Hydro Environmental Resources Inc. Update on the VW Demo Unit

    LAS VEGAS--July 18, 2001--Hydro Environmental Resources Inc. (OTC BB: HYER) has another update for their VW demo unit.
    HERI has driven its demo unit over 500 miles of highway and city driving at various speeds with continuous stop and start procedures.
    Hydro Environmental Resources Inc. is pleased to announce that the ECHFR (Electro Chem Hydrogen Fuel Reactor) System has established itself as being economical as well as pollution free.
    Although HERI does not intend to enter into the arena of automotive energy production, the company is completing its experiments to prove the viability of its Hydrogen Producing System.
    The vehicle ran the test distance for a formula cost of $25 as opposed to $.06 per mile with gasoline for the average vehicle under similar conditions.
    The demo vehicle unit has now shown to be economical and pollution free compared to gasoline-powered vehicles.

    In conjunction with the provisions of the Safe Harbor section of the Private Securities Litigation Reform Act of 1995, this news release may contain forward-looking statements pertaining to future anticipated projected plans, performance and developments, as well as other statements relating to future operations.