In addition, our customer base increased with approximately 1,350 new customers
added to our ePortŪ Connect service during the fiscal year ended
Cost of sales consisted of cost of services for license and transaction fee related costs of
$15,312,966and $11,651,138and equipment costs of $3,743,226and $3,468,993, for the year ended June 30, 2012and 2011, respectively. The increase in total cost of sales of $3,936,061was due to an increase in cost of services of $3,661,828and an increase in equipment costs of $274,233. The increase in cost of services was predominantly related to increases in units connected to the network and increases in transaction dollars. In addition, approximately $316,000of the $3,661,828increase in cost of services was attributable to increased debit card processing costs incurred because of the significant increase of interchange fees charged by Visa and MasterCard, which became effective on October 1, 2011. The impact on margins caused by these increases in the second fiscal quarter did not impact the subsequent quarters in fiscal 2012 as the Visa Agreement that went effect on October 14, 2011essentially restored Visa debit interchange rates to pre- October 1, 2011levels during the one-year term of the agreement, and the Company ceased the acceptance of MasterCard debit cards in mid-November 2011. Also contributing to the increase in cost of services was approximately $199,000of costs for electronic communication of software updates to connected ePortsŪ. The increase in equipment costs related to the increased freight-in costs of approximately $140,000associated with our Verizon enabled ePorts as well as slightly higher costs to manufacture the Verizon enabled ePorts.