Trading Update

20 July 2017 

HaloSource, Inc.

("HaloSource" or the "Company")

TRADING UPDATE

HaloSource Inc. (HAL.LN, HALO.LN), the global clean water technology company traded on London Stock Exchange's AIM market, today announces a trading update for the six-month period ended 30 June 2017.

Total revenues from continuing operations for the period ended 30 June 2017 are expected to be $0.9 million (H1 2016: $1.4 million, H2 2016: $0.7 million). Revenue during the period came primarily from established customers including Perfect, Lonsid, Midea, and Pentair. As previously announced, in H1 2017 the Company completed successful NSF testing of its lead-removal media, raised $2.2M of additional financing (from new and existing investors) and signed a 5-year e-commerce distribution agreement with JiuBan in China.

The Company continues to make significant reductions in its operating expenses and expects them to be reduced in H1 2017 by more than 30% as compared to H1 2016. Given the Company's focus on reaching cashflow breakeven, management expects to continue to reduce operating expenses in H2 2017.

Net cash as at 30 June 2017 is expected to be $2.1 million. The Company expects that for the year ended 31 December 2017 revenue from continuing operations will be between $4 million and $5 million, operating expenses will be between $5.5 million and $6 million and the net loss will be between $3.5 million and $4.5 million.

James Thompson, CEO of HaloSource, commented:

"We are very pleased with the progress we have made with our newly executed all-drinking water business strategy. We grew revenues almost 30% over 2H 2016, reflecting the continued interest by our customers in our technologies, and we expect to see continued growth going-forward. Additionally, we made significant announcements in the area of lead-removal and a brand new e-commerce distribution partner in China. New products and new distribution will drive continued top-line growth in a market that continues to grow at double digit rates.

Customer concentration is always an issue with emerging technology companies and historically we have experienced revenue shortfalls as a result. With new distribution agreements like Jiuban, where their exclusivity in the e-commerce channel is maintained with the purchase of $10 million worth of products over the initial 3-year period of the agreement, we believe we can start to diversify our customer concentration risk. This deal is the first of its kind for the Company; directly selling a branded line of bottles and pitchers marketed under HaloSource's new astreaTM brand (www.astreawater.com) via an established e-commerce partner. We expect to do more of these types of distribution agreements going forward, where we extract more value from our portfolio of best-in-class technologies."

The information communicated in this Announcement is inside information for the purposes of Article 7 of Market Abuse Regulation 596/2014 ("MAR"). For the purposes of MAR and Article 2 of Commission Implementing Regulation (EU) 2016/1055, this announcement is being made on behalf of the Company by Craig Crowell, Chief Financial Officer. 

Enquiries:

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. astreaTM is a new brand in progress of registration for consumer products. 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