08:00 Wed 07 Sep 2016
Amphion Innovations - Interim Results for the six months to 30 June 2016
Interim Results for the six months to
Period Highlights:
· Net Asset Value per ordinary share in the Company ("Ordinary Shares") up to 4.3p (US
· Total liabilities remained approximately unchanged over the period at US
· Motif began dosing patients in its iclaprim Phase III trials in March.
· Satisfactory settlement with
Post-Period Highlights:
· Concluded a new Memorandum of Understanding to merge m2m with another company.
· DataTern's Markman Hearing in MicroStrategy Case scheduled for
· Entered into additional draw-downs of loan facility of US
* Exchange rate at
"Since completing the IPO on AIM in April last year, Motif has moved quickly to get two trials underway and announced the dosing of the first patient in March in its pivotal Phase III trial. Motif recently announced that patient enrollment to date is ahead of projections. Motif has a very bright future and is now on its way to potentially becoming a significant player in the antibiotic market, which has a growing need for novel therapies.
"We are committed to working closely with Motif to help it achieve its goals. In addition, we now have the opportunity to move forward a couple of our other Partner Companies. We look forward to the future with confidence and to being able to report further progress with Motif, DataTern, m2m, and other Partner Companies in due course."
Financial Results and Net Asset Value
Revenue for the six-month period ended
The Pound fell against the Dollar in late June, following the Leave vote in the Brexit referendum, and over the six month period the exchange rate fell approximately 10%. However, because the Company has assets and liabilities in both US Dollars and Pounds Sterling, there was only a small, but marginally positive, impact on the net assets of the Company. Total assets in US Dollars were US
On
In addition, on
On
During the course of the Period, the Company has made additional tranches of draw-downs on its loan facility with an institutional lender, as announced originally on
Motif Bio plc
Following Motif's AIM IPO on
Iclaprim has a novel mechanism of action and enjoys a number of important clinical and commercial attributes, such as a low propensity to develop resistance, which has been demonstrated in vitro. Iclaprim was originally developed by
On
Motif's share price rose approximately 21% over the Period to
DataTern and the Intellectual Property Licensing Programme
The Court found that the '502 patent solved a specific problem in computing using an inventive concept and concluded that the invention was eligible for patent protection under the
With these favourable results, the MicroStrategy case has continued. A review of the MicroStrategy source code is expected to take place in
Given the favourable ruling DataTern received from the
MicroStrategy sells business intelligence and analytics software platforms used by other defendants. There are seven defendants in the MicroStrategy case.
DataTern's legal team, supported by the Company's extensive team of technical and patent experts, continues to believe in the strength of its intellectual property. Both of DataTern's key patents have completed a comprehensive re-examination by the United States Patent and Trademark Office ("USPTO") and successfully emerged both fully validated and with additional claims added. It remains the considered opinion of the Company's team that the two patents are both valid and being infringed by a wide range of companies that are practicing this critical art. The Board believes that a
Under the revenue sharing agreement with DataTern,
Building Value in the Partner Companies
Since flotation, our business model has been to start and build companies with high value potential based on innovative and proprietary, but fundamentally proven, technology. Our continued ability to select promising IP and to develop the IP portfolios in each of our Partner Companies is a critical success factor, and is getting steadily stronger as we deepen our knowledge and experience in this area. This knowledge underpins
m2m is poised to make good progress. We are pleased to be able to announce that we have renewed the Memorandum of Understanding first announced in early
We continue to believe that the technology platform of Kromek Group plc ("Kromek") has significant potential. With the acquisition of eV Products in 2013, Kromek gained one of the leading cadmium zinc telluride ("CZT") production capabilities in the world. As the cost of producing this material becomes competitive with scintillator technology, the opportunity exists for a lasting shift to CZT-based detector systems, bringing the benefits of multispectral imaging to CT systems and nuclear medicine, for example in SPECT systems. During its last fiscal year to
In
WellGen continues to explore the opportunity to develop a novel functional beverage based on a patented anti-inflammatory ingredient. The market for such products has been expanding rapidly in recent years. The company signed a joint venture and supply agreement with a US-based sports drink company that has established distribution channels in the mid-west of
Financing
Financial support for
The liabilities on the balance sheet stood at a total of approximately US
Prospects
The success of Motif's AIM IPO and the subsequent increase in the value of our shareholding in Motif has been the driver behind the increase in our Net Asset Value over the last 15 months. It has also demonstrated the value of our patient and persistent approach to the development of our Partner Companies. Despite the sharp increase in Motif's share price since the IPO, we believe that it should be valued more in-line with comparable companies trading on
The outlook for
For further information please contact:
+1 212 210 6224
Yellow Jersey PR
+44 (0)7768 537 739
+44 020 7886 2500
+44 020 7382 1100
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Condensed consolidated statement of comprehensive income |
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For the six months ended |
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Unaudited |
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Unaudited |
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Notes |
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Six months |
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Six months |
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Audited |
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ended |
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ended |
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Year ended |
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Continuing operations |
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US $ |
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US $ |
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US $ |
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Revenue |
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4 |
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60,000 |
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267,601 |
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519,855 |
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Cost of sales |
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- |
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- |
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- |
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Gross profit |
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60,000 |
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267,601 |
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519,855 |
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Administrative expenses |
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(1,565,488) |
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(1,522,155) |
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(4,680,212) |
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Operating loss |
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(1,505,488) |
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(1,254,554) |
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(4,160,357) |
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Fair value gains on investments |
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8 |
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1,156,454 |
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34,807,904 |
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8,512,215 |
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Realised gains on sale of investment |
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- |
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- |
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1,595,429 |
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Interest income |
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326,914 |
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342,657 |
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678,824 |
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Other gains and losses |
