TIDMAMP
RNS Number : 1345P
Amphion Innovations PLC
29 September 2011
Amphion Innovations plc
Interim Results for the 6 months to 30 June 2011
London and New York, 29 September 2011 - Amphion Innovations plc
(LSE: AMP) ("Amphion" or the "Company"), the developer of medical
and technology businesses, today announces its unaudited interim
results for the six months to 30 June 2011.
Highlights
Financial
-- Revenue for the first six months was US $2.6 million as
compared to US $1.6 million for the first six months of 2010
-- Operating loss was reduced from US $1.1 million for the first
six months of 2010 to $130,224 for the first six months of 2011
-- The net asset value per share at 30 June 2011 was US 22 cents
or UK 13.9 pence per share
Commercial
-- IP licensing programme (DataTern) has been expanded alongside
new IP legal partner with encouraging progress to date
-- Kromek's GR1 instrument in use and attracting significant
attention in Japan
-- Motif BioSciences making good progress on formation of
strategic partnership with a new Indian partner
Amphion's Chairman and Chief Executive Officer, Richard Morgan,
said: "We are pleased to be reporting an improved set of results
for the Company. Alongside the progress being made by each of the
Partner Companies, we believe DataTern is starting to benefit from
the support of our new IP litigation partner and as a result the
potential of this business has increased substantially. Improved
performance by DataTern should in due course lead to an improvement
in Amphion's results, with a positive impact on Amphion's financial
condition and its ability to fund and grow its Partner
Companies."
Amphion Innovations plc
Charlie Morgan +1 212 210 6224
Cardew Group
Tim Robertson +44 20 7930 0777
Seymour Pierce Limited (Nominated Advisor)
Freddy Crossley/ Mark Percy +44 20 7107 8300
Notes to editors
About Amphion Innovations plc
Amphion (LSE: AMP) builds shareholder value in emerging
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. Amphion has significant
shareholding in seven Partner Companies developing proven
technologies targeting substantial commercial marketplaces. The
Amphion model has been refined to optimise the commercialisation of
patents and other intellectual property within the Partner
Companies. The Partner Companies collectively own or control over
200 separately identified pieces of intellectual property, a number
which grows steadily each year.
On the web: www.amphionplc.com
CEO's Statement
Financial Results and Net Asset Value
Revenue for the first six months was US $2.6 million as compared
to US $1.6 million for the first six months of 2010. The increase
in revenue is mainly due to the improved performance of DataTern,
the Company's Intellectual Property licensing programme, which
increased revenue from US $732,050 for the first six months of 2010
to US $2 million for the first six months of 2011. Operating loss
was reduced from US $1.1 million for the first six months of 2010
to $130,224 for the first six months of 2011 as a result of the
increase in revenue and a decrease in administrative expenses from
US $2.4 million to US $1.9 million. The decrease in administrative
expenses reflects the Company's continuing commitment to reduce its
operating costs. Net profit for the first six months of 2011 was US
$197,934 as compared to a loss of US $2.9 million for the first six
months of 2010. Net cash at the end of the period was $855,235. The
Company's net assets increased slightly from US $29.2 million at 31
December 2010 to US $29.6 million at 30 June 2011, the increase
being primarily as a result of foreign currency adjustments. The
net asset value per share at 30 June 2011 was US 22 cents or UK
13.9 pence per share.
IP Licensing Programme
In April, Microsoft and SAP filed actions against DataTern in
New York asserting generally that our '402 and '502 patents are
invalid and not infringed. In response, DataTern retained a well
respected law firm, McCarter & English LLP, to meet this
challenge. In working with McCarter & English over the last few
months DataTern has conducted a thorough review of its legal
strategies and options. This work has served to confirm DataTern's
continuing belief that its intellectual property is strong and the
extent of infringement by third parties is broad. As a result of
this work, DataTern has now taken concrete steps to combat the
allegations by Microsoft and SAP and to bolster our patent rights.
First, DataTern has filed a motion in New York to dismiss or at
least stay these actions while DataTern continues litigations in
Texas against users of the patented technology. Second, DataTern
has filed an application with the U.S. Patent and Trademark Office
(USPTO) to re-examine the '402 patent. Under this procedure, a
patent may be maintained as is, expanded, reduced or even rendered
invalid. DataTern's confidence in the validity of this patent
justifies exposing it to re-examination to test and strengthen its
validity. As we reported previously, the '502 patent successfully
completed re-examination by the USPTO with all 18 original claims
intact and 26 new claims added. We look forward to working with
McCarter & English as we seek fair and reasonable licensing
agreements with the companies using this important technology.
