Town of Brant Erie County, New York

Transcription

1 Town of Brant Erie County, New York FARM WINERY PROJECT MODEL BUSINESS PLAN December 2004 Shepstone Management Company 100 Fourth Street Honesdale, PA FAX

2 Farm Winery Project Model Business Plan Table of Contents Table of Contents Page i 1.0 Executive Summary Business Description, Mission Statement and Business Goals Description of Business Business Mission Statement Business Goals Marketing Plan Regional Wine Market and Competition Business Marketing Plan Management Plan Financial Plan Sales Forecast, Income and Expenses Capital Requirements and Financing Proposal Cash Flow Analysis Appendices 6-1 A. Pro Forma Income and Expense Statements A-1 B. Pro Forma Balance Sheets B-1 C. Cash Flow Projections C-1 D. Resumes of Management Personnel D-1 E. Equipment Listing E-1 Shepstone Management Company i Table of Contents

3 Farm Winery Project Model Business Plan Executive Summary Brant Farms Winery, LLC, proposes to establish a new estate winery in the extensive juice grape region surrounding Brant, New York. This will be a premium winery that builds upon the success of the several nearby wineries constituting the Chautauqua and Niagara Wine Trails. Annual production will begin at 5,550 cases and increase to 9,250 cases over a period of 5-6 years. All grapes will be purchased from local and regional vineyards. The winery will produce the following high quality varietals: Chardonnay, Cabernet Franc, Cabernet Savignon and Seyval Blanc. It will also produce three relatively high quality wines using native varieties; Pink Catawba, Concord and Delaware. Most of the wine will be sold out of the tasting room, but high-end restaurants and wine shops may also be used to reach customers as volume grows. Brant Farms Winery will be located in the Town of Brant, Erie County, New York. It will enjoy relatively easy access from I-90 via exits 57 and 58. This route is the major link between the cities of Buffalo and Erie. It carries 28,040 vehicles per day, a significant portion of which represent potential customers for Brant Farms Winery. There is a total market of over 1,225,000 persons within 60 minutes of Brant, creating a major opportunity for a tourism attraction with destination appeal. The market within 30 minutes is also considerable. It has a population of over 208,000 persons, of which over 80,000 are adults of 45 or more years of age. This is a prime market for high quality wines of the type Brant Farms Winery proposes to supply. There are, too, large gains in certain categories around which a new winery venture can be developed. These include households earning over $50,000 per year with the additional disposal income to spend on travel, entertainment and high-quality dining experiences. Those households are increasing at a rate of about 3% per year across the market as a result of income gains as the population ages. There is steady growth of about 1% per year in population aged 45+ years who are likely to be interested in high quality wines, particularly dry wines. This, combined with income gains, creates a growing market. There are some 16 wineries located to the north and south of Brant along the Chautauqua and Niagara wine trails. There are an additional 50 wineries located on the Niagara Peninsula in adjoining Ontario None of the local wineries offer the same combination of wines as proposed by Brant Farms Winery, with its balance of native and high quality varietals and emphasis on dry wines. Brant Farms Winery will emphasize a strategy that is focused on a relatively small number of higher-end products products. This will be accomplished using a tasting room and a wine club. Also, high end restaurants and wine shops will be used to market the ultrapremium and super-premium products. Shepstone Management Company Page 1-1 Executive Summary

4 Farm Winery Project Model Business Plan Brant Farms Winery will be owned and operated by James and Mary Smith, the owners of the vineyard on which it will be located. They will conduct the business through a limited liability corporation known as Brant Farms Winery, LLC. James will serve as President and Operations Manager. He has worked as a winemaker prior to returning to the vineyard operation that he and Mary now own. James and Mary both attended Cornell and graduated with degrees in Ag Economics. Average prices of $8, $15 and $22 per 750 ml bottle are projected, respectively, for premium, super-premium and ultrapremium wines. It is anticipated that 60% of wines will be sold as premium wines with 30% and 10%, respectively, for super-premium and ultra-premium wine selections. This activity is forecasted to generate $1,095,000 of sales in the fifth year, at which point it will be profitable. NOTE: This model plan is based on similar models developed by Cornell University (see Writing a Business Plan: An Example for a Small Premium Winery, E.B , by Mark E. Pisoni and Gerald B. White) and by the Ohio Wine Producers Association (The Dollar and Sense of Starting a Small Winery, by Chris Stamp). Several elements of this model draw excerpts directly from these reports and they provide much additional guidance that will be helpful to any party developing their own winery plan. This model plan provides a recommended approach for organizing such a business, relying upon a number of assumptions that are fictional in nature. It is, therefore, not intended and should not be used as a substitute for the extensive due diligence and financial analysis connected with a new business, activities that must be tailored to the needs of each individual enterprise. It is proposed to borrow the sum of $1,200,000 over a 15 year term to finance the establishment of this business over a two-year period (the winery in the first year and tasting room in the second), plus an equal amount of working capital, substantial portions of which will be supplied by the owners on a loan basis. Shepstone Management Company Page 1-2 Executive Summary

5 Farm Winery Project Model Business Plan Business Description, Mission Statement and Business Goals 2.1 Business Description Brant Farms Winery, LLC, proposes to establish a new estate winery in the extensive juice grape region surrounding Brant, New York. This will be a premium winery that builds upon the success of the several nearby wineries constituting the Chautauqua and Niagara Wine Trails. Annual production will begin at 5,550 cases and increase to 9,250 cases over a period of 5-6 years. All grapes will be purchased from local and regional vineyards. The winery will produce the following high quality varietals: Chardonnay, Cabernet Franc, Cabernet Savignon and Seyval Blanc. It will also produce three relatively high quality wines using native varieties; Pink Catawba, Concord and Delaware. Most of the wine will be sold out of the tasting room, but high-end restaurants and wine shops may also be used to reach customers as volume grows. The key to the winery's success will be its high quality wines. Research shows that U.S. consumers are drinking more expensive and higher quality wines. A 2003 study of California wine shipments indicates premium table wine sales of $7 and above for a 750 ml bottle increased 6% to account for 30% of the volume and 62% of all winery revenues. The Brant Farms Winery will capitalize on these consumption trends. Most of the wineries in the Lake Erie wine region over a wide range of wines and tend to emphasize fruity sweet wines (although many of the Canadian wineries on the Niagara Peninsula are more focused in their offerings). Brant Farms Winery, by producing a relatively smaller number of higher quality wines, will establish a marketable competitive advantage. It is anticipated that 10% of the wines produced will fall into the ultra-premium market with an average price of $22.00 per 750 ml bottle. Another 30% will constitute super-premium wines sold for an average of $15.00 per bottle. The remainder will be premium wines selling at an average of $8.00 per bottle. This mix will allow for higher margins but will also require some specialized equipment to accommodate the varied processes involved. Moreover, it is anticipated that sales of super-premium and ultra-premium wines will require waiting 18 months after production to make the first sales, while premium wines will be sold after 12 months. It is assumed that 50% of a given wine will be sold the first year it is marketed, with 25% each for the following two years. This project will support other agricultural tourism efforts locally and help to implement the goal of the Brant, Evans and North Collins Regional Farmland Protection Plan to "...promote local agritourism in tourism brochures and other tourism outlets such as in state publications, along wine tasting routes or at the Seaway Trail and Convention and Visitors Bureau." Shepstone Management Company Page 2-1 Business Description and Mission

