INITIATING COVERAGE International Wastewater Systems Inc. (CSE: IWS; Frankfurt: IWI; WKN: A14233)

November 25, 2015

The Future is Green – And Bright for IWS How a UK-Canadian business merger makes money from wastewaster while preserving the environment “There is no question that climate change is happening: the only arguable point is what part humans are playing in it.“ (David Attenborough) In June, the G7 leaders met in Germany and decided to cut greenhouse gases by phasing out the use of fossil fuels by the end of the century. The German chancellor, Angela Merkel, has offcially announced these measures in a move hailed as historic by some environmental campaigners. In a 17-page communique issued after the summit at Schloss Elmau under the slogan “Think Ahead, Act Together”, the G7 leaders agreed to back the recommendations of the IPCC, the United Nations’ climate change panel, to reduce global greenhouse gas emissions at the upper end of a range of 40% to 70% by 2050, using 2010 as the baseline. Merkel won praise for succeeding in her ambition to ensure climate was not squeezed off the agenda by other pressing issues. Some environmental groups said she had established herself as a “climate hero” (view her speech here). International Wastewater Systems Inc. (CSE: IWS; Frankfurt: IWI; WKN: A14233) Innovative, new technologies are all well and good, but these are only lucrative for investors when they are on the verge of a massive market breakthrough and thus have proven to work. There exist thousands of new technologies calling themselves “innovative” and “revolutionary”, yet in reality only few have a real chance for success because a commercial viability still must be proven with year-long commercial usages. IWS’s technology not only is truly innovative but has already been successfully demonstrated in numerous commercial projects worldwide.

Have a look yourself and google “International Wastewater System” or “SHARC Energy System” – you may recognize immediately that the media has put ample focus on both companies, which have merged in a recent reverse-takeover. IWS’s founder and CEO, Lynn Mueller, recently said: “We were expanding so fast we just couldn’t capitalize it privately.” Newspapers and business magazines in Canada and the UK have strongly increased their editorials on the SHARC technology since mid-2015. The best: The new technology is already proven and no serious competitors are expected thanks to patents. Such is the basis for sustainable corporate success. Capital Manager anticipates a strong increase in newsflow by IWS in the upcoming weeks and months, for which reasons we have initiated coverage and will follow the corporate developments closely. A remarkable overview of numerous articles on IWS and its SHARC system can be viewed here and shows that their technology is on the rise and that there may be no way around IWS in the future as the company took over the pioneering role in this booming renewable energy sector. IWS should become the industry standard in energy recovery from wastewaters, whereas some already praise IWS as the successfully implemented standard ready to take off. According to its share price on the Canadian Securities Exchanges (CSE), IWS appears to be a company-making success story in its infancy:

With 81 million shares issued and outstanding, IWS has a current market cap of around $40 million. The upward trend appears to have started in mid-2015 while the company already generates millions of dollars in revenues per year. IWS is confident to predict publicly a 20-fold increase of revenues in the next few years. The newspaper Leicester Mercury wrote in an article on November 10, 2015, that SHARC’s UK CEO, Russel Burton, decided to move its UK headquarters from Nottingham to Leicester. Burton told the newspaper that SHARC’s revenue is set to grow from £3 million to £60 million in the next 3-5 years.

Russ Burton (CEO of SHARC Energy Systems)

To date, the SHARC system has been successfully installed in 8 buildings alone in the Vancouver area (see overview here). IWS already has orders for 10 more systems in Europe, Canada and the US, including the Borders College in Scotland, where the system is currently being implented (20 year contract; 5,500 students; 95% of the college’s heat requirements will be generated by the SHARC technology). The innovative SHARC system had been examined by the University of Glasgow in a case study involving the Borders College, with the following results:

• The use of this technology provides for the sustainable development. • This project estimated reduction of CO2 emissions is around 140

tonnes/year. • The monetary savings by the college per year sums up to around £10,000

per year on their bills for heating by using SHARC system in comparison to use of gas boilers for heating of the buildings.

UK Green Investment Bank plc (GIB) and the Equitix Energy Efficiency Fund has committed £4 million into the SHARC technology and will fund the pilot project Borders College. Lord Smith of Kelvin (Chairman of GIB) commented: "Our 50th investment neatly sums up what we are trying to achieve at GIB. We are backing the deployment of innovative new technology across the UK to produce renewable energy, cut energy use, cut costs and improve the UK’s green performance. It is enabling SHARC Energy systems to equip Borders College with pioneering technology in an arrangement that I hope can be replicated elsewhere in the country."

Wastwaters: A rich source for renewable energies The US Department of Energy raised its concers lately by announcing: “350 billion kW-hrs worth of hot water are discarded annually through drains in North America.” So what’s the value of energy from wastewater? The approximate natural gas equivalent of 350 billion kWh is 1.4 billion MCF. At a gas price of $9.26/MCF, some $13 billion annually are drained alone in the US. Governments on a worldwide scale are working on new rules and regulations to stop such a massive waste of money and energy. We are not aware of any other sector experiencing such a strong backing from governments as being the case with renewable energies.

Buildings: By far the biggest energy consumers Buildings consume nearly half of all the energy produced in the US: (source):

75% of all the electricity produced in the US is used just to operate buildings (globally, these percentages are even greater):

The building sector was responsible for nearly half (45%) of all the CO2 emissions in the US in 2010 (by comparison: transportation accounted for 34% of CO2 emissions and industry just 21%):

IWS is in a second-to-none position to profit from the trend from industrial nations to enact laws for the reduction of CO2 emissions publicly and privately. There exist no other sector, where that much greenhouse gases can be reduced as being the case with buildings. Thus, IWS’s focus is set on a sector which is booming and experiencing sustainable backup by governments.

