HydraLogic Systems Inc. announces completion of US$2,000,000 financing

    TORONTO, Sept. 5 /CNW/ - HydraLogic Systems Inc. ("HydraLogic" or the
"Company") (TSX.V: HLS - OTC Pink Sheet: HYSYF) announced today that it has
completed a US$2,000,000 financing of the Company (the "Financing") by
entering into an investment agreement (the "Investment Agreement") with CCM
Master Qualified Fund, Ltd. ("CCM") pursuant to which CCM invested
US $2,000,000 in the Company in exchange for a secured convertible promissory
note (the "Promissory Note") and 18,181,818 common share purchase warrants of
the Company ("Warrants"). Each Warrant entitles CCM to purchase one common
share in the capital of the Company (a "Common Share") at a price of US$0.11
per Common Share for a period of two years from the date of the Warrants. In
addition, in the event there is a Change of Control (as defined in the
Investment Agreement) of the Company, CCM, which is a principal shareholder of
the Company, will have the right to convert the principle amount outstanding
under the Promissory Note into Common Shares of the Company at a price of
US $0.11 per Common Share.
    The Promissory Note and Warrants issued pursuant to the Financing are
subject to a four-month hold period which expires on January 6, 2009, as
required by the TSX Venture Exchange and under Canadian securities
    The Financing was completed to significantly improve HydraLogic's
financial position. A portion of the proceeds from the Financing will be used
to pay out certain outstanding share price guarantee obligations in the
aggregate amount of US$1,124,919 payable to each of M-Nix Systems of Broward
County LLC and Third Coast Insect Control Inc. under certain purchase
agreements previously entered into with the Company. The remainder of the
proceeds from the Financing will be used for general corporate purposes.
    "We are extremely pleased to have completed this transaction" said
Michael Beckley, President and Chief Executive Officer of HydraLogic. "This
transaction puts HydraLogic in a much stronger financial position for the
fourth quarter of 2008 and the beginning of 2009."

    About HydraLogic Systems Inc.

    HydraLogic is an innovator of engineered misting systems and proprietary
environmental chemistries with reoccurring revenue distribution platforms. The
company strives to be market leaders in providing technologies, though turnkey
distribution and service models into the multi-billion dollar mosquito and
odour control industries as Bug DeFence and HLS Ecolo respectively.
    HydraLogic Systems is traded on the TSX Venture exchange - symbol: HLS.

    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.

    The TSX Venture Exchange does not accept responsibility for the adequacy
    or accuracy of this news release.

    %SEDAR: 00020350E

For further information:

For further information: Michael Beckley, President & CEO, (705)
735-9535 ext 25, beckley@hydralogic.com

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HydraLogic Systems Inc.

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