08:00 Thu 03 Sep 2015
Amphion Innovations - Interim Results
Interim Results for the 6 months to
Period Highlights
· Successful IPO of
· Motif share price valued at
· Net Asset Value per ordinary share in the Company ("Ordinary Shares") was 12.0p (US
· Raised
· Closed the Period with approximately US
· Reduced total liabilities by US
Post-Period Highlights
· Motif raised
· Independent tests on Motif's antibiotic iclaprim showed it to be effective in vitro against a range of Gram-positive bacteria and 16 times more potent than trimethoprim, an existing synthetic antibiotic used to treat bacterial infections.
· Kromek Group plc ("Kromek") raised
* Exchange rate at
"The dramatic rise in our Net Asset Value per Share was mainly due to the increase in the value of our holdings in Motif. Following its successful IPO in
"We are committed to working closely with Motif to help it achieve its goals. In addition, we now have the opportunity to move forward one or two other Partner Companies and, for the first time in many years, to begin to explore the possibility of adding to
Financial Results and Net Asset Value
Following the successful IPO of Motif on
Revenue for the six-month period ended
We have continued to cut costs wherever possible and the leadership team has continued to work with reduced levels of current cash compensation. Total administrative expenses were lower than last year due in part to lower expenses in DataTern. As a result, the operating loss for the Period was US
During the Period, the Company was able to raise capital from the equity capital markets for the first time in seven years. In April, holders of warrants associated with an institutional lender elected to exercise all their warrants, generating approximately
Motif
On
Recently, on
The decision by Motif to focus on its antibiotic programme has proven to be timely given the growing recognition of the worldwide problems caused by resistance. In
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
DataTern and the Intellectual Property Licensing Programme
In
In late
The cases in
Our legal team, supported by our extensive team of technical and patent experts, continues to believe in the strength of the two DataTern patents. Both of these 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 firm and considered opinion of our team that the two patents are both valid and being infringed by a wide range of companies that are practicing this critical art. We believe that a Claim Construction ruling, which is fully reflective of our interpretation of the claims of the patents, would establish significant infringement by a large number of companies and we believe that we should be able to generate a significant amount of revenue from this asset over the next few years.
Under the revenue sharing agreement with DataTern, FireStar Software (where the technology and patents were originally developed) would share directly in the revenue stream.
Our goal is to arrive at fair licensing agreements with these and other users of the technology in order to give DataTern and
Building Value in Our Partner Companies
Since flotation, our basic business model has been to start and build companies with high value potential based on innovative and proprietary, but basically proven, technology. Our ability to select good 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
Following the successful IPO for Motif on AIM in April 2015, we have the opportunity to advance other Partner Companies and to start to consider, for the first time in over five years, how best to grow the Company in the future.
m2m is poised to make good progress. We anticipate being able to expand the core business and we can see a number of ways in which we can enlarge and improve the scope of the business by combining with other emerging companies. MRI is a medical imaging modality that is being increasingly used in pre-clinical investigations as well as for clinical diagnostics. m2m has a number of patents on the technology which is aimed at improving the diagnostic quality of MRI images, and the company's leadership has identified a number of pathways to expand its footprint in the general area.
Despite repeated profit warnings since Kromek's IPO, and the disappointing performance of the share price, we continue to believe that the company's technology platform has great 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 where SPECT is used. Kromek has recently completed a follow-on financing with institutional and other investors, raising approximately £11 million before expenses through a placing of new ordinary shares at 25 pence. Following the placing,
In April 2014, the case
WellGen continues to explore the opportunity to develop a novel functional beverage based on its 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
Prospects
The success of the Motif IPO and the subsequent increase in the value of our holding in Motif has been the driver behind a significant increase in our Net Asset Value. 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 Nasdaq and that our holding could be worth considerably more than the level shown on the balance sheet at the end of the period. We continue to work closely with Motif to develop the business and close the valuation gap.
