AOI Medical, Inc. Interim Results

 

TIDMAOI 
 
RNS Number : 9100Z 
AOI Medical, Inc. 
30 September 2009 
 

AOI Medical, Inc. 
 
 
Interim Results 
 
 
 
 
London, UK, 30 September 2009 - AOI Medical, Inc. (the "Company" or "AOI") (AIM: 
AOI), a medical device company focusing on innovative orthopaedic medial devices 
for the spine and trauma markets, today announces its interim results for the 
six months ended 30 June 2009. 
 
 
Highlights 
 
 
  *  As at 30 June 2009, surgical procedures had been successfully completed on 49 
  patients as part of the Company's 60 patient confirmatory clinical study for 
  Ascendx(TM) Vertebral Compression Fracture ("VCF")  Reduction System 
  ("Ascendx(TM)") (treatment for vertebral compression fractures) 
  *  In September 2009, the Company successfully completed enrollment for its 60 
  patient confirmatory clinical study for Ascendx(TM) 
  *  In August 2009, the Company successfully raised US$2.6 million through the issue 
  of senior convertible loan notes 
  *  Cash and cash equivalents as at 30 June 2009 were US$1.4 million 
 
 
 
 
 
Enquiries: 
+----------------------------------------------+---------------------------------+ 
|                                              |                                 | 
+----------------------------------------------+---------------------------------+ 
| Numis Securities Ltd                         | Tel: [phone]        | 
+----------------------------------------------+---------------------------------+ 
| Nominated Adviser: Michael Meade / Brent     |                                 | 
| Nabbs                                        |                                 | 
+----------------------------------------------+---------------------------------+ 
| Corporate Broking: David Poutney             |                                 | 
+----------------------------------------------+---------------------------------+ 
 
 
Background to AOI Medical, Inc. 
 
 
AOI is a medical device company focusing on the development and 
commercialisation of innovative orthopaedic medical devices for the spine and 
trauma markets. It is progressing the development of three separate technology 
platforms: Ascendx(TM) VCF Reduction System, BAMF Trauma and Cervical Plate. 
Further information can be found at www.aoimedical.net 
 
Ascendx(TM) VCF Reduction System Clinical Trial 
 
 
On 7 September 2009, the Company announced that it had successfully completed 
enrollment for the sixty (60) patient clinical trial of its Ascendx(TM) 
Vertebral Compression Fracture ("VCF") Reduction System ("Ascendx(TM)"). The 
trial was initiated in June 2008 in eight sites across the United States. 
 
 
The primary end point of the trial was acute procedural success defined as 
successful device deployment, cement delivery, and device withdrawal. The data 
from the trial will be used as clinical support for the Company's 510(k) 
submission to the FDA in relation to Ascendx(TM). 
 
 
Senior Convertible Loan Notes 
 
 
On 5 August 2009, the Company announced that it had successfully raised US$2.6 
million through the issue of senior convertible loan notes. The net proceeds 
from this fundraising are being used to augment the Company's working capital 
for the FDA approval and the market launch of Ascendx(TM). 
 
 
The senior convertible loan notes ("SCLN's"), shall be repayable on or before 30 
September 2012 although the SCLN's shall become convertible at the option of the 
holder after 1 October 2011 (the "Conversion Date"). The SCLN's carry a coupon 
of 8 per cent. interest per annum, payable quarterly in arrears until such time 
as they are repaid or converted in accordance with the terms. The SCLN's are 
callable, or repaid with no risk of conversion, by the Company on or before the 
Conversion Date, after which the SCLN's are convertible into shares of common 
stock in the Company ("Common Shares") at a price of 60 cents per Common Share. 
Additionally, subscribers for the SCLN's were issued 333 warrants, with an 
exercise price of 60 cents per Common Share, for each US$1,000 principal amount 
of SCLNs purchased and an additional 100 warrants for each US$1,000 principal 
amount of SCLNs purchased if the SCLN's have not been repaid by the Conversion 
Date (the "Warrants"). The Warrants may be exercised into new Common Shares at 
any time prior to the fifth anniversary of the issuance of the Warrants.  The 
placement agent for this transaction was issued 167 warrants, with an exercise 
price of 60 cents per Common Share, for each US$1,000 principal amount of SCLNs 
purchased (the "Placement Agent Warrants"). The Placement Agent Warrants may be 
exercised into new Common Shares at any time prior to the fifth anniversary of 
their issuance.  If the SCLN's were converted in full after the Conversion Date 
and all the Warrants and Placement Agent Warrants exercised, approximately 5.89 
million new Common Shares would be issued, representing up to approximately 69 
per cent. of the current issued share capital of the Company. 
 
 
The SCLN's carry prepayment penalties in year one (1), two (2) and three (3) of 
10 per cent., 20 per cent. and 30 per cent, respectively. 
 
 
Cash Resources 
 
 
At 30 June 2009, the Company had cash and cash equivalents of US$1.4 million. 
 
 
Board Changes 
 
 
On 8 September 2009, the Company announced that William Christy had stood down 
as the Chief Executive Officer and as a Director of AOI with immediate effect 
and that Scott Baily had also stood down as a Non-executive Director of AOI with 
immediate effect. In addition, it was announced that Ian Johnson would stand 
down as the Non-executive Chairman of AOI with effect from the de-listing of the 
Company's common stock to trading on AIM. 
 
 
Proposed Cancellation of Admission to AIM 
 
 
On 8 September 2009, AOI announced that it was intending to put to stockholders 
proposals to cancel the admission of its common stock to trading on AIM. The 
Directors of AOI consider, inter alia, that the benefits of maintaining a 
listing on AIM are out-weighed by the costs incurred in maintaining such a 
listing and that AOI derives little benefit in terms of the liquidity in its 
shares or in its ability to raise new capital. In addition, the Directors do not 
believe that the market places an appropriate valuation on AOI or its shares. 
 
