SALINE WATER CONVERSION PROJECT:

BUSINESS PLAN MILETUS RESEARCH GROUP, INC.
The principle of all things is water; all comes from water, and to water all returns.

INTENT

Miletus Research Group is a research and development company aimed at turning advances in science and technology into state-of-the­-art inventions, processes and products. The company has particular strengths in the areas of packaging technology, plastics, electronics, fluid flow analysis, and computer modeling. Initially the individuals associated with Miletus intend to concentrate their efforts in the area of saline water conversion. The company derives its name from the city of Miletus where the philosopher Thales flourished around 585 B.C. Thales stated that "Everything flows," a teaching that applies to water and other fluids or, figuratively speaking, to the ideas of invention and the evolution of technology itself. Major projects flowing out of the research and development associated with Miletus 's desalination efforts will primarily deal with fluid membrane interfaces of various types and for diverse applications.

INTRODUCTION

The efficient utilization of natural resources has become an increasing concern of humankind to survive on planet Earth. Of the four elements of classical Greek philosophy (earth, fire, air, and water), air and water are absolutely essential for sustaining life. Water exists in abundance on Earth, but most of it is in the form of salty ocean water unfit for human consumption. And while water is plentiful in some regions, it is scarce in others, which are often regions of superb climate for agriculture and desirable places to live with rapidly growing populations. Transporting water from regions of plenty to regions of scarcity is expensive and runs into logistical and political problems. For these and other reasons the idea of desalting sea water has been an attractive one for a long time and many attempts have already been made in this direction.

It is, nevertheless remarkable that the first successful desalting processes using the membrane-based technology now referred to as "reverse osmosis" took place just under thirty years ago. The, cellulose acetate membranes of Loeb & Sourirajan were announced in a press release from UCLA in August of 1960. Reverse osmosis has come to be considered the most promising technique for water desalination since it is not based on a change of phase of water from liquid to vapor as are many of its competitors such as flash distillation and freezing processes.

Assuming that Miletus Group's technological advances lead to better membranes and improved process design, it is inevitable that reverse osmosis will become the desalting technique o£ choice both on technical and economic grounds.

To place this thirty year time span in perspective, it was also just some thirty years ago that masers, the crude forerunners of lasers, were developed. We all understand the wide variety of applications of lasers today and the profound impact this development has had on our daily lives. Today science stands at the threshold of development of a new and awesome tool, the X-ray laser. Such a device will, in time, permit the creation of three­ dimensional (holographic) imaging on scales as minute as the atom, with a significant increase in our ability to visualize and comprehend processes and mechanisms at this basic level. Considering the impact that ordinary X-rays have had on our ability to image and diagnose in medicine and technology, the development of X-ray lasers is truly a milestone.

We cite the example of the X-ray laser for two reasons. First, we think it is in itself a development of profound implications. Second, the thirty-year development of the X-ray laser from visible light lasers illustrates the pace of technological and scientific innovation. This pace is unprecedented in the history of western civilization and offers enormous challenges and opportunities. Technologies that to one generation are science fiction are becoming the bread-and-butter reality for the next generation. In many cases, (computers come to mind) the time scale of development is considerably shorter than that of generations.

In water desalination, the past thirty years have seen important advances in our understanding of membrane function, flow control, and analytical and diagnostic techniques. Methods to control both the physical chemistry involved in producing membranes and the flow field that a membrane encounters in a desalination device have advanced considerably. Computer simulation, coupled with laboratory experimentation, allow more rapid progress and more comprehensive exploration than was possible in the past, as we see, for example, in the field of aircraft design and VLSI chips. Although the progress in desalination may not be as revolutionary as that in laser physics, the results are no less profound, and the stakes and rewards in reaching the goal of an efficient, stable, economical desalination technology are substantial. Indeed, just as laser technology will affect our daily lives in war and peace, advances in water purification affect the entire biosphere of our planet. More pragmatically, a survey of patents related to reverse osmosis technology for the period 1975 to 1984 revealed 678 filings in Japan and 620 in western countries. Of the documents filed in western countries, 113 were of Japanese origin: The issue of having the best technology for water desalination (and related purification) has global repercussions.

DESCRIPTION O F THE INVENTION IN FOUR PHASES

The initial focus of this group is to create a system which economically creates fresh water from ocean water. This will be accomplished by utilizing a non-petroleum-based membrane within a pulsatile-pressure or static-pressure fluid conversion system.

The benefits of the membrane are that, at osmotic pressures (osmotic pressure is the pressure required to force liquids through a membrane to separate salts from that fluid) equal to current systems, the membrane will permit fluid transport at a factor of five- ten times the volume of any current system. For example, current requirements in creating fresh water from ocean water are that the processing costs are a maximum of fifty cents per gallon; Miletus Group's membrane, in the same system, would lower the cost to less than ten cents per gallon and perhaps as little as five cents per gallon of fresh, drinkable water.

The benefits of the pulsatile flow (see "I-A" below) are that one can radically reduce the pressures required to create flow through membranes, thereby allowing systems to be built which will utilize plastic rather than stainless steel. The benefit to the entire process is that the up-front cost for manufacturing complete saline water conversion units is reduced up to 90% over existing systems. Miletus also anticipates doubling or quadrupling the volume of fluid transport through current membranes of like surface area, further reducing the processing cost per gallon of water to less than five cents per gallon.

