General and administrative expenses increased 15.7% to $2.2 million in the first quarter of 2011 from $1.9 million in the first quarter of 2010. As a percentage of total sales, general and administrative expenses decreased to 4.2% of total sales for the three months ended March 31, 2011, compared to 7.3% of total sales for the three months ended March 31, 2010. The total general and administrative expenses increase was attributable to an increase in payroll for additional management and design and marketing staff as a result of our business expansion. The decrease in general and administrative expenses as a percentage of total sales was due to the increase in our sales.

Income from operations for the first quarter of 2011 increased 81.1% to $3.3 million, compared to $1.8 million in the first quarter of 2010.

For the first quarter of 2011, GAAP net income attributable to the Company was $2.6 million, or $0.18 per diluted share, an increase of 65.8% from $1.6 million, or $0.11 per diluted share in the first quarter of 2010. GAAP net income attributable to the Company results for in the first quarter of 2011 include approximately $0.2 million, or $0.01 per diluted share, of non-cash income related to the change in fair value of a derivative liability compared to approximately $0.1 million, or $0.01 per diluted share, of non-cash income related to the change in fair value of a derivative liability in the first quarter of 2010. Excluding these non-cash items for the first quarter 2011 and 2010, non-GAAP diluted earnings per share were $0.17 in the first quarter of 2011 compared to $0.10 in the first quarter of 2010. (see "About Non-GAAP Financial Measures" below).

Balance Sheet and Cash Flow
As of March 31, 2011, the Company had approximately $9.7 million of cash and cash equivalents, compared to approximately $3.7 million as of March 31, 2010. Ever-Glory had working capital of approximately $27.4 million as of March 31, 2011, and outstanding bank loans of approximately $19.5 million as of March 31, 2011.

Business Outlook
For the second quarter of 2011, the Company anticipates total net sales of $32 to $42 million and net income of $1.3 to $1.8 million. For full year 2011, Ever-Glory anticipates total net sales between $180 and $215 million and net income between $7.3 and $9.0 million. The full year revenue forecast is comprised of $120 to $150 million in expected wholesale revenue and $60 to $65 million in expected revenue from retail operations.