China Ritar Power Corp. - FORM 10-K

The principal activities of the Company and its subsidiaries (collectively “the Company”) consist of research and development, manufacturing and selling of rechargeable batteries. All activities of the Company are principally conducted through its subsidiaries operating in the PRC.

2.	Summary of Significant Accounting Policies

Basis of Preparation and Principles of consolidation- The consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America and include the assets, liabilities, revenues, expenses and cash flows of the Company and all its subsidiaries. The results of subsidiaries are consolidated from the date of acquisition, being the date on which the Company obtains control, and continue to be consolidated until the date that such control ceases. All significant intercompany accounts, transactions and cash flows are eliminated on consolidation.

As discussed in Notes 1 and 29, the Company sold all of its ownership interest in Shanghai Ritar in October 2009 and initiated the liquidation of Huizhou Ritar in 2009. As a result, Shanghai Ritar and Huizhou Ritar have been reported as discontinued operations and consolidated financial statement information for all periods presented has been reclassified to reflect this presentation.

Cash and cash equivalents- Cash and cash equivalents include cash on hand, cash accounts, interest bearing savings accounts and time certificates of deposit with a maturity of three months or less when purchased.

Restricted Cash- Deposits in banks pledged as securities for bank loan and bills payable (Note 15) that are restricted in use are classified as restricted cash under current assets.

Inventory- Inventory is stated at the lower of cost or market, determined by the weighted average method. Work-in-progress and finished goods inventories consist of raw materials, direct labor and overhead associated with the manufacturing process.

Building	30 years
Leasehold improvements	5 years
Plant and machinery	5-10 years
Furniture, fixtures and equipment	5 years
Motor vehicles	5 years

Intangible asset – Intangible assets are stated at cost. Amortization are provided on the straight-line method based on the estimated useful lives of the assets as follow: Computer software − 5 years.

The Company accounts for its intangible assets pursuant to FASB Accounting Standards Codification (“ASC”) Topic 350, “Intangibles – Goodwill and Other.” Under ASC 350, intangibles with definite lives continue to be amortized on a straight-line basis over the lesser of their estimated useful lives or contractual terms. Intangibles with indefinite lives are evaluated at least annually for impairment by comparing the asset's estimated fair value with its carrying value, based on cash flow methodology.

F-7

Advertising Costs- The Company expenses advertising costs as incurred. Advertising expenses charged to operations were $100,196 and $79,691 for the years ended December 31, 2009 and 2008 respectively.

2.	Summary of Significant Accounting Policies (continued)

Warranty Costs- The Company accounts for its liability for product warranties in accordance with FASB ASC Topic 460 “Guarantees.” Under ASC 460, the aggregate changes in the liability for accruals related to product warranties issued during the reporting period must be charged to expense as incurred.

The Company maintains a policy of providing after sales support for certain products by way of a warranty program. The Company accrues an estimate of its exposure to warranty claims based on both current and historical product sales data and warranty costs incurred. The Company assesses the adequacy of its recorded warranty liability at least annually and adjusts the amounts as necessary. The Company recognized warranty expenses amounting to approximately $Nil and $395,799 for the years ended December 31, 2009 and 2008, respectively, which are included in its selling expenses. (see Note 25).

Comprehensive income- Accumulated other comprehensive income represents foreign currency translation adjustments.

Income taxes-Income taxes are provided on an asset and liability approach for financial accounting and reporting of income taxes. Any tax paid by subsidiaries during the year is recorded. Current tax is based on the profit or loss from ordinary activities adjusted for items that are non-assessable or disallowable for income tax purpose and is calculated using tax rates that have been enacted or substantively enacted at the balance sheet date. Deferred income tax liabilities or assets are recorded to reflect the tax consequences in future years of differences between the tax basis of assets and liabilities and the financial reporting amounts at each year end.

A valuation allowance is recognized if it is more likely than not that some portion, or all, of a deferred tax asset will not be realized.

F-8

Foreign currency translation- The Company uses the United States dollars (“U.S. Dollar” or “US$” or “$”) for financial reporting purposes. The PRC subsidiaries within the Company maintain their books and records in their functional currency, Chinese Renminbi (“RMB”), being the lawful currency in the PRC. Assets and liabilities of the PRC subsidiaries are translated from RMB into US Dollars using the applicable exchange rates prevailing at the balance sheet date, except for equity items which are translated at historical rates. Items on the statement of operations are translated at average exchange rates during the reporting period. Equity accounts are translated at historical rates. Adjustments resulting from the translation of the Company’s financial statements are recorded as accumulated other comprehensive income.

2.	Summary of Significant Accounting Policies (continued)

The exchange rates used to translate amounts in RMB into U.S. Dollars for the purposes of preparing the consolidated financial statements are based on the rates as published on the website of People’s Bank of China and are as follows:-

RMB is not a fully convertible currency. All foreign exchange transactions involving RMB must take place either through the People’s Bank of China (the “PBOC”) or other institutions authorized to buy and sell foreign exchange. The exchange rates adopted for the foreign exchange transactions are the rates of exchange quoted by the PBOC, which are determined largely by supply and demand. Translation of amounts from RMB into United States dollars (“US$”) has been made at the following exchange rates for the respective years:

December 31, 2009
Balance sheet, except for equity items		RMB6.8282 to US$1.00
Statement of income and comprehensive income		RMB6.8310 to US$1.00

December 31, 2008
Balance sheet, except for equity items		RMB6.8346 to US$1.00
Statement of income and comprehensive income		RMB6.9253 to US$1.00

No representation is made that the RMB amounts could have been, or could be, converted into U.S. dollars at the above rates.

The value of RMB against U.S. dollars and other currencies may fluctuate and is affected by, among other things, changes in China’s political and economic conditions. Any significant revaluation of RMB may materially affect the Company’s financial condition in terms of U.S. dollar reporting.

