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Diamond Champagne Inc. Investor Business Plan Founder: Angela Toma-Valente Diamond Champagne Inc. CONFIDENTIALITY STATEMENT This document (the “Business Plan”) contains confidential information proprietary to Diamond Champagne Inc., from now on referred to as the “Company” (the “Company”). This information and related conversations are submitted solely to introduce selected parties to the Company’s Business Plan. The Company’s disclosure of information contained herein and in related conversations does not constitute authorization for the recipient of the Business Plan to use the information, ideas, or concepts contained herein for any purpose other than the evaluation of the Company, or to disclose any information to any other parties. The Company retains ownership of this Business Plan, including any concepts and ideas described herein. Each recipient of this document agrees to treat the information in a strictly confidential manner. The recipient may not disclose, directly or indirectly, or permit any agent or affiliate to disclose any information contained herein, or reproduce this document in whole or part without the prior written consent of the Company, unless otherwise required by applicable law. Any party who accepts delivery of this Business Plan, or any other document(s) or verbal communication(s) of confidential information from the Company, agrees to be bound by the terms of this Confidentiality Statement and further agrees to promptly return any such documents and materials to the Company upon request. SECURITY STATEMENT This Business Plan does not constitute an offer to sell or the solicitation of an offer to buy any securities, or an offer to sell or the solicitation of an offer to buy such securities in any circumstances in which such offer or solicitation is unlawful. Neither the delivery of this Business Plan nor any sale of the Company’s securities shall, under any circumstances, create any implication that there has been no change in the affairs of the Company since the date hereof, or that information contained herein is correct as of any time after its date. DISCLAIMER STATEMENT The market analysis and financial projections presented herein represent the Company’s best judgment and reasonable assumptions of future events and circumstances; all other information contained herein has been obtained from sources deemed reliable. However, no warranty or representation, expressed or implied, is made as to the accuracy or completeness of any information contained herein, and same is submitted subject to errors and omissions, and no representations or warranties of future company performance or market trends are intended, and such are expressly disclaimed. BUSINESS PLAN 2 Diamond Champagne Inc. MISSION STATEMENT We want to be an Elite Brand of Champagne along with our brand representing Luxury, Power, and Success with an exquisite taste. BUSINESS PLAN 3 Diamond Champagne Inc. TABLE OF CONTENTS CONFIDENTIALITY STATEMENT ........................................................................................................................... 2 SECURITY STATEMENT ........................................................................................................................................ 2 DISCLAIMER STATEMENT .................................................................................................................................... 2 MISSION STATEMENT ......................................................................................................................................... 3 EXECUTIVE SUMMARY ........................................................................................................................................ 5 OBJECTIVES ................................................................................................................................................................ 6 FINANCIAL OBJECTIVES ....................................................................................................................................... 7 START-UP SUMMARY.......................................................................................................................................... 8 TOTAL FUNDS ALLOCATED ........................................................................................................................................ 8 PRODUCTS ......................................................................................................................................................... 9 MARKET ANALYSIS SUMMARY: CHAMPAGNE INDUSTRY .................................................................................... 10 USA MARKET STUDY ................................................................................................................................................ 12 THE WINE MARKET IN CHINA.................................................................................................................................. 13 OPERATIONAL STRATEGY .................................................................................................................................. 14 LEGAL STRUCTURE ................................................................................................................................................... 14 LOCATIONS ............................................................................................................................................................... 14 TARGET MARKET ...................................................................................................................................................... 14 LICENSING ................................................................................................................................................................ 15 ENDORSEMENT ........................................................................................................................................................ 15 BRANDING AND MARKETING ............................................................................................................................ 16 OBJECTIVES .............................................................................................................................................................. 16 KEYS TO SUCCESS ..................................................................................................................................................... 16 MARKETING STRATEGIES......................................................................................................................................... 17 GLOBAL COMPETITIVE ANALYSIS ....................................................................................................................... 18 COMPETITIVE ADVANTAGES ................................................................................................................................... 18 BARRIERS TO ENTRY ................................................................................................................................................ 19 SWOT ANALYSIS ............................................................................................................................................... 20 RISK ANALYSIS .......................................................................................................................................................... 20 EXIT STRATEGY ................................................................................................................................................. 21 RETURN ON INVESTMENT (ROI) ........................................................................................................................ 22 MILESTONES .................................................................................................................................................... 23 MANAGEMENT ................................................................................................................................................ 24 ABOUT THE OWNER – MRS. ANGELA TOMA ......................................................................................................... 24 KEY MANAGEMENT ................................................................................................................................................. 25 BOARD MEMBERS ADVISORS .................................................................................................................................. 25 ORGANIZATIONAL CHART ....................................................................................................................................... 25 PERSONNEL FORECAST ..................................................................................................................................... 26 FINANCIAL INDICATORS .................................................................................................................................... 