BIDS.L Regulatory News (BIDS)

Fitbug Holdings Plc / Epic: FITB.L / Index: AIM / Sector: Leisure

8 May 2015

FITBUG HOLDINGS PLC ('Fitbug' or the 'Company')

FINAL RESULTS

Fitbug Holdings Plc, the AIM quoted provider of online personal health and wellbeing services, is pleased to provide its final results for the year ended 31 December 2014. The report and accounts for the year ended 31 December 2014 are being sent to shareholders and will be available on the Company's website, www.fitbugholdings.com, shortly. In addition, the Company gives notice of its AGM to be held at our new registered office, Suite 5, 5 Rochester Mews, London NW1 9JB on 1st June 2015 at 1:00pm.

HIGHLIGHTS

· Successfully capitalising on the rapidly growing B2C market for wearable technology:

o Sales agreements signed with international blue chip retailers, including Sainsburys, Target, BestBuy and Amazon

· Product offering developed to include pioneering digital coaching service - "Kiqplan™"- received positively by industry participants leading to a range of high profile sales and marketing opportunities:

o Integrated into the Samsung Digital Health platform - included as one of the strategic partner applications in Samsung's S Health platform, available globally

o Inclusion as an inaugural member of the Jawbone Marketplace which features best-in-class devices and apps spanning categories including fitness, sleep and food

o Appointed as the Official Fitness Partner of Race for Life 2015

· Raised £3,510,200 to scale up the sales and marketing programmes for both the Orb and the Kiqplan, to meet the fast growing demand for wearable technology and complementary products

· Kiqplan development and rollout on schedule

· 208% increase in revenues to £2,312,000 is testament to recent strength of activities

· Loss after tax of £3,761,000 reflects the significant investment in development and marketing

· Supportive financial backers in NW1 Investments and Kirsh Group with repayment term on all main loans, including convertible loan note, extended to 31 July 2016

· Positive outlook for the year ahead with a clear Kiqplan development path, a growing market opportunity and a strong team

Paul Landau, CEO of Fitbug. Limited said, "2014 was an exciting and transformational year for Fitbug as a result of our increased emphasis on the emerging consumer space for wearable technology and the development of a pioneering new coaching framework called Kiqplan. This, along with the establishment of high profile retail and B2B partnerships, provides an important foundation upon which to drive the business forward over the coming years. In particular Kiqplan, which is compatible with a range of wearable device, provides a highly innovative proposition which will allow the Company to capitalise on the emergence of both existing and new wearable technologies such as smart watches which are expected to proliferate in the near term."

CHAIRMAN AND CEO STATEMENT

With over 10 years' experience innovating the wearable health technology sector, we are delighted with the success we have achieved during the period under review. This has been an important year for the Company, distinguished by a number of advances to our integrated health service, the launch of Kiqplan and notable commercial agreements with partners such as Samsung, Target, J Sainsbury, Argos, Jawbone and others. We believe the progress made during the period is testament to the quality and versatility of our integrated service offering and approach, which we look forward to building upon.

It is clear that the market for wearable technology is flourishing and evolving; naturally our over-arching strategy is to capitalise on this. As demonstrated over recent months, we are making great strides in this vein. We are confident that our service offering is attractive and clearly differentiated from other providers in the sector. We believe passionately in the importance of a service orientation and developing products and services which are effective in motivating and inspiring users to lead more healthy and active lifestyles in order to achieve their goals. In addition to our B2C activity, we have proven B2B relationships and having traditionally operated in this space, we will continue to take advantage of the growing range of commercial opportunities in this market.

With this in mind, a key achievement for Fitbug during 2014 was the development and launch of our digital coaching platform Kiqplan™. This means that we now have an integrated platform of wearable health technology which uniquely combines wearable tracking devices, such as the Fitbug Orb, with targeted and personalised coaching programmes such as the Goodbye Baby Bump post-natal plan. Critically we designed Kiqplan to be open platform, meaning that it is compatible with a broad range of sensors, including wearable activity trackers, smart watches, smart phones and third party mobile apps, ensuring that it can be offered to the broadest possible user base.

