Interim results from Amphion Innovations (LON:AMP) show that the technology commercialisation firm moved into the black during the first six months of the year on increased revenues.

The firm’s revenues for the half-year period to June 30 were US$2.6 million, compared with US$1.6 million in H1 2010, while its operating loss was reduced to US$130,244 from US$1.1 million. But gains on investments as well as interest income meant that the firm actually posted a profit on the pre-tax line of £270,403 (H1 2010: £2.7 million).

Amphion’s DataTern intellectual property-licensing subsidiary, with the help of law firm McCarter & English, continues to make progress with its patent-enforcement activities against a number of companies regarding its next-generation business software: ObjectSpark.  DataTern has taken “concrete steps” to combat allegations by Microsoft and SAP and to bolster its own patent rights. The first of these was a filing of 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.

Meanwhile, DataTern has filed an application with the US Patent and Trademark Office to re-examine the business’s ‘402 patent. Under this procedure a patent may be maintained as it is, expanded, reduced or even rendered invalid, but Amphion said that DataTern’s confidence in the validity of the patent justifies exposing it to re-examination.

DataTern saw a substantial increase in income from its licensing activities during the first half, with its revenues increasing to US$2 million (H1 2010: $732,050).

Among Amphion’s ‘Partner Companies’ Kromek, its digital X-ray business, continues to make progress and recently received additional orders for its GR1 instrument, which is being used in Japan for the decommissioning of the Fukushima nuclear power plant. Meanwhile, Motif BioSciences is progressing towards the consummation of an “important and exciting” partnership with one of the leading Indian pharmaceutical services companies and other Partner Companies are also doing well, the firm said.

“We are pleased to be reporting an improved set of results for the company,” said Richard Morgan, Amphion’s chairman and chief executive officer. “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.”

DataTern has also been making progress with its patent disputes with a number of companies regarding its next-generation business software.

Amphion expects to report revenue of US$2.6 million for the six months to 30 June, compared to US$1.6 million for H1 2010. The firm said the increase in revenue is mainly due to the improved performance of DataTern, which increased revenue from US$700,000 during H1 2010 to US£$2 million in H1 2011.

Amphion’s profitability benefited from this increase in revenue, with its operating loss reducing to US$130,000 from US$1.1 million in H1 2010. Admin expenses were also reduced, to US$1.9 million from US$2.4 million in H1 2010.

Meanwhile, the firm said it expected to have a net profit of US$190,000 for H1 2011, compared to a loss of US$2.9 million for H1 2010.

The firm's net asset value stood at US$29.6 million (some 22 US cents per share) at 30 June, up from US$29.2 million six months earlier.

Amphion also reported that its DataTern subsidiary has taken “concrete steps” to combat actions filed against it by Microsoft and SAP in April concerning its ‘402 and ‘502 patents. The two business software firms assert that these patents are invalid and not infringed by companies that DataTern has itself taken action against.

DataTern has retained law firm McCarter & English, and has filed a motion in New York to dismiss, or at least stay, the actions by Microsoft and SAP, while it also intends to file an application in the US Patent and Trademark Office to re-examine the ‘402 patent. The ‘502 patent has already successfully completed re-examination by the USPTO with all 18 original claims intact and 26 new claims added.

DataTern’s patent-protected offerings include ObjectSpark Technologies – which can be used across a range of industries to allow business users to develop their own customised data service layers. The business provides non-exclusive licences for its technologies on what it describes as reasonable and non-discriminatory terms.

In January this year, DataTern announced it had settled five patent infringement lawsuits involving the ‘402 and ‘502 patents, generating total revenues of US$1.125 million.

Amphion said that the market for financing of private emerging technology and med-tech companies remains “extremely challenging”.  However, it said that provided its IP programme continues to make progress its need for capital at the parent company level should remain relatively small.

During the last 10 trading days, Amphion’s shares have more than doubled their price from 2.12 pence each to 4.25 pence.

Amphion expects to announce its complete interim results on 23 September.

Directors at Amphion Innovations (LON:AMP) are continuing to acquire shares in the business.

