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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 |
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RNS Number:3198D
Axismobile PLC
05 September 2007
Date: 5 September 2007
On behalf of: AxisMobile PLC ("AxisMobile" or "the Company")
Embargoed until: 0700hrs
AxisMobile PLC
* Interim Results for the six months ended 30 June 2007
AxisMobile PLC (AIM: AXIS), the consumer mobile email specialist, is pleased to
announce its Interim Results for the six months ended 30 June 2007.
Highlights
* Continued product development, including greater functionality and enhanced
product offering.
* Selection and successful launch of a hosted consumer mobile email solution for
E-Plus, Germany's third largest mobile network operator.
* Participating in 20 Requests for Proposals with a considerable high win ratio
enabling the expansion in the global market.
* Winning a number of contracts and signing a number of agreements, including:
- A rolling annual contract with Moscow-based Telecom Express, a leading
technology reseller and systems integrator.
- Launching 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.
- 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.
- Contracts with one of T-Mobile's European regional network operators, a
large network operator in Switzerland and an additional operator in Russia
to provide consumer mobile email services.
Post period end events
* Appointment of Shai Schiller as Executive Chairman and Sharon David as
Chief Executive Officer in order to meet the growing needs of the Company.
* A signed Letter of Intent with another major operator in Russia, giving
AxisMobile contracts with all the 3 major countrywide operators which accounts
for over 90% of the Mobile Network Operator Market in the Russian territory.
* Selection by a large Ukrainian network operator to provide consumer mobile
email services.
Commenting on AxisMobile's results, Sharon David, CEO of AxisMobile, said:
"Mobile email technology has improved to truly meet the needs of consumers, and
operators are seeing the financial and brand benefits of offering mobile email
solutions. Based on AxisMobile's successes to date, our evolving product
roadmap, experienced management team and our sales pipeline, we believe that
there is a great opportunity to take advantage of the growing need for consumer
mobile email solutions."
Enquiries to:
Sharon David, CEO
Hugo Goldman, CFO
AxisMobile PLC Contactable via Redleaf Communications
Emma Kane/Paul Dulieu/Tom Newman
Redleaf Communications Tel: 020 7822 0200
Notes to Editors:
* Axis Mobile Limited 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 website:
www.axismobile.com
CHAIRMAN'S STATEMENT
I am pleased to report AxisMobile's interim results for the six months ended 30
June 2007. The period was characterised by additional contract wins that will
yield revenues in future periods, initial product deliveries and the further
expansion of our new business pipeline. The Company took advantage of the
growing market demands for consumer mobile email services and managed to
significantly increase its shares of new business wins. As previously reported,
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.
Results
The Group is reporting, according to International Financial Reporting Standard
3, AxisMobile Limited's accounts as the surviving entity of the reverse takeover
that took place in June 2006, for accounting purposes. However, for legal
purposes, AxisMobile plc was the entity that purchased AxisMobile Limited under
the Share Purchase Agreement.
The Group has adopted the US dollar as its reporting currency. The majority of
revenues and the 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 depreciated by
over 0.57% against the US dollar during the reporting period to 30 June 2007.
Significant non-cash expenses are reported in this period resulting mainly from
share-based compensation expenses on transactions undertaken prior to the
reverse takeover and the granting of options before the current period.
Therefore proforma accounts have been prepared to present a clearer picture of
underlying performance of the business.