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948,995 |
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(93,792) |
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505,015 |
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Finance costs |
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(606,848) |
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(650,573) |
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(1,187,427) |
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Profit before tax |
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320,027 |
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33,151,642 |
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5,943,699 |
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Tax on profit |
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6 |
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- |
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- |
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(1,900) |
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Profit for the period |
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320,027 |
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33,151,642 |
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5,941,799 |
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Other comprehensive income |
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Exchange differences arising on translation |
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of foreign operations |
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- |
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- |
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- |
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Other comprehensive income/(loss) for the period |
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- |
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- |
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- |
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Total comprehensive income for the period |
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320,027 |
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33,151,642 |
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5,941,799 |
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Earnings per share |
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7 |
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Basic |
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US |
$ 0.00 |
US |
$ 0.21 |
US |
$ 0.03 |
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Diluted |
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US |
$ 0.00 |
US |
$ 0.15 |
US |
$ 0.02 |
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Amphion Innovations plc |
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Condensed consolidated statement of financial position |
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At 30 June 2016 |
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Unaudited |
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Unaudited |
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Audited |
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Notes |
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30 June 2016 |
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30 June 2015 |
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31 December 2015 |
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US $ |
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US $ |
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US $ |
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Non-current assets |
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Intangible assets |
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197,474 |
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352,558 |
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275,016 |
Security deposit |
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20,000 |
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13,600 |
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22,008 |
Investments |
8 |
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38,766,523 |
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61,602,246 |
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37,444,316 |
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38,983,997 |
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61,968,404 |
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37,741,340 |
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Current assets |
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Prepaid expenses and other receivables |
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1,302,133 |
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2,648,118 |
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1,206,843 |
Cash and cash equivalents |
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48,146 |
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1,690,277 |
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936,981 |
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1,350,279 |
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4,338,395 |
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2,143,824 |
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Total assets |
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40,334,276 |
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66,306,799 |
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39,885,164 |
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Current liabilities |
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Trade and other payables |
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10,121,740 |
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10,288,182 |
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10,346,011 |
Notes payable |
10 |
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11,326,234 |
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8,316,734 |
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10,334,901 |
Convertible promissory notes |
10 |
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- |
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8,694,834 |
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8,312,180 |
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21,447,974 |
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27,299,750 |
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28,993,092 |
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Non-current liabilities |
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Convertible promissory notes |
10 |
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7,652,133 |
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- |
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- |
Notes payable |
10 |
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- |
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975,000 |
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- |
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7,652,133 |
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975,000 |
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- |
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Total liabilities |
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29,100,107 |
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28,274,750 |
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28,993,092 |
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Net assets |
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11,234,169 |
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38,032,049 |
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10,892,072 |
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Equity |
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Share capital |
11 |
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3,465,082 |
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3,451,594 |
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3,460,880 |
Share premium account |
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38,677,055 |
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38,618,323 |
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38,667,074 |
Retained earnings |
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(30,907,968) |
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(4,037,868) |
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(31,235,882) |
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Total equity |
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11,234,169 |
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38,032,049 |
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10,892,072 |
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Amphion Innovations plc |
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Condensed consolidated statement of changes in equity |
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For the six months ended 30 June 2016 |
