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1997. The significant increase in delivery costs is the direct result of an increase in sales to retail customers across the country and internationally and an increase in delivery costs overall for the industry.
General and Administrative expenses were $336,199 for the quarter ended September 30, 1997, compared with $312,834 for the same period ended September 30, 1996, an increase of 7.5%. In addition, general and administrative expenses for the six months ended September 30, 1997 increased by 11.2% compared with the same period in fiscal 1997. The increase is primarily attributed to increased expenses for consulting services and employee salaries.
Research and Development expenses were $52,388 for the quarter ended September 30, 1997, compared with $47,062 for the quarter ended September 30, 1996, an increase of 11.3%. These expenses were $96,147 for the six months ended September 30, 1997 as compared to $105,603 for the six months ended September 30, 1996. The increase in expenses during the second quarter is due to the introduction and development of several new product positions as well as the development of formulations for the new foodservice equipment.
Other Income and Expenses netted to $12,569 in income for the quarter ended September 30, 1997 as compared to $44,798 for the quarter ended September 30, 1996. During the first two quarters of fiscal 1998, interest expense was increased due to the addition of the line of credit secured by the Company on November 1, 1997. Additionally, during fiscal 1997, the Company held marketable securities which earned interest income; these marketable securities were partially sold during fiscal 1997 and were completely liquidated as of June 30, 1997.
Liquidity and Capital Resources
Operating Activities -- Net cash provided by operating activities was $438,212 for the six months ended September 30, 1997 compared to net cash used of $2,204,826 for the same period in 1996. This change in operating activities is the result of the Company achieving profitability during fiscal 1998 following an improvement in gross margin. In addition, accounts receivable was built up in the prior year as a result of the increase in sales during fiscal 1997.
Investing Activities -- Net cash used in investing activities totaled $234,635 for the six months ended September 30, 1997 compared to net cash used of $3,048,375 for the same period in 1996. The decline in cash used for investing activities resulted from the purchase of marketable securities with cash reserves from financing activities in the first quarter of fiscal 1997 and the subsequent sale of these securities during fiscal 1997 and in the first quarter of fiscal 1998. As of September 30, 1997, all marketable securities had been sold by the Company.
Financing Activities -- Net cash used in financing activities was $195,984 for the six months ended September 30, 1997 compared to net cash provided by financing activities of $5,704,705 for the same period in 1996.
On April 16, 1996, the Company completed a private placement of 1,337,524 shares of the Company's common stock at an aggregate price of $2,000,000, and 4,000 shares of the Company's convertible preferred stock at an aggregate price of $4,000,000.
On November 1, 1996, the Company secured a $2 million line of credit with Finova Capital Corporation with interest at the prime rate plus two percent. At September 30, 1997, the balance outstanding under this line of credit agreement was $1,121,736.
On June 27, 1997, the Company secured a $1.5 million Purchase Money Machinery and Equipment Accommodation with Finova Capital Corporation to finance the acquisition of certain production equipment. The agreement calls for interest at the prime rate plus two percent. As of September 30, 1997, the balance outstanding under this agreement was $1,208,632.