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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Shariah (Regs) | LSE:SCAP | London | Ordinary Share | COM SHS USD0.01 (REGS) |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 0.25 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
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0 | 0 | N/A | 0 |
TIDMSCAP
RNS Number : 3159J
Shariah Capital, Inc
29 June 2011
29 June 2011
Shariah Capital Inc. ("Shariah Capital" or the "Company")
Final Results for the year ended 31 December 2010
The Board of Directors of Shariah Capital is pleased to announce the Company's final results for the year ended 31 December 2010.
Shariah Capital is a U.S.-based company that creates and customizes Shariah compliant financial products and platforms and provides selective Shariah consulting and advisory services primarily to global financial institutions and investment firms with product initiatives directed to Islamic investors.
The Company is best known for its pioneering efforts in Shariah compliant hedge funds. It developed a proprietary software engine for screening stocks electronically, devised a Shariah compliant, arboon-based short sale methodology, and modified prime brokerage documentation that led to one of the first Shariah compliant hedge funds and fund of hedge funds.
2010 HIGHLIGHTS
In January 2010, the DSAM Kauthar Gold Fund, managed by Tocqueville Asset Management, received the MENA Fund Manager Award for Outstanding Performance & Innovation based on its 67.61% net return in 2009. It won this prestigious award for the second consecutive year, in January 2011, for its 27.02% return in 2010.
In March 2010, Shariah Capital and Barclays Capital successfully restructured their relationship regarding the Al Safi Trust, a comprehensive platform developed by Shariah Capital and Barclays that provides investment managers with Shariah screening and Shariah compliant short sale solutions as well as prime brokerage, administration, auditing, and trustee oversight within a pre-established Cayman trust framework. As a result of the restructuring, Shariah Capital assumed exclusive marketing and operational responsibilities for the Al Safi Trust. Barclays continues as the platform's prime broker and custodian.
In April 2010, the Dubai Multi Commodities Centre Authority (DMCCA) redeemed $140.5 million of the $200 million original seed capital it had provided to the DSAM Kauthar Funds in 2008. The Company successfully negotiated a new lock-up with DMCCA for a minimum of $100 million until 30 June 2011. Total DSAM Kauthar Fund assets as at 31 December 2010 were $121.8 million.
In September 2010, the Board of Dubai Shariah Asset Management (DSAM), the Company's joint venture company with DMCCA, agreed to pay Shariah Capital a one-off payment of $325,000 in quarterly installments through DSAM's fiscal year ending 30 June 2011. This payment is compensation to the Company for its strategic support of the DSAM Kauthar Funds, including sales and marketing.
In December 2010, the Board voted to shift the sales strategy of the DSAM Kauthar Funds to a retail focus. The Funds' audited track records now meet and exceed the 2-year minimum required by most retail distributors for inclusion on their platforms. Market research indicates that few Shariah compliant, commodity-linked alternative investment funds currently are available to MENA retail investors.
Consequently, in an effort to raise new assets, the Company successfully negotiated with managers of the DSAM Kauthar Gold and DSAM Kauthar Energy funds to reduce investment minimums and improve liquidity terms for retail-friendly versions of these funds. In November 2010, DSAM also hired a 10-year industry veteran in Dubai with direct experience in retail, takaful (Islamic insurance), and the distribution platforms of global insurance firms. His first-hand experience marketing investment funds to commercial bank and insurance company distributors that target retail investors is a key factor in implementing the DSAM Board's directive.
Although opportunities with institutional investors will continue to be pursued actively, DSAM near term will focus its marketing strategies on those banks, insurance companies, and financial advisors in the region with product needs and retail client demand for our unique DSAM Kauthar Funds.
PERSONNEL
The Company had no changes of personnel in 2010. It plans no additional hires this year and believes its core management team sufficient to meet the challenges of its commitment to the DSAM Kauthar Funds in 2011.
