EFTA02444693.pdf

ISBRE pure anal/lab/rd.. the warkPs best driniting waigerlm ISBRE HOLDING CORP. Confidential Business Overview 4 February 2010 EFTA_R1_01521615 EFTA02444693 I S 8 kE DISCLOSURE THIS PRESENTATION MATERIAL CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED, AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. THE OPINIONS, FORECASTS, PROJECTIONS OR OTHER STATEMENTS, OTHER THAN STATEMENTS OF HISTORICAL FACT, ARE FORWARD-LOOKING STATEMENTS. ALTHOUGH THE COMPANY BELIEVES THAT THE EXPECTATIONS REFLECTED IN SUCH FORWARD-LOOKING STATEMENTS ARE REASONABLE, THEY DO INVOLVE A NUMBER OF RISKS AND UNCERTAINTIES. THIS PRESENTATION IS ISSUED PURSUANT TO RULE 135C UNDER THE SECURITIES ACT AND SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY OF THE COMPANY'S SECURITIES, NOR SHALL THERE BE ANY SALE OF THE COMPANY'S SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO THE REGISTRATION ON OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. Isbre Holding Corp. Confidential 2 EFTA_R1_01521616 EFTA02444694 I S RE Osa Valley Isbre Holding Corp. 3 Confidential EFTA_R1_01521617 EFTA02444695 I S 8 kE Table of Contents Page I. EXECUTIVE OVERVIEW 6 II. MARKET OVERVIEW 10 III. BUSINESS MODEL AND GROWTH STRATEGY 15 IV. FINANCIAL INFORMATION OVERVIEW 30 V. MANAGEMENT, EMPLOYEES AND OWNERSHIP 32 VI. EXHIBITS 37 Isbre Holding Corp. Confidential 4 EFTA_R1_01521618 EFTA02444696 I S 8 IkE I. EXECUTIVE OVERVIEW Isbre Holding Corp. S Confidential EFTA_R1_01521619 EFTA02444697 IS B kE lsbre Holding Corp. ("lsbre" or the "Company") is a super-premium water company with a unique bulk water shipping and sales capability. Isbre (the Norwegian word for "glacier") owns an exclusive 99-year right to extract up to 5 MM gallons per day from the purest natural water source in the world. Isbre's source is a glacial aquifer in the Osa Valley, at the end of the Hardanger Fjord on the west coast of Norway. Hydrogeological research and working and monitoring wells have confirmed the quality and quantity of Isbre water. The unique geography of Isbre's source (adjacent to a deep water port) allows bulk-shipping for bottling in leading bottled water markets, providing superior cost economics and multiple operating efficiencies and advantages. Isbre has identified a site on the Delaware River in Bristol, PA for construction of a U.S. bottling facility. Isbre's strategy is to focus initially on the U.S. super-premium water market (this category contains all imported waters). The U.S. is the world's largest super-premium bottled water market, with approximately $470 MM in wholesale sales. In contrast to the fractionated European bottled water industry, the U.S. is a homogeneous bottled water market with the greatest demand for super-premium water. Concentrating initially on the U.S. simplifies Isbre's business model, from marketing and distribution to shipping and production, without sacrificing near- and medium-term growth opportunity. Isbre is well positioned for penetration and rapid growth in the U.S. lsbre's strategy is to be the low-cost producer and high-volume distributor in the U.S. super- premium water market. The right water pedigree: lsbre's water is the "purest" natural water ever tested. There are two major competitors in the U.S. super-premium market: Fiji and Evian. Fiji and other smaller competitors have taken market share from Evian. While Evian has lost market share (from $220 MM to $130 MM in sales in the past 7 years), Fiji has grown from $13 MM to $131 MM during the same time period. The newest super-premium growth story, Voss, has achieved about $30 MM in revenue with a mixed U.S. and UK distribution strategy. Specifically, lsbre water has 4 parts per million (ppm) of total dissolved solids ("tds"). For comparison, Fiji has 230 ppm, Evian has 310 ppm, and Voss has 64 ppm. Consequently, Isbre has a better pedigree in terms of product quality than the two growth leaders in the U.S. bottled water market. The right cost economics — shipping bulk water to the U.S. for bottling: Bottling away from the source is an innovation in the super-premium category and will immediately make Isbre the most efficient competitor in this market, even at a relatively small market share. Isbre is deploying a staged bulk shipment strategy. Initially, lsbre imported product bottled at the Osa Valley plant. Importing bottled product (from the Osa source to a warehouse in the Northeast) has a landed cost of approximately $11.00 per case; this is order of magnitude the same cost experienced by Isbre's competitors. In September 2008, lsbre began shipping water in bulk via flexitanks (food grade plastic containers holding 24,000 liters )6,300 gallons)) to existing U.S. bottling plants with excess production capacity. This approach ("Flexitank to U.S.") allows Isbre to expand capacity and lower its unit cost while being capital lean. Due to lower U.S. raw material (bottles, caps, cartons, etc.) and labor costs, the Flexitank to U.S. strategy produces U.S. landed cost savings of approximately $4.00 per case versus the cost of importing bottled product. In 2010, following development of a bottling plant at the Bristol site, including installation of a stainless steel water storage tank and related infrastructure, the Company will be ready to deploy its "Tanker to U.S." bulk shipment capability. Isbre water will be loaded directly into tanker ships at the Osa Valley source and transported to the Bristol plant for bottling. The Tanker to U.S. strategy will produce an additional 53.00 per case in savings, making lsbre far and away the lowest cost provider of any imported water. Isbre Holding Corp. 6 Confidential EFTA_R1_01521620 EFTA02444698 ISBRE A successful focus to-date of building a mass-distribution platform for its super- premium product (high volume, low cost, high price): Isbre's focus has been penetrating East Coast high-volume distributors. Isbre has placement in the three largest Northeast supermarket chains: • ShopRite. 220 stores. Began in January 2008, has progressed to where the Company is now in 177 stores. Expects to be in the remainder by mid-2009. • Stop & Shop. 541 stores. Roll out began in late June 2008. Isbre is now in all divisions. • A & P. 390 stores. Includes A&P, Waldbaums, and Super Fresh. Roll out began in February 2009. Other notable supermarkets placements include: • Whole Foods. 17 NJ and NY stores; 95 regional balance pending. • King's. 26 NJ stores. • Foodtown. 20 NJ stores; remaining 40 by midyear. • Giant Carlisle. 140 Southwest PA stores. • Ukrops. 23 VA stores. • Kroger. 90 stores (Houston division). • Fresh Market. 91 East Coast stores. Other retailers who have approved Isbre and when shipments will commence: • Duane Reade. 240 stores. 2Q'10. • Hannaford. 170 stores. 