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Unaudited |
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Share |
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Share |
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premium |
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Retained |
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Notes |
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capital |
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account |
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earnings |
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Total |
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US $ |
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US $ |
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US $ |
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US $ |
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Balance at 1 January 2015 |
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2,716,656 |
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36,070,864 |
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(37,201,341) |
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1,586,179 |
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Profit for the period |
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- |
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- |
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33,151,642 |
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33,151,642 |
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Total comprehensive income for the period |
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- |
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- |
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33,151,642 |
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33,151,642 |
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Issue of share capital |
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734,938 |
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2,667,411 |
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- |
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3,402,349 |
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Costs of issuance |
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- |
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(119,952) |
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- |
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(119,952) |
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Recognition of share-based payments |
|
|
- |
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- |
|
11,831 |
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11,831 |
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Balance at 30 June 2015 |
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|
3,451,594 |
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38,618,323 |
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(4,037,868) |
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38,032,049 |
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Balance at 1 January 2016 |
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|
3,460,880 |
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38,667,074 |
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(31,235,882) |
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10,892,072 |
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Profit for the period |
|
|
- |
|
- |
|
320,027 |
|
320,027 |
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Total comprehensive income for the period |
|
|
- |
|
- |
|
320,027 |
|
320,027 |
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|
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Issue of share capital |
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|
4,202 |
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9,981 |
|
- |
|
14,183 |
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Recognition of share-based payments |
12 |
|
- |
|
- |
|
7,887 |
|
7,887 |
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Balance at 30 June 2016 |
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|
3,465,082 |
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38,677,055 |
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(30,907,968) |
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11,234,169 |
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Amphion Innovations plc |
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Condensed consolidated statement of cash flows |
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For the six months ended 30 June 2016 |
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Unaudited |
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Unaudited |
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|
Six months |
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Six months |
|
Audited |
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ended |
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ended |
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Year ended |
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30 June 2016 |
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30 June 2015 |
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31 December 2015 |
|
US $ |
|
US $ |
|
US $ |
Operating activities |
|
|
|
|
|
|
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Profit |
320,027 |
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33,151,642 |
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5,941,799 |
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Adjustments for: |
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|
|
|
|
Amortisation of intangible assets |
77,542 |
|
77,542 |
|
155,084 |
Recognition of share-based payments |
22,071 |
|
29,015 |
|
98,881 |
(Increase)/decrease in security deposit |
2,008 |
|
- |
|
(8,408) |
(Increase)/decrease in prepaid & other receivables |
(95,290) |
|
(78,738) |
|
1,362,537 |
Increase/(decrease) in trade & other payables |
(224,271) |
|
17,598 |
|
75,427 |
Receivables reclassified to investments |
- |
|
(106,041) |
|
(432,420) |
Change in fair value of investments |
(1,156,454) |
|
(33,587,887) |
|
(8,512,215) |
Gain on sale of investments |
- |
|
(1,220,017) |
|
(1,595,429) |
Transfer of assets to settle interest expense |
- |
|
89,480 |
|
89,480 |
Issue notes to settle interest expense |
205,221 |
|
227,061 |
|
- |
(Gain)/loss from change in foreign exchange rate on |
|
|
|
|
|
convertible promissory notes |
(865,269) |
|
104,725 |
|
- |
|
|
|
|
|
|
Net cash used in operating activities |
(1,714,415) |
|
(1,295,620) |
|
(2,825,264) |
|
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Investing activities |
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Purchases of investments |
(165,753) |
|
(139,799) |
|
(402,015) |
|
|
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|
|
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Net cash used in investing activities |
(165,753) |
|
(139,799) |
|
(402,015) |
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Financing activities |
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Proceeds on issue of shares, net of issuance costs |
- |
|
3,265,213 |
|
3,265,213 |
Proceeds on issue of promissory notes |
1,765,000 |
|
300,000 |
|
3,300,000 |
Repayments of promissory notes |
(773,667) |
|
(652,333) |
|
(2,609,167) |
|
|
|
|
|
|
Net cash from financing activities |
991,333 |
|
2,912,880 |
|
3,956,046 |
|
|
|
|
|
|
Net increase/(decrease) in cash and cash equivalents |
(888,835) |
|
1,477,461 |
|
728,767 |
|
|
|
|
|
|
Cash and cash equivalents at the beginning of the period |
936,981 |
|
212,816 |
|
212,816 |
|
|
|
|
|
|
Effect of foreign exchange rate changes |
- |
|
- |
|
(4,602) |
|
|
|
|
|
|
Cash and cash equivalents at the end of the period |
48,146 |
|
1,690,277 |
|
936,981 |
|
|
|
|
|
|
Interest received |
18 |
|
19 |
|
43 |
Interest paid |
156,205 |
|
77,231 |
|
245,079 |
1. General information
The condensed consolidated interim financial statements for the six months ended 30 June 2016 are unaudited and do not constitute statutory accounts within the meaning of the Isle of Man Companies Act 2006. The statutory accounts of Amphion Innovations plc for the year ended 31 December 2015 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. 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 2015. Changes to accounting standards in the current year had no material impact.
3. Use of judgements and estimates
The preparation of the Group's interim 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 interim 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 financial instruments and other receivables. By their nature, these estimates and assumptions are subject to an inherent measurement of uncertainty and the effect on the Group's financial statements of changes in estimates in future periods could be significant.
Investments that are fair valued through profit or loss, as detailed in note 8, are all considered to be "Partner Companies". Those "Partner Companies" categorised as Level 3 are defined as investment in "Private Companies".
