winery business plan

BUSINESS PLAN

Business Plan Prepared By

Bill K. Fre e m a n

Vice President Operations and Wi n e m a k e r

1234 West 12th Te rr a c e

Westhill, StateB 66000

0 0 0 - 5 5 5 - 6 9 3 2

Date Prepared

December 200A

EXECUTIVE SUMMARY 5

MANAGEMENT AND ORGANIZATION 7Management team 7Compensation and ownership 8Board of directors/advisory council 8Infrastructure 9Contracts and franchise agreements 9Insurance 9Employee stock option plan and other incentives 9Organization chart 9

PRODUCT PLAN 10Purpose of the product or service 10Unique features 10Stage of development 11Future research and development 11Trademarks 11Government approvals 11Product and service limitations 12Product liability 12Related products 12Production 13Facilities 13Suppliers 13Environmental factors 14

MARKETING PLAN 15Industry profile 15

Current size 15Growth potential 15Geographic location 16Industry trends 16Seasonality factors 16Profit characteristics 17Distribution channels 17Basis of competition 17

Competition profile 18Customer profile 18Target market profile 19Pricing profile 19Gross margin on products 20Break-even analysis 20

Chapel Springs Winery Business Plan

Table of contents

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Market penetration 20Distribution channels 20Sales representatives and Direct-sales force 20Direct mail 21

Advertising and promotion 21Packaging and labeling 22Service and warranties 22Trade shows 22Future markets 22

OPERATING AND CONTROL SYSTEMS 23Administrative policies, procedures, and controls 23

Receiving orders 23Billing the customers 23Paying the suppliers 23Collecting the accounts receivable 23Reporting to management 23Staff development 23Inventory control 24Handling warranties and returns 24Monitoring the company budgets 24Security systems 24

Documents and paper flow 24Planning chart 25

Product development 25Manufacturing 25Financial requirements 26Marketing flow chart 26Market penetration 26Management and infrastructure 26

Risk analysis 27Salvaging assets 27

GROWTH PLAN 28New offerings to market 28Capital requirements 28Personnel requirements 28Exit strategy 28

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FINANCIAL PLAN 29Sales Projections 29Income Projections 31Cash Requirements 31Sources of Financing 31Projected Financial Statements

Start-Up Funding & ExpendituresProjected Cash Flow StatementsProjected Year-End Income StatementsProjected Year-End Balance SheetRatio Analysis

SUPPORTING DOCUMENTS AppendixSales ProjectionsInventory ProjectionsOperating Expenses ProjectionsDepreciation Schedules Capital Budget Projection Equity & Debt Worksheet

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Ve n t u re DescriptionChapel Springs Wi n e ry, LLC, is a vertically integrated boutique vineyard and winery locatedin Auxville, StateA. Our annual goal is to produce, market and sell up to 5,000 gallons ofdistinctive, rich, artisan wines ($11 to $20 a bottle) directly from the winery ’s tasting ro o m( retail) to pro g ressive wine consumers, and to a lesser extent through selected re s t a u r a n t sand distributors. We plan to begin production August 200C and to open our doors for salesNovember 200C.

Ve n t u re Org a n i z a t i o nChapel Springs Wi n e ry will be joining 32 other StateA wineries, and will focus on craftingworld-class regional wines. Chapel Springs Wi n e ry ’s owners are :

Paul S. Oberon, Ph.D. – President & CFO

D r. Oberon, re t i red, was Vice Chancellor Emeritus and Professor at the University ofStateB Medical Center where he was extensively involved on the boards of numero u sg o v e rnmental and private organizations specializing in business innovation anddevelopment. This experience in strategic business planning will be the guiding forc eleading the management team.

Bill K. Freeman, CSP, P.E. – Vice President & Winemaker

Bill is Vice President and Business Leader of Risk Control Strategies with Marsh Inc.in Metro City and has eighteen years of experience in consulting. He has developedhis winemaking skills the last twelve years learning and gaining hands-on experiencef rom commercial winemakers, professional wine conferences, technical courses andfield experience. He has achieved numerous awards in national and regional winec o m p e t i t i o n s .

Jill K. Freeman – Vice President, Marketing and Business Operations

Jill has a Bachelors degree in Business Administration/Marketing from StateB StateU n i v e r s i t y. Her most recent position as Interim Finance Director at We C a re Learn i n gCenter has provided her insight and experience in operating a small business.

Linda K. Oberon – Vice President, Facilities and Tasting Room

As a past president of the University Auxiliary, Linda Oberon led many successfulv e n t u res for the Auxiliary including the start-up of the University Gift Shop and thedevelopment of the We C a re Learning Center, Inc. She also held the position of BoardP resident of We C a re Learning Center, Inc.

Chapel Springs Wi n e ry will establish an advisory council consisting of selected businessleaders and experienced marketers along with community re p resentation. The advisorycouncil will meet with the management team semi-annually to review strategic issues.


Executive Summary

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Ve n t u re MarketP remium wine consumption is up an estimated 15% in the United States in 200A for winespriced between $7 and $14 a bottle, while luxury wines ($25 and up) increased 18%.A c c o rding to the StateA Department of Agriculture Grape and Wine Program, StateA wineshave increased their market share 42% from five years ago.

With the rapid growth of pro g ressive wine drinkers looking for something diff e rent, ChapelSprings Wi n e ry will create a visceral wine experience offering unique wine varietals bestsuited for the region, complementing regional foods such as spicy barbecues, quail, turkey,venison, trout, other wild game, and home-style meals.

Ve n t u re OperationsThe Oberons will lease 39 acres to Chapel Springs Wi n e ry for the winery and vineyard site ona long-term lease of one dollar ($1.00) per acre, per year. The 39 acres are available forcollateral. The Oberons and Freemans will invest $30,000 of their own funds. Chapel SpringsWi n e ry will annually purchase grapes for winery production from its sister business, Obero nVi n e y a rds .

Ve n t u re FinancingBill and Jill Freeman are seeking a personal mortgage loan for $55,000 for the wineryp roduction and tasting room facility, which they will lease to Chapel Springs Wi n e ry. Thecompany is requesting a $25,000 loan for winery production equipment including winepre s s ,stainless steel fermentation and storage tanks, bottling equipment and transfer pumps.

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Management team

President & CFO: Paul S. Oberon, Ph.D.

As President and Chief Financial Officer (CFO), Dr. Oberon will provide the company strategicbusiness and financial planning guidance. Prior to his re t i rement in July of 1999, Dr. Obero nwas Vice Chancellor Emeritus and Professor at the University of StateB Medical Center. Hes e rved on numerous advisory boards of governmental and private organizations specializingin business innovation and development. Dr. Obero n ’s experience and knowledge of strategicbusiness planning will guide the management team.

Vice President of Operations & Winemaker: Bill K. Freeman, CSP, and PE

Bill Freeman will be responsible for the day-to-day winery operations. He will determine winestyles and implement the winemaking techniques to fit the company’s marketing strategy. Billwill also be responsible for winery maintenance and safety.

Bill is an accomplished winemaker recognized by many commercial StateA winemakers. Hehas honed his winemaking skills over the past twelve years with the help of mentors in thec o m m e rcial winemaking industry. He has studied wine chemistry through short courses fro mthe University of California-Davis, and worked as an apprentice in two commercial wineries.He regularly attends professional winemaking conferences, short-courses, and tastings tostay abreast of new developments and techniques in the industry. Bill continues to advancehis knowledge and skill through his involvement in an experimental vineyard in Leaton,StateA. He has won numerous awards for his wines in both regional and national winecompletions, winning best of show in StateA in 1997.

He has been a safety consultant for nineteen years, and has worked with Maxwell, Inc. overthe past 14 years as the business leader of the Metro City Office. His consulting role pro v i d e shim experience in business planning and management. He has a Master of Science inOccupational Safety.

Vice President of Marketing: Jill K. Freeman

Jill Freeman will establish and implement the strategic marketing plan and maintain an activerole in the local community and the StateA Grape and Wine Program. Jill has a BachelorsD e g ree in Business Administration/Marketing from StateB State University. Her most re c e n tposition as Interim finance director at We C a re Learning Center provides her experience inmany aspects of small business operations.

Vice President of Facilities and Retail: Linda K. Oberon

Linda Oberon will act as liaison with vendors, manage materials pro c u rement, and coord i n a t eand manage retail sells in the tasting room. As a past president of the StateB UniversityMedical Center Wo m e n ’s Auxiliary, Linda led many successful ventures for the Auxiliaryincluding the start-up of the University Gift Shop, and the development of the We C a reL e a rning Center, Inc. She was board president for the We C a re Learning Center.

See Appendix for re s u m e s .


Management and Organization Plan

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Compensation and ownershipChapel Springs Wi n e ry will be established as a Limited Liability Corporation (LLC). Themanagement team will own the company as follows:

Paul S. Obero n 2 0 %

Linda K. Obero n 2 0 %

Jill K. Fre e m a n 3 0 %

Bill K. Fre e m a n 3 0 %

A d v i s o ry CouncilA d v i s o ry Council Member C o m p a n y / A d d re s s E x p e rt i s e

Lila Sarg e n t 820 E. Primro s e C u rrent accountant for A c c o u n t a n t Springton, AA 00000 O b e ron Enterprises LLC

(000) 555-1212

Jim Lutz 1010 Walnut, Suite 500 C u rrent lawyer for A t t o rn e y M e t ro City, AA 00000 O b e ron Enterprises LLC

(000) 555-2500

D r. Mundi Dhrakamikari Southwest StateA State University State enologist providing State Enology Advisor 9740 Red Spring Road c o m m e rcial vintners technical

Mountain Air, AA 00000 advice on winemaking(000) 555-4105

Bob Andre w s StateA Department of Agriculture Assists in developing StateA StateA Grape and Wine Grape and Wine Program wine marketing strategies P rogram Administrator Capital City, StateA including promotional (000) 555-6807 i n t e rviews, publications, wine

tastings, and other public e v e n t s

M a ry Zimmerm a n Best-Field Vi n e y a rd s C o m m e rcial vineyard and Les Zimmerm a n B a s h e r, StateB w i n e ry operationsStateB winery owners (000) 555-2342 Retail and tasting pro m o t i o n s

Carl and Karen Gold Peaceful Bend Wi n e ry Technical advice on StateA winery owners c o m m e rcial wine operations

I n f r a s t ru c t u reI n f r a s t ru c t u re Member C o m p a n y / A d d re s s R o l e

Dan Holden A m e r i c a ’s Bank B a n k e r7568 Money LaneM e t ro, AA 00000

L o retta Bedford Accounting Serv i c e s A c c o u n t a n t7777 W. 8thM e t ro, AA 00000

J e ff rey Smith Smith, Tilden & Underw o o d A t t o rn e y3434 South BoulevardM e t ro, AA 00000

Contracts and agre e m e n t sThe following contracts will be found in Appendix B:

♦ LLC Management Agre e m e n t♦ Insurance Funded Buy-out Agre e m e n t

I n s u r a n c eEach member of the company will be insured by a life insurance policy owned by the LLCwith the proceeds used to purchase the deceased’s ownership of the company. Theremaining owners will receive equal portions of the company.

Employee stock option plan and other incentivesOwnership of the company will remain in the family with no plans to use stock options orother incentives.

O rganization chart

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Paul Obero nP resident & CFO

Jill Fre e m a nVice Pre s i d e n t

Marketing and Sales

Linda Obero nVice Pre s i d e n t

Facilities and Retail

Bill Fre e m a nVice Pre s i d e n t

Operations & Wi n e m a k e r


P roduct Plan

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Purpose of the pro d u c tChapel Springs Wi n e ry, a boutique winery, will provide distinctive, rich, artisan wines top ro g ressive wine consumers. With the rapid growth of pro g ressive wine drinkers looking forsomething diff e rent, Chapel Springs Wi n e ry will create a visceral wine experience off e r i n gunique wine varietals best suited for the region. Our regional wines will complement ourregional foods such as spicy barbecues, quail, turkey, venison, trout, other wild game, andhome-style meals.

Unique feature sChapel Springs Wi n e ry will be a vertically integrated vineyard and winery operation allowingfor complete control of fruit and wine quality. From planting and harvesting thro u g hp roduction and finally to the customer’s palate, we will work to ensure every bottle is our best.Our operation’s unique features designed to enhance our customers’ experience include:

♦ H a rvest Parties for interested friends of the winery to participate and celebrate in theh a rvesting and crushing of the grapes.

♦ E n v i ronmentally friendly vineyard and winery incorporating Integrated PestManagement (IPM) in the vineyard, and recycling and composting programs in thew i n e ry.

