Highland Haze Cigar Lounge Per Lefsrud

Our Product

The Ambiance

Floor Plan

Location

Behind the Company Management Consulting Suppliers

Target Market

Competition

Competitive Advantage

Capital Budget 80% Debt 20% Equity Land Building & Installation Equipment Total Capital Costs $400,000 $1,768,189 $93,972 $2,262,161 80% Debt 20% Equity

Revenue Model Gross Profit Margin = 69% Net Profit Margin = 22% Year 2018 2019 2020 2021 2022 Sales 848,575 1,442,578 2,163,866 2,875,100 3,018,854 COGS 262,973 447,055 670,582 890,993 935,543 Gross Profit 585,602 995,523 1,493,284 1,984,106 2,083,311 Expenses 584,256 791,592 1,128,507 1,252,114 1,296,043 Net income before Taxes 1,345 203,930 364,777 731,992 787,269 Income Taxes 168 25,491 45,597 120,498 134,317 Net Income 1,177 178,439 319,180 611,494 652,952 Gross Profit Margin = 69% Net Profit Margin = 22% IRR = 42%

Thank you!

Detailed Capital Budget Summary Description Estimated Cost ($) Source Land 400,000 Suncorp Valuations/various realtors Building/installation Costs:   Structure (110x65=7,150 sq. ft.) (including doors, walls, and bars) 1,650,000 RSMeans Sewage & water 8,400 Home Advisor Electrical 45,000 Journeyman Electrician Natural gas 9,500 Sask Energy Heating/cooling (HVAC) system 12,500 Carpet (5,000 sq. ft.) 16,840 Great Floors Paint (8,200 sq. ft. of wall) 22,550 Home Painters Walk-in Humidor (300 sq. ft.) 3,399 Aristocrat Humidors Total 2,168,189 Equipment: Lounge chairs (70) 40,950 Surplus Furniture Bar stools (10) 3,339 The Brick Tables (13) 12,727 Wholesale Furniture Brokers Sinks (4) 2,149 Webstaurant Refrigerators (2) 10,516 Store room freezer unit 8,239 Toilets (5) 1,645 Lowe’s Urinals (3) 780 Deelat Industrial Canada Office desks (2) 1,490 ULINE Office chairs (2) 682 Global Industrial Dishwasher 2,699 Costco Pool tables (3) 4,257 Wayfair Sound system 1,399 Amazon Dishes/cups/cutlery 3,100 Canadian Restaurant Supplier Total Equipment Costs 93,972 Total Capital Costs 2,262,161 Detailed Capital Budget Summary

Annual Operating Budget/Cost of Sales Expense Estimated Yearly Cost ($) Source   Property tax 39,639 City of Saskatoon Natural gas 4,826 Sask Energy Electricity 28,600 Sask Power Water & Sewer 2,502 Sask Water General Inventory 865,000 Various Suppliers Cleaning 6,200 Manilla Cleaning Services Ltd. Wages 431,910 Industry averages – marginally higher Accounting (per-year for monthly consultations) 9,600 AdvisoryHQ Legal (Startup consulting) 1,900 Mckercher Law Advertising (Local radio/Newspaper) ~5,000 Industry Matters (Saskatchewan Campaigning) & The Star Phoenix Freight 37,500 uShip Insurance 6,000 SGI Canada License and fees 125+ 85 annually Telephone 258 Sasktel Repair & Maintenance 1-3% of sales Small Business Chron CPP expense 21,379 Canada Revenue Agency EI expense 1.4 times wages Total Operating Expenses & Cost of Sales 1,464,325

Labour Total Hours Worked GM (me) Assistant Manager   Total Hours Worked GM (me) Assistant Manager Bartenders (2 at a time) Servers (2-4 at a time) Security (2-4 at a time) Cooks (2 at a time) Sales Personnel (1-2 at a time) Total Daily Paid Hours Labour cost per day ($) Monday 8 4 26 31 18 132 1,985 Tuesday Wednesday Thursday Friday 44 158 2,236 Saturday Sunday Wages Salary 50k Salary $15 $12 $17 Yearly Total 719,850

