Sylvan Source M-600 Training Guide

1. Sylvan Source M-600Training Guide

2. Agenda • Company Overview L. Demmons • Water Conditions • Product Training • Sales Training L. Demmons • Installation Training L. Demmons

3. Sylvan Source M-600 Company Training

4. Company Overview Mission Become the leading provider of pure water solutions for a contaminated world. • Technology & IP • Unique integration of the degasser, distiller and demister enables our products to • consistently reduce more contaminants more effectively than any other technologies or • products. • Automated control functions and self-cleaning mechanisms for no maintenance: no • cleaning, no chemicals, no cartridges, no filters, no membranes - NO user intervention. • 3 PCT patents pending • 6 provisional patents filed • Know-how: core competencies in system design. • #1 West Coast IP Firm, aggressively pursuing IP development • Q1 Launch • Two tier distribution – North America • SubZero, Viking and BSH Distributors • Certifications complete • NSF • IAPMO • UL • California, Massachusetts and Wisconsin • Shipping now

5. Sylvan Source Management Team Laura Demmons, CEO & ChairmanHP, Eastman Kodak, and water and energy entrepreneur since 2001 Richard Deep, COOHP, GE, SanDisk, and Trikon; general management, executive management and COO Gene Thiers, Ph.D., CTO SRI, several years in water and energy technologies and management William Deihl, CFO CPA, CFO for 2 public companies and multiple start-ups John Orcutt, VP, Business Development BlueStream Ventures, Actional, executive positions at 3DO, Unisys and HP

6. Clean Water in Decline • Fresh water scarcity growing • Global water supply dropped by33% since 1970* • Water tables dropping (USGS) • Salt water incursions (USGS) • Saline in ground water (USGS) • Fresh water contamination increasing • Contaminated drinking water is responsible for a large percentage of human disease (WHO – World Health Organization) • 2,000 new chemical compounds introduced each year** • 99.5% of chemicals in the U.S. do not have a federal or state standard** • Centuries-old infrastructure breaking down • Waste and fresh water pipes crossed over in Atlanta resulting in tap water that looked like beer *** • 650 water mains break every day, chronic leakage in about 20-30% of the infrastructure (USGS) • Debris, fecal matter, drugs and toxins get sucked into “fresh” water pipes (USGS) • European infrastructure even older than U.S. *Bernadette McDonald & Douglas Jehl, “Whose Water Is It? **Patrick Sullivan, Franklin Agardy, James Clark, “America’s Threatened Drinking Water” ***US News and World Report

7. The Result INCREASING CONTAMINATION • 54 million+ people in the U.S. with arsenic in tap water at unsafe levels – National Resource Defense Council (NRDC) • Estimated 15 million to 40 million+ people in the U.S. with MTBE, a fuel additive which dissolves easily in water, in tap water or water source (no federal guidelines) – Environmental Working Group (EWG) • 20 million+ people in the U.S. with perchlorate in their tap water (no federal guidelines) - EWG • More than 4,000 reported health-based violations in community water systems in the U.S. affecting 23 million people – Environmental Protection Agency GROWING CONSUMER FEARS FUEL BOTTLED WATER DEMAND • $9+ billion spent in 2004 on bottled water in the U.S. • Safety of tap water is biggest reason consumers purchase bottled water

8. The Result: Consumers • Growing Consumer Fears Fuel Bottled Water Demand • Bottled water is240 to 10,000+ times more expensive per gallon than average tap water • Bottled water demand crosses all socio-economic boundaries Why people buy bottled water: (NRDC) (NRDC, Aqua International)

9. Common Technologies Today Filtration (including carbon) The process of removing suspended particles from water by passing it through one or more permeable membranes or media of limited porosity (e.g., sand, activated carbon, diatomaceous earth). Only removes insoluble solids (such as dirt and other sediments). Requires periodic cleaning and replacement, and performance immediately degrades with time. What can remain: Salts, bacteria, viruses, pesticides, some gases and VOCs, heavy metals Reverse Osmosis (RO) (without downstream filtering) Removes water from dissolved contaminants using differential permeation. In R/O, water under pressure passes through a semi-permeable membrane that separates it from various contaminants. Requires periodic cleaning and replacement, performance immediately degrades with time, and small particles can rupture the membrane. The RO process wastes more water than any other process. What can remain: Some VOCs (with small molecules such as THMs and TCE), some bacteria, viruses, gases Distillation (without downstream filtering) The process of heating a liquid to its boiling point, removing the vapors through a cooling and condensing apparatus, and finally collecting the condensed liquid in a separate container. Typically a single batch process requiring cleaning after each batch. What can remain: VOCs, gases, and some carry-over of metals and salts

10. Competition: Existing Alternatives Effectiveness Compound Filtration R.O. Distillation Inorganic Chemicals Organic Chemicals Salts Micro Organisms Low Medium High Consistency Performance Over Time Media Replacement Cleaning Water Efficiency

11. Sylvan Source M-600 Product Training

12. Sylvan Source M-600 • Ultra-Clean Water System for Residential Use • Reduces contaminants more effectively than other available technologies • No cleaning or maintenance • Integrates degassing, distillation, and demisting • Automated, on-demand, fully contained wall-mount unit • Manufactured in the U.S.

