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Kelso, K_businessplan

Military EXpress LLC December 2016 1

A Military Veteran Family Corps in the Transportation Industry

109 East 7th Street Cheyenne, WY 82001

p. (214) 713-6644

[email protected]



Table of Contents

I. Executive Summary ............................................................................................. 4

Objective

Background

Conclusion

II. Company Overview .............................................................................................. 6

Vision Statement

History

Current Status

Strategy

Goals & Mission Objectives

III. Services ................................................................................................................. 8

Current Stage of Development

Operational Benefits

Propriety Position

Competitive Advantage

IV. Market Analysis ................................................................................................... 11

Growth Trends & Key Driving Forces

Market Segmentation

Competition

Market Acceptance

V. Management Team ............................................................................................. 15

Key Personnel

Personnel Needs

Organizational Structure

VI. Operating Strategy .............................................................................................. 18

Location

Acquisition Summary

Operations

Pricing

Advertising and Promotion

VII. Critical Risks ...................................................................................................... 22

Compliance



Fuel prices

Competitive pricing

VIII. Funding .............................................................................................................. 23

IX. Offering .............................................................................................................. 23

X. Appendix ............................................................................................................ 24

2017 Military EXpress Income Projection Statement

TE Inc Division Balance Sheet – Opening Day

Certificate of Organization

Articles of Organization

FMCSA Motor Carrier USDOT and MC Registration



Executive Summary

Objective

Our entire corporation will be composed solely of drivers and driver support personnel who

have earned the privilege to be employed by Military EXpress based upon their Veteran or military

family status and hiring criteria. The business entity will be a privately held corporation which will

provide an opportunity for employee or immediate family to become shareholders.

Background

As of 2015, The Department of Veterans Affairs (VA) reported that the three states with the

highest concentrations of Veterans are California, Florida and Texas. Each of these states

accommodate between 950,001 – 1,851,470 Veterans.

Texas Workforce Investment Council’s “2016 Update” concluded that the Dallas-Ft Worth-

Arlington area has a Veteran-rich environment with 13 of its counties having the dense to most

dense concentration of Veterans (144,00 – 655,999). Furthermore, the 2016 Update found that the

annual unemployment rate was 16.2 % for Veterans between the ages of 18 – 24 compared to

nonVeterans 12.5 %. Between the ages of 24 -34, the annual unemployment rate was 7.7 % for

Veterans and 6.5 % for nonVeterans. We intend to capture these unemployed, young Veterans and

provide them with a career in the transportation and logistics industry.

The U.S. Freight Transportation Forecast predicts major growth in the trucking industry by

2022. The forecast suggests that overall revenue for the industry will rise nearly 66 % and tonnage

will increase by 24 %.

At the same time, Genco reports that one of the major trends to affect the trucking industry

is a shortage of qualified Commercial Driver Licensed (CDL) holders. The average age of truck

drivers is moving upward as Baby Boomers are nearing retirement. The number of Americans aged

55 or older will increase by 29.7 %. There will not be enough younger drivers to replace retiring

drivers.



Retention and recruitment are a staggering cost of doing business for most trucking firms.

Some of the largest firms have a turn-over rate of 100 %. Currently 34 % of experienced CDL

drivers have a military background. We intend to capture those individuals with our generous pay

and benefits package to include an Employee Stock Ownership Program (ESOP). Eventually, 51 %

of the stock will be owned by the Veteran, employee/shareholders.

If you keep the drivers happy they won’t leave your business. An opinion piece, by Norris

Beren in Transport Topics this past April, concluded that there isn’t a driver shortage.

“The revolving door of drivers coming and going is often caused by one simple but

overwhelming factor: the attitude of the CEO [Chief Executive Officer], who drives

company culture and guides operations people…Fix this problem and you will see the

retention percentage begin to improve as long at the employees that these drivers work with

adopt a “Drivers Are First” culture — and live by it.”

Military EXpress intends to be the premier trucking corporation with this “Drivers First”

culture, and it will revolve around the military ethos and mindset to get the mission done in a safe

and conscientious manner.

