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The following is an excerpt from a S-1 SEC Filing, filed by GRANTO, INC. on 4/23/2008.
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GRANTO, INC. - S-1 - 20080423 - BUSINESS
Business of Company

We are engaged in the business of developing, manufacturing, and selling mechanical chalkboard erasers with built-in micro vacuums specifically for office and school supply retailers and teachers in the Philippines and other Asian countries as end users. Such a product will allow teachers to efficiently and thoroughly clean chalkboards without the detrimental health effects that often result from breathing chalk dust propelled into the air and lungs by chalkboard erasers presently in use in the Asian market. We are currently in the process of designing and developing our Product, and we are continually refining this design through experiments, testing different engine speeds and brush lengths in order to determine optimum features for maximum cleaning performance and chalk-dust absorption. When we are satisfied that our Product will compete effectively in the School Supply Industry by being the most practical and effective chalkboard eraser, we will begin the manufacture and distribution of the Product to stationery retailers.

Our offices are located at 137 4th Street, Riverside Vill. Sta Lucia, Pasig City, the Philippines.

Chalkboards and Erasers

Chalkboards have long been a standard school supply in the Asian educational system, and they are also used in many establishments as a form of advertising upcoming events and menus. Chalkboard erasers are important supplements to chalkboards. They make chalkboards reusable and provide an easy means of cleaning up writings made on the board.

Chalkboard erasers typically consist of a block of wood covered by a felt pad, or felt strips that are bound together with sticky paper or cardboard that also serves as a handle. The felt strips are used to wipe off chalk dust. However, chalkboard erasers get dirty very quickly, and once this happens they no longer remove chalk from a board. They require high maintenance to prevent too much accumulation of dust particles that prevent them from working and can make allergies and breathing a problem. The most common way of cleaning traditional chalkboard erasers is by repeatedly pounding the eraser against a metal filter or the side of a wall, a process that forces the chalk dust into the surrounding air.

 
Chalk Dust Hazards

Chalk dust is the natural by-product of using a chalk crayon on a chalkboard. As the chalk is scraped across the rough surface of the chalkboard or erased with a traditional eraser, particles of chalk dust are sent out into the surrounding air. Some of this chalk dust settles to the ground or is ventilated outside, but much of it falls on clothing, furniture, electronic equipment and shelves. Teachers and students also inhale a portion of this chalk dust, which usually becomes trapped in the mucus layers of the throat and upper lungs.

While the main ingredients of chalk dust are considered to be non-toxic , which simply means they do not pose a threat when ingested, chalk dust can and does accumulate in the human respiratory system and can create long-term health problems due to overexposure.  So while swallowing a piece of white chalkboard chalk won't kill you, breathing in chalk dust for a number of years can create or trigger respiratory problems.  A small amount of inhaled chalk dust is not considered harmful. Those with healthy respiratory systems can expel the chalk dust through coughing, and the remaining material should be absorbed safely into the body. For those with allergies and chronic breathing issues such as asthma, however, exposure to chalk dust can trigger a reaction. In fact, many school systems strongly urge teachers to move students with respiratory problems away from the chalkboard area. Chalkboards, trays and erasers filled with chalk dust should also be cleaned regularly.

Standard chalk for classroom use is generally made from gypsum or calcium carbonate, a processed form of natural limestone. The traditional method of creating white chalk was to form a clay-like paste with the calcium carbonate and allow it to cure in chalk-shaped molds. This chalk worked well with slate chalkboards, but it also generated a significant amount of chalk dust that floated into the surrounding air. Teachers who used traditional chalk for a number of years often developed respiratory problems, although they were not generally considered severe.

There is now a product called dustless chalk , designed to address the chalk dust issue. Instead of forming chalk crayons through individual molds, the new chalk mixture is extruded into ropes, then cut to size and allowed to dry. This dustless chalk does generate a form of chalk dust, but the particles are much heavier and tend to fall directly to the floor instead of floating in the air. Exposure to airborne chalk dust has been reduced, but the accumulation of chalk dust elsewhere is still problematic.