Partner Companies
The market for financing of private emerging technology and
med-tech companies remains extremely challenging. Provided our IP
programme continues to make progress, Amphion's need for capital at
the parent company level should remain relatively small. We
anticipate needing to provide continuing support to several of our
Partner Companies in the period ahead and we will continuously
re-evaluate the need for external funding for Amphion in the light
of progress at DataTern. At the level of each Partner Company, we
continue to devote considerable time and effort to the generation
of financial and operating support through strategic partnerships
of various kinds and through the monetisation of the intellectual
property which, for example, is underway and making good progress
at Axcess. Our Partner Companies continue to generate valuable new
intellectual property, as evidenced by the patents recently issued
to both FireStar and m2m.
Kromek continues to make progress in its core programmes and has
recently received additional orders for its GR1 instrument which is
being used in Japan for the decommissioning of the Fukushima
nuclear power plant. There appear to be a number of additional
opportunities for the sale of this product and derivative products
in Japan, in the wake of the earthquake and subsequent tsunami.
Motif BioSciences has made good progress towards the consummation
of an important and exciting partnership with one of the leading
Indian pharmaceutical services companies. The combination of
Motif's leading team of drug discovery experts and the capabilities
of the new partner represents an integrated capability to take
Motif's proprietary projects from concept to the development of a
Pre-Clinical Candidate, expected to be completed in less than two
years. Axcess is continuing to make progress on the enforcement of
its intellectual property rights and is pursuing licensing
opportunities which promise to provide the IP differentiation and
the financial resources to allow the company to rebuild its
operations and develop its market position with its leading
partners. FireStar continues to advance its proprietary messaging
technology in collaboration with the Object Management Group and to
make progress towards key milestones in its programme with the
Social Security Administration and others. In due course we
anticipate FireStar also standing to benefit from its sharing
agreement with Amphion in the future DataTern licensing revenue
stream. We continue to work with PrivateMarkets, m2m and WellGen to
develop new plans that will allow these companies to get back on
the road to recovery and make progress towards raising additional
capital from third party investors or partners.
Outlook
We continue to have confidence in both the strength of the IP
programme and the basic technology and market opportunities for
each of our Partner Companies and we are working hard to preserve
and extract as much value as possible from each one. The Board
expects to see a significant increase in DataTern activity in the
months ahead which, if our basic assumptions on the quality and
strength of our IP prove correct, should lead to a significant
increase in revenue and cash flow over the next fifteen months.
While the short term results of these new activities are difficult
to predict with any accuracy and we will have to continue to manage
the business very cautiously in the short term, we are optimistic
they will lead to good outcomes over time. Improved performance by
DataTern should in turn lead to an improvement in Amphion's results
in due course, with a positive impact on Amphion's financial
condition and its ability to fund and grow its Partner Companies.
While it is too early to be able to say that the worst is behind
us, we are encouraged by recent developments and optimistic about
Amphion's future prospects for 2011 and beyond.
Amphion
Innovations
plc
Condensed consolidated statement of
comprehensive income
For the six months
ended 30 June 2011
Unaudited
Notes Six months Six months
ended ended Year ended
30 June 30 June 31 December
2011 2010 2010
----------- ----------- ------------
Continuing
operations US$ US$ US$
Revenue 3 2,598,648 1,630,942 4,090,071
Cost of sales 3 (865,000) (286,450) (1,012,581)
Gross profit 1,733,648 1,344,492 3,077,490
Administrative
expenses (1,863,872) (2,421,973) (4,991,491)
Operating loss (130,224) (1,077,481) (1,914,001)
Fair value
gains (losses)
on
investments 7 374,849 (1,535,011) (24,715,925)
Interest income 396,556 271,419 564,638
Other gains and
losses (24,864) (79,688) (103,416)
Finance costs (345,914) (320,211) (649,205)
Profit (loss)
before tax 270,403 (2,740,972) (26,817,909)
Tax on profit 5 (72,469) (150,000) (37,570)
Profit (loss)
for the period 197,934 (2,890,972) (26,855,479)
----------- ----------- ------------
Other
comprehensive
income
Exchange
differences
arising on
translation
of foreign
operations (8,029) (6,361) (3,035)
Other
comprehensive
loss for the
period (8,029) (6,361) (3,035)
----------- ----------- ------------
Total comprehensive income
(loss) for the period 189,905 (2,897,333) (26,858,514)
=========== =========== ============
Earnings per
share 6
Basic US $ 0.00 US $(0.02) US $(0.20)
=========== =========== ============
Diluted US $ 0.00 US $(0.02) US $(0.16)
