Next-RO, Inc.Next-RO, Inc.

The Cleanest, Safest, The Cleanest, Safest, Best Tasting Purified Best Tasting Purified

Drinking Water Drinking Water Directly from Your Directly from Your

Tap.Tap.

Faster Better Faster Better CheaperCheaper

The U.S. Water The U.S. Water DemandsDemands

- U.S. population increased 50% while water U.S. population increased 50% while water consumption increased 300%consumption increased 300%

- It is estimated that 36 states will be It is estimated that 36 states will be enduring water shortages by 2013enduring water shortages by 2013

- Availability of clean drinking water Availability of clean drinking water decreases with climate changes, decreases with climate changes, industrialization and pollution.industrialization and pollution.

- Every one needs clean drinking water - Every one needs clean drinking water - There is no substitute.There is no substitute.

U.S. Water MarketU.S. Water Market

- Average American consumes 6.1 (8 ounce) Average American consumes 6.1 (8 ounce) servings of water per dayservings of water per day

- 2.3 servings of that is bottled water2.3 servings of that is bottled water

- Water is estimated to be a $75 billion a Water is estimated to be a $75 billion a year industryyear industry

- U.S. water market expected to reach $150 U.S. water market expected to reach $150 billion by 2010billion by 2010

U.S. Water QualityU.S. Water Quality - Studies have found that pollution and - Studies have found that pollution and

deteriorating plumbing are delivering drinking deteriorating plumbing are delivering drinking water that might pose health risks water that might pose health risks

- Aging pipes can break, leach contaminants Aging pipes can break, leach contaminants and breed bacteria and breed bacteria

- Tap water can contain - Lead, Pathogens Tap water can contain - Lead, Pathogens (germs), Trihalomethanes (THM’s), Arsenic, (germs), Trihalomethanes (THM’s), Arsenic, Radon, PerchlorateRadon, Perchlorate

- American Society of Civil Engineers gives the American Society of Civil Engineers gives the country’s water system a D minus.country’s water system a D minus.

Alternatives to Tap WaterAlternatives to Tap Water

Bottled WaterBottled Water – is often no more – is often no more than carbon filtered tap waterthan carbon filtered tap water

Home FiltrationHome Filtration – various – various companies are selling RO, Ultra companies are selling RO, Ultra Filtration and Carbon Filtration Filtration and Carbon Filtration devicesdevices

Water StoresWater Stores – retail locations – retail locations where you can purchase purified where you can purchase purified water in bulkwater in bulk

Bottled Water Bottled Water DemandDemand

- U.S. is the Worlds leading consumer of U.S. is the Worlds leading consumer of bottled water – 26 billion liters in 2006bottled water – 26 billion liters in 2006- Showing a 9.7% growthShowing a 9.7% growth

- Costs as much $2.50 a liter or approx. Costs as much $2.50 a liter or approx. $10 gal$10 gal

- 57% growth in 5 years is attributed to:57% growth in 5 years is attributed to:- that lack of confidence in public that lack of confidence in public

waterwater- convenienceconvenience

Plastic Water BottlesPlastic Water Bottles- Plastic water bottles produced in the U.S. (2004) Plastic water bottles produced in the U.S. (2004)

required 1.5 million barrels of crude oil required 1.5 million barrels of crude oil

- Transporting bottled water involves burning fossil Transporting bottled water involves burning fossil fuelsfuels

- 86% of plastic water bottles used in the U.S. 86% of plastic water bottles used in the U.S. become garbage or litter become garbage or litter

- Buried water bottles can take up to 1,000 years to Buried water bottles can take up to 1,000 years to biodegradebiodegrade

- 40% of recycled water bottles deposited in the U.S. 40% of recycled water bottles deposited in the U.S. in 2004 were exported – using more fossil fuelsin 2004 were exported – using more fossil fuels

Home FiltrationHome Filtration

- RO water is the purest, cleanest and RO water is the purest, cleanest and SAFESTSAFEST drinking water in the worlddrinking water in the world

- Removes up to 99% of unwanted Removes up to 99% of unwanted substances commonly found in tap substances commonly found in tap and well waterand well water

- RO water is the most recommended RO water is the most recommended by doctors and dietitians by doctors and dietitians

