Trading Update

FOR IMMEDIATE RELEASE 7 FEBRUARY 2013

HALOSOURCE, INC.

("HaloSource" or "the Company")

TRADING UPDATE

Seattle, U.S.A. - HaloSource, Inc. ("HaloSource" or "the Company") (HAL.LN, HALO.LN), the clean water technology company, will announce its preliminary results for the year ended 31 December 2012 on 11 March 2013.

The Board of the Company is taking this opportunity to provide the market with an update of activity throughout the second half of 2012 and the outlook for 2013.

Highlights

·; Revenuefor the full year ended 31 December 2012 is expected to be in line with current market expectations at approximately $13.3 million.

·; The successful placing in October 2012 has strengthened the Company's balance sheet and enabled it to take advantage of and maximize the value in growth opportunities in its core business segments. At year end, total cash, including restricted cash and short-term investments, was approximately $27 million, giving the Company adequate resources to fund its plans for growth.

·; The Company announced several key achievements and milestones in the second half of 2012 which will provide a solid foundation for future growth:

o July 2012: An exclusive supply agreement with RST Environmental Solutions Limited for sales of the Company's HaloKlear products in New Zealand and Australia.

o September 2012: A supply agreement for HaloPure® Water Pitchers with Pentair Hidrofiltros', marking the Company's commercial entry into Brazil.

o October 2012: Entered into a development and production agreement with Tupperware, the U.S. based global direct selling company, to provide HaloSource's patented HaloPure® technology in cartridges for Tupperware's new line of gravity-based water purifiers that will be initially launched through Tupperware India.

o November 2012: A supply agreement with Enviroclin Bio Solutions, a leading water solutions provider in Malaysia, to market and sell its unique HaloKlear dry blend concentrates for water treatment in Malaysia, Singapore, Thailand and Brunei.

o November 2012: HaloSource signed a standstill agreement and is in advanced testing and commercial planning with one of the world's largest consumer products companies for deployment of HaloPure®-powered gravity water dispensers in China.

o November 2012: A truly revolutionary new product line was unveiled for treating swimming pool and hot tub water, new SeaKlear Mighty Pods™. This new line launched with two products initially; "Weekly Pool Care" and "Cloudy Pool Care". Both are designed specifically to make the task of pool water cleanup related to cloudy water, phosphate control, and scummy build-up simple to execute with a user friendly dosing system that incorporates the necessary "chemistry" into one easy to use, single dose water soluble pouch.

2012 Results

The Company delivered improved results for the year under review and expects revenue of approximately $13.3 million for the full year, to be broken down between:

·; HaloKlear (Environment Water Remediation) revenue of $2.1 million, up 160% from 2011

·; HaloPure® (Drinking Water) revenue of $2.2 million, up 58% from 2011

·; SeaKlear (Recreational Water) revenue of $8.8 million, down 4% from 2011

Business Review

The Company has made a number of major changes in its global Sales, Marketing, Business Development and other operating functions around the world. These changes were initiated in order to get closer to the end user and allow the Company to more quickly react to local needs and opportunities in the markets in which HaloSource operates. As a result of these changes, the Company successfully executed several new partnerships, launched new products, and revived partnerships with key players in certain markets.

HaloKlear (Environmental Water Remediation)

The HaloKlear business saw significant growth in 2012 (160%) driven largely by new partnerships with SIGSA (Latin America and Spain), RST (New Zealand and Australia) and Stormtec (Canada). Additionally, the Company continues to find new partners and new applications for its environmental water solutions in the United States. Innovation continues to be a factor as the Company remains focused on "green" technologies which, in many instances, are higher performing and more cost effective than existing applications.

In 2012, the Company signed four new supply agreements for HaloKlear products, including its first supply agreement related to treatment of municipal water in Malaysia. HaloSource expects more new partnerships in the near future and sees significant opportunities for growth in a variety of industries, including municipal water treatment, construction, oil and gas and mining, each of which produces significant amounts of water requiring remediation before recycling or returning it to the environment.

HaloPure® (Drinking Water Purification)

Water Purification revenues increased by 58% driven primarily by newly signed partnerships in China (Perfect), Brazil (Pentair) and India (Tupperware) as well as reinitiating growth with Eureka Forbes in India. 2012 also included a one-time fee related to a standstill agreement with a large multi-national corporation for exclusive rights to gravity-based water purification devices using HaloPure® technology in China.

