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EXECUTIVE SUMMARY

Bel Vino Winery Information Document

Dated April 1, 2018

Re: Bel Vino Winery (Bel Vino, LLC) 33515 Rancho California Rd. Temecula, CA 92591

Note: A more detailed, 20 page information package is also available Web Links To Bel Vino Videos and Photo Galleries: Go to BelVinoWinery.com and click on the “Gallery” button near the top of the page. World Class Winery & Vineyard Property: Bel Vino Winery is a fully functioning winery that has been in business over two decades. Under visionary new ownership since late 2011, Bel Vino is now a world class winery in a world class location, with one of the best growth potentials of any winery in Southern California. With a prime location and 40 prime vineyard acres, a growing wine and hospitality business, outstanding facilities, great management team, aggressive marketing and a cutting-edge business model, Bel Vino is enjoying strong double digit growth and is well positioned for the future. In October of 2011 the present owner purchased the existing winery and renamed it "Bel Vino". Under its former name and ownership the winery first opened in 1996. The winery was in need of a major makeover and turn-around when it was taken over by the present owner, and that turn-around has been 100% complete for approximately one year. The present owner has spent approximately $5 million on a complete business turnaround and property rebuild. This includes: remodeling, rebuilding, repairing, etc. the physical property and grounds, and includes sums spent on new software, hardware, infrastructure, security, hiring first rate employees and on extensive sales and marketing activities. Consider Bel Vino Primarily For Its Growth Potential: Bel Vino is currently minimally profitable and may even lose a small amount of money in 2018. However the Winery is experiencing a high rate of growth in a growing economy. 2017 total revenue was up 35.4% over 2016 and net profit was up 118.3%. The Owner projects continued high growth rates for the foreseeable future and also projects the Winery’s net income will become substantially positive over the next one or two years. But a greater value of Bel Vino are the rapidly rising prices for winery and vineyard properties in Temecula Wine Country. There are a number of economic, zoning, physical location and demographic factors which are driving property values dramatically higher in Temecula Wine Country.

No winery in Temecula Wine Country is better positioned to benefit from the rapidly rising property prices than Bel Vino is, much of it due to the Winery’s business model, improvements and physical location. The Owner projects that rising prices will increase the value of the Winery and its 40 acres at up to $1 million annually over the next five years or more, similar to the appreciation of the last 5 years. The land alone increased from $75,000 per acre to $200,000+ per acre in the last 5 years, an increase of at least $5 million in 5 years in just the land value at the Winery. Exceptional Demographics: Temecula wine country is located within two hours of over 20 million people due to being positioned in the middle of Southern California. It’s unlikely that any other wine country in the world is situated in such a densely populated area and among a population that has the wealth and culture to spend on wine, entertainment and hospitality. These demographics drive large numbers of tourists and guests to visit Temecula Wine Country, with Bel Vino receiving an average of 50,000+ visitors annually. Business Model Description: Bel Vino is a fully self-contained, fully operational winery hospitality property. The hospitality activities and sales include: Both retail & wholesale wine sales, a Bistro (restaurant), wine club shipments, weddings, parties and events, and a Bed & Breakfast Inn. The Winery owns 40 acres, of which 30 are planted in mature vineyards and which are growing 12 popular wine

Contact Information:

Mike Janko, Owner/Trustee [email protected]

Cell: 801-597-3700

Executive Summary, Bel Vino – Page 2

varietals. Grapes are harvested once a year, with the majority being used to make wine for the Winery and with any excess being sold to other area wineries. For the hospitality side of the business the company owns and operates: (1) A large tasting room for retail tastings, retail and wholesale wine sales, some export wine sales, parties and events, (2) a growing wine club, (3) an in-house bistro (cafe) and commercial kitchen, (4) a concert venue, (5) a full service wedding venue and (6) a bed & breakfast inn. The winery enjoys some of the best facilities, location and scenery in the Temecula Valley Wine Country. Wine Production: For many reasons it often is a poor decision for smaller wineries, like Bel Vino, to produce their own wine. To make really good wine requires a complex and expensive facility and highly paid workers. So it is common practice for smaller wineries all over the U.S. to use outside production facilities for winemaking, because those facilities can make better wine and make it at a lower cost. Many Temecula area wineries use outside contract winemaking companies to produce their wine in order to eliminate large investment and construction costs and to get better and lower cost wine. In addition to cost factors, using outside production allows a winery to concentrate much better on its hospitality business.

For the reasons just stated Bel Vino does not produce its own wine though it does own the 40 acre vineyard property and all the grapes grown there. The Winery’s production is contracted out to “Cali Wine & Vine, LLC”, a state-of-art winemaking service located in the City of Temecula (Cali Wine & Vine is separately owned by Mr. Janko and other investors). The annual winemaking capacity of Cali Wine & Vine is 100,000+ cases (1.2 million bottles) per year, far more than Bel Vino’s needs.

