23 Sep 2010 13:30
23 September 2010 iPoint-media plc ("iPoint" or "the Group") Interim Results For the six month period ended 30 June 2010
iPoint (AIM: IPNT), a leading provider of live interactive video calling applications and delivery platforms for web, mobile and media, announces its interim results for the six month period ended 30 June 2010.
Directors Report
During the first six months of 2010 the Group experienced significant slippageon all tenders submitted in conjunction with its strategic partner Ericsson totelecoms companies that were anticipated to be signed and delivered prior to 30June 2010. As a consequence, the Group's revenues for the six months ended 30June 2010 are well below market expectations and this has an impact on theGroup's ability to meet its working capital requirements.As announced previously the Company has taken significant steps to reduce itscash operating costs. However, even following implementation of thesesignificant cost reductions, unless the Group is able to generate increasedrevenues in the short-term it will require an additional injection of cash inorder to continue operating as a going concern.
The Business of iPoint
iPoint's business is developing enabling technology - a service creationplatform for developing live interactive video calling services. Theseplatforms enable telecom operators and media companies to develop and deploy awide variety of applications and services over broadband internet and mobilenetworks. The deliverable consists of a `Telco grade' video applicationplatform that incorporates a powerful service creation environment (SCE). TheSCE is based on a suite of software building blocks and pre-configuredapplication templates that enable quick and easy deployment of video callingservices over IP and 3G networks. In addition iPoint has developed dedicatedproduction tools for WEB / mobile TV production companies for reusing existingWEB content.iPoint's business strategy is based on delivery to two verticals: telecoms andmedia. The Group's core technology and intellectual property are common to bothof these verticals.During 2009, iPoint executed its strategy in the telecom vertical by workingclosely with Ericsson in implementing signed projects and responding to tenderrequests from various telecom service operators in conjunction with Ericsson .The continuing difficulties experienced during the first half of 2010 result inpart from the global slowdown in the telecoms market, added to the growingpractice of telecoms operators to require projects on a revenue share basisrather than upfront payment. In June 2010 after conducting a strategic review,the Group's management decided to focus more of the Group's resources onpursuing opportunities in the media market. Accordingly, while support for itsstrategic partnership with Ericsson continues, the Group is focusing onexpanding sales of its new products GOliveINTERVIEW and GOliveSTUDIO to theChinese media market.
GOliveStudio is a Web/Mobile TV production tool that provides new media connectivity and internet content repurposing (changing the format and presentation of the content) at a fraction of the cost of existing solutions.
"GOliveINTERVIEW" product enables broadcasters to conduct a live interview witha reporter equipped with a standard computer laptop, camera, and iPoint-mediareporter software.To date, the Group has received positive feedback from potential customers inChina and has enter ed into a strategic agreement with China Unicom to sellGOliveINTERVIEW and GOliveSTUDIO, bundled with China Unicom's network relatedproducts and services. China Unicom operatesGSM and WCDMA services in 31 provinces in China and ranks as the second largestmobile operator in China.GOliveInterview and GOliveStudio are a viable cost effective solution for morethan 10,000 studios in China (TV broadcasters, WEBTV, MobileTV and Radiostations). Following on from the successful deployment of the GOliveINTERVIEWproduct by Beijing TV (BTV) for live viewer contributions during the recentfootball World Cup, iPoint and China Unicom have identified the potential ofthese products within the large and growing Chinese media market. Workingclosely with iPoint-media, China Unicom plans to bundle the GOliveINTERVIEW andGOliveSTUDIO products with its network connectivity products, services andsupport and leverage its market presence as one of the world's leading mobiletelecoms operators to create a compelling cost effective solution for thetarget market.
Financial highlights
The Group generated unaudited revenue of £283,276 for the six month periodended 30 June 2010 compared to £619,571 for the period ended 30 June 2009 andgross profit for the six month period ended 30 June 2010 of £237,053 comparedto £543,839 for the previous period. The results represent a decrease of 54 percent. in revenue and 56 per cent. in gross profit. The significant delays onall tenders submitted in conjunction with its strategic partner Ericsson totelecoms companies that were anticipated to be signed and delivered prior to 30June 2010 was a key contributing factor leading to the decrease in revenues andthe corresponding impact on the Group's ability to generate a profit over theperiod.The six month period ended 30 June 2010 produced a net loss of £756,238compared to £307,214 for the period ended 30 June 2009. The increase in netloss in the six month period ended 30 June 2010 compared to the previous periodwas principally a consequence of the decrease in revenues.This delay in revenues has had a material impact on the Group's ability to meetits working capital requirements. The slowdown at Ericsson also impacted theGroup's ability to exercise the approved grant from the chief scientist inIsrael, as the Group did not receive introductions to the IMS based projects ithad expected to receive from Ericsson.
