BEACON EQUITY RESEARCH

Analyst: Victor Sula, PhD

Initial Report
April 21st, 2008

PURO daily 04/18/08

0.80
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Purio Inc. 0.30

1048-1685 H St volume
Blaine, WA 98230 800

Phone: 1 (877) 512-1120

Thousands
600
Email: svd@puriowatertech.com 400

www.puriowatertech.com 200

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Feb March Apr

Market Data Company Overview

Symbol / Exchange OTC BB: PURO Purio Inc. (PURO) is a development-stage company involved in the design,
Coverage Initiated April 21, 2008 manufacture and commercialization of water treatment systems and prod-
Current Price $0.45 ucts. The Company’s patented continuous-flow water/suspended-solids sepa-
Rating Speculative Buy ration technology has applications in wastewater treatment, water re-cycling
Price Target $1.10 and drinking water production. PURO’s technology has been tested by an
Outstanding Shares 55.23 Million
independent laboratory, Canadian Environmental Technology Advancement
Market Cap. $24.85 Million
Corporation-West (CETAC-WEST), and deemed effective in meeting enhanced
Average 3M Volume 65,529
primary treatment standards for BOD (biological oxygen demand) and TSS
Source: Yahoo Finance (total suspended solids). In addition, the technology exceeded standards for
phosphorus removal.

The Company is currently working to refine its technology by installing state-

of-the-art digital control systems and replacing iron components with plastic
and lighter weight metals. The new, more compact and lighter weight system
will be suitable for deployment in densely populated urban areas, in places
where space is limited such as on board ships and in existing buildings where
outdated water systems must be retrofitted or replaced. The system is also
portable, making it useable in applications where mobility is important. The
first of the new units is being tested. Commercial sales are expected to com-
mence in the second half of 2008.
 Analyst: Victor Sula, PhD
Initial Report
April 21st, 2008

Investment Highlights

Business model based on proprietary technology

PURO is leveraging its patented continuous-flow water/suspended-solids separation technology to cost-effec-

tively provide clean water for residential, agricultural, industrial and recreational uses. The Company’s treat-
ment process mechanically separates suspended solids from liquids without using membranes or filters. The
liquids are then further refined through bio-filtration or ozonation to reduce biological oxygen demand. The
treated water, which meets the most vigorous environmental disposal standards, can be used for industrial, irri-
gation or other agricultural applications. PURO’s technology has been proven effective in reclaiming residential
wastewater and has been approved for use in several Canadian jurisdictions.

Technology advantages drive market adoption

PURO’s pre-engineered modular design offers many advantages over traditional installed treatment systems.
The system is portable and can be readily deployed in temporary or emergency situations. It has variable-flow
capabilities and a small footprint so it can be located where real estate is valuable or where surrounding terrain
prevents the construction of larger water/wastewater treatment facilities. Because the technology is based on
a mechanical process, it eliminates the need to control sometimes complicated biological processes that make
competitor systems less reliable. In addition, the technology is closed and odorless, making it deployable in
populated areas. It is also environmentally friendly, energy-efficient and can be powered with solar energy.

Because the system is filterless, maintenance costs are minimized and servicing is greatly simplified. The sys-
tem’s efficiency in producing clean water translates into lower production costs and higher operating profits for
PURO.

Positive independent evaluations

PURO’s patented technology was tested by an independent laboratory, Canadian Environmental Technology
Advancement Corporation-West (CETAC-WEST). The comprehensive evaluation report uses protocols and stan-
dards similar to those used by the United States Environmental Protection Agency (EPA) or ISO 14023 regula-
tions. Data from a treatment facility using PURO’s technology to reclaim wastewater generated by a 120-home
community was evaluated over a nine-month period.

The report confirmed PURO’s technology met or exceeded regulatory standards for BOD (biological oxygen
demand), TSS (total suspended solids) and phosphorus (P) removal.

