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 Table of Contents

1.0 Executive Summary.....................................................................................................................1

Chart: Highlights...........................................................................................................................1
1.1 Objectives....................................................................................................................................1
1.2 Mission...........................................................................................................................................2
1.3 Keys to Success.........................................................................................................................2
2.0 Company Summary......................................................................................................................2
2.1 Company Ownership................................................................................................................3
2.2 Company History.......................................................................................................................3
Table: Past Performance............................................................................................................4
2.3 Company Locations and Facilities.......................................................................................5
3.0 Products and Services.................................................................................................................5
3.1 Product and Service Description.........................................................................................6
3.2 Competitive Comparison........................................................................................................6
3.3 Sales Literature..........................................................................................................................7
3.4 Fulfillment....................................................................................................................................7
3.5 Technology...................................................................................................................................7
3.6 Future Products and Services...............................................................................................7
4.0 Market Analysis Summary.........................................................................................................7
4.1 Market Segmentation..............................................................................................................7
Chart: Market Analysis (Pie).....................................................................................................8
Table: Market Analysis................................................................................................................8
4.2 Target Market Segment Strategy.......................................................................................8
4.2.1 Market Needs......................................................................................................................9
4.2.2 Market Trends.....................................................................................................................9
4.2.3 Market Growth....................................................................................................................9
4.3 Service Business Analysis......................................................................................................9
4.3.1 Competition and Buying Patterns...............................................................................9
4.3.2 Main Competitors..............................................................................................................9
4.3.3 Business Participants.....................................................................................................10
5.0 Strategy and Implementation Summary...........................................................................10
5.1 Strategy Pyramid....................................................................................................................10
5.2 Value Proposition.....................................................................................................................11
5.3 Marketing Strategy.................................................................................................................11
5.3.1 Pricing Strategy...............................................................................................................11
5.4 Competitive Edge....................................................................................................................11
5.5 Sales Strategy..........................................................................................................................11
Chart: Sales by Year..................................................................................................................12
5.5.1 Sales Forecast..................................................................................................................12
Table: Sales Forecast............................................................................................................12
Chart: Sales Monthly.............................................................................................................14
5.6 Milestones..................................................................................................................................14
Table: Milestones........................................................................................................................14
6.0 Management Summary.............................................................................................................15
6.1 Organizational Structure......................................................................................................15

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 Table of Contents

6.2 Management Team.................................................................................................................15

6.3 Personnel Plan..........................................................................................................................16
Table: Personnel..........................................................................................................................16
7.0 Financial Plan................................................................................................................................16
7.1 Important Assumptions........................................................................................................17
Table: General Assumptions...................................................................................................17
7.2 Key Financial Indicators.......................................................................................................17
Chart: Benchmarks....................................................................................................................18
7.3 Break-even Analysis...............................................................................................................18
Chart: Break-even Analysis....................................................................................................18
Table: Break-even Analysis....................................................................................................19
7.4 Projected Profit and Loss.....................................................................................................19
Table: Profit and Loss................................................................................................................19
Chart: Profit Monthly.................................................................................................................21
Chart: Profit Yearly.....................................................................................................................21
Chart: Gross Margin Monthly.................................................................................................22
Chart: Gross Margin Yearly.....................................................................................................22
7.5 Projected Cash Flow...............................................................................................................22
Chart: Cash...................................................................................................................................23
Table: Cash Flow.........................................................................................................................23
7.6 Projected Balance Sheet......................................................................................................25
7.6 Projected Balance Sheet......................................................................................................25
Table: Balance Sheet.................................................................................................................25
7.7 Business Ratios........................................................................................................................26
Table: Ratios.................................................................................................................................26
Table: Sales Forecast..........................................................................................................................1
Table: Personnel....................................................................................................................................4
Table: Personnel....................................................................................................................................4
Table: General Assumptions.............................................................................................................6
Table: General Assumptions.............................................................................................................6
Table: Profit and Loss..........................................................................................................................7
Table: Profit and Loss..........................................................................................................................7
Table: Cash Flow...................................................................................................................................9
Table: Cash Flow...................................................................................................................................9
Table: Balance Sheet.........................................................................................................................11
Table: Balance Sheet.........................................................................................................................11

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 Durango Gravel

1.0 Executive Summary

Durango Gravel, Inc. produces and sells types and grades of gravel to public and private
customers in the Four Corners Region, concentrating on the area around Durango, Colorado. In
just five months of operation, we operated at a profit, recording $250,000 in sales and selling
almost 49,000 tons of gravel products.

Our goal for this year is to penetrate the asphalt market, with its high profitability and limited
competition. By adding an asphalt plant, and meeting our minimum goals of 45,500 tons of
asphalt, we plan to sell over 191,000 tons of gravel products to municipalities, contractors and
end-users, with sales of over $2,696,000 and net profits of $854,000.

We have experienced significant success penetrating the local market by offering superior
products and customer service.

Our keys to continued success are:

1. Expanding into the asphalt market.

2. Establishing and maintaining working relationships with major institutional users.
3. Exploiting the coming void in gravel supplies to establish a market niche.
4. Developing a net profit margin above 30%.
5. Effectively communicating to our existing and potential customers, through targeted efforts,
our position as a differentiated provider of the highest-quality gravel and asphalt products.

Chart: Highlights

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 Durango Gravel

1.1 Objectives

The objectives of Durango Gravel, Inc. for the coming year:

ASPHALT

1. Establish strategic working relationships with the major asphalt users in the area.
2. Develop initial sales of 45.5K tons of asphalt, resulting in first-year sales of $1,638,000.
3. Increase Sales over a three-year period to 77K tons per year.

GRAVEL

1. Continue to develop strategic working relationships with the 10-15 major institutional users.
2. Hit target gravel sales levels of 145.5K tons of both road base and screened rock, resulting
in gravel sales of $1,064,000.
3. Continue to exploit the weaknesses inherent in the major area competitors to increase our
presence in the local market area.

1.2 Mission

Durango Gravel, Inc. serves municipalities, construction companies and individual users by
providing superior-quality products manufactured to the highest standards at competitive
prices.

Our principals have a history of valuing relationships with their customers. We communicate
our commitment to quality and customer appreciation through outstanding product quality,
personal service and efficient delivery. Our commitment to our customers is reflected through
honest and responsible business practices.

1.3 Keys to Success

The keys to success for Durango Gravel, Inc.:

1. Establishing and maintaining working relationships and contractual agreements with

municipality and business sector clients.
2. Increasing our facility to maximum production within the next three years.
3. Continuing our position as a customer-service-oriented company with competitive pricing.
4. Increasing our profit margins and decreasing our production costs.
5. Developing a presence in the asphalt market with area users.

2.0 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.

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 Durango Gravel

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.

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 Durango Gravel

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.

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 Durango Gravel

Table: Past Performance

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

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 Durango Gravel

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.