27 REVENUE FORECAST......................................................................................................................................... 28 BREAK-EVEN ANALYSIS ..................................................................................................................................... 30 PROJECTED INCOME STATEMENT ..................................................................................................................... 32 PROJECTED CASH FLOW ................................................................................................................................... 34 PROJECTED BALANCE SHEET ............................................................................................................................. 35 SENSITIVITY ANALYSIS....................................................................................................................................... 36 FINANCIAL ASSUMPTIONS ................................................................................................................................ 37 APPENDIX: YEAR ONE FINANCIALS..................................................................................................................... 38 BUSINESS PLAN 4 Diamond Champagne Inc. EXECUTIVE SUMMARY Diamond Champagne Inc. (also referred to as “the Company”) is a parent corporation to two luxuries new champagne brands getting ready to launch globally. The Company realizes the desire of new-milennium consumers to remain associated with a luxurious lifestyle in drinking preference and, to fulfill the desire, the Company intends to import rich tasting champagne from France and will sell to all 3 tiers of distributors nationally and globally. Both brands will request ample quantity of Champagne styles along with the custom liquors bottles that will contain the champagne. The Company has designed custom bottles and is confident of capturing the immediate attention of its consumers worldwide upon launch. The Company initially offers two brands with three different types/styles of Champagne; Le Patron Champagne (Brut & Rose) and Flawless Diamond Champagne (Brut, Rose & Flawless Limited Edition) and looking for investor funding amounting to $3.5MM to achieve the Company’s objectives. Opportunity: Consumers have reassessed their priorities and increasingly asked themselves what they truly value in luxury goods. Preferences are shifting from ownership and acquiring new things to acquiring more meaningful experiences, and from high quantity to high quality and overall value. In this scenario, fine wines/champagne and spirits are outpacing all other luxury categories regarding growth in 2017. Global sales in fine champagne will increase by an estimated rate of 7% in real USD value terms in 2018. This momentum further highlights a shift in consumer spending from personal luxury goods (such as luxury timepieces, jewelry, and leather goods) to luxury experiences, wellness, and lifestyle1. About the Market: Champagne is produced from grapes that are grown in the Champagne region of France. The grapes that are used are very specific, such as Pinot Noir, Pinot Meunier, and Chardonnay. These grapes are fermented to make wine that contains about 9% of alcohol by volume. Champagne is also known as a sparkling wine and is strictly regulated by Comité Champagne of France. Various wine-producing countries produce sparkling wine similar to champagne, but any other wine which might resemble champagne cannot be sold or labeled as champagne. On July 31st, 2017 the Champagne industry of France reported revenue of €4.9 billion, of which €2.8 billion pertains to export, which is more than 50% of the industry’s total sales: this trend is lucrative for Diamond Champagne Inc. as they are determined to import the fine quality product from France. The Champagne region of France is composed of 34,300 hectares, representing around 0.4% of the world’s vineyard area. 13% of the volume of sparkling wines is provided by this area, which carries around 40% of the value internationally. Marketing: Marketing for Diamond Champagne Inc. will be done through a variety of channels, with the internet and word of mouth being the primary drivers. The Company will develop a user-friendly portal that outlines all of the products that are being offered. Moving forward, plans call for the Company’s website to be Search Engine Optimized (SEO) to give it more traction and traffic that will ultimately translate into increased revenues and profit margins. The Company will have a social media presence via Facebook, Twitter and Instagram: having these social media partners will give the Company the opportunity to drive a strong word-of-mouth through celebrity promoters. Print advertising will round out the marketing model, with print advertisements being placed in publications that are typically read by members of the targeted audience. Import and Distribution: Diamond Champagne Inc. has its own elegantly designed bottles, which will be filled with imported champagne. Diamond Champagne will import its own champagne as the Company holds a federal import/export, federally bounded warehouse license, and wholesaler & distributor license as well. Target Market: Diamond Champagne Inc. anticipates that the primary customers of its products or services will be consumers aged 21 to 65: Consumers in this segment have a well-settled job and include the retired community. Consumers in this age group are frequent purchasers of wine. While the above will be the primary target consumers, the secondary consumer segment includes: 1 https://blog.euromonitor.com/2017/12/ranked-top-10-champagne-drinking-countries.html BUSINESS PLAN 5 Diamond Champagne Inc.  Consumers aged 21 to 44: Consumers in this segment are university students, job seekers and include consumers having well-settled jobs. This segment of consumer drinks wine for socializing reasons.  Consumers aged 64+: Consumers in this segment are purely from the retired community, who are regular drinkers and wine is a part of their routine. Management: Toma-Valente is the founder and president of Diamond Champagne Inc. Toma Valent is a seasoned business professional who is well connected and attuned to the needs of her targeted market. Her work ethic and business acumen will be the key drivers that propel this venture towards a position of lasting success. Mrs. Toma Valente is an entrepreneurial end driven Chief Executive with 15 years of leading industry expertise in founding numerous companies in domestic and international marketplaces. She is a facilitator and builders of world class management and product development teams with specializations in multiple start-ups and scaled growth stages. She possesses proven fundraising and networking skills, building fruitful partnerships with hundreds of clients and delivering multi-million dollar bottom line growth. Mrs. Toma Valente holds a Bachelor of Science in Electrical Engineering and a Master’s degree in Audio Engineering from Lawrence Technological University. Financial Overview: The Company expects steady growth over the first five years of operation and projects the following revenue to be generated: Revenue Year 1 Year 2 Year 3 $4,158,238 $4,324,567 $4,540,796 Year 4 Year 5 $4,813,243 $5,053,906 OBJECTIVES The purpose of this plan is to provide investors and interested parties with the information necessary to evaluate the scope and future growth of Diamond Champagne Inc. in the marketplace. In addition to serving as a roadmap for management, the plan will show that: 1) a significant market opportunity exists when analyzing the current market demands and competitive landscape; 2) the management team set in place is qualified to execute on a well-thought-out operational, marketing and sales strategy, and 3) the correct capital structure will allow for a long-lasting, profitable business. To achieve the Company’s objectives, Diamond Champagne Inc. is seeking $3.5MM in total funding. The funding will be allocated in a variety of ways, including staffing, operations, and marketing initiatives. The investment risk is minimal based on the management experience and industry growth rates. Diamond Champagne Inc.’s financial model shows consistent growth for the brand over the next five years. By year five, plans call for the Company to achieve $5MM in annual gross revenue, with a net profit of $1.3MM or approximately 26.55%. Projected Revenue By Year ($1,000's) $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $0 Year 1 Year 2 Year 3 Year 4 Year 5 BUSINESS PLAN 6 Diamond Champagne Inc. FINANCIAL OBJECTIVES The following table and graphs illustrate the financial goals of Diamond Champagne Inc. during the next five years. The financials are explained in detail throughout the plan. Projected Operating Highlights By Year ($1,000's) $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $0 Year 1 Year 2 Revenue Gross Margin Year 3 EBITDA Year 4 Year 5 Net Profit BUSINESS PLAN 7 Diamond Champagne Inc. START-UP SUMMARY The following tables and graphs detail the funding the business will