Attached files

file filename
EXCEL - IDEA: XBRL DOCUMENT - THT Heat Transfer Technology, Inc.Financial_Report.xls
EX-31.2 - EXHIBIT 31.2 - THT Heat Transfer Technology, Inc.exhibit31-2.htm
EX-31.1 - EXHIBIT 31.1 - THT Heat Transfer Technology, Inc.exhibit31-1.htm
EX-32.2 - EXHIBIT 32.2 - THT Heat Transfer Technology, Inc.exhibit32-2.htm
EX-32.1 - EXHIBIT 32.1 - THT Heat Transfer Technology, Inc.exhibit32-1.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10−Q

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: September 30, 2014

[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to  _____________

Commission File Number: 001-34812

THT HEAT TRANSFER TECHNOLOGY, INC.
(Exact Name of Registrant as Specified in Its Charter)

Nevada 20-5463509
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)  

     THT Industrial Park
No. 5 Nanhuan Road, Tiexi District
Siping, Jilin Province 136000
People’s Republic of China
(Address of principal executive offices, Zip Code)

86-434-3265241
(Registrant’s telephone number, including area code)

     _____________________________________________________
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes  [X]        No[   ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes  [X]        No[   ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

  Large accelerated filer [   ] Accelerated filer [   ]
  Non-accelerated filer [   ] (Do not check if a smaller reporting company)              Smaller reporting company [X]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes  [   ]        No [X]

The number of shares outstanding of each of the issuer’s classes of common stock, as of November 13, 2014 is as follows:

Class of Securities Shares Outstanding
Common Stock, $0.001 par value 20,453,500


THT HEAT TRANSFER TECHNOLOGY, INC.
 
Quarterly Report on Form 10-Q
Period Ended September 30, 2014

TABLE OF CONTENTS

PART I   1
FINANCIAL INFORMATION 1
            ITEM 1. FINANCIAL STATEMENTS. 1
            ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. 3
            ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. 8
            ITEM 4. CONTROLS AND PROCEDURES. 8
PART II 9
OTHER INFORMATION 9
            ITEM 1. LEGAL PROCEEDINGS.  9
            ITEM 1A.    RISK FACTORS. 9
            ITEM 3. DEFAULTS UPON SENIOR SECURITIES. 9
            ITEM 4. MINE SAFETY DISCLOSURES. 9
            ITEM 5. OTHER INFORMATION. 9
            ITEM 6. EXHIBITS. 9


PART I
FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

THT HEAT TRANSFER TECHNOLOGY, INC.
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2014 AND 2013

  Pages(s)
Consolidated Balance Sheets F-1
Consolidated Statements of Income and Comprehensive Income F-2
Consolidated Statements of Cash Flows F-4
Notes to Consolidated Financial Statements

F-5 - F-11

1


THT Heat Transfer Technology, Inc.
Consolidated Balance Sheets
(Stated in US dollars)

    Sep 30     December 31,  

 

  2014     2013  

 

  Unaudited        

ASSETS

           

Current assets

           

   Cash and cash equivalents

$  5,929,971   $  9,082,137  

   Restricted cash-current

  808,078     1,451,884  

   Counter guarantee receivable

  -     245,483  

   Trade receivables, net

  45,802,400     44,316,445  

   Bills receivable

  2,766,050     1,716,223  

   Other receivables, prepayments and deposits, net

  15,547,743     14,489,152  

   Inventories, net

  27,917,371     25,303,711  

   Deferred tax assets

  168,728     169,916  

Total Current Assets

  98,940,341     96,774,951  

 

           

   Restricted cash, non-current

  328,535     276,471  

   Retention receivable

  1,377,375     2,208,751  

   Property, plant and equipment, net

  7,822,707     7,371,951  

   Land use rights, net

  6,050,017     6,190,059  

 

           

TOTAL ASSETS

$  114,518,975   $  112,822,183  

 

           

LIABILITIES & SHAREHOLDERS’ EQUITY

           

Current Liabilities

           

   Accounts payable

  8,125,386     8,912,229  

   Other payables and accrued liabilities

  32,577,029     22,330,746  

   Income tax payable

  476,118     599,781  

   Short-term bank loans

  6,175,448     16,038,230  

   Current maturities of long-term loans

  -     981,932  

Total Current Liabilities

  47,353,981     48,862,918  

 

           

Non-current liabilities

           

   Long-term loans

  568,791     572,794  

Total Long-term Liabilities

  568,791     572,794  

 

           

Total Liabilities

  47,922,772     49,435,712  

 

           

SHAREHOLDERS’ EQUITY

           

   Preferred stock, $.001 par value, 10,000,000 shares authorized,
no shares issued and outstanding

           

   Common stock, $.001 par value, 190,000,000 shares authorized,
20,453,500 shares issued and outstanding at September 30, 2014
and December 31, 2013

  20,454     20,454  

   Additional paid-in capital

  26,524,324     26,524,324  

   Statutory reserve

  4,001,792     3,652,538  

   Retained earnings

  30,151,881     27,043,638  

   Accumulated other comprehensive income

  5,897,752     6,145,517  

Total THT Heat Transfer Technology Inc. stockholders’ equity

  66,596,203     63,386,471  

   Noncontrolling interests

  -     -  

TOTAL SHAREHOLDERS’ EQUITY

  66,596,203     63,386,471  

 

           

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

$  114,518,975     112,822,183  

The accompanying notes are an integrated part of these unaudited consolidated financial statements

F-1


THT Heat Transfer Technology, Inc.
Consolidated Statements of Income and Comprehensive Income
(Stated in US dollars)
(Unaudited)

    For the Nine Months Ended Sep 30,     For Three Months Ended September 30,  
    2014     2013     2014     2013  
                         

Sales revenue

$  36,940,786   $  32,584,283     15,942,714   $  13,761,475  

Cost of revenue

  (24,065,042 )   (21,314,593 )   (10,354,769 )   (9,494,611 )

Gross Profit

  12,875,744     11,269,690     5,587,945     4,266,864  

 

                       

Operating expenses

                       

