Slide © Water Evolution Technologies, Inc.- CONFIDENTIAL 1 Built on over 17 years of experience and...

Slide © Water Evolution Technologies, Inc .- CONFIDENTIAL 1

Built on over 17

years of

experience and

research in

providing

optimized water

for food and

beverage…


Water Evolution Technologies' Systems

Arctic Peaks Water Systems provide high-volume, clean, clear, crisp, purified water to your customers.

These systems are targeted for the convenience store market. Larger systems provide high-volume, purified, safe water to large hotels, resorts and entertainment centers.

small medium large

Convenience Stores Restaurants Hotels

• All components are NSF certified.• These high-volume water purification systems collectively meet or exceed NSF standards.• Water provided to the bottle fill station and cup fountains exceed NSF Standard 55 Class A Purification.• Water Fill Stations are NAMA certified and meet unique Utah requirements.


Why Bottling Companies Use Purified Water• Insures Profit control for the bottler• Maintains Product superiority in bottled drinks• Provides Consistent & Superior Drink Quality• Insures water quality & safety – 87% to 92% of the recipe is water

• Syrup “over-flavoring” is the only fountain taste control method which still adds profit to the original syrup manufacturer

• Supply water composition, taste and purity is considered the responsibility of the store owner and may vary widely from location to location.

• Syrup vendors do not wish to become arbitrators between the store owners and their municipal water system – their reputation is protected by their bottled drinks in the store cooler.

• Syrup “over-flavoring” is a water taste compensation technique that “works” on a cost increase per drink basis.

• Vendors cannot afford to offer “free store water purification” to go with their “free fountain machine offers.”

Bottling and Syrup Manufacturers

Why aren’t these benefits available to you at your fountain?

Nu-EdenPurE water is Coca Cola tested and verified to meet or exceed optimum taste and carbonation for fountain beverages.


MEMO

TO:

FROM:

SUBJECT: REQUIREMENT FOR FOUNTAIN DISPENSING SYSTEMS

Following are the requirements which need to be supplied by the customer to enable the service network to install a beverage system. Meeting all requirements is critical to ensuring the consumer a quality drink. Serving quality drinks supports the expectation of the as the best product on the market as well as reflecting positively for our customers serving the products. If a poor quality product is served, it reflects badly on the outlet as well as

We are joint partners in delivering quality products and services to consumers.

1. A ½ inch dedicated supply line with a separate valve shut off must be located within 6 feet of the carbonator for carbonated beverages and within 20 feet of the dispenser for non-carb beverages. The shut-off should end with a ½ inch I.D. female pipe fitting.

2. Use only ambient or cold un-softened water (hot or softened water cannot be carbonated).

3. There must be a minimum of 40 p.s.i. at 120 gallons per hour per carbonator and a maximum of 75 p.s.i. for incoming water pressure. If the water pressure is over 75 p.s.i., install a pressure regulator.

4. Agent: Before connecting the waterline to the carbonator, flush the water supply to remove any foreign material by drawing at least five gallons.

5. Agent: Check for copper contamination. Under no circumstances should a dispenser be placed in service if copper contamination is suspected.

Vendor Business Communications on Water Requirements, circa 2001.


Soft Water and FoamingLancer USA’s Turbo-Carb High Capacity Carbonator manual

advises the user: “Do not connect to a heated (hot) water source or a water source supplying soft water. This will cause excessive foaming.”

The un-explained “WHY” behind the Syrup and Beverage Vendor’s warnings.

• Softened or de-mineralized water, the same as reverse osmosis (RO) water has different physical properties from chlorinated tap water.

• In industry terms, NOT planning for “tap water” makes installations less critical and less “conditional” to setup – as a trade-off against cost of operation and performance.

• NOT PLANNING for “tap water” by the industry allowed us to become the leading beverage efficiency specialists; we perfect the set up, operation & maintenance of reduced mineralized water giving greater attention to detail and mastering multiple chemistry issues…the outcome is great drink taste, optimum carbonation, & capturing substantial measurable profit for vendors previously unidentified for their bottom-line; payback is usually 12 to 36 months.

