-- Revenue for 2007 increased 58.3% to $31.3 million -- Net Income for 2007 increased 62.3% to $10.9 million NEW YORK, Oct. 15 /Xinhua-PRNewswire-FirstCall/ -- China Dongsheng International, Inc. (OTC:CDSG) (BULLETIN BOARD: CDSG) , a leading provider in the nutraceutical industry through its 100%-owned subsidiary, Jilin Dongsheng Weiye Science and Technology Co., Ltd ('Dongsheng') is engaged in the development and manufacture of nutritional supplements and personal care products in China, today announced financial results for the fiscal year ended June 30, 2007. For the fiscal year ended June 30, 2007, Dongsheng sold products from two primary product lines: Aidong Nutritionals, which include supplements and healthcare products with Chitosan as a main ingredient and Jiujiu Ozone Purifiers, a line of portable home Ozone air, water, and food purifiers. In addition, Dongsheng sold "Nao Li Zhi Bao" herbal extracts, a Chinese herbal supplement line of natural botanical extracts and Donghe Cosmetics, a line of skin care products. China Dongsheng's financial results for the year ended June 30, 2007 are as follows: Income Statement Revenues for the fiscal year ended June 30, 2007 were $31,320,831, an increase of 58.3% or $11,536,919 over revenues for the fiscal year ended June 30, 2006. The Company's Dongsheng subsidiary accounted for $30,102,955 in revenues while the software subsidiary ('Paperclip') accounted for $1,217,876 in revenues. Dongsheng's Chitosan based product sales rose from approximately $11.03 million in fiscal year 2006 to approximately $15.84 million in fiscal year 2007. Ozone purifier product sales rose from approximately $8.66 million in fiscal year 2006 to approximately 14.16 million in fiscal year 2007. Among, the 2,500 retail outlets that sells Dongsheng's products, there are 379 retail stores that exclusively sells its products. These exclusive retail outlets were a driving force behind the increase in sales during the past fiscal year. The Company's gross profit for the fiscal year ended June 30, 2007 was $18,648,445, as compared to $10,891,954 for the same period in 2006. The Company's Dongsheng subsidiary accounted for $17,430,569 in gross profit while the Paperclip subsidiary accounted for $1,217,876 in gross profit. Gross margins increased to 59.7% in 2007 compared to 55.1% in 2006 as a result of our ability to decrease our cost of goods sold. The Company's net income for the fiscal year ended June 30, 2007 totaled $10,973,994, an increase of 62.3% from $6,761,503 for the fiscal year ended June 30, 2006. The Company's Dongsheng subsidiary accounted for $10,798,693 in net income while the Paperclip subsidiary accounted for $175,300 in net income. The increase in net income is a direct result of our 58.3% increase in sales. In addition, we were able to lower our cost of goods sold as sales order volume increased. Balance Sheet Total assets for the fiscal year ended June 30, 2007 totaled $41.2 million. Included in the $41.2 million is $34.3 million of property, plant, and equipment. The Company has incurred direct costs of construction or acquisition and design fees for a new plant and office building. The Company reported total liabilities of $20,484,937 for the fiscal year ended June 30, 2007 which includes an accrued taxes payable amount of $18,925,542. The Company has no preferred shares or long-term debt outstanding. Statement of Cash Flows Cash flows from operations during fiscal year June 30, 2007 amounted to $25,999,761 representing an increase of approximately 164.9% compared with cash flows from operations of $9,815,226 for the same period in 2006. The increased cash flow was due primarily to the increase of our net income by $4,212,491, to $10,973,994 in fiscal year 2007, compared with net income of $6,761,503 in fiscal year 2006. The increased cash flow was also due in part to a decrease in advances to suppliers by $3,280,649 during fiscal year 2007, due to our better control over payment to our suppliers. In addition, our taxes payable changed from $6,838,637 in fiscal year 2006 to $11,155,583 in fiscal year 2007. In 2006, Dongsheng changed its status from the private-run enterprise to foreign-invested enterprise following the acquisition by ASI. In accordance with Chinese laws, the subsidiary is now eligible to the income tax holiday of 5 years commencing from its first profit-making year. The subsidiary had applied for the income tax exemption from Chinese tax authority. As of September 23, 2007, Dongsheng, received an tax clearance notice from the Local Tax Bureau in China which stated that, all tax liabilities have been cleared. Furthermore, Dongsheng no longer owes the outstanding balance relating to income taxes and other tax liabilities. The Company has opted to make adjustment to the previous accrued tax liabilities in the next quarterly filing in which the accrued income tax payable will be reversed and recorded as income tax benefit in the period when the certificate of approval and tax clearance are granted by the Chinese authority. The total tax payable of $18,925,542 accrued in the Company's book as of June 30, 2007 includes $18,884,618 for the Company's operating subsidiary, Dongsheng Weiye, and $40,924 for the Company. Our cash flows used in investing activities amounted to $26,377,230 for the year ended June 30, 2007. Compared to 2005, our cash flows used in investing activities increased by $14,704,568, which is attributed primarily to the additions in construction in progress which account for approximately $23,614,652. Our cash flows provided by financing activities amounted to $41,443 in the fiscal year ended June 30 2007 compared to $1,185,056 in the same period for 2006. Our financing activity in fiscal year 2007 consisted our receiving $63,145 from our management as part of a note payable for miscellaneous business activity expenses. We also made payments of loans from our software development subsidiary in the amount of $21,702. In comparison, in fiscal year 2006, the $1,185,056 was a result of additional capital contributions by our management. Mr. Aidong Yu, Chairman and CEO of China Dongsheng stated, 'We are very pleased with our company's performance for 2007. We continue to show solid growth in our sales, which was attributable to the burgeoning sales network.' Mr. Yu continues, 'In the next years, I look forward to expanding into overseas markets including the U.S., Europe, and Southeast Asia.' About China Dongsheng International, Inc. China Dongsheng International, Inc., through its 100%-owned subsidiary, Jilin Dongsheng Weiye Science and Technology Co., Ltd, is engaged in the development and manufacture of nutritional supplements and personal care products domestically in China. It sells these products through a network marketing system with approximately 200,000 distributors and 2,500 retail outlets in twenty-six provinces throughout China. Safe Harbor Statement The statements contained herein that are not historical facts are 'forward-looking statements' within the meaning of Section 21E of the Securities and Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. Such forward-looking statements may be identified by, among other things, the use of forward-looking terminology such as 'believes,' 'expects,' 'may,' 'will,' 'should,' or 'anticipates' or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy that involve risks and uncertainties. In particular, our statements regarding the potential growth of the markets are examples of such forward-looking statements. The forward-looking statements include risks and uncertainties, including but not limited to, general economic conditions and regulatory developments, not within our control. The factors discussed herein and expressed from time to time in our filings with the Securities and Exchange Commission could cause actual results and developments to be materially different from those expressed or implied by such statements. The forward-looking statements are made only as of the date of this filing, and we undertake no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances. For more information, please contact: Peter D. Zhou Tel: +1-212-232-0120 DATASOURCE: China Dongsheng International, Inc. CONTACT: Peter D. Zhou, +1-212-232-0120, for China Dongsheng International, Inc.

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