Sales and Marketing Expenses. Sales and marketing expenses increased by $639,000
or 23.6% for the year ended June 30, 2013 compared with the year ended June 30,
2012. The U.K. business experienced an increase in expenses of approximately
$260,000 from the addition of sales personnel. The U.S. business experienced a
net increase in expenses of approximately $366,000 from additions in advertising
and show expenses of $91,000, approximately $242,000 for additional sales
personnel including additional travel expenses, and approximately $32,000 for
additional marketing salaries and related expenses.
General and Administrative Expenses. General and administrative expenses
increased by $715,000 or 20.7% to $4,163,000 for the year ended June 30, 2013 as
compared from $3,448,000 for the year ended June 30, 2012. The increased
expenses were primarily the result of additional salaries and benefits for
administration staff in the U.K and U.S. business units. Additional expenses in
the U.S. were approximately $200,000 in officer's equity compensation,
additional payroll and related expenses of approximately $230,000, approximately
$20,000 of employee equity compensation, $57,000 of NASDAQ fees, $90,000 in
director's equity and cash compensation and $86,000 of executive search and
recruiting costs compared to the year ending June 30, 2012.
Depreciation and Amortization Expenses. Depreciation and amortization expenses
decreased by $49,000 for the year ended June 30, 2013, as compared with the
period in 2012.
Other Income (Expenses). Other income (expenses) for the year ended June 30,
2013, included an adjustment for the change in fair value of derivative
liabilities of ($271,000), a gain on settlement of derivative liabilities of
$131,000 and gain on the settlement of liabilities of $13,000. Other income
(expenses) for the year ended June 30, 2012, included an adjustment for the
change in fair value of derivative liabilities of $230,000 and a gain on
settlement of liabilities of $215,000.
Interest Expense. Interest expense decreased by $45,000 to $146,000 for the year
ended June 30, 2013. The decrease in interest expense is primarily related to
the reduction of our interest bearing loans. HSBC cash interest was
approximately $120,000 for the year ended June 30, 2013, and debt issuance cost
amortization was approximately $11,000, compared to cash interest of
approximately $166,000 and debt issuance cost amortization of $25,000 for the
year ended June 30, 2012.
Income Taxes. Income taxes decreased $227,000 to $723,000 for the year ended
June 30, 2013, as compared to $950,000 for the year ended June 30, 2012. This
decrease was the result of decreased U.K. income in fiscal 2013 when compared to