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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Axismobile | LSE:AXIS | London | Ordinary Share | GB00B16KF945 | ORD 10P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 2.625 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
RNS Number:0088X Axismobile PLC 22 May 2007 This announcement has been reissued with a correction to Note 7 in the Notes to the Accounts. The original was issued at 0708hrs on 21 May 2007 under RNS number: 9235W Date: 21 May 2007 On behalf of: AxisMobile PLC ("AxisMobile" or "the Company") Embargoed until: 0700hrs AxisMobile PLC * Maiden Final Results for the year ended 31 December 2006 AxisMobile PLC (AIM: AXIS), the consumer mobile email specialist, is pleased to announce its maiden final results for the year ended 31 December 2006. Highlights * Reverse takeover of CCO Capital plc, an AIM-listed cash shell, change of name to AxisMobile PLC and subsequent re-admission of AxisMobile's shares to trading on AIM in June * Placing of 6,675,000 Ordinary Shares at 60 pence per share to raise #4 million, before expenses * Management team strengthened by appointment of VP Sales, VP Marketing and VP R&D * Significant investment of US$2.86m (2005: US$0.83M) in R&D to maintain position as a technology leader in consumer mobile email * Sales and Marketing expenditure increased to US$2.46m (2005: US$0.47m), which has led to more customer wins and has significantly enhanced the sales pipeline for 2007/8 * Signed global sales channel agreement with a leading provider of telecommunications networks to provide consumer mobile email services * Commercial deployment expected to occur in 2007 * Revenue recognition, mainly in 2H 2007, expected to be significantly higher than 2006 Post period end events * Selected by E-Plus, Germany's third largest mobile network operator, to provide a hosted consumer mobile email solution * Signed rolling annual contract with first Russian customer, Telecom Express in Moscow * Push mobile email solution for Enterprise and Small-to-Medium sized businesses (SME) launched in China with anticipated sales of 2,000 business solutions during 2007. Received the first purchase order for a system to be launched in a Chinese bank * Signed agreement with Sonic-Duo to provide consumer mobile email services to Megafon-Moscow's subscribers * Entered into contract to provide consumer mobile email to the customers of one of T-Mobile's European regional network operators. * Signed contract with another large operator in Russia to provide consumer mobile email services * 18 active product demonstrations underway around the world with mobile network operators and system integrators * Short-listed in three current "Requests for Proposals" * Participation in seven new "Request for Proposals" in 1H 2007 * Zeev Binman appointed to the Board as a non-executive director * Signed loan agreements worth $3 million led by Plenus Venture Lending and have secured a line of credit of $250,000 with a major Israeli bank. Commenting on AxisMobile's maiden set of results, Shai Schiller, CEO of AxisMobile, said: "There is a significant opportunity to drive the mass market adoption of consumer mobile email and AxisMobile is well placed to be a major player in the industry. "Our main focus this year has been on building our sales capability, establishing a pipeline of business and taking advantage of the rapidly growing market opportunity for consumer mobile email services. The numerous new customer wins and the many prospects we are actively pursuing are evidence of the demand for our products and the success of our approach. We are confident that we will see a growing momentum in sales through 2007." Enquiries to: Shai Schiller, CEO Contactable via Redleaf Hugo Goldman, CFO Communications AxisMobile PLC Emma Kane / Samantha Robbins / Paul Dulieu Redleaf Communications Tel: 020 7822 0200 Notes to Editors: * Axis Mobile Ltd was founded during early 2000. It is a leader in the emerging market of consumer mobile email which allows consumers to access email via mobile telephone handsets. * AxisMobile's objective is to provide software that drives the mass market adoption of mobile email and related products by making multimedia information portable, ubiquitous and easy to access on subscribers' existing mobile handsets at an attractive cost. AxisMobile's email platform provides a 'one-stop-shop' for consumer mobile as it supports Web, WAP, IMAP4, MMS, SMS and J2ME interfaces. Such interfaces cover most methods of transmitting mobile data communications. AxisMobile's platform means that mobile operators no longer need to integrate platforms from different vendors. This reduces costs. AxisMobile aims to leverage customer relationships by offering additional products and services based on its technology platform, hence producing cross-sales and increasing the value to customers and to its shareholders. * Consumer mobile email represents a huge growth opportunity for mobile operators and vendors. The success of mobile communications has become a worldwide