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SmartHeat Inc. Reports Record 2nd Quarter Financial Results, Reaffirms 2008 Sales and Earnings Guidance
Thursday August 14, 7:05 am ET

NEW YORK, NY--(MARKET WIRE)--Aug 14, 2008 -- SmartHeat Inc. (OTC BB:SMHT.OB - News)

--  Earnings per Share of $0.04, increased approximately 400% from Q2 in
    2007.
--  Net Income of $0.73 Million, Increased 2270% from Q2 in 2007.
--  Record Revenue of $5.56 Million, Increased 380% from Q2 in 2007.
--  Expects strong earnings growth to continue in the second half of 2008
    which is SmartHeat's two strongest quarters of the year.
--  Reaffirms 2008 revenue guidance of approximately $42 million, net income
    between $7.4 million and $7.7 million.

SmartHeat Inc. (Website: www.smartheatinc.com) (OTC BB:SMHT.OB - News), a market leader in China's "green" technology heat energy saving industry, today announced record financial results for the quarter ended June 30, 2008.

SmartHeat generated revenues of $5.56 million, compared to $1.16 million in the same period in 2007, an increase of approximately 380%. The sales increase was primarily due to the expansion of the company's sales force, growth of SmartHeat's existing sales channels which developed new customers and the extension of the company's customer base into new markets in China. SmartHeat expects its growth momentum to continue through the remainder of 2008.

Net income for the quarter was $732,412, compared to approximately $3,219 for the same period in 2007. This increase is attributed to greater economies of scale combined with rapid growth in revenues and significantly improved operating efficiency. SmartHeat believes that net income growth momentum will continue in the second half of 2008.

James Jun Wang, SmartHeat's CEO, commented: "We are very pleased with the 2nd quarter financial results. Our strong financial performance reflects implementation of our growth strategies in a favorable market environment as China embraces more energy efficient products. SmartHeat stands to benefit greatly from China's 'green' movement towards clean environment as our efficient energy saving products reduce heat energy use by as much as 50%. We look forward to continued execution of our growth plan as we enter two of SmartHeat's strongest quarters."

About SmartHeat Inc.

SmartHeat Inc. is a US company with its primary operations in China. SmartHeat is a market leader in China's "green" technology heat energy saving industry. SmartHeat manufactures plate heat exchangers and compact plate heat exchanger units -- the technology that helps to capture and recycle waste heat thus reduces fossil fuel related costs and pollution. SmartHeat's products and technology have broad residential and industrial applications. China's heat transfer market is currently estimated at approximately $2.4 billion with double digit annual growth according to China Heating Association. Additional information about SmartHeat is available at its corporate website: www.smartheatinc.com

Safe Harbor Statement

All statements in this press release that are not historical are forward-looking statements made pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. There can be no assurance that actual results will not differ from the company's expectations. SmartHeat's actual results may differ from its projections. Further, preliminary results are subject to normal year-end adjustments. You are cautioned not to place undue reliance on any forward-looking statements in this press release as they reflect SmartHeat's current expectations with respect to future events and are subject to risks and uncertainties that may cause actual results to differ materially from those contemplated. Potential risks and uncertainties include, but are not limited to, the risks described in SmartHeat's filings with the Securities and Exchange Commission.

                      SMARTHEAT, INC. AND SUBSIDIARY
     CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
                                (Unaudited)

                              FOR THE SIX MONTHS     FOR THE THREE MONTHS
                                ENDED JUNE 30,          ENDED JUNE 30,
                               2008        2007        2008        2007
                            ----------  ----------  ----------  ----------

Net sales                   $8,637,283  $2,457,967  $5,558,232  $1,159,098

Cost of goods sold           6,228,156   1,598,789   4,115,200     756,368
                            ----------  ----------  ----------  ----------

Gross profit                 2,409,127     859,178   1,443,032     402,730

Operating expenses
     Selling expenses          608,028     484,893     410,607     267,682
     General and
      administrative
      expenses                 446,470     298,842     162,325     141,397
                            ----------  ----------  ----------  ----------

     Total operating
      expenses               1,054,498     783,735     572,932     409,079
                            ----------  ----------  ----------  ----------

Income (loss) from
 operations                  1,354,629      75,443     870,100      (6,349)

