Dehaier Medical Systems Announces First Quarter Net Income Up 54%
Company Plans Expanded Marketing Strategies
BEIJING, May 14 /PRNewswire-Asia-FirstCall/ -- Dehaier Medical Systems Ltd. (Nasdaq: DHRM), an emerging leader in the development, assembly, marketing and sale of medical products in China, today reported financial results for its first quarter 2010 ended March 31, 2010.
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Q1 2010 Highlights
-- Revenue for the first quarter ended March 31, 2010 increased 5% to
$2.6 million from $2.5 million in the same quarter a year ago
reflecting the increased acceptance of the company's products among
hospitals and other healthcare facilities.
-- Gross profit increased 4% to $0.97 million for Q1 FY'10 from
$0.94 million in Q1 FY'09.
-- Gross margin for the first quarter ended March 31, 2010 remained
constant at 37%, which is the same as that of the first quarter in 2009.
-- Operating income rose 40.67% to $0.65 million in Q1 FY'10 compared with
$0.46 million in Q1 FY'09 primarily due to the increase in revenues and
a decrease in general and administrative expense.
-- Net income attributable to Dehaier in the first quarter was
$0.52 million, an increase of 54% from $0.34 million for the same
period in 2009.
-- Earnings per diluted share in Q1 FY'10 was $0.17, compared to $0.11 per
diluted share in Q1 FY'09, due to the decrease in general and
administrative expense.
Liquidity and Capital Resources
The company's cash balance on March 31, 2010 was approximately $1.22 million. On March 31, 2010 Dehaier had short-term debt of $879,006 consisting of a final loan payment to a bank, which is due on May 20, 2010. The company had no long-term debt. Working capital was $6.75 million. Stockholders' equity totaled $11.08 million. The current ratio was 1.96, up from 1.87 at December 31, 2009.
Chen Ping, Dehaier's Chief Executive Officer, said, "The first quarter of 2010 has been an exciting period for Dehaier Medical Systems as we prepared for our Initial Public Offering on Nasdaq of 1,500,000 ordinary shares. The IPO closed on April 22nd and the management team has been invited to ring the bell at Nasdaq in early July. We are looking forward to visiting New York and meeting with analysts and portfolio managers to tell the American investment community about Dehaier.
"For the three months ended March 31, 2010, our total revenues increased by approximately 5% to $2.64 million from $2.52 million for the first three months in the prior year. Many of our end users such as hospitals became repeat customers when they needed new medical equipment, demonstrating the increased acceptance of our products among hospitals and other healthcare facilities.
"To strengthen our market presence, we plan to open new Customer Experience Centers in China. These centers will give our potential customers an opportunity to experience our products first-hand in an environment that is similar to the environment in which they will use the products, whether that is a home or healthcare facility. We anticipate using a portion of the net proceeds of the IPO to expand our marketing efforts in order to continue to grow our revenues in China and internationally.
"Our selling expense decreased in both U.S. dollars and as a percentage of our total net revenues for the three months ended March 31, 2010, primarily due to decreased spending in expanding our distribution network built in 2009.
"In the near term we will be introducing new products to the market which we plan to promote through a variety of advertising methods," said Ping.
About Dehaier Medical Systems Ltd.
Dehaier Medical Systems is an emerging leader in the development, assembly, marketing and sale of medical products in China, including respiratory and oxygen homecare products. The company develops and assembles its own branded products from third party components. The company also distributes products designed and manufactured by other companies including medical devices and respiratory and oxygen homecare products from IMD (Italy), Timesco (UK), ResMed (Australia) and JMS (Japan). Dehaier's technology is based on two patents, five pending patents and proprietary technology. More information may be found at http://www.chinadhr.com .
Information for investors, including an investment profile about Dehaier is available at http://www.hawkassociates.com/profile/dhrm.cfm . An online investor kit including press releases, current price quotes, stock charts and other valuable information for investors is available at http://www.hawkassociates.com .
Forward-looking Statements
This news release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements that are other than statements of historical facts. These statements are subject to uncertainties and risks including, but not limited to, product and service demand and acceptance, changes in technology, economic conditions, the impact of competition and pricing, government regulation, and other risks contained in reports filed by the company with the Securities and Exchange Commission. All such forward-looking statements, whether written or oral, and whether made by or on behalf of the company, are expressly qualified by the cautionary statements and any other cautionary statements which may accompany the forward-looking statements. In addition, the company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date hereof.