 
Subsequently, on 23 September 2009, the Company announced that it was seeking 
Shareholder approval to cancel the admission of its Common Shares to trading on 
AIM at a Special Meeting which will be held on 9 October 2009. A circular, 
together with a notice of the Special Meeting were posted to Shareholders on 23 
September 2009. A copy of the circular is available on the Company's website at 
www.aoimedical.net.If approved, it is expected that cancellation of admission of 
the Common Shares to trading on AIM will take effect from 7.00 a.m. on 21 
October 2009. 
 
 
Outlook 
 
 
AOI is making good progress towards commercialising its lead product, 
Ascendx(TM). We believe that the product has significant potential and following 
the successful completion of enrollment for our 60 patient confirmatory clinical 
study for Ascendx(TM), we are currently on track for FDA approval and market 
launch of Ascendx(TM) in the United States in the first half of 2010. 
 
 
We have also continued to make progress on our other technology platforms whilst 
building the Company's intellectual property portfolio, a fundamental part of 
our commercial strategy. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  FINANCIAL REVIEW 
INCOME STATEMENT 
 
 
Revenue 
AOI is an early stage medical device company and as such currently has not yet 
derived revenue from principal operations. Revenues of $92,000 were earned 
during the first six months of 2009 solely from the Food and Drug Administration 
approved clinical trial for Ascendx(TM), the Company's lead product. 
 
 
Expenses 
Operating expenses decreased by approximately $1.0 million to $2.5 million 
versus the six months ended 30 June 2008 ("H1 2008") of $3.5 million. $634,000 
of this decrease was due to a decrease in salaries and employee benefits. This 
decrease in salaries and employee benefits was due to (1) a decrease in 
stock-based compensation of $415,000, caused by the vesting terms of stock 
options granted during 2007, and (2) a decrease in non-stock-based compensation 
and employee benefits of $219,000 caused by a reduction in salary expense of 
current employees and a reduction in the total number of employees during 2009. 
The decrease in operating expenses was also due to (1) a decrease in stock-based 
Board of Directors' fees of $332,000, caused by a decrease in the fair market 
value of the Company's common shares from $4.52 at 30 June 2008 to $0.41 at 30 
June 2009, and (2) a decrease in research and development costs related to 
Ascendx(TM) of $126,000. 
 
 
Net other expenses decreased from $15,000 in H1 2008 to $nil in H1 2009. H1 2008 
includes a net loss of approximately $15,000 related to the sale of fixed income 
trading securities, net of related interest income. 
 
 
BALANCE SHEET 
 
 
Cash and cash equivalents 
The Company had cash and cash equivalents of $1.4 million at 30 June 2009 
compared with $1.1 million at 30 June 2008. At 30 June 2008 the Company also had 
investments of $5.9 million which were sold during H2 2008 with the net proceeds 
deposited into operating cash. The decrease from $7.0 million of cash and cash 
equivalents and investments at 30 June 2008 to $1.4 million of cash and cash 
equivalents at 30 June 2009 reflects the amount used to fund the operations of 
the Company during that time period. 
 
 
Other current assets 
The Company had other current assets of $588,000 at 30 June 2009 compared with 
$7.1 million at 30 June 2008. At 30 June 2009 other current assets consist 
primarily of inventory of $451,000. At 30 June 2008 other current assets consist 
primarily of investments of $5.9 million, inventory of $511,000 and deferred 
charges of $563,000. The decrease in investments reflects the sale of all 
investments with the net proceeds deposited into operating cash. Deferred 
charges are costs incurred related to the Company's capital raise that occurred 
during H2 2009. Deferred charges are classified as a non-current asset at 30 
June 2009. 
 
 
Property and equipment, net 
Property and equipment, net decreased from $670,000 at 30 June 2008 to $481,000 
at 30 June 2009. Of this net decrease, $221,000 reflects depreciation expense, 
partially offset by the purchase of property and equipment, primarily tooling, 
machinery and equipment needed for research and development and production 
efforts. 
 
 
Intangible Assets, net 
Intangible Assets, net of $539,000 (H1 2008: $507,000) is comprised primarily of 
capitalized patent costs of $139,000 (H1 2008: $132,000) and capitalized license 
costs of $398,000 (H1 2008: $371,000), net of accumulated amortization of 
$76,000 (H1 2007: $44,000). The increase over H1 2008 largely reflects two 
payments of cash for license costs that total $53,000. 
 
 
Other Assets 
The Company had other assets of $811,000 at 30 June 2009 compared to $32,000 at 
30 June 2008. This increase is a result of a change in the classification of 
deferred charges. At 30 June 2009 deferred charges were classified as other 
assets and at 30 June 2008 deferred charges were classified as other current 
assets. 
 
 
Accounts Payable and Accrued Expenses 
Accounts payable and accrued expenses decreased to $669,000 in H1 2009 from $1.4 
million in H1 2008 largely due to the payment of amounts relating to the capital 
raise that occurred during H2 2009, and inventory and Ascendx(TM) clinical trial 
costs that were outstanding at 30 June 2008. 
 
 
 
 
Share capital 
The Company had 8,436,489 USD$0.0001 ordinary shares issued and outstanding at 
30 June 2009 (30 June 2008: 8,430,720). 
 