Traditional RO System Traditional RO System ProblemsProblems

1.1. In-efficient and Wasteful – As many as 19 In-efficient and Wasteful – As many as 19 gallons of water can be wasted to create gallons of water can be wasted to create 1 gallon of product water1 gallon of product water

2.2. Bulky – Up to 2 X the size of the Next-RO Bulky – Up to 2 X the size of the Next-RO engineengine

3.3. Inconsistent Water Delivery – often Inconsistent Water Delivery – often produce half full ice cube trays and pots produce half full ice cube trays and pots of coffeeof coffee

Traditional RO systemsTraditional RO systems

System ComparisonSystem Comparison

Next-RO Next-RO The Industries BestThe Industries Best

Next-RO is the culmination of over 100 Next-RO is the culmination of over 100 years of combined experience in the years of combined experience in the “Point of Use” Water Filtration “Point of Use” Water Filtration business.business.

Each member of the design team Each member of the design team brings specific expertise including brings specific expertise including injection molding, manufacturing and injection molding, manufacturing and filtration.filtration.

Tim Beall –Tim Beall – CEO, President, DirectorCEO, President, Director

- 33 years experience in plastic injection molding 33 years experience in plastic injection molding and water treatment and water treatment

- Specializing inSpecializing in- Plastic injection mold manufacturing, tool design Plastic injection mold manufacturing, tool design

and system assemblyand system assembly- Authority on Water on water RO system design Authority on Water on water RO system design

and developmentand development- Authority on valve design and integrationAuthority on valve design and integration

- Developed and holds patents in Water on Water RO Developed and holds patents in Water on Water RO system designsystem design

- Developed and patented a break through Bio Developed and patented a break through Bio Disinfect Ion system Disinfect Ion system

- Worked extensively with the Coca Cola Company Worked extensively with the Coca Cola Company and Pepsi Cola Company on a new water system and Pepsi Cola Company on a new water system concept for the Post Mix fountain business.concept for the Post Mix fountain business.

Robert A Slovak - DirectorRobert A Slovak - Director

- 34 years experience in water treatment34 years experience in water treatment- Specializing in - Commercial, residential and industrial Specializing in - Commercial, residential and industrial

RO System design, development and installationRO System design, development and installation - Co-founded Water Factory Systems, Inc. manufactures Co-founded Water Factory Systems, Inc. manufactures

RO systems sold to Cuno, Inc. now owned by 3MRO systems sold to Cuno, Inc. now owned by 3M- Published numerous articles on water treatmentPublished numerous articles on water treatment- Holds patents pertaining to design and control Holds patents pertaining to design and control

innovations in RO and filtrationinnovations in RO and filtration- Member of NSF/ANSIMember of NSF/ANSI- Serves on WQA RO committees developing RO system Serves on WQA RO committees developing RO system

standards standards

Michael T. Baird – DirectorMichael T. Baird – Director

- 23 years of experience in water treatment23 years of experience in water treatment

- Specializing in – filtration, membrane technology, Specializing in – filtration, membrane technology,

chemical treatment and disinfectionchemical treatment and disinfection

- President and CEO of TST WaterPresident and CEO of TST Water

- Built and sold Hydro-Flow (filter manufacturer) now Built and sold Hydro-Flow (filter manufacturer) now

PentairPentair

- 8 years - VP of sales and marketing for Sta-Rite 8 years - VP of sales and marketing for Sta-Rite

Industries responsible for - sales and marketing, Industries responsible for - sales and marketing,

acquisition, OEM account development acquisition, OEM account development

- On the board of directors of the WQA (chairman of On the board of directors of the WQA (chairman of

international business)international business)

- On the board of directors of Carbon Resources, Inc. On the board of directors of Carbon Resources, Inc.

Jack Slovak – ShareholderJack Slovak – Shareholder

- 34 years experience in water treatment34 years experience in water treatment- Specializing inSpecializing in

- Commercial, residential and industrial ROCommercial, residential and industrial RO- RO System design and developmentRO System design and development- RO installationRO installation- Business operations, negotiations and salesBusiness operations, negotiations and sales

- Co-founded Water Factory Systems, Inc. Co-founded Water Factory Systems, Inc. manufactures RO systems sold to Cuno, Inc. and manufactures RO systems sold to Cuno, Inc. and is now 3Mis now 3M

- 8 years stayed on as chief engineer8 years stayed on as chief engineer

The Next Generation of The Next Generation of RORO

The Most Advanced The Most Advanced Purified Drinking Water Purified Drinking Water

System in the World!System in the World!