Operating Results
Six months to 30 June 2007 - Unaudited
GAAP results Non-GAAP Non-GAAP
adjustment - results
(as reported) mainly share pro forma
based
compensation*
US$'000 US$'000 US$'000
Revenues 433 0 433
Cost of revenues 482 95 387
----- ---- -----
Gross profit (loss) (49) (95) 46
------ ------ ----
Operating expenses:
Research and development 1,517 285 1,232
Sales and marketing 1,346 224 1,122
General and administrative 1,663 615 1,048
------- ----- -------
Total operating expenses 4,526 1,124 3,402
Operating profit/(loss) (4,575) (1,219) (3,356)
Financial expenses, net 114 86 28
----- ---- ----
Net profit/(loss) (4,689) (1,305) (3,384)
================================================
Basic and diluted loss
per share 0.16 0.05 0.11
*Including US$86,000 for amortization of loan discounts and revaluation of
conversion options
Group operating loss for the six months to 30 June 2007 amounted to US$4.6m
(2006: US$5.8m), which on a proforma basis, excluding non cash items as
explained below, represents an Operating Loss of US$3.3m (2006: US$3.1m). Net
Loss for the period was US$4.7m (2006: US$11.3m).
Significant expenses amounting to US$1.3m were charged under International
Financial Reporting Standards ("IFRS"), as a result of the following: US$1.2m in
share based compensation which occurred mostly in 2006 and US$86,000 in 2007 for
amortization of loan discounts and revalution of conversion options. These
charges did not result in any cash outflow but were a required accounting
adjustment. Under IFRS, the deemed benefit resulting from the grant of the share
based compensation, as well as for the amortization of loan discounts and
revaluation of the conversion option is presented as operating or financial
expenses, as applicable, taking into consideration the fair value of the
underlying shares at the time the transactions were executed.
The results reflect investment by the Company in research and development to
ensure that AxisMobile maintains its position as a technology leader enabling
the mass market adoption of mobile email. There was also investment in sales
infrastructure in order to increase the number of contracts and to build a
sizable pipeline.
Revenues in the first six months of 2007 were US$0.4m (2006: US$0.3m). During
this period, there was a considerable strengthening in the sales pipeline, a
number of trials and demonstrations conducted, several Requests for Proposals
are in progress and many new prospects exist.
The cost of revenues of US$0.9m (2006: US$0.4m) does not include 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 in the first half were
US$4.5m, which amounted to US$3.4m on a proforma basis (2006: US$3m), which
included headcount increases needed to support the roll-out of our business
plan.
We have also continued to invest in research and development, with cash
expenditure in the half year totalling US$1.5m (2006: US$0.9m).
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.
AxisMobile also continues to develop its relationship with a leading global
network provider of next generation telecommunications networks to provide
consumer mobile email services. In conjunction with this partner, AxisMobile
plans to expand its reach into new markets and new market segments.
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
resulted in a loss per share of 16 cents (equivalent to 8 pence) (2006: 52 cents
or 28 pence).
Cash and Cash Flow
Cash balances were US$2.4m as of 30 June 2007.
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.
I am optimistic about our future and look forward to gaining additional
shareholder value.
Shai Schiller
Chairman of the Board
CHIEF EXECUTIVE'S REVIEW
I am pleased to report on our progress and advancements during the last six
months.
Progress
There have been many achievements in the period and we continue to make good
progress in our sales and product development.
Notable achievements in product development during the period included:
* Developing an optimized and secure 1-step registration system
* Creating a centralized billing server
* Developing an Advanced Customer Care and Administration Tool with SME
functionality
* Making enhancements to the Email2MMS, Email2SMS, MMS2Email, and SMS2Email
products
* Building an infrastructure for PIM functionality and Exchange integration
In the area of operational and customer development, our most notable
achievements have been:
* Signing a rolling annual contract with Moscow-based Telecom Express, a
leading technology reseller and systems integrator.
* Selection by E-Plus, Germany's third largest mobile network operator, to
provide a hosted consumer mobile email solution. The service was successfully
launched this summer.
* Launching 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 that it expects to sell dozens of business solutions during
2007-2008 in China and Thailand. AxisMobile received the first purchase order
for a system to be launched in a Chinese bank.
* Signing 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.
* Entering into a contract with one of T-Mobile's European regional network
operators to provide consumer mobile email services to its customers.
* Entering into a contract with a large network operator in Switzerland to
provide consumer mobile email services.
* Entering into a contract with an additional operator in Russia to provide
consumer mobile email services.
