---

UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-K

[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934        
For the fiscal year ended: December 31, 2009

[     ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934For the transition period from __________to ____________

Commission File Number: 000-52232

THT HEAT TRANSFER TECHNOLOGY,
INC.(Exact name of registrant as specified in its
charter)

|Nevada                                                         | 20-5463509                             
|-------------------------------------------------------------- | ---------------------------------------
|(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number)

THT Industrial Park, No. 5 Nanhuan Road, Tiexi District
Siping, Jilin Province 136000 Peoples Republic of China(Address of principal executive office and 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)

Securities registered pursuant to Section 12(b) of the Act:
None

Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $0.001

Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined in Rule 405 of the Securities Act. Yes[   ]         No[ x
]

Indicate by check mark if the registrant is not required to file
reports pursuant to Section 13 or Section 15(d) of the Act. Yes[   ]         No[ x ]

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 if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K.[   ]

---

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. (Check one):

|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 Act). Yes[   ]         No[ x ]

The issuers revenues for its most recent fiscal year ended
December 31, 2009, were $34.89 million.

The aggregate market value of the
ordinary shares, $0.001 par value per share (Shares), of the registrant held
by non-affiliates on June 30, 2009 was $0, as there were no Shares held by
non-affiliates on such date, and the registrants Shares were not then publicly
traded.

There were 16,000,000 shares of common stock outstanding as of
March 26, 2010.

DOCUMENTS INCORPORATED BY REFERENCE:

None

---

THT HEAT TRANSFER TECHNOLOGY, INC.

FORM 10-K

For the Fiscal Year Ended December 31, 2009

TABLE OF CONTENTS

|Number         |                                                                                                                          | Page
|-------------- | ------------------------------------------------------------------------------------------------------------------------ | ----
|PART I         |                                                                                                                          |     
|               |                                                                                                                          |     
|Item
      1.  | Business                                                                                                                 | 2   
|Item
      1A. | Risk
      Factors                                                                                                       | 17  
|Item
      2.  | Properties                                                                                                               | 25  
|Item
      3.  | Legal
      Proceedings                                                                                                  | 25  
|Item
      4.  | (Removed
      and Reserved)                                                                                             | 25  
|               |                                                                                                                          |     
|PART II        |                                                                                                                          |     
|               |                                                                                                                          |     
|Item
      5.  | Market
      for Registrants Common Equity, Related Stockholder Matters and Issuer
      Purchases of Equity Securities | 25  
|Item
      6.  | Selected
      Financial Data                                                                                            | 26  
|Item
      7.  | Managements
      Discussion and Analysis of Financial Condition and Results of Operations                              | 26  
|Item
      7A. | Quantitative
      and Qualitative Disclosures about Market Risk                                                         | 37  
|Item
      8.  | Financial
      Statements and Supplementary Data                                                                        | 37  
|Item
      9   | Changes
      in and Disagreements with Accountants on Accounting and Financial
      Disclosure                         | 37  
|Item
      9A  | Controls
      and Procedures                                                                                            | 38  
|Item
      9B  | Other
      Information                                                                                                  | 39  
|               |                                                                                                                          |     
|PART III       |                                                                                                                          |     
|Item
      10. | Directors,
      Executive Officers and Corporate Governance                                                             | 39  
|Item
      11. | Executive
      Compensation                                                                                             | 42  
|Item
      12. | Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters               | 43  
|Item
      13  | Certain
      Relationships and Related Transactions, and Director Independence                                          | 44  
|Item
      14. | Principal
      Accountant Fees and Services                                                                             | 45  
|               |                                                                                                                          |     
|PART IV        |                                                                                                                          |     
|               |                                                                                                                          |     
|Item
      15. | Exhibits
      and Financial Statement Schedules                                                                         | 45  

---

INTRODUCTORY NOTE

Use of Terms

Except as otherwise indicated by the context, references in
this report to:

- Beijing Juyuan refers to Beijing Juyuan Hanyang Heat Exchange Equipment
  Co., Ltd., a PRC corporation and our indirect, 75%-owned subsidiary;
- BVI refers to the British Virgin Islands;
- China, Chinese and PRC, refer to the Peoples Republic of China;
- Exchange Act refers to the Securities Exchange Act of 1934, as amended.
- Megaway refers to Megaway International Holdings Limited, a BVI
  corporation and our direct, wholly owned subsidiary, and/or its direct and
  indirect subsidiaries, as the case may be;
- RMB refers to Renminbi, the legal currency of China;
- Securities Act refers to the Securities Act of 1933, as amended;
- Siping Juyuan refers to Siping City Juyuan Hanyang Plate Heat Exchanger
  Co. Ltd., a PRC corporation and our indirect, wholly-owned subsidiary;
- Star Wealth refers to Star Wealth International Holdings Limited, a Hong
  Kong coroporation and our indirect, wholly-owned subsidiary;
- THT, the Company, we, us, or our, refers to the combined business
  of THT Heat Transfer Technology, Inc., and its wholly-owned subsidiaries,
  Megaway, Star Wealth, Siping Juyuan and 75%-owned subsidiary Beijing Juyuan,
  but do not include the stockholders of THT Heat Transfer Technology, Inc.;
- U.S. dollar, $ and US$ refer to the legal currency of the United
  States; and
- Wisetop refers to Wisetop International Holdings Limited, a BVI
  corporation.

Forward-Looking Statements

This report contains
information that may constitute "forward-looking statements." Generally, the
words "believe," "expect," "intend," "estimate," "anticipate," "project," "will"
and similar expressions identify forward-looking statements, which generally are
not historical in nature. All statements that address operating performance,
events or developments that we expect or anticipate will occur in the
futureincluding statements relating to volume growth, share of sales and
earnings per share growth, and statements expressing general views about future
operating resultsare forward-looking statements. Management believes that these
forward-looking statements are reasonable as and when made. However, caution
should be taken not to place undue reliance on any such forward-looking
statements because such statements speak only as of the date when made. We
undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise,
except as required by law. In addition, forward-looking statements are subject
to certain risks and uncertainties that could cause actual results to differ
materially from our historical experience and our present expectations or
projections. These risks and uncertainties include, but are not limited to,
those described in Part I, "Item 1A. Risk Factors" and elsewhere in this report
and those described from time to time in our future reports filed with the
Securities and Exchange Commission.

1

---

PART I

Item 1 . Business Overview

THT Heat Transfer Technology, Inc. is a Nevada holding company
which conducts its operations through China-based operating subsidiaries. We are
a leading total solution provider in the heat exchange industry. A heat
exchanger is a device built for efficient heat transfer from one medium to
another, whether the media are separated by a solid wall so that they never mix,
or the media are in direct contact. Through our Chinese operating subsidiary,
Siping Juyuan, we design, manufacture and sell plate heat exchangers,
shell-and-tube heat exchangers, heat exchanger units, other heat exchanger
products, and provide total heat exchange solutions.

Our sales revenue and net income before noncontrolling
interests were $34,890,853 and
$4,142,921, respectively, during the year ended December 31, 2009, and
$32,466,806 and $2,984,482, respectively, during the year ended December 31,
2008.

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

Our Organizational Structure

The following chart reflects our organizational structure for
our active subsidiaries as of the date of this Annual Report.



2

---

Our Corporate History

Background and History of BTHC

The Company, formerly called BTHC VIII, Inc., was organized on
August 7, 2006 as a Delaware corporation to effect the reincorporation of BTHC
VIII, LLC, a Texas limited liability company, mandated by the plan of
reorganization discussed below. In accordance with the confirmed plan of
reorganization, BTHCs business plan was to seek to identify a privately-held
operating company desiring to become a publicly held company by merging with
BTHC through a reverse merger or other acquisition transaction. On June 30,
2009, in accordance with our business plan, we completed the acquisition of
Megaway pursuant to the Share Exchange Agreement. As a result of this
acquisition, we are no longer a shell company.

In September 1999, Ballantrae Healthcare LLC and affiliated
limited liability companies including BTHC VIII, LLC (collectively Ballantrae)
were organized for the purpose of operating nursing homes throughout the United
States. Although Ballantrae continued to increase the number of nursing homes it
operated and in June 2000 had received a substantial equity investment, it was
unable to achieve profitability. During 2001 and 2002, Ballantrae continued to
experience severe liquidity problems and did not generate enough revenues to
cover its overhead costs. Despite obtaining additional capital and divesting
unprofitable nursing homes, by March, 2003, Ballantrae was out of cash and
unable to meet its payroll obligations.

On March 28, 2003, Ballantrae filed a petition for
reorganization under Chapter 11 of the United States Bankruptcy Code. On
November 29, 2004, the bankruptcy court approved the First Amended Joint Plan of
Reorganization, or the Plan, as presented by Ballantrae, its affiliates and
their creditors. On August 16, 2006, pursuant to the Plan, BTHC VIII, LLC was
merged into the Company.

Halter Financial Group, Inc. or HFG, participated with
Ballantrae and their creditors in structuring the Plan. As part of the Plan, HFG
provided $76,500 to be used to pay professional fees associated with the Plan
confirmation process. HFG was granted an option to be repaid through the
issuance of equity securities in 17 of the reorganized Ballantrae entities,
including the Company. HFG exercised the option, and as provided in the Plan,
70% of the Companys outstanding common stock, or 420,000 shares, were issued to
HFG, in satisfaction of HFG's administrative claims. The remaining 30% of the
Companys outstanding common stock, or 180,528 shares, were issued to 581
holders of administrative and tax claims and unsecured debt. The 600,528 shares,
or Plan Shares, were issued pursuant to Section 1145 of the Bankruptcy Code.

Effective August 16, 2006, HFG transferred its 420,000 Plan
Shares to Halter Financial Investments L.P., or HFI, a Texas limited partnership
controlled by Timothy P. Halter. Mr. Halter also served as our sole officer and
director from our formation on August 7, 2006 until February 12, 2009, when he
was replaced by Gerard Pascale.

We were subject to the jurisdiction of the bankruptcy court
until we consummated the exchange transaction described below with Sino-America
Ventures, Inc. in February 2009. As we timely consummated a merger or
acquisition with a qualifying entity, we filed a certificate of compliance with
the bankruptcy court which stated that the requirements of the Plan had been
met, resulting in the discharge to be deemed granted. Thereafter, the post
discharge injunction provisions set forth in the Plan and the confirmation order
became effective.

Exchange Transaction with SAV

On February 12, 2009, we entered into a share exchange
agreement, or the Exchange Agreement, with Sino- America Ventures, Inc., or SAV,
a Delaware corporation, and the sole stockholder of LAV, Mr. Gerard Pascale.
Pursuant to the Exchange Agreement, Mr. Pascale transferred 100% of the issued
and outstanding shares of the capital stock of SAV to us in exchange for
5,404,800 newly issued shares of our common stock that constituted approximately
90% of our issued and outstanding capital stock on a fully-diluted basis as of
and immediately after the consummation of such exchange. As a result of this
transaction, Mr. Pascale became our controlling stockholder and SAV became our
subsidiary. In connection with the Exchange Agreement, our sole director and
officer, Timothy P. Halter, resigned and was replaced by Mr. Pascale as our sole
director and officer.

SAV was organized on February 10, 2009 as a Delaware
corporation and was formed to seek and identify a privately-held operating
company desiring to become a publicly held company by combining through a
reverse merger or acquisition transaction. SAV was dissolved on May 22,
2009.

Background and History of Megaway and its
Subsidiaries

Megaway was incorporated in the British Virgin Islands on April
8, 2009. Megaway is a holding company that has no operations or assets other
than its ownership of all of the capital stock of Star Wealth. Star Wealth was
incorporated in Hong Kong on March 25, 2009. Star Wealth is also a holding
company that has no operations or assets other than its ownership of all of the
equity interests of Siping Juyuan. Siping City Juyuan Heat Exchange Equipment
Co., Ltd., or Old Juyuan, the predecessor of Siping Juyuan, was first
incorporated in China in December 1998. In May 2006, Old Juyuan was divided into
three individual enterprises, including Siping Juyuan. Siping Juyuan carried on
the major business of Old Juyuan while the other two enterprises gradually
ceased operation. Mr. Guohong Zhao, our Chairman, Chief Executive Officer and
President, is the founder of Old Juyuan. All of our manufacturing operations are
conducted through Siping Juyuan. Siping Juyuan has a term from June 8, 2009, the
date the acquisition by Star Wealth of 100% of the equity interest in Siping
Juyuan was approved by the Economic Technology Cooperation Bureau of Jilin
Province and Siping Juyuan became a wholly-foreign owned enterprise, through June 7, 2029. Siping Juyuan owns 75% of the equity
interests of Beijing Juyuan, which is solely engaged in the sales of Siping
Juyuans products, and carries no production activities.

3

---

Acquisition of Megaway

On June 30, 2009, we completed a reverse acquisition
transaction with Megaway whereby we issued to Wisetop, then the sole shareholder
of Megaway, 14,800,000 shares of our common stock in exchange for all of the
issued and outstanding capital stock of Megaway. Megaway thereby became our
wholly owned subsidiary and Wisetop became our controlling stockholder.

In connection with our reverse acquisition of Megaway, we
entered into the Cancellation Agreement with Mr. Gerald Pascale, whereby Mr.
Pascale agreed to the cancellation of 4,805,387 shares of our common stock owned
by him.

Upon the closing of the reverse acquisition, Mr. Gerard
Pascale, our sole director and officer, submitted a resignation letter pursuant
to which he resigned from all offices that he held effective immediately and
from his position as our director that became effective on July 10, 2009.
Guohong Zhao was appointed as our director effective upon the closing of the
reverse acquisition. In addition, our executive officers of the Company were
replaced by the Siping Juyuan executive officers upon the closing of the reverse
acquisition as indicated in more detail below.

For accounting purposes, the share exchange transaction was
treated as a reverse acquisition with Megaway as the acquirer and the Company as
the acquired party. When we refer in this report to business and financial
information for periods prior to the consummation of the reverse acquisition, we
are referring to the business and financial information of Megaway on a
consolidated basis unless the context suggests otherwise.

Reincorporation of BTHC

On November 24, 2009, the Company entered into an Agreement and
Plan of Merger, or the Merger Agreement, with THT Heat Transfer Technology,
Inc., the Surviving Corporation, a Nevada corporation and wholly-owned
subsidiary of the Company. Pursuant to the Merger Agreement, the Company agreed
to merge with and into the Surviving Corporation, with the Surviving Corporation
continuing as the surviving entity. This transaction is referred to as the
Reincorporation Merger. The Reincorporation Merger became effective on November
30, 2009, which is referred to as the Effective Time.

As a result of the Reincorporation Merger, the legal domicile
of the Surviving Corporation is now Nevada. The Reincorporation Merger was
consummated to move the Companys domicile to Nevada as described in our
Definitive Information Statement on Schedule 14C, or Information Statement,
filed with the Securities and Exchange Commission on October 5, 2009, which
description is incorporated by reference. As described in the Information
Statement, the Merger Agreement and Reincorporation Merger were duly approved by
the written consent of stockholders of the Company owning at least a majority of
the outstanding shares of the Companys common stock, dated September 16, 2009.
A copy of the Merger Agreement is attached to this report as Exhibit 2.1 and is
incorporated herein by reference.

Pursuant to the terms of the Merger Agreement, (i) the Company
merged into the Surviving Corporation, with the Surviving Corporation being the
surviving corporation, and the Company thereby changed its name to THT Heat
Transfer Technology, Inc.; (ii) from and after the Effective Time, the Company
possesses all of the rights, privileges, powers, and franchises of the
predecessor corporation in the merger, and the predecessor corporations debts
and liabilities became the debts and liabilities of the Surviving Corporation;
(iii) the predecessor corporation's existing Board of Directors and officers
became the Board of Directors and officers of the Surviving Corporation; and
(iv) the Articles of Incorporation and Bylaws of the Surviving Corporation now
govern the Surviving Corporation. A description of the provisions of the
Articles of Incorporation and Bylaws of the Surviving Corporation was previously
disclosed in the Information Statement. Copies of the Articles of Incorporation
and Bylaws of Surviving Corporation, as amended to date, are attached hereto as
Exhibits 3.1 and Exhibit 3.2, respectively.

The Reincorporation Merger did not result in any change in
headquarters, business, jobs, management, location of any of offices or
facilities, number of employees, assets, liabilities or net worth (other than as
a result of the costs incident to the Reincorporation Merger, which are
immaterial). Management, including all directors and officers, remain the same
in connection with the Reincorporation Merger. There were no substantive changes
in the employment agreements for executive officers or in other direct or
indirect interests of the current directors or executive officers as a result of
the Reincorporation Merger. Following the Reincorporation Merger, the securities
of the Surviving Corporation continued to be registered under Section 12(g) of
the Exchange Act of 1934 by virtue of Rule 12g-3 of the Exchange Act.

As a result of the Reincorporation Merger, each outstanding
share of the predecessor corporations common stock, par value $0.001 per share,
was automatically converted into one share of the Surviving Corporations common
stock, par value $0.001 per share. Each outstanding certificate representing
shares of the predecessor corporations common stock is deemed, without any
action by the predecessor corporations stockholders, to represent the same
number of shares of the Surviving Corporations common stock.

Our Industry

A heat exchanger is a device built for efficient heat transfer
from one medium to another. It is widely used in various industries including
metallurgy, heat and power, petrochemical, food and beverage, pharmaceutical and
shipbuilding.

4

---

According to China Heat Exchanger Industry Report
(hereinafter referred to as the Industry Report) issued by Zero Power
Intelligence Co., Ltd., an independent market research firm in China, the world
heat exchanger market has grown significantly in the past several years. The
global sales value of heat exchangers grew from US$29.7 billion in 2005 to
US$38.6 billion in 2008, representing a growth of 30%, and is expected to grow
to US$55.3 billion in 2012, representing a growth of 43% in the four-year period
from 2009 to 2012.

According to the Industry Report, China has become the second
largest market and one of the fastest growing markets for heat exchangers. The
sales value of heat exchangers in China grew from US$3.2 billion in 2005 to
US$5.4 billion in 2008, representing a growth of 70%, and is expected to grow to
US$ 11.0 billion in 2012, representing a growth of 106% in the four-year period
from 2009 to 2012.

Growth of the Chinese Heat Exchange Industry

We anticipate that growth in the Chinese heat exchanger
industry will mainly be driven by the following factors:

Fast economic growth in China

According to the Development Research Center of the PRC State
Council, Chinas GDP is expected to grow 9.5% in 2010, which is one of the
fastest in the world. Heat exchangers are widely used in various industries,
including metallurgy, heat and power, petrochemical, food and beverage,
pharmaceutical, and shipbuilding, therefore the heat exchanger market benefits
from the overall economic growth.

Growing Energy Needs

A fast growing economy requires more energy. In pace with the
rising energy needs, more and more power plants are being constructed. Heat
exchangers are widely used in the closed circulation system of a thermal power
plant, nuclear reactor heat exchange system and regular water cooling system of
nuclear power plant. According to State Electricity Regulatory Commission,
energy investment in China was US$ 84.9 billion in 2009 and is expected to grow
at compound annual growth rate of 10% till 2013.TheChinese government plans to spend a total of US$ 66 billion in nuclear
power plant construction. By 2020, altogether 23 million-KW level nuclear power
plants will be constructed. In 2009, 5 new nuclear power plants have started
construction in Zhejiang, Shandong, Guangdong and Hainan province.

Environmental Protection

New environmental rules and regulations have helped reduce
emissions and energy consumption. The Chinese government and other countries
governments encourage investments to reduce energy consumption and emission. In
many applications, industry buyers tend to use heat exchangers instead of simple
cooling systems in consideration of both efficiency and energy savings. In 2009,
investment in energy savings and reducing emissions in China was US $4.4 billion
and is expected to reach US $7.3 billion in 2010.

Fast Pace Urbanization

District heating systems are required in cities in the northern
part of China, which are experiencing fast urbanization. Heat exchangers are an
important part of district heating systems. Also, HVAC (Heating, Ventilation and
Air Conditioning), which is essential to buildings, requires installation of
heat exchangers. In 2009, the HVAC market in China was US$6.00 billion and is
expected to grow at compound annual growth rate of 25% by 2012.

Shipbuilding Rise

Sea transportation remains Chinas most important
transportation method and we expect that sea transportation will continue to
grow due to continued globalization. To satisfy the need for more sea
transportation, more ships are required to be built. Heat exchangers are
installed in engine cooling systems and air-conditioning systems of every ship.
China has become a strong player in shipbuilding. In 2009, China accounted for
38.5% of shipbuilding orders worldwide, according to the statistics provided by
Ministry of Industry and Information Technology. In 2010, China is expected to
deliver 77.1 million DWT (Deadweight Tonnage) of new ships, representing a
compound annual growth rate of 51% from 2006.

Our Competitive Strengths

We believe that the following strengths enable us to compete
effectively in and to capitalize on growth in the heat exchange industry in
China:

- Leading market position. In 2008, we ranked second in China
  in terms of sales revenue among plate heat exchange manufacturers. This
  leading sales position will help develop our brand and brand awareness
  throughout China and assist us in acquiring an even larger market share in the
  future.

5

---

- Comprehensive solutionprovider. Unlike
  most other heat exchanger manufacturers in China, we not only provide heat
  exchange products, but also provide comprehensive solution to our customers.
  As a total solution provider, we analyze the working condition of our
  customers; provide optimized design based on analysis and simulation, offer
  high quality heat exchange products, and continuously assist our customer in
  improving their heat exchange processes.
- Broad product range. We provide the broadest range of heat
  exchanger products in China other than Alfa Laval, the global market leader
  for heat exchanger products. Our products include plate heat exchangers, shell
  and tube heat exchangers, heat exchange units, air-cooled heat exchangers,
  welded plate heat exchangers and plate-and-shell heat exchangers. The broad
  product variety provides our customers with one-stop purchasing convenience.
- Solid track record.Over the past 10 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 and for critical projects in both the PRC and other foreign countries,
  including Beijing 2008 Olympics Wukesong Sports Center, Guangdong Linao
  nuclear plant and BASF Chemical plant in Germany. Our strong track record
  demonstrates our ability in developing and providing high quality solutions
  and products that has provide our Company with a strong brand and reputation
  in the industry.
- Professional sales team.We have a sales team with 132
  experienced sales people, which we believe is among the largest in the Chinese
  market. Our sales people are organized into 4 groups by industry, namely
  metallurgy, heat and power, petrochemical and shipbuilding, each specialized
  in serving customers in the specific industry. With specialization, our sales
  people are able to be more focused and be equipped with better industry
  knowledge and experience.

Our Growth Strategy

We are committed to enhancing our sales, profitability and cash
flows through the following strategies:

- Increase production and processing capacity. To fulfill
  future sales growth and enhance our capacity during peak periods, recently
  expanded our production facility. Our new workshop has a floor area of 7,356
  square meters and our new production line of plate heat exchangers with a
  designed capacity of 200,000 square meters annually was implemented in the new
  workshop in October 2009.
- Expand sales network. We will further expand our sales
  network by establishing new sales offices in China. Meanwhile, we are
  strengthening our marketing efforts in the international market.
- Continue developing new products. We will continue to develop
  new products to broaden our product range so as to meet broader customer
  demands and seize large market shares. New products under development include
  semi-welded plate heat exchanger, disassemble plate evaporator, welded plate
  falling-film evaporator and oversized plate-and-shell heat exchanger. These
  new products will help us to reach a larger number of customers in the
  chemical, food and beverage, pharmaceutical and refinery industries.

Our Products

Our products and heat exchange solutions are sold to customers
in the chemical industry, metallurgical industry, and shipbuilding industry. Our
products are also used with heating, ventilating and air conditioning, or HVAC,
systems and district heating (i.e., a system for distributing heat generated in
a centralized location for residential and commercial heating requirements such
as space heating and water heating). Our products include plate heat exchangers,
shell and tube heat exchangers, air-cooled heat exchangers, welded plate heat
exchangers, heat exchanger units, plate and shell heat exchangers.

6

---

Plate Heat Exchangers



A plate heat exchanger is a type of heat exchanger that uses
metal plates to transfer heat between two fluids. This type of heat exchanger
has a major advantage over a conventional shell and tube heat exchangers because
the fluids are exposed to a much larger surface area because the fluids spread
out over the plates. This spreading out of the fluids over the plates
facilitates the transfer of heat, and greatly increases the speed of the
temperature change.

The plate heat exchanger consists of a coiled pipe containing
one fluid that passes through a chamber containing another fluid. The walls of
the pipe are usually made of metal or another substance with a high thermal
conductivity, to facilitate the interchange, whereas the outer casing of the
larger chamber is made of a plastic or coated with thermal insulation, to
discourage heat from escaping from the exchanger.

Plate heat exchangers are used in a variety of industries
including, iron and steel, aluminum, chemical, electric power generation,
nuclear power generation, central building air-conditioner, pharmaceutical, and
food and beverage. Plate heat exchanger sales accounted for approximately 63% of
our revenues in 2009.

Shell-and-tube Heat Exchanger



A shell-and-tube heat exchanger is a type of heat exchanger
that consists of a shell (a large pressure vessel) with a bundle of tubes inside
it. One fluid runs through the tubes, and another fluid flows over the tubes
(through the shell) to transfer heat between the two fluids. Heat is transferred
from one fluid to the other through the tube walls, either from tube side to
shell side or vice versa. The fluids can be either liquids or gases on either
the shell or the tube side. Shell-and-tube heat exchanger sales accounted for
approximately 12% of our revenues in 2009.

Shell-and-tube heat exchangers are used in most of the same
industries as plate heat exchangers. Shell-and-tube heat exchangers are most
commonly used with extremely high-pressure liquids.

7

---

Heat Exchanger Units



A heat exchanger unit is a whole set of district heating
control equipment. A heat exchanger unit integrates the following components:
plate heat exchangers, circulating pump, water supplement pump, thermometer,
manometer, various sensors, conduits, valves and industrial controls, water
supplement system, stable pressure system, frequency conversion flux control
system, heat measurement and network communication control system. We combine
these components on-site at our manufacturing facilities. We utilize our
proprietary technologies to customize heat exchanger units to our clients
specifications. Sales of heat exchanger units accounted for approximately 17% of
our revenues in 2009.

Our heat exchanger units are most widely used in thermal power
plants and residential heating systems, which require integration of control and
monitoring systems for several different spaces.

Air-cooled Heat Exchanger



An air-cooled heat exchanger is a pressure vessel which cools a
circulating fluid within finned tubes by forcing ambient air over the exterior
of the tubes. A common example of an air cooler is a cars radiator. Air-cooled
heat exchangers are beneficial because they increase plant efficiency and they
are a green solution as compared to cooling towers and shell and tube heat
exchangers because they do not require an auxiliary water supply (water lost due
to drift and evaporation, plus no water treatment chemicals are required). Sales
of air-cooled heat exchangers accounted for 2% of our revenues in 2009.

Air-cooled heat exchangers are used in various industries where
cooling liquids are too costly to obtain or not readily available.

8

---

Welded Plate Heat Exchanger



A welded plate heat exchanger is used for heat exchange between
high-pressure fluids or where a more compact product is required. In place of a
pipe passing through a chamber, there are instead two alternating chambers,
usually thin in depth, separated at their largest surface by a corrugated metal
plate. The heat transfer plates are connected by welding. Compared with other
plate heat exchangers, welded plate heat exchangers can work under situations
where the liquid pressure is higher. However, as the heat transfer plates are
welded, it is less convenient to maintain and clean as compared with other types
of plate heat exchangers that are connected by gaskets. Welded plate heat
exchangers accounted for 2% of our revenues in 2009.

Welded plate heat exchangers are applied in many of the same
industries as other plate heat exchangers and as shell-and-tube heat
exchangers.

Plate-and-Shell Heat Exchanger



A plate-and-shell heat exchanger is a hybrid type of heat
exchanger that combines aspects of the plate heat exchanger with aspects of the
shell-and-tube heat exchanger. Plate-and-shell heat exchangers consist of a
shell (a large pressure vessel) with heat transfer plates inside of the shell
instead of tubes.

One of the advantages of a plate-and-shell heat exchanger is
its high heat transfer efficiency. These types of heat exchangers also have a
compact structure and light weight. Shell-and-plate heat exchangers are also
resistant to high pressure and high temperatures. They are commonly used to meet
the requirements of large-scale equipment used in oil refining, the chemical
industry, fertilizer production and metallurgy. The heat transfer efficiency of
a plate-and-shell heat exchanger is more than double that of a shell-and-tube
heat exchanger. Sales of plate-and-shell heat exchangers accounted for 1% of our
total sales for 2009.

Other heat exchange products accounted for 3% of our revenues
for 2009.

New Products under Development

Our research and development department is constantly working
on new products for our customers and enhancements to our existing products.
Currently, our research and development team is working on semi-welded plate
heat exchangers, disassemble plate evaporators, welded plate falling-film
evaporators and oversized plate-and-shell heat exchangers.

- Semi-welded plate heat exchanger.A semi-welded plate heat
  exchanger is similar to a welded plate heat exchanger, but the heat transfer
  plates are connected by welding at one side and by gaskets at the other side
  instead of welding on both sides. The benefit of a semi-welded plate heat
  exchanger is that it can function well with a high pressure liquid on the
  welded side just like a welded plate heat exchanger, except that it is easier
  to clean and maintain because it has gaskets on the other side. Semi-welded
  plate heat exchangers are commonly used in tower cooling
  in connection with sulfuric acid production. We started sales of our
  semi-welded plate heat exchanger products in December 2009.

9

---

- Evaporator.An evaporator is used to concentrate beverages, foods
  and chemicals by vaporizing water from the fluids containing the desired
  products. It is commonly used in the food, beverage and pharmaceutical
  industries. We expect to commercialize our disassemble plate evaporator in May
  2010. We are also developing a welded plate falling-film evaporator. A welded
  plate falling-film evaporator can be operated with very low temperature
  differences between the heating media and the boiling liquid, and it also has
  very short product contact times, typically just a few seconds per pass. These
  characteristics make the falling film evaporator particularly suitable for
  heat-sensitive products. We expect to commercialize our welded plate falling
  film evaporator in September 2010.
- Oversized plate-and-shell heat exchanger.An oversized
  plate-and-shell heat exchanger utilizes a heat transfer plate that has a
  developed area of more than 6,000 square meters. Oversized plate-and-shell
  heat exchangers are commonly used in large refinery equipment such as
  catalytic reforming or hydrogenation equipment used in the petrochemical
  industry. We expect to commercialize our oversized plate-and-shell heat
  exchanger in July 2011.