♦ After eleven years of experimenting with diff e rent varietals and perfecting his winestyles, Bill Freeman, winemaker has selected six specific wines that the winery willo ff e r. These wines will complement local fare including:

Norton — a dry full-bodied red wine native to StateA, rich with bold cherry fruit, and spicyoak characters made to stand up to spicy barbecue sauces, smoked meats, and chocolate(similar to an Australian Shiraz).

Chambourcin — a dry medium-bodied red wine with blackberry and strawberry fruit muchlike a Pinot Noir complementing many dishes including pan-fried quail, venison, and cheeses.

Cabernet Franc — a dry red wine with pretty violet aromas, firm tannins and excellentblending qualities that will add enjoyment to lamb dishes, steaks and other flavorful foods.

Chardonel — a dry full-bodied white wine similar to chardonnay with crisp acids and pearand apple fruit flavors that go well with chicken, veggies and fresh baked bre a d .

Traminette — a slightly sweet (off - d ry) white wine with some spiciness, honey and mineralnotes, rich tropical fruit that is best paired with grilled bratwurst, German dishes, orientaldishes and spicy foods.

Vignoles — a sweet dessert wine with loads of pineapple, honey, and a crisp backbone tobalance the sugar, making it perfect as an aperitif or after dinner sipper.

Stage of developmentChapel Springs Wi n e ry is currently in the start-up stage. We plan to start production August200C with our first wine sales to begin in November 200C. The following is our pro j e c t e ds c h e d u l e :

♦ J a n u a ry 200B Wi n e ry Facility and Process Design♦ April 200B Begin construction of facility♦ October 200B Complete facility♦ F e b ru a ry 200C Complete installation of winery processing equipment♦ M a rch 200C Initiate BATF and state licensing pro c e s s♦ August 200C Obtain approvals and begin pro d u c t i o n♦ November 200C Open tasting room and begin sales

F u t u re re s e a rch and developmentChapel Springs Wi n e ry will continue to look for new wine varietals and styles to attract andretain the pro g ressive consumer. Our winemaker will continue to stay current with newtechnologies and processes in the wine industry through professional organizations, tradej o u rnals and industry networking. The members will continue to use the state re s o u rc e savailable, and attend technical winemaking short courses and conferences. We haveestablished relationships with the Southwest StateA State University’s enology and viticulturep rogram headed by Dr. Tom Farrar and the StateA Department of Agriculture ’s Grape andWine Program headed by Bob Andrews that will enable us to stay current in StateA’s winei n d u s t ry tre n d s .

Tr a d e m a r k sChapel Springs Wi n e ry ’s trademark will consist of the name and logo.

G o v e rnment appro v a l sChapel Springs Wi n e ry will meet all re g u l a t o ry re q u i rements and obtain all re q u i red bonds,p e rmits, licenses and approvals from the Bureau of Alcohol, Tobacco, and Fire a rms (BAT F ) ,StateA Alcohol Beverage Control, and a County merc h a n t ’s license prior to operation. Theoperation does not plan to have more than 6 employees, under the 10-employee thre s h o l drequiring Occupational Safety and Health Administration (OSHA) written safety and healthp rograms.

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P roduct limitations♦ Wine is a living product that will change with time. ♦ White wine quality will start to decline after two to three years in the bottle.♦ Red wines will improve with age for 10 years, and then begin declining.♦ Wine can only be sold and consumed by adults 21 years or older. ♦ Wine is to be consumed in moderation, preferably with food and friends.♦ Drinking and driving do not mix.

P roduct liabilityP u rveyors of food and drink run the risk of a consumer becoming ill from a bad or spoiledp roduct. This is highly unlikely since a bad wine will be discovered in the first few sips.H o w e v e r, we will carry insurance against this possibility.

Another real risk comes from serving alcohol and sending a customer out the door and ontothe road in an impaired driving condition. Chapel Springs Wi n e ry will promote re s p o n s i b l ewine enjoyment, advocating and providing education in wine’s proper use “with food, familyand friends.” Linda Oberon will manage the tasting room and will serve food and measure damounts of wine to guests. Bread, crackers and cheese will be served to customers withwines. A policy will be established re g a rding identifying and handling guests that have hadenough to drink. In addition, the tasting experience will be accompanied with inform a t i o nabout grape varieties, wine styles, food pairing with certain wines, and the generalwinemaking pro c e s s .

Insurance coverage will be obtained from Jim Farley, insurance agent, specializing in StateA’swine industry. Lines of coverage and limits will be obtained based on the insurance agent’srecommendations for the following:

♦ Liquor liability coverage – Tasting Room serv i c e♦ Corporate general liability coverage – Wi n e ry Pre m i s e s♦ P roducts liability – Wi n e s♦ P ro p e rty coverage – Facility, equipment, contents, and inventory

Related products The retail tasting room will offer many wine-related accessories, wine glasses, Riedel cry s t a ls t e m w a re, wine-related clothing, handcrafted goods, crackers, local cheeses and sausagemeats for sale. In addition, regional artists will display their work at the winery for sale onc o n s i g n m e n t .

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P ro d u c t i o nThe wine production process will generally include the following steps:

1 . C rush and press – grapes are destemmed, crushed (broken open), and pressed toobtain the juice in preparation for ferm e n t a t i o n .

2 . F e rmentation – juice is converted to wine by adding wine yeast to the juice in af e rmentation tank and allowing it to ferment for 10 to 30 days.

3 . Aging and Storage – wine is allowed settle and stabilize in tanks, then it is racked intoclean tanks leaving sediment behind. Some wine is aged in oak barrels to impart oakcharacteristics. Red wines may be aged 6 to 24 months.

4 . Fining, Filtering, and Bottling – fining and filtering are used to finish and clear the wine,removing unwanted proteins and other micro particles. Bottling is the final step of thep ro c e s s .

F a c i l i t i e sThe winery will be a two-level building with 2,400 square feet (40’ x 60’) on each floor. Anoutside crushing and pressing pad (20’ x 20’) will be attached under a protective ro o fs t ru c t u re. The winery ’s production area on the bottom level will include a refrigerated storagea rea for cold stabilizing wines (15’ x 15’), tank and cooperage storage area, a small laboratoryfor wine chemistry analysis, and a finished product storage area. The tasting room (on the topfloor) will be at the front of the building (20’ x 40’) with a banquet room (40’ x 40’) attached.Plans for future expansion will be incorporated into the design.

S u p p l i e r sWi n e ry Stainless Steel Oak Barre l s Lab ware S u p p l i e r sE q u i p m e n t Ta n k s

Criveller Mueller Ta n k s World Cooperage Vi n q u i ry Vi n q u i ry

C o m p a n y

P ro s p e ro C r i v e l l e r S t a Vin Inc. The Wine Lab Scott Lab

E q u i p m e n t

P a s c o P ro s p e ro B a rrel Builders G. W. Kent A M P

P resque Isle G. W. Kent To n n e l l e r i e Wine Bottle

M e rc i e r & Packaging

G. W. Kent

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E n v i ronmental factorsThe winery will operate with an environmentally friendly approach. Bill Freeman will managere g u l a t o ry compliance. There will be very little waste. All waste that can be recycled will bereused or recycled. Pomace (spent grape seeds, skins and stems) after fermentation will beused for composting. Returned bottles will be cleaned and reused. Wastewater from tank andw i n e ry cleaning will be biodegradable and captured in a surface impoundment for use inv i n e y a rd irrigation. The StateA Department of Natural Resources regulations will be re v i e w e dto ensure the winery operates within applicable regulations. All tanks will be protected withs e c o n d a ry containment to prevent ground water contamination from spillage of wine.Refrigeration coolant for tank jackets and room refrigeration will be maintained as re q u i red bythe Federal Environmental Protection Agency (EPA) and properly serviced by a licensedtechnician. In the vineyard, an integrated pest management system will be used tosignificantly reduce chemicals needed to manage pests in the vineyard .

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I n d u s t ry pro f i l e

Current size

U. S. consumers spent $19 billion on wine last year, according to the American Vi n t n e r sAssociation (AVA). Wine consumption is growing and the AVA projects an annual increase inwine sales of 8 to 10%.

Prior to Prohibition, StateA was the country ’s second-biggest wine-producing state. NowStateA is one of the top 20 in U.S. wine production with sales less than 1%. StateA’s 32wineries produced 315,000 gallons in 1999 re p resenting a 4.96% market share for all winesold in StateA (StateA Department of Agriculture). Of the 8.4 million gallons of wine sold inStateA last year, only 415,000 gallons were StateA produced wines (StateA Department ofA g r i c u l t u re). We believe there is sufficient market potential in StateA for Chapel SpringsWi n e ry to thrive and be profitable.

Growth potential

A study perf o rmed by the Wine Market Council released this year shows wine consumptionup 17% in the U. S. This is largely due to the re p o rts of health benefits of moderate wineconsumption and to an aging affluent baby boomer population. The market for super-p remium wines ($7 to $14 a bottle) grew 15% last year, while luxury wines ($25 and up)i n c reased 18% according to the American Vintners Association. Sales of StateA-pro d u c e dwine rose from 292,032 gallons to 415,201 gallons over the last five years, a 42% incre a s e .(StateA Department of Agriculture )

We believe StateA has a bright future re g a rding increased market-share potential. Some ofthe data that supports our belief include:

♦ “Data on total wine sales in StateA indicate substantial opportunity for the industry andthe state for expansion by the wine-production segment. Only about five percent ofthe present potential is now being tapped” (James L. Watson & Associates, Impact ofWine Production in StateA on the StateA Economy, for the StateA Department ofA g r i c u l t u re )

♦ S t a t e A’s wine industry has a major re s o u rce in the StateA Department of Agriculture ’sGrape and Wine Program. Established in 1984, it is used for re s e a rch, developmentand promotion of StateA grapes, wines and juices. The program coord i n a t e smarketing and public relations activities with wholesalers, restaurateurs, retailers, andthe general public. Top priorities include building consumer awareness of the qualityand availability of StateA wines.

♦ S t a t e A’s wine industry relies mainly on direct sales in the tasting room indicatingg rowth potential in outside regions, states and international sales (StateA Depart m e n tof Agriculture).

♦ “Aging baby boomers have twice the income their parents did and they’re spendingm o re dollars on better wine.” (Heather Pierce, “A toast to StateA wine,” The MetroDispatch, June 26. 200A.)


Marketing Plan

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In our opinion, the trend for increased wine consumption will continue, especially in pre m i u mand luxury wines. We expect StateA wine sales to follow this trend. We believe the potentialfor surpassing other regions is strong due to StateA’s unique wine varietals, emphasis onp remium and luxury level wines, StateA’s Grape and Wine Program and the wine industry ’sconnection to tourism, one of StateA’s top three industries according to the Department ofEconomic Development.

Geographic locations

Wines are produced in many countries around the world including France, Italy, Germ a n y,Spain, Chile, Australia, and the United States. The top 20 wine-producing states in the U.S.a re led by California, New York, and Wa s h i n g t o n .

Industry trends

Ever since Morley Safer unearthed the French Paradox on the CBS news program 60Minutes in 1991, wine sales and consumption have been on the increase. Reported healthbenefits of moderate wine drinking has inspired U.S wine consumers to enjoy wine withoutfeeling guilty. Numerous medical studies show moderate use of wine to have health benefitsin preventing heart disease, cancer, osteoporosis, diabetes, and kidney stones (StateAD e p a rtment of Agriculture, Grape and Wine Program).

Americans enjoyed about two gallons apiece last year while the French, Italians, andP o rtuguese swilled 15 gallons a head, according to AVA. Red wine quality and sales are onthe rise despite their higher prices due to re p o rted health benefits. Women as well as men aredrinking more red wine and the core wine consumer market is reaching its peak spending ageof 46 years old (Vi n e y a rd and Wi n e ry Management, March/April 2000).

Another trend developing with pro g ressive wine drinkers is the movement away fro mm a i n s t ream wine regions such as California to smaller, more unique wine regions that off e rsomething diff e rent and special. Oregon wines have followed this trend. Regional wines thata re distinct, unique and of high quality are attracting attention and becoming more populara c c o rding to Don Foust, a Metro City-based wine writer that holds the Master of Wine andMaster Sommelier designations. StateA’s potential for growth as a "regional" wine pro d u c e rof high quality and distinct style wines is strong in our opinion.

We believe the southwest corner of StateA offers great potential for wine consumption gro w t hdue to the increase of affluent re t i red couples moving into the area. Buena Vista, StateC (a drycounty), just 20 miles south of Auxville has a population of over 10,000 re t i red aff l u e n tp rofessionals, many of which drink wine and are looking for high quality activities.

