RNS Number:9952P
Amphion Innovations PLC
13 March 2008
13 March 2008
Amphion Innovations plc
Preliminary Results for the year to 31 December 2007
Amphion Innovations plc (LSE: AMP) ('Amphion' or 'the Company'), which builds
shareholder value in high growth companies in the medical and technology
sectors, today announces its audited preliminary results for year ended 31
December 2007.
Financial Highlights
* Strong growth in Net Asset Value per share up 29% to US $0.44 at 31
December 2007 (2006: US $0.34)
* Net Asset Value in Sterling grew 26% over the past year to 22p from 17.5p
despite the 1.3% adverse move in the dollar/pound exchange rate
* Revenues grew by 132% (or 2.3x) to US $2.9 million (2006: US $1.2 million)
* Profit before tax increased by 50% to US $10.6 million (2006: US $7.0
million)
* Earnings per share of US $0.10 versus US $0.07 for 2006
* Year end cash balance of US $4.6 million
Operating Highlights
* Successfully raised over US $21 million of funding for 4 Partner Companies
in 2007
* Added new Partner Company, PrivateMarkets Inc.
* Significant progress on further establishing two other ventures:
+ MSA Holding B.S.C., a Gulf based joint venture, incorporated in
Bahrain and fully capitalised
+ DataTern Inc., being established to exploit IP opportunities within
the Company's Partner Companies
Richard C.E. Morgan, Amphion's Chief Executive Officer said:
"Amphion continued to make excellent progress in 2007 which is reflected in the
continued growth of our Partner Companies and our strong financial performance,
including the ongoing rapid growth of our NAV per share, up 29% from 2006.
Our progress in 2007 confirms our confidence in the Amphion model. We enter 2008
with a strong group of Partner Companies and an exciting joint venture taking
shape in the Gulf region. We are optimistic we will achieve at least one trade
sale or IPO in 2008 and look forward to even further growth in NAV, thereby
creating substantial shareholder value."
Enquiries:
Amphion Innovations +1 (212) 210-6224
Charlie Morgan
Cardew Group +44 0207 930 0777
Tim Robertson/ Jamie Milton/ Matthew Law
Charles Stanley Securities, Nominated Advisor +44 020 7149 6000
Mark Taylor/ Freddy Crossley
Chairman and CEO's Statement
Results
We are pleased to present Amphion's results for the year to 31 December 2007
which show continued improvement over 2006, with a 29% increase in Net Asset
Value ("NAV") per Share on the back of significant progress made by our Partner
Companies. With the addition of PrivateMarkets Inc., the number of Partner
Companies has reached eight. In addition, we have one joint-venture company (MSA
Holding), which we are building in partnership with local investors in the Gulf
region, and we are forming another specialised entity, called DataTern Inc., to
address and exploit particular opportunities in the extensive intellectual
property portfolio which resides within Amphion's Partner Companies.
The NAV per Share rose by a further 16% in the second half of 2007 to 22p. Since
we completed the IPO in August 2005, our NAV per Share has grown at a compound
rate of 35.7% per annum in US dollar terms and 27.5% per annum in Pounds
Sterling. The weakness in the dollar over this period had a negative impact on
the sterling results but this effect is now being partially offset by our
growing sterling asset base, represented by our holdings in DSC and Myconostica.
Revenues for the year ended 31 December 2007 were US $2.9 million, net profit
equaled US $10.4 million and operating loss was US $3.0 million, as compared to
revenue of US $1.2 million, net profit of US $7.0 million, and operating loss of
US $2.9 million for the year ended 31 December 2006.
Funding
We continue to operate to the original plan which we developed at the time of
our IPO in 2005. During 2007 we raised an additional �6.2 million in three
separate placings in January, July, and November. That capital increase brought
the total amount raised since the IPO to �13.8 million, close to the �15 million
target in our original plan. While the capital markets have become more volatile
and inclement in recent months, we are optimistic we will achieve at least one
trade sale or IPO in 2008.
Partner Companies
The Amphion model is optimised to add one new Partner Company each year and to
produce, on average, one trade sale or IPO each year. Each of these Partner
Companies is carefully selected and built to achieve a market valuation in
excess of US $100 million. Our objective is to maintain a relatively large
ownership position in each company, which should ensure that each trade sale or
IPO generates a significant amount of value for Amphion's shareholders.
Consistent with our model, we started one new Partner Company in 2007. This
company, initially named ETI and recently renamed PrivateMarkets Inc., was
formed as a spinout of one of our existing Partner Companies (FireStar Software
Inc.). PrivateMarkets has made rapid progress over the last six months and we
are pleased to report that it is already generating revenue. After the period
end, we raised US $3.75 million in a Series A fundraising and we believe that
this company has great potential to show rapid growth over the next few years.
We continue to be very active in helping our Partner Companies raise capital and
continue to add to our network of agents who work with our companies to raise
capital. During 2007, we raised over US $21 million during the period, across
four Partner Companies. We continue to be able to raise funds for our Partner
Companies, despite a more challenging fundraising environment, and since the
period end, we have raised US $3.75 million for PrivateMarkets.
During 2007, Amphion team members acted as CEO of one of our companies and as
CFO in the case of another two. In each case our goal was to establish a solid
bridge to a full time executive. In many cases, we have seen that Amphion's
supportive role and active involvement has helped in recruiting high calibre
management talent, beyond what a small independent start-up could possibly
attract. In addition, we are extremely active on the boards of each one of our
companies, providing the role of Chairman on five of them and chairing key
committees in others.
Early in 2007 we announced the agreement we had reached with several prominent
families in the Gulf region to form a joint venture company, MSA Holding. This
company was incorporated in Bahrain in the first half of 2007 and by year end we
had completed the initial organisational and financial steps to get MSA
established. During the year we were also delighted to add Dr. Faisal H.
Al-Refaei, based in Kuwait, to the Amphion team. The mission of MSA is to
practice a variant of the Amphion model, tailored to suit the particular needs
of the region and to act as a capital source for Amphion, our Partner Companies,
and, of course, the projects we plan to start in the region. We are currently
incubating two companies which will become the foundation of MSA's portfolio and
once we have accomplished that step, our goal is to take MSA out to the local
markets for a substantial capital increase.
Intellectual property is the lifeblood of each one of our Partner Companies. We
have invested a lot of time and effort in assembling a range of specialised
resources and in developing various tools, designed to optimise the value of our
intellectual property portfolio. At the last count, Amphion and its Partner
Companies owned or controlled over 150 separately identified pieces of
intellectual property, a number that is expected to grow to at least 200 in
2008. Last year we mentioned that we were taking steps to reorganise part or all
of these resources into a new company. We have since taken further steps in this
direction and hope to be able to report further progress for this entity, now
called DataTern Inc., as the year unfolds.
Outlook
The prospects for Amphion remain very bright, however it is hard to envisage the
growth in NAV being sustained at these high levels in the long term.
Nevertheless, despite difficult market conditions, we were pleased to announce a
completed fundraise for PrivateMarkets Inc., after the end of the reporting
period. We believe that at least two Partner Companies could soon be ready to
complete trade sales or IPO's, public market conditions permitting.
Leading universities in the UK and elsewhere continue to generate many exciting
and potentially revolutionary ideas and inventions each year which have the
right qualities to form the basis of a successful start up company. However, the
challenges faced by such young and immature ventures are considerable. Getting
organised, raising capital, developing plans, recruiting talented management,
and then dealing with the challenges of rapid growth and competition in the
marketplace all represent significant challenges to young and fragile companies.
Amphion brings a wealth of experience and a disciplined approach to the task of
helping each of our Partner Companies address these issues as they arise.
We entered 2008 with a strong group of Partner Companies and an exciting new
venture taking shape in the Gulf region. We look forward to further progress
this year and to the further rapid growth in Net Asset Value that we expect to
report in the year ahead.
Partner Companies' Summary
Below we provide a summary of progress made with each of our Partner Companies.
AXCESS International Inc. (OTCBB: AXSI) ("AXCESS") focuses on real-time business
activity monitoring products, which enable companies to track personnel, assets,
and vehicles wirelessly. The information gained through the use of its patented
Dot(TM) micro-wireless technology platform then allows management to subsequently
make changes to improve decision-making and control throughout the enterprise.
Analysts estimate the market for such products will exceed US $5 billion by
2010. Amphion's fully diluted ownership stake in AXCESS was 7.47% as of 31
December 2007, valued at US $3.1 million (2006: US $2.7 million).
2007 Developments
AXCESS announced record revenues for the year ended 31 December 2007. Revenue
was a record US $3.4 million, exceeding 2006 by 127%, on the back of increased
activities, including provision of RFID and wireless sensor monitoring to
Barbados Port Inc., to help provide security at the Cricket World Cup Games. New
company products entering the market included the Enterprise DotTM, the world's
smallest, most powerful battery-powered wireless computer, which can track and
identify personnel, assets, and vehicles. Also during 2007, AXCESS received two
new patents, bringing the total number of awarded patents to seven.
Durham Scientific Crystals, Ltd. ("DSC") is a spin-out from Durham University
(UK) focused on the application of patented, unique semi-conducting materials
which are used in detectors for medical, security, and defense digital x-ray
imaging. DSC's current market opportunities are for radiation detectors for
industrial instrumentation markets and detector modules for the aviation
security markets. Future markets are predominantly in the industrial inspection
and the medical sector. Analysts estimate the total size of these markets to be
over US $7 billion. Amphion's fully-diluted ownership stake in DSC was 25.32% as
of 31 December 2007, valued at US $9.7 million (2006: US $4.1 million).
2007 Developments
In 2007, DSC received a �0.35 million contribution from the UK Home Office to
develop a liquid and small object scanner and airport checkpoint baggage
scanners that use Cadmium Telluride detectors for direct materials, liquid, and
threat object identification, due for delivery in the summer of 2008 and the
checkpoint detection system for spring 2009. DSC also received contracts from
the CENAMPS (National Centre for Nanotechnology) and the European Space Agency
for crystals growth. During 2007, DSC successfully raised an additional �5.1
million in financing.
FireStar Software, Inc. ("FireStar") has developed a patent protected software
technology called EdgeNode(TM) that provides secure, private, and efficient
communications for any set of different companies to exchange electronic
business transactions. Amphion's fully-diluted ownership stake in FireStar was
16.21% as of 31 December 2007, valued at US $4.8 million (2006: US $4.0
million).