13. M-600 Advantages • Advantages • Able to consistently reduce a broader • range of contaminants • No need for filters, membranes, • chemicals, or cleaning • More consistent contaminant reduction • Self-contained, fully automatic • Multiple points of delivery • Requires less waste water to produce • ultra-clean water • Benefits • No need to identify specific contaminants in • water. No worry if the “mix” changes. • No added expense. No chance of doing more • harm than good. • Continuous, high-quality water – no degradation • as with systems that require membranes and/or • cartridges. • No assembly required - set it and forget it! • One system can deliver ultra-clean water to • multiple areas within the home. • Uses 1/2 gallon of waste water versus RO • system which require 5-10 gallons.

14. Sylvan Source Process Sylvan Source’s 4-Step Process • Degassing • Distillation • Demisting • Condensing

15. Sylvan Source Process Degassing • Water is heated to near boiling inside the degasser • Pre-heating allows dissolved gases and organics to vaporize • Counter-flowing steam from the distiller discharges contaminants out of the degasser In contrast, simple distillers carry gases into product water

16. Sylvan Source Process Distillation • After degassing, water moves into the distiller where it is heated to boiling and converted to steam • Contaminated mist droplets remain in water and can be carried over • Sylvan Source performs an intermediate step - Demisting

17. Sylvan Source Process Demisting • After distillation, mist droplets enter the demister • Steam and heavier mist droplets are separated using a patent-pending process • Droplets carrying residual contaminants are discharged from the demister In contrast, simple distillers carry contaminated mist droplets into product water

18. Sylvan Source Process Condensing • The condenser takes the steam and cools it into ultra-clean water • Once condensed, water is ready to use for drinking and cooking

19. Effectiveness Comparison Effectiveness Compound Filtration R.O. Distillation Sylvan Source Inorganic Chemicals Organic Chemicals Salts Micro Organisms Low Medium High Highest Consistency Performance Over Time Media Replacement Cleaning Water Efficiency

20. Sample Test Results NaCl input value suppressed for clarity. Actual = 1000 ppm Sodium Chloride (NaCl) is a reasonable proxy for “salts” such as nitrates, sulfates, chlorides, perchlorate; and heavy metals such as lead, mercury, antimony and arsenic present in water as salts. Isopropyl alcohol (IPA) is a reasonable proxy for Dioxin, Phenol, EPTC, chloroneb, epichlorohydrin, trans-nonachlor, and endosulfan sulfate. Methyl ethyl ketone (MEK) is a reasonable proxy forMTBE, PCBs, acetone, chlordane, trifluralin, nitroso-diphenylamine, DBCP, di nitro toluene, and diethyl phthalate.

21. Operating Costs • * The cost for waste water is not factored into the table above. To produce 1 gallon of clean water : • Sylvan Source produces 1/2 gallon of waste water. • Reverse Osmosis systems produce 5-10 gallons of waste water or more! • ** Average drinking and cooking water consumption/day: 2.6 gallons per family of 5 (source: Perchlorate in Drinking Water: A Science and Policy Review, June 2004)

22. Product Features No Cleaning • Patent-pending, self-cleaning process • “Scrubs” the floor of the boiling chamber • Keeps scale in suspension so that it cannot harden • Flushes suspended scale automatically after each cycle No Maintenance • No filters, membranes, cartridges or chemicals required • Saves money and time • Consistent water quality over time

23. Product Features Consistent High Water Quality • No filter, membranes or cartridges that start to degrade immediately • No degradation or bacterial growth with filter and membrane systems • Consistent water quality with every cycle • Clean, healthy, delicious water

24. Product Features • High Quality - “Built to Last” • High quality stainless steel machined parts • NSF approved tubing and subcomponents • Heavy duty steel frame with powder coat for durability • 10+ year expected life • 3 year warranty on parts and labor

25. Product Features Integrated, Stylish Design • Next generation design • Self-contained, wall-mount unit • Ready for installation in the garage, utility room or basement • First true ultra-clean water appliance • Install and walk-away

26. Product Features Multiple Points of Delivery • Provides clean water automatically and on-demand, to faucets, ice-makers and other water resources • Points of entry can be located on different levels • One unit provides multiple points of water delivery throughout the home