 Administrative expenses

  2,897,520     3,852,670     871,639     1,348,042  

 Research and development expenses

  2,536,250     1,191,079     855,751     557,003  

 Selling expenses

  3,151,939     4,063,539     1,051,672     1,565,837  

Total Operating Expenses

  8,585,709     9,107,288     2,779,062     3,470,882  

 

                       

Income from operations

  4,290,035     2,162,402     2,808,883     795,982  

 

                       

Other Income (Expenses)

                       

 Interest income

  8,660     19,069     2,497     4,295  

 Other income

  399,563     560,670     327     267,742  

 Finance costs

  (642,835 )   (946,662 )   (263,675 )   (277,355 )

 Other expense

  -     (621 )   (17 )   (17 )

Total Other Expense

  (234,612 )   (367,544 )   (260,868 )   (5,335 )

 

                       

Income before income taxes and noncontrolling interests

  4,055,423     1,794,858     2,548,015     790,647  

Income tax expenses

  (597,926 )   (376,841 )   (500,193 )   (93,365 )

Net Income

  3,457,497     1,418,017     2,047,822     697,282  

Net loss (income) attributable to noncontrolling interests

  -     (53,092 )   -     -  

Net income attributable to THT Heat Transfer Technology, Inc.
common stockholders

$ 3,457,497 $ 1,364,925 2,047,822 $ 697,282

 

                       

Net Income

  3,457,497     1,418,017     2,047,822     697,282  

Other Comprehensive Income

                       

Foreign currency translation adjustments

  (247,765 )   1,597,429     178,555     367,094  

Comprehensive Income

  3,209,732     3,015,446     2,226,377     1,064,376  

Comprehensive (income) loss attributable to noncontrolling interests

- (25,690 ) - -

Comprehensive income attributable to THT Heat
Transfer Technology, Inc. common stockholders

$ 3,209,732 $ 2,989,756 2,226,377 $ 1,064,376

 

                       

Earnings per share attributable to THT Heat
Transfer Technology, Inc. common stockholders

   Basic and diluted

$  0.17   $  0.07     0.10   $  0.03  

Weighted average number of shares outstanding

                       

   Basic and diluted

  20,453,500     20,453,500     20,453,500     20,453,500  

The accompanying notes are an integrated part of these unaudited consolidated financial statements

F-2


THT Heat Transfer Technology, Inc.
Consolidated Statements of Changes in Shareholders’ Equity
(Stated in US dollars)

                THT Heat Transfer Technology, Inc.                    
    Common Stock                 Accumulated Other           Total  
                Additional Paid-in           Comprehensive           Shareholders'  

 

  No. of Shares     Amount     Capital     Statutory Reserve     Income     Retained Earnings     Equity  

Balance, December 31, 2013

  20,453,500   $  20,454   $  26,524,324   $  3,652,538   $  6,145,517   $  27,043,638   $  63,386,471  

 

                                         

Net income

                                3,457,497     3,457,497  

Foreign currency translation adjustment

                          (247,765 )         (247,765 )

Appropriation to reserve

                    349,254           (349,254 )   -  

 

                                         

Balance, September 30, 2014 (Unaudited)

  20,453,500   $  20,454   $  26,524,324   $  4,001,792   $  5,897,752   $  30,151,881   $  66,596,203  

The accompanying notes are an integrated part of these unaudited consolidated financial statements

F-3


THT Heat Transfer Technology, Inc.
Consolidated Statements of Cash Flows
(Stated in US dollars)
(Unaudited)

    For the Nine        
    Months Ended     For the Nine Months  
    Sep 30,     Ended Sep 30,  
    2014     2013  
             

CASH FLOWS FROM OPERATING ACTIVITIES

           

Net income

$  3,457,497   $  1,418,017  

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

 Gain on sale of property plant and equipment   (8,190 )      

 Depreciation and amortization

807,308 898,337

 Allowance for doubtful accounts

  (210,411 )   363,698  

Changes in operating assets and liabilities:

           

 Trade receivables

  (1,587,478 )   2,196,165  

 Bills receivable

  (1,063,150 )   1,684,456  

 Other receivables, prepayments and deposits

  (1,641,477 )   (6,478,549 )

 Inventories

  (2,793,979 )   (10,341,601 )

 Retention receivable

  816,963     120,095  

 Trade payables

  (725,471 )   3,432,449  

 Other payables and accrued expenses

  9,939,247     2,790,539  

 Tax payable

  (119,622 )   (613,325 )

NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES

  6,871,237     (4,529,719 )

 

           

CASH FLOWS FROM INVESTING ACTIVITIES

           

 Change in restricted cash

  580,390     (145,957 )

 Payments to acquire property, plant and equipment

  (258,576 )   (116,217 )
 Proceed from sale of property, plant and machinery   9,763     -  

NET CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES

  331,577     (262,174 )

 

           

CASH FLOWS FROM FINANCING ACTIVITIES

           

 Proceeds from bank loans

  14,318,955     25,412,961  

 Repayment of bank loans

  (24,081,878 )   (28,629,791 )

 Proceeds from long-term loans

  -     (960,969 )

 Repayment of long-term loans

  (976,292 )   -  

 Refund of Counter guarantee receivable

  244,073     240,243  

 Cash paid for acquisition of non-controlling interests

  -     (404,485 )

NET CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES

  (10,495,142 )   (4,342,041 )

 

           

 

           

Effect of foreign currency translation on cash and cash equivalents

  140,162     185,567  

 

           

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

  (3,152,166 )   (8,948,367 )

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

$  9,082,137   $  10,703,199  

CASH AND CASH EQUIVALENTS AT END OF PERIOD

$  5,929,971   $  1,754,832  

 

           

Supplementary Disclosures for Cash Flow Information:

           

 Interest paid

$ 495,140   $  944,751  

 Income taxes paid

$ 896,285   $  891,947  

The accompanying notes are an integrated part of these unaudited consolidated financial statements

F-4


THT Heat Transfer Technology, Inc.
Notes to Unaudited Consolidated Financial Statements
(Unaudited)
(Stated in US Dollars)

1.

Corporate information

THT Heat Transfer Technology, Inc. (the “Company” or “THT” or the “Surviving Corporation”) is a Nevada corporation with major operations in China. The Company’s shares are quoted for trading on the Nasdaq Global Market in the United States.

