HydraLogic Systems Inc.
TSX VENTURE : HLS

HydraLogic Systems Inc.

May 31, 2006 16:00 ET

Hydralogic Announces First Quarter 2006 Financial Results

BARRIE, ONTARIO--(CCNMatthews - May 31, 2006) -

- Revenues increase by 173 percent to $1.28 million

- Gross margin increased from 24 percent to 46 percent

- Outlook remains positive

HydraLogic Systems Inc. (TSX VENTURE:HLS) today reported its results for the first quarter ending March 31, 2006.

For the three-month period ending March 31, 2006, revenues increased by 173 percent on a year-over-year basis to $1.28 million versus $469,825 during the same period in 2005. Gross profit for the period increased to $596,553, or 46 percent of revenues versus $114,203, or 24 percent of revenues for the corresponding period in 2005. The Company reported a net loss of $526,783 or C$0.02 per share versus a net loss of $524,758 or C$0.02 for the same period in 2005.

"I am very pleased with our progress year to date and look forward to reporting similar financial performance in the quarters to come," noted Michael Beckley, President and CEO of HydraLogic Systems Inc. "Given the success we've had with our acquisition and integration efforts, and overall market demand for our products, we are very confident in the growth and profitability prospects of HydraLogic."

Detailed financial statements are available at www.sedar.com

NOT FOR DISSEMINATION IN THE UNITED STATES

About HydraLogic Systems Inc. - www.hydralogic.ca

HydraLogic Systems Inc. is an environmental technology company that is focused on the replacement of harmful polluting chemicals with non-toxic organic solutions. Its technologies are being commercialized through distribution partnerships with leading regional, national and international companies with clientele in the waste management, pest control and agricultural products industries.

This press release may contain forward-looking statements and involve known and unknown risks, uncertainties and other factors that may cause the Company's actual results, performance or achievements to be materially different from the results, performance or achievements expressed or implied by the forward-looking statement. Factors that impact such forward-looking statements include, a month others, changes in general economic conditions, interest rates, government regulations and competition. The Company disclaims any intention or obligation to update or revise and forward-looking statements unless required by applicable law.

The TSX VENTURE EXCHANGE has neither approved nor disapproved the contents of this press release.

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