Second Quarter 2010 Highlights:

• Hubei revenues were $10.9 million, an increase of 29% over the second quarter of 2009
• Hubei earnings before interest, taxes, depreciation and amortization ("EBITDA") representing the Company's 55% share was $2.6 million, an increase of 38% over the second quarter of 2009
• Hubei added nearly 23,000 subscribers during the quarter
• Binzhou revenues were $3.1 million, an increase of 34% over the second quarter of 2009
• Binzhou EBITDA representing the Company's 60% share was $1.4 million, an increase of 54% over the second quarter of 2009

Comments from Mr. Clive Ng, Founder & Executive Chairman

"We have delivered another quarter of strong performance," says Clive Ng, Founder and Executive Chairman of China Cablecom. "The first half of 2010 has been a productive year for our joint venture partners and cable operations in Binzhou and Hubei. China's deployment of digitalization continue nationwide with expectations of a full digital TV broadcasting by 2015, and we are pleased to announce that our digital subscribers have grown 20% from a quarter-to-quarter comparison. We continue to implement aggressive cost-cutting efforts in our China and U.S. operations and with the continued increase in paying subscribers, digital growth and ARPU rates, we are confident in the development of China's media opportunities and of the future progress of our operations."

Financial Results for the Second Quarter of 2010

Consolidated revenues for the second quarter of 2010 were $14 million compared to consolidated revenues of $10.7 million for the second quarter of 2009. The increase was due to growth in paying subscribers and revenues generated in subscription and installation fees. Consolidated operating expenses for the second quarter of 2010 were $5.7 million compared to consolidated operating expenses of $4.7 million for the second quarter of 2009.

Based on U.S. GAAP, net loss attributable to ordinary shareholders for the second quarter of 2010 was $2.4 million or $0.39 per basic and fully diluted share compared to a net loss attributable to ordinary shareholders of $4.4 million, or $1.37 per basic and fully diluted share in the second quarter of 2009.

The net loss for the second quarter 2010 was significantly impacted by (1) non-cash amortization of intangible assets which were acquired in connection with China Cablecom's acquisition of Binzhou Broadcasting and Hubei in the amount of $0.37 million and $0.33 million, respectively, (2) non-cash interest expense associated with original issue debt discount and deferred financing costs relating to China Cablecom's senior secured, junior secured and unsecured notes in the amount of $0.93 million, (3) non-cash stock based compensation in the amount of $0.41 million.

Business Outlook

For the full year of 2010, China Cablecom reiterates its revenue guidance of $50-55 million. This includes total paying subscribers of 1.8 million and consolidated digital subscribers of 750,000.

Based on these metrics, the Company estimates EBITDA for 2010 to be in the range of $14-15 million, accounting for the 60% economic ownership in Binzhou and 55% economic ownership in Hubei.

Operating Metrics

The following summary financial and operating highlights for Binzhou and Hubei reflect the results of the respective operating joint ventures on a stand-alone basis and do not include China Cablecom's corporate operations and overhead. EBITDA reflects China Cablecom's consolidated share of 55% and 60% in Hubei Chutian and Binzhou Broadcasting, respectively.

Conference Call and Webcast

China Cablecom's management team will host a conference call today at 8:30 a.m. EDT, October 15, 2010 (or 8:30 p.m., October 15, 2010 Shanghai time). To listen to the conference call, please use the dial-in numbers below:

USA Toll Number: 1-877-941-1465

International: 1-480-629-9644

A replay of the call will be available for two weeks following the call and can be accessed by dialing the numbers below:

USA Toll Number: 1-800-406-7325

International: 1-303-590-3030

PASSCODE: 4373677#

The conference call will be available on webcast live and available for replay at: www.chinacablecom.net.

About China Cablecom Holdings

China Cablecom is a joint-venture provider of cable television services in the People's Republic of China, operating in partnership with a local state-owned enterprise ("SOE") authorized by the PRC government to control the distribution of cable TV services through the deployment of analog and digital cable services. China Cablecom has consummated the acquisition of a 55 percent economic interest in a cable network in Hubei province with paying subscribers exceeding 1,200,000. The Company originally acquired operating rights of the Binzhou Broadcasting network in Binzhou, Shandong Province in September 2007 by entering into a series of asset purchase and services agreements with a company organized by SOEs, owned directly or indirectly by local branches of State Administration of Radio, Film and Television in five different municipalities to serve as a holding company of the relevant businesses. China Cablecom now operates 28 cable networks with over 1.7 million paying subscribers. China Cablecom's strategy is to replicate the acquisitions by operating partnership models in other municipalities and provinces in the PRC and then introducing operating efficiencies and increasing service offerings in the networks in which it operates.

Safe Harbor Statement

The matters discussed in this press release contain "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements contained in this presentation and in the Company's other written and oral reports are based on current Company expectations and are subject to risks and uncertainties, which could cause actual results to differ materially. Any forward-looking statements are not guarantees of future performance and actual results of operations, financial condition and liquidity, and developments in the industry may differ materially from those made in or suggested by the forward-looking statements contained herein. These forward-looking statements are subject to numerous risks, uncertainties and assumptions. The forward-looking statements herein speak only as of the date stated herein and might not occur in light of these risks, uncertainties, and assumptions. China Cablecom Holdings undertakes no obligation and disclaims any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. You should carefully consider these factors as well as the additional risk factors outlined in the filings that China Cablecom Holdings makes with the U.S. Securities and Exchange Commission, including the Annual Report on Form 20-F filed with respect to the year ended December 31, 2009.

Reconciliation of Non-U.S. GAAP Measures

This release contains discussion of China Cablecom's revenues, as well as EBITDA. Although EBITDA is not a measure of financial condition or performance determined in accordance with U.S. GAAP, China Cablecom uses EBITDA to value businesses it acquires or anticipates acquiring. EBITDA is not defined in the same manner by all companies and may not be comparable to other similarly titled measures of other companies unless the definition is the same.

Below is a table reconciling certain non- U.S. GAAP financial measures appearing elsewhere herein relating to China Cablecom to the most closely analogous U.S. GAAP measures:

Mr. Defu Dong, Chairman and CEO of TechFaith and CEO of 798 Entertainment, said, "This investment reflects the high optimism and confidence our management team has in our games business strategy and future success. In addition, this direct investment in 798 Entertainment by our employees will further motivate our employees to achieve higher performance levels, as they will directly benefit from the success of 798 Entertainment."

Mr. Dong added, "With our games business now divided into three branches, we have a streamlined, focused operational structure: 798 Game focuses on the development of PC online games and publishing; 798 Anytime Online (formerly called 798 Mobile) focuses on the development of mobile phone games and 17 Wee focuses on the motion game business. All three are building and developing a catalog of games titles and working on some exciting innovations. Our goal is to build a strong catalog of games titles in each of the three above areas. This will give us the necessary platform to attract the sizeable universe of gamers needed to drive games revenue growth and profitability on a sustained basis."

About TechFaith

TechFaith (Nasdaq:CNTF - News) is a China-based original developed product ("ODP") provider focused on the original design and sales of mobile phone products. TechFaith aims to become a branded mobile phone specialist in differentiated market segments in the China market. TechFaith is also striving to build a leading PC and online gaming business through its wholly-owned subsidiary, 798 Entertainment Limited.

• TechFaith engages in the development and production of mid- to high-end handsets and tailor made handsets. TechFaith's original developed products include: (1) multimedia phones and dual mode dual card handsets of multiple wireless technology combinations, such as GSM/GSM, GSM/CDMA, GSM/WCDMA, GSM/TD-SCDMA and UMTS/CDMA; (2) Windows-based smartphones and Pocket PC phones; and (3) handsets with interactive online gaming and professional game terminals with phone functionality.
• With the capability of developing Middleware Application MMI/UI software on 2G/2.5G(GSM/GPRS, CDMA1X), 3G(EV-DO, WCDMA/UMTS, TD-SCDMA) and 3.5G(HSDPA) communication technologies, TechFaith is able to provide Middleware Application MMI/UI software packages that fulfill the specifications of handset brand owners and carriers in the global market. For more information, please visit www.techfaithwireless.com.
• TechFaith is aiming to become a branded mobile phone specialist for differentiated market segments in the China market, such as under its wholly-owned subsidiary brand name QIGI for smartphone business which targets enterprise users and operator tailored market, under Glomate brand, selling other brand names for girls and teenagers, under the TechFace brand name to target the market of outdoor sports enthusiasts.
• TechFaith is targeting both the mobile and online PC gaming markets through its websites www.798uu.com and www.798game.com with gaming content developed internally, co-developed and licensed from third parties.

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "confident," "outlook" and similar statements. Among other things, the business outlook and strategic and operational plans of TechFaith and management quotations contain forward-looking statements. TechFaith may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission on Forms 20-F and 6-K, etc., in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about TechFaith's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Potential risks and uncertainties include, but are not limited to, those risks outlined in TechFaith's filings with the U.S. Securities and Exchange Commission, including its annual report on Form 20-F. TechFaith does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

    Fiscal year 2010 ending June 30, 2010 financial highlights

    -- FY2010 revenue exceeds our revenue guidance of $63.0 million for FY2010,
       up 49.0% year over year (yoy) to $63.9 million from $42.9 million for
       FY2009
    -- Gross profit delivered $33.3 million, up 55.6% yoy from $21.4 million
       for FY2009
    -- Gross margins increased to 52.2% from 49.8% for FY2009
    -- Net income rose 51.9% yoy to $12.0 million at 19.0% net margin from
       $7.9 million at 18.0% net margin for FY2009; the net income also
       exceeds our net income guidance of $11.0 million for FY2010
    -- Earnings per share equals to $0.47 per basic share, or $0.40 per
       diluted share, up 25.0% year over year from $0.32 per diluted share in
       FY2009
    -- Cash and cash equivalents were $27.0 million on June 30, 2010 as
       compared to $12.4 million in cash and cash equivalents on June 30, 2009
    -- FY2010 operating cash flow rose 85.5% year over year to $15.4 million
       from $8.3 million in FY2009



    FY2010 results
                                   FY2010            FY2009           YoY
    Sales                     $63.9 million       $42.9 million     +49.0%
    Gross Profit              $33.3 million       $21.4 million     +55.6%
    Operating Income          $14.7 million        $9.7 million     +51.8%
    Net Income                $12.0 million        $7.9 million     +51.9%
    EPS (Diluted)                  $0.40               $0.32        +25.0%
    Diluted Shares             30.1 million        24.8 million     +21.4%

Revenue delivered $63.9 million for the FY2010 up from $42.9 million for FY2009, growing 49.0% yoy, supported by our continuous sales channel expansion and market penetration for our current product portfolio especially the lead products. The results exceeded our targeted $63.0 million FY2010 revenue guidance and validated our growth strategies on sales and marketing, manufacturing capacity expansion along with new pipeline development.

Our lead product revenues are Ginkgo Mihuan Oral Liquid (GMOL): $22.8 million, Apu Shuangxin (Benorylate) Granules (APU) $6.0 million, Xuelian Chongcao Oral Liquid (XLCC): $3.9 million, Azithromycin Dispersible Tablets (AZI): $4.1 million, Qingre Jiedu Oral Liquid (QRE): $3.6 million. The lead product revenues totaled $40.4 million, representing 63.0% of the FY2010 revenue.

Cost of revenue for the FY2010 was $30.6 million or 47.9% of the revenue compared to $21.5 million or 50.2% of the revenue of the FY2009.

Gross profit for the FY2010 was $33.3 million, at 52.2% gross margin, up from 49.8% gross margin for the FY2009. The improvement of the gross margins was the result of our portfolio optimization strategy that focused on higher margin products such as GMOL in the sales mix in addition to enhanced cost control measures that yielded greater efficiencies in manufacturing process.

Operating and R&D expenses were $19.0 million in FY2010 compared to $11.7 million in FY2009. The increase was primarily due to our recent sales and marketing expansion along with the compensation expenses to external service providers. We anticipate these costs may continue to increase but in line with our revenue growth.

Operating income delivered $14.7 million at 23.1% operating margin for the FY2010, up 51.8% yoy from $9.7 million at 22.7% operating margin for the FY2009.

Net income was $12.0 million for FY2010, as compared to the net income of $7.9 million for FY2009, an increase of $4.1 million or 51.9%. The net income gain was primarily the result of the revenue growth (49.0% yoy), improved gross margins (52.2% up from 49.8% in FY2009), and improved operating margins (23.1% up from 22.7% in FY2009).

Diluted earnings per share for FY2010 were $0.40, compared to $0.32 in FY2009, based on 30.1 million and 24.8 million shares for FY2010 and FY2009, respectively.

"For the fiscal year 2010, we have reached and exceeded our revenue and net income targets of $63.0 million and $11.0 million respectively. We thank our 1,365 employees whose diligence and persistence make possible Tianyin's successful operating performance not only for this year but for the past almost a decade of growth. In addition, we exceeded our revenue target of $22.0 million for Gingko Mihuan Oral Liquid through our continuous effort in sales expansion and market penetration," stated Dr. Jiang, Guoqing, Tianyin's Chief Executive Officer. "In addition to our 10 late-stage pipeline drugs pending approval that target various high-incidence medical indications in China, the future lays ahead with our initiative in the growing pharmaceutical raw material space. We expect our Jiangchuan macrolide facility to contribute to our revenue growth in the fiscal year 2011."

Balance sheet and cash flow

As of June 30, 2010, we had cash and cash equivalents of $27.0 million. Net cash generated from operating activities was $15.4 million for FY2010 ended June 30, 2010 as compared to $8.3 million for FY2009.

The strong cash flow was primarily the result of net income growth and further improved accounts receivable $8.2 million 12.8% of the FY2010 revenue versus $5.6 million or 13.1% of the FY2009 revenue.

We believe that Tianyin is adequately funded to meet all of our working capital and capital expenditure needs for the FY 2011.

Net cash used in investing activities for FY2010 and FY2009 totaled $8.8 million and $7.8 million respectively. The increase was mainly due to the construction of Jiangchuan facility and the new drug development.

Business Development & Outlook

Jiangchuan macrolide facility progress update:

Jiangchuan holds a license from China's SFDA to produce macrolide antibiotics such as Azithromycin, one of the world's best-selling antibiotics. Tianyin's goal is to utilize Jiangchuan as the foundation of a broader, longer-term strategy to build a significant presence in the rapidly growing macrolide antibiotics market. Construction of the new production facility at Xinjin Industrial Development Area commenced on January 8, 2010 with Phase I testing production (250 tons capacity) scheduled by the year-end 2010. Tianyin anticipates the revenue contribution from our macrolide facility starting in the fiscal year 2011.

Pipeline update:

We currently have 10 product candidates pending SFDA approval: 1) Huangtengsu Tablets, 2) Lifei Tablets, 3) Fuyang Granules, 4) Shuxiong Tablets, 5) Suxiao Zhixie Capsules, 6) Shuanghuang Xiaoyan Tablets, 7) Huoxiang Zhengqi Capsules, 8) Jiegu Xujing Ointment, 9) Runing Tablets, and 10) Dengzhan Huasu Tablets. We will be updating the progress of the approval process accordingly.

Fiscal year 2011 Guidance

The management reaffirms FY2011 revenue guidance of $113.0 million and net income guidance of $18.0 million, representing 77.0% and 50.0% year over year growth respectively.

Conference Call

Management will host a conference call to discuss the FY2010 results at 9:00 a.m. ET on Thursday, September 30, 2010.

Interested parties may access the call by dialing +1-877-941-4776 (U.S.), or +1-480-629-9762 (International). The conference ID is 4369258. It is advisable to dial in approximately 5-10 minutes prior to the start of the call.

A replay will be available through September 30, 2010 and can be accessed by dialing 1-877-870-5176 (U.S.), or +1-858-384-5517 (International). The passcode is 4369258.

This call is being web cast by ViaVid Broadcasting and can be accessed at the following link:

    For more information, please contact:

     James Jiayuan Tong M.D. Ph.D.
     Chief Financial Officer, Chief Business & Development Officer Director
     Tianyin Pharmaceutical Co., Inc.
     Web:   http://www.tianyinpharma.com
     Email: Dr.Tong@tianyinpharma.com
     Tel:   +86-28-8551-6696 (Chengdu, China)
            +1-949-350-6999 (U.S.)
            +86 134 36 550011 (China)
     Address: 23rd Floor Unionsun Yangkuo Plaza
              No 2 Block 3 South Renmin Road
              Chengdu, 610041
              China



                          Consolidated Balance Sheets

                                                        June 30,    June 30,
                                                          2010        2009
    Assets
    Current assets:
      Cash and cash equivalents                       $27,009,066 $12,352,223
      Accounts receivable, net of allowance
       for doubtful accounts of $421,079 and
       $171,947 at June 30, 2010 and 2009,
       respectively                                     8,185,240   5,620,519
      Inventory                                         3,588,824   3,808,289
      Advance payments                                    382,980   1,188,115
      Loans receivable                                    294,600          --
      Other current assets                                 77,283     683,189
        Total current assets                           39,537,993  23,652,335

    Property and equipment, net                        14,968,822   9,642,526

    Intangibles, net                                   15,232,286  12,037,483

        Total assets                                  $69,739,101 $45,332,344

    Liabilities and stockholders' equity
    Current liabilities:
      Accounts payable and accrued expenses            $1,715,781  $1,392,639
      Accounts payable - construction related           2,248,849          --
      Short-term bank loans                             1,473,000   1,399,075
      VAT taxes payable                                   658,312     458,930
      Income taxes payable                                861,614     490,514
      Other taxes payable                                  19,564      11,890
      Dividends payable                                    72,995     325,417
      Other current liabilities                           429,135     307,934
        Total current liabilities                       7,479,250   4,386,399

        Total liabilities                               7,479,250   4,386,399

    Stockholders' equity:
      Common stock, $0.001 par value, 50,000,000
       shares authorized, 27,326,527 and 17,908,912
       shares issued and outstanding at June 30,
       2010 and 2009, respectively                         27,326      17,909
      Series A convertible preferred stock, $0.001
       par value, 1,360,250 and 7,146,500 shares
       issued and outstanding at June 30, 2010 and
       2009, respectively                                   1,360       7,147
      Additional paid-in capital                       29,623,396  19,694,514
      Statutory reserve                                 3,732,883   2,299,807
      Treasury stock                                     (111,587)   (111,587)
      Retained earnings                                25,687,770  16,486,775
      Accumulated other comprehensive income            2,845,076   2,551,380
        Total stockholders' equity                     61,806,224  40,945,945

    Noncontrolling interest                               453,627          --

        Total equity                                   62,259,851  40,945,945

        Total liabilities and stockholders' equity    $69,739,101 $45,322,344



       Consolidated Statements of Operations and Comprehensive Income

                                                   For the Years Ended June 30,
                                                        2010         2009

    Sales                                           $63,939,684  $42,894,355

    Cost of sales                                    30,594,639   21,516,065

    Gross profit                                     33,345,045   21,378,290

    Operating expenses
      Selling expenses                               12,796,881    7,825,939
      General and administrative expenses             4,949,179    3,491,804
      Research and development                          852,848      343,952
        Total operating expenses                     18,598,908   11,661,695

    Income from operations                           14,746,137    9,716,595

    Other income (expenses):
      Interest (expense) income, net                    (26,649)     261,463
      Impairment loss on intangible assets                   --     (431,344)
      Other expenses                                    (39,518)          --
        Total other expenses                            (65,167)    (169,881)

    Income before provision for income taxes         14,680,970    9,546,714

    Provision for income taxes                        2,626,143    1,639,104

    Net income                                       12,054,827    7,907,610

    Less: Net income attributable to
     noncontrolling interest                             11,677           --

    Net income attributable to Tianyin
     Pharmaceutical Co., Inc.                        12,043,150    7,907,610

    Other comprehensive income
        Foreign currency translation adjustment         293,696       73,506

    Comprehensive income                            $12,336,846   $7,981,116

    Basic earnings per share                              $0.47        $0.41
    Diluted earnings per share                            $0.40        $0.32

    Weighted average number of common shares
     outstanding:
        Basic                                        24,427,329   15,937,411
        Diluted                                      30,081,685   24,805,281



                        Consolidated Statements of Cash Flows

                                                  For the Years Ended June 30,
                                                       2010          2009
    Cash flows from operating activities:
      Net Income                                   $12,043,150    $7,907,610
      Adjustments to reconcile net income to
       net cash provided by (used in)
       operating activities:
        Depreciation and amortization                  953,767       676,605
        Provision for bad debts                        247,131        81,512
        Loss on disposal of fixed assets                39,518            --
        Impairment loss on intangible assets                --       431,344
        Stock-based payments                         1,037,686       249,026
        Noncontrolling interest                         11,677            --
        Changes in current assets and current
         liabilities:
          Accounts receivable                       (2,770,322)   (1,223,282)
          Inventory                                    239,233      (237,975)
          Other current assets                         606,785       (62,705)
          Accounts payable and accrued expenses        315,202        49,867
          Accounts payable - construction related    2,239,231            --
          VAT taxes payable                            222,833       180,701
          Income tax payable                           366,845       147,897
          Other taxes payable                          (19,223)      (28,213)
          Dividend payable                            (252,422)           --
          Other current liabilities                    119,007       164,611
            Total adjustments                        3,356,948       429,388

            Net cash provided by operating
             activities                             15,400,098     8,336,998

    Cash flows from investing activities:
      Loans receivable                                (293,340)           --
      Additions to property and equipment              (59,946)      (58,014)
      Additions to construction in progress         (5,749,230)   (4,179,902)
      Additions to intangible assets-drug           (2,742,729)   (2,417,250)
      Advance payments for intangible assets-drug           --    (1,188,115)

        Net cash used in investing activities       (8,845,245)   (7,843,281)

    Cash flows from financing activities:
      Proceeds from short-term bank loans               66,002            --
      Additional paid-in capital                     8,894,828            --
      Dividend declared and paid                    (1,409,079)      (73,944)
      Treasury stock                                        --      (111,587)
      Proceeds from minority shareholders              440,010            --

        Net cash provided by (used in)
         financing activities                        7,991,761      (185,531)

    Effect of foreign currency translation on cash     110,229       (13,113)

    Net increase in cash and cash equivalents       14,656,843       295,073

    Cash and cash equivalents at beginning of year  12,352,223    12,057,150

    Cash and cash equivalents at end of year       $27,009,066   $12,352,223

    Supplemental schedule of non-cash activities
        Advance payments for intangible assets-drug   $808,152           $--

Prices of pure magnesium have recently surged to over $2,900 per metric ton FOB China, an increase of over 7% in the past two weeks. This is mainly due to the rising price of ferrosilicon, one of the key raw materials in the magnesium production process. Many ferrosilicon producers are experiencing rolling blackouts as part of the Chinese government's initiative to meet their yearend energy savings target. This has caused a shortage of ferrosilicon supply resulting in a price increase of more than $200 per metric ton. In a market where magnesium supplies have been declining, the uncertainty of ferrosilicon pricing has caused many magnesium producers to refrain from offering long term contracts. International Magnesium Group, our wholly owned subsidiary is, however, able to provide long term magnesium supply contracts based on our innovative cost indexed pricing formula, as we ramp up our production in both Baotou Changxin Magnesium and Taiyuan Chang Magnesium facilities in the coming months.

Commenting on the contracts, Dr. James Wang, Chairman and CEO of China Direct Industries, Inc., stated, "We are excited to receive these recent contracts during a time of uncertainty in the magnesium market. We also believe balance will be restored in the magnesium markets as other metals markets have begun to strengthen due to improving global demand and we see prices returning to more sustainable levels in the range of $3,000 to $3,300 per ton FOB China in the coming months. We are also confident that IMG's cost indexed pricing guarantee and shipment commitments will allow IMG to gain additional market share during this time of price strengthening amid supply disruptions and we intend to aggressively pursue sales opportunities as we position our magnesium operations for future growth."

About China Direct Industries, Inc.

China Direct Industries, Inc. (NASDAQ:CDII - News), is a U.S. owned holding company operating in China in two core business segments, pure magnesium production and distribution and distribution of basic materials in China. China Direct Industries also provides advisory services to China based companies in competing in the global economy. Headquartered in Deerfield Beach, Florida, China Direct Industries operates 9 subsidiaries throughout China. This infrastructure creates a platform to expand business opportunities globally while effectively and efficiently accessing the U.S. capital markets. For more information about China Direct Industries, please visit http://www.cdii.net.

DISCLOSURE NOTICE:

In connection with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, China Direct Industries, Inc., is hereby providing cautionary statements identifying important factors that could cause our actual results to differ materially from those projected in forward-looking statements (as defined in such act). Any statements that are not historical facts and that express, or involve discussions as to, expectations, beliefs, plans, objectives, assumptions or future events or performance (often, but not always, indicated through the use of words or phrases such as "will likely result," "are expected to," "will continue," "is anticipated," "estimated," "intends," "plans," "believes" and "projects") may be forward-looking and may involve estimates and uncertainties which could cause actual results to differ materially from those expressed in the forward-looking statements. These statements include, but are not limited to, our expectations concerning market prices of our magnesium products and our ability to gain market share.

We caution that the factors described herein could cause actual results to differ materially from those expressed in any forward-looking statements we make and that investors should not place undue reliance on any such forward-looking statements. Further, any forward-looking statement speaks only as of the date on which such statement is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of anticipated or unanticipated events or circumstances. New factors emerge from time to time, and it is not possible for us to predict all of such factors. Further, we cannot assess the impact of each such factor on our results of operations or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. This press release is qualified in its entirety by the cautionary statements and risk factor disclosure contained in our Securities and Exchange Commission filings, including our Transition Report on Form 10-K for the fiscal year ended September 30, 2009.

 
Contact Information:

For the Company:

China Direct Industries, Inc.
Richard Galterio or Lillian Wong
Investor Relations
Phone: 1-877-China-57
Email: richard.galterio@cdii.net
lillian.wong@cdii.net 

As per the supply contract, China BAK will supply 1,000 units of lithium- ion high-power batteries, which will be used by Geoby Electric to manufacture electric bicycles. Management expects to receive additional orders from Geoby Electric following successful integration and performance testing.

About China BAK Battery Inc.

China BAK Battery, Inc. (NASDAQ:CBAK - News) is a leading global manufacturer of lithium-based battery cells. The Company produces battery cells that are the principal component of rechargeable batteries commonly used in cellular phones, notebook computers and portable consumer electronics such as digital media devices, portable media players, portable audio players, portable gaming devices, and PDAs.

After conducting an in-depth market survey, the company developed the aluminum magnesium alloy electric scooter specifically designed to meet customers' request for lighter weight vehicles delivering greater mileage. Mr. Zhiguo Fu, CEO of ABAT, stated, "This initial order exemplifies management's significant progress in developing new products and services to meet the needs of our customers. As the orders for our aluminum magnesium alloy electric scooter increase in the European market and we will expand our product development and distribution efforts with additional new electric vehicles to meet a growing global demand."

About Advanced Battery Technologies, Inc.

Advanced Battery Technologies, Inc. (Nasdaq:ABAT - News), founded in September 2002, develops, manufactures and distributes rechargeable Polymer Lithium-Ion (PLI) batteries. The Company's products include rechargeable PLI batteries for electric automobiles, motorcycles, mine-use lamps, notebook computers, walkie-talkies and other electronic devices. ABAT's batteries combine high-energy chemistry with state-of-the-art polymer technology to overcome many of the shortcomings associated with other types of rechargeable batteries. Early in 2009, the Company acquired Wuxi Angell Autocycle Co. Ltd., an electric vehicle business, and renamed it Wuxi Zhongqiang Autocycle Co., Ltd. ("Wuxi ZQ"). The Company has a New York office, with its executive offices and manufacturing facilities in China.

Safe Harbor Statement

Certain statements in this release and other written or oral statements made by or on behalf of the Company are "forward-looking statements" within the meaning of the federal securities laws. Statements regarding future events and developments and our future performance, as well as management's expectations, beliefs, plans, estimates or projections relating to the future are forward-looking statements within the meaning of these laws. The forward-looking statements are subject to a number of risks and uncertainties including market acceptance of the Company's services and projects and the Company's continued access to capital and other risks and uncertainties. The actual results the Company achieves may differ materially from those contemplated by any forward-looking statements due to such risks and uncertainties. These statements are based on our current expectations and speak only as of the date of such statements.

Advanced Battery Technologies, Inc.
Dan Chang, SVP Finance
(212) 391-2752
shuyuan.chang@gmail.com
Rubenstein Investor Relations
Tim Clemensen
(212) 843-9337
TClemensen@RubensteinIR.com

Beijing Chong Construction Co., Ltd. is a comprehensive construction enterprise located in Beijing with over $47 million in total assets. The company is primarily engaged in construction projects involving office and residential construction, historic building renovation, and municipal public projects and Industrial construction in the Beijing region.

Commenting on the contract, Dr. James Wang, Chairman and CEO of China Direct Industries, Inc., stated, "We are excited to have received an additional significant contract for our basic materials segment with a prominent construction company in Beijing. We look forward to building on this momentum in the coming quarters as we continue to aggressively market in this area as we look to expand our basic materials segment."

About China Direct Industries, Inc.

China Direct Industries, Inc. (NASDAQ:CDII - News), is a U.S. owned holding company operating in China in two core business segments, pure magnesium production and distribution and distribution of basic materials in China. China Direct Industries also provides advisory services to China based companies in competing in the global economy. Headquartered in Deerfield Beach, Florida, China Direct Industries operates 9 subsidiaries throughout China. This infrastructure creates a platform to expand business opportunities globally while effectively and efficiently accessing the U.S. capital markets. For more information about China Direct Industries, please visit http://www.cdii.net.

DISCLOSURE NOTICE:

In connection with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, China Direct Industries, Inc., is hereby providing cautionary statements identifying important factors that could cause our actual results to differ materially from those projected in forward-looking statements (as defined in such act). Any statements that are not historical facts and that express, or involve discussions as to, expectations, beliefs, plans, objectives, assumptions or future events or performance (often, but not always, indicated through the use of words or phrases such as "will likely result," "are expected to," "will continue," "is anticipated," "estimated," "intends," "plans," "believes" and "projects") may be forward-looking and may involve estimates and uncertainties which could cause actual results to differ materially from those expressed in the forward-looking statements. These statements include, but are not limited to, our belief regarding our future business and the potential revenues to be generated by the contract with Beijing Chong Construction Co. Ltd., and our expectations regarding the expansion of our basic materials segment.

We caution that the factors described herein could cause actual results to differ materially from those expressed in any forward-looking statements we make and that investors should not place undue reliance on any such forward-looking statements. Further, any forward-looking statement speaks only as of the date on which such statement is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of anticipated or unanticipated events or circumstances. New factors emerge from time to time, and it is not possible for us to predict all of such factors. Further, we cannot assess the impact of each such factor on our results of operations or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. This press release is qualified in its entirety by the cautionary statements and risk factor disclosure contained in our Securities and Exchange Commission filings, including our Transition Report on Form 10-K for the fiscal year ended September 30, 2009.

Contact Information:

Neither the United States Securities and Exchange Commission nor any state securities commission has approved or disapproved of the Proposed Offer or securities to be issued in connection therewith, or passed upon the adequacy or accuracy of this press release, or the merits or fairness of the Proposed Offer. Any representation to the contrary is a criminal offense.

Qiao Xing Universal Resources, Inc. (Nasdaq: XING, the "Company" or "XING"), an emerging Chinese resources company headquartered in Huizhou, Guangdong Province, today announced that it has proposed to acquire all outstanding shares of Qiao Xing Mobile Communication Co., Ltd (NYSE: QXM, or "QXMC") that it does not currently own, by way of a Scheme of Arrangement (the "Proposed Offer") under British Virgin Islands law. The Proposed Offer, if completed, will result in QXMC becoming a privately-held company. The Company currently owns approximately 61.1% of the outstanding shares of QXMC.

The Company has proposed to issue 1.9 shares of its common stock plus US$0.80 in cash per share to shareholders of QXMC other than the Company (the "Minority Shareholders"). The Company believes that the Proposed Offer is fair and reasonable to the Minority Shareholders and in the best interests of the shareholders of both QXMC and the Company. The Company described the Proposed Offer in a letter dated September 8, 2010, addressed to a special committee of the board of directors of QXMC comprised of directors who are independent under the rules of the New York Stock Exchange and are not affiliated with the Company (the "Special Committee"). The Company asked the Special Committee of QXMC to advise it whether they believe they will be prepared to recommend to the Minority Shareholders that they accept the Proposed Offer. If the independent directors of QXMC are not prepared to recommend to the Minority Shareholders that they accept the Proposed Offer, the Company may proceed to make the Proposed Offer directly to the Minority Shareholders. The Proposed Offer will be subject to several conditions, including, without limitation, no fundamental changes in QXMC's financial condition or results of operations, requisite regulatory approvals, confirmatory diligence, all requisite corporate approvals, including shareholder approvals, and certain other conditions that will be described in the Scheme of Arrangement document.

Mr. Ruilin Wu, the Company's Chairman and Chief Executive Officer, said, "We firmly believe that this transaction is in the best interest of both companies' shareholders. QXMC is in stable financial condition but it has faced a tough competitive environment and shrinking revenue. We believe that by privatizing QXMC, we will be able to make the best use of its balance sheet, which will provide us with strong financial support for the implementation of our resources-focused strategy. We have achieved initial success in the resources industry with our Molybdenum mining business, which started commercial production in the second half of 2009. Our goal is to become a pure resource company with meaningful scale and we continue to evaluate opportunities to expand our mining resources in areas such as lead, zinc, copper and molybdenum."

About Qiao Xing Universal Resources, Inc.

Qiao Xing Universal Resources, Inc. is an emerging Chinese resources company headquartered in Huizhou, Guangdong Province, China. The Company was previously one of the leading players of telecommunication terminal products in China, but made the strategic decision to diversify into the resources industry in 2007. In April 2009, the Company acquired the 100% equity interest in China Luxuriance Jade Company, Ltd ("CLJC"). CLJC, through its wholly owned Chinese subsidiaries, owns the rights to receive the expected residual returns from Chifeng Haozhou Mining Co., Ltd. ("Haozhou Mining"), a large copper- molybdenum poly-metallic mining company in Inner Mongolia, China. Since then, the Company has further refined its strategy to become a pure resources company and is actively seeking additional acquisition targets in the resources industry.

Forward Looking Statements

This press release contains forward-looking statements. In some cases, these forward-looking statements can be identified by words or phrases such as "aim," "anticipate," "believe," "continue," "estimate," "expect," "intend," "is/are likely to," "may," "plan," "potential," "will" or other similar expressions. Statements that are not historical facts, including, without limitation, statements about Qiao Xing Universal Resources, Inc.'s beliefs and expectations with respect to the Proposed Offer and its ability to further its resource focused strategy, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward- looking statement. Information regarding these factors is included in our filings with the Securities and Exchange Commission. Qiao Xing Universal Resources, Inc. does not undertake any obligation to update any forward- looking statement, except as required under applicable law. All information provided in this press release is as of September 8, 2010.