Primary Treatment Secondary Treatment1

Raw Sewage Typical Standards Purio Separator Typical Standards Treatment Train

TSS (mg/l) 200-300 50-100 32 10-30 5

BOD (mg/l) 200-300 75-150 62 10-25 9
P (mg/l) 7-10 5-7 1 3.6-6.5 0.2
Total Coliform >107 >200,000 >1,000,000 <200,000 1,600

Source: Company website

Purio Inc. (PURO) 2

 Analyst: Victor Sula, PhD
Initial Report
April 21st, 2008

PURO invited to design water treatment system for new resort development

In February 2008, PURO received a formal invitation to design both the wastewater management system and
potable water supply system for the SnowCastle Estates resort development in the Candle Lake/Torch Lake re-
gion of Central Saskatchewan, Canada. According to SnowCastle Estates management, PURO’s modular design
was a major attraction since the water systems can be expanded in conjunction with the three-phase plan for the
resort’s development. SnowCastle Estates will consist of 450 one-half to three-quarter acre lots. The resort antici-
pates significant cost advantages and environmental benefits can be gained by deploying PURO’s technology.

Broad range of technology application taps multiple markets

The Company’s technology addresses a broad range of applications, including wastewater treatment, drink-
ing water production, industrial and agricultural applications. In addition, using PURO’s technology, industrial
customers can recycle process water and reduce or eliminate wastewater disposal costs. Rapidly rising energy
prices are encouraging processors to recycle water whenever possible.

Revenue visibility

More then $7 million has been invested in bringing the technology to commercial viability and positioning it for
installation. The Company is preparing for the commercial launch of its systems by upgrading its technology to
include digital control systems, solar power and lighter weight components. These improvements will reduce
manufacturing costs, make the unit more compact and portable and increase its affordability.

The first of the new units are scheduled for beta-testing over the next two months, with commercial sales planned
in the second half of 2008. PURO plans a global rollout of its operations; the Company’s marketing plan focuses
on production and sale of water treatment units in developing economies, larger systems which will generate
recurring revenues in developed countries and water treatment micro-units for residential and small commercial
customers. We expect the Company to begin generating revenues in 2008 and anticipate annualized revenues
may reach $15 million by year-end 2009.

E normous market opportunity

Water treatment and processing is a $450 billion annual worldwide market, trailing only power generation and
oil, according to Terrapin Asset Management. Helmut Kaiser Consultancy forecast revenues generated by water
treatment and processing will grow to $650 billion by 2025.

The water treatment infrastructure in the United States is aging rapidly; equipment that was installed following
the Clean Water Act in 1972 is reaching the end of its lifecycle and there is a critical need for upgrading and retro-
fitting outdated water treatment equipment. According to the EPA, the United States will spend approximately
$203 billion over the next 20 years treating polluted wastewater. Forbes Magazine estimates global spending for
water systems will exceed $1 trillion over the next two decades.

In this high-demand environment, sales opportunities abound for manufacturers such as PURO who can pro-
vide energy-efficient, reduced-footprint systems that not only replace outdated equipment, but comply with the
most rigorous wastewater treatment regulations.

Purio Inc. (PURO) 3

 Analyst: Victor Sula, PhD
Initial Report
April 21st, 2008

In developing countries there is a dire need for water to fulfill basic human self-sufficiency demands. In most
cases, the problem is not the lack of available water, but the inability to obtain it in a cost-effective, reliable man-
ner. The World Health Organization estimated that approximately 1.1 billion people had no access to safe drink-
ing water in 2003. Health concerns and rising living standards in developing countries are creating demand for
low-cost water treatment systems that provide safe drinking water and effective wastewater treatment.

Business Model

The Company has developed a proprietary, mechanical water clarification technology that can be deployed
globally to provide safe, reliable water supplies to homeowners, farmers and businesses. PURO’s technology
addresses a broad range of applications, including the clarification of surface water, industrial process water and
sewage. PURO plans to focus initially on applications for its technology in wastewater treatment and recycling in
the industrial and commercial sectors and then, after its technology has been proven, pursue sales opportunities
in the residential water treatment market.

PURO’s water treatment system clarifies wastewater by reducing or removing unwanted impurities such as
clay, silt and other organic and inorganic materials from the water through lime-soda softening, filtration, ion
exchange and reverse osmosis. The Company’s system is designed to remove biological and chemical substances
that deplete oxygen in water, improve environmental compliance, minimize sludge volume and produce cleaner
water at a lower cost than competitor systems which use chemical precipitation. In the primary clarification
stage, PURO’s equipment clarifies water on a flow-through basis without using membranes or chlorine, thus
reducing expenses and environmental challenges associated with filter maintenance and replacement.
The Company recently submitted a patent application for its second-generation compact, high-capacity multi-
stage water clarifier. The patent covers 137 countries. The new compact unit is smaller and lighter weight than
the previous model, resulting in lower manufacturing and operating costs. It can also be powered with solar
energy. The entire unit, including sanitization equipment, fits on a 4’ x 10’ skid.
The Company’s marketing strategy for North America focuses on constructing, owning and operating large
treatment systems that will generate service revenues. In addition, the Company plans to sell micro-systems
priced at $20,000 per unit; this is 60 percent less costly than comparable units marketed by competitors 1. Outside
of North America, PURO plans to commercialize its technology through strategic partnerships that will create
licensing fees.
1 http://www.gaskinsco.com/linkto-puro.shtml

