MPS 812 Business Plan

Contents
1. 2. 3. 4. 5. 6. 7. 8. Executive Summary Problem & Opportunity Our Products Management Team Route to Market Business Strategy Financials Exit Strategy

1. Executive Summary 1.1 Introduction of Company and Type of Business

1.2 Problem & Opportunity

1.3 Our Products

1.4 Management Team

1.5 Route to Market

1.6 Business Strategy

1.7 Financials

1.8 Exit Strategy

2. Problem and Opportunity Battery life is a major limitation in most portable electronic devices. A typical cellphones battery can last around 4 hours of talktime[1], while a typical laptop battery can last around 6 hours when the laptop is running applications without power-saving mode[2]. This would be a problem when using such mobile devices in areas where there are no easily accessible power supplies such as rural regions. Even in urban areas, it can prove to be quite a hassle to lug a charger around and having to search for a spot with power socket when using laptops outdoors. In light of the ever-growing usage of mobile devices, there is need for batteries which can last much longer than current ones. Nevertheless, lithium-ion battery technology is reaching a plateau in terms of increasing battery storage capacity while mobile electronic devices are becoming increasingly energy intensive. As such, new technologies have to be utilized to solve this problem. Also the market size for mobile electronic products is projected to continue increasing, ensuring a steady demand for longer-lasting batteries.

3. Products 3.1 Technology We are using patented nanotechnology. Years of research and development at the Massachusetts Institute of Technology have culminated in our NanoBatt super-capacitor batteries which can last up to 600 times longer than conventional chemical batteries, store much more energy per unit weight and be charged almost instantaneously. Our batteries are created using revolutionary techniques to deposit millions of carbon nanotubes filaments, which are tiny carbon threads as thin as 1/50000 of a human hair, on the capacitor electrodes. Since the storage ability of a capacitor depends on the size of its surface area, the use of such nanotubes filaments vastly increases the effective surface area and increases its energy storage density to levels exceeding that of traditional batteries. Our NanoBatt batteries can last up to 800 times longer than conventional chemical batteries, store much more energy per unit weight and be charged almost instantaneously. NanoBatt batteries have the potential to supplant conventional lithium-ion batteries in energy-intensive portable electronic devices such as mobile phones and laptops. Other possible applications of our technology include powering electric cars, autonomous robots and spacecraft equipment. Moreover, nanotube production technology has come a long way since its infancy. Since 2000, the production cost of high-grade single-walled nanotubes has fallen from US$1500 per gram to US$100 per gram. Our product, however, requires only short segments of filaments which are even cheaper still at US$50 per gram. This price tag is expected to continue falling. 3.2 Current Products We currently have two types of products cellphones batteries and laptop batteries. We have LiIon batteries for all models of major cellphones brands such as Nokia, Apple, Sony Ericsson and Blackberry, as well as for all models of laptop batteries such as HP, Fujitsu, Acer, Apple.

3.3 Comparisons with other products Table 1: Specifications of several popular lithium-ion batteries and Nanobatt battery for cellphoness Brand Battery life (talktime) Weight Time required for full charge A 4 hours 50g 3 hours B 5.5 hours 75g 4 hours C 4.5 hours 60g 4 hours NanoBatt 500 hours 60g Less than 1 sec

Lifespan (number of charging cycles) Specific energy density (Wh/kg) Temperature dependency Production cost (US$)

900 150 Moderate $4

800 220 High $4.5

700 200 Moderate $5

600 000 23 000 Very Low $10

The talktime of Nanobatts are 100 longer than that of current batteries used in cellphones. With a typical 3 days recharging once scenario, Nanobatts are able to last 300 days without recharging with one and half hour of talktime each day. This could save a lot of hassle espcially for busy always on the move cellphoness and laptops users because recharging batteries with Nanobatt is as simple as connecting the cellphoness to the power source and disconnecting again.

