8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 16, 2009

SMARTHEAT INC.

(Exact Name of Registrant as Specified in Charter)

Nevada	000-53052	98 -0514768
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

A-1, 10, Street 7 Shenyang Economic and Technological Development Zone Shenyang, China	110027
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code: +86 (24) 2519-7699

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 DFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4 (c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02    Results of Operations and Financial Condition.

On November 16, 2009, SmartHeat Inc. issued a press release:

·   announcing its financial results for the fiscal quarter ended September 30, 2009 where revenues increased 83% to $37.8 million from $20.7 million in third quarter 2008 and net income increased 105% to $8.9 million from $4.3 million in third quarter 2008.

·   Affirming 2009 earnings guidance of $80 million in revenue and $15.5 million in net income.

The information contained in the press release is deemed to be "filed" under the Securities Exchange Act of 1934 as Exhibit 99.1 to this report, and such press release is incorporated herein by reference.

Item 9.01    Financial Statements and Exhibits.

(d)    Exhibits

Exhibit 99.1  Press Release “SmartHeat Inc. Announces Third Quarter 2009 Financial Results, Affirms Full Year Earnings Guidance and Anticipates Growth Momentum to Continue Into 2010”, dated November 16, 2009.  Exhibit 99.1 is deemed to be "filed" under the Securities Exchange Act of 1934 in this Current Report on Form 8-K.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated: November 16, 2009

SMARTHEAT INC.
By:	/s/ Jun Wang
Name:	Jun Wang
Title:	Chairman & Chief Executive Officer

EX-99.1

SmartHeat Inc. Announces Third Quarter 2009 Financial Results, Affirms Full Year

Earnings Guidance and Anticipates Growth Momentum to Continue Into 2010

· Revenues increased 83% to $37.8 million from $20.7 million in 3Q08

· Net income increased 105% to $8.9 million from $4.3 million in 3Q08

· Earnings Per Share increased 98% to $0.36 from $0.18 in 3Q08

· Affirms 2009 earnings guidance of $80 million in revenue and $15.5 million in net income

· Successfully completed $75 million financing

· Positive signs of economic growth in China, anticipates earnings growth momentum to continue into 2010

NEW YORK, November 16, 2009 /PRNewswire-Asia/ — SmartHeat Inc. (NASDAQ: HEAT - News; website: www.smartheatinc.com), a market leader in China's clean technology, energy savings industry today announced record financial results for the third quarter ended September 30, 2009. SmartHeat's products significantly reduce heat energy costs, increase energy efficiency and reduce air pollution.

James Jun Wang, Chairman & CEO of SmartHeat, commented, "We are excited to announce a quarter of strong financial performance. Our third quarter financial results are the result of a favorable market environment for our industry and our management team diligently executing on our growth strategies. China’s energy savings industry is supported by the Chinese government as a sector that is receiving significant funding through government initiatives and the Chinese stimulus package. Because of this support, China’s heat energy savings industry has not been as negatively impacted by the current global economic slowdown.

“The weakened economy has increased customer awareness of utilizing energy saving equipment from which we are a primary beneficiary. SmartHeat is well positioned to potentially reap significant benefits from the world’s transition to cleaner technologies and energy saving equipment,” concluded Mr. Wang.

Third Quarter Financial Performance

Revenues were $37.8 million in the third quarter of 2009 compared to $20.7 million in the same period last year, an 83% increase. The significant revenue increase was due significant sales growth across all product lines as a result of:

increasing our traditional heat supply sales as a result growth in the China domestic infrastructure construction industry, accounting for $24.22 million or 43% of total sales

adding new customers in the chemical, engineering, electric power, metal smelting, industries, accounting for $19.37 million or 34% of our total sales

rising heat meter sales, accounting for $7.8 million or approximately 14% of total sales

Gross profit was $13.1 million in the third quarter of 2009 compared to $7.4 million in the same period last year, a 77% increase. Gross profit increased primarily due to the increased sales

Operating expenses were $2.5 million in the third quarter of 2009 compared to $2.1 million in the same period last year, an 18% increase. Operating expenses increased in the quarter because of the higher general and administrative expenses associated with an increase inexpenses incurred to expand our growing sales and due to our recent financing activities.