Manufacturing

Manufacturing Facilities

Our manufacturing facilities are based in Siping City, Jilin
Province, Northeast China. The total floor area of our facility is approximately
17,482 square meters. The production portion of the facility is approximately
11,275 square meters. Our research and development center is approximately 1,164
square meters and our executive office building, garage, and dormitory are
approximately 5,043 square meters. We currently have two production lines for
plate heat exchangers with an annual capacity of 500,000 square meters and one
welding workshop with an annual capacity of 3,000 tons. The plate heat exchanger
production line produces all heat transfer plates used in our plate heat
exchangers, heat exchange units, air-cooled heat exchangers, welded plate heat
exchangers and plate-and-shell heat exchangers. This production line also
assembles heat transfer plates into plate heat exchangers. The welding work shop
assembles shell and tube heat exchangers, heat exchanger units, air-cooled heat
exchangers, welded plate heat exchangers and plate-and-shell heat exchangers,
which require intensive welding operations. The facility is located on a 36,530
square meter plot of land for which we own the land use right.

The capacity and utilization of our production lines are set
forth below:

Production line
    Current
      capacity
    2009
      Utilization
    2008
      UtilizationPlate heat exchanger production line (square meters)
    300,000
    85%
    65%Welding workshop (tons)
    3,000
    65%
    49%Plate heat exchanger production line (square meters)
    200,000
    12%
    -


In real operation, the run hours of our production lines vary
considerably from time to time over the year. This is mainly because our
products are customized rather than standard products, and our sales orders are
commonly project based and placed unevenly over the year. In addition, the
market demand from the heat industry tends to demonstrate strong seasonality.
The period from July to October every year is commonly the peak season when the
residential heating system for northern China is implemented. Therefore, with
the current utilization rate, our production lines have been running at full
capacity during the peak periods.

To fulfill future sales growth and to enhance our capacity
during peak periods, we further expanded our production facility. Our new
workshop, which started operation in October 2009, has a floor area of 7,356
square meters and a new production line for plate heat exchangers with a
designed capacity of 200,000 square meters. With the new workshop, are able to
further streamline our production lines and have more space available for
assembly and welding. In the new plate heat exchanger production line, we
installed a 6,000 ton press machine to produce smaller size heat transfer plates
while the old plate heat exchanger production line with a 22,000 ton press
machine will be used to produce larger sized heat transfer plates. With the new
workshop and the new production line, we believe both our production capacity
and efficiency will be significantly improved.

10

---

Manufacturing Processes

The following diagram illustrates the production process for
our plate heat exchangers.

Production Process for Plate Heat Exchanger
Manufacturing



The manufacturing process for the plate heat exchanger begins
with the removal of edges from steel plates that we acquire as a raw material.
Once the edges are removed, we cut the steel plate down to the desired size. The
next step is the pressing of the steel plate to the desired shape and form.
After the pressing is complete, we seal and combine the heat transfer plates
together. The final step is to conduct a hydrostatic pressure test, which tests
our product for leakage and also tests the strength of the product to ensure
conformity to customer specifications.

The following diagram illustrates the production process for
our shell-and-tube heat exchangers.

Production Process of Shell-and-Tube Heat Exchanger
Manufacturing



The manufacturing process for the shell-and-tube heat exchanger
begins with the welding and combination of the shell and heat exchange tube. The
next step is to conduct a hydrostatic pressure test, which tests our product for
leakage and also tests the strength of the product to ensure conformity to
customer specifications.

The production process for our heat exchange units, air-cooled
heat exchangers, welded plate heat exchangers and plate and shell heat
exchangers is similar to that of our plate heat exchanger production process,
except that additional processes are added to arrive at the finished product.
With the heat exchange units, additional components are added in the welding
workshop, including a circulating pump, water supplement pump, thermometer,
manometer, various sensors, conduits and valves. In the case of the air-cooled
heat exchanger, additional fans and blowers are added to the plate heat
exchanger in the welding workshop. With the welded plate heat exchanger, the
heat transfer plates are welded rather than connected by gaskets. Finally, in
the case of the plate and shell heat exchanger, the heat transfer plates replace
tubes inside the shell vessel.

Raw Materials

We purchase raw materials for each project and the procurement
is subject to different solutions designed to customer specifications, including
the material type, material volume and accessories. Our raw materials are mainly
stainless steel plates, carbon steel plates, titanium steel plates, nickel steel
plates, and other steel base alloys. Different steel plates are used to produce
heat exchangers used in different environments or for use with different fluids.
For heat exchangers used in environments full of corrosive air or liquids, such
as on a ship or in alumina smelting, or used to exchange heat from
highly-corrosive fluids, such as acid and alkali chemicals, corrosion resistant
steel plates, such as titanium steel plates, nickel steel plates, steel base
alloy like 254SMO and Hastelloy alloy, are used as raw materials. For heat
exchangers used in a regular environment or with regular fluids, stainless
steel plates and carbon steel plates are used as raw materials. We also purchase
heat transfer tubes from third party vendors to produce shell-and-tube heat
exchangers and plate-and-shell heat exchangers.

11

---

Our Suppliers and Supplier Arrangements

The raw materials that we use to produce our products are
widely available in the market. Since our products are mostly customized rather
than standard products, we usually make purchases based on orders received, and
commonly in small batches. Therefore, we make purchases from trading companies
so that we are able to place orders in small batches and request quick
deliveries. Most of these trading companies are distributors of large global
steel or alloy manufacturers such as Nippon Yakin Co., Ltd., TISCO, Haynes
International, Inc., BAOTI, and Nippon Steel Corporation.

The following table sets forth our top ten suppliers in
2009:

Supplier
    Raw materials
    Amount US$
      000Tianjin Gerui New
      Metal Co., Ltd.
    White
      Steel Plate
    2,692Shenyang Oriental Kunlun Stainless Steel Industrial Co., Ltd.
    White Steel Plate
    1,800Shenyang Tong Feng Da Material Co., Ltd.
    Carbon Steel Pate
    1,229Dashiqiao Xiangyun Petrochemical Machinery Factory
    Flange \ Forging
    998Xi'an Lianyi Rubber Products Co., Ltd.
    Glue Cushion
    961Siping Tianyan Electrical Manufacturing Co., Ltd.
    White Steel Plate
    734Zhejiang Jiuli Special Material Technology Co., Ltd.
    White Steel Tube
    647Wuxi Huarui Iron and Steel Trading Co., Ltd
    White Steel Plate
    587Jiangmen Xinhao Special Stainless Steel Co., Ltd.
    White Steel Plate
    565Siping Xinguangju Automatic Control Equipment Co., Ltd.
    Electrical Cabinets
    536


The following table sets forth our top ten suppliers in
2008.

Supplier
    Raw
      materials
    Amount
      US$ 000Tianjin Gerui New Metal Co., Ltd.
    Titanium Steel, Nickel Steel,
      Stainless Steel
    4,641Shenyang Oriental Kunlun Stainless Steel Industrial Co., Ltd.
    Stainless Steel
    3,307Shanghai Non-Ferrous Metals Pudong
      Development Trade Co., Ltd.
    Hastelloy Alloy
    1,679Shenyang Tong Feng Da Material Co., Ltd.
    Carbon Steel Pate
    1,384Jiangmen Xinhao Special Stainless Steel
      Co., Ltd.
    Titanium Steel,
      Nickel Steel, Stainless Steel
    1,242Wuxi Huarui Iron and Steel Trading Co., Ltd
    Stainless Steel Plate
    1,051Beijing Richead Co., Ltd.
    Titanium Steel Plate
    937Shanghai Huaxia Industrial Co., Ltd.
    Titanium Steel Plate
    936Baoji Chuangxin Metal Material Co., Ltd.
    Titanium Steel Plate
    847Wuxi Precision Steel Tube Co., Ltd
    Heat Transfer Tube
    823


We pay the entire purchase price for the raw materials upon
delivery. For materials purchased domestically, we pay 100% on receipt. For
imported materials, we are usually required to make 30% deposit upon making an
order with the balance due upon receipt.

Our Customers

Our customers are widely dispersed throughout various
industries, including metallurgy, heat and power, petrochemical, food and
beverage, pharmaceutical and shipbuilding. Our products have been well received
by Fortune 500 companies in large projects worldwide. The following table
identifies some of our customers and the projects in which our products have
been used.

12

---

*All marks are trademarks or registered trademarks of their
respective owners. The display of trademarks herein does not imply that a
license of any kind has been granted.

The following table sets forth our top ten customers in
2009:

Customer
    Main Products
    Amount US$
      '000 (including value-added tax)
    % of RevenueChina National Electric Equipment
      Corporation
    Plate Heat Exchanger
    1,605
    4.60%Ningbo Wanhua Polyurethane Co., Ltd.
    Plate Heat Exchanger
    1,415
    4.06%China Packaging and Food
      Machinery Corporation
    Plate Heat Exchanger
    1,271
    3.64%Five Rings Technology Co., Ltd.
    Plate Heat Exchanger
    1,176
    3.37%Guangzhou Wen Chong Shipyard
      Co., Ltd.
    Plate Heat Exchanger
    1,048
    3.00%Tianjin Bohai Chemical Industry Co., Ltd.
    Air-cooled Heat Exchanger
      Plate Heat Exchanger
    989
    2.83%China National Machinery and
    Shell-and-Tube
    907
    2.60%


|Equipment Import & Export Corporation                  | Heat
      exchanger |     |      
|------------------------------------------------------ | -------------------- | --- | -----
|Liaoyang Gongchangling Qinglong Heating Co., Ltd.      | Heat Exchanger Unit  | 895 | 2.57%
|China Communications Tianjin Waterway Bureau Co., Ltd. | Plate Heat Exchanger | 815 | 2.34%
|Jinzhou City Heating Co., Ltd.                         | Plate Heat Exchanger | 774 | 2.22%

13

---

The following table sets forth our top ten customers in 2008:

Customer
    Main Products
    Amount US$
      '000 (including value-added tax)
    % of RevenueSiping Juyuan Plate Heat Exchanger
      Corporation
    Plate Heat Exchanger
    5,804
    17.9%Guangxi Xinfa Aluminum &
      Electricity Co., Ltd.
    Plate Heat Exchanger
    2,834
    8.7%Chiping Xinfa Huayu
      Alumina Co., Ltd.
    Plate Heat Exchanger
    2,462
    7.6%China National Electric
      Equipment Corporation
    Plate Heat Exchanger
    2,401
    7.4%China National Packaging and
      Food Machinery Corporation
    Plate Heat Exchanger
    1,308
    4.0%Zhongjiao Tianjin Channel
      Corporation
    Plate Heat Exchanger
    1,163
    3.6%China Huadian Corporation
    Shell-and-tube Heat
      Exchanger
    1,226
    3.8%Qinhuangdao City District
      Heating Corporation
    Heat Exchanger Unit
    1,196
    3.7%Wuhuan Engineering Co.,
      Ltd.
    Shell-and-tube Heat
      Exchanger
    1,118
    3.4%Baotou City District
      Heating Corporation
    Plate Heat Exchanger
    1,104
    3.4%


Sales and Marketing

As of December 31, 2009, our sales force consisted of 132
experienced sales people organized into 4 groups, namely heat and power,
shipbuilding, metallurgy and petrochemical, each serving our customers in the
specific industry. With specialization, our sales people are able to be more
focused and be equipped with better industry knowledge and experience. Of the
132 sales people, 63 are based in Beijing and Siping, and 69 are based in 10
other sales offices.

Besides Siping and Beijing, we established 10 sales offices in
10 provinces in China. The following table set forth the location of our sales
offices:

Region
    Number of offices
    LocationNorthern China
    3
    Harbin, Shenyang, BaotouEastern China
    2
    Qingdao, ShanghaiCentral China
    2
    Wuhan, Zhengzhou,Western China
    3
    Xian, Taiyuan, Chengdu


Each sales office makes direct sales and provides after-sales
services to the customers in its area. Our sales offices in Qingdao, Wuhan,
Xian, Zhengzhou, Taiyuan, Chengdu, Harbin, Shenyang and Baotou are focused on
sales to the heating and power industry while our Shanghai sales office is
focused on sales to the shipbuilding industry.

Competition

The heat exchanger market in China is very segmented and
competitive. There are over 1,500 heat exchanger manufacturers in China, most of
which are relatively small in size. As a leading heat exchanger manufacturer in
China, we mainly face competition from the leading domestic players including
SmartHeat, Shanghai Accessen and Lanzhou Lanshi, as well as the leading
international players including Alfa Laval and Aluminium Plant & Vessel Company Limited, or APV, who have
presence in China. A brief summary and analysis of our major competitors is set
out below:

14

---

- Alfa Lavalis the largest plate heat exchanger manufacturer in the
  world as well as in China. Alfa Laval has the broadest range of products
  covering application in almost all applicable industries. Since it also
  produces other industrial products like separators, Alfa Laval is also able to
  provide customers with integrated solutions of heat exchangers and other
  industrial products. In the shell-and-tube heat exchangers market, Alfa Laval
  is especially strong in providing products to the food and beverage industry
  and the pharmaceutical industry. Alfa Laval is our key competitor in almost
  all industries. As compared to Alfa Laval, we are able to provide products of
  similar quality at a lower price.
- APVis one of the earliest plate heat exchanger manufacturers in the
  world. It was founded by Dr. Richard Seligman, who made the first plate heat
  exchanger, in 1910. In 2008, APV was acquired by SPX, a multi-national company
  listed on the New York Stock Exchange. APV is especially strong in providing
  solutions and products for the power industry. As compared to APV, we have a
  broader range of products and larger production capacity and sales volume in
  China.
- SmartHeat, Inc.is a Chinese manufacturer of heat exchangers that is
  listed on NASDAQ Global Market. Its production facility is located in
  Shenyang, Northeast China. SmartHeat manufactures and sells plate heat
  exchangers, heat exchanger units and heat meters. It used to be the OEM
  service provider of Sondex, the Denmark manufacturer of plate heat exchangers,
  who is an especially strong competitor in the oil and gas industry. SmartHeat
  is also more experienced in producing heat exchanger units but produces no
  shell-and-tube heat exchangers. As compared to SmartHeat, we believe that we
  have stronger research and development capabilities and have a broader range
  of products. We also believe that we have a longer track record in the
  industry than SmartHeat.
- Shanghai Accessenis a Chinese manufacturer of heat exchangers. Its
  production facility is located in Shanghai, China. It started to produce and
  sell plate heat exchangers and heat exchanger units under its own brand in
  2002. It does not produce shell-and-tube heat exchangers. As compared to
  Accessen, we believe that we have stronger research and development
  capabilities and broader range of products. We also believe that we have a
  longer track record in the industry and we are much larger than Accessen in
  terms of production capacity and sales volume.
- Lanzhou Lanshiis a Chinese manufacturer of heat exchangers. Its
  production facility is located in Lanzhou, Northwest China. It manufactures
  and sells plate heat exchangers and heat exchanger units. Lanzhou Lanshi
  caters to the alumina production market. As compared to Lanshi, we believe
  that we have stronger research and development capabilities and a broader
  range of products. We are also much larger than Lanshi in terms of production
  capacity and sales volume.

Intellectual Property

Trademarks

We sell all our products under trademarks of 巨元 and THT.
巨元 has been registered with the State Trademark Bureau of PRC and has a valid
term of 10 years expiring August 20, 2010. THT has been registered with the
State Trademark Bureau of PRC at July 14, 2009 and has a valid term of 10 years
expiring July 13, 2019.

Patents

We own 7 patents, all of which are for utility models. The term
of the patents, as stipulated by the PRC Patent Law, is 10 years starting from
the authorization date. The following table lists our patents, their
registration and certificate numbers and their authorization dates:

Patents
    Registration
      No.
    Certificate
      No.
    Authorization
      DateVariable section flow channel plate heat exchanger
    ZL200720093847.4
    1109105
    2008-10-08Wide flow channel disassemble plate heat exchanger
    ZL200520127760.5
    876165
    2007-03-07Wide flow channel welded plate heat exchanger
    ZL200520127762.4
    842256
    2006-11-29Large-scale closed cooling water circulator
    ZL200520127763.9
    CN 2842348Y
    2006-11-29Block type heat exchanger
    ZL200520127761X
    842022
    2006-11-29Multi-combined block type heat exchanger
    ZL00266936.0
    464763
    2001-11-28Rotational flow shell-and-tube heat exchanger
    ZL00266938.2
    465069
    2001-11-28


Environmental Matters

Our manufacturing facilities are subject to various pollution
control regulations with respect to noise and air pollution and the disposal of
waste and hazardous materials. We also are subject to periodic inspections by
local environmental protection authorities. Our operating subsidiaries have
received certifications from the relevant PRC government agencies indicating
that their business operations are in material compliance with the relevant PRC environmental laws and regulations. We
are not currently subject to any pending actions alleging any violations of
applicable PRC environmental laws.

15

---

Regulation

Because our operating subsidiaries are located in the PRC, we
are regulated by the national and local laws of the PRC.

We are subject to the environmental regulations described in
the preceding section entitled Our Business  Environmental Matters.

There is no private ownership of land in China. Upon payment of
a land grant fee, land use rights can be obtained from the government for a
period unto 50 years in the case of industrial land and are typically renewable.
We have received the necessary land use rights certificate for three land lots,
all of which are located at No.5 NanhuanRoad, Tie Xi District, Siping City. The
three land lots occupy a total of 36,529 square meters.

We are also subject to Chinas foreign currency regulations.
The PRC government has controlled Renminbi reserves primarily through direct
regulation of the conversion of Renminbi into other foreign currencies. Although
foreign currencies, which are required for current account transactions, can
be bought freely at authorized PRC banks, the proper procedural requirements
prescribed by PRC law must be met. At the same time, PRC companies are also
required to sell their foreign exchange earnings to authorized PRC banks, and
the purchase of foreign currencies for capital account transactions still
requires prior approval of the PRC government.

Under current PRC laws and regulations, Foreign Invested
Entities, or FIEs, may pay dividends only out of their accumulated after-tax
profits, if any, determined in accordance with PRC accounting standards and
regulations. In addition, FIEs in China are required to set aside at least 10.0%
of their after-tax profit based on PRC accounting standards each year to their
general reserves until the cumulative amount of such reserves reaches 50.0% of
their registered capital. These reserves are not distributable as cash
dividends. The board of directors of an FIE has the discretion to allocate a
portion of the FIEs after-tax profits to staff welfare and bonus funds, which
may not be distributed to equity owners except in the event of liquidation.

We do not face any significant government regulation in
connection with the production of our products. We do not require any special
government permits to produce our products other than those permits that are
required of all corporations in China.

Our Employees

As of December 31, 2009, we employed a total of 597 full-time
employees. The following table sets forth the number of employees by
function:

Function
    Number of employeesSenior Management
    8Solution design
    30Sales
    132Marketing
    30Procurement
    8Production
    227Quality Control
    24R&D
    65HR
      & Administration
    53Finance
    18Internal Audit and Control
    2TOTAL
    597


As required by applicable PRC law, we have entered into
employment contracts with most of our officers, managers and employees. We are
working towards entering employment contracts with those employees who do not
currently have employment contracts with us. We believe that we maintain a
satisfactory working relationship with our employees, and we have not
experienced any significant disputes or any difficulty in recruiting staff for
our operations.

Our employees in China participate in a state pension scheme
organized by PRC municipal and provincial governments. We are currently required
to contribute to the scheme at a rate of 30.6% to 31.2% of the average monthly
salary.

In addition, we are required by PRC law to cover employees in
China with various types of social insurance, and we believe that we are in
material compliance with the relevant PRC laws.

16

---

Insurance

We maintain property insurance for our premises located at
Siping, China where our main production facilities are located. The aggregate
maximum amount covered by our insurance policy is up to RMB 25.39 million
(approximately $3.72 million). We also maintain property insurance for our
automobiles. We do not maintain business interruption, product liability
insurance or key-man life insurance. We believe our insurance coverage is
customary and standard of companies of comparable size in comparable industries
in China. However, we cannot ensure that our existing insurance policies are
sufficient to insulate us from all loses and liabilities that we may incur.

Litigation

From time to time, we may become involved in various lawsuits
and legal proceedings which arise in the ordinary course of business. We are
currently not a party to any legal proceeding and are not aware of any legal
claims that we believe will have a material adverse affect on our business,
financial condition or operating results.

Our Address

The address of THT principal executive office in China is No.5
Nanhuan Road, Tiexi District, Siping, Jilin Province, Peoples Republic of
China, 136000 and our telephone number is 86-434-3265241. We maintain a website
at www.tht.cn that contains information about us, but that information is
not a part of this Annual Report.

Item 1A. RISK FACTORS

An investment in our common stock involves a high degree of
risk. You should carefully consider the risks described below, together with all
of the other information included in this report, before making an investment
decision. If any of the following risks actually occurs, our business, financial
condition or results of operations could suffer. In that case, the trading price
of our common stock could decline, and you may lose all or part of your
investment.

RISKS RELATED TO OUR BUSINESS

Our industry is very competitive in
China.

The domestic market for heat exchange products is fragmented
and highly competitive. We compete with over 1,500 small-sized, local Chinese
heat exchanger manufacturers. The number of these companies varies from time to
time. While we may have greater resources than our smaller competitors, it is
possible that these competitors have better access in certain local markets to
customers and prospects and lower production and raw material costs. Some of our
products compete on the basis of price and are sold in fragmented markets with
low barriers to entry, allowing less expensive domestic producers to gain market
share and reduce our margins.

Foreign competition is intense and could have a material
adverse effect on our financial condition and results of operations.

In addition to domestic competition, we face intense
competition from foreign competitors. The intensity of foreign competition is
affected significantly by fluctuations in the value of the U.S. dollar against
Chinese currency and by the level of import duties imposed by the Chinese
government on certain products. Our major international competitors are Alfa
Laval and APV. Many of our competitors have more resources and greater brand
recognition than we enjoy. While our resources may not be as great as our larger
competitors, we believe our product quality and direct sales offices and
distribution network are superior in China. If our competitors are able to gain
greater market share or improve their sales efforts, our sales may decrease, we
may be forced to lower our prices, or our marketing costs may increase, all of
which could negatively impact our financial results.

Our revenue will decrease if the industries in which our
customers operate experience a protracted slowdown.

Our products mainly serve as key components in projects
operated by our customers who are mostly in the chemical, metallurgical,
shipbuilding, HVAC and district heating industries. Therefore, we are subject to
the general changes in economic conditions affecting those industry segments of
the economy. If the industry segments in which our customers operate do not grow
or if there is a contraction in those industries, demand for our valve products
will decrease. Demand for our products is typically affected by a number of
overarching economic factors, including, but not limited to, interest rates, the
availability and magnitude of private and governmental investment in
infrastructure projects and the health of the overall global economy. If there
is a decline in economic activity in China and the other markets in which we
operate or a protracted slowdown in industries on which we rely for our sales,
demand for our products and our revenue will likewise decrease.

17

---

Approximately 31.23% of our sales revenues were derived
from our ten largest customers and 4.60% of our sales revenues in 2009 were
derived from our largest customer, and any reduction in revenues from any of
these customers would reduce our revenues and net income.

Approximately 31.23% of our sales revenue in 2009 came from our
top ten customers, with China National Electric Equipment Corporation accounting
for approximately 4.60% of our sales revenue in 2009. If we cease to do business
at or above current levels with the top customers or with any other large
customers who contribute significantly to our sales revenues, and we are unable
to generate additional or substitute sales revenue, our net income would decline
considerably.

Any decrease in the availability, or increase in the
cost, of raw materials could materially affect our earnings.

Our operations depend heavily on the availability of various
raw materials. The raw materials for our operations are mainly stainless steel
plates, carbon steel plates, titanium steel plates, nickel steel plates and
other steel based alloy. The availability of raw materials may decrease and
their prices may fluctuate greatly. We have long-term relationships with several
suppliers; however, if our suppliers are unable or unwilling to provide us with
raw materials on terms favorable to us, we may be unable to produce certain
products. This could result in a decrease in profit and damage to our reputation
in our industry. In the event our raw material and energy costs increase, we may
not be able to pass these higher costs on to our customers in full or at all.
Any increase in the prices for raw materials or energy resources could
materially increase our costs and therefore lower our earnings. Additionally,
certain of our supply contracts are for fixed prices. Although we currently
benefit from favorable pricing in some of these supply contracts, if market
prices for these raw materials decline, we may not be able to take advantage of
decreasing market prices, and our profit margins may suffer.

Our rapid expansion could significantly strain our
resources, management and operational infrastructure which could impair our
ability to meet increased demand for our products and hurt our business
results.

To accommodate our anticipated growth, we will need to expend
capital resources and dedicate personnel to implement and upgrade our
accounting, operational and internal management systems and enhance our record
keeping and contract tracking system. Such measures will require us to dedicate
additional financial resources and personnel to optimize our operational
infrastructure and to recruit more personnel to train and manage our growing
employee base. If we cannot successfully implement these measures efficiently
and cost-effectively, we will be unable to satisfy the demand for our products,
which will impair our revenue growth and hurt our overall financial
performance.

Our business is capital intensive and our growth strategy
may require additional capital which may not be available on favorable terms or
at all.

We believe that our current cash, cash flow from operations and
the proceeds from this offering will be sufficient to meet our present and
reasonably anticipated capital and capital expenditure needs given the current
state of our production line for the marketing of the products. We may, however,
require additional cash resources due to changed business conditions,
implementation of our strategy to expand our manufacturing capacity or other
investments or acquisitions we may decide to pursue. If our own financial
resources are insufficient to satisfy our capital requirements, we may seek to
sell additional equity or debt securities or obtain additional credit
facilities. The sale of additional equity securities could result in dilution to
our stockholders. The incurrence of indebtedness would result in increased debt
service obligations and could require us to agree to operating and financial
covenants that would restrict our operations. Financing may not be available in
amounts or on terms acceptable to us, if at all. Any failure by us to raise
additional funds on terms favorable to us, or at all, could limit our ability to
expand our business operations and could harm our overall business
prospects.

We depend heavily on key personnel, and turnover of key
employees and senior management could harm our business.

Our future business and results of operations depend in
significant part upon the continued contributions of our key technical and
senior management personnel, including Guohong Zhao, our Chairman and Chief
Executive Officer and Jianjun He, our Chief Financial Officer. They also depend
in significant part upon our ability to attract and retain additional qualified
management, technical, marketing and sales and support personnel for our
operations. If we lose a key employee, if a key employee fails to perform in his
or her current position, or if we are not able to attract and retain skilled
employees as needed, our business could suffer. Significant turnover in our
senior management could significantly deplete our institutional knowledge held
by our existing senior management team. We depend on the skills and abilities of
these key employees in managing the manufacturing, technical, marketing and
sales aspects of our business, any part of which could be harmed by turnover in
the future.

Unexpected equipment failures may damage our business due
to production curtailments or shutdowns.

We conduct periodic inspection and maintenance of all of our
equipment to minimize the impact of interruption of production and prevent
breakdown because this machinery is highly specialized and cannot be repaired or
replaced without significant expense and time delay. On occasion, our equipment
may be out of service as a result of unanticipated failures which may result in
material plant shutdowns or periods of reduced production. Interruptions in
production capabilities will inevitably increase production costs and reduce our
sales and earnings. In addition to equipment failures, our facilities are also
subject to the risk of catastrophic loss due to unanticipated events such as
fires, explosions or adverse weather conditions. Furthermore, any interruption
in production capability may require us to make large capital expenditures to
remedy the situation, which could have a negative effect on our profitability
and cash flows. Although we have business interruption insurance, we cannot
provide any assurance that the insurance will cover all losses that we
experience as a result of the equipment failures. In addition, longer-term
business disruption could result in a loss of customers. If this were to occur,
our future sales levels, and therefore our profitability, could be adversely
affected.

18

---

Our failure to adequately protect our intellectual
property rights may undermine our competitive position, and litigation to
protect our intellectual property rights may be costly.

We strive to strengthen and differentiate our product portfolio
by developing new and efficient manufacturing processes and innovative products
and product improvements. We maintain seven utility model patents and three
registered trademarks and one trademark application pending registration with
State Trademark Bureau of PRC as intellectual property assets. We believe that
the protection of our intellectual property will become increasingly important
to our business. Implementation and enforcement of intellectual property-related
laws in China has historically been lacking due primarily to ambiguities in PRC
intellectual property law. Accordingly, protection of intellectual property and
proprietary rights in China may not be as effective as in the United States or
other countries. We will continue to rely on a combination of patents, trade
secrets, trademarks and copyrights to provide protection in this regard, but
this protection may be inadequate. For example, our pending or future patent
applications may not be approved or, if allowed, they may not be of sufficient
strength or scope. As a result, third parties may use the technologies and
proprietary processes that we have developed and compete with us, which could
negatively affect any competitive advantage we enjoy, dilute our brand and harm
our operating results.

In addition, policing the unauthorized use of our proprietary
technology can be difficult and expensive. Litigation may be necessary to
enforce our intellectual property rights and given the relative unpredictability
of Chinas legal system and potential difficulties enforcing a court judgment in
China, there is no guarantee litigation would result in an outcome favorable to
us. Furthermore, any such litigation may be costly and may divert management
attention away from our core business. An adverse determination in any lawsuit
involving our intellectual property is likely to jeopardize our business
prospects and reputation. We have no insurance coverage against litigation costs
so we would be forced to bear all litigation costs if we cannot recover them
from other parties. All of the foregoing factors could harm our business and
financial condition.

If our customers and/or the ultimate consumers of
products that use our products successfully assert product liability claims
against us due to defects in our products, our operating results may suffer and
our reputation may be harmed.

Due to the high pressures and temperatures at which many of our
products are used and the fact that some of our products are relied upon by our
customers or end users in their facilities or operations, or are manufactured
for relatively broad consumer use, we face an inherent risk of exposure to
claims in the event that the failure, use or misuse of our products results, or
is alleged to result, in bodily injury, property damage or economic loss. We
believe that we meet or exceed existing professional specification standards
recognized or required in the industries in which we operate. We have been
subject to claims in the past, none of which have had a material adverse effect
on our financial condition or results of operations, and we may be subject to
claims in the future. We currently do not maintain product liability coverage
and such insurance may be difficult to obtain on terms acceptable to us and may
not cover warranty claims. A successful product liability claim or series of
claims against us, including one or more consumer claims purporting to
constitute class actions, or a significant warranty claim or series of claims
against us could materially decrease our liquidity and impair our financial
condition.