4. Management Team

Co-founders: Goh Woon Peng, Ong Wei Guang, Chan Eng Aik, Chin Xin Yu, Lim Kuo Hou, Ridwan Salim Sanad At present, we do not have any CEO and CFO yet as none of the co-founders possess the necessary experience and expertise for these positions. Chief Executive Officer: We will find someone with the relevant expertise to steer our company, preferably a former CEO of a Fortune 500 company. Since we are a new start-up company, we will look for someone who is willing and has the experience to take on multiple roles initally. He should have relevant expertises in operations management, marketing, forming the overall strategy, financing, creation of company culture, building of senior management team, human resources, compliance with safety regulations. Chief Financial Officer: We will hire someone with relevant financial training to assume to role of CFO. He should have the expertise to ensure there is strict adherence to the budget of the company. He should also be able to devise real time auditing tools that could identify and report the financial happenings and potential problems area of activity to the management timely and accurately. Chief Technology Officer: Professor Riccardo Signorelli Prof Riccardo Signorelli from MIT has extensive research experience dealing with nanotechnology, especially in nanotube fabrication. He is also responsible for overseeing the development of NanoBatts technology and is our mentor.

Technical Advisors: Joel Schindall, John Kassakian Prof Joel and Prof John from MIT were also involved in the development of NanoBatts technology. As such, we shall appoint them as our technical advisors. 5. Route to Market 5.1 Market Size

The market for possible applications for NanoBatt overlaps almost all devices that require a use of a battery. However, we identified the cellphones battery market and the laptops battery market as the best candidates with sufficient market size and demand for high performance batteries.

Cell phone sales in first quarter of 2009 was at 269.1 million units. Based on this data, we can expect that annual sales of ~1.1 billion units. This figure should continue to increase at a rate of 7% to 9% per year in the near future. Since the volume of aftermarket battery sales is far overshadowed by the sales to the OEM, we assume that the volumetric sales of cellphone batteries to be closely tagged to the sales of cellphones. Given the current market price of US$2.70 per unit for basic models of cell phone batteries, the market size for all cell phone batteries is estimated at US$2.97 billion.

Statistics show that in 2009 cellphones sales took a 13.4% share in units sold. This value was only 10.8% a year ago. Based on this trend, the share of cellphones sales may reach 18% in 2011 with 200 million units sold and reach 22% in 2012 at 250 million units. Typically, the unit cost for a cellphones battery is considerably higher at US$5 which reflects that the market size for cellphones batteries is valued at US$1-1.25 billion.

Our other focus is on the laptop battery market. In 2010, laptops sales is forecasted at 169.8 million units and the predicted to grow at about 10% each year to reach 264.0 million units by 2014. Again, we assume that the sales of laptops to be directly correlated to the sales in its batteries. Currently, unit costs for laptop batteries range from US$15 to US$25, indicating a market size of US$3.4 billion now.

In all, the present total market size for cellphone batteries and laptop batteries is valued at US$4.4 billion. This represents the the markets with the best potential for the application of

NanoBatt. With decreasing costs as the technology matures, the potential future market may be as large as US$8.3 billion.

5.2 Potential Customers

Our primary customers will be the Original Equipment Manufacturers (OEMs) of cellphones (eg. Nokia, Google, Motorola, etc.) and laptops (eg. Alienware, Sony, Toshiba etc.).

5.3 Market Growth The existing large market of high energy consumption laptops and cellphones and their rapid market growth predicted in next two years underpins our potential to establish a considerable market share in laptops and cellphones battery market.

We will license our products to the leading laptops and cellphones OEMs mentioned above. Initially our batteries will be used in the launch of their new series of product for market testruns. Licensees that see outweighing benefits using our batteries in the initial market test-runs will use our batteries as the new standard in all their future products. In this way, we will successfully retain the two leading laptops and cellphones manufacturers as our long-term customers which ensures a stable source of income in the near future. By penetrating the market of the leading manufacturers first, we hope our batteries would become the new standard for laptops and cellphones market quickly in three to four years time.

