FARM WINERY PROJECT MODEL BUSINESS PLAN

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Town of Brant Erie County, New York FARM WINERY PROJECT MODEL BUSINESS PLAN December 2004 Shepstone Management Company 100 Fourth Street Honesdale, PA 18431 570-251-9550 FAX 251-9551 www.shepstone.net Farm Winery Project Model Business Plan - 2004 Table of Contents Table of Contents 1.0 2.0 Executive Summary Business Description, Mission Statement and Business Goals 2.1 2.2 2.3 3.0 Description of Business Business Mission Statement Business Goals Page i 1-1 2-1 2-1 2-2 2-2 3-1 3-1 3-3 4-1 5-1 5-1 5-1 5-1 6-1 A-1 B-1 C-1 D-1 E-1 Marketing Plan 3.1 3.2 Regional Wine Market and Competition Business Marketing Plan 4.0 5.0 Management Plan Financial Plan 5.1 5.2 5.3 Sales Forecast, Income and Expenses Capital Requirements and Financing Proposal Cash Flow Analysis 6.0 Appendices A. B. C. D. E. Pro Forma Income and Expense Statements Pro Forma Balance Sheets Cash Flow Projections Resumes of Management Personnel Equipment Listing Shepstone Management Company i Table of Contents Farm Winery Project Model Business Plan - 2004 1.0 Executive Summary Brant Farms Winery, LLC, proposes to establish a new estate winery in the extensive juice grape region surrounding Brant, New York. This will be a premium winery that builds upon the success of the several nearby wineries constituting the Chautauqua and Niagara Wine Trails. Annual production will begin at 5,550 cases and increase to 9,250 cases over a period of 5-6 years. All grapes will be purchased from local and regional vineyards. The winery will produce the following high quality varietals: Chardonnay, Cabernet Franc, Cabernet Savignon and Seyval Blanc. It will also produce three relatively high quality wines using native varieties; Pink Catawba, Concord and Delaware. Most of the wine will be sold out of the tasting room, but high-end restaurants and wine shops may also be used to reach customers as volume grows. 208,000 persons, of which over 80,000 are adults of 45 or more years of age. This is a prime market for high quality wines of the type Brant Farms Winery proposes to supply. There are, too, large gains in certain categories around which a new winery venture can be developed. These include households earning over $50,000 per year with the additional disposal income to spend on travel, entertainment and high-quality dining experiences. Those households are increasing at a rate of about 3% per year across the market as a result of income gains as the population ages. There is steady growth of about 1% per year in population aged 45+ years who are likely to be interested in high quality wines, particularly dry wines. This, combined with income gains, creates a growing market. There are some 16 wineries located to the north and south of Brant along the Chautauqua and Niagara wine trails. There are an additional 50 wineries Brant Farms Winery will be located in the located on the Niagara Peninsula in Town of Brant, Erie County, New York. It adjoining Ontario None of the local will enjoy relatively easy access from I-90 wineries offer the same combination of via exits 57 and 58. This route is the wines as proposed by Brant Farms major link between the cities of Buffalo Winery, with its balance of native and high and Erie. It carries 28,040 vehicles per quality varietals and emphasis on dry day, a significant portion of which wines. represent potential customers for Brant Farms Winery. Brant Farms Winery will emphasize a strategy that is focused on a relatively There is a total market of over 1,225,000 small number of higher-end products persons within 60 minutes of Brant, products. This will be accomplished creating a major opportunity for a tourism using a tasting room and a wine club. attraction with destination appeal. The Also, high end restaurants and wine market within 30 minutes is also shops will be used to market the ultraconsiderable. It has a population of over premium and super-premium products. Shepstone Management Company Executive Summary Page 1-1 Farm Winery Project Model Business Plan - 2004 Brant Farms Winery will be owned and operated by James and Mary Smith, the owners of the vineyard on which it will be located. They will conduct the business through a limited liability corporation known as Brant Farms Winery, LLC. James will serve as President and Operations Manager. He has worked as a winemaker prior to returning to the vineyard operation that he and Mary now own. James and Mary both attended Cornell and graduated with degrees in Ag Economics. Average prices of $8, $15 and $22 per 750 ml bottle are projected, respectively, for premium, super-premium and ultrapremium wines. It is anticipated that 60% of wines will be sold as premium wines with 30% and 10%, respectively, for super-premium and ultra-premium wine selections. This activity is forecasted to generate $1,095,000 of sales in the fifth year, at which point it will be profitable. It is proposed to borrow the sum of $1,200,000 over a 15 year term to finance the establishment of this business over a two-year period (the winery in the first year and tasting room in the second), plus an equal amount of working capital, substantial portions of which will be supplied by the owners on a loan basis. NOTE: This model plan is based on similar models developed by Cornell University (see Writing a Business Plan: An Example for a Small Premium Winery, E.B. 2002-07, by Mark E. Pisoni and Gerald B. White) and by the Ohio Wine Producers Association (The Dollar and Sense of Starting a Small Winery, by Chris Stamp). Several elements of this model draw excerpts directly from these reports and they provide much additional guidance that will be helpful to any party developing their own winery plan. This model plan provides a recommended approach for organizing such a business, relying upon a number of assumptions that are fictional in nature. It is, therefore, not intended and should not be used as a substitute for the extensive due diligence and financial analysis connected with a new business, activities that must be tailored to the needs of each individual enterprise. Shepstone Management Company Executive Summary Page 1-2 Farm Winery Project Model Business Plan - 2004 2.0 Business Description, Mission Statement and Business Goals 2.1 Business Description in the Lake Erie wine region over a wide range of wines and tend to emphasize fruity sweet wines (although many of the Canadian wineries on the Niagara Peninsula are more focused in their offerings). Brant Farms Winery, by producing a relatively smaller number of higher quality wines, will establish a marketable competitive advantage. It is anticipated that 10% of the wines produced will fall into the ultra-premium market with an average price of $22.00 per 750 ml bottle. Another 30% will constitute super-premium wines sold for an average of $15.00 per bottle. The remainder will be premium wines selling at an average of $8.00 per bottle. This mix will allow for higher margins but will also require some specialized equipment to accommodate the varied processes involved. Moreover, it is anticipated that sales of super-premium and ultra-premium wines will require waiting 18 months after production to make the first sales, while premium wines will be sold after 12 months. It is assumed that 50% of a given wine will be sold the first year it is marketed, with 25% each for the following two years. This project will support other agricultural tourism efforts locally and help to implement the goal of the Brant, Evans and North Collins Regional Farmland Protection Plan to "...promote local agritourism in tourism brochures and other tourism outlets such as in state publications, along wine tasting routes or at the Seaway Trail and Convention and Visitors Bureau." Business Description and Mission Brant Farms Winery, LLC, proposes to establish a new estate winery in the extensive juice grape region surrounding Brant, New York. This will be a premium winery that builds upon the success of the several nearby wineries constituting the Chautauqua and Niagara Wine Trails. Annual production will begin at 5,550 cases and increase to 9,250 cases over a period of 5-6 years. All grapes will be purchased from local and regional vineyards. The winery will produce the following high quality varietals: Chardonnay, Cabernet Franc, Cabernet Savignon and Seyval Blanc. It will also produce three relatively high quality wines using native varieties; Pink Catawba, Concord and Delaware. Most of the wine will be sold out of the tasting room, but high-end restaurants and wine shops may also be used to reach customers as volume grows. The key to the winery's success will be its high quality wines. Research shows that U.S. consumers are drinking more expensive and higher quality wines. A 2003 study of California wine shipments indicates premium table wine sales of $7 and above for a 750 ml bottle increased 6% to account for 30% of the volume and 62% of all winery revenues. The Brant Farms Winery will capitalize on these consumption trends. Most of the wineries Shepstone Management Company Page 2-1 Farm Winery Project Model Business Plan - 2004 2.2 Mission Statement G. Establishing and maintaining a position of leadership in the regional grape and wine industry. Establishing a reputation as a centerpiece tourist attraction that will draw still more visitors and create new marketing opportunities within the greater Buffalo region. The Brant Farms Winery will market a limited but top quality lines of wines from both native and vinifera grape varieties that build on the Lake Erie and Brant region's reputation for producing fine agricultural products, also creating a tourism attraction for visitors from Buffalo, Cleveland, Erie and other markets. H. 2.3 Business Goals The following are the key business goals of Brant Farms Winery in launching this project: A. Creating a business that will ensure full-time employment for the winery owners. Generating a positive cash flow within five years of business establishment. Generating a profit within five years of business establishment. Generating a long-term rate of return of at least 10% on equity invested, including land priced at market value. Achieving an operating margin of 40% before depreciation, interest and taxes. Establishing a foundation for future business growth through increased visitation to the area, expansions and new still higher-quality offerings, that fit within the above mission statement. Business Description and Mission B. C. D. E. F. Shepstone Management Company Page 2-2 Farm Winery Project Model Business Plan - 2004 3.0 Marketing Plan 3.1 Regional Wine Market and Competition These include households earning over $50,000 per year with the additional disposal income to spend on travel, entertainment and highquality dining experiences. Those households are increasing at a rate of about 3% per year across the market as a result of income gains as the population ages. There is steady growth of about 1% per year in population aged 45+ years who are likely to be interested in high quality wines, particularly dry wines. This, combined