Charles & Colvard Reports First Quarter 2010 Financial Results

Charles & Colvard, Ltd. (NASDAQ: CTHR), the sole manufacturer of moissanite jewels, The Most Brilliant Jewel in the World ^TM, announced today its financial results for the first quarter ended March 31, 2010.

Net sales for the quarter were $2.85 million, an increase of 15% from $2.49 million in the first quarter of 2009 and an increase of 21% from $2.36 million in the fourth quarter of 2009. Sales continue to improve primarily due to management’s efforts of revitalizing existing customer relationships as well as the addition of several new customers, domestically and internationally, during the quarter.

The Company achieved profitability in the first quarter with net income of $298,000, or $0.02 per diluted share, a $1.58 million improvement over net loss “as adjusted” of $1.28 million, or ($0.07) per diluted share, in the first quarter of 2009.

Randy N. McCullough, Chief Executive Officer of Charles & Colvard, commented, “We are extremely pleased with first quarter 2010 results. Not only did our sales improve over fourth quarter 2009, but we also achieved a 15% increase over the first quarter of 2009 and reported our first profitable quarter since third quarter 2007. We believe that these results are an initial indication that our new strategy of growing our core business with key jewelry manufacturers and distributors, developing leading jewelry brands globally featuring moissanite, and increasing our focus on the end consumer is beginning to take hold. As we continue to execute on this strategy, we believe the results will propel Charles & Colvard to new heights of revenue growth and profitability.”

Contributing to net income was a reduction in costs and expenses during the quarter of $1.04 million, or 28%, when compared with the same period in 2009, due primarily to ongoing cost control initiatives that commenced in the latter part of 2009. In addition, the Company recognized a net income tax benefit of $130,000 primarily resulting from the reversal of income tax liabilities associated with uncertain tax positions from prior years.