=========== =========== ============
Amphion Innovations plc
Condensed consolidated statement of financial
position
At 30 June 2011
Unaudited Audited
Notes 30 June 2011 31 December 2010
---------------- -----------------
US$ US$
Non-current assets
Intangible assets 1,008,541 1,095,372
Property, plant and
equipment 12,013 14,427
Security deposit 70,735 70,735
Investments 7 39,910,226 39,123,683
41,001,515 40,304,217
---------------- -----------------
Current assets
Prepaid expenses and
other receivables 2,835,359 1,924,412
Cash and cash
equivalents 855,235 605,127
3,690,594 2,529,539
---------------- -----------------
Total assets 44,692,109 42,833,756
================ =================
Current liabilities
Trade and other payables 4,092,676 4,207,393
---------------- -----------------
Non-current liabilities
Convertible promissory
notes 8 8,968,555 8,968,555
Notes payable 9 2,000,000 500,000
10,968,555 9,468,555
---------------- -----------------
Total liabilities 15,061,231 13,675,948
================ =================
Net assets 29,630,878 29,157,808
================ =================
Equity
Share capital 10 2,476,890 2,476,890
Share premium account 38,330,766 38,047,601
Translation reserve (25,021) (16,992)
Retained earnings (11,151,757) (11,349,691)
Total equity 29,630,878 29,157,808
================ =================
Amphion
Innovations
plc
Condensed consolidated
statement of changes in equity
For the six months
ended 30 June 2011
Unaudited
Foreign
Share currency
Share premium translation Retained
Notes capital account reserve earnings Total
--------- ---------- ----------- ------------ -----------
US$ US$ US$ US$ US$
Balance at 1
January
2010 2,457,657 37,403,821 (13,957) 15,505,788 55,353,309
Loss for the
period - - - (2,890,972) (2,890,972)
Exchange
differences
arising on
translation
of foreign
operations - - (6,361) - (6,361)
Total comprehensive
loss for the
period - - (6,361) (2,890,972) (2,897,333)
--------- ---------- ----------- ------------ -----------
Issue of
share
capital 10 5,178 76,617 - - 81,795
Recognition
of
share-based
payments 11 - 386,538 - - 386,538
Balance at 30
June 2010 2,462,835 37,866,976 (20,318) 12,614,816 52,924,309
========= ========== =========== ============ ===========
Balance at 1
January
2011 2,476,890 38,047,601 (16,992) (11,349,691) 29,157,808
Income for
the period - - - 197,934 197,934
Exchange
differences
arising on
translation
of foreign
operations - - (8,029) - (8,029)
Total comprehensive
income for the
period - - (8,029) 197,934 189,905
--------- ---------- ----------- ------------ -----------
Recognition
of
share-based
payments 11 - 283,165 - - 283,165
Balance at 30
June 2011 2,476,890 38,330,766 (25,021) (11,151,757) 29,630,878
========= ========== =========== ============ ===========
Amphion Innovations plc
Condensed consolidated statement
of cash flows
For the six months ended 30 June
2011
Unaudited
Six months Six months
ended ended Year ended
30 June 31 December
2011 30 June 2010 2010
------------ ------------- ------------
US$ US$ US $
Operating activities
Operating loss (130,224) (1,077,481) (1,914,001)
Adjustments for:
Depreciation of property, plant
and equipment 2,587 4,846 8,888
Amortisation of intangible assets 86,831 86,831 173,662
Recognition of share based
payments 283,165 468,333 663,013
Increase in prepaid & other
receivables (910,947) (602,169) (222,498)
Decrease in trade & other payables (114,720) (1,934,094) (183,531)
Interest expense (345,914) (320,211) (649,205)
Other gains & losses (22,425)
Income tax (72,469) (150,000) (37,570)
Net cash used in operating
activities (1,201,691) (3,523,945) (2,183,667)
------------ ------------- ------------
Investing activities
Interest received 396,556 271,419 564,638
Purchases of investments (411,691) (1,243,515) (2,900,613)
Purchases of equipment - (7,813) (7,874)
Net cash used in investing
activities (15,135) (979,909) (2,343,849)
------------ ------------- ------------
Financing activities
Proceeds on issue of convertible
promissory notes - - 1,450,265
Proceeds on issue of promissory
notes 1,500,000 1,450,265 500,000
Net cash from financing activities 1,500,000 1,450,265 1,950,265
------------ ------------- ------------
Net increase/(decrease) in cash
and cash equivalents 283,174 (3,053,589) (2,577,251)
Cash and cash equivalents at the
beginning of the period 605,127 3,266,221 3,266,221
Effect of foreign exchange rate
changes (33,066) (85,757) (83,843)
Cash and cash equivalents at the
end of the period 855,235 126,875 605,127
============ ============= ============
Amphion Innovations plc
Notes to the condensed consolidated financial statements
(Unaudited)
For the six months ended 30 June 2011
1. General information
The condensed consolidated interim financial statements for the
six months ended 30 June 2011 are unaudited and do not constitute
statutory accounts within the meaning of the Isle of Man Companies
Acts 1931 to 2004. The statutory accounts of Amphion Innovations
plc for the year ended 31 December 2010 have been filed with the
Registrar of Companies and contain an unqualified audit report
which includes an emphasis of matter relating to significant
uncertainty in respect of going concern and valuation of Partner
Company investments and other receivables from Partner Companies.
