These companies enter into software subscription agreements with their customers to provide periodic updates to the information contained in the various products. Revenue is recognized ratably over the term beginning with the sale of the product and ending on the subscription renewal date. Revenue recognized during 1996 under this method was $287,164 giving rise also to deferred revenue of approximately $243,399 which will be recognized during 1997. Approximately 48% of the 1996 revenues were derived from the HR/Comply product, a human resource library marketed to Human Resource professionals throughout the country by TRS. Selling, general, and administrative expenses increased by approximately $1,010,261 resulting primarily from increased legal fees due to the litigation as discussed in Item 3 - Legal Proceedings, acquisition search and related costs, and developmental costs associated with completing and marketing the HR/Comply product. Amortization expense increased by approximately $571,836 due to the amortization of intangible assets acquired through the Corporation's acquisition program. Included in the amortization expense is a write-off of $171,000 for one of the two products being developed by TRS at the time of acquisition that will no longer be marketed. Other income and expense items generated $658,461 in income compared to a $1,013,430 loss in 1995. This is primarily due to the increase in rental income on the former corporate headquarters located in Jackson, Mississippi; interest income increase of approximately $70,000 due to more cash investments; a decrease in interest expense of $396,080 due to the lower average debt level; the gain on the sale of the Alanco stock in 1996 of $671,000; the write-off of the Corporation's equity interest in PMM of $1,051,000; and the unrealized gain in Alanco stock of $358,000 in 1995.
A summary of accounts payable and accrued expenses at December 31 follows:
On October 2, 1995, the Corporation completed the sale of Dixie Life, which was 99.3% owned by the Corporation, to Standard Life Insurance Company of Indiana ("Standard"). Dixie Life represented virtually all of the Corporation's assets and operations. The selling price of the Corporation's interest in Dixie Life to Standard was $7,389,086, of which $3,646,468 was in cash. The Corporation used $1,720,000 of the cash proceeds to repay Subordinated Convertible Notes and to purchase from Dixie Life lease receivables of $503,258. Standard canceled a $3,688,746 term loan due from the Corporation held by a subsidiary of Standard. The Corporation also received accounts receivable of $53,872, all of which were written off as uncollectible at December 31, 1995.
As of December 31, 1996 the total number of exercisable stock options was 40,000.
During 1995, the Company entered into leasing activities which consist of the leasing of fry cook units to be placed in various locations and operated by the lessee. All of the Company's leases are classified as direct financing leases. Under the direct financing method of accounting for leases, the total net rentals receivable under the lease contracts are recorded as a net investment in direct financing leases, and the unearned income on each lease is recognized each month at a constant periodic rate of return on the unrecovered investment.