 
 
+--------------------------------------+--------+-----------+--+-----------+--+-------------+ 
| STATEMENTS OF OPERATIONS             |        |           |  |           |  |             | 
+--------------------------------------+--------+-----------+--+-----------+--+-------------+ 
|                                      |        |           |  |           |  |             | 
+--------------------------------------+--------+-----------+--+-----------+--+-------------+ 
|                                      |        |           |  |           |  |             | 
+--------------------------------------+--------+-----------+--+-----------+--+-------------+ 
|                                      |        | Unaudited |  | Unaudited |  |     Audited | 
|                                      |        |       Six |  |       Six |  |  Year ended | 
|                                      |        |    months |  |    months |  | 31 December | 
|                                      |        |  ended 30 |  |  ended 30 |  |        2008 | 
|                                      |        | June 2009 |  | June 2008 |  |             | 
+--------------------------------------+--------+-----------+--+-----------+--+-------------+ 
|                                      |  Notes |     $'000 |  |     $'000 |  |       $'000 | 
+--------------------------------------+--------+-----------+--+-----------+--+-------------+ 
|                                      |        |           |  |           |  |             | 
+--------------------------------------+--------+-----------+--+-----------+--+-------------+ 
| Revenues                             |        |        92 |  |         - |  |          47 | 
+--------------------------------------+--------+-----------+--+-----------+--+-------------+ 
|                                      |        |           |  |           |  |             | 
+--------------------------------------+--------+-----------+--+-----------+--+-------------+ 
| Cost of Sales                        |        |        36 |  |         - |  |          18 | 
+--------------------------------------+--------+-----------+--+-----------+--+-------------+ 
|                                      |        |           |  |           |  |             | 
+--------------------------------------+--------+-----------+--+-----------+--+-------------+ 
| Gross Profit                         |        |        56 |  |         - |  |          29 | 
+--------------------------------------+--------+-----------+--+-----------+--+-------------+ 
|                                      |        |           |  |           |  |             | 
+--------------------------------------+--------+-----------+--+-----------+--+-------------+ 
| Research and development             |        |     1,104 |  |     1,407 |  |       2,524 | 
+--------------------------------------+--------+-----------+--+-----------+--+-------------+ 
| Operations                           |        |       102 |  |        49 |  |         143 | 
+--------------------------------------+--------+-----------+--+-----------+--+-------------+ 
| Sales and marketing                  |        |       424 |  |       415 |  |         785 | 
+--------------------------------------+--------+-----------+--+-----------+--+-------------+ 
| General and administrative           |        |       855 |  |     1,580 |  |       2,641 | 
+--------------------------------------+--------+-----------+--+-----------+--+-------------+ 
|   Total operating expenses           |        |     2,485 |  |     3,451 |  |       6,093 | 
+--------------------------------------+--------+-----------+--+-----------+--+-------------+ 
|                                      |        |           |  |           |  |             | 
+--------------------------------------+--------+-----------+--+-----------+--+-------------+ 
| Operating loss                       |        |   (2,429) |  |   (3,451) |  |     (6,064) | 
+--------------------------------------+--------+-----------+--+-----------+--+-------------+ 
|                                      |        |           |  |           |  |             | 
+--------------------------------------+--------+-----------+--+-----------+--+-------------+ 
| Other income (expense), net          |        |         - |  |      (15) |  |           8 | 
+--------------------------------------+--------+-----------+--+-----------+--+-------------+ 
|                                      |        |           |  |           |  |             | 
+--------------------------------------+--------+-----------+--+-----------+--+-------------+ 
| Net loss                             |        |   (2,429) |  |   (3,466) |  |     (6,056) | 
+--------------------------------------+--------+-----------+--+-----------+--+-------------+ 
|                                      |        |           |  |           |  |             | 
+--------------------------------------+--------+-----------+--+-----------+--+-------------+ 
| Basic and diluted loss per share -   |   2    |    (0.29) |  |    (0.41) |  |      (0.72) | 
| dollars                              |        |           |  |           |  |             | 
+--------------------------------------+--------+-----------+--+-----------+--+-------------+ 
|                                      |        |           |  |           |  |             | 
+--------------------------------------+--------+-----------+--+-----------+--+-------------+ 
 
 
 
 
 
+-------------------------------------+---------+------------+------------+-------------+ 
| Balance Sheets                      |         |            |            |             | 
+-------------------------------------+---------+------------+------------+-------------+ 
|                                     |         |            |            |             | 
+-------------------------------------+---------+------------+------------+-------------+ 
|                                     |         |            |            |             | 
+-------------------------------------+---------+------------+------------+-------------+ 
|                                     |         |            |            |             | 
+-------------------------------------+---------+------------+------------+-------------+ 
|                                     |         |            |            |             | 
+-------------------------------------+---------+------------+------------+-------------+ 
|                                     |  Notes  |  Unaudited |  Unaudited |     Audited | 
|                                     |         |        Six |        Six |  Year ended | 
|                                     |         |     months |     months | 31 December | 
|                                     |         |     ended  |      ended |        2008 | 
|                                     |         |    30 June |    30 June |     ($'000) | 
|                                     |         |       2009 |       2008 |             | 
|                                     |         |    ($'000) |    ($'000) |             | 
+-------------------------------------+---------+------------+------------+-------------+ 
| ASSETS                              |         |            |            |             | 
+-------------------------------------+---------+------------+------------+-------------+ 
| Current assets:                     |         |            |            |             | 
+-------------------------------------+---------+------------+------------+-------------+ 
|   Cash and cash equivalents         |    1    |      1,397 |      1,127 |       3,696 | 
+-------------------------------------+---------+------------+------------+-------------+ 
|   Other current assets              |         |        588 |      7,072 |       1,341 | 
+-------------------------------------+---------+------------+------------+-------------+ 
|   Total current assets              |         |      1,985 |      8,199 |       5,037 | 
+-------------------------------------+---------+------------+------------+-------------+ 
|                                     |         |            |            |             | 
+-------------------------------------+---------+------------+------------+-------------+ 
| Property and equipment, net         |         |        481 |        670 |         592 | 
+-------------------------------------+---------+------------+------------+-------------+ 
| Intangible assets, net              |         |        539 |        507 |         554 | 
+-------------------------------------+---------+------------+------------+-------------+ 
| Other assets                        |         |        811 |         32 |          32 | 
+-------------------------------------+---------+------------+------------+-------------+ 
|   Total other assets                |         |      1,831 |      1,209 |       1,178 | 
+-------------------------------------+---------+------------+------------+-------------+ 
| TOTAL ASSETS                        |         |      3,816 |      9,408 |       6,215 | 
+-------------------------------------+---------+------------+------------+-------------+ 
|                                     |         |            |            |             | 
+-------------------------------------+---------+------------+------------+-------------+ 
| LIABILITIES AND STOCKHOLDERS'       |         |            |            |             | 
| EQUITY                              |         |            |            |             | 
+-------------------------------------+---------+------------+------------+-------------+ 
| Current liabilities:                |         |            |            |             | 
+-------------------------------------+---------+------------+------------+-------------+ 
| Accounts payable and accrued        |         |        669 |      1,376 |         596 | 
| expenses                            |         |            |            |             | 
+-------------------------------------+---------+------------+------------+-------------+ 
| Total current liabilities           |         |        669 |      1,376 |         596 | 
+-------------------------------------+---------+------------+------------+-------------+ 
|                                     |         |            |            |             | 
+-------------------------------------+---------+------------+------------+-------------+ 
|   Deferred rent                     |         |         28 |         43 |          36 | 
+-------------------------------------+---------+------------+------------+-------------+ 
|   Total long-term liabilities       |         |         28 |         43 |          36 | 
+-------------------------------------+---------+------------+------------+-------------+ 
|                                     |         |            |            |             | 
+-------------------------------------+---------+------------+------------+-------------+ 
| Stockholders' Equity:               |         |            |            |             | 
+-------------------------------------+---------+------------+------------+-------------+ 
|   Common stock                      |    3    |          1 |          1 |           1 | 
+-------------------------------------+---------+------------+------------+-------------+ 
|   Additional paid-in capital        |    3    |     19,125 |     18,977 |      19,160 | 
+-------------------------------------+---------+------------+------------+-------------+ 
| Accumulated deficit                 |    3    |   (16,007) |   (10,989) |    (13,578) | 
+-------------------------------------+---------+------------+------------+-------------+ 
|   Total stockholders' equity        |         |      3,119 |      7,989 |       5,583 | 
+-------------------------------------+---------+------------+------------+-------------+ 
|                                     |         |            |            |             | 
+-------------------------------------+---------+------------+------------+-------------+ 
| TOTAL LIABILITIES AND               |         |      3,816 |      9,408 |       6,215 | 
| STOCKHOLDERS' EQUITY                |         |            |            |             | 
+-------------------------------------+---------+------------+------------+-------------+ 
|                                     |         |            |            |             | 
+-------------------------------------+---------+------------+------------+-------------+ 
 
