HEO H2O Innovation Inc

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H2O Innovation Inc. ("H2O Innovation" or the "Company") (TSX
VENTURE:HEO)(ALTERNEX:MNEMO:ALHEO) announces the completion, on June 17, 2009,
of the previously announced acquisition of substantially all of the assets of
Professional Water Technologies, Inc. ("Professional Water Technologies" or
"PWT") by an indirectly wholly-owned U.S. subsidiary of H2O Innovation, in an
arms' length transaction, pursuant to an asset purchase agreement executed on
May 28, 2009 (the "Acquisition"). The Company also announces today the
completion of an also previously announced equity financing of CAD$ 1.5 million
with Le Fonds d'investissement REA II Natcan Inc. ("Fonds REA II"). The proceeds
of this private placement are to be used by the Company for partial payment of
the Acquisition and related transaction costs. The completion of this financing
completes the total CAD$4.275 million equity financings previously proposed on
May 28, 2009 in relation to the Acquisition.


Acquisition positions H2O Innovation as a complete membrane filtration expert

This acquisition positions H2O Innovation as a complete membrane filtration
expert covering the full spectrum, from customized system design and in-house
manufacturing to maintenance solutions and operations efficiency consulting. PWT
and its unique line of specialty chemicals also allow H2O Innovation to develop
closer ties with its customer base in a continual relationship. The Company will
seek to extend such continual relationships to the more than 400 customers that
have installed H2O Innovation systems over the years and to further solidify the
customer relationships PWT brings. This one-of-a-kind offer-which differentiates
H2O Innovation from both equipment providers and chemical suppliers-should
enable the Company to increase its recurring revenues, benefit from higher
margins than those typical to equipment sales, and establish a lead position for
subsequent systems sales.


"We are very pleased to announce the closing of the acquisition of Professional
Water Technologies and to immediately start working with PWT's team to grow H2O
Innovation's water treatment systems after sales and maintenance solutions
business line, which will no doubt become a strong growth vehicle for our
Company for the years ahead" said Frederic Dugre, President and CEO, H2O
Innovation Inc.


Acquisition makes H2O Innovation's business model evolve

With the strategic acquisition of Professional Water Technologies, H2O
Innovation now counts two solid lines of business: Equipment & Systems sales and
After Sales & Maintenance Solutions. Through its Equipment and Systems business
line, H2O Innovation offers custom design, manufacturing, assembling and
commissioning of water treatment systems through innovation membrane filtration
and biological solutions. The After Sales & Maintenance Solutions line of
business-now counting on approximately 15 combined employees and 13
international distributors-offers customers a proprietary dendrimer-based highly
efficient line of patent-pending specialty chemicals, along with generic
products, replacement parts and solutions such as membrane forensics and systems
optimization. Going forward following its stated growth strategy, H2O Innovation
is contemplating a business mix that will see it generate 70% of its revenues
from sales of equipment and systems and 30% from after sales and maintenance
solutions. As of the third quarter of fiscal year 2009 ended March 31, 2009, H2O
Innovation recorded over CAD$4 million of sales of sales of services and
consumables while PWT recorded total sales of US$2.6 million for the year ended
December 31, 2008, based on its unaudited financial statements.


"As we mentioned when we first announced our intention to acquire the assets of
PWT, this is an important and strategic addition to our operations. With it, H2O
Innovation becomes a truly complete membrane filtration expert and our intention
is to be renowned as a leader in this field in North America and abroad"
concluded Frederic Dugre.


Reminder of the acquisition highlights

- Significantly grows H2O Innovation's sales of services and consumables-which
are generally recurring in nature


- Improves H2O Innovation's average consolidated gross operating margin

- Brings H2O Innovation's a proprietary line of specialty patent-pending
sustainable membrane pre-treatment and maintenance specialty chemicals


- Expands H2O Innovation into new geographical markets where the Company is not
currently active in the equipment business-60% of Professional Water
Technologies' sales are through a network of distributors in Australia, China,
Europe, India, Israel, Mexico, Taiwan, and Thailand


- Adds a 12,000 sq. ft. manufacturing facility and office space in Vista, California

- Allows additional synergies to be obtained through consolidation of certain
administrative functions and internal sales


"Our joining H2O Innovation signals the next exciting phase of our evolution,"
stated Stephen Dunham, PWT's President and CEO and H2O Innovation's newly
appointed Vice-President, After Sales & Maintenance Solutions. "Our unique
product capabilities, technical expertise, and global presence will have an
increased and synergistic value when combined with H2O Innovation's technical,
financial, and material resources."


