NANOTECHNOLOGY Evolutionary

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NANOTECHNOLOGY Evolutionary RevolutionaryDevel
opmentsKevin McGovern, Chairman McGovern
Capital LLC

• NANOWATER 2004

September 27, 2004
www.kevinmcgovern.com
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McGOVERN CAPITAL LLC

• Originate, fund, structure and implement capital
  formation, joint ventures and business alliances
• IP Strategist create, grow and maximize
  intellectual property assets
• Platform Technologies
• Catch the Current TM
• Relationships Entrepreneurs, Corporations,
  Universities and Governments

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McGOVERN CAPITAL LLC

• Many of our portfolio companies that we FOUNDED
  are CATEGORY LEADERS
• SOBE BEVERAGES Leader in the Nutraceutical
  industry, fastest growing beverage company in the
  history of the United States, Sale to Pepsi
  After 4 Years
• KX Industries Water Filters / Nano / Micro
  biological, leading manufacturer of water and air
  filter components
• NeoStrata Alpha Hydroxy Acids (AHAs) - Wrinkle
  Creams / technology incorporated in 40 of all
  skin care products worldwide / distributed in 44
  countries, 42 licensed companies
• VLIW Microprocessor Chip Architecture / Patent
  enforcement against Hewlett Packard / ST
  Microelectronics
• The Forbes/Wolfe Nanotech Report - Most
  successful newsletter launch in the history of
  Forbes
• Counsel Press Business Solutions for the Legal
  Community

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McGOVERN CAPITAL LLC

• Must have PULSE ON INDUSTRIES
• DETECT CURRENT BELOW WATER LINE
• NANOTECHNOLOGY
• ANGSTROM PUBLISHING -- JV with FORBES
• The Forbes/Wolfe Nanotech Report
• Leading Nanotechnology Research and Newsletter
• KX INDUSTRIES
• Patented, microbiological water filter technology
  designed to defeat one of the worlds greatest
  killers Water-Born Diseases (WBD) (MORE ON KX
  LATER)
• NANO-FIBER TECHNOLOGY PORTFOLIO - broad
  applications in many industries worldwide /
  negotiating joint ventures

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NANOTECHNOLOGY TODAY AN
INTERNATIONAL PERSPECTIVE

• UNITED STATES
• U.S. nanotech funding from government is rapidly
  approaching 1 BILLION PER YEAR
• U.S. Congress approved 849 MILLION for nanotech
  research and development for FISCAL 2003
• U.S. Congress earmarked for nanotech research
  3.7 BILLION OVER THE NEXT 4 YEARS

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NANOTECHNOLOGY TODAY AN
INTERNATIONAL PERSPECTIVE

• CHINA
• Over 700 Chinese companies are registered as
  nanotechnology companies
• 17 Chinese nanotech firms are publicly traded
• Over 50 Chinese public companies have invested in
  nanotechnology RD
• China has planned to spend 300 million on
  nanotech RD from 2001 to 2005

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NANOTECHNOLOGY TODAY AN
INTERNATIONAL PERSPECTIVE

• JAPAN -- investment in nanotech is approximately
  500 MILLION PER YEAR
• TAIWAN National Initiative on Nano Science
  Technology is a
• 5-YEAR PLAN with a total spending of 600
  MILLION from 2002 to 2007

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NANOTECHNOLOGY TODAY AN
INTERNATIONAL PERSPECTIVE

• EUROPEAN COMMISSION
• The EU will funnel nearly 700 MILLION into
  nanotech over the NEXT 3 YEARS
• The EU has allocated 1.2 BILLION for 2002-2006
• These funds are in addition to investments from
  individual EU nations
• Total European spending on nanotech research
  could DOUBLE that of the U.S.

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WHAT IS BEING FUNDED?

• REVOLUTIONARY TECHNOLOGIES are being funded
  disproportionately
• Revolutionary
• Materials and Methods Never Before Devised
• Evolutionary
• Nanotechnology inventions that are silently
  making their way into everyday products, CREATING
  INCREMENTAL IMPROVEMENTS without the users
  necessarily knowing that they are experiencing a
  part of nanotechnology

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Revolutionary Technologies

• EXAMPLE Carbon Nanotubes have drawn the most
  nanotech research dollars to date
• Often called Light Pipes the carbon nanotubes
  are being considered for a broad range of
  applications, such as scratch-resistant films
• However, government, universities and
  corporations have not yet moved revolutionary
  technologies, such as carbon nanotubes, from the
  laboratory to the market

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Evolutionary Nano Examples

• TEXTILES Nano-Tex is applying nanotechnology to
  fibers to create an improved fabric that resists
  stains and wrinkles
• BEVERAGES Vordian produces plastic with
  nano-sized clay particles that make shatter-proof
  beer bottles

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Evolutionary/Revolutionary Nano Examples

• WATER FILTERS KX Industries applies
  nanotechnology in water filter components to
  remove particles and kill pathogens the size of
  bacteria and viruses

