From the 10Q
RESULTS OF OPERATIONS
COMPARISON OF THE SIX AND THREE MONTH PERIODS ENDED DECEMBER 31, 2012 COMPARED TO THE SIX AND THREE MONTH PERIODS ENDED DECEMBER 31, 2011
REVENUES. We had net revenues for the six months ended December 31, 2012 of $854,178 compared to $1,667,000 in the corresponding period in 2011, representing a decrease of approximately 49%. Revenues for the three months ended December 31, 2012 were $422,104 compared to $552,569, representing a decrease of approximately 24%. The decreases in net revenues in the six and three month periods ended December 31, 2012 compared to the corresponding periods in 2011 are primarily attributable to a decrease in deliverable products and support services billings resulting from continuing delays in release of funding at the Department of Defense and Department of Energy on projects where we serve as a subcontractor as well as at other customers. The budget constraints and budget uncertainty at the U.S. government agencies have significantly reduced the issuance of orders and delayed projects for all participants in our industry.
GROSS MARGINS. Gross margins for the six months ended December 31, 2012 were 56% as compared to 47% for the corresponding period in 2011 and the gross margins were 59% for the three months ended December 31, 2012 as compared to 16% for the three months ended December 31, 2011. The increase in gross margins for the six and three month periods of 2012 compared to the same periods in 2011 is primarily attributable to a change in the mix of equipment sales and support services billings and a reduction in personnel costs due to the lower revenues, partially offset by the decrease in revenues discussed above.
RESEARCH AND DEVELOPMENT. Research and development expenses were $46,794 and $21,863 for the six and three months ended December 31, 2012, respectively, compared to $69,011 and $34,505 for the corresponding six months and three months, respectively, in 2011. The reduction in research and development expenses was due to reductions in personnel costs.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and administrative expenses were $489,060 for the six months ended December 31, 2012 compared to $860,011 for the corresponding six months in 2011. Selling, general and administrative expenses were $249,255 for the three months ended December 31, 2012 compared to $336,876 for the corresponding six months in 2011. The decrease in selling, general and administrative expenses during the six month period ended December 31, 2012 as compared to the corresponding period in 2011 is primarily attributable to an increase in 2011 in our allowance for doubtful accounts in the amount of $200,000. In the six and three month periods ended December 31, 2012 as compared to the same periods in 2011, the other components of the selling, general and administrative expenses decreased by 26% primarily due to reduced personnel costs.
STOCK BASED COMPENSATION. From time to time, we issue stock options to our directors and employees and consultants. In the quarter ended December 31, 2011, we recognized expense for stock based compensation of $96,815. Stock-based compensation is non-cash and, therefore, has no impact on cash flow or liquidity. We issued no stock options in the six and three month periods ended December 31, 2012.
LOSS FROM OPERATIONS. The loss from operations for the three months ended December 31, 2012 of $(23,465) compared to a loss of $(377,822) for the corresponding three months of 2011. The decrease in the loss from operations during the three months ended December 31, 2012 compared to the same period in 2011 was primarily attributable to the 2011 increase in the allowance for doubtful accounts of $200,000, the 2011 stock based compensation of $96,815 and to reductions in personnel costs in 2012. The loss from operations for the six months ended December 31, 2012 was $(56,317) compared to a loss of $(245,813) for the corresponding six months of 2011. The decrease in the loss from operations during the six months ended December 31, 2012 period compared to the same period in 2011 was primarily attributable to the 2011 increase in the allowance for doubtful accounts of $200,000, the 2011 stock based compensation of $96,815 and to reductions in personnel costs in 2012. In the six months, these items were partially offset by the higher revenues in the six months of 2011.
