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eTranzUSA, Inc. - Nationwide

$3.2 Billion

eTranzUSA, Inc. (ETU) and CyberTran® have established a Joint Venture and was formed to bring to the world a paradigm shift in transit development. We will bring to market a private, low-cost, ultra-light rail, electric transit system, known as CyberTran, and the associated transit-oriented development (TOD) surrounding the stations throughout California, then the world. We will provide low-cost transit, traffic relief, reduce air pollution and provide more affordable, market-rate housing choices in walk-able, live-able, sustainable communities, as well as local employment opportunities through both our manufacturing jobs and those created in the commercial and retail space in the transit villages.

CTI's main short-term, three to five-year corporate objective is to establish a strong presence in two to three metropolitan areas. To achieve that goal, CTI's strategy is to be the low-cost innovator in the passenger rail industry. Currently, no other competitor is filling this niche. While there are several companies that are hoping to exploit this niche, only three companies, Ultra, Austrans and Taxi 2000, are as close to commercialization as CyberTran®.

Both of these systems offer on-demand service and off-line stations; however, all of these systems have size limitations relative to CyberTran®. Even if CTI encounters competition within the low-cost innovator niche in any or all of its three main target markets, the total market opportunity for low-cost innovators promises to be significant, given the mounting concern worldwide over congestion, pollution, the need for rail transit and the lack of financing for conventional public transit.

CTI's strategy for commercializing the CyberTran® technology is to take advantage of CyberTran®'s disruptive nature relative to conventional rail transit technologies. It has been well documented in research and publications such as "The Innovator's Dilemma" and "The Innovators Solution" by Christensen (Harvard Business School Press) that disruptive technologies (a technology that solves a problem or produces a product/service in a totally different, and usually less expensive manner) have a significant competitive advantage over the technology of an existing industry. A brief list of examples when a disruptive technology has taken over a market follows:

   1. Henry Ford's automation of the automobile production line vs. hand assembly
   2. General Motors and General Electric diesel-electric locomotives vs. steam engines
   3. Bell telephone vs. telegraph
   4. PC's vs. main frame computers
   5. Digital watches vs. mechanical movements
   6. Nucor's mini-mill production of steel vs. huge steel production facilities
   7. Caterpillar, John Deere, Komatsu, etc. with hydraulic excavators vs. cable pulled systems. The          process is so well documented, with such a relevance to the CyberTran® technology, that the books          mentioned above are recommended reading for anyone seriously considering investing in CTI.

As a synopsis of the books and the advantages of a disruptive technology, the reason that a disruptive technology can come seemingly from out of nowhere and take over an existing market is that the existing holders of the market find it extremely difficult, if not impossible, to change their mode of operation and compete with the new technology. The classic example is when the Swiss watch industry was introduced to the digital watch. On viewing the chip and the LCD time display, a Swiss watchmaker was heard to remark "That's not a watch". They misunderstood their industry as one producing watches instead of one producing time indicating devices. It took the Japanese only a few years to take over the market. JVC will use the process described in the books above to go after low end markets as a cost competitor, markets that the existing technology companies will not be able to compete for because of their present technology, cost structure, and production process. As experience is gained in the lower market levels, JVC will take the technology slowly up-market and compete with the technologies at higher levels. It is this strategy that has pointed JVC toward the parking lot circulator at Oakland International Airport. The JVC design of this application and evaluation by industry consultants, indicate that the CyberTran® technology can be installed for approximately 50% of existing technology systems. This is the same approach that Nucor took with the steel market ---- start making re-bar at a price that no one could compete with, dominate that market, and then move up-market. JVC's first step is to dominate the airport circulator market, and then move up-market.

In keeping with the ETU mission statement and the CTI marketing philosophy, JVC's over-arching marketing objective is to develop and maintain strong customer relationships with key transit agencies within a given region. New customers will be developed as market areas are identified by need and opportunity. From a practical standpoint, we recognize the importance of developing anchor systems within a given metropolitan region and growing the network from that initial system. Airports provide an optimum starting point for this marketing effort, since, in addition to showcasing a transit system, they are often the most vital link that a metropolitan economy has to domestic and international markets. Transit authorities are eager to maintain connectivity from airports to population centers, as illustrated by the recent decision to expand New York's Air Train from JFK to [Lower Manhattan]. Starting with the Oakland Airport, JVC plans to market to other midsize to larger airports in the western region. This strategy reflects the following findings:

   that the western region will continue to experience the fastest demographic and economic growth;
   the western region is less densely developed, with the most 'Greenfield' opportunities; and,
   western metropolitan areas tend to be served by buses more than rail by comparison to mid-western and      northeastern metropolitan areas.