2Q '10. Additionally, lsbre is sold in over 3,000 "street" accounts (convenience stores, delicatessens, pizza parlors, etc.) and over 250 restaurants and hotels. Isbre has established itself firmly in the super-premium category, selling retail at $5.99 per six- pack, which is approximately the same price point as Fiji and Evian. The Company sold 64,000 cases of water in the US in 2008 and 40,000 cases in 2009. Note: As Isbre awaits funding, it had to curtail sales and marketing efforts in 2009. Bulk shipping combined with broad-based distribution and its superior water pedigree will give lsbre an unassailable position as the low cost competitor in the U.S. super-premium bottled water market, and thus allow it to grow market share efficiently. As noted above, importing bottled product (as all other super-premium waters do) has a landed cost of approximately $11.00 per case. This cost is reduced to approximately $7.00 per case using flexitanks, and to approximately $4.30 per case with bulk tanker shipping. Isbre's unique ability to employ bulk tanker shipping produces a total landed cost of less than 50% of the cost of other imported waters. Consequently, lsbre will be by far the lowest cost competitor in the U.S. super-premium market. As the lowest cost producer in the super-premium category, Isbre will be able to spend more money on marketing on a per-unit basis (including focused promotions to retailers) to rapidly gain market share. The tanker bulk shipment strategy will also permit production flexibility and responsiveness and packaging size and innovation unprecedented in the imported water industry. Isbre's bulk shipping capability also gives the Company the ability to sell water in bulk. The Company is not aware of any other high quality water location that permits bulk extraction and transport. Consequently, until a comparable capability is developed, Isbre will enjoy a compelling Isbre Holding Corp. 7 Confidential EFTA_R1_01521621 EFTA02444699 ISBU competitive advantage in the creation and exploitation of an international market for bulk water sales. The profit margin on bulk water sales exceeds 90%. Offering and Use of Proceeds The Company is seeking to raise $14,000,000. Use of proceeds is to finance the remaining docking and infrastructure work in Norway, the construction and equipping of the Bristol plant (retrofit of an existing facility), including a stainless steel holding tank allowing for bulk shipment, the launch of a comprehensive marketing initiative, and working capital. An itemization of the use of proceeds appears in Exhibit I. The Company expects to be EBITDA positive by the end of 2010 and beyond. Corporate Structure lsbre Holding Corp., headquartered in Montvale, N.J., is an operating company and holding company. The Company was incorporated in Maryland in 1996. The Company is a pink sheet, non-reporting company trading under the symbol "ISBH". Volume is low and trades are infrequent. The current management team joined in 2006/7. Isbre has registered trademarks in several jurisdictions protecting its award-winning bottle design and the phrase "The World's Best Drinking Water®." A list of Isbre's trademarks appears in Exhibit II. The Company's website is www.isbre.com. lsbre Holding Corp. 8 Confidential EFTA_R1_01521622 EFTA02444700 I S 8 IkE II. MARKET OVERVIEW Isbre Holding Corp. 9 Confidential EFTA_R1_01521623 EFTA02444701 IS IkE The U.S. Bottled Water Market The U.S. bottled water market is the world's largest market and has grown in volume consistently over the last 20 years (see Table 1). As shown in Table 2, the U.S. market has grown from $4.2 billion in wholesale sales in 1997 to $11.7 billion in 2007. Table 1: US Bottled Water Per Capita Consumption Gallons Per Capita, 20-Year Trend 35 30 25 20 15 10 5 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 Table 2: Total U.S. Bottled Water Sales Wholesale Dollar Sales (in Millions) and Growth, 1997-2007 812,000.0 $9,000.0 $6,000.0 $ $3,000.0 410.5% $6,880. $6,113. $5,314. ,22!4,66.1 M IMI I I 15.0% 14.8% $11,705.915.0% $10,857.- $10,007. 12.6° $7,9018,526. $9,1691 12.0% 97 98 99 00 '01 '02 '03 04 '05 06 '07 Source: Beverage Marketing Corporation 9.0% 8% 6.0% I Volume Growth lsbre Holding Corp. 10 Confidential EFTA_R1_01521624 EFTA02444702 IS B kE Bottled water is the largest beverage growth market in the U.S. (according to Beverage Marketing Corporation, it has 15% U.S. share in 2007 up from 8% in 1999). Although it is second to carbonated beverages (which Beverage Marketing Corporation states has a 27% U.S. share), bottled water will become larger in the next 5 years if relative growth rates continue (7 to 8% CAGR vs. carbonated beverages' flat to negative growth rate in recent years). The super-premium water market has grown as quickly on a volume basis but has been more robust in maintaining its price per unit of volume than the rest of the market, which has dropped by five percent from 2002-2007. Table 3 shows the growth of the U.S. bottled water market relative to the growth of the U.S. Super- Premium bottled water market. Table 3: US Bottled Water to the Super-Premium Water Market Comparison U.S. Bottled Water Market U.S. Super-Premium Bottled Water Market 2007 Volume (MM Gallons) 8,823 181 CAGR Volume (2002-2007) 8.7% 8.0% 2007 Wholesale Revenue $11,550 $470 $ / Gallon $1.24 $3.35 CAGR $ / Gallon (1%) 2%(a) Source: Beverage Marketing Corporation. (a) Largely due to emergence of Fiji vs. Evian, where Fiji has actually gained market share with a higher price point than Evian, which has kept prices almost flat during this period. As shown in Table 4, in 2007 the super-premium category increased in volume at a greater rate than the rest of the U.S. bottled water market. Table 4: U.S. Bottled Water Market (Volume) Category Gallonage 2006 (million) 2007 Market 2006 Share 2007 Growth 2007 Domestic 8,089.20 8,636.90 98.00% 97.90% 6.80% Super-Premium 164.3 181 2.00% 2.10% 10.40% Total Market 8,253.50 8,823.00 100% 100% 6.90% Source: Beverage Marketing Corporation Over the longer term, the expectation is that bottled water will continue to grow in popularity in the United States. Convenience has been and continues to be the primary reason for this growth. That said, two factors will militate against sustained growth: (a) the current downturn in the US economy and (b) environmental concerns regarding bottled water versus tap water (energy, plastic, etc). While these concerns may be less relevant to the super-premium bottled water market (as opposed to the premium or "everyday price sectors), it is prudent to take into account both factors in forecasting near- and medium- term growth. Isbre Holding Corp. 11 Confidential EFTA_R1_01521625 EFTA02444703 IS kE The Competitive Landscape The U.S. bottled water market is dominated by the larger beverage companies. Nestle Waters (Poland Spring and other regional brands) continues to be the leading bottled water company with market share around 30%. Pepsi's (Aquafina) market share is approximately 12% . While Coke (Dasani) is #3 behind Nestle and Pepsi at about 11%, its growth rate has been higher over the past five years. Coke's market share was 4.4% in 2000 and increased to 10.5% in 2005. All three companies have gained market share in recent years at the expense of smaller competitors. While the major beverage companies dominate the mainstream water market, the opportunity for smaller players to acquire meaningful market share in the super-premium segment is appealing (see Figure 1A). In fact Fiji and Voss, both smaller firms, have taken share from Danone's Evian (distributed by Coke), which traditionally had been the top player in this market. Fiji is the stellar example of small player growth in the super-premium market (see Figure 1B). In 2006, Fiji passed Evian to become the leading imported water in the U.S. Fiji has more than tripled its revenues since its acquisition by Roll Industries in 2004. While Evian has slipped dramatically, it has slowed its revenue shrinkage trend. Both Evian and Volvic have been owned by Danone Group since 1992; however, Volvic is not widely marketed in the U.S. Privately-held Voss has grown from almost zero in 2002 to over $30 MM in revenue by 2007; however, Voss has focused almost exclusively on the on-premise (restaurant/hotel) business. While Voss hopes to grow its supermarket presence, it has not achieved success in 2007/2008 in its pursuit of this channel (which is the largest U.S. channel for super-premium water). Figure 1: US Leading Bottled Super-Premium Water Brands Figure 1A: Super-Premium Brands US Volume (2002 —2007) Figure 16: Fiji Water Revenue (2002 — 2007) ...,. 