Dehaier Medical Systems (NASDAQ:DHRM)

BEIJING, May 24, 2012 /PRNewswire-Asia-FirstCall/ -- Dehaier Medical Systems Ltd. (NASDAQ: DHRM) ("Dehaier" or the "Company"), an emerging leader in the development, assembly, marketing and sale of medical devices and homecare medical products in China, today announced that the Chinese subsidiary of INTERMEDICAL ("IMD"), an Italian X-ray medical equipment manufacturer, extended Dehaier's appointment to exclusively distribute IMD's products throughout China through 2014.

Dehaier will remain the exclusive distributor of IMD's RADIUS C-arm X Ray machine in mainland China. Dehaier originally established a cooperation agreement with IMD in 2003 to begin distribution and sales for IMD's X-Ray machines in the China market, including its C-arm X-ray. IMD's C-arm X-ray machine generally consists of two units, the X-ray generator and an image system on a portable imaging system (C-arm) and a terminal used to store and manipulate the images. It has typically been used by hospitals and physicians for a variety of imaging and photography work and has been well-received by the medical community for its affordable price, stable performance and high quality.

Dehaier's President and CEO, Mr. Ping Chen, stated, "We are very pleased to continue to cooperate with IMD. Our distribution of their products has been a successful and mutually beneficial endeavor for nearly 10 years. We opened significant market opportunities for IMD's C-arm X-Ray machine in China, and the product has successfully sold and generated strong recurring revenue for Dehaier. In 2011, sales of C-arm X-ray machines from all vendors constituted approximately $3.6 million, or approximately 17%, of our total sales. Moving forward, we are hopeful that IMD's products will occupy an increasing percentage of total sales. In addition, we are working diligently to expand into the distribution of new product lines, while simultaneously growing the customer base for our own homecare health products."

First Quarter 2012 Financial and Operating Highlights

• Revenues of $3.3 million, up 12.3%
• Gross profit of $1.2 million, up 24.4%; gross margin improved to 37.4% from 33.8%
• Income from operations of $454,820, an increase of 52.4%
• Net income attributable to the Company of $126,021, or $0.03 per basic and diluted share, compared to$205,414, or $0.04 per diluted share in the prior year. Net income included a non-cash change in fair value of warrants liability of $199,508 in the first quarter of 2012.

Mr. Ping Chen, Chief Executive Officer of Dehaier Medical, stated, "In the first quarter of 2012, we continued to show strong growth in China and have begun to enter international markets. We continue to grow our medical device distribution platform business, which includes working with a number of larger international manufacturers. We recently extended our exclusive agreement with Timesco of London Ltd., a progressive surgical and medical company. Simultaneously, we are developing our own branded product line domestically and abroad. Within China, our homecare medical products, focused primarily on sleep disorder and respiratory ailments, continued to gain traction among Chinese consumers."

Mr. Chen continued, "We are also continuing to diversify our revenues. In the first quarter of 2012, we focused on implementing state-level government-contracted projects. We have placed a strong emphasis on obtaining provincial contracts throughout China, which are larger in size and scale. In March, Dehaier won a new bid to implement a government procurement project to provide imaging equipment for township hospitals in Xi'an, Shaanxi, China. We believe this bid demonstrates how far our Company has grown, indicates the government's faith in our ability to complete these projects, and could significantly contribute to our revenues in 2012."

Ms. Aileen Qi, Chief Financial Officer of Dehaier, commented, "We were pleased with our first quarter financial results, which were in line with the Company's expectations. Our favorable mix of product sales and market share gains led to a 12.3% revenue increase over the prior-year's quarter. Dehaier's growth was mainly driven by sales of our traditional medical devices and government procurement projects. We have also focused on streamlining our costs and improving our inventory management and were pleased to lower our operating expenses as a percentage of sales. This has benefitted the Company considerably during a time of inflationary pressures on our products and has allowed Dehaier to remain cost-competitive."