Seasonality factors

The StateA wine industry capitalizes on several seasonal opportunities for increased winesales. These seasons include "harvest" during September, October fest, Thanksgiving andChristmas holidays, New Ye a r’s, Easter, May fest, and summer vacation season. Each ofthese seasons offers an opportunity for a special event at the winery.

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Chapel Springs Wi n e ry will create an emphasis on seasonal wine sales through events hostedat the vineyard and winery including:

♦ H a rvesting Weekend Events♦ New bottling releases ♦ Tasting parties for the Holiday Season♦ “Spring into Wine” Weekend Part y♦ Summer picnics with local music♦ Cellar Tasting To u r s♦ Local Artist Studio Cellar Part i e s♦ Special Reserve Barrel Ta s t i n g sWe will communicate these events through a quarterly newsletter to our re g i s t e re dcustomers, and through local and regional community networks.

Profit characteristics

Small boutique-type wineries like Chapel Springs Wi n e ry that sell premium wines directly tothe consumer in the tasting room have the highest profit margins in the industry. StateAwineries selling retail from their premises typically have a profit margin ranging from 50% to75% (StateA Grape and Wine Program). The average cost of gross sales for a bottle of wineis approximately $3.50 (AVA) and can be sold for $8.00 to $26.00. Larger wineries that rely onvolume sales through a three-tier distribution system typically have smaller profit margins of10 to 20%.

Distribution channels

L a rge wineries producing 10,000 to 100,000 gallons of wine a year typically use the thre e - t i e rsystem (i.e. winery to distributor to re t a i l e r.) Approximately 90% of StateA wineries sell wined i rectly from their tasting room and winery.

Chapel Springs Wi n e ry will rely initially on direct retail sales from the tasting room and focuson building customer relationships. We may also sell a small quantity to select re s t a u r a n t sand wine shops in the Metro City area for winery promotion and recognition.

Basis of competition

Wine competes for customers on several levels. The consumer who chooses his or her wineon price alone is not part of our target market. Wines are also chosen based on vineyard s ,taste and food selection. Ambience can play a key role. The customer must not feelintimidated or ignorant.

Chapel Springs Wi n e ry ’s key competitive factors will be premium wine quality, uniquevarietals, and a very friendly atmosphere at the winery. Our mission is to craft distinctp remium wines that are very approachable to new wine drinkers and experienced wineenthusiasts alike, and to promote a healthy wine experience through education. Our locationwill also serve to make us the first choice among wine enthusiasts in the area.

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Competition pro f i l eOur competition’s profile consists of:

♦ Small boutique wineries producing less than 5,000 gallons annually♦ Price range of $8 to $24 a bottle♦ Tasting room and banquet ro o m♦ Cellar room tours and tasting♦ Picnic facilities and special events

Chapel Springs Wi n e ry ’s direct competition is StateA’s 32 wineries and StateC’s five wineries.Several new wineries are planned in the southwest StateA area according to the StateAGrape and Wine Program. However, we believe new local wineries will increase consumeri n t e rest in the re g i o n ’s wines and improve recognition and acceptance of our wines.

I n d i rect competition exists from U. S. wines produced by California, Washington, New Yo r kand other states, as well as foreign-made wines. Many of these wines produced by the larg evolume wineries are cost competitive and targeted to “traditional” wine consumers that spendan average of $4.00 a bottle (Clark Smith, University of California-Davis). This segment will notbe our focus.

Substitute competition may occur with a small segment of the population involved in homewinemaking; however, we believe this segment is drawn to small boutique-type wineries andoften help promote such vineyard and winery operations.

Customer pro f i l eA G E ❏ Baby Boomers 45-54

❏ Young Professional 25-35

❏ R e t i red Professional 65-75

S E X ❏ Male and Female

P R O F E S S I O N ❏ Corporate Pro f e s s i o n a l

❏ P rofessors

❏ L a w y e r s

❏ Young business men and women

I N C O M E ❏ $40,000 and up

G E O G R A P H I C ❏ We s t e rn StateA

❏ N o rt h e rn StateC

❏ E a s t e rn StateB

❏ N o rtheast StateD

SOCIAL CLASS ❏ Middle-upper Class

LIFE STYLE ❏ Active and Healthy

❏ Tr a v e l s

❏ S o c i a l i z e s

❏ 80% internet active

P E R S O N A L I T Y ❏ Enjoys good food and wine

❏ Aw a re of health benefits of wine

❏ R e w a rded by hedonism

❏ Wants something unique

❏ Likes art and music

Ta rget market pro f i l eC o re wine consumers are defined by the Wine Market Council as individuals who drink wineonce per week. Of the core group, 11% generate roughly 88% of U. S. wine sales. Ourt a rget market is the top 11% of wine consumers known as pro g ressive wine drinkers. Theseindividuals tend to be 45 to 55 years old, have the greatest amount of disposable income,and have some experience with wine. This group also likes to dine out and have wine withmeals, during celebrations, and holidays.

Our second market is the new wine drinker with little or no experience tasting wine. Thisg roup is looking for a safe, non-threatening environment where it can experiment and learnabout wine. Many of these individuals are young professionals, 25 to 35 years of age withdisposable income.

Chapel Springs Wi n e ry ’s philosophy is simple. Treat each guest as a friend, and share withhim or her our passion for wine.

Pricing pro f i l ePricing per bottle will be as follows:

Tr a m i n e t t e $ 1 1 . 0 0

C h a rd o n e l $ 1 2 . 0 0

Vi g n o l e s $ 1 4 . 0 0

C h a m b o u rc i n $ 1 4 . 0 0

C a b e rnet Franc $ 1 7 . 0 0

N o rt o n $ 1 9 . 0 0

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G ross margin on pro d u c t sVa r i e t a l Cost P r i c e Gallons / Cost of R e t a i l G ro s sper p e r Bottles G ross Sales P r i c e M a rg i nb o t t l e b o t t l e of wineTraminette $ 3 . 8 5 $ 1 1 . 0 0 1 , 0 0 0 g / 5 , 0 0 0 1 9 , 2 5 0 5 5 , 0 0 0 3 5 , 7 5 0

C h a rdonel $ 4 . 2 0 $ 1 2 . 0 0 7 5 0 g / 3 , 7 5 0 1 5 , 7 5 0 4 5 , 0 0 0 2 9 , 2 5 0

Vi g n o l e s $ 4 . 9 0 $ 1 4 . 0 0 5 0 0 g / 2 , 5 0 0 1 2 , 2 5 0 3 5 , 0 0 0 2 2 , 7 5 0

C h a m b o u rc i n $ 4 . 9 0 $ 1 4 . 0 0 7 5 0 g / 3 , 7 5 0 1 8 , 3 7 5 5 2 , 5 0 0 3 4 , 1 2 5

C a b e rnet Franc $ 5 . 9 5 $ 1 7 . 0 0 2 5 0 g / 1 , 2 5 0 7 , 4 3 8 2 1 , 2 5 0 1 3 , 8 1 2

N o rt o n $ 6 . 6 5 $ 1 9 . 0 0 1 , 0 0 0 g / 5 , 0 0 0 3 3 , 2 5 0 9 5 , 0 0 0 6 1 , 7 5 0

To t a l s 4 , 2 5 0 g / 2 1 , 2 5 0 $ 1 0 6 , 3 1 3 $ 3 0 3 , 7 5 0 $ 1 9 7 , 4 3 7

B reak-even analysisOur fixed costs through 200D, including salaries, facility and utilities, are estimated at $50,000a n n u a l l y. Variable costs per bottle are estimated at approximately $8.33 (including an average$5.00 per bottle direct cost of goods sold). At this level of staffing and production it will takesales of 7,500 bottles @ $15.00 to break even.

Market penetration

Distribution channels

Our primary means of distribution will be direct sales from the winery ’s tasting room. Specialevents such as wedding receptions, banquets, family and club gatherings at the winery ’sbanquet hall will offer additional opportunities for sales. A small amount (less than 2%) will besold through select restaurants and wine specialty shops in the Metro City are a

StateA has an advantage in that most of the wine sales are made from the winery, eliminatingdistributors and retailers, and keeping all of the profit within the winery (StateA Grape andWine Program).

Sales representatives and Direct-sales force

Linda Oberon, Vice President of Facilities and Sales, will manage the tasting room operations,along with Jill Freeman, Vice President of Marketing. Wine poured in the tasting room isestimated at 1,200 bottles annually equaling $4,368 in cost of goods produced.

Jill will develop and cultivate relationships with several key restaurants and wine shops in theM e t ro City area. Restaurants may include Stolen Sizzle, BB’s, Matt Z’s, LaBistro, and othersmall, up-scale venues that have unique wine offerings. Wine specialty shops may includeRyland Liquors, Homer’s, and Larry ’s Liquors in Metro City, and Red Rover in Springton.S a l a ry amounts for the four members will be dependent upon gross margin and profit and areinitially projected at $18,000 annually with $2,000 in benefits.

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Direct mail

Chapel Springs Wi n e ry will send a quarterly newsletter to re g i s t e red customers (“Chapel Wi n eClub” members) that have visited the winery. Each guest will be asked to sign our guest bookand informed of our Wine Club and newsletter. The newsletter will focus on upcoming events,recent developments, new wine releases and discount offerings. We estimate 500 copies at$0.25 each totaling $125 each quart e r.

A d v e rtising and pro m o t i o nOur advertising campaign will begin with press releases announcing the opening of the are a ’sfirst winery to local and regional newspapers and television stations for potential speciali n t e rest stories/coverage. We will target our press releases to Metro City, Bonnert o w n ,Springton, StateA, Rivera, Hillsdale, Benton, Bonville, and Fayette, StateC. In addition to thew i n e ry, our press releases will inform the media of Chapel Springs Wi n e ry ’s banquet hallavailable for special occasions such as wedding receptions, parties, company re t reats andreunions.

On occasion, we will offer press releases of noteworthy events such as our harvest part i e s ,community involvement and medals from high profile national competitions. Some of thespecial events that will be announced include Art and Wine Cellar Parties featuring re g i o n a la rtists and their work, harvest parties, and the Spring Music Wine Festival.

Our harvest parties will take place every Saturday during harvest season (late August thro u g hSeptember) from 8:00 am to 12:00 pm. Each “grape harvester” will be treated to a lunch andwine, and will receive a special edition T- s h i rt with our logo indicating their participation in theannual harvest. In addition they will receive a coupon for a free bottle of wine during their nextvisit. This experience will also benefit the winery in eliminating costs for grape harv e s t i n go ffsetting harvest party costs.

A quarterly newsletter will be sent to our re g i s t e red customers or “Chapel Wine Club.” Asp a rt of the registration, customer swill provide their email address and birthday for ourdatabase. We will send each Wine Club member a "Happy Birthday" email notifying him orher of a special birthday gift certificate redeemable at the winery.

We will have an interactive web site full of color photographs of the vineyard and winery withbuttons for the wine list, a map to the winery, a virtual tour of the winery, vine and wineeducational fun facts, and up-coming events.

In addition, the StateA Grape and Wine Program will assist in promotion through the “Ta s t eStateA Wine” campaign including bro c h u res, wine maps, area tastings, and Web site. Webelieve the most effective advertisement will be word of mouth from our customers and willfocus on customer satisfaction and re l a t i o n s h i p s .

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Packaging and labelingChapel Springs Wi n e ry believes very strongly in the importance of product image,p resentation and quality packaging. We will use heavy weight, high quality bottles fro mDempos Glass in Louisville, Kentucky, which are more expensive than most other bottles.Red wines will be bottled in the “Tempest” (Bordeaux) style in antique green and dead leafg reen, and white wines bottled in “Allegro” (burgundy style) in flint. Bottle costs are $.55 each.

Our label will be design by Barclay Consulting, a wine marketing firm in California thatspecializes in wine marketing and label design. Label design costs are budgeted at $1,500.

P re s s u re sensitive label stock and printing costs are estimated at $.20 each. Grade A, number9 (1.25") corks will be purchased from APM at a cost of $.10 each. Wax seals in coord i n a t i n gcolors will be used with a cost of $.02 each.

Our wine presentation/packaging will be distinctive and “upper end” making our wines uniquec o m p a red to regional competitors.

S e rvice and warr a n t i e sChapel Springs Wi n e ry will replace wines that have been re t u rned to the winery as flawed, orcork tainted. We estimate a 0.25% re t u rn or one out of 400 bottles.

Trade showsChapel Springs Wi n e ry will participate and display wines for tastings in StateA’s "Taste StateAWines" events held in Metro City, St. Lawrence and Springton. The tasting in Metro City hasbeen held each April at the Metro City Art Museum or Museum of Modern Art. There are nocosts other than travel expenses and wine poured. The average number of wine loversattending is 200.