4,0 1 .0 • IX. ICO . w. m. . m. 0 to — ..,.. - IM OM I= 4 n ria) 11.0 /1.0 $101 183 so so ze 10 = ii • a 20X t ie X03 • ted4byno MS X06 MO Pare • Pecos Pow. X0, Von salon 2:02 2033 MI 2111 20 N Source: Beverage Marketing Corporation 'Increased from 7.4% to 12% during 2002.2005. !sore Holding Corp. 12 Confidential EFTA_R1_01521626 EFTA02444704 I S kE Brand Positioning of Bottled Water Players in the US Market Isbre is focused on the top of the U.S. bottled water market. This is naturally a smaller but also less elastic market. Because of the uniqueness of its water, Isbre is able to enter the market as a high quality provider, despite competing against bottled water companies that are many times its size. Because Isbre is directly competing only against other super-premium brands, its true competition is limited to Fiji, Evian, and, to a lesser extent, Voss (see Figure 2). Figure 2: US Super Premium Bottled Water Segmentation (2008E) Other 207 Voss 6% Evian 32% Fiji 42% Source: Beverage Marketing Corporation and other industry estimates The super-premium market captures the highest price point for bottled water on a unit revenue basis. Fiji and Evian are selling 500 ml bottles at $5.99-$6.99 per six-pack. Voss actually sells in the ultra-premium category, with its focus on the glass bottle market in restaurants and hotels. As in most other retail categories, bottled water sales are very competitive at the lower end of the price spectrum. Price competition lessens as product quality and differentiation play an increased role in consumer choice in the higher cost categories. Figure 3 shows that Fiji, at the higher end of the price spectrum, has been able to attain spectacular sales growth while passing along cost increases. While Evian has been trying to re-capture share through more aggressive pricing, Evian has limited flexibility because of its high cost structure. In fact, the cost structure for Fiji, Voss and all other imported waters does not allow these companies to compete on price. Figure 3: Fiji Price to Volume Elasticity Analysis 60.00% • 50.00% • 40.00% 75 30.00% .1 20.00% e 10.00% 0.00°/ Volume Change Vs. Price Change elle Ao tko oW qt. op tt. Ato kO tc) est .41 ifla ktt cp k• 1, le al- p. be fir Nte Ca' gyp. 1a. %A Price Source: IRI G/D/Mx. % volume change in Fiji water sales positively correlates to % change in price during 2006. Isbre Holding Corp. 13 Confidential EFTA_R1_01521627 EFTA02444705 I S 8 IkE III. BUSINESS MODEL AND GROWTH STRATEGY Isbre Holding Corp. 14 Confidential EFTA_R1_01521628 EFTA02444706 ISBRE Isbre Holding Corp. is a producer and marketer of super-premium bottled water with a unique capability to ship and sell water in bulk. Exclusive Water Rights Isbre has secured exclusive private and public rights to its water. Private rights are granted by the Osa Valley landowners under a 99-year water rights agreement. Public rights are granted under a water extraction permit issued by the Norwegian government that allows up to 5,000,000 gallons of water to be extracted per day. Isbre's existing water source is a sub-glacier, artesian spring at the end of the Hardanger Fjord in the Osa Valley, in the municipality of Ulvik, on the west coast of Norway. There are numerous other Osa Valley water sources controlled by Isbre. Isbre controls all of the land relevant to these resources by 99-year easement rights. World's Purest Natural Water The water from Isbre's source is the purest natural water ever tested. Hydrogeological research, working and monitoring wells, and environmental studies have confirmed the quality and quantity of the water. Tests of the Isbre water consistently show that, with total dissolved solids ("tds") of not more than 4 ppm (parts per million), Isbre is significantly lower in tds than other super-premium waters (see Table 5). This means that Isbre's water is free of the mineral, metallic or salty tastes found in water of its super-premium competitors. Isbre has registered with the U.S. Patent and Trademark Office and the European Union the trademark "The World's Best Drinking Water®" (see Exhibit II). Table 5: Comparison of lsbre Purity to Key Super-Premium Water Competitors (a) Brand Purity Measure (b) ISBRE 4 Voss 64 Volvic 140 Fiji 230 Evian 310 San Pellegrino 990 (a) Lab Tested by Groundwater Analytical, Inc. and Eurofins Norge. (b) Units = tds in Parts Per Million. Ids is the total amount of charged ions, minerals. salts or metals dissolved in a volume of water, expressed as (mg/L). also referred to as parts per million. Win the U.S. Market The U.S. is the focus of Isbre's production and distribution plan. This strategy recognizes the uniformity and size of the U.S. super-premium water market. The U.S. opportunity manifests itself in the following ways: The U.S. is the single biggest still water market opportunity. Europe may have more overall bottled water sales, but a vast majority of the market are sparkling and mineral waters. Group Danone, the number one player in Europe. uses multiple brands to navigate the different regions in Europe, showing the market's fragmentation. Isbre Holding Corp. 15 Confidential EFTA_R1_01521629 EFTA02444707 IS kE U.S. marketing translates more easily across the entire market whereas Europe requires multiple marketing efforts. Germany, Britain, France, Italy, and Spain have regionalized marketing cultures. The U.S. has more opportunity to develop scale efficient bottling (e.g., lower labor costs, more spare bottling capacity) and distribution (lower fuel/transportation costs). lsbre's Plan: Marketing Strategy In the North American bottled water market, the Company's strategy is to be a super-premium water brand. Isbre's key competitors are Fiji (the top and fastest growing brand), Evian (which has been losing share), and Voss (smaller, growing share). The roll-out strategy has been planned as a 4 stage process: Stage 1: Establish an all-channel distribution network across the greater New York/Philadelphia Metropolitan Markets (having a combined population of over 25 million people). This stage has bee') st.ccessfg ly c( tig uted Stage 2: Achieve widespread, multi-channel retail placement in the Northeast Market. Isbre is now available in over 2,000 supermarkets (over 60% of the supermarkets in the region), 3,000 street accounts, and over 300 restaurants, hotels, etc. This stage gas also coon corralotec Stage 3: Drive case sales through chain or location specific price promotions and other promotional events. I g:s stage ts underv,ay. Stage 4: Launch a highly focused PR campaign, targeting the most likely Isbre consumer audiences. This effort will be supported with cost efficient, "rifle shot" specific media spend. Steps 1 & 2 are well along and lsbre is now ready to initiate steps 3 & 4. Placement alone will not achieve high sales per placement on a widespread basis. The introduction of steps 3 & 4 will allow Isbre to take advantage of existing opportunities to dramatically increase sales. Isbre is perfectly poised to continue its rollout and reap the benefits of the widespread placement success achieved to date. Isbre's marketing strategy is aligned with establishing its position as a U.S. super-premium water brand. While Isbre is a new entrant, it will leverage the branding successes of Fiji and Voss. These firms have proven the appeal of imported, premium priced bottled water from an exotic source. Fiji, in particular, has demonstrated that a water brand from a pristine aquifer source is able to attract an audience that is growing faster than the overall water market. This leverage gives lsbre greater ability to optimize distribution, since there is now clearly established, broad-based awareness of and demand for super-premium water (no longer the province of the most expensive venues but now demanded by mass market venues such as supermarkets). Isbre will sell into the demand that these brands have