3.0 Products and Services

Durango Gravel Inc. deals exclusively in providing gravel and gravel-related products, including
but not limited to the following:

 3/4" ABC
 3" ABC
 3/8" screened and washed rock
 1/2" screened and washed rock
 3/4" screened and washed rock
 1-11/2" screened and washed rock
 1"-3" cobble
 4"-6" cobble
 Pre-washed sand
 Fill dirt
 Topsoil
 Bedding materials
 Crusher fines
 Boulders--various sizes

The company provides consulting and products. Customers can either provide their own trucks
for products, or the company will deliver for a fee. Our standard average delivery fee
is $65.00, with maximum related expenses of $40.00. The only product costs will be
associated with production. Company trucks delivered 416% of the loads in year 2000.
Trucking was subcontracted to independent trucking companies, including Justin McCarty
Trucking and Excavation.

In addition, we plan to provide SX grade asphalt.

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 Durango Gravel

3.1 Product and Service Description

Royalty Costs are $2.00/Ton. Manufacturing Costs are budgeted at $1.15/ton (a high figure).
Starred items have no manufacturing costs.

Roads and driveways,

Asphalt Used by everyone
$20.90/ton
Base material for roads,
3" ABC - 3/4" ABC Used by everyone
driveways and site fill
3/8" Screened and Driveway and walkway
Washed Rock (Pea topping, winter snow Used by everyone
Gravel) maintenance
1/2" Screened and
Asphalt base Used by everyone
Washed Rock
3/4" Screened and Driveways, walkways, pipe
Used by everyone
Washed Rock bedding, french drains
1-11/2" Screened and
French drains and driveways Used by everyone
Washed Rock
1"-3" Cobble Decoration and fill Used by everyone
Preferred by
4"-6" Cobble Decoration and large fill landscaping
contractors
Pipe bedding, fill, horse
Pre-Washed Sand* Used by everyone
arenas
Fill Dirt* Used by everyone
Topsoil* Landscaping
Bedding Material*
Boulders* various Landscaping - wall
sizes construction

3.2 Competitive Comparison

Within our niche we have two significant competitors, Oldcastle (Four Corners) and LaFarge,
which are both multi-national corporations headquartered outside the United States. While
these are both well-run companies, the local perception is that the money they earn goes
directly overseas to their headquarters, as opposed to reinvesting their profits in the local
economy. In addition, many of their policies are set at the corporate level, resulting in less
customer-service orientation then is the norm for this region. A number of general contractors
have started to utilize our products because of our ownership and policies.

There is one other significant competitor, C & J Gravel. Their reserves are limited, and offer a
limited product line. A number of their major users have started to utilize our products. We
expect more in the next year.

The way we compete is on the fact that we offer a larger selection of products, superior quality,
and better customer service in terms of information on our product line. We compete on our
road base products in terms of price and availability, with fast delivery.
Page 7
 Durango Gravel

3.3 Sales Literature

This year we will be producing a company catalog, which would include asphalt products for
targeted customers.

3.4 Fulfillment

We produce almost all of our product line at our site, with effectively no need to outsource any
materials.

3.5 Technology

The technology for the production of gravel, gravel-related products and asphalt is well
established. We have developed effective and revolutionary marketing techniques for:
convenient and time-saving loading of client trucks, and saving our institutional customers
substantial amounts on their trucking expenses.

3.6 Future Products and Services

Our major addition this year will be asphalt, of which there is only one area producer at
present. A number of contractors have expressed interest in using our asphalt.

Our long-range plan includes the opening of a second pit, in order to compete with producers in
the more remote county areas.

4.0 Market Analysis Summary

Asphalt products are required for road and driveway construction. There are a significant
number of roads and driveways which need to be paved each year. There is at present only
one area source for asphalt. The high prices charged are a reflection of their monopoly. Thus,
there is a significant niche to be filled.

Gravel and rock-related products are a necessary ingredient to road building in the area. There
are a significantly large percentage of roads which need to be re-graveled each year. In
addition, there is a significant percentage of the population who have "retired" to the area, and
are engaged in remodeling and making their new homes more accessible.

Also, the previously-described "window of opportunity" and the vulnerability of competitors to a

customer-oriented operation are significant. The average end-user is more concerned with
customer service than with price.

4.1 Market Segmentation

The major customer groups for Durango Gravel, Inc. are:

Municipalities, Schools and State Agencies. There are 12 municipalities in the immediate
area who are using, or have needs for, our products and are in our target market. They are
able to utilize our products and the quantities we could manufacture. As of this date, five are
using us as one of their sources.

Page 8
 Durango Gravel

Larger Construction Companies. Many of the larger construction companies bid on state,
county, city and large private construction projects, We have bid on their gravel products and
received 12 awards in the past six months. We plan to bid on their asphalt needs as well this
year.

Construction and Private Companies. The area is filled with smaller contractors who either
purchase concrete, gravel and asphalt products directly, or arrange for them for a fee. Many of
the smaller contractors are not compensated to a significant degree, and have been eager to
utilize a company such as ours.

Chart: Market Analysis (Pie)

Table: Market Analysis

Market Analysis
2001 2002 2003 2004 2005
Potential Customers Growth CAGR
Public 15% 10 12 14 16 18 15.83%
Private 15% 65 75 86 99 114 15.08%
End User 20% 60 72 86 103 124 19.90%
Other 0% 0 0 0 0 0 0.00%
Total 17.35% 135 159 186 218 256 17.35%

4.2 Target Market Segment Strategy

The population of the Four Corners Area has increased dramatically in the last 10 years and is
still increasing, creating a greater demand for houses and roads. A large percentage of this
increase is attributed to both retirees, and those with substantial incomes who have purchased
Page 9
 Durango Gravel

a second home. Many people belonging to these groups have come from areas where good
customer service is expected, and had been unhappy with the quality of customer service
available before we began operations.

4.2.1 Market Needs

We understand that our target market needs more than just asphalt and gravel products. This
need has grown out of increased population growth, the influx of a segmented customer base
with significant disposable income, and the lack of change of our competitors to increased
customer service requirements.

4.2.2 Market Trends

The market for asphalt, gravel and gravel-related products has grown at a steady rate for the
past seven years, and shows no signs of abating. There are trends toward both more
institutional and private road development and more private end-user interest in quality and
customer service.

4.2.3 Market Growth

According to the three major suppliers in the region, as well as the La Plata Area Chamber of
Commerce, the market in construction products has grown at 12% per year for the past three
years, and is projected to increase. More important is the increased need for road-related
products. With an almost 45% population increase in the county in the last 10 years, it is
estimated that over 35% of existing county roads will require maintenance in the next four
years. In addition, the extensive winters in the region are particularly difficult on gravel roads.
After two mild winters, this winter of normal snow will result in an increase in road
maintenance.

4.3 Service Business Analysis

The last decade has shown a consolidation of suppliers by nationwide corporations. In

numerous instances, these companies have policies which are set on a national level and are
not "user-friendly" or responsive to the particular needs of this region.

The area asphalt market has but one producer at present, with predictable non-competitive
pricing and customer service policies.