* Participating in 20 Requests for Proposals with a considerable high win
ratio enabling the expansion in the global market.
Since the end of the reporting period, the following customer wins have also
been announced:
* A signed Letter of Intent with another major operator in Russia, giving
AxisMobile contracts with all the 3 major countrywide operators which accounts
for over 90% of the Mobile Network Operator Market in the Russian territory.
* Selection by a large Ukrainian network operator to provide consumer mobile
email services.
People
In order to meet the growing needs of the company, Shai Schiller was appointed
Executive Chairman on 6 July 2007, replacing Non-Executive Chairman Oded Zucker
who becomes a Non-Executive Director of the Company. Sharon David was appointed
to the Board of the Company as Chief Executive Officer
As Executive Chairman, Shai Schiller will be able to focus on the Company's
overall strategy, including strategic business development, financing and
expansion opportunities, whilst Sharon David will undertake the day-to-day
running of the business as Chief Executive. Sharon David will also continue in
the role of Vice President Sales. Shai Schiller and Sharon David have worked
together since 1996, first when they both served in management positions at
Comverse and, in the past several years at AxisMobile, when Sharon was a
consultant to the company before joining the management team as Vice President
Sales.
The senior management team is now comprised of:
Shai Schiller, Chairman of the Board
Sharon David, Chief Executive Officer
Hugo Goldman, Chief Financial Officer
Ariel Yalov, Chief Technology Officer
Doron Schwartz, Vice President Operations
Stacy Fassberg, Vice President Marketing
Knaan Ratosh, Director, Research & Development
The Board remains unchanged, as Zeev Binman and Sharon Gelbaum-Shpan were
re-elected to the Board at the last Annual General Meeting held in June.
AxisMobile currently employs 53 people.
Outlook
The Company is working intensively on the delivery of its services and solutions
to several customers that have signed contracts and purchase orders. These
deliveries represent the first phase of a fast growing business and we expect to
see an increase in the level of 'subscriber take up' after the initial delivery
stage is complete.
While one new customer, Eplus, already has our system deployed, the high level
of success we have achieved in attracting new customers means that we are now
facing increased pressure as we look to deliver to our new customers during the
second half of the year. To achieve our delivery targets, we are making special
efforts to mitigate any possible delays and their impact by delivering all major
services and features this year. This move will enable most of our customers to
launch their services undelayed during the fourth quarter of this year, but will
result in final acceptance of our systems taking place in the first half of
2008.
As a result, because revenue is not recognised until final acceptance is
achieved, some revenue will now be recognised in the first half of our next
financial year. Consequently, total revenue for the second half of the current
financial year will be lower than originally expected.
Mobile email technology has improved to truly meet the needs of consumers, and
operators are seeing the financial and brand benefits of offering mobile email
solutions. This has led the market to an inflexion point, as mass market
adoption of mobile email is set to experience large scale growth. A number of
analyst firms are predicting double and triple digit growth rates in the next 5
years. Gartner recently stated that they believe that by 2010, 20% of all email
accounts will be mobilized. They further stated that email will "take over from
other messaging services like text messaging and MMS as email lacks many of the
restrictions these tools suffer from."
Based on AxisMobile's successes to date, our evolving product roadmap,
experienced Management Team and our sales pipeline, we believe that there is a
great opportunity to take advantage of the growing need for consumer mobile
email solutions.
We are very confident as to the future growth of the mobile email market and the
role that AxisMobile will play.