created. At the same time, Isbre will provide a high-end alternative to consumers and retailers alike by investing heavily in an optimized delivery channel. While lsbre will spend on traditional marketing efforts, it will focus on promotional marketing, which is much more tactical. PR and media celebrating the unique selling proposition of lsbre will be introduced into each market as critical placement levels have been achieved. Isbre's efforts will initially be directed towards securing shelf space rather than image creation. These efforts will put Isbre into the right stores in the right places to grow its market presence and share from the bottom up. In addition to distribution focused promotional pricing, Isbre will utilize a full range of marketing activities, including media advertising, marketing Isbre Holding Corp. 16 Confidential EFTA_R1_01521630 EFTA02444708 IS B kE communications, display advertising, point-of-sale material, trade show exhibition and web-site development. Isbre's strategy is to optimize its presence in its chosen outlets while creating a campaign that is unique and attractive to the target consumer. Isbre's marketing strategy will highlight significant expenditures for promotional costs (see Table 6: approximately 36% of the total marketing budget). Price promotions are a proven method to optimize sales at chain supermarkets, and align Isbre with chain supermarkets, which are the biggest sellers of super-premium water. Promotional costs cover markdown costs at chain stores (or independent retailers) that will be promoted in weekly chain ads and promotional programs for street accounts and on-premise accounts. For example, a typical promotional schedule for a supermarket chain is comprised of two weeks per quarter of reduced retail price promotion, resulting in a significant sales increase. Price promotions are often accompanied by off-shelf display, using either a "winged" or a "full end" display. Winged displays sell 4.5 times more product, while full end displays bring 10-12 times more sales. The costs of these promotions are shared by the retailer and the distributor, as all take a lower margin during promotional periods. As a result of lsbre's unique bulk water transport economies, lsbre will enjoy a powerful cost advantage versus other imported waters, allowing price promotion at reduced but still profitable pricing levels. Super-premium sector competitors will be unable to match these promotions. Table 6: lsbre Marketing Budget Promotional Cods Supermarket Slotting Fees Trade Advertising Promotional Activities Media Total 2010 2011 2012 2013 2014 5 687.500 S 1.571,250 S 2.338.678 S 3,331,106 $ 4,657,510 S 101,250 S 202,050 $ 314.100 S 471,150 S 659,610 S 308.000 S 764.400 S 974,960 S 1.403,344 S 1.868,682 $ 260.000 $ 500,000 S 790,000 S 1.000,000 $ 1,210.000 S 100.000 S 675.000 S 2.650,000 S 3,450.000 S 4,300.000 Illustration 1: Rachael Ray Daytime Talk Show One strategy to gain super-premium market share is via celebrity acceptance. Isbre is the water of Rachael Ray's daytime talk show. Isbre's Plan: US Distribution Model/Approach To date, lsbre's distribution focus has been adding and upgrading distributors in the Northeast. It will soon follow with distribution in the Mid-Atlantic and Southeast. Beverage Marketing Corp. reports that 53% of super-premium PET bottled water in the U.S. is sold in these three regions (see Figure 4A). Isbre has active distributor relationships in all Northeast states, and a growing number of Southeast states and Texas (see Figure 4B). Isbre Holding Corp. 17 Confidential EFTA_R1_01521631 EFTA02444709 ISBRE Figure 4: Regional Analysis of US Super-Premium Market Figure 4A: US Super-Premium Market by Region Regional Share as % of US Region Total Volume Great lake South Central Plains West California Total US 10% 8% 5% 6% 18% 100% Figure 48: lsbre Current and Planned US Distribution Source: Beverage Marketing Corporation: current lsbre distribution areas are highlighted in yellow. Isbre's regional and state distributors (see Table 7) play a role in warehousing, shipping and delivery, selling and shelf space placement. The distributors purchase Isbre and sell to the supermarkets. street accounts, and other retailers. The distributors buy lsbre water for approximately $12.00 per case and resell it for approximately $17.00 (on average -$5 per case, see Figure 5). Table 7: Isbre's US Distributors to Date Distributor Name Location Capitol Beverage Group DC NKS Distributors DE Chesapeake Beverage Group MD DPI Specialty Distributors Mid-Atlantic Peerless/Crescent NJ Oak & Boening NY Spirit & Sanzone NY Gretz Beer PA Penn Distributors PA Haddon House CT, MD, DE, DC Figure 5: Bottled Water Value Chain (% of the Retail Sales) Isbre Corp Sells $12 25/Case il sinbuto Relater $516 $650 22% 21% Picito Consume PO0 10196 Isbre has made considerable progress over the last 24 months adding and upgrading distributors and penetrating East Coast markets, and to the lesser extent, the Mid South market (see Table 8): Supermarket — on shelf in over 2,000 locations with approvals for another 300 in place and another 1,000 in negotiation. Isbre Holding Corp. 18 Confidential EFTA_R1_01521632 EFTA02444710 IS E "Street Accounts" — on shelf in over 3,000 locations including convenience stores, deli's, gyms, specialty stores, etc. Restaurants & Hotels - at over 250 locations. Within these regions, the Company expects that initially, 70% of its sales will go through supermarkets, and 30% will go through street accounts, restaurants and hotels. This mix will transition to 50/50 as brand awareness increases and alternate channel demand improves. The Company has achieved placement in the three largest Northeast supermarket chains: ShopRite, Stop & Shop, and A&P. ShopRite. 229 stores. Began in January 2008, has progressed to where the Company is now in 177 stores. Expects to be in the remainder by Q2 2010 (ShopRite has 45 different owners requiring an extended roll-out period). Stop & Shop. 561 stores. Roll out began in late June 2008. Isbre is in all divisions A & P. 390 stores. Includes A&P, Food Emporium, Waldbaums, and Super Fresh. Rollout began in February 2009. Isbre is in all stores. Other notable supermarkets lsbre is in or will be rolling out to and the respective timings are as follows: Whole Foods. 17 New York and New Jersey stores. 2Q 2009. Fresh Market. 91 East Coast stores. 3Q 2009. D'Agostinos. 23 NYC stores. 2O 2009. Hannaford. 170 Northeast stores. 2Q 2010. Drug/variety retailers who have approved Isbre and when shipments will commence: Duane Reade. 240 stores. 2Q 2010. lsbre expects to sell 4 cases per store per week in the supermarket chains by the end of 2009. It expects to achieve that sales velocity when it goes through the full marketing/distribution cycle: store placement, promotion (getting the right high volume location in stores) and media/event spending. Anecdotally, lsbre has been able to achieve that success where it has focused its marketing efforts. In the summer of 2008 on Long Island, with no promotion, Isbre sold 9 cases per store per week in IGA, a 10 store chain in the Hamptons. Additionally, in January 2009, Isbre was introduced into the eight New Jersey Whole Foods stores and experienced exceptional results, averaging over 10 cases per store per week in January and February. Of particular note were the great sales achieved in two specific Whole Foods stores. In the Jericho, NY location, lsbre sold 150 cases in the first 10 days from a major lobby display. At the new store in Paramus, NJ, Isbre sold 50 cases during a four hour demo within two weeks of the store's opening. Isbre Holding Corp. 19 Confidential EFTA_R1_01521633 EFTA02444711 ISBRE Table 8: Retail Placement Summary -1-2008 50 6-1-2008 700 8-1-2008 1500 11-15-2008 1850 6-1-2009 2000 Supermarkets Restaurants 50 200 220 230 250 Street 600 2000 2200 2250 2500 Convenience 50 200 200 215 215 Specialty Food Stores 20 50 60 70 110 Hotels 2 20 20 20 30 Golf Clubs 0 8 8 8 8 Some of the key restaurants/hotels are shown in Illustration 2: Illustration 2: Hotels and Restaurants Logos T tta_ A(A;\ I AWOL, O 7:1 THE PIPINLE RIB A / i, osodiraistrers I ast WAFER WORKS Rem/ rt;n1IS :.