Las Vegas Railway Express, Inc. Click to edit Executive Summary Master title style Las Vegas Railway Express, Inc. (the “Company”, “LVRE”) will operate the “X” Train, a luxury passenger train, on a 330 mile route between Los Angeles and Las Vegas and will offer a compelling alternative to current travel options Trains Outfitted With First Class Accommodations − Concierge Reservation Services: Pre- and post-boarding at discounted prices from hotels, restaurants, shows − Deluxe first class cars with executive seats, multiple flat screens in each car, bar and five-star food service, smoking cars, limited card games (for hotel credit—no gambling) , corporate suites and door-to-door hotel transfers upon arrival in Las Vegas Non-train booking income provides supplementary growth opportunity Procure Operating rights for passenger train service over existing Union Pacific (“UP”) and Burlington Northern Santa Fe (“BNSF”) rail systems − LVRE to provide market rate fees to railroads to for financial incentive to give priority to LVRE trains − LVRE has negotiated right-of-way over longer and slower UP freight trains − UP has agreed to a 90% on-time arrival guarantee Quick Train Statistics Average Speed – 65 mph Trip Time – 5 hours Fare – $99/passenger (one-way) Confidential – May not reproduce or distribute without permission of Las Vegas Railway Express, Inc. 2 Click to and Market edit Competition Master title style Driving is cheapest and most popular mode of travel, but route congestion and safety are prevalent and growing problems 12MM individuals drive between Los Angeles and Las Vegas each year Single highway (I-15) drive over mountain pass (plus intersections) – On peak travel days (which coincide with Las Vegas as entertainment destination) the drive can take 6+ hours – Drive takes ~4.5 hours on uncongested days (Monday afternoon, Tuesday and Wednesday) I-15 between Los Angeles and Las Vegas is the most dangerous highway in the country (according to U.S. DOT) Typical trip costs: ~$68/one way (17 gallons of gas) Flying is more expensive and door-to-door transit time only marginally faster than driving 2MM individuals fly to Las Vegas each year from one of four Los Angeles airports Tickets are $280-$320 per person one way Flying has its own issues: – 1 hour actual flight time, plus drive time in traffic to airport – Incur additional parking fees – Must endure check-in and airport security procedures – Additional waiting time in advance of flight – Total time: ~4.5 hours Flying is generally an uncomfortable experience given driving to airport through congestion, airport procedures, uncomfortable seats due to small plane configuration, lack of carry-on baggage space, limited service and Las Vegas hotel transfer Confidential – May not reproduce or distribute without permission of Las Vegas Railway Express, Inc. 3 Click to edit Opportunity Compelling Master title style Ample demand exists in current market to make LVRE a winner Las Vegas Municipal RTC Survey estimated 4MM individuals would use rail if a viable option existed Other surveys estimate that 30% of the 12MM individuals which travel to Las Vegas do so for entertainment alone (gambling, shows, world-class dining, shopping, etc.—excludes travel for business, conventions, athletic events, etc.) Non-train booking services will generate a high-margin, supplemental and diversified revenue stream Online booking platform and concierge reservation service offer travelers an easy and convenient solution for lodging and entertainment booking Opportunity to capture additional fee income from current train passengers LVRE team of experienced Las Vegas leisure and gaming experts possess deep relationships with top Vegas hotels and casinos and intimate knowledge of the market Conservative non-train revenue forecast means greater upside exists beyond current projections LVRE need only capture a small fraction of the overall market to achieve profitability Break even projected at 120,000 passengers per year Year 1 – Two trains making two round trips 2 days a week (Thursday, Friday –Sunday) – Travel Thursday, Friday & Sunday (most popular travel days and most highly congested highway times) – Overall capacity of 1,200 passengers on a train of 15 cars Confidential – May not reproduce or distribute without permission of Las Vegas Railway Express, Inc. 4 Click to editRevenues Non-Train