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Analyst: Analyst: Lisa Springer, CFA Initial Report October 13th, 2008

10/10/08 NHYT daily 0.65 0.60 0.55 0.50 0.45 0.40

Tel: 832-295-9978 Fax: 832-295-4877 E-mail (IR): info@windfallcommunications.com Website: www.neohydrotech.com

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Company Introduction

MARKET DATA

Symbol Exchanges Current Price Price Target Rating Outstanding Shares Market Cap. Average 3-m Volume

0.35

Thousands

Neohydro Technologies, Corp. 11200 Westheimer Suite 900 Houston Texas 77042

NHYT OTC BB $0.48 $0.84 Speculative Buy 72.80 Million $34.94 Million n/a

Source: Yahoo Finance, Analyst Estimates

Neohydro Technologies Corp. (NHYT or the “Company”) is a service company specializing in the marketing, distribution and licensing of systems for industrial water treatment, water processing, and water recycling through an innovative high voltage electrolysis process. The new technology eliminates biological oxygen demand, algae, bacteria, viruses, fungus and many metals from the treated water, and prevents the spreading of diseases such as salmonella, ecoli, MRSA, HIV, Hepatitis and othershepatitis and other diseases. The core of the electrolytic process is the brinecell™ Brinecell™ anode which that combines three diverse metals (platinum, titanium, and niobium) to create a completely new generation electrode. According to management, only these proprietary electrodes are capable of handling the electrical current necessary to create the powerful mixed oxidant solution on-site. Brinecell™ requires only water, basic salt, and electricity as consumables for water treatment, and after an advanced oxidation process leaves no chemical residuals. The Company has assembled a strong team of professionals with extensive experience in all facets of the water treatment industry that ensures that the developments, debugging and running of water treating equipment are in the leading position in the industry nowadays. On September 22, 2008, Dean Themy – one of the founders of brinecell™ and neohydroBrinecell™ and Neohydro™ technologies - was appointed as NHYT`s President’s president and CEO. Mr. Themy brings overmore than 30 years of experience in the electrolytic industry. His extensive knowledge of this industry led him to form Oxidant3 Corp., where he served as Presidentpresident from 2003 to 2007. Re-locating to Houston, he formed Neohydro LLC, which focuses its business on the electro-oxidation industry,

Neohydro Technologies, Corp. (OTCBB: NHYT)

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Analyst: Lisa Springer, CFA Initial Report October 13th, 2008

with an emphasis on manufacturing anodes, the core element of the electrolytic process, which are. Mr. Themy also served as Interim Presidentinterim president and consultant to New Environmental Solutions Inc., a company focused in the waste recycling operation using proprietary equipment and processing agents. In October 2008, NHYT was awarded “Most Promising Energy & Clean Technology Company” at Rice Alliance Energy & Clean Technology Venture Forum.

Highlights Business model to provide a viable solution for wastewater treatment challenge Following a licensing agreement with Neohydro Corp., a company with overmore than 30 years of experience in the electro-oxidation industry, NHYT entered the wastewater treatment market and started the development, marketing, selling and distributing products for the treatment of industrial water. The Company’s products utilize water and salt (NaCl), that, with the licensed technology - Neohydro™ and Brinecell™ - are transformed), and transforms them into a reversible, safe, disinfecting solution through Neohydro™ and Brinecell™. The new technology eliminates biological oxygen demand, algae, bacteria, viruses, fungus and many metals from the treated water, and prevents the spreading of diseases such as salmonella, e-coli, MRSA, HIV, Hepatitis and othershepatitis and other diseases. Award winning technology The Company’s marketed technology is based on a process called high-voltage electrolysis, which is widely adopted in waste water treatment, including purification of living waste water and many kinds of industrial waste water. NHYTwastewater. NHYT’s proprietary technology consists of the special alloy called brinecell™Brinecell™, an electrode which that can withstand higher current and have a longhigher current, has a longer life, becomeand becomes a powerful tool for electrolysis. The brinecellBrinecell™ is made up of special metals includingsuch as platinum, titanium, niobium, and tantalum, which all of which have remarkable attributes and which transformsused to transform the brinecell™ inBrinecell™ into an electrode which can withstand higher current, have a longer life and become a powerful tool for electrolysis. In October 2008, NHYT was awarded “Most Promising Energy & Clean Technology Company” at Rice Alliance Energy & Clean Technology Venture Forum. The Company was chosen by Rice Alliance Information Technology Advisory Board from nearly 60 competitors based on the companies’ elevator pitch presentations A complete electrolytic process meets the wastewater treatment requirements The Company developed a complete electrolytic process to deploy the technology and provide customized solutions to meet every potential client’s requirements. The technology deployment process starts with an analysis and testing of clients’ particularities. The Company is designing and producing an a wastewater treatment unit that meetmeets the compactness and portability requirements to allow a multiple utilization and deployment even in the most regionally isolated locations. For example, the rover unit is the size of a pick-up truck; energy is supplied by a small generator inside the rover and travels between multiple sites, precluding the need to purchase expensive site-dedicated solutions.

