(STOCK SYMBOL - VSE, "HED")

Hedley Announces Results

for the Second Quarter 2001

Mississauga, Ontario (August 9, 2001) Hedley Technologies Ltd.  reports the second quarter results.

Dear shareholder,

    Sales for the six months ending June 30, 2001 were only $153,073, down approx. 56% from the same period last year.  However, expenses of $381,089 were 27% lower than last year, resulting in a net loss to date of $302,319 vs. $310,962 for the second quarter of 2000.  The net loss per share of 3 cents is the same as last year at this time.

    Severe drought conditions in southern Alberta and Saskatchewan and excessive moisture in Manitoba’s Red River Valley, will, in all probability, cause Canadian sales of Protect-It to continue to lag behind last year.   USA sales of Protect-It were mainly down because of the timing of some orders.  Subsequent to June 30, sales have increased sufficiently to bring them back in line with our forecast.

    While sales of Protect-It into the USA are most important to our sustained growth, we will continue to pursue all avenues in our quest to increase both product mix and sales to other foreign markets.  Additional sales of Insecolo in North America and sales of Protect-It to Croatia and Japan reflect these efforts.

    With our 3 busiest sales months ahead of us, and the potential for positive results from our R & D, we look forward to reporting some encouraging news in the coming months.

On behalf of the Board,

Douglas R. Larson
President & COO
 

Consolidated Financial Highlights

For the six months ended June 30, 2001 and 2000

Canadian $

All figures unless otherwise noted are reported in accordance with Canadian Generally Accepted Accounting Principles.

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