Three Floyds Brewery Business Plan

9750 Indiana Parkway Suite2 Munster Indiana 46321 Phone 219-922-3565 E-Mail: [email protected]

Confidentiality Agreement

The undersigned reader acknowledges that the information provided by Three Floyds Brewing Co. in this business plan is confidential; therefore, reader agrees not to disclose any information without the exlicit written permission of Three Floyds Brewing Co.

It is acknowledged by reader that information to be furnished in this business plan is in all respects confidential in nature, other than information which is in the public domain through other means, and that any disclosure or use of same by reader, may cause serious harm or damage to Three Floyds Brewing Co. & Three Floyds Brewpub. Upon request, this document is to be immediately returned to Nick Floyd. ___________________ ___________________ Signature ___________________ ___________________ Name (typed or printed) ___________________ ___________________ Date

Confidentiality Agreement

The undersigned reader acknowledges that the information provided by Three Floyds Brewing Co. in this business plan is confidential; therefore, reader agrees not to disclose any information without the exlicit written permission of Three Floyds Brewing Co.

It is acknowledged by reader that information to be furnished in this business plan is in all respects confidential in nature, other than information which is in the public domain through other means, and that any disclosure or use of same by reader, may cause serious harm or damage to Three Floyds Brewing Co. & Three Floyds Brewpub. Upon request, this document is to be immediately returned to Nick Floyd. ___________________ ___________________ Signature ___________________ ___________________ Name (typed or printed) ___________________ ___________________ Date

Table of Contents 1.0

Introd Introduct uction ion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.1 Overvi Overview ew . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.2 Missio Mission n . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .2

2.0

Compan Company y Summa Summary ry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1 Compan Company y Owne Ownersh rship ip . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1.1 Investor Investor Returns Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1.2 Pub 3-D 3-D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2 StartStart-up up Sum Summar mary y . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .. . .

3.0

Produc Products ts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 3.1 Beer Beer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 3.2 Cuisin Cuisinee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 3.3 Floor Floor Plan Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

4.0

Excell Excellent ent Loca Locatio tion n . . . . .. . . . .. . . . . .. . . . .. . . . . .. . . . . .. . . . . .. . . . . .. . . . . .. . . . . .. . . . . .. . . . . .. . . . . 4.1 Dining Dining in Nort Northwe hwest st Indi Indiana ana . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2 Why "Not "Not Norm Normal" al" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2.1 Pub 3-D 3-D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5.0

Marke Marketin ting g . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 5.1 Market Marketing ing Stra Strateg tegy y . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 5.2 Sales Sales Stra Strateg tegy y . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 5.2.1 5.2.1 Projec Projectio tion-R n-Reve evenue nuess . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 5.2.2 5.2.2 Munste Mun sterr Demog Demograp raphic hicss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

6.0

Manag Manageme ement nt S Summ ummary ary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 6.1 Person Personnel nel Plan Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

7.0

Financ Financial ial Plan Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 7.1 Expens Expenses es . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 7.2 Fixed Fixed Cost Costss . . 28

3 3 3 4 5

13 13 13 14

Three Floyds Brewpub 1.0 Introduction INTRODUCTION This document is the first generation business plan for Three Floyds Brewpub. Three Floyds Brewpub will be the restaurant/bar facet of Three Floyds Brewing Company of 9750 Indiana Parkway, Munster Indiana. Three Floyds Brewing Company is a regional microbrewery founded in 1996 in Hammond Indiana and originally only manufactured kegged beer for the Chicago/Northwest Indiana market. Today Three Floyds Brewing Company produces both kegged and bottled beer, which it markets in over 15 states, predominantly in the Midwestern United States. Three Floyds Brewing Company is well known for its high quality American style ales and lagers, which have won countless awards and accolades. The last two decades have witnessed an explosion of beer styles available to the American public, primarily offered by small microbreweries and brewpubs. There are as many styles of beer available today, as there are wine styles! Recently even major breweries have been forced to introduce new lines of diluted or "fake" specialty beers. The sophisticated beer drinker has experienced a variety of beer styles and is constantly searching for new, innovative products. In addition, there has been a growing acceptance of naturally brewed products that are served unfiltered and unpasteurized. These beers, predominantly ales, hearken back to styles of "olden days" when Chicago supported over 200 breweries. The growth of home brewing as a hobby is another factor adding to the demand for microbrewed products. During leisure time, or when frequenting pubs, the new beer aficionados demand interesting beer and it has to be good; increasingly they know about ‘off’ flavors and the heterocyclic compounds which gives a beer a poor or funky flavor. This hobby is concentrated amongst higher income (upper/ upper-middle class) males and females, and is growing rapidly. Furthermore a number of home brewing/ microbrew magazines are publicizing and fostering this trend. Beer appreciation seems to be gaining a status and refinement comparable to wine tasting. In order to maximize profitability and create an effective platform for Three Floyds’ beers, a brewpub will be built in Three Floyds Brewing Company’s front office area. By Indiana State Law, the Three Floyds Brewpub has to be a separate entity from Three Floyds Brewing Company. What this means is that Three Floyds has an unprecedented offer for fans of Three Floyds Brewing—beer enthusiasts, home brewers and

Three Floyds Brewpub cooler north- England, Ireland, Germany and Poland among them, where interesting associations between beef, pork, sausage and fermented barley- wheat are the basis for the cuisine of the pub or beer garden. Thus, the concept of a brewpub with its in-house brew and adjacent kitchen has solid historical precedent. The U.S. microbrewing/brewpub industry began on the West Coast and slowly moved east. Microbrews are now the norm in cities such as Denver, Portland, San Francisco and Kansas City where some establishments have gained market shares of greater than 40%. The Chicago/Northwest Indiana Metro Area remains one of the largest untapped areas available for microbrewery penetration. Currently, the Southside of Chicago and Northwest Indiana have only four brewpubs: Flossmoor Station (Flossmoor, IL), Harrison’s (Orland, IL), Aberdeen (Valparaiso, IN), and Duneland (Michigan City, IN). Imagine four Brewpubs for over 2.5 million people! All of these brewpubs are designed to appeal to the suburban "casual dining" crowd. In contrast, Three Floyds Brewpub will cater to the urbanite, the beer connoisseur, the beer tourist, the home brewer, the adventurous suburbanite, and the "not normal" person! Three Floyds Brewpub will be a world beer destination! Thus in the next decade, Northwest Indiana will provide a premium opportunity for the creation of a new brewpub. The consumer demand for quality innovative microbrews is growing massively, and with only four brewpubs to service 2.5 million people, there appears to be more than a little room for the development of a superior facility. Three Floyds intends to capitalize on this significantly underdeveloped local market as well as on the growing national and local trend towards microbrew products.

Highlights (Planned)

$1,200,000 $1,000,000 $800,000

Three Floyds Brewpub it is situated in a former railroad stationhouse, successfully developing this theme in beer brands and cuisine. In contrast, Three Floyds will create a distinctively unique brewpub environment, modish but still traditional in a room framed by red wood cabinetry and a zinc bar. There will be a varying menu of the highest quality world-renowned ales and lagers. Three Floyds will offer its own products along with rotating choices of the best American and European beers with a distinctive matching cuisine influenced by its own characteristic flagship beers. Frequently, menu choices will be prepared with the beers as critical culinary ingredients. Finally, Three Floyds Brewpub will be distinct by providing couches for the weary, displaying art—including sculpture—for sale on consignment, having regular movie nights, and a personal mug club. In addition, superior teas, espresso, cappuccino, freshly pressed citrus juices, and in- house root beers will appeal to those who want non-alcoholic refreshments. It is our belief that by creating such a comfortable, unique environment we can ensure Three Floyds Brewpub will be a success for years to come.

