Penfield's

3500 Comsouth Drive, Suite 500 Austin, Texas 78744 (512) 610-9221 www.penfields.com • cmashburn@penfields.com INTRODUCTION OVERVIEW For nearly thirty years Penfield’s has been an operator and partner in first class hotels due to its specialized attention to the hotel industry and consistent quality of service. Due to a commitment to develop revenue streams that have not been optimized in hotels, Penfield’s has become a steadfast partner to convention-sized hotels. Constantly evolving and innovating, Penfield’s tailors solutions for hotels of any size, finding a niche and developing mutual partnerships. Penfield’s is able to reduce hotel operating expenses and increase revenue and available hotel capital. Strategic partnerships with global leaders, like FedEx and Xerox, allow Penfield’s to offer a wide array of customizable services and adapt to personalize each location meeting the hotel’s needs. Penfield’s Business Centers complement the hotel as a seamless extension of hotel operations. Many guest services and amenities are consolidated into one convenient location. One of Penfield’s many competitive advantages is that it works directly with FedEx, UPS, USPS and all other carriers to offer any of their services. In addition, Penfield’s is a FedEx Authorized Ship Center (FASC) and is compensated by FedEx for every package shipped. Currently in operation at 6 hotel properties, 2 convention centers, 1 retail store and 2 major rental-car airport locations, Penfield’s has upwards of 15 locations to open in the coming year. These locations will be small to large and span the breadth of services Penfield’s has to offer. A wide-array of services enables Penfield’s clients to outsource routine or specialized operations confidently and cost- effectively by performing these services in a reliable, secure and professional manner. The benefits of outsourcing these services include the ability to leverage Penfield’s scale and strategic partnerships, expertise, systems and comprehensive training, lower labor and capital costs and experience higher quality and more stable processes. Penfield’s revenue is derived from short and long-term contracts with hotels, car rental agencies, convention centers and freight clients that operate in the United States. The company, which is privately held, is based in Austin, Texas. Penfield’s operation had gross revenues of approximately $3.13 million in 2012 and has added $1 million in additional contract revenue to date. After taking over the operations in 2010, Penfield’s current Executive Team began identifying non-performing contracts and negotiated out of four pre-existing contracts that were generating negative revenue. This revenue of approximately $800K has been replaced with positive bottom line revenue, with additional growth slated for 2013. VALUE DRIVERS Hotel Operation Expertise – Penfield’s is a recognized leader in the hotel business center and dock operations industry with comprehensive knowledge and experience gained by managing dozens of outsourced operations contracts across the United States over the past thirty years. It continually assesses both the technical and operational challenges to convention hotel operations and incorporates value-added solutions to its service offering to meet these challenges. Quality, Diverse Customer Base – Penfield’s has a diversified customer base consisting of hotels, convention centers and car rental locations. Strong Financial Performance – Penfield’s has realized consistent growth and has maintained profitable long term contracts year over year. With contracts spanning 10-15 years, there is continued base revenue, with steady growth both near and long term. Comprehensive Employee/Customer Training – Penfield’s provides comprehensive training to its employees as a cornerstone to its business, including extensive on-site instruction. Its employees are cross-trained to ensure flexibility and increased productivity. Customer Focused – Penfield’s has a loyal employee base consisting of non-union employees who embrace a customer-focused approach to service and operate as an extension of Penfield’s clients. This has resulted in a loyal customer arrangement that has produced consistent contract expansion. MARKET OPPORTUNITY Penfield’s uniquely provides services within three industries. In 2012, the major carrier shipping industry generated $164 billion, which includes USPS, UPS, FedEx and DHL alone. The same year, the lodging industry generated $127 billion. The Less than Truckload (LTL) Freight industry generated $30 billion. Penfield’s is able to cater to customers and clients within all of these industries. In 2009 the lodging industry experienced a shift in which properties began staffing services through third party vendors. In order to reduce operation costs and focus more closely on hospitality, properties and their management