Good morning everybody! We’re glad you’ve been able to join us for our first quarter 2013 financial conference call. After our recent year end call, this call always seems to come quickly! Even given the short passage of time since our last discussion, you’ll see we have some interesting things to talk about. Along with me today is our CFO, Frank Cesario. As we expected, quarterly revenue has improved, to $3million, for this recent first quarter. To give you a frame of reference, our quarterly revenue last year ranged from $2.1 million to $2.8 million, so this quarter represents another step toward our objective. Only a few years ago we reported $6.3 million in revenues for the entire year. We’ve also moved forward with some significant projects, each of which may offer us the chance to remake our company in a few years’ time.
After Frank provides a short overview of our financial results, I’ll go into a little more detail about our position as we keep rolling in to 2013. Frank?
Thanks Jess.
Good morning, this is Frank Cesario. Before I begin today’s overview of our financial results for the first quarter, please remember that all financial results are stated in approximate terms.
Revenue for the first quarter was $3.0 million, versus revenue of $2.4 million for the comparable 2012 quarter.
Gross margins were 30% versus 23% for the comparable quarter, as the benefits of our continuing revenue improvement coupled with sound operations practices. This improvement on only $0.6 million of additional revenue offers a very positive element of leverage as we add new sources of revenue to our mix.
The net loss for the quarter was $0.5 million, or $0.02 per share, compared to a net loss of $0.8 million, or $0.04 per share, in the comparable 2012 quarter.
I will note that we tend to expend more cash for working capital and the timing of certain spending in the first and fourth quarters of the year, so the cash position, while far stronger than last year, includes that dynamic. During a typical quarter, without working capital changes, a few hundred thousand more revenue would yield a flat cash position based on how the Company is structured today. Timing also plays a part, as our cash balance was $4.0 million on April first and then $3.6 million on April second. Still, we ended the quarter with a $3.6 million cash position. Our company remains debt free.
Jess?
Thanks Frank. Well, we’re sure off to a solid start. Everyone who’s been listening, knows that our goals, well exceed achieving $3 million in quarterly revenue, but this does represent another step towards our next major milestone, achieving breakeven on a cash-flow basis. We’re a stone’s throw from generating positive cash flow, at which point our net operating loss carry forward will begin to be a real asset to our stockholders. Before we get ahead of ourselves, let me be clear that we fully understand we have meaningful challenges ahead of us, yet my goal and vision is firmly set on accruing high value to our shareholders and stakeholders. That’s why I’m here. That’s how we drill our people, and those are my expectations. Patience and persistence, along with lots of energy, will eventually get us there. Nobody’s looking forward to saying “we have arrived” more than I am, but my sights are set much higher than only achieving positive cash flow. Now, in addition to quarterly revenue growth, our progress so far this year has permitted us to resolve a series of issues that will allow Nanophase to more broadly sell our products. These positive changes include removal of some overly broad and limiting exclusive relationships, in coatings, in polishing, and, in late Q1, we regained the ability to enter Asian markets, markets we haven’t had direct access to for more than a decade, when our licensing agreement in that region became non-exclusive. We’ve also discussed the launch of Z-COTE LSA with BASF in late 2012. We expect to begin building volume soon, and we expect the sun care market in general to remain a strong one for us. There are still good tailwinds in this market for all of our products. We’re not sure which products will drive future growth most, but we believe our entire market will continue to expand.
I mentioned in our last call that we’ve further expanded our franchise by developing products in a few new areas related to energy management. In particular, we’ve already submitted a patent application related to energy storage that will allow us, potentially, to leverage our technology and products in a more valuable way. We aren’t expecting to change the world with this one, but we hope to improve upon existing technologies by delivering solutions that are both cheaper, and more efficient, than what is currently used today in two different areas of the energy space. Again, we are playing to our strengths. Both products, while in different areas, were designed to address existing commercial problems, problems that our specific technology may be uniquely suited to solving. We’ll have a better idea about when we’ll be ready to enter these markets by the end of the year. These efforts in energy are in addition to the work we’ve done to extend our existing technologies into new market applications, such as abrasion resistant coatings for graphic arts. We will be talking more about this area in the near future as well.
A takeaway from today’s call should be: That we have set the bar high for where we’re willing to invest our resources, financial and human, in marketing and product development. I expect a solid ROI from our investments in this development work, and we are all on the same page here at Nanophase. In the end, most projects and initiatives don’t meet enough of our internal hurdles along the way to justify continued investment, and we conclude them. The ones that survive, and grow out of our product development process, are potential game changers for our company. We are doing the right things in the right way.
Lastly, you may recall our announcing the addition of Kevin Cureton to our team, as our new Vice President of Sales, Marketing and Business Development, at the end of 2012. We said at the time that Kevin brings the energy, experience, judgment and sales leadership that I believe will help us to climb higher and faster. I had big expectations for his ability, and I told you originally that I expected Kevin to step up to the challenge. Now that I’ve seen him in action, I can see my confidence was well-placed. His addition to Nanophase, the changes I’ve made to how our senior team collaborates, and the talent, and unyielding commitment, of the rest of our officers and employees to Nanophase's success, has helped us step up our efforts toward achieving aggressive growth goals. Again, there will be challenges, but I am very confident in our ability to meet them.
With that, I’ll tie things up. Although most of our investors listen to the webcast or review the transcript after the live call, we’d like to invite those participating in today’s call to ask any questions you may have, or to share your comments.
Samya, would you please begin the Q&A session?
We’re fully confident that we have the team, the know-how, the products, the business strategy, and more than enough potential, to achieve our goals. We appreciate your continued support, I appreciate your continued support, and, as always, we try to be available for any follow-up questions you may have. Thanks for your participation and enjoy the rest of your day!