We believe the combination of tracking and coaching technology provides users with a distinct service offering unlike any other in the market which helps our customers achieve specific health, weight and fitness goals by contextualising the data provided by wearable devices. Encouragement and motivation tools help them stay on track meaning that Kiqplan customers are more likely to achieve their health and fitness goals. Our four Kiqplans programmes at launch were:

· Slim + Trim

· Beer Belly Blaster

· Healthy Baby Bump

· Goodbye Baby Bump

Since this initial launch, we have also developed 5k and 10k Kiqplans as part of our partnership agreement with Cancer Research UK's Race for Life 2015.

Work to develop enhanced Kiqplan packaging and Point of Sale (POS) material, to maximise consumer understanding and retail uptake, has been completed and is now being introduced through retail outlets. Our products and services are competitively priced; the Orb retails at £49.99 and our Kiqplan programmes, which were formally launched at the Consumer Electronics Show in January 2015, sell for £19.99.

As discussed previously, there has been strong retail interest in Orb and Kiqplan offerings. Our sales drive began with US retail chain Target Corporation ('Target') and UK supermarket J Sainsbury plc ('Sainsbury's) stocking Fitbug products in their wearable ranges from November 2014. Target, one of the largest retailers in the US with approximately 1,800 stores and an online website, agreed to stock Fitbug products in all of its stores. Sainsbury's made Fitbug products available in its main stores. Both Target and Sainsbury's have placed additional orders in 2015. Further to this, in December 2014 Fitbug announced that Bestbuy.com, the leading American online consumer electronics retailer agreed to sell Fitbug Orb and Kiqplan as part of its wearable range, and Amazon.co.uk also agreed to expand its range of Fitbug products to include Kiqplan.

Post period end, in February 2015, US Midwest retailer "Meijer", a large regional American hypermarket chain with over 200 stores, agreed to stock the Fitbug Orb in three colours, and eight Kiqplan programmes from May 2015. Importantly, Meijer plans to dedicate a two foot aisle section specifically to support Kiqplan with full dedicated POS material. Fitbug products will be carried in all Meijer stores and available online.

These sales agreements underpin the quality of Fitbug's products and our active growth strategy. We look forward to building upon the success achieved to date and will provide further updates on these developments in due course.

Aside from the Company's products being stocked by leading retailers, an important consideration in our growth strategy has been the "open platform" compatibility of Kiqplan with other wearable devices, the latest generation of mobile smart phones and smart watches, as well as leading compatible apps. As highlighted through the recent high profile launch of the Apple watch, digital health technology is a growing and extremely active space and we believe that the integration of our unique technology with other leading health devices represents a strategic and compelling development opportunity. In line with this, in November 2014 we announced that Kiqplan was to be integrated into the Samsung Digital Health platform. This became live in February 2015 with the Fit + Healthy Kiqplan programme included as one of the partner applications in Samsung's S Health platform, available globally.

Kiqplan is certainly being recognised as an innovative service offering unlike any other in the sector on an industry level, a belief which was solidified post period end in January 2015 when Kiqplan became an inaugural member of the Jawbone® Marketplace. Jawbone is a world-leader in consumer technology and wearable devices, building hardware products and software platforms powered by data science. The Jawbone Marketplace features best-in-class devices and apps spanning categories across fitness, sleep, food, lifestyle and the smart home, bringing together apps and devices to help further enhance the experience of Jawbone users. Under its agreement with Fitbug, Jawbone will offer the Slim + Trim Kiqplan on its Marketplace, and also highlight the other plans available on kiqplan.com for U.S-based Jawbone consumers.

In January 2015 we were also delighted to announce a partnership with Cancer Research UK, making Fitbug the Official Fitness Partner of Race for Life 2015. Fitbug will provide customised Race for Life 5k and 10k Kiqplans designed to help women of all levels of athletic ability to prepare for race day. These new plans will be promoted by Race for Life to the 500,000+ women who annually take part in nearly 300 events that run across the UK every spring and summer.

These partnerships with Cancer Research UK, Samsung and Jawbone, along with the recently announced deals with Punter Southall Health & Protection Consulting Limited and Towers Watson, represent significant milestones in Fitbug's development strategy. The deals present a significant opportunity to promote Fitbug and its products to new audiences whilst also highlighting the scalable potential of our business and service offering.