Revenue Centers: Income is generated from these revenue operations:

1. Retail wine sales from guest tastings and from bottle sales in the Tasting Room

2. Wine club automatic deliveries and shipments

3. Wine club member onsite purchases of food and wine

4. Special events, parties, weddings and the weekly Friday Nite Live event

5. Bistro wine and food sales

6. Bed and Breakfast Inn income

7. Concert performances

8. Sales directly from the BelVinoWinery.com e-commerce center

9. Wholesale bottle sales to grocery markets, bars, restaurants, hotels, etc.

10. Export wholesale bottle sales

11. Grape and bulk wine sales from excess production

Note That The Above Business Model Means: Bel Vino operates several different revenue generating centers in one overall operation. Each one of these revenue centers is fully operational with trained managers and staff. Each one of these centers has some complement of software programs, forms, contracts, price lists, marketing materials, policy and procedure, and many have website and social media presence. To start from scratch and bring any one of these revenue centers up to a fully operational mode would easily cost as much as $200,000 for each, and that is without including the cost of any of the fixed assets, building structures or land. Further, this could easily take one to two years to accomplish for each revenue center and many would have to be done sequentially after another one was completed.

Aggressive Marketing. While winemaking and business operations are critical aspects of Bel Vino, sales and marketing are always of the highest priority. The Winery has a highly effective sales and marketing program which includes a combination of: A sophisticated portfolio of wine with creative branding, effective pricing and sales structure for each product and service, full complement of marketing support materials and tools, well trained and motivated sales people, physical property upgrades which provide a special experience to guests and visitors, and constant monitoring and feedback of sales results.

Advertising is done through in-depth web and social media marketing, along with mobile phone applications and some local targeted print advertising. Also, the Winery makes extensive use of strategic alliances with

Executive Summary, Bel Vino – Page 3

tour companies (buses, limos, etc.), area restaurants and wedding services providers (photographers, wedding planners, etc.)

Aggressive Sales: The winery has anywhere from 4 to 10 employees involved in retail and hospitality sales (for wine, restaurant, parties, etc.) on any given day and each have been given in-depth training for their sales responsibilities. Employees earn commissions and bonuses, have sales quotas and are regularly counseled and supported in meeting their quotas. This sales model has contributed much to the Winery’s strong, double digit growth.

Wedding sales are supported by three in-house staff who handle the frequent bridal prospect tours (and the same staff have multiple other duties). For 2018 we expect 15 to 25 weddings and up to 50 for 2019, at an average of approximately $12,500 gross revenue for each wedding.

The Owner directly handles wholesale sales and big ticket sales, has a comprehensive wholesale bottle sales program and currently is achieving much success with grocery chains and other retail outlets.

Competition Strategy: In reviewing the sales and marketing efforts of our competitors we believe Bel Vino is head and shoulders above them in those efforts and that the Winery’s results confirm this. In addition, the local Wine Country competition is not a big factor for Bel Vino. The reasons are:

(1) Bel Vino has one of the best locations with the best views, and the Winery has a complement of facilities and quality offerings that are among the area’s best. The location, the views and the offerings make Bel Vino automatically one of the favorite stops for Wine Country visitors and tour operators.

(2) Bel Vino places special emphasis on producing the best wines in Southern California and receives daily compliments from visitors who state that our wine is the best in the area. Wine quality provides an important competitive edge for the Winery.

(3) The Winery’s biggest competitive edge may be its aggressive and shrewd sales and marketing. Most of Bel Vino’s competitors are wine makers first and often are small time business owners and thinkers.

These competitive advantages and Winery offerings bring in well over 50,000 guests per year to Bel Vino.

Asset Valuations

Excellent Appreciation Potential: Several factors are driving Temecula Wine Country vineyard and winery property values rapidly higher. These include: Very limited availability of prime locations, great demographics with 20 million affluent people living within one to two hours of Temecula, Southern California’s high tourism traffic, and overly restrictive local permitting for new wineries. The high amount of guest traffic in Temecula Wine Country makes prime locations very desirable for developers wishing to get established here. It is estimated that prime acreage, such as Bel Vino’s, has increased 200% to 300% in value in the last five years and similar growth in land value is likely in the next five years. In addition to the land, strong appreciation exists for licensed and permitted winery facilities, so that substantial future appreciation of both the Bel Vino land and the Winery operation seems a near certainty. Estimated Winery Asset Valuations:

$ 9,000,000 40 Acres land (of which 30 acres are vineyards) @ $225,000 per acre 2,300,000 Buildings, landscaping, driveway, parking lots, utility tie-ins, etc. 865,800 Wine Inventory as of 12/31/2016 67,500 401 Oak barrels 220,500* First fall harvest valued as bulk wine (approximately 12,650 gallons) 1,500,000 Business enterprise (including the two assets lists that start on page 4 below) 750,000 Licenses and permitting $14,703,800 Total estimated value - the replacement cost to build a new winery from scratch * As finished bottled wine, the fall harvest has a retail value of $1,753,500

Executive Summary, Bel Vino – Page 4

PROJECTIONS

The table below represents very conservative projections for what we believe the winery’s performance will be for 2018 and 2019. The projections are based on the assumption that the Winery maintains the business, sales and marketing activities as they presently exist, that is “status quo”.