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INVESTOR BENEFITS OFEVOLUTIONARY NANO
TECHNOLOGIES

• EVOLUTIONARY nano investments offer GREATER
  NEAR-TERM RETURN ON INVESTMENTS and LESS
  TECHNOLOGICAL RISKS potentially greater
  long-term ROI (but more technological risk) from
  revolutionary deals
• From an INVESTMENT POINT OF VIEW, investors
  should be less concerned with the purity of the
  nanotechnology nature of the deal, and MORE
  CONCERNED with the SIZE and MATURITY OF THE
  PRODUCTS MARKET the RELATIVE TECHNOLOGICAL RISK
  of the product and the TIME HORIZON to the
  companys profitability and potential exit

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Revolutionary Evolutionary
Nano Success

• A WELL-BALANCED PORTFOLIO should contain both
  REVOLUTIONARY AND EVOLUTIONARY TYPE DEALS
• As funding continues to be earmarked
  disproportionately to revolutionary technologies,
  evolutionary developments will, as a by-product,
  continue to be created

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Nanotech Water EVOLUTIONARY AND
REVOLUTIONARY SUCCESS

• Nanotechnologys solutions to the worlds water
  issues are both EVOLUTIONARY AND REVOLUTIONARY
• HOW BIG IS THE GLOBAL WATER MARKET?

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GLOBAL WATER MARKET

• Water is a 400 billion global business
• Demand for drinking water is expected to grow
  another 40 by 2025
• Global consumption of water is doubling every 20
  years, more than twice the rate of human
  population growth
• According to the United Nations, 1.3 billion
  people already lack access to safe drinking
  water

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2000 United Nations Millennium Development Goals

• Eradicate extreme poverty and hunger
• Achieve universal primary education
• Promote gender equality and empower women
• Reduce child mortality
• Improve maternal health
• Combat HIV/AIDS, malaria, and other diseases
• Ensure environmental sustainability

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2000 United Nations Millennium Development Goals

• To Ensure Environmental Sustainability the UN
  adopted the specific goal to
• Halve, by 2015, the proportion of people
  without sustainable access to safe drinking
  water

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GLOBAL WATER MARKET

• More than 97 of the worlds water reserves are
  salt water, contained in the Earths oceans
• Just a small proportion of the 1.3 billion square
  kilometers that make up the worlds water
  reserves is fresh water
• Only 0.4 of those reserves is accessible

Source www.forestinfo.org
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Water Scarcity

• About three-quarters of annual worldwide rainfall
  comes down in areas containing less than
  one-third of the world's population.
• Seasonal rains run off too quickly for efficient
  use. India, for instance, gets 90 of its
  rainfall during the short summer rainy season.

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Water Scarcity

• Since 1940 annual global water withdrawals have
  increased by an average of 2.5 to 3 a year
  compared with annual population growth of 1.5 to
  2. In developing countries such withdrawals have
  been increasing by 4 to 8 a year.
• According to one research study, today 31
  countries face chronic freshwater shortages. By
  the year 2025, 48 countries are expected to face
  shortages affecting up to 2.8 billion people.

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Water Scarcity

• Among countries likely to run short of water in
  the next 25 years are Ethiopia, India, Kenya,
  Nigeria, and Peru. Parts of other large
  countries, such as China, already face chronic
  water problems.
• The supply of available freshwater is effectively
  shrinking because of pollution including
  municipal sewage, toxic industrial waste, and
  harmful chemicals from agricultural activities

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Water Scarcity
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Water Scarcity and Stress
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Water Use
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Conflicts

• In 1985 Dr. Boutros Ghali famously said that "the
  next war in the Middle East will be fought over
  water, not politics
• "If the wars of this century were fought over
  oil, the wars of the next century will be fought
  over water." Ismail Serageldin, former vice
  president for sustainable development at the
  World Bank.

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Conflicts

• In Central Asia the Aral Sea Basin is a source of
  international conflicts over water. Turkmenistan,
  Uzbekistan, Kazakstan, Kyrgyzstan, and Tajikistan
  all depend for their survival on the waters of
  the Amu Darya and Syr Darya rivers.
• Israel, Syria and Jordan all compete for the
  scarce fresh water that flows form the Sea of
  Galilee which Israel took complete control of in
  the 1967 war. Israels peace treaty with Jordan
  included a guarantee of certain amounts of water
  flowing to Jordan, but drought and population
  expansion has made this provision increasing
  difficult to sustain.

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Water Scarcity

• The average distance that women in Africa and
  Asia walk to collect water is 6 km.
• The weight of water that women in Africa and Asia
  carry on their heads is the equivalent of your
  airport luggage allowance (20kg).
• The average person in the developing world uses
  10 liters of water a day.
• The average person in the United Kingdom uses 135
  liters of water every day.
• One flush of your toilet uses as much water as
  the average person in the developing world uses
  for a whole days washing, cleaning, cooking and
  drinking.
• One gram of feces can contains10,000,000
  Viruses, 1,000,000 bacteria, 1,000 parasite
  cysts, 100 parasite eggs.

