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China Health Labs & Diagnostics Ltd. Announces New Food Safety Sales Contract

China Health Labs & Diagnostics Ltd. ("China Health" or the "Company"), is pleased to announce that it has entered into and delivered on a new sales order of RMB 12.4 million ($2.0 million) for 39 food safety rapid test labs, which were installed in large restaurants and hotels in Beijing. The Company's Type B BK Food Safety Rapid Test System ("BK-iRT") was also delivered as part of this food safety rapid test labs installation. The delivery of the food safety rapid test labs and BK-iRT was completed in December 2012.

The Company also delivered in December 2012 on the sales order of RMB 74.0 million ($11.7 million) for food safety products and its BK-iRT, as previously announced by the Company on October 3, 2012. The BK-iRT product and other food safety products are to be used by Beijing's food safety detection units in monitoring the thousands of food preparation and distribution nodes in Beijing.

Subsequent to the Company's delivery on the RMB 74.0 million ($11.7 million) sales order of its food safety and BK-iRT products, a number of Chinese government officials and food safety and health institutions toured the Company's facilities to learn more about the food safety total solutions and products offered by the Company. They provided positive feedback and this resulted in the additional sales order of RMB 12.4 million ($2.0 million), which was delivered in December 2012.

The BK-iRT is a compact and mobile food safety testing solution and can conduct approximately 100 rapid and accurate types of tests, including testing for physicochemical residues, veterinary drug residues, biotoxins, heavy metal residues, prohibited additives, and food additives. The solution also includes an information management module equipped with a 3G telecommunication function to transmit and communicate data with a network of mobile and stationary labs, which allows data sharing, real-time monitoring and dynamic instructions. Other target markets for the BK-iRT include food distribution centres and facilities such as canteens for large organizations, hospitals and universities.

The Company has continued to expand its presence in the food safety industry and has delivered products and food safety labs that could represent revenues of over RMB 86.4 million ($13.7 million) for the fiscal year 2012, representing growth of approximately 52% for the Company's food safety business sector compared to the fiscal year 2011 during which the Company had revenues of $9.0 million. Further, the Company's gross margins in this sector has increased for fiscal year 2012 as the BK-iRT is a proprietary product developed and manufactured in the Company's Beijing facility, whereas sales in prior years consisted of third party products which generated lower gross margins. The Company is actively marketing to other large cities and municipalities in China in growing its food safety sector outside of Beijing based on the Company's past success in delivering to the Chinese government effective solutions to address food safety concerns and also in developing new products to meet future demands.

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