XYZ Spirits, LLC · advertising, print advertising, event sponsorships, industry trade shows,...

XYZ Spirits,

LLC

Business Plan

June 2018

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TABLE OF CONTENTS

1. Executive Summary ................................................................................................................. 4

2. Company Overview ................................................................................................................. 5

2.1. Mission Statement ............................................................................................................. 5

2.2. Company Description ....................................................................................................... 5

2.3. Capital Requirements ....................................................................................................... 6

2.4. Growth Strategy ................................................................................................................ 6

3. The Products.............................................................................................................................. 7

3.1. Product Line Overview & Strategy ................................................................................ 7

3.2. XYZ Vodka ......................................................................................................................... 7

3.3. XYZ Whiskey .................................................................................................................... 7

3.4. XYZ Rum ........................................................................................................................... 7

3.5. Pricing Strategy ................................................................................................................. 7

4. The Market ................................................................................................................................ 8

4.1. Target Market Analysis .................................................................................................... 8

4.1.1. Target Consumer Profile ........................................................................................... 8

4.1.2. Grocery Stores ............................................................................................................ 8

4.1.3. Drug Stores ................................................................................................................. 8

4.1.4. Liquor Stores ............................................................................................................... 8

4.1.5. Mass market retailers ................................................................................................ 8

4.1.6. Restaurants ................................................................................................................. 8

4.1.7. Bars/Nightclubs .......................................................................................................... 8

4.2. U.S. Vodka Market Analysis ............................................................................................ 9

4.2.1. Figures & Trends ........................................................................................................ 9

4.2.3. Industry Analysis ..................................................................................................... 10

4.3. U.S. Whiskey Market Analysis ...................................................................................... 10

4.3.1. Figures & Trends ...................................................................................................... 10

4.3.2. Industry Analysis ..................................................................................................... 11

4.4. U.S. Rum Market Analysis ............................................................................................. 12

4.4.1. Figures & Trends ...................................................................................................... 12

4.5. Europe Alcohol Spirits Market Analysis ..................................................................... 12

4.6. Profile of Direct Competitors ......................................................................................... 12

4.6.1. Diageo ........................................................................................................................ 12

4.6.2. Constellation Brands ............................................................................................... 12

4.6.3. Bacardi Limited ........................................................................................................ 13

4.6.4. Pernod Ricard ........................................................................................................... 13

4.6.5. Suntory Holdings Limited ...................................................................................... 14

4.7. Competitive Analysis ..................................................................................................... 14

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5. Marketing Plan ........................................................................................................................ 15

5.1. Marketing Overview & Strategy ................................................................................... 15

5.2. Branding Strategy ............................................................................................................ 15

5.3. Internet Marketing .......................................................................................................... 15

5.4. Print Advertising ............................................................................................................. 15

5.5. Public Relations ............................................................................................................... 15

5.6. Affiliate Marketing .......................................................................................................... 15

5.7. TV Advertising ................................................................................................................ 15

6. Operational Plan ..................................................................................................................... 16

6.1. Operational Overview .................................................................................................... 16

6.1.1. Hours of Operation .................................................................................................. 16

6.1.2. Legal Structure ......................................................................................................... 16

6.1.3. Growth Plan .............................................................................................................. 16

6.2. Manufacturing ................................................................................................................. 16

6.3. Packaging & Labels ......................................................................................................... 16

6.4. Inventory Management .................................................................................................. 16

6.5. Computer Hardware & Software .................................................................................. 16

6.6. Legal & Insurance ........................................................................................................... 16

6.7. Accounting ....................................................................................................................... 16

6.8. Licenses & Permits .......................................................................................................... 16

7. Management & Staff ............................................................................................................... 17

7.1. Executive Management .................................................................................................. 17

7.1.1. John Doe, Chief Executive Officer ......................................................................... 17

7.1.2. John Doe, Chief Operating Officer ........................................................................ 17

7.1.3. John Doe, Chief Financial Officer .......................................................................... 18

7.2. Board & Advisors ............................................................................................................ 18

7.2.1. John Doe, Chairman of the Board .......................................................................... 18

8. Financing & Growth Strategy ............................................................................................... 19

8.1. Capital Requirements ..................................................................................................... 19

8.2. Risk Analysis .................................................................................................................... 19

9. Financials ................................................................................................................................. 20

9.1. Sales ................................................................................................................................... 20

9.1.1. Sales Assumptions ................................................................................................... 20

9.1.2. Sales Projections ....................................................................................................... 22

9.2. Expenses ........................................................................................................................... 22

9.2.1. G & A Expenses ........................................................................................................ 22

9.2.2. Marketing Expenses ................................................................................................ 23

9.2.3. Staff Headcount & Salaries ..................................................................................... 23

9.3. Pro-Forma Financial Statement Annual Summaries .................................................. 24

9.3.1. Pro-Forma Income Statement ................................................................................. 24

9.3.2. Pro-Forma Statement of Cash Flows ..................................................................... 25

9.3.3. Pro-Forma Balance Sheet ........................................................................................ 25

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1. EXECUTIVE SUMMARY

Problem: No existing alcohol product

on the market has been designed to

REMOVED INFO.

Solution: XYZ Spirits, LLC produces

whiskey, vodka, and rum that has

been carefully crafted to REMOVED

INFO and are the first-of-its-kind.

Products: The products are a unique

blend of alcohol and REMOVED

INFO. The products were invented

by an internationally acclaimed team

of scientists over several years.

Company: XYZ Spirts, LLC will

launch with 3 products: XYZ Vodka,

XYZ Whiskey, and XYZ Rum, which

are respectively vodka, whiskey, and

rum products. The products will

come in the following five sizes: 50

ml, 200 ml, 375 ml, 750 ml, and 1 L.

Target Consumer: XYZ Spirts, LLC’s

target consumer profile will be men

and women between the ages of 21

and above, sports fans, and

REMOVED INFO.

Target Market: XYZ Spirits, LLC will

target grocery stores, mass market

retailers, drug stores, and liquor

stores in the U.S., Canada, Europe,

and potentially additional markets.

The Market: U.S. Vodka industry

was $3.7 billion in 2017. The U.S.

whiskey and bourbon distillery

market was $3.0 billion in 2016.

Revenue in the North America Rum

segment was $3.6 billion in 2018.

Marketing: XYZ Spirits, LLC’s

marketing campaign will include

distribution partnerships, Internet

marketing, print advertising, public

relations, celebrity endorsement,

industry trade shows, TV

advertising, and promotions.

Financing: XYZ Spirits, LLC seeks

$12,000,000 of which an estimated

$500,000 will be for capital

expenditures and the remaining

$11,500,000 will be for working

capital. XYZ Spirts, LLC owners have

invested $x.x million into XYZ Spits,

LLC.

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2. COMPANY OVERVIEW

2.1. MISSION STATEMENT

XYZ Spirts, LLC’s mission is to

become the leading U.S. and global

producer of liquor products that

REMOVED INFO.

