Dehaier Medical Systems first-quarter net income increases 54% to $0.52 million

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.

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.