F u t u re marketsAs we grow and increase production, we will consider distributing wine to selective marketssuch as Big Bluff, StateC; St. Martin, StateA; Wa r s a w, StateB; Trent, and State City, StateD;and Demont, StateE. We plan to capitalize on the regional wine market and maintain aregional pre s e n c e .

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Administrative policies, pro c e d u res, and contro l s

Receiving orders

I n i t i a l l y, all sales will be made in the tasting room. As we grow and increase market aware n e s s ,we will market our wines through a select group of boutique restaurants and wine shops inM e t ro City. We will maintain a close relationship with each of our select markets and pro a c t i v e l yfill orders through special promotions and events. We will enable our small group of re s t a u r a n t sand wine shops to fill their orders at any time by a simple phone call, fax or email.

Billing the customers

Chapel Springs Wi n e ry sales in the tasting room will be retail based, requiring cash or cre d i tc a rd at time of purchase. Billing to our select restaurants and wine shops will be initially on aconsignment basis. As we establish our brand within each location, we will arrange forpayments of 50% up front with the remainder collected 30 days after retail sale.

Paying the suppliers

We will pay our suppliers upon delivery with a company American Express card, allowing us toconsolidate and track expenses. For grapes purchased from our sister business, Obero nVi n e y a rds LLC, we will transfer funds from our corporate bank account to the Obero nVi n e y a rds’ account upon harvest of grapes.

Collecting the accounts receivable

I n v e n t o ry levels at our restaurant and retail liquor outlets will be verified every two weeks.Invoices will then be sent for bottles sold. Payment due dates will be within 30 days from billingdate. At 30 days, any outstanding receivables will be sent a reminder notice. At 45 days,outstanding receivables will be called and payment arrangements determined. Relationshipswill be continued with only those outlets that pay in a timely fashion.

Reporting to management

Our four-member team will maintain an informal communication process and will documentweekly activities in a business diary for advisory board re v i e w. If and when the need foradditional employees becomes apparent, a more stru c t u red communication system will beinstituted with re p o rt stru c t u re and pro c e d u re s .

Staff development

Linda Oberon and Jill Freeman will attend a short course in wine tasting room managementand techniques off e red by Barclay Consulting in San Francisco, California, in January 2001. Wewill continue to promote ongoing training and education in each member’s respective are a .


Operating and Control Systems

23

Inventory control

Our inventory control will follow the Bureau of Alcohol, Tobacco, and Fire a rm ’s excise taxre p o rting and bonding re q u i rements, maintaining accurate figures on gallons in pro c e s s( f e rmentation tanks, stainless steel tanks, and oak cooperage) and bottled wine stored inbonded storage areas. A computerized system will be used to track and monitor inventory inthe winery.

Retail inventory in the tasting room will be controlled with the use of a computer program.

Handling warranties and returns

Chapel Springs Wi n e ry ’s policy will be to replace without question a re t u rned flawed bottle ofwine with a bottle of the same variety. (On occasion, a bottle of wine may develop an offa roma due to a cork induced problem called cork taint. Industry averages for cork taint area p p roximately 1%; our small production volume and personal involvement in all pro c e s s e sshould reduce our re t u rn rate).

Monitoring the company budgets

Paul Oberon and Jill Freeman will review budgets monthly and pre p a re an analysis for BillF reeman and Linda Oberon. The members will then evaluate the need for modifications oradjustments in spending.

Security systems

As re q u i red by the BAT F, our winery will be bonded and secured with perimeter lighting,c o n t rolled access and secured doors and windows. A commercial alarm system will beincorporated into the building during construction. Cash accumulated on the premises fro mwine sales will be kept in a safe and bank deposits will be made fre q u e n t l y.

All business-related data kept on computer will be stored off site with daily backup copiesmade of the data stored in a separate location.

Documents and paper flowEach batch of wine will have a data sheet identifying the varietal(s), date harvested, grapec h e m i s t ry numbers, alcohol content, applied winemaking techniques, processing additives,and gallons. We will fill out the sheet as the wine is processed to meet BATF excise tax andre c o rd-keeping needs. A copy of a sample data sheet is included in the appendix.

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Planning chart

Product development

Our product will be begin its life cycle in the harvest season as the grape varietals begin toripen. In August, Bill Freeman will take period grape samples to analyze for ripeness. Graperipeness will be based on juice chemistry including pH, brix (sugar level), titratable acidity,c o l o r, texture, and most importantly taste and aroma. Bill Freeman will be responsible formaking the decision to harvest each varietal. Harvest dates will coincide with weekends inAugust and September when possible to incorporate our Harvest Party events allowingguests to join the grape picking.

Our wine release schedule will be as follows:

♦ Traminette, Vignoles and Chambourcin blush wines will be released in November,t h rough Febru a ry (three to six months) following the harv e s t .

♦ C h a rdonel barrel fermented and aged wines will be released 12 to 18 months followingthe harv e s t .

♦ C h a m b o u rcin, Norton and Cabernet Franc barrel aged wines will be released 18 to 24months following harv e s t .

Manufacturing

The following steps and their respective time lines outline our winemaking pro c e s s :

♦ Harvest — H a rvest will occur during the early morning hours to maintain cool grapet e m p e r a t u res. Grapes will be immediately taken to the crushing pad for cru s h i n g( v i n e y a rd is located adjacent to the winery). – August and September.

♦ Crush and press — Each grape varietal will be destemmed, crushed (broken open),and/or press pressed, based on the style and type of wine to be made. This stepseparates the juice from the skins, stems and seeds and pre p a res the juice forf e rmentation – August and September.

♦ Fermentation — Once the juice is settled and separated from the sediment, the juiceis adjusted to appropriate acid, pH and sugar levels and inoculated with a specificwine yeast culture to begin the fermentation process. The fermenting juice ismaintained in a temperature - c o n t rolled fermentation tank and allowed to ferment forperiod of time (10 to 30 days).

♦ Aging and Storage — After fermentation, the wine is racked into a storage vessel (i.e.stainless steel tank or oak barrel) for settling and stabilizing. Some wine is aged in oakb a rrels to impart oak characteristics. Fruity white and blush wines are aged for 3 to 6months, while red wines may be aged 6 to 24 months.


Operating and Control Systems

25

♦ Fining, Filtering, and Bottling — Fining is used to settled out microscopic part i c l e ssuspended in the wine and to improve the quality and clarity of the finished pro d u c t .Filtering is also used to finish and clear the wine, removing unwanted proteins andother micro particles. After cold and heat stabilization, the wine is ready to be bottled,labeled and case packed.

Financial requirements

Bill and Jill Freeman will seek a loan of $55,000 for the design and construction of the wineryin April 200B. The Freemans will lease the winery facility to the company. Chapel SpringsWi n e ry will seek a $25,000 loan for wine production equipment in April 200C.

Marketing flow chart

Market penetration

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April 200BEstablish a web site

September 200BStateA Wi n eB ro c h u re s

April 200CP ress Release:New Vi n e y a rd

August 200CP ress Release:

H a rv e s t

November 200CN e w s l e t t e rQ u a rt e r l y

November 200CP ress Release:Wi n e ry Opening

As we develop brand awareness in the region and accumulate national competition medals,we will begin developing relationships with select restaurants and wine shops for possibledistribution. We will also invite local and regional wine writers to visit the vineyard and wineryfor special VIP tastings and tours.

Our Web site and newsletter will offer free delivery of Chapel Springs wines purchased overthe Internet or through mail orders. Special discounts for case orders will also be off e re d .

Management and infrastructure

Our four-member management team will be in place starting January 10, 200B, and willcontinue management functions until the members mutually decide to make changes.

Risk analysis The wine industry faces many potential risks including environmental exposures, severew e a t h e r, and pests in the vineyards, lack of local community acceptance, neo-Pro h i b i t i o nactivism, and regional wine skepticism.

Chapel Springs Wi n e ry will emphasize the importance of environmentally friendly practicesand will use integrated pest management and reduced pesticide usage in the vineyard. Wewill also incorporate recycling, reusing and reducing waste streams. Composting of grapepomace will be re t u rned to the vineyard as natural organic materials. Our enviro n m e n t a l l yconscious approach will help achieve acceptance from our neighbors.

We cannot control the weather; however, our vine selection, trellising and training practiceswill help reduce vine loss during hard winters. We will also have secondary fruit sources forgrapes from Crystal Hill Vi n e y a rds in Jackson, StateA.

Chapel Springs Wi n e ry will promote the moderate use of wine with family, friends and food.Our tasting staff and winemaker will provide our customers with StateA’s wine history and thea re a ’s numerous vineyards prior to Prohibition.

We will be an active member of the community and promote the local economy. ChapelSprings Wi n e ry will donate sacramental wines to local churches for communion services andspeak to group functions, associations and clubs interested in the are a ’s winegro w i n g .

We will enter our wines in state and national competitions and obtain medals to establish ourbrand quality among peers. Significant medals and awards received from these competitionswill present opportunities for press releases to local and regional media.

Salvaging assetsSelling our winery facility, wine production equipment, tanks, bottles, and new oak barrels canpay a major portion of all debt.

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New offerings to marketAs we develop our brand awareness, we will produce several new high-end specialty winesi n c l u d i n g :

♦ Sparkling Cuvee - a Champagne method, whole cluster pressed Chardonel andC h a m b o u rcin aged for 24 months on the lees.

♦ Majestic Port - a porto style blend of Chambourcin, Norton and Cabernet Francf o rtified with brandy to 18% alcohol.

♦ Muscat Desert - a split bottle (375 ml) of pure heaven made from a Hungarianvariatel Muscat grape with rich honey, tropic fruit and mineral notes.

We will continue to look for new grape varietals that fit into our brand and increase wineq u a l i t y.

Capital re q u i re m e n t sSome equipment will be added as we grow our business including an automated bottling andlabeling line estimated at $15,000 and centrifuge estimated at $5,000. In addition, we will addtwo stainless steel jacketed tanks (1,000 gallons each) estimated at $16,000. The additional$36,000 will be raised through cash flow during the second full year of operation (200E).

Personnel re q u i re m e n t sE v e n t u a l l y, we will hire tasting room staff and vineyard help. We may also hire a cellarm a s t e r(assistant to the winemaker). We will take advantage of internship programs from theUniversity of StateC’s enology program and Southwest StateA State University’s viticultureand enology pro g r a m s .

Exit strategyAs a family business, our exit strategy will be to pass the business on to our two sons (50/50),or lease the business to a third part y. In the event we are unable to lease the business, wewill cease operations and sell the equipment and supplies. The winery building would thenbe converted to a farm home in the woods with a really nice wine cellar.


G rowth Plan

28

Sales Pro j e c t i o n sChapel Springs Wi n e ry will begin generating revenue during the November 200C grandopening. Our profitability ratios will begin to increase in 200F as we gain volume ande fficiencies. Below are our wine sales pro j e c t i o n s :

200C Wines Sales - $13,260

Our 200C harvest is estimated to produce 2,000 gallons of wine, with 1,500 gallons(500 each) of Traminette ($12 a bottle), Vignoles Desert Wine ($14), and Chambourc i nBlush ($13 a bottle) that we will bottle by early November and have ready for sale at theopening date. Our re s e a rch of similar winery operations’ sales indicates for the firstyear average monthly sales of $6,500 (500 bottles X $13) operating five days a week( We d n e s d a y, Thursday, Friday, Saturd a y, and Sunday from 11:00 am to 5:00 pm).Using this average along with the seasonal percentages of sales from the table belowwe estimate November sales of $6,240 and December sales of $7,020.

200D Wine Sales - $135,000

For the first six months of 200D, the start-up sales average of $6,500 per month asa ffected by the seasonal percentages is used to project sales. In July, as severalh i g h e r-end wines are bottled and available, revenues are expected to increase to anaverage of $13.50 a bottle ($7,500 a month) with average monthly sales of 550 bottles(these averages are then calculated according to seasonal fluctuations). Our gallons–of-w i n e - p roduced will increase to 4,000 gallons in 200D with approximately 30% of thei n v e n t o ry being aged for release in 200E or 200F.

200E Wine Sales - $192,000

We project our production to be 5,000 gallons in 200E. Annual bottle sales will incre a s eto 12,000, including releases of previous-year higher-end red wines. Our sales in 200Ea re projected to be $192,000 based on 12,000 bottles at an average price of $16 abottle.