CEO Richard Morgan remains a believer in the technology business builder, buying 400,000 more shares at 2.375 pence each in Amphion on Wednesday. Morgan’s total stake in the firm is now more than 18 per cent since he holds 24,192,499 shares.

Meanwhile, today the firm confirmed that directors James Macaleer and Gerard Moufflet continue to be compensated in shares. Amphion issued 727,107 shares to the two directors: Macaleer, who received 577,107 new shares, saw his total shareholding increase to 23,318,019 shares; Moufflet’s holding grew to 450,000 shares after receiving 150,000 new shares.

Fellow director Anthony Henfrey waived his fees for Q4 2010 and Q1 and Q2 2011.

Amphion Innovations starts and builds companies based on proprietary (patented) technologies developed by universities and academic institutions in the UK and US. Each one of the companies the firm has chosen to invest in and develop was carefully selected to address established markets worth in excess of US$1 billion each, and Amphion also believes that many of them can achieve exit values of more than US$100 million each.

The firm has struggled from difficulties in raising capital for its partner companies ever since the financial crisis began a few years ago. But Amphion’s recent annual results, released at the end of June, reported that investee company Kromek – a UK business developing digital X-ray systems for applications in security, industrial production, medicine and defence – is continuing to enjoy success in raising capital and continuing to make good progress. 

Amphion Innovations (LON:AMP) said the recovery of its intellectual property licensing activities seen in the second half of last year has continued into 2011.

It also revealed it is looking at ways of “extracting value” from the IP in its DataTern business as it unveiled its annual results.

They showed that net asset value per fell to 14 pence a share in the 12 months ended December 31 from 26 pence a year earlier. Revenues fell 53 per cent to US$4.1 million and the group booked a US$1.9 million loss.

Amphion, which invests in growth companies in the medical and technology sectors, said the progress of its partner companies was affected by difficulties raising outside capital.

But a restructuring of DataTern’s intellectual property licensing activities has enhanced gross margins and improved controls.

Seven new licence deals were concluded in the second half bringing the total to 28 by the end of December.

Chief executive Richard Morgan said: "The recovery of our IP licensing activities in the second half of the year has continued into the current year.  

“This programme has become a central part of Amphion's business and the key source of revenue and cash flow, allowing the Group to continue to provide some support for our partner companies, despite the difficult overall funding environment.  

“We continue to explore new ways of extracting value from the intellectual property assets in DataTern and elsewhere in the group.”  

The news sent the stock soaring 50 per cent in a frenetic opening hour of trade. However, Amphion eased back a little to settle at 6.25 pence at 10.50am, up 1.75 pence on the day.  

The trigger for today’s movement was an update on litigation. Amphion revealed this morning that its software arm DataTern has settled five patent infringements since September for a total of US$1.125 million.

The medical and technology specialist also reported that DataTern sold 10 licences last year generating US$2.75 million, of which US$2.025 million came in the second half.

Together with proceeds from the licensing programme due this year and the company’s new debt facility Amphion now has sufficient cash to cover its working capital requirements.

Chief executive Richard Morgan said: "We are confident in the quality of the patents owned by DataTern and believe that a very large number of corporations are using this technology and infringing our patents.  

“Our primary goal remains to licence this technology on terms that are fair to the users and in the process to obtain an adequate return on the investment made in the technology.  We expect to see additional settlements over the next few months, and beyond. 

"Following the restructuring of DataTern, Amphion is able to retain a larger share of each settlement and now that the programme is getting back on track we believe that in the year ahead cash flow from licensing agreements should once again cover the direct operating costs of Amphion, including interest on the Convertible Promissory Note. 

"Since inception, DataTern has signed 29 licenses with companies from the financial, credit card, retail, leisure, healthcare, airline, e-commerce, and software industries for a total of about $16 million."

Amphion Innovations (LON:AMP) revealed this morning that its software arm DataTern has settled five patent infringements since September for a total of US$1.125 million.

The medical and technology specialist also reported that DataTern sold 10 licences last year generating US$2.75 million, of which US$2.025 million came in the second half.

Together with proceeds from the licensing programme due this year and the company’s new debt facility Amphion now has sufficient cash to cover its working capital requirements.