5.4 Marketing Approach

We will hold a booth in International Consumer Electronics Show 2011 and International CTIA wireless trade show 2011 in Las Vegas. By paricipating in the world's largest consumer

technology trade shows, we could publicize our products to the leading OEMs of laptops and cellphones (eg. Nokia, Google, Motorola, etc for cellphones and eg. Alienware, Sony, Toshiba etc for laptops.). . Brochures with comparison of performance between our products and other rechargable batteries will be distributed to laptops and cellphones manufacturers in the tradeshow.

Apart from that, we will also make use of the connections of our CEO, industrial connections of NTU as well as that of MIT through our CTO to kick start our business relationship with potential licensees quickly.

After the licensing deal is struck with our licensees, feedback of our products from our licensee will be channeled to our R&D department for to finetune our products research according to the changing needs of our licensees. In this way, we can ensure a continual lasting relationship with our licensee by continually inventing better products that fit the needs of the cellphones and laptops manufacturers.

5.5 Competitors and substitutes

Listed below are companies that are potential competitiors:

Mphase Battery with chemicals isolated from electrode by Technologies"nanograss" when the battery is not in use Altairnano Naoexa Lithium-ion battery with the anode composed of lithium titanate spindel nanoparticles

Very long shelf life

Higher power, quicker recharge, less combustible than standard lithium-ion batteries Lithium-ion battery using nanocomposite electrodes using Higher power, less combustible than technology developed at Argonne National Laboratory standard lithium-ion batteries

EcoloCap Lead acid batteries using nanotube coated Solutions electrodes

Zpower Silver-zinc battery using nanoparticles in the silver cathode

Increased energy density at a lower cost that Li-ion batteries

Higher power density, low combustibility

Structured silicon anodes for use in lithium-ion Higher power density, low batteries combustibility Nanotube based additive for use in lithium-ion NanoAmor electrodes Nexeon

At the moment, our concept of a capacitor-based battery unique in the market. Our most immediate competitors offer nanotechnology-enhanced lithium-ion batteries which are evolutionary improvements over traditional lithium ion batteries. These batteries would possibly be able to reuse much of current technology and manufacturing processes and thus be cheaper than our product. However, we still hold a fundamental advantage in the charging speed and longevity of capacitors over chemical batteries. Furthermore, we designed our product to be completely compatible with devices that operate on traditional batteries, there will be no requirement for any redesign of their devices to optimize performance with NanoBatt. Therefore, we expect we have the superior advantage in terms performance over our competitors. Our main challenges will instead be our smaller financial base compared to our competitors and potential attempts by our competitors to block our products in the market by using their financial clouts.

Technological Position

We aim to quickly obtain patents in major markets such as the United States, China, Europe, India and South-east Asia to establish a barrier to entry to prevent copycat competitors. Moreover, we will engage in continous research and development in the derivatives and improvements of our technology. Details of the technical approach will only be revealed to our outsourced manufacturers after signing a confidentiality agreement with NanoBatt.

Substitutes

In the long term, there are a few battery technologies being developed which can potentially displace current battery technology.

Lithium-Polymer batteries have been well studied and researched on. These batteries are highly mouldable and have high energy capacity but degrade more rapidly and are more expensive than current lithium-ion batteries. They are yet to be widely used in the industry but this trend is changing with the introduction of Li-Po batteries into popular devices like the MacBook and Amazon Kindle.

