September 15, 2008 16:05 ET

H2O Complete a Bank Financing CA$3.5 M and Streamlines Fixed Operating Costs

QUEBEC CITY, QUEBEC--(Marketwire - Sept. 15, 2008) - H2O Innovation (2000) Inc. ("H2O,")(TSX VENTURE:HEO)(ALTERNEXT:MNEMO:ALHEO) announces that it has executed a CA$3,500,000 loan with a Canadian chartered bank. Also, following the recent acquisition of Itasca Systems Inc., the management has reviewed all of its operating processes and, in implementing the resulting synergies, plans to reduce its annual fixed charges for sales and administrative expenses by some CA$750,000, on a consolidated basis.

Due to the growth of its backlog (CA$21 M as at August 26, 2008), the H2O management deemed it appropriate to complete this financing in order to provide required cash-flow for the execution of the contracts over the next few months. The CA$3.5 M will be allocated to H2O's working capital fund. It is the first H2O's long-term bank financing, which objective is to create reasonable leverage to its working capital.

At the same time, adjustments made during the first quarter of this fiscal year as part of efforts to integrate various companies acquired over the past few months, has the objective to increase internally working capital generated from operating activities without impacting the company's organic growth strategy. "This budget in which all members of the management team have participated, will allow us to optimize use of our human and material resources. More directly, we believe that increasing cash-flow generated from our operations will provide us leverage to future acquisitions", explained president and CEO Frederic Dugre.

About H2O

H2O's mission is to develop, manufacture and market innovative, environment-friendly, products intended for drinking water production, wastewater treatment and industrial processes.

Forward-Looking Statements

This press release contains forward-looking statements which reflect H2O's current expectations regarding future events. The forward-looking statements involve risks and uncertainties. Actual results could differ materially from those projected herein. H2O rejects any obligation to revise or update the forward-looking statements contained in this press release.

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