4.3.1 Competition and Buying Patterns

The Durango area is a region where "Word-of-Mouth" endorsements are unusually important.
Most private end-user customers seem to choose their provider based on quick delivery,
friendliness and customer service. Business and construction-related users choose based on the
establishment of a mutually beneficial and trustworthy relationship.

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 Durango Gravel

4.3.2 Main Competitors

Oldcastle (Four Corners Materials)

Strengths - long-term relationships, 30 years in business, long-term employees, decent quality.

Weaknesses - product, price and credit flexibility, foreign ownership, product reserves, travel
and loading time, monopolistic practices in regards to asphalt.

C&J

Strengths - established, local ownership.

Weaknesses - limited products, limited reserves, location.

4.3.3 Business Participants

The main sales volume in this area is now concentrated in the following companies:

Asphalt: Oldcastle (Four Corners Materials).

Gravel (Durango): Oldcastle (Four Corners Materials), Durango Gravel, Inc., C & J, Sandco.

(Outlying Areas): LaFarge, Gosney & Sons, Hocker.

All of these other companies compete with similar limited products and unchanging company
policies. Products are similar, costs are important, but customer service and perception of
honesty is critical. Our company has increased its participation in the local gravel market by
400% in just five months.

5.0 Strategy and Implementation Summary

Durango Gravel, Inc.'s strategy is as follows:

1. Add an asphalt plant as quickly as possible to penetrate the asphalt market.

2. Continue to expand gravel sales.
3. Continue our uniquely designed service for those customers with their own delivery trucks.
4. Continue the establishment of long-term, mutually-beneficial relationships with commercial
accounts.
5. Continue our revolutionary program to cut delivery costs for municipalities and industry
end-users.
6. Aggressively market our "Consumer-Oriented" focus.

We intend to maximize product sales through aggressive marketing, penetrate the asphalt
market, and increase our targeted marketing efforts.

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 Durango Gravel

5.1 Strategy Pyramid

Our main strategy at Durango Gravel, Inc. is to position ourselves at the top of the quality
scale, featuring our combination of fine quality products and the best customer service in the
region.

We are committed to communicating our "Quality" position to the market. Programs are mainly
those listed in the Milestones Table, including the continued acquisition of public-sector
accounts.

5.2 Value Proposition

We offer our target customer, who cares about personal service, as well as product quality, a
vendor who acts as a strategic ally, with the highest quality asphalt and gravel products at a
premium price that reflects the value of reassurance that systems will work.

5.3 Marketing Strategy

The marketing strategy is the core of the main strategy, and is multi-faceted:

1. Penetrate the asphalt market.

2. Emphasize personal service and support.
3. Foster a long-term relationship business.
4. Focus on the public-sector, major contractor and high-end homeowner as key target
markets.
5. Induce more companies to utilize our revolutionary delivery and loading strategies.

5.3.1 Pricing Strategy

With regard to products carried by our competitors, our pricing strategy will be to either match
their prices, or to be marginally lower. We expect that our superior service will be a major
factor.

5.4 Competitive Edge

Our competitive edge is our quality product, location, emphasis on customer service, and our
long-term availability of products.

5.5 Sales Strategy

We need to sell our company, not just the products. We have to sell our service and support.

The Yearly Total Sales chart summarizes our ambitious sales forecast. We expect sales to
increase from $250,000 last year to approximately $2.7 million next year. The marketing
strategy is the core of the main strategy, and is multi-faceted.

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 Durango Gravel

Chart: Sales by Year

5.5.1 Sales Forecast

Sales forecasts are based on the following information:

1. The acquisition of an asphalt plant, in place by April, 2001.

2. A minimum 45.5K ton asphalt sales in year one.
3. Our gravel sales total reflects 45.5K tons "sold" to our asphalt plant.

Page 13
 Durango Gravel

Table: Sales Forecast

Sales Forecast
2001 2002 2003
Unit Sales
Asphalt 45,500 61,000 77,000
Crusher Fines - for Asphalt 18,200 24,400 30,800
3/4 in. ABC - for Asphalt 18,200 24,400 30,800
1/2 in. Screened Rock - for Asphalt 9,100 12,200 15,400
3 in. ABC 23,800 25,000 26,500
3/4 in. ABC 31,200 33,000 35,000
Other Screened Rock 10,000 11,000 12,500
Sand 10,500 12,500 15,000
Cobble 6,100 6,500 7,000
Boulders 2,100 2,300 2,500
Topsoil 6,500 7,000 7,500
Other Dirt Products 10,000 11,000 12,000
Total Unit Sales 191,200 230,300 272,000

Unit Prices 2001 2002 2003

Asphalt $36.00 $38.00 $40.00
Crusher Fines - for Asphalt $10.50 $11.25 $12.00
3/4 in. ABC - for Asphalt $5.50 $5.75 $6.00
1/2 in. Screened Rock - for Asphalt $8.00 $8.40 $8.75
3 in. ABC $4.50 $4.65 $4.90
3/4 in. ABC $5.50 $5.75 $5.90
Other Screened Rock $9.00 $9.50 $10.00
Sand $10.00 $11.00 $12.00
Cobble $13.00 $14.00 $15.00
Boulders $9.00 $9.50 $10.00
Topsoil $15.00 $15.50 $16.00
Other Dirt Products $2.50 $2.65 $2.80

Sales
Asphalt $1,638,000 $2,318,000 $3,080,000
Crusher Fines - for Asphalt $191,100 $274,500 $369,600
3/4 in. ABC - for Asphalt $100,100 $140,300 $184,800
1/2 in. Screened Rock - for Asphalt $72,800 $102,480 $134,750
3 in. ABC $107,100 $116,250 $129,850
3/4 in. ABC $171,600 $189,750 $206,500
Other Screened Rock $90,000 $104,500 $125,000
Sand $105,000 $137,500 $180,000
Cobble $79,300 $91,000 $105,000
Boulders $18,900 $21,850 $25,000
Topsoil $97,500 $108,500 $120,000
Other Dirt Products $25,000 $29,150 $33,600
Total Sales $2,696,400 $3,633,780 $4,694,100

Direct Unit Costs 2001 2002 2003

Asphalt $0.00 $0.00 $0.00
Crusher Fines - for Asphalt $5.50 $5.50 $5.50
3/4 in. ABC - for Asphalt $10.50 $10.50 $10.50
1/2 in. Screened Rock - for Asphalt $8.00 $8.00 $8.00
3 in. ABC $0.00 $0.00 $0.00
3/4 in. ABC $0.00 $0.00 $0.00
Other Screened Rock $0.00 $0.00 $0.00
Sand $0.00 $0.00 $0.00
Cobble $0.00 $0.00 $0.00
Boulders $0.00 $0.00 $0.00
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Topsoil $0.00 $0.00 $0.00

Other Dirt Products $0.00 $0.00 $0.00

Direct Cost of Sales

Asphalt $0 $0 $0
Crusher Fines - for Asphalt $100,100 $134,200 $169,400
3/4 in. ABC - for Asphalt $191,100 $256,200 $323,400
1/2 in. Screened Rock - for Asphalt $72,800 $97,600 $123,200
3 in. ABC $0 $0 $0
3/4 in. ABC $0 $0 $0
Other Screened Rock $0 $0 $0
Sand $0 $0 $0
Cobble $0 $0 $0
Boulders $0 $0 $0
Topsoil $0 $0 $0
Other Dirt Products $0 $0 $0
Subtotal Direct Cost of Sales $364,000 $488,000 $616,000

Chart: Sales Monthly

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5.6 Milestones

The accompanying table lists important program milestones, with dates and managers in
charge, and budgets for each. The milestone schedule indicates our emphasis on planning for
implementation.