2.2. COMPANY DESCRIPTION

XYZ Spirits, LLC (herein also referred

to as “XYZ”) was established as a

limited liability company in ABC in

January 2018 and is owned and led by

John Doe. XYZ Spirits produces

whiskey, vodka, and rum that

REMOVED INFO. XYZ’s products

are the first of its kind.

XYZ’s products are a unique blend of

alcohol and REMOVED INFO. In

addition, the products REMOVED

INFO. The products were invented

by an internationally acclaimed team

of scientists with several years of

research and development and are

manufactured in the United States.

XYZ will promote its products via

distribution partnerships, sales,

celebrity/influencer endorsement,

internet marketing, television

advertising, print advertising, event

sponsorships, industry trade shows,

promotions, and public relations.

XYZ’s target consumer profile will be

men and women that are 21 years old

or above, sports fans, and REMOVED

INFO. XYZ will target grocery stores,

mass market retailers, drug stores,

liquor stores, bars & nightclubs in the

U.S., Canada, Europe, and Asia.

In compliance with U.S. and Canada

law, XYZ will sell its products to

multiple distributors throughout the

U.S. and Canada. As XYZ expands

marketing and sales on an

international basis, XYZ will identify

and partner with distribution

companies in Europe and potentially

additional countries.

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2.3. CAPITAL REQUIREMENTS

XYZ seeks to raise $12,000,000 of

which an estimated $695,000 will be

used for capital expenditures and the

remaining $11,305,000 will be

available for working capital to

support marketing, operations, and

inventory.

2.4. GROWTH STRATEGY

Phase 1 (Month 1-12):

Target Market: U.S. and Canada

Marketing Initiatives:

▪ Launch marketing in U.S. and

Canada

▪ Establish distribution

partnerships

▪ Promote social media pages

▪ Garner positive reviews from

customers

Operations:

▪ Hire and train staff and

management

▪ Maintain efficient operations

▪ Become valued members of the

community by engaging in

events


Target Market: U.S., Canada, and

Europe


▪ Increase marketing in U.S. and

Canada

▪ Launch marketing in Europe

▪ Establish additional distribution

partnerships

Operations:

▪ Improve operational efficiency by

maximizing output and

minimizing input

▪ Hire and train additional staff

▪ Continue to engage with the

community


Target Market: U.S., Canada, Europe,

Asia, and South America


▪ Increase marketing in the U.S.,

Canada, and Europe

▪ Launch marketing in Asia and

South America

▪ Establish additional distribution

partnerships

Operations:

▪ Improve operational efficiency

▪ Hire and train additional staff

▪ Continue to engage with the

community

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3. THE PRODUCTS

3.1. PRODUCT LINE OVERVIEW &

STRATEGY

XYZ will launch with three products:

XYZ Whiskey, XYZ Vodka, and XYZ

Rum.

The products will come in the

following five sizes: 50mL, 200mL,

375mL, 750mL, 1 L

3.2. XYZ VODKA

XYZ Vodka has been

distilled from high

quality grains and

REMOVED INFO. The

vodka is REMOVED

INFO. XYZ Vodka has

been crafted with

REMOVED INFO.

3.3. XYZ WHISKEY

XYZ Whiskey has

been blended with

high quality

bourbon

REMOVED INFO to

give the core

whiskey flavor,

smoothness and rich taste. XYZ

Whiskey has been crafted with a

proprietary blend of REMOVED

INFO.

3.4. XYZ RUM

XYZ Rum has

been crafted by

fermenting and

then distilling high

quality molasses

and using

REMOVED INFO

in its blend.

3.5. PRICING STRATEGY

XYZ will maintain very competitive

pricing and projects the following

pricing at the wholesale level for its

products:

▪ XYZ Vodka 50 ml = $x.xx

▪ XYZ Vodka 200 ml = $x.xx

▪ XYZ Vodka 375 ml = $xx.xx

▪ XYZ Vodka 750 ml = $xx.xx

▪ XYZ Vodka 1 L = $xx.xx

▪ XYZ Whiskey 50 ml = $x.xx

▪ XYZ Whiskey 200 ml = $x.xx

▪ XYZ Whiskey 375 ml = $xx.xx

▪ XYZ Whiskey 750 ml = $xx.xx

▪ XYZ Whiskey 1 L = $xx.xx

▪ XYZ Rum 50 ml = $x.xx

▪ XYZ Rum 200 ml = $x.xx

▪ XYZ Rum 375 ml = $xx.xx

▪ XYZ Rum 750 ml = $xx.xx

▪ XYZ Rum 1 L = $xx.xx

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4. THE MARKET

4.1. TARGET MARKET ANALYSIS

4.1.1. TARGET CONSUMER PROFILE

XYZ’s target consumer profile

includes:

▪ Everyone aged 21 and above.

▪ Sports fans

4.1.2. GROCERY STORES1

There are 38,441 supermarkets in the

U.S.2 The largest supermarkets and

grocery stores in the U.S. are

respectively: Kroger, Albertson’s,

Ahold USA, Publix Super Markets,

H-E-B Grocery Co., Walmart Stores,

Inc. (Neighborhood Market), and

Whole Foods Markets.

4.1.3. DRUG STORES

There are approximately 67,000 drug

stores/pharmacies in the U.S. 3 The 5

leading drug store chains are

Therespectively: Walgreens Boots

Alliance, CVS Health Corporation,

Express Scripts, Inc. Walmart Stores,

Inc., and Rite Aid Corporation.4

4.1.4. LIQUOR STORES5

There are 69,534 liquor stores in the

U.S.

4.1.5. MASS MARKET RETAILERS

There is currently a total of 33,742

mass merchandise and dollar stores

in the U.S. There are over 11,453

Walmart stores across the U.S. There

are 663+ Costco locations across the

U.S. with over 700 million

subscribing members. Kroger is the

3rd largest Mass Market Retailer in

the U.S. with over 2,625 stores.6

4.1.6. FULL-SERVICE RESTAURANTS

The current number of full-service

restaurants is 31,480.7

4.1.7. BARS/NIGHTCLUBS8

In 2017, the number of establishments

in the bars, taverns and nightclub

industry in the United States was

forecasted to reach 62,602.