Neohydro Technologies, Corp. (OTCBB: NHYT)

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Analyst: Analyst: Lisa Springer, CFA Initial Report October 13th, 2008

The wastewater then is pumped into treatment units and exposed to an electric field. The water is subjected to electro-oxidation long enough to destroy all biological and chemical contaminants. Trace elements rebond when the process ends - safely and efficiently converting 99.9% of the supplied water into acceptably regulated levels of chlorine and mixed oxidants. Technology advantages support the rapid adoption The Company’s technology helps reduce cost of operations, supports green initiatives, and minimizes chemical hazards in many industries and in diverse applications. NHYT’s technology also eliminates transport, handling, storage and regulations issues. In addition to providing a single-solution approach to wastewater treatment, Neohydro™ can also be incorporated into existing methods on a smaller scale for clients who are primarily interested in retaining their pre-existing setup. This will improve the processing time of traditional treatment methods, and decreases the necessary treatment cycles to achieve EPA requirements at a greatly reduced cost. A wide range of technology application to address the needs of different industries The Company’s technology can be used in a variety of industries such as chemical engineering, metallurgy, healthcare, agriculture, , foodstuffs and the oil industry. Every oil well in the world uses water that requires disinfection and detoxification. With the implementation of electro-oxidation, oil companies will be able to reuse water and eliminate transportation and treatment costs. NHYT`’s technology has the potential to greatly reduce this large cost to the oil industry, saving oil companies 75% on their water cost by re-using water with the Company’s electro-oxidation equipment. Proven management team NHYT’s Presidentpresident and CEO Dean Themy bring to the Company overmore than 30 years of experience in the electrolytic industry. Mr. Themy brings a vast knowledge of development and marketing experience to the waste recycling business. He was the founder of Oxidant3 Corporation., and served as its Presidentpresident from July 1, 2003, to March 15 2007. Oxidant3 Corporation was based in Salt Lake, Utah, and was formed to conduct R&D of Medicalmedical sterilization devices and for the production of water treatment equipment. Mr. Themy also formed Neohydro LLC, a company which that focuses its business on the electro-oxidation industry, with emphasis on manufacturing electrodes (anodes), the core element of the electrolytic process.

Neohydro Technologies, Corp. (OTCBB: NHYT)

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Analyst: Lisa Springer, CFA Initial Report October 13th, 2008

World water crisescrisis supports the technology rollout Nearly 97% of the water on the earth is salt water. Of the 3% that represents fresh water, overmore than twothirds of fresh water is frozen in glaciers and polar ice caps, leaving only 0.9% available for human consumption. Changes in global climates associated with global warming are affecting water resources worldwide. In many regions of the world, the combination of lower precipitation and higher evaporation is diminishing water supplies in rivers, lakes and underground reservoirs. 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 population growth is rapid. In 2000, the United Nations World Commission on Water estimated an additional $100 billion dollars a year in spending would be needed to alleviate water scarcity worldwide. Solid outlook for wastewater treatment equipment market The U.S. population is estimated to reach 420 million by mid-2050, which can put enormous strain on existing water resources,; however, this can strengthen the demand for water recycling and reuse systems. There are more than 50,000 community water systems and more than 16,000 wastewater systems in the U.S. The equipment that was installed following the Clean Water Act in 1972 is coming to the end of its lifecycle, and there is a stringent need to upgrade and retrofit the wastewater treatment equipment. New market opportunities exist for manufacturers that can provide energy-efficient, reduced-footprint equipment upgrades that not only replace non-functional or older equipment, but bring the end-user into compliance with strict regulations that govern wastewater treatment. The U.S. EPA estimates a $202.5 billion nationwide capital investment is needed to control wastewater pollution for up to a 20-year period. This amount includes $134.4 billion for wastewater treatment and collection systems, $54.8 billion for combined sewer overflow corrections, and $9.0 billion for storm-water management. Small communities have documented needs of approximately $17.0 billion.