Conclusion

The convergence of these facts and predictions will present an opportunity for a new

transportation industry model to emerge. This new model will employ only Veterans and their

immediate family and provide an opportunity to become an owner through an ESOP. Proof of

concept was completed in November 2015, and breakeven point was met within two months. We

request capital funding and mentorship to grow from an LLC to a privately-held corporation that is

large enough to make an ESOP viable.



Company Overview

Vision Statement

To be the largest nation-wide, for-hire, driver-centric transportation business entity with a

military ethos and safety first mindset, solely owned and operated by Veterans and their immediate

family members.

History

Ken Kelso is a hard-charging, Marine who has dedicated his life to helping fellow Veterans.

Military EXpress (Business) started out as his brainchild in 2010. He envisioned a Transportation

Corps of 50,000 drivers and support staff owned and operated by Veterans and their immediate

family members covering North America within ten (10) years

In October 2014, the Business was formed, and Ken hit the road. He carried 64 loads, and

covered 76,000 accident-free miles in 275 days covering all four corners of the country. Along the

way, he conducted “gorilla recon” at various truck stops. He interviewed 60 random military-

Veteran, “company” Commercial Driver’s License (CDL) holders over a cup of coffee. He asked

about their dispatcher, home time, kids’ college funding. In every case, the driver had a negative

view about their company and stated they were merely “getting by.” When he explained the basic

concepts behind the Business, - to a man - they all asked, “How do I sign up and when do we start?”

The loyalty and trust shared among Veterans is extraordinary testament to the “missing piece” in

“civilian” transport companies. This opportunity can be utilized to the benefit of our Veterans.

Current Status

The Business was organized as a Limited Liability Corporation (LLC) in the State of

Wyoming on October 2, 2014. Ken reached break even status by January 2015 and came off the

road in December 2015. Since then, he has been refining his vision and searching for funding to

expand.



Strategy

Ken expects to grow the Business to 188 employees in the next three (3) years. He plans to

acquire an established transportation company as a base of operations in Texas. Then hire ten (10)

drivers and four (4) support staff over the next year. The Business will add 50 drivers and 8 support

staff in year 2. In year 3, the Business will hire an additional 100 drivers and 16 support staff. The

Business expects to lease tractors (semis) and trailers. By leasing the equipment, the rental company

will build most of the operating costs into the rental agreement. Accounting services and

oversize/overweight permitting will be outsourced until support staff can be hired to fill these

positions.

Goals & Mission Objectives

The Business will acquire TE Inc.1 by the end of First Quarter 2017. TE Inc has a Data

Universal Numbering System (DUNS) number. This will allow the Business to compete for

Department of Defense (DoD) Carrier Contracts through the Freight Carrier Registration

Program (FCRP) and administered by U.S. Army Military Surface Deployment &

Distribution Command (SDDC) and to be paid for services rendered.

The Business will be co-located with Military Logistics LLC, Military EXpress’ exclusive

brokerage agency, to save brokerage fees and create an income stream.

Within five (5) years, the Business will be transformed from a LLC to a privately-held, C-

Corporation by employing experienced CDL holders and support staff who are either

Veterans with an honorable discharge or their immediate family members.

Within ten (10) years, shares of the corporation will be available to employees and their

immediate family members via an Employee Stock Ownership Plan (ESOP).

We will achieve this goal within three (3) years by hiring a total of 188 employees, and

leasing 160 tractors and 160 trailers and own/lease 5 straight trucks/cargo vans.

1 A Non-Disclosure Agreement prevents us from revealing the actual name of this LLC.



For the next three (3) years, the Business will provide an 8 % return on investment (ROI)

for our investors/angels.

We intend to have the highest retention rate in the nation thereby saving recruitment and

marketing dollars. We expect to grow our driver pool through word of mouth and social

media.

We will have the lowest at-fault accident ratio in the industry and monitor tractor and/or

trailer movement using telemetric services.

Our drivers will be the most courteous, friendly and thoughtful drivers in the nation. We

will always aid stranded motorists and stop to assist accident victims until relieved by

authorities.