Financial Plan

29

We are aware that wine sales tend to vary by month and season. Based on our re s e a rch ofsimilar StateA wineries, we estimate our percentage of revenue by month in the table below:

J a n u a ry 3 %

F e b ru a ry 3 %

M a rc h 4 %

A p r i l 4 %

M a y 5 %

J u n e 9 %

J u l y 1 0 %

A u g u s t 1 2 %

S e p t e m b e r 1 5 %

O c t o b e r 1 8 %

N o v e m b e r 8 %

D e c e m b e r 9 %

The tasting room gift shop will offer retail sales of wine glasses and accessories, local crafts,a rtwork, regional cheeses, sausages, and breads, generating an estimated annual revenue of$40,000 in 200D. This re p resents approximately 31% of wine revenue, which closely mirro r sthe industry averages. Our rental of the winery ’s banquet room is estimated to generate$6,000 annually (projecting an average of 12 events during spring, summer and fall seasons,at $500 each rental). This is a conservative estimate based on similar operations.

Total Estimated Revenue by Year

To t a l Wi n e Gift Shop Banquet ro o m

2 0 0 C $ 13,260 $ 13,260 0 0

2 0 0 D $ 1 3 2 , 6 4 0 $ 86,640 $ 4 0 , 0 0 0 $ 6 , 0 0 0

2 0 0 E $ 2 6 0 , 5 2 0 $ 1 9 2 , 0 0 0 $ 5 9 , 5 2 0 $ 9 , 0 0 0

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Income Pro j e c t i o n sChapel Springs Wi n e ry will run at a loss of ($8,809) the first year of operations. In 200D wep roject a modest profit of $27,771 possible because the owners will delay taking salaries untilwell into the year. Profits will increase in 200E to $63,093. It will take several years after thef o recast period to realize the high profit margins common to the industry.

Cash Require m e n t sWe will use an American Express card to make purchases for supplies and materials to avoidi n t e rest charges and maintain cash flow. We anticipate cash levels in our corporate bankaccount to be kept around $10,000 for our American Express charges and other expenses.

Pratt Energy Systems of Rogers, StateC, estimates the design and construction of our energ ye fficient winery to be $80,000. We project $25,000 for winery production equipment, tanksand cooperage. $36,000 in additional equipment will be needed for expanded production in2 0 0 E .

S t a rt-up investment will cover cash flow re q u i rements for the first year and a-half. Due to theslow selling season at the beginning of every year, there are likely to be cash flowre q u i rements by early spring of each year.

S o u rces of FinancingThe owners will invest $30,000 start-up capital in 200B.

Bill and Jill Freeman will seek a personal mortgage loan of $55,000 for the facility, which willbe leased to Chapel Springs Wi n e ry fully furnished for $500/month.

We will seek an equipment loan for the $25,000 on a 5-year term at 12% interest and willapply for the Wine & Grape Production Tax Credit Program off e red by the StateA Depart m e n tof Economic Development, which will issue a state income tax credit of 25% of the purc h a s eprice of all new winery equipment and materials.

The addition of $36,000 in equipment scheduled for October, 200E will be funded thro u g hcash flow.

A line of credit for $50,000 at 10% interest will be established at the beginning of year 200Eto cover seasonal cash shortages. Cash drawn from the line will be paid back during thesummer season.

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START-UP FUNDING & EXPENDITURESChapel Springs Winery, LLC

Start-up Cash Equity Investments 30,000 Loan Proceeds - Real-Estate Loans - Total Start-up Cash 30,000

Start-up ExpendituresSecurity Deposits Rent (last month's) - Telephone Deposit - Utilities Deposit - Other Deposits - Total Security Deposits -

Start-up Expenses Accounting Fees Activation Fee - Corporate Fees & Taxes 100 Federal Tax ID - Fictitious Name Costs - Insurance - Legal & Consulting Fees - Meals & Entertainment - Office Supplies - Payroll Expenses (training/setup) Salaries & Wages - Payroll Taxes - Benefits - Pre-opening advertising 500 Printing (cards, stationery, brochures) 500 Sales Tax Permit - Other Start-up Expenses - Total Start-up Expenses 1,100

Other Costs Opening Inventory -

Capital Expenditures Computer Equipment - Equipment/Machinery - Furniture & Fixtures - Vehicles - Leasehold Improvements - Buildings - Land - Total Start-up Capital Expenditures -

Total Start-up Expenditures 1,100

Appendix

Cash Flow StatementChapel Springs Winery, LLC

200C Pre Start-up JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTAL

Cash In Cash Sales - - - - - - - - - - 6,224 7,002 13,227 Collections from Accounts Receivables - - - - - - - - - - - - - Equity Received 30,000 - - - - - - - - - - - - 30,000 Loans Received - - 25,000 - - - - - - - - - - 25,000 Other Cash In (receipts from other assets) - - - - - - - - - - - - - Other Cash In (interest, royalties etc.) - - - - - - - - - - - - - Total Cash In 30,000 - 25,000 - - - - - - - - 6,224 7,002 68,227 Total Cash Available 30,000 28,900 53,900 28,650 27,094 25,040 24,484 23,678 23,121 15,965 9,109 14,227 18,760 97,127

Cash Out Inventory Expenditures Inventory/Raw Material (Cash) - - - - - - - - 6,000 6,000 - - 3,000 15,000 Inventory/Raw Material (Paid on Account) - - - - - - - - - - - - - - Production Expenses - - - - - - - - - - - 300 300 600 Operating Expenses Advertising 500 - - - - - - - - - - - - 500 Bank Charges - - - - - - - - - - - - - - Dues & Subscriptions - - - - - - - - - - - 125 - 125 Insurance - - - - - - - - 300 300 300 300 300 1,500 Licenses & Fees 100 - - 1,000 - - - - 300 - - - - 1,400 Marketing & Promotion 500 - - - 1,500 - - - - - - 125 150 2,275 Meals & Entertainment - - - - - - - - - - - - - - Miscellaneous - - - - - - - - - - - - - - Office Expense - - - - - - - - - - - 200 200 400 Office Supplies - - - - - - - - - - - 50 50 100 Outside Services - - - - - - - - - - - - - - Payroll Expenses Salaries & Wages - - - - - - - - - - - - - - Payroll Taxes - - - - - - - - - - - - - - Benefits - - - - - - - - - - - - - - Professional Fees - - - - - - - - - - - - - - Property Taxes - - - - - - - - - - - - - - Rent - - - - - - - - - - - 200 200 400 Repairs & Maintenance - - - - - - - - - - - 150 150 300 Shipping & Delivery - - - - - - - - - - - - - - Telephone - - - - - - - - - - - - - - Training & Development - - - - - - - - - - - - - - Travel - - 250 - - - 250 - - - 250 - - 750 Utilities - - - - - - - - - - - 100 100 200 Vehicle - - - - - - - - - - - - - - Wine samples - - - - - - - - - - - 364 364 728 Excise tax - - - - - - - - - - - - 2,140 2,140 Other - - - - - - - - - - - - - - Paid on Account - - - - - - - - - - - - - - Non-operating Costs Capital Purchases - - 25,000 - - - - - - - - - - 25,000 Estimated Income Tax Payments - - - - - - - - - - - - - - Interest Payments - - - 250 245 244 241 238 234 231 228 225 221 2,357 Loan Principal Payments - - - 306 309 312 315 319 322 325 328 331 335 3,202 Owner's Draw - - - - - - - - - - - - - - Other Cash Out - - - - - - - - - - - - - - Total Cash Out 1,100 - 25,250 1,556 2,054 556 806 557 7,156 6,856 1,106 2,470 7,510 56,977

Monthly Cash Flow (cash in - cash out) 28,900 - (250) (1,556) (2,054) (556) (806) (557) (7,156) (6,856) (1,106) 3,754 (508) 11,250 Beginning Cash Balance - 28,900 28,900 28,650 27,094 25,040 24,484 23,678 23,121 15,965 9,109 8,003 11,757 - Ending Cash Balance 28,900 28,900 28,650 27,094 25,040 24,484 23,678 23,121 15,965 9,109 8,003 11,757 11,250 11,250


200D JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTAL

Cash In Cash Sales 3,531 3,531 5,373 5,373 6,550 11,258 13,633 16,226 20,116 24,007 11,039 11,671 132,308 Collections from Accounts Receivables - - - - - - - - - - - - - Equity Received - - - - - - - - - - - - - Loans Received - - - - - - - - - - - - - Other Cash In (receipts from other assets) - - - - - - - - - - - - - Other Cash In (interest, royalties etc.) - - - - - - - - - - - - - Total Cash In 3,531 3,531 5,373 5,373 6,550 11,258 13,633 16,226 20,116 24,007 11,039 11,671 132,308 Total Cash Available 14,781 15,547 17,029 18,763 19,270 25,163 29,937 34,499 32,576 30,223 27,347 27,352 143,558

Cash Out Inventory Expenditures Inventory/Raw Material (Cash) - 1,000 1,000 1,000 1,000 1,500 2,000 12,500 13,000 4,000 2,000 - 39,000 Inventory/Raw Material (Paid on Account) - - - - - - - - - - - - - Production Expenses 650 650 650 2,375 2,375 2,375 2,375 2,375 2,375 2,375 2,375 2,375 23,325 Operating Expenses Advertising - - - - - - - - - - - - - Bank Charges - - - - - - - - - - - - - Dues & Subscriptions - - - - - - - - - - 125 - 125 Insurance 300 300 300 300 300 300 300 300 300 300 300 300 3,600 Licenses & Fees - - - - - - - - 300 - - - 300 Marketing & Promotion 125 - - 125 - - 125 - - 125 - 150 650 Meals & Entertainment - - - - - - - - - - - - - Miscellaneous - - - - - - - - - - - - - Office Expense 200 200 200 200 200 200 200 200 200 200 200 200 2,400 Office Supplies 50 50 50 50 50 50 50 50 50 50 50 50 600 Outside Services - - - - - - - - - - - - - Payroll Expenses Salaries & Wages - - - - - - 4,500 4,500 4,500 4,500 4,500 4,500 27,000 Payroll Taxes - - - - - - 360 360 360 360 360 360 2,160 Benefits - - - - - - 315 315 315 315 315 315 1,890 Professional Fees - - - - - - - - - - - - - Property Taxes - - - - - - - - - - - - - Rent 200 200 200 200 200 200 200 200 200 200 200 200 2,400 Repairs & Maintenance 150 150 150 150 150 150 150 150 150 150 150 150 1,800 Shipping & Delivery - - - - - - - - - - - - - Telephone 70 70 70 70 70 70 70 70 70 70 70 70 840 Training & Development - - - - - - - - - - - - - Travel - 250 - - - 250 - - - 250 - - 750 Utilities 100 100 100 100 100 100 100 100 100 100 100 100 1,200 Vehicle - - - - - - - - - - - - - Wine samples 364 364 364 364 364 364 364 364 364 364 364 364 4,368 Excise tax - - - - - - - - - - - 4,280 4,280 Other - - - - - - - - - - - - - Paid on Account - - - - - - - - - - - - - Non-operating Costs Capital Purchases - - - - - - - - - - - - - Estimated Income Tax Payments - - - 553 - 2,743 - - 3,519 - - 1,516 8,331 Interest Payments 218 215 211 208 204 201 197 194 190 186 183 179 2,386 Loan Principal Payments 338 342 345 348 352 355 358 362 366 370 374 377 4,287 Owner's Draw - - - - - - - - - - - - - Other Cash Out - - - - - - - - - - - - - Total Cash Out 2,765 3,891 3,640 6,043 5,365 8,858 11,664 22,040 26,359 13,915 11,666 15,486 131,692

Monthly Cash Flow (cash in - cash out) 766 (360) 1,733 (670) 1,185 2,400 1,969 (5,814) (6,243) 10,092 (627) (3,815) 616 Beginning Cash Balance 11,250 12,016 11,656 13,389 12,720 13,905 16,305 18,273 12,459 6,217 16,308 15,681 11,250 Ending Cash Balance 12,016 11,656 13,389 12,720 13,905 16,305 18,273 12,459 6,217 16,308 15,681 11,866 11,866


200E JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTAL

Cash In Cash Sales 7,527 7,527 11,033 11,033 13,542 23,578 26,087 31,104 38,631 46,158 21,069 22,580 259,869 Collections from Accounts Receivables - - - - - - - - - - - - - Equity Received - - - - - - - - - - - - - Loans Received - 10,000 - 5,000 - - - - - - - - 15,000 Other Cash In (receipts from other assets) - - - - - - - - - - - - - Other Cash In (interest, royalties etc.) - - - - - - - - - - - - - Total Cash In 7,527 17,527 11,033 16,033 13,542 23,578 26,087 31,104 38,631 46,158 21,069 22,580 274,869 Total Cash Available 19,393 24,854 21,114 24,124 23,975 33,988 35,343 46,382 56,772 64,253 34,006 40,521 286,735