Chief executive Richard Morgan said: "We are confident in the quality of the patents owned by DataTern and believe that a very large number of corporations are using this technology and infringing our patents.  

“Our primary goal remains to licence this technology on terms that are fair to the users and in the process to obtain an adequate return on the investment made in the technology.  We expect to see additional settlements over the next few months, and beyond. 

"Following the restructuring of DataTern, Amphion is able to retain a larger share of each settlement and now that the programme is getting back on track we believe that in the year ahead cash flow from licensing agreements should once again cover the direct operating costs of Amphion, including interest on the Convertible Promissory Note. 

"Since inception, DataTern has signed 29 licenses with companies from the financial, credit card, retail, leisure, healthcare, airline, e-commerce, and software industries for a total of about $16 million."

The loan is repayable on 31 January 2012, and it carries 5 percent interest per year.  

Macaleer has a 17.12 percent stake in Amphion.

After being under pressure for a few weeks the stock had something of a relief rally yesterday. The stock gained around 40 percent to an intraday high of 5.125 pence, before closing the session at 4.75 pence.

Amphion nurtures small, high growth companies in the medical and technology sectors through to float.

It has significant shareholdings in eight partner companies and two specialised entities, developing proven technologies targeting substantial commercial marketplaces, each in excess of US$1 billion.  

Each partner company is chosen with the goal of achieving an exit valuation in excess of US$100 million.  

Kromek and UMASS will develop an advanced system for breast cancer detection and diagnosis, which it said could change the way this disease is detected.

The contract, which is worth US$1.5 million to Kromek, was funded via US$4 million from the US National Institute for Health (NIH).

X-ray mammography, which is considered the imaging mode of choice for early detection of breast cancer, records images that represent a three-dimensional (3D) object in a two-dimensional (2D) plane, meaning that normal breast tissue versus tumour tissue can be difficult to distinguish.

Kromek claims its technology can achieve better resolutions of breast tissue without increasing doses of radiation for patients, while the contract has potential to “significantly advance clinical diagnostics, in the field of breast cancer detection, and potentially way beyond”.

"Kromek and NOVA possess a unique technological answer to the challenge of achieving better resolutions of breast tissue, without increasing doses of radiation for patients," Amphion said in the statement.

“The modality we are using, which combines photon counting and cone-beam CT imaging, holds unique promise for the medical imaging market.

“We are looking forward to working together with Kromek and NOVA towards a solution that could change the way breast cancer detection is carried out for many years to come,” said professor of radiology at the University of Massachussets Stephen Glick.

Growth in the mammography market is influenced rising incidence of breast cancer in industrialised as well as developing nations.

The US mammography equipment market is forecast to be worth US$585 million per annum by 2015.

The deal will further expand Kromek’s presence in the medical imaging market, following the announcement earlier this month about our work with Siemens on CT imaging development in Germany and the US.

Just a month ago, Kromek secured official EU certification to provide colour x-ray liquid detection systems to all European airports.

This means that all airports on the continent are free to buy and implement Kromek’s Bottle Scanner product, marking the first time that airports can purchase tested, approved, and secure technology, allowing them to relax the liquid ban.

The technology is set to loosen up security restrictions for air passengers as it will eliminate the ban on carrying liquids on flights by April 2013.

Kromek is seen as the likeliest partner company of Ampion to be the next to become publicly traded.

According to Ampion chief executive Richard Morgan, the earliest the business can be floated would be during the first quarter of 2011, at which point Amphion’s 16% stake should be worth far more than the last valuation of £9 million.

For comparison, Amphion’s current market cap is around £6.4 million.

Meanwhile, Kromek itself managed to raise £12.3 million in an oversubscribed financing in March this year.

This means that all airports on the continent are free to buy and implement Kromek’s Bottle Scanner product, marking the first time that airports can purchase tested, approved, and secure technology, allowing them to relax the liquid ban.

The technology is set to loosen up security restrictions for air passengers as it will eliminate the ban on carrying liquids on flights by April 2013.

By April 2011, liquid items bought in transit will be allowed on board, providing the appropriate security measures, such as screening, are in place at the airports concerned.

