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): August 11, 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 August 11, 2009, SmartHeat Inc. issued a press release:

o announcing its financial results for the fiscal quarter ended June 30, 2009 where revenues increased 125% to $12.5 million from $5.6 million in the second quarter of 2008, and net income increased 257% to $2.6 million from $0.73 million in the second quarter of 2008;

o raising its third quarter 2009 financial guidance to approximately $35 million in revenues and approximately $6.8 million in net income; and,

o raising its 2009 earnings guidance to approximately $15.5 million in net income on revenues of approximately $80 million.

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 Record 2nd Quarter 2009 Financial Results, Raises Full Year Earnings Guidance, Anticipates Growth Momentum to Continue Into 2010 from Clean Technology Product Sales”, dated August 11, 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: August 11, 2009

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

EX-99.1

SmartHeat Inc. Announces Record 2nd Quarter 2009 Financial Results, Raises Full Year Earnings Guidance, Anticipates Growth Momentum to Continue Into 2010 from Clean Technology Product Sales

· - Revenues - increased 125% to $12.5 million from $5.6 million in 2Q08

· - Net income - increased 257% to $2.6 million from $0.73 million in 2Q08

· - Earnings Per Share of $0.11, an increase of 267% from EPS $0.03 in 2Q08

· - Raises 3rd quarter 2009 financial guidance to approximately $35 million in revenues and approximately $6.8 million in net income

· - Raises 2009 earnings guidance to approximately $15.5 millionin net income on revenues of approximately $80 million

· - Successfully completed recent asset acquisition of one of China’s largest industry players

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

NEW YORK, August 11, 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 2nd quarter ended June 30, 2009. SmartHeat's products significantly reduce heat energy costs, increase energy efficiency and reduce air pollution. SmartHeat is a U.S. company with its primary operations in China.

James Jun Wang, Chairman & CEO of SmartHeat, commented: "Our strong 2nd quarter financial results reflected management’s excellent execution of our growth strategies in a favorable market environment for our industry. Due to China’s effective implementation of its economic stimulus plan in which the energy savings industry was particularly supported by the Chinese government as a sector that receives significant funding allocations, China’s heat energy savings industry has not been negatively impacted by the current global economic slowdown. As a market leader in this space, we believe SmartHeat will continue to deliver consistent and rapid earnings growth in the foreseeable future.”

Mr. Wang continued:” SmartHeat noticed positive signs of economic recovery and gradual expansion in China’s energy savings industry. The current economic slowdown has significantly increased customer awareness towards utilization of energy savings equipment from which we are a primary beneficiary. SmartHeat is well positioned to potentially reap significant benefits from the world’s economic recovery.”

Record 2nd Quarter Revenues

· Revenues of $12.5 million, up 125%, compared to $5.6 million in Q2 2008.

· Significant revenue increase was due to continued market expansion in a favorable market environment.

· SmartHeat experienced significant sales and earnings growth across all product lines.

Record 2nd Quarter Net Income

· Net income of $2.6 million, up 257%, compared to $0.73 million in Q2 2008.

· Fully diluted EPS of $0.11, up 267%, compared to EPS of $0.03 in Q2 2008.

· Total shares issued and outstanding as of June 30, 2009 were 24,179,900 shares.

· The significant increase in net income was primarily due to greater economies of scale in production costs combined with rapid growth in revenues and improved operating efficiency.

Raises 3rd Quarter 2009 Earnings Guidance

Based on our anticipated greater pace of economic recovery in the 2nd half and increased customer demand for our products as we have entered our seasonally strongest quarter in a year, SmartHeat raises 3rd quarter earnings guidance to approximately $35 million in revenues and approximately $6.8 million in net income. In the 3rd quarter of 2008, SmartHeat reported revenues of $20.7 million and net income of $4.3 million.

Raises Full Year 2009 Earnings Guidance

SmartHeat raises full year 2009 earnings guidance to approximately $15.5 million in net income on approximately $80 million in revenues. In 2008, SmartHeat reported revenues of $32.7 million and net income of $6.34 million.   

Business Outlook

Mr. Wang commented:” Since the beginning of the 2nd half, we have experienced greater customer order flow and willingness among our existing and new customers to increase demand for our energy savings equipment. Our recently completed asset acquisition of one of China’s largest PHE manufacturers has not only expanded our production capabilities but also extended our product offerings to new customer segments. We believe SmartHeat’s rapid earnings growth momentum will continue well into 2010 as we anticipate broader global economic recovery next year. We are optimistic that SmartHeat is on track to achieve solid 3rd quarter earnings growth and another year of record success in 2009 for our growing list of individual and institutional shareholders."