6 Farm Winery Project Model Business Plan Mission Statement The Brant Farms Winery will market a limited but top quality lines of wines from both native and vinifera grape varieties that build on the Lake Erie and Brant region's reputation for producing fine agricultural products, also creating a tourism attraction for visitors from Buffalo, Cleveland, Erie and other markets. G. Establishing and maintaining a position of leadership in the regional grape and wine industry. H. Establishing a reputation as a centerpiece tourist attraction that will draw still more visitors and create new marketing opportunities within the greater Buffalo region. 2.3 Business Goals The following are the key business goals of Brant Farms Winery in launching this project: A. Creating a business that will ensure full-time employment for the winery owners. B. Generating a positive cash flow within five years of business establishment. C. Generating a profit within five years of business establishment. D. Generating a long-term rate of return of at least 10% on equity invested, including land priced at market value. E. Achieving an operating margin of 40% before depreciation, interest and taxes. F. Establishing a foundation for future business growth through increased visitation to the area, expansions and new still higher-quality offerings, that fit within the above mission statement. Shepstone Management Company Page 2-2 Business Description and Mission

7 Farm Winery Project Model Business Plan Marketing Plan 3.1 Regional Wine Market and Competition Brant Farms Winery will be located in the Town of Brant, Erie County, New York. It will enjoy relatively easy access from I-90 via exits 57 and 58. This route is the major link between the cities of Buffalo and Erie. It carries 28,040 vehicles per day, a significant portion of which represent potential customers for Brant Farms Winery. Other major market factors include the following: A. U.S. Route 20 also provides access to the site and serves as a regional alternate and collector for I-90. It carries 15,600 vehicles per day. B. There is a total market of over 1,225,000 persons within 60 minutes of Brant (see table following), creating a major opportunity for a tourism attraction with destination appeal. The market within 30 minutes is also considerable. It has a population of over 208,000 persons, of which over 80,000 are adults of 45 or more years of age. This is a prime market for high quality wines of the type Brant Farms Winery proposes to supply. C. While the overall population of the region is not growing, the number of households is relatively stable. There are, too, large gains in certain categories around which a new winery venture can be developed. These include households earning over $50,000 per year with the additional disposal income to spend on travel, entertainment and highquality dining experiences. Those households are increasing at a rate of about 3% per year across the market as a result of income gains as the population ages. There is steady growth of about 1% per year in population aged 45+ years who are likely to be interested in high quality wines, particularly dry wines. This, combined with income gains, creates a growing market. Market Area Demographics, Minutes Minutes Minutes Total Population, , , ,155 1,234,934 Population, , , ,731 1,225,082 Population, , , ,511 1,206,169 Households, , , , ,561 Households, , , , ,357 Households, , , , ,772 HH's $50K Income, , ,740 47, ,686 HH's $50K Income, , ,945 52, ,929 HH's $50K Income, , ,814 60, ,259 Growth, ,253 16,869 8,209 30,331 % Growth, % 15.3% 15.6% 15.3% Annual % Growth 3.0% 3.1% 3.1% 3.1% Population 45+, , , , ,378 Population 45+, , , , ,548 Population 45+, , , , ,586 Growth, ,718 14,241 7,080 26,039 % Growth, % 5.2% 5.3% 5.3% Annual % Growth 1.1% 1.0% 1.1% 1.1% Source: ESRI - Business Information Solutions D. The amount of spending within the identified market areas (0-30 minutes (Primary Market), minutes (Secondary Market) and minutes (Tertiary or Fringe Shepstone Management Company Page 3-1 Marketing Plan

8 Farm Winery Project Model Business Plan Market) is quite impressive. The following table summarizes some of the most relevant trends: Market Area Visitation to Attractions and Expenditures 0-30 Minutes While there is no specific data available on wine use, travel expenditures as a whole by households residing within 30 minutes are estimated to total over $116 million. The market within one hour represents over $685 million of travel expenditures. Three categories of comparable interests to visiting a winery were examined. Dining out, for example, was an activity enjoyed by some 470,000 adults in the market area and 184,000 adults cooked for fun, plus 185,000 individuals went to a bar or nightclub. These are all potential consumers of wine, a large number of whom could be attracted to a Brant Farms Winery on the Chautauqua or Niagara wine trail Minutes Minutes There is competition throughout the outer reaches of the market area for this type of enterprise but none within the immediate Total Travel Expenditures $116,234,322 $368,658,225 $200,149,685 $685,042,232 Average Per Household $1,464 $1,304 $1,536 $1,391 Dined Out 82, , , ,903 Cooked for Fun 30, ,252 50, ,359 Went to Bar/Nightclub 31, ,722 49, ,617 Note: Visitation estimates reflect the number of market area adults participating Source: ESRI - Business Information Solutions Brant area. The Lake Erie Viticultural Area (Chautauqua County) is, in fact, the largest grape growing county outside of California, with some 20,000 acres of vineyards. Most of these vineyards are planted to Concord grapes used for grape juice. There are also, however, some 16 wineries located to the north and south of Brant along the Chautauqua and Niagara wine trails. There are an additional 50 wineries located on the Niagara Peninsula in adjoining Ontario. There are 18 wineries in the Niagara-onthe-Lake area alone, plus numerous others throughout the peninsula. The following table examines the wine varieties offered by the principal wineries along the Chautauqua Wine Trail, the most likely source of competition for Brant Farms Winery. Chautauqua Wine Trail - Types of Wines Offered Blueberry Sky Johnson Estate Merritt Schloss Estate Roberian Doepken Vetter Willow Vineyards Creek Woodbury Count Chardonnay No Yes Yes Yes No Yes Yes Yes 6 Cabernet Sauvignon No Yes No Yes Yes Yes Yes No 5 Delaware No Yes Yes Yes No Yes Yes No 5 Reisling No Yes No Yes Yes No Yes Yes 5 Seyval No Yes Yes Yes No Yes No Yes 5 Fruit Wines Yes No Yes No No Yes No Yes 4 Niagara No Yes No No No Yes Yes Yes 4 Concord No Yes No No No Yes Yes No 3 Dry Riesling No No No No No Yes Yes Yes 3 Marechal Foch No Yes Yes No No Yes No No 3 Chambourcin No Yes No No No No Yes No 2 Chautauqua Blush No Yes Yes No No No No No 2 Chautauqua White No No Yes No Yes No No No 2 Ives Noir No Yes No Yes No No No No 2 Pink Catawba No No No Yes No No Yes No 2 Vidal Blanc No Yes No Yes No No No No 2 Other Red No Yes Yes No No Yes Yes Yes 5 Other White No Yes Yes No Yes No No Yes 4 Other Blush No Yes Yes No No No No Yes 3 Other No Yes Yes No No No Yes No 3 Shepstone Management Company Page 3-2 Marketing Plan

