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.
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.
- 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.
- 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.
- 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.
- "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)
- 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
- 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).
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.
- 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
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.
- 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.
- To expand production annually by opening a plant with two additional lines of production each year for years two through five.
- 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.)
- 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.
- 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.
- 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.