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

SMARTHEAT, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	AS OF JUNE 30, 2009		AS OF DECEMBER 31, 2008
	(UNAUDITED)
ASSETS
CURRENT ASSETS
Cash & cash equivalents	$	2,408,714	$	1,435,212
Restricted cash		933,312		462,048
Accounts receivable, net		8,997,822		11,390,169
Retentions receivable		357,683		290,852
Advances to suppliers		2,909,069		412,524
Other receivables, prepayments and deposits		1,366,965		698,834
Inventories		8,220,181		6,107,583
Note receivable - bank acceptance		14,637		14,631
Total current assets		25,208,383		20,811,853
NON-CURRENT ASSETS
Restricted cash		23,345		219,472
Accounts receivable, net		740,116		310,810
Retentions receivable		1,420,830		166,912
Intangible assets, net		4,179,143		1,155,131
Property and equipment, net		7,363,041		2,436,553
Total noncurrent assets		13,726,475		4,288,878
TOTAL ASSETS	$	38,934,858	$	25,100,731
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable	$	1,620,935	$	1,210,906
Unearned revenue		1,691,800		850,408
Notes payable - bank acceptance		762,710		-
Taxes payable		559,085		1,327,775
Accrued liabilities and other payables		5,968,709		1,330,812
Due to minority shareholder		-		5,303
Loans payable		5,562,142		2,443,450
Total current liabilities		16,165,381		7,168,654
OTHER PAYABLES - NONCURRENT		1,200,586		-
DEFERRED TAX LIABILITY		23,488		38,854
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock, $0.001 par value; 75,000,000 shares authorized, 24,179,900 shares issued and outstanding at June 30, 2009 and December 31, 2008, respectively		24,180		24,180
Paid in capital		8,223,671		8,223,453
Statutory reserve		1,530,781		1,150,542
Accumulated other comprehensive income		997,772		984,629
Retained earnings		10,768,999		7,510,419
Total stockholders' equity		21,545,403		17,893,223
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	38,934,858	$	25,100,731

SMARTHEAT, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME

(UNAUDITED)

	FOR THE SIX MONTHS ENDED JUNE 30,						FOR THE THREE MONTHS ENDED JUNE 30,
	2009			2008			2009			2008
Net sales	$	18,705,898		$	8,637,283		$	12,498,395		$	5,558,232
Cost of goods sold		11,874,903			6,228,156			7,973,956			4,115,200
Gross profit		6,830,995			2,409,127			4,524,439			1,443,032
Operating expenses
Selling expenses		1,159,532			608,028			698,619			410,607
General and administrative expenses		1,340,132			446,470			770,610			162,325
Total operating expenses		2,499,664			1,054,498			1,469,229			572,932
Income from operations		4,331,331			1,354,629			3,055,210			870,100
Non-operating income (expenses)
Interest income		80,421			260,683			63,740			113,545
Interest expense		(117,612	)		(163,040	)		(64,760	)		(96,412	)
Subsidy income		35,340			9,141			35,340			9,141
Other expense		(11,199	)		-			(10,119	)		(2,891	)
Other income		969			8,290			969			-
Total non-operating income (expenses)		(12,081	)		115,074			25,170			23,383
Income before income tax		4,319,250			1,469,703			3,080,380			893,483
Income tax expense		680,432			266,028			462,831			161,071
Net income		3,638,818			1,203,675			2,617,549			732,412
Other comprehensive item
Foreign currency translation		13,143			410,896			11,433			168,802
Comprehensive Income	$	3,651,961		$	1,614,571		$	2,628,982		$	901,214
Basic weighted average shares outstanding		24,179,900			20,213,419			24,179,900			21,926,838
Diluted weighted average shares outstanding		24,191,063			20,213,419			24,206,099			21,926,838
Basic earnings per share	$	0.15		$	0.06		$	0.11		$	0.03
Diluted earnings per share	$	0.15		$	0.06		$	0.11		$	0.03

SMARTHEAT, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	FOR THE SIX MONTHS ENDED JUNE 30,
	2009			2008
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	3,638,818		$	1,203,675
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation and amortization		194,027			104,038
Unearned interest on accounts receivable		68,292			(22,366	)
Stock option compensation expense		218			-
Decrease in deferred tax liability		(15,380	)		-
(Increase) decrease in current assets:
Accounts receivable		1,349,607			(1,803,120	)
Retentions receivable		(1,320,413	)		346,914
Advances to suppliers		(2,487,309	)		(1,888,198	)
Other receivables, prepayments and deposits		(1,468,178	)		(277,990	)
Inventories		(2,109,938	)		2,874,481
Increase (decrease) in current liabilities:
Accounts payable		1,721,658			1,358,223
Unearned revenue		840,957			(1,709,100	)
Taxes payable		(769,124	)		(167,960	)
Accrued liabilities and other payables		226,202			423,418
Net cash (used in) provided by operating activities		(130,563	)		442,015
CASH FLOWS FROM INVESTING ACTIVITIES:
Restricted cash		(274,835	)		(229,833	)
Construction in progress		-			(39,549	)
Acquisition of property & equipment		(239,005	)		(119,299	)
Net cash used in investing activities		(513,840	)		(388,681	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of assets acquisition liability		(1,500,139	)		-
Repayment to shareholder		-			(44,862	)
Proceeds from (Repayment to) short term loans		3,117,362			(213,152	)
Net cash provided by (used in) financing activities		1,617,223			(258,014	)
EFFECT OF EXCHANGE RATE CHANGE ON CASH & CASH EQUIVALENTS		682			19,028
NET INCREASE (DECREASE) IN CASH & CASH EQUIVALENTS		973,502			(185,652	)
CASH & CASH EQUIVALENTS, BEGINNING OF PERIOD		1,435,212			393,147
CASH & CASH EQUIVALENTS, END OF PERIOD	$	2,408,714		$	207,495
Supplemental Cash flow data:
Income tax paid	$	995,787		$	197,756
Interest paid	$	121,259		$	87,887