Revenue & Marketing Expense Projections Year 2018 2019 2020 2021 2022 Revenue: Beer Average Price $8.00 $9.00 Quantity 33,943 57,703 86,555 102,226 107,337 $271,544 $461,625 $692,437 $920,032 $966,033 Cigars $10.00 $11.00 9,334 15,868 23,803 28,751 30,189 $93,343 $158,684 $238,025 $316,261 $332,074 Scotch/hard liquor $12.00 105,420 110,691 $373,373 $634,734 $952,101 $1,265,044 $1,328,296 Food 13,789 23,442 35,163 41,529 43,606 110,315 187,535 281,303 373,763 392,451 Total Revenue $848,575 $1,442,578 $2,163,866 $2,875,100 $3,018,854 Marketing Expenses Training $7,000 $1,000 Newspaper ads $1,500 Radio ads $3,500 $2,000 Social media presence $600 $500 Total $12,600 $4,500

Pro-forma Income Statement For the year ended 2018 2019 2020 2021 2022 Sales 848,575 1,442,578 2,163,866 2,875,100 3,018,854 COGS 262,973 447,055 670,582 890,993 935,543 Gross Profit 585,602 995,523 1,493,284 1,984,106 2,083,311 69% Operating Expenses Accounting and Legal 11,500 9,600 Advertizing (Marketing) 12,600 4,500 Insurance 6,000 Property Taxes 39,639 Telephone 258 Utilities 35,928 Repair and Maintenance 16,972 28,852 43,277 57,502 60,377 Wages and Salaries 243,970 389,940 679,920 782,780 828,093 Employee Benefits (salaries) 8,230 8,395 8,562 8,734 8,908 Employee Benefits (wages) 20,156 40,312 80,623 94,732 100,779 Misc Variable Costs % Sales 4,243 7,213 10,819 14,375 15,094 Capital Cost Allowance 44,761 86,528 80,912 75,976 71,602 Debt Interest 140,000 134,429 128,468 122,089 115,264 Total Operating Expenses 584,256 791,592 1,128,507 1,252,114 1,296,043 Taxable Income 1,345 203,930 364,777 731,992 787,269 Income Taxes 168 25,491 45,597 120,498 134,317 Net Income 1,177 178,439 319,180 611,494 652,952

Pro-forma Balance Sheet Year 2018 2019 2020 2021 2022 Current Assets Cash 209,401 389,787 700,104 1,291,360 1,309,455 Inventories 5,113 8,693 13,039 17,325 18,191 Total Current Assets 214,515 398,480 713,143 1,308,685 1,327,646 Non-Current Assets Land 400,000 Buildings 1,768,189 Furniture and Fixtures 93,972 96,972 99,972 102,972 105,972 Accumulated CCA (44,761) (131,289) (212,201) (288,178) (359,780) Total Non-Current Assets 2,217,400 2,133,872 2,055,960 1,982,983 1,914,381 Total Assets 2,431,915 2,532,352 2,769,103 3,291,668 3,242,027 Liabilities Accounts Payable 10,227 17,385 26,078 34,650 36,382 Long Term Debt 1,920,411 1,835,250 1,744,129 1,646,628 1,542,303 Total Liabilities 1,930,637 1,852,636 1,770,207 1,681,278 1,578,685 Common Shares Class A 100 Common Shares Class B 500,000 (100,000) Retained Earnings 1,177 179,616 498,796 1,110,290 1,763,242 Total Equity 501,277 679,716 998,896 1,610,390 1,663,342 Total Liab & Equity

Pro-forma Cash Flow Statement For the year ended 2018 2019 2020 2021 2022 Net Income 1,177 178,439 319,180 611,494 652,952 CCA 44,761 86,528 80,912 75,976 71,602 Operating Cash Flow 45,938 264,967 400,092 687,471 724,553 Changes in Working Capital Inventories (5,113) (3,579) (4,346) (4,286) (866) Accounts Payable 10,227 7,159 8,693 8,572 1,732 Total 5,113 3,579 4,346 4,286 866 Investment Activities Land (400,000) - Buildings (1,768,189) Furniture and Fixtures (93,972) (3,000) (2,262,161) Financing Activities Long Term debt 1,920,411 (85,160) (91,122) (97,500) (104,325) Common Shares Class A 100 Common Shares Class B 500,000 (600,000) Dividends 2,420,511 (704,325) Net Cash Flow 209,401 180,386 310,317 591,256 18,094 Cash Bal Beg of Year 389,787 700,104 1,291,360 Cash Bal End of Year 1,309,455