Neohydro Technologies, Corp. (OTCBB: NHYT)

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Analyst: Lisa Springer, CFA Initial Report October 13th, 2008

Business Model The Company is developing, modifying, marketing, selling and distributing products for the treatment of industrial water. NHYT completed a licensing agreement with Neohydro Corp., a company with overmore than 30 years of experience in the electro-oxidation industry, for the acquisition of the exclusive worldwide marketing, distribution and licensing rights for its proprietary technologies - Neohydro™ and Brinecell™. These technologies represent commercially viable wastewater treatment solutions for industrial applications utilizing an innovative electrolytic process to produce clean (micro-pathogen free) water. The Company’s products utilize water and salt (NaCl); when used with the new technology - Neohydro™ and Brinecell™, the water and salt are transformed into a reversible, safe, disinfecting solution. The on-site generation of a synergistic, mixed-oxidant solution by NHYT’s electro-oxidation equipment produces a powerful solution of hypochlorus acid, ozone from water, hydrogen peroxide, low levels of hydroxyl radicals, and low levels of sodium hypochlorite. The combination of hydrogen peroxide (H2O2) and ozone to produce the short-lived hydroxyl radicals (<1 sec. lifetime) integrates three very effective organic, inorganicc and microbial destruction methods into a single system. The proprietary electrolytic treatment process removes a variety of contaminants that are impossible or too expensive to be removed by filtration or chemical treatment systems. Among these contaminants are emulsified oil, total petroleum hydrocarbons, heavy metals and suspended solids. The solution generated from basic salt, water and electricity creates a powerful oxidizing solution that destroys virus, fungi, and bacteria without harmful chemicals or high heat. In addition, the solution is harmless to humans and animals, as well as ecologically friendly. The Company’s wastewater treatment systems represent a mobile, compact, modular miniplant efficiently designed to reduce operating cost and minimize maintenance cost. Made of corrosion resistant materials such as high quality and long lasting electrodes, wastewater treatment systems can be designed for automatic or manual control for end of line or point of source applications. The programmable logic software manages all system processes, monitors operation and errors, and provides direct communication to the factory. The communication kit allows NHYT technicians to monitor the system, adjust operations and processes, and troubleshoot the system in real-time from the factory. Strategy NHYT’s strategy is to exploit, integrate and commercialize leading waste water treatment, and recycling, and to re-use technologies with the objective of creating a cleaner and healthier global environment andwhile capitalizing on profitable opportunities for its shareholders. NHYT targets emerging markets and identifies specific projects where the need and opportunity for implementation of industrial waste water treatment technologies are most significant. By partnering with industry and technology leaders, the Company intends to implement and market effective, integrated waste water treatment solutions by incorporating proven, new and improved technologies to make its business more dynamic, more efficient, and ultimately more profitable.

Neohydro Technologies, Corp. (OTCBB: NHYT)

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Analyst: Lisa Springer, CFA Initial Report October 13th, 2008

To achieve this goal, the Company intends to: • Use a win-win relationship with customers; • Continue prudent growth through the acquisition and development; • Optimizing and maximizing returns on existing assets; • Provide accurate and cost effective solutions to customer problems; • Improve the quality and responsiveness of its services; • Provide timely service and product delivery; • Provide training for customer`ss’ staff so they understand water treatment; • Continue to deliver stable, predictable, growing cash flows; • Use environmentally acceptable methods in its work; and • Maintain an active relationship with licensor in order to keep up the innovation and apply those results to the Company`’s customers.

