The ThermoFuel Process is a renewable energy process that converts raw or
digested sewage sludge (biosolids) into a high-energy fuel that can be converted
into electricity for use on-site or exported to the local power grid. This
Technology is an upgrade of the Company "STORS" process, which, along with the
Company's ARP technology, was proven in a two-year, $3,000,000 large-scale
demonstration project in Colton, CA in the greater Los Angeles area, in 2000,
which was sponsored by the United States Environmental Protection Agency
("EPA"). The ThermoFuel process is a renewable energy process that provides a
cost-effective solution for biosolids disposal for municipal wastewater
treatment. ThermoFuel integrates advanced primary sludge digestion with
hydrothermal treatment of waste activated sludge to expand the capacity of
municipal wastewater facilities. This is designed to be a compact,
environmentally effective method of upgrading existing wastewater treatment
plants to Exceptional Quality ("EQ") Class A biosolids production without the
use of storage ponds or lagoons, as is common in some municipal wastewater
facilities. EQ Class A biosolids denotes the least health risk of human exposure
to biosolids as defined in the 40 CFR Part 503 Risk Assessment study of the EPA.
Over 95% of all municipal wastewater treatment plants in the U.S. currently
produce Class B biosolids that do not meet the required pathogen and vector
attraction reduction requirements and as such pose a potential health risk in
direct human contact. The high energy and low moisture content of the ThermoFuel
process make it suitable for use as a fuel substitute or blending agent for
power plants, municipal solid waste incinerators, cement kilns, and similar
applications. The Company and Mr. Fassbender filed a patent application related
to ThermoFuel (see - Sewage Treatment System below) in February 2003. The U.S.
Patent & Trademark Office issued the Sewage Treatment System patent on March 17,
2005.

*ThermoFuel can be utilized as a stand-alone system or combined with the
Company's ARP or Enhanced Biogas Production technologies to provide the
wastewater treatment plant operator with a comprehensive and cost-effective
method of upgrading existing wastewater treatment plants to produce 100% EQ
Class A biosolids; a product which can then be safely applied to expired land,
such as a landfill or mining reclamation, or converted on-site to energy via a
gasification plant or boiler. ThermoFuel would allow wastewater treatment plant
operators to control the incoming waste stream entirely on-site, with only clean
water and saleable commodities leaving the plant. The primary target markets for
ThermoFuel are municipal and industrial wastewater treatment facilities.

ARP

The Ammonia Recovery Process, or ARP technology, is a non-thermal, absorption
process which captures ammonia from dilute waste streams, converting it into
ammonium sulfate which can be packed and sold to agriculture markets worldwide.
The ARP technology was proven in technology demonstration projects in
conjunction with the Civil Engineering Research Foundation (CERF) and the City
of New York in 1998, and during the EPA-sponsored demonstration at Colton, CA in
2000. In 2005, the Company signed its first commercial contract for a 500,000
gallon per day ARP system for New York City's Bowery Bay Water Pollution Control
Plant ("WPCP"). That project was cancelled during 2006 and is currently being
moved to the 26th Ward WPCP on Jamaica Bay, with construction of the plant
expected to be completed by the end of 2007. This project is the first
large-scale stand alone project ever implemented by the City of New York
designed to prevent excess ammonia from flowing into the Long Island Sound.

*ARP is a patented process designed to recover ammonia from dilute aqueous waste
streams. In tests, ARP has been a reliable, low-cost, environmentally effective
method of treating wastewater discharge stream containing nitrogen in the form
of ammonia. The ARP extracts ammonia out of sewage treatment liquid and
livestock waste via chemisorption and converts it into standard,
commercial-grade, ammonium sulfate fertilizer. The Company is targeting ammonia
recovery from aqueous streams, such as the liquid product resulting from
centrifuging anaerobically digested sewage sludge or animal waste. This stream,
known as the "centrate" contains approximately 600 to 1,600 parts-per--million
dilute ammonia. In advanced wastewater treatment plants where nitrogen is
nitrified and denitrified, a portion of the nitrogen in the treatment plant is
converted into nitrogen gas. Such plants generate primary and waste activated
sludges which are typically treated with anaerobic digestion and then dewatered.
In the anaerobic digestion process, more than half of the nitrogen in organic
nitrogen compounds is converted into ammonia.
Once the anaerobically digested sludge is dewatered, the bulk of the organically
bound nitrogen stays with the sludge solids while virtually all of the ammonia
nitrogen stays with the water portion or centrate. This centrate is typically
recycled to the front of the waste water treatment plant. ARP treats the
centrate as a relatively concentrated ammonia stream, and returns a very low
ammonia stream to the plant. This reduction in the nitrogen load on the plant
can increase the overall plant through-put by up to 30%. The removed and
concentrated ammonia can thereafter be converted into ammonium sulfate, a
commercial grade fertilizer. The primary markets for ARP are municipal
wastewater treatment and in the treatment of wastewater discharge from large
concentrated animal farming operations, including dairy, pork, beef and poultry
facilities. A second ARP patent that incorporates incremental process changes as
a result of the two ARP field demonstration projects is currently pending.