A Beverage Vendor’s Carbonator Manual Guideline


• Repeat & New Customers• Taking Trend Setting Lead in Health

Conscious Industry• No hard water buildup • Reduces fountain dispenser and ice

maker maintenance expense & downtime

• Risk Free Performance Guarantee• Whole-Store water purification • Verified acceptable with FDA as a very

low sodium beverage• Unlocks the flavor for food, fountain and

baking items

Arctic Peaks' Water Systems produce a TESTED and PROVEN reduced mineralized water to consistently meet or exceed optimum carbonation for national brand soda fountain syrups; High flow with No Foaming. It has MANY advantages for the enterprise:

• Reduces Product Cost• Increases Profit Margin • Shifts Product Focus from bottled to dispensed drinks• Creates New Profit Centers• Provides Consistent & Superior Drink Quality• Provides Water “safe-haven”• Customer Satisfaction from Superior Taste• Assists Community in Implementing Disaster Preparedness

Water Evolution Technologies' Cutting Edge Breakthrough!

Documentation available for inspection.


Successes

Sysco Intermountain

Jordan Commons

Mayan Restaurant

Gateway Theaters

Grub Steak

Royal Resort & Hotel

IKEA

Independent DealersChevron Kicks 66SinclairTexaco

Hundreds of Installations

“I don’t know what you are doing, but your drinks are better than anywhere else..”

Customer comment reported by Steve Barkell – Owner of Kicks 66

Hundreds of Installations

Documentation available for inspection.


Anatomy of a Fountain Beverage

Ingredients• Syrup (R/O Water + flavoring + preservatives + artificial sweeteners or sugars)• Water – 87 to 92% of the drink recipe but, has varying inorganic mineral levels, staggering taste differences from location to location combined with ever changing municipal water supplies and treatment processes.• Ice – Same issues as water.

• Carbon Dioxide gas

System Adjustments & Environmental Factors• Syrup (temperature, pressure)• Ratio of syrup to water• Dispensing mixing valve – construction and materials• Valve seating, wear and/or corrosion/mineralization• Water (temperature, pressure, reservoir capacities, flow rate, mineral content, TDS)• Carbon Dioxide (temperature, pressure, flow rate)• Ambient temperatures of system components, line lengths and tubing insulation.


System BenefitsMaintenance Reduction – Cash, Time & Labor

•Hot water heater•Precision valves and interface components•Cleaning equipment•Sterilization feature prevents need for ‘boil order”

emergency cleanings and filter media replacements.

Savings•Syrup•Ice•Operational cost•Adjustments•Equipment life

Increased Profits•Shift from bottled to dispensed drinks•Self-serve bottled water sales•Spot flavoring and additive sales

Arctic Peaks Water Systems

System Features• Filtration (fiber, membrane, or

nano-technology)• Self-cleaning (backwash) filters• Fail safe protection features• Robust control system with

remote reporting options• Sterilization treatment, kills

bacteria• Ion exchange, removes heavy

metals• Chlorination of wells• Chlorine removal• Catalytic oxidation• Sediment filters

• Water “safe haven” (with auxiliary power and water source connections)

Community Disaster Water Preparedness


Shift beverage sales from lower margin bottled products to higher margin dispensed products.

Industry research indicates the “perceived safety” as well as the quality and consistency of refrigerated bottled drinks (taste and carbonization) are the primary reasons for consumer preference over dispensed drinks.

When the Arctic Peaks' Water Systems is installed at the dispensing site, the quality and consistency of dispensed drinks will rival bottled drinks. The options of “still” and “carbonated” water (no BIBs) can be blended with “flavor spot” drinks and dramatically increase fountain sales and margins.

Bottles to Fountain Dispenser


Arctic Peaks’ Water Fill Stations provide purified, crystal-clear and stable water to your customers.

Create Additional Operating Margin

Our beverage optimizing system processes store water to insure consistent properties which optimize and stabilize settings of your post-mix dispensers. The water filtration and sterilization techniques employed by Arctic Peaks’ Chilled

At a fraction of the cost of bottled water with its increasing transportation, storage and container costs, the Arctic Peaks' Water Systems provide a remarkable alternative. Given that most of this revenue is pure profit, your operating margin water products will significantly increase as customers shift sales to the Arctic Peaks' Fill Station; 1 to 5 gallon dispenser or specialty bottle and cup fillers.