Fuel cells promises extremely high energy density. Now, they are most frequently used in large scale applications like in vehicles where the need to store alot of energy is imperative. They can be potentially used on laptops and cellphoness but at current prices it would be prohibitive. However, it can occupy a niche market for users who demand >100 hr battery life.

http://www.gizmag.com/lithium-ion-battery-breakthrough-mit/11244/

Competitors:

http://www.understandingnano.com/batteries.html

Substitutes Li-Po batt, Improvement on Li-ion,Fuel Cells

6. Business Strategy NanoBatts business model involves the designing and licensing of IP based on our proprietary batteries rather than the manufacturing and selling of actual batteries. We aim to license IP to a network of partner companies, and in particular we are targeting the world's leading cellphones and laptop companies. These companies will incorporate NanoBatt batteries in their products, paying NanoBatt royalty on every battery produced. This will constitute our main revenue stream. Our key focus and competency lies in research and development. original equipment manufacturers (OEMs) with the requisite nanotube fabrication facilities for the production of NanoBatt batteries. This First year revenue We plan to incorporate our batteries together with new series of cellphoness and laptops. Market size for cellphones and laptop batteries are large compared to other products such as electric cars and autonomous robots. Thus, we will just focus on selling cellphones and laptop batteries for the first 2 years in order to achieve positive cash flow as soon as possible. More products such as

electric car batteries will be introduced into the production lines from the 3rd year onwards to diversify our sources of income.

Cost of production The manufacturing costs of our Nanobatt batteries will be approximately 2 times higher than that of conventional lithium-ion batteries. We plan to decrease this to 1.5 times that of Li-ion batteries through economies of scale.

Table 1: Manpower Allocation in the first 3 years of operation Year Senior scientist Scientist Senior technician Technician maintenance Sales & marketing Management Total 1st year 1@$5000 1@$3000 1@$2500 & 0 0 1@$5000 4 0 1@$4000 1 5 1@$2000 1 1 7 2nd year 1 1 1 3rd year 1 2 1

Business strategy summary :

Growth Strategy Once proof-of-concept has been shown in a high profile cellphones or laptop company, we expect other companies in the same or in other industries to follow quickly. The incentive for the launching customers in each sector will be to be first on its respective market, and possibly, when additional patentable technology is developed, they can receive royalties on that specific part. This will make our clients more competitive than others in the same market.

Nanobatt will focus first on a successful proof-of-concept in collaboration with a launching customer from the battery industry, using a small team of top experts in the fields of Nanotechnology in nanotubes fabrication, supplemented by experts in whey processing from our partner. Once the proof-of-concept is demonstrated, Nanobatt will quickly increase the critical mass of scientists to widen the scope of our applications. Business developers with a background in the battery-industrial (phone, car, portable computer industries.) sector will be hired to establish our market as fast as we can. On the production side, as soon as our first prototype NB1 fits the requirements, the prototype will be licensed to the companies who are interested in. A charge on licensing fee per unit will be determined to companies interested in applying our prototype to their products. From second year onwards, our applications will be customized for different industrial sectors, each with their own specific challenges and problems, we consider to group a

scientific team with a focus on research and development in our prototype, in order to maximize ability of our prototype to penetrate into their core industrial sector.

Suppliers & Strategic Partners A small number of partners are now signed on or are subject to negotiations. They will be paramount for the proof-of-concept phase: Massachusetts Institute of Technology (modeling, carbon nanotubes) TDI Wageningen (processing technology) Future collaborations, either through (inter-)national subsidized technology development projects or through partnership relations, include: carbon nanotubes supplier Massachusetts Institute of Technology (processing technology) A substantial number of major nanotubes suppliers companies are located in the America, concentrating a large critical mass of relevant research groups, an essential condition for implementation of NB1 technology at industrial scale in the batteries industrial sector.

Operating Locations During the proof-of-concept phase, we will be operating from the Massachusetts Institute of Technology in the group of Prof. Dressehaus, with whom we already have a collaborative project in the area of fabrication of Ultracapacitor. Nanobatt will outsource the manufacturing of NB1.

7. Financials sure.will get it done by 26 7.1 Projected Cash Flow Based on a royalty rate of 10% for each Nanobatt battery sold by the OEMs at an estimated price of S$10 to cellphones companies and S$40 to laptop companies, we will earn S$1 and S$4 respectively for each battery sold. According to our predicted market share which we can capture for each year, we have calculated our revenue and cash flow in table 3 below.