Services

Since September 11, 2001, America has been at war with an implacable enemy. Our military

has sustained operations from the mountain villages of Afghanistan to the desert towns of Iraq. The

enemy has used shifting tactics from Improvised Explosive Devices to Surface-to-Air missiles.

Throughout the conflicts, our military has regrouped and met the challenge. The Army and Marines

depend upon the Air Force to transport the “beans and bullets.” The Air Force depends upon them

to keep the wolves at bay. And everyone depends upon the Navy SEALs to find and eliminate high

value targets.

Today’s business environment is much the same. Shifting priorities, new rules and

complex regulations pose as problematic an environment as the battlefield. But the one

overwhelming article of faith that our Veterans hold dear to their hearts is the simple mantra of “No

One Left Behind.” This guiding principle provides a substrate unknowable to the civilian

population.



Current Stage of Development

We will provide our clients with exceptional service and overwhelming professionalism. We

will under promise and over deliver on their expectations while continuing to provide transportation

to TE Inc.’s clientele.

Starting March 2017, we will begin to supply transportation to the oil production industry.

Oil companies and those who provide services to those companies expect new growth with the

change in the administration. The Business has secured Master Service Agreements (MSA) with

Coast Services, Centerville, TX and MarCorps Logistics, Houston, TX. The Business will be the

exclusive Rig Mobilization (Rig down, Move and Rig up) transportation providers for the above

entities. These two MSA’s will provide a guaranteed gross revenue of at least $5.06 million.

All our drivers will be fully insured and licensed as well as Transportation Security

Administration (TSA) certified. All driver helpers will be fully insured, bonded and TSA certified.

Driver Benefits

Our pay and benefit package is the most generous in the industry.

Mileage calculated by the actual driven miles rather than “as the crow flies;”

No broker fees if cargo is booked through Military Logistics;

$0.40/mile - New Driver [less than two (2) years’ experience];

$0.50/mile Experienced Drivers with more than two (2) years behind the wheel;

$0.20/mile for hauling an empty trailer;

Safety milestone bonus and/or award starting at

o 250,000 miles – New Drivers Only - Bumped up to experienced rates

o 500,000 miles

o Then in 500,000 mile increments

Assigned tractors will not be shared among the driver pool;

Paid weekly by direct deposit or reloadable payroll card



Health Insurance;

Annual physical/Current DOT Physical Card

Dedicated dispatch available 24/7/365.

Operational Benefits

The Business has established a Veteran Partnership Lease Agreement with Ryder Truck to

supply sleeper tractors and trailers which includes all operating costs except fuel. Included is license

plates and permits; all required insurance; preventative maintenance, repairs and breakdown service;

telemetric tracking; commercial-grade Global Positioning System (GPS), and a widely-accepted fuel

card. The telemetric and fuel card data will be fed to ATBS accounting service.

ATBS will provide accounting services for a monthly price per vehicle. Its services include

tax consulting; quarterly tax estimates; year-end State & Federal Tax returns; bottom line maximizer;

monthly profit & loss statements, year-to-date profit & loss statements; bookkeeping; details profit

plan; unlimited business consulting; industry benchmarking; entity formation; and payroll services.

Our drivers are to be treated as our primary asset. They will be served in an expert and

prompt manner. They should expect to be treated in a polite and dignified manner by all. Business

will be transparent to our drivers because they are our greatest asset.

Customer Service

Our clients expect to deal with the Business in a professional and expeditious manner. They

expect their goods to be delivered on time and on target and in good condition. Our drivers will

contact each client to provide then an Estimated Time of Arrival (ETA) or Estimated Time of

Departure (ETD). The driver will contact the on-call dispatcher if there are any problems or

unanticipated delays encountered on the road.

Propriety Position

The Business intends to be the first trucking firm that truly revolves around the driver. We

recognized that truck without a driver behind the wheel is a liability. We will hire only Veterans or



their immediate family members either behind the wheel or driving a desk. All support staff will

gain practical knowledge and an appreciation for driver duties during an annual 48-hour ride along.

We aim to treat our drivers as an asset rather than employee. Within ten (10) years, the Business will

be a privately-held, employee-owned corporation with the employees having proportional seating on

the Board of Directors.