2007 Developments
In 2007, FireStar launched Energy Trading International Inc., now PrivateMarkets
Inc. After the reporting period, with PrivateMarkets' successful completion of
an additional US $3.75 million financing, FireStar now owns 48% of the company.
FireStar also sold certain non-Edgenode(TM) intellectual property assets of the
ObjectSpark(TM) technologies including patents, trademarks, and software to
DataTern Inc., a wholly owned subsidiary of Amphion Innovations plc, whilst
retaining the right to use ObjectSpark(TM) technologies in current and future
FireStar products. Also during the reporting period, FireStar signed a letter of
understanding with Marsoft, the largest independent advisory firm to the
shipping industry for bilateral trading in the maritime shipping industry, to
develop a trading application for the shipping industry.
m2m Imaging Corp. ("m2m") specialises in developing high performance magnetic
resonance imaging ("MRI") coils and accessories for use in low cost, enhanced
imaging for clinical and preclinical markets. The continued growth of the global
installed base of clinical and preclinical magnetic resonance systems continues
to provide m2m with enormous opportunities for growth and it is estimated that
the market is valued at US $12 billion. Amphion's fully-diluted ownership stake
in m2m was 23.53% as of 31 December 2007, valued at US $4.0 million (2006: US
$3.7 million).
2007 Developments
During 2007, m2m continued its growth from 2006 in worldwide preclinical
markets. During the reporting period, m2m successfully engineered a prototype
preclinical cryogenic coil to come to market in 2008, completed their ATP
Federal grant, and continued both the development and delivery of new products
from the Australian subsidiary into the world's leading academic and commercial
research communities. As of 1 March 2008, m2m moved its headquarters to
Cleveland, Ohio.
Motif BioSciences Inc. ("Motif") works with a variety of Founder Populations to
accelerate discovery of genetic variation involved in common diseases, such as
diabetes, asthma, and cancer and aims to develop the commercial value of these
discoveries by partnering with pharmaceutical and diagnostic companies.
Amphion's fully-diluted ownership stake in Motif was 37.69% as of 31 December
2007, valued at US $12.8 million (2006: US $10.3 million).
2007 Developments
In 2007, Motif initiated the most comprehensive study of genetic variation in
asthma in five of the Gulf countries: Kuwait, U.A.E., Yemen, Oman, Bahrain, and
Saudi Arabia. Motif was also commissioned by the Harvard School of Public
Health as its genetics partner in its large scale and long term Kuwait Post
Traumatic Stress Disorder project.
Also during the reporting period, Motif made significant progress in partnership
negotiations with Kuwait University/Kuwait Cancer Control Centre in early-onset
Breast Cancer, and the Diabetes Foundation of Barbados. After the reporting
period, Motif and Imperial College London signed a Research Partnership
Agreement. Under the agreement, Motif will partner with Professor Philippe
Froguel of Imperial College, and with appropriate permission, gain immediate
access to genetic samples and clinical data collected by Professor Froguel and
his colleagues in Morocco in the field of diabetes.
Other corporate developments in 2007 include the securing of US $1 million in
financing.
MSA Holding B.S.C. ("MSA") is a Bahrain-based investment company formed in 2007
by Amphion and its Kuwaiti partners to participate in the next stage of the
Gulf's technological and life sciences development by investing in local
companies with a local focus, while attracting and developing the best young
Arab and Western entrepreneurial talent. Amphion's fully-diluted ownership stake
in MSA was 50% as of 31 December 2007, valued at US $2.9 million (2006: n/a).
2007 Developments
During 2007, MSA successfully completed capital raisings under the terms of its
2006 Heads of Agreement, as well as finalised the incorporation of its core
companies: Saydanah and Suvani. Dr. Faisal H. Al-Refaei, Amphion's Regional
Director, Middle East was appointed CEO of Saydanah, while Suvani has identified
a leading candidate for its CEO.
Since the end of the reporting period, both Saydanah and Suvani have become
operational and are close to partnership deals with Amphion Partner Companies,
WellGen and AXCESS, respectively.
Myconostica Ltd. ("Myconostica") is a spin-out from Manchester University (UK)
that specialises in a new type of molecular diagnostic test for clinical use in
fighting the growing problem of life-threatening, invasive fungal infections.
The market size is estimated to be in excess of US $500 million. Amphion's
fully-diluted ownership stake in Myconostica was approximately 35.70% as of 31
December 2007, valued at US $5.8 million (2006: US $1.9 million).
2007 Developments
In 2007, Myconostica achieved CE marking (regulatory approval for use in Europe
and recognised in several other territories) for the MycXtra(TM) fungal extraction
system and developed the Myconostica FXG(TM) respiratory test, aimed at
identifying both the important Aspergillus and Pneumocystis fungal pathogens in
a single test. This has achieved excellent clinical results and CE marking for
the Myconostica FXG(TM) is anticipated early in 2008. During the reporting period,
Myconostica secured �0.6 million of funding in the first close of the Series C
financing, expected to have a second and final close in Q1 of 2008.
PrivateMarkets, Inc. ("PrivateMarkets") is one of Amphion's new Partner
Companies. Originally named Energy Trading International Inc., when it was
formed in February 2007, PrivateMarkets has introduced the first and only
service for the bilateral, structured trading of energy commodities.
PrivateMarkets is initially marketing its product to the electricity and gas
markets in the US, but plans to expand its operations to other commodity markets
in the US, as well as globally. In the US alone, the total addressable market
for the company is well in excess of US $1 billion a year. Amphion's
full-diluted ownership stake in PrivateMarkets was 13.06% as of 31 December
2007, valued at US $1.7 million (2006: n/a).
2007 Developments
During 2007, PrivateMarkets secured US $2.3 million in financing, primarily from
Amphion in the form of convertible promissory notes which were converted to
equity upon the close of the Series A Preferred Stock financing after the period
end in February 2008. The funds were used to support initial product development
and marketing.
After the reporting period, PrivateMarkets successfully completed an additional
US $3.75 million financing.
WellGen, Inc. ("WellGen") applies proprietary nutrigenomics technology to the
discovery of food and dietary supplement ingredients from plants and foods for
the health and wellness markets which are estimated to be worth US $84 billion
worldwide. Amphion's fully-diluted ownership stake in WellGen was 15.01% as of
31 December 2007, valued at US $6.8 million (2006: US $4.9 million).
2007 Developments
In 2007, WellGen moved into new headquarters and operating facilities located at
the Commercialization Center for Innovative Technologies in the New Jersey
Technology Center in North Brunswick, New Jersey. A patent, US Patent No.
7,238,376, was awarded for the company's proprietary black tea extract, WG401,
which has demonstrated inflammation-fighting properties. Over the course of the
reporting period, WellGen completed two more corroborative human studies for
WG401, which supported its performance, the known mechanism of its action at the
cellular level and the quick onset of its activity. Three additional ingredient
patents were also awarded in 2007.
Other corporate developments in 2007 include the appointment of Nancy Rawson,
Ph.D. as Chief Scientific Officer and the securing of US $9.5 million in
financing.
Since the close of the reporting period, WellGen has appointed Robert M.
Hellauer as Chief Financial Officer.
Amphion Innovations plc
Consolidated income statement
For the year ended 31 December 2007
Notes
Year ended Year ended
31 December 2007 31 December 2006
-----------------------------------
Continuing operations US $ US $
Revenue 4 2,871,222 1,238,040
Other operating income - 1,650
Administrative expenses (5,877,946) (4,092,028)
-----------------------------------
Operating loss (3,006,724) (2,852,338)
Fair value gains on investments 13,549,980 9,681,104
Interest income 8 136,467 170,490
Other gains and losses (113,419) 37,337
Finance costs (1,192) -
-----------------------------------
Profit before tax 6 10,565,112 7,036,593
Tax on profit 9 (125,977) (83,214)
-----------------------------------
Profit for the period 10,439,135 6,953,379
===================================
Earnings per share 10
Basic US $ 0.10 US $ 0.07
===================================
Diluted US $ 0.10 US $ 0.07
===================================
Amphion Innovations plc
Company income statement
For the year ended 31 December 2007
Year ended Year ended
Notes 31 December 2007 31 December 2006
-------------------------------------
US $ US $
Continuing operations
Administrative expenses (2,998,360) (2,939,317)
-------------------------------------
Operating loss (2,998,360) (2,939,317)
Fair value gains on investments 13,459,980 9,515,820
Interest income 8 137,543 167,724
Other gains and losses (113,419) 30,017
Finance costs (1,192) -
-------------------------------------
Profit before tax 6 10,484,552 6,774,244
Tax on profit 9 - -
-------------------------------------
Profit for the period 10,484,552 6,774,244
=====================================
Amphion Innovations plc
Consolidated balance sheet
At 31 December 2007
Notes 31 December 2007 31 December 2006
--------------------------------------
US $ US $
Non-current assets
Intangible assets 11 2,274,636 -
Fixtures, fittings, and equipment 12 28,161 30,116
Security deposit 121,694 121,694
Investments 14 51,642,725 32,254,563
--------------------------------------
54,067,216 32,406,373
--------------------------------------
Current assets
Prepaid expenses and other receivables 15 639,429 1,258,941
Cash and cash equivalents 4,594,007 1,848,539
--------------------------------------
5,233,436 3,107,480
--------------------------------------
Total assets 59,300,652 35,513,853
======================================
Current liabilities
Trade and other payables 16 2,469,742 1,349,986
--------------------------------------
Total liabilities 2,469,742 1,349,986
======================================
Net assets 56,830,910 34,163,867
======================================
Equity
Share capital 17 2,388,071 1,808,983
Share premium account 34,772,046 23,114,093
Translation reserve 2,860 11,993
Retained earnings 19,667,933 9,228,798
--------------------------------------
Total equity 56,830,910 34,163,867
======================================
The financial statements were approved by the Board of Directors and authorised
for issue on 12 March 2008. They were signed on its behalf by:
Director Director
Richard M. Mansell-Jones Robert J. Bertoldi
Amphion Innovations plc
Company balance sheet
At 31 December 2007
Notes 31 December 2007 31 December 2006
-----------------------------------------------
US$ US$
Non-current assets
Fixtures, fittings, and
equipment 12 6,886 12,541
Security deposit 121,694 121,694
Investments 14 51,311,449 32,013,287
Investment in subsidiaries 13 766,406 3
-----------------------------------------------