Beyond the human health aspects of chalk dust exposure, there are also potential electronic hazards. Devices such as computers and digital versatile disc (DVD) players stored inside classrooms can suffer damage from accumulated chalk dust. As the dust particles circulate throughout the room, cooling fans may draw them into the computers' inner workings. As dust builds up on the motherboard and other heat-sensitive parts, the risk of overheating increases. Chalk dust can also cause severe damage to sensitive electronics, such as the laser reader of a DVD player or the playback heads of a video cassette recorder (VCR).

Chalk dust is considered an irritant and an occupational hazard by a number of occupational safety organizations around the world. Many safety experts suggest using a filtered mask over the mouth and nose and taking a number of breaks in a fresh air environment for those who work around chalk dust for extended periods of time.
 

While some chalkboards have been replaced by whiteboards, there are many advantages to using the chalkboard. Whiteboards produce their own kind of "dust": particles of the dried marker fluid. This dust is much darker in color than chalk dust and is heavier, so it doesn't travel as far, but it stains the walls and floors underneath the whiteboards. Expensive solvents may remove some but not all stains. Erasers and chalk trays are obviously intended to capture and confine dust. While essential, they do not solve the entire problem. Chalk in bulk costs less than five cents a stick; marker pens are ten times as expensive. Chalk is seldom stolen; marker pens are frequently taken from classrooms. Chalk breaks if you drop it, but marker pens dry out quickly if left uncapped. You can look at a piece of chalk and see how much of it is left. Looking at a marker pen reveals nothing. Marker pens can be a budget drain for a school or university.  Chalkboards can still work fine after 30-50 years of use, while whiteboards require solvents to return them to their like-new condition as they age. Solvent is expensive and the cleaning process is laborious. Thus, financial constraints often lead to chalkboards being utilized over whiteboards in the Philippines and other Asian countries.

Our Product

The rising demand in the Philippines and other Asian countries for chalkboards and chalkboard erasers in conjunction with an increasing awareness of the detrimental effects of chalk dust have resulted in what we anticipate will be a highly receptive potential market for our Product.  Teachers and students are seeking a product that will efficiently and thoroughly clean a chalkboard without the negative effects of propelled chalk dust. The health risks of inhaling chalk dust in addition to the damage it inflicts on electronic equipment in the classroom highlight the necessity of a chalkboard eraser that cleans effectively and absorbs chalk dust instead of forcing it into the air.

We are in the process of developing a chalkboard eraser (see figure 1 below) that contains a micro-engine system that works like a vacuum to collect the chalk dust as it cleans the chalkboard. Our Product is designed specifically for school and office supply retailers and teachers as end users in the Philippines and other Asian countries. Our product is operated by a simple on/off switch (1), which activates the micro engine (2). As the brush (3) wipes the chalk from the chalkboard, the vacuum created by the micro engine draws the chalk dust through the powder vents (4) located in parallel with the brush sections and into the powder collecting room (5). The micro engine is powered by two replaceable AA batteries (6), and there is a removable cover (7) to allow the disposal of the powder collected.
 

GRAPHIC1
Figure 1


We are in the process of refining the design for our Product, which will be integral to its success. We are designing and developing our Product by conducting experiments to improve on quality and cost. These experiments include testing different engine speeds and brush lengths in order to determine optimum features for maximum cleaning performance and chalk-dust absorption. We are also experimenting with our Product’s use near electronic devices, including the examination of these devices to determine if any chalk dust accumulates on them following the use of our Product.  We are searching for the lowest priced components available in the market in our efforts to reduce cost. We are researching the benefits of adding more components to further improve our Product. We are also improving our Product's essential qualities, such as cleaning ability, chalk-dust absorption, and endurance over time with repeated use. Refining these qualities will ensure that our Product is practicable, affordable, and beneficial.