The Board and management have supported
For further information please contact:
+1 212 210 6224
Yellow Jersey PR
+44 (0)7747 788 211
Panmure Gordon Limited
+44 020 7886 2500
Northland Capital Partners Limited (Joint Corporate Broker)
+44 020 7382 1100
Plumtree Capital Limited
+44 020 7183 2493
+646 568 7502
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Condensed consolidated statement of comprehensive income |
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|||||||
For the six months ended 30 June 2015 |
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|||||
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||||
|
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Unaudited |
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Unaudited |
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||||
|
|
Notes |
Six months |
|
Six months |
|
Audited |
||||
|
|
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ended |
|
ended |
|
Year ended |
||||
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30 June 2015 |
|
30 June 2014 |
|
31 December 2014 |
||||
Continuing operations |
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|
US $ |
|
US $ |
|
US $ |
||||
|
|
|
|
|
|
|
|
||||
Revenue |
|
4 |
267,601 |
|
240,000 |
|
484,700 |
||||
Cost of sales |
|
|
- |
|
- |
|
- |
||||
Gross profit |
|
|
267,601 |
|
240,000 |
|
484,700 |
||||
|
|
|
|
|
|
|
|
||||
Administrative expenses |
|
|
(1,522,155) |
|
(2,009,275) |
|
(3,494,351) |
||||
|
|
|
|
|
|
|
|
||||
Operating loss |
|
|
(1,254,554) |
|
(1,769,275) |
|
(3,009,651) |
||||
|
|
|
|
|
|
|
|
||||
Fair value gains/(losses) on investments |
|
8 |
34,807,904 |
|
(5,783,308) |
|
(9,927,978) |
||||
Interest income |
|
|
342,657 |
|
419,467 |
|
849,384 |
||||
Other gains and losses |
|
|
(93,792) |
|
(426,678) |
|
675,265 |
||||
Finance costs |
|
|
(650,573) |
|
(544,893) |
|
(1,176,299) |
||||
|
|
|
|
|
|
|
|
||||
Profit/(loss) before tax |
|
|
33,151,642 |
|
(8,104,687) |
|
(12,589,279) |
||||
|
|
|
|
|
|
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|
||||
Tax on profit/(loss) |
|
6 |
- |
|
(63) |
|
(442) |
||||
|
|
|
|
|
|
|
|
||||
Profit/(loss) for the period |
|
|
33,151,642 |
|
(8,104,750) |
|
(12,589,721) |
||||
|
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||||
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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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- |
|
18 |
|
18 |
||||
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||||
Other comprehensive income/(loss) for the period |
|
- |
|
18 |
|
18 |
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||||
Total comprehensive income/(loss) for the period |
33,151,642 |
|
(8,104,732) |
|
(12,589,703) |
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Earnings/(loss) per share |
|
7 |
|
|
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||||
|
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||||
Basic |
|
|
$ 0.21 |
US |
$ (0.06) |
US |
$ (0.09) |
||||
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Diluted |
|
|
$ 0.15 |
US |
$ (0.06) |
US |
$ (0.09) |
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Amphion Innovations plc |
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Condensed consolidated statement of financial position |
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At 30 June 2015 |
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Unaudited |
|
Unaudited |
|
Audited |
|
Notes |
30 June 2015 |
|
30 June 2014 |
|
31 December 2014 |
|
|
US $ |
|
US $ |
|
US $ |
|
|
|
|
|
|
|
Non-current assets |
|
|
|
|
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Intangible assets |
|
352,558 |
|
507,642 |
|
430,100 |
Security deposit |
|
13,600 |
|
13,600 |
|
13,600 |
Investments |
8 |
61,602,246 |
|
30,104,315 |
|
28,767,659 |
|
|
61,968,404 |
|
30,625,557 |
|
29,211,359 |
|
|
|
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Current assets |
|
|
|
|
|
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Prepaid expenses and other receivables |
|
2,648,118 |
|
3,634,487 |
|
2,569,380 |
Cash and cash equivalents |
|