Purio Inc. (PURO) 4

 Analyst: Victor Sula, PhD
Initial Report
April 21st, 2008

Corporate strategy

The Company plans to begin commercializing its water clarification systems in 2008. In the future, PURO plans
to increase its visibility and revenues by exploring new applications for its technology and introducing new
products. Specific aspects of PURO’s strategy include:

- Exploring and evaluating applications for its proprietary technology in new areas of industrial and agri-
cultural use;
- Enhancing its technology advantages through an aggressive research and development program;
- Establishing effective product marketing channels through a network of distributors and retailers;
- Creating Company-owned or Company-controlled sales outlets in developing countries;
- Building a large customer base;
- Leveraging relationships with multi-national companies by servicing them globally;
- Attaining a level of capitalization sufficient to support the Company’s growth; and
- Continuing to reduce costs.

Technology

The Company’s patented technology is based on a modular, self-contained, chemically enhanced effluent treat-
ing system (CCETS). The CCETS separates solids (inorganic and organic) from waste liquids using a chemically
enhanced physical treatment process. Suspended solids typically consist of large solids, settleable by gravity
alone, and nonsettleable material, often colloidal in nature.

Removal is generally accomplished by chemical addition, coagulation, flocculation, sedimentation and separa-
tion of solids (sludge) and clarified water (effluent). The combination of these five distinct processes is referred
to as water clarification. Treatment occurs in a closed system, operating under low pressure to maintain positive
flow through the process. Since the system is closed, the process operator doesn’t come into contact with the
waste stream (which may contain harmful bacteria and chemicals).

The CCETS consists of:

(a) A pump for grinding solids and pumping ground solids and liquid effluent;
(b) An inlet for introducing flocculant and coagulants into the ground solids and liquid effluent;
(c) A mixing chamber with an inlet connected to the pump outlet. The mixing chamber is of sufficient length
to allow the flocculant and coagulants to fully mix with the solids and liquid effluent and form flocs which settle
from the liquid effluent;
(d) A settling chamber connected to the mixing chamber outlet. The settling chamber promotes laminar flow
to the solids and liquid effluent and has sufficient length to allow the flocs in the liquid to settle from the efflu-
ent;
(e) A mechanical propulsion device for moving the solids and liquid effluent through the length of the set-
tling chamber; and
(f) A clarifier chamber connected to an outlet of the settling chamber. The clarifier chamber separates flocs
from the liquid effluent.

Purio Inc. (PURO) 5

 Analyst: Victor Sula, PhD
Initial Report
April 21st, 2008

The entire clarification process is divided into three stages:

I. In the first stage, raw sewage is ground and then pumped into a special mixing chamber. In the mixing
chamber, the ground sewage is treated with chemicals. The chemicals are introduced in a manner which ensures
rapid and complete mixing with the sewage prior to entering the special slow mix chamber. One option is to
introduce the chemicals at the pump. Another preferred approach is to introduce the chemicals in a rapid mix
(dynamic or static) located immediately upstream of the special mixing chamber. The effluent and chemicals
are subjected to varying fluid velocities that are program- controlled to optimize flocculation and settling of the
solids from the supernatant liquid.

II. In the second stage, the flocculated suspended solids, which are now termed sludge, pass along the set-
tling chamber and settle at the bottom of the chamber. At the end of the settling chamber, they are removed from
the system. Clear supernatant water is drawn off the top. The supernatant is sufficiently clear and innocuous so
that it may be safely released to surface water without causing contamination.

III. Depending upon the desired water quality and end-user requirements, a final treatment stage may be
added. Advanced microbiological filtration and disinfectant processes may be used to remove remaining fine
particles, thus reducing chemical oxygen demand and microbiological elements to acceptable levels.

