BioNitrogen Corp.
PINKSHEETS : BION

BioNitrogen Corp.

April 18, 2012 15:00 ET

BioNitrogen Corp. (BION) Signs Memorandum of Understanding with Kobay Technology Berhad for Construction of Urea Production Facility

BION and Kobay Sign MOU Agreement for Construction of One or More Nitrogen-Based Urea Manufacturing Facility in Malaysia

MIAMI, FLORIDA--(Marketwire - April 18, 2012) - BioNitrogen Corp. (PINKSHEETS:BION) ("BioNitrogen" or "the Company") is pleased to announce today they have signed a Memorandum of Understanding (MOU) Agreement (the "Agreement") with Kobay Technologies Berhad ("Kobay") for the development of one or more nitrogen-based urea manufacturing facility(ies) or "plants" in Malaysia.

This Agreement is intended to reflect the general intent of the parties and confirm their understanding regarding certain terms which will form the basis of a final, binding Joint Venture Agreement ("Final JV Agreement") for construction of urea production facility(ies).

The Agreement will create a new corporate entity, for example BioNitrogen Malaysia Corp. ("entity"), which will provide an ownership company for the development of the fertilizer manufacturing plant(s) described in the Final JV Agreement, with consideration given to liability protection, tax benefits, management structure, and other issues relevant to formation and operation of the entity. The new corporate entity will be owned 50% by BioNitrogen and 50% by Kobay, with the capital commitments of each entity to be said percentages.

The Agreement in Principle is as follows:

  1. Equity Contribution and Funding: The equity contributions of each party, as well as the total funding of the facilities which are to be the subject of any future agreements between the parties, are to be made in equal shares of 50.00% by BioNitrogen and 50.00% by Kobay. All details of funding are to be more specifically described in the Final JV Agreement.
  2. Development of Urea Production Facility: BioNitrogen shall be solely responsible for the construction of the facility. The plant(s) will be built in accordance with the requirements and specifications as determined by BioNitrogen and its engineering firm (Kellogg, Brown and Root, "KBR Inc."). Kobay will assist with the procurement of the land where the plant(s) are to be located as well as assisting with the proper permitting, licensing and handling of governmental tariffs.
  3. Biomass Supply to Facility: Kobay will be responsible for obtaining the bonafide agreements for the required biomass feedstock to be utilized as raw materials for the operation of the facility.
  4. Sale ("Off Take") Agreements: Kobay shall be responsible for obtaining bonafide agreements for the off take of the production of said facility or facilities.
  5. Licensing of Technology: BioNitrogen will enter into a sublicense agreement with the new entity under which the entity will have the right to use proprietary technology for the conversion of feedstock to nitrogen-based fertilizer (the "Sublicense Agreement"). Under the Sublicense Agreement, the entity will pay to BioNitrogen Corp. a royalty fee equal to 2.50% of gross revenues.
  6. Management and Operation of the Plant: BioNitrogen and/or its designee shall be solely responsible for the necessary development, management and operational functions for the manufacturing plant(s), including, without limitation, hiring an independent contractor for plant construction, implementing all necessary technology, hiring of personnel, implementing feedstock procurement procedures, entering into contracts to market the fertilizer, and risk management.

"In 2012, we are focused on executing both a domestic and international business development strategy, which we believe creates long-term value for our business partners and shareholders.", Mr. Frank J. Segredo, Chief Development Officer of BioNitrogen states. "International fertilizer markets, specifically in the Pacific Rim are about to undergo a radical and disruptive product and price change. Thanks to our new patent-pending, Made-in-America technology, BioNitrogen will soon be able to produce 46% nitrogen urea fertilizer at a fraction of the cost of production of similar products in the Pacific Rim markets while offering substantial savings in logistics. We are very pleased with the successful outcome of our negotiations with RG Chandrasegaran R. Ganesson and look forward to working closely with Kobay to develop a successful long-term partnership in the region."

The MOU is not an all-inclusive document and does not purport to contain all essential terms and conditions of the transaction. All parties understand that time is of the essence, and have agreed to work collectively to arrive at final terms and conditions to complete the pending contracts in the coming weeks.

About BioNitrogen Corp.

BioNitrogen is an entrepreneurial, American company that has been established to design and to build fully operational, turnkey manufacturing facilities to produce urea. BioNitrogen is undertaking these efforts in response to the challenges presented by an ever expanding world population, a rapidly increased need for food production, and an awareness of the fragility of the world's environment. Given all these challenges and the promise that the Company's products possess to effectively respond to these challenges, the Company believes that it is positioned at the right place and time. BioNitrogen's modular plant designs are capable of manufacturing 15 tons of urea fertilizer per hour for a total annual production of approximately 124,200 tons per plant.

BioNitrogen is headquartered in Miami, Florida, USA and trades on the over-the-counter pink current information tier under the stock symbol BION. Learn more at http://www.BioNitrogen.com/Invest_Today/.

Additional information can be found on BioNitrogen's website at www.BioNitrogen.com and an executive corporate summary video can be viewed here, http://www.BioNitrogen.com/slides/bionitrogen-video/.

Safe Harbor Statement

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 - This press release contains forward-looking statements, including without limitation statements about the operations and future prospects for BioNitrogen Corp. (the "Company"). Forward-looking statements in this press release should not be viewed as pledges or undertakings regarding future performance. These forward-looking statements are subject to risks and uncertainties that could cause the Company's actual results to vary materially from those anticipated. The Company cautions the reader not to place too much reliance upon any such forward-looking statements, because such forward-looking statements reflect the opinions and beliefs of the Company only as of the date when they were made. Factors that may cause actual results to differ materially from the forward-looking statements contained in this release include, among others, the following: (i) the Company's future operational, financial or marketing performance; (ii) the ability of the Company to bring new products to market that are complementary to the products that the Company currently produces; (iii) the ability of the Company to increase or maintain profit margins on the products it offers to the marketplace; (iv) the strength of the Company's product development pipeline; (v) the Company's growth and profitability prospects; (vi) the estimated size and growth prospects of the natural fertilizer market; (vii) the Company's competitive position in the natural fertilizer market and its ability to take advantage of future opportunities in this market; (viii) the benefits of the Company's products to be realized by customers; (ix) the receptiveness of the agricultural and commercial market for bulk urea or other products that the Company manufactures; and (x) a reduction in the cost of natural gas or other inputs that may make the cost of producing urea using alternate methods less expensive compared to the cost of producing urea at one of the Company's plants. Forward-looking statements are based on management's beliefs and opinions at the time the statements are made. The Company does not have any obligation to update forward-looking statements should circumstances change or should management's beliefs or opinions change.

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