phenomenon with approximately 1.7 billion subscribers globally. In 2005, Forrester research estimated that the number of Western European consumer mobile email users will increase from 12.3 million in 2005 to 62.7 million by 2008. During the same period, revenues from consumer mobile mail will grow from Euro120 million per year to Euro1.15 billion per year in Western Europe alone. In the US, Forrester estimates that the number of consumer mobile email users will increase from 12.1 million in 2005 to 38 million in 2008 and that revenues will soar from $13 million per year in 2005 to $406 million in 2008. * Publication quality photographs are available from Redleaf Communications * Further information on AxisMobile is available from the AxisMobile website: www.axismobile.com CHAIRMAN'S STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2006 I am pleased to report AxisMobile's maiden final results for the year ended 31 December 2006. The year was characterised by the reverse takeover in the first half of the year, of CCO Capital plc ("CCO"), an AIM-listed cash shell, its concurrent change of name to AxisMobile PLC and the subsequent re-admission of its shares to trading on AIM at the end of June. A placing of 6,675,000 Ordinary Shares at #0.6 per share raised #4m (#2.5m net of expenses) to provide general working capital and to pursue business development opportunities, including mergers and acquisitions. The activities of the year were focused on building the sales force, establishing a pipeline and taking advantage of the growing market demands for consumer mobile email services. As reported in the interim results, there is a significant opportunity to drive the mass market adoption of consumer mobile email and AxisMobile is well placed to be a major player in the industry. Financial Results The Group is reporting, according to International Financial Reporting Standard 3, Axis Mobile Ltd's ("Axis") accounts as the surviving entity of the reverse takeover for accounting purposes. However, for legal purposes, AxisMobile PLC was the entity that purchased Axis Mobile Ltd under the Share Purchase Agreement. Therefore, the results for 2006 represent the results of Axis Mobile Ltd reflecting the acquisition (by reverse takeover) of CCO. The Group has adopted the US dollar as its reporting currency. The majority of revenues and a significant proportion of the expenses are denominated or determined in US currency, therefore the US dollar is the functional and reporting currency used by management. We believe that reporting in the Group's functional currency, thereby eliminating the unnecessary translation of results into Pounds Sterling, will improve the visibility of the Group's underlying operational performance for investors. The Group will however remain exposed to the Israeli currency (NIS)/US dollar exchange rate as around two thirds of our costs are denominated or determined in NIS - a currency that has appreciated by over 8.2% against the US dollar during the reporting period to 31 December 2006. Significant non-cash expenses are reported in this period resulting from loan conversions and share-based compensation expenses on transactions undertaken prior to the reverse takeover. Therefore proforma accounts have been prepared to present a clearer picture of underlying performance of the business. Change of Accounting Year End The year end of Axis Mobile Ltd is 31 December. As Axis Mobile Ltd is the principal operating company of the Group, AxisMobile plc has changed its accounting year end to 31 December. Operating Results GAAP Non-GAAP results results Non-GAAP adjustment (as reported) H1 - (Before listing) H2 - (After listing) pro forma US$'000 US$'000 US$'000 US$'000 US$'000 Share based Remeasurement Share based compensation of embedded compensation derivatives in convertible loans Revenues 552 - - - 552 Cost of revenues (525) 15 - 171 (339) -------- -------- -------- -------- -------- Gross Profit 27 15 - 171 213 -------- -------- -------- -------- -------- Operating expenses: Research and development (2,858) 171 - 456 (2,231) Sales and marketing (2,461) 219 - 251 (1,991) General and administrative (4,787) 2,328 - 216 (2,243) Total operating expenses (10,106) 2,718 - 923 (6,465) -------- -------- -------- -------- -------- Operating loss (10,079) 2,733 1,094 (6,252) Financial(expenses) income, net (5,265) - 5,451 - 186 -------- -------- -------- -------- -------- Net loss (15,344) 2,733 5,451 1,094 (6,066) -------- -------- -------- -------- -------- Basic and diluted loss per share (0.74) 0.13 0.26 0.05 (0.29) -------- -------- -------- -------- -------- Group operating loss amounted to US$10.1m (2005: US$2.4m). Financial expenses amounted to US$5.3m including a one-time expense of remeasurement of embedded derivatives in convertible loans of US$5.5m and current financial income of US$0.2m. The net loss for the year was US$15.3m (2005: US$2.5m), or a proforma operating loss of US$6.1m excluding non cash items, as explained below. Whilst the listing costs have not been expensed to the income