HAL.L Regulatory News (HAL)

3 November 2016

This announcement contains inside information

HaloSource, Inc.

("HaloSource" or the "Company")

Trading Update and Commencement of Strategic Review

HaloSource, Inc. (HAL.LN, HALO.LN), the global clean water technology solutions company trading on London's AIM market, today provides an update on trading ahead of the year ending 31 December 2016.

As announced on 26 July 2016, total revenues from continuing operations for the six months ended 30 June 2016 were negatively impacted by manufacturing related stoppages at a key customer in China. Although these issues were resolved over the summer, demand for the Company's products into the second half from this key customer has been weaker than expected. As a result, the Company expects revenues for the year ending 31 December 2016 to be materially lower than market expectations, and in the range of $2 to $3 million. While the Company has taken significant steps during the year to reduce operating expenses, the reduction in revenues will result in the net loss for the full year being higher than market expectations.

As at 31 December 2016 the Company expects to have net cash of approximately $2.0 million, which would fund the Company through to Q2 2017 at the current cash burn rate. However, the Board will continue to take proactive steps to reduce the cash burn rate to prolong the funding position of the Company through to at least the end of 2017. This includes closing its production facility in India by the end of 2016, with customers in India to continue to be serviced by its Chinese facility. The impact of these steps will result in the Company's expectations for revenue for 2017 being in a range of $4 to $6 million.

In light of the above, the Company's Board will undertake a review of all strategic options available to the Company. Shareholders will be updated further in due course.

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About HaloSource

HaloSource, Inc. innovates and integrates technologies to deliver clean, drinking water solutions to partners with trusted brands around the world. The Company works with scientists and industry experts across the globe in search of new ways to improve drinking water quality and has been awarded more than 30 patents for its ground breaking chemistries, which provide safe drinking water for more than 10 million consumers globally. The Company's class-leading HaloPure® Drinking Water technology has the highest global certifications, including registration with the US EPA.

Founded in Seattle, Washington, HaloSource has grown to become an influential leader in drinking water purification. HaloSource is headquartered in the US with operations in China and in India. Learn more about the Company's research and development and future cutting edge technologies by visiting www.halosource.com.

HaloPure is a registered trademark of HaloSource, Inc. All other trademarks, brand names or product names belong to their respective holders.

This document contains certain forward-looking statements relating to the Company. The Company considers any statements that are not historical facts as "forward-looking statements". They relate to events and trends that are subject to risk and uncertainty that may cause actual results and the financial performance of the Company to differ materially from those contained in any forward-looking statement. These statements are made by management in good faith based on information available to them and such statements should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying any such forward-looking information.