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manufacturing options, including an examination of a third party contract manufacturer, and the appointment of a permanent CEO. Public company costs increased $29,000 largely as a result of hiring an investor relations consultant in the first half of 2012. Legal fees increased by $107,000 primarily due to AVAC litigation expenses. Travel increased $30,000 with much of that increase related to new manufacturing options. Offsetting the increases, Board of Directors compensation decreased by $19,000 and accounting and audit fees decreased by $37,000 as a result of higher 2011 fees related to IFRS conversion work. 

During the fourth quarter of 2012, general and administration expenses increased by $101,000 or 27% mostly as a result of increased consulting costs of $71,000, and salaries and benefits of $19,000 partially offset by decreased expenses for directors’ compensation of $8,000, and accounting and audit fees of $10,000. In general, the same factors that influenced the general and administrative costs for the year ended December 31, 2012 were applicable to the fourth quarter. 

## SALES AND MARKETING 

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Sales and marketing expenses in the year ended December 31, 2012 increased by $88,000 or 79% in comparison with the same period of 2011 due primarily to consultant fees incurred to examine marketing strategies and branding evaluation options. 

The fourth quarter of 2012 showed an increase in expenditures of $14,000 or 54% versus 2011 as a result of higher attendance at industry trade shows and for technical support to our new US-based distributors. 

The Company is continuing to evaluate marketing options and anticipates additional participation and expenditures at major personal care and cosmetic conferences. Our goal is to expand our business with existing customers and to explore potential opportunities with new customers. 

## FINANCE COSTS 

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