Fair Value of Financial Instruments – The Company adopted FASB ASC 820-10 “Fair Value Measurements and Disclosures.” ASC 820-10 clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows:

Level 1: Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date.

Level 2: Inputs are unadjusted quoted price for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, imputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data.

Level 3: Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information.

The fair value of the forward foreign exchange contracts was measured using level 2 inputs and reported as derivative instruments under current liabilities on the balance sheet as of December 31, 2008. Additional disclosures of the forward foreign exchange contracts that are measured at fair value on a recurring basis are included above in this footnote.

There were no assets or liabilities measured at fair value on a non-recurring basis for the year ended December 31, 2009.

F-9

Basic income/loss per common share - The computation of income/loss per share is based on the weighted average number of shares outstanding during the year presented in accordance with FASB ASC 260-10, “Earnings Per Share.”

2.	Summary of Significant Accounting Policies (continued)

The following is a reconciliation of the calculation of basic and diluted earnings per share

	2009		2008

Net income attributable to China Ritar stockholders	$	8,692,780	$	5,164,060

Weighted average shares outstanding-basis		19,693,630		19,127,598
Add: Effect of dilutive warrants		430,663		−

Weighted average shares outstanding-diluted		20,124,293		19,127,598

Warrants to purchase up to 1,384,337 shares of common stock were excluded from the calculation of diluted earnings per share for the year ended December 31, 2008, because their effects were anti-dilutive.

Significant estimates relating to specific financial statement accounts and transactions are identified - The financial statements include some amounts that are based on management’s best estimates and judgments. The most significant estimates relate to allowance for uncollectible accounts receivable, inventory work in process valuation and obsolescence, depreciation, useful lives, taxes, and contingencies. These estimates may be adjusted as more current information becomes available, and any adjustment could be significant.

Cost of goods sold - Cost of goods sold consists primarily of the costs of the raw materials, direct labor, depreciation of plant and machinery, and overhead associated with the manufacturing process of the environmentally friendly lead-acid batteries.

Shipping and handling cost- Shipping and handling costs related to delivery of finished goods are included in selling expenses. During the years ended December 31, 2009 and 2008 shipping and handling costs expensed to other selling, general and administrative expenses were $1,050,505 and $1,482,825, respectively.

Government grants- Government grants are recognized initially as deferred income in the balance sheet at fair value when there is reasonable assurance that they will be received and the Company will comply with the conditions associated with the grant. Grants that compensate the Company for expenses incurred are recognized in consolidated statements of operations as other income on a systematic basis in the same periods in which the expenses are recognized. Grants that compensate the Company for the cost of an asset are recognized in consolidated statements of operations on a systematic basis over the useful life of the asset.

F-10

Recent Accounting Pronouncements

3.	Recent Changes in Accounting Standards

In June 2009, the FASB established the FASB Accounting Standards CodificationTM (ASC) as the single source of authoritative U.S generally accepted accounting principles (GAAP) recognized by the FASB to be applied to nongovernmental entities. Rules and interpretive releases of the Securities and Exchange Commission (“SEC”) under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. The ASC superseded all previously existing non-SEC accounting and reporting standards, and any prior sources of U.S. GAAP not included in the ASC or grandfathered are not authoritative. New accounting standards issued subsequent to June 30, 2009 are communicated by the FASB through Accounting Standards Updates (ASUs). The ASC did not change current U.S. GAAP but changes the approach by referencing authoritative literature by topic (each a “Topic”) rather than by type of standard. The ASC has been effective for the Company effective July 1, 2009. Adoption of the ASC did not have a material impact on the Company’s Consolidated Financial Statements, but references in the Company’s Notes to Consolidated Financial Statements to former FASB positions, statements, interpretations, opinions, bulletins or other pronouncements are now presented as references to the corresponding Topic in the ASC.

Effective January 1, 2009, the first day of fiscal 2009, the Company adopted FASB ASC 350-30 and ASC 275-10-50 (formerly FSP FAS 142-3, Determination of the Useful Life of Intangible Assets), which amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS No. 142, Goodwill and Other Intangible Assets. The Company will apply ASC 350-30 and ASC 275-10-50 prospectively to intangible assets acquired subsequent to the adoption date. The adoption of these revised provisions had no impact on the Company’s Consolidated Financial Statements.

Effective January 1, 2009, the Company adopted FASB ASC 815-10-65 (formerly SFAS 161, Disclosures about Derivative Instruments and Hedging Activities), which amends and expands previously existing guidance on derivative instruments to require tabular disclosure of the fair value of derivative instruments and their gains and losses., This ASC also requires disclosure regarding the credit-risk related contingent features in derivative agreements, counterparty credit risk, and strategies and objectives for using derivative instruments. The adoption of this ASC did not have a material impact on the Company’s Consolidated Financial Statements.

During 2008, the Company adopted FASB ASC 820-10 (formerly FSP FAS 157-2, Effective Date of FASB Statement 157), which deferred the provisions of previously issued fair value guidance for nonfinancial assets and liabilities to the first fiscal period beginning after November 15, 2008. Deferred nonfinancial assets and liabilities include items such as goodwill and other nonamortizable intangibles. Effective January 1, 2009, the Company adopted the fair value guidance for nonfinancial assets and liabilities. The adoption of FASB ASC 820-10 did not have a material impact on the Company’s Consolidated Financial Statements.

Effective January 1, 2009, the Company adopted FASB ASC 810-10-65 (formerly SFAS 160, Noncontrolling Interests in Consolidated Financial Statements — an amendment of ARB No. 51), which amends previously issued guidance to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a noncontrolling interest in a subsidiary, which is sometimes referred to as minority interest, is an ownership interest in the consolidated entity that should be reported as equity. Among other requirements, this Statement requires that the consolidated net income attributable to the parent and the noncontrolling interest be clearly identified and presented on the face of the consolidated income statement. The adoption of the provisions in this ASC did not have a material impact on the Company’s Consolidated Financial Statements.