1 “Largest Grocery Stores & Supermarkets in

the U.S. in 2016”; Statista; 2018 2 “Number of Supermarkets & Grocery Stores in

the U.S. from 2011 to 2016”; Statista; 2017 3 “Pharmacies in the U.S.”; Wikipedia; 6/2018 4 “The 5 Largest Drug Stores in the U.S.”; NPI;

June 28, 2016 5 “Liquor stores in the U.S.”; Manta; 2018

6 “Sizing up the Competition for Costco & Other

Warehouse Clubs”; Market Realist; January

2016 7 “Number of restaurants in the U.S. from 2011

to 2017”; Statista; 2018 8 “Bar & Nightclub Industry – Statistics &

Facts”; Statista; 2018

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4.2. U.S. VODKA MARKET

ANALYSIS9

4.2.1. FIGURES & TRENDS

The Vodka Distilleries industry has

experienced impressive growth in both

revenue and establishments over the

five years to 2017. Consumers have

increasingly gravitated toward

alcoholic beverages that offer high

quality, “craft”- based ingredients, and

a new class of regional

vodka distillers has

emerged to satisfy this new

consumer trend. As a

result, industry revenue

has increased at an

annualized rate of 6.0% to

$3.7 billion over the five

years to 2017,

while the number

of industry

enterprises has

increased at a

sharp annualized

rate of 28.3% to 212

distilling

companies over

the same period. The wide range of

available vodkas is expected to yield an

additional 6.0% revenue increase in

2017. Over the five years to 2022, the

Vodka Distilleries industry is

anticipated to grow at an annualized

rate of 4.5% to $4.6 billion.

9 “Vodka Distilleries in the US”; IBISWorld;

October 2017

During the five-year period, the

industry will benefit from expected

increases in per capita expenditure on

alcohol and disposable income, which

will drive demand for more high-value

industry goods. Nevertheless,

consumers of vodka have historically

demonstrated a degree of brand

loyalty, particularly to

brands that are imported

from distilleries across the

world. Many of the

industry’s most widely

consumed brands,

including Finlandia,

Stolichnaya, Grey Goose

and Absolut, are

not produced by

US distilleries and

are therefore major

competitors to

domestic vodka

brands. Total

imports of vodka

are expected to

increase at an annualized rate of 3.1%

over five years to 2022, which will put

increased pressure on industry

demand.

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4.2.3. INDUSTRY ANALYSIS

The Vodka Distilleries industry exhibits

a moderate level of market share

concentration, with the top four

companies expected to account for

57.8% of revenue in 2018. The

industry’s market share concentration

has significantly increased over the past

five years, as some of the industry’s

largest players have expanded their

presence in the industry through

mergers and acquisitions (M&S). More

importantly, however, is how some of

the industry largest players have grown

their brands over the past five years.

Both Deep Eddy and Fifth Generation’s

Tito’s Vodka have experienced

impressive growth during the period,

due in large part to changing consumer

preferences. As a result, industry

market share concentration has

expanded substantially from 33.1% in

2013.

Another significant component of the

industry’s concentration over the past

five years is the decline of industry

imports. Imports experienced a

significant decline over the past five

years, as a result of the boom in

domestic craft vodka distillers and

changing consumer preference.

10 “Whisky & Bourbon Distilleries in the US”;

IBISWorld; October 2017

4.3. U.S. WHISKEY MARKET

ANALYSIS10


The past five years have demonstrated

remarkable change for the Whiskey and

Bourbon Distilleries industry, not only

from the industry’s most dominant

distillers, but also from an emerging

class of independent micro distillers

from across the country. Although

industry household brands, such as Jim

Beam, Evan Williams, Jack Daniel’s and

Wild Turkey, have all invested in major

production facilities and new artisanal

stills, it is the growing class of craft

distilleries that provided the industry

with its recent boost.

Massive growth from independent

newcomers, like Kings County, Ole

Smoky and Catoctin Creek, has

contributed to a projected annualized

revenue growth of 6.2% during the

same period, reaching $3.0 billion.

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Passionate drinkers of whiskey are

more prone to purchase premium

whiskey, but the emerging

independent brewers in this industry

still must establish themselves as

legitimate contenders in the industry.

IBISWorld anticipates industry revenue

to increase at an annualized rate of 1.4%

rate over the five years to 2021, reaching

$3.2 billion.

4.3.2. INDUSTRY ANALYSIS

In 2018, the Whiskey and Bourbon

Distilleries industry is expected to

experience a moderate level of market

share concentration, with the four

largest industry operators accounting

for an estimated 57.3% of the industry.

While most of these companies

experienced a gradual rise in their

respective market shares over the past

five years, the increasing popularity of

local, independent craft distilleries

prohibited stronger growth. To combat

the growing popularity of these smaller

establishments, major distillers have

consolidated to achieve more

significant market share, including

Beam Suntory Inc. and Brown- Forman

Corp.

The remainder of the industry’s market

share is spread out over regional and

local brands. These operators have

smaller distilleries, most of which will

not expand beyond their regional or

niche markets. Still, there are fewer

such players compared with the wine

and beer industries. This is because

microbreweries and wineries are

relatively easy to set up, but distilleries

are more tightly regulated and

experience stricter tax rates due to the

higher alcohol content of their product.

However, demand for craft distilleries

is escalating. As a result, the industry is

experiencing an influx of enterprises.

The top global players in the Distilleries

industry are constantly buying and

selling brands among each other,

leading to considerable reallocation of

market share and brands in the

Whiskey and Bourbon Distilleries

industry. For example, in one of the

industry’s largest acquisitions to date,

Japanese food and beverage producer

Suntory purchased Jim Beam for $13.6

billion. These heavy acquisitions and

brand trading strategies are expected to

continue over the five years to 2023,

with the major players focusing their

positioning within their respective

niche markets.

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4.4. U.S. RUM MARKET ANALYSIS


Revenue in the Rum North America

segment is estimated to US $3.6 billion

in 2018. The market is expected to grow

annually by 0.2% (CAGR 2018-2021). In

the market for Rum, volume is expected

to amount to 173.0ML by 2021. The

average volume per person in the

market for Rum amounts to 0.5L in

2018. 11

The rise of the rum cocktails is a

successful trend, with the popularity of

concoctions such as mojito and Mai-tai

contributing greatly in the growth and

development of the rum market. A

great example is Havana Club – a rum

brand leader. It continues to focus its

marketing messages around lifestyle

and cocktails on social media and at

consumer events with great success.12

4.5. EUROPE ALCOHOL SPIRITS

MARKET ANALYSIS13

Revenue in the Spirits segment

amounts to US$43,458m in 2018. The

market is expected to grow annually by

1.9% (CAGR 2018-2021). In the

Alcoholic Drinks market, 4% of total

revenue will be generated through

online sales by 2021. The market for

Spirits is expected to show a volume

growth of 0.5% in 2019.

11 “Rum – North America”; Statista Market

Forecast; 2018

The average volume per person in the

market for Spirits amounts to 5.3L in

2018. The average price per unit in the

market for Spirits amounts to US$15.58

in 2018.