Competition

We compete with a number of established manufacturers, importers, and distributors who sell chalkboard erasers and related items. These companies enjoy brand recognition which exceeds that of our brand name. We compete with several manufacturers, importers, and distributors who have significantly greater financial, distribution, advertising, and marketing resources than we do, including:

·  
The StikkiWorks Co. makes a Dust Muncher Chalkboard Eraser/Screen Cleaner that they state is made from a “revolutionary super absorbent material.”  StikkiWorks Co. claims this product “is the fastest, safest & most efficient way to clean chalkboards” and is “also exceptional for cleaning computer screens and all electronic equipment.”  They assert that it “absorbs dust instead of pushing it around…can be used over and over before washing… won’t scratch surfaces’” and can be “used dry.”
·  
Beijing Haur Ming Stationery Enterprise Co., Ltd. makes a Self Cleaning Chalk Board
 
that the company claims features: “no more chalk dust” and a push button remote-control operation with auto timer to set the cleaning times.  It is also touted as “easy to maintain and install.”
 
 
·  
Taiwan Innovative sells a vacuum product that is designed to sit near chalkboards and vacuum the chalk dust off standard chalkboard erasers. While this solves the problem of cleaning erasers without releasing dust into the air, it fails to address the problem of chalk dust being propelled into the air as chalkboards are erased.

There are also several companies that sell what is referred to as “dustless chalk,” which purportedly reduces the amount of inhaled chalk dust, though, as mentioned earlier, dust accumulation elsewhere is still problematic with use of this chalk.  These companies include:

·  
Quartet Manufacturing Company makes an Omega Nontoxic Low Dust Chalk in assorted colors, as well as a Quartet Deluxe Chalkboard Eraser/Cleaner made with laminated felt and a “special material” on the reverse side of the eraser that completes board cleaning.
·  
Crayola sells Anti-Dust Chalkboard Chalk they claim “keeps dust to a minimum.”  It is also certified non-toxic and recommended for ages 4 and up.

We compete primarily on the basis of quality, brand name recognition, and price. We believe that our success will depend upon our ability to remain competitive in our product area. The failure to compete successfully in the future could result in a material deterioration of customer loyalty and our image and could have a material adverse effect on our business.

Regulatory Matters

We are unaware of and do not anticipate having to expend significant resources to comply with any governmental regulations of the stationery industry. We are subject to the laws and regulations of those jurisdictions in which we plan to sell our product, which are generally applicable to business operations, such as business licensing requirements, income taxes and payroll taxes. In general, the development, manufacture, and sale of our Product in the Philippines and other Asian countries is not subject to special regulatory and/or supervisory requirements.

Employees

We have no other employees other than our officers and directors. Our President oversees all responsibilities in the areas of corporate administration, business development, and research. We intend to expand our current management to retain skilled directors, officers, and employees with experience relevant to our business focus. Our current management team is highly skilled in technical areas such as researching and developing our product, but not skilled in areas such as marketing our product and business management. Obtaining the assistance of individuals with and in-depth knowledge of operations and markets will allow us to build market share more effectively. We intend on employing sales representatives in the Philippines when our product is ready for production and shipping and in various provinces of China when we are ready to expand internationally.

Environmental Laws

We have not incurred and do not anticipate incurring any expenses associated with environmental laws.
 

Description of Property

We maintain our corporate office at 137 4th Street, Riverside Vill. Sta Lucia, Pasig City, the Philippines.

Plan of Operation

Historical results and trends should not be taken as indicative of future operations. Management's statements contained in this report that are not historical facts are forward-looking statements. Forward-looking statements, which are based on certain assumptions and describe future plans, strategies and expectations of the Company, are generally identifiable by use of the words "believe," "expect," "intend," "anticipate," "estimate," "project," "prospects," or similar expressions. The Company's ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse affect on the operations and future prospects of the Company on a consolidated basis include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.

Product Development

We intend to continue the development and refinement of our Product over the coming months. We will first focus on our experiments to improve the quality of our Product to increase its appeal to teachers. We feel our final Product will compete effectively in the marketplace due to its highly functional performance and beneficial health qualities relative to similar products in the marketplace.