Additional Information and Where to Find It

Qiao Xing Universal Resources, Inc. plans to file a Schedule 13E-3 with the United States Securities and Exchange Commission (the "SEC") in connection with the Proposed Offer. The Schedule 13E-3 will contain additional information regarding the Proposed Offer, including, without limitation, information regarding the special meeting of shareholders of Qiao Xing Mobile Communication Co., Ltd that will be called to consider the Proposed Offer. The Schedule 13E-3 will contain important information about Qiao Xing Universal Resources, Inc., Qiao Xing Mobile Communication Co., Ltd, the Proposed Offer and related matters. Investors and shareholders should read the Schedule 13E-3 and the other documents filed with the SEC in connection with the Proposed Offer carefully before they make any decision with respect to the Proposed Offer. A copy of the Scheme of Arrangement with respect to the Proposed Offer will be an exhibit to the Schedule 13E-3. The Proposed Offer is expected to be exempt from the registration requirements of the United States Securities Act of 1933 Act by virtue of the exemption provided by Section 3(a)(10); however, it is possible that the offer may change forms such that the exemption provided by Section 3(a)(10) may no longer be available. In such a case Qiao Xing Universal Resources, Inc. may file a Form F-4 with respect to the Proposed Offer.

The Schedule 13E-3 and all other documents filed with the SEC in connection with the Proposed Offer will be available when filed free of charge at the SEC's web site at www.sec.gov. Additionally, the Schedule 13E-3 and all other documents filed with the SEC in connection with the Proposed Offer will be made available to investors or shareholders free of charge by calling or writing to:

    Company Contact:
     Qiao Xing Universal Resources
     Rick Xiao, Vice President
     Phone: +86-752-282-0268
     Email: rick@qiaoxing.com

                                                Filing under Rule 425 under
                                                 the Securities Act of 1933
                             Filing by: Qiao Xing Universal Resources, Inc.
                   Subject Company: Qiao Xing Mobile Communication Co., Ltd
         SEC File No. of Qiao Xing Mobile Communication Co., Ltd: 001-33430

According to the contracts, China TransInfo will provide ETC electronics engineering machinery systems, ETC application system development and upgrading services, and 10,000 onboard electronic tags for highway authorities in Shanxi Province. The Company will also provide 10,000 onboard electronic tags and 120 readers for highway authorities in Shandong Province and Sichuan Province. Of the RMB 44.6 million total revenue contribution from the contracts, RMB 12.0 million is expected to be recognized through the balance of 2010, with the remaining RMB 32.6 million expected to be recognized in 2011 and 2012.

China TransInfo has become one of the top three players in the ETC sector and has the highest annual growth rate in market share. In 2007, China rolled out domestic ETC standards. In 2008, the government started to promote ETC, first with pilot projects in several provinces and regions and then expanded them to build a national ETC network. As one of only eight companies with a track record of successfully selling related products, China TransInfo won its first ETC project in Zhejiang Province in 2009, and then went on to win bids in Jiangsu, Shandong, Shaaxi Shanxi provinces and Tianjin Municipality.

"We are excited about the significant progress we have made in the ETC market," commented Mr. Shudong Xia, Chairman and Chief Executive Officer. "This year, with one exception, we have won projects in every province and municipality in China that solicited new bids. Our recent success in Shanxi, Shandong and Sichuan provinces further demonstrates strong market recognition for our products and technology and increases our market penetration in different regions, paving a solid foundation for us to continue to expand nationally. We expect strong growth in the ETC market as regulatory authorities continue to push implementation and car owners increasingly purchase and install onboard electronic tags. Based on our advanced technology, product advantage, brand equity and solid customer relations, we are confident that we will continue to benefit from the growth of the ETC market."

About China TransInfo

China TransInfo, through its affiliate, China TransInfo Technology Group Co., Ltd., (the "Group Company") and the Group Company's PRC operating subsidiaries, is primarily focused on providing transportation information services and comprehensive solutions based on Geographic Information System (GIS) technologies. The Company aims to become the largest transportation information products and comprehensive solutions provider, as well as the largest real time transportation information platform operator and provider in China. In addition, the Company is developing its transportation system to include Electronic Toll Collection technology. As the co-formulator of several transportation technology national standards, the Company owns software copyrights for 89 software products and has won 5 of the 10 model cases sponsored by the PRC Ministry of Communications. The Company's affiliation with Peking University provides the Company access to the University's GeoGIS Research Laboratory, including over 30 Ph.D. researchers. As a result, the Company is playing a key role in setting the standards for electronic transportation information solutions. For more information, please visit the Company's website at http://www.chinatransinf... .

Safe Harbor Statement

This press release contains certain statements that may include "forward looking statements". All statements other than statements of historical fact included herein are "forward-looking statements". These forward looking statements are often identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions, involve known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company's periodic reports that are filed with the Securities and Exchange Commission and available on its website (http://www.sec.gov). All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.

    For more information, please contact:

    Company Contact:
     Ms. Fan Zhou, Investor Relations Director
     China TransInfo Technology Corp.
     Email: ir@ctfo.com
     Tel    +86-10-5169-1657

    Investor Relations Contact:
     Mr. Athan Dounis, Account Manager
     Email: athan.dounis@ccgir.com
     Tel:   +1-646-213-1916

     Mr. Crocker Coulson, President
     Email: crocker.coulson@ccgir.com
     Tel:   +1-646-213-1915
     CCG Investor Relations
     Web:   http://www.ccgirasia.com

ZHUHAI, China and NEW YORK -- China Architectural Engineering, Inc. ("CAE" or the "Company") (Nasdaq: CAEI), a provider of design, engineering, fabrication and installation services of high-end building envelope systems, today announced that the Company has completed its acquisition of 60% ownership of Shanghai ConnGame Network Ltd. ("ConnGame"), an MMORPG (Massively Multiplayer Online Role Playing Game) developer and operator, in exchange for 25 million shares of the Company's common stock. The acquisition of ConnGame was conducted through the acquisition of a 60% ownership in New Crown Technology, Inc., ConnGame's 100% parent.

ConnGame, founded and led by experienced management in China's online game industry, develops MMORPGs for operation in China. Leveraging its innovative game engines, scalable development platforms, and accomplished production teams, ConnGame focuses on self-developed MMORPGs game titles that are based on China's iconic characters and nostalgic epochs.

The Company also announced today that the Company's board of directors has appointed Mr. Jun Tang as a member and as the chairman of the board of directors of the Company, effective as of the closing of the acquisition, which occurred on August 18, 2010. Immediately prior to the effective time of Mr. Jun Tang's appointment, Luo Ken Yi resigned as the chairman of the board of directors, but remains a member of the board.

Mr. Jun Tang, the new chairman of CAE, commented, "It's my great honor to be appointed as the chairman of the board of CAE. I am very excited about this opportunity to return to the gaming industry and to quickly develop and grow CAE's new business. It is my duty and goal to work closely with my team and members of the board to build a strong management team, strengthen our execution capabilities and further enhance our communication with investors to grow and expand our company.

"With the completion of this acquisition, we envision CAE taking greater advantage of our core architectural engineering and design market, and more importantly, capturing China's large and rapidly growing online game market. We will strengthen our business model by diversifying our revenue stream, as well as eliminating unprofitable business segments. I am convinced that CAE and ConnGame share a common culture of technical excellence. Therefore, I am confident that the integration of our businesses and technologies will drive business growth and operational efficiency for CAE and ultimately create higher shareholder value.

"I would also like to express my deep appreciation to the former chairman of CAE, Mr. Luo Ken Yi, for his dedication, professionalism and leadership during his tenure. He has made outstanding contributions to CAE and we sincerely thank him for his hard work, both in the past and in the future as he continues to serve as a member of the board."

About China Architectural Engineering

China Architectural Engineering, Inc. (Nasdaq: CAEI) is a provider of design, engineering, fabrication and installation services of high-end curtain wall systems, roofing systems, steel construction systems, and eco-energy systems. Founded in 1992, CAEI has maintained its market leadership by providing timely, high-quality, reliable, fully integrated, and cost-effective solutions. Collaborating with world-renowned architects and building engineers, the Company has successfully completed over one hundred large, complex and unique projects worldwide, including numerous award-winning landmarks across Asia's major cities.

For further information on China Architectural Engineering, Inc., please visit http://www.caebuilding.com .

About Shanghai ConnGame

Shanghai ConnGame, founded and led by experienced management in China's online game industry, develops MMORPGs for operation in China. Leveraging its innovative game engines, scalable development platforms, and accomplished production teams, ConnGame focuses on self-developed MMORPGs game titles that are based on China's iconic characters and nostalgic epochs.

Forward-Looking Statements

In addition to historical information, the statements set forth above may include forward-looking statements that may involve risk and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Actual results could differ materially from the expectations contained in forward-looking statements as a result of risks and uncertainties, including, but not limited to, difficulties in moving into the online gaming market; the Company's ability to integrate the management, personnel and operations of the Company and ConnGame; required Company payments under the waiver agreement and ability to maintain the conditions of the bondholder waiver and dilution from the potential adjustment to the conversion price of the bonds for non-compliance with the waiver; identification and remediation of the Company's deficiencies and weaknesses in its internal controls over financial reporting, potential claims or litigation that may result from the occurrence of restatements, ability to identify and secure debt, equity, and/or other financing required to continue the operations of the Company; reduction or reversal of the Company's recorded revenue or profits due to "percentage of completion" method of accounting and expenses; increasing provisions for bad debt related to the Company's accounts receivable; fluctuation and unpredictability of costs related to our products and services; adverse capital and credit market conditions; expenses and costs associated with its convertible bonds, regulatory approval requirements and competitive conditions; and various other matters, many of which are beyond our control. These and other factors that may result in differences are discussed in greater detail in the Company's reports and other filings with the Securities and Exchange Commission.

    For more information, please contact:

    Investor Contact:
    ICR:
     Michael Tieu
     Tel:   +86-10-6599-7960
     Email: michael.tieu@icrinc.com

     Bill Zima
     Tel:   +1-203-682-8200
     Email: bill.zima@icrinc.com

SOURCE China Architectural Engineering, Inc.

Investor Contact: ICR: Michael Tieu, +86-10-6599-7960, or michael.tieu@icrinc.com; Or Bill Zima, +1-203-682-8200, or bill.zima@icrinc.com

(Logo: http://photos.prnewswire... )

Global Sources' chairman and CEO, Merle A. Hinrichs, said: "Revenue grew by 8% for the second quarter, and we expect higher growth in the second half, as compared to the same respective periods a year ago. Our performance is being driven by the positive market reaction to our increasingly integrated offering of online, exhibitions and magazines, and by the continued rapid expansion of our trade show business, where we now have over 60 trade shows scheduled for 2011, up from 30 in 2009.

"We believe our shows attract the top-tier of the import buying community, since virtually all of the attendees have clearly demonstrated that they are actively looking for products and suppliers. More than 100,000 buyers attended our China Sourcing Fairs in 2009, and we expect to substantially exceed that this year, to the benefit of all of our advertisers and exhibitors. In addition, our value proposition for exhibitors is increasingly 'digital', with buyers now able to search online for exhibitors, view their products and make inquiries."

    Financial highlights -- Second quarter: 2010 compared to 2009
    -- Revenue was $58.4 million, as compared to $54.2 million.
       -- Online revenue was $22.4 million, as compared to $22.1 million.
       -- Exhibitions revenue was $27.4 million, as compared to $24.0 million.
       -- Print revenue was $7.4 million, as compared to $7.1 million.
       -- Revenue from mainland China was $43.4 million, as compared to $39.3
          million.
    -- GAAP net income, including a non-cash stock based compensation (SBC)
       expense of $1.1 million, and amortization of intangibles as it relates
       to certain equity compensation plans of $102,000, was $7.3 million, or
       $0.16 per diluted share, as compared to second quarter 2009 GAAP net
       income of $5.1 million or $0.11 per diluted share, which included a
       non-cash SBC expense of $1.7 million.
    -- Non-GAAP net income was $8.5 million, or $0.18 per diluted share, as
       compared to $6.8 million, or $0.15 per diluted share, for the second
       quarter of 2009.
    -- Adjusted EBITDA was $10.1 million, as compared to $8.0 million for the
       second quarter of 2009.
    -- Total deferred income and customer prepayments were $84.6 million as at
       June 30, 2010, as compared to $72.8 million as at June 30, 2009.

    Financial highlights -- Six Months Ended June 30: 2010 compared to 2009
    -- Revenue was $92.4 million, as compared to $89.0 million.
    -- GAAP net income was $9.8 million, or $0.21 per diluted share, as
       compared to $6.3 million, or $0.14 per diluted share.
    -- Non-GAAP net income was $11.8 million, or $0.26 per diluted share, as
       compared to $8.5 million, or $0.19 per diluted share, for the six
       months ended June 30, 2009.
    -- Adjusted EBITDA was $15.1 million, as compared to $12.2 million for the
       six months ended June 30, 2009.

Global Sources' non-GAAP metrics

Management believes non-GAAP metrics are useful measures of operations and provides GAAP to non-GAAP reconciliation tables at the end of this press release. Global Sources defines non-GAAP net income as net income excluding non-cash, SBC expense or credit, amortization of intangibles as it relates to certain equity compensation plans, gains or losses on acquisitions and investments, and/or impairment charges, for all historical and future references to non-GAAP metrics. Non-GAAP EPS is defined as non-GAAP net income divided by the weighted average of diluted common shares outstanding. Adjusted EBITDA is defined at earnings before interest, taxes, depreciation, amortization, stock-based compensation and impairment of goodwill and intangible assets.

Global Sources' CFO, Connie Lai, said: "We expect revenue growth of 13% to 15% in the second half of 2010, as compared to the second half of 2009. However, to support our growth objectives, we are investing in marketing, technology and the expansion of our trade show business. This, along with the rising cost of doing business in China, is expected to increase operating expenses."

    Financial expectations for the second half of 2010
    -- For the second half of 2010 ending Dec. 31, 2010:
       -- Revenue is expected to be in the range of $97.0 million to $98.0
          million, representing an increase of 13% to 15%, as compared to
          $85.5 million for the second half of 2009.
       -- GAAP EPS is expected to be in the range of $0.23 to $0.25, as
          compared to $0.21 per diluted share in the second half of 2009.
          Using the stock price of $7.57 on Aug. 6, 2010, SBC and the
          amortization of intangibles as it relates to certain equity
          compensation plans are estimated to be an expense of $0.05 per
          diluted share.
       -- Non-GAAP EPS is expected to be in the range of $0.28 to $0.30, as
          compared to $0.23 per diluted share for the same period in 2009.
       -- Adjusted EBITDA is expected to be $16.0 million, as compared to
          $13.1 million in the second half of 2009.

    Recent Corporate Highlights
    -- Appointed Connie Lai as Chief Financial Officer effective Aug. 1, 2010.
    -- Announced planned launch of five China Sourcing Fairs in Miami in July
       2011, enabling Asian exporters to meet face-to-face with American,
       Canadian, and Latin American buyers.
    -- Conducted a tender offer, which commenced on June 30, 2010 and expired
       on July 28, 2010, for the purchase of 11,121,000 outstanding common
       shares of the company at a purchase price of $9.00 per share or
       $100,089,000 in total.
    -- Held 14 China Sourcing Fairs and two India Sourcing Fairs:
       -- In Dubai in June, the Electronics, Fashion Accessories, Gifts &
          Premiums, Home Products, Baby & Children's Products and Hardware &
          Building Materials shows and the India Sourcing Fair featured over
          1,310 booths.
       -- In Shanghai in June, the 1st Electronics show featured more than 460
          booths.
       -- In Hong Kong in April, the Electronics & Components and Security
          Products shows featured over 2,650 booths; while the Home Products,
          Gifts & Premiums, Baby & Children's Products, Fashion Accessories
          and Underwear & Swimwear shows featured 3,200 booths.
       -- In Hong Kong in April, the India Sourcing Fair: Home Products
          featured over 110 booths.
    -- In March, the 15th IIC-China Conference & Exhibition spring edition was
       held in Shenzhen, Shanghai and Chengdu. Exhibitors included top China
       semiconductor companies, as well as international vendors  including
       Fairchild Semiconductor, Fujitsu Microelectronics, Intel and Microsoft.
    -- Private Sourcing Events were held from April 1 through to July 22, 2010
       for more than 60 sourcing teams from very large buying organizations
       including Brookstone, Carrefour, Casino, El Corte Ingles, Primark,
       Kmart Australia, WHSmith, Staples and Target Australia. These events
       created more than 250 high quality, one-on-one selling opportunities
       for Global Sources suppliers.
    -- Renewed contracts with AsiaWorld-Expo Management to host China Sourcing
       Fairs in Hong Kong for 2013 and 2014. The renewal contracts represent a
       total gross value of approximately US$16.7 million.
    -- Generated over 192 million requests for information (RFIs) from buyers
       to suppliers through Global Sources Online during the 12 months ended
       June 30, 2010, up 137% compared to the same period last year.
    -- Increased Global Sources' independently certified community of active
       buyers to more than 967,000 at the end of the second quarter, 16.5%
       higher than the same time last year.

Conference call for Global Sources second quarter 2010 earnings

Chairman and CEO, Merle A. Hinrichs, and CFO, Connie Lai, are scheduled to conduct a conference call at 8:00 a.m. ET on August 19, 2010 (8:00 p.m. on August 19, 2010 in Hong Kong) to review these results in more detail. To participate, please call at least 10 minutes in advance to ensure all callers are placed into the call at the start time. Investors in the United States may participate by dialing (877) 941-4774, and international participants may dial (1-480) 629-9760. Investors in Hong Kong are required to provide the conference ID 4330799; are encouraged to dial into the call 10 to 15 minutes prior to the call to prevent delay in joining; and may participate by dialing (852) 3009-5027. A live webcast of the conference call is scheduled to be available on Global Sources' corporate site at August 26, 2010. To listen to the telephone replay, dial (800) 406-7325, or dial (303) 590-3030 outside the United States, and enter pass code 4330799. For those in the Hong Kong area, the replay dial-in number is (852) 3056-2777, and the pass code is 4330799.

Suppliers receive more than 192 million sales leads annually from buyers through Global Sources Online (http://www.globalsources... ) alone.

Global Sources has been facilitating global trade for nearly 40 years. Global Sources' network covers more than 60 cities worldwide. In mainland China, Global Sources has about 2,500 team members in more than 40 locations, and a community of over 2 million registered online users and magazine readers for its Chinese-language media.

Safe Harbor Statement

This news release contains forward-looking statements within the meaning of Section 27-A of the Securities Act of 1933, as amended and Section 21-E of the Securities Exchange Act of 1934, as amended. The company's actual results could differ materially from those set forth in the forward-looking statements as a result of the risks associated with the company's business, changes in general economic conditions, and changes in the assumptions used in making such forward-looking statements.

                              - Tables Follow -


                     GLOBAL SOURCES LTD. AND SUBSIDIARIES
                         CONSOLIDATED BALANCE SHEETS
   (In U.S. Dollars Thousands, Except Number of Shares and Per Share Data)

                                                   At                 At
                                                June 30,         December 31,
                                                  2010               2009
                                               (Unaudited)
    ASSETS
    Current Assets:
     Cash and cash equivalents                $   173,666        $    91,553
     Term deposits with banks                       1,519             60,357
     Available-for-sale securities                  6,476              6,423
     Accounts receivable, net                       4,054              3,438
     Receivables from sales representatives         5,795              5,607
     Inventory                                        591                600
     Prepaid expenses and other current assets     12,692             13,603
     Deferred tax assets                               98                 13
       Total Current Assets                       204,891            181,594


    Property and equipment, net                    76,854             77,815
    Goodwill                                        2,497                  -
    Intangible assets, net                          6,947              8,770
    Long term investments                             100                100
    Deferred tax assets                               421                446
    Other noncurrent assets                         2,369              1,667
       Total Assets                           $   294,079        $   270,392

    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current Liabilities:
     Accounts payable                         $    10,192        $    10,901
     Deferred income and customer prepayments      81,661             73,841
     Accrued liabilities                           14,675             11,585
     Income taxes payable                             439                435
       Total Current Liabilities                  106,967             96,762
    Deferred income and customer prepayments        2,935              2,516
    Deferred tax liability                          1,523                141
       Total Liabilities                          111,425             99,419

    Shareholders' equity:
     Common shares, US$0.01 par value;
      75,000,000 shares authorized;
      51,529,794 (2009: 51,427,642)
      shares issued and 44,654,794
      (2009: 44,552,642) outstanding                  515                514
     Additional paid in capital                   140,225            138,468
     Treasury shares, at cost -- 6,875,000
      (2009: 6,875,000) shares                    (50,000)           (50,000)
     Retained earnings                             81,208             71,369
     Accumulated other comprehensive income         3,247              2,859
       Total Company Shareholders' Equity         175,195            163,210

     Non-controlling interests                      7,459              7,763
       Total Equity                           $   182,654        $   170,973
       Total Liabilities and Equity           $   294,079        $   270,392



                     GLOBAL SOURCES LTD. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF INCOME
   (In U.S. Dollars Thousands, Except Number of Shares and Per Share Data)

                                   Three months ended      Six months ended
                                        June 30,                June 30,
                                    2010         2009       2010        2009
                                (Unaudited)  (Unaudited)(Unaudited) (Unaudited)
    Revenue:
      Online and other media
       services (Note 1)        $   29,786   $   29,156 $   58,100  $   58,651
      Exhibitions                   27,375       23,983     31,880      28,471
      Miscellaneous                  1,284        1,081      2,395       1,886
                                    58,445       54,220     92,375      89,008
    Operating Expenses:
      Sales (Note 2)                20,217       19,995     33,348      33,733
      Event production               9,757        8,892     10,941       9,713
      Community (Note 2)             7,127        7,892     11,464      13,089
      General and administrative
       (Note 2)                     12,429       11,323     23,391      22,918
      Online services development
       (Note 2)                      1,319        1,353      2,638       2,764
      Amortization of intangibles
       and software costs              314           38        587          80
    Total Operating Expenses        51,163       49,493     82,369      82,297
    Income from Operations           7,282        4,727     10,006       6,711
      Interest and dividend
       income                          100          348        359         413
      Foreign exchange gains
       (losses), net                   (73)          66        (12)        (27)
    Income before Income Taxes  $    7,309   $    5,141 $   10,353  $    7,097
    Income Tax Expense                (125)         (36)      (229)       (174)
    Net Income                  $    7,184   $    5,105 $   10,124  $    6,923
      Net income attributable to
       non-controlling interests        66          (13)      (285)       (634)
    Net Income Attributable to
     the Company                $    7,250   $    5,092 $    9,839  $    6,289
    Diluted net income per
     share attributable to the
     Company's shareholders     $     0.16   $     0.11 $     0.21  $     0.14
    Shares used in diluted net
     income per share
     calculations               46,090,605   45,729,535 46,113,290  45,700,362


      Note: 1. Online and other media services consists of:

                                 Three months ended       Six months ended
                                       June 30,                June 30,
                                   2010         2009        2010        2009
                                (Unaudited)  (Unaudited)(Unaudited) (Unaudited)

      Online services           $   22,393   $   22,054 $   44,174  $   44,024
      Print services                 7,393        7,102     13,926      14,627
                                $   29,786   $   29,156 $   58,100  $   58,651


      Note: 2. Non-cash compensation expenses associated with the employee and
               team member equity compensation plans and Global Sources
               Directors Share Grant Award Plan included under various
                           categories of expenses are as follows:

                                   Three months ended       Six months ended
                                        June 30,                June 30,
                                    2010        2009        2010        2009
                                (Unaudited)  (Unaudited)(Unaudited) (Unaudited)

      Sales                     $      381   $      831 $      512  $      840
      Community                        101          142        161         149
      General and administrative       568          640        923       1,076
      Online services development       74          102        154         176
                                $    1,124   $    1,715 $    1,750  $    2,241



                     GLOBAL SOURCES LTD. AND SUBSIDIARIES
                    ACTUAL GAAP to NON-GAAP RECONCILIATION
   (In U.S. Dollars Thousands, Except Number of Shares and Per Share Data)

                                   Three months ended       Six months ended
                                         June 30,               June  30,
                                     2010        2009        2010        2009

    GAAP EPS                        $0.16       $0.11       $0.21       $0.14

    GAAP Net Income                $7,250      $5,092      $9,839      $6,289

    Non-cash stock based
     compensation expense
     (Note 1)                       1,124       1,715       1,750       2,241

    Amortization of
     intangibles (Note 2)             102          --         217          --

    Non-GAAP Net Income            $8,476      $6,807     $11,806      $8,530

    Non-GAAP diluted net
     income per share               $0.18       $0.15       $0.26       $0.19


    Total shares used in non-
     GAAP diluted net income
     per share calculations    46,090,605  45,729,535  46,113,290  45,700,362

    Notes:
    (1) Actual SBC is calculated based on actual share price on date of the
        awards for employees and revaluation based on the share price of the
        last day of the quarter for consultants.

    (2) Amortization of intangible assets relating to certain non-compete
        agreements.



                     GLOBAL SOURCES LTD. AND SUBSIDIARIES
                        ADJUSTED EBITDA RECONCILIATION
                         (In U.S. Dollars Thousands)

                                           Three months ended Six months ended
                                                June 30,          June 30,
                                             2010     2009     2010     2009

    US GAAP Income from operations         $7,282   $4,727    $10,006   $6,711

    Depreciation and amortization           1,723    1,587      3,357    3,207

    EBITDA                                  9,005    6,314     13,363    9,918

    Non-cash stock based compensation
     expense                                1,124    1,715      1,750    2,241

    Adjusted EBITDA                       $10,129   $8,029    $15,113  $12,159




                     GLOBAL SOURCES LTD. AND SUBSIDIARIES
                   GUIDANCE GAAP to NON-GAAP RECONCILIATION
    (In U.S. Dollars Millions, Except Number of Shares and Per Share Data)

                                             GUIDANCE            ACTUAL
                                            Six months      Six months ended
                                         ended December 31,    December 31,
                                               2010                2009
    Revenue                               $97.0 to     $98.0         $85.5

    GAAP EPS                              $0.23 to     $0.25         $0.21

    Non-cash stock based compensation
     expense (Note 1)                     $0.04        $0.04        ($0.01)

    Amortization of intangibles
     (Note 2)                             $0.01        $0.01         $0.03

    Non-GAAP diluted net income per
     share                                $0.28 to     $0.30         $0.23

    Total shares used in non-GAAP
     diluted net income
     per share calculations          37,388,141   37,388,141    45,794,197


    Notes:
    (1) Actual SBC is calculated based on actual share price on date of the
        awards for employees and revaluation based on the share price of the
        last day of the quarter for consultants.

    (2) Amortization of intangible assets relating to certain non-compete
        agreements.


    For financial matrix, please visit:
    http://www.prnasia.com/sa/attachment/201...


    Global Sources Press Contact in Asia
     Camellia So
     Tel:   +852-2555-5021
     Email: cso@globalsources.com

    Global Sources Press Contact in U.S.
     James W.W. Strachan
     Tel:   +1-480-664-8309
     Email: strachan@globalsources.com

    Global Sources Investor Contact in Asia
     Suzanne Wang
     Tel:   +852-2555-4747
     Email: investor@globalsources.com

    Global Sources Investor Contact in U.S.
     Kirsten Chapman & Timothy Dien
     Lippert/Heilshorn & Associates, Inc.
     Tel:   +1-415-433-3777
     Email: tdien@lhai.com

The Beijing-based company's American depositary shares rose 17 cents, or 5.3 percent, to $3.38 in after-hours trading. The stock had finished regular trading up 14 cents, or 4.6 percent, at $3.21.

For the April-June quarter, China Techfaith said it earned $7.3 million, or 13 cents per ADS, compared with $4.5 million, or 10 cents per ADS, in the year-ago quarter.

Revenue rose nearly 32 percent year-over-year to $65.5 million. The company sold 691,000 mobile products in the quarter, helped by demand in Europe, China, India and Southeast Asia.

For the current quarter, China Techfaith predicted revenue of $66 million to $68 million.

Financial Highlights
- 2nd quarter 2010 revenue increases to $5.8 million, up 25.6% from $4.6 Million in the 2nd quarter of 2009
- Revenues for the six months ended June 30, 2010 reached $11.2 million, up 43.6% from $7.8 million recorded in the same period in 2009.

Net revenues for the second quarter of 2010 were $5.8 million, an increase of 25.6% compared to the $4.6 million recorded in the second quarter of 2009. Revenues for the six months ended June 30, 2010 reached $11.2 million, up 43.6% from the $7.8 million recorded in the comparable period in 2009. The increase in revenue is largely attributable to a strong rebound in the shipping industry in China when compared to the same period in 2009 coupled with an aggressive pricing strategy. In the second quarter of 2010 our gross margins were 0.6%, a direct result of a very competitive shipping and logistics market where we made price concessions in an effort to garner new customers and increase shipping volumes. Our gross margins were 6.8% in the same period in 2009. Operating expenses for the second quarter of 2010 were $678,000, as compared to $207,000 in the second quarter of 2009. The increase in operating expenses is primarily due to stock based incentive compensation expenses to an officer and director as well as one time issuance of stock based compensation for consulting services.

On a non-GAAP basis, net loss for the second quarter of 2010 was ($378,000) after excluding non-cash items including $464,000 related to the stock-based compensation expenses and $215,000 related to the change in fair value of derivative liability. This compares to non-GAAP income of $70,000 in the second quarter of 2009, excluding non-cash items. This resulted in non-GAAP basic and diluted EPS of ($0.01) in the second quarter of 2010 as compared to non-GAAP basic and diluted EPS of ($0.00) in the second quarter of 2009. On a GAAP basis the Company recorded a net loss of ($1.1 million) as compared to net income of $60,000 in the second quarter of 2009. This resulted in GAAP basic and diluted EPS of ($0.03) as compared to basic and diluted GAAP EPS of $0.00 in the second quarter of 2009.

At June 30, 2010 the Company had cash of $1.1 million compared to $1.7 million at December 31, 2009. Total Assets at June 30, 2010 improved to $6.5 million from $6.4 million at December 31, 2009 while total liabilities decreased to $6.2 million at June 30, 2010 from $8.7 million at December 31, 2009.

Commenting on China Logistics Group's financial performance, Wei Chen, its CEO and Chairman, stated, "We are pleased with our top line performance in the second quarter. We have worked very hard to increase sales in a very competitive environment and attempt to add additional customers. While this has resulted in lower gross margins we are confident that it will lead to better overall performance as the demand for logistic services in and out of China continues to grow and we intend to work diligently on behalf of our company and its shareholders."

About China Logistics Group, Inc.
China Logistics Group, Inc. is a U.S. company doing business in China through its 51% ownership in its subsidiary Shandong Jiajia International Freight & Forwarding Co., Ltd. (Shandong Jiajia). Established in 1999; Shandong Jiajia is an international freight forwarder and logistics manager located in China. Shandong Jiajia acts as an agent for international freight and shipping companies. It sells cargo space and arranges land, maritime, and air international transportation for clients seeking primarily to export goods from China.

Since its formation in 1999, Shandong Jiajia has offered its clients a comprehensive service package which includes receipt of goods, warehousing, transporting shipments, consolidation of freight, customs declaration, inspection declaration, multimodal transport, and combined large-scale logistics.

The Company has established relationships with both domestic and international transportation service providers. Shandong Jiajia has been an agent of world known shipping companies including NYK (Nippon Yusen Kaisha), P&O (Nedlloyd), and RCL (Regional Container Lines). Shandong JiaJia has branch offices in major seaport cities in China including Shanghai, Qingdao, Xiamen, and Lianyungang.

 


                CHINA LOGISTICS GROUP, INC. AND SUBSIDIARIES
                        CONSOLIDATED BALANCE SHEETS

                                                  June 30,     December 31,
                                                    2010           2009
                                                ------------  -------------
                                                  Unaudited
                           ASSETS
Current assets:
Cash                                            $  1,078,577  $   1,720,838
Accounts receivable, net                           3,257,683      2,923,990
Other Receivables                                  1,435,692      1,100,662
Advance to vendors and other prepaid expenses        210,782        146,062
Due from related parties                             464,689        447,032
                                                ------------  -------------
  Total current assets                             6,447,423      6,338,584
                                                ------------  -------------
Property and equipment, net                           25,052         39,748
                                                ------------  -------------
  Total assets                                  $  6,472,475  $   6,378,332
                                                ============  =============

            LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable - trade                           2,756,601      2,733,820
Accrued registration rights penalty                1,597,000      1,597,000
Other accruals and current liabilities               683,020        535,576
Advances from customers                              771,244        475,358
Due to related parties                               411,237        814,226
Foreign tax payable                                   18,555         18,784
                                                ------------  -------------
  Total current liabilities                        6,237,657      6,174,764
                                                ------------  -------------
Derivative liability                                       -      2,535,505
                                                ------------  -------------
Total liabilities                                  6,237,657      8,710,269
                                                ------------  -------------

Equity:
 China Logistics Group, Inc. shareholders'
  equity
Preferred stock - $0.001 par value, 10,000,000
 shares authorized
  Series B convertible preferred stock -
   450,000 issued and outstanding at June 30,
   2010 and December 31, 2009                            450            450
Common stock, $.001 par value, 500,000,000
 shares authorized; 39,508,203 and 34,508,203
 shares issued and outstanding at June 30, 2010
 and December 31, 2009                                39,508         34,508
Additional paid-in capital                        20,498,979     17,057,203
Accumulated deficit                              (20,453,837)   (19,541,703)
Accumulated other comprehensive loss                (169,902)      (178,505)
                                                ------------  -------------
   Total China Logistics Group, Inc.
    shareholders' equity (deficit)                   (84,802)    (2,628,047)
                                                ------------  -------------
Noncontrolling interest                              319,620        296,110
                                                ------------  -------------
  Total equity                                       234,818     (2,331,937)
                                                ------------  -------------
  Total liabilities and equity                  $  6,472,475  $   6,378,332
                                                ============  =============

         See notes to unaudited consolidated financial statements.


                CHINA LOGISTICS GROUP, INC. AND SUBSIDIARIES
                   CONSOLIDATED STATEMENTS OF OPERATIONS

                     For the Three Months Ended   For the Six Months Ended
                              June 30,                    June 30,
                     --------------------------  --------------------------
                         2010          2009          2010          2009
                     ------------  ------------  ------------  ------------
                       Unaudited     Restated      Unaudited     Restated
Sales                $  5,788,599  $  4,607,989  $ 11,212,756  $  7,806,561
Cost of sales           5,755,453     4,293,127    10,768,978     7,582,716
                     ------------  ------------  ------------  ------------
  Gross profit             33,146       314,862       443,778  $    223,845
                     ------------  ------------  ------------  ------------

Operating expenses:
  Selling, general
   and
   administrative         676,080       201,880       874,959       518,288
  Depreciation and
   amortization             2,248         4,735         5,146         7,085
  Bad debt expense
   (recovery of bad
   debt)                        -             -             -         1,244
                     ------------  ------------  ------------  ------------
   Total operating
    expenses              678,328       206,615       880,105       526,617
                     ------------  ------------  ------------  ------------
(Loss) income from
 operations              (645,182)      108,247      (436,327)     (302,772)
                     ------------  ------------  ------------  ------------

Other income
 (expenses):

   Realized exchange
    gain (loss)                 -        35,957             -        35,957
  Other income            (69,427)            -       (68,152)            -
  (Loss) gain on
   change in fair
   value of
   derivative
   liability             (214,873)       (5,293)     (447,059)    3,383,700
  Interest (expense)
   income                  (2,253)         (210)       (3,282)          813
                     ------------  ------------  ------------  ------------
   Total other
    (expenses)
    income               (286,553)       30,454      (518,493)    3,420,470
                     ------------  ------------  ------------  ------------

(Loss) income before
 income taxes            (931,350)      138,701      (954,821)    3,117,698
 Foreign taxes              5,615         6,314        10,808         8,140
                     ------------  ------------  ------------  ------------
Net (loss) income        (937,350)      132,387      (965,629)    3,109,558
                     ------------  ------------  ------------  ------------
 Less: Net income
  (loss)
  attributable to
  the noncontrolling
  interest                122,031        72,670        15,213       (71,909)
                     ------------  ------------  ------------  ------------
Net (loss) income
 attributable to
 China Logistics
 Group, Inc.         $ (1,059,381) $     59,717  $   (980,841) $  3,181,467
                     ============  ============  ============  ============

Earnings (loss) per
 common share:
  Basic              $      (0.03) $       0.00  $      (0.02) $       0.09
  Diluted            $      (0.03) $       0.00         (0.02) $       0.08

Weighted average
 number of shares
 outstanding:
  Basic                38,815,895    34,508,203    36,673,949    34,508,203
  Diluted              38,815,895    39,008,203    36,673,949    39,008,203

      See notes to unaudited consolidated financial statements.