 
 
+-------------------------------------------------+-----------+-----------+-----------+ 
| STATEMENTS OF CASH FLOWS                        |           |           |           | 
+-------------------------------------------------+-----------+-----------+-----------+ 
|                                                 |           |           |           | 
+-------------------------------------------------+-----------+-----------+-----------+ 
|                                                 |           |           |           | 
+-------------------------------------------------+-----------+-----------+-----------+ 
|                                                 | Unaudited | Unaudited |   Audited | 
|                                                 |       Six |       Six |      year | 
|                                                 |    months |    months |  ended 31 | 
|                                                 |  ended 30 |  ended 30 |  December | 
|                                                 |      June |      June |           | 
+-------------------------------------------------+-----------+-----------+-----------+ 
|                                                 |      2009 |      2008 |      2008 | 
+-------------------------------------------------+-----------+-----------+-----------+ 
|                                                 |     $'000 |     $'000 |     $'000 | 
+-------------------------------------------------+-----------+-----------+-----------+ 
|                                                 |           |           |           | 
+-------------------------------------------------+-----------+-----------+-----------+ 
| CASH FLOWS FROM OPERATING ACTIVITIES            |           |           |           | 
+-------------------------------------------------+-----------+-----------+-----------+ 
|   Net loss                                      |   (2,429) |   (3,466) |   (6,056) | 
+-------------------------------------------------+-----------+-----------+-----------+ 
| Adjustments to reconcile net loss to net cash   |           |           |           | 
| provided by (used in) operating activities:     |           |           |           | 
+-------------------------------------------------+-----------+-----------+-----------+ 
|   Depreciation and amortization                 |       163 |       103 |       230 | 
+-------------------------------------------------+-----------+-----------+-----------+ 
|   Loss on disposal of property and equipment    |         1 |         5 |         5 | 
+-------------------------------------------------+-----------+-----------+-----------+ 
|   Realized loss on investments                  |         - |       171 |       171 | 
+-------------------------------------------------+-----------+-----------+-----------+ 
|   Stock grants and options                      |       208 |       547 |       781 | 
+-------------------------------------------------+-----------+-----------+-----------+ 
|   Deferred compensation                         |     (243) |        88 |        38 | 
+-------------------------------------------------+-----------+-----------+-----------+ 
|   Changes in operating assets and liabilities:  |           |           |           | 
+-------------------------------------------------+-----------+-----------+-----------+ 
|   Investments                                   |         - |     1,000 |     6,874 | 
+-------------------------------------------------+-----------+-----------+-----------+ 
|   Accounts receivable                           |       (1) |         - |      (47) | 
+-------------------------------------------------+-----------+-----------+-----------+ 
|   Other receivables                             |       (1) |        47 |        44 | 
+-------------------------------------------------+-----------+-----------+-----------+ 
|   Inventory                                     |        90 |     (511) |     (541) | 
+-------------------------------------------------+-----------+-----------+-----------+ 
|   Prepaid expenses                              |        12 |        44 |        59 | 
+-------------------------------------------------+-----------+-----------+-----------+ 
|   Other assets                                  |         - |         - |        12 | 
+-------------------------------------------------+-----------+-----------+-----------+ 
|   Accounts payable and accrued expenses         |      (13) |       384 |     (187) | 
+-------------------------------------------------+-----------+-----------+-----------+ 
|   Deferred rent                                 |       (8) |       (4) |      (11) | 
+-------------------------------------------------+-----------+-----------+-----------+ 
| Net cash provided by (used in) operating        |   (2,221) |   (1,592) |     1,372 | 
| activities                                      |           |           |           | 
+-------------------------------------------------+-----------+-----------+-----------+ 
|                                                 |           |           |           | 
+-------------------------------------------------+-----------+-----------+-----------+ 
| CASH FLOWS FROM INVESTING ACTIVITIES            |           |           |           | 
+-------------------------------------------------+-----------+-----------+-----------+ 
| Increase in intangible assets                   |      (38) |      (77) |     (141) | 
+-------------------------------------------------+-----------+-----------+-----------+ 
| Purchase of property and equipment              |       (1) |     (227) |     (259) | 
+-------------------------------------------------+-----------+-----------+-----------+ 
|   Net cash used in investing activities         |      (39) |     (304) |     (400) | 
+-------------------------------------------------+-----------+-----------+-----------+ 
|                                                 |           |           |           | 
+-------------------------------------------------+-----------+-----------+-----------+ 
| CASH FLOWS FROM FINANCING ACTIVITIES            |           |           |           | 
+-------------------------------------------------+-----------+-----------+-----------+ 
| Increase in deferred charges                    |      (39) |     (335) |     (634) | 
+-------------------------------------------------+-----------+-----------+-----------+ 
|   Net cash used in financing activities         |      (39) |     (335) |     (634) | 
+-------------------------------------------------+-----------+-----------+-----------+ 
|                                                 |           |           |           | 
+-------------------------------------------------+-----------+-----------+-----------+ 
| NET INCREASE (DECREASE)  IN CASH AND CASH       |   (2,299) |   (2,231) |       338 | 
| EQUIVALENTS                                     |           |           |           | 
+-------------------------------------------------+-----------+-----------+-----------+ 
|                                                 |           |           |           | 
+-------------------------------------------------+-----------+-----------+-----------+ 
| Cash and cash equivalents, beginning of period  |     3,696 |     3,358 |     3,358 | 
+-------------------------------------------------+-----------+-----------+-----------+ 
|                                                 |           |           |           | 
+-------------------------------------------------+-----------+-----------+-----------+ 
| CASH AND CASH EQUIVALENTS, END OF PERIOD        |     1,397 |     1,127 |     3,696 | 
+-------------------------------------------------+-----------+-----------+-----------+ 
|                                                 |           |           |           | 
+-------------------------------------------------+-----------+-----------+-----------+ 
| Supplemental cash flow information:             |           |           |           | 
+-------------------------------------------------+-----------+-----------+-----------+ 
|   Cash paid during the year for interest        |         - |         - |         - | 
+-------------------------------------------------+-----------+-----------+-----------+ 
|                                                 |           |           |           | 
+-------------------------------------------------+-----------+-----------+-----------+ 
| Supplemental disclosure of non-cash activity:   |           |           |           | 
+-------------------------------------------------+-----------+-----------+-----------+ 
| Deferred charges unpaid at end of period        |        86 |       229 |        19 | 
+-------------------------------------------------+-----------+-----------+-----------+ 
|                                                 |           |           |           | 
+-------------------------------------------------+-----------+-----------+-----------+ 
| Issuance of stock options and warrants          |         - |        41 |        41 | 
+-------------------------------------------------+-----------+-----------+-----------+ 
|                                                 |           |           |           | 
+-------------------------------------------------+-----------+-----------+-----------+ 
 