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Results of Lack of Water

• Water-related diseases kill millions of people
  each year, prevent millions more from leading
  healthy lives, and undermine development efforts.
  About 2.3 billion people in the world suffer from
  diseases that are linked to water.
• Diseases include Cholera, Typhoid Fever,
  Gastroenteritis, shigella, polio, meningitis,
  hepatitis A and E, Amoebiasis and Dysentery.
• An estimated 3 billion people lack a sanitary
  toilet
• An estimated 4 billion cases of diarrheal disease
  occur every year, causing 3 million to 4 million
  deaths, mostly among children

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Results of Lack of Water

• 2.2 million people in developing countries, most
  of them children, die every year from diseases
  associated with lack of access to safe drinking
  water, inadequate sanitation and poor hygiene.
• Some 6,000 children die every day from diseases
  associated with lack of access to safe drinking
  water, inadequate sanitation and poor hygiene
  equivalent to 20 jumbo jets crashing every day.
• In Zambia, one in five children die before their
  fifth birthday.  In contrast in the UK fewer than
  1 of children die before they reach the age of
  five.

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Results of Lack of Water

• In the past 10 years diarrhea has killed more
  children than all the people lost to armed
  conflict since World War II.
• In China, India and Indonesia twice as many
  people are dying from diarrheal diseases as from
  HIV/AIDS.
• The population of the Kibeira slum in Nairobi,
  Kenya pay up to five times the price for a liter
  of water than the average American citizen.
• An estimated 25 of people in developing country
  cities use water vendors purchasing their water
  at significantly higher prices than piped water.
• The simple act of washing hands with soap and
  water can reduce diarrheal disease by one-third.

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The Price of Water Scarcity

• Waterborne diseases cost the Indian economy 73
  million working days a year. 
• A cholera outbreak in Peru in the early 1990s
  cost the economy US1 billion in lost tourism and
  agricultural exports in just 10 weeks.
• UN Estimates the Worldwide economic impact of
  waterborne diseases exceeds 80 billion/year.

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Results of Lack of Water

• At any one time it is estimated that half of the
  worlds hospital beds are occupied by patients
  suffering from water-borne diseases.

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Types of Pollutants

• Particulate matter particles of minerals and
  organic material that cause turbidity in water.
• Chemical pollutants includes pesticides and
  industrial wastes dissolved in solution
• Disease causing agents bacteria, virus and
  parasitic organisms.
• Truly safe drinking water must address all three
  of these categories.

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Water Treatment Methods

• Boiling Effective when done properly.
  Ineffective against particulate matter and
  chemical pollutants, expensive and energy
  intensive.
• Chemical Disinfection Effective against most
  pathogens. Some pathogens resistant.
  Environmental and end-user risks. Ineffective
  against chemical pollutants.
• Solar Simple and low-cost. May be ineffective
  against certain pathogens or through turbid
  water. Ineffective against chemical pollutants.

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Water Treatment Methods

• Filtration Devices Vary greatly depending upon
  pore size and composition. Can be very effective
  against particulate matter and chemical
  pollutants. Traditionally ineffective against
  many pathogens.
• UV Effective against many pathogens but
  perceived as complicated and expensive.
  Ineffective against particulate matter and
  chemical pollutants.

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Purification Methods Predominant Across Regions
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KX Industries MATRIKX CASE STUDY

• SOLUTION TO WORLDS WATER ISSUES
• REVOLUTIONARY DEVELOPMENT
• comprehensive microbiological reduction of
  waterborne bacteria and viruses
• produces microbiologically and chemically-purified
  water from virtually any water source (e.g.
  river water in Africa)
• EVOLUTIONARY poised for market rollout

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MATRIKX INTERNATIONAL

• PATENTED, MICROBIOLOGICAL WATER FILTER TECHNOLOGY
  can defeat one of the worlds greatest killers
  WATER BORN DISEASES (WBD)
• WBD cause approx 2.2 MILLION DEATHS ANNUALLY and
  4 BILLION CASES OF GI DISEASE ANNUALLY (est. 100
  BILLION ANNUAL DIRECT ECONOMIC LOSSES)
• Produces MB and chemically-purified water from
  VIRTUALLY ANY WATER SOURCE (e.g. river water in
  Africa)
• SOLUTION low price (6-10/FAMILY/YEAR) makes
  the product affordable to any family with even
  minimal annual income
• OTHER OUTCOMES (i) investment jobs to
  localities (ii) water conservation and (iii)
  anti-terrorism

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SUMMARY OF NANOTECHS FUTURE

• INTERNATIONAL COMPETITION
• EVOLUTIONARY nanotech developments will result in
  near-term, less risky revenue opportunities
• KEY PARTNERSHIPS ALLIANCES among government,
  universities, corporations, VCs and entrepreneurs
  will continue to drive the development of
  nanotechnology
• IP will continue to be the CORE OF NANOTECHNOLOGY
  DEVELOPMENT
• THE FUTURE OF NANO WATER WILL DEVELOP WITHIN THIS
  SAME FRAMEWORK

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Future of NanoWater

• International Phenomenon
• Evolutionary and Revolutionary
• Alliances are Key (e.g. MatriKX)
• IP Will Determine Success

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