BIDS.L Regulatory News (BIDS)

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

20 September 2013

Fitbug Holdings Plc ('Fitbug' or 'the Company')

Interim Results - Continued investment leaves Fitbug well placed for strong global growth

Fitbug Holdings Plc, the AIM traded provider of online personal health and well-being services, announces its results for the six months ended 30 June 2013.

Overview

· Expansion into new markets in China and Australia in line with strategy to increase its presence in the global Connected Health Market

· Strong pipeline of new business opportunities

· Launch of Fitbug Orb on track for October

· Legal action against Fitbit Inc progressing

· Pre-tax loss of £1,049,000 (2012: loss of £649,000) reflecting increased investment in new fully integrated range of mobile health products and global market development

· New loan of £500,000, on attractive terms, agreed with NW1 Investments Limited

Fitbug Executive Chairman Fergus Kee said "Growth in the Connected Health Market is accelerating. With expansion into Asia and Australia, further deals in the US and our new activity and sleep tracker, the Fitbug Orb, ready for market launch in October 2013, I believe Fitbug is well placed for strong global growth."

Executive Chairman's Statement

This has been a very active period for Fitbug, which has seen us further advance and affirm our established position in the Connected Health Market. In line with the rapid development of new, particularly mobile, technology and the increasing media and consumer interest in personal health, the Connected Health Market is projected to grow very strongly over the next few years. Whilst the US market is key, this is a global trend. In particular, we are optimistic about the new opportunities that our expansion into the fast paced markets in Australia and Singapore will create.

In order to capitalise on these growing markets, in August 2013 we announced that the Company's proprietary digital health technology will be offered to AIA Vitality customers in Singapore following the launch of AIA Vitality, a joint venture between the largest pan-Asian life insurer AIA Group Limited ('AIA') and Discovery Holdings Limited ('Discovery') (see announcement dated 15.08.13). Discovery Vitality, which has a successful 16-year track record as the world's largest and longest-standing wellness programme, with more than 5 million customers across four continents, has been a long-standing customer of Fitbug. In order to maximise the impact of our launch into Asia, we successfully launched Fitbug's Singapore website, in conjunction with AIA Vitality, to increase our global reach and exposure. This will also be a useful marketing tool as we look to augment our regional presence going forward.

Following on from our successful expansion into Asia, in September 2013 we signed a Master Services Agreement ('MSA') with Leap4Life Global Inc ('Leap4Life'), a US based wellness services provider. Under the MSA, the Company's proprietary digital health technology will, as part of a Leap4Life wellbeing programme, be offered to employees of Australia's largest grocery retailer. With the programme offered to initially 150,000 employees, we are excited about the potential to significantly expand our product reach across the company.

In addition to our developments into new geographic regions, we remain very focussed on building upon our presence in the key US market. In the first half Fitbug signed deals with MyFitnessPal and Redbrick Health. MyFitnessPal is a leading nutrition and fitness tracking app. Powered by more than 30 million people, MyFitnessPal has developed a searchable database of over 2.5 million items, allowing nutrition tracking. Redbrick Health is a fast-growing leader in consumer health engagement and behaviour change technology. Serving large, self-insured employers and strategic distribution partners it announced record client growth in 2012.

In June 2013, Fitbug also announced that its fully integrated connected health products will feature on CarePass, a new interactive consumer website and mobile app launched by Aetna. Aetna is one of the leading diversified health care benefits companies in the US and serves an estimated 44 million people. CarePass offers users simple and convenient access to some of the best health and wellness mobile apps in the marketplace and as one of only twenty companies selected to be included in CarePass, Fitbug's inclusion is extremely prestigious, illustrating Fitbug's leading market position in the US connected health market. 

To support our ambitious growth strategy we remain focussed on developing a highly innovative product range. In line with this, we are on track for the commercial launch of our new "Fitbug Orb" activity and sleep tracker early in Q4 2013. The Fitbug Orb, previewed at the Consumer Electronics Show, will be a critical addition to our product family and I look forward to updating the market on this exciting development in due course.

To fund our continued development Fitbug has signed a £500,000 loan agreement ('the Loan'), with NW1 Investments Limited ('NW1'). The Loan is repayable by 31 July 2014 and will accrue interest at a rate of 5% per annum, payable on a quarterly basis. If during the term of the Loan, Fitbug undertakes an equity issue, the Loan Holder can elect to convert some or the entire Loan into new ordinary shares in Fitbug. NW1 Investments Limited is a company in which the family of David Turner and Allan Fisher, both directors of Fitbug, have a material interest. The independent directors of the Company, being Fergus Kee, Paul Landau, Andrew Brummer and Geoffrey Simmonds, consider, having consulted with Cantor Fitzgerald Europe, that the terms of the loan are fair and reasonable in so far as the shareholders are concerned. The Company is also in discussions with NW1 regarding additional Loan facilities. The funds loaned would help support the Company's continued marketing and product development.

