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RESTATEMENT OF FINANCIAL STATEMENTS | 12 Months Ended
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Dec. 31, 2015
Accounting Changes and Error Corrections [Abstract] |
Accounting Changes and Error Corrections [Text Block] |
| 3. | RESTATEMENT OF FINANCIAL STATEMENTS
On February 22, 2016, the Company’s management along with the Company’s Board of Directors agreed to focus the Company’s business interests on new mobile medical devices, and decided to discontinue their traditional medical device business interest. The traditional medical device line of business included assembly and sales of X-ray machines, anesthesia machines, monitoring devices, general medical products, and oxygen generators. The mobile medical device business will focus on the development of the Company’s remaining product line, inclusive of products such as the second generation ventilator, general medical products (such as laryngoscope), compressor products, sleep respiratory products, and wireless medical devices. As part of their decision to discontinue its traditional medical device business, the Company reevaluated its prior beliefs and estimates about certain assets as of 2014. The Board of Directors concluded that the audited consolidated financial statements for the year ended December 31, 2014 included in the Company’s Annual Report on Form 20-F for the year ended December 31, 2014, originally filed with the Securities and Exchange Commission on April 30, 2015, should no longer be relied upon due to an understatement of bad debt allowances for accounts receivable and other receivables, an overstatement of prepayments and carrying value of long-lived assets and an inadequate reserve on inventory. As a result, management determined that a fair presentation of the Company’s financial statements in light of the 2016 decision to classify traditional medical device operations as discontinued required the Company to increase bad debt allowances for accounts receivable and other receivables, to write down some prepayments, to place increased reserve on inventory due to obsolescence, and to write down the carrying value of long-lived assets to the fair value less disposal cost. These error corrections will be presented as restatements, in addition to presenting the traditional medical device business as a discontinued operation, as determined by the Company’s management and Board of Directors. The effects of the restatement were as follows:
|  | As of December 31, |
|  | 2014 |  |  |  |  | 2014 |
|  | As Previously Reported |  | Effect of Restatement |  | Restated |
|  | US$ |  |  | US$ |  | US$ |
ASSETS |  |  |  |  |  |  |  |  |  |
CURRENT ASSETS: |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  |  | 1,727,763 |  |  | - |  |  | 1,727,763 |
Accounts receivable, net |  |  | 169,765 |  |  | (27,536) |  |  | 142,229 |
Other receivables, net |  |  | 1,693,466 |  |  | (22,785) |  |  | 1,670,681 |
Advances to suppliers - third parties |  |  | 1,929,663 |  |  | (326,097) |  |  | 1,603,566 |
Advance to supplier - related party |  |  | - |  |  | 1,498,627 |  |  | 1,498,627 |
Inventories, net |  |  | 4,119,330 |  |  | (35,992) |  |  | 4,083,338 |
Tax receivable |  |  | 138,986 |  |  | (138,986) |  |  | - |
Deferred tax asset |  |  | 407,539 |  |  | (407,539) |  |  | - |
Current assets held for discontinued operation |  |  | 20,908,018 |  |  | (18,244,705) |  |  | 2,663,313 |
Total Current Assets |  |  | 31,094,530 |  |  | (17,705,013) |  |  | 13,389,517 |
Deposits for purchase of property, plant and equipment-related party |  |  | 1,498,627 |  |  | (1,498,627) |  |  | - |
