Granite Industries, Inc.

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Chemical Laboratory Business Plan

Company Summary

Granite began operations as a custom and toll chemical manufacturer. The management team consists of a president and CEO, a vice president of operations and marketing and a physician.

Note: Names have been removed for confidentiality.

2.1 Company History

Beginning in June, we spent the remainder of our first year outfitting our manufacturing facility, which included equipment installation and build-out. We became fully operational the first quarter of our second year. Our concentration was on small lot toll manufacturing and custom orders. In that same quarter we were approached by Customer A, LLC to become a subcontractor for a $23 million order they had from Manufacturer A. They offered us a mirror contract to produce Creatine Monohydrate. It was necessary for us to expand facilities to meet the requirements and we were successful in obtaining an SBA loan through Wachovia Bank. The loan process took 12 months and we were only able to accommodate a small part of the Customer A order during that period through financial support from the principals. Customer A had to have a back-up producer during this period. Unfortunately that producer failed to meet Manufacturer A's quality standards and Customer A defaulted on the contract. This also ended our contract.

We returned to our original plan which has continued to the present time. Our experience with Customer A brought us to realize that the market for Creatine Monohydrate exceeds $300 million. Creatine is an FDA approved food supplement which is used by athletes and weekend sports enthusiasts alike. More importantly, we realized that we would be the only domestic source of this product. Proceeding from that point, and with no marketing program other than word-of-mouth, we achieved increasing sales in the succeeding years. Our financials in this document provide the details as well as our projections. We are convinced that this is a lucrative market and that, with adequate equipment and marketing, we can capture a significant part of it.

Note: Customer and Distributor company names and financial information have been removed from this sample plan to protect proprietary and confidential information.

Past Performance
FY 1998 FY 1999 FY 2000
Sales $241,782 $269,507 $210,102
Gross Margin $82,812 $112,178 $94,234
Gross Margin % 34.25% 41.62% 44.85%
Operating Expenses $388,109 $332,338 $247,060
Collection Period (days) 0 0 73
Inventory Turnover 6.00 6.00 0.00
Balance Sheet
FY 1998 FY 1999 FY 2000
Current Assets
Cash $481 $7,644 $12,000
Accounts Receivable $16,452 $52,499 $15,500
Inventory $27,888 $17,526 $18,873
Other Current Assets $0 $0 $0
Total Current Assets $44,821 $77,669 $46,373
Long-term Assets
Long-term Assets $258,795 $157,530 $149,118
Accumulated Depreciation $31,013 $39,731 $23,605
Total Long-term Assets $227,782 $117,799 $125,513
Total Assets $272,603 $195,468 $171,886
Current Liabilities
Accounts Payable $120,509 $76,789 $26,513
Current Borrowing $0 $40,785 $7,291
Other Current Liabilities (interest free) $0 $0 $43,503
Total Current Liabilities $120,509 $117,574 $77,307
Long-term Liabilities $262,368 $280,000 $324,550
Total Liabilities $382,877 $397,574 $401,857
Paid-in Capital $386,759 $535,007 $814,820
Retained Earnings ($224,683) ($507,974) ($877,599)
Earnings ($272,350) ($229,139) ($167,192)
Total Capital ($110,274) ($202,106) ($229,971)
Total Capital and Liabilities $272,603 $195,468 $171,886
Other Inputs
Payment Days 0 0 30
Sales on Credit $0 $0 $170,102
Receivables Turnover 0.00 0.00 10.97

2.2 Company Ownership

Granite incorporated in Delaware as a C Corporation. The company is owned in equal shares by the three members of the management team.