Operating income was $10.7 million in the third quarter of 2009 compared to $5.4 million in the same period last year, a 100% increase. Operating income increased as a result of continued economies of scale in production costs combined with the rapid growth in revenues and improved operating efficiency.

Net income was $8.9 million in the third quarter of 2009 compared to $4.3 million in the same period last year, a 105% increase. Earnings per share were $0.36 in the third quarter of 2009 compared to $0.18 in the same period last year. In addition to the increased revenue and income from operations, net income and EPS both benefited from a decrease in the tax rate during the quarter from 18.5% to 15.5%.

Affirms Full Year 2009 Earnings Guidance

SmartHeat re-affirms its full year 2009 earnings guidance of approximately $15.5 million in net income and approximately $80 million in revenues compared to $6.3 million in net income and $32.7 million in revenues in 2008.

Business Outlook

Mr. Wang commented, “We continue to experience increasing order flow and demand from our existing and new customers for our energy savings equipment. Not only has demand for our products increased, but our production capabilities and product offerings have increased with recent acquisitions.

“In the third quarter the Company completed a $75 million equity offering. The net proceeds from the offering will be used for general corporate purposes, including the continued expansion of our product offerings, capital expenditures, and to meet growing working capital needs to continue our rapid growth. We believe the additional working capital will also be used by the company to bid on additional projects which are larger and more profitable, which we believe to be strategic fits to our long term business plan.

“We believe SmartHeat’s earnings growth momentum will continue well into 2010 as we anticipate a broader domestic economic expansion in China next year. We are optimistic that SmartHeat is on track to achieve solid fourth quarter earnings growth and another year of rapid growth in 2010 for our growing list of individual and institutional shareholders,” Mr Wang concluded.

About SmartHeat Inc.

Founded by James Jun Wang, a former executive at Honeywell China, 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 (PHEs), custom plate heat exchanger units (PHE Units) and heat meters. 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 Corporate Communications:

Ms. Jane Ai, Corporate Secretary

SmartHeat Inc.

Tel: 011-86-24-25363366

Email: info@SmartHeatinc.com

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SMARTHEAT, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME

(UNAUDITED)

	FOR THE NINE MONTHS ENDED SEPTEMBER 30,						FOR THE THREE MONTHS ENDED SEPTEMBER 30,
	2009			2008			2009			2008
Net sales	$	56,541,795		$	29,345,571		$	37,835,897		$	20,708,288
Cost of goods sold		36,562,363			19,502,070			24,687,460			13,273,914
Gross profit		19,979,433			9,843,501			13,148,438			7,434,374
Operating expenses
Selling expenses		2,325,471			1,664,882			1,165,939			1,056,854
General and administrative expenses		2,626,775			1,470,577			1,286,643			1,024,107
Total operating expenses		4,952,245			3,135,459			2,452,581			2,080,961
Income from operations		15,027,187			6,708,042			10,695,856			5,353,413
Non-operating income (expenses)
Interest income		145,839			318,070			65,418			57,387
Interest expense		(209,462	)		(257,116	)		(91,850	)		(94,076	)
Subsidy income		21,443			16,141			(13,897	)		7,000
Financial expense		(222,625	)		-			(222,625	)		-
Other expense					(13,676	)		11,199			(13,676	)
Other income		61,644			9,744			60,675			1,454
Total non-operating income (expenses)		(203,162	)		73,163			(191,081	)		(41,911	)
Income before income tax		14,824,026			6,781,205			10,504,776			5,311,502
Income tax expense		2,304,672			1,246,935			1,624,240			980,907
Net income from operations		12,519,354			5,534,270			8,880,536			4,330,595
Less: net income attributable to noncontrolling interest		-			5,934			-			5,934
Net income		12,519,354			5,528,336			8,880,536			4,324,661
Other comprehensive item
Foreign currency translation		270,399			578,670			257,256			167,774
Comprehensive Income	$	12,789,753			6,107,006		$	9,137,792		$	4,492,435
Basic weighted average shares outstanding		24,430,806			21,503,588			24,924,435			24,055,878
Diluted weighted average shares outstanding		24,513,092			21,503,647			25,010,735			24,056,054
Basic earnings per share	$	0.51		$	0.26		$	0.36		$	0.18
Diluted earnings per share	$	0.51		$	0.26		$	0.36		$	0.18

