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.

Haywood Securities Inc., Jennings Capital Inc. and Brant Securities Limited , as agents for the Canadian  tranche of the offering, received a cash commission of 6% of the gross proceeds of the first tranche of the offering.  In addition Bristol Capital Ltd. received a cash finder’s fee of  $5,625  for services provided.

All shares, warrants and any shares issuable upon exercise of the warrants issued pursuant to the offering are subject to a four month hold period as required under applicable securities laws and the policies of the TSX Venture Exchange.

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.

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 http://www.hy-drive.com.