To obtain safe drinking water, two additional processes are required:

reverse osmosis and Ultraviolet (UV) light treatment. Reverse osmo-
sis occurs when water is moved across a membrane against the con-
centration gradient, from lower concentration to higher concentra-
tion. UV light treatment is used to remove chlorine, polychlorinated
biphenyls, lead, trichloroethylene, ethylene dibromide, and e-Coli
bacteria, as well as over 50 additional chemical contaminants and
pesticides which are on the EPA’s Primary Health-Related Contami-
nants list for drinking water. These extra steps ensure that water
dispensed by the UV filtration system meets the highest safety and
cleanliness standards for drinking water.

Safe Drinking Water Production project

PURO has initiated a Safe Drinking Water Production project which

is intended to prove its technology’s ability to clarify contaminated
source water as a first step in producing safe drinking water. As part
of this project, PURO is using a non-chemical, non-toxic sanitizing
agent – ozone- that works 3,000 times faster than chlorine and is more effective against a broader range of patho-
gens.

Technology applications

The Company focuses on applications for its technology in wastewater treatment, process water recycling, drink-
ing water production and industrial applications.

Purio Inc. (PURO) 6

 Analyst: Victor Sula, PhD
Initial Report
April 21st, 2008

- PURO technology is a continuous-flow water/suspended-solids primary separation system. The process

mechanically separates suspended solids from liquids without using membranes or filters. The processed water
satisfies all safety standards for environmental disposal and can be used for industrial processes or other ap-
plications. The resulting water can be further refined through bio-filtration or ozonation to reduce biological
oxygen demand and converted into safe drinking water.

- For agricultural and residential purposes, the main source of treated water is surface water. Typically
sourced from ponds, lakes, springs and cisterns, surface water provides a good alternative where drilled wells
are not feasible. With PURO’s technology, surface water can be filtered and disinfected to provide clean, inexpen-
sive water for household uses, livestock, lawn and garden, swimming pools or any other home or farm purpose.
Separated solids produced by the system can be further processed through bio-reduction technologies such as
composting to create a useful by-product for agriculture, horticulture or landscaping.

- PURO’s technology can also be used to reclaim polluted process water that is a by-product of industrial
and agricultural processes and normally disposed of at a cost. Rapidly rising energy prices are encouraging pro-
cessors to recycle wastewater and reduce or eliminate water disposal charges.

- The Company also plans to address applications for its technology in the energy sector by providing
on-site, technology-driven solutions for the global natural gas, petroleum and petrochemical industries. PURO
intends to deliver a full range of water treatment products and oil/water separation solutions for refineries and
petrochemical plants.

Web-based monitoring

The Company plans to install Web-based controllers on its systems which will monitor concentration levels,
fluoride, phosphate, flow, tank levels, feed pump operations and components. These controllers will log data,
automatically generate reports and dial-out when intervention is needed. Real-time data will be displayed and
alarms will trigger on a summary overview screen.

Purio Inc. (PURO) 7

 Analyst: Victor Sula, PhD
Initial Report
April 21st, 2008

Industry Outlook

Nearly 97 percent of the earth’s water is salt water 2. Of the 3 percent that represents fresh water, over two-thirds
of fresh water is frozen in glaciers and polar ice caps, leaving only 0.9 percent available for human consumption.
Changes in the world’s climate associated with global warming are affecting water resources worldwide. The
combination of lower precipitation and higher evaporation in many regions of the world is diminishing water
supplies in rivers, lakes and underground reservoirs.

Major demographic changes are also seriously affecting the quality and quantity of safe drinking water. Accord-
ing to the United Nations, the world’s population reached 6.5 billion in 20053. Despite lower-than-expected fertil-
ity rates, the global population is forecast to exceed 9.3 billion by 2050. Almost all of this growth will be in less
developed countries, where the population is expected to grow from 5.3 billion today to 7.8 billion by 2050.

World population growth, 1950–2050

10 9.35
9
7.58
8
6.84
7 6.08
6 5.28
5 4.45
3.70
4
3.04
3 2.55
2
1
0
1950 1960 1970 1980 1990 2000 2010 2020 2050

(in billions, historical and projected)

Source: US Census Bureau, International Database (http://www.infoplease.com/ipa/A0762181.html).

still lack access to safe drinking water4. About half of the population of the developing world suffers from dis-
eases caused by contaminated water or food, and an estimated 30,000 people, most of them children, die every
day from diseases caused by tainted water or food 5.