Financials

The results for the six months to 30 June 2013 show a pre-tax loss of £1,049,000 (2012: £649,000) reflecting expansion into new markets and increased investment in new products. Cash at 30 June 2013 is £284,000 (2012: £1,136,000).

Corporate Update

The Company is currently engaged in legal action in the US against Fitbit Inc. We believe that Fitbit's use of its trademark is infringing on Fitbug's rights. The Company has asked the U.S. District Court in Northern California to order Fitbit to permanently cease use of its Fitbit mark and from engaging in conduct that is causing confusion with Fitbug's brand and services. Legal action continues to progress and the Company will update shareholders on this in due course. 

Outlook

With a strong pipeline of new business opportunities, recent expansion into Asia and Australia and the imminent launch of an exciting new product, I believe that Fitbug is well placed for future growth in the expanding global Connected Health Market.

Fergus Kee

Executive Chairman

20 September 2013

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

Consolidated statement of comprehensive income

for the period ended 30 June 2013

Consolidated statement of changes in equity

for the six months ended 30 June 2013

Consolidated Balance Sheet

at 30 June 2013

Consolidated cash flow statement

for the six months ended 30 June 2013

Unaudited notes forming part of the consolidated interim financial statements

for the six months ended 30 June 2013

1 BASIS OF PREPARATION

Fitbug Holdings plc is a company incorporated in the United Kingdom under the Companies Act 2006. Its registered office address is 1st Floor Waterside House, 47-49 Kentish Town Road, London NW1 8NX.

The condensed consolidated interim financial statements of the company for the six months ended 30 June 2013 comprise the company and its subsidiaries (together referred to as "the group"). These interim statements do not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. The interim financial information has been prepared using the same accounting policies, presentation, method of computation and estimation techniques as are expected to be adopted in the group financial statements for the year ending 31 December 2013 and which were adopted in the audited group financial statements for the year ended 31 December 2012.

The financial information for the year ended 31 December 2012 has been extracted from the statutory accounts for that period. The auditors have reported on the statutory accounts for the year ended 31 December 2012 and their report was unqualified. The auditors' report drew attention by emphasis of matter to issues surrounding the ability of the company to continue as going concern. A copy of those financial statements has been filed with the Registrar of Companies. 

The condensed consolidated interim financial statements have been prepared using accounting policies consistent with International Financial Reporting Standards (IFRSs) as adopted in the EU. While the financial figures included in this half yearly report have been computed in accordance with IFRSs as adopted in the EU applicable to interim periods, this half yearly report does not contain sufficient information to constitute an interim financial report as that term is defined in IAS 34.

2 LOSS PER SHARE

The loss per share from continuing and discontinued operations is based on a loss for the period attributable to equity holders of the Parent Company of £1,049,000 (2012 - loss of £649,000) and the weighted average number of ordinary shares being in issue for the period of 168,515,007 (2012 - 152,136,461).

The exercise of the outstanding options would reduce the loss per share and hence have an anti-dilutive effect. There are 13,000,000 (2012: 13,300,000) shares that could potentially be issued under the terms of options that will potentially reduce future earnings per share.

3 GOING CONCERN

The condensed interim financial statements for the six months ended 30 June 2013 have been prepared on the assumption that the group will be able to continue trading as a going concern for the foreseeable future. At 30 June 2013 the group had net liabilities of £1,880,000, which includes loans of £2,250,000 from Kifin Limited, a Kirsh Group subsidiary, including a £1,000,000 loan issued under a convertible loan note instrument dated 28 June 2013. This facility has a term of three years to 30th June 2015 and accrues interest at a rate of 5% per annum, payable in arrears at the end of the first year and quarterly thereafter. The loan note is convertible by the holder, at any time, into 66,666,667 ordinary shares in Fitbug at a price of 1.5 pence per ordinary share. The other loans are repayable by 31 July 2014 and accrue interest at a rate of 5% per annum, payable on a quarterly basis.

The group also has a £372,000 loan from NW1 Investments Limited, a company connected to two of the directors of the Group.

Post period end, Fitbug Holdings plc agreed a £500,000 loan from NW1 Investments Limited which is repayable by 31 July 2014 and will accrue interest at a rate of 5% per annum, payable on a quarterly basis. The Group is also currently in discussions with NW1 Investments Limited regarding a further loan facility.

The directors have prepared financial forecasts which suggest that, based on anticipated sales pipeline, the Group has sufficient facilities to meet its working and development capital requirements.

The directors have continued to adopt the going concern concept in preparing these interim financial statements on the basis that they believe that the anticipated sales pipeline and a number of opportunities currently available to them will generate improved revenue and profitability. The sales forecasts are however based on the achievement of and timings of revenue forecasts which, although believed reasonable by the directors are nevertheless, in part, outside the Group's direct 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 reclassified as current assets and liabilities and provisions would be required for any costs associated with closure.