RECONCILIATION OF GAAP TO NON-GAAP NET INCOME
The following table reconciles the calculation of net income per share on a basic and fully diluted basis from the amounts reported in accordance with generally accepted accounting principles ("GAAP") to such amounts before giving effect to the following non-cash items: depreciation and amortization and gain or loss due to the change in fair value of derivative liability. This disclosure is being provided as we believe it is meaningful to our investors and other interested parties to understand our operating performance on a consistent basis without regard to the impact of expenses linked to market fluctuations. The presentation of the non-GAAP information titled "Non-GAAP net income," "Non-GAAP net loss," "Non-GAAP basic EPS" and "Non-GAAP diluted EPS" is not meant to be considered in isolation or as a substitute for net income or diluted income per share prepared in accordance with GAAP.

 
                            Three        Three
                            Months       Months     Six Months   Six Months
CHLO GAAP to Non-GAAP     Ended June   Ended June   Ended June   Ended June
 Reconciliation            30, 2010     30, 2009     30, 2010     30, 2009
                         -----------  -----------  -----------  -----------
                          Unaudited    Unaudited    Unaudited    Unaudited
                                        Restated                  Restated
GAAP net income
 attributable to CHLO
 common stockholders     $(1,059,381) $    59,717  $  (980,841)   3,181,467
Depreciation and
 Amortization expense          2,248        4,735        5,146        7,085
Share-based compensation
 expense                     464,000                   464,000
Change in fair value of
 derivative liability        214,873        5,293      447,059   (3,383,700)
                         -----------  -----------  -----------  -----------
Non-GAAP net income
 attributable to CHLO
 common stockholders        (378,260)      69,745      (64,636)    (195,148)
                         -----------  -----------  -----------  -----------
 Weighted Average Common
  Shares Outstanding -
  basic and diluted       38,815,895   34,508,203   36,673,949   34,508,203
GAAP Earnings applicable
 to common stockholders  $(1,059,381) $    59,717     (980,841)   3,181,467
 GAAP Basic EPS                (0.03)        0.00        (0.03)        0.09
 GAAP Diluted EPS              (0.03)        0.00        (0.03)        0.08
Non-GAAP Earnings
 applicable to common
 stockholders               (378,260)      69,745      (64,636)    (195,148)
 Non-GAAP Basic EPS            (0.01)        0.00        (0.00)       (0.01)
 Non-GAAP Diluted EPS    $     (0.01) $      0.00        (0.00)       (0.01)
                         -----------  -----------  -----------  -----------
Shares used in basic net
 income per-share
 calculation - GAAP       38,815,895   34,508,203   36,673,949   34,508,203
Shares used in basic net
 income per-share
 calculation - Non-GAAP   38,815,895   34,508,203   36,673,949   34,508,203
Shares used in diluted
 net income per-share
 calculation - GAAP       38,815,895   39,008,203   36,673,949   39,008,203
Shares used in diluted
 net income per-share
 calculation - Non-GAAP   38,815,895   39,008,203   36,673,949   39,008,203

Safe Harbor Statement
In connection with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, China Armco Metals, Inc., is hereby providing cautionary statements identifying important factors that could cause our actual results to differ materially from those projected in forward-looking statements (as defined in such act). Any statements that are not historical facts and that express, or involve discussions as to, expectations, beliefs, plans, objectives, assumptions or future events or performance (often, but not always, indicated through the use of words or phrases such as "will likely result," "are expected to," "will continue," "is anticipated," "estimated," "intends," "plans," "believes" and "projects") may be forward-looking and may involve estimates and uncertainties which could cause actual results to differ materially from those expressed in the forward-looking statements. These statements include, but are not limited to, our guidance and expectations regarding revenues, net income and earnings. In addition, any such statements are qualified in their entirety by reference to, and are accompanied by, the following key factors that have a direct bearing on our results of operations:

• our ability to continue as a going concern;
• risks from Securities and Exchange Commission litigation;
• the loss of the services of any of our executive officers or the loss of services of any of our key persons responsible for the management, sales, marketing and operations efforts of our subsidiaries;
• continuing material weaknesses in our disclosure controls and procedures and internal control over financial reporting which may lead to additional restatements of our financial statements;
• our dependence upon advisory services provided by a U.S. company due to our management's location in the PRC;
• Our reliance on overseas cargo agents to provide services to us and to our customers;
• Significant credit risks in the operation of our business;
• Difficulties in effecting service of legal process, enforcing foreign judgments or bringing original actions in China based on United States or other foreign laws;
• Fluctuation in the value of the renminbi (rmb);
• Substantially all of our assets and all of our operations are located in the PRC and are subject to changes resulting from the political and economic policies of the Chinese government;
• The Chinese government exerts substantial influence over the manner in which we must conduct our business activities;
• A slowdown in the Chinese economy or an increase in its inflation rate;
• Any recurrence of severe acute respiratory syndrome, or SARS, or another widespread public health problem;
• Restrictions on currency exchange;
• Chinese laws and regulations governing our business operations are sometimes vague and uncertain and the effects of any changes in such laws and regulations;
• Our ability to enforce our rights due to policies regarding the regulation of foreign investments in the PRC;
• The dilutive effects of an exercise of our outstanding warrants and the possible conversion of our Series B Convertible Preferred stock;
• Our lack of various corporate governance measures, in the absence of which, shareholders may have more limited protections against interested director transactions, conflicts of interest and similar matters;
• The impact of "penny stock" status and lack of liquidity of our stock which currently trades and is quoted on the OTC bulletin board; and
• The impact of the cashless exercise provisions of our outstanding warrants.

We caution that the factors described herein could cause actual results to differ materially from those expressed in any forward-looking statements we make and that investors should not place undue reliance on any such forward-looking statements. Further, any forward-looking statement speaks only as of the date on which such statement is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of anticipated or unanticipated events or circumstances. New factors emerge from time to time, and it is not possible for us to predict all of such factors. Further, we cannot assess the impact of each such factor on our results of operations or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. This press release is qualified in its entirety by the cautionary statements and risk factor disclosure contained in our Securities and Exchange Commission filings, including our Annual Report on Form 10-K for the year ended December 31, 2009.

 
Contact:
China Logistics Group, Inc.
Lillian Wong
Investor Relations
954-363-7333
ir@chinalogisticsinc.com 

    (Logo: http://www.newscom.com/cgi-bin/prnh/2007... )
    (Logo: http://photos.prnewswire.com/prnh/200708... )

    Second Quarter 2010 Highlights
    -- Net revenue increased 67.0% year-over-year to $17.0 million
    -- Gross profit increased 284.8% year-over-year to $1.5 million with gross
       margin improving 5.1 percentage points to 9.0%
    -- The Company reported net income of 0.1 million, or $0.01 per diluted
       share, compared to a net loss of $1.8 million, or $0.08 per diluted
       share, in the second quarter of fiscal year 2009
    -- Adjusted net loss (non-GAAP) was $0.05 million, or $0.00 per share,
       compared to an adjusted net loss of $1.3 million, or ($0.06) per
       diluted share, in the second quarter of fiscal year 2009

"We are pleased to report our first profitable quarter since Diguang was first impacted by the global economic crisis in the second half of 2008," said Mr. Song Yi, the President and Chief Executive Officer of Diguang. "During the second quarter, we maintained our focus on domestic sales, which grew in excess of 100%. Growth in sales of our LED products, including LED backlights, LED LCMs, LED general lighting products and LED monitors, continued to represent a majority of our total sales. Meanwhile, we witnessed strong momentum in our CCFL business, as our Wuhan facility saw an increase in OEM orders for large size CCFL backlights from our major customers in Taiwan. We successfully added new high-profile customers, including TCL and Skyworth, to supply China's two largest TV manufactures with LED backlights and LED TVs."

Highlights for the Three Months Ended June 30, 2010

Net revenue was $17.0 million for the three months ended June 30, 2010, an increase of 67.0% from $10.2 million for the comparable period in 2009. This was due to the improved market demand for the Company's traditional and newly-developed backlight products along with continued economic recovery from the global financial crisis which adversely affected sales in the previous year. Sales of LED products, including LED backlights, LED liquid crystal modules (LCM), LED general lights and liquid crystal displays (LCD), amounted to $9.8 million, or 58% of total sales revenue, while sales of CCFL products, including CCFL backlights and CCFL LCMs were $6.8 million, or 40% of total sales revenue. The remainder came from miscellaneous sales. Sales of LED backlights grew 33.2% to $7.4 million, while sales of CCFL backlights increased 162.8% to $6.6 million in the second quarter of 2010. Sales of LCM grew 25.9% to $1.9 million, and the Company generated additional revenue of $0.6 million from LCD LED monitors compared to $0.1 million in the second quarter of 2009, when it commenced mass production of this product. The Company expects further sales growth of LCD LED monitors. Sales of LED general lighting products declined due to aggressive competition. However, management is still confident about the prospect of the LED general lighting segment in the next few years.

Gross profit for the second quarter of 2010 totaled $1.5 million, or 9.0% of net revenue, compared to $0.4 million, or 3.9% of net revenue, for the same period of 2009. The increase in gross margin was primarily the result of the contribution from LED products, which had a gross margin of 11% compared to 5% in the second quarter of 2009. However, this was partially offset by the significant increase in OEM sales of lower margin, large size CCFL products during the quarter.

Operating expenses totaled approximately $1.3 million for the second quarter of 2010, down 39.5% from $2.2 million in the second quarter of 2009. Total operating expenses in the second quarter of 2010 amounted to 7.8% of net revenue, compared to 21.5% in the second quarter of 2009. Selling expenses rose 25.0%, primarily due to increased commissions and transportation expenses associated with increased sales. The Company's net research and development costs were a negative $0.2 million, due to a government subsidy of $0.5 million that was recorded following the completion of a display project for the Guangdong Department of Information Industry during the quarter. As the actual funding for this project was received in 2008, this was recorded as a non-cash item. General and administrative expenses were $0.9 million in the second quarter of 2010, compared to $1.1 million in the same period in 2009.

Interest expense was $0.2 million for the second quarter of 2010, up from $72,062 in the same period of 2009 as the Company utilized additional bank loans to support its working capital needs.

The Company's net income attributable to common shares during the three months ended June 30, 2010 was $0.1 million, improved from net loss of $1.8 million attributable to common shares for the same period in 2009. Earnings per basic and diluted share were $0.01 for the second quarter of 2010, improved from losses per basic and diluted share of ($0.08) for the same period of 2009.

Adjusted net loss (non-GAAP), which excludes non-cash items (including non-controlling interest, depreciation, inventory provision, loss on disposal of assets and share-based compensation), for the second quarter of 2010 would have been $47,156, or $0.00 per basic and diluted share. Adjusted net loss (non-GAAP) for the second quarter of 2009 would have been $1.3 million, or ($0.06) per basic and diluted share. Please see the reconciliation table below.

Six Months Results Ended June 30, 2010

Total revenue for the first six months of 2010 was $29.5 million, up 82.2% from the first six months of 2009. Gross profit for the first six months of 2010 was $3.2 million, a significant increase of 217.6% from gross profit of $1.0 million in the comparable period a year ago. Gross margin was 11.0% for the first six months of 2010, up from 6.3% in the same period of 2009. The Company recorded an operating loss of $0.3 million, compared with an operating loss of $3.2 million in the first six months of 2009. Net loss attributable to common shares for the first six months of 2010 was $0.5 million, compared with a loss of $3.0 million in the first six months of 2009. Basic and diluted loss per share were ($0.02) for the first six months of 2010 compared to ($0.14) in the first six months of 2009. Excluding non-cash items, net income for the first half year of 2010 on a non-GAAP basis would have been $30,857, or $0.00 per share, compared to non-GAAP net loss of $2.0 million, or ($0.09) per share a year ago. Please see the reconciliation table below.

Reconciliation of GAAP Net Income and Earnings per Share to Non-GAAP Net Income and Earnings per Share

                                   Three Months ended      Six Months ended
                                        June 30                June 30
                                    2010        2009        2010        2009

    GAAP net income (loss)        126,794  -1,837,175    -450,031  -3,047,593
    Non-cash items:
     Non controlling interest       6,282    -146,193     -44,571    -185,854
     Depreciation                 493,506     430,205     940,112     857,492
     Bad debts allowance
      (recovery)                 -170,638           0     107,940           0
     Inventory provision              -72     177,682     -33,470     156,614
     Loss (gain) on disposal
      of assets                      -379       6,140       2,307      20,179
     Share-based compensation      11,218     100,090      22,437     200,180
     Research and development
      costs offset by funding
      advanced                   -513,867           0    -513,867           0
     Deferred tax assets                0           0           0      28,485
    Non GAAP net income (loss)    -47,156  -1,269,251      30,857  -1,970,497

    GAAP net income (loss)           0.01       -0.08       -0.02       -0.14
     Non-cash items:
     Non controlling interest        0.00       -0.01        0.00       -0.01
     Depreciation                    0.02        0.02        0.04        0.04
     Bad debts allowance            -0.01        0.00        0.00        0.00
     Inventory provision             0.00        0.01        0.00        0.01
     Loss on disposal of
      assets                         0.00        0.00        0.00        0.00
     Share-based compensation        0.00        0.00        0.00        0.01
     Research and development
      costs offset by funding
      advanced                      -0.02        0.00        0.00        0.00
     Deferred tax assets             0.00        0.00        0.00        0.00
    Non GAAP net income (loss)       0.00       -0.06        0.02       -0.09
    Weighted average shares
     outstanding - diluted     22,072,000  22,072,000  22,072,000  22,072,000

Financial Condition

As of June 30, 2010, Diguang had $8.0 million in cash and cash equivalents and $3.0 million in restricted cash. Working capital increased significantly to approximately $6.7 million compared to $2.8 million at the end of 2009. As of June 30, 2010, the Company had $7.4 million in short-term bank loans and $8.1 million in long-term bank loans. Shareholders' equity was $19.8 million as of June 30, 2010. Cash used in operating activities was $1.2 million, improved from $6.2 million for the six months ended June 30, 2009, primarily due to an increase in accounts payable and a lower net loss, offset by an increase in accounts receivable related to increased sales to domestic customers.

Business Outlook

Diguang continues to anticipate strong growth driven by increased demand for its LED TVs and monitors and LED backlights. The Company recently began small scale production of its 32" and 42" ultra-thin LED backlights and TVs, and commenced large-scale production of 19" LED TV and 24" LED backlights for TCL, one of the largest TV manufacturers in China.

Diguang's new production facility in Shenzhen is proceeding on schedule. The new facility, which is designed to manufacture large-size LED backlights and LED TVs, can accommodate 15 production lines of LED backlights used in LED TVs, with annual capacity of over 6 million units, as well as 12 integrated production lines of LED TVs (including LED monitors) and LED backlights, with annual capacity of over 4 million units of LED TVs. The Company still expects to complete construction in the fourth quarter of 2010 and will begin production in the first quarter of 2011. The Company plans to increase production lines on a gradual basis according to market demand.

"We remain optimistic about the future of the LED market, especially for LED TVs and monitors. We believe our new contracts with China's two largest TV manufacturers have the potential to serve as an inflection point for our business to return to sustainable growth and profitability," commented Mr. Song. "Given our shift toward higher margin product mix and our efforts to aggressively cut costs, we are confident in our ability to maintain our current level of gross margin. We reaffirm our revenue guidance of $60 million to $80 million for the fiscal year 2010."

Use of Non-GAAP Financial Measures

The Company's financial results prepared based on U.S. GAAP for the three and six months ended June 30, 2010 and 2009 include non-cash expenses such as depreciation, share based compensation, bad debt allowance, inventory provisions, loss on the disposal of assets, research and development costs offset by funding advanced and deferred tax assets. To supplement the Company's condensed consolidated financial statements presented in accordance with U.S. GAAP, the Company has provided non-GAAP financial measures excluding the impact of these items in this release, including adjusted net income and adjusted diluted earnings per share. The Company's management believes that, in conjunction with U.S. GAAP financial measures, these non-GAAP financial measures (i) improve transparency for investors, (ii) assist investors in their assessment of the Company's operating performance, (iii) facilitate comparison to the Company's historical performance, (iv) ensure that these measures are fully understood in light of how the Company evaluates its operating results, (v) properly define the metrics used and confirm their calculation. The additional adjusted information is not meant to be considered in isolation or as a substitute for items appearing on the Company's financial statements prepared in accordance with U.S GAAP. Rather, the non-GAAP measures should be used as supplement to U.S. GAAP results to assist the reader in better understanding the operational performance of the Company. The adjusted financial information that the Company provides may also differ from the adjusted information provided by other companies, which limits their usefulness as comparative measures. Our management believes that these adjusted financial measures are useful to investors because they exclude non-cash expenses that management excludes when it internally evaluates the performance of the Company's business and makes operating decisions, including internal budgeting, and performance measurement, as these measures provide a consistent method of comparison to historical periods. As a result, the provision of these adjusted measures allows investors to evaluate the Company's performance using the same methodology and information as that used by the Company's management. Moreover, management believes that these adjusted measures reflect the essential operating activities of the Company. Adjusted measures are subject to inherent limitations because they do not include all of the expenses included under the U.S. GAAP and because they involve the exercise of judgment of which charges are excluded from the adjusted financial measure. However, the Company's management compensates for these limitations by providing the relevant disclosure of the items excluded. A reconciliation of each adjusted measures to the nearest U.S. GAAP financial measures appears in the table above.

About Diguang International Development Co., Ltd.

Through its subsidiaries, Diguang develops and produces CCFL and LED backlights for a wide range of TFT-LCD products. A backlight is the typical light source of a liquid crystal display (LCD), with applications spanning televisions, computer monitors, cellular phones, digital cameras, DVDs and other home appliances. Leveraging its LED expertise, the Company also creates and markets energy-saving technologies and solutions for rapidly growing markets such as LED backlight monitors and LED general lighting. For more information, contact CCG Investor Relations directly or go to Diguang's website at http://www.diguangintl.c... .

Safe Harbor Statements

This press release contains forward-looking statements made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are based upon the current plans, estimates and projections of Diguang's management and are subject to risks and uncertainties, which could cause actual results to differ from the forward-looking statements. Therefore, you should not place undue reliance on these forward-looking statements. The following factors, among others, could cause actual results to differ from those set forth in the forward-looking statements: business conditions in China, weather and natural disasters, changing interpretations of generally accepted accounting principles; outcomes of government reviews; inquiries and investigations and related litigation; continued compliance with government regulations; legislation or regulatory environments, requirements or changes adversely affecting the businesses in which Diguang is engaged; fluctuations in customer demand; management of rapid growth; intensity of competition from other providers of backlights; timing approval and market acceptance of new product introductions; general economic conditions; geopolitical events and regulatory changes, as well as other relevant risks, including but not limited to risks outlined in the Company's periodic filings with the U.S. Securities and Exchange Commission. Diguang does not assume any obligation to update the information contained in this press release.

                   DIGUANG INTERNATIONAL DEVELOPMENT CO., LTD.
                        CONSOLIDATED STATEMENTS OF INCOME
                              AND COMPREHENSIVE INCOME
                                   (In US Dollars)

                             Three Months Ended         Six Months Ended
                                   June 30,                 June 30,
                              2010         2009         2010         2009
                           (Unaudited)  (Unaudited)  (Unaudited)  (Unaudited)
    Revenues:
    Revenues, net          $17,042,646  $10,203,137  $29,526,840  $16,202,990
    Cost of sales           15,503,593    9,803,156   26,283,433   15,181,644

    Gross profit             1,539,053      399,981    3,243,407    1,021,346

    Selling expense            651,082      520,662    1,251,913      938,896
    Research and
     development costs        (195,017)     619,107      333,967    1,025,431
    General and
     administrative
     expenses                  872,045    1,056,433    1,940,977    2,187,411
    Loss on disposing
     assets                       (379)      20,179        2,307       20,179

    Income (Loss) from
     operations                211,322   (1,816,400)    (285,757)  (3,150,571)

    Interest income
     (expense), net           (189,787)     (72,062)    (359,013)    (159,508)
    Investment income
     (expense)                      --          300           --          800
    Other income (expense)     108,473      (67,728)     147,065      110,193

    Income (loss) before
     income tax                130,008   (1,955,890)    (497,705)  (3,199,086)

    Income tax provision        12,829       28,485       12,829       31,573

    Net income (loss)          117,179   (1,984,375)    (510,534)  (3,230,659)

    Net income (loss)
     attributable to non-
     controlling interest       (9,615)    (147,200)     (60,503)    (183,066)

    Net income (loss)
     attributable to
     common shares            $126,794  $(1,837,175)   $(450,031) $(3,047,593)

    Weighted average
     common shares
     outstanding - basic    22,072,000   22,072,000   22,072,000   22,072,000

    Earnings (losses) per
     share - basic                0.01        (0.08)       (0.02)       (0.14)

    Weighted average
     common shares
     outstanding - diluted  22,072,000   22,072,000   22,072,000   22,072,000

    Earnings (losses) per
     shares - diluted             0.01        (0.08)       (0.02)       (0.14)


    Comprehensive income
     (loss):
     Net income (loss)         117,179   (1,984,375)    (510,534)  (3,230,659)
     Translation
      adjustment               135,125       43,052       96,160     (202,817)
    Comprehensive income
     (loss)                    252,304   (1,941,323)    (414,374)  (3,433,476)
     Comprehensive income
      (loss) attributable
      to non-controlling
      interest                   6,282     (146,193)     (44,571)    (185,854)

    Comprehensive income
     attributable to
     common shares            $246,022  $(1,795,130)   $(369,803) $(3,247,622)



                      DIGUANG INTERNATIONAL DEVELOPMENT CO., LTD.
                           CONSOLIDATED BALANCE SHEETS
                                 (In US Dollars)

                                                June 30,        December 31,
                                                 2010              2009
                                               (Unaudited)
    ASSETS
    Current assets:
    Cash and cash equivalents                   $7,985,036        $6,190,513
    Restricted cash                              2,990,186         4,341,112
    Accounts receivable, net of allowance
     for doubtful accounts $1,529,505 and
     $1,426,927                                 15,380,592        13,972,086
    Inventories, net of provision
     $3,519,124 and $3,508,548                  11,069,802         7,439,287
    Other receivables, net of provision
     $69,032 and $69,260                           312,100           465,013
    VAT recoverable                                541,297            82,497
    Advance to suppliers                         1,717,692           900,328
    Total current assets                        39,996,705        33,390,836

    Investment, net of impairment
     $1,500,000 and $1,500,000                          --                --
    Plant, property and equipment, net          17,480,483        17,736,766
    Construction in process                      4,103,667           132,079
    Long-term prepayments                          398,142           439,502

    Total assets                               $61,978,997       $51,699,183

    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current liabilities:
    Bank loans                                  $7,420,789       $10,213,683
    Accounts payable                            21,267,387        15,446,721
    Advance from customers                         586,897           325,165
    Accruals and other payables                  2,492,387         2,510,206
    Accrued payroll and related expense            796,191           712,206
    Income tax payable                             386,289           394,989
    Amount due to stockholders - current           353,461           943,378
    Total current liabilities                   33,303,401        30,546,348

    Long-term bank loans                         8,110,300                --
    Research funding advanced                      756,654           952,255
    Total non-current liabilities                8,866,954           952,255

    Total liabilities                           42,170,355        31,498,603

    Equity
    Common stock, par value $0.001 per
     share, 50 million shares authorized,
     22,593,000 and 22,593,000 shares
     issued, 22,072,000 and 22,072,000
     shares outstanding                             22,593            22,593
    Additional paid-in capital                  20,904,072        20,881,635
    Treasury stock at cost                        (674,455)         (674,455)
    Appropriated earnings                          798,974           802,408
    Accumulated deficit                         (8,090,851)       (7,644,254)
    Translation adjustment                       4,419,119         4,338,891
    Total stockholders' equity                  17,379,452        17,726,818
     Non-controlling interest                    2,429,190         2,473,762
    Total equity                                19,808,642        20,200,580

    Total liabilities and stockholders'
     equity                                    $61,978,997       $51,699,183



                  DIGUANG INTERNATIONAL DEVELOPMENT CO., LTD.
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
               Increase (Decrease) in Cash and Cash Equivalents
                           (In US Dollars)

                                                  Six months ended June 30,
                                                   2010               2009
                                                (Unaudited)        (Unaudited)
    Cash flows from operating activities:
    Net loss                                     $(510,534)       $(3,230,659)
    Adjustments to reconcile net income
     to net cash provided by (used in)
     operating activities:
    Depreciation                                   940,112            857,492
    Bad debts allowance                           (107,940)                --
    Inventory provision                            (33,470)           156,614
    Loss on disposing assets                         2,307             20,179
    Share-based compensation                        22,437            200,180
    Research and development costs offset
     by funding advanced                          (513,867)                --
    Deferred tax asset                                  --             28,485
    Changes in operating assets and
     liabilities:
    Accounts receivable                         (1,293,968)            15,066
    Inventory                                   (3,566,997)        (3,019,267)
    Other receivables                              152,168            273,569
    VAT recoverable                               (455,819)          (170,768)
    Prepayments and other assets                  (813,265)          (388,562)
    Accounts payable                             4,612,699           (795,191)
    Accruals and other payable                      74,284            (69,945)
    Advance from customers                         262,798           (131,108)
    Accrued interest payable to related
     parties                                            --             55,057
    Taxes payable                                   (8,773)           (17,745)

    Net cash used in operating activities       (1,237,828)        (6,216,603)

    Cash flows from investing activities:
    Purchase of fixed assets investment
     in construction                            (3,345,363)           (59,948)
    Proceeds from disposal of fixed
     assets                                          5,527             18,447

    Net cash used in investing activities       (3,339,836)           (41,501)

    Cash flows from financing activities:
    Due to related parties                        (597,568)          (800,508)
    Repayments for short-term bank
     facilities                                 (1,454,707)                --
    Proceeds from (repayments for) import
     financing loans                            (1,356,660)         4,338,227
    Restricted cash pledged for (released
     from) import financing loans                1,350,926         (4,338,227)
    Proceeds from long-term loan
     facilities                                  8,110,300                 --
    Research funding advanced                      317,237                 --

    Net cash received from financing
     activities                                  6,369,528           (800,508)

    Effect of changes in foreign exchange
     rates                                           2,659           (205,218)

    Net increase (decrease) in cash and
     cash equivalents                            1,794,523         (7,263,830)

    Cash and cash equivalents, beginning
     of the year                                 6,190,513         15,024,363

    Cash and cash equivalents, end of the
     year                                       $7,985,036         $7,760,533

    Supplemental disclosures of cash flow
     information:
     Cash paid for interest                        403,523            147,461
     Cash paid for income taxes                     24,067             14,820



    For more information, please contact:

    Company Contact:
     Victoria Liu
     Diguang International Development Co., Ltd.
     Email: victoria@diguang.com
     Tel:   +1-626-593-5486

    Investor Relations Contact:
     Elaine Ketchmere, Partner
     CCG Investor Relations
     Email: Elaine.ketchmere@ccgir.com
     Tel:   +1-310-954-1345
     Web:   http://www.ccgirasia.com

Second Quarter 2010 Results

Revenues from contracts for the second quarter of 2010 were $5.7 million, a decrease of $24.9 million, or 81%, from $30.6 million for the comparable period in 2009, mainly as a result of fewer projects, due to the declining global construction activities and the Company's suspension of international projects.

Gross loss was $0.4 million, compared to a gross profit $10.0 million for the second quarter of 2009. The decrease in gross profit was primarily a result of increases in raw material, labor and administrative costs in China, as well as adjustments made in accordance to the percentage-of-completion method of accounting because of increases in estimated costs of current projects.

Selling, general and administrative expenses were $1.8 million for the second quarter of 2010, versus $6.1 million a year ago. Payroll expenses accounted for approximately 44% of the total expenses, followed by depreciation expenses of 8%, and rental expenses of 6%.

Interest expenses were $1.9 million for the second quarter ended June 30, 2010, an increase of $0.4 million from $1.5 million a year ago. The increase was mainly due to the additional interest expense related to short-term bank loans, as well as the increase in accretion of bonds interest discount.

Net loss was $3.3 million, or a loss of $0.06 per fully diluted share, compared to a net profit of $2.5 million, or $0.05 per fully diluted share, for the comparable period in 2009.

Liquidity and Capital Resources

The Company had an unrestricted cash balance of approximately $0.6 million as of June 30, 2010, as compared to $0.5 million as of March 31, 2010. Net cash provided by operating activities was $9.0 million for the six months ended June 30, 2010, compared to $2.7 million for same period in 2009.

Mr. Ken Luo, chairman and chief executive officer of CAE, commented, "Our second quarter sales performance was primarily impacted by the fewer number of projects executed as a result of the global economic slowdown. However, this summer, we have seen a much improved market sentiment. Leveraging our unique design, technology and craftsmanship, we have signed new contracts in the second quarter worth approximately $21.5 million, including the Terrace Garden Project and Xinhai Revolution Museum in Hubei, and Liuzhou Sports Centre in Guangxi. We are also making good progress in the designing and constructing of high-end curtain wall system segment. We expect most of these revenues to be recognized in the second half of this year. With our advanced technical capabilities, we have strategically targeted China's high-end landmark projects that involve more design and consulting services to highlight our value proposition and capabilities. To date, we have won approximately $3 million worth of such contracts, including contracts with the Shenzhen Airport, Hangzhou Railway Station and Joy Coast at Overseas Chinese Town."

Business Updates

Mr. Luo continues, "Despite the difficult global economic crisis that heavily impacted high-end construction and engineering companies, we are working diligently to counter the negative impact on CAE. Such efforts include our corporate restructuring, through which we believe that CAE can benefit from a more diversified business model, while lowering both operational and financial risks. We are pleased to announce that we have entered into a definitive agreement for the acquisition of a 60% interest in ConnGame. We expect to announce the closing of this deal in the near future. After the completion of this acquisition, we envision CAE becoming a web-based engineering and design service platform that complements ConnGame's core online gaming business.

"In the architecture construction and engineering segment, we will be more selective and focus only on quality projects that return higher profits and pose lower risks. In the online gaming segment, we currently intend to launch our new games in the following months, and we expect this segment to soon drive the majority of our revenues. We believe our pending acquisition of a 60% interest in ConnGame will enable CAE to take greater advantage of our core architectural engineering and design market, and more importantly, to capture China's large and rapidly growing online game market.

"Upon the completion of the acquisition, CAE's board and management team will be reorganized to reflect the new business model. I truly look forward to the new management team to grow our combined businesses and to deliver greater value to our supportive shareholders," Mr. Luo concludes.

About China Architectural Engineering

China Architectural Engineering, Inc. (NASDAQ:CAEI - News) is a provider of design, engineering, fabrication and installation services of high-end curtain wall systems, roofing systems, steel construction systems, and eco-energy systems. Founded in 1992, CAEI has maintained its market leadership by providing timely, high-quality, reliable, fully integrated, and cost-effective solutions. Collaborating with world-renowned architects and building engineers, the Company has successfully completed over one hundred large, complex and unique projects worldwide, including numerous award-winning landmarks across Asia's major cities.

For further information on China Architectural Engineering, Inc., please visit http://www.caebuilding.c... .

Forward-Looking Statements

In addition to historical information, the statements set forth above may include forward-looking statements that may involve risk and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Actual results could differ materially from the expectations contained in forward-looking statements as a result of risks and uncertainties, including, but not limited to, the proposed acquisition of ConnGame; difficulties in moving into the online gaming market; the Company's ability to integrate the personnel and operations of the Company and ConnGame; required Company payments under the waiver agreement and ability to maintain the conditions of the bondholder extension; identification and remediation of the Company's deficiencies and weaknesses in its internal controls over financial reporting, potential claims or litigation that may result from the occurrence of restatements, ability to identify and secure debt, equity, and/or other financing required to continue the operations of the Company; difficulties related to integration and management of the combined operations; reduction or reversal of the Company's recorded revenue or profits due to "percentage of completion" method of accounting and expenses; increasing provisions for bad debt related to the Company's accounts receivable; fluctuation and unpredictability of costs related to our products and services; adverse capital and credit market conditions; fluctuation and unpredictability of costs related to the Company's products and services; expenses and costs associated with its convertible bonds, regulatory approval requirements and competitive conditions; and various other matters, many of which are beyond our control. These and other factors that may result in differences are discussed in greater detail in the Company's reports and other filings with the Securities and Exchange Commission.

