SHENZHEN, China, Nov. 13 /Xinhua-PRNewswire-FirstCall/ -- China Ritar Power Corp. (OTC Bulletin Board: CRTP) ("China Ritar" or the "Company"), a leading Chinese manufacturer of lead acid batteries, today announced its financial results for the third quarter of fiscal year 2008 ended on September 30, 2008.

    Third Quarter Highlights

    -- Revenue grew 30.4% year-over-year to a record $36.3 million
    -- Gross profit increased 18.0% to a record $7.5 million from $6.3
       million a year ago
    -- Net income was $2.4 million, compared to $3.1 million for the
       third quarter a year ago. Excluding $0.96 million non-cash, stock-
       based compensation expense, non-GAAP net income increased 7.8% to
       $3.4 million
    -- Fully diluted earnings per share were $0.12, compared to $0.16 a
       year ago. Non-GAAP fully diluted earnings per share was $0.17
    -- Overseas sales accounted for 83% of total sales in the third
       quarter, compared to 71% for the first half of 2008
    -- Alternative energy sales increased to 15% of sales, compared to 6%
       a year ago

"We made significant progress expanding our market share in the third quarter with increased sales overseas and further penetration in the alternative energy market. Moreover, we continue to experience strong demand from telecom and uninterruptable power sources (UPS) markets which contributed to our strong performance for the quarter," commented Mr. Jiada Hu, China Ritar's Chairman and Chief Executive Officer. "Our advanced R&D in product innovation has granted us a unique edge in establishing our position in the alternative energy market with world-leading clients such as Emerson Electric in the US and Suntech Power in China. We believe that our successful penetration in this market will contribute to stronger growth and higher margins over the next few years."

Revenue was a record $36.3 million for the third quarter of 2008, exceeding revenue of $27.8 million in the third quarter of 2007 by 30.4%. Revenue growth was mainly attributed to a significant increase in sales of telecom, UPS and alternative energy batteries in overseas markets as a result of proactive marketing strategies during the period. Batteries used for Telecom, UPS and light electronic vehicles (LEV) markets accounted for 41%, 31% and 10% of total sales of the third quarter of 2008, respectively. During the quarter, the Company successfully increased its penetration in the alternative energy battery market with the addition of five new customers bringing the total customers for this market to 30. Revenue generated from this market increased to 15% of the Company's total sales during the third quarter of 2008 compared to 6% in the same period a year ago.

Gross profit in the third quarter increased 18.0% to a record $7.5 million from $6.3 million in the same period last year. Gross margin for the quarter was 20.5% compared to 22.7% in the third quarter of 2007. The decrease in gross margin is mostly due to a special promotion with lower sales price implemented as a part of the Company's sales strategy to increase their market share. The promotional campaign offered on average a 2-3% reduction in sales price and is expected to last throughout 2008.

Operating expenses increased 53.3% to $4.0 million compared to the same period last year. The increase was mostly due to $0.96 million non-cash, stock-based compensation recognized under salaries in the quarter that did not occur in the year earlier period. This accounting arrangement relates to the potential release of shares of the Company's common stock to the Company's CEO from escrow pursuant to a make good agreement entered into by the Company in connection with its private placement financing in February 2007. Management believes that the Company will meet the net income target for 2008 of $8.2 million set forth in that make good agreement, therefore recording the compensation expense for the third quarter of 2008. Excluding this non-cash, stock-based compensation expense, operating expenses were 8.3% of revenue compared to 9.3% of revenue a year ago.

Income tax increased to $777,491 from $327,242 in the third quarter in 2007. The Company paid more taxes mostly because of the increased income and minority interests. The increase of income tax was also due to a change of income tax rate of the Company's subsidiary, Shenzhen Ritar, to 18% as of January 1, 2008, previously it was 7.5%. The Company expects the tax rate to remain the same for the fourth quarter and increase to 20% for 2009. The tax rates for other facilities remain the same.

Net income decreased 22.9% to $2.4 million in the third quarter from $3.1 million in the same period last year. Excluding the non-cash, stock-based compensation, non-GAAP net income for the third quarter of 2008 was $3.4 million, increasing 7.8% from the same period prior year. Non-GAAP net margin for the third quarter was 9.4%, compared to 11.2% for the same period in 2007. Fully diluted earnings per share were $0.12, compared to $0.16 a year ago. Non-GAAP fully diluted earnings per share were $0.17, increasing 8.9% from a year ago.

Nine Months Results

Revenue for the first nine months of 2008 was $86.4 million, up 75.9% from $49.1 million during the same period prior year. Gross profit was $17.5 million, or 20.3% of revenue, up 64.8% from $10.6 million, or 21.6% of revenue, in the first nine months of 2007. Operating profit was $7.6 million, or 8.8% of revenue, up 36.2% from $5.6 million, or 11.4% of revenue, in the first nine months of 2007. Net income for the first nine months of 2008 was $4.7 million, or 5.4% of net revenue, compared to net income of $4.5 million, or 9.2% of revenue in the same period a year ago. Net income for the first nine months of 2008 includes approximately $3 million in non-cash stock-based compensation discussed above. Non-GAAP net income for the first nine months was approximately $7.7 million, increasing 71.1% compared to the same period last year. Diluted earnings per share were $0.24, compared to $0.25 per diluted share in the same period a year ago.