Fair value of financial instruments
The Directors use their judgement in selecting an appropriate valuation technique for financial instruments not quoted in an active market ("Private Investments"). The estimation of fair value of these Private Investments includes a number of assumptions which are not supported by observable market inputs. The carrying amount of the Private Investments is US $6 million.
Fair value of other receivables
Other receivables are stated at their amortised cost which approximates their fair value and are reduced by appropriate allowances for estimated irrecoverable amounts and do not carry any interest.
4. Revenue
An analysis of the Group's revenue is as follows:
|
Six months ended |
|
Six months ended |
|
Year ended |
|
30 June 2016 |
|
30 June 2015 |
|
31 December 2015 |
|
US $ |
|
US $ |
|
US $ |
|
|
|
|
|
|
Continuing operations |
|
|
|
|
|
Advisory fees |
60,000 |
|
210,000 |
|
459,904 |
License fees |
- |
|
57,601 |
|
59,951 |
|
|
|
|
|
|
|
60,000 |
|
267,601 |
|
519,855 |
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.
5. 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 2016 |
|
30 June 2016 |
|
30 June 2016 |
|
30 June 2016 |
|
30 June 2016 |
|
|
|
US $ |
|
US $ |
|
US $ |
|
US $ |
|
US $ |
REVENUE |
|
|
|
|
|
|
|
|
|
|
|
External advisory fees |
|
60,000 |
|
- |
|
- |
|
- |
|
60,000 |
|
External license fees |
|
- |
|
- |
|
- |
|
- |
|
- |
|
Total revenue |
|
60,000 |
|
- |
|
- |
|
- |
|
60,000 |
|
Cost of sales |
|
- |
|
- |
|
- |
|
- |
|
- |
|
Gross profit |
|
60,000 |
|
- |
|
- |
|
- |
|
60,000 |
|
Administrative expenses |
|
(341,193) |
|
(889,603) |
|
(334,692) |
|
- |
|
(1,565,488) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment result |
|
(281,193) |
|
(889,603) |
|
(334,692) |
|
- |
|
(1,505,488) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value gains on |
|
|
|
|
|
|
|
|
|||
investments |
|
- |
|
1,176,171 |
|
- |
|
(19,717) |
|
1,156,454 |
|
Interest income |
|
- |
|
326,914 |
|
- |
|
- |
|
326,914 |
|
Other gains and losses |
|
195 |
|
948,800 |
|
- |
|
- |
|
948,995 |
|
Finance costs |
|
- |
|
(583,491) |
|
(23,357) |
|
- |
|
(606,848) |
|
Profit/(loss) before tax |
|
(280,998) |
|
978,791 |
|
(358,049) |
|
(19,717) |
|
320,027 |
|
Income taxes |
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit/(loss) after tax |
|
(280,998) |
|
978,791 |
|
(358,049) |
|
(19,717) |
|
320,027 |
|
|
|
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 2016 |
|
30 June 2016 |
|
30 June 2016 |
|
30 June 2016 |
|
30 June 2016 |
|
|
|
|
US $ |
|
US $ |
|
US $ |
|
US $ |
|
US $ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INFORMATION |
|
|
|
|
|
|
|
|
|
|
|
|
Segment assets |
|
7,858,227 |
|
40,836,766 |
|
229,627 |
|
(8,590,344) |
|
40,334,276 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment liabilities |
|
7,885,812 |
|
21,907,661 |
|
7,235,277 |
|
(7,928,643) |
|
29,100,107 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortisation |
- |
|
- |
|
77,542 |
|
- |
|
77,542 |
|
||
|
|
|
|
|
|
|
|
|
|
|
||
Recognition of share-based |
|
|
|
|
|
|
|
|
|
|
||
payments |
|
- |
|
22,071 |
|
- |
|
- |
|
22,071 |
|
5. Segment information, (continued)
For management purposes for 30 June 2015, 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 2015 |
|
30 June 2015 |
|
30 June 2015 |
|
30 June 2015 |
|
30 June 2015 |
|
|
|
US $ |
|
US $ |
|
US $ |
|
US $ |
|
US $ |
REVENUE |
|
|
|
|
|
|
|
|
|
|
|
External advisory fees |
|
210,000 |
|
- |
|
- |
|
- |
|
210,000 |
|
External license fees |
|
- |
|
- |
|
57,601 |
|
- |
|
57,601 |
|
Total revenue |
|
210,000 |
|
- |
|
57,601 |
|
- |
|
267,601 |
|
Cost of sales |
|
- |
|
- |
|
- |
|
- |
|
- |
|
Gross profit |
|
210,000 |
|
- |
|
57,601 |
|
- |
|
267,601 |
|
Administrative expenses |
|
(472,570) |
|
(668,081) |
|
(381,504) |
|
- |
|
(1,522,155) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment result |
|
(262,570) |
|
(668,081) |
|
(323,903) |
|
- |
|
(1,254,554) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value gains on |
