TIDMAMP

RNS Number : 9202X

Amphion Innovations PLC

03 September 2015

Amphion Innovations plc

Interim Results for the 6 months to 30 June 2015

London and New York, 3 September 2015 - Amphion Innovations plc (LSE: AMP) ("Amphion" or the "Company"), the developer of medical and technology businesses, today announces its unaudited interim results for the six months to 30 June 2015 (the "Period").

Period Highlights

   --    Successful IPO of Partner Company Motif Bio plc ("Motif") 
   --    Motif share price valued at 68.75 pence at Period-end, up from 20 pence at its IPO 

-- Net Asset Value per ordinary share in the Company ("Ordinary Shares") was 12.0p (US $0.19)* at Period-end, an increase from 0.7p ($0.01) per Ordinary Share at 31 December 2014

   --    Raised GBP2.1 million through the placing of new Ordinary Shares and the exercise of warrants 
   --    Closed the Period with approximately US $1.7 million in cash 
   --    Reduced total liabilities by US $2.1 million during the Period 

Post-Period Highlights

-- Motif raised GBP22 million in July following a placing of new shares with institutional investors

-- 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 GBP11 million in August through a placing of new ordinary shares.

* Exchange rate at 30 June 2015 - 1.5727.

Richard Morgan, CEO of Amphion Innovations plc commented:

"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 April 2015, Motif concluded a financing in July to raise GBP22 million, before expenses, in a placing with several leading institutional investors, at a price significantly higher than the IPO price. We believe Motif has a very bright future and is now on its way to becoming a significant player in the antibiotic market, which has a growing need for novel therapies.

"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 Amphion's portfolio. We look forward to the future with renewed confidence and to being able to report further progress with Motif, DataTern, and other Partner Companies in due course."

Financial Results and Net Asset Value

Following the successful IPO of Motif on London's AIM market in early April, Motif's share price rose sharply from 20 pence at the IPO to 68.75 pence at the end of the reporting period. As a result, the value of Amphion's holdings in Motif rose from US $13.2 million at the end of December to US $46.5 million at the end of June. During the Period, the share price of Kromek also recovered, from 34 pence to 43 pence at the end of June. These two changes, combined with the reduction in total liabilities over the period, were the main factors behind the substantial improvement in Amphion's Net Asset Value per Ordinary Share, over the Period, to 12.3 pence at the end of June. While the prices of both Motif and Kromek have fallen back since the end of June, the pro-forma NAV per Ordinary Share is currently approximately 10 pence per Ordinary Share. Both companies have completed substantial financings and now have significant financial resources relative to their current operating costs.

Revenue for the six-month period ended 30 June 2015 was US $267,601, slightly higher than the US $240,000 recorded in the first half of 2014. Revenue remained at about the same level as last year and below prior periods mainly due to the absence of licensing income from DataTern, the wholly-owned Amphion subsidiary.

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 $1,254,554 compared with US $1,769,275 as reported in the same period of last year.

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 GBP581,000 in net proceeds to the Company. In addition, in June, the Company raised additional capital through a placing of new Ordinary Shares, with net proceeds to the Company of circa GBP1.54 million before expenses. Partly as a result of these financing activities, total liabilities decreased by over US $2 million over the Period and the cash balance at the end of June was US $1.7 million.

Amphion's holding of intellectual property assets is valued at amortised cost of US $352,558. In addition to the initial purchase of these IP assets from our Partner Company FireStar Software, Amphion has made additional substantial investment in these assets. That investment has been expensed as incurred and the value of those assets continues to be carried only at amortised historical cost. The Directors believe that the realisable value of the intellectual property assets held by DataTern is substantially in excess of the carrying value and the incremental investments being made in the pursuit of infringers of the IP will generate a significant profit. We believe that if we are successful in concluding licensing agreements with the various infringing parties at levels that meet our expectations, the Company's NAV per Ordinary Share would be significantly higher.

Motif

On 2 April 2015, Motif successfully completed its IPO and admission to AIM, raising GBP2.8 million at 20 pence per ordinary share. On 23 June 2015, Motif concluded a conditional placing of 44 million new ordinary shares at a placing price of 50 pence per ordinary share with institutional investors to raise GBP22 million. On 22 July 2015, the FDA designated iclaprim as a Qualified Infectious Diseases Product ("QIDP") for hospital acquired bacterial pneumonia ("HABP"). This satisfied the final condition of the placing, with admission of the 44 million new ordinary shares occurring on 27 July 2015. On 22 July 2015, the Company also reported that the FDA had also designated iclaprim as QIDP for acute bacterial skin and skin structure infections ("ABSSSI"), the second of two serious and life threatening infections for which Motif applied for QIDP status. With QIDP designation, iclaprim is now eligible for a total of 10 years of market exclusivity, making this development an important step in continuing to build the value of iclaprim for Motif and our investors.