statement, significant financial expenses amounting to US$5.5m were charged under International Financial Reporting Standards ("IFRS") as a result of the conversion, prior to the listing, of several convertible loans into equity at a discount. In addition, as a result of the reorganisation of the Axis' equity and employee options, additional costs of approximately US$2.7m (Total Year US$3.8m) related to the grant of employee share options were incurred prior to listing. These charges did not result in any cash outflow but were a required accounting adjustment. Under IFRS, the deemed benefit resulting from the conversion of the convertible loans at discounts, as well as the share based compensation is presented as financial or operating expenses, as applicable, taking into consideration the fair value of the underlying shares at the time the transactions were executed. The results reflect significant investment by Axis in two areas. The first investment was in achieving the public listing of the Axis's shares, which the Directors considered as crucial for the future growth and expansion of AxisMobile. The second significant investment has been in research and development to ensure that the Group maintains its position as a technology leader enabling the mass market adoption of mobile email. The sales and marketing capabilities of the Company have also been strengthened by the appointment of an experienced Vice President of Sales and Vice President of Marketing. AxisMobile continues to build its team to address fast growing markets and to develop existing and new sales channels with global leaders, in order to increase its global reach. Revenues in 2006 were US$0.55m (FY 2005: US$2.01m). During the first half of 2006 the Company was focusing on the reverse takeover and the placing. During the second half of 2006, the sales and marketing teams were built and the sales pipeline was created and significantly developed. In 2007, several of the customers in the 2006 pipeline signed business agreements. The cost of revenues includes costs and expenses associated with sales contracts that are expected to be fully recognised in future periods. Services and support revenues were not segregated due to the low revenue figures. Our operating expenses were US$10.1m, proforma operating expenses amounted to US$6.5m, (FY 2005: US$3.1m proforma operating expenses amounted to US$2.5m) which included headcount increases needed to support the roll-out of our business plan. We continue to invest in research and development, with cash expenditure in the year totalling US$2.8m (FY 2005: US$0.8m). Existing Customer / Sales Channel Activity AxisMobile has a strategic agreement with Comverse, a world leader in messaging and value-added service applications, which provides a sales channel for its technology. During 2006, AxisMobile also signed a strategic agreement with a leading global network provider of next generation telecommunications networks to provide consumer mobile email services. The provider serves 28 of the world's top 50 mobile network operators, as well as over 1 billion users worldwide of next generation telecommunications networks, to provide consumer mobile email services. Revenue from this sales channel is expected in 2007. Financing Costs As set out above, prior to the reverse takeover of CCO, Axis Mobile Ltd converted several loans into equity at certain discounts, which resulted in an aggregated financing cost, related to the conversion, of US$5.5m. Earnings Per Share The Board considers the most relevant measure of earnings per share (EPS) to be the adjusted basic EPS, being pre-tax profits before financing costs divided by the weighted average number of shares in issue. EPS calculated on this basis was a loss per share of 74 cents (equivalent to 38 pence) (2005: 82 cents or 44 pence). Cash and Cash Flow Cash balances increased by US$2.3m during the period to US$2.4m as of 31 December 2006 as a result of the placing. The Board regularly reviews the funding requirements of the business to ensure it is well-positioned to pursue business development opportunities and deliver on its strategy. In addition to the expected growth in revenue in 2007, additional funds/loan facilities amounting over $3m were secured in order to enable the Company to accelerate the roll out of its services and solutions to its growing client base and provide working capital ahead of revenues generated from clients later this year. Progress There have been many achievements in the period. Notable achievements in product development include: * Implementation of selected parts of the LEMONADE profile * Introduction of an advanced E2MMS interface * PIM support (address book and calendar) for J2ME clients * Advanced self-registration wizard that allows users to self-enroll to the service * Coverage of new handsets specifically for the J2ME and Optimizer interfaces * Native BREW client support * Introduction of a "Single Box" solution for small scale deployments. * Support for additional notification methods, including IMAP-IDLE and OMA/EMN In the area of