|
|
|
|
|
|
|
|
|||
investments |
|
- |
|
35,084,408 |
|
- |
|
(276,504) |
|
34,807,904 |
|
Interest income |
|
- |
|
342,657 |
|
- |
|
- |
|
342,657 |
|
Other gains and losses |
|
- |
|
(93,792) |
|
- |
|
- |
|
(93,792) |
|
Finance costs |
|
(342) |
|
(625,634) |
|
(24,597) |
|
- |
|
(650,573) |
|
Profit/(loss) before tax |
|
(262,912) |
|
34,039,558 |
|
(348,500) |
|
(276,504) |
|
33,151,642 |
|
Income taxes |
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit/(loss) after tax |
|
(262,912) |
|
34,039,558 |
|
(348,500) |
|
(276,504) |
|
33,151,642 |
|
|
|
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 2015 |
|
30 June 2015 |
|
30 June 2015 |
|
30 June 2015 |
|
30 June 2015 |
|
|
|
|
US $ |
|
US $ |
|
US $ |
|
US $ |
|
US $ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INFORMATION |
|
|
|
|
|
|
|
|
|
|
|
|
Segment assets |
|
11,705,260 |
|
60,892,631 |
|
396,170 |
|
(6,687,262) |
|
66,306,799 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment liabilities |
|
7,085,484 |
|
20,540,316 |
|
6,532,264 |
|
(5,883,314) |
|
28,274,750 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortisation |
- |
|
- |
|
77,542 |
|
- |
|
77,542 |
|
||
|
|
|
|
|
|
|
|
|
|
|
||
Recognition of share-based |
|
|
|
|
|
|
|
|
|
|
||
payments |
|
- |
|
29,015 |
|
- |
|
- |
|
29,015 |
|
5. 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 2016 |
|
30 June 2015 |
|
|
US $ |
|
US $ |
|
|
|
|
|
United States |
|
- |
|
210,000 |
United Kingdom |
|
60,000 |
|
- |
|
|
60,000 |
|
210,000 |
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 2016 |
30 June 2015 |
|
US $ |
US $ |
United States |
- |
50,551 |
Europe |
- |
7,050 |
|
- |
57,601 |
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:
|
Carrying amount |
|
Additions to fixtures, fittings, and |
||||
|
of segment assets |
|
equipment and intangible assets |
||||
|
Six months ended |
|
Six months ended |
|
Six months ended |
|
Six months ended |
|
30 June 2016 |
|
30 June 2015 |
|
30 June 2016 |
|
30 June 2015 |
|
US $ |
|
US $ |
|
US $ |
|
US $ |
|
|
|
|
|
|
|
|
United States |
7,520,429 |
|
13,733,409 |
|
- |
|
- |
United Kingdom |
32,813,847 |
|
52,573,390 |
|
- |
|
- |
|
40,334,276 |
|
66,306,799 |
|
- |
|
- |
6. Income tax expense
|
||||||||||||||||||||||||||||||||||||||||||||||||
|
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 three subsidiaries, two in the USA 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 Group charge for the period can be reconciled to the profit per the consolidated income statement as follows:
|
US $ |
|
|
Profit before tax |
320,027 |
|
|
Tax at the Isle of Man income tax rate of 0% |
- |
|
|
Effect of different tax rates of subsidiaries |
|
operating in other jurisdictions |
- |
|
|
Current tax |
- |
7. 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 |
|
Six months ended |
|
Six months ended |
|
Year ended |
|
|
30 June 2016 |
|
30 June 2015 |
|
31 December 2015 |
|
|
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) |
|
320,027 |
|
33,151,642 |
|
5,941,799 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of shares |
|
|
|
|
|
|
|
|
Six months |
|
Six months |
|
|
|
|
ended |
|
ended |
|
Year ended |
|
|
30 June 2016 |
|
30 June 2015 |
|
31 December 2015 |
|
|
|
|
|
|
|
Weighted average number of ordinary shares for |
|
|
|
|
|
|
the purposes of basic earnings per share |
|
197,493,495 |
|
160,917,415 |
|
179,083,069 |
|
|
|
|
|
|
|
Effect of dilutive potential ordinary shares: |
|
|
|
|
|
|
Share options |
|
2,405,083 |
|
3,671,872 |
|
3,925,501 |
Convertible promissory notes |
|
72,233,543 |
|
55,286,030 |
|
56,369,051 |
|
|
|
|
|
|
|
Weighted average number of ordinary shares for |
|
|
|
|
|
|
the purposes of diluted earnings per share |
|
272,132,121 |
|
219,875,317 |
|
239,377,621 |
Share options that could potentially dilute basic earnings per share in the future have not been included in the calculation of diluted earnings per share because they are antidilutive.