52,206,435 32,147,525
-----------------------------------------------
Current assets
Prepaid expenses and other
receivables 15 379,580 988,087
Cash and cash equivalents 4,480,257 1,797,085
-----------------------------------------------
4,859,837 2,785,172
-----------------------------------------------
Total assets 57,066,272 34,932,697
===============================================
Current liabilities
Trade and other payables 16 588,049 1,176,067
-----------------------------------------------
Total liabilities 588,049 1,176,067
===============================================
Net assets 56,478,223 33,756,630
===============================================
Equity
Share capital 17 2,388,071 1,808,983
Share premium account 34,772,046 23,114,093
Retained earnings 19,318,106 8,833,554
-----------------------------------------------
Total equity 56,478,223 33,756,630
===============================================
The financial statements were approved by the Board of Directors and authorised
for issue on 12 March 2008. They were signed on its behalf by:
Director Director
Richard M. Mansell-Jones Robert J. Bertoldi
Amphion Innovations plc
Consolidated statement of changes in equity
For the year ended 31 December 2007
Share
Share premium Translation Retained
Notes capital account reserve earnings Total
--------- ---------- ----------- ---------- ----------
US $ US $ US $ US $ US $
Balance at 31 December 2005 1,685,160 20,101,328 2,220 2,275,419 24,064,127
Issue of share capital 123,823 3,047,600 - - 3,171,423
Incremental costs directly
attributable to issue of shares 18 - (150,950) - - (150,950)
Recognition of share-based payments 21 - 116,115 - - 116,115
Exchange differences arising on
translation of foreign operations - - 9,773 - 9,773
Profit for the year - - - 6,953,379 6,953,379
--------- ---------- ----------- ---------- ----------
Balance at 31 December 2006 1,808,983 23,114,093 11,993 9,228,798 34,163,867
Issue of share capital 17 579,088 12,179,676 - - 12,758,764
Incremental costs directly
attributable to issue of shares 18 - (778,379) - - (778,379)
Recognition of share-based payments 21 - 256,656 - - 256,656
Exchange differences arising on
translation of foreign operations - - (9,133) - (9,133)
Profit for the year - - - 10,439,135 10,439,135
--------- ---------- ----------- ---------- ----------
Balance at 31 December 2007 2,388,071 34,772,046 2,860 19,667,933 56,830,910
========= ========== =========== ========== ==========
Amphion Innovations plc
Company statement of changes in equity
For the year ended 31 December 2007
Share
Share premium Retained
Notes capital account earnings Total
--------- ---------- ---------- ----------
US $ US $ US $ US $
Balance at 31 December 2005 1,685,160 20,101,328 2,059,310 23,845,798
Issue of share capital 123,823 3,047,600 - 3,171,423
Incremental costs directly attributable
to issue of shares 18 - (150,950) - (150,950)
Recognition of share-based payments 21 - 116,115 - 116,115
Profit for the year - - 6,774,244 6,774,244
--------- ---------- ---------- ----------
Balance at 31 December 2006 1,808,983 23,114,093 8,833,554 33,756,630
Issue of share capital 17 579,088 12,179,676 - 12,758,764
Incremental costs directly attributable
to issue of shares 18 - (778,379) - (778,379)
Recognition of share-based payments 21 - 256,656 - 256,656
Profit for the year 10,484,552 10,484,552
--------- ---------- ---------- ----------
Balance at 31 December 2007 2,388,071 34,772,046 19,318,106 56,478,223
========= ========== ========== ==========
Amphion Innovations plc
Consolidated cash flow statement
For the year ended 31 December 2007
Year ended Year ended
Notes 31 December 2007 31 December 2006
---------------- ----------------
US $ US $
Operating activities
Operating loss (3,006,724) (2,852,338)
Adjustments for:
Depreciation of fixtures,
fittings, and equipment 12 12,052 9,210
Recognition of share based payments 256,656 116,115
(Increase) decrease in prepaid &
other receivables 619,512 (615,453)
Increase in trade & other payables 1,119,756 995,667
Interest expense (1,192) -
Income tax (125,977) (75,894)
---------------- ----------------
Net cash used in operating activities (1,125,917) (2,422,693)
---------------- ----------------
Investing activities
Interest received 136,467 170,490
Proceeds on disposal of investments 14 581,353 2,905,719
Purchases of investments (6,419,535) (4,937,763)
Purchases of intangible assets (2,274,636) -
Proceeds from repayment of note - 637,000
Purchases of equipment 12 (10,059) (12,899)
---------------- ----------------
Net cash used in investing activities (7,986,410) (1,237,453)
---------------- ----------------
Financing activities
Proceeds on issue of shares, net
of share issuance costs 11,980,385 3,020,473
---------------- ----------------
Net cash from financing activities 11,980,385 3,020,473
---------------- ----------------
Net increase/(decrease) in cash and
cash equivalents 2,868,058 (639,673)
Cash and cash equivalents at the
beginning of the year 1,848,539 2,448,422
Effect of foreign exchange rate changes (122,590) 39,790
---------------- ----------------
Cash and cash equivalents at the
end of the year 4,594,007 1,848,539
================ ================
Amphion Innovations plc
Company cash flow statement
For the year ended 31 December 2007
Year ended Year ended
Notes 31 December 2007 31 December 2006
---------------- ----------------
Operating activities US $ US $
Operating loss (2,998,360) (2,939,317)
Adjustments for:
Depreciation of fixtures, fittings,
and equipment 12 5,655 5,664
Recognition of share based payments 256,656 116,115
(Increase) decrease in prepaid &
other receivables 608,507 (408,280)
Increase (decrease) in trade &
other payables (588,018) 897,631
Interest expense (1,192) -
---------------- ----------------
Net cash used in operating
activities (2,716,752) (2,328,187)
---------------- ----------------
Investing activities
Interest received 137,543 167,724
Proceeds on disposal of investments 14 581,353 2,905,719
Purchases of investments (7,185,938) (4,937,763)
Proceeds from repayment of note - 637,000
Purchases of equipment 12 - (2,263)
---------------- ----------------
Net cash used in investing activities (6,467,042) (1,229,583)
---------------- ----------------
Financing activities
Proceeds on issue of shares, net
of share issuance costs 11,980,385 3,020,473
---------------- ----------------
Net cash from financing activities 11,980,385 3,020,473
---------------- ----------------
Net increase/(decrease) in
cash and cash equivalents 2,796,591 (537,297)
Cash and cash equivalents at the
beginning of the year 1,797,085 2,304,365
Effect of foreign exchange rate changes (113,419) 30,017
---------------- ----------------
Cash and cash equivalents at the
end of the year 4,480,257 1,797,085
================ ================
Amphion Innovations plc
Notes to the consolidated financial statements
For the year ended 31 December 2007
1. General information
Amphion Innovations plc (the "Company") is a public limited company incorporated
in the Isle of Man under the Companies Acts 1931 to 2004 on 7 June 2005 with
registered number 113646C. The address of the registered office is 15-19 Athol
Street, Douglas, Isle of Man, IM1 1LB. The principal place of business is 330
Madison Avenue, New York, NY, USA, 10017. The principal activity of the Company
and its subsidiaries (the "Group") is to build shareholder value in high growth
companies in the medical and technology sectors, by using a focused, hands-on
company building approach, based on decades of experience in both the US and UK.
The consolidated financial statements include the accounts of Amphion
Innovations plc and its three wholly owned subsidiaries, Amphion Innovations US
Inc. and DataTern, Inc., which are incorporated in the United States, and
Amphion Innovations UK Limited, which is incorporated in the United Kingdom.
These financial statements are presented in US dollars because that is the
currency of the primary economic environment in which the Company operates.
2. Significant accounting policies
The financial statements have been prepared in accordance with International
Financial Reporting Standards (IFRS). However, the comparative consolidated
income statement for the year ended 31 December 2006 does not reflect the
presentation and disclosures required by IFRS 5 "Non-current Assets Held for
Sale and Discontinued Operations" arising from Motif BioSciences Inc. ("Motif")
ceasing to be a subsidiary during the year ended 31 December 2006, when
Amphion's ownership interest fell below 50%. Historically, the Company had not
consolidated Motif in the financial statements of the Group, as the Directors
believed that the presentation of this subsidiary on an unconsolidated basis
provided a fairer presentation of the Group's position.
In the current year, the Group has adopted IFRS 7 Financial Instruments:
Disclosures which is effective for annual reporting periods beginning on or
after 1 January 2007, and the related amendment to IAS 1 Presentation of
Financial Statements. The impact of the adoption of IFRS 7 and the changes to
IAS 1 has been to expand the disclosures provided in these financial statements
regarding the Group's financial instruments and management of capital.
As of the date of authorisation of these financial statements, the following
Standards and Interpretations which have not been applied in these financial
statements were in issue but not yet effective:
IFRS 8 Operating Segments
IFRIC 8 Scope of IFRS 2
IFRIC 11 IFRS 2: Group and Treasury Share Transactions
IFRIC 12 Service Concession Arrangements
IFRIC 13 Customer Loyalty Programmes
IFRIC 14 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and
their Interaction
The Directors anticipate that the adoption of these Standards and
Interpretations in future periods will have no material impact on the financial
statements of the Group.
The financial statements have been prepared on the historical cost basis,
modified by the revaluation of investments. The principal accounting policies
adopted are set out below.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of
the Company and entities controlled by the Company (its subsidiaries). Control
is achieved where the Company has the power to govern the financial and
operating policies of any entity so as to obtain benefits from its activities.
The results of subsidiaries acquired during the year are included in the
consolidated income statement from the effective date of acquisition.
Where necessary, adjustments are made to the financial statements of
subsidiaries to bring the accounting policies used into line with those used by
the Group.
All intra-group transactions, balances, income, and expenses are eliminated on
consolidation.
2. Significant accounting policies, (continued)
Cash and cash equivalents
Cash and cash equivalents include balances with banks and demand deposits, which
have maturities of less than three months
Investments
Investments comprise equity investments, warrants, options and promissory notes.
Investments are recognised and derecognised on a trade date where a purchase or
sale of an investment is under a contract whose terms require delivery of the
investment within the timeframe established by the market concerned, and are
initially measured at fair value, net of transaction costs except for those
financial assets classified as fair value through profit or loss which are
initially measured at fair value.