Effective January 1, 2009, the Company adopted FASB ASC 805-10, (formerly SFAS 141R, Business Combinations), which establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, any noncontrolling interest in an acquiree and the goodwill acquired. In addition, the provisions in this ASC require that any additional reversal of deferred tax asset valuation allowance established in connection with fresh start reporting on January 7, 1998 be recorded as a component of income tax expense rather than as a reduction to the goodwill established in connection with the fresh start reporting. The Company will apply ASC 805-10 to any business combinations subsequent to adoption.

F-11

Recent Accounting Pronouncements

3.	Recent Changes in Accounting Standards (continued)

Effective January 1, 2009, the Company adopted FASB ASC 805-20 (formerly FSP FAS 141R-1, Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies), which amends ASC 805-10 to require that an acquirer recognize at fair value, at the acquisition date, an asset acquired or a liability assumed in a business combination that arises from a contingency if the acquisition-date fair value of that asset or liability can be determined during the measurement period. If the acquisition-date fair value of such an asset acquired or liability assumed cannot be determined, the acquirer should apply the provisions of ASC Topic 450, Contingences, to determine whether the contingency should be recognized at the acquisition date or after such date. The adoption of ASC 805-20 did not have a material impact on the Company’s Consolidated Financial Statements.

Effective July 1, 2009, the Company adopted FASB ASC 825-10-65 (formerly FASB Staff Position (“FSP”) No. FAS 107-1 and Accounting Principles Board 28-1, Interim Disclosures about Fair Value of Financial Instruments), which amends previous guidance to require disclosures about fair value of financial instruments for interim reporting periods of publicly traded companies as well as in annual financial statements. The adoption of FASB ASC 825-10-65 did not have a material impact on the Company’s Consolidated Financial Statements.

Effective July 1, 2009, the Company adopted FASB ASC 320-10-65 (formerly FSP FAS 115-2 and FAS 124-2, Recognition and Presentation of Other-Than-Temporary Impairments). Under ASC 320-10-65, an other-than-temporary impairment must be recognized if the Company has the intent to sell the debt security or the Company is more likely than not will be required to sell the debt security before its anticipated recovery. In addition, ASC 320-10-65 requires impairments related to credit loss, which is the difference between the present value of the cash flows expected to be collected and the amortized cost basis for each security, to be recognized in earnings while impairments related to all other factors to be recognized in other comprehensive income. The adoption of ASC 320-10-65 did not have a material impact on the Company’s Consolidated Financial Statements.

Effective July 1, 2009, the Company adopted FASB ASC 820-10-65 (formerly FSP FAS 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly), which provides guidance on how to determine the fair value of assets and liabilities when the volume and level of activity for the asset or liability has significantly decreased when compared with normal market activity for the asset or liability as well as guidance on identifying circumstances that indicate a transaction is not orderly. The adoption of ASC 820-10-65 did not have a material impact on the Company’s Consolidated Financial Statements.

In the fourth quarter of fiscal 2009, the Company adopted ASC 715, Compensation – Retirement Benefits (formerly FASB FSP FAS 132(R)-1, Employers’ Disclosures about Postretirement Benefit Plan Assets), which expands the disclosure requirements about plan assets for defined benefit pension plans and postretirement plans. The adoption of these disclosure requirements has had no material effect on the Company’s Consolidated Financial Statements.

In the quarter ended December 31, 2009, the Company adopted ASC Update No. 2009-05, which provides guidance on measuring the fair value of liabilities under FASB ASC 820 (formerly SFAS 157, Fair Value Measurements). . The adoption of this Update has had no material effect on the Company’s Consolidated Financial Statements.

F-12

CHINA RITAR POWER CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008

3.	Recent Changes in Accounting Standards (continued)

New Accounting Pronouncement to be Adopted

In June 2009, the FASB issued SFAS No. 166, Accounting for Transfers of Financial Assets – an amendment of FASB Statement No. 140, (codified by ASU No. 2009-16 issued in December 2009). SFAS No. 166 limits the circumstances in which a financial asset should be derecognized when the transferor has not transferred the entire financial asset by taking into consideration the transferor’s continuing involvement. The standard requires that a transferor recognize and initially measure at fair value all assets obtained (including a transferor’s beneficial interest) and liabilities incurred as a result of a transfer of financial assets accounted for as a sale. The concept of a qualifying special-purpose entity is removed from SFAS No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities,” along with the exception from applying FIN 46(R), Consolidation of Variable Interest Entities. The standard is effective for the first annual reporting period that begins after November 15, 2009 (i.e. the Company’s fiscal 2010). Earlier application is prohibited. It is expected the adoption of this Statement will have no material effect on the Company’s Consolidated Financial Statements.

In June 2009, the FASB issued SFAS No. 167, Amendments to FASB Interpretation No. 46(R), (codified by ASU No. 2009-17 issued in December 2009). The standard amends FIN No. 46(R) to require a company to analyze whether its interest in a variable interest entity (“VIE”) gives it a controlling financial interest. A company must assess whether it has an implicit financial responsibility to ensure that the VIE operates as designed when determining whether it has the power to direct the activities of the VIE that significantly impact its economic performance. Ongoing reassessments of whether a company is the primary beneficiary are also required by the standard. SFAS No. 167 amends the criteria to qualify as a primary beneficiary as well as how to determine the existence of a VIE. The standard also eliminates certain exceptions that were available under FIN No. 46(R). This Statement will be effective as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009 (i.e. the Company’s fiscal 2010). Earlier application is prohibited. Comparative disclosures will be required for periods after the effective date. It is expected the adoption of this Statement will have no material effect on the Company’s Consolidated Financial Statements.