2.

Description of business

The Company is a holding company whose primary business are conducted through its subsidiaries, namely SipingJuyuan which is located in the Jilin Province and Beijing Juyuan which is located in Beijing City of the PRC. The Company is engaged in the manufacturing and trading of plate heat exchangers and various related products.

SipingJuyuan was established in the PRC on May 31, 2006 following the division (the “Division”) of Siping City Juyuan Heat Exchange Equipment Co., Ltd. (“Old Juyuan Company”) into three companies, namely SipingJuyuan, Siping City Juyuan Heat Exchange Equipment Co., Ltd. (“New Juyuan Company”) and Siping City JuyuanHanyang Pressure Vessels Co., Ltd (“JuyuanHanyang Pressure Vessels”).

3.

Summary of significant accounting policies

Basis of presentation and consolidation

The accompanying unaudited consolidated financial statements of the Company and its subsidiaries have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) including the instructions to Form 10-Q and Regulation S-X. Certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been or omitted from these statements pursuant to such rules and regulations and, accordingly, they do not include all the information and notes necessary for comprehensive consolidated financial statements and should be read in conjunction with the Company’s consolidated financial statements and accompanying notes thereto for the year ended December 31, 2013 filed with the SEC in the Company’s Form 10-K on March 31, 2014.

In the opinion of the management of the Company, all adjustments, which are of a normal recurring nature, necessary for a fair statement of the results for the nine-month period have been made. Results for the interim periods presented are not necessarily indicative of the results that might be expected for the entire fiscal year.

F-5


The consolidated financial statements include the financial statements of the Company and its subsidiaries. All significant inter- company balances and transactions have been eliminated on consolidation.

Fair value of financial instruments

Accounting Standards Codification (“ASC”) Topic 820 requires the disclosure of the estimated fair value of financial instruments including those financial instruments for which fair value option was not elected. As of September 30, 2014 and December 31, 2013, the carrying amounts of the Company’s financial assets and liabilities approximated their fair values due to short maturities or the applicable interest rates approximated the current market rates.

Reclassifications

Certain amounts in the consolidated financial statements for the prior period have been reclassified to conform to the presentation of the current period for the comparative purposes.

Recently issued accounting pronouncements

In April 2014, the FASB issued ASU 2014-08, “Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity ”. The amendments in the ASU change the criteria for reporting discontinued operations while enhancing disclosures in this area. It also addresses sources of confusion and inconsistent application related to financial reporting of discontinued operations guidance in U.S. GAAP. Under the new guidance, only disposals representing a strategic shift in operations should be presented as discontinued operations. In addition, the new guidance requires expanded disclosures about discontinued operations that will provide financial statement users with more information about the assets, liabilities, income, and expenses of discontinued operations. The amendments in the ASU are effective in the first quarter of 2015 for public organizations with calendar year ends. Early adoption is permitted. The Company does not expect the adoption to have a significant impact on its consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09, “Revenue from contracts with Customers (Topic 606)”. This ASU affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of non-financial assets. This ASU will supersede the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance. The ASU also supersedes some cost guidance included in Subtopic 605-35, Revenue Recognition-Construction-Type and Production-Type Contracts. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchanged for those goods or services. The standard is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. The Company is currently in the process of evaluating the impact of the adoption on its consolidated financial statements.

F-6


In June 2014, the FASB issued ASU 2014-12, “Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved After the Requisite Service Period”. The amendments in the ASU require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. A reporting entity should apply existing guidance in Topic 718, Compensation – Stock Compensation, as it relates to awards with performance conditions that affect vesting to account for such awards. The performance target should not be reflected in estimating the grant-date fair value of the award. Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. If the performance target becomes probable of being achieved before the end of the requisite service period, the remaining unrecognized compensation cost should be recognized prospectively over the remaining requisite service period. The total amount of compensation cost recognized during and after the requisite service period should reflect the number of awards that are expected to vest and should be adjusted to reflect those awards that ultimately vest. The requisite service period ends when the employee can cease rendering service and still be eligible to vest in the award if the performance target is achieved. The amendments in this ASU are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted. The adoption of this standard is not expected to have a material impact on the Company’s financial position and results of operations.

In August 2014, the FASB issued ASU 2014-15 “Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”. The amendment in the ASU provides guidance on determining when and how to disclose going-concern uncertainties in the financial statements. The new standard requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued. An entity must provide certain disclosures if conditions or events raise substantial doubt about the entity’s ability to continue as a going concern. The amendments in this Update are effective for annual periods and interim periods within those annual periods beginning after December 15, 2016. Earlier adoption is permitted. The adoption of this standard is not expected to have a material impact on the Company’s financial position and results of operations.

4.

Trade receivables, net


      September 30,     December 31,  
      2014     2013  
      (Unaudited)        
               
  Trade receivables $  52,648,938   $  51,422,790  
  Less: Allowance for doubtful accounts   (6,846,538 )   (7,106,345 )
               
    $  45,802,400   $  44,316,445  

F-7


As of September 30, 2014 and December 31, 2013, the Company’s trade receivables of $0 and $501,536, respectively, were pledged as collateral under certain loan and guarantee arrangements (see Note 9).

An analysis of the allowance for doubtful accounts for the nine months ended September 30, 2014 and 2013 is as follows:

      Nine months ended  
      September 30,  
      (Unaudited)  
      2014     2013  
               
  Balance at beginning of period $  7,106,345   $  4,127,640  
  Adjustment of bad debt expense   (210,411 )   363,698  
  Translation adjustments   (49,396 )   114,995  
               
  Balance at end of period $  6,846,538   $  4,606,333  

5.

Inventories, net


      September 30,     December 31,  
      2014     2013  
      (Unaudited)        
               
  Raw materials $  5,923,554   $  5,412,793  
  Work-in-progress   21,782,592     18,966,311  
  Finished goods   231,054     944,576  
      27,937,200     25,323,680  
  Allowance for obsolete inventories   (19,829 )   (19,969 )
    $  27,917,371   $  25,303,711  

No further allowance for obsolete inventories was recognized during the nine months ended September 30, 2014 and 2013.