Copies are available on the company's website at
www.amphionplc.com/reports.php.
2. Accounting policies
These condensed consolidated interim financial statements have
been prepared in accordance with the recognition and measurement
requirements of International Financial Reporting Standards
(IFRS).
The accounting policies applied by the Group are consistent with
those followed in the preparation of the Group's annual financial
statements for the year ended 31 December 2010 except for the
impact of the adoption of the Standards and Interpretations
described below.
Amendment to IRFIC 14: Prepayments of a Minimum Funding
Requirement (effective for annual periods beginning on or after 1
January 2011)
Revised IAS 24: Related Party Disclosures (effective for annual
periods beginning on or after 1 January 2011)
These standards do not have a material impact on the financial
statements of the Group.
3. Revenue
An analysis of the Group's revenue is as follows:
Six months ended Six months ended Year ended
30 June 2011 30 June 2010 31 December 2010
US $ US$ US$
Continuing
operations
Advisory fees 563,648 898,892 1,558,021
License fees 2,035,000 732,050 2,532,050
2,598,648 1,630,942 4,090,071
================= ================= =================
In February 2008, DataTern, Inc., a wholly owned subsidiary of
the Company, entered into an agreement with IP Navigation Group,
LLC to provide strategic advisory services including licensing and
enforcement of various patents held by DataTern, Inc. DataTern,
Inc. and IP Navigation Group LLC agreed to terminate the advisory
services agreement effective as of 31 October 2010. In August 2010,
DataTern entered into an agreement with new lawyers and technical
experts where they would receive 46% of the gross proceeds. In
March 2011, the fee was reduced to 40%. During 2011, the new
lawyers assisted in obtaining non-exclusive licenses of DataTern's
key database patents to various companies totaling US $2,035,000.
The lawyers received fees of US $865,000.
As part of the agreement for DataTern, Inc. to purchase certain
of the intangible assets in December 2007, a portion of future
revenues from these patents will be retained by FireStar Software,
Inc. No amounts have become payable to FireStar Software, Inc. to
date.
In July 2011, DataTern, Inc. entered into an agreement with
McCarter & English to represent them in their litigation with
Microsoft Corporation and SAP AG and in certain other patent
matters.
4. Segment information
For management purposes, the Group is currently organised into
three business segments - advisory services, investing, and
intellectual property. These business segments are the basis on
which the Group reports its primary segment information.
Information regarding these segments is presented below.
Advisory Investing Intellectual
services activities property Eliminations Consolidated
Six
months Six months Six months Six months Six months
ended ended ended ended ended
30 June 30 June
2011 2011 30 June 2011 30 June 2011 30 June 2011
US $ US $ US $ US $ US $
REVENUE
External
advisory fees 563,648 - - - 563,648
External license
fees - - 2,035,000 - 2,035,000
Inter-segment
fees 120,000 - - (120,000) -
---------- -----------
Total revenue 683,648 - 2,035,000 (120,000) 2,598,648
Cost of sales - - (865,000) - (865,000)
---------- ----------- ------------- ------------- -------------
Gross profit 683,648 - 1,170,000 (120,000) 1,733,648
Administrative
expenses (420,722) (727,468) (835,682) 120,000 (1,863,872)
---------- ----------- -------------
Segment result 262,926 (727,468) 334,318 - (130,224)
Fair value gains on
investments - 374,849 - - 374,849
Interest income 21,986 374,554 16 - 396,556
Other gains and
losses - (24,864) - - (24,864)
Finance costs - (341,457) (4,457) - (345,914)
Profit (loss)
before tax 284,912 (344,386) 329,877 - 270,403
Income taxes (4,545) - (67,924) - (72,469)
---------- ----------- -------------
Profit (loss)
after tax 280,367 (344,386) 261,953 - 197,934
Advisory Investing Intellectual
services activities property Eliminations Consolidated
Six
months Six months Six months Six months Six months
ended ended ended ended ended
30 June 30 June 30 June 30 June 30 June
2011 2011 2011 2011 2011
US $ US $ US $ US $ US $
OTHER
INFORMATION
Segment assets 3,599,426 42,438,794 1,390,700 (2,736,811) 44,692,109
Segment
liabilities 3,270,083 13,333,375 459,602 (2,001,829) 15,061,231
Depreciation 2,596 1,443 807 - 4,846
Amortisation - - 86,831 - 86,831
Recognition of
share-based
payments - 283,165 - - 283,165
4. Segment information, (continued)
For management purposes for 30 June 2010, the Group was
organised into three business segments - advisory services,
investing activities, and intellectual property.
