Dehaier Medical Systems Q2 Revenue Up 46% to $4.83 Million; Net Income Up 59% to 1.14 Million; EPS 0.27

Tuesday, August 17, 2010 Corporate News
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BEIJING, Aug. 16 Dehaier Medical SystemsLtd. (Nasdaq: DHRM), an emerging leader in the development, assembly,marketing and sale of medical devices and homecare medical products in China,today reported financial results for its second quarter 2010 ended June 30,2010.

Liquidity and Capital Resources

The company's cash balance on June 30, 2010 was approximately $6.54million. On June 30, 2010 Dehaier had short-term debt of $1,474,610 in theform of a short-term bank loan due in June 2011. The company had no long-termdebt. Working capital was $17,559,244, which the company said would beadequate to meet anticipated cash needs and sustain current operations for atleast 12 months.

Management Comments

Dehaier CEO Mr. Ping Chen said, "The second quarter of 2010 was anexciting period for our rapidly growing company. We recorded another quarterof excellent financial results and our stock began trading on the NasdaqCapital Market with our successful initial public offering ("IPO"), whichclosed on April 22, 2010. We sold 1,500,000 shares that produced net proceedsof $9,944,207.

"This has provided us with sufficient working capital to expand ourmarketing efforts in order to grow our revenues in China and internationally.

"The increase in revenues reflected increased acceptance of our productsamong hospitals and other healthcare facilities as many of our end users suchas hospitals became repeat customers when they needed new medical equipment.The increase in revenue was also due to Dehaier's growing line of productofferings.

"We signed several exclusive distribution agreements this quarter withinternational firms Penlon, HEYER and Welch Allyn to expand our product lines.Sales of products from these companies are already contributing to revenuegrowth.

"We are targeting the addition of four to eight new product offerings peryear. We anticipate these new products will include distributed products aswell as products that are developed or acquired by Dehaier. We have designated25 percent of the IPO proceeds for product research and development. Another20 percent of the IPO proceeds have been budgeted for potential acquisitions,clearly showing our focus on building a pipeline of products to introduce toour customers. We will be concentrating on products that enhance ourcapability to serve the respiratory and oxygen homecare markets.

"Underscoring the important competitive advantage we are achieving withour proprietary home oxygen therapy products is our previously-announced newcontract with Beijing C&D Co. to purchase Dehaier oxygen-chip units.

"In addition to increasing sales of our fast-growing Dehaier brandhomecare medical products, we are building new revenue streams by adding toour product line offerings through complementary acquisitions, such as theemergency ventilator product line we purchased from Beijing QiumanshiTechnology Co., as announced last month. That acquisition included theproduction technology as well as the complete proprietary intellectualproperty.

"With the marketing capital provided by our IPO, we plan to open newcustomer experience centers ("CECs") to strengthen our market presencethroughout China. These CECs give our potential customers an opportunity toexperience our products first-hand in an environment similar to theenvironment in which they will use the products, either in a home or in ahealthcare facility. Our initial CEC is already operational in Beijing and weanticipate opening three new CECs in the third quarter and up to nine CECsduring the fourth quarter, so that we will operate CECs in twelve cities atthe end of 2010. Our plan to open CECs in provincial capitals and big citiesthroughout China is a key part of our strategy for growing our high-marginhomecare medical product sales.

"We have participated in several medical exhibitions and tradeshows inChina and abroad to network and build relationships and alliances as wefurther build our distribution network in China and internationally.

"Our business outlook continues to be very favorable. We are excited tobring our growth story to the financial community, and were very pleased toparticipate recently in the Global Hunter investment conference in SanFrancisco. We remain comfortable with our previously announced earnings pershare target for 2010 of $0.80," Mr. Chen said.

Conference Call

Dehaier will host an earnings conference call on Tuesday, August 17, 2010at 9:00 a.m. Eastern Time (9:00 pm Beijing time on August 17). The call willcover the company's second quarter 2010 results, and a question-and-answersession will follow.

To participate, call U.S. toll free number 1-888-549-7735 approximately 10minutes before the call. International callers, please dial 1-480-629-9858.The conference ID number is 4349036. A live and archived webcast of the callwill be available at . Both an MP3file one hour after the call and a transcript 24 hours after the call will beavailable. These will be archived for 90 days via .

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 andoxygen homecare medical products. The company develops and assembles its ownbranded products from third party components. The company also distributesproducts designed and manufactured by other companies including medicaldevices and respiratory and oxygen homecare products from IMD (Italy), WelchAllyn (USA), Penlon (UK), HEYER (Germany), Timesco (UK), ResMed (Australia)and JMS (Japan). Dehaier's technology is based on two patents, five pendingpatents and proprietary technology. More information may be found at .

Information for investors, including an investment profile about Dehaieris available at . An onlineinvestor kit including press releases, current price quotes, stock charts andother valuable information for investors is available at .

Forward-looking Statements

This news release contains forward-looking statements as defined by thePrivate Securities Litigation Reform Act of 1995. Forward-looking statementsinclude statements concerning plans, objectives, goals, strategies, futureevents or performance, and underlying assumptions and other statements thatare other than statements of historical facts. These statements are subject touncertainties and risks including, but not limited to, product and servicedemand and acceptance, changes in technology, economic conditions, the impactof competition and pricing, government regulation, and other risks containedin reports filed by the company with the Securities and Exchange Commission.All such forward-looking statements, whether written or oral, and whether madeby or on behalf of the company, are expressly qualified by the cautionarystatements and any other cautionary statements which may accompany theforward-looking statements. In addition, the company disclaims any obligationto update any forward-looking statements to reflect events or circumstancesafter the date hereof.(Logo: ) (Logo: ) Q2 2010 Financial Highlights -- Revenue for the second quarter ended June 30, 2010 increased 46% to $4.83 million from $3.31 million in the same quarter a year ago reflecting the increased acceptance of the company's products among hospitals and other healthcare facilities. Expanded product lines also contributed to the revenue growth. -- Gross profit increased 46% to $1.92 million for Q2 FY'10 from $1.31 million in Q2 FY'09. -- Gross margin for the second quarter ended March 31, 2010 remained constant at 40%, the same as the second quarter in 2009. -- Operating income rose 52.76% to $1.36 million in Q2 FY'10 compared with $0.89 million in Q2 FY'09 primarily due to the increased revenues. -- Net income attributable to Dehaier for the second quarter ended June 30, 2010 increased 59% to $1.14 million, compared to $0.72 million for the same period of 2009. -- Earnings per diluted share in Q2 FY'10 was $0.27, compared to $0.24 per diluted share in Q2 FY'09. Six Months Highlights -- Revenue for the first six months of 2010 increased by 28% to $7.47 million from $5.83 million in the first six months of 2009. -- Gross profit increased 29% to $2.89 million from $2.25 million in the same period of 2009. -- Gross margin for the first six months ended June 30, 2010 remained constant at 39%, which is the same as that of the first six months in 2009. -- Operating income rose 49% to $2.0 million from $1.35 million in the same period of 2009. -- Net income attributable to Dehaier for the first six months increased 58% to $1.66 million, compared to $1.05 million for the same period of 2009. -- Earnings per diluted share in H1 FY'10 was $0.46, compared to $0.35 per diluted share in H1 FY'09.

SOURCE Dehaier Medical Systems Ltd.

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