As of September 30, 2014 and December 31, 2013, respectively, the inventory of $0 and $3,600,419 were pledged under certain loan agreements (see Note 10).

6.

Income tax

The effective tax rate is 20% and 12% for the three months periods ended September 30, 2014 and September 30, 2013, respectively. The effective tax rate is 15% and 21% for the nine months periods ended September 30, 2014 and September 30, 2013, respectively.

F-8


   
7.

Property, plant and equipment, net

As of September 30, 2014 and December 31, 2013, property, plant and equipment with net book values of $4,691,729 and $4,954,744, respectively, were pledged as collateral under certain loan arrangements (see Note 9).

8.

Land use rights

As of September 30, 2014 and December 31, 2013, certain land use rights were pledged as collateral under certain loan arrangements (see Note 9).

During the nine months ended September 30, 2014 and 2013, amortization amounted to $96,907 and $95,798, respectively.

9.

Short-term bank loans


      September 30,     December 31,  
      2014     2013  
      (Unaudited)        
               
  Secured bank loans $  6,175,448   $  16,038,230  
               
    $  6,175,448   $  16,038,230  

The Company’s bank loans carry annual interest from 100% to 120% of the benchmark interest rate published by the People’s Bank of China (the “PBOC”).

The secured bank loans were secured by the following assets of the Company:

      September 30,     December 31,  
      2014     2013  
      (Unaudited)        
               
  Trade receivables (Note 4) $  -   $  501,536  
  Property, plant and equipment (Note 7)   4,691,729     4,954,744  
  Land use rights (Note 8)   990,537     1,014,947  
               
    $  5,682,266   $  6,471,227  

As of September 30, 2014, the Company has repaid the short-term loan secured by trade receivables in full.

F-9



10.

Long-term loans

Long-term loans include the following:

      September 30,     December 31,  
      2014     2013  
      (Unaudited)        
  Secured loan $  -   $  981,932  
  Unsecured loan   568,791     572,394  
               
  Total $  568,791   $  1,554,726  

The secured loan borrowed from China Development Bank Company bears interest at an annual rate of 15% over the benchmark rate of the PBOC for three-year long-term loans and guaranteed by a third party. On January 6, 2014, the Company repaid the loan balance of $981,932 in full.

The loan was secured by the following assets of the Company:

      September 30, 2014     December 31, 2013  
      (Unaudited)        
  Inventories (Note 5) $  -   $  3,600,419  
               
    $  -   $  3,600,419  

As a condition of the guarantees for the loan, the Company paid 2.5% of the loan balance to the third party as compensation for acting as guarantor for the Company and made the counter guarantee deposits to the guarantor of $245,483 as of December 31, 2013. As of March 31, 2014, the deposits have been refunded to the Company upon the Company’s settlement of the loan on January 6, 2014.

In December 2013, the Company also obtained a 3-year entrusted loan from a non-financial institution bearing interest at 3% per annum granted by local government.

11.

Earnings per share

The basic earnings per share is calculated using the net income attributable to the Company’s common stockholders and the weighted average number of shares outstanding during the reporting periods. During the reporting periods, certain share-based awards were not included in the computation of diluted earnings per share because they were anti-dilutive. Accordingly, the basic and diluted earnings per share are the same.

12.

Segment information

The Company is solely engaged in the manufacturing and trading of plate heat exchangers and various related products. Since the nature of the products, their production processes, and their distribution methods are substantially similar, they are considered as a single reportable segment under ASC 280 “Segment Reporting”.

F-10


The Company’s sales revenues by products for the nine months ended September 30, 2014 and 2013 were as follows:

      Nine months ended September 30,  
      2014     %     2013     %  
      (Unaudited)           (Unaudited)        
                           
  Plate heat exchanger $  12,072,115     33   $  13,189,394     41  
  Heat exchange unit   14,265,444     39     10,199,904     31  
  Air-cooled heat exchanger   390,381     1     1,898,115     6  
  Shell-and-tube heat exchanger   2,616,147     7     1,928,460     6  
  Others   7,596,699     20     5,368,410     16  
    $  36,940,786     100   $  32,584,283     100  

All of the Company’s long-lived assets and revenues classified based on the customers are located in the PRC.

13.

Related party transactions

As of September 30, 2014 and December 31, 2013, respectively, the Company advanced $9,751 and $14,987 to Guohong Zhao, Chief Executive Officer of the Company, for handling selling and logistic activities for the Company in the ordinary course of business, which was included in "Other receivables, prepayments and deposits, net".

F-11



ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Special Note Regarding Forward Looking Statements

In addition to historical information, this report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We use words such as “believe,” “expect,” “anticipate,” “project,” “target,” “plan,” “optimistic,” “intend,” “aim,” “will” or similar expressions which are intended to identify forward-looking statements. Such statements include, among others, those concerning market and industry segment growth and demand and acceptance of new and existing products; any projections of sales, earnings, revenue, margins or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements regarding future economic conditions or performance; as well as all assumptions, expectations, predictions, intentions or beliefs about future events. You are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, including those identified in Item 1A “Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, 2013, as well as assumptions, which, if they were to ever materialize or prove incorrect, could cause the results of the Company to differ materially from those expressed or implied by such forward-looking statements.

Readers are urged to carefully review and consider the various disclosures made by us in this report and our other filings with the SEC. These reports attempt to advise interested parties of the risks and factors that may affect our business, financial condition and results of operations and prospects. The forward-looking statements made in this report speak only as of the date hereof and we disclaim any obligation, except as required by law, to provide updates, revisions or amendments to any forward-looking statements to reflect changes in our expectations or future events.

