The company, which provides sport, entertainment and lifestyle content through web sites such as football365, paid pounds 255,000 in NICs on share options worth more than pounds 2m in the six months to 30 September.
"We find it crazy that people are encouraged to provide their staff with options, but have to pay the price of doing so," said Martin Turner, finance director of 365.
The cost of NICs combined with growingcosts related to expansion and amortisation of goodwill acquired in acquisitions saw the interim operating loss double to pounds 1.6m, although sales rose to pounds 9.5m from pounds 84,000 a year earlier. 365 reported 944,267 unique web users in November, more than double the number in June.
365 also revealed it has held talks with British Telecom to offer a branded high speed Internet access service using digital subscriber line (DSL) technology when that becomes available in April. The company plans to market DSL to small business customers it has recently begun to target for telecoms and Internet service provision. But Mr Turner criticised BT's proposed pounds 60 per month access charge for low-grade DSL service. "It's going to have to come down in price."
The company is also in talks with at least one high-street betting shop about using its sports web sites, which include rugby365 and cricketinfo365, for online gambling. "It's not the sort of thing we want to rush into," Mr Turner said. With pounds 58m raised in a flotation on 2 December, 365's cash balance stands at around pounds 65m. Dan Thompson, chief executive, said 365 will speed spending to develop the business. "As new opportunities arise we will invest in them." 365 stock yesterday finished up 10p at 251.5p.
Meanwhile, Sports Internet, a rival content group, announced a deal to enter an online promotional and distribution relationship with Yahoo!, the web portal operator. Sports Internet's Optasoccer.com, the fantasy football site launched a year ago, is being made available through Yahoo! Sports.Reuse content