Financial Condition

As of September 30, 2008, China Ritar had $3.7 million in cash and equivalents, $24.0 million in working capital and $4.1 million in long-term loan. Shareholders' equity stood at $33.2 million, up from $23.7 million at year end 2007.

Business Outlook

China Ritar added five new production lines at the Hengyang factory in the first half of 2008 bringing the total number of production lines to 19. The Company is in the process of ramping up the utilization rate of its new production lines which is currently at 25% and expected to increase to 85% in 2009. The Company expects revenues from its batteries used for alternative energy storage will increase to 15% of total sales in 2008 and 25% in 2009, compared to 5% in 2007.

"We are strategically adjusting our product mix away from highly competitive markets such as automobiles to higher margin, emerging markets. We believe the demand for alternative energy storage will continue to increase as developing countries strive to reduce C02 emissions," said Mr. Jiada Hu. "We also believe that we have established a strong competitive position with our nano gel batteries that are of equal quality yet priced 1/3 to 1/2 less than international competitors. Moreover, we continue to develop our position in the telecom market, especially in developing countries such as India and Brazil, which are undergoing nation-wide construction of their telecom infrastructures, and China, which is ramping-up its 3G network construction throughout the country."

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 56 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

This press release contains certain statements that may include 'forward- looking statements' within the meaning of federal securities laws. 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.

                        -- FINANCIAL TABLES FOLLOW --



                           CHINA RITAR POWER CORP.
                    CONDENSED CONSOLIDATED BALANCE SHEETS


                                                September 30,    December 31,
                                                        2008            2007
                                                  (unaudited)
                      ASSETS
    Current assets:
    Cash and cash equivalents                 $    3,723,965  $    4,775,562
    Accounts receivable, net of allowances
     of $1,208,391 and $670,327                   24,879,945      12,042,973
    Inventories                                   22,944,858      11,850,682
    Advance to supplier                            1,922,308       3,328,039
    Other current assets                           1,406,042         577,493
    Restricted cash                                3,475,050       5,857,637

    Total current assets                          58,352,168      38,432,386

    Property, plant and equipment:
    Property, plant and equipment, net            12,855,833       6,274,103
    Intangible assets, net                            15,372          18,083
    Land use right                                   482,257         451,456
    Due from related parties                              --         206,175

    Total assets                              $   71,705,630  $   45,382,203

       LIABILITIES AND STOCKHOLDERS' EQUITY
    Current liabilities:
    Accounts payable                          $   21,422,291  $   10,878,649
    Income and other tax payable                   2,399,035       1,168,938
    Accrued salaries                                 415,768         300,552
    Bills payable                                  1,550,096       4,012,797
    Other current liabilities                      2,256,394       1,939,708
    Current portion of long term debt                536,950         170,903
    Short term loans                               5,792,748       3,089,922

    Total current liabilities                     34,373,282      21,561,469

    Long-term liabilities:
    Long-term loans                                4,074,679         136,722
                                                   4,074,679         136,722

    Total liabilities                             38,447,961      21,698,191

    Minority interest in consolidated
     subsidiaries                                      9,310          28,058
    Commitments and contingencies

               STOCKHOLDERS' EQUITY
    Stockholders' equity
    Preferred stock, $.001 par value,
     10,000,000 shares authorized, no
     shares issued and outstanding                        --              --
    Common stock at $.001 par value;
     authorized 100,000,000 shares
     authorized, 19,134,992 and 19,000,996
     shares issued and outstanding                    19,135          19,001
    Additional paid-in capital                    18,259,376      15,343,481
    Retained earnings                             11,570,436       6,889,145
    Accumulated other comprehensive income         3,399,412       1,404,327

    Total stockholders' equity                    33,248,359      23,655,954

    Total liabilities and stockholders'
     Equity                                   $   71,705,630  $   45,382,203




                           CHINA RITAR POWER CORP.
     CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME


                              Nine Months Ended        Three Months Ended
                                 September 30,              September 30,
                                 2008         2007         2008         2007
                           (unaudited)  (unaudited)  (unaudited)  (unaudited)
    Revenue               $86,394,684  $49,102,024  $36,321,897  $27,849,417

    Cost of sales          68,893,115   38,482,501   28,868,390   21,531,285

    Gross profit           17,501,569   10,619,523    7,453,507    6,318,132
    Operating expenses
    Salaries                3,946,743      870,074    1,469,858      258,219
    Sales commission          875,854      960,622      419,499      726,104
    Shipping and handling
     cost                   1,166,326      928,194      463,794      508,986
    Other selling, general
     and administrative
     expenses               3,914,333    2,271,521    1,633,578    1,106,813
    Additional expenses            --       10,643           --           --