Technology The Company’s marketed technology is based on a process called high-voltage electrolysis. ElectrolyticThe electrolytic process is widely adopted in waste water treatment, including the purification of living waste water and many kinds of industrial waste water, especially with better results for waste water with high contents of surface active agent, oil-bound waste water, plating waste water, textile printing & and dyeing, waste water and print waste water.

Cathode

Anode

The principle of electrolysis of water

H2O + Elektrolyte

Electrolysis of water is an electrolytic process that converts water into oxygen and hydrogen gas with the aid of an electrical current. The electrolytic process requires that an electrolyte, an ionized solution or molten metallic salt, completes an electric circuit between two electrodes. When the electrodes are connected to a source of direct current - one, called the cathode - becomes negatively (-) charged, while the other - called the anode - becomes positively (+) charged. The electrical current converts water molecules into hydrogen and oxygen. Within the electrolytic cell of the cathode, hydrogen ions accept electrons in a reduction reaction, thus forming hydrogen gas. At the anode, hydroxide ions undergo an oxidation reaction and provide electrons to the anode to complete the circuit and create water and oxygen gas. The mass of a substance produced by an electrode during electrolysis is proportional to the quantity of electrical charge transferred at that electrode. Neohydro Technologies, Corp. (OTCBB: NHYT)

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Analyst: Lisa Springer, CFA Initial Report October 13th, 2008

Brinecell™. Neohydro™ proprietary technology consists of the special brinecell™. The brinecellBrinecell™. Brinecell™ is made up of special metals including platinum, titanium, niobium, and tantalum, all of which all have remarkable attributes. Using a proprietary technology, the licensor company marries these metals to form a new alloy, the brinecell™.Brinecell™. This is a powerful tool for electrolysis, an electrode which can withstand higher current and has a longer life. The special brinecellBrinecell™ allows the simple chemical reaction of electrolysis to become viable.

Source: www.neohydro.com

NHYT`’s electrolytic process

1. Testing Phase Using a test sample of waste water, NHYT plans a custom solution for the customer. 2. Deployment Phase The Company’s units are compact and portable - allowing rapid deployment to even the most regionally isolated locations. The rover unit is the size of a pick-up truck and can be up-and-running in less than a day. The littleminimal energy needed to power the unit is supplied by a small generator inside the rover. The rover travels between multiple sites, precluding the need to purchase expensive site-dedicated solutions. 3. Brinecell™ Electro-Oxidizes Contaminants Waste water is pumped into units exposed to an electric field. In a process called high-voltage electrolysis, the Neohydro Technologies, Corp. (OTCBB: NHYT)

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Analyst: Lisa Springer, CFA Initial Report October 13th, 2008

chemical bonds of salt (NaCl) and water (H2O) inside the solution are released;, producing ozone from water, monotonic chlorine, free radicals and hydrogen peroxide. All are powerful sterilizing elements that destroy all biological oxygen demand (BOD) or chemical oxygen demand (COD) organic/inorganic pollutants and biofilm present in the water. 4. Renewal of 99.9% Water Volume The water is subjected to electro-oxidation long enough to destroy all biological and chemical contaminants. Trace elements rebond when the process ends - safely and efficiently converting 99.9% of the supplied water into acceptably regulated levels of chlorine and mixed oxidants.

Source: the Company´s website.

Neohydro Technologies, Corp. (OTCBB: NHYT)

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Analyst: Lisa Springer, CFA Initial Report October 13th, 2008

Technology advantages The Company’s technology has a number of advantages that positions it to be subject of mass deployment. These are: • • • • • • • • •

Mobile, turn-key operation; Modular, scalable for a variety of applications; Reduced operating costs; Increased reliability; Technology destroys all water-borne bacteria, crypto, spores, and viruses; Taste, texture, color or odor of water is not negatively altered; Residual disinfecting properties remain active for hours; There are noNo residual harmful waste byproducts; and On-site source of hydrogen peroxide eliminates transport, handling, storage and regulations issues.

In addition to providing a single-solution approach to wastewater treatment, Neohydro™ can be incorporated into existing methods on a smaller scale for clients who are primarily interested in retaining their pre-existing setup. This will improve the processing time of traditional treatment methods and decreases the necessary treatment cycles to achieve EPA requirements at greatly reduced cost. Technology applications Direct Applications: • • • •

Purifying incoming water; Recycling wastewater; Elimination of biofilms; and Separation of oil, gas or sludge.