Of the 1.1 billion people worldwide without access to safe drinking water, nearly two-thirds (725 million) live
in Asia, 297 million live in Africa and an estimated 120 million live in the Americas 6. In Europe, an estimated 41
million people do not have access to safe drinking water. In September 2000, world leaders at the United Nations
Millennium Summit pledged to reduce by half the number of people without access to safe drinking water by
2015.

The less developed regions of the world are experiencing rapid population growth and a steady migration of
rural residents to towns and cities. Currently, half of the world’s population and most of the world’s economic
output is located in urban areas. In many rapidly growing urban areas, building the infrastructure necessary to
2 http://en.wikipedia.org/wiki/Water_resource#Water_stress
3 www.un.org/apps/news/story.asp?NewsID=13451&Cr=population&Cr1
4 www.who.int/water_sanitation_health/monitoring/jmp2000.pdf
5 www.zmag.org/content/showarticle.cfm?ItemID=7572
6 www.worldwatercouncil.org/fileadmin/wwc/World_Water_Forum/WWF4/synthesis_sept06.pdf

Purio Inc. (PURO) 8

 Analyst: Victor Sula, PhD
Initial Report
April 21st, 2008

deliver safe drinking water to residents poses an enormous challenge. Many urban drinking water systems don’t
disinfect the water. Data indicates that roughly one in five water systems in Africa, Asia, Latin America and the
Caribbean, and two in five systems in the small islands of Oceania, are not disinfected, leading to public health
issues7.

Comparative distribution of the world’s urban population, 1950-2000

60
% of the world’s urban population

50

40
1950
30 2000

20

10

0
Africa Asia Euroope Latin America Northern Oceania
& the Caribbean America

Source: www.unesco.org/water/wwap/wwdr2/pdf/wwdr2_ch_3.pdf.

According to the International Water Resources Association, one-third of the developing world will face severe
water shortages in the 21st century. By 2025, water shortages will be commonplace in poorer nations where
resources are limited and populations are growing. In 2000, the United Nations World Commission on Water
estimated an additional $100 billion dollars in annual spending would be needed to alleviate water scarcity
worldwide.
Projected water scarcity in 2025

Physical water scarcity

Economic water scarcity
Little or no water scarcity
Not estimated

Source: International Water Resources Association (www.iwra.siu.edu).

7 www.bvsde.paho.org/bvsacd/cef-2/WJwash.pdf

Purio Inc. (PURO) 9

 Analyst: Victor Sula, PhD
Initial Report
April 21st, 2008

In 2003, water treatment and wastewater processing was a $96 billion U.S. market.

US water treatment revenues and growth

Business segment 2003 Revenue (billion) 2004-2006 growth

Drinking water utilities $32.6 3-4%

Wastewater utilities $30.8 3-4%
Water treatment equipment $8.9 4-6%
Delivery equipment $8.9 2-3%
Consulting/Engineering $6.1 5-6%
Chemicals $3.6 0-1%
Contract operations $2.3 6-10%
Maintenance services $1.5 3-5%
Instruments/Monitoring $0.8 5-7%
Analytic testing $0.5 2-4%
Total U.S. Water Industry $95.9

Source: The World’s Water 2006–2007 (www.worldwater.org/data20062007/Table18.pdf).

Wastewater recycling and reuse market

Stringent federal regulations governing wastewater discharge, growing population and increasing demand for
fresh water, drive demand for water recycling in the United States. Frost & Sullivan estimated the domestic
market for water treatment equipment and services at $104.9 billion in 2003 and forecasts this market will grow
to $150 billion by 2010. The water treatment infrastructure of the United States is aging rapidly. Equipment
installed to comply with the Clean Water Act in 1972 is reaching the end of its lifecycle and municipalities are
scrambling to raise funds for upgrading and retrofitting their wastewater treatment systems. According to the
EPA, the United States must invest approximately $203 billion over the next 20 years in systems and equipment
for controlling wastewater pollution to comply with safety standards outlined in the Safe Drinking Water Act
(SDWA).

In the United States, water and wastewater treatment is provided by local public systems. According to an EPA
survey, there are about 54,000 public water systems in the United States. About 90 percent of these public water
systems obtain their water from groundwater. However, only 34 percent of Americans (or 101 million) are sup-
plied with treated groundwater, while 66 percent (or 195 million) are supplied with treated surface water.

