Basin Water, Inc., incorporated in December 1999, designs, builds and implements systems for the treatment of contaminated groundwater. The Company has developed an ion-exchange wellhead treatment system that reduces groundwater contaminant levels. Basin Water, Inc. focuses on the treatment of groundwater for three chemical contaminants, which are arsenic, nitrate and perchlorate. The Company markets its system to utilities, cities, municipalities, special districts, real estate developers and other organizations that supply water, collectively referred to as water providers, for use in treating groundwater sources that have chemical contaminants. Basin Water, Inc. has 50 systems delivered or in process in California and Arizona, with an aggregate installed capacity of approximately 86,800 acre-feet per year or approximately 28.3 billion gallons per year. The Company has developed a groundwater treatment process using a multiple-bed system design, which helps in meeting different volume requirements. The system allows beds to be sequenced in and out of service to optimize performance, and offers users a range of production rates up to 12,000 gallons per minute. Its system consists of multiple vessels that operate on a parallel process. As of December 31, 2005, Basin Water, Inc. had delivered or had in process 20 arsenic treatment systems with an aggregate arsenic removal capacity of approximately 40,500 acre-feet per year, or 13.2 billion gallons per year. As of December 31, 2005, it had also delivered or had in process 19 nitrate treatment systems with an aggregate nitrate removal capacity of approximately 29,850 acre-feet per year, or 9.7 billion gallons per year. The Company is also targeting perchlorate actively in areas surrounding the United States Department of Defense (DOD) testing sites. As of December 31, 2005, Basin Water, Inc. had delivered or had in process five perchlorate treatment systems with an aggregate perchlorate removal capacity of approximately 10,000 acre-feet per year, or 3.3 billion gallons per year. The Company manufactures groundwater treatment systems on a build-to-order basis with a four to six week lead time. Each customer installation is designed using Basin Water, Inc.'s BasinWater-IX software program. The Basin Water-IX software program is a simulation program specifically designed for analysis of the wellhead treatment of groundwater contaminants. Typically the Company's system is installed adjacent to a wellhead. The Company's system is automatic and uses a program logic controller (PLC) that runs advanced control programs. The PLC controls all process equipment. It provides each contaminant removal system with a built-in alarm system that remotely calls for service or shut-down the system in the event of an emergency. Basin Water, Inc. 's service technicians assist with the removal of waste products by either a licensed waste removal company or through the customer's existing waste stream system. In addition, the Company arranges for the delivery of operating materials, including salt and replacement resin, to the system and for the maintenance of the system. The Company's customers include Arizona-American Water Company, California Water Service Company, Golden State Water Company, East Valley Water District, Del Valle Capital Corp. and Coachella Valley Water District. Basin Water, Inc.'s system can be employed in the treatment of a range of contaminants. The Company competes with USFilter, Severn Trent, Calgon Carbon, Layne Christensen, Hungerford & Terry and Rohm & Haas.

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