Table: Milestones

Milestones

Milestone Start Date End Date Budget Manager Department

Asphalt Plant 1/1/2001 4/1/2001 $500 McCarty Admin.
State Gravel Awards 1/1/2001 5/1/2001 $0 Mazur Admin.
County Asphalt Awards 1/1/2001 6/1/2001 $0 Hughes S&M
Add Five Major Contractors to
1/1/2001 7/1/2001 $500 McCarty Admin.
Customers
Reputation and Name Recognition 1/1/2001 12/31/2001 $1,000 Mazur Admin.
Totals $2,000

6.0 Management Summary

Our management philosophy is based on responsibility and mutual respect. At present,

including our trucking and excavating personnel, we number 11. We expect to grow to 17 with
the addition of the asphalt plant, and to 20 by next year.

6.1 Organizational Structure

The team includes 11 employees, under our president. Our main management divisions are
sales and marketing, production, delivery, and administration. Service is handled by all
divisions, with direction from administration.

6.2 Management Team

Justin McCarty, Bayfield, Colorado - President, 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 - Vice-president, sales and marketing, educated in natural
resources management, and with extensive customer-service experience, Mr. Hughes focuses
on developing public accounts.

Gary Small, Mancos, Colorado - Production, Mr. Small has many years of crusher and asphalt-
related experience.

Baylin Berg, Durango Colorado - Delivery, Mr. Berg has been instrumental in developing a
revolutionary delivery plan to save money for our customers, as well as increase revenues for
our trucking division.

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Bill Mazur, Durango, Colorado - Administration, Bill is responsible for the day-to-day company
operation, as well as coordinating all the departments.

6.3 Personnel Plan

The following table shows the Personnel Plan for Durango Gravel.

Table: Personnel

Personnel Plan
2001 2002 2003
Production Personnel
Production Manager $26,300 $27,500 $28,800
Crusher 1 $24,000 $25,000 $26,000
Crusher 2 $21,600 $22,000 $22,500
Crusher 3 $21,600 $22,000 $22,500
Asphalt 1 $12,600 $17,000 $18,000
Asphalt 2 $12,600 $17,000 $18,000
Asphalt 3 $9,000 $17,000 $18,000
Asphalt Loader $12,600 $22,700 $24,000
Loader $21,600 $22,700 $24,000
Subtotal $161,900 $192,900 $201,800

Sales and Marketing Personnel

Sales/Marketing 1 $21,000 $23,000 $25,000
Other $0 $0 $0
Subtotal $21,000 $23,000 $25,000

General and Administrative Personnel

Administrator $28,000 $32,000 $37,000
Other $0 $0 $0
Subtotal $28,000 $32,000 $37,000

Other Personnel
Name or title $0 $0 $0
Other $0 $0 $0
Subtotal $0 $0 $0

Total People 9 12 15

Total Payroll $210,900 $247,900 $263,800

7.0 Financial Plan

The most important element in the financial plan is the critical need for improving several of the
key factors that impact cash flow:

 We plan to finance our growth through a combination of long-term debt and cash flow.
Purchase of the new asphalt plant and related equipment will require debt financing.
 Additional technology and equipment will be financed with cash flow.
 Inventory turnover is not a critical element to ensure profitability.

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7.1 Important Assumptions

The financial plan depends on important assumptions, most of which are shown in the following
table. The key underlying assumptions are:

 We assume a slow-growth economy, without major recession.

 We assume, of course, that there are no unforeseen changes in technology to make
products immediately obsolete.
 We assume access to equity capital and financing sufficient to maintain our financial plan as
shown in the tables.

Table: General Assumptions

General Assumptions
2001 2002 2003
Plan Month 1 2 3
Current Interest Rate 13.00% 13.00% 13.00%
Long-term Interest Rate 10.00% 10.00% 10.00%
Tax Rate 25.00% 25.00% 25.00%
Other 0 0 0

7.2 Key Financial Indicators

The most important factor to Durango Gravel, Inc.'s anticipated growth is the procurement of
necessary financing for our asphalt plant. The following chart shows projected changes in key
financial indicators:

 Sales
 Gross Margin
 Operating Expenses
 Collection Days
 Inventory Turnover

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Chart: Benchmarks

7.3 Break-even Analysis

The following table and chart describe our estimated monthly break-even point. Based on our
estimated sales and expenses, our monthly break-even point is shown below.

Chart: Break-even Analysis

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Table: Break-even Analysis

Break-even Analysis

Monthly Units Break-even 3,170

Monthly Revenue Break-even $44,704

Assumptions:
Average Per-Unit Revenue $14.10
Average Per-Unit Variable Cost $1.90
Estimated Monthly Fixed Cost $38,670

7.4 Projected Profit and Loss

We expect to close year 2001 with excellent sales and very respectable profits.

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Table: Profit and Loss

Pro Forma Profit and Loss

2001 2002 2003
Sales $2,696,400 $3,633,780 $4,694,100
Direct Cost of Sales $364,000 $488,000 $616,000
Production Payroll $161,900 $192,900 $201,800
Asphalt Plant Maintenance $226,590 $303,780 $383,460
Asphalt By-Product Additives $273,000 $36,600 $46,200
Other $0 $0 $0
Total Cost of Sales $1,025,490 $1,021,280 $1,247,460

Gross Margin $1,670,910 $2,612,500 $3,446,640

Gross Margin % 61.97% 71.89% 73.42%

Operating Expenses

Sales and Marketing Expenses

Sales and Marketing Payroll $21,000 $23,000 $25,000
Advertising/Promotion $6,000 $6,600 $7,200
Travel $1,200 $1,500 $1,800
Miscellaneous $2,400 $3,000 $3,600
Total Sales and Marketing Expenses $30,600 $34,100 $37,600
Sales and Marketing % 1.13% 0.94% 0.80%

General and Administrative Expenses

General and Administrative Payroll $28,000 $32,000 $37,000
Sales and Marketing and Other Expenses $0 $0 $0
Depreciation $18,000 $24,000 $30,000
Leased Equipment $124,800 $145,000 $145,000
Equipment Expense $18,000 $21,000 $25,000
Equipment Fuel $21,600 $33,500 $48,000
Utilities $9,000 $12,000 $15,000
Insurance $21,600 $24,000 $30,000
Office Expense $4,800 $6,000 $6,500
Miscellaneous $36,000 $42,000 $48,000
Pit Lease $120,000 $150,000 $180,000
Payroll Taxes $31,635 $37,185 $39,570
Other General and Administrative Expenses $0 $0 $0
Total General and Administrative Expenses $433,435 $526,685 $604,070
General and Administrative % 16.07% 14.49% 12.87%