Note: Not shown here is that the Winery lost money in 2016, but total revenue for 2017 was up 35.4% and net profit was up 118.3% over 2016. Year 2016 had a large net loss and 2017 had a modest profit. The difference between that loss and profit accounted for the 118.3% increase (see 2017 numbers below).

2017 2018 2019

Actual Projected Projected Gross Revenue 1,427,085.57 1,783,856.96 2,140,628.36 25% Increase in 2018, 20% in 2019

COGS 642,515.11 706,766.62 777,443.28 10% Increase each year

Gross Profit 784,570.46 1,077,090.34 1,363,185.07 G&A Expense 704,667.57 775,134.33 852,647.76 10% Increase each year

Net Profit 79,902.89 301,956.01 510,537.31 In addition, we project an increase in property values of $1 million or more per year for the next few years, see page 3 topic above, “Excellent Appreciation Potential” for more information.

SUPPLEMENTAL INFORMATION

Bel Vino Real Estate and Improvements:

• Total land area: 40.57 acres (164,181 square meters, 1,767,229 square feet)

• 30 acres of high quality, well maintained vineyards producing 80 to 100 tons of grapes per year

• A beautiful 3,266 square foot residence with outstanding valley & vineyard views (currently used as a B&B inn and a wedding venue) built in 1984 and fully remodeled in 2013

• A 7,000 square foot main winery building, fully code compliant & permitted, completely remodeled in 2015, containing: A large tasting room & gift shop area, a barrel room events venue, offices, complete commercial kitchen that is permitted & code compliant, modern & high efficiency air conditioning & plumbing, modern & low power LED lighting

• A 2 bedroom-751 sq. ft. farm house

• 4 well-landscaped acres surrounding the main winery building

• An outdoor concert venue with band stand, lighting truss & dance floor that can handle 500+ guests

• 4 parking lots with a combined parking capacity of up to 250 vehicles

• 3 phase 400 amp power service, utility hookups for sewer and water Physical Assets - The winery owns or possesses:

1. An outstanding and well trained workforce and management team

2. An extensive inventory of high quality bottled wine and bulk wine

3. A comprehensive accounting system providing P&L results for each revenue center

4. A complete set of office equipment with a state-of-art computer network and server

(Continued Next Page)

Executive Summary, Bel Vino – Page 5

5. An extensive and modern security and video system

6. Nearly new fire sprinkler and fire alarm system, fully up to current code

7. An advanced multiple station cash register system, point of sale software, catering - food service and event software, all providing detailed inventory and sales tracking and reporting.

8. 4 wine tasting bars & equipment, gift shop furniture & fixtures, gift shop inventory

9. Complete commercial kitchen which is fully staffed, code compliant and permitted

10. All furniture, fixtures & accessories for all the venues and event activities

Intellectual and Non-Tangible Winery Assets:

1. Well established brand & logo

2. Annual property value appreciation projected at up to $1 million each year

3. Customer traffic which generates more than 50,000 guest visits per year

4. Numerous and important tour company relationships

5. World class, award winning wine

6. 1,700 member wine club, growing at approximately 500 new members per year

7. Attractive and effective web site with high guest visits and with an e-commerce site

8. Extensive customer lists and direct mail list

9. Extensive advertising & promotional materials, huge photo library

10. Advertising & promotional plan, relationships and arrangements

11. Physical display materials and signage

12. Export document templates & procedures

13. Wine label, advertising and graphical artwork

14. Price lists (tiered as: retail, wholesale, distribution, export & bulk)

15. Policy & procedure materials, forms and contracts

16. Likely is EB-5 Visa (Green Card) compatible but no preparatory work has been done

17. Training and incentive programs for server/sales employee

18. Comprehensive HR materials and in-house HR competency

19. Bel Vino likely is EB-5 Visa (Green Card) compatible

Employee Info: Bel Vino has a total of approximately 35 full time and part time employees who are

experienced, well trained and motivated. These employees are fully capable of running the entire hospitality

business without additional on site management. The General Manager of the Winery has direct oversight

over: The Tasting Room, Wine Club, Bistro, Bed & Breakfast Inn, and over weddings, special events, and

sales and advertising. The other hospitality managers are: Finance & Accounting, Food & Catering, Tasting

Room & Wine Club, Head Chef, and Maintenance.

THE END