Lumen Foods' Logo Lumen Foods' Business Plan

Executive Summary

Purpose
General

Stonewall's Jerquee - Teriyaki
To provide due diligence information to pre-qualified buyers of the Lumen Foods' operation, the core business of Herbologics Ltd. in Lake Charles, LA. This business has been in continuous operation since 1986, has been profitable since 1990, currently grosses over $700,000 per year, and is currently for sale for $380,000 : $130,000 for its commercial real estate holdings -- (there is an existing $138,000 outstanding mortgage; however, the property was recently appraised at $481,680) -- and $250,000 for the Lumen Foods operation itself.
Lumen Foods' logo FACTOID --- "Even in the 1980's, when Lumen Foods was suffering heavy losses -- and even through a 1989 reorganization... secured creditors got paid, in full, every time, on time, with no exceptions. Since 1990, Lumen Foods has not lost money and it has been consistently profitable for its owners since 1993 (i.e. for the past 13 years), effective income regulated through 'discretionary expensing' " ...

Legal Structure
Legal Name Herbologics, Ltd. (a Louisiana "C" corporation)
Core Business
(d/b/a)
 Lumen Foods
Lead Products Imitation meat products, primarily Stonewall's Jerquee (tm), the company's brand name for its line of meatless jerkies.
Incorporated August, 1992 (Louisiana); however, current management founded the company in Feb., 1986.
Headquarters Lake Charles, Louisiana -- since inception.
Relevant Prior
Business Activity		 Lumen Foods formally operated as Lumen Food Corporation from February, 1986 to October, 1992. Perpetually undercapitalized in its early years, Lumen Food Corp. was reorganized in Sept., 1989, and resold to the newly formed Herbologics, Ltd. at the end of 1992.
Financial
Highlights
Accounting Period The calendar year option was not chosen when the Company filed its SS-4 in 1992, so, by default, the company's fiscal has always started on August 1st and ended the following July 31st. Thus the quarterly breakdown is as follows:
1st Quarter:  Aug 01 - Oct 31
2nd Quarter:  Nov 01 - Jan 31
3rd Quarter:  Feb 01 - Apr 30
4th Quarter:  May 01 - Jul 31
Accounting Method Accrual Basis; inventory valuation: FIFO.
Financial Statements: See income statement and balance sheet for the quarter (and year) up to July 31, 2006. These statements will remain our most current financials until the fourth quarter results are available in early December, 2006. (For historics, we have Lumen Foods' financial synopsis, covering its first 11 years of business ['86-'97] -- scanned from an earlier Business Plan.)
Valuation Comments The owners are currently seeking to sell the Lumen Foods operation -- excluding all liabilities (except its outstanding real estate mortgage of $138,000), cash on accounts, and receivables for $380,000. When deducing the $130,000 portion of this figure allocated to real estate, the resulting $250,000 for the business represents substantially less than half of the company's yearly gross. It figure was chosen so that if new owner(s) used debt financing, the purchase price could easily be financed from operational profit, even in the absence of growth. Prospects should note that the company's principals have been very conservative in their managerial accounting. Maximum depreciation conventions have been utilized and most equipment (both new and used purchases) are now "off the books." There is no property that the Company owns that does not have a greater liquidation value than it does a book value.
Facilities & Properties
"Wilshire" Property:
409 Scott St.
411 Scott St.
2116 Hodges St.
2118 Hodges St.
2120 Hodges St.
2122 Hodges St.
2124 Hodges St.
2126 Hodges St.
2128 Hodges St.