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

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SMARTHEAT, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	SEPTEMBER 30, 2009		DECEMBER 31, 2008
	(UNAUDITED)
ASSETS
CURRENT ASSETS
Cash & cash equivalents	$	60,294,695	$	1,435,212
Restricted cash		1,043,524		462,048
Accounts receivable, net		20,276,792		11,390,169
Retentions receivable		553,105		290,852
Advances to suppliers		3,474,936		412,524
Other receivables, prepayments and deposits		3,282,014		698,834
Inventories		14,394,162		6,107,583
Note receivable - bank acceptance		70,655		14,631
Total current assets		103,389,881		20,811,853
NON-CURRENT ASSETS
Restricted cash		19,185		219,472
Accounts receivable, net		582,375		310,810
Retentions receivable		2,309,852		166,912
Construction in progress		60,230		-
Intangible assets, net		4,122,844		1,155,131
Property and equipment, net		7,578,356		2,436,553
Total noncurrent assets		14,672,842		4,288,878
TOTAL ASSETS	$	118,062,723	$	25,100,731
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable	$	6,030,827	$	1,210,906
Unearned revenue		2,084,036		850,408
Notes payable - bank acceptance		1,000,543		-
Taxes payable		2,147,376		1,327,775
Accrued liabilities and other payables		7,071,473		1,330,812
Due to minority shareholder		-		5,303
Loans payable		5,564,504		2,443,450
Total current liabilities		23,898,759		7,168,654
DEFERRED TAX LIABILITY		15,519		38,854
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock, $0.001 par value; 75,000,000 shares authorized, 32,756,575 and 24,179,900 shares issued and outstanding at September 30, 2009 and December 31, 2008, respectively		32,757		24,180
Paid in capital		71,679,770		8,223,453
Statutory reserve		2,689,432		1,150,542
Accumulated other comprehensive income		1,255,603		984,629
Retained earnings		18,490,884		7,510,419
Total stockholders' equity		94,148,446		17,893,223
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	118,062,723	$	25,100,731

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

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SMARTHEAT, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	FOR THE NINE MONTHS ENDED SEPTEMBER 30,
	2009			2008
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income including noncontrolling interest	$	12,519,354		$	5,534,270
Adjustments to reconcile net income including noncontrolling interest to net cash used in operating activities:
Depreciation and amortization		409,371			173,821
Unearned interest on accounts receivable		195,901			(71,804	)
Stock option compensation expense		1,755			1,270
Decrease in deferred tax liability		(23,357	)		-
(Increase) decrease in current assets:
Accounts receivable		(9,305,812	)		(4,995,840	)
Retentions receivable		(2,403,726	)		107,279
Advances to suppliers		(3,051,902	)		320,260
Other receivables, prepayments and deposits		485,060			(2,346,526	)
Inventories		(8,277,813	)		118,223
Note receivable		(55,986	)		(201,118	)
Increase (decrease) in current liabilities:
Accounts payable		5,782,299			928,337
Unearned revenue		1,232,371			(1,581,803	)
Taxes payable		818,141			864,934
Accrued liabilities and other payables		(4,450,011	)		(266,072	)
Net cash used in operating activities		(6,124,354	)		(1,414,769	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Restricted cash		(380,457	)		(101,542	)
Purchase asset of Siping		(0	)		-
Construction in progress		(60,203	)		(83,027	)
Acquisition of property & equipment		(3,610,566	)		(287,398	)
Net cash used in investing activities		(4,051,225	)		(471,967	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Due to minority shareholders		-			(660	)
Due from / (to) shareholder		-			(587,644	)
Short term loans		12,117,636			-
Repayment of short term loans		(9,216,986	)		(1,361,113	)
Issuance of common stock		66,138,390			5,100,000
Net cash provided by financing activities		69,039,040			3,150,583
EFFECT OF EXCHANGE RATE CHANGE ON CASH & CASH EQUIVALENTS		(3,978	)		(9,482	)
NET INCREASE IN CASH & CASH EQUIVALENTS		58,859,482			1,254,365
CASH & CASH EQUIVALENTS, BEGINNING OF PERIOD		1,435,213			448,573
CASH & CASH EQUIVALENTS, END OF PERIOD	$	60,294,695		$	1,702,938
Supplemental Cash flow data:
Income tax paid	$	1,272,797		$	426,809
Interest paid	$	219,061		$	201,269

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

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