June 14, 2007 08:30 ET

H2O Innovation Announces the Closing of an Equity Financing of CAD 15.5M

QUEBEC CITY, QUEBEC--(Marketwire - June 14, 2007) - H2O Innovation (2000) Inc. ("H2O")(TSX VENTURE:HEO) is pleased to announce that it closed today a previously announced CAD 15.5M equity financing through AMSTERDAMS EFFECTENKANTOOR B.V. ("AEK") and which involved 14 other subscribers, including FONDACTION, le Fonds de developpement de la CSN pour la cooperation et l'emploi, SIPAR INC., SOCIETE INNOVATECH QUEBEC ET CHAUDIERE-APPALACHES and one of its directors, Mr. John G. Booth. Pursuant to the private placement, H2O issued a total of 8,852,015 units at a price of CAD 1.75 per unit for an aggregate consideration of CAD 15,491,026.25. Each unit will be converted into one common share at a price of CAD 1.75 and one warrant, the latter granting AEK and the other subscribers the right, for the next 24 months, to subscribe to a common share of H2O at a price of CAD 2.30.

The proceeds of the private placement will be applied to the completion of the previously announced proposed acquisition of a US based wastewater equipment company (the "Target") and for other working capital purposes. The closing of the private placement was not conditional upon the acquisition of the Target.

As part of this private placement, AEK has received fees equal to CAD 819,961.50, which represents 5.29 % of the proceeds of the placement and a total of 492,161 share purchase warrants which entitle its holder the right, for the next 24 months, to subscribe to a maximum of 492,161 common shares of H2O at a price per common share of CAD 2.30.

Under the private placement, AEK subscribed to 2,700,000 units. As a result of this private placement, AEK has acquired control, on behalf of fully managed accounts, of up to 29,230,489 common shares of H2O representing up to 60.61% of the currently issued and outstanding common shares of H2O, assuming only the full exercise of the warrants held by it. AEK seeks to contribute to the working capital of H2O in order to allow H2O to meet its obligations in its sales backlog that today amounts to CAD 10.1 M mostly intended for municipal infrastructures, of water treatment systems.

Under the private placement, FONDACTION subscribed to 742,857 units. As a result of this private placement, FONDACTION n now has control over 4,453,148 common shares of H2O representing up to 12.06% of the currently issued and outstanding common shares of H2O, assuming only the full exercise of the warrants held by it. FONDACTION holds the common shares and other securities of H2O for investment purposes.

About AEK

AEK is a Dutch broker and a Euronext admitted company, with offices located at Herengracht 208-214, 1016 BS, Amsterdam, Netherlands. AEK is a member of the International Securities Market Association (ISMA) and is governed by the Netherlands Authority for the Financial Markets. AEK operates as an intermediary in transactions in stocks, bonds, real estate shares and derivatives focusing on domestic and foreign institutional investors. AEK, as a group, manages EUR 600 millions on behalf of its clients.

About H2O

H2O is pursuing its market development in drinking water with a complete portfolio of membrane technologies for municipal, industrial and commercial sectors. H2O's mission is to develop, produce and market state of the art, environmentally friendly products dedicated to the production of drinking water and the treatment of wastewater and industrial processed water.

Forward-Looking Statements

Except for historical information provided herein, the press release may contain information and statements of a forward-looking nature concerning the affairs and business of H2O. These statements are based on management best possible evaluation of future events, and as such involve a number of risk factors. Such factors may include, without excluding other considerations, risks related to the negotiations surrounding the acquisition of the Target and requirements of regulatory authorities in connection therewith. As a result, readers are advised that actual results may differ from expected results. H2O is not required to update or revise publicly its forward-looking statements.

The TSX Venture Exchange and the Alternext Exchange assume no responsibility for the relevance or accuracy of this press release.

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