The delay in revenues from customers in the telecoms market and the need to invest resources to adapt the Group's products to the Chinese media market standards requires financial resources and a reduction of cash usage until revenues from China reach a level which will balance the Group's cash flow.
The Directors believe that there are good growth prospects for iPoint'sproducts Goliveinterview and Golivestudio in the Chinese media market and thatthe Group's products and capabilities are well-matched to market requirements.However, the Directors have assessed that the fulfillment of those growthprospects is subject to cash injection that will enable the Group to continueits business as a going concern until its revenues from China grow sufficientlyto balance its cash flow.
As a consequence of the above, the Group decided to implement an aggressive cost reduction scheme in order to extend its existing working capital. This cost reduction scheme has achieved a reduction in the monthly operating costs of approximately 50% which implies a reduction in the Group's operating expenses of more than US$ 400,000 during the second half of 2010.
This cost reduction scheme included a 40% decrease in the number of employeesand a voluntary reduction of over 50% in the salaries of senior employees thatremained with the Group. The Group's senior employees have expressed theirsupport for the Group's vision and its ability to succeed and thereforevoluntarily agreed to the salary reduction described above as a way ofcontributing to working capital.However, even following implementation of these significant cost reductions,unless the Group is able to generate increased revenues in the short - term itwill require an additional injection of cash in order to continue operating
asa going concern.Fund raising activities
On 14 August 2009 the Group announced an Open Offer and Subscription Offer (with priority to existing shareholders) of £1,727,000 in Units comprising:
7,040,000 placing shares at 4 pence per Ordinary Share; and £1,408,000 8%Unsecured Loan Notes due in 2013 with 14,960,000 Bonus Shares at par. (TheBonus Shares are not capable of being sold, transferred or pledged to any thirdparty for a period of one year from issue and for a period of a further year inrespect of 50% of these Bonus Shares.)
On 17 February 2010, the Group announced that it had received applications under the Open Offer and the Subscription Offer amounting to £1,727,000, the maximum aggregate amount that could be raised under the Open Offer and the Subscription Offer.
Nisko Investments Ltd agreed not to withdraw or otherwise impair Nisko'sguarantee of iPoint Media Ltd's overdraft facility with United Mizrahi Bank Ltdfor the duration of the term of the Loan Notes issued by the Group(for a periodof 4 years from date of issue), up to NIS 1,970,000 (the "Guarantee").
Operational highlights
Key material achievements for operation in mediaduring 2010
* Purchase order from a Chinese production company for WEB TV. - the first
customer for GOliveStudio. * Strategic Agreement with China Unicom making it the premier marketing channel for GOliveINTERVIEW and GOliveSTUDIO in China. * June/July 2010 - GoliveInterview selected Chine se TV sta tion for live studio interaction/discussions with internet users over video calls. Several product trials installed at Chinese TV broadcasters, and other media companies. * July 2010 - BBC Northern Ireland has selected iPoint-media's GOliveTV platform for live user participation in its Sunday morning live show.
Post balance sheet events
On 31 August 2010, in light of the current business condition and the financialresults, the Group announced that it was to seek the consent of holders of itsLoan Notes (the "Noteholders") to defer the next interest payment, due on 30September 2010 in accordance with the Loan Note Instrument, until the Companyhas implemented a comprehensive restructuring of its business and debts. Theseproposals were approved at a meeting of the Noteholders on 21 September 2010.
Going Concern
The Group incurred a net loss of £756,238 during the six month period ended 30June 2010. The unused cash proceeds of the Group as at 31 August 2010 totalledapproximately £215,000 (which include short-term borrowings, guaranteed for thenext four years by Nisko Investments Ltd, up to the amount of NIS 1,970,000).The aforementioned factors indicate the existence of a material uncertaintywhich may cast significant doubt about the Group's ability to continue as agoing concern. The ability of the Group to continue its operational existenceis subject to the fulfilment of the Group's forecasts and its ability to raisefunds in the short-term. The Directors, after reviewing the forecasted revenuesand having considered the Group's ability to raise funds in the short-termadoptthe going concern basis in preparing the accounts.
Outlook and Strategy
The Group faces a challenging period in the second half of 2010 due to theslowdown in Ericsson and the uncertainty of the revenue streams through newprojects with telecom companies for the second half of 2010. The ability of theGroup to continue its operational existence is subject to the fulfilment of theGroup's forecast from customers in the Chinese media market and its ability toraise funds in the short-term.
