
Consultant
Consultant
Consultant
Consultant
Consultant
Consultant

$4,200,300

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ATP - Advanced Technology Pallets

Chart: Milestones

6.0 Management Summary

THE MANAGEMENT TEAM
ATP's management team and its consultants are qualified professionals with vast experience
with plant installation and operations, purchasing and marketing. ATP's consultants will be
employed during the start-up period (see Start-up table). ATP welcomes any additional person
from our investor's group that can contribute to the success of the company.
Dan R. Radke, President:

SUMMARY OF QUALIFICATIONS

Inventor of the material and the product RST-PAL Pallets. Utility patent issued in July 2002,
number USPTO 08/680,476.
Dan Radke, the inventor of the unique material for making the RST-PAL Pallets, has been
involved in scrap tire recycling issues for ten years by offering his expertise to government
agencies, municipalities, individuals and companies wishing to enter the emerging scrap tire
recycling industry, Radke has earned a reputation for his knowledge of the scrap tire
industry. Assisted States, Counties and Municipalities to remediate scrap tire problems.
Contributed to California Integrated Waste Management Board to develop rules, regulations
and guidelines for the States scrap tire program.
Process, technology inventor, business owner and manager, sales, marketing, production
line machinery and equipment, business operations, training and management
More than 30 years owning and operating start-up companies.
Three years, international business transactions, as a consultant bringing American
Companies to Eastern Europe, primarily Hungary to form U.S./Hungarian Joint Ventures.
Authored the Hungarian Small Business Foundation to establish loan guarantees for
privatization and start up Hungarian Small Businesses, working directly with the Hungarian
Banks and Government.

Eliezer Banensohn, Vice President:

SUMMARY OF QUALIFICATIONS

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ATP - Advanced Technology Pallets

Aeronautical Engineer - B.Sc. degree. Experience in R & D for new products.

12 years extensive experience as an expert in marketing of new and revolutionary products
in new markets.
Eight years experience as a specialist in putting up new franchise organizations and
licensing operations.
Won prizes for best business in South-Africa and Argentina (as VP Marketing & Engineering).
Participated, in engineering capacity, in the development and marketing of revolutionary
advanced building system - "Domecrete" in many countries worldwide.
Participated, in engineering capacity, in the development of Hi-Tech product (Baby-Sense
S.I.D.S. detector, medical industry).
Plant design and Manufacturing experience in plastic, rubber, and metal products, injection
molds and machinery. Inventor and patent owner for the product "non-electrical hand
operated washing machine".
25 years experience as computer software and hardware analyst.
15 years experience in marketing software and hardware computer systems.
Owned several computer service bureaus using IBM mainframe

Shayne Del Cohen, (Consultant) Public Relations, Government Affairs

Business and economic development, government relations, grant writing, bid preparation,
business trade representations, lobbying, employee relations, training and staff planning.

Gene Pitzer, (Consultant) Machinery & Equipment Acquisitions

Contract acquisition for machinery and equipment for Stamford, Texas plant, 25 years
experience, retired No.1 tool and die manager for General Motors, Owner; Tool Consulting
Corporation, developed tire recycling machinery.

Steven Garbukas, (Consultant) Chemical, Epoxy Binder Systems Acquisitions

Contract acquisition for all special binder systems developed by Dan Radke and Steven
Garbukas, source and supply plants with materials at best possible price, provide all
injection and delivery systems to material during batching.

Richard Turner, (Consultant) Machinery and Equipment Line Standup, Plant Engineer

Supervise and install all production line machinery and equipment at the first plant, in
Stamford, Texas and all subsequent plants. Initial plant manager, over production and
safety, will train employees, including plant manager.

Layne T. Rushforth, (Attorney)

Richard Dickinson, (CPA)
* (Resumes of any of the above people are available on request.)
6.1 Personnel Plan
Our first plant will be located in Stamford, Texas, a rural area close to a large metropolitan city,
where large scrap tire stockpiles are located within less than one mile of our plant. The area has
a large workforce in desperate need of jobs, which will help ATP recruit qualified and devoted

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ATP - Advanced Technology Pallets

workers, that will be paid more than the average wages for this area, which are less than in
more populated areas. The direct labor cost shows that each plant will require approximately 70
workers in three shifts.
The team for the first manufacturing plant is currently being interviewed with the help of
Stamford's Mayor and City Manager. The Personnel table shows the position and salary of the
68 employees that will work in three shifts of eight hours each. Production is based on seven
working hours with one hour budgeted for maintenance and crew change. To facilitate training,
during the first month one shift will be in operation, in the second month, two shifts and from
the third month forward the plant will operate at full production capacity with three shifts.
The Profit & Loss table shows the payroll burden as 23% of the salary, which covers the taxes
and benefits for the employees. No increase in wages and salaries have been forecasted,
however, it is assumed that as the company grows, employees will receive increases in their
wages, salaries and benefits.
The Personnel table shows the direct and active involvement of the company President (the
inventor) and the V.P. in all stages of the start up, purchasing of the machinery and running the
business. The team includes highly qualified professionals as consultants in different areas that
will enable a smooth and efficient entry to production. As the projected expansion takes place,
ATP will begin a search for highly qualified management candidates that will manage the
company in the future.
ATP will also investigate foreign licensing that will bring additional revenue streams to the
company. ATP's V.P. has already made contacts with foreign entities and has found great
interest from foreign companies. Elie (VP) spearheads negotiations for foreign licensing and
manufacturing.
The Personnel table for the first 12 months appears in the appendix.

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ATP - Advanced Technology Pallets

Table: Personnel

Personnel Plan
Year 1

Year 2

Year 3

Year 4

Year 5

$48,000
$14,400
$23,920
$12,480
$75,600
$113,256
$99,528
$102,960
$178,464
$66,352
$59,488
$211,120
$105,560
$18,720
$44,616
$0
$1,174,464

$96,000
$28,800
$49,920
$24,960
$172,800
$247,104
$217,152
$224,640
$389,376
$144,768
$129,792
$434,304
$217,152
$37,440
$97,344
$0
$2,511,552

$144,000
$43,200
$74,880
$37,440
$259,200
$370,656
$325,728
$336,960
$584,064
$217,152
$194,688
$651,456
$325,728
$56,160
$146,016
$0
$3,767,328

$192,000
$57,600
$99,840
$49,920
$345,600
$494,208
$434,304
$449,280
$778,752
$289,536
$259,584
$868,608
$434,304
$74,880
$194,688
$0
$5,023,104

$240,000
$72,000
$124,800
$62,400
$432,000
$617,760
$542,880
$561,600
$973,440
$361,920
$324,480
$1,085,760
$542,880
$93,600
$243,360
$0
$6,278,880

$51,000
$25,200
$0
$76,200

$60,000
$30,000
$0
$90,000

$72,000
$36,000
$0
$108,000

$84,000
$36,000
$0
$120,000

$84,000
$36,000
$0
$120,000

$90,000
$85,000
$37,800
$27,000
$0
$0
$239,800

$120,000
$114,000
$42,000
$40,800
$36,000
$0
$352,800

$144,000
$138,000
$48,000
$40,800
$48,000
$0
$418,800

$180,000
$174,000
$48,000
$48,000
$48,000
$0
$498,000

$180,000
$174,000
$48,000
$48,000
$48,000
$0
$498,000

Name or Title
Name or Title
Other
Subtotal

$0
$0
$0
$0

$0
$0
$0
$0

$0
$0
$0
$0

$0
$0
$0
$0

$0
$0
$0
$0

Total People

75

145

213

281

349

$1,490,464

$2,954,352

$4,294,128

$5,641,104

$6,896,880

Production Personnel
Texas plant manager
Texas office worker
Receptionist (x2)
Data entry (x1)
Foreman (x3)
Line operator (x6)
Loader (x6)
Batcher (x6)
Conveyer worker (x12)
Assembly lead (x4)
Assembly helper (x4)
Cutter (x12)
Forklift operator (x6)
Maint. Supervisor
Maint. helper (x3)
Other
Subtotal
Sales and Marketing Personnel
Marketing Director
Marketing Secretary
Other
Subtotal
General and Administrative Personnel
President - Dan Radke
Vice Pres. - Elie Banenson
Office Manager
Receptionist (x2)
Office workers (x2)
Other
Subtotal
Other Personnel