Investments are classified as fair value through profit and loss. Investments
are carried at value as determined by management using the International Private
Equity and Venture Capital Valuation Guidelines. The following broad guidelines
are generally used in security valuations: a) marketable securities which are
freely tradable and for which quotations are readily available are valued using
their last closing prices, (b) all other securities are valued at fair value as
estimated by management in good faith. Factors generally considered in
determining fair value are the latest offering price from recently executed
financing transactions related to the investee companies and comparison to
similar instruments of similar companies. Investments that do not have a quoted
market price in an active market and whose fair value cannot be reliably
measured are valued at cost until such time as a fair value can be determined.
Financial instruments
Financial assets and financial liabilities are recognised on the Group's balance
sheet when the Group becomes a party to the contractual provisions of the
instrument.
Prepaid expenses and other receivables
Prepaid expenses and other receivables are stated at their nominal value which
approximates their fair value. Other receivables are reduced by appropriate
allowances for estimated irrecoverable amounts and do not carry any interest.
Financial liabilities and equity
Financial liabilities and equity instruments are classified according to the
substance of the contractual arrangements entered into. An equity instrument is
any contract that evidences a residual interest in the assets of the Group after
deducting all of its liabilities.
Trade and other payables
Trade and other payables are not interest bearing and are stated at nominal
value which approximates their fair value.
Equity instruments
Equity instruments issued by the Group are recorded at the proceeds received,
net of direct issue costs.
Share based payments
The Group has applied the requirements of IFRS 2 Share-based Payments.
The Group issues equity-settled share-based payments to certain employees and
consultants. Equity-settled share-based payments are measured at fair value at
the date of grant. The fair value determined at the grant date of the
equity-settled share-based payments is expensed on a straight-line basis over
the vesting period, based on the Group's estimate of the shares that will
eventually vest. The fair value of equity-settled share-based payments
attributable to the issue of equity instruments is charged against equity.
Fair value is measured using the Black-Scholes pricing model. The expected life
used in the model has been adjusted based on management's best estimate for
effects of non-transferability, exercise restrictions, and behavioral
considerations.
2. Significant accounting policies, (continued)
Financial instruments, (continued)
Capital risk management
The Group manages its capital to ensure that entities in the Group will be able
to continue as going concerns while maximizing the return to stakeholders
through the optimisation of the debt and equity balance. The capital structure
of the Group consists of cash and cash equivalents and equity attributable to
equity holders of the parent, comprising issued capital, reserves, and retained
earnings as disclosed in note 17.
Impairment of financial assets
Financial assets are assessed for indicators of impairment at each balance sheet
date. Financial assets are impaired where there is objective evidence that, as a
result of one or more events that occurred after the initial recognition of the
financial asset, the estimated future cash flows of the investment have been
impacted.
Revenue recognition
Revenue is measured at the fair value of the consideration received or
receivable and represents amounts receivable for and services provided in the
normal course of business, net of VAT and other sales related taxes.
Interest income
Interest income is accrued on a time basis.
Dividend income
Dividend income from investments is recognised when the shareholders' right to
receive payment has been established.
Leasing
Leases are classified as finance leases whenever the terms of the lease transfer
substantially all the risks and rewards of ownership to the lessee. All other
leases are classified as operating leases.
Foreign currencies
The individual financial statements of each group company are presented in the
currency of the primary economic environment in which it operates (its
functional currency). For the purpose of the consolidated financial statements,
the results and financial position of each group company are expressed in US
dollars, which is the functional currency of the Company, and the presentation
currency for the consolidated financial statements.
Transactions in currencies other than US dollars are recorded at the rates of
exchange prevailing on the dates of the transactions. At each balance sheet
date, monetary assets and liabilities that are denominated in foreign currencies
are retranslated at the rates prevailing on the balance sheet date. Non-monetary
assets and liabilities carried at fair value that are denominated in foreign
currencies are translated at the rates prevailing at the date when the fair
value was determined. Gains and losses arising on retranslation are included in
net profit or loss for the period, except for exchange differences arising on
non-monetary assets and liabilities where the changes in fair value are
recognised directly in equity.
On consolidation, the assets and liabilities of the Group's overseas operations
are translated at exchange rates prevailing on the balance sheet date. Income
and expense items are translated at the average exchange rates for the period
unless exchange rates fluctuate significantly. Exchange differences arising, if
any, are classified as equity and transferred to the Group's translation
reserve. Such translation differences are recognised as income or as expenses in
the period in which the operation is disposed of.
Retirement benefit costs
Payments to defined contribution retirement benefit schemes are charged as an
expense as they fall due.
2. Significant accounting policies, (continued)
Taxation
Income tax expense represents the sum of the tax currently payable and deferred
tax.
The tax currently payable is based on taxable profit for the period. Taxable
profit differs from net profit as reported in the income statement because it
excludes items of income or expenditure that are taxable or deductible in other
years and it further excludes items that are never taxable or deductible. The
Group's liability for current tax is calculated using tax rates that have been
enacted or substantively enacted at the balance sheet date.
Deferred taxation is the tax expected to be payable or recoverable on
differences between the carrying amount of assets and liabilities in the
financial statements and the corresponding tax basis used in the computation of
taxable profit.
Deferred tax is calculated at the tax rates that are expected to apply to the
period when the liability is settled or the asset realised. Deferred tax assets
and liabilities are not discounted.
Fixtures, fittings, and equipment
Fixtures, fittings, and equipment are stated at cost less accumulated
depreciation and any recognised impairment loss.
Depreciation is charged so as to write off the cost or valuation of assets over
their estimated useful lives of 3-5 years, using the straight-line method.
Intangible assets
Intangible assets comprise patents and other intellectual property and are
measured initially at purchase cost and are amortised on a straight-line basis
over their estimated useful lives.
Impairment of tangible and intangible assets
At each balance sheet date, the Group reviews the carrying amounts of its
tangible and intangible assets to determine whether there is any indication that
those assets have suffered an impairment loss. If any such indication exists,
the recoverable amount of the asset is estimated in order to determine the
extent of the impairment loss (if any). Where the asset does not generate cash
flows that are independent from other assets, the Group estimates the
recoverable amount of the cash-generating unit to which the asset belongs. An
intangible asset with an indefinite useful life is tested for impairment
annually and whenever there is an indication that the asset may be impaired.
3. Key sources of estimation uncertainty
The preparation of the Group's financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets,
liabilities, and contingencies at the date of the Group's financial statements,
and revenue and expenses during the reporting period. Actual results could
differ from those estimated. Significant estimates in the Group's financial
statements include the amounts recorded for the fair value of the investments.
By their nature, these estimates and assumptions are subject to measurement
uncertainty and the effect on the Group's financial statements of changes in
estimates in future periods could be significant.
4. Revenue
An analysis of the Group's and Company's revenue for the period is as follows:
Group Company Group Company
Year ended Year ended Year ended Year ended
31 December 31 December 31 December 31 December
2007 2007 2006 2006
----------- ----------- ----------- -----------
US $ US $ US $ US $
Settled in cash 2,871,222 - 1,238,040 -
----------- ----------- ----------- -----------
Advisory fee income 2,871,222 - 1,238,040 -
----------- ----------- ----------- -----------
5. Business and geographical segments
Business segments
For management purposes for 2007, the Group is organised into three business
segments - advisory services, investing activities, and intellectual property.
These business segments are the basis on which the Group reports its primary
segment information.
Segment information about these businesses is presented below.
Advisory Investing Intellectual
services activities property Eliminations Consolidated
Year ended Year ended Year ended Year ended Year ended
31 December 31 December 31 December 31 December 31 December
2007 2007 2007 2007 2007
US $ US $ US $ US $ US $
REVENUE
External advisory fees 2,871,222 - - - 2,871,222
Inter-segment fees - 606,352 - (606,352) -
---------- ---------- ---------- ---------- ----------
Total revenue 2,871,222 606,352 - (606,352) 2,871,222
Administrative expenses (2,552,990) (3,610,129) (321,179) 606,352 (5,877,946)
---------- ---------- ---------- ---------- ----------
Segment result 318,232 (3,003,777) (321,179) - (3,006,724)
Fair value and realised
gains on investments - 13,549,980 - - 13,549,980
Interest income 345 138,954 - (2,832) 136,467
Other gains and losses - (113,419) - - (113,419)
Finance costs - (1,192) (2,832) 2,832 (1,192)
---------- ---------- ---------- ---------- ----------
Profit before tax 318,577 10,570,546 (324,011) - 10,565,112
Income taxes (115,548) (10,429) - (125,977)
---------- ---------- ---------- ---------- ----------
Profit after tax 203,029 10,560,117 (324,011) - 10,439,135
OTHER INFORMATION
Segment assets 788,102 57,194,434 2,274,636 (956,520) 59,300,652
Segment liabilities 202,558 611,749 2,183,132 (527,697) 2,469,742
Capital additions 7,656 2,403 2,274,636 - 10,059
Depreciation 5,068 6,984 - - 12,052
Recognition of share based
payments - 256,656 - - 256,656
5. Business and geographical segments, (continued)
For management purposes for 2006, the Group was organised into two business
segments - advisory services and investing activities.
Advisory Investing
services Activities Eliminations Consolidated
Year ended Year ended Year ended Year ended
31 December 31 December 31 December 31 December
2006 2006 2006 2006
US $ US $ US $ US $
REVENUE
External advisory fees 1,238,040 - - 1,238,040
Inter-segment fees - 444,027 (444,027) -
---------- ---------- ---------- ----------
Total revenue 1,238,040 444,027 (444,027) 1,238,040
Other operating income 1,650 - 1,650
Administrative expenses (1,040,195) (3,495,860) 444,027 (4,092,028)
---------- ---------- ---------- ----------
Segment result 199,495 (3,051,833) - (2,852,338)
Fair value and realised
gains on investments - 9,681,104 - 9,681,104
Interest income 1,152 169,338 - 170,490
Other gains and losses 7,323 30,014 - 37,337
---------- ---------- ---------- ----------
Profit before tax 207,970 6,828,623 - 7,036,593
Income taxes (70,899) (12,315) - (83,214)
---------- ---------- ---------- ----------
Profit after tax 137,071 6,816,308 - 6,953,379
---------- ---------- ---------- ----------
OTHER INFORMATION
Segment assets 517,470 35,055,555 (59,172) 35,513,853
Segment liabilities 162,161 1,243,148 (55,323) 1,349,986
Additions to fixtures,
fittings, and equipment 7,082 5,817 - 12,899
Depreciation 2,876 6,334 - 9,210
Advisory fees settled in
equity instruments - 116,115 - 116,115
5. Business and geographical segments, (continued)
Geographical segments
The Group's operations are located in the United States and the United Kingdom.