The results for the full year to 31 December 2010 are largely dependent on the ability of the Group to exercise the marketing channel of China Unicom into sales.
In the second half of 2010, iPoint will be focusing on completing the salescycle and deploying its products with several TV broadcasting stations in Chinathrough China Unicom. Several trials with those customers are ongoing or havebeen concluded successfully. Working together with China Unicom, the Group hasidentified 15 potential sales to customers to be delivered before 31 December2010 and is expected to balance its cashflow during the first quarter of 2011.The outlook of the media vertical looks promising with the new product of theGOlivestudio. Although this product familywas initially developed for theChinese market, the group is investigating its application to the media marketin Europe. Working in collaboration with IBM, the Group expects to identify newopportunities. The outlook in the telecoms market working together withEricsson is more difficult to assess due to the global slowdown mentionedabove.I should like to thank our team for their commitment, professionalism anddedication. iPoint remains utterly committed to its core values: total qualityand innovation, increasing its revenues and developing its relationships withpartners and customers. The Group will keep the market updated on both theNoteholders' vote and its efforts to improve cash generation and secureadditional financing to enable it to grow its business.Shmuel GellerCEO23 September 2010Further Enquiries:iPoint-media plc Muki Geller Tel: (0) 972 544 450 667
Libertas Capital Corporate Finance Limited Thilo Hoffmann/Andrew McLennan Tel: 44 (0) 20 7569
9690AppendixIncome Statement
For the six months ended 30 June 2010
Six months Six months Year ended ended ended 31 December 30 June 30 June 2009 2010 2009 (audited) (unaudited) (unaudited) £ £ £ Revenue 283,276 619,571 1,275,908 Cost of sales (46,223) (75,732) (210,399) Gross profit 237,053 543,839 1,065,509 Research and development (353,175) (337,752) (498,458) Selling and marketing (205,282) (231,360) (604,422) Administrative expenses (273,667) (234,780) (458,495) Loss from ordinary activities before income (595,071) (260,053) (495,866) tax and finance costs Net finance costs (161,167) (39,961) (51,512) Loss before income tax (756,238) (300,014) (547,378)
Tax on loss on ordinary activities - (7,200) - Net loss from ordinary activities (756,238) (307,214)
(547,378)
Basic and diluted earnings per share (0.4p) (0.22p)
(0.4p)
The income statement has been prepared on the basis that all operations arecontinuing operations.Balance SheetAs at 30 June 2010 As at As at As at 31 December 30 June 30 June 2009 2010 2009 (audited) (unaudited) (unaudited) £ £ £ Assets Non-current Assets Intangible assets 200,511 157,871 188,200 Property, plant & equipment 40,160 48,613 36,493 240,671 206,484 224,693 Current assets Trade receivables 18,851 261,504 278,831 Other receivables 32,288 30,512 50,985 Cash & cash equivalents 421,200 159,974 545,424 472,339 451,990 875,240 Total assets 713,010 658,474 1,099,933 Equity and liabilities
Share capital and reserves
Issued capital 623,302 551,315 593,933 Share premium account 3,729,817 3,410,251 3,577,075 Other components of equity 524,537 322,760
448,175
Reverse acquisition reserves 1,098,894 1,098,894 1,098,894 Merger reserve 854,146 854,146 854,146 Retained earnings (7,514,911) (6,518,509) (6,758,673) Translation reserve (123,431) (9,342) (102,604) Total equity (807,646) (290,485) (289,054) Non-current liabilities 732,744 55,462 430,371 Current liabilities Trade & other payables 262,213 416,698 441,636 Related party 2,470 19,760 6,644 Deferred income 79,502 137,250 149,877 Short-term borrowing 443,727 319,789 360,459 Total current liabilities 787,912 893,497 958,616 Total liabilities 1,520,656 948,959 1,388,987 Total equity and liabilities 713,010 658,474 1,099,933 Cash Flow Statement
For the six months ended 30 June 2010
Six months Six months Year ended ended ended 31 December 30 June 30 June 2009 2010 2009 (audited) (unaudited) (unaudited) £ £ £
Cash flows from operating activities
Cash receipts from customers 531,572 604,574 1,235,735 Cash paid to suppliers and employees (1,097,676) (865,398) (1,702,869) (566,104) (260,824) (467,134) Cash absorbed by operations Interest paid (65,821) (7,063) (25,933) Interest received - 170 170
Net cash outflow from operating activities (631,925) (267,717) (492,897)
Cash flow from investing activities
Purchase of equipment (11,278) (23,859) (23,510) Exchange differences on fixed assets (1,632) 20,579 4,603 depreciation/cost Net cash outflow used in investing (12,910) (3,280) (18,907) activities
Cash flows from financing activities
Proceeds from issue of shares 204,494 380,000 581,541 Proceeds from issue of loan 519,002 - 888,870 Less: costs of issue (154,242) - (337,489) Net cash flows used in financing activities 569,254 380,000 1,132,922 Exchange differences (20,827) 142,819 49,557
Net increase in cash and cash equivalents (96,408) 251,822 670,675
Cash and cash equivalents brought forward 259,038 (411,637) (411,637)