Primary Industries Served: • • • •

Oil & gas industry; Food industry; Pulp & paper factories; and Chemical manufacturing plants.

Industry Outlook Nearly 97% of the water on the earth is salt water. Of the 3% that represents fresh water, overmore than two-thirds of fresh water is frozen in glaciers and polar ice caps, leaving only 0.9% available for human consumption. Changes in global climates 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.

Neohydro Technologies, Corp. (OTCBB: NHYT)

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Analyst: Lisa Springer, CFA Initial Report October 13th, 2008

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 population growth is rapid. South Africa, North Africa, the Middle East and northern China will likely face severe water shortages due to scarcity of resources and overpopulation. In 2000, the United Nations World Commission on Water estimated an additional $100 billion a year in spending would be needed to alleviate water scarcity worldwide.

Physical water scarcity Economic water scarcity Little or no water scarcity No estimated

International Water Management Institute

Note:

DTP Unit, IWMI - January 2000.

Projected water scarcity in 2025

Indicates countries that will import more than 10% of their cereal consumption in 2025

Prepared by IWMI as input for the World Water Vision, The Hague, March 2000.

http://iwmi.org

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

In 2003, the United States water industry had total revenues of $96 billion. The U.S. Water Industry Revenue (2003) and Growth (2004 to 2006) Business segment Drinking water utilities Wastewater utilities Water treatment equipment Delivery equipment Consulting/Engineering Chemicals Contract operations Maintenance services Instruments/Monitoring Analytic testing Total U.S. Water Industry

2003 Revenue (billion)

2004-2006 growth

$32.6 $30.8 $8.9 $8.9 $6.1 $3.6 $2.3 $1.5 $0.8 $0.5 $95.9

3-4% 3-4% 4-6% 2-3% 5-6% 0-1% 6-10% 3-5% 5-7% 2-4%

Source: The Worldâ&#x20AC;&#x2122;s Water 2006â&#x20AC;&#x201C;2007 (www.worldwater.org/data20062007/Table18.pdf).

Neohydro Technologies, Corp. (OTCBB: NHYT)

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Analyst: Lisa Springer, CFA Initial Report October 13th, 2008

Wastewater treatment equipment market According to a Freedonia Group report, the worldwide demand for water treatment products is projected to reach $40 billion by 2011. Although the U.S. will remain the largest water treatment market, developing nations, particularly such as China and India, are expected to register the fastest growth. Meanwhile, the market for water and wastewater treatment chemicals is expected to exceed $23 billion by 2010, up from $18 billion in 2005, according to McIlvaine report. The U.S. Water Recycling and Reuse Systems Market earned revenues of $676 million in 2006 and expect to reach $1.3 billion in 2013. The United States population is estimated to reach 420 million by mid-2050, which can put enormous strain on the existing water resources. This can, however, strengthen the demand for water recycling and reuse systems. A Frost & Sullivan report mentioned that advanced wastewater treatment technologies, such as continuous backwash filters and membrane bioreactor (MBR), are capable of producing water quality to a level that is acceptable for recycle and reuse, and that the latest technology advancements will help to expand existing water resources to cope with increasing demand for freshwater. The power industry is likely to be by far the largest market segment followed by municipal water treatment. The growth in the power market is due primarily to the switch from gas to coal as the fuel for new plants. The world market for water and wastewater treatment chemicals in the power sector will rise from $3.4 billion in 2006 to $4 billion in 2010. Municipal wastewater will be the third -largest segment. Pulp and paper, refineries and chemicals occupy the next three spots in the rankings. Others include: metal working, electronics, food, pharmaceuticals, and mining. In the United States there are more than 50,000 community water systems and more than 16,000 wastewater systems. Most water and wastewater systems are owned by municipal governments. The U.S. EPA estimates $202.5 billion is the nationwide capital investment needed to control wastewater pollution for up to a 20-year period. This amount includes $134.4 billion for wastewater treatment and collection systems, $54.8 billion for combined sewer overflow corrections, and $9.0 billion for storm-water management. Small communities have documented needs of approximately $17.0 billion. EPAâ&#x20AC;&#x2122;s Estimate of the National Need for Water Infrastructure Investment, $bn