Water Systems allow you to sell on-site water and ice that is competitive in quality with unique containers that sustain the cold water longer. Ice-Cold Specialty Bottle

Fill Station

Ambient Temperature Vending



C-Store Industry Problems

• Narrowing beverage profit margins

• Projected increases in cost for beverage packaging and shipping

• Syrup costs have risen and are projected to rise

• Projected increases in costs for beverage packaging and shipping

• Post-mix beverage quality varies widely among store locations

• Post-mix beverage quality varies between flavors on the same machine• Poor quality post-mix beverages are reflected in increased pre-

packaged sales

• Fountain beverage quality may define a store’s image

• Stiff competition between store locations – often in view of one another

• Municipal water systems do not supply consistent water characteristics

• If store owners need consistent water – they must supply it….


C-Store Industry Problems

Municipal Water Roulette

• Multi-well systems – characteristics change seasonally, upon volume demand and may even shift hourly.

• Chlorination levels and water characteristics – can vary daily or even hourly in some adaptive systems.

• System repairs, even without the need to issue a “Boil Water Order” can dramatically shift water quality.

Municipal Water drink “cocktails”

• Chlorination by-product carcinogens ie THM’s, chloroform, bromoform, etc.

• Active organics – chlorine resistant or insufficient chlorine treatment time for some organisms (e.g. Cryptosporidium or Giardia).

• Chemical organics – industrial chemicals, fertilizers or pharmaceuticals

• Inorganic contaminants – average allowable levels may “spike” at times.


Inconsistent Water Quality - Variations in quality of the municipal water system

Beverage Mixing InconsistencyDue to municipal water Due to temperature of inlet water, mix storage, mixing location and dispenser

serving locations.

Instability of Dispensing ValvesMultiple adjustments needed to “mask” municipal water variations give rise to

“creeping” settings and over-flavoring (excess syrup).Scale build up on valve componentsValve abrasion (wear due to scale build up) & corrosion reset ability

Poor Ice QualityScale from mineralized waterIron bacteria formation

High Syrup CostsCost trend is increasing Excess syrup or “over-flavoring” is often used to mask bad local water tastes and excess chlorine.

Food Service Environment Problems


Water Contact Equipment MaintenanceIcemakersHot beverages – Coffee & CocoaCold Drink Beverage, Soft Drinks

Frozen drink dispenserFood preparation equipmentWater heatersDish washersValvesSinks and lavatory fixtures

Food Service Environment Problems

Increasing Costs of Competitive Bottled DrinksBottle costBottled transport costsPlastic bottle disaster

Municipal Boil Water OrdersCompletely suspend sales and operation until the condition changes or

provide alternate water, beverage, and ice.

According to the requirements of the law they create significant down time cleaning costs for all water contact equipment (disassembly, filter media replacements, flushing).

Human FactorsTendency to “tweek” syrup settings to compensate for municipal water

characteristics


Municipal Advisory“Boil Water” ImplicationsC-Store and Food Services

WATER TREATMENT UNITS

ICE MACHINE

SODA MACHINE

COFFEE & COCOA MACHINES

SINKS

AUTOMATED DISHWASHERS

COOKING

HAND WASHING

VEGATABLE & FISH / SHELLFISH SPRAYS

If a Boil Advisory is established there are specific procedures your food establishment must follow to avoid contamination.

The input water treatment capability of a fully implemented WET Inc. Water System provides protection against contaminated municipal water. This acceptance by your local Health Department is not automatic and should be based on a requested review to pre-exempt your facility for continued operation during “boil water” advisories.


Analysis Basis To Date - Best Approximations were used and should be conservative.

BIB volume and dollar value for each store analyzed was based on the best estimate of the store managers. Annual cost by computer tracking is more reliable and preferred than estimated costs.

For several stores using RO water processing, the cost was estimated at $250/store but this figure was not adjusted for increased replacement cycling due to high volume processing or an increased local contaminant load.

Case Study - Analysis Assumptions

A case study was conducted across 9 convenience stores.

The data was compiled into a single store and a 20 store scenario, to assist enterprises to easily estimate their own

possible savings.


