Independent Auditors’ Report

To the Board of Directors and Shareholders

SCHILLI TRANSPORTATION SERVICES, INC. AND AFFILIATES

(THE ENTITIES OF THOMAS R. SCHILLI AND FAMILY)

Remington, Indiana

We have audited the accompanying consolidated financial statements of SCHILLI TRANSPORTATION SERVICES, INC. AND AFFILIATES which comprise the consolidated balance sheets as of December 31, 2016 and January 2, 2016, and the related consolidated statements of operations, comprehensive income, changes in shareholders’ equity and cash flows for the years then ended, and the related notes to the consolidated financial statements.

Management’s Responsibility for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditors’ judgement, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of SCHILLI TRANSPORTATION SERVICES, INC. AND AFFILIATES as of December 31, 2016 and January 2, 2016, and the results of their operations and their cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

/s/ Somerset CPAs, P.C.

April 28, 2017

Indianapolis, Indiana

SCHILLI TRANSPORTATION SERVICES, INC. AND AFFILIATES

(THE ENTITIES OF THOMAS R. SCHILLI AND FAMILY)

Consolidated Balance Sheets

SCHILLI TRANSPORTATION SERVICES, INC. AND AFFILIATES

(THE ENTITIES OF THOMAS R. SCHILLI AND FAMILY)

Consolidated Statements of Operations

For the Years Ended December 31, 2016 and January 2, 2016

SCHILLI TRANSPORTATION SERVICES, INC. AND AFFILIATES

(THE ENTITIES OF THOMAS R. SCHILLI AND FAMILY)

Consolidated Statements of Comprehensive Income

For the Years Ended December 31, 2016 and January 2, 2016

SCHILLI TRANSPORTATION SERVICES, INC. AND AFFILIATES

(THE ENTITIES OF THOMAS R. SCHILLI AND FAMILY)

Consolidated Statements of Changes in Shareholders’ Equity

Years Ended December 31, 2016 and January 2, 2016

SCHILLI TRANSPORTATION SERVICES, INC. AND AFFILIATES

(THE ENTITIES OF THOMAS R. SCHILLI AND FAMILY)

Consolidated Statements of Cash Flows

For the Years Ended December 31, 2016 and January 2, 2016

NOTE 1 – NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations

Schilli Transportation Services, Inc. ("STS") is a licensed ICC transportation intermediary (freight  broker) and logistics company utilizing the services of various trucklines under contract to the broker. STS, as a broker, pays a portion of the amounts invoiced for services to affiliated and non-affiliated companies. STS provides management services on a fee basis and provides accounting, tax, payroll, human resource and computer services under contract to the affiliated entities of Schilli Motor Lines, Inc. and Subsidiaries ("SML"), Schilli Leasing, Inc. ("SLI"), Schilli National Truck Leasing & Sales, Inc. ("SLS"), Schilli Distribution Services, Inc. ("SDS"), Midwest Shuttle Services, Inc. ("MSS") and Schilli Family, LLC ("SFP"). The Company is also the common paymaster for these affiliated entities as it relates to insurance and employee benefits. Thomas R. Schilli (50% ownership of STS) and various family members (aggregating 50% ownership of STS) control STS and the affiliated entities; however, each entity has its own management team and operates independently.

SML is a holding company of the following motor carriers. Schilli Specialized Flatbed Division, Inc. is a motor carrier engaged in the transportation of commodities utilizing flatbed trailers primarily in the Midwest. Schilli Specialized of Texas, Inc. is a motor carrier engaged in the transportation of commodities utilizing flatbed trailers primarily in the Southwest. Schilli Specialized Van Division, Inc. is a motor carrier engaged in the transportation of general freight and vehicles utilizing van and specialty trailers.

SLS (previously SLI) provides to a broad spectrum of customers (including private carriers and ICC licensed carriers) full-service maintenance leases, fuel and maintenance services, sells used leased/rental equipment and assists customers with equipment specifications and purchasing.

SDS provides warehousing, shipper services, logistics services and fulfillment services. Effective January 3, 2016, MSS ceased operations and merged into SDS. MSS provided loading and shuttle services.