Competitive Advantage

Because of the trust and loyalty shared among Veterans, other Veterans are willing to use

Veteran owned and operated businesses. They know that if a Veteran is given a job it will be

mission accomplished. Many companies go out of their way to hire Veterans because of the ethos

and prior training they bring to the job. This is amply demonstrated by a simple internet search

regarding Veteran recruitment bonuses and hiring preferences.

In 2015, there were 21.2 million men and women were Veterans, accounting for

approximately 9 % of the civilian population. Per Mike Haynie, director IVMF, this increasing

dichotomy has “disconnected the consequences of war from the American public.” This gives

Veterans another powerful link to each other as well as introduces a feeling of responsibility among

civilians.

Market Analysis

The Business has two different market sectors: the Veterans we hire and Veteran clientele.

Over one-third of CDL holders are Veterans. This ratio far over represents the 9 % Veteran

population. Transportation companies want to hire our Veterans for the various reasons outlined

above. Our ethos, esprit de corps, and viewing drivers as an asset will be spread through word of

mouth, social media and a professionally designed hiring portal.

Our second sector entails growing our transportation network to reach throughout North

America. Therefore, we will heavily target end users through print, social media, the internet and

other brokers.



Growth Trends & Key Driving Forces

2014 Texas Veteran Population by County

The American Trucking Associations (ATA) cites a growing shortage of nearly 50,000

drivers in America. In 2013, that number was 30,000. In addition, the median age for truck drivers

is 49 years old while per the Labor Department, the median age for American workers is 42 years

old. Furthermore, the Labor Department states that the national average unemployment rate is

5 %

However, per the Department of Veterans Affairs (VA) and the Texas Workforce

Investment Council’s 2016 Update, the unemployment rate for Veterans between the ages of 18 – 24

years old is 16.2 %. The unemployment rate for Veterans between the ages of 25 – 34 years old is



7.7 %. This is the same demographic which the trucking industry fails to recruit. Veterans want to

work and are not afraid of putting in the hours necessary to accomplish the mission

We will become an employer for the unemployed younger Veteran workforce and

provide a true career path with room to advancement. Because our drivers will be treated as a true

asset we will save our recruitment and training dollars to put that back into our drivers’ pockets.

The Bureau of Labor and Statistics cites a CDL driver’s average salary is $43,180 per year.

Under our pay and benefit package our drivers can expect to earn well over $60,000. Further, our

drivers will be able to book with any broker, but if one books through Military Logistics the

brokerage fee is waived putting more money in the driver’s pocket. This benefit is unheard of in the

trucking industry, and we predict to be on the leading edge of what will become a new industry

standard.

Finally, the population in this region is set to explode over the next 15 years. Using data from

the U.S. Census Bureau and Texas Office of the State, the population will grow by more than 3.5

million between now and 2030. Somehow all these people will need to be fed, housed, and clothed.

These needs are currently filled by the trucking industry and this demand will only grow as well. The

Business wants to be poised ahead of the oncoming tsunami both as an employer and as a

transportation entity.

Market Segmentation

As described above we have two distinct customer mindsets. We have drivers who want to

drive and shippers who wants their goods and products transported. One would think mix the two

together and shake well would produce a martini of satisfaction. But if you mix too much vermouth

or a low-quality gin, it may be a martini, but I wouldn’t want to drink it. It takes a skilled bartender

to get the right ingredients in the right amount, and that is the expertise of a broker can make or

break a successful run.



The Business expects to provide services for the local trade (within 100 miles) that TE Inc.

Division. has been filling and increase Over-the-Road (OTR) capacity to accommodate DoD cargo.

The Oil Field Division will provide transportation for the oil production industry. For the next 18

months, we project gross revenue to fall into the following categories:

Other services involve: Secured Delivery; Overnight Delivery; Same Day Delivery; Fleet Exclusivity;

White Glove2/Two-man team; Residential/Inside Delivery; Packing and transportation of

Household Goods; Unpack and Debris Removal; Lift Gate Service; Dock Transfer and

Warehousing.