4.6. PROFILE OF DIRECT

COMPETITORS

4.6.1. DIAGEO

▪ Year Founded – 1997

▪ Headquarters – United

Kingdom

▪ Types of liquor – Scotch,

whiskey, gin, vodka, rum,

bourbon, and tequila

▪ Revenues – $15.3B (2017)

▪ Overview

o Was the world’s largest

distiller until being

overtaken in 2017

o Sells products in over 180

countries

o Has offices in approx. 80

countries

o Over 30,000 employees

o Brands include Smirnoff,

Johnnie Walker, Baileys, and

Guinness

12 “A Rum Business – Market Trends in 2017”;

Wild West; February 20, 2017 13 “Europe Spirits Highlights”; Statista; 2018

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4.6.2. CONSTELLATION BRANDS


▪ Headquarters – New York, USA

▪ Types of liquor – Wine, beer,

scotch, whiskey, gin, vodka,

rum, bourbon, and tequila

▪ Revenues – $7.32B (2017)

▪ Overview

o World leader in premium

wine

o More than 100 wines, beers,

and spirits

o Owns approximately 40

facilities

o Employs 9,000 people

o Acquired by Svedka in

March 2007 for

approximately US$384

million

4.6.3. BACARDI LIMITED


▪ Headquarters – Cuba




▪ Revenues – $5.5B (2017)

▪ Overview

o Largest privately held,

family-owned spirits

company in the world

o Bacardi Limited refers to the

Bacardi group of companies,

including Bacardi Int’l

Limited

o Over 200 brands/labels

o Employs 6,000 people

o Manufactures at 29 facilities

in 16 markets on 4 continents

and sells in more than 150

countries

4.6.4. PERNOD RICARD


▪ Headquarters – France




▪ Revenues – $9.8B (2017)

▪ Overview

o World’s 2nd largest wine &

spirits seller

o Acquired distilled beverage

division and many holdings

from Seagram

o Over 18,000 employees

O Major legal battle with The

Havana Club brand

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4.6.5. SUNTORY HOLDINGS LIMITED

▪ Year Founded - 1899

▪ Headquarters - Japan




▪ Revenues – $1.19B (2017)

▪ Overview

o Make sandwiches and soft

drinks, as well as liquor

o 1 of the largest makers of

distilled beverages in the

world

o 1 of 1st Asian companies to

use a U.S. celebrity (Bill

Murray) for marketing

o Acquired Beam, Inc (2014)

4.7. COMPETITIVE ANALYSIS

Diageo is one of the world's leading

premium drinks businesses with a

collection of brands that include spirits,

beer, and wine; though, it still a

relatively young company. None of

Diageo’s products are focused on

REMOVED INFO.

Bacardi Limited is the largest privately

held spirits company in the world;

though, XYZ will have a competitive

advantage over Bacardi as none of

Bacardi’s 200 brands are REMOVED

INFO like XYZ.

Constellation Brands is a leading liquor

brand with a wide range of beer, wine,

and liquor products. XYZ will have a

competitive advantage due to its

competitive pricing, superior quality,

and REMOVED INFO.

Pernod Ricard is a French company that

produces distilled beverages. Much

like Diageo, Pernod Ricard has a greater

variety of products compared to XYZ;

however, XYZ’s focus and dedication to

REMOVED INFO.

Suntory Holdings Limited is one of the

oldest companies in the distribution of

alcoholic beverages in Japan. XYZ’s

sole focus on REMOVED INFO alcohol

will yield a competitive advantage to

XYZ, as Suntory also focused on food

and drinks.

As XYZ will be the only company in the

world that produces alcohol with

REMOVED INFO and will pursue an

aggressive marketing campaign, it

should be able to establish itself as the

leader within this segment of the

alcohol industry and penetrate the U.S.

and global vodka, rum, and whiskey

markets.

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5. MARKETING PLAN

5.1. OVERVIEW & STRATEGY

XYZ will implement a dynamic

marketing campaign to drive

business growth and maximize

branding within the liquor

production and distribution industry.

5.2. BRANDING STRATEGY

XYZ will build credibility in the

liquor production and distribution

industry while focusing the branding

strategy on REMOVED INFO. XYZ

will assess the market based upon its

geographic location and the

competitive landscape.

5.3. INTERNET MARKETING

XYZ’s Internet marketing will

include display advertising, search

engine marketing (Google, Bing,

others), PPC advertising, social

media, and video marketing to

promote XYZ’s liquor products to

potential and existing customers as

well as consumers. XYZ will ensure

that XYZ’s website and articles will

be found upon searches related to

liquor. XYZ’s search engine

optimization efforts will include link

building, blog commenting, social

network marketing, and article

marketing. XYZ will maintain a

profile on Facebook, Instagram, Twitter,

Pinterest, and other social media.

5.4. PRINT ADVERTISING

XYZ will utilize print advertising in

magazines that appeal to its

demographic. Examples of such

magazines in the U.S. that XYZ can

advertise in are:

▪ XYZ Magazine

▪ XYZ Magazine

▪ XYZ Magazine

▪ XYZ Advocate

▪ XYZ Magazine

▪ XYZ Advocate

▪ XYZ Magazine

5.5. PUBLIC RELATIONS

XYZ will be featured in magazine

articles, newspaper articles, TV news,

and online articles.

5.6. AFFILIATE MARKETING

XYZ will send marketing materials to

bars, restaurants, and other

establishments to spread brand

awareness and word-of-mouth

referrals from bartenders, servers,

cashiers, and others.

5.7. TELEVISION ADVERTISING

XYZ will utilize TV advertising on

regional and national channels that

appeal to its demographic. An

emphasis will be placed on TV

advertising during sporting events.

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6. OPERATIONAL PLAN

6.1. OVERVIEW

6.1.1. HOURS OF OPERATION

XYZ will conduct normal hours of

business operations, which will be

from 9AM to 6PM on Monday to

Friday.

6.1.2. LEGAL STRUCTURE

XYZ was established as a limited

liability company in the state of ABC.

6.1.3. GROWTH PLAN

Upon growth, XYZ will move to a

larger office.

6.2. MANUFACTURING

All three of the Company’s distilled

spirts products will be manufactured

by XYZ in ABC, which is a leading

distilled spirits manufacturer.

6.3. PACKAGING & LABELS

After being manufactured, the

distilled spirits will be delivered to

ABC, which will package and labels

the Company’s three types of

distilled spirits products.

6.4. INVENTORY MANAGEMENT

XYZ’s staff and management will

maintain a sufficient and reasonable

stock of supplies to conduct day-to-

day business. XYZ’s electronic

logistic system will track inventory.

6.5. COMPUTER HARDWARE &

SOFTWARE

XYZ will obtain the essential

computer hardware and software

systems to support operations

including inventory management

systems, payroll administration

programs, sales management tools,

managerial accounting, and financial

analysis and reporting, as well as

performance management.

6.6. LEGAL & INSURANCE

XYZ will retain the services of a

corporate attorney to handle all legal

matters related to the operation of the

business including contract

administration, employment, and

corporate business issues. XYZ will

obtain the required insurance and

permits to manage the risks are

associated with this type of business.

6.7. ACCOUNTING

XYZ will outsource all accounting

responsibilities to a full-time

accountant and CPA, who will

produce monthly reports for A/P,

A/R, payroll, and operational

expenses.

