Each Unit will consist of one common share of the Company and one-half of a common share warrant. Each whole warrant will entitle the holder to purchase one additional common share of the Company and will expire two years from the date of issue.

The agents have been engaged on a best efforts basis and there can be no assurances that the private placement will be completed or that, if completed, it will be on the terms currently contemplated.  Completion of the private placement is subject to certain conditions including [satisfactory due diligence by the agents], completion of definitive documentation and receipt of all necessary regulatory approvals, including the approval of the TSX Venture Exchange.

The Agents will receive a cash fee equal to 6% of the gross proceeds raised from the private placement.  In addition, the Company has granted the Agents an option for additional Units, to be sold on a "best efforts" agency basis, which shall be exercisable at any time up to 48 hours prior to the closing date, up an additional 1,000,000 Units.

The net proceeds of the offering will be used to fund 2007 operating requirements including increased working capital required to finance product roll-out and the introduction of new products within existing and new market verticals previously announced and in negotiation; sales and marketing expenditures to augment existing globalization initiatives; research and development expenses to further enhance the technology; patent applications to strengthen the Company's intellectual property portfolio and general corporate purposes.

"This financing is expected to provide the financial strength and resources to maintain our initiatives and fund new technology into existing and newly defined markets” said Tom Brown, President and CEO of Hy-Drive. "We are currently in negotiations for both new geographical expansion and new products introductions to include product trials to forward our vision to be first in class for hydrogen generation for defined targeted industrial applications.”

The securities offered have not been registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States or to, or for the benefit of U.S. persons except in certain transactions exempt from the registration requirements of such Act. This news release shall not constitute an offer to sell nor the solicitation of an offer to buy nor shall there be any sale of the securities in any state in which such offer, solicitation or sale would be unlawful.

The shares and warrants and the shares underlying the warrants will be subject to a hold period of four months plus one day from the date of issuance in accordance with the policies of the TSX Venture Exchange and applicable securities laws.

About Hy-Drive:

Hy-Drive is an energy technology firm that has developed a proprietary, patented hydrogen generating system. The Hy-Drive system generates and injects hydrogen gas into a regular internal combustion engine, enhancing the combustion process by allowing fuel to burn more efficiently and completely. In previous extensive customer trials and third party tests, the Hy-Drive system has demonstrated significant performance enhancements, including reduced emissions, increased torque/horsepower and significant fuel savings. These benefits, specifically fuel economy and reduced emissions, provide customers with greater productivity overall, as their engines operate more efficiently, with improved cycle times and less carbon build-up. For further information, visit www.hy-drive.com.