Enet China, or Eguo™ as it is known locally in China, is an integrated and multi-
channeled consumer product and service distribution company that services the
explosive growth of the middle class in China’s major cities. The Company is
pursuing a web and spokes model in each of the major Chinese metropolitan areas
that have populations of one million or more. The Eguo™ website, www.eguo.
com, is one of the largest e-commerce websites in China today, having ranked third
in the last available government sponsored ranking. The Company expects the
Chinese e-commerce market to rapidly expand over the next five years as a new
generation of computer savvy consumers enter the marketplace and the cost of
broadband continues to decrease. Presently eguo.com offers over 50,000 products
to over one million registered users. It focuses on items that have rapid turnover,
repeat purchases, and high margins without inventory costs. It is the leading online
destination for many product categories including digital products, sports and
outdoor equipment, cosmetics and electronics.

The Company plans to offer over one million products over the next five years.
The spokes of the model are the Company’s Eguo-Marts, a network of
approximately 100 stores per city that the Company plans to locate in each major
Chinese metropolitan area. The Eguo-Marts are placed in the new residential
complexes and office buildings where the newly affluent Chinese middle class
lives and works, a group that values both convenience and speed in their shopping
experience. Eguo-Marts focus on high volume product sales and serve as the
delivery service station for the Eguo™ website.

An Eguo-Mart typically has 1,000 square feet of selling space and carries about
200,000 products. Logistically the Company can deliver the vast majority of its
basic 200,000 Eguo-Mart featured products on the website from an Eguo-
Mart within minutes of an order being placed in the targeted service area. Orders of
other products, not carried in the local Eguo-Mart, are delivered to the customer the
next day after items are fulfilled from the Company’s vendor partners’ warehouses.
In all cases, delivery is free of charge. To support its logistical, merchandising, and
multi-channeled sales operations, Eguo™ has developed and implemented
proprietary technologies including the Eguo™ Management Information System
(Eguo-MIS) and the Eguo™ Merchandising and Marketing System (Eguo-
MMS). As a result, Eguo’s merchandising capability is 10 times more productive
than that of the traditional merchant as measured by the number of vendors and
products a merchant is able to source and manage. Eguo’s marketing and customer
acquisition is 100 times more effective than that achieved by conventional
marketing methods as measured by customer response and conversion rate.
Utilization of these systems allows Eguo™ to achieve savings of up to 50% on its
operating costs in many areas of its operation. It is the goal of Eguo™ to become
the largest integrated full-service e-commerce provider in China