Total Payroll

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ATP - Advanced Technology Pallets

7.0 Financial Plan

The projected financial plan is very sound. The one-time investment gives ATP the ability to
take 50% of the profits (after tax) as dividends at the end of year two and to self fund
expansion by one additional plant per year. The projected cash flow is outstanding and will
enable ATP to be even more aggressive in our expansion plans.
As mentioned throughout this Business Plan, each plant will produce a maximum of 100,000
pallets per month, which is very low in comparison to the demand for pallets. (800 million
pallets divide by 12 gives approximately an average of 67 million pallets per month sold in the
U.S.)
In addition to the expansion within the U.S., overseas licensing projects will be developed, from
which we will create additional revenue streams through licensing fees, royalties, and other
contractual payments.
ATP may also enter into other joint ventures or partnerships to license other entities to
manufacture and market RST-PAL pallets not only in the U.S. but also worldwide.
The last two sources of income are not included in the financial forecast and do not appear in
the tables.

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ATP - Advanced Technology Pallets

7.1 Important Assumptions

The financial plan based on important assumptions, detailed in the following statements:

Due to the initial limited production in comparison to the market size, ATP assumes that
even a slow-growth economy, will not affect our plan for the next five years.

ATP forecasts that there would be no unforeseen changes in technology to make our
products obsolete. Pallet buyers are looking for cost effective solutions for replacing the high
cost of purchasing, repairing, and discarding wooden pallets and RST-PAL pallets offer the
solution by providing a longer lasting more durable pallet.

Cash flow is not expected to be a problem, with most pallets being paid for on delivery.
There will be exceptions for specific customers, as an example, the U.S. Government, based
on the quantity of pallets that are ordered, but generally, payments for pallets will be paid in
full upon delivery.

ATP's growth is based on internal financial resources. ATP will budget 50% for growth and
50% from the profits as dividends after taxes (from year two forward and as long as it does
not affect the planned growth of the company).

The source of raw material (scrap tires) is virtually endless as long as cars continue to roll
on tires. Presently, 250 million tires are added each year to scrap tire stockpiles all over the
country.

ATP assumes a short holding of inventory beyond the curing time of the pallets and
transportation arrangements.

ATP assumes a 5% annual raise in our selling price, which is comparable to the wooden
pallet industry and fluctuating lumber costs.

ATP assumes no raise in our material costs, because the quantities we purchase will
increase, and ATP anticipates discounts to offset any increased costs.

ATP assumes an average sales price per pallet in the first year of production to be $18.50,
which is significantly less costly than hardwood pallets whose entire cost includes purchase,
repair, maintenance, and discard/disposal.

Table: General Assumptions

General Assumptions
Plan Month
Current Interest Rate
Long-term Interest Rate
Tax Rate
Other

Year 1

Year 2

Year 3

Year 4

Year 5

1
0.00%
0.00%
33.67%
0

2
0.00%
0.00%
34.00%
0

3
0.00%
0.00%
33.67%
0

4
0.00%
0.00%
34.00%
0

5
0.00%
0.00%
33.67%
0

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ATP - Advanced Technology Pallets

7.2 Break-even Analysis

This break-even analysis shows that ATP has budgeted fixed costs and projects sufficient sales
to maintain good cash flow balances. This projection is based on two production lines.
The essential insight here is that ATP's projected sales levels will be running comfortably above
the break-even point.

Table: Break-even Analysis

Break-even Analysis
Monthly Revenue Break-even

$357,289

Assumptions:
Average Percent Variable Cost
Estimated Monthly Fixed Cost

45%
$196,738

Chart: Break-even Analysis

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ATP - Advanced Technology Pallets

7.3 Projected Profit and Loss

NOTES TO PROJECTED FINANCIAL STATEMENTS
NOTE 1 - MATERIALS COST
The raw materials, recycled scrap tire rubber, will be provided on an as needed basis. No large
stockpiles of material or inventories of recycled rubber shall be stored at the manufacturing
site.
The main ingredient of an RST-PAL pallet is recycled scrap tire rubber that has been processed
to specific dimensions. There is three million tons of scrap tire shredded rubber on the ground
in Texas with ten permitted processors or tire shredders, which want to provide material to ATP.
ATP will purchase scrap tire rubber from a Stamford, Texas processor, and has estimated the
cost of material at $1.25/pallet ($50 per ton). It should be noted that ATP is working closely
with the Texas Natural Resource and Conservation Commission and ATP may even have an
opportunity to acquire surplus scrap tire rubber for less costs. Texas now produces
approximately 200,000 tons of scrap tire rubber annually. In addition, the current Texas
Legislature is considering paying manufacturers of products using recycled scrap tire rubber,
$0.75 per pallet ($30 per ton) as an incentive to increase production of products using scrap
tire rubber.
A small amount of recycled plastic is utilized in the formula and its cost is estimated at $0.90
per pallet. In addition a secret formulated binder, developed by the inventor Dan Radke, is used
in the manufacture of the pallets, estimated to cost $6.50 per pallet.
NOTE 2 - DIRECT LABOR (Production Payroll) and PAYROLL BURDEN
Projected Direct Labor includes the salary and wages for those employees directly involved in
the pallet production process in the plant and is reflected in Topic 6.1. Payroll burden is
estimated at 23% (FICA 6.20%; Medicare 1.45%; FUTA .80%; State Unemployment 3.00%;
Workers Compensation and Employee Health Benefits 11.55%).
The total Direct Labor cost includes payroll burden and other direct costs such as utilities,
building repairs and maintenance, plus plant supplies estimated at 5%. The total for direct labor
cost and payroll burden per pallet is estimated at $1.31.
NOTE 3 - ROYALTIES
The Licensing Agreement requires payment of 5% of gross sales to Mr. Radke, the inventor, as
royalties. This may be paid quarterly or monthly (5% has been used throughout these
projections). There will be no royalties for the first six months of production to help the cash
flow of the company.
NOTE 4 -GENERAL & ADMINISTRATIVE WAGES AND PAYROLL BURDEN
The company will employ Management and clerical staff as appears in the Personnel table,
Topic 6.1. Additional management members and marketing representatives will be added as
needed throughout the growth of the company. Payroll burden estimated at 23% including
taxes, W/C, health and employee benefits. During the six-month start-up phase and thereafter,
the company will employ experts in the industry as consultants.

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ATP - Advanced Technology Pallets

NOTE 5 - DEPRECIATION
Machinery and equipment is being depreciated over 10 years, property over 30 years.
NOTE 6 - OFFICE EXPENSES
Provision has been made for estimated general office expenses. Computers and office
equipment costing $15,000 is included in the initial start-up budget and Expensed Equipment.
The amount budgeted for Year One is $12,000, which will increase at the rate of $12,000 per
year with each additional plant.
NOTE 7 - MARKETING and SALES
Management anticipates strong demand for the RST-PAL pallets creating a real challenge for
production to keep up with the demand. Back orders are expected and sales on advanced
production should drive expansion. With many potential pallet users identified, who currently
use from 100,000 to 7 million pallets annually, we will approach the expansion of our national
sales force, carefully. ATP does not want a large sales force with production sold out for months
in advance. A budget in this category will be used for sales representatives or commissions on
sales and is budgeted at $73,000 during year one. Based on attendance at conventions and
trade shows it is anticipated that our targeted Dallas - Fort Worth Metropolis, Houston, San
Antonio and the rest of Texas will absorb all our production for many years.
A Marketing Director shall develop goals and strategies with the board of directors. ATP plans to
hire a qualified director in year one. Sales representatives will be hired and it is anticipated they
will receive a base salary with commissions of ten cents per pallet sold. The budget takes these
assumptions into consideration.
NOTE 8 - MACHINERY MAINTENANCE
The initial production line machinery will be in good working order, nevertheless, ATP will plan
for parts maintenance and replacement. This budget grows as more machinery and plants are
established.
NOTE 9 - TAXES
The "taxes incurred" appearing in the P&L represents State of Texas Franchise taxes and
Federal Income Taxes for a total of 34%.
The Profit and Loss table for the first 12 months appears in the appendix.