The results of the European Civil Aviation Conference (ECAC) led trials have proven that the technology is ready to allow the 2011 regulatory deadline to be met by the airports.

Kromek called the achievement a milestone in the company’s history.

“It's a significant milestone for Kromek as the approved listing is vindication that colour x-ray detection has been proven," said chief executive of Kromek Arnab Basu.

“The next generation of X-ray technology has arrived, with a market ready machine that can detect liquid threats.”

Kromek's Bottle Scanner has qualified as a Category B device that has achieved Type 1 and Type 2 100% capability and been officially tested, verified and authorised by ECAC.

The threat from Liquid, Aerosol and Gel (LAG) based explosives became apparent in August 2006 following discovery of a plot to use such devices aboard multiple transatlantic flights.

Kromek also noted that liquid is becoming a common tool for terrorist use, further increasing the relevance of its technology.

“Our groundbreaking technology not only provides products to the airline security market but has the opportunity for development into a range of products for many highly lucrative markets such as medical and industrial fields,” said Basu.

Kromek is seen as the likeliest partner company of Ampion to be the next to become publicly traded.

According to Ampion chief executive Richard Morgan, the earliest the business can be floated would be during the first quarter of 2011, at which point Amphion’s 16% stake should be worth far more than the last valuation of £9 million.

For comparison, Amphion’s current market cap is around £10 million.

Meanwhile, Kromek itself managed to raise £12.3 million in an oversubscribed financing in March this year.

It has also bought California-based NOVA R&D, which added a number of imaging and detection technologies in the chemical, biological, radiological and nuclear space to the enlarged business, as well as what Amphion calls significant commercial relationships.

Investors clearly liked the news, as shares in Amphion rose more than 14% in early trade to 8 pence.

Since 2008, 22 licenses of these patens have been signed, resulting in revenues of US$14 million for DataTern.

DataTern was originally established in order to commercialise selected intellectual property opportunities in partnership with Amphion's partner companies. Its intellectual property has been licensed into the financial, credit card, retail, leisure, healthcare, airline, e-commerce, and software industries.

Amphion has recently restructured DataTern’s business, stating that a more efficient and more predictable process was now in place.

Amphion nurtures small, high growth companies in the medical and technology sectors through to float.

It has significant shareholdings in eight partner companies and two specialised entities, developing proven technologies targeting substantial commercial marketplaces, each in excess of US$1 billion.

Each partner company is chosen with the goal of achieving an exit valuation in excess of US$100 million.
Shares in Amphion rallied 10% yesterday.

Earlier this week, partner company FireStar Software won part of a major US grant, and Amphon is expecting FireStar's share to be approximately US$2 million.

In early September, partner company Kromek made “excellent progress” during the first half, raising a further £12.3 million while completing the acquisition of California-based NOVA.

Meanwhile, molecular diagnostics firm Myconostica raised US$1 million and Amphion said Motif BioSciences attracted “significant interest” with its new approach to drug discovery.

The FireStar and OMG partnership with the Southeast Michigan Health Information Exchange (SEMHIE) and the Southeast Michigan Health Authority (SEMHA) has contributed to SEMHIE receiving contracts from the US Social Security Administration and a Beacon Community Grant from the US Department of Health and Human Services worth a total US$19 million.

The AIM listed developer of medical and technology businesses owns a 13.78% stake in FireStar, a software product company focused on allowing different organizations to automatically exchange electronic information with each other.

Amphion stated that the internet is not “sufficiently robust or secure” to address the problems with the reliable exchange of information between different organizations. “This award will provide the funding to develop the standards to address this problem, which, in turn, will give FireStar the opportunity to implement the standard in all medical entities.

“FireStar will offer a software appliance, built on its proven and patented product, EdgeNode, that will facilitate the processing and distribution of information/data based on the standard.

“This is an exciting multi-billion dollar marketplace opportunity,” said Amphion chief executive Richard Morgan.

The partnership between FireStar and OMG is expected to enable SEMHIE to shorten the time and cost of processing Social Security disability claims as well as increase the quality and cut the cost of the treatment of diabetes for the citizens of Southeast Michigan.