2.0 Company Summary

2.1 Company Ownership

THREE FLOYDS LIMITED LIABILITY COMPANY

Based on financial projections, Three Floyds Brewpub will be a very profitable venture. Three Floyds Brewpub will have 2500 total ownership "shares or member units," Three Floyds Brewpub ownership shares will be split 60% by Three Floyds Brewing, LLC (1500 Shares) and 40% by the third party investors (1000 Shares). Three Floyds Brewpub’s shares will be available to investors in two forms: Gold status and Silver status. Members will achieve Gold status if they purchase more than 10 shares. Gold status members will have first right to future stock offerings and brewpub expansions. Gold status members will see quick

Three Floyds Brewpub

2.1.2 Pub 3-D Textures & Colors are exaggerated for effect

Three Floyds Brewpub 2.2 Start-up Summary

SEPTEMBER-2003

Business Plan/Prospectus Finished Market Business Plan Market Business Plan/Building Permit Start Building OutDemolition of Interior Start Bar/Restaurant Build Out Build Out Soft Opening-R&D on Food/Kitchen Grand Opening Weekend

OCTOBER-2003 NOVEMBER-2003 DECEMBER2003 J ANUARY-2004

Halloween Promotions Thanksgiving Promotions Holiday Parties Profit Sharing From 2003

MARCH-2003 APRIL-2003 MAY-2003 J UNE-2003 J ULY-2003 AUGUST-1-16-2003 AUGUST-16-31-2003

Raise Capital Raise Capital Parking lot

Get Draft System Working All Limited Partner Party

Three Floyds Brewpub Table: Start-up

Start-up Requirements Start-up Expenses Legal Stationery etc. Brochures Consultants Insurance Rent Research and Development Plans /Permits and Fees Demolition Saw Trench and Concrete GC Overhead General Conditions Fire Protection Heat Vent & Airconditioning Electrical & Sitelighting Plumbing Painting Drywall Ceiling Floor Covering and Base New exit Door Window View Wall Bar and Bar Back Carpentry Paving Exterior Concrete Brewery Tanks Six Months operating Capital Construction Overuns-Cash Reserve Total Start-up Expense Start-up Assets Needed

$5,000 $2,000 $2,000 $5,000 $1,500 $1,500 $3,000 $17,000 $15,000 $3,480 $28,133 $5,000 $6,500 $7,100 $15,200 $6,100 $3,900 $4,000 $6,300 $12,600 $2,100 $3,300 $30,000 $17,000 $30,000 $2,970 $50,000 $60,000 $110,000 $455,683


Start-up

$500,000 $450,000 $400,000 $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $0 Expenses

Assets

3.0 Products

THREE FLOYDS CUISINE, DESIGN AND DECOR

Investment

Loans

Three Floyds Brewpub The vegetarian will be able to find a varied, flavorful menu as well. A veggie burger is not adequate for those who do not eat meat. Three Floyds’ vegetarian menu will include items like a sweet pepper pilaf, lentils with cumin, caramelized onions, garlic and tomatoes, and a satisfying caponetta. The rich complex tastes of the vegetable world are easy for the brewer to complement given the natural origins of his or her raw materials: hop, barley, wheat, and yeast. Currently, more flavors and tastes are being rediscovered and developed offering the creative brewer and chef enormous opportunity to work together and prosper. Three Floyds’ brewpub and the adjacent Three Floyds brewery are the ideal crucible for just this. Design

The Three Floyds Brewpub will be built in what currently houses Three Floyds Brewing Co offices, approximately 2000 square feet. Walls will be demolished and a restaurant, bar and kitchen will be built out. Three Floyds Brewpub bar section will be built out using old stainless steel open fermenters for a European zinc bar look. Three Floyds bar area will also have couches and a general lounge feel. Three Floyds dining area will be adorned with all genres of art and have a mix of booths and tables in addition to the Plexiglas brewery viewing area. Three Floyds kitchen will be built out with the best kitchen equipment including a Baker’s Pride wood pizza oven. In addition, an oversized kitchen refrigerator and keg cooler will be installed. Decor

Decor will be provided by the local working artists of the day, with a particular focus on those from the Chicago/Northwest Indiana area. They will be offered wall space to display their works in a type of informal gallery. These "objects d’art" will complement and enhance the dining experience. In addition, we will tap into the local demographic makeup, building a sense of community. This type of atmosphere would enable the high school artist to be displayed alongside the professional—making the pub walls truly "not normal." The entire concept is based on an amalgam of styles. The emphasis is on creating a casual, comfortable, innovative, and slightly off-center space, that will take the quality food, beverage, and service of the elegant bar/restaurant and meld it with Three Floyds’ "not normal" flair for style and atmosphere. It will comfortably accommodate both the Munster business diner and the Lansing softball team.

Three Floyds Brewpub Three Floyds on tap house beers: Alpha King™ Pale Ale: Big American Pale Ale; a hop lover’s cult beer and Three Floyds’ flagship beer

6.5% abv-1996 Award of excellence Real Ale Fest Chicago-1998 Silver Medal World Beer Championships1998 1stPlace She-Nanigans Beer Affair-1999 Highly Recommended Beverage Tasting Institute-1999 Silver Medal Indiana State Fair-2000 Best Pale Ale World Expo of Beer Frankenmuth-2000-Exceptional Beverage Tasting Institute-2000 Silver Medal Indiana State Fair-2002 Favorite Beer Brewpub Shootout Chicago Beer Society-2002 Silver Medal Indiana State Fair-2003 Best American Pale Ale Ratebeer.com Robert the Bruce™ Scottish Ale: Big, malty, 90 Shilling Scottish Ale; Three Floyds second biggest seller

7% abv-1997 Gold Medal Real Ale Fest Chicago-1999 Silver She-Nanigans Beer Affair-2000 Exceptional Beverage Tasting Institute-2002 Gold Medal Indiana State Fair-2002 CHAMPION British Style Ales Real Ale Fest Chicago-2002 Silver Scottish ale Real Ale Fest Chicago Behemoth™ Barley Wine: A massive American Barley Wine; caramel- squeals and hoppy appeals 10.5%

abv-1997 Bronze Medal Fall Beer Tasting Chicago Beer Society-1998 Gold Medal World Beer Championships-1998 Silver Medal Real Ale Fest Chicago-1999 Gold Medal Indiana State Fair-2000 Gold Medal Indiana State Fair-2000 Bronze Medal Real Ale Fest Chicago-2002 Gold Medal Indiana State Fair2002 Silver Medal Real Ale Fest Chicago Pride & Joy™ Mild Ale: American version of British Session Ale; 5% abv-1998 Bronze Medal World Beer

Championships-1999 Highly Recommended Beverage testing Institute-2002 Bronze Medal Indiana State Fair Dreadnaught™ Imperial India Pale Ale: A hophead’s delight! Huge IPA rapidly becoming another Three

Floyds’ cult beer. 9.5% abv-2002 CHAMPION Beer Indiana State Fair-2002 Silver Medal Real Ale Fest rd Chicago-2002 Gold Medal Indiana State Fair-2003 3 In The World RateBeer.Com Rabbid Rabbit™ Saison: Belgian-style farmhouse beer; 7.5% abv-1999 Highly Recommended Beverage

Testing Institute-2002 Silver Medal Indiana State Fair

Three Floyds Brewpub Evil Elf: Belgian Dubbel Extra Special Super Best Bitter* Berliner Wiesse* Old Ale* Dortmunder Export* Helles* Malt Liquor* Alt* Polish Baltic Porter* Harvest Ale* Surly Elf Root Beer