Locate Suitable Manufacturing

We do not currently have any manufacturing facilities. Our management has contacted several general manufacturers in the Philippines and other Asian countries, and have begun negotiations for the manufacture of our Product on a contract basis. We are currently negotiating price, payment, customer guarantee, shipping, inventory, delivery schedule and returns. We plan to pursue this further upon the final development and commercialization of our Product. Production of our chalkboard eraser doesn't require any facilities or equipment beyond what is available to any general manufacturer. We could contract with any general manufacturer to produce our Product by following our instructions. We do not anticipate renting a warehouse at this stage of our business. The general manufacturer that will work with us will provide packaging, storage, and shipping service for us as part of our agreement. All of the raw materials necessary to produce our Product are available in the public marketplace. We will only accept wholesale orders from wholesale distributors. Once we receive wholesale orders, we will hold the order until certain quantities, which will be pre-negotiated with our general manufacturer, are attained. Then we will contract with our general manufacturer to produce our Product for us at pre-negotiated prices. Typically the
 
 
order will be shipped within five business days after we place the order.

Sales and Distribution Strategy

Our goal is for our chalkboard eraser to become a leading product in the marketplace in the Philippines. In order to achieve our goal, we intend to increase awareness of our Product with potential customers, who we anticipate will be major office and school supply chains as wholesale customers and teachers as end users. We intend to do this by engaging in the following:

·  
Attending national and regional school supply promotional events and conferences . There are events and conferences managed by regional and central institutions and organizations to promote school and office related products. We plan to attend a number of events attended by school and office supply merchants and stationery chain representatives in the order to further expose our product. These events will include trade meetings, promotional events, seminars, and conferences, such as the International Stationery and Office Products Fair Tokyo ("ISOT"), which are heavily attended by stationery products wholesalers and chain representatives, in order to further expose our Product.

·  
Developing direct marketing programs to attract retailers . In addition to attending the foregoing conferences and seminars, we intend to market directly to wholesalers and major school and office supply chains. Our marketing will include conducting seminars and the use of online and traditional advertising media such as newspapers and trade publications.

·  
Promoting to the public through internet-based and traditional media advertising . We intend to use Internet-based and traditional media to promote our product directly to the public to raise public awareness of our product. A health-conscious public could pull our Product through the supply chain if they are properly educated regarding our Product.

We will also mail our brochure to wholesale distributors, and, initially, we will do special promotions providing small amounts of our Product to a few major stores, while allowing them to pay us after three months. If the market shows an interest in our Product, they will then begin to order from us regularly. We will begin marketing from the Philippines, where our directors have many contacts, and we will then move forward in marketing our Product in China and other Asian countries.

Intellectual Property Protection

We intend to aggressively assert our rights under trade secret, unfair competition, trademark and copyright laws to protect our intellectual property, including product formulas, proprietary manufacturing processes and technologies, product research and concepts, and recognized trademarks. These rights are protected through the acquisition of patents and trademark registrations, the maintenance of trade secrets, the development of trade dress, and, where appropriate, litigation against those who are, in our opinion, infringing these rights.

We are currently consulting with law firms to protect our brand name and product design. While there can be no assurance that registered trademarks will protect our proprietary information, we
 
 
intend to assert our intellectual property rights against any infringer. Although any assertion of our rights can result in a substantial cost to, and diversion of effort by, our company, management believes that the protection of our intellectual property rights is a key component of our operating strategy.

Sales Personnel

We do not currently employ any sales personnel. In the short term, we intend to use the services of our management to sell our Product. As our Product approaches the manufacturing stage, however, we plan to employ sales representatives in the Philippines to promote and sell our product to wholesalers, retailers, and end-user teachers. These sales representatives will be responsible for soliciting, selecting and securing accounts within a particular regional territory. We expect to pay such sales representatives on a commission basis. In addition, we may decide to pay each sales representative a base salary. We expect to provide service and support to our sales representatives, including advertising and sales materials. When we determine to expand our sales internationally, we will employ sales personnel in various provinces of China and other Asian nations.