Advisory Investing Intellectual
services activities property Eliminations Consolidated
Six
months Six months Six months Six months Six months
ended ended ended ended ended
30 June 30 June
2010 2010 30 June 2010 30 June 2010 30 June 2010
US $ US $ US $ US $ US $
REVENUE
External
advisory fees 898,892 - - - 898,892
External license
fees - - 732,050 - 732,050
Inter-segment
fees 120,000 39,565 - (159,565) -
---------- ------------
Total revenue 1,018,892 39,565 732,050 (159,565) 1,630,942
Cost of sales - - (286,450) - (286,450)
---------- ------------ ------------- ------------- -------------
Gross profit 1,018,892 39,565 445,600 (159,565) 1,344,492
Administrative
expenses (706,740) (1,053,580) (821,218) 159,565 (2,421,973)
---------- ------------ -------------
Segment result 312,152 (1,014,015) (375,618) - (1,077,481)
Fair value losses on
investments - (1,535,011) - - (1,535,011)
Interest income - 271,379 40 - 271,419
Other gains and
losses - (79,688) - - (79,688)
Finance costs - (320,211) - - (320,211)
Profit (loss)
before tax 312,152 (2,677,546) (375,578) - (2,740,972)
Income taxes (150,000) - - - (150,000)
---------- ------------ -------------
Profit (loss)
after tax 162,152 (2,677,546) (375,578) - (2,890,972)
Advisory Investing Intellectual
services activities property Eliminations Consolidated
Six
months Six months Six months Six months Six months
ended ended ended ended ended
30 June 30 June
2010 2010 30 June 2010 30 June 2010 30 June 2010
US $ US $ US $ US $ US $
OTHER
INFORMATION
Segment assets 2,237,781 64,434,932 1,273,578 (3,596,597) 64,349,694
Segment
liabilities 2,165,160 10,200,931 741,682 (1,682,388) 11,425,385
Capital
additions 2,835 1,738 3,240 - 7,813
Depreciation 2,596 1,443 807 - 4,846
Amortisation - - 86,831 - 86,831
Recognition of
share-based
payments - 486,333 - - 486,333
4. Segment information, (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
------------------------------------
Six months ended Six months ended
30 June 2011 30 June 2010
US $ US $
United States 420,000 390,000
United Kingdom 143,648 508,892
563,648 898,892
================= =================
The following table provides an analysis of the Group's license
fees by geographical location.
License fees by
geographical location
------------------------------------
Six months ended Six months ended
30 June 2011 30 June 2010
US$ US$
United States 2,035,000 725,000
Europe - 7,050
2,035,000 732,050
================= =================
The following is an analysis of the carrying amount of segment
assets, and additions to fixtures, fittings and equipment, analysed
by the geographical area in which the assets are located:
Additions to fixtures,
Carrying amount fittings and
equipment and intangible
of segment assets assets
---------------------------- ------------------------------
Six months Six months Six months Six months
ended ended ended ended
30 June 2011 30 June 2010 30 June 2011 30 June 2010
US $ US $ US $ US $
United States 30,071,593 48,377,095 - 6,075
United Kingdom 14,620,516 15,972,599 - 1,738
44,692,109 64,349,694 - 7,813
============= ============= ============== ==============
5. Income tax expense
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2011 2010 2010
---------- ---------- -----------
US $ US $ US $
Isle of Man
income tax - - -
Tax on US
subsidiary 72,469 150,000 37,570
Tax on UK
subsidiary - - -
Current tax 72,469 150,000 37,570
========== ========== ===========
From 6 April 2006, a standard rate of corporate income 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 four subsidiaries, two in the USA, one in the
UK, and one in the Kingdom of Bahrain. The US subsidiaries, Amphion
Innovations 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 28% 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:
US $
Profit before tax 197,934
=======
Tax at the Isle of Man income tax rate of 0% -
Effect of different tax rates of subsidiaries
operating in other jurisdictions 72,469
Current tax 72,469
=======
6. 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:
Six months Six months
Earnings ended ended Year ended
31 December
30 June 2011 30 June 2010 2010
------------ ------------ ------------
US $ US $ US $
Earnings for the purposes of basic
and diluted earnings per share
(profit for the year attributable to
equity holders of the parent) 197,934 (2,890,972) (26,855,479)
============ ============ ============
Number of shares
Six months Six months
ended ended Year ended
31 December
30 June 2011 30 June 2010 2010
------------ ------------ ------------
Weighted average number of ordinary
shares for
the purposes of basic earnings per
share 133,498,743 132,449,212 132,797,826
Effect of dilutive potential
ordinary shares:
Share options - 419,579 102,243
Convertible promissory notes 31,990,100 31,990,100 31,990,100
Weighted average number of ordinary
shares for
the purposes of diluted earnings per
share 165,488,843 164,858,891 164,890,169
============ ============ ============
Share options that could potentially dilute basic earnings per
share in the future have not been included in the calculation of
dilute earnings per share because they are antidilutive. 7.