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ATP - Advanced Technology Pallets

Chart: Profit Monthly

Chart: Profit Yearly

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ATP - Advanced Technology Pallets

Chart: Gross Margin Monthly

Chart: Gross Margin Yearly

Page 36

ATP - Advanced Technology Pallets

Table: Profit and Loss

Pro Forma Profit and Loss

Year 1

Year 2

Year 3

Year 4

Year 5

Sales
Direct Cost of Sales
Production Payroll
Other Costs of Goods
Total Cost of Sales

$21,887,712
$9,835,432
$1,174,464
$0
$11,009,896

$49,783,507
$21,344,602
$2,511,552
$0
$23,856,154

$78,270,222
$32,016,902
$3,767,328
$0
$35,784,230

$109,393,242
$42,689,203
$5,023,104
$0
$47,712,307

$143,347,294
$53,361,504
$6,278,880
$0
$59,640,384

Gross Margin
Gross Margin %

$10,877,816
49.70%

$25,927,353
52.08%

$42,485,992
54.28%

$61,680,935
56.38%

$83,706,910
58.39%

$76,200
$73,000
$578,090
$0
$727,290
3.32%

$90,000
$120,000
$2,489,175
$0
$2,699,175
5.42%

$108,000
$120,000
$3,913,511
$0
$4,141,511
5.29%

$120,000
$180,000
$5,469,662
$0
$5,769,662
5.27%

$120,000
$180,000
$7,167,365
$0
$7,467,365
5.21%

$239,800
$681,090
$0
$60,000
$12,000
$30,000
$12,000
$48,000
$12,000
$388,680

$352,800
$2,669,175
$0
$120,000
$24,000
$40,000
$24,000
$72,000
$24,000
$544,644

$418,800
$4,123,511
$0
$240,000
$36,000
$50,000
$36,000
$96,000
$36,000
$647,964

$498,000
$5,769,662
$0
$360,000
$48,000
$60,000
$48,000
$120,000
$48,000
$760,140

$498,000
$7,497,365
$0
$480,000
$60,000
$70,000
$60,000
$144,000
$60,000
$760,140

Operating Expenses

Sales and Marketing Expenses

Sales and Marketing Payroll
Advertising/Promotion
Royalties
Other Sales and Marketing Expenses
Total Sales and Marketing Expenses
Sales and Marketing %
General and Administrative Expenses
General and Administrative Payroll
Sales and Marketing and Other Expenses
Depreciation
Rent
Office Expenses
Accounting
Legal
Travel
Insurance (property & casualty)
Payroll Taxes & Benefits Payroll Burden
Other General and Administrative
Expenses
Total General and Administrative Expenses
General and Administrative %

$0

$0

$0

$0

$0

$1,483,570
6.78%

$3,870,619
7.77%

$5,684,275
7.26%

$7,711,802
7.05%

$9,629,505
6.72%

$0
$0
$30,000
$120,000
$150,000
0.69%

$0
$0
$60,000
$250,000
$310,000
0.62%

$0
$0
$90,000
$350,000
$440,000
0.56%

$0
$0
$120,000
$500,000
$620,000
0.57%

$0
$0
$150,000
$500,000
$650,000
0.45%

Total Operating Expenses

$2,360,860

$6,879,794

$10,265,786

$14,101,464

$17,746,870

Profit Before Interest and Taxes

EBITDA
Interest Expense
Taxes Incurred

$8,516,956
$8,516,956
$0
$2,886,463

$19,047,559
$19,047,559
$0
$6,476,170

$32,220,206
$32,220,206
$0
$10,847,469

$47,579,471
$47,579,471
$0
$16,177,020

$65,960,040
$65,960,040
$0
$22,206,547

Net Profit
Net Profit/Sales

$5,630,493
25.72%

$12,571,389
25.25%

$21,372,737
27.31%

$31,402,451
28.71%

$43,753,493
30.52%

Other Expenses:
Other Payroll
Consultants
Machine Maintenance
Miscellaneous Expenses
Total Other Expenses
Other %

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ATP - Advanced Technology Pallets

7.4 Projected Cash Flow

The table presents our projected cash flow balances. The critical first year reflects positive cash
flow. Monthly cash flow is positive and more important the balances are positive, which
indicates adequate financial reserves and correct planning of the required working capital. The
estimated results permit a margin of error and still appear strong, even though the numbers
remain conservative.
ATP intends to distribute dividends to its shareholders in a way that will enable the continuation
of the expansion of the company according to this Business Plan. ATP estimates that from year
two forward 50% of the profit (after tax) will be distributed to the shareholders. The Board of
Directors will determine any other distributions to be made on an annual basis.
The following chart shows the cash availability for the next 12 months. The bar labeled "Cash
Balance" shows our projected cash balance for the first 12 months of the project and it is
adequate (above zero). The second set of bars, labeled "Net Cash Flow", indicates the change
in the Cash Balance for each month.

Chart: Cash

Page 38

ATP - Advanced Technology Pallets

Table: Cash Flow

Pro Forma Cash Flow

Year 1

Year 2

Year 3

Year 4

Year 5

$21,887,712
$0
$21,887,712

$49,783,507
$0
$49,783,507

$78,270,222
$0
$78,270,222

$109,393,242
$0
$109,393,242

$143,347,294
$0
$143,347,294

$0
$0
$0
$0
$0
$0
$0
$21,887,712

$0
$0
$0
$0
$0
$0
$0
$49,783,507

$0
$0
$0
$0
$0
$0
$0
$78,270,222

$0
$0
$0
$0
$0
$0
$0
$109,393,242

$0
$0
$0
$0
$0
$0
$0
$143,347,294

Year 1

Year 2

Year 3

Year 4

Year 5

$1,490,464
$14,351,974
$15,842,438

$2,954,352
$35,835,965
$38,790,317

$4,294,128
$51,505,862
$55,799,990

$5,641,104
$71,487,777
$77,128,881

$6,896,880
$91,914,615
$98,811,495

$0
$0
$0
$0
$0
$0
$0
$15,842,438

$0
$0
$0
$0
$0
$0
$6,514,868
$45,305,185

$0
$0
$0
$0
$0
$0
$10,916,680
$66,716,670

$0
$0
$0
$0
$0
$0
$16,070,324
$93,199,205

$0
$0
$0
$0
$0
$0
$22,174,037
$120,985,532

$6,045,274
$6,799,174

$4,478,322
$11,277,496

$11,553,552
$22,831,047

$16,194,037
$39,025,084

$22,361,762
$61,386,847

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

Page 39

ATP - Advanced Technology Pallets

7.5 Projected Balance Sheet

The Projected annual financial balances are shown in the following table. The balances for the
first 12 months are presented in the appendix.
Table: Balance Sheet