8. Investments
At fair value through profit or loss
|
Group |
|||
|
Level 1 |
Level 2 |
Level 3 |
Total |
|
US $ |
US $ |
US $ |
US $ |
At 1 January 2016 |
31,655,446 |
- |
5,788,870 |
37,444,316 |
|
|
|
|
|
Investments during the year |
- |
- |
165,753 |
165,753 |
Fair value gains |
1,158,404 |
- |
(1,950) |
1,156,454 |
|
|
|
|
|
At 30 June 2016 |
32,813,850 |
- |
5,952,673 |
38,766,523 |
|
|
|
|
|
At 1 January 2015 |
6,668,978 |
- |
22,098,681 |
28,767,659 |
|
|
|
|
|
Investments during the year |
- |
- |
245,840 |
245,840 |
Disposition of investment |
(2,219,157) |
- |
- |
(2,219,157) |
Transfers between levels |
13,315,665 |
- |
(13,315,665) |
- |
Fair value losses |
34,807,904 |
- |
- |
34,807,904 |
|
|
|
|
|
At 30 June 2015 |
52,573,390 |
- |
9,028,856 |
61,602,246 |
The Group is required to classify fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. In the case of the Group, investments classified as Level 1 have been valued based on a quoted price in an active market. Investments classified as Level 2 have been valued using inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). Fair values of unquoted investments classified as Level 3 in the fair value hierarchy have been determined in part or in full by valuation techniques that are not supported by observable market prices or rates. Investment valuations for Level 3 investments have been arrived at using a variety of valuation techniques and assumptions. For instance where the fair values are based upon the most recent market transaction but which occurred more than twelve months previously, the investments are classified as Level 3 in the fair value hierarchy.
The net increase in fair value for the six months ended 30 June 2016 of US $1,156,454 includes a net increase of US $1,158,404 from the change in value of the public companies and is based on quoted prices in active markets.
Fair value determination
The Directors have valued the investments in accordance with the guidance laid down in the International Private Equity and Venture Capital Valuation Guidelines. The inputs used to derive the investment valuations are based on estimates and judgements made by management which are subject to inherent uncertainty. As such the carrying value in the financial statements at 30 June 2016 may differ materially from the amount that could be realised in an orderly transaction between willing market participants on the reporting date.
In making their assessment of fair value at 30 June 2016, management has considered the total exposure to each entity including equity, warrants, options, promissory notes, and receivables.
8. Investments, (continued)
Further information in relation to the directly held private investment portfolio that are at Level 3 at 30 June 2016 is set out below:
|
Fair value |
Methodology |
Unobservable inputs |
|
US $ |
|
|
Private investments |
5,952,673 |
Multiple methods used in combination including: Discount to last market price, |
Discount (30%-100%), |
|
|
discount to last financing round, price of future financing round and third party |
Price of fund raising. |
|
|
valuation. |
|
Given the range of techniques and inputs used in the valuation process and the fact that in most cases more than one approach is used, a sensitivity analysis is not considered to be a practical or meaningful disclosure. Shareholders should note however that increases or decreases in any of the inputs listed above in isolation may result in higher or lower fair value measurements.
9. Other financial assets and liabilities
The carrying amounts of the Group's financial assets and financial liabilities at the statement of financial position date are as follows.
|
|
|||
|
30 June 2016 |
31 December 2015 |
||
|
Carrying |
Fair |
Carrying |
Fair |
|
amount |
value |
amount |
value |
|
US $ |
US $ |
US $ |
US $ |
Financial assets |
|
|
|
|
Fair value through profit or loss |
|
|
|
|
Fixed asset investments - designated |
|
|
|
|
as such upon initial recognition |
38,766,523 |
38,766,523 |
37,444,316 |
37,444,316 |
Currents assets |
|
|
|
|
Loans and receivables |
|
|
|
|
Security deposit |
20,000 |
20,000 |
22,008 |
22,008 |
Prepaid expenses and other |
|
|
|
|
receivables |
1,302,133 |
1,302,133 |
1,206,843 |
1,206,843 |
Cash and cash equivalents |
48,146 |
48,146 |
936,981 |
936,981 |
|
|
|
|
|
Financial liabilities |
|
|
|
|
Amortised cost |
|
|
|
|
Trade and other payables |
10,121,740 |
10,121,740 |
10,346,011 |
10,346,011 |
Notes payable |
11,326,234 |
11,326,234 |
10,334,901 |
10,334,901 |
Convertible promissory notes |
7,652,133 |
7,652,133 |
8,312,180 |
8,312,180 |
9. Other financial assets and liabilities, (continued)
The carrying value of cash and cash equivalents, the security deposit, prepaid expenses and other receivables, and trade and other payables, in the Directors' opinion, approximate to their fair value at 30 June 2016 and 31 December 2015.
