NEW YORK, May 15, 2012 /PRNewswire-Asia/ -- SmartHeat
Inc. (NASDAQ: HEAT; website: www.smartheatinc.com), a market leader
in China's clean technology,
energy savings industry, today announced financial results for the
quarter ended March 31,
2012.
Financial Summary
Net sales in the three months ended March
31, 2012, were $6.75 million,
while net sales in the three months ended March 31, 2011, were $7.89
million, an overall decrease of $1.15
million or 15%. The decrease in sales was due primarily to
the decrease in sales volume in the three months ended March 31, 2012, compared to the same period of
2011. Sales volume of PHEs, PHE Units, heat meters and heat pumps
decreased 17%, 21%, 72% and 19%, respectively, in the first quarter
of 2012 compared to 2011.
Gross profit was $1.67 million in
the three months ended March 31,
2012, compared to $2.56
million in the same period of 2011, or gross profit margins
of 25% and 32%, respectively. The decreased gross profit was due
primarily to our decreased sales, production volume and average
selling price.
Operating expenses totaled $9.55
million in the three months ended March 31, 2012, compared to $7.08 million in the same period of 2011, an
increase of $2.47 million or 35%.
Operating expenses as a percentage of sales were 142% in the three
months ended March 31, 2012, compared
to 90% in the three months ended March 31,
2011. The increase in operating expenses mainly resulted
from: bad debt allowance for other receivables of $0.39 million for the three months ended
March 31, 2012, compared with
$0 for the same period of 2011;
provision for inventory allowance of $0.13
million for the three months ended March 31, 2012, compared with $0 for the same period of 2011; and an
after-sales service expense of $1.63
million for the three months ended March 31, 2012, compared with $0.66 million for the same period of 2011 for
equipment installation and modifications of products under warranty
as part of our continued process of improving product quality and
introducing newly-developed technology to maintain existing
customers and attract new contracts.
Our net loss for the three months ended March 31, 2012, was $6.9
million compared to net loss of $3.9
million for the same period of 2011, an increase of
$2.98 million or 75%. Net loss as a
percentage of sales was 103% in the three months ended March 31, 2012, and net loss as a percentage of
sales was 50% in the comparable period of 2011. This increase in
net loss was attributable to decreased net sales and increased bad
debt allowance and inventory provision reserve in the first quarter
of 2012.
About SmartHeat Inc.
Founded by James Jun Wang, a
former executive at Honeywell China, SmartHeat Inc.
(www.smartheatinc.com) is a NASDAQ Global Select Market listed
(NASDAQ: HEAT) U.S. company with its primary operations in
China. SmartHeat is a market
leader in China's clean technology
energy savings industry. SmartHeat manufactures heat exchangers,
custom plate heat exchanger units (PHE Units), heat meters and heat
pumps. SmartHeat's products directly address air pollution problems
in China where massive coal
burning for cooking and heating 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,
municipalities and industrial/residential users. China's heat transfer market is currently
estimated at approximately $2.4
billion with double-digit annual growth according to the
China Heating Association.
Safe Harbor Statement
All statements in this press release that are not historical are
forward-looking statements made pursuant to the "safe harbor"
provisions of the Private Securities Litigation Reform Act of 1995.
There can be no assurance that actual results will not differ from
the company's expectations. SmartHeat's actual results may differ
from its projections. Further, preliminary results are subject to
normal year-end adjustments. You are cautioned not to place
undue reliance on any forward-looking statements in this press
release as they reflect SmartHeat's current expectations with
respect to future events and are subject to risks and uncertainties
that may cause actual results to differ materially from those
contemplated. Potential risks and uncertainties include, but are
not limited to, the risks described in SmartHeat's filings with the
Securities and Exchange Commission.
Contact Corporate Communications:
Ms. Jane Ai, Corporate Secretary
SmartHeat Inc.