Next-RO System Next-RO System ComponentsComponents

1.1. The ValveThe Valve –– Patented technology key in Patented technology key in

producing RO water with "no backpressure" on producing RO water with "no backpressure" on

the membranethe membrane

2.2. Tank - Tank - Patented technology allows for far smaller Patented technology allows for far smaller

tanktank

3.3. Manifold Technology – Manifold Technology – eliminates hoses, bulky eliminates hoses, bulky

mess and leaks inherent in other systemsmess and leaks inherent in other systems

4.4. Filters - Filters - Bayonet / quick connect design for easy Bayonet / quick connect design for easy

maintenance and safe, sterile exchangemaintenance and safe, sterile exchange

The EngineThe Engine

How it WorksHow it Works

Next-RO Performance Next-RO Performance AdvantagesAdvantages

High EfficiencyHigh Efficiency - - can reduce waste water up to 500% can reduce waste water up to 500% over conventional RO systemsover conventional RO systems

ConvertibleConvertible - - the only POU RO system in the world the only POU RO system in the world designed to go on the counter or under the sinkdesigned to go on the counter or under the sink

Crystal Clean Water ProductionCrystal Clean Water Production - - produces the produces the highest quality water up to 50% faster than its “Air on highest quality water up to 50% faster than its “Air on Water” competitorsWater” competitors

Low MaintenanceLow Maintenance - - quick connect cartridges require quick connect cartridges require replacement no more than once a yearreplacement no more than once a year

Consistent FlowConsistent Flow - - service Refrigerator ice makers and service Refrigerator ice makers and water dispenser, coffee makers and coolerswater dispenser, coffee makers and coolers

Market ConditionsMarket Conditions

- Approximately 500k to 600k POU RO units purchased Approximately 500k to 600k POU RO units purchased annually in the U.S. and growingannually in the U.S. and growing

- Major OEM’s have been consolidating the industry – Major OEM’s have been consolidating the industry – buying companies for 13 to 30 times valuebuying companies for 13 to 30 times value

- Major OEM’s are all selling the same inefficient, bulkyMajor OEM’s are all selling the same inefficient, bulky““Air Captive” systemsAir Captive” systems

- With no patent protection on the base technology, With no patent protection on the base technology, low cost foreign manufacturers have started to effect low cost foreign manufacturers have started to effect profit margins and threaten shelf space.profit margins and threaten shelf space.

Marketing StrategyMarketing Strategy

Next-RO is the Pentium Processor of the Next-RO is the Pentium Processor of the Home RO industry. With the ability to Home RO industry. With the ability to morph into a variety of different body styles morph into a variety of different body styles each distribution channel can have their each distribution channel can have their own unique look. While the machine you own unique look. While the machine you buy at Home Depot would look different buy at Home Depot would look different from the one you might buy at Wal-mart – from the one you might buy at Wal-mart – they would each be Powered by Next-RO.they would each be Powered by Next-RO.

Next-RO Marketing Next-RO Marketing AdvantagesAdvantages

- Broadest Range of Operating ConditionsBroadest Range of Operating Conditions - - 25 25 psi lower than closest competitor - opening markets psi lower than closest competitor - opening markets current systems can’t gocurrent systems can’t go

- Servicing AppliancesServicing Appliances - - opens opportunities in opens opportunities in small business, restaurants and office environments small business, restaurants and office environments

- Product DifferentiationProduct Differentiation -- we offer the OEM’s we offer the OEM’s access to patented technology that will prevent low access to patented technology that will prevent low cost foreign manufactures from competing in the cost foreign manufactures from competing in the U.S. marketU.S. market

Next-RO Manufacturing Next-RO Manufacturing AdvantagesAdvantages

Low Cost ManufacturingLow Cost Manufacturing

The entire engine is plastic injection molded The entire engine is plastic injection molded and assembled at the press. With less than and assembled at the press. With less than 5% labor we can compete with China and 5% labor we can compete with China and manufacture right here in the United States.manufacture right here in the United States.

High Speed ManufacturingHigh Speed Manufacturing

Current plastic injection molding tooling was Current plastic injection molding tooling was designed to meet or exceed 1,000 engines designed to meet or exceed 1,000 engines per day.per day.