FINANCIAL SUMMARY

Fitbug's financial results for the year ended 31 December 2014 show revenues of £2,312,000 (31 December 2013: £749,000) and a loss after tax of £3,761,000 (31 December 2013: loss £2,643,000) which reflects the significant investment in Kiqplan's development, marketing of all products and the costs involved in litigation with Fitbit Inc ('Fitbit'). Fitbug's cash balance at 31 December 2014 was £3,425,000 (2013: £139,000).

Importantly, we have supportive financial backers in NW1 Investments and Kirsh Group. In 2014 we signed loan agreements for £4,350,000 with NW1 Investments Limited at an interest rate of 5%. We were also delighted to announce an agreement that the repayment date of the majority of the loans to the Company was extended to 31 July 2016. Post period end the Company has also agreed with the convertible loan note holder that the term for the remaining £500,000 Convertible Loan Notes be extended to 30 June 2016.

To support our strategy, in December 2014 we successfully raised £3,510,200 (before expenses) by way of a placing of 39,002,224 new ordinary shares at 9 pence per share. This bolstered cash position is being used to scale up the sales and marketing programmes for both the Orb and Kiqplan, to meet the fast growing demand for wearable technology and complementary products.

 Corporate Update

In November 2014, after 10 years of service Geoffrey Simmonds, Non-Executive Director, agreed to step down from the Board. Following this, in December 2014 Malcolm Fried, the CEO of Fitbug Holdings Plc, stepped down from the Company. Malcolm had joined in an interim capacity in April 2014 to assist with the formation of strategy and the identification of commercial markets. The Company now has a firm focus and direction and Malcolm consequently stepped down from the Board. Paul Landau, the founder of the Fitbug business, remains CEO of Fitbug Limited, the main operating company and Fergus Kee has reverted to his previous position as Executive Chairman (previously non-executive). We, along with the rest of the Board and the Executive Team are committed to driving growth for the benefit of all stakeholders.

To strengthen the Fitbug senior team and help more effectively manage the myriad of opportunities that are evident we have made two new senior appointments. Our Director of Marketing, Simon Breakell, joins from Adidas where he worked for the last three years in a number of senior marketing roles, and Anna Gudmundson as Interim Head of Product, will help develop and extend the Kiqplan product range.

Legal action

Fitbug's legal action against Fitbit, alleging trademark infringement and unfair competition, continues to progress. The Company has appealed the decision by the District Court for the Northern District of California Northern given in January 2015, which sided with Fitbit based on a laches defence. The case will now be appealed to the 9th Circuit. Fitbug also continues to progress separate trademark actions in the UK and EU against Fitbit, applying to cancel Fitbit's EU trademark registration and defending the Company's earlier UK trademark registration. Whilst these legal actions are of course an important consideration, Fitbug's primary focus remains on developing its integrated wearable health technology to increase market share and build investor value.

Outlook

With an established range of wearable health tracking technology and a complementary and growing range of Kiqplan coaching programmes in place, we are encouraged by progress in 2014 and excited by the potential opportunity. The notable retail agreements and strategic partnerships we have secured highlight the attraction and relevance of our innovative product range. These agreements have been secured in a timely manner, underpinning our active growth strategy and going forward we look forward to building upon this strong foundation. In line with this, a key focus will be the continued roll-out of Kiqplan; we are currently working on new programmes to extend our current portfolio and continue to seek new partnership and retail agreements for both these and our wearable products.

With a clear Kiqplan development path, a growing market opportunity, a strong team and a focus on product innovation, marketing and ultimately sales generation, we believe the Fitbug business has an exciting future ahead.

Finally, we would like to take this opportunity to thank the rest of the team and our shareholders for their continued commitment and support. We would also like to thank our advisers and shareholders, both new and longer term, who have helped build the heightened market awareness around our company.