Other Expenses:
Other Payroll $0 $0 $0
Consultants $0 $0 $0
Contract/Consultants $0 $0 $0
Total Other Expenses $0 $0 $0
Other % 0.00% 0.00% 0.00%

Total Operating Expenses $464,035 $560,785 $641,670

Profit Before Interest and Taxes $1,206,875 $2,051,715 $2,804,970

EBITDA $1,224,875 $2,075,715 $2,834,970
Interest Expense $68,669 $61,994 $58,394
Taxes Incurred $284,552 $497,430 $686,644

Net Profit $853,655 $1,492,291 $2,059,932

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Net Profit/Sales 31.66% 41.07% 43.88%

Chart: Profit Monthly

Chart: Profit Yearly

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Chart: Gross Margin Monthly

Chart: Gross Margin Yearly

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7.5 Projected Cash Flow

The cash flow depends on assumptions for inventory turnover, payment days, and accounts
receivable management. Our projected 60-day collection days is critical, and it is also
reasonable. We need $110,000 in new financing (current borrowing and additional investment)
in March to get through a cash flow dip as we build up for mid-year sales.

Chart: Cash

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Table: Cash Flow

Pro Forma Cash Flow

2001 2002 2003
Cash Received

Cash from Operations

Cash Sales $134,820 $181,689 $234,705
Cash from Receivables $2,589,881 $3,432,952 $4,437,746
Subtotal Cash from Operations $2,724,701 $3,614,641 $4,672,451

Additional Cash Received

Sales Tax, VAT, HST/GST Received $0 $0 $0
New Current Borrowing $60,000 $0 $0
New Other Liabilities (interest-free) $0 $0 $0
New Long-term Liabilities $0 $0 $0
Sales of Other Current Assets $0 $0 $0
Sales of Long-term Assets $0 $0 $0
New Investment Received $50,000 $0 $0
Subtotal Cash Received $2,834,701 $3,614,641 $4,672,451

Expenditures 2001 2002 2003

Expenditures from Operations

Cash Spending $210,900 $247,900 $263,800
Bill Payments $1,238,771 $1,626,499 $2,319,281
Subtotal Spent on Operations $1,449,671 $1,874,399 $2,583,081

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $60,000 $0 $0
Other Liabilities Principal Repayment $0 $0 $0
Long-term Liabilities Principal Repayment $36,000 $36,000 $36,000
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
Subtotal Cash Spent $1,545,671 $1,910,399 $2,619,081

Net Cash Flow $1,289,031 $1,704,243 $2,053,371

Cash Balance $1,290,410 $2,994,653 $5,048,023

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7.6 Projected Balance Sheet

The Projected Balance Sheet is quite positive. We do not project any real trouble meeting our
debt obligations--as long as we can achieve our specific objectives.

Table: Balance Sheet

Pro Forma Balance Sheet

2001 2002 2003
Assets

Current Assets
Cash $1,290,410 $2,994,653 $5,048,023
Accounts Receivable $55,052 $74,191 $95,840
Inventory $293,640 $163,560 $194,393
Other Current Assets $0 $0 $0
Total Current Assets $1,639,102 $3,232,404 $5,338,256

Long-term Assets
Long-term Assets $1,056,350 $1,056,350 $1,056,350
Accumulated Depreciation $18,000 $42,000 $72,000
Total Long-term Assets $1,038,350 $1,014,350 $984,350
Total Assets $2,677,452 $4,246,754 $6,322,606

Liabilities and Capital 2001 2002 2003

Current Liabilities
Accounts Payable $29,963 $142,973 $194,893
Current Borrowing $0 $0 $0
Other Current Liabilities $10,835 $10,835 $10,835
Subtotal Current Liabilities $40,798 $153,808 $205,728

Long-term Liabilities $637,936 $601,936 $565,936

Total Liabilities $678,734 $755,744 $771,664

Paid-in Capital $1,134,896 $1,134,896 $1,134,896

Retained Earnings $10,168 $863,823 $2,356,114
Earnings $853,655 $1,492,291 $2,059,932
Total Capital $1,998,719 $3,491,010 $5,550,942
Total Liabilities and Capital $2,677,452 $4,246,754 $6,322,606

Net Worth $1,998,719 $3,491,010 $5,550,942

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7.7 Business Ratios

The table follows with our main business ratios. We do intend to improve gross margin and
collection days. Industry profile ratios based on the Standard Industrial Classification (SIC)
code 1442, Construction Sand and Gravel, are shown for comparison.

Table: Ratios

Ratio Analysis
2001 2002 2003 Industry Profile
Sales Growth 978.28% 34.76% 29.18% 11.10%

Percent of Total Assets

Accounts Receivable 2.06% 1.75% 1.52% 14.30%
Inventory 10.97% 3.85% 3.07% 6.70%
Other Current Assets 0.00% 0.00% 0.00% 32.60%
Total Current Assets 61.22% 76.11% 84.43% 53.60%
Long-term Assets 38.78% 23.89% 15.57% 46.40%
Total Assets 100.00% 100.00% 100.00% 100.00%

Current Liabilities 1.52% 3.62% 3.25% 31.90%

Long-term Liabilities 23.83% 14.17% 8.95% 26.20%
Total Liabilities 25.35% 17.80% 12.20% 58.10%
Net Worth 74.65% 82.20% 87.80% 41.90%

Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 61.97% 71.89% 73.42% 39.10%
Selling, General & Administrative Expenses 30.36% 30.94% 29.69% 19.60%
Advertising Expenses 0.22% 0.18% 0.15% 0.10%
Profit Before Interest and Taxes 44.76% 56.46% 59.76% 3.70%

Main Ratios
Current 40.18 21.02 25.95 1.68
Quick 32.98 19.95 25.00 1.22
Total Debt to Total Assets 25.35% 17.80% 12.20% 58.10%
Pre-tax Return on Net Worth 56.95% 57.00% 49.48% 3.70%
Pre-tax Return on Assets 42.51% 46.85% 43.44% 8.80%

Additional Ratios 2001 2002 2003

Net Profit Margin 31.66% 41.07% 43.88% n.a
Return on Equity 42.71% 42.75% 37.11% n.a

Activity Ratios
Accounts Receivable Turnover 46.53 46.53 46.53 n.a
Collection Days 60 7 7 n.a
Inventory Turnover 0.77 2.13 3.44 n.a
Accounts Payable Turnover 41.71 12.17 12.17 n.a
Payment Days 28 18 26 n.a
Total Asset Turnover 1.01 0.86 0.74 n.a

Debt Ratios
Debt to Net Worth 0.34 0.22 0.14 n.a
Current Liab. to Liab. 0.06 0.20 0.27 n.a