Property and equipment, net |  |  | 2,694,167 |  |  | - |  |  | 2,694,167 |
Intangible assets, net |  |  | 5,014,470 |  |  | - |  |  | 5,014,470 |
Long-term prepaid expenses |  |  | - |  |  | 142,377 |  |  | 142,377 |
Other assets held for discontinued operation |  |  | 6,643,480 |  |  | (6,641,829) |  |  | 1,651 |
Total Assets |  |  | 46,945,274 |  |  | (25,703,092) |  |  | 21,242,182 |
LIABILITIES AND EQUITY |  |  |  |  |  |  |  |  |  |
CURRENT LIABILITIES: |  |  |  |  |  |  |  |  |  |
Short-term borrowings |  |  | 2,440,500 |  |  | - |  |  | 2,440,500 |
Accounts payable |  |  | 67,094 |  |  | - |  |  | 67,094 |
Advances from customers |  |  | 61,443 |  |  | - |  |  | 61,443 |
Accrued expenses and other current liabilities |  |  | 477,387 |  |  | (16,774) |  |  | 460,613 |
Taxes payable |  |  | 134,814 |  |  | - |  |  | 134,814 |
Warranty obligation |  |  | 134,220 |  |  | - |  |  | 134,220 |
Current liabilities held for discontinued operation |  |  | 362,791 |  |  | (11,107) |  |  | 351,684 |
Total Current Liabilities |  |  | 3,678,249 |  |  | (27,881) |  |  | 3,650,368 |
OTHER LIABILITIES |  |  |  |  |  |  |  |  |  |
Warrants liability |  |  | 553,060 |  |  | - |  |  | 553,060 |
Total Liabilities |  |  | 4,231,309 |  |  | (27,881) |  |  | 4,203,428 |
Commitments and Contingency |  |  |  |  |  |  |  |  |  |
Equity |  |  |  |  |  |  |  |  |  |
Common shares, $0.002731 par value, 18,307,038 shares authorized, 6,194,475 and 5,808,675 shares issued and outstanding at December 31, 2015 and 2014, respectively |  |  | 15,864 |  |  | - |  |  | 15,864 |
Additional paid in capital |  |  | 18,719,965 |  |  | - |  |  | 18,719,965 |
Retained earnings |  |  | 19,142,337 |  |  | (25,297,107) |  |  | (6,154,770) |
Accumulated other comprehensive income |  |  | 3,382,707 |  |  | 17,492 |  |  | 3,400,199 |
Total Dehaier Medical Systems Limited shareholders' equity |  |  | 41,260,873 |  |  | (25,279,615) |  |  | 15,981,258 |
Non-controlling interest |  |  | 1,453,092 |  |  | (395,596) |  |  | 1,057,496 |
Total equity |  |  | 42,713,965 |  |  | (25,675,211) |  |  | 17,038,754 |
Total liabilities and equity |  |  | 46,945,274 |  |  | (25,703,092) |  |  | 21,242,182 |
|  | For the Years Ended |
|  | December 31, |
|  | 2014 |  |  |  |  | 2014 |
|  | As Previously Reported |  | Effect of Restatement |  | Restated |
|  | US$ |  | US$ |  | US$ |
Revenues |  |  | 2,774,241 |  |  | - |  |  | 2,774,241 |
Costs of revenue |  |  | (1,746,399) |  |  | (36,008) |  |  | (1,782,407) |
Gross profit |  |  | 1,027,842 |  |  | (36,008) |  |  | 991,834 |
Service incomes |  |  | 131,446 |  |  | - |  |  | 131,446 |
Service expenses |  |  | (34,519) |  |  | - |  |  | (34,519) |
General and administrative expenses |  |  | (1,945,226) |  |  | - |  |  | (1,945,226) |
Provision for doubtful accounts |  |  | (8,351) |  |  | (380,847) |  |  | (389,198) |
Selling expenses |  |  | (227,304) |  |  | - |  |  | (227,304) |
Operating loss |  |  | (1,056,112) |  |  | (416,855) |  |  | (1,472,967) |
Financial expenses |  |  | (195,965) |  |  | 21,664 |  |  | (174,301) |
Other incomes |  |  | 83,762 |  |  | - |  |  | 83,762 |
Other expenses |  |  | - |  |  | (22,299) |  |  | (22,299) |
Loss on disposal of equipment |  |  | (635) |  |  | 635 |  |  | - |
Change in fair value of warrants liability |  |  | 2,866,171 |  |  | - |  |  | 2,866,171 |
Income before provision for income tax and non-controlling interest |  |  | 1,697,221 |  |  | (416,855) |  |  | 1,280,366 |
Provision for income tax (expense) benefit |  |  | 49,991 |  |  | (407,717) |  |  | (357,726) |
