Huiheng Medical, Inc. Reports Record Financial Results for Fiscal Year 2007 and Financial Results f...(ompared to $6.61 million for the sameper...),Health

Total revenues from services were $5.04 million in 2007, an increase of $0.36 million or 7.7%, compared to $4.68 million in 2006. The increase was due to the signing of 3 new service contracts in mid-2006 which resulted in revenues on those contracts for roughly half of 2006 and all of 2007.

Total revenues from tax refunds and subsidies were $1.38 million in 2006, an increase of approximately $320,000 or 30% over the $1.06 million in tax refunds and subsidies for 2007. Tax refunds and subsidies accumulate each current year and are paid and recognized as revenue the following year.

Cost of revenues

The total cost of revenues in 2007 amounted to $3.76 million, an increase of $1.11 million or 41.9%, compared to $2.65 million in 2006. The increase was due to increased number of units sold in 2007 compared with 2006.

Gross margin

As a percentage of total revenues, the overall gross margin in 2007 decreased to 76.4% from 78.5% in 2006. The decrease was due to product sales accounting for a larger percentage of total revenues in 2007 compared with 2006, when higher margin service revenues accounted for a larger percentage of total revenues.

Operating expenses

Sales and marketing expenses. Sales and marketing expenses were approximately $82,000 in 2007, a decrease of 33%, or roughly $41,000 compared to approximately $123,300 in 2006. The decrease was due to a fewer commissions paid to sales staff as senior management was responsible for several sales and were not paid any commissions.

General and administrative expenses. General and administrative expenses were $1.53 million in 2007, an increase of roughly $250,000 compared to approximately $1.28 million in 2006. The increase in general and administrative expenses was due primarily to incr
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