Cash Out Inventory Expenditures Inventory/Raw Material (Cash) - 2,500 1,000 1,500 1,500 2,500 3,000 16,000 16,000 3,000 4,000 4,000 55,000 Inventory/Raw Material (Paid on Account) - - - - - - - - - - - - - Production Expenses 3,333 3,333 3,333 3,333 3,333 3,333 3,333 3,333 3,333 3,333 3,333 3,333 40,000 Operating Expenses Advertising - - - - - - - - - - - - - Bank Charges - - - - - - - - - - - - - Dues & Subscriptions - - - - - - - - - - 125 - 125 Insurance 300 300 300 300 300 300 300 300 300 300 300 300 3,600 Licenses & Fees - - - - - - - 300 - - - - 300 Marketing & Promotion 125 - - 125 - - 125 - - 125 - - 500 Meals & Entertainment - - - - - - - - - - - - - Miscellaneous - - - - - - - - - - - - - Office Expense 200 200 200 200 200 200 200 200 200 200 200 200 2,400 Office Supplies 50 50 50 50 50 50 50 50 50 50 50 50 600 Outside Services - - - - - - - - - - - - - Payroll Expenses Salaries & Wages 5,667 5,667 5,667 5,667 5,667 5,667 5,667 5,667 5,667 5,667 5,667 5,667 68,000 Payroll Taxes 453 453 453 453 453 453 453 453 453 453 453 453 5,440 Benefits 397 397 397 397 397 397 397 397 397 397 397 397 4,760 Professional Fees - - - - - - - - - - - - - Property Taxes - - - - - - - - - - - - - Rent 300 300 300 300 300 300 300 300 300 300 300 300 3,600 Repairs & Maintenance 150 150 150 150 150 150 150 150 150 150 150 150 1,800 Shipping & Delivery - - - - - - - - - - - - - Telephone 70 70 70 70 70 70 70 70 70 70 70 70 840 Training & Development - - - - - - - - - - - - - Travel - 250 - - - 250 - - - 250 - - 750 Utilities 100 100 100 100 100 100 100 100 100 100 100 100 1,200 Vehicle - - - - - - - - - - - - - Wine samples 364 364 364 364 364 364 364 364 364 364 364 364 4,368 Excise tax - - - - - - - - - - - 5,350 5,350 Other - - - - - - - - - - - - - Paid on Account - - - - - - - - - - - - - Non-operating Costs Capital Purchases - - - - - - - - - 36,000 - - 36,000 Estimated Income Tax Payments - - - - - - - - 10,736 - - 8,192 18,928 Interest Payments 175 254 250 289 285 198 152 148 144 140 135 131 2,301 Loan Principal Payments 381 385 389 393 396 10,400 5,404 409 413 417 421 425 19,833 Owner's Draw - - - - - - - - - - - - - Other Cash Out - - - - - - - - - - - - - Total Cash Out 12,065 14,773 13,023 13,691 13,565 24,732 20,065 28,241 38,677 51,316 16,065 29,482 275,695

Monthly Cash Flow (cash in - cash out) (4,538) 2,753 (1,990) 2,342 (23) (1,154) 6,022 2,863 (46) (5,158) 5,004 (6,901) (826) Beginning Cash Balance 11,866 7,328 10,081 8,091 10,433 10,410 9,256 15,278 18,141 18,095 12,937 17,941 11,866 Ending Cash Balance 7,328 10,081 8,091 10,433 10,410 9,256 15,278 18,141 18,095 12,937 17,941 11,040 11,040

Chapel Springs Winery, LLC Year-End

Income Statement (Projected)200C 200D 200E

Net Sales (less returns & allowances) 13,227 132,308 259,869 Cost of Goods Sold 4,278 42,789 84,042 Gross Margin $ 8,949 $ 89,520 $ 175,827

Operating Expenses Advertising 500 - - Bad Debt Expense - - - Bank Charges - - - Depreciation & Amortization 4,583 5,000 6,800 Dues & Subscriptions 125 125 125 Insurance 1,500 3,600 3,600 Licenses & Fees 1,400 300 300 Marketing & Promotion 2,275 650 500 Meals & Entertainment - - - Miscellaneous - - - Office Expense 400 2,400 2,400 Office Supplies 100 600 600 Outside Services - - - Payroll Expenses Salaries & Wages - 27,000 68,000 Payroll Taxes - 2,160 5,440 Benefits - 1,890 4,760 Professional Fees - - - Property Taxes - - - Rent 400 2,400 3,600 Repairs & Maintenance 300 1,800 1,800 Shipping & Delivery - - - Telephone - 840 840 Training & Development - - - Travel 750 750 750 Utilities 200 1,200 1,200 Vehicle - - - Wine samples 728 4,368 4,368 Excise tax 2,140 4,280 5,350 Other - - - Total Operating Expenses $ 15,401 $ 59,363 $ 110,433

Operating Income $ (6,452) $ 30,157 $ 65,394

Interest Expense 2,357 2,386 2,301 Other Income (interest, royalties, etc.) - - -

Income Before Taxes $ (8,809) $ 27,771 $ 63,093

Income Taxes (if C Corp) - - -

Net Income $ (8,809) $ 27,771 $ 63,093

Chapel Springs Winery, LLC

Balance Sheet (Projected)Year-End

200C 200D 200E

AssetsCurrent Assets

Cash & Equivalents 11,250 11,866 11,040 Accounts Receivable - - - Inventory 11,322 30,859 41,817 Security Deposits - - - Other Current Assets - - -

Total Current Assets $ 22,572 $ 42,725 $ 52,857

Fixed AssetsProperty, Plant & Equipment 25,000 25,000 61,000 Less: Accumulated Depreciation (4,583) (9,583) (16,383) Other Non-Current Assets - - -

Total Non-Current Assets $ 20,417 $ 15,417 $ 44,617

Total Assets $ 42,989 $ 58,142 $ 97,474

LiabilitiesCurrent Liabilities Accounts Payable - - -

Line of Credit - - - Other Current Liabilities - - -

Total Current Liabilities $ - $ - $ -

Long-term LiabilitiesLoans - - - Mortgages 21,798 17,511 12,678 Other Non-Current Liabilities - - -

Total Non-Current Liabilities $ 21,798 $ 17,511 $ 12,678

Total Liabilities $ 21,798 $ 17,511 $ 12,678

EquityEquity Investments 30,000 30,000 30,000 Retained Earnings (8,809) 18,962 82,055 Less: Owner's & Investor's Draws - (8,331) (27,259) Total Equity $ 21,191 $ 40,631 $ 84,796

Total Liabilities and Equity $ 42,989 $ 58,142 $ 97,474

Chapel Springs Winery, LLCFinancial Ratios

200C 200D 200E

Profitability Ratios

Gross Margin 67.66% 67.66% 67.66%

Operating Margin -48.78% 22.79% 25.16%

Net Margin -66.60% 20.99% 24.28%

Return on Assets (ROA) -20.49% 47.76% 64.73%

Return on Equity (ROE) -41.57% 68.35% 74.41%

Liquidity Ratios

Current Ratio #DIV/0! #DIV/0! #DIV/0!

Quick Ratio #DIV/0! #DIV/0! #DIV/0!

Risk Ratios

Debt Ratio 0.51 0.30 0.13

Debt to Equity 1.03 0.43 0.15

Efficiency Ratios

Inventory Turnover 0.38 1.39 2.01

Days Sales Outstanding (DSO) 0.00 0.00 0.00

Investment Turnover Ratio 0.31 2.28 2.67

Gross Income

Total Current Liabilities

Current Assets - Inventory

Net SalesOperating Income

Total AssetsNet Income

Accounts Receivable

Net Sales

Total Assets

InventoryCost of Goods Sold

Total LiabilitiesShareholders' Equity

Net Sales/365

Net Sales

Total Assets

Net IncomeNet Sales

Total Liabilities

Shareholders' EquityNet Income

Total Current Assets

Current Liabilities


S u p p o rting Documents

Appendix

Appendix

SALES PROJECTIONSChapel Springs Winery, LLCYear 1 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTALSales BudgetWine - - - - - - - - - - 6,240 7,020 13,260Gift Shop - - - - - - - - - - - - 0Banquet Room - - - - - - - - - - - - 0Product/Service Category D - - - - - - - - - - - - 0Product/Service Category E - - - - - - - - - - - - - Product/Service Category F - - - - - - - - - - - - - Product/Service Category G - - - - - - - - - - - - - Gross Sales - - - - - - - - - - 6,240 7,020 13,260 Less: Returns & Allowances - - - - - - - - - - (16) (18) (33) Net Sales - - - - - - - - - - 6,224 7,002 13,227 Other Income - - - - - - - - - - - - - Total Income - - - - - - - - - - 6,224 7,002 13,227 Credit Management Sales (cash) - - - - - - - - - - 6,224 7,002 13,227 Sales (credit) - - - - - - - - - - - - - Received on Account - - - - - - - - - - - - - Bad Debt Expense - - - - - - - - - - - - -

Year 1 AssumptionsWineGift ShopBanquet RoomProduct/Service Category DProduct/Service Category EProduct/Service Category FProduct/Service Category GLess: Returns & AllowancesOther Income Sales (cash) Sales (credit) Received on Account Bad Debt Expense

estimated at .25% based on industry averages for boutique operations

based on industry averages for start-up boutique winery--seasonal schedule in Financial Plan introduction sectrion of plan - avg bottle price $13.00 YE

AR

1 YE

AR

1 YE

AR

1

YE

AR

1 YE

AR

1 YE

AR

1 YE

AR

1

Appendix

SALES PROJECTIONSChapel Springs Winery, LLCYear 2 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTALSales BudgetWine 2,340 2,340 3,120 3,120 3,900 7,020 9,000 10,800 13,500 16,200 7,200 8,100 86,640 Gift Shop 1,200 1,200 1,600 1,600 2,000 3,600 4,000 4,800 6,000 7,200 3,200 3,600 40,000 Banquet Room - - 667 667 667 667 667 667 667 667 667 - 6,000 Product/Service Category D - - - - - - - - - - - - - Product/Service Category E - - - - - - - - - - - - - Product/Service Category F - - - - - - - - - - - - - Product/Service Category G - - - - - - - - - - - - - Gross Sales 3,540 3,540 5,387 5,387 6,567 11,287 13,667 16,267 20,167 24,067 11,067 11,700 132,640 Less: Returns & Allowances (9) (9) (13) (13) (16) (28) (34) (41) (50) (60) (28) (29) (332) Net Sales 3,531 3,531 5,373 5,373 6,550 11,258 13,633 16,226 20,116 24,007 11,039 11,671 132,308 Other Income - - - - - - - - - - - - - Total Income 3,531 3,531 5,373 5,373 6,550 11,258 13,633 16,226 20,116 24,007 11,039 11,671 132,308 Credit ManagementSales (cash) 3,531 3,531 5,373 5,373 6,550 11,258 13,633 16,226 20,116 24,007 11,039 11,671 132,308 Sales (credit) - - - - - - - - - - - - - Received on Account - - - - - - - - - - - - - Bad Debt Expense - - - - - - - - - - - - -



gift shop revenues based on industry averages and tied to seasonal nature of winery12 events over 3 busy seasons -- events average $500 based on room rental and product purchases

in July avg bottle price increases to $13.50 as aged wines are released for sales--avg bottles sold per month increases to 550

YE

AR

2 YE

AR

2 YE

AR

2 YE

AR

2 Y

EA

R 2 Y

EA

R 2 Y

EA

R 2

Appendix

SALES PROJECTIONSChapel Springs Winery, LLCYear 3 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTALSales BudgetWine 5,760 5,760 7,680 7,680 9,600 17,280 19,200 23,040 28,800 34,560 15,360 17,280 192,000 Gift Shop 1,786 1,786 2,381 2,381 2,976 5,357 5,952 7,142 8,928 10,714 4,762 5,357 59,520 Banquet Room - - 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 - 9,000 Product/Service Category D - - - - - - - - - - - - - Product/Service Category E - - - - - - - - - - - - - Product/Service Category F - - - - - - - - - - - - - Product/Service Category G - - - - - - - - - - - - - Gross Sales 7,546 7,546 11,061 11,061 13,576 23,637 26,152 31,182 38,728 46,274 21,122 22,637 260,520 Less: Returns & Allowances (19) (19) (28) (28) (34) (59) (65) (78) (97) (116) (53) (57) (651) Net Sales 7,527 7,527 11,033 11,033 13,542 23,578 26,087 31,104 38,631 46,158 21,069 22,580 259,869 Other Income - - - - - - - - - - - - - Total Income 7,527 7,527 11,033 11,033 13,542 23,578 26,087 31,104 38,631 46,158 21,069 22,580 259,869 Credit ManagementSales (cash) 7,527 7,527 11,033 11,033 13,542 23,578 26,087 31,104 38,631 46,158 21,069 22,580 259,869 Sales (credit) - - - - - - - - - - - - - Received on Account - - - - - - - - - - - - - Bad Debt Expense - - - - - - - - - - - - -


based on industry averages related to wine sales18 events over 3 busy seasons--events average $500 based on room rental and product purchases

YE

AR

3 YE

AR

3 YE

AR

3


high-end aged wines released for sale--average bottle price increases to $16.00--avg 1000 bottles per month (based on industry averages for established co.)