1,690,277 |
|
1,147,354 |
|
212,816 |
|
|
4,338,395 |
|
4,781,841 |
|
2,782,196 |
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Total assets |
|
66,306,799 |
|
35,407,398 |
|
31,993,555 |
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Current liabilities |
|
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|
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Trade and other payables |
|
10,288,182 |
|
9,191,443 |
|
10,270,584 |
Notes payable |
10 |
8,316,734 |
|
8,308,600 |
|
8,964,901 |
Convertible promissory notes |
10 |
8,694,834 |
|
- |
|
10,189,891 |
|
|
27,299,750 |
|
17,500,043 |
|
29,425,376 |
|
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|
|
|
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Non-current liabilities |
|
|
|
|
|
|
Convertible promissory notes |
10 |
- |
|
10,914,129 |
|
- |
Notes payable |
10 |
975,000 |
|
1,012,000 |
|
982,000 |
|
|
975,000 |
|
11,926,129 |
|
982,000 |
|
|
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Total liabilities |
|
28,274,750 |
|
29,426,172 |
|
30,407,376 |
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Net assets |
|
38,032,049 |
|
5,981,226 |
|
1,586,179 |
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Equity |
|
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Share capital |
11 |
3,451,594 |
|
2,693,319 |
|
2,716,656 |
Share premium account |
|
38,618,323 |
|
36,042,868 |
|
36,070,864 |
Translation reserve |
|
- |
|
- |
|
- |
Retained earnings |
|
(4,037,868) |
|
(32,754,961) |
|
(37,201,341) |
|
|
|
|
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|
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Total equity |
|
38,032,049 |
|
5,981,226 |
|
1,586,179 |
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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 2015 |
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|||||
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Unaudited |
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|
||||
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Foreign |
|
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|
||||
|
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Share |
|
currency |
|
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|
||||
|
|
Share |
|
premium |
|
translation |
|
Retained |
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|
||||
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Notes |
capital |
|
account |
|
reserve |
|
earnings |
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Total |
||||
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|
US $ |
|
US $ |
|
US $ |
|
US $ |
|
US $ |
||||
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|
||||
Balance at 1 January 2014 |
|
2,693,319 |
|
36,042,868 |
|
(13,396) |
|
(24,645,286) |
|
14,077,505 |
||||
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|
|
|
|
|
|
|
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|
||||
Loss for the period |
|
- |
|
- |
|
- |
|
(8,104,750) |
|
(8,104,750) |
||||
|
|
|
|
|
|
|
|
|
|
|
||||
Exchange differences arising on |
|
|
|
|
|
|
|
|
|
|
||||
translation of foreign operations |
|
- |
|
- |
|
18 |
|
- |
|
18 |
||||
|
|
|
|
|
|
|
|
|
|
|
||||
Total comprehensive loss for the period |
- |
|
- |
|
18 |
|
(8,104,750) |
|
(8,104,732) |
|||||
|
|
|
|
|
|
|
|
|
|
|
||||
Recognition of share-based payments |
|
- |
|
- |
|
- |
|
8,453 |
|
8,453 |
||||
|
|
|
|
|
|
|
|
|
|
|
||||
Dissolution of subsidiary |
|
- |
|
- |
|
13,378 |
|
(13,378) |
|
- |
||||
|
|
|
|
|
|
|
|
|
|
|
||||
Balance at 30 June 2014 |
|
2,693,319 |
|
36,042,868 |
|
- |
|
(32,754,961) |
|
5,981,226 |
||||
|
|
|
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|
|
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|
||||
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|
|
|
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|
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|
||||
Balance at 1 January 2015 |
|
2,716,656 |
|
36,070,864 |
|
- |
|
(37,201,341) |
|
1,586,179 |
||||
|
|
|
|
|
|
|
|
|
|
|
||||
Profit for the period |
|
- |
|
- |
|
- |
|
33,151,642 |
|
33,151,642 |
||||
|
|