6.8. LICENSES & PERMITS

XYZ has a business license from the

city of ABC and a Seller’s permit from

the ABC Board of Equalization.

17 | P a g e

7. MANAGEMENT & STAFF

7.1. EXECUTIVE MANAGEMENT

7.1.1. JOHN DOE, CHIEF EXECUTIVE

OFFICER

REMOVED INFO

7.1.2. JOHN DOE, CHIEF

OPERATING OFFICER

REMOVED

INFO

18 | P a g e

7.1.3. JOHN DOE, CHIEF FINANCIAL

OFFICER

REMOVED INFO

7.2. BOARD & ADVISORS

7.2.1. JOHN DOE, CHAIRMAN OF

THE BOARD

REMOVED INFO

19 | P a g e

8. FINANCING & GROWTH STRATEGY

8.1. CAPITAL REQUIREMENTS

XYZ seeks to raise $12,000,000 of

which an estimated $695,000 will be

used for capital expenditures and the

remaining $11,305,000 will be

available for working capital to

support marketing, operations, and

inventory.

XYZ’s owners have already invested

$x.x million into XYZ, which includes

REMOVED INFO.

8.2. RISK ANALYSIS

XYZ is a start-up company and will

be managed by a group of

professional and seasoned business

owners. The risks associated with

this venture are related to future

uncertainties in the liquor industry

and fall within the medium risk

segment of the investment spectrum.

Management believes that given the

current trends in the economy that

there will be strong demand for the

products that XYZ delivers to the

marketplace.

While there can be no guarantees that

XYZ will be able to effectively

manage the business risks associated

with the economic cycle,

management is very confident that it

will be able to effectively increase

revenues throughout time.

Capital Expenditures: Cost

Machine Tooling 500,000

Packaging Design 75,000

Marketing Materials Design 35,000

Website Design 10,000

Computer Hardware & Software 25,000

Office Furniture 50,000

Total capital expenditures 695,000

Working capital:

Marketing expenses 6,250,000

G&A expenses 2,805,000

Inventory 2,250,000

Total working capital 11,305,000

Total capital requirements 12,000,000

Table 1

XYZ Spirits, LLCCapital Requirements

20 | P a g e

9. FINANCIALS

9.1. SALES

9.1.1. SALES ASSUMPTIONS

Year 1 Year 2 Year 3 Year 4 Year 5

Drug Stores: 15.0% 10.0% 6.0% 4.0% 3.0% monthly growth rate

# of Drug Store Bottles Sold 60 62.5 65.0 67.5 70.0 turns/store

XYZ Vodka 200 ml - Drug Stores 16.0% 16.0% 16.0% 16.0% 16.0% of Drug Store bottles sold



XYZ Vodka 1 L - Drug Stores 15.0% 15.0% 15.0% 15.0% 15.0% of Drug Store bottles sold



XYZ Whiskey 750 ml - Drug Stores 5.0% 5.0% 5.0% 5.0% 5.0% of Drug Store bottles sold

XYZ Whiskey 1 L - Drug Stores 3.5% 3.5% 3.5% 3.5% 3.5% of Drug Store bottles sold

XYZ Rum 200 ml - Drug Stores 4.0% 4.0% 4.0% 4.0% 4.0% of Drug Store bottles sold



XYZ Rum 1 L - Drug Stores 3.5% 3.5% 3.5% 3.5% 3.5% of Drug Store bottles sold

100.0% 100.0% 100.0% 100.0% 100.0%

Grocery Stores:

# of Grocery Stores 15.0% 10.0% 6.0% 4.0% 3.0% monthly growth rate

# of Grocery Store Bottles Sold 62.5 65.0 67.5 70.0 72.5 turns/store

XYZ 200 ml - Grocery Stores 16.0% 16.0% 16.0% 16.0% 16.0% of Grocery Store bottles sold

XYZ Vodka 375 ml - Grocery Stores 16.0% 16.0% 16.0% 16.0% 16.0% of Grocery Store bottles sold

XYZ Vodka 750 ml - Grocery Stores 20.0% 20.0% 20.0% 20.0% 20.0% of Grocery Store bottles sold

XYZ Vodka 1 L - Grocery Stores 15.0% 15.0% 15.0% 15.0% 15.0% of Grocery Store bottles sold

XYZ Whiskey 200 ml - Grocery Stores 4.0% 4.0% 4.0% 4.0% 4.0% of Grocery Store bottles sold



XYZ Whiskey 1 L - Grocery Stores 3.5% 3.5% 3.5% 3.5% 3.5% of Grocery Store bottles sold

XYZ Rum 200 ml - Grocery Stores 4.0% 4.0% 4.0% 4.0% 4.0% of Grocery Store bottles sold



XYZ Rum 1 L - Grocery Stores 3.5% 3.5% 3.5% 3.5% 3.5% of Grocery Store bottles sold

100.0% 100.0% 100.0% 100.0% 100.0%

Mass Market Retail Stores:

# of Mass Market Retail Stores 15.0% 10.0% 7.0% 4.0% 2.5% monthly growth rate

# of Mass Market Retail Store Bottles Sold 57.5 60.0 62.5 65.0 67.5 turns/store

XYZ Vodka 200 ml - Mass Market Retail Stores 16.0% 16.0% 16.0% 16.0% 16.0% of Mass Market Retail bottles sold



XYZ Vodka 1 L - Mass Market Retail Stores 15.0% 15.0% 15.0% 15.0% 15.0% of Mass Market Retail bottles sold

XYZ Whiskey 200 ml - Mass Market Retail Stores 4.0% 4.0% 4.0% 4.0% 4.0% of Mass Market Retail bottles sold



XYZ Whiskey 1 L - Mass Market Retail Stores 3.5% 3.5% 3.5% 3.5% 3.5% of Mass Market Retail bottles sold

XYZ Rum 200 ml - Mass Market Retail Stores 4.0% 4.0% 4.0% 4.0% 4.0% of Mass Market Retail bottles sold



XYZ Rum 1 L - Mass Market Retail Stores 3.5% 3.5% 3.5% 3.5% 3.5% of Mass Market Retail bottles sold

100.0% 100.0% 100.0% 100.0% 100.0%

Liquor Stores:

# of Liquor Stores 15.0% 10.0% 6.0% 4.0% 3.0% monthly growth rate

# of Liquor Store Bottles Sold 40.0 41.0 42.0 43.0 44.0 turns/store

XYZ Vodka 50 ml - Liquor Stores 10.0% 10.0% 10.0% 10.0% 10.0% of Liquor Store bottles sold




XYZ Vodka 1 L - Liquor Stores 12.5% 12.5% 12.5% 12.5% 12.5% of Liquor Store bottles sold

XYZ Whiskey 50 ml - Liquor Stores 2.5% 2.5% 2.5% 2.5% 2.5% of Liquor Store bottles sold




XYZ Whiskey 1 L - Liquor Stores 3.5% 3.5% 3.5% 3.5% 3.5% of Liquor Store bottles sold