Pro Forma Balance Sheet

Year 1

Year 2

Year 3

Year 4

Year 5

$6,799,174
$0
$997,477
$0
$7,796,650

$11,277,496
$0
$4,246,138
$0
$15,523,634

$22,831,047
$0
$4,402,324
$0
$27,233,371

$39,025,084
$0
$5,217,569
$0
$44,242,653

$61,386,847
$0
$6,114,339
$0
$67,501,186

$4,033,200
$0
$4,033,200
$11,829,850

$4,033,200
$0
$4,033,200
$19,556,834

$4,033,200
$0
$4,033,200
$31,266,571

$4,033,200
$0
$4,033,200
$48,275,853

$4,033,200
$0
$4,033,200
$71,534,386

Year 1

Year 2

Year 3

Year 4

Year 5

Accounts Payable
Current Borrowing
Other Current Liabilities
Subtotal Current Liabilities

$1,412,258
$0
$0
$1,412,258

$3,082,720
$0
$0
$3,082,720

$4,336,401
$0
$0
$4,336,401

$6,013,556
$0
$0
$6,013,556

$7,692,632
$0
$0
$7,692,632

Long-term Liabilities
Total Liabilities

$0
$1,412,258

$0
$3,082,720

$0
$4,336,401

$0
$6,013,556

$0
$7,692,632

Paid-in Capital
Retained Earnings
Earnings
Total Capital
Total Liabilities and Capital

$6,000,000
($1,212,900)
$5,630,493
$10,417,593
$11,829,850

$6,000,000
($2,097,275)
$12,571,389
$16,474,114
$19,556,834

$6,000,000
($442,566)
$21,372,737
$26,930,170
$31,266,571

$6,000,000
$4,859,846
$31,402,451
$42,262,297
$48,275,853

$6,000,000
$14,088,260
$43,753,493
$63,841,753
$71,534,386

Net Worth

$10,417,593

$16,474,114

$26,930,170

$42,262,297

$63,841,753

Assets

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

7.6 Business Ratios

Business ratios for the years of this plan are shown below. Industry profile ratios based on the
Standard Industrial Classification (SIC) code 2448, Wood Pallets and Skids, are the closest
available and are shown for comparison. ATP's patented technologies are so new, that there is
no SIC code that directly applies.

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ATP - Advanced Technology Pallets

Table: Ratios
Ratio Analysis
Year 1
n.a.

Year 2
127.45%

Year 3
57.22%

Year 4
39.76%

0.00%
8.43%
0.00%
65.91%
34.09%
100.00%

0.00%
21.71%
0.00%
79.38%
20.62%
100.00%

0.00%
14.08%
0.00%
87.10%
12.90%
100.00%

0.00%
10.81%
0.00%
91.65%
8.35%
100.00%

0.00%
8.55%
0.00%
94.36%
5.64%
100.00%

25.59%
22.80%
20.32%
68.71%
31.29%
100.00%

11.94%
0.00%
11.94%
88.06%

15.76%
0.00%
15.76%
84.24%

13.87%
0.00%
13.87%
86.13%

12.46%
0.00%
12.46%
87.54%

10.75%
0.00%
10.75%
89.25%

29.14%
18.37%
47.51%
52.49%

100.00%
49.70%

100.00%
52.08%

100.00%
54.28%

100.00%
56.38%

100.00%
58.39%

100.00%
24.90%

24.02%

26.83%

27.11%

27.68%

28.03%

13.13%

0.33%
38.91%

0.24%
38.26%

0.15%
41.17%

0.16%
43.49%

0.13%
46.01%

0.37%
3.19%

Main Ratios
Current
Quick
Total Debt to Total Assets
Pre-tax Return on Net Worth
Pre-tax Return on Assets

5.52
4.81
11.94%
81.76%
72.00%

5.04
3.66
15.76%
115.62%
97.40%

6.28
5.26
13.87%
119.64%
103.05%

7.36
6.49
12.46%
112.58%
98.56%

8.77
7.98
10.75%
103.32%
92.21%

2.13
1.23
7.55%
51.16%
15.47%

Additional Ratios
Net Profit Margin
Return on Equity

Year 1
25.72%
54.05%

Year 2
25.25%
76.31%

Year 3
27.31%
79.36%

Year 4
28.71%
74.30%

Year 5
30.52%
68.53%

n.a
n.a

0.00
0
10.91
11.16
27
1.85

0.00
0
8.14
12.17
22
2.55

0.00
0
7.40
12.17
26
2.50

0.00
0
8.88
12.17
26
2.27

0.00
0
9.42
12.17
27
2.00

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

0.14
1.00

0.19
1.00

0.16
1.00

0.14
1.00

0.12
1.00

n.a
n.a

$6,384,393
0.00

$12,440,914
0.00

$22,896,970
0.00

$38,229,097
0.00

$59,808,553
0.00

n.a
n.a

0.54
12%
4.81
2.10
0.00

0.39
16%
3.66
3.02
0.52

0.40
14%
5.26
2.91
0.51

0.44
12%
6.49
2.59
0.51

0.50
11%
7.98
2.25
0.51

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

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

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 5 Industry Profile

31.04%
-5.69%

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ATP - Advanced Technology Pallets

7.7 Long-term Plan

In addition to the enclosed financial information contained in this Business Plan, ATP would like
to make the following observations that were not emphasized in this Business Plan:
The Business Plan covers five years of activities. We consider the financial projections in the
Business Plan as conservative. As an example; since July 2002, (the date the patent was
issued), ATP's Vice President, Elie Banensohn has traveled to several European countries and
has met with representatives of companies from the Far East. These companies recognize the
value of RST-PAL pallets and have shown an interest in licensing the technology in order to
manufacture and market the pallets in their countries (in some cases with our participation).
The Business Plan does not include any income from licensing fees or royalties from foreign
entities. Scrap tire problems exists everywhere and is even more acute in Europe and the Far
East as they have less space for storage and less scrap tire processing technology than the U.S.
Revenues include some benefits from State or Federal level subsidies or grants for helping to
clean up scrap tire problems, which are available. There are States that are offering
participation in funding new companies using scrap tire rubber. ATP and its Board of Directors
believe that demand for RST-PAL pallets may cause expansion plans to be reviewed and
changed, assuming demand will be high. After initial exposure of RST-PAL pallets to the market,
additional plants may need to be installed sooner than the company growth plan calls for.
As previously mentioned, a division or subsidiary of ATP will be proposed to manage the pallet
leasing aspect of sales, which will afford pallet users the option to change over their entire
inventories of wooden pallets to RST pallets on a "lease to purchase" plan. ATP anticipates
substantial revenues and success in the pallet leasing market.
8.0 FAQ - Frequently Asked Questions
1. Why did you choose Stamford, Texas as your first location?
1. One of the largest piles of shredded scrap tires in Texas is located in Stamford. The
quantities of raw material in this pile are enough for ten years of full production.
2. The state of Texas pays for making final products from the scrapped tires about $30 per ton
(approximately $0.75 per pallet).
3. In the area of DFW (about a radius of 150 miles around) the yearly consumption of new
pallets is about sixty million.
4. The local municipality is very helpful. Rural America has unemployment problems. Therefore
the local authorities have offered to subsidize the plant for our production lines, by enabling
us to use a new existing building of 60,000 sq.ft. with all the facilities including: offices, rest
rooms, electricity, air conditioning, boiler system etc. and the property is located on seven
acres with the building which can be used for storing and loading pallets and employee
parking, all offered with great terms and conditions.
5. The location of this plant is less than one mile from the scrap tire pile.