Net income from continuing operations |  |  | 1,747,212 |  |  | (824,572) |  |  | 922,640 |
Net income (loss) from discontinuing operations |  |  | (1,088,208) |  |  | (24,868,304) |  |  | (25,956,512) |
Net Income (Loss) |  |  | 659,004 |  |  | (25,692,876) |  |  | (25,033,872) |
Less: net loss attributable to non-controlling interest |  |  | (339,989) |  |  | (395,769) |  |  | (735,758) |
Net income (loss) attributable to Dehaier Medical Systems Limited |  |  | 998,993 |  |  | (25,297,107) |  |  | (24,298,114) |
Net income from continuing operations |  |  | 1,747,212 |  |  | (824,572) |  |  | 922,640 |
Net income (loss) from discontinuing operations |  |  | (1,088,208) |  |  | (24,868,304) |  |  | (25,956,512) |
Other comprehensive income (loss) |  |  |  |  |  |  |  |  |  |
Foreign currency translation loss |  |  | (592,421) |  |  | 15,530 |  |  | (576,891) |
Comprehensive income (loss) |  |  | 66,583 |  |  | (25,677,346) |  |  | (25,610,763) |
-less comprehensive loss attributable to the non-controlling interest |  |  | (340,194) |  |  | (422,583) |  |  | (762,777) |
Comprehensive income (loss) attributable to Dehaier Medical Systems Limited |  |  | 406,777 |  |  | (25,254,763) |  |  | (24,847,986) |
Earnings (loss) per share |  |  |  |  |  |  |  |  |  |
-Basic |  |  | 0.18 |  |  | (4.59) |  |  | (4.41) |
-Diluted |  |  | 0.18 |  |  | (4.52) |  |  | (4.34) |
Weighted average number of common shares used in computation |  |  |  |  |  |  |  |  |  |
-Basic |  |  | 5,510,076 |  |  | - |  |  | 5,510,076 |
-Diluted |  |  | 5,597,169 |  |  | - |  |  | 5,597,169 |
|  | For the years ended |
|  | December 31, |
|  | 2014 |  |  |  |  | 2014 |
|  | As Previously Reported |  | Effect of Restatement |  | Restated |
|  | US$ |  | US$ |  | US$ |
Cash flows from operating activities |  |  |  |  |  |  |  |  |  |
Net income (loss) |  |  | 659,004 |  |  | (25,692,876) |  |  | (25,033,872) |
Net income (loss) from discontinued operations |  |  | (1,088,208) |  |  | (24,868,304) |  |  | (25,956,512) |
Net income from continuing operations |  |  | 1,747,212 |  |  | (824,572) |  |  | 922,640 |
Adjustments to reconcile net income to net cash (used in) provided by operating activities |  |  |  |  |  |  |  |  |  |
Stock-based compensation expense |  |  | 1,408,421 |  |  | - |  |  | 1,408,421 |
Depreciation and amortization |  |  | 269,595 |  |  | - |  |  | 269,595 |
Change in fair value of warrants liability |  |  | (2,866,171) |  |  | - |  |  | (2,866,171) |
Change in deferred tax assets |  |  | (282,041) |  |  | 407,717 |  |  | 125,676 |
Provision for accounts receivable |  |  | 8,351 |  |  | 27,549 |  |  | 35,900 |
Provision for other receivables |  |  | - |  |  | 27,200 |  |  | 27,200 |
Provision for advances to suppliers - third parties |  |  | - |  |  | 326,098 |  |  | 326,098 |
Change in warranty reserve |  |  | (209,227) |  |  | - |  |  | (209,227) |
Provision for inventory obsolescence |  |  | 106,199 |  |  | 36,008 |  |  | 142,207 |
Changes in assets and liabilities: |  |  |  |  |  |  |  |  |  |
(Increase) Decrease in accounts receivable |  |  | 1,743,792 |  |  | - |  |  | 1,743,792 |
Decrease in advances to suppliers - third parties |  |  | 3,751,434 |  |  | - |  |  | 3,751,434 |
Increase in advance to supplier - related party |  |  | (1,498,627) |  |  | - |  |  | (1,498,627) |
Increase in other receivables |  |  | (443,285) |  |  | - |  |  | (443,285) |
Increase in inventories |  |  | (3,676,810) |  |  | - |  |  | (3,676,810) |
Decrease in taxes receivable |  |  | 372,935 |  |  | - |  |  | 372,935 |
Increase in long-term prepaid expenses |  |  | (142,377) |  |  | - |  |  | (142,377) |