need to bring the vision to reality. Start-up funding includes all the expenditures, both start-up assets, and start-up expenses, incurred before the Company starts earning revenue. The working capital element of the asset table represents the balance of cash at the beginning of Month 1 of the financial projections. As shown in the charts above and the graph below, the total start-up funding needed to implement this venture successfully is $3.85MM. The owner intends to invest $350K in personal funds to create the Company’s brand. As depicted above, $1.74MM will be used for start-up expenses; $192K will be used to purchase long-term assets, and $1MM will be used for purchasing inventory. The remaining balance of $909K will be used for working capital. TOTAL FUNDS ALLOCATED BUSINESS PLAN 8 Diamond Champagne Inc. PRODUCTS Diamond Champagne Inc. will be a driving force in bringing champagne deemed to accommodate the lifestyle of new millennium consumers. The philosophy of the Company is Go Hard or Go Home, meaning No Risk, No Reward. The goal of the Company is to sell (wholesale) 2 containers before the commercial retail launch of the product. The Company will import high-class, rich-tasting champagne from France and distribute it globally to wholesalers. The following is a listing of the types of products that will be initially available through Diamond Champagne Inc.  Le Patron Champagne o Brut o Rose A perfect gift – The driest sparkling wines — No dosage, no added sugar. For many American wine consumers, the winter shopping season includes obligatory visits to local wine shops or grocery store wine aisles for their annual bubbly purchases. Brut will be a perfect bubbly purchase for those consumers.  Flawless Diamond Champagne o Brut o Rose A perfect entertainment partner – very enjoyable tasting - If a consumer is looking for energy and vivacity, the perfect choice is Rosé Champagne. There is more natural ripeness at harvest time these days, so there is less need for dosage. There’s also less need to adjust with too much red wine – the fruit can speak for itself. o Flawless (Limited Edition) BUSINESS PLAN 9 Diamond Champagne Inc. MARKET ANALYSIS SUMMARY: CHAMPAGNE INDUSTRY France’s Champagne Industry Champagne is produced from grapes that are grown in the Champagne region of France. The grapes that are used are very specific, such as Pinot Noir, Pinot Meunier, and Chardonnay. These grapes are fermented to make wine that contains about 9% of alcohol by volume. Champagne is also known as a sparkling wine and is strictly regulated by Comité Champagne of France. Various wine producing countries produce sparkling wine similar to champagne, but any other wine which might resemble champagne cannot be sold or labeled as champagne: all champagne is sparkling wine, but all sparkling wine is not champagne. Only grapes that are grown according to the appellation rules are allowed to make champagne. 2 2 https://www.champagne.fr/assets/files/economie/filiere-champagne/plaquette_economie_champagnegb.pdf BUSINESS PLAN 10 Diamond Champagne Inc. Top 10 Export Market According to Comité Interprofessionnel du vin de Champagne, due to rising levels of shipments until October last year compared to the same period in 2016, the region was estimated to see its global total reach at least 312m bottles, a rise of 2% on 2016’s 306m bottle figure. However, the performance for the region in the last two months of 2017, Champagne’s busiest time of the year, saw the estimate for 2017’s total fall from 312m to 307.6m bottles – representing an increase of just 0.5% on the previous year.3 4 3 4 https://www.thedrinksbusiness.com/2018/01/2017-champagne-shipments-forecast-to-fall-below-308m-bottles/ https://www.champagne.fr/en/champagne-economy/key-market-statistics BUSINESS PLAN 11 Diamond Champagne Inc. USA MARKET STUDY Wine & Spirits Wholesaling The Wine and Spirits Wholesaling industry comprises establishments primarily engaged in the wholesale merchant distribution of wine, distilled alcohol beverages or neutral spirits and ethyl alcohol used in blended wines and distilled liquors. Over the five years to 2018, industry revenue is anticipated to increase an annualized 2.3% to $103.1 billion, including growth of 1.4% in 2018 alone. Increased consumer spending, driven by an increase in disposable income as well as consumption trends toward high-value wine and distilled spirits, has driven revenue growth for the industry throughout the period. Major players have continued to enact partnerships and mergers with smaller regional distributors to expand their geographical reach. Over the five years to 2023, industry revenue is forecast to increase an annualized 1.4% to $110.3 billion. Moving forward, there remains a degree of looming concern among industry wholesalers that the three-tier distribution system may be subject to deregulation. Currently, there are no direct threats or deregulation proposals that have become a major concern; however, industry operators will continue to staunchly oppose any proposed policies that might threaten the industry’s growth projection. Major Product Segmentation Wine: Table wines, defined as all still wines containing no more than 14.0% alcohol by volume, are the highest demanded by consumers, generating an estimated 35.3% of industry revenue in 2018. Table wines are most commonly sold by wholesalers in cases of 12 750-ml bottles or six 1.5-liter bottles, although miniaturized and boxed versions of many wine brands are also available. Table wines consist of popular red and white varietals such as Pinot Noir, Merlot, Cabernet Sauvignon, Chardonnay, Riesling and Sauvignon Blanc. Dessert wines, defined as all wines containing more than 14.0% alcohol by volume, represent a significantly smaller portion of industry revenue. Dessert wines are sweet and typically served with dessert. In comparison with table wines, there are far fewer varieties included in dessert wines. Notable dessert wines include fortified port, sherry, and Eisweins (Ice Wine). This segment represents 4.3% of industry revenue. Sparkling wines and champagne represent another 2.8% of industry revenue. BUSINESS PLAN 12 Diamond Champagne Inc. THE WINE MARKET IN CHINA The Chinese grape wine market was worth an estimated US$ 38.3 billion in 2015 and is expected to increase by 81%, reaching an anticipated US$ 69.3 billion by 2019. Since 2010, the volume of wine sales in China has increased by 132%, reaching 2,466 million liters in 2015. This amount is expected to grow another 75% by 2019, reaching 4,320 million liters. Still wines represented 96.8% of the total wine market value in 2014. Red wine was the most popular, with 75.2% volume share in 2014. This popularity may be due to the perceived health benefits of red wine and the significance of the hue in Chinese culture, in which it signifies wealth, power, and good luck. The volume sales of white wine increased 68.6% from 2010 to 2014, while the volume sales of rosé increased 105% during the same period, signaling an opportunity for producers in this category. Importance of Imported Wine Imported wines hold the highest volume market share in the tier 1 cities of Beijing, Guangzhou, Shanghai, and Shenzhen, where there is the strongest presence of expatriates, western-educated young professionals, and consumers who have knowledge of and preference for foreign wines. Combined, these cities account for 53% of the volume of imported wine sales. After the United-States, China was the second largest export market for wine in 2015, worth CAD$ 13.5 million. Market Environment China’s size and growing middle class have made it an attractive export market for wine producers around the globe. China is the most populous country in the world, with a population of approximately 1.37 billion in 2015. The population of China has increased by 2% over the past five years and is expected to reach 1.4 billion by 2020. Although China is experiencing an economic downturn, with the lowest gross domestic product (GDP) growth rate since the 1990’s, it was still the world’s second-largest economy in 2015, with a GDP of US$10.9 trillion. Consumer spending increased by 7.3% between 2013 and 2014, up from 6.7% between 2012 and 2013. Additionally, increased travel has resulted in an interest in Western culture, which is perceived to be more advanced, and a demand for modern lifestyles. In 2012, the Chinese surpassed Americans and Germans as the world’s top international tourism spenders, taking 83 million foreign trips and spending US$ 102 billion. The number of foreign trips is expected to reach 200 million by the year 2020. As Chinese tourists increasingly visit wine-drinking countries, they are increasing the knowledge of and preference for foreign wines in China5. 