Use of Terms

Except where the context otherwise requires and for the purposes of this report only:

“THT,” “Company,” “we,” “us,” or “our” are to the combined business of THT Heat Transfer Technology, Inc., a Nevada corporation, and its consolidated subsidiaries: Megaway, Star Wealth, Siping Juyuan and Beijing Juyuan;
“Megaway” are to Megaway International Holdings Limited, a BVI company;
“Star Wealth” are to Star Wealth International Holdings Limited, a Hong Kong company;
“Siping Juyuan” are to Siping City Juyuan Hanyang Plate Heat Exchanger Co. Ltd., a PRC company;
“Beijing Juyuan” are to Beijing Juyuan Hanyang Heat Exchange Equipment Co., Ltd., a PRC company;
“BVI” are to the British Virgin Islands;
“Hong Kong” are to the Hong Kong Special Administrative Region of the People’s Republic of China;
“PRC” and “China” are to the People’s Republic of China;
“SEC” are to the Securities and Exchange Commission;
“Exchange Act” are to the Securities Exchange Act of 1934, as amended;
“Securities Act” are to the Securities Act of 1933, as amended;
“Renminbi” and “RMB” are to the legal currency of China; and
“U.S. dollars,” “dollars” and “$” are to the legal currency of the United States.

Overview of our Business

We are a leading total solution provider in the heat exchange industry. Our major products are plate heat exchangers, heat exchanger units, air-cooled heat exchangers and shell-and-tube heat exchangers. Unlike most other heat exchanger manufacturers in China, we not only provide heat exchange products, but also provide total solutions to our customers. As a total solutions provider, we analyze the working condition of our customers, provide optimized designs based on analysis and simulation, offer high quality heat exchange products, and continuously assist our customers in improving the heat exchange process.

Over the past ten years, we have successfully completed over 3,000 projects in more than 15 industries, including metallurgy, heat and power, petrochemical, food and beverage, pharmaceutical and shipbuilding. We have provided heat exchange solutions to Fortune 500 companies, including Shell, BP, BASF, LG, Sinopec and China Shenhua. We have also provided heat exchange products for important Chinese and international projects such as the Beijing 2008 Olympics Wukesong Sports Center, Guangdong Linao nuclear plant and BASF Chemical plant in Germany.

2


Our operations are headquartered in Siping, Jilin Province, PRC. Our primary Chinese operating subsidiaries are Siping Juyuan and Beijing Juyuan.

Third Quarter Financial Performance Highlights

The following summarizes certain key financial information for the third quarter of 2014:

Sales revenue: Sales revenue increased by $2.18 million, or 15.85%, to $15.94 million for the three months ended September 30, 2014, from $13.76 million for the same period in 2013.

   

Gross profit: Gross profit increased by $1.32 million, or 30.96%, to $5.59 million for the three months ended September 30, 2014, from $4.27 million for the same period in 2013. As a percentage of sales revenue, gross profit increased by 4.04% to 35.05% for the three months ended September 30, 2014, from 31.01% for the same period in 2013.

   

Net income attributable to stockholders: Net income attributable to our stockholders increased by $1.35 million, or 193.69%, to $2.05 million for the three months ended September 30, 2014, from $0.70 million for the same period in 2013.

   

Fully diluted net income per share: Fully diluted net income per share was $0.10 for the three months ended September 30, 2014, as compared to $0.03 for the same period in 2013.

Results of Operations

Comparison of Three Months Ended September 30, 2014 and 2013

The following table sets forth key components of our results of operations for the periods indicated.

    Three Months Ended              
    September 30,     $     %  
    2014     2013     Change     Change  
Sales revenue $  15,942,714   $  13,761,475   $  2,181,239     15.85  
Cost of sales   (10354,769 )   (9,494,611 )   (860,158 )   9.06  
Gross profit   5,587,945     4,266,864     1,321,081     30.96  
Operating expenses:                        
       Administrative expenses   871,639     1,348,042     (476,403 )   (35.34 )
       Research and development expenses   855,751     557,003     298,748     53.63  
       Selling expenses   1,051,672     1,565,837     (514,165 )   (32.84 )
Total operating expenses   2,779,062     3,470,882     (691,820 )   (19.93 )
Income from operations   2,808,883     795,982     2,012,901     252.88  
Interest income   2,497     4,295     (1,798 )   (41.86 )
Other income   327     267,742     (267,415 )   (99.88 )
Finance costs   (263,675 )   (277,355 )   13,680     (4.93 )
Other expense   (17 )   (17 )   -     -  
Income before income taxes   2,548,015     790,647     1,757,368     222.27  
Income taxes   (500,193 )   (93,365 )   406,828     (435.74 )
Net income   2,047,822     697,282     1,350,540     193.69  

Sales revenue. Our sales revenue is generated from sales of heat exchange products. Sales revenue increased by $2.18 million, or 15.85%, to $15.94 million for the three months ended September 30, 2014, from $13.76 million for the same period in 2013. Our sales volume in the three months ended September 30, 2014 amounted to 947 units, an increase of 526 units, from 421 units for the same period in 2013. Such increase was mainly due to the increased sales revenue from heat exchanger units and air coolers in the 2014 period as compared with the 2013 period. Sales revenue from heat exchanger units increased by $2.98 million, or 57.58%, to $8.16 million for the three months ended September 30, 2014, from $5.18 million for the same period in 2013. Sales from others increased $0.32 million, or 15.26%, to $2.43 million for the three months ended September 30, 2014, from $2.11 million for the same period in 2013. The increase was a result of increased demand for our products and economic recovery in China in 2014 compared with previous years.

3


The following table shows our sales revenue by product for the three months ended September 30, 2014 and 2013:

    Three Months Ended September 30,  
    2014     2013  
   $     %    $     %  
Plate heat exchanger $  4,937,061     30.97   $  5,475,911     39.79  
Heat exchange unit   8,159,272     51.18     5,177,785     37.63  
Air-cooled heat exchanger   736     0.00     434,576     3.16  
Shell-and-tube heat exchanger   415,330     2.61     564,681     4.10  
Others   2,430,315     15.24     2,108,522     15.32  
TOTAL $  15,942,714     100.00   $  13,761,475     100.00  

Cost of sales. Our cost of sales is primarily comprised of the costs of our raw materials, labor and factory overhead. Our cost of sales increased by $0.86 million, or 9.06%, to $10.35 million for the three months ended September 30, 2014, from $9.49 million for the three months ended September 30, 2013. The increase in the cost of sales was generally in line with the increase in our sales revenue. Cost of sales as a percentage of sales revenue were 64.95% and 68.99% for the three months ended September 30, 2014 and 2013, respectively, a decrease of 4.04 percentage points. The decrease was mainly attributable to the decrease in labor costs and raw material costs.

