Trading Update

For Immediate Release 26 January 2015

HaloSource, Inc.

("HaloSource" or the "Company")

Trading Update

HaloSource Inc. (HAL.LN, HALO.LN), the global clean water technology company traded on London's AIM, today issues a trading update for its financial year ended 31 December 2014 ahead of its preliminary results for the period which it expects to announce on Tuesday, 10 March 2015.

Management today confirms that revenue for the full year ended 2014 is expected to be US$21.0 million, in line with market consensus. The 2014 revenue figure represents growth of approximately 30% year-on-year, accelerating to approximately 35% for H2 2014 compared to the prior period in H2 2013. The increase was driven by strong performance in Drinking Water and Environmental Water, together with a more modest revenue increase in Recreational Water.

The revenue growth achieved in 2014 is attributable to:

Drinking Water

Revenue grew by 97% to US$6.3 million as we experienced continued acceleration of orders from our strategic partners in China, Latin America and India including Perfect, Jarden and Eureka Forbes. In each case we continue to see strong growth in the market for point-of-use (POU) water purification devices, a trend which we expect to expand further, together with demand for our class leading HaloPure® regulatory-approved drinking water technology. Deployment of our HaloPure®media has been key to helping our partners participate in markets where regulatory considerations are becoming more demanding while also differentiating their product offerings from other less effective technologies. One example of this robust growth in 2014 was the shipment of 516,000 cartridges for the year to Perfect China, our partner in the direct sales channel, up from 216,000 in 2013; an increase of 139%.

As announced on 24 December 2014, we extended our stand-still agreement with a major multinational consumer goods company for the third consecutive year for incorporation of our class leading bromine based HaloPure® disinfection technology in their gravity-fed water purification devices sold through the retail and online channels in China. Shipments of cartridges to this partner continue in support of their national launch.

Environmental Water

Revenue grew by over 130% to US$3.0 million as we successfully expanded existing partnerships with Stormtec in Canada as well establishing new partnerships with major segment players like Rain-4-Rent in the US. We expect to continue on this track in establishing additional strategic tie-ups in 2015 as the markets for US industrial segments continue their recovery.

Recreational Water

Revenue grew 1% to US$11.5 million despite the challenging headwinds in the North American recreational water market driven by poor weather conditions across the country for the second year in a row. This constrained sales growth across the entire specialty chemicals segment. Despite these headwinds, the Company established an important OEM partnership with Fluidra S.A., Europe and the Middle East's largest distributor of pool and spa products. Looking forward, the overall residential real estate market in North America continues to show early signs of recovery which we feel bodes well for a return to solid growth in 2015.

Martin Coles, CEO of HaloSource, commented, "Our strategic focus of delivering innovation in the chemistry of water purification which we take to market through strategic relationships with key industry players is clearly gaining traction and has equal application in all segments where we operate. Our relentless focus on the areas in which we excel is starting to pay-off and, as a result our Drinking Water and Environmental Water business units continue to increase their contributions to our overall financial performance. We remain focused on achieving cash flow breakeven and profit as we drive revenue growth and margin expansion while also maintaining tight reins on our spending."

HaloSource remains confident in its prospects for growth in 2015 and beyond. Following the successful placing in November 2014 to raise £7m (approximately US$10.3m net of expenses), together with continued tight control on expenditure during the year, we had approximately US$14m of net cash at the year-end giving the Company adequate capital to continue executing its business plan.

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About HaloSource

HaloSource, Inc. creates innovative solutions for water purification that serve people, preserve the planet 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.

Founded in Seattle, Washington, HaloSource has grown to become an influential leader in three market segments: drinking water, recreational water, and environmental water treatment and remediation. 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.

HaloKlear, HaloPure, SeaKlear and HaloShield are either trademarks or registered trademarks of HaloSource, Inc. All other trademarks, brand names or product names belong to their respective holders.