The Capital of Three Lakes, Inc.

Private Placement
Offering Memorandum
~ Summary ~

$6,000,000

The Capital of Three Lakes, Inc. has been formed to fund a number of projects in the Town of Three
Lakes, Wisconsin. All funds will be invested in Three Lakes properties and business operations. The
company is a Wisconsin Corporation and has made a Subchapter S Corporation (S Corp) election with the
IRS. S corporations are limited to 100 shareholders and one class of stock. This is a Private Placement of
up to six million (6,000,000) shares to be issued at $1 each to raise approximately Six Million Dollars
($6,000,000). This offering relies upon an exemption from registration under the securities laws at the
federal level of government under SEC Rule 506(b) of Regulation D under Section 4(a)(2) of the Securities
Act and is also exempt from registration at the state level of government under the State of Wisconsin
Uniform Securities Law, Subchapter II, 551.202(24m).

INVESTMENT TYPES & MINIMUMS

1. Equity
a. A minimum subscription of 50,000 shares of stock at $1 ($50,000) are required to invest.
b. Subscriptions will be accepted initially through December 31st, 2019.
c. Dividends will be paid quarterly or annually as determined by the BOD.
2. Debt - Fixed Income
a. Interest will be paid annually or quarterly on the anniversary date of the Note.
b. The Note will be secured by the assets of the Corporation as well as a Personal Guarantee
from Mark McCain.
c. Debt: Up to $2,000,000 in Promissory Notes will issued. The minimum amounts, rates
and terms are as follows:

Notes 60-month 120-month

$25,000 3.25% 3.75%
$50,000 3.50% 4.00%
$100,000 4.00% 4.50%
$250,000 5.00% 5.50%
$500,000 6.00% 6.50%

MISSION STATEMENT
When the idea of forming an equity company came to mind a few years ago, I envisioned a company that
would be funded by individuals, like myself, who not only have a great deal of affection for Three Lakes,
but also have a financial interest in seeing the downtown town flourish within the confines of its already-
established “footprint”. I envisioned a company with shareholders that are both residents, non-resident
homeowners, regular visitors and, for that matter, any “Three Lakes Enthusiast” who understands the
importance of keeping our small town alive and well. I imagined a company investing in properties in
need of renovation, operations in need of proper capitalization, quality management and staffing. A
company that builds and maintains quality, affordable housing. In short, a company that fuels the private
enterprises that are important pieces of the puzzle that come together with the common-good work of
government and the volunteer work of civic groups to keep a town on the path of sustainability. I
imagined a company that would be handed down from one generation to the next; shares of stock handed
down from parents to their children, and so on. So therefore,

The Capital of Three Lakes, Inc., as presented in this offering document for your consideration, has no
plan to terminate its operations after a specified period of time. Anyone considering an investment
should plan on their investment being “locked-up” for the 10 years of what is described herein as the
“Building & Development” and “Maturation” phases. After those phases have elapsed, the company will
work with shareholders who wish to sell their shares of stock.

The Capital of Three Lakes, Inc. will be operated with the goal of remaining a going
concern into perpetuity.

INVESTMENT PHASES

As with most startups, the first years consist of developing the operation and assets of the company.
Ideally, after the company has been developed and the assets are put to work, a respectable return can
be generated while the new projects are undertaken and developed alongside the existing and ongoing
projects. Although time frames must remain somewhat flexible, it is possible to divide the projects into
phases.

● Building & Development: 2019 - 2023

● Investment Maturation: 2024 - 2028
● First Exit Opportunity: 2029

Building & Development

Downtown Three Lakes consists of commercial properties that range from quality, aesthetically pleasing
and well maintained properties to properties with little or no value. There are a number of quality
properties that only need to be brought into the modern era; facelifts, mechanical upgrades, and general
renovations will create more desirable commercial spaces.

In the first five-year period, approximately $3,000,000 will be invested in commercial properties,
$2,500,000 will be invested in operations for inventory, equipment and working capital and the balance
of $500,000 will be invested in affordable, single family dwellings and duplexes in Three Lakes.
Affordable housing is scarce in Three Lakes but, even so, this company will not invest in multi-unit
apartment complexes. It will, however, invest in buildings along the downtown (Superior Street) that are
“street retail” with apartments above the retail spaces. This is a common, desirable and valuable feature of
many Downtown business districts.