* to be named at a later time

3.2 Cuisine

NOT NORMAL MENU

Three Floyds Brewpub VIDALIA ONION SOUP - Vidalia onions, shallots, Scottish ale Smothered in Gruyere cheese HABENERO CHICKEN SOUP -hearty chicken broth made with Rabbid Rabbit Saison, cilantro and habenero (scotch bonnet) peppers

HOOSIER MICRO CHEESE PLATE -sampler platter of micro cheeses from Indiana cheese makers REAL SCOTCH EGG-British style sausage wrapped around an extra large grade A hard-boiled egg JAMBALAYA-Midwestern jambalaya made with chicken, local Polish sausage from Hammond, Tasso and basmati rice

HOUSE GUMBO-alternating gumbo seasonally HOUSE SALAD CAESAR SALAD BELGIAN FRIES-European style fries served with Belgian mayonnaise, curry sauce and banana ketchup BREWERS’ OWN CHICKEN BREAST -Oven roasted stuffed chicken breast-spinach, three cheeses, sundried tomatoes and Farmhouse Ale sauce

ALPHA KING’S CHOP - double cut pork chop-grilled applewood bacon, soy glaze served with hot apple chutney

DAILY FRESH FISH WOOD OVEN PIZZA-baked with wood in BakersPride oven ROBERT the BRUCE RIBEYE -Scottish ale marinated bone-in ribeye with grilled onions and mushrooms, Scottish ale demi-glaze

Three Floyds Brewpub ROBERT the BRUCE ICE CREAM -super malty- malted house ice cream DARK LORD FLOAT -Dark Lord Russian Imperial Stout- Brownie and Ice Cream Float FRESH FRUIT

NOT NORMAL PRICES

Fundamentally, Three Floyds believes prices should be competitive but not outrageous. The entrée prices will range from $6-$12 for dinner, $4-$7 for lunch, with a target beer price of $2.50 for "beer of the week," $3 for high gravity pints, and experimental/guest beer prices ranging from $3.50 -$6. This range of food and beer pricing is extremely attractive taking into consideration the quality of the products.

3.3 Floor Plan

Three Floyds Brewpub 4.0 Excellent Location

EXCELLENT LOCATION

Three Floyds Brewpub is ideally situated just south of Interstate 80/94 and is only minutes from I-55, I-57, I65, I-90 and I-294, not to mention minutes from U.S. 30 and U.S. 41, nearly two thirds of the United States’ population is within a day’s drive. Three Floyds’ base of operations, the town of Munster, Indiana, is located in the northwest corner of the state, on the Illinois/Indiana state line. The town of Munster is about 15 miles south of Lake Michigan and 20 miles south east of Chicago’s Loop, a mere 30 minute drive. This means Munster is centrally located to Three Floyds Brewpub’s targeted brewpub market, from Orland to the west to Merrillville and Valparaiso in the east. Munster, Indiana and the six communities surrounding it are home to over 200,000 residents alone, with Munster residents having one of the higher disposable incomes per capita. Three Floyds’ location will also benefit from lower taxes than surrounding states, building costs are 22% lower than Chicago, electric and gas costs are 10%-15% lower than Commonwealth Edison in Chicago. Salaries in Indiana average over $5000 less than the rest of the Chicagoland area, which will allow the brewpub a fixed cost advantage. Three Floyds Brewpub is located right off Calumet Avenue, one of Northwest Indiana’s busiest thoroughfares. This street will soon be extended to U.S. 30 bringing tens of thousands past Three Floyds Brewpub daily!

4.1 Dining in Northwest Indiana

DINING IN NORTHWEST INDIANA

Three Floyds Brewpub Since the move to Munster, Three Floyds has continued its "not normal" philosophies in other ways. One prime example is in the unusual, eye-catching graphic art that employs a truly original use of color all help to create the "not normal" theme. Whether it is in the packaging, tap handles, t-shirts, or other paraphernalia, Three Floyds stands out from the rest. Most of the graphics on our website include the major labels for the beers, so feel free to peruse the various web pages to get a sense of the off-beat style that has become synonymous with Three Floyds. Overall, everything relating to Three Floyds is "not normal"—a tradition and motto that will carry over to Three Floyds Brewpub. The "not normal" concept explores the limits of brewing and pushes the boundaries of the brewing art without the use of adjuncts such as corn or rice.

4.2.1 Pub 3-D Textures & Colors are exaggerated for effect

Three Floyds Brewpub 5.0 Marketing

5.1 Marketing Strategy

THE MARKETING PLAN

Printed, televised, and guerilla marketing will be an integral part of Three Floyds Brewpub’s publicity. While construction is underway, events and beer fests will provide opportunities to promote the anticipated brewpub. Nearing construction completion, we will hold opening events to gain media attention. Additionally, a publicist will be placed on retainer in order to maximize media coverage. Three Floyds will purchase advertisements in several print-publications: the Chicago Tribune, the Chicago Sun-Times, the South Town, the Times, the Post-Tribune, the Reader, the Great Lakes Brewing News, and the Cream City Suds. Print advertisements will contain food specials, beer news, upcoming events, and directions to the establishment. Three Floyds will use cable access advertisements for the first time for brewpub promotion. Cable access advertisements are low in cost, and may expand the brewpub’s customer base considerably without costand time-intensive marketing strategies. It is important to vary the time and channel the advertisements are shown in order as to maximize viewing by different groups of people. Marketing during this first year will be vastly important. In addition to advertisements, participation in beer festivals will aid publicity by expanding public awareness. These events, usually advertised independently, offer another route for marketing. Currently, Three Floyds participates in numerous beer festivals, including the Great Taste of the Midwest, the Real Ale Festival, the Chicago Brew Pub Shoot Out, the Lafayette Strong Ale Fest, the Great British Beer Fest, and the Great American Beer Festival.

Three Floyds Brewpub Open seating found in large theme restaurants might still be a popular option for some diners; however, these restaurants rarely include the sense of security and comfort essential for attracting a regular clientele. These large theme restaurants are noisy, busy, impersonal, lending themselves to continuous but not repeat business, the very antithesis of the pub, bistro or trattoria.. The intimacy of a small brewpub can be equally attractive to the mid-week diner and the power lunch executive. Three Floyds will capture this intimacy and cultivate a strong, regular customer base. Finally, the demand for Three Floyds products has created a secure following of home brewers and beer enthusiasts already. Regular patrons/Three Floyds’ aficionados form a solid foundation for the brewpub business from which a mug club can be developed—Three Floyds’ fans may bring in their own mugs on which they may have their names printed and receive a discount on special brews and events.

5.2.1 Projection-Revenues

PROJECTED REVENUES

Two primary financial drivers for developing revenue projections for a brewpub operation are customer count and average check total per customer. Customer count is based on the number of seats/tables available and the rate of the turnover of these tables. Taking these projections into account, Three Floyd’s Brewpub will provide comfortable seating for 80 people - 50 in the dining area and 30 plus in the bar area. The bar area could, during peak hours, hold up to 50 people elbow to elbow, bumping up maximum capacity to one hundred-plus patrons. Based on conservative seating we have assumed weekly average customer counts and made annual projections for the last two fiscal quarters of 2003 through the year 2008. The second factor in developing projected revenues is the average food and drink check total by customer. We have assumed an average lunch check of $6, an average dinner check of $14, and $9 for an average bar check. The average price for a pint of beer will be $3 with national brewpub averages at one drink for lunch customers, two for dinner