Master title style High-Margin Supplementary Revenue Stream Booking platform will be sole channel to purchase “X” Train tickets – In discussions with Navitaire Rail to build custom tailored ticketing and reservation portal LVRE will offer packages and specials to bundle with train tickets – High hit bookings: Hotel rooms, shuttle transfers (model assumes 40-50% capture rate) – Specialty bookings: Golf packages, shows, club bookings etc. (model assumes ~20% capture rate) Projections calculated using a full bottom-up model for each bucket of non-train revenue White-Glove Concierge Booking and Reservation Service Sales team will proactively call customers after booking to upsell bundled packages Onboard concierge to book hotels, restaurant reservations, golf and other packages Attractive Upside Potential Current model assumes very conservative capture rate Management’s hospitality experience suggests actual upsell rates could meaningfully exceed forecasted assumptions Potential volume discounts from hotels, restaurants, shows, etc. currently not reflected in the model – Discounts passed on to customers to further encourage bundling Confidential – May not reproduce or distribute without permission of Las Vegas Railway Express, Inc. 5 Click to edit Financial Metrics Master title style Las Vegas Railway Express 5 Year Financial Plan Year 1 Yr 1 Exit Rate Year 2 Year 3 Year 4 Year 5 TOTAL TRAIN REVENUES $ TOTAL TRAIN EXPENSES $ 63,212,326 $ 55,330,506 $ 67,663,898 $ 56,054,193 $ 140,818,446 $ 106,254,411 $ 228,704,957 $ 157,125,222 $ 326,871,861 $ 208,601,521 $ 435,319,156 260,605,959 TRAIN OPERATING INCOME $ 7,881,820 $ 11,609,706 $ 34,564,035 $ 71,579,735 $ 118,270,340 $ 174,713,197 22,033,289 46,093,494 NET INCOME Full Operating Ratio 4,762,001 87.53% 7,222,406 82.84% 75.45% Confidential – May not reproduce or distribute without permission of Las Vegas Railway Express, Inc. 68.70% 76,442,388 113,130,245 63.82% 59.87% 6 Click to edit Financial Metrics Master title style Las Vegas Railway Express 5 Year Financial Plan 1 Train 1 Train Add 1 Train-YE 2 Add 2 Trains-YE 4 Add 2 Trains-YE 6 Add 2 Trains-YE 8 Year 1 Yr 1 Exit Rate Year 2 Year 3 Year 4 Year 5 Xtrain Metrics and Financial Statistics Number of Trains at Beginning of Yr New Trains Added Annual Ridership Ridership Growth Annual Round Trips Avg # of Riders per Round Trip 0 2 227,058 Market Penatration (vs 12,000,000) Avg Ticket Price per Rider Average Revenue per Customer $ $ Revenues 0 2 243,048 208 1,092 208 1,169 2 2 470,106 107% 416 1,130 1.9% 2.0% 3.9% 5.9% 8.0% 198.00 $ 278.40 $ 198.00 $ 278.40 $ 218.00 $ 299.55 $ 238.00 $ 320.70 $ 258.00 $ 341.84 $ 63,212,326 67,663,898 140,818,446 4 2 713,154 52% 624 1,143 6 2 956,202 34% 832 1,149 8 2 1,199,250 25% 1,040 1,153 10.0% 228,704,957 326,871,861 278.00 362.99 435,319,156 Operating Expenses: Train C.O.G.S. Train Payroll Other Train Operating Expenses Total Train Operating Expenses Train Operating Ratio $ $ $ $ 4,096,127 1,921,200 45,531,529 51,548,856 82% $ $ $ $ 4,384,587 1,921,200 45,966,756 52,272,543 77% $ $ $ $ 8,480,714 3,746,580 89,792,126 102,019,420 72% $ $ $ $ 12,865,300 5,727,587 133,816,856 152,409,744 67% Confidential – May not reproduce or distribute without permission of Las Vegas Railway Express, Inc. $ $ $ $ 17,249,887 7,738,105 178,467,488 203,455,480 62% $ $ $ $ 21,634,473 9,914,447 223,529,497 255,078,417 59% 7 Click to edit Master title style Project Status Click to edit Operating Agreement Master titlewith style Union Pacific Railroad Union Pacific Railroad Rail access agreement to run trains on UP route from Las Vegas to Daggett, California Market Rate fee structure Right of way agreement to pass slower freight trains – Guarantee 90% On- Time arrival – LVRE will pay competitive market rate—incentivizing freight rail companies to give priority to LVRE trains Sole Right to run privately operated passenger service on Daggett to Las Vegas rail corridor for 5 years Provisions for running additional trains in future years Capital Improvements to be paid for by LVRE for capacity improvement UPRR completed RTC capacity planning Agreement finalized Confidential – May not reproduce or distribute without permission of Las Vegas Railway Express, Inc. 9 Click toPacific Union edit Master Projecttitle Team style Union Pacific John Rebensdorf VP Operations Omaha, NE Jerry Wilmoth General Manager Network