China Ritar Power Announces First Quarter Fiscal 2010 Results

SHENZHEN, China, May 17 /PRNewswire-Asia/ -- China Ritar Power Corp. (Nasdaq: CRTP) ("China Ritar" or the "Company"), a leading Chinese manufacturer of innovative nano gel and environmentally friendly batteries, today announced its financial results for the first quarter of fiscal year 2010 ended on March 31, 2010.

First Quarter Highlights

-- Revenue increased 51% year-over-year to $24.8 million

-- Domestic sales increased to 26% of total revenue

-- Gross profit increased 45% year-over-year to $4.8 million

-- Net income increased 197% year-over-year to $1.6 million

-- Fully diluted earnings per share were $0.07, up from $0.03 in first

quarter 2009

"We are extremely pleased with our financial results for the quarter. Our strong growth is the result of continued demand for our lead acid batteries resulting in revenue from domestic and international markets increasing 72% and 45%, respectively," Mr. Jiada Hu, China Ritar's Chairman and Chief Executive Director commented. "Moreover, this quarter we were extremely honored to have our batteries selected to power the Brazilian Pavilion at the World Expo 2010 in Shanghai which enhances our strong market position and reputation for high quality batteries developed using advanced technology."

Revenue was $24.8 million for the first quarter of 2010, up 51.4% from revenue of $16.4 million in the first quarter of 2009. This increase in revenue was due to an increase in sales volume of 31.3% and a 15.3% increase in the Company's average selling price (ASP). Batteries used for Telecom, Alternative energy, UPS and Light electronic vehicles (LEV) markets accounted for 30%, 27%, 34% and 9% of total sales of the first quarter of 2010, respectively. International sales represented 74.3% of total sales with domestic sales representing the balance of 25.7%.

Gross profit for the quarter increased 44.9% to $4.8 million from $3.3 million in the same period of 2009. Gross margin for first quarter of 2010 was 19.2% compared to 20.1% in the first quarter of 2009.

Operating expenses were $2.5 million or 10.2% of sales, compared to $2.3 million or 14.3% of sales in the first quarter of 2009. The increase in operating expenses is mainly due to an increase in the dollar amount of $0.24 million for other selling, general and administrative expenses due to the Company's expanded production and sales volume during the first quarter.

Operating profit for the first quarter was $2.2 million, up 136.3% from $0.9 million in the first quarter of 2009. Operating margin was 9.0% compared to 5.8% in the same period a year ago.

Net income was $1.6 million in the first quarter of 2010, up 196.7% from $0.5 million in net income from the same period a year ago. Fully diluted earnings per share were $0.07 compared to fully diluted earnings per share of $0.03 in the first quarter of 2009.

Financial Condition

As of March 31, 2010, China Ritar had $20.9 million in cash and equivalents and restricted cash, $42.7 million in working capital and $38.8 million in total liabilities. Shareholders' equity stood at $57.3 million, up from $55.4 million at year end 2009.

Business Outlook

China Ritar Power has been granted a new industrial park by the Hengyang government. The industrial park will be completed during the second quarter of 2010 and the Company expects to begin installing equipment for 10 production lines in the second half of the year. Once completed, the total number of production lines will increase from 19 to 29.

"We are upbeat on the outlook for 2010 as opportunities in our target niche markets remain robust. Specifically, the telecom industry is expected to spend approximately $10-12 million as they build out the 3G network in China," commented Mr. Hu. "Over the past year, we have been working closely with the top three telecom providers in China and have been approved as a qualified supplier for China Unicom and China Mobile and expect to be approved by China Telecom this year."

Conference Call

China Ritar will host a conference call at 9:00 am EDT on Tuesday, May 18, 2010 to discuss the 2010 first quarter results. To participate in the conference call, please dial the following number fifteen minutes prior to the scheduled conference call time: 888-339-2688. International callers should dial 617-847-3007. The pass code for the call is 83490716. If you are unable to participate in the call at this time, a replay will be available on Tuesday, May 18, 2010 at 11:00 AM ET through Tuesday June 1, 2010. To access the replay, dial 888-286-8010, international callers should dial 617-801-6888. The conference pass code is 79945385. This conference call will be broadcast live over the Internet and can be accessed by all interested parties by clicking on http://ir.ritarpower.com/en . Please access the link at least fifteen minutes prior to the start of the call to register, download, and install any necessary audio software. For those unable to participate during the live broadcast, a 90-day replay will be available shortly after the call by accessing the same link.

