Underground Solutions Announces Completion of $19.0 Million Common Stock Offering.

POWAY, Calif. -- Underground Solutions, Inc. (Pink Sheets:UGSI) announced today that it had completed a $19.0 million private placement of common stock at a price of $0.08 per share. The transaction closed on January 17th. The Company issued and sold approximately 235 million shares in the offering, bringing its total outstanding shares on a fully-diluted basis to approximately 600 million. Of the $19.0 million in common stock sold in the offering, approximately $12.0 million was purchased by three investment groups, all of whom were existing investors in the Company: The Water Fund, LP, a New York-based hedge fund; Wynnefield Partners Small Cap Value, LP I, a New York-based investment partnership; and DHW Water Partners, a California based investment partnership.

The Company indicated that the funds raised in the offering will be used for debt retirement, capital equipment, research and development expenditures, and general corporate purposes.

Andy Seidel, the Company's President and Chief Executive Officer, stated, "The proceeds of this offering will provide us with the capital we need to develop a national sales presence, and to make the investments in equipment and inventory required to achieve the aggressive growth targets that we have established for ourselves. Since joining the Company in December 2005, we have recruited a number of top-tier water industry professionals to join our existing sales organization, and we are building a strong back-office to support our enhanced sales effort. Equally important, we now have the means to invest in both developing new products and enhancing our existing patented technologies to supplement our existing cutting-edge products."

Seidel added, "Our emphasis over the next several months will be to use our sales organization to increase awareness of the significant advantages of our Fusible PVC(TM) and Duraliner(TM) technologies in addressing the infrastructure needs of this country. In order to ensure that our Fusible PVC(TM) products are readily available for deployment on current projects, we are investing significantly to build Fusible PVC(TM) pipe inventories at key locations across the United States."

Mark Smith, Chairman of the Board, noted, "We are grateful for the vote of confidence evidenced by this significant new investment in our Company. We note that the $19.0 million of new money invested in the Company came from a combination of existing shareholders and new investors, all of whom clearly see the long-term value inherent in our proprietary technologies."

As announced earlier by the Company, Andy Seidel became President and Chief Executive Officer in December 2005. Seidel is the former CEO of United States Filter Corporation (USFilter), the nation's leading provider of water and wastewater products, systems and services. Mark Smith, who has led the Company since its inception, became Chairman of the Board at that time.

Seidel was joined at UGSI by a new executive management team which, in addition to Seidel, includes: Roop Jain, Executive Vice President and Chief Operating Officer; Steve Stanczak, Executive Vice President and General Counsel; and Raj Patel, Executive Vice President and Chief Financial Officer.

Prior to the common stock offering that closed yesterday, the Company raised $2.2 million in December and January through the issuance of its Series B Convertible Notes. The Notes converted into newly authorized shares of Series B Convertible Preferred Stock at $0.08 per share effective upon the closing of the common stock offering. The new series of Preferred Stock are convertible into common stock of the Company on a 1:1 basis, subject to standard anti-dilution provisions.

Underground Solutions is an infrastructure technology and pipeline rehabilitation company. The Company has developed and continues to develop unique and proprietary technologies focused exclusively on the underground infrastructure industry.

UGSI's products developed and successfully introduced into the market to date include Duraliner(TM), Fusible C-900(TM), Fusible C-905(TM) and Fusible PVC(TM).

Fusible C-900(TM), Fusible C-905(TM) and Fusible PVC(TM) are NSF-61 certified and cover a full range of piping diameters from 3 inch to 48 inch to provide the only available method of installing a continuous, monolithic, gasket-free PVC pipe or conduit capable of being used in numerous trenchless (no-dig) or conventional "open-cut" applications. Applications for this revolutionary technology cover every aspect of piping installations including both pressure and non-pressure situations in the water, sewer, electrical, industrial and telecommunications industries.

Duraliner(TM) is a unique patented process which allows the Company to rehabilitate deteriorated water lines and other pressure pipes with minimal excavation. It is the only pipeline renewal system resulting in a "stand alone" structural lining capable of handling internal minimum operating pressures of 150 psi. Duraliner(TM) conforms to NSF 61 Standards for Drinking Water Components/Health Effects and has a design life exceeding 100 years.

Certain statements in this news release contain forward-looking information within the meaning of the Private Securities Litigation Act of 1995. Such forward-looking statements involve certain risks, assumptions and uncertainties, including the inability to generate and secure the necessary product sales, or the lack of acceptance of the company's products by potential customers. In each case actual results may differ materially from such forward-looking statements. The Company does not undertake to publicly update or revise its forward-looking statements even if experience or future changes make it clear that any projected results (expressed or modified) will not be realized.