Biomagnetics Diagnostics Corp., a medical diagnostics company, signed a letter of intent to acquire all the assets of Zhuhai Oil Energy Science and Technology Ltd., a China based company engaged in the production of gasoline and diesel biofuel blends. In consideration, Biomagnetics will issue a total of 10 million shares of its common stock and will agree to capitalize Lanzhou with the minimum capital of $1 million over the next 90 days.

Under the terms, Biomagnetics will acquire all assets of Zhuhai, including the intellectual property for proprietary formulations for very low carbon footprint biofuel blends, future patents to be filed for these formulations, and rights to a previously signed three-year contract to supply this unique biofuel to an electricity power plant, also located in Guangdong.

“We are very enthusiastic about our potential participation in the “Green Revolution” occurring throughout China, commented Clayton Hardman, CEO of Biomagnetics. “While a rapid shift in energy policy is occurring throughout China, the industrial areas of southern China are seeing exceptionally strong pressure to reduce the impact of electricity production on the environment. The Zhuhai low carbon footprint biofuel formulations significantly reduce particulate and carbon emissions, but are still cost competitive. Zhuhai has not yet begun delivery under its large power plant contract, but plans commencement upon the filing of the intellectual property protection applications. We believe the acquisition of Zhuhai, when combined with the acquisition of the proprietary, biodegradable PVA plastic film business from Lanzhou New Technology Development, which we announced last week, add significant value to current and future Biomagnetics common shareholders, with a very minimal shareholder dilution relative to the strong set of assets and the very robust expected revenue and profit streams being acquired.”

* Indicates Mandatory