Lithium & Boron Technology (LBTI) 8-K Results of Operations and Financial Condition

SmartHeat Inc. Announces Record 2008 Annual Results - Revenues Up 146%, Net Income Up203%, EPS of $0.29, Anticipates Rapid Earnings Growth in 2009 from Clean Technology Energy Savings Product Sales

· 2008 revenue of $32.7 million, up 146% compared to $13.3 million in 2007

· 2008 net income of $6.34 million, up 203% compared to $2.09 million in 2007

· 2008 earnings per share (EPS) of $0.29, up 164% compared to $0.11 in 2007

· Benefits from China’s national economic stimulus plan towards clean technology energy savings industry

· Anticipates growth momentum to continue in 2009

NEW YORK, March 18 /PRNewswire-Asia/ -- SmartHeat Inc. (Nasdaq: HEAT - - News; website: www.smartheatinc.com), a market leader in China's clean technology energy savings industry today announced audited 2008 financial results for the fiscal year ended December 31, 2008. SmartHeat is a US company with its primary operations in China. SmartHeat was the first China based company listed on NASDAQ in 2009.

In 2008, SmartHeat experienced continued rapid growth in a favorable market environment. Increased product sales were directly attributed to strong brand name, broader market acceptance of the Company’s products and services, deeper market penetration as well as economic expansion in China’s energy savings industry. SmartHeat’s advanced clean technology energy savings products significantly reduce heat energy waste, lower heat energy costs and reduce air pollution.

Record 2008 Revenue

· Revenue of $32.7 million, up 146% compared to $13.3 million in 2007.

· Revenue increase was primarily due to the significant increase in sales to new and existing customers.

Record 2008 Earnings

· Net income of $6.34 million, up 203% compared to $2.09 million in 2007.

· Net income increase was primarily due to rapid growth in revenue and reductions in costs from improved economies of scale and continuing efforts to increase the efficiency of operations.

Anticipates Significant Sales Growth in 2009 in a Favorable Market Environment

In addition to anticipated new customer orders through organic growth, SmartHeat is a beneficiary of China’s favorable environmental policies. China has allocated significant resources within its national economic stimulus plan to increase government spending on environmental protection related products and technology. SmartHeat stands to greatly benefit from these initiatives as the Company’s products directly address efficient energy use and reduction in air pollution.

Management Comments: 2008 Financial Results and 2009 Market Guidance

James Jun Wang, CEO of SmartHeat, commented: “Our audited 2008 financial results exceeded management’s financial performance targets as we laid out in early 2008. SmartHeat expects to experience significant product sales in 2009 as China has made reduction in air pollution a national priority through stronger environmental protection measures, greater funding efforts and broad mandates for clean technology energy savings equipment use. Based on significantly increased product orders received in the first two months in 2009 compared to the same period in 2008, SmartHeat anticipates strong product sales and earnings growth in 2009 from all sectors of our customer base: government, industrial, commercial and consumers. We look forward to another year of record earnings in 2009.”

About SmartHeat Inc.

SmartHeat Inc. (www.smartheatinc.com) is a NASDAQ Global Market listed (Nasdaq: HEAT - News) US company with its primary operations in China. SmartHeat is a market leader in China's clean technology energy savings industry. SmartHeat manufactures standard plate heat exchangers and custom plate heat exchanger units. SmartHeat’s products directly address air pollution problems in China where massive coal burning for cooking and heating purposes is the only source of economical heat energy in China. With broad product applications, SmartHeat's products significantly reduce heating costs, increase energy use and reduce air pollution. SmartHeat’s customers include global Fortune 500 companies as well as municipalities and industrial/residential users. China's heat transfer market is currently estimated at approximately $2.4 billion with double-digit annual growth according to China Heating Association.

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.

    Contact Information:

    Ms. Jane Ai, Corporate Secretary

    SmartHeat Inc.