SEMHIE is an organization whose members include Chrysler, Ford Motor Company, General Motors, the Wayne and Oakland County Medical Societies, Greater Detroit Area Health Council, Blue Cross Blue Shield of Michigan, Michigan State University, the Henry Ford Health System, Detroit Medical Center and others.

Amphion has significant shareholdings in eight partner companies and two specialised entities, developing proven technologies targeting substantial commercial marketplaces, each in excess of US$1 billion.

Each partner company is chosen with the goal of achieving an exit valuation in excess of US$100 million.

Earlier this month, the company said partner company Kromek made “excellent progress” during the first half, raising a further £12.3 million while completing the acquisition of California-based NOVA.

Meanwhile, molecular diagnostics firm Myconostica raised US$1 million and Amphion said Motif BioSciences attracted “significant interest” with its new approach to drug discovery.

Amphion currently has eight partner companies developing proven technologies and targeting substantial commercial marketplaces in excess of US$1bn. Amphion aims to achieve a an exit value in excess of US$100m for each partner company.  Two of Amphion’s more advanced partner companies, Kromek and WellGen, are considered potential IPO candidates.

Last week, digital X-ray device developer Kromek raised £12.3m in an oversubscribed financing. Kromek has developed a family of products for the global aviation and border security markets to combat threats posed by liquid based explosives and smuggling of narcotics dissolved in alcohol. During 2009, Kromek launched its second product in June, the 311+ Scanner, to scan for liquids in quart sized bags as well as a variety of bottles in airport security.

The company was also awarded a US$4m contract from a US Defense Agency to develop Detectors from ‘Vapour Growth Cadmium Zinc Telluride’ material and it completed a UK Government contract to develop new baggage scanning systems. Also during the period Kromek's first product, the Bottle Scanner, underwent successful trials at Newcastle Airport.

During 2009, WellGen introduced its first commercial products range under the TeAmé brand name. According to Amphion, the line of natural food supplements address important health needs of ‘baby-boomers’ such as joint health, stress management, immune defense, and exercise nutrition.  The partner also signed an agreement with RFI Ingredients, to collaborate on a range of opportunities to create and market therapeutic nutrition products. 

In a preclinical study WellGen's proprietary black-tea extract concentrate, demonstrated that it significantly improves glucose control, thereby advancing the company's lead medical food into the final phase of clinical development for diabetes.

Amphion also noted the progress being made among its other partners. Wireless-technology group Axcess International became profitable in the first half of 2009 and achieved record year-end revenues of US$4.9m. Physical commodity-trading platform PrivateMarkets built upon its Q408 launch in the Texas electricity market, growing trading volumes and exceeded expectations with a 25% increase in the customer base by year-end.

Molecular diagnostics company Myconostica, continued to make progress as it began to sell its 2nd generation MycAssay Aspergillus product in Europe. Also during the period, Myconostica successfully raised £1.75m in the summer. In the current financial year, Myconostica recently launched a new version of MycAssay Pneumocystis product.

Amphion said that genetic research group Motif BioSciences' partnership with Imperial College London and Professor Philippe Froguel began to yield results during 2009, with discoveries including specific genetic associations with type 2 diabetes, obesity, hypertension, and dyslipidemia. 

The company also noted that FireStar Software has extended its successful partnership with OMG to include OMG MDMI Labs. Additionally the partner has also developed a partnership with Southeast Michigan Health Information Exchange, to assist them in building their Information Exchange.

Looking ahead through 2010 and beyond, the company expects the IP licensing programme to be a key source of financial support, and if it can meet its revenue generation objectives, Amphion believes it should be able to cover most, if not all, of its direct operating costs.

The company acknowledged that for its business model to work Amphion needs continuous access to capital, which remained very scarce throughout 2009 for early stage emerging technology companies. As such Amphion said it needs to see a return of a viable IPO market, for the broader economic recovery to make a positive impact on its own performance.

As previously stated, Amphion believes that a number of its partner companies should be ready to approach the IPO market, as and when it revives but the company believes that conditions will improve slowly during 2010. Whilst remaining cautious, Amphion believes in the strength of its business model and in the quality of its partner companies.