Competition

There are 62 small freight businesses within 100-mile radius of DFW area. However, while the

larger freight corporations have a professional web presence, the majority have simple weblinks and

contact information. While conducting research, we encountered numerous wrong contact

information, broken weblinks or a minimalist website. Also, many of these small businesses, have

arcane pricing which makes it extremely difficult for the average consumer to compare apples to

apples. Within this environment, the freight broker works. The broker negotiates the price between

what the shipper wants to pay and what the transport company receives in payment. In return, the

2 Sensitive shipments and fragile items which must be delivered with special care.

Oil Rig Transport

40%

Local LTL50%

OTR TL5%

Other Services

5%



broker receives a commission based upon the value of the cargo and from the trucker hauling the

freight.

Market Acceptance

For the same reason that freight companies want to hire the Veteran, the broker wants to

use Veteran transportation services. Many times, the in-built trust among Veteran brokers,

dispatchers and drivers delivers a better paying load quicker than the major competitors can muster

their forces.

Management Team

The Business’s management team will be recruited from Veteran professionals in various

fields of expertise. Ken Kelso has identified key personnel and Advisory Board members. In

addition, he will be hiring personnel central to the success of the Business.

Key Personnel

Ken Kelso, Marine, CDL Holder

He is the President and CEO of the Business. He is a CDL holder, with the following

endorsements: HAZMAT, Tanker, and Double/Triple Vans. He holds a Transportation Worker

Identification Credential authorized by the TSA. Furthermore, he is a Certified Master Broker and

can turn a wrench too. In 2014, Ken graduated from the Honor Courage Commitment, Inc. (HHC)

Fellows Program held at Southern Methodist University, Cox School of Business and the Caruth

Center of Entrepreneurship. The mission of HHC is to “maximize Veteran talent to grow the U.S.

economy and build local communities.” At HHC he learned how to create a start-up business plan.

Not being satisfied with a “paper exercise,” he hopped out on the road to provide proof of concept.

It was at HHC that he worked with many of the people who will sit on our Advisory Board

which he has begun to establish. These board members will be instrumental in providing guidance

to the Business during its transformative period from LLC to C-corporation. It will be comprised of



Veterans in the oil production industry, financing professionals, entrepreneurs, and motivational

speakers.

Mike Rimpley, USMC Veteran

Don Neil, US Army Veteran

Kory Ryan,USMC, Attorney

Salvatore "Sal" Giunta, Army Veteran, Medal of Honor Recipient, Motivational Speaker

Sal is the first living person since the Vietnam War to receive the U.S. military's highest

decoration for valor, the Medal of Honor. He was cited for saving the lives of members of his squad

on October 25, 2007 during the War in Afghanistan. He left the U.S. Army in June 2011 and has

since gone on to be a successful author and motivational speaker. He is a Fellow graduate of HHC

and sits on their Board of Directors.

Michael Jernigan, Marine Veteran

He was blinded by a roadside bomb in Iraq on August 22nd 2004. Micheal had 45% of his

cranium crushed and suffered severe damage to his right hand and left knee. He graduated with a

Bachelor’s Degree in History from the University of South Florida in the spring of 2012. Michael is

a Community Outreach Coordinator at Southeastern Guide Dogs. He was featured in the HBO

documentary Alive Day with James Gandolfini and has been a contributing writer for the New York

Times. He remains active in Veteran affairs by representing blind Veterans and bringing awareness

to the trials faced by our service members that have returned home wounded.

Mary Ellen ‘Mel’ Spera, Army Veteran, Marketing and Social Media

Mel is Market Analyst, Copywriter, and Social Media expert. She is Chief Financial Officer

and Lead Copywriter at Parker’s Voice, an independent small business in Delaware. According to

Ken, her grasp of disparate information and ability to dig out nuggets of gold is phenomenal. She

claims that she’s just using the skill set she acquired when she was a military intelligence analyst and

being the “Godzilla of rabbit holes” is second nature to her

https://en.wikipedia.org/wiki/United_States_Army

https://en.wikipedia.org/wiki/Vietnam_War

https://en.wikipedia.org/wiki/United_States_Armed_Forces

https://en.wikipedia.org/wiki/Medal_of_Honor

https://en.wikipedia.org/wiki/War_in_Afghanistan_(2001%E2%80%93present)



Personnel Needs

It is critical that qualified, Veterans be hired by the end of First Quarter 2017 to meet our

MSA commitments and provide transportation that TE Inc.’s customer base has come to expect.

