SmartSkyways Now
For the Automated Guideway Transport industry                                                                                       August 2003
Skyways Feature 

Skyways Feature

Ballot Initiative

Polling Results

Once SmartSkyways has public approval for the operating demo ROW (rights-of-way), we will need to apply to the municipalities involved for a building permit. In two years, perhaps sooner, we will need the $88 million. The joint venture partner may provide all additional financing or may choose to utilize a development consortia method. A consortium is the most powerful economic force in the world today. This will be comprised of multiple small joint ventures (Targets) bringing in additional recourses to the operating demo. SmartSkyways will provide both the test track and the operating demo as an engineering laboratory from which each company can study, engineer, build and operate ever larger routes. We will be working on alliances with other companies to jointly develop a mobile wireless travel reservations network for 100, 000 travelers per day. We have the ability to joint venture a percentage of the gross sales for specific ventures including an automation command and control system worth approximately 15% of the sales price for each route. Some of the funding could come from car advertising and naming rights ventures for local business.

The Operating Demo and Sales Model

When the joint venture provides the minimum capital backing , we will make an offer to the the Platte Valley Landowners, Denver Tech Center and to Greenwood Village, Keystone, Breckenridge, or Vail, to serve as our demonstration model. The first one of these communities we make a deal with receives a demonstration system at no cost to them. After which, all others will have to purchase a local loop with a new sales tax district. As an incentive to be the first to deal, we will offer a private franchise at no cost to the town in which we will build a five mile, one way local loop for approximately $58 million. ($88 million if the Platte Valley) This will be on the route of our choice in exchange for rights-of-way. Within one year, recipient must conduct a vote to authorize the system. We reserve the right to charge fares of our own choosing, profits can be made on a daily pass of $1.00 for unlimited daily ridership. During this same period we will operate and conduct off-hours testing and use the system as a demonstration model for future sales.

PROPOSED EXPENDITURES for the Consortium

Membership Benefits

The Consortia partner(s) would be entitled to 60% of these figures. The initial capital of $5 million gets diluted to 15% and our management team would earn 25%. We hope to win a preliminary vote that will authorize a demonstration model, but each route would still have to be packaged, voted on and financed separately. Although we are demonstrating how transport could earn profits (estimated 9% to 12% after taxes) instead of requiring subsidies, it is still not an easy sell. That is why the demonstration model is key. The initial $98 million investment can also be rolled over dozens of times and used to build small local loops. These Consortium funds will provide for a the sales model to be built in either the Platte Valley or the Denver Tech Center (DTC)

The joint venture partners will market membership to form a development consortium that builds the sales model and then other routes. The cash flow profit potential shown above is more than $880 million in royalties (over 25 years) from $3.2 billion in front range projects.. Consortium members will share future development expenditures but will not share in the profits from the initial capital joint venture. Consortia membership may take the form of general partnerships. Our financing model shows the level of business needed for the joint venture to earn the royalties shown above over 25 years on a Colorado full build out of 300 miles.

Terms

Consortium Members as General Partners: The Joint Venture will offer alliances to be formed under Colorado law that give exclusive rights to provide services and components for each member. Targets for the consortium. Members will not be entitled to a share of the earnings, tax benefits, and cash flow of the Joint Venture . A take out strategy may be triggered when the Consortium grows into financing any line haul system as a shareholder corporation in Phase Three. The Consortium collectively will have options for a preferred percentage of any new public offering such as any Interstate system or other opportunities describes in Routes.

The Managing Partners: The Joint Venture Managing Partners will be Smart Skyways LLC and the initial joint venture partner Smart Skyways LLC will be a for profit Limited Liability Corporation whose stock is held by the founders/principles and by designers. The Managing Partners are contributing three assets to the partnership: 1) administrative experience in transit matters. 2) a new transit technology business plan. 3) a prototype on-line global voting and information service. The Managing Partners have the authority to act on behalf of the partnership for all management and administration of the partnership’s affairs. An incentive royalty of 3% annually of gross revenues for any operating system will be shared by all management including future management.

Cash Flow -Tax Benefits

Main Compensation for Consortium: The main source of revenues to the consortium members will be a split of the sales for our Skyways Technology. In addition, an amount of any public offering shares will be allocated to the Consortium members if a public offering is made. The Managing Partner may also convert into a prorate percentage (as is their 25% share in this partnership) in the outstanding shares of any Public Offering at the time of conversion. If the funding of Phase Three does not occur, there will be no buyout.

Dissolution and Termination: The Joint Venture will remain active after formation of the first operating system for Colorado and will resell the technology (and packaging of the privatization methodology, management, etc.) to other communities world wide. The Development Consortium will be the permanent vehicle for commercializing Automated Transport.

Investor Targets: This could be a community partnership of business and industry. Those that will benefit the most from sponsoring the project: airlines, hotels, car rental, travel agencies, airports, railroads, banking, attractions, resorts, retail, civic organizations, transit agencies, and airports

Board of Directors: Each investor (with a minimum of $5 million) will offered a director seat on the board that plans the project. From this group of directors a candidates will be selected for the subsequent Board of Directors for other franchises.

Subordination: Management requires a non taxable event to enter this joint venture. If required by tax laws, the managing partners will subordinate their interest in profits to a maximum per annum payment to each investor in the amount of capital invested. This will include subordination of assets so that the joint venture partners will own all of the assets until they receive the minimum agreed return on their investment.

Agreement of Joint Venture: This Summary should be read in the context of the General Partnership Agreement, which shall govern the operation of the Partnership and the rights and obligations of the Partners there under.

Land Banking Optional ($60 Million)

This includes a series of convertible debentures promissory notes from early investors that who may want to assemble land used for infrastructure, such as the station stops. Terms of the notes will include designer bond (a three year, zero coupon, with the right to convert in the later public offering at a preferred rate). Land will be offered as collateral.