Non-operating income
 (expenses)
     Interest income           260,683     164,421     113,545      95,396
     Interest expense         (163,040)    (87,966)    (96,412)    (57,854)
     Other income                8,290      12,000       6,116      10,923
     Subsidy income              9,141      51,830         134         272
                            ----------  ----------  ----------  ----------

     Total non-operating
      income                   115,074     140,285      23,383      48,737
                            ----------  ----------  ----------  ----------

Income before income tax     1,469,703     215,728     893,483      42,388

Income tax expense             266,028      52,486     161,071      39,178
                            ----------  ----------  ----------  ----------

Income after income tax      1,203,675     163,242     732,412       3,210

Less: minority interest              -      (1,846)          -          (9)

                            ----------  ----------  ----------  ----------
Net income                   1,203,675     165,088     732,412       3,219

Other comprehensive item
     Foreign currency
      translation              410,896      77,254     168,802      39,842
                            ----------  ----------  ----------  ----------


Comprehensive Income        $1,614,571  $  242,342  $  901,214  $   43,061
                            ==========  ==========  ==========  ==========

Basic and diluted weighted
 average shares outstanding 20,213,419  21,926,838  18,500,000  18,500,000
                            ----------  ----------  ----------  ----------

Basic and diluted earnings
 per share                  $     0.06  $     0.01  $     0.04  $     0.00
                            ==========  ==========  ==========  ==========



                      SMARTHEAT, INC. AND SUBSIDIARY
                        CONSOLIDATED BALANCE SHEETS

                                                 AS OF            AS OF
                                               JUNE 30,        DECEMBER 31,
                                                 2008             2007
                                              (Unaudited)
ASSETS

CURRENT ASSETS
     Cash & cash equivalents                $       207,495 $       393,147
     Restricted cash                                807,709         537,098
     Accounts receivable, net                     7,954,078       4,762,822
     Retentions receivable                           26,552         191,319
     Advances to suppliers                        2,111,461         158,750
     Other receivables                            1,100,950         766,231
     Inventories                                  5,474,046       7,928,408
     Due from related party                         224,710         118,560
                                            --------------- ---------------

        Total current assets                     17,907,001      14,856,335

NON-CURRENT ASSETS
     Property and equipment, net                  2,133,803       2,040,809
     Construction in progress                        40,696               -
     Accounts receivable, net                             -         949,998
     Retentions receivable                                -         169,309
     Intangible assets, net                         620,801         534,208
                                            --------------- ---------------

       Total noncurrent assets                    2,795,300       3,694,324

                                            --------------- ---------------
TOTAL ASSETS                                $    20,702,301 $    18,550,659
                                            =============== ===============


LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
     Accounts payable                       $     4,724,904 $     3,128,585
     Unearned revenue                             1,565,208       3,125,406
     Tax payable                                    362,121         503,010
     Other payables                               1,294,697         807,700
     Due to related party                           526,772         445,990
     Loans payable                                4,693,917       4,619,856
                                            --------------- ---------------

         Total current liabilities               13,167,619      12,630,547

COMMITMENTS AND CONTINGENCIES

MINORITY INTEREST                                         -               -

STOCKHOLDERS' EQUITY
     Common stock, $0.001 par value;
      75,000,000 shares authorized,
      22,549,900 and 18,500,000 shares
      issued and outstanding at June 30, 2008
      and December 31, 2007, respectively            22,550          18,500
     Paid in capital                              3,098,082       3,102,132
     Statutory reserve                              627,722         506,532
     Accumulated other comprehensive income         884,755         473,859
     Retained earnings                            2,901,573       1,819,089
                                            --------------- ---------------

         Total stockholders' equity               7,534,682       5,920,112

                                            --------------- ---------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY  $    20,702,301 $    18,550,659
                                            =============== ===============


Contact Information:
____________________________________

U.S. Contact:
Mr. Arnold Staloff
Independent Board Member
SmartHeat Inc.
Tel: 212-631-3510

Corporate Contact:
Mr. James Wang
CEO
SmartHeat, Inc.
Tel: 011-86-13701368262
Email: info@smartheatinc.com
http://www.smartheatinc.com
____________________________________
Source: SmartHeat, Inc.

 

 
Copyright © SmartHeat, Inc. 2008
 
 
 
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