 
  NOTES TO THE UNAUDITED INTERIM RESULTS 
 
 
1.    BASIS OF PREPARATION 
The interim financial information has been prepared on the basis of the 
accounting policies set out in the Company's audited financial statements for 
the year ended 31 December 2008. 
 
 
Results for the periods ended 30 June 2009 and 30 June 2008 have not been 
audited. The results for the period ended 31 December 2008 have been extracted 
from the audited financial statements. 
 
 
Copies of the interim results for the six months ended 30 June 2009 can be found 
on the Company's website at www.aoimedical.net. 
 
 
Cash and Cash Equivalents 
 
 
The Company considers all highly liquid investments with an original maturity of 
three months or less when purchased to be cash equivalents. 
 
 
Accounts Receivable 
 
 
Accounts receivable are stated at amounts management expects to collect from 
outstanding balances. Management provides for probable uncollectible amounts 
through a charge to earnings and a credit to a valuation allowance based on its 
assessment of the current status of individual accounts. Balances still 
outstanding after management has used reasonable collection efforts are written 
off through a charge to the valuation allowance and a credit to accounts 
receivable. 
 
 
Inventory 
 
 
Inventory is stated at the lower of cost or market. The Company uses the average 
cost method of determining cost for its inventory. 
 
 
Deferred Charges 
 
 
Deferred charges represent costs incurred directly related to a capital raise, 
which would be offset against any proceeds raised. 
 
 
Property and Equipment 
 
 
Property and equipment are stated at cost. Depreciation and amortization are 
computed on a straight-line basis over the estimated useful lives of the related 
assets, ranging from two to seven years. Amortization of leasehold improvements 
is estimated on a straight-line basis over the estimated lives of the related 
asset or applicable lease term, if shorter. Repairs and maintenance are charged 
to operations as incurred, while significant improvements are capitalized. 
Long-lived assets held and used by the Company are reviewed for impairment 
whenever changes in circumstances indicate the carrying value of an asset may 
not be recoverable. 
 
 
Research and Development 
 
 
Expenditures for research and development are expensed as incurred. 
 
 
Intangible Assets 
 
 
Intangible assets consist of capitalized patent costs and capitalized license 
costs, net of accumulated amortization. 
 
 
Patent costs include legal costs incurred for various patent applications and 
filing fees. Once the patent is granted, the Company will amortize the 
capitalized patent costs over the remaining life of the patent using the 
straight-line method. If the patent is not granted, the Company will write-off 
any capitalized patent cost at that time. 
 
 
License costs include payments to the licensor and legal costs incurred to 
obtain certain license agreements. Costs to obtain the licenses are capitalized 
as incurred per the license agreements. The Company amortizes capitalized 
license costs over the estimated useful life of the licenses. 
 
