Hy-Drive Technologies Announces Cdn $295,512 Financing.

MISSISSAUGA, Ontario -- Hy-Drive Technologies Ltd. ("Hy-Drive") (TSX VENTURE:HGS) today announced that, based on a price reservation filed with the TSXV on January 12th, 2006, it will be completing further private placements of an aggregate of 347,661 units at a price of $0.85 per unit for gross proceeds of approximately (Cdn.) $295,512. The placees are all prior investors of Hy-Drive who are entitled to subscribe for units of Hy-Drive on the terms of the $2.3 million unit private placement recently completed and announced on January 5, 2006.

Each unit will consist of one common share of Hy-Drive and one-half of a warrant.Each whole warrant will entitle the holder to purchase one additional common share at an exercise price of $2.00 and will expire two years from the date of issue.

The net proceeds of the offering will be used for working capital and equipment requirements, the build up of inventory, sales and marketing expenses, research and development expenses and the funding of patent applications.

In accordance with the terms of Hy-Drive's agency agreement with Capstone Investments, Capstone will be entitled to be issued broker's warrants equal to 6% of the number of units purchased by investors introduced by Capstone.Each broker's warrant will entitle the holder to purchase one common share at an exercise price of $0.85 prior to its expiry two years from the date of issue.The agent will also receive a commission of up to 6% of the gross proceeds raised from investors introduced by Capstone.

All shares, warrants and any shares issuable upon exercise of the warrants (including the broker's warrants) will be subject to a four month hold period as required under applicable securities laws and the policies of the TSX Venture Exchange.

Following the completion of this financing, Hy-Drive will have 45,263,787 issued and outstanding common shares.All transactions are subject to final acceptance by the TSX Venture Exchange.

Hy-Drive also confirms the grant of 62,500 directors' options, as at February 6, 2006, each option entitling its holder to purchase one common share at $1.00.The options expire five years from the date of grant.Any shares issued upon the exercise of the options will be subject to a 4 month hold period from the date of grant.

Forward-Looking Statements 

Certain statements contained in this press release may constitute forward-looking statements.Such statements reflect Hy-Drive's current views with respect to future events and are subject to certain risks, uncertainties and assumptions.Many factors could cause Hy-Drive's actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including among other things, those which are discussed under the headings "Risk Factors" and elsewhere in documents that Hy-Drive files from time to time with securities regulatory authorities.

Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward looking statements prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected. Hy-Drive does not intend, and does not assume any obligation, to update these forward-looking statements.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any jurisdiction 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 extensive customer trials and tests conducted to date, the Hy-Drive system has demonstrated significant performance enhancements, including reduced emissions, increased torque/horsepower, fuel savings and extended engine life. These benefits 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.

The TSX Venture Exchange has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release. The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

Hy-Drive Technologies Ltd. (TSX VENTURE:HGS)