"Thermal" Property:
2200 Hodges St.
2202 Hodges St.
 Lumen Foods' home office The operation is currently located in the mid-town section of Lake Charles, Louisiana. This facility, together with the "Thermal Property" (2200-2202 Hodges Street: see below) were appraised by Capital One Bank at $481,680 in October, 2006. Total square footage: over 20,000, of which is 7,000 is warehouse and manufacturing. Most of the remainder is office. [See plat, overview of structures [409 Scott St. is shaded in grey], and photos of improvements.] The offices and meat analog manufacturing facility are located in 7,500 sq. ft. of property at 409 Scott Street. The Company has, for all intents and purposes, owned this property from May, 1995 to the present (See Property Disposition below).
The 2200-2202 Hodges Street structure sits on 0.55 acres (3 lots), of which the Company uses 4,500 sq. ft. for storage of raw materials. The Company bought this property in December, 1993. A brand new 2,000 square foot warehouse was built in early-to-mid November, 2006 to accommodate additional dry goods.
Ownership & Management
Shareholder(s) Cathryn E. Caton, wife of the Company's founder, Greg Caton, is currently Herbologics' sole shareholder.
Management The current Management of the company consists of:

President Cathryn E. Caton
Technical Consultant Gregory Caton
Plant Manager Catherine Webster
Shipping / Receiving / Inventory Manager Zoe Farris
Customer Service Tabetha LeDoux
There is a Management page on this subdirectory, a staff page on the root, and Mr. Caton has a more extensive bio at gregcaton.com.
Products Lines
Products Although the company can manufacture a wide variety of meat replacement products (see Heartline), a decision was made in the early 2000's to drop the "cooking vegetarian meats" and the survival-related dry blend meals and focus on the company's more profitable snack line, particularly Stonewall's Jerquee. Stonewall's now constitutes better than 90% of the Company's revenue.
In-House Brands & Distribution Channels Heartline Meatless Meats, Cajun Jerky, and Stonewall's Jerky historically, but -- again -- the first two lines have been dropped to focus on Stonewall's. Most distribution takes place through health food wholesalers, the majority of which have had a working relationship with Lumen Foods since the late 1980's.
Internet Presence
Top Level Domains soybean.com is the primary domain and is the name people most identify with the Company's web site. Other "parked domains" that are owned by Herbologics and link directly to the Company's web site include: soyfood.com, and and lumenfds.com (its first domain: July 1995).
Web Traffic Levels Relative to its competitors, Lumen Foods has a respectable internet presence. Measured in ecommerce dollars and not "hits," the website generates an average of approximately $15,000 a month in high profit retail sales. As states, the majority of the balance is sold through distributors. Hit count reports are confidential and accessible online, using a password. Management can provide hard copies for eligible prospective buyers.
Other "Quick" Facts
Pending Regulatory Action There is no regulatory action pending at this time.
Pending Lawsuits & Other Legal Matters The Company enjoys an excellent credit rating, excellent vendor relations and a good D & B rating.
There is no pending civil litigation, against Lumen Foods or its principals.
However, in September, 2003, the U.S. Food & Drug Administration prosecuted Lumen Foods' Founder, Greg Caton, in conjunction with his online work as an herbalist, the entirety of his herbal work still viewable on the Alpha Omega Labs' website. Included in the plea agreement was the forfeiture of the above stated real property. (See "Property Resolution" below). On May 12, 2006 the U.S. Department of Justice sent a Release Agreement to Company Management, and in exchange for holding the U.S. Government harmless of any of the expenses related to the Forfeiture, the Property was returned to Herbologics, Ltd.
As an aside, various journalists and online commentators have written about the Alpha Omega Labs case, see:

Mark Lipsman's article on Good Health Info.net.
Aspartame site article (Canada)
Dan Raber article
Chris Gupta article (Canada)
The Canadian Tax Tyranny site
FDA heavihandness explained
Property Disposition The return of the properties from which Lumen Foods operates (all of which can be viewed on our rental page, so called because it has rental units) provides prospective buyers with the opportunity to purchase Lumen Foods' real property for the $130,000 asking price, plus the assumption of its $138,000 loan balance, or $268,000, an amount that is equal to what Lumen Foods paid for it.
QUICK LINKS
Opening Business Plan Financials Pictorial
Asset Detail History/Future Growth Product Line Management
Credit Rating Wholesale Accts Risk Top of Page