Scientific Research & Experimental Development (SRED) Federal Tax Credits Approved

    MISSISSAUGA, ON, Sept. 2 /CNW/ - Hy-Drive Management is pleased to
announce that Canada Revenue Agency (CRA) has completed assessment of the
Company's claim for Scientific Research & Experimental Development (SRED)
Federal Tax Credits for the years 2005, 2006 and 2007 and has provided the
Company with its report for approval. CRA tax credits relate to expenditures
made by the Company to advance science in the development of its Hydrogen
Generating System (HGS(R)). A total of $13.0 million in tax credits which may
be used by Hy-Drive to reduce future tax payments has been approved.
    The completion of the CRA audit of Hy-Drive's SRED claim is used as the
basis for determining the Company's Ontario Investment Tax Credit (OITC). The
OITC is a refundable tax credit paid by the Government of Ontario to support
research and scientific development in the Province of Ontario. As a result of
the audit, Hy-Drive will receive a cash payment from the Province for the
years 2005 through 2007 amounting to a total of $591,000 plus accrued
interest. This payment is expected in the current fiscal year and represents a
meaningful addition to the Company's capital.
    Hy-Drive management expects to continue to apply for these and other
Federal and Provincial Government programs available for both 2008 and 2009
fiscal years.

    About Hy-Drive

    Hy-Drive is a technology firm that has developed a proprietary, patented
hydrogen generating system. Hy-Drive's Hydrogen Generating System ("HGS(TM)")
generates and injects hydrogen gas into a regular internal combustion engine,
enhancing the combustion process by allowing fuel to burn more efficiently and
completely. For more information, please visit

    Cautionary Note Regarding Forward-Looking Statements:

    This press release contains certain forward-looking statements that are
based upon current expectations, which involve risks and uncertainties
associated with the Company's business, and the economic environment in which
the business operates. Forward-looking statements contained in this press
release that are not statements of historical fact may be deemed to be
forward-looking statements including but not limited to, statements about
future development of Hy-Drive's products, commercial production in 2009,
future working capital requirements, and validation of Hy-Drive's products,
and can be identified by the use of forward-looking terminology such as
"plans", "expects", or "does not expect", "is expected", "budget",
"scheduled", "estimates", "forecasts", "intends", "anticipates", or "does not
anticipate", "thinks", or "believes" or variations of such words and phrases
or statements that certain actions, events or results "may", "could", "would",
"might", or "will be taken", "occur", or "be achieved" and similar expressions
to the extent that they relate to the Company or its management. These
forward-looking statements are not historical facts, but reflect the Company's
current expectations regarding future results or events. These forward-looking
statements are subject to a number of risks and uncertainties that could cause
actual results or events to differ materially from current expectations,
including the matters discussed in the section "Risks and Uncertainties"
    Although Hy-Drive has attempted to identify important factors that could
cause actual results to differ materially from those contained in
forward-looking information, there may be other factors that cause results not
to be as anticipated, estimated or intended. There can be no assurance that
such information will prove to be accurate, as actual results and future
events could differ materially from those anticipated in such information.
Accordingly, readers should not place undue reliance on forward-looking
information. Hy-Drive does not undertake to update any forward-looking
information that is incorporated by reference herein, except in accordance
with applicable securities laws.

    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.

    %SEDAR: 00016984E

For further information:

For further information: Hugo T. Sorensen, President & CEO, Hy-Drive
Technologies Ltd., Tel: (905) 542-3024, ext. 222,; Fred
M. Florence, Vice President & CFO, Hy-Drive Technologies Ltd., Tel: (905)
542-3024 ext. 257,

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