And “Over-Flavoring” by Store

0

10

20

30

40

Store1

Store2

Store3

Store4

Store5

Store6

Store7

Store8

Store9

% O

ver

Fla

vori

ng

Inconsistency Between Stores

Stores 1,2 & 6 had RO water treatment installed


Store 1 RO

Store 2RO

Store 3 Store 4 Store 5 Store 6RO

Store 7 Store 8 Store 9

Coke 11 8 19,6,8 6,8 3,4 -9 20,17,20 11 70,75

Coke - Diet 10 12 20 5 15,16 11 19 8,4 17,14

C. F. Diet Coke 13 8 7 111 12 21 12,10

Cherry Coke 12

Vanilla Coke 12 15

Coke Products

Case Study - Multiple Drink Variability

Numbers need to be Multiplied by 3.34 to Represent Excess Syrup % Above a common 5 to 1 ratioThere are multiple ratios that have been found to be acceptable and promoted.

Store 1RO

Store 2RO

Store 3 Store 4 Store 5 Store 6RO

Store 7 Store 8 Store 9

Pepsi 7,8 5,8 42,50 7,8 0 8 19,3 11,20 20,21

Pepsi Diet 13 34 11,10 13 7 5 67

Caffeine Free Pepsi 5 10,12 7 13 9 24

Wild Cherry Pepsi 7 12 5 -30 17 10 13

Dr. Pepper 4 113,30,

10,35 6,7 9,14 14 12 30, 33 12,8

Dr. Pepper - Diet 10 25 8 23,19 9 11 15 0,2

Pepsi Products


Store A 10

Pepsi

9

Diet Mountain

Dew

8

Diet Pepsi

7

Mountain Dew

6

Brisk

ICE 5

Dr. Pepper

4

Diet Dr. Pepper

3

Wild Cherry Pepsi

2

Mug Root Beer

1

Sierra Mist

Sample 1 +5 +50 +8 -9 Bad 0 +4 +30 -7 -11

Sample 2 +7 +67 +3 0 Water 0 -9 +36 -15 -6

Sample 3 +7 +45 -11 -8 Valve 0 +10 +46 -10 -15

Store B 10

Diet Coke with Lime

9

Cherry Coke

8

Diet Dr. Pepper

7

Caffeine Free Coke

6

Minute Maid

Lemonade

ICE 5

Hi C

4

Diet Coke

3

Caffeine Free Diet

Coke

2

Coke

1

Sprite

0

Fruit Punch Power

Aid

Sample 1 +5 +11 +5 +17 +10 +10 +11 +7 +12 +11 +25

Sample 2 +7 +14 +3 +15 +6 +22 +11 +8 +12 +13 +9

Sample 3 +5 +14 +6 +21 +21 +22 +11 +5 +12 +13 +11

Store C 10

Diet Pepsi

9

Mt. Dew

8

Lemon Mist

7

Code Red

6

Sobe -Lean

ICE 5

Sobe - No Fear

4

Sobe -Energy

3

Cherry Pepsi

2

Mug Root Beer

1

Dr. Pepper

Sample 1 +8 +7 +6 +10 +8 +12 -3 +6 +9 +8

Sample 2 +8 +12 +6 +7 +23 +16 +2 +4 +9 +9

Sample 3 +8 +11 +9 +9 +5 +16 0 +9 +11 +10

Consistent Beverage INCONSISTENCY results from

VALVE INSTABILITY and

WATER QUALITY VARIABILITY


Case Study - Syrup Savings

Assumption - $ 30,000/year or $2,500/month average syrup cost per store

BIB = Bag-in-Box

Competitive BIB cost not disclosed in this slide

* Is the nine store case study for average syrup savings available for capture

Savings

$2,500 X 27.48%* = $687/month savings per store

$687/per month X 12 = $8,244/year per store

$8,244 X 20 stores = $164,880/year


ELIMINATED EQUIPMENT OPERATIONAL EXPENSES - YEARLY

Item Store per Year 20 Stores

Four (4) Everpure filters $560 $11,200

Hot water heater element replacement $600 $12,000

Scaling maintenance on ice machine $1,200 $24,000

RO in Stores (10 stores out of 20)* $3,000 $30,000

Total – With RO UnitWithout RO Unit

$5,360$2,360

$77,200

Case Study - Operational Savings

*Number of stores with RO Water Treatment Systems


Case Study - Water Fountain

Item Store per Year 20 Stores

Arctic Peaks' Fill Station $10.00 per day

$3,650 $21,200

Arctic Peaks' Fill Station Vendor

Exterior or Interior Building Placement

Coin Operated

NAMA Listed



1.22 years1 Month on a Lease

Case Study - Convenience Store

YEARLY SAVINGS ESTIMATE STORE STORE - RO 20 STORES*

Syrup Savings $8,244 $8,244 $164,880

Operational Savings $2,360 $5,360 *$77,200

SAVINGS TOTAL $10,604 $13,604 $242,080

Arctic Peaks’ Fill Station $3,560 $3,560 $72,200

Savings & Fill Station $14,164 $17,164 $313,280

Investment

