Adams Regulatory News (ADA)

28 Sep 2007 10:32

Adamind Ltd28 September 2007 28 September 2007 Adamind Ltd ("Adamind" or "the Company") Interim Results for the period ended 30 June 2007 Adamind Ltd announces its financial results for the six months ended 30 June2007. Summary • Revenues amounted to $691,000 (H1 2006: $1.7m) reflecting the sale of assets in the first half • Profit before tax was $544,000 (H1 2006: $3,998 (loss)) • Basic and diluted profit per share of 1cent (H1 2006: 11 cents (loss)) • Cash, Cash equivalents, restricted cash, and Short term available-for-sale Securities totalled $24.29m in cash plus $550,000 in escrow (from the Mobixell Networks (Israel) Ltd transaction) • Sale of assets to Mobixell Networks (Israel) Ltd • Intention to return monies to shareholders Orna Berry, Executive Chairperson of Adamind, said: "The Board plans to returnthe cash as soon as it can to its shareholders. The Company hedges the fundsagainst currency fluctuations and keeps a majority of the money in GBP. ShouldAdamind be approached by potential buyers for the Company as a going concern,the Board will explore the offer in order to try and maximize the shareholders'return and accelerate the time of the return." Enquiries: AdamindOrna Berry, Executive Chairperson +972 9 971 9111 Corfin CommunicationsHarry Chathli, Neil Thapar +44 20 7977 0020 Landsbanki SecuritiesSimon Bridges +44 20 7426 9000 Overview The results reflect the strategic direction taken by the Board in activelypursuing a range of alternative proposals with a view to maximising shareholdervalue after the slower than expected growth in demand for MMS and contentservices market, affecting the entire industry. Towards the end of 2006, anumber of parties expressed an interest in exploring a potential deal. On 21 February 2007, the Company announced that it had entered into an agreementfor the sale of substantially all the Company's assets (excluding, among others,cash and cash equivalents and marketable securities) and assignment of relatedliabilities to Mobixell Networks (Israel) Ltd. The transaction was approved atan Extraordinary General Meeting held on 12 April 2007. The Company has taken specific measures to reduce its cash burn. The coststructure as of October 1st, 2007 following the departure of the CEO and the CFOwill be comprised of the following: board members' payments, the AIM and FSArelated expenses and a limited number of essential service providers. As of Sept.25th 2007, the Company had $23.9m in cash, cash equivalents andshort-term securities plus $550,000 in escrow (from the Mobixell Networks(Israel) Ltd transaction). FSA Investigation The U.K. Financial Services Authority ("FSA") is investigating the Company, inrespect of circumstances, statements and behaviour occurring prior to an adversetrading statement made by the Company on 22 June 2006, and with respect tocircumstances suggesting that market abuse may have occurred. The FSA hasinterviewed directors and officers of the Company and appears to be in the finalstages of its investigation. It is not possible for management to assess whatimpact it may have on the Company's financial statements in the future. TheCompany is in discussions with its insurance company, negotiating thepossibility of recovering a portion of the legal expenses incurred pertaining tothe aforementioned FSA investigation. Part of the expenses have been reimbursedafter the balance sheet date and negotiations are continuing with the insurancecompany with respect to other expenses. At the present time, management isunable to determine the additional amounts, if any, that it might receive asreimbursement. Outlook The Board plans to return the cash as soon as it can to its shareholders. TheCompany is currently hedging the funds against currency fluctuations and keepinga majority of the money in GBP. Should Adamind be approached by potential buyersfor the company as a going concern, the Board will explore any interest in orderto try and maximize the shareholders return and accelerate the time of thereturn. ADAMIND LTD. AND ITS SUBSIDIARIES INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS OF 30 JUNE 2007 U.S. DOLLARS IN THOUSANDS UNAUDITED INDEX Page --------- Consolidated Balance Sheets 2 Consolidated Statements of Operations 3 Consolidated Statements of Changes in Equity 4 Consolidated Statements of Cash Flows 5 - 6 Notes to Financial Statements 7 - 8 - - - - - - - - - CONSOLIDATED BALANCE SHEETSU.S. dollars in thousands, except share and per share data 30 June 31 DecemberASSETS 2007 2006 --------- --------- Unaudited Audited --------- ---------CURRENT ASSETS:Cash and cash equivalents $ 22,499 $ 15,213Restricted cash 237 -Short-term available-for-sale marketable securities 1,559 7,451Trade receivables - 1,535Other accounts receivable and prepaid expenses 729 468 --------- --------- Total current assets 25,024 24,667---------------------- --------- --------- NON-CURRENT ASSETS:Property and equipment, net - 477Intangible assets, net - 2,087 --------- --------- Total non-current assets - 2,564-------------------------- --------- --------- Total assets $ 25,024 $ 27,231-------------- ========= ========= LIABILITIES AND EQUITY CURRENT LIABILITIES:Trade payables $ 8 $ 577Employees and payroll accruals 73 936Accrued expenses and other liabilities 639 1,211Deferred revenues - 657 --------- --------- Total current liabilities 720 3,381--------------------------- --------- --------- EQUITY:Share capital -Ordinary shares of NIS 0.01 par value - Authorized:50,000,000 shares at 30 June 2007 and 31 December2006;Issued and outstanding: 35,688,886 and 35,546,636 81 81shares at 30 June 2007 and 31 December 2006, respectivelyAdditional paid-in capital 31,840 31,768Net unrealized loss reserve (8) (46)Accumulated deficit (7,609) (7,953) --------- --------- Total equity 24,304 23,850--------------- --------- --------- $ 25,024 $ 27,231 ========= ========= The accompanying notes are an integral part of the consolidated financialstatements. CONSOLIDATED STATEMENTS OF OPERATIONSU.S. dollars in thousands, except share and per share data ---------------- Six months ended Year ended 30 June 31 December ---------------- 2007 2006 2006 --------- --------- ---------- Unaudited Audited ---------------- ---------- Revenues $ 691 $ 1,704 $ 5,946Cost of revenues 165 323 739 --------- --------- ---------- Gross profit 526 1,381 5,207 --------- --------- ---------- Operating expenses:Research and development, net 825 1,664 3,002Sales and marketing 1,014 2,817 5,550General and administrative 1,590 962 2,137Amortization of intangible assets 204 420 831Impairment of intangible assets - - 1,165 --------- --------- ---------- Total operating expenses 3,633 5,863 12,685 --------- --------- ---------- Operating loss 3,107 4,482 7,478Financial income, net 546 484 960Other income (note 1b) 3,105 - - --------- --------- ---------- Profit (loss) before income taxes 544 (3,998) (6,518)Income taxes 200 - - --------- --------- ---------- Net profit (loss) $ 344 $ (3,998) $ (6,518) ========= ========= ========== Basic net profit (loss) per share $ 0.01 $ (0.11) $ (0.18) ========= ========= ========== Diluted net profit (loss) per share $ 0.01 $ (0.11) $ (0.18) ========= ========= ========== Weighted average number of sharesused in computing basic net profit(loss) per share 35,569,056 35,485,231 35,516,186 ========= ========= ========== Weighted average number of sharesused in computing diluted net profit(loss) per share 35,853,409 35,485,231 35,516,186 ========= ========= ========== The accompanying notes are an integral part of the consolidated financialstatements. STATEMENTS OF CHANGES IN EQUITYU.S. dollars in thousands, except share data Ordinary shares Additional paid-in Net unrealized shares Amount capital loss reserve -------- ------ ------------- --------- Balance as ofJanuary 1,2006 35,388,636 $ 80 $ 31,285 $ -(Audited) Issuance ofshares uponexercise ofemployees'share options 158,000 1 64 - Cancellationofissuance - - 298 -expense Unutilizedlosses onavailable forsalemarketable - - - (46)securities Share basedcompensation - - 121 - Loss - - - - -------- ------ -------- -------- Balance as of31 December2006 (Audited) 35,546,636 81 31,768 (46) Issuance ofshares uponexercise ofemployees'share options 142,250 *) 59 - Issuanceexpenses - - (213) - Realizedlosseson availablefor salemarketable - - - 38securities Share basedcompensation - - 226 - Net profit - - - - -------- ------ -------- -------- Balance as of30 June 2007(unaudited) 35,688,886 $ 81 $ 31,840 $ (8) ======== ====== ======== ======== Total Accumulated Total recognized deficit equity income and expenses -------- ------- -------- Balance as of January 1, 2006(Audited) $ (1,435) $ 29,930 $ - Issuance of shares uponexercise of employees' shareoptions - 65 - Cancellation of issuanceexpense - 298 - Unutilized losses on availablefor sale marketable securities - (46) (46) Share based compensation - 121 - Loss (6,518) (6,518) (6,518) -------- ------- -------- Balance as of 31 December 2006(Audited) (7,953) 23,850 (6,564) ======== Issuance of shares uponexercise of employees' shareoptions - 59 - Issuance expenses - (213) - Realized losses on availablefor sale marketable securities - 38 38 Share based compensation - 226 - Net profit 344 344 344 -------- ------- -------- Balance as of 30 June 2007(unaudited) $ (7,609) $ 24,304 $ 382 ======== ======= ======== *) Represents an amount lower than $ 1. The accompanying notes are an integral part of the consolidated financialstatements. CONSOLIDATED STATEMENTS OF CASH FLOWSU.S. dollars in thousands -------------- Six months ended Year ended 30 June 31 December -------------- -------- 2007 2006 2006 -------- -------- --------- Unaudited Audited -------------- ---------Cash flows from operating activities:Net profit (loss) $ 344 $ (3,998) $ (6,518) Adjustments to reconcile net profit (loss) to netcash used in operating activities: Depreciation and amortization 331 545 1,106 Impairment of intangible assets - - 1,165 Gain on sale of Company's assets (3,105) - - Amortization of premiums onheld-to-maturity marketable securities - 32 - Decrease (increase) in trade receivablesand other accounts receivable and prepaidexpenses 352 (4) (259) Increase (decrease) in trade payables, employees and payroll accruals and accruedexpenses and other liabilities (1,732) 260 (87) Increase (decrease) in deferred revenues 615 (132) 84 Share-based compensation 226 141 121 -------- -------- --------- Net cash used in operating activities (2,969) (3,156) (4,388) -------- -------- --------- Cash flows from investing activities:---------------------------------------Purchase of equipment (26) (238) (326) Investment in restricted cash (237) - - Proceeds from sale of property andequipment - - 6 Proceeds from short-term available-for-salemarketable securities 5,930 3,300 - Proceeds from short-term held-to-maturitymarketable securities - - 9,341 Proceeds from long-term held-to-maturitymarketable securities - - 9,420 Proceeds from the sell of Company's assets,net 4,529 - - Payment for the acquisition of SenstreamLtd. (1) - (782) (782) -------- -------- --------- Net cash provided by investing activities 10,196 2,280 17,659 -------- -------- --------- Cash flows from financing activities:---------------------------------------Issuance of shares upon exercise ofemployees' share options, net 59 56 65 -------- -------- --------- Net cash provided by financing activities 59 56 65 -------- -------- --------- Increase (decrease) in cash and cashequivalents 7,286 (820) 13,336 Cash and cash equivalents at beginning ofperiod 15,213 1,877 1,877 -------- -------- --------- Cash and cash equivalents at endof period $ 22,499 $ 1,057 $ 15,213 ======== ======== ========= Supplemental disclosure of cash flow activities:-------------------------------------------------- Cash received during the period forinterest $ 451 $ 588 $ 1,162 ======== ======== ========= Non-cash financing activities:-------------------------------- Cancellation of accrued for issuanceexpense $ - $ 298 $ 298 ======== ======== ========= Cancellation of accrued for issuanceexpense $ 213 $ - $ - ======== ======== ========= The accompanying notes are an integral part of the consolidated financialstatements. CONSOLIDATED STATEMENTS OF CASH FLOWS (Cont.)U.S. dollars in thousands --------------- Six months ended Year ended 30 June 31 December --------------- -------- 2007 2006 2006 -------- -------- ---------(1) Payment for the acquisition of Senstream Ltd. Unaudited Audited------------------------------------------------------------------------------ Estimated fair value of assets acquired and liabilities assumed at the date of acquisition:Working capital deficiency, excluding cash andcash equivalents $ - $ 489 $ 489 Property and equipment - (8) (8) Intangible assets - (1,280) (1,280) Accrued severance pay, net - 17 17 -------- -------- --------- $ - $ (782) $ (782) ======== ======== ========= The accompanying notes are an integral part of the consolidated financialstatements. NOTE 1:- GENERAL a. Adamind Ltd. ("the Company") was incorporated in Israel and commencedoperations in 2004. In February 2005, the Company completed an Initial PublicOffering ("IPO") on the London Stock Exchange Alternative