 
The Company records the acquisition and amortization of patents and license fees 
in accordance with Statement of Financial Accounting Standards ("SFAS") No. 142, 
"Goodwill and Other Intangible Assets". The Company reviews patents and license 
fees for impairment in accordance with SFAS No. 144, "Accounting for the 
Impairment or Disposal of Long-Lived Assets". Internal and external facts and 
circumstances are considered for indication of the ability to recover the 
carrying value of the unamortized patent costs and license fees. 
 
 
Investments 
 
 
Investments include trading securities. Such investments are carried at fair 
value. Unrealized gains and losses are charged to operations and the investment 
is carried at its new cost basis. 
 
 
Fair Values of Financial Instruments 
 
 
The following methods and assumptions were used by the Company in estimating its 
fair value disclosures for financial instruments: 
 
 
Cash and cash equivalents and accounts payable and accrued liabilities: The 
carrying amounts reported in the balance sheets approximate fair values because 
of the short maturities of those instruments. 
 
 
Revenue Recognition 
 
 
Revenue is realized and earned when all of the following criteria are met: 
persuasive evidence of a sales arrangement exists; delivery has occurred and the 
product has been used; the price is fixed or determinable; and collectibility is 
reasonably assured. Revenues earned were solely from the Food and Drug 
Administration approved clinical trial for AscendxTM, the Company's lead 
product. 
 
 
Income Taxes 
 
 
Income taxes are provided for the tax effects of transactions reported in the 
financial statements and consist of taxes currently payable plus deferred taxes 
related primarily to tax loss carryforwards. Any applicable deferred tax assets 
and liabilities represent the future tax return consequences of those 
differences, which will either be taxable or deductible when the assets and 
liabilities are recovered or settled. In addition, a valuation allowance is 
established to reduce any deferred tax asset for which it is determined that it 
is more likely than not that some portion of the deferred tax asset will not be 
realized. 
 
 
Use of Estimates 
 
 
The preparation of financial statements in conformity with accounting principles 
generally accepted in the United States of America requires management to make 
estimates and assumptions that affect the amounts reported in the financial 
statements and accompanying notes. Actual results could differ from those 
estimates. 
 
 
Stock-Based Compensation 
 
 
The Company follows SFAS No. 123R, Share Based Payment, for stock-based 
compensation, which establishes a fair value based method of accounting for such 
stock-based compensation. Stock-based compensation cost is measured at the grant 
date based on the fair value of the award, taking into consideration estimated 
forfeitures, and is recognized as compensation expense over the vesting period. 
The Company provides the disclosure requirements of SFAS No. 123, Accounting for 
Stock-Based Compensation, and SFAS No. 148, Accounting for Stock-Based 
Compensation - Transition and Disclosure, and Amendment of FAS No.123, for 
employee arrangements. Stock-based awards to non-employees are accounted for 
under SFAS 123, related amendments and related interpretations. 
 
 
Recent Accounting Pronouncements 
 
 
In July 2006 the Financial Accounting Standards Board ("FASB") issued 
Interpretation No. 48, Accounting for Uncertainty in Income Taxes ("FIN 48"). 
This interpretation, among other things, creates a two-step approach for 
evaluating uncertain tax positions. Recognition (step one) occurs when an 
enterprise concludes that a tax position, based solely on its technical merits, 
is more likely than not to be sustained upon examination. Measurement (step two) 
determines the amount of benefit that more likely than not will be realized upon 
settlement. Derecognition of a tax position that was previously recognized would 
occur when a company subsequently determines that a tax position no longer meets 
the more likely than not threshold of being sustained. FIN 48 specifically 
prohibits the use of a valuation allowance as a substitute for derecognition of 
tax positions, and it has expanded disclosure requirements. FIN 48 is effective 
for fiscal years beginning after 15 December 2008, in which the impact of 
adoption should be accounted for as a cumulative-effect adjustment to the 
beginning balance of retained earnings. The Company has adopted FIN 48 as of 1 
January 2009, as required. The adoption of FIN 48 has had no effect on the 
Company's financial position, results of operations or cash flows. There are no 
unrecognized tax benefits to disclose in the notes to the financial statements. 
 
 
In September 2006 the FASB issued SFAS No. 157, Fair Value Measurements ("SFAS 
157"), which defines fair value as the price that would be received to sell an 
asset or that would be paid to transfer a liability in an orderly transaction 
between market participants at the measurement date. SFAS 157 establishes a 
framework for measuring fair value and expands disclosures about fair value 
measurements. The requirements of SFAS 157 became effective for the Company's 
fiscal year 2008. However, in February 2008 the FASB decided that an entity need 
not apply this standard to nonfinancial assets and liabilities that are 
recognized or disclosed at fair value in the financial statements on a 
nonrecurring basis until the subsequent year. The adoption of SFAS 157 did not 
have a significant impact on the Company's financial statement. 
 
 
In May 2009, the FASB issued SFAS No. 165, Subsequent Events ("SFAS 165"), which 
establishes general standards of accounting for, and requires disclosure of, 
events that occur after the balance sheet date but before financial statements 
are issued or are available to be issued.  The Company adopted the provisions of 
SFAS 165 as of 30 June 2009.  The adoption of these provisions did not have a 
significant impact on the Company's financial statements. 
 
 
In June 2009, the FASB issued SFAS No. 168, The FASB Accounting Standards 
Codification and the Hierarchy of Generally Accepted Accounting Principles 
("SFAS 168").  SFAS 168 will become the single source of authoritative 
nongovernmental U.S. generally accepted accounting principles ("GAAP"), 
superseding existing FASB, American Institute of Certified Public Accountants 
("AICPA"), Emerging Issues Task Force ("EITF"), and related accounting 
literature.  SFAS 168 reorganizes the thousands of GAAP pronouncements into 
roughly 90 accounting topics and displays them using a consistent structure. 
Also included is relevant Securities and Exchange Commission guidance organized 
using the same topical structure in separate sections.  SFAS 168 will be 
effective for financial statements issued for reporting periods that end after 
15 September 2009.  This will have an impact on the Company's financial 
statements since all future references to authoritative accounting literature 
will be references in accordance with SFAS 168. 
 