5 https://www.agr.gc.ca/resources/prod/Internet-Internet/MISB-DGSIM/ATS-SEA/PDF/6799-eng.pdf BUSINESS PLAN 13 Diamond Champagne Inc. OPERATIONAL STRATEGY LEGAL STRUCTURE Diamond Champagne Inc. is a registered Corporation in the State of Michigan, office in Southfield (suburb of Detroit) with hopes in moving corporate office to the world famous General Motors Building in Downtown Detroit. Ownership is held by Mrs. Angela Toma. LOCATIONS Headquarters: The Renaissance Center, Detroit, MI The Renaissance Center is a group of seven interconnected skyscrapers in Downtown Detroit, Michigan, United States. Detroit is the largest and most populous city in the U.S. state of Michigan, the largest city on the United States–Canada border, and the seat of Wayne County. The municipality of Detroit had a 2017 estimated population of 673,104, making it the 23rd-most populous city in the United States. The metropolitan area, known as Metro Detroit, is home to 4.3 million people, making it the second-largest in the Midwest after Chicago. Global Presence The Company will also have a presence in France, Japan and Hong Kong. The office in France of the Company will be the main import and major distribution office to Europe. Office in China will open doors for exploring Asian countries, primarily serving China, Japan, Hong Kong to be served as the distribution hub for India, Malaysia and other countries. TARGET MARKET USA The target market for the products that are being offered by Diamond Champagne Inc. will be male and female consumers more than 21 years of age. According to the US Census Bureau, the number of millennials currently represents a greater percentage of the US population than the Baby Boomer generation, and these younger consumers will all be of legal drinking age over the next decade. As a result, industry operators will cater to a growing market of new, young consumers whose tastes are entirely different from consumers in other age groups. The USA is the second leading importer of Champagne6. China According to EuroMonitor International, total alcohol consumption in China has increased by 21.6% between 2009 and 2014. Imported wines have traditionally been seen as a status symbol and considered a crucial element of doing business; however, the new generation of wine consumers is also drinking wine as part of their social life outside of work. This consumer segment mainly consists of graduates working in high-earning professions in their late 20s and early 30s. Elderly consumers tend to be more price-sensitive, while middleyoung and middle-aged consumers are more concerned with the concept of “face” and will pay more on a particular brand to demonstrate dignity, honor and pride.7 6 7 https://africacheck.org/reports/no-nigeria-is-not-the-worlds-biggest-champagne-consumer-after-france/ https://www.agr.gc.ca/resources/prod/Internet-Internet/MISB-DGSIM/ATS-SEA/PDF/6799-eng.pdf BUSINESS PLAN 14 Diamond Champagne Inc. France France accounts for half of global champagne consumption. Europe continues to account for the vast majority (75%) of global sales. Western European penetration rates are concentrated on a very small number of markets – in particular, France (49% of global volume sales) and the UK (10% of global volume sales). Consumers have reassessed their priorities and increasingly asked themselves what they truly value in luxury goods. In this scenario, fine wines/champagne and spirits outpaced all other luxury categories regarding growth in 2017. Global sales in fine champagne will increase by an estimated rate of 7% in real USD value terms this year. This momentum further highlights a shift in consumer spending from personal luxury goods (such as luxury timepieces, jewelry and leather goods) to luxury experiences, wellness and lifestyle.8 The target market is further segmented based on income and age factors. The characteristics of the target market are as follows: Consumers aged 26 to 44:  The largest market for wine  Consumers in this age group are university students, job seekers and includes those who have a wellsettled job  They like to drink wine but don’t know what to buy  May select by wine label design Consumers aged 45 to 64:  Frequent purchasers of wine  This age group is considered as image seekers and the largest consumers of the Company’s products  Have settled job  Have basic wine knowledge  Influenced by wine rating  Don’t know much about wine, just like to drink it Consumers aged 65+:  Consumers include the retired community  Wine is part of their routine LICENSING The Company has obtained the following licenses in the USA for smooth operations:     Federal Import & Export Wholesaler License Bonded and Insured Federal Warehouse Direct Shipping License ENDORSEMENT The Company has finalized endorsement contracts with the following artists against the upfront payment mentioned below:     8 Christian Mathis (Trick – Trick - American hip-hop artist) – $100,000 + $2 per case Aubrey Drake (Canadian Rapper) – $300,000 + $5 per case Ellen DeGeneres (American Comedian) – $300,000 + $4 per case Floyd Mayweather (Boxer) – $500,000 + $5 per case https://blog.euromonitor.com/2017/12/ranked-top-10-champagne-drinking-countries.html BUSINESS PLAN 15 Diamond Champagne Inc. BRANDING AND MARKETING Diamond Champagne Inc. recognizes that maintaining a sterling, well-regarded brand is essential for propagating a strong standing in the Global Champagne industry. To raise brand awareness among its intended audiences, the Company will emphasize a logo and company colors on all marketing materials. The Company’s branding, values, and mission will aid in fueling word-of-mouth buzz and building a loyal customer following. By upholding a positive corporate image in addition to providing its top-quality products, Diamond Champagne Inc. will increase its market share, stand out among its competitors, and become a dominant player in the market. The Company will also fervently track any direct or indirect competition in the marketplace to ensure it stays on top of cutting-edge industry trends and opportunities. Moving forward, Diamond Champagne Inc. will strive to meet the following objectives as it accomplishes specific keys to success: OBJECTIVES     Become a recognized brand in the Global Champagne industry Develop a strong customer service model Remain flexible in product offerings Remain attuned to the marketplace and integrate products into the business mix that meet the needs of the targeted audience KEYS TO SUCCESS  Ability to control stock on hand Distributors typically warehouse 60 to 90 days of product inventory. Companies must control inventory levels to ensure that products are selling and to reduce warehousing costs.  Establishment of brand names A portfolio of brand-name products helps operators compete for retailer purchases, as well as shelf space in retail stores, restaurant presence, and producer attention. Brand names are more recognized and therefore easier for wholesalers to sell.  Proximity to key markets To minimize transport and distribution costs, it is important to have a location that is close to major suppliers and clients.  Must comply with government regulations Alcohol industries are closely regulated. While some laws aid distributors, others are largely intended to control and reduce alcohol sales. Wholesalers must ensure compliance to avoid legal complications.  Effective product promotion Distributors must effectively market their inventories to retailers and restaurants using value-added services, including tastings, wine and food pairings, inventory management and new product development. BUSINESS PLAN 16 Diamond Champagne Inc. MARKETING STRATEGIES Marketing for Diamond Champagne Inc. will be done through a variety of channels including the Internet, email marketing, video blogging, social media, trade shows, and word-of-mouth buzz. Word of mouth will round out the marketing model and has the potential of providing the most marketing push as it will allow the Company to deliver an authentic, trusted marketing message. Networking:  Attend conferences related to the Champagne, Wine and Liquor industry, e.g., Eastern Winery Exposition, United States Trade Tasting, and Wine Marketing and Tourism.  Participate in Job-Fairs to attract new employees.  Get registered with Detroit Regional Chamber, and, upon expansion, obtain registration with the chamber of commerce in respective jurisdictions. Company’s Website:  Age confirmation display on the homepage, confirmation will take the visitor forward  Search Engine Optimized website will direct traffic searching for sparkling wine, quality champagne, classy drinks, high-end drinks, alcohol, and French Champagne.  The website will list all the products offered by the Company.  The website will display a location guide to worldwide stores of the Company. Social Media  Generate brand awareness and maintain a presence on social media websites such as Facebook, Instagram, Twitter, and LinkedIn.  Facebook’s pay-per-click and Twitter’s business promotions will be utilized to target above-age consumers.  