YE

AR

3 YE

AR

3 YE

AR

3 YE

AR

3

Appendix

INVENTORY PROJECTIONSChapel Springs Winery, LLC

Year 1 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTALInventory ManagementInventory Purchases - - - - - - - 6,000 6,000 - - 3,000 15,000 Inventory/ Raw Material Purchases (Cash) - - - - - - - 6,000 6,000 - - 3,000 15,000 Inventory/ Raw Material Purchases (Credit) - - - - - - - - - - - - - Payment on Account - - - - - - - - - - - - -

Production ExpensesFreight-in & Trucking - - - - - - - - - - - - - Insurance - - - - - - - - - - - - - Payroll Expenses - production Salaries & Wages - - - - - - - - - - - - - Employee Benefits - - - - - - - - - - - - - Payroll Taxes - - - - - - - - - - - - - Rent - - - - - - - - - - 300 300 600 Repairs & Maintenance - - - - - - - - - - - - - Rework - - - - - - - - - - - - - Subcontracting - - - - - - - - - - - - - Utilities - - - - - - - - - - - - - Other Production Expenses - - - - - - - - - - - - - Inventory Production Expenses - - - - - - - - - - 300 300 600

Inventory BalanceBeginning Inventory Balance - - - - - - - - 6,000 12,000 12,000 10,287 - Inventory Purchased - - - - - - - 6,000 6,000 - - 3,000 15,000 Inventory Production - - - - - - - - - - 300 300 600 (Cost of Goods Sold) - - - - - - - - - - (2,013) (2,265) (4,278) Ending Inventory Balance - - - - - - - 6,000 12,000 12,000 10,287 11,322 11,322

Year 1 AssumptionsInventory/ Raw Material Purchases Freight-in & TruckingInsurancePayroll Expenses - production Salaries & Wages Employee Benefits Payroll TaxesRentRepairs & MaintenanceReworkSubcontractingUtilitiesOther Production Expenses

proportional share of rent

YE

AR

1 YE

AR

1 YE

AR

1 YE

AR

1Y

EA

R 1 Y

EA

R 1 Y

EA

R 1 Y

EA

R 1

15 tons of grapes at $800 per ton -- $3,000 inventory to stock gift shop

winemaster working without pay

Appendix


Year 2 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTALInventory ManagementInventory Purchases - 1,000 1,000 1,000 1,000 1,500 2,000 12,500 13,000 4,000 2,000 - 39,000 Inventory/ Raw Material Purchases (Cash) - 1,000 1,000 1,000 1,000 1,500 2,000 12,500 13,000 4,000 2,000 - 39,000 Inventory/ Raw Material Purchases (Credit) - - - - - - - - - - - - - Payment on Account - - - - - - - - - - - - -

Production ExpensesFreight-in & Trucking - - - - - - - - - - - - - Insurance - - - - - - - - - - - - - Payroll Expenses - production Salaries & Wages - - - 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 13,500 Employee Benefits - - - 120 120 120 120 120 120 120 120 120 1,080 Payroll Taxes - - - 105 105 105 105 105 105 105 105 105 945 Rent 300 300 300 300 300 300 300 300 300 300 300 300 3,600 Repairs & Maintenance 150 150 150 150 150 150 150 150 150 150 150 150 1,800 Rework - - - - - - - - - - - - - Subcontracting - - - - - - - - - - - - - Utilities 200 200 200 200 200 200 200 200 200 200 200 200 2,400 Other Production Expenses - - - - - - - - - - - - - Inventory Production Expenses 650 650 650 2,375 2,375 2,375 2,375 2,375 2,375 2,375 2,375 2,375 23,325

Inventory BalanceBeginning Inventory Balance 11,322 10,830 11,338 11,251 12,888 14,145 14,379 14,345 23,973 32,842 31,453 32,258 11,322 Inventory Purchased - 1,000 1,000 1,000 1,000 1,500 2,000 12,500 13,000 4,000 2,000 - 39,000 Inventory Production 650 650 650 2,375 2,375 2,375 2,375 2,375 2,375 2,375 2,375 2,375 23,325 (Cost of Goods Sold) (1,142) (1,142) (1,738) (1,738) (2,118) (3,641) (4,409) (5,247) (6,506) (7,764) (3,570) (3,774) (42,789) Ending Inventory Balance 10,830 11,338 11,251 12,888 14,145 14,379 14,345 23,973 32,842 31,453 32,258 30,859 30,859


payroll taxes at 7%

based on proportionate share of utilities --estimate from local utility company

proportioanate share of rentbased on industry averages to maintain, clean and refurbish

YE

AR

2 YE

AR

2 YE

AR

2 YE

AR

2Y

EA

R 2 Y

EA

R 2 Y

EA

R 2 Y

EA

R 2

25 tons of grapes @ $800 per ton -- inventory restocking to keep levels at approximately $3,000

winemaster at $18,000 per year starting in Aprilbenefits at 8%

Appendix


Year 3 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTALInventory ManagementInventory Purchases - 2,500 1,000 1,500 1,500 2,500 3,000 16,000 16,000 3,000 4,000 4,000 55,000 Inventory/ Raw Material Purchases (Cash) - 2,500 1,000 1,500 1,500 2,500 3,000 16,000 16,000 3,000 4,000 4,000 55,000 Inventory/ Raw Material Purchases (Credit) - - - - - - - - - - - - - Payment on Account - - - - - - - - - - - - -

Production ExpensesFreight-in & Trucking - - - - - - - - - - - - - Insurance - - - - - - - - - - - - - Payroll Expenses - production Salaries & Wages 2,333 2,333 2,333 2,333 2,333 2,333 2,333 2,333 2,333 2,333 2,333 2,333 28,000 Employee Benefits 187 187 187 187 187 187 187 187 187 187 187 187 2,240 Payroll Taxes 163 163 163 163 163 163 163 163 163 163 163 163 1,960 Rent 300 300 300 300 300 300 300 300 300 300 300 300 3,600 Repairs & Maintenance 150 150 150 150 150 150 150 150 150 150 150 150 1,800 Rework - - - - - - - - - - - - - Subcontracting - - - - - - - - - - - - - Utilities 200 200 200 200 200 200 200 200 200 200 200 200 2,400 Other Production Expenses - - - - - - - - - - - - - Inventory Production Expenses 3,333 3,333 3,333 3,333 3,333 3,333 3,333 3,333 3,333 3,333 3,333 3,333 40,000

Inventory BalanceBeginning Inventory Balance 30,859 31,758 35,157 35,922 37,188 37,642 35,850 33,747 43,021 49,861 41,267 41,786 30,859 Inventory Purchased - 2,500 1,000 1,500 1,500 2,500 3,000 16,000 16,000 3,000 4,000 4,000 55,000 Inventory Production 3,333 3,333 3,333 3,333 3,333 3,333 3,333 3,333 3,333 3,333 3,333 3,333 40,000 (Cost of Goods Sold) (2,434) (2,434) (3,568) (3,568) (4,380) (7,625) (8,436) (10,059) (12,493) (14,927) (6,814) (7,302) (84,042) Ending Inventory Balance 31,758 35,157 35,922 37,188 37,642 35,850 33,747 43,021 49,861 41,267 41,786 41,817 41,817


based on industry averages to maintain, clean and refurbish

based on proportionate share of utilities --estimate from local utility company

YE

AR

3 YE

AR

3 YE

AR

3 YE

AR

3Y

EA

R 3 Y

EA

R 3 Y

EA

R 3 Y

EA

R 3

30 tons of grapes @ $800 per ton -- inventory restocking to keep levels at approximately $3,000

winemaster at $20,000 per year plus part-time help at $8000 per yearbenefits at 8%payroll taxes at 7%proportioanate share of rent

Appendix

OPERATING EXPENSE PROJECTIONSChapel Springs Winery, LLC

Year 1 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTAL Operating Expenses

Advertising - - - - - - - - - - - - - Bank Charges - - - - - - - - - - - - - Dues & Subscriptions - - - - - - - - - - 125 - 125 Insurance - - - - - - - 300 300 300 300 300 1,500 Licenses & Fees - - 1,000 - - - - 300 - - - - 1,300 Marketing & Promotion - - - 1,500 - - - - - - 125 150 1,775 Meals & Entertainment - - - - - - - - - - - - - Miscellaneous - - - - - - - - - - - - - Office Expense (postage) - - - - - - - - - - 200 200 400 Office Supplies - - - - - - - - - - 50 50 100 Outside Services - - - - - - - - - - - - - Payroll Expenses Salaries & Wages - - - - - - - - - - - - - Payroll Taxes - - - - - - - - - - - - - Benefits - - - - - - - - - - - - - Professional Fees - - - - - - - - - - - - - Property Taxes - - - - - - - - - - - - - Rent - - - - - - - - - - 200 200 400 Repairs & Maintenance - - - - - - - - - - 150 150 300 Shipping & Delivery - - - - - - - - - - - - - Telephone - - - - - - - - - - - - - Training & Development - - - - - - - - - - - - - Travel - 250 - - - 250 - - - 250 - - 750 Utilities - - - - - - - - - - 100 100 200 Vehicle - - - - - - - - - - - - - Wine samples - - - - - - - - - - 364 364 728 Excise tax - - - - - - - - - - - 2,140 2,140 Other - - - - - - - - - - - - -

Total Operating Expenses - 250 1,000 1,500 - 250 - 600 300 550 1,614 3,654 9,718

Assumptions - Year 1AdvertisingBank ChargesDues & SubscriptionsInsuranceLicenses & FeesMarketing & PromotionMeals & EntertainmentMiscellaneousOffice Expense (postage)Office SuppliesOutside ServicesPayroll Expenses Salaries & Wages Payroll Taxes BenefitsProfessional FeesProperty TaxesRentRepairs & MaintenanceShipping & DeliveryTelephoneTraining & DevelopmentTravelUtilitiesVehicleWine samplesExcise taxOther

based on industry averagesbased on tax rate for bottles produced (not sold)

attending three wine tastings per year (will travel by car)proportionate share of utilities -- estimate from local utility company

proportionate share of rentbased on landlord's estimate

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1 YE

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1 YE

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1 YE

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cost of two industry magazinesestimate form insurance agentBATF bond -- state and local feeslabel design -- newsletter in November -- web site maintenace fee in December

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1 YE

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estimate for newsletter mailings and normal course of businessminimal supplies needed

owners working without pay this year

Appendix



Advertising - - - - - - - - - - - - - Bank Charges - - - - - - - - - - - - - Dues & Subscriptions - - - - - - - - - - 125 - 125 Insurance 300 300 300 300 300 300 300 300 300 300 300 300 3,600 Licenses & Fees - - - - - - - - 300 - - - 300 Marketing & Promotion 125 - - 125 - 125 - - 125 - 150 650 Meals & Entertainment - - - - - - - - - - - - - Miscellaneous - - - - - - - - - - - - - Office Expense (postage) 200 200 200 200 200 200 200 200 200 200 200 200 2,400 Office Supplies 50 50 50 50 50 50 50 50 50 50 50 50 600 Outside Services - - - - - - - - - - - - - Payroll Expenses Salaries & Wages - - - - - - 4,500 4,500 4,500 4,500 4,500 4,500 27,000 Payroll Taxes - - - - - - 360 360 360 360 360 360 2,160 Benefits - - - - - - 315 315 315 315 315 315 1,890 Professional Fees - - - - - - - - - - - - - Property Taxes - - - - - - - - - - - - - Rent 200 200 200 200 200 200 200 200 200 200 200 200 2,400 Repairs & Maintenance 150 150 150 150 150 150 150 150 150 150 150 150 1,800 Shipping & Delivery - - - - - - - - - - - - - Telephone 70 70 70 70 70 70 70 70 70 70 70 70 840 Training & Development - - - - - - - - - - - - - Travel - 250 - - - 250 - - - 250 - - 750 Utilities 100 100 100 100 100 100 100 100 100 100 100 100 1,200 Vehicle - - - - - - - - - - - - - Wine samples 364 364 364 364 364 364 364 364 364 364 364 364 4,368 Excise tax - - - - - - - - - - - 4,280 4,280 Other - - - - - - - - - - - - -

