SOON (.12) revenue up 73% at $7,209,831.
Revenues were $7,209,831 and $4,159,115 for the three months ended March 31, 2011 and 2010 respectively. Revenues increased by $3,050,716, or 73.35% for the three months ended March 31, 2011, compared to the same period in 2010. Revenues for PU leather and footwear were $6,120,197 and $1,089,633 respectively for the three months ended March 31, 2011, compared to $2,894,601 and $1,264,514, respectively for the three months ended March 31, 2010.
The increase in revenue for our PU leather business was due to a substantial increase in orders from existing distributors. In addition, according to our distributors, the market for PU leather in China has increased since second half year of 2010. Sales from our footwear segment were materially unchanged as we continued to produce our private label “WinTop” flip-flop. Historically, a majority of our footwear sales are to Ransford Limited who sells our footwear products in Africa and the Middle East. Ransford accounted for 100% and 86.32% of our footwear sales for the three months ended March 31, 2011 and 2010, respectively.
Cost of Revenues
Cost of revenue includes our costs of raw materials and salaries of workers. Cost of revenue was $5,532,814 and $3,160,520 for the three months ended March 31, 2011 and 2010, respectively. Cost of revenue for the three months ended March 31, 2011 increased by $2,372,294, or by 75.06%, compared to the same period in 2010. The increase in cost of revenue was primarily attributable to the increase in the purchase of raw materials due to the increase in sales. Stated as a percentage of revenues, cost of revenue for the three months ended March 31, 2011, was 77% and for the corresponding period of 2010 was 76%. The cost of revenue for PU leather and footwear was $4,499,806 and $1,033,008 for the three months ended March 31, 2011 respectively, and $2,053,100 and $1,107,420 for the same period in 2010 Resins and base-cloth represents 80% of the cost of revenues for PU leather. PVC resins, other chemical materials, and labor cost represents 80% of the cost of revenues for footwear. Our ability to control that cost by producing our own resins has contributed to the stability in our cost of revenues as a percent of sales. As part of phase 2 of the San Ming construction project, we will also produce our own base-cloth.
Gross Margin
Gross margin was $1,677,017 and $998,595 for the three months ended March 31, 2011 and 2010, respectively. Gross margin for the three months ended March 31, 2011 increased by $678,422 or by 67.94% compared to the same period in 2010. Increase of gross margin was mainly due to the increased sales of PU leather.