On 3 May 2011, Shaykh Yusuf Talal DeLorenzo left the Company as Chief Shariah Officer and as a member of the Board of Directors.
FINANCIAL REVIEW
During the twelve months ended 31 December 2010, Shariah Capital realized, for book purposes, a net loss of $353,954 compared to a net loss of $1,637,819 for the same period in 2009. The Company generated revenue of approximately $1,280,666 in 2010 compared to revenue of approximately $1,535,000 for the same period in 2009. The revenue decline is directly attributable to the $140.5 million DMCCA redemption. Loss per share decreased to $0.005 in 2010 compared to $0.03 in 2009. The lower loss per share is attributable mainly to decreases in expenses and, in particular, to an expense reduction of over $830,000 for stock-based compensation.
The Company recorded income attributable to its unconsolidated DSAM joint venture of $20,314 in 2010. An equity loss of approximately $350,000 was recorded for this joint venture in 2009.
Expenses for the Company declined to $1,693,578 in 2010 from $2,871,294 in 2009. This decrease is attributable primarily to lower stock-based compensation and reduced payroll expenses.
LIQUIDITY AND CAPITAL RESOURCES
The Company's fee receivables, cash, and cash equivalents stood at approximately $4.5 million at the end of 2010, of which over $4.31 million was held in cash and cash equivalents. This compares to cash, cash equivalents, certificates of deposit and fee receivables at the end of 2009 of approximately $5.1 million. Fee receivables of approximately $202,000 were attributable primarily to advisory fees for the Al Safi Trust platform earned in the fourth quarter of 2010 and paid in January, 2011. The Company believes its cash and cash equivalent position is sufficient to meet ongoing and budgeted operations.
OUTLOOK
In spite of DSAM's award winning fund performance the Company believes the alternative fund market, particularly in the Middle East, remains extremely challenging. As a result, it will continue to cut costs, cap expenses, and drive business opportunities where it can judiciously safeguard cash and leverage the fund managers' continuing performance. Presently, the Company is in active discussions with DMCCA regarding the extension of DMCCA's lock-up of seed capital in the DSAM Kauthar Funds. There is no certainty these discussions will be successful. DMCCA has notified the Company that it will redeem its investment, currently valued at approximately $14.5 million, in the DSAM Kauthar Natural Resources Fund on 30 June 2011. This fund will be closed at that time.
The Company is also in active negotiations regarding a new retail opportunity for DSAM and two of its Kauthar funds. There is no agreement at this time between the partners on funding a budget for DSAM's upcoming 2011-2012 fiscal year. If the Company is successful in these discussions, it will focus the majority of its resources supporting the rolling out DSAM's new retail sales strategy. It will do so against the backdrop of tumultuous local equity markets, illiquidity resulting from depressed Gulf real estate values, and the caution created by the Middle East political unrest of the Arab Spring.
We remain determined to meet every challenge and pursue every opportunity with commitment and purpose.
We are grateful to our shareholders for their continued confidence and support.
Eric Meyer
Chairman & Chief Executive Officer
Enquiries:
Eric Meyer
Chairman & CEO
Shariah Capital Inc.
125 Elm Street
New Canaan, CT 06840
Office: +1 (203) 972-0331
Fax: +1 (203) 972-0229
Email: emeyer@shariahcap.com
Website: www.shariahcap.com
Martin Smith
Investec Investment Banking
Switchboard: +44 20 7597 5970
Shariah Capital, Inc.
