H2O Innovation Awarded CAN$8.0 Million in Contracts for Municipal and Industrial Water Treatment Systems in the United States and Canada

QUEBEC CITY, QUEBEC--(Marketwire - July 6, 2011) - (TSX VENTURE:HEO)(ALTERNEXT:MNEMO:ALHEO)

All amounts in Canadian dollars unless otherwise stated.

H₂O Innovation Inc. ("H₂O Innovation" or the "Company") announces today that it was awarded new contracts totalling $8.0 million shortly before the end of its 2011 fiscal year, on June 30, 2011. These contracts will see H₂O Innovation provide custom-built membrane filtration water treatment systems and equipment to municipal and industrial end-users in the United States and Canada. H₂O Innovation secured an all-time high of $17.4 million in new bookings during the fourth quarter of fiscal 2011. These contracts bring H₂O Innovation's sales backlog to a record-high of $36.6 million as at fiscal year-end, June 30, 2011. The Company's sales backlog is comprised entirely of systems and equipment sales and does not include sales of services and consumable products.

"With demand from the North American industrial market remaining high, we are particularly pleased to observe that approximately two-thirds of the total value of the contracts announced today come from the U.S. and Canadian municipal markets. Our backlog stands at $36.6 million – the highest level in the Company's 11-year history – fuelled by the strong growth in systems and equipment sales we have been experiencing in the last three quarters of fiscal 2011. The projects announced today will translate into revenues during fiscal 2012 and beyond, and, combined with our strong base of recurring revenues, put us in a very enviable position as we start this new fiscal year", stated Frédéric Dugré, President and CEO of H₂O Innovation.

Two contracts will see H₂O Innovation deliver nanofiltration membrane systems for the production of drinking water from surface water sources to two Canadian municipalities located in the provinces of New Brunswick and Quebec. The contract awarded to H₂O Innovation by the town of Rivière-Verte is the Company's first system sale in New Brunswick, a new regional market for the Company. For this nanofiltration system and the one to be delivered to the town of Sutton, Quebec, H₂O Innovation has optimized permeate recovery rate above 80%, minimizing water loss and maximizing system efficiency.

A third Canadian municipal contract will see H₂O Innovation supply a nanofiltration membrane system to the municipality of Saint-Adolphe-d'Howard, Quebec, expanding the drinking water production capabilities of the municipality's existing nanofiltration system, initially designed and manufactured by H₂O Innovation.

The Company will also deliver a brine minimization system for the East Cherry Creek Valley Water & Sanitation District's Northern Water Supply Project in Colorado. This system will enhance permeate recovery from the District's low-pressure reverse-osmosis drinking water production system, presently being assembled by H₂O Innovation. The City of Sterling, Colorado, has also selected H₂O Innovation to supply a nanofiltration membrane system that will produce softened water.

As part of another contract, H₂O Innovation will design, fabricate, and deliver a reverse osmosis membrane filtration system to a U.S. industrial end-user in the energy and power generation sector.

All projects announced today will be manufactured in the Company's two North American plants, in Ham-Nord, Quebec and Minneapolis, Minnesota.

Prospective disclosures

Certain statements set forth in this press release regarding the operations and the activities of H₂O Innovation as well as other communications by the Company to the public that describe more generally management objectives, projections, estimates, expectations or forecasts may constitute forward-looking statements within the meaning of securities legislation. Forward-looking statements concern analysis and other information based on forecast future results and the estimate of amounts that cannot yet be yet determined. Forward-looking statements include the use of the words "expect", "believe", "estimate" and other similar terms as well as those usually used in the future and the conditional, notably regarding certain assumptions as to the success of a venture. Those forward-looking statements involve a number of risks and uncertainties which may result in actual and future results of the Company to be materially different than those indicated. Information about the risk factors to which the Company is exposed is provided in the Annual Information Form dated September 21, 2010 available on SEDAR (www.sedar.com). Unless required to do so pursuant to applicable securities legislation, H₂O Innovation assumes no obligation to update or revise forward-looking statements contained in this press release or in other communications as a result of new information, future events and other changes.

About H₂O Innovation

Building on 11 years of experience, H₂O Innovation designs, manufactures, and integrates state-of-the-art custom-built water treatment systems for the production of drinking water and industrial process water, the reclamation and reuse of water, and the treatment of wastewater in the municipal, commercial, institutional, industrial, oil & gas, mining, and energy markets. The Company also offers operating and maintenance solutions for membrane filtration and reverse osmosis systems. H₂O Innovation has approximately 100 employees, seven offices including three manufacturing plants in Canada and the United States and is a founding partner of H₂O Innovation India, a joint venture based in Mumbai, India. Shares of H₂O Innovation are listed on the TSX Venture Exchange (HEO) and on the NYSE Euronext Alternext Exchange (MNEMO:ALHEO). For more, visit www.h2oinnovation.com.