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ATP - Advanced Technology Pallets

2. If your plant is in Texas why is your headquarters is in Las Vegas?

As can be seen from our Business Plan, ATP expects to open four plants in the next five years.
These plants will be in different states. Las Vegas was chosen as our corporate headquarters
because of the following reasons:
1. No state tax in Nevada;
2. Las Vegas is the leader for conventions, trade shows and exhibitions where our products will
be displayed and introduced to many industries and manufacturers;
3. Las Vegas is also a popular tourist destination for business people throughout the world.
Vegas has excellent airline connections, which offers a real opportunity to bring executives
to visit and learn more about RST-PAL pallets and how it will positively affect their company
profits.
3. Is there any financial help from the State administration in putting up the plant in
their State?
There are several States, among them Louisiana and New Jersey that are giving up to 80% of
the capital cost of putting up a plant that will utilize scrap tires. The problem of scrap tires is
enormous and exists in most states. Most states have scrap tire programs to deal with the
remediation of scrap tires.
4. Are there any federal laws regarding the use of recycled products?
Yes, all Federal Agencies, including the Department of Defense and Department of
Transportation are mandated to use "recycled products first". Our product is made from
recycled materials and is very strong and durable and is acceptable for Government use due to
its life cycle being much longer than a traditional wooden pallet, and the price of a RST-PAL
pallets is very competitive.
5. How does the production of pallets made from scrap tires helps the ecology?
The RST-PAL pallet is an environmentally correct product made from recycled materials that can
be recycled itself, making it a "triple green product". First, according to statistics published by
NWPCA (National Wooden Pallet and Container Association) the U.S. consumption of pallets is
800 million per year. To make this huge quantity of pallets, 3.5 million trees are cut every year.
Every RST-PAL pallet sold will help to save our forests, allowing hardwoods to be used for more
important and valuable uses other than pallets.
Second, getting rid of the scrap tire piles is a worldwide problem. This problem is even more
acute in Europe and the Far East. Each year in the U.S. 250-280 million tires are added to the
existing stockpiles of scrap tires. These piles are environmental hazards as they can become
disastrous tire fires and are breeding grounds for mosquitoes (which bring diseases such as the
West Nile Virus), rodents, snakes, and other vermin.
6. Are the projections in ATP's Business Plan "Too good to be true"?
ATP believes that the projections, although they are very positive, are conservative. We also
believe our biggest challenge will be keeping up with the production needed to meet the
demand for our pallets. When a company evaluates the annual cost of their wooden pallets,
including; purchase, repair, replacement, and discarding costs versus the one time purchase
price of RST-PAL pallets, they will see tremendous savings in buying and using RST-PAL pallets.
Regarding the financial forecasts, ATP has purposely left out several positive issues. For
example, the cost of recycled rubber (cut and prepared for our use) is $1.25/pallet. This cost
can be reduced drastically by purchasing a special machine (Grizli) and cutting the tire shreds
to our specific dimensions. The price of the machine can be recovered within one year of
production. Additionally, the most expensive cost in making our pallets is the binder system,

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ATP - Advanced Technology Pallets

$6.50/pallet. Our projections do not take into consideration the savings of using even less
binder per pallet which will be achieved by utilizing the new production line machinery, with a
different delivery system. We estimate a minimum saving of 25% on our projected costs when
we will buy the raw material and batch it ourselves.
Additional savings will be achieved by getting larger discounts as the volume of materials
purchased increases.
Other potential revenue streams that are not projected include licensing ATP technology to
foreign countries to manufacture and market RST-PAL pallets. In addition ATP anticipates
opening a subsidiary company to provide pallet leasing or a lease to purchase program for our
customers to enable them the opportunity to convert their wooden pallet inventory to RST-PAL
pallets at an accelerated pace.
7. How are the scrap tires used today?
Only a small portion of scrap tires are recycled or used today. The main use (about 30%) is
adding crumb rubber to asphalt for making roads. Other products that are made of scrap tires
are: car floor mats, playground filler, floor tiles and some other soft products which do not need
strength or rigidity of the final material. Scrap tire piles continue to accumulate all over the
country and constitute dangerous environmental hazards.
8.What is the real market potential and what is the risk if the users do not accept the
pallets?
As previously stated, of the 800 million pallets manufactured each year, about 60% are made
from hardwood. Our product replaces the hardwood pallets, and if you look at our 5-year
projection, we will produce approximately 19 million pallets while in the same 5 years the
pallets industry will produce 2.4 billion hardwood pallets, which means we will capture, within 5
years, about 0.8% (less than 1%) of the total pallet market.
ATP surveyed the acceptance of RST-PAL pallets through pre-production marketing efforts and it
was excellent. We visited 62 pallet users in the DFW area. All of the companies were impressed
with the RST-PAL pallets made from this unique and patented "new material" from recycled
scrap tires. Many stated that they would use the pallets once we had a production facility. They
were especially impressed that our pallets were stronger and more durable than wooden pallets
and would perform much longer than wooden pallets. NWPCA states, "wooden pallets last from
1.5 to 2 trips before having to be repaired or replaced." We also visited with the buyer of pallets
for 3M company in Minneapolis, and the buyer was very eager to use RST-PAL pallets. 3M
purchases more than 7 million pallets in just one year. ATP also contacted, through the
Department of Defense, the Army, Air Force PX and Exchange, AAFAS. They actually wanted us
to deliver 50,000 pallets as an initial order but unfortunately we were not in production.
9.Can you show us orders from companies that were interested in using your pallet?
No. As we have not begun production, we cannot guarantee that ATP will be able to deliver
pallets on a specific date, and so we have not accepted any orders. As the projected calculation
shows tremendous savings to the user, and as RST-PAL pallets have so many advantages in
comparison to wooden pallets and at a competitive price, ATP believes that when production
commences, pallets will be immediately accepted. Some of the users we visited were surprised
that the price was so low in relation to the performances of RST-PAL pallets.
10. What are the technical properties of the pallets and which tests have already
done?
The technical data and the tests results are as follows:

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ATP - Advanced Technology Pallets

RST-PAL pallets are both rackable and stackable, and pass ISO standards.
The RST-PAL pallets have the same parameters as hardwood pallets, including two or four
way entry, and meet GMA pallet standards.
Weight: 40"x48", four way GMA pallet, hardwood=65 lbs; RST-PAL=71 lbs.
The difference in weight disappears after the wood starts absorbing water/liquids.
The deflection of a pallet with our material, according to ISO when R=1500KG, is about zero
(actually equal to the deflection of metal under the same load).
A test was conducted with 3 concrete beams weighing 25 tons (51,000 lbs), which were
loaded and lifted onto an RST-PAL pallet. In comparison, wooden pallets have a static
weight load of 2,500 pounds.

In conclusion, this is not a high precision, high tech product -- it is a strong and durable pallet
with excellent material qualities and is offered to pallet users at a very competitive price, which
will save pallet buyers bottom line profits.
11. Usually, as production increases, the price normally decreases (mainly because of
competition). In your B.P. the price is increased. Please explain?
Actually, part of the answer is in the question. There is no competition. Hardwood is a
commodity and its price changes constantly with lumber prices (which continue to increase
annually). Our increase in price takes this fact into account. The raise in prices, as appears in
our projections, of 25% during the next five years is probably less than the increase in the cost
of hardwood. Another reason is that our initial price is very low, designed so that ATP can
penetrate different markets rapidly.
Most key pallet purchasers that we talk with, think we are vastly under priced for a pallet that is
so durable and lasts so long. Some believe RST-PAL pallets should be in the $39.00-$59.00
price range (similar to plastic pallets), and not just a few dollars more than hardwood pallets.
ATP assumes that for many years (due to patent protection) RST-PAL pallets will not have
competitors, which can often drive the price down. The assumption is that the advantages of
RST-PAL pallets over hardwood pallets will cause pallet users to purchase RST-PAL pallets to
lower their pallet costs. Following RST-PAL pallets becoming established in the market place,
the advantages and the savings will be widely recognized and there will be justification for
further price increases.
The opening price of $18.50 is an average price and not applicable to all sizes nor to all
customers. Certainly, a customer purchasing 500,000 pallets per year will be given a discount
different from a customer purchasing 1,000 pallets.
The Board of Directors will re-visit the $18.50 price as sales develop. Our projected low price is
intended to introduce the pallet to many different manufacturers and industries that use pallets,
targeting those companies with a closed loop system that can use, retrieve and use over and
over again the same durable pallets.