XYZ Rum 50 ml - Liquor Stores 2.5% 2.5% 2.5% 2.5% 2.5% of Liquor Store bottles sold




XYZ Rum 1 L - Liquor Stores 3.5% 3.5% 3.5% 3.5% 3.5% of Liquor Store bottles sold

100.0% 100.0% 100.0% 100.0% 100.0%

E-Tailers:

# of E-Tailer Bottles Sold 15.0% 10.0% 6.0% 4.0% 3.0% monthly growth rate

XYZ Vodka 375 ml - E-tailers 25.0% 25.0% 25.0% 25.0% 25.0% of E-tailer bottles sold

XYZ Vodka 750 ml - E-tailers 30.0% 30.0% 30.0% 30.0% 30.0% of E-tailer bottles sold

XYZ Vodka 1 L - E-tailers 25.0% 25.0% 25.0% 25.0% 25.0% of E-tailer bottles sold

XYZ Whiskey 375 ml - E-tailers 6.5% 6.5% 6.5% 6.5% 6.5% of E-tailer bottles sold

XYZ Whiskey 750 ml - E-tailers 8.0% 8.0% 8.0% 8.0% 8.0% of E-tailer bottles sold

XYZ Whiskey 1 L - E-tailers 8.0% 8.0% 8.0% 8.0% 8.0% of E-tailer bottles sold

XYZ Rum 375 ml - E-tailers 6.5% 6.5% 6.5% 6.5% 6.5% of E-tailer bottles sold

XYZ Rum 750 ml - E-tailers 8.0% 8.0% 8.0% 8.0% 8.0% of E-tailer bottles sold

XYZ Rum 1 L - E-tailers 8.0% 8.0% 8.0% 8.0% 8.0% of E-tailer bottles sold

100.0% 100.0% 100.0% 100.0% 100.0%

Food Service:

# of Food Service Stores 15.0% 10% 6.0% 4% 3.0% monthly growth rate

# of Food Service Bottles Sold 15.0 16.0 17.0 18.0 19.0 turn per store

XYZ Vodka 1 L - Food Service 67.0% 67.0% 67.0% 67.0% 67.0% of Food Service bottles sold

XYZ Whiskey 1 L - Food Service 16.5% 16.5% 16.5% 16.5% 16.5% of Food Service bottles sold

XYZ Rum 1 L - Food Service 16.5% 16.5% 16.5% 16.5% 16.5% of Food Service bottles sold

100.0% 100.0% 100.0% 100.0% 100.0%

Bars/Nightclubs:

# of Bars/Nightclubs 15.0% 10.0% 6.0% 4.0% 3.0% monthly growth rate

# of Bar/Nightclub Bottles Sold 40 42.5 45 47.5 50 turns per store

XYZ Vodka 1 L - Bars/Nightclubs 67.0% 67.0% 67.0% 67.0% 67.0% of Bar/Nightclub bottles sold

XYZ Whiskey 1 L - Bars/Nightclubs 16.5% 16.5% 16.5% 16.5% 16.5% of Bar/Nightclub bottles sold

XYZ Rum 1 L - Bars/Nightclubs 16.5% 16.5% 16.5% 16.5% 16.5% of Bar/Nightclub bottles sold

21 | P a g e

Drug Store Revenues:

XYZ Vodka 200 ml - Drug Stores $5.00 $5.13 $5.25 $5.38 $5.52 per bottle sold



XYZ Vodka 1 L - Drug Stores $19.00 $19.48 $19.96 $20.46 $20.97 per bottle sold

XYZ Whiskey 200 ml - Drug Stores $6.00 $6.15 $6.30 $6.46 $6.62 per bottle sold



XYZ Whiskey 1 L - Drug Stores $21.00 $21.53 $22.06 $22.61 $23.18 per bottle sold

XYZ Rum 200 ml - Drug Stores $5.50 $5.64 $5.78 $5.92 $6.07 per bottle sold



XYZ Rum 1 L - Drug Stores $19.50 $19.99 $20.49 $21.00 $21.52 per bottle sold

Total Drug Store Revenues

Grocery Store Revenues:

XYZ Vodka 200 ml - Grocery Stores $5.00 $5.13 $5.25 $5.38 $5.52 per bottle sold



XYZ Vodka 1 L - Grocery Stores $19.00 $19.48 $19.96 $20.46 $20.97 per bottle sold

XYZ Whiskey 200 ml - Grocery Stores $6.00 $6.15 $6.30 $6.46 $6.62 per bottle sold

XYZ Whiskey 375 ml - Groery Stores $10.50 $10.76 $11.03 $11.31 $11.59 per bottle sold

XYZ Whiskey 750 ml - Grocery Stores $18.00 $18.45 $18.91 $19.38 $19.87 per bottle sold

XYZ Whiskey 1 L - Grocery Stores $21.00 $21.53 $22.06 $22.61 $23.18 per bottle sold

XYZ Rum 200 ml - Grocery Stores $5.50 $5.64 $5.78 $5.92 $6.07 per bottle sold



XYZ Rum 1 L - Grocery Stores $19.50 $19.99 $20.49 $21.00 $21.52 per bottle sold

Total Grocery Store Revenues

Liquor Store Revenues:

XYZ Vodka 50 ml - Liquor Stores $3.00 $3.08 $3.15 $3.23 $3.31 per bottle sold




XYZ Vodka 1 L - Liquor Stores $19.00 $19.48 $19.96 $20.46 $20.97 per bottle sold

XYZ Whiskey 50 ml - Liquor Stores $3.50 $3.59 $3.68 $3.77 $3.86 per bottle sold




XYZ Whiskey 1 L - Liquor Stores $21.00 $21.53 $22.06 $22.61 $23.18 per bottle sold

XYZ Rum 50 ml - Liquor Stores $3.25 $3.33 $3.41 $3.50 $3.59 per bottle sold




XYZ Rum 1 L - Liquor Stores $19.50 $19.99 $20.49 $21.00 $21.52 per bottle sold

Total Liquor Store Revenues

Mass Market Retailer Revenues

XYZ Vodka 200 ml - Mass Market Retailers $5.00 $5.13 $5.25 $5.38 $5.52 per bottle sold



XYZ Vodka 1 L - Mass Market Retailers $19.00 $19.48 $19.96 $20.46 $20.97 per bottle sold

XYZ Whiskey 200 ml -Mass Market Retailers $6.00 $6.15 $6.30 $6.46 $6.62 per bottle sold

XYZ Whiskey 375 ml -Mass Market Retailers $10.50 $10.76 $11.03 $11.31 $11.59 per bottle sold

XYZ Whiskey 750 ml - Mass Market Retailers $18.00 $18.45 $18.91 $19.38 $19.87 per bottle sold

XYZ Whiskey 1 L - Mass Market Retailers $21.00 $21.53 $22.06 $22.61 $23.18 per bottle sold