A YouTube channel will be created and optimized through the benefits of SEO, which will contribute to the process of reaching targeted customers. Influencer Marketing With the Champagne industry highly dependent on hype and influence of leading actors and actresses, the company will use movie actors to create buzz for the Company’s brand. Actors featured in the Company’s advertising campaign may also distribute promotional products like t-shirts and caps. Email Campaign The Company will use email marketing to engage customers, increase sales, and promote online service. Properly executed with the right strategies, email marketing will be a costeffective method to retain and enroll new customers. BUSINESS PLAN 17 Diamond Champagne Inc. GLOBAL COMPETITIVE ANALYSIS As the Company builds its position and competitive advantages, it will continue to execute a marketing plan that highlights the benefits of its services. Any business that operates with a similar model serves as a direct or indirect competitor. The identified competitors are described below: Moët & Chandon – Established: 1743 Website: https://www.moet.com Country of Origin: France Thought by many to be the best champagne brand in the world, the LVMH brand is also the best-selling champagne brand. With brand ambassadors including Scarlett Johansson and Roger Federer and sponsorship of some of the world’s best events, it’s no surprise that this luxury brand is top of the list. Veuve Clicquot – Established: 1772 Website: http://www.veuve-clicquot.com/ Country of Origin: France Veuve Clicquot Ponsardin is a French Champagne house based in Reims, specializing in premium products. Founded in 1772 by Philippe ClicquotMuiron, Veuve Clicquot played an important role in establishing champagne as a favored drink of haute bourgeoisie and nobility throughout Europe. Nicolas Feuillatte – Established: 1976 Website: https://www.nicolas-feuillatte.com/en Country of Origin: France Nicolas Feuillatte is the best-selling champagne brand in the drink’s homeland of France, but despite this, it comes in third in the world. This brand is also one of the youngest in terms of champagne brands, founded in 1976; but that hasn’t stopped it from reaching the top three on the bestsellers list. COMPETITIVE ADVANTAGES The following is a listing of the primary competitive advantages of the Company upon entering the market.        Congenial customer service Niche industry with amazing growth potential Experienced and professional management Fine quality champagne from France Aggressive marketing campaign including testing Luxurious brand with an appealing outlook Endorsements by leading actors and actresses BUSINESS PLAN 18 Diamond Champagne Inc. BARRIERS TO ENTRY USA The Wine and Spirits Wholesaling industry in the US has low and steady barriers to entry. Capital requirements are low. Barriers to entry for new operators are the acquisition of licenses to distribute wine and spirits in any and all states in which they operate, and obtaining contracts with producers and supply agreements with retailers. Loyalty and brand recognition are also barriers to entry, with many retailers and restaurants hesitant to switch wholesale contracts due to uncertainly of the reputation of any new entrants. In addition, exclusivity contracts and long-term distribution contracts with established industry operators make it more difficult for new operators to gain market share. Although overall capital intensity is low, initial capital investments in warehouses, delivery and logistics systems, trucking fleets and labor present barriers to entry as well. In general, to be profitable, industry players must operate across state lines. The larger the geographic footprint of a company, the larger the capital investment necessary. China China has been called the wild west of the global wine and spirits market for good reason: the distribution path to the consumer is varied and unlike anything western companies have dealt with previously. This was especially true when the first import firms struggled to establish and develop distribution channels from scratch, having to hire and train employees who had never tasted wine. Effective communication with the Chinese consumer is a major challenge. Brands need websites in fluent Chinese, providing updated information and names of stockists (important given all the fakes in the supply chain). Since China does not have a western food culture or related vocabulary, producers should consider marketing with a China-specific wine vocabulary, something Cambridgeeducated, Beijing-based wine educator Fongyee Walker has been developing. High tariffs on imported alcohol drastically increase retail prices, creating challenges for low- to mid-priced products entering the market, as they are significantly more expensive than their domestic equivalent (which continues to improve in quality). High tariffs on imported alcohol drastically increase retail prices, creating challenges for low- to mid-priced products entering the market, as they are significantly more expensive than their domestic equivalent (which continues to improve in quality). The global wine industry is summarized as: BUSINESS PLAN 19 Diamond Champagne Inc. SWOT ANALYSIS The following is a listing of the key strengths and weaknesses of Diamond Champagne Inc., as well as the opportunities and threats that exist within the marketplace. Strengths        Experience and knowledge of the leadership team and founder The ability to establish the brand and dominate the market globally Luxurious and attractive bottle designs Involvement of celebrity sponsors as brand promoters International distribution model with a presence in 3 prominent jurisdictions Customer service commitment Scope and quality of products Weaknesses   Opportunities     Increasing popularity of the industry Growth among demographic segments Increasing trend towards luxurious lifestyles Global opportunity to expand the business, e.g., recent tariff liberty with South Korea The Company needs funding and working capital for a successful launch As a new business, the Company must build its credibility Threats  Larger companies that have more resources and the ability to reach deeper into the market RISK ANALYSIS The risks involved with Diamond Champagne Inc. will be minimal. The business operates with little overhead; a vital factor that bodes well for long-term sustainability and the creation of a durable business model. However, relatively high barriers to entry have fostered a competitive landscape with a vast range of available products and services. In order to face the risks as a new business in the marketplace, the Company must implement a highly effective marketing campaign, build industry connections and communicate its value to potential customers while focusing on how it uniquely fills a market need. With that being said, the Company stands as a viable business opportunity that has the potential to deliver significant returns to any investor. BUSINESS PLAN 20 Diamond Champagne Inc. EXIT STRATEGY After careful consideration, the Company has developed the following scenarios for the investors and management to recover their investments. SCENARIO ONE: REPAYMENT Diamond Champagne Inc. chooses to remain a privately owned enterprise. The Company repays its investors in full, consolidating ownership, in the Founder. SCENARIO TWO: BUYOUT Diamond Champagne Inc., experiences growth and sees an opportunity to expand its brand into additional markets as a successful income-generating operation. Additional markets open the door for additional product offerings and revenue streams. Due to its substantial market growth and industry recognition, major competing brands begin to take notice of the Company. These businesses approach Diamond Champagne Inc. with attractive buyout offers; then the Company negotiates and sells to the best deal. SCENARIO THREE: MERGER Diamond Champagne Inc. merges with another company to expand its market reach and development capabilities. Potential merger partners include companies that can offer a more diversified market reach or provide expanded resources for research and development. Diamond Champagne Inc.’s management would maintain majority control of the Company and combine its operational and sales efforts with its merger partner. BUSINESS PLAN 21 Diamond Champagne Inc. RETURN ON INVESTMENT (ROI) Diamond Champagne Inc. is currently seeking an equity investor. The Company has placed a value on the Company of $17.5 million, and it is looking for a $3.5 million investment for 20% of the company. These funds are sufficient to allow the Company to achieve its business goals and maintain an adequate cash flow balance. The value of Diamond Champagne Inc.’s shares will increase as the Company achieves its goals. The investor will be secure in knowing that the Company’s valuation is increasing as revenues grow, the balance sheet becomes stronger and the Company attains a strong market position. The Company believes that it can achieve an excellent valuation in the next five years. Based on reasonable financial ratios and the business plan projections, Diamond Champagne Inc. is estimated to be valued at ~$54 million by year 5. *The company valuation has been estimated by management based on product development and future revenue. Management expects that investors will be able to cash out on their