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The net loss for the quarter was $1.4 million, or $0.53 a diluted share, as compared to a net loss of $4.8 million, or $1.81 per diluted share, for the first quarter of 2011. A significant portion of the difference between quarters is attributed to our continued focus on reducing operating expenses.In the first quarter 2012, operating expenses were 47.6% of net sales as compared to 52.8% in the first quarter 2011. The largest reduction occurred in the selling and administrative expenses, which decreased by 28% when compared to the first quarter 2011 expense levels. As discussed in prior calls, the decreases in operating expenses as compared to earlier periods is due to continually improving our operational efficiencies, a task that is rooted in last year’s second quarter reorganization. For the quarter, gross profit as a percentage of sales showed a minimal decline of 0.2% as compared to the first quarter 2011. In summary, the earnings before interest, taxes, depreciation and amortization, or EBITDA, for the first quarter of 2012 was a positive $402,000 as compared to a negative EBITDA for the first quarter 2011 of $2.1 million. In reviewing the balance sheet at March 31 st, 2012, I’d like to address several items. The first item is our cash and cash equivalents have decreased by $5.5 million to a balance of $12.6 million at March 31 st, 2012 as compared to the $18.1 million on hand at December 31 st, 2011. A large portion of the decrease in cash and cash equivalents are the approximately $2.7 million in litigation settlements paid in March, 2012. The expenses for the Marinova and Charm [ph] litigations were accrued in December 2011. The settlement of both cases in March 2012 was previously reported as a subsequent event in the 2011 Form 10-K. In addition to these accrued expenses, we used cash to further reduce our trade payables to continue improving the quality of our balance sheet.
A second area of asset decrease is property and equipment that have accumulated depreciation. The first quarter 2012 balance decreased from $9.6 million at the beginning of the quarter to $7.2 million at March 31 st, 2012, primarily due to depreciation expense during the first quarter. As in prior quarters, a large portion of the depreciation expense is from our Enterprise Resource Planning system, which went into operation in 2007.The full book value has been fully recognized as of March 31, 2012, therefore there should be no further depreciation expense associated with these assets. Inventory net of reserves for the quarter ended March 31 st, 2012 was essentially unchanged from December 31, 2011. Total liabilities decreased $4.2 million to a balance of $32.4 million at March 31 st, 2012. The net decrease in total liabilities was primarily due to the payment of accounts payable, accrued expenses and commissions in SNE [ph] as payable. As in prior quarters, we essentially have no long-term debt. Finally, during the first quarter 2012 we did not pay dividends, we did not repurchase shares on the open market and we did not initiate any equity raises through our agreement with Dutchess Capital. However, due to the previously disclosed reverse stock that occurred in January 2012, we did repurchase fractional shares. Read the rest of this transcript for free on seekingalpha.com