Source: www.epa.gov/owm/mtb/cwns/2004rtc/toc.htm

Neohydro Technologies, Corp. (OTCBB: NHYT)

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Analyst: Lisa Springer, CFA Initial Report October 13th, 2008

The equipment that was installed following the Clean Water Act in 1972 is coming to the end of its lifecycle and there is a stringent need to upgrade and retrofit the wastewater treatment equipment. New market opportunities exist for manufacturers that can provide energy-efficient, reduced-footprint equipment upgrades that not only replace non-functional or older equipment, but bring the end-user into compliance with strict regulations that govern wastewater treatment.

Outlook and valuation Outlook On September 22, 2008, the Company entered into a licensing agreement with Neohydro Corp. and Dean Themy whereby. Per the agreement, NHYT was granted a worldwide license from Neohydro Corp.’s to use its intellectual property rights of the use in the business of for the sale, marketing and distribution of Neohydro Corp.’s water sterilization technology, proprietary high voltage electrolysis device that transforms water solely for Industrial Applications.industrial applications. In exchange for the license, Neohydro Technologies Corp. will issue an amount equal to the value of 20% of the issued and outstanding shares of its common stock or approximately 14,560,000 restricted shares of common stock to Dean Themy. The fee for the license is $1,400,000 payable as follows:

Date 26-Sep-08 15-Oct-08 30-Oct-08 15-Jan-09 15-Apr-09 15-Jul-09 Total

Amount $100,000 $150,000 $250,000 $300,000 $300,000 $300,000 $ 1,400,000

Source: Company press releases

In addition, the Company is obligated to pay a royalty of 10% of the gross proceeds from the sale of products. As a result of this agreement, the Company began execution of a wastewater treatment business model, planning to sell mobile wastewater treatment units developed based on the Neohydro Corp. license. The Company produces and develops “High Voltage Electrolytic Generators” to create a powerful on-site Electro-Oxidant solution to treat all water pathogens, organics, inorganics, Bod, Cod and Biofilm to EPA Standards. The Company is bringing a proven new technology to the Waste Water Industry. Awastewater industry, seeking a non invasive solution that follow Environmentalfollows environmental laws and, does not harm the human Neohydro Technologies, Corp. (OTCBB: NHYT)

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Analyst: Lisa Springer, CFA Initial Report October 13th, 2008

race, and helps conserve the earth’s most precious commodity - water. The water is treated on-site with no toxic chemicals, using only electrical power, NHYT’s proprietary electrodes and wastewater. In fact, NHYT is the only company that uses High Voltage Electrolysishigh voltage electrolysis to generate electro oxidants. The Company’s growth strategy is based on technology deployment through mobile treatment units and alignment with service companies in the Industry to sell the wastewater treatment units directly to the oil and gas companies:, focusing specifically on the purification of water and the treatment of Waste Water for drilling of natural gas. The industry is looking for new technology, since the older technologies like distillation and reverse osmosis are costly and, highly inefficient, and not as effective as the NHYT’s Electro Oxidation technology. In addition, the Company’s process is environmentally friendly and eliminates transportation costs by being able to treat the water on-site. The Company has estimated that the cost of equipment is around 50% of what current technologies cost and 50% to operate. The Company plans to start commercialization already in 2008 and enter the market with two units: 1. The “Rover 15ww model” is mobile and can treat two well sites a week. The unit is trailer mounted completely self sufficient with a capacity of 15,000 gallons per day. The Company is planning to sell or lease at least 6six Rovers 15ww models at a price of $200,000 each in 2009. 2. The “Electro-Ox 55 model” is a skid mounted all inclusive unit that is not portable and is designed to be centered at a main station where water can be brought and treated at a standalone plant within close vicinity to the drilling wells. The capacity of this unit is 55,000 gallons per day. The Company is planning the commercialization of at least 2two units at a price of $650,000 each in 2009. These sales only account for the Oil and Gas Industry industry and do not include other Industrial Waste Water Applications, industrial wastewater applications that are scheduled to be developed. Revenue forecast, $ Mn

Source: Management outlook

Neohydro Technologies, Corp. (OTCBB: NHYT)