In October 2009, the FASB concurrently issued the following ASC Updates (ASU):

· ASU No. 2009-13—Revenue Recognition (ASC Topic 605): Multiple-Deliverable Revenue Arrangements (formerly EITF Issue No. 08-1). ASU No. 2009-13 modifies the revenue recognition guidance for arrangements that involve the delivery of multiple elements, such as product, software, services or support, to a customer at different times as part of a single revenue generating transaction. This standard provides principles and application guidance to determine whether multiple deliverables exist, how the individual deliverables should be separated and how to allocate the revenue in the arrangement among those separate deliverables. The standard also expands the disclosure requirements for multiple deliverable revenue arrangements.

· ASU No. 2009-14—Software (ASC Topic 985): Certain Revenue Arrangements That Include Software Elements (formerly EITF Issue No. 09-3). ASU No. 2009-14 removes tangible products from the scope of software revenue recognition guidance and also provides guidance on determining whether software deliverables in an arrangement that includes a tangible product, such as embedded software, are within the scope of the software revenue guidance.

ASU No. 2009-13 and ASU No. 2009-14 should be applied on a prospective basis for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010, with earlier application permitted. Alternatively, an entity can elect to adopt these standards on a retrospective basis, but both these standards must be adopted in the same period using the same transition method. The Company expects to apply these ASU Updates on a prospective basis for revenue arrangements entered into or materially modified beginning April 1, 2011. The Company is currently evaluating the potential impact these ASC Updates may have on its financial position and results of operations.

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CHINA RITAR POWER CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008

3.	Recent Changes in Accounting Standards (continued)

New Accounting Pronouncement to be Adopted

In October 2009, the FASB also issued ASU No. 2009-15—Accounting for Own-Share Lending Arrangements in Contemplation of Convertible Debt Issuance or Other Financing. ASU 2009-15 amends ASC 470-20, Debt with Conversion and Other Options, to provide accounting and reporting guidance for own-share lending arrangements issued in contemplation of convertible debt issuance. ASU 2009-15 is effective for fiscal years beginning on or after December 15, 2009 (i.e. the Company’s fiscal 2010) with retrospective application required.

In January 2010, the FASB issued the following ASC Updates:

· ASU No. 2010-01—Equity (Topic 505): Accounting for Distributions to Shareholders with Components of Stock and Cash. This Update clarifies that the stock portion of a distribution to shareholders that allows them to elect to receive cash or stock with a potential limitation on the total amount of cash that all shareholders can elect to receive in the aggregate is considered a share issuance that is reflected in EPS prospectively and is not a stock dividend for purposes of applying Topics 505 and 260 (Equity and Earnings Per Share). The amendments in this Update are effective for interim and annual periods ending on or after December 15, 2009 with retrospective application.

· ASU No. 2010-02—Consolidation (Topic 810): Accounting and Reporting for Decreases in Ownership of a Subsidiary. This Update amends Subtopic 810-10 and related guidance to clarify that the scope of the decrease in ownership provisions of the Subtopic and related guidance applies to (i) a subsidiary or group of assets that is a business or nonprofit activity; (ii) a subsidiary that is a business or nonprofit activity that is transferred to an equity method investee or joint venture; and (iii) an exchange of a group of assets that constitutes a business or nonprofit activity for a noncontrolling interest in an entity, but does not apply to: (i) sales of in substance real estate; and (ii) conveyances of oil and gas mineral rights. The amendments in this Update are effective beginning in the period that an entity adopts FAS 160 (now included in Subtopic 810-10).

· ASU No. 2010-05—Compensation—Stock Compensation (Topic 718): Escrowed Share Arrangements and the Presumption of Compensation. This Update simply codifies EITF Topic D-110, “Escrowed Share Arrangements and the Presumption of Compensation and does not change any existing accounting standards.

· ASU No. 2010-06—Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements. This Update amends Subtopic 820-10 that require new disclosures about transfers in and out of Levels 1 and 2 and activity in Level 3 fair value measurements. This Update also amends Subtopic 820-10 to clarify certain existing disclosures. The new disclosures and clarifications of existing disclosures are effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measurements, which are effective for fiscal years beginning after December 15, 2010.

The Company expects that the adoption of the above Updates issued in January 2010 will not have any significant impact on its financial position and results of operations.

Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the Company’s Consolidated Financial Statements upon adoption.

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CHINA RITAR POWER CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008

4.	Cash and Cash Equivalents

Cash and cash equivalents are summarized as follows:

	As of December 31,
	2009		2008

Cash at banks	$	20,422,998	$	7,518,725
Cash on hand		36,363		22,972

Total	$	20,459,361	$	7,541,697

Financial instruments that potentially subject the Company to significant concentrations of credit risk include cash and cash equivalents. As of December 31, 2009 and 2008, substantially all of the Company’s cash and cash equivalents were placed with major banks located in the PRC, which management believes are of high credit quality.

5.	Restricted Cash

Restricted cash consists of the following:

	As of December 31,
	2009		2008
Bank deposits held as collaterals for:
- Bank loans (Notes 16 and 17) and bills payable (Note 15)	$	5,724,907	$	4,387,679
- Bank guarantee for tender purposes		175,742		−
Total	$	5,900,649	$	4,387,679

At December 31, 2009 and 2008, restricted cash of $5,724,907 and $4,387,679 respectively represented the bank deposits pledged for banking facilities. Generally, the deposit will be released when the relevant bank loans are repaid upon maturity (see Note 16 and 17).

At December 31, 2009, bank deposits of $175,742 were held as collaterals for bank guarantees against the Company’s tenders for the supply of lead-acid batteries to China Mobile Limited.

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CHINA RITAR POWER CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008

6.	Accounts Receivable, net

Accounts receivable by major categories are summarized as follows:

	As of December 31,
	2009			2008

Trade accounts receivable	$	26,036,146		$	18,428,358
Less: allowances for doubtful accounts		(1,115,321	)		(1,114,276	)
Net	$	24,920,825		$	17,314,082

Concentrations in accounts receivable - Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of accounts receivable. At December 31, 2009, two customers on an individual basis accounted for more than 5% but less than 10% of the Company’s accounts receivable, with total amounts of $2,799,836 representing 11% of total accounts receivable in aggregate. At December 31, 2008 three customers on an individual basis accounted for more than 5% but less than 10% of the Company’s accounts receivable, with total amounts of $4,863,740 representing 26% of total accounts receivable in aggregate.