9 Farm Winery Project Model Business Plan The table indicates that all of the wines proposed to be produced by Brant Farms Winery, with the exception of Cabernet Franc, are made by other wineries. However, none of the other wineries offer the same combination of wines as proposed by Brant Farms Winery, with its balance of native and high quality varietals with emphasis on dry wines over fruity and sweet varieties. Cabernet Franc is not offered on the Chautauqua Wine Trail, although it is grown by several Niagara Peninsula wineries in nearby Canada. Pinot Noir is alternative to Cabernet Franc if grapes are not available to purchase at a reasonable price. Pinot Noir is produced by one other winery on the Chautauqua Wine Trail and another on the Niagara Wine Trail but not promoted heavily in the region. Significantly, Warm Lake Estates Winery, north of Buffalo, markets its Pinot Noir at prices ranging from $15.99 to $35.99 for 750 ml bottles, indicating the potential in premium wines. 3.2 Business Marketing Plan The proposed winery's competitive advantage will be its dedication to producing higher quality wines than its competitors by purchasing the best grapes and investing in the highest quality wine making equipment. The Brant Farms Winery will also emphasize a strategy that is more focused with fewer products. High end restaurants and wine shops will be used to market the ultrapremium and super-premium products. Brant Farms Winery will target wealthy, college-educated baby boomers as customers. These individuals are highly wine-educated, enjoy dining out, and regularly entertain friends or business associates. These consumers are become more wine-educated through experience and promotional efforts in which Brant Farms Winery will also participate. Brant Farms Winery's second target market consists of premier restaurants and wine shops located throughout the Buffalo, Cleveland and Erie regions. Gourmet restaurants that carry a variety of premium wines and in state specialty wine shops that focus on carrying premium wine. Brant Farms Winery will market 40% of its wines under "reserve" labels as ultrapremium and super-premium products (10% and 30%, respectively). The remainder will be sold simply as premium wines. Wines will be packaged in standard 750-ml bottles and follow traditional European bottle shapes and colors. Natural corks will be used to allow consumers to smell them, adding to the romance and sophistication of the wine drinking experience. Natural cork also follows with European wine tradition. Foil capsules are, likewise, the standard in premium wine; therefore, Brant Farms Winery will be using these. Cardboard twelve bottle cases are the standard in the wine industry and will be used to package the wine. Brant Farms Winery will offer its customers a number of other activities intended to create a pleasant winery experience. Wine tastings will be offered each day to encourage customers to visit Shepstone Management Company Page 3-3 Marketing Plan

10 Farm Winery Project Model Business Plan the winery and try the various wines. Educational winery tours will be offered on weekends to introduce customers to the grape growing and winemaking process. A monthly wine tasting class will be led by the winemaker. Other events will also be conducted on special occasions. Brant Farms Winery will adopt a high price and high quality pricing strategy. Prestige pricing will be used to inform customers of the high quality product being sold. Ultra-premium wines will be marketed at an average price of $22 per bottle, super-premiums at $15 and premiums at $8. These prices are consistent with other high quality wines in the marketplace (e.g. Warm Lake Estates). Many regional wineries have produced lower priced wines from native varieties and French American hybrids. Consequently, local consumers have grown accustomed to lighter, fruity, sweet wines. However, research shows that over time, consumer's taste preferences shift from lighter, sweeter wines to drier, more complex wines (Barclay, 1999). This present an opportunity to increase prices by producing higher quality wines. Brant Farms Winery s promotion goal will be one of differentiation and all promotion activities will reinforce the winery's premium positioning status. Consumer promotion events will be intended to bring customers to the winery for fun, noncommercial activities. These events include crush and bottling parties, dances, food pairings, tastings, home winemaking seminars, barrel tastings, and winery and vineyard tours. Additionally, the winery will participate in the appropriate wine trail program (Chautauqua or Niagara). Events targeting other customers will focus on building relationships. These events will include regularly visiting restaurants and wine shops, having special dinners and barrel tastings at the winery for top accounts and regularly sending free wine samples to these accounts. Brant Farms Winery will spend $4 per case plus a fixed amount of $500 per month on marketing its wines. A webpage and some billboards will be used to help launch the promotional campaign. Grand opening advertising and publicity will be used to call attention to season openings and the Brant Farms Winery website. The bulk of marketing expenditures, however, will be directed to the brochure, website and publicity campaign. All employees will be given hospitality and customer service training prior to staring work. Road signage will also be used to communicate information on the Brant Farms Winery location, business hours, special promotions and related attractions. A number of signs will be placed along busy roadways (e.g. U.S. Route 20) to ensure customer exposure. Direct marketing studies indicate the number of roadside signs is directly related to tourist site revenue and, therefore, every effort will be made to maximize the use of such signage, which will be done using bright but tasteful designs and Brant Farms Winery logo. Shepstone Management Company Page 3-4 Marketing Plan

11 Farm Winery Project Model Business Plan A variety of other promotional and marketing techniques will be used to build consumer interest in Brant Farms Winery. These will include: Regular and frequent events that can be used as an excuse for advertising and publicity. Such events will include contests, displays and educational events. Brant Farms Winery customers that the business is open each year and to alert them regarding special events. The mailing list will also be used as the basis for establishing a Brant Farms Winery Club to market premium wines to higher income repeat customers. Use of promotional items such as calendars, maps and other advertising specialties displaying Brant Farms Winery logo and providing directional information. Cross-promotion with noncompeting businesses selling to Brant Farms Winery target market (e.g. a local B&B). Assembly of media packages to encourage profiles of Brant Farms Winery in local newspapers. Support of different fund-raising and charity events. Publicity will be heavily used to generate inexpensive or free advertising by developing news releases that provide local media with a feature stories on Brant Farms Winery events. A media day will be conducted at the outset of each season to encourage feature stories in local and regional media outlets. A media list will be developed for this purpose and news releases will be sent to appropriate media each time there is an occasion or event associated with Brant Farms Winery. A mailing list will be developed to inform Shepstone Management Company Page 3-5 Marketing Plan