Decrease in accounts payable |  |  | (19,710) |  |  | - |  |  | (19,710) |
Decrease in advances from customers |  |  | (256,504) |  |  | - |  |  | (256,504) |
Decrease in accrued expenses and other current liabilities |  |  | (33,961) |  |  | - |  |  | (33,961) |
Increase in taxes payable |  |  | 52,064 |  |  | - |  |  | 52,064 |
Net cash (used in) provided by operating activities from continuing operations |  |  | 31,290 |  |  | - |  |  | 31,290 |
Net cash provided by operating activities from discontinued operations |  |  | 4,106,063 |  |  | - |  |  | 4,106,063 |
Net cash provided by (used in) operating activities |  |  | 4,137,353 |  |  | - |  |  | 4,137,353 |
Cash flows from investing activities |  |  |  |  |  |  |  |  |  |
Capital expenditures and other additions |  |  | (2,053,039) |  |  | - |  |  | (2,053,039) |
Purchases of intangible assets |  |  | (3,353,353) |  |  | - |  |  | (3,353,353) |
Net cash used in investing activities from continuing operations |  |  | (5,406,392) |  |  | - |  |  | (5,406,392) |
Net cash used in investing activities from discontinued operations |  |  | (5,791,256) |  |  | - |  |  | (5,791,256) |
Net cash used in investing activities |  |  | (11,197,648) |  |  | - |  |  | (11,197,648) |
Cash flows from financing activities |  |  |  |  |  |  |  |  |  |
Proceeds from bank loan |  |  | 2,944,000 |  |  | - |  |  | 2,944,000 |
Repayments of bank loan |  |  | (2,948,700) |  |  | - |  |  | (2,948,700) |
Net proceeds from option exercises |  |  | 194,300 |  |  | - |  |  | 194,300 |
Net proceeds from issuance of common stock |  |  | 6,066,546 |  |  | - |  |  | 6,066,546 |
Net cash provided by financing activities |  |  | 6,256,146 |  |  | - |  |  | 6,256,146 |
Effect of exchange rate fluctuations on cash and cash equivalents |  |  | (61,033) |  |  | - |  |  | (61,033) |
Net decrease in cash and cash equivalents |  |  | (865,182) |  |  | - |  |  | (865,182) |
Cash and cash equivalents at beginning of year |  |  | 2,592,945 |  |  | - |  |  | 2,592,945 |
Cash and cash equivalents at end of year |  |  | 1,727,763 |  |  | - |  |  | 1,727,763 |
Supplemental cash flow information |  |  |  |  |  |  |  |  |  |
Income tax paid |  |  | 188,695 |  |  | - |  |  | 188,695 |
Interest paid |  |  | 176,231 |  |  | - |  |  | 176,231 |

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- Definition The entire disclosure for reporting accounting changes and error corrections. It includes the conveyance of information necessary for a user of the Company's financial information to understand all aspects and required disclosure information concerning all changes and error corrections reported in the Company's financial statements for the period. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 250 -SubTopic 10 -Section 50 -Paragraph 7 -URI http://asc.fasb.org/extlink&oid=56949863&loc=d3e22644-107794 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 250 -SubTopic 10 -Section 45 -Paragraph 23 -URI http://asc.fasb.org/extlink&oid=6368906&loc=d3e21914-107793 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 250 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=56949863&loc=d3e22595-107794 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 250 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=56949863&loc=d3e22499-107794 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 250 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB TOPIC 1.N.Q3) -URI http://asc.fasb.org/extlink&oid=26874127&loc=d3e30840-122693 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 1 -Section N + Details
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