Cash and cash equivalents carried forward 162,630 (159,815) 259,038 Represented by: Positive cash balance 421,200 159,974 545,424 Short-term bank borrowing (258,570) (319,789) (286,386) 162,630 (159,815) 259,038
Unaudited Group Statement of Changes in Equity
For the six months ended 30 June 2010
Share Share Other Translation Reverse Merger Retained Total capital premium components reserve acquisition reserve earnings of equity reserve £ £ £ £ £ £ £ £ At 1 January 530,789 3,050,777 322,760 (152,161) 1,098,894 854,146 (6,211,295) (506,090)2009 Shares issued 20,520 359,480 - - - - - 380,000 in period for cash Shares issued 6 (6) - - - - - - on acquisition of ANV Total - - - 142,819 - - (307,214) (164,395)comprehensive income for the period
At 30 June 551,315 3,410,251 322,760 (9,342) 1,098,894 854,146 (6,518,509) (290,485)2009 Shares issued 33,256 168,285 - - - - - 201,541 in year for cash Equity - - 162,412 - - - - 162,412 component of loan notes Shares issued 9,326 72,652 - - - - - 81,978 in year for services Shares issued 36 1,170 - - - - - 1,206 on acquisition of ANV Issue of - - 23,705 - - - - 23,705 share options Share issue - (75,283) (60,702) - - -
- (135,985)costs Total - - - (93,262) - - (240,164) (333,426)comprehensive income for the period
At 31 593,933 3,577,075 448,175 (102,604) 1,098,894 854,146
(6,758,673) (289,054)December 2009
Shares issued 27,994 171,366 - - - - - 199,360 in period for cash Issue of - - 5,616 - - - - 5,616 share options Shares issued 500 7,000 - - - - - 7,500 in period for services Issue of 875 4,259 - - - - - 5,134 share options Share issue - (29,883) (24,095) - - -
- (53,978) costs Notes - - 94,841 - - - - 94,841 discount Total - - - (20,827) - - (756,238) (777,065)comprehensive income for the period
At 30 June 623,302 3,729,817 524,537 (123,431) 1,098,894 854,146
(7,514,911) (807,646)2010
Notes to the Interim Financial Statements for the six months ended 30 June 2010
1. Basis of preparation
The interim financial statements include the financial position of the Companyand its subsidiaries iPoint USA Corporation, iPoint-media Ltd (Israel), All NewVideo Plc (in liquidation since 21 December 2007) and All New Video (UK)Limited (together "the Group") as at 30 June 2010 and the results of theGroup's operations for the six months then ended. They have been prepared onaccounting bases and policies that are consistent with those used in thepreparation of the financial statements for the year ended 31 December 2009.
These consolidated interim financial statements have been prepared under the historical cost convention.
These interim consolidated financial statements are for the six months ended 30June 2010. They have been prepared in accordance with IAS 34, Interim FinancialReporting. These interim financial statements have been prepared in accordancewith those IFRS standards and IFRIC interpretations issued and effective orissued and early adopted as at the time of preparing these statements(September 2010). The IFRS standards and IFRIC interpretations that will beapplicable at 31 December 2010, including those that will be applicable on anoptional basis, are not known with certainty at the time of preparing theseinterim financial statements. The policies set out below have been consistentlyapplied to all the years presented.The information set out in this interim report for the six months ended 30 June2010 does not constitute statutory accounts as defined by section 434 of theCompanies Act 2006. The statutory accounts for the year ended 31 December 2009,incorporating an unqualified auditor's report, have been filed with theRegistrar of Companies.The Group incurred a net loss of £756,238 during the six month period ended 30June 2010. The unused cash proceeds of the Group as at 31 August 2010 totalledapproximately £215,000 (which include short-term borrowings, guaranteed for thenext four years by Nisko Investments Ltd, up to the amount of NIS 1,970,000 ).The Group faces a challenging remainder of 2010 due to uncertainty of revenuestreams and the significant delay in revenues that has occurred during thefirst half of 2010. The aforementioned factors indicate the existence of amaterial uncertainty which may cast significant doubt about the Group's abilityto continue as a going concern. The ability of the Group to continue itsoperational existence is subject to the fulfilment of the Group's forecasts and/or its ability to raise funds in the short -term. In addition costs could bereduced should the forecasted revenue streams not be achieved. The Directors,after reviewing the forecasted revenues and having considered the Group'sability to raise funds in the short -term and taking into account thepossibility of reducing costs, adopt the going concern basis in preparing theaccounts.2. Loss per share
The basic loss per share is calculated by dividing the loss attributable toequity shareholders by the weighted average number of shares in issue. Incalculating the diluted loss per share, share options outstanding have beentaken into account where the impact of these is diluted. Options were excludedfrom the calculation of the total diluted number of shares, as the impact ofthese is anti-dilutive.