Compliance and Safety Officer. The holder of this position will ensure that federal and state

rules and regulations are followed and documented. The Business will need an experienced safety

officer with a special emphasis in the Federal Motor Carrier Safety Administration’s (FMCSA)

programs. Experience in land based rig mobilization will be helpful but not a critical need.

Oil Field Division Chief. This position will require an intimate knowledge regarding rig

mobilization. In the past, costly mistakes have occurred in the industry from moving and rig crews

not following their own procedural requirements nor having the required equipment for loading

equipment. Expensive delays can arise without comprehensive planning.

Experienced CDL holders. It is estimated that a minimum of eight (8) drivers will be

necessary to fulfill our MSA requirements. Current forecasts call for 18 rigs to be moved per month

with each move (without complications) taking from two (2) to three (3) days This will provide

adequate home time and mitigate anticipated unexpected delays.

Support staff. At a minimum, the Business requires four (4) full time staff members.

Support staff will be responsible for producing required transportation paperwork such as bills of

lading and invoices. In addition, support staff will also act as dispatchers and monitor the various

Load Management websites and telemetric sources.



Organizational Structure

Operating Strategy

The Business expects continual growth as it transforms into a privately-held, C-Corporation

within the next five (5) years (classes of shares are undetermined). Once the Business’s entity has

been transformed, we will provide our 200+ employees with an ESOP. The ESOP will provide

capital to grow the Business to 1,000 employee/shareholders with a 51% stake within ten (10) years.

The Business is currently comprised of a two (2) revenue streams: Less than Truck Load

(LTL) and Truck Load (TL) and is run on a cash basis. We will reorganize the two revenue streams

in by the end of First Quarter 2017. TE Inc. Division is an established business that provides

mostly LTL within a 100-mile radius of DFW International Airport. The Oil Field Division will

provide equipment oil rig transportation as specified above.

Location

Ken is negotiating the purchase of TE Inc. real property, assets and business. It is situated

within the Dallas corridor and will act as a base of operations. The Dallas–Fort Worth–Arlington,

TX Metropolitan Statistical Area is comprised of 13 counties, and it is the economic and cultural

Advisory BoardKen Kelso President

TE Inc. Division Chief

2 Drivers 2 Support Staff

Oil Field Division Chief

8 Drivers 2 Support Staff

Compliance & Safety Offier

Mel Spera

Marketing & Social Media



hub of the region commonly called North Central Texas. It is the largest inland metropolitan area in

the United States. Factoring in a higher than average growth, data from the 2010 Census estimated

that the 2015 population grew to 7,102,796. In 2014, 1.57 million tons of goods and materials

landed at DFW International Airport via dedicated all-cargo aircraft. This made DFW Airport the

10th largest air-cargo hub in the nation surpassing Newark (NJ) and Logan (MA) International

Airports.

The regional economy of the area is driven by the service sector, trade, and transportation

industries. Per the Texas Workforce Investment Council’s 2016 Update, the truck transportation

industry was listed as one of the top 10 industries employing over 15,600 Veterans throughout

Texas.

In addition, trucking moves over a network of greater than 556 miles of Interstate and other

highways and 1,026 miles of other principal arterial roads within the area.

Finally, Dallas is one of the apexes of the “Texas Triangle” (an area that measures several

thousand square miles) which is comprised of Dallas, Houston and San Antonio.



As mentioned earlier, the population is expected grow above the national average with the next

15 years. The above map predicts the impact of this growth on the trucking industry in 2040. All of

this combines to provide a target-rich opportunity for an organization which will pride itself on its

Veterans and “Driver’s First Mentality.”