Fergus Kee, Chairman Fitbug Holdings Plc

Paul Landau, CEO Fitbug Limited and Director Fitbug Holdings Plc

**ENDS**

For further information visit www.kiqplan.com or www.fitbugholdings.com contact:

FINANCIAL RESULTS

Consolidated Statement of Changes in Equity

For the year ended 31 December 2014

Notes to the Consolidated Financial Statements for the year to 31 December 2013

1. General Information

Fitbug Holdings plc is a company incorporated in the UK and its activities are as described in the chairman's statement.

The preliminary announcement of results is not the company's statutory accounts. Statutory accounts for the year ended 31 December 2014 have not been delivered to the Registrar of Companies. The auditors have reported on the statutory accounts for the year ended 31 December 2014 on 8 May 2015 and their report was unqualified and included a reference to a matter to which the auditor drew attention by way of emphasis without qualifying the report.

Emphasis of matter

The auditors' report drew attention by emphasis of matter to issues surrounding going concern as set out in note 2.

2. Basis of preparation and significant accounting policies

The consolidated financial statements of Fitbug Holdings Plc have been prepared in accordance with International Financial Reporting Standards (IFRSs), International Accounting Standards (IAS) and International Financial Reporting Interpretations Committee (IFRIC) interpretations (collectively "IFRSs") as adopted for use in the European Union and as issued by the International Accounting Standards Board, and with those parts of the Companies Act applicable to companies reporting under IFRS.

Going concern

The financial statements have been prepared on the going concern basis which assumes that the Group and the Company will have sufficient resources to enable it to continue trading for the foreseeable future.

The directors have prepared financial forecasts which suggest that, based on conversion of the anticipated sales pipeline; sufficient facilities will be available to meet the Group's short term funding requirements. However the board consider that it will be necessary to secure further longer term funding to support the development of the business and planned growth in the US.

The directors have continued to adopt the going concern concept in preparing the financial statements on the basis that they believe that the new funds secured as described above and the anticipated sales pipeline will provide sufficient cash until such time that longer term finance can be sourced. The sales forecasts are however necessarily based on the achievement of timings and revenue forecasts which, although believed reasonable by the directors, are nevertheless outside the Group's control. If significant delays were to take place, these may render the Group's cash resources insufficient.

If as a result the Group were unable to continue as a going concern, then adjustments would be necessary to write assets down to their recoverable amounts, non-current assets and liabilities would be re-classified as current assets and liabilities and provisions would be required for any costs associated with closure.

3. Loss per share

The loss per share from continuing and discontinued operations is based on a loss of the year attributable to equity holders of the Parent Company of £3,761,000 (2013: £2,643,000) and the weighted average number of ordinary shares in issue for the year of 168,911,331 (2013: 168,514,973).

The exercise of the outstanding options would reduce the loss per share and hence have an anti-dilutive effect.

There are 23,100,000 (2013: 13,000,000) shares that could potentially be issued under the terms of options and a further 33,333,334 shares that could potentially be issued under the terms of a convertible loan that will potentially reduce future earnings per share.

4. Loss for the Year

Exceptional operating and administrative expenses are legal and professional costs in relation to trademark and patent cases with Fitbit Inc.

I have also noticed that the paragraph about going concern at the end of the financials has been modifies slightly and should read as follows:

Going concern

The financial statements have been prepared on the going concern basis which assumes that the Group and the Company will have sufficient resources to enable it to continue trading for the foreseeable future.

The directors have prepared financial forecasts which suggest that, based on conversion of the anticipated sales pipeline; sufficient facilities will be available to meet the Group's short term funding requirements. However, the board considers that it will be necessary to secure further longer term funding to support the development of the business and planned growth in the US.

The directors have continued to adopt the going concern concept in preparing the financial statements on the basis that they believe that the new funds secured as described above and current funds together with the anticipated sales pipeline will provide sufficient cash until such time that longer term finance can be sourced. The sales forecasts are, however, necessarily based on the achievement of timings and revenue forecasts which, although believed reasonable by the directors, are nevertheless outside the Group's control. If significant delays were to take place, these may render the Group's cash resources insufficient.

If as a result the Group were unable to continue as a going concern, then adjustments would be necessary to write assets down to their recoverable amounts, non-current assets and liabilities would be re-classified as current assets and liabilities and provisions would be required for any costs associated with closure.