Revenue Assumptions Estimate our sales of our first product, Forecast production volume X selling price - outsourcing production cost = revenue Initiate more production lines for growth Table 3: Projected cash flow for first 4 years Cashflow forecast (S$'000) Year Income revenue Total Expenditure Cashflow from operation Cashflow from investment Total Cashflow calculated 2011 1644 426 2012 5712 743.5 2013 9916 1428 8488 7200 1288 2014 14900 2279 12621 1200 11421

1218 4968.5 1300 -82 5000 -31.5

7.2 Projected Company Valuation Table 4: Projected company valuation for first 4 years
Company Valuation in $$ 000 Free Cash Flow Now Year 1 -82 2 -31.5 3 1288 4 11421

Discount rate Discount Factor Current Value Entity value Debt Company Value

45% 0.690 -57 7116 0 7116

35% 0.549 -17

25% 0.512 659

15% 0.572 6530

Figure 2: (Bar charts of projected company valuation for first 4 years)

8. Exit Strategy We will put up our company for acquisition after 5 years by a larger company in the same industry, preferably one which possesses nanotube fabrication facilities.

[1] [2]

http://www.infosyncworld.com/news/n/8069.html http://onlinelaptopbattery.com/tag/average-laptop-battery-life/

Appendix - Detailed financials

Year 2011 Direct calculation of cash flow Month Income from sales (in unit of '000) Orders Received/Confirmed Cell Phone battery Laptop battery Licensing earning (S$ '000) Payment received 1 2 3 4 5 6 7 8 9 10 11

102 43

102 43

102 43 274

102 43 274

102 43 274 274

102 43 274 274

102 43 274 274

102 43 274 274

102 43 274 274

Cost (in unit of S$ '000) Lab Rental Salary Patent Application Fee (US,EU,China) Maintenance Fee (US,EU,China) Tax Interest Total Costs Cash Flow from operation Investments 10 15.5 0 0 0 0 25.5 -25.5 10 15.5 0 0 0 0 25.5 -25.5 10 15.5 12 0 0 0 37.5 -37.5 10 15.5 12 0 0 0 37.5 -37.5 10 15.5 12 0 0 0 37.5 -37.5 10 15.5 12 0 0 0 37.5 -37.5 10 15.5 12 0 0 0 37.5 236.5 10 15.5 12 0 0 0 37.5 236.5 10 15.5 12 0 0 0 37.5 236.5 10 15.5 12 0 0 0 37.5 236.5 10 15.5 12 0 0 0 37.5 236.5

Equipment Liquidity Total Cashflow calculated

100

50

50

200

200

200

200

-125.5

-75.5

-37.5

-37.5

-87.5

-37.5

236.5

36.5

36.5

36.5

36.5

Year 2012 Direct calculation of cash flow Month Income from sales (in unit of '000) Orders Received/Confirmed Cell Phone battery Laptop battery Licensing earning (S$ '000) Payment received 13 14 15 16 17 18 19 20 21 22

205 93 274 274

205 93 274 274

205 93 577 274

205 93 577 274

205 93 577 577

205 93 577 577

205 93 577 577

205 93 577 577

205 93 577 577

205 93 577 577

20 9 57 57

Cost (in unit of S$ '000) Lab Rental Salary Patent Application Fee (US,EU,China) Maintenance Fee (US,EU,China) Tax Interest Total Costs Cash Flow from operation Investments Equipment 10 19.5 12 0 0 0 41.5 232.5 10 19.5 12 0 0 0 41.5 232.5 10 19.5 12 0 0 0 41.5 232.5 10 19.5 12 0 0 0 41.5 232.5 10 19.5 12 0 245.5 0 287 290 10 19.5 12 0 0 0 41.5 535.5 10 19.5 12 0 0 0 41.5 535.5 10 19.5 12 0 0 0 41.5 535.5 10 19.5 12 0 0 0 41.5 535.5 10 19.5 12 0 0 0 41.5 535.5

