ADGI Announces Termination of Agreement with Investment Banker.

Business Editors/Technology Writers

American Diversified Group, Inc. (OTCBB:ADGI) today announced the termination of its relationship with Hornblower & Weeks (HBW) because of the announcement on July 9, 2002 by the National Association of Securities Dealers (NASD) that it has charged HBW with violating a recent NASD-imposed prohibition against issuing research reports. The violation charged by the NASD related to a "marketing letter" on ADGI issued by HBW in May 2002.

In making the announcement, ADGI management noted that NASD had not alleged any wrongdoing on the part of the company or its management. "This matter is strictly and entirely between NASD and HBW and has nothing to do with ADGI," said Dr. Jerrold R. Hinton, ADGI's President.

The NASD announcement quoted statements made in the HBW marketing letter about ADGI as being "exaggerated, unwarranted and misleading." Those statements were that ADGI "is positioned as a premier provider of communication products and enhanced value added services...," and "is positioned to exploit the upside potential of the vast expansion of the Internet." Dr. Hinton said, "The NASD may consider those statements as misleading in the context of a report by a brokerage firm, but ADGI believes they are proper and completely justified by the facts."

Taking issue with the first-quoted statement, Dr. Hinton noted that the rapidly growing worldwide market for IP telephony and Internet based services has been independently reported by many major and respected research firms such as Frost & Sullivan and major telephone companies such as AT&T. He pointed out that ADGI owns proprietary software that enables it to provide a vast array of premium telecommunication products utilizing IP technology and the Internet on a worldwide basis, and because ADGI offers these services to countries that do not have such services, it puts ADGI in a strong position to exploit the potential provided by the vast expansion of the Internet.

As to the second quote, Dr. Hinton noted that ADGI has service agreements with numerous telecommunications companies around the world, including those in Central and South America and the Far East. Most recently, ADGI entered into a strategic alliance with Time dotCom, the second largest telecommunications company in Malaysia. The agreement provides for Time dotCom to introduce ADGI's Enhanced Services Platform (ESP) of telecommunication services in Malaysia. Dr. Hinton said that Time dotCom, a large company with considerable expertise in its market, selected ADGI to provide these services because of the premium services provided by ADGI's ESP. He noted that Time dotCom has recently issued a number of press releases about its close working relationship with ADGI and the Malaysian market's anticipation of the introduction of ADGI's ESP. "Just this past week," said Dr. Hinton, "our Chairman and CEO attended the ceremonies in Kuala Lumpur for the launch of the ESP services."

The NASD announcement correctly noted that the HBW report had omitted to disclose information about ADGI's 2001 year-end results. Dr. Hinton noted that ADGI has fully and accurately reported those results in its Annual Report on Form 10-KSB filed with the Securities and Exchange Commission. "What's more," he said, "our first quarter results show considerable improvement. During the quarter we substantially exceeded our projected goals both in terms of revenue and profitability and we believe we are on target to meet our previously announced annualized goals."

Dr. Hinton concluded, "We want to assure our shareholders that ADGI is committed to its goal of being a premier provider of communication products and enhanced value added services, and that the NASD statements refer not to ADGI, but to the investment bankers. We regret the necessity of terminating our relationship with HBW, but we cannot continue to do business with a company whose activities on our behalf create these types of problems for us."

Certain statements in this release constitute forward-looking statements or statements which may be deemed or construed to be forward-looking statements within the meaning of the Private Placement Act of 1995. The words "forecast", "project", "intend", "expect", "should", "would", and similar expressions and all statements, which are not historical facts, are intended to identify forward-looking statements. These forward-looking statements involve and are subject to known and unknown risks, uncertainties and other factors which could cause the Company's actual results, performance (finance or operating) or achievements to differ from future results, performance (financing and operating) or achievements expressed or implied by such forward-looking statements. The above are more fully discussed in the Company's SEC filings.