I. Fluid flow. Assumption that osmotic pressures of 450 p.s.i. are required.

A. Pulsatile flow. Determine the proper pulse for fluids to move more efficiently through membranes. It is our intent to increase the efficiencies of fluid flow through any existing membrane by perfecting and engineering a system which precisely pulsates a given fluid at the proper rate to facilitate the most effective effusive action. It is evident that within most living systems, as the heart pulsates, fluids are efficiently passed through membranes at low pressure.

B. Static flow: From our study of existing technologies it is apparent that current art is based on very high osmotic pressures. It is our intent to show that these pressures are not only inefficient but also unnecessary. Very simply, one need to only consider the passage of fluid through plants and trees.

II. Membrane: Current industry assumption is that petroleum-based membranes are the most effective for the purpose of saline water conversion and other fluid/membrane systems. However, Miletus has developed a revolutionary non-petroleum-based membrane which is a minimum of five times as hydrophilic. What this means for us is that, just based on the efficiencies of the new filter, we are at least five times as efficient in passing fluids through membranes as any existing technology. This alone makes the proposed systems economically viable.

III. Interface of superior membrane with superior method for passing fluids through a membrane. Once we have perfected the above, it is our intent to optimize Miletus Group's systems by coupling the technologies.

IV. Finally a system requiring low energies at low pressure will be developed to work undersea, utilizing either energy transfer systems to create the power required to desalinize ocean water or another passive method for creating the energy required.

PRINCIPALS AND BOARD OF DIRECTORS

Miletus Research principals will be as follows :

The group following incorporation will be made up of the following individuals:

Investor , Chairman and Chief Executive Officer.

Mr. James P. Hawkins, President and Director of Research.

______________, Executive Vice President and Chief operating officer.

Dr. Hassan Aref, Vice President

Dr. John J. Hawkins, Vice President (Research Plastics Chemist at Smith-Kline-Beckman [developer of plastic fiber optics, medium-density polyethylene's and the membrane process).

The Board of Directors for Miletus Research Inc. will be comprised of the following:

The individuals above and others to be determined

A.) Funding request is for $4,000,000. B. Time 'fable
B.) Time Table

Month 1: Receive funding, secure facility and modify as per "facility requirements," secure technical and office equipment, and principals begin work.

Month 2: Take delivery of technical and office equipment, set up work stations and lab areas, and salaried staff begin.

Months 3 through 5: Refine a licensable computer-generated technology regarding fluid flow through existing membranes.

Month 6: Patent process initiated regarding technologies developed and, once filed, marketing begins.

Months 7 through 9: Marketing and research will continue; focus will turn toward completion of membrane and developing of a computer model to interface proposed membrane with new fluid flow techniques. License fees and royalties begin.

Month 10: Consortium formation; recommended parties include DRG-Britain, Bosch-West Germany and proposed research group. Marketing and research continue.

Months 11 and 12: Refine technology and achieve first membrane synthesis.

Months 13 through 18: Develop first interface prototypes, incorporating fluid knowledge and revolutionary hydrophilic membrane.

Months 19 through 23: Test and refine interface prototypes.

Month 24: Consortium begins marketing complete systems.

C. Yield & Sources

Month 6 • The licensable computer-generated technology will generate funds from the licensed technology. The amounts will vary from licensee to licensee, but all licensees will pay (i) an upfront license fee and (ii) a guaranteed continuing royalty based on minimum utilization. It is projected that $ will be attained from the initial license fees and $ in continuing royalties.

CAPITAL EXPENDITURES

A. Leasehold improvements: Estimated tenant improvements of $55,000.

B. Technical Equipment Requirements (all costs approximate):

Description Cost

Sun 4 Megaflop work stations, with training

Two Mac II Computers @ $11,000 each One Mac SE Computer

Two modems for Macs @ $400 each one laser printer for Mac

One dot matrix printer One color video scanner one plotter for blueprinting Various software

Diagnostic equipment

Machining and tooling equipment: lst year 2nd year
Systems hardware purchases: 1st year 2nd year
Chem Lab outfitting: lst year 2nd year

Total Technical Equipment: $1,237,800first year $1,050,000 second year

C. Office Equipment / Furnishings (all costs approximate):

Office furniture $ 12,000

Telephone system ' 10,000

Security system 1,000

Copier 5,000

Word Processor 5,000

Calculators (G) 500

Telecopier 2,000

Total Office Equipment: $36,500 first year

OTHER OPERATING EXPENSES

See itemization on attached spreadsheet. Miletus Business Plan

SUMMARY

The introduction briefly touched on the maser's potential for imaging three dimensionally, in real time, objects as small as atoms. Also, we presented the fields of expertise represented within the Miletus Research Group, Inc. This group is being structured to allow us to computer image and, thereby, anticipate information which will result from holographic X-ray laser research some ten years hence. The potential with respect to saline water conversion, as well as other technologies, is to analyze and quantify data, leading to a computer model which will permit us to realistically predict specific molecular structures for membranes, their shape and configuration, while designing systems specific to these membranes and to the fluids with which they will interface. Included, of course, will be the actual dynamics of how best to pass fluids through said membranes.

Utilizing this procedure as a model, the Miletus Research Group, Inc. will be capable of not only projecting but also actually patenting entire segments of diverse technologies. Flowing from the potential for increasing generalized knowledge is the likelihood of staggering profits for Miletus and its investors, only one example of which is the reduction of processing costs for conversation of saline water to fresh water from fifty cents to five cents per gallon.