    For more information, please contact:

    Investor Contact:
     ICR:
     Michael Tieu
     Tel:   +86-10-6599-7960
     Email: michael.tieu@icrinc.com

     Bill Zima
     Tel:   +1-203-682-8200
     Email: bill.zima@icrinc.com



                      CHINA ARCHITECTURAL ENGINEERING, INC.
                           CONSOLIDATED BALANCE SHEETS
       AS OF JUNE 30, 2010 (UNAUDITED) AND DECEMBER 31, 2009(STATED IN US
                                    DOLLARS)

                                                 June 30,    December 31,
                                                   2010          2009
                                               (unaudited)
    ASSETS
    Current assets
    Cash and cash equivalents                $     631,444  $    740,125
    Restricted cash                              3,102,371     3,033,819
    Contract receivables, net                   86,205,606    89,189,103
    Costs and earnings in excess of
     billings                                    8,424,430     8,100,580
    Job disbursements advances                   1,347,604     2,696,794
    Other receivables                           27,104,828    30,768,067
    Inventories                                    170,076       727,499
    Deferred income taxes, current                 112,603       113,033
    Other current assets                           256,510       297,838
    Total current assets                       127,355,472   135,666,858

    Non-current assets
    Plant and equipment, net                     2,214,877     2,539,457
    Intangible assets                               60,998        70,610
    Goodwill                                     7,995,896     7,995,896
    Other non-current asset                        377,910       287,586

    TOTAL ASSETS                             $ 138,005,153  $146,560,407


    Current liabilities
    Short-term bank loans                    $   6,969,821  $  9,529,880
    Accounts payable                            27,256,636    26,614,484
    Billings over costs and estimated
     earnings                                    4,613,674     6,098,666
    Amount due to shareholder                    3,540,998    10,080,345
    Other payables                              13,874,058     9,360,314
    Business and other taxes payable             4,670,310     4,923,771
    Customers' deposits                          5,939,674     6,392,676
    Other Accrual                                4,756,148     4,324,011
    Total current liabilities                   71,621,319    77,324,147

    Non-current liabilities
    Long term bank loans                     $      70,415  $    109,239
    Convertible bond payable, net               26,569,215    24,564,161


    TOTAL LIABILITIES                        $  98,260,949  $101,997,547

    STOCKHOLDERS' EQUITY
    Preferred stock, $0.001 par value,
     10,000,000 shares authorized, 0
     shares issued and outstanding at
     June 30, 2010 and December 31,
     2009; Common stock, $0.001 par
     value, 100,000,000 shares
     authorized, 55,156,874 shares
     issued and outstanding at June
     30, 2010 and 53,256,874 shares
     issued at and outstanding December
     31, 2009                                $      55,157  $     53,257
    Additional paid in capital                  28,465,904    26,495,876
    Statutory reserves                           3,040,595     3,040,595
    Accumulated other comprehensive income       3,931,932     3,868,437
    Retained earnings                            4,280,864    11,131,084
    Total Company shareholders' equity          39,774,452    44,589,249
    Noncontrolling interests                       (30,248)      (26,389)
    Total shareholders' equity                  39,744,204    44,562,860
    TOTAL LIABILITIES AND

    STOCKHOLDERS' EQUITY                     $ 138,005,153  $146,560,407





                      CHINA ARCHITECTURAL ENGINEERING, INC.
                   UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
        FOR THE THREE- AND SIX-MONTH PERIODS ENDED JUNE 30, 2010 AND 2009
                              (STATED IN US DOLLARS)

                             Three Months Ended         Six Months Ended
                                  June 30,                   June 30,
                            2010           2009         2010         2009
    Contract
     revenues earned     $5,708,417   $30,598,974  $17,180,540   $66,942,038
    Cost of contract     (6,137,792)  (20,647,144) (15,281,985)  (48,809,377)
    revenues earned

    Gross profit /
     (Loss)               $(429,375)   $9,951,830   $1,898,555   $18,132,661

    Selling, general
     and administrative
     expenses            (1,845,895)   (6,119,798)  (6,068,575)  (12,070,828)

    Income / (Loss)
     from operations    $(2,275,270)   $3,832,032  $(4,170,020)   $6,061,833

    Interest income           2,867        46,259        5,283        49,965
    Interest expense     (1,867,885)   (1,463,851)  (3,493,996)   (2,775,584)
    Other expense            (8,081)           --       (8,930)           --
    Other income            816,414       138,619      823,928       160,456

    Income / (Loss)
     before taxation
     on Continuing
     Operations         $(3,331,955)   $2,553,059  $(6,843,735)   $3,496,670

    (Income tax) /
     tax benefit                 --            --       (9,575)           --

    Net earnings/
     (Loss) including
     non-controlling
     interests           (3,331,955)    2,553,059   (6,853,310)    3,496,670
    (Income) / Loss
     attributable to
     non-controlling
     interests                1,619        (1,405)       3,090        (1,405)

    Net earnings/(Loss)
     attributable to
     the Company        $(3,330,336)   $2,551,654  $(6,850,220)   $3,495,265

    Earnings/(Loss)
     per share:
    Basic                    $(0.06)        $0.05       $(0.12)        $0.07
    Diluted                  $(0.06)        $0.05       $(0.12)        $0.07

    Weighted average
     shares outstanding:
    Basic                55,156,874    53,256,874   54,945,763    53,256,874
    Diluted              55,156,874    53,256,874   54,945,763    53,256,874

    Second Quarter ("Q2") 2010 Highlights and Developments:

    -- Q2 diluted EPS of $0.12 vs. $0.10 for Q2 2009

    -- Q2 net income increased 32% from Q2 2009 to $6.3 million

    -- Q2 gross margin of 52.3% compared to 57.9% in Q2 of 2009

-- The Company attended the 63rd PHARMCHINA exhibition to strengthen customer relationships and attract new distributors. Through the event, the Company added three independent distributors in Guizhou, Gansu and Ningxia provinces and signed one year Supply Contracts with these distributors. In addition, the Company signed Over-the-Counter ("OTC") Drug Purchase Agreements with 11 drug manufacturers.

-- The Company received SFDA's approval for the anti-Asthma drug R- Bambuterol(R) Hydrochloride Tablets to commence clinical trials as a Class 1 New Drug under special/fast track review.

-- The board approved the extension of the contract term between Lotus Pharmaceuticals, Inc.'s wholly-owned foreign enterprise and two operating entities in China from 10 years to 30 years.

-- As of today, the Company has completed the pilot scale production of R- Bambuterol with sufficient active pharmaceutical ingredient and tablets for use in clinical trials I & II, an important step towards entering clinical trials.

-- The construction of Lotus' new building complex in Beijing continued, construction approximately 65% completed as of today.

-- Attended the Global Hunter Securities 2010 China Conference.

-- Terminated the Standby Equity Distribution Agreement with YA Global Master SPV LTD prior to obtaining any financing under the agreement to help protect against stock dilution.

-- In July, the board of directors unanimously approved a maximum of 3 million shares to be allocated to a stock incentive plan as a means to attract, retain and reward individuals who can contribute to the long term financial success of the Company.

-- The Company reaffirms FY2010 Revenue and Net Income Guidance and provides exact targets.

"During the first half of 2010, the value-added output of China's pharmaceutical industry increased 14.9% over the same period in 2009. China's investments in (i) providing medical insurance to over 90% of its population and (ii) improving quality of rural care contribute to the long-term growth opportunities over the course of the next ten years," commented Dr. Zhongyi Liu, Chairman and CEO of Lotus. "We implement our business strategies to align with China's medical reforms. We are working on upgrading our facilities. We also continue to deepen our customer relationships, and structure our high quality prescription drug offerings and services according to market opportunities."

"On one hand, we are now offering 20 different types of prescription drugs through our nationwide wholesales channels which are complimented by our over 60 performing independent distributors. On the other hand, in the direct sales to other drug stores in Beijing, we have had great success mainly because we are driven by the market demand in the Beijing area, and by our OTC sales team's excellent performance."

Net Revenues for the second quarter of 2010 increased 40% to $19.1 million from $13.6 million during the same period of 2009. Wholesale revenues, one of our revenue segments (which accounted for 67% of the Company's total revenues) increased 19% primarily due to the Company's five new prescription drugs covered by the National Health Insurance Program having established their market acceptance. They are both Western and TCM prescription drugs treating duodenal ulcer, chronic prostate infection, psoriasis, influenza and meridian pain, respectively. Retail revenues (which accounted for 32% of total revenues) increased 123% due to relatively fast growth in direct sales to OTC drug outlets in Beijing. Once our new 10,000 sqm storage facility is ready for use, we would be qualified for bidding through the centralized tender process for hospitals in Beijing.

Gross margins for the second quarter of 2010 decreased to 52.3% as compared to 57.9% in the second quarter of 2009. The decrease in gross profit margin was attributable to the increase in cost of sales as a higher percentage of total net revenues than during the prior year's period. The increase in cost of sales as a percentage of total net revenues is a result of reducing sales price per unit by increasing inventory turnover. The management reduced average sales prices per unit to speed up inventory turnover because our warehouse space was insufficient due to 1) the removal of one of the Company's warehouses during construction of our new facility in Beijing, and 2) humidity-related problems occurring in spring and summer that increased the need for warehouse space.

Total operating expenses for the second quarter of 2010 were $3.5 million, a 34% increase from the second quarter of 2009. The increase resulted from the increase of selling expenses mainly as a result of our increase of sales activities in relation to direct sales to OTC drug stores in Beijing, as well as increases in professional fees.

Net income for the second quarter of 2010 was $6.3 million, or $0.12 per diluted share, compared to $4.8 million, or $0.10 per diluted share, in the second quarter of 2009.

Financial Condition

Cash for operations and liquidity needs are funded through cash flows from operations. Cash and cash equivalents were approximately $1.1 million as of June 30, 2010. Current assets and current liabilities as of June 30, 20010, were $9.0 million and $7.8 million, yielding a current ratio of 1.1X. For the six months ended June 30, 2010, net cash provided by operating activities was approximately $8.9 million, which resulted primarily from the Company's organic growth and effective management of cash flow.

Six-Month Results

For the six-month period ended June 30, 2010, total revenues were $34.1 million, an increase of 34% from $25.5 million in the same period last year. Gross profit was $18.7 million, up 28.8% from gross profit of $14.5 million for the six months of 2009. Gross margin was 54.9 %, compared to 57.1% for the first six months of 2009. Operating income was $12.1 million, compared to $9.5 million for the six months ended June 30, 2009.

Net income for the period was $11.3 million, an increase of 35% from $8.4 million during the same period last year. Earnings per share (diluted) for the first half of 2010 was $0.21, as compared to $0.17 in the first half of 2009.

Fiscal Year 2010 Guidance

Lotus both reiterates its prior guidance for the fiscal year 2010, and also provides exact guidance for the fiscal year 2010 due to its growth in the first half of 2010. Lotus expects net revenues to increase from approximately $57.8 million in 2009 to $73.6 million in 2010 and for net income to rise from $16.4 million in 2009 to $21.4 million in 2010.

About Lotus Pharmaceuticals, Inc. ( http://www.lotuspharma.c... )

Lotus Pharmaceuticals, Inc. is a growing developer and producer of drugs and a licensed national seller of pharmaceutical items in the PRC. Lotus operates its business through its two controlled entities: Liang Fang Pharmaceutical, Ltd. and En Ze Jia Shi Pharmaceutical, Ltd. Lotus' current drug development is focused on the treatment of cerebro-cardiovascular disease, asthma and diabetes. Liang Fang sells drugs directly and indirectly through its national sales channels to hospitals, clinics and drugs stores in 30 provinces of the PRC.

Safe Harbor Statement

This press release contains "forward-looking statements" within the meaning of the "safe-harbor" provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate, or imply future results, performance or achievements, and may contain the words "estimate," "project," "intent," "forecast," "anticipate," "plan," "planning," "expect," "believe," "will likely," "should," "could," "would," "may," or words or expressions of similar meaning. Such statements are not guarantees of future performance and could cause the actual results of the Company to differ materially from the results expressed or implied by such statements, including, but not limited to, changes from anticipated levels of sales, future national or regional economic and competitive and regulatory conditions, changes in relationships with customers, access to capital, increased costs, difficulties in developing and marketing new products, marketing existing products, customer acceptance of existing and new products, the time to get new drugs approved by the State Food and Drug Administration and other factors. Additional information regarding risks can be found in the Company's Annual Report on Form 10K and its other filings with the SEC. Accordingly, although the Company believes that the expectations reflected in such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. The Company has no obligation to update the forward-looking information contained in this press release.

    For more information, please contact:

    Lotus Pharmaceuticals, Inc.
     Yan Zeng, CFO
     Tel:   +86-10-6389-9868
     Email: zy@lotuspharma.com



                  LOTUS PHARMACEUTICALS, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS

                                                         As of
                                             June 30, 2010   December 31, 2009
                                               (Unaudited)
    ASSETS
    CURRENT ASSETS:
       Cash                                     $1,078,724        $3,945,740
       Accounts receivable                       5,044,427         1,784,194
       Other receivable                             16,200            16,132
       Inventories                               1,684,513         1,039,867
       Prepaid expenses and other assets         1,146,203           856,691
       Deferred debt costs                              --            52,226

            Total Current Assets                 8,970,067         7,694,850

    PROPERTY AND EQUIPMENT, net                 28,105,096        16,223,775

    OTHER ASSETS
       Prepaid expenses                            978,749         1,359,583
       Deposits and Installments on
        intangible assets                        9,253,004         9,214,299
       Intangible assets, net                   49,218,003        49,888,428

            Total Assets                       $96,524,919       $84,380,935

    LIABILITIES AND SHAREHOLDERS' EQUITY

    CURRENT LIABILITIES:
       Accounts payable and accrued
        expenses                                  $138,491          $427,924
       Other payables                            1,528,432         2,262,760
       Taxes payable                             3,739,362         3,131,908
       Unearned revenue                            646,967         1,163,771
       Due to related parties                    1,776,616         1,490,649
       Series A convertible redeemable
        preferred stock, $.001 par value;
        10,000,000 shares authorized;
        684,176 and 4,967,959 shares
        issued and outstanding at June
        30, 2010 and December 31, 2009,
        respectively, net of  discount                  --         4,170,572

            Total Current Liabilities            7,829,868        12,647,584

    LONG-TERM LIABILITIES:
       Due to related parties                      856,843           866,102
       Notes payable - related parties           5,090,316         5,069,023

            Total Liabilities                   13,777,027        18,582,709


    STOCKHOLDERS' EQUITY:
       Preferred stock ($.001 par value;
        10,000,000 shares authorized;
        684,176 and 4,967,959 shares
        issued and outstanding
        at June 30, 2010 and December 31,
        2009, respectively)                            684                --
       Common stock ($.001 par value;
        200,000,000 shares authorized;
        53,377,185 and 47,306,332 shares
        issued and outstanding at June 30,
        2010 and December 31, 2009,
        respectively)                               53,377            47,306
       Additional paid-in capital               21,006,861        15,649,328
       Statutory reserves                        6,240,202         5,674,324
       Retained earnings                        50,751,338        40,066,036
       Accumulated other comprehensive
        income                                   4,695,430         4,361,232

            Total stockholders' Equity          82,747,208        65,798,226

            Total Liabilities and
             Stockholders' Equity              $96,524,235       $84,380,935


                   LOTUS PHARMACEUTICALS, INC. AND SUBSIDIARIES
       CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
                                   (UNAUDITED)

                          For the Three Months Ended For the Six Months Ended
                                   June 30,                  June 30,
                              2010         2009         2010         2009

    NET REVENUES:
         Wholesale         $12,746,132  $10,673,718  $24,244,218  $19,614,123
          Retail             6,160,361    2,759,419    9,412,753    4,896,607
          Other revenues       198,508      198,592      396,942      945,286

            Total Net
             Revenues       19,105,001   13,631,729   34,053,913   25,456,016

    COST OF SALES            9,105,751    5,743,166   15,349,380   10,929,324

    GROSS PROFIT             9,999,250    7,888,563   18,704,533   14,526,692

    OPERATING EXPENSES:
         Selling expenses    2,375,159    1,801,235    4,544,112    3,503,034
         General and
          administrative     1,075,348      769,103    2,097,205    1,516,309

            Total
             Operating
             Expenses        3,450,507    2,570,338    6,641,317    5,019,343

    INCOME FROM OPERATIONS   6,548,743    5,318,225   12,063,216    9,507,349

    OTHER INCOME
     (EXPENSE):
         Debt issuance
          costs                     --      (99,516)     (52,226)    (199,033)
         Interest income           906       44,793        2,186       46,112
         Interest expense      (59,428)    (470,551)    (491,830)    (918,648)

            Total Other
             Income
             (Expense)         (58,522)    (525,274)    (541,870)  (1,071,569)

    INCOME BEFORE INCOME
     TAXES                   6,490,221    4,792,951   11,521,346    8,435,780

    INCOME TAXES               167,959        7,418      270,166       82,145

    NET INCOME              $6,322,262   $4,785,533  $11,251,180   $8,353,635

    COMPREHENSIVE INCOME:
          NET INCOME         6,322,262    4,785,533   11,251,180    8,353,635

          OTHER
           COMPREHENSIVE
           INCOME:
              Foreign
               currency
               translation
               gain            323,270        2,896      334,198       65,007

    COMPREHENSIVE INCOME    $6,645,532   $4,788,429  $11,585,378   $8,418,642

    NET INCOME PER COMMON
     SHARE:
        Basic                    $0.12        $0.11        $0.22        $0.19
        Diluted                  $0.12        $0.10        $0.21        $0.17

    WEIGHTED AVERAGE
     COMMON SHARES
     OUTSTANDING:
        Basic               53,006,376   43,527,669   51,292,302   43,289,189
        Diluted             53,869,385   49,562,146   53,676,675   49,183,956


                  LOTUS PHARMACEUTICALS, INC. AND SUBSIDIARIES
           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

                                                 For the Six Months Ended
                                                         June 30,
                                                   2010              2009

    CASH FLOWS FROM OPERATING ACTIVITIES:
      Net income                               $11,251,180        $8,353,635
      Adjustments to reconcile net income
       from operations to net cash
       provided by  operating activities:
        Depreciation and amortization              889,539           725,308
        Amortization of deferred debt
         issuance costs                             52,226           199,033
        Amortization of discount on
         convertible redeemable preferred
         stock                                     151,553           600,669
        Amortization of prepaid expense
         attributable to warrants                       --            14,849
        Interest expense attributable to
         beneficial conversion feature of
         preferred shares                          184,660                --
        Stock-based compensation                   229,950           109,334
        Recognition of unearned revenue                 --          (396,450)
      Changes in assets and liabilities:
        Accounts receivable                     (3,240,293)        4,008,383
        Inventories                               (637,828)        1,017,856
        Prepaid expenses and other
         current assets                            354,472         2,101,008
        Accounts payable and accrued
         expenses                                  175,027           (22,506)
        Other current payables                    (740,967)         (169,743)
        Taxes payable                              592,024          (863,589)
        Unearned revenue                          (519,697)          541,327
        Due to related parties                     166,492           118,685

    NET CASH PROVIDED BY OPERATING
     ACTIVITIES                                  8,908,338        16,337,799

    CASH FLOWS FROM INVESTING ACTIVITIES:
        Payments on intangible assets                   --        (8,621,660)
        Purchase of property and
         equipment                             (11,780,895)       (7,166,057)

    NET CASH USED IN INVESTING ACTIVITIES      (11,780,895)      (15,787,717)

    CASH FLOWS FROM FINANCING ACTIVITIES:

    NET CASH PROVIDED BY FINANCING
     ACTIVITIES                                         --                --

    EFFECT OF EXCHANGE RATE ON CASH                  5,541             1,476

    NET (DECREASE) INCREASE IN CASH             (2,867,016)          551,558

    CASH - beginning of period                   3,945,740         1,278,808

    CASH - end of period                        $1,078,724        $1,830,366

    SUPPLEMENTAL DISCLOSURE OF CASH FLOW
     INFORMATION:
      Cash paid for:
        Interest                                        $--              $--
        Income taxes                                $3,746               $--

      Non-cash investing and financing
       activities:
        Common stock issued for services          $397,050          $258,000
        Common stock issued for
         conversion of convertible
         redeemable preferred stock             $4,048,200          $150,000
        Increase in payable for
         construction-in-progress                      $--          $293,520
        Convertible redeemable preferred
         stock reclassified to permanent
         equity                                   $595,233               $--
        Convertible redeemable preferred
         stock issued for dividend payable        $321,308          $400,000

In the 2010 second quarter:

• Revenues reached $9,911,884, up 80.8% compared to $5,481,551 in the same period last year;
• Net income grew 425.1% to $1,188,767 from $226,373 in last year's second quarter;
• Non GAAP adjusted net income (excluding non-cash stock option compensation expense) was $1,359,349.

In the first six months of 2010:

• Revenues grew 91.5% to $18,166,224
• Net income advanced 383.5% from $(356,525) in the first half last year to $1,010,782;
• Non GAAP adjusted net income (excluding non-cash stock option compensation expense) was $2,162,832.

Mr. Xiaoming Hu, Chairman and CEO of the Company, stated, "The second quarter of 2010 will stand out as one of the most exciting in Kandi's recent history as our businesses outperformed our expectations in many aspects. After years of effort, we received government approval to manufacture and sell our pure electric vehicles in China. Significant government announcements were made that clearly supported our comprehensive new business model to become one of leading pure EV producers and service providers in China. And, visible progress was made with local and regional government support in transforming Jinhua into a model EV city."

Rebounding Sales For All Products

In the second quarter, while unit sales were only slightly higher than in the prior year period, revenues were up more strongly, reflecting a Company focus on exports of higher end vehicles.

Unit sales in the quarter of the Company's three-wheeled motorcycle more than doubled year over year, while sales of ATVs and utility vehicles (UTVs) were up only slightly in the period, but generated higher revenues.

The Company reported that the top contributor to the revenue gains in the period was its all electric COCO LSV, with sales of 1,005 units, primarily in the U.S., generating $4,131,674 in revenues.

The second biggest contributor to gains in the quarter was go-karts, of which 2,785 units were sold generating $3,141,901.

Through the first half of the year, sales of COCOs generated $5,810,682, which was the second biggest contributor to the top line after go-karts, where sales advanced strongly to 6,387 units and revenues roughly tripled from the same period last year to $6,906,990. Sales of the Company's ATVs, UTVs and three-wheeled motorcycles were $1,595,181, $2,301,704 and $1,551,647 respectively.

EVs in China: Major Developments

Among the milestone events and accomplishments during the first half and second quarter of 2010 were the following:

• On April 13, 2010, Kandi announced that, in an effort to "jump-start" EV sales in Jinhua City, Zhejiang Province, it anticipated local government funded subsidies for up to 50% of the purchase price would be made available to the first 3,000 purchasers of Kandi's electric vehicles. It believes this reflects a strong government commitment to the success of the Alliance and the establishment of a "model EV city" in Jinhua.
• On April 30, 2010, culminating years of effort by Kandi to develop an economical EV able to meet all government requirements, in public announcement No.98, China's Ministry of Industry and Information and Technology qualified the Kandi low speed vehicle (KD5020X) for China's energy conserving and new energy projects. The vehicle was placed on its list of vehicles in its 10^th catalogue of recommended car types which meet requirements for sales to the public.
• On June 21, 2010, the Company announced that following the milestone approval by the government of Kandi's first EV, another Kandi EV -- Model KD 5010XXYEV -- also was approved for sale in China. With its larger size and better performance, the Company believes this latest model has broad market appeal and will play a significant role in the Company's future development.

Subsequent Events

• On July 12, 2010, Kandi announced that it expanded EV sales to Hangzhou, the capital city of Zhejiang Province, with an initial order from the Postal Service there for 60 all electric vehicles.

• On July 16, 2010, the Company announced that construction of the first, large battery charging farm to support a planned network of battery changing stations was underway in Jinhua. The State Grid Corporation of China, China's largest electric power and transmission company, is funding the project and is responsible for construction, which is expected to be completed before the end of 2010.

"As reflected in second quarter results," Mr. Hu concluded, "while we are starting to lay a solid foundation for our future growth in the EV space, our management also intends to continuously expand sales in recreational vehicles. We see a further gradual improvement in this market over the remainder of the year and we hope that our legacy business can return to pre global financial crisis normal levels."

SEE TABLE BELOW

About Kandi Technologies, Corp.

Kandi Technologies, Corp. (NASDAQ:KNDI - News) ranks as one of the largest manufacturers and exporters of go-karts in China, making it a world leader in the production of this popular recreational vehicle. It also ranks among the leading manufacturers in China of all terrain vehicles (ATVs), and specialized utility vehicles (UTVs), especially for agricultural purposes. Recently, it introduced a second generation high mileage, two seater three-wheeled motorcycle. A major company focus also has been on the manufacture and sales of highly economical, beautifully designed, all electric super mini cars for neighborhood driving and commuting. Available in the U.S., convertible and hardtop models of the COCO travel up to 60 miles at speeds reaching 25mph on a six hour charge. In China, the government recently approved the sale there of Kandi EVs, including KD5010, which can travel at speeds up to 45mph. Kandi believes that battery powered, electric super minis and related services will become the Company's largest revenue and profit generator. The Company's products can be viewed at http://www.kandivehicle..... Its corporate/ir website is http://www.chinakandi.co....

About The Alliance For Chinese Electric Vehicle Development and Commercialization ("the Alliance")

On January 4, 2010, Kandi announced it had forged an Alliance with major Chinese energy, IT and battery companies to help launch a new electronic vehicle (EV) era in China. The new business model of the Alliance addresses key hurdles to mass commercialization of EVs by reducing EV purchase costs, eliminating battery concerns and substantially increasing driving ranges. The new model envisions expansion on a city by city basis of its new model, key elements of which include: strong government cooperation, separating the sale of electric vehicles from the sale of batteries, construction of a comprehensive network of "battery stations" within each city for repair, replacement and charging of batteries, and also, utilizing Kandi vehicles and patented and patent pending EV technology for easy removal and replacement of batteries. The core members of the Alliance are: Kandi Technologies Corp., China Potevio/CNOOC New Energy and Power Ltd. (a joint venture between China National Offshore Oil Corporation and China Potevio Co.) and Tianneng Power International, Ltd. Jinhua City, where Kandi is based, has been chosen as the first model EV city by the Alliance.

Non-GAAP Financials

We provide non-GAAP information in this release for financial results which exclude non-cash stock option compensation expenses. It is our belief that providing this information enhances investor understanding of our operations, because the exclusion of such non-cash stock option expenses permits more transparent comparisons of Kandi's operations that management utilizes to evaluate their performance, in addition to the GAAP presentation of results. The non-GAAP information presented is supplemental and is not meant to substitute for GAAP financials. The non-GAAP financial information that the Company provides also may differ from the non-GAAP information provided by other companies.

Information Regarding Forward-Looking Statements

Except for historical information contained herein, the statements in this Press Release are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties, which may cause our actual results in future periods to differ materially from forecasted results. These risks and uncertainties include, among other things, product demand, market competition, and risks inherent in our operations. These and other risks are described in our filings with the Securities and Exchange Commission.

 

                         KANDI TECHNOLOGIES, CORP.
                              AND SUBSIDIARIES
           CONDENSED CONSOLIDATED STATEMENTS OF (LOSS) INCOME AND
                        COMPREHENSIVE (LOSS) INCOME
---------------------------------------------------------------------------
                                (UNAUDITED)

                           Three Months Ended          Six Months Ended
                        ------------------------  -------------------------
                          June 30,     June 30,     June 30,      June 30,
                            2010         2009         2010          2009
                        -----------  -----------  ------------  -----------
REVENUES, NET           $ 9,911,884  $ 5,481,551  $ 18,166,224  $ 9,487,455
COST OF GOODS SOLD       (7,559,235)  (4,037,629)  (13,963,654)  (7,063,351)
                        -----------  -----------  ------------  -----------
GROSS PROFIT              2,352,649    1,443,922     4,202,570    2,424,104
                        -----------  -----------  ------------  -----------
Research and
 development                400,370      580,772       743,768    1,106,973
Selling and
 distribution expenses       89,685       97,810       942,013      183,994
General and
 administrative
 expenses                 1,147,061      678,278     1,797,872    1,456,210
                        -----------  -----------  ------------  -----------
INCOME (LOSS) FROM
 OPERATIONS                 715,533       87,062       718,917     (323,073)
Interest income
 (expense), net             541,224     (109,253)      333,273     (418,557)
Government grants            45,950       24,951        75,789      124,005
Other income, net            10,801      245,971        57,859      302,185
                        -----------  -----------  ------------  -----------
INCOME (LOSS) FROM
 OPERATIONS BEFORE
 INCOME TAXES             1,313,508      248,731     1,185,838     (315,440)
INCOME TAX (EXPENSE)
 BENEFIT                   (124,741)     (22,358)     (175,056)     (41,085)
                        -----------  -----------  ------------  -----------

INCOME (LOSS) FROM
 CONTINUING OPERATIONS    1,188,767      226,373     1,010,782     (356,525)
                        -----------  -----------  ------------  -----------

                        -----------  -----------  ------------  -----------
NET INCOME (LOSS)         1,188,767      226,373     1,010,782     (356,525)
                        -----------  -----------  ------------  -----------



                             Three Months Ended        Six Months Ended
                         ------------------------- ------------------------
                           June 30,     June 30,     June 30,     June 30,
                             2010         2009         2010         2009
                         ------------ ------------ ------------ -----------
OTHER COMPREHENSIVE
 INCOME
Foreign currency
 translation                  137,493       16,121      130,941      28,419
                         ------------ ------------ ------------ -----------
COMPREHENSIVE INCOME
 (LOSS)                     1,326,260      242,494    1,141,723    (328,106)
                         ============ ============ ============ ===========

WEIGHTED AVERAGE SHARES
 OUTSTANDING BASIC         20,866,109   19,961,000   20,424,671  19,961,000
                         ------------ ------------ ------------ -----------
WEIGHTED AVERAGE SHARES
 OUTSTANDING DILUTED       24,677,264   21,126,517   22,004,992  19,961,000
                         ============ ============ ============ ===========

NET INCOME (LOSS) PER
 SHARE FROM CONTINUING
 OPERATIONS, BASIC       $       0.06 $       0.01 $       0.05 $     (0.02)
                         ------------ ------------ ------------ -----------
NET INCOME (LOSS) PER
 SHARE FROM CONTINUING
 OPERATIONS, DILUTED     $       0.05 $       0.01 $       0.05 $     (0.02)
                         ============ ============ ============ ===========

NET INCOME (LOSS) PER
 SHARE, BASIC            $       0.06 $       0.01 $       0.05 $     (0.02)
                         ------------ ------------ ------------ -----------
NET INCOME (LOSS) PER
 SHARE, DILUTED          $       0.05 $       0.01 $       0.05 $     (0.02)
                         ============ ============ ============ ===========

 
Contacts:
Kandi Technologies, Corp. 
Hu Xiaoming
Chairman and CEO
86-579 - 82239856
US Investors:
Ken Donenfeld
donfgroup@aol.com 
kdonenfeld@dgiir.com 
Tel: 212-425-5700
Fax- 646-381-9727 

    1Q FY2010 Highlights
    -- Revenues decreased by 10.9% year-over-year to RMB186.2 million (US$27.5
       million) but increased by 5.9% sequentially.
    -- Net income was RMB33.7 million (US$5.0 million).
    -- Non-GAAP net income, as defined below, decreased by 21.4% year-over-
       year to RMB57.0 million (US$8.4 million) but increased by 10.8%
       sequentially.
    -- EBITDA, as defined below, was RMB142.0 million (US$20.9 million).
    -- Adjusted EBITDA, as defined below, was RMB105.2 million (US$15.5
       million).
    -- Diluted earnings per ADS* was RMB1.29 (US$0.19).
    -- Non-GAAP diluted earnings per ADS*, as defined below, decreased by
       20.4% year-over-year to RMB2.18 (US$0.32) but increased by 10.1%
       sequentially.
    -- Net cash generated from operations was RMB69.8 million (US$10.3
       million).
    -- Approximately RMB101.7 million (US$15.0 million) 3.5% convertible notes
       and RMB113.6 million (US$16.8 million) 4% convertible notes were
       purchased and cancelled by the Company. Approximately 285,000 ADSs*
       were returned to the Company under the share lending agreement in
       connection with the issuance of 4% convertible notes in August 2008.

    Outlook for 2Q FY2010
    -- Target revenues are expected to be not less than RMB200.0 million
       (US$29.5 million), representing a year-over-year increase of not less
       than 20.4% and a quarter-over-quarter increase of not less than 7.4%.
    -- Target non-GAAP net income is expected to be not less than RMB65.0
       million (US$9.6 million), representing a year-over-year increase of not
       less than 267.9% and a quarter-over-quarter increase of not less than
       14.0%.
    -- Target non-GAAP diluted earnings per ADS* is expected to be not less
       than RMB2.49 (US$0.37), representing a year-over-year increase of not
       less than 271.6% and a quarter-over-quarter increase of not less than
       14.2%.

The above targets are based on the Company's current views on the operating and market conditions, which are subject to change.

*One American Depositary Share ("ADS") = 10 ordinary shares

See "Non-GAAP Measure Disclosures" below, where the impact of certain items on reported results is discussed.

"We are pleased with the third consecutive sequential growth in our quarterly revenues. Following the recent receipt of SFDA approval for our SPR-based HPV-DNA chip and positive feedback from the trial use of our chip by our hospital customers, we believe that we will achieve accelerated sequential growth in the upcoming quarters," commented Mr. Xiaodong Wu, Chairman and Chief Executive Officer of the Company.

1Q FY2010 Unaudited Financial Results

The Company reported revenues of RMB186.2 million (US$27.5 million) for 1Q FY2010, representing a 10.9% decrease from the corresponding period of FY2009 but a 5.9% increase from 4Q FY2009.

The Company's revenues are currently generated from two segments, molecular diagnostic systems and immunodiagnostic systems. The molecular diagnostic system segment includes FISH products and SPR products while the immunodiagnostic system segment consists of ECLIA products.

Molecular diagnostic system sales for 1Q FY2010 were RMB108.1 million (US$15.9 million), representing a 9.8% increase from the corresponding period of FY2009 and a 7.1% increase from 4Q FY2009. The year-over-year and sequential increase was primarily due to the increase in usage of the Company's FISH probes by existing and new hospital customers served by the Company's direct sales personnel.

Immunodiagnostic system sales for 1Q FY2010 were RMB78.1 million (US$11.5 million), representing a 29.3% decrease from the corresponding period of FY2009 and a 4.3% increase from 4Q FY2009. The year-over-year decrease was primarily due to the price reduction for ECLIA reagent kits since September 2009.

Gross margin was 67.0% for 1Q FY2010 which decreased year-over-year from 73.5% for the corresponding period of FY2009 but improved sequentially from 64.9% for 4Q FY2009. The year-over-year decrease in gross margin was primarily due to the impact of the price reduction for ECLIA reagent kits. The sequential increase in gross margin was primarily due to the price reduction for major raw materials used in the production of ECLIA reagent kits and more contribution from the sales of FISH probes which generate higher gross margin.

Research and development expenses were RMB10.6 million (US$1.6 million) for 1Q FY2010, representing a 9.2% year-over-year decrease but a 2.7% sequential increase. The year-over-year decrease was primarily due to lower stock compensation expenses.

Sales and marketing expenses were RMB18.3 million (US$2.7 million) for 1Q FY2010, representing a 68.0% year-over-year increase and a 9.4% sequential increase. The year-over-year and sequential increase was primarily due to the increase in direct sales efforts for molecular diagnostic systems.

General and administrative expenses were RMB25.1 million (US$3.7 million) for 1Q FY2010, representing a 46.4% year-over-year decrease and a 6.0% sequential decrease. The year-over-year decrease was primarily due to no costs of independent internal investigation for 1Q FY2010.

Amortization of SPR intangible assets was RMB27.3 million (US$4.0 million) for 1Q FY2010. Due to the commencement of sales of HPV-DNA chips, the amortization of SPR intangible assets will be classified from operating expenses to cost of revenues starting from 2Q FY2010.

Interest expense on convertible notes was RMB32.5 million (US$4.8 million) for 1Q FY2010. As of June 30, 2010, the Company's outstanding convertible notes of US$135 million and US$248 million bear interest at 3.5% and 4% per annum, respectively, and will mature in November 2011 and August 2013, respectively.

Interest expense on amortization of convertible notes issuance costs was RMB4.0 million (US$0.6 million) for 1Q FY2010.

Due to the adoption of new authoritative guidance governing the accounting for own-share lending arrangements in contemplation of convertible debt issuance or the financing effective on April 1, 2010, the Company recorded additional non-cash interest expense on amortization of share lending costs of RMB2.5 million (US$0.4 million) for the 4% convertible notes in 1Q FY2010. The Company also made adjustments related to these convertible notes for the corresponding periods of FY2009 by increasing non-cash interest expense on amortization of share lending costs by RMB2.6 million and RMB2.8 million for 4Q FY2009 and 1Q FY2009 respectively, to adopt this guidance retrospectively. There is no share lending arrangement for 3.5% convertible notes.