The following table provides an analysis of the Group's advisory fees by
geographical location of the investment.
Advisory fees by
geographical location
-----------------------
2007 2006
---- ----
US $ US $
United States 2,354,875 1,092,900
United Kingdom 516,347 145,140
--------- ---------
2,871,222 1,238,040
========= =========
The following is an analysis of the carrying amount of segment assets, and
additions to fixtures, fittings, and equipment, and intangible assets analysed
by the geographical area in which the assets are located:
Carrying amount Additions to fixtures, Additions to
of segment assets fittings and equipment intangible assets
-------------------------- ------------------------ ------------------
2007 2006 2007 2006 2007 2006
---- ---- ---- ---- ---- ----
US $ US$ US $ US$ US $ US$
United States 43,683,138 29,408,915 7,656 9,345 2,274,636 -
United Kingdom 15,617,514 6,104,938 2,403 3,554 - -
---------- ---------- ------- ------- --------- -------
59,300,652 35,513,853 10,059 12,899 2,274,636 -
========== ========== ======= ======= ========= =======
6. Profit before tax
Profit before tax has been arrived at after crediting/(charging) the following
gains and losses:
Group Company Group Company
Year ended Year ended Year ended Year ended
31 December 31 December 31 December 31 December
2007 2007 2006 2006
US $ US $ US $ US $
----------- ----------- ----------- -----------
Net foreign exchange gains
/(losses) (113,419) (113,419) 30,017 30,017
=========== =========== =========== ===========
Change in fair value of
financial assets designated
as at fair value through
profit or loss 13,549,980 13,459,980 9,681,104 9,515,820
=========== =========== =========== ===========
Depreciation of equipment 12,052 5,655 9,210 5,664
=========== =========== =========== ===========
Auditors' remuneration -
audit services 135,968 81,356 164,607 150,000
=========== =========== =========== ===========
Auditors' remuneration -
audit services, underestimated
in prior year - - 117,865 117,865
=========== =========== =========== ===========
Auditors' remuneration -
advisory services 26,813 26,813 - -
=========== =========== =========== ===========
7. Staff costs
The average monthly number of employees (including Executive Directors) was:
2007 2006
---- ----
Number Number
Amphion Innovations plc and Amphion Innovations
US Inc. (employees and costs are shared) 7 6
Amphion Innovations UK Ltd. 2 2
------ ------
Total for the Group 9 8
====== ======
Group Company Group Company
2007 2007 2006 2006
---- ---- ---- ----
Their aggregate remuneration comprised: US $ US $ US $ US $
Wages and salaries 1,893,920 883,683 1,312,737 639,601
Social security costs 93,705 30,912 76,281 27,647
Other pension costs (see note 22) 28,826 - 26,538 -
--------- --------- --------- ---------
2,016,451 914,595 1,415,556 667,248
========= ========= ========= =========
8. Interest income
Group Company Group Company
Year ended Year ended Year ended Year ended
31 December 31 December 31 December 31 December
2007 2007 2006 2006
----------- ----------- ----------- -----------
US $ US $ US $ US $
Interest income:
Bank deposits 72,908 71,152 41,316 39,155
Investments 63,559 66,391 128,569 128,569
Other - - 605 -
----------- ----------- ----------- -----------
136,467 137,543 170,490 167,724
=========== =========== =========== ===========
9. Income tax expense
Group Group
Year ended Year ended
31 December 2007 31 December 2006
---------------- ----------------
US $ US $
Isle of Man income tax - -
Tax on US subsidiary 115,548 70,899
Tax on UK subsidiary 10,429 12,315
---------------- ----------------
Current tax 125,977 83,214
================ ================
From 6 April 2006, a standard rate of corporate tax of 0% applies to Isle of Man
companies, with exceptions taxable at the 10% rate, namely licensed banks in
respect of deposit-taking business, companies that profit from land and property
in the Isle of Man and companies that elect to pay tax at the 10% rate. No
provision for Isle of Man taxation is therefore required. The Company is treated
as a Partnership for U.S. federal and state income tax purposes and,
accordingly, its income or loss is taxable directly to its partners.
The Company has three subsidiaries, two in the USA and one in the UK. The US
subsidiaries, Amphion Innovation US Inc. and DataTern, Inc., are Corporations
and therefore taxed directly. The US subsidiaries suffer US federal tax, state
tax, and New York City tax on their taxable net income. The UK subsidiary,
Amphion Innovations UK Limited, is liable to UK Corporation tax at rates up to
30% on its taxable profits and gains.
The Group charge for the period can be reconciled to the profit per the
consolidated income statement as follows:
2007 2006
US $ US $
Profit before tax 10,565,112 7,036,593
========== ==========
Tax at the Isle of Man income tax rate of 0% - -
Effect of different tax rates of subsidiaries
operating in other jurisdictions 125,977 83,214
---------- ----------
Current tax 125,977 83,214
========== ==========
10. Earnings per share
The calculation of the basic and diluted earnings per share attributable to the
ordinary equity holders of the parent is based on the following data:
Earnings
Year ended Year ended
31 December 2007 31 December 2006
---------------- ----------------
US $ US $
Earnings for the purposes of basic and diluted earnings per share
(profit for the year attributable to equity holders of the parent) 10,439,135 6,953,379
================ ================
Number of shares
Year ended Year ended
31 December 2007 31 December 2006
---------------- ----------------
Weighted average number of ordinary shares
for the purposes of basic earnings per share 108,073,228 95,175,992
Effect of dilutive potential ordinary shares:
Share options 163,733 110,211
---------------- ----------------
Weighted average number of ordinary shares
for the purposes of diluted earnings per share 108,236,961 95,286,203
================ ================
11. Intangible assets
Patents, software,
trademark and copyright
-----------------------
US $
COST
At 1 January 2006 -
Additions -
-----------------------
At 1 January 2007 -
Additions 2,274,636
-----------------------
At 31 December 2007 2,274,636
=======================
The intangible assets relate to certain intellectual property assets which were
acquired on 20 December 2007 in a transaction between Amphion Innovations plc,
DataTern, Inc. ("DataTern"), a wholly owned subsidiary of Amphion Innovations
plc, and FireStar Software Inc. ("FireStar"), a company in which Amphion
Innovations plc holds an investment. The assets were purchased for the following
consideration: discharge of debtor of US $415,000 and assumption by Amphion of
certain third party payable totaling approximately US $1.8 million. As part of
the purchase, US $1,565,278.05 of promissory notes of FireStar, held by Amphion
were converted into FireStar stock. Under the terms of the purchase, FireStar
retains an interest of 48.29% of any future distributions on the 502 Patent and
24.14% of any future distributions on the 402 and 077 Patents.
12. Fixtures, fittings, and equipment
Group Company
Fixtures, fittings, Fixtures, fittings,
and equipment and equipment
------------------- -------------------
COST US $ US $
At 1 January 2006 28,760 17,723
Additions 12,899 2,263
------------------- -------------------
At 1 January 2007 41,659 19,986
Additions 10,059 -
------------------- -------------------
At 31 December 2007 51,718 19,986
------------------- -------------------
ACCUMULATED DEPRECIATION
At 1 January 2006 2,333 1,781
Charge for the period 9,210 5,664
------------------- -------------------
At 1 January 2007 11,543 7,445
Charge for the period 12,052 5,655
Exchange difference (38) -
------------------- -------------------
At 31 December 2007 23,557 13,100
------------------- -------------------
CARRYING AMOUNT
At 31 December 2007 28,161 6,886
=================== ===================
At 31 December 2006 30,116 12,541
=================== ===================
13. Subsidiaries
Details of the Company's subsidiaries at 31 December 2007 are as follows:
Place of Proportion Proportion
incorporation of of
Name of (or registration) ownership voting
subsidiary and operation interest power held Principal activity
% %
------------------------------- ----------------- ---------- ----------- ---------------------
Consolidated
------------
Amphion Innovations US Inc. Delaware, USA 100 100 Advisory services
Amphion Innovations UK Limited England & Wales 100 100 Advisory services
DataTern, Inc. Delaware, USA 100 100 Intellectual property
The investments in subsidiaries are all stated at cost.
14. Investments
At fair value through profit and loss
Group Company
31 December 2007 31 December 2007
Unrealised Unrealised
Fair Value Cost gain/(loss) Fair Value Cost gain/(loss)
US $ US $ US $ US $ US $ US $
Public companies:
AXCESS International Inc. 3,088,760 2,559,521 529,239 3,088,760 2,559,521 529,239
Private companies:
Durham Scientific
Crystals, Ltd. 9,689,225 2,884,056 6,805,169 9,689,225 2,884,056 6,805,169
Energy Trading International,
Inc. 1,690,000 1,690,000 - 1,690,000 1,690,000 -
FireStar Software, Inc. 4,783,933 4,941,783 (157,850) 4,783,933 4,941,783 (157,850)
Motif BioSciences, Inc. 12,791,591 5,464,624 7,326,967 12,791,591 5,464,624 7,326,967
MSA Holding B.S.C. 2,929,468 1,500,000 1,429,468 2,929,468 1,500,000 1,429,468
m2m Imaging Corp. 4,015,826 1,636,268 2,379,558 3,684,550 1,582,500 2,102,050
Myconostica Ltd. 5,847,695 2,745,331 3,102,364 5,847,695 2,745,331 3,102,364
WellGen, Inc. 6,806,227 4,814,936 1,991,291 6,806,227 4,814,936 1,991,291
---------- ---------- ---------- ---------- ---------- ----------
51,642,725 28,236,519 23,406,206 51,311,449 28,182,751 23,128,698
========== ========== ========== ========== ========== ==========
Group Company
31 December 2007 31 December 2007
Fair Value Cost Unrealised Fair Value Cost Unrealised
US $ US $ US $ US $ US $ US $
Shares 39,482,486 20,054,147 19,428,339 39,482,486 20,054,147 19,428,339
Promissory notes 4,275,645 4,275,645 - 4,275,645 4,275,645 -
Warrants & options 7,884,594 3,906,727 3,977,867 7,553,318 3,852,959 3,700,359
---------- ---------- ---------- ---------- ---------- ----------
51,642,725 28,236,519 23,406,206 51,311,449 28,182,751 23,128,698
========== ========== ========== ========== ========== ==========
14. Investments, (continued)
Group Company
31 December 2006 31 December 2006
Unrealised Unrealised
Fair Value Cost gain/(loss) Fair Value Cost gain/(loss)
US $ US $ US $ US $ US $ US $
Public companies:
AXCESS International Inc. 2,686,210 2,409,521 276,689 2,686,210 2,409,521 276,689
Beijing Med-Pharm Corporation 446,388 113,314 333,074 446,388 113,314 333,074
Private companies:
Durham Scientific Crystals, Ltd. 4,110,000 2,134,673 1,975,327 4,110,000 2,134,673 1,975,327
FireStar Software, Inc. 4,060,284 4,155,784 (95,500) 4,060,284 4,155,784 (95,500)
Motif BioSciences, Inc. 10,346,655 4,252,279 6,094,376 10,346,655 4,252,279 6,094,376
m2m Imaging Corp. 3,736,026 1,386,268 2,349,758 3,494,750 1,332,500 2,162,250
Myconostica Ltd. 1,929,000 1,929,000 - 1,929,000 1,929,000 -
WellGen, Inc. 4,940,000 4,549,458 390,542 4,940,000 4,549,458 390,542
---------- ---------- ---------- ---------- ---------- ----------
32,254,563 20,930,297 11,324,266 32,013,287 20,876,529 11,136,758
========== ========== ========== ========== ========== ==========
Group Company
31 December 2006 31 December 2006
Fair Value Cost Unrealised Fair Value Cost Unrealised
US $ US $ US $ US $ US $ US $
Shares 25,065,759 15,683,292 9,382,467 25,065,759 15,683,292 9,382,467
Promissory notes 1,340,278 1,340,278 - 1,340,278 1,340,278 -
Warrants & options 5,848,526 3,906,727 1,941,799 5,607,250 3,852,959 1,754,291
---------- ---------- ---------- ---------- ---------- ----------
32,254,563 20,930,297 11,324,266 32,013,287 20,876,529 11,136,758
========== ========== ========== ========== ========== ==========
Fair value determination
At 31 December 2007 the one publicly traded company, AXCESS International Inc.
