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Durango Gravel

Company Summary

Durango Gravel manufactures numerous types of gravel products from base rock.  These products are 3/4″ and 3″ ABC, 3/8″, 1/2″, 3/4″ 1-11/2″ screened and washed rock, 1″-3″ cobble, and 4″-6″ cobble. In addition, we provide, pre-washed sand, fill dirt, topsoil, bedding materials and crusher fines, along with various sizes of boulders.  These products are sold to municipalities, business entities and end users in the Four Corners Region, with a concentration around Durango, Colorado.

The pit site has been the location of Durango, a locally owned gravel pit, for over 15 years.  We have greatly expanded the base of customers in the last six months.

2.1 Company Ownership

Durango Gravel, Inc. is incorporated as a “S” Corporation under the laws of Colorado, and Colorado laws shall govern and take precedence.

Two classes of stock shares have been issued as follows:

1000 Class “A” Stock Shares – Voting Rights Only – No Dividend Rights

Justin McCarty – 510 Shares

Chad Hughes – 490 Shares

1000 Class “B” Stock Shares – Dividend Shares Only – No Voting Rights

Justin McCarty – 450 Shares

Chad Hughes – 450 Shares

Not Issued – 100 Shares

Net profits are distributed in the form of dividends on a basis which shall be determined from time to time. Corporate officers are as follows:

Justin McCarty: president, treasurer, chief executive officer and chief financial officer. Justin McCarty designs and directs the overall corporate strategy.

Chad Hughes: vice president, secretary, chief operating officer and chief financial officer. Chad Hughes directs the day-to-day operations of the corporation.

At the end of each year, a meeting of the directors decides the management responsibilities for the following year.

2.2 Company History

Durango Gravel, Inc. was formed in June, 2000.  The principals of the corporation are as follows:

Justin McCarty, Bayfield, Colorado – Owner of an excavating, landscaping, trucking and road grading business, Mr. McCarty has extensive experience in all phases of gravel and rock hauling, production and industry practices.  Mr. McCarty oversees operations of the corporation, and additionally, is a major consumer of plant products.  He also will be a consumer of asphalt products.

Chad Hughes, Durango, Colorado – Educated in natural resources management, and with extensive customer-service experience, Mr. Hughes focuses on developing public accounts and day-to-day operations.

In June, 2000 the corporation entered into a five-year lease agreement with Durango Gravel, a locally-owned gravel pit, giving the mineral rights for a five-year period, renewable for additional five-year periods.  With no advertising, marketing or crushing operations, the pit had been selling approximately 24,000 tons of gravel per year. In addition, options were obtained on a number of other parcels suitable for gravel pits.

The corporation invested approximately $700,000 in crushing and production equipment, and began operations on July 24, 2000.  In the five months of operation in year 2000, sales of 47,000 tons of material were recorded, mostly in road base material, with an average of 9,000 tons per month.

Our goal of penetrating the local market and taking advantage of the niche available was met, with a number of the major area contractors utilizing our products. Our customer service policies have met with near universal praise and acceptance.  We are developing a reputation as an honest, customer-service oriented company with superior products.

We have made substantial inroads into the institutional market, receiving gravel awards from municipalities, county, state and institutional entities. We had an operating profit for year 2000, despite an unanticipated additional $40,000 in equipment maintenance costs. We are poised to make more major inroads in the local market, with the spring and summer season for higher-profit screened rock fast approaching.

Past Performance
1998 1999 2000
Sales $0 $0 $250,065
Gross Margin $0 $0 $250,065
Gross Margin % 0.00% 0.00% 100.00%
Operating Expenses $0 $0 $244,981
Collection Period (days) 0 0 64
Inventory Turnover 0.00 0.00 1.00
Balance Sheet
1998 1999 2000
Current Assets
Cash $0 $0 $1,379
Accounts Receivable $0 $0 $83,354
Inventory $0 $0 $657,640
Other Current Assets $0 $0 $0
Total Current Assets $0 $0 $742,373
Long-term Assets
Long-term Assets $0 $0 $1,056,350
Accumulated Depreciation $0 $0 $0
Total Long-term Assets $0 $0 $1,056,350
Total Assets $0 $0 $1,798,723
Current Liabilities
Accounts Payable $0 $0 $18,888
Current Borrowing $0 $0 $0
Other Current Liabilities (interest free) $0 $0 $10,835
Total Current Liabilities $0 $0 $29,723
Long-term Liabilities $0 $0 $673,936
Total Liabilities $0 $0 $703,659
Paid-in Capital $0 $0 $1,084,896
Retained Earnings $0 $0 $5,084
Earnings $0 $0 $5,084
Total Capital $0 $0 $1,095,064
Total Capital and Liabilities $0 $0 $1,798,723
Other Inputs
Payment Days 0 0 60
Sales on Credit $0 $0 $237,000
Receivables Turnover 0.00 0.00 2.84

2.3 Company Locations and Facilities

Our pit is located in Durango, Colorado, the hub of the southwest Colorado Region and the major city in La Plata County.  The gravel pit has a primary and secondary crusher, generator, a number of loaders and excavators, and an electronic scale. 

Our scale is located approximately 1/4 mile from the highway – the shortest distance of any pit in the area.  The pit has a reserve of approximately 6,000,000 tons, by far the most in the area.  There are approximately 60 acres, a 150 sq. ft. scale house, tool trailer and pit office.  We are planning to add an additional 980 sq. ft. office this Spring.

Our corporate office is in Bayfield, Colorado – approximately 1 acre with 1,500 sq. ft. building, a 250 sq. ft. office, fence and storage area.