SeaKlear (Recreational Water)

Revenues in the U.S. pool and spa industry, sold primarily under the SeaKlear® brand, were down 4%. The Company believes this is attributable primarily to inventory management initiatives with some of the Company's key distributors who are focused on optimising their inventory levels. Despite the challenges of an industry with marginal growth, the Company is very positive regarding its ability to gain market share through new product introductions and innovation, such as its Mighty Pods, launched in late 2012. Additionally, the Company is focused on driving deeper, more meaningful partnerships in the segment while focusing on consumer and end user needs and effectively building awareness for the SeaKlear brand and suite of offerings.

Outlook

The Company made significant progress in 2012 and successfully executed in a number of areas under its strategic initiatives, including the addition of several new global partners and the introduction of a new, innovative product in the SeaKlear segment. Additionally, the pipeline for growth continues to expand through new customers, new markets and new innovation as the Company is able to attract potential new users to its unique line-up of water technology products. The accomplishments achieved in 2012 are significant building blocks to sustained future growth. With these core partnerships and products in place, the Company expects to accelerate its growth trajectory in 2013.

HaloSource's CEO, Martin Coles, commented: "We are extremely pleased with our progress and internal execution against the core elements of our strategic plan; and most importantly the reception and application of our solutions from key business partners and end users.

Our innovative suite of water purification solutions clearly resonates with the market needs for greener solutions, increasing efficacy and lowering total cost of ownership, and simplicity in application/dosing. We are witnessing significant strengthening of demand for HaloSource powered solutions across all lines of our business and our growth trajectory is ramping sequentially both year-on-year and with each successive half yearly reporting cycle.

We are clearly gaining momentum behind innovation in our core technologies and the application of our scientific solutions in partnership with key industry players."

For further information:

About HaloSource

HaloSource (www.halosource.com) is a global clean water technology company headquartered in Bothell, Washington, U.S.A. We design solutions to protect people, preserve the planet and celebrate our most valuable resource-water that is safer, cleaner and more accessible for people everywhere.

HaloSource is committed to relentless innovation, industry-leading products and ongoing support for water-related philanthropy. Our proprietary technologies for drinking and recreational water, textile coatings, and environmentally friendly wastewater recycling, enable our partners to rid the world's water of impurities and return it responsibly to the earth.

HaloSource Technologies that Protect Water and Textiles:

·; HaloPure® mediais the most flexible, price-competitive disinfection solution for clean drinking water in the industry. In 2009, it became the first drinking water technology in 30 years to be registered by the United States Environmental Protection Agency (USEPA), widely recognized as having the world's most stringent performance requirements for water purification. In 2010, HaloPure® media was approved by China's Ministry of Health (MOH) and recognized for meeting the world's most stringent water purification requirements, a key differentiator for our multi-national partners. In Brazil, the use of HaloPure® media has met or exceeded all appropriate standards of the National Institute of Metrology, Standardization and Industrial Quality (INMETRO).

·; SeaKlear® Pool and Spa treatment products bring both natural biopolymers and antimicrobial applications for treating recreational water.

·; HaloShield®products consist of antimicrobial coatings solutions that employ unique technology that binds chlorine-based bleach to textiles such as sheets, lab coats and towels for use as a non-toxic biocide.

HaloSource Technologies that Preserve the Environment:

·; HaloKlear™products use natural biopolymers providing industrial water clarification with dramatic reductions in ecological impact.

HaloSource Initiatives that Celebrate Clean Water:

·; HaloSource supports organizations dedicated to sustainable clean water projects. Earlier this year, we were proud to be a presenting sponsor in the 2012 Carry5 awareness and fundraising event benefiting Water 1st International. In 2013, the company is working to provide clean water to a village in the Mdolo region of Malawi with their partner A Barefoot Mile.

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.

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This press release contains certain forward-looking statements. All statements contained in this press release that do not relate to matters of historical facts should be considered forward-looking statements. Forward-looking statements include statements with respect to the operations, performance and financial condition of the Company, the market for and benefits of its products and services, the Company's introduction and deployment of new products, the potential benefits of business relationships with third parties, and the Company's plans and strategies for future growth. By their nature, these statements involve uncertainty since future events and circumstances can cause results and developments to differ materially from those anticipated. The forward-looking statements reflect knowledge and information available at the date of preparation of this press release and the Company undertakes no obligation to update these forward-looking statements. Nothing in this press release should be construed as a profit forecast. These statements about future events are subject to risks and uncertainties that could cause HaloSource's actual results to differ materially from those that might be inferred from the forward-looking statements. HaloSource can make no assurance that any forward-looking statements will prove correct.