 
2.    LOSS PER SHARE 
 
 
The Company computes loss per share in accordance with SFAS No. 128, Earnings 
per Share. SFAS No. 128 provides for the calculation of basic and diluted 
earnings per share. Basic earnings per share includes no dilution and is 
computed by dividing income available to common stockholders by the weighted 
average number of common shares outstanding for the period. Diluted earnings per 
share reflects the potential dilution of securities that could share in the 
earnings of the Company. The impact of stock options was anti-dilutive, 
therefore basic and diluted net loss per share are the same. All options, 
warrants and convertible debt were excluded for the periods ended 30 June 2009 
and 2008 and the year ended 31 December 2008. 
 
 
 
 
+------------------------------------+----------------+----------------+----------------+ 
|                                    |  Unaudited six |  Unaudited six |   Audited year | 
|                                    |   months ended |   months ended |          ended | 
|                                    |   30 June 2009 |   30 June 2008 |    31 December | 
|                                    |                |                |           2008 | 
+------------------------------------+----------------+----------------+----------------+ 
| Loss attributable to common        |       $(2,429) |       $(3,466) |       $(6,056) | 
| shareholders($'000)                |                |                |                | 
+------------------------------------+----------------+----------------+----------------+ 
| Weighted average number of common  |          8,436 |          8,431 |          8,431 | 
| shares('000s)                      |                |                |                | 
+------------------------------------+----------------+----------------+----------------+ 
| Basic and diluted loss per share   |        $(0.29) |        $(0.41) |        $(0.72) | 
+------------------------------------+----------------+----------------+----------------+ 
 
 
 
 
 
 
 
 
3. RECONCILIATION OF CHANGES IN STOCKHOLDERS' EQUITY 
 
 
+-------------------------+------------+------------+-------------+------------+ 
|                         |            |            |             |            | 
+-------------------------+------------+------------+-------------+------------+ 
|                         |  Common    |Additional  |Accumulated  |   Total    | 
|                         |  Shares    |  Paid-in   |  Deficit    |   ($'000)  | 
|                         |  ($'000)   |  Capital   |  ($'000)    |            | 
|                         |            |  ($'000)   |             |            | 
+-------------------------+------------+------------+-------------+------------+ 
| Balance 31 December     |          1 |     19,160 |    (13,578) |      5,583 | 
| 2008                    |            |            |             |            | 
+-------------------------+------------+------------+-------------+------------+ 
|                         |            |            |             |            | 
+-------------------------+------------+------------+-------------+------------+ 
| Stock-based             |          - |        208 |           - |        208 | 
| compensation            |            |            |             |            | 
+-------------------------+------------+------------+-------------+------------+ 
|                         |            |            |             |            | 
+-------------------------+------------+------------+-------------+------------+ 
| Deferred compensation   |          - |      (243) |           - |      (243) | 
+-------------------------+------------+------------+-------------+------------+ 
|                         |            |            |             |            | 
+-------------------------+------------+------------+-------------+------------+ 
| Net loss                |          - |          - |     (2,429) |    (2,429) | 
+-------------------------+------------+------------+-------------+------------+ 
|                         |            |            |             |            | 
+-------------------------+------------+------------+-------------+------------+ 
| Balance 30 June 2009    |          1 |     19,125 |    (16,007) |      3,119 | 
+-------------------------+------------+------------+-------------+------------+ 
|                         |            |            |             |            | 
+-------------------------+------------+------------+-------------+------------+ 
 
 
4.    STOCK BASED COMPENSATION 
 
 
The following table summarizes the stock option activity during the six months 
ended 30 June 2009: 
+---------------------------------+--------------+--------+----------------+ 
|                                 |    Number of |        |       Weighted | 
|                                 |      Options |        |        Average | 
|                                 |              |        | Exercise Price | 
+---------------------------------+--------------+--------+----------------+ 
|                                 |              |        |                | 
+---------------------------------+--------------+--------+----------------+ 
| Outstanding at 31 December 2008 |      642,894 |        |          $4.42 | 
+---------------------------------+--------------+--------+----------------+ 
|   Granted                       |            - |        |              - | 
+---------------------------------+--------------+--------+----------------+ 
|   Forfeited                     |     (45,875) |        |          $4.85 | 
+---------------------------------+--------------+--------+----------------+ 
| Outstanding at 30 June 2009     |      597,019 |        |          $4.38 | 
+---------------------------------+--------------+--------+----------------+ 
|                                 |              |        |                | 
+---------------------------------+--------------+--------+----------------+ 
| Exercisable at 30 June 2009     |      370,551 |        |          $3.99 | 
+---------------------------------+--------------+--------+----------------+ 
 
 
The following table shows total stock-based compensation expense for the six 
months ended 30 June: 
 
 
+---------------------------------+--+-------------+----+-------------+ 
|                                 |                                   | 
+---------------------------------+-----------------------------------+ 
|                                 |  |        2009 |    |        2008 | 
+---------------------------------+--+-------------+----+-------------+ 
|                                 |  |             |    |             | 
+---------------------------------+--+-------------+----+-------------+ 
| Research and development        |  |     $75,311 |    |    $205,818 | 
+---------------------------------+--+-------------+----+-------------+ 
| Sales and marketing             |  |     $84,736 |    |     $12,066 | 
+---------------------------------+--+-------------+----+-------------+ 
| General and administrative      |  |     $48,280 |    |    $329,498 | 
+---------------------------------+--+-------------+----+-------------+ 
|                                 |  |             |    |             | 
+---------------------------------+--+-------------+----+-------------+ 
|                                 |  |    $208,327 |    |    $547,382 | 
+---------------------------------+--+-------------+----+-------------+ 
 
 
 