companies sought outsourced solutions. This, along with Penfield’s unique approach and first-to-market Dockmaster® program, presented an expansion opportunity. Additionally, Penfield’s is one of the few hotel and convention business centers that will help customers make freight and trucking arrangements. In 2012 a unique opportunity was presented to Penfield’s by The Hertz Corporation seeking to provide a first-to-market offering to their customers of gift and sundry shops located within Hertz facilities. Hertz sought a third-party solution provider and found value in the gift ship and business center operations Penfield’s has already shown success. Hertz awarded Penfield’s a master service agreement as sole provider of these operations with aggressive expansion opportunities in the U.S. and potentially overseas. Road Trip by Hertz in San Diego HOTEL OPERATIONS SERVICES DOCKMASTER® PACKAGE HANDLING SYSTEM Penfield’s operates a secure shipping and receiving program to manage all packages and deliveries using proprietary technology, Apple device and application to track all packages that are digitally scanned and signed in real-time. Penfield’s receives, securely stores and ships ALL packages from any carrier for the hotel and distributes to in-house departments and guests. BUSINESS CENTERS & GIFT SHOPS Onsite business centers within the hotels offer many amenities to the hotel as client and our mutual customers, the guests and convention groups: 24-Hour computer workstations with internet, full service digital printing/copying, faxing and document finishing, equipment rental services (printers, copiers, mobility scooters), full retail selection, shipping supplies and support. Lobby iPad Bar (featuring printing capabilities to the Business Center) Fully stocked gift shops, located in prime lobby locations offering food, beverage, souvenirs, sundries and a shopping experience. Selection is customized to the property and locale. Additional services tailored to hotel, including a multifunction operation Business Center & Gift Shop within same storefront. DRAYAGE & CONVENTION SERVICES Tradeshow and drayage services, plus all pre-show handling to include advanced warehousing and material handling then unloading and delivery to show site / teardown and return to warehouse. ADDITIONAL SERVICES 24/7 Unmanned Business Center for smaller properties Coat and bag check Lost and found management Hotel and guest mail sorting and distribution Whole host of staffing services to support the hotel and visiting groups CUSTOMER BASE & CONTRACTS Penfield’s has established strong relationships with a diverse customer base consisting of large convention hotels, hospitality ownership and management companies and a major car rental agency. Penfield’s has been providing Dockmaster® operation, business center and gift shop services for nearly 30 years. Additional service offerings such as freight/logistics, coat and bag check, retail sales and temporary staffing has enabled contract expansion at existing locations and opened new contract opportunities. Penfield’s is poised for significant growth. Penfield’s typically provides its services under five to ten-year contracts, which are either sole-sourced or awarded through competitive bidding. Penfield’s has never lost a contract due to service failure or performance issues and is pre-qualified with hotel management companies to bid on upcoming contracts. OPPORTUNITIES & COMPETITIVE ADVANTAGE There are many ways Penfield’s is set apart from other providers. Penfield’s has been in business 25 years, and does not see any direct competition in the market. The company has created a hybrid business model that blends several components, some of which are offered individually by niche competitors, but not as a whole package, as Penfield’s provides. Penfield’s operates the Dockmaster® program, securely handling all inbound and outbound hotel, guest and group packages, which removes liability and expense for the hotel. Penfield’s provides shipping, like UPS and FedEx but is not strictly a shipper. Penfield’s supplies copies, like FedEx/Kinko’s, but is not strictly a copy and print center. Penfield’s has shipping abilities through all carriers with competitive rates for outbound packages and several pickup times. Penfield’s is a freight forwarder, able to secure LTL/FTL arrangements for groups with oversized or heavy cargo. Because Penfield’s is a hybrid of several business models, the competition will have to adapt to Penfield’s. Competitors will have to modify their core businesses to meet Penfield’s market advantage. Penfield’s specialized hospitality industry focus provides a depth of experience, know-how and contacts in this market that single-service companies cannot match. Penfield’s only formidable competitors, FedEx Office/Kinko’s and The UPS Store, will not handle the shipping and receiving of other