SFP is a limited liability company that primarily owns and leases real estate. The accompanying consolidated financial statements contain only the assets, liabilities, revenues and expenses specifically related to the business activities of SFP. They do not include the personal assets, liabilities, revenues or expenses of the individual members. SFP's duration shall be in perpetuity, unless sooner dissolved in accordance with the operating agreement.

Consolidation

The consolidated financial statements include STS and its affiliated entities, which are collectively referred to as the "Company". STS has determined that the affiliated parties are variable interest entities as defined by accounting principles generally accepted in the United States of America, and the majority shareholder of STS has the power to direct the activities of the variable interest entities that most significantly impact their economic performance, and therefore, STS has been determined to be the primary beneficiary of the affiliated parties. All significant intercompany balances and transactions have been eliminated in consolidation. Unaudited balance sheets and statements of operation are presented for the variable interest entities within the accompanying Supplementary Information.

Fiscal Year

The Company's fiscal year ends on the nearest Saturday to December 31. Fiscal year 2016 refers to the year ended December 31, 2016, and is comprised of 52 weeks. Fiscal year 2015 refers to the year ended January 2, 2016, and is comprised of 52 weeks.

Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

NOTE 1 – NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (Continued)

Revenue Recognition

As a third party transportation logistics provider, STS acts as the shippers' agent and arranges for a carrier to handle the freight. STS is the primary obligor in its transactions, has all credit risk, maintains substantially all risk and rewards and has discretion in selecting the supplier and latitude in pricing decisions. Gross revenues consist of the total dollar value of services purchased by shippers. Revenue is recognized upon the delivery of freight, at which time the related transportation cost, including commission, is also recognized. At that time, the obligations are completed and collection of receivables is reasonably assured.

Revenue for SML and MSS is recognized at the time freight is delivered to its destination and related expenses are accrued as incurred.

For direct financing leases by SLI and SLS, the difference between aggregate lease rentals and the cost of the related assets (less estimated residual value at the end of the lease term, if any) is recorded as unearned income. Income is earned over the life of the contracts using the interest method. For operating leases and rental units, income is earned on a straight-line basis over the related lease period by SLI , SLS and SFP. All other revenue is recognized when the related services have been performed.

Revenue for SDS is recognized at the time warehousing, shipper, product transfer, logistics and fulfillment services are provided.

The Company presents revenue net of sales-related taxes.

Interest income for notes receivable is recognized on the interest method applied to the outstanding balance on each loan.

Accounts Receivable

The Company carries its accounts receivable at invoiced amounts less an allowance for doubtful accounts. On a periodic basis, the Company evaluates accounts receivable and establishes an allowance for doubtful accounts, based on history of past write-offs and collections and current credit conditions. Management has established an allowance for doubtful accounts of $328,699 and $178,960 as of December 31, 2016 and January 2, 2016, respectively. The Company's policy is to record interest on past due receivables when collected.

Investment Securities

The Company classifies all of its marketable equity securities as available-for-sale securities. Such investments consist primarily of common stock. Available-for-sale securities are stated at fair value based on quoted market prices, with unrealized gains and losses on such securities reflected, net of tax, as other comprehensive income or loss in shareholders' equity. Realized gains and losses on investments are included in earnings and determined using the specific identification method.

Inventory

Inventory of repair parts, tires and supplies are stated at the lower of cost, determined by the first-in, first-out method, or market.

Property, Equipment and Depreciation

Property and equipment are carried at cost and include expenditures for new additions and those which substantially increase the useful lives of existing assets. Depreciation of property and equipment is computed using straight-line methods over the estimated useful lives of 15 to

40 years for buildings, 2 to 10 years for revenue equipment and 3 to 10 years for other equipment.

Expenditures for normal repairs and maintenance are charged to operations as incurred. Sales of leasing/rental equipment are reported as a component of total sales with the related costs reported as a component of operating expenses. The net gain was $309, 119 and $216,457 for the years ended December 31, 2016 and January 2, 2016, respectively. The cost of other property or equipment retired or otherwise disposed of and the related accumulated depreciation are removed from the accounts in the year of disposal with the resulting gain or loss reflected in earnings.