Sharon David
Chief Executive Officer
CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands (except share and per share data)
30 June 31 December
2007 2006
--------- ---------
Unaudited Audited
--------- ---------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 2,422 $ 2,444
Trade receivables 28 63
Other accounts receivable and prepaid expenses 935 588
--------- ---------
Total current assets 3,385 3,095
--------- ---------
NON-CURRENT ASSETS:
Long-term restricted cash 115 115
Long-term lease deposit 69 74
Property and equipment, net 354 344
--------- ---------
Total non-current assets 538 533
--------- ---------
Total assets $ 3,923 $ 3,628
========= =========
LIABILITIES AND EQUITY (DEFICIENCY)
CURRENT LIABILITIES:
Current maturities of loans $ 603 $ -
Trade payables 644 225
Accounts payable and accrued expenses 1,727 1,095
Deferred revenues 514 332
--------- ---------
Total current liabilities 3,488 1,652
--------- ---------
NON-CURRENT LIABILITIES:
Liability due to conversion option 662 -
Liabilities for royalties 1,226 1,226
Long-term loans 1,269 -
Employee benefit liability 96 98
--------- ---------
Total non-current liabilities 3,253 1,324
--------- ---------
Total liabilities 6,741 2,976
--------- ---------
EQUITY (DEFICIENCY):
Share capital-
Ordinary shares of #0.1 par value 5,359 5,359
Additional paid-in capital 34,877 33,658
Accumulated deficit (43,054) (38,365)
--------- ---------
Total equity (deficiency) (2,818) 652
--------- ---------
Total liabilities and equity $ 3,923 $ 3,628
========= =========
The accompanying notes are an integral part of the interim consolidated
financial statements.
4 September, 2007
---------------- --------------------- -------------------
Date of approval of the Shai Schiller Hugo Goldman
financial statements Chairman of the Chief Financial Officer
Board of Directors and Finance Director
CONSOLIDATED STATEMENTS OF OPERATIONS
U.S dollars in thousands (except share and per share data)
Six months ended Year ended
30 June 31 December
-----------------
2007 2006 2006
--------- --------- ---------
Unaudited Audited
----------------- ---------
Revenues $ 433 $ 321 $ 552
Cost of revenues (*) 482 368 525
--------- --------- ---------
Gross profit (loss) (49) (47) 27
--------- --------- ---------
Operating expenses:
Research and development (*) 1,517 908 2,858
Sales and marketing (*) 1,346 1,215 2,461
General and administrative (*) 1,663 3,641 4,787
--------- --------- ---------
Total operating expenses 4,526 5,764 10,106
--------- --------- ---------
Operating loss 4,575 5,811 10,079
Financial expenses 239 5,542 5,460
Financial income (125) (36) (195)
--------- --------- ---------
Loss for the period $ 4,689 $ 11,317 $ 15,344
========= ========= =========
Basic and diluted loss per $ (0.16) $ (0.52) $ (0.74)
share ========= ========= =========
Weighted average number of
Ordinary shares outstanding
during the period used to
compute basic and diluted
loss per share 29,433,063 21,713,063 20,623,070
========= ========= =========
(*) Including cost of employee share based compensation:
Cost of revenues $ 95 $ 15 $ 186
Research and development 285 171 627
Sales and marketing 224 219 470
General and administrative 615 2,328 2,544
--------- --------- ---------
$ 1,219 $ 2,733 $ 3,827
========= ========= =========
(**) Including $ 5,451 revaluation of convertible loans in 2006.
The accompanying notes are an integral part of the interim consolidated
financial statements.
STATEMENTS OF CHANGES IN EQUITY (DEFICIENCY)
U.S. dollars in thousands
Additional
Ordinary Preferred paid-in Accumulated Total equity
shares shares capital deficit (deficiency)
------- -------- ------- -------- --------
Balance as of
1 January, 2006
(audited) $ 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 - - - (15,344) (15,344)
------- -------- ------- -------- --------
Balance as of
31December,
2006 (audited) 5,359 - 33,658 (38,365) 652
Share based
compensation - - 1,219 - 1,219
Loss - - - (4,689) (4,689)
------- -------- ------- -------- --------
Balance as of
30June, 2007
(Unaudited) $ 5,359 $ - $ 34,877 $ (43,054) $ (2,818)
======= ======== ======= ======== ========
*) Net of transaction costs in the amount of $ 2,603
The accompanying notes are an integral part of the interim consolidated
financial statements.