Our products may become subject to recall in the event of
defects or other performance related issues.

We are at risk for product recall costs which are costs
incurred when, either voluntarily or involuntarily, a product is recalled
through a formal campaign to solicit the return of specific products due to a
known or suspected performance defect. Costs typically include the cost of the
product, part or component being replaced, the cost of the recall borne by our
customers and labor to remove and replace the defective part or component. Our
products have not been the subject of an open recall. If a recall decision is
made, we will need to estimate the cost of the recall and record a charge to
earnings in that period. In making this estimate, judgment is required as to the
quantity or volume to be recalled, the total cost of the recall campaign, the
ultimate negotiated sharing of the cost between us and our distributor or
customer. As a result, these estimates are subject to change. Excessive recall
costs or our failure to adequately estimate these costs may negatively affect
our operating results.

Certain of our existing stockholders have substantial
influence over our company, and their interests may not be aligned with the
interests of our other stockholders.

Ms. Jinghua Zhao is the indirect, beneficial owner of
approximately 92.5% of our common stock. As a result, she has significant
influence over our business, including decisions regarding mergers,
consolidations and the sale of all or substantially all of our assets, election
of directors and other significant corporate actions. This concentration of
ownership may also have the effect of discouraging, delaying or preventing a
future change of control, which could deprive our stockholders of an opportunity
to receive a premium for their shares as part of a sale of our company and might
reduce the price of our shares.

We have limited insurance coverage and do not carry any
business interruption insurance, third-party liability insurance for our
manufacturing facilities or insurance that covers the risk of loss of our
products in shipment.

Operation of our manufacturing facilities involves many risks,
including equipment failures, natural disasters, industrial accidents, power
outages, labor disturbances and other business interruptions. Furthermore, if
any of our products are faulty, then we may become subject to product liability claims or we may have to engage in a product
recall. We do not carry any business interruption insurance, product recall or
third-party liability insurance for our manufacturing facilities or with respect
to our products to cover claims pertaining to personal injury or property or
environmental damage arising from defaults with our products, product recalls,
accidents on our property or damage relating to our operations. Therefore, our
existing insurance coverage may not be sufficient to cover all risks associated
with our business. As a result, we may be required to pay for financial and
other losses, damages and liabilities, including those caused by natural
disasters and other events beyond our control, out of our own funds, which could
have a material adverse effect on our business, financial condition and results
of operations.

19

---

We may be exposed to potential risks relating to our
internal controls over financial reporting and our ability to have those
controls attested to by our independent auditors.

As directed by Section 404 of the Sarbanes-Oxley Act of 2002,
or SOX 404, the SEC adopted rules requiring public companies to include a report
of management on the companys internal controls over financial reporting in
their annual reports, including Form 10-K. In addition, the independent
registered public accounting firm auditing a company's financial statements must
also attest to and report on the operating effectiveness of the companys
internal controls. We were not subject to these requirements for the fiscal year
ended December 31, 2009. Under current law, we will be subject to these
requirements beginning with our annual report for the fiscal year ending
December 31, 2010. We have identified that in our internal control system we do
not have accounting staff who are experienced with US GAAP, we do not have
qualified resources to perform the internal audit functions properly and we lack
an internal audit department. Our management have identified the steps necessary
to address the material weaknesses, including hiring experienced accounting
staff and early evaluation and review of complex and non-routine transactions.
However, we can provide no assurance that we will comply with all of the
requirements imposed thereby. There can be no assurance that we will receive a
positive attestation from our independent auditors. In the event we identify
significant deficiencies or material weaknesses in our internal controls that we
cannot remediate in a timely manner or we are unable to receive a positive
attestation from our independent auditors with respect to our internal controls,
investors and others may lose confidence in the reliability of our financial
statements.

Our holding company structure may limit the payment of
dividends.

We have no direct business operations, other than our ownership
of our subsidiaries. While we have no current intention of paying dividends,
should we decide in the future to do so, as a holding company, our ability to
pay dividends and meet other obligations depends upon the receipt of dividends
or other payments from our operating subsidiaries and other holdings and
investments. In addition, our operating subsidiaries, from time to time, may be
subject to restrictions on their ability to make distributions to us, including
as a result of restrictive covenants in loan agreements, restrictions on the
conversion of local currency into U.S. dollars or other hard currency and other
regulatory restrictions as discussed below. If future dividends are paid in RMB,
fluctuations in the exchange rate for the conversion of RMB into U.S. dollars
may reduce the amount received by U.S. stockholders upon conversion of the
dividend payment into U.S. dollars.

Chinese regulations currently permit the payment of dividends
only out of accumulated profits as determined in accordance with Chinese
accounting standards and regulations. Our subsidiaries in China are also
required to set aside a portion of their after tax profits according to Chinese
accounting standards and regulations to fund certain reserve funds. Currently,
our subsidiaries in China are the only sources of revenues or investment
holdings for the payment of dividends. If they do not accumulate sufficient
profits under Chinese accounting standards and regulations to first fund certain
reserve funds as required by Chinese accounting standards, we will be unable to
pay any dividends.

We may be classified as a passive foreign investment
company, which could result in adverse United States federal income tax
consequences to U.S. holders.

We believe that we are not considered a passive foreign
investment company, or PFIC, for United States federal income tax purposes for
our tax year ending December 31, 2009. However, each year we must make a
separate determination as to whether we are a PFIC. We cannot assure you that we
will not be a PFIC for our tax year ending December 31, 2010 or any following
tax year. If a non-U.S. corporation either (i) at least 75% of its gross income
is passive income for a tax year or (ii) at least 50% of the value of its assets
(based on an average of the quarterly values of the assets during a tax year) is
attributable to assets that produce or are held for the production of passive
income, then the non-U.S. corporation will be deemed a PFIC. The market value of
our assets may be determined to a large extent by the market price of our
Ordinary Shares, which is likely to fluctuate after this offering. Furthermore,
how we spend as well as how quickly we spend the proceeds from the offering will
affect the composition of our income and assets. If we are treated as a PFIC for
any tax year during which U.S. holders hold Ordinary Shares, certain adverse
United States federal income tax consequences could apply to such U.S.
holders.

RISKS RELATED TO DOING BUSINESS IN CHINA

We may be exposed to liabilities under the Foreign
Corrupt Practices Act, and any determination that we violated the Foreign
Corrupt Practices Act could hurt our business.

We are subject to the Foreign Corrupt Practice Act, or FCPA,
and other laws that prohibit improper payments or offers of payments to foreign
governments and their officials and political parties by U.S. persons and
issuers as defined by the statute for the purpose of obtaining or retaining business. We have operations, agreements with third
parties and make sales in China, which may experience corruption. Our activities
in China create the risk of unauthorized payments or offers of payments by one
of the employees, consultants, sales agents or distributors of our Company, even
though these parties are not always subject to our control. It is our policy to
implement safeguards to discourage these practices by our employees. However,
our existing safeguards and any future improvements may prove to be less than
effective, and the employees, consultants, sales agents or distributors of our
Company may engage in conduct for which we might be held responsible. Violations
of the FCPA may result in severe criminal or civil sanctions, and we may be
subject to other liabilities, which could negatively affect our business,
operating results and financial condition. In addition, the government may seek
to hold our Company liable for successor liability FCPA violations committed by
companies in which we invest or that we acquire.

20

---

Changes in Chinas political or economic situation could
harm us and our operating results.

Economic reforms adopted by the Chinese government have had a
positive effect on the economic development of the country, but the government
could change these economic reforms or any of the legal systems at any time.
This could either benefit or damage our operations and profitability. Some of
the things that could have this effect are:

- Level of government involvement in the economy;
- Control of foreign exchange;
- Methods of allocating resources;
- Balance of payments position;
- International trade restrictions; and
- International conflict.

The Chinese economy differs from the economies of most
countries belonging to the Organization for Economic Cooperation and
Development, or OECD, in many ways. For example, state-owned enterprises still
constitute a large portion of the Chinese economy and weak corporate governance
and a lack of flexible currency exchange policy still prevail in China. As a
result of these differences, we may not develop in the same way or at the same
rate as might be expected if the Chinese economy was similar to those of the
OECD member countries.

Our business is largely subject to the uncertain legal
environment in China and your legal protection could be limited.

The Chinese legal system is a civil law system based on written
statutes. Unlike common law systems, it is a system in which precedents set in
earlier legal cases are not generally used. The overall effect of legislation
enacted over the past 20 years has been to enhance the legal protections
afforded to foreign invested enterprises in China. However, these laws,
regulations and legal requirements are relatively recent and are evolving
rapidly, and their interpretation and enforcement involve uncertainties. These
uncertainties could limit the legal protections available to foreign investors,
such as the right of foreign invested enterprises to hold licenses and permits
such as requisite business licenses. In addition, all of our executive officers
and our directors are residents of China and not of the U.S., and substantially
all the assets of these persons are located outside the U.S. As a result, it
could be difficult for investors to effect service of process in the U.S., or to
enforce a judgment obtained in the U.S. against our Chinese operations and
subsidiaries.

The Chinese government exerts substantial influence over
the manner in which we must conduct our business activities.

China only recently has permitted provincial and local economic
autonomy and private economic activities. The Chinese government has exercised
and continues to exercise substantial control over virtually every sector of the
Chinese economy through regulation and state ownership. Our ability to operate
in China may be harmed by changes in its laws and regulations, including those
relating to taxation, import and export tariffs, environmental regulations, land
use rights, property and other matters. We believe that our operations in China
are in material compliance with all applicable legal and regulatory
requirements. However, the central or local governments of the jurisdictions in
which we operate may impose new, stricter regulations or interpretations of
existing regulations that would require additional expenditures and efforts on
our part to ensure our compliance with such regulations or interpretations.

Accordingly, government actions in the future, including any
decision not to continue to support recent economic reforms and to return to a
more centrally planned economy or regional or local variations in the
implementation of economic policies, could have a significant effect on economic
conditions in China or particular regions thereof, and could require us to
divest ourselves of any interest we then hold in Chinese properties or joint
ventures.

Future inflation in China may inhibit our ability to
conduct business in China.

In recent years, the Chinese economy has experienced periods of
rapid expansion and highly fluctuating rates of inflation. During the past ten
years, the rate of inflation in China has been as high as 20.7% and as low as
-2.2% . These factors have led to the adoption by the Chinese government, from
time to time, of various corrective measures designed to restrict the
availability of credit or regulate growth and contain inflation. High inflation may in the future cause the Chinese
government to impose controls on credit and/or prices, or to take other action,
which could inhibit economic activity in China, and thereby harm the market for
our products and our company.

21

---

Restrictions on currency exchange may limit our ability
to receive and use our revenues effectively.

The majority of our revenues will be settled in Renminbi and
U.S. dollars, and any future restrictions on currency exchanges may limit our
ability to use revenue generated in Renminbi to fund any future business
activities outside China or to make dividend or other payments in U.S. dollars.
Although the Chinese government introduced regulations in 1996 to allow greater
convertibility of the Renminbi for current account transactions, significant
restrictions still remain, including primarily the restriction that
foreign-invested enterprises may only buy, sell or remit foreign currencies
after providing valid commercial documents, at those banks in China authorized
to conduct foreign exchange business. In addition, conversion of Renminbi for
capital account items, including direct investment and loans, is subject to
governmental approval in China, and companies are required to open and maintain
separate foreign exchange accounts for capital account items. We cannot be
certain that the Chinese regulatory authorities will not impose more stringent
restrictions on the convertibility of the Renminbi.

Failure to comply with PRC regulations relating to the
establishment of offshore special purpose companies by PRC residents may subject
our PRC resident stockholders to personal liability, limit our ability to
acquire PRC companies or to inject capital into our PRC subsidiaries, limit our
PRC subsidiaries ability to distribute profits to us or otherwise materially
adversely affect us.

In October 2005, the PRC State Administration of Foreign
Exchange, or SAFE, issued the Notice on Relevant Issues in the Foreign Exchange
Control over Financing and Return Investment Through Special Purpose Companies
by Residents Inside China, generally referred to as Circular 75, which required
PRC residents to register with the competent local SAFE branch before
establishing or acquiring control over an offshore special purpose company, or
SPV, for the purpose of engaging in an equity financing outside of China on the
strength of domestic PRC assets originally held by those residents. Internal
implementing guidelines issued by SAFE, which became public in June 2007 (known
as Notice 106), expanded the reach of Circular 75 by (i) purporting to cover the
establishment or acquisition of control by PRC residents of offshore entities
which merely acquire control over domestic companies or assets, even in the
absence of legal ownership; (ii) adding requirements relating to the source of
the PRC residents funds used to establish or acquire the offshore entity; (iii)
covering the use of existing offshore entities for offshore financings; (iv)
purporting to cover situations in which an offshore SPV establishes a new
subsidiary in China or acquires an unrelated company or unrelated assets in
China; and (v) making the domestic affiliate of the SPV responsible for the
accuracy of certain documents which must be filed in connection with any such
registration, notably, the business plan which describes the overseas financing
and the use of proceeds. Amendments to registrations made under Circular 75 are
required in connection with any increase or decrease of capital, transfer of
shares, mergers and acquisitions, equity investment or creation of any security
interest in any assets located in China to guarantee offshore obligations, and
Notice 106 makes the offshore SPV jointly responsible for these filings. In the
case of an SPV which was established, and which acquired a related domestic
company or assets, before the implementation date of Circular 75, a retroactive
SAFE registration was required to have been completed before March 31, 2006;
this date was subsequently extended indefinitely by Notice 106, which also
required that the Registrant establish that all foreign exchange transactions
undertaken by the SPV and its affiliates were in compliance with applicable laws
and regulations. Failure to comply with the requirements of Circular 75, as
applied by SAFE in accordance with Notice 106, may result in fines and other
penalties under PRC laws for evasion of applicable foreign exchange
restrictions. Any such failure could also result in the SPVs affiliates being
impeded or prevented from distributing their profits and the proceeds from any
reduction in capital, share transfer or liquidation to the SPV, or from engaging
in other transfers of funds into or out of China.

We believe our stockholders who are PRC residents as defined in
Circular 75 have registered with the relevant branch of SAFE, as currently
required, in connection with their equity interests in us and our acquisitions
of equity interests in our PRC subsidiaries. However, we cannot provide any
assurances that their existing registrations have fully complied with, and they
have made all necessary amendments to their registration to fully comply with,
all applicable registrations or approvals required by Circular 75. Moreover,
because of uncertainty over how Circular 75 will be interpreted and implemented,
and how or whether SAFE will apply it to us, we cannot predict how it will
affect our business operations or future strategies. For example, our present
and prospective PRC subsidiaries ability to conduct foreign exchange
activities, such as the remittance of dividends and foreign currency-denominated
borrowings, may be subject to compliance with Circular 75 by our PRC resident
beneficial holders. In addition, such PRC residents may not always be able to
complete the necessary registration procedures required by Circular 75. We also
have little control over either our present or prospective direct or indirect
stockholders or the outcome of such registration procedures. A failure by our
PRC resident beneficial holders or future PRC resident stockholders to comply
with Circular 75, if SAFE requires it, could subject these PRC resident
beneficial holders to fines or legal sanctions, restrict our overseas or
cross-border investment activities, limit our subsidiaries ability to make
distributions or pay dividends or affect our ownership structure, which could
adversely affect our business and prospects.

Our business and financial performance may be materially
adversely affected if the PRC regulatory authorities determine that our
acquisition of Siping Juyuan constitutes a Round-trip Investment without MOFCOM
approval.

On August 8, 2006, six PRC regulatory agencies promulgated the
Regulation on Mergers and Acquisitions of Domestic Companies by Foreign
Investors, or the 2006 M&A Rule, which became effective on September 8,
2006. According to the 2006 M&A Rule, a Round-trip Investment is defined
as having taken place when a PRC business that is owned by PRC individual(s) is
sold to a non-PRC entity that is established or controlled, directly or
indirectly, by those same PRC individual(s). Under the 2006 M&A Rules, any
Round-trip Investment must be approved by the MOFCOM, and any indirect arrangement or
series of arrangements which achieves the same end result without the approval
of MOFCOM is a violation of PRC law.

22

---

On June 30, 2009, Mr. Guohong Zhao, our Chairman and CEO and a
founder of Siping Juyuan, entered into an option agreement with Ms. Jinghua
Zhao, the sole shareholder of Wisetop, pursuant to which Mr. Guohong Zhao was
granted an option, exercisable after 180 days, to acquire all of the equity
interests of Wisetop owned by Ms. Jinghua Zhao at an exercise price of
$3,246,160. This option expires on June 30, 2011.

Also on June 30, 2009, Wisetop entered into separate option
agreements with the other original founders of Siping Juyuan, pursuant to which
such founders were granted options, exercisable after 90 days, to purchase an
aggregate of 10,240,786 shares of our common stock owned by Wisetop at a total
exercise price of $7,291,440. These options also expire on June 30, 2011.

After Mr. Guohong Zhao and the founders (collectively referred
to herein as the PRC Individuals) exercise these options, they will be our
controlling stockholders. Their acquisition of our equity interest, or the
Acquisition, is required to be registered with the competent administration of
industry and commerce authorities, or AIC, in Beijing. The PRC Individuals are
required to make filings with the Beijing SAFE, to register the Company and its
non-PRC subsidiaries to qualify them as SPVs, pursuant to Circular 75 and
Circular 106.

The PRC regulatory authorities may take the view that the
Acquisition and the Share Exchange Agreement are part of an overall series of
arrangements which constitute a Round-trip Investment, because at the end of
these transactions, the PRC Individuals will become majority owners and
effective controlling parties of a foreign entity that acquired ownership of our
Chinese subsidiaries. The PRC regulatory authorities may also take the view that
the registration of the Acquisition with the relevant AIC in Beijing and the
filings with the Beijing SAFE may not be evidence that the Acquisition has been
properly approved because the relevant parties did not fully disclose to the
AIC, SAFE or MOFCOM the overall restructuring arrangements, the existence of the
Share Exchange Agreement and its link with the Acquisition. If the PRC
regulatory authorities take the view that the Acquisition constitutes a
Round-trip Investment under the 2006 M&A Rules, we cannot assure you we may
be able to obtain the approval required from MOFCOM.

If the PRC regulatory authorities take the view that the
Acquisition constitutes a Round-trip Investment without MOFCOM approval, they
could invalidate our acquisition and ownership of our Chinese subsidiaries.
Additionally, the PRC regulatory authorities may take the view that the
Acquisition constitutes a transaction which requires the prior approval of the
China Securities Regulatory Commission, or CSRC, before MOFCOM approval is
obtained. We believe that if this takes place, we may be able to find a way to
re-establish control of our Chinese subsidiaries business operations through a
series of contractual arrangements rather than an outright purchase of our
Chinese subsidiaries. But we cannot assure you that such contractual
arrangements will be protected by PRC law or that the registrant can receive as
complete or effective economic benefit and overall control of our Chinese
subsidiaries business than if the Company had direct ownership of our Chinese
subsidiaries. In addition, we cannot assure you that such contractual
arrangements can be successfully effected under PRC law. If we cannot obtain
MOFCOM or CSRC approval if required by the PRC regulatory authorities to do so,
and if we cannot put in place or enforce relevant contractual arrangements as an
alternative and equivalent means of control of our Chinese subsidiaries, our
business and financial performance will be materially adversely affected.

Under the New EIT Law, we may be classified as a
resident enterprise of China. Such classification will likely result in
unfavorable tax consequences to us and our non-PRC shareholders.

China passed a new Enterprise Income Tax Law, or the New EIT
Law, and its implementing rules, both of which became effective on January 1,
2008. Under the New EIT Law, an enterprise established outside of China with de
facto management bodies within China is considered a resident enterprise,
meaning that it can be treated in a manner similar to a Chinese enterprise for
enterprise income tax purposes. The implementing rules of the New EIT Law define
de facto management as substantial and overall management and control over the
production and operations, personnel, accounting, and properties of the
enterprise.

On April 22, 2009, the State Administration of Taxation issued
the Notice Concerning Relevant Issues Regarding Cognizance of Chinese Investment
Controlled Enterprises Incorporated Offshore as Resident Enterprises pursuant to
Criteria of de facto Management Bodies, or the Notice, further interpreting the
application of the New EIT Law and its implementation non-Chinese enterprise or
group controlled offshore entities. Pursuant to the Notice, an enterprise
incorporated in an offshore jurisdiction and controlled by a Chinese enterprise
or group will be classified as a non-domestically incorporated resident
enterprise if (i) its senior management in charge of daily operation reside or
perform their duties mainly in China; (ii) its financial or personnel decisions
are made or approved by bodies or persons in China; (iii) its substantial
properties, accounting books, corporate chops, board and shareholder minutes are
kept in China; and (iv) 1⁄2 directors with voting rights or senior management
often resident in China. Such resident enterprise would be subject to an
enterprise income tax rate of 25% on its worldwide income and must pay a
withholding tax at a rate of 10% when paying dividends to its non-PRC
shareholders. However, it remains unclear as to whether the Notice is applicable
to an offshore enterprise incorporated by a Chinese natural person. Nor are
detailed measures on imposition of tax from non-domestically incorporated
resident enterprises are available. Therefore, it is unclear how tax authorities
will determine tax residency based on the facts of each case.

23

---

However, as our case substantially meets the foregoing
criteria, there is a likelihood that we are deemed to be a resident enterprise
by Chinese tax authorities.If the PRC tax
authorities determine that we are a resident enterprise for PRC enterprise
income tax purposes, a number of unfavorable PRC tax consequences could follow.
First, we may be subject to the enterprise income tax at a rate of 25% on our
worldwide taxable income as well as PRC enterprise income tax reporting
obligations. In our case, this would mean that income such as interest on
financing proceeds and non-China source income would be subject to PRC
enterprise income tax at a rate of 25%. Second, although under the New EIT Law
and its implementing rules dividends paid to us from our PRC subsidiaries would
qualify as tax-exempt income, we cannot guarantee that such dividends will not
be subject to a 10% withholding tax, as the PRC foreign exchange control
authorities, which enforce the withholding tax, have not yet issued guidance
with respect to the processing of outbound remittances to entities that are
treated as resident enterprises for PRC enterprise income tax purposes. Finally,
it is possible that future guidance issued with respect to the new resident
enterprise classification could result in a situation in which a 10%
withholding tax is imposed on dividends we pay to our non-PRC shareholders and
with respect to gains derived by our non-PRC shareholders from transferring our
shares. We are actively monitoring the possibility of resident enterprise
treatment for the 2008 tax year and are evaluating appropriate organizational
changes to avoid this treatment, to the extent possible.

If we were treated as a resident enterprise by PRC tax
authorities, we would be subject to taxation in both the U.S. and China, and our
PRC tax may not be creditable against our U.S. tax.

The value of our securities will be affected by the
currency exchange rate between U.S. dollars and RMB.

The value of our common stock will be affected by the foreign
exchange rate between U.S. dollars and RMB, and between those currencies and
other currencies in which our sales may be denominated. For example, if we need
to convert U.S. dollars into RMB for our operational needs and the RMB
appreciates against the U.S. dollar at that time, our financial position, our
business, and the price of our common stock may be harmed. Conversely, if we
decide to convert our RMB into U.S. dollars for the purpose of declaring
dividends on our common stock or for other business purposes and the U.S. dollar
appreciates against the RMB, the U.S. dollar equivalent of our earnings from our
subsidiaries in China would be reduced.

RISKS RELATED TO THE MARKET FOR OUR STOCK

Our common stock is quoted on the OTC Bulletin Board
which may have an unfavorable impact on our stock price and
liquidity.

Our common stock is quoted on the OTC Bulletin Board. The OTC
Bulletin Board is a significantly more limited market than the New York Stock
Exchange or NASDAQ system. The quotation of our shares on the OTC Bulletin Board
may result in a less liquid market available for existing and potential
stockholders to trade shares of our common stock, could depress the trading
price of our common stock and could have a long-term adverse impact on our
ability to raise capital in the future.

We are subject to penny stock regulations and
restrictions.

The SEC has adopted regulations which generally define
so-called penny stocks to be an equity security that has a market price less
than $5.00 per share or an exercise price of less than $5.00 per share, subject
to certain exemptions. If our common stock becomes a penny stock, we may
become subject to Rule 15g-9 under the Exchange Act, or the Penny Stock Rule.
This rule imposes additional sales practice requirements on broker-dealers that
sell such securities to persons other than established customers and accredited
investors (generally, individuals with a net worth in excess of $1,000,000 or
annual incomes exceeding $200,000, or $300,000 together with their spouses). For
transactions covered by Rule 15g-9, a broker-dealer must make a special
suitability determination for the purchaser and have received the purchaser's
written consent to the transaction prior to sale. As a result, this rule may
affect the ability of broker-dealers to sell our securities and may affect the
ability of purchasers to sell any of our securities in the secondary market.

For any transaction involving a penny stock, unless exempt, the
rules require delivery, prior to any transaction in a penny stock, of a
disclosure schedule prepared by the SEC relating to the penny stock market.
Disclosure is also required to be made about sales commissions payable to both
the broker-dealer and the registered representative and current quotations for
the securities. Finally, monthly statements are required to be sent disclosing
recent price information for the penny stock held in the account and information
on the limited market in penny stock.

There can be no assurance that our common stock will qualify
for exemption from the Penny Stock Rule. In any event, even if our common stock
were exempt from the Penny Stock Rule, we would remain subject to Section
15(b)(6) of the Exchange Act, which gives the SEC the authority to restrict any
person from participating in a distribution of penny stock, if the SEC finds
that such a restriction would be in the public interest.

Certain provisions of our Certificate of Incorporation
may make it more difficult for a third party to effect a
change-in-control.

Our Certificate of Incorporation authorizes the Board of
Directors to issue up to 10,000,000 shares of preferred stock. The preferred
stock may be issued in one or more series, the terms of which may be determined
at the time of issuance by the board of directors without further action by the
stockholders. These terms may include voting rights including the right to vote
as a series on particular matters, preferences as to dividends and liquidation, conversion rights and redemption
rights provisions. The issuance of any preferred stock could diminish the rights
of holders of our common stock, and therefore could reduce the value of such
common stock. In addition, specific rights granted to future holders of
preferred stock could be used to restrict our ability to merge with, or sell
assets to, a third party. The ability of the board of directors to issue
preferred stock could make it more difficult, delay, discourage, prevent or make
it more costly to acquire or effect a change-in-control, which in turn could
prevent the stockholders from recognizing a gain in the event that a favorable
offer is extended and could materially and negatively affect the market price of
our common stock.

24

---

Item 2. Properties

Land Use Rights

There is no private land ownership in China. Individuals and
companies are permitted to acquire land use rights for specific purposes. We
were granted land use rights from the PRC government for 36,529 square meters of
three land slots located at No.5 NanhuanRoad, Tiexi District, Siping City, Jilin
Province, China. The land use rights will expire on December 8, 2056, December
30, 2056 and December 30, 2057, respectively.

Mortgages were created over the land use rights of the two land
lots with an area of 17682.78 square meters and 7,227.22 square meters,
respectively. Such mortgages are used for securing the Companys indebtedness
with China Agriculture Bank, Siping Branch. We believe that all our properties
have been adequately maintained, are generally in good condition and are
suitable and adequate for our business.

Buildings

We currently own ten buildings covered by ten Property
Ownership Certificates issued by Siping City Housing Administration Bureau. All
the buildings are located at No.5 Nanhuan Road, Tie Xi District, Siping City.
The building with area of 4,633.93 square meters was mortgaged to secure our
indebtedness with China Agriculture Bank, Siping Branch on November 8, 2007.

Buildings under Construction

Our third workshop and our research center are under
construction, which are located at the south side of NanhuanRoad, Tie Xi
District, Siping City. We have obtained a License for Construction Land Planning
(Ref. Di Zi No. 200802050) issued by Siping City Construction Bureau on July 25,
2008, which shows that the land area approved for the Companys above-mentioned
construction is 11,781 square meters.

We also acquired a License for Construction Project Planning
(Ref. Jian Zi No. 200803043) issued on September 5, 2008 by Siping City
Construction Bureau. The License shows that the area of the above-mentioned
construction will be 7,716 square meters.

Leased Properties

We currently lease seven real properties as representative
offices in Taiyuan, Baotou, Shenyang, Harbin, Xian, Wuhan and Qingdao.

Item 3. 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 affect on our business, financial condition or operating
results.

Item 4. (Removed and Reserved).

PART II

Item 5. Market for Registrants Common Equity, Related
Stockholder Matters and Issuer Purchases of Equity Securities.

Market for our Common Stock

Our common stock is quoted on the OTC Bulletin Board trades
under the symbol THTI.OB. On December 31, 2009, the closing bid quotation for
our common stock as reported on the OTCBB was $5.03. The bid price reflects
inter-dealer quotations, does not include retail markups, markdowns or
commissions and does not necessarily reflect actual transactions.

The following table sets forth, for the periods indicated, the
high and low closing prices of our common stock as reported by nasdaq.com. These
prices reflect inter-dealer prices, without retail mark-up, mark-down or
commission, and may not represent actual transactions.

25

---

Closing PricesHigh
    
    
    LowYear Ending December 31, 20094th Quarter
    $
    5.33
    
    $
    4.823rd Quarter
    $
    N/A
    
    $
    N/A2nd Quarter
    $
    N/A
    
    $
    N/A1st Quarter
    $
    N/A
    
    $
    N/A


Closing PricesHigh
    
    
    LowYear Ended December 31, 20084th Quarter
    $
    N/A
    
    $
    N/A3rd Quarter
    $
    N/A
    
    $
    N/A2nd Quarter
    $
    N/A
    
    $
    N/A1st Quarter
    $
    N/A
    
    $
    N/A


Reports to Stockholders

We plan to furnish our stockholders with an annual report for
each fiscal year ending December 31 containing financial statements audited by
our independent certified public accountants. Additionally, we may, in our sole
discretion, issue unaudited quarterly or other interim reports to our
stockholders when we deem appropriate. We intend to maintain compliance with the
periodic reporting requirements of the Exchange Act.

Approximate Number of Holders of Our Common
Stock

On March 26, 2010, there were 798 stockholders of record of our
common stock.

Dividend Policy

We have never declared dividends or paid cash dividends. Our
board of directors will make any future decisions regarding dividends. We
currently intend to retain and use any future earnings for the development and
expansion of our business and do not anticipate paying any cash dividends in the
near future.

Item 6. Selected Financial Data

Not required.