FINANCIAL STATEMENTS
AND
INDEPENDENT AUDITORS' REPORT
DECEMBER 31, 2010 AND 2009
BALANCE SHEET
December 31, 2010 2009 ---------------------------------------------- ------------ ------------ ASSETS Current assets Cash and cash equivalents $ 4,319,166 $ 1,932,629 Certificates of deposit 2,725,722 Fees receivable, less allowance for doubtful accounts of approximately $20,000 and $0 for 2010 and 2009, respectively 202,757 434,732 Due from related parties 160,640 111,527 Prepaid expenses and other current assets 213,426 28,040 Investment in DSAM Joint Venture 17,973 Total current assets 4,913,962 5,232,650 Property and equipment, net 6,812 6,463 ------------ ------------ $ 4,920,774 $ 5,239,113 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable and accrued expenses $ 129,120 $ 103,533 Due to related party 8,425 Investment in DSAM Joint Venture 2,341 ------------ ------------ Total current liabilities 137,545 105,874 ------------ ------------ Stockholders' equity Common stock, $.01 par value, 70,000,000 shares authorized; 61,744,132 shares issued and 61,670,232 outstanding at 2010 and 2009 617,441 617,441 Additional paid-in capital 12,587,729 12,583,785 Accumulated deficit (8,316,598) (7,962,644) Treasury stock at cost, 73,900 shares at 2010 and 2009 (105,343) (105,343) ------------ ------------ Total stockholders' equity 4,783,229 5,133,239 ------------ ------------ $ 4,920,774 $ 5,239,113
STATEMENT OF OPERATIONS
Years Ended December 31, 2010 2009 ----------------------------------------------- ----------- ------------ Revenue Advisory fee income $ 1,028,167 $ 1,394,963 Consulting fee income 252,499 113,166 Expense reimbursement 27,300 ----------- ------------ Total revenue 1,280,666 1,535,429 ----------- ------------ Expenses Payroll and employee benefits 980,082 1,169,329 AIM expenses 85,336 91,130 Bad debt expense 20,416 Computer expenses 20,948 101,848 Depreciation 2,587 3,036 Insurance 57,904 57,912 Marketing 15,742 17,197 Office expense and supplies 11,462 14,708 Professional fees and other 347,760 389,728 Registrar fees 13,162 13,522 Rent 74,025 96,175 Other taxes 27,880 15,810 Stock-based compensation 3,944 836,047 Telephone 9,732 12,291 Travel and entertainment 22,598 52,561 ----------- ------------ Total expenses 1,693,578 2,871,294 ----------- ------------ Loss from operations (412,912) (1,335,865) Other income Interest and dividend income 38,644 48,797 Income (loss) attributable to unconsolidated joint venture 20,314 (350,751) ----------- ------------ Net loss $ (353,954) $ (1,637,819) Loss per share, basic and diluted $ (0.01) $ (0.03) Weighted average shares outstanding, basic and diluted 60,344,132 60,250,707
STATEMENT OF CASH FLOWS
Years Ended December 31, 2010 2009 ------------------------------------------------ ---------- ------------ Cash flows from operating activities Net loss $ (353,954) $ (1,637,819) Adjustments to reconcile net loss to net cash used in operating activities: Stock-based compensation 3,944 836,047 (Income) loss attributable to unconsolidated joint venture (20,314) 350,751 Unrealized depreciation (appreciation) 3,226 (3,221) Depreciation 2,587 3,036 Bad debt expense 20,416 Changes in operating assets and liabilities: Fees receivable 211,559 (152,359) Due from related parties (40,688) 69,153 Prepaid expenses and other current assets (185,386) 43,621 Accounts payable and accrued expenses 25,587 (43,397) ---------- ------------ Net cash used in operating activities (333,023) (534,188) ---------- ------------ Cash flows from investing activities Purchase of certificates of deposit (1,160,005) Redemptions of certificates of deposit 2,722,496 220,594 Purchase of property and equipment (2,936) (1,057) Investment in DSAM Joint Venture (354,809) ---------- ------------ Net cash provided by (used in) investing activities 2,719,560 (1,295,277) ---------- ------------ Cash flows used in financing activities, Purchase of treasury stock (20,443) ---------- ------------ Net increase (decrease) in cash and cash equivalents 2,386,537 (1,849,908) Cash and cash equivalents, beginning of year 1,932,629 3,782,537 ---------- ------------ Cash and cash equivalents, end of year $ 4,319,166 $ 1,932,629 Supplemental disclosures of cash flow information: Cash paid for franchise taxes $ 27,880 $ 15,810