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Analyst: Lisa Springer, CFA Initial Report October 13th, 2008

The Companyâ&#x20AC;&#x2122;s management is expecting a significant revenue growth in the next five years, ranging around 200% per year. With these levels of growth NHYT expects to reach break even already in 2009. Pro forma Income Statement, $ 2008

2009

2010

200,000 130,000 70,000

2,900,000 1,885,000 1,015,000

8,700,000 5,481,000 3,219,000

19,140,000 11,484,000 7,656,000

R&D General and Administrative Sales & Marketing

15,000 28,000 15,000

200,000 360,000 240,000

220,000 432,000 336,000

242,000 518,400 470,400

Operating income

12,000

215,000

2,231,000

6,425,200

Revenue Cost of sales Gross profit

2011

Source: Management outlook

Valuation For valuation purposes, we compared NHYT with other companies that provide water treatment solutions to industrial as well as oil and gas sectors. The peer group companies currently trade at forward Price/Sales multiples of around 1.16 x 2009 sales and at P/E multiples at 11.20 x 2009 earnings. We believe MVSRNHYT should trade at better multiples given its low cost technology, solid growth outlook and rapid revenue uptake. Comparative analysis Company Name 10-Oct-08 Ecolab Inc. Calgon Carbon Corp. Halliburton Company Baker Hughes Inc. Pall Corp.

Ticker symbol ECL CCC HAL BHI PLL

Price per Mrkt. Cap. P/E Share, $ $ Mn 2008 2009 37.09 15.15 16.25 33.14 27.54

9,170 624 14,260 10,200 3,290

Peers Median

P/S 2008

2009

19.73 28.06 5.62 6.06 12.46

17.25 21.64 4.55 5.18 11.20

1.48 1.55 0.79 0.85 1.23

1.39 1.35 0.68 0.74 1.16

12.46

11.20

1.23

1.16

2009

Source: Yahoo Finance

We believe the Company should trade at 10 x 2011 earnings. That is we believe the Companyâ&#x20AC;&#x2122;s fair market value could near $64 million, assuming the management forecast of revenue and earnings will materialize. Dividing this amount by 76 million fully diluted shares outstanding, we derive a $0.84 price target. As a result, we are initiating coverage of NHYT with a Speculative Buy rating and a $0.84 price target. However, we strongly advise investors to consider the risk factors mentioned below since the Company faces many challenges in achieving its revenue growth goals.

Neohydro Technologies, Corp. (OTCBB: NHYT)

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Analyst: Lisa Springer, CFA Initial Report October 13th, 2008

Risks Limited operating history The Company has a limited operating history, which makes it difficult to evaluate its future prospects.; NHYT has not reported revenues to date. Moreover, NHYT changed its business focus in July 2008 and plans to commercialize a new technology that has not yet gained a significant market acceptance. As a result, the Company could incur annual operating losses over the next period as it expands its marketing and commercialization efforts. Therefore, there is no assurance that the Company will generate adequate operating revenues or achieve profitable operations from its current business initiatives. Dependence on license agreements The Company depends on third-party intellectual property that is necessary for its business. To date, NHYT licensed exclusive marketing and distribution rights from Neohydro Corp. The Company`â&#x20AC;&#x2122;s licensor may fail to maintain or to enforce patent protection for those products to which the Company secured exclusive rights. Moreover, the license excludes the right to manufacture products. Thus, there can be no assurance that Neohydro Corp. will not curtail or discontinue its operations, which will have an adverse impact on the Company`â&#x20AC;&#x2122;s business. Market competitiveness NHYT operates in a the highly competitive industry of waste water treatment industry. There are multi-million dollar companies with greater resources for marketing, distribution and development. The Company may be in a disadvantage if any of its competitors will introduce on the market similar products. These circumstances could affect the Company`â&#x20AC;&#x2122;s business development, financial condition, and results of operations. Need for additional capital Since NHYT is in development stage, it has reported no revenues to date. In order to develop its distribution and marketing channels in the selected markets and to continue the expansion of marketed product line, the Company will require additional capital. There can be no assurance that the Company will be able to find the needed sources of financing and those will be available on terms favorable to it, or at all. In this case, NHYT may not be unable to continue, develop or expand its operations. Regulatory environments NHYT is subject to the requirements of environmental and occupational safety, and health laws and regulations in the United States, including those governing the use, storage, handling, generation, treatment, emission release, discharge and disposal of certain materials, substances and wastes. There is no assurance that laws, regulations policies, or regulatory agency in the United States will not be changed, applied or interpreted in a manner that will essentially change the ability of NHYT to carry on its business.