with income gains, creates a growing market. Market Area Demographics, 2000-2008 0-30 30-45 45-60 Minutes Minutes Minutes Population, 2000 Population, 2003 Population, 2008 Households, 2000 Households, 2003 Households, 2008 HH's $50K Income, 2000 HH's $50K Income, 2003 HH's $50K Income, 2008 Growth, 2003-2008 % Growth, 2003-2008 Annual % Growth Population 45+, 2000 Population 45+, 2003 Population 45+, 2008 Growth, 2003-2008 % Growth, 2003-2008 Annual % Growth 208,329 207,355 204,397 79,244 79,415 79,283 32,332 35,340 40,593 5,253 14.9% 3.0% 80,832 84,808 89,526 4,718 5.6% 1.1% 696,450 687,996 676,261 284,577 282,636 281,184 100,740 109,945 126,814 16,869 15.3% 3.1% 267,437 275,198 289,440 14,241 5.2% 1.0% Total Brant Farms Winery will be located in the Town of Brant, Erie County, New York. It will enjoy relatively easy access from I-90 via exits 57 and 58. This route is the major link between the cities of Buffalo and Erie. It carries 28,040 vehicles per day, a significant portion of which represent potential customers for Brant Farms Winery. Other major market factors include the following: A. U.S. Route 20 also provides access to the site and serves as a regional alternate and collector for I-90. It carries 15,600 vehicles per day. There is a total market of over 1,225,000 persons within 60 minutes of Brant (see table following), creating a major opportunity for a tourism attraction with destination appeal. The market within 30 minutes is also considerable. It has a population of over 208,000 persons, of which over 80,000 are adults of 45 or more years of age. This is a prime market for high quality wines of the type Brant Farms Winery proposes to supply. While the overall population of the region is not growing, the number of households is relatively stable. There are, too, large gains in certain categories around which a new winery venture can be developed. B. 330,155 1,234,934 329,731 1,225,082 325,511 1,206,169 129,740 130,306 130,305 47,615 52,644 60,852 8,209 15.6% 3.1% 127,110 133,541 140,621 7,080 5.3% 1.1% 493,561 492,357 490,772 180,686 197,929 228,259 30,331 15.3% 3.1% 475,378 493,548 519,586 26,039 5.3% 1.1% Source: ESRI - Business Information Solutions C. D. The amount of spending within the identified market areas (0-30 minutes (Primary Market), 30-45 minutes (Secondary Market) and 4560 minutes (Tertiary or Fringe Marketing Plan Shepstone Management Company Page 3-1 Farm Winery Project Model Business Plan - 2004 There is competition throughout the outer reaches of the market area for this type of enterprise but none within the immediate Brant area. The Lake Erie Viticultural Area Market Area Visitation to Attractions and Expenditures (Chautauqua County) is, 0-30 30-45 45-60 in fact, the largest grape Minutes Minutes Minutes Total Travel Expenditures $116,234,322 $368,658,225 $200,149,685 $685,042,232 growing county outside Average Per Household $1,464 $1,304 $1,536 $1,391 of California, with some Dined Out 82,652 254,502 132,749 469,903 20,000 acres of Cooked for Fun 30,796 103,252 50,311 184,359 vineyards. Most of these Went to Bar/Nightclub 31,927 102,722 49,968 184,617 vineyards are planted to Note: Visitation estimates reflect the number of market area adults participating Concord grapes used Source: ESRI - Business Information Solutions for grape juice. There are also, however, some While there is no specific data 16 wineries located to the north and available on wine use, travel south of Brant along the Chautauqua and expenditures as a whole by Niagara wine trails. There are an households residing within 30 additional 50 wineries located on the minutes are estimated to total over Niagara Peninsula in adjoining Ontario. $116 million. The market within one There are 18 wineries in the Niagara-onhour represents over $685 million of the-Lake area alone, plus numerous travel expenditures. others throughout the peninsula. The following table examines the wine Three categories of comparable varieties offered by the principal wineries interests to visiting a winery were along the Chautauqua Wine Trail, the examined. Dining out, for example, most likely source of competition for Brant was an activity enjoyed by some Farms Winery. 470,000 adults in the market area Chautauqua Wine Trail - Types of Wines Offered and 184,000 adults Blueberry Johnson Merritt Schloss Vetter Willow Sky Estate Estate Roberian Doepken Vineyards Creek Woodbury Count cooked for fun, plus Chardonnay No Yes Yes Yes No Yes Yes Yes 6 Cabernet Sauvignon No Yes No Yes Yes Yes Yes No 5 185,000 individuals Delaware No Yes Yes Yes No Yes Yes No 5 No Yes No Yes Yes No Yes Yes 5 went to a bar or Reisling Seyval No Yes Yes Yes No Yes No Yes 5 nightclub. These Fruit Wines Yes No Yes No No Yes No Yes 4 Niagara No Yes No No No Yes Yes Yes 4 are all potential Concord No Yes No No No Yes Yes No 3 No No No No No Yes Yes Yes 3 consumers of wine, Dry Riesling Marechal Foch No Yes Yes No No Yes No No 3 No Yes No No No No Yes No 2 a large number of ChambourcinBlush Chautauqua No Yes Yes No No No No No 2 No No Yes No Yes No No No 2 whom could be Chautauqua White Ives Noir No Yes No Yes No No No No 2 No No No Yes No No Yes No 2 attracted to a Brant Pink Catawba Vidal Blanc No Yes No Yes No No No No 2 Farms Winery on Other Red No Yes Yes No No Yes Yes Yes 5 Other White No Yes Yes No Yes No No Yes 4 the Chautauqua or Other Blush No Yes Yes No No No No Yes 3 Other No Yes Yes No No No Yes No 3 Niagara wine trail. Shepstone Management Company Market) is quite impressive. The following table summarizes some of the most relevant trends: Marketing Plan Page 3-2 Farm Winery Project Model Business Plan - 2004 The table indicates that all of the wines proposed to be produced by Brant Farms Winery, with the exception of Cabernet Franc, are made by other wineries. However, none of the other wineries offer the same combination of wines as proposed by Brant Farms Winery, with its balance of native and high quality varietals with emphasis on dry wines over fruity and sweet varieties. Cabernet Franc is not offered on the Chautauqua Wine Trail, although it is grown by several Niagara Peninsula wineries in nearby Canada. Pinot Noir is alternative to Cabernet Franc if grapes are not available to purchase at a reasonable price. Pinot Noir is produced by one other winery on the Chautauqua Wine Trail and another on the Niagara Wine Trail but not promoted heavily in the region. Significantly, Warm Lake Estates Winery, north of Buffalo, markets its Pinot Noir at prices ranging from $15.99 to $35.99 for 750 ml bottles, indicating the potential in premium wines. customers. These individuals are highly wine-educated, enjoy dining out, and regularly entertain friends or business associates. These consumers are become more wine-educated through experience and promotional efforts in which Brant Farms Winery will also participate. Brant Farms Winery's second target market consists of premier restaurants and wine shops located throughout the Buffalo, Cleveland and Erie regions. Gourmet restaurants that carry a variety of premium wines and in state specialty wine shops that focus on carrying premium wine. Brant Farms Winery will market 40% of its wines under "reserve" labels as ultrapremium and super-premium products (10% and 30%, respectively). The remainder will be sold simply as premium wines. Wines will be packaged in standard 750-ml bottles and follow traditional European bottle shapes and colors. Natural corks will be used to allow consumers to smell them, adding to the romance and sophistication of the wine drinking experience. Natural cork also follows with European wine tradition. Foil capsules are, likewise, the standard in premium wine; therefore, Brant Farms Winery will be using these. Cardboard twelve bottle cases are the standard in the wine industry and will be used to package the wine. Brant Farms Winery will offer its customers a number of other activities intended to create a pleasant “winery experience.” Wine tastings will be offered each day to encourage customers to visit Marketing Plan 3.2 Business Marketing Plan The proposed winery's competitive advantage will be its dedication to producing higher quality wines than its competitors by purchasing the best grapes and investing in the highest quality wine making equipment. The Brant Farms Winery will also emphasize a strategy that is more focused with fewer products. High end restaurants and wine shops will be used to market the ultrapremium and super-premium products. Brant Farms Winery will target wealthy, college-educated baby boomers as Shepstone Management Company Page 3-3 Farm Winery Project Model Business Plan - 2004 the winery and try the various wines. Educational winery tours will be offered on weekends to introduce customers to the grape growing and winemaking process. A monthly wine tasting class will be led by the winemaker. Other events will also be conducted on special occasions. Brant Farms Winery will adopt a high price and high quality pricing strategy. Prestige pricing will be used to inform customers of the high quality product being sold. Ultra-premium wines will be marketed at an average price of $22 per bottle, super-premiums at $15 and premiums at $8. These prices are consistent with other high quality wines in the marketplace (e.g. Warm Lake Estates). Many regional wineries have produced lower priced wines from native varieties and French American hybrids. Consequently, local consumers have grown accustomed to lighter, fruity, sweet wines. However, research shows that over time, consumer's taste preferences shift from lighter, sweeter wines to drier, more complex wines (Barclay, 1999). This present an opportunity to increase prices by producing higher quality wines. Brant Farms Winery’s promotion goal will be one of differentiation and all promotion activities will reinforce the winery's premium positioning status. Consumer promotion events will be intended to bring customers to the winery for fun, noncommercial activities. These events include crush and bottling parties, dances, food pairings, tastings, home winemaking seminars, barrel tastings, Shepstone Management Company and winery and vineyard tours. Additionally, the winery will participate in the appropriate wine trail program (Chautauqua or Niagara). Events targeting other customers will focus on building relationships. These events will include regularly visiting restaurants and wine shops, having special dinners and barrel tastings at the winery for top accounts and regularly sending free wine samples to these accounts. Brant Farms Winery will spend $4 per case plus a fixed amount of $500 per month on marketing its wines. A webpage and some billboards will be used to help launch the promotional campaign. Grand opening advertising and publicity will be used to call attention to season openings and the Brant Farms Winery website. The bulk of marketing expenditures, however, will be directed to the brochure, website and publicity campaign. All employees will be given hospitality and customer service training prior to staring work. Road signage will also be used to communicate information on the Brant Farms