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China Health Labs & Diagnostics Ltd. Announces $10.1 Million Sales Order for its Food Safety Business

China Health Labs & Diagnostics Ltd. announced that it has secured a sales order of RMB 61.5 million ($10.1 million) for food safety testing equipment, lab management system ("LMS") software and hardware, and installation services from the Beijing municipal government, through a bidding agent, Oriental Scientific Instruments Import and Export Corporation. The sales order is for delivery in 2011, and includes a LMS software developed by the Company to connect all the Beijing food safety labs, enabling more efficient communications and operations.

This sales order represents growth of 100% for the food safety business compared to 2010, when the Company had revenues of $33.7 million of which 15% or $5.5 million was from the food safety business.

"Improving food safety is a high priority for the Chinese government at the central and municipal levels. The Chinese government established the State Council Food Safety Commission last year and this year, the SCFSC announced a five-year program for food safety education," said Wilson Yao, CEO of China Health. "We have used our expertise in lab management and design to assist the Beijing municipal government to establish an effective network of food testing labs that operate with our proprietary lab management system. In the future, we plan to use our track record in Beijing as a reference to expand our food safety sales to other cities in China."

In 2008, China Health entered the food safety market by installing food-testing labs mandated and paid for by the Beijing municipal government in response to concerns due to the growing number of high profile food safety incidents and the need to improve safety for the Beijing Olympics. In 2009 and 2010, the Company developed and provided food safety lab solutions, including the Company's proprietary LMS software, for major food distribution centres in Beijing and a mobile lab solution based on the need for on-site rapid testing, which generated increasing revenues in each year.

Currently, the Company's food safety lab solutions test for, among other things: (1) heavy metal residue, such as mercury, cadmium and lead; (2) pesticide residue, such as alpha-BHC, formothion, oryzalin, pyraflufen-ethyl, DDT and nitenpyram; (3) veterinary drug residue, such as ampicillin, amoxicillin, altrenogest and bacitracin; (4) pathogenic micro-organisms, such as salmonella, shigella, vibrio parahaemolyticus and clostridium botulinum; and (5) poisonous food additives, such as lean meat powder, melamine, plasticizer and malachite green. The food safety lab solutions include equipment assembled at the Company's Beijing manufacturing facility and sourced from other manufacturers. To date, China Health has installed 17 major labs, 250 mini-labs (in food distribution and manufacturing facilities) and supplied 17 mobile labs to the Beijing municipal government to improve food safety.

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