The Company, in certain circumstances, has arranged to sell certain of its accounts receivable to banks. For receivables sold to banks that the Company has surrendered control, the Company derecognized the discounted receivables pursuant to the provisions of ASC 860, “Transfers and Servicing”. As of December 31, 2009 and 2008, the Company has derecognized discounted receivable amounting to $458,217 and $nil, respectively in accordance with ASC 860.

Inventory

Inventory by major categories are summarized as follows:

	As of December 31,
	2009		2008

Raw materials	$	2,846,892	$	1,651,284
Work in progress		13,919,696		9,237,669
Finished goods		2,717,636		1,885,827
Total	$	19,484,224	$	12,774,780

8.	Other Current Assets

Other current assets consist of the following:

	As of December 31,
	2009		2008

Notes receivable	$	118,140	$	141,082
Advance to staff and deposit, net of allowances of $97,707 and $97,615		647,351		331,727
Other receivables, net of allowance of $nil		732,257		−
Value added tax recoverable		2,417,857		3,665,427
Total	$	3,915,605	$	4,138,236

F-16

CHINA RITAR POWER CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008

9.	Property, Plant and Equipment

Property, plant and equipment consist of the following:

	As of December 31,
	2009			2008
At cost:
Building	$	8,456,956		$	5,311,491
Leasehold improvement		390,329			314,250
Plant and machinery		8,830,851			5,396,799
Furniture, fixtures and equipment		517,532			395,840
Motor vehicles		1,034,070			868,640
Total		19,229,738			12,287,020
Less: accumulated depreciation and amortization		(2,981,187	)		(1,846,936	)
Net book value	$	16,248,551		$	10,440,084

As of December 31, 2009 and 2008, certain property, plant and machinery with an aggregate net book value of $8,933,605 and $3,866,654, respectively, were pledged as securities against the bank loan facilities, as described in more details in Notes 16 and 17.

During the year ended December 31, 2009, depreciation expenses amounted to $1,177,408, among which $878,399, $135,532 and $163,477 were recorded as cost of sales, selling expense and administrative expense respectively.

During the year ended December 31, 2008, depreciation expenses amounted to $774,856, among which $556,223, $129,313 and $89,320 were recorded as cost of sales, selling expense and administrative expense respectively.

10.	Intangible assets

Intangible assets consist of the following:

	As of December 31,
	2009			2008
At cost:
Computer software	$	27,887		$	27,861
Less: Accumulated amortization		(18,480	)		(10,773	)
Net book value	$	9,407		$	17,088

During the year ended December 31, 2009 and 2008, amortization expenses amounted to $7,694 and $5,995, which were included in administrative expense, respectively.

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CHINA RITAR POWER CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008

11.	Land Use Right

	As of December 31,
	2009			2008

Right to use land	$	483,582		$	483,129
Accumulated amortization		(15,317	)		(6,442	)
	$	468,265		$	476,687

Land use right represented the cost incurred by the Company’s subsidiary , Hengyang Ritar, to obtain the right from the relevant PRC land authority to use the lands where its production facilities and warehouses of the subsidiaries are situated for a period of 50 years.

As of December 31, 2009 and 2008, all of land use right with the net book value of $468,265 and $476,687, respectively, were pledged as securities against the bank loan facilities, as described in more details in Notes 16 and 17.

During the year ended December 31, 2009, amortization expenses amounted to $8,866, which was included in administrative expense.

During the year ended December 31, 2008, amortization expenses amounted to $6,357, which was included in administrative expense.

The estimated amortization expense for land use right for each of the next five years is approximately $9,672.

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CHINA RITAR POWER CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008

12.	Related Party Transactions

Guarantees provided by related parties

Certain of the Company’s short-term and long-term loans (see Notes 16 and 17) and bills payable (see Note 15) are secured by personal guarantees provided by Mr. Jiada Hu (CEO and principal stockholder of the Company) and Ms. Henying Peng (director of certain subsidiaries of the Company and the spouse of Mr. Jiada Hu).

Sale of Shanghai Ritar

As further discussed in Note 29, on October 15, 2009, Shenzhen Ritar entered into an agreement with a family member of Ms. Henying Peng (director of certain subsidiaries of the Company and the spouse of Mr. Jiada Hu, CEO and principal stockholder of the Company) to sell 95%, representing all of Shenzhen Ritar’s ownership interest in Shanghai Ritar, for RMB2,850,000 (or $417,216), payable in cash within 6 months from the date of the agreement.

The following table sets out the receivable from sale of Shanghai Ritar:

Selling price	$	417,216
Effect of exchange rate changes		171
Receivable from sale of Shanghai Ritar as of December 31, 2009	$	417,387

Receivables from a former subsidiary

Receivables from a former subsidiary as of December 31, 2009 represented the amount due from Shanghai Ritar, the former 95% subsidiary sold by the Company in October 2009, further details of which are set out in Note 29.

The following table sets out the movement of the amount due from Shanghai Ritar from October 15, 2009 (date of sale of Shanghai Ritar) to December 31, 2009:

Amount due from Shanghai Ritar at date of sale (Note 29)	$	4,628,809
Repayment from Shanghai Ritar		(705,070	)
Effect of exchange rate changes		1,609
Amount due from Shanghai Ritar, at December 31, 2009	$	3,925,348

The amount due from Shanghai Ritar is non-interest bearing and without fixed repayment term, but is secured by the personal guarantee of Mr. Jiada Hu (CEO and principal stockholder of the Company) as well as Shanghai Ritar’s plant and machinery, trade and other receivables and inventories.