operational and customer development, our most notable achievements have been: * Signed a global agreement with a leading international provider of next generation telecommunications networks, to provide consumer mobile email services. * Secured a broad reaching patent in the US for our Mobile email service. The patent protects AxisMobile's Email Optimizer, which enables subscribers to use their handheld's embedded email client software and gain access to previously unsupported mailboxes and attachments. It further minimises the load time of large data by converting the content of emails for mobile handset device formats and sizes thereby significantly reducing the email size. * Selected by IXI Mobile, developer of the OgoTM family of mobile messaging solutions for the mass market, to provide email attachment support. * Recruited a new Vice President of R&D * Successfully completed installation of an upgrade to the MMBox system for Telefonica Moviles, Spain. * Ongoing product development and enhancement with IXI. Since the end of the reporting period, the following sales contracts have been announced: * Signed a rolling annual contract with Moscow-based Telecom Express, a leading technology reseller and systems integrator * Selected by E-Plus, Germany's third largest mobile network operator, to provide a hosted consumer mobile email solution * Launched a push mobile email solution for Enterprise and Small-to-Medium sized businesses (SME) in China in conjunction with an existing sales channel partner's business solution. The sales channel partner, a leading international provider of next generation telecommunications networks, has indicated to the Company that it expects to sell up to 2,000 business solutions during 2007. AxisMobile received the first purchase order for a system to be launched in a Chinese bank. * Signed an agreement with Sonic Duo, a fully owned subsidiary of OJSC "MegaFon" and the operator of Megafon-Moscow, to provide consumer mobile email services to its subscribers. * Entered into a contract with one of T-Mobile's European regional network operators to provide consumer mobile email services to its customers. * Signed an agreement with another notable operator in Russia to provide consumer mobile email services. In addition, the following sales activity is currently underway: * Currently running 18 active product demonstrations with mobile network operators and system integrators including 8 companies in Europe, 8 in South America and 2 in India * Short-listed in 3 current Requests for Proposals * Anticipate participating in 5-7 additional Requests for Proposals in the first half of 2007. The recently signed contracts - for which deliveries are scheduled to take place in the coming months, or have already begun - together with the above mentioned sales activity, the list of short listed accounts, together with the other ones in our pipeline, is very encouraging. In order to support the rollout of services and provide working capital ahead of revenue generated from clients later this year, AxisMobile signed loan agreements worth $3 million led by Plenus Venture Lending and secured a line of credit of $250,000 with a major Israeli Bank. While the board remain cautious about the future, we anticipate commercial deployments to occur in 2007, with revenue recognition mainly in the second half of 2007, expected to be significantly higher than 2006. People The senior management team is comprised of: Shai Schiller, Chief Executive Officer Hugo Goldman, Chief Financial Officer Ariel Yaloz, Chief Technology Officer Doron Schwartz, Vice President Operations Stacy Fassberg, Vice President Marketing Avi Elbaum, Vice President Research & Development Sharon David, Vice President Sales The Board has been strengthened by the appointment of Zeev Binman in February 2007 as a non-executive director. Representing Pitango Venture Capital on the Board, Zeev joined Pitango in 1998 and has extensive experience serving as a financial, commercial and operational executive in Israel and abroad. Prior to joining Pitango, Mr. Binman served as Vice President of Finance and Organization at PazGas, the leading Israeli energy Company. He also held a similar position at Fibronics International in the US, a leading fiber-optic communications Company. As Mr Binman was appointed by the Board, his appointment will terminate at the forthcoming Annual General Meeting, at which time shareholders will have the opportunity to elect him back onto the Board. Sharon Gelbaum-Shpan, who left Pitango and is now a partner at Poalim Ventures Capital, will remain on the Board of AxisMobile as a non-executive director if re-elected at the forthcoming Annual General Meeting.. A brief biography of each director can be found on the Company's website: http://www.axismobile.com/Board.html. AxisMobile currently employs 53 people. Outlook As worldwide mobile data revenues break $72 billion this year and are projected to reach $163 billion by 2011 (Ibid - see note 1), it is clear that mobile subscribers are becoming more tech-savvy and comfortable