investment in the Company when it generates sufficient profits to repay them. The Company expects to achieve this goal by the end of Year 5. Investors are projected to receive a 311% return on investment. The assumed company valuation was based on a multiplier of 6 multiplied by Net Assets. BUSINESS PLAN 22 Diamond Champagne Inc. MILESTONES The tentative milestones are shown below. Management reserves the right to make changes to this schedule as needed. Milestones Start Date Duration (days) Obtain Funding 10/1/2018 45.00 Secure Location for Headquarters 11/15/2018 15.00 Hire Staff 11/30/2018 30.00 Finalize contracts with suppliers 12/30/2018 30.00 Grand Opening 1/29/2019 180.00 Achieve $1.9MM in Gross Sales 1/29/2019 365.00 Obtain Funding Secure Location for Headquarters Hire Staff Finalize contracts with suppliers Grand Opening Achieve $1.9MM in Gross Sales Jul-18 Oct-18 Feb-19 May-19 Aug-19 Dec-19 BUSINESS PLAN 23 Diamond Champagne Inc. MANAGEMENT ABOUT THE OWNER – MRS. ANGELA TOMA Professional Profile Entrepreneurial and driven chief executive with 15 years of leading industry expertise in founding numerous companies in domestic and international marketplaces. Facilitator and builder of world-class management and product development teams with specialties in multiple start-ups and scaled growth stages. Proven fundraising and networking skills, building fruitful partnerships with hundreds of clients and delivering multimillion-dollar bottom line growth. Demonstrated Achievement  Grew Granite Fabricators revenue from $1.6 million to $4 million and maintained staﬀ size of 26 while increasing proﬁtability.  Expanded market share for Cabinets of Michigan from 30% to 45% in over two years, increasing proﬁt margins by 40% with higher quality services.  Founded two companies with highly proﬁtable exit Executive Experience FOUNDER-CEO Apr 2018 – Present DIAMOND CHAMPAGNE CORPORATION, SOUTHFIELD, MICHIGAN Evaluates feasibility of design ideas, based on factors such as appearance, safety, function, serviceability, budget, production costs/methods, and market characteristics. CEO Jun 2015 – Present DETROIT'S RED LIGHT DISTRICT 2 Schedules promotional or performance engagements for clients. Facilitates arena concerts and promotional tours for various artist. Maintains recording studio as well as produce music and engineer tracks for various artists. VICE PRESIDENT Dec 2014 – Present GRANITE FABRICATORS & TILE CENTER Initiates or coordinate inventory or cost control programs. In charge of day-to-day operations and manage a staﬀ of 26. CFO Jan 2015 – Present CABINETS OF MICHIGAN Prepares sketches of ideas, detailed drawings, illustrations, artwork, or blueprints, Using drafting instruments or computer-aided design equipment. Coordinates the look and function of product lines. PARTNER May 2016 – Present SEA PLATINUM VODKA & CHAMPAGNE COGNAC Manages sales team including setting goals, providing incentives, and evaluating employee performance. Provides presentation and product demonstration support during the introduction of new products and services to ﬁeld staﬀ and customers. BUSINESS PLAN 24 Diamond Champagne Inc. KEY MANAGEMENT        President - Mrs. Angela Toma CFO - Demetrious Felonry Territory Executives Web Support Bookkeepers Social Media Consultant Packaging Staff BOARD MEMBERS ADVISORS Besides the Company’s devoted and experienced management team, Diamond Champagne Inc. will consult with a board of directors or advisors to aid in the process of goal setting, accomplishing objectives and overall business development in their pursuit of success. ORGANIZATIONAL CHART President CFO Territory Executive Web Support Bookkeeper Packaging Staff* Social Media Consultant *Packaging staff will be hired on contractual/daily wages basis and are expensed out in income statement BUSINESS PLAN 25 Diamond Champagne Inc. PERSONNEL FORECAST The personnel forecast below shows the staffing needs for the next five years. Personnel Forecast Year 1 Staff Count President CFO Territory Executives Web Support Bookkeepers Social Media Consultant Packaging Staff Total Personnel - Year- Year 3 Year 4 Year 5 - - - Staff Salary - Total President $60,000 $65,000 $70,000 CFO $40,000 $41,200 $42,436 Territory Executives $80,000 $82,400 $84,872 Web Support $45,000 $46,350 $47,741 Bookkeepers $90,000 $92,700 $95,481 Social Media Consultant $35,000 $72,100 $74,263 Total Payroll $350,000 $399,750 $414,793 Personnel Assumptions: (1) Costs are based on average wages. $80,000 $43,709 $87,418 $49,173 $98,345 $114,736 $473,382 $90,000 $45,020 $90,041 $50,648 $101,296 $157,571 $534,576 BUSINESS PLAN 26 Diamond Champagne Inc. FINANCIAL INDICATORS The following table summarizes Diamond Champagne Inc.’s projected financial performance with standardized measurement indicators used to evaluate profitability, leverage, asset turnover and liquidity. As with any longrange projection, accuracy is based on reasonable estimates of return on investment and past performance. The Company believes the following numbers are attainable and reasonable. However, actual results will vary. Financial Indicators Year 1 Year 2 Year 3 Year 4 Year 5 78.12% 3.84% 5.32% 3.81% 3.98% 78.12% 26.98% 34.59% 21.56% 22.54% 78.12% 27.31% 34.99% 18.62% 19.33% 78.12% 27.03% 34.61% 16.32% 16.86% 78.12% 26.55% 33.99% 14.39% 14.81% 5.03 0.99 4.03 0.80 4.08 0.68 4.11 0.60 4.12 0.54 Leverage Ratios: Debt to Equity Debt to Assets Ratio 0.05 4.32% 0.05 4.34% 0.04 3.66% 0.03 3.22% 0.03 2.88% Liquidity Ratios: Current Ratio Current Debt to Total Assets Ratio -% -% -% -% -% 1.04 0.84 0.71 0.62 0.56 Profitability %'s: Gross Margin Net Profit Margin EBITDA to Revenue Return on Assets Return on Equity Activity Ratios: Accounts Payable Turnover Asset Turnover Additional Indicators: Revenue to Equity Ratio Financial Indicators 40.00% 35.00% Net Profit Margin 30.00% EBITDA to Revenue 25.00% 20.00% Debt to Assets Ratio 15.00% Current Debt to Total Assets Ratio 10.00% 5.00% 0.00% Year 1 Year 2 Year 3 Year 4 Year 5 BUSINESS PLAN 27 Diamond Champagne Inc. REVENUE FORECAST The following is a five-year revenue forecast. Direct costs include all costs that can be directly tied to revenue and include “cost of goods/services.” Revenue Forecast Total Le Patron Champagne Brut Rose Flawless Diamond Champagne Brut Rose Flawless (Limited Edition) Price Le Patron Champagne Brut Rose Flawless Diamond Champagne Brut Rose Flawless (Limited Edition) Revenue Le Patron Champagne Brut Rose Flawless Diamond Champagne Brut Rose Flawless (Limited Edition) Total Revenue Direct Cost Le Patron Champagne Brut Rose Flawless Diamond Champagne Brut Rose Flawless (Limited Edition) Direct Cost of Revenue Le Patron Champagne Brut Rose Flawless Diamond Champagne Brut Rose Flawless (Limited Edition) Subtotal Cost of Revenue Year 1 Year 2 Year 3 Year 4 Year 5 1,625 1,430 1,690 1,488 1,775 1,562 1,881 1,656 1,976 1,739 1,625 1,495 325 1,690 1,555 338 1,775 1,633 355 1,881 1,731 376 1,976 1,818 395 $100.00 $199.00 $100.00 $199.00 $100.00 $199.00 $100.00 $199.00 $100.00 $199.00 $100.00 $199.00 $10,000. 00 $100.00 $199.00 $10,000. 00 $100.00 $199.00 $10,000. 00 $100.00 $199.00 $10,000. 00 $100.00 $199.00 $10,000. 00 $162,545 $284,650 $169,047 $296,036 $177,500 $310,837 $188,150 $329,488 $197,557 $345,962 $162,545 $297,588 $3,250,9 09 $4,158,2 38 $169,047 $309,492 $3,380,9 45 $4,324,5 67 $177,500 $324,966 $3,549,9 93 $4,540,7 96 $188,150 $344,464 $3,762,9 92 $4,813,2 43 $197,557 $361,688 $3,951,1 42 $5,053,9 06 $18.00 $19.00 $18.00 $19.00 $18.00 $19.00 $18.00 $19.00 $18.00 $19.00 $18.00 $19.00 $2,000.0 0 $18.00 $19.00 $2,000.0 0 $18.00 $19.00 $2,000.0 0 $18.00 $19.00 $2,000.0 0 $18.00 $19.00 $2,000.0 0 $29,258 $27,178 $30,429 $28,265 $31,950 $29,678 $33,867 $31,459 $35,560 $33,032 $29,258 $28,413 $650,182 $764,289 $30,429 $29,549 $676,189 $794,860 $31,950 $31,027 $709,999 $834,603 $33,867 $32,889 $752,598 $884,679 $35,560 $34,533 $790,228 $928,913 BUSINESS PLAN 28 Diamond Champagne Inc. Revenue Forecast Assumptions: (1) Revenue and costs are based on averages. (2) Revenue assumptions is provided below: Year 1 Revenue Monthly $500,000 $450,000 $400,000 $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $0 Flawless (Limited Edition) Rose Brut Rose Month 12 Month 11 Month 10 Month 9 Month 8 Month 7 Month 6 Month 5 Month 4 Month 3 Month 2 Month 1 Brut BUSINESS PLAN 29 Diamond Champagne Inc. Revenue By Year $6,000,000 $5,000,000 Flawless (Limited Edition) $4,000,000 Rose $3,000,000 Brut Rose $2,000,000 Brut $1,000,000 $0 Year 1 Year 2 Year 3 Year 4 Year 5 BREAK-EVEN ANALYSIS The following break-even analysis shows the revenue necessary to break even in the first year of operation. Break-even is where revenue equals expenses. As shown below, the Company is expected to incur average monthly fixed costs of $253,862 in Year 1. To cover fixed costs and variable costs, which rise and fall with revenue, the Company must, on average, achieve revenue of $329,266 per month to break even. Year 1 Break-even Analysis Monthly Revenue Break-even $329,266 Assumptions: Average Monthly Revenue $346,520 Average