Total Operating Expenses 1,559 1,684 1,434 1,559 1,434 1,684 6,734 6,609 6,909 6,984 6,734 11,039 54,363


based on industry averagesbased on tax rate for bottles produced (not sold)

attending three wine tastings per year (will travel by car)proportionate share of utilities -- estimate from local utility company

proportionate share of rentbased on landlord's estimate

Benefits @ 8%Payroll taxes @ 7%

minimal supplies needed

three owner at salary of $18,000 beginning in July

quarterly newsletter -- website maintenance estimate for newsletter mailings and normal course of business

cost of two industry magazinesestimate form insurance agentstate & local fees

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2 YE

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R 2 Y

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Advertising - - - - - - - - - - - - - Bank Charges - - - - - - - - - - - - - Dues & Subscriptions - - - - - - - - - - 125 - 125 Insurance 300 300 300 300 300 300 300 300 300 300 300 300 3,600 Licenses & Fees - - - - - - - 300 - - - - 300 Marketing & Promotion 125 - - 125 - - 125 - - 125 - - 500 Meals & Entertainment - - - - - - - - - - - - - Miscellaneous - - - - - - - - - - - - - Office Expense (postage) 200 200 200 200 200 200 200 200 200 200 200 200 2,400 Office Supplies 50 50 50 50 50 50 50 50 50 50 50 50 600 Outside Services - - - - - - - - - - - - - Payroll Expenses Salaries & Wages 5,667 5,667 5,667 5,667 5,667 5,667 5,667 5,667 5,667 5,667 5,667 5,667 68,000 Payroll Taxes 453 453 453 453 453 453 453 453 453 453 453 453 5,440 Benefits 397 397 397 397 397 397 397 397 397 397 397 397 4,760 Professional Fees - - - - - - - - - - - - - Property Taxes - - - - - - - - - - - - - Rent 300 300 300 300 300 300 300 300 300 300 300 300 3,600 Repairs & Maintenance 150 150 150 150 150 150 150 150 150 150 150 150 1,800 Shipping & Delivery - - - - - - - - - - - - - Telephone 70 70 70 70 70 70 70 70 70 70 70 70 840 Training & Development - - - - - - - - - - - - - Travel - 250 - - - 250 - - - 250 - - 750 Utilities 100 100 100 100 100 100 100 100 100 100 100 100 1,200 Vehicle - - - - - - - - - - - - - Wine samples 364 364 364 364 364 364 364 364 364 364 364 364 4,368 Excise tax - - - - - - - - - - - 5,350 5,350 Other - - - - - - - - - - - - -

Total Operating Expenses 8,176 8,301 8,051 8,176 8,051 8,301 8,176 8,351 8,051 8,426 8,176 13,401 103,633


proportionate share of rent

3 owners at $20,000 per year plus a part-time person at $8,000 per yearBenefits @ 8%Payroll taxes @ 7%

based on landlord's estimate attending three wine tastings per year (will travel by car)proportionate share of utilities -- estimate from local utility company

based on tax rate for bottles produced (not sold)based on industry averages

cost of two industry magazinesestimate form insurance agentstate & local feesquarterly newsletter -- website maintenance estimate for newsletter mailings and normal course of businessminimal supplies needed

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3 YE

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3 YE

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3 YE

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R 3 Y

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R 3 Y

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R 3

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DEPRECIATION SCHEDULESChapel Springs Winery, LLC

Year 1 Existing Assets JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTALSet-up Assets (no detail entered) - - - - - - - - - - - - - Set-up Assets (detail entered) - - - - - - - - - - - - - Start-up Purchases - - - - - - - - - - - - - Total - - - - - - - - - - - - - Year 2 Existing AssetsSet-up Assets (no detail entered) - - - - - - - - - - - - - Set-up Assets (detail entered) - - - - - - - - - - - - - Start-up Purchases - - - - - - - - - - - - - Total - - - - - - - - - - - - - Year 3 Existing AssetsSet-up Assets (no detail entered) - - - - - - - - - - - - - Set-up Assets (detail entered) - - - - - - - - - - - - - Start-up Purchases - - - - - - - - - - - - - Total - - - - - - - - - - - - -

Year 1 New Purchases JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTALComputer Equipment - - - - - - - - - - - - - Computer Equipment Depreciation - - - - - - - - - - - - - Equipment/Machinery - 25,000 - - - - - - - - - - 25,000 Equipment Depreciation - 417 417 417 417 417 417 417 417 417 417 417 4,583 Furniture - - - - - - - - - - - - - Furniture Depreciation - - - - - - - - - - - - - Leasehold Improvements - - - - - - - - - - - - - Leasehold Depreciation - - - - - - - - - - - - - Vehicles - - - - - - - - - - - - - Vehicle Depreciation - - - - - - - - - - - - - Building - - - - - - - - - - - - - Building Depreciation - - - - - - - - - - - - - Year 2 New PurchasesComputer Equipment - - - - - - - - - - - - - Computer Equipment Depreciation - - - - - - - - - - - - - Equipment/Machinery - - - - - - - - - - - - - Equipment Depreciation 417 417 417 417 417 417 417 417 417 417 417 417 5,000 Furniture - - - - - - - - - - - - - Furniture Depreciation - - - - - - - - - - - - - Leasehold Improvements - - - - - - - - - - - - - Leasehold Depreciation - - - - - - - - - - - - - Vehicles - - - - - - - - - - - - - Vehicle Depreciation - - - - - - - - - - - - - Building - - - - - - - - - - - - - Building Depreciation - - - - - - - - - - - - - Year 3 New PurchasesComputer Equipment - - - - - - - - - - - - - Computer Equipment Depreciation - - - - - - - - - - - - - Equipment/Machinery - - - - - - - - - 36,000 - - 36,000 Equipment Depreciation 417 417 417 417 417 417 417 417 417 1,017 1,017 1,017 6,800 Furniture - - - - - - - - - - - - - Furniture Depreciation - - - - - - - - - - - - - Leasehold Improvements - - - - - - - - - - - - - Leasehold Depreciation - - - - - - - - - - - - - Vehicles - - - - - - - - - - - - - Vehicle Depreciation - - - - - - - - - - - - - Building - - - - - - - - - - - - - Building Depreciation - - - - - - - - - - - - -

Appendix

CAPITAL BUDGET PROJECTIONSYear 1 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTALCapital BudgetOwner's Draw - - - - - - - - - - - - - Investor's Draw - - - - - - - - - - - - - Dividends Paid - - - - - - - - - - - - - Security Deposits - - - - - - - - - - - - - Amortization - - - - - - - - - - - - - Depreciation (existing assets) - - - - - - - - - - - - - Capital Asset Purchases - 25,000 - - - - - - - - - - 25,000 Depreciation (new purchases) - 417 417 417 417 417 417 417 417 417 417 417 4,583 Land - - - - - - - - - - - - -

Year 1 Total Depreciation 4,583 Assumptions - Year 1Owner's DrawInvestor's DrawDividends PaidSecurity DepositsAmortizationEquipmentEquipment DepreciationFurnitureFurniture DepreciationLeasehold ImprovementsLeasehold DepreciationVehiclesVehicle DepreciationBuildingBuilding DepreciationLand

winery production equipment, tanks and cooperage based on estimate from vendor

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CAPITAL BUDGET PROJECTIONSYear 2 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTALCapital BudgetOwner's Draw - - - - - - - - - - - - - Investor's Draw - - - - - - - - - - - - - Dividends Paid - - - - - - - - - - - - - Security Deposits - - - - - - - - - - - - - Amortization - - - - - - - - - - - - - Depreciation (existing assets) - - - - - - - - - - - - - Capital Asset Purchases - - - - - - - - - - - - - Depreciation (new purchases) 417 417 417 417 417 417 417 417 417 417 417 417 5,000 Land - - - - - - - - - - - - -


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CAPITAL BUDGET PROJECTIONSYear 3 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTALCapital BudgetOwner's Draw - - - - - - - - - - - - - Investor's Draw - - - - - - - - - - - - - Dividends Paid - - - - - - - - - - - - - Security Deposits - - - - - - - - - - - - - Amortization - - - - - - - - - - - - - Depreciation (existing assets) - - - - - - - - - - - - - Capital Asset Purchases - - - - - - - - - 36,000 - - 36,000 Depreciation (new purchases) 417 417 417 417 417 417 417 417 417 1,017 1,017 1,017 6,800 Land - - - - - - - - - - - - -


automated bottling and labeling line @ $15,000, centrifuge @ $5,000, two stainless steel jacketed tanks @$16,000 -- estimates from vendor

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Appendix

Equity InvestmentChapel Springs Winery, LLC JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTAL

Year 1 - - - - - - - - - - - - - Year 2 - - - - - - - - - - - - - Year 3 - - - - - - - - - - - - -

Real Estate LoansChapel Springs Winery, LLC

Existing Balance - New Borrowing JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTALYear 1 - 25,000 - - - - - - - - - - 25,000 Outstanding balance - 25,000 24,694 24,385 24,073 23,758 23,439 23,117 22,792 22,464 22,133 21,798 Year 2 - - - - - - - - - - - - - Outstanding balance 21,460 21,118 20,773 20,425 20,073 19,718 19,360 18,998 18,632 18,262 17,888 17,511 Year 3 - - - - - - - - - - - - - Outstanding balance 17,130 16,745 16,356 15,963 15,567 15,167 14,763 14,354 13,941 13,524 13,103 12,678

Repayment JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTALYear 1 - principal - - 306 309 312 315 319 322 325 328 331 335 3,202 Year 1 - interest - - 250 245 244 241 238 234 231 228 225 221 2,357 Year 2 - principal 338 342 345 348 352 355 358 362 366 370 374 377 4,287 Year 2 - interest 218 215 211 208 204 201 197 194 190 186 183 179 2,386 Year 3 - principal 381 385 389 393 396 400 404 409 413 417 421 425 4,833 Year 3 - interest 175 171 167 164 160 156 152 148 144 140 135 131 1,843

Traditional Business Loan and/or other Long-term LoansChapel Springs Winery, LLC

Loan 1 Existing Balance - New Borrowing JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTALYear 1 - - - - - - - - - - - - - Outstanding balance - - - - - - - - - - - - Year 2 - - - - - - - - - - - - - Outstanding balance - - - - - - - - - - - - Year 3 - - - - - - - - - - - - - Outstanding balance - - - - - - - - - - - -

Repayment JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTALYear 1 - principal - - - - - - - - - - - - - Year 1 - interest - - - - - - - - - - - - - Year 2 - principal - - - - - - - - - - - - - Year 2 - interest - - - - - - - - - - - - - Year 3 - principal - - - - - - - - - - - - - Year 3 - interest - - - - - - - - - - - - -

Loan 2 Borrowing JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTALYear 1 - - - - - - - - - - - - - Outstanding balance - - - - - - - - - - - - Year 2 - - - - - - - - - - - - - Outstanding balance - - - - - - - - - - - - Year 3 - - - - - - - - - - - - - Outstanding balance - - - - - - - - - - - -

Repayment JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTALYear 1 - principal - - - - - - - - - - - - - Year 1 - interest - - - - - - - - - - - - - Year 2 - principal - - - - - - - - - - - - - Year 2 - interest - - - - - - - - - - - - - Year 3 - principal - - - - - - - - - - - - - Year 3 - interest - - - - - - - - - - - - -

Line of CreditChapel Springs Winery, LLC

Existing Balance -

Borrowing JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTALYear 1 - - - - - - - - - - - - - Outstanding balance - - - - - - - - - - - - Year 2 - - - - - - - - - - - - - Outstanding balance - - - - - - - - - - - - Year 3 - 10,000 - 5,000 - - - - - - - - 15,000 Outstanding balance - 10,000 10,000 15,000 15,000 5,000 - - - - - -

Repayment JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC TOTALYear 1 - principal - - - - - - - - - - - - - Year 1 - interest - - - - - - - - - - - - - Year 2 - principal - - - - - - - - - - - - - Year 2 - interest - - - - - - - - - - - - - Year 3 - principal - - - - - 10,000 5,000 - - - - - 15,000 Year 3 - interest - 83 83 125 125 42 - - - - - - 458

Year 1 - total principal paid 3,202 Year 1 - total interest paid 2,357 Year 2 - total principal paid 4,287 Year 2 - total interest paid 2,386 Year 3 - total principal paid 19,833 Year 3 - total interest paid 2,301

Appendix