12 Farm Winery Project Model Business Plan Management Plan Brant Farms Winery will be owned and operated by James and Mary Smith, the owners of the vineyard on which it will be located. They will conduct the business through a limited liability corporation known as Brant Farms Winery, LLC. Each of the principals will own 50% of the stock. James will serve as President and Operations Manager. His duties will include coordinating grape purchasing, winery operation and maintenance and staffing. He has worked as a winemaker for one of the Finger Lakes wineries (see his resume) prior to returning to the vineyard operation that he and Mary now own. James attended Cornell James Smith and graduated President and Manager with a degree in Ag Economics. Mary Smith will act as Treasurer Bill Jones and Financial Winemaker Manager of the operation. She, too, is a Cornell Temporary Bottlers Ag Economic & Winery Employees graduate and has been actively engaged in managing the family vineyard operation. Bill Jones will serve as Winemaker for the operation, working under the direction of James Smith. Sally Ames will serve as Sales Manager. Both will work 8 months per year. An organization chart follows: Resumes, including work experience, education, professional affiliations and other qualifications to run this business, are attached. The two principals will, at the outset, be the only year-round employees of Brant Farms Winery, although the Winemaker and Sales Manager will be permanent positions. Other positions will be filled with part-time or seasonal personnel. It is anticipated that approximately 25 such employees will be required, most of whom will be Brant Farms Winery, LLC James & Mary Smith Owners Sally Ames Sales Manager Tasting Room Employees Mary Smith Treasurer youth, retirees or other individuals seeking part-time work. Brant Farms Winery, LLC will also join either the Chautauqua or Niagara Wine Shepstone Management Company Page 4-1 Management Plan

13 Farm Winery Project Model Business Plan Trails and the New York Wine and Grape Foundation to secure additional marketing support services for its business. Shepstone Management Company Page 4-2 Management Plan

14 Farm Winery Project Model Business Plan Financial Plan 5.1 Sales Forecast, Income and Expenses As indicated earlier, Brant Farms Winery will have the capacity to produce 9,250 cases of wine per year. It will begin marketing premium wines 12 months following their manufacture and superpremium and ultra-premium wines 18 months after production. It will start producing at 60% of capacity and increase to full capacity within five years. Average prices of $8, $15 and $22 per 750 ml bottle are projected, respectively, for premium, super-premium and ultrapremium wines. It is anticipated that 60% of wines will be sold as premium wines with 30% and 10%, respectively, for super-premium and ultra-premium wine selections. Other assumptions may be found in the self-explanatory cash flow analysis. This activity is forecasted to generate $1,095,000 of sales in the fifth year, at which point it will be profitable. 5.2 Capital Requirements and Financing Proposal It is proposed to borrow the sum of $1,200,000 over a 15 year term to finance the establishment of this business over a two-year period (the winery in the first year and tasting room in the second), plus an equal amount of working capital. The working capital financing is proposed as a line of credit for cash flow projection purposes. The owners will invest $25,000 worth of equity in land and another $225,000 in cash equity toward the project. The capital expenses involve an estimated $12,500 in site work and $700,000 of building expenses for a winery and tasting room. Approximately $450,000 will be required for winemaking equipment. This includes equipment for manufacturing high quality red as well as white wines, although used equipment will be employed in many instances to lower capital costs. A detailed listing of equipment is included in the Appendices. NOTE: Sample equipment inventories that may be used to assemble such a listing are available in the model business plans developed by Cornell University (see Writing a Business Plan: An Example for a Small Premium Winery, E.B , by Marke E. Pisoni and Gerald B. White) and by the Ohio Wine Producers Association (The Dollar and Sense of Starting a Small Winery, by Chris Stamp). 5.3 Cash Flow Analysis A self-explanatory cash flow analysis is attached as Appendix C of this Business Plan. The assumptions used in the analysis are also provided. It indicates this business will amortize long-term debt. While it will require up to $1,200,000 of working capital, a substantial portion of which will be provided by the owners on a loan basis, that capital will be returned in full with interest at 7.5% by the eight year of operation. The project will return all Shepstone Management Company Page 5-1 Financial Plan

15 Farm Winery Project Model Business Plan equity by the ninth year of operation and generate net operating income (before depreciation and taxes) of $555,000 per year thereafter. It will generate a positive net operating income before taxes in the fourth year of operation. Because much of the working capital for this project will be provided in the form of owner financing and the interest rate is, at 7.5%, above current lending rates, there is a significant margin of error for any unanticipated costs of launching the enterprise and bearing marketing expenses, including wine giveaways. Shepstone Management Company Page 5-2 Financial Plan

16 6.0 Appendices Attached, as appendices to this Business Plan, are the following business financial documents: A. Pro Forma Income and Expense Statements B. Pro Forma Balance Sheets C. Cash Flow Projections D. Resumes of Management Personnel E. Equipment Listing Farm Winery Project Model Business Plan Shepstone Management Company Page 6-1 Appendices

17 APPENDIX A Pro Forma Income & Expense Statements

18 Brant Farms Winery PRO FORMA FINANCIAL STATEMENTS INCOME AND EXPENSES: FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 INCOME Ultra-premium sales $0 $20,513 $90,354 $151,404 $202,198 Super-premium sales $0 $41,958 $184,815 $309,690 $413,586 Premium sales $0 $159,840 $293,040 $426,240 $479,520 SUB-TOTAL $0 $222,311 $568,209 $887,334 $1,095,304 Cost of Goods Sold (Grapes) $115,677 $154,236 $173,516 $183,156 $192,795 GROSS INCOME ($115,677) $68,074 $394,693 $704,178 $902,508 EXPENSES Principal/manager/office salaries $80,000 $80,000 $80,000 $80,000 $80,000 Other variable labor costs (production) $38,850 $51,800 $58,275 $61,513 $64,750 Other variable labor costs (sales) $38,850 $51,800 $58,275 $61,513 $64,750 Labor overhead $39,425 $45,900 $49,138 $50,756 $52,375 Packaging $0 $80,475 $107,300 $120,713 $115,348 Repairs/maintenance $12,000 $12,000 $12,000 $12,000 $12,000 Fuel and supplies $6,750 $8,600 $9,525 $9,988 $10,450 Utilities $15,158 $18,210 $19,736 $20,499 $21,263 Insurance $14,400 $14,400 $14,400 $14,400 $14,400 Office expense/professional fees $6,000 $6,000 $6,000 $6,000 $6,000 Marketing $28,200 $35,600 $39,300 $41,150 $43,000 Contingency/miscellaneous $13,982 $20,239 $22,697 $23,927 $24,217 SUB-TOTAL $293,614 $425,024 $476,646 $502,457 $508,552 Interest $60,797 $134,872 $159,126 $163,877 $150,384 Depreciation $47,125 $65,458 $65,458 $65,458 $65,458 TOTAL EXPENSES $401,536 $625,355 $701,230 $731,792 $724,394 NET INCOME BEFORE TAXES ($517,213) ($557,280) ($306,537) ($27,614) $178,114