Item 7. Managements Discussion and Analysis of Financial
Condition and Results of Operations

Overview

The following discussion is an overview of the important
factors that management focuses on in evaluating our business, financial
condition and operating performance and should be read in conjunction with the
financial statements included in this Annual Report. This discussion contains
forward-looking statements that involve risks and uncertainties. Actual results
could differ materially from those anticipated in these forward looking
statements as a result of any number of factors, including those set forth under
the section entitled Risk Factors and elsewhere in this Annual Report.

Our Business

THT is a Nevada holding company whose China-based indirect
operating subsidiary Siping Juyuan manufactures and sells heat exchangers. Since
1998, we have been providing total heat exchange solutions to our customers. Our
major products are plate heat exchangers, shell-and-tube heat exchangers and
heat exchanger units. Unlike most other heat exchanger manufacturers in China,
we not only provide heat exchange products, but also provide total solution to
our customers. As a total solution provider, we analyze the working condition of
our customers; provide optimized design based on analysis and simulation, offer
high quality heat exchange products, and continuously assist our customer in
improving heat exchange process.

Over the past 10 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.

26

---

As of December 31, 2009, we had 597 employees.  We currently have two production line for plate heat exchangers with an annual capacity of 500,000 square meters and one welding workshop with an annual capacity of 3,000 tons.

Revenue

We generate our revenue from the sales of our heat exchange products.

Cost of Sales

Cost of revenue includes our direct costs to manufacture our products, including the cost of our raw materials, employee remuneration for staff engaged in production activity, and related expenses that are directly attributable to the production of
products.

Gross Profit and Gross Margin

Gross profit is equal to the difference between our revenue and the cost of sales. Gross margin is equal to gross profit divided by revenue.

Operating Expenses

Our operating expenses consist of salaries, sales commission, research and development expense and other selling expense and general and administrative expenses. We expect most components of our operating expenses will increase as our business grows
and as we incur increased costs related to being a public company.

Principal Factors Affecting Our Financial Performance

We believe that the following factors will continue to affect our financial performance:

Growth of ChinasUrbanization and Industrialization

According to China Heat Association, the annual growth rate of the heat exchange industry in China is expected to be 106% from 2009 to 2012. This growth is fueled by rapid industrialization and manufacturing industries developing in China. If this
growth continues, we believe that we will be able to sustain our growth and continue to be a leader in the heat exchange industry in China.

PRC Regulations

China has looked favorably on the heat exchange industry and has loosened regulations to promote manufacturing growth in China, which ultimately benefits the Company and similarly situated companies.

The Chinese government committed to promote the development of Chinas urbanization, which includes the heat exchange industry, through, among other things, tax incentives, import/export support and capital support. In addition, the stimulus
package offered by the Chinese government will provide market opportunities for us.  As long as China continues to promote economic growth and allows manufacturing companies to grow and expand their operations, we expect our operations will be
positively effected by PRC regulations.

Taxation

United States

THT is subject to United States tax at a tax rate of 34%. No provision for income taxes in the United States has been made as THT had no taxable income for 2009.

British Virgin Islands

Megaway was incorporated in the BVI and under the current laws of the BVI, is not subject to income taxes.

Hong Kong

Star Wealth was incorporated in Hong Kong and subject to Hong Kong profits tax at a tax rate of 16.5% . No provision for Hong Kong tax has been made as
Star Wealth has no taxable income during the reporting periods.

27

---

PRC

A company registered in China is subject to national and local
income taxes within China at the applicable tax rate on the taxable income as
reported in its PRC statutory financial statements in accordance with relevant
income tax laws. Under the Provisional Taxation Regulation of the Peoples
Republic of China effective before January 1, 2008, income tax was generally
payable by enterprises at a rate of 33% of their taxable income.

In 2007, China passed the New EIT Law and its implementing
rules, both of which became effective on January 1, 2008. The New EIT Law
significantly curtails tax incentives granted to foreign-invested enterprises
under the previous law. The New EIT Law, however, (i) reduces the statutory rate
of enterprise income tax from 33% to 25%, (ii) permits companies to continue to
enjoy their existing tax incentives, adjusted by certain transitional phase-out
rules, and (iii) introduces new tax incentives, subject to various qualification
criteria.

Substantially all of our income may be derived from dividends
we receive from our PRC operating subsidiaries described above. The New EIT Law
and its implementing rules generally provide that a 10% withholding tax applies
to China-sourced income derived by non-resident enterprises for PRC enterprise
income tax purposes. We expect that such 10% withholding tax will apply to
dividends paid to us by our PRC subsidiaries, but this treatment will depend on
our status as a non-resident enterprise. For detailed discussion of PRC tax
issues related to resident enterprise status, see Risk Factors  Risks Related
to Doing Business in China  Under the New EIT Law, we may be classified as a
resident enterprise of China. Such classification will likely result in
unfavorable tax consequences to us and our non-PRC shareholders.

Siping Juyuan was entitled to a special tax concession, or the
Tax Concession, because it employed the required number of handicapped staff
according to the relevant PRC tax rules. In particular, this Tax Concession entitled Siping Juyuan to a refund of value-added tax paid in the years
ended December 31, 2009 and 2008.

Beijing Juyuan, being a sino-foreign joint venture enterprise,
was entitled to two years EIT exemption, from the first profit making calendar
year of operations after offset of accumulated taxable losses, followed by a 50%
tax reduction for the immediate next three calendar years, or the Tax Holiday.
The Tax Holiday commenced in the fiscal year of 2008.

Pursuant to the new EIT law, commencing from January 1, 2008,
Siping Juyuan and Beijing Juyuan were subject to PRC EIT at the statutory rate
of 25%. As Siping Juyuan was qualified as a High-tech Enterprise, it was
entitled to a preferential EIT rate of 15%. Beijing Juyuan was subject to EIT at
the rate of 0% during the Tax Holiday.

We incurred income taxes of $663,991 for the year ended
December 31, 2009, an increase of $320,368 or 93.23% from the taxes we incurred
in the same 2008 period, which were $343,623. This increase in taxes was more
than offset by our higher revenues and operating profits.

Results of Operations

The following tables set forth key components of our results of
operations for the periods indicated, in dollars and as a percentage of
revenue.

|                               |   | Year Ended December 31, |  
|------------------------------ | - | ----------------------- | -
|                               |   | 2009                    |  
|                               |   |                         |  
|                               |   |                         |  
|Sales revenue                  | $ | 34,890,853              |  
|Cost of sales                  |   | (19,967,695             | )
|Gross profit                   |   | 14,923,158              |  
|                               |   |                         |  
|Expenses                       |   |                         |  
|Administrative expenses        |   | 3,064,790               |  
|Research and development costs |   | 1,096,285               |  
|Selling expenses               |   | 5,782,045               |  
|Total operating expenses       |   | 9,943,120               |  
|                               |   |                         |  
|Income from operations         |   | 4,980,038               |  
|                               |   |                         |  
|' Interest income              |   | 16,672                  |  
|Other income/(expense), net    |   | 491,557                 |  
|Interest expense               |   | (681,355                | )

|Income before income taxes and
      noncontrolling interests |   | 4,806,912 |   |   | 3,328,105 |  
|------------------------------------------------------------- | - | --------- | - | - | --------- | -
|Income taxes                                                  |   | (663,991  | ) |   | (343,623  | )
|                                                              |   |           |   |   |           |  
|Net income before noncontrolling interests                    | $ | 4,142,921 |   | $ | 2,984,482 |  
|                                                              |   |           |   |   |           |  
|As a Percentage of Sales Revenue                              |   |           |   |   |           |  
|Sales revenue                                                 |   | 100.0 %   |   |   | 100.0 %   |  
|Cost of sales                                                 |   | 57.23 %   |   |   | 68.50 %   |  
|Gross profit                                                  |   | 42.77 %   |   |   | 31.50 %   |  
|                                                              |   |           |   |   |           |  
|Expenses                                                      |   |           |   |   |           |  
|Administrative expenses                                       |   | 8.78 %    |   |   | 6.77 %    |  
|Research and
      development costs                          |   | 3.14 %    |   |   | 3.12 %    |  
|Selling expenses                                              |   | 16.57 %   |   |   | 10.94 %   |  
|Total operating expenses                                      |   | 28.49 %   |   |   | 20.83 %   |  
|                                                              |   |           |   |   |           |  
|Income before income taxes and
      noncontrolling interests |   | 13.78 %   |   |   | 10.25 %   |  
|Income taxes                                                  |   | (1.90) %  |   |   | (1.06) %  |  
|                                                              |   |           |   |   |           |  
|Net income before noncontrolling interests                    |   | 11.87 %   |   |   | 9.19 %    |  

28

---

Comparison of Fiscal Year Ended December 31, 2009 and Fiscal
Year Ended December 31, 2008

Sales Revenue. Our sales revenue is generated from sales
of heat exchange products. Sales revenue increased approximately $2.42 million,
or 7.47%, to approximately $34.89 million in 2009 from approximately $32.47
million in 2008. Sales volume of our heat exchange products increased
approximately 742 units or 44.89% to approximately 2,395 units in 2009 from
approximately 1,653 units in 2008. The increase in sales volume was mainly due
to the 10 sales center we established in 2008 were come into play in 2009 and
the increase in sales revenue was mainly attributable to the strong growth in
market demand driven by the fast economic recovery in China and our strengthened
sales efforts to seize larger market share. However, the increase of sales
revenues was partially offset by the decrease in our average selling prices in
2009 when the price of steel, our major raw material, remained significantly
lower than the price in 2008. The market price of steel which accounts for 75%
of our total cost of sales decreased by 40% during 2009. As a result of the
decrease of the price of steel, our average selling prices in 2009 decreased by
25.84% .

Cost of Sales. Our cost of sales is primarily comprised
of the costs of our raw materials, accessories, utilities, labor and overhead.
Our cost of sales decreased approximately $2.27 million, or 10.22%, to
approximately $19.97 million in 2009 from approximately $22.24 million in 2008.
The decrease was mainly attributable to our efforts to optimize our product mix
in 2009 and the decrease in the purchase price of our major raw materials. We
increased the percentage of our sales derived from high margin products which
apply to petrochemical and shipbuilding industry such as air-cooled heat
exchangers, plate heat exchangers and plate and frame heat exchangers to 50% in
2009 from 35% in 2008. In addition, the market price of steel, which accounts
for 75% of our total cost of sales, decreased by 40% during 2009. As a result,
our unit cost of sales significantly decreased by 38.03% in 2009 as compared to
2008. Although as stated above, the sales revenues increased by 7.47% in 2009,
our cost of sales instead decreased by 10.21% .

Gross Profit. Our gross profit is equal to the
difference between our sales revenue and our cost of sales. Our gross profit
increased approximately $4.70 million, or 45.93%, to approximately $14.92
million during 2009 from approximately $10.23 million in 2008. Gross profit as a
percentage of sales revenue was 42.77% during 2009 as compared to 31.50% during
2008. Such percentage increase was mainly attributable to our efforts to
optimize our product mix and maximize our profitability. In response to the
market demand and through intensive sales efforts,, we significantly increased
sales of high gross margin products to the petrochemical and shipbuilding
industry which include air-cooled heat exchangers, plate heat exchangers and
plate and frame heat exchangers. Sales mix for these products increased to 50%
in 2009 from 35% in 2008.The increase in revenue and the decrease in cost of
operation made gross profit increased.

Administrative Expenses. Our administrative expenses
consist of the costs associated with staff and support personnel who manage our
business activities. Our administrative expenses increased approximately $0.86
million, or 39.48%, to approximately $3.06 million during 2009 from
approximately $2.20 million in 2008. As a percentage of sales revenue,
administrative expenses in 2009 increased to 8.8%, as compared to 6.8% for 2008.
The $0.86 million increase in administrative expenses was mainly attributable to
the expansion of our management team and the increased professional expense
associated with being a public company. As a result of the expansion of our
management team, the salary of management team and administration staff
increased approximately $0.22 million, or 24.44% to approximately $1.12 million
in 2009 from approximately $0.90 in 2008. The professional expense associated
with being a public company increased approximately $0.35 million, or 768.14% in
2009 from 2008.

29

---

Research and Development Expenses. Our research and
development expenses consist of the costs associated with R&D personnel and
expense in R&D projects. Our R&D expenses increased approximately $0.08
million, or 8.21%, to approximately $1.10 million in 2009 from approximately
$1.01 million in 2008. The increase was mainly attributable to our continued
efforts to strengthen our R&D function and increased input in the
development of new products.

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 increased approximately $2.23 million, or
63%, to approximately $5.78 million during 2009 from approximately $3.55 million
in 2008. As a percentage of sales revenue, selling expenses in 2009 increased to
16.6%, as compared to 10.9% for 2008. This percentage increase was primarily
attributable to the wages of sales personnel increased 120%, to $1.32 million in
2009 from $0.60 million in 2008 and the travel expense increased 85%, to $3.22
million in 2009 from $1.74 million in 2008. Our transportation costs increased
30%, to $0.78 million in 2009 from $0.60 million in 2008 was attributable to the
increase in our sales volume.

Total Operating Expenses. Our total expenses increased
approximately $3.18 million, or 47.03%, to approximately $9.94 million during
2009 from approximately $6.76 million in 2008. This increase was mainly due to
the increase in our administrative expenses, research and development expenses
and selling expenses. As a percentage of sales revenue, total expenses in 2009
increased to 28.5%, as compared to 20.8% for 2008. This increase was primarily
attributable to the increase in administrative expenses, research and
development expenses and selling expenses.

Income before income taxes and noncontrolling interests. Income
before income taxes increased approximately $1.48 million, or 44.43%, to
approximately $4.81 million in 2009 from approximately $3.33 million in 2008.
Income before income taxes as a percentage of sales revenue increased to
[13.78]% in 2009, as compared to 10.3% in 2008 due to the factors described
above.

Income Taxes. Our income taxes increased to
approximately $0.66 million from approximately $0.34 million during 2009 as
compared to 2008. This increase was mainly due to income before income taxes
increased approximately $1.48 million, or 44.43%, to approximately $4.81 million
in 2009 from approximately $3.33 million in 2008 and the income tax rate were
same both 2008 and 2009.

Net income before noncontrolling interests. Our net income
increased approximately $1.16 million, or 38.82%, to approximately $4.14 million
in 2009 from approximately $2.98 million in 2008 as a result of the factors
described above.

Liquidity and Capital Resources

As of December 31, 2009, we had cash and cash equivalents of
$5.38 million and restricted cash of $1.38 million. The following table provides
detailed information about our net cash flow for all financial statements
periods presented in this report.

Cash Flow(All amounts in thousands of U.S. dollars)Fiscal Year Ended December 31,2009
    
    
    2008Net cash  (used in) provided by operating
      activities
    $
    (6,251
    )
    $
    4,563Net cash (used in) provided by investing activities
    
    (1,249
    )
    
    1,042Net cash provided by financing activities
    
    342
    
    
    8,596Effect of foreign current translation on cash and cash
    equivalents
    
    (41
    )
    
    137Net cash (outflows ) inflows
    
    (7,199
    )
    
    12,254


Operating Activities

Net cash used in operating activities was $6.25 million in
2009, as compared to $4.56 million net cash provided by operating activities in
2008. Cash flow used in operating activities increased $10.81 million in 2009
from 2008.The reasons are as follows:

Accounts receivable increased approximately $8.23 million
excluding the effect of foreign currency exchange differences, to approximately
$14.88 million in 2009 from approximately $6.85 million in 2008. In 2009, 44% of
our sales contracts was from projects in thermoelectric industry which took
longer time to install than our projects for other industries. Accounts
receivables increased significantly as a result of the large volume of those
long-term projects. In addition, affected by the economic crisis, many companies
postponed installation, configuration, maintenance or services of their
projects, which further increased our accounts receivable. As the economy has
gradually recovered, we expect that in 2010 our accounts receivable will
decrease. The company is monitoring the accounts receivable situation and
expects improvement and will evaluate actions as necessary to manage collections
effectively.

30

---

Investing Activities

Net cash used in investing activities was $1.25 million in
2009, as compared to $1.04 million net cash used in investing activities in
2008. The change was mainly attributable to $1.32 million increase in capital
investment from 2008 to 2009. In addition, we paid $443,000 for the purchase of
land use rights in 2008 and there were no such expenses in 2009.

Financing Activities

Net cash provided by financing activities was $0.34 million in
2009, as compared to $8.60 million net cash provided by financing activities in
2008. The change was mainly due to:

|1. | The short-term loan amounted to $7.31 million in 2009 and
      was $4.77 million in 2008. The long-term loan amounted to $4.04 million in
      2008. We repaid $5.86million in 2009 and $3.77million in 2008.
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                
|2. | In 2008 we had $8.75million invested by some
      shareholders.                                                                                                                                               
|   |                                                                                                                                                                                                                
|3. | We have repaid $4.85million to related parties in 2008
      and there were no such outflows in 2009.                                                                                                          

As of December 31, 2009, the amount, maturity date and term of
each of our bank loans are as follows:

|(dollars in millions)                          | 
|---------------------------------------------- | 
|                                               | 
|Bank                                           | 
|Agriculture Bank of China,
      Siping Branch | 
|Bank of Communications, Changchun Branch       | 

We believe that we maintain good relationships with the various
banks we deal with and our current available working capital, after receiving
the aggregate proceeds from our planned capital raising activities and bank
loans referenced above, should be adequate to sustain our operations at our
current levels through at least the next twelve months.

Obligations Under Material Contracts

We are party to the following loan agreements:

- Commission Loan Agreement, dated July 24, 2008, among Siping Juyuan, Siping
  City Fu Guo Investment and Development Co., Ltd. and Siping City Credit
  Association Union, pursuant to which Siping City Credit Association Union,
  entrusted by Siping City Fu Guo Investment and Development Co., Ltd., provided
  a loan with a total amount of RMB 28,000,000 (approximately $4,102,000). The
  agreement is for a term of three years, from June 27, 2008 to June 26, 2011.
  The first interest rate is 6% above the lending rate over the same period
  published by the PRC; annual interest rate is 8.0136%. The interest rate is
  adjusted on June 21 every year; the adjusted interest rate is 6% above the
  lending rate of the same category over the same period published by the PRC.
  The loan balance of RMB 23,000,000 (approximately $3,363,950) has not yet been
  repaid.
- Loan Agreement, dated December 14, 2009, between Siping Juyuan and Siping
  Branch of Agriculture Bank of China, pursuant to which Siping Branch of
  Agriculture Bank of China provided a loan with a total amount of RMB
  20,000,000 (approximately $2,930,000). The agreement is for a term from
  December 14, 2009 to December 13, 2010. The interest rate based on the
  benchmark interest rate published by the PRC.

Critical Accounting Policies

Basis of presentation and consolidation

After the consummation of the reorganization detailed in note 2
above, Mr. Zhao and the other original stockholders of Siping Juyuan maintain
control over Siping Juyuan by virtue of the option agreements. Accordingly,
accounting for recapitalization is adopted for the preparation of these
consolidated financial statements. These financial statements, issued under the
name of the Company, represent the continuation of the financial statements of
Siping Juyuan.

The consolidated financial statements have been prepared in
accordance with generally accepted accounting principles in the United States of
America (US GAAP).

31

---

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.

Use of estimates

In preparing financial statements in conformity with US GAAP,
management makes estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosures of contingent assets and liabilities at
the dates of the financial statements, as well as the reported amounts of
revenues and expenses during the reporting periods. These accounts and estimates
include, but are not limited to, the valuation of trade receivable, other
receivables, inventories and deferred income taxes and the estimation on useful
lives and residual values of property, plant and equipment. Actual results could
differ from those estimates.

Noncontrolling interest

Noncontrolling interest on the consolidated balance sheets
resulted from the consolidation of a 75% owned subsidiary, Beijing Juyuan, which
was acquired on November 15, 2007.

Noncontrolling interest on the consolidated statements of
income and comprehensive income represents the minority stockholders
proportionate share of the net loss of Beijing Juyuan.

Concentration of credit risk

Financial instruments that potentially subject the Company to
significant concentration of credit risk consist principally of cash and cash
equivalents, restricted cash, trade receivables and other receivables. As of
December 31, 2009 and 2008, all of the Companys cash and cash equivalents and
restricted cash were held by major financial institutions located in the PRC,
which management believes are of high credit quality. With respect to trade
receivables, the Company extends credit based on an evaluation of the customers
financial condition. The Company generally does not require collateral for trade
receivables and maintains an allowance for doubtful accounts for trade and other
receivables.

During the reporting periods, New Juyuan Company contributed
18% ($5,804,115) to the Companys sales revenue during the year ended December
31, 2008. There was no other customer that contributed 10% or more to the
Companys sales revenue during the years.

As of December 31, 2009 and 2008, the Company did not have any
balance of gross trade receivable due from individual customer that represented
10% or more of the Companys gross trade receivables.

Cash and cash equivalents

Cash and cash equivalents include all cash, deposits in banks
and other highly liquid investments with initial maturities of three months or
less. As of December 31, 2009 and 2008, almost all the cash and cash equivalents
were denominated in RMB and were placed with banks in the PRC. They are not
freely convertible into foreign currencies and the remittance of these funds out
of the PRC is subject to exchange control restrictions imposed by the PRC
government. The remaining insignificant balance of cash and cash equivalents
were denominated in United States Dollars.

Allowance for doubtful debts

The Company establishes an allowance for doubtful debts based
on managements assessment of the collectibility of trade receivables and other
receivables. A considerable amount of judgment is required in assessing the
amount of the allowance and the Company considers the historical level of credit
losses and applies percentages to aged receivable categories. The Company makes
judgments about the creditworthiness of each debtor based on ongoing credit
evaluations, and monitors current economic trends that might impact the level of
credit losses in the future. If the financial condition of the debtors were to
deteriorate, resulting in their inability to make payments, a larger allowance
may be required.

Bad debts are written off when identified. The Company extends
unsecured credit to customers ranging from three to six months in the normal
course of business. The Company does not accrue interest on trade
receivables.

Historically, losses from uncollectible accounts have not
significantly deviated from the general allowance estimated by the management
and no significant additional bad debts have been written off directly to the
profit and loss. This general provisioning policy has not changed in the past
since establishment and the management considers that the aforementioned general
provisioning policy is adequate and not too excessive and does not expect to
change this established policy in the near future.

32

---

Retention receivable

Retention receivable is the amount withheld by a customer until
the warranty period is over. Retention receivables which were expected to be
collected within one year of $1,232,917 and $1,413,154 were included in the
balance of trade receivable as of December 31, 2009 and 2008, respectively.
Retention receivables which were expected to be collected after one year of
$795,144 and $224,932 were presented separately as long-term assets.

Inventories

Inventories are stated at the lower of cost or market value.
Cost is determined on a weighted average basis and includes all expenditures
incurred in bringing the goods to the point of sale and putting them in a
saleable condition. In assessing the ultimate realization of inventories, the
management makes judgments as to future demand requirements compared to current
or committed inventory levels. The Companys reserve requirements generally
increase with its projected demand requirements; decrease due to market
conditions and product life cycle changes. The Company estimates the demand
requirements based on market conditions, forecasts prepared by its customers,
sales contracts and orders in hand.

Property, plant and equipment

Property, plant and equipment are stated at cost less
accumulated depreciation. Cost represents the purchase price of the asset and
other costs incurred to bring the asset into its existing use.

Depreciation is provided on the straight-line basis (after
taking into account the respective estimated residual values) over the estimated
useful lives of property, plant and equipment. The principal useful lives and
residual value are as follows :-

Estimated useful lives
    
    
    Residual valueBuildings
    
    20 years
    
    
    5%Plant and machinery
    
    6 years
    
    
    5%Motor vehicles
    
    3 - 5 years
    
    
    5%Office equipment
    
    2 - 5 years
    
    
    Nil - 5%


Maintenance or repairs are charged to expense as incurred. Upon
sale or disposition, the applicable amounts of asset cost and accumulated
depreciation are removed from the accounts and the net amount less proceeds from
disposal is charged or credited to income.

Construction in progress mainly represents expenditures in
respect of the Companys corporate campus and factories, including offices,
factories and research center, under construction. All direct costs relating to
the acquisition or construction of the Companys corporate campus and factories
are capitalized as construction in progress. No depreciation is provided in
respect of construction in progress.

Land use rights

Land use rights are stated at cost less accumulated
amortization. Amortization is provided using the straight-line method over the
terms of the lease of 50 years obtained from the relevant PRC land
authority.

Impairment of long-lived assets

Long-lived assets are tested for impairment in accordance with
ASC 360-10-45 Impairment or Disposal of Long-Lived Assets (previously SFAS No.
144). The Company periodically evaluates potential impairment whenever events or
changes in circumstances indicate that the carrying amount of the assets may not
be recoverable. The Company recognizes impairment of long-lived assets in the
event that the net book values of such assets exceed the future undiscounted
cash flows attributable to such assets. During the reporting periods, the
Company has not identified any indicators that would require testing for
impairment.

Revenue recognition

Revenue from sales of the Companys products is recognized when
products are delivered and customer acceptance is made, the sales price is fixed
or determinable, no other significant obligations of the Company exist and
collection is reasonably assured.

There were no sales returns and allowances for the years ended
December 31, 2009 and 2008. The Company does not provide unconditional right of
return, prices protection or any other concessions to its customers. Generally,
the Company provides free after-sale service for a period ranging from half year
to 1 year. After-sale expense was $16,577 and $12,152 for the years ended
December 31, 2009 and 2008 respectively.

33

---

Cost of sales

Cost of sales consists primarily of materials costs, freight
charges, purchasing and receiving costs, inspection costs, wages, employee
compensation, depreciation and related costs, which are directly attributable to
the production of products. Write-down of inventories to lower of cost or market
is also recorded in cost of sales.

Administrative expenses

Administrative expenses consist primarily of rent paid, office
expenses, entertainment, traveling expenses, staff welfare, consumables, labor
protection and salaries and wages which are incurred at the administrative level
and exchange difference.

Selling expenses

Selling expenses consist primarily of advertising, salaries and
transportation costs incurred during the selling activities.

Advertising, transportation, research and development
expenses

Advertising, transportation, research and development expenses
are charged to expense as incurred.

Advertising expenses amounting to $877 and $1,463 for two years
ended December 31, 2009 and 2008 respectively are included in selling
expenses.

Transportation expenses amounting to $808,112 and $584,312 for
two years ended December 31, 2009 and 2008 respectively are included in selling
expenses.

Income taxes

The Company uses the asset and liability method of accounting
for income taxes pursuant to ASC 740 Income Taxes (previously SFAS No. 109).
Under the asset and liability method of ASC 740, deferred tax assets and
liabilities are recognized for the future tax consequences attributable to
temporary differences between the financial statements carrying amounts of
existing assets and liabilities and loss carryforwards and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled.

Comprehensive income

The Company has adopted ASC 220, Comprehensive Income, which
establishes standards for reporting and display of comprehensive income, its
components and accumulated balances. Components of comprehensive income include
net income and foreign currency translation adjustments. As at December 31, 2009
and 2008, the only component of accumulated other comprehensive income was
foreign currency translation adjustments.

Foreign currency translation

The functional currency of the Company is RMB and RMB is not
freely convertible into foreign currencies. The Company maintains its financial
statements in the functional currency. Monetary assets and liabilities
denominated in currencies other than the functional currency are translated into
the functional currency at rates of exchange prevailing at the balance sheet
date. Transactions denominated in currencies other than the functional currency
are translated into the functional currency at the exchanges rates prevailing at
the dates of the transaction. Exchange gains or losses arising from foreign
currency transactions are included in the determination of net income for the
respective periods.

For financial reporting purposes, the financial statements of
the Company that are prepared using the functional currency have been translated
into United States dollars. Assets and liabilities are translated at the
exchange rates at the balance sheet dates and revenue and expenses are
translated at the average exchange rates and stockholders equity is translated
at historical exchange rates. Any translation adjustments resulting are not
included in determining net income but are included in foreign exchange
adjustment to other comprehensive income, a component of stockholders equity.
The exchange rates in effect at December 31, 2009 and 2008 were RMB1 for $0.1463
and $0.1467 respectively. There is no significant fluctuation in exchange rate
for the conversion of RMB to US dollars after the balance sheet date.

Fair value of financial instruments

The Company adopted ASC 820 (previously Statement of Financial
Accounting Standards (SFAS) No. 157) on January 1, 2008. The adoption of ASC
820 did not materially impact the Companys financial position, results of
operations or cash flows.

34

---

Fair value of financial instruments (contd)

ASC 825 requires the disclosure of the estimated fair value of
financial instruments including those financial instruments for which fair value
option was not elected. Except for long-term loan disclosed as below, the
carrying amounts of other financial assets and liabilities approximate to their
fair value due to short maturities or the applicable interest rates approximate
the current market rates:

As of
    
    
    As ofDecember 31, 2009
    
    
    December 31, 2008Carrying
    
    
    
    
    
    Carryingamount
    
    
    Fair value
    
    
    amount
    
    
    Fair valueLong-term loan
    $
    3,363,950
    
    $
    3,442,357
    
    $
    3,960,900
    
    $
    4,107,162


The fair values of long-term loan are estimated using
discounted cash flow analysis, based on the Companys current incremental
borrowing rates for similar types of borrowing arrangements.

Stock-based compensation

During the reporting periods, the Company did not make any
stock-based compensation payments. Dividends are recorded in
the Companys financial statements in the period in which they are declared.

Recently issued accounting pronouncements

In June 2009, the Financial Accounting Standard Board (FASB)
approved its Accounting Standards Codification (Codification) as the single
source of authoritative United States accounting and reporting standards
applicable for all non-governmental entities, with the exception of the SEC and
its staff. The Codification is effective for interim or annual financial periods
ending after September 15, 2009 and impacts the Companys financial statements
as all future references to authoritative accounting literature will be
referenced in accordance with the Codification. There have been no changes to
the content of the Companys financial statements or disclosures as a result of
implementing the Codification.

As a result of the Companys implementation of the
Codification, previous references to new accounting standards and literature are
no longer applicable. In these financial statements, the Company will provide
reference to both new and old guidance to assist in understanding the impacts of
recently adopted accounting literature, particularly for guidance adopted since
the beginning of the current fiscal year but prior to the Codification.