|
|
|
|
|
|
|
|
|
||||
Exchange differences arising on |
|
|
|
|
|
|
|
|
|
|
||||
translation of foreign operations |
|
- |
|
- |
|
- |
|
- |
|
- |
||||
|
|
|
|
|
|
|
|
|
|
|
||||
Total comprehensive income for the period |
- |
|
- |
|
- |
|
33,151,642 |
|
33,151,642 |
|||||
|
|
|
|
|
|
|
|
|
|
|
||||
Issue of share capital |
|
734,938 |
|
2,667,411 |
|
- |
|
- |
|
3,402,349 |
||||
|
|
|
|
|
|
|
|
|
|
|
||||
Incremental costs directly attributable |
|
|
|
|
|
|
|
|
|
|
||||
to issue of shares |
12 |
- |
|
(119,952) |
|
- |
|
- |
|
(119,952) |
||||
|
|
|
|
|
|
|
|
|
|
|
||||
Recognition of share-based payments |
13 |
- |
|
- |
|
- |
|
11,831 |
|
11,831 |
||||
|
|
|
|
|
|
|
|
|
|
|
||||
Balance at 30 June 2015 |
|
3,451,594 |
|
38,618,323 |
|
- |
|
(4,037,868) |
|
38,032,049 |
||||
|
|
|
|
|
|
|
|
|
|
|
||||
Amphion Innovations plc |
|
|
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|
|
Condensed consolidated statement of cash flows |
|
|
|
|
|
For the six months ended 30 June 2015 |
|
|
|
|
|
|
|
|
|
|
|
|
Unaudited |
|
Unaudited |
|
|
|
Six months |
|
Six months |
|
Audited |
|
ended |
|
ended |
|
Year ended |
|
30 June 2015 |
|
30 June 2014 |
|
31 December 2014 |
|
US $ |
|
US $ |
|
US $ |
Operating activities |
|
|
|
|
|
|
|
|
|
|
|
Operating loss |
(1,254,554) |
|
(1,769,275) |
|
(3,009,651) |
|
|
|
|
|
|
Adjustments for: |
|
|
|
|
|
Depreciation of property, plant and equipment |
- |
|
308 |
|
308 |
Amortisation of intangible assets |
77,542 |
|
77,542 |
|
155,084 |
Recognition of share-based payments |
29,015 |
|
8,453 |
|
98,377 |
(Increase)/decrease in prepaid & other receivables |
(78,738) |
|
19,709 |
|
1,084,816 |
Increase/(decrease) in trade & other payables |
17,598 |
|
(220,118) |
|
859,021 |
Interest expense |
(650,573) |
|
(544,893) |
|
(1,176,299) |
Other gains and losses |
15,443 |
|
- |
|
12,201 |
Income tax |
- |
|
(63) |
|
(442) |
|
|
|
|
|
|
Net cash used in operating activities |
(1,844,267) |
|
(2,428,337) |
|
(1,976,585) |
|
|
|
|
|
|
Investing activities |
|
|
|
|
|
|
|
|
|
|
|
Interest received |
342,657 |
|
419,467 |
|
849,384 |
Purchases of investments |
(139,799) |
|
(141,536) |
|
(286,259) |
Receivables reclassified to investments |
(106,041) |
|
- |
|
(2,663,291) |
Proceeds from disposition of investment |
2,219,157 |
|
- |
|
- |
Adjustment to note payable for foreign exchange rate |
104,725 |
|
328,293 |
|
(656,340) |
|
|
|
|
|
|
Net cash from/(used in) investing activities |
2,420,699 |
|
606,224 |
|
(2,756,506) |
|
|
|
|
|
|
Financing activities |
|
|
|
|
|
|
|
|
|
|
|
Proceeds on issue of shares, net of issuance costs |
3,265,213 |
|
- |
|
- |
Proceeds on issue of promissory notes |
300,000 |
|
2,000,000 |
|
3,081,301 |
Proceeds on issue of convertible promissory notes |
227,061 |
|
1,042,165 |
|
1,302,561 |
Repayments of promissory notes |
(955,167) |
|
- |
|
(455,000) |
Repayments of convertible promissory notes |
(1,826,843) |
|
- |
|
- |
|
|
|
|
|
|
Net cash from financing activities |
1,010,264 |
|
3,042,165 |
|
3,928,862 |
|
|
|
|
|
|
Net increase/(decrease) in cash and cash equivalents |
1,586,696 |
|
1,220,052 |
|
(804,229) |
|
|
|
|
|
|
Cash and cash equivalents at the beginning of the period |
212,816 |
|
353,964 |
|
353,964 |
|
|
|
|
|
|
Effect of foreign exchange rate changes |
(109,235) |
|
(426,662) |
|
663,081 |
|
|
|
|
|
|
Cash and cash equivalents at the end of the period |
1,690,277 |
|
1,147,354 |
|
212,816 |
1. General information
The condensed consolidated interim financial statements for the six months ended 30 June 2015 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 2014 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 2014. 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 $9 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. The recovery of the advisory fees due at 30 June 2015 of US $0.9 million is dependent on a number of uncertain factors including the ability of the Partner Companies to raise finances (through current investors and new financing rounds) in order to support the future growth plans and therefore generate enough cash to be able to settle any outstanding debts.