Gross profit. Our gross profit is equal to the difference between our sales revenue and our cost of sales. Our gross profit increased by $1.32 million, or 30.96%, to $5.59 million for the three months ended September 30, 2014, from $4.27 million for the same period in 2013. The increase in our gross profit was mainly attributable to increased sales revenue from heat exchanger units and air coolers. Although the average unit selling price of our products decreased 48.50% in the three months ended September 30, 2014 in comparison with the same period in 2013, gross profit margin for the three months ended September 30, 2014 increased to 35.05% from 31.01% for the same period in 2013. The increase in our gross profit margin was mainly attributable to the significant increase of sales volume and the decrease in labor costs and raw material costs as noted above.

Administrative expenses. Our administrative expenses consist of the costs associated with staff and support personnel who manage our business activities. Our administrative expenses decreased by $0.48 million, or 35.34%, to $0.87 million for the three months ended September 30, 2014, from $1.35 million for the same period in 2013. As a percentage of sales revenue, administrative expenses decreased to 5.47% for the three months ended September 30, 2014, as compared to 9.8% for the same period in 2013. The decrease in administrative expense was primarily due to overall decrease of administrative expenses in every category in the third quarter of 2014.

Research and development expenses. Our research and development expenses consist of the costs associated with research and development personnel and expense in research and development projects. Our research and development expenses increased by $0.30 million, or 53.63%, to $0.86 million for the three months ended September 30, 2014, from $0.56 million for the same period in 2013. The increase in research and development expenses was mainly attributable to our research and development of new products such as plate air cooler used in TMSR (Thorium Molten Salt Reactor), plate heat exchanger used in distributed energy resource and plate evaporator and condenser used in ship generators.

Selling expenses. Our selling expenses include sales commissions, the cost of advertising and promotional materials, salaries and fringe benefits of sales personnel, after-sale support services and other sales-related costs. Our selling expenses decreased by $0.51 million, or 32.84%, to $1.05 million for the three months ended September 30, 2014, from $1.57 million for the same period in 2013. As a percentage of sales revenue, selling expenses decreased to 6.60% for the three months ended September 30, 2014, as compared to 11.38% for the same period in 2013. The decrease was mainly attributable to $0.45 million decrease of transportation costs. The decreasing transportation price in market in 2014 led to this decrease in transportation costs.

Income before income taxes. Income before income taxes increased by $1.76 million, or 222.27%, to $2.55 million for the three months ended September 30, 2014, from $0.79 million for the same period in 2013. Such increase was mainly attributable to the increased gross profit and decreased total expenses.

4


Income taxes. Our income taxes increased by $0.41 million, or 435.74%, to $0.50 million for the three months ended September 30, 2014, from $0.09 million for the same period in 2013.

Net income. As a result of the cumulative effect of the foregoing factors, our net income increased by $1.35 million, or 193.69%, to $2.05 million for the three months ended September 30, 2014, from $0.70 million for the same period in 2013. As a percentage of sales revenue, our net income was 12.84% and 5.07% for the three months ended September 30, 2014 and 2013, respectively.

Comparison of Nine Months Ended September 30, 2014 and September 30, 2013

The following table sets forth key components of our results of operations for the periods indicated.

    Nine months Ended              
    September 30,     $     %  
    2014     2013     Change     Change  
Sales revenue $  36,940,786   $  32,584,283   $  4,356,503     13.37  
Cost of sales   (24,065,042 )   (21,314,593 )   (2,750,449 )   12.90  
Gross profit   12,875,744     11,269,690     1,606,054     14.25  
Operating expenses:                        
       Administrative expenses   2,897,520     3,852,670     (955,150 )   (24.79 )
       Research and development expenses   2,536,250     1,191,079     1,345,171     112.94  
       Selling expenses   3,151,939     4,063,539     (911,600 )   (22.43 )
Total operating expenses   8,585,709     9,107,288     (521,579 )   (5.73 )
Income from operations   4,290,035     2,162,402     2,127,633     98.39  
Interest income   8,660     19,069     (10,409 )   (54.59 )
Other income   399,563     560,670     (161,107 )   (28.74 )
Finance costs   (642,835 )   (946,662 )   303,827     (32.10 )
Other expense   0     (621 )   621     (100.00 )
Income before income taxes and noncontrolling interests   4,055,423     1,794,858     2,260,565     125.95  
Income taxes   (597,926 )   (376,841 )   (221,085 )   58.67  
Net income before noncontrolling interests   3,457,497     1,418,017     2,039,480     143.83  
Net loss attributable to noncontrolling interests   -     (53,092 )   53,092     (100.00 )
Net income attributable to THT common stockholders $  3,457,497   $  1,364,925   $  2,092,572     153.31  

Sales revenue. Our sales revenue increased by $4.36 million, or 13.37%, to $36.94 million for the nine months ended September 30, 2014, from $32.58 million for the same period in 2013. Our sales volume in the nine months ended September 30, 2014 amounted to 2060 units, an increase of 657 units, from 1,403 units for the same period in 2013. Such increase was mainly due to the increased sales revenue from heat exchanger units and shell-and-tube heat exchangers in the 2014 period as compared with the 2013 period. Sales revenue from heat exchanger units increased by $4.07 million, or 39.86%, to $14.27 million for the nine months ended September 30, 2014 from $10.20 million for the same period in 2013. Sales revenue from shell-and-tube heat exchangers increased $0.69 million, or 35.66%, to $2.62 million for the nine months ended September 30, 2014 from $1.93 million for the same period in 2013. The increase was a result of increased demand for our products and economic recovery of China in 2014 compared with previous years.