19 APPENDIX B Pro Forma Balance Sheets

20 ASSETS AND LIABILITIES: Brant Farms Winery PRO FORMA FINANCIAL STATEMENTS Beginning FY 2005 Beginning FY 2006 Beginning FY 2007 Beginning FY 2008 Beginning FY 2009 Ending FY 2009 ASSETS CURRENT ASSETS Cash on hand $225,000 $1,777 $2,900 $1,113 $4,314 $3,999 Accounts receivable $0 $0 $0 $0 $0 $0 TOTAL CURRENT ASSETS $225,000 $1,777 $2,900 $1,113 $4,314 $3,999 FIXED ASSETS (DEPRECIATED VALUE) Land $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 Buildings, equipment & other $0 $659,750 $1,119,292 $1,053,833 $988,375 $922,917 TOTAL FIXED ASSETS $25,000 $684,750 $1,144,292 $1,078,833 $1,013,375 $947,917 TOTAL ASSETS $250,000 $686,527 $1,147,192 $1,079,947 $1,017,689 $951,916 LIABILITIES AND EQUITY CURRENT LIABILITIES Accounts payable $0 $0 $0 $0 $0 $0 Short-term debt $0 $280,000 $845,000 $1,135,000 $1,155,000 $970,000 Current portion of long-term debt $0 $28,298 $50,708 $54,645 $58,887 $63,458 TOTAL CURRENT LIABILITIES $0 $308,298 $895,708 $1,189,645 $1,213,887 $1,033,458 LONG-TERM LIABILITIES Non-current portion of long-term debt $0 $645,442 $1,075,978 $1,021,333 $962,446 $898,988 TOTAL LIABILITIES $0 $953,740 $1,971,686 $2,210,978 $2,176,333 $1,932,446 Equity $250,000 $250,000 $250,000 $250,000 $250,000 $250,000 Retained earnings $0 ($517,213) ($1,074,494) ($1,381,031) ($1,408,645) ($1,230,531) TOTAL LIABILITIES AND EQUITY $250,000 $686,527 $1,147,192 $1,079,947 $1,017,689 $951,916

21 APPENDIX C Cash Flow Projections

22 Brant Farms Winery Cash Flow Analysis FISCAL YEAR (JUL-JUN) VOLUME AS % OF BASE 60% 80% 90% 95% 100% 100% 100% 100% 100% 100% Ultra-premium wine cases produced Super-premium wine cases produced 1,665 2,220 2,498 2,636 2,775 2,775 2,775 2,775 2,775 2,775 Premium wine cases produced 3,330 4,440 4,995 5,273 5,550 5,550 5,550 5,550 5,550 5,550 REVENUE Ultra-premium sales $0 $20,513 $90,354 $151,404 $202,198 $224,054 $236,752 $242,002 $244,200 $244,200 Super-premium sales $0 $41,958 $184,815 $309,690 $413,586 $458,291 $484,265 $495,005 $499,500 $499,500 Premium sales $0 $159,840 $293,040 $426,240 $479,520 $512,820 $526,140 $532,800 $532,800 $532,800 SUB-TOTAL $0 $222,311 $568,209 $887,334 $1,095,304 $1,195,165 $1,247,157 $1,269,807 $1,276,500 $1,276,500 Cost of Goods (retail and food) ($115,677) ($154,236) ($173,516) ($183,156) ($192,795) ($192,795) ($192,795) ($192,795) ($192,795) ($192,795) TOTAL GROSS MARGIN ($115,677) $68,074 $394,693 $704,178 $902,508 $1,002,369 $1,054,362 $1,077,011 $1,083,705 $1,083,705 OPERATING EXPENSES Principal/manager/office salaries $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 $80,000 Other variable labor costs (production) $38,850 $51,800 $58,275 $61,513 $64,750 $64,750 $64,750 $64,750 $64,750 $64,750 Other variable labor costs (sales) $38,850 $51,800 $58,275 $61,513 $64,750 $64,750 $64,750 $64,750 $64,750 $64,750 Labor overhead $39,425 $45,900 $49,138 $50,756 $52,375 $52,375 $52,375 $52,375 $52,375 $52,375 Packaging $0 $80,475 $107,300 $120,713 $115,348 $134,125 $134,125 $134,125 $134,125 $134,125 Repairs/maintenance $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 Fuel and supplies $6,750 $8,600 $9,525 $9,988 $10,450 $10,450 $10,450 $10,450 $10,450 $10,450 Utilities $15,158 $18,210 $19,736 $20,499 $21,263 $21,263 $21,263 $21,263 $21,263 $21,263 Insurance $14,400 $14,400 $14,400 $14,400 $14,400 $14,400 $14,400 $14,400 $14,400 $14,400 Office expense/professional fees $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 Marketing $28,200 $35,600 $39,300 $41,150 $43,000 $43,000 $43,000 $43,000 $43,000 $43,000 Contingency/miscellaneous $13,982 $20,239 $22,697 $23,927 $24,217 $25,156 $25,156 $25,156 $25,156 $25,156 TOTAL OPERATING EXPENSES $293,614 $425,024 $476,646 $502,457 $508,552 $528,268 $528,268 $528,268 $528,268 $528,268 OPERATING MARGIN (CASH) ($409,291) ($356,950) ($81,953) $201,721 $393,956 $474,101 $526,094 $548,743 $555,436 $555,436 DEVELOPMENT COSTS Land $25,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 Site work $12,500 $0 $0 $0 $0 $0 $0 $0 $0 $0 Winery construction costs $450,000 $250,000 $0 $0 $0 $0 $0 $0 $0 $0 Equipment costs $200,000 $250,000 $0 $0 $0 $0 $0 $0 $0 $0 Financing/organizational costs $10,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 Contingency $34,375 $25,000 $0 $0 $0 $0 $0 $0 $0 $0 TOTAL DEVELOPMENT COSTS $731,875 $525,000 $0 $0 $0 $0 $0 $0 $0 $0 FINANCING & EQUITY Equity in land $25,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 Cash equity contribution $225,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 TOTAL EQUITY $250,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 Working capital loan proceeds $280,000 $570,000 $385,000 $220,000 $125,000 $100,000 $80,000 $45,000 $0 $0 Working capital loan repayments $0 $5,000 $95,000 $200,000 $310,000 $385,000 $440,000 $365,000 $5,000 $0 Working capital loan balance $280,000 $845,000 $1,135,000 $1,155,000 $970,000 $685,000 $325,000 $5,000 $0 $0 Working capital loan interest ($9,188) ($48,438) ($76,344) ($85,031) ($75,781) ($57,031) ($32,094) ($3,438) $0 $0 Loan proceeds $700,000 $500,000 $0 $0 $0 $0 $0 $0 $0 $0 Amortization ($77,869) ($133,490) ($133,490) ($133,490) ($133,490) ($133,490) ($133,490) ($133,490) ($133,490) ($133,490) TOTAL DEBT SERVICE ($87,057) ($181,927) ($209,834) ($218,521) ($209,271) ($190,521) ($165,584) ($136,927) ($133,490) ($133,490) CASH FLOW $1,777 $1,123 ($1,787) $3,200 ($315) ($1,420) $510 $91,816 $416,947 $421,947 CUMULATIVE CASH $1,777 $2,900 $1,113 $4,314 $3,999 $2,579 $3,089 $94,905 $511,852 $933,798 Cash Flow Assumptions Principal/manager/office salaries $80,000 Interest rate 7.5% Variable labor costs/case - production $7.00 Labor overhead 25.0% Variable labor costs/case - sales $7.00 Repair/maintenance costs/year $12,000 Grape price per ton, ultra-premium $1,600 Variable fuel/supply costs per case $1.00 Grape price per ton, super-premium $1,450 Variable utility costs per case $1.65 Grape price per ton, premium $1,200 Insurance costs (monthly) $1,200 Ultra-premium cases produced annually 925 Office/professional expense (monthly) $500 Super-premium cases produced annually 2,775 Variable marketing costs per case $4.00 Premium cases produced annually 5,550 Contingency expense 5.0% Total cases produced annually (capacity) 9,250 1st year production % 60.0% Packaging costs/case $ nd year production % 80.0% Ultra-premium sales price/bottle $ rd year production % 90.0% Super-premium sales price/bottle $15.00 Annual growth rate (years 4 to 5) 5.0% Premium sales price/bottle $8.00 Annual growth rate (years 6+) 0.0%