The largest project is the expansion of the Three Lakes Winery facility. The expansion, on the existing
four-acre property, will enlarge the retail space, production areas and warehouse areas as well as create
space for Three Lakes Distillery. Three Lakes Winery is a 46-year old “landmark” business and is
considered an “anchor” of the Downtown Business District drawing approximately 10,000 visitors
annually. The expansion and the addition of the distillery is expected to double the number of visitors
within five years.

The other commercial buildings are all on Superior Street. There are entrepreneurs who are willing to
“hang a shingle” in Three Lakes but they don’t always have the capital to purchase commercial property,
let alone perform the upgrades necessary to have a proper facility for their operations. This project will
address these issues with a number of important properties.

Investment Maturation

The second 5-year phase of the investment, 2024 through 2028, will be focused on maximizing the return
from the commercial properties and the operations and at the same time, take on new projects. The vast
majority of the construction and renovations are expected to be completed by 2024, with the exception of
the ongoing development of affordable housing which will continue aggressively through the end of the
Investment Maturation phase.

First Exit Opportunity

Starting in approximately 2029, the Board of Directors will consider any shareholder request that their
shares of stock be repurchased by the Company. The first to invest will receive first choice of exit timing.
In other words, investors will be given the the opportunity to choose when they would like to have their
shares repurchased based on when they made their initial investment. The Board of Director will, at the
time, decide how to fund any approved stock repurchase.

USE OF PROCEEDS

There is no minimum amount of funding, either equity or debt, that is required to start the Company; The
Capital of Three Lakes is already a going concern. Every new dollar raised is put to work immediately. As
the funds flow into the Company, they will be invested in a number of commercial properties, small retail
operations and the new “sister” business to Three Lakes Winery: the Three Lakes Distillery. These
properties and operations are the assets of the company.

The goal and purpose of the investment is twofold: generate a respectable return from each asset while
undertaking the important work of revitalizing parts of Downtown Three Lakes.

>>>It is the explicit goal of this company to invest in, renovate and revitalize existing
commercial properties rather than build on undeveloped land which may result in “rural
sprawl”. <<<

This approach may be more expensive in the short-term because of the inherently high cost of renovation
compared to building new, but the result will keep the “footprint” of Three Lakes as it is now.
The commercial properties in Downtown Three Lakes that meet the aesthetic expectations of residents
and visitors and also meet the functional needs of the commercial tenants, are generally of higher value
and are, by extension, more likely to be financially viable properties and operations. Each building will get
at least a “facelift” and bring it up to modern building standards and at the same time in some cases,
create the appearance of a building that has been there for a century or more. Every effort will be made to
keep the buildings “small-town quaint” yet maintain architectural integrity as was done with the Dobbs
building a century ago. The intangible, emotional value of the aesthetic will be given a great deal of
consideration as to how the building “fits” into the landscape the Downtown.

This revitalization work is important for a number of reasons. Most Three Lakes “Enthusiasts” want to see
Three Lakes stay small and quaint but they also want to see it remain vibrant and distinctive from the
surrounding communities. We have proven, by revitalizing the Three Lakes Hardware & Rental Center,
that if we properly capitalize, properly stock and staff our small businesses and provide excellent
customer service, residents and visitors will gladly shop locally. However, the burden is on the commercial
property owners to provide aesthetically pleasing and functional spaces. Furthermore, it is the burden of
the small business owners to provide quality and competitively priced products and services to encourage
residents and visitors to shop locally.

ASSETS

The Capital of Three Lakes, Inc. is more of a Holding Company than a Private Equity Company in that
the goal is long-term in nature rather than turning a quick return. The assets of the Company are the
LLC’s that own the real estate (properties) and the business operation (also LLC’s) that occupy the various
properties via lease agreement. In short, these LLC are subsidiaries of The Capital of Three Lakes, Inc.