Three Floyds Brewpub We feel these numbers are very conservative with our vast microbrewery and brewpub knowledge and research. A significant increase early on could come from an early, aggressive marketing campaign, including a tremendous amount of word of mouth publicity. Three Floyds Brewpub will continue to advertise every month, endeavor to get critical reviews and propagate an effective marketing database that could easily bring larger customer counts than are projected. Another factor that may arrive in time to raise expected revenues, is an amendment to Indiana alcohol laws. The Brewers’ Guild of Indiana, of which Three Floyds Brewing is a founding member, has lobbied tirelessly for an amendment that would allow Three Floyds to sell packaged beer to go on Sundays. Once ratified, it would make Three Floyds THE ONLY LICENSE IN ALL OF LAKE COUNTY, IN (500,000 people!). Three Floyds Brewpub Sunday sales alone will help us to exceed our projections. Table: Sales Forecast (Planned)

Sales Forecast Sales Food & Beer Sales Other Total Sales Direct Cost of Sales Food & Beer Sales Other Subtotal Direct Cost of Sales

2003 $151,712 $0 $151,712

2004 $477,946 $0 $477,946

2005 $654,612 $0 $654,612

2006 2007 $812,012 $1,009,666 $0 $0 $812,012 $1,009,666

2003 $26,546 $0 $26,546

2004 $83,633 $0 $83,633

2005 $114,549 $0 $114,549

2006 $142,104 $0 $142,104

Sales Monthly (Planned) $40,000 $35,000 $30,000

2007 $176,682 $0 $176,682


Sales by Year (Planned)

$1,200,000 $1,000,000 $800,000

Food & Beer Sales

$600,000

Other $400,000 $200,000 $0 2003

2004

2005

2006

5.2.2 Munster Demographics DP-2: Profile of Selected Social Characteristics: 2000 Data Set: Census 2000 Summary File 3 (SF 3) - Sample Data

2007

Never married

3,595

20.7

Now married, except separated

10,980

63.2

Separated

71

0.4

Widowed

1,631

9.4

Female

1,330

7.7

Divorced

1,105

6.4

Female

716

4.1

GRANDPARENTS AS CAREGIVERS Grandparent living in household with one or more own grandchildren under 18 years Grandparent responsible for grandchildren

309

100.0

103

33.3

Civilian population 18 years and over

16,317

100.0

Civilian veterans

2,165

13.3

Population 5 to 20 years

4,789

100.0

With a disability

290

6.1

Population 21 to 64 years

11,718

100.0

With a disability

1,118

9.5

Percent employed

65.7

(X)

No disability

10,600

90.5

Percent employed

78.7

(X)

Population 65 years and over

3,691

100.0

With a disability

1,336

36.2

Population 5 years and over

20,501

100.0

Same house in 1995

14,180

69.2

Different house in the U.S. in 1995

6,165

30.1

Same county

3,615

17.6

Different county

2,550

12.4

Same state

484

2.4

Different state

2,066

10.1

Elsewhere in 1995

156

0.8

Total population

21,511

100.0

Native

19,811

92.1

VETERAN STATUS

DISABILITY STATUS OF THE CIVILIAN NONINSTITUTIONALIZED POPULATION

RESIDENCE IN 1995

NATIVITY AND PLACE OF BIRTH

Three Floyds Brewpub Czech1

222

1.0

Danish

119

0.6

Dutch

1,083

5.0

English

1,523

7.1

French (except Basque)1

563

2.6

French Canadian1

86

0.4

German

4,202

19.5

Greek

318

1.5

Hungarian

541

2.5

Irish1

3,024

14.1 8.0

Italian

1,725

Lithuanian

215

1.0

Norwegian

182

0.8

Polish

4,173

19.4

Portuguese

0

0.0

Russian

294

1.4

Scotch-Irish

284

1.3

Scottish

244

1.1

Slovak

883

4.1

Subsaharan African

5

0.0

Swedish

674

3.1

Swiss

107

0.5

Ukrainian

157

0.7

United States or American

561

2.6

Welsh

142

0.7

West Indian (excluding Hispanic groups)

16

0.1

Other ancestries

4,468

20.8

(X) Not applicable. 1 The data represent a combination of two ancestries shown separately in Summary File 3. Czech includes Czechoslovakian. French includes Alsatian. French Canadian includes Acadian/Cajun. Irish includes Celtic. Ancestry Code List (PDF 35KB) Place of Birth Code List (PDF 74KB) Language Code List (PDF 17KB) Source: U.S. Census Bureau, Census 2000 Summary File 3, Matrices P18, P19, P21, P22, P24, P36, P37, P39, P42, PCT8, PCT16, PCT17,

Three Floyds Brewpub 60 to 64 years

1,071

5.0

65 to 74 years

2,010

9.3

75 to 84 years

1,494

6.9

85 years and over

531

2.5

Median age (years)

42.9

(X)

18 years and over

16,286

75.7

Male

7,594

35.3 40.4

Female

8,692

21 years and over

15,695

73.0

62 years and over

4,640

21.6

65 years and over

4,035

18.8

Male

1,646

7.7

Female

2,389

11.1

One race

21,292

99.0

White

19,851

92.3

Black or African American

222

1.0

American Indian and Alaska Native

13

0.1

Asian

965

4.5

RACE

Asian Indian

487

2.3

Chinese

121

0.6

Filipino

146

0.7

Japanese

25

0.1

Korean

113

0.5

Vietnamese

8

0.0 0.3

Other Asian 1

65

Native Hawaiian and Other Pacific Islander

4

0.0

Native Hawaiian

2

0.0

Guamanian or Chamorro

0

0.0

Samoan

0

0.0

Other Pacific Islander 2

2

0.0

Some other race

237

1.1

Two or more races

219

1.0

Race alone or in combination with one or more other races 3 White

20,053

93.2

Black or African American

246

1.1

American Indian and Alaska Native

55

0.3

Asian

1 050

49

Three Floyds Brewpub Female householder, no husband present

647

8.0

With own children under 18 years

301

3.7 24.1

Nonfamily households

1,946

Householder living alone

1,760

21.8

Householder 65 years and over

972

12.0

Households with individuals under 18 years

2,820

34.9

Households with individuals 65 years and over

2,673

33.0

Average household size

2.62

(X)

Average family size

3.07

(X)

HOUSING OCCUPANCY Total housing units

8,339

100.0

Occupied housing units

8,091

97.0

Vacant housing units

248

3.0

For seasonal, recreational, or occasional use

34

0.4

Homeowner vacancy rate (percent)

0.9

(X)

Rental vacancy rate (percent)

8.4

(X)

Occupied housing units

8,091

100.0

Owner-occupied housing units

7,209

89.1

Renter-occupied housing units

882

10.9

HOUSING TENURE

Average household size of owner-occupied unit

2.69

(X)

Average household size of renter-occupied unit

1.99

(X)

(X) Not applicable 1 Other Asian alone, or two or more Asian categories. 2 Other Pacific Islander alone, or two or more Native Hawaiian and Other Pacific Islander categories. 3 In combination with one or more other races listed. The six numbers may add to more than the total population and the six percentages may add to more than 100 percent because individuals may report more than one race. Source: U.S. Census Bureau, Census 2000 Summary File 1, Matrices P1, P3, P4, P8, P9, P12, P13, P,17, P18, P19, P20, P23, P27, P28, P33, PCT5, PCT8, PCT11, PCT15, H1, H3, H4, H5, H11, and H12.