Infrastructure Roseville, CA Don Caldwell Real Estate Group Rancho Cucamonga, CA Terry M Tate Director Transportation Services – West Salt Lake City. UT David D Orrell, PE Director Construction/Public Projects Omaha, NE Rick Durrant Director Quality Services – West Roseville, CA Neil Scott Superintendent Transportation SVCS – Utah Salt Lake City, UT James Marshall Program Manager – Commuter Engineering Salt Lake City, UT Simon J Hjelm Capacity Planning Omaha, NE Confidential – May not reproduce or distribute without permission of Las Vegas Railway Express, Inc. 10 Click toOperating BNSF edit Master Agreement title style Summary Market Rate $142 per train mile Guarantee 90% on time operations Priority scheduling over freight BNSF dispatch Fullerton to Daggett, California Operations commence while construction on Cap Ex is underway Economic Benefits to BNSF » Year 1 Direct LVRE $9,746,880 $19,493,760 » Year 3 $38,987,520 » Year 4 $58,481,280 » Year 5 $77,975,040 Confidential – May not reproduce or distribute without permission of Las Vegas Railway Express, Inc. Year 2 11 Click to Team Project edit Master BNSFtitle style Burlington Northern Santa Fe Matt Rose Chairman/CEO Ft. Worth, TX Carl Ice President/COO Ft. Worth, TX Rollin Bredenberg VP Capacity Planning Ft. Worth, TX DJ Mitchell AVP Passenger Rail Ft. Worth, TX Rich Wessler Director Passenger Rail Operations Ft. Worth, TX Gary Agnew General Director Resource Planning Ft. Worth, TX Rick L Depler Asst. Director Passenger Operations Ft. Worth, TX Confidential – May not reproduce or distribute without permission of Las Vegas Railway Express, Inc. 12 Click to edit Haulage Agreement Master title withstyle Amtrak Operating train crews and scheduling Experienced crew and maintenance teams Familiar with the Los Angeles to Las Vegas route on the BNSF and UP rail lines Established security and safety procedures Efficient operating performance record Confidential – May not reproduce or distribute without permission of Las Vegas Railway Express, Inc. 13 Click to Project Amtrak edit Master Team title style Amtrak Joe McHugh VP Policy & Development Washington, DC. Stephen Gardner VP Policy & Development Washington, DC. Jonathan Hutchinson Director – Corridor Development Oakland, CA. Don Kushto Principal – Host Railroads Philadelphia, PA. William Sheridan Chief, Service Planning/Strategy Washington, DC. Paul Vilter AVP – Host Railroads Philadelphia, PA. Suzanne Fike Principal Officer – Strategic Partnerships Oakland, CA. Confidential – May not reproduce or distribute without permission of Las Vegas Railway Express, Inc. 14 ClickCar Rail to edit Procurement Master title& style Refit Agreement in place to acquire 24 Bi-Level Budd 7600 Series passenger cars from Transportation Management Services BRC Coach & Transit of Las Vegas Nevada to complete refit and refurbishment of rail cars Don Primi of Rail Enterprises serves as Owner’s representative on refit & FRA, UPRR and BNSF compliance Interior design by Carpenter Sellers DelGatto, architects Confidential – May not reproduce or distribute without permission of Las Vegas Railway Express, Inc. 15 Southern California Terminal Metrolink Feeder System 12 million passengers a year ride this system These are examples of specifications and drawing disclosures of the train concept that will help you understand what constitutes a complete design of the train, which are provided as These are examples of specifications and drawing disclosures of the train concept that will help you understand what constitutes a complete design of the train, which are provided as examples only. Actual designs will vary from these illustrations. Capacity up to 3 trains & 700,000 riders annually These are examples of specifications and drawing disclosures of the train concept that will help you understand what constitutes a complete design of the train, which are provided as examples only. Actual designs will vary from these illustrations. Capacity up to 8 trains and 2 million riders annually These are examples of specifications and drawing disclosures of the train concept that will help you understand what constitutes a complete design of the train, which are provided as examples only. Actual designs will vary from these illustrations. Click to edit Master Development Timeline title style Uses of Proceeds The Company estimates that it will require $35MM to begin Phase