Hydrocarbon Technologies Inc. Receives Patent for Alternative Fuels.

Business Editors

DRAPER, Utah--(BUSINESS WIRE)--Sept. 4, 2001

Headwaters Inc. (Nasdaq: HDWR), Tuesday announced that Hydrocarbon Technologies Inc. ("HTI"), a wholly owned subsidiary of Headwaters Inc., has received a patent for a process that converts organic municipal solid waste (MSW) into alternative fuels such as gasoline and diesel fuel.

This process is based on chemical digestion and catalytic hydro-conversion of the municipal solid waste into liquid fuels as an alternative to landfill disposal or incineration.

According to the Environmental Protection Agency, the U.S. annual production of municipal solid waste exceeds 200 million tons. Over 85 percent of this municipal solid waste consists of organic materials which could be processed with HTI's technology into transportation fuels.

As landfills continue to fill up, and incinerators are faced with environmental problems, HTI can offer a solution that improves energy efficiency and reduces environmental risks.

Brent M. Cook, president of Headwaters Inc., stated, "This patent strengthens HTI's position on a technology that can produce a clean, high BTU alternate fuel from municipal solid waste (MSW). Headwaters will be protecting this and all other technologies with the appropriate intellectual property protections.

"We feel confident with the recent acquisition of HTI that new technologies and business opportunities will continue to present themselves well into the future."

About Headwaters Inc.

Headwaters Inc. is a world leader in developing and deploying alternative fuel and related technologies. It is focused on converting fossil fuels such as coal and heavy oils to alternative energy products. Through its existing alternative fuels business, the company earns a growing royalty stream that provides the capital needed to acquire and expand synergistic new business opportunities.

Headwaters Inc. trades under the Nasdaq symbol HDWR.

About Hydrocarbon Technologies Inc.

Hydrocarbon Technologies Inc. is the vanguard in the development and commercialization of coal and heavy oil conversion, catalysts and catalytic processes that produce alternate fuels and chemicals while improving energy efficiency and reducing environmental risks. HTI is a wholly owned subsidiary of Headwaters.

The Financial Relations Board Inc. serves as financial relations counsel to this company and is acting on the company's behalf in issuing this bulletin and receiving compensation therefor. The information contained herein is furnished for information purposes only and is not to be construed as an offer to buy or sell securities.

Certain statements contained in this document may be deemed to be forward-looking statements under federal securities laws, and Headwaters intends that such forward-looking statements be subject to the safe harbor created thereby.

Such forward-looking statements relate to: i) the growth of Headwaters' revenues, earnings, or earnings per share; ii) the ability of Headwaters to sustain the earnings stream from its alternative fuels business; iii) the expectation that Headwaters' stock is undervalued or will increase in value in the future; iv) the completion of any future acquisitions and the expectation that the value of such acquisitions will increase, v) the commercialization of any technology acquired or developed.

Headwaters cautions that these statements are qualified by important factors that could cause actual results to differ materially from those reflected by the forward-looking statements contained herein.

Such factors include, but are not limited to: a) the availability of tax credits to our licensees under the tax code; b) our dependence on licensees to use our technology; c) collection of payments outstanding; d) limitations in the capital available to Headwaters to execute on its business plan, and the cost of that capital; e) the ability of Headwaters to locate and close on attractive acquisition opportunities; f) the company's limited operating history with its new business strategy and its ability to sustain and manage its growth under that strategy; g) the success of the company in replacing and growing its financial performance before its legacy alternative fuels business declines; and other risks as detailed in Headwaters' annual report on Form 10-K, quarterly report on Form 10-Q, and other filings from time to time with the Securities and Exchange Commission.