    Tel: 011-86-13309831658

    Email: info@smartheatinc.com

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SMARTHEAT, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
	AS OF DECEMBER 31, 2008		AS OF DECEMBER 31, 2007
ASSETS
CURRENT ASSETS
Cash & cash equivalents	$	1,435,212	$	393,147
Restricted cash		462,048		537,098
Accounts receivable, net		11,390,169		4,762,822
Retentions receivable		290,852		191,319
Advances to suppliers		412,524		158,750
Other receivables, prepayments and deposits		698,834		766,231
Inventories		6,107,583		7,928,408
Due from related party		-		118,560
Note receivable		14,631		-
Total current assets		20,811,853		14,856,335
NON-CURRENT ASSETS
Restricted cash		219,472		-
Accounts receivable, net		310,810		949,998
Retentions receivable		166,912		169,309
Intangible assets, net		1,155,131		534,208
Property and equipment, net		2,436,553		2,040,809
Total noncurrent assets		4,288,878		3,694,324
TOTAL ASSETS	$	25,100,731	$	18,550,659
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable	$	1,210,906	$	3,128,585
Unearned revenue		850,408		3,125,406
Taxes payable		1,327,775		503,010
Accrued liabilities and other payables		1,330,812		807,700
Due to related party		-		445,990
Due to minority shareholder		5,303		-
Loans payable		2,443,450		4,619,856
Total current liabilities		7,168,654		12,630,547
DEFERRED TAX LIABILITY		38,854		-
COMMITMENTS AND CONTINGENCIES
MINORITY INTEREST		-		-
STOCKHOLDERS' EQUITY
Common stock, $0.001 par value; 75,000,000 shares authorized, 24,179,900 and 18,500,000 shares issued and outstanding at December 31, 2008 and December 31, 2007, respectively		24,180		18,500
Paid in capital		8,223,453		3,102,132
Statutory reserve		1,150,542		506,532
Accumulated other comprehensive income		984,629		473,859
Retained earnings		7,510,419		1,819,089
Total stockholders' equity		17,893,223		5,920,112
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	25,100,731	$	18,550,659

The accompanying notes are an integral part of these consolidated financial statements

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SMARTHEAT, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
	FOR THE YEARS ENDED DECEMBER 31,
	2008			2007
Net sales	$	32,676,082		$	13,273,151
Cost of goods sold		21,717,735			8,667,353
Gross profit		10,958,347			4,605,798
Operating expenses
Selling expenses		1,564,977			1,681,624
General and administrative expenses		1,851,693			687,466
Total operating expenses		3,416,670			2,369,090
Income from operations		7,541,677			2,236,708
Non-operating income (expenses)
Interest income		405,266			175,084
Interest expense		(314,192	)		(230,905	)
Other income		11,738			45,126
Other expenses		(13,709	)		(16,939	)
Exchange loss		(12,044	)		-
Subsidy income		16,230			52,591
Total non-operating income		93,289			24,957
Income before income tax		7,634,966			2,261,665
Income tax expense		1,293,660			175,647
Income after income tax		6,341,306			2,086,018
Less: minority interest		5,966			(1,873	)
Net income		6,335,340			2,087,891
Other comprehensive item
Foreign currency translation		510,770			333,449
Comprehensive Income	$	6,846,110		$	2,421,340
Basic weighted average shares outstanding		22,176,322			18,500,000
Diluted weighted average shares outstanding		22,176,432			18,500,000
Basic earnings per share	$	0.29		$	0.11
Diluted earnings per share	$	0.29		$	0.11

The accompanying notes are an integral part of these consolidated financial statements

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SMARTHEAT, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
	FOR THE YEARS ENDED DECEMBER 31,
	2008			2007
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	6,335,340		$	2,087,891
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation and amortization		252,598			104,055
Unearned interest on accounts receivable		(127,819	)		(122,379	)
Stock option compensation expense		5,613			-
Decrease in deferred tax liability		(163	)		-
Minority interest		5,966			(1,873	)
(Increase) decrease in current assets:
Accounts receivable		(4,943,868	)		(2,526,521	)
Retentions receivable		(74,797	)		70,446
Advances to suppliers		62,759			(45,386	)
Other receivables, prepayments and deposits		182,577			(327,734	)
Inventory		2,405,678			(2,184,063	)
Receivables from related party		-			(86,242	)
Increase (decrease) in current liabilities:
Accounts payable		(2,389,649	)		979,881
Unearned revenue		(2,993,636	)		1,265,085
Taxes payable		779,408			326,053
Accrued liabilities and other payables		(261,040	)		513,507
Payables to related party		-			(54,761	)
Net cash used in operating activities		(761,033	)		(2,041	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in restricted cash		(108,040	)		(135,915	)
Cash purchased at acquisition		55,426			-
Acquisition of property & equipment		(439,861	)		(909,280	)
Note receivable		(14,635	)		-
Net cash used in investing activities		(507,110	)		(1,045,195	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Change in due to minority shareholders		(663	)		-
Change in due from / (to) shareholder		(343,913	)		(558,243	)
Short term loans		(2,447,804	)		1,774,966
Capital contribution		5,100,000			-
Net cash provided by financing activities		2,307,620			1,216,723
EFFECT OF EXCHANGE RATE CHANGE ON CASH & CASH EQUIVALENTS		2,588			21,365
NET INCREASE IN CASH & CASH EQUIVALENTS		1,042,065			190,852
CASH & CASH EQUIVALENTS, BEGINNING OF YEAR		393,147			202,295
CASH & CASH EQUIVALENTS, END OF YEAR	$	1,435,212		$	393,147
Supplemental Cash flow data:
Income tax paid	$	660,127		$	134,033
Interest paid	$	274,969		$	280,719

The accompanying notes are an integral part of these consolidated financial statements

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