Noncontrolling Interests (Included in amended Topic ASC 810
Consolidation, previously SFAS No. 160 Noncontrolling Interests in
Consolidated Financial Statements, an amendment of ARB No. 51)

The amended topic establishes 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 is an ownership interest in the consolidated entity that should be
reported as equity in the consolidated financial statements. As a result of the
adoption of this amended topic, the Company has reclassified financial statement
line items within the Companys condensed consolidated balance sheets and
statements of income and comprehensive income for the prior period to conform to
this topic.

Business Combinations (Included in amended Topic ASC 805
Business Combinations, previously SFAS No. 141(R))

This ASC guidance addresses the accounting and disclosure for
identifiable assets acquired, liabilities assumed, and noncontrolling interests
in a business combination. The adoption of this amended topic has no material
impact on the Companys financial statements.

Intangibles - Goodwill and Other (Included in amended Topic
ASC 350, previously FASB Staff Position (FSP) No. 142-3 Determination of the
Useful Life of Intangible Assets)

The amended topic amends the factors an entity should consider
in developing renewal or extension assumptions used in determining the useful
life of recognized intangible assets. This new guidance applies prospectively to
intangible assets that are acquired individually or with a group of other assets
in business combinations and asset acquisitions. The amended topic is effective
for financial statements issued for fiscal years and interim periods beginning
after December 15, 2008. Early adoption is prohibited. The adoption of this
amended topic has no material effect on the Company's financial statements.

35

---

Business Combinations (Included in amended Topic ASC 805,
previously FSP No. 141R-1 Accounting for Assets Acquired and Liabilities
Assumed in a Business Combination That Arise from Contingencies)

Amended topic ASC 805 amends the requirements for the
provisions for the initial recognition and measurement, subsequent measurement
and accounting, and disclosures for assets and liabilities arising from
contingencies in business combinations. The amended topic eliminates the
distinction between contractual and non-contractual contingencies, including the
initial recognition and measurement criteria and instead carries forward most of
the provisions for acquired contingencies. The amended topic is effective for
contingent assets and contingent liabilities acquired arising from business
combinations for which the acquisition date is on or after December 15, 2008.
The adoption of this amended topic has no material effect on the Company's
financial statements.

Fair Value Measurements and Disclosures (Included in amended
Topic ASC 820, previously FSP No. 157-4 Determining Whether a Market is Not
Active and a Transaction Is Not Distressed)

The amended topic clarifies when markets are illiquid or that
market pricing may not actually reflect the real value of an asset. If a
market is determined to be inactive and market price is reflective of a
distressed price then an alternative method of pricing can be used, such as a
present value technique to estimate fair value. The amended topic identifies
factors to be considered when determining whether or not a market is inactive.
The amended topic is effective for interim and annual periods ending after June
15, 2009, with early adoption permitted for periods ending after March 15, 2009
and shall be applied prospectively. The adoption of this amended topic has no
material effect on the Company's financial statements.

Investments - Debt and Equity Securities - Overall -
Transition and Open Effective Date Information (Included in amended Topic ASC
320, previously FSP No. 115-2 and SFAS No. 124-2 Recognition and Presentation
of Other-Than-Temporary Impairments)

The amended topic amends the other-than-temporary impairment
guidance in U.S. GAAP for debt securities through increased consistency in the
timing of impairment recognition and enhanced disclosures related to the credit
and noncredit components of impaired debt securities that are not expected to be
sold. In addition, increased disclosures are required for both debt and equity
securities regarding expected cash flows, credit losses, and securities with
unrealized losses. The adoption of this amended topic has no material impact on
the Companys financial statements.

Interim Disclosures about Fair Value of Financial
Instruments (Included in amended Topic ASC 825 Financial Instruments,
previously FSP SFAS No. 107-1)

This guidance requires that the fair value disclosures required
for all financial instruments be included in interim financial statements. This
guidance also requires entities to disclose the method and significant
assumptions used to estimate the fair value of financial instruments on an
interim and annual basis and to highlight any changes from prior periods. The
amended topic was effective for interim periods ending after September 15, 2009.
The adoption of this amended topic has no material impact on the Companys
financial statements.

Subsequent Events (Included in amended Topic ASC 855
Subsequent Events, previously SFAS No. 165)

The amended topic establishes accounting and disclosure
requirements for subsequent events. The amended topic details the period after
the balance sheet date during which the Company should evaluate events or
transactions that occur for potential recognition or disclosure in the financial
statements, the circumstances under which the Company should recognize events or
transactions occurring after the balance sheet date in its financial statements
and the required disclosures for such events. The Company adopted this amended
topic effective June 1, 2009.

Accounting for Transfers of Financial Assets (Included in
amended Topic ASC 860 Transfers and Servicing, previously SFAS No. 166
Accounting for Transfers of Financial Assets - an Amendment of FASB Statement
No. 140)

The amended topic addresses information a reporting entity
provides in its financial statements about the transfer of financial assets; the
effects of a transfer on its financial position, financial performance, and cash
flows; and a transferors continuing involvement in transferred financial
assets. Also, the amended topic removes the concept of a qualifying special
purpose entity, limits the circumstances in which a transferor derecognizes a
portion or component of a financial asset, defines participating interest and
enhances the information provided to financial statement users to provide
greater transparency. The amended topic is effective for the first annual
reporting period beginning after November 15, 2009 and will be effective for us
as of January 1, 2010. The management is in the process of evaluating the impact
of adopting this amended topic on the Companys financial statements.

Consolidation of Variable Interest Entities - Amended
(Included in amended Topic ASC 810 Consolidation, previously SFAS 167
Amendments to FASB Interpretation No. 46(R))

The amended topic require an enterprise to perform an analysis
to determine the primary beneficiary of a variable interest entity; to require
ongoing reassessments of whether an enterprise is the primary beneficiary of a
variable interest entity and to eliminate the quantitative approach previously
required for determining the primary beneficiary of a variable interest entity.
The amended topic also requires enhanced disclosures that will provide users of
financial statements with more transparent information about an enterprises
involvement in a variable interest entity. The amended topic is effective for
the first annual reporting period beginning after November 15, 2009 and will be
effective for us as of January 1, 2010. The management is in the process of
evaluating the impact of adopting this amended topic on the Companys financial
statements.

36

---

In August 2009, the FASB issued ASU No. 2009-05, an update to
ASC 820 Fair Value Measurements and Disclosures. This update provides
amendments to reduce potential ambiguity in financial reporting when measuring
the fair value of liabilities. Among other provisions, this update provides
clarification that in circumstances in which a quoted price in an active market
for the identical liability is not available, a reporting entity is required to
measure fair value using one or more of the valuation techniques described in
ASU No. 2009-05. ASU No. 2009-05 will become effective for the Companys annual
financial statements for the year ending December 31, 2009. The management is in
the process of evaluating the impact of adopting this ASU on the Companys
financial statements.

In October 2009, the FASB issued ASU No. 2009-13 Revenue
Recognition (Topic 605): Multiple Deliverable Revenue Arrangements - A Consensus
of the FASB Emerging Issues Task Force. This update provides application
guidance on whether multiple deliverables exist, how the deliverables should be
separated and how the consideration should be allocated to one or more units of
accounting. This update establishes a selling price hierarchy for determining
the selling price of a deliverable. The selling price used for each deliverable
will be based on vendor-specific objective evidence, if available, third-party
evidence if vendor-specific objective evidence is not available, or estimated
selling price if neither vendor-specific or third-party evidence is available.
The Company will be required to apply this guidance prospectively for revenue
arrangements entered into or materially modified after January 1, 2011; however,
earlier application is permitted. The management is in the process of evaluating
the impact of adopting this ASU on the Companys financial statements.

The FASB issued ASU-2010-09 (Topic 855) to amend guidance on
subsequent events to remove the requirement for SEC filers (as defined in ASU
2010-09) to disclose the date through which an entity has evaluated subsequent
events. This change alleviates potential conflicts with current SEC guidance. An
SEC filer is still required to evaluate subsequent events through the date
financial statements are issued, but disclosure of that date is no longer
required. The amendments in ASU 2010-09 became effective upon issuance of the
guidance.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Seasonality

Our operating results and operating cash flows historically
have not been subject to seasonal variations. This pattern may change, however,
as a result of new market opportunities or new product introductions.

Item 7A. Quantitative and Qualitative Disclosure About
Market Risk

Not required.

Item 8. Financial Statements and Supplementary Financial
Data

The full text of our audited consolidated financial statements
as of December 31, 2009 and 2008 begins on page F-1 of this Annual Report on
Form 10-K.

Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.

Change in Accountants

On June 30, 2009, concurrent with the share exchange
transaction, our board of directors recommended and approved the dismissal of SW
Hatfield CPA, or SW Hatfield, as our independent auditor, effective upon the
filing of the consummation of the share exchange transaction.

SW Hatfields reports on our financial statements as of and for
the fiscal years ended December 31, 2008 and December 31, 2007 did not contain
an adverse opinion or a disclaimer of opinion and were not qualified or modified
as to uncertainty, audit scope, or accounting principles, except that its report
for the fiscal year ended December 31, 2008 contained a going concern
qualification as to the ability of us to continue.

During the fiscal years ended 2008 and 2007 and during the
subsequent interim period prior to SW Hatfields dismissal, there were (1) no
disagreements with SW Hatfield on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedures,
which disagreements, if not resolved to the satisfaction of SW Hatfield, would
have caused SW Hatfield to make reference to the subject matter of the
disagreements in connection with its reports, and (2) no events of the type
listed in paragraphs (A) through (D) of Item 304(a)(1)(v) of Regulation S-K.

Concurrent with the decision to dismiss SW Hatfield as our
independent auditor, our board of directors elected to continue the existing
relationship of our new subsidiary Siping Juyuan with PKF Hong Kong, Certified
Public Accountants (PKF) and appointed PKF as our independent registered
public accounting firm.

During the fiscal years ended 2008 and 2007 and through to the
date of appointment of PKF, neither us nor anyone acting on our behalf consulted
PKF with respect to (i) the application of accounting principles to a specified
transaction, either completed or proposed, or the type of audit opinion that
might be rendered on our financial statements, and neither a written report was
provided to us or oral advice was provided that PKF concluded was an important factor considered by us in
reaching a decision as to the accounting, auditing or financial reporting issue;
or (ii) any matter that was the subject of a disagreement or reportable events
set forth in Item 304(a)(1)(iv) and (v), respectively, of Regulation S-K.

37

---

We furnished SW Hatfield with a copy of this disclosure on June
25, 2009, providing SW Hatfield with the opportunity to furnish us with a letter
addressed to the SEC stating whether it agrees with the statements made by us
herein in response to Item 304(a) of Regulation S-K and, if not, stating the
respect in which it does not agree. A letter from SW Hatfield, dated June 30,
2009 is filed as Exhibit 16.1 to this report.

Item 9A. Controls and Procedures.

Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in
Rule 13a-15(e) under the Exchange Act) that are designed to ensure that
information that would be required to be disclosed in Exchange Act reports is
recorded, processed, summarized and reported within the time period specified in
the SECs rules and forms, and that such information is accumulated and
communicated to our management, including to our Chief Executive Officer and
Chief Financial Officer, as appropriate, to allow timely decisions regarding
required disclosure.

As required by Rule 13a-15 under the Exchange Act, our
management, including our Chief Executive Officer, Mr. Guohong Zhao, and Chief
Financial Officer, Mr. Jianjun He, evaluated the effectiveness of the design and
operation of our disclosure controls and procedures as of December 31, 2009.
Based on our assessment, Mr. Zhao and Mr. He determined that, as of December 31,
2009, and as of the date that the evaluation of the effectiveness of our
disclosure controls and procedures was completed, our disclosure controls and
procedures were not effective to satisfy the objectives for which they are
intended.

Internal Controls Over Financial Reporting

Managements Annual Report on Internal Control over
Financial Reporting.

Management is responsible for establishing and maintaining
adequate internal control over financial reporting for the Company. Internal
control over financial reporting refers to the process designed by, or under the
supervision of, our chief executive officer and chief financial officer, and
effected by our Board of Directors, management and other personnel, to provide
reasonable assurance regarding the reliability of our financial reporting and
the preparation of financial statements for external purposes in accordance with
U.S. GAAP, and includes those policies and procedures that:

|o | pertain to the maintenance of records that in
      reasonable detail accurately and fairly reflect the transactions and
      dispositions of our assets;                                                                                                                                                       
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|o | provide reasonable assurance that transactions
      are recorded as necessary to permit preparation of financial statements in
      accordance with U.S. GAAP, and that our receipts and expenditures are
      being made only in accordance with the authorization of our management and
      directors; and
|o | provide reasonable assurance regarding
      prevention or timely detection of unauthorized acquisition, use or
      disposition of our assets that could have a material effect on the
      financial statements.                                                                                             

During our assessment of the effectiveness of internal control
over financial reporting as of December 31, 2009, our management identified
material weakness related to the following:

1.Accounting and
Finance Personnel WeaknessesUS GAAP expertise. Our current
accounting staff is relatively new and inexperienced, and needs substantial
training to meet the higher demands of being a U.S. public company. The
accounting skills and understanding necessary to fulfill the requirements of
U.S. GAAP-based reporting, including the skills of subsidiary financial
statements consolidation, are inadequate and were inadequately supervised. The
lack of sufficient and adequately trained accounting and finance personnel
resulted in an ineffective segregation of duties relative to key financial
reporting functions.

2. Lack of Internal Audit
Function We lack qualified resources to perform the internal audit
functions properly. In addition, the scope and effectiveness of the internal
audit function are yet to be developed.

3.Lack of Internal
Audit System We lack an internal audit department, which
renders ineffective our ability to prevent and detect control lapses and errors
in the accounting of certain key areas like revenue recognition, purchase
approvals, inter-company transactions, cash receipt and cash disbursement
authorizations, inventory safeguard and proper accumulation for cost of
products, in accordance with our appropriate costing method.

The Company's management has identified the steps necessary to
address the material weaknesses described above and in 2010, we have continued
to implement these remedial procedures.

38

---

1. Hire, as needed, additional accounting and operations
personnel and outside contractors with technical accounting expertise and
reorganized the accounting and finance department to ensure that accounting
personnel with adequate experience, skills and knowledge relating to complex,
non-routine transactions are directly involved in the review and accounting
evaluation of our complex, non-routine transactions.2. Involve, as needed,
both internal accounting and operations personnel and outside contractors with
technical accounting expertise early in the evaluation of our complex,
non-routine transaction to obtain additional guidance as to the application of
generally accepted accounting principles to such a proposed transaction.3.
Require that our senior accounting personnel and the principal accounting
officer review our complex, non-routine transactions to evaluate and approve the
accounting treatment for such transactions.4. Evaluate our internal audit
function in relation to our financial resources and requirements.

Our management is not aware that the material weakness in our
internal control over financial reporting causes them to believe that any
material inaccuracies or errors existed in our financial statements as of
December 31, 2009. The reportable conditions and other areas of our internal
control over financial reporting identified by us as needing improvement have
not resulted in a material restatement of our financial statements. Nor are we
aware of any instance where such reportable conditions or other identified areas
of weakness have resulted in a material misstatement or omission in any report
we have filed with or submitted to the Commission.

Because of its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements. Projections of any
evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the
degree of compliance with the policies and procedures may deteriorate.

Management remains committed to improving its internal controls
and will continue to work to put effective controls in place. The Company is
actively recruiting staff with good knowledge of U.S. GAAP to assist in the
Companys financial reporting.

Auditor Attestation

This annual report does not include an attestation report of
our registered public accounting firm regarding internal control over financial
reporting. Managements report was not subject to attestation by our registered
public accounting firm pursuant to temporary rules of the Securities and
Exchange Commission that permit us to provide only managements report in this
annual report.

Item 9B. Other Information.

None.

PART III

Item 10. Directors, Executive Officers, and Corporate
Governance Directors and Executive Officers

The following table sets forth the name and position of each of
our current executive officers and directors.

|Name              | Age | Position                                              
|----------------- | --- | ------------------------------------------------------
|Guohong Zhao      | 49  | Chairman,
      President and CEO                     
|Jianjun He        | 37  | Chief Financial Officer,
      Treasurer and Secretary
|Yue Cui           | 49  | Vice President of
      Production                    
|Fucai Zhan        | 39  | Vice President of R&D                                 
|Wenquan Tao       | 70  | Director                                              
|William P. Haus   | 46  | Director                                              
|To Tsang          | 34  | Director                                              
|Gerard Pascale(1) | 40  | Director                                              

|(1) | Former President, Chief Financial Officer and Secretary
      prior to June 30, 2009 and current director until the 10th day following
      the mailing by us of the Information Statement to our
  stockholders.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Guohong Zhao. Mr. Zhao became our Chairman and CEO on
June 30, 2009, the day that we consummated our reverse acquisition of Megaway.
As the founder of Siping Juyuan, Mr. Zhao has served as the Chairman and CEO of
Siping Juyuan for over 10 years since 1998. From 1996 to 1997, he was the
Chairman and CEO of Siping City Traffic Safety Equipment Co., Ltd., a
manufacturer of traffic safety equipment. Before 1995, he worked in senior
positions in China Agriculture Bank, Siping Branch. Mr. Zhao graduated from
Jilin Province Radio and Television University in 1986, holding a college degree
in Economics. Mr. Zhao has over 10 years experience in the heat exchanger
industry and over 20 years management experience.

39

---

Jianjun He.Mr. He became our Chief Financial
Officer on June 30, 2009, the day that we consummated our reverse acquisition of
Megaway. Mr. He has served as the CFO of Siping Juyuan since 2007. From 1999 to
2007, he worked as senior financial officer in Jilin Grain Group, a state-owned
enterprise engaged in the grain processing and trading business. From 1995 to
1999, he worked as senior financial officer in Jilin Chia Tai Enterprise Co.
Ltd, an enterprise engaged in the animal feed business, which is a joint venture
of Chia Tai Group, the largest business group of Thailand. Mr. He graduated from
Changchun Taxation College in 1995 with major in Auditing and obtained master
degree in Jilin University in 2005. He has more than 10 years experience in
accounting and finance and is an associate member of the Chinese Institute of
Certified Public Accounts.

Yue Cui. Mr. Cui became our Vice President of Production
on June 30, 2009, the day that we consummated our reverse acquisition of
Megaway. Mr. Cui has served as Vice President of Production of Siping Juyuan
since 2006. From 2000 to 2006, he was the operation manager of Siping Juyuan.
>From 1979 to 2000, he was the production manager of Siping Tool Factory, a tool
manufacturer. With 20 years experience in manufacturing industry, he has
significantly improved the production management of the Company.

Fucai Zhan. Mr. Zhan became our Vice President of
Research and Development on June 30, 2009, the day that we consummated our
reverse acquisition of Megaway. Mr. Zhan joined Siping Junyuan in 1999 as Vice
President of Sales and was appointed as Vice President of Research and
Development in 2009. Before joining Siping Juyuan, he worked as production
manager, Research and Development manager and assistant to GM in Dong Feng
Siping Auto Parts Co., Ltd. Mr. Zhan possesses over 15 years comprehensive
experience in production, research and development, and sales and is well
positioned to lead our research and development function to be highly market
oriented. Mr. Zhan graduated from Jilin University of Technology in 1996.

Wenquan Tao.Mr. Wenquan Tao, age 70, has been working
as a professor at School of Energy & Power Engineering of Xi'an Jiaotong
University since 1986. Mr. Tao is currently an academician of the Chinese
Academy of Science, a member of the Advisory Board of Numerical Heat Transfer
and a member of Editorial Board of Progress in Computational Fluid Dynamics. In
addition, he is an associate editor of ASME Journal of Heat Transfer, associate
editor of International Journal of Heat & Mass Transfer, and an associate
editor of International Communications in Heat & Mass Transfer. In 2003, Mr.
Tao was honored by the Ministry of Education of China as National Distinguished
Professor. Mr. Tao graduated from Xian Jiaotong University with a M.S. and a
B.S. in Power Machinery Engineering.

William P. Haus, CFA.Mr. William Haus, age 46, has
extensive experience in business and finance for public companies as well as
China-based companies. Mr. Haus is a Senior Partner with Halter Financial Group
and works in its Shanghai, China office. From August 2008 to February 2010, Mr.
Haus was Chief Executive Officer and director of CS China Acquisition
Corporation, a Special Purpose Acquisition Corporation (SPAC) created to effect
a business combination with a China-based private company which it did
successfully on February 2, 2010. From September 2005 to May 2008, Mr. Haus was
an Analyst for The Pinnacle Fund & The Pinnacle China Fund, both of which
are hedge funds focused on investment opportunities in the United States and
China. From March 2000 to September 2005, Mr. Haus was an Equity Research
Analyst covering both the Healthcare Information Technology and Pharmaceutical
Outsourcing industries for two securities brokerage firms. Mr. Haus graduated
from the State University of New York College at Fredonia with a B.S. in
Business Administration and a B.A. in Economics and received a Master of
Business Administration in Finance from Boston University. Mr. Haus is a
Chartered Financial Analyst (CFA) and member of the CFA Institute.

To Tsang.Mr. To Tsang, age 34, has extensive knowledge
with overseas capital markets and has advised various PRC companies on their
pre-IPO restructurings, pre-IPO financing and securities offerings on the
overseas capital markets and has advised on numerous reverse acquisitions of
overseas public companies by PRC companies. Since May 2008, he has been a
partner at King & Wood, practicing mergers and acquisitions, corporate
restructurings, securities offerings, and other corporate advisory matters. From
April 2006 to April 2008, Mr. Tsang worked as a Hong Kong solicitor with DLA
Piper. From July 1997 to March 2006, Mr. Tsang worked as a Hong Kong trainee and
paralegal for Michael Cheuk, Wong & Kee. Mr. Tsang holds an LL.M. from the
University of London, a PCLL from the City University of Hong Kong, and an LL.B.
from Xiamen University. He is admitted as a Solicitor to the High Court of Hong
Kong as well as a PRC qualified lawyer.

Gerard Pascale. Mr. Pascale became our Chairman,
President, Chief Financial Officer and Secretary on February 12, 2009. On June
30, 2009, Mr. Pascale resigned from all offices he held with us. On the same
date, Mr. Pascale submitted his resignation as a member of our board of
directors, which will become effective on the 10th day following the mailing of
the Information Statement to our stockholders, which Information Statement was
mailed on June 30, 2009. Mr. Pascal is also the President and Founder of SC
Financial, LLC, which specializes in advising both US and international clients
on valuation, financial modeling and the responsibilities of publicly traded US
companies. For the previous three years, Mr. Pascale was responsible for
managing the affairs of clients of Heritage Management Consultants. In this role
he specialized in providing finance and SEC support throughout the entire
process of listing in the US. This role included developing business plans,
reviewing financial statement preparation, preparing financial projections and
budgets and preparing and making presentations to US investors. Mr. Pascale has
an MBA from the University of Chicago. Mr. Pascale has been a Certified Public
Accountant since 1993.

Except as noted above, there are no other agreements or
understandings for any of our executive officers or directors to resign at the
request of another person and no officer or director is acting on behalf of no
will any of them act at the direction of any other person.

Directors are elected until their successors are duly elected
and qualified.

40

---

Board Composition and Committees

The Board of Directors is currently composed of five members:
Guohong Zhao, Fucai Zhan, William Haus, Wenquan Tao and To Tsang.

We currently have standing audit, corporate governance and
nominating, and compensation committees.

Our audit committee comprises William Haus, Wenquan Tao and To
Tsang. William Haus serves as the chairman of the audit committee. The audit
committee is primarily responsible for reviewing the services performed by our
independent auditors, evaluating our accounting policies and our system of
internal controls. Mr. Haus serves as our audit committee financial expert as
that term is defined by the applicable SEC rules.

The corporate governance and nominating committee comprises
William Haus, Wenquan Tao and To Tsang with Mr. Tao as the chairman. The
committee is primarily responsible for nominating directors and setting policies
and procedures for the nomination of directors. The committee is also
responsible for overseeing the creation and implementation of our corporate
governance policies and procedures.

The compensation committee comprises William Haus, Wenquan Tao
and To Tsang with Mr. Tsang as the chairman. The compensation committee is
primarily responsible for reviewing and approving our compensation and benefit
policies, including compensation of executive officers.

Independent Directors

Our Board is currently composed of five members, three of
which, William Haus, Wenquan Tao and To Tsang, are independent as that term is
defined by Rule 4200(a)(15) of the NASDAQ listing standards.

Policy Regarding Board Attendance

Our directors are expected to attend Board meetings as
frequently as necessary to properly discharge their responsibilities and to
spend the time needed to prepare for each such meeting. Our directors are
expected to attend annual meetings of stockholders, but we do not have a formal
policy requiring them to do so.

Family Relationships

There are no family relationships among our directors or
officers.

Involvement in Certain Legal Proceedings

None of our directors or executive officers has, during the
past ten years:

- been convicted in a criminal proceeding or been subject to a pending
  criminal proceeding (excluding traffic violations and other minor offences);
- had any bankruptcy petition filed by or against the business or property of
  the person, or of any partnership, corporation or business association of
  which he was a general partner or executive officer, either at the time of the
  bankruptcy filing or within two years prior to that time;
- been subject to any order, judgment, or decree, not subsequently reversed,
  suspended or vacated, of any court of competent jurisdiction or federal or
  state authority, permanently or temporarily enjoining, barring, suspending or
  otherwise limiting, his involvement in any type of business, securities,
  futures, commodities, investment, banking, savings and loan, or insurance
  activities, or to be associated with persons engaged in any such activity;
- been found by a court of competent jurisdiction in a civil action or by the
  Securities and Exchange Commission or the Commodity Futures Trading Commission
  to have violated a federal or state securities or commodities law, and the
  judgment has not been reversed, suspended, or vacated;
- been the subject of, or a party to, any federal or state judicial or
  administrative order, judgment, decree, or finding, not subsequently reversed,
  suspended or vacated (not including any settlement of a civil proceeding among
  private litigants), relating to an alleged violation of any federal or state
  securities or commodities law or regulation, any law or regulation respecting
  financial institutions or insurance companies including, but not limited to, a
  temporary or permanent injunction, order of disgorgement or restitution, civil
  money penalty or temporary or permanent cease-and-desist order, or removal or
  prohibition order, or any law or regulation prohibiting mail or wire fraud or
  fraud in connection with any business entity; or
- been the subject of, or a party to, any sanction or order, not subsequently
  reversed, suspended or vacated, of any self-regulatory organization (as
  defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any
  registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act
(7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or
organization that has disciplinary authority over its members or persons
associated with a member.

41

---

Section 16(A) Beneficial Ownership Reporting
Compliance

Under U.S. securities laws, directors, certain executive
officers and persons holding more than 10% of our common stock must report their
initial ownership of the common stock, and any changes in that ownership, to the
SEC. The SEC has designated specific due dates for these reports.

Code of Ethics

On September 25, 2009, our board of directors adopted a new
code of ethics that applies to all of our directors, officers and employees,
including our principal executive officer, principal financial officer and
principal accounting officer. The new code replaces our prior code of ethics
that applied only to our principal executive officer, principal financial
officer, principal accounting officer or controller and any person who performed
similar functions, and addresses, among other things, honesty and ethical
conduct, conflicts of interest, compliance with laws, regulations and policies,
including disclosure requirements under the federal securities laws,
confidentiality, trading on inside information, and reporting of violations of
the code. A copy of the Code of Ethics can be found as Exhibit 14.1 in our
current report on Form 8-K filed on September 28, 2009.

Item 11. Executive Compensation

Summary Compensation Table Fiscal Years Ended December 31,
2009 and 2008

The following table sets forth information concerning all cash
and non-cash compensation awarded to, earned by or paid to the named persons for
services rendered in all capacities during the noted periods. No executive
officer received total annual salary and bonus compensation in excess of
$100,000.

|Name and Principal Position                           | Year    | Salary ($) | Total ($)
|----------------------------------------------------- | ------- | ---------- | ---------
|Guohong Zhao, CEO and
      President (1)             | 2009    | $16,724    | $16,724  
|2008                                                  | $16,724 | $16,724   
|Gerard Pascale, former
      Chairman and CEO (2)     | 2009    | -          | -        
|2008                                                  | -       | -         
|Timothy P. Halter, former
      President and CEO (3) | 2009    | -          | -        
|2008                                                  | -       | -         

|(1) | On June 30, 2009, we acquired Megaway in a reverse
      acquisition transaction that was structured as a share exchange and in
      connection with that transaction, Mr. Zhao became our Chief Executive
      Officer, President and director. Prior to the effective date of the
      reverse acquisition, Mr. Zhao served at Megaways wholly owned subsidiary
      Siping Juyuan as its chief executive officer. The annual, long term and
      other compensation shown in this table include the amount Mr. Zhao
      received from Siping Juyuan prior to the consummation of the reverse
      acquisition.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|(2) | Gerard Pascale resigned from all offices he held with us
      and his position as our director upon the closing of the reverse
      acquisition of Megaway on June 30, 2009.                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|(3) | Mr. Timothy P. Halter served as our President and sole
      director from our formation on August 7, 2006 until his resignation and
      appointment of Mr. Pascale on February 12, 2009.                                                                                                                                                                                                                                                                                                                                                                                                                               

Employment Agreements

We do not have any employment agreement with any of our
management.

We have not provide retirement benefits (other than a state
pension scheme in which all of our employees in China participate) or severance
or change of control benefits to our named executive officer.

42

---

Outstanding Equity Awards at Fiscal Year End

None of our executive officers received any equity awards,
including, options, restricted stock or other equity incentives during the
fiscal year ended December 31, 2009.

Payment of Post-Termination Compensation

The Company does not have change-in-control agreements with any
of its executive officers, and the Company is not obligated to pay severance or
other enhanced benefits to executive officers upon termination of their
employment.

Director Compensation

The following table sets forth all compensation awarded to,
earned by or paid to the directors in 2009:

|Name            |   | Fees Earned or Paid in Cash |  |  | Stock Awards |  |  | Option Awards |  |   | Total | 
|--------------- | - | --------------------------- |  |  | ------------ |  |  | ------------- |  | - | ----- | 
|Guohong Zhao    |   | N/A                         |  |  | N/A          |  |  | N/A           |  |   | N/A   | 
|Fucai Zhan      |   | N/A                         |  |  | N/A          |  |  | N/A           |  |   | N/A   | 
|Wenquan Tao     | $ | 6,000                       |  |  | N/A          |  |  | N/A           |  | $ | 6,000 | 
|To Tsang        | $ | 6,000                       |  |  | N/A          |  |  | N/A           |  | $ | 6,000 | 
|William P. Haus | $ | 9,000                       |  |  | N/A          |  |  | N/A           |  | $ | 9,000 | 

William Haus, Wenquan Tao and To Tsang were appointed director
effective as of September 25, 2009. On the same day, the Company entered into
separate independent director contracts and indemnification agreements with each
of them. Under the terms of the independent directors contracts, the Company
agreed to pay Mr. Tao an annual fee of $24,000, Mr. Tsang an annual fee of
$24,000 and Mr. Haus an annual fee of $36,000, as compensation for the services
to be provided by them as independent directors. Under the terms of the
indemnification agreement, we agreed to indemnify the independent director
against expenses, judgments, fines, penalties or other amounts actually and
reasonably incurred by the independent director in connection with any
proceeding if the independent director acted in good faith and in our best
interests. It is our practice to reimburse our directors for reasonable travel
expenses related to attendance at board of directors and committee meetings.