using data applications on their mobile devices. And in most research studies, mobile email is significantly ahead of other data services in popularity. There is also a growing interest from mobile customers who are not yet using mobile email. One survey showed that over 21% of US subscribers are interested in receiving email on their mobile device (Critical Path, as quoted in "Mobile Consumer Email" - copyright 2006, Visiongain). Another survey (Yankee Group - copyright 2005) places that number closer to 60% in some European segments. Such overwhelming interest from potential subscribers and the significant number of subscribers already using mobile email today confirms that there is real and significant potential for mobile email to become a true mass market commodity. AxisMobile sales activity proves this theory. With numerous new customer wins, including Sonic Duo, Eplus, TMO, Telecom Express, Sales Channel in China, as well as many prospects in the pipeline, we are very confident in our ability to take advantage of the consumer mobile email opportunity and to see significant sales growth throughout 2007. Oded Zucker Chairman 18 May 2007 CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2006 U.S. Dollars in thousands (except share and per share data) Note 2006 2005 -------- -------- Continuing Operations Revenues 3 552 2,010 Cost of revenues (*) (525) (1,287) -------- -------- Gross (loss)/profit 27 723 -------- -------- Operating expenses: Research and development (*) (2,858) (830) Sales and marketing (*) (2,461) (573) General and administrative (*) (4,787) (1,727) -------- -------- Total operating expenses (10,106) (3,130) -------- -------- Operating loss (10,079) (2,407) Financial expenses, net (**) (5,265) (66) -------- -------- Net loss 5 (15,344) (2,473) ======== ======== Basic and diluted loss per share (cents) 5 (0.74) (0.82) ======== ======== (*) Including cost of employee share based compensation: 2006 2005 -------- -------- Cost of revenues 186 - Research and development 627 - Sales and marketing 470 - General and administrative 2,544 617 -------- -------- 3,827 617 ======== ======== (**) Including $ 5,451 revaluation of convertible loans. None of the Group's activities were discontinued in the period. CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2006 U.S. dollars in thousands (except share and per share data) Note 31 December 31 December 2006 2005 ASSETS CURRENT ASSETS: Cash and cash equivalents 2,444 174 Trade receivables 63 268 Other accounts receivable and prepaid expenses 588 174 -------- -------- Total current assets 3,095 616 -------- -------- NON CURRENT ASSETS: Long-term restricted cash 115 111 Long-term lease deposits 74 21 Investment in subsidiary - - Property and equipment, net 344 445 Other assets - 62 -------- -------- Total non-current assets 533 639 -------- -------- Total assets 3,628 1,255 ======== ======== CONSOLIDATED BALANCE SHEET (CONTINUED) AS AT 31 DECEMBER 2006 U.S. dollars in thousands (except share and per share data) Note 31 December 31 December 2006 2005 LIABILITIES AND EQUITY CURRENT LIABILITIES: Trade payables 225 141 Accounts payable and accrued expenses 1,193 590 Convertible loan - 1,500 Related parties - - Deferred revenues 332 280 -------- -------- Total current liabilities 1,750 2,511 -------- -------- NON CURRENT LIABILITIES: Liabilities for royalties 1,226 1,237 -------- -------- Total non current liabilities 1,226 3,748 -------- -------- COMMITMENTS AND CONTINGENT LIABILITIES Total liabilities 2,976 3,748 -------- -------- EQUITY: Share capital - Ordinary shares of # 0.10 par value 5,359 12 Series A Preferred shares of NIS 0.01 par value - 8 Series B and B-1 Preferred shares of NIS 0.01 par value - 33 Additional paid-in capital 33,658 20,475 Accumulated deficit (38,365) (23,021) -------- -------- Total equity 652 (2,493) -------- -------- Total liabilities and equity 3,628 1,255 ======== ======== CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (DEFICIENCY) FOR THE YEAR ENDED 31 DECEMBER 2006 U.S. dollars in thousands Additional Total Ordinary Preferred paid-in Accumulated equity shares shares capital deficit (deficiency) ------- -------- -------- --------- --------- Balance as of 1 January 2005 12 41 19,858 (20,548) (637) Share-based compensation - - 617 - 617 Loss for the period - - - (2,473) (2,473) -------- -------- -------- -------- -------- Balance as of 31 December 2005 12 41 20,475 (23,021) (2,493) Conversion of convertible loans 67 4 9,789 - 9,860 Reclassification and conversion of Preferred shares and net exercise of warrants into Ordinary shares 243 (45) (198) - - Exercise of options issued to employees and consultants 56 - 58 - 114 Equity reorganization - pro-rata reduction of number of outstanding Ordinary shares (334) - 334 - - Issuance of shares in connection with the reverse acquisition and the placement (Note 1b) 1,410 - 3,278*) - 4,688 Share based compensation - - 3,827 - 3,827 Adjustment of share capital to reflect the Company's legal equity following the consummation of the reverse acquisition 3,905 - (3,905) - - Loss