In the second quarter of 2012, revenue from North America was 17%, Asia Pacific was 64% and Europe was 19% of total revenue. One customer generated more than 10% of our revenue during the second quarter, while the top 5 customers generated 39.3% of our second quarter revenue.
Gross margin in the second quarter was 29.8% compared with 34.9% of revenue for the first quarter of 2012. The drop in gross margin was largely the result of the new People's Republic of China value-added tax, or VAT, levied on foreign enterprises that import materials, which do not form part of the final product. AXT recently received notice of the retroactive VAT, which applies to the period of July 1, 2011, to June 30, 2012, and amounted to $1.27 million expense in the quarter ended June 30, 2012, which resulted in a 505 basis points impact to gross margins. Excluding the effect of this VAT tax, gross margins in the second quarter would have been 34.9%. Going forward, we expect that this new VAT will negatively impact gross margins by approximately 150 basis points per quarter.
Selling, general and administrative expenses were $4 million for the second quarter of 2012 compared with $3.9 million in the first quarter of 2012. Research and development cost was $914,000 for the second quarter of 2012 compared with $835,000 for the first quarter of 2012. Total stock-compensation expense was $292,000 for the second quarter of 2012, of which $18,000 was included in cost of revenues, $239,000 in SG&A and $35,000 in R&D.
Income from operations for the second quarter of 2012 was $2.6 million compared with income from operations of $3.6 million in the first quarter of 2012. Net interest and other income for the second quarter of 2012 was $219,000. Net income in the second quarter of 2012 was $1.3 million or $0.04 per diluted share. Without the effect of the retroactive VAT, net income in the second quarter would have been $2.6 million or $0.08 per diluted share. This compares with net income of $1.6 million or $0.05 per diluted share in the first quarter of 2012.Read the rest of this transcript for free on seekingalpha.com