-xx.pbeus fl-Re- 3,1 U.S. Market - Production Plan tell HI /I sir axmn ISBRE lsbre's production plan in the U.S. is based on a phased migration from its Norway-bottling factory to the "Tanker to U.S" production model. The "Tanker to U.S." model is an end-game, Industry changing, low unit-cost model (see Table 9). In the interim, lsbre will be operating its "Flexitank to the U.S." model, which will dramatically improve near-term economics vs. its Norway production model. Isbre Holding Corp. 20 Confidential EFTA_R1_01521634 EFTA02444712 ISBRE Table 9: Comparison of Unit Profitability ISBRE Norway Flex'tank Bulk Tanker Bottling Shipping Shipping Price to Distributor $12.25 $12.25 $12.25 Transportation Cost 3.44 2.25 0.51 Packaging & Bottling Cost 7.79 4.87 3.78 Isbre Gross Margin $1.02 $5.13 $7.96 Note. Estimate of landed cost of 0 5 liter case. I. Norway Production Model lsbre formerly owned a bottling facility in Norway at the Osa Valley source (see Illustration 3). • Using this bottling method, Isbre began deliveries of bottled water (1.0 liter and 0.5 liter PET bottles, transported by container) to the U.S. in May 2006. • lsbre completed the construction of a temporary bottling facility at the Osa source in December 2005. The construction of a permanent facility was completed in December 2006 and expanded in October 2008. • In February 2009, the Company entered into a distribution agreement with Norske Glace Limited, a UK company formed to distribute lsbre water in a number of European countries. In May 2009, an affiliate of Norske Glace assumed ownership and operation of the Osa Valley plant. Norske Glace personnel will load Isbre water into flexitanks and tanker ships (see discussion below). Illustration 3: Osa Valley Bottling Plant Isbre Holding Corp. 21 Confidential EFTA_R1_01521635 EFTA02444713 IS B E II. Flexitank to U.S. Model — 4th Quarter 2008 Isbre has outsourced production to existing bottling plants in the U.S. It will get the water to these bottlers using an interim bulk shipping approach: transporting the water in flexitanks. A flexitank is a single-use, heavy-duty plastic bag that is installed in a standard 20-foot container and holds 20,000 - 24,000 liters. Flexitanks are manufactured from FDA approved food grade resins and are widely used for transporting a variety of high-value liquids. Isbre has shipped flexitanks from its Osa source to a bottling plant owned by Leisure Time Spring Water, a licensed bottling company located in Kiamesha Lake, NY. Isbre has also made U.S. bottling arrangements with Union Beverage, a licensed bottling company located in Hillside, NJ. Flexitank shipments first will be used for bottling 1.0 liter product but ultimately will be used for all sizes. Flexitank bottling commenced in September 2008. The Flexitank to U.S. model will reduce the U.S. landed cost per case by approximately $4.00 due to the reduced transportation and production expense. Further economies are expected as flexitank shipments achieve a larger volume. III. Tanker to U.S. Model — 2011 Isbre intends to eliminate as much shipping related cost as possible by creating the 'Tanker to U.S." bottling factory model. It is believed that lsbre's Osa Valley facility is the only location in the world where high-quality water can be pumped from a natural source directly into tanker ships for low-cost bulk transport. A combination of unique geographic and hydrogeological circumstances gives Isbre the singular ability to enter into sales of bulk water. The Hardanger is a deep-water fjord; the surrounding mountains form a seabed several hundred feet deep. This waterway is affected by the warm water carried by the Gulf Stream; consequently, the Hardanger does not freeze during the winter months. These conditions combine to allow a large tanker ship to dock within 40 feet of the shore. Water can then be extracted directly from the source and pumped into the ship. Once onboard, the water is distributed through stainless steel pipes to the various stainless steel tanks (compartments) contained within the vessel; the number of compartments will vary according to vessel size. Isbre bulk water is then shipped for bottling locally, generating tremendous transportation cost savings. This bulk shipping capability combined with lsbre's super-premium water quality gives it the potential to have unrivaled, best- in-industry unit economics relative to all of its super-premium water competitors. There is no new technology required to transport Isbre's water in bulk. Many food-grade liquids are transported by tanker ships: olive oil, palm oil, soda syrup concentrate, orange juice, rum, wine. scotch and other beverages. This type of shipping is so routine that an international shipping protocol has been developed for the bulk transport of food-grade liquids. The Tanker to U.S. model will further reduce the U.S. landed cost per case by approximately $3.00 for both size bottles. IV. Unprecedented Profit Margin Opportunity As noted above, importing bottled product (as all other super-premium waters do) has a landed cost of approximately $11.00 per case. This cost is reduced to approximately $7.00 per case using flexitanks. and to approximately $4.30 per case with bulk tanker shipping. Isbre's unique Isbre Holding Corp. 22 Confidential EFTA_R1_01521636 EFTA02444714 IS kE ability to employ bulk tanker shipping produces a total landed cost of less than 50% of the cost of other imported waters. Consequently, Isbre will be by far the lowest cost competitor in the U.S. super-premium market. The tanker bulk shipment strategy will also permit production flexibility and responsiveness and packaging size and innovation unprecedented in the imported water industry. As the lowest cost producer in the super-premium category, Isbre will be able to spend more marketing dollars on a per-unit basis and engage in retail promotional activity that cannot be replicated by competitors. For example, Table 10 below demonstrates that lsbre's bulk shipment approach will enable it to generate healthy profit margins at price promotions simply impossible for other super-premium waters to match. Table 10: Half-Liter Six-Pack Margins at Various Price Points @ 55.99 Retail $4.99 Retail @ 53.99 Retail• Retail per Case $23.96 $19.96 $15.96 Cost to Retailer $17.50 516.00 513.60 Retail Profit per Case $6.46 $3.96 $2.36 Retailer Margin 27% 201 15% Cost to Distributor $12.25 512.25 $12.25 Promo Credit $0 .75 $1.95 Ne: Cost to Distributor $12.25 $11.50 $10.30 Distributor Profit per Case 55.25 $4.50 $3.30 Distributor Margin 30% 28% 24% Compteutor Production Cost $11.00 $11.00 $11.00 Trucking $0.50 $0.50 50.50 Total Competitor Cost $11.50 $11.50 $11.50 Competitor Margin $ per Case S0 15 (51.20) Competitor Margin % per Case 6.5% 0% 10.4% Flexitank Production Cost $7.00 $7.00 $7.00 Trucking $0.50 $0.50 $0.50 Total Landed Flexitank Cost 5/50 $1.50 $1.50 Isbre Margin 5 per Case $4.75 $4.00 $2.80 stye Margin % per Case 63% 53% 37% Tanker Production Cost 54.30 54 3D 54.30 Trucking $0.50 $0 .50 $0.50 Total Landed Tanker Cost $4.80 54.80 $4.80 Isbre Margin $ per Case 57.45 $6.70 $5.50 isbee Margin % per Case 155% 140% 115% costs typically run 50.5051 00 per case depending on case sales volume during the sale period. For example, the $3.99 per six-pack major Feature ad at A&P (447 stores) would cost 55.000 and would