HydraLogic Reports Fourth Quarter and Fiscal 2008 Financial Results

    TORONTO, April 30 /CNW/ - HydraLogic Systems Inc. ("HydraLogic" or the
"Company") (TSX.V: HLS, OTC Pink Sheet: HYSYF) today announced the Company's
financial operating results for the fourth quarter and fiscal year ending
December 31, 2008 for which Financial Statements and Management's Discussion &
Analysis have been filed on www.sedar.com.
    "While flushed with growth opportunity, the Company undertook a
disciplined approach to reducing operating costs, consolidate operations and
to optimize sales within its current business units" explained Michael
Beckley, President and Chief Executive Officer of HydraLogic Systems Inc.
"Growth and our ability to implement improvements were greatly impaired by a
weak working capital position and difficult economic conditions, particularly
in the USA where we recorded 67% of our annual revenues. Despite these
conditions, the Company maintained sales revenue at $7.3 million and improved
EBITDA by 29% in fiscal 2008."
    Information in the table below is expressed in thousands CDN$ except per
share data

                                     Q4- 2008   Q4- 2007   Fiscal    Fiscal
    Year Ending December 31,         Unaudited  Unaudited  2008      2007
    Revenue                          $1,132     $1,469     $7,258    $7,308
    Gross Profit                     $259       $745       $3,890    $3,870
    Net Loss                         $(5,483)   $(2,268)   $(5,967)  $(4,140)
    Basic and diluted (Loss)
     per Share                       $(0.08)    $(0.03)    $(0.10)   $(0.09)

      -  Revenue flat in 2008
      -  $647,000 improvement in EBITDA1 or 29 % over comparative period
         in '07
      -  Significant non-cash expense make up approximately $4.6 million,
         which accounts for over 75% of reported loss in '08
      -  Gross Margin increased 2% to 54%

    (1) Earnings before income taxes, depreciation and amortization

    "The collapse in the US market and economic conditions at December 31,
2008, resulted in the Company reporting significant non-cash expense including
goodwill impairment, write-down and amortization of assets, warrant cost and
interest expense of approximately $4.7 million or greater than 78% of the
reporting loss for the 2008 operating year."
    "We achieved significant optimization in areas of manufacturing,
distribution and administration with revenue creation centered on high margin
reoccurring revenue platforms. While difficult to interpret, with the extent
of write-downs taken in Q4, management is confident in the efficiencies and
direction of the Company and continues to focus sales in lucrative geographic
areas for both odour and mosquito control. The positive impact of the
Company's efforts to reduce operational costs continues to impact the balance
sheet and will carry on over the first two quarters of 2009 as severance
commitments, systems integration and physical facility changes run their
    As of April 30, 2009, the Company was in breach of financial covenants
with its Lender. In particular, the Company reported Q3 and Q4 2008
consecutive quarters with negative Net Income (after adding back (i)
Amortization, (ii) Depreciation, (iii) Taxes and (iv) Interest). The Company
is in discussions with the Lender to make amendments to the general covenants
in the September 5th 2008, Investment Agreement and is also seeking additional
sources of debt and equity financing to replace the Lender's note.
    Commenting on the Company's outlook for 2009, Beckley offered, "Through
years of investment in products, brands and programs we have established a
reliable high margin business. The Company has a clean balance sheet going
into 2009 and better than ever prospects for reporting profit from its
products. We have redefined the value propositions and operating efficiencies
of our business units and have a pipeline of technology, alliances and
opportunity to translate new sales into better bottom line performance. We
maintain a steady course in the optimization of the acquired businesses
including HLS Ecolo that, as recently reported, is proving successful in
attracting significant distribution alliances. We will further leverage our
success in having achieved a leadership position in the fastest growing
segment of the entire pest industry and take steps to advance our very
exciting and industry unique line of environmentally responsible mosquito
control repellents and devices for prominent positions on retail shelves
across the US and Canada".

    About HydraLogic Systems Inc.

    HydraLogic blends proprietary environmental formulations and manufactures
misting systems for product application that together serve the multi-billion
dollar mosquito and odour control sectors in the U.S., Canada and 20 other
countries. Through its Bug Defence (www.bugdefence.com) and HLS Ecolo
(www.hlsecolo.com) distribution and service businesses, the Company is a
leader in providing turn-key dealer and service platforms applicable to many
markets around the globe. HydraLogic Systems Inc. is listed for trading on the
TSX Venture Exchange - symbol: HLS.

    To receive Company press releases, please email jacqueline@chfir.com and
mention "HydraLogic News" on the subject line.

    Neither TSX Venture Exchange nor its Regulation Services Provider (as
    that term is defined in the policies of the TSX Venture Exchange) accepts
    responsibility for the adequacy or accuracy of this release.

    Forward-Looking Statements

    This press release contains certain "forward-looking statements". These
statements relate to future events or future performance and reflect
expectations and belief regarding growth, results of operations, performance,
business prospects, opportunities or industry performance and trends. These
forward-looking statements reflect current internal projections, expectations
or beliefs and are based on information currently available. A number of
factors could cause actual events or results to differ materially from the
results discussed in the forward-looking statements. Although it is believed
that the forward-looking statements contained in this press release are based
upon reasonable assumptions, investors cannot be assured that actual results
will be consistent with these forward-looking statements. These
forward-looking statements are made as of the date of this press release, and
HydraLogic Systems Inc. assumes no obligation to update or revise them to
reflect new events or circumstances, except as required pursuant to applicable
securities laws.

    %SEDAR: 00020350E

For further information:

For further information: please visit www.hydralogic.com or contact:
HydraLogic Systems Inc., Michael Beckley, President & CEO, Tel: (416) 740-3900
ext. 400, Email: beckley@hydralogic.com; CHF Investor Relations, Jacqueline
Wagenaar, Account Manager, Tel: (416) 868-1079 ext. 289, Email:

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