Monthly Variable Cost $79,355 Estimated Monthly Fixed Cost $253,862 Year 1 Break-even Analysis $300,000 $200,000 $100,000 $0 ($100,000) ($200,000) ($300,000) $0 $329,266 $658,531 BUSINESS PLAN 30 Diamond Champagne Inc. BUSINESS PLAN 31 Diamond Champagne Inc. PROJECTED INCOME STATEMENT Diamond Champagne Inc. intends to deploy its funding to maximize growth and profitability. In the Income Statement table below, gross margin equals sales minus direct costs. The “bottom line” or profit (as measured before and after interest, taxes, depreciation and amortization) equals gross margin minus operating expenses. Pro Forma Income Statement Year 1 Year 2 Year 3 Year 4 Year 5 $4,158,238 $4,324,567 $4,540,796 $4,813,243 $5,053,906 Subtotal Cost of Revenue $764,289 $794,860 $834,603 $884,679 $928,913 Merchant Credit Card Fees $145,538 $151,360 $158,928 $168,464 $176,887 Total Cost of Revenue $909,827 $946,220 $993,531 $1,053,143 $1,105,800 $3,248,411 $3,378,347 $3,547,265 $3,760,100 $3,948,105 78.12% 78.12% 78.12% 78.12% 78.12% Rent $39,000 $42,900 $47,190 $51,909 $57,100 Utilities Revenue Gross Margin Gross Margin/Revenue Expenses $18,000 $19,800 $21,780 $23,958 $26,354 Website/Digital Expenses $6,000 $6,600 $7,260 $7,986 $8,785 Office Supplies $6,000 $6,600 $7,260 $7,986 $8,785 Travel & Entertainment $120,000 $132,000 $145,200 $159,720 $175,692 Marketing, Advertising & Endorsement $415,824 $932,457 $954,080 $981,324 $1,005,391 Legal Miscellaneous Expenses Professional Services $3,600 $3,960 $4,356 $4,792 $5,271 $24,000 $26,400 $29,040 $31,944 $35,138 $7,200 $7,920 $8,712 $9,583 $10,542 $207,912 $216,228 $227,040 $240,662 $252,695 $1,749,000 $0 $0 $0 $0 Packaging $41,582 $43,246 $45,408 $48,132 $50,539 Depreciation $19,200 $19,200 $19,200 $19,200 $19,200 Payroll Taxes $39,025 $44,572 $46,249 $52,782 $59,605 Sales Commission Startup Cost Total Personnel $350,000 $399,750 $414,793 $473,382 $534,576 $3,046,343 $1,901,633 $1,977,567 $2,113,361 $2,249,672 Profit Before Interest and Taxes $202,068 $1,476,714 $1,569,697 $1,646,740 $1,698,434 EBITDA $221,268 $1,495,914 $1,588,897 $1,665,940 $1,717,634 $42,434 $310,110 $329,636 $345,815 $356,671 $159,633 $1,166,604 $1,240,061 $1,300,925 $1,341,763 Total Operating Expenses Taxes Incurred Net Profit Net Profit/Revenue 3.84% 26.98% 27.31% 27.03% 26.55% Income Statement Assumptions: (1) Depreciation is based on 10 years; (2) Total payroll taxes are 11.15%; (3) Company taxes are based on 21%. BUSINESS PLAN 32 Diamond Champagne Inc. The charts below represent the total revenue monthly and for the next five years. The charts illustrate the percentage of revenue allocated to cost of goods (COG), operating expenses, taxes and interest. The net income piece represents revenue less the aforementioned expenditures. Gross Margin & Profit Monthly $500,000 $0 -$500,000 Gross Margin -$1,000,000 Profit -$1,500,000 Month 12 Month 11 Month 10 Month 9 Month 8 Month 7 Month 6 Month 5 Month 4 Month 3 Month 2 Month 1 -$2,000,000 Gross Margin & Profit Yearly $4,500,000 $4,000,000 $3,500,000 $3,000,000 $2,500,000 Gross Margin $2,000,000 Profit $1,500,000 $1,000,000 $500,000 $0 Year 1 Year 2 Year 3 Year 4 Year 5 BUSINESS PLAN 33 Diamond Champagne Inc. PROJECTED CASH FLOW The following depictions of Diamond Champagne Inc.’s projected cash flow show that the Company expects to maintain sufficient cash balances over the five years of this plan. The “pro forma cash flow” table differs from the “pro forma income statement” table. Pro forma cash flow is intended to represent the actual flow of cash in and out of Diamond Champagne Inc. In comparison, the revenue and expense projections on the income statement include “non-cash” items and exclude funding and investment illustrations. Pro Forma Cash Flow Year 1 Year 2 Year 3 Year 4 Year 5 $4,158,238 $4,324,567 $4,540,796 $4,813,243 $5,053,906 $350,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $3,500,000 $0 $0 $0 $0 $8,008,238 $4,324,567 $4,540,796 $4,813,243 $5,053,906 Cash Received Revenue Owner Contribution Proceeds From Long-term Assets Proceeds from Investor Subtotal Cash Received Expenditures Expenditures from Operations Total Personnel Bill Payments $350,000 $399,750 $414,793 $473,382 $534,576 $1,699,442 $2,685,416 $2,857,825 $3,006,743 $3,146,593 $2,049,442 $3,085,166 $3,272,617 $3,480,125 $3,681,169 Subtotal Spent on Operations Additional Cash Spent Investor Repayment $0 $0 $0 $0 $0 Start-up Costs $1,749,000 $0 $0 $0 $0 Purchase Inventory $1,000,000 $50,000 $100,000 $250,000 $300,000 $192,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $4,990,442 $3,135,166 $3,372,617 $3,730,125 $3,981,169 $3,017,796 $1,189,401 $1,168,178 $1,083,119 $1,072,737 Purchase Long-term Assets Dividends Paid Subtotal Cash Spent Net Cash Flow Cash Balance $3,017,796 $4,207,197 $5,375,375 $6,458,494 $7,531,231 Cash Flow Assumptions: (1) Proceeds from Investors assume funds were received in the amount of $3.5MM; (2) Owner Contribution is $350K. Year 1 Cash $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 Net Cash Flow $1,000,000 Cash Balance $500,000 Month 12 Month 11 Month 10 Month 9 Month 8 Month 7 Month 6 Month 5 Month 4 Month 3 Month 2 Month 1 $0 BUSINESS PLAN 34 Diamond Champagne Inc. PROJECTED BALANCE SHEET A balance sheet is a snapshot of Diamond Champagne Inc.’s financial condition. The balance sheet has three parts: assets, liabilities and ownership equity. Pro Forma Balance Sheet Year 1 Year 2 Year 3 Year 4 Year 5 Cash $3,017,796 $4,207,197 $5,375,375 $6,458,494 $7,531,231 Inventory $1,000,000 $1,050,000 $1,150,000 $1,400,000 $1,700,000 $4,017,796 $5,257,197 $6,525,375 $7,858,494 $9,231,231 $192,000 $192,000 $192,000 $192,000 $192,000 $19,200 $38,400 $57,600 $76,800 $96,000 $172,800 $153,600 $134,400 $115,200 $96,000 $4,190,596 $5,410,797 $6,659,775 $7,973,694 $9,327,231 Assets Current Assets Total Current Assets Long-term Assets Long-term Assets Accumulated Depreciation Total Long-term Assets Total Assets Liabilities and Capital Current Liabilities Accounts Payable $180,962 $234,559 $243,477 $256,471 $268,245 Subtotal Current Liabilities $180,962 $234,559 $243,477 $256,471 $268,245 Total Liabilities $180,962 $234,559 $243,477 $256,471 $268,245 Paid-in Capital $3,850,000 $3,850,000 $3,850,000 $3,850,000 $3,850,000 $0 $159,633 $1,326,238 $2,566,299 $3,867,223 $159,633 $1,166,604 $1,240,061 $1,300,925 $1,341,763 Total Capital $4,009,633 $5,176,238 $6,416,299 $7,717,223 $9,058,986 Total Liabilities and Capital $4,190,596 $5,410,797 $6,659,775 $7,973,694 $9,327,231 Net Worth $4,009,633 $5,176,238 $6,416,299 $7,717,223 $9,058,986 Retained Earnings Earnings BUSINESS PLAN 35 Diamond Champagne Inc. SENSITIVITY ANALYSIS The sensitivity analysis below assumes that revenues are 10% higher or 10% lower than figures projected earlier in this business plan. Best Case Scenario (Revenue Increases by 10%) Year 1 Year 2 Year 3 Year 4 Year 5 Revenue $4,574,062 $4,757,024 $4,994,875 $5,294,568 $5,559,296 Cost of Goods $1,000,810 $1,040,842 $1,092,884 $1,158,457 $1,216,380 Gross Margin $3,573,252 $3,716,182 $3,901,991 $4,136,110 $4,342,916 78.12% 78.12% 78.12% 78.12% 78.12% Gross Margin/Revenue Operating Expenses $3,046,343 $1,901,633 $1,977,567 $2,113,361 $2,249,672 Net Profit $48,776 $1,433,494 $1,520,295 $1,597,972 $1,653,663 Cash Flow $2,906,938 $1,456,291 $1,448,412 $1,380,167 $1,384,637 Cash Balance $2,906,938 $4,363,229 $5,811,641 $7,191,808 $8,576,445 1.07% 30.13% 30.44% 30.18% 29.75% Net Profit/Revenue Worst Case Scenario (Revenue Decreases by 10%) Revenue Year 1 Year 2 Year 3 Year 4 Year 5 $3,742,414 $3,892,111 $4,086,716 $4,331,919 $4,548,515 Cost of Goods $818,844 $851,598 $894,178 $947,829 $995,220 Gross Margin $2,923,570 $3,040,512 $3,192,538 $3,384,090 $3,553,295 Gross Margin/Revenue 78.12% 78.12% 78.12% 78.12% 78.12% Operating Expenses $3,046,343 $1,901,633 $1,977,567 $2,113,361 $2,249,672 Net Profit ($468,566) $899,715 $959,827 $1,003,877 $1,029,862 Cash Flow $2,389,596 $922,512 $887,945 $786,071 $760,836 Cash Balance $2,389,596 $3,312,108 $4,200,053 $4,986,123 $5,746,960 -12.52% 23.12% 23.49% 23.17% 22.64% Net Profit/Revenue BUSINESS PLAN 36 Diamond Champagne Inc. FINANCIAL ASSUMPTIONS The assumptions below provide growth rates, cash on hand, and the terms of funding based on an investment and owner contribution amount of $3,850,000. Financial Assumptions Year 2 Year 3 Year 4 Year 5 Growth Assumptions Total Revenue Growth Total Expense Growth Year 1 4% -38% 5% 4% 6% 7% 5% 6% Personnel Assumptions Average Salary Growth Payroll Growth 3% 14% 3% 4% 3% 14% 3% 13% 27 32 33 32 37 32 40 32 Cash Assumptions Months of Cash on Hand Bill Payment Term (Days) 1 32 BUSINESS PLAN 37 APPENDIX: YEAR ONE FINANCIALS Year 1 Revenue Forecast Total Le Patron Champagne Brut Rose Flawless Diamond Champagne Brut Rose Flawless (Limited Edition) Revenue Le Patron Champagne Brut Rose Flawless Diamond Champagne Brut Rose Flawless (Limited Edition) Total Revenue Direct Cost of Revenue Le Patron Champagne Brut Rose Flawless Diamond Champagne Brut Rose Flawless (Limited Edition) Subtotal Cost of Revenue Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 