Mr. Guohong Zhao and Mr. Fucai Zhan are paid in their capacity
as executive officers of the Company and they do not receive any additional
compensation for their service as directors.

Limitation of Liability and Indemnification of Officers and
Directors

Our bylaws provide for the indemnification of our present and
prior directors and officers or any person who may have served at our request as
a director or officer of another corporation in which we own shares of capital
stock or of which we are a creditor against expenses actually and necessarily
incurred by them in connection with the defense of any actions, suits or
proceedings in which they, or any of them, are made parties, or a party, by
reason of being or having been director(s) or officer(s) of us or of such other
corporation, in the absence of negligence or misconduct in the performance of
their duties. This indemnification policy could result in substantial
expenditure by us, which we may be unable to recoup.

Insofar as indemnification by us for liabilities arising under
the Securities Exchange Act of 1934 may be permitted to our directors, officers
and controlling persons pursuant to provisions of the Articles of Incorporation
and Bylaws, or otherwise, we have been advised that in the opinion of the SEC,
such indemnification is against public policy and is, therefore, unenforceable.
In the event that a claim for indemnification by such director, officer or
controlling person of us in the successful defense of any action, suit or
proceeding is asserted by such director, officer or controlling person, we will,
unless in the opinion of our counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by us is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.

At the present time, there is no pending litigation or
proceeding involving a director, officer, employee or other agent of ours in
which indemnification would be required or permitted. We are not aware of any
threatened litigation or proceeding which may result in a claim for such
indemnification.

Item 12. Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters .

The following table sets forth information regarding beneficial
ownership of our common stock as of March 26, 2010 (i) by each person who is
known by us to beneficially own more than 5% of our common stock; (ii) by each
of our officers and directors; and (iii) by all of our officers and directors as
a group.

43

---

Unless otherwise specified, the address of each of the persons
set forth below is in care of Siping Juyuan, THT Industrial Park, No. 5 Nanhuan
Road, Tiexi District, Siping City, Jilin Province, Peoples Republic of China.

Name and Address of Beneficial
      Owner
    Office, If Any
    Title of Class
    Amount and Nature of
      Beneficial Ownership(1)
    Percent of
      Class(2)Officers and
      DirectorsGerard Pascale 28 Cottonwood Lane Hilton Head, SC
      29926
    Director (4)
    Common stock, $0.001 par value
    19,412
    *Guohong Zhao
    Chairman, CEO and President
    Common stock, $0.001 par
      value
    0
    *Jianjun He
    Chief Financial Officer
    Common stock, $0.001 par value
    0
    *Yue Cui
    Vice President of
      Production
    Common stock, $0.001 par
      value
    0
    *Fucai Zhan
    Vice President of R&D
    Common stock, $0.001 par value
    0
    *All officers and directors as a group
      (5 persons named above)
    
    Common stock, $0.001 par
      value
    19,412
    *5% Security HoldersWisetop International Holdings Limited
    
    Common stock, $0.001 par
      value
    14,800,000
    92.5%Jinghua Zhao
    
    Common stock, $0.001 par value
    14,800,000(3)
    92.5%


* Less than 1%

|(1) | Beneficial Ownership is determined in accordance with the
      rules of the SEC and generally includes voting or investment power with
      respect to securities. Each of the beneficial owners listed above has
      direct ownership of and sole voting power and investment power with
      respect to the shares of our common stock.                                                                                                                                                                                                                                                                                                                                                                                                                                      
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|(2) | A total of 16,000,000 shares of our common stock are
      considered to be outstanding pursuant to SEC Rule 13d-3(d)(1) as of June
      25, 2009. For each beneficial owner above, any options exercisable within
      60 days have been included in the denominator.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|(3) | Represents 14,800,000 shares that are indirectly held by
      Ms. Zhao, through Wisetop International Holdings Limited, a BVI company
      owned and controlled by her. The shares held by Wisetop are subject to an
      option agreement, which gives 19 original founders of Siping Juyuan an
      option to acquire an aggregate of 10,240,786 shares our common stock
      currently owned by Wisetop. In addition, Ms. Zhaos ownership interests in
      Wisetop are subject to an option agreement, which gives our Chairman and
      CEO, Mr. Guohong Zhao, an option to acquire all of Ms. Zhaos ownership
      interests in Wisetop. For details regarding these option agreements, see
      our disclosures under Transactions with Related Persons
  below.

Changes in Control

Pursuant to an option agreement, dated June 30, 2009, between
Ms. Jinghua Zhao and Mr. Guohong Zhao, Mr. Zhao was granted an option to acquire
all of the equity interests of Wisetop owned by Ms. Zhao. In addition, pursuant
to an option agreement, dated June 30, 2009, between Wisetop and 19 original
founders of Siping Juyuan, the founders were granted an option to acquire an
aggregate of 10,240,786 shares our common stock currently owned by Wisetop. For
details regarding these option agreements, see our disclosures under
Transactions with Related Persons below. Other than the foregoing, we do not
currently have any arrangements which if consummated may result in a change of
control of our Company.

(4) Gerald Pascale resigned from his position as a director on
June 30, 2009, the day that we consummated our reverse acquisition of
Megaway.

Item 13. Certain Relationships and Related Transactions, and
Director Independence

Transactions with Related Persons

The following includes a summary of transactions since the
beginning of the last fiscal year, or any currently proposed transaction, in
which we were or are to be a participant and the amount involved exceeded or
exceeds $120,000, and in which any related person had or will have a direct or
indirect material interest (other than compensation described under Executive
Compensation). We believe the terms obtained or consideration that we paid or received, as applicable, in
connection with the transactions described below were comparable to terms
available or the amounts that would be paid or received, as applicable, in
arm's-length transactions.

44

---

- On June 30, 2009, we entered into the Cancellation Agreement with Mr.
  Gerald Pascale, whereby Mr. Pascale agreed to the cancellation of 4,805,387
  shares of our common stock owned by him. At the time he entered into the
  Cancellation Agreement, Mr. Pascale was our sole director and officer.
- On June 30, 2009, Mr. Guohong Zhao, our Chairman and CEO and a founder of
  Siping Juyuan, entered into an option agreement with Ms. Jinghua Zhao, an
  Australian citizen the sole shareholder of Wisetop, pursuant to which Mr. Zhao
  was granted an option to acquire all of the equity interests of Wisetop owned
  by Ms. Zhao. Mr. Zhao may exercise the option, in whole but not in part,
  during the period commencing on the 180thday following of the date
  of the option agreement and ending on the second anniversary of the date
  thereof.
- June 30, 2009, Wisetop entered into separate option agreements with the
  other original founders of Siping Juyuan, pursuant to which such founders were
  granted options to purchase an aggregate of 10,240,786 shares of our common
  stock owned by Wisetop. The founders may exercise these options during the
  period commencing on the 90thday following of the date of the
  option agreement and ending on the second anniversary of the date thereof.

Except as set forth in our discussion above, none of our
directors, director nominees or executive officers has been involved in any
transactions with us or any of our directors, executive officers, affiliates or
associates which are required to be disclosed pursuant to the rules and
regulations of the SEC.

Promoters and Certain Control Persons

We did not have any promoters at any time during the past five
fiscal years.

Director Independence

Our Board is currently composed of 5 members, of which Wenquan
Tao, To Tsang and William Haus are independent as that term is defined under
the NASDAQ listing standards.

All actions of the board of directors require the approval of a
majority of the directors in attendance at a meeting at which a quorum is
present. Our directors have a duty of to act in good faith with a view to our
interests. In fulfilling their duty of care to us, our directors must ensure
compliance with our Certificate of Incorporation. During 2009, our board met one
time and no director missed any meetings of the board.

Item 14. Principal Accountant Fees and Services.

PKF and SW Hatfield were engaged to examine the Companys  financial
statements for the fiscal years ended December 31, 2009 and 2008 respectively.

Audit Fees. PKF and SW Hatfield were paid aggregate fees of approximately
$86,000 and $4,450 for the fiscal years ended December 31, 2009 and 2008,
respectively, for professional services rendered for the audit of our annual
financial statements.

Tax Fees.There was no tax fees paid to PKF for the
fiscal year ended December 31, 2009. $200 tax fees were paid to SW Hatfield for
the year ended December 31, 2008.

All Other Fees. PKF and SW Hatfield were
paid no other fees for professional services during the fiscal years ended
December 31, 2009 and 2008 respectively.

Board of Directors Pre-Approval Policies and
Procedures

Our Board of Directors has adopted the policy to pre-approve
audit and permissible non-audit services provided by our independent
auditors.

PART IV

Item 15. Exhibits, Financial Statement and Schedules

|(a) | The following documents
      are filed as part of this Report:              
|--- | -----------------------------------------------------------------------------
|(1) | Financial Statements are set forth beginning
      on page F-1 of this Report
|    | Section 1.                                                                   

|    | Section 2.                                                                                                                                                                                                                                        | Consolidated
      Balance Sheets                                | F-3     
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------- | --------
|    | Section 3.                                                                                                                                                                                                                                        | Consolidated Statements of
      Income and Comprehensive Income | F-4     
|    | Section 4.                                                                                                                                                                                                                                        | Consolidated
      Statement of Equity                           | F-5     
|    | Section 5.                                                                                                                                                                                                                                        | Consolidated Statements of
      Cash Flows                      | F-6     
|    | Section 6.                                                                                                                                                                                                                                        | Notes to Consolidated
      Statements                           | F-7-F-25
|(2) | Financial Statement Schedules: All Schedules
      are omitted because the information called for is not applicable, is not
      required, or because the financial information is set forth in the financial
      statements or notes thereto.
|(3) | Exhibits                                                                                                                                                                                                                                          |                                                                  |         

45

---

Exhibits (Including Those Incorporated By Reference).

Exhibit Index

|Exhibit No. | Description                                                                                                                                                                                                                                                                                                                                                                                                             
|----------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.1         | Share Exchange Agreement, dated June 30, 2009, among the
      Company, Megaway International Holdings Limited and its sole shareholder.
      [Incorporated by reference to Exhibit 2.1 to the Companys Current Report
      on Form 8-K filed on July 7, 2009].                                                                                                                                                      
|2.2         | Share Exchange Agreement, dated February 12, 2009, among
      the Company, Sino- America Ventures, Inc. and its stockholders
      [Incorporated by reference to Exhibit 2.1 to the Companys Current Report
      on Form 8-K filed on February 13, 2009].                                                                                                                                                            
|2.3         | First Amended, Chapter 11 Plan of Reorganization
      [Incorporated by reference to Exhibit 2.1 to the Companys Registration
      Statement on Form 10 filed on September 21, 2006].                                                                                                                                                                                                                                 
|2.4         | Order Confirming First Amended, Chapter 11 Plan of
      Reorganization [Incorporated by reference to Exhibit 2.2 to the Companys
      Registration Statement on Form 10 filed on September 21, 2006].                                                                                                                                                                                                                
|2.5         | Agreement and Plan of Merger, dated November 24, 2009,
      between BTHC VIII, Inc. and THT Heat Transfer Technology, Inc.
      [Incorporated by reference to Exhibit 2.1 to the Companys Current Report
      on Form 8-K filed on December 4, 2009].                                                                                                                                                               
|3.1         | Certificate of Incorporation of the Company [Incorporated
      by reference to Exhibit 3.4 to the Companys Registration Statement on
      Form 10 filed on September 21, 2006].                                                                                                                                                                                                                                      
|3.2         | Certificate of Merger of BTHC VIII, LLC into the Company
      [Incorporated by reference to Exhibit 3.2 to the Companys Registration
      Statement on Form 10 filed on September 21, 2006].                                                                                                                                                                                                                         
|3.3         | Certificate of Amendment of Certificate of Incorporation
      of the Company [Incorporated by reference to Exhibit 3.1 to the Companys
      Current Report on Form 8-K filed on October 16, 2007]                                                                                                                                                                                                                    
|3.4         | Bylaws of the Company [Incorporated by reference to
      Exhibit 3.5 to the Companys Registration Statement on Form 10 filed on
      September 21, 2006].                                                                                                                                                                                                                                                            
|3.5         | Articles of Incorporation of THT Heat Transfer
      Technology, Inc. [Incorporated by reference to Exhibit 3.1 to the                                                                                                                                                                                                                                                                                                  
|            | Companys Current Report on Form 8-K filed on December 4,
      2009].                                                                                                                                                                                                                                                                                                                                                  
|3.6         | Bylaws of THT Heat Transfer Technology, Inc.
      [Incorporated by reference to Exhibit 3.2 to the Companys Current Report
      on Form 8-K filed on December 4, 2009].                                                                                                                                                                                                                                              
|4.1         | Cancellation Agreement, dated June 30, 2009, by and
      between the Company and Gerald Pascale [Incorporated by reference to
      Exhibit 4.1 to the Companys Current Report on Form 8-K filed on July 7,
      2009].                                                                                                                                                                                              
|10.1        | Commission Loan Agreement (English translation), dated
      July 24, 3008, by and among Siping Juyuan, Siping City Fu Guo Investment
      and Development Co., Ltd. and Siping City Credit Association Union
      [Incorporated by reference to Exhibit 10.1 to the Companys Current Report
      on Form 8-K filed on July 7, 2009].                                                                               
|10.2        | Loan Agreement (English translation), dated September 27,
      2008, by and between Siping Juyuan and Siping Branch of Agriculture Bank
      of China[Incorporated by reference to Exhibit 10.2 to the Companys
      Current Report on Form 8-K filed on July 7, 2009].                                                                                                                                             
|10.3        | Loan Agreement (English translation) , dated September
      27, 2007, by and between Siping Juyuan and Siping Branch of Agriculture
      Bank of China. [Incorporated by reference to Exhibit 10.3 to the Companys
      Current Report on Form 8-K filed on July 7, 2009].                                                                                                                                          
|10.4        | Maximum Amount Mortgage Agreement (English translation),
      dated September 27, 2007, by and among Siping Juyuan, Siping City Ju Yuan
      Heat Exchange Equipment Co., Ltd , Siping City Ju Yuan Han Yang Pressure
      Vessel Co., Ltd. and Siping Branck of Agriculture Bank of China
      [Incorporated by reference to Exhibit 10.4 to the Companys Current Report
      on Form 8-K filed on July 7, 2009].
|10.5        | Form of Labor Contract (English translation) for
      contracts signed before January 1, 2008, by and between Siping Juyuan and
      its employees [Incorporated by reference to Exhibit 10.5 to the Companys
      Current Report on Form 8-K filed on July 7, 2009].                                                                                                                                               
|10.6        | Form of Non-Disclosure Agreement (English translation)
      for agreements signed before January 1, 2008, by and between Siping Juyuan
      and its employees [Incorporated by reference to Exhibit 10.6 to the
      Companys Current Report on Form 8-K filed on July 7, 2009].                                                                                                                                    

46

---

|Exhibit No. | Description                                                                                                                                                                                                                                                            
|----------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.7        | Form Labor Contract (English translation) for contracts
      signed after January 1, 2008, by and between Siping Juyuan and its
      employees [Incorporated by reference to Exhibit 10.7 to the Companys
      Current Report on Form 8-K filed on July 7, 2009].  
|10.8        | Form of Supplementary Agreement of Labor Contract
      (English translation), by and between Siping Juyuan and its employees
      [Incorporated by reference to Exhibit 10.8 to the Companys Current Report
      on Form 8-K filed on July 7, 2009].               
|10.9        | BTHC VIII, Inc. Independent Directors Contract, dated as
      of September 25, 2009, by and between BTHC VIII, Inc. and Wenquan Tao
      [Incorporated by reference to Exhibit 10.1 to the Companys Current Report
      on Form 8-K filed on September 28, 2009]. 
|10.10       | BTHC VIII, Inc. Independent Directors Contract, dated as
      of September 25, 2009, by and between BTHC VIII, Inc. and William Haus
      [Incorporated by reference to Exhibit 10.2 to the Companys Current Report
      on Form 8-K filed on September 28, 2009].
|10.11       | BTHC VIII, Inc. Independent Directors Contract, dated as
      of September 25, 2009, by and between BTHC VIII, Inc. and To Tsang
      [Incorporated by reference to Exhibit 10.3 to the Companys Current Report
      on Form 8-K filed on September 28, 2009].    
|10.12       | Indemnification Agreement, dated as of September 25,
      2009, by and between BTHC VIII, Inc. and Wenquan Tao [Incorporated by
      reference to Exhibit 10.4 to the Companys Current Report on Form 8-K
      filed on September 28, 2009].                       
|10.13       | Indemnification Agreement, dated as of September 25,
      2009, by and between BTHC VIII, Inc. and William Haus [Incorporated by
      reference to Exhibit 10.5 to the Companys Current Report on Form 8-K
      filed on September 28, 2009].                      
|10.14       | Indemnification Agreement, dated as of September 25,
      2009, by and between BTHC VIII, Inc. and To Tsang [Incorporated by
      reference to Exhibit 10.6 to the Companys Current Report on Form 8-K
      filed on September 28, 2009].                          
|16          | Letter from SW Hatfield CPA regarding change in
      certifying accountant. [Incorporated by reference to Exhibit 16 to the
      Companys Current Report on Form 8-K filed on July 7, 2009].                                                                        
|21          | Subsidiaries of the Company [Incorporated by reference to
      Exhibit 21 to the Companys Current Report on Form 8-K filed on July 7,
      2009].                                                                                                                   
|31.1        | Certification of  Guohong Zhao, President and Chief Executive
      Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                
|31.2        | Certification of Jianjun He, Chief Financial Officer, pursuant to Section
      302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                 
|32.1        | Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuit to
      section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                            
|32.2        | Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuit to
      section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                            

47

---

SIGNATURES

Pursuant to the requirements of
Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

|               | THT HEAT TRANSFER         
|-------------- | --------------------------
|               | TECHNOLOGY, INC.          
|               |                           
|March 30, 2010 | By
      :/s/ Guohong Zhao
|(Date Signed)  | Guohong Zhao, President   

Pursuant to the requirements of
the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the Company in the capacities and on the dates
indicated.

Each person whose signature
appears below hereby authorizes Guohong Zhao as attorney-in-fact to sign on his
behalf, individually, and in each capacity stated below, and to file all
amendments and/or supplements to this annual report on Form 10-K.

|Signature              |  | Capacity                                                                 | Date          
|---------------------- |  | ------------------------------------------------------------------------ | --------------
|                       |  |                                                                          |               
|/s/ Guohong Zhao       |  | President, Director and Chief Executive Officer
      (Principal         |               
|                       |  | Executive Officer)                                                       | March 30, 2010
|Guohong Zhao           |  |                                                                          |               
|                       |  |                                                                          |               
|/s/ Jianjun He         |  | Chief Financial Officer (Principal Financial
      Officer and Principal |               
|                       |  | Accounting                                                               | March 30, 2010
|Jianjun He             |  | Officer)                                                                 |               
|                       |  |                                                                          |               
|/s/ To Tsang           |  | Director                                                                 | March 30, 2010
|To Tsang               |  |                                                                          |               
|                       |  |                                                                          |               
|/s/ William
      Haus |  | Director                                                                 | March 30, 2010
|William Haus           |  |                                                                          |               
|                       |  |                                                                          |               
|/s/ Wenquan Tao        |  | Director                                                                 | March 30, 2010
|Wenquan Tao            |  |                                                                          |               
|                       |  |                                                                          |               
|/s/ Fucai Zhan         |  | Vice President of R&D and Director                                       | March 30, 2010
|Fucai Zhan             |  |                                                                          |               

48

---

Exhibit Index

|Exhibit No. | Description                                                                                                                                                                                                                                                                                                                                                                                                             
|----------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.1         | Share Exchange Agreement, dated June 30, 2009, among the
      Company, Megaway International Holdings Limited and its sole shareholder.
      [Incorporated by reference to Exhibit 2.1 to the Companys Current Report
      on Form 8-K filed on July 7, 2009].                                                                                                                                                      
|2.2         | Share Exchange Agreement, dated February 12, 2009, among
      the Company, Sino- America Ventures, Inc. and its stockholders
      [Incorporated by reference to Exhibit 2.1 to the Companys Current Report
      on Form 8-K filed on February 13, 2009].                                                                                                                                                            
|2.3         | First Amended, Chapter 11 Plan of Reorganization
      [Incorporated by reference to Exhibit 2.1 to the Companys Registration
      Statement on Form 10 filed on September 21, 2006].                                                                                                                                                                                                                                 
|2.4         | Order Confirming First Amended, Chapter 11 Plan of
      Reorganization [Incorporated by reference to Exhibit 2.2 to the Companys
      Registration Statement on Form 10 filed on September 21, 2006].                                                                                                                                                                                                                
|2.5         | Agreement and Plan of Merger, dated November 24, 2009,
      between BTHC VIII, Inc. and THT Heat Transfer Technology, Inc.
      [Incorporated by reference to Exhibit 2.1 to the Companys Current Report
      on Form 8-K filed on December 4, 2009].                                                                                                                                                               
|3.1         | Certificate of Incorporation of the Company [Incorporated
      by reference to Exhibit 3.4 to the Companys Registration Statement on
      Form 10 filed on September 21, 2006].                                                                                                                                                                                                                                      
|3.2         | Certificate of Merger of BTHC VIII, LLC into the Company
      [Incorporated by reference to Exhibit 3.2 to the Companys Registration
      Statement on Form 10 filed on September 21, 2006].                                                                                                                                                                                                                         
|3.3         | Certificate of Amendment of Certificate of Incorporation
      of the Company [Incorporated by reference to Exhibit 3.1 to the Companys
      Current Report on Form 8-K filed on October 16, 2007]                                                                                                                                                                                                                    
|3.4         | Bylaws of the Company [Incorporated by reference to
      Exhibit 3.5 to the Companys Registration Statement on Form 10 filed on
      September 21, 2006].                                                                                                                                                                                                                                                            
|3.5         | Articles of Incorporation of THT Heat Transfer
      Technology, Inc. [Incorporated by reference to Exhibit 3.1 to the
      Companys Current Report on Form 8-K filed on December 4, 2009].                                                                                                                                                                                                                           
|3.6         | Bylaws of THT Heat Transfer Technology, Inc.
      [Incorporated by reference to Exhibit 3.2 to the Companys Current Report
      on Form 8-K filed on December 4, 2009].                                                                                                                                                                                                                                              
|4.1         | Cancellation Agreement, dated June 30, 2009, by and
      between the Company and Gerald Pascale [Incorporated by reference to
      Exhibit 4.1 to the Companys Current Report on Form 8-K filed on July 7,
      2009].                                                                                                                                                                                              
|10.1        | Commission Loan Agreement (English translation), dated
      July 24, 3008, by and among Siping Juyuan, Siping City Fu Guo Investment
      and Development Co., Ltd. and Siping City Credit Association Union
      [Incorporated by reference to Exhibit 10.1 to the Companys Current Report
      on Form 8-K filed on July 7, 2009].                                                                               
|10.2        | Loan Agreement (English translation), dated September 27,
      2008, by and between Siping Juyuan and Siping Branch of Agriculture Bank
      of China[Incorporated by reference to Exhibit 10.2 to the Companys
      Current Report on Form 8-K filed on July 7, 2009].                                                                                                                                             
|10.3        | Loan Agreement (English translation) , dated September
      27, 2007, by and between Siping Juyuan and Siping Branch of Agriculture
      Bank of China. [Incorporated by reference to Exhibit 10.3 to the Companys
      Current Report on Form 8-K filed on July 7, 2009].                                                                                                                                          
|10.4        | Maximum Amount Mortgage Agreement (English translation),
      dated September 27, 2007, by and among Siping Juyuan, Siping City Ju Yuan
      Heat Exchange Equipment Co., Ltd , Siping City Ju Yuan Han Yang Pressure
      Vessel Co., Ltd. and Siping Branck of Agriculture Bank of China
      [Incorporated by reference to Exhibit 10.4 to the Companys Current Report
      on Form 8-K filed on July 7, 2009].
|10.5        | Form of Labor Contract (English translation) for
      contracts signed before January 1, 2008, by and between Siping Juyuan and
      its employees [Incorporated by reference to Exhibit 10.5 to the Companys
      Current Report on Form 8-K filed on July 7, 2009].                                                                                                                                               
|10.6        | Form of Non-Disclosure Agreement (English translation)
      for agreements signed before January 1, 2008, by and between Siping Juyuan
      and its employees [Incorporated by reference to Exhibit 10.6 to the
      Companys Current Report on Form 8-K filed on July 7, 2009].                                                                                                                                    
|10.7        | Form Labor Contract (English translation) for contracts
      signed after January 1, 2008, by and between Siping Juyuan and its employees [Incorporated by reference to Exhibit 10.7
      to the Companys Current Report on Form 8-K filed on July 7, 2009].                                                                                                                                                         

49

---

|Exhibit No. | Description                                                                                                                                                                                                                                                            
|----------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.8        | Form of Supplementary Agreement of Labor Contract
      (English translation), by and between Siping Juyuan and its employees
      [Incorporated by reference to Exhibit 10.8 to the Companys Current Report
      on Form 8-K filed on July 7, 2009].               
|10.9        | BTHC VIII, Inc. Independent Directors Contract, dated as
      of September 25, 2009, by and between BTHC VIII, Inc. and Wenquan Tao
      [Incorporated by reference to Exhibit 10.1 to the Companys Current Report
      on Form 8-K filed on September 28, 2009]. 
|10.10       | BTHC VIII, Inc. Independent Directors Contract, dated as
      of September 25, 2009, by and between BTHC VIII, Inc. and William Haus
      [Incorporated by reference to Exhibit 10.2 to the Companys Current Report
      on Form 8-K filed on September 28, 2009].
|10.11       | BTHC VIII, Inc. Independent Directors Contract, dated as
      of September 25, 2009, by and between BTHC VIII, Inc. and To Tsang
      [Incorporated by reference to Exhibit 10.3 to the Companys Current Report
      on Form 8-K filed on September 28, 2009].    
|10.12       | Indemnification Agreement, dated as of September 25,
      2009, by and between BTHC VIII, Inc. and Wenquan Tao [Incorporated by
      reference to Exhibit 10.4 to the Companys Current Report on Form 8-K
      filed on September 28, 2009].                       
|10.13       | Indemnification Agreement, dated as of September 25,
      2009, by and between BTHC VIII, Inc. and William Haus [Incorporated by
      reference to Exhibit 10.5 to the Companys Current Report on Form 8-K
      filed on September 28, 2009].                      
|10.14       | Indemnification Agreement, dated as of September 25,
      2009, by and between BTHC VIII, Inc. and To Tsang [Incorporated by
      reference to Exhibit 10.6 to the Companys Current Report on Form 8-K
      filed on September 28, 2009].                          
|16          | Letter from SW Hatfield CPA regarding change in
      certifying accountant. [Incorporated by reference to Exhibit 16 to the
      Companys Current Report on Form 8-K filed on July 7, 2009].                                                                        
|21          | Subsidiaries of the Company [Incorporated by reference to
      Exhibit 21 to the Companys Current Report on Form 8-K filed on July 7,
      2009].                                                                                                                   

|31.1 | Certification of  Guohong Zhao, President and Chief Executive
      Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|---- | ---------------------------------------------------------------------------------------------------------------------------------------
|31.2 | Certification of Jianjun He, Chief Financial Officer, pursuant to Section
      302 of the Sarbanes-Oxley Act of 2002.                 
|32.1 | Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuit to
      section 906 of the Sarbanes-Oxley Act of 2002            
|32.2 | Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuit to
      section 906 of the Sarbanes-Oxley Act of 2002            

50

---

THT Heat Transfer Technology Inc.

Consolidated Financial Statements

---

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

|                                                                       | Page      
|---------------------------------------------------------------------- | ----------
|Report of Independent Registered
      Public Accounting Firm          | F-2       
|Consolidated Balance Sheets                                            | F-3       
|Consolidated Statements
      of Income and Other Comprehensive Income | F-4       
|Consolidated Statement of Equity                                       | F-5       
|Consolidated Statements
      of Cash Flows                            | F-6       
|Notes to Consolidated Financial Statements                             | F-7 - F-26

F-1

---

Report of Independent Registered Public Accounting Firm

To the Directors and Stockholders of THT Heat Transfer
Technology Inc.

We have audited the accompanying consolidated balance sheets of
THT Heat Transfer Technology Inc. (the Company) and its subsidiaries as of
December 31, 2009 and 2008, and the related consolidated statements of income
and comprehensive income, equity and cash flows for each of the two years in the
period ended December 31, 2009. These financial statements are the
responsibility of the Companys management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
the Company and its subsidiaries as of December 31, 2009 and 2008, and the
consolidated results of their operations and their cash flows for each of the
two years in the period ended December 31, 2009 in conformity with accounting
principles generally accepted in the United States of America.