Outlook for 2012

Mr. Chen concluded, "Over the next few months, our primary focus is to utilize our existing distribution business as a platform to expand and grow into new revenue streams. We launched our home oxygen therapy service ("HOTS") in Beijing in the third quarter of 2011, and our management team remains focused on development and research of products as well as identifying the target customers, which we feel will contribute significantly to our future growth. We also have continued our expansion into the International healthcare market. In early 2012, we received CE Mark approval for our sleep diagnostic devices and air compressors, which will facilitate our efforts to sell our products in the European Union. We are seeking new and cost-effective means of distributing our products worldwide and are always looking for ways to corporate with others. Medical equipment sales and distribution will remain our main source of revenue going forward, and we expect this segment to develop at a stable pace and to serve as our foundation for growth. We will continuously leverage our cross-selling opportunities by expanding existing relationships of third-party distributed products, seeking new distribution partners and building international business for our proprietary products."

BEIJING, April 23, 2012 /PRNewswire-Asia-FirstCall/ -- Dehaier Medical Systems Ltd. (NASDAQ: DHRM) ("Dehaier" or the "Company"), an emerging leader in the development, assembly, marketing and sale of medical devices and homecare medical products in China, today announced that it has signed a strategic cooperation agreement with Timesco of London Ltd., one of the most progressive surgical and medical companies in the U.K.

Under the terms of this three-year agreement Dehaier will be the exclusive distributor in mainland China for Timesco's entire laryngoscope Optima series of products, which include the CXL and Eclispse series. The presidents of both companies signed the agreement at the 67th China International Medical Equipment Fair in Shenzhen.

A laryngoscope is a viewing instrument that is used for tracheal intubations. The laryngoscope Optima series products offer a broad visual field and better vision for physicians due to its patented light source, while also addressing a variety of clinical demands through a diverse set of models and specifications. The agreement represents a benchmark for Dehaier as a leading distributor in China's laryngoscope market, while also providing a new product channel for the Company to offer its customers across China and ultimately strengthen its market share and increase revenue.

Dehaier's President and CEO, Mr. Ping Chen, commented, "Dehaier has maintained a long-term and reliable partnership with Timesco since 2003; we are currently taking as leading distributor in the laryngoscope market in China. We are glad that Timesco has expressed their appreciation of our product sales and market influence. Dehaier secured our competitive position through a strong and geographically diverse distribution network. We anticipate a comprehensive cooperation with Timesco, and believe this will help enhance our corporate reputation and ultimately agreements such as this will return value for our shareholders."

DHRM adds a statement about the possible need to raise capital to pursue acquisition opportunities.

2011 10K

In 2010, we financed our operations primarily from proceeds of common stock issuances. In 2011, we mainly used the cash proceeds from our IPO and from our operations. As of December 31, 2011, we had approximately $3.69 million in cash and cash equivalents. As a result of the total cash activities, net cash decreased from $5,923,386 at December 31, 2010 to $3,694,486 at December 31, 2011. We believe that our currently available working capital of $26,981,557, including cash of $3,694,486, should be adequate to meet our anticipated cash needs and sustain our current operations for at least 12 months. To the extent we engage in acquisitions in the future, we will need to rely on a variety of sources of funding, including but not limited to operating cash and debt/equity financings. 

Fourth Quarter 2011 Financial Highlights

• For its fourth quarter ended December 31, 2011, the Company reported revenue of $5.4 million, compared to$6.7 million in the prior year period. The decrease was largely due to the adjustment of business strategies that company made in the fourth quarter and second half of 2011 (referenced above), which focused on expanding market penetration of its home oxygen therapy service and international expansion. The Company is spending significant resources on upgrading products and accumulating market insight for these initiatives and expects corresponding revenues from these business areas in the near future.
• The Company's gross profit for the quarter ended December 31, 2011 was $1.8 million, or 33.6% of revenue, compared to $2.5 million, or 37% of revenue in the prior year period. The decrease in gross margin was largely due to increased expenses related to marketing and pursuing our new business initiatives.
• As discussed above, the Company incurred a non-cash charge due to an increase in provision for doubtful accounts of approximately $0.86 million for the year ended December 31, 2011. As a result, the Company reported an operating loss of $46,139 for the period, compared to operating income of $1.5 million in the prior year. The Company also reported a net loss attributable to the Company of $36,104, or negative $0.01per diluted share, compared to net income of $1.5 million, or $0.32 per diluted share, in the fourth quarter of 2010.

