China Sky One Medical Reports Second Quarter 2007 Financial Results

China Sky One Medical Reports Second Quarter 2007 Financial Results

August 15, 2007

    HARBIN, China, Aug. 15 /Xinhua-PRNewswire-FirstCall/ --
China Sky One Medical, Inc. (OTC Bulletin Board: CSKI), a
manufacturer, marketer and distributor of pharmaceutical,
medicinal and diagnostic products in China, today announced
financial results for the three month and six month periods
ending June 30, 2007. The Company plans to file its 10Q
today.

    Financial Highlights from the second quarter of 2007
include:

    -- Revenue increased 181% to $14.6 million from $5.2
million in 2Q06
    -- Gross profit increased 190% to $11.3 million from
$3.9 million in 2Q06
    -- Gross margin increased 140 basis points to 77.4%
compared to 76.0% in
       2Q06
    -- Operating income increased to $5.2 million compared
to an operating
       loss of $1.2 million in 2Q06
    -- Net income increased to $4.2 million, or $0.34 per
diluted share,
       compared to a net loss of $1.2 million in 2Q06

    Mr. Liu Yan-Qing, Chief Executive Officer and President
of China Sky One Medical, Inc. stated, "We are pleased
with our strong performance in the second quarter of 2007.
Our revenue increased 181% to $14.6 million, which exceeded
our revenue guidance forecast of $12.8 million to $14.2
million. The increase in revenue is attributable to
continued expansion of our salesforce and channels of
distribution, as well as the addition of a new line of
contract sale service in 2006 to sell other manufactured
brands through our distribution channel."

    Mr. Liu added, "In addition to our current
portfolio of externally-applied plant and herb-based
medicinal products, we will implement great efforts to
develop biological products in the future. Some of our new
biological products, such as Urinate Micro Albumin
Examination Testing kit and AMI Test Kits, began to
contribute to our revenue growth in the second quarter of
2007. At the same time, we began to construct the workshop,
R&D center and offices for our new biotech engineering
project. We are confident these initiatives will position
us well for long-term growth."

    Second Quarter Ended June 30, 2007

    Revenue for the second quarter increased 181% to $14.6
million from $5.2 million in the second quarter of 2006,
which is mainly due to continued sales growth of the
Company's own product line and a contract service line of
manufacturer's products sold through the Company's
distribution channel. During the second quarter, the
Company experienced a large increase in export sales of
Slim Patch, which contributed $4.3 million of revenue, up
significantly from approximately $372,000 in the second
quarter of 2006. Sales of other manufactured brands through
the Company's distribution network contributed $3.6 million
of revenue during the second quarter, up from $1.8 million
in the same period of 2006.

    Gross profit increased 190% to $11.3 million from $3.9
million in the second quarter of 2006. Gross margin in the
second quarter 2007 increased 140 basis points to 77.4%
compared to 76.0% in the prior year's period, which was in
line with management's expectation. Management believes
that the Company can improve its gross margin from second
quarter 2007 results through the expansion of the Company's
production capacity and the growth in sales volume of other
branded products.

    Operating income in the second quarter of 2007 was $5.2
million compared to an operating loss of $1.2 million in the
same period of 2006. Operating margin was 35.3%. Selling,
general and administrative expenses increased 78% to $5.7
million from $3.2 million in the second quarter of 2006,
which is the result of increased headcount and the
expansion of the Company's sales and marketing activities.

    Net income was $4.2 million, or $0.34 per diluted
share, in the second quarter of 2007 compared to net loss
of $1.2 million in the second quarter of 2006. Net margin
was 28.8%. Net income slightly missed the Company's
previous expectation of $5 million to $5.5 million, due to
the expenditure related to a twelve month marketing
campaign, which is non-recurring for the remaining two
quarters of 2007.

    Mr. Liu noted, "During the second quarter 2007, we
spent approximately $2.0 million to implement a marketing
campaign to promote our brand and full- line products for
the next twelve months. While this resulted in a miss to
our net income guidance for the second quarter, the
marketing program we now have in place positions us well
for increased consumer awareness and product demand. We
expect the efforts related to our marketing campaign will
continue to benefit our financial results for the second
half of 2007."

