Halosource (Di) Regulatory News (HALO)

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement via a Regulatory Information Service ("RIS"), this inside information is now considered to be in the public domain.

HaloSource Corporation

("HaloSource" or the "Company")

£1.6 million Fundraising, Trading Update, Change of Adviser, Issue of Warrants and Notice of Annual General Meeting

Highlights

· £1.6 million raised from new and existing shareholders to continue commercialisation of Company's lead reduction technology and astreaTM brand

· Successful product crowdfunding campaign completed on Indiegogo platform

· Initial launch customer for astreaTM ONE bottle announced on 18 July 2018

· Sales of the astreaTM ONE bottle to commence in Q3 via e-commerce channel

HaloSource Corporation (HAL.LN, HALO.LN), the global clean water technology company traded on London Stock Exchange's AIM market, is pleased to announce a proposed fundraising of approximately £1.6 million (approximately $2.0 million) (before expenses) through the issue of an aggregate of 158,570,498 new shares of $0.0001 each ("New Shares") to new and existing investors at a price of 1p per New Share (the "Issue Price") (the "Fundraising"). The New Shares will rank pari passu in all respects with the existing shares of $0.0001 each in issue ("Shares").

Completion of the proposed fundraising is conditional upon, inter alia, passing of resolutions by shareholders at the Annual General Meeting of the Company in order to ensure that the Directors have the necessary authorities and powers to allot the New Shares for cash on a non-pre-emptive basis. Notice of the Annual General Meeting is included in a circular which is being posted to Shareholders today (the "Circular"). The background to and reasons why the Board believes that the proposed fundraising is in the best interests of the Company and its shareholders as a whole and why the Directors unanimously recommend that shareholders vote in favour of the resolutions contained in the Circular are set out below.

The Company expects to issue 100,271,289 New Shares pursuant to a placing agreement entered into by the Company with its broker, WH Ireland Limited, (the "Placing Agreement") (the "Placing"), such shares to be issued to investors in the United Kingdom. Subscribers have also entered into conditional subscription agreements (the "Subscription Agreements") with the Company to subscribe for an aggregate of 58,299,209 New Shares (the "Subscriptions").

The net proceeds of the Placing and Subscriptions will be used to provide additional working capital and to fund the continued commercialisation of the Company's lead reduction technology and launch of its astreaTM branded business in the United States. The Directors anticipate that the net proceeds of the Fundraising will provide sufficient working capital for the Company until approximately the end of 2018. The Directors are continuing to explore means of raising additional capital.

The Issue Price represents a premium of approximately 11 per cent. to the mid-market closing price of 0.9p on 21 August 2018. The Fundraising is not being underwritten and is conditional on, inter alia, the passing of a resolution to waive pre-emption rights in respect of the Fundraising by shareholders at the Annual General Meeting of the Company to be held at 1725 220th Street SE, Suite 103, Bothell, Washington 98021 at 4.00 p.m. on 10 September 2018.

The New Shares will represent approximately 22 per cent. of the issued share capital of the Company as enlarged by the Fundraising (the "Enlarged Share Capital").

Application will be made to the London Stock Exchange for the New Shares to be admitted to trading on AIM ("Admission"). The New Shares will rank pari passu in all respects with the Shares, including the right to receive all dividends and other distributions declared, made or paid in respect of the Shares following Admission. It is expected that such Admission will become effective, and that dealings on AIM will commence, at 8.00 a.m. on 11 September 2018. Following Admission, the Company's issued share capital will consist of 721,576,274 Shares.

Related party transactions

Invesco Asset Management Limited and Woodford Investment Management Limited are substantial shareholders of the Company (the "Substantial Shareholders") and therefore classified as related parties under the AIM Rules for Companies ("AIM Rules"). Alan Matthews, James Thompson, Craig Crowell, and Kent Johnson (the "Participating Directors") are, by virtue of their directorships of the Company, also related parties of the Company under the AIM Rules. The Substantial Shareholders' and Participating Directors' (together the "Related Parties") participations in the Fundraising are considered related party transactions under the AIM Rules.

The independent Director, Massoud Entekhabi, the only Director not subscribing in the Fundraising, having consulted with the Company's nominated adviser, WH Ireland Limited, considers that the terms of the participations of the Related Parties in the Fundraising are fair and reasonable insofar as the Company's shareholders are concerned.