4. Revenue
An analysis of the Group's revenue is as follows:
|
Six months ended |
|
Six months ended |
|
Year ended |
|
30 June 2015 |
|
30 June 2014 |
|
31 December 2014 |
|
US $ |
|
US $ |
|
US $ |
|
|
|
|
|
|
Continuing operations |
|
|
|
|
|
Advisory fees |
210,000 |
|
240,000 |
|
480,000 |
License fees |
57,601 |
|
- |
|
4,700 |
|
|
|
|
|
|
|
267,601 |
|
240,000 |
|
484,700 |
A provision for doubtful accounts has been set up for US $120,000 for the advisory fees accrued from Partner Companies and US $120,000 of bad debt expense was recognised in the statement of comprehensive income.
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 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)
For management purposes for 30 June 2014, 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 2014 |
|
30 June 2014 |
|
30 June 2014 |
|
30 June 2014 |
|
30 June 2014 |
|
|
|
US $ |
|
US $ |
|
US $ |
|
US $ |
|
US $ |
REVENUE |
|
|
|
|
|
|
|
|
|
|
|
External advisory fees |
|
240,000 |
|
- |
|
- |
|
- |
|
240,000 |
|
External license fees |
|
- |
|
- |
|
- |
|
- |
|
- |
|
Total revenue |
|
240,000 |
|
- |
|
- |
|
- |
|
240,000 |
|
Cost of sales |
|
- |
|
- |
|
- |
|
- |
|
- |
|
Gross profit |
|
240,000 |
|
- |
|
- |
|
- |
|
240,000 |
|
Administrative expenses |
|
(593,770) |
|
(1,019,364) |
|
(396,141) |
|
- |
|
(2,009,275) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment result |
|
(353,770) |
|
(1,019,364) |
|
(396,141) |
|
- |
|
(1,769,275) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value losses on |
|
|
|
|
|
|
|
|
|||
investments |
|
- |
|
(5,783,308) |
|
- |
|
- |
|
(5,783,308) |
|
Interest income |
|
- |
|
419,467 |
|
- |
|
- |
|
419,467 |
|
Other gains and losses |
|
- |
|
(426,678) |
|
- |
|
- |
|
(426,678) |
|
Finance costs |
|
- |
|
(514,818) |
|
(30,075) |
|
- |
|
(544,893) |
|
Loss before tax |
|
(353,770) |
|
(7,324,701) |
|
(426,216) |
|
- |
|
(8,104,687) |
|
Income taxes |
|
(63) |
|
- |
|
- |
|
- |
|
(63) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss after tax |
|
(353,833) |
|
(7,324,701) |
|
(426,216) |
|
- |
|
(8,104,750) |
|
|
|
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 2014 |
|
30 June 2014 |
|
30 June 2014 |
|
30 June 2014 |
|
30 June 2014 |
|
|
|
US $ |
|
US $ |
|
US $ |
|
US $ |
|
US $ |
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INFORMATION |
|
|
|
|
|
|
|
|
|
|
|
Segment assets |
|
3,847,271 |
|
35,867,334 |
|
549,897 |
|
(4,857,104) |
|
35,407,398 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment liabilities |
|
6,131,859 |
|
22,481,869 |
|
4,985,809 |
|
(4,173,365) |
|
29,426,172 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation |
|
308 |
|
- |
|
- |
|
- |
|
308 |
|
Amortisation |
- |
|
- |
|
77,542 |
|
- |
|
77,542 |
||
Recognition of share-based |
|
|
|
|
|
|
|
|
|
||
payments |
|
- |
|
8,453 |
|
- |
|
- |
|
8,453 |
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 2015 |
|
30 June 2014 |
|
|
US $ |
|
US $ |
|
|
|
|
|
United States |
|
210,000 |
|
240,000 |
United Kingdom |
|
- |
|
- |
|
|
210,000 |
|
240,000 |
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 2015 |
30 June 2014 |
|
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 2015 |
|
30 June 2014 |
|
30 June 2015 |
|
30 June 2014 |
|
US $ |
|
US $ |
|
US $ |
|
US $ |
|
|
|
|
|
|
|
|
United States |
13,733,409 |
|
25,611,034 |
|
- |
|
- |
United Kingdom |
52,573,390 |
|
9,796,364 |
|
- |
|
- |
|
66,306,799 |
|
35,407,398 |
|
- |
|
- |
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 |
33,151,642 |
|
|
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 2015 |
|
30 June 2014 |
|
31 December 2014 |
|
|
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) |
|
33,151,642 |
|
(8,104,750) |
|
(12,589,721) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of shares |
|
|
|
|
|
|
|
|
Six months |
|
Six months |
|
|
|
|
ended |
|
ended |
|
Year ended |
|
|
30 June 2015 |
|
30 June 2014 |
|
31 December 2014 |
|
|
|
|
|
|
|
Weighted average number of ordinary shares for |
|
|
|
|
|
|
the purposes of basic earnings per share |
|
160,917,415 |
|
146,884,071 |
|
147,390,887 |
|
|
|
|
|
|
|
Effect of dilutive potential ordinary shares: |
|
|
|
|
|
|
Share options |
|
3,671,872 |
|
- |
|
- |
Convertible promissory notes |
|
55,286,030 |
|
63,806,662 |
|
65,412,061 |
|
|
|
|
|
|
|
Weighted average number of ordinary shares for |
|
|
|
|
|
|
the purposes of diluted earnings per share |
|
219,875,317 |
|
210,690,733 |
|
212,802,948 |
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.