Recently, on 24 August 2015, Motif announced the results of an independent report from microbiology specialists, JMI Laboratories. The report showed that iclaprim is effective in vitro against a range of Gram-positive bacteria and iclaprim was found to be 16 times more potent than trimethoprim, the only other antibacterial dihydrofolate reductase inhibitor ("DHFRi") administered alone in today's market.

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 July 2014, Prime Minister David Cameron announced the launch of a global taskforce, under the leadership of Jim O'Neill, to coordinate an international effort to combat antibiotic resistant superbugs. Prime Minister Cameron commented, "If we fail to act, we are looking at an almost unthinkable scenario where antibiotics no longer work and we are cast back to the dark ages of medicine where treatable infections and injuries can kill once again". Motif's mission is to address this global health crisis by developing new antibiotics that work in different ways to those commonly used today.

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 Hoffman-La Roche Inc. and completed comprehensive development in 2008, including two Phase 3 trials with over 900 patients being treated, half of whom were treated with this antibiotic. Although the FDA declined to approve the drug at the time, despite having met the original goals agreed with the agency, the FDA confirmed that they were satisfied with the safety profile of iclaprim and this was confirmed in Motif's April meeting with the agency. Motif is now planning to begin a new Phase 3 trial in the next few months and is confident the drug will meet the new endpoints. Subject to the necessary regulatory approvals, Motif intends to begin marketing the drug in 2018.

DataTern and the Intellectual Property Licensing Programme

In April 2014, DataTern received a ruling from the Federal Circuit Court of Appeal ("FCCA"), which its legal advisers considered favorable. Following that ruling, DataTern submitted a request to the FCCA for a reconsideration of certain aspects of the ruling, which were denied in July 2014 and so the ruling received in April became final. As a result, the case in New York was terminated, with the result that the previously unfavorable Markman ruling of August 2012 was, in the case of Microsoft, nullified.

In late December 2014, DataTern received a ruling from the FCCA of its appeal in the MicroStrategy case that our legal advisers considered to be clearly favorable. There are seven defendants in the MicroStrategy case, which is now starting to move ahead. In May 2015 there was a hearing on two summary judgment motions filed by the defendants and a ruling in that hearing has not yet been handed down.

(MORE TO FOLLOW) Dow Jones Newswires

September 03, 2015 02:00 ET (06:00 GMT)

The cases in Texas, which were on hold pending the Microsoft appeal, are expected to move ahead again in the next six months and we expect to have a Claim Construction hearing (often called a Markman hearing) in Texas in 2016. Following some settlements and dismissals there are now 5 defendants remaining in Texas.

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 FireStar a fair return on the substantial investment they have made. If we are successful, we believe that the value of the net income to DataTern should be substantially in excess of its carrying value.

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 Amphion's investment in each Partner Company at the outset and as it develops. However, our primary goal in every company is the development of a successful business model and operating capabilities that can utilise the technology to provide innovative products, generate revenue, and make profits. We continue to see a lot of opportunity to build and, in due course, extract value from our Partner Companies, in addition to the IP licensing programme being pursued directly by DataTern.

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 GBP11 million before expenses through a placing of new ordinary shares at 25 pence. Following the placing, Amphion's ownership in Kromek has decreased to approximately 5.75%.

In April 2014, the case Axcess brought against Baker & Botts LLP, the law firm, went to the jury which returned a verdict in favour of Axcess of US $40.5 million. The judge then overruled this verdict. Axcess is in the process of pursuing an appeal to the Texas Court of Appeals, which should be heard in the next six months. In parallel, we have worked closely with Axcess' legal advisers to evaluate the extent to which all 13 patents in its portfolio are being infringed. It is clear that many companies are now offering products or services that incorporate some of the basic wireless technology developed by Axcess over the last 15 years. A number of companies in the transportation, security, and other sectors appear to be infringing one or more of these patents and the company has recently initiated a claim for a licence from one of the Fortune 500 companies where the analysis shows this to be the case.