STATEMENT OF CHANGES IN STOCKHOLDERS' CAPITAL
Years Ended December 31, 2010 and 2009 --------------------------- -------- ----------- ------------ ---------- -------------- Additional Total Common Stock Paid-in Accumulated Treasury Stockholders' Shares Amount Capital Deficit Stock Equity ----------- -------- ----------- ------------ ---------- -------------- Balances, December 31, 2008 61,744,132 $ 617,441 $ 11,747,738 $ (6,324,825) $ (84,900) $ 5,955,454 Stock-based compensation 836,047 836,047 Purchase of treasury stock (20,443) (20,443) Net loss (1,637,819) (1,637,819) ----------- -------- ----------- ------------ ---------- -------------- Balances, December 31, 2009 61,744,132 $ 617,441 $ 12,583,785 $ (7,962,644) $ (105,343) $ 5,133,239 Stock-based compensation 3,944 3,944 Net loss (353,954) (353,954) ----------- -------- ----------- ------------ ---------- -------------- Balances, December 31, 2010 61,744,132 $ 617,441 $ 12,587,729 $ (8,316,598) $ (105,343) $ 4,783,229
NOTES TO FINANCIAL STATEMENTS
1. Nature of operations
Shariah Capital, Inc. (the "Company") was incorporated on September 6, 2006 as a Delaware Corporation. The Company creates and customizes Shariah-compliant financial products and platforms and provides Shariah consulting and advisory services primarily to financial institutions and investment management firms with product initiatives directed to Islamic investors in the Middle East and Far East and, specifically to, Islamic institutional and high net worth investors. The Company has built proprietary solutions endorsed by prominent Shariah scholars that enable hedge fund and other alternative investment managers to manage their portfolios consistent with their existing strategies and processes while complying with Shariah. The Company explores business opportunities with financial and investment management firms in Europe, Asia and the United States.
2. Summary of significant accounting policies
Basis of Presentation
The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP").
These financial statements were approved by management and available for issuance on June 27, 2011. Subsequent events have been evaluated through this date.
Cash and Cash Equivalents and Concentration of Credit Risk
Cash and cash equivalents include cash held in banks and money market funds with original maturities of three months or less. The Company maintains cash balances in certain financial institutions which, at times, may exceed federally insured limits. The Company has not experienced any losses on these accounts, and believes it is not subject to any significant credit risk.
Fees Receivable and Allowance for Doubtful Accounts
Fees receivable consist of advisory fees and consulting fees. Advisory fees are based on the percentage of the net assets of the fund for which the Company serves as the Shariah advisor. Consulting fees primarily consist of up-front non-refundable fees earned upon the commencement of the engagement, pursuant to the service agreements; a progress fee based upon completion of certain deliverables and a final payment based upon the completion of the consulting and advisory services. Advisory fees and consulting fees are recognized in the year they are earned. On a periodic basis, the Company evaluates its fees receivable and determines if an allowance for doubtful accounts is necessary, based on the history of collections and current credit conditions. The Company recorded an allowance for doubtful accounts of approximately $20,000 at December 31, 2010. No allowance for doubtful accounts was deemed necessary at December 31, 2009.
Property and Equipment
Property and equipment is stated at cost less accumulated depreciation. The Company provides for depreciation utilizing the straight-line method over the estimated useful lives of the related assets. Computer equipment is depreciated using an estimated useful life of five years. Expenditures for repairs and maintenance are charged to expense as incurred.
