GreenShift executes agreement to invest in Ovation products

Ovation has invested over $9 million developing vapor compression distillation technology that offers dramatic price and performance advantages over competing clean water technologies. fire-hydrant sized appliance that can generate 25 gph of pure water from a variety of dirty water input sources at a cost of $0.004 per gallon...

MOUNT ARLINGTON, NJ, Aug. 9, 2005 (PRNewswire-FirstCall) -- GreenShift Corp. has executed agreements to invest in Ovation Products Corp., a development stage company with patented and proprietary technologies involving new implementations of vapor compression distillation.

Ovation has invested over $9 million developing technology that offers dramatic price and performance advantages over competing clean water technologies. Ovation is finalizing the development of its initial product, the Clean Water Appliance -- a fire-hydrant sized appliance that can generate 25 gallons of pure water per hour from a variety of dirty water input sources at a cost of about $0.004 per gallon, or about 1.2% of the cost of traditional home distillation methods. Ovation expects that its Clean Water Appliance will be available in the fourth quarter 2005 and will sell for a fraction of the price of commercial distillation systems.

To achieve this small size, low cost efficiency, Ovation's products incorporate new implementations of a distillation process called vapor compression. It has been granted 11 patents for its technology and system, and has filed for an additional five patents to date.

Vapor Compression Distillation
Distillation is the "gold standard" for water purification in that it removes bacteria, viruses, heavy metals, suspended solids and almost all chemicals. It is the single most effective method for purifying water. Other processes such as ultra filtration and reverse osmosis do not produce perfect water quality, discharge several times more wastewater, degrade over time, and require replacement of filters and cartridges. Ovation's products provide a consistent high quality output and require no filter or cartridges.

"Most distillation methods lose a lot of energy in the form of heat," said Bill Zebuhr, Ovation's chairman, founder, chief technology officer, and the inventor of Ovation's technology. "It takes 1,000 BTUs to vaporize a pound of water, which is equal to about a pint. Purifying water accordingly costs about $0.35 per gallon with a conventional home distiller. Vapor compression distillation enables the iterative recovery and reuse of the heat of vaporization to evaporate successive batches of water while dirty concentrate is continuously discharged from the system."

Zebuhr has refined the efficiency of Ovation's technology to the point where Ovation has been able to reduce energy loss by over 98% and distill water for about 1.2% of the cost of traditional home methods. Ovation believes that the Ovation Clean Water Appliance is the most efficient commercial distiller in the world, of any size.

The Water Purification and Treatment Industry
Due to the decline in water quality or access to potable water, several million people die every year from water contaminated by solvents, pesticides, industrial wastes, lead, and other pollutants. The World Health Organization estimates that, globally, nearly 3.5 billion people are without potable water or basic sanitation, and quantifies the costs associated with this problem at about $11.3 billion by 2015. While most of these deaths occur in developing countries, some also occur in industrialized countries.

Within the United States, much of the population lives in metropolitan areas with established water and wastewater systems in place. However, many of these existing, older water and wastewater systems are in desperate need of repair. Industry consultants estimate that between 10% and 40% of water transported via the existing water systems is lost through leakage and inaccurate metering. Also, more individuals are moving to less developed areas, with the most rapid population growth occurring in resource-constrained areas with underdeveloped and inadequate infrastructure. Compounding this strain is that many of the regions experiencing the rapid growth also have significant water scarcity issues.

Additionally, various industries use significant amounts of water in the fabrication of products and the cooling and washing of equipment. For example, in the semiconductor industry, about 2,800 to 3,200 gallons of water are required to make a single eight-inch wafer. These high-water demand industries are looking to cut costs by maintaining clean water in the process loop via water treatment systems that discharge a minimum amount of effluent.

The overall result of the increasingly limited supply of drinking water, economic expansion, the increasing need for large quantities of purified water by commercial and industrial companies, heightened public health and safety concerns relating to drinking water, and the promulgation of stringent, complex, and costly governmental regulations is an increased demand on the water purification and treatment industry to develop efficient cost-effective water-treatment systems for various sectors of society. These sectors include the household, consumer, bottled water, commercial and industrial, municipal and waste treatment markets, among others.

A New Business Model
Ovation does not currently anticipate selling standalone products to the public or as a stand-alone appliance. Instead, Ovation anticipates working with key strategic partners in a number of industries that will integrate Ovation's distillation technology into a variety of appliances, products and services. Ovation will design, market and manufacture different component distillers, which utilize its core distillation technology and are built to meet specifications requested by its corporate partners. Because of Ovation's unique technology and strong patent position, it has been and expects to be able to negotiate favorable licensing terms with its corporate partners for specific applications. Additionally, Ovation plans to sub-contract manufacturing of its Clean Water Appliance and parts to one or more specialty metal manufacturers.

"We have successfully developed our technology to the point where it is cost-effective at the residential scale," said Bob MacDonald, Ovation's chief executive officer. "We believe that this is a tremendous achievement that can have profound implications on how we use our water resources today."

"The philosophy underlying Ovation's technology is perfectly aligned with GreenShift's focus today," said Kevin Kreisler, chairman and chief executive officer of GreenShift. "We believe that we can enable substantial environmental gains by developing and supporting practical solutions that make it easy and cost-effective for residential and commercial consumers to reduce waste and increase recycling and reuse."

"It is our view that these solutions must profitably and seamlessly integrate with our daily lives and existing infrastructure in order to gain acceptance and bring to pass compelling environmental gains. Ovation's technology achieves this and I am personally thrilled to include this important company in our portfolio," said Kreisler.

Under the terms of its agreement with Ovation, GreenShift will purchase 200,000 shares, or about 9.39%, of Ovation's outstanding stock for $1 million and GreenShift has the option to acquire an additional 400,000 shares of Ovation common stock at $6.00 per share. Ovation recently filed to become publicly traded and expects to commence trading later this year.

GreenShift Corp. (www.greenshift.com) is a publicly traded business development company (BDC) whose mission is to develop and support companies and technologies that facilitate the efficient use of natural resources and catalyze transformational environmental gains. BDCs are essentially publicly-traded equity funds where shareholders and financial institutions provide capital in a regulated environment for investment in a pool of long-term, small and middle-market companies. GreenShift's current portfolio includes investments in the following environmentally proactive companies: Veridium Corp.; INSEQ Corp.; GreenWorks Corp.; GreenShift Industrial Design Corp.; Coriolis Energy Corp.; TDS (Telemedicine) Inc.; Ethanol Oil Recovery Systems Inc.; Sterling Planet Inc.; and, Ovation Products Corp. In addition, GreenShift hopes to add investments in wind power, hydropower, practical centralized applications of hydrogen power, alternative fuels, infrastructure and mining to its portfolio during 2005 and 2006.

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In related company news, see:
-- "GreenShift Executes License for New Clean Water Technology"
-- "GreenShift to Launch Industrial Design Initiative"

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