Other income was RMB43.3 million (US$6.4 million) for 1Q FY2010. The significant year-over-year and sequential increase was primarily due to the gain from the purchase of the Company's convertible notes on the open market.

Income tax expense was RMB18.7 million (US$2.8 million) for 1Q FY2010. The significant income tax expense was primarily because certain expenses of the Company such as stock compensation expense, amortization of acquired intangible assets and interest expense of convertible notes were not deductible for income tax purpose. In addition, the Company is required to accrue for withholding income tax on distributable earnings generated in China during 1Q FY2010.

Net income was RMB33.7 million (US$5.0 million) for 1Q FY2010, representing a significant increase from the corresponding period of FY2009 and 4Q FY2009.

Non-GAAP net income was RMB57.0 million (US$8.4 million) for 1Q FY2010, representing a 21.4% decrease from the corresponding period of FY2009 but a 10.8% increase from 4Q FY2009.

Earnings before interest, taxes, depreciation and amortization ("EBITDA") was RMB142.0 million (US$20.9 million) for 1Q FY2010, representing a 26.6% increase from the corresponding period of FY2009 and a 25.7% increase from 4Q FY2009.

Adjusted EBITDA which excludes stock compensation expense and gain on purchase of convertible notes was RMB105.2 million (US15.5 million) for 1Q FY2010, representing a 15.4% decrease from the corresponding period of FY2009 but a 5.6% increase from 4Q FY2009.

Stock compensation expense for 1Q FY2010 was RMB10.6 million (US$1.6 million), of which RMB0.1 million was allocated to cost of revenues, RMB1.4 million to research and development expenses, RMB0.1 million to sales and marketing expenses and RMB9.0 million to general and administrative expenses.

Amortization of acquired intangible assets for 1Q FY2010 was RMB49.7 million (US$7.3 million), of which RMB22.4 million was allocated to cost of revenues and RMB27.3 million to operating expenses. Due to the commencement of sales of HPV-DNA chips, amortization of acquired intangible assets will all be allocated to cost of revenues starting from 2Q FY2010.

As of June 30, 2010, the Company's cash and cash equivalents was RMB742.3 million (US$109.5 million). Net cash generated from operating activities for 1Q FY2010 was RMB69.8 million (US$10.3 million).

As of June 30, 2010, the Company's net accounts receivable was RMB311.3 million (US$45.9 million), representing an increase of 2.6% from the balance at March 31, 2010.

For the convenience of readers, certain RMB amounts have been translated into U.S. dollars at the rate of RMB6.7815 to US$1.00, the noon buying rate in New York City for cable transfers of RMB per U.S. dollar as set forth in the H.10 weekly statistical release of the Federal Reserve Board, as of Wednesday, June 30, 2010. No representation is made that the RMB amounts could have been or could be converted into U.S. dollars at that rate or at any other rate on June 30, 2010 or at any other dates.

Non-GAAP Measure Disclosures

The Company provides gross profit, operating income, net income, earnings per ADS, EBITDA and adjusted EBITDA on a Non-GAAP basis to enable investors to better assess the Company's operating performance. The Non-GAAP measures described by the Company are reconciled to the corresponding GAAP measures in the exhibit below titled "Reconciliations of GAAP measures to Non-GAAP measures".

The Company reported for 1Q FY2010 and provided guidance for 2Q FY2010 net income and diluted earnings per ADS on a Non-GAAP basis. Each of the terms used by the Company is defined as follows:

    -- Non-GAAP gross profit represents gross profit reported in accordance
       with GAAP, adjusted for the effects of stock compensation expense and
       amortization of acquired intangible assets.

    -- Non-GAAP operating income represents operating income reported in
       accordance with GAAP, adjusted for the effects of stock compensation
       expense and amortization of acquired intangible assets.

    -- Non-GAAP net income represents net income reported in accordance with
       GAAP, adjusted for the effects of stock compensation expense,
       amortization of acquired intangible assets, non-cash interest expense
       of convertible notes, non-cash interest expense for amortization of
       share lending costs and gain on purchase of convertible notes.

    -- Non-GAAP earnings per ADS represents Non-GAAP net income divided by the
       weighted average number of ADSs used in computing basic and diluted
       earnings per ADS in accordance with GAAP.

    -- EBITDA represents net income reported in accordance with GAAP, adjusted
       for the effects of interest income, interest expenses, income tax
       expense, depreciation as well as amortization of acquired intangible
       assets.

    -- Adjusted EBITDA represents EBITDA adjusted for the effects of stock
       compensation expense and gain on purchase of convertible notes.

Non-GAAP financial measures are used by the Company in their financial and operating decision-making because management believes they reflect the Company's ongoing business in a manner that allows meaningful period-to-period comparison. The Company's management believes that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating the Company's current operating performance and future prospects in the same manner as management does, if they so choose.

The presentation of this additional financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. For a reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measures, please see the financial information included with this earnings announcement.

Conference Call

The Company's senior management team will host an earnings conference call at 8:00 a.m. U.S. Eastern Time on August 16, 2010 (or 8:00 p.m. Beijing/Hong Kong time on the same date) to discuss the results following this earnings announcement.

    The dial-in details for the live conference call are as follows:

    -- U.S. Toll Free Number 1-866-543-6407
    -- International Dial-in Number 1-617-213-8898
    Passcode: CMEDCALL

A live webcast of the conference call will be available on http://ir.chinameditech.... .

A replay of this webcast will be available for one month on this website.

A telephone replay of the call will be available after the conclusion of the conference call through 10:00 a.m. U.S. Eastern Time on August 17, 2010.

    The dial-in details for the replay are as follows:

    -- U.S. Toll Free Number 1-888-286-8010
    -- International Dial-in Number 1-617-801-6888
    Passcode: 57983372

About China Medical Technologies, Inc.

China Medical Technologies, Inc. is a leading China-based advanced IVD company using molecular diagnostic technologies including Fluorescent in situ Hybridization (FISH) and Surface Plasmon Resonance (SPR) and an immunodiagnostic technology, Enhanced Chemiluminescence Immunoassay (ECLIA), to develop, manufacture and distribute diagnostic products used for the detection of various cancers, diseases and disorders as well as companion diagnostic tests for targeted cancer drugs. The Company generates all of its revenues in China through the sale of diagnostic consumables including FISH probes, SPR-based DNA chips and ECLIA reagent kits to hospitals which are recurring users of the consumables for their patients. The Company sells FISH probes and SPR chips to large hospitals through its direct sales force and ECLIA reagent kits to small and mid-size hospitals through distributors. For more information, please visit http://www.chinameditech... .

Safe Harbor Statement

This press release contains forward-looking statements. These statements constitute "forward-looking" statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Among other things, the quotations from management in this press release, as well as its outlook for 2Q FY2010, contain forward-looking statements. Such statements involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Further information regarding these and other risks is included in the Company's filings with the U.S. Securities and Exchange Commission, including its annual report on Form 20-F. The Company does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under applicable law.

    For more information, please contact:

     Sam Tsang and Winnie Yam
     Tel:   +852-2511-9808
     Email: IR@chinameditech.com



    China Medical Technologies, Inc.
    Unaudited Condensed Consolidated Balance Sheets
                                                         As of
                                                 March 31,      June 30,
                                                   2010           2010
                                                    RMB       RMB      US$
                                               As adjusted(1)
                                                       (in thousands)
    Assets
    Current assets
    Cash and cash equivalents                     815,453   742,340  109,465
    Trade accounts receivable, net                303,368   311,282   45,902
    Inventories                                    24,889    20,177    2,975
    Prepayments and other receivables              21,508    12,048    1,777
    Due from a related party                      204,774   203,445   30,000
        Total current assets                    1,369,992 1,289,292  190,119


    Property, plant and equipment, net            155,825   151,621   22,358
    Land use rights                                 7,049     7,001    1,032
    Goodwill                                        8,654     8,654    1,276
    Intangible assets, net                      3,285,190 3,216,535  474,311
    Convertible notes issuance costs               46,681    39,166    5,775
    Share lending costs(1)                         35,678    30,744    4,534
        Total assets                            4,909,069 4,743,013  699,405

    Liabilities
    Current liabilities
    Trade accounts payable                         20,126    24,136    3,559
    Accrued liabilities and other payables        183,498   186,036   27,433
    Income taxes payable                           57,529    56,518    8,334
        Total current liabilities                 261,153   266,690   39,326

    Convertible notes
                                                2,777,086 2,556,014  376,910
    Deferred income taxes                          67,134    72,518   10,694
        Total liabilities                       3,105,373 2,895,222  426,930

    Shareholders' equity
    Ordinary shares US$0.1 par value:
    500,000,000 authorized; 322,680,001 issued
     and outstanding as of March
     31, 2010 and June 30, 2010                   258,840   258,840   38,169
    Additional paid-in capital(1)                 808,221   820,778  121,032
    Treasury stock                                (45,143)  (47,108)  (6,947)
    Accumulated other comprehensive loss(1)       (70,556)  (70,731) (10,430)
    Retained earnings(1)                          852,334   886,012  130,651
        Total shareholders' equity              1,803,696 1,847,791  272,475

        Total liabilities and shareholders'
         equity                                 4,909,069 4,743,013  699,405

    Note:

    (1) As a result of the adoption of new authoritative guidance governing
        the accounting for own-share lending arrangements in contemplation of
        convertible debt issuance or other financing effective on April 1,
        2010, the Company adjusted relevant numbers in the unaudited
        condensed consolidated balance sheet as of March 31, 2010
        retrospectively in accordance with GAAP.



    China Medical Technologies, Inc.
    Unaudited Condensed Consolidated Statements of Income

                                          For the Three Months Ended
                                    June 30,    March 31,
                                      2009        2010         June 30, 2010
                                       RMB         RMB        RMB        US$
                                As adjusted(4) As adjusted(4)

                                  (in thousands except for per ADS information)

    Revenues, net(1)                 208,957     175,728    186,170     27,453
    Cost of revenues(2)              (55,413)    (61,624)   (61,354)    (9,047)
    Gross profit                     153,544     114,104    124,816     18,406
    Operating expenses
      Research and development(2)    (11,703)    (10,352)   (10,632)    (1,568)
      Sales and marketing(2)         (10,870)    (16,695)   (18,266)    (2,694)
      General and administrative(2)  (46,954)    (26,743)   (25,149)    (3,708)
      Amortization of SPR
       intangible assets             (27,352)    (27,343)   (27,329)    (4,030)
        Total operating expenses     (96,879)    (81,133)   (81,376)   (12,000)
    Operating income                  56,665      32,971     43,440      6,406
      Interest income                  2,773       4,155      4,597        678
      Interest expense - convertible
       notes                         (35,432)    (34,831)   (32,505)    (4,793)
      Interest expense -
       amortization of convertible
       notes issuance costs           (4,380)     (4,263)    (4,012)      (592)
      Interest expense -
       amortization of share lending
       costs(4)                       (2,756)     (2,644)    (2,475)      (365)
      Other income, net                  240      24,638     43,295      6,384
    Income before income tax          17,110      20,026     52,340      7,718
    Income tax expense               (16,919)    (15,206)   (18,662)    (2,752)
    Net income                           191       4,820     33,678      4,966
    Earnings per ADS
    - basic                             0.01        0.19       1.30       0.19
    - diluted(3)                        0.01        0.19       1.29       0.19
    Weighted average number of ADS
    - basic                       26,324,842  25,993,349 26,005,975 26,005,975
    - diluted(3)                  26,438,076  26,050,599 26,128,403 26,128,403

    Notes:

    (1)  Revenues, net               RMB'000     RMB'000    RMB'000    US$'000
    - Molecular diagnostic systems    98,466     100,897    108,092     15,940
    - Immunodiagnostic systems       110,491      74,831     78,078     11,513
                                     208,957     175,728    186,170     27,453

    (2)  Stock compensation          RMB'000     RMB'000    RMB'000    US$'000
     expense
    - Cost of revenues                    --          --         52          8
    - Research and development         2,047       1,440      1,418        209
    - Sales and marketing                 --          --         91         13
    - General and administrative      10,110       9,252      9,031      1,332
                                      12,157      10,692     10,592      1,562

    (3) Interest expense and amortization in connection with convertible notes
        were not added back in computing diluted earnings per ADS because they
        were anti-dilutive.

    (4) As a result of the adoption of new authoritative guidance governing
        the accounting for own-share lending arrangements in contemplation of
        convertible debt issuance or other financing effective on April 1,
        2010, the Company adjusted relevant numbers in the unaudited condensed
        consolidated statements of income for the three months ended June 30,
        2009 and March 31, 2010 retrospectively in accordance with GAAP.



    China Medical Technologies, Inc.
    Reconciliations of GAAP measures to Non-GAAP measures

                                      For the Three Months Ended
                              June 30,     March 31,
                                2009         2010          June 30, 2010
                                 RMB          RMB         RMB          US$
                            As adjusted(2)As adjusted(2)

                               (in thousands except for per ADS information)

    Gross profit               153,544      114,104     124,816       18,406
    Adjustments:
      Stock compensation
       expense                      --           --          52            8
      Amortization of
        acquired
        intangible assets       22,455       22,423      22,414        3,305
    Non-GAAP gross profit      175,999      136,527     147,282       21,719
    Gross margin                 73.5%        64.9%       67.0%        67.0%
    Non-GAAP gross margin        84.2%        77.7%       79.1%        79.1%

    Operating income            56,665       32,971      43,440        6,406
    Adjustments:
      Stock compensation
       expense                  12,157       10,692      10,592        1,562
      Amortization of
       acquired
       intangible assets        49,807       49,766      49,743        7,335
    Non-GAAP operating
     income                    118,629       93,429     103,775       15,303
    Operating margin             27.1%        18.8%       23.3%        23.3%
    Non-GAAP operating
     margin                      56.8%        53.2%       55.7%        55.7%

    Net income                     191        4,820      33,678        4,966
    Adjustments:
      Stock compensation
       expense                  12,157       10,692      10,592        1,562
      Amortization of
       acquired
       intangible assets        49,807       49,766      49,743        7,335
      Non-cash interest
       expense of
       convertible notes         7,620        7,618       7,916        1,167
      Non-cash interest
       expense -
       amortization of share
       lending costs(2)          2,756        2,644       2,475          365
      Gain on purchase of
       convertible notes            --      (24,064)    (47,393)      (6,989)
    Non-GAAP net income         72,531       51,476      57,011        8,406
    GAAP net margin               0.1%         2.7%       18.1%        18.1%
    Non-GAAP net margin          34.7%        29.3%       30.6%        30.6%

    Net income                     191        4,820      33,678        4,966
    Adjustments:
      Interest income           (2,773)      (4,155)     (4,597)        (678)
      Interest expense -
       convertible notes        35,432       34,831      32,505        4,793
      Interest expense -
       amortization
       of convertible notes
       issuance costs            4,380        4,263       4,012          592
      Interest expense -
       amortization
       of share lending
       costs(2)                  2,756        2,644       2,475          365
      Income tax expense        16,919       15,206      18,662        2,752
      Depreciation               5,450        5,588       5,475          807
      Amortization of
       acquired
       intangible assets        49,807       49,766      49,743        7,335
    EBITDA                     112,162      112,963     141,953       20,932
    EBITDA margin                53.7%        64.3%       76.2%        76.2%

    EBITDA                     112,162      112,963     141,953       20,932
    Adjustments:
      Stock compensation
       expense                  12,157       10,692      10,592        1,562
      Gain on purchase of
       convertible notes            --      (24,064)    (47,393)      (6,989)
    Adjusted EBITDA            124,319       99,591     105,152       15,505
    Adjusted EBITDA
     margin                      59.5%        56.7%       56.5%        56.5%

    Earnings per ADS
    - basic                       0.01         0.19        1.30         0.19
    - diluted                     0.01         0.19        1.29         0.19

    Non-GAAP earnings per
     ADS
    - basic                       2.76         1.98        2.19         0.32
    - diluted(1)                  2.74         1.98        2.18         0.32

    Weighted average
     number of ADS
    - basic                 26,324,842   25,993,349  26,005,975   26,005,975
    - diluted(1)            26,438,076   26,050,599  26,128,403   26,128,403

    Notes:

    (1) Interest expense and amortization in connection with convertible notes
        were not added back in computing non-GAAP diluted earnings per ADS
        because they were anti-dilutive.

    (2) As a result of the adoption of new authoritative guidance governing
        the accounting for own-share lending arrangements in contemplation of
        convertible debt issuance or other financing effective on April 1,
        2010, the Company adjusted relevant numbers in the unaudited condensed
        consolidated statements of income for the three months ended June 30,
        2009 and March 31, 2010 retrospectively in accordance with GAAP.

    Second Quarter 2010 Highlights
    -- Revenues increased 23.3% year-over-year to $40.9 million
    -- Gross profit rose 32.6% year-over-year to $31.8 million, representing a
       gross margin of 77.9%, as compared to 72.4% a year ago
    -- Operating income grew 37.7% to $22.8 million
    -- GAAP net income attributable to controlling interest was $12.9 million,
       or $0.49 per diluted share, including a $2.3 million non-cash gain from
       change in the fair value of derivative liabilities
    -- Excluding the non-cash gain, interest on convertible notes and non-cash
       employee compensation, non-GAAP adjusted net income was $10.9 million
       or $0.41 per diluted share, a 31.2% increase from $8.3 million or $0.38
       per diluted share a year ago

"Our second quarter results were very strong, with 23.3% growth in revenues and 31.2% growth in adjusted net income, primarily driven by robust demand and a favorable pricing environment for our plasma-based products," said Mr. Chao Ming Zhao, Chief Executive Officer of China Biologic. "We are moving forward with establishing our two new plasma collection stations in Yishui and Ninyang counties in Shandong Province, and expect to begin trial collections at the new locations by the end of the year. We also increased our focus on marketing and educational medical conferences in the second quarter, as part of our strategy to strengthen our ties with hospitals and clinics, since we believe that direct sales to these customers can secure our market share and support our long-term growth."

Second Quarter 2010 Results

Revenue for the second quarter of 2010 increased 23.3% to $40.9 million, from $33.2 million in the same 2009 period. Revenue growth is primarily attributable to price increases ranging from 0.1% to 433.5% across the Company's plasma-based product portfolio. Rising pricing reflects continued supply shortage in China's plasma industry. The Company generally expects pricing to remain stable during the balance of the year, while management continues to monitor the impact of China's health care reform efforts on procurement and pricing for products listed within China's National Medical Insurance Catalog. Among the Company's product groups, while Human Albumin pricing remained flat relative to the second quarter of 2009, it remained the largest revenue contributor at 46.4% of total sales. Human Immunoglobulin for Intravenous Injection, the Company's most in-demand product group and second largest revenue contributor at 39.3% of total sales, experienced average year-over-year price increases of 26.9% in second quarter 2010. Human Hepatitis B Immunoglobulin experienced the sharpest average price increase among the Company's product categories, up 433.5% compared to the prior year period, and contributed 6.9% of total revenues in second quarter 2010.

Gross profit for the second quarter of 2010 was $31.8 million, up 32.6%, from $24.0 million in the second quarter of 2009. Gross profit margin expanded to 77.9% from 72.4% in the same period a year ago and 74.9% in the first quarter of 2010. The gross profit margin expansion was primarily attributable to the increase in the average selling price, as well as some volume increase, of the Company's plasma products quarter-over-quarter.

Operating expenses in the second quarter increased 21.3% to $9.1 million, from $7.5 million in the same period last year. Higher expenses primarily reflected a 258.2% increase in research and development spending, mostly related to development of two late stage pipeline projects for which the Company expects to receive SFDA approval in early 2011. Selling expenses increased 66.6% year-over-year to $1.9 million due to intensified promotion and conferences activities as the Company continues its efforts in expanding its penetration into hospital and inoculation centers. General and administrative expenses decreased 1.6% year-over-year in the second quarter of 2010 to $5.9 million, or 14.4% of total sales, versus $6.0 million, or 18.1% of total sales for the same period in 2009.

The decrease in general and administrative expenses is due mainly to reduced general payroll and employee benefits and outside services, as well as decreases in legal expenses and office supplies.

Income from operations in the 2010 second quarter was $22.8 million, a 37.7% increase from $16.5 million during the same period a year ago. Operating margin rose to 55.7% from 49.8% year-over-year.

Total other income was $1.9 million in the 2010 second quarter, as compared to net other expense of $2.3 million in the same 2009 period. The increase primarily reflected a $2.3 million gain related to change in the fair value of warrant liabilities.

Income taxes increased to $5.1 million in the 2010 second quarter, from $3.0 million in the prior year. The effective tax rate was 20.6% in the second quarter, as compared to 20.9% same quarter last year.

Net income attributable to controlling interest for the 2010 second quarter was $12.9 million, or $0.49 per diluted share, and included a $2.3 million non-cash gain related to change in the fair value of derivative liabilities. Net income during the 2009 second quarter was $7.0 million, or $0.32 per diluted share, which included a non-cash $1.3 million charge related to change in the fair value of warrants.

Excluding non-cash employee compensation expenses, change in the fair value of derivative liabilities and interest related to the convertible notes under the if-converted method, non-GAAP adjusted net income for the three months ended June 30, 2010 was $10.9 million, or $0.41 per diluted share, up 31.2% from $8.3 million, or $0.38 per diluted share, in the same 2009 period.

Six Months Results

For the first six months of 2010, total revenue was $68.0 million, up 25.2% from the first six months of 2009. Gross profit for the first six months of 2010 was $52.1 million, up 33.9% from $39.0 million in the comparable period a year ago. Gross margin for the first six months of 2010 was 76.7%, as compared to 71.7% for the same period in 2009. The increase in gross margin was due mainly to the increases in selling prices of the Company's products, which ranged from 1.3% to 375.0%. Income from operations for the period was $36.0 million, up 35.3% from $26.6 million in the first six months of 2009. Net income for the first six months of 2010 was $23.5 million, up 109.1% from $11.2 million in the first six months of 2009. Fully diluted earnings per share were $0.90 for the first six months of 2010 compared to $0.52 in the first six months of 2009. Excluding non-cash employee compensation expenses, change in the fair value of derivative liabilities and interest related to the convertible notes under the if-converted method, non-GAAP adjusted net income for the six months ended June 30, 2010 was $18.5 million, or $0.70 per diluted share, an increase of 41.8% from non-GAAP net income of $13.0 million or $0.60 per fully diluted share for the six months ended June 30, 2009.

Financial Condition

As of June 30, 2010, the Company had $56.3 million in cash and cash equivalents, approximately $63.9 million in working capital, and a current ratio of 2.4. Total stockholders' equity at the end of the quarter was $78.8 million, up 59.3% from $49.5 million at the end of 2009.

The Company generated $19.4 million in net cash from operating activities during the first half of 2010, as compared to $28.4 million in the same period of 2009. The decline in operating cash flow was primarily due to an increase in inventory, accounts receivable and income taxes paid. Higher inventory reflected increased plasma collection and timing of SFDA approval of finished plasma goods, while higher accounts receivable reflects increased end-user sales to hospitals.

Recent Events and Updates

On July 7, 2010 and July 20, 2010, Shandong Taibang established Ning Yang Taibang Plasma Company and Yi Shui Taibang Plasma Company, both 100% owned by Shandong Taibang for the purpose of constructing and operating two recently government-approved plasma stations in Shandong Province, PRC. Once the new plasma stations are operational, the Company will have 18 total plasma stations and expects the two new plasma stations will increase aggregate plasma collection capacity by up to an additional to 80 metric tons over the next few years.

2010 Guidance and Business Outlook

China Biologic maintained its guidance for 2010 revenues in the range of $142 million and $149 million and 2010 adjusted net income in the range of $34 million and $36 million. As part of its scheduled annual maintenance and inspection process, the Company shut down its facility in Qianfeng for approximately 45 days in June and July and its Taibang facility for 30 days beginning in late July. Due to careful planning of production and inventories, this is expected to have minimal impact to the company's revenue generation.

Guidance for 2010 adjusted net income excludes any non-cash gain or loss related to change in the fair value of derivative liabilities, stock-based compensation expense and any adjustments in the U.S. federal income tax provision in 2010 related to the expiration of the look-through exception for Subpart F income on December 31, 2009, and excludes any acquisitions, new product approvals or operational impact from new plasma stations. The guidance also does not assume any material price or volume increases during the year.

China Biologic's applications for Human Prothrombin Complex Concentrate and Human Coagulation Factor VIII remain under SFDA review. As a result of internal changes at the SFDA that have delayed processing of new drug applications, management expects to commercially launch these two products in early 2011. Management expects that these new products will enrich the Company's product portfolio and enhance its competitive position in the plasma-based product market.

Mr. Zhao added, "Results for the first half of 2010 confirm that China Biologic's strategy is on track and our strong balance sheet and our operating cash flow provides us with the resources to take advantage of opportunities created by rising consumer demand and tight supply conditions based on strict government regulation. We plan to expand our plasma supply through building new collection stations and increasing the capacity of our existing stations. Our investment in R&D is expected to bring additional advanced, higher margin products into our portfolio. We are also working to increase our relationships with our end customers through carefully targeted marketing activities and we continue to evaluate opportunities to acquire additional collection and production assets that can further strengthen our leading position in the industry."

Conference Call

China Biologic will host a conference call at 8:00 a.m. ET on Monday, August 16, 2010, to discuss the second quarter 2010 financial results. To participate in the conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: 877-409-5468. International callers should dial +1-702-894-2400. The pass code for the call is 94191315. If you are unable to participate in the call at this time, a replay will be available for 14 days starting on Monday, August 16, 2010 at 9:00 a.m. ET. To access the replay, dial 800-642-1687, international callers should dial +1-706-645-9291. The conference pass code is 94191315.

                  CHINA BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIES
                  RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
                FOR THE THREE MONTHS ENDED JUNE 30, 2010, AND 2009

                           Three Months Ended   Three Months Ended
                              June 30, 2010        June 30, 2009
                               Net     Diluted      Net     Diluted
                             Income      EPS      Income      EPS
    Adjusted net income -
     non GAAP              10,936,852   $0.41    8,335,605   $0.38
    Non-cash employee
     compensation (1)          45,948   $0.00       27,594   $0.00
    Loss (income) in fair
     value of derivative   (2,270,829) $(0.09)  91,295,732   $0.06
     liabilities (2)
    Net income
     attributable to
     controlling interest
     for diluted EPS (3)   13,161,733   $0.49    7,012,279   $0.32
    Interest add-back on
     convertible notes        284,190               41,534
    Net income
     attributable to
     controlling interest  12,877,543            6,970,745
    Weighted average
     number of shares -
     diluted               26,599,255           21,811,473



                               Six Months Ended   Six Months Ended
                                June 30, 2010      June 30, 2009
                               Net      Diluted     Net     Diluted
                             Income       EPS     Income      EPS
    Adjusted net income -
      GAAP                 18,452,929    $0.70  13,014,319   $0.60
    Non-cash employee
     compensation (1)         617,841    $0.02      54,967   $0.00
    Loss (income) in fair
     value of derivative
     liabilities (2)       (6,104,406)  $(0.23)  1,688,755   $0.08
    Net income
     attributable to
     controlling interest
     for diluted EPS (3)   23,939,494    $0.90  11,270,597   $0.52
    Interest add-back on
     convertible notes        456,311               41,534
    Net income
     attributable to
     controlling interest  23,483,183           11,229,063
    Weighted average
     number of shares
     - diluted             26,541,685           21,527,509


    (1) Non-cash compensation expenses related to options granted to employees
        and directors under the Company's 2008 Equity Incentive
        Plan

    (2) Adoption of a new accounting rule effective January 1, 2009 requires
        changes in the fair value of derivative liabilities to be recognized
        in earnings each quarter.

    (3) Net Income attributable to controlling interest for calculating
        diluted earnings per share includes interest add-back on Convertible
        Notes.

Use of Non-GAAP Financial Measures

This press release contains non-GAAP financial measures that exclude non-cash compensation expenses related to options granted to employees and directors under the Company's 2008 Equity Incentive Plan and changes in the fair value of derivative liabilities, including warrants and derivative instruments (including the conversion option) embedded in the Company's Senior Secured Convertible Notes. To supplement the Company's condensed consolidated financial statements presented on a GAAP basis, the Company has provided non-GAAP financial information excluding the impact of this item in this release. The Company's management believes that these non-GAAP measures provide investors with a better understanding of how the results relate to the Company's historical performance. A reconciliation of the adjustments to GAAP results appears in the table accompanying this press release. This additional non-GAAP information is not meant to be considered in isolation or as a substitute for GAAP financials. The non-GAAP financial information that the Company provides also may differ from the non-GAAP information provided by other companies.

About China Biologic Products, Inc.

China Biologic Products, Inc., through its indirect majority-owned subsidiaries, Shandong Taibang Biological Products Co. Ltd. and Guiyang Dalin Biologic Technologies Co., Ltd, and its equity investment in Xi'an Huitian Blood Products Co., Ltd., is currently the largest non-state-owned plasma-based biopharmaceutical company in China. The Company is a fully integrated biologic products company with plasma collection, production and manufacturing, research and development, and commercial operations. The Company's plasma- based biopharmaceutical products are irreplaceable during medical emergencies, and are used for the prevention and treatment of various diseases. The Company sells its products to hospitals and other healthcare facilities in China. Please see the Company's website http://www.chinabiologic... for additional information.

Safe Harbor Statement

This release may contain certain "forward-looking statements" relating to the business of China Biologic Products, Inc. and its subsidiaries. All statements, other than statements of historical fact included herein are "forward-looking statements," including statements regarding: the ability of the Company to achieve the financial guidance provided by the management; the ability of the Company to win SFDA approval for its research and development pipeline projects, and commercially launch new products; the Company's ability to build new or expand existing plasma collection stations and increase plasma collection capacity; the Company's ability to otherwise achieve its commercial objectives, including its ability to gain market share and further strengthen the Company's leadership in the PRC plasma market; the business strategy, plans and objectives of the Company and its subsidiaries; and any other statements of non-historical information. These forward-looking statements are often identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions, and involve known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company's periodic reports that are filed with the Securities and Exchange Commission and available on its website (http://www.sec.gov). All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.