    Six Months Ended June 30, 2007

    For the six months ended June 30, 2007, revenue
increased 116% to $19.8 million from $9.2 million in the
first six months of 2006. During this same time period,
gross profit improved 121% to $15.4 million from $7.0
million. Gross margin of 77.6% compared to 76.1% in the
first six months of 2006. Operating income in the first six
months of 2007 was $7.1 million compared to an operating
loss of $131,000 in the same period of 2006. Net income was
$5.8 million, or $0.46 per diluted share, compared to a net
loss of $148,000, or ($0.01) per diluted share, in the
first six months of 2006.

    Balance Sheet

    As of June 30, 2007, the Company had $5.2 million of
cash, compared to $6.7 million at March 31, 2007. The $1.4
million decrease is primarily attributable to cash used in
investing activities for the purchase of land use rights in
the Song Bei District of Harbin and the start of
construction of the Company's new biotech engineering
project. As of June 30, 2007, the Company had working
capital of $4.7 million and no long-term debt.

    "Our working capital and borrowing capabilities
are adequate to cover our current operating and capital
requirements. We will make sure to leverage the funds to
meet future liquidity and capital needs and take advantage
of new investment opportunities," concluded Liu.

    Business Update
    -- The Company has been recognized as an
"Innovative Enterprise" by the
       Government of Harbin.  As part of this recognition,
the Company will
       receive an annual grant of RMB 4.0 million
(approximately USD $525,000)
       for the next three years, beginning June 2007
through June 2010.  The
       grant will support the Company's new product
research and development
       efforts.  In addition to the annual grant described
above, the local
       government set aside RMB 6.0 million (approximately
USD $787,000) per
       Company for future investment in the area.  This
additional support
       would, for example, be paid to research institutes
for technology
       consulting or educational programs which,
ultimately, would benefit the
       recipients.
    -- Eight of the Company's new diagnosis kit products
entered into the
       clinical trial stage in August 2007, including:
Rapid Diagnosis Kit for
       Human Urine Microalbumin, Urine One Step LH Test,
Rapid Detect Kit for
       Prealbumin, Rapid Detect Kit for APO B, Rapid Detect
Kit for APO A1,
       Rapid Detect Kit for Magnesium Ion, Semi-quantitive
Uterine Cancer One
       Step Test, and Semi-quantitive Calcium Ion.
    -- Construction of new facilities for the new biotech
engineering project.
       During the quarter, the Company entered into an
agreement with the
       Development and Construction Administration
Committee of Harbin Song
       Bei New Development district to purchase the land
use rights for 50
       years for development of a new biotech engineering
facility.  Terms of
       the agreement called for a deposit of 30% of the
total land price
       within 15 days after signing the agreement, a 40%
payment 7 days prior
       to the start of construction and the balance 7 days
after getting the
       formal land use right. The project consists of two
phases:

       -- A main workshop, R&D center and office using
land area of 30,000
          square meters; construction started in May 2007
with projected
          completion by June 2008.
       -- A second workshop and show room using land area
of 20,000 square
          meters; construction starting in September 2008
with projected
          completion by December 2009.

    About China Sky One Medical, Inc.

    China Sky One Medical, Inc., a Nevada corporation, is a
holding company whose principal operations are through its
subsidiaries, which are engaged in the manufacturing,
marketing and distribution of pharmaceutical, medicinal and
diagnostic kit products. Through its wholly-owned
subsidiaries, Harbin Tian Di Ren Medical Science and
Technology Company ("TDR") and Harbin First Bio-
Engineering Company Limited ("First"), the
Company's principal revenue source is the manufacture and
sale of over-the-counter pharmaceutical products.
http://www.skyonemedical.com.

    Safe Harbor Statement

    Certain of the statements made in the press release
constitute forward- looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995.
These statements can be identified by the use of forward-
looking terminology such as "believe,"
"expect," "may," "will,"
"should," "project," "plan,"
"seek," "intend," or
"anticipate" or the negative thereof or
comparable terminology. Such statements typically involve
risks and uncertainties and may include financial
projections or information regarding our future plans,
objectives or performance. Actual results could differ
materially from the expectations reflected in such
forward-looking statements as a result of a variety of
factors, including the risks associated with the effect of
changing economic conditions in The People's Republic of
China, variations in cash flow, reliance on collaborative
retail partners and on new product development, variations
in new product development, risks associated with rapid
technological change, and the potential of introduced or
undetected flaws and defects in products, and other risk
factors detailed in reports filed with the Securities and
Exchange Commission from time to time.

