June 19, 2008 08:30 ET

H2O Innovation Wins CAN$ 4.1M New Contracts and Increases Sales Backlog to CAN$ 19.8M

QUEBEC CITY, QUEBEC--(Marketwire - June 19, 2008) - H2O Innovation (2000) Inc. ("H2O")(TSX VENTURE:HEO)(ALTERNEXT:MNEMO:ALHEO) is pleased to announce the signing of five new contracts in the USA and Canada. The contracts total CAN$ 4.1 million, bringing the firm's backlog to CAN$ 19.8 million compared to CAN$ 10.1 million as of June 26 last year.

Contracts in Canada:

Two of the contracts were awarded in the province of Quebec, Canada. The first one came through a competitive bidding process with the state electricity agency, Hydro-Quebec. It is for a filtration system that removes turbidity from raw water and provides process water used in one of their power plants located in Quebec. It is worth mentioning that two years ago, H2O provided and commissioned similar water process systems for another power plant facility belonging to Hydro-Quebec.

The second contract is to equip a mining workers camp with two mobile units: one for the production of drinking water and the other for wastewater treatment. This contract is a good example of H2O Innovation's integrated capabilities in answering to its clients needs with a wide variety of water treatment. Moreover, it clearly shows that our diversification strategy is starting to bring significant results. This strategy was initiated last year and intended to target other growing markets such as energy, mining and oil & gas, beyond municipal market.

Contracts in the USA:

The three other contracts were awarded to H2O's American subsidiary, Membrane Systems Inc. ("MSI"). One of the systems to be designed and furnished for the City of San Diego through RBF Consulting Engineers of California is a good size demonstration unit for treating ground water under the influence of surface water.

The project in Richmond, near San Francisco, will be a water reclamation project treating tertiary treated domestic wastewater. MSI furnished system will be used to recycle four (4) million gallons per day ("MGD") of wastewater using very effective low pressure filtration and reverse osmosis membrane technologies.

The third contract is an industrial high pressure reverse osmosis system that minimizes concentrate going to the waste stream. The treatment system is designed for a peak flow rate of 200,000 gallons per day. Through the years, H2O has built an impressive list of references in recycle water (or reclamation) applications - one of the fastest growing applications in the United States due to water depletion of the underground water reserves.

H2O Innovation's COO, Frederic Dugre, is pleased to see that the synergies expected through the various acquisitions are finally paying off. "It is now clear that our extended experience in the water sector and our "knowledge to share" approach with customers and consultants are permitting us to rapidly develop other market segments, bringing added value and savings to customers in niche applications. Our success in winning these contracts validates the strategy in place and shows that integration is taking place in all of our subsidiaries. Consequently, real leverage commercially as well as operationally starts to happen. We believe our CAN$ 19.8M backlog is now a great pride and challenge for the entire organization. It shall permit us to generate positive cash flow and become a significant pure-water player in this fast growing industry."

About H2O

H2O is pursuing its market development in the water treatment sector with a complete portfolio of membrane technologies and biological processes. H2O's mission is to develop, produce and market state-of-the-art, environmental friendly products dedicated to the production of drinking water and the treatment of wastewater and industrial processed water.

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