NOTE 1 – NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (Continued)

Revenue equipment on financing leases consist of tractors and trailers which are recorded at cost and are being depreciated primarily by the straight-line method over the terms of the leases as they are producing revenue.

The provision for depreciation amounted to $6,377,403 and $6,674,443 for the years ended December 31, 2016 and January 2, 2016, respectively.

Long-lived Assets

Long-lived assets to be held and used are tested for recoverability whenever events or changes in circumstances indicate that the related carrying amount may not be recoverable. When required, impairment losses on assets to be held and used are recognized based on the excess of the asset's carrying amount over the fair value of the asset. Certain long-lived assets to be disposed of by sale are reported at the lower of carrying amount or fair value less cost to sell.

Insurance

The Company participates in an insurance program of affiliated entities which in the aggregate reserve and retain the risk of loss of $300,000 per occurrence for auto claims.

For workers' compensation, the Company is self-insured with a reinsurance policy in its home state of Indiana with a deductible of $250,000. If there is a claim in excess of $250,000, the Company funds for the claim and then is reimbursed. For all other states except Texas, the Company has a workers' compensation policy in place with a deductible of $250,000. In Texas, the Company has a non-subscriber policy with a $100,000 deductible.

SLI and SLS have property and liability insurance coverage with liability limits of $5,000,000 including umbrella coverage. The liability deductible is $2,500 and the property deductible is $10,000.

SLI and SLS have garage keeper's liability with $100,000 limits at selected locations. Five locations including two in Remington, Indiana, South Bend, Indiana, Indianapolis, Indiana and St. Joseph, Missouri, have additional liability limits from $100,000 to $750,000. There is a $5,000 per auto deductible and $25,000 per occurrence deductible. The policy also includes dealers physical damage with a $5,000 per auto deductible and a per occurrence deductible of $25,000. Various limits are provided at each location, with the highest being $1,245,000 at the locations with the largest concentration of values which are at Remington, Indiana, South Bend, Indiana and Indianapolis, Indiana.

SML is self-insured for cargo claims and physical damages to equipment.

The Company records a liability for reported claims and expected claims settlement expenses at each balance sheet date. Such liabilities are based on estimates, which are reviewed semiannually by the third-party insurance carrier, and while management believes that the amounts are adequate, the ultimate losses could differ materially in the near term from the amounts provided. Such estimates are reviewed and evaluated in light of emerging claims experience and existing circumstances. Any changes in estimates from this review process are reflected in operations currently. The computation has not been actuarially evaluated and may or may not include all relevant information to formulate loss experience to compute estimated claims liability and related expense; therefore, liabilities recorded relating to accrued claims may be more or less than amounts ultimately paid. The claims are presently paid as incurred and valued by the insurance company.

Advertising

The Company charges advertising costs to expense as incurred.

Income Taxes

SDS, SLS, MSS, STS and SML, with the consent of its shareholder(s), have elected under the Internal Revenue Code to be an S corporation. In lieu of corporation income taxes, the shareholder of an S corporation is taxed on their proportionate share of the Company's taxable income. Therefore, no provision for income taxes has been included in the financial statements.

No provision has been made for federal and state income taxes since the proportionate share of SFP's income or loss is included in the personal tax returns of the members.

Note 1 – Nature of Operations and Summary of Significant Accounting Policies:

Regarding SLI, income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due plus deferred taxes. Deferred taxes are recognized for the differences between the basis of assets and liabilities for financial statement and income tax purposes. Those differences relate primarily to accounts receivable (use of allowance method for financial statement purposes and direct write-off method for income tax purposes), fixed assets (use of different depreciation methods and lives for financial statement and income tax purposes) and certain accrued expenses (use of accrual method for financial statement purposes and cash method for income tax purposes). The deferred tax assets and liabilities represent the future tax consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Deferred taxes are also recognized for any operating loss carryforwards, charitable contribution carryforwards and tax credit carryforwards that are available to offset future income taxes.

