WOW..Comparison of the Three Months Ended March 31, 2012 and 2011
Results of Operations
We continue to focus on growing our patent licensing and barcode infrastructure business. During the three months ended March 2012 and 2011, our operating losses were $835,000and $1.4 million, respectively. Our net loss was ($165.5) million and net income was $8.8 million for the three months ended March 2012 and 2011, respectively. Our net income (loss) includes gains and losses from the change in fair value of our hybrid financial instruments, warrants and debentures. We incur these gains and losses principally as a result of changes in the market value of our common stock. During the three months ended March 31, 2012, we reported losses on our hybrid financial instruments, warrants and debentures, totaling ($162.3) and during the three months ended March 31, 2011, we reported gains on our hybrid financial instruments, warrants and debentures, totaling $10.9 million. Due to the volatility of our stock price during the three months ended March 31, 2012, changes in the fair value of our derivative liabilities have a material impact on our overall net income (loss) which makes quarter and annual comparisons difficult.
Revenues. Revenues for the three months ended March 31, 2012 and 2011, respectively, were $726,000 and $369,000, an increase of $357,000, or 97%. Our revenues and product mix have changed as a result of changes in our operations and business strategy. We are no longer detailing the line items of our product revenues in an effort to preserve competitive advantage; however, two business lines, IP licensing and 2D Core (NeoSphere and NeoReader), account for the bulk of our revenue.
Cost of Revenues. Cost of revenues was $22,000 for the three months ended March 31, 2012 compared with $238,000 for the three months ended March 31, 2011, a decrease of $216,000, or 91%. Research and development decreased as we optimized our team for barcode management and infrastructure development and reduced the resources for our hardware operation.
Sales and Marketing. Sales and marketing expenses were $205,000 and $316,000 for the three months ended March 31, 2012 and 2011, respectively, a decrease of $111,000, or 35%. We expect that our sales and marketing expense will increase as we continue to promote our business strategy and core technology.
General and Administrative.General and administrative expenses were $1,000,000 and $794,000 for the three months ended March 31, 2012 and 2011, respectively, an increase of $206,000, or 26%. G&A expenses increased as a result of legal fees and other related commitments.
Research and Development. Research and development expenses were $334,000 and $401,000 for the three months ended March 31, 2012 and 2011, respectively, a decrease of $67,000, or 17%. Research and development decreased as we optimized our team for barcode management and infrastructure development and reduced the resources for our hardware operation.
Loss from Operations. For the three months ended March 31, 2012 and 2011, respectively, our loss from operations was $835,000 and $1.4 million. This improvement was primarily the result of increased revenue and gross profit
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