 
The options outstanding and exercisable at 30 June 2009 are as follows: 
 
 
+----------+--+-------------+--+-----------+--+----------+--+-----------+--+-------------+--+----------+--+-----------+ 
|          |  |                  Options Outstanding                    |  |           Options Exercisable            | 
+----------+--+---------------------------------------------------------+--+------------------------------------------+ 
|Range of  |  |      Number |  |  Weighted |  | Weighted |  | Aggregate |  |     Options |  | Weighted |  | Aggregate | 
|Exercise  |  | outstanding |  |   Average |  |  Average |  | Intrinsic |  | Exercisable |  |  Average |  | Intrinsic | 
|  Prices  |  |             |  | Remaining |  | Exercise |  |     Value |  |             |  | Exercise |  |     Value | 
|          |  |             |  |  Expected |  |    Price |  |           |  |             |  |    Price |  |           | 
|          |  |             |  |   Life in |  |          |  |           |  |             |  |          |  |           | 
|          |  |             |  |     Years |  |          |  |           |  |             |  |          |  |           | 
+----------+--+-------------+--+-----------+--+----------+--+-----------+--+-------------+--+----------+--+-----------+ 
|          |  |             |  |           |  |          |  |           |  |             |  |          |  |           | 
+----------+--+-------------+--+-----------+--+----------+--+-----------+--+-------------+--+----------+--+-----------+ 
| $0.01 -  |  |     248,235 |  |       2.2 |$ |     2.06 |$ |    39,000 |  |     168,379 |$ |     1.40 |$ |    39,000 | 
| $3.70    |  |             |  |           |  |          |  |           |  |             |  |          |  |           | 
+----------+--+-------------+--+-----------+--+----------+--+-----------+--+-------------+--+----------+--+-----------+ 
| $4.34 -  |  |     120,242 |  |       2.5 |  |     4.90 |  |         - |  |      69,367 |  |     5.20 |  |         - | 
| $5.99    |  |             |  |           |  |          |  |           |  |             |  |          |  |           | 
+----------+--+-------------+--+-----------+--+----------+--+-----------+--+-------------+--+----------+--+-----------+ 
| $6.63 -  |  |     222,236 |  |       3.5 |  |     6.63 |  |         - |  |     126,499 |  |     6.63 |  |         - | 
| $6.75    |  |             |  |           |  |          |  |           |  |             |  |          |  |           | 
+----------+--+-------------+--+-----------+--+----------+--+-----------+--+-------------+--+----------+--+-----------+ 
| $7.07    |  |       6,306 |  |       3.1 |  |     7.07 |  |         - |  |       6,306 |  |     7.07 |  |         - | 
+----------+--+-------------+--+-----------+--+----------+--+-----------+--+-------------+--+----------+--+-----------+ 
|          |  |     597,019 |  |       2.7 |$ |     4.38 |$ |    39,000 |  |     370,551 |$ |     3.99 |$ |    39,000 | 
+----------+--+-------------+--+-----------+--+----------+--+-----------+--+-------------+--+----------+--+-----------+ 
 
 
 
 
At 30 June 2009, approximately $241,000 of deferred compensation expense 
remained to be expensed over a weighted average period of 2.3 years. 
 
 
 
 
 
 
 
 
5.    SUBSEQUENT EVENTS 
 
 
The following events have occurred after 30 June 2009, which the Company 
considers necessary to disclose in order to keep these financial statements from 
being misleading. Subsequent events have been evaluated through 30 September 
2009, the date the financial statements were issued. 
 
 
In August 2009, the Company successfully raised approximately $2.6 million 
through the issue of senior convertible loan notes. The net proceeds from this 
fundraising are being used to augment the Company's working capital for the FDA 
approval and the market launch of Ascendx(TM). 
 
 
The senior convertible loan notes ("SCLNs"), shall be repayable on or before 30 
September 2012 although the SCLNs shall become convertible at the option of the 
holder after 1 October 2011 (the "Conversion Date"). The SCLNs carry a coupon of 
8 per cent. interest per annum, payable quarterly in arrears until such time as 
they are repaid or converted in accordance with the terms. The SCLNs are 
callable, or repayable with no risk of conversion, by the Company on or before 
the Conversion Date, after which the SCLNs are convertible into shares of common 
stock in the Company ("Common Shares") at a price of 60 cents per Common Share. 
Additionally, subscribers for the SCLNs were issued 333 warrants, with an 
exercise price of 60 cents per Common Share, for each $1,000 principal amount of 
SCLNs purchased and an additional 100 warrants for each $1,000 principal amount 
of SCLNs purchased if the SCLNs have not been repaid by the Conversion Date (the 
"Warrants"). The Warrants may be exercised into new Common Shares at any time 
prior to the fifth anniversary of the issuance of the Warrants. The placement 
agent for this transaction was issued 167 warrants, with an exercise price of 60 
cents per Common Share, for each $1,000 principal amount of SCLNs purchased (the 
"Placement Agent Warrants"). The Placement Agent Warrants may be exercised into 
new Common Shares at any time prior to the fifth anniversary of their issuance. 
If the SCLNs were converted in full after the Conversion Date and all the 
Warrants and Placement Agent Warrants exercised, approximately 5.89 million new 
Common Shares would be issued, representing up to approximately 69 per cent. of 
the current issued share capital of the Company. 
 
 
The SCLNs carry prepayment penalties in year one (1), two (2) and three (3) of 
10 per cent., 20 per cent. and 30 per cent., respectively. 
 
 
On 8 September 2009, the Company announced that William Christy had stood down 
as the Chief Executive Officer and as a Director of the Company with immediate 
effect and that Scott Baily had also stood down as a Non-executive Director of 
the Company with immediate effect. In addition, it was announced that Ian 
Johnson would stand down as the Non-executive Chairman of the Company with 
effect from the de-listing of the Company's common stock to trading on AIM. 
 
 
 
 
 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
 IR LLMPTMMTTBIL