sell approximately 20 cases per store, equating to a cost of $0.56 per case. V. The Time Charter Party Agreement Isbre has entered into a Time Charter Party Agreement to arrange for bulk transport of its water from the Osa, Norway source to its Pennsylvania facility with Jo Tankers of Bergen, Norway, an internationally recognized shipping company that specializes in the transport of liquids (see www.jotankers.com for a description of this shipping company). Isbre Holding Corp. 23 Confidential EFTA_R1_01521637 EFTA02444715 IS kE The term of the Charter is ten years, commencing in 2009. The first vessel to be utilized under the Charter is the Jo Spirit (see Illustration 4). This vessel (built in 1998, summer deadweight 6,285) carries 20 stainless steel tanks with a total capacity of 1,366,970 gallons. Illustration 4: Jo Spirit The rate of hire for the Jo Spirit is $12,075 per day. Ordinarily, a "round voyage" between Osa and Bristol would require approximately 28 days, including loading and unloading. Since the Jo Spirit is currently under charter for the trip from the Caribbean to Northern Europe, lsbre will have the advantage of a "back haul" opportunity and incur only about fifty percent of the transportation expense that a dedicated charter would entail. The rate of hire for larger vessels reaches $22,000 per day (for a DWT 39,273 vessel with 10,000,000 gallon capacity). When U.S. production requires greater water delivery, Jo Tankers will substitute larger vessels. The Jo Tankers fleet contains vessels with capacities approaching 10 million gallons. Isbre and JoTankers have agreed upon the protocol for transporting Isbre's water. Note: Other shipping companies have expressed interest in working with lsbre on bulk water transport. VI. The Bristol, Pennsylvania Site The water will be unloaded into a stainless steel storage tank at the Riverside Industrial Center, a 60.5 acre site located on the Delaware River, north of Philadelphia, in Bristol, Pennsylvania (see Illustration 5). The Riverside complex is owned by Constructural Dynamics Inc., a wholly-owned subsidiary of The Silvi Group Companies ("Silvi"). isbre Holding Corp. 24 Confidential EFTA_R1_01521638 EFTA02444716 ISBRE Illustration 5: The Riverside Industrial Center, Bristol PA Isbre and Silvi entered into a Letter of Intent for Isbre to lease approximately 140,000 sq. ft. at Riverside for a term (including renewals) of 35 years. The complex has a deep water bulkhead in place; ships requiring a draft of up to 38 feet can be moored. As part of the lease transaction, Silvi is taking Isbre shares in lieu of rent for a five-year period. Details of the Riverside lease appear in Exhibit III. Note: The letter of Intent has expired, but Isbre is confident that it can reactivate the lease on the same or better terms. Isbre maintains a good relationship with Silvi. Isbre will develop the Bristol site and lease the building to a co-packer which will operate the bottling plant. Isbre has a preliminary agreement with Linker Equipment Corporation, a 50-year old international bottling equipment manufacturer and beverage bottling company. The Bristol facility is an excellent location for logistic considerations. As shown in Illustration 6 below, the areas from southern Massachusetts to northern Virginia are within a 200-mile radius of Bristol. Isbre Holding Corp. 25 Confidential EFTA_R1_01521639 EFTA02444717 1 S B E Illustration 6: Bristol, PA O 2007 awns T•then...... imbue Nye 0.2007 Ann pO) lot loblebk. 144..11. ,CO' VII. U.S. Market — Packaging Plan The Company's Flexitank to US and Tanker to U.S. arrangements also generate flexibility and scalability. For example, the Company will be able to bottle "on demand' in different container sizes according to customer requests, resulting in unprecedented production flexibility. Isbre has already started exploring Tetra Pak containers as a way of providing additional flexibility in packaging. This "just-in-time" capability means that less storage space is required for raw material and bottled product, on-site or off-site, thereby reducing warehouse expense. The Company intends to market its water in the following sizes (see Illustration 7): • 330 ml PET • 1.5 liter PET • 0.5 liter PET • 3.0 liter PET • 1.0 liter PET • 1.0 liter glass Isbre will introduce a 1.0 liter glass bottle in 3O 2010. This bottle will be used for both still and sparkling Isbre water. The renowned graphic designer Milton Glaser has been engaged to design the glass bottle. An attractive glass bottle will support and enhance the fundamental value of the Isbre brand and help it maintain a strong presence in the super-premium category, in the on- premise and hospitality segments in particular. Isbre Holding Corp. 26 Confidential EFTA_R1_01521640 EFTA02444718 ISBkE Illustration 7: lsbre Packaging •••• ng mono cerrromc mire p .— Itlalrlll 4-4 IN( WORLD'S UP MIMING WATER' le "Nelal•Sinr•CaPaa SIA . F el I RAE 5 Ofintalr*G Warn (Nail ill i 11 oing '4. mo Table 11 below shows forecasted growth in the U.S. Super-Premium bottled water market and the anticipated volume increases for Fiji and lsbre. Recognizing current economic conditions, as indicated in the footnotes, the forecast assumes future volume at significantly lower growth rates than historical levels. Table 11 also reflects a conservative assumption that Isbre achieves only 13% of total Super-Premium sales and 25% of Fiji sales in 2013. Table 11: lsbre Potential Share of Super-Premium Still Water uper-premium 1.3 2007 181 2008 188.2 2009 19a.8 2010E 203.6 2011E 211./ 2012E 220.2 2013 E 229 Fiji 1 ' 39.2 47 56.5 67.7 81.3 97.5 117 Fiji % of Super- Premium 22% 25% 29% 33% 38% 44% 51% isbre ' lsbre %Super- 104.559 205,920 146,720 1.597 4.818 8.927 14.699 Premium 0.0% 0.3% 0.3% 0.1% 2.2% 4.05% 6.4% sbre% of Fiji 0.26% 0.4% 0.25% 2.3% 5.0% 9.1% 12.56% 1. &Whore :I Gallons 2. Source. Sandal* Research 3.2007 emsal et. el ow: s: *realer (vs 104 area proeses tetel 1. 2001 actual. 20% growth trtere.Vter Ivi 39 2Kavg vow:- rate 2002-2063: 5 1007•20C9 actualtnan:egil Mac el Notctans dynamite. lsbre Holding Corp. 27 Confidential EFTA_R1_01521641 EFTA02444719 I S kE The Non-US Market While the U.S. market is clearly important for Isbre, the opportunity outside of North America is a significant expansion opportunity for the company. According to data reported by Beverage Marketing Corporation, • Europe is the largest and most mature bottled water market worldwide. • The bottled water market in Asia has almost doubled in size since 2001 and sells roughly 80% as much bottled water as Europe. • South America is a modest growth, modest size market, although two Latin American countries, Mexico and Brazil, are among the top 10 worldwide in terms of bottled water consumption. Preliminary exploration of non-US distribution opportunities has been promising. • Isbre has entered into a distribution agreement covering a number of European countries • Isbre has had preliminary discussions with three firms to distribute Isbre in South Korea. China and Japan. • Several firms have shown interest regarding bottled and bulk water opportunities in the Middle East. The Global Bulk Water Sales Opportunity Isbre's bulk water sales strategy is quite simple: Isbre will sell water directly from its Osa Valley source to bottlers and other purchasers. In most cases, bulk water purchasers will be responsible for all steps of the bottling process, including commissioning the tanker which will take water from the Isbre source and transport to a bottling plant. For Isbre, the sale of water in bulk offers gross margins in excess of 90%. Until a comparable capability is developed, the Company will enjoy a compelling competitive advantage in the ability to create and exploit the international market for