The following table shows our sales revenue by product for the nine months ended September 30, 2014 and 2013:

    Nine months Ended September 30,  
    2014     2013  
  $      %    $     %  
Plate heat exchanger $  12,072,115     32.68   $  13,189,394     40.48  
Heat exchange unit   14,265,444     38.62     10,199,904     31.30  
Air-cooled heat exchanger   390,381     1,06     1,898,115     5.83  
Shell-and-tube heat exchanger   2,616,147     7.08     1,928,460     5.92  
Others   7,596,699     20.56     5,368,410     16.47  
TOTAL $  36,940,786     100.00   $  32,584,283     100.00  

Cost of sales. Our cost of sales increased by $2.75 million, or 12.90%, to $24.07 million for the nine months ended September 30, 2014, from $21.31 million for the nine months ended September 30, 2013. The increase in the cost of sales was generally in line with the increase in our sales revenue. Cost of sales as a percentage of sales revenue were 65.14% and 65.41% for the nine months ended September 30, 2014 and 2013, respectively, a decrease of 0.27 percentage points. The decrease was mainly attributable to the decrease in the labor costs and raw material costs.

5


Gross profit. Our gross profit increased by $1.61 million, or 14.25%, to $12.88 million for the nine months ended September 30, 2014, from $11.27 million for the same period in 2013. The increase in our gross profit was mainly attributable to increased sales revenue from plate heat exchangers and shell-and-tube heat exchangers. Although the average unit selling price of our products decreased 22.79% in the nine months ended September 30, 2014 in comparison with the same period in 2013, gross profit margin for the nine months ended September 30, 2014 increased to 34.86% from 34.59% for the same period in 2013. The increase in our gross profit margin was mainly attributable to the significant increase of sales volume and the decrease in labor costs and raw material costs as noted above.

Administrative expenses. Our administrative expenses decreased by $0.96 million, or 24.79%, to $2.90 million for the nine months ended September 30, 2014, from $3.85 million for the same period in 2013. As a percentage of sales revenue, administrative expenses decreased to 7.84% for the nine months ended September 30, 2014, as compared to 11.82% for the same period in 2013. The decrease in administrative expense was primarily due to the decrease in the allowance for doubtful accounts in the nine months ended September 30, 2014.

Research and development expenses. Our research and development expenses increased by $1.35 million, or 112.94%, to $2.54 million for the nine months ended September 30, 2014, from $1.19 million for the same period in 2013. The increase in research and development expenses was mainly attributable to our research and development of new products such as plate air cooler used in TMSR (Thorium Molten Salt Reactor), plate heat exchanger used in distributed energy resource and plate evaporator and condenser used in ship generators.

Selling expenses. Our selling expenses decreased by $0.91 million, or 22.43%, to $3.15 million for the nine months ended September 30, 2014, from $4.06 million for the same period in 2013. As a percentage of sales revenue, selling expenses decreased to 8.53% for the nine months ended September 30, 2014, as compared to 12.47% for the same period in 2013. The decrease was mainly attributable to 0.98 million decrease of transportation costs. The decreasing transportation price in market in 2014 leads to this decrease in transportation costs.

Income before income taxes. Income before income taxes increased by $2.26 million, or 125.95%, to $4.06 million for the nine months ended September 30, 2014, from $1.79 million for the same period in 2013. Such increase was mainly attributable to increased gross profit and decreased total expenses.

Income taxes. Our income taxes increased by $0.22 million, or 58.67%, to $0.60 million for the nine months ended September 30, 2014, from $0.38 million for the same period in 2013.

Net income attributable to common stockholders. As a result of the cumulative effect of the foregoing factors, our net income attributable to common stockholders increased by $2.09 million, or 153.31%, to $3.46 million for the nine months ended September 30, 2014, from $1.36 million for the same period in 2013. As a percentage of sales revenue, our net income attributable to common stockholders was 9.36% and 4.19% for the nine months ended September 30, 2014 and 2013, respectively.

Liquidity and Capital Resources

As of September 30, 2014, we had cash and cash equivalents of $5.93million, primarily consisting of cash on hand and demand deposits. We can use our land as collateral to borrow approximately $4.76 million. In addition, we have an approximately $19.53 million credit line from China Construction Bank and Agriculture Bank of China. We anticipate that cash on hand and borrowing capacity under our bank loans will be sufficient to satisfy our ongoing obligations.

We believe our allowance for doubtful accounts is appropriate. We have an installment payment arrangement with our customers. The current economic slowdown and China’s tightened credit policy led to delayed payments and delayed delivery schedules by our customers, which in turn caused us to keep our allowance for doubtful accounts staying at the high level in the nine months ended September 30, 2014. To control inflation after a massive stimulus plan, the Chinese government tightened its credit policy. As a result, state-owned banks limited their lending to large state-owned corporations and privately held companies continue to have difficulty accessing capital. Most of our customers have been affected by the tightened credit policy and have limited access to capital. The Company records an allowance for doubtful accounts at a rate of 25% for receivables aged between 1 to 2 years, 50% for receivables aged between 2 to 3 years and 100% for receivables aged over 3 years.

6


Our allowance of obsolete inventory is also appropriate because we purchase raw materials after we receive purchase orders. Although our customers may delay their payment or delivery schedules, which increase our inventories, they do not cancel their orders so as to cause us to classify the delayed inventories as obsolete inventories.

We expect that the trend of delayed customer payments and delayed delivery schedules will continue in the future. We have been taking the following measures to mitigate the situation: 1) send the collection letters or call the customers to request payment; 2) appoint specialists to visit our customers to collect payment; 3) file law suits.

PRC legal restrictions permit payments of dividends by our PRC subsidiaries only out of their accumulated after-tax profits, if any, determined in accordance with PRC accounting standards and regulations. Our PRC subsidiaries are also required under PRC laws and regulations to allocate at least 10% of their annual after-tax profits determined in accordance with PRC GAAP to a statutory general reserve fund until the amounts in said fund reaches 50% of our registered capital. Allocations to these statutory reserve funds can only be used for specific purposes and are not transferable to us in the form of loans, advances, or cash dividends. Given that the Company and the PRC subsidiaries do not intend to pay dividends for the foreseeable future, we consider the impact of restrictions on our liquidity, financial condition and results of operations is not significant.

The following table provides a summary of our net cash flows from operating, investing, and financing activities.

