BUGS Signs Letter of Intent for Merger/Spin-off with Hewitt Energy Group, Inc.; Third Merger/Spin-off to Help Boost Balance Sheet Assets.

Business Editors

CARLSBAD, Calif.--(BUSINESS WIRE)--July 22, 2002

U.S. Microbics Inc. (OTCBB:BUGS) announced today that it has entered into a Letter of Intent with Hewitt Energy Group, Inc., (HEGI) of Salt Lake City, UT whereby the company will spin-off 90 percent of a newly formed, wholly-owned subsidiary of BUGS in a tax-free exchange for 10 percent of a newly formed, wholly-owned subsidiary of HEGI. In connection with the transaction, HEGI would contribute certain of its oil and gas development and exploration assets to its subsidiary to support the stock exchange with BUGS subsidiary. Both parties have retained the services of the investment banking service firm of Alexander & Wade Inc. (AWI) of San Diego, to facilitate the exchange transaction.

"Excellent opportunities continue to present themselves, and we continue to execute on our business model of growth through contract development coupled with near-term strengthening of our balance sheet through merger/spin-off strategy," stated Robert C. Brehm, CEO of BUGS. "These merger/spin-off transactions allow us to increase the assets on our balance sheet which increases our ability to qualify for larger environmental cleanup contracts thus supporting our core business and increasing shareholder value."

"This transaction represents a greater degree of flexibility that will allow us to gain increased access to the public capital markets," stated Douglas C. Hewitt, president of HEGI. "This merger/spin-off will create a new opportunity for BUGS shareholders by providing a growth vehicle for them in the oil and gas industry, while providing HEGI shareholders with increased liquidity for their investment."

U.S. Microbics Inc. is an emerging global environmental company using conventional and biological technology to provide better, faster, cheaper and safer environmental cleanup solutions. For further information about U.S. Microbics contact Robert Brehm by phone at 760/918-1860, ext. 102 or learn about the company by visiting the Web site at www.bugsatwork.com.

Hewitt Energy Group, Inc., is an independent, privately-held oil and gas development and exploration company focused on the identification, acquisition and spin-off of projects containing both development and exploration opportunities. HEGI seeks development projects in areas where significant reserves have been bypassed due to antiquated operational and technical exploitation methods used by prior operators. Through the application of advanced exploitation methods, company personnel have substantially increased both production and reserves. HEGI also seeks to increase the value of its projects by including exploration properties in areas with no existing or prior production, but that the company has identified as having significant geologic potential for future production of oil or gas. For further information about HEGI contact Douglas Hewitt by phone at 801/519-8500.

The information contained in this press release includes forward-looking statements. Forward-looking statements usually contain the words "estimate," "anticipate," "believe," "expect," or similar expressions that involve risks and uncertainties. These risks and uncertainties include the Company's status as a startup company with uncertain profitability, need for significant capital, uncertainty concerning market acceptance of its products, competition, limited service and manufacturing facilities, dependence on technological developments and protection of its intellectual property. The Company's actual results could differ materially from those discussed herein. Factors that could cause or contribute to such differences are discussed more fully in the "Risk Factors," "Management's Discussion and Analysis or Plan of Operation" and other sections of the Company's Form 10-KSB and other publicly available information regarding the Company on file with the Securities and Exchange Commission. The Company will provide you with copies of this information upon request.