XYZ Rum 200 ml -Mass Market Retailers $5.50 $5.64 $5.78 $5.92 $6.07 per bottle sold



XYZ Rum 1 L -Mass Market Retailers $19.50 $19.99 $20.49 $21.00 $21.52 per bottle sold

Total Mass Market Retailer Revenues

E-tailer Revenues

XYZ Vodka 375 ml - E-tailers $9.50 $9.74 $9.98 $10.23 $10.49 per bottle sold

XYZ Vodka 750 ml - E-tailers $17.00 $17.43 $17.86 $18.31 $18.76 per bottle sold

XYZ Vodka 1 L - E-tailers $19.00 $19.48 $19.96 $20.46 $20.97 per bottle sold

XYZ Whiskey 375 ml - E-tailers $10.50 $10.76 $11.03 $11.31 $11.59 per bottle sold

XYZ Whiskey 750 ml - E-tailers $18.00 $18.45 $18.91 $19.38 $19.87 per bottle sold

XYZ Whiskey 1 L - E-tailers $21.00 $21.53 $22.06 $22.61 $23.18 per bottle sold

XYZ Rum 375 ml - E-tailers $10.00 $10.25 $10.51 $10.77 $11.04 per bottle sold

XYZ Rum 750 ml - E-tailers $17.50 $17.94 $18.39 $18.85 $19.32 per bottle sold

XYZ Rum 1 L - E-tailers $19.50 $19.99 $20.49 $21.00 $21.52 per bottle sold

Total E-Tailer Revenues

Food Service Revenues

XYZ Vodka 1 L - Food Service $19.00 $19.48 $19.96 $20.46 $20.97 per bottle sold

XYZ Whiskey 1 L - Food Service $21.00 $21.53 $22.06 $22.61 $23.18 per bottle sold

XYZ Rum 1 L - Food Service $19.50 $19.99 $20.49 $21.00 $21.52 per bottle sold

Total Food Service Revenues

Bar/Nightclub Revenues:

XYZ Vodka 1 L - Bars/Nightclubs $19.00 $19.48 $19.96 $20.46 $20.97 per bottle sold

XYZ Whiskey 1 L - Bars/Nightclubs $21.00 $21.53 $22.06 $22.61 $23.18 per bottle sold

XYZ Rum 1 L - Bars/Nightclubs $19.50 $19.99 $20.49 $21.00 $21.52 per bottle sold

Total Bar/Nightclub Revenues

Total Revenues

Cost of Goods Sold 47.5% 45.0% 45.0% 45.0% 45.0% of sales

Cost of Distribution 12.0% 11.5% 11.0% 10.5% 10% of sales

Cost of Freight 3.5% 4.0% 4.5% 5.0% 5.0% of sales

22 | P a g e

9.1.2. SALES PROJECTIONS

9.2. EXPENSES

9.2.1. G & A EXPENSES


Sales (Bottles Sold):

# of Drug Store Bottles Sold 69,604 273,592 678,862 1,239,635 1,925,301

# of Grocery Store Bottles Sold 43,503 170,995 424,289 774,772 1,243,261

# of Mass Market Retail Store Bottles Sold 34,802 136,796 339,431 619,817 930,693

# of Liquor Store Bottles Sold 52,203 201,911 493,480 888,405 1,361,463

# of E-Tailer Bottles Sold 10,151 38,303 91,385 183,885 370,013

# of Food Service Bottles Sold 10,876 43,775 110,968 206,606 326,614

# of Bar/Nightclub Bottles Sold 58,003 232,553 587,476 1,090,419 1,719,019

Revenues:

Total Drug Store Revenues $907,810 $3,657,534 $9,302,289 $17,411,098 $27,717,560

Total Grocery Store Revenues $567,381 $2,285,959 $5,813,931 $10,881,936 $17,898,576

Total Liquor Store Revenues $251,721 $258,014 $264,464 $271,076 $277,853

Total Mass Market Retailer Revenues $187,812 $330,181 $338,436 $346,897 $355,569

Total E-Tailer Revenues $360,346 $770,978 $1,885,428 $3,888,697 $8,020,443

Total Food Service Revenues $1,351,188 $4,627,303 $11,981,732 $22,795,369 $36,834,739

Total Bar/Nightclub Revenues $1,125,990 $4,627,303 $11,981,732 $22,795,369 $36,834,739

Total Revenues $4,752,248 $16,557,271 $41,568,012 $78,390,442 $127,939,478

Cost of Sales:

Cost of Goods Sold $2,257,318 $7,450,772 $18,705,605 $35,275,699 $57,572,765

Cost of Distribution $570,270 $1,904,086 $4,572,481 $8,230,996 $12,793,948

Cost of Freight $166,329 $662,291 $1,662,720 $3,527,570 $6,396,974

Total Cost of Sales $2,993,916 $10,017,149 $24,940,807 $47,034,265 $76,763,687

Gross Margin $1,758,332 $6,540,122 $16,627,205 $31,356,177 $51,175,791

XYZ Spirits, LLC

Table 2

Sales Forecast


Wages & salaries 432,000 737,850 1,111,781 1,205,062 1,370,636

Payroll expense 34,560 59,028 88,943 96,405 109,651

Benefits 25,920 44,271 66,707 72,304 82,238

Liability insurance 71,284 248,359 623,520 1,175,857 1,919,092

Legal & consulting 120,000 150,000 180,000 207,000 227,700

Supplies 18,000 22,500 27,000 31,050 34,155

Telephone & communications 30,000 37,500 45,000 51,750 56,925

Utilities/Internet 12,000 15,000 18,000 20,700 22,770

Travel 60,000 75,000 90,000 103,500 113,850

Meals & entertainment 30,000 37,500 45,000 51,750 56,925

Auto mileage expenses 30,000 37,500 45,000 51,750 56,925

Total general & administrative expenses $863,764 $1,464,508 $2,340,951 $3,067,128 $4,050,867

General & Administrative Expenses

XYZ Spirits, LLC

Table 3

23 | P a g e

9.2.2. MARKETING EXPENSES

9.2.3. STAFF HEADCOUNT & SALARIES


Marketing materials 12,500 13,800 15,180 15,939 16,337

Internet marketing 900,000 1,125,000 1,350,000 1,552,500 1,707,750

Print advertising 900,000 1,125,000 1,350,000 1,552,500 1,707,750

Public relations 210,000 262,500 315,000 362,250 398,475

Television Advertising 2,000,000 3,750,000 4,500,000 5,175,000 5,692,500

Celebrity Endorsement 1,750,000 2,333,275 3,000,000 3,250,000 3,500,000

Total marketing & advertising $5,772,500 $8,609,575 $10,530,180 $11,908,189 $9,522,812