I operations in the 1st year – Use of proceeds include: » Railcar purchase, design, refurbishment and outfitting » Las Vegas Depot design and construction » UP & BSNF mileage fees » Salaries and other professional fees (legal, marketing/PR, etc.) » IT and corporate infrastructure development Completion and Launch Anticipated Timeline of Significant Events 1Q 2012 Financing 2Q 2012 Mezzanine Financing Rail Cars Las Vegas Depot 3Q 2012 4Q 2012 1Q 2013 Close $35MM Round Retrofit Design Work Site Design Refurbishment and Outfitting Depot and Station Construction BNSF & UP Fees Mileage Fees Confidential – May not reproduce or distribute without permission of Las Vegas Railway Express, Inc. 23 Click to edit Master Organizational Charttitle style President/CEO Michael A. Barron Investor Relations Mike Mason CFO Wanda Witoslawski Controller Senior Accountant VP Asset Development Joe Cosio-Barron Rail Car Locomotives VP Sales & Marketing CIO Bob Gottesman Website Development On Board technical Operations Corporate Systems Infrastructure Don Adams Director Director Director Sales Marketing Retail Sales Ticket Manager Manager Call Center Operations Manager Social media Passenger Services Operations Chief Human Resources Penny Stegeman Jim Wilson Vicki DiBernardo On Board Operations Director Food & Beverage (2) Housekeeping Engineering Support Security Corporate Sales Station Development Training & Development Dianne Barron Bartenders Waitstaff support Director Legal Maintenance Operations Director Logistics Safety Officer Chefs Cooks Support Confidential – May not reproduce or distribute without permission of Las Vegas Railway Express, Inc. 24 ClickPersonnel Key to edit Master title style Gilbert H. Lamphere – Chairman of the Board Mr. Lamphere serves on the Board of Directors of CSX Corporation ($25bn, 23,000 mile railroad) and has served on the board of Canadian National Railway ($25bn, 15,000 mile transcontinental railroad), Chaired the Board of the Illinois Central Railroad ($2.5bn, 1,000 mile Class 1 railroad between Chicago and New Orleans) and served on the board of Florida East Coast Railway ($2.8bn railroad, 350 miles down East Coast of Florida). He was also instrumental in the investment and oversight of Mid South Rail. Mid South, Illinois Central and Canadian National became successively the most efficient railroads with the lowest operating ratios in North America. Michael Barron – President/CEO Mr. Barron has been a developer of new business enterprises for nearly 30 years. Trained as a City & Regional Planner, Mr. Barron was responsible for Monterey California’s downtown redevelopment project of famous Cannery Row and Fisherman’s Wharf. Mr. Barron founded Citidata, the first electronic provider of computerized real estate multiple listing service (MLS) information in the nation. He led the business development team at TRW that acquired 11 companies and became the world’s largest repository of real estate property information - Experian. He founded and served as President, Finet Holdings Corporation (NASDAQ:FNCM), a publicly traded mortgage banking business specializing in e-mortgage financing on site in real estate offices. The company maintained a market capitalization of $500mm. Mr. Barron pioneered the first nationwide commercially deployed video conference mortgage financing platform for Intel Corporation operating in 20 states and funded over $1bn in closed loans annually. He was CEO for Shearson Home Loans and founded Liberty Capital, a $100mm asset management company based in Las Vegas, Nevada. Wanda Witoslawski - Chief Financial Officer Ms. Witoslawski has served in progressively responsible financial positions for public companies over the past twelve years. She served as Controller for Ocean West Enterprises until its acquisition by Shearson Home Loans in 2005 where she managed the accounting function for a staff of 1,350 employees and $200mm credit facility. Upon Shearson’s exit from mortgage banking in 2007, she joined the principals Mr. Barron and Mr. Cosio-Barron as Controller at Liberty Capital Asset Management, an investor in acquiring defaulted mortgage pools, managing public accounting documents for SEC filings and the financial supervision over the liquidation of over 4,000 mortgage loans the company had acquired. Confidential – May not reproduce or distribute without permission of Las Vegas