27. Product Features Water Quality Monitor • Monitors the level of Total Dissolved Solids (TDS) in storage tank • Light on panel indicates if TDS is above acceptable level • Easily viewable indicator light on front panel TDS Indicator Light

28. Product Specifications Water Production • Produces 6 gallons of ultra-clean water per day • Contains a 7 gallon water storage tank • Stainless steel water processor and storage tank • Automatic flow process keeps water storage tank filled • Better than 2:1 ratio of clean water to waste water • Use only 1/2 gallon of waste water to produce 1 gallon of • ultra-clean water

29. Product Specifications Product Dimensions and Weight • Unit Dimensions…31” x 25.5” x 13.75” (HxWxD) • Unit Weight (Empty)…85 lbs • Unit Weight (Full)……135 lbs Electrical • 1100 watts • 115 VAC • 60 Hz • 10.7 amps General Specifications Operating Pressure……….30-100 psi Operating Temperature…..40o – 90o F Demand Pump…………….1.4 gallons/minute Demand Pump Pressure…40-60 psi Noise Level…………………<60 dBa Warranty……………………3 year parts and labor

30. Product Specifications Plumbing and Install Requirements • Water in • Water out • Gravity drain • Air gap • Dedicated electrical outlet

31. Product Certifications Certification and Testing* • NSF/ANSI 62: Water Distillation Systems – tested and certified • IAPMO UPC certified • UL Safety tested and certified State Product Certifications • California Department of Health Services certified • Massachusetts product approval • Wisconsin Department of Commerce approved Independent Testing • Additional contaminant reduction testing • Independent, EPA approved laboratories

32. Hard Water Condition • Miniscule deposits from hard water cause scale build-up in pipes and damages water- using appliances • If water hardness is 120ppm (calcium & magnesium) a water softener is recommended with the M-600 • Using without a water softener may require additional servicing to prevent hard water damage • Using M-600 without a water softener where hard water concentrations exceed 400ppm of calcium and magnesium will void the Sylvan Source warranty

33. Sediment • Sediment: sed-i-ment n • Solid fragments of inorganic or organic material that come from the weathering of rock and/or chemical reactions in pipes. • Recommend household sediment trap • In areas with high levels of sediment • Trap and captures large particles • Dirt • Sand • Rocks • Installed ahead of inlet water line • Helps protect all water appliances in your home

34. Warranty & Service • 3 year warranty on parts and labor • Nationwide support service: ServicePower, Inc. • www.servicepower.com • Service documentation available on Sylvan • Source website: www.sylvansource.com/documentation.html

35. Summary • High Growth Potential: • Sylvan Source has defined a new category by launching the first in a line of • breakthrough products that will establish Sylvan Source as a market leader • Sylvan Source Partnership: • Opportunity to participate in future, industry-leading product solutions • Profitability: • The increasing awareness and demand for safe, clean drinking water creates an • expanding market for Sylvan Source’s premier products that offer its partners • unparalleled profitability • Market Acceptance: • Strong early indicators of consumer and industry acceptance • Unique and Proprietary Product Line: • Offers ultra-clean water systems – differentiate and compelling value proposition • Sylvan Source will employ multiple clean water and solar technologies – patent • pending, proprietary technology

36. Q & A

37. Sylvan Source M-600Sales Training

38. Key Points M-600 What it’s not… • Yet another water purification product What it is… • A true water appliance • A technology breakthrough • A paradigm shift in the approach to providing clean, delicious, healthy water

39. Key Messages • Consistently reduces contaminants more effectively • No cleaning or maintenance required • No cartridges, filters, chemicals or membranes • Multiple points of delivery with one system • Consistent water quality • Significantly reduced water waste vs. other technologies • Installs and works like a true appliance

40. Sales & Marketing Support • Product brochure and data sheet • Consumer white paper • Point-of-sale display • Owner and installation manuals • Architect builder guide • Training materials and video • Third-party testing certification • NSF • UL • IAPMO • California, Massachusetts and Wisconsin • Active public relations campaign

41. Buyer Appeal • Safety • Convenience • Savings • Image

42. Builder Appeal • Additional revenue opportunity • Enhanced builder image – unique offering • Many builders looking for a “competitive edge” • Paying attention to consumer needs • Offering world’s finest water system

43. Distributor Appeal Sales Opportunity: • An exclusive • Unique product – no one else has it • Compelling story • A new income opportunity • Diversify your product portfolio • Add on/cross sell opportunity • A way to build upon relationship with builders • A reason to call on builders directly • Adding value – exposing builders to new cutting-edge products • Exciting new technology you can share with dealers and end users

44. Questions?

45. Sylvan Source Installation Training