Accounting principles generally accepted in the United States of America require the Company to examine its tax positions for uncertain positions. Management is not aware of any tax positions that are more likely than not to change in the next twelve months or that would not sustain an examination by applicable taxing authorities.

The Company's policy is to recognize penalties and interest with respect to income taxes in the Consolidated Statements of Operations as incurred.

The Company's federal and state income tax returns for 2013 through 2016 are subject to examination by the applicable tax authorities, generally for the three years after the later of the original or extended due date.

Cash Flows

For purposes of the Consolidated Statements of Cash Flows, the Company considers all highly liquid instruments that are purchased within three months or less of an instrument's maturity date to be cash equivalents.

Concentration of Credit Risk

The Company's financial instruments that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. The Company places its cash and cash equivalents with primarily three financial institutions. At times, such amounts may be in excess of the FDIC insured limit. The Company has never experienced any losses related to these balances. The Company routinely assesses the financial strength of its customers and, as a consequence, believes that its accounts receivable credit risk exposure is limited.

The Company receives a significant portion of its revenue from customers in the building materials industry. One customer in that industry accounted for 20% and 16% of revenues for the years ended December 31, 2016 and January 2, 2016, respectively.

Fair Value Measurements

FASB Accounting Standards Codification (ASC) 820, "Fair Value Measurements" defines fair value, establishes a framework for measuring fair value and enhances disclosures about fair value measurements. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Valuation techniques used to measure fair value maximize the use of observable inputs and minimizes the use of unobservable inputs. Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company's assumptions about the inputs that market participants would use in pricing the asset or liability and are developed based on the best information available in the circumstances.

The fair value hierarchy input levels are as follows:

Note 1 – Nature of Operations and Summary of Significant Accounting Policies (Continued):

Recently Issued Accounting Pronouncements

In May 2014, the FASB issued Accounting Standards Update 2014-09, "Revenue from Contracts with Customers", which supersedes nearly all existing revenue recognition guidance under accounting principles generally accepted in the United States of America. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing accounting principles generally accepted in the United States of America. The standard is effective for annual periods beginning after December 15, 2018, using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting ASU 2014-09 recognized at the date of adoption (which includes additional footnote disclosures). The Company is currently evaluating the impact of its pending adoption of ASU 2014-09 on the financial statements and has not yet determined the method by which the Company will adopt the standard in 2019.

In March 2016, the FASB issued Accounting Standards Update 2016-08, "Revenue from Contracts with Customers, Principal versus Agent Considerations (Reporting Revenues Gross versus Net)". The amendment updates ASU 2014-09 by clarifying certain implementation guidance, but does not change the core principle of the new revenue standard. The updates (i) require an entity to determine whether it is a principal or an agent for each distinct good or service (or a distinct bundle of goods or services) to be provided to the customer; (ii) illustrate how an entity that is a principal might apply the control principle to goods, services or rights to services, when another party is involved in providing goods or services to a customer and; (iii) clarify that the purpose of certain specific control indicators is to support or assist in the assessment of whether an entity controls a good or service before it is transferred to the customer, provide more specific guidance on how the indicators should be considered and clarify that their relevance will vary depending on the facts and circumstances. The amendments are effective concurrent with ASU 2014-09, and the Company is currently evaluating the impact of this accounting standards update.

In July 2015, the FASB issued Accounting Standards Update 2015-11, "Simplifying the Measurement of Inventory", which require inventory within the scope of this standard to be measured using the lower of cost and net realizable value. The changes apply to all types of inventory, except those measured using last-in, first-out or the retail inventory method. The amendments are effective for annual periods beginning after December 15, 2016, and interim periods within fiscal years beginning after December 15, 2017. The Company is currently evaluating the impact of this accounting standards update.

In November 2015, the FASB issued Accounting Standards Update 2015-17, "Income Taxes", which eliminate the prior guidance that required an entity to separate deferred tax liabilities and assets between current and noncurrent amounts in a classified balance sheet. Rather, deferred taxes will be presented as noncurrent under the new standard. The new standard takes effect in 2018 for nonpublic business entities and early adoption is permitted. The Company does not expect this accounting standards update to have a material effect upon the Consolidated Balance Sheets, as the current deferred tax assets are $170,000 at December 31, 2016.