F-19

CHINA RITAR POWER CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008

13.	Income and Other Taxes Payables

Income and other taxes payables consist of the following:

	As of December 31,
	2009		2008

Income tax payable	$	3,927,626	$	2,857,643
Individual income withholding tax payable		13,131		12,587
Other taxes payable		46,178		27,852
Total	$	3,986,935	$	2,898,082

14.	Other Current Liabilities

Other current liabilities consist of the following:

	As of December 31,
	2009		2008

Other payable and accrued expenses	$	909,176	$	1,110,561
Advance from customers		1,891,703		1,386,937
Total	$	2,800,879	$	2,497,498

15.	Bills Payable and Credit Facilities

The Company is required to place bank deposits, classified as restricted cash as disclosed in Note 5, equal to 30-100%, subject to bank’s decision, of the bills amount as collaterals against the Banks’ guarantees for such bills. Such bank acceptance facilities up to approximately $9,519,346 granted by Citibank, Shenzhen Branch, are additionally secured by guarantees provided by Shanghai Ritar, Hengyang Ritar, Mr. Jaida Hu (CEO and principal stockholder of the Company) and Ms. Henying Peng (director of certain subsidiaries of the Company and the spouse of Mr. Jiada Hu). Under this kind of arrangement, Shenzhen Ritar is obligated to pay 0.05% of the bills amount as handling charges.

F-20

CHINA RITAR POWER CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008

16.	Short-Term Loans

Short-term loans consist of the following:

Interest

As of December 31,

Bank

Loan period

rate

Securities

2009

2008

Citibank

2008-10-24 to 2009-1-16

9% p.a.

Bank deposits and directors’ personal guarantees

−

146,314

Citibank

2008-10-24 to 2009-1-21

9% p.a.

Bank deposits and directors’ personal guarantees

−

540,470

Citibank

2008-10-24 to 2009-1-16

9% p.a.

Bank deposits and directors’ personal guarantees

−

132,576

Citibank

2008-10-26 to 2009-1-23

9% p.a.

Bank deposits and directors’ personal guarantees

−

389,059

Citibank

2008-10-26 to 2009-1-23

9% p.a.

Bank deposits and directors’ personal guarantees

−

1,074,085

DBS Bank

2008-10-21 to 2009-2-6

8% p.a.

Bank deposits

−

85,239

DBS Bank

2008-12-10 to 2009-2-13

7% p.a.

Bank deposits

−

481,630

Citibank

2008-12-15 to 2009-3-13

7% p.a.

Bank deposits and directors’ personal guarantees

−

585,257

DBS Bank

2008-12-30 to 2009-4-10

7% p.a.

Bank deposits

162,325

DBS Bank

2009-10-22 to 2010-2-8

6% p.a.

Property, plant and equipment, land use right and directors’ personal guarantee

864,064

−

DBS Bank

2009-11-12 to 2010-3-3

6% p.a.

Property, plant and equipment land use right and directors’ personal guarantee

251,897

−

DBS Bank

2009-12-31 to 2010-4-21

6% p.a.

Property, plant and equipment land use right and directors’ personal guarantee

348,554

−

1,464,515

3,596,955

F-21

CHINA RITAR POWER CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008

17.	Long-Term Loans

Long-term loans consist of the following:

	As of December 31,
	2009		2008

Loan from DBS Bank, bearing interest at 6.91% (2008: 9.072%) p.a., repayable by monthly installments from 2009-04-18 to 2013-09-18, secured by certain property, plant and equipment and land use right of the Company as disclosed in Note 9 and Note 11, respectively.	$	3,661,288	$	4,389,431

Loan from DBS Bank, bearing interest at 5% p.a., repayable by monthly installments from 2009-07-12 to June 2011-06-12, secured by machinery and equipment of Hengyang Ritar as disclosed in Note 9 and joint guarantees given by Shenzhen Ritar, China Ritar, Mr. Jiada Hu, Ms. Hengying Peng and Mr. Jianjun Zeng		562,373		-

Other borrowing from Department of Science and Technology of Bao An, interest free, term from 2007-12-20 to 2009-12-20, and secured by the Shenzhen Small and Medium Enterprises Credit Guarantee Center		-		146,314
Total loans		4,223,661		4,535,745
Less: Current maturities		1,342,473		877,886
Long-term loans, less current maturities	$	2,881,188	$	3,657,859

Future maturities of long-term loans are as follows:
Payable within the years ending December 31,
2009	$	-	$	877,886
2010		1,342,473		975,429
2011		1,172,588		975,429
2012		976,343		975,429
2013		732,257		731,572
Total	$	4,223,661	$	4,535,745

18.	Noncontrolling Interest

Noncontrolling interest at December 31, 2008 represented the minority stockholders’ proportionate share of 5% of the equity of Shanghai Ritar.

As discussed in Note 29, on October 15, 2009, the Company disposed of its 95% ownership interest in Shanghai Ritar.

F-22

CHINA RITAR POWER CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008

19.	Income Taxes

United States

The Company was incorporated in the United States of America and is subject to U.S. tax. No provision for income taxes has been made as the Company has no taxable income for the years presented.

British Virgin Islands

Ritar International was incorporated in the British Virgin Islands and is not subject to income taxes under the current laws of the British Virgin Islands.

PRC

Shenzhen Ritar is subject to PRC enterprises income tax (“EIT”) at the applicable tax rates on the taxable income as reported in its Chinese statutory accounts in accordance with the relevant enterprises income tax laws applicable to foreign enterprises. Pursuant to the same enterprises income tax laws, being classified as a high technology company, Shenzhen Ritar was allowed preferential tax treatment – full exemption from PRC enterprises income tax for two fiscal years 2003 and 2004, which were its first profit-making years, and 50% reduction in its EIT rates for the ensuing three years, 2005 through 2008.