Investment Market("AIM") under the symbol "ADA". The Company issued 11,363,636 Ordinary shares toinstitutional and other investors and raised approximately $ 28,000 beforeissuance expenses of approximately $ 2,900. In 2006, an accrual of $ 298 forstamp duty, which was included in issuance expenses, was cancelled based on alegal opinion received by the Company. The Israeli tax authorities have notaccepted the legal opinion, and insist that the Company pay the abovementionedamount plus interest and penalty (increasing the amount due to linkagedifferentials, penalties and interest to approximately $ 331 as of 30 June,2007). In July 2007, the Company paid $ 213 to the tax authorities in order tocease the accumulation of penalties. As of balance sheet date, the stamp dutywas accrued. This amount may be retrieved to the Company depending on thedecision of the Israeli Supreme court on a similar case b. Sale of Company's assets In April 2007, Mobixell Networks (Israel) Ltd. (a subsidiary of MobixellTechnologies Inc.) ("Mobixell Networks") and the Company completed an AssetPurchase Deal ("Transaction") in which the Company sold to Mobixell Networkssubstantially all of the Company's tangible and intangible assets (excluding,among others, cash and cash equivalents and marketable securities) and relatedliabilities, in consideration of $ 5,500. The Transaction was approved by theshareholders on April 12, 2007. Consummation of this Transaction resulted in again on the sale of $ 3,105 (net of transaction costs of $ 421). As part of theTransaction, 10% of the consideration ($ 550) was deposited in escrow for aperiod of 12 months (until April 2008) c. Prior to the Transaction, the Company was a provider of software, whichenables mobile multimedia content and converged communications services. TheCompany addressed the interoperability challenge that exists between differentmobile devices to receive and process media rich content. The Adamind SpireTMplatform provides media adaptation and enhancement software enabling serviceoperators to successfully deploy messaging, content and next generationconvergence services. d. The U.K. Financial Services Authority ("FSA") is investigating the Company,in respect of circumstances, statements and behavior occurring prior to anadverse trading statement made by the Company on 22 June 2006, and with respectto circumstances suggesting that market abuse may have occurred. Theinvestigation is currently underway and it is not possible for management toassess what impact it may have on the Company's financial statements in thefuture. The Company is in discussions with its insurance company, negotiatingthe possibility of recovering a portion of the legal expenses incurredpertaining to the aforementioned FSA investigation. At the present time,management is unable to determine the amount, if any, that it might receive asreimbursement. e. The Company has certain tax exposures resulting from the operation of theCompany in multiple tax jurisdictions and as a result of the sale of theCompany's assets (see note 1b). The Company is in the process of assessing theprobability and quantification of these tax exposures. NOTE 1:- GENERAL (CONT') f. One of the Company's former employees filed a claim in the Labor Court inIsrael for a total amount of approximately $53, claiming the termination of hisemployment was negotiated in bad faith. The Company filed a statement of defenserejecting all his claims and allegation. A hearing is schedule to take place inJanuary 2008. Currently, the Company and its legal advisors cannot assess theoutcome of this claim, and as a result, the financial statements do not includeany provision with respect of this claim. NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES The interim condensed consolidated financial statements for the six months ended30 June, 2007, have been prepared in accordance with IAS 34, Interim FinancialReporting. These financial statements should be read in conjunction with theCompany's audited annual financial statements and accompanying notes as of 31December 2006 ("the annual financial statements"). The significant accountingpolicies and methods of computations applied in the preparation of the interimfinancial statements are the same as those applied in the annual financialstatements as of 31 December, 2006. This information is provided by RNS The company news service from the London Stock Exchange