HAL.L Regulatory News (HAL)

23 February 2016

HaloSource, Inc.

("HaloSource" or the "Company")

UPDATE ON STRATEGY AND TRADING AND SALE OF ENVIRONMENTAL WATER BUSINESS

HaloSource, Inc. (HAL.LN, HALO.LN), the global clean water technology company traded on London's AIM, today announces that its Board has undertaken a review of the Company's strategy and is implementing its plan to focus exclusively on the growth of its Drinking Water business going forward. The Company is making structural changes to the Drinking Water business to place key resources in its two major markets, China and India, resulting in significant headcount reductions in the United States. The Board expects that this will help drive operational efficiencies as well as improve the Company's ability to work with key Drinking Water customers in the Asia-Pacific region.

In conjunction with its strategic review, the Company received an approach from Dober Chemical Corporation ("Dober") to acquire the Company's HaloKlear® branded Environmental Water business which delivered revenues of $2.4 million for the year ended 31 December 2015 but was not profitable during the year. Under the terms of the asset sale agreement, the Company will receive an initial cash consideration of $550,000, subject to post-closing adjustments, for the book value of inventory and certain capital assets related to the Environmental Water business, together with deferred consideration of not less than $303,000 and not more than $1,147,000 in cash dependent upon sales of HaloKlear® over the next two years. The deferred consideration will be payable quarterly by Dober. All cash received from Dober will be used to fund the working capital requirements of the Company. The sale of the Company's Environmental Water business and the structural changes the Company is implementing in its Drinking Water business will substantially reduce annual operational costs going forward.

As a consequence of its review, the Board now estimates that revenues from its remaining business segments for 2016 will be lower than current market expectations. However, the Board expects the net loss for 2016 to be in line with current market expectations.

Martin Coles, President and CEO of HaloSource, said:

"The plans we are implementing will leave HaloSource well positioned for success as a Drinking Water focused business. We will continue to focus our efforts on growing our presence in the Drinking Water market by providing market-leading technology that powers the devices of our existing business partners while adding new partnerships as additional players enter this rapidly growing business segment. We expect to improve operating margins and tightly control operating expenses while growing revenues going forward."

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About HaloSource

HaloSource, Inc. creates innovative solutions for water purification that serve people and protect our most valuable resource. The Company works with scientists and industry experts across the globe in search of new ways to improve water quality and has been awarded more than 70 patents for its ground breaking chemistries, which provide effective and environmentally responsible solutions to the growing issue of water stress.

HaloSource was founded in Seattle, Washington and has 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 and SeaKlear are either trademarks or registered trademarks of HaloSource, Inc. All other trademarks, brand names or product names belong to their respective holders.