                            9,903,256    5,041,054    3,986,729    2,600,122

    Operating profit        7,598,313    5,578,469    3,466,778    3,718,010

    Other income and
     (expenses)
    Interest income           128,398       21,030       49,260        4,506
    Other income                  963        1,365          744        1,247
    Interest expenses        (749,610)    (188,939)    (403,439)     (79,694)
    Foreign currency
     exchange (loss) gain    (457,690)    (297,412)      74,433     (147,131)
    Other expenses             (8,739)     (33,085)      (3,425)     (34,320)

    Other (expenses)       (1,086,678)    (497,041)    (282,427)    (255,392)

    Income before income
     taxes and minority
     interests              6,511,635    5,081,428    3,184,351    3,462,618

    Income taxes           (1,850,361)    (540,810)    (777,491)    (327,242)

    Income before minority
     interests              4,661,274    4,540,618    2,406,860    3,135,376

    Minority interests
     share (profit) loss       20,017       (4,923)       3,205       (8,787)

    Net income              4,681,291    4,535,695    2,410,065    3,126,589

    Other comprehensive
     income
    Foreign currency
     translation
     adjustment             1,995,085      725,129      352,424      305,412

    Comprehensive income   $6,676,376   $5,260,824   $2,762,489   $3,432,001

    Earnings per share:
    - Basic                     $0.24        $0.26        $0.13        $0.16
    - Diluted                   $0.24        $0.25        $0.12        $0.16

    Weighted average
     number of shares
     outstanding:
    - Basic                19,125,115   17,751,406   19,134,992   19,000,996
    - Diluted              19,479,221   18,352,671   19,519,730   19,722,493



                           CHINA RITAR POWER CORP.
               CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (UNAUDITED)

                                                         Nine Months Ended
                                                            September 30,
                                                         2008           2007
    Operating activities
    Income for the period                       $   4,681,291 $    4,535,695
    Adjustments to reconcile net income from
     operations to net cash used in
     operating activities:
             Depreciation and amortization of
              property, plant and equipment           653,925        390,532
     Amortization of land use right                     2,264             --
    Allowance of bad debts-Accounts receivable        479,359        119,677
    Allowance of bad debts-Other receivable            67,549         26,771
    Allowances for slowing moving items               117,198             --
    Stock based compensation-make good provision    2,890,050             --
    Minority interests                                (20,017)         4,923
    Changes in non-cash operating working
     capital items:                                        --             --
    Accounts receivables                          (12,103,486)    (2,506,147)
    Inventories                                   (10,061,890)    (8,056,587)
    Advance to suppliers                            1,546,540             --
    Other current assets                             (836,721)    (1,364,909)
    Accounts payable                                9,542,377      2,318,614
    Income tax and other tax payable                1,132,426       (581,766)
    Accrued salaries                                   97,431        154,042
    Bills payable                                  (2,656,342)     2,709,815
    Other current liabilities                         131,190      1,578,350
    Net cash used in operating activities          (4,336,856)      (670,990)

    Investing activities
    Loan to related parties                           216,761        618,401
    Proceeds from disposal of fixed assets                 --            374
    Purchase of equipment                          (6,615,432)    (2,181,130)
    Net cash used in investing activities          (6,398,671)    (1,562,355)

    Financing activities
    Proceeds from issuance of stock, net of
     direct issue expenses $1,835,952                      --     10,414,048
    Proceeds from issuance of stock for warrant
     exercised                                         26,105        128,607
    Proceeds from other loan borrowings                85,812         49,653
    Proceeds from bank borrowings                  23,609,767      3,817,192
    Repayment of other loan borrowings                     --       (360,529)
    Repayment of bank borrowings                  (17,102,702)    (3,142,808)
    Deferred offering costs                                --        321,271
    Restricted cash                                 2,724,036     (3,428,421)
    Net cash provided by financing activities       9,343,018      7,799,013

    Effect of exchange rate changes in cash           340,912        279,397

    Net (decrease) increase in cash and cash
     equivalents                                   (1,051,597)     5,845,065

    Cash and cash equivalents, beginning of year    4,775,562        954,843

    Cash and cash equivalents, end of year      $   3,723,965 $    6,799,908

    Supplemental disclosure of cash flow
     information
    Cash paid during the year
    Interest paid                               $     283,715 $      143,144
    Income taxes paid                           $     629,901 $      166,170

    Non-cash financing activities
    Issuance of common stock for cashless
     exercise of warrants                                 125             --



    For more information, please contact:

    Elite IR
     John Marco, Partner
     Tel:   +1-310-819-2948
     Email: John.marco@elite-ir.com

    Elite IR
     Leslie J. Richardson, Partner
     Tel:   +852-3183-0283
     Email: Leslie.richardson@elite-ir.com

SOURCE China Ritar Power Corp.