Tel: 011-86-24-25363366
Email: info@SmartHeatinc.com
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SMARTHEAT INC. AND SUBSIDIARIES
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CONSOLIDATED BALANCE SHEETS
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March
31, 2012
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December 31, 2011
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(Unaudited)
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ASSETS
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CURRENT
ASSETS
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Cash &
equivalents
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$
15,853,549
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$
12,419,922
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Restricted
cash
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4,595,887
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2,688,691
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Accounts receivable,
net
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40,103,024
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47,055,517
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Retentions
receivable
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3,213,372
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3,583,898
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Advances to
suppliers
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14,013,756
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17,603,984
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Other receivables
(net), prepayments and deposits
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6,184,693
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6,663,330
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Taxes
receivable
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585,654
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-
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Inventories,
net
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54,391,322
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53,648,549
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Notes receivable -
bank acceptances
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1,083,269
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1,916,320
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Total current assets
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140,024,526
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145,580,211
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NONCURRENT
ASSETS
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Restricted
cash
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243,464
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204,991
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Retentions
receivable
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501,419
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670,291
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Advance to supplier
for equipment
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2,087,183
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1,122,914
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Construction in
progress
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1,338,051
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522,876
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Property and
equipment, net
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11,091,109
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11,348,601
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Intangible assets,
net
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15,287,187
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15,419,805
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Goodwill
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2,161,368
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2,098,332
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Other noncurrent
asset
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5,027
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10,044
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Total
noncurrent assets
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32,714,808
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31,397,854
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TOTAL
ASSETS
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$
172,739,334
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$
176,978,065
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LIABILITIES AND STOCKHOLDERS'
EQUITY
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CURRENT
LIABILITIES
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Accounts
payable
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$
9,631,362
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$
12,660,100
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Advance from
customers
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4,964,406
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4,585,218
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Taxes
payable
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23,644
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1,178,712
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Accrued liabilities
and other payables
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3,993,972
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4,136,298
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Notes payable - bank
acceptances
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1,971,908
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3,278,232
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Loans
payable
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18,588,247
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10,633,402
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Total current liabilities
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39,173,539
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36,471,962
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DEFERRED
TAX LIABILITY
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164,904
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189,516
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LONG-TERM
PAYABLE
|
2,065,361
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2,281,023
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COMMITMENTS AND CONTINGENCIES
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STOCKHOLDERS' EQUITY
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Common stock, $0.001
par value; 75,000,000
shares authorized, 3,955,774 shares issued and
outstanding at March 31, 2012, and December 31, 2011,
respectively
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3,956
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3,956
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Paid-in
capital
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103,004,904
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102,985,737
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Statutory
reserve
|
5,396,014
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5,396,014
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Accumulated other
comprehensive income
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11,389,924
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11,119,887
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Retained
earnings
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10,513,268
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17,445,733
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Total Company stockholders' equity
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130,308,066
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136,951,327
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NONCONTROLLING INTEREST
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1,027,464
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1,084,237
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TOTAL EQUITY
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131,335,530
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138,035,564
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TOTAL
LIABILITIES AND EQUITY
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$
172,739,334
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$
176,978,065
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SMARTHEAT INC. AND SUBSIDIARIES
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CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE LOSS
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THREE
MONTHS ENDED MARCH 31,
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2012
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2011
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(Unaudited)
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Net
sales
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$
6,746,398
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$
7,892,149
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Cost of
goods sold
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5,074,937
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5,330,229
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Gross
profit
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1,671,461
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2,561,920
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Operating
expenses
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Selling
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2,373,762
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1,929,155
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General and
administrative
|
4,677,214
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3,349,354
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Provision for bad
debt allowance
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2,495,891
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1,797,946
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Total operating
expenses
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9,546,867
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7,076,455
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Loss from
operations
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(7,875,406)
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(4,514,535)
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Non-operating income (expenses)
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Interest
income
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48,139
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75,334
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Interest
expense
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(282,580)
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(130,172)
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Financial
expense
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(51,131)
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(20,427)
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Foreign exchange
transaction loss
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(16,345)
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(125,100)
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Other
income
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1,162,964
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32,705
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Total non-operating
income (expenses), net
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861,047
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(167,660)
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Loss
before income tax
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(7,014,359)
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(4,682,195)
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Income tax
benefit
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(24,104)
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(680,899)
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Net loss
before noncontrolling interest
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(6,990,255)
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(4,001,296)
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Less: Loss
attributable to noncontrolling interest
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(57,790)
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(47,494)
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Net loss
to SmartHeat Inc.
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(6,932,465)
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(3,953,802)
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Other
comprehensive item
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Foreign currency
translation gain
attributable to SmartHeat Inc.
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270,037
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1,793,230
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Foreign currency
translation gain
attributable to noncontrolling interest
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1,017
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-
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Comprehensive loss attributable to SmartHeat
Inc.