Mr. Ping Chen, Chief Executive Officer of Dehaier Medical, stated, "We were very pleased to report steady growth during 2011 as we continue to slowly transition from traditional domestic distribution of medical devices to diversified sales of homecare medical devices, both domestically and internationally. Within China, our homecare medical products, focused primarily on sleep disorder and respiratory ailments, continued to gain traction among Chinese consumers. We also have worked diligently to secure larger, State-level contracted business, as evidenced by our cooperation with China Developmental Bank for healthcare infrastructure projects in Hunan and Anhui provinces. We also worked to establish the first oxygen filling facility and service center for home oxygen therapy service in Beijing, which represents the initial step of expansion into home oxygen therapy treatment domestically."

Mr. Chen continued, "We also recently expanded outside of China, and invested time and resources during the second half of 2011 on increasing our geographic footprint. We received CE Mark certification on three of our products, our Medical Air Compressor, Oxygen Concentrator, and Sleep Diagnostic Devices. We enhanced our sales and distribution channels in international markets, most notably signing with three companies to distribute Dehaier's DHR-5L oxygen concentrators in Romania, which marked Dehaier's first entry into the European homecare medical product market. Finally, we recently established a wholly-owned subsidiary in Illinois, as part of a long-term goal of establishing sales channels in North America. Because of these strategic growth initiatives, we incurred expenses without corresponding revenue; however, as we enter 2012 we believe that these developments will begin to drive a more diverse and robust revenue stream to the Company."

Outlook for 2012

Mr. Chen concluded, "We continue to see strong market trends on the consumer level in the homecare medical device sector in China and expect government expansion and vigorous promotion of healthcare projects by the newly-released state policies over the next five years. We remain confident about the long-term growth prospects for the healthcare sector in China and look forward to continuing to expand our unique product lines and distribution abilities throughout the country. We are also supported by a moderate balance sheet, with $27.0 million in working capital and no long-term debt. As a result, we feel that the Company is in an excellent position to expand into new markets."

The executive officers of Dehaier Medical Systems Limited (the “Registrant”) intend to use the materials filed herewith, in whole or in part, on its website and in one or more meetings with investors and analysts.

BEIJING, Dec. 16, 2011 /PRNewswire-Asia-FirstCall/ -- Dehaier Medical Systems Ltd. (NASDAQ: DHRM) ("Dehaier" or the "Company"), an emerging leader in the development, assembly, marketing and sale of medical devices and homecare medical products in China, today announced that it has signed on three Romanian companies to distribute Dehaier's DHR-5L oxygen concentrators in Romania. This marks Dehaier's first entry into the European homecare medical product market.

Ms. Rayna Dong, Director of Dehaier's International Business Department said, "We are delighted to establish cooperation with our new distributors in Europe. To extend Dehaier's market reach, our international sales forces have actively sought distribution and OEM opportunities and have participated in international medical equipment trade shows. These activities also promote our market acceptance and brand awareness outside China. We believe that our homecare medical products, such as our full line of sleep-disordered breathing and respiratory products, are not only competitive in terms of quality and price, but also provide all-in-one solution to our end users. Going forward, we will continue to seek distributors to penetrate international markets."

"Our partnership with those distributors in Europe will allow Dehaier to extend its footprint into Europe and marks a significant milestone forward in our international market development plan," commented Mr. Ping Chen, Chief Executive Officer of Dehaier Medical. "We believe that the market potential for our homecare medical products is well beyond the Chinese domestic market. In the coming years, we will continue developing the European and other international markets. As we pursue regulatory approvals in Europe and the United States for more of our products, we aim to sign on more international distributors to reach a wider global market."

Growth Strategies

• We will develop our home oxygen services and expand the service platform to dominate the domestic market for this service in China, and we will also implement value-added business based on the same platform. Eventually, we seek to provide customers with an all-in-one solution in the home healthcare field.