Neohydro Technologies, Corp. (OTCBB: NHYT)

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Analyst: Lisa Springer, CFA Initial Report October 13th, 2008

Management Team Dean Themy President, CEO, Treasurer, CFO andPrincipal Accounting Officer.

Mr. Dean Themy has been the Company`â&#x20AC;&#x2122;s president, principal executive officer, treasurer, principal financial officer and principal accounting officer since September 22, 2008. Mr. Themy brings to the Company over more than 30 years of experience in the electrolytic industry. He was the founder of Oxidant3 Corporation., and served as its Presidentpresident from July 1, 2003, to March 15, 2007. Oxidant3 orationwas based in Salt Lake, Utah, and was formed to conduct R&D of Medicalmedical sterilization devices and for the production of water treatment equipment. Mr. Themy also formed Neohydro LLC, a company that focuses its business on the electro-oxidation industry, with emphasis on manufacturing the core element of the electrolytic process, which are the electrodes (anodes). From 2006 to December 1, 2008, Mr. Themy served as Interim Presidentinterim president and consultant to New Environmental Solutions Inc. of Houston, Texas. Mr. Themy brings a vast knowledge of development and marketing experience to the waste recycling business.

I.J. Wilk Ph.D. , Senior Scientist

Dr. I.J. Wilk, a world-renowned chemist in the field of electrolysis, brings more than 45 years of experience to NHYT as a Ph.D. commercial chemist. Dr. Wilk has focused on electrolysis to generate water purification solutions. Dr. Wilk has worked with the Themy family and has conducted extensive testing and analysis on all processes of Brinecell technology . Prior to joining Neohydro, Dr. Wilk has been concerned with focused on water and air pollution problems, including acid deposition. He has testified at committee hearings for the California legislature on pollution and safety problems. Dr. Wilk received degrees of: Bachelor of Science in Chemistry,chemistry from North Dakota State University; Masters of Science in Organic Chemistry,organic chemistry from Northwestern University; Doctorand doctor of Philosophy and Physical-Organic Chemistry,philosophy and physicalorganic chemistry from the University of California.

Nicholas K. Kambouris Secretary

Mr. Nicholas K. Kambouris is a successful entrepreneur and developer. As a developer of multiple milliondollar developments in both residential and commercial applications, he Mr. Kambouris worked with Allpro Realty Group, Inc., of Salt Lake, Utah, where he acted as broker and sales agent from August 2001 to Present.the present. In 2003,, Mr. Kambouris formed Protos Equities, LLC of Salt Lake, which was engaged in managing a portfolio of properties, including industrial, multi-family, retail, and residential properties, that have been acquired through mergers or acquisitions. From April 1995 to Presentpresent he served as Presidentpresident of Intermountain Equities, a Utah-based full service clothing retail company.

Neohydro Technologies, Corp. (OTCBB: NHYT)

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Analyst: Lisa Springer, CFA Initial Report October 13th, 2008

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In no way has my opinion been influenced by outside parties, nor has my compensation 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. Lisa Springer, MBA, CFA - Senior Analyst Lisa serves Beacon Research Partners as a research analyst. She brings to the company over 15 years experience in equity research and investment marketing. Prior to joining Beacon, Lisa worked as an equity analyst for an independent research provider. She has also held positions as investor relations officer for a NYSE-listed company and director of financial analysis for a large consulting firm. Lisa earned an MBA from the University of Chicago and is a Chartered Financial Analyst (CFA).

Neohydro Technologies, Corp. (OTCBB: NHYT)

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Analyst: Lisa Springer, CFA Analyst: Initial  

NHYT OTC BB $0.48 $0.84 Speculative Buy 72.80 Million $34.94 Million n/a Symbol Exchanges Current Price Price Target Rating Outstanding Sha...