COMMUTING TO WORK Workers 16 years and over

10,148

100.0

Car, truck, or van -- drove alone

8,442

83.2

Car, truck, or van -- carpooled

664

6.5

Public transportation (including taxicab)

443

4.4

Walked

157

1.5

Other means

55

0.5

Worked at home

387

3.8

Mean travel time to work (minutes)

26.2

(X)

Employed civilian population 16 years and over

10,296

100.0

Management, professional, and related occupations

4,763

46.3

Service occupations

938

9.1

Sales and office occupations

2,510

24.4 0.3

OCCUPATION

Farming, fishing, and forestry occupations

30

Construction, extraction, and maintenance occupations

753

7.3

Production, transportation, and material moving occupations

1,302

12.6

INDUSTRY Agriculture, forestry, fishing and hunting, and mining

14

0.1

Construction

641

6.2 15.8

Manufacturing

1,626

Wholesale trade

331

3.2

Retail trade

1,189

11.5

Transportation and warehousing, and utilities

551

5.4

Information

242

2.4

Finance, insurance, real estate, and rental and leasing

724

7.0

Professional, scientific, management, administrative, and waste management services

1,011

9.8

2,647

25.7

Educational, health and social services Arts, entertainment, recreation, accommodation and food services

599

5.8

Other services (except public administration)

483

4.7

Public administration

238

2.3

CLASS OF WORKER Private wage and salary workers

8,490

82.5

Government workers

1,110

10.8

Self-employed workers in own not incorporated business

655

6.4

Unpaid family workers

41

0.4

8 108

100 0

INCOME IN 1999 Households

Three Floyds Brewpub Median family income (dollars)

74,255

(X)

Per capita income (dollars)

30,952

(X)

Median earnings (dollars): Male full-time, year-round workers

53,387

(X)

Female full-time, year-round workers

34,490

(X)

POVERTY STATUS IN 1999 (below poverty level) Families

174

(X)

Percent below poverty level

(X)

2.8

With related children under 18 years

123

(X)


(X)

4.3


34

(X)


(X)

4.3

Families with female householder, no husband present

54

(X)


(X)

9.2


39

(X)


(X)

11.6


10

(X)


(X)

15.4 (X)

Individuals

912


(X)

4.3

18 years and over

647

(X)


(X)

4.0

65 years and over

107

(X)


(X)

2.9

Related children under 18 years

265

(X)


(X)

5.2

Related children 5 to 17 years

239

(X) 5.8


(X)

Unrelated individuals 15 years and over

266

(X)


(X)

11.5

(X) Not applicable. Detailed Occupation Code List (PDF 42KB) Detailed Industry Code List (PDF 44KB)

Three Floyds Brewpub philosophy will make Three Floyds Brewpub a great financial success, and a great place to work as well. Three Floyds Brewpub employees will be educated, so that they can be an expert on the brewing process, beer styles, and beer/food combinations. Comprehensive knowledge of these categories will reassure customers that Three Floyds is not simply another restaurant but a full service brewpub. To ensure levels of expertise are being met, employees will be invited to beer festivals, events, and brewmaster dinners, as well as being educated through giving tours.

6.1 Personnel Plan

GENERAL PARTNERS:

MIKE FLOYD –Chairman and Co-Founder of Three Floyds Brewing Company. • • • • • • •

30 plus years, Medical profession, nephrologist founding partner -Nephrology Specialists, Munster IN University of Durham, England, UK Northwestern University Chicago, IL - Fellow and Faculty Consultant to the Philippine Kidney Foundation University of Texas at Houston-Faculty and Staff Physician Author of 40 Scientific publications

SIMON FLOYD-Kitchen Consultant and Co-Founder of Three Floyds Brewing Company •

• •

2 years, Venezia Bar&Grill Schererville, IN- Head chef experienced in: restaurant and bar management, restaurant build out, inventory, restaurant sanitation, restaurant inventory 11years, Café Venezia Merrillville IN Chef School of the Art Institute of Chicago

Three Floyds Brewpub •

testing 4 Years, Fullgraf Inc. St. John, IN-Brick&Masonry industry

JAMES CIBAK-Brewmaster •

• •

•

•

Graduate of Siebel Institute of Brewing Technology in Brewing Science, MicroBrewing Operations and Quality Control Loyola University Chicago, IL Degree in Business Administration 1 Year, Weinkeller Breweries Westmont, IL &Berwyn, IL-head brewer: ran 2 brewpubs simultaneously 10 barrel system and 15 barrel system experienced in: beer filtration, formulation, brewhouse operations, kegging, bottling, yeast handling-brands brewed: Aberdeen Amber, Berliner Wiesse, Bavarian Hefe-Wiesse, Dusseldorfer Dopplebock, Berwyn Pilsner, E.S.B. 6 Years, Goose Island Brewing Co. Chicago, IL-experienced in all aspects large scale microbrewery production: formulation, brewhouse calculations, cellaring, filtration, yeast propagation&handling, double brewing, quality control. Brands Brewed: Honkers Ale, Hex Nut Brown, Summertime, Baderbrau, I.P.A., Schwarzbier, oatmeal stout 2 years, Three Floyds Brewing Co. Munster, IN-Brewmaster

JOHN FREYER- Head of Sales & Marketing • • • • • • • • •

Founder of Freyer Marketing Chicago,IL 7 Years Three Floyds Brewing Co Munster, IN & Hammond, IN -Head of Sales &Marketing Beer Sales and Marketing for Louis Glunz Beer Chicago, IL Founder Joseph Geis Beer Co Chicago, IL Beer Sales and Distribution Union Liquors Chicago, IL General Manager Weinkeller Brewery Berwyn, IL Restaurant & Bar Management Fox's Pub Assistant General Manager Ruby Tuesday Assistant Manager (Catering ) Art Institute of Chicago

DICK VAN DYKE-Salesman & Marketing

Three Floyds Brewpub Table: Personnel (Planned)

Personnel Plan

Total Payroll

2003 $10,000 $11,950 $2,200 $7,000 $3,000 $34,150

2004 $24,600 $46,800 $13,080 $12,600 $12,600 $109,680

2005 $30,000 $59,400 $15,840 $16,800 $14,400 $136,440

2006 $35,000 $63,600 $15,840 $16,800 $14,400 $145,640

2007 $36,000 $63,600 $15,840 $16,800 $14,400 $146,640

Total People Payroll Burden Total Payroll Expenditures

7 $5,123 $39,273

10 $16,452 $126,132

12 $20,466 $156,906

13 $21,846 $167,486

13 $21,996 $168,636

Bartender/Manager Line Cooks servers Dishwasher bus

7.0 Financial Plan

7.1 Expenses

EXPENSES

Operating expenses can be broken down into three main groups: Food & Beer , Labor , and Fixed Overhead Food & Beer

We have projected our food cost at 25%. This cost is in line with other brewpub competitors in the Chicago area. Brewpub food costs range from 12% pizza heavy menu up to 35% menu featuring steak and lobster. We have assumed an overall bar cost at 10% which is lower than most brewpubs and bars because our

Three Floyds Brewpub 7.2 Fixed Costs

Fixed Costs

Fixed costs include a number of overhead expense items that must be paid monthly. Fixed costs include lease payments, utilities, insurance, taxes, maintenance and marketing. Utilities are projected at $1200$1500 a month depending on the season. A monthly rent payment of $1500 will be due. Maintenance fees will run $550 a month. Advertising and marketing will be $2000 a month early on for the marketing blitz then scaled back to $500 once the brewpub is established. Three Floyds Brewpub has the benefit of sharing phone, office, accounting and insurance costs with Three Floyds Brewing Co.