/s/ PKF Certified Public Accountants Hong Kong, China
March 29, 2010

F-2

---

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

|                                                                                     |   | As of December 31, | 
|------------------------------------------------------------------------------------ | - | ------------------ | 
|                                                                                     |   | 2009               | 
|ASSETS                                                                               |   |                    | 
|Current assets                                                                       |   |                    | 
|Cash and
      cash equivalents                                                      | $ | 5,379,627          | 
|Restricted cash - Note 4                                                             |   | 1,376,114          | 
|Trade
      receivables, net - Note 5                                                |   | 14,882,408         | 
|Bills receivable                                                                     |   | 487,803            | 
|Other
      receivables, prepayments and deposits, net - Note 6                      |   | 6,312,268          | 
|Income tax recoverable                                                               |   | -                  | 
|Inventories, net - Note 7                                                            |   | 10,158,203         | 
|Deferred tax assets -
      Note 8                                                   |   | 96,858             | 
|                                                                                     |   |                    | 
|Total current assets                                                                 |   | 38,693,281         | 
|Retention receivable                                                                 |   | 795,144            | 
|Counter guarantee receivable - Note 13                                               |   | 204,762            | 
|Property, plant and
      equipment, net - Note 9                                    |   | 6,416,112          | 
|Land use rights - Note 10                                                            |   | 990,181            | 
|                                                                                     |   |                    | 
|TOTAL ASSETS                                                                         | $ | 47,099,480         | 
|                                                                                     |   |                    | 
|LIABILITIES AND EQUITY                                                               |   |                    | 
|                                                                                     |   |                    | 
|LIABILITIES                                                                          |   |                    | 
|Current liabilities                                                                  |   |                    | 
|Trade payables                                                                       | $ | 1,900,599          | 
|Bills
      payable - Note 4                                                         |   | -                  | 
|Other payables and
      accrued expenses - Note 11                                  |   | 12,634,290         | 
|Income
      tax payable                                                             |   | 474,492            | 
|Short-term bank loans -
      Note 12                                                |   | 5,850,348          | 
|Current
      maturities of long-term loan - Note 13                                 |   | 1,755,104          | 
|                                                                                     |   |                    | 
|Total current
      liabilities                                                      |   | 22,614,833         | 
|Long-term loan - Note 13                                                             |   | 1,608,846          | 
|                                                                                     |   |                    | 
|TOTAL LIABILITIES                                                                    |   | 24,223,679         | 
|                                                                                     |   |                    | 
|COMMITMENTS AND CONTINGENCIES- Note 19                                               |   |                    | 
|                                                                                     |   |                    | 
|STOCKHOLDERS EQUITY                                                                 |   |                    | 
|Preferred stock : par
      value of $0.001 per share                                |   |                    | 
|Authorized 10,000,000
      shares, none issued and outstanding                      |   |                    | 
|Common stock : par
      value $0.001 per share - Note 14                            |   |                    | 
|Authorized 40,000,000
      shares in 2009 and 2008;                                 |   |                    | 
|issued and outstanding 16,000,000 shares in 2009 and 14,800,000 shares in
      2008 |   | 16,000             | 
|Additional paid-in capital                                                           |   | 14,010,700         | 
|Statutory reserve -
      Note 15                                                    |   | 863,304            | 
|Accumulated other comprehensive income                                               |   | 718,884            | 
|Retained earnings                                                                    |   | 7,025,634          | 
|                                                                                     |   |                    | 
|Total THT Heat Transfer Technology
      Inc. stockholders equity                   |   | 22,634,522         | 
|Noncontrolling interests                                                             |   | 241,279            | 
|                                                                                     |   |                    | 
|TOTAL EQUITY                                                                         |   | 22,875,801         | 
|                                                                                     |   |                    | 
|TOTAL LIABILITIES AND EQUITY                                                         | $ | 47,099,480         | 

See Notes to Consolidated Financial Statements

F-3

---

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

|                                                                                                         |   | Year ended December 31, |  
|-------------------------------------------------------------------------------------------------------- | - | ----------------------- | -
|                                                                                                         |   | 2009                    |  
|                                                                                                         |   |                         |  
|Sales revenue - Note 20                                                                                  | $ | 34,890,853              |  
|Cost of sales                                                                                            |   | (19,967,695             | )
|                                                                                                         |   |                         |  
|Gross profit                                                                                             |   | 14,923,158              |  
|                                                                                                         |   |                         |  
|Operating expenses                                                                                       |   |                         |  
|Administrative expenses                                                                                  |   | 3,064,790               |  
|Research and development expenses                                                                        |   | 1,096,285               |  
|Selling expenses                                                                                         |   | 5,782,045               |  
|                                                                                                         |   |                         |  
|                                                                                                         |   | 9,943,120               |  
|                                                                                                         |   |                         |  
|Income from operations                                                                                   |   | 4,980,038               |  
|Interest income                                                                                          |   | 16,672                  |  
|Other income - Note 16                                                                                   |   | 491,557                 |  
|Interest expense                                                                                         |   | (681,355                | )
|                                                                                                         |   |                         |  
|Income before income taxes and noncontrolling
      interests                                            |   | 4,806,912               |  
|Income taxes - Note 8                                                                                    |   | (663,991                | )
|                                                                                                         |   |                         |  
|Net income before noncontrolling interests                                                               |   | 4,142,921               |  
|Net loss attributable to noncontrolling interests -
      Note 3                                         |   | 76,615                  |  
|                                                                                                         |   |                         |  
|Net income attributable to THT Heat Transfer Technology
      Inc. common stockholders                   | $ | 4,219,536               |  
|                                                                                                         |   |                         |  
|Net income before noncontrolling interests                                                               | $ | 4,142,921               |  
|Other comprehensive (loss) income                                                                        |   |                         |  
|Foreign currency translation
      adjustments                                                           |   | (54,116                 | )
|                                                                                                         |   |                         |  
|Comprehensive income                                                                                     |   | 4,088,805               |  
|Comprehensive loss (income) attributable to
      noncontrolling interests                               |   | 77,615                  |  
|                                                                                                         |   |                         |  
|Comprehensive income attributable to THT Heat Transfer
      Technology Inc. common stockholders         | $ | 4,166,420               |  
|                                                                                                         |   |                         |  
|Earnings per share attributable to THT Heat Transfer
      Technology Inc. common stockholders - Note 17 | $ | 0.27                    |  
|                                                                                                         |   |                         |  
|Weighted average number of shares outstanding                                                            |   |                         |  
|- Basic and diluted                                                                                      |   | 15,408,219              |  

See Notes to Consolidated Financial Statements

F-4

---

THT Heat Transfer Technology
Inc. Consolidated Statements of Equity (Stated in US Dollars)

|                                               |  | THT Heat Transfer Technology
      Inc. stockholders |  |   |         |  |   |            |  
|---------------------------------------------- |  | ---------------------------------------------------- |  | - | ------- |  | - | ---------- | -
|                                               |  |                                                      |  |   |         |  |   |            |  
|                                               |  |                                                      |  |   |         |  |   | Additional |  
|                                               |  | Common stock                                         |  |   | paid-in |  |   | Statutory  |  
|                                               |  | No. of shares                                        |  |   | Amount  |  |   | capital    |  
|                                               |  |                                                      |  |   |         |  |   |            |  
|Balance at January 1,
      2008               |  | 14,800,000                                           |  | $ | 14,800  |  | $ | 14,010,900 |  
|Net income (loss)                              |  | -                                                    |  |   | -       |  |   | -          |  
|Foreign currency
      translation adjustments |  | -                                                    |  |   | -       |  |   | -          |  
|Appropriation to reserves                      |  | -                                                    |  |   | -       |  |   | -          |  
|                                               |  |                                                      |  |   |         |  |   |            |  
|Balance, December 31, 2008                     |  | 14,800,000                                           |  |   | 14,800  |  |   | 14,010,900 |  
|Recapitalization                               |  | 1,200,000                                            |  |   | 1,200   |  |   | (200       | )
|Net income (loss)                              |  | -                                                    |  |   | -       |  |   | -          |  
|Foreign currency
      translation adjustments |  | -                                                    |  |   | -       |  |   | -          |  
|Appropriation to reserves                      |  | -                                                    |  |   | -       |  |   | -          |  
|                                               |  |                                                      |  |   |         |  |   |            |  
|Balance, December 31, 2009                     |  | 16,000,000                                           |  | $ | 16,000  |  | $ | 14,010,700 |  

See Notes to Consolidated Financial Statements

F-5

---

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

|                                                                                                                                                                                |   | Year ended December 31, |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | ----------------------- | -
|                                                                                                                                                                                |   | 2009                    |  
|Cash flows from operating
      activities                                                                                                                                      |   |                         |  
|Net income attributable to THT Heat Transfer Technology
      Inc. common stockholders                                                                                          | $ | 4,219,536               |  
|Adjustments to reconcile net income
      attributable to THT Heat Transfer Technology Inc. common stockholders to
      net cash (used in) provided by operating activities :- |   |                         |  
|Depreciation and amortization                                                                                                                                                   |   | 762,804                 |  
|(Gain) loss on disposal of property, plant and equipment                                                                                                                        |   | (60,753                 | )
|Deferred taxes                                                                                                                                                                  |   | 15,435                  |  
|Allowance for doubtful accounts                                                                                                                                                 |   | 244,526                 |  
|Provision
      for obsolete inventories                                                                                                                                        |   | 17,836                  |  
|Noncontrolling interests                                                                                                                                                        |   | (76,615                 | )
|Changes in operating assets and
      liabilities :-                                                                                                                            |   |                         |  
|Restricted cash                                                                                                                                                                 |   | -                       |  
|Trade receivables                                                                                                                                                               |   | (8,230,212              | )
|Bills
      receivable                                                                                                                                                          |   | 41,631                  |  
|Other receivables,
      prepayments and deposits                                                                                                                               |   | (4,190,219              | )
|Inventories                                                                                                                                                                     |   | 603,612                 |  
|Retention receivable                                                                                                                                                            |   | (570,582                | )
|Trade
      payables                                                                                                                                                            |   | (481,493                | )
|Other payables and
      accrued expenses                                                                                                                                       |   | 880,299                 |  
|Income
      tax payable                                                                                                                                                        |   | 573,051                 |  
|                                                                                                                                                                                |   |                         |  
|Net cash flows (used in) provided by
      operating activities                                                                                                                 |   | (6,251,144              | )
|                                                                                                                                                                                |   |                         |  
|Cash flows from investing
      activities                                                                                                                                      |   |                         |  
|Payments to acquire property, plant and
      equipment                                                                                                                         |   | (1,323,041              | )
|Proceeds from disposal
      of property, plant and equipment                                                                                                                   |   | 73,967                  |  
|Acquisition of land use rights                                                                                                                                                  |   | -                       |  
|                                                                                                                                                                                |   |                         |  
|Net cash flows used in investing activities                                                                                                                                     |   | (1,249,074              | )
|                                                                                                                                                                                |   |                         |  
|Cash flows from financing activities                                                                                                                                            |   |                         |  
|Proceeds from bank
      loans                                                                                                                                                  |   | 7,309,001               |  
|Repayment of bank loans                                                                                                                                                         |   | (5,864,742              | )
|Proceeds from long-term
      loans                                                                                                                                             |   | -                       |  
|Counter guarantee paid                                                                                                                                                          |   | -                       |  
|Repayment of long-term
      loan                                                                                                                                               |   | (584,720                | )
|Decrease (increase) in restricted cash                                                                                                                                          |   | 212,818                 |  
|(Decrease) increase in
      bills payable                                                                                                                                      |   | (730,900                | )
|Cash acquired from reverse acquisition                                                                                                                                          |   | 1,000                   |  
|Capital injection from
      stockholders of Siping Juyuan                                                                                                                      |   | -                       |  
|Repayment to related parties                                                                                                                                                    |   | -                       |  
|                                                                                                                                                                                |   |                         |  
|Net cash flows provided by financing activities                                                                                                                                 |   | 342,457                 |  
|                                                                                                                                                                                |   |                         |  
|Effect of foreign currency translation on cash and
      cash equivalents                                                                                                       |   | (41,699                 | )
|                                                                                                                                                                                |   |                         |  
|Net (decrease) increase in cash and cash equivalents                                                                                                                            |   | (7,199,460              | )
|Cash and cash equivalents -
      beginning of year                                                                                                                             |   | 12,579,087              |  
|                                                                                                                                                                                |   |                         |  
|Cash and cash equivalents - end of
      year                                                                                                                                   | $ | 5,379,627               |  
|                                                                                                                                                                                |   |                         |  
|Supplemental disclosures for cash
      flow information                                                                                                                        |   |                         |  
|Cash paid for :-                                                                                                                                                                |   |                         |  
|Interest                                                                                                                                                                        | $ | 517,427                 |  
|Income taxes                                                                                                                                                                    | $ | 75,490                  |  
|                                                                                                                                                                                |   |                         |  
|Non-cash investing and financing
      transactions:                                                                                                                            |   |                         |  
|Issue of 14,800,000
      shares of common stock for reverse acquisition                                                                                                        | $ | 14,800                  |  

See Notes to Consolidated Financial Statements

F-6

---

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

|1. | Corporate information                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | THT Heat Transfer Technology, Inc. (the Company or
      THT or the Surviving Corporation) is the surviving corporation
      pursuant to the Reincorporation Merger as detailed below.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Reincorporation Merger                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | On November 24, 2009, BTHC VIII, Inc. ("BTHC") entered
      into an Agreement and Plan of Merger (the "Merger Agreement") with THT, a
      Nevada corporation and wholly-owned subsidiary of BTHC. Pursuant to the
      Merger Agreement, BTHC agreed to merge with and into THT, with THT
      continuing as the surviving entity (the "Reincorporation Merger"). The
      Reincorporation Merger became effective on November 30, 2009 (the
      "Effective Time").                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | As a result of the Reincorporation Merger, the legal
      domicile of the Surviving Corporation is now Nevada. The Merger Agreement
      and Reincorporation Merger were duly approved by the written consent of
      stockholders of BTHC owning at least a majority of the outstanding shares
      of BTHC's common stock, dated September 16, 2009.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Pursuant to the terms of the Merger Agreement, (i) BTHC
      merged into THT, with THT being the surviving corporation, and BTHC
      thereby changed its name to THT Heat Transfer Technology, Inc.; (ii) from
      and after the Effective Time, THT possesses all of the rights, privileges,
      powers, and franchises of BTHC, and BTHC's debts and liabilities became
      the debts and liabilities of THT; (iii) BTHC's existing Board of Directors
      and officers became the Board of Directors and officers of the Surviving
      Corporation; and (iv) the Articles of Incorporation and Bylaws of THT now
      govern the Surviving Corporation.                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | The Reincorporation Merger did not result in any change
      in headquarters, business, jobs, management, location of any of offices or
      facilities, number of employees, assets, liabilities or net worth (other
      than as a result of the costs incident to the Reincorporation Merger,
      which are immaterial). Management, including all directors and officers,
      remain the same in connection with the Reincorporation Merger. There were
      no substantive changes in the employment agreements for executive officers
      or in other direct or indirect interests of the current directors or
      executive officers as a result of the Reincorporation Merger.                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | As a result of the Reincorporation Merger, each
      outstanding share of BTHC's common stock, par value $0.001 per share, was
      automatically converted into one share of THT's common stock, par value
      $0.001 per share. Each outstanding certificate representing shares of
      BTHC's common stock is deemed, without any action by BTHC's stockholders,
      to represent the same number of shares of THT's common stock.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Reorganization                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Before the Reincorporation Merger and on June 30, 2009,
      BTHC entered into a Share Exchange Agreement (the Share Exchange
      Agreement) with Megaway International Holdings Limited, a British Virgin
      Islands corporation ("Megaway"), and its sole shareholder, Wisetop
      International Holdings Limited, a British Virgin Islands corporation
      ("Wisetop"). Pursuant to the Share Exchange Agreement, Megaway became a
      wholly-owned subsidiary of the Company and Wisetop was issued 14,800,000
      shares of the Company's common stock, which, after giving effect to the
      Cancellation Agreement disclosed below, constituted 92.5% of the Companys
      issued and outstanding capital stock on a fully-diluted basis as of and
      immediately after the consummation of the transactions contemplated by the
      Share Exchange Agreement, in exchange for 100% of the issued and
      outstanding shares of Megaway.

F-7

---

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

|1. | Corporate information (Contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | Megaway was dormant since its incorporation until it
      acquired 100% of the outstanding capital stock of Star Wealth
      International Holdings Limited ("Star Wealth"), a Hong Kong corporation on
      May 5, 2009. Star Wealth was also dormant since its incorporation until it
      acquired 100% of the equity interest of Siping City Juyuan Hanyang Plate
      Heat Exchanger Co., Ltd. (Siping Juyuan), a PRC corporation, on May 10,
      2009.                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | On May 10, 2009, Star Wealth entered into an equity
      transfer agreement with all of the shareholders of Siping Juyuan to
      acquire their entire interests in Siping Juyuan at a total cash
      consideration of RMB60,000,000 ($8,795,075). The equity transfer agreement
      was approved by the local government of the Peoples Republic of China
      (the PRC) on May 31, 2009.                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | Siping Juyuan has a 75% directly owned subsidiary,
      Beijing Juyuan Hanyang Heat Exchange Equipment Co. Ltd (Beijing Juyuan).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | As a condition precedent to the consummation of the Share
      Exchange Agreement, on June 30, 2009, the Company entered into a
      cancellation agreement, or the Cancellation Agreement, with Mr. Gerald
      Pascale, who was the major stockholder of the Company immediately before
      the Share Exchange Agreement and served as the Companys sole director and
      officer from February 12, 2009 until June 30, 2009 when he was replaced by
      Guohong Zhao (Mr. Zhao), a founder of Siping Juyuan, whereby Mr. Pascale
      agreed to the cancellation of 4,805,387 shares of the Companys common
      stock owned by him.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | Mr. Zhao was appointed as the Companys director and
      chief executive officer effective upon the closing of the above reverse
      acquisition. In addition, the Companys executive officers were replaced
      by the executive officers of Siping Juyuan upon the closing of the reverse
      acquisition.                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | On June 30, 2009, Mr. Zhao entered into an option
      agreement with Ms. Jinghua Zhao, the sole shareholder of Wisetop, pursuant
      to which Mr. Zhao was granted an option, exercisable after 180 days, to
      acquire all of the equity interests of Wisetop owned by Ms. Jinghua Zhao
      at an exercise price of $3,246,160. This option expires on June 30, 2011.                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | Also on June 30, 2009, Wisetop entered into separate
      option agreements with the other original stockholders of Siping Juyuan,
      pursuant to which such stockholders were granted options, exercisable
      after 90 days, to purchase an aggregate of 10,240,786 shares of the
      Companys common stock owned by Wisetop at total exercise price of
      $7,291,440. These options also expire on June 30, 2011.                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | After Mr. Zhao and the other original stockholders
      exercise these options, they will be the Companys controlling
      stockholders holding 92.5% equity interest.                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|2. | Description of business                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | The Company is a holding company whose primary business
      are conducted through its subsidiaries, namely Siping Juyuan 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.                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | Siping Juyuan 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 Siping Juyuan, Siping City Juyuan Heat Exchange Equipment Co., Ltd.
      (New Juyuan Company) and Siping City Juyuan Hanyang Pressure Vessels
      Co., Ltd (Juyuan Hanyang Pressure Vessels).                                                                                                                                                                                                                   

F-8

---

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

|3. | Summary of significant accounting policies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Basis of presentation and consolidation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | After the consummation of the reorganization detailed in
      note 1 above, Mr. Zhao and the other original stockholders of Siping
      Juyuan maintain control over Siping Juyuan by virtue of the option
      agreements. Accordingly, accounting for recapitalization is adopted for
      the preparation of these consolidated financial statements. These
      financial statements, issued under the name of the Company, represent the
      continuation of the financial statements of Siping Juyuan.                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | The consolidated financial statements have been prepared
      in accordance with generally accepted accounting principles in the United
      States of America (US GAAP).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Use of estimates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | In preparing financial statements in conformity with US
      GAAP, management makes estimates and assumptions that affect the reported
      amounts of assets and liabilities and disclosures of contingent assets and
      liabilities at the dates of the financial statements, as well as the
      reported amounts of revenues and expenses during the reporting periods.
      These accounts and estimates include, but are not limited to, the
      valuation of trade receivable, other receivables, inventories and deferred
      income taxes and the estimation on useful lives and residual values of
      property, plant and equipment. Actual results could differ from those
      estimates.                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Noncontrolling interest                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Noncontrolling interest on the consolidated balance
      sheets is resulted from the consolidation of a 75% owned subsidiary,
      Beijing Juyuan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Noncontrolling interest on the consolidated statements of
      income and comprehensive income represents the minority stockholders
      proportionate share of the net loss of Beijing Juyuan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Concentration of credit risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Financial instruments that potentially subject the
      Company to significant concentration of credit risk consist principally of
      cash and cash equivalents, restricted cash, trade receivables and other
      receivables. As of December 31, 2009 and 2008, all of the Companys cash
      and cash equivalents and restricted cash were held by major financial
      institutions located in the PRC, which management believes are of high
      credit quality. With respect to trade receivables, the Company extends
      credit based on an evaluation of the customers financial condition. The
      Company generally does not require collateral for trade receivables and
      maintains an allowance for doubtful accounts for trade and other
      receivables.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | During the year ended December 31, 2009, there was no
      customer that contributed 10% or more to the Companys sales revenue.
      During the year ended December 31, 2008, New Juyuan Company contributed
      18% ($5,804,115) to the Companys sales revenue.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | As of December 31, 2009 and 2008, the Company did not
      have any balance of gross trade receivable due from individual customer
      that represented 10% or more of the Companys gross trade receivables.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

F-9

---

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

|3. | Summary of significant accounting policies
      (Contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | Cash and cash equivalents                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | Cash and cash equivalents include all cash, deposits in
      banks and other highly liquid investments with initial maturities of three
      months or less. As of December 31, 2009 and 2008, almost all the cash and
      cash equivalents were denominated in RMB and were placed with banks in the
      PRC. They are not freely convertible into foreign currencies and the
      remittance of these funds out of the PRC is subject to exchange control
      restrictions imposed by the PRC government. The remaining insignificant
      balance of cash and cash equivalents were denominated in United States
      Dollars.                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | Allowance for doubtful debts                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | The Company establishes an allowance for doubtful debts
      based on managements assessment of the collectibility of trade
      receivables and other receivables. A considerable amount of judgment is
      required in assessing the amount of the allowance and the Company
      considers the historical level of credit losses and applies percentages to
      aged receivable categories. The Company makes judgments about the
      creditworthiness of each debtor based on ongoing credit evaluations, and
      monitors current economic trends that might impact the level of credit
      losses in the future. If the financial condition of the debtors were to
      deteriorate, resulting in their inability to make payments, a larger
      allowance may be required.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | Bad debts are written off when identified. The Company
      extends unsecured credit to customers ranging from three to six months in
      the normal course of business. The Company does not accrue interest on
      trade receivables.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | Historically, losses from uncollectible accounts have not
      significantly deviated from the general allowance estimated by the
      management and no significant additional bad debts have been written off
      directly to the profit and loss. This general provisioning policy has not
      changed in the past since establishment and the management considers that
      the aforementioned general provisioning policy is adequate and not too
      excessive and does not expect to change this established policy in the
      near future.                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | Retention receivable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | Retention receivable is the amount withheld by a customer
      until the warranty period is over. Retention receivables which were
      expected to be collected within one year of $1,232,917 and $1,413,154 were
      included in the balance of trade receivable as of December 31, 2009 and
      2008, respectively. Retention receivables which were expected to be
      collected after one year of $795,144 and $224,932 were presented
      separately as non-current assets.                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | Inventories                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | Inventories are stated at the lower of cost or market
      value. Cost is determined on a weighted average basis and includes all
      expenditures incurred in bringing the goods to the point of sale and
      putting them in a saleable condition. In assessing the ultimate
      realization of inventories, the management makes judgments as to future
      demand requirements compared to current or committed inventory levels. The
      Companys reserve requirements generally increase with its projected
      demand requirements; decrease due to market conditions and product life
      cycle changes. The Company estimates the demand requirements based on
      market conditions, forecasts prepared by its customers, sales contracts
      and orders in hand.   

F-10

---

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

|3. | Summary of significant accounting policies
      (Contd)                                                                                                                                                                                                                   
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                             
|   | Property, plant and equipment                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                             
|   | Property, plant and equipment are stated at cost less
      accumulated depreciation. Cost represents the purchase price of the asset
      and other costs incurred to bring the asset into its existing use.                                                              
|   |                                                                                                                                                                                                                                                                             
|   | Depreciation is provided on the straight-line basis
      (after taking into account the respective estimated residual values) over
      the estimated useful lives of property, plant and equipment. The principal
      useful lives and residual value are as follows :-



| |                     | Estimated useful
      lives |  | Residual value
| | ------------------- | ---------------------------- |  | --------------
| |                     |                              |  |               
| | Buildings           | 20 years                     |  | 5%            
| | Plant and machinery | 6 years                      |  | 5%            
| | Motor vehicles      | 3 - 5 years                  |  | 5%            
| | Office equipment    | 2 - 5 years                  |  | Nil - 5%      

Maintenance or repairs are charged to
expense as incurred. Upon sale or disposition, the applicable amounts of asset
cost and accumulated depreciation are removed from the accounts and the net
amount less proceeds from disposal is charged or credited to income.

Construction in progress mainly
represents expenditures in respect of the Companys corporate campus and
factories, including offices, factories and research center, under construction.
All direct costs relating to the acquisition or construction of the Companys
corporate campus and factories are capitalized as construction in progress. No
depreciation is provided in respect of construction in progress.

Land use rights

Land use rights are stated at cost less
accumulated amortization. Amortization is provided using the straight-line
method over the terms of the lease of 50 years obtained from the relevant PRC
land authority.

Impairment of long-lived assets

Long-lived assets are tested for
impairment in accordance with ASC 360-10-45 Impairment or Disposal of
Long-Lived Assets (previously SFAS No. 144). The Company periodically evaluates
potential impairment whenever events or changes in circumstances indicate that
the carrying amount of the assets may not be recoverable. The Company recognizes
impairment of long-lived assets in the event that the net book values of such
assets exceed the future undiscounted cash flows attributable to such assets.
During the reporting periods, the Company has not identified any indicators that
would require testing for impairment.

F-11

---

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

|3. | Summary of significant accounting policies
      (Contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | Revenue recognition                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | Revenue from sales of the Companys products is
      recognized when products are delivered and customer acceptance is made,
      the sales price is fixed or determinable, no other significant obligations
      of the Company exist and collection is reasonably assured.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | There were no sales returns and allowances for the years
      ended December 31, 2009 and 2008. The Company does not provide
      unconditional right of return, prices protection or any other concessions
      to its customers. Generally, the Company provides free after-sale service
      for a period ranging from half year to 1 year. After-sale expense was
      $16,577 and $12,152 for the years ended December 31, 2009 and 2008
      respectively.                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | Cost of sales                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | Cost of sales consists primarily of materials costs,
      freight charges, purchasing and receiving costs, inspection costs, wages,
      employee compensation, depreciation and related costs, which are directly
      attributable to the production of products. Write-down of inventories to
      lower of cost or market is also recorded in cost of sales.                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | Administrative expenses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | Administrative expenses consist primarily of rent paid,
      office expenses, entertainment, traveling expenses, staff welfare,
      consumables, labor protection and salaries and wages which are incurred at
      the administrative level and exchange difference.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | Selling expenses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | Selling expenses consist primarily of advertising,
      salaries and transportation costs incurred during the selling activities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | Advertising, transportation, research and development
      expenses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | Advertising, transportation, research and development
      expenses are charged to expense as incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | Advertising expenses amounting to $877 and $1,463 for the
      years ended December 31, 2009 and 2008 respectively are included in
      selling expenses.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | Transportation expenses amounting to $808,112 and
      $584,312 for the years ended December 31, 2009 and 2008 respectively are
      included in selling expenses.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | Income taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | The Company uses the asset and liability method of
      accounting for income taxes pursuant to ASC 740 Income Taxes (previously
      Statement of Financial Accounting Standards (SFAS) No. 109). Under the
      asset and liability method of ASC 740, deferred tax assets and liabilities
      are recognized for the future tax consequences attributable to temporary
      differences between the financial statements carrying amounts of existing
      assets and liabilities and loss carryforwards and their respective tax
      bases. Deferred tax assets and liabilities are measured using enacted tax
      rates expected to apply to taxable income in the years in which those
      temporary differences are expected to be recovered or settled.

F-12

---

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

|3. | Summary of significant accounting policies
      (Contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Comprehensive income                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | The Company has adopted ASC 220, Comprehensive Income,
      which establishes standards for reporting and display of comprehensive
      income, its components and accumulated balances. Components of
      comprehensive income include net income and foreign currency translation
      adjustments. As of December 31, 2009 and 2008, the only component of
      accumulated other comprehensive income was foreign currency translation
      adjustments.                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Foreign currency translation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | The functional currency of the Company is RMB and RMB is
      not freely convertible into foreign currencies. The Company maintains its
      financial statements in the functional currency. Monetary assets and
      liabilities denominated in currencies other than the functional currency
      are translated into the functional currency at rates of exchange
      prevailing at the balance sheet date. Transactions denominated in
      currencies other than the functional currency are translated into the
      functional currency at the exchanges rates prevailing at the dates of the
      transaction. Exchange gains or losses arising from foreign currency
      transactions are included in the determination of net income for the
      respective periods.                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | For financial reporting purposes, the financial
      statements of the Company that are prepared using the functional currency
      have been translated into United States dollars. Assets and liabilities
      are translated at the exchange rates at the balance sheet dates and
      revenue and expenses are translated at the average exchange rates and
      stockholders equity is translated at historical exchange rates. Any
      translation adjustments resulting are not included in determining net
      income but are included in foreign exchange adjustment to other
      comprehensive income, a component of stockholders equity. The exchange
      rates in effect as of December 31, 2009 and 2008 were RMB1 for $0.1463 and
      $0.1467 respectively. There is no significant fluctuation in exchange rate
      for the conversion of RMB to US dollars after the balance sheet date.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Fair value of financial instruments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | The Company adopted ASC 820 (previously SFAS No. 157) on
      January 1, 2008. The adoption of ASC 820 did not materially impact the
      Companys financial position, results of operations or cash flows.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | ASC 825 requires the disclosure of the estimated fair
      value of financial instruments including those financial instruments for
      which fair value option was not elected. Except for long-term loan
      disclosed as below, the carrying amounts of other financial assets and
      liabilities approximate to their fair value due to short maturities or the
      applicable interest rates approximate the current market rates:                                                                                                                                                                                                                                                                                                                                                                                                                                                                           



| |                |   | As
      of       |  |   | As
      of       | 
| | -------------- | - | ----------------- |  | - | ----------------- | 
| |                |   | December 31, 2009 |  |   | December 31, 2008 | 
| |                |   | Carrying          |  |   |                   | 
| |                |   | amount            |  |   | Fair value        | 
| |                |   |                   |  |   |                   | 
| | Long-term loan | $ | 3,363,950         |  | $ | 3,442,357         | 

The fair values of long-term loan are
estimated using discounted cash flow analysis, based on the Companys current
incremental borrowing rates for similar types of borrowing arrangements.