The Related Parties' interest in the Company, following Admission, will be:

Expected timetable

Each of the times and dates above is subject to change. Any such change will be notified by an announcement on a Regulatory Information Service. All times in this announcement refer to British Summer Time.

Background to and reasons for the Fundraising

As announced in the Company's preliminary results for the year ended 31 December 2017, the Company has focused on growing its business to a profitable scale as quickly as possible. The recently announced launch of the astreaTM ONE bottle at our first retail customer in the US, along with growing awareness of the seriousness of heavy metal contamination in drinking water, provides confidence that this product will be a commercial success.

The profitable growth of the Company's hydration products in the US is the Company's immediate objective. To support this strategy, the Company has launched the Fundraising to provide the additional working capital required by the Company to finance the launch of the Company's lead reduction technology via both e-commerce and retail channels and continue the growth of HaloSource's drinking water business.

Trading update

In the final results announcement issued on 9 May 2018, the Board indicated that achievement of market forecasts for the year ended 31 December 2018 would depend on the generation of significant H2 2018 sales. As a result of delays in anticipated sales orders in the Company's OEM division and the launch of astreaTM, the Board now expects results for the year to be significantly below market expectations.

Change of Adviser

HaloSource announces the appointment of WH Ireland Limited as its Nominated Adviser and sole Broker with immediate effect.

Issue of Warrants

In conjunction with the Fundraising, the Company has agreed to issue WH Ireland Limited warrants to subscribe for 3,171,410 shares of $0.0001 each at an exercise price of 1p per share.

For further information, please contact:

About HaloSource

HaloSource Corporation 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 novel technologies by visiting www.halosource.com or www.astreawater.com.

The HaloPure® and astreaTM brands are registered trademarks of HaloSource. All other trademarks, brand names or product names belong to their respective holders.

Forward-looking statements

This announcement contains statements about the Company that are or may be deemed to be "forward-looking statements".

All statements, other than statements of historical facts, included in this announcement may be forward-looking statements. Without limitation, any statements preceded or followed by, or that include, the words "targets", "plans", "believes", "expects", "aims", "intends", "will", "may", "should", "anticipates", "estimates", "projects", "would", "could", "continue" or words or terms of similar substance or the negative thereof, are forward-looking statements. Forward-looking statements include, without limitation, statements relating to the following: (i) future capital expenditures, expenses, revenues, earnings, synergies, economic performance, indebtedness, financial condition, dividend policy, losses and future prospects and (ii) business and management strategies and the expansion and growth of the operations of HaloSource Corporation.

These forward-looking statements are not guarantees of future performance. These forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of any such person, or industry results, to be materially different from any results, performance or achievements expressed or implied by such forward-looking statements. These forward-looking statements are based on numerous assumptions regarding the present and future business strategies of such persons and the environment in which each will operate in the future. Investors should not place undue reliance on such forward-looking statements and, save as is required by law or regulation (including to meet the requirements of the AIM Rules, the Prospectus Rules and/or the FSMA), HaloSource Corporation does not undertake any obligation to update publicly or revise any forward-looking statements (including to reflect any change in expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based). All subsequent oral or written forward-looking statements attributed to the Company or any persons acting on their behalf are expressly qualified in their entirety by the cautionary statement above. All forward-looking statements contained in this announcement are based on information available to the Directors of the Company at the date of this announcement, unless some other time is specified in relation to them, and the posting or receipt of this announcement shall not give rise to any implication that there has been no change in the facts set forth herein since such date.

Details of the Placing and Subscriptions

The Company has today announced that it has conditionally raised, in aggregate, approximately £1.6 million (approximately $2.0 million) (before expenses) by way of a Placing of 100,271,289 New Shares and Subscriptions for 58,299,209 New Shares with certain new and existing investors representing 22 per cent. of the Enlarged Share Capital, at an Issue Price of 1p per New Share. All of the Placing Shares have been conditionally placed pursuant to the Placing Agreement.

The Issue Price of 1p per New Share represents a premium of approximately 11 per cent. to the closing price of 0.9p on 21 August 2018. The Board unanimously agrees that the method of issue is appropriate to secure the investment necessary in order to provide funds for the growth and development of the Company.

The Placing and Subscriptions are conditional on, inter alia:

· The passing of the requisite resolutions at the Annual General Meeting;

· The conditions in the Placing Agreement being satisfied or (if applicable) waived and the Placing Agreement not having been terminated in accordance with its terms prior to Admission; and

· Admission becoming effective by no later than 8.00 a.m. on 11 September 2018 (or such time and / or date, being no later than 25 September 2018, as the Company and its broker may agree).