The following table sets out the fair values of financial instruments not measured at fair value and analyses it by the level in the fair value hierarchy into which each fair value measurement is categorised at 30 June 2016.
|
|
|||
|
Level 1 |
Level 2 |
Level 3 |
Total |
|
US $ |
US $ |
US $ |
US $ |
Financial assets |
|
|
|
|
Security deposit |
- |
20,000 |
- |
20,000 |
Prepaid expenses and |
|
|
|
|
other receivables |
- |
1,302,133 |
- |
1,302,133 |
Cash and cash equivalents |
- |
48,146 |
- |
48,146 |
|
- |
1,370,279 |
- |
1,370,279 |
|
|
|
|
|
Financial liabilities |
|
|
|
|
Trade and other payables |
- |
10,121,740 |
- |
10,121,740 |
Notes payable |
- |
11,326,234 |
- |
11,326,234 |
Convertible promissory notes |
- |
7,652,133 |
|
7,652,133 |
|
- |
29,100,107 |
- |
29,100,107 |
10. Promissory notes
Convertible promissory notes
At a meeting on 26 February 2016, the holders of £5,707,738 of convertible promissory notes agreed to amend the terms of the note. The notes will now be redeemed on 31 December 2017, will be convertible into ordinary shares at 8 pence per share, and will pay interest at 7% if paid in ordinary shares or 5% if paid in cash or additional notes. In addition, for every £1 of note held, the noteholder will be issued two warrants with an exercise price of 10 pence per share. Each note holder may serve at least 60 days' notice on the Company to redeem up to a proportion of the notes held by it on the following dates: 15% on 31 May 2016; 20% on 30 November 2016; 20% on 30 June 2017.
During 2016, US $205,221 (£141,778) additional convertible promissory notes were issued in payment of the accrued interest payable on the notes for the quarter ended 31 December 2015 and the quarter ended 31 March 2016. The Company redeemed a total of approximately £67,000 of convertible promissory notes at the 31 May 2016 redemption date. The amounts were paid in August 2016.
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.
10. Promissory notes, continued
Promissory notes
In June 2014, the Company was granted a loan facility by an institutional lender (the "Lender"). In April 2016, the Company borrowed an additional US $1,765,000 increasing the amount borrowed under the facility to US $4.1 million. Under the terms of the additional draw, the interest rate will be 10% with repayments starting on 1 May 2016 and with the final repayment due on 1 February 2017. The proceeds are to be used to repay the existing amount due under the facility and for working capital for Amphion and its Partners Companies. The loan is secured by the pledge by the Company of 7,774,678 ordinary shares of Kromek Group plc and 14,906,145 ordinary shares of Motif Bio plc. Additional terms of the facility allow the conversion of the drawn-down amount into ordinary shares in the Company. Up to US $500,000 of the facility may be converted at 6.5 pence per ordinary share and the remainder of the amount drawn-down, approximately US $3.6 million, may be converted at 8.0 pence per ordinary share. At 30 June 2016, the balance of the note is US $3,998,333. As part of the loan facility, the Directors agreed to a Deed of Postponement that regulates the Directors' rights in respect to the repayment of any debt due to them from the Company. The Directors agreed to defer payment of their debt by the Company until the loan facility is repaid in full. The loan facility was amended in July and August 2016 (see note 14 for full details).
11. Share capital
|
Number |
|
£ |
|
US $ |
|
|
|
|
|
|
Balance as at 31 December 2015 |
197,219,423 |
|
1,972,194 |
|
3,460,880 |
|
|
|
|
|
|
Issued and fully paid: |
|
|
|
|
|
Ordinary shares of 1p each |
291,806 |
|
2,918 |
|
4,202 |
|
|
|
|
|
|
Balance as at 30 June 2016 |
197,511,229 |
|
1,975,112 |
|
3,465,082 |
|
|
|
|
|
|
During the six months ended 30 June 2016, the following changes occurred to the share capital of the Company:
On 12 January 2016, the Company issued 291,806 ordinary 1p shares at a premium of 2.375 per share (US $9,982) to Directors in payment of the 2015 fourth quarter and 2016 first quarter Directors' fees.
12. 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 2016, no options were issued under the Plan.
|
2016 |
||
|
|
|
Weighted |
|
|
|
average |
|
Number of |
|
exercise |
|
share options |
|
price (in £) |
|
|
|
|
Outstanding at beginning of period |
12,450,000 |
|
0.07 |
Granted during the period |
- |
|
- |
Cancelled during the period |
- |
|
- |
Expired during the period |
(500,000) |
|
0.11 |
Outstanding at the end of the period |
11,950,000 |
|
0.07 |
|
|
|
|
Exercisable at the end of the period |
11,516,667 |
|
0.08 |
Options are recorded at fair value on the date of grant using the Black-Scholes model. The Group recognised total costs of US $7,887 relating to equity-settled share-based payment transactions in 2016 which were expensed in the statement of comprehensive income during the period.
