Breaking News: Human BioSystems Forms Subsidiary For Ethanol Business - HBS BioEnergy.

PALO ALTO, Calif. -- Human BioSystems ("HBS") (OTCBB:HBSC) announced today the formation of HBS BioEnergy ("HBE"), a wholly owned subsidiary of Human BioSystems.

HBS BioEnergy will operate as a separate company and subsidiary of HBS for the purpose of developing the bio energy business including the two ethanol fuel production facility projects to be acquired from EXL III Group Corporation ("EXL III") pursuant to the Letter of Intent ("LOI") mentioned in the press release dated July 27, 2006.

The formation of this subsidiary is the first step toward establishing the organizational structure to consummate the acquisition and to carry out HBS's plan to build the facilities that will produce renewable fuel sources for the U.S. market.

The commencement of any meaningful operation of HBE is dependent upon the signing of definitive agreements between HBS, EXL III and its principal Mr. Claude Luster III pursuant to the Letter of Intent signed in July, 2006. The acquisition is expected to close in the fall of 2006, after certain conditions are met, including but not limited to completion of satisfactory due diligence by HBS, the negotiation and completion of a definitive acquisition agreement and Consulting Services Agreement, approval of the HBS and EXL III boards of directors and other customary conditions.

Human BioSystems is a developer of preservation platforms for organs and other biomaterials. The Company, headquartered in Palo Alto, California with research facilities in Michigan, has been granted four patents by the U.S. Patent Office. HBS also announced recently the signing of a letter of intent to enter the BioFuels business through the acquisition of two ethanol production facility projects from EXL III, an equity partner in ethanol plant ventures.

Certain statements contained herein are "forward-looking" statements (as such term is defined in the Private Securities Litigation Reform Act of 1995). Because such statements include risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause results to differ materially from those expressed or implied by such forward-looking statements include, but are not limited to, failure to complete a final definitive agreement, failure to obtain regulatory approvals for the construction of ethanol plants, failure to obtain the required financing and to construct the ethanol plants, failure of the ethanol plants to meet standards, the inability to find raw material for the production of ethanol or to sell the ethanol at on acceptable terms, the risks involved in pursuing a business unrelated to HBS' prior business, and other factors discussed in filings made by the Company with the Securities and Exchange Commission.