In January 2016, the FASB issued Accounting Standards Update 2016-01, "Recognition and Measurement of Financial Assets and Financial Liabilities". The amendment requires an entity to: (i) measure equity investments at fair value through net income, with certain exceptions; (ii) present in other comprehensive income the changes in instrument-specific credit risk for financial liabilities measured using the fair value option; (iii) present financial assets and financial liabilities by measurement category and form of financial asset; (iv) calculate the fair value of financial instruments for disclosure purposes based on an exit price and; (v) assess a valuation allowance on deferred tax assets related to unrealized losses of available-for-sale debt securities in combination with other deferred tax assets. The amendment provides an election to subsequently measure certain nonmarketable equity instruments at cost less any impairment and adjusted for certain observable price changes. The amendment also requires a qualitative impairment assessment of such equity investments and amends certain fair value disclosure requirements. The new standard takes effect in 2019 for nonpublic business entities. The Company does not expect this accounting standards update to have a material effect upon the Consolidated Financial Statements as all material investments were either sold or disposed of during the year ended December 31, 2016.

In February 2016, the FASB issued Accounting Standards Update 2016-02, "Leases". The new standard establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than twelve months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard also requires a lessor to classify leases as either sales-type, finance or operating. A lease will be treated as a sale if it transfers all of the risks and rewards, as well as control of the underlying asset, to the lessee. If risks and rewards are conveyed without the transfer of control, the lease is treated as financing. If the lessor doesn't convey risks and rewards or control, an operating lease results. The new standard is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years.

Note 1 – Nature of Operations and Summary of Significant Accounting Policies (Continued):

A modified retrospective transition approach is required for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is currently evaluating the impact of this accounting standards update.

Note 2 – Assigned Receivables:

The Company has entered into an asset based lending agreement with a financial services provider (lender). The agreement allows the lender to purchase up to $5,000,000 of the Company's qualified accounts receivable through August 1, 2018, and shall be further extended automatically for successive one year periods unless the lender provides sixty days' notice. Early termination fees are $12,500 (0.25% of the credit facility). The lender retains ownership, credit risk and collection responsibility of customer accounts receivable for accounts purchased from the Company.

The agreement includes interest at a rate of LIBOR plus 3.15% on gross billings for delivered and billed services. The agreement also provides the lender with a retainer on certain billings as defined in the agreement and requires the Company to pay a minimum monthly fee of $5,000, including interest. Outstanding borrowings are collateralized by substantially all of STS' assets and are guaranteed by SML and the Company's majority shareholder.

The assigned receivables liability consisted of the following at December 31, 2016 and January 2, 2016:

Note 3 – Investments:

The following is a summary of the Company's investment in available-for-sale securities at December 31, 2016 and January 2, 2016:

Net realized gains from the sale of available-for-sale securities amounted to $0 and $36, 163 for the years ended December 31 , 2016 and January 2, 2016, respectively, and are included as a component of other income (expense) in the Consolidated Statements of Operations.

The net change in the unrealized holding gains on available-for-sale securities of $72,962 and $78,911 is included in the determination of other comprehensive income at December 31, 2016 and January 2, 2016, respectively.

On January 3, 2016, the majority shareholder received a distribution of all available-for-sale securities, at cost, as payment on his outstanding note payable to the Company disclosed in Note 6.

Note 4 – Notes Receivable:

Notes receivable consisted of the following at December 31, 2016 and January 2, 2016:

Note 5 – Line of Credit:

At December 31, 2016 and January 2, 2016, SDS had a revolving line of credit payable August 5, 2017, providing for maximum advances of $1,950,000. Interest is payable monthly at the monthly LIBOR rate plus 2.25% and 2.35% at December 31, 2016 and January 2, 2016, respectively (2.87% at December 31, 2016 and 2.78% at January 2, 2016). The outstanding balance on the line of credit was $168,761 and $20,698 at December 31, 2016 and January 2, 2016, respectively. The line of credit is secured by substantially all assets of the Company and the personal guarantee of the Company's majority shareholder. The line of credit is also subject to certain financial and non-financial covenants and a borrowing base. At December 31, 2016, SDS was not in compliance with the covenant regarding the lease adjusted leverage ratio; however, the bank has granted a waiver of default remedies with respect to noncompliance as of that date.