1 19

41

535

200

200

500

500

500

500

500

500

500

500

30

Liquidity Total Cashflow calculated

32.5

32.5 -267.5 -267.5

-210

35.5

35.5

35.5

35.5

35.5

235

Year 2013 Direct calculation of cash flow Month Income from sales (in unit of '000) Orders Received/Confirmed Cell Phone battery Laptop battery Licensing earning (S$ '000) Payment received 25 26 27 28 29 30 31 32 33 34

35

335 154 577 577

335 154 577 577

335 154 951 577

335 154 951 577

335 154 951 951

335 154 951 951

335 154 951 951

335 154 951 951

335 154 951 951

335 154 951 951

335 154 951 951

Cost (in unit of S$ '000) Lab Rental Salary Patent Application Fee (US,EU,China) Maintenance Fee (US,EU,China) Tax Interest Total Costs Cash Flow from operation Investments Equipment 10 24.5 12 0 0 0 46.5 530.5 10 24.5 12 0 0 0 46.5 530.5 10 24.5 15.9 1.6 0 0 52 525 10 24.5 15.9 1.6 0 0 52 525 10 24.5 15.9 1.6 937 0 989 -38 10 24.5 15.9 1.6 0 0 34.5 916.5 10 24.5 15.9 1.6 0 0 34.5 916.5 10 24.5 15.9 1.6 0 0 34.5 916.5 10 24.5 15.9 1.6 0 0 34.5 916.5 10 24.5 15.9 1.6 0 0 34.5 916.5

10 24.5

15.9 1.6 0 0

34.5

916.5

600

600

600

600

600

600

600

600

600

600

600

Liquidity Total Cashflow calculated

-69.5

-69.5

-75

-75

-638

316.5

316.5

316.5

316.5

316.5

316.5

Year 2014 Direct calculation of cash flow Month Income from sales (in unit of '000) Orders Received/Confirmed Cell Phone battery Laptop battery Licensing earning (S$ '000) Payment received 37 38 39 40 41 42 43 44 45 46

487 225 951 951

487 225 951 951

487 225 1387 951

487 225 1387 951

487 225 1387 1387

487 225 1387 1387

487 225 1387 1387

487 225 1387 1387

487 225 1387 1387

487 225 1387 1387

48 22 138 138

Cost (in unit of S$ '000) Lab Rental Salary Patent Application Fee (US,EU,China) Maintenance Fee (US,EU,China) Tax Interest Total Costs Cash Flow from operation Investments Equipment Liquidity 10 24.5 15.9 1.6 0 0 52 899 10 24.5 15.9 1.856 0 0 52.26 898.7 10 24.5 15.9 1.856 0 0 52.26 898.7 10 24.5 15.9 1.856 0 0 52.26 916.5 10 24.5 15.9 1.856 1652 0 1704 -317 10 24.5 15.9 1.856 0 0 52.26 1353 10 24.5 15.9 1.856 0 0 52.26 1353 10 24.5 15.9 1.856 0 0 52.26 1353 10 24.5 15.9 1.856 0 0 52.26 1353 10 24.5 15.9 1.856 0 0 52.26 1353

1 24.

15. 1.85

52.2

135

100

100

100

100

100

100

100

100

100

100

10

Total Cashflow calculated

799

798.7

798.7

816.5

-417

1253

1253

1253

1253

1253

125

Due to rounding differences, the presented totals may deviate from the sum of the presented figures

http://www.tomshardware.com/news/acer-dell-hp-notebook-sales,7820.html http://www.canalys.com/pr/2010/r2010021.html http://www.understandingnano.com/batteries.html http://www.inventionstatistics.com/Licensing_Royalty_Rates.html http://pesn.com/2006/02/09/9600232_MIT_Battery/

Group members: Goh Woon Peng (086818L16) Ong Wei Guang (087464J16) Chan Eng Aik (086878G16) Chin Xin Yu () Lim Kuo Hou (073333D16) Ridwan Salim ()