The Company incurred a net loss of $717 and $3,437, respectively, for the three and nine months ended September 29, 2012 compared to $1,042 and $4,100 for the same periods in 2011. The decrease in the net loss of $325 for the third quarter of 2012 compared to the same period in 2011 was primarily due to a $238 deferred income tax benefit resulting from the final allocation of the purchase price of EOC to the assets acquired and liabilities assumed.
In order for the Company to be in compliance with its net income (loss) financial covenants under the Credit Facility, our net loss for the nine months ended September 29, 2012 and for the year ended December 31, 2012 must not exceed $3,500. The Company was in compliance with this financial covenant for the nine months ended September 29, 2012. However, management believes it is probable that the Company will not be in compliance with this financial covenant for the year ended December 31, 2012. As such, we will need to seek a waiver of this likely noncompliance from Gibraltar.
In addition, based upon management's current financial projections, management believes it is probable that the Company will not be in compliance with the net income (loss) financial covenants under the Credit Facility in 2013. The financial covenants for 2013 were established in 2012 and at a time when management's operating plan for 2013 had not yet been prepared. Although management is still in the process of finalizing our 2013 operating plan, management believes that the current net income (loss) financial covenant for the first three quarters in 2013 and for the year ending December 31, 2013, as set forth in the Waiver and Loan Modification Agreement attached as Exhibit 10.1 to this Form 10-Q, will need to be amended.
In this regard, we have initiated discussions with Gibraltar regarding obtaining a waiver of our probable noncompliance with our net income (loss) financial covenant for the year ended December 31, 2012 as well as an amendment to our financial covenants for 2013. If Gibraltar grants such a waiver and amends the covenants for 2013, it is possible that Gibraltar may impose additional conditions and require other concessions from the Company beyond what Gibraltar required as a condition to providing its previous waiver of the Company's noncompliance with the net income (loss) financial covenant under the Credit Facility for the six months ended June 30, 2012. We also are discussing with Gibraltar the possibility of including eligible inventory to our borrowing base as a means to assure that we have adequate credit availability under our Credit Facility.
Management has continued its efforts to reduce its net losses to improve the Company's financial performance and to be in compliance with the financial and other covenants in the Credit Facility for the fiscal year ended December 31, 2012. These efforts focus on increasing sales volume in both the residential and commercial product markets. Management's anticipation of future growth is not contingent solely upon a significant improvement in the economic conditions for the furniture industry, but instead on identifying key opportunities in the residential and commercial product markets and providing the product and strong service to exceed our customers' expectations. These efforts also focus on gross margin improvement, primarily by implementing identified cost reductions and improving efficiencies in its operating facilities and supply chain process, as well as exploring pricing opportunities. In addition, the Company will continue to closely monitor and control its selling, general and administrative expenses to be in line with its revenues. We recently reorganized our sales management team to provide a more focused approach to increasing sales which resulted in reduced headcount and annual savings going forward of approximately $500. Management is also revising its operating plan beyond 2012.
There is no assurance that Gibraltar will grant such a waiver or agree to such an amendment. In the event that Gibraltar is unwilling to agree to the waiver and amend the net income (loss) financial covenants for 2013 to levels that the Company believes it can achieve, then Gibraltar could declare an event of default, terminate the Credit Facility and not extend further credit to the Company, declare upon notice to the Company all amounts then outstanding under the Credit Facility to be immediately due and payable, charge a default rate of interest, take possession and sell assets of the Company that constitute collateral for the Credit Facility and exercise any other rights and remedies that Gibraltar may have. Any of these actions would adversely affect our liquidity, business and ability to continue to operate.
Further, if our trade creditors were to impose unfavorable terms on us, this could negatively impact our ability to obtain raw materials, products and services on acceptable terms. We have implemented expense controls and limitations on capital expenditures to conserve cash at the present time.
Because we presently are incurring losses, the continued availability of credit under our Credit Facility is critical to meeting our short term liquidity needs and to our ability to continue to operate. Assuming that Gibraltar grants the waiver and agrees to the amendment discussed above, the Company expects additional borrowings under the Credit Facility in the fourth quarter of 2012 and throughout 2013.
Under our Directors Stock Plan, our non-employee directors are granted an annual award of either restricted common stock or stock options of the Company. There were an insufficient number of shares authorized and available for issuance to satisfy the full amount of the 2012 restricted stock award to our non-employee directors under our Directors Stock Plan. Accordingly, our non-employee directors agreed to receive fewer shares of restricted stock at the present time, with the understanding that the directors will receive the balance of their 2012 restricted stock award on or before the 2013 annual meeting of stockholders of the Company in such form (either in cash or stock) as will be determined by the Compensation Committee.