The following is a list of companies that are now or will soon be, subsidiaries of The CTL:

1. Three Lakes Hardware & Building Materials LLC. This LLC has two distinct operations:
a. dba Three Lakes Hardware & Rental Center
b. dba Three Lakes Mercantile & General Store
The Mercantile will be spun off at the beginning of 2019 by forming a new LLC, mostly to make
the accounting less complex and to legally recognize the two distinct operations.
2. Three Lakes Brick & Mortar LLC: This company owns the Hardware property. It also just
bought Lazy Susan’s antique shop so that the entire site can be properly developed.
3. ZeROI LLC: This company owns:
a. The 3 Lakes Diner Building
b. The little log cabin building next to and connected to the 3 Lakes Diner
c. The Mercantile building and
d. The vacant lot next to the Mercantile.
All three of these parcels will be split from ZeROI and owned by separate LLCs. Having each
parcel in a different LLC allows for the development to take place within a dedicated LLC rather
than blended with other distinct properties.
4. Evolution Kitchens LLC: The 3 Lakes Diner is a dba of Evolution Kitchens LLC.
5. Park Place LLC: This company owns:
a. The old Dairy Queen Building
b. The two-story home on that property and
c. The trailer directly behind the old DQ building which will be removed in the spring of
2019.
 This property will be divided so that the residential and commercial sites and buildings can be
developed independently. This will allow for their distinctive functions and features to be
maximized for aesthetic and economic value.
6. Bluejays Restaurant LLC: This company owns Bluejays Restaurant (named after the Three
Lakes School mascot), planned to be opened this spring (or as soon as practicable) in the former
Dairy Queen building.
7. Three Lakes Distillery: Once it is fully funded at about $750,000, this company will be 52%
owned by Mark & Scott McCain and 48% owned by The CTL.
8. McCain Holdings LLC: The CTL will own a yet-to-be-determined percentage (probably 40%)
of the winery-distillery property in partnership with Scott & Mark McCain (McCain Holdings
LLC). This will be decided when the final cost of construction is determined later this winter or
spring.
9. Dobbs Building: This building is occupied by Burkett Century 21 and Subway as well as three
residential apartments. Negotiations for its purchase are underway with the owner of this
Landmark Building.
10. Residential properties: We will be looking for residential lots (vacant or teardowns) to move
two homes (one owned by McCain Holdings LLC on Michigan Street and the other owned by
Three Lakes Brick & Mortar LLC, the home attached to the former Lazy Susan’s antique shop) as
well as the former TreeHuggers market building. That building will serve as the Winery Retail
shop during construction of the Winery-Distilery Complex and moved afterwards. In addition to
those three projects, The CTL will develop other residential properties. The goal will be, when
building new, to develop architecturally distinctive, aesthetically pleasing homes that are energy
efficient and economical to build with a lease price-point that fits into the budget of those in the
middle of the income scale in Three Lakes.

THREE LAKES WINERY

Fruit of the Woods Wine Cellar, Inc. dba Three Lakes Winery, the operation, will remain owned 100% by
Scott & Mark McCain. It is the success of Three Lakes Winery that has funded and even inspired the
revitalization projects, such as they are, up to this point. Even so, as a tenant of McCain Holdings LLC,
Three Lakes Winery will enter into a long-term lease agreement that will have a “Percentage Rent”
provision, a portion of which will flow to The Capital of Three Lakes, Inc.

RETURNS

Each assets held by the Capital of Three Lakes will generate a different return on the capital invested. The
returns are projected to range from:
● 2.8% to 16.5% in 2020
● 2.3% to 17.9% in 2021
● 2.2% to 24.5% in 2022
● 2.9% to 24.5% in 2023 and from
● 2.9% to 26.4% in 2024, the first year of the five-year Investment Maturation phase.

Returns are challenging to predict but even so, historical financial data offers some guidance in
developing the projections. Over all, the returns on the capital investment are projected to be as follows:

Year ROI
2020 5.3%
 2021 6.8%
2022 6.9%
2023 7.5%
2024 8.5%

RISK

As with all investments, there is a possibility of losing your entire capital investment. To mitigate that
possibility, the majority of the assets will be commercial real estate. The other assets will be residential
real estate, equipment and inventory.

If you are interested in investing, please complete the attached form to indicate the type and amount you
would consider investing as well as date the funds will become available.

Finally, if your know of another Three Lakes Enthusiast who you think might be interested in investing,
please provide their contact information.

For more information, please send me an email: markjmccain@gmail.com.

Thank you,

Mark McCain
Three Lakes, Wisconsin