23 Brant Farms Winery Cash Flow Analysis FISCAL YEAR (JUL-JUN) MONTH Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun VOLUME AS % OF BASE 60% 60% 60% 60% 60% 60% 60% 60% 60% 60% 60% 60% Ultra-premium wine cases produced Super-premium wine cases produced Premium wine cases produced REVENUE Ultra-premium sales $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Super-premium sales $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Premium sales $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 SUB-TOTAL $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Cost of Goods (grapes) $0 $0 ($57,839) ($57,839) $0 $0 $0 $0 $0 $0 $0 $0 TOTAL GROSS MARGIN $0 $0 ($57,839) ($57,839) $0 $0 $0 $0 $0 $0 $0 $0 OPERATING EXPENSES Principal/manager/office salaries $6,667 $6,667 $6,667 $6,667 $6,667 $6,667 $6,667 $6,667 $6,667 $6,667 $6,667 $6,667 Other variable labor costs (production) $0 $0 $5,828 $5,828 $5,828 $5,828 $3,885 $3,885 $3,885 $3,885 $0 $0 Other variable labor costs (sales) $0 $0 $5,828 $5,828 $5,828 $5,828 $3,885 $3,885 $3,885 $3,885 $0 $0 Labor overhead $1,667 $1,667 $4,580 $4,580 $4,580 $4,580 $3,609 $3,609 $3,609 $3,609 $1,667 $1,667 Packaging $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Repairs/maintenance $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 Fuel and supplies $100 $100 $933 $933 $933 $933 $655 $655 $655 $655 $100 $100 Utilities $500 $500 $1,874 $1,874 $1,874 $1,874 $1,416 $1,416 $1,416 $1,416 $500 $500 Insurance $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 Office expense/professional fees $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 Marketing $500 $500 $3,830 $3,830 $3,830 $3,830 $2,720 $2,720 $2,720 $2,720 $500 $500 Contingency/miscellaneous $607 $607 $1,612 $1,612 $1,612 $1,612 $1,277 $1,277 $1,277 $1,277 $607 $607 TOTAL OPERATING EXPENSES $12,740 $12,740 $33,850 $33,850 $33,850 $33,850 $26,813 $26,813 $26,813 $26,813 $12,740 $12,740 OPERATING MARGIN (CASH) ($12,740) ($12,740) ($91,689) ($91,689) ($33,850) ($33,850) ($26,813) ($26,813) ($26,813) ($26,813) ($12,740) ($12,740) DEVELOPMENT COSTS Land $25,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Site work $12,500 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Winery construction costs $450,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Equipment costs $200,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Financing/organizational costs $10,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Contingency $34,375 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 TOTAL DEVELOPMENT COSTS $731,875 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 FINANCING & EQUITY Equity in land $25,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Cash equity contribution $225,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 TOTAL EQUITY $250,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Working capital loan proceeds $0 $0 $0 $20,000 $40,000 $40,000 $35,000 $35,000 $35,000 $35,000 $20,000 $20,000 Working capital loan repayments $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Working capital loan balance $0 $0 $0 $20,000 $60,000 $100,000 $135,000 $170,000 $205,000 $240,000 $260,000 $280,000 Working capital loan interest $0 $0 $0 ($125) ($375) ($625) ($844) ($1,063) ($1,281) ($1,500) ($1,625) ($1,750) Loan proceeds $700,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Amortization ($6,489) ($6,489) ($6,489) ($6,489) ($6,489) ($6,489) ($6,489) ($6,489) ($6,489) ($6,489) ($6,489) ($6,489) TOTAL DEBT SERVICE ($6,489) ($6,489) ($6,489) ($6,614) ($6,864) ($7,114) ($7,333) ($7,552) ($7,770) ($7,989) ($8,114) ($8,239) CASH FLOW $198,896 ($19,229) ($98,178) ($78,303) ($714) ($964) $854 $635 $416 $198 ($854) ($979) CUMULATIVE CASH $198,896 $179,667 $81,489 $3,186 $2,472 $1,508 $2,361 $2,996 $3,413 $3,610 $2,756 $1,777 Cash Flow Assumptions Principal/manager/office salaries $80,000 Interest rate 7.5% Produce % Sales % Variable labor costs/case - production $7.00 Labor overhead 25.00% July 0.0% 10.0% Variable labor costs/case - sales $7.00 Repair/maintenance costs/year $12,000 August 0.0% 12.0% Grape price per ton, ultra-premium $1,600 Variable fuel/supply costs per case $1.00 September 15.0% 15.0% Grape price per ton, super-premium $1,450 Variable utility costs per case $1.65 October 15.0% 18.0% Grape price per ton, premium $1,200 Insurance costs (monthly) $1,200 November 15.0% 8.0% Ultra-premium cases produced annually 925 Office/professional expense (monthly) $500 December 15.0% 9.0% Super-premium cases produced annually 2,775 Variable marketing costs per case $4.00 January 10.0% 3.0% Premium cases produced annually 5,550 Contingency expense 5.00% February 10.0% 3.0% Total cases produced annually (capacity) 9,250 1st year production % 60.0% March 10.0% 4.0% Packaging costs/case $ nd year production % 80.0% April 10.0% 4.0% Ultra-premium sales price/bottle $ rd year production % 90.0% May 0.0% 5.0% Super-premium sales price/bottle $15.00 Annual growth rate (years 4 to 5) 5.0% June 0.0% 9.0% Premium sales price/bottle $8.00 Annual growth rate (years 6+) 0.0% Total % 100.0%

