HARRIS INTERACTIVE INC

In July 2013, the Financial Accounting Standards Board (“FASB”) issued new accounting guidance for income tax presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss or a tax credit carryforward exists. This guidance requires an entity to net its unrecognized tax benefits against the deferred tax assets for all same jurisdiction net operating loss or similar tax loss carryforwards, or tax credit carryforwards. The guidance is to be applied prospectively (with an option to apply retrospectively) and will apply to all unrecognized tax benefits that exist at the effective date. This guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2013, with early adoption permitted. Adoption of this guidance will have no impact on the Company’s consolidated financial statements.

Other recent authoritative guidance issued by the FASB (including technical corrections to the Accounting Standards Codification) and the SEC did not, or are not expected to have a material effect on the Company’s consolidated financial statements.

Interest expense, net. There was no interest expense for the three months ended September 30, 2013, compared with $101 or less than 1% of total revenue for the same prior year period, as we fully paid off our outstanding debt on June 28, 2013.

Net cash used in investing activities. Net cash used in investing activities was $263 for the three months ended September 30, 2013, compared with $58 for the same prior year period. Investing activities for both periods consisted solely of capital expenditures, which increased for the three months ended September 30, 2013 compared with the same prior year period. The increase was driven by certain routine capital expenditures made during the first quarter of fiscal 2014 that had been previously deferred as a result of our cost control initiatives that were in effect during the same prior year period.

Net cash provided by (used in) financing activities. Net cash provided by financing activities was $40 for the three months ended September 30, 2013, compared with $1,117 used in financing activities for the same prior year period. The primary source of cash during the three months ended September 30, 2013 was the cash proceeds from stock option exercises, while the primary use of cash during the same prior year period was to make required principal payments on our outstanding debt, which was paid in full on June 28, 2013.