carriers’ packages, therefore limiting the hotel’s program and options for the guest. Penfield’s offers temporary staffing as it relates to the client, providing needed services to groups hosting large events. Penfield’s operates an on-the-go shipping kiosk setting up on the showroom/convention floor as groups close down their show. To expand business further, Penfield’s has implemented an Outreach Program, collaborating with the hotel Sales and Convention Services staff to contact incoming groups and meeting planners and make advanced service arrangements. Penfield’s attends all hotel Site Visits and Pre-Convention Meetings with group and client meeting planners, partnering with the hotel representatives. FUTURE GROWTH Penfield’s is planning a future release of PenTrk, an application specifically developed in house for the hotel industry to track packages, parcels, and even lost and found. This product will be marketed to Penfield’s current hotel clients and will be promoted to the hotel industry as a whole. Penfield’s has strategic plans to grow its freight forwarding business with growth already being experienced in the convention centers. A new service Penfield’s will begin offering and expanding is a Shipping Audit & Optimization service that includes a full audit of FedEx/UPS invoices. This service includes auditing shipping invoices, processing claims for errors or incorrect rates and providing shipping reports and analytics to clients. An additional facet will include Contract Negotiations, where Penfield’s will assist clients to obtain optimal pricing and contractual agreements with their carrier of choice. A new offering in the gift shop and retail industry, is the Open Market shop that features fully secure, self-check-out kiosks in small retail shops offering food, beverage, sundries and souvenirs. Penfield’s will unveil this model later this year through its partner Hertz. EXECUTIVE TEAM CHRIS MASHBURN, President Chris has been successful in the acquisition and merger of several businesses over the last 14 years. In 1999 he founded a startup retail business, taking it from concept to a successful acquisition in five years. In 2001 Chris co-founded a private commercial security firm as President/CEO. To support the company’s expansion, Chris managed corporate systems development, instituted leadership and management training and built strong relationships with partners and clients. He was responsible for developing structure and internal control systems resulting in company growth from $400,000 in annual revenue to $50 million in just over 6 years. Chris led the acquisition and merger of three additional companies. Chris served in the Texas Department of Public Safety for 20 years, retiring in 2004 with the rank of Highway Patrol Captain. Chris’ accomplishments at DPS include serving on the security detail assigned to protect George W. Bush during the 2000 presidential campaign. He went on to develop and coordinate the incoming Texas Governor’s Security Detail, and was later assigned to the Director’s Office of the State Police, serving as an Audit and Inspection Captain. Chris completed, with honors, the prestigious 12- week management course at the University of Louisville, Southern Police Institute. He attended Tarleton State University and the University of Kentucky-Louisville, majoring in Agricultural Business and Business Administration. Chris has been married for 26 years and currently lives in Austin, Texas. FINANCIALS Officer salary included in Expenses. Officer salary included in Expenses. * Startup of four new contracts produced travel expense totaling $104,313 for the year. * May 2013 included an additional pay ** Intercompany Transactions of $207,040 not included. period incurring additional expenses expenses totaling $69,599. USE OF FUNDS Repay high-interest debt to reduce cost of working capital $ 450,000 Funding new operations 300,000 New equipment purchase 150,000 Increase retail merchandise selection 70,000 Enhance operational branding 30,000 TOTAL $ 1,000,000 OPTIONS, PAYBACK & RETURN Management anticipates that the proposed capital will dramatically increase Penfield’s Office revenues by reducing the current cost of working capital while dramatically increasing the rate of new client acquisition and fund ongoing opportunities with Hertz. Penfield’s is open to multiple finance options including, but not limited to: simple debt repayment, minority equity options, convertible debt, equity with a structured buyback, or any other proposal that works for both the Investor(s) and the company. SIGNATURE BY CHRIS MASHBURN Chris is a founder and president of Penfield’s Office. He is the main architect of Penfield’s Office strategy and acquisitions to date. Chris has over 20+ years of experience in management and entrepreneurial operations. Chris Mashburn cmashburn@penfields.com 254-717-1440 cell