(Morrisville, N.C.) Charles & Colvard, Ltd. (NASDAQ: CTHR), the sole manufacturer of moissanite jewels, The Most Brilliant Jewel in the WorldTM, 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.

Prior year results are shown “as adjusted” due to a change in the Company’s method of accounting for inventories from the first-in, first-out (“FIFO”) method to the average cost method that was adopted January 1, 2010. As a result, cost of goods sold increased in first quarter 2009 by $18,000 and net income decreased by the same amount. In addition, inventory decreased $2.03 million as of March 31, 2009 due to the cumulative change in accounting principle.

Financial Position

The Company had $2.79 million in cash and $5.05 million in liquid long-term investments at the end of the quarter, and it generated approximately $489,000 of cash from operations during the quarter. Net income of $298,000, a net decrease in inventory of $639,000, and an increase in accrued cooperative advertising of $138,000 were the primary drivers for positive cash flow in the quarter, which more than offset an increase in trade accounts receivable of $595,000.

Total inventory, including long-term and consignment inventory, was $38.49 million at the end of the quarter, down from $39.13 million at the end of fiscal year 2009. The Company purchased $289,000 of raw material during the quarter. Trade accounts receivable were $1.71 million at the end of the quarter, up from $1.04 million at the end of fiscal year 2009 primarily as a result of increased sales during the quarter.

First Quarter 2010 Financial Results Webcast

Charles & Colvard will host a webcast to present first quarter 2010 results on Tuesday, April 27, 2010 at 4:30 p.m. EDT. The webcast can be accessed live and will be available for replay at www.charlesandcolvard.com.

Charles & Colvard, Ltd. (NASDAQ: CTHR), based in the Research Triangle Park area of North Carolina, is the global sole source of lab-created moissanite, a unique, near-colorless jewel that is distinct from other gemstones and jewels based on its exceptional fire, brilliance, luster, durability, and rarity. Charles & Colvard Created Moissanite is currently used in fine jewelry sold primarily through domestic and international retailers. For more information, please access www.moissanite.com or www.charlesandcolvard.com.