Sales of water recycling and reuse systems exceeded $676 million in 2006 and are forecast to grow to $1.3 billion
by 2013. Increasing urban populations are putting enormous strain on existing water resources and creating
demand for water recycling and reuse.

According to Freedonia Group, worldwide demand for water treatment products is projected to reach $40 bil-
lion by 2011. Although the United States remains the largest water treatment market, developing nations, par-
ticularly China and India, are expected to register the fastest growth8. At the same time, the market for water and
wastewater treatment chemicals is expected to exceed $23 billion by 2010, up from $18 billion in 2005, according
to a McIlvaine report.9
8 www.the-infoshop.com/study/fd58413-water-treatment.html
9 www.mcilvainecompany.com/brochures/water.html#NO26

Purio Inc. (PURO) 10

 Analyst: Victor Sula, PhD
Initial Report
April 21st, 2008

The power industry is the greatest user of water treatment systems, followed by municipal water systems. Wa-
ter demand by the power market is increasing because of the switch from cleaner-burning natural gas to more
affordable but dirtier coal as a primary fuel source for new power plants. Demand for water and wastewater
treatment chemicals by the power sector is forecast to rise from $3.4 billion in 2006 to $4 billion by 201010. In ad-
dition to municipal systems and power generators, paper manufacturers, refineries, and chemical plants are
major producers of waste water. Others industries generating significant amounts of waste water include metal
working, electronics, food, pharmaceuticals and mining11.

Bottled water market

In many parts of the world, bottled water is viewed as a necessity due to unsafe locally produced water. This
has been a key driver of bottled water sales in emerging markets. Another reason for rising bottled water sales is
perceived health benefits. Water has no calories and is seen as a healthier alternative to sugar-filled soft drinks.

Worldwide bottled water sales could be as high as 160 billion liters per year and consumption is increasing 7
percent to 10 percent annually. According to Datamonitor, the global bottled water market grew 7.4 percent in
2005 to 120.2 billion liters. By 2010, the market is forecast to grow 32.4 percent to 159.2 billion liters. In dollar
terms, the global bottled water market grew 6.3 percent in 2005 to $58 billion. By 2010, the market is forecast to
grow 30 percent to $75.3 billion.

U.S. bottled water market

12,000

10,000

8,000

6,000

4,000

2,000

0
2001 2002 2003 2004 2005 2006
millions of galons 5,185 5,796 6,270 6,807 7,537 8,267
millions of dollars $6,881 $7,901 $8,526 $9,169 $10,013 $10,980

Source: http://www.bottledwater.org/public/Stats_2005.doc

The United States consumes 8.2 billion gallons (30 billion liters) of bottled water annually. Bottled water is a big
business in the United States, generating $11 billion in annual sales and exceeding sales of both beer and coffee.

10 www.impeller.net/magazine/news_en/doc3704x.asp
11 www.pollutiononline.com/Content/news/article.asp?Bucket=Article&DocID=0d8b899f-6d58-11d4-8c57-009027de0829&VNETCOOKIE=NO

Purio Inc. (PURO) 11

 Analyst: Victor Sula, PhD
Initial Report
April 21st, 2008

Financial Outlook

PURO expects to commercially introduce its water clarification systems in 2008. At present, the Company is up-
grading its technology with state-of-the-art digital control systems and replacing iron components with plastic
and lighter weight metals. This next generation system is lighter, more compact and costs less to manufacture
than the model it replaces. The compact unit can be readily deployed in densely populated urban areas, on board
ships and in buildings where water systems must be replaced or retrofitted. The more compact device is also
highly portable and deployable in applications where speed and mobility are important.

The first of the new units will be beta-tested over the next two months with commercial introduction scheduled
in the second half of 2008. In addition, the Company is establishing production facilities and a global distribution
network. PURO plans to license local companies to build and sell water treatment units in developing countries
such as China, India and on the African continent. In the developed countries of the European Union and the
United States, the Company plans to build and operate larger wastewater treatment facilities which will gener-
ate service revenues. PURO is also planning to build and sell small capacity micro-units which will be directly
marketed to end-users via a dealer distribution and/or direct sales network or licensed to third-party operators.

