Board Changes and Trading Update

For IMMEDIATE RELEASE 21 october 2011

Board Changes and Trading Update

Seattle, U.S.A. - HaloSource, Inc. ("HaloSource" or "the Company") (HAL.LN, HALO.LN) the clean water and antimicrobial technology company, announced the resignation of its Chief Executive John Kaestle.

Concurrent with this change, the Company's Board of Directors has asked Martin Coles, currently Executive Deputy Chairman, to step into the role of Chief Executive Officer effective immediately with the intent of confirming this as a permanent full-time position effective November 1st. The Board is very pleased that Martin has accepted this new role and he will also remain a member of the Company's Board of Directors.

Martin joined HaloSource in July 2011 as Executive Deputy Chairman and has held a number of customer and consumer facing senior executive roles and board positions in leading international blue-chip companies spanning a wide variety of sectors including consumer industries, technology and sport. He has over 30 years of significant business experience at the operating level together with consulting and advisory work on consumer engagement, branding and corporate strategy and brings senior board experience to HaloSource as its new Chief Executive. 

Prior to joining the HaloSource Board Martin served as President of Starbucks Coffee International and COO of Starbucks Coffee Company during a 6 year period with responsibility for Company operations in 51 countries under a number of different ownership structures. He previously served as President and CEO of the Reebok brand, was a Director of Levi Strauss and Co. and held senior executive positions at Nike and Pepsi Cola Bottling. Martin began his career in operations at Procter and Gamble in the UK moving with the company to the US in 1980 and where he held senior positions both in operations and product marketing.

Martin holds a BSc (hons) in Biochemistry from the University of Wales in Swansea, UK. He is a former chair of the Advisory Board for the University of Washington International Business School, is a member of the Advisory Board for Seattle University International Business School serving concurrently as a fellow of the Albers Business School.

Commenting on the appointment, Jerry Wetherbee, Board Chairman of HaloSource, said:

"On behalf of the entire Board, I would like to thank John Kaestle for his many years of devoted service to our company and wish him well in the next phase of his career. Additionally, the Board feels very fortunate to welcome a Chief Executive of Martin's stature. He is a seasoned business professional with extensive corporate knowledge and insight, and we look forward to working with him in the next phase of HaloSource's commercialization."

Martin Coles said: "I am delighted to step into the role of Chief Executive at HaloSource. The Company has established itself as a global leader in clean water technology a business segment with unlimited global growth potential where current entrants are barely scratching the surface of consumer demand.

I look forward to working as a member of the HaloSource team bringing clean water to the world and achieving our potential in this huge global business sector".

Trading Update:

In respect to the Company's trading, the Board has revised its previously provided revenue guidance for the full 2011 year to the range of $12-13M. As the company reported in July, the recreational water business's annual autumn distribution period is key to achieving the 2011 forecast. At this point, orders into distribution have not concluded as expected in the period post Q2. While we expect this to impact negatively our Q4 revenue, we envisage volume improvement in the first half of 2012, in anticipation of next year's pool season.

HaloPure's business has now shipped approximately 16,000 Waterbirds (Bajaj-branded XTP-21 powered by HaloPure) in the year-to-date, and expect to ship multi-thousand units per month over the balance of the year. Whilst this level is below our earlier forecasts, we are working with Bajaj on product enhancements and new packaging to accelerate growth and be ready for the 2012 key selling monsoon season. In addition to Bajaj, we signed a major new partner in the global direct selling space in August and expect several significant announcements through the balance of the year.

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