49 43 81 72 98 86 130 114 146 129 146 129 146 129 146 129 163 143 163 143 179 157 179 157 49 45 10 81 75 16 98 90 20 - - - - - - - - - $4,876 $8,539 $8,127 $14,232 $9,753 $17,079 $13,004 $22,772 $14,629 $25,618 $14,629 $25,618 $14,629 $25,618 $14,629 $25,618 $16,255 $28,465 $16,255 $28,465 $17,880 $31,311 $17,880 $31,311 $4,876 $8,928 $97,527 $124,747 $8,127 $14,879 $162,545 $207,912 $9,753 $17,855 $195,055 $249,494 $13,004 $23,807 $260,073 $332,659 $14,629 $26,783 $292,582 $374,241 $14,629 $26,783 $292,582 $374,241 $14,629 $26,783 $292,582 $374,241 $14,629 $26,783 $292,582 $374,241 $16,255 $29,759 $325,091 $415,824 $16,255 $29,759 $325,091 $415,824 $17,880 $32,735 $357,600 $457,406 $17,880 $32,735 $357,600 $457,406 $878 $815 $1,463 $1,359 $1,755 $1,631 $2,341 $2,174 $2,633 $2,446 $2,633 $2,446 $2,633 $2,446 $2,633 $2,446 $2,926 $2,718 $2,926 $2,718 $3,218 $2,990 $3,218 $2,990 $878 $852 $19,505 $22,929 $1,463 $1,421 $32,509 $38,214 $1,755 $1,705 $39,011 $45,857 $2,341 $2,273 $52,015 $61,143 $2,633 $2,557 $58,516 $68,786 $2,633 $2,557 $58,516 $68,786 $2,633 $2,557 $58,516 $68,786 $2,633 $2,557 $58,516 $68,786 $2,926 $2,841 $65,018 $76,429 $2,926 $2,841 $65,018 $76,429 $3,218 $3,125 $71,520 $84,072 $3,218 $3,125 $71,520 $84,072 BUSINESS PLAN 38 Year 1 Personnel Forecast Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 - - - - - - - - - - - - $5,000 $3,333 $3,333 $5,000 $3,333 $3,333 $5,000 $3,333 $3,333 $5,000 $3,333 $3,333 $5,000 $3,333 $3,333 $5,000 $3,333 $3,333 $5,000 $3,333 $3,333 $5,000 $3,333 $3,333 $5,000 $3,333 $3,333 $5,000 $3,333 $3,333 $5,000 $3,333 $3,333 $5,000 $3,333 $3,333 Web Support Bookkeepers Social Media Consultant $3,750 $2,500 $2,917 $3,750 $2,500 $2,917 $3,750 $2,500 $2,917 $3,750 $2,500 $2,917 $3,750 $2,500 $2,917 $3,750 $2,500 $2,917 $3,750 $2,500 $2,917 $3,750 $2,500 $2,917 $3,750 $2,500 $2,917 $3,750 $2,500 $2,917 $3,750 $2,500 $2,917 $3,750 $2,500 $2,917 Staff Salary - Total President CFO Territory Executives Web Support Bookkeepers Social Media Consultant Total Payroll $5,000 $3,333 $6,667 $3,750 $7,500 $2,917 $29,167 $5,000 $3,333 $6,667 $3,750 $7,500 $2,917 $29,167 $5,000 $3,333 $6,667 $3,750 $7,500 $2,917 $29,167 $5,000 $3,333 $6,667 $3,750 $7,500 $2,917 $29,167 $5,000 $3,333 $6,667 $3,750 $7,500 $2,917 $29,167 $5,000 $3,333 $6,667 $3,750 $7,500 $2,917 $29,167 $5,000 $3,333 $6,667 $3,750 $7,500 $2,917 $29,167 $5,000 $3,333 $6,667 $3,750 $7,500 $2,917 $29,167 $5,000 $3,333 $6,667 $3,750 $7,500 $2,917 $29,167 $5,000 $3,333 $6,667 $3,750 $7,500 $2,917 $29,167 $5,000 $3,333 $6,667 $3,750 $7,500 $2,917 $29,167 $5,000 $3,333 $6,667 $3,750 $7,500 $2,917 $29,167 Staff Count President CFO Territory Executives Web Support Bookkeepers Social Media Consultant Packaging Staff Total Personnel Staff Salary President CFO Territory Executives BUSINESS PLAN 39 Year 1 Income Statement Month 1 $124,747 $22,929 $4,366 $27,295 Month 2 $207,912 $38,214 $7,277 $45,491 Month 3 $249,494 $45,857 $8,732 $54,590 Month 4 $332,659 $61,143 $11,643 $72,786 Month 5 $374,241 $68,786 $13,098 $81,884 Month 6 $374,241 $68,786 $13,098 $81,884 Month 7 $374,241 $68,786 $13,098 $81,884 Month 8 $374,241 $68,786 $13,098 $81,884 Month 9 $415,824 $76,429 $14,554 $90,983 Month 10 $415,824 $76,429 $14,554 $90,983 Month 11 $457,406 $84,072 $16,009 $100,081 Month 12 $457,406 $84,072 $16,009 $100,081 $97,-% $162,-% $194,-% $259,-% $292,-% $292,-% $292,-% $292,-% $324,-% $324,-% $357,-% $357,-% $3,250 $1,500 $500 $500 $10,000 $34,652 $300 $2,000 $600 $17,326 $1,749,000 $3,465 $1,600 $3,252 $29,167 $1,857,112 $3,250 $1,500 $500 $500 $10,000 $34,652 $300 $2,000 $600 $17,326 $0 $3,465 $1,600 $3,252 $29,167 $108,112 $3,250 $1,500 $500 $500 $10,000 $34,652 $300 $2,000 $600 $17,326 $0 $3,465 $1,600 $3,252 $29,167 $108,112 $3,250 $1,500 $500 $500 $10,000 $34,652 $300 $2,000 $600 $17,326 $0 $3,465 $1,600 $3,252 $29,167 $108,112 $3,250 $1,500 $500 $500 $10,000 $34,652 $300 $2,000 $600 $17,326 $0 $3,465 $1,600 $3,252 $29,167 $108,112 $3,250 $1,500 $500 $500 $10,000 $34,652 $300 $2,000 $600 $17,326 $0 $3,465 $1,600 $3,252 $29,167 $108,112 $3,250 $1,500 $500 $500 $10,000 $34,652 $300 $2,000 $600 $17,326 $0 $3,465 $1,600 $3,252 $29,167 $108,112 $3,250 $1,500 $500 $500 $10,000 $34,652 $300 $2,000 $600 $17,326 $0 $3,465 $1,600 $3,252 $29,167 $108,112 $3,250 $1,500 $500 $500 $10,000 $34,652 $300 $2,000 $600 $17,326 $0 $3,465 $1,600 $3,252 $29,167 $108,112 $3,250 $1,500 $500 $500 $10,000 $34,652 $300 $2,000 $600 $17,326 $0 $3,465 $1,600 $3,252 $29,167 $108,112 $3,250 $1,500 $500 $500 $10,000 $34,652 $300 $2,000 $600 $17,326 $0 $3,465 $1,600 $3,252 $29,167 $108,112 $3,250 $1,500 $500 $500 $10,000 $34,652 $300 $2,000 $600 $17,326 $0 $3,465 $1,600 $3,252 $29,167 $108,112 Profit Before Interest and Taxes Taxes Incurred ($1,759,660) $3,536 $54,309 $3,536 $86,793 $3,536 $151,761 $3,536 $184,245 $3,536 $184,245 $3,536 $184,245 $3,536 $184,245 $3,536 $216,729 $3,536 $216,729 $3,536 $249,213 $3,536 $249,213 $3,536 Net Profit Net Profit/Revenue ($1,763,196) -1413.42% $50,-% $83,-% $148,-% $180,-% $180,-% $180,-% $180,-% $213,-% $213,-% $245,-% $245,-% Revenue Subtotal Cost of Revenue Merchant Credit Card Fees Total Cost of Revenue Gross Margin Gross Margin/Revenue Expenses Rent Utilities Website/Digital Expenses Office Supplies Travel & Entertainment Marketing, Advertising & Endorsement Legal Miscellaneous Expenses Professional Services Sales Commission Startup Cost Packaging Depreciation Payroll Taxes Total Personnel Total Operating Expenses BUSINESS PLAN 40 Year 1 Cash Flow Additional Cash Received Revenue Owner Contribution Proceeds from Investor Subtotal Cash Received Total Personnel Bill Payments Additional Cash Spent Investor Repayment Start-up Costs Purchase Inventory Purchase Long-term Assets Dividends Paid Cash Spent Net Cash Flow Cash Balance Month 1 $124,747 $350,000 $3,500,00 0 $3,974,74 7 Month 2 $207,912 $0 Month 3 $249,494 $0 Month 4 $332,659 $0 Month 5 $374,241 $0 Month 6 $374,241 $0 Month 7 $374,241 $0 Month 8 $374,241 $0 Month 9 $415,824 $0 Month 10 $415,824 $0 Month 11 $457,406 $0 Month 12 $457,406 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $207,912 $249,494 $332,659 $374,241 $374,241 $374,241 $374,241 $415,824 $415,824 $457,406 $457,406 $29,167 $0 $29,167 $108,176 $29,167 $126,373 $29,167 $135,471 $29,167 $153,668 $29,167 $162,766 $29,167 $162,766 $29,167 $162,766 $29,167 $162,766 $29,167 $171,864 $29,167 $171,864 $29,167 $180,962 $0 $1,749,00 0 $1,000,00 0 $192,000 $0 $2,970,16 7 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $137,343 $155,539 $164,638 $182,834 $191,933 $191,933 $191,933 $191,933 $201,031 $201,031 $210,129 $1,004,58 0 $1,004,58 0 $70,569 $1,075,14 9 $93,955 $1,169,10 4 $168,021 $1,337,12 6 $191,407 $1,528,53 3 $182,309 $1,710,84 2 $182,309 $1,893,15 0 $182,309 $2,075,45 9 $223,891 $2,299,35 1 $214,793 $2,514,14 3 $256,375 $2,770,51 9 $247,277 $3,017,79 6 BUSINESS PLAN 41 Year 1 Balance Sheet Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Cash $1,004,580 $1,075,149 $1,169,104 $1,337,126 $1,528,533 $1,710,842 $1,893,150 $2,075,459 $2,299,351 $2,514,143 $2,770,519 $3,017,796 Inventory $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $2,004,580 $2,075,149 $2,169,104 $2,337,126 $2,528,533 $2,710,842 $2,893,150 $3,075,459 $3,299,351 $3,514,143 $3,770,519 $4,017,796 $192,000 $192,000 $192,000 $192,000 $192,000 $192,000 $192,000 $192,000 $192,000 $192,000 $192,000 $192,000 Current Assets Total Current Assets Long-term Assets Accumulated Depreciation Total Long-term Assets Total Assets $1,600 $3,200 $4,800 $6,400 $8,000 $9,600 $11,200 $12,800 $14,400 $16,000 $17,600 $19,200 $190,400 $188,800 $187,200 $185,600 $184,000 $182,400 $180,800 $179,200 $177,600 $176,000 $174,400 $172,800 $2,194,980 $2,263,949 $2,356,304 $2,522,726 $2,712,533 $2,893,242 $3,073,950 $3,254,659 $3,476,951 $3,690,143 $3,944,919 $4,190,596 Current Liabilities $108,176 $126,373 $135,471 $153,668 $162,766 $162,766 $162,766 $162,766 $171,864 $171,864 $180,962 $180,962 Subtotal Current Liabilities Accounts Payable $108,176 $126,373 $135,471 $153,668 $162,766 $162,766 $162,766 $162,766 $171,864 $171,864 $180,962 $180,962 Total Liabilities $108,176 $126,373 $135,471 $153,668 $162,766 $162,766 $162,766 $162,766 $171,864 $171,864 $180,962 $180,962 Paid-in Capital $3,850,000 $3,850,000 $3,850,000 $3,850,000 $3,850,000 $3,850,000 $3,850,000 $3,850,000 $3,850,000 $3,850,000 $3,850,000 $3,850,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Retained Earnings Earnings ($1,763,196) ($1,712,423) ($1,629,167) ($1,480,942) ($1,300,233) ($1,119,524) ($938,815) ($758,107) ($544,914) ($331,721) ($86,044) $159,633 Total Capital $2,086,804 $2,137,577 $2,220,833 $2,369,058 $2,549,767 $2,730,476 $2,911,185 $3,091,893 $3,305,086 $3,518,279 $3,763,956 $4,009,633 Total Liabilities and Capital $2,194,980 $2,263,949 $2,356,304 $2,522,726 $2,712,533 $2,893,242 $3,073,950 $3,254,659 $3,476,951 $3,690,143 $3,944,919 $4,190,596 Net Worth $2,086,804 $2,137,577 $2,220,833 $2,369,058 $2,549,767 $2,730,476 $2,911,185 $3,091,893 $3,305,086 $3,518,279 $3,763,956 $4,009,633 BUSINESS PLAN 42