Question-and-Answer Session
Operator
(Operator instructions) The first question comes from the line of Katherine Lu with Oppenheimer; please proceed.
Katherine Lu – Oppenheimer
Hi, good morning and good evening Tony, Lily, Wilfred and Hong. Thank you for taking my questions. Congratulations on the strong quarter. I have actually three questions; first is, on some P&L line items. It looks like the margin came in a bit lower than expected, I understand the product mix and increased SG&A led to this margin decline, but I’m just wondering do you see anything related to product pricing change, and also is this quarter's SG&A as a percentage of sales a good run rate for us to model forward?
(Spoken in Chinese)
Wilfred Chow
Hi Katherine, this is Wilfred. I would like to answer your question here. So as you can see the gross margin is little bit lower than the precious one. As you also noticed that as we explained this is mainly because of the (inaudible) which has a record low margin because of the nature and at the same time we have also invested a lot in the selling and marketing, also advertising and building our brand. So all this come together we have a net margin of approximately 23% or 24% in this quarter.
I think this is a completion of the factor of the product mix as well as our investment in the brand, but as you can see as the company continue to grow, each of the of our top line revenue mainly is concentrated on the over-to-counter product right now. We think that we will continue to invest in these line items. The line item currently that you see in the operating expenses line is fairly reasonable.
Katherine Lu – Oppenheimer & Co.
Okay, and there seems to be a deposit for long-term assets of roughly $23.6 million on your balance sheet, so I just curious what is that item for?
(Spoken in Chinese)
Lily Li
Hi, I am Lilly. Actually the deposit for long-term asset you mentioned are mainly the fall in two purposes, the first one is for the HSPL, in the harboring of our manufacturing facilities and the second purpose is for the GLP extraction facility and new deposit – actually for the land reserved for these two purposes..
Katherine Lu – Oppenheimer
Okay. Then my final question is for you Lily, Chinese NDRC put out a healthcare reform draft in last month and yesterday we also saw government put out $586 billion economic stimulus package. Again this package put healthcare reform in the 10 key investment areas. So, I am just wondering what types impact do you see this reform to China’s healthcare industry and maybe more specifically to AOBO’s performance outlook and also your exhibition strategy going forward.
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