("AXCESS"), is valued based on its last quoted closing prices. In regard to the
Group's valuation of AXCESS, the Directors have assumed an orderly sale of the
stock over an extended period of time and have therefore chosen not to apply a
discount to the quoted market price. Promissory notes held in Energy Trading
International, Inc. are valued at cost. Equity investments in Durham Scientific
Crystals, Ltd., FireStar Software, Inc., Motif BioSciences, Inc., m2m Imaging
Corp. (formerly Supertron Technologies Inc.), Myconostica Ltd. and WellGen, Inc.
are valued using the latest offering price from recently executed financing
transactions by those companies. Convertible promissory notes held in these
companies are valued at cost. The value of MSA Holding B.S.C. is based on the
value of its net assets at 31 December 2007. Warrants for all companies are
valued at the valuation price less the warrant exercise price plus a factor for
the time value of the warrant. The time value factor is based on the premise
that an in-the-money ten year warrant is worth half the exercise price.
During the year ended 31 December 2007, the Company sold 68,675 shares of
Beijing Med-Pharm Corporation for total proceeds of US $581,353. In December
2007, the Company contributed 500,000 shares of Motif BioSciences, Inc. to MSA
Holding B.S.C. valued at US $1.5 million, realising a non-cash gain of US $1
million.
At 31 December 2007, MSA Holding B.S.C. owned 2,626,467 of the ordinary shares
of Amphion Innovations plc.
14. Investments, (continued)
Subsequent to the year end Energy Trading International, Inc. changed its name
to PrivateMarkets, Inc.
The Group's ownership percentages of the investments are as follows:
2007 2006
Fully-diluted Fully-diluted
Country of incorporation ownership % ownership %
AXCESS International, Inc. United States of America 7.47 8.55
Beijing Med-Pharm Corporation United States of America - .23
Durham Scientific Crystals, Ltd England & Wales 25.32 26.24
Energy Trading International, Inc. United States of America 13.06 -
FireStar Software, Inc. United States of America 16.21 10.75
Motif BioSciences, Inc. United States of America 37.69 41.17
MSA Holding B.S.C. Kingdom of Bahrain 50.00 -
m2m Imaging Corporation United States of America 23.53 22.81
Myconostica Ltd England & Wales 35.70 32.46
WellGen, Inc. United States of America 15.01 17.39
15. Other financial assets and liabilities
The carrying amounts of the Group's financial assets and financial liabilities
at the balance sheet date are as follows. The accounting policies described in
note 2 explain how the various categories of financial instruments are measured.
Group Company
2007 2006 2007 2006
Carrying Fair Carrying Fair Carrying Fair Carrying Fair
amount value amount value amount value amount value
US $ US $ US $ US $ US $ US $ US $ US $
Financial assets
Fair value through profit
or loss
Fixed asset investments
- designated as such upon
initial recognition 51,642,725 51,642,725 32,254,563 32,254,563 51,311,449 51,311,449 32,013,287 32,013,287
Currents assets
Security deposit 121,694 121,694 121,694 121,694 121,694 121,694 121,694 121,694
Prepaid expenses and other
receivables 639,429 639,429 1,258,941 1,258,941 379,580 379,580 988,087 988,087
Cash and cash equivalents 4,594,007 4,594,007 1,848,539 1,848,539 4,480,257 4,480,257 1,797,085 1,797,085
Financial liabilities
Trade and other payables 2,469,742 2,469,742 1,349,986 1,349,986 588,049 588,049 1,176,067 1,176,067
The carrying value of cash and cash equivalents, the security deposit, prepaid
expenses and other receivables, and trade and other payables approximate their
fair value at 31 December 2007 and 2006.
At the balance sheet date other receivables includes subscriptions receivable of
US $234,536 (2006: US $702,660). The Directors consider that the carrying value
of other receivables approximates to their fair value.
15. Other financial assets and liabilities, (continued)
Credit risk
Credit risk refers to the risk that a counterparty will default on its
contractual obligations resulting in financial loss to the Group. The Group has
adopted a policy of only dealing with creditworthy counterparties, as a means of
mitigating the risk of financial loss from defaults.
The credit risk on liquid funds is limited because the counterparties are banks
with high credit-ratings assigned by international credit-rating agencies. The
maximum exposure to credit risk for the financial asset investments designated
at fair value through the profit and loss is represented by their carrying
value.
The Group's exposure to counterparty credit risk also arises from balances from
partner companie's relating to fees charged for services provided by Amphion.
Amphion seeks to mitigate the risk noted above through its philosophy of working
with a small number of rigorously selected Partner Companies, assisting them to
grow by implementing a consistent and proven methodology developed over the
management team's 20 years of company building experience. The Group's time
tested model of company creation is built on a robust risk management process
that relies on proven, defensible intellectual property sourced from some of the
world's leading corporations and universities.
Included in the Group's other receivables are debtors which are past due at the
reporting date for which the Group has not provided as there has not been a
significant change in credit quality and the Group believes that the amounts are
still considered recoverable. The Group does not hold any collateral over these
balances. The US $415,000 that was due from FireStar Software, Inc. at 31
December 2006 was forgiven as part of the 20 December 2007 Asset Purchase
Agreement between FireStar, the Company, and DataTern, Inc.
The following table is an analysis of the age of financial assets that are past
due but not impaired:
Group
More than 3
Not past due Not more than months and not More than
or impaired 3 months more than 1 year 1 year Total
2007
Fees receivable - 136,569 69,000 - 205,569
Rebilliable
expenses - 8,550 21,008 - 29,558
Other receivables 110,479 - 234,536 - 345,015
Prepaid expenses* 59,287 - - - 59,287
------------------------------------------------------------------
169,766 145,119 324,544 - 639,429
------------------------------------------------------------------
2006
Fees receivable - 25,849 - 376,500 402,349
Rebillable
expenses 21,777 - 11,274 44,421 77,472
Other receivables 19,100 - - - 19,100
Subscriptions
receivable 702,660 - - - 702,660
Prepaid expenses* 57,360 - - - 57,360
------------------------------------------------------------------
800,897 25,849 11,274 420,921 1,258,941
------------------------------------------------------------------
15. Other financial assets and liabilities, (continued)
Company
More than 3
Not past due Not more than months and not More than
or impaired 3 months more than 1 1 year Total
year
2007
Fees receivable - - - - -
Rebilliable expenses - 4,552 - - 4,552
Other receivables 89,493 - 234,536 - 324,029
Prepaid expenses 50,999 - - - 50,999
---------------------------------------------------------------
140,492 4,552 234,536 - 379,580
---------------------------------------------------------------
2006
Fees receivable - - 184,952 184,952
Rebillable expenses - - - 44,241 44,241
Other receivables 5,556 - - - 5,556
Prepaid expenses 50,678 - - - 50,678
Subscriptions receivable 702,660 - - - 702,660
---------------------------------------------------------------
758,894 - - 229,193 988,087
---------------------------------------------------------------
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial
obligations as they fall due. The principal risk to which the Group is exposed
is liquidity risk.
Amphion's investments are in Partner Companies that are often development stage
companies and will likely experience significant negative cash flow. The Partner
Companies may be unable to obtain financing to fund their negative cash flows
due to market conditions or lack of operational progress. In these instances,
though Amphion is not obligated to do so, the Group may feel it necessary to
provide additional investment to the Partner Company. Amphion may also be
required to spend additional management time on these companies.
Adverse market conditions may also delay liquidity events for the Partner
Companies, thereby requiring additional rounds of financing in which Amphion may
feel it necessary to participate. During these adverse market conditions Amphion
may also find it difficult to raise additional capital.
Amphion seeks to mitigate the risk noted above through its philosophy of working
with a small number of rigorously selected Partner Companies, assisting them to
grow by implementing a consistent and proven methodology developed over the
management team's 20 years of company building experience. The Group's time
tested model of company creation is built on a robust risk management process
that relies on proven, defensible intellectual property sourced from some of the
world's leading corporations and universities.
15. Other financial assets and liabilities, (continued)
The following table is a maturity analysis that shows the remaining contractual
maturity for the Group's financial liabilities.
Group Company
Less than 1-3 3 months Less than 1-3 3 months
1 month months to 1 year Total 1 month months to 1 year Total
2007
Trade payables & other payables 2,181,003 99,796 188,943 2,469,742 193,264 223,391 171,394 588,049
2006
Trade payables & other payables 548,124 582,494 219,368 1,349,986 496,764 480,330 198,973 1,176,067
The 2007 payables include US $1,734,393 of payables assumed from FireStar
Software, Inc. as part of the Asset Purchase Agreement dated 20 December 2007.