7.3 Projected Profit and Loss Table: Profit and Loss (Planned)

Pro Forma Profit and Loss Sales Direct Cost of Sales Other Production Expenses Total Cost of Sales Gross Margin Gross Margin % Operating Expenses: Advertising/Promotion Accnt/Leg Miscellaneous Payroll Expense

2003 $151,712 $26,546 $0 -----------$26,546 $125,166 82.50%

2004 $477,946 $83,633 $0 -----------$83,633 $394,313 82.50%

2005 $654,612 $114,549 $0 -----------$114,549 $540,063 82.50%

2006 2007 $812,012 $1,009,666 $142,104 $176,682 $0 $0 ----------------------$142,104 $176,682 $669,908 $832,984 82.50% 82.50%

$9,000 $1,500 $2,500 $34 150

$6,000 $3,600 $6,600 $109 680

$6,000 $3,600 $6,600 $136 440

$6,000 $3,600 $6,600 $145 640

$6,000 $3,600 $6,600 $146 640


Profit Monthly (Planned) $16,000 $14,000 $12,000 $10,000 $8,000 $6,000 $4,000 $2,000 $0 Jan Feb Mar Apr May Jun

Jul Aug Sep Oct Nov Dec

Profit Yearly (Planned)

$600,000 $500,000


Gross Margin Monthly (Planned) $35,000 $30,000 $25,000 $20,000 $15,000 $10,000 $5,000 $0 Jan Feb Mar Apr May Jun


Gross Margin Yearly (Planned)

$900,000 $800,000 $700,000

Three Floyds Brewpub 7.4 Projected Cash Flow

CASH FLOW

Given the assumptions detailed above, Three Floyds Brewpub generates positive cash flow in its first month! $47,000 in the last few months of 2003, $186,000 in 2004, $290,000 in 2005, $400,000 in 2006, $550,000 in 2007, and $679,000 in year 2008. Table: Cash Flow (Planned)

Pro Forma Cash Flow

2003

2004

2005

2006

2007

Cash Received Cash from Operations: Cash Sales

$151,712

$477,946

$654,612

$812,012

From Receivables Subtotal Cash from Operations

$0 $151,712

$0 $477,946

$0 $654,612

$0 $812,012

$1,009,66 6 $0 $1,009,66 6

Additional Cash Received Extraordinary Items Sales Tax, VAT, HST/GST Received New Current Borrowing New Other Liabilities (interest-free) New Long-term Liabilities Sales of other Short-term Assets Sales of Long-term Assets New Investment Received Subtotal Cash Received

$0 $0 $0 $0 $0 $0 $0 $0 $151,712

$0 $0 $0 $0 $0 $0 $0 $0 $477,946

$0 $0 $0 $0 $0 $0 $0 $0 $654,612

$0 $0 $0 $0 $0 $0 $0 $0 $812,012

$0 $0 $0 $0 $0 $0 $0 $0 $1,009,66 6

2003

2004

2005

2006

2007

Expenditures


Cash (Planned) $120,000 $100,000 $80,000

Net Cash Flow

$60,000

Cash Balance $40,000 $20,000 $0 Jan Feb Mar Apr May Jun

7.5 Projected Balance Sheet Table: Balance Sheet (Planned)

Pro Forma Balance Sheet


Three Floyds Brewpub 7.5.1 Plan of Distribution and Operating Agreement

PLAN OF DISTRIBUTION AND OPERATING AGREEMENT

General

The Company is hereby offering for sale to a limited number of investors in this Offering by subscription, and subject to acceptance or rejection in whole or in part by the Company, in its sole and absolute discretion, a minimum of One (1) Shares and a maximum of One Thousand (1000) Shares of its common stock at a cash purchase price of $500 per Share. In this Offering, the Minimum Investment is one (1) Shares or $500, and the Maximum Investment is 400 Shares or $200,000. The Minimum Investment and Maximum Investment limitations may be waived or modified by the Company in its sole and absolute discretion. The Company has not employed securities dealer or underwriter in connection with this Offering. No commissions or discounts have been or will be paid by the Company to anyone in connection with the Offering or sale of any of the Shares. Each person who agrees to purchase Shares in this Offering must execute a Subscription Agreement and an Operating Agreement.

Three Floyds Brewpub The Shares are being offered pursuant to the "seed capital" exemption from the registration requirements of the Securities Act for securities offerings of non-reporting companies that do not exceed an aggregate annual amount of $1,000,000. The Offering made pursuant to this Memorandum is intended to be conducted under the Securities Act in accordance with Regulation D promulgated by the SEC. The Shares to be offered and sold will be "freely tradable" and and will be limited to transactions (1) registered under state law requiring public filing and delivery of a disclosure document to investors before sale, or (2) exempted under state law permitting general solicitation and advertising so long as sales are made only to accredited investors. As a result of the Company’s formation as a limited liability company, there is no restriction on who may be a member. As such, a non-resident alien, corporation, partnership, LLC or any type of trust may become a member of the Company. Investors should obtain independent legal and/or accounting advice with respect to the tax implications of becoming a member in a limited liability company. Each investor will be required to represent that such investor has received all information requested by such investor with respect to the Company Each investor will also be required to represent that: (I) the investor’s overall commitment to investments which are not readily marketable is not (and the investor’s acquisition of the Shares will not cause such overall commitment to become) disproportionate to the investor’s net worth; (ii) the investor has adequate net worth and means of providing for his or her current needs and personal contingencies to sustain a complete loss of such investment in the Shares and (iii) the investor has carefully evaluated the risk of investing, either alone or together with a purchaser representative.

Three Floyds Brewpub • A properly executed: Subscription Agreement and Operating Agreement. • A certified or cashier’s check payable to "Three Floyds Brewpub LLC Escrow Account" in the amount of $500 per Share. The Minimum Investment per investor is $500 unless otherwise waived by Company. The subscription documents are contained separately and provided with this Memorandum. The appropriate subscription documents should be returned to the Company in accordance with the instructions set forth therein. Additional copies of the subscription booklet are available from the Company by contacting Nick Floyd, Three Floyds Brewing, LLC, 9750 Indiana Parkway, Munster, IN 46321, (219) 922-3565. At Closing, all subscriptions will be filled, to the extent accepted, by issuance of certificates representing the Shares. Such issuance of certificates will occur on a reasonable date after the Closing of this Offering. Subscriptions

In the event subscriptions for fewer than One Thousand (1000) Shares, or $500,000, are received in response to this Offering, the Company, in its sole and absolute discretion, may elect to waive the Maximum Investment limitation. In the event subscriptions for fewer than 299 Shares, or $199,500, are received, notwithstanding such waiver, the Offering will be terminated and subscription payments will be returned to subscribers. No interest will be paid on any subscription funds returned to subscribers.

Three Floyds Brewpub provided in the Subscription Materials, in time for delivery thereof prior to 5:00 p.m. local time on the Expiration Date. If the Offering is fully subscribed before the Expiration Date, the Company may act to accelerate expiration of the subscription period, thereby accelerating the Expiration Date. The Company may also, in its sole and absolute discretion, act to extend the subscription period. In either event, the Company shall not be required to give notice of the acceleration or extension to any party. Termination of the Offering

The Company shall terminate this Offering if Closing shall not have occurred by December 31, 2003. In addition, the Company may in its sole and absolute discretion and for any reason whatsoever terminate this Offering prior to the issuance of certificates representing the Shares. The Company has no obligation to give notice of any such termination to any party, although the Company will be responsible for returning subscription amounts in full to subscribers within a reasonable period of time in the event of such a termination. No interest will be paid on any subscription funds returned to subscribers. In the event the Offering is thus terminated, none of the expenses related to the Offering will be paid out of subscribers’ funds or the income therefrom. These expenses will be paid by the Company. Closing

The Closing of the Offering shall occur following the Expiration Date or any acceleration or extension thereof upon the timely receipt of subscriptions for the Shares portion of the Shares and acceptance by the Company thereof. As soon as practicable following the Closing, the Company will issue to each subscriber one or

Three Floyds Brewpub EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE UNITED STATE AND STATE SECURITIES LAWS." Transferability of the Shares will be subject to the terms of a Operating Agreement, and certificates evidencing the Shares will also contain the following legend: "THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE HELD UNDER, AND THE RIGHTS OF THE HOLDER HEREOF ARE SUBJECT TO ALL THE TERMS, PROVISIONS AND CONDITIONS OF A CERTAIN OPERATING AGREEMENT DATED AS OF MARCH 24, 2003, ENTERED INTO BY AND AMONG THREE FLOYDS BREWPUB, LLC. AND ALL OF THE MEMBERS OF THE COMPANY, AND THE SAME MUST ONLY BE PLEDGED, HYPOTHECATED, SOLD OR OTHERWISE DISPOSED OF OR ASSIGNED OR TRANSFERRED ON THE BOOKS OF THE COMPANY EXCEPT IN ACCORDANCE WITH THE TERMS, PROVISIONS AND CONDITIONS OF SAID OPERATING AGREEMENT." RISK FACTORS

The purchase of shares offered within this document entails certain risks which members should consider before making a decision to invest in the company. There can be no assurance that any rate of return or other investment objectives will be realized or that there will be any return of capital. In addition to general investment risks and those factors set forth elsewhere in this document, a prospective purchaser of shares should consider the following factors.