For further information, please contact:
Hawk Associates
Julie Marshall or Frank Hawkins
Tel: +1-305-451-1888
Email: [email protected]
DEHAIER MEDICAL SYSTEMS LIMITED AND AFFILIATE
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, December 31,
2010 2009
US$ US$
(unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents 1,222,933 1,151,721
Accounts receivable, less allowance
for doubtful accounts of $ 102,956
and $ 102,939 7,138,891 6,891,291
Other receivables 1,624,819 1,499,111
Prepaid expenses and other current
assets 1,392,455 1,691,387
Inventory, net 2,404,842 2,326,126
Total current assets 13,783,940 13,559,636
Property and equipment, net 2,781,904 2,862,625
Tax receivable 1,546,962 1,362,372
Total assets 18,112,806 17,784,633
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term borrowings 879,006 1,464,770
Accounts payable 64,233 93,770
Advances from customers 164,955 174,253
Accrued expenses and other current
liabilities 375,023 336,412
Taxes payable 5,375,561 4,993,387
Warranty obligation 178,784 178,755
Due to officer -- 3,861
Total current liabilities 7,037,562 7,245,208
Commitments and contingency
Shareholders' equity
Common stock, $0.002731 par value,
18,307,038 shares authorized,
3,000,000 shares issued and
outstanding 8,193 8,193
Additional paid-in capital 3,196,974 3,196,974
Retained earnings 5,818,953 5,298,742
Accumulated other comprehensive
income 774,763 773,127
Total Dehaier Medical Systems Limited
shareholders' equity 9,798,883 9,277,036
Non-controlling interest 1,276,361 1,262,389
Total shareholders' equity 11,075,244 10,539,425
Total liabilities and shareholders'
equity 18,112,806 17,784,633
DEHAIER MEDICAL SYSTEMS LIMITED AND AFFILIATE
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
For the three months ended March 31,
2010 2009
US$ US$
Revenue $2,641,089 $2,524,284
Cost of revenues (1,666,718) (1,587,488)
Gross profit 974,371 936,796
Service income 93,067 99,235
Service expense (28,021) (37,268)
General and administrative expense (223,385) (337,566)
Selling expense (167,851) (200,429)
Operating income 648,181 460,768
Financial expense (including
interest expense of $ 18,828 and
$28,365) (19,326) (28,956)
Income before provision for income
taxes and non-controlling interest 628,855 431,812
Provision for income taxes (94,883) (80,612)
Net income 533,972 351,200
Non-controlling interest in income (13,761) (13,344)
Net income attributable to Dehaier
Medical Systems Limited $520,211 $337,856
Earnings per share
-Basic 0.17 0.18
-Diluted 0.17 0.11
Weighted average number of common
shares used in computation
-Basic 3,000,000 1,891,930
-Diluted 3,000,000 3,000,000
DEHAIER MEDICAL SYSTEMS LIMITED AND AFFILIATE
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the three months ended March 31,
2010 2009
US$ US$
Operating Activities
Net income $533,972 $351,200
Adjustments to reconcile net income
to net cash provided by operating
activities
Depreciation and amortization 85,750 69,758
Provision for inventory obsolescence -- 52,917
Provision for warranty -- 18,534
Changes in assets and liabilities:
Increase in accounts receivable (247,601) (1,247,041)
Decrease in prepayments and other
current assets 298,932 633,009
Increase in other receivables (125,708) (100,682)
Increase in inventory (78,717) (106,480)
Increase in tax receivable (184,590) (152,567)
(Decrease) increase in accounts
payable (29,537) 293,340
(Decrease) increase in advances from
customers (9,298) 48,822
Increase in accrued expenses and
other current liabilities 38,611 2,890
Increase in tax payable 382,174 331,251
Net cash provided by operating
activities $663,988 $194,951
Investing Activities
Capital expenditures and other
additions $(4,578) $(4,410)
Advance to related parties (3,861) (969)
Net cash used in investing activities $(8,439) $(5,379)
Financing Activities
Repayment of Bank loan $(585,764) $(295,060)
Net cash used in financing activities $(585,764) $(295,060)
Effect of exchange rate fluctuations
on cash and cash equivalents 1,427 (8,830)
Net increase (decrease) in cash and
cash equivalents 71,212 (114,318)
Cash and cash equivalents at
beginning of period 1,151,721 282,603
Cash and cash equivalents at end of
period $1,222,933 $168,285
Supplemental cash flow information
Income tax paid $1,616 $160
Interest paid $18,828 $28,365
SOURCE Dehaier Medical Systems Ltd.
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