PURO’s invitation to design a wastewater treatment and potable water supply system for a large resort devel-
opment project evidences the advantages of its technology and the Company’s ability to pursue and win large
projects. Based on the business plan discussed above, we expect the Company to begin generating meaningful
revenues in 2008 and produce annualized revenues exceeding $15 million by year-end 2009.

Purio Inc. (PURO) 12

 Analyst: Victor Sula, PhD
Initial Report
April 21st, 2008

Valuation

Since PURO has no direct publicly-traded peers, we selected a peer group of companies which manufacture and
market water filtration, purification, and separation products.

These peers were recently trading at an average 3.5 times forward Price/Sales multiple. We think PURO war-
rants a higher valuation than its industry peers due to its superior growth prospects, proprietary technology
and rapid progress towards commercialization. As a result, we will value the Company at a 4.8 times forward
Price/Sales multiple.
Peer Comparison

Company Name Ticker Price per Mrkt. Cap. P/E P/S

21-Mar-08 Symbol Share, $ $ Mn 2008 2009 2008 2009

Aqua America Inc. WTR 18.68 2,490 23.06 20.99 3.85 3.55
Basin Water Inc. BWTR 5.06 111 n/m n/m 3.47 2.09
Pall Corp. PLL 37.06 4540 20.59 17.32 2.03 1.85
Worldwater & Solar WWAT 1.01 191 0.90 0.82 9.55 5.46
York Water Co. YORW 15.07 170 22.83 23.18 8.50 4.86

Peer Median 21.71 19.15 3.85 3.55

Source: Yahoo Finance, Analyst estimates

Applying a 4.8 times forward Price/Sales multiple to our $15 million revenue estimate, we obtain an equity target
price of $72 million. Since the Company will need to raise significant additional capital to implement its 2008
business plan, we assume an increase in the fully diluted share base to 65 million and derive a share price target
for PURO of $1.10.

We are initiating coverage of Purio Inc. with a Speculative Buy rating and a $1.10 price target. However we
encourage investors to consider the risks described below if they are contemplating a purchase of these shares.
Specific risk factors include the Company’s early development stage, need for additional capital and unproven
technology.

Purio Inc. (PURO) 14

 Analyst: Victor Sula, PhD
Initial Report
April 21st, 2008

Investment Risks

Inherent business risks

Although PURO has made good progress advancing its proprietary water treatment technology, there is no
assurance that the Company will be able to build a viable business and generate positive cash flows. In addi-
tion, the current lack of revenues, limited operating history and reliance on external financing may delay the
Company’s progress towards commercialization.

Need for addition capital

The Company anticipates it will need to raise at least $1 million in financing over the next 12 months to imple-
ment its business plan. R&D activities will also require substantial additional capital. There is no guarantee that
PURO will be able to secure the necessary funding.

Competition

PURO operates in a highly competitive market for water treatment and purification equipment. Many of its
competitors have greater marketing and financial resources and established distribution networks. In addition,
some of PURO’s competitors are divisions of large multi-national corporations and have better access to capital
or lower capital costs.

Patent pending

The Company has a patent application pending for its second-generation separators. To date, the Company has
not been granted a patent and there is no guarantee that it will be awarded a patent. The possibility exists that
another company has already filed for patent protection on a technology similar to or superior to PURO’s.

Purio Inc. (PURO) 14

 Analyst: Victor Sula, PhD
Initial Report
April 21st, 2008

Management

Earl Switenky Mr. Switenky brings to the Company nearly 30 years of executive experience and 10
Director years experience in the water treatment industry. In 1999, Mr. Switenky founded and
was an officer of Purio Environmental Water Source Inc., a technology acquisition and
development firm specializing in drinking water production and wastewater recla-
mation. In addition, Mr. Switenky was a co-founder of a partnership, UltraSafe Water
Source, specializing in the manufacturing, marketing and servicing of water purifica-
tion equipment. Prior to founding UltraSafe, he worked as an independent contractor
for a private, international marketing company serving the fine jewelry and precious
metals industries. In this position, Mr. Switenky developed successful distributor rela-
tionships in Canada, the continental United States, Hawaii, Australia, New Zealand and
the United Kingdom. From 1984 to 1994, Mr. Switenky managed Turfland Inc., a suc-
cessful full-service landscaping and irrigation design and installation business. He also
served as an instructor at Northwest Regional College from 1985 to 1993. He graduated
from the University of Saskatchewan with a degree in education in 1974.