Next-RO TodayNext-RO Today

-Letter of Intent for 67,800 units worth over 11 Letter of Intent for 67,800 units worth over 11 million dollarsmillion dollars

- Cover of WC&P July IssueCover of WC&P July Issue

- Over 50 requests for distribution rights in 15 Over 50 requests for distribution rights in 15 different countriesdifferent countries

-Strong interest from GE, Watts, Culligan, Strong interest from GE, Watts, Culligan, Pentair, 3M, AO Smith (China)Pentair, 3M, AO Smith (China)

-Tooling complete and being testedTooling complete and being tested

- 11stst production units to be tested (30 - 60 days) production units to be tested (30 - 60 days)

Channels of DistributionChannels of Distribution

Dealers UtilitiesPowered by

Next-RO

U.S.Distributors

DirectResponse

Foreign MrktPartners

Next-RO

Big BoxRetail

Rental

HomeownerIndependent

Dealers

HomeownerBranded

Non-BrandedHomeowner

Distributor/Dealer

Homeowner

Streams of RevenueStreams of Revenue

MinimumAnnual Unit

Sales

InstallationCommission

50% ofAnnual #’s

SupplierFee

U.S.Commercial

Fee

InternationalMarketing Fee

Next-RO

U.S. InstallerFee

50% ofAnnual #’s

MinimumAnnual Unit

Sales

UpgradeCommission

StrengthsStrengths#1 #1 Depth of Industry Experience -Depth of Industry Experience -The Next-RO The Next-RO

management team includes 4 of the worlds leading management team includes 4 of the worlds leading authorities in POU RO and Filtration.authorities in POU RO and Filtration.

#2 #2 Industry Credibility - Industry Credibility - The reputation of our team The reputation of our team members gives us instant credibility and has opened members gives us instant credibility and has opened negotiations with the biggest OEM’snegotiations with the biggest OEM’s

#3 #3 Innovative Patented Technology –Innovative Patented Technology – Encompassed Encompassed by 138 Claims, makes Next-RO the most advanced by 138 Claims, makes Next-RO the most advanced purified drinking water system in the world. We bring purified drinking water system in the world. We bring the cthe cleanest, safest, best tasting drinking water leanest, safest, best tasting drinking water directly to your tap - faster, better and cheaper than directly to your tap - faster, better and cheaper than the competition.the competition.

#4 #4 Manufacturing Capabilities -Manufacturing Capabilities - Engineered to be Engineered to be completely injection molded. Less than 5% labor completely injection molded. Less than 5% labor means we can manufacture (1000 units per day) right means we can manufacture (1000 units per day) right here in the U.S. and compete with China.here in the U.S. and compete with China.

OpportunitiesOpportunities

#1 #1 Orders and Letters of IntentOrders and Letters of Intent for over 67,800 units for over 67,800 units totaling over 11,000,000 in gross revenue.totaling over 11,000,000 in gross revenue.

#2 #2 Lack of real product differentiationLack of real product differentiation and the and the

recent arrival of low cost manufactured products has recent arrival of low cost manufactured products has threatened the shelf space and profit margins of the threatened the shelf space and profit margins of the major OEM’s and created a real demand for ourmajor OEM’s and created a real demand for oursuperior, patented product.superior, patented product.

#3 #3 Demand for clean drinkingDemand for clean drinking water is rising and will water is rising and will continue to rise.continue to rise.

#4 #4 Water conservation concernsWater conservation concerns make the Next-RO make the Next-RO engine (with its high efficiency rating) more attractive engine (with its high efficiency rating) more attractive to retailers and consumers.to retailers and consumers.

ThreatsThreats

#1 #1 Competing technology-Competing technology- There are other There are other filtration systems enjoying varying degrees of filtration systems enjoying varying degrees of success. However, RO is still considered to be the success. However, RO is still considered to be the best.best.

#2 #2 Material costsMaterial costs could increase affecting our profit could increase affecting our profit margins. However, we have very high profit margins. However, we have very high profit margins and the cost would have to increase margins and the cost would have to increase precipitously.precipitously.

#3 #3 Demand for filtered water decreasesDemand for filtered water decreases because because public drinking water becomes more publicly public drinking water becomes more publicly accepted as drinkable.accepted as drinkable.