8. Investments
At fair value through profit or loss
|
Group |
|||
|
Level 1 |
Level 2 |
Level 3 |
Total |
|
US $ |
US $ |
US $ |
US $ |
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 |
|
|
|
|
|
At 1 January 2014 |
15,579,671 |
- |
20,166,416 |
35,746,087 |
|
|
|
|
|
Investments during the year |
- |
- |
2,949,550 |
2,949,550 |
Fair value losses |
(8,910,693) |
- |
(1,017,285) |
(9,927,978) |
|
|
|
|
|
At 31 December 2014 |
6,668,978 |
- |
22,098,681 |
28,767,659 |
The Company 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 Company, 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 2015 of US $34,807,904 is from the change in value of the public companies and is based on quoted prices in active markets.
During 2015, securities with a carrying value of $46,528,082 at 30 June 2015 were transferred from Level 3 to Level 1 because the securities were listed on the AIM of the London Stock Exchange in April 2015 and are actively traded in the market. The securities now have a published price quotation in an active market.
In June 2015, the Company sold 779,642 shares of Kromek Group plc for total net proceeds of US $392,314 to partially repay the loan facility.
In June 2015, the Company transferred 2,843,126 shares of Kromek Group plc to a noteholder in exchange of US $1,042,724 of convertible promissory notes. The exchange rights gave the noteholder the right to exchange part or the whole note into Kromek shares.
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
8. Investments, (continued)
estimates and judgements made by management which are subject to inherent uncertainty. As such the carrying value in the financial statements at 30 June 2015 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 2015, management has considered the total exposure to each entity including equity, warrants, options, promissory notes, and receivables.
Further information in relation to the directly held private investment portfolio at 30 June 2015 is set out below:
|
Fair value |
Methodology |
Unobservable inputs |
|
US $ |
|
|
Private investments |
9,028,856 |
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 2015 |
31 December 2014 |
||
|
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 |
61,602,246 |
61,602,246 |
28,767,659 |
28,767,659 |
Currents assets |
|
|
|
|
Loans and receivables |
|
|
|
|
Security deposit |
13,600 |
13,600 |
13,600 |
13,600 |
Prepaid expenses and other |
|
|
|
|
receivables |
2,648,118 |
2,648,118 |
2,569,380 |
2,569,380 |
Cash and cash equivalents |
1,690,277 |
1,690,277 |
212,816 |
212,816 |
|
|
|
|
|
Financial liabilities |
|
|
|
|
Amortised cost |
|
|
|
|
Trade and other payables |
10,288,182 |
10,288,182 |
10,270,584 |
10,270,584 |
Notes payable |
8,316,734 |
8,316,734 |
8,964,901 |
8,964,901 |
Convertible promissory notes |
8,694,834 |
8,694,834 |
10,189,891 |
10,189,891 |
Notes payable |
975,000 |
975,000 |
982,000 |
982,000 |
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 2015 and 31 December 2014.