Arctic Peaks' Water Systems $19,090 $381,800

*Operational SavingsWith RO - 10Without RO – 10

Return on Investment -


Case Study Five-year Cost of Ownership

SAVINGS 1 STORE 20 STORES

Syrup Savings $41,220 $824,400

Operational Savings $11,800 $236,000

Arctic Peaks’ Fill Station *$17,800 $356,000

Sub- Total $70,090 $1,416,400

Arctic Peaks' Water Systems $19,800 $381,800

Total $ 51,730 $1,034,600

Savings - $1,034,600

* Very Conservative Estimate


Case Study Comparisons to RO Water System

Arctic Peaks' Water Systems Reverse Osmosis (RO) Systems

Adjustable for consistent optimum carbonation Typically below standard

No drink foaming Foaming is typically below standard without system modifications.

Low maintenance Periodic high maintenance

High volume Typically low delivery volume and capacity (unless extra RO water storage is purchased).

Early payback High expense, slow pay back depending on operating costs/month (example $250/month)

Serves all plumbing and appliances except evaporative coolers; clean & unstained toilets make a statement and makes a preferred image.

Doesn’t serve all plumbing, e.g. water heaters, toilets and other water-related equipment

No required service upon E-coli contamination or other living micro organisms

Requires immediate service upon E-coli contamination

A fully implemented installation may be Exempt Unless extra protection is specially provided, filters and membranes must be replaced

Provides water “safe-haven” option No water “safe-haven” without modifications and additions.

Moves to balance or alkaline pH Low pH - Acidic


The article “Rising Water Level,” in the June 2004 issue of www.c-storedecisions.com provides insight in the expected progression of the market. The article makes the following key points:

● “Bottle water assumed the No. 2 position among the country’s most consumed beverages last year. Now trailing only carbonated soft drinks, bottled water has surpassed beer, milk and coffee as the second most-consumed beverage on a per-capita volume basis.”

● “Pepsi’s Aquafina had the top volume SKUs in 2003, but Coke’s Dasani and several brands from Nestle Waters North American also put in a solid performance. Nestle continues to be the top brand overall.”

● “Bigger is getting better in the c-store channel. Multi-packs and bulk water sales picked up last year. Retailers anticipate getting even more aggressive with larger pack sizes in 2004 and beyond.”

The Future of “Pre-Packaged Water”

Note - All three brand bottled waters are based on RO water at their bottling plants.


The bottled water market has it’s share of advocates and critics but all market indicators suggest that water will be the dominant beverage of choice for convenience stores between 2009 and 2013*.

Currently, the public image of bottled water is that it is safer and healthier than what may be obtained from the municipally supplied tap water. Similarly, though not usually noted, in-store dispensed beverages, are mixed with tap water and occasionally employ the benefits of disposable carbon filters to remove some consumer-detectable contaminants (odor, taste and “particles”).

Thus, the non-bottled beverage sales of a convenience store are based on the quality, reliability and reputation of its local municipal water or local well supply. *Convenience Store Decisions, June 2004 (www.c-storedecisions.com)

Market Indicators


The following information will be required for an in-depth analysis. It is necessary to validate store-targeted cost savings.