bulk water sales. The extent and composition of the bulk water sales market is unknown at this time. Prospective bulk water purchasers include: bottled water companies, governments (for civilian and military consumption), beverage manufacturers (e.g., beer, alcohol or other beverage producers seeking a large supply of ultra-pure water), and humanitarian organizations. Isbre Holding Corp. 28 Confidential EFTA_R1_01521642 EFTA02444720 ISBRE IV. FINANCIAL INFORMATION OVERVIEW Isbre Holding Corp. 29 Confidential EFTA_R1_01521643 EFTA02444721 I S 8 Ft E Table 12: Isbre Projected Income Statement Isbre Holding Corp. 30 Confidential EFTA_R1_01521644 EFTA02444722 I S IkE Volume 2010 Year 1 2011 Year 2 2012 Yew 3 2013 Year 4 2014 YerS US Gallons 1,597,077 4,818,761 8,927,993 14,699,167 22,414,661 Non-US Gallons 0 554,531 1,505,156 2.455,781 3,247,969 Bulk Gallons 17.904256 65,988,672 130.105,568 194 298,416 258,584,786 US Cases 500.000 1,375.000 2,403,800 3,834,600 5,747,800 Non-US Cases 0 150,000 400,000 650,000 8_50000 Other Cases 0 0 0 0 0 Revenue US Revenue 6,337,500 16,799,0:0 28,824,672 45,528,904 68,385,828 Non-US Revenue 0 1,280,000 3,536,000 4844,000 7,842,000 Promotional Discounts (49.563) (122,356) (262.860) (377.230) (464360) Bulk 1,331,913 4,811,382 9,426,774 14,438,154 19,194,932 Investment Income 220,918 378,897 408,273 763,411 1,281,655 Expenses US Packaging 3,582,732 6,859,198 12,054,154 19,801,986 29,888,450 US Freight 355,000 563,750 985,558 1,572,186 2,356,598 Non-US Packaging 0 762,500 2,050,503 3,309,500 4,331,500 Sea Transport 0 1,790,487 1,118,626 2.237.252 3,355,878 Water Usage Fee 233,888 856,344 1,531,745 1,715,554 1,715,554 US Plant(s) - CAM 0 40,000 50,000 75,000 75,000 US Plant(s) - Utilities 0 125,000 150,000 250,000 250,000 Marketing 1.456.750 3,712.700 7,067,738 9,655.600 12,695.802 US Salaries & Wages 650,000 1,335,000 2,095,000 2,350,030 2,780,000 US Benefits 195,000 400,500 628,500 705,000 834,000 Bristol Bottling Plant Wages 0 693,200 720.928 1,024,234 1,065.203 So. Cal Plant Wages 0 0 0 0 0 Bristol Benefits 0 207,960 216,278 307,270 319,561 So. Cal Benefits 0 0 0 0 Norway Wages&Benefits 0 80,000 84,000 88.200 92,610 Norway Electric 895 3,299 6,505 9,715 12,929 US HQ Rent 40,000 45,C® 50,000 50,000 60,000 Car Allowance 60,000 100,000 100,000 100,000 100,000 Telephone 15,000 25,740 28,314 30,000 30,000 Insurance 15,000 50,000 150,000 200,000 200,000 Travel 40,000 100,0:0 100,000 100,000 100,000 lab Testing 20,000 50,0:0 100,000 100,000 100,000 Postage/Delivery 8,400 10,920 13,104 14,414 14,414 Director Fees 0 50,000 80,000 80,000 80,000 Professional Fees 125,000 200,000 250,000 250,000 250,000 Transfer Agent Fees 20,000 28,122 30,000 30,000 30,000 Consulting Fees 75,000 150,000 225,479 232,498 232,498 Shareholder Communications 10,000 10,000 10,000 10,003 10,000 Depreciation 0 751,234 1,151,234 1,151,234 1,151,234 Interest Expense 0 0 0 0 0 Income before Tax 938,104 4,145,969 10,885,196 20,747,596 34,104,824 Income Taxes 0 0 0 (1.292.035) 13,641.930 EUITDA 938.100 4,897,203 12,034429 21,038,830 35,256,050 Operating Cash 727,860 3,983,332 10,154,305 17,521,579 17,028,001 Isbre Holding Corp. 31 Confidential EFTA_R1_01521645 EFTA02444723 ISBRE V. OWNERSHIP AND MANAGEMENT Isbre Holding Corp. 32 Confidential EFTA_R1_01521646 EFTA02444724 ISBkE Ownership The Company intends to establish U. S. subsidiaries for distribution of lsbre and for each U.S. bottling plant. The Company also intends to re-name itself (possibly as "Norwegian Water Resources, Inc.") to remove the "Isbre" brand from the corporate name. Capitalization / Public Market Status I Shareholders Isbre's shares are currently listed on the Pink Sheets under the symbol ISBH.PK. It is a non-reporting company. In Isbre's formative years, it was thought that it would be easier to raise equity capital as a public entity. At this stage of development, lsbre management is flexible as to the whether it should remain a public company. As of September 1, 2009, Isbre had 17,812,992 common/voting shares outstanding and 26,978,283 warrants outstanding. The warrants have strike prices ranging from $1.00 to $4.50. The average strike price is approximately $3.12. Approximately 95% of the warrants are priced at $3.00 or higher. If all warrants were exercised, an additional $82 million would be invested in Isbre. The vast majority of the warrants expire between 2014 and 2016. Since August 2004. Isbre has periodically raised equity capital through the sale of common stock to high net worth individuals and institutional investors. Equity raised during this time frame totaled approximately $8 million. The Warrant Exchange Program In August 2009, the Company introduced a Warrant Exchange Program. The WEP seeks to achieve the two important goals of raising needed capital for the Company and mitigating the "warrant overhang" concern cited by several potential Isbre investors. The Cash Exchange. Warrant holders have the option to exercise their warrants at 10% of the strike price. Most of the warrants have a strike price of $3.00, translating into a $0.30 program strike price. The Cashless Exchange. Warrant holders also have the option to exchange a warrant for a fractional share of lsbre stock. Example: 10,000 warrants with a strike price of $3.00 can be exchanged for 0.3 share, producing 3,000 shares of IHC common stock. share amounts are as follows: Warrant Strike Price The different warrant strike prices and fractional Fractional Share $1.00 0.90 $1.50 0.60 $2.00 0.45 $3.00 0.30 $3.20 0.28 $3.50 0.25 $4.50 0.15 As of February 1, 2010, 6,972,554 warrants have been exchanged for 2,205.458 shares in cashless exchanges and 1,883,129 warrants have been converted into the same number of shares at the reduced strike prices. Note: Since there is no way of predicting participation in the Warrant Exchange Program, Isbre Holding Corp. 33 Confidential EFTA_R1_01521647 EFTA02444725 IS B E there is no way of predicting the number of warrants that will be exchanged or the amount of proceeds that will be raised through the program. Approximately 11 million shares, or 64% of total common shares outstanding (pre-Warrant Exchange Program), are owned by employees and affiliated shareholders. Table 13 below shows the breakout of the larger holders. Table 13: Major Isbre Shareholders Common Shares % of Total NorgeWater U.S.A. (a) 3,844,387 21.5% Bjorn V. Seljevold 2,765,770 15.8% Pure Capital (b) 1.650.000 9.4% Forum Asset Management (c) 1.000.000 5.7% William D. Siegel 906,250 5.2% Karl Sandoy 589,190 3.4% Stevan Sandberg 479,062 2.7% Subtotal 11,234,659 63.7% Other 6,415,446 36.3% Total (d) 17,650,105 100.0% (a) Norgewater U.S.A. is an informal collective of -friends IS family" of Mr. Sandberg. (b) Pure Capital is a Norwegian Investment Company with 3 shareholders: Svein Johnson (50%), Blom Hanevik (40%) and Kjetil Lien (10%). Svein Johnsen has founded several Norwegian companies, including the mobile company Chess, where he was the CEO. The company was sold to TeliaSonera for over $350 million after only three years of operation. Bjorn Hanevik was the architect behind the biggest lottery company in Norway. The company was sold to UBS five years ago. Mr. Kiehl is an investor in stocks and real estate. (c) Founded in 2001 and based in New York City, Forum Asset Management is a global investment manager that focuses in fixed-income and emerging markets. (d) Shareholdings will be affected by participation in the WEP. Isbre Holding Corp. 34 Confidential EFTA_R1_01521648 EFTA02444726 ISBRE Management Stevan A. Sandberg, President; Director From 2001 to 2006, Mr. Sandberg was the President of Advisory Services at The Staubach Company, where he was also a member of the Board of Directors. From 1987 to 2001, he was employed at Cushman & Wakefield and served on the Board of Directors and Executive Committee during this time. His responsibilities at Cushman & Wakefield included General Counsel and Secretary from 1987 to 1997 and Executive Vice President, Strategic Advisory Services, from 1997 to 2001. From 1982 to 1987, Mr. Sandberg was The Rockefeller Group General Counsel, Real Estate & Corporate Finance. From 1977 to 1982, he was a Real Estate Associate at Shearman & Sterling and Kelley, Drye & Warren. Mr. Sandberg graduated from Dartmouth College and earned his Law Degree from Harvard Law School. In 2004, Mr. Sandberg was engaged by lsbre as a real estate consultant. In the course of the engagement, he formed an investor group that became a significant investor in the Company. Mr. Sandberg went on lsbre's Board of Directors in 2005 and became President in 2006. William A. Louttit, Executive Vice President; Director Mr. Louttit began his retail career as a part-time clerk in a Grand Union supermarket and rose to become Executive Vice President and Chief Operating Officer of the Grand Union Company. He also served on Grand Union's Board of Directors and Executive Committee. Mr. Louttit was also Chairman and Chief Executive Officer of the Northeast group of the Great Atlantic & Pacific Tea Company, encompassing Metro A&P, Waldbaums, Super Fresh and Food Emporium stores. Mr. Louttit is a member of the New Jersey Food Council, where he was voted Retailer of the Year in 1991. Isbre Holding Corp. 35 Confidential EFTA_R1_01521649 EFTA02444727 ISBkE Board of Directors James M. Stevens Sr., Director Mr. Stevens is Chairman of J.M. Stevens & Associates, Inc. a beverage industry consulting firm, established in 1997, and Co-Founder of Dutcher Crossing Winery of Healdsburg, California. His beverage experience, ranging over 35 years, includes introducing Perrier to the U.S. in the 1970's, which helped establish bottled water as a beverage category of its own. Mr. Stevens served during 2000 as President and CEO of the Danone Water Company of North America while continuing to operate his consulting firm. From 1992 through 1996 Mr. Stevens was President and CEO of the Suntory Water Group, growing it to the nation's second largest bottled water company. At Suntory he was successful in establishing the Crystal Spring brand as the Official Bottled Water of the 1996 Olympic Games in Atlanta. In 1986, he joined Coca-Cola Enterprises and was named executive vice president and COO in 1989. From 1969 to 1976, Mr. Stevens held key management positions with Pepsi-Cola Bottling Group, Purchase, New York. Mr. Stevens holds a Bachelor of Arts degree from Moravian College, Bethlehem, PA, where he majored in business and psychology. Bjorn V. Seljevold, Director Mr. Seljevold is the former CEO and Chairman of the Company, a position he held from the Company's inception in 1996 until February 2007. A former officer and pilot with the Royal Norwegian Air Force. Mr. Seljevold moved to the United States in 1982. In 1984, he formed Suffolk Helicopters, Inc. (subsequently renamed American Helicopter Corp.), which was one of the first aviation companies to conduct airborne traffic surveys. American Helicopter Corp. also became a major flight training facility. Christopher H. Bartle, Director Mr. Bartle has practiced law since 1982 at such firms as: Simpson Thacher & Bartlet, Paul, Weiss, Rifkind, Wharton & Garrison, and Dolgenos, Newman & Cronin. His practice of law has included corporate, environmental, litigation, bankruptcy and real estate. In 2005, Mr. Bartle joined the APC Group. a buyer of distressed real estate and loan assets. In addition to Isbre, Mr. Bartle is currently a board member of the following companies: Boylan Bottling Co.. Inc., Crayons, Inc. (Advisory Board), SweetskinZ, Inc., and Brand Name Management, Inc. Mr. Bartle graduated from Yale University and earned his law degree from Yale Law School. Bjorn Hanevik, Director Mr. Hanevik was the architect behind the biggest lottery company in Norway. The company was sold to UBS five years ago. Isbre Holding Corp. 36 Confidential EFTA_R1_01521650 EFTA02444728 I S 8 IkE VI. EXHIBITS Isbre Holding Corp. 37 Confidential EFTA_R1_01521651 EFTA02444729 IS B kE EXHIBIT I. Use of Proceeds Osa Infrastructure $ 1,700,000 Bristol Retrofit $ 2,300,000 Bristol Bottling Line $ 1,500,000 Bristol Storage Tank $ 3,600,000 Marketing $ 1,800,000 Product Expansion $ 1,000,000 Working Capital $ 2,100,000 TOTAL $ 14,000,000 Isbre Holding Corp. 38 Confidential EFTA_R1_01521652 EFTA02444730 ISBRE EXHIBIT II. Patents and Trademarks Mark Country of Filing Serial Number Filing Date Registration Number Registration Date BLASTER USA 78/632,249 11/30/2005 BOTTLE DESIGN USA 76/639,785 05/31/2005 3,149,320 09/26/2006 ISBRE Canada 835,590 02/05/1997 TMA569,466 10/23/2002 ISBRE European Union 835,590 02/05/1997 000472803 09/30/1998 ISBRE Mexico 559237 03/07/2007 ISBRE Singapore T06/23535G 11/02/2006 ISBRE NORWEGIAN GLACIER WATER and design USA 76/444,348 08/28/2002 2,736,395 07/15/2003 MISCELLANEOUS BOTTLE DESIGN Singapore T06/23533J 11/02/2006 OSA USA 76/497,873 03/17/2003 3,159,336 10/17/2006 THE WORLD'S BEST DRINKING WATER European Union 001815893 001815893 08/02/2002 THE WORLD'S BEST DRINKING WATER Singapore 106/23524A 11/02/2006 THE WORLD'S BEST DRINKING WATER USA 75/476,665 2,358,787 06/13/2000 THE t SITED STATES OF A3lt RICA Itedn•esSea %.t.wh,r 33311.717 IMae MOM nom Wm at -nil feta ration Moe Juni 0.340 THE WORLD'S REST DRINKING WATER MI•0 \Ir.Il 14 41 I V 114.. OUCH PrOIP Ir/ ...II I. 111,4:3VOI3 Rtna wnn36 ..... 44%•••11 I NO IKE 314013 N , Y•IMI MCI. 1.1.111. • Jofta a• r6. roans: ...paw a . 1µd .-%t,.. N..* •ftionte.M.1.varanafteingftftor 'ft ft. ft.a M a./ reirriftz. An. ad:s.a.e. nt4v•••• Ma to .watafte ..µ.....•••••••1/./......• M rer.6.,,v•• Menlo "On Illie.M.Wwwft. or”.1...ftrufteft1/4 41.. s'Ilroftue I balm ft.O. tit.. •thnt t soy v.a aft.peftwaotek n..h arrla..µrrtnMJ nuennfleaso Jftli —. ftoistatftmpft4 erne ft eV., MIS • • • • • r /MSS *I NO.'S' IV MSS/ 1914 a. nan•Can Cr fininnaaal. Ilisnedlioanniamn ••••••••11S. litermlnintla •••••nplUablee ■ nanOndOnntonOt imespimmiellaimisdowimin. ISIPPI•Ipmitiamlidaildwan•O• ...iiimass amps rouses' ISA 114 Wein Mt UST °RISC...Gnat' SS/a 3.36.•43.30- b.lft. Aft Isbre Holding Corp. 39 Confidential EFTA_R1_01521653 EFTA02444731 IS B kE EXHIBIT III. Bristol PA Riverside Industrial Center Lease Details Premises Lease Terms Landlord Equity 38,220 sq. ft. on Term: 15 years In return for the 5-year free rent first floor and period and various other concessions 100,576 sq. ft. on Rent: Lease Years 1-5, no cash rent. and benefits, the landlord will receive second floor; 138,796 sq. ft. Lease Years 6-8: $2.88 per sq. ft. 898,325 shares of lsbre stock. total. Easements Lease Years 9-11: $3.15 per sq. ft. relating to use of dock, tanks and Lease Years 12-14: $3.44 per sq. ft. piping Lease Year 15: $3.76 per sq. ft. Tank Land Rent: $0.50/sq.ft. increasing by $0.10 each 5 years CAM: Repair & Maintenance: 5% of base rent Insurance: $0.05/sq.ft. Real Estate Taxes: $0.11/sq.ft. Landlord Work: Base building improvements, elevator repairs, loading dock door replacements, electrical upgrade, base heating system Tenant Work: The Company estimates up to $1,200,000 in tenant building improvements. Additional work includes a water storage tank and the piping necessary to carry the water from the ship to the tank. Security: Two months average rent ($64,000) Options to Renew: The Company has two options to renew the lease term, each for a ten-year period, at a rental rate equal to fair market rental value Option to Expand: The Company has the right to lease other space becoming available in the building Isbre Holding Corp. 40 Confidential EFTA_R1_01521654 EFTA02444732