HydroFlo Portfolio Company Customer Receives Letter of Intent for $210 Million Purchase

Aug. 19, 2005

HydroFlo, Inc. announced portfolio company Metals & Arsenic Removal Technology, Inc. (MARTI) received an agreement amendment with Essentially Yours Industries, Inc. (EYII) to provide the corporation with an undisclosed amount of water pitcher filtration systems to meet the demand received from recent transactions in China. The total value of the order is expected to exceed $210 million. As the demand for MARTI products grows, the contract will be reevaluated to ensure adequate product supply.

The Letter of Intent (LOI) includes an undisclosed number of patented Code Blue™ filtration systems to be supplied by MARTI throughout 2006 and 2007. These units will be privately labeled and will contain an exclusive formulation for EYII distribution.

The agreement covers sales over a 2-year period with the Guangzhou CEIEC Enterprise CO. LTD. (Guangzhou CEIEC), a subsidiary of The China National Electronics Import & Export Corporation (CEIEC). CEIEC, located in South China, is the largest exporter and importer of electronic products in China and was the first Chinese enterprise to establish sales and cooperative relations with foreign brand name enterprises such as Hitachi, Sharp, Mitsubishi, Panasonic, Siemens, Casio, Phillips, Hewlett-Packard, LG and Samsung. Currently, the CEIEC is under the direction of the Chinese government and has extensive business relations with nearly 100 countries and regions and imports/exports over $1 billion in products every year.

The Code Blue™ portable water filtration system removes arsenic and other contaminants from drinking water to a negligible level. China's large rural population and poor infrastructure in those outlying regions have created a huge demand for the Code Blue™ system which will facilitate the removal of harmful toxins from water, making it safe for human consumption.

Under the terms of the LOI, Guangzhou CEIEC will acquire agency rights from EYI Industries to distribute the Code Blue™ filtration system throughout China, and will commit to the purchase of $210 million worth of product as per the following schedule:

Fiscal 2006 (US$42,000,000)

Quarter (Q1) = $700,000

Q2 = $2,800,000

Q3 = $14,000,000

Q4 = $24,500,000

Fiscal 2007 (US$168,000,000)

Q1 = $31,500,000

Q2 = $38,500,000

Q3 = $45,500,000

Q4 = $52,500,000

George Moore, Chief Operating Officer of MARTI explained his expectations for this agreement amendment, “MARTI management firmly believes that everyone in the world should be able to obtain clean water. With this and future additions in the EYI agreement MARTI will form the foundation which will allow both the EYI team and MARTI to provide access to quality water in all homes world wide. The opportunity to work with EYI with global goals to improve world health parallels our own goal to improve the human condition through quality. The Letter of Intent will ensure that people in Asia as well as the western hemisphere will be able to drink clean healthy water in their homes. This will be an excellent opportunity for all involved.”

Dennis L. Mast, CEO of HydroFlo said, “I am pleased to see an order such as this one. I feel as though my strategic business objectives are beginning to be realized in that people all over the world will be protected from harmful contaminants in water.”

Source: HydroFlo, Inc.

Image by Burnham RNG, courtesy twentytwo & brand.