McGOVERN CAPITAL LLC

1
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

2
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

3
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

4
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

5
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

6
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
7
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.

8
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.

9
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

10
Water Scarcity
11
Water Scarcity and Stress
12
Water Use
13
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.

14
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.

15
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

16
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.

17
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.

18
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.

19
WORLD FILTER

• KX Industries
• World Filter Technology

20
KX Industries L.P.Worldwide Manufacturing
Corporate Headquarters
21
KX Industries L.P.Company Profile

• World leader in production of extruded activated
  carbon water filters
• First manufacturer of miniature EOT health claim
  filter
• First manufacturer of miniature refrigerator
  filter
• First manufacturer of carbon block in flat-sheet
  form
• First manufacturer of 1.75 pre-RO water cooler
  filters
• First manufacturer of carbon block inserts for
  ceramics
• 1989 start-up as limited partnership with EXXON
  Chemical Company
• April 1997, K T Corporation, general partner of
  KXI, purchases partnership interest of limited
  partner EXXON

22
KX Industries L.P.Product Overview

• MATRIKX Carbon Block
• High density of active ingredients
• Allows high degree of product miniaturization
• Supports wide range of health claims in single
  structure
• Low tooling costs, attractive economics
• PLEKX Flat Sheet Medium
• Improved dirt capacity and lower initial ?P
• Supports wide range of health claims
• Flexible methods for integration into hardware
• No tooling costs, extremely attractive economics

23
KX Industries L.P.Facilities Summary

• Current Facilities
• 100,000 sq. ft. Plant, Orange CT
• 65,500 sq. ft. RD lab Pilot Plant,
• West Haven CT
• 25,000 sq. ft. Injection molding, Watertown CT
• EXPANSION 2004 New 135,000 SF Injection Molding
  and Light Assembly Division (IMLAD) Plant

24
World Filter Technology

• Filter Software
• The software of the system consists of a filter
  medium that performs the critical water
  purification task.
• Filter Hardware
• The hardware of the system consists of any
  components that hold the software, create seals,
  and interface to the plumbing or environment.

25
Whats a Microbiological Filter ?

• The fundamental raw material is either a special
  nanofiber or a fine activated carbon particles
  that are treated with a special coating.
• These materials are formed into microporous
  structures that intercept even the smallest viral
  particle.
• The filters operate even in water consisting of
  simulated sewage sludge i.e. under any
  condition. Performance meets U.S. EPAs guide
  standard for Microbiological Water Purifiers.

26
GRAVITY-FLOW MICROBIOLOGICAL DEVICES

• No ordinary fiber can produce a structure
  capable of intercepting viral particles at low
  pressure drop gravity flow. What is required is
  a new type of
• NANOFIBER

27
SEM OF ADVANCED NANOFIBER

• 15,000 X
• 0.2 Micron MFP
• Hydrophilic
• Fibers Bonded
• 50 nm Fibers

28
World Filter Performance

• Performance
• gt99.999999

Test 1
Test 2
Test 3
9
Test 4
8
7
EPA bacteria standard
6
Log Reduction
5
EPA Virus standard
4
3
EPA Cyst standard
2
1
0
E. coli
MS2
29
World Filter TechnologyGravity-Flow Devices

• Filter Software
• PREFILTRATION LAYER Provides high dirt
  capacity, prevents premature plugging
• ADSORPTION LAYER Efficiently adsorbs chemical
  contaminants.
• NANOFIBER LAYER A charged micro-porous structure
  that intercepts colloidal-size particles,
  including bacterial, viral and parasitic
  organisms.

30

• World Filter Technology
• DEVELOPING WORLD PRODUCTS

31
World FilterDeveloping Emerging Countries

• 4 billion cases annually of hygiene-related
  diseases such as diarrhea
• 2.2 - 2.5 million deaths annually principally in
  children lt 5 years old.
• Representing 31 of child deaths by key diseases.

1. Looking back looking ahead WHO 2003
32
World Filter TechnologyLESS-DEVELOPED WORLD

• PROVIDE A FAMILY SAFE AND DELICIOUS WATER FOR
  0.02/day.
• The filter is expected to be sold at a price of
  0.80-0.90 (INR 35-40) each and operates one
  month, producing roughly 100 gallons (378 L) of
  clean, safe and great tasting water for
  0.008/gallon (10 paise/L).
• Retail price of the dispensing unit is estimated
  at 6.00 - 11.00 depending upon size and is
  produced by the local distributor partner.

33
World Filter TechnologyGRAVITY-FLOW, In-HOME
UNITS

• LOW COST PURIFIER
• Raw water flows by gravity from an upper
  reservoir, through the filter, into a safe
  storage lower reservoir.

34
World Filter Technology

• Filter installed between top and bottom
  reservoirs, replaced monthly.
• Each filter ticket provides 75-100 gallons and
  flows at 1-1.5 GPH (4-6 L/hr.)
• Cost is 0.008 per gallon. No maintenance or
  moving parts. Easy filter changeout in 10
  seconds.
• Lower clean reservoir protected at all times.
  

35
Arequipa, Peru - Field Trial
Aug. 2004 Randomized controlled field trial (50
households) conducted by Prof. Tom Clasen of
London School of Hygiene and Tropical Medicine
(LSHTM) in collaboration with University of North
Carolina and Massachusetts Institute of
Technology.
The filter system.dramatically improved the
microbial quality of drinking water of a
low-income population in rural Peru. In so
doing, the system reduced substantially the
health risk presented by such water. The system
also demonstrated a capacity for reducing
turbidity to meet international guidelines.
Source Final Report, Tom Clasen, LSHTM
36
World Filter Partnership

• Within less-developed nation markets, we would
  establish local production of the water
  dispensing hardware and local distribution
  partners using a model similar to the beverage
  bottling industry. We have just signed an MOU
  with a reputed consumer products company to
  distribute this product in India.
• In some regions, we may fulfill supply contracts
  to NGOs that will assume responsibility for the
  distribution of the water purification systems.
  Eventually, a market mechanism would be
  established to sustain this supply.
• The critical water filter tickets will initially
  continue to be produced at a central factory in
  North America.

37
WORLD FILTER TECHNOLOGY CARBON FILTERS, VILLAGE
SCALE

• A village-scale unit, also suitable for
  food-service or post-mix applications, would
  consist of a nanofiber prefilter followed by a
  microbiological barrier carbon block.
• Technology is fully tested by CA-DHS and provides
  25,000 gallons of purified water at a flow rate
  of 1.5 GPM (gt2000 gallons per day) at a cost of
  0.001 per gallon (Rs. 1.2 per 100 L). Initial
  system cost is 100-150. No maintenance
  required-- no moving parts.

38
Challenges / Considerations

• 1) Plan / Timing
• 2) Team
• Local Knowledge / Relationships
• 3) Constituents
• Commercial
• NGO
• Governments
• 4) Partnerships
• Customer Profile(s)
• Distribution (Urban, Peri, Rural)
• 5) Pricing

39
Challenges / Considerations

• 6) Pyramid of Influence
• Key opinion Leaders
• Customer Education
• Social Marketing
• 7) Macro Entity / Taxes
• 8) Micro Corruption / Counterfeits