Acquisition Summary

With the acquisition of TE Inc., Military EXpress will own a successful business established

in 1992 that serves the North Central Texas area. Most of its clientele are long-term patrons who

require delivery from/to DFW International Airport. It provides a base of operations, four (4) older

vehicles and three (3) functional dry vans with one (1) non-functioning dry van used for storage.

Although TE’s personnel are not Veterans, we will grandfather them into our organization for as

long as they wish to be employed by us.

TE Inc sits on 2.6 acres and, spending on marketing is marginal. Most clients find them via

word of mouth, an antiquated website or from brokers. As stated above, TE Inc. already has a

DUNS which is vital to the Business’ plans to capitalize on the opportunity to transport freight for

the DoD A rare open season is scheduled to run from January 9 – February 28, 2017.

Currently the business and all assets are listed for $770,000 with the real estate valued at

$160,000. Businesses of this type sell somewhere between 2-4x the net operating income. Based

upon net operating income for the 2015 tax year ($332,600) x 3 calculates to a valuation of $690,000.

Although 2016 gross revenue will be less than 2015, expenditures are down and the net operating

income has been projected to be well over $220,000. Last, but certainly not least, the business will be

without any liens or encumbrances upon transfer of ownership.



*Data through September 2016 ** 2017 Projection based on average of previous four years

Operations

The Business will operate on a 24-hour basis. Our drivers will receive goods, transport, and

deliver the goods 365 days per year. The Business will employee staff to provide 24/7/365 to

support our drivers. If one of our drivers in on the road, there will be someone “home” to assist as

necessary.

Financial Strategies

During the 1st year, we project to add 10 leased tractors, 10 leased trailers, 10 drivers and 2

support staff. The additional equipment and staff will provide transport and support the Oil Field

Division’s MSAs. TE Inc’s location will provide enough room to store the additional equipment.

The office space will be tight but will accommodate the extra staff.

During the 2nd year, we project adding 50 more tractors, 50 trailers, 50 more drivers and 8

more support staff. TE Inc. real property is 2.6 acres and will able to accommodate the additional

equipment especially because all the equipment will rarely be on-site at the same time.

By year 3, we should have out grown the property. We should find a site that has ample

space and is well lit, fenced and gated. This new depot should be able to secure 160 tractors, 160

trailers, five (5) straight trucks/cargo vans and provide room for the support staff. Either TE Inc.

$-

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

2013 2014 2015 2016* 2017**

TE Inc. Finacial Overview

Gross Expenses Net



will be consolidated at the new location or it will remain as a separate entity in its current location.

Consolidating operations will provide strength multipliers that will be absent working out of two

locations. Therefore, it is recommended that the 2.6-acre site and warehouse be sold to provide

capital for the third-year expansion.

Pricing

TE Inc. Division’s rate model is based on zone of delivery, weight and distance.

The Oil Field Division’s pricing is determined upon the size of the oil rig and at a fixed rate per

move. Gulf coast rate is $30,000 per rig and MarCorps is $20,000 per rig. Gulf Coast anticipates

two moves per month while MarCorps has scheduled 217 moves during 2017.

Advertising and Promotion

Current adverting for the TE Inc Division is negligible. The owners have built a successful business

model through clients’ word of mouth, broker relationship and an antiquated website. The Business

plans to ramp up advertising dollars, invest in professionally designed website and maintain its client

base. In additional it will invest in DAT and Internet Truck Stop Load Boards to monitor the most

profitable transportation lanes.

Once the Business establishes its reputation for on time and on target rig mobilization.

Word of mouth in the oil production industry will garner more MSAs. Because we will be renting

our tractors and trailers we will not over extend our self with capital investment or over hiring.

Critical Risks

Compliance

Staying compliant with the myriad federal and state rules and regulations will be a fulltime

job for our Compliance and Safety Officer. The FMCSA is mandated to reduce crashes, injuries and

fatalities involving large trucks and buses. Some of FMCSA’s programs require annual driver



physicals; random drug and alcohol testing; HAZMAT regulations; Hours of Service (HOS); and

Cargo Securement. The regulations often change at the last minute.

Fuel prices

As diesel fuel rises the tight margin of profit shrinks. However, in many cases this is countered by

the carrier by implementing a fuel surcharge.