About China Ritar Corp.

China Ritar designs, develops, manufactures and markets environmentally friendly, lead acid batteries with a wide range of capacities and applications, including telecommunications, Uninterruptible Power Supply (UPS) devices, Light Electrical Vehicles (LEV), and alternative energy systems (solar and wind power). China Ritar sells, markets and services six series and 197 models of Ritar-branded, cadmium-free valve-regulated lead-acid (VRLA) batteries. Products are sold worldwide with sales in 81 countries including China, India, and numerous markets in Europe and the Americas. Additional information can be found at the Company's website http://www.ritarpower.com .

Safe Harbor Statement

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: Certain statements in this press release and oral statements made by China Ritar on its conference call in relation to this release, constitute forward-looking statements for purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, included herein are forward-looking statements. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company's periodic reports that are filed with and available from the Securities and Exchange Commission. All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.

For more information, please contact:

Elite IR

John Marco, Partner

Tel: +1-310-819-2948

Email: John.marco@elite-ir.com

Leslie J. Richardson, Partner

Tel: +852-3183 0283

Email: Leslie.richardson@elite-ir.com

-FINANCIAL TABLES FOLLOW-

CHINA RITAR POWER CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

March 31 December 31

2010 2009

(Unaudited) (Audited)

ASSETS

Current assets:

Cash and cash equivalents $16,065,653 $20,459,361

Restricted cash 4,846,846 5,900,649

Accounts receivable, net of

allowances of $1,115,631 and

$1,115,321 23,730,447 24,920,825

Receivable from sale of a

subsidiary 417,503 417,387

Due from a former subsidiary 3,904,185 3,925,348

Inventory 22,724,610 19,484,224

Advance to suppliers 3,007,890 2,477,449

Other current assets 4,250,888 3,915,605

Total current assets 78,948,022 81,500,848

Non-current assets:

Property, plant and equipment, net 16,340,688 16,248,551

Construction in progress 94,185 136,443

Intangible assets, net 8,233 9,407

Land use right 465,976 468,265

Rental and utility deposits 82,462 82,439

Deferred income tax assets 119,547 115,064

Total assets $96,059,113 $98,561,017

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable $14,081,871 $16,658,868

Income and other taxes payable 4,660,234 3,986,935

Accrued salaries 498,191 502,978

Bills payable 9,598,172 13,498,001

Other current liabilities 2,048,698 2,800,879

Current portion of long term loans 1,342,846 1,342,473

Short-term loans 3,996,308 1,464,515

Total current liabilities 36,226,320 40,254,649

Long-term loans 2,548,721 2,881,188

Total liabilities 38,775,041 43,135,837

Stockholders' equity:

Preferred stock, $.001 par value,

10,000,000 shares authorized, none

issued and outstanding -- --

Common stock at $.001 par value;

100,000,000 shares authorized,

21,858,925 and 21,450,238 shares

issued and outstanding 21,859 21,450

Additional paid-in capital 31,721,124 31,461,723

Retained earnings 22,331,131 20,745,985

Accumulated other comprehensive

income 3,209,958 3,196,022

Total equity 57,284,072 55,425,180

Total liabilities and stockholders'

equity $96,059,011 $98,561,017

CHINA RITAR POWER CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE

INCOME (UNAUDITED)

For the Three Months Ended

March 31,

2010 2009

CONTINUING OPERATIONS

Net revenue $24,808,360 $16,383,661

Cost of sales 20,037,964 13,091,145

Gross profit 4,770,396 3,292,516

Operating expenses:

Salaries 565,842 394,893

Sales commission 531,551 749,224

Shipping and handling cost 285,260 281,946

Other selling, general and

administrative expenses 1,158,642 923,076

Total operating expenses 2,541,295 2,349,139

Operating profit 2,229,101 943,377

Other income / (expenses):