Liquidity Ratios
Net Working Capital $1,598,305 $3,078,596 $5,132,528 n.a

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Interest Coverage 17.58 33.10 48.04 n.a

Additional Ratios
Assets to Sales 0.99 1.17 1.35 n.a
Current Debt/Total Assets 2% 4% 3% n.a
Acid Test 31.63 19.47 24.54 n.a
Sales/Net Worth 1.35 1.04 0.85 n.a
Dividend Payout 0.00 0.00 0.00 n.a

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 Appendix

Table: Sales Forecast

Sales Forecast
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Unit Sales
Asphalt 0% 0 0 0 4,000 6,000 9,000 9,000 9,000 4,500 4,000 0 0
Crusher Fines - for Asphalt 0% 0 0 0 1,600 2,400 3,600 3,600 3,600 1,800 1,600 0 0
3/4 in. ABC - for Asphalt 0% 0 0 0 1,600 2,400 3,600 3,600 3,600 1,800 1,600 0 0
1/2 in. Screened Rock - for Asphalt 0% 0 0 0 800 1,200 1,800 1,800 1,800 900 800 0 0
3 in. ABC 0% 1,000 1,300 1,500 2,000 2,000 2,500 3,500 3,000 2,500 2,000 1,500 1,000
3/4 in. ABC 0% 1,200 1,600 2,000 2,600 2,800 3,500 4,500 3,800 3,000 2,700 2,000 1,500
Other Screened Rock 0% 300 500 700 800 800 1,000 1,000 1,500 1,300 1,100 500 500
Sand 0% 100 300 500 1,000 1,000 1,500 1,500 2,000 1,500 500 300 300
Cobble 0% 100 100 500 1,000 1,500 1,000 500 500 300 200 200 200
Boulders 0% 50 100 150 200 250 250 250 250 250 200 100 50
Topsoil 0% 0 0 200 700 1,000 1,500 1,500 500 500 300 200 100
Other Dirt Products 0% 300 500 700 800 800 1,000 1,000 1,500 1,300 1,100 500 500
Total Unit Sales 3,050 4,400 6,250 17,100 22,150 30,250 31,750 31,050 19,650 16,100 5,300 4,150

Unit Prices Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Asphalt $36.00 $36.00 $36.00 $36.00 $36.00 $36.00 $36.00 $36.00 $36.00 $36.00 $36.00 $36.00
Crusher Fines - for Asphalt $10.50 $10.50 $10.50 $10.50 $10.50 $10.50 $10.50 $10.50 $10.50 $10.50 $10.50 $10.50
3/4 in. ABC - for Asphalt $5.50 $5.50 $5.50 $5.50 $5.50 $5.50 $5.50 $5.50 $5.50 $5.50 $5.50 $5.50
1/2 in. Screened Rock - for Asphalt $8.00 $8.00 $8.00 $8.00 $8.00 $8.00 $8.00 $8.00 $8.00 $8.00 $8.00 $8.00
3 in. ABC $4.50 $4.50 $4.50 $4.50 $4.50 $4.50 $4.50 $4.50 $4.50 $4.50 $4.50 $4.50
3/4 in. ABC $5.50 $5.50 $5.50 $5.50 $5.50 $5.50 $5.50 $5.50 $5.50 $5.50 $5.50 $5.50
Other Screened Rock $9.00 $9.00 $9.00 $9.00 $9.00 $9.00 $9.00 $9.00 $9.00 $9.00 $9.00 $9.00
Sand $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00
Cobble $13.00 $13.00 $13.00 $13.00 $13.00 $13.00 $13.00 $13.00 $13.00 $13.00 $13.00 $13.00
Boulders $9.00 $9.00 $9.00 $9.00 $9.00 $9.00 $9.00 $9.00 $9.00 $9.00 $9.00 $9.00
Topsoil $15.00 $15.00 $15.00 $15.00 $15.00 $15.00 $15.00 $15.00 $15.00 $15.00 $15.00 $15.00
Other Dirt Products $2.50 $2.50 $2.50 $2.50 $2.50 $2.50 $2.50 $2.50 $2.50 $2.50 $2.50 $2.50

Sales
Asphalt $0 $0 $0 $144,000 $216,000 $324,000 $324,000 $324,000 $162,000 $144,000 $0 $0
Crusher Fines - for Asphalt $0 $0 $0 $16,800 $25,200 $37,800 $37,800 $37,800 $18,900 $16,800 $0 $0
3/4 in. ABC - for Asphalt $0 $0 $0 $8,800 $13,200 $19,800 $19,800 $19,800 $9,900 $8,800 $0 $0
1/2 in. Screened Rock - for Asphalt $0 $0 $0 $6,400 $9,600 $14,400 $14,400 $14,400 $7,200 $6,400 $0 $0

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 Appendix

3 in. ABC $4,500 $5,850 $6,750 $9,000 $9,000 $11,250 $15,750 $13,500 $11,250 $9,000 $6,750 $4,500
3/4 in. ABC $6,600 $8,800 $11,000 $14,300 $15,400 $19,250 $24,750 $20,900 $16,500 $14,850 $11,000 $8,250
Other Screened Rock $2,700 $4,500 $6,300 $7,200 $7,200 $9,000 $9,000 $13,500 $11,700 $9,900 $4,500 $4,500
Sand $1,000 $3,000 $5,000 $10,000 $10,000 $15,000 $15,000 $20,000 $15,000 $5,000 $3,000 $3,000
Cobble $1,300 $1,300 $6,500 $13,000 $19,500 $13,000 $6,500 $6,500 $3,900 $2,600 $2,600 $2,600
Boulders $450 $900 $1,350 $1,800 $2,250 $2,250 $2,250 $2,250 $2,250 $1,800 $900 $450
Topsoil $0 $0 $3,000 $10,500 $15,000 $22,500 $22,500 $7,500 $7,500 $4,500 $3,000 $1,500
Other Dirt Products $750 $1,250 $1,750 $2,000 $2,000 $2,500 $2,500 $3,750 $3,250 $2,750 $1,250 $1,250
Total Sales $17,300 $25,600 $41,650 $243,800 $344,350 $490,750 $494,250 $483,900 $269,350 $226,400 $33,000 $26,050

Direct Unit Costs Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Asphalt 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
Crusher Fines - for Asphalt 0.00% $5.50 $5.50 $5.50 $5.50 $5.50 $5.50 $5.50 $5.50 $5.50 $5.50 $5.50 $5.50
3/4 in. ABC - for Asphalt 0.00% $10.50 $10.50 $10.50 $10.50 $10.50 $10.50 $10.50 $10.50 $10.50 $10.50 $10.50 $10.50
1/2 in. Screened Rock - for Asphalt 0.00% $8.00 $8.00 $8.00 $8.00 $8.00 $8.00 $8.00 $8.00 $8.00 $8.00 $8.00 $8.00
3 in. ABC 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
3/4 in. ABC 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
Other Screened Rock 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
Sand 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
Cobble 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
Boulders 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
Topsoil 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
Other Dirt Products 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