Competitive pricing

Staying competitive in a tight market means keeping close watch on the operating expenses

and having a good working relationship with a broker. Military EXpress will generate sufficient

income to continue growing and return an excellent ROI by using Military Logistics brokerage

service.

Funding

Both TE Inc. and Oil Field Divisions will provide substantial gross revenue. However, the Business

will be left without any operating capital. A cash infusion of $100,000 will provide operating capital

until our accounts receivables begin. We project the debt of $850,000 to be paid in full within three

(3) years allowing us to proceed with our expansion plans. We are planning to finance the

acquisition of TE Inc. through a financing package developed by Don Neil of ATBS

Offering

We anticipate that our total debt of $950,000 will be paid before January 2020. We are offering our

investors 8% net revenue over the next three (3) years for an investment of $100,000 in operating

capital. We project an ROI of $125,364 in the first year alone.



Appendix

2017 Military EXpress Income Projection Statement

Revenue

TE Inc $ 492,800

Gulf Coast MSA $ 720,000

MarCorps MSA $ 4, 340,000

Total Gross Income $ 5,552,800

Fixed Yearly Expenses

President $ 75,000

Social Media $ 42,000

Compliance Officer $ 50,000

Division Chiefs $ 100,000

Ryder Tractor Lease (8) $ 406,560

Ryder Trailer Lease (8) $ 6,400

Liability & Physical Damage Ins** $ 3,300

Real Property Ins** $ 344

ACA Medical Ins (Drivers) $ 156,000

ACA Medical Ins (Support Staff) $ 6,000

Worker's Compensation Ins $ 25,000

Advertising & Marketing $ 7,000

License Plates $ 8,700

Personal Property Tax $ 13,000

Ryder Extended Coverage Ins $ 57,600

Ryder Fuel Use & Tax Reporting $ 2,560

GPS Service** $ 790

ATBS Accounting $ 15,000

Support Staff $ 87,000

Cargo Ins $ 28,880

DAT/Internet Truckstop Load Boards $ 6,950

Total Fixed Expenses $ 1,098,084

Variable Yearly Expenses

Ryder Tractor Lease/mile $ 624,000

Ryder Trailer Lease/mile $ 48,000

Tractor Fuel $ 780,000

Parking Fees & Tolls $ 15,000

Permits $ 25,000



Travel Expenses $ 12,500

Tires** $ 1,800

Maintenance** $ 8,700

Repairs** $ 13,666

Legal Fees $ 10,000

Driver Wages $ 528,000

Payroll Taxes $ 215,250

Delivery Supply Expenses $ 7,000

Lawn & Brush Hog Service $ 1,500

Contract Labor $ 25,000

Postage $ 950

Office Supplies $ 12,000

Utilities $ 2,800

Phone/Internet $ 1,500

Misc Expenses/Losses $ 5,000

Total Variable Expenses $ 2,337,666

Profit (Loss) $ 2,117,050

Minus cash asset debt $ (100,000)

Minus acquisition debt $ (450,000)

Net Profit $ 1,567,050

Return on Investment in the first year $ 125,364

** For physical assets belonging to TE Inc.



TE Inc Division Balance Sheet – Opening Day

Assets

Current Assets:

Cash: $100,000

Petty Cash $1,000

Accounts

Receivable

$0

Fixed Assets:

Land $110,000

Buildings $50,000

Office Equip $4,940

Office Furn $5,319

GPS Systems $2,454

Automobiles/

Vehicles

$79,756

Software $5,751

TOTAL ASSETS: $359,189

Liabilities

Current

Liabilities:

Notes Payable $100,000

Interest

Payable

$42,500

Investor Payable $125,364

Taxes Payable:

Federal

Income Tax

$0

State Income

Tax

$0

Property Tax $4,644

Payroll

Accrual

$6,224

Long-Term

Liabilities

$850,000

Net

Worth/Owner’s

Equity/Retained

Earnings

$0

TOTAL

LIABILITIES:

$1,128,732

Certificate of Organization

Articles of Organization

FMCSA Motor Carrier USDOT and MC Registration

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