                          -FINANCIAL TABLES FOLLOW -


                CHINA BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIES
                         CONSOLIDATED BALANCE SHEETS
                  AS OF JUNE 30, 2010 and DECEMBER 31, 2009

                                   ASSETS
                                              June 30,        December 31,
                                                2010              2009
                                            (Unaudited)
    CURRENT ASSETS:
       Cash and cash equivalents            $56,263,131       $53,843,951
       Accounts receivable, net
        of allowance for doubtful
        accounts of $1,253,975 and
        $1,254,955 as of June 30,
        2010 and December 31, 2009,
        respectively                          5,658,429         1,767,076
       Accounts receivable -
        related party                           229,817           222,617
       Other receivables                      2,291,010         2,186,441
       Inventories, net of
        allowance for obsolete of
        $742,269 and $519,333 as
        of June 30, 2010 and
        December 31, 2009,
        respectively                         41,434,786        35,132,724
       Prepayments and deferred
        expense                               1,848,327         1,299,125
       Deferred tax assets                    1,119,908         1,053,771
           Total current assets             108,845,408        95,505,705

    PLANT AND EQUIPMENT, net                 35,598,253        28,873,413

    OTHER ASSETS:
       Investment in unconsolidated
        affiliate                             7,001,553         6,627,355
       Prepayments - non-current              2,637,092         3,223,960
       Intangible assets, net                19,988,081        21,180,322
       Goodwill                              12,425,589        12,425,589
           Total other assets                42,052,315        43,457,226

    Total assets                           $186,495,976      $167,836,344

                           LIABILITIES AND EQUITY

    CURRENT LIABILITIES:
       Accounts payable                      $3,268,413        $3,701,843
       Notes payable                                 --            48,598
       Short term loans - bank                5,965,650         4,474,350
       Short term loans - holder
        of noncontrolling interest                   --         3,652,500
       Other payables and accrued
        liabilities                          20,592,061        19,246,814
       Other payable - related
        parties                               3,100,153         3,087,527
       Accrued interest - holder
        of noncontrolling interest                   --         2,068,526
       Customer deposits                      4,051,003         3,868,577
       Taxes payable                          7,509,571         8,774,079
       Investment payable                        78,800         2,195,365
       Current maturities of notes
        payable, net of discount of
        $7,112,409 as of June 30,
        2010                                    387,591                --
           Total current liabilities         44,953,242        51,118,179

    OTHER LIABILITIES:
       Other payable - land use right           324,265           323,687
       Derivative liability -
        conversion option                    13,522,842        19,960,145
       Fair value of derivative
        instruments                           8,658,837        12,701,262
       Notes payable, net of
        discount of $8,464,380 as
        of December 31, 2009                         --            89,760
           Total other liabilities           22,505,944        33,074,854

                  Total liabilities          67,459,186        84,193,033

     COMMITMENTS AND CONTINGENCIES

    EQUITY:
       Common stock, $0.0001 par
        value, 100,000,000 shares
        authorized, 23,513,533 and
        23,056,442 shares issued and
        outstanding at June 30, 2010
        and December 31, 2009,
        respectively                              2,351             2,305
       Additional paid-in-capital            28,070,754        22,517,077
       Statutory reserves                    23,233,527        17,414,769
       Retained earnings                     22,967,030         5,302,605
       Accumulated other comprehensive
        income                                4,520,744         4,227,394
           Total shareholders' equity        78,794,406        49,464,150

    NONCONTROLLING INTEREST                  40,242,384        34,179,161

           Total equity                     119,036,790        83,643,311

                   Total liabilities
                    and equity             $186,495,976      $167,836,344



                CHINA BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIES
       CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
          FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2010 AND 2009
                                 (Unaudited)

                          Three months ended            Six months ended
                               June 30,                     June 30,
                         2010           2009           2010           2009
    REVENUES:
      Revenues       $40,580,807    $33,030,868    $67,442,329    $53,936,737
      Revenues -
       related party     327,509        150,677        564,540        393,406
        Total
         revenues     40,908,316     33,181,545     68,006,869     54,330,143

    COST OF REVENUES:
      Cost of
       revenues        9,058,906      9,161,765     15,857,760     15,376,695

    GROSS PROFIT      31,849,410     24,019,780     52,149,109     38,953,448

    OPERATING EXPENSES:
      Selling
       expenses        1,856,881      1,114,614      2,799,789      1,694,110
      General and
       administrative
       expenses        5,905,950      6,004,802     10,868,202      9,827,709
      Research and
       development
        expenses       1,317,483        367,856      2,486,138        835,583
         Total
          operating
           expenses    9,080,314      7,487,272     16,154,129     12,357,402

    INCOME FROM
     OPERATIONS       22,769,096     16,532,508     35,994,980     26,596,046

    OTHER (INCOME)
     EXPENSE:
      Equity in
       loss (income) of
       unconsolidated
       affiliate        (157,114)        90,390       (345,655)        50,143
      Change in
       fair value of
       derivative
       liabilities    (2,270,829)     1,295,732     (6,104,406)     1,688,755
      Interest
       expense, net      439,005        883,914        620,058      1,254,767
      Other income -
       related party        (449)            --       (914,738)            --
      Other expense,
       net               102,914        (16,005)       197,234         35,310
        Total other
         (income)
         expense, net (1,886,473)     2,254,031     (6,547,507)     3,028,975

    INCOME BEFORE
     PROVISION FOR
     INCOME TAXES AND
     NONCONTROLLING
     INTEREST         24,655,569      14,278,477    42,542,487     23,567,071

    PROVISION FOR
     INCOME TAXES      5,086,881       2,982,101     8,282,947      5,012,295

    NET INCOME        19,568,688      11,296,376    34,259,540     18,554,776

    Less: Net income
     attributable to
     noncontrolling
     interest          6,691,145       4,325,631    10,776,357      7,325,713

    NET INCOME
     ATTRIBUTABLE TO
     CONTROLLING
     INTEREST         12,877,543       6,970,745    23,483,183     11,229,063

    OTHER COMPREHENSIVE
     INCOME:
      Foreign
       currency
       translation
       adjustments       274,049          (1,250)      293,350         17,387
      Comprehensive
       (income) loss
       attributable to
       noncontrolling
       interest          162,723         (33,362)      138,768        393,940
    COMPREHENSIVE
     INCOME          $13,314,315      $6,936,133   $23,915,301    $11,640,390


    BASIC EARNINGS
     PER SHARE:
      Weighted average
       number of
       shares         23,511,435      21,442,909    23,449,508     21,438,948
      Earnings per
       share               $0.55           $0.33         $1.00          $0.52

    DILUTED EARNINGS
     PER SHARE:
      Weighted
       average number
       of shares      26,599,255      21,811,473    26,541,685     21,527,509
      Earnings per
       share               $0.49           $0.32         $0.90          $0.52



                CHINA BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE SIX MONTHS ENDED JUNE 30, 2010 AND 2009
                                 (Unaudited)

                                                2010               2009
    CASH FLOWS FROM OPERATING
     ACTIVITIES:
       Net income attributable to
        controlling interest                $23,483,183        $11,229,063
       Net income attributable to
        noncontrolling interest              10,776,357          7,325,713
       Consolidated net income               34,259,540         18,554,776
       Adjustments to reconcile net
        income to cash provided by
        operating activities:
               Depreciation                   1,670,321          1,589,625
               Amortization                   1,740,659          1,704,248
               (Gain) Loss on disposal
                of equipment                      3,020               (506)
               Recovery of bad debt
                previously reserved              (8,973)           (22,311)
               Allowance for bad debt -
                other receivables and
                prepayment                      432,895            406,736
               Allowance for obsolete
                inventories                     219,897                 --
               Deferred tax assets              (61,571)                --
               Stock based compensation         617,841             54,967
               Change in fair value of
                derivative liabilities       (6,104,406)         1,688,755
               Amortization of deferred
                note issuance cost              171,667             25,323
               Amortization of discount
                on convertible notes            312,259             20,356
               Equity in (income) loss
                of unconsolidated affiliate    (345,655)            50,143
       Change in operating assets and
        liabilities:
               Accounts receivable           (3,861,953)          (676,036)
               Accounts receivable -             (6,264)          (375,810)
                related party
               Other receivables                (95,231)           (23,082)
               Inventories                   (6,351,255)        (4,130,960)
               Prepayments and deferred
                expenses                       (849,198)          (750,937)
               Accounts payable                (446,713)           (50,767)
               Other payables and
                accrued liabilities           1,252,134          4,594,379
               Accrued interest -
                holder of noncontrolling
                interest                     (2,068,526)           911,084
               Customer deposits                169,398          4,251,476
               Taxes payable                 (1,294,805)           608,063
    Net cash provided by operating
     activities                              19,355,081         28,429,522

    CASH FLOWS FROM INVESTING
     ACTIVITIES:
       Cash acquired through
        acquisition                                  --         11,943,673
       Payments made for acquisition         (4,022,288)       (10,373,854)
       Purchase of plant and equipment       (6,154,212)        (1,865,746)
       Additions to intangible assets           (87,769)        (1,014,766)
       Advances on non-current assets          (471,667)          (590,428)
                   Net cash used in
                    investing activities    (10,735,936)        (1,901,121)

    CASH FLOWS FROM FINANCING
     ACTIVITIES:
       Proceeds from warrants
        conversion                              689,160            113,700
       Proceeds from issuance of
        convertible notes                            --          8,971,337
       Repayments of former shareholders
        loan in acquiring company                    --         (2,652,737)
       Proceeds from short term loans
        - bank                                5,867,600         13,513,754
       Payments on short term loans
        - bank                               (4,400,700)                --
       Payments on long term loan
        - bank                                       --         (5,862,800)
       Repayments of non-controlling
        shareholder loan                     (3,652,500)                --
       Payments on notes payables               (48,595)                --
       Distribution paid to
        noncontrolling interest
        shareholders                         (4,864,240)                --
                   Net cash (used in)
                    provided by financing
                    activities               (6,409,275)        14,083,254

    EFFECTS OF EXCHANGE RATE CHANGE IN
     CASH                                       209,310             52,750

    INCREASE IN CASH                          2,419,180         40,664,405

    CASH and CASH EQUIVALENTS,
     beginning of periods                    53,843,951          8,814,616

    CASH and CASH EQUIVALENTS, end of
     periods                                $56,263,131        $49,479,021

    SUPPLEMENTAL DISCLOSURE OF CASH
     FLOW INFORMATION
       Income taxes paid                     $9,500,399         $4,351,056
       Interest paid                           $161,684           $715,158
    Non-cash investing and financing
     activities:
       Reclassification of derivative
        liability to equity related to
        conversion of convertible notes      $2,498,957                $--
       Reclassification of derivative
        liability to equity related to
        exercise  of warrants                $1,747,765           $125,009
       Distribution paid in exchange
        of holder of noncontrolling
        interest loan                               $--         $3,736,773
       Distribution paid by offsetting
        accounts receivable - related
        party                                       $--         $3,720,649
       Net assets addition with unpaid
        commitment                                  $--         $2,849,321
       Intangible assets acquired with
        prepayments made in prior periods      $440,070                $--
       Plant and equipment acquired with
        prepayments made in prior periods      $629,166        $14,290,227



    For more information, please contact:

    Company Contact:
     Mr. Y. Tristan Kuo
     Chief Financial Officer
     China Biologic Products, Inc.
     Tel:   +86-538-6202206
     Email: IR@chinabiologic.com
     Web:   http://www.chinabiologic.com

    Investor Relations Contact:
     Mr. Kalle Ahl, Account Manager
     CCG Investor Relations
     Tel:   +1-646-833-3417
     Email: kalle.ahl@ccgir.com
     Web:   http://www.ccgirasia.com

     Mr. Crocker Coulson, President
     Tel:   +1-646-213-1915
     Email: crocker.coulson@ccgir.com

    Second Quarter 2010 Highlights
    -- Revenue increased 151.1% year-over-year to $24.0 million
    -- Gross profit expanded 104.7% year-over-year to $9.6 million; gross
       margin was 39.9%, up 5.6 percentage points from the first quarter of
       2010
    -- Operating income grew 60.9% year-over-year to $4.6 million
    -- Adjusted net income increased 41.9% year-over-year to $4.1 million, or
       $0.16 per fully diluted share
    -- Majority-owned subsidiary, Beijing UNISITS Technology Corp. LTD
       ("UNISITS") was selected to design a highway management program in
       Chongqing, as part of the pioneer project for the National Highway
       Information Grid
    -- Launched the Company's Information and Control System for major
       commercial vehicles (the "IC System") at the World Expo in Shanghai
    -- Launched its Fleet Management Service business in Hunan Province

"After acquiring a majority stake in UNISITS, we have maintained our focus on further enhancing the synergies between the two companies and improving gross margin. We are delighted that both UNISITS and our legacy business enjoyed strong growth and improving margins due to an increasing number of higher margin contracts," commented by Mr. Shudong Xia, Chief Executive Officer of China TransInfo. "Meanwhile, we continued to enhance our position in the transportation information industry through our participation in the National Highway Information Grid and the debut of our IC System at the World Expo in Shanghai. The launch of our Fleet Management Service business in Hunan Province is a major milestone for us, and we expect it to begin contributing to our financial results in the fourth quarter of 2010."

Second Quarter 2010 Results

For the quarter ended June 30, 2010, revenue increased 151.1% to $24.0 million from $9.6 million in the comparable period of 2009. Revenue from products and applications in the transportation business sector was $22.6 million, or 93.9% of total revenue, as compared to $6.5 million, or 68.3% of total revenue, in the same period last year, primarily as a result of the UNISITS acquisition. For the second quarter, UNISITS contributed approximately $16.31 million of sales. The remainder of revenue was derived from the digital city, land & resources, and other business sectors.

The Company's gross profit increased 104.7% to $9.6 million in the second quarter of 2010, compared to $4.7 million in the same period of 2009. Gross margin improved 5.60 percentage points to 39.9% from 34.3% in the first quarter of 2010, though still lower than 48.9% in the same period of prior year. The decrease in gross margin resulted from the consolidation of UNISITS' financials into those of China TransInfo, since UNISITS' business involves more hardware components, which have much lower gross margins than do the products and services of the Company's legacy transportation business. However, in the second quarter, gross margin of UNISITS also improved to 29.7% from 25.4% in the first quarter, while that of legacy business hit a historical high of 61.3%.

Operating expenses were $5.0 million, as compared to $1.8 million in the second quarter of 2009. The increase was primarily due to the Company's expansion initiatives, enhanced research and development efforts as well as higher staffing and professional fees. Notably, the growth of selling expenses was well below the revenue growth rate. Selling expenses increased 48.4% to $0.5 million, or 1.9% of sales in the second quarter of 2010, from $0.3 million, or 3.2% of sales, during the same period of 2009. The decrease in selling expenses as a percentage of sales was primarily because the Company won many contracts from repeat customers due to its technology leadership and reputation, rather than through aggressive sales and marketing efforts.

Operating income increased 60.9% to $4.6 million, as compared to $2.8 million in the second quarter of 2009.

Other income was $0.7 million in the second quarter of 2010, compared to $0.1 million in the second quarter of 2009. The increase was due to subsidy income of $0.7 million in the second quarter of 2010 related to government high technology grants.

Net income attributable to the Company increased 28.9% to $3.6 million, or $0.14 per diluted share, as compared to $2.8 million, or $0.13 per diluted share, in the same period of 2009. Adjusted net income attributable to the Company, excluding non-cash stock based compensation expense and amortization expense of intangibles from acquisitions, increased 41.9% to $4.1 million, or $0.16 per diluted share, as compared to $2.9 million, or $0.13 per diluted share, in the comparable period of 2009. Weighted average diluted shares outstanding increased to 25.1 million shares, from 22.4 million shares in the second quarter of 2009.

         Table 1: CHINA TRANSINFO TECHNOLOGY CORP. AND SUBSIDIARIES

                  RECONCILIATION OF NON-GAAP FINANCIAL DATA

                                             For the three months ended
                                           June 30, 2010      June 30, 2009
                                                    Diluted            Diluted
                                        Net Income    EPS   Net Income   EPS
    Adjusted Amount                      4,073,296    0.16   2,870,742   0.13

    Adjustments
    Amortization of intangible assets
     from acquisitions (1)                  47,100    0.00       4,362   0.00
    Non-cash share based compensation      416,278    0.02      66,737   0.00
    Amount per consolidated statement of
     operations                          3,609,917    0.14   2,799,643   0.13


                                              For the six months ended
                                           June 30, 2010      June 30, 2009
                                                    Diluted            Diluted
                                        Net Income    EPS   Net Income   EPS
    Adjusted Amount                      6,293,896    0.26   4,383,448   0.20

    Adjustments
    Amortization of intangible assets
     from acquisitions (1)                  94,175    0.00       8,721   0.00
    Non-cash share based compensation      830,765    0.03     126,398   0.01
    Amount per consolidated statement of
     operations                          5,368,956    0.22   4,248,329   0.19

    (1) Amortizations of intangible assets from acquisitions for Q1 2010
         includes amortizations of intangible assets from acquisitions of
         China TranWiseway in 2008 and UNISITS in 2009

Six Months Results

Revenue for the six months ended June 30, 2010 increased 204.1% to $48.9 million, as compared to $16.1 million in the same period of 2009. Gross profit expanded 126.3% to $18.1 million from $8.0 million a year ago. Operating income grew 91.6% to $8.2 million from $4.3 million in the first six months of 2009. Net income attributable to the Company increased 26.4% to $5.4 million, or $0.22 per diluted share, as compared to net income of $4.2 million, or $0.19 per diluted share, in the first six months of 2009. Adjusted net income attributable to the Company excluding non-cash expenses increased 43.6% to $6.3 million, or $0.26 per diluted share, as compared to $4.4 million, or $0.20 per fully diluted share, in the first six months of 2009. Weighted average fully diluted shares outstanding increased to 24.1 million shares from 22.4 million shares in the first six months of 2009.

Financial Condition

As of June 30, 2010, cash and cash equivalents totaled $25.2 million, compared to $27.4 million as of December 31, 2009. Working capital increased to $62.5 million, compared to $44.4 million as of December 31, 2009. Stockholders' equity was $95.4 million, compared to $77.8 million as of December 31, 2009. Cash used in operating activities was $11.6 million, primarily the result of an increase in accounts receivable due to increased sales, seasonally slow collections, and an increase in other receivables and certain prepaid expenses. The Company believes these are all seasonal factors and expects cash flow from operations to improve in the second half of 2010.

Business Outlook

"There are vast business opportunities available in China's transportation information industry, due in large part to the government's emphasis on leveraging technology to manage the country's overwhelming traffic flow. The acquisition of UNISITS further strengthens our leading position in the Intelligent Transportation Systems (ITS) market and we look forward to increasing penetration in the highway segment while consolidating our foothold in the urban transportation market," commented Mr. Xia. "Our new fleet management business represents a largely untapped commercial market that enjoys strong support from the government. We believe we are well positioned to emerge as a major player in this evolving market."

For fiscal 2010, the Company reaffirms its previous guidance for revenue of approximately $120 million and adjusted net income of approximately $18 million. Historically, the Company sees lower sales during the first half than the second half of the year due to governmental seasonal budgeting activities.

Conference Call

The Company will host a conference call on Friday, August 13, 2010 at 8:00 a.m. Eastern Time to discuss its financial results for the second quarter ended June 30, 2010.

To participate in the live conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: (877) 406-6165. International callers should dial (706) 902-4263. When prompted by the operator, enter conference pass code 895 061 40.

A replay will be available for 14 days starting on Friday, August 13, 2010 at 9:00 a.m. Eastern Time and can be accessed by dialing (800) 642-1687. International callers should dial (706) 645-9291. When prompted, enter conference pass code 895 061 40.

Use of Non-GAAP Financial Information

GAAP results for the three and six months ended June 30, 2010 and 2009 include non-cash share based compensation and amortization of intangible assets from acquisitions. To supplement the Company's condensed consolidated financial statements presented on a GAAP basis, the Company has provided non-GAAP financial information, which are adjusted net income and adjusted earnings per share, excluding the impact of these items in this release. The Company's management believes that these non-GAAP measures provide investors with a better understanding of how the results relate to the Company's historical performance. The additional adjusted information is not meant to be considered in isolation or as a substitute for GAAP financials. The adjusted financial information that the Company provides also may differ from the adjusted information provided by other companies. Management believes that these adjusted financial measures are useful to investors because they exclude non-cash expenses that management excludes when it internally evaluates the performance of the Company's business and makes operating decisions, including internal budgeting, and performance measurement, as these measures provide a consistent method of comparison to historical periods. As a result, the provision of these adjusted measures allows investors to evaluate the Company's performance using the same methodology and information as that used by the Company's management. Moreover, management believes that these adjusted measures reflect the essential operating activities of the Company. Non-GAAP measures are subject to inherent limitations because they do not include all of the expenses included under GAAP and because they involve the exercise of judgment of which charges are excluded from the adjusted financial measure. However, the Company's management compensates for these limitations by providing the relevant disclosure of the items excluded. A reconciliation of adjustments to GAAP results appears in Table 1 in this release.

About China TransInfo

China TransInfo, through its affiliate, China TransInfo Technology Group Co., Ltd., (the "Group Company") and the Group Company's PRC operating subsidiaries, is primarily focused on providing transportation information services and comprehensive solutions based on Geographic Information System (GIS) technologies. The Company aims to become the largest transportation information products and comprehensive solutions provider, as well as the largest real time transportation information platform operator and provider in China. In addition, the Company is developing its transportation system to include Electronic Toll Collection technology. As the co-formulator of several transportation technology national standards, the Company owns software copyrights for 89 software products and has won 5 of the 10 model cases sponsored by the PRC Ministry of Communications. The Company's affiliation with Peking University provides the Company access to the University's GeoGIS Research Laboratory, including over 30 Ph.D. researchers. As a result, the Company is playing a key role in setting the standards for electronic transportation information solutions. For more information, please visit the Company's website at http://www.chinatransinf... .

Safe Harbor Statement

This press release contains certain statements that may include "forward looking statements". All statements other than statements of historical fact included herein are "forward-looking statements". These forward looking statements are often identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions, involve known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company's periodic reports that are filed with the Securities and Exchange Commission and available on its website (http://www.sec.gov). All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.

                          -FINANCIAL TABLES FOLLOW-



         Table 2: CHINA TRANSINFO TECHNOLOGY CORP. AND SUBSIDIARIES

                   Condensed Consolidated Income Statement

                               Three Months Ended       Six Months Ended
                                     June 30,                June 30,
                                2010         2009        2010          2009

    Net sales                $24,045,906  $9,577,921  $48,933,381  $16,091,316
    Cost of sales             14,463,937   4,895,845   30,818,236    8,086,742
    Gross profit               9,581,969   4,682,076   18,115,145    8,004,574
    Total operating Expenses   4,999,719   1,834,616    9,867,176    3,700,335
    Income from operations     4,582,250   2,847,460    8,247,969    4,304,239
    Non-operating income
     (expense):
     Interest income              46,442      18,744       76,928       32,483
     Interest expense           (105,457)    (44,268)    (203,311)     (89,989)
     Subsidy income              727,581      89,982      754,024      119,284
     Other expense, net          (17,918)      7,063      (74,829)       6,868
      Total non-operating
       income                    650,648      71,521      552,812       68,646
    Income before income taxes,
     non-controlling interests,
     and gain on equity
     investments in affiliates 5,232,898   2,918,981    8,800,781    4,372,885
    Income taxes:                464,027      24,203      839,823       24,082
    Net income before non-
     controlling interests
     and gain on equity
     investments in
     affiliates net income     4,768,871   2,894,778    7,960,958    4,348,803
    Gain (loss) on equity
     investments in
     affiliates due to
     proportional shares of
     the affiliates
     net income                   57,206          --     (301,589)          --
    Net income before non-
     controlling interests     4,826,077   2,894,778    7,659,369    4,348,803
     Non-controlling
      interests in net
      income of subsidiary     1,216,160      95,135    2,290,413      100,474
    Net income                $3,609,917  $2,799,643   $5,368,956   $4,248,329
     Weighted average
      number of shares of
      outstanding:
      Basic                   25,051,414  22,215,551   24,031,595   22,201,432
      Diluted                 25,096,523  22,394,557   24,088,927   22,376,216
     Earnings per share -
      Basic                        $0.14       $0.13        $0.22        $0.19
      Diluted                      $0.14       $0.13        $0.22        $0.19
     Comprehensive income
     Net income
      including
      noncontrolling
      interest                $4,826,077  $2,894,778   $7,659,369   $4,348,803
     Translation
      adjustments                340,372      60,485      341,398     (105,465)
     Comprehensive income     $5,166,449  $2,955,263   $8,000,767   $4,243,338
     Comprehensive income
      attributable to
      noncontrolling interest $1,216,160     $95,135   $2,290,413     $100,474
     Comprehensive income
      attributable to CTFO    $3,950,289  $2,860,128   $5,710,354   $4,142,864



          Table 3: CHINA TRANSINFO TECHNOLOGY CORP. AND SUBSIDIARIES

                     Condensed Consolidated Balance Sheets

                                                      June 30,     December 31,
                                                        2010           2009
                                                     (Unaudited)

    ASSETS
    Cash and cash equivalents                        $25,224,837   $27,400,420
    Restricted cash                                    2,931,719     1,591,076
    Accounts receivable, net of allowance for
     doubtful accounts of $45,071 and $38,209,
     respectively                                     22,330,831    14,968,778
    Inventories                                          539,611       482,286
    Costs and estimated earnings in excess of
     billings on incompleted contracts                35,672,455    33,853,708
    Prepaid expenses and other current assets         12,877,524     5,871,997
    Other receivables                                 10,048,905     8,416,096
    Deferred income tax assets                            24,769        28,715
    Total current assets                             109,650,651    92,613,076
    Property and equipment, net                       10,055,682    10,541,486
    Long-term investments                              6,996,939     8,027,122
    Intangible assets, net                             5,302,110     4,494,781
    Goodwill                                          10,020,447     9,979,631
    Other assets                                         976,674       826,671

    Total assets                                    $143,002,503  $126,482,767

    LIABILITIES AND
     STOCKHOLDERS' EQUITY
    Accounts payable                                 $23,649,449   $20,728,539
    Short-term borrowings from banks                   8,911,650     7,481,700
    Billings in excess of costs and estimated
     earnings on incompleted contracts                11,100,255    17,021,936
    Accrued expenses and other current liabilities     3,510,331     3,022,140
    Total current liabilities                         47,171,685    48,254,315
    Other long-term liabilities                          389,756       389,489

    Total liabilities                                 47,561,441    48,643,804

    Commitments and contingencies                             --            --

    Stockholders' equity
    Preferred stock, $0.001 par value per share,
     authorized 10,000,000 shares, no shares
     issued and outstanding at June  30, 2010 and
     December 31, 2009                                        --            --
    Common stock, $0.001 par value per share,
     authorized 150,000,000 shares, issued and
     outstanding 25,245,069 and 22,452,745 shares,
     respectively                                         25,245        22,453
    Additional paid-in capital                        43,222,562    25,253,666
    Retained earnings                                 37,317,279    31,948,323
    Non-controlling interests                         12,419,532    18,499,475
    Accumulated other comprehensive income             2,456,444     2,115,046

    Total stockholders' equity                        95,441,062    77,838,963

    Total liabilities and stockholders' equity      $143,002,503  $126,482,767



         Table 4: CHINA TRANSINFO TECHNOLOGY CORP. AND SUBSIDIARIES

         Condensed Consolidated Statements of Cash Flows (unaudited)

                                                      Six Months Ended June 30,
                                                           2010        2009

    CASH FLOWS FROM OPERATING
     ACTIVITIES:
    Net income                                          $5,368,956  $4,248,329
    Adjustments to reconcile net income to net cash
     provided by operating activities:
      Non-controlling interests                          2,290,413     100,474
      Depreciation and amortization expense              1,021,829     491,752
      Stock-based compensation                             843,481     126,398
      Gain on equity investments in affiliates due
       to proportional shares of the affiliates
       net income                                          301,589          --
      Loss on disposal of property and equipment             6,370          --
      Allowance for doubtful accounts                        6,677          --
      (Increase) Decrease in assets:
        Restricted cash                                 (1,328,611)   (371,248)
        Accounts receivable                             (7,277,274) (1,452,048)
        Inventories                                        (55,123)    (38,898)
        Prepaid expenses and other current assets       (3,950,462)    606,919
        Other receivables                               (1,596,043)    (63,283)
        Cost of estimated earnings in
         excess of billings on incompleted contracts    (1,673,328) (4,938,381)
        Other assets                                    (2,451,029)         --
      Decrease (Increase) in liabilities:
        Accounts payable                                 2,824,509    (882,636)
        Billings in excess of costs and
         estimated on incompleted contracts             (5,966,489)   (365,051)
        Accrued expenses and other current liabilities      77,457    (833,370)
    Net cash used in operating activities              (11,557,078) (3,371,043)

    CASH FLOWS FROM INVESTING ACTIVITIES:
      Increase in other non-current asset                       --     (38,081)
      Proceeds from disposal of property and equipment       5,520          --
      Purchases of property and equipment                 (420,344) (1,204,584)
      Disposal of property and equipment                    11,889          --
      Payments for acquisition of companies               (258,761)   (475,620)
      Dividends from subsidiaries'
       and variable interest entity                         50,973          --
      Purchases of intangible assets                      (888,986) (1,414,756)
    Net cash used in investing activities               (1,499,709) (3,133,041)

    CASH FLOWS FROM FINANCING
     ACTIVITIES:
      Proceeds from short-term borrowings                4,474,045          --
      Payments of short-term borrowings                 (3,080,490)         --
      Non-controlling interest
       shareholders' capital contribution                       --      87,960
      Proceeds from issuing common shares               10,000,000          --
      Payments to related parties                               --    (449,153)
      Payments of transaction costs
       related to shares issuance                               --     (32,500)
      Payments to third parties for stock financing       (610,439)         --
    Net cash used in financing activities               10,783,116    (393,693)

    Effect of foreign currency translation                  98,088     (16,643)

    Net decrease in cash and cash equivalents           (2,175,583) (6,914,420)
    Cash and cash equivalents - beginning of period     27,400,420  16,122,464
    Cash and cash equivalents - end of period          $25,224,837  $9,208,044

    Supplemental disclosures of cash flow information:
      Interest paid                                        $90,874     $89,989
      Income taxes paid                                   $447,795     $20,364


    For more information, please contact:

    Company Contact:
     Ms. Fan Zhou, Investor Relations Director
     China TransInfo Technology Corp.
     Email: ir@ctfo.com
     Tel  +86-10-5169-1657

    Investor Relations Contact:
     Mr. Athan Dounis, Account Manager
     Email: athan.dounis@ccgir.com
     Tel:   +1-646-213-1916

     Mr. Crocker Coulson, President
     Email: crocker.coulson@ccgir.com
     Tel: +1-646-213-1915

     CCG Investor Relations
     Web: http://www.ccgirasia.com

3rd Quarter Revenue of $31.9 Million Up 64% From the Three Month Period Ended June 30, 2009

3rd Quarter Revenue Improves Across All Business Segments Compared to the Three Month Period Ended June 30, 2009

3rd Quarter Gross Margins Improve to 6.1% From (1.6%) in Three Month Period Ended June 30, 2009

China Direct Industries, Inc. ("China Direct Industries") (NASDAQ:CDII - News), a U.S. owned holding company operating in China in two core business segments, pure magnesium production and distribution of basic materials, announced today its financial results for the third quarter of our fiscal 2010 for the three months ended June 30, 2010.

Financial Highlights

For the third quarter of fiscal 2010 total revenues increased to $31.9 million, a 64% increase as compared to total revenues of $19.5 million for the three month period ended June 30, 2009. Our third quarter gross profit reached $2.0 million as compared to a loss of ($308,000) for the three month period ended June 30, 2009. Our operations resulted in a net loss for the third quarter of fiscal 2010 of ($1.1 million) inclusive of $420,000 in non-cash compensation. This represents a substantial improvement from the third quarter of fiscal 2009 where we recorded a net loss of ($2.9 million). Our loss per basic and diluted share narrowed to ($0.04) from the ($0.12) recorded in the three month period ended June 30, 2009. Operating revenue, gross margins, and gross profit increased across all business segments reflecting a continued improvement in each of the segments. For the first nine months of fiscal 2010, revenue totaled $77.6 million with a net loss of ($412,000) inclusive of $1.1 million in non-cash compensation compared to revenues of $79 million with a net loss of ($8.8) million for the first nine months of fiscal 2009.

Balance Sheet

At June 30, 2010, total assets were $83.7 million and shareholder equity was $51.0 million with 31.0 million shares outstanding. At September 30, 2009, total assets were $80.5 million and shareholder equity of $46.1 million with 27.2 million shares outstanding. At June 30, 2010 cash and cash equivalents were $14.4 million and working capital was $37.1 million. At September 30, 2009 cash and cash equivalents were $12.9 million and working capital was $31.0 million.

Financial Outlook and Conference Call

The overall environment in our various segments continue to improve especially in consulting where we have signed two new clients and anticipate the consummation of a number of business transactions with them in the fourth quarter. The gross margin and revenue improvements trend in our magnesium segment continued in the third quarter with gross margins improving to 4.3%, a 19% increase from gross margins of 3.6% recorded in the second quarter of fiscal 2010. We anticipate this trend will continue as additional production from our restarted facilities is brought online in the coming quarters and we broadened our magnesium product offerings with the integration of Ruiming Magnesium into our IMG brand. Our trading operations are finalizing several purchase and sale agreements for various metal ore for delivery into China from South America and Mexico with shipments expected to begin in the fourth quarter of fiscal 2010. While we remain optimistic regarding our outlook for the remainder of fiscal 2010, when taking all of these factors into consideration, we now see our net income ranging between $6 to $8 million and our revenue ranging from between $120 and $130 million. We will further discuss our operating results as well as our outlook for the remainder of fiscal 2010 during the conference call today, August 12, 2010 at 5:00 PM EST.

Commenting on the third quarter, Dr. James Wang, Chairman and CEO of China Direct Industries, Inc., stated, "Our results for the third quarter reflect a significant improvement in overall operating revenue across all of our business segments as compared to the same period in fiscal 2009. Additionally we are encouraged by the sequential improvement in our magnesium segment where both revenue and gross margins have improved significantly as we prepare to reinitiate operations at several facilities in response to signs of increasing demand. We believe our consulting operations are poised to add a substantial contribution to our bottom line performance in the near term as we recently added two new clients and we anticipate the efforts we have made in our international commodity trading business will also begin to demonstrate positive results. As we head into the fourth quarter of fiscal 2010 and into fiscal 2011, we maintain a strong balance sheet with significant cash and negligible debt in an improving environment across all our business segments."

China Direct Industries Conference Call to discuss the Company's financial results for the third quarter of fiscal 2010.

The conference call will take place at 5:00 p.m. EST on Thursday August 12, 2010. Anyone interested in participating should call (877) 407-8035 if calling within the United States or (201) 689-8035 if calling internationally approximately 5 to 10 minutes prior to 5:00 p.m. Participants should ask for the China Direct Industries Third Quarter 2010 Financial Results conference call.

This call is being webcast and can be accessed at China Direct Industries website at http://www.investorcalen.... The playback of the webcast can be accessed through either site until August 12, 2011. To access the webcast, you will need to have the Windows Media Player on your desktop. For the free download of the Media Player, please visit:
Noncontrolling interests 18,137,919 18,249,198
------------- -------------
Total equity 69,120,166 64,324,411
------------- -------------
Total liabilities and equity $ 83,725,105 $ 80,515,770
============= =============

The notes to our unaudited consolidated financial statements are an
integral part of these unaudited financial statements.





CHINA DIRECT INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

For the Three For the Nine
Months Ended June 30, Months Ended June 30,
------------------------ ------------------------
2010 2009 2010 2009
----------- ----------- ----------- -----------
Revenues $29,987,583 $17,468,762 $71,021,737 $58,876,248
Revenues-related
parties 1,956,931 2,007,621 6,545,831 20,242,695
----------- ----------- ----------- -----------
Total revenues 31,944,514 19,476,383 77,567,568 79,118,943
----------- ----------- ----------- -----------
Cost of revenues 29,984,123 19,784,135 71,788,808 79,124,046
----------- ----------- ----------- -----------
Gross profit
(loss) 1,960,391 (307,752) 5,778,760 (5,103)
----------- ----------- ----------- -----------

Operating expenses:
Selling, general,
and administrative 3,304,123 2,711,369 8,566,932 8,844,318
----------- ----------- ----------- -----------
Operating loss (1,343,732) (3,019,121) (2,788,172) (8,849,421)
----------- ----------- ----------- -----------
Other (expense) income:
Other (expense)
income: (43,961) 58,364 4,524 125,192
Interest income
(expense) 37,332 (86,856) 40,944 (98,240)
Realized gain (loss)
on sale of
marketable
securities 33,155 (79,221) 2,134,344 (410,750)
Realized loss on
other than
temporary
impairment - - - (7,521,088)
Realized gain on
sale subsidiaries - - - 238,671
----------- ----------- ----------- -----------
Total other
income (expense) 26,526 (107,713) 2,179,812 (7,666,215)
----------- ----------- ----------- -----------
Loss from continuing
operations before
income taxes (1,317,206) (3,126,834) (608,360) (16,515,636)
Income tax (expense)
benefit (7,378) (13,056) (62,302) 166,414
----------- ----------- ----------- -----------
Loss from
continuing
operations, net
of income taxes (1,324,584) (3,139,890) (670,662) (16,349,222)
----------- ----------- ----------- -----------
Loss from
discontinued
operations - (574,217) - (2,111,040)
----------- ----------- ----------- -----------
Net loss (1,324,584) (3,714,106) (670,662) (18,460,262)
----------- ----------- ----------- -----------
Net loss
attributable to
noncontrolling
interests-continuing
operations 240,167 545,084 258,913 2,934,573
Net loss
attributable to
noncontrolling
interests-
discontinued
operations - 281,366 - 1,034,411
----------- ----------- ----------- -----------
Net loss
attributable to
China Direct
Industries, Inc. (1,084,417) (2,887,657) (411,749) (14,491,278)
----------- ----------- ----------- -----------



Deduct dividends on
Series A Preferred
Stock:
Preferred stock
dividend (20,125) (33,691) (80,433) (74,161)
----------- ----------- ----------- -----------
Net loss attributable
to common stockholders (1,104,542) (2,921,348) (492,182) (14,565,439)
=========== =========== =========== ===========

Basic and diluted
income (loss) per
common share
Basic $ (0.04) $ (0.12) $ (0.02) $ (0.61)
=========== =========== =========== ===========
Diluted (0.04) (0.12) (0.02) (0.61)
=========== =========== =========== ===========
Basic weighted
average common
shares outstanding 28,828,887 24,168,640 28,940,495 23,731,020
=========== =========== =========== ===========
Diluted weighted
average common
shares outstanding 28,828,887 24,168,640 28,940,495 23,731,020
=========== =========== =========== ===========

The notes to our unaudited consolidated financial statements are an
integral part of these unaudited financial statements.

DISCLOSURE NOTICE:

 
--  Fluctuations in the pricing and availability of magnesium and in levels
    of customer demand.
--  Changes in the prices of magnesium and magnesium-related products.
--  Our ability to implement our acquisition strategy of growing our
    business through increased magnesium production capacity and
    acquisitions.
--  Fluctuations in the cost or availability of coke gas and coal.
--  Loss of orders from any of our major customers.
--  Our dispute with the noncontrolling shareholders of Pan Asia
    Magnesium that resulted in our establishment of a reserve for loss and
    the possibility of litigation and adverse outcomes in such litigation.
--  The value of the equity securities we accept as compensation is subject
    to adjustment which could result in losses to us in future periods.
--  Our ability to effectively integrate our acquisitions and to manage our
    growth and our inability to fully realize any anticipated benefits of
    acquired business.
--  Our need for additional financing which we may not be able to obtain on
    acceptable terms, the dilutive effect additional capital raising
    efforts in future periods may have on our current shareholders and the
    increased interest expense in future periods related to additional debt
    financing.
--  Our dependence on certain key personnel.
--  Difficulties we have in establishing adequate management, cash, legal
    and financial controls in the PRC.
--  Our ability to maintain an effective system of internal control over
    financial reporting.
--  The lack various legal protections in certain agreements to which we
    are a party and which are material to our operations which are
    customarily contained in similar contracts prepared in the United
    States.
--  Potential impact of PRC regulations on our intercompany loans.
--  Our ability to assure that related party transactions are fair to our
    company.
--  Yuwei Huang, our executive vice president - magnesium, director and an
    officer of several of our magnesium subsidiaries and his daughter Lifei
    Huang is also an owner and executive officer of several companies which
    directly compete with our magnesium business.
--  The impact of a loss of our land use rights.
--  Our ability to comply with the United States Foreign Corrupt Practices
    Act which could subject us to penalties and other adverse consequences.
--  Limits under the Investment Company Act of 1940 on the value of
    securities we can accept as payment for our business consulting
    services.
--  Our acquisition efforts in future periods may be dilutive to our then
    current shareholders.
--  The risks and hazards inherent in the mining industry on the operations
    of our basic materials segment.
--  Our inability to enforce our rights due to policies regarding the
    regulation of foreign investments in China.
--  The impact of environmental and safety regulations, which may increase
    our compliance costs and reduce our overall profitability.
--  The effect of changes resulting from the political and economic
    policies of the Chinese government on our assets and operations
    located in the PRC.
--  The impact of Chinese economic reform policies.
--  The influence of the Chinese government over the manner in which our
    Chinese subsidiaries must conduct our business activities.
--  The impact on future inflation in China on economic activity in China.
--  The impact of any recurrence of severe acute respiratory syndrome, or
    SARS, or another widespread public health problem.
--  The limitation on our ability to receive and use our revenues
    effectively as a result of restrictions on currency exchange in China.
--  Recent substantial declines in the market price for shares of our
    common stock and continued highly volatile and wide market price
    fluctuations.