Direct Cost of Sales

Asphalt $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Crusher Fines - for Asphalt $0 $0 $0 $8,800 $13,200 $19,800 $19,800 $19,800 $9,900 $8,800 $0 $0
3/4 in. ABC - for Asphalt $0 $0 $0 $16,800 $25,200 $37,800 $37,800 $37,800 $18,900 $16,800 $0 $0
1/2 in. Screened Rock - for Asphalt $0 $0 $0 $6,400 $9,600 $14,400 $14,400 $14,400 $7,200 $6,400 $0 $0
3 in. ABC $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
3/4 in. ABC $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other Screened Rock $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Sand $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Cobble $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Boulders $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Topsoil $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other Dirt Products $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Subtotal Direct Cost of Sales $0 $0 $0 $32,000 $48,000 $72,000 $72,000 $72,000 $36,000 $32,000 $0 $0

Page 2
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Page 3
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Table: Personnel

Personnel Plan
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Production Personnel
Production Manager $1,800 $2,000 $2,000 $2,100 $2,300 $2,300 $2,300 $2,300 $2,300 $2,300 $2,300 $2,300
Crusher 1 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000
Crusher 2 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800
Crusher 3 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800
Asphalt 1 $0 $0 $0 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $0 $0
Asphalt 2 $0 $0 $0 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $0 $0
Asphalt 3 $0 $0 $0 $0 $1,800 $1,800 $1,800 $1,800 $1,800 $0 $0 $0
Asphalt Loader $0 $0 $0 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $0 $0
Loader $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800
Subtotal $9,200 $9,400 $9,400 $14,900 $16,900 $16,900 $16,900 $16,900 $16,900 $15,100 $9,700 $9,700

Sales and Marketing Personnel

Sales/Marketing 1 $0 $0 $2,100 $2,100 $2,100 $2,100 $2,100 $2,100 $2,100 $2,100 $2,100 $2,100
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal $0 $0 $2,100 $2,100 $2,100 $2,100 $2,100 $2,100 $2,100 $2,100 $2,100 $2,100

General and Administrative Personnel

Administrator $2,000 $2,000 $2,500 $2,000 $2,000 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal $2,000 $2,000 $2,500 $2,000 $2,000 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500

Other Personnel
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 6 6 7 10 11 11 11 11 11 10 9 9

Total Payroll $11,200 $11,400 $14,000 $19,000 $21,000 $21,500 $21,500 $21,500 $21,500 $19,700 $14,300 $14,300

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Table: General Assumptions

General Assumptions
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Plan Month 1 2 3 4 5 6 7 8 9 10 11 12
Current Interest Rate 13.00% 13.00% 13.00% 13.00% 13.00% 13.00% 13.00% 13.00% 13.00% 13.00% 13.00% 13.00%
Long-term Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%
Tax Rate 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00%

Other 0 0 0 0 0 0 0 0 0 0 0 0

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Table: Profit and Loss

Pro Forma Profit and Loss

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Sales $17,300 $25,600 $41,650 $243,800 $344,350 $490,750 $494,250 $483,900 $269,350 $226,400 $33,000 $26,050
Direct Cost of Sales $0 $0 $0 $32,000 $48,000 $72,000 $72,000 $72,000 $36,000 $32,000 $0 $0
Production Payroll $9,200 $9,400 $9,400 $14,900 $16,900 $16,900 $16,900 $16,900 $16,900 $15,100 $9,700 $9,700
Asphalt Plant Maintenance $0 $0 $0 $19,920 $29,880 $44,820 $44,820 $44,820 $22,410 $19,920 $0 $0
Asphalt By-Product Additives $0 $0 $0 $24,000 $36,000 $54,000 $54,000 $54,000 $27,000 $24,000 $0 $0
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Cost of Sales $9,200 $9,400 $9,400 $90,820 $130,780 $187,720 $187,720 $187,720 $102,310 $91,020 $9,700 $9,700

Gross Margin $8,100 $16,200 $32,250 $152,980 $213,570 $303,030 $306,530 $296,180 $167,040 $135,380 $23,300 $16,350
Gross Margin % 46.82% 63.28% 77.43% 62.75% 62.02% 61.75% 62.02% 61.21% 62.02% 59.80% 70.61% 62.76%

Operating Expenses

Sales and Marketing Expenses

Sales and Marketing Payroll $0 $0 $2,100 $2,100 $2,100 $2,100 $2,100 $2,100 $2,100 $2,100 $2,100 $2,100
Advertising/Promotion $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500
Travel $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100
Miscellaneous $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200
Total Sales and Marketing Expenses $800 $800 $2,900 $2,900 $2,900 $2,900 $2,900 $2,900 $2,900 $2,900 $2,900 $2,900
Sales and Marketing % 4.62% 3.13% 6.96% 1.19% 0.84% 0.59% 0.59% 0.60% 1.08% 1.28% 8.79% 11.13%

General and Administrative Expenses

General and Administrative Payroll $2,000 $2,000 $2,500 $2,000 $2,000 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500
Sales and Marketing and Other
$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Expenses
Depreciation $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500
Leased Equipment $10,400 $10,400 $10,400 $10,400 $10,400 $10,400 $10,400 $10,400 $10,400 $10,400 $10,400 $10,400
Equipment Expense $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 $1,500
Equipment Fuel $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800
Utilities $750 $750 $750 $750 $750 $750 $750 $750 $750 $750 $750 $750
Insurance $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800 $1,800

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Office Expense $400 $400 $400 $400 $400 $400 $400 $400 $400 $400 $400 $400
Miscellaneous $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000
Pit Lease $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000
Payroll Taxes 15% $1,680 $1,710 $2,100 $2,850 $3,150 $3,225 $3,225 $3,225 $3,225 $2,955 $2,145 $2,145
Other General and Administrative
$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Expenses
Total General and Administrative
$34,830 $34,860 $35,750 $36,000 $36,300 $36,875 $36,875 $36,875 $36,875 $36,605 $35,795 $35,795
Expenses
General and Administrative % 201.33% 136.17% 85.83% 14.77% 10.54% 7.51% 7.46% 7.62% 13.69% 16.17% 108.47% 137.41%

Other Expenses:
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
Contract/Consultants $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Other Expenses $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other % 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

Total Operating Expenses $35,630 $35,660 $38,650 $38,900 $39,200 $39,775 $39,775 $39,775 $39,775 $39,505 $38,695 $38,695

Profit Before Interest and Taxes ($27,530) ($19,460) ($6,400) $114,080 $174,370 $263,255 $266,755 $256,405 $127,265 $95,875 ($15,395) ($22,345)
EBITDA ($26,030) ($17,960) ($4,900) $115,580 $175,870 $264,755 $268,255 $257,905 $128,765 $97,375 ($13,895) ($20,845)
Interest Expense $5,616 $5,616 $6,191 $6,191 $6,191 $5,791 $5,791 $5,791 $5,391 $5,391 $5,391 $5,316
Taxes Incurred ($8,287) ($6,269) ($3,148) $26,972 $42,045 $64,366 $65,241 $62,653 $30,468 $22,621 ($5,197) ($6,915)