Investments
At fair value through profit or loss
30 June 2011 31 December 2010
----------------------------------- -----------------------------------
Unrealised Unrealised
Fair Value Cost gain/(loss) Fair Value Cost gain/(loss)
US $ US $ US $ US $ US $ US $
Public
companies:
Axcess
International,
Inc. 1,725,714 4,086,447 (2,360,733) 1,762,048 4,015,447 (2,253,399)
Private
companies:
FireStar
Software, Inc. 2,912,111 4,714,283 (1,802,172) 2,912,111 4,714,283 (1,802,172)
Kromek 14,402,945 3,433,760 10,969,185 13,718,138 3,274,915 10,443,223
Lab 21 Limited 200,082 3,059,428 (2,859,346) - - -
Motif
BioSciences,
Inc. 12,224,822 11,861,987 362,835 12,201,521 11,832,887 368,634
m2m Imaging
Corp. 3,935,248 2,953,685 981,563 3,890,248 2,878,685 1,011,563
Myconostica Ltd. - - - 200,000 3,051,366 (2,851,366)
PrivateMarkets,
Inc. 3,419,884 4,799,433 (1,379,549) 3,350,197 4,729,746 (1,379,549)
WellGen, Inc. 1,089,420 5,479,936 (4,390,516) 1,089,420 5,479,936 (4,390,516)
39,910,226 40,388,959 (478,733) 39,123,683 39,977,265 (853,582)
========== ========== =========== ========== ========== ===========
30 June 2011 31 December 2010
----------------------------------- -----------------------------------
Unrealised Unrealised
Fair Value Cost gain/(loss) Fair Value Cost gain/(loss)
US $ US $ US $ US $ US $ US $
Stocks 22,407,059 23,442,122 (1,035,063) 21,829,504 23,275,215 (1,445,711)
Promissory notes 16,566,187 13,321,379 3,244,808 16,321,400 13,076,592 3,244,808
Warrants &
options 936,980 3,625,458 (2,688,478) 972,779 3,625,458 (2,652,679)
39,910,226 40,388,959 (478,733) 39,123,683 39,977,265 (853,582)
========== ========== =========== ========== ========== ===========
7. Investments, (continued)
At 30 June 2011, Axcess International, Inc. has been valued
based on its quoted bid price less a discount of 15% to reflect the
illiquid nature of the shares (US $0.021 per share). FireStar
Software, Inc. has been valued based on a discounted cash flow
model of projected operating results (US $4.50 per share). Kromek
Limited has been valued based on the value of the latest offering
price from the most recently executed financing transaction which
occurred in January 2010 (GBP7.20 per share). Lab 21 Limited has
been valued based on the price of the most recently executed
financing transaction (GBP30.00 per share). Motif BioSciences, Inc.
has been valued based on a planned strategic partnership that is
expected to be closed in 2011 (US $0.61 per share). m2m Imaging
Corp. has been valued based on a discounted cash flow model of
projected operating results (US $3.89 per share). PrivateMarkets,
Inc. has been valued based on a discounted cash flow model of
projected operating results (US $0.18 per share). WellGen, Inc. has
been valued based on a discounted cash flow model of projected
operating results (US $0.52 per share).
The valuations at 30 June 2011 remain unchanged from 31 December
2010 except for the updated quoted bid price for Axcess
International Inc. and foreign exchange fluctuations.
A significant degree of judgment is required in establishing
fair values for private investments which are dependent on
non-market observable inputs. Significant uncertainty also exists
in the assumptions that have been applied in relation to the
planned strategic partnership and in the discounted cash flow
valuation models as mentioned above. Accordingly, the valuation of
all of these investments are subject to inherent uncertainty and
therefore the amount realized on disposal may differ materially
from the amount at which they are stated in the financial
statements.