 

Contact:
Contact Information:
For the Company:
China Direct Industries, Inc.
Richard Galterio or Lillian Wong
Investor Relations
Phone: 1-877-China-57
Email:
richard.galterio@cdii.net
lillian.wong@cdii.net

    SECOND QUARTER 2010 FINANCIAL SUMMARY:
    -- Total revenue increased 37% quarter-over-quarter and 341%
       year-over-year to US$71.4 million, exceeding the Company's previously
       guided range of US$65-68 million.
    -- Gross profit was US$31.9 million compared to US$23.7 million in the
       previous quarter and US$3.8 million in 2Q09. Gross margin was 44.6%
       compared to 45.5% in the previous quarter and 23.6% in 2Q09.
    -- Cash flows from operations were US$35.2 million, compared with
       US$28.7 million in the previous quarter, and compared with
       US$-0.8 million in 2Q09.
    -- GAAP net income was US$11.1 million, compared with US$6.6 million in
       the previous quarter and a net loss of US$13.1 million in 2Q09.
    -- GAAP net income per basic and diluted ADS was US$0.24 and US$0.21,
       respectively, an improvement from US$0.14 and $0.13 per basic and
       diluted ADS, respectively, in 1Q10 and a loss of US$0.29 per basic and
       diluted ADS in 2Q09.
    -- Non-GAAP net income was US$17.7 million, compared to US$8.7 million in
       1Q10 and a net loss of US$7.5 million in 2Q09. Non-GAAP net income per
       diluted ADS was US$0.34, an improvement from US$0.17 per diluted ADS in
       1Q10 and a loss of US$0.16 per diluted ADS in 2Q09.

BUSINESS HIGHLIGHTS:

Commenting on the results, Spreadtrum's President and CEO, Dr. Leo Li said, "We maintained our positive momentum in the second quarter of 2010 and achieved our best quarterly results in the history of our company in terms of revenue and profitability. Revenues for the quarter rose 341% year-over-year to $71.4 million and net income grew 69% from the prior quarter to $11.1 million as new and existing customers continued to recognize the value and quality of our products. Our low cost solutions with high quality and attractive features are enabling us to gain market share in both the GSM and TD markets. At the same time, we further expanded our operating and net margins during the second quarter.

"Looking ahead to the second half of 2010, we are confident that our solid and growing base of loyal customers, the expected increase in revenue contribution from both domestic and international sales, coupled with favorable trends in the TD market, and our plans to deepen our product portfolio, will support continued growth in the second half of the year. For the third quarter 2010, we expect revenue to be in the range of $88-96 million with flat or slightly lower gross margins on a sequential basis. Although we are facing toughening competition as we gain market shares in both GSM and TD business, we believe that our value proposition and ability to execute on our key initiatives will support healthy and sustainable margin levels that are in line with our long-term targets."

Further commenting on the Q2 financial results, Shannon Gao, Spreadtrum CFO, said, "As we further develop and expand our business, we anticipate an increase in R&D expenses in the second half of the year while continuing to maintain effective controls over our operating expenses to better align our bottom-line."

SECOND QUARTER FISCAL YEAR 2010 FINANCIAL REVIEW:

Revenue

Revenue in 2Q10 totaled US$71.4 million, up from US$52.1 million in 1Q10 and US$16.2 million in 2Q09.

Unit shipments of 2G/2.5G semiconductors realized in 2Q10 increased 29.6% sequentially and 250.6% year-over-year. Unit shipments of 3G semiconductors realized in 2Q10 increased 95.3% sequentially and 1,664.9% year-over-year.

Gross Profit and Margin

Gross profit for the quarter was US$31.9 million, up 34% from US$23.7 million in 1Q10 and up from US$3.8 million in 2Q09. Gross margin for the quarter was 44.6%, down from 45.5% in 1Q10 and up from 23.6% in 2Q09. Non-GAAP gross margin, adjusted to exclude share-based compensation, was 44.7%, a sequential decrease from 45.7% in 1Q10 and a year-over-year increase from 24.0% in 2Q09.

The average selling price per unit of 2G/2.5G baseband and Radio Frequency ("RF") bundle semiconductors in 2Q10 decreased 7.8% sequentially and was down 0.7% year-over-year. The average selling price per unit of 3G baseband and RF bundle semiconductors in 2Q10 decreased 22.1% sequentially and 39.0% year-over-year. Overall gross margin maintained fairly stable sequentially due to increased volume in sales of higher margin products.

Cost of revenue in 2Q10 totaled US$39.6 million, representing an increase of 39% from the previous quarter and up 219% from 2Q09 levels, attributable to an increase in sales across all major product lines.

Operating Expense and Margin

The Company's operating margin for the quarter was 17.7%, compared to 14.3% in the previous quarter and negative 85.7% in 2Q09. The sequential and year-over-year improvements in operating margin were primarily driven by an increase in sales and gross profit, also by an increase in government subsidies, which were recorded as a reduction of R&D expenses, partially offset by an impairment loss of intangible assets due to technological obsolescence and change in business strategy. Non-GAAP operating margin, adjusted to exclude share-based compensation expense and impairment loss of intangible assets was 26.9% in 2Q10, up from 18.3% in 1Q10 and negative 51.2% in 2Q09.

Total operating expenses in 2Q10, including selling, general and administrative (SG&A) expenses and research and development (R&D) expenses, were US$19.2 million, representing an increase from US$16.2 million in 1Q10 and an increase from US$17.7 million in 2Q09. The sequential and year-over-year rises in operating expenses were primarily due to an impairment loss of intangible assets, partially offset by a decrease in share-based compensation and an increase in government subsidies, which were recorded as a reduction of R&D expenses.

R&D expenses increased 24.7% sequentially and increased 84.6% year-over-year to US$14.96 million in 2Q10. The sequential increase was primarily attributable to an impairment loss of intangible assets, partially offset by an increase in earned government subsidies, which were recorded as a reduction of R&D expenses. The year-over-year increase was mainly due to the aforementioned reasons, as well as increases in employee compensation expense.

SG&A expenses were flat on a sequential basis and decreased 55.7% year-over-year to US$4.26 million in 2Q10. The year-over-year decrease was driven primarily by a decline in share-based compensation attributable to SG&A expenses.

Non-Operating Income

In 2Q10, the Company recorded interest income of US$0.8 million, up from both the previous quarter and 2Q09 as a result of investing a higher balance of cash. Other income (net) in 2Q10 was a gain of US$0.4 million, compared to a loss of US$0.1 million in 1Q10 and a gain of US$0.2 million in 2Q09. The sequential and year-over-year increases were primarily due to foreign exchange gain.

Net Income/Loss

The Company's net income totaled US$11.1 million in 2Q10, compared to US$6.6 million in 1Q10 and a net loss of US$13.1 million in 2Q09. The sustained profitability in the first half of 2010 was primarily due to increased sales of product lines and net profit margins coupled by stable gross profit margin. Net profit margin was 15.6%, up from 12.6% in 1Q10 and up from negative 80.7% in 2Q09. Basic and diluted income per ADS was US$0.24 and US$0.21, respectively, in 2Q10, compared to US$0.14 and US$0.13, respectively, in 1Q10 and a loss of US$0.29 per basic and diluted ADS in 2Q09.

Excluding share-based compensation expenses and impairment loss of intangible assets, the Company's non-GAAP net income for 2Q10 was US$17.7 million, up from a non-GAAP net income of US$8.7 million in 1Q10 and up from a non-GAAP net loss of US$7.5 million in 2Q09. Diluted non-GAAP income per ADS in 2Q10 was US$0.34, compared with US$0.17 per ADS in the prior quarter and a non-GAAP loss of US$0.16 per diluted ADS in 2Q09.

Balance Sheet and Cash Flow

As of June 30, 2010, the total balance of cash and cash equivalents and term deposit with maturity dates over 90 days was 147.1 million, an increase of 31.9 million from 115.2 million as of March 31, 2010. The increase primarily resulted from a rise in advances from customers, an increase of 2Q2010 net profit, and an increase of government subsidies, partially offset by an increase in inventory. The total balance of restricted cash which is available to use when the related expenses occurred and appropriate obligations are satisfied was 18.9 million, compared with 18.7 million as of March 31, 2010. In 2Q10, the Company generated US$35.2 million in cash from operating activities and used $1.7 million cash on property and equipment as well as US$2.5 million toward intangible asset acquisitions.

Accounts receivable and notes receivable (collectively, "A/R") decreased by US$2.0 million from US$3.8 million as of March 31, 2010 to US$1.8 million as of June 30, 2010. Average A/R days decreased sequentially from 11 days to 4 days as a result of an increase of advances from customers and shorter cash collection period upon customer acceptance. Inventory as of June 30, 2010 was US$49.6 million, an increase of US$12.5 million from March 31, 2010. This increase resulted from a rise in deferred costs included within inventories, which consisted of products shipped to customers where the rights and obligations of ownership had passed to the customers, but revenue had not yet been recognized due to pending customer acceptance. Inventory days were 100 days based on the average inventory amount of this quarter as a result of the higher inventory balance, partially offset by higher sales. Total assets as of June 30, 2010 were US$286.3 million, up US$38.7 million from US$247.6 million as of March 31, 2010. The increase in total assets was primarily attributable to increases of US$32.1 million in cash and US$12.5 million in inventory, partially offset by a decrease of US$2 million in accounts receivable and notes receivable, and a decrease of $4.5 million of intangible assets.

Current liabilities increased from US$73.1 million as of March 31, 2010 to US$97.7 million as of June 30, 2010, primarily due to the increases of US$15.3 million in advance from customers, accrued expenses and other current liabilities (mainly comprise increase of US$3.0 million in government subsidies, US$2.4 million in accrued rebate to customers, US$2.3 million accrued employee compensation) and US$2.0 million in income tax payable, partially offset by a decrease of US$1.9 million in accounts payable. Long-term liabilities as of June 30, 2010 were US$49.6 million, compared to US$49.3 million as of March 31, 2010.

BUSINESS OUTLOOK:

Spreadtrum currently expects revenue for the third quarter of 2010 to be in the range of US$88-96 million with flat or slightly lower gross margin on a sequential basis.

WEBCAST OF CONFERENCE CALL:

The Company's senior management will host a conference call at 9:00 pm (Eastern) / 6:00 pm (Pacific) on Thursday, August 12, 2010, which is 9:00 am (Hong Kong) on Friday, August 13, 2010 to discuss the financial results and recent business activities. The conference call may be accessed by calling:

                            Toll Free                  Toll
    United States           +1-866-700-0161            +1-617-213-8832
    China                   10-800-130-0399
    South China             China Telecom
                            10-800-130-0399
                            China Netcom
                            10-800-852-1490
    North China             China Telecom
                            10-800-152-1490
    Hong Kong               800-96-3844
    United Kingdom          00-800-280-02002
    Participant Passcode    "SPRD" or "Spreadtrum"

A telephone replay will be available shortly after the call until August 19, 2010 at (US Toll Free) +1-888-286-8010 or (US Toll) +1-617-801-6888. Passcode: 27065058.

A live webcast of the conference call and replay will be available in the investor relations section of the Company's website.

DISCUSSION OF NON-GAAP FINANCIAL MEASURES:

In addition to disclosing financial results prepared in accordance with US GAAP, the Company's earnings release contains non-GAAP financial measures that exclude the effects of share-based compensation and impairment loss of intangible assets. The non-GAAP financial measures used by management and disclosed by the Company exclude the income statement effects of all forms of share-based compensation and impairment loss of intangible assets.

The non-GAAP financial measures disclosed by the Company should not be considered a substitute for financial measures prepared in accordance with US GAAP. The financial results reported in accordance with US GAAP and reconciliation of GAAP to non-GAAP results should be carefully evaluated. The non-GAAP financial measures used by the Company may be prepared differently from and, therefore, may not be comparable to similarly titled measures used by other companies.

The Company provides the presentation of non-GAAP gross margin, non-GAAP operating margin, non-GAAP net income (loss), and non-GAAP diluted earnings per ADS, all excluding share-based compensation expenses and impairment loss of intangible assets. The Company believes that these non-GAAP financial measures provide important supplemental information to management and investors regarding financial and business trends relating to the Company's financial condition and results of operations. The non-GAAP diluted earnings per ADS are calculated by dividing non-GAAP net income (loss) by the US GAAP weighted average diluted shares outstanding.

                       Spreadtrum Communications, Inc.
                  Condensed Consolidated Income Statements
     (in thousands of US dollars, except per share data and percentages)
                                (unaudited)

                                      Three months ended
                                 June 30,   March 31,   June 30,  Change from
                                  2009        2010        2010    2Q09   1Q10

    Revenue                      16,218      52,113      71,448   341%    37%
    Cost of revenue              12,396      28,410      39,585   219%    39%
    Gross profit                  3,822      23,703      31,863   734%    34%

    Operating expenses
      Research & development      8,100      11,990      14,955    85%    25%
      Selling, general &
       administrative             9,618       4,251       4,263   (56%)    0%
    Total operating expenses     17,718      16,241      19,218     8%    18%
    Operating income (loss)     (13,896)      7,462      12,645  (191%)   69%

    Non-operating income
     (expense)
      Interest income               334         609         754   125%    24%
      Interest expense              (66)       (696)       (633)  852%    (9%)
      Other income (expense),
       net                          232        (124)        378    63%  (405%)
    Total non-operating
     income (expense)               500        (211)        499     0%  (337%)
    Income (loss) before tax
     and equity in loss of
     affiliates                 (13,396)      7,251      13,144  (198%)   81%
    Income tax
     expense(benefit)              (306)        583       1,988  (750%)  241%
    Equity in loss of
     affiliates, net of
     taxes                           --         (82)        (29)    --   (65%)
    Net income (loss)           (13,090)      6,586      11,127  (185%)   69%

    Income (loss) per ADS,
     basic                        (0.29)       0.14        0.24  (183%)   71%
    Income (loss) per ADS,
     diluted                      (0.29)       0.13        0.21  (172%)   62%

    Margin analysis:
    Gross margin                  23.6%       45.5%       44.6%
    Operating margin             (85.7%)      14.3%       17.7%
    Net margin                   (80.7%)      12.6%       15.6%

    Weighted average ADS
     equivalent: (1)
    Basic                    44,606,747  46,539,706  46,990,866
    Diluted                  44,606,747  50,424,925  51,825,499
    ADS equivalent
     outstanding at end of
     period                  44,836,196  46,722,120  47,233,651

    (1) Assumes all outstanding ordinary shares are represented by ADSs. Each
    ADS represents three ordinary shares.



                       Spreadtrum Communications, Inc.
                       Consolidated Income Statements
         (in thousands of US dollars, except per share data and percentages)
                                   (unaudited)

                                                  Six months ended
                                               June 30,     June 30,
                                                 2009         2010      Change
    Revenue                                    $24,434      $123,562     406%
    Cost of revenue                             19,018        67,996     258%
    Gross profit                                 5,416        55,566     926%

    Operating expenses
      Research & development                    15,884        26,945      70%
      Selling, general & administrative         12,991         8,514     (34%)
    Total operating expenses                    28,875        35,459      23%
    Operating income (loss)                    (23,459)       20,107    (186%)

    Non-operating income (expense)
      Interest income                              578         1,363     136%
      Interest expense                            (109)       (1,329)  1,119%
      Other income, net                            648           254     (61%)
    Total non-operating income                   1,117           288     (74%)
    Income (loss) before tax and equity in
     loss of affiliates                        (22,342)       20,395    (191%)
    Income tax expense (benefit)                  (947)        2,571    (371%)
    Equity in loss of affiliates, net of
     taxes                                          --          (111)
    Net income (loss)                         $(21,395)      $17,713    (183%)

    Income (loss) per ADS, basic                $(0.48)        $0.38    (179%)
    Income (loss) per ADS, diluted              $(0.48)        $0.35    (173%)

    Margin analysis:
    Gross margin                                 22.2%         45.0%
    Operating margin                            (96.0%)        16.3%
    Net margin                                  (87.6%)        14.3%

    Weighted average ADS equivalent: (3)
    Basic                                   44,359,240    46,766,532
    Diluted                                 44,359,240    51,236,488

     (3) Assumes all outstanding ordinary shares are represented by ADSs. Each
     ADS represents three ordinary shares.



                        Spreadtrum Communications, Inc.
                    Condensed Consolidated Balance Sheets
                         (in thousands of US dollars)
                                (unaudited)
                                                          As of
                                            December      March        June
                                            31, 2009    31, 2010    30, 2010

    Cash and cash equivalents                $37,809     $33,908     $29,995
    Restricted cash                          $11,496     $18,677     $18,889
    Short term deposits                      $20,504     $37,384     $72,921
    Notes receivable                          $1,383        $266          --
    Accounts receivable, net                  $7,008      $3,569      $1,836
    Inventories                              $25,541     $37,038     $49,557
    Deferred tax assets                       $1,347      $1,347      $1,354
    Prepaid expenses and other current
     assets                                   $5,561      $8,869      $9,154
    Total current assets                    $110,650    $141,058    $183,706

    Property and equipment, net              $27,090     $26,568     $27,049
    Acquired intangible assets, net          $26,621     $25,208     $20,543
    Equity Investment                         $1,001      $7,428      $7,398
    Deferred tax assets                         $570        $570        $571
    Goodwill                                  $2,000      $2,000      $2,000
    Long term deposits                       $43,935     $43,948     $44,177
    Other long term assets                    $7,227        $819        $838
    Total assets                            $219,094    $247,600    $286,282

    Accounts payable                         $19,498     $20,727     $18,785
    Advances from customers                  $14,667     $29,929     $45,180
    Income tax payable                        $3,071      $3,655      $5,632
    Accrued expenses and other current
     liabilities                             $17,888     $18,779     $28,136
    Total current liabilities                $55,124     $73,090     $97,733

    Long term loan                           $43,935     $43,948     $44,177
    Other long-term obligations               $5,464      $5,380      $5,383
    Total long term liabilities              $49,399     $49,328     $49,560
    Total liabilities                       $104,523    $122,418    $147,293

    Shareholders' equity                    $114,571    $125,182    $138,989
    Total liabilities & shareholders'
     equity                                 $219,094    $247,600    $286,282



                        Spreadtrum Communications, Inc.
                          Supplemental Information
                (in thousands of US dollars, except percentages)

    Revenue                                   3Q08     4Q08     1Q09     2Q09
    Baseband and RF Semiconductor          $18,765   $9,298   $8,007  $16,071
    Turnkey Solutions                       $1,212     $937     $209     $147
    Total                                  $19,977  $10,235   $8,216  $16,218
    As % of Total Revenue
    Baseband Semiconductor                   93.9%    90.8%    97.5%    99.1%
    Turnkey Solutions                         6.1%     9.2%     2.5%     0.9%
    Gross Margin                             43.7%   -26.8%    19.4%    23.6%


    Revenue                                   3Q09     4Q09     1Q10     2Q10
    Baseband and RF Semiconductor          $38,349  $42,118  $52,107  $71,298
    Turnkey Solutions                          $30     $139       $6     $150
    Total                                  $38,379  $42,257  $52,113  $71,448
    As % of Total Revenue
    Baseband and RF Semiconductor            99.9%    99.7%   100.0%    99.8%
    Turnkey Solutions                         0.1%     0.3%     0.0%     0.2%
    Gross Margin                             39.0%    42.2%    45.5%    44.6%



                     Spreadtrum Communications, Inc.
                  Reconciliation of GAAP to Non-GAAP Results
         (in thousands of US dollars, except per share data and percentages)
                                 (unaudited)

                                                     Three months ended
                                              June 30,   March 31,    June 30,
                                                2009        2010        2010
    Cost of revenue                           $12,396     $28,410     $39,585
     Adjustment for share-based
      compensation                                (60)       (102)        (91)
    Cost of revenue (non-GAAP)                $12,336     $28,308     $39,494
    Operating income (loss)                  $(13,896)     $7,462     $12,645
     Adjustment for share-based
      compensation within: Cost of
      revenue                                      60         102          91
     Research and development                     632       1,200       1,176
     Selling, general, and administrative       4,898         776         799
    Adjustment for impairment loss of
     long-lived assets                          4,486
    Operating income (loss) (non-GAAP)         (8,306)      9,540      19,197
    Net income (loss)                         (13,090)      6,586      11,127
     Adjustment for share-based
      compensation within: Cost of
      revenue                                      60         102          91
     Research and development                     632       1,200       1,176

     Selling, general, and administrative       4,898         776         799
    Adjustment for impairment loss of
     long-lived assets                                                  4,486
    Net income (loss) (non-GAAP)*              (7,500)      8,664      17,679
    Income (loss) per ADS, diluted              (0.29)       0.13        0.21
     Adjustment for share-based
      compensation                               0.13        0.04        0.04
    Adjustment for impairment loss of
     long-lived assets                                                   0.09
    Income (loss) per ADS, diluted (non-
     GAAP)*                                     (0.16)       0.17        0.34
    Gross margin                                23.6%       45.5%       44.6%
     Adjustment for share-based
      compensation                               0.4%        0.2%        0.1%
    Gross margin (non-GAAP)                     24.0%       45.7%       44.7%
    Operating margin(loss)                     (85.7%)      14.3%       17.7%
     Adjustment for share-based
      compensation                              34.5%        4.0%        2.9%
    Adjustment for impairment loss of
     long-lived assets                                                   6.3%
    Operating margin(loss) (non-GAAP)          (51.2%)      18.3%       26.9%
    Net margin(loss)                           (80.7%       12.6%       15.6%
     Adjustment for share-based
      compensation                              34.5%        4.0%        2.9%
    Adjustment for impairment loss of
     long-lived assets                                                   6.3%
    Net margin(loss) (non-GAAP)*               (46.2%)      16.6%       24.8%
    Operating expenses                        $17,718     $16,241     $19,218
     Adjustment for share-based
      compensation:
     Research and development                     632       1,200       1,176
     Selling, general, and administrative       4,898         776         799
    Adjustment for impairment loss of
     long-lived assets                                                  4,486
    Operating expenses (non-GAAP)             $12,188     $14,265     $12,757

     * The non-GAAP adjustment does not take into consideration the impact of
     taxes.

ABOUT SPREADTRUM COMMUNICATIONS, INC.

Spreadtrum Communications, Inc. (Nasdaq: SPRD; "Spreadtrum") is a fabless semiconductor company that develops baseband and RF processor solutions for the wireless communications market. Spreadtrum combines its semiconductor design expertise with its software development capabilities to deliver highly-integrated baseband processors with multimedia functionality and power management. Spreadtrum has developed its solutions based on an open development platform, enabling its customers to develop customized wireless products that are feature-rich to meet their cost and time-to-market requirements.

SAFE HARBOR STATEMENT:

This press release contains "forward-looking statements" within the meaning of the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. Such forward-looking statements include, without limitation, statements regarding the Company's ability to gain market share in both GSM and TD markets, the Company's belief that its growing customers, the expected domestic and international sales growth, the favorable trends in TD market and the plans to deepen its product portfolio will support its continued growth in the second half of the year, the Company's ability to maintain healthy and sustainable margin levels that are in line with long-term targets under increasingly tough competition, the Company's ability to maintain effective controls over its operating expenses when facing an increase in R&D expense in the second half of the year, the Company's expectations with respect to revenue being in the range of US$88-96 million in the third quarter of 2010 with flat or slightly lower gross margins on a sequential basis. The Company uses words like "believe," "anticipate," "intend," "estimate," "expect," "project" and similar expressions to identify forward-looking statements, although not all forward-looking statements contain these words. These statements are forward-looking in nature and involve risks and uncertainties that may cause actual market trends and the Company's actual results to differ materially from those expressed or implied in these forward-looking statements for a variety of reasons. Potential risks and uncertainties include, but are not limited to, continuing competitive pressure in the semiconductor industry and the effect of such pressure on prices; unpredictable changes in technology and consumer demand for mobile phones; the rate at which the commercial deployment of TD-SCDMA technology will grow; market acceptance of products utilizing TD-SCDMA technology; the Company's ability to sustain recent rates of growth; the state of and any change in the Company's relationship with its major domestic and international customers and Chinese government agencies; the Company's ability to successfully complete the projects of the Chinese TD-SCDMA operator; and changes in political, economic, legal and social conditions in China. For additional discussion of these risks and uncertainties and other factors, please consider the information contained in the Company's filings with the U.S. Securities and Exchange Commission (the "SEC") and the annual report on Form 20-F filed on May 7, 2010, especially the section under "Risk Factors" and such other documents that the Company may file with the SEC from time to time, including on Form 6-K. The Company assumes no obligation to update any forward-looking statements, which apply only as of the date of this press release, and does not intend to update any forward-looking statement whether as a result of new information, future events or otherwise except as required by law.

    For further information, please contact:

    Investor Relations
     Tel:   +86-21-5080-2727
     Email: ir@spreadtrum.com
     Web:   http://www.spreadtrum.com

    Second Quarter 2010 Financial Highlights
    -- Total revenues increased by 53.0% year-over-year and by 15.5%
       quarter-over-quarter to US$56.3 million, a record high in AirMedia's
       operating history.
    -- Revenues from traditional media in airports increased by 115.5%
       year-over-year and by 23.7% quarter-over-quarter to US$12.2 million.
       Traditional media in airports started to contribute to net profits in
       the second quarter of 2010.
    -- Gross profit was US$6.5 million, improving from gross loss of
       US$488,000 in the same period one year ago and gross profit of
       US$2.2 million in the previous quarter.
    -- Loss from operations was US$5.8 million, improving from loss from
       operations of US$8.4 million in the same period one year ago and loss
       from operations of US$8.5 million in the previous quarter.
    -- Net loss attributable to AirMedia's shareholders was US$4.7 million,
       improving from net loss attributable to AirMedia's shareholders of
       US$7.0 million in the same period one year ago and net loss
       attributable to AirMedia's shareholders of US$6.5 million in the
       previous quarter. Basic and diluted loss attributable to AirMedia's
       shareholders per American Depositary Share ("ADS") were both US$0.07.
    -- Adjusted net loss attributable to AirMedia's shareholders (non-GAAP),
       which is net loss attributable to AirMedia's shareholders excluding
       share-based compensation expenses and amortization of acquired
       intangible assets, was US$424,000, improving from adjusted net loss
       attributable to AirMedia's shareholders (non-GAAP) of US$5.4 million in
       the same period one year ago and adjusted net loss attributable to
       AirMedia's shareholders (non-GAAP) of US$3.8 million in the previous
       quarter. Adjusted basic and diluted net loss attributable to AirMedia's
       shareholders per ADS (non-GAAP) were both US$0.01.
    -- The Company generated positive operating cash flow in excess of capital
       expenditure in the second quarter of 2010. Other than restricted cash
       of US$1.4 million, cash and short-term investments increased to
       US$83.5 million as of June 30, 2010 from $76.2 million as of March 31,
       2010.

"Our business continued to turn around in the second quarter of 2010 with new record total revenues of US$56.3 million. We experienced another quarter of improved advertising spending in China, indicating that a sustained recovery of advertising is under way in 2010. Our forecast of continued revenue ramp up in the third quarter further boosts our confidence to break even under U.S. GAAP in the third quarter of this year," commented Herman Guo, chairman and chief executive officer of AirMedia. "Other than the gas station media network, we have completed our media expansion in the short term. Going forward, we will continue to focus on improving our profitability and fully realizing the operating leverage of our business model based on fixed concession fees during contract periods, allowing revenue growth to directly bring about profitability growth," Mr. Guo added.

"We are pleased to see that our improving business performance is reflected in the Company's financial results," Xiaoya Zhang, AirMedia's president and acting chief financial officer, commented. "Traditional media in airports, which had been our biggest drag in 2009, started to contribute to net profits in the second quarter of 2010. With non-GAAP adjusted net loss close to break even in the second quarter of 2010, we expect our U.S. GAAP net income to break even in the next quarter. We are particularly delighted that we generated positive operating cash flow in excess of capital expenditure this quarter. With the improved cash balance as of the end of the second quarter of 2010, we believe we have sufficient cash to support our operations in the foreseeable future," Mr. Zhang added.

    Second Quarter 2010 Financial Results

    Revenues
    Total revenues by product line (numbers in US$ 000's except for
    percentages):
                                          Quarter           Quarter
                                           Ended    % of     Ended    % of
                                          June 30,  Total   March 31, Total
                                            2010   Revenues   2010   Revenues

    Air Travel Media Network               52,559    93.3%   46,124    94.6%
      Digital frames in airports           27,019    48.0%   22,397    45.9%
      Digital TV screens in airports        6,550    11.6%    6,473    13.3%
      Digital TV screens on airplanes       5,872    10.4%    6,856    14.1%
      Traditional media in airports        12,241    21.7%    9,898    20.3%
      Other revenues in air travel            877     1.6%      500     1.0%
    Gas Station Media Network                 801     1.4%      176     0.4%
    Other Media                             2,971     5.3%    2,469     5.0%
    Total revenues                         56,331   100.0%   48,769   100.0%
    Net revenues                           55,085            47,759

                                          Quarter
                                           Ended    % of      Y/Y       Q/Q
                                          June 30,  Total    Growth   Growth
                                            2009   Revenues   rate     rate

    Air Travel Media Network               36,819   100.0%    42.7%    14.0%
      Digital frames in airports           16,474    44.7%    64.0%    20.6%
      Digital TV screens in airports        9,117    24.8%   -28.2%     1.2%
      Digital TV screens on airplanes       3,932    10.7%    49.3%   -14.4%
      Traditional media in airports         5,680    15.4%   115.5%    23.7%
      Other revenues in air travel          1,616     4.4%   -45.7%    75.4%
    Gas Station Media Network                  --     0.0%      N/A   355.1%
    Other Media                                --     0.0%      N/A    20.3%
    Total revenues                         36,819   100.0%    53.0%    15.5%
    Net revenues                           36,295             51.8%    15.3%

Total revenues for the second quarter of 2010 reached US$56.3 million, representing a year-over-year increase of 53.0% from US$36.8 million and a quarter-over-quarter increase of 15.5% from US$48.8 million. The year-over-year increase was primarily due to increases in revenues from digital frames in airports, traditional media in airports, other media, digital TV screens on airplanes and the gas station media network. The quarter-over-quarter increase was primarily due to increases in revenues from digital frames in airports, traditional media in airports, the gas station media network and other media.

Revenues from digital frames in airports

Revenues from digital frames in airports for the second quarter of 2010 increased by 64.0% year-over-year and by 20.6% quarter-over-quarter to US$27.0 million. The year-over-year increase was due to an increase in the number of time slots sold, which was partially offset by a decrease in the average advertising revenue per time slot sold (the "ASP"). The quarter-over-quarter increase was due to increases in both the ASP and the number of time slots sold. Please refer to "Summary of Selected Operating Data" below for detailed definitions of the operating data cited in this press release.

The number of time slots sold for the second quarter of 2010 increased by 74.5% year-over-year and by 8.6% quarter-over-quarter to 9,918 time slots. The year-over-year and quarter-over-quarter increases were due to continued sales efforts and growing acceptance of AirMedia's digital frames. AirMedia's digital frames were in operation in 33 airports in the second quarter of 2010, up from 28 airports at the end of the second quarter of 2009 and 32 airports at the end of the first quarter of 2010. The number of time slots available for sale for the second quarter of 2010 increased by 24.5% year-over-year and by 8.5% quarter-over-quarter to 32,708 time slots. The year-over-year and quarter-over-quarter increases were primarily due to an increase in the number of airports in AirMedia's digital frame network. The utilization rate of digital frames for the second quarter of 2010 increased by 8.7 percentage points year-over-year to 30.3% and remained unchanged from the previous quarter. The year-over-year increase was primarily due to the increase in the number of time slots sold, which was partially offset by the increase in the number of time slots available for sale.

The ASP of digital frames for the second quarter of 2010 decreased by 6.0% year-over-year and increased by 11.1% quarter-over-quarter to US$2,724. The year-over-year decrease was primarily due to higher discounts offered in the second quarter of 2010 than in the same period one year ago. The quarter-over-quarter increase was primarily due to the change in the mix of time slots sold. The number of time slots sold in the top three airports, which have significantly higher ASPs than those sold in other airports, accounted for a higher percentage of total number of time slots sold in the second quarter of 2010 than in the previous quarter.

Revenues from digital TV screens in airports

Revenues from digital TV screens in airports for the second quarter of 2010 decreased by 28.2% year-over-year and increased by 1.2% quarter-over-quarter to US$6.6 million.

The number of time slots sold for the second quarter of 2010 decreased by 8.7% year-over-year and by 28.8% quarter-over-quarter to 5,344 time slots. The year-over-year decrease was primarily due to advertisers' shift in their budget allocations from our digital TV screens in airports to our other products in airports and on airplanes. The quarter-over-quarter decrease was primarily attributable to AirMedia's termination of a promotional campaign, which had been adopted in the first quarter of 2010 and offered high discount from the listing prices. The number of time slots available for sale for the second quarter of 2010 decreased by 9.5% year-over-year and by 0.4% quarter-over-quarter to 22,950 time slots primarily due to the termination of operation of digital TV screens in certain second-tier and third-tier airports. The utilization rate for the second quarter of 2010 increased by 0.2 percentage point year-over-year and decreased by 9.3 percentage points quarter-over-quarter to 23.3%. The year-over-year increase was primarily due to the decrease in the number of time slots available for sale. The quarter-over-quarter decrease was primarily due to the decrease in the number of time slots sold.

The ASP of digital TV screens in airports for the second quarter of 2010 decreased by 21.3% year-over-year and increased by 42.2% quarter-over-quarter to US$1,226. The year-over-year decrease was primarily due to higher discounts offered in the second quarter of 2010 than in the same period one year ago. The quarter-over-quarter increase was primarily attributable to the termination of the promotional campaign which had been adopted in the first quarter of 2010.