On March 16, 2007, the PRC government promulgated a new tax law, China’s Unified Enterprise Income Tax Law (“New EIT Law”), which took effect from January 1, 2008. Under the New EIT Law, foreign-owned enterprises as well as domestic companies are subject to a uniform tax rate of 25%. The New EIT Law provides for a grandfathering and five-year transition period from its effective date for those enterprises which were established before the promulgation date of the New EIT Law and which were entitled to a preferential EIT treatment. Accordingly, Shenzhen Ritar was subject to an EIT rate of 20% and 18% for the years ended December 31, 2009 and 2008, respectively, under the New EIT Law.

Shanghai Ritar, Hengyang Ritar and Huizhou Ritar are generally subject to PRC EIT at 25% for the years ended December 31, 2009 and 2008.

The provision for income taxes consists of the following:

	For the years ended December 31,
	2009			2008

Current tax provision – PRC income tax	$	2,063,339		$	2,400,314
Deferred tax		(115,017	)		−
Total	$	1,948,322		$	2,400,314

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred income tax assets at December 31, 2009 result principally from the shorter useful lives of property, plant and equipment for accounting purposes than allowed for PRC income tax reporting purposes. Significant components of deferred income tax assets are as follows:

	As of December 31,
	2009		2008
Deferred income tax assets – non-current:
Depreciation	$	115,064	$	−
Less: Valuation allowance		−		−
	$	115,064	$	−

F-23

CHINA RITAR POWER CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008

19.	Income Taxes (continued)

A reconciliation of the provision for income taxes determined at the local income tax to the Company’s effective income tax rate is as follows:

	For the Years ended December 31,
	2009			2008

Pre-tax income from continuing operations	$	10,088,357		$	8,253,681

United States federal corporate income tax rate		35	%		35	%
Income tax expense computed at U.S. federal corporate income tax rate		3,530,925			2,888,788
Reconciling items:
Impact of tax holiday of Shenzhen Ritar		(454,653	)		(897,569	)
Non-deductible expenses		−			1,446,152
Rate differential for PRC earnings		(1,014,439	)		(1,210,879	)
Other		(113,511)			173,822

Effective tax expense	$	1,948,322		$	2,400,314

The effect of the tax holiday of Shenzhen Ritar amounted to $454,653 and $897,569 for the years ended December 31, 2009 and 2008, equivalent to basic earnings per share of $0.02 and $0.02, respectively, and diluted earnings per share amount of $0.05 and $0.05, respectively.

The Company has analyzed the tax positions taken or expected to be taken in its tax filings and has concluded it has no material liability related to uncertain tax positions or unrecognized tax benefits as of December 31, 2009 and 2008.

The New EIT Law imposes a withholding tax of 10% unless reduced by a tax treaty, for dividends distributed by a PRC-resident enterprise to its immediate holding company outside the PRC for earnings accumulated beginning on January 1, 2008 and undistributed earnings generated prior to January 1, 2008 are exempt from such withholding tax. The Company has not provided for income taxes on accumulated earnings of its PRC subsidiaries as of December 31, 2009 and 2008, since these earnings are intended to be reinvested indefinitely in the overseas jurisdictions. It is not practicable to estimate the amount of additional taxes that might be payable on such undistributed earnings.

According to the PRC Tax Administration and Collection Law, the statute of limitations is three years if the underpayment of taxes is due to computational or other errors made by the taxpayer or the withholding agent. The statute of limitations extends to five years under special circumstances. In the case of transfer pricing issues, the statute of limitation is ten years. There is no statute of limitation in the case of tax evasion. Accordingly, the income tax returns of the Company’s PRC subsidiaries for the years ended December 31, 2007 through 2009 are open to examination by the PRC state and local tax authorities.

F-24

During 2008, the Company issued 124,651 shares of common stock for the cashless exercise of 163,550 warrants and 9,345 shares of common stock for the exercise of warrants at $2.78 per share for cash, respectively.

20.	Common Stock and Warrant Transactions

Common stock

During 2009, the Company issued 99,828 shares of common stock for the cashless exercise of 309,579 warrants and 65,418 shares of common stock for the exercise of warrants at $2.78 per share for cash, respectively.

In October 2009, the Company completed the sale of 2,150,000 shares of common stock to selected institutional investors for $6.00 per share and raised proceeds of $12,059,449, net of placement agent fees and other direct expenses.

Common Stock Purchase Warrants

In 2007, the Company completed a private placement pursuant to which the Company issued and sold 5,724,292 shares of its common stock to certain investors. In addition, the Company granted to the same investors three-year warrants to purchase 1,317,746 shares of the Company’s common stock at $2.78 per share. In connection with this private placement, the Company issued to the placement agent, Roth Capital Partners, LLC warrants to purchase up to 286,215 shares of the Company’s common stock with the exercise price of $2.14 per share.

A summary of the warrants activity as of December 31, 2009, and changes during the year then ended is presented below:

Warrant	Number of underlying shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (years)		Aggregate Intrinsic Value

Outstanding at December 31, 2007		1,557,232		$	2.66		2.17	$	6,493,657
Granted		−
Exercised		(172,895	)	$	2.78

Outstanding at December 31, 2008		1,384,337		$	2.65		1.17	$	2,630,240
Granted		−
Exercised		(374,997	)	$	2.78

Outstanding at December 31, 2009		1,009,340		$	2.78		0.17	$	2,038,867

Exercisable at December 31, 2009		1,009,340		$	2.78		0.17	$	2,038,867

21.	Other income

Other income consists of the following:

	For the years ended December 31,
	2009		2008

Gain on disposal of property, plant and equipment	$	2,030	$	451
Government grants		154,618		−
Other		3,748		1,771
Total	$	160,396	$	2,222

During the year ended December 31, 2009, the Company received government grants of $154,618, which were granted unconditionally for the purposes of subsidizing the Company’s research and development activities.