Cash Flow

    Nine months Ended September 30,  

 

  2014     2013  

Net cash provided by (used in) operating activities

$  6,871,237   $  (4,529,719 )

Net cash provided by (used in) investing activities

  331,577     (262,174 )

Net cash used in financing activities

  (10,495,142 )   (4,342,041 )

Effects of exchange rate change in cash

  140,162     185,567  

Net decrease in cash and cash equivalents

  (3,152,166 )   (8,948,367 )

Cash and cash equivalents at beginning of the period

  9,082,137     10,703,199  

Cash and cash equivalent at end of the period

$ 5,929,971   $  1,754,832  

Operating Activities

Net cash provided by operating activities was $6.88 million for the nine months ended September 30, 2014, compared with $4.53 million used in the same period in 2013. The increase in net cash provided by operating activities was mainly attributable to increased net income, less purchase of inventories, less increase of other receivables, prepayments, and deposits, more increase of other payables and accrued expenses, offset by more decrease of trade payables and more increase of accounts receivables.

Investing Activities

Net cash provided by investing activities was $0.33 million for the nine months ended September 30, 2014, compared with $0.26 million used in the same period in 2013. The net cash provided by investing activities during the nine months ended September 30, 2014 was primarily due to release of more restricted cash offset by payments made to acquire property, plant and equipment.

Financing Activities

Net cash used in financing activities was $10.50 million for the nine months ended September 30, 2014, compared with $4.34 million for the same period in 2013. The decrease in net cash used in financing activities resulted from less proceeds from bank loans and more repayments of bank loans.

Capital Expenditures

Our capital expenditures were used primarily for the purchase of equipment to expand our production capacity.

7



    Nine months Ended September 30,  
    2014     2013  
Construction costs $  531,209   $  144,681  
Purchase of equipment   498,749     152,282  
Prepayment for land use right   -     -  
Total capital expenditures $  1,029,958   $  296,963  

We estimate that our total capital expenditures in fiscal year 2014 will reach approximately $1.50 million to buy the equipment for necessary products used in the nuclear power industry.

Seasonality

Our operating results and operating cash flows historically have been subject to seasonal variations. Our revenues usually increase over each quarter of the calendar year with the first quarter usually the slowest quarter because fewer projects are undertaken during and around the Chinese spring festival.

Inflation

Inflation and changing prices have not had a material effect on our business, and we do not expect that inflation or changing prices will materially affect our business in the foreseeable future. However, our management will closely monitor price changes in the Chinese economy and our industry and continually maintain effective cost controls in operations.

Off Balance Sheet Arrangements

We do not have any off balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, sales or expenses, results of operations, liquidity or capital expenditures, or capital resources that are material to an investment in our securities.

Critical Accounting Policies

Critical accounting policies are those we believe are most important to portraying our financial conditions and results of operations and also require the greatest amount of subjective or complex judgments by management. Judgments and uncertainties regarding the application of these policies may result in materially different amounts being reported under various conditions or using different assumptions. See Note 3 to our unaudited condensed consolidated financial statements included elsewhere in this report.

Recent Accounting Pronouncements

See Note 3 to our unaudited condensed consolidated financial statements included elsewhere in this report.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not Applicable.

ITEM 4. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act). Disclosure controls and procedures refer to controls and other procedures designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Interim Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

As required by Rule 13a-15(e), our management has carried out an evaluation, with the participation and under the supervision of our Chief Executive Officer, Mr. Guohong Zhao, and Interim Chief Financial Officer, Mr. Zhigang Xu, of the effectiveness of the design and operation of our disclosure controls and procedures, as of September 30, 2014. Based upon, and as of the date of this evaluation, Messrs. Zhao and Xu determined that because of the material weaknesses described in Item 9A “Controls and Procedures” of our Annual Report on Form 10-K for the year ended December 31, 2013, which we are still in the process of remediating as of September 30, 2014, our disclosure controls and procedures were not effective. Investors are directed to Item 9A of our Annual Report on Form 10-K for the year ended December 31, 2013 for the description of these weaknesses.

8


Changes in Internal Control over Financial Reporting

We regularly review our system of internal control over financial reporting and make changes to our processes and systems to improve controls and increase efficiency, while ensuring that we maintain an effective internal control environment. Changes may include such activities as implementing new, more efficient systems, consolidating activities, and migrating processes.

During its evaluation of the effectiveness of internal control over financial reporting as of December 31, 2012, our management identified material weakness related to our lack of: (1) sufficient and adequately trained accounting and finance personnel; (2) qualified resources to perform the internal audit functions properly; and (3) an internal audit department which renders ineffective our ability to prevent and detect control lapses and errors in the accounting of certain key areas. As disclosed in our Annual Report on Form 10-K for the year ended December 31, 2013, our management has identified the steps necessary to address the material weaknesses, and in the third quarter of 2014, we continued to implement these remedial procedures.

Other than in connection with the implementation of the remedial measures described above, there were no changes in our internal controls over financial reporting during the third quarter of 2014 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II
OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

From time to time, we may become involved in various lawsuits and legal proceedings, which arise, in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these, or other matters, may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that we believe will have a material adverse effect on our business, cash flows, financial condition or operating results.

ITEM 1A. RISK FACTORS.

Not applicable.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5. OTHER INFORMATION.

We have no information to disclose that was required to be in a report on Form 8-K during the third quarter of 2014, but was not reported. There have been no material changes to the procedures by which security holders may recommend nominees to our board of directors.

ITEM 6. EXHIBITS.

The list of exhibits in the Exhibit Index to this report is incorporated herein by reference.

9


SIGNATURES

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 thereunto duly authorized.

Date: November 13, 2014 THT HEAT TRANSFER TECHNOLOGY, INC.
     
  By: /s/ Guohong Zhao
    Guohong Zhao, Chief Executive Officer
    (Principal Executive Officer)
     
  By: /s/ Zhigang Xu
    Zhigang Xu, Chief Financial Officer
    (Principal Financial Officer and Principal
    Accounting Officer)

10


EXHIBIT INDEX

Exhibit No.   Description
31.1   Certifications of Principal Executive Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2   Certifications of Principal Financial Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1 Certifications of Principal Executive Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2 Certifications of Principal Financial Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101   Interactive data files pursuant to Rule 405 of Regulation S-T (furnished herewith).

11