Long-Lived Assets
The Company accounts for long-lived assets under GAAP which requires the Company to review for impairment of long-lived assets, whenever events or changes in circumstances indicate that the carrying amount of an asset might not be recoverable. When such an event occurs, management determines whether there has been an impairment by comparing the anticipated undiscounted future net cash flows to the related asset's carrying value. If an asset is considered impaired, the asset is written down to fair value, which is determined based either on discounted cash flows or appraised value, depending on the nature of the asset. The Company did not have any impairment losses on long-lived assets for the years ended December 31, 2010 and 2009.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Stock-Based Compensation
GAAP requires an entity to measure the cost of employees services received in exchange for stock-based awards based on the grant date fair value of the awards. The grant date fair value of employee restricted stock-based awards will be estimated based on the market price of the Company's stock on the date of the grant. All stock-based awards granted to employees are recognized as compensation expense over the service period (generally the vesting period) in the financial statements based on their fair values established at the time the awards are granted. GAAP requires the Company to estimate the future forfeitures which has an impact on stock-based compensation expense. GAAP also requires the realization of tax benefits in excess of amounts recognized for financial reporting purposes to be recognized as a financing activity rather than an operating activity in the statements of cash flows.
If an award is modified after the grant date, incremental compensation expense, if any, will be recognized in an amount equal to the excess of the fair value of the modified award over the fair value of the original award immediately before modification.
For non-employee stock-based awards, the Company recognizes an expense in accordance with GAAP and values the stock-based award on the fair value of the grant date of the award with subsequent adjustments based on the fair value of the award as it vests. The fair value of the restricted stock-based award is estimated based on the market price of the Company's stock.
Income Taxes
The Company is responsible for minimum taxes to the state of Connecticut. Due to losses incurred for the years ended December 31, 2010 and 2009, no income tax provision for federal taxes has been recorded in the accompanying financial statements.
The Company complies with the provisions of GAAP, which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred income tax assets to the amount expected to be realized.
The determination of the Company's provision for income taxes requires significant judgment, the use of estimates, and the interpretation and application of complex tax laws. Significant judgment is required in assessing the timing and amounts of deductible and taxable items and the probability of uncertain tax positions being sustained upon examination by the applicable taxing authority. The benefits of uncertain tax positions are recorded in the Company's financial statements only after determining a more likely than not probability that the uncertain tax positions will withstand challenge, if any, from tax authorities. When facts and circumstances change, the Company reassesses these probabilities and records any changes in the financial statements as appropriate. Accrued interest and penalties related to income tax matters are classified as a component of income tax expense.
In accordance with GAAP, the Company is required to determine whether a tax position is more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The Company is subject to income tax examinations by major taxing authorities for all tax years since inception. The tax benefit recognized is measured as the largest amount of benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement.
De-recognition of a tax benefit previously recognized results in the Company recording a tax liability that reduces stockholder's equity. The Company recognizes interest accrued and penalties related to unrecognized tax benefits in income tax payable, if assessed. No interest expense or penalties have been recorded as of and for the year ended December 31, 2010. The Company may be subject to potential examinations by U.S. federal, U.S. state or foreign jurisdictions in the areas of income taxes. These potential examinations may include questioning the timing and amounts of deductions, the nexus of income among various jurisdictions and compliance with U.S. federal, U.S. state and foreign tax laws. The Company's management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.
Fair Value - Definition and Hierarchy
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., "the exit price") in an orderly transaction between market participants at the measurement date.
In determining fair value, the Company uses various valuation approaches. A fair value hierarchy for inputs used in measuring fair value maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are those that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs reflect the Company's assumptions about the inputs market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The fair value hierarchy is categorized into three levels based on the inputs as follows:
Level 1 - Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Valuation adjustments and block discounts are not applied to Level 1
securities. Since valuations are based on quoted prices that are readily and regularly available in active markets, valuation of these securities does not entail a significant degree of judgment.
Level 2 - Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.
Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement.
Fair Value - Valuation Techniques
The Company values investments in mutual funds, which are included in cash and cash equivalents, based on the quoted market price of the net asset value of shares held at year end. Certificates of deposit are based on a market value pricing model.