STATEMENTS OF CHANGES IN EQUITY
U.S. dollars in thousands
Additional
Ordinary Preferred paid-in Accumulated Total
shares shares capital deficit equity
------- -------- -------- -------- --------
Balance as of 1
January, 2006
(audited) $ 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 - 3,639 - 5,049
Share based
compensation - - 2,733 - 2,733
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 - - - (11,317) (11,317)
------- -------- -------- -------- --------
Balance as of 30
June, 2006
(unaudited) $ 5,359 $ - $ 32,925 $ (34,338) $ 3,946
======= ======== ======== ======== ========
(*) Net of transaction costs in the amount of $ 2,603
The accompanying notes are an integral part of the interim consolidated
financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
Six months ended Year ended
30 June 31 December
----------------
2007 2006 2006
-------- -------- ----------
Unaudited Audited
---------------- ----------
Cash flows from operating activities:
---------------------------------------
Loss for the period $ (4,689) $ (11,317) $ (15,344)
Adjustments to reconcile loss to net
cash used in operating activities (a) 1,752 9,745 10,283
-------- -------- ----------
Net cash used in operating activities (2,937) (1,572) (5,061)
-------- -------- ----------
Cash flows from investing activities:
---------------------------------------
Purchase of property and equipment (85) (108) (154)
Increase in long-term lease deposits - (38) (53)
Increase in short-term deposit -
restricted cash - (367) -
Increase in long-term restricted cash - (2) (4)
Addition to cash resulting from
reverse acquisition (Note 1b) - 376 376
Proceeds from sale of property and
equipment - 1 1
-------- -------- ----------
Net cash provided by (used in)
investing activities (85) (138) 166
-------- -------- ----------
Cash flows from financing activities:
---------------------------------------
Proceeds from loans and warrants 3,000 - -
Proceeds from convertible loans - 2,723 2,723
Proceeds from exercise of options - 114 114
Proceeds from issuance of shares, net - 1,259 4,328
-------- -------- ----------
Net cash provided by financing
activities 3,000 4,096 7,165
-------- -------- ----------
Increase (decrease) in cash and cash
equivalents (22) 2,386 2,270
Cash and cash equivalents at
beginning of the period 2,444 174 174
-------- -------- ----------
Cash and cash equivalents at end of
the period $ 2,422 $ 2,560 2,444
======== ======== ==========
Supplemental disclosure of non-cash investing
and financing activities:
Issuance of shares to holders of
convertible loans $ - $ 9,860 $ 9,860
======== ======== ==========
Receivable for unpaid share capital $ - $ 3,491 $ -
======== ======== ==========
Short-term liability due to one-time
engagement fee of loans $ 552 $ - $ -
======== ======== ==========
The accompanying notes are an integral part of the interim consolidated
financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
Six months ended Year ended
30 June 31 December
---------------
2007 2006 2006
-------- -------- -----------
Unaudited Audited
--------------- -----------
(a) Adjustments to reconcile loss to cash used in
operating activities:
--------------------------------------------------
Income and expenses not involving operating cash
flows:
Amortization of loan discount $ 132 $ - $ -
Depreciation 75 62 255
Share based compensation 1,219 2,733 3,827
Gain on sale of property and equipment - (1) (1)
Consulting services received in consideration
of convertible loan - 100 100
Revaluation of convertible loans - 5,451 5,451
Accrued interest on convertible loan - 86 86
Amortization of long-term lease deposit 5 - -
Revaluation of conversion option (46) - -
Changes in operating assets and liabilities:
Decrease in employee benefit liability (2) - -
Decrease in trade receivables 35 179 205
Increase in other accounts receivable and (347) (101) (352)
prepaid expenses
Decrease in liabilities for royalties - (9) (11)
Increase in trade payables 419 383 69
Increase in accrued salaries and other 80 759 602
accounts payable
Increase in deferred revenues 182 103 52
-------- -------- -----------
$ 1,752 $ 9,745 $ 10,283
======== ======== ===========
The accompanying notes are an integral part of the interim consolidated
financial statements.