.. -------------------------------------------------------------------------------- -->Enhanced Biogas Production

The Enhanced Biogas Production process allows existing wastewater treatment
plants operators to upgrade the performance of key plant components making the
plant run more efficiently as well as recover excess ammonia coming off the
digesters. The Enhanced Biogas Production process is designed to retrofit
existing conventional wastewater treatment plants by allowing them to recover
ammonia from anaerobic digesters and thereby enhance the efficiency of the
digesters. The technique can be used as a stand-alone technology or in
coordination with the Company's ARP technology. It can also be implemented with
the Temperature Phased Anaerobic Digestion technology (described below) used by
wastewater treatment plant operators, to make more biogas and destroy pathogens.
Temperature phasing is a relatively new method adopted by wastewater treatment
plant operators that uses two phases of anaerobic digestion. In the high
temperature phase (around 120 - 140º F) waste solids are disinfected and
conditioned to reduce pathogens below threshold levels and solubilize some of
the solids during the digestion phase. The Enhanced Biogas Production process
can also be integrated with ThermoFuel and used in conjunction with municipal
and industrial wastewater applications that use aerobic or anaerobic digestion.
The Enhanced Biogas Production process is intended to be a cost-effective method
of processing and treating animal waste from concentrated animal farming and in
which the waste is converted into two saleable commodities: (i) energy in the
form of methane; and (ii) ammonium sulfate, a commercial grade fertilizer.

*The Enhanced Biogas Production process is currently protected by two patents
held by Alexander Fassbender. The first patent was issued in June 2002, and the
second patent was issued in May 2004. Foreign patents applications have been
filed and are pending. The patents cover both single and multiple digester
configurations using the Enhanced Biogas method. The Company currently licenses
the Enhanced Biogas Production and Sewage Treatment Method technologies from Mr.
Fassbender. Under the terms of the agreement with Mr. Fassbender, at the time
when cumulative sales of the licensed products exceed $20 million, the Company
agrees to pay to Mr. Fassbender 1% of the net sales thereafter (as defined in
the agreement). Subject to Mr. Fassbender's approval, the Company may sublicense
the technologies. Beginning in 2008 and each year thereafter, Mr. Fassbender may
terminate the agreement if the Company or any of its affiliates has not sold or
leased a licensed product in that calendar year.

Sewage Treatment System

The Sewage Treatment System ("STS") is a patented wastewater treatment system
(U.S. Patent No. 6,893,566) that takes advantage of the synergy of mechanical,
thermal, and chemical integration to generate EQ Class A biosolids at low
capital and operating costs. Among other things, STS significantly increases
operating temperatures and sludge retention time available at an existing
anaerobic digestion facility, increasing plant capacity. The excess thermal
energy from biogas generated by the digester can be used to supply between 50%
to 100% of the heat energy required for the ThermoFuel process, significantly
reducing energy costs.

*The target markets for STS and the Enhanced Biogas Production process
technologies are municipal and industrial wastewater treatment plants and
wastewater treatment facilities located on large and confined animal farming
operations.

*The performance of these wastewater treatment technologies 1) meet or exceed all
current or proposed federal or state water quality discharge regulations, 2)
produce virtually no air emissions, 3) lowers capital, operating and maintenance
costs, and 4) provides beneficial reuse of virtually all by-products.

TIPS

In addition to its Water Technologies, the Company is in the process of
developing a new clean energy technology that offers a cost-effective and
environmentally responsible solution to both carbon capture and global warming.

ThermoEnergy Integrated Power System, or TIPS represents a novel thermodynamic
approach in power plant design. Based on reliable oxy-fuel chemistry, it
combines the combustion of carbonaceous fuels (coal, oil, natural gas or
biomass) with essentially complete recovery of all by-products, including carbon
dioxide ("CO2 ") which can then be used for sequestration or beneficial reuse.
The key element that differentiates TIPS from conventional oxy-fuel designs is
that combustion shifts the temperatures at which water, CO2, mercury and acid
gases condense. Gas-to-liquid nucleate condensation physics is then used to
collect and remove the pollutants, while CO2 is recovered as a liquid through
direct condensation to reduce harmful air emissions of acid gases, mercury, soot
and CO2. TIPS is well-suited for new construction and offers a cost-effective
way to upgrade existing coal-fired power plants zero air emission status.

TIPS converts the energy in biomass or fossil fuels, such as coal, gas and oil,
and integrates that combustion with the efficient production of steam or
electricity, the recovery of carbon dioxide in liquid form for sequestration or
beneficial reuse and the elimination of air emissions of mercury, acid gases and
particulates. The primary markets for the TIPS process will be power generation
plants for electric utilities and combined heat and power plants for industrial
clients, many of which produce waste by-products that can be used as a feedstock
for TIPS. Some of the industries in which TIPS can be utilized include oil
refineries, petrochemical processing plants and pulp and paper mills. In March
2001, ThermoEnergy Power Systems was granted U.S. Patent No. 6,196,000 for TIPS.
The Company recently received a second U.S. patent relating to the TIPS process.
(U.S. Patent No. 6,918,253). Foreign patent applications have been filed in
approximately 38 countries, including Australia, Canada, China, the European
Patent Office, India, Mexico, Poland, Romania, the Russian Federation, South
Africa and the Ukraine (collectively, the "International Applications") as
provided for by the Patent Cooperation Treaty. To date, the Company has received
notice of allowance from Russia and has paid the issue fee. The Company
typically obtains continuances in countries where continuances are permitted
such as Canada and Japan. Continuances are used to keep the patenting process
alive in certain geographical markets until such time the Company deems the cash
outlay on patenting costs and subsequent maintenance fees appropriate in that
jurisdiction. This preserves all rights and the Company can request examination
at the appropriate time.