• We will expand our product portfolio through continued investment in research and development and acquisition of companies having proper products complementary to our core business. We plan to release the second generation of home use continuous positive airway pressure products and oxygen concentrators in early 2012. We have received CE mark approval for our sleep diagnostic device DHR-998, which will be marketed in European countries soon.

• We will expand our distribution channels into e-commerce platforms. We plan to create more cross-selling opportunities for our homecare products, while providing oxygen delivery through the service platform.

• We will build our brand name domestically as both a distributor and a trusted partner by leveraging our relationships with healthcare professionals, agents and other downstream distributors, maintaining and expanding our customer base, and promoting business growth steadily.

• We will expand into overseas markets and establish a distribution network, through distribution agreements, OEM partnerships, direct sales force and e-commerce platforms. We will build our brand name by actively participating in international trade shows. We will attempt to have all our homecare medical products approved by the U.S. Food and Drug Administration and its counterpart in Europe.

BEIJING, October 1, 2011 /PRNewswire-Asia-FirstCall/ -- Dehaier Medical (NASDAQ: DHRM) an emerging leader in the development, assembly, marketing and sale of medical devices and homecare medical products in China, today announced that Aileen Qi has been appointed interim Chief Financial Officer, effective October 1, 2011. Ms. Rita Liu has tendered her resignation as the Chief Financial Officer of Dehaier Medical Systems Limited (the "Company"), effective September 30, 2011. Ms. Liu resigned in order to pursue other professional opportunities, and not due to any disagreement with the Company.

We believe that our currently available working capital of $23,148,929, including cash of $3,372,673, should be adequate to meet our anticipated cash needs and sustain our current operations for at least 12 months.

First Quarter Results:

• Revenue increased by 12% year-over-year to $2.95 million, up from $2.64 million in the first quarter of 2010.
• Gross profit was $1.00 million, or 34% of revenue, compared with $0.97 million, or 37% of revenue in the first quarter of 2010.
• Operating income and operating margin were $0.30 million and 10%, respectively, compared with $0.65 million and 25%, respectively, in the first quarter of 2010.
• Net income attributable to the Company was $0.21 million, or $0.04 per diluted share based on 4.7 million weighted average shares outstanding, compared with net income of $0.52 million, or $0.17 per diluted share based on 3.0 million weighted average shares outstanding in the first quarter of 2010.

"Despite the seasonally low first quarter as hospitals and government-sponsored organizations finalize their spending budgets for the year, we increased our sales by 12% from the same period last year. Primary drivers of our year-over-year top line gains included favorable market momentum, as well as increased sales of our medical device products and strong partnerships with third party brand names," said Mr. Ping Chen, CEO of Dehaier. "During the quarter, we made critical investments to build our infrastructure that best position our Company to capture the burgeoning market opportunity for both our medical device and homecare medical products. We continued to dedicate resources to R&D, introducing innovative products for the oxygen and respiratory homecare market, and established a seasoned marketing team to support our expansion initiatives. Although these efforts affected our bottom line in the first quarter, we believe these investments in our future will contribute to sales growth and bolster our profits in 2011 as we continue build on our solid base of customers in both the professional and homecare medical product markets."

Risk Factors section in 2010 10K is inadequate.

BEIJING, April 25, 2011 /PRNewswire-Asia/ -- Dehaier Medical Systems Ltd. today released the following letter to shareholders from Mr. Ping Chen, Dehaier's Chairman and Chief Executive Officer:

To Our Shareholders, Partners and Friends:

Last week marked the first anniversary of Dehaier's initial public offering and the listing of our shares on the NASDAQ. The year that has passed since our IPO was one of growth and execution, strategically, operationally and financially. Our success in the last year is thanks to the continued advancement of both our medical devices and homecare products.

In 2010, we expanded our distribution business product portfolio by partnering with third party medical device manufacturers, and strengthened our brand through increased domestic marketing. We believe that these efforts will position us well to gain additional share as China's healthcare market continues to mature.