Loss Per Share
Loss per share is based on the weighted average number of common shares outstanding. The Company complies with GAAP, which requires dual presentation of basic and diluted earnings per share on the face of the statement of operations. Basic loss per share excludes dilution and is computed by dividing income available to common stockholders by the weighted-average common shares outstanding for the year.
The unvested weighted average of the restricted stock granted to employees of 1,400,000 and 1,493,425 for the years ended December 31, 2010 and 2009, respectively, are antidilutive and have been excluded from the computation of loss per share.
Treasury Stock
No treasury shares were acquired during 2010. In December 2009, the Company acquired 31,450 shares of common stock for approximately $0.65 from an employee.
3. Property and equipment
Property and equipment consists of the following at December 31, 2010 and 2009:
2010 2009
Computer Equipment $12,896 $ 16,151
Less Accumulated Depreciation $6,084 $ 9,688
$6,812 $ 6,463
Depreciation expense amounted to approximately $2,600 and $3,000 for the years ended December 31, 2010 and 2009, respectively.
4. Fair value measurements
The Company's assets recorded at fair value have been categorized based upon a fair value hierarchy as described in the Company's significant accounting policies in Note 2.
The following table presents information about the Company's assets measured at fair value as of December 31, 2010 and 2009:
2010 2009
Quoted Prices in Quoted Prices in
Active Markets for Active Markets for
Identical Assets Identical Assets
(Level 1) (Level 1)
_______________ _______________
Assets (at fair value)
Investments in money market funds $ 3,259,318 $ 498,605
Certificates of Deposit $ - $ 2,725,722
5. Stock-based compensation
The Company granted 2,700,000 shares of restricted stock on December 7, 2006 to several employees which vest over three years. The fair value of the shares on the grant date was $2,700,000. In December 2007, the Company amended the terms of the granted restricted stock awards. The amendment increased the December 7, 2006 shares for certain employees by 5% or 47,500 shares, and extended the vesting period from December 7, 2007 to March 31, 2008, subject to earlier acceleration at the option of the Company. In December 2008, the Company amended the terms of the granted restricted stock awards for two of its employees. The amendment extended the vesting date for 600,000 shares of common stock from December 7, 2008 to December 7, 2009.
In December 2009, the Company amended the terms of the granted restricted stock awards for two of its employees. The amendment extended the vesting date for 1,400,000 shares of common stock from December 7, 2009 to December 7, 2010. During 2010, the Company further amended the terms of the granted restricted stock awards for the same two employees, extending the vesting date for 1,400,000 shares of common stock from December 7, 2010 to August 31, 2011.
The fair value of each restricted stock award was estimated on the date of grant or the date of modification, if there was an additional incremental compensation cost, based on the market price of the Company's stock at that date.
Stock-based compensation expense amounted to approximately $4,000 and $836,000 for the years ended December 31, 2010 and 2009, respectively.
6. Income taxes
The Company has an available net operating loss carry forward of approximately $6,176,000 to offset future taxable income expiring at various dates through 2030.
The Company has a deferred tax asset of approximately $2,600,000 and $2,400,000 at December 31, 2010 and 2009, respectively. In recognition of the uncertainty regarding the ultimate amount of income tax benefit to be derived, the Company has recorded a valuation allowance at December 31, 2010 and 2009 for the full amount of the deferred tax asset.
7. Commitments and contingencies
Operating Leases
In February 2010, the Company entered into an operating lease for its corporate office in Connecticut, which expired in January 2011, with an optional one year extension. The Company is currently renting its corporate office on a month to month basis. Rent expense amounted to approximately $74,000 and $96,000 for the years ended December 31, 2010 and 2009, respectively.
Employment Agreements
The Company entered into employment agreements with its management employees. Agreements with two of three management employees terminate on August 31, 2011, with one such agreement providing for an extension at the option of the Company for an additional year. The employment agreement with the Chairman and Chief Executive Officer of the Company provides for termination upon 12 months notice and a $650,000 termination fee.
