Gross profit ("GP") for the year ended June 30, 2013 was $14,096,613 compared to
GP of $9,961,051 for the previous fiscal year, an increase of $4,135,562, or
42%, of which $3,766,696 is attributable to license and transaction fees GP and
$368,866 of equipment sales GP. Overall gross profit margins increased from 34%
to 39% due to an increase in license and transaction fees margins to 39%, from
34% in the prior fiscal year and by an increase in equipment sales margins to
39%, from 34% in the prior fiscal year. Improved license and transaction fee
margins are due to increased efficiencies stemming from new/or renegotiated
supplier agreements as well as a larger ePort Connect service base, including
the VISA agreement described under the section titled "Important Relationships"
that was entered into on October 12, 2011.
Selling, general and administrative ("SG&A") expenses of $12,068,566 for the
fiscal year ended June 30, 2013, decreased by $3,392,102 or 22%, from the prior
fiscal year. Fiscal 2013 SG&A expenses include $328,000 of expenses related to
the fiscal 2012 proxy contest, related litigation and settlement. Included in
the $15,460,668 of SG&A expenses during the year ended June 30, 2012 were
approximately $975,000 of expenses for the separation of the former CEO from the
Company and approximately $2.2 million related to the proxy contest, related
litigation and settlement.
Exclusive of the two matters described above, SG&A decreased approximately
$516,000, or 4%, in fiscal 2013 as compared to fiscal 2012. The overall decrease
is comprised of approximately $363,000 for the reversal of sales tax audit
assessment accruals estimated in fiscal 2012 that were finalized at a lower
amount in fiscal 2013; a $222,000 reduction in employee and director
compensation and benefit expenses; and, smaller decreases in several other areas
totaling $158,000. These reductions are offset, by a $227,000 increase in sales
and marketing expenses for the 2013 fiscal year.
Other income and expense for the year ended June 30, 2013, primarily consisted
of a $267,928 of non-cash gain for the change in the fair value ("FV") of the
Company's warrant liabilities. The primary factor affecting the change in fair
value is the decrease in the Black-Scholes value ("BSV") of the warrants from
June 30 2012 to June 30 2013. For the year ended June 30, 2012, the Company had
a non-cash gain of $1,813,687 for the same warrant liabilities.
The fiscal year ended June 30, 2013 resulted in net income of $854,123 compared
to a net loss of $5,211,238 for the fiscal year ended June 30, 2012, an
improvement of $6,065,361 between fiscal years. After preferred dividends of
$664,452 for each fiscal year, net income (loss) applicable to common
shareholders was $189,671 and $(5,875,690) for the fiscal years ended 2013 and
2012, respectively. For the fiscal year ended June 30, 2013, net earnings per
common share, basic and diluted were $0.01 and $0.01, respectively, compared to
the prior fiscal year net loss per common share (basic and diluted) of $(0.18).