DiaMedica Inc.

DiaMedica Inc.

December 21, 2006 17:40 ET

DiaMedica Files Preliminary Prospectus for Initial Public Offering

WINNIPEG, MANITOBA--(CCNMatthews - Dec. 21, 2006) -

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DiaMedica Inc. ("DiaMedica") announces that it has filed a preliminary prospectus with the securities regulatory authorities in Ontario, Manitoba, Alberta and British Columbia in connection with its initial public offering of common shares (the "Offering"). The Offering, which is expected to close on or about January 31, 2006, consists of a minimum of 3,000,000 and a maximum of 5,000,000 common shares at a price of $1.00 per share, for gross proceeds of up to $5,000,000. DiaMedica has retained a syndicate of underwriters, lead by Dundee Securities Corporation and including Research Capital Corporation (the "Underwriters") in connection with the Offering. The Underwriters will be paid a cash fee equal to 9% of the gross proceeds from the Offering and will be entitled to receive broker warrants exercisable into an amount equal to 4% of the number of common shares sold under the Offering. The broker warrants are exercisable for a period of 24 months from the date that the Offering closes.

DiaMedica expects to receive between $2.73 million and $4.55 million in net proceeds from the Offering and intends to use these funds for research and development as well as general and administrative expenses, including working capital.

About DiaMedica

DiaMedica is a biotechnology company developing novel treatments for various stages of type 2 diabetes, based on a mechanism involving nerve signaling to the liver. Rather than treating the symptoms, DiaMedica addresses the cause of type 2 diabetes with multiple points of intervention. Its lead product, DM-71, is currently in a phase II trial. The Company has two other products in its pre-clinical pipeline, DM-83 and DM-99.

These securities have not been registered under the United States Securities Act of 1933, as amended, or the securities laws of any state, and may not be offered or sold within the United States or to, or for the account or benefit of U.S. persons unless an applicable exemption from U.S. registration requirements is available.

Except for historical information, this press release may contain forward-looking statements, which reflect the Company's current expectation regarding future events. These forward-looking statements involve risks and uncertainties, which may cause but are not limited to, changing market conditions, the successful and timely completion of clinical studies, the establishment of corporate alliances, the impact of competitive products and pricing, new product development, uncertainties related to the regulatory approval process and other risks detailed from time to time in the Company's ongoing quarterly and annual reporting.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

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