Revenues from digital TV screens on airplanes

Revenues from digital TV screens on airplanes for the second quarter of 2010 increased by 49.3% year-over-year and decreased by 14.4% quarter-over-quarter to US$5.9 million. The year-over-year increase was due to increases in both the number of time slots sold and the ASP of digital TV screens on airplanes. The quarter-over-quarter decrease was due to decreases in both the number of time slots sold and the ASP of digital TV screens on airplanes.

The number of time slots sold for the second quarter of 2010 increased by 38.5% year-over-year and decreased by 9.4% quarter-over-quarter to 259 time slots. The year-over-year increase was due to continued sales efforts, and the quarter-over-quarter decrease was due to seasonality. Although the first quarter is in general a weak quarter for our advertising business as a whole, it is a peak season for advertising on digital TV screens on airplanes as advertisers place more advertising orders to take advantage of high passenger volume during the Spring Festival holiday period in China. The number of time slots available for sale for the second quarter of 2010 decreased by 15.4% year-over-year and by 2.9% quarter-over-quarter to 396 time slots. The year-over-year decrease was primarily due to the termination of our operation of digital TV screens on the airplanes of China United Airlines and less advertising time on Air China's airplanes. The quarter-over-quarter decrease was primarily due to the termination of our operation of digital TV screens on the airplanes of China United Airlines. The utilization rate for the second quarter of 2010 increased by 25.4 percentage points year-over-year and decreased by 4.7 percentage points quarter-over-quarter to 65.4%. The year-over-year increase was due to the increase in the number of time slots sold and the decrease in the number of time slots available for sale. The quarter-over-quarter decrease was primarily due to the decrease in the number of time slots sold.

The ASP of digital TV screens on airplanes for the second quarter of 2010 increased by 7.8% year-over-year and decreased by 5.4% quarter-over-quarter to US$22,672. The year-over-year increase in the ASP was primarily due to lower discounts offered in the second quarter of 2010 than in the same period one year ago and the increase in the listing prices of digital TV screens on Air China's airplanes. The quarter-over-quarter decrease in the ASP was primarily due to higher discounts offered in the second quarter of 2010 than in the first quarter of 2010.

Revenues from traditional media in airports

Revenues from traditional media in airports for the second quarter of 2010 primarily included revenues from traditional media in Beijing Capital International Airport, Shenzhen International Airport and Wenzhou Yongqiang Airport, as well as revenues from billboards and painted advertisements on gate bridges in certain airports. Revenues from traditional media in airports for the second quarter of 2010 increased by 115.5% year-over-year and by 23.7% quarter-over-quarter to US$12.2 million. The year-over-year increase was primarily due to continued sales efforts and growing acceptance of AirMedia's traditional media in airports. The quarter-over-quarter increase was primarily due to an increase in the number of locations sold.

The number of locations sold for the second quarter of 2010 increased 45.4% year-over-year and 15.8% quarter-over-quarter to 455 locations primarily due to continued sales efforts. The number of locations available for sale for the second quarter of 2010 decreased by 35.9% year-over-year and increased by 3.7% quarter-over-quarter to 705 locations. The year-over-year decrease was primarily because AirMedia terminated the operation of certain unprofitable traditional media in Beijing Capital International Airport as well as billboards and painted advertisements on gate bridges in certain airports in the first quarter of 2010. The quarter-over-quarter increase was primarily due to the increase in the number of billboards in the Wenzhou airport and light boxes in certain airports. The utilization rate of traditional media for the second quarter of 2010 increased by 36.1 percentage points year-over-year and by 6.7 percentage points quarter-over-quarter to 64.5%. The year-over-year increase was due to the decrease in the number of locations available for sale and the increase in the number of locations sold. The quarter-over-quarter increase was primarily due to the increase in the number of locations sold.

The ASP of traditional media in airports for the second quarter of 2010 increased by 48.1% year-over-year and by 6.8% quarter-over-quarter to US$26,903 primarily due to more locations with higher listing prices sold in the second quarter of 2010.

Revenues from the gas station media network

Revenues from the gas station media network for the second quarter of 2010 increased by 355.1% quarter-over-quarter to US$801,000.

As of August 8, 2010, AirMedia had installed its media, including scrolling light boxes and billboards, in a total of 1,545 Sinopec gas stations, of which 214 are located in Beijing, 295 in Shanghai, 104 in Shenzhen and the remaining 932 in 14 other cities.

Revenues from other media

Revenues from other media were primarily revenues from Beijing AirMedia City Outdoor Advertising Co., Ltd., a company AirMedia acquired in January 2010, which operates unipole signs and other outdoor media across Beijing. Revenues from other media increased 20.3% quarter-over-quarter to US$3.0 million due to more media resources sold.

Please refer to "Summary of Selected Operating Data" for more operating data.

Business tax and other sales tax

Business tax and other sales tax for the second quarter of 2010 were US$1.2 million, compared to US$524,000 in the same period one year ago and US$1.0 million in the previous quarter. For purposes of calculating the amount of business and other sales tax, concession fees are permitted to be deducted from total revenues under applicable PRC tax law.

Net revenues

Net revenues for the second quarter of 2010 reached US$55.1 million, representing a year-over-year increase of 51.8% from US$36.3 million and a quarter-over-quarter increase of 15.3% from US$47.8 million.

Cost of Revenues

Cost of revenues for the second quarter of 2010 was US$48.6 million, representing a year-over-year increase of 32.2% from US$36.8 million and a quarter-over-quarter increase of 6.8% from US$45.5 million. The year-over-year and quarter-over-quarter increases were primarily due to an increase in concession fees in connection with the expansion of AirMedia's business. Cost of revenues as a percentage of net revenues in the second quarter of 2010 was 88.2%, compared to 101.3% in the same period one year ago and 95.3% in the previous quarter.

AirMedia incurs concession fees to airports for placing and operating digital TV screens, digital frames, traditional media and other displays in airports, to airlines for playing programs on their digital TV screens, to Sinopec for placing outdoor media in its gas stations, and to other media resources owners for placing unipole signs and other outdoor media across Beijing.

Concession fees for the second quarter of 2010 were US$33.3 million, representing a year-over-year increase of 18.7% from US$28.1 million and a quarter-over-quarter increase of 4.3% from US$31.9 million. The year-over-year and quarter-over-quarter increases were primarily due to newly signed or renewed concession rights contracts during the period. Concession fees as a percentage of net revenues in the second quarter of 2010 was 60.4%, decreasing from 77.3% in the same period one year ago and 66.9% in the previous quarter. The year-over-year and quarter-over-quarter decreases of concession fees as a percentage of net revenues were primarily due to the fact that revenues continued to ramp up while incremental concession fees grew at a slower pace than revenue growth. AirMedia has no intention to materially expand its media resources in the near term until it has returned to strong and sustainable profitability.

Gross Profit/Loss

Gross profit for the second quarter of 2010 was US$6.5 million, improving from gross loss of US$488,000 in the same period one year ago and gross profit of US$2.2 million in the previous quarter.

Gross profit as a percentage of net revenues for the second quarter of 2010 was 11.8%, compared to gross loss as a percentage of net revenues of negative 1.3% in the same period one year ago and gross profit as a percentage of net revenues of 4.7% in the previous quarter. The year-over-year and quarter-over-quarter improvements in gross profit as a percentage of net revenues were primarily due to the increase in net revenues.

    Operating Expenses
    Operating expenses (numbers in US$ 000's except for percentages):

                                          Quarter         Quarter
                                           Ended    % of   Ended     % of
                                          June 30,   Net  March 31,  Net
                                            2010  Revenues   2010   Revenues
    Selling and marketing expenses          4,545    8.3%    4,123    8.6%
    General and administrative expenses     7,679   13.9%    6,630   13.9%
    Total operating expenses               12,224   22.2%   10,753   22.5%
    Adjusted operating expenses (non-
     GAAP)                                  7,914   14.4%    8,069   16.9%

                                          Quarter
                                           Ended    % of     Y/Y     Q/Q
                                          June 30,   Net    Growth  Growth
                                            2009   Revenues  rate    rate

    Selling and marketing expenses          2,741    7.6%    65.8%   10.2%
    General and administrative expenses     5,178   14.3%    48.3%   15.8%
    Total operating expenses                7,919   21.8%    54.4%   13.7%
    Adjusted operating expenses (non-
     GAAP)                                  6,303   17.4%    25.6%   -1.9%

Total operating expenses for the second quarter of 2010 were US$12.2 million, representing a year-over-year increase of 54.4% from US$7.9 million and a quarter-over-quarter increase of 13.7% from US$10.8 million.

On June 30, 2010, to provide better incentive to its employees, the Compensation Committee of AirMedia's board of directors approved an adjustment to the exercise price of certain outstanding stock options, which were granted on July 2, 2007, July 20, 2007, November 29, 2007 and July 10, 2009, respectively. The revised exercise price for each option is US$1.57 per ordinary share, or US$3.14 per ADS. The re-pricing of these stock options resulted in one-time share-based compensation expenses of US$1.6 million in the second quarter of 2010. Total operating expenses for the second quarter of 2010 included share-based compensation expenses of US$3.4 million, compared to share-based compensation expenses of US$1.0 million in the same period one year ago and share-based compensation expenses of US$1.8 million in the previous quarter.

Adjusted operating expenses (non-GAAP) for the second quarter of 2010, which excluded share-based compensation expenses and amortization of acquired intangible assets, were US$7.9 million, representing a year-over-year increase of 25.6% from US$6.3 million and a quarter-over-quarter decrease of 1.9% from US$8.1 million. Adjusted operating expenses as a percentage of net revenues (non-GAAP) in the second quarter of 2010 was 14.4%, compared to 17.4% in the same period one year ago and 16.9% in the previous quarter.

Please refer to the attached table captioned "Reconciliation of GAAP Operating Expenses to Non-GAAP Adjusted Operating Expenses" for a reconciliation of operating expenses under U.S. GAAP to adjusted operating expenses (non-GAAP).

Selling and marketing expenses for the second quarter of 2010 were US$4.5 million, including share-based compensation expenses of US$927,000. This represented a year-over-year increase of 65.8% from US$2.7 million and a quarter-over-quarter increase of 10.2% from US$4.1 million in the previous quarter. The year-over-year increase was primarily due to higher expenses related to expansion of the direct sales force and increased share-based compensation expenses. The quarter-over-quarter increase was primarily due to the one-time share-based compensation expenses associated with the re-pricing of stock options in the second quarter of 2010.

General and administrative expenses for the second quarter of 2010 were US$7.7 million, including share-based compensation expenses of US$2.5 million. This represented a year-over-year increase of 48.3% from US$5.2 million and a quarter-over-quarter increase of 15.8% from US$6.6 million. The year-over-year increase was primarily due to the one-time share-based compensation expenses associated with the re-pricing of stock options in the second quarter of 2010, higher bad-debt provisions, and higher amortization of acquired intangible assets. The quarter-over-quarter increase was primarily due to the one-time share-based compensation expenses associated with the re-pricing of stock options in the second quarter of 2010, which were partially offset by lower bad-debt provisions.

Loss from Operations

Loss from operations for the second quarter of 2010 was US5.8 million, as compared to loss from operations of US$8.4 million in the same period one year ago and loss from operations of US$8.5 million in the previous quarter.

Adjusted loss from operations (non-GAAP) for the second quarter of 2010, which excluded share-based compensation expenses and amortization of acquired intangible assets, was US$1.4 million, compared to adjusted loss from operations (non-GAAP) of US$6.8 million in the same period one year ago and adjusted loss from operations (non-GAAP) of US$5.8 million in the previous quarter. Adjusted operating margin (non-GAAP) for the second quarter of 2010, which excluded the effect of share-based compensation expenses and amortization of acquired intangible assets, was negative 2.6%, compared to negative 18.7% in the same period one year ago and negative 12.2% in the previous quarter.

Please refer to the attached table captioned "Reconciliation of GAAP Loss from Operations to Non-GAAP Adjusted Loss from Operations" for a reconciliation of loss from operations under U.S. GAAP to adjusted loss from operations (non-GAAP).

Income Tax Benefit/Expenses

Income tax expenses for the second quarter of 2010 were US$19,000, compared to income tax benefit of US$653,000 in the same period one year ago and income tax expenses of US$21,000 in the previous quarter.

Net Loss Attributable to AirMedia's Shareholders

Net loss attributable to AirMedia's shareholders for the second quarter of 2010 was US$4.7 million, compared to net loss attributable to AirMedia's shareholders of US$7.0 million in the same period one year ago and net loss attributable to AirMedia's shareholders of US$6.5 million in the previous quarter. The basic and diluted net loss attributable to AirMedia's shareholders per ADS for the second quarter of 2010 were both US$0.07, compared to basic and diluted net loss attributable to AirMedia's shareholders per ADS of US$0.11 in the same period one year ago and basic and diluted net loss attributable to AirMedia's shareholders per ADS of US$0.10 in the previous quarter.

Adjusted net loss attributable to AirMedia's shareholders (non-GAAP) for the second quarter of 2010, which is net loss attributable to AirMedia's shareholders excluding share-based compensation expenses and amortization of acquired intangible assets, was US$424,000, compared to adjusted net loss attributable to AirMedia's shareholders (non-GAAP) of US$5.4 million in the same period one year ago and adjusted net loss attributable to AirMedia's shareholders (non-GAAP) of US$3.8 million in the previous quarter. Basic and diluted adjusted net loss attributable to AirMedia's shareholders per ADS (non-GAAP) for the second quarter of 2010 were both US$0.01, compared to basic and diluted adjusted net loss attributable to AirMedia's shareholders per ADS (non-GAAP) of US$0.08 in the same period one year ago and basic and diluted adjusted net loss attributable to AirMedia's shareholders per ADS (non-GAAP) of US$0.06 in the previous quarter.

Please refer to the attached table for a reconciliation of net loss attributable to AirMedia's shareholders and basic and diluted net loss attributable to AirMedia's shareholders per ADS under U.S. GAAP to adjusted net loss attributable to AirMedia's shareholders (non-GAAP) and basic and diluted adjusted net loss attributable to AirMedia's shareholders per ADS (non-GAAP).

Cash, Restricted Cash and Short-term Investments

Other than restricted cash of US$1.4 million, cash and short-term investments totaled US$83.5 million as of June 30, 2010, compared to US$124.3 million as of December 31, 2009 and 76.2 million as of March 31, 2010. The decrease in cash and short-term investments from December 31, 2009 was primarily due to an increase in prepaid concession fees incurred, based on the terms of certain material concession rights contracts. The increase in cash and short-term investments from March 31, 2010 was primarily due to an increase in cash flow from operations.

Other Recent Developments

AirMedia obtained a concession rights contract to sell advertisements on the digital TV screens on the airplanes of Hainan Airlines, the fourth largest airline in mainland China, from August 1, 2010 to March 31, 2012.

On June 30, 2010, to provide better incentive to its employees, the Compensation Committee of AirMedia's board of directors approved an adjustment to the exercise price of certain outstanding stock options, which were granted on July 2, 2007, July 20, 2007, November 29, 2007 and July 10, 2009, respectively.

Business Outlook

AirMedia currently expects that its total revenues for the third quarter of 2010 will range from US$60.0 million to US$62.0 million, representing a year-over-year increase of 59.0% to 64.3% from the same period in 2009.

AirMedia currently expects that concession fees will be at least US$33.5 million in the third quarter of 2010.

The above forecast reflects AirMedia's current and preliminary view and is therefore subject to change. Please refer to the Safe Harbor Statement below for the factors that could cause actual results to differ materially from those contained in any forward-looking statement.

    Summary of Selected Operating Data

                                  Quarter   Quarter   Quarter
                                    Ended     Ended     Ended   Y/Y     Q/Q
                                  June 30, March 31,  June 30, Growth  Growth
                                     2010      2010      2009   Rate    Rate

    Digital frames in
     airports
      Number of airports in
       operation                       33        32        28   17.9%    3.1%
      Number of time slots
       available for sale (2)      32,708    30,144    26,277   24.5%    8.5%
      Number of time slots
       sold (3)                     9,918     9,134     5,683   74.5%    8.6%
      Utilization rate (4)          30.3%     30.3%     21.6%    8.7%    0.0%
      Average advertising
       revenue per time slot
       sold (5)                  US$2,724  US$2,452  US$2,899   -6.0%   11.1%

    Digital TV screens in
     airports
      Number of airports in
       operation                       37        36        40   -7.5%    2.8%
      Number of time slots
       available for sale (1)      22,950    23,050    25,350   -9.5%   -0.4%
      Number of time slots
       sold (3)                     5,344     7,505     5,856   -8.7%  -28.8%
      Utilization rate (4)          23.3%     32.6%     23.1%    0.2%   -9.3%
      Average advertising
       revenue per
       time slot sold (5)        US$1,226    US$862  US$1,557  -21.3%   42.2%

    Digital TV screens on
     airplanes
      Number of airlines in
       operation                        8         8         9  -11.1%    0.0%
      Number of time slots
       available for sale (1)         396       408       468  -15.4%   -2.9%
      Number of time slots
       sold (3)                       259       286       187   38.5%   -9.4%
      Utilization rate (4)          65.4%     70.1%     40.0%   25.4%   -4.7%
      Average advertising
       revenue per time slot
       sold (5)                 US$22,672 US$23,972 US$21,026    7.8%   -5.4%

    Traditional Media in
     airports
    Numbers of locations
     available for sale (6)           705       680     1,100  -35.9%    3.7%
    Numbers of locations
     sold (7)                         455       393       313   45.4%   15.8%
    Utilization rate (8)            64.5%     57.8%     28.5%   36.1%    6.7%
    Average advertising
     revenue per
     location (9)               US$26,903 US$25,186 US$18,162   48.1%    6.8%



    Notes:
    (1) We define a time slot as a 30-second equivalent advertising time unit
        for digital TV screens in airports and digital TV screens on airplanes,
        which is shown during each advertising cycle on a weekly basis in a
        given airport or on a monthly basis on the routes of a given airline,
        respectively. Our airport advertising programs are shown repeatedly on
        a daily basis during a given week in one-hour cycles and each hour of
        programming includes 25 minutes of advertising content, which allows
        us to sell a maximum of 50 time slots per week. The number of time
        slots available for our digital TV screens in airports during the
        period presented is calculated by multiplying the time slots per week
        per airport by the number of weeks during the period presented when we
        had operations in each airport and then calculating the sum of all the
        time slots available for each of our network airports. The length of
        our in-flight programs typically ranges from approximately 45 minutes
        to an hour per flight, approximately five to 13 minutes of which
        consist of advertising content. The number of time slots available for
        our digital TV screens on airplanes during the period presented is
        calculated by multiplying the time slots per airline per month by the
        number of months during the period presented when we had operations on
        each airline and then calculating the sum of all the time slots for
        each of our network airlines.
    (2) We define a time slot as a 12-second equivalent advertising time unit
        for digital frames in airports, which is shown during each standard
        advertising cycle on a weekly basis in a given airport. Our standard
        airport advertising programs are shown repeatedly on a daily basis
        during a given week in 10-minute cycles, which allows us to sell a
        maximum of 50 time slots per week. The length of time slot and
        advertising program cycle of some digital frames in several airports
        are different from standard ones. The number of time slots available
        for our digital frames in airports during the period presented is
        calculated by multiplying the time slots per week per airport by the
        number of weeks during the period presented when we had operations in
        each airport and then calculating the sum of all the time slots
        available for each of our network airports.
    (3) Number of time slots sold refers to the number of 30-second equivalent
        advertising time units for digital TV screens in airports and digital
        TV screens on airplanes or 12-second equivalent advertising time units
        for digital frames in airports sold during the period presented.
    (4) Utilization rate refers to total time slots sold as a percentage of
        total time slots available for sale during the relevant period.
    (5) Average advertising revenue per time slot sold for digital TV screens
        in airports, digital TV screens on airplanes and digital frames in
        airports is calculated by dividing our revenues derived from digital
        TV screens in airports, digital TV screens on airplanes and digital
        frames in airports by its own number of time slots sold, respectively.
    (6) We define the number of locations available for sale in traditional
        media as the sum of (1) the number of light boxes and billboards in
        Beijing, Shenzhen, Wenzhou and certain other airports (light boxes and
        billboards), and (2) the number of gate bridges in 10 airports (gate
        bridges).
    (7) The number of locations sold is defined as the sum of (1) the number
        of light boxes and billboards sold and (2) the number of gate bridges
        sold. To calculate the number of light boxes and billboards sold in a
        given airport, we first calculate the "utilization rates of light
        boxes and billboards" in such airport by dividing the "total value of
        light boxes and billboards sold" in such airport by the "total value
        of light boxes and billboards" in such airport. The "total value of
        light boxes and billboards sold" in a given airport is calculated as
        the daily listing prices of each light boxes and billboards sold
        multiplied by their respective number of days sold during the period
        presented. The "total value of light boxes and billboards" in a given
        airport is calculated as the sum of quarterly listing prices of all
        the light boxes and billboards during the period presented. The number
        of light boxes and billboards sold in a given airport is then
        calculated as the number of light boxes and billboards available for
        sale in such airport multiplied by the utilization rates of light
        boxes and billboards in such airport. The number of gate bridges sold
        in a given airport is counted based on the contracts.
    (8) Utilization rate refers to total locations sold as a percentage of
        total locations available for sale during the period presented.
    (9) Average advertising revenue per location sold is calculated by
        dividing the revenues derived from all the locations sold by the
        number of locations sold during the period presented.

Earnings Conference Call Details

AirMedia will hold a conference call to discuss the second quarter 2010 earnings at 8:00 PM U.S. Eastern Time on August 11, 2010 (5:00 PM U.S. Pacific Time on August 11, 2010; 8:00 AM Beijing/Hong Kong time on August 12, 2010). AirMedia's management team will be on the call to discuss financial results and operational highlights and answer questions.

    Conference Call Dial-in Information
    U.S.:          +1 800 901 5247
    U.K.:          +44 207 365 8426
    Hong Kong:     +852 3002 1672
    International: +1 617 786 4501
    Pass code:     AMCN

A replay of the call will be available for 1 week between 11:00 p.m. on August 11, 2010 and 11:00 p.m. on August 18, 2010, Eastern Time.

    Replay Dial-in Information
    U.S.:          +1 888 286 8010
    International: +1 617 801 6888
    Pass code:     23034694

Additionally, a live and archived webcast of this call will be available on the Investor Relations section of AirMedia's corporate website at http://ir.airmedia.net.c... .

Use of Non-GAAP Financial Measures

AirMedia's management uses non-GAAP financial measures to gain an understanding of AirMedia's comparative operating performance and future prospects. AirMedia's non-GAAP financial measures exclude the following non-cash items: (1) share-based compensation expenses, and (2) amortization of acquired intangible assets. Non-GAAP financial measures are used by AirMedia's management in their financial and operating decision-making, because management believes they reflect AirMedia's ongoing business and operating performance in a manner that allows meaningful period-to-period comparisons. AirMedia's management believes that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating AirMedia's operating performance in the same manner as management does, if they so choose. Specifically, AirMedia believes the non-GAAP financial measures provide useful information to both management and investors by excluding certain charges that the Company believes are not indicative of its core operating results.

The non-GAAP financial measures have limitations. They do not include all items of income and expense that affect AirMedia's income from operations. Specifically, these non-GAAP financial measures are not prepared in accordance with GAAP, may not be comparable to non-GAAP financial measures used by other companies and, with respect to the non-GAAP financial measures that exclude certain items under GAAP, do not reflect any benefit that such items may confer to AirMedia. Management compensates for these limitations by also considering AirMedia's financial results as determined in accordance with GAAP. The presentation of this additional information is not meant to be considered superior to, in isolation from or as a substitute for results prepared in accordance with US GAAP. For more information on these non-GAAP financial measures, please see the table captioned "Reconciliation of GAAP Net Loss and EPS and Non-GAAP Adjusted Loss and EPS", "Reconciliation of GAAP Operating Expenses to Non-GAAP Adjusted Operating Expenses" and "Reconciliation of GAAP Loss from Operations to Non-GAAP Adjusted Loss from Operations" set forth at the end of this release.

About AirMedia Group Inc.

AirMedia Group Inc. (Nasdaq:AMCN - News) is a leading operator of out-of-home advertising platforms in China targeting mid-to-high-end consumers. AirMedia operates the largest digital media network in China dedicated to air travel advertising. AirMedia operates digital frames in 33 major airports, including the 15 largest airports in China. AirMedia also operates digital TV screens in 37 major airports, including 25 out of the 30 largest airports in China. In addition, AirMedia sells advertisements on the routes operated by nine airlines, including the four largest airlines in China. In selected major airports, AirMedia also operates traditional media platforms, such as billboards and light boxes, and other digital media, such as mega LED screens.

In addition, AirMedia has obtained exclusive contractual concession rights until the end of 2014 to develop and operate outdoor advertising platforms at Sinopec's service stations located throughout China.

For more information about AirMedia, please visit http://www.airmedia.net.... .

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expect," "anticipate," "future," "intend," "plan," "believe," "estimate," "confident" and similar statements. Among other things, the Business Outlook section and the quotations from management in this announcement, as well as AirMedia Group Inc.'s strategic and operational plans, contain forward-looking statements. AirMedia may also make written or oral forward-looking statements in its reports to the U.S. Securities and Exchange Commission, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about AirMedia's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Potential risks and uncertainties include, but are not limited to: if advertisers or the viewing public do not accept, or lose interest in, our air travel advertising network, we may be unable to generate sufficient cash flow from our operating activities and our prospects and results of operations could be negatively affected; we derive most of our revenues from the provision of air travel advertising services, and any slowdown in the air travel advertising industry in China may materially and adversely affect our revenues and results of operation; our strategy of expanding our advertising network by building new air travel media platforms and expanding into traditional media in airports may not succeed, and our failure to do so could materially reduce the attractiveness of our network and harm our business, reputation and results of operations; if we do not succeed in our expansion into gas station and other outdoor media advertising, our future results of operations and growth prospects may be materially and adversely affected; if our customers reduce their advertising spending or are unable to pay us in full, in part or at all for a period of time due to an economic downturn in China and/or elsewhere or for any other reason, our revenues and results of operations may be materially and adversely affected; we face risks related to health epidemics, which could materially and adversely affect air travel and result in reduced demand for our advertising services or disrupt our operations; if we are unable to retain existing concession rights contracts or obtain new concession rights contracts on commercially advantageous terms that allow us to operate our advertising platforms, we may be unable to maintain or expand our network coverage and our business and prospects may be harmed; a significant portion of our revenues has been derived from the five largest airports and three largest airlines in China, and if any of these airports or airlines experiences a material business disruption, our ability to generate revenues and our results of operations would be materially and adversely affected; our limited operating history makes it difficult to evaluate our future prospects and results of operations; and other risks outlined in AirMedia's filings with the U.S. Securities and Exchange Commission. AirMedia does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

    For further information, please contact:

    AirMedia Group Inc.
     Raymond Huang
     Investor Relations Director
     Tel:   +86-10-8460-8678
     Email: ir@airmedia.net.cn

    IR Inside
     Caroline Straathof
     Tel:   +31-6-54624301
     Email: info@irinside.com





    AirMedia Group Inc.
    UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
    (In U.S. dollars in thousands)

                                                     June 30,      December 31,
                                                       2010            2009
    ASSETS:
    Current Assets:
      Cash                                            70,159           123,754
      Restricted cash                                  1,446             1,431
      Short-term investments                          13,345               586
      Accounts receivable, net                        49,368            40,019
      Prepaid concession fees                         40,787            15,425
      Amount due from related party                       26             5,991
      Other current assets                             4,061             4,069
      Deferred tax assets - current                    4,323             3,693
    Total current assets                             183,515           194,968
      Property and equipment, net                     77,110            78,831
      Long-term investments                            1,581             1,984
      Long-term deposits                              16,449            15,914
      Deferred tax assets - non-current                4,362             4,726
      Acquired intangible assets, net                 19,885            11,141
      Goodwill                                        17,322             9,087
    Total Assets                                     320,224           316,651
    LIABILITIES AND EQUITY:
    Current Liabilities:
      Accounts payable (including accounts
       payable of the consolidated variable
       interest entities without recourse
       to AirMedia Group Inc. $29,489 and
       $30,067 as of June 30, 2010 and
       December 31, 2009, respectively)               32,304            30,680

      Accrued expenses and other current
       liabilities (including accrued
       expenses and other current
       liabilities of the consolidated
       variable interest entities without
       recourse to AirMedia Group Inc.
       $4,959 and $3,827 as of June 30,
       2010 and December 31, 2009, re                  7,945             7,136

      Deferred revenue (including deferred
       revenue of the consolidated variable
       interest entities without recourse
       to AirMedia Group Inc. $11,976 and
       $8,924 as of June 30 2010 and
       December 31, 2009, respectively)               11,976             8,941

      Income tax payable (including income
       tax payable of the consolidated
       variable interest entities without
       recourse to AirMedia Group Inc. $220
       and $76 as of June 30, 2010 and
       December 31, 2009, respectively)                  196                52

      Dividend payable (including dividend
       payable of the consolidated variable
       interest entities without recourse
       to AirMedia Group Inc. $1,069 and
       nil as of June 30, 2010 and December
       31, 2009, respectively)                         1,069                --

      Amounts due to related parties
       (including amounts due to related
       parties of the consolidated variable
       interest entities without recourse
       to AirMedia Group Inc. $411 and $408
       as of June 30, 2010 and December 31,
       2009 respectively)                                411               408

    Total current liabilities                         53,901            47,217
      Deferred tax liability - non-current             5,332             3,155
    Total liabilities                                 59,233            50,372
    Equity
      Ordinary shares                                    132               132
      Additional paid-in capital                     273,748           268,542
      Statutory reserves                               6,912             6,912
      Accumulated deficits                           (33,727)          (22,488)
      Accumulated other comprehensive
       income                                         11,519             9,947
    Total AirMedia Group Inc.'s
     shareholders' equity                            258,584           263,045
    Noncontrolling  interests                          2,407             3,234
    Total equity                                     260,991           266,279
    Total Liabilities and  Equity                    320,224           316,651




    AirMedia Group Inc.
    UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
    (In U.S. dollars in thousands, except share and ADS related data)

                                                   Three Months Ended
                                           June 30,     March 31,    June 30,
                                             2010          2010        2009

    Revenues                                 56,331       48,769       36,819
    Business tax and other sales tax         (1,246)      (1,010)        (524)
    Net revenues                             55,085       47,759       36,295
    Cost of revenues                         48,612       45,523       36,783
    Gross profit/(loss                        6,473        2,236         (488)
    Operating expenses:
      Selling and marketing *                 4,545        4,123        2,741
      General and administrative *            7,679        6,630        5,178
    Total operating expenses                 12,224       10,753        7,919
    Loss from operations                     (5,751)      (8,517)      (8,407)
    Interest income                             137          237          461
    Gain on remeasurement of fair value
     of previously held investment
     (net)                                       --          919           --
    Other income, net                            84          229          222
    Loss before income taxes                 (5,530)      (7,132)      (7,724)
    Income tax expenses (benefits)               19           21         (653)
    Net loss before net income of
     equity accounting investments           (5,549)      (7,153)      (7,071)
    Net income of equity accounting
     investments                                 48          154           37
    Net loss                                 (5,501)      (6,999)      (7,034)
    Less: Net loss attributable to
     noncontrolling interests                  (767)        (494)         (39)
    Net loss attributable to AirMedia
     Group Inc.'s shareholders               (4,734)      (6,505)      (6,995)
    Net loss attributable to AirMedia
     Group Inc.'s shareholders per
     ordinary share
    Basic                                     (0.04)       (0.05)       (0.05)
    Diluted                                   (0.04)       (0.05)       (0.05)
    Net loss attributable to AirMedia
     Group Inc.'s shareholders per ADS
    Basic                                     (0.07)       (0.10)       (0.11)
    Diluted                                   (0.07)       (0.10)       (0.11)
    Weighted average ordinary shares
     outstanding used  in computing net
     loss per ordinary share - basic    131,169,981  131,154,704  130,564,714
    Weighted average ordinary shares
     outstanding used  in computing net
     loss per ordinary share - diluted  131,169,981  131,154,704  130,564,714
    * Share-based compensation charges
      included are as follow:
      Selling and marketing                     927          514          233
      General and administrative              2,450        1,254          777




    AirMedia Group Inc.
    RECONCILIATION OF GAAP NET LOSS AND EPS TO NON-GAAP ADJUSTED NET LOSS AND
    EPS
    (In U.S. dollars in thousands, except share and ADS related data)

                                                   Three Months Ended
                                            June 30,    March 31,    June 30,
                                              2010          2010        2009
    GAAP net loss attributable to
     AirMedia Group Inc.'s shareholders      (4,734)      (6,505)      (6,995)
    Amortization of acquired intangible
     assets                                     933          916          606
    Share-based compensation                  3,377        1,768        1,010

    Adjusted net loss attributable to
     AirMedia Group Inc.'s shareholders
     (non-GAAP)                                (424)      (3,821)      (5,379)

    Adjusted net loss attributable to
     AirMedia Group Inc.'s shareholders
     per share (non-GAAP)
    Basic                                      0.00        (0.03)       (0.04)
    Diluted                                    0.00        (0.03)       (0.04)

    Adjusted net loss attributable to
     AirMedia Group Inc.'s shareholders
     per ADS (non-GAAP)
    Basic                                     (0.01)       (0.06)       (0.08)
    Diluted                                   (0.01)       (0.06)       (0.08)

    Shares used in computing adjusted
     basic net loss attributable to
     AirMedia Group Inc.'s shareholders
     per share (non-GAAP)               131,169,981  131,154,704  130,564,714
    Shares used in computing adjusted
     diluted net loss attributable to
     AirMedia Group Inc.'s shareholders
     per share (non-GAAP)               131,169,981  131,154,704  130,564,714


     Note:

    (1) The Non-GAAP adjusted net loss per share and per ADS are computed
        using Non-GAAP adjusted net loss and number of shares and ADSs used in
        GAAP basic and diluted EPS calculation, where the number of shares and
        ADSs is adjusted for dilution due to share-based compensation grants.



    AirMedia Group Inc.
    RECONCILIATION OF GAAP OPERATING EXPENSES TO NON-GAAP ADJUSTED OPERATING
    EXPENSES
    (In U.S. dollars in thousands, except for percentages)

                                                   Three Months Ended
                                             June 30,    March 31,    June 30,
                                               2010        2010        2009

    GAAP operating expenses                   12,224      10,753      7,919
    Amortization of acquired intangible
     assets                                      933         916        606
    Share-based compensation                   3,377       1,768      1,010

    Adjusted operating expenses (non-
     GAAP)                                     7,914       8,069      6,303

    Adjusted operating expenses as a
     percentage of net revenues (non-
     GAAP)                                     14.4%       16.9%      17.4%




    AirMedia Group Inc.
    RECONCILIATION OF GAAP LOSS FROM OPERATIONS TO NON-GAAP ADJUSTED LOSS
    FROM OPERATIONS
    (In U.S. dollars in thousands, except for percentages)

                                                   Three Months Ended
                                             June 30,    March 31,    June 30,
                                               2010        2010        2009

    Loss from operations                      (5,751)     (8,517)     (8,407)
    Amortization of acquired intangible
     assets                                      933         916         606
    Share-based compensation                   3,377       1,768       1,010

    Adjusted loss from operations (non-
     GAAP)                                    (1,441)     (5,833)     (6,791)

    Adjusted operating margin (non-GAAP)       -2.6%      -12.2%      -18.7%