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Trunkbow International (TBOW) Posts Solid Increases in Q1, Positive Outlook for Future

Trunkbow International Holdings Limited, a leading provider of Mobile Payment Solutions (MPS) and Mobile Value Added Solutions (MVAS) in the People’s Republic of China, today announced financial results for its first quarter ended March 31, 2011.

Revenue in the first quarter of 2011 increased 27.6 percent to $5.0 million compared with revenue of $3.9 million in the same period of 2010. Cost of revenue in the first quarter of 2011 was $0.6 million compared with $0.2 million in the same period of 2010.

Gross profit increased 19.0 percent to $4.4 million compared to $3.7 million in the first quarter of 2010. As a percentage of net revenue, gross margin was 88.9 percent in the first quarter of 2011, down from 95.4 percent in the year-ago quarter.

Operating income in the first quarter of 2011 decreased 11.4 percent to $2.4 million compared with $2.8 million in the first quarter of last year.

Trunkbow reported net income for the first quarter 2011 at $3.4 million, or $0.09 per diluted share, an increase of 36.9 percent compared to net income of $2.6 million, or $0.10 per basic and diluted share, reported for the comparable quarter of last year.

As of March 31, 2011, the company had $23.2 million in cash and cash equivalents, compared with $10.3 million as of December 31, 2010. The increase in cash and cash equivalents stems primarily from $18.1 million in net proceeds from the company’s IPO completed on February 8, 2011. As of March 31, 2011, Trunkbow had working capital of $64.5 million, short-term loans of $1.8 million and total shareholders’ equity of $65.5 million.

Qiang Li, Trunkbow’s CEO, commented on the company’s strategy for current and future growth.

“In addition to our financial and operational accomplishments, we continued executing on key strategic initiatives, including the expansion of our product pipeline through the development of new technologies and applications for mobile commerce, which we plan to roll-out during the rest of year,” Li stated in the press release.

Trunkbow expects to finish up the second quarter of 2011 with revenue of $9.5 million and net income of $4.3 million, representing year-over-year growth of 138 percent and 95 percent, respectively. The company bases its expectations on its plan to boost its market share through the introduction of its services in new provinces and increases, as well as by increasing its presence among China’s leading mobile carriers.

“Looking ahead, we expect to achieve strong growth on a sequential quarter basis during the remainder of 2011. We are uniquely positioned in the MPS space as the only provider of an end-to-end solution incorporating hardware, software and services, and believe that this gives us a significant competitive advantage with both carriers and merchants, while offering a compelling solution for consumers,” Li stated. “With an intuitive, user-friendly platform, partnerships with mobile and payment industry leaders and a strong balance sheet bolstered by the proceeds of our first quarter IPO, we are confident in our ability to reach the next level of success.”

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