Winery location, business hours, special promotions and related attractions. A number of signs will be placed along busy roadways (e.g. U.S. Route 20) to ensure customer exposure. Direct marketing studies indicate the number of roadside signs is directly related to tourist site revenue and, therefore, every effort will be made to maximize the use of such signage, which will be done using bright but tasteful designs and Brant Farms Winery logo. Marketing Plan Page 3-4 Farm Winery Project Model Business Plan - 2004 A variety of other promotional and marketing techniques will be used to build consumer interest in Brant Farms Winery. These will include: • Regular and frequent events that can be used as an excuse for advertising and publicity. Such events will include contests, displays and educational events. • Use of promotional items such as calendars, maps and other advertising specialties displaying Brant Farms Winery logo and providing directional information. • Cross-promotion with noncompeting businesses selling to Brant Farms Winery target market (e.g. a local B&B). • Assembly of media packages to encourage profiles of Brant Farms Winery in local newspapers. • Support of different fund-raising and charity events. Publicity will be heavily used to generate inexpensive or free advertising by developing news releases that provide local media with a feature stories on Brant Farms Winery events. A media day will be conducted at the outset of each season to encourage feature stories in local and regional media outlets. A media list will be developed for this purpose and news releases will be sent to appropriate media each time there is an occasion or event associated with Brant Farms Winery. A mailing list will be developed to inform Shepstone Management Company Brant Farms Winery customers that the business is open each year and to alert them regarding special events. The mailing list will also be used as the basis for establishing a Brant Farms Winery Club to market premium wines to higher income repeat customers. Marketing Plan Page 3-5 Farm Winery Project Model Business Plan - 2004 4.0 Management Plan Brant Farms Winery will be owned and operated by James and Mary Smith, the owners of the vineyard on which it will be located. They will conduct the business through a limited liability corporation known as Brant Farms Winery, LLC. will work 8 months per year. organization chart follows: An Each of the principals will own 50% of the stock. James will serve as President and Operations Manager. His duties will Other positions will be filled with part-time include coordinating grape purchasing, or seasonal personnel. It is anticipated winery operation and maintenance and that approximately 25 such employees staffing. He has worked as a winemaker will be required, most of whom will be for one of the Finger Lakes Brant Farms wineries (see his Winery, LLC resume) prior to James & Mary Smith returning to the Owners vineyard operation that he and Mary now own. James James Smith Mary Smith attended Cornell President and Manager Treasurer and graduated with a degree in Ag Economics. Mary Smith will Bill Jones act as Treasurer Winemaker and Financial Manager of the operation. She, too, is a Cornell Temporary Bottlers & Winery Employees Ag Economic graduate and has been actively engaged in managing the family vineyard operation. Bill Jones will serve as Winemaker for the operation, working under the direction of James Smith. Sally Ames will serve as Sales Manager. Both Shepstone Management Company Resumes, including work experience, education, professional affiliations and other qualifications to run this business, are attached. The two principals will, at the outset, be the only year-round employees of Brant Farms Winery, although the Winemaker and Sales Manager will be permanent positions. Sally Ames Sales Manager Tasting Room Employees youth, retirees or other seeking part-time work. individuals Brant Farms Winery, LLC will also join either the Chautauqua or Niagara Wine Management Plan Page 4-1 Farm Winery Project Model Business Plan - 2004 Trails and the New York Wine and Grape Foundation to secure additional marketing support services for its business. Shepstone Management Company Management Plan Page 4-2 Farm Winery Project Model Business Plan - 2004 5.0 Financial Plan 5.1 Sales Forecast, Income and Expenses $25,000 worth of equity in land and another $225,000 in cash equity toward the project. The capital expenses involve an estimated $12,500 in site work and $700,000 of building expenses for a winery and tasting room. Approximately $450,000 will be required for winemaking equipment. This includes equipment for manufacturing high quality red as well as white wines, although used equipment will be employed in many instances to lower capital costs. A detailed listing of equipment is included in the Appendices. NOTE: Sample equipment inventories that may be used to assemble such a listing are available in the model business plans developed by Cornell University (see Writing a Business Plan: An Example for a Small Premium Winery, E.B. 2002-07, by Marke E. Pisoni and Gerald B. White) and by the Ohio Wine Producers Association (The Dollar and Sense of Starting a Small Winery, by Chris Stamp). As indicated earlier, Brant Farms Winery will have the capacity to produce 9,250 cases of wine per year. It will begin marketing premium wines 12 months following their manufacture and superpremium and ultra-premium wines 18 months after production. It will start producing at 60% of capacity and increase to full capacity within five years. Average prices of $8, $15 and $22 per 750 ml bottle are projected, respectively, for premium, super-premium and ultrapremium wines. It is anticipated that 60% of wines will be sold as premium wines with 30% and 10%, respectively, for super-premium and ultra-premium wine selections. Other assumptions may be found in the self-explanatory cash flow analysis. This activity is forecasted to generate $1,095,000 of sales in the fifth year, at which point it will be profitable. 5.3 Cash Flow Analysis 5.2 Capital Requirements and Financing Proposal It is proposed to borrow the sum of $1,200,000 over a 15 year term to finance the establishment of this business over a two-year period (the winery in the first year and tasting room in the second), plus an equal amount of working capital. The working capital financing is proposed as a line of credit for cash flow projection purposes. The owners will invest Shepstone Management Company A self-explanatory cash flow analysis is attached as Appendix C of this Business Plan. The assumptions used in the analysis are also provided. It indicates this business will amortize long-term debt. While it will require up to $1,200,000 of working capital, a substantial portion of which will be provided by the owners on a loan basis, that capital will be returned in full with interest at 7.5% by the eight year of operation. The project will return all Financial Plan Page 5-1 Farm Winery Project Model Business Plan - 2004 equity by the ninth year of operation and generate net operating income (before depreciation and taxes) of $555,000 per year thereafter. It will generate a positive net operating income before taxes in the fourth year of operation. Because much of the working capital for this project will be provided in the form of owner financing and the interest rate is, at 7.5%, above current lending rates, there is a significant margin of error for any unanticipated costs of launching the enterprise and bearing marketing expenses, including wine giveaways. Shepstone Management Company Financial Plan Page 5-2 Farm Winery Project Model Business Plan - 2004 6.0 Appendices Attached, as appendices to this Business Plan, are the following business financial documents: A. B. C. D. E. Pro Forma Income and Expense Statements Pro Forma Balance Sheets Cash Flow Projections Resumes of Management Personnel Equipment Listing Shepstone Management Company Appendices Page 6-1 APPENDIX A Pro Forma Income & Expense Statements Brant Farms Winery PRO FORMA FINANCIAL STATEMENTS INCOME AND EXPENSES: INCOME Ultra-premium sales Super-premium sales Premium sales SUB-TOTAL Cost of Goods Sold (Grapes) GROSS INCOME EXPENSES Principal/manager/office salaries Other variable labor costs (production) Other variable labor costs (sales) Labor overhead Packaging Repairs/maintenance Fuel and supplies Utilities Insurance Office expense/professional fees Marketing Contingency/miscellaneous SUB-TOTAL Interest Depreciation TOTAL EXPENSES NET INCOME BEFORE TAXES FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 $0 $0 $0 $0 $115,677 ($115,677) $20,513 $41,958 $159,840 $222,311 $154,236 $68,074 $90,354 $184,815 $293,040 $568,209 $173,516 $394,693 $151,404 $309,690 $426,240 $887,334 $183,156 $704,178 $202,198 $413,586 $479,520 $1,095,304 $192,795 $902,508 $80,000 $38,850 $38,850 $39,425 $0 $12,000 $6,750 $15,158 $14,400 $6,000 $28,200 $13,982 $293,614 $60,797 $47,125 $401,536 ($517,213) $80,000 $51,800 $51,800 $45,900 $80,475 $12,000 $8,600 $18,210 $14,400 $6,000 $35,600 $20,239 $425,024 $134,872 $65,458 $625,355 ($557,280) $80,000 $58,275 $58,275 $49,138 $107,300 $12,000 $9,525 $19,736 $14,400 $6,000 $39,300 $22,697 $476,646 $159,126 $65,458 $701,230 ($306,537) $80,000 $61,513 $61,513 $50,756 $120,713 $12,000 $9,988 $20,499 $14,400 $6,000 $41,150 $23,927 $502,457 $163,877 $65,458 $731,792 ($27,614) $80,000 $64,750 $64,750 $52,375 $115,348 $12,000 $10,450 $21,263 $14,400 $6,000 $43,000 $24,217 $508,552 $150,384 $65,458 $724,394 $178,114 APPENDIX B Pro Forma Balance Sheets Brant Farms Winery PRO FORMA FINANCIAL STATEMENTS ASSETS AND LIABILITIES: ASSETS CURRENT ASSETS Cash on hand Accounts receivable TOTAL CURRENT ASSETS FIXED ASSETS (DEPRECIATED VALUE) Land Buildings, equipment & other TOTAL FIXED ASSETS TOTAL ASSETS LIABILITIES AND EQUITY CURRENT LIABILITIES Accounts payable Short-term debt Current portion of long-term debt TOTAL CURRENT LIABILITIES LONG-TERM LIABILITIES Non-current portion of long-term debt TOTAL LIABILITIES Equity Retained earnings TOTAL LIABILITIES AND EQUITY Beginning FY 2005 Beginning FY 2006 Beginning FY 2007 Beginning FY 2008 Beginning FY 2009 Ending FY 2009 $225,000 $0 $225,000 $1,777 $0 $1,777 $2,900 $0 $2,900 $1,113 $0 $1,113 $4,314 $0 $4,314 $3,999 $0 $3,999 $25,000 $0 $25,000 $250,000 $25,000 $659,750 $684,750 $686,527 $25,000 $1,119,292 $1,144,292 $1,147,192 $25,000 $1,053,833 $1,078,833 $1,079,947 $25,000 $988,375 $1,013,375 $1,017,689 $25,000 $922,917 $947,917 $951,916 $0 $0 $0 $0 $0 $280,000 $28,298 $308,298 $0 $845,000 $50,708 $895,708 $0 $1,135,000 $54,645 $1,189,645 $0 $1,155,000 $58,887 $1,213,887 $0 $970,000 $63,458 $1,033,458 $0 $0 $250,000 $0 $250,000 $645,442 $953,740 $250,000 ($517,213) $686,527 $1,075,978 $1,971,686 $1,021,333 $2,210,978 $962,446 $2,176,333 $898,988 $1,932,446 $250,000 $250,000 $250,000 $250,000 ($1,074,494) ($1,381,031) ($1,408,645) ($1,230,531) $1,147,192 $1,079,947 $1,017,689 $951,916 APPENDIX C Cash Flow Projections Brant Farms Winery Cash Flow Analysis FISCAL YEAR (JUL-JUN) VOLUME AS % OF BASE Ultra-premium wine cases produced