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$
(6,662,428)
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$
(2,160,572)
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Comprehensive loss attributable to noncontrolling
interest
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$
(56,773)
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$
(47,494)
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Basic
weighted average shares outstanding
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3,955,774
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3,855,194
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Diluted
weighted average shares outstanding
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3,955,774
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3,855,194
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Basic loss
per share
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$
(1.75)
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$
(1.03)
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Diluted
loss per share
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$
(1.75)
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$
(1.03)
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SMARTHEAT INC. AND SUBSIDIARIES
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CONSOLIDATED STATEMENTS OF CASH
FLOWS
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THREE
MONTHS ENDED MARCH 31,
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2012
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2011
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(Unaudited)
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CASH FLOWS
FROM OPERATING ACTIVITIES:
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Loss including noncontrolling interest
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$
(6,990,255)
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$
(4,001,296)
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Adjustments to reconcile net loss including
noncontrolling
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interest to net cash used in operating activities:
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Depreciation and amortization
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467,833
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366,811
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Provision for bad debts
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2,063,016
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1,797,946
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Provision for other receivables
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386,536
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-
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Provision for inventory impairment
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126,156
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-
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Unearned interest on accounts receivable
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(26,081)
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(27,755)
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Stock option expense
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19,167
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51,085
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Changes in deferred tax
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(24,760)
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(752,593)
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(Increase) decrease in current assets:
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Accounts receivable
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4,966,662
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(844,730)
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Retentions receivable
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542,728
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163,638
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|
Advances to suppliers
|
3,666,981
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(4,101,704)
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Other receivables, prepayments and deposits
|
98,927
|
(4,840,886)
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|
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Inventories
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(778,158)
|
(2,877,453)
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Taxes receivable
|
(583,212)
|
-
|
|
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Increase (decrease) in current liabilities:
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|
Accounts payable
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(3,039,905)
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2,270,069
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Unearned revenue
|
89,621
|
619,602
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|
|
Taxes payable
|
(1,155,066)
|
(2,020,415)
|
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Accrued liabilities and other payables
|
(177,567)
|
(1,263,461)
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|
|
|
|
|
|
|
Net cash used in operating activities
|
(347,377)
|
(15,461,142)
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CASH FLOWS
FROM INVESTING ACTIVITIES:
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|
|
Change in restricted cash
|
(1,938,601)
|
753,705
|
|
|
Acquisition of property & equipment
|
(8,693)
|
(830,858)
|
|
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Acquisition of intangible assets
|
(7,927)
|
(63,176)
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|
Cash paid for acquisition
|
-
|
(13,488,030)
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|
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Cash from acquisition of subsidiaries
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-
|
448,849
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|
Notes receivable
|
833,325
|
777,259
|
|
|
Advance for equipment purchase
|
(964,269)
|
-
|
|
|
Construction in progress
|
(812,935)
|
(160,210)
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|
|
|
|
|
|
|
Net cash used in investing activities
|
(2,899,100)
|
(12,562,461)
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CASH FLOWS
FROM FINANCING ACTIVITIES:
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|
Proceeds from short-term loans
|
7,927,197
|
486,086
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Cash contribution from noncontrolling interest
|
-
|
744,512
|
|
|
Notes payable
|
(1,307,041)
|
-
|
|
|
Payment on notes payable
|
-
|
(1,342,691)
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|
|
|
|
|
|
|
Net cash provided by (used in) financing activities
|
6,620,156
|
(112,093)
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EFFECT OF
EXCHANGE RATE CHANGE ON CASH & EQUIVALENTS
|
59,948
|
307,134
|
|
|
|
|
|
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|
NET
INCREASE (DECREASE) IN CASH & EQUIVALENTS
|
3,433,627
|
(27,828,562)
|
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CASH &
EQUIVALENTS, BEGINNING OF PERIOD
|
12,419,922
|
56,806,471
|
|
|
|
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CASH &
EQUIVALENTS, END OF PERIOD
|
$
15,853,549
|
$
28,977,909
|
|
|
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|
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|
Supplemental cash flow data:
|
|
|
|
|
Income
tax paid
|
$
207,724
|
$
1,343,218
|
|
|
Interest paid
|
$
282,456
|
$
141,263
|
|
|
|
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|
SOURCE SmartHeat Inc.