Railway Express, Inc. 25 ClickPersonnel Key to edit Master (cont.) title style Joseph A. Cosio-Barron –Vice President – Asset Development Mr. Cosio-Barron currently serves as LVRE’s Executive Vice President and has over 35 years of experience in real estate investment and development. Previously, Mr. Cosio-Barron was President of Shearson Home Loans and co-founded Liberty Capital, a $100 million asset management company based in Las Vegas. He has also served as the Managing Partner and President of CBS Consultants, Inc. a financial firm offering highly specialized services in securities compliance, development and lending for hotels, resorts, casinos and entertainment, as Executive Vice President of Finet Holdings Corporation, President of Terra West Construction, Senior Vice-President of Multi-Financial Corporation. John H. Marino, Vice President –Rail Operations (interim) Mr. Marino currently serves as Vice President – Rail Operations where he supervises the Company’s activities with the Class 1 railroads, railcar procurement, and railset maintenance. Mr. Marino also serves as President of Transportation Management Services, Inc., and was previously President and Chief Operating Officer of Rail America (NYSE:RA), co-founder of Huron & Eastern Railway Company, Inc., President of Huron Transportation Group, President and Chief Executive Officer of several short line railroads, as an officer of the Reading Railroad and with the United States Railway Association. Confidential – May not reproduce or distribute without permission of Las Vegas Railway Express, Inc. 26 ClickPersonnel Key to edit Master (cont.) title style Donald J. Adams, Vice President, Sales & Marketing Mr. Adams currently serves as Vice President of Sales & Marketing for the LVRE. Mr. Adams has spent the last 35 years as Founder and Chief Executive Officer of Allstate Ticketing in Las Vegas. Allstate ticketing is the oldest and largest broker of sightseeing tours in Nevada, with over 20 (and growing) locations including the Flamingo, Harrah's, Hoover Dam, Las Vegas Convention and Visitors Authority and McCarran International airport. Mr. Adams and Allstate were pioneers in using the web-based platforms for the industry and in 2005 sold Allstate to Travelocity, Inc. Prior to founding Allstate, Mr. Adams served in executive roles for many Las Vegas gaming companies. Dianne D. David-Barron, Stations Development Manager Ms. David-Barron serves as LVRE’s Stations Development Manager. Ms. David-Barron has been an executive in the real estate and mortgage industries for 38 years. She is currently responsible for the construction and operations of the Las Vegas, Nevada, X Train Railway Station and for the integration of the service in Fullerton, California Station. Ms. David-Barron was previously the VP of the REO Department for Liberty Capital Asset Management, where she he managed a portfolio in excess of 4,000 loans located in 23 states. Ms. David-Barron has also served as Vice President of Residential Lending for Shearson Home Loans, Sales Manager for Virtual Mortgage Network, Vice President of Lender Services for Finet Corporation and as President of the Lender Services Division of American Financial Network. Confidential – May not reproduce or distribute without permission of Las Vegas Railway Express, Inc. 27 Click toBoard Team edit Master Members titleand style Consultants LVRE is supported by a team of experienced consultants and advisors whose specialties include railroad operations, investment banking, legal, insurance, real estate development, and marketing John McPherson President Illinois Central Railroad (ret) President – Florida East Coast Railway (ret.) Board Member - LVRE Tom Mulligan Director, Passenger Ops. – Union Pacific (ret.) Board Member - LVRE John Marino President Rail America (ret) Board Member - LVRE Mark Schulte Managing Director Dahlman Rose Investment Bankers Rob Pek President – BRC Coach and Transit Brian Harrington Harrington Group LLC - Insurance Mike DelGatto CSD Architects Dave Sundaram Odyssey Real Estate Capital – Commercial RE Chet Opheikens R&O Construction – General Contractor Phil Cherry Lamar Advertising Daniel T. Behr Jordan, Knauff & Co Jody Walker Walker Engineering – Civil Engineers Confidential – May not reproduce or distribute without permission of Las Vegas Railway Express, Inc. 28 Las Vegas Railway Express, Inc.