for the period - - - (15,344) (15,344) -------- -------- -------- -------- -------- Balance as of 31 December, 2006 5,359 - 33,658 (38,365) 652 ======== ======== ======== ======== ======== *) Net of transaction costs in the amount of $ 2,602 CONSOLIDATED STATEMENTS OF CASH FLOW FOR THE YEAR ENDED 31 DECEMBER 2006 U.S. dollars in thousands 2006 2005 Cash flows from operating activities: Net loss (15,344) (2,473) Adjustments to reconcile net loss to net cash used in operating activities (a) 10,283 53 -------- -------- Net cash used in operating activities (5,061) (2,420) -------- -------- Cash flows from investing activities: Purchase of property and equipment (154) (367) Increase in long-term lease deposits (53) (11) Increase in long-term restricted cash (4) (46) Addition to cash resulting from reverse acquisition (Note 1b) 376 - Proceeds from sale of property and equipment 1 19 -------- -------- Net cash provided by (used in) investing activities 166 (405) -------- -------- Cash flows from financing activities: Proceeds from convertible loans 2,723 1,500 Proceeds from exercise of options 114 - Proceeds from issuance of shares, net 4,328 - -------- -------- Net cash provided by financing activities 7,165 1,500 -------- -------- Increase (decrease) in cash and cash equivalents 2,270 (1,325) Cash and cash equivalents at beginning of the year 174 1,499 -------- -------- Cash and cash equivalents at end of the year 2,444 174 ======== ======== Supplemental disclosure of non-cash investing and financing activities: Conversion of convertible loans to equity 9,860 - ======== ======== CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2006 U.S. dollars in thousands 2006 2005 (a) Adjustments to reconcile net loss to net cash used in operating activities: Income and expenses not involving operating cash flows: Depreciation 255 134 Share-based compensation 3,827 617 Loss (gain) on sales of property and equipment (1) 14 Consulting services received in consideration of 100 - convertible loan Remeasurement of embedded derivatives in convertible 5,451 - loans Accrued interest on convertible loan 86 - Changes in operating assets and liabilities: Decrease in trade receivables 205 78 Increase in other accounts receivable, prepaid (352) (147) expenses and other assets Decrease in liability for royalties (11) (17) Increase (decrease) in trade payables 69 (42) Increase in accounts payable and accrued expenses 602 215 Increase (decrease) in deferred revenues 52 (799) -------- -------- 10,283 53 ======== ======== NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2006 1. GENERAL a. AxisMobile Plc. (the "Company") (formerly CCO Capital Plc.), a publicly traded Company on the AIM market of London Stock Exchange PLC, was incorporated on 9 February, 2005 in the United Kingdom. The Company was established with the aim of identifying and thereafter acquiring a Company or business in the technology, media or telecommunication sectors. Axis Mobile Ltd. ("Axis" or the "Subsidiary") was incorporated in Israel in February 2000. Axis located in Tel-Aviv, Israel, is a software application provider engaged in bringing community and messaging applications to the mobile user. b. In June, 2006, the Company and Axis entered into a share purchase agreement ("SPA"). Pursuant to the terms of the agreement, upon closing, on 26 June, 2006, Axis's shareholders sold their holdings in Axis in consideration for the issuance of 21,713,063 Ordinary shares of the Company and 3,173,447 warrants to purchase Ordinary shares of the Company at an exercise price of Euro0.60 (approximately $1.092) per share. The warrants expire in June 2011. As a result of the issuance of the Ordinary shares, the shareholders of Axis obtained control of the Company. Accordingly the transaction was accounted for as a reverse acquisition in accordance with IFRS 3 "Business Combination". For financial reporting purposes, Axis (the legal subsidiary) is the acquirer and the Company (the legal parent) is the acquiree. The consolidated financial statements prepared following the reverse acquisition are issued under the name of the Company, but they are a continuance of the financial statements of Axis. Because such consolidated financial statements represent a continuation of the financial statements of Axis: (a) the assets and liabilities of Axis have been recognized and measured in these consolidated financial statements at their pre-combination carrying amounts. (b) the retained earnings and other equity balances recognized in those consolidated financial statements are the retained earnings and other equity balances of Axis immediately before the business combination. (c) the amount recognized as issued equity instruments in these consolidated financial statements has been determined by adding to the issued equity of Axis immediately before the business combination the cost of the combination determined as described in the following paragraphs. However, the equity structure appearing in those consolidated financial statements (the number and type of equity instruments issued) reflects