The Group's ownership percentages of the investments are as
follows:
Fully-diluted
ownership
Country of incorporation %
Axcess International, Inc. United States of America 12.62
FireStar Software, Inc. United States of America 14.59
Kromek England & Wales 15.30
Lab 21 Limited England & Wales 0.30
Motif BioSciences, Inc. United States of America 32.88
m2m Imaging Corp. United States of America 25.22
PrivateMarkets, Inc. United States of America 25.33
WellGen, Inc. United States of America 15.30
8. Convertible promissory notes
The notes are convertible into ordinary shares of the Company at
any time prior to 31 December 2013 at a conversion price of
eighteen pence per ordinary share. In the event that the closing
market price of the ordinary shares is equal to or greater than 25
pence per ordinary share for 25 consecutive trading dates at any
time prior to 31 December 2013, the notes will automatically be
converted into fully paid ordinary shares.
If the notes have not been converted, they will be repaid on 31
December 2013. Interest of 7% will be paid quarterly until the date
of repayment.
For each note issued, the Company also issued 1.11 warrants.
Each warrant will entitle the holder to subscribe for one ordinary
share at 20 pence per ordinary share.
8. Convertible promissory notes, (continued)
The net proceeds received from the issue of the convertible
promissory notes are classified as a financial liability due to the
fact that the notes are denominated in a currency other than the
Company's functional currency and that on any future conversion a
fixed number of shares would be delivered in exchange for a
variable amount of cash.
9. Note payable
During 2011, a Director advanced the Company US $1,500,000 under
two promissory notes. In April, the Director advanced US $500,000.
The loan is repayable on 31 January 2012 and carries interest at 5%
per annum. In June, the Director advanced US $1,000,000. The loan
is repayable on 31 December 2012 and carries interest at 5% per
annum. Should Amphion's licensing programme achieve gross revenues
of US $10,000,000 during the term of the promissory note, the
holder will receive interest of an additional 20% per annum,
payable at maturity.
10. Share capital
30 June 2011
GBP
Authorised:
250,000,000 ordinary shares of 1p each 2,500,000
=============
Number GBP US$
Balance as at 31 December 2010 133,498,743 1,334,987 2,476,890
Issued and fully paid:
- - -
Balance as at 30 June 2011 133,498,743 1,334,987 2,476,890
============= ========== ==========
During the six months ended 30 June 2011, no changes occurred to
the share capital of the Company.
11. 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.
During 2011, no options were issued under the Plan.
11. Share based payments, (continued)
2011
Weighted
average
Number of exercise
share options price (in GBP)
Outstanding at beginning of period 13,153,869 0.19
Forfeited during the period (650,000) 0.16
Outstanding at the end of the period 12,503,869 0.19
==============
Exercisable at the end of the period 10,703,883 0.20
Options are recorded at fair value on the date of grant using
the Black-Scholes model. The Group recognized total costs of US
$283,165 relating to equity-settled share-based payment
transactions in 2011 which were expensed in the income statements
during the period.
12. 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 partners are
disclosed below.
During the period, the Group paid miscellaneous expenses for
Motif BioSciences, Inc. ("Motif") such as office expenses. At 30
June 2011, the net amount due from Motif is US $6,431.
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 2012 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 no fee
during the period ended 30 June 2011.
A subsidiary of the Company has entered into an agreement with
Kromek to provide advisory and consulting services. Richard Morgan
and Jerel Whittingham, Directors of the Company, are also Directors
of Kromek. 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 Kromek in that month and can be terminated by one of
the parties. The subsidiary's fee for the period ended 30 June 2011
was US $60,000. Amphion Innovations US Inc. also received US
$69,426 as a fund raising fee for the period ended 30 June 2011. At
30 June 2010, US $50,000 of the advisory fee and US $69,426 of the
fund raising fee remains payable by Kromek. At 30 June 2010, the
Company has a US $158,844 balance payable to Kromek for the
exercise of warrants.
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
was US $120,000. The agreement expired on 31 December 2009.
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 2012 and shall
automatically renew for successive one year periods. Amphion
Innovations US Inc.'s fee for the period ended 30 June 2011 was US
$120,000. At 30 June 2011, US $120,000 of the advisory fee remains
payable by Motif.
12. Related party transactions, (continued)
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 quarterly fee under this agreement is US
$45,000. This agreement is effective until 1 November 2011 and will
renew on an annual basis until terminated by either party. Amphion
Innovations US Inc.'s fee for the period ended 30 June 2011 was US
$90,000. At 30 June 2011, US $540,000 of the advisory fee remains
payable by m2m.
A subsidiary of the Company has entered into an agreement with
WellGen, Inc. ("WellGen") to provide advisory and consulting
services. Richard Morgan and Robert Bertoldi, Directors of the
Company, are also Directors of WellGen. The fee under this
agreement is US $60,000 per quarter. The agreement is effective
until 20 June 2012 and will renew annually for subsequent 12-month
periods until terminated by either party. The subsidiary's fee for
the period ended 30 June 2011 was US $120,000. At 30 June 2011, US
$480,000 of the advisory fee remains payable.
