Fourth Quarter 2008 Highlights:

Revenue increased 36.9% year-over-year to $33.2 million;

Gross profit grew 5.9% year-over-year to $5.0 million;

Net income was $0.48 million for fully diluted earnings per share of $0.02;

Non-GAAP net income was $1.4 million for fully diluted earnings per share of $0.07, excluding $0.96 million in non-cash, stock-based compensation expense.

Full Year Highlights:

Increased market penetration to 81 countries with over 800 customers;

Batteries for renewable energy storage increased to 15% of total sales, compared to 5% in fiscal year 2007.

‘We are pleased to report that we exceeded our revenue guidance for the full year 2008 as demand for our lead acid batteries remains healthy. We continue to maintain our strong market position through our innovative R&D that enables us to offer our international quality batteries at a competitive price while targeting rapidly growing niche markets,’ stated Jiada Hu, China Ritar’s chairman and chief executive director. ‘In 2008, we made tremendous progress expanding our market penetration as we now sell our products in 81 countries and have over 800 customers. Moreover, sales for our renewable energy storage batteries remained strong with a 375% increase in sales for the year; representing 20% of total sales in the fourth quarter of 2008.’

Revenue was $33.2 million in the fourth quarter of 2008, up 36.9% from revenue of $24.2 million in the fourth quarter of 2007. Batteries used for telecom, uninterruptible power supply (UPS), renewable energy storage and light electronic vehicles (LEV) accounted for 38.0%, 32.2%, 20.3% and 9.5% of total sales of the fourth quarter of 2008, respectively. On a seasonal basis, the second and third quarters are the strongest as orders tend to slow down in the fourth quarter and first quarters due to the holiday seasons.

Gross profit for the quarter increased 5.9% to $5.0 million from $4.8 million in the same period of 2007. Gross margin for fourth quarter of 2008 was 15.2% compared to 19.6% in the fourth quarter of 2007. The decline in gross margin was mainly due to the rapid decline in lead prices during the fourth quarter, which was directly passed on to the Company’s customers. China Ritar’s long-term gross margin target is 20.5%.

Operating expenses were $4.2 million compared to $6.1 million in the fourth quarter of 2007. Adjusting for $0.96 million and $3.85 million in non-cash, stock-based compensation recognized under salaries in the fourth quarter of 2008 and 2007, respectively, non-GAAP operating expenses were $3.2 million or 9.7% of sales and $2.2 million or 9.2% of sales, respectively. The non-cash, stock-based compensation relates to the release of shares of the Company’s common stock to the Company’s CEO from escrow pursuant to a make good agreement to meet the net income target for 2007 of $5.7 million and 2008 of $8.2 million entered into by the Company in connection with its private placement financing in February 2007.

Operating income for the fourth quarter was $0.85 million compared to ($1.3) million in the fourth quarter of 2007. Adjusting for the previously mentioned non-cash, stock-based compensation, non-GAAP operating income was $1.8 million in the fourth quarter of 2008 compared to $2.5 million in the same period a year ago.

Net income was $0.48 million in the fourth quarter of 2008 for fully diluted earnings per share of $0.02 compared to ($1.9) million in net income and fully diluted earnings per share of ($0.10) in the fourth quarter of 2007. Excluding the non-cash, stock-based compensation, non-GAAP net income for the fourth quarter of 2008 was $1.4 million, down 26.1% from non-GAAP net income of $2.0 million in the fourth quarter of 2007. Non-GAAP fully diluted earnings per share for the fourth quarter of 2008 were $0.07 compared to non-GAAP fully diluted earnings per share of $0.10 in the same period last year.

Full Year 2008 Financial Results:

Batteries used for UPS, telecom, renewable energy storage, and LEV markets accounted for 32%, 42%, 15% and 10% of total sales of the fiscal year 2008, respectively. Gross profit was $22.5 million, up 46.6% from $15.4 million for the full year 2007. Gross margin was 18.9% in 2008 compared to 21.0% in 2007. Operating income for the year was $8.4 million, up 98.2% from operating income of $4.3 million in the full year 2007. Adjusting for the full year non-cash, stock-based compensation of $3.85 million in 2007 and 2008, non-GAAP operating income for the year was $12.3 million, up 51.6% from non-GAAP operating income of $8.1 million in the prior year. Non-GAAP net income for the year was $9.0 million, up 38.9% from non-GAAP net income of $6.5 million in 2007. Fully diluted earnings per share for 2008 were $0.27 compared to $0.14 for the full year 2007. Non-GAAP fully diluted earnings per share for the year were $0.47 compared to $0.34 a year ago.

Financial Condition:

As of December 31, 2008, China Ritar had $12.7 million in cash and equivalents and restricted cash, $23.5 million in working capital and $3.7 million in long-term debt. Net cash provided by operating activities for the year was $4.7 million. Shareholders’ equity stood at $34.4 million, up from $23.7 million at year-end 2007.

Business Outlook:

In 2008, China Ritar added a new factory in Hengyang with five battery production lines and a lead plate manufacturing facility. The battery production lines are currently operating at about a 60% utilization rate and are expected to reach 80% to 85% by the second or third quarter of 2009. With 19 production lines in operation, the Company believes that it has sufficient capacity to support its growth plans for 2009. The company expects revenues from its renewable energy storage batteries to increase to 25% in 2009 from 15% in 2008. The Company does not have any capital expenditure plans at this time.

‘Stationary lead acid batteries continue to be the preferred energy storage device for standby power applications such as UPS, telecom and renewable energy. Furthermore, with the initial market success of our proprietary nano gel batteries for wind and solar power storage, we expect sales from this segment to increase to 25% of total revenue in 2009,’ stated Hu. ‘Yet, as the timing of the global economic recovery remains uncertain, we are maintaining a cautiously optimistic outlook for 2009.’