24 Brant Farms Winery Cash Flow Analysis FISCAL YEAR (JUL-JUN) MONTH Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun VOLUME AS % OF BASE 80% 80% 80% 80% 80% 80% 80% 80% 80% 80% 80% 80% Ultra-premium wine cases produced Super-premium wine cases produced Premium wine cases produced REVENUE Ultra-premium sales $0 $0 $0 $0 $0 $0 $2,198 $2,198 $2,930 $2,930 $3,663 $6,593 Super-premium sales $0 $0 $0 $0 $0 $0 $4,496 $4,496 $5,994 $5,994 $7,493 $13,487 Premium sales $15,984 $19,181 $23,976 $28,771 $12,787 $14,386 $4,795 $4,795 $6,394 $6,394 $7,992 $14,386 SUB-TOTAL $15,984 $19,181 $23,976 $28,771 $12,787 $14,386 $11,489 $11,489 $15,318 $15,318 $19,148 $34,466 Cost of Goods (grapes) $0 $0 ($77,118) ($77,118) $0 $0 $0 $0 $0 $0 $0 $0 TOTAL GROSS MARGIN $15,984 $19,181 ($53,142) ($48,347) $12,787 $14,386 $11,489 $11,489 $15,318 $15,318 $19,148 $34,466 OPERATING EXPENSES Principal/manager/office salaries $6,667 $6,667 $6,667 $6,667 $6,667 $6,667 $6,667 $6,667 $6,667 $6,667 $6,667 $6,667 Other variable labor costs (production) $0 $0 $7,770 $7,770 $7,770 $7,770 $5,180 $5,180 $5,180 $5,180 $0 $0 Other variable labor costs (sales) $0 $0 $7,770 $7,770 $7,770 $7,770 $5,180 $5,180 $5,180 $5,180 $0 $0 Labor overhead $1,667 $1,667 $5,552 $5,552 $5,552 $5,552 $4,257 $4,257 $4,257 $4,257 $1,667 $1,667 Packaging $2,500 $2,500 $7,071 $12,071 $12,071 $12,071 $8,048 $8,048 $8,048 $8,048 $0 $0 Repairs/maintenance $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 Fuel and supplies $100 $100 $1,210 $1,210 $1,210 $1,210 $840 $840 $840 $840 $100 $100 Utilities $500 $500 $2,332 $2,332 $2,332 $2,332 $1,721 $1,721 $1,721 $1,721 $500 $500 Insurance $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 Office expense/professional fees $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 Marketing $500 $500 $4,940 $4,940 $4,940 $4,940 $3,460 $3,460 $3,460 $3,460 $500 $500 Contingency/miscellaneous $732 $732 $2,301 $2,551 $2,551 $2,551 $1,903 $1,903 $1,903 $1,903 $607 $607 TOTAL OPERATING EXPENSES $15,365 $15,365 $48,312 $53,562 $53,562 $53,562 $39,954 $39,954 $39,954 $39,954 $12,740 $12,740 OPERATING MARGIN (CASH) $619 $3,816 ($101,454) ($101,909) ($40,774) ($39,176) ($28,466) ($28,466) ($24,636) ($24,636) $6,408 $21,726 DEVELOPMENT COSTS Land $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Site work $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Winery construction costs $250,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Equipment costs $250,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Financing/organizational costs $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Contingency $25,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 TOTAL DEVELOPMENT COSTS $525,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 FINANCING & EQUITY Equity in land $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Cash equity contribution $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 TOTAL EQUITY $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Working capital loan proceeds $40,000 $10,000 $115,000 $115,000 $55,000 $55,000 $45,000 $45,000 $40,000 $40,000 $10,000 $0 Working capital loan repayments $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $5,000 Working capital loan balance $320,000 $330,000 $445,000 $560,000 $615,000 $670,000 $715,000 $760,000 $800,000 $840,000 $850,000 $845,000 Working capital loan interest ($2,000) ($2,063) ($2,781) ($3,500) ($3,844) ($4,188) ($4,469) ($4,750) ($5,000) ($5,250) ($5,313) ($5,281) Loan proceeds $500,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Amortization ($11,124) ($11,124) ($11,124) ($11,124) ($11,124) ($11,124) ($11,124) ($11,124) ($11,124) ($11,124) ($11,124) ($11,124) TOTAL DEBT SERVICE ($13,124) ($13,187) ($13,905) ($14,624) ($14,968) ($15,312) ($15,593) ($15,874) ($16,124) ($16,374) ($16,437) ($16,405) CASH FLOW $2,495 $629 ($359) ($1,533) ($742) $512 $941 $660 ($761) ($1,011) ($29) $320 CUMULATIVE CASH $4,272 $4,901 $4,542 $3,009 $2,267 $2,779 $3,720 $4,380 $3,620 $2,609 $2,580 $2,900 Cash Flow Assumptions Principal/manager/office salaries $80,000 Interest rate 7.5% Produce % Sales % Variable labor costs/case - production $7.00 Labor overhead 25.0% July 0.0% 10.0% Variable labor costs/case - sales $7.00 Repair/maintenance costs/year $12,000 August 0.0% 12.0% Grape price per ton, ultra-premium $1,600 Variable fuel/supply costs per case $1.00 September 15.0% 15.0% Grape price per ton, super-premium $1,450 Variable utility costs per case $1.65 October 15.0% 18.0% Grape price per ton, premium $1,200 Insurance costs (monthly) $1,200 November 15.0% 8.0% Ultra-premium cases produced annually 925 Office/professional expense (monthly) $500 December 15.0% 9.0% Super-premium cases produced annually 2,775 Variable marketing costs per case $4.00 January 10.0% 3.0% Premium cases produced annually 5,550 Contingency expense 5.0% February 10.0% 3.0% Total cases produced annually (capacity) 9,250 1st year production % 60.0% March 10.0% 4.0% Packaging costs/case $ nd year production % 80.0% April 10.0% 4.0% Ultra-premium sales price/bottle $ rd year production % 90.0% May 0.0% 5.0% Super-premium sales price/bottle $15.00 Annual growth rate (years 4 to 5) 5.0% June 0.0% 9.0% Premium sales price/bottle $8.00 Annual growth rate (years 6+) 0.0% Total % 100.0%