Annual base salaries of approximately $796,000 and $1,050,000 were paid to management employees for the years ended December 31, 2010 and 2009, respectively. The Company paid cash bonuses to certain employees in the amount of approximately $0 and $1,000 for the years ended December 31, 2010 and 2009, respectively.
Employment Agreements (continued)
During 2010, the Company entered into an employment agreement with one management employee to provide housing, transportation and moving allowances in the amount of approximately $163,000, of which approximately $92,000 was expensed for the year ended December 31, 2010.
Non-Executive Director Service Agreement
A non-executive director for the Company received compensation of approximately $15,000 and $16,000 for serving as a member on the Board of Directors of the Company for the years ended December 31, 2010 and 2009, respectively.
8. Related party transactions
During 2008, the Company, in collaboration with various professional organizations, formed the Al Safi Trust, a Cayman Islands trust with related sub-trusts ("Al Safi"). Al Safi is a Shariah-compliant alternative investment platform, and the first known platform to provide an infrastructure for long and short-term Shariah-compliant investments. The Company is the Shariah advisor and receives a Shariah advisory fee based on the net asset value of all Al Safi sub-trusts. In September 2008, three sub-trusts were formed on Al Safi, each of which was seeded with $50,000,000 by the Dubai Multi Commodities Centre Authority ("DMCCA"). In November 2008, a fourth sub-trust was seeded by DMCCA in the amount of $50,000,000, for an aggregate total of $200,000,000 in invested capital. As of December 31, 2010, assets under management in Al Safi were approximately $122,000,000. Advisory fee income from Al Safi amounted to approximately $1,028,000 and $1,395,000 for the years ended December 31, 2010 and 2009, respectively. The reduction in advisory fee income resulted from a redemption of seed capital by the DMCCA from Al Safi. Consulting fee income from Al Safi amounted to approximately $20,000 and $23,000 for the years ended December 31, 2010 and 2009, respectively.
In connection with forming Al Safi, the Company announced a joint venture with DMCCA. The joint venture entity, Dubai Shariah Asset Management Company, Ltd. ("DSAM") is owned 51 percent by Dubai Commodity Asset Management ("DCAM"), which is wholly owned by DMCCA, and 49 percent by the Company. The investment is accounted for under the equity method of accounting for long-term investments. In conjunction with the joint venture, DMCCA purchased a 4.99% equity share of the Company and an executive from DMCCA was elected to the Company's Board of Directors as a non-executive director.
DSAM develops and manages Shariah-compliant investment products focused on commodities. DSAM has the right to assess a fee based on a percentage of the net asset value of the four sub-trusts seeded by the DMCCA (exclusive of capital invested by the DMCCA).
Consulting fee income from DSAM amounted to approximately $162,000 and $0 for the years ended December 31, 2010 and 2009, respectively. In addition, the Company is the Shariah advisor to DMCCA for related Shariah-compliant investments. Consulting fee income from the DMCCA amounted to approximately $70,000 and $90,000 for the years ended December 31, 2010 and 2009, respectively.
The Company's income (loss) attributable to DSAM amounted to approximately $20,000 and ($351,000) for the years ended December 31, 2010 and 2009, respectively and is included in the accompanying statements of operations.
The Company had a receivable from DSAM in the amount of approximately $161,000 and $112,000 at December 31, 2010 and 2009, respectively, representing reimbursement of expenses from DSAM and is reported as a component of due from related parties in the accompanying balance sheets.
The Company loaned an employee $50,000 in January 2010, which is secured by the common stock of the Company held by the employee. The loan bears interest at a rate of 1.00% per annum plus prime (3.25% at December 31, 2010) and matures in August 2011 and is reported as a component of prepaid expenses and other current assets in the accompanying balance sheets.
9. Major customers
The Company had advisory fee income from one related party that accounted for 100% of the Company's total advisory fee income for the years ended December 31, 2010 and 2009.
The Company has two related parties that account for 100% of its fees receivable and consulting fee income as of and for the years ended December 31, 2010 and 2009.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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