Accordingly, if any of these conditions are not satisfied or, if applicable, waived, the Placing will not proceed.

In connection with the Subscriptions, the subscribers have entered into the Subscription Agreements.

Terms of the Placing Agreement

Under the terms of the Placing Agreement, the Company's broker has agreed to use its reasonable endeavours, as an agent to the Company, to place the Placing Shares at the Issue Price with certain investors.

The Placing is not being underwritten.

The Placing Agreement provides for payment of certain fees and commissions.

The Placing Agreement contains customary warranties given by the Company in relation to, inter alia, the accuracy of the information in this announcement, certain financial information and other matters relating to the Company and its business. In addition, the Company will provide certain indemnities in respect of certain liabilities in connection with the Placing.

The Placing Agreement may be terminated in certain customary circumstances prior to Admission, including if: (i) the Company is in breach of the terms of the Placing Agreement (including the warranties); and/or (ii) there occurs a material adverse change in or an event having a serious adverse effect on any of the financial markets, or the operations, condition (financial or other), trading position or prospects or results of operations of the Company.

If this right is exercised, the Placing will not proceed.

The Placing Agreement is not subject to any right of termination after Admission.

Annual General Meeting

A notice convening the Annual General Meeting to be held at 1725 220th Street SE, Suite 103, Bothell, Washington 98021 at 4:00 p.m. on 10 September 2018 will be posted to shareholders. The resolutions to be proposed at that meeting are summarised below.

1. Ordinary Resolution - approve the re-election of the following directors of the Company: Alan Matthews, James Thompson, Craig Crowell, Kent Johnson and Massoud Entekhabi.

2. Special Resolution - amend the Company's Articles of Association to increase the number of shares authorised to be issued by the Company.

3. Special Resolution - disapplication of the shareholders pre-emption rights in connection with the proposed issue of New Shares pursuant to the proposed Fundraising.

4. Special Resolution - adoption of a new equity incentive plan by the Company.

5. Ordinary Resolution - approve the re-appointment of the Company's auditor, BDO USA LLP.

6. Ordinary Resolution - approve the remuneration of the Company's auditor.

Directors' and PDMR's Shareholdings

The beneficial and non-beneficial interests of the Directors and persons closely associated with them in Shares at the date of this announcement and following the Fundraising are set out in the table below.

Action to be taken in respect of the Annual General Meeting

Shareholders should check that they have received with the notice of meeting:

· A form of proxy or form of instruction for use in respect of the Annual General Meeting; and

· A reply-paid envelope for use in conjunction with the return of the form of proxy.

Whether or not Shareholders propose to attend the Annual General Meeting in person, Shareholders are strongly encouraged to complete, sign and return their form of proxy in accordance with the instructions printed thereon as soon as possible, but in any event so as to be received, by post to Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol BS99 6ZY or by hand to Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol BS99 6ZY, during normal business hours only, by no later than 4:00 p.m. on 6 September 2018 (or, in the case of an adjournment of the Annual General Meeting, not later than 48 hours before the time fixed for the holding of the adjourned meeting (excluding any part of a day that is not a business day in England)).

If Shareholders hold their shares in the Company in uncertificated form (that is, in CREST), those Shareholders may vote using the Form of Instruction or the CREST Voting Service in accordance with the procedures set out in the CREST Manual (please also refer to the accompanying notes to the Notice of General Meeting set out in the Circular). Voting instructions submitted via CREST must be received by the Company's Depositary (Computershare Investor Services PLC) by no later than 4:00 p.m. on 5 September 2018 (or, in the case of an adjournment, not later than 72 hours before the time fixed for the holding of the adjourned meeting (excluding any part of a day that is not a Business Day)).

Appointing a proxy in accordance with the instructions set out above will enable shareholder votes to be counted at the Annual General Meeting in the event of Shareholder's absence. The completion and return of the form of proxy will not prevent shareholders from attending and voting at the Annual General Meeting, or any adjournment thereof, in person should shareholders wish to do so.

Recommendation

The Directors of the Company believe that the resolutions to be proposed at the Annual General Meeting are in the best interests of the Company and Shareholders as a whole and unanimously recommend that shareholders vote in favour of the Resolutions.