Super-premium wine cases produced Premium wine cases produced REVENUE Ultra-premium sales Super-premium sales Premium sales SUB-TOTAL Cost of Goods (retail and food) TOTAL GROSS MARGIN OPERATING EXPENSES Principal/manager/office salaries Other variable labor costs (production) Other variable labor costs (sales) Labor overhead Packaging Repairs/maintenance Fuel and supplies Utilities Insurance Office expense/professional fees Marketing Contingency/miscellaneous TOTAL OPERATING EXPENSES OPERATING MARGIN (CASH) DEVELOPMENT COSTS Land Site work Winery construction costs Equipment costs Financing/organizational costs Contingency TOTAL DEVELOPMENT COSTS FINANCING & EQUITY Equity in land Cash equity contribution TOTAL EQUITY Working capital loan proceeds Working capital loan repayments Working capital loan balance Working capital loan interest Loan proceeds Amortization TOTAL DEBT SERVICE CASH FLOW CUMULATIVE CASH 2005 1 60% 555 1,665 3,330 2006 2 80% 740 2,220 4,440 2007 3 90% 833 2,498 4,995 2008 4 95% 879 2,636 5,273 2009 5 100% 925 2,775 5,550 2010 6 100% 925 2,775 5,550 2011 7 100% 925 2,775 5,550 2012 8 100% 925 2,775 5,550 2013 9 100% 925 2,775 5,550 2014 10 100% 925 2,775 5,550 $0 $0 $0 $0 ($115,677) ($115,677) $20,513 $41,958 $159,840 $222,311 ($154,236) $68,074 $90,354 $184,815 $293,040 $568,209 ($173,516) $394,693 $151,404 $202,198 $224,054 $236,752 $242,002 $244,200 $244,200 $309,690 $413,586 $458,291 $484,265 $495,005 $499,500 $499,500 $426,240 $479,520 $512,820 $526,140 $532,800 $532,800 $532,800 $887,334 $1,095,304 $1,195,165 $1,247,157 $1,269,807 $1,276,500 $1,276,500 ($183,156) ($192,795) ($192,795) ($192,795) ($192,795) ($192,795) ($192,795) $704,178 $902,508 $1,002,369 $1,054,362 $1,077,011 $1,083,705 $1,083,705 $80,000 $38,850 $38,850 $39,425 $0 $12,000 $6,750 $15,158 $14,400 $6,000 $28,200 $13,982 $293,614 ($409,291) $80,000 $51,800 $51,800 $45,900 $80,475 $12,000 $8,600 $18,210 $14,400 $6,000 $35,600 $20,239 $425,024 ($356,950) $80,000 $58,275 $58,275 $49,138 $107,300 $12,000 $9,525 $19,736 $14,400 $6,000 $39,300 $22,697 $476,646 ($81,953) $80,000 $61,513 $61,513 $50,756 $120,713 $12,000 $9,988 $20,499 $14,400 $6,000 $41,150 $23,927 $502,457 $201,721 $80,000 $64,750 $64,750 $52,375 $115,348 $12,000 $10,450 $21,263 $14,400 $6,000 $43,000 $24,217 $508,552 $393,956 $80,000 $64,750 $64,750 $52,375 $134,125 $12,000 $10,450 $21,263 $14,400 $6,000 $43,000 $25,156 $528,268 $474,101 $80,000 $64,750 $64,750 $52,375 $134,125 $12,000 $10,450 $21,263 $14,400 $6,000 $43,000 $25,156 $528,268 $526,094 $80,000 $64,750 $64,750 $52,375 $134,125 $12,000 $10,450 $21,263 $14,400 $6,000 $43,000 $25,156 $528,268 $548,743 $80,000 $64,750 $64,750 $52,375 $134,125 $12,000 $10,450 $21,263 $14,400 $6,000 $43,000 $25,156 $528,268 $555,436 $80,000 $64,750 $64,750 $52,375 $134,125 $12,000 $10,450 $21,263 $14,400 $6,000 $43,000 $25,156 $528,268 $555,436 $25,000 $12,500 $450,000 $200,000 $10,000 $34,375 $731,875 $0 $0 $250,000 $250,000 $0 $25,000 $525,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $25,000 $225,000 $250,000 $280,000 $0 $280,000 ($9,188) $700,000 ($77,869) ($87,057) $1,777 $1,777 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $125,000 $310,000 $970,000 ($75,781) $0 ($133,490) ($209,271) ($315) $3,999 $0 $0 $0 $100,000 $385,000 $685,000 ($57,031) $0 ($133,490) ($190,521) ($1,420) $2,579 $0 $0 $0 $80,000 $440,000 $325,000 ($32,094) $0 ($133,490) ($165,584) $510 $3,089 $0 $0 $0 $45,000 $365,000 $5,000 ($3,438) $0 ($133,490) ($136,927) $91,816 $94,905 $0 $0 $0 $0 $5,000 $0 $0 $0 ($133,490) ($133,490) $416,947 $511,852 $0 $0 $0 $0 $0 $0 $0 $0 ($133,490) ($133,490) $421,947 $933,798 $570,000 $385,000 $220,000 $5,000 $95,000 $200,000 $845,000 $1,135,000 $1,155,000 ($48,438) ($76,344) ($85,031) $500,000 ($133,490) ($181,927) $1,123 $2,900 $0 ($133,490) ($209,834) ($1,787) $1,113 $0 ($133,490) ($218,521) $3,200 $4,314 Cash Flow Assumptions Principal/manager/office salaries Variable labor costs/case - production Variable labor costs/case - sales Grape price per ton, ultra-premium Grape price per ton, super-premium Grape price per ton, premium Ultra-premium cases produced annually Super-premium cases produced annually Premium cases produced annually Total cases produced annually (capacity) Packaging costs/case Ultra-premium sales price/bottle Super-premium sales price/bottle Premium sales price/bottle $80,000 $7.00 $7.00 $1,600 $1,450 $1,200 925 2,775 5,550 9,250 $14.50 $22.00 $15.00 $8.00 Interest rate Labor overhead Repair/maintenance costs/year Variable fuel/supply costs per case Variable utility costs per case Insurance costs (monthly) Office/professional expense (monthly) Variable marketing costs per case Contingency expense 1st year production % 2nd year production % 3rd year production % Annual growth rate (years 4 to 5) Annual growth rate (years 6+) 7.5% 25.0% $12,000 $1.00 $1.65 $1,200 $500 $4.00 5.0% 60.0% 80.0% 90.0% 5.0% 0.0% Brant Farms Winery Cash Flow Analysis FISCAL YEAR (JUL-JUN) MONTH VOLUME AS % OF BASE Ultra-premium wine cases produced Super-premium wine cases produced Premium wine cases produced REVENUE Ultra-premium sales Super-premium sales Premium sales SUB-TOTAL Cost of Goods (grapes) TOTAL GROSS MARGIN OPERATING EXPENSES Principal/manager/office salaries Other variable labor costs (production) Other variable labor costs (sales) Labor overhead Packaging Repairs/maintenance Fuel and supplies Utilities Insurance Office expense/professional fees Marketing Contingency/miscellaneous TOTAL OPERATING EXPENSES OPERATING MARGIN (CASH) DEVELOPMENT COSTS Land Site work Winery construction costs Equipment costs Financing/organizational costs Contingency TOTAL DEVELOPMENT COSTS FINANCING & EQUITY Equity in land Cash equity contribution TOTAL EQUITY Working capital loan proceeds Working capital loan repayments Working capital loan balance Working capital loan interest Loan proceeds Amortization TOTAL DEBT SERVICE CASH FLOW CUMULATIVE CASH 2005 Jul 60% 0 0 0 2005 Aug 60% 0 0 0 2005 Sep 60% 83 250 500 2005 Oct 60% 83 250 500 2005 Nov 60% 83 250 500 2005 Dec 60% 83 250 500 2006 Jan 60% 56 167 333 2006 Feb 60% 56 167 333 2006 Mar 60% 56 167 333 2006 Apr 60% 56 167 333 2006 May 60% 0 0 0 2006 Jun 60% 0 0 0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 ($57,839) ($57,839) $0 $0 $0 $0 ($57,839) ($57,839) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $6,667 $0 $0 $1,667 $0 $1,000 $100 $500 $1,200 $500 $500 $607 $12,740 ($12,740) $6,667 $0 $0 $1,667 $0 $1,000 $100 $500 $1,200 $500 $500 $607 $12,740 ($12,740) $6,667 $5,828 $5,828 $4,580 $0 $1,000 $933 $1,874 $1,200 $500 $3,830 $1,612 $33,850 ($91,689) $6,667 $5,828 $5,828 $4,580 $0 $1,000 $933 $1,874 $1,200 $500 $3,830 $1,612 $33,850 ($91,689) $6,667 $5,828 $5,828 $4,580 $0 $1,000 $933 $1,874 $1,200 $500 $3,830 $1,612 $33,850 ($33,850) $6,667 $5,828 $5,828 $4,580 $0 $1,000 $933 $1,874 $1,200 $500 $3,830 $1,612 $33,850 ($33,850) $6,667 $3,885 $3,885 $3,609 $0 $1,000 $655 $1,416 $1,200 $500 $2,720 $1,277 $26,813 ($26,813) $6,667 $3,885 $3,885 $3,609 $0 $1,000 $655 $1,416 $1,200 $500 $2,720 $1,277 $26,813 ($26,813) $6,667 $3,885 $3,885 $3,609 $0 $1,000 $655 $1,416 $1,200 $500 $2,720 $1,277 $26,813 ($26,813) $6,667 $3,885 $3,885 $3,609 $0 $1,000 $655 $1,416 $1,200 $500 $2,720 $1,277 $26,813 ($26,813) $6,667 $0 $0 $1,667 $0 $1,000 $100 $500 $1,200 $500 $500 $607 $12,740 ($12,740) $6,667 $0 $0 $1,667 $0 $1,000 $100 $500 $1,200 $500 $500 $607 $12,740 ($12,740) $25,000 $12,500 $450,000 $200,000 $10,000 $34,375 $731,875 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $25,000 $225,000 $250,000 $0 $0 $0 $0 $700,000 ($6,489) ($6,489) $198,896 $198,896 $0 $0 $0 $0 $0 $0 $0 $0 ($6,489) ($6,489) ($19,229) $179,667 $0 $0 $0 $0 $0 $0 $0 $0 ($6,489) ($6,489) ($98,178) $81,489 $0 $0 $0 $20,000 $0 $20,000 ($125) $0 ($6,489) ($6,614) ($78,303) $3,186 $0 $0 $0 $40,000 $0 $60,000 ($375) $0 ($6,489) ($6,864) ($714) $2,472 $0 $0 $0 $40,000 $0 $100,000 ($625) $0 ($6,489) ($7,114) ($964) $1,508 $0 $0 $0 $35,000 $0 $135,000 ($844) $0 ($6,489) ($7,333) $854 $2,361 $0 $0 $0 $35,000 $0 $170,000 ($1,063) $0 ($6,489) ($7,552) $635 $2,996 $0 $0 $0 $35,000 $0 $205,000 ($1,281) $0 ($6,489) ($7,770) $416 $3,413 $0 $0 $0 $35,000 $0 $240,000 ($1,500) $0 ($6,489) ($7,989) $198 $3,610 $0 $0 $0 $20,000 $0 $260,000 ($1,625) $0 ($6,489) ($8,114) ($854) $2,756 $0 $0 $0 $20,000 $0 $280,000 ($1,750) $0 ($6,489) ($8,239) ($979) $1,777 Cash Flow Assumptions Principal/manager/office salaries Variable labor costs/case - production Variable labor costs/case - sales Grape price per ton, ultra-premium Grape price per ton, super-premium Grape price per ton, premium Ultra-premium cases produced annually Super-premium cases produced annually Premium cases produced annually Total cases produced annually (capacity) Packaging costs/case Ultra-premium sales price/bottle Super-premium sales price/bottle Premium sales price/bottle $80,000 $7.00 $7.00 $1,600 $1,450 $1,200 925 2,775 5,550 9,250 $14.50 $22.00 $15.00 $8.00 Interest rate Labor overhead Repair/maintenance costs/year Variable fuel/supply costs per case Variable utility costs per case Insurance costs (monthly) Office/professional expense (monthly) Variable marketing costs per case Contingency expense 1st year production % 2nd year production % 3rd year production % Annual growth rate (years 4 to 5) Annual growth rate (years 6+) 7.5% 25.00% $12,000 $1.00 $1.65 $1,200 $500 $4.00 5.00% 60.0% 80.0% 90.0% 5.0% 0.0% Produce % Sales % July August September October November December January February March April May June Total 2005 0.0% 0.0% 15.0% 15.0% 15.0% 15.0% 10.0% 10.0% 10.0% 10.0% 0.0% 0.0% 100.0% 10.0% 12.0% 15.0% 18.0% 8.0% 9.0% 3.0% 3.0% 4.0% 4.0% 5.0% 9.0% 100.0% Brant Farms Winery Cash Flow Analysis FISCAL YEAR (JUL-JUN) MONTH VOLUME AS % OF BASE Ultra-premium wine cases produced Super-premium wine cases produced Premium wine cases produced REVENUE Ultra-premium sales Super-premium sales Premium sales SUB-TOTAL Cost of Goods (grapes) TOTAL GROSS MARGIN OPERATING EXPENSES Principal/manager/office salaries Other variable labor costs (production) Other variable labor costs (sales) Labor overhead Packaging Repairs/maintenance Fuel and supplies Utilities Insurance Office expense/professional fees Marketing Contingency/miscellaneous TOTAL OPERATING EXPENSES OPERATING MARGIN (CASH) DEVELOPMENT COSTS Land Site work Winery construction costs Equipment costs Financing/organizational costs Contingency TOTAL DEVELOPMENT COSTS FINANCING & EQUITY Equity in land Cash equity contribution TOTAL EQUITY Working capital loan proceeds Working capital loan repayments Working capital loan balance Working capital loan interest Loan proceeds Amortization TOTAL DEBT SERVICE CASH FLOW CUMULATIVE CASH 2006 Jul 80% 0 0 0 2006 Aug 80% 0 0 0 2006 Sep 80% 111 333 666 2006 Oct 80% 111 333 666 2006 Nov 80% 111 333 666 2006 Dec 80% 111 333 666 2007 Jan 80% 74 222 444 2007 Feb 80% 74 222 444 2007 Mar 80% 74 222 444 2007 Apr 80% 74 222 444 2007 May 80% 0 0 0 2007 Jun 80% 0 0 0 $0 $0 $15,984 $15,984 $0 $15,984 $0 $0 $19,181 $19,181 $0 $19,181 $0 $0 $23,976 $23,976 ($77,118) ($53,142) $0 $0 $28,771 $28,771 ($77,118) ($48,347) $0 $0 $12,787 $12,787 $0 $12,787 $0 $0 $14,386 $14,386 $0 $14,386 $2,198 $4,496 $4,795 $11,489 $0 $11,489 $2,198 $4,496 $4,795 $11,489 $0 $11,489 $2,930 $5,994 $6,394 $15,318 $0 $15,318 $2,930 $5,994 $6,394 $15,318 $0 $15,318 $3,663 $7,493 $7,992 $19,148 $0 $19,148 $6,593 $13,487 $14,386 $34,466 $0 $34,466 $6,667 $0 $0 $1,667 $2,500 $1,000 $100 $500 $1,200 $500 $500 $732 $15,365 $619 $6,667 $0 $0 $1,667 $2,500 $1,000 $100 $500 $1,200 $500 $500 $732 $15,365 $3,816 $6,667 $7,770 $7,770 $5,552 $7,071 $1,000 $1,210 $2,332 $1,200 $500 $4,940 $2,301 $48,312 ($101,454) $6,667 $7,770 $7,770 $5,552 $12,071 $1,000 $1,210 $2,332 $1,200 $500 $4,940 $2,551 $53,562 ($101,909) $6,667 $7,770 $7,770 $5,552 $12,071 $1,000 $1,210 $2,332 $1,200 $500 $4,940 $2,551 $53,562 ($40,774) $6,667 $7,770 $7,770 $5,552 $12,071 $1,000 $1,210 $2,332 $1,200 $500 $4,940 $2,551 $53,562 ($39,176) $6,667 $5,180 $5,180 $4,257 $8,048 $1,000 $840 $1,721 $1,200 $500 $3,460 $1,903 $39,954 ($28,466) $6,667 $5,180 $5,180 $4,257 $8,048 $1,000 $840 $1,721 $1,200 $500 $3,460 $1,903 $39,954 ($28,466) $6,667 $5,180 $5,180 $4,257 $8,048 $1,000 $840 $1,721 $1,200 $500 $3,460 $1,903 $39,954 ($24,636) $6,667 $5,180 $5,180 $4,257 $8,048 $1,000 $840 $1,721 $1,200 $500 $3,460 $1,903 $39,954 ($24,636) $6,667 $0 $0 $1,667 $0 $1,000 $100 $500 $1,200 $500 $500 $607 $12,740 $6,408 $6,667 $0 $0 $1,667 $0 $1,000 $100 $500 $1,200 $500 $500 $607 $12,740 $21,726 $0 $0 $250,000 $250,000 $0 $25,000 $525,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $40,000 $0 $320,000 ($2,000) $500,000 ($11,124) ($13,124) $2,495 $4,272 $0 $0 $0 $10,000 $0 $330,000 ($2,063) $0 ($11,124) ($13,187) $629 $4,901 $0 $0 $0 $115,000 $0 $445,000 ($2,781) $0 ($11,124) ($13,905) ($359) $4,542 $0 $0 $0 $115,000 $0 $560,000 ($3,500) $0 ($11,124) ($14,624) ($1,533) $3,009 $0 $0 $0 $55,000 $0 $615,000 ($3,844) $0 ($11,124) ($14,968) ($742) $2,267 $0 $0 $0 $55,000 $0 $670,000 ($4,188) $0 ($11,124) ($15,312) $512 $2,779 $0 $0 $0 $45,000 $0 $715,000 ($4,469) $0 ($11,124) ($15,593) $941 $3,720 $0 $0 $0 $45,000 $0 $760,000 ($4,750) $0 ($11,124) ($15,874) $660 $4,380 $0 $0 $0 $40,000 $0 $800,000 ($5,000) $0 ($11,124) ($16,124) ($761) $3,620 $0 $0 $0 $40,000 $0 $840,000 ($5,250) $0 ($11,124) ($16,374) ($1,011) $2,609 $0 $0 $0 $10,000 $0 $850,000 ($5,313) $0 ($11,124) ($16,437) ($29) $2,580 $0 $0 $0 $0 $5,000 $845,000 ($5,281) $0 ($11,124) ($16,405) $320 $2,900 Cash Flow Assumptions Principal/manager/office salaries Variable labor costs/case - production Variable labor costs/case - sales Grape price per ton, ultra-premium Grape price per ton, super-premium Grape price per ton, premium Ultra-premium cases produced annually Super-premium cases produced annually Premium cases produced annually Total cases produced annually (capacity) Packaging costs/case Ultra-premium sales price/bottle Super-premium sales price/bottle Premium sales price/bottle $80,000 $7.00 $7.00 $1,600 $1,450 $1,200 925 2,775 5,550 9,250 $14.50 $22.00 $15.00 $8.00 Interest rate Labor overhead Repair/maintenance costs/year Variable fuel/supply costs per case Variable utility costs per case Insurance costs (monthly) Office/professional expense (monthly) Variable marketing costs per case Contingency expense 1st year production % 2nd year production % 3rd year production % Annual growth rate (years 4 to 5) Annual growth rate (years 6+) 7.5% 25.0% $12,000 $1.00 $1.65 $1,200 $500 $4.00 5.0% 60.0% 80.0% 90.0% 5.0% 0.0% Produce % Sales % July August September October November December January February March April May June Total 2005 0.0% 0.0% 15.0% 15.0% 15.0% 15.0% 10.0% 10.0% 10.0% 10.0% 0.0% 0.0% 100.0% 10.0% 12.0% 15.0% 18.0% 8.0% 9.0% 3.0% 3.0% 4.0% 4.0% 5.0% 9.0% 100.0% Brant Farms Winery Cash Flow Analysis FISCAL YEAR (JUL-JUN) MONTH VOLUME AS % OF BASE Ultra-premium wine cases produced Super-premium wine cases produced Premium wine cases produced REVENUE Ultra-premium sales Super-premium sales Premium sales SUB-TOTAL Cost of Goods (grapes) TOTAL GROSS MARGIN OPERATING EXPENSES Principal/manager/office salaries Other variable labor costs (production) Other variable labor costs (sales) Labor overhead Packaging Repairs/maintenance Fuel and supplies Utilities Insurance Office expense/professional fees Marketing Contingency/miscellaneous TOTAL OPERATING EXPENSES OPERATING MARGIN (CASH) DEVELOPMENT COSTS Land Site work Winery construction costs Equipment costs Financing/organizational costs Contingency TOTAL DEVELOPMENT COSTS FINANCING & EQUITY Equity in land Cash equity contribution TOTAL EQUITY Working capital loan proceeds Working capital loan repayments Working capital loan balance Working capital loan interest Loan proceeds Amortization TOTAL DEBT SERVICE CASH FLOW CUMULATIVE CASH 2007 Jul 90% 0 0 0 2007 Aug 90% 0 0 0 2007 Sep 90% 125 375 749 2007 Oct 90% 125 375 749 2007 Nov 90% 125 375 749 2007 Dec 90% 125 375 749 2008 Jan 90% 83 250 500 2008 Feb 90% 83 250 500 2008 Mar 90% 83 250 500 2008 Apr 90% 83 250 500 2008 May 90% 0 0 0 2008 Jun 90% 0 0 0 $7,326 $14,985 $29,304 $51,615 $0 $51,615 $8,791 $17,982 $35,165 $61,938 $0 $61,938 $10,989 $22,478 $43,956 $77,423 ($86,758) ($9,335) $13,187 $26,973 $52,747 $92,907 ($86,758) $6,149 $5,861 $11,988 $23,443 $41,292 $0 $41,292 $6,593 $13,487 $26,374 $46,454 $0 $46,454 $4,029 $8,242 $8,791 $21,062 $0 $21,062 $4,029 $8,242 $8,791 $21,062 $0 $21,062 $5,372 $10,989 $11,722 $28,083 $0 $28,083 $5,372 $10,989 $11,722 $28,083 $0 $28,083 $6,716 $13,736 $14,652 $35,104 $0 $35,104 $12,088 $24,725 $26,374 $63,187 $0 $63,187 $6,667 $0 $0 $1,667 $0 $1,000 $100 $500 $1,200 $500 $500 $607 $12,740 $38,875 $6,667 $0 $0 $1,667 $0 $1,000 $100 $500 $1,200 $500 $500 $607 $12,740 $49,198 $6,667 $8,741 $8,741 $6,037 $16,095 $1,000 $1,349 $2,560 $1,200 $500 $5,495 $2,919 $61,305 ($70,640) $6,667 $8,741 $8,741 $6,037 $16,095 $1,000 $1,349 $2,560 $1,200 $500 $5,495 $2,919 $61,305 ($55,156) $6,667 $8,741 $8,741 $6,037 $16,095 $1,000 $1,349 $2,560 $1,200 $500 $5,495 $2,919 $61,305 ($20,013) $6,667 $8,741 $8,741 $6,037 $16,095 $1,000 $1,349 $2,560 $1,200 $500 $5,495 $2,919 $61,305 ($14,851) $6,667 $5,828 $5,828 $4,580 $10,730 $1,000 $933 $1,874 $1,200 $500 $3,830 $2,148 $45,117 ($24,054) $6,667 $5,828 $5,828 $4,580 $10,730 $1,000 $933 $1,874 $1,200 $500 $3,830 $2,148 $45,117 ($24,054) $6,667 $5,828 $5,828 $4,580 $10,730 $1,000 $933 $1,874 $1,200 $500 $3,830 $2,148 $45,117 ($17,034) $6,667 $5,828 $5,828 $4,580 $10,730 $1,000 $933 $1,874 $1,200 $500 $3,830 $2,148 $45,117 ($17,034) $6,667 $0 $0 $1,667 $0 $1,000 $100 $500 $1,200 $500 $500 $607 $12,740 $22,364 $6,667 $0 $0 $1,667 $0 $1,000 $100 $500 $1,200 $500 $500 $607 $12,740 $50,447 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $25,000 $820,000 ($5,125) $0 ($11,124) ($16,249) ($2,374) $526 $0 $0 $0 $0 $30,000 $790,000 ($4,938) $0 ($11,124) ($16,062) $3,136 $3,662 $0 $0 $0 $85,000 $0 $875,000 ($5,469) $0 ($11,124) ($16,593) ($2,233) $1,429 $0 $0 $0 $75,000 $0 $950,000 ($5,938) $0 ($11,124) ($17,062) $2,782 $4,211 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $35,000 $35,000 $40,000 $40,000 $35,000 $40,000 $0 $0 $0 $0 $0 $0 $0 $0 $5,000 $35,000 $985,000 $1,020,000 $1,060,000 $1,100,000 $1,135,000 $1,175,000 $1,170,000 $1,135,000 ($6,156) ($6,375) ($6,625) ($6,875) ($7,094) ($7,344) ($7,313) ($7,094) $0 ($11,124) ($17,280) ($2,293) $1,918 $0 ($11,124) ($17,499) $2,649 $4,567 $0 ($11,124) ($17,749) ($1,804) $2,764 $0 ($11,124) ($17,999) ($2,054) $710 $0 ($11,124) ($18,218) ($252) $459 $0 ($11,124) ($18,468) $4,498 $4,957 $0 ($11,124) ($18,437) ($1,073) $3,885 $0 ($11,124) ($18,218) ($2,771) $1,113 Cash Flow Assumptions Principal/manager/office salaries Variable labor costs/case - production Variable labor costs/case - sales Grape price per ton, ultra-premium Grape price per ton, super-premium Grape price per ton, premium Ultra-premium cases produced annually Super-premium cases produced annually Premium cases produced annually Total cases produced annually (capacity) Packaging costs/case Ultra-premium sales price/bottle Super-premium sales price/bottle Premium sales price/bottle $80,000 $7.00 $7.00 $1,600 $1,450 $1,200 925 2,775 5,550 9,250 $14.50 $22.00 $15.00 $8.00 Interest rate Labor overhead Repair/maintenance costs/year Variable fuel/supply costs per case Variable utility costs per case Insurance costs (monthly) Office/professional expense (monthly) Variable marketing costs per case Contingency expense 1st year production % 2nd year production % 3rd year production % Annual growth rate (years 4 to 5) Annual growth rate (years 6+) 7.5% 25.0% $12,000 $1.00 $1.65 $1,200 $500 $4.00 5.0% 60.0% 80.0% 90.0% 5.0% 0.0% Produce % Sales % July August September October November December January February March April May June Total 2005 0.0% 0.0% 15.0% 15.0% 15.0% 15.0% 10.0% 10.0% 10.0% 10.0% 0.0% 0.0% 100.0% 10.0% 12.0% 15.0% 18.0% 8.0% 9.0% 3.0% 3.0% 4.0% 4.0% 5.0% 9.0% 100.0% Brant Farms Winery Cash Flow Analysis FISCAL YEAR (JUL-JUN) MONTH VOLUME AS % OF BASE Ultra-premium wine cases produced Super-premium wine cases produced Premium wine cases produced REVENUE Ultra-premium sales Super-premium sales Premium sales SUB-TOTAL Cost of Goods (grapes) TOTAL GROSS MARGIN OPERATING EXPENSES Principal/manager/office salaries Other variable labor costs (production) Other variable labor costs (sales) Labor overhead Packaging Repairs/maintenance Fuel and supplies Utilities Insurance Office expense/professional fees Marketing Contingency/miscellaneous TOTAL OPERATING EXPENSES OPERATING MARGIN (CASH) DEVELOPMENT COSTS Land Site work Winery construction costs Equipment costs Financing/organizational costs Contingency TOTAL DEVELOPMENT COSTS FINANCING & EQUITY Equity in land Cash equity contribution TOTAL EQUITY Working capital loan proceeds Working capital loan repayments Working capital loan balance Working capital loan interest Loan proceeds Amortization TOTAL DEBT SERVICE CASH FLOW CUMULATIVE CASH 2008 Jul 95% 0 0 0 2008 Aug 95% 0 0 0 2008 Sep 95% 132 395 791 2008 Oct 95% 132 395 791 2008 Nov 95% 132 395 791 2008 Dec 95% 132 395 791 2009 Jan 95% 88 264 527 2009 Feb 95% 88 264 527 2009 Mar 95% 88 264 527 2009 Apr 95% 88 264 527 2009 May 95% 0 0 0 2009 Jun 95% 0 0 0 $13,431 $27,473 $42,624 $83,528 $0 $83,528 $16,117 $32,967 $51,149 $100,233 $0 $100,233 $20,147 $41,209 $63,936 $125,291 ($91,578) $33,713 $24,176 $49,451 $76,723 $150,350 ($91,578) $58,772 $10,745 $21,978 $34,099 $66,822 $0 $66,822 $12,088 $24,725 $38,362 $75,175 $0 $75,175 $5,861 $11,988 $12,787 $30,636 $0 $30,636 $5,861 $11,988 $12,787 $30,636 $0 $30,636 $7,814 $15,984 $17,050 $40,848 $0 $40,848 $7,814 $15,984 $17,050 $40,848 $0 $40,848 $9,768 $19,980 $21,312 $51,060 $0 $51,060 $17,582 $35,964 $38,362 $91,908 $0 $91,908 $6,667 $0 $0 $1,667 $0 $1,000 $100 $500 $1,200 $500 $500 $607 $12,740 $70,788 $6,667 $0 $0 $1,667 $0 $1,000 $100 $500 $1,200 $500 $500 $607 $12,740 $87,493 $6,667 $9,227 $9,227 $6,280 $18,107 $1,000 $1,418 $2,675 $1,200 $500 $5,773 $3,104 $65,177 ($31,463) $6,667 $9,227 $9,227 $6,280 $18,107 $1,000 $1,418 $2,675 $1,200 $500 $5,773 $3,104 $65,177 ($6,405) $6,667 $9,227 $9,227 $6,280 $18,107 $1,000 $1,418 $2,675 $1,200 $500 $5,773 $3,104 $65,177 $1,645 $6,667 $9,227 $9,227 $6,280 $18,107 $1,000 $1,418 $2,675 $1,200 $500 $5,773 $3,104 $65,177 $9,998 $6,667 $6,151 $6,151 $4,742 $12,071 $1,000 $979 $1,950 $1,200 $500 $4,015 $2,271 $47,698 ($17,062) $6,667 $6,151 $6,151 $4,742 $12,071 $1,000 $979 $1,950 $1,200 $500 $4,015 $2,271 $47,698 ($17,062) $6,667 $6,151 $6,151 $4,742 $12,071 $1,000 $979 $1,950 $1,200 $500 $4,015 $2,271 $47,698 ($6,850) $6,667 $6,151 $6,151 $4,742 $12,071 $1,000 $979 $1,950 $1,200 $500 $4,015 $2,271 $47,698 ($6,850) $6,667 $0 $0 $1,667 $0 $1,000 $100 $500 $1,200 $500 $500 $607 $12,740 $38,320 $6,667 $0 $0 $1,667 $0 $1,000 $100 $500 $1,200 $500 $500 $607 $12,740 $79,168 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $50,000 $20,000 $20,000 $5,000 $35,000 $35,000 $30,000 $25,000 $0 $0 $50,000 $70,000 $0 $0 $0 $0 $0 $0 $0 $0 $20,000 $60,000 $1,085,000 $1,015,000 $1,065,000 $1,085,000 $1,105,000 $1,110,000 $1,145,000 $1,180,000 $1,210,000 $1,235,000 $1,215,000 $1,155,000 ($6,781) ($6,344) ($6,656) ($6,781) ($6,906) ($6,938) ($7,156) ($7,375) ($7,563) ($7,719) ($7,594) ($7,219) $0 ($11,124) ($17,905) $2,882 $3,995 $0 ($11,124) ($17,468) $25 $4,021 $0 ($11,124) ($17,780) $756 $4,777 $0 ($11,124) ($17,905) ($4,310) $467 $0 ($11,124) ($18,030) $3,615 $4,082 $0 ($11,124) ($18,062) ($3,063) $1,018 $0 ($11,124) ($18,280) ($342) $676 $0 ($11,124) ($18,499) ($561) $115 $0 ($11,124) ($18,687) $4,464 $4,579 $0 ($11,124) ($18,843) ($693) $3,886 $0 ($11,124) ($18,718) ($398) $3,488 $0 ($11,124) ($18,343) $825 $4,314 Cash Flow Assumptions Principal/manager/office salaries Variable labor costs/case - production Variable labor costs/case - sales Grape price per ton, ultra-premium Grape price per ton, super-premium Grape price per ton, premium Ultra-premium cases produced annually Super-premium cases produced annually Premium cases produced annually Total cases produced annually (capacity) Packaging costs/case Ultra-premium sales price/bottle Super-premium sales price/bottle Premium sales price/bottle $80,000 $7.00 $7.00 $1,600 $1,450 $1,200 925 2,775 5,550 9,250 $14.50 $22.00 $15.00 $8.00 Interest rate Labor overhead Repair/maintenance costs/year Variable fuel/supply costs per case Variable utility costs per case Insurance costs (monthly) Office/professional expense (monthly) Variable marketing costs per case Contingency expense 1st year production % 2nd year production % 3rd year production % Annual growth rate (years 4 to 5) Annual growth rate (years 6+) 7.5% 25.0% $12,000 $1.00 $1.65 $1,200 $500 $4.00 5.0% 60.0% 80.0% 90.0% 5.0% 0.0% Produce % Sales % July August September October November December January February March April May June Total 2005 0.0% 0.0% 15.0% 15.0% 15.0% 15.0% 10.0% 10.0% 10.0% 10.0% 0.0% 0.0% 100.0% 10.0% 12.0% 15.0% 18.0% 8.0% 9.0% 3.0% 3.0% 4.0% 4.0% 5.0% 9.0% 100.0% Brant Farms Winery Cash Flow Analysis FISCAL YEAR (JUL-JUN) MONTH VOLUME AS % OF BASE Ultra-premium wine cases produced Super-premium wine cases produced Premium wine cases produced REVENUE Ultra-premium sales Super-premium sales Premium sales SUB-TOTAL Cost of Goods (grapes) TOTAL GROSS MARGIN OPERATING EXPENSES Principal/manager/office salaries Other variable labor costs (production) Other variable labor costs (sales) Labor overhead Packaging Repairs/maintenance Fuel and supplies Utilities Insurance Office expense/professional fees Marketing Contingency/miscellaneous TOTAL OPERATING EXPENSES OPERATING MARGIN (CASH) DEVELOPMENT COSTS Land Site work Winery construction costs Equipment costs Financing/organizational costs Contingency TOTAL DEVELOPMENT COSTS FINANCING & EQUITY Equity in land Cash equity contribution TOTAL EQUITY Working capital loan proceeds Working capital loan repayments Working capital loan balance Working capital loan interest Loan proceeds Amortization TOTAL DEBT SERVICE CASH FLOW CUMULATIVE CASH 2009 Jul 100% 0 0 0 2009 Aug 100% 0 0 0 2009 Sep 100% 139 416 833 2009 Oct 100% 139 416 833 2009 Nov 100% 139 416 833 2009 Dec 100% 139 416 833 2010 Jan 100% 93 278 555 2010 Feb 100% 93 278 555 2010 Mar 100% 93 278 555 2010 Apr 100% 93 278 555 2010 May 100% 0 0 0 2010 Jun 100% 0 0 0 $19,536 $39,960 $47,952 $107,448 $0 $107,448 $23,443 $47,952 $57,542 $128,938 $0 $128,938 $29,304 $59,940 $71,928 $161,172 ($96,398) $64,774 $35,165 $71,928 $86,314 $193,406 ($96,398) $97,009 $15,629 $31,968 $38,362 $85,958 $0 $85,958 $17,582 $35,964 $43,157 $96,703 $0 $96,703 $6,593 $13,487 $14,386 $34,466 $0 $34,466 $6,593 $13,487 $14,386 $34,466 $0 $34,466 $8,791 $17,982 $19,181 $45,954 $0 $45,954 $8,791 $17,982 $19,181 $45,954 $0 $45,954 $10,989 $22,478 $23,976 $57,443 $0 $57,443 $19,780 $40,460 $43,157 $103,397 $0 $103,397 $6,667 $0 $0 $1,667 $0 $1,000 $100 $500 $1,200 $500 $500 $607 $12,740 $94,708 $6,667 $0 $0 $1,667 $0 $1,000 $100 $500 $1,200 $500 $500 $607 $12,740 $116,198 $6,667 $9,713 $9,713 $6,523 $17,302 $1,000 $1,488 $2,789 $1,200 $500 $6,050 $3,147 $66,091 ($1,316) $6,667 $9,713 $9,713 $6,523 $17,302 $1,000 $1,488 $2,789 $1,200 $500 $6,050 $3,147 $66,091 $30,918 $6,667 $9,713 $9,713 $6,523 $17,302 $1,000 $1,488 $2,789 $1,200 $500 $6,050 $3,147 $66,091 $19,868 $6,667 $9,713 $9,713 $6,523 $17,302 $1,000 $1,488 $2,789 $1,200 $500 $6,050 $3,147 $66,091 $30,612 $6,667 $6,475 $6,475 $4,904 $11,535 $1,000 $1,025 $2,026 $1,200 $500 $4,200 $2,300 $48,307 ($13,842) $6,667 $6,475 $6,475 $4,904 $11,535 $1,000 $1,025 $2,026 $1,200 $500 $4,200 $2,300 $48,307 ($13,842) $6,667 $6,475 $6,475 $4,904 $11,535 $1,000 $1,025 $2,026 $1,200 $500 $4,200 $2,300 $48,307 ($2,353) $6,667 $6,475 $6,475 $4,904 $11,535 $1,000 $1,025 $2,026 $1,200 $500 $4,200 $2,300 $48,307 ($2,353) $6,667 $0 $0 $1,667 $0 $1,000 $100 $500 $1,200 $500 $500 $607 $12,740 $44,703 $6,667 $0 $0 $1,667 $0 $1,000 $100 $500 $1,200 $500 $500 $607 $12,740 $90,657 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $80,000 $1,075,000 ($6,719) $0 ($11,124) ($17,843) ($3,135) $1,179 $0 $0 $0 $0 $100,000 $975,000 ($6,094) $0 ($11,124) ($17,218) ($1,020) $158 $0 $0 $0 $20,000 $0 $995,000 ($6,219) $0 ($11,124) ($17,343) $1,341 $1,499 $0 $0 $0 $0 $15,000 $980,000 ($6,125) $0 ($11,124) ($17,249) ($1,331) $168 $0 $0 $0 $0 $0 $980,000 ($6,125) $0 ($11,124) ($17,249) $2,618 $2,786 $0 $0 $0 $0 $15,000 $965,000 ($6,031) $0 ($11,124) ($17,155) ($1,543) $1,243 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $70,000 $970,000 ($6,063) $0 ($11,124) ($17,187) $3,470 $3,999 $30,000 $35,000 $20,000 $20,000 $0 $0 $0 $0 $0 $30,000 $995,000 $1,030,000 $1,050,000 $1,070,000 $1,040,000 ($6,219) ($6,438) ($6,563) ($6,688) ($6,500) $0 ($11,124) ($17,343) ($1,185) $59 $0 ($11,124) ($17,562) $3,597 $3,655 $0 ($11,124) ($17,687) ($40) $3,616 $0 ($11,124) ($17,812) ($165) $3,451 $0 ($11,124) ($17,624) ($2,922) $529 Cash Flow Assumptions Principal/manager/office salaries Variable labor costs/case - production Variable labor costs/case - sales Grape price per ton, ultra-premium Grape price per ton, super-premium Grape price per ton, premium Ultra-premium cases produced annually Super-premium cases produced annually Premium cases produced annually Total cases produced annually (capacity) Packaging costs/case Ultra-premium sales price/bottle Super-premium sales price/bottle Premium sales price/bottle $80,000 $7.00 $7.00 $1,600 $1,450 $1,200 925 2,775 5,550 9,250 $14.50 $22.00 $15.00 $8.00 Interest rate Labor overhead Repair/maintenance costs/year Variable fuel/supply costs per case Variable utility costs per case Insurance costs (monthly) Office/professional expense (monthly) Variable marketing costs per case Contingency expense 1st year production % 2nd year production % 3rd year production % Annual growth rate (years 4 to 5) Annual growth rate (years 6+) 7.5% 25.0% $12,000 $1.00 $1.65 $1,200 $500 $4.00 5.0% 60.0% 80.0% 90.0% 5.0% 0.0% Produce % Sales % July August September October November December January February March April May June Total 2005 0.0% 0.0% 15.0% 15.0% 15.0% 15.0% 10.0% 10.0% 10.0% 10.0% 0.0% 0.0% 100.0% 10.0% 12.0% 15.0% 18.0% 8.0% 9.0% 3.0% 3.0% 4.0% 4.0% 5.0% 9.0% 100.0% Brant Farms Winery Cash Flow Analysis FISCAL YEAR (JUL-JUN) MONTH VOLUME AS % OF BASE Ultra-premium wine cases produced Super-premium wine cases produced Premium wine cases produced REVENUE Ultra-premium sales Super-premium sales Premium sales SUB-TOTAL Cost of Goods (grapes) TOTAL GROSS MARGIN OPERATING EXPENSES Principal/manager/office salaries Other variable labor costs (production) Other variable labor costs (sales) Labor overhead Packaging Repairs/maintenance Fuel and supplies Utilities Insurance Office expense/professional fees Marketing Contingency/miscellaneous TOTAL OPERATING EXPENSES OPERATING MARGIN (CASH) DEVELOPMENT COSTS Land Site work Winery construction costs Equipment costs Financing/organizational costs Contingency TOTAL DEVELOPMENT COSTS FINANCING & EQUITY Equity in land Cash equity contribution TOTAL EQUITY Working capital loan proceeds Working capital loan repayments Working capital loan balance Working capital loan interest Loan proceeds Amortization TOTAL DEBT SERVICE CASH FLOW CUMULATIVE CASH 2010 Jul 100% 0 0 0 2010 Aug 100% 0 0 0 2010 Sep 100% 139 416 833 2010 Oct 100% 139 416 833 2010 Nov 100% 139 416 833 2010 Dec 100% 139 416 833 2011 Jan 100% 93 278 555 2011 Feb 100% 93 278 555 2011 Mar 100% 93 278 555 2011 Apr 100% 93 278 555 2011 May 100% 0 0 0 2011 Jun 100% 0 0 0 $21,978 $44,955 $51,282 $118,215 $0 $118,215 $26,374 $53,946 $61,538 $141,858 $0 $141,858 $32,967 $67,433 $76,923 $177,323 ($96,398) $80,925 $39,560 $80,919 $92,308 $212,787 ($96,398) $116,389 $17,582 $35,964 $41,026 $94,572 $0 $94,572 $19,780 $40,460 $46,154 $106,394 $0 $106,394 $7,051 $14,423 $15,385 $36,859 $0 $36,859 $7,051 $14,423 $15,385 $36,859 $0 $36,859 $9,402 $19,231 $20,513 $49,145 $0 $49,145 $9,402 $19,231 $20,513 $49,145 $0 $49,145 $11,752 $24,038 $25,641 $61,432 $0 $61,432 $21,154 $43,269 $46,154 $110,577 $0 $110,577 $6,667 $0 $0 $1,667 $0 $1,000 $100 $500 $1,200 $500 $500 $607 $12,740 $105,475 $6,667 $0 $0 $1,667 $0 $1,000 $100 $500 $1,200 $500 $500 $607 $12,740 $129,118 $6,667 $9,713 $9,713 $6,523 $20,119 $1,000 $1,488 $2,789 $1,200 $500 $6,050 $3,288 $69,048 $11,877 $6,667 $9,713 $9,713 $6,523 $20,119 $1,000 $1,488 $2,789 $1,200 $500 $6,050 $3,288 $69,048 $47,341 $6,667 $9,713 $9,713 $6,523 $20,119 $1,000 $1,488 $2,789 $1,200 $500 $6,050 $3,288 $69,048 $25,524 $6,667 $9,713 $9,713 $6,523 $20,119 $1,000 $1,488 $2,789 $1,200 $500 $6,050 $3,288 $69,048 $37,345 $6,667 $6,475 $6,475 $4,904 $13,413 $1,000 $1,025 $2,026 $1,200 $500 $4,200 $2,394 $50,279 ($13,420) $6,667 $6,475 $6,475 $4,904 $13,413 $1,000 $1,025 $2,026 $1,200 $500 $4,200 $2,394 $50,279 ($13,420) $6,667 $6,475 $6,475 $4,904 $13,413 $1,000 $1,025 $2,026 $1,200 $500 $4,200 $2,394 $50,279 ($1,134) $6,667 $6,475 $6,475 $4,904 $13,413 $1,000 $1,025 $2,026 $1,200 $500 $4,200 $2,394 $50,279 ($1,134) $6,667 $0 $0 $1,667 $0 $1,000 $100 $500 $1,200 $500 $500 $607 $12,740 $48,692 $6,667 $0 $0 $1,667 $0 $1,000 $100 $500 $1,200 $500 $500 $607 $12,740 $97,837 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $90,000 $880,000 ($5,500) $0 ($11,124) ($16,624) ($1,149) $2,850 $0 $0 $0 $0 $115,000 $765,000 ($4,781) $0 ($11,124) ($15,905) ($1,787) $1,062 $0 $0 $0 $5,000 $0 $770,000 ($4,813) $0 ($11,124) ($15,937) $940 $2,002 $0 $0 $0 $0 $30,000 $740,000 ($4,625) $0 ($11,124) ($15,749) $1,592 $3,594 $0 $0 $0 $0 $10,000 $730,000 ($4,563) $0 ($11,124) ($15,687) ($163) $3,431 $0 $0 $0 $0 $25,000 $705,000 ($4,406) $0 ($11,124) ($15,530) ($3,185) $246 $0 $0 $0 $30,000 $0 $735,000 ($4,594) $0 ($11,124) ($15,718) $862 $1,108 $0 $0 $0 $30,000 $0 $765,000 ($4,781) $0 ($11,124) ($15,905) $675 $1,783 $0 $0 $0 $20,000 $0 $785,000 ($4,906) $0 ($11,124) ($16,030) $2,836 $4,619 $0 $0 $0 $15,000 $0 $800,000 ($5,000) $0 ($11,124) ($16,124) ($2,258) $2,361 $0 $0 $0 $0 $35,000 $765,000 ($4,781) $0 ($11,124) ($15,905) ($2,214) $148 $0 $0 $0 $0 $80,000 $685,000 ($4,281) $0 ($11,124) ($15,405) $2,431 $2,579 Cash Flow Assumptions Principal/manager/office salaries Variable labor costs/case - production Variable labor costs/case - sales Grape price per ton, ultra-premium Grape price per ton, super-premium Grape price per ton, premium Ultra-premium cases produced annually Super-premium cases produced annually Premium cases produced annually Total cases produced annually (capacity) Packaging costs/case Ultra-premium sales price/bottle Super-premium sales price/bottle Premium sales price/bottle $80,000 $7.00 $7.00 $1,600 $1,450 $1,200 925 2,775 5,550 9,250 $14.50 $22.00 $15.00 $8.00 Interest rate Labor overhead Repair/maintenance costs/year Variable fuel/supply costs per case Variable utility costs per case Insurance costs (monthly) Office/professional expense (monthly) Variable marketing costs per case Contingency expense 1st year production % 2nd year production % 3rd year production % Annual growth rate (years 4 to 5) Annual growth rate (years 6+) 7.5% 25.0% $12,000 $1.00 $1.65 $1,200 $500 $4.00 5.0% 60.0% 80.0% 90.0% 5.0% 0.0% Produce % Sales % July August September October November December January February March April May June Total 2005 0.0% 0.0% 15.0% 15.0% 15.0% 15.0% 10.0% 10.0% 10.0% 10.0% 0.0% 0.0% 100.0% 10.0% 12.0% 15.0% 18.0% 8.0% 9.0% 3.0% 3.0% 4.0% 4.0% 5.0% 9.0% 100.0% Brant Farms Winery Cash Flow Analysis FISCAL YEAR (JUL-JUN) MONTH VOLUME AS % OF BASE Ultra-premium wine cases produced Super-premium wine cases produced Premium wine cases produced REVENUE Ultra-premium sales Super-premium sales Premium sales SUB-TOTAL Cost of Goods (grapes) TOTAL GROSS MARGIN OPERATING EXPENSES Principal/manager/office salaries Other variable labor costs (production) Other variable labor costs (sales) Labor overhead Packaging Repairs/maintenance Fuel and supplies Utilities Insurance Office expense/professional fees Marketing Contingency/miscellaneous TOTAL OPERATING EXPENSES OPERATING MARGIN (CASH) DEVELOPMENT COSTS Land Site work Winery construction costs Equipment costs Financing/organizational costs Contingency TOTAL DEVELOPMENT COSTS FINANCING & EQUITY Equity in land Cash equity contribution TOTAL EQUITY Working capital loan proceeds Working capital loan repayments Working capital loan balance Working capital loan interest Loan proceeds Amortization TOTAL DEBT SERVICE CASH FLOW CUMULATIVE CASH 2011 Jul 100% 0 0 0 2011 Aug 100% 0 0 0 2011 Sep 100% 139 416 833 2011 Oct 100% 139 416 833 2011 Nov 100% 139 416 833 2011 Dec 100% 139 416 833 2012 Jan 100% 93 278 555 2012 Feb 100% 93 278 555 2012 Mar 100% 93 278 555 2012 Apr 100% 93 278 555 2012 May 100% 0 0 0 2012 Jun 100% 0 0 0 $23,504 $48,077 $52,614 $124,195 $0 $124,195 $28,205 $57,692 $63,137 $149,034 $0 $149,034 $35,256 $72,115 $78,921 $186,293 ($96,398) $89,895 $42,308 $86,538 $94,705 $223,551 ($96,398) $127,154 $18,803 $38,462 $42,091 $99,356 $0 $99,356 $21,154 $43,269 $47,353 $111,776 $0 $111,776 $7,234 $14,798 $15,784 $37,816 $0 $37,816 $7,234 $14,798 $15,784 $37,816 $0 $37,816 $9,646 $19,730 $21,046 $50,422 $0 $50,422 $9,646 $19,730 $21,046 $50,422 $0 $50,422 $12,057 $24,663 $26,307 $63,027 $0 $63,027 $21,703 $44,393 $47,353 $113,449 $0 $113,449 $6,667 $0 $0 $1,667 $0 $1,000 $100 $500 $1,200 $500 $500 $607 $12,740 $111,455 $6,667 $0 $0 $1,667 $0 $1,000 $100 $500 $1,200 $500 $500 $607 $12,740 $136,294 $6,667 $9,713 $9,713 $6,523 $20,119 $1,000 $1,488 $2,789 $1,200 $500 $6,050 $3,288 $69,048 $20,847 $6,667 $9,713 $9,713 $6,523 $20,119 $1,000 $1,488 $2,789 $1,200 $500 $6,050 $3,288 $69,048 $58,105 $6,667 $9,713 $9,713 $6,523 $20,119 $1,000 $1,488 $2,789 $1,200 $500 $6,050 $3,288 $69,048 $30,308 $6,667 $9,713 $9,713 $6,523 $20,119 $1,000 $1,488 $2,789 $1,200 $500 $6,050 $3,288 $69,048 $42,727 $6,667 $6,475 $6,475 $4,904 $13,413 $1,000 $1,025 $2,026 $1,200 $500 $4,200 $2,394 $50,279 ($12,463) $6,667 $6,475 $6,475 $4,904 $13,413 $1,000 $1,025 $2,026 $1,200 $500 $4,200 $2,394 $50,279 ($12,463) $6,667 $6,475 $6,475 $4,904 $13,413 $1,000 $1,025 $2,026 $1,200 $500 $4,200 $2,394 $50,279 $143 $6,667 $6,475 $6,475 $4,904 $13,413 $1,000 $1,025 $2,026 $1,200 $500 $4,200 $2,394 $50,279 $143 $6,667 $0 $0 $1,667 $0 $1,000 $100 $500 $1,200 $500 $500 $607 $12,740 $50,287 $6,667 $0 $0 $1,667 $0 $1,000 $100 $500 $1,200 $500 $500 $607 $12,740 $100,709 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $95,000 $590,000 ($3,688) $0 ($11,124) ($14,812) $1,643 $4,223 $0 $0 $0 $0 $125,000 $465,000 ($2,906) $0 ($11,124) ($14,030) ($2,736) $1,486 $0 $0 $0 $0 $5,000 $460,000 ($2,875) $0 ($11,124) ($13,999) $1,848 $3,334 $0 $0 $0 $0 $45,000 $415,000 ($2,594) $0 ($11,124) ($13,718) ($613) $2,721 $0 $0 $0 $0 $15,000 $400,000 ($2,500) $0 ($11,124) ($13,624) $1,684 $4,405 $0 $0 $0 $0 $30,000 $370,000 ($2,313) $0 ($11,124) ($13,437) ($709) $3,696 $0 $0 $0 $25,000 $0 $395,000 ($2,469) $0 ($11,124) ($13,593) ($1,055) $2,640 $0 $0 $0 $25,000 $0 $420,000 ($2,625) $0 ($11,124) ($13,749) ($1,212) $1,429 $0 $0 $0 $15,000 $0 $435,000 ($2,719) $0 ($11,124) ($13,843) $1,300 $2,729 $0 $0 $0 $15,000 $0 $450,000 ($2,813) $0 ($11,124) ($13,937) $1,206 $3,935 $0 $0 $0 $0 $40,000 $410,000 ($2,563) $0 ($11,124) ($13,687) ($3,399) $536 $0 $0 $0 $0 $85,000 $325,000 ($2,031) $0 ($11,124) ($13,155) $2,554 $3,089 Cash Flow Assumptions Principal/manager/office salaries Variable labor costs/case - production Variable labor costs/case - sales Grape price per ton, ultra-premium Grape price per ton, super-premium Grape price per ton, premium Ultra-premium cases produced annually Super-premium cases produced annually Premium cases produced annually Total cases produced annually (capacity) Packaging costs/case Ultra-premium sales price/bottle Super-premium sales price/bottle Premium sales price/bottle $80,000 $7.00 $7.00 $1,600 $1,450 $1,200 925 2,775 5,550 9,250 $14.50 $22.00 $15.00 $8.00 Interest rate Labor overhead Repair/maintenance costs/year Variable fuel/supply costs per case Variable utility costs per case Insurance costs (monthly) Office/professional expense (monthly) Variable marketing costs per case Contingency expense 1st year production % 2nd year production % 3rd year production % Annual growth rate (years 4 to 5) Annual growth rate (years 6+) 7.5% 25.0% $12,000 $1.00 $1.65 $1,200 $500 $4.00 5.0% 60.0% 80.0% 90.0% 5.0% 0.0% Produce % Sales % July August September October November December January February March April May June Total 2005 0.0% 0.0% 15.0% 15.0% 15.0% 15.0% 10.0% 10.0% 10.0% 10.0% 0.0% 0.0% 100.0% 10.0% 12.0% 15.0% 18.0% 8.0% 9.0% 3.0% 3.0% 4.0% 4.0% 5.0% 9.0% 100.0% Brant Farms Winery Cash Flow Analysis FISCAL YEAR (JUL-JUN) MONTH VOLUME AS % OF BASE Ultra-premium wine cases produced Super-premium wine cases produced Premium wine cases produced REVENUE Ultra-premium sales Super-premium sales Premium sales SUB-TOTAL Cost of Goods (grapes) TOTAL GROSS MARGIN OPERATING EXPENSES Principal/manager/office salaries Other variable labor costs (production) Other variable labor costs (sales) Labor overhead Packaging Repairs/maintenance Fuel and supplies Utilities Insurance Office expense/professional fees Marketing Contingency/miscellaneous TOTAL OPERATING EXPENSES OPERATING MARGIN (CASH) DEVELOPMENT COSTS Land Site work Winery construction costs Equipment costs Financing/organizational costs Contingency TOTAL DEVELOPMENT COSTS FINANCING & EQUITY Equity in land Cash equity contribution TOTAL EQUITY Working capital loan proceeds Working capital loan repayments Working capital loan balance Working capital loan interest Loan proceeds Amortization TOTAL DEBT SERVICE CASH FLOW CUMULATIVE CASH 2012 Jul 100% 0 0 0 2012 Aug 100% 0 0 0 2012 Sep 100% 139 416 833 2012 Oct 100% 139 416 833 2012 Nov 100% 139 416 833 2012 Dec 100% 139 416 833 2013 Jan 100% 93 278 555 2013 Feb 100% 93 278 555 2013 Mar 100% 93 278 555 2013 Apr 100% 93 278 555 2013 May 100% 0 0 0 2013 Jun 100% 0 0 0 $24,115 $49,326 $53,280 $126,720 $0 $126,720 $28,938 $59,191 $63,936 $152,064 $0 $152,064 $36,172 $73,988 $79,920 $190,081 ($96,398) $93,683 $43,407 $88,786 $95,904 $228,097 ($96,398) $131,699 $19,292 $39,461 $42,624 $101,376 $0 $101,376 $21,703 $44,393 $47,952 $114,048 $0 $114,048 $7,326 $14,985 $15,984 $38,295 $0 $38,295 $7,326 $14,985 $15,984 $38,295 $0 $38,295 $9,768 $19,980 $21,312 $51,060 $0 $51,060 $9,768 $19,980 $21,312 $51,060 $0 $51,060 $12,210 $24,975 $26,640 $63,825 $0 $63,825 $21,978 $44,955 $47,952 $114,885 $0 $114,885 $6,667 $0 $0 $1,667 $0 $1,000 $100 $500 $1,200 $500 $500 $607 $12,740 $113,980 $6,667 $0 $0 $1,667 $0 $1,000 $100 $500 $1,200 $500 $500 $607 $12,740 $139,324 $6,667 $9,713 $9,713 $6,523 $20,119 $1,000 $1,488 $2,789 $1,200 $500 $6,050 $3,288 $69,048 $24,635 $6,667 $9,713 $9,713 $6,523 $20,119 $1,000 $1,488 $2,789 $1,200 $500 $6,050 $3,288 $69,048 $62,651 $6,667 $9,713 $9,713 $6,523 $20,119 $1,000 $1,488 $2,789 $1,200 $500 $6,050 $3,288 $69,048 $32,328 $6,667 $9,713 $9,713 $6,523 $20,119 $1,000 $1,488 $2,789 $1,200 $500 $6,050 $3,288 $69,048 $45,000 $6,667 $6,475 $6,475 $4,904 $13,413 $1,000 $1,025 $2,026 $1,200 $500 $4,200 $2,394 $50,279 ($11,984) $6,667 $6,475 $6,475 $4,904 $13,413 $1,000 $1,025 $2,026 $1,200 $500 $4,200 $2,394 $50,279 ($11,984) $6,667 $6,475 $6,475 $4,904 $13,413 $1,000 $1,025 $2,026 $1,200 $500 $4,200 $2,394 $50,279 $781 $6,667 $6,475 $6,475 $4,904 $13,413 $1,000 $1,025 $2,026 $1,200 $500 $4,200 $2,394 $50,279 $781 $6,667 $0 $0 $1,667 $0 $1,000 $100 $500 $1,200 $500 $500 $607 $12,740 $51,085 $6,667 $0 $0 $1,667 $0 $1,000 $100 $500 $1,200 $500 $500 $607 $12,740 $102,145 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $100,000 $225,000 ($1,406) $0 ($11,124) ($12,530) $1,450 $4,539 $0 $0 $0 $0 $130,000 $95,000 ($594) $0 ($11,124) ($11,718) ($2,393) $2,146 $0 $0 $0 $0 $0 $0 $0 $50,000 $30,000 ($188) $0 ($11,124) ($11,312) $1,339 $1,495 $0 $0 $0 $0 $20,000 $10,000 ($63) $0 ($11,124) ($11,187) $1,141 $2,637 $0 $0 $0 $0 $10,000 $0 $0 $0 ($11,124) ($11,124) $23,876 $26,513 $0 $0 $0 $0 $0 $0 $0 $0 ($11,124) ($11,124) ($23,108) $3,405 $0 $0 $0 $20,000 $0 $20,000 ($125) $0 ($11,124) ($11,249) ($3,233) $172 $0 $0 $0 $15,000 $0 $35,000 ($219) $0 ($11,124) ($11,343) $4,438 $4,610 $0 $0 $0 $10,000 $0 $45,000 ($281) $0 ($11,124) ($11,405) ($624) $3,986 $0 $0 $0 $0 $40,000 $5,000 ($31) $0 ($11,124) ($11,155) ($70) $3,915 $0 $0 $0 $0 $0 $5,000 ($31) $0 ($11,124) ($11,155) $90,990 $94,905 $15,000 $80,000 ($500) $0 ($11,124) ($11,624) ($1,990) $156 Cash Flow Assumptions Principal/manager/office salaries Variable labor costs/case - production Variable labor costs/case - sales Grape price per ton, ultra-premium Grape price per ton, super-premium Grape price per ton, premium Ultra-premium