HAL.L Regulatory News (HAL)

This press release contains certain forward-looking statements with respect to the operations, performance and financial condition of the Company. By their nature, these statements involve uncertainty since future events and circumstances can cause results and developments to differ materially from those anticipated. The forward-looking statements reflect knowledge and information available at the date of preparation of this press release and the Company undertakes no obligation to update these forward-looking statements. Nothing in this press release should be construed as a profit forecast.

HaloSource GROUP OPERATIONAL UPDATE

Seattle, U.S.A. - HaloSource, Inc. ("HaloSource" or "the Company") (HAL.LN, HALO.LN) the clean water and antimicrobial technology company is pleased to announce it has made strong progress in 2010 while generating revenue of $14.1m. This represents growth of approximately 20% for the full year. Revenue in Q4 2010 was US$3.7m, up 58% on Q4 2009, demonstrating momentum in the Company's growth. The Company looks forward to executing the strategy and business development plans highlighted at the time of the IPO and its expectations for 2011 remain unchanged.

HaloSource will announce its 2010 full year results on 22nd February, 2011. In advance of these results, the company is providing an update on trading since its AIM listing on 18th October 2010.

Summary

·; HaloPure Drinking Water revenue grew by more than 40% in 2010

·; Environmental Water revenue grew by more than 98% in 2010

·; In December, Bajaj Electricals launched a line of HaloPure powered drinking water devices for the Indian market

·; The company made strong progress with new and prospective customers across all businesses

·; The company is fully-funded and well positioned to undertake planned growth in 2011

HaloPure Drinking Water

Use of HaloSource's US Environmental Protection Agency ("EPA") registered HaloPure drinking water disinfection technology as a gold standard purification technology in India continues to expand. In the past quarter, the Water Quality Association (WQA) India task force has developed a series of revised regulatory recommendations for water purification devices that address the need for improvements in virus performance, contributing to new interest in HaloPure amongst manufacturers. Sales of HaloPure cartridges to existing Indian partners, Eureka Forbes and Genpure, grew in 2010. In addition on 21st December, Bajaj Electricals, a major distributor and retailer across India, launched its first HaloPure powered product. Encouraging progress has also been made on a series of pending distribution agreements with multi-national and regional companies for whom India is a focus market. Expansion of the HaloPure manufacturing facility in India, doubling capacity, is progressing and is due for completion at the end of Q2. Additive to India, HaloPure cartridges or components have now been sold in preliminary quantities in China, Brazil, Israel, Croatia, Turkey and Thailand.

The company has completed the development of a range of disinfecting HaloPure-powered pitcher products for in-home consumer use, along with the design and development of a gravity HaloPure-powered canister purifier for use in households in emerging markets. Available in three models, the HaloPure gravity unit can treat water for a family of five for up to six months. Commercial agreements for the distribution of these products are pending in India, Brazil,Indonesia, US, Canada and Mexico.

Final steps in the national certification of HaloPure in China have been completed and the company expects to receive full Ministry of Health clearance during 1H 2011. This will allow the full scale supply of HaloPure components to China-based device and appliance manufacturers and multi-nationals that sell consumer drinking water devices to China's rapidly expanding middle class. Additive to this, the company recently received a commercial scale order from a multi-national drinking water device manufacturer with plans to launch in China.

Water Clarification

HaloSource continues to build a robust Recreational Water business with a full line of specialty recreational water cleaning and clarifying products. The acquisition of the AquaPill™ and SPAroma™ product lines on 2nd December 2010 will provide further growth opportunities in recreational water through greater distribution and new formats for the company's SeaKlear® branded products.

Growth in the Environmental Water sector continues to be strong, with the company rapidly expanding beyond its core StormKlear storm-water remediation products. This has largely been driven by growing the company's regulatory reach state by state under the US Clean Water Act. The company believes its proprietary rapid-acting, dual bio-polymer technology will drive significant growth in 2011 by providing solutions in the oil and gas, mining and bio-fuels industries. A nationwide distribution agreement with a Fortune 500 service provider is also pending.

Antimicrobial Coatings

Beyond water technology, the company expects that continued regulatory efforts with USEPA will result in its HaloShield-powered textile products (marketed in the US under the Clorox Freshcare™ brand) becoming the first and only textile products to carry pathogenic-killing claims.

After debt repayment of $14.5m and the $3m Aquapill acquisition, the group had cash balances at 31 December 2010 of approximately $31.2 million. This funding ensures HaloSource is well positioned to build on the progress it has made in 2010 and undertake the extensive growth activities planned across its businesses in 2011.

ENDS

About HaloSource

HaloSource is a clean water technology company, headquartered in Seattle, US with operations in India and China. It is focused on the provision of cleaner, clearer and safer water using its proprietary N-halamine bead technology to clean and purify water, killing bacteria and viruses that may cause disease.

HaloPure provides safer drinking water. In 2009, it became the first new drinking water technology in 30 years to be granted both Manufacture-For-Use and Device registrations by the United States Environmental Protection Agency (USEPA), which is widely recognized as having the world's most stringent performance requirements for water purification. HaloPure® is a unique contact biocide technology that is proven to attack and kill a wide range of harmful micro-organisms and is approved for long-term use in a variety of markets, including the United States.

SeaKlear and StormKlear products use a second technology based on natural bio-polymers to provide water clarification and antimicrobial applications for treating recreational and environmental water; and HaloShield facilitates the binding of chlorine-based bleach to textiles such as sheets, lab coats and towels. www.halosource.com

About HaloSource's Markets

HaloPure products are principally targeted at consumers in emerging market countries, where access to safe drinking water is particularly poor. In an independent analysis of the global Point of Use drinking water device market carried out in 2005, Frost and Sullivan concluded that:

·; the market for residential water treatment equipment in China was estimated at $960 million in 2005, growing at an annual rate of 20.4 per cent between 2004 and 2011;

·; the market for residential drinking water devices in India was estimated at $425 million in 2009, and experiencing growth of approximately 25 per cent annually; and

·; in 2005 the global markets for filtration formats in the form of under-the-sink, counter top and replacement cartridges were growing annually at 20 per cent, 21 per cent and 18 per cent, respectively.

The World Health Organisation has estimated that 1.1 billion people lack access to safe drinking water and the Centre for Disease Control is recommending Point Of Use filtration and disinfection.