FireStar has continued to work on the development of its patented technology, which was also the basis of the formation of PrivateMarkets and is incorporated in its EdgeNode(TM) product. PrivateMarkets, an Amphion Partner Company, offers an Internet-based marketplace that links together a network of potential buyers and sellers who trade specific physical commodities. EdgeNode enables companies to facilitate low-cost, secure, machine-to-machine messaging, in a novel architecture, which is well suited to the needs of the healthcare and financial industries. The current focus is moving increasingly towards healthcare and in particular the potential productivity gains that should be possible with use of the technology in managing data and images so vital to clinical trials. With this change in focus we may consider the opportunity to reintegrate the trading applications licensed to PrivateMarkets back into FireStar so that all the technology rights reside in the same company.

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 the United States, with an opportunity to expand to other US markets and beyond.

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 Amphion through several lean years but the fact that we have been able to raise fresh equity capital is an encouraging development. Our stated goal is to reduce the level of gearing or leverage on our balance sheet and we are committed to doing so in ways that preserve as much of the shareholder value we have managed to create through this support. Following these developments, the Board is encouraged to progress with the development of Amphion's other Partner Companies and the IP licensing programme, and looks forward to the future with confidence.

For further information please contact:

Amphion Innovations

Charlie Morgan

+1 212 210 6224

Yellow Jersey PR

Dominic Barretto / Charles Goodwin

+44 (0)7747 788 211

Panmure Gordon Limited

Freddy Crossley / Fred Walsh (Corporate Finance)

Charlie Leigh-Pemberton (Corporate Broking)

+44 020 7886 2500

Northland Capital Partners Limited (Joint Corporate Broker)

Gerry Beaney / David Hignell (Corporate Finance)

John Howes/ Mark Treharne (Corporate Broking)

+44 020 7382 1100

Plumtree Capital Limited

Stephen Austin

+44 020 7183 2493

+646 568 7502

 
 Amphion Innovations 
  plc 
 Condensed consolidated 
 statement 
 of comprehensive income 
 For the six months 
 ended 
 30 June 2015 
 
 
 
                                             Unaudited              Unaudited 
                           Notes            Six months             Six months                        Audited 
                                                 ended                  ended                     Year ended 
                                               30 June                30 June                    31 December 
                                                  2015                   2014                           2014 
 Continuing operations                            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 

(MORE TO FOLLOW) Dow Jones Newswires

September 03, 2015 02:00 ET (06:00 GMT)

 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) 
 
 Tax on profit/(loss)          6                     -                   (63)                          (442) 
 
 Profit/(loss) for 
  the period                                33,151,642            (8,104,750)                   (12,589,721) 
                                  --------------------       ----------------       ------------------------ 
 
 
 Other comprehensive 
  income 
 
 Exchange differences 
  arising on translation 
   of foreign operations                             -                     18                             18 
 
 Other comprehensive 
  income/(loss) 
  for the period                                     -                     18                             18 
                                  --------------------       ----------------       ------------------------ 
 
 Total comprehensive 
  income/(loss) 
  for the period                            33,151,642            (8,104,732)                   (12,589,703) 
                                  ====================       ================       ======================== 
 
 
 
 
 Earnings/(loss) per 
  share                        7 
 
 Basic                                          $ 0.21   US          $ (0.06)   US                  $ (0.09) 
                                  ====================       ================       ======================== 
 
 
 Diluted                                        $ 0.15   US          $ (0.06)   US                  $ (0.09) 
                                  ====================       ================       ======================== 
 
 
 
 
 Amphion Innovations 
  plc 
 Condensed consolidated statement 
  of financial position 
 At 30 June 2015 
 
 
 
 
                                              Unaudited         Unaudited                  Audited 
                                                30 June           30 June              31 December 
                              Notes                2015              2014                     2014 
                                     ------------------  ----------------  ----------------------- 
                                                   US $              US $                     US $ 
 
 Non-current assets 
 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 
                                     ------------------  ----------------  ----------------------- 
 
 Current assets 
 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 
                                     ------------------  ----------------  ----------------------- 
 
 Total assets                              66,306,799         35,407,398                31,993,555 
                                     ==================  ================  ======================= 
 
 Current liabilities 
 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 
                                     ------------------  ----------------  ----------------------- 
 
 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 
                                     ------------------  ----------------  ----------------------- 
 
 Total liabilities                         28,274,750         29,426,172                30,407,376 
                                     ==================  ================  ======================= 
 
 Net assets                                38,032,049           5,981,226            1,586,179 
                                     ==================  ================  ======================= 
 
 Equity 
 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) 
 
 Total equity                              38,032,049           5,981,226           1,586,179 
                                     ==================  ================  ======================= 
 
 
 