NOTE 1:- GENERAL
a. Axis Mobile 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 Mobile Ltd., 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 June 26,
2006, Axis's former 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
#0.6 (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.
The 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 was recorded as reduction of
additional paid-in capital.
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 in
consideration for $7,292 (before transaction costs).
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES
Basis of preparation:
The interim condensed consolidated financial statements for the six months
ended 30 June, 2007 have been prepared in accordance with IAS 34 Interim
Financial Reporting.
The interim condensed consolidated financial statements do not include all
the information and disclosures required in the annual financial statements,
and should be read in conjunction with Company's annual financial statements
as at 31 December, 2006.
Significant accounting policies:
The accounting policies adopted in the preparation of the interim condensed
consolidated financial statements are consistent with those followed in the
preparation of the Company's annual financial statements for the year ended
31 December, 2006, except for the adoption of new Standards and
Interpretations and except as noted below. Adoption of these new Standards
and Interpretations did not have any effect on the financial position or
performance of the Company.
Severance pay liability:
The Company's liability for severance pay pursuant to the Israel's Severance
Pay Law is based on the last monthly salary of the employee multiplied by the
number of years of employment, as of the date of severance. The cost of
providing severance pay is determined as of 30 June, 2007 using an
independent actuary using the projected unit credit actuary valuation method.
Actuarial gains and losses are recognized immediately in the statement of
income in the period in which they arise.
Loans with attached warrants:
The proceeds from loans and attached warrants had been allocated to the fair
value of the warrants first and the residual value was attributed to the
long-term loans according to IAS 39 requirement.
After initial recognition the warrants are measured at fair value through
profit and loss.
NOTE 3:- SIGNIFICANT EVENTS DURING THE REPORTED PERIOD
a. In April 2007, the Company entered into a loan agreement with Plenus
Venture ("Plenus") in an aggregate amount of $ 2,000. The loan bears
interest of 12 month "Libor" + 5.5% plus value added tax and arrangement
fee of $ 368 that will be paid upon demand. 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 commencing on
September 1, 2007. As part of the agreement, Plenus receives 735,000
Warrants at 25p. The Company received an independent valuation of the
warrant granted to Plenus. According to the valuation, the value of the
warrant is $ 472 and the effective interest rate for the loan element is
80.1%.
b. On 9 May, 2007, the Company entered into a loan agreement with two of its
major shareholders in an aggregate amount of $ 1,000. The loan bears
interest of 12 month "Libor"+5.5% plus value added tax and arrangement fee
of $ 184 that will be paid upon demand. The accrued interest shall be
payable every quarter. The principal amount shall be due and payable in
twenty four consecutive, equal installments of $ 42 commencing on November
1, 2007. As part of the agreement lenders receive 367,500 Warrants at 25p.
The Company received an independent valuation of the warrant granted to
lenders. According to the valuation, the value of the warrant is $ 236 and
the effective interest rate for the loan element is 72.25%.
c. According to the IAS 39 requirements, the total consideration had been
allocated first to the fair value of the warrants granted in the above
mentioned loans, then the engagement fees and the residual value were
attributed to the loans.
d. During the six months ended 30 June, 2007 the Board of Directors had
granted 923,500 options to the Company employees, consultants and
directors. Each option can be exercised to purchase one Ordinary share of
#0.1 par value of the Company at an average exercise price of $ 1, vested
over a period of 12 quarters.
The fair value of the Company's share options granted to employees and
consultants for the six months ended 30 June, 2007 was estimated using the
following assumptions:
Six months ended 30 June, 2007
-----------
Risk free interest 4.67%
Dividend yields 0%
Volatility 65%
Expected term (in years) 1 - 6.5
Forfeiture rate 0 - 25%
The weighted average fair value of the options granted in 2007 was $ 0.61.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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