Reminder of the terms of the acquisition

On May 28, 2009 H2O Innovation announced the execution of an asset purchase
agreement between an indirectly wholly-owned U.S. subsidiary of H2O Innovation,
and Professional Water Technologies pertaining to the acquisition of
substantially all of the assets of Professional Water Technologies in an arms'
length transaction. The purchase price of US$3.7 million is payable in cash and
may be increased up to US$5.7 million if PWT's sales reach US$13.1 million
within the 24 months period following the closing of the transaction. H2O
Innovation will also assume liabilities accrued, prior to closing, in the normal
course of business of PWT of approximately US$150,000.


Professional Water Technologies in numbers:

- Sales of US$2.6 million and EBITDA of US$0.53 million for the year ended
December 31, 2008 based on the unaudited financial statements of PWT-acquisition
is immediately accretive.


- Net book value of US$400,000 for the assets based on the unaudited financial
statements of PWT for the year ended December 31, 2008.


- Sustained revenue and profitability growth over the last 4 years.

- Professional Water Technologies is presently profitable.

Founded in 1995 and headquartered in Vista, California, Professional Water
Technologies develops leading patent-pending products for maintaining and
operating municipal, industrial, and commercial membrane filtration systems, in
particular for reverse osmosis systems. Professional Water Technologies
synthesizes and manufactures a unique line of dendrimer-based sustainable
specialty chemicals for membrane pre-treatment applications, and develops
specific blends for maintenance, preservation, and cleaning of membrane systems
that maximizes the operating efficiency, economy, and longevity of reverse
osmosis systems. In complement to its product line, PWT also offers
comprehensive analytic and technical capabilities aimed at maximizing the
efficiency and cost-effectiveness of reverse osmosis systems.


Equity financing with Fonds REA II

The Company has also finalized the transaction set forth in the letter of intent
it had entered into with Le Fonds d'investissement REA II Natcan Inc. whereby
Fonds REA II has indicated its interest to acquire from the Company 2,727,273
units at a price of CAD$0.55 per unit for a total consideration of CAD$1.5
million previously announced by press release on May 28, 2009 in connection with
the Acquisition. Each unit is comprised of one common share and one common share
purchase warrant and each warrant entitles Fonds REA II to purchase one
additional common share of the Company at a price of CAD$0.85 at any time prior
to the date that is 30 months following the closing of this private placement.
The net proceeds of this financing are to be used for the partial payment of the
purchase price for the Acquisition and related transaction costs as well as to
pursue its accelerate growth following the Acquisition and maximize its future
growth opportunities. The Warrants, and the Common Shares underlying the
Warrants, are subject to a statutory four-month hold period. The completion of
this financing completes the total CAD$4.275 million equity financings
previously proposed on May 28, 2009 in relation to the Acquisition.


Exchange of subscription receipts following closing of transaction

On June 4, 2009, H2O Innovation completed a separate equity offering whereby it
issued 5,045,454 subscription receipts for aggregate gross proceeds of
CAD$2,774,999.70. Each subscription receipt was exchanged following the closing
of the acquisition on June 17, 2009 pursuant to the terms of the subscription
receipt agreement for units consisting of one common share in the share capital
of the corporation and one common share purchase warrant. Each common share
purchase warrant will entitle the holder thereof to acquire at any time before
5:00 pm (Montreal time) on December 5, 2011, one common share at a price of
CAD$0.85 per common share. Individual certificates will be issued shortly to
holders of subscription receipts which do not need to take any action in order
to receive the common shares and warrants which they are entitled following the
exchange of subscription receipts. The proceeds from this offering of
subscription receipts were used by H2O Innovation to partially fund the
Acquisition.


Prospective disclosures

This press release may contain prospective disclosures representing current
expectations of H2O Innovation and are subject to certain risks and
uncertainties. For details of these risks and uncertainties please refer to the
Company's Annual Information Form dated September 26, 2008 available on SEDAR
(www.sedar.com). H2O Innovation is under no obligation to revise or update the
prospective disclosures contained in this press release.


About H2O Innovation

Exclusively dedicated to water treatment, H2O Innovation is establishing itself
as a key player in sustainable development and the field of clean technologies.
H2O Innovation designs, develops, produces, and integrates state-of-the-art
water treatment systems for the production of drinking water, the reclamation of
water, the treatment of wastewater and industrial processed water in the
municipal, commercial, pharmaceutical, industrial, mining, and energy markets.
H2O Innovation has approximately 100 employees and eight offices including two
manufacturing and assembly plants in Canada and the United States. Shares of H2O
Innovation are listed on the TSX Venture Exchange (HEO) as well as on the NYSE
Euronext Alternext Exchange (MNEMO:ALHEO).

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