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 categorized at 30 June 2015.
|
|
|||
|
Level 1 |
Level 2 |
Level 3 |
Total |
|
US $ |
US $ |
US $ |
US $ |
Financial assets |
|
|
|
|
Security deposit |
- |
13,600 |
- |
13,600 |
Prepaid expenses and |
|
|
|
|
other receivables |
- |
2,648,118 |
- |
2,648,118 |
Cash and cash equivalents |
- |
1,690,277 |
- |
1,690,277 |
|
- |
4,351,995 |
- |
4,351,995 |
|
|
|
|
|
Financial liabilities |
|
|
|
|
Trade and other payables |
- |
10,288,182 |
- |
10,288,182 |
Notes payable |
- |
8,316,734 |
- |
8,316,734 |
Convertible promissory notes |
- |
8,694,834 |
|
8,694,834 |
Notes payable |
- |
975,000 |
- |
975,000 |
|
- |
28,274,750 |
- |
28,274,750 |
10. Promissory notes
Convertible promissory notes
During 2015, US $227,062 (£148,994) additional convertible promissory notes were issued in payment of the accrued interest payable on the notes for the quarter ended 31 December 2014 and the quarter ended 31 March 2015. In December 2014, holders of £1,856,250 of convertible promissory notes requested to exercise their exchange rights and exchange their shares into Kromek shares. At 30 June 2015, 2,843,126 shares of Kromek were exchanged for £1,161,597 of convertible promissory notes. At 30 June 2015, the convertible promissory notes totaled US $8,694,834 and the warrants issued totaled 11,057,208.
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.
Promissory notes
In June 2014, the Company was granted a loan facility by an institutional lender (the "Lender"). The Company has drawn down to date a sum of US $3.3 million with a further draw down facility of up to a maximum of US $10 million, subject to the consent of each party. The facility is secured by part of Amphion's holding in Kromek Group plc ("Kromek") and may be repaid at the Company's discretion in cash, the issue of Amphion shares, or the payment of Kromek shares where the Lender will be subject to certain limitations including adherence to any existing lock-in and an orderly market agreement. Repayment is on a monthly basis starting on 1 September 2014 with final payment extended to 1 January 2016. The interest rate of the loan is 12% per annum of the gross amount provided to the Company. To date the Lender has received 15,239,477 3-year warrants in Amphion with exercise prices ranging from 3.5 pence to 4.375 pence per share. In April 2015, the lender exercised all of the warrants for a total of
10. Promissory notes, (continued)
£580,843. In addition, Amphion has issued 1,113,616 3-year simulated warrants to the lender at exercise prices ranging from 46.70 pence to 61.25 pence per share. If the Lender exercises the warrants, Amphion will pay the difference between the exercise price and the Kromek market price. The Company also paid a further 8% of the gross amount provided as an implementation fee. 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 funds are to be used for working capital for Amphion and its Partner Companies. At 30 June 2015, the balance of the note is US $1,926,833.
11. Share capital
|
Number |
|
£ |
|
US $ |
|
|
|
|
|
|
Balance as at 31 December 2014 |
148,278,506 |
|
1,482,785 |
|
2,716,656 |
|
|
|
|
|
|
Issued and fully paid: |
|
|
|
|
|
Ordinary shares of 1p each |
344,471 |
|
3,445 |
|
5,287 |
Ordinary shares of 1p each |
2,148,243 |
|
21,482 |
|
33,060 |
Ordinary shares of 1p each |
1,298,646 |
|
12,986 |
|
19,599 |
Ordinary shares of 1p each |
15,239,477 |
|
152,395 |
|
225,905 |
Ordinary shares of 1p each |
29,311,230 |
|
293,112 |
|
451,087 |
|
|
|
|
|
|
Balance as at 30 June 2015 |
196,620,573 |
|
1,966,205 |
|
3,451,594 |
|
|
|
|
|
|
During the six months ended 30 June 2015, the following changes occurred to the share capital of the Company:
On 16 February 2015, the Company issued 344,471 ordinary 1p shares at a premium of 2.25 per share (US $11,896) to Directors in payment of the 2015 first quarter Directors' fees.
On 3 March 2015, the Company issued 2,148,243 ordinary 1p shares at a premium of 2.14 per share (US $70,749) to the institutional lender in partial payment of the loan facility.
On 1 April 2015, the Company issued 1,298,646 ordinary 1p shares at a premium of 1.66 per share (US $32,535) to the institutional lender in partial payment of the loan facility.
On 10 April 2015, the Company issued 15,239,477 ordinary 1p shares at premiums ranging from 2.5 to 3.375 per share (US $635,114) in settlement of the exercise of warrants by the institutional lender.