In the event we hire sales personnel, we do not intend to do so in the next twelve months unless our revenues are enough to absorb the cost of these personnel.

Expenses

We estimate the costs to implement our business strategy over the following twelve months to be:
·  
Travel and Related expenses, which will consist primarily of our executive officer and directors visiting school supply merchants and resellers in their sales efforts. We estimate travel and related expenses for the next twelve months will be approximately $4,000;
 
·  
Initial Marketing, which will consist of the marketing efforts discussed above, including direct marketing and attendance at trade shows. We estimate initial marketing expenses for the next twelve months will be approximately $6,000;
 
·  
Research and Development costs consist of developing and testing our Product and determining the best combination of materials and suppliers for production. We estimate that research and development costs for the next twelve months will be approximately $10,000.
 

We intend to obtain business capital through the use of private equity fundraising or shareholders loans. We anticipate that, in time, the primary source of revenues for our business model will be the sale of our Product.

Significant Equipment

We do not intend to purchase any significant equipment for the next twelve months.

Results of Operations for the Period from February 29, 2008 (Date of Inception) until March 31, 2008

We generated no revenue for the period from February 29, 2008 (Date of Inception) until March 31, 2008. Our Operating Expenses during this period equaled $4,000, consisting entirely of Professional Fees. We, therefore, recorded a net loss of $4,000 for the period from February 29, 2008 (Date of Inception) until March 31, 2008. Our operating expenses are wholly attributable to professional fees associated with the initial development of our business, legal expenses, and consulting fees.

We anticipate our operating expenses will increase as we implement our business plan. The increase will be attributable to expenses to implement our business plan, and the professional fees to be incurred in connection with the filing of a registration statement with the Securities Exchange Commission under the Securities Act of 1933. We anticipate our ongoing operating expenses will also increase once we become a reporting company under the Securities Exchange Act of 1934.


Liquidity and Capital Resources

As of March 31, 2008, we had total current assets of $39,000, consisting of Cash in the amount of $35,000 and Prepaid Expenses in the amount of $4,000. We had no current liabilities as of March 31, 2008.  Thus, we have working capital of $39,000 as of March 31, 2008.

Operating activities used $8,000 in cash for the period from February 29, 2008 (Date of Inception) until March 31, 2008. Our net loss of $4,000 represented half our negative operating cash flow while our Prepaid Expenses of $4,000 represented the other half. Financing Activities during the period from February 29, 2008 (Date of Inception) until March 31, 2008 generated $43,000 in cash during the period.

As demonstrated above, we expect to spend approximately $20,000 to implement our business plan over the coming year.  Our accounting, legal and administrative expenses for the next twelve months are anticipated to be $30,000.  As of March 31, 2008, we had $35,000 in cash.

As of March 31, 2008, we have insufficient cash to operate our business at the current level for the next twelve months and insufficient cash to achieve our business goals.  The success of our business plan beyond the next 12 months is contingent upon us obtaining additional financing. We intend to fund operations through debt and/or equity financing arrangements, which may be insufficient to fund our capital expenditures, working capital, or other cash requirements. We do not have any formal commitments or arrangements for the sales of stock or the advancement or loan of funds at this time. There can be no assurance that such additional financing will be available to us on acceptable terms, or at all.

Going Concern

We have limited working capital and have not yet received revenues from sales of products.  These factors have caused our accountants to express substantial doubt about our ability to continue as a going concern.  The financial statements do not include any adjustment that might be necessary if we are unable to continue as a going concern.

Our ability to continue as a going concern is dependent on our generating cash from the sale of our common stock and/or obtaining debt financing and attaining future profitable operations.  Management’s plans include selling our equity securities and obtaining debt financing to fund our capital requirement and ongoing operations; however, there can be no assurance we will be successful in these efforts.

Off Balance Sheet Arrangements

As of March 31, 2008, there were no off balance sheet arrangements.