Marketing Expenses

XYZ Spirits, LLC

Table 4


Chief Executive Officer 1.0 1.0 1.0 1.0 1.0

Chief Operating Officer 1.0 1.0 1.0 1.0 1.0

Chief Financial Officer 1.0 1.0 1.0 1.0 1.0

Operations Manager 0.0 1.0 2.0 2.0 3.0

Administrative Assistant 1.0 1.0 3.0 3.0 3.0

Account Executive 0.0 2.0 3.0 4.0 4.0

Accountant 1.0 1.0 2.0 2.0 2.0

Total Headcount 5.0 12.0 20.0 23.0 24.0

Staff Headcount (Year-End Totals)

XYZ Spirits, LLC

Table 5


Chief Executive Officer $144,000 $158,400 $166,320 $170,478 $174,740

Chief Operating Officer $96,000 $105,600 $110,880 $113,652 $116,493

Chief Financial Officer $96,000 $105,600 $110,880 $113,652 $116,493

Operations Manager $78,000 $85,800 $87,945 $90,144 $92,397

Administrative Assistant $45,000 $42,000 $43,050 $42,000 $43,050

Account Executive $69,000 $72,450 $74,261 $76,118 $78,021

Accountant $51,000 $53,550 $54,889 $56,261 $57,667

XYZ Spirits, LLC

Table 6

Staff Salaries

24 | P a g e

9.3. PRO-FORMA FINANCIAL STATEMENT ANNUAL SUMMARIES

9.3.1. PRO-FORMA INCOME STATEMENT


Revenues:

Total Drug Store Revenues $907,810 $3,657,534 $9,302,289 $17,411,098 $27,717,560

Total Grocery Store Revenues $567,381 $2,285,959 $5,813,931 $10,881,936 $17,898,576

Total Liquor Store Revenues $251,721 $258,014 $264,464 $271,076 $277,853

Total Mass Market Retailer Revenues $187,812 $330,181 $338,436 $346,897 $355,569

Total E-Tailer Revenues $360,346 $770,978 $1,885,428 $3,888,697 $8,020,443

Total Food Service Revenues $1,351,188 $4,627,303 $11,981,732 $22,795,369 $36,834,739

Total Bar/Nightclub Revenues $1,125,990 $4,627,303 $11,981,732 $22,795,369 $36,834,739

Total Sales $4,752,248 $16,557,271 $41,568,012 $78,390,442 $127,939,478

Total Cost of Sales $2,993,916 $10,017,149 $24,940,807 $47,034,265 $76,763,687

Expenses:

Marketing expense 5,772,500 8,609,575 10,530,180 11,908,189 13,022,812

General & administrative 833,764 1,427,008 2,295,951 3,015,378 3,993,942

Expenses - Total 6,606,264 10,036,583 12,826,131 14,923,567 17,016,755

Net operating income: ($4,847,932) ($3,496,461) $3,801,074 $16,432,610 $34,159,036

Depreciation 30,310 30,310 30,310 30,310 30,310

Interest earned 279,616 117,554 148,547 493,899 1,224,411

Interest expense 0 0 0 0 0

Income before taxes (4,598,625) (3,409,217) 3,919,311 16,896,200 35,353,138

Income taxes 0 0 0 0 0

Net income ($4,598,625) ($3,409,217) $3,919,311 $16,896,200 $35,353,138

Projected Income Statement

Schedule 1

XYZ Spirits, LLC

-160%

-140%

-120%

-100%

-80%

-60%

-40%

-20%

0%

20%

40%

Y1Q1

Y1Q2

Y1Q3

Y1Q4

Y2Q1

Y2Q2

Y2Q3

Y2Q4

Y3Q1

Y3Q2

Y3Q3

Y3Q4

Y4Q1

Y4Q2

Y4Q3

Y4Q4

Y5Q1

Y5Q2

Y5Q3

Y5Q4

Net Profit Margin

25 | P a g e

9.3.2. PRO-FORMA STATEMENT OF CASH FLOWS

9.3.3. PRO-FORMA BALANCE SHEET


Cash flows from operations

Net Income: ($4,598,625) ($3,409,217) $3,919,311 $16,896,200 $35,353,138

Depreciation 30,310 30,310 30,310 30,310 30,310

Increase (decrease) in accrued liabilities 20,520 14,528 17,762 4,431 7,865

Increase (decrease) in accrued taxes 0 0 0 0 0

Increase (decrease) in accounts payable 396,840 110,653 144,115 113,545 109,578

(Increase) decrease in accounts receivable (72,847) (125,747) (241,300) (334,391) (446,125)

(Increase) decrease in inventory (414,689) (545,609) (916,466) (2,216,202) (7,574,318)

Net cash flows from operations ($4,638,491) ($3,925,082) $2,953,732 $14,493,892 $27,480,447

Cash flows from investing activities:

Capital expenditures 190,000 0 0 20,000 0

Prepaid expenses 0 0 0 0 0

Net cash flows from investing $190,000 $0 $0 $20,000 $0

Cash flows from financing:

Proceeds from issuance of debt 0 0 0 0 0

Proceeds from sale of stock 12,000,000 0 0 0 0

Debt service payments 0 0 0 0 0

Net cash flows from financing 12,000,000 0 0 0 0

Net increase (decrease) in cash 7,171,509 (3,925,082) 2,953,732 14,473,892 27,480,447

Beginning cash balance - 7,171,509 3,246,427 6,200,159 20,674,051

Ending cash balance $7,171,509 $3,246,427 $6,200,159 $20,674,051 $48,154,498

Projected Statements of Cash Flows

XYZ Spirits, LLC

Schedule 2


Assets:

Current assets

Cash and marketable items $7,171,509 $3,246,427 $6,200,159 $20,674,051 $48,154,498

Accounts receivable 72,847 198,594 439,894 774,285 1,220,410

Prepaid expenses - - - - -

Total current assets 7,244,356 3,445,021 6,640,053 21,448,336 49,374,908

Net non-current assets: 159,690 129,381 99,071 88,762 58,452

Total assets 7,404,046 3,574,402 6,739,124 21,537,098 49,433,361

Liabilities & Shareholders' Equity

Current liabilities+B33

Accounts payable 396,840 507,493 651,609 765,154 874,731

Accrued liabilities 20,520 35,048 52,810 57,240 65,105

Accrued taxes - - - - -

Total current liabilities 417,360 542,541 704,418 822,394 939,837

Long-term Liabilities

Long-terrm debt (1) - - - - -

Total long-term liabilities - - - - -

Total Liabilities 417,360 542,541 704,418 822,394 939,837

Shareholders' equity

Common stock 12,000,000 12,000,000 12,000,000 12,000,000 12,000,000

Retained earnings (4,598,625) (8,007,842) (4,088,531) 12,807,669 48,160,807

Total shareholders' equity 7,401,375 3,992,158 7,911,469 24,807,669 60,160,807

Total liabilities and equity 7,818,735 4,534,699 8,615,888 25,630,063 61,100,644

Projected Balance Sheet

Schedule 3

XYZ Spirits, LLC

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