Three Floyds Brewpub The Manager in turn will be dependent upon the efforts of those officers and employees of the Manager who will be actively involved in the Company’s business. The Company will enter into a Management Agreement with the Manager outlining areas of responsibility and authority. The Management Agreement does not require the Manager to devote its full time and efforts to the Company and the Manager may devote energies to other parties, subject to the powers, authorities, and limitations set forth in the Management Agreement. Furthermore, the Manager will be authorized to utilize a portion of the capital raised through this document for the expansion of Three Floyds Brewing, LLC, which, in its sole and absolute discretion, is necessary in order to meet the increased demands upon Three Floyds Brewing, LLC generated by the restaurant and brewpub and any additional exposure and demand created through the restaurant and brewpub.

TAX CONSIDERATIONS. An investment in the Company involves complex Federal, state and local income tax considerations which will differ for each Shareholder. Prospective Members that are tax-exempt entities should consult with their own advisors prior to any investment in the Company as to the potential unrelated business taxable income and other tax consequences that may apply to their particular situations. Both tax-exempt entities and other persons should consult with their own tax advisors regarding any other U.S. Federal, state and local tax effects of investing in the Company. LIMITED TRACK RECORD OF THE MANAGER


Risks Related to Investment Terms LIMITATION OF RECOURSE AND IDEMNIFICATION OF THE MANAGER.

The Management Agreement limits the circumstances under which the Manager or its affiliates will be held liable to the Company. As a result, Members may have a more limited right of action in certain cases than they would have in the absence of this provision. In addition, the Management Agreement provides that the Company will indemnify the Manager and its affiliates, partners and employees for certain claims, losses, damages, and expenses arising out of their activities on behalf of the Company. Such indemnification obligations could materially affect the returns to Members. THE COMPANY MAY BE ADVESELY AFFECTED BY LEGISLTIVE OR REGULATORY DEVELOPMENT

All statements contained in this Memorandum concerning the Federal income tax consequences of an investment in the Company are based upon existing law and the interpretations thereof. The rules dealing with Federal income taxation are constantly under review by persons involved in the legislative process and by the Internal Revenue Service and the Treasury Department, resulting in revisions of resolutions and revised interpretations of established concepts as well as statutory changes. Therefore, no assurance can be given that the currently anticipated income tax treatment of an investment in Company will not be modified by legislative, judicial or administrative changes, possibly with retroactive effect, to the detriment of the

Three Floyds Brewpub 7.5.1.1 Investor Questionnaire THREE FLOYDS BREWPUB, LLC. An Indiana Limited Liability Company

Confidential Investor Questionnaire

The primary purpose of this Confidential Investor Questionnaire is to assure Three Floyds Brewpub, LLC., an Indiana Limited Liability Company (the "Company"), that the prospective Investor in the Company’s stock (the "Securities"), will be eligible to invest in the Securities. Please print or type your answers. If the answer to any question is "No" or "Not Applicable", please so state. Please provide information for all subscribers, using separate questionnaires if necessary. Please do not combine or consolidate financial information of co-subscribers, except that of your spouse. Except as set forth herein, your answers will at all times be kept strictly confidential. By signing this Confidential Investor Questionnaire, however, you understand and agree that (i) the Company is relying on the accuracy, truth and completeness of your representations and statements set forth in your response in this Confidential Investor Questionnaire, the Subscription Agreement and any other document delivered by you to the Company in determining whether the offer and sale of the Securities comply with applicable law including federal and state securities law, (ii) if your representations or responses are not accurate, truthful and complete, you or the Company, or both, may be found I violation of federal or state securities laws, and (iii) the Company may present this Confidential Investor Questionnaire, and other documents delivered by you to the Company, to the appropriate parties if the Company is called upon to establish the availability of exemptions from registration and other compliance with federal and state securities laws and for other appropriate purposes. The entire Confidential Investor Questionnaire must be completed by all investors.

Three Floyds Brewpub ______________________________________________________________________________

Relationship to subscriber: _____Spouse _____ Parent _____ Child Other Blood Relative _____ _____ Other (please specify) __________________________________________ Age: _________________________________________________________________________ Citizenship: ___________________________________________________________________ State in which Investor Votes: ____________________________________________________ State in which Investor holds a valid driver’s license: __________________________________ 2. Employment and Business Information

Occupation or Profession: __________________________________________________ Name of Current Employer: ________________________________________________ Business Address: ________________________________________________________ ________________________________________________________________________ Business Telephone: ______________________________________________________ Current Position or Title:___________________________________________________

Three Floyds Brewpub 5. Business Experience

Please provide details of any professional licenses, registrations or other training or experience (including courses or seminars attended) in financial, business or tax matters: ________________________________________________________________________ ________________________________________________________________________ ________________________________________________________________________ 6. Ability to Make Investment Decisions

1.

Do you have such knowledge and experience in financial matters that you are capable of evaluating the merits and risks of your prospective investment in the Company? Yes _____ No _____ 2.

If the answer to (a) is No, do you intend to use a purchaser representative together with whom you would be capable of evaluation the merits and risks of your prospective investment in the Company?

Yes _____ No _____ If "Yes, please state the name of the purchaser representative: ________________________________________________________________________ 7. Accredited or Unaccredited Investor

The undersigned is an "Accredited Investor" inasmuch as the undersigned is: _____ A director, executive officer or general partner of the Company;

Three Floyds Brewpub and state securities laws;

(b) The undersigned understands that any information contained in this confidential Investor Questionnaire that is untrue, incomplete or inaccurate may result in the undersigned or the Company, or both, being in violation of applicable law including federal and state securities laws, and that by subscribing to purchase the Securities of the Company and executing this Confidential Investor Questionnaire and the Subscription Agreement to be delivered to the undersigned, the undersigned is agreeing to indemnify the Company and others from damages arising from those statements or from other matters; (c) The undersigned understands that a false statement or representation may constitute a violation of law, and that any person who suffers damage as a result of a false statement or representation, may have claims against the undersigned for damages; (d) The undersigned will notify the Company immediately of ay material change in any of such information occurring prior to the acceptance of the undersigned’s subscription; (e) The undersigned understands that the Company may request further information in order to determine the suitability of the undersigned’s subscription and in establishing compliance with federal and state securities laws. The undersigned shall furnish this additional information promptly if the undersigned desires to have the undersigned’s subscription considered further; and (f) The undersigned knows of no pending or threatened litigation the outcome of which could adversely affect the answer to any questions hereunder. IN WITNESS WHEROF, the undersigned has completed the foregoing statements and executed this Confidential Investor Questionnaire this ________ of _________________, 2003.