     CONTACT
     In the United States:
     Ashley Ammon MacFarlane and Bill Zima
     Integrated Corporate Relations, Inc.
     203-682-8200 (Investor Relations)

     In Asia:
     Xuyang Zhang
     Integrated Corporate Relations, Inc.
     86 10 8523 3087 (Investor Relations)

                         (financial tables to follow)



                 China Sky One Medical, Inc. and
Subsidiaries
               Condensed Consolidated Statements of
Operations
          For the Three and Six Months Ended June 30, 2007
and 2006
                                 (Unaudited)


                              For the Three Months      For
the Six Months
                                 Ended June 30,          
Ended June 30,
                               2007        2006        
2007          2006
                                        (Restated)         
       (Restated)

    Revenues              $14,645,247   $5,189,235  
$19,824,363   $9,168,354

    Cost of Goods Sold      3,308,648    1,245,156    
4,435,343    2,194,754

    Gross Profit           11,336,599    3,944,079   
15,389,020    6,973,600

    Operating Expenses
      Selling, general
       and administrative   5,654,199    3,169,857    
7,697,975    5,065,823
      Depreciation and
       amortization           137,587       98,857      
220,942      105,013
      Research and
       development            380,630    1,910,229      
395,840    1,933,375
        Total operating
         expenses           6,172,416    5,178,943    
8,314,757    7,104,211

    Other Income (Expense)
      Interest income and
       other income             7,228            -       
12,027            -
      Interest expense              -       (8,180)     
(16,494)     (17,332)
        Total other income
         (expense)              7,228       (8,180)      
(4,467)     (17,332)

    Net Income Before
     Provision for Income
     Tax                    5,171,411    (1,243,044)  
7,069,796     (147,943)

    Provision for Income
     Taxes
      Current                 943,887       265,198   
1,288,152      468,666
      Deferred                      -      (265,198)       
   -     (468,666)
                              943,887             -   
1,288,152            -
    Net Income             $4,227,524   $(1,243,044) 
$5,781,644    $(147,943)


    Basic Earnings
     Per Share                  $0.35        $(0.11)      
$0.48      $ (0.01)

    Basic Weighted Average
     Shares Outstanding    12,084,938    10,929,370  
12,060,865   10,929,370

    Diluted Earnings
     Per Share                  $0.34        $(0.11)      
$0.46      $ (0.01)

    Diluted Weighted
     Average Shares
     Outstanding           12,531,385    10,929,370  
12,504,845   10,929,370

    The Components of Other
     Comprehensive Income

      Net Income           $4,227,524   $(1,243,044) 
$5,781,644    $(147,943)
      Foreign currency
       translation
       adjustment             327,771        36,321     
586,537       55,388

    Comprehensive Income   $4,555,295   $(1,206,723) 
$6,368,181     $(92,555)



                 China Sky One Medical, Inc. and
Subsidiaries
                     Condensed Consolidated Balance Sheet
                                June 30, 2007
                                 (Unaudited)

                                    ASSETS



    Current Assets
      Cash and cash equivalents                      
$5,154,329
      Accounts receivable, net                        
3,733,184
      Other receivables                                  
53,358
      Inventories                                     
1,099,749
      Prepaid expenses                                   
12,195
        Total current assets                         
10,052,815

    Property and equipment, net                       
6,657,646

    Intangible assets, net                            
1,966,950
    Deposit on Land                                   
7,664,751

                                                    
$26,342,162

    LIABILITIES AND STOCKHOLDERS' EQUITY

    Current Liabilities
      Accounts payable and accrued expenses          
$2,737,252
      Wages payable                                     
665,554
      Welfare payable                                   
175,973
      Taxes Payable                                   
1,779,121
      Notes payable                                        
   -
        Total current liabilities                     
5,357,900

    Stockholders' Equity
      Preferred stock ($0.001 par value, 5,000,000
       shares authorized, none issued and outstanding)     
   -
      Common stock ($0.001 par value, 20,000,000
       shares authorized, 12,106,696 issued and
       outstanding)                                      
12,107
      Additional paid-in capital                      
8,948,881

      Accumulated other comprehensive income          
1,008,656
      Retained earnings                              
11,014,618
        Total stockholders' equity                   
20,984,262

                                                    
$26,342,162