Market risk
Market risk is the risk that changes in interest rates, foreign exchange rates,
equity prices, and other rates, prices, volatilities, correlations, or other
market conditions will have an adverse impact on the Group's financial position
or results. Thus market risk comprises three elements - foreign currency risk,
interest rate risk, and other price risk. Information to enable an evaluation of
the nature and extent of these three elements of market risk are shown below.
Amphion seeks to mitigate the risk noted above through its philosophy of working
with a small number of rigorously selected Partner Companies, assisting them to
grow by implementing a consistent and proven methodology developed over the
management team's 20 years of company building experience. The Group's time
tested model of company creation is built on a robust risk management process
that relies on proven, defensible intellectual property sourced from some of the
world's leading corporations and universities.
Foreign currency risk
The Group undertakes certain transactions denominated in foreign currencies.
Hence, exposures to exchange rate fluctuations arise. Exchange rate exposures
are managed by minimising the balance of foreign currencies to cover expected
cash flows during periods where there is strengthening in the value of the
foreign currency.
The carrying amounts of the Group's foreign currency denominated monetary assets
and monetary liabilities at the reporting date are as follows:
Group Company
Liabilities Assets Liabilities Assets
2007 2006 2007 2006 2007 2006 2007 2006
US$ US$ US$ US$ US$ US$ US$ US$
Sterling - Cash equivalent 23,700 67,081 1,175,621 630,734 - - 1,175,621 604,596
Sterling - Investment - - 15,536,921 6,039,000 - - 15,536,921 6,039,000
A 5% strengthening of the US dollar against the British pound sterling at the
reporting date would have increased profit or loss by approximately US $835,000
(2006: US $333,000). A 5% weakening of the US dollar against the British pound
sterling would have decreased profit or loss of the Group by approximately US
$835,000 (2006: US $333,000). A 5% strengthening of the US dollar against the
British pound sterling at the reporting date would have increased profit or loss
of the Company by approximately US $835,000 (2006: US $332,000). A 5% weakening
of the US dollar against the British pound sterling would have decreased profit
or loss of the Company by approximately US $835,000 (2006: US $332,000). The GBP
/USD rate used at 31 December 2007 was 1.9843 (2006: 1.9586). In management's
opinion, the sensitivity analysis is unrepresentative of the inherent foreign
exchange risk as the sensitivity analysis is based on balances at the end of the
year and does not reflect the exposure during the year.
15. Other financial assets and liabilities, (continued)
Interest Rate Risk
The Group's exposure to interest rate risk is restricted to the cash and cash
equivalent balance of US $4,594,007 (US $1,848,539 in 2006). At 31 December
2007, the Group maintains interest bearing accounts with a corporate bank at
variable rates. The average monthly rate for 2007 was approximately 4%. An
increase of 100 basis points in interest rates would have increased profit or
loss of the Group by US $17,000. A decrease of 100 basis points in interest
rates would have decreased profit or loss of the Group by US $17,000. An
increase of 100 basis points in interest rates would have increased profit or
loss of the Company by $17,000. A decrease of 100 basis points in interest rates
would have decreased profit or loss of the Company by US $17,000. The Group
manages its exposure to interest rate risk by managing its cash balances and
deposits to maximize its return while ensuring the Group has sufficient
available cash to meet its needs. The Group does note enter into interest rate
derivatives.
Other price risks
The Group is exposed to equity price risks arising from equity investments.
Equity investments are held for strategic rather than trading purposes. The
Group does not actively trade these investments.
At the reporting date, the potential effect of using reasonably possible
alternative assumptions as inputs to valuation techniques from which the fair
values of the investments are determined would be an increase of approximately
US $12 million (2006: US $4.4 million) to profit or loss of the Group and the
Company using more favorable assumptions and an approximate decrease of US $7.6
million (2006: US $4.6 million) to profit or loss of the Group and the Company
using less favorable assumptions. The more favorable assumptions used were an
increase in price of 33% to 54% (2006: 12% to 20%). The less favorable
assumptions used were a reduction in price of 10% to 15% (2006: 5% to 15%). The
determination of reasonably possible alternative assumptions is subject to
considerable judgment.
The amounts generated from the sensitivity analysis are estimates of the impact
of market risk assuming that specified changes occur. Actual results in the
future may differ materially from these results due to developments in the
global financial markets which may cause exchange rates to vary from the
hypothetical amounts disclosed above, which therefore should not be considered a
projection of likely future events and losses.
16. Trade and other payables
Group
Trade and other payables principally comprise amounts outstanding for purchases
and ongoing costs. Other payables include US $1,734,393 of debt relating to
DataTern, Inc. assumed as part of the Asset Purchase Agreement with FireStar
Software Inc. in 2007.
Company
Trade and other payables principally comprise amounts outstanding for trade
purchases and ongoing costs.
The Directors consider that the carrying amount of trade and other payables
approximates to their fair value.
17. Share capital
2007 2006
---- ----
� �
Authorised:
150,000,000 ordinary shares of 1p each 1,500,000 1,500,000
========== ==========
Number � US $
Balance as at 31 December 2005 93,639,455 936,395 1,685,160
Issued for cash:
Ordinary shares of 1p each 4,010,769 40,108 75,844
Ordinary shares of 1p each 2,450,000 24,500 47,979
----------- --------- ---------
Balance as at 31 December 2006 100,100,224 1,001,003 1,808,983
Issued for cash:
Ordinary shares of 1p each 320,000 3,200 6,278
Ordinary shares of 1p each 9,690,000 96,900 194,411
Ordinary shares of 1p each 18,181,805 181,817 378,399
----------- ---------- ----------
Balance as at 31 December 2007 128,292,029 1,282,920 2,388,071
=========== ========== ==========
Holders of the ordinary shares are entitled to receive dividends and other
distributions and to attend and vote at any general meeting.
In August 2007, a Lock-In Agreement, dated 16 August 2005, between the Company,
the Company's broker and nominated advisor, Amphion Capital Partners LLC, the
Directors and certain applicable employees holding ordinary shares expired. The
Lock-In Agreement stated that for a period of 24 months immediately following
the admission to AIM, they would not make a sale or disposal except through the
broker of the Company to maintain an orderly market in the ordinary shares.
During the year ended 31 December 2007, the following changes occurred to the
share capital of the Company:
On 22 January 2007, the Company issued 320,000 ordinary 1p shares at a premium
of 24p per share (US $150,662).
On 29 June 2007, the Company issued 9,690,000 ordinary 1p shares at a premium of
21p per share (US $4,082,620).
On 6 November 2007, the Company issued 15,909,077 ordinary 1p shares at a
premium of 21p per share (US $6,968,796).
On 15 November 2007, the Company issued 2,272,728 ordinary 1p shares at a
premium of 21p per share (US $977,598).
18. Issue costs
The Company incurred costs of US $778,379 (2006: US $150,950) relating to the
issue of shares. The costs were primarily for fees paid to agents. These equity
transaction costs were deducted from equity in accordance with IAS 32, Financial
Instruments Disclosure and Presentation.
19. Contingent liabilities
The Compensation Committee has recommended that bonuses be issued for the year
2007. If the total amount of the bonuses were paid out in cash, the cash charge
would amount to US $421,000. The Compensation Committee is requiring that 50% of
the bonus be paid in shares. No provision has been made in these financial
statements for the bonuses as the payment of the bonuses is dependent upon the
recipient being employed by the Company on 31 March 2008.
20. Operating lease arrangements
At the balance sheet date, the Group has outstanding commitments under
non-cancellable operating leases, which fall due as follows:
2007 2006
---- ----
US$ US$
Within one year 351,654 385,821
In the second to fifth years inclusive 717,885 989,452
After five years - -
--------- ---------
1,069,539 1,375,273
========= =========
Operating lease payments represent rentals payable by the Group for certain of
its office properties. The term of the New York lease is seven years of which
four years are remaining and the term of the UK lease is six months beginning
April 2008. The New York rental increases in 2009 and is fixed for an additional
two years. The UK rental is fixed for 6 months. The Group recognised expenses of
US $403,007 in respect of operating lease arrangements in the year ended 31
December 2007.
21. Share-based payments
In 2006 the Group established the 2006 Unapproved Share Option Plan ("the Plan")
and it was adopted pursuant to a resolution passed on 8 June 2006. Under this
plan, the Compensation Committee may grant share options to eligible employees,
including Directors, to subscribe for ordinary shares of the Company. The number
of Shares over which options may be granted under the Unapproved Plan cannot
exceed ten percent of the ordinary share capital of the Company in issue on a
fully diluted basis. The Plan will be administered by the Compensation
Committee. The number of shares, terms, performance targets, and exercise period
will be determined by the Compensation Committee.
As of 31 December 2007, a total of 10,136,445 options have been issued (2006:
total of 1,357,725) of which 8,500,000 options were issued under the "2006
Unapproved Share Option Plan (2006: 650,000) and 625,000 options have been
forfeited.
The options issued under the Plan have a four year vesting period in addition to
being subject to performance criteria and at 31 December 2007, 639,906 of these
options were vested (2006: 25,000).
As of 31 December 2007, a balance of 2,261,445 options not in the Plan have been
issued (2006: 707,725). These options expire after five years from the date of
grant. Of these options, 553,720 options were issued fully vested in 2007 (2006:
107,725 were fully vested when issued).
21. Share-based payments, (continued)
2007 2006
Number of Weighted Number of Weighted
share options average share options average
exercise exercise
price (in �) price (in �)
Outstanding at beginning of period 1,357,725 .25 600,000 0.25
Granted during the period 9,403,720 .23 757,725 0.25
Forfeited during the period (625,000) .25 - 0.25
---------- ----------
Outstanding at the end of the period 10,136,445 .23 1,357,725 0.25
========== ==========
Exercisable at the end of the period 2,018,018 .23 732,725 0.25
The options are recorded at fair value on the date of grant using the
Black-Scholes model. The inputs into the model are as follows:
2007 2006
US$ US$
Weighted average share price .46 0.50
Weighted average exercise price .46 0.49
Expected volatility 37% 37%
Expected life 5-14 years 5 years
Risk free rate 3.49%-5.25% 4.56%
Expected dividends - -
Expected volatility was determined by calculating the historical volatility of
the Group's share price from the date of listing to the end of the year.