the equity structure of the Company, including the equity instruments issued by the Company to effect the combination. These consolidated financial statements prepared following the reverse acquisition reflect the fair values of the assets and liabilities of the Company (the acquiree for accounting purposes). Since as of the date of the acquisition, the fair value of the Company's identifiable assets approximates their carrying value, the excess of the purchase price over the carrying value of the net assets acquired together with the direct transaction costs incurred has been recorded as reduction of additional paid-in capital. Pursuant to the SPA, the Company changed its name from CCO Capital Plc. to AxisMobile Plc. Concurrently with the SPA, the Company entered into an additional agreement (the "Placing agreement") with certain investors. Under the terms of the Placing agreement the Company issued 6,675,000 Ordinary shares for consideration of $7.3M (before transaction costs). 2. SIGNIFICANT ACCOUNTING POLICIES Basis of preparation: The consolidated financial statements of the Company have been prepared in accordance with International Financial Reporting Standards ("IFRS") that are effective as of 31 December 2006 on the assumption that the Group is a going concern. When assessing the foreseeable future, the directors have looked at a period of twelve months from the date of approval of this annual report. The directors have considered the Group's cash flow projections and contingency plans for that period and consider that it is appropriate to prepare the Group's financial statements on a going concern basis, which assumes that the Group is to continue in operational existence for the foreseeable future. 3. REVENUE a. Group activities The principal activity of the Group is provide consumer mobile email solutions to mobile operators, ISPs, system integrators and equipment manufacturers. b. Revenues by geographical market and customer location The Company conducts its business on the basis of one reportable segment Revenues from external customers by location of customer: 2006 2005 ------ ------ $000 $000 Israel 150 1,115 Europe 402 865 Asia Pacific - 30 ------ ------- 552 2,010 ====== ======= 4. TAXATION On the basis of these financial statements no provision for tax has been made. Carry forward tax losses of Axis totalled approximately $20M as of 31 December, 2006. No deferred tax assets were recorded in respect of carry forward losses due to the uncertainty of their realization in the foreseeable future. 5. NET LOSS PER SHARE The following table sets forth the computation of basic and diluted net loss per share: 2006 2005 -------- -------- $000 $000 Net loss (15,714) (2,473) Deemed dividend - - 8% Preferred shares dividend - (1,603) -------- -------- (15,714) (4,076) ======== ======== Weighted average number of Ordinary shares outstanding during the year used to compute basic and 20,623,070 4,948,505 diluted loss per share ========== ========= Basic and diluted loss per share $(0.74) $(0.82) ========== ========= All outstanding preferred shares and stock options were not taken into consideration in calculating diluted loss per share as their effect is anti dilutive. 6. SEGMENT INFORMATION a. Axis's long-lived assets are located only in Israel. b. Major customers: Customer 2006 2005 ------ ------ Comverse 27% 54% Belgacom 29% 23% Amper 43% 7% 7. SUBSEQUENT EVENTS a) In April 2007, the Company entered into a loan agreement with Plenus Venture ("Plenus") in an aggregate amount of $2,000,000. The loan bears interest of 12 month "Libor"+ 5.5% plus value added tax and arrangement fee of $368,000. The accrued interest shall be payable every quarter. The principal amount shall be due and payable in twenty four consecutive, equal monthly installments of $83,000 commencing on September 1, 2007. As part of the agreement Plenus receives 735,000 Warrants at 25p. b) In 9 May 2007, the Company entered into a loan agreement with two of its major shareholders in an aggregate amount of $1,000,000. The loan bears interest of 12 month "Libor"+ 5.5% plus value added tax and arrangement fee of $184,000. The accrued interest shall be payable every quarter. The principal amount shall be due and payable in twenty four consecutive, equal monthly installments of $42,000 commencing on November 1, 2007. As part of the agreement lenders receive 367,500 Warrants at 25p. The announcement set out above does not constitute a full financial statement of the Company's affairs for the period ended 31 December 2006. The Company's auditors have reported on the full accounts for the said year and have accompanied them with an unqualified report. The accounts have yet to be delivered to the Registrar of Companies. The annual report and accounts will be available from the Company Secretary: Reed Smith Corporate Services Limited, Minerva House, 5 Montague Close, London SE1 9BB This information is provided by RNS The company news service from the London Stock Exchange END FR UUOKRBRRVURR
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