F-25

Foreign currency exchange gain / (loss) consist of the following:

22.	Foreign currency exchange (loss) / gain

	For the years ended December 31,
	2009			2008

Foreign currency reinstatement / realization gain / (loss)	$	186,242		$	(789,696	)
(Loss) / gain from derivative forward foreign exchange contracts		(237,022	)		232,308
Total	$	(50,780	)	$	(557,388	)

23.	Commitments and Contingencies

Operating Leases Commitments

In the normal course of business, the Company leases office space under operating lease agreements. The Company rents office space, primarily for regional sales administration offices, in commercial office complexes that are conducive to administrative operations. The operating lease agreements generally contain renewal options that may be exercised at the Company's discretion after the completion of the base rental terms. In addition, many of the rental agreements provide for regular increases to the base rental rate at specified intervals, which usually occur on an annual basis. The Company was obligated under operating leases requiring minimum rentals as of December 31, 2009 as follows:

Years ending December 31,
2010	$	468,023
2011		332,820
2012		27,369
Thereafter		−
Total minimum lease payments	$	828,212

During the year ended December 31, 2009, rent expenses amounted to $747,557, among which $539,353, $33,385 and $174,819 were recorded as cost of sales, administrative expense and selling expense, respectively.

During the year ended December 31, 2008, rent expenses amounted to $708,639, among which $523,348, $39,405 and $145,886 were recorded as cost of sales, administrative expense and selling expense, respectively.

Capital Commitments

As of December 31, 2009, the Company had a total capital commitment of $581,005 for the acquisitions of property, plant and equipment, which was not provided for in the financial statements and is expected to be disbursed within the next fiscal year.

PRC employee costs

According to the prevailing laws and regulations of the PRC, the Company’s subsidiaries in the PRC are required to cover its employees with medical, retirement and unemployment insurance programs. Management believes that due to the transient nature of the employees of Hengyang Ritar, Hengyang Ritar does not need to provide all its employees with such social insurances, and has not paid the social insurances for all employees.

In the event that any current or former employee of Hengyang Ritar files a complaint with the PRC government, Hengyang Ritar may be subject to making up the social insurances as well as administrative fines. As the Company believes that these fines would not be material, no provision has been made in this regard.

F-26

The Company contributes to a state pension scheme organized by municipal and provincial governments in respect of its employees in PRC. The compensation expense related to this plan, which is calculated at a rate of 8% of the average monthly salary, was $186,071 and $245,806 for the years ended December 31, 2009 and 2008 respectively.

24.	Employee Benefits

25.	Product Warranty

The Company accrues an estimate of its exposure to product warranty claims based on both current and historical product sales data and warranty costs incurred. The Company assesses the adequacy of its recorded warranty liability annually and adjusts the amount as necessary. The warranty liability is included in other current liabilities in the accompanying balance sheet.

Changes in the provision for the product warranty are as below:

	For the years ended December 31,
	2009		2008

Opening balance	$	178,613	$	136,803
Warranty provision accrued		-		395,799
Paid during warranty period		-		(353,989	)
Closing balance	$	178,613	$	178,613

26.	Risk of Concentrations

The Company has no significant concentrations risk with respect to sales, as there was no single customer accounting for 10% or more of the Company’s gross sales for the years ended December 31, 2009 and 2008.

The Company has the following concentrations of business with suppliers constituting more than 10% of the Company’s purchasing volume:

	For the years ended December 31,
	2009			2008

Anxi Min Hua Dianchi Company Limited		30	%		30	%
Henan Yuguang Gold & Lead Company Limited		16	%		-
Quanzhou City Kaiying Power Company Limited		11	%		14	%
Zhongshan Shi Bao Li Xu Battery Company Limited		-			14	%

F-27

The interest rates and terms of repayment of bank and other borrowings are disclosed in Note 16 and Note 17. Other financial assets and liabilities do not have material interest rate risk.

27.	Operating Risks

Interest rate risk

Credit risk

The Company is exposed to credit risk from its cash in bank and fixed deposits and bills and accounts receivable. The credit risk on cash in bank and fixed deposits is limited because the counterparties are recognized financial institutions. Bills and accounts receivable are subjected to credit evaluations. An allowance has been made for estimated irrecoverable amounts, which has been determined by reference to past default experience and the current economic environment.

Foreign currency risk

Most of the transactions of the Company were settled in RMB and U.S. dollars. In the opinion of the directors, the Company would not have significant foreign currency risk exposure.

Transaction gains and losses arising from transactions denominated in a currency other than the functional currency of the entity involved are included in other income (expense), net on the consolidated statements of operations.

Company’s operations are substantially in foreign countries

Substantially all of the Company’s manufacturing operations are carried out in China. The Company’s operations are subject to various political, economic, and other risks and uncertainties inherent in China. Among other risks, the Company’s operations are subject to the risks of restrictions on transfer of funds; export duties, quotas, and embargoes; domestic and international customs and tariffs; changing taxation policies; foreign exchange restrictions; and political conditions and governmental regulations.

28.	Segment Information

The Company has only one business segment, which is manufacturing and trading of rechargeable batteries for use in light electric vehicles or LEV and UPS segments.

The Company's sales by geographic destination are analyzed as follows:

	For the years ended December 31,
	2009		2008

PRC	$	33,349,627	$	24,113,350

Outside PRC
- Hong Kong		2,537,091		9,653,661
- Germany		4,900,537		8,321,577
- India		4,769,663		14,957,025
-South Africa		226,828		1,093,871
-Italy		3,942,897		3,101,094
-Singapore		956,180		1,304,372
-Brazil		3,580,609		5,409,227
-America		11,148,275		7,302,403
-Australia		4,403,423		4,178,394
- other countries, less than 5% of total sales individually		28,815,046		32,877,082
		65,280,549		88,198,706

Total net sales	$	98,630,176	$	112,312,056

F-28