In 2007, options were granted on 12 January, 26 March, 1 May, 29 June, 13
September, and 9 November. The aggregate of the estimated fair values of the
options granted on those dates is US $2,797,289. In 2006, options were granted
on 17 February, 15 August, and 29 December. The aggregate of the estimated fair
values of the options granted on those dates is US $153,206.
The Company and Group recognised total costs of US $256,656 and US $116,115
relating to equity-settled share-based payment transactions in 2007 and 2006
respectively. In 2007, US $82,574 of the total costs were charged against equity
as the share-based payments were directly attributable to the issue of the
equity instruments. The remaining US $174,082 was expensed in the income
statement during the period.
22. Retirement benefit plans
The Company established a defined contribution plan under Section 401(k) of the
Internal Revenue Code. The plan enables qualified employees to reduce their
taxable income by contributing up to 15% of their salary to the plan. The
Company may elect to make a matching contribution to the plan. The Company has
elected not to make a contribution for the years ended 31 December 2007 or 2006.
The UK subsidiary has a defined contribution pension scheme. The total pension
expense recognised in the income statement of US $28,826 (2006: US $26,538)
represents contributions paid by this company to the plan.
23. Events after the balance sheet date
In January and March 2008, the Company made advances of �150,000 under a
promissory note from Myconostica Ltd.
In January and February 2008, the Company made advances of US $505,000 under a
promissory note from Motif BioSciences, Inc.
In January and February 2008, the Company made advances of US $220,000 under a
promissory note from Energy Trading International, Inc.
In January and February 2008, the Company made advances of US $360,000 under a
promissory note from AXCESS International, Inc.
24. Related party transactions
Transactions between the Company and its subsidiaries, which are related parties
of the Company, have been eliminated on consolidation and are not disclosed in
this note. Details of transactions between the Group and other related parties
are disclosed below.
During the year, the Group paid miscellaneous expenses for Motif BioSciences,
Inc. ("Motif") such as office expenses. At 31 December 2007, the amount owed by
Motif to the Group is US $19,956 (2006: US $14,140).
A subsidiary of the Company has entered into an agreement with AXCESS
International Inc. ("AXCESS") to provide advisory services. Richard Morgan and
Robert Bertoldi, Directors of the Company, are also Directors of AXCESS. Amphion
Innovations US Inc. will receive a monthly fee of US $10,000 pursuant to this
agreement. The agreement is effective until 1 March 2008 and will renew on an
annual basis until terminated by one of the parties. The monthly fee is
suspended for any month in which AXCESS' cash balance falls below US $500,000.
Amphion Innovations US Inc. received US $100,000 for the year ended 31 December
2007 (2006: US $70,000).
A subsidiary of the Company has entered into an agreement with Durham Scientific
Crystals Inc. ("DSC") to provide advisory and consulting services. Richard
Morgan, a Director of the Company, is also a Director of DSC. The monthly fee
under this agreement is the lesser of US $10,000 and 50% of the gross
compensation paid to Directors and management of DSC in that month and expires
on 21 September 2008. The subsidiary's fee for the year ended 31 December 2007
was US $120,000 (2006: 78,167) of which US $10,000 was due at 31 December 2007
(2006: US $10,000). Amphion Innovations US Inc. also received US $225,688 as a
fund raising fee for the year ended 31 December 2007 (2006: US$56,266).
A subsidiary of the Company has entered into an agreement with FireStar Software
Inc. ("FireStar") to provide advisory and consulting services. Richard Morgan, a
Director of the Company, is also a Director of FireStar. The annual fee under
this agreement is US $240,000 and expires 1 January 2008. The fee for the year
ended 31 December 2007 was suspended and not recognised. The outstanding fees
due at 31 December 2006 have been discharged as part of the Asset Purchase
Agreement between Amphion Innovations PLC, DataTern, Inc. and FireStar Software,
Inc. dated 20 December 2007.
A subsidiary of the Company has entered into an agreement with Motif
BioSciences, Inc. ("Motif") to provide advisory and consulting services. Richard
Morgan, a Director of the Company, is also a Director of Motif. The annual fee
for the services is US $240,000. The agreement is effective until 1 April 2008
and shall automatically renew for successive one year periods. Amphion
Innovations US Inc.'s fee for the period ended 31 December 2007 was US $282,000
(2006: US $249,000) which includes a US $42,000 fund raising fee. At 31 December
2007, US $120,000 of the advisory fee is due from Motif (2006: nil).
A subsidiary of the Company has entered into an agreement with Myconostica
Limited ("Myconostica") to provide advisory and consulting services. Richard
Morgan, a Director of the Company, is also a Director of Myconostica. The
monthly fee for the services is �4,500 and expires 1 December 2008. An
additional �2,250 per month will be charged starting 1 November 2007 while Jerel
Whittingham is acting CEO of Myconostica. The subsidiary's fee for the year
ended 31 December 2007 is �58,500 or US $114,715 (2006: �4,500 or US $8,293) of
which US $44,894 (2006: US $8,293) was still due at 31 December 2007.
A subsidiary of the Company has entered into an agreement with m2m Imaging Corp.
("m2m") to provide advisory and consulting services. Robert Bertoldi, a Director
of the Company, is also a Director of m2m. The monthly fee under this agreement
is US $15,000. This agreement is effective until 1 November 2008 and will renew
on an annual basis until terminated by either party. Amphion Innovations US
Inc.'s fee for the period ended 31 December 2007 was US $180,000 (2006: US
$482,500 of which $337,500 was a success fee).
24. Related party transactions, (continued)
A subsidiary of the Company has entered into an agreement with WellGen Inc.
("WellGen") to provide advisory and consulting services. Richard Morgan, a
Director of the Company, is also a Director of WellGen. The fee for the first
and second quarters of 2007 under this agreement is US $45,000 and US $60,000
for each subsequent quarter. The agreement is effective until 20 June 2008 and
will renew annually for subsequent 12-month periods until terminated by either
party. The subsidiary's fee for the year ended 31 December 2007 was US $210,000.
Amphion Innovations US Inc. also received US $1,492,875 as a fund raising fee
for the year ended 31 December 2007.
A subsidiary of the Company has entered into an agreement with Energy Trading
International, Inc. ("ETI") to provide advisory services. Richard Morgan, a
Director of the Company, is also a Director of ETI. The fee under this agreement
is US $15,000 per quarter beginning 7 February 2007 until 31 October 2007, US
$30,000 per quarter from 1 November 2007 until the successful sale of at least
US $3,000,000 and thereafter, US $45,000 per quarter. This agreement is
effective until 7 February 2008 and will renew annually for subsequent 12-month
periods unless terminated by either party. The fee for 2007 has been deferred
and not recognised until ETI has a successful financing.
On 20 December 2007, Amphion Innovations plc, DataTern, Inc., a wholly owned
subsidiary of Amphion Innovations plc, and FireStar Inc. entered into an Asset
Purchase Agreement described in note 11.
Directors' interests
The Directors' direct ownership in the Partner Companies is as follows:
Fully diluted %
Investment company owned by Directors
------------------------------- -------------------
2007 2006
---- ----
AXCESS International Inc. 5.45% 5.37%
Beijing Med-Pharm Corporation - 0.21%
Durham Scientific Crystals Ltd. 1.20% 1.08%
FireStar Software, Inc. 1.48% 1.50%
Motif BioSciences, Inc. 3.91% 4.12%
Myconostica Limited .26% -
WellGen, Inc. 4.57% 5.37%
The Directors who held office at 31 December 2007 had the following interests in
the Company's ordinary share capital:
2007 2006
Ordinary Ordinary
Shares Shares
Richard M. Mansell-Jones 2,398,163 2,398,163
Richard C.E. Morgan 20,734,155 16,141,531
Robert J. Bertoldi 5,643,237 5,643,237
R. James Macaleer 19,769,248 19,769,248
Anthony W. Henfrey 858,861 858,861
24. Related party transactions, (continued)
Aggregate Directors' remuneration
The total amounts for Directors' remuneration was as follows:
Year ended Year ended
31 December 2007 31 December 2006
US$ US$
Emoluments 988,163 835,411
Directors' emoluments and compensation
Group Group Group Year ended Year ended
Fees/Basic Benefits in Annual 31 December 31 December
salary kind bonuses 2007 total 2006 total
US$ US$ US$ US$ US$
Name of Director
Executive - salary
Richard C.E. Morgan 350,000 14,034 110,000 474,034 362,851
Robert J. Bertoldi 275,000 19,129 60,000 354,129 312,602
Non-executive - fees
Richard M. Mansell-Jones 70,000 - - 70,000 70,000
R. James Macaleer 35,000 - - 35,000 35,000
Anthony W. Henfrey 35,000 - - 35,000 34,974
Ronald E. Thomas 20,000 - - 20,000 19,984
------- ------- ------- ------- -------
Aggregate emoluments 785,000 33,163 170,000 988,163 835,411
======= ======= ======= ======= =======
Directors' share options
Aggregate emoluments disclosed above do not include any amounts for the value of
options to acquire ordinary shares in the company granted to or held by the
Directors. Details of options for Directors who served during the year are as
follows:
Date from
1 January 31 December Exercise which Expiry
Name of Director Scheme 2007 Granted 2007 price exercisable date
Richard Morgan 2006 Unapproved Share - 2,000,000 2,000,000 �0.23 1 July 2011 30 June 2021
Option Plan
Robert Bertoldi 2006 Unapproved Share - 1,250,000 1,250,000 �0.23 1 July 2011 30 June 2021
Option Plan
--- ---------- ---------
- 3,250,000 3,250,000
=== ========== =========
Notice
The financial information set out above does not constitute the company's
statutory accounts for the year ended 31 December 2007, but is derived from
those accounts. Statutory accounts for the year ended 31 December 2007 will be
delivered to the Registrar of Companies following the Company's annual general
meeting. The auditors have reported on those accounts; their reports were
qualified and did not contain statements under s. 15(4) or (6) Companies Act
1982 of the Isle of Man.
Approval
This statement was approved by the Board of Directors on 12 March 2008.
Copies of the Annual Report and Accounts
Copies of the Annual Report and Accounts will be sent to all shareholders.
Further copies will be obtainable from the Company's primary office: Amphion
Innovations plc, Attn: Investor Relations, 330 Madison Avenue, New York, NY
10017, USA.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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Amphion Innovations (LSE:AMP)
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Amphion Innovations (LSE:AMP)
Gráfica de Acción Histórica
De Jul 2023 a Jul 2024