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ATP - Advanced Technology Pallets

12. Everything seems so good, what is the down side to this project?
ATP believes that according to the projections, the only downside is our start-up production
capacity. ATP knows that it will capture the small percentage of less than 1% of the total
market demand. The projection shows that this 1% of the market will enable both growth from
profits to fund expansion and a good return in the form of dividends for its investors.
RST-PAL pallets are heavier, by about 8 lbs, than the equivalent size pallet made of hardwood.
This is true only at the beginning of the lifecycle of a wooden pallet as wood absorbs water and
other liquids and can become even heavier than RST-PAL pallets. An average 40' truck trailer
carries about 22 loaded pallets, and by using RST-PAL pallets the total added weight is less than
200 lbs, which is not significant.
13. Is your patent defendable and what does it actually protect?
The patent was approved and issued in July 2002. It took about five years to perfect and to
reach the utmost protection possible. It protects any product made from recycled scrap tire
rubber using a plurality of sizes with or without other materials like plastic, adhesives etc.
14. Who has the exclusivity to utilize this patent?
The total and irrevocable exclusivity was granted to ATP Corporation, which consists of the new
investors and the existing partners. This exclusivity includes licensing to other parties worldwide
for the manufacturing and marketing of RST-PAL pallets.
15. It appears that you are looking for investment of $4M to $6M. Elaborate.
These two numbers express the difference between starting with one line of production vs. two
lines. The basic set of machines needed for production can be extended to two lines with
addition of some machines. By starting with two lines, the production capacity is doubled to
1.2M pallets per year with net profit projected of over $8M versus $3.2M if ATP opens with a
single line.
16. How will the investor's capital be used?
A detailed start-up expenses and funding table can be found in Topic 2.2. The main expense
item is for machinery and in both cases about $750,000 remains as working capital.
17. What equity percentage are you offering for the investment?
The calculation of the present value of the company based on the projections appears in the
business plan. The present value of five years of net earnings at 25% discount is over $100
million. We deliberately took an unreasonably high discount rate to avoid any disputes.
We value our company at "present value" of just over $17M. Hence, for the $6 million
investment; we offer 35% of the company with all its rights.
18. Is there any other way of financing the project?
Yes. We would accept a loan, secured by the assets and rights of ATP, which will carry interest
of 5% for a period of ten years starting (the repayment) at the beginning of the second year.
The return can be accelerated.
In addition to the secured note, the lender will be offered 17.5% equity interest for a loan of $6
million.

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ATP - Advanced Technology Pallets

19. Who is ATP's management team?

See Chapter 6.0 of the Business Plan. Each member of the team along with our consultants, are
highly qualified professionals with vast and proven experience in their fields (e.g. plant
installation and operations, purchasing and marketing). ATP is also open to investor
participation both in the company and on the Board of Directors.
9.0 Disclaimer
The financial projections that appear in this Business Plan are estimated revenues, expenses,
and cash flow, which are based on research and the assumptions discussed throughout this
Business Plan. They represent the best of management's knowledge and belief and also are
based on actual operations in the pilot plant in Stamford, Texas. The Company's expected
revenues, expenses, and cash flow for the projected periods are subject to the Company's
ability to develop sales and production levels at the price and costs estimated by management.
Accordingly, these projections reflect management's estimates as of January-June 2003, and
its expected course of action if such sales and production levels are attained at the price and
costs anticipated.
These projected financial statements are for the purpose of providing updated information to
existing and new investors. These projected financial statements should not be considered to be
a presentation to forecast future results. Accordingly, these projections may not be useful for
other purposes.
The assumptions disclosed herein are those that management believes are significant to the
projections. Furthermore, even if the sales and production levels as well as the projected price
and costs are attained, there will usually be differences between projected and actual results
because events and circumstances frequently do not occur as expected, and those differences
may be material.

Page 47

Appendix
Table: Sales Forecast

Sales Forecast
Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

$646,464

$1,292,928

$1,864,800

$1,939,392

$1,864,800

$1,864,800

$1,939,392

$1,939,392

$1,939,392

$1,939,392

$1,864,800

$1,939,392

$26,208

$52,416

$75,600

$78,624

$75,600

$75,600

$78,624

$78,624

$78,624

$78,624

$78,624

$75,600

$672,672

$1,345,344

$1,940,400

$2,018,016

$1,940,400

$1,940,400

$2,018,016

$2,018,016

$2,018,016

$2,018,016

$1,943,424

$2,014,992

Sales
RST-PAL pallets
Subsidies

$18.50/$22.50
(5th yr)
$30/ton

Total Sales

Direct Cost of Sales

Recycled Rubber
Recycled Plastic
Binders System
Subtotal Direct Cost of Sales

125%
90%
650%

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

$43,680
$31,450
$227,136

$87,360
$62,899
$454,272

$126,025
$90,738
$655,330

$131,040
$94,349
$681,408

$126,000
$90,720
$655,200

$126,000
$90,720
$655,200

$131,040
$94,349
$681,408

$131,040
$94,349
$681,408

$131,040
$94,349
$681,408

$131,040
$94,349
$681,408

$126,000
$90,720
$655,200

$131,040
$94,349
$681,408

$302,266

$604,531

$872,093

$906,797

$871,920

$871,920

$906,797

$906,797

$906,797

$906,797

$871,920

$906,797

Page 1

Appendix
Table: Personnel

Personnel Plan
Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

$4,000

$4,000

$4,000

$4,000

$4,000

$4,000

$4,000

$4,000

$4,000

$4,000

$4,000

$4,000

$1,200

$1,200

$1,200

$1,200

$1,200

$1,200

$1,200

$1,200

$1,200

$1,200

$1,200

$1,200

$1,040
$1,040
$2,200
$3,432
$3,016
$3,120
$5,408
$3,016
$2,704
$12,064
$6,032
$1,560
$1,352

$2,080
$1,040
$4,400
$6,864
$6,032
$6,240
$10,816
$3,016
$2,704
$18,096
$9,048
$1,560
$2,704

$2,080
$1,040
$6,600
$10,296
$9,048
$9,360
$16,224
$6,032
$5,408
$18,096
$9,048
$1,560
$4,056

$2,080
$1,040
$6,600
$10,296
$9,048
$9,360
$16,224
$6,032
$5,408
$18,096
$9,048
$1,560
$4,056

$2,080
$1,040
$6,600
$10,296
$9,048
$9,360
$16,224
$6,032
$5,408
$18,096
$9,048
$1,560
$4,056

$2,080
$1,040
$6,600
$10,296
$9,048
$9,360
$16,224
$6,032
$5,408
$18,096
$9,048
$1,560
$4,056

$2,080
$1,040
$6,800
$10,296
$9,048
$9,360
$16,224
$6,032
$5,408
$18,096
$9,048
$1,560
$4,056

$2,080
$1,040
$7,000
$10,296
$9,048
$9,360
$16,224
$6,032
$5,408
$18,096
$9,048
$1,560
$4,056

$2,080
$1,040
$7,200
$10,296
$9,048
$9,360
$16,224
$6,032
$5,408
$18,096
$9,048
$1,560
$4,056

$2,080
$1,040
$7,200
$10,296
$9,048
$9,360
$16,224
$6,032
$5,408
$18,096
$9,048
$1,560
$4,056

$2,080
$1,040
$7,200
$10,296
$9,048
$9,360
$16,224
$6,032
$5,408
$18,096
$9,048
$1,560
$4,056

$2,080
$1,040
$7,200
$10,296
$9,048
$9,360
$16,224
$6,032
$5,408
$18,096
$9,048
$1,560
$4,056

Production Personnel
Texas plant manager
Texas office worker
Receptionist (x2)
Data entry (x1)
Foreman (x3)
Line operator (x6)
Loader (x6)
Batcher (x6)
Conveyer worker (x12)
Assembly lead (x4)
Assembly helper (x4)
Cutter (x12)
Forklift operator (x6)
Maint. Supervisor
Maint. helper (x3)
Other