A subsidiary of the Company has entered into an agreement with
PrivateMarkets, Inc. ("PrviateMarkets") to provide advisory
services. Richard Morgan, a Director of the Company, is also a
Director of PrivateMarkets. The fee under this agreement is US
$30,000 per quarter until the successful sale of at least US
$3,000,000 and thereafter, US $45,000 per quarter. This agreement
will renew annually unless terminated by either party. The
subsidiary's fee for the period ended 30 June 2011 was US $90,000.
At 30 June 2011, US $680,000 remains payable from
PrivateMarkets.
Amphion Innovations US Inc. has entered into an agreement with
DataTern, Inc. ("DataTern") (a wholly owned subsidiary of the
Company) to provide advisory and consulting services. Richard
Morgan and Robert Bertoldi, Directors of the Company, are also
Directors of DataTern. The quarterly fee under this agreement is US
$60,000 and renews annually unless terminated by either party. The
subsidiary's fee for the period ended 30 June 2011 is US
$120,000.
The net amount payable by the Company at 30 June 2011 to Richard
C.E. Morgan, a Director of the Company, is US $1,246,180. The
amount payable includes a voluntary salary reduction of US
$812,683, US $341,779 of which will be payable at the discretion of
the Board at a later date.
In 2011, R. James Macaleer, a Director of the Company, advanced
US $1,500,000 to the Company under two notes. The promissory note
for US $500,000 is repayable on 31 January 2012 and carries
interest at 5% per annum. The US $1,000,000 promissory note is
repayable on 31 December 2012 and carries interest at 5% per annum.
At Mr. Macaleer's option, should the IP assets of DataTern, Inc. be
sold prior to maturity of the Note, the outstanding amount of the
note and interest will be repaid within 30 days of the receipt of
the proceeds from such sale. Should DataTern, Inc.'s licensing
programme achieve gross revenues of US $10,000,000 during the term
of the promissory note, Mr. Macaleer will receive interest of an
additional 20% per annum, payable at maturity. At 30 June 2011, Mr.
Macaleer advanced a total of US $2,100,000 to the Company. At 30
June 2011, US $42,834 was due to Mr. Macaleer for Director's
fees.
At 30 June 2011, US $58,887 was due to Gerard Moufflet, a
Director of the Company, for Director's fees and US $7,027 for
expenses.
At 30 June 2011, US $3,909 was due to Anthony Henfrey, a
Director of the Company, for expenses. Dr. Henfrey waived his
entitlement to receive his Director's fees for 2011.
At 30 June 2011, US $23,535 was due to Richard Mansell-Jones, a
retired Director of the Company, for Director's fees.
At 30 June 2011, US $287,884 and US $213,311 were due to Robert
Bertoldi and Jerel Whittingham, Directors of the Company,
respectively, for voluntary salary reductions of which US $188,769
and US $154,705 are payable by the discretion of the Board at a
later date.
12. Related party transactions, (continued)
The Directors' direct ownership in the Partner Companies is as
follows:
Fully diluted
% owned by
Investment company directors
--------------------------- -------------
Axcess International, Inc. 7.43
FireStar Software, Inc. 1.52
Kromek 1.29
Lab 21 Limited .00
Motif BioSciences, Inc. 4.05
m2m Imaging Corp. 1.46
PrivateMarkets, Inc. 2.74
WellGen, Inc. 4.62
13. Events after the balance sheet date
In July 2011, DataTern, Inc. entered into an agreement with
McCarter and English to represent them in their litigation with
Microsoft Corporation and SAP AG and in certain other patent
matters. DataTern, Inc. has filed a motion in New York to dismiss
or stay these actions while they continue litigations in Texas
against users of the patented technology. DataTern has filed an
application with the U.S. Patent and Trademark Office to reexamine
the '402 patent. Under this procedure, a patent may be maintained
as is, expanded, reduced or even rendered invalid.
In August and September 2011, R. James Macaleer, a Director of
the Company, advanced the Company US $1,000,000 under a US
$2,000,000 promissory note. The Company can call down the note in
several tranches by giving Mr. Macaleer no fewer than 15 business
days notice. The promissory note accrues interest at the rate of 5%
per annum and is payable on 31 December 2012.
In July and August 2011, the Company made advances of US
$138,000 under a promissory note from Axcess International,
Inc.
In July through September 2011, the Company made advances of US
$25,600 under a promissory note from Motif BioSciences, Inc.
In July and August 2011, the Company made advances of US $26,000
under a promissory note from PrivateMarkets, Inc.
In July through September 2011, the Company made advances of US
$156,440 under a promissory note from m2m Imaging Corp.
In July through September 2011, the Company made advances of US
$35,191 to WellGen, Inc.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR DMGZLKRDGMZM
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