_________________________ _________________________


Appendix Appendix Table: Sales Forecast (Planned)

Sales Forecast Sales Food & Beer Sales Other Total Sales

Jan $0 $0 $0

Feb $0 $0 $0

Mar $0 $0 $0

Apr $0 $0 $0

May $0 $0 $0

Jun $0 $0 $0

Jul $0 $0 $0

Aug $22,240 $0 $22,240

Sep $25,740 $0 $25,740

Oct $31,240 $0 $31,240

Nov $35,000 $0 $35,000

Dec $37,492 $0 $37,492

Direct Cost of Sales Food & Beer Sales Other Subtotal Direct Cost of Sales

Jan $0 $0 $0

Feb $0 $0 $0

Mar $0 $0 $0

Apr $0 $0 $0

May $0 $0 $0

Jun $0 $0 $0

Jul $0 $0 $0

Aug $3,892 $0 $3,892

Sep $4,504 $0 $4,504

Oct $5,467 $0 $5,467

Nov $6,125 $0 $6,125

Dec $6,558 $0 $6,558

Appendix Appendix Table: Personnel (Planned)

Personnel Plan Bartender/Manager Line Cooks servers Dishwasher bus Total Payroll Total People Payroll Burden Total Payroll Expenditures

Jan $0 $0 $0 $0 $0 $0

Feb $0 $0 $0 $0 $0 $0

Mar $0 $0 $0 $0 $0 $0

Apr $0 $0 $0 $0 $0 $0

May $0 $0 $0 $0 $0 $0

Jun $0 $0 $0 $0 $0 $0

Jul $0 $0 $0 $0 $0 $0

Aug $2,000 $1,950 $440 $1,400 $600 $6,390

Sep $2,000 $2,500 $440 $1,400 $600 $6,940

Oct $2,000 $2,500 $440 $1,400 $600 $6,940

Nov $2,000 $2,500 $440 $1,400 $600 $6,940

Dec $2,000 $2,500 $440 $1,400 $600 $6,940

0 $0 $0

0 $0 $0

0 $0 $0

0 $0 $0

0 $0 $0

0 $0 $0

0 $0 $0

6 $959 $7,349

7 $1,041 $7,981

7 $1,041 $7,981

7 $1,041 $7,981

7 $1,041 $7,981

Appendix Appendix Table: Profit and Loss (Planned)

Pro Forma Profit and Loss Sales Direct Cost of Sales Other Production Expenses Total Cost of Sales Gross Margin Gross Margin % Operating Expenses: Advertising/Promotion Accnt/Leg Miscellaneous Payroll Expense Payroll Burden Depreciation office Utilities Insurance Rent Phone Total Operating Expenses Profit Before Interest and Taxes Interest Expense Short-term Interest Expense Long-term Taxes Incurred Extraordinary Items Net Profit Net Profit/Sales

Jan $0 $0 $0 -----------$0 $0 0.00%

Feb $0 $0 $0 -----------$0 $0 0.00%

Mar $0 $0 $0 -----------$0 $0 0.00%

Apr $0 $0 $0 -----------$0 $0 0.00%

May $0 $0 $0 -----------$0 $0 0.00%

Jun $0 $0 $0 -----------$0 $0 0.00%

Jul $0 $0 $0 -----------$0 $0 0.00%

Aug $22,240 $3,892 $0 -----------$3,892 $18,348 82.50%

Sep $25,740 $4,504 $0 -----------$4,504 $21,236 82.50%

Oct $31,240 $5,467 $0 -----------$5,467 $25,773 82.50%

Nov Dec $35,000 $37,492 $6,125 $6,558 $0 $0 ----------------------$6,125 $6,558 $28,875 $30,934 82.50% 82.51%

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 -----------$0 $0 $0 $0 $0 $0 $0 0.00%

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 -----------$0 $0 $0 $0 $0 $0 $0 0.00%

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 -----------$0 $0 $0 $0 $0 $0 $0 0.00%

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 -----------$0 $0 $0 $0 $0 $0 $0 0.00%

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 -----------$0 $0 $0 $0 $0 $0 $0 0.00%

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 -----------$0 $0 $0 $0 $0 $0 $0 0.00%

$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 -----------$0 $0 $0 $0 $0 $0 $0 0.00%

$2,000 $300 $500 $6,390 $959 $0 $200 $1,500 $1,000 $1,500 $200 -----------$14,549 $3,800 $0 $0 $228 $0 $3,572 16.06%

$2,000 $300 $500 $6,940 $1,041 $0 $200 $1,500 $1,000 $1,500 $200 -----------$15,181 $6,055 $0 $0 $363 $0 $5,692 22.11%

$2,000 $300 $500 $6,940 $1,041 $0 $200 $1,500 $1,000 $1,500 $200 -----------$15,181 $10,592 $0 $0 $636 $0 $9,956 31.87%

$2,000 $1,000 $300 $300 $500 $500 $6,940 $6,940 $1,041 $1,041 $0 $0 $200 $200 $1,500 $1,500 $1,000 $1,000 $1,500 $1,500 $200 $200 ----------------------$15,181 $14,181 $13,694 $16,753 $0 $0 $0 $0 $822 $1,005 $0 $0 $12,872 $15,748 36.78% 42.00%

Appendix Appendix Table: Cash Flow (Planned)

Pro Forma Cash Flow Cash Received Cash from Operations: Cash Sales From Receivables Subtotal Cash from Operations Additional Cash Received Extraordinary Items Sales Tax, VAT, HST/GST Received New Current Borrowing New Other Liabilities (interest-free) New Long-term Liabilities Sales of other Short-term Assets Sales of Long-term Assets New Investment Received Subtotal Cash Received Expenditures Expenditures from Operations: Cash Spent on Costs and Expenses Wages, Salaries, Payroll Taxes, etc. Payment of Accounts Payable Subtotal Spent on Operations Additional Cash Spent Sales Tax, VAT, HST/GST Paid Out Principal Repayment of Current Borrowing Other Liabilities Principal Repayment Long-term Liabilities Principal Repayment Purchase Other Short-term Assets Purchase Long-term Assets Dividends Adjustment for Assets Purchased on Credit Subtotal Cash Spent Net Cash Flow Cash B alance

0.00%

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

$0 $0 $0

$0 $0 $0

$0 $0 $0

$0 $0 $0

$0 $0 $0

$0 $0 $0

$0 $0 $0

$22,240 $0 $22,240

$25,740 $0 $25,740

$31,240 $0 $31,240

$35,000 $0 $35,000

$37,492 $0 $37,492

$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 $0 $0 $0 $0 $0 $0 $0 $0

$0 $0 $0 $0 $0 $0 $0 $0 $22,240

$0 $0 $0 $0 $0 $0 $0 $0 $25,740

$0 $0 $0 $0 $0 $0 $0 $0 $31,240

$0 $0 $0 $0 $0 $0 $0 $0 $35,000

$0 $0 $0 $0 $0 $0 $0 $0 $37,492

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

$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

$1,132 $7,349 $340 $8,820

$1,207 $7,981 $10,210 $19,398

$1,330 $7,981 $10,898 $20,209

$1,415 $7,981 $11,998 $21,393

$1,376 $7,981 $12,720 $22,078

$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 $0 $0 $0 $0 $0 $0 $0 $0

$0 $0 $0 $0 $0 $0 $0 $0 $8,820

$0 $0 $0 $0 $0 $0 $0 $0 $19,398

$0 $0 $0 $0 $0 $0 $0 $0 $20,209

$0 $0 $0 $0 $0 $0 $0 $0 $21,393

$0 $0 $0 $0 $0 $0 $0 $0 $22,078

$0 $44,317

$0 $44,317

$0 $44,317

$0 $44,317

$0 $44,317

$0 $44,317

$0 $44,317

$13,420 $57,737

$6,342 $64,079

$11,031 $75,110

$13,607 $88,717

$15,414 $104,131

Three Floyds Brewery Business Plan

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