$6.50/hr
$6.50/hr
$2,200/mo
$8.25/hr
$7.25/hr
$7.50/hr
$6.50/hr
$7.25/hr
$6.50/hr
$7.25/hr
$7.25/hr
$7.50/hr
$6.50/hr

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$51,184

$79,800

$104,048

$104,048

$104,048

$104,048

$104,248

$104,448

$104,648

$104,648

$104,648

$104,648

Marketing Director

$4,000

$4,000

$4,000

$4,000

$4,000

$4,000

$4,500

$4,500

$4,500

$4,500

$4,500

$4,500

Marketing Secretary

$2,000

$2,000

$2,000

$2,000

$2,000

$2,000

$2,200

$2,200

$2,200

$2,200

$2,200

$2,200

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$6,000

$6,000

$6,000

$6,000

$6,000

$6,000

$6,700

$6,700

$6,700

$6,700

$6,700

$6,700

President - Dan Radke

$6,000

$6,000

$6,500

$6,500

$7,500

$7,500

$8,000

$8,000

$8,500

$8,500

$8,500

$8,500

Vice Pres. - Elie Banenson

$6,000

$6,000

$6,000

$6,000

$7,000

$7,000

$7,500

$7,500

$8,000

$8,000

$8,000

$8,000

Office Manager

$3,000

$3,000

$3,000

$3,000

$3,000

$3,000

$3,300

$3,300

$3,300

$3,300

$3,300

$3,300

Receptionist (x2)

$1,500

$1,500

$1,500

$1,500

$1,500

$1,500

$3,000

$3,000

$3,000

$3,000

$3,000

$3,000

Office workers (x2)

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Other

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$16,500

$16,500

$17,000

$17,000

$19,000

$19,000

$21,800

$21,800

$22,800

$22,800

$22,800

$22,800

Subtotal

Sales and Marketing Personnel

Other
Subtotal

General and Administrative Personnel

Subtotal

Page 2

Appendix
Other Personnel
Name or Title

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Name or Title

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Other

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Subtotal

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Total People

33

56

74

74

74

74

75

75

75

75

75

75

$73,684

$102,300

$127,048

$127,048

$129,048

$129,048

$132,748

$132,948

$134,148

$134,148

$134,148

$134,148

Total Payroll

Page 3

Appendix
Table: General Assumptions

General Assumptions
Month 1
Plan Month
Current Interest Rate
Long-term Interest Rate
Tax Rate
Other

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

10

11

12

0.00%

0.00%

0.00%

0.00%

0.00%

0.00%

0.00%

0.00%

0.00%

0.00%

0.00%

0.00%

0.00%

0.00%

0.00%

0.00%

0.00%

0.00%

0.00%

0.00%

0.00%

0.00%

0.00%

0.00%

30.00%

34.00%

34.00%

34.00%

34.00%

34.00%

34.00%

34.00%

34.00%

34.00%

34.00%

34.00%

Page 4

Appendix
Table: Profit and Loss

Pro Forma Profit and Loss

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

Sales

$672,672

$1,345,344

$1,940,400

$2,018,016

$1,940,400

$1,940,400

$2,018,016

$2,018,016

$2,018,016

$2,018,016

$1,943,424

$2,014,992

Direct Cost of Sales

$302,266

$604,531

$872,093

$906,797

$871,920

$871,920

$906,797

$906,797

$906,797

$906,797

$871,920

$906,797

Production Payroll

$51,184

$79,800

$104,048

$104,048

$104,048

$104,048

$104,248

$104,448

$104,648

$104,648

$104,648

$104,648

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Total Cost of Sales

$353,450

$684,331

$976,141

$1,010,845

$975,968

$975,968

$1,011,045

$1,011,245

$1,011,445

$1,011,445

$976,568

$1,011,445

Gross Margin

$319,222

$661,013

$964,259

$1,007,171

$964,432

$964,432

$1,006,971

$1,006,771

$1,006,571

$1,006,571

$966,856

$1,003,547

47.46%

49.13%

49.69%

49.91%

49.70%

49.70%

49.90%

49.89%

49.88%

49.88%

49.75%

49.80%

Sales and Marketing Payroll

$6,000

$6,000

$6,000

$6,000

$6,000

$6,000

$6,700

$6,700

$6,700

$6,700

$6,700

$6,700

Advertising/Promotion

$3,500

$3,500

$4,500

$4,500

$5,000

$5,000

$6,000

$6,000

$7,500

$7,500

$10,000

$10,000

$0

$0

$0

$0

$0

$0

$96,970

$96,970

$96,970

$96,970

$93,240

$96,970

Other Costs of Goods

Gross Margin %

Operating Expenses

Sales and Marketing Expenses

Royalties
Other Sales and Marketing Expenses

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Total Sales and Marketing Expenses

$9,500

$9,500

$10,500

$10,500

$11,000

$11,000

$109,670

$109,670

$111,170

$111,170

$109,940

$113,670

Sales and Marketing %

1.41%

0.71%

0.54%

0.52%

0.57%

0.57%

5.43%

5.43%

5.51%

5.51%

5.66%

5.64%

$16,500

$16,500

$17,000

$17,000

$19,000

$19,000

$21,800

$21,800

$22,800

$22,800

$22,800

$22,800

$6,000

$6,000

$7,000

$7,000

$7,500

$7,500

$105,470

$105,470

$106,970

$106,970

$105,740

$109,470

General and Administrative Expenses

General and Administrative Payroll
Sales and Marketing and Other
Expenses
Depreciation

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Rent

$5,000

$5,000

$5,000

$5,000

$5,000

$5,000

$5,000

$5,000

$5,000

$5,000

$5,000

$5,000

Office 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

Accounting

$2,500

$2,500

$2,500

$2,500

$2,500

$2,500

$2,500

$2,500

$2,500

$2,500

$2,500

$2,500

Legal

$1,000

$1,000

$1,000

$1,000

$1,000

$1,000

$1,000

$1,000

$1,000

$1,000

$1,000

$1,000

Travel

$4,000

$4,000

$4,000

$4,000

$4,000

$4,000

$4,000

$4,000

$4,000

$4,000

$4,000

$4,000

Insurance (property & casualty)

$1,000

$1,000

$1,000

$1,000

$1,000

$1,000

$1,000

$1,000

$1,000

$1,000

$1,000

$1,000

$27,675

$27,675

$28,290

$28,290

$30,750

$30,750

$35,055

$35,055

$36,285

$36,285

$36,285

$36,285

Payroll Taxes & Benefits Payroll

Burden

23%

Page 5

Appendix
Other General and Administrative
Expenses
Total General and Administrative
Expenses

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$64,675

$64,675

$66,790

$66,790

$71,750

$71,750

$176,825

$176,825

$180,555

$180,555

$179,325

$183,055

9.61%

4.81%

3.44%

3.31%

3.70%

3.70%

8.76%

8.76%

8.95%

8.95%

9.23%

9.08%

Other Payroll

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Consultants

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

General and Administrative %

Other Expenses:

Machine Maintenance

$2,500

$2,500

$2,500

$2,500

$2,500

$2,500

$2,500

$2,500

$2,500

$2,500

$2,500

$2,500

Miscellaneous Expenses

$10,000

$10,000

$10,000

$10,000

$10,000

$10,000

$10,000

$10,000

$10,000

$10,000

$10,000

$10,000

Total Other Expenses

$12,500

$12,500

$12,500

$12,500

$12,500

$12,500

$12,500

$12,500

$12,500

$12,500

$12,500

$12,500

1.86%

0.93%

0.64%

0.62%

0.64%

0.64%

0.62%

0.62%

0.62%

0.62%

0.64%

0.62%

$86,675

$86,675

$89,790

$89,790

$95,250

$95,250

$298,995

$298,995

$304,225

$304,225

$301,765

$309,225

Profit Before Interest and Taxes

$232,547

$574,338

$874,469

$917,381

$869,182

$869,182

$707,976

$707,776

$702,346

$702,346

$665,091

$694,322

EBITDA

$232,547

$574,338

$874,469

$917,381

$869,182

$869,182

$707,976

$707,776

$702,346

$702,346

$665,091

$694,322

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$69,764

$195,275

$297,319

$311,910

$295,522

$295,522

$240,712

$240,644

$238,798

$238,798

$226,131

$236,069

$162,783

$379,063

$577,150

$605,471

$573,660

$573,660

$467,264

$467,132

$463,548

$463,548

$438,960

$458,253

24.20%

28.18%

29.74%

30.00%

29.56%

29.56%

23.15%

23.15%

22.97%

22.97%

22.59%

22.74%

Other %

Total Operating Expenses

Interest Expense
Taxes Incurred

Net Profit
Net Profit/Sales

Page 6

Appendix
Table: Cash Flow

Pro Forma Cash Flow

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

$672,672

$1,345,344

$1,940,400

$2,018,016

$1,940,400

$1,940,400

$2,018,016

$2,018,016

$2,018,016

$2,018,016

$1,943,424

$2,014,992

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$672,672

$1,345,344

$1,940,400

$2,018,016

$1,940,400

$1,940,400

$2,018,016

$2,018,016

$2,018,016

$2,018,016

$1,943,424

$2,014,992

Cash Received
Cash from Operations
Cash Sales
Cash from Receivables
Subtotal Cash from Operations
Additional Cash Received
Sales Tax, VAT, HST/GST Received

$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

$672,672

$1,345,344

$1,940,400

$2,018,016

$1,940,400

$1,940,400

$2,018,016

$2,018,016

$2,018,016

$2,018,016

$1,943,424

$2,014,992

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

Cash Spending

$73,684

$102,300

$127,048

$127,048

$129,048

$129,048

$132,748

$132,948

$134,148

$134,148

$134,148

$134,148

Bill Payments

$25,623

$782,957

$1,207,607

$1,523,626

$1,319,526

$1,200,606

$1,244,981

$1,455,087

$1,418,015

$1,420,320

$1,417,374

$1,336,251

Subtotal Spent on Operations

$99,307

$885,257

$1,334,655

$1,650,674

$1,448,574

$1,329,654

$1,377,729

$1,588,035

$1,552,163

$1,554,468

$1,551,522

$1,470,399

Sales Tax, VAT, HST/GST Paid Out

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Principal Repayment of Current Borrowing

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Other Liabilities Principal Repayment

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Long-term Liabilities Principal Repayment

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Purchase Other Current Assets

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Purchase Long-term Assets

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

Dividends

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$0

$99,307

$885,257

$1,334,655

$1,650,674

$1,448,574

$1,329,654

$1,377,729

$1,588,035

$1,552,163

$1,554,468

$1,551,522

$1,470,399

Subtotal Cash Received

Expenditures

0.00%

Expenditures from Operations

Additional Cash Spent

Subtotal Cash Spent

Net Cash Flow

$573,365

$460,087

$605,745

$367,342

$491,826

$610,746

$640,287

$429,981

$465,853

$463,548

$391,902

$544,593

Cash Balance

$1,327,265

$1,787,352

$2,393,097

$2,760,439

$3,252,265

$3,863,011

$4,503,298

$4,933,278

$5,399,131

$5,862,679

$6,254,581

$6,799,174

Page 7

Appendix
Table: Balance Sheet

Pro Forma Balance Sheet

Assets

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

$753,900
$0
$0
$0
$753,900

$1,327,265
$0
$332,493
$0
$1,659,757

$1,787,352
$0
$664,984
$0
$2,452,336

$2,393,097
$0
$959,302
$0
$3,352,399

$2,760,439
$0
$997,477
$0
$3,757,916

$3,252,265
$0
$959,112
$0
$4,211,377

$3,863,011
$0
$959,112
$0
$4,822,123

$4,503,298
$0
$997,477
$0
$5,500,774

$4,933,278
$0
$997,477
$0
$5,930,755

$5,399,131
$0
$997,477
$0
$6,396,608

$5,862,679
$0
$997,477
$0
$6,860,156

$6,254,581
$0
$959,112
$0
$7,213,693

$6,799,174
$0
$997,477
$0
$7,796,650

$4,033,200
$0
$4,033,200
$4,787,100

$4,033,200
$0
$4,033,200
$5,692,957

$4,033,200
$0
$4,033,200
$6,485,536

$4,033,200
$0
$4,033,200
$7,385,599

$4,033,200
$0
$4,033,200
$7,791,116

$4,033,200
$0
$4,033,200
$8,244,577

$4,033,200
$0
$4,033,200
$8,855,323

$4,033,200
$0
$4,033,200
$9,533,974

$4,033,200
$0
$4,033,200
$9,963,955

$4,033,200
$0
$4,033,200
$10,429,808

$4,033,200
$0
$4,033,200
$10,893,356

$4,033,200
$0
$4,033,200
$11,246,893

$4,033,200
$0
$4,033,200
$11,829,850

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Month 7

Month 8

Month 9

Month 10

Month 11

Month 12

Starting Balances

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

$0
$0
$0
$0

$743,074
$0
$0
$743,074

$1,156,590
$0
$0
$1,156,590

$1,479,503
$0
$0
$1,479,503

$1,279,549
$0
$0
$1,279,549

$1,159,350
$0
$0
$1,159,350

$1,196,435
$0
$0
$1,196,435

$1,407,823
$0
$0
$1,407,823

$1,370,671
$0
$0
$1,370,671

$1,372,976
$0
$0
$1,372,976

$1,372,976
$0
$0
$1,372,976

$1,287,553
$0
$0
$1,287,553

$1,412,258
$0
$0
$1,412,258

Long-term Liabilities
Total Liabilities

$0
$0

$0
$743,074

$0
$1,156,590

$0
$1,479,503

$0
$1,279,549

$0
$1,159,350

$0
$1,196,435

$0
$1,407,823

$0
$1,370,671

$0
$1,372,976

$0
$1,372,976

$0
$1,287,553

$0
$1,412,258

$6,000,000
($1,212,900)
$0
$4,787,100
$4,787,100

$6,000,000
($1,212,900)
$162,783
$4,949,883
$5,692,957

$6,000,000
($1,212,900)
$541,846
$5,328,946
$6,485,536

$6,000,000
($1,212,900)
$1,118,996
$5,906,096
$7,385,599

$6,000,000
($1,212,900)
$1,724,467
$6,511,567
$7,791,116

$6,000,000
($1,212,900)
$2,298,127
$7,085,227
$8,244,577

$6,000,000
($1,212,900)
$2,871,787
$7,658,887
$8,855,323

$6,000,000
($1,212,900)
$3,339,051
$8,126,151
$9,533,974

$6,000,000
($1,212,900)
$3,806,184
$8,593,284
$9,963,955

$6,000,000
($1,212,900)
$4,269,732
$9,056,832
$10,429,808

$6,000,000
($1,212,900)
$4,733,280
$9,520,380
$10,893,356

$6,000,000
($1,212,900)
$5,172,240
$9,959,340
$11,246,893

$6,000,000
($1,212,900)
$5,630,493
$10,417,593
$11,829,850

$4,787,100

$4,949,883

$5,328,946

$5,906,096

$6,511,567

$7,085,227

$7,658,887

$8,126,151

$8,593,284

$9,056,832

$9,520,380

$9,959,340

$10,417,593

Paid-in Capital
Retained Earnings
Earnings
Total Capital
Total Liabilities and Capital
Net Worth

Page 8