• BIB prices before and after rebates for national syrups

• Annual volume and dollar value of syrup for each store analyzed for national syrups

• Total volume and dollar value of syrup for convenience stores for specific years.

• Specific cost and contractual details of the reverse osmosis or other treatment or filtration installations. Hot Water Heater annual maintenance expense per store or for network

• Ice Machine annual maintenance expenses per store or for network

• Beverage machine maintenance

• Everpure annual filter cartridge replacement expenses per store or for network

• Most popular dispensed drink cup size

• Estimate of new drink versus refill drink distribution

• Details on how profit margin on dispensed drinks is calculated

To Analyze Your Stores


How We Accomplish It:

Arctic Peaks' Water Systems

• We do a complete water entry to product delivery analysis

• We do a beverage and water system environmental analysis.

• Components are selected for high reliability and maintainability.

• Component capacities are selected with conservative performance margins.

• We can supply monitoring programs using visiting personnel or automated monitoring systems using local or remote data logging. Built on over 15 years of design, installation, research and proven experience in providing optimized water for food and beverage.

• Understands Market Direction

• We can provide a “risk free opportunity” for qualifying stores (1-2 years of previous operation history).


Value Added Summary

We have over 17 years in the water industry

We have proven systems performance

We are backed by guarantees, i.e. manufacturers, WET performance and installation

All components are NSF certified

Water Fill Station is NAMA certified

This high-volume water purification system collectively meets or exceeds NSF standards.

Water provided at the Fill Stations and Fountain exceeds NSF Standard 55 Class A Purification

Arctic Peaks Water Systems qualifies as VERY low sodium beverage under FDA standards

Besides equipment selection, we typically have a series of multiple empirically derived designs and engineered guidelines which ensure consistent optimum system performance.


WET Services & Customer Support

• Complete Arctic Peaks Water Systems – “turn key” optimized for C-Stores and food services.

• Upgrades – water and post-mix beverage systems

• Site Evaluations – per dispenser, per store

• Savings Surveillance Programs – seasonally, quarterly, on demand

• Consulting services*

* May require multi-year non-disclosure agreement.

Services

• Custom designs

• Installations

• Technical evaluations

• Water/beverage marketing

• Financing / Leasing support

Support


Can you think of ANY reason why trying it wouldn’t be a wise investment? The benefits are available now:

Arctic Peaks' Water SystemsNu-EdenPurE WaterThe PURFECT Choice

Question?


The “WET” Process Of Constructing a Savings Proposal

1. Estimate your savings potential – Estimate your potential saving with a conservative 10 % syrup savings multiplier of your usage input to the SavingsAnalysis.XLS spreadsheet..

2. Invite WET to your store – No-cost-to-you evaluation of your post-mix cold beverage dispensers and your water supply system to develop an average syrup savings figure for your store and an upgrade cost estimate..

3. Refined spreadsheet analysis - Input actual BIB cost figures for 1-year of operation plus upgrade cost and system option to estimate return on investment (ROI) for various scenarios:

• Water Fill Stations – indoor or outdoor• Remote systems monitoring• Maintenance services• Electronic message signs

4. Contract (with or without financing)

5. Installation (premium for late night installations).

6. Savings surveillance program ( 2 to 4 visits per year per plan)

7. Options for continued surveillance services and maintenance.


Are You Where and You Want to BeWith Your Water and Beverages?

Scale: 1-low to 5-high.

Category Where

We Are*Where We Want To Be

Your gap

Consistent Drink Quality

Customer Optimum Satisfaction

Adding New Customers

Improving Drinks to Enhance Customer Loyalty

Increasing Profitability

Additional high-profit beverage Centers

Bottled Drink Quality Delivered at the Fountain

Creating a Canned and bottled Drink image at the fountain

Decreasing Product Cost

Decreasing Maintenance Downtime & Cost

Leadership Role in a “Healthy Water” Conscious Environment

Building a Community Image in Disaster Water Preparedness

Avoiding Contamination and Excessive Cost of Compliance to “Boil Order” Requirements

*Water Evolution Technologies will confirm the “Where We Are” data with analysis.

Slide © Water Evolution Technologies, Inc.- CONFIDENTIAL 1 Built on over 17 years of experience and...

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