Our solid financial results reflect the strong demand in China for medical devices and the overall health of our business.  In 2010, our revenue of $19.6 million represented a year-over-year increase of 58%.  Our gross profit grew by 57% year-over-year to $7.6 million. Dehaier's net income increased by 70% year-over-year to $4.5 million, or $1.09 per diluted share. Our homecare business was particularly strong, with $4.5 million in sales. Our triple digit revenue growth for the full year in our homecare business resulted in greater balance within our revenue mix, which meets one of our longer-term sales objectives of achieving a nearly equal split between homecare and medical devices.

During the last 12 months, we have accomplished a number of important milestones that give us a great deal of confidence in our ability to build on our record 2010 results with an even stronger 2011.  

Product Portfolio Growth for Distinct End Markets

Our performance in 2010 was the result of strong growth in both our branded and third party medical devices, as well as the continued emergence of our homecare products. The breadth of our product portfolio allows us to address the needs of two fast-growing segments of the market, each with unique but significant growth catalysts.

The professional medical device market, where we offer both branded and third-party products such as anesthesia machines, C-arm X-ray equipment and respiratory therapy equipment, is experiencing tremendous growth as a result of China's New Medical Reform Plan and 12th Five Year Plan, both of which provide for significant government capital investments to improve the quality and availability of healthcare nationwide. The goal of these programs and investments is to give Chinese citizens greater, more cost effective access to high-quality, professional care, regardless of location or financial resources.

Our products and the third party products we distribute are becoming more widely adopted by hospitals, health centers and clinics thanks in part to increased government funding. In order to build our position in this market, we focused throughout 2010 on expanding our network of dealers and distributors and relationships with medical centers. These efforts increased awareness of the products we offer, both directly and as a distributor.

The continued growth of our footprint in the Chinese market has brought Dehaier attention from leading global medical device manufacturers, and in 2010 we expanded our third party device portfolio through exclusive distribution agreements for HEYER Medical's respiratory products and two of Welch Allyn's patient monitors, the Propaq® CS and the Atlas™.

In addition to the growth of our third party distribution portfolio, we won a $2 million medical device distribution bid for a new rural healthcare construction project supported by China Development Bank Corp, through which we will collaborate with Philips Medical Systems, Olympus Corporation of Japan and others to supply newly-built medical facilities with state-of-the-art equipment. This equipment will be used to provide the rural population with a higher standard of care through improved facilities and technology.

While the professional medical device market is substantial, we believe the greatest untapped potential, both domestically and internationally, lies with our homecare products, and we are keenly focused on the ongoing expansion of this line of products. Our full-year homecare product sales increased by over 300% compared with 2009, and continued growing as a percentage of our total sales.

We believe the homecare market will remain strong for the foreseeable future and are committed to capturing greater market share as it continues to mature. In addition to leveraging our strong dealer, distributor and hospital network, where we have built a great deal of brand equity as a result of our professional medical devices, we are employing non-traditional marketing tools to reach out directly to potential homecare customers.

During 2010, we opened 12 Customer Experience Centers (CECs), which provide patients and medical professionals a convenient way to experience our products and services in a safe, comfortable environment, designed to reduce the stress associated with beginning such treatments. These CECs have been popular with potential customers, and we plan to open an additional 20 Centers by the end of 2011, giving Dehaier a direct presence in many of China's key geographic areas.

Market Dynamics and Strategic Growth

The healthcare market in China is poised for significant growth as a result of increasing government investment in improving the quality and availability of healthcare in China to fall more closely in line with healthcare in other developed nations. In addition, a growing percentage of Chinese citizens' personal wealth is being spent on health and wellness-related initiatives. We believe that Dehaier is positioned to capitalize the growth of China's emerging healthcare industry and, more importantly, its nascent medical device and homecare market.