The weighted average number of shares in the period was:
Six months Six months Year ended ended ended 31 December 30 June 30 June 2009 2010 2009 (audited) (unaudited) (unaudited) Total 188,054,742 121,326,848 113,162,943 Loss attributable to equity (756,238) (307,214) (2,612,894) shareholders of the parent Basic and diluted earnings per (0.4p) (0.22p) (2.3p) share 3. Dividends
No dividends have been declared for the six months ended 30 June 2010.
4. Copies of the Interim Results
Copies of the Interim Results are available on the Company's website www.ipoint-media.com.
IPOINT-MEDIA PLCINDEPENDENT REVIEW REPORT
INTERIM REPORT FOR THE SIX MONTHS ENDED 30 JUNE 2010
We have been engaged by the company to review the condensed set of financialstatements in the interim report for the six months ended 30 June 2010 whichcomprises the consolidated income statement, consolidated interim balancesheet, consolidated interim statement of changes in shareholders' equity,consolidated interim cash flow statement, and related notes. We have read theother information contained in the interim report and considered whether itcontains any apparent misstatements or material inconsistencies with theinformation in the condensed set of financial statements.
Directors' Responsibilities
The interim report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the interim report in accordance with the AIM rules. As disclosed in note 1, the annual financial statements of the iPoint-media plc are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this interim report has been prepared in accordance with International Accounting Standard 34, ``Interim Financial Reporting,'' as adopted by the European Union.
Our Responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the interim report based on our review.
Our report has been prepared in accordance with the terms of our engagement toassist the company in meeting the requirements of the rules of the London StockExchange for companies trading securities on the Alternative Investment Marketand for no other purpose. No person is entitled to rely on this report unlesssuch a person is a person entitled to rely on this report by virtue of and forthe purpose of our terms of engagement or has been expressly authorised to doso by our prior consent. Save as above, we do not accept responsibility forthis report to any other person or for any other purpose and we herebyexpressly disclaim any and all such liability.
Scope of Review
We conducted our review in accordance with International Standard on ReviewEngagements (UK and Ireland) 2410, ``Review of Interim Financial InformationPerformed by the Independent Auditor of the Entity'' issued by the AuditingPractices Board for use in the United Kingdom. A review of interim financialinformation consists of making enquiries, primarily of persons responsible forfinancial and accounting matters, and applying analytical and other reviewprocedures. A review is substantially less in scope than an audit conducted inaccordance with International Standards on Auditing (UK and Ireland) andconsequently does not enable us to obtain assurance that we would become awareof all significant matters that might be identified in an audit. Accordingly,we do not express an audit opinion.
Emphasis of matter - going concern
In forming our opinion, which is not qualified, we have considered the adequacyof the disclosures made within the accounting policies concerning the Group'sability to continue as a going concern. The Group incurred a net loss of £756,238 during the six months ended 30 June 2010 and at this date the Group hadnet liabilities of £807,646. This, along with other matters explained withinthe accounting policies indicates the existence of a material uncertainty whichmay cast significant doubt about the Group's ability to continue as a goingconcern. The financial statements do not include the adjustments that wouldresult of the Group was unable to continue as a going concern.
Conclusion
Based on our review, nothing has come to our attention that causes us tobelieve that the condensed set of financial statements in the interim reportfor the six months ended 30 June 2010 is not prepared, in all materialrespects, in accordance with International Accounting Standard 34 as adopted bythe European Union.haysmacintyre
Chartered Accountants Fairfax House
Registered Auditors 15 Fulwood Place
LondonWC1V 6AY23 September 2010
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