F-13

---

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

|3. | Summary of significant accounting policies
      (Contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | Stock-based compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | During the reporting periods, the Company did not make
      any stock-based compensation payments.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | Dividends                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | Dividends are recorded in the Companys financial
      statements in the period in which they are declared.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | Off-balance sheet arrangements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | The Company does not have any off-balance sheet
      arrangements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | Recently issued accounting pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | FASB Accounting Standards Codification (Accounting
      Standards Update ASU No. 2009-1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | In June 2009, the Financial Accounting Standard Board
      (FASB) approved its Accounting Standards Codification (Codification)
      as the single source of authoritative United States accounting and
      reporting standards applicable for all non-governmental entities, with the
      exception of the SEC and its staff. The Codification is effective for
      interim or annual financial periods ending after September 15, 2009 and
      impacts the Companys financial statements as all future references to
      authoritative accounting literature will be referenced in accordance with
      the Codification. There have been no changes to the content of the
      Companys financial statements or disclosures as a result of implementing
      the Codification.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | As a result of the Companys implementation of the
      Codification during the current quarter, previous references to new
      accounting standards and literature are no longer applicable. In these
      financial statements, the Company will provide reference to both new and
      old guidance to assist in understanding the impacts of recently adopted
      accounting literature, particularly for guidance adopted since the
      beginning of the current fiscal year but prior to the Codification.                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | Noncontrolling Interests (Included in amended Topic
      ASC 810 Consolidation, previously SFAS No. 160 Noncontrolling Interests
      in Consolidated Financial Statements, an amendment of ARB No. 51)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | The amended topic establishes 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 is an ownership interest in the consolidated
      entity that should be reported as equity in the consolidated financial
      statements. As a result of the adoption of this amended topic, the Company
      has reclassified financial statement line items within the Companys
      condensed consolidated balance sheets and statements of income and
      comprehensive income for the prior period to conform to this topic.                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | Business Combinations (Included in amended Topic ASC
      805 Business Combinations, previously SFAS No. 141(R))                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | This ASC guidance addresses the accounting and disclosure
      for identifiable assets acquired, liabilities assumed, and noncontrolling
      interests in a business combination. The adoption of this amended topic
      has no material impact on the Companys financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

F-14

---

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

|3. | Summary of significant accounting policies
      (Contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | Recently issued accounting pronouncements(contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | Intangibles - Goodwill and Other (Included in amended
      Topic ASC 350, previously FASB Staff Position (FSP) No. 142-3
      Determination of the Useful Life of Intangible Assets)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | The amended topic amends the factors an entity should
      consider in developing renewal or extension assumptions used in
      determining the useful life of recognized intangible assets. This new
      guidance applies prospectively to intangible assets that are acquired
      individually or with a group of other assets in business combinations and
      asset acquisitions. The amended topic is effective for financial
      statements issued for fiscal years and interim periods beginning after
      December 15, 2008. Early adoption is prohibited. The adoption of this
      amended topic has no material effect on the Company's financial
      statements.                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | Business Combinations (Included in amended Topic ASC
      805, previously FSP No. 141R-1 Accounting for Assets Acquired and
      Liabilities Assumed in a Business Combination That Arise from
      Contingencies)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | Amended topic ASC 805 amends the requirements for the
      provisions for the initial recognition and measurement, subsequent
      measurement and accounting, and disclosures for assets and liabilities
      arising from contingencies in business combinations. The amended topic
      eliminates the distinction between contractual and non-contractual
      contingencies, including the initial recognition and measurement criteria
      and instead carries forward most of the provisions for acquired
      contingencies. The amended topic is effective for contingent assets and
      contingent liabilities acquired arising from business combinations for
      which the acquisition date is on or after December 15, 2008. The adoption
      of this amended topic has no material effect on the Company's financial
      statements.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | Fair Value Measurements and Disclosures (Included in
      amended Topic ASC 820, previously FSP No. 157-4 Determining Whether a
      Market is Not Active and a Transaction Is Not Distressed)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | The amended topic clarifies when markets are illiquid or
      that market pricing may not actually reflect the real value of an asset.
      If a market is determined to be inactive and market price is reflective of
      a distressed price then an alternative method of pricing can be used, such
      as a present value technique to estimate fair value. The amended topic
      identifies factors to be considered when determining whether or not a
      market is inactive. The amended topic is effective for interim and annual
      periods ending after June 15, 2009, with early adoption permitted for
      periods ending after March 15, 2009 and shall be applied prospectively.
      The adoption of this amended topic has no material effect on the Company's
      financial statements.                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | Investments - Debt and Equity Securities - Overall -
      Transition and Open Effective Date Information (Included in amended Topic
      ASC 320, previously FSP No. 115-2 and SFAS No. 124-2 Recognition and
      Presentation of Other-Than-Temporary Impairments)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | The amended topic amends the other-than-temporary
      impairment guidance in U.S. GAAP for debt securities through increased
      consistency in the timing of impairment recognition and enhanced
      disclosures related to the credit and noncredit components of impaired
      debt securities that are not expected to be sold. In addition, increased
      disclosures are required for both debt and equity securities regarding
      expected cash flows, credit losses, and securities with unrealized losses.
      The adoption of this amended topic has no material impact on the Companys
      financial statements.                                                                                                                                                                                                                      

F-15

---

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

|3. | Summary of significant accounting policies
      (Contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Recently issued accounting pronouncements(contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Interim Disclosures about Fair Value of Financial
      Instruments (Included in amended Topic ASC 825 Financial Instruments,
      previously FSP SFAS No. 107-1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | This guidance requires that the fair value disclosures
      required for all financial instruments be included in interim financial
      statements. This guidance also requires entities to disclose the method
      and significant assumptions used to estimate the fair value of financial
      instruments on an interim and annual basis and to highlight any changes
      from prior periods. The amended topic was effective for interim periods
      ending after September 15, 2009. The adoption of this amended topic has no
      material impact on the Companys financial statements.                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Subsequent Events (Included in amended Topic ASC 855
      Subsequent Events, previously SFAS No. 165)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | The amended topic establishes accounting and disclosure
      requirements for subsequent events. The amended topic details the period
      after the balance sheet date during which the Company should evaluate
      events or transactions that occur for potential recognition or disclosure
      in the financial statements, the circumstances under which the Company
      should recognize events or transactions occurring after the balance sheet
      date in its financial statements and the required disclosures for such
      events. The Company adopted this amended topic effective June 1, 2009.                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Accounting for Transfers of Financial Assets (Included
      in amended Topic ASC 860 Transfers and Servicing, previously SFAS No.
      166 Accounting for Transfers of Financial Assets - an Amendment of FASB
      Statement No. 140)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | The amended topic addresses information a reporting
      entity provides in its financial statements about the transfer of
      financial assets; the effects of a transfer on its financial position,
      financial performance, and cash flows; and a transferors continuing
      involvement in transferred financial assets. Also, the amended topic
      removes the concept of a qualifying special purpose entity, limits the
      circumstances in which a transferor derecognizes a portion or component of
      a financial asset, defines participating interest and enhances the
      information provided to financial statement users to provide greater
      transparency. The amended topic is effective for the first annual
      reporting period beginning after November 15, 2009 and will be effective
      for us as of January 1, 2010. The management is in the process of
      evaluating the impact of adopting this amended topic on the Companys
      financial statements.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Consolidation of Variable Interest Entities - Amended
      (Included in amended Topic ASC 810 Consolidation, previously SFAS 167
      Amendments to FASB Interpretation No. 46(R))                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | The amended topic require an enterprise to perform an
      analysis to determine the primary beneficiary of a variable interest
      entity; to require ongoing reassessments of whether an enterprise is the
      primary beneficiary of a variable interest entity and to eliminate the
      quantitative approach previously required for determining the primary
      beneficiary of a variable interest entity. The amended topic also requires
      enhanced disclosures that will provide users of financial statements with
      more transparent information about an enterprises involvement in a
      variable interest entity. The amended topic is effective for the first
      annual reporting period beginning after November 15, 2009 and will be
      effective for us as of January 1, 2010. The management is in the process
      of evaluating the impact of adopting this amended topic on the Companys
      financial statements.                                                 

F-16

---

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

|3. | Summary of significant accounting policies
      (Contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | Recently issued accounting pronouncements(contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | In August 2009, the FASB issued ASU No. 2009-05, an
      update to ASC 820 Fair Value Measurements and Disclosures. This update
      provides amendments to reduce potential ambiguity in financial reporting
      when measuring the fair value of liabilities. Among other provisions, this
      update provides clarification that in circumstances in which a quoted
      price in an active market for the identical liability is not available, a
      reporting entity is required to measure fair value using one or more of
      the valuation techniques described in ASU No. 2009-05. ASU No. 2009-05
      becomes effective for the Companys annual financial statements for the
      year ended December 31, 2009. The adoption of this update has no material
      impact on the Companys financial statements.                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | In October 2009, the FASB issued ASU No. 2009-13 Revenue
      Recognition (Topic 605): Multiple Deliverable Revenue Arrangements - A
      Consensus of the FASB Emerging Issues Task Force. This update provides
      application guidance on whether multiple deliverables exist, how the
      deliverables should be separated and how the consideration should be
      allocated to one or more units of accounting. This update establishes a
      selling price hierarchy for determining the selling price of a
      deliverable. The selling price used for each deliverable will be based on
      vendor-specific objective evidence, if available, third-party evidence if
      vendor-specific objective evidence is not available, or estimated selling
      price if neither vendor-specific or third-party evidence is available. The
      Company will be required to apply this guidance prospectively for revenue
      arrangements entered into or materially modified after January 1, 2011;
      however, earlier application is permitted. The management is in the
      process of evaluating the impact of adopting this ASU on the Companys
      financial statements.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | The FASB issued ASU-2010-09 (Topic 855) to amend guidance
      on subsequent events to remove the requirement for SEC filers (as defined
      in ASU 2010-09) to disclose the date through which an entity has evaluated
      subsequent events. This change alleviates potential conflicts with current
      SEC guidance. An SEC filer is still required to evaluate subsequent events
      through the date financial statements are issued, but disclosure of that
      date is no longer required. The amendments in ASU 2010-09 became effective
      upon issuance of the guidance.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              



|**4.** | Restricted cash                                                                                     |   | As of December 31, | 
|------ | --------------------------------------------------------------------------------------------------- | - | ------------------ | 
|       |                                                                                                     |   | 2009               | 
|       |                                                                                                     |   |                    | 
|       | Bank deposits held as
      collateral for bills payable                                            | $ | -                  | 
|       | Bank deposits held as collateral for
      performance bonds issued by the
      banks to customers |   | 1,376,114          | 
|       |                                                                                                     |   |                    | 
|       |                                                                                                     | $ | 1,376,114          | 

When the Company intends or is
requested to settle its suppliers by issuance of bills, it is required to place
deposits with banks equal to 100% of the bills amount at the time of issuance.
These deposits will be used to settle the bills at maturity.

When the Companys customers request to
receive performance bonds issued by the banks in relation to the Companys
performance under the sales contracts, the Company has to place deposits with
banks equal to 100% of the bonds amount at the time of issuance.

F-17

---

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

|**5.** | Trade receivables, net                 |   | As of December 31, |  
|------ | -------------------------------------- | - | ------------------ | -
|       |                                        |   | 2009               |  
|       |                                        |   |                    |  
|       | Trade receivables                      | $ | 15,480,623         |  
|       | Less : Allowance for doubtful accounts |   | (598,215           | )
|       |                                        |   |                    |  
|       |                                        | $ | 14,882,408         |  

An analysis of the allowance for
doubtful accounts for the years ended December 31, 2009 and 2008 is as follows
:-

| |                                   |   | Year ended December 31, |  
| | --------------------------------- | - | ----------------------- | -
| |                                   |   | 2009                    |  
| |                                   |   |                         |  
| | Balance at beginning of year      | $ | 422,560                 |  
| | Addition of bad debt expense, net |   | 176,831                 |  
| | Translation adjustments           |   | (1,176                  | )
| |                                   |   |                         |  
| | Balance at end of year            | $ | 598,215                 |  



|**6.** | Other receivables, prepayments and deposits  |   | As of December 31, |  
|------ | -------------------------------------------- | - | ------------------ | -
|       |                                              |   | 2009               |  
|       |                                              |   |                    |  
|       | Advances to staff                            | $ | 384,060            |  
|       | Deposits for public bid                      |   | 503,860            |  
|       | Prepayments to suppliers                     |   | 5,149,200          |  
|       | Other receivables                            |   | 342,880            |  
|       |                                              |   |                    |  
|       |                                              |   | 6,380,000          |  
|       | Less : Allowance for doubtful
      accounts |   | (67,732            | )
|       |                                              |   |                    |  
|       |                                              | $ | 6,312,268          |  

Advances to staff mainly represent
staff drawings for handling selling and logistic activities for the Company in
the ordinary course of business.

|**7.** | Inventories                               |   | As of December 31, |  
|------ | ----------------------------------------- | - | ------------------ | -
|       |                                           |   | 2008               |  
|       |                                           |   |                    |  
|       | Raw materials                             | $ | 2,517,879          |  
|       | Work-in-progress                          |   | 7,647,868          |  
|       | Finished goods                            |   | 10,301             |  
|       |                                           |   |                    |  
|       |                                           |   | 10,176,048         |  
|       | Less : Provision for obsolete inventories |   | (17,845            | )
|       |                                           |   |                    |  
|       |                                           | $ | 10,158,203         |  

No provision for obsolete inventories
was recognized during the year ended December 31, 2008.

F-18

---

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

|8. | Income tax                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | United States                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | The Company is subject to the United States Federal and
      state income tax at a statutory rate of 34%. No provision for the U.S.
      Federal income taxes has been made as the Company had no taxable income in
      this jurisdiction for the reporting periods.                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | The Company has not recognized a deferred tax liability
      for the undistributed earnings of its foreign subsidiary as of December
      31, 2009 because the Company currently does not expect those unremitted
      earnings to reverse and become taxable to the Company in the foreseeable
      future. A deferred tax liability will be recognized when the Company no
      longer plans to permanently reinvest undistributed earnings. Calculation
      of related unrecognized deferred tax liability is not practicable.                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | BVI                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | Megaway was incorporated in the BVI and, under the
      current laws of the BVI, is not subject to income taxes.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | HK                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | Star Wealth was incorporated in Hong Kong and subject to
      Hong Kong profits tax at a tax rate of 16.5%. No provision for Hong Kong
      tax has been made as the Company has no taxable income during the
      reporting periods.                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | PRC                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | Pursuant to the new China enterprise income tax (EIT)
      law, commencing from January 1, 2008, Siping Juyuan and Beijing Juyuan
      were subject to PRC EIT at the statutory rate of 25%.                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | As Siping Juyuan was qualified as a High-tech
      Enterprise, it was entitled to a preferential EIT rate of 15%
      (Preferential Tax Rate). Beijing Juyuan, being a Sino-foreign joint
      venture enterprise, was entitled to two years EIT exemption, from the
      first profit making calendar year of operations after offset of
      accumulated taxable losses, followed by a 50% tax reduction for the
      immediate next three calendar years (Tax Holiday). The Tax Holiday
      commenced in the fiscal year of 2008 and Beijing Juyuan was subject to EIT
      at the rate of 0% during the reporting periods.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | Siping Juyuan was also entitled to a special tax
      concession (Tax Concession) because it employed the required number of
      handicapped staff according to the relevant PRC tax rules. In particular,
      this Tax Concession entitled Siping Juyuan refund of value-added tax paid
      during the reporting periods (Note 16).                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | The components of the provision for income taxes are :-                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       



| |                |   | Year ended December 31, | 
| | -------------- | - | ----------------------- | 
| |                |   | 2009                    | 
| |                |   |                         | 
| | Current taxes  | $ | 648,556                 | 
| | Deferred taxes |   | 15,435                  | 
| |                |   |                         | 
| |                | $ | 663,991                 | 

F-19

---

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

|8. | Income taxes (Contd)                                                                                                                                          
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                
|   | The effective income tax expense differs from the PRC statutory income
      tax rate of 25% for the years ended December 31, 2009 and 2008 as follows
      :-



| |                                                                                 |   | Year ended December 31, |  
| | ------------------------------------------------------------------------------- | - | ----------------------- | -
| |                                                                                 |   | 2009                    |  
| |                                                                                 |   |                         |  
| | Provision for income taxes at
      applicable tax rates                        | $ | 1,201,728               |  
| | Non-taxable items for tax                                                       |   | (107,366                | )
| | Non-deductible items for tax                                                    |   | 155,961                 |  
| | Additional deduction from tax bureau on research and
      development expenses |   | (172,798                | )
| | Preferential Tax Rate                                                           |   | (413,534                | )
| | Change in tax rate                                                              |   | -                       |  
| | Others                                                                          |   | -                       |  
| |                                                                                 |   |                         |  
| | Income tax expense                                                              | $ | 663,991                 |  

The amount of benefit from Preferential
Tax Rate was $413,534 and $297,576 for the years ended December 31, 2009 and
2008, respectively, and the effect on earnings per share was $0.03 and $0.02,
respectively.

In July 2006, the FASB issued ASC 740
(previously Interpretation No. 48 Accounting for Uncertainty in Income Taxes).
This interpretation requires recognition and measurement of uncertain income tax
positions using a more-likely-than-not approach. The management evaluated the
Companys tax positions and considered that no additional provision for
uncertainty in income taxes is necessary as of December 31, 2009.

Current deferred tax assets as of
December 31, 2009 and 2008 are composed of the following :-

| |                                    |   | As of December 31, | 
| | ---------------------------------- | - | ------------------ | 
| |                                    |   | 2009               | 
| |                                    |   |                    | 
| | Allowance for doubtful accounts    | $ | 94,181             | 
| | Provision for obsolete inventories |   | 2,677              | 
| | Unrealized profit on inventories   |   | -                  | 
| |                                    |   |                    | 
| |                                    | $ | 96,858             | 



|**9.** | Property, plant and equipment, net |   | As of December 31, |  
|------ | ---------------------------------- | - | ------------------ | -
|       |                                    |   | 2009               |  
|       | Cost :-                            |   |                    |  
|       | Buildings                          | $ | 3,535,590          |  
|       | Plant and machinery                |   | 2,975,905          |  
|       | Office equipment                   |   | 382,851            |  
|       | Motor vehicles                     |   | 274,265            |  
|       |                                    |   |                    |  
|       |                                    |   | 7,168,611          |  
|       | Accumulated depreciation           |   | (1,861,540         | )
|       | Construction in progress           |   | 1,109,041          |  
|       |                                    |   |                    |  
|       | Net                                | $ | 6,416,112          |  

F-20

---

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

|9. | Property, plant and equipment (Contd)                      
|-- | ------------------------------------------------------------
|   |                                                             
|   | During the reporting periods, depreciation is included in :-



| |                                                  |   | Year ended December 31, | 
| | ------------------------------------------------ | - | ----------------------- | 
| |                                                  |   | 2009                    | 
| |                                                  |   |                         | 
| | Cost of sales and overheads of
      inventories | $ | 336,554                 | 
| | Research and development expenses                |   | 187,123                 | 
| | Administrative expenses                          |   | 218,302                 | 
| |                                                  |   |                         | 
| |                                                  | $ | 741,979                 | 

As of December 31, 2009 and 2008,
property, plant and equipment with net book values of $2,972,439 and $2,053,270,
respectively, were pledged as collateral under certain loan arrangements (Note
12).

During the year ended December 31,
2009, property, plant and equipment with net book value of $13,214 were disposed
of at a consideration of $73,967, resulting in a gain of $60,753. During the
year ended December 31, 2008, property, plant and equipment with net book value
of $13,393 were disposed of at a consideration of $5,766, resulting in a loss of
$7,627.

|**10.** | Land use rights          |   | As of December 31, |  
|------- | ------------------------ | - | ------------------ | -
|        |                          |   | 2009               |  
|        |                          |   |                    |  
|        | Land use rights          | $ | 1,030,298          |  
|        | Accumulated amortization |   | (40,117            | )
|        |                          |   |                    |  
|        |                          | $ | 990,181            |  

The Company obtained the right from the
relevant PRC land authority for a period of fifty years to use the land on which
the office premises, production facilities and warehouse of the Company are
situated. As of December 31, 2009 and 2008, the land use rights of carrying
amount of $990,181 and $563,657 were pledged as collateral under certain loan
arrangements (Note 12).

During the years ended December 31,
2009 and 2008, amortization amounted to $20,825 and $12,301 respectively. The
estimated amortization expense for each of the five succeeding years from 2009
is approximately $21,000 each year.

F-21

---

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

|**11.** | Other payables and accrued
      expenses |   | As of December 31, | 
|------- | ----------------------------------------- | - | ------------------ | 
|        |                                           |   | 2009               | 
|        |                                           |   |                    | 
|        | Accrued audit fee                         | $ | 70,000             | 
|        | Receipt in advance from customers         |   | 8,453,347          | 
|        | Pension payable                           |   | 281,381            | 
|        | Salaries payable                          |   | 225,092            | 
|        | Other payables and
      accrued expenses |   | 3,604,470          | 
|        |                                           |   |                    | 
|        |                                           | $ | 12,634,290         | 

Pension payable represents accrued
staff medical, industry injury claims, labor and unemployment insurances, all of
which are third parties insurance and the insurance premiums are based on
certain percentage of salaries. The obligations of the Company are limited to
those premiums contributed by the Company.

Included in other payables as of
December 31, 2009 and 2008 was an amount of $1,721,465 and $1,070,910
respectively, representing governmental financial support received for the
Companys efficient heat exchange equipment manufacture project. The project
will be subject to the governments inspection and whether the government
support is repayable or not is subject to the inspection results.

|**12.** | Short-term bank loans |   | As of December 31, | 
|------- | --------------------- | - | ------------------ | 
|        |                       |   | 2009               | 
|        |                       |   |                    | 
|        | Secured bank loans    | $ | 2,925,174          | 
|        | Unsecured bank loans  |   | 2,925,174          | 
|        |                       |   |                    | 
|        |                       | $ | 5,850,348          | 

All bank loans are repayable within one
year.

The bank loans as of December 31, 2009
carried annual interest at 100% of the benchmark interest rate published by the
Peoples Bank of China. The bank loans as of December 31, 2008 carried annual
interest at 120% of the benchmark interest rate published by the Peoples Bank
of China.

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

| |                                   |   | As of December 31, | 
| | --------------------------------- | - | ------------------ | 
| |                                   |   | 2009               | 
| |                                   |   |                    | 
| | Buildings (Note 9)                | $ | 2,804,052          | 
| | Construction in progress (Note 9) |   | 168,387            | 
| | Land use rights (Note 10)         |   | 990,181            | 
| |                                   |   |                    | 
| |                                   | $ | 3,962,620          | 

As of December 31, 2009, the unsecured
bank loan was guaranteed by Mr. Zhao and a non-related party.

F-22

---

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

|12. | Short-term bank loans (Contd)                                                                                                                                                                                                                                                                                                                             
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                            
|    | As of December 31, 2008, the unsecured bank loans
      included (i) a loan of $2,934,000 that was guaranteed by Mr. Zhao and his
      spouse, a stockholder and her spouse, New Juyuan Company, Juyuan Hanyang
      Pressure Vessels and a third party; and (ii) a loan of $95,355 that was
      secured by bank deposits of a director of the Company.
|    |                                                                                                                                                                                                                                                                                                                                                            
|    | Each of the aforementioned directors and stockholders did
      not receive any compensation for pledging their assets or acting as
      guarantors for the Company.                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                            
|    | During the reporting periods, there was no covenant
      requirement under the bank loans granted to the Company.                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                            
|13. | Long-term loan                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                            
|    | The loan is borrowed from a non-financial institution,
      bearing interest at an annual rate of 106% of the benchmark rate of the
      Peoples Bank of China for three-year to five-year long-term loans and
      guaranteed by a third party. The Company paid a counter guarantee of
      $204,762 to the non-financial institution.              
|    |                                                                                                                                                                                                                                                                                                                                                            
|    | Maturities of the loan as of December 31, 2009 are as
      follows :-                                                                                                                                                                                                                                                                                     



| | Year |   |           | 
| | ---- | - | --------- | 
| | 2010 | $ | 1,755,104 | 
| | 2011 |   | 1,608,846 | 
| |      | $ | 3,363,950 | 



|14. | Common Stock                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | On June 30, 2009, the Company issued 14,800,000 shares of
      common stock at par value of $0.001 each to the then stockholders of
      Megaway in exchange of 100% of the outstanding capital stock of Megaway.                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | The common stock reflects the recapitalization as if it
      occurred as of the beginning of the first period presented.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|15. | Statutory reserve                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | The statutory reserve in the consolidated balance sheets
      comprises Siping Juyuans statutory reserve. In accordance with the
      relevant laws and regulations of the PRC, each of Siping Juyuan and
      Beijing Juyuan is required to set aside at least 10% of their respective
      after-tax net profits each year determined in accordance with PRC GAAP and
      if any, to fund the statutory reserve until the balance of the reserve
      reaches 50% of their respective registered capital. The statutory reserve
      is not distributable in the form of cash dividends and can be used to make
      up cumulative prior year losses.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | Beijing Juyuan did not make any appropriation to
      statutory reserve during the years ended December 31, 2009 and 2008 as it
      incurred losses in both years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

F-23

---

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

|**16.** | Other income                                         |   | Year ended December 31, | 
|------- | ---------------------------------------------------- | - | ----------------------- | 
|        |                                                      |   | 2009                    | 
|        |                                                      |   |                         | 
|        | Refund of value-added
      tax under Tax Concession | $ | 312,521                 | 
|        | Other income                                         |   | 179,036                 | 
|        |                                                      |   |                         | 
|        |                                                      | $ | 491,557                 | 



|17. | Earnings per share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | During the reporting periods, the Company had no dilutive
      instruments. Accordingly, the basic and diluted earnings per share are the
      same.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | The per share data reflects the recapitalization as if it
      occurred as of the beginning of the first period presented.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|18. | Defined contribution plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | Pursuant to the relevant PRC regulations, the Company is
      required to make contributions at a rate of 30.6% to 31.2% of employees
      salaries and wages to a defined contribution retirement scheme organized
      by a state-sponsored social insurance plan in respect of the retirement
      benefits for the Companys employees in the PRC. The only obligation of
      the Company with respect to the retirement scheme is to make the required
      contributions under the plan. No forfeited contribution is available to
      reduce the contribution payable in the future years. The defined
      contribution plan contributions were charged to the consolidated
      statements of income. The Company contributed $124,679 and $179,983 for
      the years ended December 31, 2009, and 2008, respectively.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|19. | Commitments and contingencies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | Capital commitment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | As of December 31, 2009, the Company had capital
      commitments amounting to $551,304 in respect of the construction of the
      Companys campus and factory that were contracted for but not provided in
      the consolidated financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | Contingencies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | As of December 31, 2009 and 2008, the Company had
      contingencies arising from the division of Old Juyuan Company into Siping
      Juyuan, New Juyuan Company and Juyuan Hanyang Pressure Vessels. According
      to the division agreement of Old Juyuan Company (Division Agreement),
      all parties to the Division Agreement undertook joint and several
      liabilities for the indebtedness of Old Juyuan Company.                                                                                                                                                                                                                                                                                                                                                                                                        

F-24

---

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

|19. | Commitments and contingencies (Contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | Contingencies(contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | In accordance with ASC 450 (previously SFAS No. 5),
      Contingencies, the Company records a liability in the consolidated
      financial statements for these contingencies when a loss is known or
      considered probable and the amount can be reasonably estimated. If the
      reasonable estimate of a known or probable loss is a range, and no amount
      within the range is a better estimate than any other, the minimum amount
      of the range is accrued. If a loss is possible but not known or probable,
      and can be reasonably estimated, the estimated loss or range of loss is
      disclosed. In most cases, significant judgment is required to estimate the
      amount and timing of a loss to be recorded.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | The Companys loss is possible but not known or probable,
      accordingly no liability in respect of this undertaking was recognized as
      of December 31, 2009 and 2008. The Company believes that a reasonable
      estimate of the possible loss range from $nil to $1,620,991 as of December
      31, 2009 (2008: from $nil to $6,377,000).                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|20. | 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 (previously SFAS No. 131), Segment
      Reporting.                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | The Companys sales revenues by products for the years
      ended December 31, 2009 and 2008 were as follows :-                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    



| |                                 |   | Year ended December 31, | 
| | ------------------------------- | - | ----------------------- | 
| |                                 |   | 2009                    | 
| |                                 |   |                         | 
| | Plate heat exchanger            | $ | 21,928,639              | 
| | Heat exchange unit              |   | 5,783,854               | 
| | Air-cooled heat
      exchanger |   | 674,677                 | 
| | Shell-and-tube heat exchanger   |   | 4,217,761               | 
| | Others                          |   | 2,285,922               | 
| |                                 |   |                         | 
| |                                 | $ | 34,890,853              | 

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

F-25

---

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

|21. | Related party transactions                                                                                                                                                                             
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                        
|    | Apart from the transactions as disclosed in note 12 to
      the consolidated financial statements, the Company has entered into the
      following transactions with the following related parties :-



| |                                                                                         |   | Year ended December 31, | 
| | --------------------------------------------------------------------------------------- | - | ----------------------- | 
| |                                                                                         |   | 2009                    | 
| |                                                                                         |   |                         | 
| | Sales of finished goods and raw materials
      to New Juyuan Company                   | $ | -                       | 
| | Purchase of finished goods and raw materials from New
      Juyuan Company              | $ | -                       | 
| | Purchase of finished goods and raw
      materials from Juyuan Hanyang Pressure Vessels | $ | -                       | 



|    | The Company has advised that the terms obtained and
      consideration paid in connection with the transactions described above
      were no less favorable than those that would have been obtained by the
      Company in arms-length transactions with an unrelated party.                                                                                                                              
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                
|    | After Mr. Zhao and his spouses disposal of their
      interest in New Juyuan Company and Juyuan Hanyang Pressure Vessels in May
      2008 and March 2008 respectively, the transactions entered into by the
      Company with New Juyuan Company and Juyuan Hanyang Pressure Vessels were
      treated as transactions with unrelated parities and therefore were not
      included in the above figures.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                
|22. | Subsequent events                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                
|    | The Company has evaluated its activities subsequent to
      December 31, 2009, and has concluded that no subsequent events have
      occurred that would require recognition or disclosure in the consolidated
      financial statements.                                                                                                                                                                   

F-26

---