13. 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 2016, the amount due from Motif is US $459.
On 1 April 2015, Motif Bio plc entered into an advisory and consultancy agreement with Amphion Innovations US Inc. Richard Morgan, a Director of the Company, is also the Chairman of Motif Bio plc and Robert Bertoldi, a Director of the Company, is also a Director of Motif Bio plc. The consideration for the services is US $120,000 per annum. The period is for an initial period of twelve months and will automatically renew each year on the anniversary date unless either party notifies the other by giving 90 days written notice prior to expiration. Amphion Innovations US Inc.'s fee for the period ended 30 June 2016 was US $60,000.
On 1 April 2015, Motif Bio plc entered into a consultancy agreement with Amphion Innovations plc for Robert Bertoldi, an employee of Amphion Innovations plc, to provide services to Motif Bio plc. The consideration for the services is US $180,000 annually. On 1 July 2016, the consideration decreased to US $75,000 annually. The agreement is for an initial period of twelve months and will automatically renew each year on the anniversary date unless either party notifies the other by giving 90 days written notice prior to expiration.
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 renews 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 2016.
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 renews on an annual basis until terminated by either party. Amphion Innovations US Inc.'s fee for the period ended 30 June 2016 was suspended. At 30 June 2016, US $630,000 of the advisory fees remain payable by m2m. This balance has been reduced by a provision for doubtful debts in the amount of US $600,000.
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 renews annually until terminated by either party. The subsidiary's fee for the period ended 30 June 2016 was suspended. At 30 June 2016, US $1,320,000 of the advisory fees remain payable. This balance has been reduced by a provision for doubtful debts in the amount of US $1,320,000.
A subsidiary of the Company has entered into an agreement with PrivateMarkets, Inc. ("PrivateMarkets") 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 2016 was suspended. At 30 June 2016, US $770,000 remains payable by PrivateMarkets. The payable has been reduced by a provision for doubtful debts in the amount of US $770,000.
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 2016 was suspended.
13. Related party transactions, (continued)
During 2013, Richard Morgan, a Director of the Company, advanced US $190,000 to a subsidiary of the Company under promissory notes. The promissory notes accrue interest at 5% per annum and are payable in three years. In 2010, Richard Morgan advanced US $352,866 to the Company. In July 2014, the balance of this advance was converted into a demand note that accrues interest at 5% per annum. At 30 June 2016, US $81,301 remains outstanding. The net amount payable by the Group at 30 June 2016 to Richard Morgan is US $2,307,787. The amount payable includes a voluntary salary reduction of US $1,804,879, US $341,779 of which will be payable at the discretion of the Board at a later date.
At 30 June 2016, US $110,273 was due to Gerard Moufflet, a Director of the Company, for Director's fees and US $8,337 for expenses.
At 30 June 2016, US $988,254 was due to Robert Bertoldi, a Director of the Company, for voluntary salary reductions of which US $188,769 is payable by the discretion of the Board at a later date.
14. Subsequent Events
In July 2016, the Company borrowed an additional US $750,000 under the YA Global Master SPV Ltd. loan facility. Under the terms of the additional draw, nil interest is charged with a repayment amount of US $881,250 due on 6 October 2016. The additional draw may be converted into ordinary shares in accordance with the additional terms of the facility in April 2016. The additional draw is to be secured by the Company pledging 1,400,000 ordinary shares of Motif Bio plc. In July and August 2016, the Company sold 2,070,000 ordinary shares of Kromek Group plc in repayment of the US $881,250. Pursuant to the terms of the additional draw, the net proceeds of US $720,995 was used to repay the additional draw leaving the balance remaining of US $160,255.
At the annual general meeting in July 2016, Mr. Richard Mansell-Jones was appointed Chairman of the Company and Mr. Paul Kennedy was appointed as a Director. Mr. Gerard Moufflet did not stand for re-election.
In July 2016, the Company issued 300,000 warrants to a consultant with a subscription price of 3.5 pence per share and an expiration date of 28 July 2019.
In August 2016, the Company borrowed an additional US $2,350,000 under the YA Global Master SPV Ltd. loan facility increasing the loan balance to US $6,198,333. Of this amount, US $3,000,000, plus interest is convertible into ordinary shares of Amphion Innovations plc at 6 pence and the remaining amount, plus interest is convertible at 8 pence. Under the terms of the additional draw, the interest rate will be 10% with repayments starting on 1 January 2017 and with the final repayment due on 1 December 2017. The proceeds are to be used to repay the existing amount due under the facility and for working capital for Amphion and its Partner Companies. The loan is secured by the pledge by the Company of 6,684,255 ordinary shares of Kromek Group plc and 27,961,625 ordinary shares of Motif Bio plc.
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