cases produced annually Super-premium cases produced annually Premium cases produced annually Total cases produced annually (capacity) Packaging costs/case Ultra-premium sales price/bottle Super-premium sales price/bottle Premium sales price/bottle $80,000 $7.00 $7.00 $1,600 $1,450 $1,200 925 2,775 5,550 9,250 $14.50 $22.00 $15.00 $8.00 Interest rate Labor overhead Repair/maintenance costs/year Variable fuel/supply costs per case Variable utility costs per case Insurance costs (monthly) Office/professional expense (monthly) Variable marketing costs per case Contingency expense 1st year production % 2nd year production % 3rd year production % Annual growth rate (years 4 to 5) Annual growth rate (years 6+) 7.5% 25.0% $12,000 $1.00 $1.65 $1,200 $500 $4.00 5.0% 60.0% 80.0% 90.0% 5.0% 0.0% Produce % Sales % July August September October November December January February March April May June Total 2005 0.0% 0.0% 15.0% 15.0% 15.0% 15.0% 10.0% 10.0% 10.0% 10.0% 0.0% 0.0% 100.0% 10.0% 12.0% 15.0% 18.0% 8.0% 9.0% 3.0% 3.0% 4.0% 4.0% 5.0% 9.0% 100.0% Brant Farms Winery Cash Flow Analysis FISCAL YEAR (JUL-JUN) MONTH VOLUME AS % OF BASE Ultra-premium wine cases produced Super-premium wine cases produced Premium wine cases produced REVENUE Ultra-premium sales Super-premium sales Premium sales SUB-TOTAL Cost of Goods (grapes) TOTAL GROSS MARGIN OPERATING EXPENSES Principal/manager/office salaries Other variable labor costs (production) Other variable labor costs (sales) Labor overhead Packaging Repairs/maintenance Fuel and supplies Utilities Insurance Office expense/professional fees Marketing Contingency/miscellaneous TOTAL OPERATING EXPENSES OPERATING MARGIN (CASH) DEVELOPMENT COSTS Land Site work Winery construction costs Equipment costs Financing/organizational costs Contingency TOTAL DEVELOPMENT COSTS FINANCING & EQUITY Equity in land Cash equity contribution TOTAL EQUITY Working capital loan proceeds Working capital loan repayments Working capital loan balance Working capital loan interest Loan proceeds Amortization TOTAL DEBT SERVICE CASH FLOW CUMULATIVE CASH 2013 Jul 100% 0 0 0 2013 Aug 100% 0 0 0 2013 Sep 100% 139 416 833 2013 Oct 100% 139 416 833 2013 Nov 100% 139 416 833 2013 Dec 100% 139 416 833 2014 Jan 100% 93 278 555 2014 Feb 100% 93 278 555 2014 Mar 100% 93 278 555 2014 Apr 100% 93 278 555 2014 May 100% 0 0 0 2014 Jun 100% 0 0 0 $24,420 $49,950 $53,280 $127,650 $0 $127,650 $29,304 $59,940 $63,936 $153,180 $0 $153,180 $36,630 $74,925 $79,920 $191,475 ($96,398) $95,077 $43,956 $89,910 $95,904 $229,770 ($96,398) $133,372 $19,536 $39,960 $42,624 $102,120 $0 $102,120 $21,978 $44,955 $47,952 $114,885 $0 $114,885 $7,326 $14,985 $15,984 $38,295 $0 $38,295 $7,326 $14,985 $15,984 $38,295 $0 $38,295 $9,768 $19,980 $21,312 $51,060 $0 $51,060 $9,768 $19,980 $21,312 $51,060 $0 $51,060 $12,210 $24,975 $26,640 $63,825 $0 $63,825 $21,978 $44,955 $47,952 $114,885 $0 $114,885 $6,667 $0 $0 $1,667 $0 $1,000 $100 $500 $1,200 $500 $500 $607 $12,740 $114,910 $6,667 $0 $0 $1,667 $0 $1,000 $100 $500 $1,200 $500 $500 $607 $12,740 $140,440 $6,667 $9,713 $9,713 $6,523 $20,119 $1,000 $1,488 $2,789 $1,200 $500 $6,050 $3,288 $69,048 $26,029 $6,667 $9,713 $9,713 $6,523 $20,119 $1,000 $1,488 $2,789 $1,200 $500 $6,050 $3,288 $69,048 $64,324 $6,667 $9,713 $9,713 $6,523 $20,119 $1,000 $1,488 $2,789 $1,200 $500 $6,050 $3,288 $69,048 $33,072 $6,667 $9,713 $9,713 $6,523 $20,119 $1,000 $1,488 $2,789 $1,200 $500 $6,050 $3,288 $69,048 $45,837 $6,667 $6,475 $6,475 $4,904 $13,413 $1,000 $1,025 $2,026 $1,200 $500 $4,200 $2,394 $50,279 ($11,984) $6,667 $6,475 $6,475 $4,904 $13,413 $1,000 $1,025 $2,026 $1,200 $500 $4,200 $2,394 $50,279 ($11,984) $6,667 $6,475 $6,475 $4,904 $13,413 $1,000 $1,025 $2,026 $1,200 $500 $4,200 $2,394 $50,279 $781 $6,667 $6,475 $6,475 $4,904 $13,413 $1,000 $1,025 $2,026 $1,200 $500 $4,200 $2,394 $50,279 $781 $6,667 $0 $0 $1,667 $0 $1,000 $100 $500 $1,200 $500 $500 $607 $12,740 $51,085 $6,667 $0 $0 $1,667 $0 $1,000 $100 $500 $1,200 $500 $500 $607 $12,740 $102,145 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $5,000 $0 $0 $0 ($11,124) ($11,124) $98,786 $193,691 $0 $0 $0 $0 $0 $0 $0 $0 ($11,124) ($11,124) $129,316 $323,007 $0 $0 $0 $0 $0 $0 $0 $0 ($11,124) ($11,124) $14,905 $337,912 $0 $0 $0 $0 $0 $0 $0 $0 ($11,124) ($11,124) $53,200 $391,112 $0 $0 $0 $0 $0 $0 $0 $0 ($11,124) ($11,124) $21,948 $413,059 $0 $0 $0 $0 $0 $0 $0 $0 ($11,124) ($11,124) $34,713 $447,772 $0 $0 $0 $0 $0 $0 $0 $0 ($11,124) ($11,124) ($23,108) $424,664 $0 $0 $0 $0 $0 $0 $0 $0 ($11,124) ($11,124) ($23,108) $401,556 $0 $0 $0 $0 $0 $0 $0 $0 ($11,124) ($11,124) ($10,343) $391,213 $0 $0 $0 $0 $0 $0 $0 $0 ($11,124) ($11,124) ($10,343) $380,870 $0 $0 $0 $0 $0 $0 $0 $0 ($11,124) ($11,124) $39,961 $420,831 $0 $0 $0 $0 $0 $0 $0 $0 ($11,124) ($11,124) $91,021 $511,852 Cash Flow Assumptions Principal/manager/office salaries Variable labor costs/case - production Variable labor costs/case - sales Grape price per ton, ultra-premium Grape price per ton, super-premium Grape price per ton, premium Ultra-premium cases produced annually Super-premium cases produced annually Premium cases produced annually Total cases produced annually (capacity) Packaging costs/case Ultra-premium sales price/bottle Super-premium sales price/bottle Premium sales price/bottle $80,000 $7.00 $7.00 $1,600 $1,450 $1,200 925 2,775 5,550 9,250 $14.50 $22.00 $15.00 $8.00 Interest rate Labor overhead Repair/maintenance costs/year Variable fuel/supply costs per case Variable utility costs per case Insurance costs (monthly) Office/professional expense (monthly) Variable marketing costs per case Contingency expense 1st year production % 2nd year production % 3rd year production % Annual growth rate (years 4 to 5) Annual growth rate (years 6+) 7.5% 25.0% $12,000 $1.00 $1.65 $1,200 $500 $4.00 5.0% 60.0% 80.0% 90.0% 5.0% 0.0% Produce % Sales % July August September October November December January February March April May June Total 2005 0.0% 0.0% 15.0% 15.0% 15.0% 15.0% 10.0% 10.0% 10.0% 10.0% 0.0% 0.0% 100.0% 10.0% 12.0% 15.0% 18.0% 8.0% 9.0% 3.0% 3.0% 4.0% 4.0% 5.0% 9.0% 100.0% Brant Farms Winery Cash Flow Analysis FISCAL YEAR (JUL-JUN) MONTH VOLUME AS % OF BASE Ultra-premium wine cases produced Super-premium wine cases produced Premium wine cases produced REVENUE Ultra-premium sales Super-premium sales Premium sales SUB-TOTAL Cost of Goods (grapes) TOTAL GROSS MARGIN OPERATING EXPENSES Principal/manager/office salaries Other variable labor costs (production) Other variable labor costs (sales) Labor overhead Packaging Repairs/maintenance Fuel and supplies Utilities Insurance Office expense/professional fees Marketing Contingency/miscellaneous TOTAL OPERATING EXPENSES OPERATING MARGIN (CASH) DEVELOPMENT COSTS Land Site work Winery construction costs Equipment costs Financing/organizational costs Contingency TOTAL DEVELOPMENT COSTS FINANCING & EQUITY Equity in land Cash equity contribution TOTAL EQUITY Working capital loan proceeds Working capital loan repayments Working capital loan balance Working capital loan interest Loan proceeds Amortization TOTAL DEBT SERVICE CASH FLOW CUMULATIVE CASH 2014 Jul 100% 0 0 0 2014 Aug 100% 0 0 0 2014 Sep 100% 139 416 833 2014 Oct 100% 139 416 833 2014 Nov 100% 139 416 833 2014 Dec 100% 139 416 833 2015 Jan 100% 93 278 555 2015 Feb 100% 93 278 555 2015 Mar 100% 93 278 555 2015 Apr 100% 93 278 555 2015 May 100% 0 0 0 2015 Jun 100% 0 0 0 $24,420 $49,950 $53,280 $127,650 $0 $127,650 $29,304 $59,940 $63,936 $153,180 $0 $153,180 $36,630 $74,925 $79,920 $191,475 ($96,398) $95,077 $43,956 $89,910 $95,904 $229,770 ($96,398) $133,372 $19,536 $39,960 $42,624 $102,120 $0 $102,120 $21,978 $44,955 $47,952 $114,885 $0 $114,885 $7,326 $14,985 $15,984 $38,295 $0 $38,295 $7,326 $14,985 $15,984 $38,295 $0 $38,295 $9,768 $19,980 $21,312 $51,060 $0 $51,060 $9,768 $19,980 $21,312 $51,060 $0 $51,060 $12,210 $24,975 $26,640 $63,825 $0 $63,825 $21,978 $44,955 $47,952 $114,885 $0 $114,885 $6,667 $0 $0 $1,667 $0 $1,000 $100 $500 $1,200 $500 $500 $607 $12,740 $114,910 $6,667 $0 $0 $1,667 $0 $1,000 $100 $500 $1,200 $500 $500 $607 $12,740 $140,440 $6,667 $9,713 $9,713 $6,523 $20,119 $1,000 $1,488 $2,789 $1,200 $500 $6,050 $3,288 $69,048 $26,029 $6,667 $9,713 $9,713 $6,523 $20,119 $1,000 $1,488 $2,789 $1,200 $500 $6,050 $3,288 $69,048 $64,324 $6,667 $9,713 $9,713 $6,523 $20,119 $1,000 $1,488 $2,789 $1,200 $500 $6,050 $3,288 $69,048 $33,072 $6,667 $9,713 $9,713 $6,523 $20,119 $1,000 $1,488 $2,789 $1,200 $500 $6,050 $3,288 $69,048 $45,837 $6,667 $6,475 $6,475 $4,904 $13,413 $1,000 $1,025 $2,026 $1,200 $500 $4,200 $2,394 $50,279 ($11,984) $6,667 $6,475 $6,475 $4,904 $13,413 $1,000 $1,025 $2,026 $1,200 $500 $4,200 $2,394 $50,279 ($11,984) $6,667 $6,475 $6,475 $4,904 $13,413 $1,000 $1,025 $2,026 $1,200 $500 $4,200 $2,394 $50,279 $781 $6,667 $6,475 $6,475 $4,904 $13,413 $1,000 $1,025 $2,026 $1,200 $500 $4,200 $2,394 $50,279 $781 $6,667 $0 $0 $1,667 $0 $1,000 $100 $500 $1,200 $500 $500 $607 $12,740 $51,085 $6,667 $0 $0 $1,667 $0 $1,000 $100 $500 $1,200 $500 $500 $607 $12,740 $102,145 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 ($11,124) ($11,124) $103,786 $615,637 $0 $0 $0 $0 $0 $0 $0 $0 ($11,124) ($11,124) $129,316 $744,953 $0 $0 $0 $0 $0 $0 $0 $0 ($11,124) ($11,124) $14,905 $759,858 $0 $0 $0 $0 $0 $0 $0 $0 ($11,124) ($11,124) $53,200 $813,058 $0 $0 $0 $0 $0 $0 $0 $0 ($11,124) ($11,124) $21,948 $835,006 $0 $0 $0 $0 $0 $0 $0 $0 ($11,124) ($11,124) $34,713 $869,718 $0 $0 $0 $0 $0 $0 $0 $0 ($11,124) ($11,124) ($23,108) $846,610 $0 $0 $0 $0 $0 $0 $0 $0 ($11,124) ($11,124) ($23,108) $823,503 $0 $0 $0 $0 $0 $0 $0 $0 ($11,124) ($11,124) ($10,343) $813,160 $0 $0 $0 $0 $0 $0 $0 $0 ($11,124) ($11,124) ($10,343) $802,817 $0 $0 $0 $0 $0 $0 $0 $0 ($11,124) ($11,124) $39,961 $842,777 $0 $0 $0 $0 $0 $0 $0 $0 ($11,124) ($11,124) $91,021 $933,798 Cash Flow Assumptions Principal/manager/office salaries Variable labor costs/case - production Variable labor costs/case - sales Grape price per ton, ultra-premium Grape price per ton, super-premium Grape price per ton, premium Ultra-premium cases produced annually Super-premium cases produced annually Premium cases produced annually Total cases produced annually (capacity) Packaging costs/case Ultra-premium sales price/bottle Super-premium sales price/bottle Premium sales price/bottle $80,000 $7.00 $7.00 $1,600 $1,450 $1,200 925 2,775 5,550 9,250 $14.50 $22.00 $15.00 $8.00 Interest rate Labor overhead Repair/maintenance costs/year Variable fuel/supply costs per case Variable utility costs per case Insurance costs (monthly) Office/professional expense (monthly) Variable marketing costs per case Contingency expense 1st year production % 2nd year production % 3rd year production % Annual growth rate (years 4 to 5) Annual growth rate (years 6+) 7.5% 25.0% $12,000 $1.00 $1.65 $1,200 $500 $4.00 5.0% 60.0% 80.0% 90.0% 5.0% 0.0% Produce % Sales % July August September October November December January February March April May June Total 2005 0.0% 0.0% 15.0% 15.0% 15.0% 15.0% 10.0% 10.0% 10.0% 10.0% 0.0% 0.0% 100.0% 10.0% 12.0% 15.0% 18.0% 8.0% 9.0% 3.0% 3.0% 4.0% 4.0% 5.0% 9.0% 100.0% APPENDIX D Resumes of Management Personnel APPENDIX E Equipment Listing