With the increase in revenues, SGOCO’s gross profit for the first quarter of 2011 increased 133% to $7.3 million from $3.1 million for the first quarter of 2010. The gross margin as a percent of sales was 8.4% in the first quarter of 2011, compared to 16.1% in the first quarter of 2010 with the decline due to downward pressure on product prices, increased sales of lower margin OEM products and the growth of low margin component and outsourced item revenues. If general market prices stabilize and panel prices resume their declining trend, the Company expects gross margin improvement.
Selling, general and administrative expenses for the first quarter of 2011 were $1.6 million, a $0.2 million increase over the first quarter of 2010. The largest increase in selling, general and administrative expenses was for professional fees associated with being a public company.Provision for Income Taxes Income tax was $0.7 million compared to $0.3 million during the three months ended March 31, 2010. Net Income and EPS Net income for the first quarter of 2011 was $5.1 million, an increase of 826%, compared to $0.6 million recorded for the same period last year. Diluted EPS was $0.32 in the first quarter of 2011, compared to $0.06 in the first quarter of 2010. Of note, diluted EPS for the first quarter of 2011 was calculated based on 16,280,942 weighted average number of common shares as compared to 8,737,596 weighted average number of common shares for the first quarter of 2010. Cash and Working Capital As of March 31, 2011, the Company had cash and restricted cash of $33.0 million and working capital of $40.9 million, compared to $30.0 million and $38.7 million, respectively, as of December 31, 2010. The current ratio was 1.31 as of March 31, 2011 compared to 1.44 as of December 31, 2010.