Note 6 – Long-Term Debt:

Long-term debt consisted of the following at December 31, 2016 and January 2, 2016:

Long-term debt associated with unrelated and related parties consisted of the following at December 31, 2016 and January 2, 2016:

Principal payments due on long-term debt outstanding at December 31, 2016, are as follows:

Note 7 – Lease Obligations and Commitments:

The Company leases certain buildings and warehouse space from unrelated parties under terms ranging from 12 months to 120 months, expiring at various dates through July 2020, with options to renew after the original terms have expired. The Company also leases buildings under operating leases on month-to-month terms. Operating lease expense related to buildings and warehouse space was $2,365,582 and $2,278,198 for the years ended December 31, 2016 and January 2, 2016, respectively.

The Company leases certain trucks and trailers from unrelated parties on month-to-month terms. Operating lease expense related to the leasing of these trucks and trailers was $351,117 and $419,758 for the years ended December 31, 2016 and January 2, 2016, respectively.

The future minimum operating lease payments under non-cancelable terms with unrelated parties at December 31, 2016, are as follows:

Note 8 – Rental and Lease Income:

The Company leases revenue equipment and buildings to unrelated parties through operating leases. The operating lease terms of third party direct finance leases vary from month-to-month to up to 10 years.

The scheduled minimum future rentals to be received on third party non-cancellable operating leases for revenue equipment and buildings at December 31,  2016, are as follows, including one Hampton, Georgia building lease renewed in 2017 for 36 months at an aggregate base rental rate of approximately $19,000 per month:

Note 9 – Income Taxes:

The accompanying Consolidated Balance Sheets includes deferred tax assets and liabilities at December 31, 2016 and January 2, 2016, as follows:

The components of income tax expense (benefit) related to current operations for the years ended December 31, 2016 and January 2, 2016, are as follows:

Note 10 – Common Stock:

The Company has voting stock with equal voting rights. All of the stock is no par value.

The following summarizes the Company's shares of common stock as of December 31, 2016 and January 2, 2016:

Note 11 – Employee Benefit Plan:

The Company sponsors a retirement and savings plan covering substantially all employees at least 21 years of age who have completed ninety days of services. Plan participants may elect to have up to a specified percentage of their salaries contributed to the Plan. However, participants' salary reduction contributions for the plan year may not exceed the limits prescribed under the Internal Revenue Code. The Company may provide for a discretionary matching contribution of 50% of the participants' contributions up to $750. The Company may also make discretionary profit sharing contributions in an amount determined by the Board of Directors. There was no retirement plan expense for the years ended December 31, 2016 and January 2, 2016.

Note 12 – Litigation:

The Company is subject to legal proceedings and claims which arise in the ordinary course of business. Management of the Company believes the resolution of any pending or threatened actions will not have a material effect on the Company's financial position or results of operations.

Note 13 – Subsequent Events:

Management has evaluated subsequent events through the date on which the financial statements were available to be issued.

Independent Auditors' Report on the Supplementary Information

To the Board of Directors and Shareholders

SCHILLI TRANSPORTATION SERVICES, INC. AND AFFILIATES

(THE ENTITIES OF THOMAS R. SCHILLI AND FAMILY)

Remington, Indiana

Our audits of the consolidated financial statements included in the preceding section of this report were conducted for the purpose of forming an opinion on those statements as a whole. The supplementary information presented in the following section of this report is presented for purposes of additional analysis and is not a required part of the consolidated financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the consolidated financial statements. The information has not been subjected to the audit procedures applied in the audits of the consolidated financial statements. Accordingly, we express no opinion.

/s/ Somerset CPAs, P.C.

April 28, 2017

Indianapolis, Indiana

SCHILLI TRANSPORTATION SERVICES, INC. AND AFFILIATES

(THE ENTITIES OF THOMAS R. SCHILLI AND FAMILY)

Consolidating Balance Sheet

December 31, 2016