IWS: The leading company in the field of heat recovery from wastewaters

• IWS has designed, developed and deployed a patented method for extracting heat from raw sewage flows.

• IWS technology provides simple and direct heat exchange from untreated wastewater.

• Tailored to building specifications for new and retrofit applications.

• IWS offers the most energy-saving, cost-effective & environmentally-friendly

solutions for a building’s heating, cooling and hot water.

Benefits of IWS Sewage Heat Recovery

• Energy savings and primary energy cost reduction of 30-85%

• Pay back periods typically less than 10 years (geothermal applications have potential for immediate payback)

• Reduced Fossil Fuel consumption Reduced CO2 and GHG emissions

• Easy install into new or existing infrastructure

• Trouble free operation and maintenance with a long product life-cycle

• LEED® points towards sustainable design

The already installed IWS systems in commercial buildings in British Columbia impressively demonstrate the global potential of the SHARC technology. For example, the Gateway Theatre in Richmond has installed the IWS system in April 2013 and reports on cost savings of $15,000 annually. The payback period is 6 years, whereas 75% in energy savings are realized every year (reduction of greenhouse gases: 70 tonnes per year). Most interestingly, the federal and provincial governments have granted an incentive worth $85,300 – a trend which should increase dramatically in the foreseeable future as governments globally are creating more and more incentives to reduce emissions. IWS should profit from this trend in a unique and massive fashion.

The IWS system has been installed in numerous residential buildings around Vancouver, which have reported on energy savings between 75-80% along with GHG reductions of 100-150 tonnes annually. Other already installed IWS system in residential buildings, as well as planned installations, can be viewed and followed here, whereas installations in industrial and public buildings can be followed here.

IWS Applications (some of the places IWS is currently working on)

• Commercial & Retail Buildings • Schools & Sport Facilities • Condominiums & Apartments • Industrial Processes • District Energy Systems • Aquatic Centers / Natatoriums • Hospitals & Long-term Care • University/College Campuses • Public Facilities • Geothermal Systems

Further information on IWS and its SHARC technology The SHARC system is described by IWS in a 2-minute video:

Link to above video: https://www.youtube.com/watch?v=eNYqDonAsGs 5-minute video from SHARC: https://vimeo.com/95958208 Corporate website of SHARC: www.sharcenergy.com Corporate website of IWS: www.sewageheatrecovery.com

Disclaimer: The above content is solely a translation from the German version. The English version is not for distribution in the USA or any other country where restrictions exist. Capital Manager is not a registered financial advisor. This is not a buy or sell recommendation. Neither Capital Manager nor its owners or affiliates own stock in International Wastewater Systems Inc. (“IWS”). Capital Manager has received a cash compensation to write this report. Therefore, conflicts of interest exist. Therefore, this content is not to be construed as independent financial analysis but strictly as advertisement. IWS has not reviewed the content prior to publication by Capital Manager. Fundamental risks also exist, which should be discussed with a registered financial advisor. Capital Manager does not guarantee the correctness of anything stated or referred herein. Much of this content is forward-looking in nature. Please consult with your financial advisor before making any investment decision. Nothing in this article should be construed as a solicitation to buy or sell any securities mentioned. Capital Manager, its owners and affiliates are not registered broker-dealers or financial advisors. Before investing in any securities, you should consult with your financial advisor and a registered broker-dealer. Never make an investment based solely on what you read in an online or printed report, including Capital Manager’s report, especially if the investment involves a small, thinly-traded company that isn’t well known. Capital Manager’s views and opinions regarding the companies featured in reports are its own views and are based on information that were researched independently and were received, which Capital Manager assumes to be reliable. Capital Manager does not guarantee the accuracy, completeness, or usefulness of any content of this report, nor its fitness for any particular purpose. Lastly, Capital Manager does not guarantee that any of the companies mentioned in the reports will perform as expected, and any comparisons made to other companies may not be valid or come into effect. All statements in this report, other than statements of historical fact should be considered forward-looking statements. Much of this report is comprised of statements of projection. Statements in this report that are forward looking include that the mentioned companies are expected to generate cashflows or any type of revenues; that IWS or its partner(s) can and will start installing, implementing, developing and producing more systems/technologies; that the company can raise sufficient funds for corporate matters, development and operating its projects; that any of the mentioned projects or indications or estimates are valid or economic. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in these forward-looking statements. Risks and uncertainties respecting technology and renewable energy companies are generally disclosed in the annual financial or other filing documents of IWS and similar companies as filed with the relevant securities commissions, and should be reviewed by any reader of this report. In addition, with respect to IWS, a number of risks relate to any statement of projection or forward statements, including among other risks: the receipt of all necessary funds, approvals and permits; the ability to conclude a transaction to start or continue installments, implementations, development and production of its products/systems/technologies; uncertainty of future market prices, capital expenditures and other costs; financings and additional capital requirements for research, development, construction, and operating of its products; the receipt in a timely fashion of further permitting for its legislative, political, social or economic developments in the jurisdictions in which IWS carries on business; operating or technical difficulties in connection with technology activities; the ability to keep key employees, joint-venture partner(s), and operations financed. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. Capital Manager does not undertake any obligation to update any statements made in this report.

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