While a favorable market is necessary for sustained growth, the market alone will not be enough to propel Dehaier to the next level of success. We have a multi-faceted growth strategy that we are constantly reviewing and refining in an effort to capture additional market share, continue building brand equity and expand our business, both domestically and internationally, with the ultimate goal of increasing shareholder value. Going forward, our primary strategic focus will be on:

• Building our brand domestically as both a manufacturer and a trusted partner by leveraging our relationships with healthcare professionals, agents and distributors, and expansion of our CEC concept as a sales and marketing tool for both consumers and medical professionals.

• Expanding our product portfolio through innovative R&D. We are currently targeting the introduction of four to eight new products for the domestic market this year, with a primary focus on additions to our oxygen and respiratory homecare offering.

• Diversifying our base of third party distributed products by expanding relationships with existing partners and establishing partnerships with additional device manufacturers.

• International expansion into the US and Europe, where several of our homecare products are currently under review by the Food and Drug Administration (FDA) in the US and Conformite Europeenne (CE) in the European Union.

 

Looking Ahead

Given our efforts and accomplishments to date, attractive markets, financial growth and clear growth strategy, we are optimistic about Dehaier Medical's continued success throughout 2011 and well into the future.

The overall healthcare market in China has grown significantly in recent years, with increasing awareness of health issues creating demand for improved infrastructure and higher levels of medical care in both urban and rural areas. We believe our cooperation with China Development Bank on rural medical care will generate more opportunities to grow our presence and build our reputation, particularly in the country's underdeveloped areas, where the need for products such as ours is greatest.

Additionally, last week, we announced a strategic cooperation agreement with Taiyo Nippon Sanso Shenwei (Shanghai) and Beijing Orient, two major medical gas providers in the global and Chinese market, to develop home oxygen therapy service in Beijing. We believe this cooperation will further solidify our market position in product and service offering.

We expect these initiatives, coupled with the successful execution of our growth strategy, will drive continued financial and operational growth, and enhance value for shareholders. On behalf of the entire Dehaier family, thank you for sharing in our success to date and being a partner in our future.

Best Regards,

Ping Chen,

 

 

 

Chairman, Chief Executive Office

On March 22, 2010, the founders of the Company placed an aggregate of 600,000 common shares of the Company into escrow. Such shares equaled 40% of the maximum number of shares which were sold in the initial public offering (“IPO”). The shares were required to remain in escrow until the Company files its Form 10-K with the Securities and Exchange Commission for the year ended December 31, 2010. The shares in escrow (Make-Good Shares) were accounted for as an element in the IPO and the Company will not recognize any compensation expense upon the return of such Make-Good Shares to the holders.

To the extent the Company’s earnings per share for the year ended December 31, 2010 were less than $0.80, the Company would have been required to redeem, pro rata, such shares in order to cause the effective earnings per share to equal $0.80. For the year ended December 31, 2010, however, the earnings per share of the company was $1.09, or approximately 36% higher than the per share price upon which the Company’s initial public offering valuation was based. Thus, the Company does not need to redeem or prorate such shares. The shares will be returned to the founders 45 days after the filing of this Form 10-K. These shares are included as part of the calculation of the basic and diluted earnings per share for all the periods presented in the accompanying consolidated financial statements.

Fourth Quarter 2010 Financial Highlights

• Revenue increased by 126% year-over-year to $6.7 million, up from $2.9 million in the fourth quarter of 2009.
• Revenue from homecare solutions grew dramatically by 998% year-over-year to $2.3 million, or 34% of total revenue, up from $209,000 in the fourth quarter of 2009.
• Gross profit increased by 119% year-over-year to $2.5 million, or 36.9% of revenue, up from $1.1 million, or 38.2% of revenue in the fourth quarter of 2009.
• Operating income and operating margin were $1.5 million and 22.8%, respectively, compared with $764,000 and 25.9%, respectively, in the fourth quarter of 2009.
• Net income attributable to the Company improved 145% to $1.5 million, or $0.32 per diluted share based on 4.7 million weighted average shares outstanding, compared with net income of $602,000, or $0.20 per diluted share based on 3.0 million weighted average shares outstanding in the fourth quarter of 2009.
• Strengthened balance sheet with $5.9 million in cash and cash equivalents, or $1.27 per diluted share, as of December 31, 2010, compared with $1.2 million as of December 31, 2009.
• Adjusted EPS was $036 vs. $0.20.