25 Brant Farms Winery Cash Flow Analysis FISCAL YEAR (JUL-JUN) MONTH Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun VOLUME AS % OF BASE 90% 90% 90% 90% 90% 90% 90% 90% 90% 90% 90% 90% Ultra-premium wine cases produced Super-premium wine cases produced Premium wine cases produced REVENUE Ultra-premium sales $7,326 $8,791 $10,989 $13,187 $5,861 $6,593 $4,029 $4,029 $5,372 $5,372 $6,716 $12,088 Super-premium sales $14,985 $17,982 $22,478 $26,973 $11,988 $13,487 $8,242 $8,242 $10,989 $10,989 $13,736 $24,725 Premium sales $29,304 $35,165 $43,956 $52,747 $23,443 $26,374 $8,791 $8,791 $11,722 $11,722 $14,652 $26,374 SUB-TOTAL $51,615 $61,938 $77,423 $92,907 $41,292 $46,454 $21,062 $21,062 $28,083 $28,083 $35,104 $63,187 Cost of Goods (grapes) $0 $0 ($86,758) ($86,758) $0 $0 $0 $0 $0 $0 $0 $0 TOTAL GROSS MARGIN $51,615 $61,938 ($9,335) $6,149 $41,292 $46,454 $21,062 $21,062 $28,083 $28,083 $35,104 $63,187 OPERATING EXPENSES Principal/manager/office salaries $6,667 $6,667 $6,667 $6,667 $6,667 $6,667 $6,667 $6,667 $6,667 $6,667 $6,667 $6,667 Other variable labor costs (production) $0 $0 $8,741 $8,741 $8,741 $8,741 $5,828 $5,828 $5,828 $5,828 $0 $0 Other variable labor costs (sales) $0 $0 $8,741 $8,741 $8,741 $8,741 $5,828 $5,828 $5,828 $5,828 $0 $0 Labor overhead $1,667 $1,667 $6,037 $6,037 $6,037 $6,037 $4,580 $4,580 $4,580 $4,580 $1,667 $1,667 Packaging $0 $0 $16,095 $16,095 $16,095 $16,095 $10,730 $10,730 $10,730 $10,730 $0 $0 Repairs/maintenance $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 Fuel and supplies $100 $100 $1,349 $1,349 $1,349 $1,349 $933 $933 $933 $933 $100 $100 Utilities $500 $500 $2,560 $2,560 $2,560 $2,560 $1,874 $1,874 $1,874 $1,874 $500 $500 Insurance $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 Office expense/professional fees $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 Marketing $500 $500 $5,495 $5,495 $5,495 $5,495 $3,830 $3,830 $3,830 $3,830 $500 $500 Contingency/miscellaneous $607 $607 $2,919 $2,919 $2,919 $2,919 $2,148 $2,148 $2,148 $2,148 $607 $607 TOTAL OPERATING EXPENSES $12,740 $12,740 $61,305 $61,305 $61,305 $61,305 $45,117 $45,117 $45,117 $45,117 $12,740 $12,740 OPERATING MARGIN (CASH) $38,875 $49,198 ($70,640) ($55,156) ($20,013) ($14,851) ($24,054) ($24,054) ($17,034) ($17,034) $22,364 $50,447 DEVELOPMENT COSTS Land $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Site work $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Winery construction costs $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Equipment costs $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Financing/organizational costs $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Contingency $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 TOTAL DEVELOPMENT COSTS $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 FINANCING & EQUITY Equity in land $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Cash equity contribution $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 TOTAL EQUITY $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Working capital loan proceeds $0 $0 $85,000 $75,000 $35,000 $35,000 $40,000 $40,000 $35,000 $40,000 $0 $0 Working capital loan repayments $25,000 $30,000 $0 $0 $0 $0 $0 $0 $0 $0 $5,000 $35,000 Working capital loan balance $820,000 $790,000 $875,000 $950,000 $985,000 $1,020,000 $1,060,000 $1,100,000 $1,135,000 $1,175,000 $1,170,000 $1,135,000 Working capital loan interest ($5,125) ($4,938) ($5,469) ($5,938) ($6,156) ($6,375) ($6,625) ($6,875) ($7,094) ($7,344) ($7,313) ($7,094) Loan proceeds $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Amortization ($11,124) ($11,124) ($11,124) ($11,124) ($11,124) ($11,124) ($11,124) ($11,124) ($11,124) ($11,124) ($11,124) ($11,124) TOTAL DEBT SERVICE ($16,249) ($16,062) ($16,593) ($17,062) ($17,280) ($17,499) ($17,749) ($17,999) ($18,218) ($18,468) ($18,437) ($18,218) CASH FLOW ($2,374) $3,136 ($2,233) $2,782 ($2,293) $2,649 ($1,804) ($2,054) ($252) $4,498 ($1,073) ($2,771) CUMULATIVE CASH $526 $3,662 $1,429 $4,211 $1,918 $4,567 $2,764 $710 $459 $4,957 $3,885 $1,113 Cash Flow Assumptions Principal/manager/office salaries $80,000 Interest rate 7.5% Produce % Sales % Variable labor costs/case - production $7.00 Labor overhead 25.0% July 0.0% 10.0% Variable labor costs/case - sales $7.00 Repair/maintenance costs/year $12,000 August 0.0% 12.0% Grape price per ton, ultra-premium $1,600 Variable fuel/supply costs per case $1.00 September 15.0% 15.0% Grape price per ton, super-premium $1,450 Variable utility costs per case $1.65 October 15.0% 18.0% Grape price per ton, premium $1,200 Insurance costs (monthly) $1,200 November 15.0% 8.0% Ultra-premium cases produced annually 925 Office/professional expense (monthly) $500 December 15.0% 9.0% Super-premium cases produced annually 2,775 Variable marketing costs per case $4.00 January 10.0% 3.0% Premium cases produced annually 5,550 Contingency expense 5.0% February 10.0% 3.0% Total cases produced annually (capacity) 9,250 1st year production % 60.0% March 10.0% 4.0% Packaging costs/case $ nd year production % 80.0% April 10.0% 4.0% Ultra-premium sales price/bottle $ rd year production % 90.0% May 0.0% 5.0% Super-premium sales price/bottle $15.00 Annual growth rate (years 4 to 5) 5.0% June 0.0% 9.0% Premium sales price/bottle $8.00 Annual growth rate (years 6+) 0.0% Total % 100.0%