Daryl English
President, CEO, CFO, Principal
Accounting Officer, Secretary
and Treasurer
Mr. English has a strong educational and business background. In 2000, Mr. English
joined a Canadian management consulting company specializing in small and medium-
sized businesses as a senior business consultant. Mr. English also served as a senior
business consultant for a prominent international consulting firm, where he specialized
in organizational development and turn-around situations. In 1994, Mr. English found-
ed a communications and international consulting company. Prior to this, Mr. English
had a successful career in commercial banking and served as vice president and chief
financial officer for a publicly-traded energy service company. Mr. English graduated
with an MBA from Queen’s University in Kingston, Ontario, in 1996.

Joseph A.M. Swanson
COO, Vice-President
and Director
Prior to joining PURO, Mr. Swanson served as a business consultant to various private
companies. In 1990, Mr. Swanson joined metal recycling company C. Brothers Ltd. as its
marketing manager. In that capacity, he developed sales and marketing plans for British
Columbia, Alberta, Saskatchewan and Manitoba. From 1980 to 1990, Mr. Swanson was
employed at Canag R&D, a promoter of soil and water conservation technologies and
equipment. He also owned Nastec Developments Ltd., a company which provided for-
estry-related services relating to environmental compliance to MacMillan-Bloedel.

Purio Inc. (PURO) 15

 Analyst: Victor Sula, PhD
Initial Report
April 21st, 2008

Disclaimer
Beacon Equity Research (otherwise known as BER) is an independent research firm specializing in small and micro capitalization compa-
nies. BER has no investment banking or consultation conflicts thereby minimizing the inherent conflicts of interest between the research
analysts and the companies they cover. BER is not a registered investment advisor or broker dealer. No information in this report should
be construed as an endorsement to either buy or sell any securities mentioned in this report. The analyst(s) who prepared this report rely
on publicly avail¬able information which neither the analyst, nor BER, can guarantee to be error-free or factually accurate. All conclu-
sions in this report are deemed reasonable and appropriate by the author. The Private Securities Litigation Reform Act of 1995 provides
investors a “safe harbor” in regard to forward-looking statements. To fully comply with the requirements of this law, BER cautions all
investors that such forward-looking statements in this report are not guarantees of future performance. Unknown risk, uncertainties, as
well as other uncontrollable or unknown factors may cause actual results to materially differ from the results, performance or expecta-
tions expressed or implied by such forward-look¬ing statements. Investors should exercise good judgment and perform adequate due-
diligence prior to making any investment. BER and its affiliates have been compensated a total of seven thousand five hundred dollars
directly from a non-controlling third party for enrollment of PURO in its research program and other services. Ratings and price targets
in this report should not be construed as recommendations or stock price predictors. Readers of this report are urged to use due-diligence
in any purchase of security listed herein. Readers should consult the Company’s SEC filings as well as our initial report on the firm to bet-
ter understand the inherent risks associated with this security. There may be many uncontrollable or unknown factors which may cause
actual results to materially differ from the results, performance or expectations expressed or implied by such forward-looking statements.
Investors should exercise good judgment and perform adequate due-diligence prior to making any investment.

All decisions are made solely by the analyst and independent of outside parties or influence.

I, Victor Sula, PhD, the author of this report, certify that the material and views presented herein represent my personal opinion regar-
ding the content and securities included in this report. In no way has my opinion been influenced by outside parties, nor has my com-
pensation been either directly or indirectly tied to the performance of any security listed. I certify that I do not currently own, nor will
own and shares or securities in any of the companies featured in this report.

Victor Sula, Ph.D. - Senior Analyst

Victor Sula, Ph.D. has held the position of Senior Analyst with several independent investment research firms since 2004. Prior to 2004,
Mr. Sula held Senior Financial Consultant positions within the World Bank sponsored Agency for Restructuring and Enterprise Assistan-
ce and TACIS sponsored Center for Productivity and Competitiveness of Moldova, where he was involved in corporate reorganization
and liquidation. He is also employed as Associate Professor at the Academy of Economic Studies of Moldova. Mr. Sula earned his Ph.D.
degree in 2001 and bachelor’s degree in Finance in 1997 from the Academy of Economic Studies of Moldova. Mr. Sula is currently a level
III candidate in the CFA program.

Purio Inc. (PURO) 16