On 10 June 2015, the Company listed 29,311,230 ordinary 1p shares at a premium of 4.25p per share (US $1,917,118).
12. Issue costs
The Company incurred costs of US $119,952 relating to the issue of shares. The costs were primarily for fees paid to agents. These equity transaction costs were deducted from equity in accordance with IAS 32, Financial Instruments Disclosure and Presentation.
13. 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 2015, no options were issued under the Plan.
|
2015 |
||
|
|
|
Weighted |
|
|
|
average |
|
Number of |
|
exercise |
|
share options |
|
price (in £) |
|
|
|
|
Outstanding at beginning of period |
15,950,000 |
|
0.07 |
Granted during the period |
- |
|
- |
Cancelled during the period |
- |
|
- |
Expired during the period |
- |
|
- |
Outstanding at the end of the period |
15,950,000 |
|
0.07 |
|
|
|
|
Exercisable at the end of the period |
11,516,667 |
|
0.09 |
Options are recorded at fair value on the date of grant using the Black-Scholes model. The Group recognised total costs of US $11,831 relating to equity-settled share-based payment transactions in 2015 which were expensed in the statement of comprehensive income during the period.
14. 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 2015, the amount due from Motif is US $2,499.
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 2016 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 2015.
A subsidiary of the Company has entered into an agreement with Motif BioSciences, Inc. ("Motif") to provide advisory and consulting services. Richard Morgan and Robert Bertoldi, Directors of the Company, are also Directors of Motif. The annual fee for the services is US $240,000. The agreement was effective until 1 April 2015. Amphion Innovations US Inc.'s fee for the period ended 30 June 2015 was US $60,000. At 30 June 2015, US $20,000 of the advisory fees remains payable by Motif. On 1 April 2015, Motif Bio plc entered into an Advisory and Consultancy Agreement with Amphion Innovations US Inc. The consideration for the services is US $120,000 per annum. In the event that Motif Bio plc raises a minimum of £5,000,000 in gross proceeds on AIM Admission or a secondary raise, a one-time payment of US $300,000 will be paid to Amphion Innovations US Inc. 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. In addition, on 1 April 2015, Motif Bio plc entered into a
14. Related party transactions, (continued)
Consultancy Agreement with Amphion Innovations plc for Robert Bertoldi, an employee of Amphion Innovations plc, to provide services to the Group. The consideration for the services is US $5,000 per month. 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. The fees for the period ended 30 June 2015 were US $45,000. At 30 June 2015, US $15,000 of the fees was deferred.
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 2015 was suspended. At 30 June 2015, 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 $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 2015 was US $120,000. At 30 June 2015, US $1,440,000 of the advisory fees remain payable. 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 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 2015 was suspended. At 30 June 2015, US $770,000 remains payable from 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 2015 was suspended.
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 2015, US $81,301 remains outstanding. The net amount payable by the Group at 30 June 2015 to Richard Morgan is US $2,220,590. The amount payable includes a voluntary salary reduction of US $1,701,464, US $341,779 of which will be payable at the discretion of the Board at a later date.
During 2010 through 2012, R. James Macaleer, the Chairman of the Company, advanced US $6,308,600 to the Company under promissory notes. The promissory notes accrue interest at 7% per annum and were to mature on 31 December 2014. In February 2015, the notes and warrants were cancelled and replaced by notes and warrants expiring on 31 December 2015 under the same terms. In 2013, R. James Macaleer advanced US $600,000 to a subsidiary of the Company under a promissory note. The promissory note accrues interest at 5% per annum and is payable three years from issuance. As part of the terms of the loan facility the Company entered into in June 2014, the Directors agreed to a Deed of Postponement that defers payment of their promissory notes by the Company until the loan facility is repaid in full (note 10). At 30 June 2015, US $7,864 was due to Mr. Macaleer for Director's fees and US $1,621,376 was due for accrued interest on the promissory notes.
At 30 June 2015, US $113,217 was due to Gerard Moufflet, a Director of the Company, for Director's fees and US $8,337 for expenses.
14. Related party transactions, (continued)
At 30 June 2015, US $910,982 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.
15. Subsequent Events
In July and August 2015, the Company made advances of US $35,316 under a promissory note from PrivateMarkets Inc. and FireStar Software Inc.
In July and August 2015, the Company made advances of US $27,171 under a promissory note from Axcess International Inc.
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