China Sky One Medical addresses concerns regarding financial reports filed with SAIC and SEC

Aug 27 2009

China Sky One Medical, Inc. ("China Sky One Medical" or "the Company") (Nasdaq: CSKI), a leading fully integrated pharmaceutical company producing over-the-counter drugs in the People's Republic of China ("PRC"), today issued a statement to address concerns that have been raised with respect to financial reports filed with the State Administration for Industry and Commerce ("SAIC") and the United States Securities and Exchange Commission ("SEC").

The Company is registered with the SAIC, the PRC governmental agency responsible for issuing and renewing its business license. As part of the SAIC's annual inspection, the Company is required to file annual financial reports. In its review of these financial reports, the SAIC's focus is on payment and authenticity of the Company's registered capital, to confirm the minimum required amount has been paid-in by the Company's shareholders and to verify the source of these funds. The Company has determined these financial reports are materially different from the financial reports filed with the SEC. The financial statements the Company has filed with the SAIC to date show lower revenues and earnings than the financial statements filed with the SEC. The Company's registered capital, however, is consistent in both the SAIC and SEC filings. The Company believes that should the SAIC impose a penalty in connection with these financial reports, it does not believe such penalty will be material to the Company.

As a result of its review the Company's Audit Committee has enhanced the procedure the Company will follow with regard to future filings with the SAIC so that all such filings will be reviewed by the Company's Chief Financial Officer prior to filing. As a result of the Audit Committee's actions, it is contemplated that in future filings there will be no material differences in the information contained in the financial statements filed with the SAIC and the SEC.

Stanley Hao, Chief Financial Officer of the Company, noted that "our financial statements, as filed with the SEC, on Form 10-K and 10-Q, are accurate and in compliance with generally accepted accounting principles."