 Amphion 
 Innovations 
 plc 
 Condensed consolidated statement 
  of changes in equity 
 For the six months 
  ended 30 June 2015 
 
 Unaudited 
                                                              Foreign 
                                               Share         currency 
                                 Share       premium      translation         Retained 
                    Notes      capital       account          reserve         earnings            Total 
                           -----------  ------------  ---------------  ---------------  --------------- 
                                  US $          US $             US $             US $             US $ 
 
 Balance at 1 
  January 
  2014                       2,693,319   36,042,868        (13,396)     (24,645,286)      14,077,505 
 
 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 
                           ===========  ============  ===============  ===============  =============== 
 
 
 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 
 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                   30 June                  31 December 
                                                    2015                      2014                         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 

(MORE TO FOLLOW) Dow Jones Newswires

September 03, 2015 02:00 ET (06:00 GMT)

    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 
                                      ==================  ========================  =========================== 
 

Amphion Innovations plc

Notes to the condensed consolidated financial statements (Unaudited)

For the six months ended 30 June 2015

   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                            -                       -                       -                      -                       - 

(MORE TO FOLLOW) Dow Jones Newswires

September 03, 2015 02:00 ET (06:00 GMT)

                     ----------------------  ----------------------  ----------------------  ---------------------  ----------------------- 
 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 
                              Six months                  months               Six months             Six months         Six months 
                                   ended                   ended                    ended                  ended              ended 
                                                         30 June                  30 June                30 June            30 June 
                            30 June 2015                    2015                     2015                   2015               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                30 June 
                               30 June 2014            30 June 2014                    2014                   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 
                              Six months                  months                Six months             Six months             Six months 
                                   ended                   ended                     ended                  ended                  ended 
                                                         30 June                   30 June                30 June                30 June 
                            30 June 2014                    2014                      2014                   2014                   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 
                   =================  ============================= 
 

(MORE TO FOLLOW) Dow Jones Newswires

September 03, 2015 02:00 ET (06:00 GMT)

The following table provides an analysis of the Group's license fees by geographical location.

 
                                   License fees by 
                                geographical location 
          ----------------------------------------------------------------- 
                               Six months                        Six months 
                                    ended                             ended 
                                  30 June                           30 June 
                                     2015                              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:

 
                                         Additions to fixtures, 
                 Carrying amount              fittings, and 
                                        equipment and intangible 
                of segment assets                assets 
            ------------------------  --------------------------- 
             Six months   Six months     Six months    Six months 
                  ended        ended          ended         ended 
                30 June      30 June        30 June       30 June 
                   2015         2014           2015          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 
 
                             Six months     Six months 
                                   ended          ended   Year ended 
                                                         31 December 
                            30 June 2015   30 June 2014         2014 
                           -------------   ------------  ----------- 
                                    US $           US $         US $ 
 
  Isle of Man income tax   -               -                  - 
  Tax on US subsidiaries   -               63                442 
 
  Current tax / refund           -              63           442 
                           ==============  ============  =========== 
 
 

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:

 
                                       Six months                      Six months 
Earnings                                    ended                           ended                     Year ended 
                                          30 June                         30 June                    31 December 
                                             2015                            2014                           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                         30 June                    31 December 
                                             2015                            2014                           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                Level                Level 
                                1                    2                    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.

(MORE TO FOLLOW) Dow Jones Newswires

September 03, 2015 02:00 ET (06:00 GMT)

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                                              Unobservable 
                  value                 Methodology                    inputs 
               ---------- 
                  US $ 
                            Multiple methods used in combination 
 Private                     including: Discount to last           Discount 
  investments   9,028,856    market price,                          (30%-100%), 
                            discount to last financing round, 
                             price of future financing round       Price of 
                             and third party                        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            Level   Level 
                                   1                2       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 (GBP148,994) 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 GBP1,856,250 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 GBP1,161,597 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)

GBP580,843. 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.

(MORE TO FOLLOW) Dow Jones Newswires

September 03, 2015 02:00 ET (06:00 GMT)

11. Share capital

 
                               Number               GBP               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 GBP) 
 
 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 GBP5,000,000 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.

(MORE TO FOLLOW) Dow Jones Newswires

September 03, 2015 02:00 ET (06:00 GMT)

Amphion Innovations (LSE:AMP)
Historical Stock Chart
From Aug 2024 to Sep 2024 Click Here for more Amphion Innovations Charts.
Amphion Innovations (LSE:AMP)
Historical Stock Chart
From Sep 2023 to Sep 2024 Click Here for more Amphion Innovations Charts.