The Board of Directors of Penn Biotech Inc. is pleased to announce that it has signed a Letter of Intent ("LOI") with the People's Republic of China's Ministry of Agriculture. The LOI commits the Company and the Ministry to engaging in a joint venture to grow seed potatoes to meet the increasing demand for the processing market in China, using the Company's revolutionary technology.

The LOI stipulates that Penn Biotech Inc. ("PBI") will supply seeds for an initial trial in Hei Long Jiang Province as recommended by the Ministry's High Quality Agricultural Product Development Service Centre (the "Centre"). Initially, 2,000 acres will be planted next year and upon successful completion of the trial the Company will expand its acreage incrementally each year to reach a total of 80,000 acres by the year 2010, with an expected yield of approximately ten tons per acre. The initial planting for the first year of the trial will be 20 - 30 metric tons of seed potatoes supplied by PBI. The location of the specific farms will be at the sole discretion of the Company.

The LOI details the responsibilities and obligations of both parties to the project. PBI will be responsible for provision of the seed potatoes, the introduction of the technology and the provision of technical services, quality assurance and training for the farmers in the project. The Centre will be responsible for sourcing suitable locations, cultivation management consistent with the PBI technology, and provision of all equipment necessary for a successful trial.

Mr. Jay Lee, President of Penn BioTech Inc., stated that "This LOI represents a major accomplishment for the Company in establishing a presence in China to meet the growing demand for processed potatoes in that country, which exceeds 3 million tons per annum."

The PBI technology provides a significant advantage to other technologies used in the propagation of seed potatoes. It is the only technology which mass produces consistently high quality, pathogen free minitubers which meet all the quality requirements for potato processors.