Interest income 44,827 57,649

Other income -- 2,540

Interest expenses (148,159) (147,424)

Foreign currency exchange loss (66,894) (49,316)

Other expenses (2,749) (1,663)

Total other expenses, net (172,975) (138,214)

Income from continuing operations

before income taxes 2,056,126 805,163

Income taxes 470,980 117,047

Income from continuing operations 1,585,146 688,116

DISCONTINUED OPERATIONS

Loss from discontinued operations,

net of taxes -- (153,857)

Net income 1,585,146 534,259

Add: Loss from discontinued

operations attributable to

non-controlling interest -- 7,694

Net income attributable to China

Ritar stockholders $1,585,146 $541,953

Other comprehensive income

attributable to China Ritar

stockholders:

Foreign currency translation

adjustment 13,936 107,421

Comprehensive income attributable to

China Ritar Stockholders 1,599,082 649,374

Comprehensive loss attributable to

non-controlling interest -- (7,695)

Comprehensive income $1,599,082 $641,679

Earnings (loss) per share

attributable to China Ritar

stockholders:

Basic:

- Income from continuing operations $0.07 $0.06

- Income (loss) from discontinued

operations -- (0.03)

- Net income $0.07 $0.03

Diluted:

- Income from continuing operations 0.07 0.06

- Income (loss) from discontinued

operations -- (0.03)

- Net income $0.07 $0.03

Weighted average number of shares

outstanding:

- Basic 21,714,637 19,133,154

- Diluted 21,714,637 19,133,154

CHINA RITAR POWER CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

For the Three Months Ended

March 31,

2010 2009

Cash Flows from Continuing Operating

Activities:

Net income $1,585,146 $534,259

Loss from discontinued operations, net

of taxes -- 153,857

Income from continuing operations 1,585,146 688,116

Adjustments to reconcile net income to

net cash provided by operating

activities:

Depreciation of property, plant and

equipment 384,904 273,861

Amortization of intangible assets and

land use right 3,594 3,592

Loss (gain) on disposal of property,

plant and equipment 2,721 (365)

Unrealized (loss) gain on derivative

instruments -- (22,992)

Changes in operating working capital

items:

Accounts receivable 1,197,244 3,064,437

Inventory (3,234,773) (1,785,432)

Advance to suppliers (529,721) --

Notes receivables (342,512) --

Deferred income tax assets (4,451) --

Other current assets 8,339 (799,486)

Accounts payable (2,581,477) (366,796)

Income and other tax payable 672,150 128,822

Accrued salaries (4,927) (110,718)

Bills payable (3,903,358) 880,465

Other current liabilities (754,576) (89,585)

Net cash provided by operating

activities (7,501,697) 1,863,919

Cash Flows from Continuing Investing

Activities:

Repayment from a former subsidiary -

Shanghai Ritar 22,254 --

Purchase of property, plant and

equipment (436,603) (496,069)

Sales proceeds of disposal of

property, plant and equipment 3,662 4,388

Net cash used in investing activities (410,687) (491,681)

Cash Flows from Continuing Financing

Activities:

Proceeds from stock issued for warrant

exercised 259,810 --

Proceeds from bank borrowings 3,647,443 1,626,177

Repayment of bank borrowings (1,449,456) (3,738,257)

Restricted cash 1,055,384 1,327,610

Net cash provided by financing

activities 3,513,181 (784,470)

Cash Flows from Discontinued

Operations Activities:

Net cash used in discontinued

operating activities -- (464,515)

Net cash used in discontinued

investing activities -- 314,805

Net cash used in discontinued

financing activities -- --

Effect of exchange rate changes on

cash -- (175)

Change in cash from discontinued

operations -- 149,885

Net cash used in discontinued

operations -- --

Effect of exchange rate changes on

cash and cash equivalents 5,495 (41,392)

Net (decrease) increase in cash and

cash equivalents (4,393,708) 546,376

Cash and cash equivalents, beginning

of period 20,459,361 7,541,697

Cash and cash equivalents, end of

period $16,065,653 $8,088,073

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