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(CHAD LOGO)THERAPEUTICSInnovative Respiratory Solutions
    
    FOR IMMEDIATE RELEASE
    
    21622 Plummer StreetChatsworth, CA 91311Toll Free: 800.423.8870Phone: 818.882.0883Main Fax: 818.882.1809Company Contact:
    
    
    
    Investor Contact:Earl L. Yager
    
    
    
    Neil Berkman AssociatesPresident and CEO
    
    
    
    (310) 826  5051www.CHADtherapeutics.com
    
    
    

info@BerkmanAssociates.com
 CHAD Therapeutics Reports
Fiscal 2007 Second Quarter and First Half Financial Results
 Management is Encouraged by the Recent CMS Ruling
Establishing New Reimbursement Rate for Oxygen Transfilling Systems Such as CHADs TOTAL
O 2 Home Oxygen Filling System
 Provides Update on Products in Development for the Sleep Disorder Market
 CHATSWORTH, California, CHAD Therapeutics, Inc.
(ASE:CTU) 2 ®
 Second Quarter and First Half Results
     (more)
 CHAD,
OXYMATIC, OXYMIZER, OXYLITE, and TOTAL
O2 are Registered Trademarks of Chad Therapeutics, Inc.
ISO 13485 Certified Company
WWW.CHADTHERAPEUTICS.COM




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CHAD Therapeutics Reports Fiscal 2007 Second Quarter and First Half Financial Results
 2 2 2
  Management Comments on CMS Ruling
 2
 2 2
  Sleep Product Update
   (more)




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CHAD Therapeutics Reports Fiscal 2007 Second Quarter and First Half Financial Results
    About CHAD Therapeutics
 www.CHADtherapeutics.com
 Safe Harbor Statements under the Private Securities Litigation Reform Act of 1995.
 The foregoing statements regarding prospects for future earnings and revenues, future
sales trends and the introduction of products under development are forward-looking statements that
involve certain risks and uncertainties. A number of important factors could cause actual results
to differ materially from those contemplated by such forward-looking statements. These include the
potential loss of one of our major customers upon whom we depend for a material portion of our
business, increased competition and continuing downward pressure on prices for certain of our
products, the potential introduction of new products with perceived competitive advantages over the
Companys products, changes or proposed changes in health care reimbursement which affect homecare
providers, the terms of any distribution agreement which may be negotiated with respect to our
TOTAL O2 system or our sleep products, and CHADs ability to anticipate and respond to
technological and economic changes in the home oxygen market. The projected timing for the
introduction of new products may be delayed as a result of unforeseen difficulties encountered in
the design, manufacture and quality testing for such products. The Company has limited design and
manufacturing resources and it relies to a significant extent upon independent contractors for the
development of products for the sleep disorder market. As a result, the Company may have more
difficulty ensuring adherence to projected timetables for the introduction of such products.
Moreover, the success of the Companys products and products under development will depend on their
efficacy, reliability and the health care communitys perception of the products capabilities and
benefits, the degree of acceptance the products achieve among homecare providers and, with respect
to products under development, obtaining timely regulatory approval. Additional factors that could
cause actual results to differ materially from those contemplated in this press release can be
found in the Companys annual and quarterly reports filed with the Securities and Exchange
Commission under the caption Risk Factors.
  * * * * *
    
    424x




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CHAD THERAPEUTICS, INC.
 Three Months Ended
    
    
    Six Months EndedSeptember 30,
    
    
    September 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Net sales
    
    $
    4,983,000
    
    
    $
    5,375,000
    
    
    $
    10,459,000
    
    
    $
    11,270,000Cost of sales
    
    
    3,366,000
    
    
    
    3,594,000
    
    
    
    7,028,000
    
    
    
    7,388,000Gross profit
    
    
    1,617,000
    
    
    
    1,781,000
    
    
    
    3,431,000
    
    
    
    3,882,000Costs and expenses:Selling, general and administrative
    
    
    1,682,000
    
    
    
    1,699,000
    
    
    
    3,384,000
    
    
    
    3,543,000Research and development
    
    
    322,000
    
    
    
    435,000
    
    
    
    657,000
    
    
    
    767,000Total costs and expenses
    
    
    2,004,000
    
    
    
    2,134,000
    
    
    
    4,041,000
    
    
    
    4,310,000Operating loss
    
    
    (387,000
    )
    
    
    (353,000
    )
    
    
    (610,000
    )
    
    
    (428,000
    )Other income, net
    
    
    16,000
    
    
    
    13,000
    
    
    
    39,000
    
    
    
    19,000Loss before income taxes
    
    
    (371,000
    )
    
    
    (340,000
    )
    
    
    (571,000
    )
    
    
    (409,000
    )Income tax benefit
    
    
    (64,000
    )
    
    
    (130,000
    )
    
    
    (148,000
    )
    
    
    (157,000
    )Net loss
    
    $
    (307,000
    )
    
    $
    (210,000
    )
    
    $
    (423,000
    )
    
    $
    (252,000
    )Loss per share:Basic
    
    $
    (0.03
    )
    
    $
    (0.02
    )
    
    $
    (0.04
    )
    
    $
    (0.02
    )Diluted
    
    $
    (0.03
    )
    
    $
    (0.02
    )
    
    $
    (0.04
    )
    
    $
    (0.02
    )Weighted shares outstanding:Basic
    
    
    10,169,000
    
    
    
    10,141,000
    
    
    
    10,169,000
    
    
    
    10,137,000Diluted
    
    
    10,169,000
    
    
    
    10,141,000
    
    
    
    10,169,000
    
    
    
    10,137,000




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CHAD THEREAPEUTICS, INC.
 September 30,2006
    
    
    2005AssetsCurrent assets:Cash
    
    $
    1,777,000
    
    
    $
    434,000Accounts receivable, net
    
    
    2,568,000
    
    
    
    3,013,000Income taxes refundable
    
    
    182,000
    
    
    
    Inventories, net
    
    
    6,303,000
    
    
    
    8,118,000Prepaid expenses and other assets
    
    
    146,000
    
    
    
    472,000Deferred income taxes
    
    
    640,000
    
    
    
    518,000Total current assets
    
    
    11,616,000
    
    
    
    12,555,000Property, plant and equipment, net
    
    
    818,000
    
    
    
    1,124,000Intangible assets, net
    
    
    1,073,000
    
    
    
    863,000Deferred income taxes
    
    
    610,000
    
    
    
    568,000Other assets
    
    
    44,000
    
    
    
    65,000Total Assets
    
    $
    14,161,000
    
    
    $
    15,175,000Liabilities and Shareholders EquityCurrent liabilities:Accounts payable
    
    $
    923,000
    
    
    $
    1,210,000Accrued expenses
    
    
    1,206,000
    
    
    
    1,176,000Income taxes payable
    
    
    
    
    
    
    Total current liabilities
    
    
    2,129,000
    
    
    
    2,386,000Capital lease obligation, net of current portion
    
    
    
    
    
    
    7,000Total liabilities
    
    
    2,129,000
    
    
    
    2,393,000Shareholders equity:Common shares, .01 par value, authorized 40,000,000
shares, 10,144,000 and 10,022,000 issued and outstanding
    
    
    13,473,000
    
    
    
    13,379,000Accumulated deficit
    
    
    (1,441,000
    )
    
    
    (597,000
    )Net shareholders equity
    
    
    12,032,000
    
    
    
    12,782,000Total Liabilities and Shareholders Equity
    
    $
    14,161,000
    
    
    $
    15,175,000