H2O INNOVATION INC.
TSX VENTURE : HEO
TSX CROISSANCE : HEO

H2O INNOVATION INC.

July 18, 2007 08:53 ET

H2O Innovation and the S.M. Group International Work Together to Offer Turn-Key Water Desalination Solutions in Algeria

QUEBEC CITY, QUEBEC--(Marketwire - July 18, 2007) - H2O Innovation (2000) inc. ("H2O")(TSX VENTURE:HEO)(ALTERNEXT:MNEMO:ALHEO) and the S.M. Group International inc. ("SMi") are proud to announce the concretization of a partnership agreement in view of offering turn-key water desalination plants in Algeria. As a result from a trade mission sponsored by the Canadian Embassy in Algeria, the two companies agreed to unite their expertise to offer what Algerian people need most: safe drinking water processed from seawater, an unending resource. Also, H2O reveals information about the acquisition of the Target Company: "WATERCO".

The agreement between H2O and SMi was publicly announced on June 5th, 2007 at the closing ceremony headed by His Excellency the Canadian Ambassador to Algeria, Mr. Robert W. Peck. This partnership has immediate effect as the teaming companies are already working on the first request for bids by L'Algerienne des Eaux ("ADE").The ADE is a Crown Corporation responsible for the implantation of a drinking water supply program in Algeria.

As an expert in the design and manufacturing of reverse osmosis plants, H2O offers a perfect answer to the current Algerian requirements. "By teaming up with the S.M. Group International inc., well known for its involvement in large scale water filtration plants in Quebec and abroad, we will be in position to present a vertically integrated team offering analysis, design, manufacture construction and operation services. This partnership is a strategic move to respond to Algerian tenders for turn-key facilities", commented Guillaume Clairet, H2O Director of Business Development. It is worth mentioning that the recent acquisition of Membrane Systems Corporation (California) and its up-to-date reverse osmosis technology, H2O holds a preferred position in the seawater desalination market in North America.

In Algeria, SMi is currently involved in over five projects in implementation stage. "As we are already well established in Algeria, we had to take into consideration the expanding water desalination market. By teaming up with H2O, a proven expert in this process, we are well positioned to approach this market with very competitive and comprehensive proposals", commented Gerard Laganiere, SMi Vice-President.

Update on the acquisition:

The H2O corporate executives want to clarify that the closing of the agreement aiming at the acquisition of a wastewater equipment company - "WATERCO"- previously announced on April 16th has not been completed yet. The negotiations concerning the transaction are slowed by the holiday season

About SMi

SMi is an engineering firm providing design and integration of scientific and technologic applications as well as realization of turn-key projects. SMi enjoys a worldwide reputation for the relevance of its scientific solutions developed in ever more complex challenges. SMi always fulfills its commitment to provide high quality scientific and technologic services without compromising on safety and welfare of worldwide populations. Its numerous partnerships with university research department, technology development centers and public sector research centers, allow SMi to access up-to-date technology developments and offer meaningful solutions from design to long term operation.

SMi catch line "From science to solutions to realizations" fits perfectly to describe this partnership aiming at a better living for the Algerian people.

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.

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