Full Year 2010 Financial Highlights

• Revenue increased by 58% year-over-year to $19.6 million, up from $12.4 million in 2009.
• Revenue from homecare solutions tripled to $4.5 million, up from $1.1 million in 2009.
• Gross profit increased by 57% year-over-year to $7.6 million, or 38.9% of revenue, up from $4.9 million, or 39.3% of revenue in 2009.
• Operating income and operating margin were $5.1 million and 26.2%, compared with $3.4 million and 27.1% in 2009, respectively.
• Net income attributable to the Company increased 70% to $4.5 million, or $1.09 per diluted share based on 4.2 million weighted average shares outstanding, compared with net income of $2.7 million, or $0.89 per diluted share based on 3.0 million weighted average shares outstanding in 2009.
• Adjusted EPS was $1.16 vs. $0.89.

"2010 was a record year for Dehaier. We achieved strong growth across both our branded and third party medical devices, as well as our homecare products businesses, while positioning the Company for success in 2011 and beyond," said Mr. Ping Chen, CEO of Dehaier. "Key to our growth in 2010 was the continued advancement of our homecare products business, in which we achieved triple-digit gains for both the fourth quarter and full year. While the domestic market presents a compelling growth opportunity, international expansion is a critical element of our longer-term strategy and we are making meaningful progress in this regard, with several of our respiratory therapy homecare products currently pending regulatory approval in the United States and European Union. We believe that securing these approvals and rolling out our products in targeted international markets will provide another important catalyst for our business and help propel Dehaier to the next level of top- and bottom-line growth."

We believe that our currently available working capital of $22,618,735, including cash of $5,923,386, should be adequate to meet our anticipated cash needs and sustain our current operations for at least 12 months.

On December 6, 2010, the Board of Directors of the Registrant concluded that the audited consolidated financial statements included in the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2009, originally filed with the Securities and Exchange Commission on March 31, 2010 , should no longer be relied upon due to an understatement of the weighted average number of common shares outstanding, assuming dilution, as of December 31, 2009. Specifically, the Registrant determined that the dilutive effect of convertible preferred shares at December 31, 2009 was understated by 923,392 shares. This resulted in the weighted average number of common shares outstanding, assuming dilution, at December 31, 2009 also being understated by 923,392 shares. In turn, diluted earnings per share for the year ended December 31, 2009 was overstated by $0.40 per share.

We believe that our currently available working capital of $18,011,309, including cash of $4,964,450, should be adequate to meet our anticipated cash needs and sustain our current operations for at least 12 months.

Third Quarter 2010 Financial Highlights

• Revenues for the third quarter of fiscal year 2010 increased by 52.1% year-over-year to $5.5 million, up from $3.6 million in the third quarter of 2009.

• Net income attributable to the Company for the third quarter increased 38.2% year-over-year to $1.4 million, compared with $1.0 millionfor the third quarter of 2009.

• Gross margin for the third quarter was 41.4% based on gross profit of $2.3 million, compared with a 41.4% margin in the same period last year.

• Operating income and operating margin for the third quarter were $1.6 million and 29.4%, respectively, compared to $1.2 million and 34.5%, respectively, in the third quarter of 2009.

• Earnings per diluted share were $0.30 for the quarter, compared with diluted EPS of $0.34achieved in the same period a year ago.

Mr. Ping Chen, CEO of Dehaier, stated, "We are very pleased with the 52% sales growth we achieved during the third quarter. As the domestic medical equipment market continues to grow, driven by national healthcare reform initiatives, we will capitalize upon our strong partnerships with leading global manufacturers to increase our market share."

Mr. Chen continued, "Our home healthcare equipment segment is a major strategic focus for Dehaier, and we plan to grow this part of our business by diversifying our product line, aggressively developing our domestic sales network, and expanding into international markets. Building upon our successful market penetration in China, we remain fully committed to becoming a leader in the global respiratory and oxygen homecare market."