Revenues increased $1,297,564 due primarily to:
Revenues were recorded at $9,397,481 for the six months ended March 31, 2007 compared to $8,099,917 for the same period ended March 31, 2006. The increase of $1,297,564 is due primarily to the increase in sales and numbers of subsidiaries in different segments of income. Currently, we have 3 new segments of income compared for the same period ended March 31, 2006. The import and export trading generated $3,708,980, the royalty income from the movie copyrights generated $792,389 and the provision of internet corporate video services generated $3,357,012. The new segment of business brings significant increase of income to the Company.
As of March 31, 2006, we had signed sales contracts with approximately 6 major clients, which generated total revenue of $8,099,917 to the Company and represented 97% of our total revenue. The loss of these customers, individually or in the aggregate, could have a material impact on our results of operations. The sales contracts have proven out our current business model and have shown us that we have customer acceptance for our products in the PRC telecommunications market. It is our present expectation that the integrated Internet and value-added telecommunication service market that we serve is an expanding market in the PRC and our customer base and number of sales contracts should increase in fiscal year 2007.
During the six months ended March 31, 2007 and 2006, sales of Total Solution System to Taikang Capital Managements Corporation, an affiliate of the Company, amounting to $720,000 were classified as Related Party Transactions.
Costs of Sales increased $4,103,664 due primarily to:
Costs of sales were $6,087,345 for the six months ended March 31, 2007, compared to $1,983,681 for the same period ended March 31, 2006. Costs of Sales included purchase of various contents and other later stage production from raw contents and costs associated with the performance of our communication services. The increase of $4,103,664 was due primarily to the increase in number of our subsidiaries, of which $3,641,220 is used for our import and export trading segment.
26