Net Profit ($24,860) ($18,807) ($9,443) $80,917 $126,134 $193,098 $195,723 $187,960 $91,405 $67,863 ($15,590) ($20,746)

Net Profit/Sales -143.70% -73.47% -22.67% 33.19% 36.63% 39.35% 39.60% 38.84% 33.94% 29.97% -47.24% -79.64%

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Table: Cash Flow

Pro Forma Cash Flow

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Cash Received

Cash from Operations

Cash Sales $865 $1,280 $2,083 $12,190 $17,218 $24,538 $24,713 $24,195 $13,468 $11,320 $1,650 $1,303
Cash from Receivables $41,677 $42,225 $16,698 $24,828 $45,969 $234,794 $331,769 $466,323 $469,210 $452,911 $254,522 $208,956
Subtotal Cash from Operations $42,542 $43,505 $18,780 $37,018 $63,186 $259,332 $356,481 $490,518 $482,677 $464,231 $256,172 $210,258

Additional Cash Received

Sales Tax, VAT, HST/GST Received 0.00% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Current Borrowing $0 $0 $60,000 $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 $50,000 $0 $0 $0 $0 $0 $0 $0
Subtotal Cash Received $42,542 $43,505 $78,780 $37,018 $113,186 $259,332 $356,481 $490,518 $482,677 $464,231 $256,172 $210,258

Expenditures Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Expenditures from Operations

Cash Spending $11,200 $11,400 $14,000 $19,000 $21,000 $21,500 $21,500 $21,500 $21,500 $19,700 $14,300 $14,300
Bill Payments $19,870 $29,528 $31,643 $38,086 $111,628 $149,547 $202,681 $203,441 $198,206 $118,491 $102,919 $32,730
Subtotal Spent on Operations $31,070 $40,928 $45,643 $57,086 $132,628 $171,047 $224,181 $224,941 $219,706 $138,191 $117,219 $47,030

Additional Cash Spent

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 $30,000 $0 $0 $30,000 $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 $9,000 $0 $0 $9,000 $0 $0 $9,000 $0 $0 $9,000
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

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Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Cash Spent $31,070 $40,928 $54,643 $57,086 $132,628 $210,047 $224,181 $224,941 $258,706 $138,191 $117,219 $56,030

Net Cash Flow $11,472 $2,577 $24,137 ($20,068) ($19,441) $49,285 $132,300 $265,577 $223,971 $326,040 $138,954 $154,228

Cash Balance $12,851 $15,428 $39,565 $19,497 $56 $49,340 $181,640 $447,217 $671,188 $997,228 $1,136,182 $1,290,410

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 Appendix

Table: Balance Sheet

Pro Forma Balance Sheet

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Assets Starting Balances

Current Assets
Cash $1,379 $12,851 $15,428 $39,565 $19,497 $56 $49,340 $181,640 $447,217 $671,188 $997,228 $1,136,182 $1,290,410
Accounts Receivable $83,354 $58,112 $40,207 $63,077 $269,859 $551,022 $782,441 $920,210 $913,591 $700,264 $462,433 $239,261 $55,052
Inventory $657,640 $657,640 $657,640 $657,640 $625,640 $577,640 $505,640 $433,640 $361,640 $325,640 $293,640 $293,640 $293,640
Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Current Assets $742,373 $728,603 $713,275 $760,282 $914,996 $1,128,718 $1,337,421 $1,535,489 $1,722,449 $1,697,092 $1,753,301 $1,669,082 $1,639,102

Long-term Assets
Long-term Assets $1,056,350 $1,056,350 $1,056,350 $1,056,350 $1,056,350 $1,056,350 $1,056,350 $1,056,350 $1,056,350 $1,056,350 $1,056,350 $1,056,350 $1,056,350
Accumulated Depreciation $0 $1,500 $3,000 $4,500 $6,000 $7,500 $9,000 $10,500 $12,000 $13,500 $15,000 $16,500 $18,000
Total Long-term Assets $1,056,350 $1,054,850 $1,053,350 $1,051,850 $1,050,350 $1,048,850 $1,047,350 $1,045,850 $1,044,350 $1,042,850 $1,041,350 $1,039,850 $1,038,350
Total Assets $1,798,723 $1,783,453 $1,766,625 $1,812,132 $1,965,346 $2,177,568 $2,384,771 $2,581,339 $2,766,799 $2,739,942 $2,794,651 $2,708,932 $2,677,452

Liabilities and Capital Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Current Liabilities
Accounts Payable $18,888 $28,478 $30,457 $34,407 $106,704 $142,792 $195,897 $196,743 $194,242 $114,980 $101,826 $31,697 $29,963
Current Borrowing $0 $0 $0 $60,000 $60,000 $60,000 $30,000 $30,000 $30,000 $0 $0 $0 $0
Other Current Liabilities $10,835 $10,835 $10,835 $10,835 $10,835 $10,835 $10,835 $10,835 $10,835 $10,835 $10,835 $10,835 $10,835
Subtotal Current Liabilities $29,723 $39,313 $41,292 $105,242 $177,539 $213,627 $236,732 $237,578 $235,077 $125,815 $112,661 $42,532 $40,798

Long-term Liabilities $673,936 $673,936 $673,936 $664,936 $664,936 $664,936 $655,936 $655,936 $655,936 $646,936 $646,936 $646,936 $637,936
Total Liabilities $703,659 $713,249 $715,228 $770,178 $842,475 $878,563 $892,668 $893,514 $891,013 $772,751 $759,597 $689,468 $678,734

Paid-in Capital $1,084,896 $1,084,896 $1,084,896 $1,084,896 $1,084,896 $1,134,896 $1,134,896 $1,134,896 $1,134,896 $1,134,896 $1,134,896 $1,134,896 $1,134,896
Retained Earnings $5,084 $10,168 $10,168 $10,168 $10,168 $10,168 $10,168 $10,168 $10,168 $10,168 $10,168 $10,168 $10,168
Earnings $5,084 ($24,860) ($43,667) ($53,110) $27,807 $153,941 $347,039 $542,762 $730,722 $822,127 $889,990 $874,401 $853,655
Total Capital $1,095,064 $1,070,204 $1,051,397 $1,041,954 $1,122,871 $1,299,005 $1,492,103 $1,687,826 $1,875,786 $1,967,191 $2,035,054 $2,019,465 $1,998,719
Total Liabilities and Capital $1,798,723 $1,783,453 $1,766,625 $1,812,132 $1,965,346 $2,177,568 $2,384,771 $2,581,339 $2,766,799 $2,739,942 $2,794,651 $2,708,932 $2,677,452

Net Worth $1,095,064 $1,070,204 $1,051,397 $1,041,954 $1,122,871 $1,299,005 $1,492,103 $1,687,826 $1,875,786 $1,967,191 $2,035,054 $2,019,465 $1,998,719

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